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COLLATERAL TRUST AGREEMENT
Among
CALIFORNIA PETROLEUM TRANSPORT CORPORATION
CHEMICAL TRUST COMPANY OF CALIFORNIA,
as Collateral Trustee
CHEMICAL TRUST COMPANY OF CALIFORNIA
as Serial Indenture Trustee
and
CHEMICAL TRUST COMPANY OF CALIFORNIA
as Term Indenture Trustee
Dated as of __________ __, 1994
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TABLE OF CONTENTS
Page
PREAMBLE............................................................... 1
ARTICLE ONE
DEFINITIONS AND CERTAIN OTHER GENERAL PROVISIONS
1.01 Definitions................................................ 5
1.02 Limitation of Rights....................................... 20
1.03 Effectiveness of Collateral Agreement...................... 20
ARTICLE TWO
ENFORCEMENT NOTICE; EXERCISE
OF REMEDIES; DETERMINATIONS
PRIOR TO ENFORCEMENT
2.01 Enforcement Notice......................................... 20
2.02 General Authority of the Collateral Trustee Over the
Collateral................................................. 21
2.03 Right To Initiate Judicial Proceedings..................... 22
2.04 Exercise of Powers; Instructions........................... 22
2.05 Remedies Not Exclusive..................................... 23
2.06 Waiver and Estoppel........................................ 24
2.07 Determinations Prior to Enforcement........................ 25
2.08 Limitation on Collateral Trustee's Duty in Respect of
Collateral................................................. 25
2.09 Limitation by Law.......................................... 25
ARTICLE THREE
THE TRUST ACCOUNTS; DISTRIBUTIONS
3.01 The Trust Accounts......................................... 26
3.02 Investment of Funds Deposited in Trust
Accounts................................................... 30
3.03 Payment Dates.............................................. 30
3.04 Application of Moneys in the Collateral
Account.................................................... 37
3.05 Collateral Trustee's Calculations.......................... 38
ARTICLE FOUR
AGREEMENTS WITH COLLATERAL TRUSTEE
4.01 Delivery of Secured Instruments and Security
Documents.................................................. 39
4.02 Information as to Loan Agreements and Indenture
Trustees................................................... 39
4.03 Representations and Warranties; Further
Assurances................................................. 39
4.04 Other Agreements of California Petroleum................... 40
ARTICLE FIVE
RELEASES; NON-DISTURBANCE
5.01 Releases................................................... 41
5.02 Non-Disturbance............................................ 42
ARTICLE SIX
THE COLLATERAL TRUSTEE
6.01 Acceptance of Trust........................................ 42
6.02 Exculpatory Provisions..................................... 42
6.03 Delegation of Duties....................................... 44
6.04 Reliance by Collateral Trustee............................. 44
6.05 Limitations on Duties of Collateral Trustee................ 45
6.06 Moneys To Be Held in Trust................................. 46
6.07 Resignation and Removal of the Collateral
Trustee.................................................... 46
6.08 Status of Successor Collateral Trustee..................... 48
6.09 Merger of the Collateral Trustee........................... 48
6.10 Co-Trustee; Separate Trustee............................... 48
6.11 Treatment of Payee or Indorsee by Collateral Trustee;
Representatives of Secured Parties......................... 51
ARTICLE SEVEN
MISCELLANEOUS
7.01 Notices.................................................... 51
7.02 No Waivers................................................. 52
7.03 Amendments, Supplements and Waivers........................ 52
7.04 Headings................................................... 53
7.05 Severability............................................... 54
7.06 Successors and Assigns..................................... 54
7.07 Governing Law.............................................. 54
7.08 Counterparts............................................... 54
7.09 Termination................................................ 54
7.10 No Liability to Other Secured Parties...................... 55
7.11 Immunities of Incorporators, Officers,
Directors and Stockholders of California Petroleum......... 55
7.12 Designated Representative................................... 56
SIGNATURES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
COLLATERAL TRUST AGREEMENT ("Collateral Agreement"), dated as
of __________ __, 1994 among CALIFORNIA PETROLEUM TRANSPORT CORPORATION, a
Delaware corporation ("California Petroleum"), CHEMICAL TRUST COMPANY OF
CALIFORNIA, as Collateral Trustee, CHEMICAL TRUST COMPANY OF CALIFORNIA, as
Serial Indenture Trustee, and CHEMICAL TRUST COMPANY OF CALIFORNIA, as Term
Indenture Trustee.
W I T N E S S E T H:
WHEREAS, capitalized terms used herein shall have the respective
meanings set forth or referred to in Article One hereof;
WHEREAS, California Petroleum, the Serial Indenture Trustee and
solely for purposes of the Trust Indenture Act, Chevron, are entering into the
Serial Indenture pursuant to which California Petroleum, as agent for, and on
behalf of, the Owners, will issue Serial Mortgage Notes in the aggregate
principal amount of $168,500,000, and California Petroleum and the Term
Indenture Trustee are entering into the Term Indenture pursuant to which
California Petroleum, as agent for, and on behalf of, the Owners, will issue
Term Mortgage Notes in the aggregate principal amount of $117,900,000;
WHEREAS, California Petroleum is entering into a Serial Loan
Agreement and a Term Loan Agreement with each Owner pursuant to which
California Petroleum will loan to such Owner an allocable amount of the
proceeds of the sale of the Serial Mortgage Notes and the Term Mortgage Notes,
respectively, in order to facilitate the acquisition of the Vessels by the
Owners and the charter of the Vessels to Chevron Transport;
WHEREAS, each Owner, in order to secure its obligations to
California Petroleum under its Serial Loan Agreement and Term Loan Agreement,
is entering into a Mortgage, an Assignment of Charter, an Assignment of
Earnings and Insurances, an Assignment of Initial Charter Guarantee, an
Assignment of Management Agreement and an Issue of One Debenture, and Chevron
is entering into an Initial Charter Guarantee;
WHEREAS, in order to further secure the obligations of each
Owner to California Petroleum under its respective Serial Loan Agreement and
Term Loan Agreement, all of the issued and outstanding shares of each owner
have been pledged to California Petroleum pursuant to the Stock Pledges;
WHEREAS, in order to secure its obligations under the Serial
Indenture and the Term Indenture, California Petroleum is entering into this
Collateral Agreement pursuant to which California Petroleum is assigning and
pledging to the Collateral Trustee all of its right title and interest in, to
and under all of the Security Documents, whether now existing or arising
hereafter, as described herein; and
WHEREAS, the Serial Indenture and the Term Indenture each provides
that a condition to its effectiveness is the execution and delivery of a
collateral trust agreement substantially in the form of this Collateral
Agreement;
GRANTING CLAUSE
NOW, THEREFORE, in consideration of the mutual promises
contained herein and to provide for the equal and ratable security of each
Secured Party with respect to the Secured Obligations owed to it and in
consideration of the premises and of the covenants in the Indentures and in the
Notes and of the purchase of the Notes by their holders, and of the sum of $1
paid to California Petroleum by the Collateral Trustee at or before the
delivery of this Collateral Agreement, the receipt and sufficiency of which
is hereby acknowledged, California Petroleum has granted, bargained, sold,
assigned, transferred, conveyed, mortgaged, pledged, granted a security
interest in and confirmed, and California Petroleum does hereby grant,
bargain, sell, assign, transfer, convey, mortgage, pledge and grant a security
interest in and confirm to the Collateral Trustee, its successors and assigns,
in trust for the equal and ratable security and benefit of the Indenture
Trustees for the benefit of holders from time to time of Secured Obligations,
a first priority security interest in and first Lien on all estate, right,
title and interest of California Petroleum in, to and under the following
described property, rights and privileges, whether now owned or existing or
hereafter acquired or arising and regardless of where located, which
collectively, including all property specifically subjected to the Lien of
this Collateral Agreement by the terms hereof, by any supplement or amendment
hereto, are included within the Trust Estate, subject to the other terms and
conditions of this Collateral Agreement:
(1) Each Vessel, in accordance with the terms and conditions of
the related Mortgage and Assignment of Mortgage;
(2) Each Initial Charter, in accordance with the terms and
conditions of the related Assignment of Initial Charter and Collateral
Assignment of Initial Charter;
(3) Each Initial Charter Guarantee, in accordance with the terms
and conditions of the related Assignment of Initial Charter Guarantee and
Collateral Assignment of Initial Charter Guarantee;
(4) Each Management Agreement, in accordance with the terms of
the related Assignment of Management Agreement;
(5) Each Vessel Purchase Agreement, in accordance with the terms
of the related Assignment of Vessel Purchase Agreement;
(6) Each Assignment of Earnings and Insurances;
(7) Each Issue of One Debenture;
(8) The Pledged Stock, in accordance with the Stock Pledge;
(9) Each Loan Agreement;
(10) Any additional security agreement, assignment or mortgage
document entered into by any Owner from time to time in connection with such
Owner's Loan Agreements;
(11) All rights of California Petroleum to receive payments of
any kind, to execute any election or option or to give or receive any notice,
consent, waiver or approval under or in respect of any of the foregoing
documents and instruments;
(12) All the charterhire, tolls, rents, issues, profits,
products, revenues and other income (including sales proceeds) of the property
subjected or required to be subjected to the Lien of this Collateral
Agreement, and all of the estate, right, title and interest of California
Petroleum in and to the same and every part of said property;
(13) All moneys and securities, including the Trust Accounts and
any Permitted Investments, now or hereafter paid or deposited or required to
be paid or deposited to or with the Collateral Trustee by or for the account of
California Petroleum or otherwise pursuant to any term of any Security
Document, and held or required to be held by the Collateral Trustee hereunder;
(14) All requisition proceeds with respect to any Vessel or any
part thereof (to the extent of California Petroleum's interest therein
pursuant to the terms of the Mortgage) and all insurance proceeds with respect
to any Vessel or any part thereof (to the extent of California Petroleum's
interest therein pursuant to the terms of the Mortgage);
(15) Any Acceptable Replacement Charter or other charter assigned
to California Petroleum pursuant to the Assignment of Earnings and Insurances;
and
(16) All income, payments and proceeds of the foregoing.
HABENDUM CLAUSE
TO HAVE AND TO HOLD the aforesaid property unto the Collateral
Trustee, its successors and assigns, in trust for the equal and ratable
benefit and security of each Secured Party with respect to the Secured
Obligations owed to it and for the uses and purposes and subject to the terms
and conditions set forth in this Collateral Agreement.
It is expressly agreed that anything contained in this
Collateral Agreement to the contrary notwithstanding, California Petroleum
shall remain liable under the Security Documents to perform all of the
obligations assumed by it under any of those documents, all in accordance with
and pursuant to the terms and provisions of those documents, and the
Collateral Trustee and the Secured Parties shall have no obligation or
liability under the Security Documents by reason of or arising out of the
assignment under this Collateral Agreement, nor shall the Collateral Trustee or
the Secured Parties be required or obligated in any manner to perform or
fulfill any obligations of California Petroleum under or pursuant to the
Security Documents or, except as expressly provided in this Collateral
Agreement, to make any payment, or to make any inquiry as to the nature or
sufficiency of any payment received by it, or present or file any claim, or
take any action to collect or enforce the payment of any amounts which may
have been assigned to it or to which it may be entitled at any time or times.
As between the holders of the Serial Mortgage Notes, on the one
hand, and the holders of the Term Mortgage Notes, on the other hand, it is
hereby agreed that the following property included in the Trust Estate shall be
held by the Collateral Trustee hereunder for the equal and ratable benefit of
the holders of the Secured Obligations other than the holders of the Serial
Mortgage Notes at the times and under the circumstances set forth below:
From and after the satisfaction and payment in full of
all of an Owner's obligations under and pursuant to a Serial Loan
Agreement, all Collateral securing such obligations including, without
limitation, (i) the related Initial Charter (including any
Termination Payment made thereunder), (ii) any amounts received under
the related Security Documents in connection with the occurrence of a
Total Loss with respect to such Vessel, (iii) any amounts received
under the related Security Documents in connection with the exercise
of any remedies thereunder and (iv) all payments under the related
Term Loan Agreement by the related Owner.
AND IT IS HEREBY COVENANTED, DECLARED AND AGREED by California
Petroleum that all the Secured Obligations are to be secured and that all the
Trust Estate is to be held, subject to the further covenants, conditions, uses
and trusts herein set forth, and California Petroleum, for itself and its
successors and assigns, does hereby covenant and agree to and with the
Collateral Trustee and its successors in said trust for the benefit of those
who shall hold the Secured Obligations or any of them, as set forth herein.
ARTICLE ONE
DEFINITIONS AND CERTAIN OTHER GENERAL PROVISIONS
Section 1.01 Definitions. (a) The following terms, as
used herein, have the following respective meanings:
"Acceptable Replacement Charter" means any replacement charter
which satisfies each of the following requirements: (i) the charter is a
bareboat charter and requires that the charterer thereunder "gross up"
charterhire payments to indemnify and hold the holders of the Term Mortgage
Notes harmless from any withholding tax imposed on the charterhire payments or
on the payments of the Term Mortgage Notes, (ii) the charterhire payments
payable during the non-cancellable term of such replacement charter, after
giving effect to (1) any "gross up" of such amounts as a result of any
withholding tax on such charterhire payments, (2) the receipt of the
Termination Payment and (3) all fees and expenses incurred in connection with
the recharter of the Vessel, provide sufficient funds for the payment in full
when due of (A) the Allocated Principal Amount of the Term Mortgage Notes for
the related Vessel and interest thereon in accordance with the revised
schedule of sinking fund and principal payments, that is applicable upon
termination of the related Initial Charter, (B) the amount of Recurring Fees
and Taxes for such Vessel, (C) the amount of Management Fees and Technical
Advisor's Fees for such Vessel, (D) the amount of fees and expenses of the
Indenture Trustee and Collateral Trustee allocable to such Vessel and (E) an
amount at least equal to 30% of the estimated amounts, on a per annum basis,
referred to in clauses (B), (C) and (D) above for miscellaneous or unexpected
expenses and (iii) the Rating Agencies shall have confirmed in writing to the
Indenture Trustee that the terms and conditions of such proposed charter will
not result in the withdrawal or reduction of the then current ratings of the
Term Mortgage Notes.
"Affiliate" means with respect to any Person (the "relevant
Person") (i) any other Person that directly, or indirectly through one or more
intermediaries, controls the relevant Person (a "Controlling Person") or (ii)
any Person (other than the relevant Person) which is controlled by or is under
common control with a Controlling Person. As used herein, the term "control"
means possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of a Person, whether through the
ownership of voting securities, by contract or otherwise.
"Allocated Principal Amount" means (i) when used with reference
to the Serial Mortgage Notes relating to any Vessel at any time, an aggregate
principal amount of outstanding Serial Mortgage Notes equal to the aggregate
principal amount of Serial Loans of the related Owner then outstanding and
(ii) when used with reference to the Term Mortgage Notes relating to any
Vessel at any time, an aggregate principal amount of outstanding Term Mortgage
Notes equal to the outstanding principal amount of the Term Loan of the
related Owner.
"Applicable Secured Parties" means (i) at any time when an
Enforcement Notice delivered by the Serial Indenture Trustee is in effect and
no Enforcement Notice delivered by the Term Indenture Trustee is in effect,
the Majority Serial Noteholders, (ii) at any time when an Enforcement Notice
delivered by the Term Indenture Trustee is in effect and no Enforcement Notice
delivered by the Serial Indenture Trustee is in effect, the Majority Term
Noteholders and (iii) at any time when an Enforcement Notice delivered by both
the Serial Indenture Trustee and the Term Indenture Trustee are in effect, the
Majority Noteholders.
"Assignment of Earnings and Insurances" means, for any Vessel,
the Assignment of Earnings and Insurances, dated the date hereof, between the
related Owner and California Petroleum, as the same may be amended from time
to time.
"Assignment of Guarantee" means, for each Initial Charter
Guarantee, the Assignment of Guarantee, dated the date hereof, between the
Owner of the related Vessel and California Petroleum, as the same may be
amended from time to time.
"Assignment of Initial Charter" means, for each Initial
Charter, the Assignment of Initial Charter, dated the date hereof, between the
Owner of the related Vessel and California Petroleum, as the same may be
amended from time to time.
"Assignment of Management Agreement" means, for any Management
Agreement, the Assignment of Management Agreement, dated the date hereof,
between the Owner of the related Vessel and California Petroleum, as the same
may be amended from time to time.
"Assignment of Mortgage" means, for each Mortgage, the
Assignment of Mortgage between California Petroleum and the Collateral
Trustee, as the same may be amended from time to time.
"Assignment of Vessel Purchase Agreement" means, for each
Vessel, the Vessel Purchase Agreement Assignment, dated the date of the Vessel
Purchase Agreement for such Vessel, between the related Owner and California
Petroleum.
"Authorized Financial Officer" of any Person means the Chief
Financial Officer, Treasurer or Controller of such Person.
"Bankruptcy Code" means the United States Bankruptcy Code of
1978, as amended.
"Business Day" means any day except a Saturday or a Sunday or
other day on which commercial banks are authorized by law to close in New York
City or in the city and state where the Collateral Trustee's principal offices
are located.
"Casualty Account" means the account established and maintained
by the Collateral Trustee pursuant to Section 3.01(f).
"Charter Event of Default" means, for each Initial Charter,
each of the events designated as a default in Clause 17 of such Initial
Charter.
"Charterhire" means, for each Initial Charter, the scheduled
payments of charterhire thereunder.
"Chevron" means Chevron Corporation, a Delaware corporation.
"Chevron Transport" means Chevron Transport Corporation, a
Liberian corporation.
"Closing Date" means ____________, 1994.
"Collateral" means the property in which the Collateral
Trustee, in its own right or as assignee of California Petroleum, is granted a
Lien from time to time under any Security Document, which lien or security
interest has not been released in accordance with the terms hereof or thereof.
"Collateral Account" means the account established and
maintained by the Collateral Trustee pursuant to Section 3.01(g).
"Collateral Assignment of Initial Charter" means for any
Initial Charter, the Collateral Assignment of Initial Charter, dated the date
of the related Initial Charter, between California Petroleum and the Collateral
Trustee, as amended from time to time.
"Collateral Assignment of Initial Charter Guarantee" means, for
any Initial Charter Guarantee, the Collateral Assignment of Initial Charter
Guarantee, dated the date of the related Initial Charter, between California
Petroleum and the Collateral Trustee, as the same may be amended from time to
time.
"Collateral Assignment of Promissory Note Guarantee" means the
Collateral Assignment of Promissory Note Guarantee, dated the Closing Date,
between California Petroleum and the Collateral Trustee, as the same may be
amended from time to time.
"Collateral Trustee" means Chemical Trust Company of California, in
its capacity as trustee under this Collateral Agreement, or any other Person
acting from time to time as trustee hereunder.
"Compulsory Acquisition" means requisition of title or other
compulsory acquisition of any Vessel (otherwise than by requisition for hire),
capture, seizure, condemnation, destruction, detention or confiscation of such
Vessel by any government or by persons acting or purporting to act on behalf
of any governmental authority.
"Default" means any Event of Default or any event or condition
which, with the giving of notice or lapse of time, or both would constitute an
Event of Default.
"Distribution Date" means each date fixed by the Collateral Trustee
for a distribution to the Secured Parties of funds, if any, held in the
Collateral Account pursuant to clause (i) of the first paragraph of Section
3.01(g) or the second paragraph of Section 3.01(g), which shall be the date
from time to time determined by the Collateral Trustee or requested by the
Applicable Secured Parties.
"Enforcement Notice" means a notice delivered or deemed delivered to
the Collateral Trustee pursuant to Section 4.10 of the Term Indenture or the
Serial Indenture stating that an Indenture Event of Default under such
Indenture has occurred and is continuing.
"Equity Account" means the account established and maintained
by the Collateral Trustee pursuant to Section 3.01(e).
"Equity Remainder" means, for any Vessel on the applicable
Payment Date for so long as the Initial Charter with respect to such Vessel
remains in effect, the positive difference, if any, between (a) $100,000 and
(b) the sum of (i) the Management Fee and the Technical Advisor's Fee for such
Vessel deposited into the Operating Account on such Payment Date and the
immediately preceding Payment Date plus (ii) the aggregate amount of Recurring
Fees and Taxes for such Vessel deposited into the Operating Account on such
Payment Date and the immediately preceding Payment Date. On and after the
termination of such Initial Charter, the "Equity Remainder" for such Vessel on
the applicable Payment Date shall be zero.
"Equity Transfer Date" means the Payment Date scheduled to
occur on __________ of each year, commencing _________ __, 1995.
"Exchange Act" means the United States Securities Exchange Act
of 1934, as amended.
"Indenture Event of Default" has the meaning ascribed to the term
"Event of Default" in the Serial Indenture or the Term Indenture.
"Indenture Trustees" means the Serial Indenture Trustee and the Term
Indenture Trustee, collectively.
"Indentures" means the Serial Indenture and the Term Indenture,
collectively.
"Initial Charter" means, for each Vessel, the bareboat charter
between the related Owner and Chevron Transport dated the Closing Date, as the
same may be amended from time to time.
"Initial Charter Guarantee" means, for any Vessel, the
Guarantee, dated the date of the related Initial Charter, given by Chevron to
the related Owner in connection with the related Initial Charter.
"Initial Charter Period" means for any Initial Charter the
period from the date of commencement of such Initial Charter to the expiration
or earlier termination of such Initial Charter pursuant to the terms and
conditions thereof.
"Initial Charterer" means, for each Initial Charter, Chevron
Transport as the Charterer thereunder, and any permitted successor or assignee
thereof.
"Initial Revenue Account" means the account established and
maintained by the Collateral Trustee pursuant to Section 3.01(a).
"Issue of One Debenture" means, for each Owner, the Issue of
One Debenture, dated the Closing Date, between such Owner and California
Petroleum, as the same may be amended from time to time.
"Lien" means with respect to any asset, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind in respect of
such asset. For the purposes of this Collateral Agreement, a Person shall be
deemed to own subject to a Lien any asset which it has acquired or holds
subject to the interest of a vendor or lessor under any conditional sale
agreement, capital lease or other title retention agreement relating to such
asset.
"Loan Agreements" means the Serial Loan Agreements and the Term
Loan Agreements, collectively.
"Majority Noteholders" means at any time the holders of Serial
Mortgage Notes and Term Mortgage Notes then Outstanding having an aggregate
principal amount in excess of 50% of the aggregate principal amount of all such
Notes then Outstanding.
"Majority Serial Noteholders" means at any time the holders of
Serial Mortgage Notes then Outstanding having an aggregate principal amount in
excess of 50% of the aggregate principal amount of all such Serial Mortgage
Notes then Outstanding.
"Majority Term Noteholders" means at any time the holders of
Term Mortgage Notes then Outstanding having an aggregate principal amount in
excess of 50% of the aggregate principal amount of all such Term Mortgage
Notes then Outstanding.
"Management Agreement" means, for each Owner, the Management
Agreement, dated the Closing Date, among such Owner, the Manager and the
Technical Advisor, as the same may be amended from time to time.
"Management Fee" means the sum of (i) for each Vessel, an
annual fee payable to the Manager, semi-annually in arrears, which shall be an
amount equal to $16,000 per annum during the period from the Closing Date to
the third anniversary of the Closing Date plus (ii) a fee of $3,500 per annum,
payable annually in arrears, during such three-year period. Thereafter, the
Management Fee shall be adjusted as provided in the Management Agreement.
"Manager" means, for any Management Agreement, P.D. Gram & Co.
ans, or any other Person acting from time to time as Manager thereunder.
"Moody's" means Moody's Investors Service, Inc.
"Mortgage" means, for each Vessel, the First Preferred Ship
Mortgage or Statutory Mortgage and Deed of Covenants for such Vessel, as
applicable, dated the date of the related Initial Charter, between the related
Owner and California Petroleum and assigned by California Petroleum to the
Collateral Trustee, as the same may be amended from time to time.
"Mortgage Event of Default" means, for any Mortgage, each of
the events designated as an "Event of Default" in Section 5.01 of such
Mortgage.
"Noteholders" means at any time the holders of the Outstanding
Serial Mortgage Notes and the Outstanding Term Mortgage Notes, collectively.
"Notes" means the Serial Mortgage Notes together with the Term
Mortgage Notes.
"Operating Account" means the account established and
maintained by the Collateral Trustee pursuant to Section 3.01(d).
"Outstanding" means, when used with respect to Secured Obligations,
any Secured Obligations then or theretofore issued or incurred by California
Petroleum, except Secured Obligations or portions thereof which have been paid
or defeased (including without limitation, through a covenant defeasance);
provided that, for purposes of determining the parties constituting the
Majority Noteholders, the Majority Serial Noteholders, the Majority Term
Noteholders or the Applicable Secured Parties for purposes of any action to be
taken hereunder, Secured Obligations held by California Petroleum or any
Affiliate thereof, any Owner or any Affiliate thereof, or Chevron or any
Affiliate thereof, shall be disregarded and deemed not to be Outstanding
(except that, in determining whether the Collateral Trustee shall be protected
in relying upon any request, demand, authorization, direction, notice, consent
or waiver, only Secured Obligations which the Collateral Trustee knows to be
so held shall be so disregarded).
"Owner" means CalPetro Tankers (Bahamas I) Limited, in the case
of the Vessel m.t. Samuel Ginn, CalPetro Tankers (Bahamas II) Limited, in the
case of the Vessel m.t. Condoleezza Rice, CalPetro Tankers (IOM) Limited, in
the case of the Vessel m.t. Chevron Mariner, or CalPetro Tankers (Bahamas III)
Limited, in the case of the Vessel m.t. William E. Crain.
"Payment Date" means each _____ and _____, commencing ______,
1995.
"Permitted Investments" means any of the following:
(a) direct general obligations of, or obligations fully and
unconditionally guaranteed as to the timely payment of principal and interest
by, the United States or any agency or instrumentality thereof, provided such
obligations are backed by the full faith and credit of the United States,
Federal Housing Administration debentures, FHLMC senior debt obligations or
FNMA senior debt obligations, but excluding any of such securities whose terms
do not provide for payment of a fixed dollar amount upon maturity or call for
redemption;
(b) federal funds, certificates of deposit, time and demand
deposits and banker's acceptances (having original maturities of not more than
one year) of any bank or trust company incorporated under the laws of the
United States or any state thereof, provided that the short-term debt
obligations of such bank or trust company at the date of acquisitions thereof
have been rated at least "A-1" or "P-1" by Standard & Poor's and Moody's,
respectively;
(c) commercial paper (having original maturities of not more
than one year) rated at least "A-1" or "P-1" by Standard & Poor's and Moody's,
respectively; or
(d) guaranteed investment contracts, investment agreements or
similar agreements rated at least "AA" or "Aa" by Standard & Poor's or
Moody's, respectively, that are treated as indebtedness for United States
federal income tax purposes.
"Person" means an individual, a corporation, a partnership, an
association, a trust or any other entity or organization, including a
government or political subdivision or an agency or instrumentality thereof.
"Pledged Stock" means all of the issued and outstanding capital
stock of each Owner, including any additional or substitute shares of capital
stock of any such Owner now owned or hereafter acquired by California Tankers
Investments Limited or any Affiliate of California Tankers Investments Limited
issued at any time or from time to time.
"Rating Agencies" means Moody's, Standard & Poor's and Duff &
Phelps Credit Rating Co.
"Recurring Fees and Taxes" means, for any Vessel, any
registration fees and tonnage taxes necessary to maintain the documentation
of the Vessel under the laws of the registry or port of documentation of
the Vessel, any periodic fees necessary to maintain the corporate status of
the related Owner, any filing or other fees necessary to maintain the
status of such Owner as a reporting company under the Exchange Act and to
comply with any covenants of such Owner under the related Mortgage, any
fees and expenses (including the cost of insurance required by the related
Mortgage and not maintained by the charterer under the charter to which
such Vessel is then subject) necessary to comply with any covenants under
the related Mortgage, any other fees and expenses contemplated to be paid
pursuant to the Management Agreement which the Manager certifies to the
Collateral Trustee are qualified to be paid thereunder and any accounting
or other professional fees and other expenses including any
fees and expenses of the Rating Agencies incurred in connection with the
foregoing. In addition, each Owner's Recurring Fees and Taxes will include
a pro rata portion of the fees and expenses, including any accounting,
administrative or other professional fees, necessary to maintain the
registration of the Notes under the Securities Act, to maintain the
corporate status of California Petroleum and the status of California
Petroleum as a reporting company (if necessary) under the Exchange Act, to
pay any facilitation or management fees and to comply with any covenants
under the Indenture or this Collateral Agreement.
"Second Revenue Account" means the account established and
maintained by the Collateral Trustee pursuant to Section 3.01(b).
"Secured Instruments" means, at any time, (i) the Serial
Indenture and the Outstanding Serial Mortgage Notes and (ii) the Term
Indenture and the Outstanding Term Mortgage Notes.
"Secured Obligations" means at any time, without duplication,
each of the following (to the extent not satisfied or terminated):
(i) all obligations of California Petroleum in respect of the
principal of and interest on the Serial Mortgage Notes;
(ii) all obligations of California Petroleum in respect of the
principal of, premium, if any, and interest on the Term Mortgage
Notes;
(iii) all sums payable by California Petroleum to the
Collateral Trustee and to the Secured Parties hereunder and under the
Collateral Assignments of Charter, the Collateral Assignments of
Guarantee and the Assignments of Mortgage, including Trustee Fees;
(iv) the performance and observance by California Petroleum of
each other term, covenant and other provision to be performed and
observed by it hereunder, under the Collateral Assignments of
Charter, the Collateral Assignments of Guarantee and the Assignments
of Mortgage, or under the Secured Instruments;
(v) all amendments, modifications, renewals, extensions and
replacements of any of the foregoing, in each case whether now
outstanding or hereafter arising.
The Secured Obligations shall include any and all interest, costs, fees and
expenses which accrue on or with respect to any of the foregoing in accordance
with the provisions of the applicable Secured Instrument, whether before or
after the commencement of any case, proceeding or other action relating to the
bankruptcy, insolvency or reorganization of California Petroleum and any such
interest, costs, fees and expenses that would have accrued thereon or with
respect thereto in accordance with the provisions of the applicable Secured
Instrument but for the commencement of any such case, proceeding or other
action.
"Secured Party" means each holder from time to time of the Secured
Obligations (including without limitation any assignees of such holders).
"Securities Act" means the United States Securities Act of
1933, as amended.
"Security Documents" means, for each Vessel, the Loan Agreements,
the Mortgages, the Assignments of Initial Charter, the Assignments of Earnings
and Insurances, the Assignment of Initial Charter Guarantee, the Assignment of
Management Agreement, the Issue of One Debenture, the Stock Pledge, the
Assignment of Vessel Purchase Agreement, and any additional security
agreement, assignment or mortgage document entered into by any Owner from time
to time in connection with such Owner's Loan Agreements.
"Security Interests" means the Liens created in the Collateral
pursuant to this Collateral Agreement and pursuant to each other Security
Document.
"Serial Indenture" means the Serial Indenture dated as of __________
__, 1994 among California Petroleum, the Serial Indenture Trustee, and, solely
for purposes of the Trust Indenture Act, Chevron, as the same may be amended
from time to time.
"Serial Indenture Trustee" means Chemical Trust Company of
California or any other Person from time to time acting as the trustee under
the Serial Indenture.
"Serial Loan Agreement" means, for any Owner, the Serial Loan
Agreement dated as of __________ __, 1994 between such Owner and California
Petroleum, as the same may be amended from time to time.
"Serial Loans" has, for any Owner, the meaning set forth in the
Serial Loan Agreement entered into by such Owner.
"Serial Mortgage Notes" has the meaning set forth in the Serial
Indenture.
"Sinking Fund Reserve Account" means the account established
and maintained by the Collateral Trustee pursuant to Section 3.01(h).
"Standard & Poor's" means Standard & Poor's Ratings Group.
"Stipulated Loss Value" means, for any Vessel on any date, the
amount specified in the related Initial Charter as the "Stipulated Loss Value"
for such date, which amount will be at least sufficient to redeem in full the
Allocated Principal Amount of Notes for such Vessel.
"Stock Pledge" means the Stock Pledge Agreement, dated the
Closing Date, between California Tankers Investments Limited and California
Petroleum, as the same may be amended from time to time.
"Subsidiary" means, with respect to any Person, any corporation
or other entity of which securities or other ownership interests having
ordinary voting power to elect a majority of the board of directors or other
persons performing similar functions are at the time directly or indirectly
owned by such Person.
"Technical Advisor" means, for each Management Agreement,
Barber Ship Management, or any other Person acting from time to time as
Technical Advisor thereunder.
"Technical Advisor's Fee" means, for each Vessel, an annual fee
payable to the Technical Advisor, semi-annually in arrears, which shall be an
amount equal to $12,500 per annum during the period from the Closing Date to
the third anniversary of the Closing Date. Thereafter, the Technical
Advisor's Fee will be adjusted as provided in the Management Agreement.
"Term Indenture" means the Term Indenture dated as of
__________ __, 1994 between California Petroleum and the Term Indenture
Trustee, as the same may be amended from time to time.
"Term Indenture Trustee" means Chemical Trust Company of
California or any other Person from time to time acting as the trustee under
the Term Indenture.
"Term Loan" has, for any Owner, the meaning set forth in the
Term Loan Agreement entered into by such Owner.
"Term Loan Agreement" means, for any Owner, the Term Loan
Agreement dated as of __________ __, 1994 between such Owner and California
Petroleum, as the same may be amended from time to time.
"Term Mortgage Notes" has the meaning set forth in the Term
Indenture.
"Termination Account" means the account established and
maintained by the Collateral Trustee pursuant to Section 3.01(c).
"Termination Payment" means the payment that Chevron Transport
is required to make pursuant to Clause 2(a) of the applicable Initial Charter
if Chevron Transport elects to terminate the Initial Charter for any Vessel on
a specified termination date.
"Total Loss" means (a) an actual or constructive or comprised
or arranged total loss of a Vessel, (b) a Compulsory Acquisition of a Vessel
or (c) if so declared by Chevron Transport at any time and in its sole
discretion a requisition for hire of the Vessel for a period in excess of 180
days.
"Trust Accounts" means the Initial Revenue Account, the Second
Revenue Account, the Termination Account, the Operating Account, the Equity
Account, the Casualty Account, the Collateral Account and the Sinking Fund
Reserve Account.
"Trust Estate" means the property rights and privileges
described in the Granting Clause in this Collateral Agreement.
"Trust Funds" means the funds deposited in the Trust Accounts.
"Trust Indenture Act" means the United States Trust Indenture
Act of 1939, as amended.
"Trustee Fees" means:
(i) reasonable compensation to the Collateral Trustee, to the
extent permitted by law (which shall not be limited by any provision
of law in regard to compensation of fiduciaries or of a trustee of an
express trust), for its services hereunder in administering the Trust
Estate;
(ii) all of the reasonable costs and expenses of the Collateral
Trustee (including, without limitation, the reasonable compensation
and expenses and disbursements of its counsel and of all agents and
other persons not regularly in its employ) (A) in connection with the
preparation, execution and delivery of this Collateral Agreement or
the other Security Documents, any waiver or consent thereunder, any
modification or termination thereof, or any Default or alleged
Default; (B) if an Indenture Event of Default occurs, in connection
with such Indenture Event of Default and collection, bankruptcy,
insolvency and other enforcement proceedings relating thereto; (C) in
connection with the administration or protection of the Trust Estate,
the sale or other disposition of any Collateral or the preservation,
protection or defense of the Collateral Trustee's rights under the
Security Documents or in and to the Trust Estate; or (D) in
connection with any removal pursuant to subsection 6.07(a);
(iii) the net amount of taxes (after taking account of any
deduction, credit or other tax reduction or benefit available by
reason of the imposition of any such tax) in any jurisdiction in
which the Collateral Trustee would not otherwise be subject to tax
except by reason of its acting as mortgagee or secured party (and not
as owner or operator) under any Security Document (directly or
through agents, separate trustees or co-trustees); provided that this
clause (iii) (a) shall apply only (1) in respect of taxes
attributable to the performance of the Collateral Trustee's
obligations as Collateral Trustee hereunder and (2) to the extent that
the Collateral Trustee, using reasonable efforts, shall have been
unable to avoid or minimize the same as contemplated by Section 6.10
and (b) shall in no event cover any federal, state, local or other
taxes imposed upon the Collateral Trustee with respect to or measured
by its net income or profits;
(iv) any stamp documentary, excise, recording, transfer or any
other similar tax and any penalties or interest with respect thereto,
which may be assessed, levied or collected by any jurisdiction in
connection with any Security Document, any Secured Obligations, the
Trust Estate or any Collateral or the sale or other disposition
thereof;
(v) any and all costs and expenses in respect of any and all
search, filing, recording and registration and similar fees, taxes,
charges, costs and expenses in connection with the filing, recording,
registration, perfection or termination any Security Document, any
financing statement or other document relating thereto, or any Lien
contemplated or perfected thereby and all costs and expenses for any
Lien, financing statement, title or other similar search relating to
the Collateral, California Petroleum, any Owner or any other Person
owning or holding any Collateral or any interest therein; and
(vi) any and all liabilities, obligations, losses, damages,
penalties, judgments, actions, suits, proceedings, reasonable costs
and expenses (including reasonable fees and disbursements of counsel)
of any kind whatsoever which may be incurred by the Collateral
Trustee in connection with any investigative, administrative or
judicial proceeding (whether or not such indemnified party is
designated a party to such proceeding) relating to the Trust Estate,
the Collateral, the Security Documents or the Secured Instruments,
provided that the Collateral Trustee shall not have the right to
payment hereunder for its own negligence or bad faith as determined
by a court of competent jurisdiction.
"UCC" means the Uniform Commercial Code as in effect on the
date hereof in the State of New York or any other applicable jurisdiction.
"Vessel Purchase Agreement" means, for any Vessel, the Vessel
Purchase Agreement, dated the Closing Date between Chevron Transport and the
related Owner.
"Vessels" means, collectively, the four Suezmax-size tankers to
be acquired by the Owners and chartered to Chevron Transport pursuant to the
Initial Charters.
(b) The words "hereof", "herein" and "hereunder" and words of
similar import when used in this Collateral Agreement refer to this Collateral
Agreement as a whole and not to any particular provision of this Collateral
Agreement, and Article, Section and subsection references are to this
Collateral Agreement unless otherwise specified.
Section 1.02 Limitation of Rights. Nothing in this
Collateral Agreement or in the Secured Instruments, expressed or implied, is
intended or shall be construed to confer upon or give to any Person other than
the Collateral Trustee and the Secured Parties any right, remedy or claim
under or by reason of this Collateral Agreement or any covenant, condition or
stipulation herein contained, and all the covenants, stipulations, promises
and agreements in this Collateral Agreement, the Collateral Assignments of
Charter, the Collateral Assignments of Guarantee and the Assignments of
Mortgage by or on behalf of California Petroleum shall be for the sole and
exclusive benefit of the Collateral Trustee and the Secured Parties.
Section 1.03 Effectiveness of Collateral Agreement. This
Collateral Agreement shall become effective simultaneously with the earlier of
the effectiveness of the Term Indenture or the effectiveness of the Serial
Indenture. All references herein to the "date hereof" or other similar
language shall mean the date of the effectiveness hereof and not the date
appearing on the cover or the caption of this Collateral Agreement (which date
is for identification purposes only).
ARTICLE TWO
ENFORCEMENT NOTICE; EXERCISE
OF REMEDIES; DETERMINATIONS
PRIOR TO ENFORCEMENT
Section 2.01 Enforcement Notice. (a) An Enforcement
Notice shall become effective upon receipt thereof (or deemed receipt thereof)
by the Collateral Trustee. An Enforcement Notice, once effective, shall
remain in effect unless and until it is cancelled as provided in subsection
2.01(c).
(b) So long as an Enforcement Notice is in effect, subject to the
provisions of Sections 2.04(b) and (c), the Collateral Trustee shall exercise
the rights and remedies provided in this Collateral Agreement, the Collateral
Assignments of Charter, the Collateral Assignments of Guarantee and the
Assignments of Mortgage. The Collateral Trustee is not empowered to exercise
any remedy hereunder unless an Enforcement Notice is in effect.
(c) The applicable Indenture Trustee (acting on the instructions of
the Majority Serial Noteholders or the Majority Term Noteholders, as the case
may be) shall be entitled to cancel any Enforcement Notice theretofore given
by it by delivering a written notice of cancellation to the Collateral Trustee
(i) before the Collateral Trustee takes any action to exercise any remedy with
respect to the Collateral or (ii) thereafter, if the Collateral Trustee
believes that all actions it has taken to exercise any remedy or remedies with
respect to the Collateral can be reversed without undue difficulty or is
reasonably assured that it is adequately indemnified for any loss incurred by
the Collateral Trustee resulting from such reversal.
(d) As soon as practicable after, but in any event within three
Business Days of, its receipt of any Enforcement Notice, the Collateral
Trustee shall give notice thereof to California Petroleum and the Indenture
Trustees. As soon as practicable after, but in any event within three
Business Days of, the cancellation of any Enforcement Notice pursuant to
subsection (c) above, the Collateral Trustee shall give notice thereof to
California Petroleum and the Indenture Trustees.
Section 2.02 General Authority of the Collateral Trustee
Over the Collateral. California Petroleum hereby irrevocably constitutes and
appoints the Collateral Trustee and any officer or agent thereof, with full
power of substitution, as its true and lawful attorney-in-fact with full power
and authority in the name of California Petroleum or in its own name, from
time to time in the Collateral Trustee's discretion, so long as any
Enforcement Notice is in effect, to take any and all appropriate action
directed by the Applicable Secured Parties and to execute any and all
documents and instruments which may be necessary or desirable to carry out the
terms hereof and accomplish the purposes hereof and, without limiting the
generality of the foregoing or any of the rights conferred on the Collateral
Trustee, whether in its own right or as assignee of California Petroleum,
pursuant to the other Security Documents, California Petroleum hereby gives
the Collateral Trustee the power and right on its behalf, without notice to
or further assent by California Petroleum, so long as any Enforcement Notice
is in effect, to do the following (to the extent the Collateral Trustee is
directed to do so by the Applicable Secured Parties):
(i) to ask for, demand, sue for, collect, receive and give
acquittance for any and all moneys due or to become due upon, or in
connection with, the Collateral;
(ii) to receive, take, endorse, assign and deliver any and all
checks, notes, drafts, acceptances, documents and other negotiable and
non-negotiable instruments taken or received by the Collateral
Trustee as, or in connection with, the Collateral;
(iii) to commence, prosecute, defend, settle, compromise,
compound or adjust any claim, suit, action or proceeding with respect
to, or in connection with, the Collateral;
(iv) to sell, transfer, assign or otherwise deal in or with the
Collateral or any part thereof as fully and effectively as if the
Collateral Trustee were the absolute owner thereof;
(v) to do, at its option and at the expense and for the account
of California Petroleum, at any time or from time to time, all acts
and things which the Collateral Trustee shall deem necessary or
advisable to protect or preserve the Collateral and to realize upon
the Collateral;
(vi) to extend the time of payment of any or all of the
Collateral and to make any allowance and other adjustments with
reference thereto; and
(vii) to exercise any of the remedies set forth in the Security
Documents;
provided that the Collateral Trustee shall give California Petroleum not less
than thirty days prior written notice of the time and place of any sale or
other intended disposition of any Collateral. California Petroleum agrees
that such notice constitutes "reasonable notification" within the meaning of
Section 9-504(3) of the UCC.
Section 2.03 Right To Initiate Judicial Proceedings. If
an Enforcement Notice is in effect, the Collateral Trustee, subject to the
provisions of Section 2.04(b) and (c), (i) shall have the right and power to
institute and maintain such suits and proceedings as it may deem appropriate
to protect and enforce the rights vested in it by this Collateral Agreement
and each Security Document and (ii) may either after entry, or without entry,
proceed by suit or suits at law or in equity to enforce such rights and to
foreclose upon the Collateral and to sell all or, from time to time, any of
the Collateral under the judgment or decree of a court of competent
jurisdiction.
Section 2.04 Exercise of Powers; Instructions. (a) All of
the powers, remedies and rights of the Collateral Trustee as set forth in this
Collateral Agreement may be exercised by the Collateral Trustee in respect of
any other Security Document as though set forth in full therein and all of the
powers, remedies and rights of the Collateral Trustee set forth in any other
Security Document may, subject to Sections 2.04(b) and (c), be exercised from
time to time as herein and therein provided.
(b) Subject to Section 2.04(c), the Applicable Secured Parties
shall have the right, by one or more instruments in writing executed and
delivered to the Collateral Trustee, to direct the time, method and place of
conducting any proceeding for any right or remedy available to the Collateral
Trustee, or of exercising any trust or power conferred on the Collateral
Trustee, or for the appointment of a receiver, or to direct the taking or the
refraining from taking of any action authorized by any Security Document;
provided that (i) such direction shall not conflict with any provisions of
law, of any Security Document or, if applicable, the Indentures and (ii) the
Collateral Trustee shall be adequately secured and indemnified as provided in
Section 6.04(d). Upon the delivery of any such instrument to the Collateral
Trustee, the Applicable Secured Parties delivering such instrument shall
deliver a copy thereof to California Petroleum and the Indenture Trustees.
Following receipt of any such instrument the Collateral Trustee shall have the
right in its discretion to take any action or omit to take any action which it
deems proper and which is not inconsistent with such direction. The
Collateral Trustee shall have no duty to take or refrain from taking any
action unless explicitly required herein or as instructed in writing as
provided herein.
(c) Notwithstanding anything to the contrary contained herein
or in any other Security Document, so long as any Serial Mortgage Notes are
Outstanding, if the Allocated Principal Amount of Serial Mortgage Notes
relating to a Vessel has been paid in full and an Enforcement Notice has been
delivered under the Term Indenture as a result of (i) a default under any
Acceptable Replacement Charter or other charter relating to such Vessel or
(ii) a Mortgage Event of Default relating to such Vessel, the Collateral
Trustee may not pursue any remedies which the Collateral Trustee otherwise
would be entitled to exercise pursuant to this Article with respect to any
Initial Charter that is not then in default and that has not reached its first
optional termination date, including amounts paid or payable thereunder, and
the related Security Documents.
Section 2.05 Remedies Not Exclusive. (a) No remedy
conferred upon or reserved to the Collateral Trustee hereunder and under the
Collateral Assignments of Charter, the Collateral Assignments of Guarantee and
the Assignments of Mortgage is intended to be exclusive of any other remedy
or remedies, but every such remedy shall be cumulative and shall be in
addition to every other remedy conferred in any Security Document or now or
hereafter existing at law or in equity or by statute.
(b) No delay or omission by the Collateral Trustee to exercise any
right, remedy or power hereunder or under any other Security Document shall
impair any such right, remedy or power or shall be construed to be a waiver
thereof, and every right, power and remedy given by any Security Document to
the Collateral Trustee may, subject to Sections 2.04(b) and (c), be exercised
from time to time and as often as may be deemed expedient by the Collateral
Trustee.
(c) If the Collateral Trustee shall have undertaken to enforce any
right, remedy or power under any Security Document and such enforcement shall
have been discontinued, stayed, enjoined or abandoned for any reason or shall
have been determined adversely to the Collateral Trustee in any related
judicial proceedings, then California Petroleum, the Collateral Trustee and
the Secured Parties shall, subject to any determination in such proceeding,
severally and respectively be restored to their former positions and rights
hereunder with respect to the Trust Estate and in all other respects, and
thereafter all rights, remedies and powers of the Collateral Trustee shall
continue as though no such action had been taken.
(d) All rights of action and of asserting claims upon or under the
Security Documents may be enforced by the Collateral Trustee without the
possession of any Secured Instrument or instrument evidencing any Secured
Obligation or the production thereof at any trial or other proceeding relative
thereto, and any suit or proceeding instituted by the Collateral Trustee shall
be, subject to Sections 6.05(d) and 6.10(b)(ii), brought in its name as
Collateral Trustee and any recovery of judgment shall be held and applied as
part of the Trust Estate.
Section 2.06 Waiver and Estoppel. (a) California
Petroleum, to the extent it may lawfully do so, (i) agrees that it will not at
any time, in any manner whatsoever, claim or take the benefit or advantage of
any appraisement, valuation, stay, extension, moratorium, turnover or
redemption law, or any law permitting it to direct the order in which the
Collateral shall be sold, now or at any time hereafter in force, which may
delay, prevent or otherwise affect the performance or enforcement of any
Security Document, (ii) hereby waives all benefit or advantage of all such
laws and covenants and (iii) agrees that it will not hinder, delay or impede
the execution of any power granted to the Collateral Trustee, in its own right
or as assignee of California Petroleum, in any Security Document but will
suffer and permit the execution of every such power as though no such law were
in force.
(b) California Petroleum, to the extent it may lawfully do so, on
behalf of itself and all who claim through or under it, including, without
limitation, the Owners, any and all subsequent creditors, vendees, assignees
and Lienors, waives and releases all rights to demand or to have any
marshalling of the Collateral upon any sale, whether made under any power of
sale granted in any Security Document or pursuant to judicial proceedings or
upon foreclosure or any enforcement of any Security Document and consents and
agrees that all the Collateral may at any such sale be offered and sold as an
entirety.
(c) California Petroleum waives, to the extent permitted by
applicable law, presentment, demand, protest and any notice of any kind
(except notices explicitly required under any Security Document) in connection
with the Security Documents and any action taken by the Collateral Trustee
with respect to the Collateral.
Section 2.07 Determinations Prior to Enforcement. Except
as otherwise specifically provided herein, the Indenture Trustees shall have
the exclusive authority to direct the conduct of the Collateral Trustee with
respect to (i) any written request under any Security Document for consent or
approval with respect to any matter or thing relating to any Collateral or any
other Person's obligations with respect thereto or (ii) any nonperformance by
any Person of any covenant or any breach of any representation or warranty
thereof set forth in any Security Document.
Section 2.08 Limitation on Collateral Trustee's Duty in
Respect of Collateral. Beyond its duties as to the custody thereof expressly
provided herein or in any Security Document and to account to the Secured
Parties and California Petroleum for moneys and other property received by it
under any Security Document, the Collateral Trustee shall not have any duty to
California Petroleum or to the Secured Parties as to any Collateral in its
possession or control or in the possession or control of any of its agents or
nominees, or any income thereon or as to the preservation of rights against
prior parties or any other rights pertaining thereto. The Collateral Trustee
shall be deemed to have exercised reasonable care in the custody of the
Collateral in its possession if the Collateral is accorded treatment
substantially equal to that which it accords its own property.
Section 2.09 Limitation by Law. All rights, remedies and
powers provided herein may be exercised only to the extent that the exercise
thereof does not violate any applicable provision of law, and all the
provisions hereof are intended to be subject to all applicable mandatory
provisions of law which may be controlling and to be limited to the extent
necessary so that they will not render this Collateral Agreement invalid,
unenforceable in whole or in part or not entitled to be recorded, registered
or filed under provisions of any applicable law.
ARTICLE THREE
THE TRUST ACCOUNTS; DISTRIBUTIONS
Section 3.01 The Trust Accounts. (a) There is hereby
established and, at all times hereafter until the earlier of the payment in
full of the Secured Obligations under the Serial Indenture or the termination
of the trusts created by this Collateral Agreement, there shall be maintained
with the Collateral Trustee at the corporate trust office of the Collateral
Trustee, a trust account (the "Initial Revenue Account") in the name and under
the control of the Collateral Trustee for the benefit of the Indenture
Trustees for the benefit of holders of the Serial Mortgage Notes and the Term
Mortgage Notes equally and ratably into which there shall be deposited, until
the first termination date under each Initial Charter any Charterhire payments
under such Initial Charter.
(b) There is hereby established and, at all times hereafter until
the trusts created by this Collateral Agreement shall have terminated, there
shall be maintained with the Collateral Trustee at the corporate trust office
of the Collateral Trustee, a trust account (the "Second Revenue Account") in
the name and under the control of the Collateral Trustee for the benefit of
the Term Indenture Trustee for the benefit of holders of the Term Mortgage
Notes equally and ratably into which there shall be deposited for each Vessel
(i) if the Initial Charter relating to such Vessel is terminated, any
Charterhire payments under any Acceptable Replacement Charter or other charter
for such Vessel and (ii) if the Initial Charter relating to such Vessel
continues in effect after the Allocated Principal Amount of the Serial
Mortgage Notes relating to such Vessel have been paid in full, any Charterhire
payments under such Initial Charter.
(c) There is hereby established and, at all times hereafter
until the trusts created by this Collateral Agreement shall have terminated,
there shall be maintained with the Collateral Trustee at the corporate trust
office of the Collateral Trustee, a trust account (the "Termination Account")
in the name and under the control of the Collateral Trustee for the benefit of
the Term Indenture Trustee for the benefit of holders of the Term Mortgage
Notes equally and ratably into which there shall be deposited for each Vessel,
if the related Initial Charter is terminated at the option of the Initial
Charterer the Termination Payment payable under such Initial Charter. Any net
proceeds from the sale, if any, of a Vessel for which the related Initial
Charter has reached its first optional termination date shall be deposited
into the Termination Account to be used along with the related Termination
Payment (and any excess amounts referred to in the next succeeding sentence
arising from previous Vessel sales and remaining in the Termination Account)
in connection with the related mandatory redemption, if any, of Term Mortgage
Notes pursuant to Section 10.1(d) of the Term Indenture. The excess, if any,
relating to such Vessel over the amount necessary to pay all amounts due and
payable in connection with such related mandatory redemption, shall be
disbursed by the Collateral Trustee, to the extent necessary on each
succeeding Payment Date, to make payments designated to be made from the
Termination Account on such Payment Date pursuant to this Section 3.01(c),
Section 3.03(b) or (c), or Section 3.04 as the case may be.
Any Termination Payment deposited into the Termination Account
shall be disbursed by the Collateral Trustee (i) if a notice of mandatory
redemption is delivered by the Owners as a result of such termination, in
accordance with Section 10.1(d) of the Term Indenture or (ii) if a notice of
mandatory redemption is not delivered by the Owners as a result of such
termination, to the extent necessary on each succeeding Payment Date, to make
payments designated to be made from the Termination Account on such Payment
Date pursuant to Section 3.03(b) or (c), as the case may be.
(d) There is hereby established and, at all times hereafter
until the trusts created by this Collateral Agreement shall have terminated,
there shall be maintained with the Collateral Trustee at the corporate trust
office of the Collateral Trustee, a trust account (the "Operating Account") in
the name and under the control of the Collateral Trustee into which the
Collateral Trustee shall deposit for each Vessel, pursuant to Section 3.03(a),
(b) or (c), as the case may be, for the applicable Payment Date, the Recurring
Fees and Taxes, the Management Fee and the Technical Advisor's Fee. Funds
deposited into the Operating Account on each Payment Date will be disbursed by
the Collateral Trustee (i) from time to time, to pay the Recurring Fees and
Taxes for each Vessel as such amounts become due and payable upon presentation
of invoices therefor pursuant to the Management Agreement, (ii) to pay the
Management Fee for each Vessel to the Manager and (iii) to pay the Technical
Advisor's Fee for each Vessel to the Technical Advisor; provided that the
Management Fee and the Technical Advisor's Fee shall be payable only to the
extent that the funds remaining in the Operating Account after any such
payment would be sufficient to pay the Recurring Fees and Taxes for the
applicable period.
(e) There is hereby established and, at all times hereafter
until the trusts created by this Collateral Agreement shall have terminated,
there shall be maintained with the Collateral Trustee at the corporate trust
office of the Collateral Trustee, a trust account (the "Equity Account") in
the name and under the control of the Collateral Trustee into which the
Collateral Trustee shall deposit, pursuant to Section 3.03(a), (b) or (c), as
the case may be, for each Equity Transfer Date, the Equity Remainder, if any,
for each Vessel. Any balance remaining in the Equity Account after payment in
full of all of the Secured Obligations shall be disbursed promptly thereafter
to the Owners, pro rata.
(f) There is hereby established and, at all times hereafter
until the trusts created by this Collateral Agreement shall have terminated,
there shall be maintained with the Collateral Trustee at the corporate trust
office of the Collateral Trustee, a trust account (the "Casualty Account") in
the name and under the control of the Collateral Trustee into which there
shall be deposited, pursuant to the provisions of the related Security
Documents, any insurance proceeds or other payments in connection with the
occurrence of a Total Loss to any Vessel. Amounts deposited in the Casualty
Account will be disbursed by the Collateral Trustee in accordance with Section
11.1(b) of the Serial Indenture and Section 10.1(c) of the Term Indenture,
respectively.
(g) There is hereby established and, at all times hereafter
until the trusts created by this Collateral Agreement shall have terminated,
there shall be maintained with the Collateral Trustee at the corporate trust
office of the Collateral Trustee, a trust account (the "Collateral Account")
in the name and under the control of the Collateral Trustee into which there
shall be deposited from time to time (i) the cash proceeds of any sale of, or
other realization upon, all or any part of the Collateral upon the exercise by
the Collateral Trustee of any of the rights and remedies described in Article
Two upon receipt of an Enforcement Notice and (ii) any other amount received
by the Collateral Trustee pursuant to any of the Security Documents for which
this Collateral Agreement does not specify another Trust Account into which
such amount is to be deposited. Any net proceeds from the sale, if any, of a
Vessel for which the related Initial Charter has been terminated that are in
excess of the amount necessary to pay all amounts due and payable in
connection with the related mandatory redemption, shall be deposited into the
Termination Account and disbursed by the Collateral Trustee, to the extent
necessary on each succeeding Payment Date, to make payments designated to be
made from the Termination Account on such Payment Date pursuant to Section
3.03(b) or (c), as the case may be, or to make Permitted Payments pursuant to
Section 3.03(d).
While an Enforcement Notice is in effect, all moneys which are
required by any Security Document to be delivered to the Collateral Trustee or
which are received by the Collateral Trustee or any agent or nominee of the
Collateral Trustee in respect of the Collateral, whether in connection with
the exercise of the remedies provided in any Security Document or otherwise,
shall be deposited in the Collateral Account and held by the Collateral
Trustee as part of the Trust Estate and applied in accordance with the terms
of this Collateral Agreement; provided that any moneys received by the
Collateral Trustee for deposit in any other Trust Account which is received
pursuant to the Security Documents relating to any Initial Charter that is not
then in default and that has not reached its first optional termination date,
including amounts paid or payable thereunder, shall be deposited in such other
Trust Account and applied in accordance with the provisions applicable to such
other Trust Account; provided further that notwithstanding anything in this
Section 3.03(g) to the contrary, all such moneys relating to Collateral with
respect to which the Lien of the Serial Indenture has been released shall be
deposited in the Termination Account and applied in accordance with the terms
of this Collateral Agreement.
(h) There is hereby established and, at all times hereafter
until the trusts created by this Collateral Agreement shall have terminated,
there shall be maintained with the Collateral Trustee at the corporate trust
office of the Collateral Trustee, a trust account (the "Sinking Fund Reserve
Account") in the name and under the control of the Collateral Trustee for the
benefit of the Term Indenture Trustee for the benefit of holders of the Term
Mortgage Notes equally and ratably into which there shall be deposited from
time to time pursuant to Section 3.03(b) or (c), as the case may be, for each
Payment Date that is not a sinking fund redemption date or a date for the
final payment of principal on the Term Mortgage Notes, an amount, if any,
equal to one-half of the aggregate sinking fund redemption amount or amount of
principal due and payable on the Term Mortgage Notes on the next succeeding
Payment Date. Any balance remaining in the Sinking Fund Reserve Account after
payment in full of all of the Secured Obligations shall be disbursed promptly
thereafter to the Owners, pro rata.
(i) Any income received by the Collateral Trustee with respect
to the balance from time to time standing to the credit of any Trust Account,
including any interest or capital gains on Permitted Investments, shall
remain, or be deposited, in such Trust Account. All cash amounts on deposit
from time to time in the Trust Accounts, together with any Permitted
Investments from time to time made with amounts on deposit therein as provided
herein shall constitute part of the Collateral. The deposit or holding of
such amounts in any Trust Account shall not constitute payment of the Secured
Obligations until applied to such Secured Obligations as provided herein.
Section 3.02 Investment of Funds Deposited in Trust
Accounts. Amounts on deposit in the Trust Accounts shall be invested and
re-invested from time to time in such Permitted Investments as the Collateral
Trustee shall determine in its sole discretion, which Permitted Investments
shall be held in the name and be under the control of the Collateral Trustee.
In order to provide the Collateral Trustee, for the benefit of the Secured
Parties, with a perfected security interest in any Permitted Investment, each
Permitted Investment shall be either:
(A) evidenced by negotiable certificates or instruments, or if
non-negotiable then issued in the name of the Collateral Trustee,
which (together with any appropriate instruments of transfer) are
delivered to, and held by, the Collateral Trustee or any agent
thereof in the State of New York; or
(B) in book-entry form and issued by the United States and
subject to pledge under applicable state law and Treasury regulations
and as to which (in the opinion of counsel to the Collateral Trustee)
appropriate measures shall have been taken for perfection of the
Security Interests.
In the absence of gross negligence or willful misconduct, the Collateral
Trustee shall not be responsible for any loss resulting from any such
investment.
Section 3.03 Payment Dates.
(a) On each Payment Date on or prior to ____, 2002, the
Collateral Trustee shall withdraw funds from the Initial Revenue Account and
then from the Equity Account (except for clause (vii) below) and make the
payments set forth below in the following order, in each case to the extent
funds are available after the preceding payment has been made in full:
(i) to deposit into the Operating Account the amount of the
Recurring Fees and Taxes then due and payable for each Vessel, or
which will become due and payable prior to the next succeeding
Payment Date;
(ii) to pay all interest then due and payable on the Serial
Mortgage Notes to the holders of the Serial Mortgage Notes, ratably
in the proportion that the amount of such payment then due under each
such Serial Mortgage Note bears to the aggregate amount of the
payments then due under all such Serial Mortgage Notes;
(iii) if such Payment Date is the maturity date for any Serial
Mortgage Notes, to pay the aggregate amount of principal then due and
payable on such Serial Mortgage Notes to the holders of such Serial
Mortgage Notes, ratably in the proportion that the amount of such
principal then due under each such Serial Mortgage Note bears to the
aggregate amount of such principal then due under all such Serial
Mortgage Notes;
(iv) to pay all interest then due and payable on the Term
Mortgage Notes to the holders of the Term Mortgage Notes, ratably in
the proportion that the amount of such payment then due under each
such Term Mortgage Note bears to the aggregate amount of the payments
then due under all such Term Mortgage Notes;
(v) to pay to the Indenture Trustees and the Collateral
Trustee, respectively, the fees and expenses then due and payable
under the Indentures to the Indenture Trustees and under the
Collateral Agreement to the Collateral Trustee;
(vi) to deposit into the Operating Account the Management Fee
and the Technical Advisor's Fee then due and payable for each Vessel;
and
(vii) if such Payment Date is an Equity Transfer Date, to the
extent funds are available, to deposit the Equity Remainder for each
Vessel into the Equity Account.
After the foregoing payments have been made, the Collateral
Trustee shall invest (and reinvest, as applicable) any balance remaining in
the Initial Revenue Account and the Equity Account in Permitted Investments
that will mature on or before the next succeeding Payment Date.
(b) On each Payment Date that occurs after __________ __, 2002
and on or before __________ __, 2005, the Collateral Trustee shall withdraw
funds from the Initial Revenue Account, the Second Revenue Account, the
Termination Account, the Sinking Fund Reserve Account, the Equity Account, or
the applicable combination of the foregoing indicated below, as the case may
be, and make the payments set forth below in the following order, in each case
to the extent funds are available in the applicable Trust Accounts after the
preceding payment has been made in full:
(i) deposit into the Operating Account the amount of the
Recurring Fees and Taxes then due and payable, or which will become
due and payable prior to the next succeeding Payment Date for each
Vessel then subject to an Initial Charter that has not reached its
first optional termination date, first from the Initial Revenue
Account and then from the Equity Account, in each case to the extent
of the funds available therein;
(ii) to pay first from the Initial Revenue Account and then from
the Equity Account, in each case to the extent of the funds available
therein, all interest then due and payable on the Serial Mortgage
Notes to the holders of the Serial Mortgage Notes, ratably in the
proportion that the amount of such payment then due under each such
Serial Mortgage Note bears to the aggregate amount of the payments
then due under all such Serial Mortgage Notes;
(iii) if such Payment Date is the maturity date for any Serial
Mortgage Notes, to pay from the Initial Revenue Account and then from
the Equity Account, in each case to the extent of the funds available
therein, the aggregate amount of principal then due and payable on
such Serial Mortgage Notes to the holders of such Serial Mortgage
Notes, ratably in the proportion that the amount of such principal
then due under each such Serial Mortgage Note bears to the aggregate
amount of such principal then due under all such Serial Mortgage
Notes;
(iv) to pay first from the Initial Revenue Account and then from
the Equity Account, in each case to the extent of the funds available
therein, all interest then due and payable on the Allocated Principal
Amount of Term Mortgage Notes for each Vessel then subject to an
Initial Charter that has not reached its first optional termination
date to the holders of the Term Mortgage Notes, ratably in the
proportion that the amount of such payment then due under each such
Term Mortgage Note bears to the aggregate amount of the payments then
due under all such Term Mortgage Notes;
(v) to deposit into the Operating Account the amount of the
Recurring Fees and Taxes then due and payable, or which will become
due and payable prior to the next succeeding Payment Date for each
Vessel for which the related Initial Charter has reached its first
optional termination date, first from the Second Revenue Account,
then from the Termination Account and then from the Equity Account,
in each case to the extent of the funds available therein;
(vi) to pay first from the Second Revenue Account, then from the
Termination Account and then from the Equity Account, in each case to
the extent of the funds available therein, all interest then due and
payable on the Allocated Principal Amount of the Term Mortgage Notes
for each Vessel which has reached the first optional termination date
under its Initial Charter to the holders of the Term Mortgage Notes,
ratably in the proportion that the amount of such payment then due
under each such Term Mortgage Note bears to the aggregate amount of
the payments then due under all such Term Mortgage Notes;
(vii) (A) if such Payment Date is a sinking fund redemption date
or a date for the payment of principal on the Term Mortgage Notes, to
pay first from the Sinking Fund Reserve Account, then from the Second
Revenue Account, then from the Termination Account and then from the
Equity Account, in each case to the extent of the funds available
therein, the aggregate sinking fund redemption amount or amount of
principal then due and payable on the Term Mortgage Notes, ratably,
in the case of payment due on maturity, in the proportion that the
amount of such payment then due under each such Term Mortgage Note
bears to the aggregate amount of the payment then due under all such
Term Mortgage Notes and (B) if such Payment Date is not a sinking
fund redemption date or a date for the payment of principal on the
Term Mortgage Notes, to deposit into the Sinking Fund Reserve Account
first from the Second Revenue Account, then from the Termination
Account and then from the Equity Account, in each case to the extent
of the funds available therein, an amount, if any, equal to one-half
of the aggregate sinking fund redemption amount or amount of
principal due and payable on the Term Mortgage Notes on the next
succeeding Payment Date;
(viii) to pay first from the Initial Revenue Account and then from
the Equity Account, in each case to the extent of the funds available
therein, to the Indenture Trustee and the Collateral Trustee,
respectively, the portion of the aggregate amount of the fees and
expenses then due under the Indentures to the Indenture Trustee and
under the Collateral Agreement to the Collateral Trustee, calculated
by multiplying the aggregate amount of such fees and expenses by a
fraction, the numerator of which is the number of Vessels then
subject to Initial Charters that have not reached their respective
first optional termination date and the denominator of which is the
total number of Vessels then subject to a Mortgage;
(ix) to pay to the Indenture Trustee, and the Collateral
Trustee, respectively, first from the Second Revenue Account, then
from the Termination Account and then from the Equity Account, in
each case to the extent of the funds therein, the portion of the
aggregate amount of the fees and expenses then due under the
Indentures to the Indenture Trustee and under the Collateral
Agreement to the Collateral Trustee, calculated by multiplying the
aggregate amount of such fees and expenses by a fraction, the
numerator of which is the number of Vessels for which the Initial
Charters have reached their respective first optional termination
date and the denominator of which is the total number of Vessels then
subject to a Mortgage;
(x) to deposit into the Operating Account first from the
Initial Revenue Account and then from the Equity Account, to the
extent of the funds available therein, the Management Fee and the
Technical Advisor's Fee then due and payable for each Vessel then
subject to an Initial Charter that has not reached its first optional
termination date;
(xi) to deposit into the Operating Account first from the Second
Revenue Account, then from the Termination Account and then from the
Equity Account, in each case to the extent of the funds available
therein, the Management Fee and the Technical Advisor's Fee then due
and payable for each Vessel for which the related Initial Charter has
reached its first optional termination date;
(xii) if such Payment Date is an Equity Transfer Date, to
withdraw from the Initial Revenue Account, to the extent funds are
available, and to deposit into the Equity Account the Equity
Remainder for each Vessel then subject to an Initial Charter that has
not reached its first optional termination date; and
(xiii) if such Payment Date is an Equity Transfer Date, to
withdraw first from the Second Revenue Account and then from the
Termination Account, in each case to the extent of the funds
available therein, and to deposit into the Equity Account the Equity
Remainder for each Vessel for which the related Initial Charter has
reached its first optional termination date.
After the foregoing payments have been made, the Collateral
Trustee shall invest (and reinvest, as applicable) any balance remaining in
each of the Initial Revenue Account (if such Payment Date is not the date upon
which the Serial Mortgage Notes are paid in full), the Second Revenue Account,
the Equity Account, the Termination Account and the Sinking Fund Reserve
Account in Permitted Investments that will mature on or before the next
succeeding Payment Date.
On the final maturity date for the Serial Mortgage Notes, after
all payments have been made in full to the holders of the Serial Mortgage
Notes, the Collateral Trustee will transfer any balance remaining in the
Initial Revenue Account to the Second Revenue Account.
(c) On each Payment Date after ________, 2005, the Collateral
Trustee shall withdraw funds first from the Sinking Fund Reserve Account (only
in the case of clause (iii)(B) below), then from the Second Revenue Account,
then from the Termination Account and then from the Equity Account, in each
case to the extent of the funds available therein, to pay:
(i) to deposit into the Operating Account the Recurring Fees
and Taxes then due and payable for each Vessel, or which will become
due and payable prior to the next succeeding Payment Date;
(ii) to pay all interest then due and payable on the Term
Mortgage Notes to the Holders of the Term Mortgage Notes, ratably in
the proportion that the amount of such payment then due under each
Term Mortgage Note bears to the aggregate amount of the payments then
due under all such Term Mortgage Notes;
(iii) (A) if such Payment Date is a sinking fund redemption date or
a date for the payment of principal on the Term Mortgage Notes, to
pay the aggregate sinking fund redemption amount or amount of
principal then due and payable on the Term Mortgage Notes, ratably,
in the case of payment due on maturity, in the proportion that the
amount of such payment then due under each such Term Mortgage Note
bears to the aggregate amount of the payment then due under all such
Term Mortgage Notes and (B) if such Payment Date is not a sinking
fund redemption date or a date for the payment of principal on the
Term Mortgage Notes, to deposit into the Sinking Fund Reserve Account
an amount, if any, equal to one-half of the aggregate sinking fund
redemption amount or amount of principal due and payable on the Term
Mortgage Notes on the next succeeding Payment Date;
(iv) to pay to the Indenture Trustee and the Collateral Trustee,
respectively, the fees and expenses then due and payable under the
Term Indenture to the Indenture Trustee and under the Collateral
Agreement to the Collateral Trustee;
(v) to deposit into the Operating Account, the Management Fee
and the Technical Advisor's Fee then due and payable for each Vessel;
and
(vi) if such Payment Date is an Equity Transfer Date, to the
extent funds are available, to deposit the Equity Remainder for each
Vessel into the Equity Account.
After the foregoing payments have been made, the Indenture Trustee will invest
(and reinvest, as applicable) any balance remaining in each of the Sinking
Fund Reserve Account, the Second Revenue Account, the Equity Account and the
Termination Account in Permitted Investments that will mature on or before the
next succeeding Payment Date. If so directed by California Petroleum and if
no Indenture Event of Default has occurred and is continuing, the Indenture
Trustee will purchase Term Mortgage Notes in the open market from funds, if
any, available in the Sinking Fund Reserve Account, provided that (a) the
purchase price of such Term Mortgage Notes is less than 100% of the principal
amount thereof plus accrued and unpaid interest to the date of such purchase
and (b) such Term Mortgage Notes are used to satisfy California Petroleum's
sinking fund obligations on the Term Mortgage Notes on the next succeeding
Payment Date.
(d) On each Payment Date occurring after the date on which
each Vessel either (i) has been sold, (ii) is subject to an Acceptable
Replacement Charter or (iii) is subject to an Initial Charter for which the
last optional termination date has occurred and has not been exercised, the
Collateral Trustee shall if so directed by the Manager disburse excess funds
contained in the Second Revenue Account and Termination Account to the Owners,
pro rata in proportion to the amount of such funds deposited in such Trust
Accounts in respect of such Owner's Vessel. For purposes of this Section
3.03(d), amounts contained in the Second Revenue Account and Termination
Account shall on any date of determination be deemed excess funds to the
extent, if any, that charterhire payments under all Initial Charters and
Acceptable Replacement Charters then in effect during the non-cancellable term
of such charters, after giving effect to (1) any "gross up" of such amounts as
a result of any withholding tax on such charterhire payments, (2) the amounts
then held in the Termination Account, (3) the amounts then held in the Second
Revenue Account and (4) all fees and expenses, if any, incurred but unpaid in
connection with the recharter of the Vessels, provide sufficient funds for the
payment in full when due of (A) sinking fund payments and payments of
principal and interest on the then Outstanding Term Mortgage Notes in
accordance with the revised schedule of sinking fund and principal payments
that is applicable on such date of determination, (B) the amount of Recurring
Fees and Taxes for all such Vessels, (C) the amount of Management Fees and
Technical Advisor's Fees for all such Vessels, (D) the amount of fees and
expenses of the Indenture Trustee and Collateral Trustee and (E) an amount at
least equal to 30% of the estimated amounts, on a per annum basis, referred to
in clauses (B), (C) and (D) above for miscellaneous or unexpected expenses.
Section 3.04 Application of Moneys in the Collateral
Account. The Collateral Trustee shall have the right (pursuant to Section
4.07) at any time to apply moneys held by it in the Collateral Account to the
payment of due and unpaid Trustee Fees and any moneys held by it in the
Termination Account pursuant to Section 3.01(g) to the payment of due and
unpaid Trustee Fees relating to the Term Mortgage Notes. Any moneys held by
the Collateral Trustee in the Collateral Account pursuant to clause (i) of the
first paragraph of Section 3.01(g) or the second paragraph of Section 3.01(g)
shall, to the extent available for distribution (it being understood that the
Collateral Trustee may liquidate Permitted Investments prior to maturity in
order to make a distribution pursuant to this Section 3.04), be distributed by
the Collateral Trustee on each Distribution Date in the following order of
priority:
First: to the Collateral Trustee for any due and unpaid Trustee
Fees and then to all reasonable expenses and charges, including the
expenses of any taking, attorney's fees, court costs and other
expenses or advances made or incurred by or on behalf of the
Collateral Trustee in connection with the ascertainment or protection
of its rights and the pursuance of its remedies hereunder or under
any of the Security Documents (including, without limitation, the
reasonable fees and disbursements of counsel);
Second: to the Indenture Trustees in an amount equal to the due
and unpaid interest on the Serial Mortgage Notes and Term Mortgage
Notes Outstanding for payment of such due and unpaid interest and, if
such money shall be insufficient to pay all such amounts in full,
then ratably to the applicable Indenture Trustees in proportion to
the due and unpaid amounts thereof on such Distribution Date;
Third: to the Indenture Trustees in an amount equal to the due
and unpaid principal on the Serial Mortgage Notes and Term Mortgage
Notes Outstanding for payment of such due and unpaid principal and,
if such money shall be insufficient to pay all such amounts in full,
then ratably to the applicable Indenture Trustees in proportion to
the due and unpaid amounts thereof on such Distribution Date;
Fourth: to each of the Indenture Trustees in an amount equal to
all other sums which constitute Secured Obligations then due and
payable and, if such moneys shall be insufficient to pay such sums
in full, then ratably to the Indenture Trustees in proportion to such
sums; and
Fifth: any surplus to the Owners or their successors or assigns
or to whomsoever may be lawfully entitled to receive the same or as a
court of competent jurisdiction may direct.
Any moneys held by the Collateral Trustee in the Collateral
Account pursuant to clause (ii) of the first paragraph of Section 3.01(g)
shall be applied by the Collateral Trustee to the purposes for which they were
paid or held pursuant to the applicable provisions of the Security Documents.
In the case of an Event of Default under the Term Indenture,
any moneys held by the Collateral Trustee in the Termination Account shall be
applied by the Collateral Trustee as set forth above in subparagraphs First
through Fourth (with any excess deposited into the Termination Account),
provided that no such funds shall be paid to the Serial Indenture Trustee for
its benefit or for the benefit of holders of the Serial Mortgage Notes.
Section 3.05 Collateral Trustee's Calculations. In making
the determinations and allocations required by this Article Three, the
Collateral Trustee may rely upon information supplied by the Indenture
Trustees as to amounts payable with respect to Secured Obligations arising
under or with respect to the Indentures or the Notes issued thereunder, and
the Collateral Trustee shall have no liability to California Petroleum or any
of the Secured Parties for actions taken in reliance on such information. All
distributions made by the Collateral Trustee pursuant to this Article Three
shall (subject to any decree of any court of competent jurisdiction) be final,
and the Collateral Trustee shall have no duty to inquire as to the application
of any amounts so distributed. However, if at any time the Collateral Trustee
determines that an allocation or distribution previously made pursuant to this
Article Three was based on a mistake of fact, the Collateral Trustee may in
its discretion, but shall not be obligated to, adjust subsequent allocations
and distributions thereunder so that, on a cumulative basis, the Secured
Parties receive the distributions to which they would have been entitled if
such mistake of fact had not been made.
ARTICLE FOUR
AGREEMENTS WITH COLLATERAL TRUSTEE
The Indenture Trustees and California Petroleum agree as follows:
Section 4.01 Delivery of Secured Instruments and Security
Documents. California Petroleum shall deliver to the Collateral Trustee true
and complete copies of all Secured Instruments in effect as of the date this
Collateral Agreement shall become effective, and shall deliver to the
Collateral Trustee, promptly upon the execution thereof, a true and complete
copy of each Secured Instrument and all amendments, modifications or
supplements to any Secured Instrument entered into after such time. California
Petroleum shall deliver to the Collateral Trustee the counterpart of each
Security Document marked "Secured Party's Original".
Section 4.02 Information as to Loan Agreements and
Indenture Trustees. The Indenture Trustees shall deliver to the Collateral
Trustee, on the date this Collateral Agreement becomes effective and from time
to time upon request of the Collateral Trustee, a list setting forth as of a
date not more than 30 days prior to the date of such delivery, the aggregate
unpaid principal amount of the Serial Loans and the Term Loan for each Owner
under the related Loan Agreements and the name and address of the Indenture
Trustees. In addition, each Indenture Trustee shall promptly notify the
Collateral Trustee of any change in the identity of such Indenture Trustee.
Section 4.03 Representations and Warranties; Further
Assurances. Whether or not an Enforcement Notice is then in effect,
California Petroleum will, from time to time, execute, deliver, file and
record any statement, assignment, instrument, document, mortgage, agreement or
other paper and take any other action, (including, without limitation, any
filings of financing or continuation statements under the UCC) that from time
to time may be necessary or desirable, or that the Collateral Trustee, any
Indenture Trustee or the Majority Noteholders may request, in order to create,
preserve, perfect, confirm or validate the Security Interests or to enable the
Collateral Trustee and the Secured Parties to obtain the full benefits of this
Agreement, or to enable the Collateral Trustee to exercise and enforce any of
its rights, powers and remedies hereunder with respect to any of the
Collateral. The Collateral Trustee shall be entitled to withdraw from the
Operating Account amounts sufficient to pay the costs of, or incidental to,
any recording or filing of any financing or continuation statement,
assignment, instrument, document, mortgage, agreement or other paper
concerning the Collateral. If at any time California Petroleum shall refuse
to sign promptly any financing or continuation statement, California Petroleum
also hereby authorizes the Collateral Trustee to sign and to file such
financing or continuation statement without the signature of California
Petroleum to the extent permitted by applicable law. California Petroleum
agrees that a photographic, photostatic or other reproduction of any Security
Document or any Mortgage or of a financing statement is sufficient as a
financing statement.
Section 4.04 Other Agreements of California Petroleum.
(a) California Petroleum will not change (A) the location of its chief
executive office or chief place of business, (B) the counties where it keeps
or holds any Collateral in its possession at any time or any records relating
to the Collateral or (C) the number of counties in the Commonwealth of
Massachusetts in which it has a place of business unless, in each case, it
shall have given the Collateral Trustee prior notice thereof and (at its own
cost and expense) delivered an opinion of counsel with respect thereto prior
to taking such action in customary form confirming the continued validity and
perfection under the UCC (to the extent such Security Interests may be
perfected under the UCC) of the Security Interests granted hereby (which
opinion may contain such exceptions and assumptions as are customary in a
legal opinion of such type). California Petroleum shall not in any event
change the location of any Collateral in its possession at any time if such
change would cause the Security Interests in such Collateral to lapse or cease
to be perfected unless prior to taking such action it shall have taken such
actions as may be necessary to prevent such lapse in perfection or failure to
be perfected.
(b) California Petroleum will not dispose of any Collateral
in its possession at any time or create, incur or suffer to exist any Lien
with respect to any Collateral.
(c) California Petroleum will, promptly upon request, provide to
the Collateral Trustee all information and evidence it may reasonably request
concerning the Collateral to enable the Collateral Trustee to enforce the
provisions of this Collateral Agreement.
(d) California Petroleum will at all times do nothing to impair the
rights of the Collateral Trustee and the Secured Parties in and to the
Collateral.
(e) California Petroleum will permit the Collateral Trustee, the
Indenture Trustees or any agent designated by any of them, from time to time
during normal business hours, to inspect, audit, check and make abstracts from
California Petroleum's books, records and other papers relating to the
Collateral.
(f) If any Collateral is at any time in the possession or control
of any warehouseman, bailee or any agent or processor of California Petroleum,
California Petroleum shall notify such warehouseman, bailee, agent or
processor of the Security Interest created under the Security Documents and to
hold all such Collateral for the account of the Collateral Trustee subject to
the instructions of the Collateral Trustee.
(g) Except as otherwise provided herein, California Petroleum
will not amend any Security Document without the prior written consent of the
Collateral Trustee as instructed by the Indenture Trustees or the Applicable
Secured Parties.
ARTICLE FIVE
RELEASES; NON-DISTURBANCE
Section 5.01 Releases. (a) In connection with the
termination of the Liens created by the Security Documents in whole or in part
or in connection with any disposition of Collateral permitted hereby or by any
Security Document, the Collateral Trustee will at the request of California
Petroleum as promptly as practicable release from the Lien created by the
Security Documents (x) all the Collateral (in connection with a termination of
all of the Security Interests) or (y) the relevant Collateral and deliver such
Collateral that is in its possession to California Petroleum and execute and
deliver such documents, certificates or other instruments as California
Petroleum shall reasonably request to evidence the termination of the Security
Interests or the release of such Collateral, as the case may be. Any such
request shall be in writing signed by an Authorized Financial Officer of
California Petroleum, shall describe the property to be released in reasonable
detail, and shall state that such release is or will be in accordance with the
Secured Instruments and the Security Documents. Each release instrument to be
delivered pursuant to any provision of this Collateral Agreement shall be in
such form as is reasonably requested by California Petroleum and, where
appropriate, shall be in recordable form or, in the case of UCC Termination
Statements, in the statutorily-prescribed form.
Section 5.02 Non-Disturbance. So long as no Charter Event
of Default shall have occurred and be continuing under any Initial Charter,
Acceptable Replacement Charter or other charter, the Security Interest of the
Collateral Trustee in such Initial Charter, Acceptable Replacement Charter or
other charter and the related Vessel created hereby shall be subject to the
rights, if any, of Chevron Transport under such Initial Charter or the
charterer under such Acceptable Replacement Charter or other charter, as the
case may be.
ARTICLE SIX
THE COLLATERAL TRUSTEE
Section 6.01 Acceptance of Trust. The Collateral Trustee,
for itself and its successors, hereby accepts the trust created by this
Collateral Agreement upon the terms and conditions hereof.
Section 6.02 Exculpatory Provisions. (a) The Collateral
Trustee shall not be responsible in any manner whatsoever for the correctness
of any recitals, statements, representations or warranties, except its own, in
the Security Documents. The Collateral Trustee makes no representations as to
the value or condition of the Trust Estate or any part thereof, or as to the
title of California Petroleum or any Owner thereto or as to the security
afforded by any Security Document, or as to the validity, execution (except
its own execution), enforceability, legality or sufficiency of any of the
Security Documents or the Secured Obligations, and the Collateral Trustee shall
incur no liability or responsibility in respect of any such matters. The
Collateral Trustee shall not be responsible for insuring the Collateral or for
the payment of taxes, charges or assessments or discharging of liens upon the
Collateral or otherwise as to the maintenance of the Collateral, except that
if the Collateral Trustee takes possession of any Collateral, the Collateral
Trustee shall use reasonable care in the preservation of the Collateral in its
possession.
(b) The Collateral Trustee shall not be required to ascertain or
inquire as to the performance by California Petroleum or any Owner of any of
the covenants or agreements contained in any Security Document or Secured
Instrument. Whenever it is necessary, or in the opinion of the Collateral
Trustee advisable, for the Collateral Trustee to ascertain the amount of
Secured Obligations then held by Secured Parties, the Collateral Trustee may
rely on certificates of the Serial Indenture Trustee or the Term Indenture
Trustee, as the case may be, with respect to Secured Obligations arising under
or with respect to the Serial Indenture and the Term Indenture, respectively,
and the Notes issued thereunder.
(c) The Collateral Trustee shall be under no obligation or duty to
take any action under any Security Document if taking such action (i)(A) would
subject the Collateral Trustee to a tax in any jurisdiction where it is not
then subject to a tax or (B) would require the Collateral Trustee to qualify
to do business in any jurisdiction where it is not then so qualified, unless in
either case the Collateral Trustee receives security or indemnity satisfactory
to it against such tax (or equivalent liability), or any liability resulting
from such qualification, in each case as results from the taking of such
action under this Collateral Agreement or any Security Document or (ii) would
subject the Collateral Trustee to in personam jurisdiction in any location
where it is not then so subject.
(d) Notwithstanding any other provision of this Collateral
Agreement or any other Security Document, the Collateral Trustee, in its
individual capacity, shall not be personally liable for any action taken or
omitted to be taken by it in accordance with the Security Documents except for
its own negligence or bad faith.
(e) The Collateral Trustee shall have the same rights with respect
to any Secured Obligation held by it as any other Secured Party and may
exercise such rights as though it were not the Collateral Trustee hereunder,
and may accept deposits from, lend money to, and generally engage in any kind
of banking or trust business with California Petroleum, any Owner, Chevron
Transport or Chevron, as if it were not the Collateral Trustee.
Section 6.03 Delegation of Duties. The Collateral Trustee
may execute any of the trusts or powers hereof and perform any duty hereunder
either directly or by or though agents or attorneys-in-fact. The Collateral
Trustee shall be entitled to advice of counsel and other experts concerning
all matters pertaining to such trusts, powers and duties. The Collateral
Trustee shall not be responsible for the negligence or misconduct of any agents
or attorneys-in-fact selected by them in good faith without negligence.
Section 6.04 Reliance by Collateral Trustee. (a)
Whenever in the administration of the Security Documents the Collateral
Trustee shall deem it necessary or desirable that a factual matter be proved
or established in connection with the Collateral Trustee taking, suffering or
omitting any actions, such matter (unless other evidence in respect thereof is
herein specifically prescribed) may be deemed to be conclusively proved or
established by a certificate of an Authorized Financial Officer of California
Petroleum delivered to the Collateral Trustee, and such certificate shall be
full warrant to the Collateral Trustee for any action taken, suffered or
omitted in reliance thereon, subject, however, to the provisions of Section
6.05.
(b) The Collateral Trustee may consult with counsel and other
experts, and any opinion of counsel or written opinion from such other expert
shall be full and complete authorization and protection in respect of any
action taken or suffered by it under any Security Document in accordance
therewith. The Collateral Trustee shall have the right at any time to seek
instructions concerning the administration of the Security Documents from any
court of competent jurisdiction.
(c) The Collateral Trustee may rely, and shall be fully protected
in acting, upon any resolution, statement, certificate, instrument, opinion,
report, notice, request, consent, order, bond or other paper or document which
it has no reason to believe to be other than genuine and to have been signed
or presented by the proper party or parties or, in the case of cables,
facsimile transmissions and telexes, to have been sent by the proper party or
parties. In the absence of negligence or bad faith, the Collateral Trustee
may conclusively rely, as to the truth of the statements and the correctness
of the opinions expressed therein, upon any certificates or opinions furnished
to the Collateral Trustee and conforming to the requirements of any Security
Document.
(d) The Collateral Trustee shall not be under any obligation to
exercise any of the rights or powers vested in the Collateral Trustee by this
Collateral Agreement (including, without limitation, Article Three) and the
other Security Documents, at the request or direction of the Indenture
Trustees or the Majority Noteholders pursuant to this Collateral Agreement or
otherwise, unless the Collateral Trustee shall have been provided adequate
security and indemnity against the costs, expenses and liabilities which may
be incurred by it in connection therewith, including such reasonable advances
as may be requested by the Collateral Trustee.
(e) Upon any application or demand by an Owner (except any such
application or demand which is expressly permitted to be made orally) to the
Collateral Trustee to take or permit any action under any of the provisions of
any Security Document, such Owner shall furnish to the Collateral Trustee a
certificate of an Authorized Financial Officer of such Owner stating that all
conditions precedent, if any, provided for in any relevant Security Document or
any Secured Instrument relating to the proposed action have been complied
with, and in the case of any such application or demand as to which the
furnishing of any document is specifically required by any provision of a
Security Document relating to such particular application or demand, such
additional document shall also be furnished.
(f) Any opinion of counsel may be based, insofar as it relates to
factual matters, upon a certificate of an appropriate Authorized Financial
Officer or representations made by an appropriate Authorized Financial Officer
in a writing delivered to the Collateral Trustee.
(g) In any case in which the Collateral Trustee shall be required
or permitted to determine whether any proceeds or avails of the sale or other
disposition of any property shall be allocated to the Collateral Account or
another Trust Account, or otherwise to make any determination as to the extent
to which the Lien created by any Security Document secures any Secured
Obligations, the Collateral Trustee is authorized, at the cost and expense of
the Trust Estate and without any direction from, or requirements for consent
of or authorization by, the Indenture Trustees or the Applicable Secured
Parties, to institute proceedings in a court of competent jurisdiction for the
obtaining of any authoritative determination of such matter. If the
Collateral Trustee institutes any such proceeding, it shall give prompt
written notice thereof to California Petroleum and the Indenture Trustees and
shall afford each of them opportunity to participate in such proceeding.
Section 6.05 Limitations on Duties of Collateral Trustee.
(a) Unless an Enforcement Notice is in effect, the Collateral Trustee shall
be obligated to perform such duties and only such duties as are specifically
set forth in the Security Documents, and no implied covenants or obligations
shall be read into any Security Document against the Collateral Trustee. If
and so long as an Enforcement Notice is in effect, the Collateral Trustee
shall, subject to the provisions of subsection 2.04(b), exercise the rights
and powers vested in it by the Security Documents, and shall not be liable
with respect to any action taken by it, or omitted to be taken by it, in
accordance with the direction of the Indenture Trustees.
(b) Except as herein otherwise expressly provided, the Collateral
Trustee shall not be under any obligation to take any action which is
discretionary with the Collateral Trustee under the provisions of any Security
Document except upon the written request of the Applicable Secured Parties.
The Collateral Trustee shall make available for inspection and copying by any
Indenture Trustee each certificate or other paper furnished to the Collateral
Trustee by California Petroleum under or in respect of any Security Document
or any of the Collateral.
(c) No provision of any Security Document shall be deemed to impose
any duty or obligation on the Collateral Trustee to perform any act or acts or
exercise any right, power, duty or obligation conferred or imposed on it, in
any jurisdiction in which it shall be illegal, or in which the Collateral
Trustee shall be unqualified or incompetent, to perform any such act or acts
or to exercise any such right, power, duty or obligation or if such
performance or exercise would constitute doing business by the Collateral
Trustee in such jurisdiction or imposes a tax on the Collateral Trustee by
reason thereof.
Section 6.06 Moneys To Be Held in Trust. All moneys
received by the Collateral Trustee under or pursuant to any provision of any
Security Document (except Trustee Fees) shall be held in trust for the
purposes for which they were paid or are held.
Section 6.07 Resignation and Removal of the Collateral
Trustee. (a) The Collateral Trustee may at any time, by giving written notice
to California Petroleum, the Owners, the Manager and the Indenture Trustees,
resign and be discharged of the responsibilities hereby created, such
resignation to become effective upon (i) the appointment of a successor
Collateral Trustee by California Petroleum, at the direction of the Manager,
(if no Enforcement Notice is then in effect) or the Applicable Secured Parties
(if an Enforcement Notice is then in effect), (ii) the acceptance of such
appointment by such successor Collateral Trustee and (iii) if no Enforcement
Notice is then in effect, the approval of such successor Collateral Trustee
evidenced by one or more instruments signed by the Indenture Trustees, which
approval shall not unreasonably be withheld. If no successor Collateral
Trustee shall be appointed and shall have accepted such appointment within 60
days after the Collateral Trustee gives the aforesaid notice of resignation,
the resigning Collateral Trustee or any Indenture Trustee may apply to any
court of competent jurisdiction to appoint a successor Collateral Trustee to
act until such time, if any, as a successor Collateral Trustee shall have been
appointed as provided in this Section 6.07. Any successor so appointed by
such court shall immediately and without further act be superseded by any
successor Collateral Trustee appointed as provided in this Section 6.07.
California Petroleum, at the direction of the Owners, (if no Enforcement
Notice is then in effect) or the Applicable Secured Parties (if an Enforcement
Notice is then in effect) may, at any time upon giving 10 days' prior written
notice thereof to the Indenture Trustees, remove the Collateral Trustee and
California Petroleum, at the direction of the Owners, (if no Enforcement
Notice is then in effect but subject to the approval referred to in clause
(iii) of the first sentence hereof) or the Applicable Secured Parties (if an
Enforcement Notice is then in effect) may appoint a successor Collateral
Trustee such removal to be effective upon the acceptance of such appointment
by the successor. Any Collateral Trustee shall be entitled to Trustee Fees to
the extent incurred or arising, or relating to events occurring, before or in
connection with such resignation or removal.
(b) If at any time the Collateral Trustee shall resign or be
removed, whether pursuant to subsection 6.07(a) or otherwise, or otherwise
become incapable of acting, the powers, duties, authority and title of the
predecessor Collateral Trustee shall be terminated and cancelled without any
other formality (except as may be required by applicable law) other than the
appointment and designation of a successor pursuant to subsection 6.07(a) and
delivery, by the Person or Persons who shall have appointed or procured the
appointment of such successor, of notice thereof, duly acknowledged by such
successor, to the predecessor, California Petroleum, the Owners, the Manager
and the Indenture Trustees. Such notice of appointment and designation shall
be full evidence of the right and authority to make the same and of all the
facts therein recited, and the Security Documents shall vest in such
successor, without any further act, deed or conveyance, all the estates,
properties, rights, powers, trusts, duties, authority and title of its
predecessor; but such predecessor shall, nevertheless, on the written request
of the Applicable Secured Parties, the Indenture Trustees, California
Petroleum, the Manager, the Owners or the successor, and at the expense of
California Petroleum, execute and deliver an instrument transferring to such
successor all the estates, properties, rights, powers, trusts, duties,
authority and title of such predecessor under the Security Documents and shall
deliver all Collateral held by it or him or its or his agents to such
successor. Should any mortgage, conveyance or other instrument in writing
from California Petroleum be required by any successor Collateral Trustee for
more fully and certainly vesting in such successor the estates, properties,
rights, powers, trusts, duties, authority and title vested or intended to be
vested in the predecessor Collateral Trustee any and all such mortgages,
conveyances and other instruments in writing shall, on request of such
successor, be executed, acknowledged and delivered by California Petroleum.
If California Petroleum shall not have executed and delivered any such
mortgage, conveyance or other instrument within 10 days after it received a
written request from the successor Collateral Trustee to do so, or if an
Enforcement Notice is in effect, the predecessor Collateral Trustee may
execute the same on behalf of California Petroleum. California Petroleum
hereby appoints any predecessor Collateral Trustee as its agent and attorney
to act for it as provided in the next preceding sentence.
Section 6.08 Status of Successor Collateral Trustee.
Every successor Collateral Trustee appointed pursuant to Section 6.07 shall be
a bank or trust company in good standing and having power to act as Collateral
Trustee hereunder, incorporated under the laws of the United States of America
or any State thereof or the District of Columbia and having its principal
corporate trust office within the 48 contiguous States and shall also have
capital, surplus and undivided profits of not less than $10,000,000, if there
be such an institution with such capital, surplus and undivided profits
willing, qualified and able to accept the trust hereunder upon reasonable or
customary terms.
Section 6.09 Merger of the Collateral Trustee. Any
corporation into which the Collateral Trustee may be merged, or with which it
may be consolidated, or any corporation resulting from any merger or
consolidation to which the Collateral Trustee shall be a party, shall be
Collateral Trustee under the Security Documents without the execution or
filing of any paper or any further act on the part of the parties hereto.
Section 6.10 Co-Trustee; Separate Trustee. (a) If at any
time or times it shall be necessary or prudent in order to conform to any law
of any jurisdiction in which any of the Collateral shall be located, or to
avoid any violation of law or imposition on the Collateral Trustee of taxes by
such jurisdiction not otherwise imposed on the Collateral Trustee, or the
Collateral Trustee shall be advised by counsel, satisfactory to it, that it is
necessary or prudent in the interest of the Secured Parties, or the Majority
Noteholders or the Indenture Trustees shall in writing so request, or the
Collateral Trustee shall deem it desirable for its own protection in the
performance of its duties under any Security Document, the Collateral Trustee,
the Indenture Trustees and California Petroleum as shall be necessary or
prudent shall execute and deliver all instruments and agreements necessary or
proper to constitute another bank or trust company, or one or more persons
approved by the Collateral Trustee and California Petroleum, either to act as
co-trustee or co-trustees of all or any of the Collateral under any of the
Security Documents, jointly with the Collateral Trustee originally named
herein or therein or any successor Collateral Trustee, or to act as separate
trustee or trustees of any of the Collateral. If California Petroleum shall
not have joined in the execution of such instruments and agreements within 10
days after it receives a written request from the Collateral Trustee to do so,
or if an Enforcement Notice is in effect, the Collateral Trustee may act under
the foregoing provisions of this subsection 6.10(a) without the concurrence of
California Petroleum and execute and deliver such instruments and agreements
on behalf of California Petroleum. California Petroleum hereby appoints the
Collateral Trustee as its agent and attorney to act for it under the foregoing
provisions of this subsection 6.10(a) in either of such contingencies.
(b) Every separate trustee and every co-trustee, other than any
successor Collateral Trustee appointed pursuant to Section 6.07, shall, to the
extent permitted by law, be appointed and act and be such, subject to the
following provisions and conditions:
(i) all rights, powers, duties and obligations conferred upon
the Collateral Trustee in respect of the custody, control and
management of moneys, papers or securities shall be exercised solely
by the Collateral Trustee or any agent appointed by the Collateral
Trustee;
(ii) all rights, powers, duties and obligations conferred or
imposed upon the Collateral Trustee under the relevant Security
Document or Documents shall be conferred or imposed and exercised or
performed by the Collateral Trustee and such separate trustee or
separate trustees or co-trustee or co-trustees, jointly, as shall be
provided in the instrument appointing such separate trustee or
separate trustees or co-trustee or co-trustees, except to the extent
that under any law of any jurisdiction in which any particular act or
acts are to be performed the Collateral Trustee shall be incompetent
or unqualified to perform such act or acts, or unless the performance
of such act or acts would result in the imposition of any tax on the
Collateral Trustee which would not be imposed absent such joint act
or acts, in which event such rights, powers, duties and obligations
shall be exercised and performed by such separate trustee or separate
trustees or co-trustee or co-trustees;
(iii) no power given by any Security Document to, or which it is
provided herein or therein may be exercised by, any such co-trustee or
co-trustees or separate trustee or separate trustees, shall be
exercised hereunder or thereunder by such co-trustee or co-trustees or
separate trustee or separate trustees except jointly with, or with
the consent in writing of, the Collateral Trustee, anything contained
in any Security Document to the contrary notwithstanding;
(iv) no trustee hereunder shall be personally liable by reason
of any act or omission of any other trustee hereunder; and
(v) California Petroleum and the Collateral Trustee, at any
time by an instrument in writing executed by them jointly, may accept
the resignation of or remove any such separate trustee or co-trustee
and, in that case by an instrument in writing executed by them
jointly, may appoint a successor to such separate trustee or
co-trustee, as the case may be, anything contained herein to the
contrary notwithstanding. If California Petroleum shall not have
joined in the execution of any such instrument within 10 days after it
receives a written request from the Collateral Trustee to do so, or
if an Enforcement Notice is in effect, the Collateral Trustee shall
have the power to accept the resignation of or remove any such
separate trustee or co-trustee and to appoint a successor without the
concurrence of California Petroleum, California Petroleum hereby
appointing the Collateral Trustee its agent and attorney to act for
them in such connection in such contingency. If the Collateral
Trustee shall have appointed a separate trustee or separate trustees
or co-trustee or co-trustees as above provided, the Collateral
Trustee may at any time, by an instrument in writing, accept the
resignation of or remove any such separate trustee or co-trustee and
the successor to any such separate trustee or co-trustee shall be
appointed by California Petroleum and the Collateral Trustee, or by
the Collateral Trustee alone pursuant to this subsection 6.10(b).
Section 6.11 Treatment of Payee or Indorsee by Collateral
Trustee; Representatives of Secured Parties. (a) The Collateral Trustee may
treat the registered holder or, if none, the payee or indorsee of any
promissory note or bond evidencing a Secured Obligation as the absolute owner
thereof for all purposes and shall not be affected by any notice to the
contrary, whether such promissory note or bond shall be past due or not.
(b) Any Person (other than the Indenture Trustees) which shall be
designated as the duly authorized representative of one or more Secured
Parties to act as such in connection with any matters pertaining to this
Collateral Agreement or the Collateral shall present to the Collateral Trustee
such documents, including, without limitation, opinions of counsel, as the
Collateral Trustee may reasonably require, in order to demonstrate to the
Collateral Trustee the authority of such Person to act as the representative
of such Secured Parties.
ARTICLE SEVEN
MISCELLANEOUS
Section 7.01 Notices. Unless otherwise specified herein,
all notices, requests, demands or other communications given to California
Petroleum, the Collateral Trustee or either Indenture Trustee shall be given in
writing or by telex or facsimile transmission (i) if to California Petroleum
or the Collateral Trustee, to such party at its address or telex or facsimile
transmission number specified on the signature pages hereof or any other
address or telex or facsimile transmission number which such party shall have
specified as its address or telex or facsimile transmission number for the
purpose of communications hereunder, by notice given in accordance with this
Section 7.01 to the party sending such communication, (ii) if to either of the
Indenture Trustees, to it at its address specified in or pursuant to the
relevant Indenture or specified from time to time by written notice to the
Collateral Trustee, (iii) if to any Owner, to it at its address specified in
or pursuant to [_________] and (iv) if to the Manager, to it at its address
specified in or pursuant to the Management Agreement. Each such notice,
request or other communication shall be effective (a) if given by telex, when
such telex is transmitted to the number specified in or pursuant to this
Section and the appropriate answerback is received, (b) if given by mail, 72
hours after such communication is deposited in the mails with first class
postage prepaid, registered or certified mail, return receipt requested,
addressed as aforesaid, (c) if given by facsimile transmission, when such
facsimile is transmitted to the facsimile transmission number specified in or
pursuant to this Section and telephonic confirmation of receipt thereof is
received or (d) if given by any other means, when received at the address
specified in or pursuant to this Section 7.01; provided that any notice,
request or demand to the Collateral Trustee shall not be effective until
received by the Collateral Trustee at the office designated by it pursuant to
this Section 7.01.
Section 7.02 No Waivers. No failure on the part of the
Collateral Trustee, any co-trustee, any separate trustee, either Indenture
Trustee or any Secured Party to exercise, no course of dealing with respect
to, and no delay in exercising, any right, power or privilege under any
Security Document shall operate as a waiver thereof nor shall any single or
partial exercise of any such right, power or privilege preclude any other or
further exercise thereof or the exercise of any other right, power or
privilege.
Section 7.03 Amendments, Supplements and Waivers. (a)
With the written consent of the Indenture Trustees, the Collateral Trustee and
California Petroleum may, from time to time, enter into written agreements
supplemental hereto for the purpose of curing any ambiguity or correcting or
supplementing any provision contained herein or in any Security Document which
may be defective or inconsistent with any other provision contained herein or
therein; or making such other provisions in regard to matters or questions
arising under this Collateral Agreement or under any Security Document as they
may deem necessary or desirable and which shall not adversely affect the
interests of the Secured Parties;
(b) With the written consent of the Indenture Trustees, the
Collateral Trustee and California Petroleum may, from time to time, enter into
written agreements supplemental hereto for the purpose of adding to or waiving
any provision of this Collateral Agreement or changing in any manner the
rights of the Collateral Trustee, the Secured Parties or California Petroleum
hereunder; provided that no such supplemental agreement shall unless signed or
consented to by the Majority Noteholders:
(i) amend, modify or waive any provision of this Section 7.03;
(ii) change the definition of "Applicable Secured Parties,"
"Outstanding," "Majority Noteholders", "Majority Serial Noteholders,"
"Majority Term Noteholders" or "Secured Obligations" or the number or
percentage of Secured Parties required to take any action under any
Security Document;
(iii) amend, modify or waive any provision of Section 3.01, 3.02,
3.03 or 3.04 of this Collateral Agreement or change the definition of
any defined term used in any of such Sections; or
(iv) except as otherwise specifically provided herein, agree to
the release of all or substantially all of the Collateral.
Any such supplemental agreement shall be binding upon California
Petroleum, the Indenture Trustees, the Secured Parties and the Collateral
Trustee and their respective successors. The Collateral Trustee shall not
enter into any such supplemental agreement unless it shall have received a
certificate of an Authorized Financial Officer of California Petroleum and an
opinion of counsel to the effect that such supplemental agreement will not
result in a breach of any provision or covenant contained in any of the
Secured Instruments.
(c) Amendments of Other Security Documents. The Indenture
Trustees (so long as no Enforcement Notice shall be in effect) or the
Applicable Secured Parties (so long as an Enforcement Notice shall be in
effect) shall have the exclusive authority to direct the Collateral Trustee to
amend, supplement or waive any provision of any Security Document (other than
this Collateral Agreement), without any consent or approval of, or prior
notice to, any other Secured Party; provided, however, that no such amendment,
supplement or waiver shall affect the right of any Secured Party not
consenting thereto to equal and ratable security with respect to Collateral to
the extent and for the periods contemplated by this Collateral Agreement or
effect a release of Collateral which would otherwise not be permitted under
the provisions of this Collateral Agreement.
(d) Nothing in this Section 7.03 shall limit or impair the
rights of California Petroleum set forth in Article V.
Section 7.04 Headings. The table of contents and the
headings of Sections and subsections have been included herein for convenience
only and should not be considered in interpreting any of the Security
Documents.
Section 7.05 Severability. Any provision of this
Collateral Agreement which is prohibited or unenforceable in any jurisdiction
shall, to the fullest extent permitted by law, not invalidate the remaining
provisions hereof, and any such prohibition or unenforceability of any
provision in any jurisdiction shall not affect the enforceability of such
provision in any other jurisdiction.
Section 7.06 Successors and Assigns. This Collateral
Agreement shall be binding upon each of the parties hereto and shall inure to
the benefit of each of the parties hereto and each of the Secured Parties and
their respective successors and assigns, and nothing herein is intended or
shall be construed to give any other Person any right, remedy or claim under,
to or in respect of this Collateral Agreement or any Collateral.
Section 7.07 Governing Law. THE PROVISIONS OF THIS
COLLATERAL AGREEMENT CREATING A TRUST FOR THE BENEFIT OF THE HOLDERS OF THE
SECURED OBLIGATIONS AND SETTING FORTH THE RIGHTS, DUTIES, OBLIGATIONS AND
RESPONSIBILITIES OF THE COLLATERAL TRUSTEE HEREUNDER SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, EXCEPT AS
OTHERWISE REQUIRED BY MANDATORY PROVISIONS OF LAW.
Section 7.08 Counterparts. This Collateral Agreement may
be signed in any number of counterparts with the same effect as if the
signatures thereto and hereto were upon the same instrument.
Section 7.09 Termination. (a) Upon (i) receipt by the
Collateral Trustee from each Indenture Trustee of a written notice stating
that all of the Secured Obligations arising under or in connection with the
Indentures and the Notes issued thereunder have been paid or deemed paid in
full (which notice shall be signed by each Indenture Trustee promptly
following the payments contemplated in this clause (i)) and (ii) the payment
in full of all amounts payable to the Collateral Trustee hereunder (exclusive
of any contingent or unliquidated claims for indemnification or
reimbursement), the Liens created by the Security Documents shall terminate
forthwith and all right, title and interest of the Collateral Trustee in and
to the Trust Estate and the Collateral shall revert and be released to
California Petroleum, its successors and assigns.
(b) Upon the termination of the Collateral Trustee's security
interests and the release of the Collateral in accordance with subsection
7.09(a), the Collateral Trustee will promptly at California Petroleum's
written request, (i) execute and deliver to California Petroleum such
documents as California Petroleum shall reasonably request to evidence the
termination of such security interest or the release of the Collateral and (ii)
deliver or cause to be delivered to California Petroleum all property of
California Petroleum then held by the Collateral Trustee or any agent thereof.
(c) This Collateral Agreement shall terminate when the security
interests granted under the Security Documents have terminated and the
Collateral has been released.
(d) Nothing herein shall be construed to prevent the Collateral
Trustee from releasing Collateral in accordance with the terms of any
applicable Security Document.
(e) Anything in this Collateral Agreement to the contrary
notwithstanding, the trust created hereunder shall expire not later than the
expiration of 21 years after the death of the last to survive of all
descendants of Mario Cuomo, Governor of New York State, living on the date
hereof.
Section 7.10 No Liability to Other Secured Parties. None
of the Secured Parties shall incur any liability to any other Secured Party
with respect to any decision or determination permitted or required to be taken
or made by it in its capacity as a Secured Party hereunder and the existence
or exercise of any right by the Majority Noteholders or the Applicable Secured
Parties to take any action or make any determination hereunder shall not impose
on any Secured Party taking or failing to take any such action or exercise
such right any duty or liability to any other Secured Party with respect
thereto or to any of the Collateral affected thereby.
Section 7.11 Immunities of Incorporators, Officers,
Directors and Stockholders of California Petroleum. No recourse under or
upon any obligation, covenant or agreement contained in this Collateral
Agreement, or in the Indentures, or in any Note, or under any judgment
obtained against California Petroleum, or by the enforcement of any assessment
or by any legal or equitable proceeding by virtue of any constitution or
statute or otherwise or under any circumstances, under or independent of this
Collateral Agreement, shall be had against (i) any incorporator, officer,
director or stockholder, past, present or future, of California Petroleum, or
of any successor corporation, or (ii) any trustee, parent, affiliate, officer,
director or stockholder, past, present or future, of any stockholder of
California Petroleum, either directly or through California Petroleum, or
otherwise, and any and all personal liability of every name and nature whether
at law or in equity, or by constitution or by statute or otherwise, of any such
incorporator, officer, director or stockholder to respond by reason of the
non-payment of any stock or any act of omission or commission on his part or
otherwise, for the payment for or to the holder of any Secured Obligation or
otherwise, of any sum that may remain due and unpaid upon any Secured
Obligation, is hereby expressly waived and released as a condition of and
consideration for the execution of this Collateral Agreement.
7.12 Designated Representative. For purposes of this
Collateral Agreement, all notices, requests, demands or other communications
to be given by California Petroleum hereunder may be given by California
Petroleum's designated representative. Notice of the appointment of any such
designated representative shall be given to the Collateral Trustee and shall
be in writing signed by California Petroleum and acknowledged by such
designated representative. The parties hereto shall be entitled to rely upon
any such notices, requests, demands and other communications given by the
designated representative as though the same had been given by California
Petroleum.
IN WITNESS WHEREOF, the parties hereto have caused this Collateral
Agreement to be duly executed (by their respective authorized officers in the
case of corporate parties) as of the day and year first written above.
CALIFORNIA PETROLEUM
TRANSPORT CORPORATION
By _________________________
Title:
CHEMICAL TRUST COMPANY OF
CALIFORNIA, as Collateral
Trustee
By __________________________
Title:
CHEMICAL TRUST COMPANY
OF CALIFORNIA, as Serial
Indenture Trustee
By __________________________
Title:
CHEMICAL TRUST COMPANY
OF CALIFORNIA, as
Term Indenture Trustee
By __________________________
Title: