EXHIBIT 4.4
DEED OF COVENANTS
TO ACCOMPANY FIRST PRIORITY
STATUTORY MORTGAGE OF A SHIP
by
CALPETRO TANKERS (BAHAMAS I) LIMITED
Shipowner
to
CALIFORNIA PETROLEUM TRANSPORT CORPORATION
Mortgagee
Dated _________ __, 1995
m/t ____________
Table of Contents
Page No.
ARTICLE I
DEFINITIONS................................ 1
Section 1.01 Definitions.............................................. 1
ARTICLE II
MORTGAGE.................................... 2
Section 2.01 Grant of Mortgage........................................ 2
Section 2.02 Indebtedness............................................. 3
ARTICLE III
REPRESENTATIONS AND WARRANTIES.............. 3
Section 3.01 Representations and Warranties of the Shipowner.......... 3
ARTICLE IV
COVENANTS................................... 5
Section 4.01 Payment of Indebtedness.................................. 5
Section 4.02 Corporate Existence...................................... 6
Section 4.03 Insurance................................................ 6
Section 4.04 Defense of Title......................................... 12
Section 4.05 Discharge of Liens....................................... 13
Section 4.06. Liens.................................................... 13
Section 4.07 Use of Vessel............................................ 13
Section 4.08 Notifications............................................ 14
Section 4.09 Payment of Crew's Wages and Allotments................... 15
Section 4.10 Charter of Vessel........................................ 15
Section 4.11 Maintenance of Vessel.................................... 15
Section 4.12 Statement of Classification Society...................... 16
Section 4.13 Surveys of Vessel........................................ 16
Section 4.14 Access to Vessel......................................... 16
Section 4.15 Books and Records........................................ 16
Section 4.16 Registration of Statutory Mortgage; Recordation of
Statutory Mortgage..................................... 17
Section 4.17 Notice of Mortgage....................................... 17
Section 4.18 Further Assurances....................................... 18
Section 4.19. Withholding Tax.......................................... 18
Section 4.20. Expenses................................................. 18
Section 4.21. Indebtedness............................................. 19
Section 4.22. Business of Shipowner.................................... 19
Section 4.23. No Bankruptcy Petition................................... 19
Section 4.24. Consolidation, Merger and Sale of Assets................. 19
Section 4.25. Loans, Advances and Other Liabilities.................... 19
Section 4.26. Restricted Payment....................................... 19
Section 4.27. Reports by the Shipowner................................. 19
ARTICLE V
EVENTS OF DEFAULT; REMEDIES................. 20
Section 5.01 Events of Default........................................ 20
Section 5.02 Remedies................................................. 22
Section 5.03 Sale of the Vessel....................................... 24
Section 5.04 Mortgagee as Attorney-in Fact............................ 25
Section 5.05 Appointment of Receiver.................................. 25
Section 5.06 Arrest or Detention of Vessel............................ 25
Section 5.07 Defense of Suits......................................... 25
Section 5.08 Cumulative Rights, Powers and Remedies................... 26
Section 5.09 Application of Proceeds.................................. 26
Section 5.10 Mortgagee's Right to Remedy Defaults..................... 27
Section 5.11 Delegation of Powers..................................... 28
Section 5.12 Legal Actions............................................ 28
Section 5.13 Deed and Statutory Mortgage Subject to Rights of
Charterer under the Charter............................ 28
ARTICLE VI
MISCELLANEOUS PROVISIONS.................... 29
Section 6.01 Performance by Charter................................... 29
Section 6.02 Discharge of Mortgage.................................... 29
Section 6.03 Indemnity................................................ 30
Section 6.04 Governing Law............................................ 30
Section 6.05 Severability............................................. 30
Section 6.06 Notices.................................................. 30
Section 6.07 Headings................................................. 31
Section 6.08 General Interpretive Principles.......................... 31
Section 6.09 Successors and Assigns................................... 31
Section 6.10 Consent to Jurisdiction. ................................ 32
Section 6.11 Payment.................................................. 32
Section 6.12 Recorded Amount.......................................... 32
Section 6.13 No waiver of Preferred Status............................ 33
Deed of Covenants, dated _________ __, 1995 (as amended or
supplemented from time to time, the "Deed"), from CalPetro Tankers (Bahamas I)
Limited, a company incorporated with limited liability in the Bahamas whose
registered office is at Mareva House, 4 George Street, Nassau, Bahamas
(hereinafter called "the Shipowner") to California Petroleum Transport
Corporation (the "Mortgagee").
WHEREAS, the Shipowner is the absolute and unencumbered owner of the
whole of the motor tanker "Condoleezza Rice" (the "Vessel") duly registered in
the name of the Shipowner under the laws and flag of The Commonwealth of the
Bahamas on ___________ __, 199_, built in 199_, having the following approximate
dimensions and tonnages: length ___ meters, breadth ____ meters, depth __
meters, gross tonnage _______, net tonnage ________, and more particularly
described in the Certificate of Registration with Official Number _____ and with
International Code Signal ______ and home port of Nassau, Bahamas;
WHEREAS, contemporaneously with the execution of this Deed there has
been executed and registered by the Shipowner in favor of the Mortgagee a First
Priority Statutory Bahamian Mortgage (to secure an account current) (the
"Statutory Mortgage") constituting a first priority statutory mortgage of the
whole of the Vessel and the Shipowner has agreed to execute this Deed collateral
thereto and to the security thereby created;
WHEREAS, in order to secure the prompt and due payment to the
Mortgagee of the Indebtedness (as defined herein) and any and all other sums
which may be or become due to the Mortgagee under or pursuant to the Loan
Agreements, this Deed, the Statutory Mortgage and any other Security Document
and also to secure the exact performance and observance and compliance with all
and any of the covenants and agreements and terms and conditions contained in
the Loan Agreements, this Deed, the Statutory Mortgage and in the other Security
Documents, the Shipowner has duly authorized the execution and delivery of this
Deed and the Statutory Mortgage in favor of the Mortgagee under and pursuant to
the laws of the Commonwealth of the Bahamas.
NOW, THEREFORE, in consideration of the premises and of the covenants
herein contained, the parties hereto covenant and agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01 Definitions.
-----------
Capitalized terms used in this Deed and the Statutory Mortgage and not
otherwise defined herein shall have the meanings assigned to such terms in
either Schedule 1 to this Deed or the Loan Agreements, and the definitions of
such terms shall be equally applicable to both the singular and the plural forms
of such terms.
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ARTICLE II
MORTGAGE
Section 2.01 Grant of Mortgage.
-----------------
In consideration of the premises and of other good and valuable
consideration, the adequacy and receipt whereof are hereby acknowledged, and in
order to secure the payment of the Indebtedness and the repayment of any costs
of foreclosure or of retaking the Vessel, and the payment of all such other
amounts as may hereafter become secured by this Deed and Statutory Mortgage in
accordance with the terms hereof and thereof, and to secure the performance and
observance of and compliance with the covenants, terms and conditions contained
in this Deed, the Statutory Mortgage, the Loan Agreements, and the other
Security Documents to which the Shipowner is a party, the Shipowner has granted,
conveyed, pledged and mortgaged and does by these presents grant, convey, pledge
and mortgage to and in favor of the Mortgagee, its successors and assigns the
whole of the Vessel, together with all of the boilers, engines, machinery,
masts, spars, rigging, boats, cables, anchors, chains, tackle, apparel,
furniture, fittings, freights and equipment thereunto appertaining or belonging,
whether now owned or hereafter acquired, whether on board or not, and all
additions, improvements and replacements hereafter made in or to the Vessel (the
term "Vessel", as used herein, shall include the Vessel together with all of the
foregoing and the Vessel's freights) To Have And To Hold the same unto the
Mortgagee, its successors and assigns, forever upon the terms set forth in this
Deed and the Statutory Mortgage for the enforcement of the payment of the
Indebtedness, the payment of any costs of foreclosure or retaking of the Vessel
and all such other amounts as may hereafter become secured by this Deed and the
Statutory Mortgage in accordance with the terms hereof and thereof and to secure
the performance and observance of and compliance with the covenants, terms and
conditions contained in this Deed, the Statutory Mortgage and the Security
Documents, it being agreed that if any amount payable by the Shipowner under
either Loan Agreement is not paid on its due date (whether formally demanded or
not) the whole or the balance of the Indebtedness and all other amounts payable
under the Security Documents shall forthwith on demand become payable; provided,
however, and the conditions of these presents are such that, if the Shipowner
shall pay or cause to be paid to the Mortgagee all of the Indebtedness as set
forth in the Security Documents, and if the Shipowner shall pay all such other
amounts as may hereafter become secured by this Mortgage and all expenses which
the Mortgagee shall have paid or incurred to protect the security granted
hereunder, and if the Shipowner shall perform, observe and comply with all and
singular of the covenants, terms and conditions in this Deed, the Statutory
Mortgage, the Loan Agreements and the other Security Documents contained,
expressed or implied, to be performed, observed or complied with by and on the
part of the Shipowner or its successors or assigns, all without delay or fraud
and according to the true intent and meaning hereof and therefor, then these
presents and the rights of the Mortgagee under this Mortgage and the other
Security Documents shall cease and, in such event, the Mortgagee agrees by
accepting this Deed and the Statutory Mortgage to execute, at the expense of the
Shipowner, all such documents as the Shipowner may reasonably require to
discharge this Deed and the Statutory Mortgage under the laws of the
Commonwealth of the
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Bahamas; otherwise this Deed and the Statutory Mortgage shall remain in full
force and effect; provided further, however, the conditions of these presents
are such that, if the Shipowner shall satisfy or cause to be satisfied and pay
or cause to be paid to the Mortgagee all of the Serial Obligations, then these
presents and the rights of the Mortgagee under this Deed and the Statutory
Mortgage and the other Security Documents with respect to the Serial Loan
Agreement shall cease and, in such event, this Deed and the Statutory Mortgage
shall secure all of the Indebtedness other than the Serial Obligations.
Section 2.02 Indebtedness.
------------
(a) The Shipowner acknowledges that pursuant to the Loan Agreements
it is jointly and severally liable with the Other Owners to the Mortgagee in the
original principal amount of Two Hundred Eighty-Five Million Four Hundred
Thousand United States Dollars (US$285,400,000). The Shipowner shall repay the
Obligations in accordance with terms and conditions of the Loan Agreements with
the last installment due and payable on _________, 2015. The Shipowner further
agrees to pay all other sums comprising the Indebtedness in accordance with the
terms, conditions and provisions in the Loan Agreements and in this Deed and the
Statutory Mortgage and to perform, observe and comply with the covenants, terms
and obligations and conditions on its part to be performed, observed and
complied with contained or implied herein and in the Loan Agreements and in the
other Security Documents.
(b) The Shipowner shall also pay to the Mortgagee upon the
Mortgagee's first written demand all stamp duties, registration and/or recording
fees, charges for certificates, valuation fees, costs and expenses (including,
the fees and expenses of its attorneys) of any nature whatsoever incurred by the
Mortgagee in connection with the preparation, completion, execution and
registration of this Deed and the Statutory Mortgage and all other claims,
expenses, costs, payments, disbursements, losses, damages or liabilities which
may be incurred by the Mortgagee by reason of the covenants and conditions
contained herein, in the Loan Agreements or in the other Security Documents,
together with interest thereon as herein or therein provided, and confirms that
such obligations are secured by this Deed and the Statutory Mortgage.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.01 Representations and Warranties of the Shipowner.
-----------------------------------------------
The Shipowner hereby represents and warrants to the Mortgagee as
follows:
(a) The Shipowner (i) is a company duly formed, validly existing
and in good standing under the laws of The Bahamas and (ii) is duly authorized,
to the extent necessary, to do business in each jurisdiction where the character
of its properties or the nature of its activities makes such qualification
necessary. The Shipowner has not engaged in any business or activity
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other than as set forth in Section 5.04 of the Loan Agreements. The Shipowner
has all requisite corporate power and authority to own and operate the property
it purports to own and to carry on its business as now being conducted and as
proposed to be conducted in respect of the Vessel.
(b) The Shipowner has all necessary corporate power and authority
to execute, deliver and perform under this Deed and the Statutory Mortgage, the
Loan Agreements and each other Security Document to which it is a party.
(c) All action on the part of the Shipowner that is required for
the authorization, execution, delivery and performance of this Deed and the
Statutory Mortgage, the Loan Agreements and each other Security Document to
which it is a party, in each case has been duly and effectively taken; and the
execution, delivery and performance of this Deed, the Statutory Mortgage, the
Loan Agreements and each such other Security Document do not require the
approval or consent of any Person except for such consents and approvals as have
been obtained on or prior to the date hereof.
(d) This Deed, the Statutory Mortgage, the Loan Agreements and each
other Security Document to which the Shipowner is a party have been duly
executed and delivered by the Shipowner. Each of this Deed, the Statutory
Mortgage, the Loan Agreements and each other Security Document to which the
Shipowner is a party constitute a legal, valid and binding obligation of the
Shipowner, enforceable against it in accordance with the terms thereof, except
as such enforceability (i) may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium and other similar laws affecting the enforcement of
creditors' rights and remedies generally and (ii) is subject to general
principles of equity (regardless of whether enforceability is considered in a
proceeding in equity or at law).
(e) Neither the execution, delivery and performance of this Deed,
the Statutory Mortgage, the Loan Agreements or any other Security Document to
which the Shipowner is a party nor the consummation of any of the transactions
contemplated hereby or thereby nor performance of or compliance with the terms
and conditions hereof or thereof (i) contravenes any Requirement of Law
applicable to the Shipowner or to the Vessel, (ii) constitutes a default under
any Security Document or (iii) results in the creation or imposition of any
Liens on the Vessel (other than Permitted Liens) or results in the acceleration
of any obligation.
(f) The Shipowner is in compliance with and not in default under
any and all Requirements of Law applicable to the Shipowner and all terms and
provisions of this Deed, the Statutory Mortgage, the Loan Agreements and all
Security Documents.
(g) All Governmental Approvals which are required to be obtained in
the name of the Shipowner in connection with the operation and maintenance of
the Vessel and the execution, delivery and performance by the Shipowner of this
Deed and the Statutory Mortgage have been obtained and are in effect as of the
date hereof.
(h) There are no actions, suits or proceedings at law or in equity
or by or before
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any Governmental Authority now pending against the Shipowner or the Vessel or,
to the best of the Shipowner's knowledge, threatened against the Shipowner or
the Vessel or pending or threatened against any property or other assets or
rights of the Shipowner with respect to the Vessel, this Deed, the Statutory
Mortgage or any other Security Document.
(i) The Shipowner is the sole and lawful owner of the whole of the
Vessel, free from all liens, security interests, mortgages, charges or
encumbrances (other than this Deed, the Statutory Mortgage, the Collateral Trust
Agreement, the Indentures and Permitted Liens). The Shipowner shall defend for
the benefit of the Mortgagee the title and possession of the mortgaged property
and every part thereof against the claims and demands of all Persons.
(j) The Shipowner is, by this Deed and the Statutory Mortgage and
the recordation thereof, constituting in favor of the Mortgagee, among other
things, all the rights of a First Priority Statutory Mortgage of the Vessel to
secure the due and punctual payment of all amounts due and to become due to the
Mortgagee pursuant to the terms and conditions of this Deed, the Statutory
Mortgage, the Loan Agreements, the other Security Documents and the documents
contemplated hereby and thereby and the payment of all commissions and fees,
costs, charges, expenses, expenditures and interest owing to the Mortgagee
hereunder and thereunder, and the performance and observance of and compliance
with all the covenants, terms, conditions and provisions of this Deed, the
Statutory Mortgage, the Loan Agreements, the other Security Documents and the
documents contemplated hereby and thereby.
(k) No tax deficiencies and no past due obligations exist that
materially affect the operations of the Shipowner, except those contested in
good faith by appropriate proceedings for which adequate reserves with respect
to such claims so contested have been set aside on the books of the Shipowner.
(l) The Shipowner is not liable for any material amount of sales,
use or other similar tax in connection with the transactions described in this
Deed, the Statutory Mortgage, the Loan Agreements and the other Security
Documents.
ARTICLE IV
COVENANTS
So long as any of the Indebtedness is outstanding or any of its
obligations hereunder or under either Loan Agreement remain outstanding, the
Shipowner covenants and agrees, subject to Section 6.01, with the Mortgagee as
follows:
Section 4.01 Payment of Indebtedness.
-----------------------
The Shipowner shall repay to the Mortgagee the Indebtedness and at all
times shall keep, perform and observe the covenants, conditions and agreements
in this Deed, the Statutory Mortgage and the other Security Documents contained,
expressed or implied on its part
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to be kept performed and observed for so long as any part of the Indebtedness
remains outstanding.
Section 4.02 Corporate Existence.
-------------------
The Shipowner is and shall remain a corporation qualified under the
laws of the Bahamas.
Section 4.03 Insurance.
---------
(a) The Shipowner, at its expense (including payment of all
premiums, costs and club calls, if any) shall effect or cause to be effected the
following insurances and keep the following in full force and effect:
(i) hull and machinery insurance equal to the greater of (i) the
Vessel's full commercial value and (ii) one hundred and fifteen percent
(115%) of the aggregate outstanding principal balance of the Term Loan and
the Serial Loan. Such Hull and Machinery insurance shall include the
"Institute Pollution Hazard Clause" and the "Institute Liner Negligence and
Additional Perils Clause". If the Vessel is laid up in port for an extended
period, then, with the prior written consent of the Mortgagee, the
Shipowner may obtain in lieu of the hull and machinery insurance referred
to in this Section 4.03(a)(i) port risk insurance equal to the greater of
(A) the Vessel's full commercial value or (B) one hundred and fifteen per
cent (115%) of the aggregate outstanding principal balance of the Term Loan
and Serial Loan. Such Port Risk insurance shall be effected on Institute of
London Underwriters "Institute Port Risk Clauses" or American Institute
"Port Risk Endorsement";
(ii) war risk hull and machinery insurance (including risks of
mines) equal to the greater of (A) the Vessel's full commercial value or
(B) one hundred and fifteen percent (115%) of the aggregate outstanding
principal balance of the Term Loan and Serial Loan. Such war risk insurance
shall be effected with a War Risks Association approved by the Mortgagee or
on the full Institute of London Underwriters "Institute War and Strikes
Clauses" or American Institute "Hull War Risks and Strikes Clauses";
(iii) mortgagee additional perils (oil pollution) insurance in an
amount equal to the aggregate outstanding principal amount of the Term Loan
related to the Vessel;
(iv) confiscation and requisition insurance to the extent and in the
circumstances that a prudent shipowner would obtain and maintain such
insurances;
(v) protection and indemnity insurance in the name of the
Shipowner, which shall include freight, demurrage and defense coverage in
an unlimited amount and coverage in respect of pollution risks for a
minimum of five hundred million dollars ($500,000,000) plus an additional
two hundred million dollars ($200,000,000) or such
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other amount as may be then customary for prudent shipowners to maintain,
including coverage against liabilities to persons who have suffered any
loss, damage or injury whatsoever in connection with anything done or not
done by the Vessel, any charterer or the Shipowner in connection with the
Vessel or the employment or use thereof (including in connection with any
oil or other substance emanating from the Vessel or any other vessel with
which the Vessel may be involved in collision) and against liability under
the United States Oil Pollution Act of 1990 ("OPA") or any re-enactment or
modification thereof under the law of any country into whose jurisdiction
the Vessel is permitted to come under the terms of the related charter;
(vi) such additional insurance as the Shipowner may deem necessary;
provided, however, that all such additional insurance, including without
limitation "disbursements," "increased value" or other "total loss only"
insurance shall not be in amounts in excess of those permitted by the hull
and machinery or war risk polices. Such hull and machinery insurance shall
be effected on Institute of London Underwriters "Institute Time Clause -
(Hulls)" or American Institute "Time (Hulls) Clauses" including four-
fourths (4/4ths) Running Down Clause, except that three-fourths (3/4ths)
Running Down Clause is allowed provided the remaining one-fourth (1/4th)
Running Down Clause is fully covered by protection and indemnity insurance;
(vii) risks which are likely to arise due to the particular usage and
trading of the Vessel including all risks customarily and usually covered
by prudent shipowners; and
(viii) risks for which the Bahamas may from time to time require
insurance or for which the Mortgagee may from time to time (after receiving
advice from its insurance advisers that a prudent shipowner would obtain
and maintain a type and amount of insurance for such risks) require
insurance.
Provided, however, that if the Vessel is subject to the Charter or an
Acceptable Replacement Charter, the insurance requirements of the related
Charter or an Acceptable Replacement Charter will supersede the above insurance
requirements.
(b) All insurance taken out or effected in connection with the Vessel
pursuant to the provisions of Section 4.03(a) hereof shall be in a form and upon
terms acceptable to the Mortgagee and shall, without limitation, be subject to
the following:
(i) all such insurance shall be taken out in the name of the
Shipowner with the Mortgagee's interest noted on the policies and cover
notes;
(ii) all such insurance shall be placed in the English or American
markets through first-class brokers and with first-class underwriters,
insurance companies, protection and indemnity associations or protection
and indemnity clubs. All insurance policies or entries shall provide that
they are payable in Dollars. All insurance policies
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shall be valued policies and none shall provide for a deductible amount in
excess of One Hundred Thousand United States Dollars (US$100,000) or such
other amount as prudent shipowners of vessels similar to the Vessel shall
maintain. No insurance shall exclude liability for negligence of the
master, officers, crew or pilots. Each policy or entry shall contain or be
accompanied by a waiver, as against the Mortgagee, of any and all premiums
and calls for which the Mortgagee might otherwise be or become liable as a
loss payee or otherwise.
(iii) Each policy shall provide that it may not lapse, be terminated,
cancelled or materially modified without fourteen (14) days' prior telex or
telegraphic notice to the Mortgagee and any assignee, except only such
notice as war risk underwriters shall be required to give pursuant to the
automatic termination clause of current war risk policies.
(iv) Each policy shall include a provision agreeing that no breach
of warranty or condition or want of due diligence on the part of the
Shipowner or any agent of the Shipowner shall defeat recovery of any claim
by the Collateral Trustee, as assignee of the Mortgagee, unless such
provision shall conflict with the available reinsurance arrangements of the
Issuers of such policy.
(c) Each insurance policy taken out pursuant to Sections 4.03(a)(i)
through (iii) and Section 4.03(a)(v) through (vii) shall contain the following
notice of assignment and loss payable clause:
Notice of Assignment/Loss Payable Clause
California Petroleum Transport Corporation, as mortgagee (the
"Mortgagee"), and CalPetro Tankers (Bahamas I) Limited (the
"Shipowner"), owner of the m.t. Condoleezza Rice (the "Vessel"),
hereby give notice that by an assignment contained in an Assignment of
Earnings and Insurances, dated as of _________ __, 1995, between the
Shipowner and the Mortgagee, the Shipowner assigned to the Mortgagee
as mortgagee of the Vessel, inter alia, all of its right, title and
interest under, to and in all policies and contracts of insurance of
whatsoever nature and all entries with protection and indemnity clubs
or societies now or hereafter taken out in respect of the Vessel, its
rights, disbursements, profits or otherwise.
All claims payable shall be subject to the following
conditions:
(i) Any claim payable in respect of an actual or
constructive or arranged or agreed or compromised total loss, or loss
in the event of the confiscation, compulsory acquisition or
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requisition of the Vessel, for title or use, by any government of any
country or any department, agency or representative thereof, pursuant
to any present or future law, proclamation, order, decree or
otherwise, shall be payable to the Mortgagee as mortgagee of the
Vessel, provided always that the written consent of the Mortgagee
shall be obtained prior to the arranged or agreed or compromised total
loss being agreed with the underwriters (insurers);
(ii) All other claims shall be released to the repairer or
salvor for the repair, salvage or other charges involved or to the
Shipowner as reimbursement if it has fully repaired the damages and
paid all of the salvage and other charges;
Notwithstanding the foregoing, if there exists an Event of Default
under the First Priority Statutory Mortgage and Deed of Covenants
collateral thereto, dated _________ __, 1995, on the Vessel given by
the Shipowner in favor of the Mortgagee and the brokers and/or
underwriters (insurers) have been so notified by the Mortgagee, all
claims shall be payable to the Mortgagee as mortgagee of the Vessel.
The underwriters (insurers) agree that the Mortgagee shall be
advised immediately of the variation or termination of this policy
(entry), and in the event of any failure by the Shipowner to pay
premiums (dues or Club calls) as and when due the Mortgagee shall be
given at least fourteen (14) days' prior telegraphic or telex notice
of the cancellation or material alteration of this policy (entry).
The Mortgagee shall have no obligations whatsoever to pay any
premiums or costs (dues or Club calls), but shall have the right to do
so in the event of non-payment by the Shipowner. The underwriters
(insurers) shall promptly advise the Mortgagee of any act of omission
of which the Underwriters (insurers) are aware that might void this
policy (entry) or make the same invalid or unenforceable in whole or
in part.
(d) Each entry or insurance policy taken out pursuant to Section
4.01(a)(iv) shall bear the following Endorsement:
Endorsement
California Petroleum Transport Corporation, as mortgagee
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(the "Mortgagee") and CalPetro Tankers (Bahamas I) Limited (the
"Shipowner"), owner of the m.t. Condoleezza Rice (the "Vessel"),
hereby give notice that by an assignment contained in an Assignment of
Earnings and Insurances, dated as of _________ __, 1995, between the
Shipowner and the Mortgagee, the Shipowner assigned to the Mortgagee
as mortgagee of the Vessel all of its right, title and interest under,
to and in all policies and contracts of insurance of whatsoever nature
and all entries with protection and indemnity clubs or societies now
or hereafter taken out in respect of the Vessel, its rights,
disbursements, profits or otherwise.
It is hereby noted that all claims shall be paid to the
Shipowner unless and until the Mortgagee shall have given notice in
writing that the Shipowner is in default under the First Priority
Statutory Mortgage and Deed of Covenants collateral thereto, dated as
of _________ __, 1995, on the Vessel given by the Shipowner in favor
of the Mortgagee in which event such claims shall be payable to the
Mortgagee as mortgagee of the Vessel. Any modification of the terms of
this insurance or cancellation or termination by reason of nonpayment
of premiums, dues, assessments, contributions or other amounts which
may become due shall not become effective against the interests of the
Mortgagee, its successors or assigns until fourteen (14) days' prior
telegraphic or telex notice is given to the Mortgagee, its successors
or assigns of such modification, cancellation or termination.
(e) Certified copies of all binders and cover notes or other satisfactory
written evidence showing that the required insurance of each type has been
placed, maintained or renewed and that the premiums thereon have been paid shall
be submitted to the Mortgagee on or before the date of this Deed and the
Statutory Mortgage and subsequently pro forma policies shall be submitted for
approval at least seven (7) days before liability under any current or renewed
insurance expires. No change shall be made in any insurance without the prior
written approval of the Mortgagee. Certified copies of all policies,
certificates of entry, contracts of insurance, cover notes and renewals thereof
shall be delivered to and held by the Mortgagee, and the Shipowner shall furnish
the Mortgagee with the original of the polices, when and if requested by the
Mortgagee. On the Closing Date, on each date the Insurances are renewed as
required by the terms hereof and each time there is a significant change in the
insurance coverage carried on the Vessel, the Shipowner shall arrange for a
detailed report signed by independent marine insurance brokers acceptable to the
Mortgagee, describing the insurance coverage then carried and maintained on the
Vessel (including the types of risk covered by such polices, the amount insured
thereunder and the expiration date thereof) and stating that in the opinion of
said insurance brokers such insurance is adequate and reasonable for the
protection of the Mortgagee and that the Shipowner is in compliance with the
insurance terms hereof.
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(f) The Mortgagee is hereby authorized, but not required, in its own name
and/or the Shipowner's name to demand, collect, give receipt for and prosecute
all necessary actions in the courts to recover any and all insurance monies
which may become due and payable to the Shipowner under any insurance required
or permitted hereunder.
(g) If the Shipowner shall at any time fail to pay or to cause to be paid
when due any insurance premiums, club calls or other costs related to obtaining
or maintaining the insurance required hereunder, or to obtain any required
insurance or to deliver to the Mortgagee all policies, certificates of entry,
contracts of insurance, binders and cover notes and all renewals thereof as
required by the provisions of this Deed and the Statutory Mortgage, the
Mortgagee may, but shall not be required to, procure such insurances and/or pay
unpaid premiums and other costs, and the cost and expense thereof, with interest
at the Default Rate, shall be an indebtedness due from the Shipowner to the
Mortgagee secured by this Deed and the Statutory Mortgage and shall be paid by
the Shipowner promptly on demand.
(h) The Shipowner shall cause each of its insurance brokers to deliver to
the Mortgagee its undertaking substantially in the form of the letter attached
hereto as Exhibit A and made a part hereof.
(i) The Shipowner shall not do any act or cause or permit any act to be
done whereby any insurance shall be or may be suspended, impaired or defeated.
(j) The Shipowner agrees to do all such things whatsoever and prepare,
execute and deliver all such documents whatsoever to enable the Mortgagee to
collect and recover any monies which may become due in respect of the policies
of insurance and entries and for that purpose (but without limitation) to permit
the Mortgagee if necessary to sue in the name of the Shipowner.
(k) The Shipowner agrees not to employ the Vessel or suffer the Vessel to
be employed otherwise than in conformity with the terms of the instruments of
insurance aforesaid (including any warranties express or implied therein)
without first obtaining the consent to such employment of the insurers and
complying with such requirements as to extra premium or otherwise as the
insurers may prescribe.
(l) The proceeds of any Insurances or entries shall be applied as follows:
(i) Until the occurrence of an Event of Default:
(A) Any claim under any Insurances (other than in respect of a
Total Loss) or whether or not such claim is under the terms of
the relevant loss payable clause payable directly to the
Shipowner, shall be applied by the Shipowner in making good the
loss or damage in respect of which it has been paid to the
Shipowner in reimbursement of money expended by it for such
purpose; and
-12-
(B) Any claim in respect of protection and indemnity insurance
shall be paid directly to the person, firm or company to which
the liability covered by such insurance was incurred or the
Shipowner in reimbursement of moneys expended by it in
satisfaction of such liability;
provided always that for as long as the Charter in respect of the Vessel
remains in force, all payments other than in respect of a Total Loss (which
shall be made to the Mortgagee) shall be made to the Charterer.
(ii) Upon the occurrence of an Event of Default, subject as provided
above, any claim under any such insurance and entry shall be paid to the
Mortgagee, as assignee of the related Shipowner, and shall be applied by the
Mortgagee pursuant to the terms of the Charter unless the Charterer is in
default thereunder in which event the Mortgagee shall apply such proceeds
against payment of the Obligations.
(iii) Any claim under such insurance and entry in respect of a Total Loss
shall be paid to the Mortgagee, as assignee of the related Shipowner, and shall
be applied by the Mortgagee, after payment of the costs of collecting such
claim, as follows:
First: To the payment of all reasonable expenses and charges,
including the expenses of any taking, attorney's fees, court costs
and any other expenses or advances made or incurred by the Mortgagee,
the Indenture Trustees and the Collateral Trustee in the protection
of its right or the pursuance of its remedies under this Deed and the
Statutory Mortgage, the Loan Agreements or the other Security
Documents;
Second: To the payment of all amounts due to the Mortgagee in
respect of taxes, indemnities, fees, expenses, premiums, purchase of
liens or otherwise under the provisions of this Deed and the
Statutory Mortgage;
Third: To the payment of interest on the Term Loan and Serial
Loan, pro rata, in accordance with their respective outstanding
balances, to but not including the Loss Date;
Fourth: To the payment to the Mortgagee in respect of principal
of the Term Loan and Serial Loan, pro rata, in accordance with their
respective outstanding balances; and
Fifth: To the payment of any surplus thereafter remaining to
the Shipowner or whomsoever may be lawfully entitled thereto.
Section 4.04 Defense of Title.
----------------
The Shipowner lawfully owns and is lawfully possessed of the Vessel
free from
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any Lien whatsoever except this Deed, the Statutory Mortgage and Permitted Liens
and shall warrant and defend the title and possession thereto and to every part
thereof for the benefit of the Mortgagee against the claims and demands of all
persons whomsoever.
Section 4.05 Discharge of Liens.
------------------
The Shipowner shall pay and discharge or cause to be paid and
discharged when due and payable unless contested in good faith from time to time
all debts, damages and liabilities whatsoever which may have given or may give
rise to maritime or possessory liens on or claims enforceable against the Vessel
and all taxes, assessments, governmental charges, fines and penalties legally
imposed on the Vessel or any income or proceeds therefrom or on the Shipowner,
the Earnings and in event of arrest of the Vessel pursuant to legal process or
in event of her detention in exercise or purported exercise of any such lien as
aforesaid to procure the release of the Vessel from such arrest or detention as
soon as possible upon receiving notice thereof but in any event within fifteen
(15) days of receiving such notice by providing bail or otherwise as the
circumstances may require.
Section 4.06. Liens.
-----
(a) Neither the Shipowner nor its agent nor the master of the
Vessel nor any charterer of the Vessel has or shall have any right, power or
authority to create, incur or permit to be placed or imposed upon the property
or any part thereof subject or intended to be subject to this Deed and Statutory
Mortgage, any liens whatsoever without the prior written consent of the
Mortgagee, other than for Permitted Liens, and liens created under the
Collateral Trust Agreement and the Indentures. A properly certified copy of this
Deed and the Statutory Mortgage shall be carried with the ship's papers on board
the Vessel, shall be exhibited to any person having business with the Vessel
which might give rise to any lien other than Permitted Liens and shall be
exhibited to any representative of the Mortgagee on demand.
(b) The Shipowner shall keep the Vessel free and clear of all
liens, security interests, charges or encumbrances (except for the Charter, the
Collateral Trust Agreements and the Indentures and Permitted Liens).
Section 4.07 Use of Vessel.
-------------
(a) The Shipowner shall not cause or permit the Vessel to be
operated in such a way as to jeopardize the safety of the Vessel, its Insurances
or in any manner contrary to law, shall not engage in any unlawful trade or
violate any applicable law, rule or regulation of the Bahamas or any other
jurisdiction in which the Vessel may operate from time to time or which may
otherwise be applicable to the Vessel or the Shipowner or carry any cargo that
shall expose the Vessel to penalty, confiscation, forfeiture, capture or
condemnation, shall not do or suffer or permit to be done anything which can or
may injuriously affect the registration or enrolment of the Vessel under the
laws and regulations of Bahamas and shall at all times keep the Vessel duly
documented thereunder.
(b) The Shipowner shall not employ the Vessel or suffer her
employment in
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any trade or business which is forbidden by international law or is otherwise
illicit or in carrying illicit or prohibited goods or otherwise use the Vessel
in any manner whatsoever which renders her liable to condemnation or to
destruction, seizure or confiscation and in event of hostilities in any part of
the world (whether war is declared or not) not allow the Vessel to enter any
zone which is declared a war zone unless the Mortgagee shall have first given
its consent thereto in writing and there shall have been effected by the
Shipowner and at its expense such special insurance cover as the Mortgagee may
require.
(c) The Shipowner shall not, during hostilities (whether or not a
state of war shall have been formally declared) between any two or more nations
or in which the United Nations Organization may be involved, or during any civil
war, employ or permit the Vessel to be employed in any manner in carrying any
goods that shall or may be declared to be contraband of war or that shall or may
render her liable to confiscation, seizure, detention or destruction unless
prior to such employment special war risks policies effected with such
underwriters as the Mortgagee may approve and in all respects to the
satisfaction of the Mortgagee shall have been effected, assigned and delivered
to the Mortgagee.
(d) Upon request, the Shipowner shall give to the Mortgagee all
information regarding the Vessel, her position and engagements in the possession
of or available to the Shipowner.
(e) The Shipowner shall comply with and satisfy all of the material
provisions of any applicable law, regulation, proclamation or order concerning
financial responsibility for liabilities imposed on the Shipowner or the Vessel
with respect to pollution by any state or nation or political subdivision
thereof, including, if applicable, the United States Federal Water Pollution
Control Act, OPA and the United States Comprehensive Environmental Response,
Compensation and Liability Act ("CERCLA"), as any of the foregoing may at any
time be amended, and shall maintain all certificates or other evidence of
financial responsibility as may be required by any such law, regulation,
proclamation or order with respect to the trade in which the Vessel is from time
to time engaged and the cargo carried by it and shall upon request, furnish the
Mortgagee with evidence that the Shipowner has acted in compliance with OPA and
CERCLA.
Section 4.08 Notifications.
-------------
The Shipowner shall immediately notify the Mortgagee of:
(a) any marine disaster involving the Vessel that has occurred, or
any serious damage suffered by the Vessel (such notice by the Shipowner to
be given within twenty-four (24) hours after the event shall have come to
its knowledge and shall furnish the Mortgagee with full information
regarding any loss of life, other accidents or damage to the Vessel), and
in such event the Mortgagee shall have the right to have an independent
survey of the damage to the Vessel at the Shipowner's expense provided that
the same shall not cause any undue delay in respect of the operation of the
Vessel, and if such
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survey be requested, the Shipowner shall lend all needed assistance.
(b) any occurrence in consequence whereof the Vessel has become or
is likely to become a Total Loss;
(c) any requirement or recommendation made by any insurer or
classification society or by any competent authority that is not complied
with immediately; and
(d) any complaint or libel filed against the Vessel, or any levy
against the Vessel, or the fact that the Vessel has been taken into custody
or detained by any proceedings in any court or tribunal or by any
government of any country or other authority, any arrest of the Vessel or
the exercise or purported exercise of any lien on the Vessel.
Section 4.09 Payment of Crew's Wages and Allotments.
--------------------------------------
The Shipowner shall promptly pay all tolls, dues and other outgoings
whatsoever in respect of the Vessel and, as and when the Mortgagee may so
require, furnish satisfactory evidence that the wages and allotment and
insurance and pension contributions of the Master and crew are being regularly
paid and that all deductions from crew's wages in respect of any tax liability
are being properly accounted for.
Section 4.10 Charter of Vessel.
-----------------
The Shipowner shall not, without the prior written consent of the
Mortgagee, charter the Vessel by demise charter or by period, time or voyage
charter for any period other than to the Charterer under the Charter or any
other charterer under an Acceptable Replacement Charter. The Shipowner shall
not modify, amend or supplement the terms of the Charter without the prior
written consent of the Mortgagee.
Section 4.11 Maintenance of Vessel.
---------------------
The Shipowner shall at all times and without cost or expense to the
Mortgagee or the Collateral Trustee maintain and preserve, or cause to be
maintained and preserved, the Vessel, her equipment and machinery in good
running order and repair so that the Vessel shall be, in so far as due diligence
can make her so, tight, staunch, strong and well and sufficiently tackled,
apparelled, furnished, equipped and in every respect seaworthy and in good
operating condition as will entitle her to the highest classification of Det
norske Veritas or such other classification society of like standing agreeable
to the Mortgagee and the Trustee. The Vessel shall, and the Shipowner covenants
that it shall, at all times comply strictly with all applicable laws, treaties
and conventions of Bahamas and rules and regulations issued thereunder and shall
have on board as and when required by such rules and regulations valid
certificates showing compliance therewith. The Shipowner shall not make or
permit to be made any substantial change in the structure, type or speed of the
Vessel or change in any of her rigs without first
-16-
obtaining the written approval of the Mortgagee. The Shipowner shall cause all
repairs to and/or replacements of any damaged worn or lost parts or equipment of
the Vessel be effected in such manner both as regards workmanship and quality of
materials so as not to diminish the value or class of the Vessel. The Shipowner
shall submit the Vessel to such periodical or other surveys as may be required
for classification purposes and shall if so required by the Mortgagee supply to
the Mortgagee on request copies of all surveys or reports issued in respect
thereof.
Section 4.12 Statement of Classification Society.
-----------------------------------
The Shipowner shall furnish to the Mortgagee and the Collateral
Trustee annually from the date hereof a certificate by Det norske Veritas (the
"Classification Society") or such other classification society acceptable to the
Mortgagee and the Collateral Trustee that such classification is maintained in
the highest category for ships of the same type as the Vessel free of
recommendations and notations which have not been complied with in accordance
with their terms and to furnish the Mortgagee from time to time and at any time
upon demand with all such information and copies of all such documents as the
Mortgagee may require concerning the classification of the Vessel.
Section 4.13 Surveys of Vessel.
-----------------
The Shipowner shall submit the Vessel or cause the Vessel to be
submitted regularly to such periodical or other surveys as may be required for
classification purposes and if so required supply and cause to be supplied to
the Mortgagee copies of all survey reports issued in respect thereof.
Section 4.14 Access to Vessel.
----------------
The Shipowner shall use all reasonable endeavors to afford the
Mortgagee and such Persons as the Mortgagee shall from time to time appoint for
that purpose full and complete access to the Vessel at any time, on reasonable
notice and in a manner which shall not interfere with the Vessel's trading
requirements to view the state and condition thereof and her cargo and papers
and to ascertain whether the Vessel is being properly repaired and maintained,
and if default shall be made in keeping her in such good state of repair and in
such working order and condition as herein mentioned (without prejudice however
to any of the Mortgagee's rights under this Deed and the Statutory Mortgage) the
Mortgagee may (but shall not be obligated to) effect such repairs as shall in
its opinion be necessary, and the Shipowner shall on demand repay to the
Mortgagee every sum of money expended for the above purpose with interest at the
Default Rate.
Section 4.15 Books and Records.
-----------------
The Shipowner shall keep proper books of account in respect of the
Vessel and as and when required by the Mortgagee make such books available for
inspection for the Mortgagee.
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Section 4.16 Registration of Statutory Mortgage; Recordation of
--------------------------------------------------
Statutory Mortgage.
------------------
(a) The Shipowner shall not change the flag or port of
documentation of the Vessel or through any action or inaction cause the
registration of the Vessel under the laws of the Commonwealth of the Bahamas to
be void or voidable or to lapse;
(b) The Shipowner shall cause this Statutory Mortgage to be
recorded or filed in a central office or at the home port of the Vessel and in
accordance with the applicable provisions of the law of the Bahamas and will
otherwise comply with and satisfy all the requirements and formalities
established by the provisions of the law of the Bahamas and any other pertinent
legislation of the Bahamas to perfect this Statutory Mortgage as a valid and
enforceable first and preferred lien upon the Vessel and maintain this Deed as a
first priority assignment of, charge over, and security interest in the Vessel
or other property assigned thereunder and shall furnish to the Mortgagee from
time to time such evidence to the Mortgagee's satisfaction with respect to the
Shipowner's compliance with the provisions of this Section.
Section 4.17 Notice of Mortgage.
------------------
(a) The Shipowner shall at all times carry on board the Vessel a
duly certified copy of this Deed and a properly certified copy of the Statutory
Mortgage and any assignment thereof (which shall form a part of the Vessel's
papers) and cause the same to be shown to any person having business with the
Vessel which might create or imply any commitment or encumbrance whatsoever on
the Vessel and place and maintain in a frame in a conspicuous place in the
navigation room and in the cabin of the Master of the Vessel a printed notice
such that the printed area covers a space not less than six inches wide by nine
inches high in the following form:
"NOTICE OF FIRST MORTGAGE"
"This Vessel is owned by CalPetro Tankers (Bahamas I) Limited and is
subject to a First Priority Statutory Mortgage and Deed of Covenants
collateral thereto in favor of California Petroleum Transport
Corporation, as mortgagee. Under the terms of said Deed, neither the
Shipowner nor any charterer nor the master of this Vessel nor any
other person has any power, right or authority whatever to create
incur or permit to be imposed on this Vessel any lien or encumbrance
except for Master's and crew's wages for not more than three (3)
months and salvage."
(b) Notwithstanding the requirement for the Shipowner to maintain
the Notice of Mortgage described in Section 4.17(a), so long as the Charter is
in effect, the Shipowner shall maintain the Notice of First Mortgage described
in Clause 14 of the Charter.
-18-
Section 4.18 Further Assurances.
------------------
(a) The Shipowner shall pay to the Mortgagee on demand on a full
indemnity basis all moneys whatsoever which the Mortgagee shall or may expend,
be put to or become liable for in or about the protection maintenance or
enforcement of the security created by this Deed, the Statutory Mortgage and the
other Security Documents or in or about the exercise by the Mortgagee of any of
the powers vested in the Mortgagee hereunder or thereunder including any and all
costs, charges, legal fees and expenses of the Mortgagee and shall pay interest
thereon at the Default Rate until the date of repayment by the Shipowner both
before and after judgment.
(b) The Shipowner shall do and permit to be done each and every act
or thing whatsoever which the Mortgagee may require to be done for the purpose
of enforcing the Mortgagee's rights hereunder and to allow the Mortgagee to use
the Shipowner's name as may be required for that purpose.
Section 4.19. Withholding Tax.
---------------
The Shipowner shall take any lawful action to the extent necessary to
prevent or avoid the imposition of any withholding taxes (other than any
withholding tax with respect to charterhire to the extent required to be paid or
reimbursed by any charterer pursuant to a charter) by any taxing jurisdiction
(including The Bahamas) with respect to any payments under the Obligations,
including changing its jurisdiction of incorporation or residence; provided
however, that it shall not be required to take, or fail to take, any action (i)
if in the opinion of counsel such act or failure to act would violate applicable
law or (ii) if in the reasonable opinion of the Shipowner the actions necessary
to avoid or prevent imposition of such withholding taxes would be unduly
burdensome. For purposes of clause (ii) of this paragraph a requirement to
change the jurisdiction of the Shipowner's incorporation or residence shall not
be treated as unduly burdensome.
Section 4.20. Expenses.
--------
The Shipowner shall upon demand pay to the Mortgagee (or as it may
direct) the amount of all investigation expenses, mortgage taxes, recording
charges, filing fees, revenue and documentary stamps and any other charges
incurred by the Mortgagee in connection with the preparation, completion or
registration of this Deed and the Statutory Mortgage, including without
limitation the reasonable expenses and fees of counsel to the Mortgagee.
Likewise any and all expenses incurred at any time by the Mortgagee with respect
to the mortgaged property or the protection or the enforcement of its rights
hereunder or thereunder, including without limitation the expenses and fees of
counsel to the Mortgagee, shall be paid by the Shipowner or, if paid by the
Mortgagee, shall be paid by the Shipowner promptly upon demand together with
interest thereon from the date of demand until such repayment at the Default
Rate in effect from time to time. The payment of all expenses and other amounts
under this Section 4.20 shall be secured by this Deed and the Statutory Mortgage
and no amounts payable by the Shipowner to
-19-
the Mortgagee under this Section 4.20 shall in any circumstances be repayable to
the Shipowner.
Section 4.21. Indebtedness.
------------
The Shipowner will not directly or indirectly, create, incur, issue,
assume, guarantee or otherwise become directly or indirectly liable with respect
to, or become responsible for the payment of any indebtedness, except for the
obligations under the Shipowner's Loan Agreements.
Section 4.22. Business of Shipowner.
---------------------
The Shipowner will not engage in any business other than the ownership
and operation of its Vessel as described herein and in accordance with the
Shipowner's charter and by-laws.
Section 4.23. No Bankruptcy Petition.
----------------------
The Shipowner will not (i) commence any case, proceeding or other
action under any existing or future bankruptcy, insolvency or similar law
seeking to have an order for relief entered with respect to it, or seeking
reorganization, arrangement, adjustment, winding up, liquidation, dissolution,
composition or other relief with respect to its debt, (ii) seek appointment of a
receiver, trustee, custodian or other similar official for it or any part of its
assets, (iii) make a general assignment for the benefit of creditors or (iv)
take any action in furtherance of, or consenting or acquiescing in, any of the
foregoing.
Section 4.24. Consolidation, Merger and Sale of Assets.
----------------------------------------
The Shipowner shall not consolidate with, or merge with or into, any
other Person or convey or transfer to any Person all or any part of the Vessel.
Section 4.25. Loans, Advances and Other Liabilities.
-------------------------------------
The Shipowner will not make any capital contributions, advances or
loans to, or investments or purchases of capital stock in, any Person, except
for Allowable Investments and Permitted Investments, as defined in the
Collateral Trust Agreement.
Section 4.26. Restricted Payment.
------------------
The Shipowner will not make any Restricted Payment except as set forth
in the Loan Agreements.
Section 4.27. Reports by the Shipowner. The Shipowner covenants:
------------------------
(a) to file with the Mortgagee, within 15 days after the Shipowner
is required to file the same with the Commission, copies of the
annual reports and of
-20-
the information, documents, and other reports (or copies of
such portions of any of the foregoing as the Commission may
from time to time by rules and regulations prescribe) which the
Shipowner may be required to file with the Commission pursuant
to Section 13 or 15(d) of the Exchange Act, or, if the
Shipowner is not required to file information, documents, or
reports pursuant to either of such Sections of the Exchange
Act, then to file with the Mortgagee and the Commission, in
accordance with rules and regulations prescribed from time to
time by the Commission, such of the supplementary and periodic
information, documents, and reports which may be required
pursuant to Section 13 of the Exchange Act, or, in respect of a
security listed and registered on a national securities
exchange, as may be prescribed from time to time in such rules
and regulations;
(b) to file with the Mortgagee and the Commission, in accordance
with rules and regulations prescribed from time to time by the
Commission, such additional information, documents, and reports
with respect to compliance by the Shipowner with the conditions
and covenants provided for in this Indenture as may be required
from time to time by such rules and regulations;
(c) to transmit to the Mortgagee in the manner and to the extent
required by Section 313(c) of the Trust Indenture Act, within
30 days after the filing thereof with the Mortgagee, such
summaries of any information, documents and reports required to
be filed by the Shipowner pursuant to subsections (a) and (b)
of this Section 4.27 as may be required by rules and
regulations prescribed form time to time by the Commission; and
(d) furnish to the Mortgagee, on or before each August 1,
commencing in 1995, a brief certificate from the principal
executive officer, principal financial officer or principal
accounting officer of the Shipowner as to his or her knowledge
of the Shipowner's compliance with all conditions and covenants
under this Mortgage. For purposes of this subsection (d), such
compliance shall be determined without regard to any period of
grace or requirement of notice provided under this Mortgage.
ARTICLE V
EVENTS OF DEFAULT; REMEDIES
Section 5.01 Events of Default.
-----------------
The following shall constitute Events of Default hereunder:
-21-
(a) An Event of Default shall occur under either the Serial Loan
Agreement, the Term Loan Agreement or any Other Loan Agreement;
(b) Default in the payment of any sums payable under the Deed and
the Statutory Mortgage to the Mortgagee within two (2) Business
Days after such amount was due;
(c) Default by the Shipowner in the due observance or performance
of any covenant set forth in Sections 4.02, 4.03, 4.04, 4.06,
4.10, 4.16, 4.24 and 4.26;
(d) Default in any material respect in the performance, or breach
in any material respect, of any covenant of the Shipowner
(other than Sections 4.02, 4.03, 4.04, 4.06, 4.10, 4.16, 4.24
and 4.26) or if any representation or warranty of the Shipowner
made in the Deed or the Statutory Mortgage or in any
certificate or other writing delivered pursuant thereto or in
connection therewith with respect to or affecting the Vessels
shall prove to be inaccurate in any material respect as of the
time when the same shall have been made, and, if such breach or
default or inaccuracy is curable, continuance of such default
or breach or inaccuracy for a period of 30 days after the
earlier to occur of (a) actual knowledge of such default,
breach or inaccuracy by the Shipowner or (b) the date on which
there has been given by registered or certified mail to the
Shipowner by the Mortgagee a written notice thereof;
(e) The entry of a decree or order for relief by a court having
jurisdiction over the Shipowner and its assets in any
involuntary case under any applicable federal or state
bankruptcy, insolvency, or other similar law of any relevant
jurisdiction now or hereafter in effect, or appointing a
receiver, liquidator, assignee, custodian, trustee, or
sequestrator (or other similar official) for the Shipowner or
for any substantial part of its property, or ordering the
winding up or liquidation of its respective affairs, and the
continuance of any such decree or order unstayed and in effect
for a period of 60 consecutive days;
(f) The commencement by the Shipowner of a voluntary case under any
applicable federal or state bankruptcy, insolvency, or other
similar law of any relevant jurisdiction now or hereafter in
effect in any jurisdiction, or the consent by the Shipowner to
the appointment of or taking possession by a receiver,
liquidator, assignee, custodian, trustee or sequestrator (or
other similar official) of the Shipowner or any substantial
part of its property, or the making by the Shipowner of any
general assignment for the benefit of creditors, or the failure
by the Shipowner generally to pay its debts as they become due,
or the taking of action by the Shipowner in furtherance of any
such action;
(g) The Vessel is deemed a Total Loss and the insurance proceeds
thereof have not been received by the Mortgagee within 60 days
after the date on which the Vessel
-22-
was deemed a Total Loss; provided, however, if the Vessel is
under charter to the Charterer pursuant to the Charter, such an
event shall be an Event of Default under this Deed and the
Statutory Mortgage if the Mortgagee has not received the amount
payable by the Charterer in the event of a Total Loss pursuant
to the Charter within 5 business days of the date on which such
amounts are due pursuant to the Charter;
(h) The Shipowner shall abandon the Vessel;
(i) A default (as described in Clause 18 of the Charter) shall have
occurred under the Charter; or
(j) This Deed and the Statutory Mortgage or any material provision
hereof or thereof shall be deemed invalidated in whole or in
part by any present or future law of the Bahamas or decision of
any competent court.
Section 5.02 Remedies.
--------
In the event any one or more Events of Default shall have
occurred and be continuing, then, in each and every such case the Mortgagee,
shall have the right to:
(a) declare immediately due and payable all of the Obligations (in
which case all of the same shall be immediately due), and bring
suit at law, in equity or in admiralty, as it may be advised,
to recover judgment for the Obligations and collect the same
out of any and all property of the Shipowner whether covered by
the Deed, the Statutory Mortgage or otherwise;
(b) exercise all of the rights and remedies in foreclosure and
otherwise given to mortgagees by the provisions of applicable
law;
(c) take and enter into possession of the Vessel, at any time,
wherever the same may be, without court decision or other legal
process and without being responsible for loss or damage and
the Mortgagee may, without being responsible for loss or
damage, hold, lay-up, lease, charter, operate or otherwise use
such Vessel for such time and upon such terms as it may deem to
be for its best advantage, and demand, collect and retain all
hire, freights, earnings, issues, revenues, income, profits,
return premiums, salvage awards or recoveries, recoveries in
general average, and all other sums due or to become due in
respect of such Vessel or in respect of any insurance thereon
from any person whomsoever, accounting only for the net
profits, if any, arising from such use of the Vessel and
charging upon all receipts from use of the Vessel or from the
sale thereof by court proceedings or by private sale all costs,
expenses, charges, damages or losses by reason of such use, and
if at any time the Mortgagee avails itself of the right given
to it to take the Vessel: (i) the Mortgagee shall have the
right to dock the Vessel for a
-23-
reasonable time at any dock, pier or other premises of the
Shipowner without charge, or to dock her at any other place at
the cost and expense of the Shipowner, and (ii) the Mortgagee
shall have the right to require the Shipowner to deliver, and
the Shipowner shall on demand, at its own cost and expense,
deliver to the Mortgagee the Vessel as demanded; and the
Shipowner shall irrevocably instruct the master of the Vessel
so long as the Deed and the Statutory Mortgage are outstanding
to deliver the Vessel to the Mortgagee as demanded;
(d) sell the Vessel or any share therein with or without the
benefit of any charter party or other engagement by public
auction or private contract without legal process at any place
in the world and upon such terms as the Mortgagee in its
absolute discretion may determine with power to postpone any
such sale and without being answerable for any loss occasioned
by such sale or resulting from the postponement thereof and at
any such public auction the Mortgagee may become the purchaser
and shall have the right to set off the purchase price against
the Obligations;
(e) to require that all policies, contracts and other records
relating to the Insurance (including details of and
correspondence concerning outstanding claims) be forthwith
delivered to such brokers as the Mortgagee may nominate;
(f) to collect, recover, compromise and give a good discharge for
all claims then outstanding or thereafter arising under any of
the Insurance and to take over or institute (if necessary using
the name of the Shipowner) all such proceedings in connection
therewith as the Mortgagee in its absolute discretion thinks
fit and to permit the brokers through whom collection or
recovery is effected to charge and retain the usual brokerage
therefor;
(g) to discharge, compound, release or compromise claims in respect
of the Vessel which have given or may give rise to any charge
or lien on the Vessel or which are or may be enforceable by
proceedings against the Vessel under the laws of all countries
to whose jurisdiction the Vessel may from time to time become
subject;
(h) pending sale of the Vessel to remove the Vessel or to require
the Vessel to be removed from any place where she may be or be
lying to any port, harbor, dock or other location for the
purposes of the Vessel docking, laying up, repair, management,
employment, maintenance, or sale or to preserve or maintain the
Mortgagee's security in the Vessel in such manner as the
Mortgagee may in its complete discretion deem necessary;
(i) to discharge, store, load, tranship and otherwise handle any
cargo for the time being on board the Vessel without liability
to any third party with regard thereto;
-24-
(j) pending sale of the Vessel to manage, insure, maintain and
repair the Vessel and to hold, lease, charter, operate, employ,
lay up or otherwise use the Vessel in such manner and for such
period as the Mortgagee in its absolute discretion deems
expedient accounting only for the net profits (if any) of such
use and for the purposes aforesaid the Mortgagee shall be
entitled to do all acts and things incidental or conducive
thereto and in particular to enter into such arrangements
respecting the Vessel, her insurance, management, maintenance,
repair, classification and employment and generally to do and
cause to be done all such acts and things whatsoever and to
make all such arrangements whatsoever in respect of the Vessel
or the working of the same in all respects as if the Mortgagee
were the absolute and sole owner of the Vessel and without
being responsible for any loss and damage thereby incurred; and
(k) to recover from the Shipowner on demand all expenses, payments,
disbursements, costs, losses and damages as may be incurred by
the Mortgagee whether the Mortgagee be in possession of the
Vessel or not or in exercise by the Mortgagee of any of the
powers herein contained together with interest thereon at the
Default Rate and such expenses, payments, disbursements, costs,
losses and damages together with the said interest thereon
shall, until paid by the Shipowner to the Mortgagee, be secured
on the Vessel by this Deed and the Statutory Mortgage.
Section 5.03 Sale of the Vessel.
------------------
(a) A sale of the Vessel made in pursuance of this Deed and
the Statutory Mortgage whether under the power of sale hereby granted or any
judicial proceedings shall operate to divest all right, title and interest of
any nature whatsoever of the Shipowner herein and thereto and shall bar the
Shipowner its successors and assigns and all persons claiming by through or
under them provided such sale is by auction and that nothing herein shall be
deemed to derogate from the Shipowner's duty to the Mortgagee. Upon any such
sale, the purchaser shall not be bound to see or inquire whether the Mortgagee's
power of sale has risen in the manner provided by the Deed and the Statutory
Mortgage and the sale shall be within the power of the Mortgagee and the receipt
of the Mortgagee for the purchase money shall effectively discharge the
purchaser who shall not be concerned with the manner of application of the
proceeds of sale or be in any way answerable or otherwise liable therefor. The
Mortgagee may bid for and purchase the Vessel and upon compliance with the terms
of sale may hold, retain and dispose of the Vessel without further
accountability therefor.
(b) The Shipowner hereby irrevocably appoints the Mortgagee and its
assigns as its true and lawful attorney with full power to act alone and with
full power of substitution until the due discharge of this Deed and the
Statutory Mortgage in accordance with the laws of the Bahamas to make all
necessary transfers of the Vessel sold pursuant to Section 5.02, including,
without limitation, executing and delivering all instruments of assignment and
transfer or quitclaim as the Mortgagee may require and the Shipowner hereby does
ratify and confirm all that its said attorneys shall lawfully do by virtue
hereof. Nevertheless, the Shipowner shall
-25-
if so requested by the Mortgagee ratify and confirm any such sale by executing
and delivering to the purchaser or purchasers of the Vessel such proper bills of
sale, conveyances, instruments of assignment and transfer or quitclaim and
releases as may be designated in such request.
Section 5.04 Mortgagee as Attorney-in Fact.
-----------------------------
The Mortgagee is hereby appointed attorney-in-fact of the Shipowner
and upon the Indebtedness becoming due and payable in the name of the Shipowner
to demand, collect, receive, compromise and sue for so far as may be permitted
by law all freights, hire, earnings, issues, revenues, income and profits of the
Vessel and all amounts due from underwriters under any insurance thereon as
payment of losses or as return premiums or otherwise salvage awards and
recoveries in general average or otherwise and all other sums due or to become
due upon the Indebtedness becoming due and payable in respect of the Vessel or
in respect of any insurance thereon from any person whomsoever and to make and
give and execute in the name of the Shipowner acquittances, receipts, releases
or other discharges for the same whether under seal or otherwise and to endorse
and accept in the name of the Shipowner all checks, notes, drafts, warrants,
agreements and all other instruments in writing with respect to the foregoing.
Section 5.05 Appointment of Receiver.
-----------------------
Whenever any right to enter and take possession of the Vessel accrues
to the Mortgagee, the Mortgagee may require the Shipowner to deliver and the
Shipowner shall on demand at its own cost and expense deliver to the Mortgagee
the Vessel as demanded. If any legal proceedings shall be taken to enforce any
right under this Deed and the Statutory Mortgage, the Mortgagee shall be
entitled as a matter of right to the appointment of a receiver of the Vessel and
the freights, hire, earnings, issues, revenues, income and profits due or to
become due and arising from the operation thereof.
Section 5.06 Arrest or Detention of Vessel.
-----------------------------
In the event that the Vessel shall be arrested or detained by any
marshal or other officer of any court of law, equity or admiralty jurisdiction
in any country or nation of the world or by any government or other authority
and shall not be released from arrest or detention within fifteen (15) days from
the date of arrest or detention, the Shipowner hereby authorizes and empowers
the Mortgagee, its successors or assigns, to apply for and receive possession of
or to take possession of the Vessel with all the rights and powers that the
Shipowner or its successors or assigns may have, possess and exercise in any
such event, and this power of attorney shall be irrevocable and may be exercised
not only by the Mortgagee but also by an assignee or appointee of the Mortgagee
with full power of substitution to the same extent and effect as if such
assignee or appointee has been named by express designation.
Section 5.07 Defense of Suits.
----------------
The Shipowner also authorizes and empowers the Mortgagee, and its
successors,
-26-
assigns and appointees, to appear in the name of the Shipowner, and its
successors and assigns, in any court of any country or nation of the world where
a suit is pending against the Vessel because of or on account of any alleged
lien against the Vessel from which the Vessel has not been released and to take
such proceedings and do such things as to them or any of them may seem proper
toward the defense of such suit and the discharge of such lien, and all monies
expended by them or any of them for the purpose of such defense and/or discharge
shall be a debt due from the Shipowner, and its successors and assigns, to the
Mortgagee, and its successors and assigns, and payment thereof together with
interest thereon at the Default Rate (to the extent permitted by law) from time
to time in effect shall be secured by the lien of this Deed and the Statutory
Mortgage in like manner and extent as if the amount and description thereof were
written herein.
Section 5.08 Cumulative Rights, Powers and Remedies.
--------------------------------------
(a) Each and every right, power and remedy herein given to the
Mortgagee shall be cumulative and shall be in addition to every other right,
power and remedy herein given or now or hereafter existing at law, in equity,
admiralty or by statute and each and every power and remedy whether herein given
or otherwise existing may be exercised from time to time and as often and in
such order as may be deemed expedient by the Mortgagee, and the exercise or the
beginning of the exercise of any right, power or remedy shall not be construed
to be a waiver of the right to exercise at the same time or thereafter any other
power or remedy.
(b) No delay or omission of the Mortgagee to exercise any right or
power vested in it under the Security Documents or any of them shall impair such
right or power or be construed as a waiver of or as acquiescence in any default
by the Shipowner, nor shall the acceptance by the Mortgagee of any security or
any payment on account of the Indebtedness, although made after default, be
deemed a waiver of any right arising out of any future default or of any past
default, and in the event of the Mortgagee at any time agreeing to waive any
such right or power such waiver shall be revocable by the Mortgagee at any time
and the right or power shall henceforth be again exercisable as though there had
been no such waiver.
(c) In the event the Mortgagee shall have proceeded to enforce any
right or pursue any power under this Deed and the Statutory Mortgage by
foreclosure, entry or otherwise and such proceedings shall have been
discontinued or abandoned for any reason, or shall have been determined
adversely to the Mortgagee, then and in every such case the Shipowner and the
Mortgagee shall be restored to their former positions and rights hereunder with
respect to the property subject or intended to be subject to this Deed and the
Statutory Mortgage and all rights, remedies and powers of the Mortgagee shall
continue as if no such proceedings had been taken.
Section 5.09 Application of Proceeds.
-----------------------
The proceeds of any sale made either under the power of sale hereby
granted to the Mortgagee or under a judgment or decree in any judicial
proceeding for the foreclosure of this Deed and the Statutory Mortgage or for
the enforcement of any remedy granted to the
-27-
Mortgagee hereunder, or any net earnings arising from the management, charter or
other use of the Vessel by the Mortgagee under any of the powers herein
reserved, any amounts on deposit to the credit of the Shipowner or the Mortgagee
from earnings of the Vessel as provided herein and any other moneys received by
the Mortgagee pursuant to the terms of this Deed and the Statutory Mortgage or
in any proceeding hereunder other than under Section 4.03(l)(ii), the
application of which is not elsewhere herein specifically provided for, shall be
applied as follows:
First: To the payment of all reasonable expenses and charges,
including the expenses of any taking, attorney's fees, court costs and
any other expenses or advances made or incurred by the Mortgagee in
the protection of its right or the pursuance of its remedies under the
Loan Agreements, this Deed or the Statutory Mortgage;
Second: To the payment of all amounts due to the Mortgagee in
respect of taxes, indemnities, fees, expenses, premiums, purchase of
liens or otherwise under the provisions of this Deed and the Statutory
Mortgage;
Third: To the payment of interest on the Term Loan and Serial
Loan, pro rata, in accordance with their respective outstanding
balances;
Fourth: To the payment of principal on the Term Loan and Serial
Loan, pro rata, in accordance with their respective outstanding
balance;
Fifth: To the payment of any amounts due and owing under the
Other Loans, pro rata, in the event of an acceleration of the
principal amount of such Other Loans; and
Sixth: To the payment of any surplus thereafter remaining to
the Shipowner or whomsoever may be lawfully entitled thereto.
The Shipowner has and shall have no personal liability or obligation
with respect to the amounts specified in paragraphs "FIRST" through "FIFTH"
above, which are payable solely from the income and proceeds received by the
Mortgagee from the Mortgagee's right, title and interest in and to the Vessel.
Section 5.10 Mortgagee's Right to Remedy Defaults.
------------------------------------
If the Shipowner shall default in the performance or observance of any
of the covenants in this Deed or the Statutory Mortgage on its part to be
performed or observed, the Mortgagee may in its discretion do any act or make
any expenditures necessary to remedy such default, and the Shipowner shall
promptly reimburse the Mortgagee, with interest at the Default Rate from time to
time in effect, for any and all expenditures so made or incurred and until the
Shipowner has so reimbursed the Mortgagee for such expenditures, the amount
thereof shall be
-28-
a debt due from the Shipowner to the Mortgagee and payment thereof shall be
secured by the lien of this Deed and the Statutory Mortgage in like manner and
extent as if the amount and description thereof were written herein, but the
Mortgagee, although privileged to do so, shall be under no obligation to the
Shipowner to make any such expenditures and the making thereof shall not relieve
the Shipowner of any default in that or any other respect. The Shipowner also
shall reimburse the Mortgagee promptly with interest at the rates referred to
above for any and all advances and expenses made or incurred by the Mortgagee at
any time in taking the Vessel or otherwise protecting its rights hereunder and
for any and all damages sustained by the Mortgagee from or by reason of any
default or defaults of the Shipowner.
Section 5.11 Delegation of Powers.
--------------------
The Mortgagee may delegate to any person or persons all or any of the
trusts, powers or discretions vested in it pursuant to this Deed and the
Statutory Mortgage and any such delegations may be made upon such terms and
conditions and subject to such regulations (including power to sub-delegate) as
the Mortgagee may in its absolute discretion deem appropriate.
Section 5.12 Legal Actions.
-------------
In addition to the other provisions hereof for enforcement of the rights of
the Mortgagee under this Deed and the Statutory Mortgage, the Mortgagee may, at
its option, in the event of any default by the Shipowner, bring an action, suit
or other proceeding in rem against the Vessel to foreclose this Deed and the
-- ---
Statutory Mortgage and sell the Vessel in any court in the Bahamas or any other
country in which the Vessel may be found; or an action, suit or other proceeding
in personam against the Shipowner or any other person obligated under the Loan
- -- --------
Agreements or any of the Security Documents to recover payment of any amount
owing by the Shipowner or such other person and/or to foreclose this Deed and
the Statutory Mortgage and sell the Vessel in any country in which the Vessel or
the Shipowner or any person so obligated may be found.
Section 5.13 Deed and Statutory Mortgage Subject to Rights of
------------------------------------------------
Charterer under the Charter.
---------------------------
So long as the Charter is in effect, the rights of the Mortgagee set
forth in this Article V are and shall be subject to the rights of the Charterer
under the Charter. So long as the Charterer shall not be in default under and
pursuant to the terms of the Charter, the Charterer shall be entitled to quiet
enjoyment of the Vessel.
-29-
ARTICLE VI
MISCELLANEOUS PROVISIONS
Section 6.01 Performance by Charterer or Charterer Under an
----------------------------------------------
Acceptable Replacement Charter.
------------------------------
(a) It is hereby agreed by the parties hereto that, for the
duration of the Charter, when the Charterer or any charterer under an Acceptable
Replacement Charter performs and discharges its obligations under the Charter
respecting the Vessel, such performance of the said obligations by the Charterer
shall be or by such charterer deemed to be proper and due performance of the
same obligations of the Shipowner under this Deed, the Statutory Mortgage, the
Assignment of Earnings, and Insurances and other Security Documents,
notwithstanding that the extent or manner of performance of the Shipowner's
obligations may differ from that of the Charterer under the Charter or of the
charterer under an Acceptable Replacement Charter.
(b) So long as the Charter is in effect, to the extent the
Shipowner's approval under the Charter is not to be unreasonably withheld, the
approval by the Mortgagee under the corresponding provisions of this Deed also
shall not be unreasonably withheld.
(c) So long as the Charter is in effect, where any obligation with
respect to the Vessel is undertaken by the Shipowner under this Deed, the
Statutory Mortgage or any other of the Security Documents but such obligation is
not undertaken by the Charterer under the Charter, then the Shipowner shall not
be treated as in default under this Deed and the Statutory Mortgage if such
obligation cannot be performed by virtue of the Charter.
(d) The insurance coverage required under an Acceptable Replacement
Charter or maintained by the Shipowner or charterer in connection with any other
charter entered into after the termination of the related Charter must be
sufficient to maintain the credit rating of the Term Mortgage Notes by the
Rating Agencies at least at the rating applicable to the Term Mortgage Notes
immediately prior to the effectiveness of such Acceptable Replacement Charter or
other charter.
Section 6.02 Discharge of Mortgage.
---------------------
The Mortgagee agrees that upon payment of the Indebtedness it shall at
the expense of the Shipowner discharge this Deed and the Statutory Mortgage and
transfer or release to the Shipowner all insurance policies and certificates of
entry relating to the Vessel freed and discharged from the provisions herein
contained.
-30-
Section 6.03 Indemnity.
---------
The Shipowner assumes liability for and agrees to indemnify the
Mortgagee and the Holders and their respective directors, officers, employees
and agents from and against any and all liabilities, losses, damages, penalties,
costs and expenses, including legal expenses, of whatsoever kind or nature,
imposed on or asserted against any of the Mortgagee and the Holders and such
directors, officers, employees and agents in any way relating to or arising out
of the Vessel or the use thereof at any time by any party (other than by the
Mortgagee after such time as the Mortgagee shall have taken possession of the
Vessel pursuant to Section 5.02), including, without limitation, (i) latent and
other defects whether or not discovered or discoverable by the Shipowner or any
other person, (ii) claims for patent, trademark or copyright infringement, (iii)
tort or damage claims of any kind, (iv) claims or penalties arising from any
violation of the laws of any country or political subdivision thereof and (v)
claims for environmental liability or in any way relating to applicable
environmental laws.
Section 6.04 Governing Law.
-------------
THIS DEED SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
COMMONWEALTH OF THE BAHAMAS AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS, WITHOUT
GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAW.
Section 6.05 Severability.
------------
If any provision of this Deed and the Statutory Mortgage is held to be
in conflict with any applicable statute or rule of law or is otherwise held to
be unenforceable for any reason whatsoever, such circumstances shall not have
the effect of rendering the provision in question inoperative or unenforceable
in any other case or circumstance, or of rendering any other provision or
provisions herein contained invalid, inoperative, or unenforceable to any extent
whatsoever.
The invalidity of any one or more phrases, sentences, clauses or
Sections of this Deed or the Statutory Mortgage, shall not affect the remaining
portions of this Deed and the Statutory Mortgage, or any part thereof.
Section 6.06 Notices.
-------
All demands, notices and communications hereunder shall be in writing,
personally delivered or mailed by certified mail-return receipt requested, and
shall be deemed to have been duly given upon receipt (a) in the case of the
Mortgagee, at the following address: California Petroleum Transport Corporation,
c/o JH Management Corporation, Room 6/9, One International Place, Boston,
Massachusetts 02110-2624, (b) in the case of the Shipowner, at the following
address: Mareva House, 4 George Street, Nassau, Bahamas, or at other such
address
-31-
as shall be designated by such party in a written notice to the other parties.
Section 6.07 Headings.
--------
The captions or headings in this Deed are for convenience only and in
no way define, limit or describe the scope or intent of any provisions or
sections of this Deed or the Statutory Mortgage.
Section 6.08 General Interpretive Principles.
-------------------------------
For purposes of this Deed except as otherwise expressly provided or
unless the context otherwise requires:
(a) the defined terms in this Deed shall include the plural as well
as the singular, and the use of any gender herein shall be deemed to include any
other gender;
(b) accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with generally accepted accounting principles as
in effect on the date hereof;
(c) references herein to "Articles", "Sections", "Subsections",
"paragraphs", and other subdivisions without reference to a document are to
designated Articles, Sections, Subsections, paragraphs and other subdivisions of
this Deed;
(d) a reference to a Subsection without further reference to a
Section is a reference to such Subsection as contained in the same Section in
which the reference appears, and this rule shall also apply to paragraphs and
other subdivisions;
(e) the words "herein", "hereof", "hereunder" and other words of
similar import refer to this Deed and the Statutory Mortgage as a whole and not
to any particular provision; and
(f) the term "include" or "including" shall mean without limitation
by reason of enumeration.
Section 6.09 Successors and Assigns.
----------------------
This Deed and the Statutory Mortgage shall inure to the benefit of and
be binding upon the Shipowner and the Mortgagee and their respective successors
and assigns.
-32-
Section 6.10 Consent to Jurisdiction.
-----------------------
Any legal suit, action or proceeding against the Shipowner arising out
of or relating to this Deed, the Statutory Mortgage, the Loan Agreements or any
other Security Document, or any transaction contemplated hereby or thereby, may
be instituted in any federal or state court in The City of New York, State of
New York and the Shipowner hereby waives any objection which it may now or
hereafter have to the laying of venue of any such suit, action or proceeding,
and the Shipowner hereby irrevocably submits to the jurisdiction of any such
court in any such suit, action or proceeding. The Shipowner hereby irrevocably
appoints and designates CT Corporation System, having an address at 1633
Broadway, New York, New York, its true and lawful attorney-in-fact and duly
authorized agent for the limited purpose of accepting service of legal process
and the Shipowner agrees that service of process upon such party shall
constitute personal service of such process on the Shipowner. The Shipowner
shall maintain the designation and appointment of such authorized agent until
all amounts payable under this Deed, the Statutory Mortgage, the Loan Agreements
and the other Security Documents shall have been paid in full. If such agent
shall cease to so act, the Shipowner shall immediately designate and appoint
another such agent satisfactory to the Mortgagee and shall promptly deliver to
the Mortgagee evidence in writing of such other agent's acceptance of such
appointment.
Section 6.11 Payment.
-------
All monies payable by the Shipowner to the Mortgagee shall be paid in
Dollars without deduction for or on account of any present or future taxes or
imposts whatsoever levied or assessed by or within any state or nation or any
political subdivision or taxing authority thereof or therein and the Shipowner
shall indemnify the Mortgagee against all such taxes or imposts. The Shipowner
shall, subject to the prior written approval of the Mortgagee (such approval not
to be unreasonably withheld), be entitled to take action in the name of the
Mortgagee at the Shipowner's expense against any taxing authority in respect of
any withholding or other taxes for which the Shipowner have indemnified the
Mortgagee, and the Mortgagee agrees to reasonably cooperate with the Shipowner
in taking such action. If as a result of any such action any moneys are
received that are attributable to such indemnified taxes (including any interest
thereon paid by such taxing authority) the same shall be recovered by the
Shipowner.
Section 6.12 Recorded Amount.
---------------
For the purposes of the recording this First Priority Statutory
Mortgage under the law of the Bahamas, the total amount of this Deed and the
Statutory Mortgage is Two Hundred and Eighty-Five Million Four Hundred Thousand
United States Dollars (US$285,400,000), and interest and the performance of the
Deed and Statutory Mortgage covenants; the maturity date is the ___ day of
_____, 2015, and the discharge amount is the same as the total amount. It is not
intended that this Deed and the Statutory Mortgage shall include property other
than the Vessel, and it shall not include property other than the Vessel as the
term "vessel" is used in the
-33-
provisions of the law of the Bahamas. Notwithstanding the foregoing, for
property other than the Vessel, if any should be determined to be covered by
this Deed and the Statutory Mortgage, the discharge amount is zero point zero
one percent (0.01%) of the total amount.
Section 6.13 No waiver of Preferred Status.
-----------------------------
No provision of this Deed and the Statutory Mortgage shall be deemed
to be a stipulation that the Mortgagee waives the priority status of the
Statutory Mortgage given by the laws of the Bahamas. Any provision of this
Mortgage which would otherwise constitute such a stipulation, to such extent,
shall have no force or effect.
-34-
IN WITNESS whereof the Shipowner has signed this Deed on the day and year
first before written.
CALPETRO TANKERS (BAHAMAS I)
LIMITED
By:
---------------------
Name:
-------------------
Title:
------------------
-35-
ACKNOWLEDGEMENT
---------------
STATE OF NEW YORK )
:ss.:
COUNTY OF NEW YORK )
On this day of _________ __ 1995, before me personally came
__________________ to me known, and known to me to be the person who executed
the foregoing instrument, who being by me duly sworn, did depose and say that he
resides at ______________________________________ that he is the attorney-in-
fact for CalPetro Tankers (Bahamas I) Limited the corporation described in, and
which executed the foregoing instrument; that it was so affixed by order of the
Board of Directors of said corporation and that he signed his name thereto by
like order.
---------------------------------------
EXHIBIT A
BROKER'S LETTER OF UNDERTAKING
(date)
_____________________
Re: CalPetro Tankers (Bahamas III) Limited
Owner of m.t. Condoleezza Rice (the "Vessel")
---------------------------------------------
We confirm that we have effected insurances for the account of the
above Owner as set out in Appendix "A" attached hereto.
Pursuant to instructions received from CalPetro Tankers (Bahamas III)
Limited (the "Owner"), and in consideration of your approving our appointment as
Brokers in connection with the insurances covered by this letter, we hereby
undertake:
1. to hold the Insurance Slips or Contracts, the Policies when
issued, and any renewals of such Policies or new Policies or any
Policies substituted (with your consent) therefor and the benefit
of the insurance thereunder to your order in accordance with the
terms of the Notice of Assignment and Loss Payable Clause set out
in Appendix "B" attached hereto; and
2. to have endorsed on each and every Policy as and when the same is
issued a copy of the Notice of Assignment and Loss Payable Clause
in the form of Appendix "B" attached hereto dated and signed by
the Shipowner and acknowledged by Underwriters in accordance with
market practice; and
3. to advise you immediately of any material changes which may be
made to the terms of the insurances or if we cease to be Brokers
for purposes of said insurances; and
4. to advise you, not later than one month before expiry of said
insurances, in the event of our not having received notice of
renewal instructions from the Shipowner and/or its agents, and in
the event of our receiving instructions to renew said insurances
to advise you promptly of the details thereof.
Our above undertakings are given subject to our lien on the Policies
for premiums for the Vessel and subject to our right of cancellation on default
in payment of such premiums. We undertake to advise you immediately if any
premiums are not paid to us by the applicable due date and not to exercise such
rights of cancellation without giving you (i) fourteen (14) days' prior notice
in writing, either by letter to the above address or by telex or cable to
________________, respectively, and (ii) a reasonable opportunity of paying any
premiums
-2-
outstanding except it is understood that in the case of War Risks the
terms of the Automatic Termination of Cover Clause contained in the War Risks
Policies shall override any undertakings given by us as Brokers. We further
undertake and agree that in the event of a total loss of the Vessel, or an
arranged, compromised or constructive total loss, our lien on the Policies and
the proceeds thereof shall be limited to any other premiums or other amounts due
in respect of Vessel or interest insured under the Policies.
Notwithstanding the terms of the said Loss Payable clause and the said
Notice of Assignment, unless and until we receive notice from you to the
contrary, we shall be empowered to arrange for a collision and/or salvage
guaranty to be given in the event of bail being required in order to prevent the
arrest of the Vessel or to secure the release of the Vessel from arrest
following a casualty. We undertake to advise you immediately in the event of
our having arranged for a collision and/or salvage guaranty. Where a guaranty
has been given as aforesaid and the guarantor has paid an amount under the
guaranty in respect of such claim, there shall be payable directly to the
guarantor out of the proceeds of the said Policies an amount equal to the amount
so paid.
Finally, it is understood that all claims shall be collected through
us, as Brokers, and that in collecting such claims we are acting on your behalf
as assignee of the insurances covered by this letter.
Yours faithfully,
[insert name of Broker]
By:
---------------------------
Director
SCHEDULE 1
DEFINED TERMS USED IN THE DEED
"Acceptable Replacement Charter" means any replacement charter which
satisfies each of the following requirements: (i) the charter is a bareboat
charter and requires that the charterer thereunder "gross up" charterhire
payments to indemnify and hold the Holders of the Securities harmless from any
withholding tax imposed on the charterhire payments or on the payments on the
Securities; (ii) the charterhire payments payable during the non-cancelable term
of such replacement charter, after giving effect to (1) any "gross up" of such
amounts as a result of any withholding tax on such charterhire payments, (2) the
receipt of the Termination Payment and (3) all fees and expenses incurred in
connection with the rechartering of the Vessel, provide sufficient funds for the
payment in full when due of (A) the Allocated Principal Amount of the Term
Mortgage Notes for the related Vessel and interest thereon in accordance with
the revised schedule of sinking fund and principal payments, that is applicable
upon termination of the related Charter, (B) the amount of Recurring Fees and
Taxes for such Vessel, (C) the amount of Management Fees and Technical Advisor's
Fees for such Vessel, (D) the amount of fees and expenses of the Indenture
Trustee, the Collateral Trustee and the Designated Representative allocable to
such Vessel and (E) an amount at least equal to 30% of the estimated amounts, on
a per annum basis, referred to in clauses (B), (C) and (D) above for
miscellaneous or unexpected expenses; and (iii) the Rating Agencies shall have
confirmed in writing to the Trustee that the terms and conditions of such
proposed charter will not result in the withdrawal or reduction of the then
current ratings of the Term Mortgage Notes.
"Allowable Investments" means for the Shipowner, its investment in the
Vessel and any Restricted Payment permitted to be made by the Shipowner and
certain obligations incurred in the ordinary course of the performance of the
Management Agreement.
"Assignment of Charter" means the assignment between the Shipowner and the
Mortgagee, as amended from time to time in accordance with the terms thereof,
together with the documents contemplated thereby, pursuant to which the
Shipowner assigns to the Mortgagee all of its right, title and interest in, to
and under the Charter.
"Assignment of Earnings and Insurances" means the assignment between the
Shipowner and the Mortgagee, as amended from time to time in accordance with the
terms thereof, pursuant to which the Shipowner assigns to the Mortgagee all of
its right, title and interest in, to and under the freights and hires (as well
as any charters entered into after the Closing Date) with respect to the Vessel.
"Assignment of Guarantee" means the assignment between the Shipowner and
the Mortgagee, as amended from time to time in accordance with the terms
thereof, pursuant to which the Shipowner assigns to the Mortgagee all of its
right, title and interest in, to and under the Chevron Guarantee.
"Business Day" means any day other than a Saturday, a Sunday or a day on
which banking institutions in New York, New York, or in the city and state where
the Trustee's
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principal offices are located, are authorized or are obligated by law, executive
order or governmental decree to be closed.
"Charter" means that certain Bareboat Charter, dated as of July 1, 1995,
between the Charterer and Shipowner.
"Charterer" means Chevron Transport Corporation.
"Chevron" means Chevron Corporation.
"Chevron Guarantee" means the guarantee of the obligations of the Charterer
under the Charter given by Chevron.
"Classification Society" means Det norske Veritas or any other private
organization which has as its purpose the supervision of vessels during their
construction and afterward, in respect to their seaworthiness and upkeep, and
the placing of vessels in grades or "classes" according to the society's rules
for each particular type of vessel.
"Closing Date" means July __, 1995.
"Code" means the United States Internal Revenue Code of 1986 and the
corresponding provisions of any successor statute.
"Collateral Trustee" means Chemical Trust Company of California.
"Commission" means the Securities and Exchange Commission.
"Compulsory Acquisition" means requisition for title or other compulsory
acquisition of the Vessel (otherwise than by requisition for hire), capture,
seizure, detention or confiscation of the Vessel by any other government or by
Persons acting or purporting to act on behalf of any government or governmental
authority.
"Default Period" means the period commencing the date any payment hereunder
was due to but not including the date such payment is paid in full.
"Default Rate" means a rate per annum for each day during the Default
Period until such payment shall be paid in full equal to 1.50% above LIBOR at
the commencement of such period.
"Dollar" or "$" means the lawful currency of the United States of America.
"Earnings" includes all monies whatsoever due or to become due to the
Shipowner at any time arising out of the use or operation of the Vessel or
otherwise including (but without prejudice to the generality of the foregoing)
all sums due and payable to the Shipowner under and pursuant to the Charter and
all freight, hire and passage monies and compensation payable
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to the Shipowner in the event of requisition of the Vessel for hire,
remuneration for salvage and towage, services, demurrage and detention moneys
and any other damages for breach (or payments for variation or termination) of
any charterparty or any contract of employment of the Vessel and all earnings of
the Vessel due or to become due to the Shipowner.
"Event of Default" means an Event of Default under Section ____ of the Loan
Agreement.
"Exchange Act" means the United States Securities Exchange Act of 1934, as
amended.
"Governmental Approval" means any authorization, consent, approval,
license, franchise, lease, ruling, permit, tariff, rate, certification,
exemption, filing or registration by or with any Governmental Authority relating
to the ownership of the Collateral or to the execution, delivery or performance
of the Loan Agreement or any Security Document.
"Governmental Authority" means the federal government, any state or other
political subdivision thereof, and any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government
and any other governmental entity with authority over the Shipowner or operation
of the Vessels.
"Indebtedness" means the payment, performance or other obligations of any
kind whatsoever of the Shipowner under and pursuant to the Loan Agreements and
the Security Documents, together with interest thereon, and all other sums which
may be or become due to the Deed and the Statutory Mortgagee under or pursuant
to the terms thereof and hereof.
"Insurance" means any policies and contracts of insurance and entries in
any protection and indemnity or war risks association which are effected by or
on behalf of the Shipowner in respect of the Vessel or otherwise in connection
with the Vessel, including but not limited to any insurance monies received by
the Shipowner pursuant to clauses 12 and 13 of the Charter and including all
claims and returns of premiums thereunder and including any compensation payable
by whomsoever to the Shipowner by virtue of requisition of the Vessel for title
or confiscation or seizure of the Vessel by any government or person or agency
purporting to act on behalf of any government.
"Issue of One Debenture" means each Issue of One Debenture between the
Shipowner and the Mortgagee, as amended from time to time in accordance with the
terms thereof, pursuant to which the Shipowner grants to the Mortgagee a
security interest in all of its assets.
"Law" means any statute, law, rule, regulation, ordinance, order, code,
policy or rule of common law, now or hereafter in effect, and any judicial or
administrative interpretation thereof by a Governmental Authority or otherwise,
including any judicial or administrative order, consent decree or judgment.
"Lien" means any mortgage, lien (statutory or other), pledge, security
interest,
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encumbrance, claim, hypothecation, assignment for security, deposit arrangement
or preference or other security agreement of any kind or nature whatsoever. For
purposes of the Loan Agreement, a Person shall be deemed to own subject to a
Lien any property which it has acquired or holds subject to the interest of a
vendor or lessor under any conditional sale agreement, capital lease or other
title retention agreement.
"Loan Agreements" means, collectively, the Serial Loan Agreement and the
Term Loan Agreement.
"Management Agreement" means the management agreement between the
Shipowner, the Manager and Barber Ship Management Group.
"Manager" means the Person performing the duties of the Manager under the
Management Agreement, initially P.D. Gram & Co. ans.
"Obligations" means, collectively, the Serial Obligations and the Term
Obligations.
"Optional Termination Date" means either _________, 2005, ______ 2007 or
_____ 2009.
"Other Loan Agreements" means, collectively, the six loan agreements, two
each between the Mortgagee and each of the Other Owners relating to the Other
Loans.
"Other Loans" means each of the loans from California Petroleum Transport
Corporation to each of the Other Owners made on the Closing Date, having an
aggregate initial principal amount of $______________..
"Other Owners" means Calpetro Tankers (Bahamas I) Limited, Calpetro Tankers
(Bahamas II) Limited and Calpetro Tankers (IOM) Limited.
"Payment Date" means each ________ and ______________ commencing
___________ 1995.
"Permitted Liens" means the Charter, any Acceptable Replacement Charter or
other charter for the Vessel, liens for crew's wages accrued for not more than
three months or for collision or salvage, liens in favor of suppliers of
necessaries or other similar liens arising in the ordinary course of its
business (accrued for not more than three months) or liens for loss, damage or
expense, which are fully covered by insurance or, in respect of which, a bond
or other security has been posted by the Shipowner with the appropriate court or
other tribunal to prevent the arrest or secure the release of the Vessel from
arrest on account of such claim or lien; provided, however, that so long as the
Charter is in effect "Permitted Liens" shall mean those liens, claims and
encumbrances permitted under the Charter.
"Person" means an individual, a partnership, a corporation, a joint
venture, an
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unincorporated association, a joint-stock company, a trust, or other entity or a
government or any agency or political subdivision thereof.
"Proceeding" means any suit in equity, action at law, or other judicial or
administrative proceeding.
"Purchase Agreement" means the Purchase Agreement, dated as of
_________________, between the Shipowner and the Charterer wherein the Shipowner
purchases the Vessel from the Charterer.
"Rating Agencies" means Moody's Investors Service, Inc., Standard & Poor's
Rating Group and Duff & Phelps Credit Rating Co.
"Requirement of Law" means, as to any Person, the certificate of
incorporation and by-laws or partnership agreement or other organizational or
governing documents of such Person, and, any Law applicable to or binding upon
such Person or any of its properties or to which such Person or any of its
properties is subject.
"Security Documents" means the Loan Agreements, the Other Loan Agreements,
the Deed, the Statutory Mortgage, the Assignment of Charter, the Assignment of
Earnings and Insurances, the Assignment of Guarantee, the Stock Pledge
Agreement, the Assignment of Management Agreement, the Assignment of Purchase
Agreement, the Issue of One Debenture, collectively.
"Serial Loan" means the loan in the initial principal amount of $________
made by the Mortgagee to the Shipowner under the Serial Loan Agreement.
"Serial Loan Agreement" means the Loan Agreement, dated as of _________ 1,
1995, between the Shipowner and the Mortgagee.
"Serial Obligations" means the payment, performance or obligations of any
kind or nature whatsoever by the Shipowner under and pursuant to the Serial Loan
Agreements, any Security Document and any instrument, agreement or document
referred to therein.
"State" means any state of the United States of America and, in addition,
the District of Columbia.
"Stock Pledge Agreement" means the Stock Pledge Agreement, dated as of
_____________, 1 1995, between the Mortgagee and California Tankers Investments
Limited.
"Term Loan" means the loan in the initial principal amount of $_________
made by the Mortgagee to the Shipowner under the Term Loan Agreement.
"Term Loan Agreement" means the Loan Agreement, dated as of _________ 1,
1995,
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between the Shipowner and the Mortgagee.
"Term Obligations" means the payment, performance or obligations of any
kind or nature whatsoever of the Shipowner under and pursuant to the Term Loan
Agreements, any Security Document and any instrument, agreement or document
referred to therein.
"Total Loss" means either (a) actual or constructive or compromised or
arranged total loss of the Vessel, (b) Compulsory Acquisition of the Vessel or
(c) if so declared by the Charterer at any time and in its sole discretion a
requisition for hire of the Vessel for a period in excess of 180 days.
"Trustee" means Chemical Trust Company of California.