Exhibit 10.1
PARTICIPATION AND LOAN AND
SECURITY AGREEMENT
dated as of January 14, 2004
by and between
K-SEA OPERATING PARTNERSHIP L.P.,
as borrower,
and
KEYBANK N.A.,
for itself as Lender, and as administrative agent for Lenders
and
THE CIT GROUP/EQUIPMENT FINANCING, INC.,
for itself as Lender, and as collateral agent for Lenders
TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS..................................................................1
Section 1.01 Defined Terms..........................................................1
Section 1.02 Terms Generally.......................................................18
Section 1.03 Accounting Terms; GAAP................................................19
ARTICLE II THE LOANS...................................................................19
Section 2.01 Commitments...........................................................19
Section 2.02 Loans.................................................................19
Section 2.03 Payments..............................................................22
Section 2.04 Requests for Loans....................................................23
Section 2.05 Settlement and Funding of Loans.......................................24
Section 2.06 Non-Receipt of Funds..................................................24
Section 2.07 Termination and Reduction of Commitments..............................24
Section 2.08 Repayment of Loans; Evidence of Debt..................................25
Section 2.09 Prepayment of Loans...................................................26
Section 2.10 Fees..................................................................26
Section 2.11 Increased Costs.......................................................27
Section 2.12 Break Funding Payments................................................28
Section 2.13 Taxes.................................................................29
Section 2.14 Payments Generally; Pro Rata Treatment; Sharing of Set-offs...........29
Section 2.15 Letters of Credit.....................................................32
Section 2.16 Mitigation Obligations; Replacement of Lenders........................34
Section 2.17 Term-Loans............................................................34
ARTICLE III GRANT OF SECURITY INTEREST..................................................35
Section 3.01 ......................................................................35
Section 3.02 ......................................................................36
Section 3.03 Orderly Liquidation Value.............................................36
ARTICLE IV REPRESENTATIONS AND WARRANTIES..............................................37
Section 4.01 Organization..........................................................37
Section 4.02 Power and Authority...................................................37
Section 4.03 Governmental Approvals; No Conflicts..................................37
Section 4.04 Financial Condition; No Material Adverse Change.......................37
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Section 4.05 Litigation............................................................38
Section 4.06 Environmental Condition...............................................38
Section 4.07 Compliance with Laws and Agreements...................................38
Section 4.08 Investment and Holding Company Status.................................38
Section 4.09 Taxes.................................................................39
Section 4.10 ERISA.................................................................39
Section 4.11 Disclosure............................................................39
Section 4.12 No Other Name.........................................................39
Section 4.13 Title.................................................................39
Section 4.14 Lenders' Security Interest............................................39
Section 4.15 Citizenship...........................................................40
ARTICLE V CONDITIONS..................................................................40
Section 5.01 Effective Date........................................................40
Section 5.02 Subsequent Loans......................................................42
Section 5.03 Facility B and Facility C Loans.......................................42
ARTICLE VI AFFIRMATIVE COVENANTS.......................................................43
Section 6.01 Financial Statements and Other Information............................43
Section 6.02 Vessel Appraisals.....................................................44
Section 6.03 Fees and Expenses.....................................................44
Section 6.04 Notices of Material Events............................................45
Section 6.05 Existence; Conduct of Business........................................45
Section 6.06 Insurance.............................................................45
Section 6.07 Taxes; Use............................................................46
Section 6.08 Maintenance of Properties; Use and Operation of Vessels...............46
Section 6.09 Books and Records; Inspection Rights..................................47
Section 6.10 Use of Proceeds.......................................................47
Section 6.11 U.S. Person...........................................................47
Section 6.12 Documentation.........................................................47
Section 6.13 Further Assurances....................................................48
Section 6.14 Borrower's Title; Lenders' Security Interest; Personal Property.......48
Section 6.15 Indemnification.......................................................48
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Section 6.16 Performance of Contracts..............................................48
Section 6.17 Environmental Compliance..............................................48
Section 6.18 Subsidiary Guaranties.................................................49
Section 6.19 Cleanup Requirement...................................................49
ARTICLE VII NEGATIVE COVENANTS..........................................................49
Section 7.01 Fixed Charge Coverage.................................................50
Section 7.02 Total Funded Debt to EBITDA...........................................50
Section 7.03 Leverage Ratio........................................................50
Section 7.04 Adjustments to Measurements...........................................50
Section 7.05 Minimum Tangible Net Worth............................................50
Section 7.06 No Liens..............................................................50
Section 7.07 No Changes in Borrower................................................50
Section 7.08 ......................................................................50
Section 7.09 Fundamental Changes...................................................50
Section 7.10 Transactions with Affiliates..........................................51
Section 7.11 Restrictive Agreements................................................51
ARTICLE VIII EVENTS OF DEFAULT AND REMEDIES..............................................52
Section 8.01 Events of Default.....................................................52
Section 8.02 Remedies..............................................................54
Section 8.03 Lenders' Cure of Third Party Agreement Default........................55
ARTICLE IX THE AGENTS..................................................................56
Section 9.01 Appointment, Powers and Immunities....................................56
Section 9.02 Reliance by Agents....................................................56
Section 9.03 Events of Defaults....................................................56
Section 9.04 Rights as a Lender....................................................57
Section 9.05 Indemnification.......................................................57
Section 9.06 Non-Reliance on Agents and Other Lenders..............................57
Section 9.07 Failure to Act........................................................58
Section 9.08 Resignation or Removal of an Agent....................................58
Section 9.09 Consents under Loan Documents.........................................58
Section 9.10 Action Upon Instructions..............................................58
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Section 9.11 Compensation of Administrative Agent..................................59
ARTICLE X MISCELLANEOUS...............................................................59
Section 10.01 Notices...............................................................59
Section 10.02 Term and Termination..................................................61
Section 10.03 [Reserved.]...........................................................61
Section 10.04 Termination Indemnity Deposit.........................................61
Section 10.05 K-Sea as Agent for Borrower...........................................61
Section 10.06 Discharge of Borrower.................................................61
Section 10.07 Joint and Several.....................................................61
Section 10.08 Waivers; Amendments...................................................61
Section 10.09 Expenses; Indemnity; Damage Waiver....................................62
Section 10.10 Successors and Assigns................................................63
Section 10.11 Survival..............................................................65
Section 10.12 Counterparts; Integration; Effectiveness..............................66
Section 10.13 Severability..........................................................66
Section 10.14 Right of Set-off......................................................66
Section 10.15 Governing Law; Jurisdiction; Consent to Service of Process............66
Section 10.16 WAIVER OF JURY TRIAL..................................................67
Section 10.17 Headings..............................................................67
Section 10.18 Confidentiality.......................................................67
Section 10.19 Interest Rate Limitation..............................................68
Section 10.20 Further Assurances....................................................68
SCHEDULES:
Schedule I - Pool Vessels
Schedule 2.01 - Commitments
Schedule 4.06 - Environmental Compliance
Schedule 4.14 - Charters
-
EXHIBITS:
Exhibit A - [Form of] Revolving Loan Note
Exhibit B - [Form of] Facility D Demand Note
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Exhibit C - [Form of] Term Loan Note
Exhibit D - [Form of] Assignment and Acceptance
Exhibit E - [Form of] Opinion of Borrower's Counsel
Exhibit F-1 - [Form of] Standby Letter of Credit
Exhibit F-2 - [Form of] Application for Documentary Letter of Credit
Exhibit G - [Form of] Loan Request (Revolving Loan)
Exhibit H - [Form of] Request (Documentary Letter of Credit)
Exhibit I - [Form of] Subsidiary Guaranty
Exhibit J - Special Provisions Applicable to Letters of Credit
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THIS
PARTICIPATION AND LOAN AND SECURITY AGREEMENT (this "AGREEMENT"),
dated as of January __, 2004, among K-SEA OPERATING PARTNERSHIP L.P., a Delaware
limited partnership ("BORROWER"); KEYBANK N.A., a national banking association
("KEYBANK"), for itself as Lender, and as administrative agent for Lenders (in
such capacity, "ADMINISTRATIVE AGENT"); and THE CIT GROUP/EQUIPMENT FINANCING,
INC., a Delaware corporation ("CIT"), for itself as Lender, and as collateral
agent for Lenders (in such capacity, "COLLATERAL AGENT").
RECITALS
WHEREAS, Borrower desires to obtain loan facilities in the aggregate
amount of Forty-Seven Million Dollars ($47,000,000.00) in order to provide
working capital for its operations and cash to enable Borrower to acquire
vessels from time to time and for other permitted corporate purposes of
Borrower; and
WHEREAS, Lenders have agreed to provide Borrower with three (3) loan
facilities: (a) a working capital facility in the amount of Ten Million Dollars
($10,000,000.00)(with a Four Million Dollar ($4,000,000.00) sublimit for
documentary letters of credit), (b) a revolving vessel acquisition facility in
the maximum amount of Thirty Million Dollars ($30,000,000.00), and (c) a swing
line facility, and KeyBank has also itself agreed to provide a fourth facility,
a standby letter of credit facility with a limit of Seven Million Dollars
($7,000,000.00), all four of which facilities (each, a "FACILITY" and together,
the "FACILITIES") shall be equally secured by all the Collateral (as hereinafter
defined) and otherwise subject to the terms and conditions of this Agreement.
The parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01 DEFINED TERMS. As used in this Agreement, the following
terms have the meanings specified below:
"ACQUIRED VESSEL" means a vessel acquired, retrofitted, rebuilt or
upgraded with a Facility B Loan, or initially with a Facility C Loan and
converted into a Facility B Loan as provided herein. All Acquired Vessels must
be owned at all times by Borrower or a Guarantor.
"ADMINISTRATIVE AGENT" means KeyBank N.A., in its capacity as
administrative agent for Lenders hereunder.
"AFFILIATE" means, with respect to a specified Person, another Person
that directly, or indirectly through one or more intermediaries, Controls or is
Controlled by or is under common Control with the Person specified, PROVIDED,
HOWEVER, that with respect to Borrower and K-Sea, this term shall not be deemed
to describe any Person who is not either Borrower, K-Sea or a direct or indirect
subsidiary of K-Sea.
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"ANNIVERSARY DATE" means the date occurring one (1) year from the
Effective Date and the same date in every year thereafter.
"ANNUAL MAINTENANCE FEE" shall be $15,000.00 per annum.
"APPLICABLE LAW" means all applicable provisions of all (a)
constitutions, statutes, ordinances, rules, regulations and orders of all
governmental and/or quasi-governmental bodies, (b) Government Approvals, and (c)
order, judgments and decrees of all courts and arbitrators.
"APPLICABLE PERCENTAGE" means, with respect to any Lender, the
percentage of the total Commitments represented by such Lender's Commitment. If
the Commitments have terminated or expired, the Applicable Percentages shall be
determined based upon the total Revolving Loans represented by such Lender's
Revolving Loans. Facility D is provided solely by KeyBank and shall be excluded
from the calculation of Applicable Percentage.
"APPRAISAL" means any appraisal, either physical or desktop or both, as
determined by an appraiser, of the Pool Vessels or any Acquired Vessel,
conducted from time to time by or at the request of Lenders pursuant to the
terms of this Agreement and shall also include the appraisal of the Pool Vessels
performed by Lenders prior to the date hereof, or at Lenders' direction, by an
appraiser appointed by Lenders and paid for by Borrower.
"APPRAISER" means any one of L&R Midland, Marcon International, Inc.,
▇▇▇▇▇▇▇ Marine Services, Inc., or any other Person agreed to by Borrower and
Collateral Agent.
"ASSIGNMENT AND ACCEPTANCE" means an assignment and acceptance entered
into by any Lender and an assignee (with the consent of any party whose consent
is required by Section 10.10 hereof), and accepted by Administrative Agent, in
the form of EXHIBIT D or any other form approved by Administrative Agent.
"ASSIGNMENTS" means, collectively, the Earnings Assignment and the
Assignment of Insurances.
"ASSIGNMENT OF INSURANCES" means the first priority assignment of
insurances respecting the Pool Vessels granted by Borrower in favor of
Collateral Agent in form and substance satisfactory to Collateral Agent.
"AVAILABILITY PERIOD" means the period from and including the Effective
Date to, but excluding, the earlier of the Termination Date and the date of
termination of the Commitments.
"BASE RATE" means, for any day, a rate per annum equal to the greater
of (a) the KeyBank Prime Rate, or (b) one-half of one percent in excess of the
Federal Funds Effective Rate. Any change in the Base Rate due to a change in the
Prime Rate or the Federal Funds Effective Rate shall be effective from and
including the effective date of such change in the KeyBank N.A. Prime Rate or
the Federal Funds Effective Rate, respectively.
"BOARD" means the Board of Governors of the Federal Reserve System of
the United States of America.
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"BORROWER" means K-Sea Operating Partnership L.P., a Delaware limited
partnership.
"BORROWING BASE" means 66 2/3% of the Orderly Liquidation Value of the
Pool Vessels.
"BUSINESS DAY" means any day that is not a Saturday, Sunday or other
day on which commercial banks in
New York City are authorized or required by law
to remain closed; PROVIDED, that when used in connection with a Loan that bears
interest at a rate per annum equal to the LIBOR Rate (including any notice in
respect thereof), the term "BUSINESS DAY" shall also exclude any day on which
banks are not open for dealings in dollar deposits in the London InterBank
Market ("LIBOR BUSINESS DAY").
"CAPITAL EXPENDITURES" means any expenditure or liability that is
properly charged to a capital account or otherwise capitalized on Borrower's
consolidated balance sheet in accordance with GAAP.
"CAPITAL LEASE OBLIGATIONS" of any Person means the obligations of such
Person to pay rent or other amounts under any lease of (or other arrangement
conveying the right to use) real or personal property, or a combination thereof,
which obligations are required to be classified and accounted for as capital
leases on a balance sheet of such Person under GAAP, and the amount of such
obligations shall be the capitalized amount thereof determined in accordance
with GAAP.
"CHANGE IN CONTROL" means (a) the acquisition of ownership, directly or
indirectly, beneficially or of record, by any Person or group (within the
meaning of the Securities Exchange Act of 1934 and the rules of the Securities
and Exchange Commission thereunder as in effect on the date hereof), of
ownership interests representing more than 50% of the general partnership
interest in K-Sea or more than 50% of the aggregate ordinary voting power
represented by the issued and outstanding ownership interests of Borrower or any
Subsidiary Guarantor, or (b) for the period of twelve (12) consecutive calendar
months, a majority of the board of Borrower or any Guarantor shall no longer be
composed of individuals (i) who were members of said board on the first day of
such period, (ii) whose election or nomination to said board was approved by
individuals referred to in clause (i) above constituting at the time of such
election or nomination at least a majority of said board, or (iii) whose
election or nomination to said board was approved by individuals referred to in
clauses (i) and (ii) above constituting at the time of such election or
nomination at least a majority of said board. The addition of independent
directors (and the subsequent replacement of such independent directors) to the
board of K-Sea upon and following its public offering shall not constitute a
"Change in Control" for this purpose.
"CHANGE IN LAW" means (a) the adoption of any law, rule or regulation
after the date of this Agreement, (b) any change in any law, rule or regulation
or in the interpretation or application thereof by any Governmental Authority
after the date of this Agreement, including, without limitation, any change in
any statutory, regulatory or institutional reserve requirement, including, but
not limited to, the Statutory Reserve Rate, or (c) compliance by any Lender (or,
for purposes of Section 2.11(b) hereof, by any lending office of such Lender or
by such Lender's holding company, if any) with any request, guideline or
directive (whether or not having the force of law) of any Governmental Authority
made or issued after the date of this Agreement.
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"CLASSIFICATION SOCIETY" means the American Bureau of Shipping or such
other classification society acceptable to Lenders.
"CODE" means the Internal Revenue Code of 1986, as amended from time to
time.
"COLLATERAL" means the collateral described in this Agreement,
including, but not limited to, Article III hereof, the Assignments and the
Mortgage, including, without limitation, the Vessels, and the Proceeds thereof,
all insurance with respect to the Vessels, any and all charters of the Vessels
by Borrower and all Hire and other amounts payable from time to time thereunder
and the Proceeds thereof, all future charters of the Vessels by Borrower,
including all Hire payments and Proceeds of the foregoing and all amounts
payable hereunder as more specifically described herein and in the Assignments
and the Mortgage.
"COLLATERAL AGENT" means The CIT Group/Equipment Financing, Inc., in
its capacity as collateral agent for Lenders hereunder.
"COMMITMENT" means, with respect to each Lender, the commitment of such
Lender to make Loans hereunder, expressed as an amount representing fifty
percent (50%) of the maximum aggregate amount of such Lender's Revolving Credit
Exposure hereunder, as such commitment may be (a) reduced from time to time
pursuant to Section 2.09 hereof, and (b) reduced or increased from time to time
pursuant to assignments by or to such Lender pursuant to Section 10.10 hereof.
The initial amount of each Lender's Commitment is set forth (x) on Schedule 2.01
or (y) in the Assignment and Acceptance pursuant to which such Lender shall have
assumed its Commitment, as applicable. In addition and with respect only to
KeyBank, Commitment means one hundred percent (100%) of the credit exposure
under Facility D.
"CONTROL" means the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of a Person, whether
through the ability to exercise voting power, by contract or otherwise.
"CONTROLLING" and "CONTROLLED" have meanings correlative thereto.
"CREDIT PARTY" means each of Borrower, each Guarantor and each of their
respective Subsidiaries.
"CURRENT MATURITIES" means principal maturing or coming due on
Indebtedness during the next succeeding period of twelve (12) calendar months or
any portion of Indebtedness that would in accordance with GAAP be classified as
a current liability of such Person.
"DEFAULT" means any event or condition which constitutes an Event of
Default or which upon notice, lapse of time or both would, unless cured or
waived, become an Event of Default.
"DISTRIBUTIONS" means, with respect to any Person (i) cash
distributions or any other distributions on, or in respect of, any ownership
interest or any membership or partnership interest of such Person, and (ii) any
and all funds, cash or other payments made in respect of the redemption,
repurchase or acquisition of such interest.
"DOCUMENTARY LETTER OF CREDIT", as defined in Section 2.02(b) hereof.
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"DOLLARS" or "$" refers to lawful money of the United States of
America.
"EARNINGS ASSIGNMENT" means the general assignment for security
interest purposes of all charters, charter hire, freights and earnings with
respect to the Pool Vessels and any Acquired Vessel granted by Borrower in favor
of Lenders, in form and substance satisfactory to Lenders and their counsel.
"EBITDA" means, with respect to any fiscal period of K-Sea and its
consolidated Affiliates, including, without limitation, Borrower or any
Guarantor, on a consolidated basis, the sum of:
(1) the net income (or net loss) of Borrower (determined in
accordance with GAAP) for such fiscal period, without giving effect to pre-tax
gains or losses on the sale of assets or to any other extraordinary pre-tax
gains or losses; plus:
(2) to the extent that any of the items referred to in any of
clauses (i) through (iii) below were deducted or added in calculating such net
income:
(i) Interest Expense of Borrower for such fiscal period;
(ii) federal and state income tax expenses of Borrower for
such fiscal period;
(iii) the amount of all depreciation and amortization for
such fiscal period.
"EFFECTIVE DATE" means the date on which the conditions specified in
Section 5.01 hereof are satisfied (or waived in accordance with Section 10.08
hereof).
"ENVIRONMENTAL ACTION" means any administrative, regulatory or judicial
action, suit, demand, demand letter, claim, notice of non-compliance or
violation, notice of liability or potential liability, investigation,
proceeding, consent order or consent agreement arising under any Environmental
Law or Environmental Permit relating to Hazardous Materials or arising from
alleged injury or threat of injury to health, safety or the environment in
connection with or arising from exposure to or the actual or potential release
of Hazardous Materials, including (a) by any Governmental Authority for
enforcement, cleanup, removal, response, remedial or other actions or damages,
and (b) by any Governmental Authority or any third party for damages,
contribution, indemnification, cost recovery, compensation or injunctive relief.
"ENVIRONMENTAL EVENT" means (i) an environmental event that has
occurred or any environmental condition that is discovered in, on, beneath, from
or involving any of the Vessels (including the presence, emission or release of
Hazardous Materials or the violation of any applicable Environmental Law) for
which a remediation or reporting could reasonably be required under applicable
Environmental Law, or (ii) notification received by Borrower, any Guarantor or
any charterer of a Vessel that such charterer, Guarantor, Borrower, or any
Vessel is the subject of an Environmental Action relating to such Vessel that
could reasonably be expected to result in any ordered remediation or corrective
action or other material liability under applicable Environmental Law.
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Participation and Loan and Security Agreement]
"ENVIRONMENTAL LAW" means any and all applicable international,
foreign, federal, state, regional and local Laws (as well as obligations, duties
and requirements relating thereto under common law) relating to: (a) emissions,
discharges, spills, releases or threatened releases of pollutants, contaminants,
Hazardous Materials, materials containing Hazardous Materials, or hazardous or
toxic materials or wastes into ambient air, surface water (including, without
limitation, all inland and ocean waters), groundwater, watercourses, publicly or
privately-owned treatment works, drains, sewer systems, wetlands, septic systems
or onto land; (b) the use, treatment, storage, disposal, handling,
manufacturing, transportation, or shipment of Hazardous Materials, materials
containing Hazardous Materials or hazardous and/or toxic wastes, materials,
products or by-products (or of equipment or apparatus containing Hazardous
Materials); or (c) pollution or the protection of human health, safety or the
environment from exposure to or injury or damage caused by Hazardous Materials.
Without limitation, "ENVIRONMENTAL LAW" includes CERCLA and OPA 90 and IMO 13(g)
(when and if the latter comes into effect).
"ENVIRONMENTAL LIABILITY" means any liability, contingent or otherwise
(including any liability for damages, costs of environmental remediation, fines,
penalties or indemnities), of Borrower or any Subsidiary directly or indirectly
resulting from or based upon (a) violation of any Environmental Law, (b) the
generation, use, handling, transportation, storage, treatment or disposal of any
Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the release or
threatened release of any Hazardous Materials into the environment or (e) any
contract, agreement or other consensual arrangement pursuant to which liability
is assumed or imposed with respect to any of the foregoing.
"ENVIRONMENTAL PERMIT" means any permit, approval, identification
number, license or other authorization required under any Environmental Law.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"ERISA AFFILIATE" means any trade or business (whether or not
incorporated) that, together with Borrower, is treated as a single employer
under Section 414(b) or (c) of the Code or, solely for purposes of Section 302
of ERISA and Section 412 of the Code, is treated as a single employer under
Section 414 of the Code.
"ERISA EVENT" means (a) any "reportable event", as defined in Section
4043 of ERISA or the regulations issued thereunder with respect to a Plan (other
than an event for which the 30-day notice period is waived); (b) the existence
with respect to any Plan of an "accumulated funding deficiency" (as defined in
Section 412 of the Code or Section 302 of ERISA), whether or not waived; (c) the
filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an
application for a waiver of the minimum funding standard with respect to any
Plan; (d) the incurrence by Borrower or any of its ERISA Affiliates of any
liability under Title IV of ERISA with respect to the termination of any Plan;
(e) the receipt by Borrower or any ERISA Affiliate from the PBGC or a plan
administrator of any notice relating to an intention to terminate any Plan or
Plans or to appoint a trustee to administer any Plan; (f) the incurrence by
Borrower or any of its ERISA Affiliates of any liability with respect to the
withdrawal or partial withdrawal from any Plan or Multiemployer Plan; or (g) the
receipt by Borrower or any ERISA Affiliate of any notice, or the receipt by any
Multiemployer Plan from Borrower or any ERISA Affiliate of
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Participation and Loan and Security Agreement]
any notice, concerning the imposition of Withdrawal Liability or a determination
that a Multiemployer Plan is, or is expected to be, insolvent or in
reorganization, within the meaning of Title IV of ERISA.
"EVENT OF DEFAULT" has the meaning assigned to such term in Article
VIII hereof.
"EVENT OF LOSS" means, with respect to any Vessel, the actual or
constructive loss or the disappearance of such Vessel or the loss of use
thereof, due to theft, destruction, damage beyond repair or damage from any
reason whatsoever, to an extent which makes repair uneconomical, or rendition
thereof unfit for normal use, or the condemnation, confiscation or seizure of,
or requisition of title to or use of, such Vessel by any Governmental Authority
or any other Person, whether or not acting under color of Governmental
Authority.
"EXCLUDED TAXES" means, with respect to Administrative Agent,
Collateral Agent, any Lender or any other recipient of any payment to be made by
or on account of any obligation of Borrower hereunder, (a) income or franchise
taxes imposed on (or measured by) its net income by the United States of
America, or by the jurisdiction under the laws of which such recipient is
organized or in which its principal office is located or, in the case of any
Lender, in which its applicable lending office is located, (b) any branch
profits taxes imposed by the United States of America or any similar tax imposed
by any other jurisdiction in which Administrative Agent, such Lender or such
other recipient is located, and (c) in the case of a Foreign Lender (other than
an assignee pursuant to a request by Borrower under Section 2.16(b) hereof), any
withholding tax that is imposed on amounts payable to such Foreign Lender at the
time such Foreign Lender becomes a party to this Agreement or is attributable to
such Foreign Lender's failure or inability to comply with Section 2.13(d)
hereof, except to the extent that such Foreign Lender's assignor (if any) was
entitled, at the time of assignment, to receive additional amounts from Borrower
with respect to such withholding tax pursuant to Section 2.13(a) hereof.
"FACILITY A" means the working capital facility in the aggregate amount
outstanding at any time not to exceed Ten Million Dollars ($10,000,000.00) with
a sublimit for Documentary Letters of Credit in the amount of Four Million
Dollars ($4,000,000.00) as described in Section 2.02(b) hereof.
"FACILITY B" means the revolving vessel acquisition facility in the
maximum amount of Thirty Million Dollars ($30,000,000.00) as described in
Section 2.02(c) hereof.
"FACILITY C" means the swing line facility as described in Section
2.02(d) hereof.
"FACILITY D" means the Standby Letters of Credit facility made
available by KeyBank in the maximum amount at any time of Seven Million Dollars
($7,000,000.00) as described in Section 2.02(e) hereof.
"FACILITY A LOAN" has the meaning assigned to such term in Section
2.02(b) hereof and includes, without limitation, all amounts debited to
reimburse the L/C Issuer for drawdowns against a Documentary Letter of Credit
and related expenses provided at the request of Borrower pursuant to Section
2.02(b) hereof.
"FACILITY B LOAN" has the meaning assigned to such term in Section
2.02(c) hereof.
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"FACILITY C AVAILABILITY" means KeyBank's Commitments under Facility A
and Facility B less KeyBank's Applicable Percentage of the outstanding amounts
of Facility A Loans, Facility B Loans and Facility C Loans.
"FACILITY C LOAN" has the meaning assigned to such term in Section
2.02(d) hereof.
"FACILITY D NOTE" means the secured promissory note of Borrower,
substantially in the form of EXHIBIT B attached hereto, evidencing each Loan
made by the L/C Issuer to Borrower under Facility D, as described in Section
2.02(e) hereof.
"FEDERAL FUNDS EFFECTIVE RATE" means, for any day, the weighted average
(rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on
overnight Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers, as published on the next succeeding Business
Day by the Federal Reserve Bank of
New York, or, if such rate is not so
published for any day that is a Business Day, the average (rounded upwards, if
necessary, to the next 1/100 of 1%) of the quotations for such day for such
transactions received by Administrative Agent from three Federal funds brokers
of recognized standing selected by it.
"FINANCIAL OFFICER" means the chief financial officer, principal
accounting officer, treasurer or controller of Borrower.
"FINANCIAL STATEMENTS" means the balance sheet and statement of income
and cash flows of K-Sea and its consolidated Affiliates (including, without
limitation, Borrower and all Guarantors), on a consolidated basis, as required
from time to time to be provided by Borrower under this Agreement.
"FIXED CHARGE COVERAGE RATIO" means, for any period, the ratio of
EBITDA less Maintenance CAPEX divided by Fixed Charges for such period.
"FIXED CHARGES" means the sum, for any period for K-Sea and its
consolidated Affiliates, including, without limitation, Borrower and any
Guarantor, on a consolidated basis, of the following: (i) Interest Expense, plus
(ii) the current portion of minimum rents under operating leases, plus (iii)
Current Maturities. For the quarters ended March 31, 2003, June 30, 2003,
September 30, 2003, and December 31, 2003, Interest Expense shall exclude all
interest incurred prior to such Closing Date related to debt obligations repaid
from IPO proceeds and not refunded with any Facility provided by Lenders
pursuant to this Agreement.
"FOREIGN LENDER" means any Lender that is organized under the laws of a
jurisdiction other than the United States of America, any State thereof or the
District of Columbia.
"GAAP" means generally accepted accounting principles in the United
States of America, as may be determined by the Financial Accounting Standards
Board.
"GOVERNMENT APPROVAL" means an authorization, consent, non-action,
approval, license or exemption of, registration or filing with, or report to,
any governmental or quasi-governmental department, agency, body or other unit.
8
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Participation and Loan and Security Agreement]
"GOVERNMENTAL AUTHORITY" means the government of the United States of
America, any other nation or any political subdivision thereof, whether state or
local, and any agency, authority, instrumentality, regulatory body, court,
central bank or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of or pertaining to
government.
"GUARANTEE" of or by any Person (the "GUARANTOR") means any obligation,
contingent or otherwise, of the guarantor guaranteeing or having the economic
effect of guaranteeing any Indebtedness or other obligation of any other Person
(the "PRIMARY OBLIGOR") in any manner, whether directly or indirectly, and
including any obligation of the guarantor, direct or indirect, (a) to purchase
or pay (or advance or supply funds for the purchase or payment of) such
Indebtedness or other obligation or to purchase (or to advance or supply funds
for the purchase of) any security for the payment thereof, (b) to purchase or
lease property, securities or services for the purpose of assuring the owner of
such Indebtedness or other obligation of the payment thereof, (c) to maintain
working capital, equity capital or any other financial statement condition or
liquidity of the primary obligor so as to enable the primary obligor to pay such
Indebtedness or other obligation, or (d) as an account party in respect of any
letter of credit or letter of guaranty issued to support such Indebtedness or
obligation; PROVIDED, that the term Guarantee shall not include any endorsement
for collection or deposit in the ordinary course of business.
"GUARANTORS" means, collectively, K-Sea and any Subsidiary Guarantor
from time to time, and each, a "GUARANTOR."
"HAZARDOUS MATERIALS" means (a) hazardous materials, hazardous wastes,
and hazardous substances as those or similar terms are defined under any
Environmental Laws, including, but not limited to, the following: the Hazardous
Materials Transportation Act, 49 U.S.C. Section 1801 ET SEQ., as amended from
time to time, the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901
ET SEQ., as amended from time to time, CERCLA, the Clean Water Act, 33 U.S.C.
Section 1251 ET SEQ., as amended from time to time, the Clean Air Act, 42 U.S.C.
Section 7401 ET SEQ., as amended from time to time, and/or the Toxic Substances
Control Act, 15 U.S.C. Section 2601 ET SEQ., as amended from time to time, OPA
90; (b) petroleum and petroleum products, including crude oil and any fractions
thereof; (c) natural gas, synthetic gas, and any mixtures thereof; (d) asbestos
and/or any material which contains any hydrated mineral silicate, including, but
not limited to, chrysolite, amosite, crocidolite, tremolite, anthophylite and/or
actinolite, whether friable or non-friable; (e) polychlorinated biphenyls
("PCBs"), or PCB-containing materials or fluids; (f) radon; (g) any other
hazardous radioactive, toxic or noxious substance, material, pollutant, or
solid, liquid or gaseous waste; and (h) any hazardous substance that, whether by
its nature or its use, is subject to regulation under any Environmental Law or
with respect to which any international, federal, state or local Environmental
Law or governmental agency requires environmental investigation, monitoring or
remediation.
"HEDGING AGREEMENT" means any interest rate protection agreement,
foreign currency exchange agreement, commodity price protection agreement
(excluding fuel surcharge) or other interest or currency exchange rate or
commodity price hedging arrangement.
9
[Participation and Loan and Security Agreement]
"HIRE" means all charter hire under any and all charters entered into
by or on behalf of Borrower of any Vessel from time to time, together with
additional hire, supplemental hire, requisition hire, freights and any other
amounts paid to or for the account of Borrower on account of the use or
employment of such Vessel.
"INDEBTEDNESS" of any Person means, without duplication, (a) all
obligations of such Person for borrowed money or with respect to deposits or
advances of any kind, (b) all obligations of such Person evidenced by bonds,
debentures, notes or similar instruments, (c) all obligations of such Person
upon which interest charges are customarily paid, (d) all obligations of such
Person under conditional sale or other title retention agreements relating to
property acquired by such Person, (e) all obligations of such Person in respect
of the deferred purchase price of property or services (excluding current
accounts payable incurred in the ordinary course of business), (f) all
Indebtedness of others secured by (or for which the holder of such Indebtedness
has an existing right, contingent or otherwise, to be secured by) any Lien on
property owned or acquired by such Person, whether or not the Indebtedness
secured thereby has been assumed, (g) all Guarantees by such Person of
Indebtedness of others, (h) all Capital Lease Obligations of such Person, (i)
all operating lease obligations of such Person, (j) all obligations, contingent
or otherwise, of such Person as an account party in respect of letters of credit
and letters of guaranty, and (k) all obligations, contingent or otherwise, of
such Person in respect of bankers' acceptances; PROVIDED, HOWEVER, that
"Indebtedness" shall not include (x) Secured Nonrecourse Obligations and (y)
nonrecourse obligations incurred in connection with leveraged lease transactions
as determined in accordance with GAAP.
"INDEMNIFIED TAXES" means Taxes other than Excluded Taxes.
"INTEREST EXPENSE" means, for any period, the sum, for K-Sea and its
consolidated Affiliates, including, without limitation, Borrower or any
Guarantor, on a consolidated basis, of the following: (a) all interest in
respect of Indebtedness (including the interest component of any payments in
respect of Capital Lease Obligations) accrued or capitalized during such period
(whether or not actually paid during such period) plus (b) the net amount
payable (or minus the net amount receivable) under Hedging Agreements relating
to interest during such period (whether or not actually paid or received during
such period).
"INTEREST PAYMENT DATE" means, with respect to any Loan, the last day
of each calendar month, PROVIDED, that if any Interest Payment Date would end on
a day other than a Business Day, such Interest Period shall be extended to the
next succeeding Business Day unless, in the case of a Facility A Loan, a
Facility B Loan and a Facility C Loan only, such next succeeding Business Day
would fall in the next calendar month, in which case such Interest Period shall
end on the next preceding Business Day. For purposes hereof, the date of a Loan
initially shall be the date on which such Loan is made.
"INTEREST PERIOD" means (a) with respect to any Facility A or Facility
B Loan, the period commencing on the first day of the calendar month of such
Loan and ending on the last day in the calendar month of such Loan; and (b) with
respect to any Facility C Loan, the period commencing on the date of such Loan
and ending on the last day in the calendar month of such Loan; PROVIDED, that if
any Interest Period would end on a day other than a Business Day, such Interest
Period shall be extended to the next succeeding Business Day unless, in the case
of a
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[Participation and Loan and Security Agreement]
Facility B Loan and a Facility C Loan only, such next succeeding Business
Day would fall in the next calendar month, in which case such Interest Period
shall end on the next preceding Business Day. For purposes hereof, the date of a
Loan initially shall be the date on which such Loan is made.
"INTEREST RATE" means the Base Rate or the LIBOR Rate, as applicable,
as set forth in Section 2.02(g) hereof.
"KEYBANK" means KeyBank N.A.
"K-SEA" means K-Sea Transportation Partners L.P.
"L/C ISSUER" means KeyBank.
"L/C LIMIT" has the meaning assigned to such term in Section 2.02(e)
hereof.
"LENDER AFFILIATE" means, (a) with respect to any Lender, (i) an
Affiliate of such Lender that is in the business of making and/or buying loans
of the type described herein, or (ii) any entity (whether a corporation,
partnership, trust or otherwise) that is engaged in making, purchasing, holding
or otherwise investing in bank loans and similar extensions of credit in the
ordinary course of its business and is administered or managed by any Lender or
an Affiliate of such Lender, and (b) with respect to any Lender that is a fund
which invests in bank loans and similar extensions of credit, any other fund
that invests in bank loans and similar extensions of credit and is managed by
the same investment advisor as such Lender or by an Affiliate of such investment
advisor.
"LENDERS" means CIT and KeyBank, each of their successors and any other
Person that shall have become a party hereto pursuant to an Assignment and
Acceptance, other than any such Person that ceases to be a party hereto pursuant
to an Assignment and Acceptance.
"LETTER OF CREDIT" means either a Documentary Letter of Credit or a
Standby Letter of Credit.
"LETTER OF CREDIT OBLIGATIONS" means all outstanding obligations
incurred by the L/C Issuer at the request of Borrower, whether direct or
indirect, contingent or otherwise, due or not due, in connection with the
issuance of a reimbursement agreement or guaranty by Administrative Agent or
purchase of a participation with respect to any Letter of Credit issued under
Facility A or Facility D. The amount of such Letter of Credit Obligations shall
equal the maximum amount which may be payable by the L/C Issuer thereupon or
pursuant thereto.
"LEVERAGE RATIO" shall be calculated by dividing total liabilities
(excluding deferred taxes) less Subordinated Indebtedness by Tangible Net Worth.
"LIBOR" means a rate of interest determined by Administrative Agent
equal to: (a) the offered rate for deposits in United States Dollars for a
one-month period which appears on Telerate Page 3750 as of 11:00 a.m., London
time, as of the last Business Day of the month preceding the first day of each
LIBOR Period, which shall be the first day of each month (unless such date is
not a Business Day, in which event the next succeeding Business Day will be
used);
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[Participation and Loan and Security Agreement]
divided by (b) a number equal to 1.0 minus the aggregate (but without
duplication) of the rates (expressed as a decimal fraction) of reserve
requirements in effect on the day which is two (2) Business Days prior to the
beginning of such LIBOR Period (including basic, supplemental, marginal and
emergency reserves under any regulations of the Board or other Governmental
Authority having jurisdiction with respect thereto, as now and from time to time
in effect) for Eurocurrency funding (currently referred to as "Eurocurrency
liabilities" in Regulation D of such Board which are required to be maintained
by a member bank of the Federal Reserve System. If such interest rates shall
cease to be available from Telerate News Service, the LIBOR Rate shall be
determined from such financial reporting service or other information as shall
be mutually acceptable to Administrative Agent and Borrower. In the event that
such rate is not available at such time for any reason, then the "LIBOR RATE"
with respect to any Facility A or Facility B Loan for such Interest Period shall
be the rate at which dollar deposits of $5,000,000.00 and for a maturity
comparable to such Interest Period are offered to the Agent by prime banks in
any Eurodollar market reasonably selected by the Agent, determined as of 11:00
a.m., London time (or as soon thereafter as practicable), two Banking Days prior
to the beginning of the relevant Interest Period.
"LIBOR BREAKAGE" has the meaning assigned to such term in Section 2.12
hereof.
"LIBOR RATE" means LIBOR plus the Margin.
"LIEN" means, with respect to any asset, any interest in property
securing an obligation owed to, or a claim by, any person other than the owner
of the property, whether such interest shall be based on common law, maritime
law, statute, contract or conveyance and including, but not limited to, the
security interest lien arising from any pledge, mortgage, chattel mortgage,
charge, encumbrance, conditional sale or trust receipt, or from a charter,
consignment or bailment for security purposes and any tax lien, mechanic's lien,
materialman's lien, ▇▇▇▇▇▇▇'▇ ▇▇▇▇, repairman's lien, any financing statement or
other similar charge or encumbrance.
"LOAN ACCOUNTS" means one or more loan accounts maintained by
Administrative Agent for Borrower in the ordinary course of business, including,
without limitation, any loan account in respect of Facility A, Facility B or
Facility C, and each, a "LOAN ACCOUNT."
"LOAN DOCUMENTS" means, collectively, this Agreement, the Notes, the
Mortgage, the Parent Guaranty, any Subsidiary Guaranty, the Assignments and all
consents given with respect to any of the foregoing.
"LOAN REQUEST" means a request by Borrower for a Loan in accordance
with Section 2.04 hereof.
"LOANS" means any loans made by Lenders to Borrower pursuant to this
Agreement, including, but not limited to, the Facility A Loans, Facility B
Loans, Facility C Loans, Letter of Credit Obligations and the Term Loans.
"LONG-TERM DEBT" means the aggregate (as of the date of calculation) of
all those component parts of the Indebtedness which fall due on or for which
payment of any amount is due more than one (1) year after the respective dates
of the agreements providing for such component parts of the Indebtedness.
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[Participation and Loan and Security Agreement]
"LONG-TERM LEASES" means, as of any date with respect to any Person,
all obligations of such Person to pay rent or other amounts under any lease of
(or other arrangement conveying the right to use) real or personal property, or
a combination thereof, of such Person outstanding the term of which ends more
than one (1) year from the date of calculation. "RENT" for this purpose shall
include only the capital portion of rent for all Capital Lease Obligations and
the entire rent payable for all operating leases.
"MAINTENANCE CAPEX" means Capital Expenditures for any period minus the
corresponding increase in Long-Term Debt and/or Long-Term Leases for the same
period.
"MARGIN" means two hundred and fifty (250) basis points.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on (a) the
Collateral, (b) the property, business, operations, financial condition,
liabilities or capitalization of K-Sea and its consolidated Affiliates,
including, without limitation, Borrower and any Guarantor, taken as a whole, (c)
the ability of Borrower to perform any of its obligations under this Agreement
(including the timely payment of all amounts due hereunder), (d) the rights of
or benefits available to Administrative Agent, Collateral Agent and Lenders
under this Agreement, or (e) the validity or enforceability of this Agreement.
"MATERIAL INDEBTEDNESS" means Indebtedness (other than the Loans), or
obligations in respect of one or more Hedging Agreements, of any one or more of
K-Sea, Borrower and its Subsidiaries in an aggregate principal amount exceeding
$500,000.00. For purposes of determining Material Indebtedness, the "principal
amount" of the obligations of K-Sea, Borrower or any Subsidiary in respect of
any Hedging Agreement at any time shall be the maximum aggregate amount (giving
effect to any netting agreements) that K-Sea, Borrower or such Subsidiary would
be required to pay if such Hedging Agreement were terminated at such time.
"MATURITY DATE" has the meaning assigned to such term in Section
2.03(c) hereof.
"MAXIMUM AMOUNT" means, with respect to Facility A, Ten Million Dollars
($10,000,000.00); with respect to Facility B, Thirty Million Dollars
($30,000,000.00); with respect to Facility D, Seven Million Dollars
($7,000,000.00); and, with respect to Facilities A, B and C in the aggregate,
Forty Million Dollars ($40,000,000.00).
"MINIMUM LOAN" means, with respect to any Facility A Loan, Facility B
Loan or Facility C Loan, Two Hundred Thousand Dollars ($200,000.00).
"MORTGAGE" means the Mortgage, dated the date hereof, granted by
Borrower to Lenders over the whole of the Pool Vessels, as the same may be
amended, modified or supplemented from time to time and from which Vessels may
be added or released from time to time.
"MULTIEMPLOYER PLAN" means a multiemployer plan as defined in Section
4001(a)(3) of ERISA.
"NON-QUALIFIED POOL VESSEL" means any Pool Vessel that is (i) a vessel
required to be phased out at any time by OPA 90, (ii) not qualified or
documented with endorsement for the
13
[Participation and Loan and Security Agreement]
United States coastwise trade, or (iii) a vessel which is part of an incomplete
two-vessel operating unit (comprised of a specific tug-barge combination).
"NOTES" means, collectively, the Revolving Loan Notes, the Facility D
Notes and the Term Loan Notes, and each, a "NOTE."
"OBLIGATIONS" means the Loans and Letters of Credit and any and all
other indebtedness, liabilities, advances, loans and obligations of every kind,
nature and description owing by Borrower to Lenders, including principal,
interest, charges, fees and expenses, however evidenced, whether as principal,
surety, endorser, guarantor or otherwise, arising under this Agreement, whether
now existing or hereafter arising, whether arising before, during or after the
initial or any renewal term of this Agreement, as set forth in Section 10.02
hereof, or after the commencement of any case with respect to Borrower under the
United States Bankruptcy Code or any similar statute, whether direct or
indirect, absolute or contingent, joint or several, due or not due, primary or
secondary, liquidated or unliquidated, secured or unsecured, original, renewed
or extended by assignment, merger with any other entity, participations or
interests of Lenders in the obligations of Borrower to others, assumption,
operation of law, subrogation or otherwise and shall also include all amounts
chargeable to Borrower under this Agreement or in connection with any of the
foregoing and shall mean all loans, advances, debts, liabilities and
obligations, for the performance of covenants, tasks or duties or for payment of
monetary amounts (whether or not such performance is then required or
contingent, or such amounts are liquidated or determinable) owing by any Credit
Party to Administrative Agent, Collateral Agent or any Lender, and all covenants
and duties regarding such amounts, of any kind or nature, present or future,
whether or not evidenced by any note, agreement or other instrument, arising
under this Agreement or any of the other Loan Documents. This term includes all
principal, interest (including all interest which accrues after the commencement
of any case or proceeding in bankruptcy after the insolvency of, or for the
reorganization of any Credit Party, whether or not allowed in such proceeding),
fees, charges, expenses, attorneys' fees and any other sum chargeable to any
Credit Party under this Agreement or any of the other Loan Documents.
"OPA" means the Oil Pollution Act of 1990, P.L. 101-380, 104 Stat. 484
ET SEQ., as amended from time to time.
"ORDERLY LIQUIDATION VALUE" means, with respect to any Vessel, the net
proceeds anticipated at a sale other than a forced sale upon foreclosure, as
determined by Lenders or by independent appraisers appointed by Lenders at the
expense of Borrower.
"ORGANIZATIONAL DOCUMENTS" means, as the case may be, the articles of
incorporation, by-laws, partnership agreement, articles of organization or other
instrument creating or governing the operations, rights and obligations of the
owners of an enterprise.
"OTHER TAXES" means any and all present or future stamp or documentary
taxes or any other excise or property taxes, charges or similar levies arising
from any payment made hereunder or from the execution, delivery or enforcement
of, or otherwise with respect to, this Agreement.
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[Participation and Loan and Security Agreement]
"PARENT GUARANTY" means that certain guaranty, dated the date hereof,
executed by K-Sea in favor of Lenders in form and substance acceptable to
Lenders in their sole discretion.
"PBGC" means the Pension Benefit Guaranty Corporation referred to and
defined in ERISA and any successor entity performing similar functions.
"PERMITTED LIENS" means:
(a) Liens imposed by law for taxes or under ERISA in respect of
contingent liabilities thereunder that are not yet due; and
(b) carriers', warehousemen's, mechanics', materialmen's,
repairmen's and other like Liens imposed by law, including, but not limited to,
liens for current wages of the crew of any Vessel, including the master of such
Vessel, for current wages of stevedores when employed directly by such vessel or
for general average or salvage, including contract salvage or liens, arising in
the ordinary course of business and securing obligations that are not overdue by
more than thirty (30) days and in each such case such liens are subordinate to
the Lien of the Mortgage;
PROVIDED, that the term "Permitted Liens" shall not include any Lien securing
Indebtedness; and, PROVIDED, FURTHER, that the aggregate amount of Permitted
Liens outstanding on all Pool Vessels at any one time shall not exceed
$500,000.00.
"PERSON" means any natural person, corporation, limited liability
company, trust, joint venture, association, company, partnership, Governmental
Authority or other entity.
"PLAN" means any employee pension benefit plan (other than a
Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section
412 of the Code or Section 302 of ERISA, and in respect of which Borrower or any
ERISA Affiliate is (or, if such plan were terminated, would under Section 4069
of ERISA be deemed to be) an "employer" as defined in Section 3(5) of ERISA.
"POOL VESSELS" means those vessels identified on Schedule I hereto,
together with any vessels hereafter added to the Pool Vessels pursuant to
Section 3.02 or Section 3.03 hereof.
"PROCEEDS shall have the meaning assigned to it in the UCC and, in any
event, shall include, but not be limited to, (i) any and all proceeds of any
insurance, indemnity or warranty payable to Lenders, from time to time with
respect to the Vessels or other Collateral; (ii) any and all payments (in any
form whatsoever) made or due and payable from time to time in connection with
any sale, requisition, confiscation, condemnation, seizure or forfeiture of all
and any part of the Vessels by any governmental body, authority, bureau or
agency of any other Person (whether or not acting under color of governmental
body); and (iii) accounts arising out of, any charter or chattel paper
evidencing, any lease, contract for use or lease of, any and all other rents,
hire or profits or other amounts from time to time paid or payable to Lenders in
connection with, the Vessels.
"PROHIBITED JURISDICTION" means any country or jurisdiction, from time
to time, (a) that is subject of a prohibition order (or any similar order or
directive), sanctions or restrictions
15
[Participation and Loan and Security Agreement]
promulgated or administered by the Office of Foreign Assets Control of the
United States Treasury Department, or (b) in which, or for which, any Lender,
which is a Lender on the Effective Date, is otherwise prohibited or restricted,
under laws, regulations, sanctions or restrictions applicable to it or its
business, from extending credit, transferring property or assets, engaging in or
facilitating trade or other economic activity, or otherwise doing business.
"PROHIBITED PERSON" means any Person appearing on the Specially
Designated Nationals List compiled and disseminated by the Office of Foreign
Assets Control of the United States Treasury Department, as the same may be
amended from time to time.
"QUALIFIED POOL VESSELS" means Pool Vessels that are documented,
coastwise eligible tugs, AT/Bs and double-hulled barges and are acceptable in
age, construction, condition and trade employment to both Administrative Agent
and Collateral Agent.
"REGISTER" has the meaning assigned to such term in Section 10.10(c)
hereof.
"RELATED PARTIES" means, with respect to any specified Person, such
Person's Affiliates and the respective directors, officers, employees, agents
and advisors of such Person and such Person's Affiliates.
"REQUIRED LENDERS" means, at any time, Lenders having Revolving Credit
Exposures and unused Commitments representing more than forty-nine percent (49%)
of the sum of the total Revolving Credit Exposure and unused Commitments at such
time, exclusive of any Standby Letter of Credit under Facility D.
"REVOLVING CREDIT EXPOSURE" means, with respect to any Lender at any
time, the sum of the outstanding principal amount of such Lender's Revolving
Loans under Facilities A (including Documentary Letters of Credit), B and C at
such time.
"REVOLVING LOAN" means a Loan made pursuant to Section 2.02(b), (c) or
(d) hereof, but shall not include any Term Loan.
"REVOLVING LOAN NOTE" means the secured promissory note of Borrower,
substantially in the form of EXHIBIT A attached hereto, evidencing each
Revolving Loan made by Lenders to Borrower under Facilities A, B or C, as
described in Section 2.02 hereof.
"SECURED NONRECOURSE OBLIGATIONS" means (i) secured obligations of
Borrower taken on a consolidated basis where recourse of the payee of such
obligations is expressly limited to an assigned lease or loan receivable and the
property related thereto, (ii) debt of Single Transaction Subsidiaries, or (iii)
liabilities of Borrower taken on a consolidated basis to any manufacturer of
leased equipment where such liabilities are payable solely out of revenues
derived from the leasing or sale of such equipment; excluding, however,
nonrecourse obligations incurred in connection with leveraged lease transactions
as determined in accordance with GAAP.
"SETTLEMENT DATE" has the meaning assigned to such term in Section 2.05
hereof.
"SINGLE TRANSACTION SUBSIDIARY" means any Subsidiary whose assets
consist solely of financing transactions and the proceeds thereof with one or
more obligors where the obligations
16
[Participation and Loan and Security Agreement]
of such Subsidiary are not guaranteed by Borrower or any other Subsidiary and
for which neither Borrower nor such other Subsidiary is liable.
"STANDBY LETTER OF CREDIT", as defined in Section 2.02(e) hereof.
"STANDBY LETTER OF CREDIT FEE" has the meaning assigned to such term in
Section 2.10(c) hereof.
"STATUTORY RESERVE RATE" means a fraction (expressed as a decimal), the
numerator of which is the number one and the denominator of which is the number
one minus the aggregate of the maximum reserve percentages (including any
marginal, special, emergency or supplemental reserves) expressed as a decimal
established by the Board to which Administrative Agent is subject with respect
to the LIBOR Rate, for eurocurrency funding (currently referred to as
"Eurocurrency Liabilities" in Regulation D of the Board). Such reserve
percentages shall include those imposed pursuant to such Regulation D. Loans
that bear interest at a rate per annum equal to the LIBOR Rate shall be deemed
to constitute eurocurrency funding and to be subject to such reserve
requirements without benefit of or credit for proration, exemptions or offsets
that may be available from time to time to any Lender under such Regulation D or
any comparable regulation. The Statutory Reserve Rate shall be adjusted
automatically on and as of the effective date of any change in any reserve
percentage.
"SUBORDINATED INDEBTEDNESS" means all Indebtedness which is
subordinated to the Obligations by its terms or pursuant to a subordination
agreement, in each case, reasonably acceptable to Lenders.
"SUBSIDIARY" means, with respect to any Person (the "PARENT") at any
date, any other Person the accounts of which would be consolidated with those of
the Parent in the Parent's consolidated financial statements if such financial
statements were prepared in accordance with GAAP as of such date, as well as any
other Person (a) of which securities or other ownership interests representing
more than 50% of the equity or more than 50% of the ordinary voting power or, in
the case of a partnership, more than 50% of the general partnership interests
are, as of such date, owned, Controlled or held by the Parent, or (b) the
financial statements of which shall be (or should be) consolidated with the
financial statements of such Person in accordance with GAAP.
"SUBSIDIARY GUARANTOR" means any Subsidiary that executes and delivers
a Subsidiary Guaranty.
"SUBSIDIARY GUARANTY" means any guaranty executed by any Subsidiary of
Borrower in favor of Lenders pursuant to Section 6.18 hereof.
"TANGIBLE NET WORTH" means the excess of total assets over total
liabilities, total assets and total liabilities each to be determined in
accordance with GAAP consistent with those applied in the preparation of the
Financial Statements referred to in Section 6.01 hereof, excluding, however,
from the determination of total assets all assets which would be classified as
intangible assets under GAAP, including, without limitation, goodwill, licenses,
patents, trademarks, trade names, copyrights and franchises. Tangible Net Worth
shall include Subordinated Indebtedness.
17
[Participation and Loan and Security Agreement]
"TAXES" means any and all present or future taxes, levies, imposts,
duties, deductions, charges or withholdings imposed by any Governmental
Authority.
"TERM LOAN" has the meaning assigned to such term in Section 2.17
hereof.
"TERM LOAN NOTE" has the meaning assigned to such term in Section 2.17
hereof.
"TERM LOAN OPTION" means the option afforded Borrower as set forth in
Section 2.17 hereof to convert a Loan under Facility B to a Term Loan.
"TERMINATION DATE" means January __, 2007.
"TITLE XI GUARANTIES" means United States government guaranties of debt
instruments issued to fund the acquisition of one or more vessels, which
guaranties are secured by preferred mortgages over the whole of such financed
vessels, as provided in 46 U.S.C. Appendix Section 1271 ET SEQ. and the
regulations promulgated by the Secretary of Transportation thereunder.
"TRANSACTIONS" means the execution, delivery and performance by
Borrower and Guarantors of this Agreement and the other Loan Documents, the
making of Loans and the use of the Proceeds thereof.
"UCC" means the Uniform Commercial Code as the same may, from time to
time, be enacted and in effect in the State of
New York; PROVIDED, that to the
extent that the UCC is used to define any term herein or in any Loan Document
and such term is defined differently in different Articles or Divisions of the
UCC, the definition of such term contained in Article or Division 9 shall
govern; PROVIDED, FURTHER, that in the event that, by reason or mandatory
provisions of law, any or all of the attachment, perfection or priority of, or
remedies with respect to Administrative Agent's or any Lender's Lien on any
Collateral is governed by the Uniform Commercial Code as enacted and in effect
in a jurisdiction other than the State of
New York, the term "UCC" shall mean
the Uniform Commercial Code as enacted and in effect in such other jurisdiction
solely for purposes of the provisions thereof relating to such attachment,
perfection, priority or remedies and for purposes of definitions related to such
provisions.
"UNUSED COMMITMENT FEE RATE" means twenty-five (25) basis points.
"UNUSED LINE FEE" means an amount determined quarterly by multiplying
the Unused Commitment Fee Rate by the difference between (x) the total
Commitment of all Lenders under Facilities A, B and C and (y) the average daily
principal balance outstanding under Facilities A, B and C and any Term Loans.
"VESSELS" means, collectively, the Pool Vessels and the Acquired
Vessels.
"WITHDRAWAL LIABILITY" means liability to a Multiemployer Plan as a
result of a complete or partial withdrawal from such Multiemployer Plan, as such
terms are defined in Part I of Subtitle E of Title IV of ERISA.
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[Participation and Loan and Security Agreement]
SECTION 1.02 TERMS GENERALLY. The definitions of terms herein shall
apply equally to the singular and plural forms of the terms defined. Whenever
the context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words "include", "includes" and "including" shall
be deemed to be followed by the phrase "without limitation". The word "will"
shall be construed to have the same meaning and effect as the word "shall".
Unless the context requires otherwise (a) any definition of or reference to any
agreement, instrument or other document herein shall be construed as referring
to such agreement, instrument or other document as from time to time amended,
supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein), (b) any reference
herein to any Person shall be construed to include such Person's successors and
assigns, (c) the words "herein", "hereof" and "hereunder", and words of similar
import, shall be construed to refer to this Agreement in its entirety and not to
any particular provision hereof, (d) all references herein to Articles,
Sections, Exhibits and Schedules shall be construed to refer to Articles and
Sections of, and Exhibits, Schedules and Annexes to, this Agreement, and (e) the
words "asset" and "property" shall be construed to have the same meaning and
effect and to refer to any and all tangible and intangible assets and
properties, including cash, securities, accounts and contract rights.
SECTION 1.03 ACCOUNTING TERMS; GAAP. Except as otherwise expressly
provided herein, all terms of an accounting or financial nature shall be
construed in accordance with GAAP, as in effect from time to time; PROVIDED,
that, if Borrower notifies Administrative Agent that Borrower requests an
amendment to any provision hereof to eliminate the effect of any change
occurring after the date hereof in GAAP or in the application thereof on the
operation of such provision (or if Administrative Agent notifies Borrower that
the Required Lenders request an amendment to any provision hereof for such
purpose), regardless of whether any such notice is given before or after such
change in GAAP or in the application thereof, then such provision shall be
interpreted on the basis of GAAP as in effect and applied immediately before
such change shall have become effective until such notice shall have been
withdrawn or such provision amended in accordance herewith.
ARTICLE II
THE LOANS
SECTION 2.01 COMMITMENTS. Subject to the terms and conditions set forth
herein, each Lender agrees to make Revolving Loans to Borrower from time to time
during the Availability Period in an aggregate principal amount that will not
result in such Lender's Revolving Credit Exposure exceeding such Lender's
Commitment. Within the foregoing limits and subject to the terms and conditions
set forth herein, Borrower may borrow, prepay and reborrow Revolving Loans.
SECTION 2.02 LOANS.
(a) Each Revolving Loan shall be made by Lenders ratably in
accordance with their respective Commitments; PROVIDED, HOWEVER, that, subject
to the provisions of Section 2.02(d) hereof, KeyBank is the sole Lender which
shall make a Loan under Facility C. The failure of any Lender to make any Loan
required to be made by it shall not relieve any other
19
[Participation and Loan and Security Agreement]
Lender of its obligations hereunder; PROVIDED, that the Commitments of Lenders
are several and no Lender shall be responsible for any other Lender's failure to
make any Loan as required.
(b) FACILITY A. Subject to the terms and conditions contained
herein and until the Termination Date, Lenders shall make loans to Borrower on a
revolving basis in amounts requested by Borrower from time to time (the
"FACILITY A LOANS" and each, a "FACILITY A LOAN") in an aggregate amount
outstanding at any time not to exceed the lesser of $10,000,000.00 or the amount
permitted by paragraph (f) of this Section 2.02. In addition, each Facility A
Loan shall be in an aggregate amount that is an integral multiple of
$100,000.00, and no such Facility A Loan shall be less than the Minimum Loan.
Facility A Loans may, upon request of Lenders, be evidenced by a Revolving Loan
Note in the form attached hereto as EXHIBIT A. Subject to availability, at
Borrower's request, L/C Issuer will issue documentary letters of credit (each, a
"DOCUMENTARY LETTER OF CREDIT") up to an aggregate dollar amount outstanding at
any one time of Four Million Dollars ($4,000,000.00) under Facility A, and any
such drawdowns made under such Documentary Letters of Credit shall be funded by
Facility A Loans at the time of such drawdown; PROVIDED, HOWEVER, the amount of
outstanding Loans and the face amount of outstanding Documentary Letters of
Credit shall not at any time exceed the Maximum Amount. Each drawdown and any
expense payable by Borrower in accordance with EXHIBIT J hereto under any such
Documentary Letter of Credit shall constitute a Loan under Facility C from the
date of such drawdown to the first day of the next succeeding calendar month, at
which time such Facility C Loan shall be refunded under Facility A and each
Lender shall fund its respective Applicable Percentage of such Facility A Loan.
Borrower shall deliver to L/C Issuer a completed and executed application form
together with such other documents in the forms then required by L/C Issuer
prior to the issuance of any Documentary Letter of Credit. In the event of any
inconsistency between L/C Issuer's required forms and this Agreement, the
Mortgages and the Assignments, the provisions of this Agreement, the Mortgages
and the Assignments shall prevail. In addition, the special provisions of
EXHIBIT J shall apply to any and all Documentary Letters of Credit.
(c) FACILITY B. Subject to the terms and conditions contained
herein and until the Termination Date, Lenders shall make loans to Borrower
under Facility B on a revolving basis in amounts requested by Borrower from time
to time (the "FACILITY B LOANS" and each, a "FACILITY B LOAN") in an aggregate
amount outstanding at any time not to exceed the lesser of $30,000,000.00 or the
amount permitted by paragraph (f) of this Section 2.02. In addition, each
Facility B Loan shall be in an aggregate amount that is an integral multiple of
$500,000.00, and no such Facility B Loan shall be less than the Minimum Loan.
Availability under Facility B shall be reduced by the amount outstanding of the
sum of any Term Loans. Facility B Loans may, upon request of Lenders, be
evidenced by a Revolving Loan Note in the form attached hereto as EXHIBIT A.
(d) FACILITY C. KeyBank will make loans under Facility C (the
"FACILITY C LOANS" and each, a "FACILITY C LOAN") to ease loan administration of
any Facility A Loan or Facility B Loan made other than on the first day of a
LIBOR Interest Period. Each Facility C Loan shall be in an aggregate amount that
is an integral multiple of $100,000.00, and no such Facility C Loan shall be
less than the Minimum Amount. Interest and principal on each Facility C Loan
will be payable from the proceeds of a Facility A Loan or a Facility B Loan in
full on the last Business Day of the month in which such Facility C Loan is
made, unless or to the extent
20
[Participation and Loan and Security Agreement]
such Facility C Loan is prepaid in accordance with Section 2.09 hereof by such
date. If an Event of Default shall occur, CIT shall purchase from KeyBank a
percentage of the then outstanding Facility C Loans equal to its Applicable
Percentage in regard to Facility A or Facility B Loans. Availability under
Facility C will be equal to the aggregate Facility C Availability under Facility
A and Facility B and cannot be used to increase availability. Any Facility C
Loan may, upon request of KeyBank, be evidenced by a Revolving Loan Note in the
form attached hereto as EXHIBIT A.
(e) FACILITY D. Subject to the terms and conditions of this
Agreement, the L/C Issuer agrees to incur, from time to time prior to the
Termination Date, upon the request of Borrower and for Borrower's account,
Letter of Credit Obligations by causing one or more standby letters of credit to
be issued or renewed, as the case may be, for Borrower's account (the "STANDBY
LETTERS OF CREDIT" and each, a "STANDBY LETTER OF CREDIT"). The aggregate amount
of all such Letter of Credit Obligations shall not at any time exceed the lesser
of (i) Seven Million Dollars ($7,000,000.00) (the "L/C LIMIT"), or the amount
permitted by paragraph (f) of this Section 2.02. Subject to Section 2.02(i)
hereof, no such Standby Letter of Credit shall have an expiry date which is more
than one (1) year following the date of issuance thereof. Any Letter of Credit
Obligation may, upon request of the L/C Issuer, be evidenced by a Facility D
Note in the form attached hereto as EXHIBIT B. Borrower shall deliver to L/C
Issuer a completed and executed application form together with subcharter
documents in the forms then required by L/C Issuer prior to the issuance of any
Standby Letter of Credit. In the event of any inconsistency between L/C Issuer's
required forms and this Agreement, the Mortgages and the Assignments, the
provisions of this Agreement, the Mortgages and the Assignments shall prevail.
In addition, the special provisions of EXHIBIT J shall apply to any Standby
Letters of Credit and any extensions or reversals thereof.
(f) The aggregate principal amount of all Loans and Letters of
Credit outstanding under all Facilities shall at no time exceed the lesser of
$47,000,000.00 or the Borrowing Base. Lenders shall have no obligation to make
any Loan or issue any Letter of Credit which, when added to then outstanding
Loans and Letters of Credit, would exceed the Maximum Amount of any Facility or
for all Facilities.
(g) INTEREST RATE. (i) Each Facility A Loan shall accrue
interest at the LIBOR Rate; (ii) each Facility B Loan under shall accrue
interest at the LIBOR Rate; and (iii) each Facility C Loan under shall accrue
interest at the Base Rate.
(h) CONDITIONS. The making of any Loan hereunder at any time
by Lenders is subject to compliance in full by Borrower with all of the terms
and provisions of this Agreement and the other Loan Documents, each as at any
time amended, and to the further condition that, at the time of the proposed
making of any Loan, there shall have been no material adverse change in the
financial condition or business of Borrower, and that no Event of Default, and
no event which with the lapse of time or the notice and lapse of time specified
for the purpose of constituting such an Event of Default, has occurred and is
continuing at the time of such proposed Loan. No Loan will be made or Letter of
Credit issued unless the conditions set forth in Article V hereof have been
fulfilled. The foregoing shall have no effect on the extension of any Standby
Letter of Credit issued under Facility D pursuant to a renewal clause set forth
therein.
21
[Participation and Loan and Security Agreement]
(i) Notwithstanding any other provision of this Agreement,
Borrower shall not be entitled to request, or to elect to convert or continue,
any Loan if the Interest Period requested with respect thereto would end after
the Termination Date, and Borrower shall not be entitled to request any Letter
of Credit or any renewal thereof which would expire after the Termination Date
or provides for drawdown after the Termination Date.
SECTION 2.03 PAYMENTS. (a) Interest on the unpaid principal balance of
each Revolving Loan shall be payable by Borrower from the date hereof at the per
annum Interest Rate set forth in Section 2.02(g) hereof. During the continuance
of any Event of Default or upon termination or non-renewal hereof, interest on
all unpaid Obligations shall accrue at a rate equal to two percent (2%) per
annum in excess of the applicable Interest Rate (the rate so determined, the
"LATE CHARGE RATE") otherwise payable until such time as all Obligations are
indefeasibly paid in full (notwithstanding entry of any judgment against
Borrower or the exercise of any other right or remedy by Lenders), and all such
interest shall be payable on demand. In no event shall charges constituting
interest exceed the rate permitted under any Applicable Law or regulation, and
if any provision of this Agreement is in contravention of any such law or
regulation, such provision shall be deemed amended to conform thereto. The
reimbursement obligations of Borrower to the L/C Issuer shall bear interest at
the Late Charge Rate from the date of payment for which reimbursement is
required to the date of reimbursement. Reimbursement by Borrower to the L/C
Issuer shall be effective on receipt by the L/C Issuer of immediately available
funds at its designated account.
(b) Interest shall be payable monthly in arrears on the daily
unpaid principal balance of the Loans then outstanding, and shall be due and
payable on the Interest Payment Dates during the term of this Agreement;
PROVIDED, that (i) interest accrued pursuant to paragraph (a) of this Section
shall be payable on demand, (ii) in the event of any repayment or prepayment of
any Loan, accrued interest on the principal amount repaid or prepaid shall be
payable on the date of such repayment or prepayment, (iii) in the event of any
voluntary or involuntary prepayment of any Facility A Loan or Facility B Loan
prior to the end of the Interest Period therefor, accrued interest on such
Facility A Loan or Facility B Loan shall be payable on the effective date of
such prepayment, together with LIBOR Breakage, and (iv) all accrued interest
shall be payable upon termination of the Commitments, except with respect to any
interest accrued under any Term Loan, which shall be paid in accordance with the
Term Note reflecting such Term Loan. Lenders are authorized to, and at their
sole election may, charge to the Loan Accounts on behalf of Borrower and cause
to be paid all interest, fees, expenses and charges other than principal due and
owing by Borrower under this Agreement, if and to the extent Borrower fails to
promptly pay any such amounts as and when due, even if such charges would cause
the balance of the Loan Accounts to exceed the Maximum Amount. Interest due
under any Facility on each Interest Payment Date shall be debited to Borrower's
account under Facility A.
(c) Principal shall be due and payable on (i) the Termination
Date for all Facility A Loans then outstanding, (ii) within eighteen (18) months
from the date of any Facility B Loan made for the purpose of acquiring one or
more vessels (except in the case of Term Loans, which shall be paid in
accordance with the Term Note reflecting such Term Loan), (iii) within the
earlier of (x) twelve months from the date of a Facility B Loan and (y)
redelivery of a vessel, in the case of any Facility B Loan made for the purpose
of retrofitting, upgrading or
22
[Participation and Loan and Security Agreement]
rebuilding of a vessel (except in the case of Term Loans, which shall be paid in
accordance with the Term Note reflecting such Term Loan), (iv) in the case of a
Facility C Loan, the last day of the month in which such Facility C Loan is
made; PROVIDED, HOWEVER, that such Facility C Loan may be refunded with the
proceeds of a Facility A Loan or Facility B Loan in accordance with the terms
hereof, and (v) as to any Term Loan, the final installment payment date thereof
(each of the above being a "MATURITY DATE"); PROVIDED, HOWEVER, that no Loan
shall extend beyond the Termination Date, except for any Term Loan as provided
herein and in the Term Note reflecting such Term Loan.
(d) All computations of interest, fees and other charges shall
be calculated on a per annum basis based on a year of 360 days computed on the
basis of the average daily unpaid balance of principal outstanding during the
preceding monthly period, in each case for the actual number of days occurring
in the period for which such interest and fees are payable.
(e) On the Maturity Date of a Facility C Loan, such Facility C
Loan shall be refunded with the proceeds of a Facility A Loan or Facility B Loan
unless a Default or Event of Default shall be then continuing.
SECTION 2.04 REQUESTS FOR LOANS. To request a Loan, Borrower shall
notify Administrative Agent of such request by telephone (a) in the case of a
Facility A Loan or Facility B Loan, not later than 11:30 a.m.,
New York City
time, three (3) Business Days before the date of the proposed Facility A Loan or
Facility B Loan, or (b) in the case of any Documentary Letter of Credit
Obligation, not later than 11:30 a.m.,
New York City time, three (3) Business
Days before the issuance date of the proposed Documentary Letter of Credit. Each
such telephonic Loan Request shall specify whether it is a Facility A Loan, a
Facility B Loan or a Letter of Credit Obligation, be irrevocable and shall be
confirmed promptly by hand delivery or telecopy to Administrative Agent of the
appropriate written Loan Request in the form attached hereto as EXHIBIT G or H
and signed by Borrower. Each such telephonic and written Loan Request shall
specify the following information in compliance with Section 2.02 hereof:
(i) the aggregate amount of the requested Loan;
(ii) the date of such Loan, which shall be a Business Day;
(iii) whether such Loan is to be a Facility A Loan, a
Facility B Loan or a Letter of Credit Obligation under Facility A or a
Letter Credit Obligation under Facility D;
(iv) in the case of a Letter of Credit Obligation, the
Loan Request shall be accompanied by (a) in the case of a Standby
Letter of Credit under Facility D, (x) to the extent not previously
delivered to Administrative Agent, copies of all agreements between
Borrower and the Standby Letter of Credit beneficiary pertaining to the
issuance of such standby Letters of Credit and (y) a copy of the form
of a Standby Letter of Credit which is attached hereto as EXHIBIT F-1,
and (b) in the case of a Documentary Letter of Credit under Facility A,
a copy of the form of the application for a documentary letter of
credit which is attached hereto as EXHIBIT F-2 and which may be amended
by the L/C Issuer from time to time; and
23
[Participation and Loan and Security Agreement]
(v) the location and number of Borrower's account to
which funds are to be disbursed, which shall comply with the
requirements of Section 2.05 hereof.
On or before the Settlement Date, Administrative Agent shall advise each Lender
of the details of the Loan Request and of the amount of such Lender's Revolving
Loan to be made as part of the requested Loan. In the event a Facility A Loan or
Facility B Loan is to be made on any day other than the first day of a LIBOR
Interest Period, the Loan Request shall be deemed a request for a Facility C
Loan to be refunded by a Facility A Loan or Facility B Loan. Notwithstanding
anything contained herein to the contrary, Documentary Letter of Credit
applications by Borrower and approvals by the L/C Issuer may be made and
transmitted pursuant to electronic codes and security measures mutually agreed
upon and established by and among Borrower, Administrative Agent and the L/C
Issuer.
SECTION 2.05 SETTLEMENT AND FUNDING OF LOANS. (a) Administrative Agent
will make such Loan available to Borrower by promptly crediting the amounts, in
like funds, to an account of Borrower maintained with Administrative Agent in
New York City and designated by Borrower in the applicable Loan Request; and (b)
each Lender shall transfer its Applicable Percentage of each Loan on the monthly
settlement date, as agreed by Lenders ("the SETTLEMENT DATE"), by wire transfer
of immediately available funds by 2:00 p.m.,
New York City time, to the account
of Administrative Agent.
SECTION 2.06 NON-RECEIPT OF FUNDS. Unless Administrative Agent shall
have received notice from a Lender prior to the proposed date of any Loan that
such Lender will not make available to Administrative Agent such Lender's share
of such Loan, Administrative Agent may assume that such Lender has made or, on
the Settlement Date, will make such share available in accordance with Section
2.05 hereof and may, in reliance upon such assumption, make available to
Borrower a corresponding amount. In such event, if any Lender has not in fact
made its share of the applicable Loan available to Administrative Agent by the
Settlement Date, then the applicable Lender and Borrower severally agree to pay
to Administrative Agent forthwith on demand such corresponding amount with
interest thereon, for each day from and including the date such amount is made
available to Borrower to but excluding the date of payment to Administrative
Agent, at (i) in the case of such Lender, the Federal Funds Effective Rate, or
(ii) in the case of Borrower, the Base Rate. If such Lender pays such amount to
Administrative Agent, then such amount shall constitute such Lender's share of
such Loan.
SECTION 2.07 TERMINATION AND REDUCTION OF COMMITMENTS.
(a) Unless previously terminated, the Commitments shall
terminate on the Termination Date.
(b) Borrower may at any time terminate this Agreement with
respect to all Facility A Loans and Facility B Loans; PROVIDED, that Borrower
shall prepay all Revolving Loans in accordance with Section 2.09 hereof and
replace all outstanding Letters of Credit and pay to Lenders a fee equal to
$800,000.00 during the first year (on or before the first Anniversary Date of
the Effective Date), $400,000.00 thereafter through the second Anniversary Date
of the Effective Date, and $200,000.00 thereafter through the third Anniversary
Date of the Effective Date; and, PROVIDED, FURTHER, that prepayment of Loans or
other Obligations made under this
24
[Participation and Loan and Security Agreement]
Agreement from the proceeds of additional equity offerings will not constitute
termination of this Agreement or of any Facility but will restore the
availability under Facility A and Facility B by the amount of such prepayments.
(c) Borrower shall notify Administrative Agent of any election
to terminate the Commitments under paragraph (b) of this Section at least three
(3) Business Days prior to the effective date of such termination or reduction,
specifying such election and the effective date thereof. Promptly following
receipt of any notice, Administrative Agent shall advise Lenders of the contents
thereof. Each notice delivered by Borrower pursuant to this Section shall be
irrevocable; PROVIDED, that a notice of termination of the Commitments delivered
by Borrower may state that such notice is conditioned upon the effectiveness of
other credit facilities, in which case such notice may be revoked by Borrower
(by notice to Administrative Agent on or prior to the specified effective date)
if such condition is not satisfied. Any termination or reduction of the
Commitments shall be permanent. Each reduction of the Commitments shall be made
ratably among Lenders in accordance with their respective Commitments.
SECTION 2.08 REPAYMENT OF LOANS; EVIDENCE OF DEBT.
(a) Borrower hereby unconditionally promises to pay to
Administrative Agent for account of each Lender the then unpaid principal amount
of each Revolving Loan on the Maturity Date thereof.
(b) Each Lender may maintain in accordance with its usual
practice an account or accounts evidencing the indebtedness of Borrower to such
Lender resulting from any Loan made by such Lender, including the amounts of
principal and interest payable and paid to such Lender from time to time
hereunder.
(c) Administrative Agent shall maintain accounts in which it
shall record (i) the amount of each Loan made hereunder and the applicable
Interest Rate thereof, (ii) the amount of any principal or interest due and
payable or to become due and payable from Borrower to each Lender hereunder, and
(iii) the amount of any sum received by Administrative Agent hereunder for the
account of Lenders and each Lender's share thereof. Lenders may from time to
time request that Administrative Agent provide Lenders with a copy of such
records.
(d) The entries made in the accounts maintained pursuant to
paragraph (b) or (c) of this Section shall be PRIMA FACIE evidence of the
existence and amounts of the obligations recorded therein; PROVIDED, that the
failure of any Lender or Administrative Agent to maintain such accounts or any
error therein shall not in any manner affect the obligation of Borrower to repay
the Loans and other Obligations in accordance with the terms of this Agreement.
(e) Any one or more Lenders may request that any Loan made by
it or them be evidenced by a Note. In such event, Borrower shall execute and
deliver to such Lender or Lenders a Note payable to the order of such Lender
(or, if requested by such Lender, to such Lender and its registered assigns) in
form and substance acceptable such Lender. Thereafter, the Loans evidenced by
such Notes and interest thereon shall at all times (including after assignment
pursuant to Section 10.10 hereof) be represented by one or more Notes in such
form payable to the order of the payee named therein. Administrative Agent may
enter Loans and repayment
25
[Participation and Loan and Security Agreement]
made on any Note; PROVIDED, HOWEVER, that failure to do so shall not affect
Borrower's obligations to repay all Loans made.
SECTION 2.09 PREPAYMENT OF LOANS.
(a) Except in the case of any Term Loan, which shall be subject
to the provisions thereof, Borrower shall have the right at any time and from
time to time to prepay any Facility A Loan, Facility B Loan or Facility C Loan
in whole or in part, subject to prior notice in accordance with paragraph (b) of
this Section.
(b) Borrower shall notify Administrative Agent by telephone
(confirmed by telecopy) of any prepayment hereunder (i) in the case of
prepayment of any Facility A Loan or Facility B Loan, not later than 11:30 a.m.,
New York City time, three (3) Business Days before the date of prepayment, or
(ii) in the case of prepayment of a Facility C Loan not later than 11:30 a.m.,
New York City time, one (1) Business Day before the date of prepayment. Each
such notice shall be irrevocable and shall specify the prepayment date and the
principal amount of each Loan or portion thereof to be prepaid. Promptly
following receipt of any such notice relating to a Facility A, Facility B, or
Facility C Loan, Administrative Agent shall advise Lenders of the contents
thereof. Each partial prepayment of any Facility A, Facility B or Facility C
Loan shall be in an amount that would be permitted in the case of such Facility
A, Facility B or Facility C Loan, as provided in Section 2.02(b), (c) or (d)
respectively. Each prepayment of a Facility A, Facility B or Facility C Loan
shall be applied (i) in the absence of a Default, as Borrower directs, or (ii)
if a Default has occurred and is continuing, as set forth in Section 2.14(b)
hereof. Prepayments shall be accompanied by accrued interest to the extent
required by Section 2.03 hereof and LIBOR Breakage, if any.
SECTION 2.10 FEES.
(a) Borrower agrees to pay to Administrative Agent for account
of each Lender on a pro rata basis, the Unused Line Fee, which shall accrue at
the Unused Commitment Fee Rate on the average daily amount of the unused
Commitments of each Lender for each of Facility A and Facility B during the
period from and including the Effective Date to but excluding the date on which
such Commitment terminates. Accrued Unused Line Fees shall be payable in arrears
on the last day of March, June, September and December of each year and on the
date on which the Commitments terminate, commencing on the first such date to
occur after the date hereof. All Unused Line Fees shall be computed on the basis
of a year of 360 days and shall be payable for the actual number of days elapsed
(including the first day but excluding the last day).
(b) Borrower agrees to pay to Lenders on the date hereof (1) an
origination fee in respect of Facility A in the amount of $100,000.00 to be
shared PRO RATA by Lenders, and (2) an origination fee in respect of Facility B
in the amount of $200,000.00 to be shared $150,000.00 by KeyBank and $50,000.00
by CIT (CIT having waived $100,000.00 of such fee).
(c) Borrower agrees to pay to the L/C Issuer on the date hereof
an origination fee in the amount of $70,000.00 for making Facility D available.
As additional compensation, Borrower shall pay to L/C Issuer on the date of the
issuance and each subsequent date of
26
[Participation and Loan and Security Agreement]
extension or renewal of any Standby Letter of Credit, a fee (the "STANDBY LETTER
OF CREDIT FEE") equal to one and one-half percent (1.50%) per annum multiplied
by the maximum amount available to be drawn under such Standby Letter of Credit,
including any Standby Letter of Credit extending more than twelve (12) months by
its own terms or by operation of any renewal or evergreen provision. In
addition, Borrower shall pay to L/C Issuer, on demand, such fees (including all
per annum fees), charges and expenses of such L/C Issuer in respect of the
issuance, negotiation, acceptance, amendment, transfer and payment of
Documentary Letter of Credit Obligations incurred under Section 2.02(b) hereof
or otherwise payable pursuant to the application and related documentation under
which such Documentary Letter of Credit is issued. Notwithstanding the
foregoing, any fees owed by Borrower pursuant to this Section 2.10(c) may be
debited to the Facility C account and refunded on the next Settlement Date with
the proceeds of a Facility A Loan.
(d) Borrower agrees to pay to Administrative Agent and
Collateral Agent, for its own account, commitment fees, appraisal fees and
agency fees payable in the amounts and at the times agreed upon among Borrower,
Administrative Agent and Collateral Agent.
(e) Borrower agrees to pay to Administrative Agent for account
of each Lender on a pro rata basis, the Annual Maintenance Fee.
(f) All fees payable hereunder shall be paid on the dates due,
in immediately available funds, to Administrative Agent for distribution to
Lenders. Fees paid to Lenders shall not be refundable under any circumstances.
SECTION 2.11 INCREASED COSTS.
(a) If any Change in Law shall:
(i) impose, modify or deem applicable any reserve,
special deposit or similar requirement against assets of, deposits with
or for the account of, or credit extended by, any Lender (except any
such reserve requirement reflected in the LIBOR Rate); or
(ii) impose on any Lender or the London InterBank Market
any other condition affecting this Agreement or any Loans made by such
Lender;
and the result of any of the foregoing shall be to increase the cost to such
Lender of making or maintaining any Loan (or of maintaining its obligation to
make any such Loan) or to reduce the amount of any sum received or receivable by
such Lender hereunder (whether of principal, interest or otherwise), then
Borrower will pay to such Lender such additional amount or amounts as will
compensate such Lender for such additional costs incurred or reduction suffered.
In the alternative, Administrative Agent may debit Borrower's account under
Facility A or Facility C in the amount of such additional costs.
(b) If any Lender determines that any Change in Law regarding
capital requirements has or would have the effect of reducing the rate of return
on such Lender's capital or on the capital of such Lender's holding company, if
any, as a consequence of this Agreement or the Loans made or Commitments held
by, such Lender, to a level below that which such
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[Participation and Loan and Security Agreement]
Lender or such Lender's holding company could have achieved but for such Change
in Law (taking into consideration such Lender's policies and the policies of
such Lender's holding company with respect to capital adequacy), then from time
to time Borrower will pay to such Lender such additional amount or amounts as
will compensate such Lender or such Lender's holding company for any such
reduction suffered.
(c) A certificate of any Lender calculating and setting forth
the amount or amounts necessary to compensate such Lender or its holding
company, as the case may be, as specified in paragraph (a) or (b) of this
Section shall be delivered to Borrower and shall be conclusive absent manifest
error. Borrower shall pay such Lender the amount shown as due on any such
certificate within 10 days after receipt thereof.
(d) Failure or delay on the part of any Lender to demand
compensation pursuant to this Section shall not constitute a waiver of such
Lender's right to demand such compensation; PROVIDED, that Borrower shall not be
required to compensate a Lender pursuant to this Section for any increased costs
or reductions incurred more than nine months prior to the date that such Lender
notifies Borrower of the Change in Law giving rise to such increased costs or
reductions and of such Lender's intention to claim compensation therefor;
PROVIDED, FURTHER, that, if the Change in Law giving rise to such increased
costs or reductions is retroactive, then the nine-month period referred to above
shall be extended to include the period of retroactive effect thereof.
SECTION 2.12 BREAK FUNDING PAYMENTS. In the event of (a) the payment of
any principal of any Facility A Loan, Facility B Loan (including any Term Loan)
other than on the last day of an Interest Period applicable thereto (including
as a result of an Event of Default), (b) the failure to borrow, convert,
continue or prepay any Revolving Loan on the date specified in any notice
delivered pursuant hereto (regardless of whether such notice is permitted to be
revocable under Section 2.09(b) hereof and is revoked in accordance herewith),
or (c) the assignment of any Loan other than on the last day of the Interest
Period applicable thereto as a result of a request by Borrower pursuant to
Section 2.16(b) hereof, then, in any such event, Borrower shall compensate each
Lender for the loss, cost and expense attributable to such event. In the case of
a Facility A Loan, Facility B Loan or Term Loan, the loss to any Lender
attributable to any such event shall be deemed to include an amount determined
by such Lender to be equal to the excess, if any, of (i) the amount of interest
that such Lender would pay for a deposit equal to the principal amount of such
Loan for the period from the date of such payment, conversion, failure or
assignment to the last day of the then current Interest Period for such Facility
A Loan, Facility B Loan (including any Term Loan (or, in the case of a failure
to borrow, convert or continue, the duration of the Interest Period that would
have resulted from such Facility A Loan, Facility B Loan or Term Loan,
conversion or continuation) if the interest rate payable on such deposit were
equal to the LIBOR Rate for such Interest Period, over (ii) the amount of
interest that such Lender would earn on such principal amount for such period if
such Lender were to invest such principal amount for such period at the interest
rate that would be bid by such Lender (or an Affiliate of such Lender) for
dollar deposits from other banks in the LIBOR Rate market at the commencement of
such period ("LIBOR BREAKAGE"). A certificate of any Lender setting forth any
amount or amounts that such Lender is entitled to receive pursuant to this
Section shall be delivered to Borrower and shall be conclusive absent manifest
error. Borrower shall pay such
28
[Participation and Loan and Security Agreement]
Lender the amount shown as due on any such certificate within 10 days after
receipt thereof, or allow such Lender to advance against Facility A accordingly,
provided availability exists.
SECTION 2.13 TAXES. Any and all payments by or on account of any
Obligation of Borrower hereunder shall be made free and clear of and without
deduction for any Indemnified Taxes or Other Taxes; PROVIDED, that if Borrower
shall be required to deduct any Indemnified Taxes or Other Taxes from such
payments, then (i) the sum payable shall be increased as necessary so that after
making all required deductions (including deductions applicable to additional
sums payable under this Section) Administrative Agent, Collateral Agent, each
Lender or L/C Issuer (as the case may be) receives an amount equal to the sum it
would have received had no such deductions been made, (ii) Borrower shall make
such deductions, and (iii) Borrower shall pay the full amount deducted to the
relevant Governmental Authority in accordance with Applicable Law.
(a) In addition, Borrower shall pay any Other Taxes to the
relevant Governmental Authority in accordance with Applicable Law.
(b) Borrower shall indemnify Administrative Agent, Collateral
Agent, the L/C Issuer and each Lender, within 10 days after written demand
therefor, for the full amount of any Indemnified Taxes or Other Taxes (including
Indemnified Taxes or Other Taxes imposed or asserted on or attributable to
amounts payable under this Section) paid by Administrative Agent, Collateral
Agent, L/C Issuer or such Lender, as the case may be, and any penalties,
interest and reasonable expenses arising therefrom or with respect thereto,
whether or not such Indemnified Taxes or Other Taxes were correctly or legally
imposed or asserted by the relevant Governmental Authority. A certificate as to
the amount of such payment or liability, together with copies of available
documentation reflecting the imposition and amount of such Indemnified Taxes or
Other Taxes delivered to Borrower by a Lender, Collateral Agent, the L/C Issuer
or by Administrative Agent on its own behalf or on behalf of a Lender, shall be
conclusive absent manifest error.
(c) As soon as practicable after any payment of Indemnified
Taxes or Other Taxes by Borrower to a Governmental Authority, Borrower shall
deliver to Administrative Agent the original or a certified copy of a receipt
issued by such Governmental Authority evidencing such payment, a copy of the
return reporting such payment or other evidence of such payment reasonably
satisfactory to Administrative Agent.
(d) Any Foreign Lender that is entitled to an exemption from or
reduction of withholding tax under the law of the jurisdiction in which Borrower
is located, or any treaty to which such jurisdiction is a party, with respect to
payments under this Agreement shall deliver to Borrower (with a copy to
Administrative Agent), at the time or times prescribed by Applicable Law or
reasonably requested by Borrower, such properly completed and executed
documentation prescribed by Applicable Law as will permit such payments to be
made without withholding or at a reduced rate.
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[Participation and Loan and Security Agreement]
SECTION 2.14 PAYMENTS GENERALLY; PRO RATA TREATMENT; SHARING OF
SET-OFFS.
(a) Borrower shall make each payment required to be made by it
hereunder (whether of principal, interest or fees, or under Section 2.11, 2.12
or 2.13 hereof, or otherwise) prior to 12:00 noon, New York City time, on the
date when due, in immediately available funds, without set-off or counterclaim,
or shall allow Administrative Agent to advance against Facility A for all such
payments, provided availability exists. Any amounts received after such time on
any date may, in the discretion of Administrative Agent, be deemed to have been
received on the next succeeding Business Day for purposes of calculating
interest thereon. All such payments shall be made to Administrative Agent at its
offices at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, except that
payments pursuant to Sections 2.11, 2.12, 2.13 and 10.09 hereof shall be made
directly to the Persons entitled thereto. Administrative Agent shall distribute
any such payments received by it for account of any other Person to the
appropriate recipient promptly following receipt thereof. If any payment
hereunder shall be due on a day that is not a Business Day, the date for payment
shall be extended to the next succeeding Business Day, and, in the case of any
payment accruing interest, interest thereon shall be payable for the period of
such extension. All payments hereunder shall be made in Dollars.
(b) (i) Payments Received by Administrative Agent. So long as
(x) no Default with respect to any payments due hereunder or under any of the
Obligations or (y) Event of Default shall have occurred and be continuing, each
payment made by Borrower received by the Administrative Agent pursuant to
paragraph (a) of this Section shall be applied, FIRST, to any costs, expenses,
fees or other amounts due under this Agreement or under the other Loan Documents
not constituting principal and interest due under the Loans, SECOND, to late
charges due pursuant to Section 2.03 hereof, THIRD, to interest due on the
unpaid principal balance of each Loan, FOURTH, to the payment in full of
principal and all other Obligations which are then due and payable. If at any
time insufficient funds are received by and available to Administrative Agent to
pay fully all amounts of principal, interest and fees then due on any Revolving
Loans, such funds shall be applied, FIRST, to pay interest and fees then due
hereunder, ratably among the parties entitled thereto in accordance with the
amounts of interest and fees then due to such parties, SECOND, to pay principal
then due hereunder, ratably among the parties entitled thereto in accordance
with the amounts of principal then due to such parties, and THIRD, all remaining
amounts, if any, shall be applied as provided in the first sentence of this
Section 2.14(b)(i).
(ii) Casualty Payments. So long as no (x) Default with
respect to any payments due hereunder or under any of the Obligations
or (y) Event of Default shall have occurred and be continuing, any
amounts received by Collateral Agent or any Lender as a result of an
Event of Loss with respect to any Pool Vessel or any Acquired Vessel
that is not a Pool Vessel (including, without limitation, any payment
of prepayment amounts under Section 2.09 hereof or insurance or
condemnation proceeds) shall be retained by Lenders as cash collateral
to the extent the aggregate Orderly Liquidation Value of the remaining
Pool Vessels is less than $71,000,000.00, until such time as Borrower
pledges another Qualified Pool Vessel or Qualified Pool Vessels to
increase the aggregate Orderly Liquidation Value of the Pool Vessels to
not less than $71,000,000.00, at which time such amounts shall be
applied, FIRST, to the payment of any amounts outstanding under
Facility C and thereafter held by Lenders for application against other
Revolving Loans at the end of any then current interest period or
periods,
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[Participation and Loan and Security Agreement]
SECOND, to the payment in full of all the Obligations which are then
due and payable, and, THIRD, the balance, if any, after payment of the
foregoing amounts, shall be paid by Lenders to Borrower.
(iii) Other Amounts. So long as no (x) Default with respect
to any payments due hereunder or under any of the Obligations or (y)
Event of Default shall have occurred and be continuing, all Proceeds
from time to time received by Collateral Agent or any Lender shall be
applied, FIRST, to any costs, expenses, fees or other amounts due under
this Agreement and the other Loan Documents not constituting principal
and interest due under the Loans, SECOND, to the payment in full of all
the other Obligations which are then due and payable, THIRD, if
provision as to the application of such amounts is made in this
Agreement or any other Loan Document, Collateral Agent or any Lender
shall, in its sole discretion, either apply such payment to the purpose
for which it was made or pay it to Borrower, which shall so apply it
and, FOURTH, if due to Borrower, Collateral Agent or such Lender shall
pay such amounts to Borrower.
(iv) Application After Default but before Event of
Default. All payments received and amounts realized by Lenders after a
Default shall have occurred and be continuing, but prior to the
occurrence of an Event of Default or any acceleration of any Loan or
Note, all Proceeds or other amounts received in repayment of the
Collateral shall be held by Lenders as part of the Collateral until
such time as no Defaults or Events of Default shall be continuing
hereunder (at which time such funds shall be paid to Borrower) or until
such funds are applied pursuant to Section 8.02 hereof. Collateral
Agent or any Lender shall apply the cash proceeds of Collateral
actually received by Lenders from any sale, lease, foreclosure or other
disposition of the Collateral to payment PRO RATA of the Obligations,
in whole or in part (including reasonable attorneys' fees and legal
expenses incurred by Lenders with respect thereto or otherwise
chargeable to Borrower). Lenders shall apply all such receipts ratably
against Obligations under Facilities A, B, C and D. Borrower shall
remain jointly and severally liable to Lenders for the payment of any
deficiency together with interest at the highest rate provided for
herein and all costs and expenses of collection or enforcement,
including reasonable attorneys' fees and legal expenses.
(v) Application After Event of Default. After an Event of
Default shall have occurred and be continuing and after Lenders have
either, (i) as assignee from Borrower of any charter of any of the
Vessels, declared such charter to be in default or terminated in
accordance with the terms thereof, or (ii) declared all amounts
outstanding hereunder to be due and payable pursuant to Section 8.02
hereof, or done both (i) and (ii), all payments received and amounts
realized by any Lender, as well as all payments or amounts then held by
Lenders as part of the Collateral, shall be applied against the
Obligations in such order and such manner as the Lenders, in their sole
discretion, may determine and as otherwise provided in the other Loan
Documents and the documents evidencing the other Obligations, and the
balance, if any, shall be paid by Lenders to Borrower.
(c) If any Lender shall, by exercising any right of set-off or
counterclaim or otherwise, obtain payment in respect of any principal of or
interest on any of its Revolving Loans
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[Participation and Loan and Security Agreement]
resulting in such Lender receiving payment of a greater proportion of the
aggregate amount of its Revolving Loans and accrued interest thereon than the
proportion received by any other Lender, then the Lender receiving such greater
proportion shall purchase (for cash at face value) participations in the
Revolving Loans of other Lenders to the extent necessary so that the benefit of
all such payments shall be shared by Lenders ratably in accordance with the
aggregate amount of principal of and accrued interest on their respective
Revolving Loans; PROVIDED, that (i) if any such participations are purchased and
all or any portion of the payment giving rise thereto is recovered, such
participations shall be rescinded and the purchase price restored to the extent
of such recovery, without interest, and (ii) the provisions of this paragraph
shall not be construed to apply to any payment made by Borrower pursuant to and
in accordance with the express terms of this Agreement or any payment obtained
by any Lender as consideration for the assignment of or sale of a participation
in any of its Loans to any assignee or participant, other than to Borrower or
any Subsidiary or Affiliate thereof (as to which the provisions of this
paragraph shall apply). Borrower consents to the foregoing and agrees, to the
extent it may effectively do so under Applicable Law, that any Lender acquiring
a participation pursuant to the foregoing arrangements may exercise against
Borrower rights of set-off and counterclaim with respect to such participation
as fully as if such Lender were a direct creditor of Borrower in the amount of
such participation.
(d) Unless Administrative Agent shall have received notice from
Borrower prior to the date on which any payment is due to Administrative Agent
for the account of Lenders hereunder that Borrower will not make such payment,
Administrative Agent may assume that Borrower has made such payment on such date
in accordance herewith and may, in reliance upon such assumption, distribute to
Lenders the amount due. In such event, if Borrower has not in fact made such
payment, then each Lender severally agrees to repay to Administrative Agent
forthwith on demand the amount so distributed to such Lender with interest
thereon, for each day from and including the date such amount is distributed to
it to but excluding the date of payment to Administrative Agent, at the Federal
Funds Effective Rate.
(e) If any Lender shall fail to make any payment required to be
made by it pursuant to Section 2.05 or 2.14(d) hereof, then Administrative Agent
may, in its discretion (notwithstanding any contrary provision hereof), apply
any amounts thereafter received by Administrative Agent for account of such
Lender to satisfy such Lender's obligations under such Sections until all such
unsatisfied obligations are fully paid.
SECTION 2.15 LETTERS OF CREDIT.
(a) Obligation Absolute. The obligation of Borrower to
reimburse Administrative Agent and the L/C Issuer for payments made with respect
to any Letter of Credit Obligation shall be absolute, unconditional and
irrevocable, without necessity of presentment, demand, protest or other
formalities, and the obligations of the Borrower to make payments to
Administrative Agent with respect to Letters of Credit shall be unconditional
and irrevocable. Such obligations of Borrower shall be paid strictly in
accordance with the terms hereof under all circumstances including the following
circumstances:
(i) any lack of validity or enforceability of any Letter
of Credit or this Agreement or the other Loan Documents or any other
agreement;
32
[Participation and Loan and Security Agreement]
(ii) the existence of any claim, set-off, defense or other
right which Borrower or any of its Affiliates, the L/C Issuer or any
Lender may at any time have against a beneficiary or any transferee of
any Letter of Credit (or any Persons or entities for whom any such
transferee may be acting), Administrative Agent, any Lender, the L/C
Issuer or any other Person, whether in connection with this Agreement,
the Letter of Credit, the transactions contemplated herein or therein
or any unrelated transaction (including any underlying transaction
between Borrower or any of its Affiliates and the beneficiary for which
the Letter of Credit was procured);
(iii) any draft, demand, certificate or any other document
presented under any Letter of Credit proving to be forged, fraudulent,
invalid or insufficient in any respect or any statement therein being
untrue or inaccurate in any respect;
(iv) payment by L/C Issuer under any Letter of Credit or
guaranty thereof against presentation of a demand, draft or certificate
or other document which does not comply with the terms of such Letter
of Credit or such guaranty;
(v) any other circumstance or happening whatsoever, which
is similar to any of the foregoing; or
(vi) the fact that a Default or an Event of Default shall
have occurred and be continuing.
(b) RISK. As among Administrative Agent, the L/C Issuer and
Borrower, Borrower assumes all risks of the acts and omissions of, or misuse of
any Letter of Credit by beneficiaries of any Letter of Credit. In furtherance
and not in limitation of the foregoing, to the fullest extent permitted by law
none of Administrative Agent or the L/C Issuer shall be responsible: (A) for the
form, validity, sufficiency, accuracy, genuineness or legal effect of any
document issued by any party in connection with the application for and issuance
of any Letter of Credit, even if it should in fact prove to be in any or all
respects invalid, insufficient, inaccurate, fraudulent or forged; (B) for the
validity or sufficiency of any instrument transferring or assigning or
purporting to transfer or assign any Letter of Credit or the rights or benefits
thereunder or proceeds thereof, in whole or in part, which may prove to be
invalid or ineffective for any reason; (C) for failure of the beneficiary of any
Letter of Credit to comply fully with conditions required in order to demand
payment under such Letter of Credit; PROVIDED, that, in the case of any payment
by Administrative Agent under any Letter of Credit, Administrative Agent shall
be liable to the extent such payment was made solely as a result of its gross
negligence or willful misconduct (as finally determined by a court of competent
jurisdiction) in determining that the demand for payment under such Letter of
Credit complies on its face with any applicable requirements for a demand for
payment under such Letter of Credit; (D) for errors, omissions, interruptions or
delays in transmission or delivery of any messages, by mail, cable, telegraph,
telex or otherwise, whether or not they be in cipher; (E) for errors in
interpretation of technical terms; (F) for any loss or delay in the transmission
or otherwise of any document required in order to make a payment under any
Letter of Credit or guaranty thereof or of the proceeds thereof; (G) for the
credit of the proceeds of any drawing under any Letter of Credit; and (H) for
any consequences arising from causes beyond the control of Administrative
33
[Participation and Loan and Security Agreement]
Agent or the L/C Issuer. None of the above shall affect, impair, or prevent the
vesting of any of Administrative Agent's or the L/C Issuer's rights or powers
hereunder or under this Agreement.
(c) Nothing contained herein shall be deemed to limit or to
expand any waivers, covenants or indemnities made by Borrower in favor of any
L/C Issuer in any letter of credit application, reimbursement agreement or
similar document, instrument or agreement between Borrower and such L/C Issuer.
SECTION 2.16 MITIGATION OBLIGATIONS; REPLACEMENT OF LENDERS.
(a) If any Lender requests compensation under Section 2.11
hereof, or if Borrower is required to pay any additional amount to any Lender or
any Governmental Authority for account of any Lender pursuant to Section 2.13
hereof, then such Lender shall use reasonable efforts to designate a different
lending office for funding or booking its Loans hereunder or to assign its
rights and obligations hereunder to another of its offices, branches or
Affiliates, if, in the judgment of such Lender, such designation or assignment
(i) would eliminate or reduce amounts payable pursuant to Section 2.11 or 2.13
hereof, as the case may be, in the future, and (ii) would not subject such
Lender to any unreimbursed cost or expense and would not otherwise be
disadvantageous to such Lender. Borrower hereby agrees to pay all reasonable
costs and expenses incurred by any Lender in connection with any such
designation or assignment.
(b) If any Lender requests compensation under Section 2.11
hereof, or if Borrower is required to pay any additional amount to any Lender or
any Governmental Authority for account of any Lender pursuant to Section 2.13
hereof, or if any Lender defaults in its obligation to fund Loans hereunder,
then Borrower may, at its sole expense and effort, upon notice to such Lender
and Administrative Agent, require such Lender to assign and delegate, without
recourse (in accordance with and subject to the restrictions contained in
Section 10.10 hereof), all its interests, rights and obligations under this
Agreement to an assignee that shall assume such obligations (which assignee may
be another Lender, if a Lender accepts such assignment); PROVIDED, that (i)
Borrower shall have received the prior written consent of Administrative Agent,
which consent shall not unreasonably be withheld, (ii) such Lender shall have
received payment of an amount equal to the outstanding principal of its Loans,
accrued interest thereon, accrued fees and all other amounts payable to it
hereunder, from the assignee (to the extent of such outstanding principal and
accrued interest and fees) or Borrower (in the case of all other amounts), and
(iii) in the case of any such assignment resulting from a claim for compensation
under Section 2.11 hereof or payments required to be made pursuant to Section
2.13 hereof, such assignment will result in a reduction in such compensation or
payments. A Lender shall not be required to make any such assignment and
delegation if, prior thereto, as a result of a waiver by such Lender or
otherwise, the circumstances entitling Borrower to require such assignment and
delegation cease to apply.
SECTION 2.17 TERM-LOANS. Prior to the Termination Date and only in the
absence of a Default or an Event of Default, Borrower shall have the option (the
"TERM LOAN OPTION") to convert any Facility B Loan to a term loan ("TERM LOAN")
on the final Interest Payment Date with respect to such Facility B Loan.
Borrower shall pay to Lenders a fee of one percent (1%) based on the amount of
any and all Facility B Loans for which the Term Out option is exercised. Each
Term Loan shall be repaid in 60 equal consecutive monthly principal payments,
plus
34
[Participation and Loan and Security Agreement]
interest, calculated on the basis of 10-year amortization, with all remaining
principal and interest to be due on the sixtieth (60th) and final Installment
Payment Date; PROVIDED, that no Term Loan may extend beyond the useful economic
life for the Borrower's trade of the Vessels identified to such Term Loan as
determined by an Appraiser. Unless Lenders may otherwise agree and except as
provided in the next sentence, interest on any termed-out Facility B Loan shall
accrue at the LIBOR Rate. Lenders will make a fixed-rate option available for
any Term Loan upon request of Borrower, such rate shall be based on Lenders'
sole judgment of the then-current market conditions and financial performance of
Borrower and Guarantors; PROVIDED, HOWEVER, that Borrower will also be permitted
to swap Lenders' existing variable rate to a fixed rate with another lending
institution. All documentation reflecting such Term Loan must be satisfactory to
Lenders and their counsel and all fees, including legal fees and expenses, and
expenses attendant thereon shall be paid by Borrower. No Term Loan Option shall
be available for any Facility B Loan or aggregation of Facility B Loans of less
than $500,000.00. Each Term Loan shall continue to be secured by all Collateral,
PROVIDED, that, if after the Termination Date there are Term Loans outstanding
and no Default or Event of Default is continuing, Lenders shall release Pool
Vessels from the Lien of the Mortgage and their Proceeds from the Lien of the
Assignments, commencing first with Non-Qualified Vessels, until, in the sole
discretion of the Collateral Agent, the Term Loan to Collateral ratio of the
Vessels identified to each Term Loan is not greater than 2:3. Borrower shall
execute and deliver to Collateral Agent any and all additional documentation,
including, without limitation, notes in the form of EXHIBIT C hereto (the "TERM
LOAN NOTES" and each, a "TERM LOAN NOTE"), mortgages, amendments, assignments
and other documentation as Collateral Agent may request to reflect such Term
Loan, at Borrower's expense, including, without limitation, attorneys' fees.
With respect to any Acquired Vessel not tendered as a Pool Vessel, a Term Loan
may be secured by a mortgage on that vessel identified to such Term Loan;
PROVIDED, that no Vessel identified to a Term Loan may be a Pool Vessel.
ARTICLE III
GRANT OF SECURITY INTEREST
SECTION 3.01 . To secure the payment and performance in full of all
Obligations, Borrower hereby grants to Lenders a continuing security interest in
and Lien upon, and a right of set-off against, and Borrower hereby assigns and
pledges to Lenders, all of the Collateral owned by it or a Subsidiary Guarantor
or in which such party has an interest.
Collateral means:
(i) each of the Pool Vessels identified in Schedule I and any
Acquired Vessel hereafter financed through Facility B or Facility C, together
with all of its machinery, anchors, cables, chains, rigging, tackle, fittings,
tools, pumps, pumping equipment, gear, apparel, furniture, appliances,
equipment, spare and replacement parts and all other appurtenances thereunto
appertaining or belonging, whether now owned or hereafter acquired by its
respective owner and whether on board or not, and also any and all additions,
improvements and replacements made in or to such Pool Vessels and Acquired
Vessels or any part thereof or in or to any equipment and appurtenances
thereunder appertaining or belonging and any and all the charter hire,
subcharter hire, freights, subfreights, earnings, charters (including, without
35
[Participation and Loan and Security Agreement]
limitation, any rights of termination thereof), to the extent set forth in the
Earnings Assignment, insurance proceeds and all other Proceeds paid or payable
to Borrower on account of the use or employment of any Vessel, being secured by
the Mortgage or any other mortgage to be executed and delivered by Borrower in
favor of Lenders (each, a "MORTGAGE"); and
(ii) all records, computer tapes, discs, and other data however
stored, ledger sheets, correspondence, invoices, delivery receipts, documents
and instruments related to any of the foregoing.
It is understood and agreed that all of the Collateral which Lenders or
any of them may at any time acquire from Borrower or from any other source in
connection with the Obligations of Borrower to Lenders, shall constitute
Collateral for each and every Obligation, without apportionment or designation
as to particular Obligations, and that all Obligations howsoever and whensoever
incurred, shall be secured by all Collateral howsoever and whensoever acquired,
and Lenders shall have the right, in its sole discretion, to determine the order
in which Lenders' rights in or remedies against any Collateral are to be
exercised and which type of Collateral and which portions of Collateral are to
be proceeded against and the order of application of proceeds of Collateral as
against particular Obligations.
SECTION 3.02 . On reasonable notice from Borrower, Lenders will permit
the substitution of a Pool Vessel with another vessel, PROVIDED, that such
substitute vessel is subject to an Appraisal and that the Orderly Liquidation
Value of the Pool Vessels after such substitution remains equal to or greater
than $71,000,000.00 and that such vessel can be used in Borrower's business as
currently constituted. Each substitute vessel shall be first made subject to the
Mortgage and the Assignments. The costs of any such substitution, including,
without limitation, counsel fees, will be for Borrower's account, payable on
demand. No Pool Vessel or Acquired Vessel shall be valued as a constituent part
of an integrated tug/barge unit unless all components of such unit are subject,
or upon acceptance by Lenders would be subject, to the Mortgage.
SECTION 3.03 ORDERLY LIQUIDATION VALUE. Based on any Appraisal of the
Pool Vessels, the aggregate Orderly Liquidation Value of the Pool Vessels must
be equal to or greater than $71,000,000.00 throughout the term of this
Agreement, PROVIDED, that in no event shall more than fifteen percent (15%) of
the aggregate Orderly Liquidation Value of the Pool Vessels be attributable to
Non-Qualified Pool Vessels. In the event any Appraisal done at any time
indicates that the aggregate Orderly Liquidation Value of the Pool Vessels is
less than $71,000,000.00, Borrower shall pledge additional vessels acceptable to
Lender, and the Proceeds thereof, until the aggregate Orderly Liquidation Value
of the Pool Vessels is equal to at least $71,000,000.00. Provided that no
Default or Event of Default is continuing, in the event that any Appraisal done
at any time indicates that the aggregate Orderly Liquidation Value of the
Vessels exceeds $71,000,000.00, then, provided there is no existing Event of
Default, at Borrower's written request and at Borrower's expense, Lenders agree
to release Pool Vessels, commencing with Non-Qualified Pool Vessels, from the
pool of assets, PROVIDED, that the aggregate Orderly Liquidation Value of the
Pool Vessels may not be reduced to less than $71,000,000.00. Notwithstanding the
foregoing, the value of any vessel acquired, retrofitted, rebuilt or upgraded
with any Facility B Loan shall not be included for purposes of determining the
aggregate Orderly
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[Participation and Loan and Security Agreement]
Liquidation Value of the Pool Vessels as collateral while such vessel is under
construction but may be included upon completion of work and redelivery to
Borrower.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Borrower hereby represents and warrants to Lenders the following, the
truth and accuracy of which, and compliance with which, shall be continuing
conditions of the making of any Loans by Lenders to Borrower:
SECTION 4.01 ORGANIZATION. Each of Borrower, K-Sea and any Subsidiary
Guarantor is a limited partnership duly organized, validly existing and in good
standing under the laws of Delaware, and has the necessary right, power and
authority to own its respective assets and to transact the business in which it
is engaged, and is duly qualified to do business in each jurisdiction where such
qualification is legally required and in each jurisdiction where the failure to
qualify would affect the enforceability of the Loan Documents or otherwise
adversely affect the Collateral or Borrower's or K-Sea's ability to perform its
respective obligations under any of the Loan Documents. In furtherance and not
in limitation of the foregoing, Borrower shall furnish to Administrative Agent
and Lenders a certificate of good standing from its respective jurisdiction of
formation.
SECTION 4.02 POWER AND AUTHORITY. Borrower has full power, authority
and legal right to execute and deliver this Agreement, any Notes, the Mortgage,
the Assignments and any other Loan Documents executed and delivered from time to
time by Borrower, and to perform its obligations hereunder and thereunder, to
borrow hereunder and to grant the security interests created by this Agreement
and the Mortgage. This Agreement has been duly executed and delivered by
Borrower and constitutes a legal, valid and binding obligation of Borrower,
enforceable in accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium or other laws affecting creditors' rights
generally and subject to general principles of equity, regardless of whether
considered in a proceeding in equity or at law.
SECTION 4.03 GOVERNMENTAL APPROVALS; NO CONFLICTS. The transactions
contemplated by this Agreement and the Loan Documents (a) do not require any
consent or approval of, registration or filing with, or any other action by, any
Governmental Authority, except such as have been obtained or made and are in
full force and effect, (b) do not require the consent of any other Person
(including, without limitation, any stockholder, trustee or holder of
Indebtedness), (c) will not violate any Applicable Law or regulation or the
charter, by-laws or other organizational documents of Borrower or any of its
Subsidiaries or any order of any Governmental Authority, (d) will not violate or
result in a default under any indenture, agreement or other instrument binding
upon Borrower or any of its Subsidiaries or its assets, or give rise to a right
thereunder to require any payment to be made by Borrower or any of its
Subsidiaries, and (e) will not result in the creation or imposition of any Lien
on any asset of Borrower or any of its Subsidiaries.
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[Participation and Loan and Security Agreement]
SECTION 4.04 FINANCIAL CONDITION; NO MATERIAL ADVERSE CHANGE. (a)
Borrower was formed on July 14, 2003, and has conducted no business other than
the acquisition, ownership and chartering of its vessels, including the Pool
Vessels.
(b) Borrower has heretofore furnished to Lenders Financial
Statements (i) as of and for the fiscal year ended June 30, 2003, reported on by
PriceWaterhouseCoopers, independent public accountants, and (ii) as of and for
the succeeding fiscal quarter ended September 30, 2003, certified by the
applicable Financial Officer, which Financial Statements present fairly, in all
material respects the financial position and results of operations and cash
flows as of such dates and for such periods in accordance with GAAP,
consistently applied, subject to year-end audit adjustments and the absence of
footnotes in the case of Financial Statements referred to in clause (b)(ii)
above.
SECTION 4.05 LITIGATION. There are no actions, suits, investigations or
proceedings by or before any arbitrator or Governmental Authority pending
against or, to the knowledge of Borrower, threatened against or affecting
Borrower or any of its Subsidiaries or any of the Collateral (i) which, if
adversely determined, could reasonably be expected, individually or in the
aggregate, to result in a Material Adverse Effect, or (ii) that involve this
Agreement or the transactions contemplated hereby.
SECTION 4.06 ENVIRONMENTAL CONDITION. Except as identified on Schedule
4.06 hereto, none of Borrower's nor any of its Subsidiaries' properties or
assets has ever been designated or identified in any manner pursuant to any
Environmental Law (including, without limitation, OPA) as a Hazardous Waste
disposal site, or a candidate for closure pursuant to any Environmental Law,
which designation or identification could reasonably be expected to have a
material adverse effect on Borrower's or its Subsidiaries' business or on any of
the Collateral. No Lien arising under any Environmental Law has attached to any
revenues or to any of the Pool Vessels or any real or personal property owned by
Borrower or any of its Subsidiaries. Neither Borrower nor any of its
Subsidiaries has received a summons, citation, notice, or directive from the
United States Environmental Protection Agency, the United States Coast Guard or
any other federal or state governmental agency regarding any action or omission
by Borrower or any of its Subsidiaries resulting in the releasing, or otherwise
exposing of Hazardous Waste into the environment, which notice could reasonably
be expected to have a material adverse effect on Borrower's or its Subsidiaries'
business or on any of the Collateral. Borrower and its Subsidiaries (a) are in
compliance (in all material respects) with all Environmental Laws, including,
but not limited to, all statutes, regulations, ordinances and other legal
requirements pertaining to the production, storage, handling, treatment,
release, transportation or disposal of any Hazardous Waste, and (b) will obtain,
maintain and/or comply with any permit, license or other approval required under
any Environmental Law.
SECTION 4.07 COMPLIANCE WITH LAWS AND AGREEMENTS. Each of Borrower and
its Subsidiaries is in compliance with all laws, regulations and orders of any
Governmental Authority applicable to it or its property and all indentures,
agreements and other instruments binding upon it or its property, except where
the failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect. No Default has occurred and is
continuing.
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[Participation and Loan and Security Agreement]
SECTION 4.08 INVESTMENT AND HOLDING COMPANY STATUS. Neither Borrower
nor any of its Subsidiaries is (a) an "investment company" as defined in, or
subject to regulation under, the Investment Company Act of 1940, or (b) a
"holding company" as defined in, or subject to regulation under, the Public
Utility Holding Company Act of 1935.
SECTION 4.09 TAXES. Each of Borrower and its Subsidiaries has timely
filed or caused to be filed all Tax returns and reports required to have been
filed and has paid or caused to be paid all Taxes required to have been paid by
it, except (a) Taxes that are being contested in good faith by appropriate
proceedings and for which Borrower or such Subsidiary, as applicable, has set
aside on its books adequate reserves, or (b) to the extent that the failure to
do so could not reasonably be expected to result in a Material Adverse Effect.
The charges, accruals and reserves on the books of Borrower in respect of Taxes
for all open years, and for the current fiscal year, make adequate provision for
all unpaid Tax liabilities for such periods.
SECTION 4.10 ERISA. No ERISA Event has occurred or is reasonably
expected to occur that, when taken together with all other such ERISA Events for
which liability is reasonably expected to occur, could reasonably be expected to
result in a Material Adverse Effect. The present value of all accumulated
benefit obligations under each Plan (based on the assumptions used for purposes
of Statement of Financial Accounting Standards No. 87) did not, as of the date
of the most recent Financial Statements reflecting such amounts, exceed the fair
market value of the assets of such Plan.
SECTION 4.11 DISCLOSURE. None of the reports, Financial Statements,
certificates or other information furnished by or on behalf of Borrower to
Administrative Agent or any Lender in connection with the negotiation of this
Agreement or the other Loan Documents or delivered hereunder or thereunder (as
modified or supplemented by other information so furnished) contains any
material misstatement of fact or omits to state any material fact necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading; PROVIDED, that, with respect to projected financial
information, Borrower represents only that such information was prepared in good
faith based upon assumptions believed to be reasonable at the time. There is no
fact known to Borrower that could have a Material Adverse Effect that has not
been disclosed herein or in a report, financial statement, exhibit, schedule,
disclosure letter or other writing furnished to Lenders for use in connection
with the transactions contemplated hereby.
SECTION 4.12 NO OTHER NAME. Borrower has not changed its name nor has
done business in any name other than that set forth in the introductory
paragraph of this Agreement.
SECTION 4.13 TITLE. Borrower has and at all times will defend and
continue to have good and marketable title to all of the Collateral, free and
clear of all Liens, security interests, claims or encumbrances of any kind
whatsoever subject only to Permitted Liens and the Vessels are documented in the
name of Borrower with the United States Coast Guard National Vessel
Documentation Center in Falling Waters, West Virginia.
SECTION 4.14 LENDERS' SECURITY INTEREST. On the Effective Date, Lenders
shall have a legal, valid and continuing first preferred ship mortgage (as
amended, supplemented or otherwise modified from time to time) over the whole
of, and a perfected first lien on and security interest
39
[Participation and Loan and Security Agreement]
in, the Pool Vessels, and Lenders shall have a perfected first lien on and
security interest in the Collateral subject only to Permitted Liens and all
taxes, fees and other charges in connection therewith shall have been duly paid.
There are no charters in effect on any Pool Vessels other than the charters
identified on Schedule 4.14 hereto.
SECTION 4.15 CITIZENSHIP. Borrower is a citizen of the United States as
defined in section 2 of the Shipping Act, 1916, as amended, duly qualified to
engage in the coastwise trade and in foreign commerce of the United States, and
shall remain such a citizen while any Loan remains outstanding and during the
life of the Mortgage.
ARTICLE V
CONDITIONS
SECTION 5.01 EFFECTIVE DATE. The obligations of Lenders to make the
Loans hereunder shall not become effective until the date on which each of the
following conditions is satisfied (or waived in accordance with Section 10.08
hereof):
(a) Administrative Agent (or its counsel) shall have received
(i) from each party hereto either (x) a counterpart of this Agreement signed on
behalf of such party or (y) written evidence satisfactory to Administrative
Agent (which may include telecopy transmission of a signed signature page of
this Agreement) that such party has signed a counterpart of this Agreement, and
(ii) executed counterparts of each of the Loan Documents executed by each party
thereto.
(b) Each partner in Borrower shall have effectively
subordinated to the rights and Lien of Lenders, all loans and advances made to
Borrower by such partner, and Liens held by such partner against Borrower's
assets. The Mortgage and other Loan Documents, agreements and instruments
executed or delivered in connection herewith shall be in form and substance
satisfactory to Lenders and their counsel and shall have been duly executed and
delivered to Lenders by the parties thereto and acknowledgments and consents (if
any) to assignments, in form and substance satisfactory to Lenders, from any
charterer of or any party to a contract of affreightment relating to the Pool
Vessels shall have been duly authorized and executed by the Borrower and
delivered to Lenders.
(c) Collateral Agent shall have received evidence satisfactory
to it that the Pool Vessels are insured in accordance with the provisions of
this Agreement, the Mortgage and the Assignment of Insurances.
(d) All filings, including all applicable UCC-1 filings
pursuant to the UCC, recordings and other actions deemed necessary or desirable
by Lenders in order to establish, protect, preserve and perfect both (i) the
Mortgage as a preferred mortgage over the whole of each of the Pool Vessels
therein pledged in favor of Lenders, and (ii) Collateral Agent's Lien on behalf
of Lenders on and security interest in all other Collateral as a valid perfected
first and only security interest subject, in the case of the Pool Vessels, only
to Permitted Liens, shall have been duly effected, including, without
limitation, the filing of financing statements and the filing and recordation of
the Mortgage and all other actions required to perfect Lenders' security
interest in
40
[Participation and Loan and Security Agreement]
the Collateral, all in form and substance satisfactory to Lenders, and all fees,
taxes and other charges relating to such filings and recordings shall have been
paid by Borrower.
(e) (i) The representations and warranties contained in this
Agreement, the Mortgage, and in all of the other agreements, documents and
instruments executed and delivered to Lenders in connection herewith shall be
true and correct in all material respects on and as of the date of the making of
each Loan with the same effect as if made on and as of such date; (ii) no
Default or Event of Default shall be in existence on the date of the making of
each Loan or shall occur as a result of each Loan; (iii) no event of default
shall have occurred and be continuing on the date on which the Loan is made
under any charter of any of the Pool Vessels; and (iv) the acceptance by
Borrower of each Loan shall constitute a representation by Borrower that the
statements contained in clauses (i), (ii) and (iii) above are true and correct
on the date on which such Loan is made.
(f) Collateral Agent and Lenders shall have (i) received an
Appraisal of all Pool Vessels, PROVIDED, that Lenders may defer a physical
appraisal and accept a desktop appraisal pending confirmation of a physical
appraisal subsequent to closing, and (ii) received and found to be satisfactory
abstracts of title, or documents of similar effect as to the Pool Vessels
confirming that such Pool Vessels are owned by Borrower free of all recorded
Liens (except the Permitted Liens) as of the date of such Loan. Additionally,
Lenders shall have received satisfactory evidence that the Pool Vessels are
operationally suitable for the trades in which such Pool Vessels are expected to
be engaged and can be operated by Borrower and/or a Subsidiary Guarantor in
their intended trades without impediment.
(g) There will have been a successful initial public offering
of K-Sea Transportation Partners L.P. with a minimum gross proceeds of
$70,000,000.00.
(h) Borrower and its Subsidiaries shall have retired all debt
other than (i) any Obligations incurred under Facility A or Facility B, and (ii)
any obligations secured by Title XI Guaranties.
(i) Lenders shall have received assurances acceptable to
Lenders that the transfer to Borrower of all Pool Vessels pursuant to the
contemplated restructuring does not constitute a fraudulent conveyance under
Applicable Law and that Borrower is in compliance with all government
regulations, including those relating to the ownership and operation of vessels
in the United States coastwise trade.
(j) No Event of Loss shall have occurred with respect to any of
the Pool Vessels.
(k) All legal matters with respect to and all legal documents
(including, but not limited to, the Loan Documents) executed in connection with
the transactions contemplated by this Agreement shall be satisfactory to counsel
for Lenders.
(l) Administrative Agent shall have received a favorable
written opinion (addressed to Administrative Agent and Lenders and dated the
Effective Date) of counsel to Borrower, substantially in the form of EXHIBIT E,
and covering such other matters relating to
41
[Participation and Loan and Security Agreement]
Borrower, this Agreement or the other Loan Documents as Required Lenders shall
reasonably request.
(m) Administrative Agent shall have received such documents
and certificates as Administrative Agent or its counsel may reasonably request
relating to the organization, existence and good standing of Borrower, the
authorization of the Transactions and any other legal matters relating to
Borrower, this Agreement or the Loan Documents, all in form and substance
satisfactory to Administrative Agent and its counsel.
(n) Lenders shall have received all fees and other amounts due
and payable hereunder and under any separate fee letters on or prior to the
Effective Date, including, to the extent invoiced, reimbursement or payment of
all out-of-pocket expenses required to be reimbursed or paid by Borrower
hereunder.
Administrative Agent (acting itself or through its counsel) shall notify
Borrower and Lenders of the Effective Date, and such notice shall be conclusive
and binding. Notwithstanding the foregoing, the obligations of Lenders to make
Loans shall not become effective unless each of the foregoing conditions is
satisfied (or waived pursuant to Section 10.08 hereof) at or prior to 3:00 p.m.,
New York City time, on January __, 2004 (and, in the event such conditions are
not so satisfied or waived, the Commitments shall terminate at such time).
SECTION 5.02 SUBSEQUENT LOANS. The obligation of Lenders to make
subsequent Loans to Borrower hereunder shall not become effective until after
the date on which conditions in Section 5.01(b), (e), (j), (m) and (n) hereof
are satisfied (or waived in accordance with Section 10.08 hereof).
Notwithstanding the foregoing, the obligations of Lenders to make Loans
shall not become effective unless each of the foregoing conditions is satisfied
(or waived pursuant to Section 10.08 hereof) at or prior to 3:00 p.m., New York
City time, on the date of any such Loan. Each Loan shall be deemed to constitute
a representation and warranty by Borrower on the date thereof as to the matters
specified in Article IV hereof.
SECTION 5.03 FACILITY B AND FACILITY C LOANS. The obligation of Lenders
to make Facility B or Facility C Loans to Borrower shall not become effective
until the date on which each of the following conditions is satisfied (or waived
in accordance with Section 10.08 hereof):
(a) Each of the conditions set forth in Section 5.01 or
Section 5.02, as applicable, is satisfied (or waived in accordance with Section
10.08 hereof).
(b) In the case of a Facility B Loan requested by Borrower to
acquire a vessel or vessels in a single transaction for an amount greater than
Ten Million Dollars and less than Twenty Million Dollars ($20,000,000.00),
Borrower shall provide a written analysis, certified by its Financial Officer,
confirming PRO FORMA covenant compliance, with supporting calculations and
financial information. In the case of a Facility B Loan request equal to or
greater than Twenty Million Dollars ($20,000,000.00), Borrower or K-Sea must
provide a complete package of historical and projected financials, asset
appraisals, management's plan for integrating the acquisition, and any other
reasonable information requested by and acceptable to Lenders; PROVIDED,
HOWEVER, that Facility B and Facility C Loans above Twenty Million Dollars
42
[Participation and Loan and Security Agreement]
($20,000,000.00) are at the sole discretion of Lenders and require Borrower to
provide written analysis, certified by Borrower's and K-Sea's Financial
Officers, confirming PRO FORMA covenant compliance and provide additional
financial information as stated above. Lenders reserve the right of refusal to
fund for any vessel acquisition that does not meet the foregoing requirements or
for which sufficient information was not provided.
(c) Each vessel Borrower proposes to acquire with a Facility B
or Facility C Loan shall be subject to an Appraisal; PROVIDED, HOWEVER, that, at
Borrower's request, Collateral Agent, in its sole discretion, may provisionally
accept a desk appraisal and permit Borrower to defer a physical Appraisal until
a subsequently scheduled drydocking if one is scheduled within the six (6) month
period following the date of acquisition of such vessel.
(d) Subject to Section 3.03 hereof, each vessel Borrower
proposes to acquire or rebuild, retrofit, upgrade or improve with a Facility B
or Facility C Loan, including any vessel owned by Borrower and not previously
included as a Pool Vessel, shall, and in the case of a vessel to be rebuilt,
retrofitted, upgraded or improved with such loan shall prior to commencement of
any financed work, be made subject to a preferred mortgage and assignments of
insurances and proceeds securing not only the Facility B and/or a Facility C
Loan with which it was acquired but all other Loans and Obligations under
Facility A, Facility B, Facility C and Facility D equally with all other
Collateral.
(e) Each vessel Borrower proposes to acquire with a Facility B
or Facility C Loan shall meet, and any vessel retrofitted, rebuilt or upgraded
with a Facility B or Facility C Loan (including an Acquired Vessel) will be
required on redelivery to Borrower to meet, the documentation and construction
standards of a Pool Vessel, except with respect to any Acquired Vessel which is
a vessel under construction and subject to a post construction financing
commitment from the United States Maritime Administration; PROVIDED, HOWEVER,
that Lenders shall have no obligation to make any Loans to finance the
retrofitting, rebuilding or upgrading of any vessel in which Lenders do not have
a security interest or mortgage acceptable to Lenders prior to the commencement
of any such work as provided in Section 5.03(d) hereof.
(f) Collateral Agent shall have received evidence satisfactory
to it that the vessel Borrower proposes to acquire with a Facility B or Facility
C Loan is insured in accordance with provisions of this Agreement, the Mortgage
and the Assignment of Insurances.
(g) Collateral Agent shall have received a certificate signed
by the United States Maritime Administration, in form and substance satisfactory
to Lenders, stating (1) that the United States Maritime Administration has
received written notice from Borrower that Borrower intends to finance the
acquisition or renovation of such vessel with one or more loans from Lenders,
and (2) that the United States Maritime Administration has not received and will
not request, demand or accept any lien on or security interest in such vessel,
her earnings, insurances or any of the proceeds thereof.
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[Participation and Loan and Security Agreement]
ARTICLE VI
AFFIRMATIVE COVENANTS
Until the Commitments have expired or been terminated and the principal
of and interest on each Loan and all fees payable hereunder shall have been paid
in full, Borrower covenants and agrees with Lenders that:
SECTION 6.01 FINANCIAL STATEMENTS AND OTHER INFORMATION.
(a) Borrower shall deliver to Lenders, at Borrower's sole
expense: (i) as soon as available but no later than forty-five (45) days after
the end of each fiscal quarter, the unaudited consolidated Financial Statements
of K-Sea for such interim fiscal period, certified by the Financial Officer of
K-Sea, and (ii) as soon as available but no later than ninety (90) days after
the end of each fiscal year, the audited consolidated Financial Statements of
K-Sea for such fiscal year, certified by independent certified public
accountants acceptable to Lenders. All of the foregoing shall be in such form
and together with such information with respect to the business of Borrower, as
Lenders may in each case request as reasonably calculated by Lenders to enable
them to confirm and prove elements of the Financial Statements. Borrower shall
keep and maintain its books and records in accordance with GAAP, consistently
applied.
(b) Concurrently with any delivery of Financial Statements
under clause (a) above, Borrower shall deliver to Lenders a certificate of a
Financial Officer of K-Sea (i) certifying as to whether a Default has occurred
since the delivery of the previous such certificate or to the date hereof and,
if such a Default has occurred, specifying the details thereof and any action
taken or proposed to be taken with respect thereto, (ii) setting forth
reasonably detailed calculations demonstrating compliance with Sections 7.01,
7.02, 7.03 and 7.05 (hereof), and (iii) stating whether any change in GAAP or in
the application thereof has occurred since the date of the audited Financial
Statements referred to in Section 4.04 or Section 6.01 hereof, as applicable,
has had a material adverse effect on the Financial Statements accompanying such
certificate and, if so, the estimated dollar amount thereof.
(c) Promptly after the same become publicly available, Borrower
shall make available (including through electronic availability) to Lenders
copies of all periodic and other reports, proxy statements and other materials
filed by Borrower or any Subsidiary with the Securities and Exchange Commission,
or any Governmental Authority succeeding to any or all of the functions of said
Commission, or with any national securities exchange, as the case may be; and
(d) Promptly following any request therefor, Borrower shall
deliver to Lenders such other information regarding the operations, business
affairs and financial condition of K-Sea or any Subsidiary, or compliance with
the terms of this Agreement, as Administrative Agent or any Lender may
reasonably request.
SECTION 6.02 VESSEL APPRAISALS. Lenders may conduct, and Borrower shall
cooperate in the conduct of, a physical Appraisal of any or all of the Pool
Vessels and Acquired Vessels at Borrower's expense, over every eighteen (18)
month period of this Agreement in the absence of
44
[Participation and Loan and Security Agreement]
an Event of Default and at any time during the continuance of an Event of
Default. The first eighteen-month period will begin on the Effective Date;
PROVIDED, HOWEVER, that Borrower will allow access to any appraiser sent by
Lenders to attend and appraise any Vessel in drydock at any time on reasonable
notice. Each fiscal year, Borrower shall provide Collateral Agent with a drydock
schedule and location of drydock.
SECTION 6.03 FEES AND EXPENSES. Borrower shall pay, on Lenders' demand
and delivery to Borrower of invoices therefor, all actual out-of-pocket costs,
expenses, filing fees and taxes payable in connection with the negotiation,
preparation, execution, delivery, recording, administration, collection,
liquidation, enforcement and defense of the Obligations, Lenders' rights in the
Collateral, this Agreement and all other existing and future agreements or
documents contemplated herein or related hereto, including any amendments,
waivers, supplements or consents which may hereafter be made or entered into in
respect hereof, or in any way involving claims or defense asserted by Lenders or
claims or defenses against Lenders asserted by Borrower or any guarantor,
including, without limitation, the Guarantors, or any third party directly or
indirectly arising out of or related to the relationship between Borrower and
Lenders, including, but not limited to, the following, whether incurred before,
during or after the initial or any renewal term or after the commencement of any
case with respect to Borrower under the United States Bankruptcy Code or any
similar statute: (a) all costs and expenses of filing or recording (including
the UCC financing statement and any Mortgage filing taxes and fees, abstract
fees relating to the Vessels, documentary taxes, intangibles taxes, etc., if
applicable); (b) all insurance premiums, appraisal fees, fees incurred in
connection with any environmental report, audit or survey and search fees; (c)
all fees as then in effect relating to the wire transfer of loan proceeds and
other funds and fees then in effect for returned checks and credit reports; (d)
with respect to periodic field examinations of the Collateral and Borrower's
operations, a per diem charge at the rate of $1,000.00 per person per day for
Lenders' examiners in the field and office in excess of three (3) days per
visit; and (e) the costs, fees and disbursements of outside counsel to Lenders,
including, but not limited to, such fees and disbursements incurred as a result
of litigation between the parties hereto, any third party and in any appeals
arising therefrom. Any of the foregoing amounts that are paid by Lenders shall,
until reimbursed by or on behalf of Borrower, constitute Obligations of Borrower
secured by the Collateral.
SECTION 6.04 NOTICES OF MATERIAL EVENTS. Borrower will furnish to
Administrative Agent and each Lender prompt written notice of the following:
(a) the occurrence of any Default or Event of Default;
(b) the filing, commencement or written threat of any action,
suit or proceeding by or before any arbitrator or Governmental Authority against
Borrower or any other Person or affecting Borrower or any Affiliate thereof
that, if adversely determined, could reasonably be expected to result in a
Material Adverse Effect;
(c) the occurrence of any ERISA Event that could reasonably be
expected to result in a Material Adverse Effect; and
45
[Participation and Loan and Security Agreement]
(d) any other development that results in, or could reasonably
be expected to result in, a Material Adverse Effect.
Each notice delivered under this Section shall be accompanied by a statement of
a Financial Officer or other executive officer of Borrower setting forth the
details of the event or development requiring such notice and any action taken
or proposed to be taken with respect thereto.
SECTION 6.05 EXISTENCE; CONDUCT OF BUSINESS. Borrower will, and will
cause each of its Subsidiaries to, do or cause to be done all things necessary
to preserve, renew and keep in full force and effect its legal existence and the
rights, licenses, permits, privileges and franchises material to the conduct of
its business.
SECTION 6.06 INSURANCE. With respect to the Collateral and other
assets, Borrower shall maintain insurance at all times, with financially sound
and reputable insurers that are reasonably acceptable to Collateral Agent. With
respect to insurance on all Collateral, all such insurance policies shall be in
such form, substance, amounts and coverage as may be satisfactory to Collateral
Agent and Lenders and shall provide for thirty (30) days' prior written notice
to Collateral Agent and Lenders of any reduction or cancellation of coverage on
account of default in the payment of any premium and shall provide Lenders with
the opportunity to cure nonpayment. Borrower hereby irrevocably appoints
Collateral Agent with full right of delegation by Collateral Agent as
attorney-in-fact for Borrower and each of them to obtain, at Borrower's expense,
any such insurance should Borrower fail to do so and, after an Event of Default,
to adjust or settle any claim or other matter under or arising pursuant to such
insurance or to amend or cancel such insurance. Borrower shall deliver to
Collateral Agent and Lenders evidence of such insurance and a lender's loss
payable endorsement satisfactory to Collateral Agent and Lenders as to all
existing and future insurance policies with respect to the Collateral. Borrower
shall deliver to Collateral Agent, in kind, all instruments representing
proceeds of insurance received by Borrower. Except as otherwise specifically
provided in the Mortgage as to any Pool Vessel or Acquired Vessel, Collateral
Agent may apply any insurance proceeds received at any time to the cost of
repairs to or replacement of any portion of the Collateral and/or, at
Administrative Agent's option, to payment of or as security for any of the
Obligations, whether or not due, in any order or manner as Collateral Agent may
determine. Borrower will insure each Pool Vessel and Acquired Vessel in
accordance with Section 1.18 of the Mortgage. Nothing in this Agreement shall be
construed to limit or restrict the provisions of Section 1.18 of the Mortgage,
but shall be in addition thereto.
SECTION 6.07 TAXES; USE. Borrower agrees that it will, and will cause
each of its Subsidiaries to, pay and discharge all taxes, assessments, licensing
obligations and governmental charges or levies imposed on the income, profits,
sale, business or properties of Borrower and its Subsidiaries prior to the date
upon which penalties attach for non-payment thereof, and promptly discharge any
liens, encumbrances or other claims which may be levied or claimed against any
of the Collateral, PROVIDED, that (i) any such tax, assessment, charge or levy
need not be paid if the payment thereof is being contested in good faith and by
appropriate proceedings, (ii) for which adequate book reserves, determined in
accordance with GAAP, shall be set aside, and (iii) the failure to make payment
pending such contest could not reasonably be expected to result in a Material
Adverse Effect, and PROVIDED, FURTHER, that if any such tax, assessment, charge
or
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[Participation and Loan and Security Agreement]
levy lawfully imposed shall remain unpaid after the date upon which a Lien on
any Collateral arises or may be imposed as a result of such non-payment, or if
any Lien is claimed for any other reason against any of the Collateral, which if
foreclosed would in Lenders' opinion adversely affect the value of Lenders'
security interest in any of the Collateral, Lenders may pay and discharge such
taxes, assessments, charges, levies and Liens, and the amount so paid by Lenders
shall be payable on demand and if not paid promptly, will be charged to the
appropriate Loan Account and shall be secured by the Collateral. Borrower will,
and will cause each of its Subsidiaries, to comply with all laws and all acts,
rules, regulations and orders of any legislative, administrative or judicial
body or official, applicable to the Collateral or to the operation of the
business of Borrower.
SECTION 6.08 MAINTENANCE OF PROPERTIES; USE AND OPERATION OF VESSELS.
Borrower will, and will cause each of its Subsidiaries to, keep and maintain all
property material to the conduct of its business in good working order and
condition, ordinary wear and tear excepted. Borrower shall require at all times
that any charterer or operator of any of the Vessels shall use its due diligence
to operate, maintain, repair, insure, man and supply the Vessels or any of them
in a careful and proper manner, comply in all material respects with and conform
to all governmental laws, rules and regulations and insurance restrictions
relating thereto, and operate any such Vessels with competent and duly qualified
personnel. Borrower shall ensure that none of the Vessels is traded, located,
operated or used, directly or indirectly, in a Prohibited Jurisdiction or by a
Prohibited Person, and no charterer nor any subcharterer or shipper shall be a
Prohibited Person or organized in a Prohibited Jurisdiction.
SECTION 6.09 BOOKS AND RECORDS; INSPECTION RIGHTS. Borrower will, and
will cause each of its Subsidiaries to, keep proper books of record and account
in which full, true and correct entries in accordance with GAAP are made of all
dealings and transactions in relation to its business and activities. Borrower
will, and will cause each of its Subsidiaries to, permit any representatives
designated by Administrative Agent or any Lender, upon reasonable prior notice,
to visit and inspect its properties, including, without limitation, the
Collateral, to examine and make extracts from its books and records, and to
discuss its affairs, finances and condition with its officers and independent
accountants, all at such reasonable times and as often as reasonably requested.
Borrower shall provide to Collateral Agent advance notice of all surveys and
regulatory inspections in order that Lenders may observe and participate. All
records, computer tapes, discs and other data storage devices, ledger sheets,
correspondence, invoices, delivery receipts, documents and instruments relating
to the Collateral shall also constitute Collateral and, unless and until
delivered to Lenders, shall be kept by Borrower, without cost to Lenders, in
appropriate containers and in safe places, and if Lenders should so request,
shall bear suitable legends identifying them as being under any Lender's
dominion and control. Lenders shall at all reasonable times have full access to
and the right to audit any and all of Borrower's books, computer tapes, discs
and other data storage devices and records, including, but not limited to, books
and records pertaining to the Collateral and including all files and
correspondence with creditors and customers, and to confirm and verify the value
and collectibility of the Collateral and to do whatever else Lenders reasonably
may deem necessary to protect its interests.
SECTION 6.10 USE OF PROCEEDS. The proceeds of the Facility A Loans can
be used for any purpose in the ordinary course of business, including minimum
quarterly distributions to partners in K-Sea. The proceeds of the Facility B
Loans will be used exclusively for (1) acquisition of
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[Participation and Loan and Security Agreement]
specific vessels from unaffiliated third parties, or, if from an Affiliate, an
acquisition which is made on terms equivalent to an arm's-length basis, or (2)
financing other rebuilding, retrofitting, upgrading or capital improvements on
Pool Vessels or acquisition of Acquired Vessels. Borrower shall not invest, lend
or otherwise distribute the proceeds of any Loan made under this Agreement in or
to any Person other than Borrower, K-Sea or any Subsidiary Guarantor, except as
set forth in the first sentence of this Section 6.10.
SECTION 6.11 U.S. PERSON. Borrower covenants and agrees that at all
times until the Lien of the Mortgage shall be discharged and there are no Loans
outstanding hereunder, it will be a limited partnership organized under the laws
of Delaware or another state within the United States.
SECTION 6.12 DOCUMENTATION. Borrower will comply with and satisfy all
provisions of the laws and regulations of the United States now or hereafter
from time to time in effect in order that the Pool Vessels and Acquired Vessels
shall continue to be documented vessels pursuant to the laws of the United
States as vessels of the United States under the United States flag with such
endorsements as shall qualify the Pool Vessels and Acquired Vessels for
participation in the coastwise trade (except for the Lemon Creek and the
Casablanca which are qualified for registry trade only) and such other trades
and services to which they may be dedicated from time to time.
SECTION 6.13 FURTHER ASSURANCES. Borrower will, promptly at any time
and from time to time, at its sole expense, execute and deliver, and cause its
Subsidiaries to execute and deliver, to Lenders such further instruments and
documents, and take such further action, as Lenders may from time to time
request in order to further carry out the intent and purpose of the Loan
Documents and to establish and protect the rights, interests and remedies
created, or intended to be created, in favor of Lenders hereby and thereby,
including, without limitation, the execution, delivery, recordation and filing
of financing statements and continuation statements. Borrower hereby authorizes
Lenders, in such jurisdictions where such action is authorized by law, to effect
any such recordation or filing of financing statements and continuation
statements without the signature of Borrower thereon and to file as valid
financing statements in the applicable financing statement records, photocopies
hereof and of any other financing statement executed in connection herewith.
Lenders agree to provide Borrower with copies of UCC filings, but shall have no
liability for failure to do so and such failure shall not serve as a defense to
the performance by any party of its obligations under the Loan Documents.
SECTION 6.14 BORROWER'S TITLE; LENDERS' SECURITY INTEREST; PERSONAL
PROPERTY. Borrower shall warrant and defend its good and marketable title in and
to the Vessels, and Lenders' perfected first priority security interest in the
Collateral, against all claims and demands whatsoever. Borrower agrees that the
Vessels shall be, and at all times and remain, separately identifiable personal
property. Borrower shall, at its sole expense, take such action (including the
obtaining and recording of waivers) as may be necessary to prevent any Person
from acquiring any right to or interest in the Vessels by virtue of the Vessels
being deemed to be real property or a part of real property or a part of other
personal property, and if at any time any Person shall claim any such right or
interest, Borrower shall, at its expense, cause such claim to be waived in
writing or otherwise eliminated by bonding or substitution of security to
Lenders' satisfaction within thirty (30) days after such claim shall have first
become known to Borrower.
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[Participation and Loan and Security Agreement]
SECTION 6.15 INDEMNIFICATION. Without limiting the generality of any
other provision hereof, Borrower shall indemnify, protect, save and keep
harmless each Lender from and against any reduction in the amount payable out of
the Collateral to such Lender with respect to the Obligations, or any other
loss, cost or expense (including reasonable legal fees) incurred by such Lender,
as the result of any breach of the provisions of this Article VI.
SECTION 6.16 PERFORMANCE OF CONTRACTS. Borrower will duly observe and
perform in all material respects all covenants and obligations to be performed
by it under any charter or any other contract for use of the Vessels or any of
them and will promptly take any and all action as may be reasonably necessary to
enforce its rights under any such charter or contract or to secure the
performance by such charterer or operator of such party's obligations under any
such charter or contract. Borrower shall not amend, terminate or otherwise
modify the terms of any such charter or contract without the prior written
consent of Lenders, which shall not be unreasonably withheld or delayed, but to
which reasonable conditions may be attached; PROVIDED, HOWEVER, Lenders shall
have no obligation to consent to any termination or to any amendment or
modification, if in Lenders' judgment such amendment or modification would
materially increase Lenders' risks in the transaction, reduce its returns or
otherwise disadvantage Lenders.
SECTION 6.17 ENVIRONMENTAL COMPLIANCE. (a) Borrower shall, and it shall
require that any and all subcharterers, managers, employees, contractors,
subcontractors, agents, representatives, Affiliates, consultants, occupants and
any and all other Persons, (i) comply in all material respects with all
applicable Environmental Laws, (ii) use, employ, process, emit, generate, store,
handle, transport, dispose of and/or arrange for the disposal of any and all
Hazardous Materials in, on, or, directly or indirectly, related to or in
connection with any of the Vessels or any portion thereof in a manner consistent
with prudent industry practice and in compliance in all material respects with
all applicable Environmental Laws, and in a manner which does not pose a
significant risk to human health, safety (including occupational health and
safety) or the environment, and (iii) obtain, maintain, and have on board each
of the Vessels any required Certificate of Financial Responsibility; (b)
Borrower shall, and it shall require that any charterer of any of the Vessels or
any of them or any other Person that may have custody of any of the Vessels
shall, upon the occurrence or discovery of an Environmental Event with respect
to such Vessel, promptly carry out, using Borrower's or such other Person's own
funds or proceeds of insurance with respect thereto, such actions as may be
necessary to remediate or cure such Environmental Event in compliance in all
material respects with all Applicable Laws, to comply in all material respects
with all applicable Environmental Laws and to alleviate any significant risk to
human health or the environment if the same arises from a condition on or in
respect of the Vessel, whether existing prior to or during the term of this
Agreement or the term of any such the charter. Once Borrower or such other
Person commences such actions, Borrower shall, and shall cause such other Person
to, thereafter diligently and expeditiously proceed to comply in all material
respects in a timely manner with all Environmental Laws and to eliminate any
significant risk to human health or the environment arising from such
Environmental Event and shall, at the request of Lenders, give periodic progress
reports to Lenders on its compliance efforts and actions. Nothing contained
herein will relieve or discharge or in any way affect the obligation of Borrower
to cure promptly any violations of Applicable Law or to pay and discharge any
Liens against any of the Vessels.
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[Participation and Loan and Security Agreement]
SECTION 6.18 SUBSIDIARY GUARANTIES. Upon the formation of any
Subsidiary of Borrower that owns, operates or has on charter, or receives any
Hire, on or with respect to any Pool Vessel or any Acquired Vessel from time to
time, Borrower shall cause each such Subsidiary to provide a Subsidiary Guaranty
to Lenders substantially in the form attached hereto as EXHIBIT I. In the event
any Subsidiary of Borrower is an entity other than a corporation, the form of
Subsidiary Guaranty shall be modified to reflect the nature of such entity.
SECTION 6.19 CLEANUP REQUIREMENT. Borrower will cause the aggregate
outstanding amount of Facility A Loans (other than letters of credit) to be
reduced to zero for a period of at least fifteen (15) days during each twelve
month period commencing on the Effective Date.
ARTICLE VII
NEGATIVE COVENANTS
Until the Commitments have expired or terminated and the principal of
and interest on each Loan and all fees payable hereunder have been paid in full
Borrower covenants and agrees with Lenders that:
SECTION 7.01 FIXED CHARGE COVERAGE. The Fixed Charge Coverage Ratio
will not be less than 3.00 to 1.00, tested quarterly based on the previous four
fiscal quarters commencing with a retrospective measurement from March 31, 2004.
SECTION 7.02 TOTAL FUNDED DEBT TO EBITDA. The ratio of total funded
debt to EBITDA will not at any time be greater than 3.25 to 1.00, tested for the
period of the previous four fiscal quarters.
SECTION 7.03 LEVERAGE RATIO. The Leverage Ratio will not exceed 2.00
to 1.00, tested quarterly.
SECTION 7.04 ADJUSTMENTS TO MEASUREMENTS. With respect to the foregoing
Sections 7.01, 7.02, and 7.03 hereof, covenant performance shall be measured
from the Effective Date with respect to Borrower and, for any prior period
constituting part of a measurement period, with respect to the performance of
K-Sea Transportation, LLC, and consolidated subsidiaries; PROVIDED, HOWEVER,
that from Interest Expense, there shall be excluded all interest incurred prior
to the Effective Date related to debt obligations discharged from IPO proceeds
and not refunded with any Facility provided by Lenders pursuant to this
Agreement.
SECTION 7.05 MINIMUM TANGIBLE NET WORTH. Borrower shall, at all
times, maintain a minimum consolidated Tangible Net Worth of $85,000,000.00.
SECTION 7.06 NO LIENS. Borrower will not and will not permit any
charterer of the Vessels or any of them to create, assume or suffer to exist any
Lien of any kind upon the Collateral except for Liens in favor of Lenders and
Permitted Liens.
SECTION 7.07 NO CHANGES IN BORROWER. Borrower shall not (a) materially
change its business; (b) change the form of organization of its business; or (c)
without thirty (30) days' prior written notice to Lenders, change its name or
jurisdiction or organization.
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[Participation and Loan and Security Agreement]
SECTION 7.08 NO DISPOSITION OF ASSETS. Without the prior written
consent of Lenders which shall not be unreasonably withheld, Borrower shall not
directly or indirectly sell, lease (except any charter of a Pool Vessel or an
Acquired Vessel permitted under the Mortgage), transfer, assign, abandon,
exchange or otherwise relinquish possession or dispose of any part of the
Collateral or any material portion of its other assets (other than Collateral or
other assets that are obsolete or worn out, or equipment disposed of, if worn
out, and replaced with equipment of the same or better quality and value, in the
ordinary course of business).
SECTION 7.09 FUNDAMENTAL CHANGES.
(a) Borrower will not, and will not permit any Subsidiary to,
merge into or consolidate with any other Person, or permit any other Person to
merge into or consolidate with it, or sell, transfer, lease or otherwise dispose
of (in one transaction or in a series of transactions) all or substantially all
of its assets, or all or substantially all of the stock of any of its
Subsidiaries (in each case, whether now owned or hereafter acquired), or
liquidate or dissolve, except that, if at the time thereof and immediately after
giving effect thereto no Default shall have occurred and be continuing; PROVIDED
(i) any Person may merge into Borrower in a transaction in which Borrower is the
surviving corporation, (ii) any Person may merge into any Subsidiary in a
transaction in which the surviving entity is a Subsidiary, (iii) any Subsidiary
may sell, transfer, lease or otherwise dispose of its assets to Borrower or to
another Subsidiary, and (iv) any Subsidiary may liquidate or dissolve if
Borrower determines in good faith that such liquidation or dissolution is in the
best interests of Borrower and is not materially disadvantageous to Lenders.
(b) Borrower will not, and will not permit any of its
Subsidiaries to, engage to any material extent in any business other than
businesses of the type conducted by Borrower, or related to its Subsidiaries on
the date of execution of this Agreement.
SECTION 7.10 TRANSACTIONS WITH AFFILIATES. Borrower will not, and will
not permit any of its Subsidiaries to, sell, lease or otherwise transfer any
property or assets to, or purchase, lease or otherwise acquire any property or
assets from, or otherwise engage in any other transactions with, any of its
Affiliates, except (a) in the ordinary course of business at prices and on terms
and conditions not less favorable to Borrower or such Subsidiary than could be
obtained on an arm's-length basis from unrelated third parties, (b) transactions
between or among Borrower and its Subsidiaries not involving any other Affiliate
and (c) any transaction permitted by Section 7.09 hereof; PROVIDED, that the
foregoing provisions of this Section 7.10 shall not prohibit any such Person
from declaring or paying any lawful Distributions so long as, after giving
effect thereto, no Default shall have occurred and be continuing. No funds
provided by Lenders to Borrower hereunder shall be employed for purposes other
than corporate purposes of Borrower and for use in Borrower's business.
SECTION 7.11 RESTRICTIVE AGREEMENTS. Borrower will not, and will not
permit any of its Subsidiaries to, directly or indirectly, enter into, incur or
permit to exist any agreement or other arrangement that prohibits, restricts or
imposes any condition upon (a) the ability of Borrower or any Subsidiary to
create, incur or permit to exist any Lien upon any of its property or assets,
which restriction (or condition) is more restrictive, in substance, than the
restrictions in Section 7.06 hereof, or (b) the ability of any Subsidiary to pay
Distributions or other distributions
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[Participation and Loan and Security Agreement]
with respect to any shares of its capital stock or to make or repay loans or
advances to Borrower or any other Subsidiary or to guaranty Indebtedness of
Borrower or any other Subsidiary; PROVIDED, that (i) the foregoing shall not
apply to restrictions and conditions imposed by law or by this Agreement, (ii)
the foregoing shall not apply to restrictions and conditions existing on the
date hereof (but shall apply to any extension or renewal of, or any amendment or
modification expanding the scope of, any such restriction or condition), (iii)
the foregoing shall not apply to customary restrictions and conditions contained
in agreements relating to the sale of a Subsidiary pending such sale, PROVIDED,
that such restrictions and conditions apply only to the Subsidiary that is to be
sold and such sale is permitted hereunder, (iv) clause (a) of the foregoing
shall not apply to restrictions or conditions imposed by any agreement relating
to secured Indebtedness permitted by this Agreement if such restrictions or
conditions apply only to the property or assets securing such Indebtedness and
(v) clause (a) of the foregoing shall not apply to customary provisions in
leases and other contracts restricting the assignment thereof.
SECTION 7.12 The Borrower shall not make distributions to any limited
or general partner of the Borrower during the continuance of an Event of Default
if, following the occurrence of such Event of Default, Lenders send a notice to
Borrower asserting or confirming such Event of Default (regardless of whether
any notice shall have been required to create such Event of Default in any
case).
ARTICLE VIII
EVENTS OF DEFAULT AND REMEDIES
SECTION 8.01 EVENTS OF DEFAULT. If any of the following events
("EVENTS OF DEFAULT") shall occur:
(a) Borrower shall fail to pay any principal of or interest on
any Loan or any fee or any other amount payable under this Agreement, when and
as the same shall become due and payable, and such failure shall continue
unremedied for a period of two (2) Business Days;
(b) any representation or warranty made or deemed made by or on
behalf of Borrower or any Subsidiary (i) in this Agreement or any amendment or
modification hereof, shall prove to have been incorrect when made or incorrect
in any material respect when deemed made or (ii) in any report, certificate,
financial statement or other document furnished pursuant to or in connection
with this Agreement or any amendment or modification thereof, shall prove to
have been incorrect in any material respect when made or deemed made;
(c) Borrower shall fail to observe or perform any covenant,
condition or agreement contained in Sections 6.04, 6.05, 6.06, 6.07, 6.08, 6.10,
6.11, 6.12, 6.14, 7.01, 7.02, 7.03 or 7.10 hereof;
(d) Borrower shall fail to observe or perform any covenant,
condition or agreement contained in this Agreement (other than those specified
in clause (a) or (c) of this Section 8.01), and such failure shall continue
unremedied for a period of thirty (30) days after notice thereof from
Administrative Agent (given at the request of any Lender) to Borrower;
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[Participation and Loan and Security Agreement]
(e) any Credit Party shall fail to make any payment (whether of
principal or interest and regardless of amount) in respect of any Material
Indebtedness, when and as the same shall become due and payable and after any
applicable grace and/or notice period;
(f) any event or condition occurs that results in any Material
Indebtedness becoming due prior to its scheduled maturity or that enables or
permits (after giving effect to any applicable grace period and/or notice
period) the holder or holders of any Material Indebtedness or any trustee or
agent on its or their behalf to cause any Material Indebtedness to become due,
or to require the prepayment, repurchase, redemption or defeasance thereof,
prior to its scheduled maturity; provided, that this clause (f) shall not apply
to secured Indebtedness that becomes due as a result of the voluntary sale,
transfer or total loss of the property or assets securing such Indebtedness or,
with respect to any Title XI debt, the United States has waived such event or
condition prior to the commencement by Lenders of any foreclosure actions or
non-judicial remedies;
(g) an involuntary proceeding shall be commenced or an
involuntary petition shall be filed seeking (i) liquidation, reorganization or
other relief in respect of any Credit Party or its debts, or of a substantial
part of its assets, under any Federal, state or foreign bankruptcy, insolvency,
receivership or similar law now or hereafter in effect or (ii) the appointment
of a receiver, trustee, custodian, sequestrator, conservator or similar official
for any Credit Party or for a substantial part of its assets, and, in any such
case, such proceeding or petition shall continue undismissed for sixty (60) days
or an order or decree approving or ordering any of the foregoing shall be
entered;
(h) any Credit Party shall (i) voluntarily commence any
proceeding or file any petition seeking liquidation, reorganization or other
relief under any Federal, state or foreign bankruptcy, insolvency, receivership
or similar law now or hereafter in effect, (ii) consent to the institution of,
or fail to contest in a timely and appropriate manner, any proceeding or
petition described in clause (g) of this Section 8.01, (iii) apply for or
consent to the appointment of a receiver, trustee, custodian, sequestrator,
conservator or similar official for Borrower or any Subsidiary or for a
substantial part of its assets, (iv) file an answer admitting the material
allegations of a petition filed against it in any such proceeding, (v) make a
general assignment for the benefit of creditors or (vi) take any action for the
purpose of effecting any of the foregoing;
(i) any Credit Party shall become unable, admit in writing or
fail generally to pay its debts as they become due;
(j) one or more judgments (excluding only the covered amounts
of insured claims, exclusive of deductibles and excess liability beyond coverage
limits and provided that underwriters have not raised defenses to coverage) for
the payment of money in an aggregate amount in excess of $500,000.00 shall be
rendered against any Credit Party or any combination thereof and the same shall
remain undischarged for a period of thirty (30) consecutive days during which
execution shall not be effectively stayed, or any action shall be legally taken
by a judgment creditor to attach or levy upon any assets of such Credit Party to
enforce any such judgment and either (i) enforcement procedings shall have been
commenced by any creditor upon any such judgment or order, or (ii) there shall
be a period of ten (10) consecutive days after
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[Participation and Loan and Security Agreement]
entry thereof during which a stay of enforcement of any such judgment or order,
by reason of a pending appeal, or otherwise, shall not be in effect; PROVIDED,
HOWEVER, that any such judgment or order shall not give rise to an Event of
Default under this subsection (j) if and for so long as and to the extent of (A)
the amount of such judgment or order is covered by a valid and binding policy of
insurance between the defendant and the insurer covering full payment thereof,
and (B) such insurer has been notified, and has not disputed the claim for
payment, of the amount of such judgment or order;
(k) an ERISA Event shall have occurred that, in the opinion of
Required Lenders, when taken together with all other ERISA Events that have
occurred, could reasonably be expected to result in a Material Adverse Effect;
(l) a Change in Control shall have occurred;
(m) Borrower, K-Sea or any Subsidiary Guarantor is dissolved or
otherwise fails to maintain its existence in good standing, or the usual
business of Borrower ceases or is suspended;
(n) except for specific matters disclosed in writing to Lenders
prior to the date hereof, any indictment or threatened indictment, occurring
after the date hereof, of Borrower under any criminal statute, including OPA or
any similar Environmental Law, or commencement or threatened commencement of
criminal or civil proceedings against Borrower, pursuant to which statute or
proceedings the penalties or remedies sought or available include forfeiture of
any of the property of Borrower. For issues relating to OPA or similar
Environmental Law, Lenders agrees that an Event of Default shall not be deemed
to have occurred prior to the date on which Borrower receives notice thereof
from Lenders;
(o) a Mortgage Event of Default shall have occurred and be
continuing under and as defined in the Mortgage;
(p) the receipt by Lenders of their first notice of an oil
spill or discharge or a hazardous discharge or an Environmental Action from a
source other than Borrower, where Lenders do not receive notice (which may be
given in oral form, PROVIDED, that same is followed with all due dispatch by
written notice given by certified mail, return receipt requested) of such
hazardous discharge or environmental complaint from Borrower within two (2)
Business Days of the time Lenders first receives said notice from a source other
than Borrower, or action by any federal, state, or local agency to foreclose a
lien upon any or all of the assets, equipment, property, leaseholds or other
facilities of Borrower (including, but not limited to, the Vessels or the other
Collateral) by reason of the occurrence of a hazardous discharge or
environmental complaint;
(q) breach by Borrower under, or lapse of, any entry or policy
of insurance from time to time in effect with respect to the Vessels;
(r) [intentionally omitted];
(s) any change in the collective bargaining agreement with
Borrower, its Subsidiaries or K-Sea occurs that is likely to have a Material
Adverse Effect;
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[Participation and Loan and Security Agreement]
(t) breach by K-Sea of the Parent Guaranty;
(u) breach by any Subsidiary of Borrower of its Subsidiary
Guaranty;
(v) [intentionally omitted]; or
(w) a change occurs in the nature or conduct of Borrower's
business or any Applicable Law affecting vessels or Environmental Law occurs
which is likely to have a Material Adverse Effect on the Collateral or
Borrower's ability to perform its obligations hereunder.
(x) Any Organizational Document of Borrower or any Guarantor
shall be amended, revoked or rescinded in any material way without the prior
written consent of Lenders.
SECTION 8.02 REMEDIES. (a) Upon the occurrence of an Event of Default,
and at any time thereafter, Lenders shall have all rights and remedies provided
in this Agreement, any other agreements among Borrower and Administrative Agent
and Lenders, the UCC or other Applicable Law, all of which rights and remedies
may be exercised without notice to Borrower, all such notices being hereby
waived, except such notice as is expressly provided for hereunder or is not
waivable under Applicable Law. All rights and remedies of Lenders are cumulative
and not exclusive and are enforceable, in Lenders' discretion, alternatively,
successively, or concurrently on any one or more occasions and in any order the
Required Lenders may determine.
(b) Without limiting the foregoing, Administrative Agent on
behalf of the Required Lenders may accelerate the payment of all Obligations and
demand immediate payment thereof to Lenders and Collateral Agent on behalf of
Required Lenders may: (a) with or without judicial process or the aid or
assistance of others, enter upon any premises on or in which any of the
Collateral may be located and take possession of the Collateral, pursue any or
all of any Lenders' rights against any of the Vessels pursuant to the Mortgage,
(b) require Borrower, at Borrower's expense, to assemble and make available to
Lenders any part or all of the Collateral at any place and time designated by
Lenders, (c) collect, foreclose, receive, appropriate, set-off and realize upon
any and all Collateral, (d) extend the time of payment of, compromise or settle
for cash, credit, return of merchandise, and upon any terms or conditions, any
and all accounts or other Collateral which includes a monetary obligation and
discharge or release the account debtor or other obligor, without affecting any
of the Obligations, (e) sell, lease, transfer, assign, deliver or otherwise
dispose of any and all Collateral (including, without limitation, entering into
contracts with respect thereto, by public or private sales at any exchange,
broker's board, any office of Lenders or elsewhere) at such prices or terms as
Lenders may deem reasonable, for cash, upon credit or for future delivery, with
Lenders having the right to purchase the whole or any part of the Collateral at
any such public sale, all of the foregoing being free from any right or equity
of redemption of Borrower, which right or equity of redemption is hereby
expressly waived and released by Borrower. If any of the Collateral is sold or
leased by Lenders upon credit terms or for future delivery, the Obligations
shall not be reduced as a result thereof until payment therefore is finally
collected by Lenders. If notice of disposition of Collateral is required by law,
seven (7) days' prior notice by Administrative Agent to Borrower designating the
time and place of any public sale or the time after which any private sale or
other
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[Participation and Loan and Security Agreement]
intended disposition of Collateral is to be made, shall be deemed to be
reasonable notice thereof and Borrower waives any other notice. In the event
Administrative Agent on behalf of Lenders institutes an action to recover any
Collateral or seeks recovery of any Collateral by way of prejudgment remedy,
Borrower waives the posting of any bond which might otherwise be required.
SECTION 8.03 LENDERS' CURE OF THIRD PARTY AGREEMENT DEFAULT. Any Lender
may, at its option, cure any default by Borrower under any agreement with a
third party or pay or bond on appeal any judgment entered against Borrower,
discharge taxes, Liens, security interests or other encumbrances at any time
levied on or existing with respect to the Collateral and pay any amount, incur
any expense or perform any act which, in such Lender's sole judgment, is
necessary or appropriate to preserve, protect, insure, maintain, or realize upon
the Collateral. Lenders may charge Borrower's Loan Account for any amounts so
expended, such amounts to be repayable by Borrower on demand. Lenders shall be
under no obligation to effect such cure, payment, bonding or discharge, and
shall not, by doing so, be deemed to have assumed any obligation or liability of
Borrower.
ARTICLE IX
THE AGENTS
SECTION 9.01 APPOINTMENT, POWERS AND IMMUNITIES. Each Lender hereby
irrevocably appoints and authorizes The CIT Group/Equipment Financing, Inc., to
act as its Collateral Agent and KeyBank N.A. to act as its Administrative Agent
hereunder and under the other Loan Documents with such powers as are
specifically delegated to the Agents by the terms of this Agreement and of the
other Loan Documents, together with such other powers as are reasonably
incidental thereto. Each Agent (which term as used in this sentence and in
Section 9.05 and the first sentence of Section 9.06 hereof shall include
reference to the Affiliates and each Agent and each Agent's Affiliates'
officers, directors, employees and agents): (a) shall have no duties or
responsibilities except those expressly set forth in this Agreement and in the
other Loan Documents, and shall not by reason of this Agreement or any other
Loan Document be a trustee for any Lender; (b) shall not be responsible to
Lenders for any recitals, statements, representations or warranties contained in
this Agreement or in any other Loan Document, or in any certificate or other
document referred to or provided for in, or received by any of them under, this
Agreement or any other Loan Document, or for the value, validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement, any loan
certificate or any other Loan Document or any other document referred to or
provided for herein or therein or for any failure by Borrower or any other
Person to perform any of its obligations hereunder or thereunder; (c) shall not
be required to initiate or conduct any litigation or collection proceedings
hereunder or under any other Loan Document; and (d) shall not be responsible for
any action taken or omitted to be taken by it hereunder or under any other Loan
Document or under any other document or instrument referred to or provided for
herein or therein or in connection herewith or therewith, except for its own
gross negligence or willful misconduct. Each Agent may employ agents and
attorneys-in-fact and shall not be responsible for the negligence or misconduct
of any such agents or attorneys-in-fact selected by it in good faith.
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[Participation and Loan and Security Agreement]
SECTION 9.02 RELIANCE BY AGENTS. Each Agent shall be entitled to rely
upon any certification, notice or other communication (including, without
limitation, any thereof by telephone, telecopy, telex, telegram or cable)
believed by it to be genuine and correct and to have been signed or sent by or
on behalf of the proper Person or Persons, and upon advice and statements of
legal counsel, independent accountants and other experts selected by the Agents.
As to any matters not expressly provided for by this Agreement or any other Loan
Document, each Agent shall in all cases be fully protected in acting, or in
refraining from acting, hereunder or thereunder in accordance with instructions
given by Required Lenders or all of Lenders as is required in such circumstance,
and such instructions of such Lenders and any action taken or failure to act
pursuant thereto shall be binding on all of Lenders.
SECTION 9.03 EVENTS OF DEFAULTS. The Agents shall not be deemed to have
knowledge or notice of the occurrence of an Event of Default (other than the
non-payment of principal of or interest on the Loans) unless the Agents have
received notice from a Lender or Borrower specifying such Event of Default and
stating that such notice is a "NOTICE OF DEFAULT". In the event that an Agent
receives such a notice of the occurrence of an Event of Default, such Agent
shall give prompt notice thereof to Lenders (and shall give each Lender prompt
notice of each such non-payment). Collateral Agent shall (subject to Section
9.10 hereof) take such action with respect to such Event of Default as shall be
directed by Required Lenders, PROVIDED, that, unless and until Collateral Agent
shall have received such directions, Collateral Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with respect
to such Event of Default as it shall deem advisable in the best interest of
Lenders except to the extent that this Agreement expressly requires that such
action be taken, or not be taken, only with the consent or upon the
authorization of Required Lenders or all of Lenders.
SECTION 9.04 RIGHTS AS A LENDER. With respect to the Commitments and
the Loans made by CIT and KeyBank (and any successor acting as Collateral Agent
or Administrative Agent, respectively) in their capacity as Lenders hereunder
shall have the same rights and powers hereunder as any other Lender and may
exercise the same as though it were not acting as an Agent, and the term
"Lender" or "Lenders" shall, unless the context otherwise indicates, include the
Agents in their individual capacities. The CIT Group/Equipment Financing, Inc.
(and any successor acting as Collateral Agent), and KeyBank N.A. (and any
successor acting as Administrative Agent) and their Affiliates may (without
having to account therefor to any Lender) accept deposits from, lend money to,
make investments in and generally engage in any kind of loan, trust or other
business with Borrower (and any of its subsidiaries or Affiliates) as if it were
not acting as an Agent, and The CIT Group/Equipment Financing, Inc., and KeyBank
N.A. and their Affiliates may accept fees and other consideration from Borrower
for services in connection with this Agreement or otherwise without having to
account for the same to Lenders.
SECTION 9.05 INDEMNIFICATION. Lenders agree to indemnify each Agent (to
the extent not reimbursed under Section 10.09 hereof, but without limiting the
obligations of Borrower under said Section 10.09) ratably in accordance with
their respective Loans, for any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind and nature whatsoever that may be imposed on, incurred by or
asserted against such Agent (including by any Lender) arising out of or by
reason of any investigation in or in any way relating to or arising out of this
Agreement or any other Loan Document or any other documents contemplated by or
referred to herein or therein or the
57
[Participation and Loan and Security Agreement]
transactions contemplated hereby or thereby (including, without limitation, the
costs and expenses that Borrower is obligated to pay under Section 8.02 hereof
but excluding, unless a default under the Mortgage has occurred and is
continuing, normal administrative costs and expenses incident to the performance
of its agency duties hereunder) or the enforcement of any of the terms hereof or
thereof or of any such other documents, PROVIDED, that no Lender shall be liable
for any of the foregoing to the extent they arise from the gross negligence or
willful misconduct of the party to be indemnified.
SECTION 9.06 NON-RELIANCE ON AGENTS AND OTHER LENDERS. Each Lender
agrees that it has, independently and without reliance on any Agent or any other
Lender, and based on such documents and information as it has deemed
appropriate, made its own credit analysis of Borrower and decision to enter into
this Agreement and that it will, independently and without reliance upon any
Agent or any other Lender, and based on such documents and information as it
shall deem appropriate at the time, continue to make its own analysis and
decisions in taking or not taking action under this Agreement. The Agents shall
not be required to keep themselves informed as to the performance or observance
by Borrower of this Agreement or any of the other Loan Documents or any other
document referred to or provided for herein or therein or to inspect the
properties or books of Borrower. Except for notices, reports and other documents
and information expressly required to be furnished to Lenders by an Agent
hereunder, no Agent shall have any duty or responsibility to provide any Lender
with any credit or other information concerning the affairs, financial condition
or business of Borrower that may come into the possession of such Agent or any
of its Affiliates.
SECTION 9.07 FAILURE TO ACT. Except for action expressly required of an
Agent hereunder and under the other Loan Documents, the Agents shall in all
cases be fully justified in failing or refusing to act hereunder and thereunder
unless it shall receive further assurances to its satisfaction from Lenders of
their indemnification obligations under Section 10.09 hereof against any and all
liability and expense that may be incurred by it by reason of taking or
continuing to take any such action.
SECTION 9.08 RESIGNATION OR REMOVAL OF AN AGENT. Subject to the
appointment and acceptance of a successor Administrative Agent or Collateral
Agent as provided below, each Administrative or Collateral Agent may resign at
any time by giving notice thereof to Lenders and Borrower, and each
Administrative or Collateral Agent may be removed at any time with or without
cause by Required Lenders. Upon any such resignation or removal, Required
Lenders shall have the right to appoint a successor Administrative or Collateral
Agent. If no successor Administrative or Collateral Agent shall have been so
appointed by Required Lenders and shall have accepted such appointment within
thirty (30) days after the retiring Administrative or Collateral Agent's giving
of notice of resignation or Required Lenders' removal of the retiring
Administrative or Collateral Agent, then the retiring Administrative or
Collateral Agent may, on behalf of Lenders, appoint a successor Administrative
or Collateral Agent. Upon the acceptance of any appointment as an Administrative
or Collateral Agent hereunder by a successor Administrative or Collateral Agent,
such successor Administrative or Collateral Agent shall thereupon succeed to and
become vested with all the rights, powers, privileges and duties of the retiring
Administrative or Collateral Agent, and the retiring Administrative or
Collateral Agent shall be discharged from its duties and obligations hereunder.
After any retiring Administrative or Collateral Agent's resignation or removal
hereunder as an Administrative or Collateral Agent,
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[Participation and Loan and Security Agreement]
the provisions of this Article IX shall continue in effect for its benefit in
respect of any actions taken or omitted to be taken by it while it was acting as
an Administrative or Collateral Agent.
SECTION 9.09 CONSENTS UNDER LOAN DOCUMENTS. Subject to Section 9.10
hereof, neither Administrative Agent nor Collateral Agent may, without the prior
consent of Required Lenders, consent to any modification, supplement, waiver,
amendment or take any other action under any of the Loan Documents, PROVIDED,
that without the prior consent of each Lender, neither Administrative Agent nor
Collateral Agent shall (except as provided herein or in the Loan Documents)
release any collateral or otherwise terminate any Lien under any Loan Document
providing for collateral security, or agree to additional obligations being
secured by such collateral security (unless the Lien for such additional
obligations shall be junior to the Lien in favor of the other obligations
secured by such Loan Document), except that no such consent shall be required,
and Collateral Agent is hereby authorized, to release any Lien covering property
which is the subject of a disposition of property permitted hereunder or to
which Required Lenders have consented.
SECTION 9.10 ACTION UPON INSTRUCTIONS. (a) If, in the opinion of the
institution acting as Administrative Agent hereunder any document required to be
executed pursuant to the terms hereof affects any right, duty, immunity or
indemnity with respect to it under this Agreement, Administrative Agent may in
its discretion decline to execute such document.
(b) Upon the written instructions at any time and from time to
time of Required Lenders, Administrative Agent shall take such of the following
actions as may be specified in such instructions: (i) exercise such election or
option, or make such decision or determination, or give such notice, consent,
waiver or approval or exercise such right, remedy or power or take such other
action hereunder or under any other Loan Document or in respect of any part or
all of the Collateral as shall be specified in such instructions; (ii) take such
action with respect to, or to preserve or protect, the Collateral (including the
discharge of Liens) as shall be specified in such instructions and as are
consistent with this Agreement; and (iii) take such other action in respect of
the subject matter of this Agreement as is consistent with the terms hereof and
the other Loan Documents.
(c) If any Event of Default shall have occurred and be
continuing, on request of Required Lenders, Administrative Agent shall exercise
such remedies under Section 8.02 hereof as shall be specified in such request.
Administrative Agent agrees to provide to Lenders, concurrently with such action
by Administrative Agent, notice of such action by Administrative Agent,
PROVIDED, that the failure to give any such notice to such Lenders shall not
affect the validity of such action.
SECTION 9.11 COMPENSATION OF ADMINISTRATIVE AGENT. During the term of
this Agreement, Borrower shall pay Administrative Agent a fee of $15,000.00 in
advance for each year or part thereof.
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[Participation and Loan and Security Agreement]
ARTICLE X
MISCELLANEOUS
SECTION 10.01 NOTICES. Except in the case of notices and other
communications expressly permitted to be given by telephone, all notices and
other communications provided for herein shall be in writing and shall be
delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by telecopy, as follows:
(a) if to Borrower, to it at:
K-Sea Transportation Partnership L.P.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
with copies to:
▇▇▇▇▇ ▇▇▇▇▇, L.L.P.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
and:
Holland & Knight, LLP
▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
and:
▇▇▇▇▇▇▇▇ Capital Partners
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇.
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
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[Participation and Loan and Security Agreement]
(b) if to Administrative Agent (including in its capacity as a
Lender), to:
KeyBank N.A.
▇▇▇ ▇▇▇▇▇ ▇▇▇.
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
(c) if to Collateral Agent (including in its capacity as a
Lender), to:
The CIT Group/Equipment Financing, Inc.
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
(d) if to any other Lender, to it at its address (or telecopy
number) set forth in the Register.
Any party hereto may change its address or telecopy number for notices and other
communications hereunder by notice to the other parties hereto. All notices and
other communications given to any party hereto in accordance with the provisions
of this Agreement shall be deemed to have been given on the date of receipt.
SECTION 10.02 TERM AND TERMINATION. The initial term of this Agreement
shall be from the date hereof until the third Anniversary Date. Notwithstanding
the foregoing, Administrative Agent at the request of Required Lenders may
terminate this Agreement immediately upon the occurrence of an Event of Default.
All Obligations shall become due and payable as of any termination hereunder
and, pending a final accounting, Lenders may withhold any balances in Borrower's
account (unless supplied with an indemnity satisfactory to such Lender) to cover
all of Borrower's Obligations, whether absolute or contingent. All of Lenders'
rights, Liens and security interests shall continue after any termination until
all Obligations have been paid and satisfied in full.
SECTION 10.03 [RESERVED.]
SECTION 10.04 TERMINATION INDEMNITY DEPOSIT. Upon termination of this
Agreement by Borrower, as permitted herein, in addition to payment of all
Obligations which are not contingent, Borrower shall deposit such amount of cash
collateral as Lenders determine is necessary to secure such Lender from loss,
cost, damage or expense, including reasonable attorneys' fees, in connection
with any open remittance items or other payments provisionally credited to the
Obligations and/or to which such Lender has not yet received final and
indefeasible payment.
SECTION 10.05 K-SEA AS AGENT FOR BORROWER. K-Sea shall be deemed the
agent of Borrower in any matter arising under this Agreement and Lenders shall
be entitled to rely on the
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[Participation and Loan and Security Agreement]
actions and communication, or lack thereof, of K-Sea as being the actions or
communications or lack thereof of each and every Borrower with respect to this
Agreement.
SECTION 10.06 DISCHARGE OF BORROWER. No termination of this Agreement
shall relieve or discharge Borrower of its Obligations, grants of Collateral,
duties and covenants hereunder or otherwise until such time as all Obligations
to Lenders have been indefeasibly paid and satisfied in full, including, without
limitation, the continuation and survival in full force and effect of all
security interests and Liens of Lenders in and upon all then existing and
thereafter-arising or acquired Collateral and all warranties and waivers of
Borrower.
SECTION 10.07 JOINT AND SEVERAL. Borrower agrees that its liabilities
hereunder are joint and several, absolute and unconditional, without regard to
the liability of any other party.
SECTION 10.08 WAIVERS; AMENDMENTS.
(a) No failure or delay by Administrative Agent or any Lender
in exercising any right or power hereunder shall operate as a waiver thereof,
nor shall any single or partial exercise of any such right or power, or any
abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. The rights and remedies of Administrative Agent and Lenders
hereunder are cumulative and are not exclusive of any rights or remedies that
they would otherwise have. No waiver of any provision of this Agreement or
consent to any departure by Borrower therefrom shall in any event be effective
unless the same shall be permitted by paragraph (b) of this Section, and then
such waiver or consent shall be effective only in the specific instance and for
the purpose for which given. Without limiting the generality of the foregoing,
the making of a Loan shall not be construed as a waiver of any Default or Event
of Default, regardless of whether Administrative Agent, Collateral Agent or any
Lender may have had notice or knowledge of such Default at the time.
(b) Neither this Agreement nor any provision hereof may be
waived, amended or modified except pursuant to an agreement or agreements in
writing entered into by Borrower and Required Lenders or by Borrower and
Administrative Agent with the consent of Required Lenders; PROVIDED, that no
such agreement shall (i) increase the Commitment of any Lender without the
written consent of such Lender, (ii) reduce the principal amount outstanding of
any Loan or reduce the rate of interest thereon, or reduce any fees payable
hereunder, without the written consent of each Lender affected thereby, (iii)
postpone the scheduled date of payment of the principal amount of any Loan, or
any interest thereon, or any fees payable hereunder, or reduce the amount of,
waive or excuse any such payment, or postpone the scheduled date of expiration
of any Commitment, without the written consent of each Lender affected thereby,
(iv) change Section 2.14(b) or (c) in a manner that would alter the pro rata
sharing of payments required thereby without the written consent of each Lender,
or (v) change any of the provisions of this Section or the definition of
"REQUIRED LENDERS" or any other provision hereof specifying the number or
percentage of Lenders required to waive, amend or modify any rights hereunder or
make any determination or grant any consent hereunder, without the written
consent of each Lender; and, PROVIDED, FURTHER, that no such agreement shall
amend, modify or otherwise affect the rights or duties of Administrative Agent
hereunder without the prior written consent of Administrative Agent.
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[Participation and Loan and Security Agreement]
SECTION 10.09 EXPENSES; INDEMNITY; DAMAGE WAIVER.
(a) Borrower shall pay (i) all reasonable out-of-pocket
expenses incurred by Administrative Agent and Collateral Agent and the
respective Affiliates, including the reasonable fees, charges and disbursements
of counsel for Administrative Agent and Collateral Agent, in connection with any
initial syndication of the credit facilities provided for herein, the
preparation and administration of this Agreement and the other Loan Documents or
any amendments, modifications or waivers of the provisions hereof (whether or
not the transactions contemplated hereby or thereby shall be consummated), and
(ii) all out-of-pocket expenses incurred by Administrative Agent, Collateral
Agent or any Lender, including the fees, charges and disbursements of any
counsel for Administrative Agent, Collateral Agent or any Lender (acting under
common counsel), in connection with the enforcement or protection of its rights
in connection with this Agreement, including its rights under this Section, or
in connection with the Loans made hereunder, including in connection with any
workout, restructuring or negotiations in respect thereof.
(b) Borrower shall indemnify Administrative Agent, Collateral
Agent, L/C Lender and each Lender, and each Related Party of any of the
foregoing Persons (each such Person being called an "INDEMNITEE") against, and
hold each Indemnitee harmless from, any and all losses, claims, damages,
liabilities and related expenses, including the fees, charges and disbursements
of any counsel for any Indemnitee (but excluding Taxes, it being understood and
agreed that Section 2.13 hereof sets forth Borrower's indemnity obligations with
respect to Taxes), incurred by or asserted against any Indemnitee arising out
of, in connection with, or as a result of (i) the execution or delivery of this
Agreement or any agreement or instrument contemplated hereby, the performance by
the parties hereto of their respective obligations hereunder or the consummation
of this Agreement or any other transactions contemplated hereby, (ii) any Loan
or the use of the proceeds therefrom, (iii) the failure of Administrative Agent
or the L/C Issuer seeking indemnification or of any L/C Issuer to honor a demand
for payment under any Letter of Credit or guaranty thereof as a result of any
act or omission, whether rightful or wrongful, of any present or future de jure
or de facto government or Governmental Authority, in each case other than to the
extent solely as a result of the gross negligence or willful misconduct of
Administrative Agent or the L/C Issuer (as finally determined by a court of
competent jurisdiction), (iv) any actual or alleged presence or release of
Hazardous Materials on or from any property owned or operated by Borrower or any
of its Subsidiaries, or any Environmental Liability related in any way to
Borrower or any of its Subsidiaries, or (v) any actual or prospective claim,
litigation, investigation or proceeding relating to any of the foregoing,
whether based on contract, tort or any other theory and regardless of whether
any Indemnitee is a party thereto; PROVIDED, that such indemnity shall not, as
to any Indemnitee, be available to the extent that such losses, claims, damages,
liabilities or related expenses are determined by a court of competent
jurisdiction by final and nonappealable judgment to have resulted from the gross
negligence or willful misconduct of such Indemnitee.
(c) To the extent that Borrower fails to pay any amount
required to be paid by it to Administrative Agent under paragraph (a) or (b) of
this Section, each Lender severally agrees to pay to Administrative Agent and
Collateral Agent such Lender's Applicable Percentage (determined as of the time
that the applicable unreimbursed expense or indemnity payment is sought) of such
unpaid amount; PROVIDED, that the unreimbursed expense or indemnified loss,
63
[Participation and Loan and Security Agreement]
claim, damage, liability or related expense, as the case may be, was incurred by
or asserted against Administrative Agent in its capacity as such.
(d) To the extent permitted by Applicable Law, Borrower shall
not assert, and hereby waives, any claim against any Indemnitee, on any theory
of liability, for special, indirect, consequential or punitive damages (as
opposed to direct or actual damages) arising out of, in connection with, or as a
result of, this Agreement or any agreement or instrument contemplated hereby,
the Transactions, any Loan, any Letter of Credit or the use of the proceeds
thereof.
(e) All amounts due under this Section shall be payable
promptly after written demand therefor.
(f) The indemnitees herein in this Section10.09 set forth are
in addition to the obligations of Borrower to pay indemnification on account of
Taxes and Other Taxes, as provided in Section 2.13 hereof.
SECTION 10.10 SUCCESSORS AND ASSIGNS.
(a) The provisions of this Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns permitted hereby, except that Borrower may not assign or otherwise
transfer any of its rights or obligations hereunder without the prior written
consent of each Lender (and any attempted assignment or transfer by Borrower
without such consent shall be null and void). Nothing in this Agreement,
expressed or implied, shall be construed to confer upon any Person (other than
the parties hereto, their respective successors and assigns permitted hereby
and, to the extent expressly contemplated hereby, the Related Parties of each of
Administrative Agent, Collateral Agent and Lenders) any legal or equitable
right, remedy or claim under or by reason of this Agreement.
(b) Any Lender may assign to one or more assignees all or a
portion of its rights and obligations under this Agreement (including all or a
portion of its Commitment and the Loans at the time owing to it); PROVIDED, that
(i) except in the case of an assignment to a Lender or a Lender Affiliate, each
of Borrower and Administrative Agent must give its prior written consent to such
assignment (which consent shall not be unreasonably withheld), (ii) except in
the case of an assignment to a Lender or a Lender Affiliate or an assignment of
the entire remaining amount of the assigning Lender's Commitment, the amount of
the Commitment of the assigning Lender subject to each such assignment
(determined as of the date the Assignment and Acceptance with respect to such
assignment is delivered to Administrative Agent) shall not be less than
$1,000,000.00 and the amount of the assigning Lender's Commitment shall not be
less than $1,000,000.00 after the effectiveness of such assignments, unless each
of Borrower and Administrative Agent otherwise consent, (iii) each partial
assignment shall be made as an assignment of a proportionate part of all the
assigning Lender's rights and obligations under this Agreement, and (iv) the
parties to each assignment shall execute and deliver to Administrative Agent an
Assignment and Acceptance, together with a processing and recordation fee of
$3,500.00; PROVIDED, FURTHER, that any consent of Borrower otherwise required
under this paragraph shall not be required if an Event of Default has occurred
and is continuing. Upon acceptance and recording pursuant to paragraph (d) of
this Section, from and after the effective date specified in each Assignment and
Acceptance, the assignee thereunder
64
[Participation and Loan and Security Agreement]
shall be a party hereto and, to the extent of the interest assigned by such
Assignment and Acceptance, have the rights and obligations of a Lender under
this Agreement, and the assigning Lender thereunder shall, to the extent of the
interest assigned by such Assignment and Acceptance, be released from its
obligations under this Agreement (and, in the case of an Assignment and
Acceptance covering all of the assigning Lender's rights and obligations under
this Agreement, such Lender shall cease to be a party hereto but shall continue
to be entitled to the benefits of Sections 2.11, 2.12, 2.13 and 10.09 hereof),
PROVIDED, HOWEVER, no assignee shall be entitled to receive any greater payment
under Section 2.11, 2.13 or 10.09(b) hereof than the assigning Lender would have
been entitled to receive with respect to the interest assigned to such assignee,
unless the assignment to such assignee is made with Borrower's prior written
consent, in which Borrower expressly waives such limitation. Any assignment or
transfer by a Lender of rights or obligations under this Agreement that does not
comply with this paragraph shall be treated for purposes of this Agreement as a
sale by such Lender of a participation in such rights and obligations in
accordance with paragraph (e) of this Section.
(c) Administrative Agent, acting for this purpose as an agent
of Borrower, shall maintain at one of its offices in The City of New York a copy
of each Assignment and Acceptance delivered to it and a register for the
recordation of the names and addresses of Lenders, and the Commitment of, and
principal amount of the Loans owing to, each Lender pursuant to the terms hereof
from time to time (the "REGISTER"). The entries in the Register shall be
conclusive, and Borrower, Administrative Agent and Lenders may treat each Person
whose name is recorded in the Register pursuant to the terms hereof as a Lender
hereunder for all purposes of this Agreement, notwithstanding notice to the
contrary.
(d) Upon its receipt of a duly completed Assignment and
Acceptance executed by an assigning Lender and an assignee, the processing and
recordation fee referred to in paragraph (b) of this Section and any written
consent to such assignment required by paragraph (b) of this Section,
Administrative Agent shall accept such Assignment and Acceptance and record the
information contained therein in the Register. No assignment shall be effective
for purposes of this Agreement unless it has been recorded in the Register as
provided in this paragraph.
(e) Any Lender may, without the consent of Borrower or
Administrative Agent, sell participations to one or more banks or other entities
(a "PARTICIPANT") in all or a portion of such Lender's rights and obligations
under this Agreement (including all or a portion of its Commitment and the Loans
owing to it); PROVIDED, that (i) such Lender's obligations under this Agreement
shall remain unchanged, (ii) such Lender shall remain solely responsible to the
other parties hereto for the performance of such obligations, and (iii)
Borrower, Administrative Agent and the other Lenders shall continue to deal
solely and directly with such Lender in connection with such Lender's rights and
obligations under this Agreement. Any agreement or instrument pursuant to which
a Lender sells such a participation shall provide that such Lender shall retain
the sole right to enforce this Agreement and to approve any amendment,
modification or waiver of any provision of this Agreement; PROVIDED, that such
agreement or instrument may provide that such Lender will not, without the
consent of the Participant, agree to any amendment, modification or waiver
described in the first proviso to Section 10.08(b) hereof that affects such
Participant. Subject to paragraph (f) of this Section, Borrower agrees that each
Participant shall be entitled to the benefits of Sections 2.11, 2.12 and 2.13
hereof to the same
65
[Participation and Loan and Security Agreement]
extent as if it were a Lender and had acquired its interest by assignment
pursuant to paragraph (b) of this Section.
(f) A Participant shall not be entitled to receive any greater
payment under Section 2.11 or 2.13 hereof than the applicable Lender would have
been entitled to receive with respect to the participation sold to such
Participant, unless the sale of the participation to such Participant is made
with Borrower's prior written consent, in which Borrower expressly waives such
limitation. A Participant that would be a Foreign Lender if it were a Lender
shall not be entitled to the benefits of Section 2.13 unless Borrower is
notified of the participation sold to such Participant and such Participant
agrees, for the benefit of Borrower, to comply with Section 2.13(d) as though it
were a Lender. So long as a Participant agrees, such Participant shall be bound
by Section 2.16 as if it were a Lender in each case thereunder.
(g) Any Lender may at any time pledge or assign a security
interest in all or any portion of its rights under this Agreement to secure
obligations of such Lender, including any such pledge or assignment to a Federal
Reserve Bank, and this Section shall not apply to any such pledge or assignment
of a security interest; PROVIDED, that no such pledge or assignment of a
security interest shall release a Lender from any of its obligations hereunder
or substitute any such assignee for such Lender as a party hereto.
SECTION 10.11 SURVIVAL. All covenants, agreements, representations and
warranties made by Borrower herein and in the certificates or other instruments
delivered in connection with or pursuant to this Agreement shall be considered
to have been relied upon by the other parties hereto and shall survive the
execution and delivery of this Agreement and the making of any Loans, regardless
of any investigation made by any such other party or on its behalf and
notwithstanding that Administrative Agent or any Lender may have had notice or
knowledge of any Default or incorrect representation or warranty at the time any
credit is extended hereunder, and shall continue in full force and effect as
long as the principal of or any accrued interest on any Loan or any fee or any
other amount payable under this Agreement is outstanding and unpaid and so long
as the Commitments have not expired or terminated. The provisions of Sections
2.11, 2.12, 2.13 and 10.09 and Article IX hereof shall survive and remain in
full force and effect regardless of the consummation of the transactions
contemplated hereby, the repayment of the Loans, the expiration or termination
of the Commitments or the termination of this Agreement or any provision hereof.
SECTION 10.12 COUNTERPARTS; INTEGRATION; EFFECTIVENESS. This Agreement
may be executed in counterparts (and by different parties hereto on different
counterparts), each of which shall constitute an original, but all of which when
taken together shall constitute a single contract. This Agreement and any
separate letter agreements with respect to fees payable to Administrative Agent
constitute the entire contract among the parties relating to the subject matter
hereof and supersede any and all previous agreements and understandings, oral or
written, relating to the subject matter hereof. Except as provided in Section
5.01 hereof, this Agreement shall become effective when it shall have been
executed by Administrative Agent and when Administrative Agent shall have
received counterparts hereof which, when taken together, bear the signatures of
each of the other parties hereto, and thereafter shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and
assigns. Delivery of an
66
[Participation and Loan and Security Agreement]
executed counterpart of a signature page of this Agreement by telecopy shall be
effective as delivery of a manually executed counterpart of this Agreement.
SECTION 10.13 SEVERABILITY. Any provision of this Agreement held to be
invalid, illegal or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability without affecting the validity, legality and enforceability of
the remaining provisions hereof; and the invalidity of a particular provision in
a particular jurisdiction shall not invalidate such provision in any other
jurisdiction.
SECTION 10.14 RIGHT OF SET-OFF. If an Event of Default shall have
occurred and be continuing, each Lender is hereby authorized at any time and
from time to time, to the fullest extent permitted by law, to set off and apply
any and all deposits (general or special, time or demand, provisional or final)
at any time held and other indebtedness at any time owing by such Lender to or
for the credit or the account of Borrower against any of and all the obligations
of Borrower now or hereafter existing under this Agreement held by such Lender,
irrespective of whether or not such Lender shall have made any demand under this
Agreement and although such obligations may be unmatured. The rights of each
Lender under this Section are in addition to other rights and remedies
(including other rights of set-off) which such Lender may have.
SECTION 10.15 GOVERNING LAW; JURISDICTION; CONSENT TO SERVICE OF
PROCESS.
(a) This Agreement shall be construed in accordance with and
governed by the law of the State of New York.
(b) Borrower hereby irrevocably and unconditionally submits,
for itself and its property, to the nonexclusive jurisdiction of the Supreme
Court of the State of New York sitting in New York County and of the United
States District Court of the Southern District of New York, and any appellate
court from any thereof, in any action or proceeding arising out of or relating
to this Agreement, or for recognition or enforcement of any judgment, and each
of the parties hereto hereby irrevocably and unconditionally agrees that all
claims in respect of any such action or proceeding may be heard and determined
in such New York State or, to the extent permitted by law, in such Federal
court. Each of the parties hereto agrees that a final judgment in any such
action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
Nothing in this Agreement shall affect any right that Administrative Agent or
any Lender may otherwise have to bring any action or proceeding relating to this
Agreement against Borrower or its properties in the courts of any jurisdiction.
(c) Borrower hereby irrevocably and unconditionally waives, to
the fullest extent it may legally and effectively do so, any objection which it
may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement in any court referred to
in paragraph (b) of this Section. Each of the parties hereto hereby irrevocably
waives, to the fullest extent permitted by law, the defense of an inconvenient
forum to the maintenance of such action or proceeding in any such court.
67
[Participation and Loan and Security Agreement]
(d) Each party to this Agreement irrevocably consents to
service of process in the manner provided for notices in Section 10.01 hereof.
Nothing in this Agreement will affect the right of any party to this Agreement
to serve process in any other manner permitted by law.
SECTION 10.16 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL
BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER
BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES
THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT
AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY,
AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
SECTION 10.17 HEADINGS. Article and Section headings and the Table of
Contents used herein are for convenience of reference only, are not part of this
Agreement and shall not affect the construction of, or be taken into
consideration in interpreting, this Agreement.
SECTION 10.18 CONFIDENTIALITY. Each of Administrative Agent, Collateral
Agent and Lenders agrees to maintain the confidentiality of the Information (as
defined below), except that Information may be disclosed (a) to its and its
Affiliates' directors, officers, employees and agents, including accountants,
legal counsel and other advisors (it being understood that the Persons to whom
such disclosure is made will be informed of the confidential nature of such
Information and instructed to keep such Information confidential), (b) to the
extent requested by any regulatory authority, (c) to the extent required by
Applicable Laws or regulations or by any subpoena or similar legal process, (d)
to any other party to this Agreement, (e) in connection with the exercise of any
remedies hereunder or any suit, action or proceeding relating to this Agreement
or the enforcement of rights hereunder, (f) subject to an agreement containing
provisions substantially the same as those of this Section, to any assignee of
or Participant in, or any prospective assignee of or Participant in, any of its
rights or obligations under this Agreement (PROVIDED, that, in the case of an
assignee or Participant, or prospective assignee or Participant, which is a
competitor of Borrower, the prior written consent of Borrower shall be required,
which consent shall not be unreasonably withheld, prior to disclosing the
Information thereto), (g) with the consent of Borrower or (h) to the extent such
Information (i) becomes publicly available other than as a result of a breach of
this Section or (ii) becomes available to Administrative Agent, Collateral Agent
or any Lender on a nonconfidential basis from a source other than Borrower. For
the purposes of this Section, "INFORMATION" means all information received from
Borrower relating to Borrower or its business, other than any such information
that is available to Administrative Agent, Collateral Agent or any Lender on a
nonconfidential basis prior to disclosure by Borrower; PROVIDED, that, in the
case of information received from Borrower after the date hereof, such
information is clearly identified at the time of delivery as confidential. Any
Person required to maintain the confidentiality of Information as provided in
this Section shall be considered to have complied with its obligation to do so
if such Person has
68
[Participation and Loan and Security Agreement]
exercised the same degree of care to maintain the confidentiality of such
Information as such Person would accord to its own confidential information.
SECTION 10.19 INTEREST RATE LIMITATION. Notwithstanding anything herein
to the contrary, if at any time the Interest Rate applicable to any Loan,
together with all fees, charges and other amounts which are treated as interest
on such Loan under Applicable Law (collectively the "CHARGES"), shall exceed the
maximum lawful rate (the "MAXIMUM RATE"), if any, which may be contracted for,
charged, taken, received or reserved by the Lender holding such Loan in
accordance with Applicable Law, the rate of interest payable in respect of such
Loan hereunder, together with all Charges payable in respect thereof, shall be
limited to the Maximum Rate and, to the extent lawful, the interest and Charges
that would have been payable in respect of such Loan but were not payable as a
result of the operation of this Section shall be cumulated and the interest and
Charges payable to such Lender in respect of other Loans or periods shall be
increased (but not above the Maximum Rate therefor) until such cumulated amount,
together with interest thereon at the Federal Funds Effective Rate to the date
of repayment, shall have been received by such Lender.
SECTION 10.20 FURTHER ASSURANCES. At the request of Lenders, at any
time and from time to time, at Borrower's sole expense, Borrower shall execute
and deliver or cause to be executed and delivered to Lenders, such agreements,
documents and instruments, including waivers, consents and subordination
agreements from mortgagees or other holders of security interests or Liens,
landlords or bailees, and do or cause to be done such further acts as Lenders,
in its reasonable discretion, deems necessary or desirable to create, preserve,
perfect or validate any security interest of Lenders or the priority thereof in
the Collateral and otherwise to effectuate the provisions and purposes of this
Agreement. Borrower hereby authorizes Lenders to file financing statements or
amendments against Borrower in favor of Lenders with respect to the Collateral,
without Borrower's signature, and to file as financing statements any carbon,
photographic or other reproductions of this Agreement or any financing
statements, signed by Borrower. Borrower hereby ratifies and confirms any
financing statements heretofore filed by Lenders with respect to the Collateral.
[SIGNATURE PAGE FOLLOWS]
69
[Participation and Loan and Security Agreement]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
K-SEA OPERATING PARTNERSHIP L.P.,
BY ITS GENERAL PARTNER K-SEA OLP GP, LLC,
as Borrower
By: /S/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chief Financial Officer
KEYBANK N.A., for itself as Lender, and as
Administrative Agent
By: /S/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
THE CIT GROUP/EQUIPMENT
FINANCING, INC., for itself as Lender, and as
Collateral Agent
By: /S/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Executive Vice President
70
[Participation and Loan and Security Agreement]
SCHEDULE I
VESSEL OFFICIAL NO. OLV
------ ------------ ---
DOUBLE-HULL BARGES
DBL 151 641082 $ 10,240,000
DBL 152 644380 9,728,000
CASABLANCA 901203 2,816,000
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ 3,920,000
DBL 70 540401 2,856,000
DBL 32 1087118 2,304,000
DBL 2202 287892 336,000
------------
SUBTOTAL 32,200,000
SINGLE-HULL BARGES
KTC 155 556673 720,000
KTC 90 507495 540,000
KTC 96 523233 536,000
RTC 81 643281 2,050,000
KTC 71 563364 1,656,000
KTC 60 630272 1,440,000
DBL 3201 512882 420,000
------------
SUBTOTAL 7,362,000
TUGS
REBEL 570047 3,760,000
YANKEE 571215 3,900,000
VOLUNTEER 653464 2,160,000
IRISH SEA 520685 2,380,000
VIKING 541711 2,000,000
BEAUFORT SEA 536836 1,920,000
TASMAN SEA 578207 1,760,000
ADRIATIC SEA 590232 3,200,000
CORAL SEA 550670 1,400,000
KARA SEA 556625 1,400,000
JAVA SEA 636105 2,000,000
BALTIC SEA 551908 1,200,000
BERING SEA 569665 1,140,000
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ 530,000
FALCON 598501 760,000
ODIN 647313 760,000
TAURUS 602379 860,000
------------
SUBTOTAL $ 31,130,000
DBL 105 653463 $ 500,000
SCHEDULE I
Page 1
SCHEDULE 2.01
COMMITMENTS
Bank Facility Commitment
---- -------- ----------
KEYBANK N.A. Facility A $ 5,000,000
Facility B $ 15,000,000
Facility C $ 20,000,000
Facility D $ 7,000,000
Total $ 27,000,000
------------
THE CIT GROUP/EQUIPMENT FINANCING,
INC. Facility A $ 5,000,000
Facility B $ 15,000,000
Facility C $ 0*
Facility D $ 0
Total $ 20,000,000
------------
AGGREGATE TOTAL COMMITMENTS $ 47,000,000
============
Subject to settlement purchase obligations by each Lender according to its
Applicable Percentage as provided in Section 2.02(d) hereof.
SCHEDULE 4.14
Page 1
[Participation and Loan and Security Agreement]
SCHEDULE 4.06
ENVIRONMENTAL COMPLIANCE
None
SCHEDULE 4.06
Page 1
[Participation and Loan and Security Agreement]
SCHEDULE 4.14
CHARTERS
1. Bareboat Charter, dated January __, 2004, between the Borrower and
K-Sea Transportation Inc., covering the following vessels:
DBL 32, Official No. 1087118
TAURUS, Official No. ▇▇▇▇▇▇
▇▇▇▇ SEA, Official No. 556625
FALCON, Official No. 598501
ODIN, Official No. 647313
AMERICAN 21, Official No. 517472
NEWARK BAY, Official ▇▇. ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇▇▇ ▇▇. ▇▇▇▇▇▇
KTC-20, Official No. 629670
HOUMA, Official No. 528526
AQUA, Official No. 622889
SPRING CREEK, Official No. 901204
DBL 31, Official No. 1079242
DBL 3201, Official No. 512882
2. Bareboat Charter Agreement, dated March 1, 1999, between Borrower
(as assignee of EW Holding Corp.) and Clean Water of New York, Inc., covering
the following vessel:
CASABLANCA, Official No. 901203
SCHEDULE 4.14
Page 1
[Participation and Loan and Security Agreement]
EXHIBIT A
[FORM OF]
REVOLVING LOAN NOTE
FOR VALUE RECEIVED, the undersigned K-SEA OPERATING PARTNERSHIP L.P.
("DEBTOR") promises to pay to the order of KEYBANK N.A. ("KEYBANK") as
administrative agent (in such capacity "ADMINISTRATIVE AGENT"), on behalf of
itself and THE CIT GROUP/EQUIPMENT FINANCING, INC. ("CIT"), as lenders
("LENDERS"), at such address and by such method as Administrative Agent may
designate, in lawful money of the United States of America, the lesser of: (i)
_________________________UNITED STATES DOLLARS ($_______________), or (ii) the
aggregate unpaid principal amount of all Facility [__] Loans made by Lender to
the Debtor pursuant to the Loan Agreement (defined below) and that are indicated
by entry on Schedule A attached hereto and made a part hereof as provided
herein, together with interest in like money on the principal sum remaining
unpaid from time to time from the date of this Note until due and payable
(whether as stated, by acceleration or otherwise) at a rate per annum equal to
the Interest Rate in accordance with the provisions of the Loan Agreement,
interest to be paid by the Debtor to Lender on the last day of each calendar
month; PROVIDED, that if any such day is other than a Business Day, interest
shall be paid by Debtor to Lender on the next preceding Business Day, through
the Maturity Date. Principal shall be paid on the Maturity Date; PROVIDED, that
the Note shall bear interest from the date thereof on the unpaid principal
amount thereof at the Interest Rate at all times while any amounts are
outstanding under the Note. Each such installment shall be applied first to the
payment of any unpaid interest on the principal sum and then to payment of
principal. Interest shall be calculated on the basis of actual number of days
elapsed in a 360-day year. Any amount not paid when due under this Note shall
bear late charges thereon, calculated at the Late Charge Rate, from the due date
thereof until such amount shall be paid in full. Any payment received after the
due date thereof shall be applied first to the payment of unpaid late charges,
second to the payment of any unpaid interest on said principal, and third to the
payment of principal.
This Note is the Note referred to in the Participation and Loan and
Security Agreement, dated as of January __, 2004, among the Debtor, KeyBank, as
Lender and Administrative Agent, and The CIT Group/Equipment Financing, Inc., as
Lender and Collateral Agent (herein, as the same may from time to time be
amended, supplemented or otherwise modified, called the "LOAN AGREEMENT"), is
secured as provided in the Loan Agreement, and is subject to prepayment only as
provided therein, and the holder hereof is entitled to the benefits thereof. No
failure or delay by Administrative Agent in the entry of amounts on Schedule A
hereto shall affect or abridge Debtor's obligation to pay such amounts to
Lenders.
All terms defined in the Loan Agreement shall have the same meaning
when used in this Note, unless the context shall otherwise require.
The Debtor hereby waives presentment, demand for payment, notice of
dishonor, and any and all other notices or demands in connection with the
delivery, acceptance, performance, default or enforcement of this Note and
hereby consents to any extensions of time, renewals,
EXHIBIT A
Page 1
[Participation and Loan and Security Agreement]
releases of any party to this Note, waivers or modifications that may be granted
or consented to by the holder of this Note.
Upon the occurrence of any one or more of the Events of Default
specified in the Loan Agreement, the amounts then remaining unpaid on this Note,
together with any interest accrued, may be declared to be (or, with respect to
certain Events of Default, automatically shall become) immediately due and
payable as provided therein.
In the event that any holder shall institute any action for the
enforcement or the collection of this Note, there shall be immediately due and
payable, in addition to the unpaid balance hereof, all late charges and all
costs and expenses of such action, including attorneys' fees. The Debtor,
Lenders, Collateral Agent and Administrative Agent, in any litigation relating
to or in connection with this Note in which they shall be adverse parties, waive
trial by jury, and the Debtor hereby waives the right to interpose any set-off,
counterclaim or defense of any nature or description whatsoever.
The Debtor agrees that its liabilities hereunder are absolute and
unconditional without regard to the liability of any other party and that no
delay on the part of the holder hereof in exercising any power or right
hereunder shall operate as a waiver thereof; nor shall any single or partial
exercise of any power or right hereunder preclude other or further exercise
thereof or the exercise of any other power or right. Notwithstanding the fact
that the payee of this Note is the Administrative Agent, Debtor agrees that this
Note represents the Obligations of Debtor to Lenders.
If at any time this transaction would be usurious under applicable law,
then regardless of any provision contained in the Loan Agreement, in this Note
or in any other agreement made in connection with this transaction, it is agreed
that (a) the total of all consideration which constitutes interest under
applicable law that is contracted for, charged or received upon the Loan
Agreement, this Note or any such other agreement shall under no circumstances
exceed the maximum rate of interest authorized by applicable law, if any, and
any excess shall be credited to the Debtor, and (b) if Lenders elect to
accelerate the maturity of, or if Lenders permit the Debtor to prepay the
indebtedness described in this Note, any amounts which because of such action
would constitute interest may never include more than the maximum rate of
interest authorized by applicable law and any excess interest, if any, provided
for in the Loan Agreement, in this Note or otherwise, shall be credited to the
Debtor automatically as of the date of acceleration or prepayment.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO DEBTS AND
OBLIGATIONS INCURRED AND TO BE PAID SOLELY IN SUCH JURISDICTION.
EXHIBIT A
Page 2
[Participation and Loan and Security Agreement]
Dated: January __, 2004
K-SEA OPERATING PARTNERSHIP L.P.,
BY ITS GENERAL PARTNER K-SEA OLP GP, LLC
By:
-------------------------------------
Name:
Title:
EXHIBIT A
Page 3
[Participation and Loan and Security Agreement]
SCHEDULE A
(Attached to and forming part of the Revolving Loan Note, dated __________,
200__, executed by K-Sea Operating Partnership L.P. and payable to KeyBank N.A.,
as Administrative Agent on behalf of itself and The CIT Group/Equipment
Financing, Inc.)
Amount of Date of Date of Repayment of Amount of Notation Made by
Loan Loan Interest Due Repayment (Signature)
--------------------------------------------------------------------------------------------
EXHIBIT A
Page 4
[Participation and Loan and Security Agreement]
EXHIBIT B
[FORM OF]
FACILITY D DEMAND NOTE
FOR VALUE RECEIVED, the undersigned K-SEA OPERATING PARTNERSHIP L.P.
("DEBTOR") promises to pay ON DEMAND to the order of KEYBANK N.A. ("KEYBANK"),
at such address and by such method as KeyBank may designate, in lawful money of
the United States of America, the lesser of: (i) SEVEN MILLION UNITED STATES
DOLLARS ($7,000,000.00), or (ii) the aggregate amount of all drawdowns made
under any Standby Letter of Credit issued for the account of Borrower under
Facility D established by Lenders for the benefit of the Debtor pursuant to the
Loan Agreement (defined below) and that are indicated from time to time by entry
on Schedule A attached hereto and made a part hereof as provided herein,
together with interest in like money on the principal sum remaining unpaid from
time to time from the date of this Note until paid at a rate per annum equal to
the Late Charge Rate in accordance with the provisions of the Loan Agreement,
interest to be paid by the Debtor to KeyBank also ON DEMAND; PROVIDED, that if
any such day is other than a Business Day, interest shall be paid by Debtor to
KeyBank on the next succeeding Business Day; PROVIDED, that this Note shall bear
interest from the date thereof on the unpaid principal amount thereof at the
Late Charge Rate at all times while any amounts are outstanding under this Note.
Each such installment shall be applied first to the payment of any unpaid
interest on the principal sum and then to payment of principal. Interest shall
be calculated on the basis of actual number of days elapsed in a 360-day year.
This Note is the Facility D Note referred to in the Participation and
Loan and Security Agreement, dated as of January __, 2004, among the Debtor,
KeyBank, as Lender and Administrative Agent, and The CIT Group/Equipment
Financing, Inc., as Lender and Collateral Agent (herein, as the same may from
time to time be amended, supplemented or otherwise modified, called the "LOAN
AGREEMENT"), is secured as provided in the Loan Agreement, and the holder hereof
is entitled to the benefits thereof. No failure or delay by KeyBank in the entry
of amounts on Schedule A hereto shall affect or abridge Debtor's obligation to
pay such amounts to KeyBank ON DEMAND.
All terms defined in the Loan Agreement shall have the same meaning
when used in this Note, unless the context shall otherwise require.
The Debtor hereby waives presentment, demand for payment, notice of
dishonor, and any and all other notices or demands in connection with the
delivery, acceptance, performance, default or enforcement of this Note and
hereby consents to any extensions of time, renewals, releases of any party to
this Note, waivers or modifications that may be granted or consented to by the
holder of this Note.
In the event that any holder shall institute any action for the
enforcement or the collection of this Note, there shall be immediately due and
payable, in addition to the unpaid balance hereof, all late charges and all
costs and expenses of such action, including attorneys' fees. The Debtor and
KeyBank, in any litigation relating to or in connection with this Note in which
they
EXHIBIT B
Page 1
[Participation and Loan and Security Agreement]
shall be adverse parties, waive trial by jury, and the Debtor hereby waives
the right to interpose any set-off, counterclaim or defense of any nature or
description whatsoever.
The Debtor agrees that its liabilities hereunder are absolute and
unconditional without regard to the liability of any other party and that no
delay on the part of the holder hereof in exercising any power or right
hereunder shall operate as a waiver thereof; nor shall any single or partial
exercise of any power or right hereunder preclude other or further exercise
thereof or the exercise of any other power or right.
If at any time this transaction would be usurious under applicable law,
then regardless of any provision contained in the Loan Agreement, in this Note
or in any other agreement made in connection with this transaction, it is agreed
that the total of all consideration which constitutes interest under applicable
law that is contracted for, charged or received upon the Loan Agreement, this
Note or any such other agreement shall under no circumstances exceed the maximum
rate of interest authorized by applicable law, if any, and any excess shall be
credited to the Debtor.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO DEBTS AND
OBLIGATIONS INCURRED AND TO BE PAID SOLELY IN SUCH JURISDICTION.
Dated: January __, 2004
K-SEA OPERATING PARTNERSHIP L.P.,
BY ITS GENERAL PARTNER K-SEA OLP GP, LLC
By:
-------------------------------------
Name:
Title:
EXHIBIT B
Page 2
[Participation and Loan and Security Agreement]
SCHEDULE A
(Attached to and forming part of the Facility D Demand Note, dated __________,
200_, executed by K-Sea Operating Partnership L.P. and payable to KeyBank N.A.)
Amount of Date of Date of Repayment of Amount of Notation Made by
Drawdown Drawdown Interest Due Repayment (Signature)
-----------------------------------------------------------------------------------
EXHIBIT B
Page 3
[Participation and Loan and Security Agreement]
EXHIBIT C
[FORM OF]
TERM LOAN NOTE
FOR VALUE RECEIVED, K-SEA OPERATING PARTNERSHIP L.P. ("DEBTOR")
promises to pay to the order of KEYBANK N.A. ("KEYBANK"), as administrative
agent (in such capacity, "ADMINISTRATIVE AGENT"), on behalf of itself and THE
CIT GROUP/EQUIPMENT FINANCING, INC. ("CIT"), as lenders ("LENDERS"), at such
address as Administrative Agent may designate, in lawful money of the United
States, the principal sum of ___________________ DOLLARS ($____________) in
sixty (60) monthly equal installments of $__________ each, together with
interest in like money on the principal sum remaining unpaid from time to time
from the date of this Note until due and payable (whether as stated, by
acceleration or otherwise) at a rate per annum equal to the Interest Rate in
accordance with the provisions of the Loan Agreement, as hereinafter defined,
commencing on _______, 20__, with the amount of the entire remaining principal
balance then outstanding, together with interest accrued on the unpaid principal
until payment in full of this Note due on the last installment payment,
_________, 20__. Each such installment shall be applied first to the payment of
any unpaid interest on the principal sum and then to payment of principal, if
any principal is then due. Interest shall be calculated on the basis of actual
number of days elapsed in a 360-day year. Any amount not paid when due under
this Note shall bear late charges thereon, calculated at the Late Charge Rate,
from the due date thereof until such amount shall be paid in full. Any payment
received after the maturity of any installment shall be applied first to the
payment of unpaid late charges, second to the payment of any unpaid interest,
and third to the payment of principal.
This Note is a Term Loan Note referred to in that certain Participation
and Loan and Security Agreement, dated as of January __, 2004, among Debtor, as
borrower, CIT, as Lender and Collateral Agent and KeyBank N.A., as Lender and
Administrative Agent (herein, as the same may from time to time be amended,
supplemented or otherwise modified, called the "LOAN AGREEMENT"), is secured as
provided in the Loan Agreement, and is subject to prepayment only as provided
herein, and the holder hereof is entitled to the benefits thereof.
[Prepayment provision]
Terms defined in the Loan Agreement shall have the same meaning when
used in this Note, unless the context shall otherwise require.
Debtor hereby waives presentment, demand for payment, notice of
dishonor, and any and all other notices or demands in connection with the
delivery, acceptance, performance, default or enforcement of this Note and
hereby consents to any extensions of time, renewals, releases of any party to
this Note, waivers or modifications that may be granted or consented to by the
holder of this Note.
Upon the occurrence of any one or more of the Events of Default
specified in the Loan Agreement, the amounts then remaining unpaid on this Note,
together with any interest accrued, may be declared to be (or, with respect to
certain Events of Default, automatically shall become) immediately due and
payable as provided therein.
EXHIBIT C
Page 1
[Participation and Loan and Security Agreement]
In the event that any holder shall institute any action for the
enforcement or the collection of this Note, there shall be immediately due and
payable, in addition to the unpaid balance hereof, all late charges and all
costs and expenses of such action, including attorneys' fees. Debtor, Lenders,
Collateral Agent and Administrative Agent, in any litigation relating to or in
connection with this Note in which they shall be adverse parties, waive trial by
jury, and Debtor hereby waives the right to interpose any set-off, counterclaim
or defense (except for the defense of payment made) of any nature or description
whatsoever.
Debtor agrees that its liabilities hereunder are absolute and
unconditional without regard to the liability of any other party and that no
delay on the part of the holder hereof in exercising any power or right
hereunder shall operate as a waiver thereof; nor shall any single or partial
exercise of any power or right hereunder preclude other or further exercise
thereof or the exercise of any other power or right. Notwithstanding the fact
that the payee of this Note is the Administrative Agent, Debtor agrees that this
Note represents the Obligations of Debtor to Lenders.
If at any time this transaction would be deemed usurious under
applicable law, then regardless of any provision contained in the Loan
Agreement, in this Note or in any other agreement made in connection with this
transaction, it is agreed that (a) the total of all consideration which
constitutes interest under applicable law that is contracted for, charged or
received upon the Loan Agreement, this Note or any such other agreement shall
under no circumstances exceed the maximum rate of interest authorized by
applicable law, if any, and any excess shall be credited to the Debtor and (b)
if Lenders elect to accelerate the maturity of, or if Lenders permit Debtor to
prepay any Indebtedness described in this Note, any amounts which because of
such action would constitute interest may never include more than the maximum
rate of interest authorized by applicable law and any excess interest, if any,
provided for in the Loan Agreement, in this Note or otherwise, shall be credited
to Debtor automatically as of the date of acceleration or prepayment.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
Dated: ____________, 20__
K-SEA OPERATING PARTNERSHIP L.P.,
BY ITS GENERAL PARTNER K-SEA OLP GP, LLC
By:
-------------------------------------
Name:
Title:
EXHIBIT C
Page 2
[Participation and Loan and Security Agreement]
EXHIBIT D
[FORM OF]
ASSIGNMENT AND ACCEPTANCE
Reference is made to the Participation and Loan and Security Agreement,
dated as of January __, 2004 (as amended and in effect on the date hereof, the
"AGREEMENT"), among K-Sea Operating Partnership L.P., KeyBank N.A., for itself
as Lender and as Administrative Agent for Lenders, and The CIT Group/Equipment
Financing, Inc., for itself as Lender and as Collateral Agent for Lenders. Terms
defined in the Agreement are used herein with the same meanings.
The Assignor named below hereby sells and assigns, without recourse, to
the Assignee named below, and the Assignee hereby purchases and assumes, without
recourse, from the Assignor, effective as of the Assignment Date set forth on
the reverse hereof, the interests set forth below (the "ASSIGNED INTEREST") in
the Assignor's rights and obligations under the Agreement, including, without
limitation, the interests set forth below in the Commitment of the Assignor on
the Assignment Date and Loans owing to the Assignor which are outstanding on the
Assignment Date, excluding accrued interest and fees to and excluding the
Assignment Date. The Assignee hereby acknowledges receipt of a copy of the
Agreement. From and after the Assignment Date (i) the Assignee shall be a party
to and be bound by the provisions of the Agreement and, to the extent of the
Assigned Interest, have the rights and obligations of a Lender thereunder, and
(ii) the Assignor shall, to the extent of the Assigned Interest, relinquish its
rights and be released from its obligations under the Agreement.
If the Assignee is a Foreign Lender, this Assignment and Acceptance is
being delivered to Administrative Agent together with any documentation required
to be delivered by the Assignee pursuant to Section 2.13(d) of the Agreement,
duly completed and executed by the Assignee. The [Assignee/Assignor] shall pay
the fee payable to Administrative Agent pursuant to Section 10.10(b) of the
Agreement.
This Assignment and Acceptance shall be governed by and construed in
accordance with the law of the State of New York.
Date of Assignment:
Legal Name of Assignor:
Legal Name of Assignee:
Assignee's Address for Notices:
Effective Date of Assignment ("ASSIGNMENT DATE")(1):
----------
(1) Must be at least five Business Days after execution hereof by all required
parties.
EXHIBIT D
Page 1
[Participation and Loan and Security Agreement]
Percentage Assigned of
Facility/Commitment (set
forth, to at least 8 decimals, as
a percentage of the Facility
Principal Amount Assigned and the aggregate
(and identifying information Commitments of all Lenders
Facility as to individual Loans) thereunder
-------- ---------------------------- ---------------------------------
Commitment Assigned: $____________________%
Facility A:
Facility B:
The terms set forth above and on the reverse side hereof are hereby
agreed to:
[NAME OF ASSIGNOR], as Assignor
By:
-----------------------------------
Name:
Title:
[NAME OF ASSIGNEE], as Assignee
By:
-----------------------------------
Name:
Title:
The undersigned hereby consent to the within assignment:(2)
K-SEA OPERATING PARTNERSHIP L.P., KEYBANK N.A., as Administrative Agent,
BY ITS GENERAL PARTNER K-SEA OLP GP, LLC
By: By:
------------------------------------- ----------------------------------
Name: Name:
Title: Title:
----------
(2) Consents to be included to the extent required by Section 10.10(b) of the
Loan Agreement.
EXHIBIT F-1
Page 2
[Participation and Loan and Security Agreement]
EXHIBIT E
[FORM OF]
OPINION OF BORROWER'S COUNSEL
EXHIBIT E
Page 1
[Participation and Loan and Security Agreement]
EXHIBIT F-1
[FORM OF]
STANDBY LETTER OF CREDIT
A KEYCORP BANK
KEYBANK NATIONAL ASSOCIATION SWIFT: ▇▇▇▇▇▇▇▇▇▇▇
STANDBY LETTER OF CREDIT SERVICES PHONE: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ FAX: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
▇▇▇
KeyBank National Association Irrevocable Standby Letter of Credit No. SXXXXXX
Date of Issuance: _____________
Beneficiary Applicant
United States of America, K-SEA OPERATING PARTNERSHIP L.P.
represented by the Secretary of Transportation, ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
acting by and through ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
The Maritime Administrator (the "Secretary")
Maritime Administration
U.S. Department of Transportation
▇▇▇ ▇▇▇▇▇▇▇ ▇▇. ▇.▇
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Amount: [USD____________]
Expiry: [ONE YEAR FROM ISSUANCE]
Gentlemen,
By order of and for account of K-Sea Operating Partnership L.P., we
hereby establish our Irrevocable Standby Letter of Credit No. SXXXXXX for an
aggregate amount not exceeding Seven Million and 00/100 United States Dollars
and we agree to timely honor your written demand hereunder upon presentation of
your draft(s) at sight drawn on [KEYBANK TO COMPLETE] accompanied by the
following document(s):
1. The original Letter of Credit and amendments, if any, for
endorsement.
2. Beneficiary's statement signed by one of its officials or
employees in the attached form.
We hereby undertake to notify you by telecommunication to (202)
366-5101, with written confirmation within three Business Days, of any
presentment that does not comply with the requirements of this Letter of Credit.
EXHIBIT F-1
Page 1
[Participation and Loan and Security Agreement]
It is a condition of this Letter of Credit that the validity shall
automatically be extended, without amendment, for additional periods of one year
from the present and each future expiration date, unless we notify you in
writing, by registered mail/return receipt requested, or courier, in each case
with receipt confirmed at least 30 days prior to the then current expiry date
that we have elected not to renew this Letter of Credit for such additional
year. Upon receipt of such notice, you may draw hereunder up to the full amount
then available solely by presentation of your sight draft and without the
submission of the beneficiary statement drawn on us accompanied by the original
letter of credit and all amendments thereto.
We hereby engage with you that drafts drawn under and in compliance
with the terms of this Letter of Credit will be duly honored on due presentation
and delivery of documents as specified to KeyBank National Association, Standby
Letter of Credit Processing and Service Center, [KEYBANK TO PROVIDE INFORMATION
FOR DELIVERY BY COURIER WITH RETURN RECEIPT OR FOR PRESENTMENT IN PERSON] Mail
Code: OH-01-51-0435), ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇., ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ on or before
_______________, or any automatically extended expiration date.
Except as otherwise provided herein, this Letter of Credit shall be
governed by and construed in accordance with International Standby Practices,
Publication No. 590 of the International Chamber of Commerce ("ISP98"). As to
matters not covered by ISP98 and to the extent not inconsistent with ISP98 or
made inapplicable by this Letter of Credit, this Letter of Credit shall be
governed by the laws of the State of New York, including the Uniform Commercial
Code as in effect in the State of New York.
------------------------------------- ---------------------------------------
Authorized Signature Authorized Signature
EXHIBIT F-1
Page 2
[Participation and Loan and Security Agreement]
FORM OF BENEFICIARY STATEMENT
We hereby certify that K-Sea Operating Partnership L.P. is in default
under that certain Restated Security Agreement, Contract MA-13781, dated
____________, by and between MARAD, K-Sea Operating Partnership L.P. and K-Sea
Transportation Partners L.P., and we demand payment in the amount of USD
___________. Payment should be remitted via Fedwire in accordance with the
following instructions:
Receiver ABA No. ▇▇▇ ▇▇▇ ▇▇▇
Bank Name Treas NYC
Account Name Maritime Administration
Account Number ▇▇▇▇▇▇▇▇
By:
----------------------------------
Name:
Date Issued:
------------------------
EXHIBIT F-1
Page 3
[Participation and Loan and Security Agreement]
EXHIBIT F-2
[FORM OF]
APPLICATION FOR DOCUMENTARY LETTER OF CREDIT
EXHIBIT F-2
Page 1
[Participation and Loan and Security Agreement]
EXHIBIT G
[FORM OF]
LOAN REQUEST
(REVOLVING LOAN)
KeyBank N.A., as Administrative Agent
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Re: Participation and Loan and Security Agreement, dated as of
January __, 2004 (the "LOAN AGREEMENT") by and among K-Sea
Operating Partnership L.P. ("BORROWER"), The CIT Group/Equipment
Financing, Inc. ("CIT"), for itself as Lender, and as collateral
agent for Lenders (in such capacity "COLLATERAL AGENT") and
KeyBank N.A. ("KEYBANK"), for itself as Lender, and as
administrative agent for Lenders (in such capacity
"ADMINISTRATIVE AGENT")
Ladies and Gentlemen:
This Loan Request is delivered to you pursuant to Section 2.04 of the
Loan Agreement. Capitalized terms used but not defined herein shall have the
meanings ascribed to such terms in the Loan Agreement.
Borrower hereby irrevocably requests that a [Facility A Loan/Facility B
Loan] in the principal amount of $____________ (the "LOAN") on ________, 200_
(the "LOAN DATE"), which is a Business Day. The purpose of such Loan [if
Facility B Loan] is _______________. [For Facility A Loans or Facility B Loans
requested for a date other than the first day of a LIBOR Interest Period, add:
Borrower requests that Lenders make such Loan under Facility C from the Loan
Date to [the first Business Day of the next succeeding calendar month], at which
time Borrower irrevocably requests and directs Lenders to refund the Facility C
Loan with the proceeds of a Facility A Loan/Facility B Loan.]
This Loan will not cause the amounts outstanding under Facility [__] to
exceed the Maximum Amount.
Borrower hereby certifies that no Default or Event of Default has
occurred and is continuing. Borrower represents and warrants that as of the Loan
Date, all statements set forth in Article IV of the Loan Agreement are true and
correct in all material respects. Borrower agrees that if prior to the Loan Date
any matter certified to herein by it will not be true and correct at such time
as if then made, it will immediately so notify Lenders and the Loan will not be
made on the Loan Date unless Lenders otherwise agree.
Please wire transfer the proceeds of the Loan to the account of the
following person at the financial institution indicated below:
EXHIBIT G
Page 1
[Participation and Loan and Security Agreement]
Amount to be Name, Address, etc.
Transferred Person to be Paid Account No. of Transferee
----------- ----------------- ----------- -------------
Borrower has caused this Loan Request to be executed and delivered, and
the certification and warranties contained herein to be made, by its duly
authorized officer this ____ date of ____________, 200__.
K-SEA OPERATING PARTNERSHIP L.P.,
BY ITS GENERAL PARTNER K-SEA OLP GP, LLC
By:
-------------------------------------
Name:
Title:
EXHIBIT G
Page 2
[Participation and Loan and Security Agreement]
EXHIBIT H
[FORM OF]
REQUEST
(DOCUMENTARY LETTER OF CREDIT)
KeyBank N.A.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Re: Participation and Loan and Security Agreement, dated as of
January __, 2004 (the "LOAN AGREEMENT"), by and among K-Sea
Operating Partnership L.P. ("BORROWER"), The CIT Group/Equipment
Financing, Inc. ("CIT"), for itself as Lender, and as collateral
agent for Lenders (in such capacity "COLLATERAL AGENT") and
KeyBank N.A. ("KEYBANK"), for itself as Lender, and as
administrative agent for Lenders (in such capacity
"ADMINISTRATIVE AGENT")
Ladies and Gentlemen:
This Loan Request is delivered to you pursuant to Section 2.04 of the
Loan Agreement. Capitalized terms used but not defined herein shall have the
meanings ascribed to such terms in the Loan Agreement.
Borrower hereby irrevocably requests that a Letter of Credit be issued
in the face amount of $____________ (the "LETTER OF CREDIT") on ________, 200_
(the "LETTER OF CREDIT ISSUANCE DATE"), which is a Business Day. We request that
the expiration date of the Letter of Credit be ______________, 200__ [For
Standby Letters of Credit only, add: subject to an evergreen clause providing
for successive one year renewals, not extending, in any event, beyond December
__, 2006.] Attached hereto as Exhibit A is a form of the Letter of Credit.
The issuance of the requested Letter of Credit will not cause the
Letter of Credit Obligations to exceed the Maximum Amount. Accompanying this
notice is a duly executed and properly completed Letter of Credit Agreement in
the form required by Administrative Agent, together with the payment of any fees
due and payable pursuant to Section 2.10 of the Loan Agreement.
Borrower hereby certifies that no Default or Event of Default has
occurred and is continuing. Borrower represents and warrants that as of the
Letter of Credit Issuance Date, all statements set forth in Article IV of the
Loan Agreement are true and correct in all material respects. Borrower agrees
that if prior to the Letter of Credit Issuance Date any matter certified to
herein by it will not be true and correct at such time as if then made, it will
immediately so notify L/C Issuer and the Letter of Credit will not be issued on
the Letter of Credit Issuance Date unless L/C Issuer otherwise agrees.
EXHIBIT H
Page 1
[Participation and Loan and Security Agreement]
Borrower has caused this Request to be executed and delivered, and the
certification and warranties contained herein to be made, by its duly authorized
officer this ____ date of ____________, 200__.
K-SEA OPERATING PARTNERSHIP L.P.,
BY ITS GENERAL PARTNER K-SEA OLP GP, LLC
By:
------------------------------------
Name:
Title:
EXHIBIT H
Page 2
[Participation and Loan and Security Agreement]
EXHIBIT I
[FORM OF]
SUBSIDIARY GUARANTY
THIS GUARANTY is made as of the ____ day of January, 2004, by
_______________________, a _________________ with an office and principal place
of business at _____________________________________________ (the "GUARANTOR"),
to THE CIT GROUP/EQUIPMENT FINANCING, INC. ("CIT"), a Delaware corporation with
an office at ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ and KEYBANK N.A.
("KEYBANK"), a national banking association with an office at ▇▇▇ ▇▇▇▇▇ ▇▇▇.,
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ ("KEYBANK" and, together with "CIT," the "LENDERS" and each,
a "LENDER").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, K-SEA OPERATING PARTNERSHIP L.P. ("BORROWER"), as borrower,
and CIT and KeyBank, as lenders, are parties to a Participation and Loan and
Security Agreement, dated as of January __, 2004, a copy of which is annexed
hereto as Annex I and made a part hereof (said Participation and Loan and
Security Agreement, as the same may be amended, supplemented or otherwise
modified from time to time, being herein called "LOAN AGREEMENT"), pursuant to
which the Lenders have agreed to make loans (the "LOANS") to the Borrower in
order to provide funds for working capital to support Borrower's operations and
to enable Borrower to acquire vessels from time to time and to provide for
documentary letters of credit and standby letters of credit ("LETTERS OF
CREDIT") for the account of Borrower in an aggregate amount for all such
facilities not to exceed $47,000,000.00 pursuant to the terms of the Loan
Agreement; and
WHEREAS, each Loan and the reimbursement obligations of each Letter of
Credit may be evidenced by a secured promissory note (the "NOTE") dated the date
of such Loan and in the forms annexed as Exhibits A and B to the Loan Agreement,
payable in accordance with the provisions of Section 2.03 of the Loan Agreement,
including provisions therein set forth for payment of interest at rates set
forth in the Loan Agreement, all Notes and Letter of Credit Obligations in the
aggregate principal amount not to exceed $47,000,000.00 (Forty-Seven Million and
No Hundredths United States Dollars) or any lesser amount determined pursuant to
provisions of the Loan Agreement from time to time; and
WHEREAS, it is a condition precedent under the Loan Agreement, INTER
ALIA, that the Guarantor deliver to Lenders a guaranty in favor of Lenders with
respect to the faithful performance by the Borrower of the Loan Agreement and
due and punctual payment of all amounts payable from time to time by the
Borrower to Lenders under the terms of the Loan Agreement, any Notes, and the
other Loan Documents (as defined in the Loan Agreement); and
WHEREAS, the Guarantor is a Subsidiary (as defined in the Loan
Agreement) of the Borrower and has determined that it is in the corporate
interests of the Guarantor that this Guaranty be given.
EXHIBIT I
Page 1
[Participation and Loan and Security Agreement]
NOW, THEREFORE, in consideration of the premises, and other good and
valuable consideration, the receipt and adequacy of which is hereby
acknowledged, and to induce Lenders to enter into the Loan Agreement and other
Loan Documents, the Guarantor agrees as follows:
1. All capitalized terms defined in or by reference to the Loan
Agreement shall have the meaning therein in the Loan Agreement provided.
2. The Guarantor hereby absolutely, irrevocably and unconditionally
jointly and severally guaranties to Lenders, their successors and assigns, as
primary obligor and not merely as surety, the due and faithful payment and
performance by the Borrower of all the terms, covenants and conditions of the
Loan Agreement, any Notes, and the other Loan Documents, as the same may
hereafter with the consent of Lenders be amended and supplemented. Without
prejudice to the generality of the foregoing, the following are hereby
guaranteed by the Guarantor:
(i) the prompt payment when due (whether at the stated
maturity or by acceleration or otherwise) of all sums, indebtedness,
obligations and liabilities of the Borrower to Lenders, whether now
existing or hereafter incurred, arising out of or in connection with
any Note or the Loan Agreement, including the Obligations set forth
therein;
(ii) any and all expenses which may be paid or incurred by
Lenders in collecting any or all of the obligations and/or in enforcing
any of its rights hereunder; and
(iii) the due and punctual performance and observance,
strictly in accordance with the terms of the Loan Agreement, of each of
the terms, conditions, covenants, agreements and indemnities of the
Borrower under the Loan Agreement.
3. If Borrower defaults in the payment of any or all sums when due
to Lenders, the Guarantor as primary obligor shall forthwith pay to Lenders or
their order the full amount due and payable (by acceleration or otherwise) in
the manner required of the Borrower by the Loan Agreement. All such payments
shall be made without deductions, withholdings, or set-off, and shall be final
and free from any claims or counterclaim of any Guarantor or Borrower against
Lenders.
4. The obligations of the Guarantor under this Guaranty shall be
continuing, absolute and unconditional under any and all circumstances and shall
be paid by the Guarantor regardless of (a) validity, regularity, legality or
enforceability of the Loan Agreement, any Notes, any of the Obligations or any
collateral security or other guaranty therefor at any time or from time to time
held by Lenders; (b) any defense, offset or counterclaim which may at any time
be available to or be asserted by Borrower or any Guarantor against Lenders; or
(c) any other event or circumstance whatsoever which may constitute, or might be
construed to constitute, an equitable or legal discharge or a surety or a
guarantor, it being the purpose and intent of the Guarantor that this Guaranty
and the Guarantor's obligations hereunder shall remain in full force and effect
and be binding upon the Guarantor and its successors until the obligations shall
have been satisfied by payment in full.
EXHIBIT I
Page 2
[Participation and Loan and Security Agreement]
5. The Guarantor waives diligence, presentment, protest, demand for
payment and/or notice of default or nonpayment to or upon Borrower or any
Guarantor with respect to the Obligations. The Guarantor waives any right to
require any Lender to marshal assets in favor of Borrower or Guarantor or any
other Person.
6. The Guarantor consents that, without the necessity of any
reservation of rights against it and without notice to or further assent by it
(a) the obligations and liabilities of the Borrower and any other party or
parties for or upon any of the Obligations, or any collateral security or
guaranty therefor or right of off-set with respect thereto, may, from time to
time in whole or in part, be rescinded, renewed, extended, settled, surrendered,
modified, accelerated, subordinated, waived, compromised, supplemented,
terminated, sold, exchanged or released by Lenders; (b) any and all collateral
security at any time held by Lenders for payment of the Obligations may be sold,
exchanged or released, all without notice to or further assent by the Guarantor,
who will remain bound hereunder, notwithstanding any such rescission, renewal,
extension, settlement, surrender, modification, acceleration, subordination,
waiver, compromise, supplement, termination, sale or exchange or release; and
(c) the covenants and agreements of Borrower contained in the Loan Agreement may
at any time be amended, modified, supplemented or terminated in whole or in
part; all as Lenders may deem advisable from time to time without impairing,
abridging, releasing or affecting the obligations of the Guarantor hereunder.
7. No change in the name, capital stock, or constitution of Borrower
shall in any way affect the liability of the Guarantor under this Guaranty, and
all the indebtedness owed by Borrower pursuant to the terms of the Loan
Agreement and any Notes, shall be guarantied by this Guaranty notwithstanding
that the incurring of such indebtedness shall be in excess of the power of
Borrower or shall be in any way irregular, defective, or informal.
8. The Guarantor shall not be entitled to prorate its obligations
herein set forth or to be subrogated to any of the rights of either Lender
against any other guarantor or Borrower or any collateral security held by
Lenders for the payment of the obligations until the elapse of one year and one
day following the payment in full of all amounts owing by the Borrower to
Lenders and the absence as of such anniversary plus one day of any assertion by
any person of a right to reversal or setting aside of any such payment or part
thereof. The Guarantor expressly waives any and all rights of subrogation,
reimbursement, indemnity, exoneration, contribution and any other claim which it
may now or hereafter have against Borrower or any other Person directly or
contingently liable for the obligations guarantied hereunder, or against or with
respect to the Borrower's property (including, without limitation, property
collateralizing the Obligations), arising from the existence or performance of
this Guaranty.
9. All rights and remedies of Lenders hereunder and under the Loan
Agreement shall be cumulative and may be exercised singly or concurrently.
10. The Guarantor hereby irrevocably and unconditionally waives: (a)
any and all notice of the acceptance of this Guaranty; (b) any and all notice of
the creation, renewal, extension or accrual of any of the Obligations and notice
of or proof of the reliance by Lenders upon this Guaranty; (c) all notices which
may be required by statute, rule of law or otherwise to preserve any rights
against the Guarantor; (d) any requirement of diligence; (e) presentment,
EXHIBIT I
Page 3
[Participation and Loan and Security Agreement]
demand, protest, notice of default or non-payment; and (f) any and all defenses
to payment hereunder, except the defense of payment already made.
11. The Guarantor hereby waives and relinquishes any duty on the part
of Lenders (should any such duty exist) to disclose to the Guarantor any matter,
fact or thing related to the business, operations or condition (financial or
otherwise) of Borrower or its Affiliates or subsidiaries or their properties,
whether now known or hereafter known by Lenders during the life of this
Guaranty.
12. When making any demand hereunder against the Guarantor, Lenders
may, but shall be under no obligation to, make a similar demand on any other
guarantor, and any failure by Lenders to make such demand or to collect any
payments from any such other guarantor or any release of such other guarantor
shall not relieve such Guarantor of its obligations and liabilities hereunder,
and shall not impair or affect the rights and remedies, express or implied, or
as a matter of law, of Lenders against the Guarantor. For the purposes hereof
"demand" shall include the commencement and continuance of any legal
proceedings.
13. The Guarantor agrees to pay all expenses in connection with the
execution and delivery of this Guaranty and its enforcement, including without
limitation the payment of any stamp or similar duties, reasonable attorney fees,
and other costs of collection.
14. This Guaranty shall continue to be effective or be reinstated, as
the case may be, if at any time payment, or any part thereof, of any of the
Obligations is rescinded or must be restored or returned by Lenders upon the
insolvency, bankruptcy, liquidation or reorganization of Borrower, or otherwise,
all as though payment had not been made.
15. Neither Lender shall have any duty to protect, secure, perfect or
insure any collateral security at any time securing the payment of the
Obligations. This is a guaranty of performance and payment and not merely of
collection. The Guarantor hereby waives any requirement that Lenders make any
demand, commence suit or exercise any other right or remedy under the Loan
Agreement prior to enforcing its rights against the Guarantor hereunder.
The Obligations, and each of them, shall conclusively be deemed to have
been created, contracted or incurred in reliance upon this Guaranty, and all
dealings between Borrower or the Guarantor and Lenders shall likewise be
conclusively presumed to have been had or consummated in reliance upon this
Guaranty. The Guarantor acknowledges receipt of a copy of the Loan Agreement and
the Loan Documents therein described.
16. No Changes in Guarantor. The Guarantor covenants and agrees that
from and after the date hereof and so long as any of the Obligations remain
outstanding, it will not (a) enter into any transaction of merger or
consolidation unless it is the surviving corporation and after giving effect to
such merger or consolidation its tangible net worth equals or exceeds that which
existed prior to such merger or consolidation; or (b) liquidate or dissolve; or
(c) sell or otherwise dispose of all or any substantial part of its assets; or
(d) without limiting the generality of clause (c), sell, transfer or otherwise
dispose of any interest in Borrower held by it as of the date hereof; or (e)
without thirty (30) days' prior written notice to Lenders, change its name or
chief executive office.
EXHIBIT I
Page 4
[Participation and Loan and Security Agreement]
17. The Guarantor hereby represents, warrants and covenants that:
(a) the Guarantor is duly incorporated, organized, existing,
and in good standing under and by virtue of the laws of the State of
___________;
(b) the Guarantor will maintain its corporate existence and
good standing under the laws of the State of _________ until the principal,
interest or any other sums payable by Borrower to Lenders under the Loan
Agreement or any other document or instrument the execution of which is provided
for in the Loan Agreement and the other Loan Documents have been fully and
indefeasibly paid by Borrower;
(c) the Guarantor has the necessary power and authority to give
this Guaranty and to perform and observe the obligations contained herein and
that this Guaranty has been validly authorized by the appropriate corporate
action of the Guarantor and constitutes a legal, valid, and binding obligation
of the Guarantor enforceable in accordance with its terms;
(d) the giving of this Guaranty and the observance of its terms
does not contravene any law, regulation, or similar enactment binding on the
Guarantor, nor does the giving of this Guaranty and the observance of its terms
contravene any existing mortgage, contract, or agreement binding on the
Guarantor or any of its assets;
(e) The Guarantor is not in default under any agreement or
guaranty to which it is a party or by which it may be bound;
(f) The obligations of the Guarantor under this Guaranty are
unconditional and irrevocable and shall rank pari passu with all other
liabilities of the Guarantor for borrowed money or for obligations that have
become the direct obligations of the Guarantor; and
(g) There are no actions, suits or proceedings before any
court, tribunal or governmental body pending or threatened (i) with respect to
any of the transactions contemplated by this Guaranty or (ii) against or
affecting the Guarantor or any of its assets which would adversely affect
Guarantor's ability to perform hereunder. The Guarantor has not been charged
with any violation of or default under any statute, decree, rule, regulations,
writ or order of any court or any administrative order.
18. No course of prior dealings between the parties, no usage of the
trade, and no parole or extrinsic evidence of any nature, shall be used or be
relevant to supplement or explain or modify any term used in this Guaranty. This
Guaranty and all obligations of the Guarantor hereunder shall be binding upon
the successors and assigns of the Guarantor, and shall, together with the rights
and remedies of Lenders hereunder, inure to the benefit of Lenders and their
respective successors and assigns. The invalidity, illegality or
unenforceability of any provision of this Guaranty shall not affect the
validity, legality or enforceability of any other provision of this Guaranty.
19. The Guarantor agrees that this Guaranty covers all Obligations of
Borrower to each Lender, including, but not limited to, any Obligation, which
arises due to the performance or exercise of rights by a Lender acting in a
capacity as administrative agent or collateral agent or otherwise.
EXHIBIT I
Page 5
[Participation and Loan and Security Agreement]
20. This Guaranty inures to the benefit of Lenders, their successors
and assigns. The Lenders may assign their respective rights hereunder to any
other Person who becomes a Lender by amendment or assignment by Lenders, or any
other them, of the Loan Agreement or an interest therein.
THIS WRITING CONTAINS THE COMPLETE, FINAL AND EXCLUSIVE STATEMENT OF
THE TERMS OF THE AGREEMENT BETWEEN THE GUARANTORS AND LENDERS RELATING TO THIS
GUARANTY.
THIS GUARANTY SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF
VALIDITY, CONSTRUCTION AND ENFORCEMENT.
THE GUARANTOR HEREBY IRREVOCABLY CONSENTS AND AGREES THAT ANY LEGAL
ACTION, SUIT, OR PROCEEDING ARISING OUT OF OR IN ANY WAY IN CONNECTION WITH THIS
CORPORATE GUARANTY MAY BE INSTITUTED OR BROUGHT IN THE COURTS OF THE STATE OF
NEW YORK, IN THE COUNTY OF NEW YORK, OR THE UNITED STATES DISTRICT COURT FOR THE
SOUTHERN DISTRICT OF NEW YORK, AS LENDERS MAY ELECT, AND BY EXECUTION AND
DELIVERY OF THIS CORPORATE GUARANTY, THE GUARANTOR HEREBY IRREVOCABLY ACCEPTS
AND SUBMITS TO, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND
UNCONDITIONALLY, THE NON-EXCLUSIVE JURISDICTION OF ANY SUCH COURT, AND TO ALL
PROCEEDINGS IN SUCH COURTS. THE GUARANTOR IRREVOCABLY CONSENTS TO SERVICE OF ANY
SUMMONS AND/OR LEGAL PROCESS BY REGISTERED OR CERTIFIED UNITED STATES AIR MAIL,
POSTAGE PREPAID, TO THE GUARANTOR AT THE ADDRESS SET FORTH ABOVE, SUCH METHOD OF
SERVICE TO CONSTITUTE, IN EVERY RESPECT, SUFFICIENT AND EFFECTIVE SERVICE OF
PROCESS IN ANY SUCH LEGAL ACTION OR PROCEEDING. NOTHING IN THIS GUARANTY SHALL
AFFECT THE RIGHT OF LENDERS TO EFFECT SERVICE OF PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW OR LIMIT THE RIGHT OF LENDERS TO BRING ACTIONS, SUITS OR
PROCEEDINGS IN THE COURTS OF ANY OTHER JURISDICTION. THE GUARANTOR FURTHER
AGREES THAT FINAL JUDGMENT AGAINST IT IN ANY SUCH LEGAL ACTION, SUIT OR
PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN ANY OTHER JURISDICTION
WITHIN OR OUTSIDE THE UNITED STATES OF AMERICA, BY SUIT ON THE JUDGMENT, A
CERTIFIED OR EXEMPLIFIED COPY OF WHICH SHALL BE CONCLUSIVE EVIDENCE OF THE FACT
AND THE AMOUNT OF THE LIABILITY.
BY ITS SIGNATURE WRITTEN BELOW, THE GUARANTOR HEREBY IRREVOCABLY WAIVES
ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING
OUT OF OR RELATING TO THIS GUARANTY, THE LOAN DOCUMENTS OR THE TRANSACTION
CONTEMPLATED HEREBY OR THEREBY.
* * *
EXHIBIT I
Page 6
[Participation and Loan and Security Agreement]
IN WITNESS WHEREOF the Guarantor has caused this Guaranty to be
executed by their duly authorized officers as of the day and year first above
written.
-----------------------------------
By:
--------------------------------
Name:
Title:
ACCEPTED:
THE CIT GROUP/EQUIPMENT
FINANCING, INC.
By:
--------------------------------
Name:
Title:
KEYBANK N.A.
By:
--------------------------------
Name:
Title:
EXHIBIT I
Page 7
[Participation and Loan and Security Agreement]
ANNEX I
PARTICIPATION AND LOAN AND SECURITY AGREEMENT
DATED AS OF JANUARY __, 2004
[to be attached to each Original Guaranty]
ANNEX I
Page 1
[Participation and Loan and Security Agreement]
EXHIBIT J
SPECIAL PROVISIONS APPLICABLE TO
LETTERS OF CREDIT
SECTION 1. DEFINITIONS. The following definitions shall apply herein:
"AGREEMENT" means the Participation and Loan and Security Agreement,
dated as of January __, 2004.
"DOCUMENTS" mean any paper, whether negotiable or non-negotiable,
including, but not limited to, all shipping documents, warehouse receipts,
documents of title (whether or not assigned to you), policies or certificates of
insurance, and other documents, security, invoices and certificates accompanying
or relating to drafts drawn under the Letter of Credit and Property shipped,
stored, or otherwise disposed of in connection with the Letter of Credit.
"DRAFTS" means any documentary draft drawn under and conditioned upon
presentation of documents required by the Letter of Credit, including, but not
limited to, such drafts accepted by the L/C Issuer.
"L/C LIABILITIES" is defined in Section 8 below.
"LETTER OF CREDIT" means a Letter of Credit described in a Documentary
Letter of Credit Application to be issued under Facility A and/or Facility C or
a Standby Letter of Credit Application to be issued under Facility D, in either
case by the L/C Issuer in accordance with the instructions received by the L/C
Issuer, the terms of which are made a part hereof and approved by Borrower, as
amended from time to time.
"LETTER OF CREDIT APPLICATION" means any request submitted by Borrower
to the L/C Issuer (in written or electronic form) for the issuance of a
Documentary Letter of Credit or a Standby Letter of Credit.
"PROPERTY" includes goods, merchandise, choses in action, and any and
all other forms of property, whether real, personal or mixed and any right or
interest therein; Property in L/C Issuer's possession shall include Property in
possession of anyone for L/C Issuer in any manner whatsoever.
"REIMBURSEMENT OBLIGATIONS" means Borrower's obligation to reimburse
the L/C Issuer for all payments made by L/C Issuer with respect to any draft on
any Letter of Credit and to pay all other liabilities arising under the
Agreement.
"REQUESTS" means any written or oral instruction that the L/C Issuer
honor Borrower's order to issue, amend or pay the Letter of Credit for
Borrower's account and risk upon a request communicated to the L/C Issuer by
telephone, telegraph, telex, facsimile transmission or other electronic means.
EXHIBIT J
Page 1
[Participation and Loan and Security Agreement]
"UNIFORM CUSTOMS" means the Uniform Customs and Practice for
Documentary Credits adopted by the International Chamber of Commerce in force at
the time of issuance of the Letter of Credit, as the same may be thereafter
amended or replaced.
Definitions set forth in the Agreement shall apply to this Exhibit J.
SECTION 2. LETTER OF CREDIT PAYMENT TERMS. The L/C Issuer may accept
or pay any draft presented to L/C Issuer, regardless of when drawn and whether
or not negotiated, if such draft, the other required documents, and any
transmittal advice are dated on or before the expiration date of the Letter of
Credit, which expiration date shall be expressly stated in the Letter of Credit
and not extended in reference to any action or inaction in any other agreement;
PROVIDED, HOWEVER, that no Standby Letter of Credit shall have an expiration
date which is more than one (1) year following the date of issuance thereof.
Except as instruction may be given by Borrower in writing expressly to the
contrary with regard to, and prior to, the issuance of the Letter of Credit, L/C
Issuer may honor, as complying with the terms of the Letter of Credit, any
instrument or other documents otherwise in order signed or issued by an
administrator, executor, trustee in bankruptcy, debtor in possession assignee
for the benefit of creditors, liquidator, receiver, conservator, or other legal
representative of the party authorized under the Letter of Credit to draw or
issue such instruments or other documents. Borrower hereby irrevocably
authorizes KeyBank to debit Borrower's account under Facility A or Facility C
(where appropriate) in United States Dollars: (A) as to drafts payable in United
States Dollars drawn or to be drawn under any Documentary Letter of Credit, the
amount paid or payable thereon, or (B) as to any Documentary Letter of Credit
payable in currency other than United States Dollars, the equivalent of the
amount paid in United States Dollars at L/C Issuer's selling rate of exchange in
the currency in which such draft is drawn, (C) any and all other expenses or
charges incurred by L/C Issuer in issuing or effecting payment of the Letter of
Credit, for perfecting or maintaining, and insuring the Property, and for
enforcing L/C Issuer's rights and remedies under the Agreement, and (D) for any
Documentary Letter of Credit, such commission, issuance and negotiation fees at
such rate as L/C Issuer may determine from time to time. In the event Borrower
has no capacity under Facility A or Facility C and without prior notice or
demand, L/C Issuer is authorized to charge any deposit account maintained by
Borrower with KeyBank, L/C Issuer or any other KeyCorp affiliate for the amount
of such draft and all Borrower's other reimbursement obligations hereunder.
Drafts drawn against any Standby Letter of Credit will be funded by debits to
Facility D and constitute Loans evidenced by the Facility D Note.
SECTION 3. REQUESTS. Requests shall be made by those persons
purportedly authorized by Borrower. L/C Issuer shall not be obligated to
identify or confirm such persons beyond the use of the authorized name or code
identification if any is established by L/C Issuer or unless Borrower provide to
L/C Issuer from time to time a written list of all Borrower's authorized
representatives. All requests will be confirmed by L/C Issuer in writing by
sending Borrower a copy of the documents authorized or requested by Borrower.
Borrower will promptly report all discrepancies in such documents upon
Borrower's receipt of such confirmation. L/C Issuer may, but shall not be
obligated to, assign a unique code number or word and require such code to be
used by Borrower and, thereafter, all further requests shall refer to such code.
L/C Issuer shall not be liable for any loss which Borrower may incur as a result
of L/C Issuer's compliance with any request in accordance with these provisions
even if unauthorized, provided that L/C Issuer acted in good faith and exercised
reasonable care.
EXHIBIT J
Page 2
[Participation and Loan and Security Agreement]
SECTION 4. MODIFICATION OF ANY LETTER OF CREDIT. These provisions shall
be binding upon Borrower with regard to the Letter of Credit if increased in
amount or otherwise amended, to drafts, documents and Property covered thereby,
and to any action taken by L/C Issuer and any of L/C Issuer's correspondents in
accordance with such extension, increase or other modification.
SECTION 5. UNIFORM CUSTOMS. Except as otherwise expressly stated in any
Letter of Credit, Borrower agrees (A) that L/C Issuer and any of L/C Issuer's
correspondents may receive and accept as a "▇▇▇▇ of Lading" under any Letter of
Credit any document issued or purportedly issued by or on behalf of any carrier
which acknowledges receipt of Property, whatever the specific provisions of such
document; and (B) that L/C Issuer and any of L/C Issuer's correspondents may
accept documents of any character which purportedly comply with the current
Uniform Customs, or which comply with the laws or regulations in force in the
customs and usages of the place of negotiation. In addition, any Standby Letter
of Credit shall be governed by and construed in accordance with International
Standby Practices, Publication No. 590 of the International Chamber of Commerce
("ISP98"). As to matters not covered by ISP98 and to the extent not inconsistent
with ISP98, such Standby Letter of Credit shall be governed by the laws of the
State of New York, including the Uniform Commercial Code as in effect in the
State of New York.
SECTION 6. SHIPMENT OF PROPERTY. With respect to any Property covered
by any Documentary Letter of Credit, Borrower agrees to procure promptly all
necessary import and export licenses or other licenses, to comply with all
foreign and domestic governmental regulations, to furnish such certificates in
that respect that L/C Issuer may require, to keep the Property adequately
covered by insurance satisfactory to L/C Issuer, and to assign the policies or
certificates of insurance to L/C Issuer or to make the loss or adjustment, if
any, payable to L/C Issuer at L/C Issuer's option.
SECTION 7. LIMITED LIABILITY. Neither L/C Issuer, any Lender,
Administrative Agent, Collateral Agent, nor L/C Issuer's correspondent shall be
responsible: (A) for the existence, character, quality, quantity, condition, or
delivery of the Property purporting to be represented by documents; (B) for any
difference in character, quality, quantity, or condition of the Property from
that expressed in documents; (C) for the validity, sufficiency, or genuineness
of documents, event if such documents should in fact prove to be invalid,
insufficient, fraudulent or forged; (D) for time, place, manner or order in
which shipment of Property is made; (E) for partial or incomplete shipment of
Property or failure or omission to ship any Property referred to in the Letter
of Credit; (F) for the character, adequacy, validity, value or genuineness of
any insurance; (G) for any deviation from instructions, delay, default or fraud
by the shipper or anyone else in connection with the Property; (H) for the
solvency, responsibility or relationship to the Property of any party issuing
any documents in connection with the Property; (I) for delay in arrival or
failure to arrive of either the Property or any of the documents relating
thereto; (J) for any breach of contract between the shippers or vendors and
Borrower; (K) for failure of any draft to bear any reference or adequate
reference to the Letter of Credit, or failure of any documents to accompany any
draft at the reverse side of the Letter of Credit or to surrender or take up the
Letter of Credit or to send forward document apart from drafts as required by
the Letter of Credit; (L) for errors; omissions, interruptions or delays in
transmission or delivery of any messages or documents by mail, cable, telegraph,
wireless or otherwise; for any errors in
EXHIBIT J
Page 3
[Participation and Loan and Security Agreement]
translation or interpretation of terms; or (M) for any other consequences
arising from causes beyond L/C Issuer's control, including, but not limited to,
any action or omission by, or any law, regulation or restriction of, any de
factor or de jure domestic or foreign government or agency.
SECTION 8. WARRANTIES; INDEMNITY. Borrower represents, warrants,
covenants and confirms that Borrower understands the general nature and
operation of a letter of credit and Borrower's obligations, rights and remedies
under each Letter of Credit, including, without limitation: (A) Borrower's
obligations to reimburse L/C Issuer for all payments to the beneficiary, its
successors or assigns, (B) conditions under which payment under the Letter of
Credit must be made by L/C Issuer, (C) that L/C Issuer has no responsibility or
liability in connection with any underlying contract or other transaction
between Borrower and the beneficiary of the Letter of Credit, and (D) that L/C
Issuer is not acting as an agent or in any fiduciary capacity for or on behalf
of Borrower or the beneficiary, except as otherwise stated herein. All
Borrower's representations, warranties and indemnities set forth herein shall
survive L/C Issuer's issuance of the Letter of Credit and any payment thereunder
and shall continue until all Borrower's obligations hereunder are paid in full.
Borrower hereby releases L/C Issuer, Lenders, Administrative Agent and
Collateral Agent from and agree indemnify and hold harmless the L/C Issuer, and
their officers, agents, and employees for any and all costs, liabilities and
expenses (including reasonable attorney fees) incurred by L/C Issuer and arising
out of or in any way relating to (1) any underlying investments, transaction,
and/or contracts between any one of Borrower and the beneficiary under the
Letter of Credit or any of its agents, and (2) any proper payment in accordance
with the terms of the Letter of Credit, any refusal to pay or honor the Letter
of Credit, or any other action or omission by L/C Issuer, or L/C Issuer's
correspondents or agents including, but limited to, L/C Issuer's indemnity (as
well as any and all cost expenses and liabilities associated with such
indemnity) in favor of a third party carrier which may be necessary to cause
such carrier to release and deliver merchandise (described as part of the Letter
of Credit) without the presentation of any original ▇▇▇▇ of lading or the other
original documents missing or otherwise presently unavailable. It is understood
that Borrower will not be obligated to indemnify L/C Issuer for gross negligence
or willful misconduct.
SECTION 9. ADDITIONAL COLLATERAL. In addition to the Collateral
described in the Agreement, as additional Collateral for all Borrower's
obligations and other liabilities to the L/C Issuer under any Documentary Letter
of Credit, whether now existing or hereafter arising, whether joint, several
independent or otherwise, and whether absolute or contingent or due or to become
due (herein, collectively, "L/C Liabilities"), Borrower hereby assigns, pledges
and grants to L/C Issuer a security interest in, and the right of possession and
disposal of: (A) All documents and all Property shipped, stored or otherwise
disposed of in connection with such Letter of Credit, whether or not released to
Borrower on trust receipts or otherwise, (B) All Borrower's right and causes of
action against all parties arising from or in connection with the contract of
sale or purchase of the property covered by such Letter of Credit, and all
guarantees, agreements or other undertakings (including those in effect between
Borrower and any account party named in the Letter of Credit), credits, policies
of insurance or other assurances in connection therewith, and (C) All proceeds
of the foregoing. On demand by L/C Issuer, Borrower will deliver, as security
for Borrower's L/C Liabilities, additional collateral security satisfactory to
L/C Issuer or will make such payment as L/C Issuer may require in immediately
available funds. Also, Borrower will execute, deliver, and file all further
instruments as may be reasonably required to carry out the purposes of the
Agreement.
EXHIBIT J
Page 4