-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Nrj0a0uP2vKdULc/45JCwnWVyfNgc1AZN0fVm4YAfnKfMM15sabyMcnjHV4P5B9x 8f3LOnSWPt8cLbgebOzTmg== 0001047469-98-012530.txt : 19980331 0001047469-98-012530.hdr.sgml : 19980331 ACCESSION NUMBER: 0001047469-98-012530 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 16 CONFORMED PERIOD OF REPORT: 19971231 FILED AS OF DATE: 19980330 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: MORAN TRANSPORTATION CO CENTRAL INDEX KEY: 0000928188 STANDARD INDUSTRIAL CLASSIFICATION: DEEP SEA FOREIGN TRANSPORTATION OF FREIGHT [4412] IRS NUMBER: 061399280 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: SEC FILE NUMBER: 033-82624 FILM NUMBER: 98579205 BUSINESS ADDRESS: STREET 1: TWO GREENWICH PLAZA CITY: GREENWICH STATE: CT ZIP: 06830 BUSINESS PHONE: 2036257800 MAIL ADDRESS: STREET 2: TWO GREENWICH PLAZA CITY: GREENWICH STATE: CT ZIP: 06830 FORMER COMPANY: FORMER CONFORMED NAME: MORGAN TRANSPORTATION CO DATE OF NAME CHANGE: 19940810 10-K 1 FORM 10-K =============================================================================== SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C 20549 ------------- FORM 10-K [X] Annual Report Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934 (FEE REQUIRED) For the Fiscal Year Ended December 31, 1997 OR [_] Transition Report Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934 (NO FEE REQUIRED) For the transition period from ______________ to ______________ Commission File No. 33-82624 Moran Transportation Company (Exact name of registrant as specified in its charter) Delaware 06-1399280 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) Two Greenwich Plaza, Greenwich, CT 06830 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (203) 625-7800 Securities registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] Indicated by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X] As of March 27, 1998, all of the registrant's 44,600 issued and outstanding shares of Common Stock, par value $.01 per share, were held by directors, officers and affiliates of the registrant. =============================================================================== MORAN TRANSPORTATION COMPANY Index to Report on Form 10-K For the Year Ended December 31, 1997 Item Page PART I...................................................................... 1 1. Business..................................................... 1 2. Properties................................................... 7 3. Legal Proceedings............................................ 10 4. Submission of Matters to a Vote of Security Holders.......... 11 PART II..................................................................... 11 5. Market For Registrant's Common Equity and Related Stockholder Matters.......................................... 11 6. Selected Consolidated Financial Data......................... 12 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.......................... 13 8. Financial Statements ........................................ 19 9. Changes In and Disagreements With Accountants on Accounting and Financial Disclosure.......................... 19 PART III.................................................................... 20 10. Executive Officers and Directors of the Registrant........... 20 11. Executive Compensation....................................... 22 12. Security Ownership of Certain Beneficial Owners and Management............................................... 26 13. Certain Relationships and Related Transactions............... 27 PART IV..................................................................... 28 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.................................................. 28 PART I PART I Item 1. Business General Moran Transportation Company was incorporated on June 2, 1994. Moran Transportation Company was formed by Lakes Shipping Company, Inc. ("Lakes Shipping") and its principals, Paul R. Tregurtha and James R. Barker (who serve as Chairman and Vice Chairman, respectively), together with members of Mr. Barker's immediate family, certain officers of Lakes Shipping (collectively, the "Lakes Group"), and certain members of senior management of Moran Towing Corporation (the "Predecessor"). Moran Transportation Company acquired the Predecessor on July 11, 1994 (the "Acquisition"). Except as otherwise indicated, or where the context otherwise requires, the "Company" shall refer to Moran Transportation Company, the Predecessor and/or each of its subsidiaries. The Company is a leading provider of tug and marine transportation services on the East and Gulf Coasts and in the U.S. coastwise trade (the "Jones Act" trade). Operating a fleet of 53 tugs and 15 barges, the Company serves a diverse customer base out of the ports of Portsmouth, New Hampshire; New York, New York; Philadelphia, Pennsylvania; Baltimore, Maryland; Norfolk, Virginia; Jacksonville, Florida; Miami, Florida; and Beaumont/Port Arthur, Texas. The Company has relationships that span 30 or more years with many of its major customers in the tug services and marine transportation businesses. Tug Services. The Company is a widely recognized leader in the tug services industry and believes it has the greatest number of tugboats performing ship docking and barge towing services along the East and Gulf Coasts of the United States. The Company provides ship docking and undocking services as well as harbor and coastwise towing for major domestic and international bulk and container cargo shipping companies, cruise lines, car carriers, barge transportation companies, oil companies, several municipalities, the U.S. Navy, and the Company's own barge fleet. The Company believes that it has a leading position in the ship docking business in each of its ports of operations, other than in Miami, Florida, where the Company began operations in February, 1993. Marine Transportation. The Company's barge fleet transports fuel oil and refined petroleum products, coal, grain and other bulk cargoes in the Jones Act and foreign trades. The Company's barges operate under term contracts with utilities and on both a contract and spot market basis with oil companies, refineries, commodity trading companies and other commercial shippers. Sales and Marketing Tug Services. The general manager of each operating port has ongoing marketing responsibilities for his port. The general managers are assisted by sales personnel based in Greenwich, Connecticut and Baltimore, Maryland. The Company also has long-standing relationships with a network of independent foreign agents in many of the major shipping centers of the world. Marine Transportation. The Company has maintained long-term relationships with key participants in the utility, energy and agricultural sectors, and uses those contacts to develop business. New business opportunities for the marine transportation business are also generated by the general managers of the Company's operating subsidiaries or divisions. The Company has the ability to quickly assemble a multi-disciplinary team to analyze new business opportunities and prepare and submit proposals tailored to meet customers' needs. 1 Competition Tug Services. The tug services industry is highly competitive. The Company competes with numerous competitors in the ports which its serves. The Company competes with McAllister Brothers, Inc. in five of its ports and with Turecamo Maritime, Inc. in New York and Philadelphia. In addition, the Company also competes with other providers of tug services in most of the ports it serves. Because entry into most ports is unrestricted, additional competitors may enter the Company's current markets in the future. Management believes that participants in the tug services market compete on the basis of price, service (including vessel availability), relationships, reputation, quality of operations, the ability to meet stringent safety requirements and operational flexibility. Marine Transportation. The marine transportation industry is highly competitive. The industry has become increasingly concentrated in recent years as smaller and/or economically weaker companies have gone out of business or have been acquired by larger competitors. The Company has a number of competitors in each of its marine transportation markets which operate U.S. flag barges, tankers and bulkers. Certain of these competitors have substantially greater resources than the Company. However, the number of vessels eligible to engage in Jones Act trade has declined over the past several years. Management believes that participants in the tank and dry bulk barge business compete on the basis of price, service (including vessel availability), relationships, reputation, quality of operations, the ability to pass stringent safety audits and operational flexibility. Further, in light of the potential liability of oil companies and other shippers of petroleum products under the Oil Pollution Act of 1990 ("OPA 90") and analogous state laws, management believes that some shippers select transporters in larger measure than in the past, on the basis of a demonstrated record of safe operations. Therefore, the Company has implemented a number of measures in order to maintain high quality operations and has continued to stress its long-standing commitment to safe transportation of petroleum products in its marketing efforts. Customers and Contracts Tug Services. The Company offers tug services to vessel owners, operators and their agents. The Company prides itself on its long-standing customer relationships, which in some cases date back to before World War II. The majority of the Company's ship docking business is performed under one-year, renewable contracts, with the remainder being on a spot basis. The Company also has long and established relationships with many of its harbor and coastwise towing customers. The Company's harbor and coastwise towing business is performed both on a contract and on a spot market basis. No single tug services customer accounted for more than 7% of the Company's total consolidated revenues in 1997. Although many of the Company's tug services customers have been customers of the Company for periods in excess of 30 years and although most of the Company's tug services customers have had at least a five-year relationship with the Company, there can be no assurance that any individual contract or relationship will be renewed or continued. Marine Transportation. The Company's marine transportation business operates both on a term contract basis and on a spot market basis. The Company strives to maintain an appropriate mix of contract and spot business, based on current market conditions. No single marine transportation customer accounted for more than 8% of the Company's total revenues in 1997. 2 Insurance The Company's operations are subject to the hazards associated with operating vessels and carrying large volumes of cargo in a marine environment. These hazards include the risk of loss of, or damage to, the Company's vessels, damage to property of third parties (including customers), loss or contamination of cargo, personal injury to employees or third parties, and pollution and other environmental damages. The Company maintains insurance coverage against these hazards. Risk of loss of, or damage to, the Company's vessels is insured to amounts which the Company believes represents the fair market values of such vessels, subject to certain deductibles. Vessel operating liabilities, resulting from such things as collision, cargo and environmental damage and personal injury, are insured at levels believed to be adequate primarily through the Company's participation in a protection and indemnity mutual insurance association. However, because of the mutual nature of such insurance, the Company is exposed to funding requirements and coverage shortfalls in the event claims by the Company or other members exceed available funds and reinsurance. See "Regulatory Matters-Environmental Matters - Oil Pollution Legislation." The Company has entered into a Marine Insurance Additional Retention Agreement (the "Insurance Agreement") with The Interlake Steamship Company, Lakes Shipping and Mormac Marine Transport Inc. (collectively, the "Mormac Group"). Messrs. Tregurtha, Barker and Langlois are officers, directors and/or direct or indirect shareholders of some or all of the entities in the Mormac Group. The Company and the Mormac Group entered into the Insurance Agreement in an effort to reduce insurance expense by obtaining lower premiums through group purchases of insurance and through higher deductibles. The Insurance Agreement also provides for allocation among the parties of any risk arising out of the increases in insurance deductibles. Pursuant to the Insurance Agreement, the Company and Mormac Group agreed to share any increased insurance claims expense required to be borne by a party as a result of insurance claims which exceed historical deductibles but are less than the new, increased deductibles. Allocations of any increased insurance claims expense is based upon the historical claims experience (in excess of historical deductibles) for each party to the agreement. In the current policy year, 65% of any additional insurance claims expense attributable to the higher deductibles will be borne by the Company and 35% of any such additional insurance claims expense will be borne by the Mormac Group. Amounts payable to the Company from members of the Mormac Group totaled $222,000 at December 31, 1997. The Company believes that the terms of the Insurance Agreement, which was prepared in consultation with an independent insurance broker, are similar to those that would be obtained in an arms'-length transaction. Regulatory Matters General. The Company's rates for transportation of bulk cargoes, which are not published and are negotiated with its customers, are not subject to government regulation. The operation of tugboats and barges is subject to regulation under various federal laws and international conventions, as interpreted and implemented by the United States Coast Guard, as well as under certain state and local laws. Tugboats and barges are required to meet operational and safety standards currently established by the United States Coast Guard. In addition, most of the Company's tugboats and all of its barges meet construction and repair standards established by the American Bureau of Shipping, a private vessel inspection organization. The Company's seagoing supervisory personnel are licensed by the United States Coast Guard. Seamen and tankermen are certificated by the United States Coast Guard. See also "Regulatory Matters-Occupational Health Regulations". 3 Jones Act and Related Regulations. The Jones Act restricts marine transportation between United States ports to vessels built and registered in the United States and owned by United States citizens. The Jones Act also requires that all United States flag vessels be manned by United States citizens, which significantly increases the labor and certain other operating costs of United States flag vessel operations compared to foreign-flag vessel operations. In addition, the United States Coast Guard and American Bureau of Shipping maintain the most stringent regime of vessel inspection in the world, which tends to result in higher regulatory compliance costs for United States flag operators than for owners of vessels registered under foreign flags. Because the Company transports cargo between United States ports and engages in harbor work within United States ports, most of its business depends upon the Jones Act remaining in effect. Compliance with the requirements of the Jones Act is therefore very important to the operations of the Company and the loss of Jones Act status could have a significant adverse effect on the Company. In this regard, stockholder agreements prohibit the transfer of shares of the Company's capital stock to non-U.S. citizens. See "Certain Relationships and Related Transactions." The Company also monitors the citizenship of its employees and will take any remedial action necessary to insure compliance with Jones Act requirements. There have been various on-going unsuccessful attempts in the past by foreign governments and companies to gain access to the Jones Act trade. These efforts have been consistently defeated by large margins in the United States Congress. Management believes that continued efforts will be made to gain access to such trade and if such efforts are successful, there could be an adverse effect on the Company. Environmental Matters. The Company is subject to various legislation and regulations enacted to protect the environment. Under applicable law, an owner or operator of real property may be liable for the costs of removal or remediation of certain hazardous or toxic substances on or under such property, regardless whether the owner or operator knew of, or was responsible for, the presence of such materials. Moreover, persons who arrange for the disposal or treatment of wastes containing such substances at an off-site facility may also be liable for the costs of removal or remediation of such substances at the off-site facility, regardless whether the facility is owned or operated by such person. In this regard, the Company and its predecessors have conducted vessel repair and maintenance activities at certain owned or leased sites, and have disposed of wastes that may contain such substances at off-site waste management facilities. As discussed below under "Legal Proceedings", Jakobson Shipyard, Inc. a subsidiary of the Company ("Jakobson") has been named as a potentially responsible party for the cleanup of an off-site waste management facility in Syosset, New York. It is possible that the Company will in the future be subject to additional claims for, and incur costs in connection with, remediation of other real property. However, the extent of any such liability and the timing of any payments to be made by the Company, if any, are not determinable. The Company may also incur future costs and expenses in order to ensure compliance with existing or new requirements under applicable environmental laws. In many instances, the ultimate costs under such environmental laws and the time period during which such costs are likely to be incurred are not determinable: See "Management's Discussion and Analysis of Financial Condition and Results of Operations - Other Matters." Oil Pollution Legislation. As a transporter of petroleum products, the Company is subject to oil pollution legislation. OPA 90 substantially affects the liability exposure of owners and operators of vessels, oil terminals and pipelines. Under OPA 90, each responsible party for a vessel or facility from which oil is discharged will be jointly and severally liable for all oil spill containment and clean-up costs and certain other damages arising from the discharge. These other damages are defined broadly to include (i) natural resource damage (recoverable only by government entities), (ii) real and personal property damage, (iii) net loss of taxes, royalties, rents, fees and other lost revenues (recoverable only by government entities), (iv) lost profits or impairment of earning capacity due to property or natural resource damage, and (v) net cost of public services necessitated by a spill response, such as protection from fire, safety or health hazards. The owner or operator of a vessel from which oil is discharged will be liable under OPA 90 unless it can be demonstrated that the spill was caused solely by an act of God, an act of war, or the act or omission of a third party unrelated by contract to the responsible party. Even if the spill is caused solely by a third party, the owner or operator must pay all removal costs and damage claims and then seek reimbursement from the third party or the trust fund established under OPA 90. OPA 90 establishes a federal limit of liability of the greater of $1,200 per gross ton or $10 million per tank vessel. A vessel owner's liability is not limited, however, if the spill results from a violation of federal safety, construction or operating regulations. 4 OPA 90 requires all vessels to maintain a certificate of financial responsibility ("COFR") for oil pollution in an amount equal to the greater of $1,200 per gross ton per vessel, or $10 million per vessel, in compliance with regulations promulgated by the U.S. Coast Guard. Additional financial responsibility in the amount of $300 per gross ton is required under regulations promulgated by the U.S. Coast Guard under the Comprehensive Environmental Response Compensation and Liability Act ("CERCLA"), the federal Superfund law. Owners of more than one tank vessel, such as the Company, are only required to demonstrate financial responsibility in an amount sufficient to cover the vessel having the greatest maximum liability (approximately $17 million in the Company's case). The Company currently maintains COFRs in compliance with applicable Coast Guard rules. OPA 90 requires all newly constructed petroleum tank vessels engaged in marine transportation of oil and petroleum products in the U.S. to be double-hulled and all existing single-hulled vessels to be retrofitted with double hulls or phased out of the industry between January 1, 1995 and 2015. Because of the age and size of the Company's individual barges, the first three of its barges will be required to be retired or retrofitted by 2005. However, many of the vessels competing with the Company's barges are required to be retired or retrofitted between now and 2005. Since the double-hull requirements of OPA 90 do not begin to impact materially the seven single-hulled barges in the Company's current tank barge fleet until 2005, the Company has not yet determined how it will finance the conversion or replacement of these single-hulled barges. However, the Company expects that, where economically feasible, it will take steps to construct new, double-hulled barges when its single-hulled barges are phased out. At current construction costs, the Company estimates that it would cost approximately (a) $5 million to build a new 40,000 barrel tank barge similar to the Connecticut and (b) $25 million to build a new barge to replace a 250,000 barrel tank barge such as the New York. The timing of the construction or conversion of such barges will depend in large measure on market conditions, particularly demand for double-hulled barges and the rates that petroleum shippers are willing to pay to use such barges. The Company expects to finance such construction or conversion from both internally generated funds and from outside sources, including the equity market, banks and insurance companies and U.S. Government-guaranteed ship financing programs, if available. There is no assurance that such financing will be available in the amounts and at interest rates that will allow the Company to replace its current single-hulled barge fleet. See "Properties-Vessels: Barge Fleet." OPA 90 directs the Coast Guard to develop interim measures for single hull-tank vessels of over 5,000 gross tons "that provide as substantial protection to the environment as is economically and technologically feasible". The Coast Guard has adopted, and is still adopting a series of operational measures that, while increasing current standards, has not, and is not expected to have an appreciable effect on the Company. OPA 90 further requires all tank vessel operators to submit for federal approval detailed vessel oil spill contingency plans setting forth their capacity to respond to a worst case spill situation. Several states have similar contingency or response plan requirements. Although the Company is currently in compliance, there can be no assurance that the Company will be able to remain in compliance with all the federal requirements or those of one or more states. OPA 90 is expected to have a continuing adverse effect on that segment of the marine transportation industry that transports petroleum products, including the Company. The effects on the industry could include, among others, (i) increased requirements for capital expenditures to fund the cost of double-hulled vessels, (ii) increased maintenance, training, insurance and other operating costs, (iii) civil penalties and liability, (iv) decreased operating revenues as a result of a further reduction of volume transported by vessels and (v) increased difficulty in obtaining sufficient insurance, particularly oil pollution coverage. These effects could adversely affect the profitability and liquidity of the Company's marine transportation line of business. Finally, OPA 90 does not preclude states from adopting their own liability laws. Many of the states in which the Company does business have enacted laws providing for strict, unlimited liability for vessel owners in the event of an oil spill. In addition, numerous states have enacted or are considering legislation or regulations involving at least some of the following provisions: tank-vessel-free zones, contingency planning, inspection of vessels, additional operating, maintenance and safety requirements, and financial responsibility requirements. Management believes that the liability provisions of OPA 90 and similar state laws have greatly expanded the Company's potential liability in the event of an oil spill, even where the Company is not at fault. 5 Other Regulations. The Company is also subject to regulations under the Federal Water Pollution Control Act of 1972, as amended by the Clean Water Act of 1977, and the Clean Air Act, as well as similar state statutory and regulatory programs. To date, compliance with the applicable provisions of these acts and regulations has not exposed the Company to material expense, although the Company has found it increasingly expensive to manage the wastes generated in its operations. User Fees and Taxes. Federal legislation imposes user fees on vessel operators such as the Company to help fund the United States Coast Guard's regulatory activities. Other federal, state and local agencies or authorities could also seek to impose additional user fees or taxes on vessel operators or their vessels. Currently, the Coast Guard collects fees for vessel inspection and documentation, licensing and tank vessel examinations. The Company does not expect that these fees will be material to it. There can be no assurance that additional user fees will not be imposed in the future. Occupational Health Regulations. Certain of the Company's vessel operations are subject to United States Occupational Safety and Health Administration regulations. Similarly, the Coast Guard has promulgated regulations that address the exposure to benzene vapors, which require the Company, as well as other operators, to perform extensive monitoring, medical testing and record keeping of seamen engaged in the handling of benzene transported aboard vessels. It is expected that these regulations may serve as a prototype for similar health regulations relating to the carriage of other cargoes. Management believes that the Company is in compliance with the provisions of the regulations that have been adopted. Employees The Company and its subsidiaries employed 586 persons as of December 31, 1997, of which 450 are crew members or other seagoing personnel. As of December 31, 1997, 318 of such employees are represented by various unions. Union contracts for certain marine employees of operating division or subsidiaries of the Company expire between May 31, 1998 (72 employees) and April 30, 2001 (28 employees). Management believes that its relationship with employees is satisfactory. 6 Item 2. Properties Vessels: Tug Fleet The tugboat fleet operated by subsidiaries of the Company is comprised of 53 tugboats with the following specifications and capacities: Average Number Age in Class in Class Years ----- -------- ----- Over 3,500 horsepower..................... 14 23.9 3,000 to 3,500 horsepower................. 18 25.1 Under 3,000 horsepower.................... 17 41.2 Mortrac(R)................................ 4 24.5 Tugboats typically have long useful lives, generally exceeding 50 years. Through its maintenance practices and periodic overhauls, the Company is able to maximize the operational life of its tug fleet and minimize vessel downtime. Management believes that the Company's tug fleet has a lower average age and is better maintained than the fleets of many of the Company's competitors. During the past three years, the Company converted four of its single screw tugs to MORTRAC(R) class tugs. The conversion consists of installing a forward mounted, fully retractable 360-degree azimuthing thruster, a state of the art wheelhouse, and new fendering systems. In addition, during the time that the vessels were undergoing conversion, a thorough maintenance and repair process was undertaken to ensure that the remaining vessel systems were in top condition. The resulting MORTRAC(R) tugs are highly maneuverable and have significantly greater horsepower than prior to conversion. Customer reaction to the capabilities of the converted vessels has been favorable and the four tugs now play key roles in the ports where they are located. The MORTRAC(R) conversion has greatly enhanced the value and expected life of the tugs in question. MORTRAC(R) is a registered trademark of the Company. 7 Vessels: Barge Fleet The Company operates 15 barges in the U.S. coastwise trade. Thirteen of the barges are owned by the Company and two are chartered to the Company. The specifications and capacities of each of such barges are set forth in the following table:
OPA 90 Year Replacement Employment Principal Name Type Built Date Capacity At 12/31/97 Cargo - ---- ---- ----- ---- -------- ----------- ----- Somerset Ocean Dry Bulk 1990 N/A 13,211 dwt Term Contract Coal Bridgeport Ocean Dry Bulk 1986 N/A 12,780 dwt Term Contract Coal Portsmouth (1) Ocean Dry Bulk 1996 N/A 13,214 dwt Spot Market Coal Virginia Ocean Dry Bulk 1982 N/A 24,109 dwt Time Charter Coal Maryland (2) Inland Dry Bulk 1970 N/A 20,357 dwt Inactive Coal Connecticut (3) Ocean Tank 1994 N/A 41,454 bbl Term Contract No. 6 Oil Texas Ocean Tank 1981 2006 130,000 bbl Term Contract No. 6 Oil Florida Ocean Tank 1980 2005 130,000 bbl Spot Market No. 6 Oil Pennsylvania Ocean Tank 1971 2005 93,000 bbl Term Contract No. 6 Oil New York (4) Ocean Tank 1970 2005 250,000 bbl Spot Market Gasoline Massachusetts (6) Ocean Tank 1982 2007 145,000 bbl Spot Market No. 6 Oil Maine Inland Tank 1976 2014 64,000 bbl Spot Market No. 6 Oil Rhode Island Inland Tank 1972 2014 64,000 bbl Spot Market No. 6 Oil Seahorse I (5) Inland Tank 1966 2014 41,770 bbl Spot Market No. 6 Oil New Jersey Inland Tank 1969 2014 36,278 bbl Bareboat Charter Bunker Fuel
(1) The Company leases this barge under a 10-year bareboat charter. (2) The Maryland has in the past been employed in a number of alternative uses, but is primarily a coal barge. The barge has not been utilized since November 7, 1996 due to damage to the vessel. The Company is currently evaluating whether to repair the vessel. (3) This barge is the primary barge used in connection with a long-term contract with Connecticut Light and Power ("CL&P"). This contract provides, among other things that CL&P may exercise a purchase option on the Connecticut in certain circumstances. First, commencing with the fourth anniversary of the delivery of the Connecticut, CL&P may, on each anniversary date, purchase the barge for a purchase price equal to certain scheduled amounts. In addition, CL&P has the option to purchase the barge if the Company willfully refuses to perform and in certain other limited circumstances. (4) Owned by a partnership in which a subsidiary of the Company has a 50% interest. (5) 100% owned by CL&P, and operated by a subsidiary of the Company pursuant to an evergreen bareboat charter. The Seahorse I is the primary back up barge for the Company's contract with CL&P, but is currently used in the spot market. The Seahorse I is double-hulled, but does not meet the OPA 90 double hull requirements and therefore has an OPA 90 replacement date. (6) The Company purchased this barge in February, 1997. See "Management's Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources." 8 Other Properties Set forth below is a list of all of the Company's offices and facilities as of December 31, 1997.
Approximate Square Feet/ Lease Location Description Linear Feet (1) Expiration Date - -------- ----------- --------------- --------------- Greenwich, CT Executive Office 17,526 2004 Portsmouth, NH Office Space 322 Owned Property Portsmouth, NH Pier Space 126 Owned Property Staten Island, NY Office and Pier Space 113,756(2) Owned Property Philadelphia, PA Pier and Office Space 52,500(2) 2007 Baltimore, MD Office Space 4,400 2002 Baltimore, MD Pier Space 415 2003 Norfolk, VA (2) Pier Space 115 Owned Property Norfolk, VA Office Space 2,610 Month to Month Jacksonville, FL Office and Pier Space 71,874(2) 2000 Miami, FL Office Space 630 1998 Nederland, TX Office Space 1,402 1998 Port Arthur, TX Pier Space 275 1998
(1) Square footage is presented for office space; linear footage is presented for pier space. (2) Aggregate square footage for entire property. Management believes that its existing properties are adequate for its current needs and that additional facilities will be readily available if needed. 9 Item 3. Legal Proceedings The Company is a party to routine, marine-related lawsuits arising in the ordinary course of its business. The claims made in connection with the Company's marine operations are covered by marine insurance, subject to applicable policy deductibles. Management believes, based on its current knowledge, that such lawsuits and claims, even if the outcomes were to be adverse, would not have a material adverse effect on the Company's financial condition and results of operations. On January 31, 1990, Jakobson was notified by letter from the EPA that the EPA had reason to believe that the subsidiary is a Potentially Responsible Party (a "PRP") under CERCLA with respect to a landfill site at Syosset, New York. In February 1994, the Town of Oyster Bay, New York, operator of the Syosset landfill, filed suit in the United States District Court for the Eastern District of New York against Jakobson and several other PRPs to recover costs associated with clean up of the landfill. In its complaint, the Town alleges that Jakobson disposed of various wastes at the landfill, which the Town operated from approximately 1933 to 1975. Prior to filing the complaint, the Town entered into an administrative consent order with the EPA to remediate the site. The Town seeks to recover from the PRPs past and future costs associated with the cleanup. According to the Town's complaint, as of February 1994, the Town had expended approximately $2.75 million and anticipated additional costs of $500,000 to evaluate remedial alternatives for the site. Clean-up costs were estimated at $25 million. Jakobson believes that it has both a factual and legal defense to liability. Although in theory liability under CERCLA is joint and several without regard to fault, as a practical matter, liability is typically apportioned among PRPs, usually on a volumetric basis. Jakobson believes that in relation to the other defendants its volumetric contribution, if any, to the site is de minimus. Jakobson is investigating the allegations of the EPA and the Town and the existence of insurance coverage should the subsidiary be found to have liability with respect to the landfill site. At this stage, management believes that it is premature to attempt to predict the outcome of the suit. Jakobson's insurers are providing a defense. Subsidiaries of the Company are defendants, along with others, in certain lawsuits filed in the U.S. District Courts for the Northern District of Ohio and the Eastern District of Pennsylvania and in Virginia state court by an aggregate of 308 individuals or their estates or personal representatives who have alleged damages for workplace exposure to asbestos. Based on employment records, a number of these individuals appear to have worked for subsidiaries of the Company, or their predecessors, for less than one year, if at all, out of their working careers. The Company is in the process of identifying the scope of its insurance coverage for these claims. At least 79 of these individuals served on vessels operated by a subsidiary of the Company on behalf of the United States government for which a government indemnity is applicable. The United States has agreed to indemnify and defend the Company with respect to approximately 68 cases. Management believes that the United States indemnity will extend to additional cases. Although the Company believes that these claims are without merit, it is impossible at this juncture to express a definitive opinion on the final outcome of any such suit. Management believes that any liability under any such suits would not have a material adverse effect on the Company's financial condition and results of operation, regardless of the scope of available insurance coverage. 10 Item 4. Submission of Matters to a Vote of Security Holders None PART II Item 5. Market for Registrant's Common Equity and Related Stockholder Matters There is currently no public trading market for the Company's issued and outstanding common stock. All of the Company's outstanding common stock is held by officers, directors and affiliates of the Company. 11 Item 6. Selected Consolidated Financial Data The following table presents historical financial information concerning the Predecessor and the Company. The historical financial information in the five-year period ending December 31, 1997, is derived from the consolidated financial statements of the Company. Such financial statements are included elsewhere herein for the three-year period ended December 31, 1997. The following financial information should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations".
Predecessor Company ----------------------- ------------------------------------------------- Period Period Year Jan. 1, 1994 July 12, 1994 Year ended (Dollars in thousands) ended thru thru December 31, Dec. 31, July 11, Dec. 31, ----------------------------------- Income Statement Data: 1993 1994 1994 1995 1996 1997 --------- --------- --------- --------- --------- --------- Operating revenue----------------------------------- $ 78,740 $ 41,694 $ 37,482 $ 77,343 $ 91,458 $ 100,526 Operating expenses------------------------------- 48,134 27,341 22,355 45,672 57,451 66,090 Depreciation------------------------------------- 6,784 3,119 3,217 7,412 7,719 7,769 General and administrative expenses-------------- 13,197 7,559 5,962 14,221 14,283 13,755 Provision for shipyard sale---------------------- 705 589 -- -- -- -- --------- --------- --------- --------- --------- --------- Operating income----------------------------- 9,920 3,086 5,948 10,038 12,005 12,912 Interest expense------------------------------------ (2,083) (975) (4,810) (10,192) (10,132) (10,026) Interest income------------------------------------- -- 28 74 51 146 346 Equity in income/(loss) from affiliates------------- 1,149 (622) -- -- -- -- Equity in income/(loss) from joint venture---------- 614 220 106 (188) (66) (727) Other income/(expense)------------------------------ 164 317 218 155 160 (273) --------- --------- --------- --------- --------- --------- Income/(loss) before provision for income taxes 9,764 2,054 1,536 (136) 2,113 2,232 Provision for income taxes-------------------------- 3,342 785 630 200 808 613 --------- --------- --------- --------- --------- --------- Income/(loss) before cumulative effect of accounting changes----------------------------- 6,422 1,269 906 (336) 1,305 1,619 Cumulative effect of accounting change (1)---------- 525 -- -- -- -- -- --------- --------- --------- --------- --------- --------- Net income/(loss)---------------------------------- $ 6,947 $ 1,269 $ 906 $ (336) $ 1,305 $ 1,619 --------- ========= ========= ========= ========= ========= Other Data: EBITDA(2)------------------------------------------- $ 19,775 $ 6,977 $ 9,987 $ 18,855 $ 23,337 $ 23,704 Net cash provided by operating activities----------- 8,334 3,939 6,527 5,491 11,427 8,929 Net cash (used for)/provided by investing activities (3,594) 817 (73,555) (5,832) (5,110) (8,063) Net cash (used for)/provided by financing activities (6,323) (4,637) 68,842 (652) (3,496) 3,252 Ratio of earnings to fixed charges (3)-------------- 4.5x 2.7x 1.3x 1.0x 1.2x 1.2x Balance Sheet Data (at end of period) Total assets---------------------------------------- $ 69,139 $ 64,432 $ 170,108 $ 174,094 $ 172,717 $ 160,290 Total long-term debt-------------------------------- 19,235 16,450 83,414 82,848 80,000 83,252 Mandatorily redeemable capital stock---------------- -- -- 1,150 1,150 1,000 1,000 Total stockholders' equity-------------------------- 20,132 19,701 10,906 10,570 12,025 13,644
- --------------------- (1) The Company adopted FAS No. 109, effective January 1, 1993. (2) EBITDA means income before provision for income taxes, interest expense (including amortization of debt discount of $349 and $106 for the year ended December 31, 1993 and the period ended July 11, 1994, respectively), depreciation and amortization and provision for shipyard sale, and is presented because the Company believes that it provides useful information regarding its ability to service and/or incur debt. EBITDA should not be considered in isolation or as a substitute for net income/(loss), cash flows from operating activities and other combined income or cash flow statement data prepared in accordance with generally accepted accounting principles or as a measure of the Company's profitability or liquidity. (3) For purposes of the computations, earnings before fixed charges consist of income/(loss) before income taxes adjusted for equity earnings/(loss), as appropriate, plus fixed charges. Fixed charges are defined as interest expense plus interest capitalized and that portion of rental expense which is deemed to be representative of the interest factor. 12 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations This discussion and analysis of the Company's financial condition and historical results of operations should be read in conjunction with the Company's and the Predecessor's consolidated historical financial statements and the related notes thereto included elsewhere in this report. Overview Revenues Tug Services. Tug services revenues depend primarily upon tug utilization and the rates charged for tug services. Tug utilization is primarily a function of the volume of vessel traffic requiring docking or undocking or other ship assistance services, barge movements, coastwise contract towing and offshore rescue work. Rates charged for tug services are primarily set by reference to the Company's scheduled rates, subject to discounts as competitive conditions warrant. When tug services are not performed on a contract basis, rates are quoted at the time that such services are requested. Tug services revenues, in the aggregate, have remained relatively stable over recent years. Although the number of ships entering and exiting ports has gradually declined, the Company has offset the resulting revenue decline by maintaining market share through relationship management and increasing coastwise towing. Marine Transportation. Marine transportation services are provided by the Company's barge fleet on a term contract basis and on a spot market basis. Rates for such services are pre-established by contract or are quoted at the time that such services are requested, and are generally set based on the quantity of product to be transported and the distance to be traveled. The Company's marine transportation revenues are primarily attributable to the transport of petroleum products (particularly No. 6 oil), coal, scrap iron, and grain. Demand for the Company's marine transportation services is substantially dependent upon general demand for petroleum, petroleum products and coal in the geographic areas served by its vessels. In addition, weather, prevailing markets for fossil fuels and other sources of energy and economic factors can affect utility consumption of petroleum, petroleum products and coal and, as a result, the demand for a substantial portion of the Company's marine transportation services. Operating Expenses. The Company's operating expenses are primarily a function of fleet size and utilization levels and are comprised of wages and benefits, fuel, repairs, insurance, insurance claims and charter hire of third party tugs to satisfy vessel requirements. In addition, the Company incurs depreciation and amortization expense. The crews of the Company's tugs and barges are primarily paid on a daily wage basis. Wage and benefit levels vary among ports due to labor market conditions. The Company capitalizes expenditures when a vessel is improved or its useful life is extended. Drydocking and related costs are capitalized when incurred and amortized over the period until the next drydocking, usually 30 months. The timing of drydockings is generally governed by American Bureau of Shipping requirements, which require two drydockings every five years. All other repair expenditures are expensed as incurred. Insurance costs consist primarily of premiums paid for (i) protection & indemnity insurance ("P&I insurance") for the Company's marine liability risks, which are insured by a mutual insurance association of which the Company is a member; (ii) hull and machinery insurance and other marine-related insurance, which are insured by commercial marine insurance markets; and (iii) general liability and other traditional insurance, which are insured by commercial insurance carriers. Insurance costs, particularly costs of marine insurance, are directly related to amount of coverage, industry and individual loss records and overall insurance market conditions, which vary from year-to-year. As discussed above under "Business-Insurance," the Company and the Mormac Group have entered into the Insurance Agreement, under which the Company's insurance expense will be affected by both the Company's increased deductibles and the respective insurance claims experience of the Company and the Mormac Group. 13 Results of Operations Year Ended December 31, 1997 compared to year ended December 31, 1996 Year Ended December 31, ------------------------ 1996 1997 --------- --------- Operating revenue ................................ $ 91,458 $ 100,526 Cost of operations Operating expenses ........................... 57,451 66,090 Depreciation ................................. 7,719 7,769 --------- --------- Total cost of operations ......................... 65,170 73,859 --------- --------- Gross profit ..................................... 26,288 26,667 General and administrative expenses .............. 14,283 13,755 --------- --------- Operating income ................................. 12,005 12,912 Interest expense ................................. (10,132) (10,026) Interest income .................................. 146 346 Equity in loss from joint venture ................ (66) (727) Other income/(expense) ........................... 160 (273) --------- --------- Income before provision for income taxes ......... 2,113 2,232 Provision for income taxes ....................... 808 613 --------- --------- Net income ....................................... $ 1,305 $ 1,619 ========= ========= Operating Revenues. Operating revenues increased by $9.1 million, or 9.9%, to $100.5 million in 1997. Tug Services revenue remained effectively flat, decreasing by $0.3 million or 0.6% to $57.1 million as lower offshore towing revenues were offset by The New York City Department of Sanitation contract which expires on June 30, 1998. Marine Transportation revenues increased by $9.4 million, or 27.6%, to $43.4 million primarily due to increased movements of coal and petroleum products. The Company also increased its transportation of other products, such as scrap and fertilizer. The Company also had a full year of operation for the barge Portsmouth, which began operations in November 1996 and the barge Massachusetts, purchased in February 1997. Operating Expenses. Operating expenses increased by $8.6 million, or 15.0%, to $66.1 million. The $8.6 million increase in operating expenses is primarily due to increases in labor, fuel, outside towing expense, repairs and drydocking amortization. The $2.5 million increase in labor expense and the $1.4 million increase in outside towing expenses were primarily due to the increased level of activity discussed above. The $1.0 million fuel expense increase was also due to the increased activity. Repair expense also increased in 1997, as did drydocking amortization. Depreciation. Depreciation expense increased by $0.1 million, or 1.3%. This increase was due to the acquisition of new equipment and to improvements to existing floating equipment, including the MORTRAC(R) conversions discussed previously. General & Administrative Expenses. General and administrative expenses decreased by $0.5 million or 3.7% to $13.8 million in 1997, primarily due to lower medical costs. Operating Income. Operating income increased by $0.9 million, or 7.6%, to $12.9 million. The increase was primarily due to the increased revenues and lower general and administrative expenses discussed above, partially offset by higher operating expenses and depreciation. 14 Equity in Loss from Joint Venture. The Company equity loss in its 50% joint venture was $0.7 million, compared the smaller loss of $0.1 million in 1996. The $0.6 million variance is due to lower rates as well as a dry-docking of the vessel, which began in the second quarter of 1997 and was completed mid-way through the third quarter. In addition, market conditions in the clean petroleum products market idled the barge New York for approximately half of the final six months of 1997 and management believes that lower rates and lower utilization could continue through 1998. Taxes: Taxes were favorably impacted by the realization of a deferred tax asset. The Company applied a capital loss carry forward to offset the tax gain associated with the termination of the Jakobson Shipyard lease (see note 5 to the financial statements). This tax asset previously had been valued at zero due to the uncertainty associated with its utilization. The Company determined in the third quarter that is was more likely than not that the asset could be utilized. Net Income. Net income increased by $0.3 million, or 24.1% to $1.6 million in 1997. The increase was primarily due to the factors discussed above. 15 Results of Operations Year Ended December 31, 1996 compared to year ended December 31, 1995 Year Ended December 31, ---------------------- 1995 1996 -------- -------- Operating revenue .................................. $ 77,343 $ 91,458 Cost of operations Operating expenses ............................. 45,672 57,451 Depreciation ................................... 7,412 7,719 -------- -------- Total cost of operations ........................... 53,084 65,170 -------- -------- Gross profit ....................................... 24,259 26,288 General and administrative expenses ................ 14,221 14,283 -------- -------- Operating income ................................... 10,038 12,005 Interest expense ................................... (10,192) (10,132) Interest income .................................... 51 146 Equity in loss from joint venture .................. (188) (66) Other income ....................................... 155 160 -------- -------- (Loss)/income before provision for income taxes .... (136) 2,113 Provision for income taxes ......................... 200 808 -------- -------- Net (loss)/income .................................. $ (336) $ 1,305 ======== ======== Operating Revenues. Operating revenues increased by $14.1 million, or 18.2%, to $91.5 million in 1996. Tug Services increased by $9.4 million or 19.7%, to $57.5 million. All areas of the tug services business --- shipdocking, harbor towing and coastwise towing -- showed increases in 1996 and included revenue related to The New York City Department of Sanitation contract which began on July 1, 1996 and expires on June 30, 1998. Marine Transportation revenues increased by $4.7 million, or 15.9%, to $34.0 million primarily due to increased movements of coal and petroleum products. The Company also increased its transportation of other products, such as scrap and fertilizer. Operating Expenses. Operating expenses increased by $11.8 million, or 25.8%, to $57.5 million. The $11.8 million increase in operating expenses is primarily due to increases in labor, fuel, outside towing expense, claims and drydocking amortization. The $2.6 million increase in labor expense and the $2.5 million increase in outside towing expenses were primarily due to the increased level of activity discussed above. The $2.6 million fuel expense increase was also due to the increased activity but was also impacted by higher fuel prices, especially in the second half of the year. Claims expense (claims under insurance deductibles) also increased in 1996 as did drydocking amortization. Depreciation. Depreciation expense increased by $0.3 million, or 4.1%. This increase was due to additional improvements to floating equipment, including the MORTRAC(R) conversions discussed previously. General & Administrative Expenses. General and administrative expenses remained essentially the same at $14.3 million, compared to $14.2 million in 1995. Operating Income. Operating income increased by $2.0 million, or 19.6%, to $12.0 million. The increase was primarily due to the increased revenues discussed above, partially offset by higher operating expenses and depreciation. Equity in Loss from Joint Venture. Equity in loss from the Company's 50% joint venture decreased by $0.1 million or 64.9% from a loss of $188,000 in 1995 to a loss of $66,000 in 1996. The decrease is primarily due to increased revenues, driven by higher rates and more operating days in 1996. Net (Loss)/Income. Net income increased by $1.6 million, from a loss of $0.3 million in 1995 to a profit of $1.3 million in 1996. The increase was primarily due to the higher operating profit discussed above. 16 Liquidity and Capital Resources The Company is highly leveraged as a result of the debt incurred in connection with the Acquisition. The Company has outstanding $80.0 million of 11.75% Series B First Preferred Ship Mortgage Notes due July 15, 2004 (the "Notes"), the issuance of which was registered under the federal securities laws. Interest on the Notes is payable semi-annually on January 15 and July 15. The Notes are redeemable, in cash, at the option of the Company, on or after July 15, 1999 at specified redemption prices plus accrued and unpaid interest. All of the Company's subsidiaries have guaranteed the Notes. The Notes rank pari passu with all existing and future senior indebtedness of the Company and senior to all subordinated indebtedness of the Company and are secured by substantially all of the Company's floating equipment. The indenture covering the Notes contains certain restrictions on incurrence of debt, liens, sales of assets, investments, and capital expenditures, dividends and upstream payments. The Company must also comply with certain other financial covenants. The Company has a revolving line of credit of up to $10.0 million, up to $5.0 million of which may be utilized for letters of credit. Both facilities are subject to borrowing base limitations. This Senior Credit Facility is secured by a first priority lien on the trade accounts receivable and inventory of the Company and bears interest at rates linked to the prime rate and/or a Eurodollar rate, at the Company's option. The Senior Credit Facility expires in July 2000. The Senior Credit Facility contains certain financial covenants and other covenants. At December 31, 1997, outstanding letters of credit approximated $472,000; no other borrowings were outstanding under the Senior Credit Facility. On December 1, 1997, the Company purchased a tug, the April Moran, from an affiliated company. As part of that transaction, the Company entered into a $3.4 million term loan which is payable in 24 quarterly installments through June 1, 2005. Interest is based upon LIBOR plus 1.75% but is fixed through June 1, 1999 at 8.1%. The loan is secured by the April Moran. On November 8, 1996, a subsidiary of the Company entered into a bareboat charter for the barge Portsmouth. The ten year charter contains an option to buy at enumerated times during the lease period. Subsequently, the subsidiary was merged into Moran Towing Corporation, which assumed the charter obligations. The Company has guaranteed performance by its subsidiary under the charter. The Company believes that cash flow from current levels of operations and, to a lesser extent, the availability under the Senior Credit Facility, will be adequate to make required payments of interest on the Company's indebtedness, as well as to fund capital expenditures. In the event that the Company draws upon the commitments under the Senior Credit Facility due to adverse business conditions or to finance acquisitions or for other corporate purposes, the Company's aggregate interest expense would correspondingly be increased. The Company's belief that it will generate sufficient cash to make required payments of interest on its indebtedness and lease obligations is based, among other things, on the assumptions that (i) the Company's revenues and operating expenses, as adjusted for inflation, will remain relatively constant; (ii) the Company will retain working capital in accordance with prior practices; (iii) the Company will not incur any material capital expenditures (excluding routine drydocking costs) other than the possible purchase or construction of new vessels or the acquisition of businesses which in turn are expected to produce additional cash flow; and (iv) neither OPA 90 nor any other federal or state environmental statutes or regulations will impose significant additional capital expenditure requirements on the Company other than the mandated phase-out or retrofitting of vessels described in "Business-Regulatory Matters." Currently, the Company has no specific plans for funding the repayment of principal on the Notes. If cash generated from operations is insufficient to pay any portion of the principal on the Notes, it would be necessary to refinance the Notes. Cash and cash equivalents for the year ended December 31, 1997 increased by $4.1 million compared to a $2.8 million decrease in the year ended December 31, 1996, and a $1.0 million increase in the year ended December 31, 1995. The changes for these periods were attributable to the factors discussed below: For the year ended December 31, 1997, net cash provided by operations of $8.9 million, together with net proceeds from a constructive total loss of $2.8 million, net proceeds from the sale of a leasehold interest of $2.9 million and increased borrowings of $3.3 million was used to fund capital expenditures of $12.7 million (including the purchase of the tug April Moran, barge Massachusetts, and two additional MORTRAC(R) conversions) and to fund a $1.0 million capital contribution to a joint venture, primarily to fund a dry-docking for the barge New York. 17 For the year ended December 31, 1996, net cash provided by operations was $11.4 million. This cash, together with temporary borrowings of $2.3 million were used to fund capital expenditures of $5.1 million (primarily the capitalization of drydocking costs and the upgrading of the tug Harriet Moran to a MORTRAC(R) tug) and to pay down debt of $5.7 million (including the indebtedness relating to the acquisition of the tug Valentine Moran and the barge Pennsylvania.) For the year ended December 31, 1995, net cash provided by operations was $5.5 million. This amount, together with $1.0 million is short-term borrowings, was used to fund capital expenditures of $5.8 million (primarily the capitalization of drydocking costs and including the upgrading of the tug Sewells Point to a MORTRAC(R) tug), to pay debt of $1.5 million and to pay financing fees of $0.1 million. Working capital was $17.6 million at December 31, 1997, $9.1 million at December 31, 1996 and $7.6 million at December 31, 1995. A subsidiary of the Company has entered into a long-term contract to provide tug and barge services to Florida Power & Light, a major Florida utility. The five-year contract begins on October 1, 1998. Under the terms of the contract, the subsidiary is building a number of tug and barge units over the next nine months. The total capital associated with the project is expected to be $8 to $10 million. The Company is exploring various financing alternatives. Other Matters In 1991, the Company discovered that the historical operations of its ship repair subsidiary, Jakobson, had resulted in environmental contamination of its leased shipyard property. During 1991, the Company decided to discontinue Jakobson's ship repair business during 1992, and therefore reduced Jakobson's assets to net realizable value. In 1992, Jakobson ceased operations and commenced the clean up of the shipyard property. Environmental costs incurred to ready the shipyard for sale were capitalized to the extent such costs are reasonably expected to be recovered from the sale of the shipyard. At December 31, 1992, management established reserves for the expected future clean up of the shipyard property. The clean up encompassed remediation of both the shipyard property and sediments in the bay immediately adjacent to the shipyard. Remediation of the shipyard property was substantially completed in 1993 and remediation of bay sediments commenced and were substantially completed in 1994. The remedial activities at the facility were concluded in 1995. The cost of this project has been approximately $6.1 million. In late 1995, Jakobson received written notification from the New York Department of Environmental Conservation that the shipyard site had been deleted from the State Registry of Inactive Hazardous Waste Disposal Sites. In 1995, the Company expended approximately $0.6 million in connection with the Jakobson property. Although such expenditures did not affect the Company's results of operations because they were charged against the provision for shipyard sale, such expenditures did reduce the Company's cash flow. In the third quarter of 1997, the owner of the Jakobson Shipyard site sold its property to the State of New York and the Town of Oyster Bay. At the same time, Jakobson Shipyard, Inc., a subsidiary of the Company, terminated its leasehold interest in the property and received $2.9 million. The loss related to the lease termination was not material. Recent Financial Accounting Pronouncements FAS No. 128, "Earnings Per Share," issued in February 1997, changes the calculation of earnings per share ("EPS") under generally accepted accounting principles in the U.S. to be more consistent with international standards. Under the new standard, companies replace the reporting of "primary" EPS with "basic" EPS. Basic EPS is calculated by dividing the income or loss available to common shareholders by the weighted average number of common shares outstanding for the period, without consideration of common stock equivalents. "Fully diluted" EPS is replaced by "diluted" EPS, which will be similar to fully diluted EPS as previously computed. This statement was adopted by the Company in 1997. FAS No. 130, "Reporting Comprehensive Income," issued in June 1997, will require the Company to disclose in financial statement format, all non-owner changes in equity. Such changes include, for example, cumulative foreign currency translation adjustments, certain minimum pension liabilities and unrealized gains and losses on securities available for sale. This statement is effective for fiscal years beginning after December 15, 1997 and requires presentation of prior period financial statements for comparability purposes. FAS No. 131, "Disclosures about Segments of an Enterprise and Related Information," issued in June 1997, establishes standards for reporting information about operation segments in annual financial statements and interim financial reports. It also establishes standards for related disclosures about products and services, geographic areas and major customers. 18 Generally, financial information is required to be reported on the basis that is used internally for evaluating segment performance and deciding how to allocate resources to segments. FAS No. 132, "Employer's Disclosure about Pension and Other Postretirement Benefits," is effective for the year ended December 31, 1998. This statement revises the disclosure requirements for employers' pension and other retiree benefits. The Company expects to adopt the above statements beginning with its 1998 financial statements, with the exception of FAS 128 which was adopted in 1997. Inflation In general, the Company's business is affected by inflation and the effects of inflation may be experienced by the Company in future periods. Management believes, however, that such effect has not been significant to the Company during the past three years. In the event that significant inflationary trends were to arise, management believes that the Company would generally be able to offset the effects thereof by increasing rates, to the extent permitted by competitive factors, and through operation of certain escalation clauses contained in certain of the Company's marine transportation contracts. There can be no assurance, however, that all such cost increases could be passed through to customers. Year 2000 The year 2000 issue is the result of computer programs being written using two digits rather than four to define the applicable year. This could result in system failures or miscalculations causing disruptions of operations, including, among other, a temporary inability to process transactions, send invoices or engage in similar normal business activities. The Company does not believe it has material exposure to the year 2000 issue with respect to its own information systems. Item 8. Financial Statements See the financial statements which are listed in items 14(a)(1)-(2). Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure There were no changes in, or disagreements with, accountants. 19 PART III Item 10. Executive Officers and Directors of the Registrant Set forth below is information concerning the directors and executive officers of the Company.
Name Age Position ---- --- -------- Paul R. Tregurtha 62 Chairman of the Board and Director James R. Barker 62 Vice Chairman of the Board and Director Malcolm W. MacLeod 64 President, Chief Executive Office and Director Jeffrey J. McAulay 44 Vice President of Finance and Administration and Director William P. Muller 46 President of Moran Services Corporation Edmond J. Moran, Jr. 53 President of Moran Mid-Atlantic Group and Director Alan L. Marchisotto 48 Vice President, General Counsel and Secretary Andrew P. Langlois 56 Director Mort Lowenthal 67 Director
Paul R. Tregurtha. Mr. Tregurtha has been a director and Chairman of the Board of the Company since June 1994. In addition, he has been Chairman of each of Mormac Marine Group, Inc. (the parent of Mormac) and Meridian Aggregates Company, which owns and operates mines in the United States, since 1988 and 1991, respectively, and Vice Chairman of each of The Interlake Steamship Company and Lakes Shipping Company, Inc. since 1988 and 1989, respectively. He served as Chairman and Chief Executive Officer of Moore McCormack Resources during 1987 and 1988 and was President and Chief Operating Officer of Moore McCormack Resources prior to that time. Mr. Tregurtha serves on the Board of Directors of Brown & Sharpe Manufacturing Company, FPL Group, Inc. and Fleet Financial Group, and is a trustee of TIAA/CREF. James R. Barker. Mr. Barker has been a director and is Vice Chairman of the Board of the Company since June 1994. In addition, he has been Chairman of each of The Interlake Steamship Company and Lakes Shipping Company, Inc. since 1987 and 1989, respectively, and Vice Chairman of Mormac Marine Group, Inc. since 1988. From 1987 to 1988, he served as Chairman of Mormac Marine Group, Inc. He served as Chairman and Chief Executive Officer of Moore McCormack Resources from 1971 to 1987. Prior to joining Moore McCormack Resources, Mr. Barker co-founded and was a principal of the management consulting firm of Temple, Barker & Sloane, where he specialized in consulting to the transportation industry. Mr. Barker is a member of the Board of Directors of each of GTE Corporation and Pittston Corporation (where he is non-executive chairman), is a trustee for Eastern Enterprises and is the Chairman of the Committee of Managers of the Skuld Protection and Indemnity Association. Malcolm W. MacLeod. Mr. MacLeod has served as President, Chief Executive Officer and director since the Acquisition. Mr. MacLeod served as President of the Predecessor from June 1987 until the Acquisition and as Chief Executive Officer from April 1991 until the Acquisition. In addition, Mr. MacLeod served as a director of the Predecessor from 1984 until the Acquisition. Mr. MacLeod served as President and Chief Executive Officer of Curtis Bay Towing Company, a Company subsidiary, from 1979 until 1987 and as Vice President of Curtis Bay from 1978 to 1979. Prior to that, Mr. MacLeod started on Company tugs after his graduation from the Massachusetts Maritime Academy in 1954 and has been with the Company and its subsidiary companies in a variety of assignments since that time, with the exception of two years' service in the United States Navy as a deck officer on fleet tugs. Jeffrey J. McAulay. Mr. McAulay has served as the Vice President of Finance and Administration and a director of the Company since April 1996. Mr. McAulay served as the Company's Controller from the Acquisition until April 1996 and served as Controller of the Predecessor from February 1992 until the Acquisition. From 1979 through 1992, Mr. McAulay was employed by W.R. Grace & Co. He held various positions at Grace's Specialty Chemicals Group including Manager of New Business Analysis (from 1988 to 1992), Assistant Controller and briefly as Chief Financial Officer of Grace's Japan Chemicals Business. Mr. McAulay began his career at the auditing firm of Arthur Andersen & Co. William P. Muller. Mr. Muller was appointed President of Moran Services Corporation and director of Moran Towing Corporation in July 1995. From 1989 until July, 1995, he was the Vice President, Operations of Moran Towing & Transportation Co., Inc., the Company's New York operating subsidiary and Vice President of Moran Services 20 Corporation. From 1981 through 1989, he was Vice President and General Manager of Moran Towing of Florida Inc., the Company's Jacksonville operating subsidiary. Mr. Muller joined Moran in 1977 as part of the sales department and held a variety of positions before accepting the Florida position. Prior to joining Moran, Mr. Muller served as a manager for Prudential Grace Line's South American operations. He began his career with Continental Insurance (MOAC) in the hull & underwriting department. Edmond J. Moran, Jr. From 1987 until the present, Mr. Moran has served as President of Moran Mid-Atlantic Corporation (which was reorganized as the Moran Mid-Atlantic Group as of January 1, 1997). Since January 1, 1997, Mr. Moran has also served as Vice President, Business Development of Moran Towing Corporation. Mr. Moran is currently a director of the Company and served as a director of the Predecessor from 1984 until the Acquisition. From 1984 until 1987, Mr. Moran served as Vice President of Moran Towing & Transportation Co., Inc. and directed all the activities of the Company's barge division. From 1981 until 1983, Mr. Moran served as President of Moran's Texas subsidiary. From 1976 until 1981, he served as Vice President and General Manager of Jacksonville operations. From 1971, when he joined the Company, until 1976, Mr. Moran served as a Sales Representative in the Harbor Operations Department. Prior to that, following active duty in the United States Navy, Mr. Moran joined the planning department of States Marine Lines, Inc. Alan L. Marchisotto. Effective January 1, 1998, Mr. Marchisotto was elected a Vice President of the Company. He continues to be General Counsel and Secretary, a position he has held since he joined the Company in 1982. From 1978 until 1982, he served as corporate and international counsel to Norlin Corporation, a NYSE-listed company, where he directed the legal affairs of manufacturing and sales subsidiaries in eleven countries and worked closely with senior management in the negotiation and structuring of complex financing and business agreements. Prior to that, he was engaged in private practice in New York City. Andrew P. Langlois. Mr. Langlois has served as a director since the Acquisition. Mr. Langlois has served as Vice President of Mormac Marine Group and Lakes Shipping Company, Inc., since 1988 and 1989, respectively, and as Vice President and Director of Meridian Aggregates Company since 1991. From 1980 to 1988, Mr. Langlois was employed by Moore McCormack Resources and was an officer from 1983 to 1988. Prior to joining Moore McCormack in 1980, he was employed by the Electric Boat Division of General Dynamics. Mort Lowenthal. Mr. Lowenthal joined the Board of Directors in November, 1994. Mr. Lowenthal is a Senior Advisor - Schroder & Co. Inc., an international investment bank. From 1980 to February 1995, Mr. Lowenthal was a Managing Director at Schroder & Co. Inc. Each director holds office until the next annual meeting of stockholders and until his successor has been elected and has qualified. Officers are elected by the Board of Directors and serve at its discretion. Directors of the Company who are not employees of the Company or the Lakes Group are reimbursed for their travel and other expenses incurred in connection with their responsibilities, and are also paid $1,100 for every meeting attended. 21 Item 11. Executive Compensation The following table sets forth the annual and long-term compensation for the five highest paid officers (named executive officers), as well as the total compensation paid to, or earned by, each individual for the Company's fiscal years ended December 31, 1997, 1996 and 1995:
Annual Compensation Fiscal All Other Name & Position Year Salary Bonus Compensation (1) --------------- ---- ------ ----- ---------------- Paul R. Tregurtha 1997 $315,952 $ -- $ -- Chairman of the Board 1996 300,000 -- -- 1995 300,000 -- -- James R. Barker 1997 315,952 -- -- Vice Chairman of the Board 1996 300,000 -- -- 1995 300,000 -- -- Malcolm W. MacLeod 1997 332,149 35,000 21,317 President and Chief Executive Officer 1996 319,374 32,000 20,067 1995 298,340 29,000 16,317 Edmond J. Moran, Jr 1997 174,535 10,000 21,317 President of Moran Mid-Atlantic Group 1996 168,635 10,000 20,067 1995 163,723 7,500 16,317 William P. Muller 1997 150,000 10,000 20,027 President of Moran Services Corporation 1996 137,980 10,000 18,550 1995 121,462 10,000 13,463
(1) Amounts for 1997 includes contribution of $20,000, $20,000 and $18,709 made by the Company to the Company's Profit Sharing Plan on behalf of Messrs. MacLeod, Moran and Muller, respectively, in 1997. See "Company Plans-Profit Sharing Plan." Also includes premiums of $1,317 paid by the Company in respect of term life insurance policies insuring the lives of Messrs. MacLeod, Moran and Muller, respectively, in 1997. Company Plans In connection with the Acquisition, the Company provided benefits to the Company's non-union employees on terms which are substantially similar to the benefit plans of the Predecessor existing prior to the Acquisition. In addition, as described below under "-1994 Stock Option Plan," the Company adopted a stock option plan which became effective upon the consummation of the Acquisition. 22 Defined Benefit Plans The following table shows the estimated annual benefits on a combined basis for employees who retire at age 65, without regard to statutory maximums, for various combinations of final average compensation and lengths of service under the Moran Towing Corporation Restated Pension Plan and the Moran Towing Corporation Supplemental Employee Retirement Plan (collectively, the "Plans"). The Restated Pension Plan is intended to be a qualified plan under Section 401(a) of the Internal Revenue Code of 1986, as amended (the "Code"), and the Supplemental Employee Retirement Plan is not intended to be so qualified.
Projected Annual Benefits at Age 65 Average Five Year of Service Year Base ----------------------------------- Salary 15 20 25 30 35 ------ -- -- -- -- -- $125,000 $27,450 $36,600 $45,750 $54,900 $64,050 150,000 33,075 44,100 55,125 66,150 77,175 175,000 38,700 51,600 64,500 77,400 90,300 200,000 44,325 59,100 73,875 88,650 103,425 225,000 49,950 66,600 83,250 99,900 116,550 250,000 55,575 74,100 96,625 111,150 129,675 275,000 61,200 81,600 102,000 122,400 142,800 300,000 66,825 89,100 111,375 133,650 155,925
Generally, the monthly pension benefit under the Plans for named executive officers is equal to 1% of the first $750 of average monthly compensation plus 1.5% of the remainder of the executive officer's average monthly compensation, multiplied by the executive's number of years of credited service. In the case of service years prior to 1975, the executive's benefit for such years is equal to 25% of the executive's average monthly compensation multiplied by a fraction equal to the executive's number of years of credited service divided by 35 and adjusted for the normal form of payment under the Plans as in effect at that time. The benefit in respect of years prior to 1975 is not reflected in the table. For purposes of the preceding computations, an executive's average monthly compensation is equal to the highest average of the executive's base compensation (on a monthly basis) for any five consecutive calendar years during the final 10 calendar years before retirement. For 1995, the base compensation for each of the named executive officers is the same as the salary shown in the summary compensation table under "Management-Executive Compensation." After three years of service, a participant becomes 20% vested and vesting continues in 20% increments for each year of service. At seven years the participant is 100% vested. The estimated number of credited years of service for named executive officers is as follows: Malcolm MacLeod, 43 years; Edmond Moran, Jr., 27 years and William P. Muller, 20 years. Profit Sharing Plan. As a retirement plan for substantially all shoreside non-union employees, the Company established a tax-qualified defined contribution plan (the "Profit Sharing Plan"). Contributions are made on an annual basis in an amount determined at the sole discretion of the Board of Directors of the Company, subject to certain maximum limitations set forth under the Code. Contributions are based upon a percentage, generally 10% to 15%, of each participant's compensation as defined in the Profit Sharing Plan. Contributions are invested in various investment alternatives pursuant to instructions received from each plan participant. After three years of service, a participant becomes 20% vested and vesting continues in 20% increments for each year of service. At seven years, the participant is 100% vested. Profit Sharing Plan contributions are made on a fiscal year basis. 1994 Stock Option Plan. The Company's 1994 Stock Option Plan (the "1994 Plan") was adopted by the Company's Board of Directors and stockholders on June 11, 1994, effective as of the consummation of the Acquisition, to provide an incentive to select employees of the Company to remain in the employ of the Company and to increase their personal interest in the success of the Company. The 1994 Plan provides for the grant of options ("1994 Stock Options") to purchase shares of the Company's Common Stock. The maximum number of shares of the Company's Common Stock issueable under the 1994 Plan is 2,000. Participation in the 1994 Plan is limited to employees of the Company designated by the Plan Committee comprised of Messrs. Tregurtha and Barker, each of whom is ineligible to receive awards under the 1994 plan. Non-employee directors of the Company are not eligible to participate. 23 The table sets forth certain information concerning the number of shares covered by stock options as of December 31, 1997. At December 31, 1997 the fair market value is assumed to be equal to the exercise price. None of the named executive officers exercised an option to purchase the Company's Common Stock in 1997. Fiscal Year-End Option Values
Number of Securities Underlying Value of Unexercised Shares Unexercised in-the-Money Options Acquired Options at Fiscal at Fiscal year End ($) on Value Year-end (Exercisable/ Name Exercise Realized (Exercisable/Unexercisable) Unexercisable) ---- -------- -------- --------------------------- -------------- Paul R. Tregurtha 0 0 0 0 James R. Barker 0 0 0 0 Malcolm W. MacLeod 0 0 800/0 $0/$0 Edmond J. Moran, Jr. 0 0 0 0 William P. Muller 0 0 168/0 0/0
24 Compensation Committee Interlocks and Insider Participation The Compensation Committee of the Company's Board of Directors is comprised of Messrs. Tregurtha, Barker and MacLeod. Messrs. Tregurtha, Barker and MacLeod have served in the positions described under "Executive Officers and Directors of the Registrant". Generally such relationships can create an opportunity for conflicts of interest in compensation decisions. Other than as set forth below, none of the members of the Committee has any other relationship with other entities that would require additional disclosure. Messrs. Tregurtha and Barker serve in various capacities, including serving as directors, of Mormac Marine Group, Inc., Meridian Aggregates Company and Lakes Shipping. Mr. Langlois, a director of the Company, is an executive officer of Mormac Marine Group, Inc., Meridian Aggregates Company and Lakes Shipping. The boards of directors of such entities perform the functions of compensation committees. In addition, the Company provides ship docking and undocking services to Mormac, a company which is owned by Messrs. Barker and Tregurtha and certain members of their families and as to which Messrs. Barker and Tregurtha are principal executive officers. Mormac operates three Coronado class oil tankers in the foreign trade and manages tankers for others in the Jones Act. During 1997, Mormac paid $275,000 for ship docking services performed by the Company. All such services were provided on arms'-length terms at customary rates. Management has been informed that Mormac expects to continue to use the Company's tug services in each instance where Mormac's tankers call on a harbor which the Company services. All such services will be performed on arms'-length terms and conditions. All of the members of the Compensation Committee are also parties to stockholder agreements with the Company. The Company has entered into the Insurance Agreement with the Mormac Group. Messrs. Tregurtha, Barker and Langlois are officers, directors and/or direct or indirect shareholders of some or all of the entities in the Mormac Group. The Company and the Mormac Group entered into the Insurance Agreement in an effort to reduce insurance expenses by obtaining lower premiums through group purchases of insurance and through higher deductibles. The Insurance Agreement also provides for allocation among the parties of any risk arising out of the increases in insurance deductibles. Pursuant to the Insurance Agreement, the Company and the Mormac Group agreed to share any increased insurance claims expense required to be borne by a party as a result of insurance claims which exceed historical deductibles but are less than the new, increased deductibles. Allocations of any increased insurance claims expense is based upon the historical claims experience (in excess of historical deductibles) for each party to the agreement. In the current policy year, 65% of any additional insurance claims expense attributable to the higher deductibles will be borne by the Company and 35% of any such additional insurance claims expense will be borne by the Mormac Group. Amounts payable to the Company from members of the Mormac Group totaled $222,000 at December 31, 1997. The Company believes that the terms of the Insurance Agreement which was prepared in consultation with an independent insurance broker, are similar to those that would be obtained in an arms'-length transaction. In February 1997, the Company entered into a bareboat charter with Interlake Transportation, Inc., a corporation which is indirectly owned by Messrs. Tregurtha and Barker, and as to which Messrs. Tregurtha, Barker and Langlois serve as executive officers and/or directors. Pursuant to the bareboat charter, the Company bareboat chartered a tug until December, 1997, at an aggregate cost of approximately $573,000. As part of a related transaction on February 21, 1997, in which the Company purchased the barge Massachusetts from a third party, the Company assigned its right to purchase such tug from the same third party to Interlake Transportation, Inc., which purchased the tug. The Company received no consideration for such assignment to Interlake Transportation, Inc. In December 1997, the Company purchased the tug from Interlake Transportation, Inc. at a price equal to the price paid to the third party in February, 1997. Interlake Transportation, Inc. realized no gain or loss on the sale. 25 Item 12. Security Ownership of Certain Beneficial Owners and Management The following table sets forth certain beneficial ownership information as of March 27, 1998, concerning the Company's Common Stock with respect to (1) each person known by the Company to be a beneficial owner of more than 5% of the outstanding shares of the Company's Common Stock, (2) each director of the Company, (3) each named executive officer of the Company, and (4) all directors and executive officers of the Company as a group.
Number Directors, Named Officers and of 5% Beneficial Owners (1) Shares (2) Percentage ------------------------ ---------- ---------- Lakes Shipping Company, Inc.--------------------------- 28,000 61.5% Paul R. Tregurtha (3)---------------------------------- 34,375 75.4 James R. Barker (4)------------------------------------ 30,310 66.5 Malcolm W. MacLeod (5)--------------------------------- 2,800 6.1 Edmond J. Moran, Jr.----------------------------------- 1,200 2.6 Andrew P. Langlois (6)--------------------------------- 450 1.0 Alan Marchisotto--------------------------------------- 800 1.8 Jeffrey J. McAulay (7)--------------------------------- 100 0.2 William P. Muller (7)---------------------------------- 168 0.4 Mort Lowenthal----------------------------------------- - - Directors and executive officers as a group (9 persons) 42,097 92.4
(1) Unless otherwise indicated, the business address of each beneficial owner of more than 5% of the Company's Common Stock is Three Landmark Square, Stamford, Connecticut 06901. (2) For purposes of computing the percentage of outstanding shares of the Company's Common Stock held by each person or entity, a person or entity is deemed to have "beneficial ownership" of any shares of the Company's Common Stock which such person or entity has the right to acquire within 60 days after the date of the report. Any such shares are deemed to be outstanding for purposes of computing percentages of beneficial ownership. Unless otherwise indicated, shares of the Company's Common Stock are considered beneficially owned by a person or entity if such person or entity has or shares voting or investment power with respect to such shares. As a result, the same security may be beneficially owned by more than one child and entity and, accordingly, in some cases, the same shares are listed opposite more than one name in this table. (3) Mr. Tregurtha owns directly 6,375 shares of the Company's Common Stock. In addition, Mr. Tregurtha beneficially owns 44.6% of the capital stock of, and serves as Vice Chairman of, Lakes Shipping. Therefore, Mr. Tregurtha may be deemed to beneficially own the 28,000 shares beneficially owned by Lakes Shipping. (4) Mr. Barker owns directly 2,310 shares of the Company's Common Stock. In addition, Mr. Barker and certain members of his family beneficially own in the aggregate 44.6% of the capital stock of Lakes Shipping. Mr. Barker also serves as Chairman of Lakes Shipping. Therefore, Mr. Barker may be deemed to beneficially own the 28,000 shares beneficially owned by Lakes Shipping. Three of Mr. Barker's adult children own, in the aggregate, 3,465 shares of Company's Common Stock, which shares are excluded from the number of shares of the Company's Common Stock shown as being owned by Mr. Barker. Mr. Barker disclaims beneficial ownership of all 3,465 shares which are owned by his children. (5) Mr. MacLeod's business address is Two Greenwich Plaza Greenwich, Connecticut 06830. Includes options to purchase 800 shares of the Company's Common Stock which were granted to Mr. MacLeod upon the consummation of the Acquisition. (6) Shares shown are held by an individual retirement account for the benefit of Mr. Langlois. (7) Includes presently exercisable options to purchase shares of the Company's Common Stock. 26 Item 13. Certain Relationships and Related Transactions As discussed under "Business," the Company was formed in June 1994 in order to acquire all of the outstanding capital stock of the Predecessor from, among others, Messrs. MacLeod and Moran. Messrs. MacLeod, Moran and Marchisotto acquired shares of the common stock of the Company concurrently with the closing of the Acquisition. In addition, as discussed in note 1 to the consolidated financial statements attached to this report, the Predecessor transferred its 20% equity interest in four partnerships to entities formed by the stockholders of the Predecessor. Finally, the agreement governing the Acquisition provides for the payment of a contingent purchase price to the former stockholders of the Predecessor upon the occurrence of certain events. Contingent purchase price of $12.0 million was paid to the former stockholders on February 10, 1997. The remaining $1.6 million of the contingent purchase price was released from escrow during the third quarter of 1997 when a subsidiary of the Company terminated its leasehold interest in Jakobson Shipyard. Part of the Jakobson escrow was paid to the Company ($0.4 million), with the remainder ($1.2 million) paid to the Stockholders of the Predecessor. Certain members of management (the "Management Group") entered into stockholder agreements (the "Stockholder Agreements") concurrently with the consummation of the Acquisition. With the exception of Alan L. Marchisotto, who purchased shares of the Company's Common Stock for cash, all members of the Management Group were issued shares of the Company's Common Stock in exchange for a portion of their shares of the capital stock of the Predecessor. The Stockholder Agreements place the following restrictions upon the transfer of the Company's Common Stock by each member of the Management Group: (i) the members of the Management Group may not transfer the Company's Common Stock to any non-U.S. citizen, for purposes of the Jones Act (a "Foreigner"), and (ii) the members of the Management Group may not transfer shares of the Company's Common Stock to any other individuals or entities except in certain limited situations, such as through obtaining the consent of the Company to the transfer, the exercise of a "Put" (as defined below) with respect to these shares or the transfer of these shares to ancestors, descendants or a spouse. The Stockholder Agreements also provide that each member of the Management Group has the right to require the Company to purchase (a "Put") all of such member's shares of the Company's Common Stock following such time as the member ceases to be an employee of any of the Company, its Subsidiaries or its affiliates, with certain limitations. The Company has the right to purchase (a "Call") the shares of the Company's Common Stock of each member of the Management Group upon the occurrence of certain events, including the death of such member, the making by such member of a general assignment for the benefit of creditors, the filing of a voluntary or involuntary petition for bankruptcy or the cessation of such member's employment with the Company, its subsidiaries or affiliates. The Stockholder Agreements for all members of the Management Group, provide that the purchase price of the shares being either purchased or sold through such a Put or Call will be the fair market value of such shares as determined by an investment banking firm of national standing. The Stockholder Agreements also provide that if the Company grants registration rights to any executive officer, it will at such time grant proportionate registration rights to the members of the Management Group. The members of the Lakes Group entered into stockholder agreements with the Company prohibiting the transfer of the Company's Common Stock to any foreigner. 27 PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K (a) Documents Filed as Part of the Report (1) Financial Statements - The Company The following Consolidated Financial Statements of the Company and its subsidiaries are included in this Report: Report of Independent Accountants . . . . . . . . . . . . F-1 Consolidated Balance Sheets at December 31, 1996 and December 31, 1997 . . . . . . . . . . . . . . . . F-2 to F-3 Consolidated Statements of Income for the Years Ended December 31, 1995, December 31, 1996 and December 31, 1997. . F-4 Consolidated Statements of Cash Flows for the Years Ended December 31, 1995, December 31, 1996 and December 31, 1997. . F-5 Consolidated Statement of Stockholders' Equity for the Years Ended December 31, 1995, December 31, 1996 and December 31, 1997. . . . . . .. . . . . . . . . . . . . . . F-6 Notes to Consolidated Financial Statements . . . . . . F-7 to F-20 28 (3) Exhibits The following is a list of Exhibits to this Report. Exhibits 10.18 - 10.20 are management contracts or compensatory plans or arrangements required to be filed as Exhibits to this report pursuant to Item 14(c) of this report. Exhibit No. Description of Document 3.1* Certificate of Incorporation of the Registrant 3.2* By-Laws of the Registrant. 4.1* Indenture, dated as of July 11, 1994, among the Registrant, the Guarantors named therein and Fleet National Bank (formerly Shawmut Bank Connecticut, National Association), as Trustee, relating to the Notes (including forms of Notes and Guarantees). 4.1(a)** Supplemental Indenture No. 1, dated December 29, 1994. 4.1(b)***Supplemental Indenture No. 2, dated January 2, 1996. 4.1(c) Supplemental Indenture No. 3, dated December 31, 1996 (filed as exhibit to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1996 and incorporated herein by reference). 4.1(d) Supplemental Indenture No. 4, dated December 31, 1997. 4.2* Form of Preferred Ship Mortgage, dated July 11, 1994, in favor of Fleet National Bank (formerly Shawmut Bank Connecticut, National Association), as Trustee. 4.3* Form of Preferred Fleet Mortgage, dated July 11, 1994, in favor of Fleet National Bank (formerly Shawmut Bank Connecticut, National Association), as Trustee. 10.1***** Second Amendment of the Revolving Credit Agreement, dated as of July 11, 1994, among the Company, the Restricted Subsidiaries named therein and BankBoston, N.A. (formerly known as The First National Bank of Boston), individually and as agent. 10.2* Revolving Credit Agreement, dated as of July 11, 1994, among the Registrant and the Restricted Subsidiaries named therein and The First National Bank of Boston, the other lenders that may become parties thereto, and The First National Bank of Boston, as agent. 10.2(a)** Instrument of Adherence dated December 29, 1994 by Barge Pennsylvania Corporation. 10.2(b)***Instrument of Adherence dated January 2, 1996, by Moran Bulk Corporation. 10.2(c) Instrument of Adherence dated December 31, 1996 by Seaboard Barge Corporation, Petroleum Transport Corporation, and Moran Towing of Delaware, Inc. (filed as exhibit to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1996 and incorporated herein by reference). 10.3* Security Agreement, dated as of July 11, 1994 among the Registrant, its subsidiaries named therein and The First National Bank of Boston, individually and as agent (filed as exhibit to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1996 and incorporated herein by reference). 10.3(a) Security Agreement, dated December 31, 1996 among Seaboard barge Corporation, Petroleum Transport Corporation and Moran Towing of Delaware, Inc., and The First National Bank of Boston, individually and as agent (filed as exhibit to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1996 and incorporated herein by reference). 29 10.4* Note, dated July 11, 1994, of the Registrant and its subsidiaries named therein, payable to the order of The First National Bank of Boston in the principal amount of up to $10,000,000. 10.5(a) Amended and Restated Term Loan Agreement, dated as of December 12, 1997, among Moran Towing Corporation, the guarantors named therein, and BankBoston Leasing Inc., as lender and as agent. 10.5(b) Amended and Restated Term Loan Agreement, dated as of December 12, 1997, payable by Moran Towing Corporation, to BankBoston Leasing Inc. 10.5(c) Guaranty in favor of BankBoston Leasing Inc., dated as of December 12, 1997. 10.5(d) First Preferred Fleet Mortgage, dated December 12, 1997, in favor of BankBoston Leasing Inc. 10.6 Agreement dated December 10, 1997, between Interlake Transportation, Inc. and Moran Towing Corporation. 10.7***** Licensed Agreement, effective June 10, 1995, between Seafarers International Union of North America, Atlantic, Gulf, Lakes and Inland Waters District, AFL - CIO, and Moran Towing of Texas Inc. 10.8***** Unlicensed Agreement, effective June 10, 1995, between Seafarers International Union of North America, Atlantic, Gulf, Lakes and Inland Waters District, AFL - CIO, and Moran Towing of Texas Inc. 10.9 Agreement, effective May 1, 1996, between Seafarers International Union of North America, Atlantic, Gulf, Lakes and Inland Waters District, AFL - CIO, and Moran Towing of Pennsylvania and Moran Towing of Maryland, divisions of Moran Towing Corporation. 10.10 Licensed Agreement, effective November 24, 1996, between American Maritime Officers and Moran Mid-Atlantic Corporation, Moran Towing of Pennsylvania Division. 10.11 Memorandum of Agreement between Local 333, United Marine Division, International Longshoremans Association, AFL-CIO, and Moran Towing & Transportation Co., Inc. 10.12 Agreement, effective May 1, 1997, between International Organization of Masters, Mates & Pilots and Moran Towing of Florida, Inc. 10.14* Stockholder Agreement, dated as of July 11, 1994, between the Registrant and Malcolm W. MacLeod. 10.15* Stockholder Agreement, dated as of July 11, 1994, between the Registrant and Edmond J. Moran, Jr. 10.16* Stockholder Agreement, dated as of July 11, 1994, between the Registrant and Alan L. Marchisotto. 10.17* Form of Stockholder Agreement, dated as of July 11, 1994, between the Registrant and each of Lakes Shipping Company, Inc., Paul R. Tregurtha, James R. Barker, Andrew P. Langlois, James A. Barker, Mark W. Barker and Karen E. Barker. 10.18* 1994 Stock Option Plan of the Registrant. 10.19* Form of 1994 Stock Option Agreement. 10.20* Moran Towing Corporation and Subsidiaries Supplemental Employee Retirement Plan. 10.21**** Marine Insurance Additional Retention Agreement between Global Marine Enterprises Ltd., Interlake Steamship Company, Lakes Shipping Company, Inc., Moran Towing Corporation and Mormac Marine Transport, Inc.. 12.1 Statement regarding computation of ratio of earnings to fixed charges. 21.1 List of Subsidiaries. 30 27.1 Financial Data Schedule - Fiscal year end 1997 27.2 Financial Data Schedule - Fiscal year ends 1995, 1996 and Quarters 1, 2, 3 of 1996 27.3 Financial Data Schedule - Quarter 1, 2, and 3 of 1997 * Filed as an Exhibit to the Registrant's Registration Statement on Form S-1 (No. 33 - 82624) and incorporated herein by reference. ** Filed as an Exhibit to the Registrant's Form 10-K for the year ended December 31, 1994 and incorporated herein by reference. *** Filed as an Exhibit to the Registrant's Form 10-Q for the quarterly period ended March 31, 1996 and incorporated herein by reference. **** Filed as an Exhibit to the Registrant's Form 10-Q for the quarterly period ended September 30, 1995 and incorporated herein by reference. ***** Filed as an Exhibit to the Registrant's Form 10-K for the year ended December 31, 1995 and incorporated herein by reference. ****** Filed as an Exhibit to the Registrant's Form 10-Q for the quarterly period ended June 30, 1997, and incorporated herein by reference. (b) Reports on Form 8-K. No reports on Form 8-K were filed during the last quarter of the year covered by this report. 31 Report of Independent Accountants To the Board of Directors and Stockholders of Moran Transportation Company In our opinion, the accompanying consolidated balance sheets and related consolidated statements of income, of cash flows and of changes in stockholders' equity present fairly, in all material respects, the financial position of Moran Transportation Company and its subsidiaries (the "Company") at December 31, 1997 and 1996, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 1997, in conformity with generally accepted accounting principles. These financial statements are the responsibility of the Company's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above. Price Waterhouse LLP Stamford, Connecticut February 20, 1998 F-1 MORAN TRANSPORTATION COMPANY AND SUBSIDIARIES Consolidated Balance Sheets (Dollars in thousands)
December 31, ------------------- 1996 1997 -------- -------- ASSETS Current assets Cash and cash equivalents ....................................... $ 5,827 $ 9,945 Accounts receivable, less allowance for doubtful accounts of $323 and $288 at December 31, 1996 and 1997, respectively ............ 12,744 14,319 Inventory (note 4) .............................................. 4,395 4,161 Unexpired insurance and other prepaid expenses .................. 2,065 2,487 Restricted funds held for contingent consideration (note 1) ..... 12,000 -- -------- -------- Total current assets ......................................... 37,031 30,912 Investment in joint venture (note 6) .............................. 2,892 3,164 Insurance claims receivable ....................................... 2,346 2,563 Fixed assets, net (note 3) ........................................ 121,325 119,920 Shipyard assets held for sale (note 13) ........................... 3,036 -- Restricted funds held for contingent consideration (note 1) ....... 1,600 -- Other assets ...................................................... 4,487 3,731 -------- -------- Total assets ...................................................... $172,717 $160,290 ======== ========
See accompanying notes to consolidated financial statements F-2 MORAN TRANSPORTATION COMPANY AND SUBSIDIARIES Consolidated Balance Sheets (Dollars in thousands)
December 31, ------------------- 1996 1997 -------- -------- LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Trade accounts payable ........................................... $ 4,486 $ 3,602 Current portion of long-term debt (note 8) ....................... -- 168 Accounts payable to joint venture ................................ 1,066 477 Accrued interest payable ......................................... 4,308 4,331 Other accrued liabilities ........................................ 4,227 3,936 Backpay liability ................................................ 885 837 Income taxes payable (note 9) .................................... 926 -- Liability for contingent consideration (note 1) .................. 12,000 -- -------- -------- Total current liabilities ..................................... 27,898 13,351 Long-term debt (note 8) ............................................ 80,000 83,252 Insurance claims reserves .......................................... 5,989 7,227 Deferred income taxes (note 9) ..................................... 34,150 32,450 Postretirement benefits other than pensions (note 10) .............. 3,995 4,321 Liability for contingent consideration (note 1) .................... 1,600 -- Other liabilities .................................................. 6,060 5,045 -------- -------- Total liabilities ............................................. 159,692 145,646 Commitments and contingencies (notes 11 and 12) Mandatorily redeemable capital stock 4,000 shares outstanding ...... 1,000 1,000 Stockholders' Equity Common stock, par value $0.01 per share authorized-100,000 shares issued and outstanding 40,600 shares ............................ 1 1 Capital surplus ................................................. 10,149 10,149 Retained earnings ............................................... 1,875 3,494 -------- -------- Total stockholders' equity ...................................... 12,025 13,644 -------- -------- Total liabilities and stockholders' equity ...................... $172,717 $160,290 ======== ========
See accompanying notes to consolidated financial statements F-3 MORAN TRANSPORTATION COMPANY AND SUBSIDIARIES Consolidated Statements of Income (Dollars in thousands, except per share amount)
Year Ended December 31, ----------------------------------- 1995 1996 1997 --------- --------- --------- Operating revenue .......................................... $ 77,343 $ 91,458 $ 100,526 Cost of operations Operating expenses ...................................... 45,672 57,451 66,090 Depreciation ............................................ 7,412 7,719 7,769 --------- --------- --------- Total cost of operations ............................... 53,084 65,170 73,859 --------- --------- --------- Gross profit ............................................... 24,259 26,288 26,667 General and administrative expenses ........................ 14,221 14,283 13,755 --------- --------- --------- Operating income ........................................... 10,038 12,005 12,912 Interest expense ........................................... (10,192) (10,132) (10,026) Interest income ............................................ 51 146 346 Equity in loss from joint venture (note 6) ................. (188) (66) (727) Other income/(expense), net ................................ 155 160 (273) --------- --------- --------- (Loss)/income before provision for income taxes ............ (136) 2,113 2,232 Provision for income taxes (note 9) ........................ 200 808 613 --------- --------- --------- Net (loss)/income ....................................... $ (336) $ 1,305 $ 1,619 ========= ========= ========= (Loss)/earnings per share Basic ................................................... (7.53) 29.26 36.30 ========= ========= ========= Diluted ................................................. (7.53) 28.56 35.20 ========= ========= ========= Weighted average number of shares outstanding (in thousands) Basic ................................................... 44.6 44.6 44.6 ========= ========= ========= Diluted ................................................. 44.6 45.7 46.0 ========= ========= =========
See accompanying notes to consolidated financial statements F-4 MORAN TRANSPORTATION COMPANY AND SUBSIDIARIES Consolidated Statements of Cash Flows (Dollars in thousands)
Year ended December 31, -------------------------------- 1995 1996 1997 -------- -------- -------- Cash flows from operating activities Net (loss)/income ............................. $ (336) $ 1,305 $ 1,619 Adjustments to reconcile net (loss)/income to net cash provided by operating activities: Depreciation and amortization ................. 9,472 11,092 11,666 Deferred income taxes ......................... 267 (1,898) (1,661) Equity in loss from joint venture ............. 188 66 727 Loss on disposal of floating equipment ........ -- 128 90 Changes in operation assets and liabilities: Accounts receivable ........................... (1,500) (697) (1,575) Other current assets .......................... (425) (182) 219 Accounts payable and accrued expenses ......... (2,528) 2,811 (1,740) Income taxes payable .......................... 151 (69) (926) Insurance claims receivable ................... (823) (629) (217) Insurance claims reserve ...................... 530 1,658 1,238 Other assets and liabilities .................. 495 (2,158) (679) -------- -------- -------- Net cash provided by operating activities .......... 5,491 11,427 8,761 -------- -------- -------- Cash flows from investing activities Capital expenditures .......................... (5,832) (5,110) (12,713) Capital contribution to joint venture ......... -- -- (1,000) Net proceeds from constructive total loss ..... -- -- 2,800 Proceeds from sale of leasehold interest ...... -- -- 2,850 -------- -------- -------- Net cash used for investing activities ............. (5,832) (5,110) (8,063) -------- -------- -------- Cash flows from financing activities Proceeds from borrowings ...................... 1,000 2,250 3,420 Repayment of debt ............................. (1,512) (5,664) -- Debt issuance costs ........................... (140) (82) -- -------- -------- -------- Net cash (used for)/provided by financing activities (652) (3,496) 3,420 -------- -------- -------- Net (decrease)/increase in cash and cash equivalents (993) 2,821 4,118 Cash and cash equivalents at beginning of period ... 3,999 3,006 5,827 -------- -------- -------- Cash and cash equivalents at end of period ......... $ 3,006 $ 5,827 $ 9,945 ======== ======== ======== Cash paid during period for Interest ...................................... $ 9,743 $ 9,816 $ 9,579 ======== ======== ======== Income taxes .................................. $ 469 $ 2,742 $ 3,656 ======== ======== ========
See accompanying notes to consolidated financial statements F-5 MORAN TRANSPORTATION COMPANY AND SUBSIDIARIES Consolidated Statements of Changes in Stockholders' Equity (Dollars in thousands)
Common Capital Retained Stock Surplus Earnings Total -------- -------- -------- -------- Balance at December 31, 1994 ....................... $ 1 $ 9,999 $ 906 $ 10,906 Net loss ........................................... -- -- (336) (336) -------- -------- -------- -------- Balance at December 31, 1995 ....................... $ 1 $ 9,999 $ 570 $ 10,570 Transfer of mandatorily redeemable capital stock.... -- 150 -- 150 Net income ......................................... -- -- 1,305 1,305 -------- -------- -------- -------- Balance at December 31, 1996 ....................... $ 1 $ 10,149 $ 1,875 $ 12,025 Net income ......................................... -- -- 1,619 1,619 -------- -------- -------- -------- Balance at December 31, 1997 ....................... $ 1 $ 10,149 $ 3,494 $ 13,644 ======== ======== ======== ========
F-6 MORAN TRANSPORTATION COMPANY Notes to Consolidated Financial Statements (Dollars in thousands) Three-year period ended December 31, 1997 (1) Moran Transportation Company Moran Transportation Company ("Moran" or the "Company") is a Delaware corporation, incorporated on June 2, 1994. Moran was organized to acquire (the "Acquisition") all of the outstanding common stock of Moran Towing Corporation (the "Predecessor"), a company which provided tug services and marine transportation services, primarily on the East and Gulf coasts of the United States. The Company is a majority owned subsidiary of Lakes Shipping Company, Inc. On July 11, 1994, the Acquisition was consummated and was accounted for as a purchase. In connection with the Acquisition, the Predecessor transferred its 20% equity interest in four partnerships to entities formed by the stockholders of the Predecessor. When the Company acquired the Predecessor, certain contingent liabilities of the Predecessor, primarily related to certain limited and defined guarantees given by the Predecessor, were assumed. These liabilities were fully reserved and funded by placing $13.6 million in escrow. In February 1997, $12.0 million of the escrow amount was released to the former shareholders upon the release of the Company from the partnership guarantees. There was no impact on the Company, other than assets and liabilities being reduced. The Company released the remaining $1.6 million escrow during the third quarter when a subsidiary of the Company terminated its leasehold interest in Jakobson Shipyard. The loss related to the lease termination was not material. (2) Summary of Accounting Policies Principles of Consolidation The consolidated financial statements include the accounts of Moran Transportation Company and its subsidiaries. The financial statements also include a 50% owned joint venture in a marine tank barge operation which is accounted for under the equity method of accounting. All material intercompany items and transactions are eliminated in consolidation. Reclassifications Certain reclassifications have been made to the prior periods' consolidated financial statements to conform with the December 31, 1997 presentation. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures, at the date of the financial statements. Similarly, estimates and assumptions are required for the reporting of revenues and expenses. Actual results could differ from the estimates that were used. F-7 MORAN TRANSPORTATION COMPANY Notes to Consolidated Financial Statements (Dollars in thousands) Three-year period ended December 31, 1997 Change in Accounting Principles In October 1995, Financial Accounting Standard No. 123 (FAS 123) - "Accounting for Stock-Based Compensation" was issued and is effective for the Company on January 1, 1996. FAS 123 permits, but does not require, a fair value based method of accounting for employee stock option plans which results in compensation expense being recognized in the results of operations when stock options are granted. The Company plans to continue to use the current intrinsic value based method of accounting for its plan. In 1997, Financial Accounting Standards No. 128 (FAS 128) - "Earnings Per Share" was issued and is effective for the Company on January 1, 1997. FAS 128 changes the calculation of earnings per share ("EPS") under generally accepted accounting principles in the U.S. to be more consistent with international standards. Under the new standards, companies replace the reporting of "primary" EPS with "basic" EPS. Basic EPS is calculated by dividing the income or loss available to common shareholders by the weighted average number of common shares outstanding for the period, without consideration of common stock equivalents. "Fully diluted" EPS is replaced by "diluted" EPS, which will be similar to fully diluted EPS as previously computed. Revenue Recognition Tug and barge revenue is recognized as services are performed. Drydocking Expenses Drydocking and related costs are capitalized when incurred and amortized over the period until the next drydocking, usually 30 months. Fixed Assets/Depreciation Fixed assets include the cost of land, building, floating equipment, capitalized drydocking costs, construction work-in-progress, improvements to leaseholds and equipment. Interest incurred during the construction of floating equipment is capitalized. Depreciation is provided on the straight-line method over the estimated useful lives of the assets which range from three to twenty-five years. Major renewals and betterments are capitalized, while replacements, maintenance and repairs which do not improve or extend the life of the assets are expensed. Income Taxes The Company and its wholly owned domestic subsidiaries file a consolidated Federal income tax return. The Company accounts for deferred income taxes using the asset and liability method as prescribed under Financial Accounting Standard No. 109, "Accounting for Income Taxes" (FAS 109). The Company provides a valuation allowance if it is more likely than not that some portion or all of the deferred tax asset will not be realized. F-8 MORAN TRANSPORTATION COMPANY Notes to Consolidated Financial Statements (Dollars in thousands) Three-year period ended December 31, 1997 Cash and Cash Equivalents The Company considers all highly liquid investments having original maturities of three months or less to be cash equivalents. Inventory Inventories are valued at the lower of cost (first-in, first-out basis) or market and include fuel, replacement parts, supplies and repair materials. Deferred Financing Costs Expenses incurred in connection with debt issuance have been deferred and are being amortized using the interest method over the terms of the related debt agreements. Environmental Expenditures Environmental expenditures are expensed or capitalized, as appropriate. Expenditures that result from the remediation of an existing condition caused by past operations, that are not attributable to current or future revenues, are expensed. Liabilities are recognized for remedial activities when the cleanup is probable and the cost can be reasonably estimated, generally coinciding with the Company's commitment to a formal plan of action. Earnings Per Share Effective December 31, 1997, earnings per share were calculated in accordance with FAS 128, accordingly prior years earning per share have been restated. Basic earnings per share is determined by dividing net income/(loss) by the weighted average number of common shares outstanding during the period, without consideration of common stock equivalents. Diluted earnings per share is determined by dividing net income/(loss) by the weighted average number of shares of common stock and common stock equivalents outstanding during the period. (3) Fixed Assets Fixed assets consist of the following: Dec. 31, Dec. 31, 1996 1997 -------- -------- Floating equipment ................................... $133,828 $135,550 Capitalized drydocking costs ......................... 7,875 10,123 Construction in progress ............................. 125 2,425 Shipyard and pier improvements ....................... 70 171 Furniture, fixtures and leasehold improvements ....... 641 903 Equipment ............................................ 147 199 Land ................................................. 663 663 -------- -------- Less: Accumulated depreciation and amortization ...... 22,024 30,114 -------- -------- Total ................................................ $121,325 $119,920 ======== ======== F-9 MORAN TRANSPORTATION COMPANY Notes to Consolidated Financial Statements (Dollars in thousands, except per share amounts) Three-year period ended December 31, 1997 (4) Inventories of Fuel, Supplies and Repair Materials The components of inventory are as follows: Dec. 31, Dec. 31, 1996 1997 ------ ------ Fuel ................................................. $1,103 $ 916 Diesel parts ......................................... 1,564 1,583 Propeller wheels and shafts .......................... 1,230 1,221 Rope, fenders, supplies and miscellaneous ............ 498 441 ------ ------ Total ................................................ $4,395 $4,161 ====== ====== (5) Investment in affiliated partnerships Subsidiaries of the Predecessor had a 20% interest in each of four partnerships with subsidiaries of Overseas Shipholding Group, Inc., each of which partnership is the bareboat charterer of one U.S. flag tanker. These interests were transferred to the stockholders of the Predecessor as part of the Acquisition. The Predecessor had provided certain financial guarantees in connection with the acquisition of the affiliated partnerships. These undertakings were limited to $12,000 in the aggregate and among others, guaranteed (i) payment of the equity portion of charter hire to the owner of the affiliated partnership's tankers, (ii) certain indemnity obligations arising under the bareboat charters, including tax obligations, and (iii) the obligation of the partnerships to maintain and insure the tankers. These guarantees survived the Acquisition and remained the obligation of the Company. To secure these guarantees, $12,000 of the purchase price was put into escrow to be released when the guarantees expired in 2003, to the extent not called upon. These funds were included in restricted funds held for contingent consideration. In February 1997, the Company was released from these obligations and the $12,000 escrow related to these guarantees was distributed to the former shareholders. (6) Investment in Joint Venture The Company has invested in a 50% owned joint venture which owns and operates an ocean going petroleum barge. The Company accounts for the joint venture under the equity method. Partner's capital in the Company's 50% investment in the joint venture was $794, $968, and $1,480 at December 31, 1995, 1996 and 1997 respectively. The Company received no cash dividends in the three years ended December 31, 1997 and made a partnership contribution of $1,000 in 1997 to cover dry-docking related costs. F-10 MORAN TRANSPORTATION COMPANY Notes to Consolidated Financial Statements (Dollars in thousands, except per share amounts) Three-year period ended December 31, 1997 The Company's 50% interest in the assets, liabilities, revenues, expenses and income of the joint venture is summarized as follows: As of December 31, ------------------ 1996 1997 ---- ---- Total assets...................... $1,483 $1,858 ====== ====== Total liabilities................. $516 $378 ==== ==== For the years ended December 31, -------------------------------- 1995 1996 1997 ---- ---- ---- Total revenues.................... $1,939 $2,528 $1,460 ====== ====== ====== Total expenses.................... $1,887 $2,354 $1,947 ====== ====== ====== Equity in income/(loss)........... $52 $174 $(487) === ==== ===== In connection with the Acquisition, the Company increased the carrying value of its investment by $2,519 to fair market value. The Company is amortizing the increase over ten years, representing the remaining useful life of the joint venture's barge. Amortization was $240 per year for the three years ending December 31, 1997. (7) Insurance Subsidiary The consolidated financial statements include the accounts of the Company's wholly-owned insurance subsidiary whose fiscal year end is March 31. Summarized unaudited financial information based on the Company's reporting periods is as follows: As of December 31, ------------------ 1996 1997 ---- ---- Total assets...................... $2,122 $2,188 ====== ====== Total liabilities................. $387 $384 ==== ==== For the years ended December 31, -------------------------------- 1995 1996 1997 ---- ---- ---- Total income (a).................. $10 $118 $70 === ==== === (a) Total income includes interest income of $23, $156 and $91 for the years ended December 31, 1995, 1996 and 1997, respectively. F-11 MORAN TRANSPORTATION COMPANY Notes to Consolidated Financial Statements (Dollars in thousands, except per share amounts) Three-year period ended December 31, 1997 (8) Long-term Debt Long-term debt at December 31 was as follows:
1996 1997 ---- ---- 11.75% Series B First Preferred Ship Mortgage Notes due July 15, 2004 $80,000 $80,000 8.1% Term Loan due June 1, 2005 .................................... -- 3,420 ------- ------- 80,000 83,420 Less: Current maturities ....................................... -- 168 ------- ------- Long-term portion .............................................. $80,000 $83,252 ======= =======
As part of the Acquisition, the Company issued $80,000 of 11.75% First Preferred Ship Mortgage Notes due July 15, 2004. In November 1994, pursuant to an Exchange and Registration Rights Agreement, the Company exchanged all of such Notes for its 11.75% Series B First Preferred Ship Mortgage Notes, the issuance of which had been registered under the federal securities laws. Interest on the notes is payable semi-annually on January 15 and July 15. The Notes are redeemable, in cash, at the option of the Company, in whole or in part in amounts of $1,000 or an integral multiple of $1,000 on or after July 15, 1999 at the redemption prices set forth below, plus accrued and unpaid interest if redeemed during the 12-month period commencing on July 15 of the year indicated below: 1999 108% 2000 106 2001 104 2002 102 2003 and thereafter 100 All of the Company's subsidiaries (the "Guarantors") have guaranteed the $80,000 of Series B First Preferred Ship Mortgage Notes. Accordingly, the financial statements of the Guarantors have not been included, individually or on a combined basis, because the guarantors have fully and unconditionally guaranteed such Notes on a joint and several basis, and because the aggregate net assets, earnings and equity of the Guarantors are substantially equivalent to the net assets, earnings and equity of the Company on a consolidated basis and, therefore, separate financial statements concerning the Guarantors are not deemed material to investors. The Notes rank pari passu with all existing and future senior indebtedness of the Company and senior to all subordinated indebtedness of the Company and are secured by substantially all of the Company's floating equipment. The indenture contains certain restrictions on incurrence of debt, liens, sales of assets, investments, capital expenditures, and dividend and upstream payments. The Company must also comply with certain other financial covenants. F-12 MORAN TRANSPORTATION COMPANY Notes to Consolidated Financial Statements (Dollars in thousands, except per share amounts) Three-year period ended December 31, 1997 On December 1, 1997, the Company purchased a tug from an affiliated company. As part of that transaction, the Company entered into a $3.4 million term loan which is payable in 24 quarterly installments through June 1, 2005, with a balloon payment equal to 50% of the original loan value. Interest is based upon LIBOR plus 1.75% but is fixed through June 1, 1999 at 8.1%. The loan is secured by the tug April Moran. The Company has a Senior Credit Facility, which consists of a revolving line of credit (the "Revolving Credit Facility") of up to $10,000, including a letter of credit facility (the "Letter of Credit Facility") of up to $5,000. Any amounts outstanding under the letter of Credit Facility reduce the available credit under the Revolving Credit Facility. The accounts receivable and inventory of the Company primarily secure the Revolving Credit Facility. At December 31, 1996 and 1997, letters of credit outstanding were $472 and $472, respectively. At year-end, the Company had no borrowings outstanding under the Revolving Credit Facility which expires on July 11, 2000. The Company has deferred debt placement costs incurred in connection with the $80,000 of First Preferred Ship Mortgage Notes. The unamortized balance of such fees was $2,854 and $2,415 at December 31, 1996 and 1997, respectively. (9) Income Taxes In accordance with FAS 109, the deferred tax provision was determined under the asset and liability approach. Deferred tax assets and liabilities were recognized on differences between the book and tax basis of assets and liabilities using current tax rates. The provision for income taxes is the sum of the amount of income tax paid or payable for the year as determined by applying current tax laws to the taxable income for the current year and the net change in the Company's deferred tax assets and liabilities during the year. The components of the provision for income taxes are as follows: For the years ended December 31, -------------------------------- 1995 1996 1997 ---- ---- ---- Current...................... $776 $2,680 $2,274 Deferred..................... (576) (1,872) (1,661) ---- ------ ------ $200 $808 $613 ==== ====== ====== This provision includes state tax expense for the years ended December 31, 1995, 1996 and 1997 of $279, $34 and $182, respectively. F-13 MORAN TRANSPORTATION COMPANY Notes to Consolidated Financial Statements (Dollars in thousands, except per share amounts) Three-year period ended December 31, 1997 The reconciliation of the Company's effective income tax rate and the statutory income tax rate are as follows: For the years ended December 31, -------------------------------- 1995 1996 1997 ---- ---- ---- Statutory income tax rate............. (34.0)% 35.0% 35.0% Increases (decreases) due to: State taxes...................... 135.8 6.4 5.3 Meals and entertainment.......... 40.7 2.0 1.9 Rate differential................ - (2.6) 1.8 Release of valuation allowance... - - (17.3) Other-net........................ 4.8 (2.6) 0.8 ----- ---- ---- Effective income tax rate............. 147.3% 38.2% 27.5% ===== ==== ==== Under FAS 109, temporary differences which give rise to a significant portion of net deferred tax liabilities were as follows: Dec. 31, Dec. 31, 1996 1997 -------- -------- Deferred tax assets State and local taxes ............................. $ 816 $ 749 Insurance claims reserves ......................... 746 623 Post retirement benefits other than pensions ...... 1,358 1,469 Capital loss carry forward ........................ 386 -- Additional compensation ........................... 234 268 Hull insurance aggregate reserves ................. 759 1,179 P & I insurance aggregates reserve ................ 373 373 Backpay liability ................................. 1,782 1,403 Other items-net ................................... 445 (109) -------- -------- Total deferred tax assets ......................... 6,899 5,955 -------- -------- Deferred tax liabilities Depreciation and amortization ..................... (36,307) (34,411) Pension benefits .................................. (466) (368) Capitalized drydocking costs ...................... (1,606) (2,263) Land valuation .................................... (197) (197) Fuel inventory costs .............................. (374) (311) Capitalized environmental remediation costs ....... (820) -- -------- -------- Total deferred tax liabilities .................... (39,770) (37,550) Valuation allowance ............................... (721) (335) -------- -------- Net deferred tax liabilities ...................... $(33,592) ($31,930) ======== ======== The current portion of net deferred income taxes of $558 and $520 at December 31, 1996 and 1997, respectively, is included in other prepaid expenses. F-14 MORAN TRANSPORTATION COMPANY Notes to Consolidated Financial Statements (Dollars in thousands, except per share amounts) Three-year period ended December 31, 1997 (10) Pension, Postretirement Benefit and Profit Sharing Plans Pension The net periodic pension expense for the Company's defined benefit pension plan is comprised of the following: For the years ended December 31, -------------------------------- 1995 1996 1997 ------- ------- ------- Service cost-benefits earned during the period $ 286 $ 327 $ 305 Interest cost projected benefit obligation .... 557 559 532 Actual return on plan assets .................. (988) (757) (1,043) Net amortization and deferral ................. 425 117 438 ------- ------- ------- Net periodic pension expense .................. $ 280 $ 246 $ 232 ======= ======= ======= The following table sets forth the defined benefit pension plan's funded status and amounts recognized in the Company's financial statements at December 31, 1996 and December 31, 1997: Dec. 31, Dec. 31, 1996 1997 ------ ------ Actuarial present value of benefit obligation: Vested benefits obligation ............................... $5,176 $5,847 ====== ====== Accumulated benefit obligation ........................... $5,383 $6,044 ====== ====== Projected benefit obligation ............................. $7,099 $7,878 Fair value of plan assets ................................ 7,775 8,338 ------ ------ Plan assets in excess of projected benefit obligation .... 676 460 Unamortized loss ......................................... 691 675 ------ ------ Prepaid pension costs .................................... $1,367 $1,135 Dec. 31, Dec. 31, 1996 1997 ------ ------ The actuarial assumptions are: Discount rate ............................................ 7.50% 7.25% Rate of increase in compensation levels .................. 4.0% 4.0% Expected long-term rate of return on assets .............. 8.0% 8.0% The Company has a defined benefit pension plan covering substantially all shoreside non-union employees. The plan generally provides benefit payments using a formula that is based on an employee's compensation and length of service. The Company's policy is to fund current service costs. The plan's assets are primarily invested in a managed bond portfolio with a portion invested in a managed equity portfolio. In 1996, a $69 contribution was made for the 1995 plan year. Since the plan is fully funded, no contribution is required for the 1997 plan year. In addition, the Company has an unfunded supplemental F-15 MORAN TRANSPORTATION COMPANY Notes to Consolidated Financial Statements (Dollars in thousands, except per share amounts) Three-year period ended December 31, 1997 employee retirement plan ("SERP") for certain executives. The Company's pension SERP liability was $575 and $651 at December 31, 1996 and 1997 respectively. In accordance with contractual agreements, the Company makes contributions to union-sponsored pension and welfare plans. Such contributions were $956, $1,965 and $2,287 for years December 31, 1995, 1996 and 1997, respectively. In addition, the Company has a defined contribution pension plan for non-union fleet employees. The Company made contributions of $182, $201 and $333 for the years ended December 31, 1995, 1996 and 1997, respectively. Profit Sharing Plan The Company has a non-contributory profit-sharing plan covering substantially all shoreside non-union employees. Company contributions are at the discretion of the Board of Directors. The Company made contributions of $556, $674 and $681 for the years ended December 31, 1995, 1996 and 1997, respectively. In addition, the Company has an unfunded profit sharing SERP for certain executives. The Company's profit sharing SERP liability was $114 and $137 at December 31, 1996 and 1997, respectively. Post Retirement Benefits The Company provides certain health care and life insurance benefits to all employees who retire from the Company and satisfy certain service and age requirements. Generally, the medical coverage pays a stated percentage of most medical expenses reduced for any deductible and payments made by Medicare or other group coverage. Benefits are administered through an insurance carrier paid by the Company. The cost of providing these benefits is shared with retirees. The cost sharing provisions vary depending on the retirement date. The plan is unfunded. The premium cost of providing these benefits was $281, $265 and $271 for the years ended December 31, 1995, 1996 and 1997, respectively. The Company accounts for retiree health care costs in accordance with Financial Accounting Standard No. 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions." This statement requires the accrual of the cost of providing postretirement benefits, including medical and life insurance coverage, during the active service period of the employee. F-16 MORAN TRANSPORTATION COMPANY Notes to Consolidated Financial Statements (Dollars in thousands) Three-year period ended December 31, 1997 The following table sets forth the Company's accrued postretirement benefit liability recognized in the Company's Consolidated Balance Sheets at December 31, 1996 and 1997 and related postretirement cost for the years ended December 31, 1996 and 1997. December 31, --------------- 1996 1997 ------ ------ Actuarial present value of postretirement benefit obligation: Retirees ................................................... $2,955 $3,590 Fully eligible active participants ......................... 890 842 Other active participants .................................. 801 984 ------ ------ Accumulated postretirement benefit obligation ................ 4,646 5,416 Unrecognized net loss ........................................ 663 1,107 ------ ------ Accrued postretirement benefit liability ..................... $3,983 $4,309 ====== ====== Net periodic postretirement benefit cost for periods ended December 31, 1996 and December 31, 1997 included the following components: 1996 1997 ---- ---- Service cost of benefits earned .................................. $161 $176 Interest cost on accumulated postretirement benefits obligation .. 318 366 Amortization of unrecognized loss ................................ 32 49 ---- ---- Net periodic postretirement benefit cost ......................... $511 $591 ==== ==== The discount rate used in determining the APBO was 7.5% in fiscal 1996 and 7.25% in 1997. The assumed health care cost trend rate used for measuring the APBO was divided into two categories: 1996 1997 ---- ---- Under age 65 participants ....................................... 11.9% 10.8% Over age 65 participants ........................................ 14.5% 12.8% Over 17 years, rates were assumed to remain unchanged at 6.1% for the under age 65 participants and 6.3% for the over age 65 participants, for 1996 and for 1997. If the health care cost trend rate was increased 1 percent, the APBO as of December 31, 1996, would have increased 11.6%. The effect of this change on the aggregate of service and interest cost for period ended December 31, 1996 would be an increase of 15.2%. As of December 31, 1997, the effect on the APBO would be an increase of 11.6% and for period service and interest an increase of 14.3%. F-17 MORAN TRANSPORTATION COMPANY Notes to Consolidated Financial Statements (Dollars in thousands) Three-year period ended December 31, 1997 (11) Commitments On November 8, 1996, a subsidiary of the Company entered into a 10 year bareboat charter for the barge Portsmouth. The Company has an option to purchase the barge at the end of the seventh year and at the end of the lease term. The annual charterhire for this vessel is $1.0 million over the term of the lease. Minimum annual rental commitments at December 31, 1997, under non-cancelable operating leases, including the bareboat charter for the Portsmouth, are as follows: 1998........................................ $1,888 1999........................................ 1,840 2000........................................ 1,842 2001........................................ 1,789 2002........................................ 1,713 2003 and beyond............................. 4,786 Total gross rent expense was $1,054, $1,160 and $1,896 for the years ended December 31, 1995, 1996 and 1997, respectively. (12) Contingent Liabilities In February 1994, a lawsuit was filed in United States District Court for the Eastern District of New York by the Town of Oyster Bay (the "Town"), New York, against the Company and several other potentially responsible parties ("PRP"). The Town is seeking indemnification for remediation and investigation costs that have been or will be incurred for a Federal Superfund site in Syosset, New York, which served as a Town owned and operated landfill between 1933 and 1975. In a Record of Decision issued on or about September 27, 1990, the EPA set forth a remedial design plan, the cost of which was estimated at $25,000 and is reflected in the Town's lawsuit. In an Administrative Consent Decree entered into between the EPA and the Town on December 6, 1990, the Town agreed to undertake remediation at the site. While the current state of law imposes joint and several liability upon PRPs, as a practical matter costs of these sites are typically shared with other PRPs. The Company believes that its portion of the hazardous materials disposed of at the site, if any, is insignificant when compared to that of the other PRPs. While management is unable to estimate the Company's future liability, if any, it does not believe such liability would have a material adverse effect on the Company's financial position or results of operations. (13) Shipyard Assets Held for Sale In the third quarter of 1997, the owner of the Jakobson Shipyard site sold its property to the State of New York and the Town of Oyster Bay. At the same time, Jakobson Shipyard, Inc., a subsidiary of the Company, terminated its leasehold interest in the property and received $2.9 million. The loss related to the lease termination was not material. F-18 MORAN TRANSPORTATION COMPANY Notes to Consolidated Financial Statements (Dollars in thousands) Three-year period ended December 31, 1997 (14) Financial Instruments The following disclosure of the estimated fair value of financial instruments at December 31, 1996 and 1997 is made in accordance with the requirements of FAS No 107, "Disclosure about Fair Market of Financial Instruments". The estimated fair value amounts have been determined by the Company using available market information and appropriate valuation methodologies. However, considerable judgment is necessarily required in interpreting market data to develop the estimates of fair value. Accordingly, the estimates presented herein are not necessarily indicative of the amounts that the Company could realize in a current market exchange. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts. The Company's financial instruments consist of cash, short-term trade receivables and payables, and short and long-term debt. With the exception of long-term debt, the carrying amounts of these financial instruments approximate their fair value. Based upon the average of the bid and asked price for the 11.75% Series B First Preferred Ship Mortgage Notes at their respective year ends, the fair value of the Company's Notes as of December 31, 1996 and 1997 is approximately $86,700 and $88,800 respectively. The Company's other long-term debt is considered to be at fair value. Financial instruments which potentially subject the Company to concentration of credit risk consist solely of trade receivables. The Company grants credit terms in the normal course of business to its customers. The Company has a diverse customer base and as part of its on-going procedures the Company monitors the credit worthiness of its customers. Bad debt write-offs have historically been minimal. The fair value information presented herein is based on pertinent information available to management as of December 31, 1996 and 1997. Although management is not aware of any factors that would significantly affect the estimated fair value amounts, such amounts have not been comprehensively revalued for purposes of these consolidated financial statements since that date, and current estimates of fair value may differ significantly from the amounts presented herein. (15) Related Party Transactions In 1995, the Company and certain related parties (the "Group") negotiated insurance coverage with third party providers in order to obtain lower premiums. In connection with the new coverage, the Group entered into a risk sharing agreement whereby the Company would bear a portion of certain claims expense of the Group in proportion to its past experience. This percentage is reset each year. The Company believes its agreement is at arms length. The amount due from related parties at December 31, 1997 was $222. F-19 MORAN TRANSPORTATION COMPANY Notes to Consolidated Financial Statements (Dollars in thousands) Three-year period ended December 31, 1997 (16) Mandatorily Redeemable Capital Stock Mandatorily Redeemable Capital Stock is the same as the Company's Common Stock in terms of voting rights, dividends and other attributes except that under certain circumstances it is redeemable at the option of stockholders or the Company at fair market value. As of December 31, 1996 and 1997, the fair market value of the shares was $250 per share. The Company's Common Stock contains no redemption features. During 1996, 600 shares of mandatorily redeemable stock were transferred into 600 shares of common stock and are no longer subject to any put rights or mandatorily redeemable features. (17) Stock Option Plan On July 11, 1994 the Company adopted a Stock Option Plan (the "1994 Plan") which became effective on the date of the Acquisition to provide an incentive to certain employees of the Company to remain in the employ of the Company and to increase their personal interest in the success of the Company. The maximum number of shares of the Company's Common Stock issuable under the 1994 Plan is 2,000, of which 1,640 were granted in the period ended December 31, 1994 at a price equal to the fair market value of the Company's Common Stock at the date of the grant. None of the options granted were exercised in the period ended December 31, 1996. Participation in the 1994 Plan is limited to employees of the Company designated by the Plan Committee. Non-employee directors of the Company are not eligible to participate. A total of 350 options were granted in 1996. No options were granted in 1997. The Company applies APB Opinion 25 and related Interpretations in accounting for the 1994 Plan. Accordingly, no compensation cost has been recognized for its fixed stock options plan. Had the compensation cost for the stock based compensation plan been determined in accordance with FAS 123, the Company's net income and earnings per share would not have been materially different. F-20 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. MORAN TRANSPORTATION COMPANY (Registrant) March 30, 1998 /s/ Jeffrey J. McAulay ---------------------- Jeffrey J. McAulay Vice President of Finance and Administration (Principal Financial Officer) and Director Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. March 30, 1998 /s/ Paul R. Tregurtha ---------------------- Paul R. Tregurtha Chairman of the Board and Director March 30, 1998 /s/ James R. Barker -------------------- James R. Barker Vice-Chairman of the Board and Director March 30, 1998 /s/ Malcolm W. MacLeod ----------------------- Malcolm W. MacLeod President, Chief Executive Officer and Director SIGNATURES March 30, 1998 /s/ Edmond J. Moran, Jr. ------------------------- Edmond J. Moran, Jr. Director March 30, 1998 /s/ Robert J. Patten --------------------- Robert J. Patten Controller (Principal Accounting Officer) March 30, 1998 /s/ Andrew P. Langlois ----------------------- Andrew P. Langlois Director March 30, 1998 /s/ Mort Lowenthal ------------------- Mort Lowenthal Director SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED PURSUANT TO SECTION 15(d) OF THE ACT BY REGISTRANTS WHICH HAVE NOT REGISTERED SECURITIES PURSUANT TO SECTION 12 OF THE ACT The registrant has not sent, and does not at present intend to send, to its security holders either: (1) An annual report to security-holders covering the registrant's last fiscal year; or (2) A proxy statement, form of proxy or other proxy soliciting material with respect to any annual or other meeting of security-holders. EX-4.1(D) 2 EX-4.1(D) SUPPLEMENTAL INDENTURE NO. 4 This SUPPLEMENTAL INDENTURE NO. 4, dated as of December 31, 1997, is by and among MORAN TRANSPORTATION COMPANY, a Delaware corporation (the "Company"), MORAN TOWING CORPORATION, a New York corporation ("Moran Towing"), the Guarantors listed on Annex I hereto (collectively, the "Guarantors"), MORAN BULK CORPORATION ("Moran Bulk"), a Delaware corporation, and FLEET NATIONAL BANK (formerly known as Shawmut Bank Connecticut, National Association), as trustee (the "Trustee"). W I T N E S S E T H: WHEREAS, the Company, the Trustee, the Guarantors and Moran Bulk are parties to that certain Indenture dated July 11, 1994, as amended by Supplemental Indentures No. 1, 2 and 3 (as so supplemented, the "Indenture"), pertaining to the Company's 11-3/4% Series B First Preferred Ship Mortgage Notes due 2004 issued under the Indenture (the "Notes"); WHEREAS, after giving effect to the merger of Moran Bulk with and into Moran Towing described below, the Guarantors listed on Annex I hereto will constitute all of the Subsidiaries of the Company. 1. Moran Bulk Corporation Merger. WHEREAS, pursuant to a certain agreement and plan of merger, effective December 31, 1997, Moran Bulk shall merge with and into Moran Towing with Moran Towing being the survivor of such merger. 2. General WHEREAS, Section 6.03 of the Indenture provides that (a) a Qualified Restricted Subsidiary shall have the right to merge with any other Qualified Restricted Subsidiary provided that the Qualified Restricted Subsidiary which is the surviving corporation shall execute a supplemental indenture (in a form reasonably satisfactory to the Trustee) pursuant to which such surviving corporation shall (i) expressly assume the obligations under the applicable Guarantee of the merged Qualified Restricted Subsidiary which is not the surviving corporation in such merger and (ii) confirm the due and punctual performance of the Guarantee of such surviving corporation and every covenant in the Indenture on the part of such surviving corporation to be performed or observed; and that (b) a Restricted Subsidiary that is not a Qualified Restricted Subsidiary shall have the right to merge with any other Restricted Subsidiary which is not a Qualified Restricted Subsidiary provided that the Restricted Subsidiary which is the surviving corporation shall (i) execute a supplemental indenture (in a form reasonably satisfactory to the Trustee) pursuant to which such surviving corporation shall (1) expressly assume the obligations under the applicable Guarantee of the merged Restricted Subsidiary which is not the surviving corporation in such merger and (2) confirm the due and punctual performance of the Guarantee of such surviving corporation and every covenant in the Indenture and the Collateral Documents on the part of such surviving corporation to be performed or observed and (ii) execute any instrument required by the Trustee pursuant to Section 3.4 of the applicable Ship Mortgage(s); WHEREAS, Moran Bulk is a Qualified Restricted Subsidiary, and Moran Towing is a Restricted Subsidiary which is not a Qualified Restricted Subsidiary; WHEREAS, notwithstanding Section 6.03 of the Indenture, which relates to mergers of (i) Qualified Restricted Subsidiaries with other Qualified Restricted Subsidiaries and (ii) Restricted Subsidiaries which are not Qualified Restricted Subsidiaries with other Restricted Subsidiaries which are not Qualified Restricted Subsidiaries, the Company and Moran Towing intend that the merger of Moran Bulk with and into Moran Towing fulfill the requirements of the proviso to Section 5.14 of the Indenture; WHEREAS, Section 5.14 of the Indenture provides that subject to Article 6 of the Indenture, the Company will do or cause to be done all things necessary to preserve and keep in full force and effect (i) its corporate existence and the corporate existence of each of its Restricted Subsidiaries, in accordance with their respective organizational documents (as the same may be amended from time to time) and (ii) its (and its Restricted Subsidiaries') rights (charter and statutory), licenses and franchises; provided, however, that the Company shall not be required to preserve any such right, license or franchise, or the corporate existence of any Restricted Subsidiary, if the Board of Directors of the Company shall determine that the preservation thereof is no longer desirable in the conduct of the business of the Company and its Restricted Subsidiaries taken as a whole and that the loss thereof is not adverse in any material respect to the Holders; WHEREAS, Sections 10.01(g) and (h) of the Indenture provide that the Trustee, the Company, the Guarantors and a Subsidiary, as applicable, may amend or supplement the Indenture without the consent of any Holder to make any changes that do not adversely affect the legal rights of any Holder or to supplement the Indenture to provide for mergers of Restricted Subsidiaries pursuant to Section 6.03, and WHEREAS, the Company, Moran Towing and the Guarantors intend that this Supplemental Indenture No. 4 fulfill the requirements of Section 5.14, and that Moran Towing assume the obligations of Moran Bulk under the Guarantee and the Indenture. NOW THEREFORE, the parties agree as follows, for the benefit of each other and for the equal and ratable benefit of the Holders of the Notes: Section 1.01 Defined Terms. Capitalized terms used in this Supplemental Indenture but not defined herein shall have the meanings given such terms in the Indenture. Section 2.01 Acceptance by Trustee. The Trustee accepts the modifications of the Indenture hereby effected only upon the terms and conditions set forth in the Indenture as supplemented by this Supplemental Indenture No. 4. Without limiting the generality of the foregoing, the Trustee shall not be responsible for the correctness of the recitals contained herein, which shall be taken as statements of the Company, and the Trustee makes no representations and shall have no responsibility for, or in respect of, the validity or sufficiency of this Supplemental Indenture No. 4. -2- Section 2.02 Construction. This Supplemental Indenture No. 4 is executed as and shall constitute an instrument supplemental to the Indenture and shall be construed in connection with and as part of the Indenture. Section 2.03 Ratification. Except as modified and expressly amended by this Supplemental Indenture No. 4, the Indenture is, in all respects, ratified and confirmed and all the terms, provisions and conditions thereof shall be and remain in full force and effect. Section 2.04 Moran Towing. Moran Towing hereby agrees as follows: (a) to assume the obligations of Moran Bulk under the Guarantee of Moran Bulk; and (b) that Moran Towing confirms the due and punctual performance by Moran Towing of the Guarantee and the Collateral Documents, to the extent applicable, of Moran Towing and/or Moran Bulk and every covenant in the Indenture and the Collateral Documents, to the extent applicable, to be performed or observed by Moran Towing and/or Moran Bulk; and Section 2.05 Exhibit F. Effective as of the date of this Supplemental Indenture No. 4, Exhibits F-1, F-2 and F-3 to the Indenture shall be replaced with Annex I attached hereto. Section 2.10 Counterparts. This Supplemental Indenture No. 4 may be executed in any number of counterparts; each signed copy shall be an original, but all of them together represent the same agreement. Section 2.11 Governing law. This Supplemental Indenture No. 4 shall be subject to the governing law and choice of forum provisions of Section 13.09 of the Indenture. -3- IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture No. 4 to be duly executed as of the day and year first above written. MORAN TRANSPORTATION COMPANY By: /s/ Jeffrey J. McAulay -------------------------- Name: Jeffrey J. McAulay Title: Vice President MORAN TOWING CORPORATION By: /s/ Jeffrey J. McAulay -------------------------- Name: Jeffrey J. McAulay Title: Vice President THE GUARANTORS LISTED ON ANNEX I HERETO By: /s/ Alan Marchisotto -------------------------- Name: Alan Marchisotto Title: Secretary As to each of the Guarantors listed in Annex I. MORAN INSURANCE COMPANY LIMITED By: /s/ Jeffrey J. McAulay -------------------------- Name: Jeffrey J. McAulay Title: Vice President MORAN BULK CORPORATION (to be merged as described above) By: /s/ Alan Marchisotto -------------------------- Name: Alan Marchisotto Title: Secretary S-1 FLEET NATIONAL BANK, as Trustee By: /s/ Mark A. Forgetta -------------------------- Name: Mark A. Forgetta Title: Authorized Signatory S-2 ANNEX I GUARANTORS Guarantors after Giving Effect to the Merger Described Herein A. Restricted Subsidiaries 1. Restricted Subsidiaries which are Not Qualified Restricted Subsidiaries Moran Towing Corporation Petroleum Transport Corporation 2. Qualified Restricted Subsidiaries Florida Towing Company Curtis Bay Towing Company of Pennsylvania Curtis Bay Towing Company of Virginia Moran Insurance Company Limited Moran Towing of Texas, Inc. Moran Shipyard Corporation Jakobson Shipyard, Inc. Moran Barge Corporation Portsmouth Navigation Corporation Hampton Roads Land Co., Inc. Moran Services Corporation Moran Towing of Delaware, Inc. Seaboard Barge Corporation B. Unrestricted Subsidiaries None S-3 EX-10.5(A) 3 EX-10.5(A) EXHIBIT 10.5(a) AMENDED AND RESTATED TERM LOAN AGREEMENT amended and restated as of December 12, 1997 among MORAN TOWING CORPORATION (THE "BORROWER") MORAN TRANSPORTATION COMPANY AND THE OTHER GUARANTORS NAMED HEREIN (THE "GUARANTORS") AND BANCBOSTON LEASING INC. (THE "LENDER") AND BANCBOSTON LEASING INC. (THE "AGENT") TABLE OF CONTENTS 1. DEFINITIONS AND RULES OF INTERPRETATION . . . . . . . . . . . . . .-2- 1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . .-2- 1.2 Rules of Interpretation . . . . . . . . . . . . . . . . . . -12- 2. TERM LOAN. . . . . . . . . . . . . . . . . . . . . . . . . . . . -12- 2.1 Amendment and Restatement of Existing Loan Agreement; Assumption of Obligations. . . . . . . . . . . . . . . . . . . . -12- 2.2 The Term Note . . . . . . . . . . . . . . . . . . . . . . . -13- 2.3 Repayment of the Principal of the Term Loan . . . . . . . . -13- 2.4 Optional Prepayment of Term Loan. . . . . . . . . . . . . . -14- 2.5 Interest on The Term Loan . . . . . . . . . . . . . . . . . -15- 3. CERTAIN GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . -16- 3.1 [Intentionally Omitted] . . . . . . . . . . . . . . . . . . -16- 3.2 Funds for Payments. . . . . . . . . . . . . . . . . . . . . -16- 3.2.1 Payments to Lender . . . . . . . . . . . . . . . . . -17- 3.2.2 No Offset, etc . . . . . . . . . . . . . . . . . . . -17- 3.3 Computations. . . . . . . . . . . . . . . . . . . . . . . . -17- 3.4 Inability to Determine Eurodollar Rate. . . . . . . . . . . -17- 3.5 Illegality. . . . . . . . . . . . . . . . . . . . . . . . . -17- 3.6 Additional Costs, etc . . . . . . . . . . . . . . . . . . . -17- 3.7 Capital Adequacy. . . . . . . . . . . . . . . . . . . . . . -18- 3.8 Certificate . . . . . . . . . . . . . . . . . . . . . . . . -19- 3.9 Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . -19- 3.10 Interest After Default . . . . . . . . . . . . . . . . . . -19- 3.10.1 Overdue Amounts . . . . . . . . . . . . . . . . . . -19- 3.10.2 Amounts Not Overdue . . . . . . . . . . . . . . . . -19- 4. SECURITY AND GUARANTIES. . . . . . . . . . . . . . . . . . . . . -19- 4.1 Security of Borrower. . . . . . . . . . . . . . . . . . . . -19- 4.2 Guaranties of the Guarantors. . . . . . . . . . . . . . . . -19- 5. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . -19- 5.1 Corporate Authority . . . . . . . . . . . . . . . . . . . . -19- 5.1.1 Incorporation; Good Standing . . . . . . . . . . . . -20- 5.1.2 Authorization. . . . . . . . . . . . . . . . . . . . -20- 5.1.3 Enforceability . . . . . . . . . . . . . . . . . . . -20- 5.2 Governmental Approvals. . . . . . . . . . . . . . . . . . . -20- 5.3 Title to Properties . . . . . . . . . . . . . . . . . . . . -20- 5.4 Financial Statements and Projections. . . . . . . . . . . . -20- 5.4.1 Financial Statements . . . . . . . . . . . . . . . . -20- 5.4.2 Budget . . . . . . . . . . . . . . . . . . . . . . . -20- - ii - 5.5 No Material Changes, etc. . . . . . . . . . . . . . . . . . -21- 5.6 Franchises, Patents, Copyrights, etc. . . . . . . . . . . . -21- 5.7 Litigation. . . . . . . . . . . . . . . . . . . . . . . . . -21- 5.8 No Materially Adverse Contracts, etc. . . . . . . . . . . . -21- 5.9 Compliance With Other Instruments, Laws, etc. . . . . . . . -21- 5.10 Tax Status. . . . . . . . . . . . . . . . . . . . . . . . . -21- 5.11 No Event of Default . . . . . . . . . . . . . . . . . . . . -22- 5.12 Holding Company and Investment Company Acts . . . . . . . . -22- 5.13 Absence of Financing Statements, etc. . . . . . . . . . . . -22- 5.14 Perfection of Security Interest . . . . . . . . . . . . . . -22- 5.15 Certain Transactions. . . . . . . . . . . . . . . . . . . . -22- 5.16 Employee Benefit Plans. . . . . . . . . . . . . . . . . . . -22- 5.17 Purpose; Regulations U and X. . . . . . . . . . . . . . . . -22- 5.18 Subsidiaries, etc . . . . . . . . . . . . . . . . . . . . . -22- 5.19 [Intentionally Omitted] . . . . . . . . . . . . . . . . . . -22- 5.20 Disclosure. . . . . . . . . . . . . . . . . . . . . . . . . -23- 5.21 Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . -23- 5.22 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . -23- 5.23 Concerning the Vessel . . . . . . . . . . . . . . . . . . . -23- 6. AFFIRMATIVE COVENANTS OF THE BORROWER AND THE GUARANTORS . . . . -23- 6.1 Punctual Payment. . . . . . . . . . . . . . . . . . . . . . -23- 6.2 Maintenance of Office . . . . . . . . . . . . . . . . . . . -23- 6.3 Records and Accounts. . . . . . . . . . . . . . . . . . . . -23- 6.4 Financial Statements, Certificates and Information. . . . . -23- 6.5 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . -24- 6.5.1. Defaults. . . . . . . . . . . . . . . . . . . . . . -24- 6.5.2. Environmental Events. . . . . . . . . . . . . . . . -24- 6.5.3. Notification of Claims Against Collateral . . . . . -25- 6.5.4. Notice of Litigation and Judgments. . . . . . . . . -25- 6.6. Corporate Existence; Maintenance of Properties. . . . . . . -25- 6.7 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . -25- 6.8 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . -25- 6.9 Inspection of Properties and Books, etc . . . . . . . . . . -25- 6.9.1. General . . . . . . . . . . . . . . . . . . . . . . -25- 6.9.2. Communication with Accountants. . . . . . . . . . . -26- 6.10 Compliance with Laws, Contracts, Licenses, and Permits. . . -26- 6.11 [Intentionally Omitted] . . . . . . . . . . . . . . . . . . -26- 6.12 Approvals . . . . . . . . . . . . . . . . . . . . . . . . . -26- 6.13 Concerning the Vessel . . . . . . . . . . . . . . . . . . . -26- 6.14 Further Assurances. . . . . . . . . . . . . . . . . . . . . -26- - iii - 7. CERTAIN NEGATIVE COVENANTS OF THE BORROWER AND THE GUARANTORS. . -26- 7.1 Restrictions on Indebtedness. . . . . . . . . . . . . . . . -27- 7.2 Restrictions on Liens . . . . . . . . . . . . . . . . . . . -27- 7.3 Restrictions on Investments . . . . . . . . . . . . . . . . -27- 7.4 Restricted Prepayments. . . . . . . . . . . . . . . . . . . -28- 7.5 Merger; Consolidation; Subsidiaries . . . . . . . . . . . . -28- 7.5.1. Mergers and Acquisitions. . . . . . . . . . . . . . -28- 7.5.2. Disposition of Assets . . . . . . . . . . . . . . . -28- 7.6 Sale and Leaseback. . . . . . . . . . . . . . . . . . . . . -28- 7.7 Compliance with Environmental Laws. . . . . . . . . . . . . -28- 7.8 [Intentionally Omitted] . . . . . . . . . . . . . . . . . . -28- 7.9 Change of Principal Place of Business or Corporate Name . . -29- 7.10 Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . -29- 7.11 Transactions with Affiliates. . . . . . . . . . . . . . . . -29- 7.12 Business Activities . . . . . . . . . . . . . . . . . . . . -29- 7.13 Negative Pledge . . . . . . . . . . . . . . . . . . . . . . -29- 7.14 Additional Guarantors . . . . . . . . . . . . . . . . . . . -29- 7.15 Other Debt Agreements . . . . . . . . . . . . . . . . . . . -29- 8. FINANCIAL COVENANTS OF THE BORROWER AND THE GUARANTORS . . . . . -29- 8.1 Debt Service. . . . . . . . . . . . . . . . . . . . . . . . -29- 8.2 Leverage. . . . . . . . . . . . . . . . . . . . . . . . . . -30- 9. CONDITIONS TO EFFECTIVE DATE . . . . . . . . . . . . . . . . . . -30- 9.1 Loan Documents. . . . . . . . . . . . . . . . . . . . . . . -30- 9.2 Certified Copies of Charter Documents . . . . . . . . . . . -30- 9.3 Corporate Action. . . . . . . . . . . . . . . . . . . . . . -30- 9.4 Incumbency Certificate. . . . . . . . . . . . . . . . . . . -30- 9.5 Validity of Liens . . . . . . . . . . . . . . . . . . . . . -30- 9.6 Perfection Certificate and UCC Search Results . . . . . . . -30- 9.7 Certificates of Insurance . . . . . . . . . . . . . . . . . -30- 9.8 Solvency Certificate. . . . . . . . . . . . . . . . . . . . -30- 9.9 Opinion of Counsel. . . . . . . . . . . . . . . . . . . . . -31- 10. EVENTS OF DEFAULT; ACCELERATION; ETC . . . . . . . . . . . . . . -31- 10.1 Events of Default and Acceleration. . . . . . . . . . . . . -31- 10.2 Remedies. . . . . . . . . . . . . . . . . . . . . . . . . . -34- 10.3 Distribution of Collateral Proceeds . . . . . . . . . . . . -34- 11. SETOFF . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -35- - iv - 12. EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . -35- 13. INDEMNIFICATION. . . . . . . . . . . . . . . . . . . . . . . . . -36- 14. SURVIVAL OF COVENANTS, ETC . . . . . . . . . . . . . . . . . . . -36- 15. ASSIGNMENT AND PARTICIPATION . . . . . . . . . . . . . . . . . . -37- 15.1 Assignment by the Lender. . . . . . . . . . . . . . . . . . -37- 15.2 Participations. . . . . . . . . . . . . . . . . . . . . . . -37- 15.3 Disclosure. . . . . . . . . . . . . . . . . . . . . . . . . -37- 15.4 Miscellaneous Assignment Provisions . . . . . . . . . . . . -37- 15.5 Assignment by Borrower; Guarantors. . . . . . . . . . . . . -37- 16. NOTICES, ETC . . . . . . . . . . . . . . . . . . . . . . . . . . -38- 17. GOVERNING LAW. . . . . . . . . . . . . . . . . . . . . . . . . . -38- 18. HEADINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . -38- 19. COUNTERPARTS . . . . . . . . . . . . . . . . . . . . . . . . . . -39- 20. ENTIRE AGREEMENT, ETC. . . . . . . . . . . . . . . . . . . . . . -39- 21. WAIVER OF JURY TRIAL . . . . . . . . . . . . . . . . . . . . . . -39- 22. CONSENTS, AMENDMENTS, WAIVERS, ETC . . . . . . . . . . . . . . . -39- 23. SEVERABILITY . . . . . . . . . . . . . . . . . . . . . . . . . . -39- 24. TREATMENT OF CERTAIN CONFIDENTIAL INFORMATION. . . . . . . . . . -40- 24.1 Sharing of Information with Section 20 Subsidiary . . . . . -40- 24.2 Confidentiality . . . . . . . . . . . . . . . . . . . . . . -40- 24.3 Prior Notification. . . . . . . . . . . . . . . . . . . . . -40- 24.4 Other . . . . . . . . . . . . . . . . . . . . . . . . . . . -41- - v - SCHEDULES Schedule 1.1(u) Unrestricted Subsidiaries Schedule 5.3 Title to Properties; Leases Schedule 5.16 Employee Benefit Plans Schedule 5.18 Subsidiaries; Joint Ventures Schedule 5.19 Real Property Schedule 5.22 Insurance Schedule 6.2 Chief Executive Offices Schedule 7.1 Existing Indebtedness Schedule 7.2 Existing Liens Schedule 7.3 Existing Investments Schedule 7.4.1 Individuals Holding Redeemable Stock EXHIBITS Exhibit A Form of Note Exhibit B Form of Guaranty Exhibit C Form of Compliance Certificate AMENDED AND RESTATED TERM LOAN AGREEMENT This AMENDED AND RESTATED TERM LOAN AGREEMENT (together with the exhibits and schedules hereto, this "Loan Agreement") is dated as of December 12, 1997, by and among MORAN TOWING CORPORATION (the "Borrower") a Delaware corporation having its principal place of business at Two Greenwich Plaza, Greenwich, Connecticut 06830, MORAN TRANSPORTATION COMPANY ("Moran"), each of the Persons executing the signature pages hereto as a guarantor (together with Moran, each a "Guarantor" and collectively, the "Guarantors"), BANCBOSTON LEASING INC. (the "Lender") and BANCBOSTON LEASING INC., as collateral agent (the "Agent"). WHEREAS, pursuant to a Construction and Term Loan Agreement, dated as of May 16, 1997 (the "Existing Loan Agreement") among Interlake Transportation, Inc. ("Interlake"), Interlake Holding Company ("Holdings"), The Interlake Steamship Company ("Steamship" and together with Holdings, the "Interlake Guarantors"), BankBoston, N.A., as construction lender, the Lender and the Agent, the Lender made a term loan in the principal amount of $3,500,000 to Interlake (the "Term Loan"), the proceeds of which were used to refinance Indebtedness incurred by Interlake in connection with the acquisition of the Vessel (defined below); WHEREAS, pursuant to an Agreement, dated as of the date hereof, between Interlake and the Borrower, Interlake has transferred the Vessel to the Borrower (the "April Transfer"), subject to the Vessel Mortgage; WHEREAS, as a condition to the Lender's consent to the April Transfer, pursuant to Section 2.1 hereof, (i) the Borrower has agreed to assume all of the obligations of Interlake under the Existing Loan Agreement with respect to the outstanding amount of the Term Loan pursuant to the terms of this Loan Agreement and (ii) the Guarantors have agreed to assume all of the obligations of the Interlake Guarantors under the Existing Loan Agreement with respect to the outstanding amount of the Term Loan; and WHEREAS, the parties hereto wish to amend and restate that portion of the Existing Loan Agreement relating to the Term Loan to reflect the April Transfer, the assumption by the Borrower of Interlake's obligations under the Existing Loan Agreement with respect to the outstanding amount of the Term Loan, and the assumption by the Guarantors of the obligations of the Interlake Guarantors under the Existing Loan Agreement with respect to the outstanding amount of the Term Loan. NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto hereby agree as follows: - 2 - 1. DEFINITIONS AND RULES OF INTERPRETATION. 1.1 DEFINITIONS. The following terms shall have the meanings set forth in this Section 1 or elsewhere in the provisions of this Loan Agreement referred to below: AFFILIATE. Any Person that would be considered to be an affiliate of the Borrower or a Guarantor under Rule 144(a) of the Rules and Regulations of the Securities and Exchange Commission, as in effect on the date hereof, if the Borrower or such Guarantor were issuing securities. AGENT. As defined in the first paragraph hereof. APRIL TRANSFER. As defined in the preamble hereto. BALANCE SHEET DATE. December 31, 1996. BASE RATE. The higher of (a) the annual rate of interest announced from time to time by BKB at its head office in Boston, Massachusetts, as its "base rate" or (b) one-half of one percent (1/2%) above the Federal Funds Effective Rate. For the purposes of this definition, "Federal Funds Effective Rate" shall mean, for any day, the rate per annum equal to the weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve System arranged by federal funds brokers, as published for such day (or if such day is not a Business Day, for the next preceding Business Day) by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a Business Day, the average of the quotations for such day on such transactions received by BKB from three funds brokers of recognized standing selected by BKB. BASE RATE LOAN(S). All or any portion of the Term Loan bearing interest calculated by reference to the Base Rate. BKB. BankBoston, N.A. BORROWER. As defined in the first paragraph hereof. BUSINESS DAY. Any day on which banking institutions in Boston, Massachusetts are open for the transaction of banking business and, in the case of Eurodollar Rate Loans, also a day which is a Eurodollar Business Day. CAPITALIZED LEASES. Leases under which the Borrower or a Guarantor is the lessee or obligor, the discounted future rental payment obligations under which are required to be capitalized on the balance sheet of the lessee or obligor in accordance with GAAP. CLOSING DATE. May 16, 1997. CODE. The Internal Revenue Code of 1986. COLLATERAL. All of the property, rights and interests of the Borrower that are or are intended to be subject to the security interests created by the Security Documents. - 3 - COMMITMENT. The Lender's commitment to maintain the Term Loan, as the same may be reduced from time to time; or if such commitment is terminated pursuant to the provisions hereof, zero. COMPLIANCE CERTIFICATE. See Section 6.4(d) hereof. CONSOLIDATED OR CONSOLIDATED. With reference to any term defined herein, shall mean that term as applied to the accounts of Moran and its Restricted Subsidiaries, consolidated in accordance with GAAP. CONSOLIDATED DEBT SERVICE. As of the end of each fiscal quarter of Moran, the aggregate amount of Debt Service of Moran and its Restricted Subsidiaries for the period of the four consecutive fiscal quarters then ending, determined on a consolidated basis for such Persons in accordance with GAAP. CONSOLIDATED EBITDA. As of the end of each fiscal quarter of Moran, the aggregate amount of EBITDA of Moran and its Restricted Subsidiaries for the period of the four consecutive fiscal quarters then ending, determined on a consolidated basis for such Persons in accordance with GAAP. CONSOLIDATED FUNDED DEBT. As at the end of each fiscal quarter of Moran, the aggregate amount of Funded Debt of Moran and its Restricted Subsidiaries as at such date, determined on a consolidated basis for such Persons in accordance with GAAP. CONSOLIDATED OPERATING CASH FLOW. As of the end of each fiscal quarter of Moran, the aggregate amount of Operating Cash Flow of Moran and its Restricted Subsidiaries for the period of the four consecutive fiscal quarters then ending, determined on a consolidated basis for such Persons in accordance with GAAP. CONVERSION REQUEST. A notice given by the Borrower to the Lender of the Borrower's election to convert or continue all or a portion of the Term Loan in accordance with Section 2.5. DEBT SERVICE. For any fiscal period of any Person, an amount equal to the SUM of (a) the Total Interest Expense of such Person for such period PLUS (b) the Total Financial Obligations of such Person for such period, as determined in accordance with GAAP. DEBT SERVICE COVERAGE RATIO. The ratio of (a) Consolidated Operating Cash Flow to (b) Consolidated Debt Service. DEFAULT. See Section 10 hereof. DISTRIBUTION. The declaration or payment of any dividend on or in respect of any shares of any class of capital stock of the Borrower or the Guarantors, other than dividends payable solely in shares of common stock of the Borrower or the Guarantors; the purchase, redemption, or other retirement by the issuer thereof of any shares of any class of capital stock of the Borrower or the Guarantors, directly or indirectly; the return of capital by the Borrower or the Guarantors to their shareholders as such; or any other distribution on or in respect of any shares of any class of capital stock of the Borrower or the Guarantors. DOLLARS or $. Dollars in lawful currency of the United States of America. DOMESTIC LENDING OFFICE. Initially the Lender's Head Office, thereafter such other office as the Lender may, from time to time, designate by written notice to the Borrower. - 4 - DRAWDOWN DATE. The date on which the Term Loan was originally made pursuant to the Existing Credit Agreement and the date on which all or any portion of the Term Loan is converted or continued in accordance with Section 2.5. EARNINGS BEFORE INTEREST AND TAXES. The earnings (or loss) from the operations of any Person for any period, after all expenses and other proper charges but before payment or provision of any income taxes or interest expense for such period, determined in accordance with GAAP. EBITDA. With respect to any Person, and for any period, the Net Income of such Person for such period, after all expenses and other proper charges but before payment or provision for any income taxes, tax distributions, interest expense, depreciation or amortization for such period, determined in accordance with GAAP, and after eliminating therefrom all extraordinary nonrecurring items of income (or deficit). EFFECTIVE DATE. The first date on which the conditions set forth in Section 9 have been satisfied and the Existing Loan Agreement is amended and restated pursuant the provisions hereof. EMPLOYEE BENEFIT PLAN. Any employee benefit plan within the meaning of Section 3(2) of ERISA maintained or contributed to by the Borrower, any Guarantor or any ERISA Affiliate, other than a Multiemployer Plan. ENVIRONMENTAL LAWS. Any federal, state, county, regional or local law, statute, or regulation pertaining to environmental matters, including without limitation, the Resource Conservation and Recovery Act of 1976, the Comprehensive Environmental Response Compensation and Liability Act of 1980, the Superfund Amendments and Reauthorization Act of 1986, the Federal Clean Water Act, the Federal Clean Air Act, the Toxic Substances Control Act, in each case as amended, and all rules, regulations, judgments, decrees, orders and licenses arising under or relating to such laws or relating to environmental matters and which are applicable to the Borrower or the Guarantors. ERISA. The Employee Retirement Income Security Act of 1974. ERISA AFFILIATE. Any Person which is treated as a single employer with the Borrower or any Guarantor under Section 414 of the Code. ERISA REPORTABLE EVENT. A reportable event with respect to a Guaranteed Pension Plan within the meaning of Section 4043 of ERISA and the regulations promulgated thereunder as to which the requirement of notice has not been waived. EUROCURRENCY RESERVE RATE. For any day with respect to a Eurodollar Rate Loan, the maximum rate (expressed as a decimal) at which any lender subject thereto would be required to maintain reserves under Regulation D of the Board of Governors of the Federal Reserve System (or any successor or similar regulations relating to such reserve requirements) against "Eurocurrency Liabilities" (as that term is used in Regulation D), if such liabilities were outstanding. The Eurocurrency Reserve Rate shall be adjusted automatically on and as of the effective date of any change in the Eurocurrency Reserve Rate. EURODOLLAR BUSINESS DAY. Any day on which commercial banks are open for international business (including dealings in Dollar deposits) in London or such other eurodollar interbank market as may be selected by the Lender in its sole discretion acting in good faith. EURODOLLAR LENDING OFFICE. Initially, the Lender's Head Office; thereafter, such other office of the Lender, if any, that shall be making or maintaining Eurodollar Rate Loans. - 5 - EURODOLLAR RATE. For any Interest Period with respect to a Eurodollar Rate Loan, the rate of interest equal to (a) the rate per annum (rounded upwards to the nearest 1/16 of one percent) at which the Lender's Eurodollar Lending Office is offered Dollar deposits two (2) Eurodollar Business Days prior to the beginning of such Interest Period in the interbank eurodollar market where the eurodollar and foreign currency and exchange operations of such Eurodollar Lending Office are customarily conducted at or about 10:00 a.m., Boston time, for delivery on the first day of such Interest Period for the number of days comprised therein and in an amount comparable to the amount of the Eurodollar Rate Loan to which such Interest Period applies, DIVIDED BY (b) a number equal to 1.00 minus the Eurocurrency Reserve Rate, if applicable. EURODOLLAR RATE LOAN(S). All or any portion of the Term Loan bearing interest calculated by reference to the Eurodollar Rate. EVENT OF DEFAULT. See Section 10 hereof. EXISTING LOAN AGREEMENT. As defined in the preamble hereto. FIXED RATE. For any Interest Period with respect to all or any portion of the Term Loan, the rate determined by the Lender, at or about the Drawdown Date of the applicable Fixed Rate Loan, in its sole discretion, acting in good faith, to be its cost of funds for funding all or such portion of such Loan for the Interest Period relating to such Loan. The Borrower may request the Lender to quote the Borrower the Fixed Rate, by giving the Lender at least three (3) Business Days notice before the requested Drawdown Date of any such Loan. The Lender will, as promptly as practicable, notify the Borrower by telephone of the Fixed Rate applicable to such Loan. FIXED RATE LOAN. All or any portion of the Term Loan bearing interest calculated by reference to the Fixed Rate. FUNDED DEBT. With respect to any Person, the aggregate amount of all Indebtedness of such Person for borrowed money (other than short-term trade credit), the deferred purchase price of assets (other than short-term trade credit) and Capitalized Leases. GAAP. (a) When used in Section 8, whether directly or indirectly through reference to a capitalized term used therein, means (i) principles that are consistent with the principles promulgated or adopted by the Financial Accounting Standards Board and its predecessors, in effect for the fiscal year ended on the Balance Sheet Date, and (ii) to the extent consistent with such principles, the accounting practice of Moran and its Subsidiaries reflected in its financial statements for the year ended on the Balance Sheet Date, and (b) when used in general, other than as provided above, means principles that are (i) consistent with the principles promulgated or adopted by the Financial Accounting Standards Board and its predecessors, as in effect from time to time and (ii) consistently applied with past financial statements of Moran and its Subsidiaries adopting the same principles, PROVIDED that in each case referred to in this definition of "GAAP" a certified public accountant would, insofar as the use of such accounting principles is pertinent, be in a position to deliver an unqualified opinion (other than a qualification regarding changes in GAAP) as to financial statements in which such principles have been properly applied. GOVERNMENTAL AUTHORITY. The United States of America, any State thereof, any political subdivision thereof, and any agency, authority, department, commission, board, bureau, or instrumentality of any of them (including without limitation the Federal Maritime Commission, MARAD, and the United States Coast Guard). GUARANTEED PENSION PLAN. Any employee pension benefit plan within the meaning of Section 3(2) of ERISA maintained or contributed to by the Borrower, any Guarantor or any ERISA Affiliate the benefits of which are guaranteed on termination in full or in part by the PBGC pursuant to Title IV of ERISA, other than a Multiemployer Plan. - 6 - GUARANTORS. As defined in the first paragraph hereof. GUARANTY. The Guaranty, dated as of the date hereof, made by the Guarantors in favor of the Lender, pursuant to which the Guarantors have guaranteed to the Lender the payment and performance of the Obligations, substantially in the form of EXHIBIT B attached hereto, and each additional guaranty of the obligations delivered pursuant to Section 7.14 hereof. HAZARDOUS SUBSTANCES. Any hazardous waste, as defined by 42 U.S.C. Section 9601(5), any hazardous substances as defined by 42 U.S.C. Section 9601(14), any pollutant or contaminant as defined by 42 U.S.C. Section 9601(33) and any toxic substances, oil or hazardous materials or other chemicals or substances regulated by any Environmental Laws. INDEBTEDNESS. With respect to any Person, (a) every obligation of such Person for money borrowed, (b) every obligation of such Person evidenced by bonds, debentures, notes or other similar instruments, including obligations incurred in connection with the acquisition of property, assets or businesses, (c) every reimbursement obligation of such Person with respect to letters of credit, bankers' acceptances or similar facilities issued for the account of such Person, (d) every obligation of such Person issued or assumed as the deferred purchase price of property or services (but excluding (i) trade accounts payable or accrued liabilities arising in the ordinary course of business which are not overdue by 60 days or more or are being contested in good faith and (ii) obligations arising under construction contracts for the construction of qualified vessels substituted pursuant to the terms of the Senior Indenture), (e) interest accrued after the commencement of any bankruptcy, insolvency, receivership or similar proceedings and other interest that would have accrued but for the commencement of such proceedings, (f) every Capitalized Lease of such Person, (g) the maximum fixed redemption or repurchase price of preferred stock of such Person at the time of determination, (h) every obligation of the type referred to in clauses (a) through (g) of another Person and all dividends of another Person the payment of which, in either case, such Person has guaranteed or is responsible or liable, directly or indirectly, as obligor, guarantor or otherwise. Any reference in this definition to indebtedness shall be deemed to include any renewals, extensions, refundings, amendments and modifications to any such indebtedness or any indebtedness issued in exchange for such indebtedness. INELIGIBLE SECURITIES. Securities which may not be underwritten or dealt in by member banks of the Federal Reserve System under Section 16 of the Banking Act of 1993 (12 U.S.C. Section 24, Seventh), as amended. INTEREST PAYMENT DATE. (a) As to any Fixed Rate Loan, the last day of each successive quarterly period of three months following the Drawdown Date thereof and in addition the last day of the Interest Period relating thereto; (b) as to any Base Rate Loan, the last day of the calendar quarter which includes the Drawdown Date thereof; and (c) as to any Eurodollar Rate Loan in respect of which the Interest Period is (i) three (3) months or less, the last day of such Interest Period and (ii) more than three (3) months, the date that is three (3) months from the first day of such Interest Period and, in addition, the last day of such Interest Period. INTEREST PERIOD. With respect to all or any portion of the Term Loan, (a) initially, the period commencing on the Drawdown Date of such Loan and ending on the last day of one of the periods set forth below: (i) for any Fixed Rate Loan, four (4) years, (ii) for any Base Rate Loan, the last day of the calendar quarter; and (iii) for any Eurodollar Rate Loan, 1, 2, 3 or 6 months; and (b) thereafter, each period commencing on the last day of the next preceding Interest Period applicable to such Loan and ending on the last day of one of the periods set forth above, as selected by the Borrower in a Conversion Request; PROVIDED that all of the foregoing provisions relating to Interest Periods are subject to the following: (a) if any Interest Period with respect to a Eurodollar Rate Loan would otherwise end on a day that is not a Eurodollar Business Day, that Interest Period shall be extended to the next succeeding Eurodollar Business Day unless the result of such - 7 - extension would be to carry such Interest Period into another calendar month, in which event such Interest Period shall end on the immediately preceding Eurodollar Business Day; (b) if any Interest Period with respect to a Base Rate Loan would end on a day that is not a Business Day, that Interest Period shall end on the next succeeding Business Day; (c) if the Borrower shall fail to give notice as provided in Section 2.5 hereof, the Borrower shall be deemed to have requested a conversion of the affected Eurodollar Rate Loan or Fixed Rate Loan to a Base Rate Loan on the last day of the then current Interest Period with respect thereto; (d) any Interest Period relating to any Eurodollar Rate Loan that begins on the last Eurodollar Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Eurodollar Business Day of a calendar month; and (e) any Interest Period with respect to all or any portion of the Term Loan, that would otherwise extend beyond the Maturity Date shall end on the Maturity Date. INTERLAKE. As defined in the preamble hereto. INTERLAKE GUARANTORS. As defined in the preamble hereto. INVESTMENTS. All expenditures made and all liabilities incurred (contingently or otherwise) for the acquisition of stock or Indebtedness of, or for loans, advances, capital contributions or transfers of property to, or in respect of any guaranties (or other commitments as described under Indebtedness), or obligations of, any Person. In determining the aggregate amount of Investments outstanding at any particular time: (a) the amount of any Investment represented by a guaranty shall be taken at not less than the principal amount of the obligations guaranteed and still outstanding; (b) there shall be included as an Investment all interest accrued with respect to Indebtedness constituting an Investment unless and until such interest is paid; (c) there shall be deducted in respect of each such Investment any amount received as a return of capital (but only by repurchase, redemption, retirement, repayment, liquidating dividend or liquidating distribution); (d) there shall not be deducted in respect of any Investment any amounts received as earnings on such Investment, whether as dividends, interest or otherwise, except that accrued interest included as provided in the foregoing clause (b) may be deducted when paid; and (e) there shall not be deducted from the aggregate amount of Investments any decrease in the value thereof. LENDER. As defined in the first paragraph hereof. LENDER'S HEAD OFFICE. The Lender's head office located at 100 Federal Street, Boston, Massachusetts 02110, or at such other location as the Lender may designate by written notice to the Borrower from time to time. LENDER'S SPECIAL COUNSEL. Bingham Dana LLP, or such other counsel as may be approved by the Lender. LEVERAGE RATIO. The ratio of (a) Consolidated Funded Debt to (b) Consolidated EBITDA. LOAN. The Term Loan. - 8 - LOAN AGREEMENT. As defined in the first paragraph hereof. LOAN DOCUMENTS. This Loan Agreement, the Note and the Security Documents. MAKE-WHOLE AMOUNT. With respect to any prepayment of a Fixed Rate Loan, an amount determined by the Lender pursuant to the following formula: - 9 - Make Whole = (R-T) X P X D Amount 360 As used in this definition of "Make-Whole Amount", "R" means the effective rate of interest quoted to the Lender by the Treasury Division of BKB, in accordance with its customary procedures, for deposits of funds with BKB on the Drawdown Date of such Fixed Rate Loan, in the principal amount of such Fixed Rate Loan and for a number of days equal to the number of days contained in the Interest Period relating to such Fixed Rate Loan. "T" means the effective rate of interest at which United States Treasury instruments maturing on the last day of the Interest Period relating to such Fixed Rate Loan, and in the same amount as the amount of such Fixed Rate Loan so prepaid, can be purchased by BKB on the date of such prepayment. "P" means the amount of principal so prepaid. "D" means the number of days remaining in the Interest Period relating to such Fixed Rate Loan, as of the date of such prepayment. MARAD. The United States Maritime Administration. MATURITY DATE. May 16, 2005. MORAN. As defined in the first paragraph hereof. MULTIEMPLOYER PLAN. Any multiemployer plan within the meaning of Section 3(37) of ERISA maintained or contributed to by the Borrower, any Guarantor or any ERISA Affiliate. NOTE. See Section 2.2 hereof. NOTE RECORD. The grid attached to the Note, or the continuation of such grid, or any other similar record, including computer records, maintained by the Lender with respect to the Term Loan. NET INCOME. The consolidated net income (or deficit) of Moran and its Restricted Subsidiaries, determined in accordance with GAAP, PROVIDED that (a) the net income of any Person which is not a wholly-owned Subsidiary of Moran or any of its Restricted Subsidiaries but which is consolidated with Moran or any of its Restricted Subsidiaries or is accounted for by Moran or any of its Restricted Subsidiaries by the equity method of accounting shall be included for the purpose of determining net income only to the extent of the amount of cash dividends or cash distributions paid to Moran or its Restricted Subsidiaries; (b) the net income of any Person acquired by Moran or any of its Restricted Subsidiaries or a Subsidiary of Moran or any of its Restricted Subsidiaries in a pooling of interests transaction for any period prior - 10 - to the date of such acquisition shall be excluded; (c) the net income of any Restricted Subsidiary of Moran that is subject to restrictions at such time, direct or indirect, on the payment of dividends or the making of distributions to Moran or any of its Restricted Subsidiaries shall be excluded to the extent of such restrictions (other than restrictions imposed by applicable law); (d) the net income of (i) any Unrestricted Subsidiary and (ii) any Subsidiary of which less than 80% of whose securities having the right (apart from the right under special circumstances) to vote in the election of directors are owned by Moran or its wholly-owned Restricted Subsidiaries shall be included only to the extent of the amount of cash dividends or cash distributions actually paid by such Subsidiary to Moran or a wholly-owned Restricted Subsidiary of Moran net of any amounts invested in or otherwise transferred to any Unrestricted Subsidiaries by Moran or its Restricted Subsidiaries in excess of $5,000,000; (e) in the case of Moran, the net income attributable to any business, properties or assets acquired (by way of merger, consolidation, purchase or otherwise) by Moran or any Restricted Subsidiary of Moran for any period prior to the date of such acquisition shall be excluded; and (f) all extraordinary gains and losses, and any gain or loss realized upon the termination of any employee pension benefit plan, in respect of dispositions of assets other than in the ordinary course of business and any one-time increase or decrease to net income which is required to be recorded because of the adoption of new accounting policies, practices or standards required by GAAP, shall be excluded. OBLIGATIONS. All indebtedness, obligations and liabilities of any of the Borrower, the Guarantors and/or their affiliates to the Lender and the Agent, individually or collectively, existing on the date of this Loan Agreement or arising thereafter, direct or indirect, joint or several, absolute or contingent, matured or unmatured, liquidated or unliquidated, secured or unsecured, arising by contract, operation of law or otherwise, arising or incurred under this Loan Agreement or any of the other Loan Documents or in respect of the Loan, the Note or any other instruments at any time evidencing any thereof. OPERATING CASH FLOW. With respect to any Person and any particular fiscal period, an amount equal to (a) such Person's Earnings Before Interest and Taxes for such period, PLUS (b) all depreciation and amortization charges for such period, in each case as determined in accordance with GAAP, MINUS (c) the aggregate amount of taxes payable by such Person in cash with respect to such period. OUTSTANDING. With respect to the Term Loan, the aggregate unpaid principal thereof as of any date of determination. PARENT CREDIT AGREEMENT. The Revolving Credit Agreement, dated as of July 11, 1994 among Moran, the Restricted Subsidiaries named therein, BankBoston, N.A. (f/k/a The First National Bank of Boston), individually and as agent for itself and the other banks which are or may become a party thereto, which term as used herein shall include any refinancing thereof or replacement financing therefor. PBGC. The Pension Benefit Guaranty Corporation created by Section 4002 of ERISA and any successor entity or entities having similar responsibilities. PERFECTION CERTIFICATE. The "Perfection Certificate" as defined in the Security Agreements. PERMITTED LIENS. Liens, security interests and other encumbrances permitted by Section 7.2. PERSON. Any individual, corporation, partnership, trust, limited liability company, unincorporated association, business, or other legal entity, and any government or any governmental agency or political subdivision thereof. REQUIREMENTS. Any law, ordinance, code, order, rule or regulation of any Governmental Authority relating in any way to the ownership, use, occupancy and operation of the Vessel. - 11 - RESTRICTED PREPAYMENT. As to any Person, any payment or prepayment of principal or repurchase of any Indebtedness of such Person in advance of the scheduled maturity thereof (as the terms of such Indebtedness are in effect on the Effective Date). RESTRICTED SUBSIDIARY. Any Subsidiary of Moran that is designated as a Restricted Subsidiary under the Parent Credit Agreement (all of which, other than the Borrower, Curtis Bay Towing Company of Pennsylvania, a Pennsylvania corporation, and Curtis Bay Towing Company of Virginia, a Virginia corporation, are Guarantors hereunder). Moran and the Borrower hereby agree that if any inactive Subsidiaries of Moran (including, without limitation, Curtis Bay Towing Company of Pennsylvania and Curtis Bay Towing Company of Virginia) cease to be inactive, they shall become Guarantors hereunder. SECTION 20 SUBSIDIARY. A Subsidiary of the bank holding company controlling the Lender and/or BKB, which Subsidiary has been granted authority by the Federal Reserve Board to underwrite and deal in certain Ineligible Securities. SECURITY DOCUMENTS. The Guaranty and the Vessel Mortgage. SENIOR INDENTURE. The Indenture, dated as of July 11, 1994, between Moran and Fleet National Bank, as successor to Shawmut Bank, N.A., as trustee, which term as used herein shall include any additional indenture or other governing documentation relating to any refinancing of, or replacement financing for, the Senior Notes. SENIOR NOTES. The promissory notes in the original aggregate principal amount of $80,000,000 issued by Moran pursuant to the Senior Indenture, which term as used herein shall include any notes issued in refinancing thereof or replacement financing therefor. SUBSIDIARY. Any corporation, trust, association, or other business entity of which the designated parent shall at any time own, directly or indirectly, at least a majority (by number of votes) of the outstanding voting stock. TERM LOAN. As defined in the first Whereas clause hereof, it being understood that such term as used herein shall refer to the $3,500,000 term loan originally made to Interlake by the Lender pursuant to the Existing Loan Agreement, the outstanding portion of which is hereby assumed by the Borrower and amended and restated hereby, as described in Section 2.1 hereof. TOTAL FINANCIAL OBLIGATIONS. With respect to any fiscal period and any Person, an amount equal to the sum of all principal payments on long-term Indebtedness that become due and payable or that are to become due and payable during such fiscal period pursuant to any agreement or instrument to which such Person is a party relating to the borrowing of money or the obtaining of credit or in respect of Capitalized Leases. TOTAL INTEREST EXPENSE. For any Person, for any period the aggregate amount of interest in respect of Indebtedness (including amortization of original issue discount on any Indebtedness and amortization of deferred financing costs, in each case calculated in accordance with GAAP) and the interest component of Indebtedness in respect of Capitalized Leases, paid or accrued (without duplication) by such Person and its Restricted Subsidiaries during such period, determined on a consolidated basis in accordance with GAAP. For purposes of this definition, (a) interest on Indebtedness determined on a fluctuating basis for periods succeeding the date of determination shall be deemed to accrue at a rate equal to the rate of interest on such Indebtedness as in effect on the date of determination and (b) interest on Indebtedness in respect of Capitalized Leases shall be deemed to accrue at an interest rate reasonably determined by the chief financial officer of such Person to be the rate of interest implicit in such Indebtedness in respect of Capitalized Leases in accordance with GAAP. - 12 - TYPE. As to all or any portion of the Term Loan, its nature as a Base Rate Loan, a Eurodollar Rate Loan or a Fixed Rate Loan. UNRESTRICTED SUBSIDIARY. Those Subsidiaries of Moran that are not designated as Restricted Subsidiaries. VESSEL. The tug "April Moran", Official Number: 644241. VESSEL MORTGAGE. The First Preferred Fleet Mortgage, dated as of December 11, 1997, by the Borrower, as owner, in favor of the Agent, as mortgagee. 1.2 RULES OF INTERPRETATION. (a) A reference to any document or agreement shall include such document or agreement as amended, modified or supplemented from time to time in accordance with its terms and the terms of this Loan Agreement. (b) The singular includes the plural and the plural includes the singular. (c) A reference to any law includes any amendment or modification to such law. (d) A reference to "the Guarantors" or "any Guarantor" means both (i) the Guarantors collectively and (ii) each Guarantor individually. (e) A reference to any Person includes its permitted successors and permitted assigns. (f) Accounting terms not otherwise defined herein have the meanings assigned to them by GAAP applied on a consistent basis by the accounting entity to which they refer. (g) The words "include", "includes" and "including" are not limiting. (h) All terms not specifically defined herein or by GAAP, which terms are defined in the Uniform Commercial Code as in effect in the Commonwealth of Massachusetts, have the meanings assigned to them therein, with the term "instrument" being that defined under Article 9 of the Uniform Commercial Code. (i) Reference to a particular "Section " refers to that section of this Loan Agreement unless otherwise indicated. (j) The words "herein", "hereof", "hereunder" and words of like import shall refer to this Loan Agreement as a whole and not to any particular section or subdivision of this Loan Agreement. 2. TERM LOAN. 2.1 AMENDMENT AND RESTATEMENT OF EXISTING LOAN AGREEMENT; ASSUMPTION OF OBLIGATIONS. Subject to the terms and conditions set forth herein, the parties hereto hereby agree that, on and as of the Effective Date, (i) the Borrower hereby assumes the obligations of Interlake with respect to the outstanding amount of the Term Loan, (ii) the Guarantors hereby assume the obligations of the Interlake Guarantors under - 13 - the Existing Loan Agreement to the extent applicable to the outstanding amount of the Term Loan, (iii) Interlake is hereby released of its obligations as borrower of the Term Loan and the Interlake Guarantors are hereby released of their obligations as guarantors of Interlake's obligations with respect to the Term Loan, and (iv) those portions of the Existing Loan Agreement concerning or relating to the Term Loan shall be amended and restated as provided herein; PROVIDED, that nothing contained herein shall, except as it relates to the Term Loan and the guarantees of the Interlake Guarantors in respect of the Term Loan (A) limit the liability or obligations of Interlake or the Interlake Guarantors under or with respect to the Existing Loan Agreement, (B) affect in any manner the rights or remedies of the Lender, the Agent or BKB with respect to any liability of Interlake or the Interlake Guarantors under or with respect to the Existing Loan Agreement, or (C) amend or otherwise modify any provision of, the Existing Loan Agreement, including, without limitation, the liability of Interlake and the Interlake Guarantors with respect to, the rights and remedies of the Lender, the Agent and BKB with respect to, and the provisions of the Existing Loan Agreement relating to, the "Construction Loans" or the "Mauthe Term Loan" (as each such term is defined in the Existing Loan Agreement). Upon the effectiveness of this Agreement and the other Loan Documents and the proper recordation of the Vessel Mortgage with the National Vessel Documentation Center, and evidence thereof having been delivered to the Agent, in each case in form and substance thereof satisfactory to the Agent, the Agent will, at the expense of the Borrower, cause to be taken all steps reasonably necessary to cause the Vessel to be released from the grant of mortgage contained in the First Preferred Fleet Mortgage, dated as of May 16, 1997, granted by Interlake in favor of the Agent pursuant to the Mauthe Loan Agreement. 2.2 THE TERM NOTE. The Term Loan shall be evidenced by an amended and restated promissory note of the Borrower in substantially the form of EXHIBIT A hereto (the "Note"), dated the Closing Date and amended and restated as of the Effective Date and completed with appropriate insertions. The Note shall be payable to the order of the Lender in the principal amount of the Term Loan and representing the obligation of the Borrower to pay to the Lender such principal amount or, if less, the outstanding amount of the Term Loan, plus interest accrued thereon, as set forth below. The Borrower irrevocably authorizes the Lender to make or cause to be made a notation on the Note Record reflecting the original principal amount of the Term Loan and, at or about the time of the Lender's receipt of any principal payment on the Note, an appropriate notation on the Note Record reflecting such payment. The aggregate unpaid amount set forth on the Note Record shall be PRIMA FACIE evidence of the principal amount thereof owing and unpaid to the Lender, but the failure to record, or any error in so recording, any such amount on the Note Record shall not affect the obligations of the Borrower hereunder or under the Note to make payments of principal of and interest on the Note when due. 2.3 REPAYMENT OF THE PRINCIPAL OF THE TERM LOAN. (a) The Borrower promises to pay to the Lender, on each Interest Payment Date with respect to the Term Loan during any period during which the Term Loan bears interest at the Fixed Rate, commencing with the Interest Payment Date next succeeding the Drawdown Date thereof, equal quarterly installments of principal and interest on the Term Loan, in an amount calculated on the Closing Date to amortize the principal amount of the Term Loan on a mortgage style basis over eight (8) years to a remaining principal amount of fifty percent (50%) of the principal amount of the Term Loan outstanding on the Closing Date. The Borrower promises to pay the remaining outstanding principal amount of the Term Loan on the Maturity Date. No amount repaid with respect to the Term Loan may be reborrowed. (b) The Borrower promises to pay to the Lender, during any period during which the Term Loan bears interest at the Base Rate or the Eurodollar Rate, the principal amount of the Term Loan in equal quarterly installments, payable on the last day of each fiscal quarter of the Borrower, each in an amount calculated to amortize the principal amount of the Term Loan to a remaining principal amount of fifty percent (50%) of the principal amount of the Term Loan outstanding on the Closing Date. The Borrower promises to pay the remaining outstanding principal amount of the Term Loan on the Maturity Date. No amount repaid with respect to the Term Loan may be reborrowed. - 14 - (c) In addition to the repayments required pursuant to Sections 2.3(a) and (b), the Borrower promises to offer to repay the entire outstanding principal amount of the Term Loan, together with all interest accrued thereon to the date of repayment, the Make-Whole Amount and the other amounts due under Section 2.4(a), if applicable, and all other fees and expenses due under this Loan Agreement (a "Repayment Offer") in connection with any refinancing of, or replacement financing for, the Parent Credit Agreement or the Senior Notes. The Borrower will make the Repayment Offer by written notice to the Lender no later than ten (10) days before the date on which such refinancing or replacement financing becomes effective. The Lender may, in its sole and absolute discretion and at any time within thirty (30) days from the receipt of such Repayment Offer, decline or accept the Repayment Offer by written notice to the Borrower. If the Lender accepts the Repayment Offer, and if the Borrower has effected such refinancing or replacement financing, then the Borrower will, within one hundred twenty (120) days from its receipt of the Lender's acceptance of the Repayment Offer, repay the entire outstanding principal amount of the Term Loan, together with all interest accrued thereon to the date of repayment, the Make-Whole Amount and the other amounts due under Section 2.4(a), if applicable, and all other fees and expenses due under this Loan Agreement. Notwithstanding the prohibitions on prepayment set forth in Section 2.4(a)(i), the Lender may, in its sole and absolute discretion, accept a Repayment Offer before the date that is two (2) years after the Closing Date, in which case the prepayment of the outstanding principal amount of the Term Loan, together with all interest accrued thereon to the date of repayment, the Make-Whole Amount and the other amounts due under Section 2.4(a), and all other fees and expenses due under this Loan Agreement, shall be made in accordance with Section 2.4(a)(ii). (d) In addition to the repayments required pursuant to Sections 2.3(a), (b), and (c), the Borrower promises to offer to repay the entire outstanding principal amount of the Term Loan, together with all interest accrued thereon to the date of repayment, the Make-Whole Amount and the other amounts due under Section 2.4(a), if applicable, and all other fees and expenses due under this Loan Agreement (a "Change of Control Repayment Offer") upon the occurrence of any "Change of Control" under, and as defined in, the Senior Indenture. The Borrower will make the Change of Control Repayment Offer by written notice to the Lender not later than the earlier to occur of (i) the date that any notice of such "Change of Control" is given to the trustee under the Senior Indenture or the holders of the Senior Notes and (ii) ten (10) days after the occurrence of such Change of Control. The Lender may, in its sole and absolute discretion and at any time within thirty (30) days from the receipt of such Change of Control Repayment Offer, decline or accept the Change of Control Repayment Offer by written notice to the Borrower. If the Lender accepts the Change of Control Repayment Offer, then the Borrower will, within thirty (30) days from its receipt of the Lender's acceptance of the Change of Control Repayment Offer, repay the entire outstanding principal amount of the Term Loan, together with all interest accrued thereon to the date of repayment, the Make- Whole Amount and the other amounts due under Section 2.4(a), if applicable, and all other fees and expenses due under this Loan Agreement. Notwithstanding the prohibitions on prepayment set forth in Section 2.4(a)(i), the Lender may, in its sole and absolute discretion, accept a Change of Control Repayment Offer before the date that is two (2) years after the Closing Date, in which case the prepayment of the outstanding principal amount of the Term Loan, together with all interest accrued thereon to the date of repayment, the Make-Whole Amount and the other amounts due under Section 2.4(a), and all other fees and expenses due under this Loan Agreement, shall be made in accordance with Section 2.4(a)(ii). 2.4 OPTIONAL PREPAYMENT OF TERM LOAN. (a) Prepayment of the Term Loan During the Fixed Rate Period. So long as the Term Loan bears interest calculated by reference to the Fixed Rate, the following provisions shall apply to the prepayment of the Term Loan: (i) The Borrower shall have no right to prepay the Term Loan until the date that is two (2) years after the Closing Date. (ii) At any time during the period beginning on the date that is two (2) years after the Closing Date and ending on the day immediately preceding the date that is three (3) years after the Closing Date, the Borrower - 15 - shall have the right to prepay the Term Loan, in whole or in part, upon not less than three (3) Business Days' prior written notice to the Lender; PROVIDED that (A) the Borrower shall, together with such prepayment, pay the Lender the Make-Whole Amount with respect to such principal prepayment PLUS an amount equal to one percent (1%) of the principal amount of the Term Loan so prepaid and (B) each partial prepayment shall be in a principal amount of at least $250,000 or a larger integral multiple thereof. (iii) At any time after the date that is three (3) years after the Closing Date, the Borrower shall have the right to prepay the Term Loan, in whole or in part, upon not less than three (3) Business Days' prior written notice to the Lender; PROVIDED that (A) the Borrower shall, together with such prepayment, pay the Lender the Make-Whole Amount with respect to the principal amount so prepaid and (B) each partial prepayment shall be in a principal amount of at least $250,000 or a larger integral multiple thereof. (b) Prepayment of the Term Loan During the Floating Rate Period. So long as the Term Loan bears interest calculated by reference to the Base Rate or the Eurodollar Rate, the Borrower shall have the right to prepay the Term Loan, without penalty and in whole or in part, upon not less than three (3) Business Days' prior written notice to the Lender; PROVIDED that (i) each partial prepayment shall be in a principal amount of at least $250,000 or a larger integral multiple thereof and (ii) no portion of the Term Loan bearing interest at the Eurodollar Rate may be prepaid pursuant to this Section 2.4(b) except on the last day of the Interest Period relating thereto, unless the Borrower pays the Lender all fees and expenses resulting from the prepayment of such portion of the Term Loan on a day other than the last day of the Interest Period relating thereto. (c) In General. Any prepayment of principal of the Term Loan pursuant to Section 2.4(a) or Section 2.4(b) shall include all interest accrued to the date of prepayment and shall be applied against the scheduled installments of principal due on the Term Loan PRO RATA; PROVIDED that, in the case of a prepayment of a portion of the Term Loan bearing interest at the Fixed Rate, the payments of principal and interest on the Term Loan determined pursuant to Section 2.3(a) shall be recalculated to amortize the then-remaining principal amount of the Term Loan on a mortgage style basis over the remaining period to the Maturity Date to a principal amount of fifty percent (50%) of the then remaining principal amount of the Term Loan. No amount prepaid or repaid with respect to the Term Loan may be reborrowed. 2.5 INTEREST ON THE TERM LOAN. (a) Interest Rate on the Term Loan. Except as otherwise provided in Section 3.10, the Term Loan shall bear interest during each Interest Period relating to all or any portion of the Term Loan at the following rates: (i) To the extent that all or any portion of the Term Loan bears interest during such Interest Period at the Fixed Rate, the Term Loan or such portion shall bear interest during such Interest Period at the rate per annum equal to the Fixed Rate determined for such Interest Period PLUS 1.75%. (ii) To the extent that all or any portion of the Term Loan bears interest during such Interest Period at the Base Rate, the Term Loan or such portion shall bear interest during such Interest Period at the rate per annum equal to the Base Rate determined from time to time during such Interest Period. (iii) To the extent that all or any portion of the Term Loan bears interest during such Interest Period at the Eurodollar Rate, the Term Loan or such portion shall bear interest during such Interest Period at the rate per annum equal to the Eurodollar Rate determined for such Interest Period PLUS 1.75%. - 16 - (b) Interest Rate Options; Notice by Borrower. (i) After the Closing Date, the Term Loan shall initially bear interest during the first Interest Period relating thereto at the Fixed Rate. After such first Interest Period, the Borrower may, subject to the conditions set forth herein, elect to have the Term Loan bear interest at the Base Rate, the Eurodollar Rate or the Fixed Rate; PROVIDED that (A) with respect to any such conversion of a Eurodollar Rate Loan to a Fixed Rate Loan or a Base Rate Loan, the Borrower shall give the Lender at least two (2) Business Days' prior written notice of such election; (B) with respect to any such conversion of a Fixed Rate Loan or a Base Rate Loan to a Eurodollar Rate Loan, the Borrower shall give the Lender at least three (3) Eurodollar Business Days' prior written notice of such election; (C) with respect to any such conversion of a Eurodollar Rate Loan into a Fixed Rate Loan or a Base Rate Loan, such conversion shall only be made on the last day of the Interest Period with respect thereto, unless the Borrower pays the Lender all fees and expenses resulting from a conversion on a date other than the last day of an Interest Period; (D) no Base Rate Loan or Fixed Rate Loan may be converted into a Eurodollar Rate Loan and no Base Rate Loan or Eurodollar Rate Loan may be converted into a Fixed Rate Loan when any Default or Event of Default has occurred and is continuing and (E) any conversion of a Fixed Rate Loan shall only be made on the last day of the Interest Period relating thereto. On the date on which such conversion is being made the Lender shall take such action as is necessary to transfer the Loan to its Domestic Lending Office or its Eurodollar Lending Office, as the case may be. Each Conversion Request relating to the conversion of a Base Rate Loan or a Fixed Rate Loan to a Eurodollar Rate Loan shall be irrevocable by the Borrower for the applicable Interest Period. (ii) Any Loan of any Type may be continued as a Loan of the same Type upon the expiration of an Interest Period with respect thereto by compliance by the Borrower with the notice provisions contained in Section 2.5(b)(i) hereof; PROVIDED that no Eurodollar Rate Loan or Fixed Rate Loan may be continued as such when any Default or Event of Default has occurred and is continuing, but shall be automatically converted to a Base Rate Loan on the last day of the first Interest Period relating thereto ending during the continuance of any Default or Event of Default of which officers of the Lender active upon the Borrower's account have actual knowledge. (c) Payment of Interest. The Borrower promises to pay interest on the Term Loan or any portion thereof outstanding during each Interest Period in arrears on each Interest Payment Date applicable to such Interest Period and on the Maturity Date. (d) Amounts, etc. Any portion of the Term Loan bearing interest calculated by reference to the Eurodollar Rate relating to any Interest Period shall be in the minimum amount of $500,000. No Interest Period relating to the Term Loan or any portion thereof bearing interest at a rate calculated by a reference to the Eurodollar Rate shall extend beyond the date on which a regularly scheduled installment payment of the principal of the Term Loan is to be made unless a portion of the Term Loan at least equal to such installment payment has an Interest Period ending on such date or is then bearing interest at a rate calculated by reference to the Base Rate. 3. CERTAIN GENERAL PROVISIONS. 3.1 [INTENTIONALLY OMITTED]. 3.2 FUNDS FOR PAYMENTS. - 17 - 3.2.1 PAYMENTS TO LENDER. All payments of principal, interest, and any other amounts due hereunder or under any of the other Loan Documents shall be made to the Lender at the Lender's Head Office or at such other location in the Boston, Massachusetts, area that the Lender may from time to time designate by written notice to the Borrower, in each case in immediately available funds. 3.2.2 NO OFFSET, ETC. All payments by the Borrower hereunder and under any of the other Loan Documents shall be made without setoff or counterclaim and free and clear of and without deduction for any taxes, levies, imposts, duties, charges, fees, deductions, withholdings, compulsory loans, restrictions or conditions of any nature now or hereafter imposed or levied by any jurisdiction or any political subdivision thereof or taxing or other authority therein unless the Borrower is compelled by law to make such deduction or withholding. If any such obligation is imposed upon the Borrower with respect to any amount payable by it hereunder or under any of the other Loan Documents, the Borrower will pay to the Lender, on the date on which such amount is due and payable hereunder or under such other Loan Document, such additional amount in Dollars as shall be necessary to enable the Lender to receive the same net amount which the Lender would have received on such due date had no such obligation been imposed upon the Borrower. The Borrower will deliver promptly to the Lender certificates or other valid vouchers for all taxes or other charges deducted from or paid with respect to payments made by the Borrower hereunder or under such other Loan Document. 3.3 COMPUTATIONS. All computations of interest on the Loan and of commitment or other fees shall be based on a 360-day year and paid for the actual number of days elapsed. Except as otherwise provided in the definition of the term "Interest Period" with respect to Eurodollar Rate Loans, whenever a payment hereunder or under any of the other Loan Documents becomes due on a day that is not a Business Day, the due date for such payment shall be extended to the next succeeding Business Day, and interest shall accrue during such extension. The Outstanding amount of the Loan as reflected on the Note Record from time to time shall be prima facie evidence of the amount so Outstanding. 3.4 INABILITY TO DETERMINE EURODOLLAR RATE. In the event that, prior to the commencement of any Interest Period relating to any Eurodollar Rate Loan, the Lender shall determine that adequate and reasonable methods do not exist for ascertaining the Eurodollar Rate that would otherwise determine the rate of interest to be applicable to any Eurodollar Rate Loan during any Interest Period, the Lender shall forthwith give notice of such determination (which shall be conclusive and binding on the Borrower) to the Borrower. In such event (a) each Conversion Request with respect to each Eurodollar Rate Loan shall be automatically withdrawn and shall be deemed a request for a Base Rate Loan, (b) each Eurodollar Rate Loan will automatically, on the last day of the then current Interest Period thereof, become a Base Rate Loan, and (c) the obligations of the Lender to convert Loans of another Type into Eurodollar Rate Loans shall be suspended until the Lender determines that the circumstances giving rise to such suspension no longer exist, whereupon the Lender shall so notify the Borrower. 3.5 ILLEGALITY. Notwithstanding any other provisions herein, if any present or future law, regulation, treaty or directive or the interpretation or application thereof shall make it unlawful for the Lender to maintain Eurodollar Rate Loans, the Lender shall forthwith give notice of such circumstances to the Borrower and thereupon (a) the commitment of the Lender to maintain Eurodollar Rate Loans or convert Base Rate Loans or Fixed Rate Loans to Eurodollar Rate Loans shall forthwith be suspended and (b) all or any portion of the Term Loan then Outstanding as a Eurodollar Rate Loan, if any, shall be converted automatically to a Base Rate Loan on the last day of each Interest Period applicable to such Eurodollar Rate Loan or within such earlier period as may be required by law. The Borrower hereby agrees to promptly pay the Lender, upon demand, any additional amounts necessary to compensate the Lender for any costs incurred by the Lender in making any conversion in accordance with this Section 3.5, including any interest or fees payable by the Lender to lenders of funds obtained by it in order to make or maintain its Eurodollar Rate Loans hereunder. 3.6 ADDITIONAL COSTS, ETC. If any present or future applicable law, which expression, as used herein, includes statutes, rules and regulations thereunder and interpretations thereof by any competent court or by any governmental or other regulatory body or official charged with - 18 - the administration or the interpretation thereof and requests, directives, instructions and notices at any time or from time to time hereafter made upon or otherwise issued to the Lender by any central bank or other fiscal, monetary or other authority (whether or not having the force of law), shall: (a) subject the Lender to any tax, levy, impost, duty, charge, fee, deduction or withholding of any nature with respect to this Loan Agreement, the other Loan Documents, the Commitment or the Loan (other than taxes based upon or measured by the revenue, income or profits of the Lender), or (b) materially change the basis of taxation (except for changes in taxes on revenue, income or profits) of payments to the Lender of the principal of or the interest on the Loan or any other amounts payable to the Lender under this Loan Agreement or the other Loan Documents, or (c) impose or increase or render applicable (other than to the extent specifically provided for elsewhere in this Loan Agreement) any special deposit, reserve, assessment, liquidity, capital adequacy or other similar requirements (whether or not having the force of law) against assets held by, or deposits in or for the account of, or loans by, or commitments of an office of the Lender, or (d) impose on the Lender any other conditions or requirements with respect to this Loan Agreement, the other Loan Documents, the Loan, the Commitment, or any class of loans or commitments of which the Loan or the Commitment forms a part, and the result of any of the foregoing is (i) to increase the cost to the Lender of making, funding, issuing, renewing, extending or maintaining the Term Loan or the Commitment, or (ii) to reduce the amount of principal, interest or other amount payable to the Lender hereunder on account of the Commitment or the Term Loan, or (iii) to require the Lender to make any payment or to forego any interest or other sum payable hereunder, the amount of which payment or foregone interest or other sum is calculated by reference to the gross amount of any sum receivable or deemed received by the Lender from the Borrower hereunder, then, and in each such case, the Borrower will, upon demand made by the Lender at any time and from time to time and as often as the occasion therefor may arise, pay to the Lender such additional amounts as will be sufficient to compensate the Lender for such additional cost, reduction, payment or foregone interest or other sum. 3.7 CAPITAL ADEQUACY. If after the date hereof the Lender determines that (a) the adoption of or change in any law, governmental rule, regulation, policy, guideline or directive (whether or not having the force of law) regarding capital requirements for banks or bank holding companies or any change in the interpretation or application thereof by a court or governmental authority with appropriate jurisdiction, or (b) compliance by the Lender or any corporation controlling the Lender with any law, governmental rule, regulation, policy, guideline or directive (whether or not having the force of law) of any such entity regarding capital adequacy, has the effect of reducing the return on the Commitment or the Term Loan to a level below that which the Lender could have achieved but for such adoption, change or compliance (taking into consideration the Lender's then existing policies with respect to capital adequacy and assuming full utilization of the Lender's capital) by any amount deemed by the Lender to be material, then the Lender may notify the Borrower of such fact. To the extent that the amount of such reduction in the return on capital is not reflected in the Base Rate, the Borrower agrees to pay the Lender for the amount of such reduction in the return on capital as - 19 - and when such reduction is determined upon presentation by the Lender of a certificate in accordance with Section 3.8 hereof. The Lender shall allocate such cost increases among its customers in good faith and on an equitable basis. 3.8 CERTIFICATE. A certificate setting forth any additional amounts payable pursuant to Section 3.6 or 3.7 and a brief explanation of such amounts which are due, submitted by the Lender to the Borrower, shall be conclusive evidence, absent manifest error, that such amounts are due and owing. 3.9 INDEMNITY. The Borrower agrees to indemnify the Lender and to hold the Lender harmless from and against any loss, cost or expense (including loss of anticipated profits) that the Lender may sustain or incur as a consequence of (a) default by the Borrower in payment of the principal amount of or any interest on any Eurodollar Rate Loans or Fixed Rate Loans as and when due and payable, including any such loss or expense arising from interest or fees payable by the Lender to lenders of funds obtained by it in order to maintain its Eurodollar Rate Loans or Fixed Rate Loans, (b) default by the Borrower in converting or continuing all or a portion of the Term Loan after the Borrower has given (or is deemed to have given) a Conversion Request relating thereto in accordance with Section 2.5 or (c) the making of any payment on a Eurodollar Rate Loan or the making of any conversion of any such Loan to a Base Rate Loan or a Fixed Rate Loan on a day that is not the last day of the applicable Interest Period with respect thereto, including interest or fees payable by the Lender to lenders of funds obtained by it in order to maintain the Term Loan. 3.10 INTEREST AFTER DEFAULT. 3.10.1 OVERDUE AMOUNTS. Overdue principal and (to the extent permitted by applicable law) interest on the Term Loan and all other overdue amounts payable hereunder or under any of the other Loan Documents shall bear interest compounded monthly and payable on demand at a rate per annum equal to two percent (2%) above the rate applicable to Base Rate Loans until such amount shall be paid in full (after as well as before judgment). 3.10.2 AMOUNTS NOT OVERDUE. During the continuance of an Event of Default the principal of the Loan not overdue shall, from and after the fifth day after such Event of Default and until such Event of Default has been cured or remedied or such Event of Default has been waived by the Lender pursuant to Section 22, bear interest at a rate per annum equal to the greater of (i) two percent (2%) above the rate of interest otherwise applicable to the Term Loan pursuant to Section 2.5 and (ii) the rate of interest applicable to overdue principal pursuant to Section 3.10.1. 4. SECURITY AND GUARANTIES. 4.1 SECURITY OF BORROWER. The Obligations shall be secured by a perfected first priority security interest (subject only to Permitted Liens entitled to priority under applicable law) in the Vessel. 4.2 GUARANTIES OF THE GUARANTORS. The Obligations shall also be guaranteed by the Guarantors pursuant to the terms of the Guaranty. 5. REPRESENTATIONS AND WARRANTIES. The Borrower and the Guarantors represent and warrant to the Lender as follows: 5.1 CORPORATE AUTHORITY. - 20 - 5.1.1 INCORPORATION; GOOD STANDING. Each of the Borrower and the Guarantors (a) is a corporation duly organized, validly existing and in good standing under the laws of its state of incorporation, (b) has all requisite corporate power to own its property and conduct its business as now conducted and as presently contemplated, and (c) is in good standing as a foreign corporation and is duly authorized to do business in each jurisdiction where such qualification is necessary except where a failure to be so qualified would not have a materially adverse effect on the business, assets or financial condition of the Borrower or the Guarantors, taken as a whole. 5.1.2 AUTHORIZATION. The execution, delivery and performance of this Loan Agreement and the other Loan Documents to which the Borrower or any of the Guarantors is or is to become a party and the transactions contemplated hereby and thereby (a) are within the corporate authority of such Persons, (b) have been duly authorized by all necessary corporate proceedings, (c) do not conflict with or result in any breach or contravention of any provision of law, statute, rule or regulation to which such Persons are subject or any judgment, order, writ, injunction, license or permit applicable to such Persons and (d) do not conflict with any provision of the corporate charter or bylaws of, or any agreement or other instrument binding upon, such Persons. 5.1.3 ENFORCEABILITY. The execution and delivery of this Loan Agreement and the other Loan Documents to which the Borrower or any of the Guarantors is or is to become a party will result in valid and legally binding obligations of each such Person enforceable against it in accordance with the respective terms and provisions hereof and thereof, except as enforceability is limited by bankruptcy, insolvency, reorganization, moratorium or other laws relating to or affecting generally the enforcement of creditors' rights and except to the extent that availability of the remedy of specific performance or injunctive relief is subject to the discretion of the court before which any proceeding therefor may be brought. 5.2 GOVERNMENTAL APPROVALS. The execution, delivery and performance by the Borrower and the Guarantors of this Loan Agreement and the other Loan Documents to which the Borrower or any of the Guarantors is or is to become a party and the transactions contemplated hereby and thereby do not require the approval or consent of, or filing with, any Governmental Authority other than filings with the National Vessel Documentation Center with respect to the Vessel Mortgage as contemplated by the Loan Documents. 5.3 TITLE TO PROPERTIES. Except as indicated on Schedule 5.3 hereto, Moran and its consolidated subsidiaries own all of the assets reflected in the consolidated balance sheet of Moran referred to in Section 5.4.1 or acquired since the date thereof (except property and assets sold or otherwise disposed of in the ordinary course of business since that date), subject to no rights of others, including any mortgages, leases, conditional sales agreements, title retention agreements, liens or other encumbrances except Permitted Liens. 5.4 FINANCIAL STATEMENTS AND PROJECTIONS. 5.4.1 FINANCIAL STATEMENTS. There has been furnished to the Lender a consolidated balance sheet of Moran and its consolidated subsidiaries as at the Balance Sheet Date, and a consolidated statement of income for the fiscal year then ended, certified by Moran's independent certified public accountants. Such balance sheet and statement of income have been prepared in accordance with GAAP and fairly present the consolidated financial condition of Moran and its consolidated subsidiaries as at the Balance Sheet Date and the consolidated results of operations for the fiscal year then ended. There are no contingent liabilities of Moran or any of its subsidiaries as of such date involving material amounts, known to the officers of the Borrower or any of the Guarantors not disclosed in said balance sheet and the related notes thereto. 5.4.2 BUDGET. The annual operating budget of Moran and its consolidated subsidiaries for the 1997 fiscal year, a copy of which has been delivered to the Lender, was prepared on the basis of the assumptions stated therein. To the knowledge of the Borrower and the Guarantors, no facts exist that (individually or in the aggregate) would reasonably be expected to result in any material adverse change in such budget. - 21 - 5.5 NO MATERIAL CHANGES, ETC. (a) Since the Balance Sheet Date there has occurred no materially adverse change in the financial condition or business of (i) the Borrower or (ii) Moran and its Restricted Subsidiaries, determined on a consolidated basis for such Persons, as shown on or reflected in the consolidated balance sheet of Moran and its Restricted Subsidiaries as at the Balance Sheet Date, or on the consolidated statement of income for the fiscal year then ended. Since the Balance Sheet Date, neither the Borrower nor any of the Guarantors has made any Distributions or Restricted Prepayments. (b) The Borrower and the Guarantors (before and after giving effect to the transactions contemplated by this Loan Agreement and the other Loan Documents) (i) are solvent, (ii) have assets having a fair value in excess of their liabilities, (iii) have assets having a fair value in excess of the amount required to pay their liabilities on existing debts as such debts become absolute and matured, and (iv) have, and expect to continue to have, access to adequate capital for the conduct of their respective businesses and the ability to pay their debts from time to time incurred in connection with the operation of their respective businesses as such debts mature. 5.6 FRANCHISES, PATENTS, COPYRIGHTS, ETC. The Borrower and the Guarantors possess all franchises, patents, copyrights, trademarks, trade names, licenses and permits, and rights in respect of the foregoing, adequate for the conduct of their respective businesses substantially as now conducted without known conflict with any rights of others. 5.7 LITIGATION. There are no actions, suits, proceedings, orders, injunctions, decisions or investigations of any kind pending, threatened or issued against the Borrower or the Guarantors before any court, tribunal, administrative agency or board which (a) if adversely determined, would reasonably be expected to materially adversely affect or materially impair (i) the properties, assets, financial condition or business of the Borrower or of the Guarantors and their subsidiaries on a consolidated basis, (ii) the ability of the Borrower or the Guarantors to perform their respective obligations under the Loan Documents, (iii) the right of the Borrower or of the Guarantors and their subsidiaries on a consolidated basis, to carry on their respective businesses substantially as now conducted by them, or (iv) the ability of the Lender to exercise its rights hereunder or under the other Loan Documents; or (b) question the validity of this Loan Agreement or any of the other Loan Documents or any action taken or to be taken pursuant hereto or thereto. 5.8 NO MATERIALLY ADVERSE CONTRACTS, ETC. Neither the Borrower nor any of the Guarantors is subject to any charter, corporate or other legal restriction, or any judgment, decree, order, rule or regulation that has or is expected in the future to have a materially adverse effect on the respective businesses, assets or financial condition of the Borrower or of the Guarantors and their subsidiaries on a consolidated basis. Neither the Borrower nor any of the Guarantors is a party to any contract or agreement that has or is expected, in the judgment of the officers of the Borrower and the Guarantors, to have any materially adverse effect on the business of the Borrower or of the Guarantors and their subsidiaries on a consolidated basis. 5.9 COMPLIANCE WITH OTHER INSTRUMENTS, LAWS, ETC. Neither the Borrower nor any of the Guarantors is in violation of (i) any provision of their respective charter documents or bylaws, or (ii) any agreement or instrument to which they may be subject or by which they or any of their properties may be bound or (iii) any law (including without limitation, any Environmental Law), decree, order, judgment, statute, license, rule or regulation, in any of the foregoing cases in a manner that would reasonably be expected to materially and adversely affect the respective financial conditions, properties or businesses of the Borrower or the Guarantors and their Restricted Subsidiaries on a consolidated basis. 5.10 TAX STATUS. The Borrower and each of the Guarantors (a) have filed all federal and, except where the failure to file could not have a materially adverse effect on the business, assets or financial condition of Moran and its Restricted Subsidiaries on a consolidated basis, state income and all other tax returns, reports and declarations required by any jurisdiction to which any of them is subject, (b) have paid all taxes - 22 - and other governmental assessments and charges shown or determined to be due on such returns, reports and declarations, except those being contested in good faith and by appropriate proceedings and (c) have set aside on their books, to the extent required by GAAP, reserves for taxes for periods subsequent to the periods to which such returns, reports or declarations apply. There are no unpaid taxes in any material amount claimed to be due from the Borrower or the Guarantors by the taxing authority of any jurisdiction. 5.11 NO EVENT OF DEFAULT. No Default or Event of Default has occurred and is continuing. 5.12 HOLDING COMPANY AND INVESTMENT COMPANY ACTS. Neither the Borrower nor any of the Guarantors is a "holding company", or a "subsidiary company" of a "holding company", or an "affiliate" of a "holding company", as such terms are defined in the Public Utility Holding Company Act of 1935; nor is it an "investment company", or an "affiliated company" or a "principal underwriter" of an "investment company", as such terms are defined in the Investment Company Act of 1940. 5.13 ABSENCE OF FINANCING STATEMENTS, ETC. Except with respect to Permitted Liens, there is no financing statement, security, agreement, ship mortgage or other document filed or recorded with any filing records, registry, or other public office, that purports to cover, affect or give notice of any lien on, or security interest in any of the Collateral. 5.14 PERFECTION OF SECURITY INTEREST. All filings, assignments, pledges and deposits of documents or instruments have been made and all other actions have been taken that are necessary, under applicable law, to establish and perfect the Agent's, the Lender's or, as the case may be, BKB's security interest in the Collateral. The Collateral and the Agent's, the Lender's or, as the case may be, BKB's rights with respect to the Collateral are not subject to any setoff, claims, withholdings or other defenses. The Borrower is the owner of the Collateral free from any lien, security interest, encumbrance and any other claim or demand, except for Permitted Liens. All of the Obligations of the Borrower will, from and after the execution and delivery of the Vessel Mortgage, be entitled to the benefits of and be secured by the Vessel Mortgage. 5.15 CERTAIN TRANSACTIONS. Except for transactions permitted under the Parent Credit Agreement, none of the officers, directors, or employees of the Borrower or any of the Guarantors is currently a party to any transaction with Borrower or any of the Guarantors (other than for services as employees, officers and directors), including any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or from, or otherwise requiring payments to or from any officer, director or such employee or, to the knowledge of the Borrower or any of the Guarantors, any corporation, partnership, trust or other entity in which any officer, director, or any such employee has a substantial interest or is an officer, director, trustee or partner. 5.16 EMPLOYEE BENEFIT PLANS. The representations and warranties of the Borrower and the Guarantors contained in Section 7.16 of the Parent Credit Agreement (other than the second sentence of Section 7.16.1) are hereby incorporated herein by reference and shall be deemed made by the Borrower and the Guarantors on and as of the Closing Date. 5.17 PURPOSE; REGULATIONS U AND X. No portion of the Loan is to be used for the purpose of purchasing or carrying any "margin security" or "margin stock" as such terms are used in Regulations U and X of the Board of Governors of the Federal Reserve System, 12 C.F.R. Parts 221 and 224. 5.18 SUBSIDIARIES, ETC. The Borrower and the Guarantors have only those Subsidiaries listed on Schedule 5.18 hereto and except as set forth on such Schedule 5.18, neither the Borrower nor any Guarantor is engaged in any joint venture or partnership with any other person. 5.19 [INTENTIONALLY OMITTED]. - 23 - 5.20 DISCLOSURE. Neither this Loan Agreement nor any of the other Loan Documents contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements herein or therein not misleading. There is no fact known to either the Borrower or any of the Guarantors which materially adversely affects, or which would reasonably be expected to materially adversely affect in the future, exclusive of effects resulting from changes in general economic or industry conditions, the business, assets, financial condition or prospects of the Borrower or of the Guarantors and their subsidiaries on a consolidated basis. 5.21 FISCAL YEAR. The fiscal year of the Borrower, Moran and the other Guarantors is the twelve months ending December 31 of each year. 5.22 INSURANCE. Schedule 5.22 attached hereto lists the P&I and hull policies and types and amounts of P&I and hull coverage (including deductibles) owned or held by the Borrower on the date hereof. Such policies of insurance are maintained with financially sound and reputable insurance companies, funds, underwriters or mutual indemnification associations. All such policies are in full force and effect; are sufficient for material compliance by the Borrower and the Guarantors with all requirements of law and all agreements to which the Borrower or the Guarantors are a party; are by their terms valid and enforceable policies that will remain in full force and effect through the respective dates set forth in such schedule; and coverage thereunder will not be reduced by, or terminate or lapse by reason of, the transactions contemplated by this Loan Agreement. 5.23 CONCERNING THE VESSEL. The Vessel complies, in all material respects, with all applicable laws and all applicable regulations thereunder. The Vessel is (i) covered by hull and machinery, protection and indemnity and excess liability insurance in accordance with the requirements of the Vessel Mortgage, and (ii) operated and maintained as a vessel in accordance in all material respects with all applicable laws and regulations. The Vessel is maintained and operated in compliance, in all material respects, with all applicable Environmental Laws. 6. AFFIRMATIVE COVENANTS OF THE BORROWER AND THE GUARANTORS. The Borrower and the Guarantors covenant and agree that, so long as the Loan or the Note is Outstanding: 6.1 PUNCTUAL PAYMENT. The Borrower will duly and punctually pay or cause to be paid the principal and interest on the Loan in accordance with the terms of this Loan Agreement and the Note. 6.2 MAINTENANCE OF OFFICE. The Borrower and each of the Guarantors will maintain its chief executive office at those locations listed on Schedule 6.2, or at such other place in the United States of America as the Borrower or the Guarantors shall designate upon written notice to the Lender, where notices, presentations and demands to or upon the Borrower and the Guarantors in respect of the Loan Documents may be given or made. 6.3 RECORDS AND ACCOUNTS. The Borrower and each of the Guarantors will (a) keep true and accurate records and books of account in which full, true and correct entries will be made in accordance with GAAP and (b) maintain adequate accounts and reserves for all taxes (including income taxes), depreciation, depletion, obsolescence and amortization of its properties contingencies, and other reserves. 6.4 FINANCIAL STATEMENTS, CERTIFICATES AND INFORMATION. The Borrower will cause to be delivered to the Lender: (a) as soon as practicable, but in any event not later than ninety (90) days after the end of each fiscal year of Moran, the consolidated balance sheet of Moran and its subsidiaries as at the end of such year, and the related consolidated statements of income and of cash flow for such year, each setting forth in comparative form the figures for the previous fiscal year, all such statements to be in reasonable detail, prepared in accordance with GAAP, and certified without qualification by Price Waterhouse LLP or by other independent certified public - 24 - accountants satisfactory to the Lender, together with a written statement from such accountants to the effect that they have read a copy of this Loan Agreement, and that, in making the examination necessary to said certification, they have obtained no knowledge of any Default or Event of Default, or, if such accountants shall have obtained knowledge of any then existing Default or Event of Default they shall disclose in such statement any such Default or Event of Default; PROVIDED that such accountants shall not be liable to the Lender for failure to obtain knowledge of any Default or Event of Default; (b) as soon as practicable, but in any event not later than forty-five (45) days after the end of each of the fiscal quarters of Moran, a copy of the unaudited consolidated balance sheet of Moran and its subsidiaries as at the end of such quarter, and the related consolidated statements of income and cash flow for the portion of Moran's fiscal year then elapsed, all in reasonable detail and prepared in accordance with GAAP, together with a certification by the principal financial or accounting officer of Moran that the information contained in such financial statements fairly presents the financial position of Moran and its consolidated subsidiaries on the date thereof (subject to year-end adjustments); (c) as soon as practicable, but in any event not later than one hundred twenty (120) days after the end of each fiscal year, the annual budget for Moran and its consolidated subsidiaries for the next succeeding fiscal year, such annual budget to be set forth in reasonable detail; (d) simultaneously with the delivery of the financial statements referred to in subsections (a) and (b) above, a statement certified by the principal financial or accounting officer of Moran (the "Compliance Certificate"), substantially in the form of Exhibit C hereto and setting forth in reasonable detail computations evidencing compliance with the covenants contained in Section 8 and (if applicable) reconciliations to reflect changes in GAAP since the Balance Sheet Date; (e) contemporaneously with the filing or mailing thereof, copies of all material of a financial nature filed with the Securities and Exchange Commission or sent to the stockholders of the Borrower or any of the Guarantors; and (f) from time to time such other financial data and information (including accountants' management letters) as the Lender may reasonably request. 6.5 NOTICES. 6.5.1. DEFAULTS. The Borrower will promptly notify the Lender in writing of the occurrence of any Default or Event of Default. If any Person shall give any notice or take any other action in respect of a claimed default (whether or not constituting an Event of Default) under this Loan Agreement, the Note, or any other note, evidence of indebtedness, indenture or other obligation to which or with respect to which the Borrower or the Guarantors are a party or obligor, whether as principal or surety, the Borrower or such Guarantor shall forthwith give written notice thereof to the Lender, describing the notice or action and the nature of the claimed default. 6.5.2. ENVIRONMENTAL EVENTS. The Borrower and the Guarantors will promptly give notice to the Lender (a) of any violation of any Environmental Law that the Borrower or any Guarantor reports in writing or that is reportable by such Person in writing (or for which any written report supplemental to any oral report is made) to any federal, state or local environmental agency and (b) upon becoming aware thereof, of any inquiry, proceeding, investigation, or other action, including a notice from any agency of potential environmental liability, or any federal, state or local environmental agency or board, that, in each instance, relates to the Vessel or would reasonably be expected to materially adversely affect the respective assets, liabilities, financial conditions or operations of the Borrower and the Guarantors and their subsidiaries on a consolidated basis, or the Agent's, BKB's, or the Lender's security interests pursuant to the Vessel Mortgage. - 25 - 6.5.3. NOTIFICATION OF CLAIMS AGAINST COLLATERAL. The Borrower and each Guarantor will, immediately upon becoming aware thereof, notify the Lender in writing of any setoff, claims, withholdings or other defenses to which any of the Collateral, or the Agent's, BKB's, or the Lender's rights with respect to the Collateral, are subject. 6.5.4. NOTICE OF LITIGATION AND JUDGMENTS. The Borrower and the Guarantors will give notice to the Lender in writing within fifteen (15) days after becoming aware of any litigation or proceedings threatened in writing or any pending litigation and proceedings affecting the Borrower or the Guarantors or to which the Borrower or the Guarantors is or becomes a party involving an uninsured claim against the Borrower or the Guarantors that would reasonably be expected to have a materially adverse effect on the respective businesses, assets or financial conditions of the Borrower, the Guarantors and their subsidiaries on a consolidated basis, stating the nature and status of such litigation or proceedings. The Borrower and the Guarantors will give notice to the Lender, in writing, in form and detail satisfactory to the Lender, within ten (10) days after any judgment not covered by insurance, final or otherwise, against the Borrower or the Guarantors in an amount in excess of $1,500,000. 6.6. CORPORATE EXISTENCE; MAINTENANCE OF PROPERTIES. The Borrower and each of the Guarantors will do or cause to be done all things necessary to preserve and keep in full force and effect their respective corporate existence, rights and franchises. Each (a) will cause all of its properties used or useful in the conduct of its business to be maintained and kept in good condition, repair and working order, subject to normal wear and tear, and supplied with all necessary equipment, (b) will cause to be made all necessary repairs, renewals, replacements, betterments and improvements thereof, all as in the judgment of the Borrower or the Guarantors, as the case may be, may be necessary so that the business carried on in connection therewith may be properly and advantageously conducted at all times, and (c) will continue to engage primarily in the businesses now conducted by them and in related businesses; PROVIDED that nothing in this Section 6.6 shall prevent the Borrower or the Guarantors from discontinuing the operation and maintenance of any of their respective properties if such discontinuance is, in the judgment of the Borrower or the Guarantors, as the case may be, desirable in the conduct of its or their business and does not in the aggregate materially adversely affect the business of Moran and its Restricted Subsidiaries or the ability of the Borrower or of the Guarantors to perform their obligations hereunder and under the other Loan Documents. 6.7 INSURANCE. The Borrower and each of the Guarantors will maintain with financially sound and reputable insurers insurance with respect to their respective properties and businesses against such casualties and contingencies as shall be in accordance with general practices of businesses engaged in similar activities in similar geographic areas. 6.8 TAXES. The Borrower and each of the Guarantors will duly pay and discharge, or cause to be paid and discharged, before the same shall become overdue, all federal taxes, charges and assessments and, except where the failure to pay could not reasonably be expected to have a material adverse effect on the business, assets or financial condition of Moran and its Restricted Subsidiaries, taken as a whole, all other taxes, assessments and other governmental charges, in each case imposed upon each of them and their respective real properties, sales and activities, or any part thereof, or upon the income or profits therefrom, as well as all claims for labor, materials, or supplies that if unpaid might by law become a lien or charge upon any of their respective property; PROVIDED that any such tax, assessment, charge, levy or claim need not be paid if the validity or amount thereof shall currently be contested in good faith by appropriate proceedings and if the Borrower or the Guarantors shall have set aside on its books adequate reserves with respect thereto; and PROVIDED FURTHER that the Borrower and the Guarantors will pay all such taxes, assessments, charges, levies or claims forthwith upon the commencement of proceedings to foreclose any lien that may have attached as security therefor. 6.9 INSPECTION OF PROPERTIES AND BOOKS, ETC. 6.9.1. GENERAL. The Borrower and each of the Guarantors shall permit the Lender or any of its designated representatives, to visit and inspect any of the properties of the Borrower or the Guarantors, including, without limitation, the Vessel, to examine the books of account - 26 - of the Borrower or the Guarantors (and to make copies thereof and extracts therefrom), and to discuss the affairs, finances and accounts of the Borrower or the Guarantors with, and to be advised as to the same by, its and their officers, all at such reasonable times and intervals as the Lender may reasonably request. 6.9.2. COMMUNICATION WITH ACCOUNTANTS. The Borrower and the Guarantors authorize the Lender to, in the presence of representatives of the Borrower or the Guarantors, communicate directly with the Guarantors' and the Borrower's independent certified public accountants and authorize such accountants to disclose to the Lender any and all financial statements and other supporting financial documents and schedules including copies of any management letter with respect to the business, financial condition and other affairs of the Borrower or the Guarantors. At the request of the Lender, the Borrower and the Guarantors shall deliver a letter addressed to such accountants instructing them to comply with the provisions of this Section 6.9.2. 6.10 COMPLIANCE WITH LAWS, CONTRACTS, LICENSES, AND PERMITS. The Borrower and each of the Guarantors will comply with (a) the applicable laws and regulations wherever its business is conducted, including all Environmental Laws, except where the failure to comply would not reasonably be expected to have a material adverse effect on the Vessel or on the business, assets or financial condition of Moran and its Restricted Subsidiaries taken as a whole, (b) the provisions of their respective charter documents and by-laws, (c) all agreements and instruments by which they or any of their respective properties may be bound, except where the failure to comply would not reasonably be expected to have a material adverse effect on the Vessel or the business, assets or financial condition of Moran and its Restricted Subsidiaries taken as a whole and (d) all applicable decrees, orders, and judgments, except where the failure to comply would not reasonably be expected to have a material adverse effect on the Vessel or the business, assets or financial condition of Moran and its Restricted Subsidiaries taken as a whole. If at any time while any portion of the Loan is Outstanding, any authorization, consent, approval, permit or license from any officer, agency or instrumentality of any government shall become necessary or required in order that the Borrower or the Guarantors may fulfill any of their obligations hereunder, the Borrower and the Guarantors will immediately take or cause to be taken all reasonable steps within the power of the Borrower and the Guarantors to obtain such authorization, consent, approval, permit or license and furnish the Lender with evidence thereof. 6.11 [INTENTIONALLY OMITTED]. 6.12 APPROVALS. The Borrower will give all such notices to, and take all such other actions with respect to, each Governmental Authority as may be required in order to comply with all applicable Requirements in the use and operation of the Vessel. 6.13 CONCERNING THE VESSEL. The Borrower shall at all times operate the Vessel in compliance in all material respects with all Requirements and in compliance in all material respects with all rules, regulations and requirements of the American Bureau of Shipping or any other classification society selected by the Borrower and reasonably acceptable to the Lender. Upon the Lender's request, the Borrower shall furnish to the Lender a copy of the certificate of such classification society covering the Vessel no later than thirty (30) days after the end of each fiscal year of the Borrower. 6.14 FURTHER ASSURANCES. The Borrower and each of the Guarantors will cooperate with the Lender and execute such further instruments and documents as the Lender shall reasonably request to carry out to its satisfaction the transactions contemplated by this Loan Agreement and the other Loan Documents. 7. CERTAIN NEGATIVE COVENANTS OF THE BORROWER AND THE GUARANTORS. The Borrower and the Guarantors covenant and agree that, so long as any portion of the Term Loan is Outstanding: - 27 - 7.1 RESTRICTIONS ON INDEBTEDNESS. Neither the Borrower nor the Guarantors will create, incur, assume, guarantee or be or remain liable, contingently or otherwise, with respect to any Indebtedness other than: (a) Indebtedness to the Lender arising under any of the Loan Documents; (b) Indebtedness of the Borrower or the Guarantors otherwise permitted under the Parent Credit Agreement or the Senior Indenture; and (c) Indebtedness existing on the date of this Loan Agreement and listed and described on Schedule 7.1 hereto and renewals, extensions or refinancings thereof, provided that such renewals, extensions or refinancings shall not increase the aggregate amount of such Indebtedness, materially increase the amount of collateral securing such Indebtedness or materially change the terms thereof. 7.2 RESTRICTIONS ON LIENS. Neither the Borrower nor the Guarantors will (a) create or incur or suffer to be created or incurred or to exist any lien, encumbrance, mortgage, pledge, charge, restriction or other security interest of any kind upon any of its property or assets of any character whether now owned or hereafter acquired, or upon the income or profits therefrom; (b) transfer any of such property or assets or the income or profits therefrom for the purpose of subjecting the same to the payment of Indebtedness or performance of any other obligation in priority to payment of its general creditors; (c) except as set forth in Section 7.1, acquire, or agree or have an option to acquire, any property or assets upon conditional sale or other title retention or purchase money security agreement, device or arrangement; (d) suffer to exist for a period of more than sixty (60) days after the same shall have been incurred any Indebtedness or claim or demand against it that if unpaid might by law or upon bankruptcy or insolvency, or otherwise, be given any priority whatsoever over its general creditors; or (e) except as permitted under the Parent Credit Agreement, sell, assign, pledge or otherwise transfer any accounts, contract rights, general intangibles, chattel paper or instruments, with or without recourse; PROVIDED that the Borrower and the Guarantors may create or incur or suffer to be created or incurred or to exist: (a) currently outstanding liens listed on Schedule 7.2 hereto and renewals or extensions thereof (including any liens arising under a refinancing of the type described in Section 7.1(c) hereof); (b) liens on property of the Borrower and the Guarantors (other than the Vessel) otherwise permitted under the Parent Credit Agreement or the Senior Indenture; and (c) liens in favor of the Agent, BKB and the Lender under the Loan Documents. 7.3 RESTRICTIONS ON INVESTMENTS. Neither the Borrower nor the Guarantors will make or permit to exist or to remain outstanding any Investment except Investments in: (a) Investments existing on the date hereof and listed on Schedule 7.3 hereto; (b) Investments consisting of the Guaranty; (c) Investments of the Guarantors and the Borrower otherwise permitted under the Parent Credit Agreement or the Senior Indenture; and (d) Investments of the Borrower and the Guarantors constituting the repurchase of the promissory notes issued by Moran pursuant to the Senior Indenture, provided that, the aggregate amount of Investments permitted pursuant to this Section 7.3(d) in any one fiscal year - 28 - plus the aggregate amount of Restricted Prepayments permitted pursuant to Section 7.4.2 in any one fiscal year shall not exceed the greater of (i) $3,000,000 and (ii) the amount of such Investments as is permitted under the Parent Credit Agreement. 7.4 RESTRICTED PREPAYMENTS. Neither the Borrower nor any of the Guarantors shall make any Restricted Prepayment constituting the repurchase of the promissory notes issued by Moran pursuant to the Senior Indenture if, after making such Restricted Prepayment and after giving effect thereto, the aggregate amount of Restricted Prepayments permitted pursuant to this Section 7.4.2 made during any one fiscal year plus the aggregate amount of Investments made during such fiscal year and permitted pursuant to Section 7.3(d) shall exceed the greater of (i) $3,000,000 and (ii) the amount of Restricted Prepayments permitted pursuant to the Parent Credit Agreement; provided, however, that the foregoing shall not limit the ability of the Borrower and the Guarantors to effect repurchases of such notes under Sections 5.10, 5.15, 5.18 or Article 12 of the Senior Indenture. 7.5 MERGER; CONSOLIDATION; SUBSIDIARIES. 7.5.1. MERGERS AND ACQUISITIONS. The Borrower shall not (i) become a party to any merger or consolidation, except as otherwise permitted under the Parent Credit Agreement or the Senior Indenture, provided that the perfected first priority security interest of the Agent in the Vessel continues after such merger or consolidation or (ii) agree to or effect any asset acquisition or stock acquisition (other than the acquisition of assets in the ordinary course of business consistent with past practices or except as otherwise permitted under the Parent Credit Agreement or the Senior Indenture). None of the Guarantors will become a party to any merger or consolidation, or agree to or effect any asset acquisition or stock acquisition, except as permitted under the Parent Credit Agreement or the Senior Indenture. 7.5.2. DISPOSITION OF ASSETS. The Borrower will not become a party to or agree to or effect any disposition of assets other than the disposition of assets other than the Vessel to the Guarantors or in the ordinary course of business; provided that, with respect to any assets or Collateral other than the Vessel, the Borrower may transfer assets in accordance with the Parent Credit Agreement or the Senior Indenture. None of the Guarantors will become a party to or agree to or effect any disposition of assets, except the disposition of assets to the other Guarantors or the Borrower and except as permitted under the Parent Credit Agreement or the Senior Indenture. 7.6 SALE AND LEASEBACK. Except as permitted under the Parent Credit Agreement or the Senior Indenture, neither the Borrower nor the Guarantors will enter into any arrangement, directly or indirectly, whereby the Borrower or any Guarantor shall sell or transfer any property owned by it in order then or thereafter to lease such property or lease other property that the Borrower or any Guarantor intends to use for substantially the same purpose as the property being sold or transferred. 7.7 COMPLIANCE WITH ENVIRONMENTAL LAWS. The Borrower will not (a) use the Vessel for the handling, processing, storage or disposal of Hazardous Substances (other than in compliance with all applicable Environmental Laws), (b) cause or permit to be located on the Vessel any receptacle for Hazardous Substances (other than in compliance with all applicable Environmental Laws), (c) generate any Hazardous Substances on the Vessel (other than in compliance with all applicable Environmental Laws), (d) conduct any activity on the Vessel or use the Vessel in any manner so as to cause a release (i.e. releasing, spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, disposing or dumping) or threatened release of Hazardous Substances on or from the Vessel which would reasonably be expected to have a material adverse effect on the Vessel or the business, assets or financial condition of the Borrower or Moran and its Restricted Subsidiaries taken as a whole, or (e) otherwise conduct any activity on the Vessel or use the Vessel in any manner that would violate any Environmental Law or bring the Vessel in violation of any Environmental Law, in each case if such violation would have a material adverse effect on Vessel or the business, assets or financial condition of the Moran and its Restricted Subsidiaries taken as a whole. 7.8 [INTENTIONALLY OMITTED]. - 29 - 7.9 CHANGE OF PRINCIPAL PLACE OF BUSINESS OR CORPORATE NAME. Neither the Borrower nor any of the Guarantors will change its principal place of business or corporate name unless it shall have (a) given the Lender at least thirty (30) days' advance written notice of such change, and (b) filed in all necessary jurisdictions such documents as may be necessary to continue without impairment or interruption the perfection and priority of the liens on the Collateral in favor of the Agent, BKB and the Lender pursuant to the Security Documents. 7.10 FISCAL YEAR. Neither the Guarantors nor the Borrower will change its fiscal year from that set forth in Section 5.21 hereof. 7.11 TRANSACTIONS WITH AFFILIATES. Neither the Borrower nor the Guarantors will (a) engage in any transaction with any Affiliate on terms more favorable to such Affiliate than would have been obtainable on an arms'-length basis, considered from the perspective of the Borrower or such Guarantor or (b) pay, or enter into any agreement requiring the Borrower or such Guarantor to pay, salary or bonus or other compensation payments to any officer or management employee of the Borrower or such Guarantor or holder of any title or office, in an amount in excess of reasonable compensation paid for similar service by similar businesses similarly situated, provided that, the Borrower and the Guarantors shall be permitted to engage in those transactions permitted under the Parent Credit Agreement. 7.12 BUSINESS ACTIVITIES. Neither the Borrower nor any of the Guarantors will use the Vessel in any business activity other than the general tug business. 7.13 NEGATIVE PLEDGE. The Borrower will not enter into any agreement limiting such Person's right to grant the Agent, BKB, or the Lender a lien or security interest in the Collateral. 7.14 ADDITIONAL GUARANTORS. Neither the Borrower nor any of the Guarantors may acquire or form any Subsidiary after the Effective Date unless (a) such Subsidiary, if designated as a Restricted Subsidiary, shall have duly executed and delivered to the Agent and the Banks, on the date of such acquisition or formation, a guaranty substantially in the form of Exhibit B attached hereto, and all other instruments and documents, including, without limitation, corporate authority documents and legal opinions, as the Agent may reasonably request in connection with the delivery of such guaranty, and (b) Moran shall have delivered to the Agent, on the date of such acquisition or formation, an updated Schedule 5.18. 7.15 OTHER DEBT AGREEMENTS. Moran will not (i) amend, supplement or otherwise modify the terms of any of the Senior Indenture or the Senior Notes or any document or instrument pertaining to the terms of any of the foregoing so as to (a) shorten the maturity or the weighted average life to maturity of the Senior Notes, (b) increase the interest rate payable on the Senior Notes, (c) change the date or amount of any scheduled payment of principal of or interest on the Senior Notes, or (d) make the covenants contained in the Senior Indenture and the Senior Notes more onerous to Moran or add covenants thereto, or (ii) give any notice of optional redemption or defeasance or optional prepayment or offer to repurchase, or make, either directly or indirectly, any payment of principal of or interest on or in redemption, defeasance, retirement or repurchase of any of the Senior Notes, except (i) for the regularly scheduled payments of principal and interest required by the terms of such instruments and the Senior Indenture, (ii) the optional redemption of the Senior Notes with the net proceeds of any public offering of common stock of Moran in accordance with the terms of the Senior Indenture and (iii) as expressly permitted under Section 7.4 hereunder; provided, that nothing contained in this Section 7.15 shall prevent Moran from refinancing or replacing the Parent Credit Agreement or the Senior Notes so long as the requirements of Section 2.3(c) are satisfied. 8. FINANCIAL COVENANTS OF THE BORROWER AND THE GUARANTORS. 8.1 DEBT SERVICE. Neither the Borrower nor the Guarantors will permit the Debt Service Coverage Ratio, calculated as of the end of each fiscal quarter of Moran, to be less than 1.35:1.00 as of any fiscal quarter end. - 30 - 8.2 LEVERAGE. Neither the Borrower nor the Guarantors will permit the Leverage Ratio, calculated as of the end of each fiscal quarter of Moran, to be greater than 6.00:1.00 as of any fiscal quarter end. 9. CONDITIONS TO EFFECTIVE DATE. The obligations of the Lender to amend and restate the Existing Loan Agreement as herein provided shall be subject to the satisfaction of the following conditions precedent on or prior to December 12, 1997: 9.1 LOAN DOCUMENTS. Each of the Loan Documents shall have been duly executed and delivered by the respective parties thereto, shall be in full force and effect and shall be in form and substance satisfactory to the Lender. 9.2 CERTIFIED COPIES OF CHARTER DOCUMENTS. The Lender shall have received from each of the Guarantors and the Borrower a copy, certified by a duly authorized officer of each such Person to be true and complete on the Effective Date, of (a) its charter or other incorporation documents as in effect on such date of certification, and (b) its by-laws as in effect on such date. 9.3 CORPORATE ACTION. All corporate action necessary for the valid execution, delivery and performance by the Guarantors and the Borrower of this Loan Agreement and the other Loan Documents to which such Person is or is to become a party shall have been duly and effectively taken, and evidence thereof satisfactory to the Lender shall have been provided to the Lender. 9.4 INCUMBENCY CERTIFICATE. The Lender shall have received from the Guarantors and the Borrower an incumbency certificate, dated as of the Effective Date, signed by a duly authorized officer of each such Person and giving the name and bearing a specimen signature of each individual who shall be authorized: (a) to sign, in the name and on behalf of each of such Person the Loan Documents to which each such Person is or is to become a party; (b) in the case of the Borrower, to make Conversion Requests; and (c) to give notices and to take other action on its behalf under the Loan Documents. 9.5 VALIDITY OF LIENS. The Vessel Mortgage shall be effective to create in favor of the Agent, BKB or, as the case may be, the Lender a legal, valid and enforceable first preferred (except for Permitted Liens) ship mortgage on the Vessel. All filings, recordings, deliveries of instruments and other actions necessary or desirable in the opinion of the Lender to protect and preserve such security interests shall have been duly effected. The Lender shall have received evidence thereof in form and substance satisfactory to the Lender. 9.6 PERFECTION CERTIFICATE AND UCC SEARCH RESULTS. The Lender shall have received from the Borrower a completed and fully executed Perfection Certificate and the results of UCC searches, indicating no liens other than Permitted Liens and otherwise in form and substance satisfactory to the Lender. 9.7 CERTIFICATES OF INSURANCE. The Lender shall have received a certificate of insurance from an independent insurance broker dated on or within fifteen days of the Effective Date, identifying insurers, types of insurance, insurance limits, and policy terms, and otherwise describing the insurance obtained in accordance with the provisions of the Vessel Mortgage. 9.8 SOLVENCY CERTIFICATE. The Lender shall have received an officer's certificate of the Borrower and the Guarantors dated as of the Effective Date as to the solvency of the Borrower and the Guarantors following the consummation of the transactions contemplated herein and in form and substance satisfactory to the Lender. - 31 - 9.9 OPINION OF COUNSEL. The Lender shall have received a legal opinion addressed to the Lender, dated as of the Effective Date, in form and substance satisfactory to the Lender, from Finn Dixon & Herling LLP, counsel to the Borrower and the Guarantors. 10. EVENTS OF DEFAULT; ACCELERATION; ETC. 10.1 EVENTS OF DEFAULT AND ACCELERATION. If any of the following events ("Events of Default" or, if the giving of notice or the lapse of time or both is required, then, prior to such notice or lapse of time, "Defaults") shall occur: (a) the Borrower shall fail to pay any principal of, or interest on, the Term Loan or any other sums due hereunder or under the other Loan Documents, when the same shall become due and payable, whether at the stated date of maturity or any accelerated date of maturity or at any other date fixed for payment; (b) the Borrower or any Guarantor shall fail to comply with any of its covenants contained in Section 6 (other than those specified in Section 10.1(c)), Section 7 or Section 8 hereof; (c) the Borrower or any Guarantor shall fail to comply with any of its covenants contained in Sections 6.3 through 6.5 hereof, the second sentence of Section 6.6 hereof, or Sections 6.8 through 6.14 hereof and such failure shall continue for ten (10) days; (d) the Borrower or any Guarantor shall fail to perform any term, covenant or agreement contained herein or in any of the other Loan Documents (other than those specified elsewhere in this Section 10) for fifteen (15) days after written notice of such failure has been given to the Borrower or such Guarantor by the Lender; (e) any representation or warranty of any Guarantor or the Borrower in this Loan Agreement, any of the other Loan Documents, or in any other document or instrument delivered pursuant to or in connection with this Loan Agreement or any other Loan Document shall prove to have been false in any material respect upon the date when made; (f) any Guarantor or the Borrower shall fail to pay at maturity, or within any applicable period of grace, any obligation for borrowed money or credit received or in respect of any Capitalized Leases in excess, individually or in the aggregate, of $3,000,000, or fail to observe or perform any material term, covenant or agreement contained in any agreement by which it is bound, evidencing or securing borrowed money or credit received or in respect of any Capitalized Leases in excess, individually or in the aggregate, of $3,000,000 for such period of time as would permit (assuming the giving of appropriate notice if required) the holder or holders thereof or of any obligations issued thereunder to accelerate the maturity thereof provided that if the Borrower or any of the Guarantors fails to perform the covenant set forth in Section 5.18 of the Senior Indenture, such failure shall not constitute an Event of Default under this clause (f) if the Borrower or such Guarantor and the Holders (as defined in the Senior Indenture) - 32 - are negotiating a waiver of such default under the Senior Indenture diligently and in good faith and such waiver is obtained or such default is cured within thirty (30) days; (g) any Guarantor or the Borrower shall make an assignment for the benefit of creditors, or admit in writing its inability to pay or generally fail to pay its debts as they mature or become due, or shall petition or apply for the appointment of a trustee or other custodian, liquidator or receiver of any Guarantor or the Borrower or of any substantial part of the assets of any Guarantor or the Borrower or shall commence any case or other proceeding relating to any Guarantor or the Borrower under the bankruptcy, reorganization, arrangement, insolvency, readjustment of debt, dissolution or liquidation or similar law of any jurisdiction, now or hereafter in effect, or shall take any action to authorize or in furtherance of any of the foregoing, or if any such petition or application shall be filed or any such case or other proceeding shall be commenced against any Guarantor or the Borrower and any Guarantor or the Borrower shall indicate its approval thereof, consent thereto or acquiescence therein or such petition or application shall not have been dismissed within forty-five (45) days following the filing thereof; (h) a decree or order is entered appointing any such trustee, custodian, liquidator or receiver or adjudicating any Guarantor or the Borrower bankrupt or insolvent, or approving a petition in any such case or other proceeding, or a decree or order for relief is entered in respect of any Guarantor or the Borrower in an involuntary case under federal bankruptcy laws as now or hereafter constituted; (i) there shall remain in force, undischarged, unsatisfied and unstayed, for more than thirty days, whether or not consecutive, any final judgment against the Guarantors or the Borrower that, with other outstanding final judgments, undischarged, against the Guarantors and the Borrower exceeds in the aggregate $3,000,000; (j) if any one or more of the Loan Documents shall be cancelled, terminated, revoked or rescinded or the Agent's, BKB's, or the Lender's security interests, mortgages or liens in the Vessel shall cease to be perfected, or shall cease to have the priority contemplated by the Vessel Mortgage, in each case otherwise than in accordance with the terms thereof or with the express prior written agreement, consent or approval of the Lender, or any action at law, suit or in equity or other legal proceeding to cancel, revoke or rescind any of the Loan Documents shall be commenced by or on behalf of any of the Guarantors or the Borrower party thereto or any of their respective stockholders, or any court or any other governmental or regulatory authority or agency of competent jurisdiction shall make a determination that, or issue a judgment, order, decree or ruling to the effect that, any one or more of the Loan Documents is illegal, invalid or unenforceable in accordance with the terms thereof; (k) with respect to any Guaranteed Pension Plan, an ERISA Reportable Event shall have occurred and the Lender shall have determined in its reasonable discretion that such event reasonably would be expected to result in liability of the Borrower or any of the - 33 - Guarantors to the PBGC or such Guaranteed Pension Plan in an aggregate amount exceeding $1,000,000 and such event in the circumstances occurring reasonably could constitute grounds for the termination of such Guaranteed Pension Plan by the PBGC or for the appointment by the appropriate United States District Court of a trustee to administer such Guaranteed Pension Plan; or a trustee shall have been appointed by the United States District Court to administer such Guaranteed Pension Plan; or the PBGC shall have instituted proceedings to terminate such Guaranteed Pension Plan; (l) any of the Guarantors or the Borrower shall be enjoined, restrained or in any way prevented by the order of any court or any administrative or regulatory agency from conducting any material part of its business and such order shall continue in effect for more than thirty (30) days; (m) there shall occur any material damage to, or loss, theft or destruction of, the Vessel or any material assets of the Borrower, whether or not insured, or any strike, lockout, labor dispute, embargo, condemnation, act of God or public enemy, or other casualty, which in any such case causes, for more than thirty (30) consecutive days, the cessation or substantial curtailment of revenue producing activities at any facility of any of the Guarantors or the Borrower if such event or circumstance is not covered by business interruption insurance and would reasonably be expected to have a material adverse effect on the business or financial condition of Moran and its Restricted Subsidiaries on a consolidated basis; (n) there shall occur the loss, suspension or revocation of, or failure to renew, any license or permit now held or hereafter acquired by any of the Guarantors or the Borrower if such loss, suspension, revocation or failure to renew would reasonably be expected to have a material adverse effect on the business or financial condition of Moran and its Restricted Subsidiaries on a consolidated basis; (o) any of the Guarantors or the Borrower shall be indicted for a state or federal crime, or any civil or criminal action shall otherwise have been brought or threatened against any of the Guarantors or the Borrower by any Governmental Authority, a punishment for which in any such case could include the forfeiture of any assets of such Guarantor or the Borrower having a fair market value in excess of $1,500,000; (p) Moran shall at any time, legally or beneficially own, directly or indirectly, less than one hundred percent (100%) of the common stock of the Borrower, as adjusted pursuant to any stock split, stock dividend or recapitalization or reclassification of the capital of such corporation; (q) the Lender shall have received a report by the American Bureau of Shipping or any other classification society, or by any marine engineer or surveyor following an inspection at the request of the Lender, that the Vessel is not in compliance with the requirements of applicable law for use as intended and action shall not have been commenced - 34 - within fifteen (15) days after written notice thereof shall have been given by the Lender to the Borrower and such corrective action shall not be diligently prosecuted or completed in a manner and time schedule consistent with industry standards; or (r) any "Event of Default" under and as defined in the Parent Credit Agreement shall have occurred and be continuing or any "Default" under and as defined in the Parent Credit Agreement shall have occurred and be continuing; provided that until such "Default" under the Parent Credit Agreement constitutes an "Event of Default" thereunder, it shall constitute a Default, but not an Event of Default hereunder; then, and in any such event, so long as the same may be continuing, the Lender may, by notice in writing to the Borrower declare all amounts owing with respect to this Loan Agreement, the Note and the other Loan Documents to be, and they shall thereupon forthwith become, immediately due and payable without presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived by the Borrower and the Guarantors; PROVIDED that in the event of any Event of Default specified in Section 10.1(g) or Section 10.1(h) hereof, all such amounts shall become immediately due and payable automatically and without any requirement of notice from the Lender. 10.2 REMEDIES. In case any one or more of the Events of Default shall have occurred and be continuing, and whether or not the Lender shall have accelerated the maturity of the Loan pursuant to Section 10.1 hereof, the Lender, if owed any amount with respect to the Loan, may, proceed to protect and enforce its rights by suit in equity, action at law or other appropriate proceeding, whether for the specific performance of any covenant or agreement contained in this Loan Agreement and the other Loan Documents or any instrument pursuant to which the Obligations are evidenced, including as permitted by applicable law the obtaining of the ex parte appointment of a receiver, and, if such amount shall have become due, by declaration or otherwise, proceed to enforce the payment thereof or any other legal or equitable right of the Lender. No remedy herein conferred upon the Lender or on any other holder of the Note is intended to be exclusive of any other remedy and each and every remedy shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing at law or in equity or by statute or any other provision of law. 10.3 DISTRIBUTION OF COLLATERAL PROCEEDS. In the event that, following the occurrence or during the continuance of any Default or Event of Default, the Lender receives any monies in connection with the enforcement of any of the Security Documents, or otherwise with respect to the realization upon any of the Collateral, such monies shall be distributed for application as follows: (a) First, to the payment of, or (as the case may be) the reimbursement of the Agent, BKB and the Lender for or in respect of all reasonable costs, expenses, disbursements and losses which shall have been incurred or sustained by the Agent, BKB and the Lender in connection with the collection of such monies by the Agent, BKB and the Lender, for the exercise, protection or enforcement by the Agent, BKB and the Lender of all or any of the rights, - 35 - remedies, powers and privileges of the Agent, BKB and the Lender under this Loan Agreement or any of the other Loan Documents or in respect of the Collateral, the Obligations and to support the provision of adequate indemnity to the Agent, BKB and the Lender against all taxes or liens which by law shall have, or may have, priority over the rights of the Agent, BKB and the Lender to such monies; (b) Second, to all other Obligations in such order or preference as the Agent, BKB and the Lender may determine; PROVIDED, HOWEVER, that the Agent, BKB and the Lender may in their discretion make proper allowance to take into account any Obligations not then due and payable; (c) Third, upon payment and satisfaction in full or other provisions for payment in full satisfactory to the Agent, BKB and the Lender of all of the Obligations, to the payment of any obligations required to be paid pursuant to Section 9-504(1)(c) of the Uniform Commercial Code of the Commonwealth of Massachusetts; and (d) Fourth, the excess, if any, shall be returned to the Borrower or to such other Persons as are entitled thereto. 11. SETOFF. Regardless of the adequacy of any collateral, during the continuance of any Event of Default, any deposits or other sums credited by or due from the Lender to the Borrower or any of the Guarantors and any securities or other property of the Borrower or any of the Guarantors in the possession of BKB or the Lender may be applied to or set off by BKB or the Lender against the payment of Obligations and any and all other liabilities, direct, or indirect, absolute or contingent, due or to become due, now existing or hereafter arising, of the Borrower or any of the Guarantors to BKB or the Lender. 12. EXPENSES. The Borrower and the Guarantors agree to pay (a) the reasonable costs of producing and reproducing this Loan Agreement, the other Loan Documents and the other agreements and instruments mentioned herein, (b) any taxes (including any interest and penalties in respect thereto) payable by the Lender (other than taxes based upon the Lender's revenue or net income) on or with respect to the transactions contemplated by this Loan Agreement (the Borrower and the Guarantors hereby agreeing to indemnify the Lender with respect thereto), (c) the reasonable fees, expenses and disbursements of the Lender's Special Counsel and any local counsel to the Lender incurred in connection with the preparation, administration or interpretation of the Loan Documents and the other instruments mentioned herein, each closing hereunder, and any amendments, modifications, approvals, consents or waivers hereto or hereunder, (d) the fees, expenses and disbursements incurred by the Lender in connection with the preparation, administration or interpretation of the Loan Documents and the other instruments mentioned herein, (e) all reasonable out-of-pocket expenses (including without limitation reasonable attorneys' fees and costs, and reasonable consulting, accounting, appraisal, vessel appraisal, investment banking and similar professional fees and charges) incurred by the Lender in connection with (i) the enforcement of or preservation of rights under - 36 - any of the Loan Documents against the Borrower or the Guarantors or the administration thereof after the occurrence of a Default or Event of Default and (ii) any litigation, proceeding or dispute whether arising hereunder or otherwise, in any way related to the Lender's relationship with the Borrower or the Guarantors and (f) all reasonable fees, expenses and disbursements of the Lender incurred in connection with lien searches or mortgage recordings. The covenants of this Section 12 shall survive payment or satisfaction of payment of amounts owing with respect to the Note. 13. INDEMNIFICATION. The Borrower and the Guarantors agree to indemnify and hold harmless the Lender from and against any and all claims, actions and suits whether groundless or otherwise, and from and against any and all liabilities, losses, damages and expenses of every nature and character arising out of this Loan Agreement or any of the other Loan Documents or the transactions contemplated hereby including, without limitation, (a) any actual or proposed use by the Borrower of the proceeds of any of the Loan, (b) the Borrower or the Guarantors entering into or performing this Loan Agreement or any of the other Loan Documents or (c) with respect to the Borrower or the Guarantors and their respective properties and assets, the violation of any Environmental Law, the presence, disposal, escape, seepage, leakage, spillage, discharge, emission, release or threatened release of any Hazardous Substances or any action, suit, proceeding or investigation brought or threatened with respect to any Hazardous Substances (including, but not limited to claims with respect to wrongful death, personal injury or damage to property), in each case including, without limitation, the reasonable fees and disbursements of counsel incurred in connection with any such investigation, litigation or other proceeding. In litigation, or the preparation therefor, the Lender shall be entitled to select its own counsel and, in addition to the foregoing indemnity, the Borrower agrees to pay promptly the reasonable fees and expenses of such counsel. If, and to the extent that the obligations of the Borrower or the Guarantors under this Section 13 are unenforceable for any reason, the Borrower and the Guarantors hereby agree to make the maximum contribution to the payment in satisfaction of such obligations which is permissible under applicable law. The covenants contained in this Section 13 shall survive payment and satisfaction in full of the Obligations. 14. SURVIVAL OF COVENANTS, ETC. All covenants, agreements, representations and warranties made herein, in the Note, in any of the other Loan Documents or in any documents or other papers delivered by or on behalf of the Borrower or the Guarantors pursuant hereto shall be deemed to have been relied upon by the Lender, notwithstanding any investigation heretofore or hereafter made by it, and shall survive the amendment and restatement by the Lender of the Existing Loan Agreement, as herein contemplated, and shall continue in full force and effect so long as any amount due under this Loan Agreement or the Note or any of the other Loan Documents remains Outstanding, and for such further time as may be otherwise expressly specified in this Loan Agreement. All statements contained in any certificate or other paper delivered to the Lender at any time by or on behalf of any of the Guarantors or the Borrower pursuant hereto or in connection with the transactions contemplated hereby shall constitute representations and warranties by the Borrower or such Guarantor hereunder. - 37 - 15. ASSIGNMENT AND PARTICIPATION. 15.1 ASSIGNMENT BY THE LENDER. The Lender may assign to one or more banks all or a portion of its interests, rights and obligations under this Loan Agreement (including all or a portion of the Term Loan at the time owing to it, and the Note held by it), provided that the Borrower shall have given its prior written consent to such assignment, which consent will not be unreasonably withheld. Upon the request of the Lender, the Borrower and the Guarantors shall consent to the amendment of this Loan Agreement and the other Loan Documents in order to enable the Lender to make such assignments. 15.2 PARTICIPATIONS. The Lender may sell participations to one or more banks or other entities in all or a portion of the Lender's rights and obligations under this Loan Agreement and the other Loan Documents; provided that (a) the Borrower shall have given its prior written consent to such participation (except for participations to affiliates of the Lender), (b) each such participation shall be in an amount of not less than $1,000,000, (c) any such sale or participation shall not affect the rights and duties of the Lender hereunder to the Borrower, and (d) the only rights granted to the participant pursuant to such participation arrangements with respect to waivers, amendments or modifications of the Loan Documents shall be the rights to approve waivers, amendments or modifications that would reduce the principal of or the interest rate on the Term Loan, or extend any regularly scheduled payment date for principal or interest or release all or substantially all of the Collateral. 15.3 DISCLOSURE. The Borrower agrees that in addition to disclosures made in accordance with standard and customary banking practices the Lender may disclose confidential information obtained by the Lender in connection with this Loan Agreement to assignees and participants and potential assignees and potential participants hereunder; provided that such assignees or participants or potential assignees or potential participants shall agree in writing (a) to treat in confidence such information, (b) not to disclose such information to a third party and (c) not to make use of such information for purposes of transactions unrelated to such contemplated assignment or participation. 15.4 MISCELLANEOUS ASSIGNMENT PROVISIONS. Anything contained in this Section 17 to the contrary notwithstanding, the Lender may at any time pledge all or any portion of its interest and rights under this Loan Agreement (including all or any portion of the Note) to any of the twelve Federal Reserve Banks organized under Section 4 of the Federal Reserve Act, 12 U.S.C. Section 341. No such pledge or the enforcement thereof shall release the Lender from its obligations hereunder or under any of the other Loan Documents. 15.5 ASSIGNMENT BY BORROWER; GUARANTORS. Neither the Borrower nor any of the Guarantors shall assign or transfer any of their rights or obligations under any of the Loan Documents; provided, however, that nothing contained herein shall limit the ability of the Borrower and the Guarantors to effect transactions in compliance with Section 7.5 hereof. - 38 - 16. NOTICES, ETC. Except as otherwise expressly provided in this Loan Agreement, all notices and other communications made or required to be given pursuant to this Loan Agreement or the Notes shall be in writing and shall be delivered in hand, mailed by United States registered or certified first class mail, postage prepaid, sent by overnight courier, or sent by telecopy and confirmed by delivery via courier or postal service, addressed as follows: (a) if to the Borrower or the Guarantors, at: Two Greenwich Plaza, Greenwich, Connecticut 06830, Attention: Alan Marchisotto, Esq., or at such other address for notice as the Borrower shall last have furnished in writing to the Person giving the notice; and (b) if to the Lender, at BancBoston Leasing Inc., 100 Federal Street, Boston, Massachusetts 02110, USA, Attention: Director of Administration, Telecopier 617.434.0474, with a copy to, BankBoston, N.A., 100 Federal Street, Boston, Massachusetts 02110, USA, Attention: Transportation Division, Telecopier: 617.434.1955, or such other address for notice as the Lender shall last have furnished in writing to the Person giving the notice. Any such notice or demand shall be deemed to have been duly given or made and to have become effective (a) if delivered by hand, overnight courier or facsimile to a responsible officer of the party to which it is directed, at the time of the receipt thereof by such officer or the sending of such facsimile and (b) if sent by registered or certified first-class mail, postage prepaid, on the third Business Day following the mailing thereof. 17. GOVERNING LAW. THIS LOAN AGREEMENT AND EACH OF THE OTHER LOAN DOCUMENTS, EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED THEREIN, ARE CONTRACTS UNDER THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS AND SHALL FOR ALL PURPOSES BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF SAID COMMONWEALTH OF MASSACHUSETTS (EXCLUDING THE LAWS APPLICABLE TO CONFLICTS OR CHOICE OF LAW). THE BORROWER AND EACH OF THE GUARANTORS AGREE THAT ANY SUIT FOR THE ENFORCEMENT OF THIS LOAN AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS MAY BE BROUGHT IN THE COURTS OF THE COMMONWEALTH OF MASSACHUSETTS OR ANY FEDERAL COURT SITTING THEREIN AND CONSENT TO THE NONEXCLUSIVE JURISDICTION OF SUCH COURT AND THE SERVICE OF PROCESS IN ANY SUCH SUIT BEING MADE UPON THE BORROWER AND THE GUARANTORS BY MAIL AT THE ADDRESS SPECIFIED IN Section 16 HEREOF. THE BORROWER AND EACH OF THE GUARANTORS HEREBY WAIVE ANY OBJECTION THAT THEY MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH SUIT OR ANY SUCH COURT OR THAT SUCH SUIT IS BROUGHT IN AN INCONVENIENT COURT. 18. HEADINGS. The captions in this Loan Agreement are for convenience of reference only and shall not define or limit the provisions hereof. - 39 - 19. COUNTERPARTS. This Loan Agreement and any amendment hereof may be executed in several counterparts and by each party on a separate counterpart, each of which when so executed and delivered shall be an original, and all of which together shall constitute one instrument. In proving this Loan Agreement it shall not be necessary to produce or account for more than one such counterpart signed by the party against whom enforcement is sought. 20. ENTIRE AGREEMENT, ETC. The Loan Documents and any other documents executed in connection herewith or therewith express the entire understanding of the parties with respect to the transactions contemplated hereby. Neither this Loan Agreement nor any term hereof may be changed, waived, discharged or terminated, except as provided in Section 22 hereof. 21. WAIVER OF JURY TRIAL. The Borrower and each of the Guarantors hereby waive their right to a jury trial with respect to any action or claim arising out of any dispute in connection with this Loan Agreement, the Notes or any of the other Loan Documents, any rights or obligations hereunder or thereunder or the performance of such rights and obligations. Except as prohibited by law, the Borrower and each of the Guarantors hereby waive any right they may have to claim or recover in any litigation referred to in the preceding sentence any special, exemplary, punitive or consequential damages or any damages other than, or in addition to, actual damages. The Borrower and each of the Guarantors (a) certify that no representative, agent or attorney of the Lender has represented, expressly or otherwise, that the Lender would not, in the event of litigation, seek to enforce the foregoing waivers and (b) acknowledge that the Lender has been induced to amend and restate the Existing Loan Agreement and to enter into this Loan Agreement and the other Loan Documents to which it is a party by, among other things, the waivers and certifications contained herein. 22. CONSENTS, AMENDMENTS, WAIVERS, ETC. Except as otherwise expressly provided in this Loan Agreement, any consent or approval required or permitted by this Loan Agreement to be given by the Lender may be given, and any term of this Loan Agreement or of any other instrument related hereto or mentioned herein may be amended, and the performance or observance by the Borrower or the Guarantors of any terms of this Loan Agreement or such other instrument or the continuance of any Default or Event of Default may be waived (either generally or in a particular instance and either retroactively or prospectively) with, but only with, the written consent of the Borrower and the written consent of the Lender. No waiver shall extend to or affect any obligation not expressly waived or impair any right consequent thereon. No course of dealing or delay or omission on the part of the Lender in exercising any right shall operate as a waiver thereof or otherwise be prejudicial thereto. No notice to or demand upon the Borrower shall entitle the Borrower to other or further notice or demand in similar or other circumstances. 23. SEVERABILITY. The provisions of this Loan Agreement are severable and if any one clause or provision hereof shall be held invalid or unenforceable in whole or in part in any jurisdiction, then such invalidity or unenforceability shall affect only such clause or provision, or part thereof, in such jurisdiction, and shall not in any manner affect such clause or provision - 40 - in any other jurisdiction, or any other clause or provision of this Loan Agreement in any jurisdiction. 24. TREATMENT OF CERTAIN CONFIDENTIAL INFORMATION. 24.1 SHARING OF INFORMATION WITH SECTION 20 SUBSIDIARY. The Borrower and each of the Guarantors acknowledges that from time to time financial advisory, investment banking and other services may be offered or provided to the Borrower, the Guarantors or one or more of their Subsidiaries, in connection with this Loan Agreement or otherwise, by a Section 20 Subsidiary. Each of the Borrower and each Guarantor, for itself and each of its Subsidiaries, hereby authorizes (a) such Section 20 Subsidiary to share with BKB and the Lender any information delivered to such Section 20 Subsidiary by the Borrower, a Guarantor or any of their Subsidiaries, and (b) BKB and the Lender to share with such Section 20 Subsidiary any information delivered to BKB or the Lender by the Borrower, a Guarantor or any of their Subsidiaries pursuant to this Loan Agreement, or in connection with the decision of the Lender to enter into this Loan Agreement; it being understood, in each case, that any such Section 20 Subsidiary receiving such information shall be bound by the confidentiality provisions of this Loan Agreement. Such authorization shall survive the payment and satisfaction in full of all of Obligations. 24.2 CONFIDENTIALITY. Each of the Lender and BKB agrees, on behalf of itself and each of its affiliates, directors, officers, employees and representatives, to use reasonable precautions to keep confidential, in accordance with their customary procedures for handling confidential information of the same nature and in accordance with safe and sound banking practices, any non-public information supplied to it by the Borrower, any Guarantor or any of their Subsidiaries pursuant to this Loan Agreement that is identified by such Person as being confidential at the time the same is delivered to the Lender or BKB, provided that nothing herein shall limit the disclosure of any such information (a) after such information shall have become public other than through a violation of this Section 24, (b) to the extent required by statute, rule, regulation or judicial process, (c) to counsel for the Lender or BKB, (d) to bank examiners or any other regulatory authority having jurisdiction over the Lender or BKB, or to auditors or accountants, (e) to the Agent, BKB or any Section 20 Subsidiary, (f) in connection with any litigation to which any one or more of the Lender, BKB or any Section 20 Subsidiary is a party, or in connection with the enforcement of rights or remedies hereunder or under any other Loan Document, (g) to a Subsidiary or affiliate of the Lender or BKB or (h) to any assignee or participant (or prospective assignee or participant) so long as such assignee or participant agrees to be bound by the provisions of Section 15.3. 24.3 PRIOR NOTIFICATION. Unless specifically prohibited by applicable law or court order, each of the Lender and BKB shall, prior to disclosure thereof, notify the Borrower and the Guarantors of any request for disclosure of any such non-public information by any governmental agency or representative thereof (other than any such request in connection with - 41 - an examination of the financial condition of the Lender or BKB by such governmental agency) or pursuant to legal process. 24.4 OTHER. In no event shall the Lender or BKB be obligated or required to return any materials furnished to it or any Section 20 Subsidiary by the Borrower, any Guarantor or any of their Subsidiaries. The obligations of the Lender and BKB under this Section 24 shall supersede and replace the obligations of the Lender and BKB under any confidentiality letter in respect of this financing signed and delivered by the Lender and/or BKB to the Borrower or a Guarantor prior to the date hereof and shall be binding upon any assignee of, or purchaser of any participation in, any interest in the Term Loan. - 42 - IN WITNESS WHEREOF, the undersigned have duly executed this Amended and Restated Term Loan Agreement as a sealed instrument as of the date first set forth above. MORAN TOWING CORPORATION By: /s/ Jeffrey J. Mcaulay ---------------------------------- Name: Jeffrey J. McAulay Title: Vice President MORAN TRANSPORTATION COMPANY, as Guarantor By: /s/ Jeffrey J. Mcaulay ---------------------------------- Name: Jeffrey J. McAulay Title: Vice President JAKOBSON SHIPYARD, INC., as Guarantor By: /s/ Alan Marchisotto ---------------------------------- Name: Alan Marchisotto Title: Secretary MORAN BARGE CORPORATION, as Guarantor By: /s/ Alan Marchisotto ---------------------------------- Name: Alan Marchisotto Title: Secretary MORAN SHIPYARD CORPORATION, as Guarantor By: /s/ Alan Marchisotto ---------------------------------- Name: Alan Marchisotto Title: Secretary - 43 - MORAN TOWING OF TEXAS, INC., as Guarantor By: /s/ Alan Marchisotto ---------------------------------- Name: Alan Marchisotto Title: Secretary PETROLEUM TRANSPORT CORPORATION, as Guarantor By: /s/ William P. Muller ---------------------------------- Name: William P. Muller Title: President SEABOARD BARGE CORPORATION, as Guarantor By: /s/ William P. Muller ---------------------------------- Name: William P. Muller Title: President MORAN TOWING OF DELAWARE, INC., as Guarantor By: /s/ Alan Marchisotto ---------------------------------- Name: Alan Marchisotto Title: Secretary MORAN BULK CORPORATION, as Guarantor By: /s/ Alan Marchisotto ---------------------------------- Name: Alan Marchisotto Title: Secretary - 44 - HAMPTON ROADS LAND CO., INC., as Guarantor By: /s/ Alan Marchisotto ---------------------------------- Name: Alan Marchisotto Title: Secretary PORTSMOUTH NAVIGATION CORPORATION, as Guarantor By: /s/ Alan Marchisotto ---------------------------------- Name: Alan Marchisotto Title: Secretary MORAN SERVICES CORPORATION, as Guarantor By: /s/ William P. Muller ---------------------------------- Name: William P. Muller Title: President MORAN INSURANCE COMPANY LIMITED, as Guarantor By: /s/ Jeffrey J. Mcaulay ---------------------------------- Name: Jeffrey J. McAulay Title: Vice President - 45 - BANCBOSTON LEASING, INC., individually and as Agent By: /s/ Susan K. Sintros ---------------------------------- Name: Susan K. Sintros Title: Assistant Vice President EX-10.5(B) 4 EX-10.5(B) EXHIBIT 10.5(b) AMENDED AND RESTATED TERM NOTE $3,500,000 amended and restated as of December 12, 1997 FOR VALUE RECEIVED, the undersigned MORAN TOWING CORPORATION, a New York corporation (the "Borrower"), hereby promises to pay to the order of BANCBOSTON LEASING INC. (the "Lender") at the Lender's Head Office (as defined in the Loan Agreement referred to below): (a) on or prior to the Maturity Date the principal amount of THREE MILLION FIVE HUNDRED THOUSAND DOLLARS ($3,500,000) or, if less, the aggregate unpaid principal amount of the Term Loan outstanding under the Amended and Restated Term Loan Agreement, amended and restated as of December 12, 1997 (as amended and in effect from time to time, the "Loan Agreement"), among the Borrower, the Guarantors named therein, the Lender, and BancBoston Leasing Inc., as agent; and (b) interest on the principal balance hereof from time to time outstanding from the Closing Date through and including the Maturity Date at the times and at the rates provided in the Loan Agreement. This Note has been issued by the Borrower in accordance with the terms of the Loan Agreement. This Note has been issued as an amendment and restatement of, but does not evidence payment or satisfaction of, the April Term Note, dated as of May 16, 1997, issued by Interlake Transportation, Inc. to the Lender. As set forth in the Loan Agreement, the obligations of Interlake Transportation, Inc. under such April Term Note have been assumed by the Borrower pursuant to the Loan Agreement. The Lender and any holder hereof is entitled to the benefits of the Loan Agreement, the Security Documents and the other Loan Documents, and may enforce the agreements of the Borrower contained therein, and any holder hereof may exercise the respective remedies provided for thereby or otherwise available in respect thereof, all in accordance with the respective terms thereof. All capitalized terms used in this Note and not otherwise defined herein shall have the same meanings herein as in the Loan Agreement. This Note is guaranteed by the Guarantors pursuant to the terms of the Guaranty, of even date herewith, executed by the Guarantors in favor of the Lender. The Borrower irrevocably authorizes the Lender to make or cause to be made, at the time of the amendment and restatement of this Note or at the time of receipt of any payment of principal of this Note, an appropriate notation on the grid attached to this Note, or the continuation of such grid, or any other similar record, including computer records, reflecting the -2- amendment and restatement of the Term Loan or (as the case may be) the receipt of such payment. The outstanding amount of the Term Loan set forth on the grid attached to this Note, or the continuation of such grid, or any other similar record, including computer records, maintained by the Lender with respect to the Term Loan shall be PRIMA FACIE evidence of the principal amount thereof owing and unpaid to the Lender, but the failure to record, or any error in so recording, any such amount on any such grid, continuation or other record shall not limit or otherwise affect the obligation of the Borrower hereunder or under the Loan Agreement to make payments of principal of and interest on this Note when due. The Borrower has the right in certain circumstances and the obligation under certain other circumstances to prepay the whole or part of the principal of this Note on the terms and conditions specified in the Loan Agreement. If any one or more of the Events of Default shall occur, the entire unpaid principal amount of this Note and all of the unpaid interest accrued thereon may become or be declared due and payable in the manner and with the effect provided in the Loan Agreement. No delay or omission on the part of the Lender or any holder hereof in exercising any right hereunder shall operate as a waiver of such right or of any other rights of the Lender or such holder, nor shall any delay, omission or waiver on any one occasion be deemed a bar or waiver of the same or any other right on any further occasion. The Borrower and every endorser and guarantor of this Note or the obligation represented hereby waives presentment, demand, notice, protest and all other demands and notices in connection with the delivery, acceptance, performance, default or enforcement of this Note, and assents to any extension or postponement of the time of payment or any other indulgence, to any substitution, exchange or release of the Collateral and any other collateral and to the addition or release of any other party or person primarily or secondarily liable. THIS NOTE AND THE OBLIGATIONS OF THE BORROWER HEREUNDER SHALL FOR ALL PURPOSES BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE COMMONWEALTH OF MASSACHUSETTS (EXCLUDING THE LAWS APPLICABLE TO CONFLICTS OR CHOICE OF LAW). THE BORROWER AGREES THAT ANY SUIT FOR THE ENFORCEMENT OF THIS NOTE MAY BE BROUGHT IN THE COURTS OF THE COMMONWEALTH OF MASSACHUSETTS OR ANY FEDERAL COURT SITTING THEREIN AND CONSENTS TO THE NONEXCLUSIVE JURISDICTION OF SUCH COURT AND THE SERVICE OF PROCESS IN ANY SUCH SUIT BEING MADE UPON THE BORROWER BY MAIL AT THE ADDRESS SPECIFIED IN THE LOAN AGREEMENT. THE BORROWER HEREBY WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH SUIT OR ANY SUCH COURT OR THAT SUCH SUIT IS BROUGHT IN AN INCONVENIENT COURT. -3- This Note shall be deemed to take effect as a sealed instrument under the laws of the Commonwealth of Massachusetts. -4- IN WITNESS WHEREOF, the undersigned has caused this Amended and Restated Term Note to be signed by its duly authorized officer as of the day and year first above written. MORAN TOWING CORPORATION By: /s/ Jeffrey J. Mcaulay -------------------------- Name: Jeffrey J. McAulay Title: Vice President
Amount of Principal Paid Balance of Amount of Type of Interest Principal Notation Date Loan Loan Period or Prepaid Unpaid Made By:
EX-10.5(C) 5 EX-10.5(C) EXHIBIT 10.5(c) GUARANTY GUARANTY, dated as of December 12, 1997, by MORAN TRANSPORTATION COMPANY ("Moran"), a Delaware corporation, and each of the other entities listed on the signature pages hereto (collectively, the "Guarantors") in favor of BANCBOSTON LEASING INC. (individually, and in its capacity as collateral agent under the Loan Agreement referred to below, the "Lender"). WHEREAS, MORAN TOWING CORPORATION, a New York corporation (the "Borrower"), the Guarantors and the Lender have entered into an Amended and Restated Term Loan Agreement, amended and restated as of December 12, 1997 (as amended and in effect from time to time, the "Loan Agreement"), pursuant to which (i) the Borrower has agreed to assume the obligations of Interlake Transportation, Inc. with respect to the outstanding portion of the Term Loan (as such term is defined in the Loan Agreement), and (ii) the Lender, subject to the terms and conditions contained therein, has agreed to amend and restate the Term Loan made pursuant to the Existing Loan Agreement (as such terms are defined in the Loan Agreement); WHEREAS, Moran is the owner of one hundred percent of the issued and outstanding stock of the Borrower and the Borrower and the Guarantors are members of a group of related corporations, the success of any one of which is dependent in part on the success of the other members of such group; WHEREAS, the Guarantors expect to receive substantial direct and indirect benefits from the amendment and restatement of the Term Loan pursuant to the Loan Agreement (which benefits are hereby acknowledged); WHEREAS, it is a condition precedent to the Lender's agreeing to amend and restate the Term Loan that the Guarantors execute and deliver to the Lender a guaranty substantially in the form hereof; and WHEREAS, the Guarantors wish to guaranty the Borrower's obligations to the Lender under or in respect of the Loan Agreement as provided herein; NOW, THEREFORE, the Guarantors hereby agree with the Lender as follows: 1. DEFINITIONS. The term "Obligations" and all other capitalized terms used herein without definition shall have the respective meanings provided therefor in the Loan Agreement. 2. GUARANTY OF PAYMENT AND PERFORMANCE. The Guarantors hereby, jointly and severally, guaranty to the Lender the full and punctual payment when due (whether at stated maturity, by required pre- payment, by acceleration or otherwise), as well as the performance, of all of the Obligations including all such which would become due but for the operation of the automatic stay pursuant to Section 362(a) of the Federal bankruptcy Code and the operation of Sections 502(b) and 506(b) of the Federal Bankruptcy Code. This Guaranty is an absolute, unconditional and continuing guaranty of the full and punctual payment and performance of all of the Obligations and not of their collectibility only and is in no way conditioned upon any requirement that the Lender first attempt to collect any of the Obligations from the Borrower or resort to any collateral security or other means of obtaining payment. Should the Borrower default in the payment or performance of any of the Obligations, the obligations of the Guarantors hereunder with respect to such Obligations in default shall become immediately due and payable to the Lender, without demand or notice of any nature, all of which are expressly waived by the Guarantors. Payments by the Guarantors hereunder may be required by the Lender on any number of occasions. -2- 3. GUARANTORS' AGREEMENT TO PAY ENFORCEMENT COSTS, ETC. The Guarantors further agree, jointly and severally, as principal obligors and not as guarantors only, to pay to the Lender, on demand, all costs and expenses (including court costs and legal expenses) incurred or expended by the Lender in connection with the Obligations, this Guaranty and the enforcement thereof, together with interest on amounts recoverable under this Section 3 from the time when such amounts become due until payment, whether before or after judgment, at the rate of interest for overdue principal set forth in the Loan Agreement, PROVIDED that if such interest exceeds the maximum amount permitted to be paid under applicable law, then such interest shall be reduced to such maximum permitted amount. 4. WAIVERS BY GUARANTORS; LENDER'S FREEDOM TO ACT. The Guarantors agree that the Obligations will be paid and performed strictly in accordance with their respective terms, regardless of any law, regulation or order now or hereafter in effect in any jurisdiction affecting any of such terms or the rights of the Lender with respect thereto. Each Guarantor waives promptness, diligence, presentment, demand, protest, notice of acceptance, notice of any Obligations incurred and all other notices of any kind, all defenses which may be available by virtue of any valuation, stay, moratorium law or other similar law now or hereafter in effect, any right to require the marshalling of assets of the Borrower or any other entity or other person primarily or secondarily liable with respect to any of the Obligations, and all suretyship defenses generally. Without limiting the generality of the foregoing, each Guarantor agrees to the provisions of any instrument evidencing, securing or otherwise executed in connection with any Obligation and agrees that the obligations of such Guarantor hereunder shall not be released or discharged, in whole or in part, or otherwise affected by (i) the failure of the Lender to assert any claim or demand or to enforce any right or remedy against the Borrower or any other entity or other person primarily or secondarily liable with respect to any of the Obligations; (ii) any extensions, compromise, refinancing, consolidation or renewals of any Obligation; (iii) any change in the time, place or manner of payment of any of the Obligations or any rescissions, waivers, compromise, refinancing, consolidation, amendments or modifications of any of the terms or provisions of the Loan Agreement, the Note, the other Loan Documents or any other agreement evidencing, securing or otherwise executed in connection with any of the Obligations; (iv) the addition, substitution or release of any entity or other person primarily or secondarily liable for any Obligation; (v) the adequacy of any rights which the Lender may have against any collateral security or other means of obtaining repayment of any of the Obligations; (vi) the impairment of any collateral securing any of the Obligations, including without limitation the failure to perfect or preserve any rights which the Lender might have in such collateral security or the substitution, exchange, surrender, release, loss or destruction of any such collateral security; or (vii) any other act or omission which might in any manner or to any extent vary the risk of such Guarantor or otherwise operate as a release or discharge of any Guarantor, all of which may be done without notice to the Guarantors. To the fullest extent permitted by law, each Guarantor hereby expressly waives any and all rights or defenses arising by reason of (A) any "one action" or "anti-deficiency" law which would otherwise prevent the Lender from bringing any action, including any claim for a deficiency, or exercising any other right or remedy (including any right of set-off), against each Guarantor before or after the Lender's commencement or completion of any foreclosure action, whether judicially, by exercise of power of sale or otherwise, or (B) any other law which in any other way would otherwise require any election of remedies by the Lender. 5. UNENFORCEABILITY OF OBLIGATIONS AGAINST BORROWER. If for any reason the Borrower has no legal existence or is under no legal obligation to discharge any of the Obligations, or if any of the Obligations have become irrecoverable from the Borrower by reason of the Borrower's insolvency, bankruptcy or reorganization or by other operation of law or for any other reason, this Guaranty shall nevertheless be binding on each Guarantor to the same extent as if each such Guarantor at all times had been the principal obligor on all such Obligations. In the event that acceleration of the time for payment of any of the Obligations is stayed upon the insolvency, bankruptcy or reorganization of the Borrower, or for any other reason, all such amounts otherwise subject to acceleration under the terms of the Loan Agreement, the Note, the other Loan Documents or any other agreement evidencing, securing or otherwise executed in connection with any Obligation shall be immediately due and payable by each such Guarantor. 6. SUBROGATION. -3- 6.1 WAIVER OF RIGHTS AGAINST BORROWER. Until the final payment and performance in full of all of the Obligations, no Guarantor shall exercise any rights against the Borrower arising as a result of payment by any Guarantor hereunder, by way of subrogation, reimbursement, restitution, contribution or otherwise, and will not prove any claim in competition with the Lender in respect of any payment hereunder in any bankruptcy, insolvency or reorganization case or proceedings of any nature; no Guarantor will claim any setoff, recoupment or counterclaim against the Borrower in respect of any liability of any such Guarantor to the Borrower; and each of the Guarantors waives any benefit of and any right to participate in any collateral security which may be held by the Lender. 6.2 PROVISIONS SUPPLEMENTAL. The provisions of this Section 6 shall be supplemental to and not in derogation of any rights and remedies of the Lender under any separate subordination agreement which the Lender may at any time and from time to time enter into with any Guarantor. 7. SETOFF. Regardless of the adequacy of any collateral security or other means of obtaining payment of any of the Obligations, the Lender is hereby authorized, upon the occurrence and during the continuance of an Event of Default, without notice to any Guarantor (any such notice being expressly waived by each Guarantor) and to the fullest extent permitted by law, to set off and apply all deposits (general or special, time or demand, provisional or final) and other sums credited by or due from the Lender to such Guarantor or subject to withdrawal by such Guarantor, against the obligations of each of the Guarantors under this Guaranty, whether or not the Lender shall have made any demand under this Guaranty and although such obligations may be contingent or unmatured. 8. FURTHER ASSURANCES. Each of the Guarantors agrees to do all such things and execute all such documents as the Lender may consider necessary or desirable to give full effect to this Guaranty and to perfect and preserve the rights and powers of the Lender hereunder. Each of the Guarantors acknowledges and confirms that each such Guarantor itself has established its own adequate means of obtaining from the Borrower on a continuing basis all information desired by such Guarantor concerning the financial condition of the Borrower and that each Guarantor will look to the Borrower and not to the Lender in order for such Guarantor to keep adequately informed of changes in the Borrower's financial condition. 9. TERMINATION; REINSTATEMENT. This Guaranty shall remain in full force and effect until the indefeasible payment in full, in cash, of the Obligations. This Guaranty shall be reinstated if at any time any payment made or value received with respect to any Obligation is rescinded or must otherwise be returned by the Lender upon the insolvency, bankruptcy or reorganization of the Borrower or any Guarantor, or otherwise, all as though such payment had not been made or value received. 10. SUCCESSORS AND ASSIGNS. This Guaranty shall be binding upon each of the Guarantors and each of their respective successors and assigns, and shall inure to the benefit of and be enforceable by the Lender and its successors, transferees and assigns. Without limiting the generality of the foregoing sentence, the Lender -4- may assign or otherwise transfer the Loan Agreement, the Note, the other Loan Documents or any other agreement or note held by it evidencing, securing or otherwise executed in connection with the Obligations, or sell participations in any interest therein, to any other entity or other person, and such other entity or other person shall thereupon become vested, to the extent set forth in the agreement evidencing such assignment, transfer or participation, with all the rights in respect thereof granted to the Lender herein. 11. AMENDMENTS AND WAIVERS. No amendment or waiver of any provision of this Guaranty nor consent to any departure by any of the Guarantors therefrom shall be effective unless the same shall be in writing and signed by the Lender. No failure on the part of the Lender to exercise, and no delay in exercising, any right hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right hereunder preclude any other or further exercise thereof or the exercise of any other right. 12. NOTICES. All notices and other communications called for hereunder shall be made in the manner and with the effect provided for in the Loan Agreement. 13. GOVERNING LAW; CONSENT TO JURISDICTION. THIS GUARANTY IS INTENDED TO TAKE EFFECT AS A SEALED INSTRUMENT AND SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE COMMONWEALTH OF MASSACHUSETTS. Each Guarantor agrees that any suit for the enforcement of this Guaranty may be brought in the courts of the Commonwealth of Massachusetts or any federal court sitting therein and consents to the nonexclusive jurisdiction of such court and to service of process in any such suit being made upon each such Guarantor by mail at the address specified by reference in Section 12. Each Guarantor hereby waives any objection that it may now or hereafter have to the venue of any such suit or any such court or that such suit was brought in an inconvenient court. 14. WAIVER OF JURY TRIAL. EACH GUARANTOR HEREBY WAIVES ITS RIGHT TO A JURY TRIAL WITH RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS GUARANTY, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THE PERFORMANCE OF ANY OF SUCH RIGHTS OR OBLIGATIONS. Except as prohibited by law, each Guarantor hereby waives any right which it may have to claim or recover in any litigation referred to in the preceding sentence any special, exemplary, punitive or consequential damages or any damages other than, or in addition to, actual damages. Each Guarantor (i) certifies that neither the Lender nor any representative, agent or attorney of the Lender has represented, expressly or otherwise, that the Lender would not, in the event of litigation, seek to enforce the foregoing waivers and (ii) acknowledges that, in agreeing to amend and restate the Term Loan and in entering into the Loan Agreement and the other Loan Documents to which the Lender is a party, the Lender is relying upon, among other things, the waivers and certifications contained in this Section 14. 15. MISCELLANEOUS. This Guaranty constitutes the entire agreement of the Guarantors with respect to the matters set forth herein. The rights and remedies herein -5- provided are cumulative and not exclusive of any remedies provided by law or any other agreement, and this Guaranty shall be in addition to any other guaranty of or collateral security for any of the Obligations. The invalidity or unenforceability of any one or more sections of this Guaranty shall not affect the validity or enforceability of its remaining provisions. Captions are for ease of reference only and shall not affect the meaning of the relevant provisions. The meanings of all defined terms used in this Guaranty shall be equally applicable to the singular and plural forms of the terms defined. -6- IN WITNESS WHEREOF, the undersigned have caused this Guaranty to be executed and delivered as of the date first above written. MORAN TRANSPORTATION COMPANY By: /s/ Jeffrey J. Mcaulay --------------------------------- Name: Jeffrey J. McAulay Title: Vice President JAKOBSON SHIPYARD, INC. By: /s/ Alan Marchisotto --------------------------------- Name: Alan Marchisotto Title: Secretary MORAN BARGE CORPORATION By: /s/ Alan Marchisotto --------------------------------- Name: Alan Marchisotto Title: Secretary MORAN SHIPYARD CORPORATION By: /s/ Alan Marchisotto --------------------------------- Name: Alan Marchisotto Title: Secretary MORAN TOWING OF TEXAS, INC. By: /s/ Alan Marchisotto --------------------------------- Name: Alan Marchisotto Title: Secretary -7- PETROLEUM TRANSPORT CORPORATION By: /s/ William P. Muller --------------------------------- Name: William P. Muller Title: President SEABOARD BARGE CORPORATION By: /s/ William P. Muller --------------------------------- Name: William P. Muller Title: President MORAN TOWING OF DELAWARE, INC. By: /s/ Alan Marchisotto --------------------------------- Name: Alan Marchisotto Title: Secretary MORAN BULK CORPORATION By: /s/ Alan Marchisotto --------------------------------- Name: Alan Marchisotto Title: Secretary HAMPTON ROADS LAND CO., INC. By: /s/ Alan Marchisotto --------------------------------- Name: Alan Marchisotto Title: Secretary PORTSMOUTH NAVIGATION CORPORATION By: /s/ Alan Marchisotto --------------------------------- Name: Alan Marchisotto Title: Secretary -8- MORAN SERVICES CORPORATION By: /s/ William P. Muller --------------------------------- Name: William P. Muller Title: President MORAN INSURANCE COMPANY LIMITED By: /s/ Jeffrey J. Mcaulay --------------------------------- Name: Jeffrey J. McAulay Title: Vice President EX-10.5(D) 6 EX-10.5(D) EXHIBIT 10.5(d) FIRST PREFERRED FLEET MORTGAGE (UNITED STATES) This FIRST PREFERRED FLEET MORTGAGE (hereinafter called the "Mortgage"), was executed on December 10, 1997 to be effective on December 12, 1997 by MORAN TOWING CORPORATION, a New York corporation having its principal place of business at Two Greenwich Plaza, Greenwich, Connecticut 06830 (hereinafter called the "Owner") in favor of BANCBOSTON LEASING INC., a Massachusetts corporation with an office at 100 Federal Street, Boston, MA 02110 (hereinafter called the "Mortgagee"). W H E R E A S WHEREAS, the Owner is the sole owner of the whole of the vessel the April Moran, Official No. 644241 (f/k/a the "April") (referred to herein, together with any additional vessels which may from time to time become subject to this Mortgage, individually as a "Vessel" and collectively as the "Vessels"); WHEREAS, pursuant to an Amended and Restated Term Loan Agreement, dated as of December 12, 1997, (the "Loan Agreement") between the Owner and the Mortgagee, (i) the Owner has assumed the obligations of Interlake Transportation, Inc., a Delaware corporation ("Interlake") in respect of the outstanding portion of the principal amount of Three Million Five Hundred Thousand Dollars ($3,500,000) term loan (as amended and restated, the "Term Loan") made by the Mortgagee to Interlake, pursuant to that certain Construction and Term Loan Agreement, dated as of May 16, 1997 (as amended from time to time the "Existing Loan Agreement"), by and among Interlake, Interlake Holding Company, as Guarantor, The Interlake Steamship Company, as Guarantor, BankBoston, N.A., as Construction Lender, the Mortgagee, and BancBoston Leasing Inc., as agent for the Lenders referred to in the Existing Loan Agreement and (ii) the Owner and the Mortgagee have agreed to amend and restate the provisions of the Existing Loan Agreement relating to the outstanding portion of the Term Loan; WHEREAS, the Term Loan is evidenced by an amended and restated promissory note of the Owner in substantially the form attached hereto and incorporated by reference herein as EXHIBIT A (the "Note"), with the same force and effect as if fully set forth herein, due and payable in the amounts and upon the terms and conditions therein recited or referenced, to the order of the payee therein named, with interest as set forth in or by reference in said Note; WHEREAS, the Owner, in order to secure the payment of the Obligations (including all principal of and interest on the Term Loan and any related costs and expenses), and such additional sums as the Owner may be obligated to pay under the covenants, terms and conditions in this Mortgage contained, and in order to secure the performance and observance of and compliance with -2- all agreements, covenants, terms and conditions in this Mortgage contained, has duly authorized the execution and delivery of this Mortgage under and pursuant to Title 46 United States Code Section 31301 ET SEQ in favor of the Mortgagee; WHEREAS, capitalized terms which are used herein without definition and which are defined in the Loan Agreement shall have the same meanings herein as in the Loan Agreement. NOW, THEREFORE, in consideration of the premises and of the sums loaned as above recited, and of other good and valuable consideration, the receipt and adequacy whereof is hereby acknowledged, the Owner, in order to secure the payment and performance of the Obligations and such additional sums as the Owner may be obligated to pay under the agreements, covenants, terms and conditions in this Mortgage contained, and in order to secure the performance and observance of and compliance with all the agreements, covenants, terms and conditions in the Loan Agreement, the Note and in this Mortgage contained, the Owner has granted, conveyed, mortgaged, pledged, set over and confirmed and does by these presents grant, convey, mortgage, pledge, set over and confirm unto the Mortgagee, its successors and assigns, all of the following described property: The whole of those certain vessels listed and described on SCHEDULE 1 attached hereto. together with their engines, boilers, machinery, masts, boats, anchors, cables, chains, rigging, tackle, apparel, furniture, equipment, spare parts and gear and all other appurtenances thereunto appertaining or belonging, whether now owned or hereafter acquired, whether on board or not, and any and all additions, improvements and replacements hereafter made in, on or to said vessels, or any part thereof, or in or to the equipment and appurtenances aforesaid, all the foregoing being hereinafter referred to as the "Vessels". TO HAVE AND TO HOLD all and singular the above mortgaged and described property unto the Mortgagee, and its successors and assigns, forever; upon the terms herein set forth for the enforcement of the payment of the Obligations in accordance with the terms of the Loan Agreement and the Note and to secure the performance and observance of, and compliance with, all agreements, covenants, terms and conditions in this Mortgage contained; PROVIDED ONLY, and the condition of these presents is such, that if the Owner, or its successors or assigns, shall fully discharge the Obligations including, without limitation, the irrevocable payment in full in cash of all of the indebtedness evidenced by the Note and all interest, expenses and fees thereon, and all other such sums as may hereafter become secured by this Mortgage and shall perform, observe and comply with all agreements, covenants, terms and conditions in this Mortgage, expressed or implied, to be performed, observed or complied with by and on the part of the Owner, then these presents and the rights hereunder shall cease, determine and be void, and otherwise shall be and remain in full force and effect. -3- IT IS HEREBY COVENANTED, DECLARED AND AGREED that the Vessels are to be held subject to the further covenants, conditions, provisions, terms and uses hereinafter set forth: ARTICLE I REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE OWNER The Owner represents to, and covenants and agrees with, the Mortgagee as follows: Section 1.1. PERFORMANCE. The Owner will observe, perform and comply with all the covenants, terms and conditions herein and in the Loan Agreement and the Note, expressed or implied, on its part to be observed, performed or complied with and will pay the Obligations including, without limitation, its indebtedness as set forth in the Note and interest thereon in accordance with the terms thereof. Section 1.2. CORPORATE AUTHORIZATION; CITIZENSHIP. The Owner was duly organized and is now validly existing as a corporation under the laws of the State of New York with a principal place of business at Two Greenwich Plaza, Greenwich, Connecticut 06830. The Owner is now, and shall so remain during the life of this Mortgage, a citizen of the United States as defined in Section 2 of the Shipping Act of 1916, as amended, entitled to own and operate the Vessels under their respective Certificates of Documentation, which the Owner shall maintain in full force and effect, and is duly qualified to engage in the coastwise trade. The Owner is duly authorized to mortgage the Vessels; all corporate action of the Owner necessary for the execution and delivery of the Note, the Loan Agreement and this Mortgage has been duly and effectively taken; and the Note and the Loan Agreement secured hereby and this Mortgage in the hands of the holder thereof are the valid and enforceable obligations of the Owner in accordance with their terms. Section 1.3. TITLE. The Owner lawfully owns and is lawfully possessed of each of the Vessels, free from any lien, encumbrance, security interest or charge of any kind (except the lien of this Mortgage and other liens permitted by the Loan Agreement (any such lien, a "Permitted Lien")), and the Owner warrants, and will 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 whosoever. Each of the Vessels is tight, staunch and strong and well and sufficiently tackled, appareled, furnished and equipped and in all respects seaworthy, as far as due diligence can make it so. Section 1.4. FIRST PREFERRED MORTGAGE. The Owner will, at its expense and at no cost to the Mortgagee, comply with and satisfy all the provisions of Title 46 United States Code Section 31301 ET SEQ. in order to establish, record and maintain this Mortgage as a first preferred fleet mortgage thereunder upon each of the Vessels and will do all such other acts and execute all such instruments, deeds, conveyances, mortgages and assurances as the Mortgagee shall reasonably require in order to subject all Vessels to the lien of this Mortgage as aforesaid. Section 1.5. OPERATION. The Owner will at all times operate each Vessel in compliance, in all -4- material respects, with all governmental rules, regulations and requirements, applicable to such Vessels (including without limitation, all requirements of the Shipping Act of 1916, as amended) and to the extent such Vessels are classified in compliance in all material respects with all rules, regulations and requirements of the applicable classification society. The Owner will neither cause nor permit any Vessel to be operated in any manner contrary, in any material respect, to the applicable law or to carry any cargo that will expose any Vessel to penalty, forfeiture or capture and will not do or suffer or permit anything to be done which can or might adversely affect the documentation of any Vessel under the laws and regulations of the United States of America and will at all times keep each of the Vessels duly documented thereunder. Section 1.6. GOVERNMENT ASSESSMENTS. The Owner will pay and discharge or cause to be paid and discharged, when due and payable from time to time, all taxes, assessments, governmental charges, fines and penalties imposed on all or any one of the Vessels or any income therefrom and all lawful claims which if unpaid might become a lien or charge upon all or any one of the Vessels, except that it shall be entitled to contest any such taxes, assessments, governmental charges, fines and penalties in good faith, provided it obtains a bond, or an insurance underwriter's letter of undertaking or sets aside on its books adequate reserves with respect thereto. Section 1.7. PERMITTED LIENS. Neither the Owner, the Master of any Vessel, any charterer nor any other person has or shall have any right, power or authority to suffer to continue, create, incur or permit to be placed or imposed upon any Vessel, its freights, profits or hire, any liens, encumbrance, security interest or charge whatsoever other than Permitted Liens. Section 1.8. NOTICE OF MORTGAGE. The Owner will carry or cause to be carried a properly certified copy of this Mortgage on board each Vessel with such Vessel's documents and will cause such certified copy and the documents of each Vessel to be exhibited to any and all persons having business with such Vessel which might give rise to a maritime lien thereon or to any sale, conveyance, mortgage or lease thereof, and to any representative of the Mortgagee; and will cause to be placed and kept prominently displayed in the chart room and in the Master's cabin of each Vessel a notice, framed under glass, printed in plain type of such size that the paragraph of reading matter shall cover a space not less than six inches wide and nine inches high, reading as follows: NOTICE OF FIRST PREFERRED FLEET MORTGAGE This Vessel is owned by Moran Towing Corporation and is subject to a First Preferred Fleet Mortgage in favor of BancBoston Leasing Inc., as agent for itself and certain other lenders, as mortgagee, under authority of Title 46 United States Code Section 31301 ET SEQ. Under the terms of said Mortgage neither the owner of this Vessel, nor any one on the owner's behalf, nor, any charterer, the Master, nor any other person has any right, power or authority to create, incur or permit to be placed or imposed upon this Vessel, its freights, profits or hire, any lien whatsoever, other than the lien of said Mortgage, and other Permitted Liens under said Mortgage, and liens for wages of crew or the Master of this Vessel arising from the current voyage, for wages of stevedores when employed directly by the Vessel, or for general average or salvage, repairs and towage. -5- Section 1.9. REMOVAL OF LIENS. If a notice of claim of lien be recorded against any one or all of the Vessels, or a libel be filed against any one or all of the Vessels and any one or more of the Vessels be attached, levied upon or taken into custody as a result thereof, or if any one or more of the Vessels be otherwise attached, levied upon or taken into custody by virtue of any proceedings in any court or tribunal, the Owner will promptly notify the Mortgagee thereof by telecopy or telex, confirmed by letter; and within fifteen (15) days of such recording, filing, attachment, levy, or taking, will cause a certificate of discharge to be recorded in the case of any such recording of notice of claim or will cause such Vessels to be released in the case of any such attachment, levy or other taking into custody and will cause all liens thereon relating to such recording, libel, attachment, levy or other taking into custody to be discharged and will promptly notify the Mortgagee thereof. Section 1.10. MAINTENANCE OF VESSELS. The Owner will at all times and without cost and expense to the Mortgagee maintain and preserve or cause to be maintained and preserved the Vessels in good running order and repair, and will cause all equipment and parts thereof which become worn out, broken or damaged to be repaired or replaced and will keep the Vessels, or cause them to be kept, in such condition as will entitle each Vessel which is classed by the American Bureau of Shipping (or other classification society) to the highest classification and rating for vessels of the same age and type in American Bureau of Shipping (or other classification society of like standing satisfactory to the Mortgagee) in class without recommendation, and annually will furnish to the Mortgagee a certificate or certificates of such society that such classification is maintained, or, as to Vessels which are not so classed, to be covered by a valid Coast Guard Certificate of Inspection. Notwithstanding the preceding sentence, if at any time any Vessel shall fail to meet such standard, the Owner shall not be in breach of this Section 1.10 provided such failure is cured within the earlier of (i) thirty days and (ii) the time prescribed by the American Bureau of Shipping for curing such condition. Each Vessel shall, and the Owner covenants that it will, at all times comply, in all material respects, with all applicable United States law, treaties and conventions, and rules and regulations issued thereunder, and shall have on board, when required thereby, valid certificates showing compliance therewith. The Owner will not make, or permit to be made, any substantial change in the structure, type or speed of any of the Vessels or change in any of the Vessels' rig without first receiving the written approval thereof by the Mortgagee, not to be unreasonably withheld or delayed if no Default or Event of Default shall then exist. Section 1.11. ACCESS. The Owner will at all reasonable times, upon reasonable prior notice if no Default or Event of Default then exists, afford the Mortgagee or its authorized representatives full and complete access to each of the Vessels where located for the purpose of inspecting the same and their cargoes and papers and, at the request of the Mortgagee, will deliver for inspection copies of any and all contracts and documents relating to the Vessels, whether on board or not. Section 1.12. SALE OR OTHER DISPOSITION OF THE VESSELS. (a) The Owner will not sell (other than sales permitted under the Loan Agreement), mortgage, transfer or demise charter any one or all of the Vessels without the written consent of the Mortgagee first had and obtained, which consent in the case of a demise charter shall not be unreasonably withheld or delayed, and any such written -6- consent to any one sale, mortgage, transfer or demise charter shall not be construed to be a waiver of this provision with respect to any subsequent proposed sale, mortgage, transfer or demise charter. (b) The Owner will not charter any Vessel to, or permit any Vessel to serve under any contract of affreightment with, a person included within the definition of "designated foreign country" or a "national" of a "designated foreign country" in the "Foreign Assets Control Regulations" or "Cuban Assets Control Regulations" of the United States Treasury Department, 31 C.F.R. Chapter V, as amended, within the meaning of said regulations or of any regulation, interpretation or ruling issued thereunder. (c) The Owner shall not enter into (i) any charter with any entity in excess of one year (inclusive of all extension and renewal option periods and other than such charters terminable at will by the parties thereto) or (ii) any demise or bareboat charter with any entity in excess of ninety days, without in each case providing Mortgagee a copy thereof. The Owner undertakes and covenants that any charter of any of the Vessels shall contain a provision prohibiting the charterer and any other persons from incurring or acquiring any lien on any Vessel. Section 1.13. INSURANCE. At all times while and so long as this Mortgage shall be outstanding: (a) The Owner will, at its own expense insure each of the Vessels and keep the same insured (in lawful money of the United States) for hull and machinery, pollution liability, and against protection and indemnity risks, generally insured against by prudent companies engaged in the same or similar business, in such form, and with such financially sound and reputable insurance companies, underwriters, funds, mutual insurance associations or clubs, acceptable to the Mortgagee, as shall be declared from time to time by a firm of independent marine insurance brokers acceptable to the Mortgagee, to be reasonably necessary or advisable for the protection of the Mortgagee and in accordance with the provisions of this Section 1.13. (b) The Owner will furnish to the Mortgagee, concurrently with the execution hereof and thereafter at intervals of not more than twelve (12) calendar months, a detailed report of the terms and conditions of the insurances, including the amount and scope of coverage, deductibles, identity of underwriters and share of placement by each underwriter, signed by a firm of independent marine insurance brokers, appointed by the Owner and acceptable to the Mortgagee, with respect to the insurance carried and maintained on the Vessels together with their opinion that the insurance coverages in place and the amount thereof are prudent and reasonable taking into account existing industry practices, the operating area and trade of the Vessels and the risks associated with such operations, and that such insurance is in compliance with the provisions of this Section 1.13. The Owner will cause such firm to agree to advise the Mortgagee promptly of any lapse of any such insurance by expiration, failure to renew or otherwise and of any default in payment of any premium, whether for new insurance or for insurance replacing, renewing or extending existing insurance, and of any other act or omission on the part of the Owner of which it has knowledge and which might, in its opinion, invalidate or render unenforceable, or cause the lapse of or prevent the renewal or extension of, in whole or in part, any insurance on the Vessels. The Owner will furnish or cause to be -7- furnished to the Mortgagee, from time to time, upon request, detailed information with respect to any insurance carried or maintained on the Vessels or required or approved by the Mortgagee to be carried or maintained thereon. The Owner will also cause such firm to agree to mark its records and to use its best efforts to advise the Mortgagee, at least thirty (30) days prior to the expiration date of any insurance carried pursuant to this Mortgage, that such insurance has been renewed or replaced with new insurance which complies with the provisions of this Section 1.13 and such advice shall be in the same detail in respect to such renewed or replacement insurance as is required in respect of insurance described in the aforesaid reports. (c) Until otherwise required by the Mortgagee, the protection and indemnity and hull and machinery insurance required by this Section 1.13 may be on the American Institute forms current at the time such insurance takes effect with deductibles or franchises no higher than the amounts set forth on SCHEDULE 2 hereto. Protection and indemnity insurance in respect to each Vessel shall be by unlimited entry in a mutual insurance association or placed with underwriters acceptable to the Mortgagee and shall include pollution liabilities (including coverage for third party claims, statutory and governmental cleanup liabilities, penalties and fines in the minimum amount for any one occurrence set forth on SCHEDULE 2 hereto) with deductibles or franchises no higher than the respective amounts set forth on SCHEDULE 2 hereto. For the purposes of insurance against total loss, each Vessel shall be insured for and valued at an amount at least equal to the greater of: (i) the full commercial value of such Vessel, or (ii) the amount set forth opposite such Vessel's name on SCHEDULE 2 hereto. For purposes of the broker's reports and opinions referred to above, the broker giving the same may rely on a statement as to the full commercial value of each of the Vessels and the gross tonnage of each of the Vessels as furnished annually by the Owner to such broker and the Mortgagee at the time insurance is negotiated with underwriters. (d) All insurance shall be taken out in the names of the Owner and the Mortgagee as their respective interests may appear; the policies or certificates shall provide that there shall be no recourse against the Mortgagee for payment of premiums; all insurance shall provide for at least thirty (30) days' prior notice to be given to the Mortgagee by the underwriters in event of cancellation or any material change in coverage. (e) All insurance policies or certificates shall provide that losses thereunder shall be payable to the Mortgagee, and all insurance moneys received by the Mortgagee shall be distributed as provided below in this Section 1.13. However, the policies or certificates may provide that (and it is agreed that): (i) any loss under any insurance on the Vessels with respect to protection and indemnity or collision liability risks may be paid directly to the person to whom any liability covered by such insurance has been incurred, or to the Owner to reimburse it for any loss, damage or expense incurred by it and covered by such insurance, provided that in the latter event the underwriter shall have first received evidence that the liability insured against has been discharged; and (ii) in the case of any loss (other than a loss covered by subparagraph (i) above -8- in this paragraph (e) or by paragraph (f) of this Section 1.13) under any insurance with respect to the Vessels involving any damage to a Vessel or liability of a Vessel, the underwriters may pay directly for the repair, salvage, liability or other charges involved, or, if the Owner shall have first fully repaired the damage and paid the cost thereof or discharged the liability or paid other charges and the underwriters shall have first received evidence thereof, may pay the Owner as reimbursement therefor; PROVIDED, however, that (a) if such damage involves a loss in excess of One Million Dollars ($1,000,000) (after application of deductibles), the underwriters shall not make such payment without first obtaining the written consent of the Mortgagee, and (b) no payment shall be made to the Owner if there shall have occurred and be continuing an event of default under this Mortgage, the Loan Agreement or the Note or an event that, with the giving of notice or the lapse of time, or both, could, in the discretion of Mortgagee, reasonably be expected to constitute an event of default under this Mortgage, the Loan Agreement or the Note. Any loss which is paid to the Mortgagee but which should have been paid, in accordance with the provisions of this paragraph, directly to the Owner, shall be paid by the Mortgagee to or as directed by the Owner, but only if there shall not have occurred any event of default under this Mortgage, the Loan Agreement or the Note, or any event that, with the giving of notice or lapse of time, or both, could, in the discretion of the Mortgagee, reasonably be expected to constitute an event of default under this Mortgage, the Loan Agreement or the Note. Subject to the immediately preceding sentence, any insurance monies paid to the Mortgagee shall, in the Mortgagee's sole and absolute discretion, be applied to the repayment of the Obligations as provided in the Loan Agreement or to the repair or replacement of the property so damaged. (f) In the event of an actual or constructive total loss or an agreed or a compromised constructive total loss of or requisition of title to or seizure or forfeiture of any Vessel, all amounts payable therefor shall be paid to the Mortgagee and shall be applied: FIRST, to the payment of the expenses of the Mortgagee in collecting such payments; SECOND, to the payment of the then accrued but unpaid interest on the Note; THIRD, to the payment of the unpaid principal indebtedness evidenced by the Note; FOURTH, to the payment of such additional sums as the Owner may be obligated to pay the Mortgagee or any other Person under the terms of this Mortgage, the Note and the Loan Agreement; and any funds remaining after such payments shall be paid to the Owner, its successors in interest or its assigns or to whomsoever may be entitled thereto. (g) The Owner shall deliver to the Mortgagee the originals of all cover notes, binders and certificates of entry in protection and indemnity associations, and all endorsements and riders amendatory thereof in respect of insurance maintained under this Mortgage. (h) The Owner agrees that it will not do any act, or voluntarily suffer or permit any act to be done, whereby any insurance required hereunder shall or may be suspended, impaired or defeated and will not suffer or permit any of the Vessels to engage in any voyage or to carry any cargo not permitted under the policies of insurance in effect, without first covering such Vessel with insurance, satisfactory in all respects, including the amount thereof, to the Mortgagee in the exercise of its reasonable discretion, for such voyage or the carriage of such cargo. -9- (i) In the event that any claim or lien is asserted against any Vessel for loss, damage or expense which is covered by insurance hereunder, and it is necessary for the Owner to obtain a bond or supply other security to prevent the arrest of such Vessel or to release such Vessel from arrest on account of such claim or lien, the Mortgagee may, in its sole discretion, and upon notice to the Owner, assign to any person, firm or corporation executing a surety or guarantee bond or other agreement to save or release such Vessel from such arrest, all right, title and interest of the Mortgagee in and to said insurance covering said loss, damage or expense, as collateral security to indemnify such person, firm or corporation against liability under said bond or other agreement. Section 1.14. REIMBURSEMENT. The Owner will, upon demand therefor, pay or reimburse the Mortgagee, with interest at the rate for overdue amounts set forth in the Loan Agreement, for: (i) any and all reasonable expenses or expenditures which the Mortgagee may from time to time incur or make in connection with insurance premiums, discharge or purchase of any lien, libel or seizure of any one or all of the Vessels, taxes, dues, assessments, governmental charges, fines and penalties, repairs, attorneys' fees and any other expenses or expenditures which the Owner is obligated herein to incur or make, but fails to incur or make; and (ii) all reasonable costs, fees and expenses suffered, incurred or made by the Mortgagee in exercising, protecting or pursuing its rights or remedies under this Mortgage (including, but not limited to, expenses of any sale or taking of any Vessel, attorneys' fees and court costs). Such obligation of the Owner to reimburse the Mortgagee shall be an additional indebtedness due from the Owner, secured by this Mortgage, and shall be payable by the Owner on demand. The Mortgagee, though privileged so to do, shall be under no obligation to the Owner or to any other person to incur or make any such expenses or expenditures, nor shall the incurring or making thereof relieve the Owner of any default in that respect. ARTICLE II EVENTS OF DEFAULT AND REMEDIES Section 2.1. EVENTS OF DEFAULT. The Owner shall be in default hereunder upon the happening of any one or all of the following events or conditions (each an "event of default"): (a) any Event of Default (as defined in the Loan Agreement) shall have occurred and be continuing; or (b) default shall be made in the due and punctual observance or performance of any of the provisions of this Mortgage; or (c) any notice shall have been issued on behalf of the United States of the seizure of any Vessel or to the effect that the Certificate of Documentation of any Vessel is subject to revocation or cancellation, for any reason whatsoever and such notice is not rescinded or revoked within five (5) days of the issuance thereof; or (d) the Owner or any charterer shall abandon any one or all of the Vessels or remove or -10- attempt to remove any one or all of the Vessels beyond the limits of the United States, except on voyage made with the intention of returning to the United States; or (e) the termination of the Owner's or any charterer's status as a citizen of the United States under Section 2 of the Shipping Act of 1916, as amended. If any event of default as specified herein shall have occurred and be continuing, then and in each and every such case the Mortgagee shall have the right to: (1) exercise all of the rights and remedies in foreclosure and otherwise given to mortgagees by the provisions of Title 46 United States Code Section 31301 ET SEQ. and all acts amendatory thereof and supplemental thereto, or the applicable law of any other jurisdiction; (2) Bring suit at law, in equity or in admiralty to recover judgment for any and all outstanding Obligations or any sum secured by this Mortgage, or otherwise, and collect the same out of any and all property of the Owner whether covered by this Mortgage or otherwise; (3) Take and enter into possession of any one or all of the Vessels, at any time, wherever the same may be, without legal process and without being responsible for loss or damage; and the Owner or other person in possession forthwith upon demand of the Mortgagee shall surrender to the Mortgagee possession of such Vessels, and the Mortgagee may, without being responsible for loss or damage, hold, lay up, lease, charter, operate or otherwise use the Vessels, for such time and upon such terms as it may deem to be for its best advantage, and demand, collect and retain, compromise and sue for 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 the Vessels, including any amounts payable in respect of any insurance in connection with the Vessels, from any person whomsoever, accounting only for the net profits, if any, arising from such use of the Vessels and charging upon all receipts from the use of the Vessels or from the sale thereof by court proceedings or pursuant to subparagraph (4) next following, all costs, expenses, charges, damages or losses by reason of such use; and if at any time the Mortgagee shall avail itself of the right herein given to take any one or more of all of the Vessels, the Mortgagee shall have the right to dock such Vessels for a reasonable time at any dock, pier or other premises of the Owner without charge, or to dock it at any other place at the cost and expense of the Owner; (4) Take and enter into possession of all or any one or more of the Vessels, at any time, wherever the same may be, without legal process, and if it seems desirable to the Mortgagee and without being responsible for loss or damage, sell such Vessels at public or private sale, at any place and at such time as the Mortgagee may deem advisable, free from any claim by the Owner in admiralty, in equity, at law or by statute. In the case of a public sale, the Mortgagee shall give notice of the time and place of the sale with a general -11- description of the property in the following manner: (i) by publishing such notice for ten (10) consecutive days in a daily newspaper of general circulation published in the port of documentation and the places of sale of such Vessels; and (ii) by mailing a similar notice to the Owner at least fourteen (14) days prior to the date fixed for such sale. In the event that any Vessel shall be offered for sale by a private sale, no newspaper publication of notice shall be required, but the Mortgagee shall mail written notice of sale to the Owner at least fourteen (14) days prior to the date fixed for entering into the contract of sale. The Mortgagee may, without notice or publication, adjourn any public or private sale or cause such sale to be adjourned from time to time by announcement at the time and place fixed for sale or for entering into a contract of sale, and such sale or contract of sale may, without further notice, be made at the time and place to which the sale or contract of sale was so adjourned. The Mortgagee shall not be obligated to make any sale of any Vessel if it shall determine not to do so, regardless of the fact that notice of sale may have been given. Any sale may be conducted without bringing the Vessel or Vessels to the place designated for such sale and in such manner as the Mortgagee may deem to be for the best advantage of the Mortgagee. (5) Instruct the Owner to terminate any existing management agreements affecting all or any one of the Vessels, and the Owner shall, upon the giving of such instructions by the Mortgagee, immediately terminate any such management agreements and shall appoint other managers satisfactory to the Mortgagee and upon terms and conditions satisfactory to the Mortgagee. (6) If commercially reasonable to do so, instruct the Owner to make application, if relevant, to the United States Maritime Administration ("MarAd") for permission of MarAd to sell all or any one of the Vessels for purposes of foreign scrapping of such Vessels or other purposes requiring such permission, and the Owner shall, upon the giving of such instructions by the Mortgagee, immediately apply for such permission of MarAd. Section 2.2. FINALITY OF SALE. Any sale of any Vessel made in pursuance of this Mortgage, whether by exercise of the power of sale granted herein or by virtue of any judicial proceedings, shall operate to divest all right, title and interest of any nature whatsoever of the Owner therein and thereto, and shall bar the Owner, its successors and assigns, and all persons claiming by, through or under them. No purchaser shall be bound to inquire whether notice has been given, or whether any default has occurred, or as to the propriety of the sale, or as to the application of the proceeds thereof. In the case of any such sale, any purchaser who is the holder of the Note shall be entitled, for the purpose of making settlement or payment for the property purchased and subject to the sharing provisions set forth in the Loan Agreement, to apply the balance due under the Note or a part thereof as part or -12- all of the purchase price to the extent of the amount remaining due and unpaid thereon. At any such sale, the holder of the Note may bid for and purchase such property and upon compliance with the terms of sale may hold, retain and dispose of such property without further accountability therefor. Section 2.3. APPOINTMENT OF ATTORNEY. (a) The Mortgagee is hereby appointed attorney in-fact of the Owner, with full power of substitution, upon the occurrence and during the continuance of any event of default, to make application, if relevant, to MarAd for permission of MarAd to sell all or any of the Vessels. (b) To the extent permitted under the Federal Ship Mortgage Act, the Mortgagee is hereby appointed attorney in-fact of the Owner, with full power of substitution, upon the occurrence and during the continuance of any event of default, to execute and deliver to any purchaser upon any sale of all or any one or more of the Vessels made in pursuance of this Mortgage, whether by exercise of the power of sale granted herein or by virtue of any judicial proceedings, and is hereby vested with full power and authority to make, in the name and in behalf of the Owner, a good conveyance of the title to such Vessels when so sold. In the event of any sale of any Vessel by exercise of any power herein contained, the Owner will, if and when required by the Mortgagee, execute such form of conveyance of such Vessel as the Mortgagee may direct or approve. (c) To the extent permitted under the Federal Ship Mortgage Act, the Mortgagee is hereby irrevocably appointed attorney-in-fact of the Owner, with full power of substitution, upon the occurrence and during the continuance of any event of default, in the name of the Owner 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 Vessels, including all amounts due from underwriters under any insurance thereon as payment of losses or as return premiums or otherwise, salvage awards and recoveries, recoveries in general average or otherwise, and all other sums due or to become due at the time of the occurrence and during the continuance of any event of default in respect of the Vessels, or in respect of any insurance thereon, from any person whomsoever, and to make, give and execute in the name of the Owner acquittance, receipts, releases or other discharges for the same, whether under seal or otherwise, to take possession of, sell or otherwise dispose of or manage or employ the Vessels, to execute and deliver charters and a bill of sale with respect to the Vessels and to endorse and accept in the name of the Owner all checks, notes, drafts, warrants, agreements and other instruments in writing with respect to the foregoing. Section 2.4. ADDITIONAL RIGHTS. Whenever any right to enter and take possession of all or any one of the Vessels accrues to the Mortgagee, it may require the Owner to deliver and the Owner shall on demand, at its own cost and expense, deliver such Vessels to the Mortgagee. If any legal proceedings shall be taken to enforce any right under this Mortgage, the Mortgagee shall be entitled as a matter of right to the appointment of a receiver of the Vessels and the freights, hire, earnings, issues, revenues and profits due or to become due and arising from the operation thereof. Section 2.5. RELEASE OF LIENS. The Owner authorizes and empowers the Mortgagee or its appointees or any of them to appear in the name of the Owner, its successors and assigns, in any -13- court of any country or nation of the world where a suit is pending against all or any one of the Vessels because of or on account of any alleged lien against such Vessels from which such Vessels have not been released and to take such proceedings as to them may seem proper toward the defense of such suit, and the purchase or discharge of such lien, and all reasonable expenditures made or incurred by them for the purpose of such defense or purchase or discharge shall be a debt due from the Owner, its successors and assigns, to the Mortgagee and shall be secured by the lien of this Mortgage. Section 2.6. CUMULATIVE REMEDIES; NO WAIVER. Each and every power and remedy herein given to the Mortgagee shall be cumulative and shall be in addition to every other power and remedy herein given or now or hereafter existing at law, in equity, in 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 power or remedy shall not be construed to be a waiver of the right to exercise at the same time or thereafter any other consistent or inconsistent power or remedy. No delay or omission by the Mortgagee in the exercise of any right or power or in the prosecution of any remedy accruing upon any event of default shall impair any such right, power or remedy or be construed to be a waiver of any such event of default or to be an acquiescence therein; nor shall the acceptance by the Mortgagee of any security or of any payment maturing after any event of default or of any payment on account of any past default be construed to be a waiver of any right arising out of any future event of default or of any past event of default not completely cured thereby. In case the Mortgagee shall have proceeded to enforce any right, power or remedy under this Mortgage by foreclosure, entry or otherwise, and such proceedings shall have been discontinued or abandoned for any reason or shall have been determined adversely to the Mortgagee, then, and in every such case, the Owner and the Mortgagee shall be restored to their former positions and rights hereunder with respect to the property subject or intended to be subject to this Mortgage, and all rights, remedies and powers of the Mortgagee shall continue as if no such proceedings had been taken. Section 2.7. OFFERS TO CURE. If at any time after the occurrence of an event of default and prior to the actual sale of the Vessels by the Mortgagee or prior to commencement of any foreclosure proceedings, the Owner offers to cure completely all events of default and to pay all expenses and advances to the Mortgagee consequent on such event of default, with interest at the rate of interest for overdue amounts set forth in Section 3.10 of the Loan Agreement, then the Mortgagee may, if it in its sole discretion so elects, accept such offer and payment and restore the Owner to its former position, but such action shall not affect any subsequent event of default or impair any rights consequent thereon. Section 2.8. APPLICATION OF PROCEEDS. In the event of any taking of the Vessels by the Mortgagee or any sale of the Vessels under any of the powers herein specified, the proceeds of any such sale and the net earnings of any charter operation or other use of the Vessels by the Mortgagee under any such power, together with any and all moneys received by the Mortgagee pursuant to or under the terms of this Mortgage or in any proceedings hereunder or with respect hereto, the application of -14- which has not elsewhere herein been specifically provided for, shall be applied as set forth in the Loan Agreement. Section 2.9. FURTHER ASSURANCES. In the event that this Mortgage, the Loan Agreement or the Note, or any provision hereof or thereof, shall be deemed invalid in whole or in part by reason of any present or future law or any decision of any court having jurisdiction, or if the documents at any time held by the Mortgagee shall be deemed by the Mortgagee for any reason insufficient to carry out the provisions, true intent or spirit of this Mortgage, the Loan Agreement or the Note, then, from time to time, the Owner will execute, on its own behalf, such other and further assurances and documents as in the opinion of the Mortgagee may be required more effectually to subject the Vessels to the payment of the principal sum of the Obligations, as in the Loan Agreement and as herein provided, and to the performance of the terms and provisions of the Note, the Loan Agreement and this Mortgage. Section 2.10. SEVERABILITY. Any provision of this Mortgage which is prohibited, unenforceable or not authorized in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition, unenforceability or non-authorization without invalidating the remaining provisions hereof or affecting the validity, enforceability or legality of such provision in any other jurisdiction. Section 2.11. REQUISITION OF TITLE, USE. (a) In the event that the title or ownership of any Vessel shall be requisitioned, purchased or taken by any government of any country or any department, agency or representative thereof, pursuant to any present or future law, proclamation, decree, order or otherwise, the lien of this Mortgage shall be deemed to attach to the claim for compensation therefor, and the compensation, purchase price, reimbursement or award for such requisition, purchase or other taking of such title or ownership is hereby agreed to be payable to the Mortgagee, who shall be entitled to receive the same and shall apply it as provided in the Loan Agreement. In the event of any such requisition, purchase or taking, and the failure of the Mortgagee to receive proceeds as herein provided, the Owner shall promptly execute and deliver to the Mortgagee such documents, if any, and shall promptly do and perform such acts, if any, as in the opinion of the Mortgagee may be necessary or useful to facilitate or expedite the collection by the Mortgagee of such part of the compensation, purchase price, reimbursement or award as is payable to it hereunder. (b) In the event that any government of any country or any department, agency or representative thereof shall not take over the title or ownership of any Vessel but shall requisition, charter or in any manner take over the use of such Vessel pursuant to any present or future law, proclamation, decree, order or otherwise and shall, as a result of such requisitioning, chartering or taking of the use of such Vessel pay or become liable to pay sums by reason of the loss of or injury to or depreciation of such Vessel, any such sum is hereby made payable to the Mortgagee, who shall apply it as provided in the Loan Agreement. In the event of any such requisitioning, chartering or taking of the use of any Vessel, the Owner shall promptly execute and deliver to the Mortgagee such documents, if any, and shall promptly do and perform such acts, if any, as in the reasonable opinion of the Mortgagee may be necessary or useful to facilitate or expedite the collection by the Mortgagee of such claims arising out of the requisitioning, chartering or taking of the use of such Vessel. -15- (c) Unless and until an event of default shall have occurred and be continuing, the Owner (a) shall be suffered and permitted to retain actual use and possession of the Vessels and (b) shall have the right, from time to time, in its discretion, and without application to the Mortgagee, and without obtaining a release thereof by the Mortgagee, to dispose of or substitute for, free from the lien hereof, any boilers, engines, machinery, bowsprits, masts, spars, rigging, boats, anchors, cables, chains, tackle, apparel, furniture, fittings, capstans, outfit, tools, pumps, pumping or other equipment or any other appurtenances and spares to any of the Vessels that are no longer useful, necessary, profitable or advantageous in the operation of the Vessels; provided that, simultaneously with such disposal, the Owner shall replace such item(s) disposed of with similar new or refurbished items, such replacement property to be free and clear of all liens and encumbrances, other than liens permitted hereunder, and all of which replacement property shall forthwith become subject to the lien of this Mortgage as a preferred mortgage thereon. ARTICLE III DEFEASANCE If the Owner shall indefeasibly pay and discharge the entire indebtedness secured hereby by well and truly paying or causing to be paid the principal of and interest due under the Note and all of the other Obligations under the Loan Agreement as and when the same becomes due and payable and if the Owner shall also indefeasibly pay or cause to be paid all other sums payable hereunder by the Owner, then this Mortgage and the lien, rights and interest hereby granted shall cease, determine and become null and void, and the Mortgagee shall, at the request of the Owner, execute and deliver such instrument or instruments of satisfaction as may be necessary to satisfy and discharge the lien hereof; and forthwith the estate, right, title and interest of the Mortgagee in and to all property subject to this Mortgage shall thereupon cease, determine and become null and void. ARTICLE IV SUNDRY PROVISIONS Section 4.1. INDEBTEDNESS SECURED. For the purpose of recording of this First Preferred Fleet Mortgage, as required by Title 46 United States Code Section 31301 ET SEQ., the total amount of obligations that is or may become secured by this Mortgage is the principal sum of Three Million Four Hundred Twenty Thousand Six Hundred Fifty-Seven Dollars and Seventy-Six Cents ($3,420,657.76) plus interest, expenses and fees, plus any additional amounts for which the Owner may become liable in connection with the performance of the covenants of this Mortgage and the Loan Agreement. The total discharge amount is the same as the total amount. The Owner's interest in each of the Vessels is 100% and the interest mortgaged with respect to each of the Vessels is 100%. Section 4.2. SUCCESSORS AND ASSIGNS. All of the covenants, promises, stipulations and agreements of the Owner in this Mortgage contained shall bind the Owner and its successors and assigns and -16- shall inure to the benefit of the Mortgagee and its successors and assigns PROVIDED, that the Owner shall not assign or transfer any of its rights or obligations hereunder. Section 4.3. AGENTS. Wherever and whenever herein any right, power or authority is granted or given to the Mortgagee, such right, power or authority may be exercised in all cases by the Mortgagee or such agent or agents as it may appoint, and the act or acts of such agent or agents when taken shall constitute the act or acts of the Mortgagee hereunder. Section 4.4. NOTICES. Any notice, request, demand, direction, consent or waiver or other documents in respect of this Mortgage shall be sufficient for every purpose if in writing and sent either by telegram, telecopy or letter (delivered by hand or sent by registered or certified mail, return receipt requested, postage prepaid) or telecopy confirmed by letter (sent as aforesaid), addressed as follows: (a) To the Owner: Moran Towing Corporation Two Greenwich Plaza Greenwich, CT 06830 Attention: Alan Marchisotto, Esq. with a copy to: Michael Herling, Esquire Finn Dixon & Herling LLP One Landmark Square Stamford, CT 06901 Telecopier: (203) 348-5777 (b) To the Mortgagee: BancBoston Leasing Inc. 100 Federal Street Boston, MA 02110 Attention: Director of Administration Telecopier: (617) 434-0974 with a copy to: BankBoston, N.A. 100 Federal Street Boston, MA 02110 Attention: Mr. Victor Garcia Telecopier: (617) 434-1955 -17- Any notice, request or communication hereunder shall be deemed to have been given in the case of a letter, when delivered by hand at the address provided in this Section or three (3) days after having been deposited in the mail with first class postage prepaid, addressed as aforesaid, or in the case of a telecopy, at the time of dispatch thereof, if in the normal business hours in the state or country where received or otherwise at the opening of business on the next succeeding business day. Any party may change the person or address to whom or which the notices are to be given hereunder, by notice duly given hereunder. Section 4.5. NO WAIVER OF PREFERRED STATUS. Notwithstanding anything contained in this Mortgage to the contrary, nothing herein shall waive the preferred status of this Mortgage and if any provision herein shall be construed to waive such status, then such provision shall to the extent so construed be void and of no effect. Section 4.6. INDEMNITY. The Owner assumes liability for, and agrees to indemnify and hold the Mortgagee harmless from, all claims, costs, expenses (including reasonable legal fees and expenses), damages and liabilities arising from or pertaining to this Mortgage or the ownership, use, possession or operation of the Vessels; PROVIDED that the Owner shall have no obligation hereunder for indemnified liabilities arising from the gross negligence or willful misconduct of the Mortgagee. The agreements and indemnities contained in this section shall survive the maturity or earlier discharge of this Mortgage and payment in full of the Note. Section 4.7. CITIZENSHIP. Notwithstanding any other language in this Mortgage to the contrary, the Mortgagee shall not take any action in violation of Section 9 of the Shipping Act, 1916, as amended by Public Law 100-700 (46 U.S.C. Chapter 313). To the extent any provision of this Mortgage contravenes Section 9 of the Shipping Act, 1916, such provision may be deemed void without affecting the validity and enforceability of the other provisions of this Mortgage. Section 4.8. CONSENT TO FORUM. THE OWNER HEREBY IRREVOCABLY CONSENTS AND AGREES THAT ANY LEGAL ACTION, SUIT, OR PROCEEDING ARISING OUT OF OR IN ANY WAY IN CONNECTION WITH THIS MORTGAGE MAY BE INSTITUTED OR BROUGHT IN THE COURTS OF THE COMMONWEALTH OF MASSACHUSETTS OR THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MASSACHUSETTS, AS THE MORTGAGEE MAY ELECT, AND BY EXECUTION AND DELIVERY OF THIS MORTGAGE, THE OWNER HEREBY IRREVOCABLY ACCEPTS AND SUBMITS TO, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE NON-EXCLUSIVE JURISDICTION OF ANY SUCH COURT, AND TO ALL PROCEEDINGS IN SUCH COURTS. THE OWNER IRREVOCABLY CONSENTS TO SERVICE OF ANY SUMMONS AND/OR LEGAL PROCESS BY REGISTERED OR CERTIFIED UNITED STATES MAIL, POSTAGE PREPAID, TO THE OWNER AT ITS ADDRESS AS SET FORTH IN SECTION 4.4 OF ARTICLE IV HEREOF, SUCH METHOD OF SERVICE TO CONSTITUTE, IN EVERY RESPECT, SUFFICIENT AND EFFECTIVE SERVICE OF PROCESS IN ANY SUCH -18- LEGAL ACTION OR PROCEEDING. NOTHING IN THIS MORTGAGE SHALL AFFECT THE RIGHT OF THE MORTGAGEE TO EFFECT SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR LIMIT THE RIGHT OF THE MORTGAGEE TO BRING ACTIONS, SUITS OR PROCEEDINGS WHETHER IN REM, IN PERSONAM, IN LAW, EQUITY, ADMIRALTY OR OTHERWISE IN THE COURTS OF ANY OTHER JURISDICTION. THE OWNER FURTHER AGREES THAT FINAL JUDGMENT AGAINST IT IN ANY SUCH LEGAL ACTION, SUIT OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN ANY OTHER JURISDICTION, WITHIN OR OUTSIDE THE UNITED STATES OF AMERICA, BY SUIT ON THE JUDGMENT, A CERTIFIED OR EXEMPLIFIED COPY OF WHICH SHALL BE CONCLUSIVE EVIDENCE OF THE FACT AND THE AMOUNT OF THE LIABILITY. -19- IN WITNESS WHEREOF, the Owner has executed this Mortgage the day and year first above written. MORAN TOWING CORPORATION By: /s/ Jeffrey J. Mcaulay --------------------------- Title: Vice President ACKNOWLEDGMENT STATE OR COMMONWEALTH OF CONNECTICUT ) ) ss.: COUNTY OF FAIRFIELD ) On this 10th day of December, 1997 before me personally came Jeffrey J. McAulay, to me known, who being by me duly sworn, did depose and say that he resides at 315 W. 223rd St., New York, NY 10015; that he is the Vice President of Moran Towing Corporation, a New York corporation, the corporation described in and which executed the foregoing instrument; and that he signed his name thereto by order of the Board of Directors of said corporation and acknowledged the same to be his act and deed as such Vice President on behalf of the corporation. /s/ Daniel Klaben ------------------------ Notary Public My commission expires: December 31, 1998. SCHEDULE 1 VESSEL NAME OFFICIAL NUMBER April Moran 644241 SCHEDULE 2 VESSEL NAME OFFICIAL NUMBER VALUE INSURED April Moran 644241 $5,000,000 EXHIBIT A [Attach Note] EX-10.6 7 EX-10.6 EXHIBIT 10.6 AGREEMENT Dated: December 10, 1997 Interlake Transportation, Inc., a Delaware corporation with its principal place of business at Three Landmark Square, Stamford, CT 06901 (hereinafter called the "Seller"), has agreed to sell, and Moran Towing Corporation, a New York corporation with its principal place of business at Two Greenwich Plaza, Greenwich, Connecticut 06830 (hereinafter called the "Buyer"), has agreed to buy the following marine equipment: Name: the tug April (to be renamed "April Moran") further described as: Classification Society/Class: American Bureau of Shipping/+A1 Towing Service, +AMS Built: 6/30/82 By: McDermott Shipyards Flag: United States Homeport: Philadelphia, Pennsylvania Call Sign: WRA 7927 Grt/Nrt: 272/185 Register Number: 644241 (hereinafter called the "Tug"). The purchase of the Tug shall be on the following terms and conditions: DEFINITIONS "Banking Days" are days on which banks are open in New York, New York. "In writing" or "written" means a letter handed over from the Sellers to the Buyers or vice versa, a registered letter, a telex or a telefax. "Classification Society" means the Society referred to above. "Class" means the designation of the Tug conferred by the Classification Society. 1. PURCHASE PRICE - Buyer shall (i) assume the debt as described on attached Schedule A (the "Assumed Debts"), and (ii) pay, or be paid, the cash purchase price calculated on Schedule A. 2. PAYMENT On delivery of the Tug and the documentation set forth in paragraph 5, the Purchase Price shall be paid in full in immediately available U.S. funds via wire transfer to such bank account as may be directed in writing by Seller or Buyer, as the case may be or their respective Assignees, or if no such account is specified, by cashier's or bank teller's check. 3. SPARES/BUNKERS, ETC; EXISTING BAREBOAT CHARTER. - 2 - a) The Tug is currently in possession of the Buyer pursuant to a bareboat charter, dated February 21, 1997 (the "Bareboat Charter") and shall become the property of the Buyer together with her full equipment, spares and appurtenances. b) Upon delivery of the Tug pursuant to the terms hereof, the Bareboat Charter shall terminate and be of no further force and effect. In connection with the termination of such Bareboat Charter, Seller shall pay to Buyer an amount equal to $200,000, as a retroactive charter hire adjustment, less unpaid charter hire payable by Buyer in respect of the months of October and November 1997 in the amount of $167,140. The net payment by Seller to Buyer upon termination of such Bareboat Charter shall be $32,860. 4. DOCUMENTATION Place of delivery: wherever the Tug is situated on the date of the closing. Time of delivery: a date mutually agreeable to Seller and Buyer, but no later than December 31, 1997. a) In exchange for payment of the Purchase Price, the Seller shall furnish the Buyer with the following delivery documents: 4.1 A valid and original bill of sale for the Tug in a form recordable in the United States, duly notarially attested, reflecting that the sale is "AS IS, WHERE IS," and warranting that the Tug is free from all incumbrances, mortgages and liens and from any other debts or claims whatsoever, except the Assumed Debts. 4.2 The current Certificate of Documentation for the Tug issued by the United States Coast Guard. 4.3 A fax copy of Confirmation of Class for the Tug issued on a recent date, with the originals sent the same day as the fax by overnight courier to Buyer c/o Moran Services Corporation, Two Greenwich Plaza, Greenwich, CT 06830. 4.4 Any such additional documents as may be required by the competent authorities in the United States for the purpose of registering the Tug in the name of the Buyer. 4.5 A copy of resolutions of the Board of Directors of Seller approving the sale of the Tug to Buyer and authorizing execution and delivery of all documents necessary to effectuate said sale. b) The Buyer shall furnish to the Seller, in addition to the Purchase Price, (i) a copy of resolutions of the Board of Directors of Buyer, approving the purchase of the Tug - 3 - by Buyer and authorizing execution and delivery of all documents necessary to effectuate said sale and to assume the Assumed Debts, and (ii) such assumption documents as are required for Buyer to assume the Assumed Debts. c) Concurrently with delivery of the Tug, Buyer and Seller shall sign and exchange with each other a Protocol of Delivery and Acceptance confirming the date and time of delivery of the Tug from Seller to Buyer. d) Concurrently with delivery of the Tug, Seller shall deliver to Buyer or to its duly authorized representative, one set of certificates, drawings, instruction books, operational manuals and plans applicable to the Tug that are in Seller's possession on the date of this Agreement. Notwithstanding the foregoing, Seller may retain manuals in its office that are the sole copies and that pertain also to other vessels owned by Seller provided that a copy thereof of is provided to Buyer. e) Concurrently with the delivery of the Tug, the Seller shall effect payment to Buyer in the amount of $32,860, as contemplated by Section 3(b) hereof. f) Concurrently with the delivery of the Tug, the Seller shall deliver a release of mortgage in such form as is acceptable to the Buyer. 5. ASSIGNMENT Buyer shall have the right to assign to an affiliate all Buyer's rights hereunder to purchase the Tug. In such event, Buyer shall given written notice thereof to Seller at least two Banking Days prior to the closing date, said notice to contain all necessary information to enable Seller to prepare the closing documents set forth in paragraph 4. Said affiliate shall be a citizen of the United States, within the meaning of Section 2 of the Shipping Act, 1916, as amended, entitled to own a vessel engaged in the United States coastwise trade. 6. ENCUMBRANCES Seller warrants that the Tug, at the time of delivery, shall be free from all charters, encumbrances, mortgages and maritime liens or any other debts whatsoever, except the Assumed Debts. The Seller hereby undertakes to indemnify the Buyer against all consequences arising out of any breach of said warranty. Seller's undertaking shall survive the closing. Except as expressly warranted above, Seller makes no warranties or representations express or implied, as to the value of the Tug or as to the seaworthiness, condition, design, operation, fitness for a particular purpose or trade or merchantability of the Tug or any parts or equipment thereof. The Tug is sold "AS IS, WHERE IS." In the event that the documents referred to in paragraph 4.5 and 4(b)(i) are not presented at the delivery of the Tug, each side represents and warrants to the other that it is authorized to consummate the transactions contemplated by this Agreement and that it will deliver said documents as soon as reasonably practical. - 4 - 7. TAXES, ETC. Any taxes, fees and expenses in connection with the purchase and registration under the Buyer's name shall be for the Buyer's account. Fees and expenses in connection with the deletion of the Seller's name from the U.S. Coast Guard register shall be for Seller's account. 8. CONDITION ON DELIVERY The Tug with everything belonging to her shall be at the Seller's risk and expense until she is delivered to the Buyer, subject to the terms and conditions of this Agreement, fair wear and tear excepted. Notwithstanding the foregoing, the Tug shall be delivered with her class maintained without condition/recommendation, free of average damage affecting the Tug's class, and with her classification certificates and national certificates, as well as all other certificates the Tug had at the time of inspection, valid and unextended without condition/recommendation by Class or the relevant authorities at the time of delivery. Notwithstanding the foregoing, Seller shall be entitled to remove from the Tug certificates of documentation, radio licenses, COFRs, Tovalop and such other documents as may be required to be removed by law. 9. LOSS OR DAMAGE In the event that the Tug becomes a loss or a constructive total loss prior to delivery hereunder to Buyer, this Agreement shall become null and void. In the event that the Tug is damaged prior to delivery hereunder to Buyer, Seller shall be responsible for repairing all such damage to the reasonable satisfaction of Buyer's surveyor to the extent that Buyer is not required to make such repairs under the terms of the Bareboat Charter. Said repair shall be completed prior to deliver of the Tug hereunder and, for such purpose, the closing may be rescheduled at a mutually agreeable date no later than December 31, 1997. If, based on surveyors' estimates, the Tug cannot be repaired within that time or if the cost of repairs will exceed $500,000.00, either party may cancel this Agreement on written notice to the other. 10. GOVERNING LAW This Agreement shall be governed by and construed in accordance with the law of the State of Connecticut and should any dispute arise out of this Agreement, the matter in - 5 - dispute shall be referred to three persons at Connecticut, one to be appointed by each of the parties hereto, and the third by the two so chosen; their decision or that of any two of them shall be final, and for purpose of enforcing any award, this Agreement may be made a rule of the Court. The proceedings shall be conducted in accordance with the rules of the Society of Maritime Arbitrators, Inc., New York. 11. WARRANTY OF U.S. CITIZENSHIP 11.1 Seller represents and warrants that it is and shall remain through the date of delivery of the Tug a citizen of the United States within the meaning Section 2 of the Shipping Act of 1916, as amended, entitled to own a vessel engaged in the United States coastwise trade. Seller further represents and warrants that it is the sole owner of the Tug and is possessed of full authority to enter into and perform this Agreement. 11.2 Buyer represents and warrants that it, and its assignee, if any, are and shall remain through the date of delivery of the Tug a citizen of the United States within the meaning of Section 2 of the Shipping Act of 1916, as amended, entitled to own a vessel engaged in the United States coastwise trade. Buyer further represents that it shall register the Tug under the laws and flag of the United States and it is possessed of full authority to enter into and perform this Agreement. INTERLAKE TRANSPORTATION, MORAN TRANSPORTATION COMPANY INC. By: /s/ Andrew P. Langlois By: /s/ Jeffrey J. McAulay -------------------------- -------------------------- Name: Andrew P. Langlois Name: Jeffrey J. McAulay Title: Vice President Title: Vice President SCHEDULE A Purchase Price (Settlement Date = December 10, 1997) Seller's Cost $3,500,000.00 less Debt of Seller to BancBoston Leasing (3,420,657.76) Inc. as of Settlement Date, in respect of current outstanding principal amount of term loan in the original principal amount of $3,500,000 under Construction and Term Loan Agreement dated as of May 16, 1997. ------------ NET PURCHASE PRICE $ 79,342.24 ============= (if positive, due Seller; if negative, due Buyer) EX-10.9 8 EX-10.9 EXHIBIT 10.9 AGREEEMENT BETWEEN THE SEAFARERS INTERNATIONAL UNION OF NORTH AMERICA, ATLANTIC, GULF, LAKES AND INLAND WATER DISTRICT, AFL-CIO AND MORAN TOWING OF PENNSYLVANIA AND MORAN TOWING OF MARYLAND DIVISION OF MORAN TOWING CORPORATION MAY 1, 1996 THROUGH APRIL 30, 2001 TABLE OF CONTENTS TABLE OF CONTENTS 1 ARTICLE I 4 EMPLOYMENT 4 SECTION 1. UNION RECOGNITION 4 SECTION 2. UNION FURNISHING EMPLOYEES 4 SECTION 3 UNION SECURITY 5 SECTION 4. HIRING OF NEW EMPLOYEES 5 SECTION 5. COMPANY REJECTION OF EMPLOYEES 5 SECTION 6. EQUAL OPPORTUNITY 5 SECTION 7. INDEMNIFICATION 6 SECTION 8. SPECIAL WORKING CONDITIONS 6 SECTION 9. TOTALITY OF AGREEMENT 6 ARTICLE II 7 GRIEVANCE AND ARBITRATION PROCEDURE 7 ARTICLE III 8 DUES CHECK-OFF AND INITIATION FEES 8 ARTICLE IV 9 GENERAL RULES 9 SECTION 1. NO STRIKES OR LOCKOUTS 9 SECTION 2. PICKET LINES AND INDUSTRIAL DISPUTES 9 SECTION 3. SUBSTITUTE PROVISION - CONFORMITY TO LAW SAVINGS CLAUSE 9 SECTION 4. SEAFARERS HARR LUNDEBERG SCHOOL OF STEAMSHIP 10 SECTION 5. HOLIDAY 10 SECTION 6. WAGES AND MANNING SCALES 10 SECTION 7. EXCLUSIVENESS OF CONTRACT 10 SECTION 8. ANNUAL PHYSICAL 11 SECTION 9. UNION RE-PRESENTA T10N ONBOAD VESSEL 11 APPENDIX A 12 SECTION 1. SEAFARERS WELFARE PLAN 12 National Health Care Plan 12 SECTION 2. SEAFARERS PENSION PLAN 12 SECTION 3. SEAFARERS HARRY LUNDEBERG SCHOOL OF STEAMSHIP 13 SECTION 4. TRANSPORTATION 13 SECTION 5. SEAFARERS JOINT EMPLOYMENT FUND 13 SECTION 6. ARBITRATION 14 APPENDIX B 16 SECTION 1. BASE DAILY WAGES RATES 16 SECTION 2. LEAVE OF ABSENCE 16 SECTION 3. LOSS OF PERSONAL EFFECTS 17 SECTION 4. WHEELHOUSE MANNING 17 SECTION 5. CARE OF LIVING QUARTERS 17 SECTION 6. MANNING SCALES 17 SECTION 7. SAILING ORDERS 17 SECTION 8. DEATH IN THE IMMEDIATE FAMILY 17 SECTION 9. SUBSISTANCE 18 SECTION 10. PAY PERIOD 18 SECTION 11. PERMISSION TO LEAVE 18 SECTION 12. NON-CREWMEMBERS ONBOARD TUGS 18 SECTION 13. MAINTENANCE AND CURE 18 SECTION 14. VESSEL SALES AND TRANSFERS 18 APPENDIX C 20 PHILADELPHIA 20 SECTION 1. COMPANY SENIORITY, PROMOTIONS AND TRANSFERS 20 SECTION 2. MOST FAVORED NATION CLAUSE 21 SECTION 3. SAFETY AND COMFORT 21 SECTION 4. CUSTOAMRY DUTIES 22 SECTION 5. ROTATION 22 SECTION 6 SAILING ORDERS 22 SECTION 7. HOLIDAYS 22 SECTION 8. MAINENTENANCE WORK 22 SECTION 9. PLANNED REPAIRS 23 SECTION 10. TIME FOR ORDERING OUT CREWS 23 APPENDIX I-C 24 PHELADELPHIA 24 MAINT'ENANCE MEN 24 SECTION 1. NOTICE OF LAYOFF 24 SECTION 2. PIECE WORK 24 SECTION 3. WORK WEEK AND OVERTIME RATES 24 SECTION 4. VACATION 25 SECTION 5. WAGES 25 APPENDIX D 26 BALTIMORE 26 SECTION 1. SENIORITY, LAYOFFS & TIE-UPS PROMOTIONS AND TRANSFERS 26 SECTION 2. PROBATIONARY PERIOD 28 SECTION 3. DISCIPLIAARY PROCEDURE 28 SECTION 4. LEAVE OF ABSENCE 28 SECTION 5. WORKING ROTATION 28 SECTION 6 ORDERING SYSTEM 29 SECTION 7. HOLIDAYS 29 SECTION 8. SAFETY AND COMFORT 29 SECTION 9. SAFETY AND GRIEVANCE MEETINGS 29 SECTION 10. UNION DELEGATES 30 APPENDIX I-D 31 BAILTIMORE 31 SHOP AGREEMENT 31 SECTION 1. HOURS, RATE OF PAY, WORKING CONDITIONS 32 SECTION 2. UNIFORMS 32 SECTION 3. TANK AND BILGE CLEANING 32 SECTION 4. HOLIDAYS 32 TERM OF AGREEMENT 33 THIS AGREEMENT, made and entered into on this 1st day of May, 1996 by and between the SEAFARERS INTERNATIONAL UNION, ATLANTIC, GULF, LAKES AND INLAND WATERS DISTRICT, AFL-CIO (hereinafter referred to as the "Union") and its successors, party of the first part and MORAN TOWING OF PENNSYLVANIA, DIVISION, and its successors and assigns, party of the second part, and MORAN TOWING OF MARYLAND, DIVISION, and its successors and assigns, party of the third part (hereinafter referred to as the "Company" and/or "Employer"). This agreement shall remain in effect until midnight of the 30th day of April 2001. ARTICLE I EMPLOYMENT SECTION 1. UNION RECOGNITION This Agreement applies to non-supervisory employees, including all mates, engineers deckhands, tankerman, electricians, handymen, helpers and machinist, excluding engineers and engineer/machinist in the port of Philadelphia, (hereinafter called "employees"), when employed on tugboats, barges and shoreside facilities of the Company. Excluding all office, clerical and supervisory employees. This recognition shall not apply to bareboat charters, to other operators nor to crews of vessels of subsidiary or affiliated companies. SECTION 2. UNION FURNISHING EMPLOYEES The Union agrees to furnish the Company with capable, competent, drug free, physically fit and properly licensed personnel as required by Company policy when and where they are required to fill vacancies necessitating the employment of employees covered hereunder, in ample time to prevent any delay in the scheduled departure of any vessel covered by this Agreement. To assure maximum harmonious relations, and in order to obtain the best qualified employees with the least risk of a delay in the scheduled departure of any vessel covered by this Agreement, the Company agrees to secure all its personnel through the hiring halls of the Union. Whenever possible, the Company shall give the Union at least twenty-four (24) hours' notice in order for the Union to have sufficient time to comply with the above. If for any reason the Union does not furnish the Company with capable, competent and physically fit persons, when and where they are required to fill such vacancies, in ample time to prevent any delay in the scheduled departure of any vessel covered by this Agreement, the Company may obtain employees from any available source, in which case the Union shall be notified, within three (3) business days of such hiring. Minimum qualifications for hiring as, or promotion to, mate will be the possession of a valid license as mate 500 ton Inland (no Colregs restriction) and the agreement to upgrade to master as soon as sufficient seatime is accumulated. Minimum qualifications for hiring as, or promotion to engineer, will be the possession of a valid license as chief engineer 4000 or greater. Engineers currently on the seniority list will secure a Chief Engineer 4000 BP license or greater, during the term of this agreement as soon as sufficient seatime is accumulated and recognized by the U.S. Coast Guard. SECTION 3. UNION SECURITY A. Subject to the provisions of the Labor Management Relations Act, 1947, as amended, all present employees who are members of the Union on the effective date of this Agreement, shall remain members of the Union in good standing as a condition of employment or pay the required agency fee. Furthermore, all new employees shall be obligated to become and remain members of the Union as a condition of employment or pay the required agency fee. B. Notwithstanding anything to the contrary therein, Paragraph A above shall not be applicable if all or any part thereof shall be in conflict with applicable law, provided however, that if all or any part of Paragraph A becomes permissible by virtue of a change in applicable law, whether by legislative or judicial action, the provisions of Paragraph A held valid shad] immediately apply. SECTION 4. HIRNG OF NEW EMPLOYEES The Union shall refer to the Employer, at his request, individuals to perform the particular classification or character of work required by the Employer. Registrants shall be referred to available employment opportunities in seniority order as contained in the Inland Shipping Rules. SECTION 5. COMPANY REJECTION OF EMPLOYEES A. The Union agrees that the Company has the right to reject, any applicant for employment who the Company considers unsatisfactory or unsuitable for the position, or to discharge any employee, who, in the opinion of the Company is not satisfactory. B. Except as provided in Sections 7B and C herein, if the union considers the discharge of any employee as being without reasonable cause, such actions shall be dealt with under the grievance procedure as provided for herein and the Union agrees that the discharge shall not cause any vessel to be delayed on her scheduled departure. C. If an applicant referred by the Union is rejected or an employee is discharged or demoted for medical reasons, the Union may challenge the decision of the Company physician. The applicant or employee shall then be re-examined by the Seafarers' physician. In the event that the two physicians do not agree, a third physician shall re-examine, and his opinion shall be final and binding. SECTION 6. EOUAL OPPORTUNITY During the term of this Agreement neither party shall discriminate against employee or applicant for employment because of race, color, sex, age, religion, national origin, handicap, veterans' status or Union membership. This nondiscriminatory policy shall include, but not be limited to the following: employment, promotion, upgrading, transfer layoff, demotion, termination, rates of pay, forms of compensation, recruitment or recruitment advertising and selection for training. SECTION 7. INDEMNIFICATION The Union shall protect and indemnify the Company in any cause of action based on improper application by the Union of the employment provisions of Article I of this Agreement. The Company shall protect and indemnify the Union in any cause of action based on improper application by the Company of the employment provisions of Article I of this Agreement. SECTION 8. SPECIAL WORKING CONDITIONS The parties agree that working conditions established in the ports of Philadelphia and Baltimore will be covered under Appendices "C" and "D"' respectively. SECTION 9. TOTALITY OF AGREEMENT The parties acknowledge that during negotiations which resulted in this Agreement each had the unlimited opportunity to make demands and proposals with respect to any subject matter not removed by law from the area of collective bargaining and that the understanding and agreements arrived at by the parties after the exercise of that right and opportunity are set forth herein. The employer shall not be obligated to continue any benefit or employee practice which it has given or engaged in prior to the execution of this agreement unless specifically set forth in this Agreement. ARTICLE II GRIEVANCE AND ARBITRATION PROCEDURE In the event that any controversy or dispute arises concerning the interpretation or application of, or compliance with the provisions of this Agreement, the Employer and the Union shall make every reasonable effort the settle the dispute informally within seven (7) business days of being notified of the existence of the complaint. A party shall have five (5) business days after learning of the dispute to initiate the seven (7) day period of informal discussions. All disputes must be submitted to the Union by the affected employee within five (5) business days from the latter of the date the employee leaves the vessel or the day in which the employee has a reasonable opportunity to learn of the existence of the dispute. In the event the dispute remains unsettled after the seven (7) day period, the complainant may file a formal written grievance. The grievance must be presented to the party against whom the complaint has been filed within seventy-two (72) hours of the expiration of the seven (7) day period. The party against whom the complaint has been filed shall have seventy-two (72) hours to provide its answer to the grievance. if no answer is filed within the stated time it will be treated as a denial of the grievance. If the parties are unable to settle the dispute within thirty (30) days after the answer, the grieving party may invoke arbitration by notifying the other party in writing of it's desire to submit the matter to binding arbitration. The party invoking arbitration shall simultaneously file a copy of the notice with the American Arbitration Association. All matters pertaining to the arbitration hearing and the selection of an arbitrator will be subject to the Rules of the American Arbitration Association. Cost incurred by the arbitrator shall be borne by the party ruled against. All time limits imposed by this Article can be extended by mutual agreement. It is understood that the sole function of the arbitrator is to interpret the express provisions of this Agreement and to apply them to the facts of the grievance. The arbitrator shall have no power to change, amend. modify, add to, subtract from, or otherwise alter this Agreement. ARTICLE III DUES CHECK-OFF AND INITATION FEES The Union, an unincorporated association consisting of employees of the Company and other employers, and the Company, to facilitate and implement the desire of employees of the Company to maintain their Union, and to assist such employees to comply with their monetary obligations to their Union, agree to establish and maintain a voluntary check-off procedure for. the employees covered by this Agreement. The Union and the Company further acknowledge that such check-off hereafter fully set forth, is in accordance with the authority and direction of exclusive federal law and decisions to - -the NLRB regulating labor management relations such as the relationship which is the subject of this Agreement between the parties. In accordance with the provisions of Section 302 (c) (4) of the Federal Labor Management Relations Act a amended, the Company agrees that upon receipt of a voluntary written authorization executed by employees covered by this Agreement, it will deduct the employees' regular initiation fees and regular dues from employees' compensation, including payments for or made during time off periods, if any, in the amounts and at the time hereafter set forth in the written authorization and timely remit such amounts to the Union. The Company agrees to hold all sums deducted in trust for the Union. The authorization for the foregoing shall be the following form signed and dated by the employee. CHECK-OFF AUTHORIZATION Seafarers International Union of North America. Atlantic, Gulf, Lakes and Inland Waters District, AFL-CIO The undersigned employee, a member of the Seafarers International Union of North America, Atlantic, Gulf, Lakes and Inland Waters District, an unincorporated association, or desiring to become a member of the above Union. hereby directs you, my employer, effective from this date, to deduct from my compensation to be paid to me by you, including payments for or made during time-off periods, if any, a sum equal to the regular initiation fees and regular membership dues of such Union. Such sum may be deducted in installment payments, as may be directed by the Union. The moneys so deducted shall be remitted by you to the Union monthly within ten (10) days after the end of each month. All moneys deducted by you, p t to this Authorization, shall be held by you in trust. Written notification by the Union to you of the amount of such regular initiation fees and membership dues and/or the amounts owed by the undersigned for the same shall be conclusive authority to you for such deductions. I submit this Authorization and assignment with the understanding that it will be effective irrevocably for a period of one year from this date, or up to the termination date of the current Collective Bargaining Agreement (if any), between your Company and the above Union, whichever occurs sooner. This Authorization and assignment shall continue in full force and effect for yearly periods beyond the irrevocable period set forth above, and each subsequent yearly period shall be similarly irrevocable unless revoked by me within fifteen (15) days after any irrevocable period. Such revocation shall be effected by individual written notice by registered mail or certified mail to both you, as the employer, and the Union, within such fifteen (15) day period. This Authorization and assignment is made and executed in accordance with the authority and directions of Section 302(c)(4) of the Labor-Management Relations Act, as Amended, and applicable law. NAME: DATE OF HERE: -------------------------- -------------------- ADDRESS: COMPANY: ------------------------ ------------------------ SOC. SEC.#: BOOK #: --------------------- -------------------------- City State Zip ---------------------- ------------------------------ SIGNATURE: DATE: ---------------------- ---------------------------- ARTICLE TV GENERAL RULES SECTION 1. NO STRIKES OR LOCKOUTS There shall be no strike, lockout or stoppage of work of any kind while the provisions of this Agreement are in effect. SECTION 2. PICKET LINES AND INDUSTRLAL DISPUTES No employee covered by this Agreement shall be compelled to work with strikebreakers or cross any picket lines approved by the Union where to do so would involve injury or threat to this person or would involve such employee's breach of his obligations as a Union member or where to do so would violate such employee's moral, ethical, and trade union beliefs. Further, an employee's refusal to do any of the aforesaid acts or an employee's exercise of the rights and immunities described in the first proviso to Section 8(b)(4) of the National Labor Relations Act, 1947, as amended, shall not constitute a breach of this Agreement and shall not be cause for the discipline or discharge. The Union agrees to notify the Company whenever any of its members notify them that they will exercise any rights under this Section or under law and agrees that the Company will be given an opportunity to deliver or arrange for the delivery of anything in its physical possession or pick up or arrange to receive any specific thing that its services are already ordered for or received up to midnight of the date of the notification. SECTION 3. SUBSTITUTE PROVISIONS - CONFORMITY TO LAW SAVINGS CLAUSE A. If any provision or the enforcement or performance of any provision of this Agreement is or shall at any time be contrary to law, then such provision shall be applicable or enforced or performed, except to the extent permitted by law. If at any time thereafter such provision or its enforcement or performance shall no longer conflict with the law, then it shall be deemed restored in full force and effect as if it had never been in conflict with the law. B. If any such provision of this Agreement or the application of such provision to any person or circumstance shall be held invalid, the remainder of this Agreement, or the application of such provision to other persons or circumstances, shall not be affected thereby. C. If any provision of this Agreement is invalidated or the enforcement of any provision is enjoined by a court of competent jurisdiction, the parties shall meet for the purposes of agreeing upon a substitute provision. If they are unable to agree, the matter shall constitute a complaint, dispute, or grievance and shall be referred to arbitration pursuant to the terms and provisions of this Agreement. The arbitrators are given the express power to draft a substitute provision in the light of the relationships existing between the parties, and such substitute provision shall be deemed incorporated in this Agreement in lieu of such invalidated provision. SECTION 4. SEAFARERS HARRY LUNDEBERG SCHOOL OF SEAMANSHIIP A. The Union and the Company do hereby mutually agree that they shall encourage all employees to upgrade their skills through attendance at the Harry Lundeberg School. Any employee having at least six (6) months' service with the Company desiring to attend the Harry Lundeberg School shall be given a leave of absence and the Company shall pay round-trip transportation to and from the School upon satisfactory completion of the course of training. B. The Company agrees to reimburse up to four (4) employees, a sum not to exceed twenty five hundred dollars ($2500.00) each, in loss wages, upon satisfactory completion of upgrading courses. In order to receive reimbursement, such employee (s) must remain available for employment with the company for a period of one year from the date of completion. SECTION 5. HOLIDAY, TRANSPORTATION AND LIVING AND WORKING CONDITIONS Holidays, transportation, and additional conditions of employment aboard Company vessels shall be set forth in the Appendixes to this Agreement, which are incorporated into and made a part of this Agreement. SECTION 6. WAGES AND MANNING SCALES Wages, manning scales and special conditions, if any, that apply to the Company shall be set forth in Appendices "B", "C", "I-C", "D" and "I-D" of this Agreement, which is incorporated and made a part of this Agreement as applicable to the specific Company signatory to Appendices "B", "C", "I-C", "D" and "I-D". SECTION 7. EXCLUSIVENESS OF CONTRACT This Agreement constitutes the sole and exclusive agreement between the parties hereto, and neither any representative of the Company or any representative of the Union shall have any authority to construe, modify, or make any changes in the terms and conditions hereof. Any change or modification of the language of the Agreement and the terms and conditions hereof shall be the subject of an Addendum executed by both the duly authorized representatives of the Union and of the Company, providing that nothing herein contained shall be construed as limiting the right of any arbitrator under the arbitration provisions hereof to interpret the Agreement. SECTION 8. ANNUAL PHYSICAL The Company may require an annual physical at the employer's expense, and all permanent employees shall be required to submit to it. SECTION 9. UNION REPRESENTATION ONBOARD VESSELS Absent an emergency, the Union shall give advance notice and shall execute a release prior to boarding the vessel. APPENDIX A SECTION 1. SEAFARERS WELFARE PLAN The Company, commencing with the effective date indicated below, shall pay to the Seafarers Welfare Plan a jointly administered Labor-Management Trust Fund and/or its successors, a sum equal to twenty-six dollars ($26.00) per man per day worked by the employees covered by the Collective Bargaining Agreement or any supplements or addenda thereto between the Union and said Company. Payment shall be made monthly and shall be accompanied by reports in such form as the trustees of the Plan may determine. Such payments shall be used to provide welfare and similar benefits for eligible employees, their families and dependents, as well as for the administration of the Plan and for any other purpose which the Trustees may determine from time to time, in accordance with the provisions of the Trust Agreement, as amended. This provision shall become effective May 1, 1996. By execution of this agreement, the Company becomes a party and subscriber to the Trust Agreement establishing the aforesaid Seafarers Welfare Plan, as amended, and acknowledges receipt of a copy of such Agreement, as amended. NATIIONAL HEALTH CARE PLAN If a National Health Care Plan is enacted and implemented during the term of this Agreement then the parties agree to meet and discuss its impact on the costs of providing medical benefits by Employers and the Seafarers' Welfare Plan. SECTION 2. SEAFARERS PENSION PLAN The Company, commencing with the effective date indicated below, shall pay to the Seafarers Pension Plan a jointly administered Labor-Management Trust Fund and/or its successors, a sum equal to nine dollars ($9.00) per man per day worked by the employees covered by the Collective Bargaining Agreement or any supplements or addenda thereto between the Union and said Company. Payment shall be made monthly and shall be accompanied by reports in such form as the Trustees of the Plan may determine. Such payments shall be used to provide pension benefits for eligible employees, as well as for the administration of the Plan and for any other purpose which the Trustees may determine from time to time, in accordance with the provisions of the Trust Agreement, as amended. This provision shall become effective May 1, 1996. The above rate represents one and one third (1/3) days contributions. Each eligible employee shall receive one and one-third (1/3) days of employment credit for each day worked. (i.e.): if any employees work one (1) or more days he (and other employees) shall receive one and one third (1/3) days credit towards his pension eligibility time. By execution of this agreement, the Company becomes a party and subscriber to the Trust Agreement establishing the aforesaid Seafarers Pension Plan as amended, and acknowledges receipt of a copy of such Agreement, as amended. SECTION 3. SEAFARERS HARRY LUNDEBERG SCHOOL OF SEAMANSHIP The Company, commencing with the effective date indicated below, shall pay to the Seafarers Harry Lundeberg School of Seamanship, a jointly administered Labor Management Trust Fund and/or its successors, a sum equal to seventy-five cents ($.75) per man per day worked by the employees covered by the Collective Bargaining Agreement or any supplements or addenda thereto between the Union and said Company. Payment shall be made monthly and shall be accompanied by reports in such form as the Trustees of the Plan may determine. Such payments shall be used to provide training programs, as well as for the administration of the Plan and for any other purpose, which the Trustees may determine from time to time, in accordance with the provisions of the Trust Agreement, as amended effective November 21, 1993. By execution of this contract, the Company becomes a party and subscriber to the Trust Agreement establishing the aforesaid Seafarers Harry Lundeberg School of Seamanship, as amended, and acknowledges receipt of a copy of such Agreement, as amended. SECTION 4. TRANSPORTATION INSTITUTE The Company, commencing with the effective date indicated below, shall pay to the Transportation Institute, a Management-Trust Fund, a sum equal to seventy-five cents ($.75) per man per day worked by the employees covered by the Collective Bargaining Agreement or any supplements or addenda thereto between the Union and said Company. Payment shall be made monthly and shall be accompanied by reports in such form as the Trustees of the Plan may determine. This Trust is established to research issues and problems affecting the American maritime industry; to publish the results thereof together with appropriate recommendations, and to engage in all other similar and comparable activities which the Trustees may determine from time to time, in accordance with the provisions of the Trust Agreement, as amended effective November 21, 1993. By execution of this contract, the Company becomes a party and subscriber to the Trust Agreement establishing the aforesaid Transportation Institute, and acknowledges receipt of a copy of such Trust Agreement. SECTION 5. SEAFARERS JOINT EMPLOYMENT FUND The Company, commencing with the effective date indicated below, shall pay to the Seafarers Hiring Hall Trust Fund, a jointly administered Labor-Management Trust Fund and/or its successors, a sum equal to seventy-five cents ($.75) per man per day worked by the employees covered by the Collective Bargaining Agreement or any supplements or addenda thereto between the Union and the Company. Payment shall be made monthly and shall be accompanied by reports in such form as the Trustees of the Plan may determine. Such payments shall be used to provide benefits in accordance with the provisions of the Trust Agreement establishing the said Fund effective November 21, 1993. By execution of this contract, the Company becomes a party and subscriber to the Trust Agreement establishing the aforesaid Seafarers Hiring Hall Trust Fund, and acknowledges receipt of a copy of said Agreement. SECTION 6. ARBITRATION In order to avoid the necessity of litigation procedures the parties agree that any question regarding the payment of moneys due to any of the Seafarers Plans may be submitted to arbitration in the Court of Prince George's County, State of Maryland. Either the Union or any Company which has a question concerning the payment of contributions, interest, or other moneys due to the Plans shall set forth the question or question in a written Demand to be served upon the opposing party by Certified Mail, Return Receipt Requested. Within five days after receipt of the Demand for Arbitration, the parties shall cause a copy of such Demand to be served upon any of the following arbitrators: John Sand, Esq. 80 New Scotland Avenue, Albany, New York 12208; Thomas Giblin, Esq., 16 Commerce Drive, Cranford, New Jersey 07016; or Robert Bogucki, Esq., 26 Court Street, Brooklyn, New York 11242, who shall arrange for a Hearing. The arbitrator shall notify the parties in writing of the date, time and place of the Hearing at last three (3) days prior to the scheduled date. In the event that the permanent Arbitrator is unable to hear and determine the question within a reasonable time after his receipt of the demand, he may designate another Arbitrator to hear and determine the question in his place and stead. In the event that the parties are in agreement as to all of the facts bearing upon the question, they may submit the issue to the Arbitrator by a written stipulation of facts and they may agree to waive a formal hearing. Any waiver of hearing shall be executed in writing by the parties. The failure of any party to attend an Arbitration hearing as scheduled by the Arbitrator shall not delay said arbitration and the Arbitration is authorized to proceed to take evidence and to issue an award as though such party were present. The Arbitrator shall not have authority to alter in any way the terms and conditions of the Agreement or the various applicable Agreements and Declarations of Trust. The award of the Arbitrator shall e in writing and shall be sworn to and may be issued with or without an opinion. The award shall be issued within seven (7) days of the hearing or submission of stipulated facts, if the latter procedure is agreed upon and shall be final, binding, and enforceable by any court of competent jurisdiction. Any extension of time for the rendering of the Arbitrator's award must be mutually agreed upon by the parties. Expenses and fees of the Arbitrator shall be shared equally by the parties. This Appendix A shall be incorporated in and made a part of the Master Collective Bargaining Agreement between the Union and the Company. Contributions and reports made pursuant to this Memorandum of Understanding shall be made monthly on the tenth (10th) day thereof covering the preceding month's working force. Notwithstanding anything herein to the contrary, the Company further agree to provide the following information on each employee: a. Name of Employee b. Employee's Rating C. Employee's Social Security Number d. Employee's on and off dates during the pay period e. Employee's total number of days worked during the pay period. Payroll Data and other pertinent records may be examined by the Plans or their representatives on demand at any reasonable hour provided at least five (5) days notice of said examination is given to the Company. APPENDIX B SECTION 1. BASE DAILY WAGE RATES Throughout the effective period of this Agreement, crewmembers shall be paid the following wage scale.
Rating Effective Effective Effective Effective Effective 5/1/96 5/1/97 5/1/98 5/1/99 5/1/2000 Mate $180.28 $185.69 $191.26 $197.95 $204.88 Engineer Utility $185.74 $191.31 $197.05 $203.95 $211.09 Asst.Eng./Util $158.43 $163.18 $168.08 $173.96 $180.05 Tankerman $120.19 $123.80 $127.51 $131.97 $136.59 Deckhand $92.40 $97.40 $102.40 $105.47 $108.64
Inexperienced deckhands shall be paid $80.00 per day for the first 30 days of work. However, if the union certifies that he has successfully completed a basic training course in seamanship at the Seafarers Harry Lundeberg School of Seamanship, or has six months previous experience as a deckhand aboard tugboats, he will be paid at the rate then in effect. B. When the Company requires a deckhand to sail as Able Bodied Seaman, said employee shall receive an additional $10.00 per day. SECTION 2. LEAVE OF ABSENCE It is agreed that the Company with the agreement of the Union may grant leave of absence for illness or accident, whether occupational or non-occupational death in the immediate family, attendance at schools, preparation for and sitting for license, and position with the Union without loss of seniority or position on the roster. Any such leave of absence shall be in writing and may be granted for a period of three (3) months and is subject to renewal or extension by agreement in writing between the Company and the Union. Leave of absence for position with the Union shall be co-extensive with the duration of his Union position, provided that the seniority rights of any person on leave of absence for a position in the Union shall terminate within thirty (30) days should the Union cease to be the collective bargaining agent for the Company covered herein. SECTION 3. LOSS OF PERSONAL EFFECTS If the personal effects of an employee "through no fault of his own" become totally lost or partially damaged because of fire on, or sinking of, a vessel, he shall be paid his actual loss by the Company up to but not to exceed the sum of Two Hundred Fifty Dollars ($250.00) in full compensation for such loss. SECTION 4. WHEELHOUSE MANNING Unlicensed personnel shall not be permitted to man the wheelhouse when neither the Master nor the Mate is in the wheelhouse. SECTION 5. CARE OF LIVING QUARTERS The Company shall be required to keep the living quarters heated and free from vermin at all times, and living quarters shall be fumigated when required. The Union agrees that its members shall cooperate at all times in keeping living quarters clean and sanitary. The quarters of all boars shall be adequately ventilated and insulated against heat and cold. SECTION 6. MANNING SCALES The manning scales shall be set by the Company based on the type of work being performed, but in no event shall any tug have less than a four-man crew at any time. However, should the union be unable to provide a fall complement, the Company may operate that vessel with three (3) crewmembers for up to twelve (12) hours. The parties agree to discuss manning levels on newly constructed or converted equipment. SECTION 7. SAILING ORDERS Orders for employees returning from scheduled days off shall be given between 6:00 p.m. and 8:00 p.m. on the day preceding their scheduled return to work. SECTION 8. DEATH IN THE IMMEDIATE FAMILY In the event of death in the immediate family, an employee covered by this Agreement shall receive two days off with pay. Death in the immediate family shall be limited to the death of a father, mother, spouse, child, brother, or sister. No payment will be made under this section if an employee chooses to work on the two bereavement days. SECTION 9. SUBSTISTANCE There shall be no cooks on any vessels and, in lieu of subsistence, the Company shall pay ten dollars ($10.00) per man per day, where applicable. The subsistence money shall be paid along with regular wages. Subsistence shall be increased according to the following schedule: 5/1/98 5/1/99 5/1/00 $.50 $.50 $.50 SECTION 10. PAY PERIOD The pay period shall be on a biweekly basis. The pay period shall end on Sunday and wages and other moneys due for that period shall be paid between 0900 and 1200 hours the following Friday. Should a holiday occur on Friday, payment win be made between 1300 - 1700 hours on the preceding Thursday. No employee shall be paid except on the regular payday following the completion of any services rendered, and no employee shall be permitted to draw advancements from the Company on account of his pay. SECTION 11. PERMISSION TO LEAVE All crewmembers must remain aboard the tug or company property unless permission to leave is granted by the Master. SECTION I2. NON-CREWMEMBERS ONBOARD TUGS No person other than crewmembers shall be permitted aboard tugs at any time without the permission of the Company's office. SECTION 13. MAINTENANCE AND CURE When an employee is entitled to maintenance and cure under maritime law, he shall be paid maintenance at the rate of seventeen dollars and fifty cents ($I 7.50) per day for each day or part thereof. The payments due hereunder shall be paid to the employee weekly. This payment shall be made regardless of whether that employee has or has not retained an attorney, filed a claim for damages, or taken any other steps to that end and irrespective of any insurance arrangements in effect between the Company and the insurer. SECTION 14. VESSEL SALES AND TRANSFERS Prior to any vessel contracted to the Seafarers International Union of North America, Atlantic, Gulf, Lakes and Inland Waters District, AFL-CIO, being disposed of in any fashion, including but not limited to sale, scrap, transfer, bareboat, charters, etc., ninety (90) days notification in writing must be sent to Union Headquarters, 5201 Auth Way, Camp Springs, Maryland 20746. The Union recognizes that the Company may not in all cases be able to provide the Union with ninety (90) days notice as provided above. However, when ninety (90) days notice is not given, the Company shall call the Union's headquarters and confirm in writing as far in advance as possible and in no event any later than the date of sale, scrap, transfer, bareboat charter, etc. In addition, the Company must give the Union the name and address and telephone number of the purchaser and will attempt to assist the Union in meeting with the buyer. APPENDIX C PHILADELPHIA The parties agree that working conditions established in the port of Philadelphia shall be covered under this Appendix and this Appendix shall be incorporated into and made a part of this Agreement. SECTION 1. COMPANY SENIORITY, PROMOTIONS AND TRANSFERS A. The date of entering the service of the Company shall govern seniority among the employees of that Company. The Company shall prepare the seniority list immediately following the execution of this Agreement, which list shall be posted in the office of the Company with a copy delivered to the Union. Within one (1) month following delivery to the Union, the Union may take objection to this list. In the absence of any such objection by the Union, the fist shall be the official list of seniority standing and binding upon the parties. No employee shall lose any seniority rights during service in the Armed Forces of the United States or in the Merchant Marine of the United States during time of national emergency or by a suspension of license by the appropriate authorities. Layoffs and/or tie-ups shall be in the inverse order of seniority, provided that the employee with the greater seniority is qualified to do the available work. Employees who are laid off in the inverse order of seniority shall continue for a period of twelve (12) months to accumulate seniority with the Company. Employees having such seniority shall be recalled to work in the inverse order of layoff provided they are qualified to perform the available work. The Company shall, in writing, notify an employee that a job is available and shall mail, by Registered Mail, Return Receipt Requested, a notice to the employee's last known address in the Company's record. If the employee does not report for work within one (1) week from the date of notice, his re-employment rights shall cease. Company shall be under no obligation to recall employees who have been laid off for more than twelve (12) months. Periods during which the Union is engaged in a legal strike shall not be included in the computation of such twelve (12) month period. In the event that an employee is laid off for a period of twelve (12) months or less, or is on a bona fide leave of absence, which must be for an agreed, definite period, his seniority shall continue uninterrupted through such period. A. A deckhand, steadily employed by the Company, who procures a license to work as mate in accordance with the requirements of the Company, as determined by the Company, may place his name on the steady job list of the Union, at which time he must elect one of the two (2) following alternatives: (1) He shall give up his steady job as deckhand and work relief as mate until he reaches the position on the steady job fist to apply for the next steady job available with any company (subject at all times to said company's right of rejection) or, (2) He shall retain his steady job as deckhand, but when he reaches the position on the steady job list to take a steady job, he shall be entitled to the next available job only with the company by whom he is steadily employed (subject at all times to said company's right of rejection) and shall have no right to a steady job with any other company. (All persons having a license required by the Company prior to October 1, 1975 shall be governed by the rules of company seniority in existence prior to October 1, 1975, which means, among other things, that such persons shall have first right to any steady job with their company prior to non-employees on the steady job list regardless of such person's position on the steady job list, subject at all times to Company's right of rejection.) The Company agrees to make its best efforts to utilize employees of the Company, prior to chartering equipment from other sources. SECTION 2. MOST FAVORED NATIONAL CAUSE In the event that, during the life of this Agreement or any extension or renewal thereof, any contract is entered into by the Union or an affiliate with any employer in this ship-docking industry in the Port of Philadelphia and the Port of Baltimore wherein the scale of wages is less than the wages specified herein, or the hours or working conditions or other terms are more favorable for such other employer than the terms of this Agreement, then the scale of wages, hours, and working conditions and any other terms contained herein shall, at the option of the Company, become immediately and automatically modified to conform to such other contract in whole or in part, and in the event that any contract with an employer entered into by the Union or an affiliate is altered or modified, then the Company may elect to modify this Agreement, in whole or in part, in accordance therewith, providing that this paragraph shall have no application whatsoever to contracts entered into between the Union and an employer who is engaged exclusively in the oil towing industry. SECTION 3. SAFETY AND COMFORT Union and Company agree to cooperate at all times in protecting the safety of employees, and to form a Safety Committee with an equal number of representatives on each side to discuss and resolve grievances involving safety. Company shall supply employees with clean blankets and soap. Clean blankets shall be furnished once a tour, provided that the Company shall have no obligation in this connection unless soiled linens previously issues are returned. Crewmembers shall not be allowed to transfer from tug to tug in midstream south of the mouth of the Schuylkill River. North of the mouth of the Schuylkill River, transfer of crewmembers from tug to tug midstream shall be at the discretion of the Master. Each tug on an out-of-harbor operation shall be equipped with an inflatable life rate and suitable grab rails for deck duty. Out-of-harbor tugs, when engaged in towing barges carrying poisonous volatile chemicals, shall not carry less than one (1) gas mask for each crewmember. No tug not so equipped shall be sent out of harbor. SECTION 4. CUSTOMARY DUTIES Crewmembers of all departments shall perform the necessary and customary duties of that department. Each crew member shall additionally assist in duties not customarily associated with his particular rating when so directed by the Company or a designated representative of the Company or by the Master as may be required in order to fulfill the assigned duties and tasks of the vessel aboard which such crew member is serving. SECTION 5. ROTATION During the period of this agreement, such rotation shall be based on a two (2) days on for one (1) day off concept. SECTION 6. SAILING ORDERS Orders for employees returning from scheduled days off shall be given between 6:00 p.m. and 8:00 p.m. on the day preceding their scheduled return to work. SECTION 7. HOLIDAYS The following days, if worked, shall be designated as holidays, and as such, all employees who work on these days shall receive as a bonus an amount equal to a day's wages in addition to the regular daily wage rate. The Employer shall post a fist of dates each January for all holidays with a copy to the Union. 1. New Year's Day 2. Lincoln's Birthday 3. Washington's Birthday 4. Good Friday 5. Fourth of July 6. Labor Day 7. Columbus Day 8. Christmas Day SECTION 8. MAINTENANCE WORK Maintenance work such as painting, chipping or scrubbing shall be done when the captain deems it safe and practical to do so. The cleaning of the pilot house, galley and sleeping quarters shall be done daily. Employees shall not be required to make fenders and bow mats or large stem fenders. Repairs shall not be considered to be maintenance work. SECTION 9. PLANNED REPAIRS If the Company requires crewmembers to work on vessels under repairs, the Company shall reimburse the crew members for their reasonable and authorized travel and lodging expenses. SECTION 10. TIME FOR ORDERING OUT CREWS The Company must order crews out on the hour or on the half-hour. The workday begins at 0001 hours. APPENDIX I-C PHILADELPHIA MAINTENANCE MEN SECTION 1. NOTICE OF LAYOFF a. The Company will give every employee forty (40) working hours (5 days) notice of its intention to lay off said employee, and such notice shall be given to the employee at the end of the regular shift only. Saturdays and Sundays shall not be counted as part of the forty (40) hours (5 days) notice. b. The Company may, in lieu of the notice aforesaid, pay the employee an amount equal to forty (40) hours pay. c. The above lay-off notice shall be considered waived for the week where an employee refuses to work overtime. SECTION 2. PIECE WORK No piecework shall be instituted for the life of this Agreement. SECTION 3. WORK WEEK AND OVERTIME RATES a. The regular hours of work shall be eight (8) hours per day and forty(40) hours per week, from Monday to Friday inclusive. AB work performed in excess of forty (40) hours per week or twelve hours in any one day shall be compensated at overtime rates as set forth in this Appendix. Each employee shall be notified at the time of his employment (or the date of execution of this Agreement, whichever is later) as to the starting time of his regular eight (8) hour shift. b. For work performed on Saturdays, Sundays or holidays, employees shall be paid at time and one-half (1-1/2) the straight time rate. c. The holidays in Appendix C, Section 7, shall be designated as holidays for all maintenance employees. d. When a holiday falls on a Saturday or Sunday it shall be celebrated on the following Monday. Regular employees, who do not work on a holiday, shall be paid eight hours, at the straight time hourly rate. e. An employee required to go away from his home pier shall be paid traveling time at his applicable straight time rate for all such hours worked, including regular meals. His time, at the straight time rate, shall be continuous until he arrives back at the dock at which he is employed. f. When overtime work is required under any provision of this Appexdix, there shall be a minimum payment of one (1) hour overtime with half (1/2) hour increments therafter. Section 4. VACATION Each employee covered by this Agreement shall be eligible for vacation benefits as follows: a. If hired between January and March 31, the employee will, after completing six (6) months of service, be eligible for a one (1) week vacation benefit. 1. In the following calendar year and up to five (5) years of service, the benefit is two (2) weeks. 2. After six (6) years of service, the benefit three (3) weeks. b. All vacations must be used in the year earned. There shall be no carrying over of time permitted. In addition, during the period of time from June 1 through September 30 of any given calendar year, the maximum number of consecutive vacation weeks, which may be used, is three (3). c. If in any year an employee shall be entitled to a vacation and he shall not be able to take such vacation at the time assigned to him because of illness or accident, then the Company shall pay him an allowance in lieu of such vacation equal to the amount of vacation pay which he would have been titled to receive for the period of such vacation. d. If an employee who is entitled to a vacation in any year shall die before taking such vacation, the amount of said vacation pay shall be paid to his next of kin or designated beneficiary. e. Any employee separating from the Company for any reason whatsoever shall be paid the vacation pay accumulated up to the date of his separation. SECTION 5. WAGES The straight time hourly rate of pay for employees covered by this Agreement shall be as follows:
Rating Effective Effective Effective Effective Effective 5/1/96 5/1/97 5/1/98 5/1/99 5/1/2000 Machinist $13.54 $13.95 $14.36 $14.87 $15.39
APPENDIX D BALTIMORE The parties agree that working conditions established in the port of Baltimore shall be covered under this Appendix and this Appendix shall be incorporated into and made a part of this Agreement. SECTION 1. SENIORITY, LAYOFFS & TIE-UPS, PROMOTIONS AND TRANSFERS SENIORITY The employee's length of service for the purpose of determining seniority rights shall be deemed to have commended on the first day of his last continuous permanent employment with the Employer. Seniority shall be maintained in the separate classification of personnel. No person shall lose any seniority right during service in the Armed Forces of the United States, during the time of national emergency, provided such person is entitled to reinstatement under applicable laws of the United States. The Employer shall prepare seniority lists immediately following execution of this Agreement, which lists shall be available to the employees involved and a copy delivered to the Union. Within one (1) month following delivery to the Union, the Union may take exception to the lists. In the absence of any such objection by the Union, the list shall be the official lists of seniority standing and be binding upon the parties. Unlicensed tugboat employees transferred into the shop shall accumulate seniority with respect to both the shop and the Employer's tugboats. Tugboat engineers transferred into the shop shall accumulate seniority with respect to the Employer's tugboats only LAYOFFS & TIE-UPS Long-term lay-off for lack of work shall be in inverse order of seniority in the separate classifications, provided that the employees claiming seniority shall be capable and competent to perform the available work. Employees who are laid off for lack of work shall be recalled to work in the inverse order of layoff in the separate classifications, provided that the employees claiming seniority shall be capable and competent to perform the available work. Where such layoff or recall is not made according to seniority, the Employer must immediately give his reasons in writing to the employees involved, with a copy to the Union, with the Employer's determination being subject to the grievance and arbitration procedure set forth herein. The Employer shall notify such employee by telephone, telegram personal notice, registered mail or in any other reasonable manner when a job is available. If the employee does not return to work within five (5) days of receiving notice of return to work or in any within one (1) week of the date of mailing such notice by registered mail, return receipt requested, to the employee's last known address on the Employer's records, the employee shall lose all seniority rights, and the Employer shall not be obligated to re-employ him. For employees that have taken employment on vessels, an additional twenty-five (25) days will be allowed to return to work but the time allowed will not exceed a total of thirty (30) days. Employees who are laid off in the inverse order of seniority and who are recalled back to a permanent position within six (6) months of the date of their layoff shall not lose their seniority. After six (6) months layoff, such employees shall lose all seniority rights and the Employer shall not be obligated to recall such employee to work, except as provided below. An employee's scheduled days off shall not be construed as lay-off because the scheduled days off are compensated for in the daily wages rates contained in the collective bargaining agreement. The Company agrees to allow bumping for all "one day tie-ups." PROMOTIONS AND TRANSFERS In connection with permanent promotions to a higher classification or with permanent transfers, if skill and ability are equal, seniority shall govern. This section does not affect transfers on a temporary basis. If a permanent promotion to a higher classification or permanent transfer is not made according to seniority, the Employer must immediately give his reasons in writing to the employees involved, with a copy of the Union, with the Employer's determination being subject to the grievance and arbitration procedure set forth herein. In the event of an opening, employees shall have the right to request promotion or transfer said opening, by requesting the same in writing to the Employer with two (2) weeks of the occurrence of such opening. Permanent a permanent transfers shall be made at the beginning of a workweek. During the time before promotion or permanent transfer is effected, the Company may make temporary assignments. There shall be a probationary period of the first thrity (30) days worked within sixty (60) days for employees promoted to a higher classification. If the employee is unable to perform in this period he has the right to return to his lower classification with no loss of seniority and without recourse to the grievance machinery. SECTION 2. PROBATIONARY PERIOD All new employees shall be on probation for the first thirty (30) days worked with the Employer within sixty (60) days. Such new employee may have his employment terminated by the Employer during this probationary period without recourse to the grievance and arbitration provisions of this Agreement. Probationary employees who are retained beyond the probationary period shall receive seniority in their classification in accordance with Section I of this Article. A new employee is defined as an individual with a permanent position in the Company whose name appears on a seniority list. SECTION 3. DISCIPLINARY PROCEDURE The Employer may dismiss or discipline an employee for just cause only. No disciplinary action against an employee shall be taken without notice being given to the Union and the affected Shop Steward or Stewards. The Union win be informed of the reason for the disciplinary action and the disciplinary action the Employer plans to take. The unavailability of a Union official or the affected Shop Steward or Stewards shall not prohibit the Employer from initiating disciplinary action and will not relieve the Employer from notifying the Union as soon as possible. SECTION 4. LEAVE OF ABSENCE Employees may be granted leaves of absence without pay up to six (6) months upon the mutual agreement of all parties. Such leave may be extended by mutual agreement. Employees elected to Union Office will be granted leaves of absence without pay for the term of their office, if satisfactory. and competent replacements are provided. Any such employee shall continue to accrue seniority during such period. Such leave of absence terminates when the employee ceases to be a Union officer or should the Union cease to be the bargaining representative of the employees. Any such employee shall retain his seniority rights, which shall include the seniority that accrued during such leave of absence, upon returning to the employment with the Company, provided the employee makes himself available for employment immediately upon the termination of his leave of absence and continues to be capable of performing his assigned work. Any employee who is transferred to a supervisory position with the Employer will be granted a leave of absence under the same terms and conditions granted to employees elected to the Union office up to a maximum of three (3) years after the date of transfer. SECTION 5. WORK ROTATION During the period of this agreement the Employees will work a schedule mutually agreeable between the parties. Effective January 1, 1994, the work rotation will be 14 days on and 7 days off. SECTION 6. ORDERING SYSTEM All employees who are off work due to their job rotation, shall call at 1800 hours on the day prior to their scheduled return to work to receive work orders. SECTION 7. HOLIDAYS The following days if worked shall be designated as holidays and as such, all employees who work on these days, shall receive as a bonus, an amount equal to a day's wage in addition to the regular daily wage rate: 1. New Year's Day 2. Washington's Birthday 3. Fourth of July 4. Labor Day 5. Thanksgiving Day 6. Memorial Day 7. Christmas Eve 8. Christmas Day SECTION 8. SAFETY AND COMFORT Not later than July 30, 1967, every boat of the Company must be equipped with a Coast Guard approved inflatable or float-off life raft of a size to accommodate the maximum number of crewmembers, which might be carried. Every boat, likewise, shall be equipped with Coast Guard approved life rings and Coast Guard approved life preservers in sufficient numbers to accommodate the maximum number of crewmembers, which night be carried. When the Company builds any new tugs, they will be air-conditioned. The Company may assign an Engineer to go in the Shop with his tug while his tug is under repairs. The Company will maintain and furnish adequate first aid equipment to all boat crews. SECTION 9. SAFETY AND GRIEVANCE MEETINGS All elected Union Delegates representing licensed, unlicensed, and shop personnel of MORAN TOWING OF MARYLAND, Union representatives and Company representatives shall meet monthly at 10:00 a.m. on the Wednesday following the first Sunday of each month at a place mutually agreed upon between the Employer and the Union. A written agenda shall be provided to all members' two days in advance of the meeting. It will be the function and the purpose of the meetings to study and make recommendations on any problem involving safety. In addition, the representative shall have the right to consider problems relating to the interpretation or enforcement of the contract terms. It is understood that the establishment and function of the meetings provided herein shall in no way alter, vary, or modify the right of any employee, the Union or the Employer, to pursue any matter through the grievance and arbitration provisions of this contract. Union Delegates who are not scheduled for work during the Safety and Grievance Meeting will be paid for their attendance at the meeting at the rate of twenty-five percent (25%) of their daily pay. During the time that the Safety and Grievance Meeting is in session, no boat shall be immobilized because of the absence of any employee, and to facilitate the mobility of boats during the period, the Company may sail shorthanded, may transfer personnel from other boats, or may do anything else necessary to preserve the mobility of the boats. SECTION 10. UNION DELEGATES The Company agrees to recognize Union Delegates designated by the Union. The duties of the Union Delegate shall be to see that rights and interests of the employees under this Agreement are protected, including, but not limited to, assisting employees in filing grievances. There shall be one Union Delegate per covered classification. APPENDIX I-D BALTIMORE SHOP AGREEMENT SECTION 1. HOURS, RATE OF PAY, WORKING CONDITIONS OVERTIME Overtime shall be paid at one and one-half (1-1/2) times the basic rate for work performed over forty (40) hours in the workweek. SHIFTS A regular shift shall begin at 8:30 a.m. unless the Employer notifies the employees differently. RATES OF PAY Rates of pay per hour shall be as follows:
5/1/96 5/1/97 5/1/98 5/1/99 5/1/00 ------ ------ ------ ------ ------ ELECTRICIAN Day $13.32 $13.72 $14.13 $14.63 $15.14 Night $14.89 $15.34 $15.80 $16.35 $16.92 MECHANICS Day $12.42 $12.79 $13.18 $13.64 $14.11 Night $13.81 $14.22 $14.65 $15.16 $15.69 HANDYMAN Day $11.64 $11.99 $12.35 $12.78 $13.23 Night $12.96 $13.35 $13.75 $14.23 $14.73 HELPERS Day $11.34 $11.68 $12.03 $12.45 $12.89 Night $12.66 $13.04 $13.43 $13.90 $14.39
FOUR HOUR CALL-OUT An employee called back from his home after having completed his regular shift, in the same calendar day to perform in accordance with past practices shall receive a guarantee of four (4) hours work or, if work is not available, four (4) hours pay at one and one-half (1-1 /2) times his straight time hourly rate. CLEAN-UP TIME Employees shall have ten (10) minutes at the end of their shift to secure their tools and equipment and to wash up. VESSEL RATES If any shopman is employed on a tug as a member of the crew, he shall be paid at the applicable daily rate as per Appendix B. SECTION 2. UNIFORMS The Company shall furnish shop employees with rental work clothes. SECTION 3. TANK AND BILGE CLEANING Whenever shop employees are required to clean bilge's, fuel or ballast tanks or perform work below the engine room floor plates, the Company will provide to the men engaged ion this work clean overalls, work gloves and also boots and safety helmets if needed. Adequate cleansing soaps and towels will be provided. Whenever shop employees are required to do the work described above, they will be given ten (10) minutes at the finish of this work to clean up. If the finish of this work immediately precedes the finish of a shift, the man will be given ten (10) minutes to wash up in addition to the time prescribed in Section I (e) of this Appendix. SECTION 4. HOLIDAYS DESIGNATED HOLIDAYS Holidays listed in Appendix D above shall be celebrated on the day as determined by the Employer, in December of each year for the following calendar year. PAY When a Holiday is not worked, an employee covered by this Agreement who is eligible for Holiday pay as set forth below shall be paid at the employee's basic straight time daily rate for eight (8) hours. Employees shall be eligible for Holiday pay if they qualify under 4 (c) below. QUALIFICATION Any employee with Company seniority covered by this Agreement who works at least five (5) days in the fourteen (14) days, immediately preceding the Holiday, shall be eligible for Holiday pay, provided, that the employee who terminates his employment or is terminated for a just cause prior to a Holiday will not be eligible for pay for the Holiday. PREMIUM When any employee covered by this Agreement is required to work on any of the specified holidays, he shall be paid at the rate of one and one-half (1-1/2) times his/her basic rate. TERM OF AGREEMENT This contract shall expire on April 30, 2001. The parties executed this Agreement hereto; whose duly authorized representative's signatures appear this 25 day July of 1997. MORAN TOWING CORPORATION SEAFARERS INTERNATIONAL UNION, MORAN TOWING OF PENNSYLVANIA, DIVISION OF NORTH AMERICA, ATLANTIC MORAN TOWING OF MARYLAND, DIVISION GULF, LAKES AND INLAND WATERS DISTRICT, AFL-CIO Company Official Signature: Union Officials Signatures: /S/ Edmond J. Moran, Jr /S/ Augie Tellez - ----------------------- ---------------- EDMOND J. MORAN, JR AUGIE TELLEZ PRESIDENT VICE PRESIDENT /S/ Walter Naef /S/ Joseph Soresi - --------------- ----------------- WALTER NAEF JOSEPH SORESI VICE PRESIDENT PORT AGENT /S/ Paul Swensen /S/ Dennis Metz - ---------------- --------------- PAUL SWENSEN DENNIS METZ VICE PRESIDENT PORT AGENT EX-10.10 9 EX-10.10 LICENSED AGREEMENT BETWEEN AMERICAN MARITIME OFFICERS AND MORAN TOWING OF PENNSYLVANIA DIVISION OF MORAN TOWING CORPORATION MAY 19 1996 - APRIL 30, 2001 1 TABLE OF CONTENTS PAGE PREAMBLE 1 Section 1 - SCOPE OF AGREEMENT 1 Section 2 - RECOGNITION 2 Section 3 - EMPLOYMENT 2 Section 4 - UNION MEMBERSHIP 3 Section 5 - SENIORITY 3 Section 6 - REJECTION OF EMPLOYEES 4 Section 7 - DIRECTION 5 Section 8 - TIE-UP NOTICE 5 Section 9 - VACANCIES, PROMOTIONS AND TRANSFERS 5 Section 10 - LEAVE OF ABSENCE 6 Section 11 - MOST FAVORED CONTRACT 7 Section 12 - MANNING SCALE 7 Section 13 - CUSTOMARY DUTIES 7 Section 14 - DEATH IN THE IMMEDIATE FAMILY 8 Section 15 - LOSS OF PERSONAL EFFECTS 8 Section 16 - DUES CHECK-OFF 8 Section 17 - HOLIDAYS 10 Section 18 - SAFETY AND SANITARY CONDITIONS 11 Section 19 - QUARTERS 12 Section 20 - GRIEVANCE AND ARBITRATION PROCEDURE 12 Section 21 - RESORT TO INTERNAL APPEALS PROCEDURE OF AMERICAN MARITIME OFFICERS 13 Section 22 - WAGES AND SUBSISTENCE 14 Section 23 - MINIMUM RATES 14 2 PAGE Section 24 - PLANNED REPAIRS 15 Section 25 - TRAVEL AND TRAVEL TIME 15 Section 26 - PLANT PREPARATION AND SECURING 15 Section 27 - MAINTENANCE WORK 15 Section 28 - SAILING ORDERS 16 Section 39 - ROTATION 16 Section 30 - SHORT-HANDED CREW 16 Section 31 - PAYMENT OF WAGES 16 Section 32 - PERMISSION TO LEAVE 16 Section 33 - UNAUTHORIZED PERSONNEL 17 Section 34 - NO DISCRIMINATION 17 Section 35 - NO STRIKES OR LOCKOUTS 17 Section 36 - PICKET LINES AND INDUSTRIAL DISPUTES 17 Section 37 - MAINTENANCE 18 Section 38 - INDEMNIFICATION 18 Section 39 - VESSELS, SALES AND TRANSFERS 18 Section 40 - SENIORITY LISTS 19 Section 41 - AGREEMENT MODIFICATION 19 Section 42 - LEGAL APPLICATIONS 20 Section 43 - NEW EQUIPMENT-MANNING SCALE 20 Section 44 - WITNESS FOR COMPANY 20 Section 45 - ENGINEER/MACHINIST 21 Section 46 - MANNING 23 Section 47 - TOTALITY OF AGREEMENT 23 Section 48 - RTM CENTER FOR ADVANCED MARITIME OFFICERS TRAINING 23 Section 49 - BENEFITS & CONTRIBUTIONS 24 NOTIFICATION AND SIGNATORY PAGE 25 3 LICENSED AGREEMENT BETWEEN AMERICAN MARITIME OFFICERS AND MORAN TOWING OF PENNSYLVANIA DIVISION OF MORAN TOWING CORPORATION PREAMBLE This Agreement, entered into the 24th day of June, 1996, effective as of the first day of May, 1996, by and between American Maritime Officers (hereinafter referred to as the "Union") and Moran Towing of Pennsylvania, Division of Moran Towing Corporation (hereinafter referred to as the "Company and/or Operator"), shall remain in effect until midnight of the 30th day of April, 2001. Thereafter, it shall continue in effect from one year, and so on, from one year to the next, unless either party shall give the other party written notice, sixty (60) days prior to the expiration of any term of its intention to modify or terminate this Agreement. SECTION 1 - SCOPE OF AGREEMENT: This Agreement applies to all licensed Engineers employed aboard the tugboats operated by the Company and also one Engineer/Machinist employed ashore. 4 SECTION 2 - RECOGNITION: The Company agrees to recognize the Union as the sole bargaining agent for all Engineers as defined in Section 1 of this Agreement in the Port of Philadelphia (hereinafter referred to as "employees"), on boats owned, operated or chartered on a bareboat basis by the Company, when the crew onboard such boats are employees of and on the payroll of the Company. This recognition shall not apply to bare boat charters to other operators, nor to crews of vessels of subsidiary or affiliated companies. SECTION 3 - EMPLOYMENT: The Union agrees to furnish the Company with capable, qualified competent and physically fit substance free persons when and where they are required to fill vacancies necessitating the employment of personnel covered hereunder, in ample time to prevent any delay in the scheduled departure of any vessel covered by this Agreement. The minimum qualification for hiring as, or promotion to Engineers, will be the possession of a valid license as Chief Engineer 4,000 HP or greater. Engineers currently on the seniority list will secure a Chief Engineer 4,000 HP license or greater, during the term of this agreement as soon as sufficient sea time is accumulated and recognized by the U. S. Coast Guard. To assure maximum harmonious relations, and in order to obtain the best qualified employees with the least risk of a delay in the schedule departure of any vessel covered by this Agreement, the Company agrees to secure all its personnel through the hiring halls of the Union. If for any reason, the Union does not furnish the Company with capable, qualified competent and physically fit persons, when and where they are required to fill such vacancies, in ample time to prevent any delay in the scheduled departure of any vessel covered by this Agreement, the Company may obtain employees from any available source, in which case the Union shall be notified. 5 SECTION 4 - UNION MEMBERSHIP: A. Subject to the provisions of the Labor-Management Relations Act, 1947, as amended, it shall be a condition of employment that all employees of the Company covered by this Agreement, who are members of the Union in good standing on the date of execution of this Agreement, or the effective date of execution of this Agreement, or the effective date thereof whichever is later, shall continue to remain members thereof in good standing throughout the entire term of this Agreement, and those employees who are not members of the Union on the date of execution of this Agreement or the effective date thereof shall, on the 30th day following the date of execution of this Agreement, or the effective date thereof, whichever is later, become and remain members in good standing in the Union. It shall also be a condition of employment that all employees covered by this Agreement hired on or after its execution or effective date shall, on the 30th day following the beginning of such employment, become and remain members in good standing in the Union. B. Notwithstanding anything to the contrary therein, Paragraph A above shall not be applicable, if all or any part thereof shall be in conflict with applicable law; provided, however that if all or part of Paragraph A becomes permissible by virtue of a change in applicable law, whether by legislative or judicial action, the provision of Paragraph A held valid shall immediately apply. SECTION 5 - SENIORITY: The Date of entering the service of an Operator in the capacity of steady Engineer shall govern Company seniority among licensed Engineers of that Operator. The seniority list shall be prepared by each operator immediately following the execution of this Agreement, which list shall be posted in the office of the Operator with a copy delivered to the Union. Within one month, following delivery to the Union, the Union may take objection to the list. In the absence of any such objection by the Union, the list shall be the official list of seniority standing and binding upon the parties. No licensed Engineers shall lose any seniority rights during service in the Armed Forces of the United States during time of national emergency, or by a suspension of license by the United States Local Inspectors. Layoffs and/or tie-ups shall be in the inverse order of seniority, provided that the Engineer with greater seniority is qualified to do the available work. Licensed Engineers who are laid off in the inverse order of seniority shall continue for a period of twelve (12) months to 6 accumulate seniority with the Operator concerned. Licensed Engineers having such seniority shall be recalled to work in the inverse order of layoff provided that they are qualified to perform the work available. The operator shall, in writing, notify eligible Engineers that a job is available, and shall mail, registered mail, return-receipt requested, the notice to the engineer's last known address on the Operator's records. If the Engineer does not report for work within one week from the date of notice, his re- employment rights shall cease. The Operator shall be under no obligation to recall to work Engineers who have been laid off for more than twelve (12) months. Periods during which the Union is engaged in a legal strike shall not be included in the combination of such twelve (12) months. In the event that an Engineer is laid off for a period of twelve months or less, or is on a bona fide leave of absence which must be for an agreed definite period, his seniority shall continue uninterrupted through such period. The Company agrees to make its best effort to utilize employees of the Company prior to chartering equipment from other sources. SECTION 6 - REJECTION OF EMPLOYEES: A. The Union agrees that the Company has the right to reject any applicant for employment, who the Company considers unsatisfactory or unsuitable for the position, or to discharge any employee, who, in the opinion of the Company is not satisfactory. If the Union considers the rejection of any applicant for employment or the discharge of any employee as being without reasonable cause, such action by the Company shall be dealt with under the grievance procedure as provided herein, and the Union agrees that any such rejection or discharge shall not cause any vessel to be delayed on her scheduled departure. B. If an applicant, referred by the Union, is rejected or any employee is discharged or demoted for medical reasons, the Union may challenge the decision of the Company physician. The applicant, or employee shall then be re-examined by a physician selected by the Union. In the event that the two physicians do not agree, a third physician shall reexamine and his opinion shall be final and binding. SECTION 7 - DIRECTION: Licensed Engineers shall be under the direction and subject to the orders only of such person or persons as the Operators may designate or appoint. 7 SECTION 8 - TIE-UP NOTICE: In the event of a temporary tie-up of a boat, the Operators shall give permanent licensed Engineers four (4) hours notice of such tie-up and its expected duration. SECTION 9 - VACANCIES, PROMOTIONS AND TRANSFERS: When vacancies occur promotions and transfers of Engineers shall be made in accordance with seniority. A vacancy shall be deemed to have occurred when a permanently assigned Engineer either dies, quits, is discharged for cause, or a new permanent Engineer's job is created. The Operator agrees to post such vacancy within thirty (30) days of occurrence. The vacancy shall remain posted for a two week period during which time the Engineers holding seniority with the Operator, may bid in writing for such vacancy. The period of posting may be increased or decreased by mutual agreement between the Union and the Operator. At the end of the bidding period, the Operator shall assign the vacancy to the Engineer, who holds the most seniority and has bid for the job, provided he is capable and qualified to hold the new position. Promotions, Transfers and new assignments shall be made at the beginning of the week. Any dispute regarding promotions and/or transfers shall be resolved by submitting said dispute to an arbitrator to be selected by mutual agreement of the Operator and the Union. In the event such mutual agreement cannot be reached the dispute shall be submitted to the American Arbitration Association for selection of an Arbitrator in accordance with their procedures. The decision of the Arbitrator shall be binding upon the parties hereto. SECTION 10 - LEAVE OF ABSENCE: It is agreed that the Operator, with the approval of the Union, may grant leave of absence for illness or accident, whether occupational or non-occupational, death in the immediate family, attendance at schools, promotion to a supervisory capacity, position with the Union, or for any reason agreed upon between the operator and the Union, without loss of seniority or position on the roster. Any such leave of absence shall be in writing and may be granted for a period of three (3) months, and is subject to renewal or extension by agreement in writing between the Operator and the Union. Leave of absence for position with the Union shall be coextensive with the duration of his Union position. Any leave of absence granted in accordance with this Section shall not deprive an Engineer of any promotion to which he would have been entitled otherwise. 8 SECTION 11 - MOST FAVORED CONTRACT: In the event that during the life of this Agreement or any extension or renewal hereof, any contract is entered into by the Union with any employer in the industry operating in the Delaware River, Delaware Bay, or their tributaries wherein the scale of wages is less than the wages specified herein, or the hours or working conditions or other terms are more favorable to such other employer than the terms of this Agreement then the scale of wages, hours and working conditions or other terms contained herein shall, at the option of the Company become immediately and automatically modified to conform to such other contract, in whole or in part, and in the event that any contract with any Employer entered into by the Union is altered or modified, then the Company may elect to modify this Agreement, in whole or in part, in accordance therewith, provided that this Paragraph shall have no application whatsoever to contracts entered into between the Union and an Employer, who is engaged exclusively in the oil towing industry. SECTION 12 - MANNING SCALE: Vessels shall be manned by at least one licensed Engineer. The company may increase the manning, at its discretion, based upon the operations or as required by Governmental regulation, but in no event except as stated in Section 30 shall any tug have less than a four man crew at any time. The parties agreed to discuss manning levels on newly constructed or converted equipment. SECTION 13 - CUSTOMARY DUTIES: Crew members of all departments shall perform the necessary and customary duties of that department, and each crew member shall additionally assist in duties not customarily associated with his particular rating when so directed by the Company or a designated representative of the Company or by the Master as may be required in order to fulfill the assigned duties and tasks of the vessels aboard which such crew member is serving. It was specifically agreed that all crew members, including the Engineer will work together to handle lines aboard the tug, assist in various engine room duties including changing of oil filters and any other work required so that the tug could perform its assigned task. 9 SECTION 14 - DEATH IN THE IMMEDIATE FAMILY: In the event of death in the immediate family, an employee covered by this Agreement shall receive two days off with pay. Death in the immediate family shall be limited to the death of father, mother, spouse, child, brother or sister. No payment will be made under this section if an employee chooses to work on the bereavement days. SECTION 15 - LOSS-OF PERSONAL EFFECTS: If personal effects of any Engineer through no fault of his own become totally lost or partially damaged because of fire on, or sinking of a vessel, he shall be paid his actual loss by the Operator up to, but not to exceed the sum of $250.00 in full compensation for such loss. SECTION 16 - DUES CHECK-OFF: The Union, an unincorporated association consisting of employees of the Company and other employers, and the Company, to facilitate and implement the desire of employees of the Company to maintain their Union, their unincorporated association organization, and to assist such employees to comply with their monetary obligations to their Union, agree to the establishment and maintenance of a voluntary check off procedure for the employees covered by this Agreement. The Union and the Company further acknowledge that such check-off hereafter fully set forth, is in accordance with the authority and direction of exclusive federal law and decisions of the N.L.R.B. regulating labor management relations such as the relationship which is the subject of this Agreement between the parties. In accordance with the provisions of Section 302 (c) (4) of the Federal Labor Management Relations Act, as amended, the Company agrees that upon receipt of a voluntary written authorization executed by employees covered by this Agreement, it will deduct the employees' regular initiation fees and regular dues from non-supervisory compensation, including payments for or made during time off periods, if any, in the amounts and at the times hereafter set forth in the written authorization and timely remit such amounts to the Union. The Company agrees to hold all sums deducted in trust for the Union. 10 CHECK OFF AUTHORIZATION AMERICAN MARITIME OFFICERS "The undersigned employee, a member of the American Maritime Officers (the "Union"), or desiring to become a member of the Union, hereby direct you, my employer, effective from this date, to deduct from my compensation, including payments for or made during time-off periods, if any, a sum equal to the regular initiation fees and regular membership dues of such Union. Such sum may be deducted in installment payments, as may be directed by the Union. The monies so deducted shall be remitted by you to the Union monthly, within 10 days after the end of each month. All monies deducted by you pursuant to this authorization shall be held in trust. Written notification by the Union to you of the amount if such regular initiation fees and membership dues, and/or the amounts owed by the undersigned for the same, shall be conclusive authority for you for such deduction." "I submit this authorization and assignment with the understanding that it will be effective irrevocably for a period of one year from this date, or up to the termination date of the current Collective Bargaining Agreement between the Company and the Union, whichever occurs sooner. "This authorization and assignment shall continue in full force and effect for yearly periods beyond the irrevocable period set forth above and each subsequent yearly period shall be similarly irrevocable unless revoked by me within 15 days after any irrevocable period. Such revocation shall be effected by individual written notice by registered mail or certified mail to both you, as the employer, and the Union, within such 15-day period. " "This authorization and assignment is made and executed in accordance with the authority and directions of Section 302(c) (4) of the Labor Management Relations Act, as amended, and applicable law." NAME: (Print)_______________________________ DATE OF HIRE: ______________ ADDRESS: _________________________________ COMPANY: ___________________ ___________________________________________ S.S. NO: ___________________ CITY_________________STATE______ZIP______ BOOK NO: ___________________ SIGNATURE: _______________________________ DATE: ______________________ 11 SECTION 17 - HOLIDAYS: The following days if worked, shall be designated as holidays, and as such, all employees who work these days shall receive as a bonus an amount equal to a day wages in addition to the regular daily rate:
1 - Christmas Day 5- Good Friday 2 - New Years Day 6 -Independence Day 3 - Lincoln's Birthday (Feb. 12) 7 - Columbus Day (October 12) 4 - Washington's Birthday (Feb. 22) 8 - Labor Day
SECTION 18 - SAFETY AND SANITARY CONDITIONS: The Union and Company agree to cooperate at all times in protecting the safety of Engineers and to form a Safety Committee with an equal number of representatives on each side to discuss and resolve grievances involving safety. Engineers shall supply their own sheets, pillow cases and towel. The Company shall supply Engineers with clean blankets and soaps. Clean blankets shall be furnished once a tour, provided that the Company shall have no obligation in this connection unless soiled blankets previously issued are returned. Engineers shall not be allowed to transfer from tug to tug in midstream south of the mouth of the Schuylkill River. North of the mouth of the Schuylkill River, transfer of Engineers from tug to tug midstream shall be at the discretion of the Master. Each tug, on an out-of-harbor operation, shall be equipped with an inflatable life raft and suitable grab rails for deck duty. Out of harbor tugs, when engaged in towing barges carrying poisonous volatile chemicals shall not carry less than one (1) gas mask for each crew member. No tug not so equipped shall be sent out-of-harbor. Engineers required to enter tanks (i.e. ballast, fuel) shall be provided quality Tyvek overalls. The Company agrees to provide back supports to all Engineers. The Union agrees that Engineers shall use back supports while performing strenuous duties. New back supports will be provided to Engineers when previously issued supports are returned. The Company agrees to meet with the Union within 60 days of the effective date of this agreement to discuss remedies of vessels electrical limitations. 12 SECTION 19 -QUARTERS: Operators shall be required to keep the living quarters heated and screened and free from vermin at all times, and living quarters shall be fumigated, when required. Union agrees that its members shall cooperate at all times in keeping living quarters sanitary. SECTION 20- GRIEVANCE AND ARBITRATION PROCEDURE: Except as may be otherwise provided in this Agreement, All complaints, disputes or grievances arising between the parties hereto relating to or in connection with or involving questions or interpretation or application of any clause of this Agreement, or any acts, conduct or relations between the parties, directly or indirectly, shall be processed pursuant to this Article. Except as otherwise provided, the Union and the Company agree that there shall be no strike or lockout or work stoppage during the term of the Agreement. In the event that any controversy or dispute arises concerning the interpretation or application of, or compliance with the provisions of this Agreement, the Employer and the Union shall make every reasonable effort to settle the dispute informally within seven (7) business days of being notified of the existence of the complaint. A party shall have five (5) business days after learning of the dispute to initiate the seven (7) day period of informal discussions. All disputes must be submitted to the Union by the affected employee within five (5) business days from the latter of the date the employee leaves the vessel or the day in which the employee has a reasonable opportunity to learn of the existence of the dispute. In the event the dispute remains unsettled after the seven (7) day period, the complainant may file a formal written grievance. The grievance must be presented to the party against whom the complaint has been filed within seventy-two (72) hours of the expiration of the seven (7) day period. The party against whom the complaint has been filed shall have seventy-two (72) hours to provide its answer to the grievance. If no answer is filed within the stated time it will be treated as a denial of the grievance. If the parties are unable to settle the dispute within thirty (30) days after the answer, the grieving party may invoke arbitration by notifying the other party in writing of its desire to submit the matter to binding arbitration. The party invoking arbitration shall simultaneously file a copy of the notice with the American Arbitration Association. All matters pertaining to the arbitration hearing and the selection of an arbitrator will be subject to the Rules of the American Arbitration 13 Association. Cost incurred by the arbitrator shall be borne by the party ruled against. All time limits imposed by this Article can be extended by mutual agreement. It is understood that the sole function of the arbitrator is to interpret the express provisions of this Agreement and to apply them to the facts of the grievance. The arbitrator shall have no power to change, amend, modify, and to, subtract from, or otherwise alter this Agreement. This Article shall be a complete and bona fide defense to any action or proceeding instituted contrary to the terms hereof. SECTION 21 - RESORT TO INTERNAL APPEALS PROCEDURE OF AMERICAN MARITIME OFFICERS: The parties recognize that in situations when the Union decides that a grievance arising under this Agreement will not be processed through the grievance procedure or to arbitration, the individual grievant or grievants involved have certain internal appeal rights within American Maritime Officers. Whenever such Internal Appeal Procedures are timely initiated, with respect to any such grievance arising under this contract, then the grievance and arbitration procedure time limits contracted herein will be suspended until such time as the Internal Appeals Procedure is exhausted concerning the question of whether the contractual grievance(s) the subject of the Internal Appeals Procedure will be pursued through the remaining steps of the grievance procedure and arbitrated. SECTION 22 - WAGES AND SUBSISTENCE: A. Throughout the effective period of this Agreement, Engineers working aboard the boats shall be paid the following wage scale, where applicable. The following shall represent the day wage rates.
WAGES 5/l/96 5/l/97 5/l/98 5/l/99 5/l/2000 ------ ------ ------ ------ -------- Chief Engineers - $ 181.80 $ 187.25 $ 192.87 $ 199.62 $206.61 5/l/96 5/l/97 5/l/98 5/l/99 5/l/2000 ------ ------ ------ ------ -------- Assistant Engineers - $ 154.49 $ 159.12 $ 163.90 $ 169.63 $175.57 - -------------------
14 B. In addition to the wage rates described herein, Engineers shall be paid subsistence for each day worked. The following shall represent the subsistence rate:
5/l/96 5/l/97 5/l/98 5/l/99 5/l/2000 ------ ------ ------ ------ -------- Subsistence $ 10.00 $ 10.00 $ 10.50 $ 11.00 $ 11.50 - -----------
SECTION 23 - MINIMUM RATES: Engineers called for duty on any day shall be paid the day rate as set forth in Section 22. SECTION 24 - PLANNED REPAIRS: If the Company requires crew members to work on vessels under repairs, the Company shall reimburse the crew members for their reasonable and authorized travel and lodging expenses. SECTION 25 - TRAVEL AND TRAVEL TIME: All Engineers covered by this Agreement shall normally start and stop work only at the Operator's designated home pier. However, should the Operator choose to tie up or change crews at a safe place elsewhere, he shall supply safe transportation to and from the home pier. Engineers tying up or leaving the tug with the change of crew shall remain on boat time until the transportation supplied by the Employer arrives. No crew member shall be permitted to operate any vehicle providing transportation. On the authorized change of crew days, the man being relieved shall be paid one-half (1/2) a day's pay, and the man relieving shall be paid one half (1/2) a day's pay. SECTION 26 - PLANT PREPARATION AND SECURING: Any Engineer, when so ordered and directed by the Operator, shall report before sailing time in order to prepare a diesel plant for operation. SECTION 27 - MAINTENANCE WORK: Maintenance work such as painting, chipping or scrubbing shall be done when the Captain deems it safe and practical to do so. The cleaning of the pilot house, galley, sleeping quarters and engine room shall be done daily. Employees shall not be required to make fenders and boy mates or large stern fenders. Repairs shall not be considered to be maintenance work. 15 SECTION 28 - SAILING ORDERS: Orders for employees returning from scheduled days off shall be given between 6:00 p.m. and 8:00 p.m. on the day preceding their scheduled return to work. (Work day to commence at 12:01 AM) SECTION 29 - ROTATION: During the period of this agreement employees will work a mutually agreed schedule. Such rotation shall be based on a (2) days on for (1) day off concept. SECTION 30 - SHORT HANDED CREW: Should the Union be unable to provide a full complement it is agreed that the Company will be able to operate the vessel for up to twelve (12) hours. SECTION 31 - PAYMENT OF WAGES: The pay period shall be on a biweekly basis. The pay period shall end on Sunday and wages and other monies due for that period shall be paid between 0900 and 1200 hours the following Friday, unless a holiday should occur on Friday of that week, in which event payment would be made between 1300 - 1700 hours on Thursday. No employee shall be paid except on the regular pay day following the completion of any services rendered, and no employee shall be permitted to draw advancements from the Company on account of his pay. SECTION 32 - PERMISSION TO LEAVE: All crew members must remain aboard the tug or company property, unless permission to leave is given by the master. SECTION 33 - UNAUTHORIZED PERSONNEL: No person other than crew members shall be permitted aboard tugs at any time without the permission of the Operator's Office. SECTION 34 - NO DISCRIMINATION: 16 During the term of this Agreement, neither party shall discriminate against any employee or applicant for employment because of race, color, sex, age, religion, national origin, handicap, veterans status or Union membership. This non- discriminatory policy shall include, but not be limited to the following: employment, promotion, upgrading, transfer, layoff, demotion, termination, rates of pay, forms of compensation, recruitment or recruitment advertising and selection for training. SECTION 35 - NO STRIKES OR LOCKOUTS: There shall be no strike, lockout, or stoppage of work while the provisions of this Agreement are in effect. SECTION 36 - PICKET LINES AND INDUSTRIAL DISPUTES: No employee covered by this Agreement shall be compelled to do work with strike breakers or cross any picket lines approved by the Union, where to do so would involve injury or threat to his person or would involve such employee's breach of his obligations as a Union member or where to do so would violate such employee's moral, ethical and trade union beliefs. Any action by an individual employee must be sanctioned by the Union. Further, an employee's refusal to do any of the aforesaid acts or an employee's exercise of the rights and immunities described in the first proviso to Section 8 (b) (4) of the National Labor Relations Act of 1947, as amended, shall not constitute a breach of this Agreement and shall not be cause for discipline or discharge. The insistence on the part of the Company that any of its employees, covered by this Agreement, go through a picket line after having elected not to, or any other breach by this Company's operations, notwithstanding any other provision of this Agreement. The Union agrees to notify the Company, whenever any of its members notify them they will exercise any rights under this Section or under law. SECTION 37 - MAINTENANCE: When a employee is entitled to maintenance under Maritime Law, he shall be paid maintenance at the rate of seventeen dollars and fifty cents (17.50) per day for each day or part thereof. The payments shall be made regardless of whether the employee has or has not retained an attorney, filed a claim for damages, or taken any other steps to that end and, irrespective of any insurance arrangements in effect between the company and insurer. 17 SECTION 38 - INDEMNIFICATION: The Union shall protect and indemnify the Company in any cause of action based upon improper application by the Union of the employment provisions of this Agreement. The Company shall protect and indemnify the Union in any cause of action based upon improper application by the Company of the employment provisions of this Agreement. SECTION 39 - VESSELS SALES AND TRANSFERS: Prior to any vessel contracted to the Union, being disposed of in any fashion, including, but not limited to sale, scrap, transfer, bareboat charter, etc., ninety (90) days notification in writing, if possible, must be sent to the Union's Philadelphia Office, 2604 South 4th Street, Philadelphia, PA 19148. The Union recognizes that the Company may not in all cases be able to provide the Union with ninety (90) days notice as provided above. However, when ninety (90) days notice is given, the Company shall call the Union's Office and confirm in writing as far in advance as possible and in no event any later than the date of sale, scrap, transfer, bareboat charter, etc. In addition, the Company must give the Union the name, address and telephone number of the purchaser and will attempt to assist the Union in meeting the buyer. SECTION 40 - SENIORITY LISTS: Seniority Lists shall be provided to the Union immediately following the execution of the Agreement. Within ninety (90) days following delivery to the Union, the Union may take objection to the lists. In the absence of any such objection by the Union, the lists shall be the official lists of seniority standing and binding upon the parties. Such lists shall include the employee's name, job classification, vessel on which employed, date of hire, social security number, and current address and phone number. SECTION 41 - AGREEMENT MODIFICATION: This Agreement constitutes the sole and exclusive Agreement between the parties hereto, and neither any representative of the Operator, nor any representative of the Union shall have any authority to construe, modify, or make any changes in the terms and conditions hereof. Any change or modification of the language of the Agreement and the terms and conditions hereof shall be the subject of an Addendum executed by both the duly authorized representatives of the Union and the 18 Operators, provided that nothing herein contained shall be construed as limiting the right of any Arbitrator under the Arbitration provisions hereof to interpret the Agreement. SECTION 42 - LEGAL APPLICATION: A. If any provision or the enforcement or performance of any provisions of this Agreement is or at any time be contrary to law, then such provision shall not be applicable or enforced or performed, except to the extent permitted by law. If at any time thereafter such provision or its enforcement or performance shall no longer conflict with the law, then it shall be deemed restored in full force and effect, as if it had never been in conflict with the law. B. If any provisions of this Agreement or the application of such provision to any person or circumstance shall be held invalid, the remainder of this Agreement, or the application of such provision to other persons or circumstances, shall not be affected thereby. C. If any provision of this Agreement is invalidated or the enforcement of any provision is enjoined by a Court of competent jurisdiction the parties shall meet for the purposes of agreeing upon a substitute provision. SECTION 43 - NEW EQUIPMENT-MANNING SCALE: Minimum crew requirements shall be as set fourth in this agreement. SECTION 44 - WITNESS FOR COMPANY: In the event an employee shall be a witness or otherwise appear for the Company, he shall be paid a day's pay plus contributions for every day so employed. This does not apply to an employee who has initiated litigation against the Company. SECTION 45 - ENGINEER/MACHINIST:
WAGES 5/1/96 5/1/97 5/1/98 5/1/99 5/1/2000 ------ ------ ------ ------ -------- Engineer Machinist Hourly Rate - $ 13.06 $ 13.45 $ 13.85 $ 14.34 $ 14.84 Holiday Rate - 13.55 13.95 14.37 14.87 15.39 Overtime Rate - 20.32 20.92 21.55 22.30 23.08
A. The regular hours of work shall be from (8: A.M. - 4:30 P.M.) eight (8) hours per day and forty (40) hours per week, from Monday to Friday inclusive. All work performed in excess 19 of forty (40) hours per week shall be compensated at the overtime rate. Each employee shall be notified at the time of his employment (or the date of execution of this Agreement, whichever is later) as to the starting time of his regular eight (8) hour shift. For any week where an employee refuses to work overtime, the regular forty (40) hour work week shall be considered waived. B. For work performed on Saturdays, Sundays and/or holidays such employees shall be paid the overtime rate. C. The following shall be observed as Holidays for eligible employees covered by this Agreement:
1 - Christmas 5 - Good Friday 2 - New Years Day 6 - Independence Day (July 4) 3 - Lincoln's Birthday (Feb. 12) 7 - Columbus Day (October 12) 4 - Washington's Birthday (Feb. 22) 8 - Labor Day
When a holiday falls on a Saturday or Sunday it shall be celebrated on the following Monday. Regular employees who do not work on a holiday shall be paid eight (8) hours at the Holiday rate. When any employee covered by this Agreement is required to work on any of the specified holidays, he shall be paid eight (8) hours at the overtime rate. D. An employee required to go away from his home pier shall be paid traveling time at his applicable straight time rate before and after his regular shift, including regular meals. His time, at the straight time rate, shall be continuous until he arrives back at the dock at which he is employed. E. Seniority shall be based on an employee's length of service with the employer in this particular classification. The employees with the longest years of service shall be the first ones rehired and the last ones laid off. F. Each engineer/machinist covered by this Agreement shall be eligible for vacation benefits as follows: 1. If hired between January 1 and March 31, the employee will, after completing 6 months of service, be eligible for a one week vacation benefit. 2. In the following calendar year and up to 5 years of service the benefit is 2 weeks. 3. After six (6) years of service the benefit is three (3) weeks. 20 4. All vacations must be used in the year earned. Other shall be no carryover of time permitted. In addition during the period of the time from June I through September 30 of any given calendar year the maximum number of consecutive vacation weeks which may be used is three. SECTION 46 - MANNING: "During the term of this Agreement, should an employee covered under this Section sever his employment for any reason, the position vacated may be eliminated where the Company determines that the position is no longer required." SECTION 47 - TOTALITY OF AGREEMENT: "The parties acknowledge that during negotiations which resulted in this Agreement each had the unlimited right and opportunity to make demands and proposals with respect to any subject matter not removed by law from the area of collective bargaining and that the understanding and agreements arrived at by the parties after the exercise of the right and opportunity are set forth herein. The employer shall not be obligated to continue any benefit or employee practice which it has given or engaged in prior to the execution of this Agreement unless specifically set forth in this Agreement." SECTION 48 - RTM CENTER FOR ADVANCED- MARITIME OFFICERS TRAINING- The Union and the Company do hereby agree that they shall encourage all employees to upgrade their skills through attendance at the Raymond T. McKay Center for Advanced Maritime Officers Training. Any employee having at least six (6) months service with the Company desiring to attend the Raymond T. McKay Center for Advanced Maritime Officers Training shall be given a leave of absence and the Company agrees to pay transportation and lost wages up to ($2500.00) for up to four (4) Employees, per term of the Agreement, who upgrade their license, provided the Engineers are available for work with Moran for a minimum of one (1) year thereafter. Such employees must receive prior approval from the Company. 21 SECTION 49 - BENEFITS & CONTRIBUTIONS: A. - 1. The Company agrees to become and/or remain party to the various AMO Plans, Committees and other entities and make contributions thereto as provided for in the confidential "Contribution Letter" which is made part of this Agreement. 2. The Company further agrees to execute all appropriate Agreements and Declarations of Trust within thirty (30) days of the execution of this Agreement. 3 . The Parties agree that such Agreements and Declarations of Trust shall continue in effect for a period of one (1) year beyond the expiration of this Agreement. B. The Parties agree that the AMO Vacation Plan shall be the recipient Plan for contributions to the Vacation Plan, S&E, JEC and AMOS. The Vacation Plan shall retain for the Plan sufficient funds to pay taxes and administrative costs and allocate the balance to the other entities in accordance with Trustees approval. The Parties authorize the Allocation Committee consisting of Joseph B. Cecire and Jerome E. Joseph to adjust any and all contributions and to transfer funds from one Plan(s) or entity(ies) to another, provided that the Plan where the rates are decreased are not adversely affected and that the action of the Allocation Committee does not increase the total amount contributed by the Company. C. For computing Pension Benefits, wages are at the levels as in effect on January 1, 1991. 22 AUTHORIZED SIGNATURES This Agreement was executed by the parties hereto, whose duly authorized representatives' signatures appear below, this __19__ Day of May, 1996. MORAN TOWING OF PENNSYLVANIA AMERICAN MARITIME OFFICERS DIVISION OF MORAN TOWING CORP. 2 WEST DIXIE HIGHWAY 2799 SOUTH DELAWARE AVENUE DANIA, FLORIDA 33004 PHILADELPHIA, PA 19148 /S/ Edmond J. Moran, Jr. /S/ Michael R. McKay - ------------------------------------ ------------------------------------ EDMOND J. MORAN, JR MICHAEL R. MCKAY PRESIDENT, MID-ATLANTIC CORPORATION PRESIDENT /S/ Walter Naef /S/ Robert W. McKay - ------------------------------------ --------------------------------- WALTER NAEF ROBERT W. MCKAY DIVISION V.P. -GENE MANAGER SECRETARY-TREASURER /S/ Robert J. Kieler ----------------------------------- ROBERT J. KIEFER EXECUTIVE BOARD 23 EX-10.11 10 EX-10.11 MEMORANDUM OF AGREEMENT Agreement made the llth day of September, 1995, between Local 333, United Marine Division, International Longshoremen's Association, AFL-CIO ("Local 333") and Moran Towing & Transportation Co., Inc, ("Moran") (collectively referred to as "the parties"), WHEREAS, in April, 1995, Local 333 and Moran reached an agreement in principle resolving their outstanding contractual and unfair labor practice disputes; WHEREAS, because the National Labor Relations Board did not complete its review of the settlement of the pending unfair labor practice proceedings until August, 1995, the parties agreement in principle was not fully embodied in a Settlement Agreement and Memorandum of Agreement ("the August MOA") and was not submitted for membership ratification until later in August, 1995; WHEREAS, the August MOA was not ratified in part because of the delay in finalizing and submitting it to ratification thereby delaying the implementation dates of the various economic improvements, which were to be effective upon ratification; WHEREAS, thereafter the parties met to negotiate modifications in the August MOA designed to address its diminished economic value as a result of the unforeseen delay in the ratification vote, as referred to above, as well as to consider other adjustments; WHEREAS, the parties are desirous of reaching mutually acceptable modifications and having negotiated hard in that effort; NOW, THEREFORE the undersigned parties have reached a new agreement for submission to ratification on the following terms: 1. Except as modified below, the terms and conditions of the August MOA (inclusive of any side letters) are reaffirmed, adopted and incorporated herein by reference for a three year term beginning on the date of ratification. 2. The wage scales shall be modified to provide that the daily rate scales that were to be effective in year two under the August MOA will be effective upon ratification of this agreement. The 4% increase in daily rate scales shall be effective on January 1, 1997. By way of example, the daily rate for New York Port Area will be increased as follows: Upon Ratification 1/1/97 Captains $ 283.50 ($270 + 5%) +4% Mates/Engineers $ 246.75 ($235 + 5%) +4% Asst Engineers $ 194.25 ($185 + 5%) +4% A/B Deckhand $ 152.25 ($145 + 5%) +4% OIS Deckhand $ 147.00 ($140 + 5%) +4% The other wage scales (e.g., those applicable to barge and tanker crews and to voyages outside the New York Port Area) shall be adjusted in the same manner. 3. Moran shall convert its existing pension plan for marine employees to a defined contribution plan that allows voluntary employee contributions (commonly and hereinafter referred to as a "401(k) plan"). (a) Moran shall contribute to the pension plan the sum of $1, 000 on account of each eligible employee for the calendar year 1995. Said contribution by Moran shall be made within 30 days after December 31, 1995. Immediately after the 1995 pension plan contribution is made, Moran shall convert the pension plan to a 401(k) plan. To the extent permitted by law, the accrued balance for each individual in the pension plan shall be rolled over into the 401(k) plan. (b) Moran shall contribute to the 401(k) plan the sum of $1,000 on account of each eligible employee for the calendar year 1996. Said contribution by Moran shall be made within 30 days after December 31, 1996. (c) Moran shall contribute to the 401(k) plan a sum equal to 4% of the gross wages, as reported on form W-2, of each eligible employee for the calendar year 1997. Said contribution by Moran shall be made within 30 days after December 31, 1997. (d) Moran shall contribute to the 401(k) plan a sum equal to (1) 4% of the gross wages, as reported on form W-2, for the calendar 2 year 1998 plus (2) an amount equal to 25% of the first $1,000 of voluntary contributions made to the 401(k) plan by each eligible employee during the calendar year 1998. Said contribution by Moran shall be made within 30 days after December 31, 1998. (e) Eligible employees of Moran shall be permitted to make voluntary contributions to the 401(k) plan to the extent permitted by law. The vesting and eligibility requirements, as well as any allocation of administrative expense, under the 401 (k) plan shall be no less favorable to the participants than now exists under the existing pension plan. Moran shall consult with and keep Local 333 informed concerning the development and implementation of the 401(k) plan. (f) The last two sentences of the first paragraph of Article 1, Section 15b of the August MOA shall continue to apply to the 401(k) plan. 4. Stony Point shall be substituted for Albany in the description of the geographical area in Article IV Section 2.c. of the August MOA. 5. Moran shall confirm in a letter addressed to Local 333 "that during the life of this agreement, Moran will continue to pay, as is its practice, all its eligible captains a year end vacation allowance of up to 14 days pay at the rate then in effect. Eligibility will be determined in the same manner currently employed by Moran." 6. Moran will consider former Moran cooks for hire as deckhands where vacancies exist provided that they are fully able to perform the required tasks. Moran will be obligated to hire no more than 3 such cooks. 7. This agreement shall be subject to ratification of the Local 333 membership and shall become effective the day after it is ratified. 3 IN WITNESS WHEREOF, this agreement has been duly executed by the parties hereto. MORAN TOWING & LOCAL 333, UNITED MARINE TRANSPORTATION CO., INC. DIVISION, ILA, AFL-CIO BY___________________________ BY: MALCOLM W. MACLEOD, PRESIDENT ALBERT M. CORNETTE, PRESIDENT 4 MEMORANDUM OF AGREEMENT Moran Towing & Transportation Co., Inc. ("Moran" or "Employer") and Local 333, United Marine Division, I.L.A. AFL-CIO ("Union") hereby agree to the following changes to the parties' expired collective bargaining agreement. AGREEMENTS OF GENERAL APPLICATION (1) Delete the grant of bargaining rights to the "Association" and all references to the "Marine Towing and Employers' Association" and modify all language which refers to Association-related items. (2) Change "Employers" to "Employer" throughout the Agreement. (3) Change the word "vessel" to "tugboat" throughout the Agreement unless otherwise agreed. (4) Delete all provisions relating to self-propelled oil tankers, self -propelled lighters, and steam tugboats. Should Moran acquire such vessels and operate such vessels within the geographical area covered by this agreement, it recognizes Local 333 as the representative of its crew members and will negotiate terms and conditions of employment. Barges are covered by the barge agreement. (5) Delete "Cooks" from the contract. INTRODUCTORY PROVISIONS (1) Change the first paragraph to the following: Agreement made, effective as of September 26, 1995, by and between Moran Towing & Transportation Co., Inc. ("Employer") and Local 333, I.L.A., AFL-CIO ("Union") in its own behalf and on behalf of all licensed and unlicensed personnel employed on the Employer's tugboats, including Captains. (2) Delete first WHEREAS paragraph. ARTICLE I. GENERAL PROVISIONS Section 1. Application of Agreement Delete reference to self-propelled lighters. In subsection (e), delete all references to the "special panel" or "special committee" and any procedures relating thereto, and substitute language providing for direct referral to an AAA-designated Arbitrator after the Parties continue to disagree as per the fourth paragraph at page 4 of the expired contract. For purposes of Article I, Section 42, and Article IV, Section 1, the term "New York Port area", shall have the same meaning as the term "Port of New York and Vicinity" as defined in Article I, Section 1 (a) (1) , of this Agreement, except that the term "New York Port area" shall not extend to work or ports on the Great Lakes; and it is further understood that the term "New York Port area" shall not extend to an uninterrupted run to or from a point south of the north end of Cape May, New Jersey, including Norfolk, Baltimore and Philadelphia, which run is considered to be a coastwise run. 2 The Employer can subcontract, hire or charter vessels provided: a) All Employer tugs are working, are laid up for repairs or are not suitable for the work (i.e., such matters as size and/or horsepower); and b) The Employer is not required to break out a tug unless there is a day's (12 hours) scheduled work for the tug and unless this scheduled work is known the day before. Section 2. Contract Signatures Delete section. Section 3. Hiring Employees Delete reference to "Steward's Department. "Add language providing for a probationary period for new Employees of two complete tours but not less than 28 work days. In the event the Employer discharges a probationary employee, the Union shall have the right to discuss the matter; however, if the parties disagree regarding the discharge, the Employer's decision will become final and not subject to arbitration. Section 4. Non-Discrimination Add "age or disability" only. Section 5. Union Shop Change dates, delete words "in good standing" and delete last sentence of first paragraph and substitute the following: "Thereafter, the Employer shall advise the Union of the names of all employees who are newly hired or whose employment has terminated." 3 Section 6. Suspension or Discharge Continue unchanged. Section 7. Employee Sublect to Orders of Employer's Appointee.. Continue unchanged. Section 8. Stoppage of Work Continue unchanged. Section 9. Lockouts Modify by substituting the following sentence for the first sentence of Section 9: The Employer agrees that during the life of this Agreement, there shall be no lockout of the Employees and, upon violation of this provision by the Employer, this Agreement may be terminated by the Union. Section 10. Seniority Paragraph a. and b. shall be amended to provide as follows: a. Seniority by Classification-Seniority by classification shall be controlling in layoffs where fitness and ability are relatively equal. An Employee shall be credited with seniority 4 within each classification in which he has worked during his last unbroken period of service with the Employer. The amount of seniority credit in each such classification shall be computed from the date of his first employment in each such classification during his last unbroken-period of service. Service with Moran shall not be considered broken for employees who went on strike on February 16, 1988 and returned to work as of the effective date of this Agreement or in response to an offer of reinstatement pursuant to the Settlement Agreement between Moran and the Union dated February 8, 1996. However, returning strikers shall not accrue seniority for the period in which they were not employed. If, however, an employee is promoted from one classification to a higher classification but fails within one year from the date of his promotion to make good in the higher job, he may return to the classification from which he was promoted without loss of seniority but, in such case, he will not retain seniority in the higher classification for the period that he worked in that classification. The decision by either the Employee or by the Employer on the competency of the Employee in the higher classification must be made not later than one (1) year from the time of the promotion. b. When an Employee transfers or is promoted from one classification to another (and continues in unbroken service with the Employer), in the event such Employee is scheduled to be laid off in his classification he shall be entitled to replace the least senior employee in his prior classification if his seniority in such classification exceeds that of the employee to be replaced. c. Modify to add: Employer may require physicals of bargaining unit employees, not more frequently than annually, by licensed physicians mutually agreed to by Employer and the Union. Employer may also require random drug/alcohol testing as required by Coast Guard regulations or in accord with Employer's past practice. The Company may factor into its determination of relative fitness and 5 ability the results of such Company administered physicals and drug and alcohol tests obtained within the twelve (12) months prior to the layoff, in accord with Employer's past practice or as required by Coast Guard regulations. Paragraphs d. through g. Continue unchanged except modify the second sentence in paragraph g(l) as follows: The Employees of that vessel shall receive Health Insurance coverage while standing-by. In paragraph g(2) after the words "he is to stand-by on call", delete the rest of this paragraph and substitute the following: may exercise his rights of seniority after 21 calendar days. These Employees shall receive Health Insurance coverage while standing-by. Delete the second paragraph of g(2). Delete paragraph g(5). Subsection h. Rehiring by Seniority Continue unchanged. Subsection i. Seniority Review Delete references to "Quick Settlement Committee" and "Review Board." Subsection j. Delete. Section 11. Laws, Rules and Regulations Continue unchanged except delete references to the "Adjustment Committee" and substitute "the parties". 6 Section 12. Existing Wages and New Personnel Delete, and substitute the following: Employer shall not reduce the wage rates of covered employees who are paid at wage rate in excess of the daily wage rates set forth in Article IV, Section 1. Section 13. Explosives Clause Delete. Section 14. Sanitation Towing Crew Change Delete. Section 15. Insurance and Pension a. Insurance Delete the entire section and substitute the Employer Plan currently in place for vessel employees and currently administered by the Employer. A copy of the insurance plan is attached hereto, as Attachment A. Bargaining unit employees shall pay any adjustment in premiums during the life of the Agreement as may be required of all other participants in that Plan, provided, however, that Employer shall not require bargaining unit employees to increase their contribution by more than $100 for individual coverage and $200 for family coverage in each of the second and third years of the agreement. There shall be no waiting period for former Moran employees who return pursuant to the settlement agreement. b. Pension Delete the entire section and substitute the Employer 7 Plan currently in place for vessel employees. A copy of the summary plan description is attached hereto, as Attachment B. Former Moran employees reinstated pursuant to the settlement agreement shall be eligible for pension coverage without a waiting period. Eligible Employees who are no longer employed by the Employer on December 31 will be sent the contribution check directly by the Employer. Employer contributions shall not be reduced during the first year of the agreement. In the event the Employer thereafter reduces or eliminates contributions under the Plan, then the Union shall be entitled to a reopener to negotiate for the same contributions previously made, and in the event the parties fail to agree, the issue shall be decided through interest arbitration. Section 16. Compensation for Loss of Effects Continue unchanged. Section 17. Watching Delete current provision and substitute the following: When ordered to watch a vessel, a crew member shall receive a day's pay for a 24 hour watch. In the event multiple tugs are tied up in the same facility the Employer may assign two men to watch three tugs. Section 18. Riding Barges Delete. Section 19. Shoveling Grain (Barges) 8 Delete. Section 20. Pyramiding Overtime Delete. Section 21. Holidays Modify to provide for five holidays to be paid at an additional day's pay for each Employee who works on the holiday. The five holidays shall be New Year's Day, Memorial Day, July 4th, Thanksgiving and Christmas Day. Delete second and third and fourth paragraphs, add following for fourth paragraph: "If a holiday falls on a Saturday and a vessel is not working that day, then the holiday, as to that vessel, shall be celebrated the previous Friday. If a holiday falls on a Sunday and a vessel is not working that day, then the holiday, as to that vessel, shall be celebrated the following Monday. If, however, the vessel is working on a holiday falling on Saturday or Sunday, the holiday shall be celebrated on that day." Section 22. Vacations Delete. Section 23. Benefits Schedule Delete. Section 24. Maintenance and Cure Continue unchanged. 9 Section 25. Fitness for Duty Continue unchanged. Section 26. Linens and Towels Continue unchanged. Section 27. Telephone Calls Continue unchanged. Section 28. Yard Time Change "regular rate of pay" to "day rate", change allowance to $8.50 in year one; $9.00 in year 2; $9.50 in year 3." Section 29. Interdepartmental Work Delete. Section 30. Licensed Officer Painting Etc. Delete and replace with the following: Licensed officers shall be required to soogee, chip or paint the vessel or perform other maintenance work only while the tug is not under way and only after they have had six hours of unbroken rest immediately preceding such work, and in no event on Saturdays, Sundays, or holidays. Section 31. Maintenance and Cleaning Delete and replace with the following: Painting, maintenance - Employees shall be required to soogee, chip or paint the vessel or perform other maintenance work (other than cleaning) only between the hours of 8:00 A.M. to 5:00 P.M. during weekdays, and in the case of unlicensed employees from 10:00 A.M. to 2:00 P.M. on Saturdays. Such work shall not be required on Sundays or holidays. Chipping shall be performed only during the hours of 12 Noon to 5:00 P.M. Sanitary Work - Such as cleaning quarters, toilets and 10 washrooms, shall be done on Saturdays between 8:00 A.M. and noon, and between 8:00 A.M. and 10:00 A.M. on Sundays and Holidays. On all other days of the week sanitary work shall be done between 6:00 A.M. and 8:00 A.M. Section 32. Handling Lines Delete. Section 33. Docking and Undocking Ships In docking and undocking ships, if a deck hand off watch is required to handle ship's, lines, such deck hand shall be paid $48 for all such work with respect to the ship. In such event, time worked handling lines shall not be included in calculating overtime. Section 34. Refrigerators Continue unchanged. Section 35. Readying Diesel Delete. Section 36. Grub Checks Continue unchanged. Section 37. Shopping for Grub Change "cook" to "the crew designated by the Captain." otherwise, the paragraph is unchanged. Section 38. Area Pilotage Delete. 11 Section 39. Cook's Overtime and Premium Delete. Section 40. Bidding for Jobs Continue unchanged. Section 41. Mailed Paychecks Continue unchanged. Section 42. Overtime Delete and replace with the following: 12 For work in the New York Port area and with respect to coastwise towing of oil barges and Blue Circle Cement barges onlv. The regular work day shall be twelve (12) hours. If an employee works more than one (1) hour off watch or is broken-out off watch three (3) or more times, he shall be paid at straight-time rates for all time worked off watch in one-half (1/2) hour increments. An employee shall not, however, be entitled to such overtime pay unless the Captain approves the work off-watch as set forth above. Except as provided in the next paragraph the Employer shall not alter an employee's work day to avoid the payment of overtime in accord with this section. The normal hours of work for the engineer shall be either 12 consecutive hours per day or 12 hours broken into two six-hour shifts. Once an engineer's work schedule has been established it shall not be changed for that tour of duty except for the purpose of synchronizing the engineer's schedule with that of outside personnel aboard the tug for the purpose of facilitating repairs or fueling. On any day that the engineer is required to work overtime for any reason, then, notwithstanding the first paragraph of Section 42, his overtime pay shall commence after twelve hours on watch. For coastwise towing, excerpt towing of oil barges and Blue Circle Cement barges. The overtime provisions applicable to New York Port area work shall apply with the following exceptions: 1. overtime shall be paid only for work in excess of fifteen (15) hours in any calendar day (midnight to midnight), at straight-time rates in one-half (1/2) hour increments. 2. The Captain shall not be entitled to overtime. The Engineer shall be entitled to overtime if there is no Assistant Engineer on board; he shall not be 13 entitled to overtime if there is an assistant Engineer on board. Section 43. Company Travel Time Change "8 hours pay" to "one day's pay." Section 44. Mud and Garbage Scale Delete. Section 45. Bareboat Chartering Delete all language after first sentence. Section 46. Service Letters Continue unchanged. Section 47. Carfare to Discharged Employees Continue unchanged. Section 48. Transfer - Notice to Union Continue unchanged. Section 49. Committee on Safety, Training and Licensing Modify to provide for the establishment of a Committee comprised of two representatives of the Employer and two representatives of the Employees, which shall make non-binding recommendations that are not subject to the grievance and arbitration machinery. Delete reference that Employer representatives must be "high level." 14 Section 50. Payment of Medical Costs for Service Disability Delete. ARTICLE II. ADJUSTMENTS AND ARBITRATION OF DISPUTES Section 1. Informal Settlement Continue unchanged except add a provision requiring that the Employer and Union shall meet within 72 hours of the time the Employer is notified of the filing of the grievance in an attempt to resolve the dispute or grievance. The grievance is not waived if the parties are unable to meet within this 72 hours. Section 2. Ouick Settlement Committee Add a new provision with respect to selection, assignment and discipline of tug captains, as follows: (1) If the Union disputes management's selection of captains for openings within the Employer's fleet or the assignment of captains within the fleet, or the demotion of a captain to mate, then it shall be entitled to discuss the matter with a high-level representative of management, but shall not be entitled to grieve or arbitrate management's decision. (2) If a captain is discharged, suspended, or otherwise disciplined, except for demotion to mate, the Union shall be entitled to grieve and arbitrate management's action, and the usual "just cause" standard shall apply. (3) In the case of demotion of a captain to mate, if a captain's vacancy arises more than six months after the demotion, the Company will in good faith consider reinstating the demotee to the position of captain. 15 Section 3. Arbitration Delete references to Quick Settlement Committee and change the last sentence of paragraph (a) to "within thirty (30) days of the date the Parties agree not to settle the grievance or the grievance is waived." ARTICLE III The Employer may operate up to three day boats per day with a three-man crew (captain, engineer, and deck hand), not to exceed twelve (12) hours per day. Crew members on a day boat shall be paid on an hourly basis; the hourly rate for each classification shall be determined by dividing the daily Harbor rate for that classification by twelve. The minimum pay per calendar day on a day boat shall be twelve (12) hours of pay. Employees will be paid the straight time hourly rate for all time worked in excess of twelve (12) hours. ARTICLE IV Change title of this Article to "WAGES, MANNING AND WORKING CONDITIONS." Delete entire Article and substitute the following: Section 1. a. Daily Wages for Twenty-Four Hour Boats The daily wage rate for New York Port area work and for coastwise towing of oil barges and Blue Circle Cement barge 16 shall be as follows: Rank Year 1 Year 2 Year Captain - N.Y. Port Area $270 +5% +4% Captain - Coastwise Oil and Blue Circle Cement 275 +5% +4% Licensed Mate 235 +5% +4% Asst. Engineer 185 +5% +4% Engineer 235 +5% +4% Deckhand - A/B 145 +5% +4% - O/S 140 +5% +4% Year 1 rates shall be effective the first payroll period after ratification of this agreement. Year 2 shall be effective one year later. Year 3 rates shall be effective two years later. b. The daily wage rate for coastwise towing, except for towing of oil barges and Blue Circle Cement barges and the coal run to the Bridgeport, Connecticut area, shall be as follows: 17 Rank Year 1 Year 2 Year Captain $265 +5% +4% Mate 220 +5% +4% Second Mate 190 +5% +4% Chief Engineer 220 +5% +4% Asst. Engineer 180 +5% +4% Deckhand - A/B 125 +5% +4% - O/S 110 +5% +4% Utility 135 +5% +4% C. The daily wage rate for the tug towing a coal barge on the run to the Bridgeport, Connecticut area shall be as follows: Rank Year 1 Year 2 Year Captain $270 +5%. +4% Mate 227.50 +5% +4% Second Mate 190 +5%. +4% Engineer 227.50 +5% +4% Asst. Engineer 182.50 +5% +4-% Deckhand - A/D 135 +5% +4% - O/S 125 +5% +4% d. New deckhands, i.e., those that have not previously been employed by Moran, shall be paid at the following wage rate for their first seventy-five (75) working days. 18 New York Port area work and coastwise oil and Blue Circle Cement towing A/B $120 O/S 110 Coastwise towing, except for towing oil barges and Blue Circle Cement barges A/B $110 O/S 110 Section 2. Manning a. Except as provided in this Section 2 (c) below, manning on each automated tugboat shall consist of 1 captain, 1 mate, 1 engineer, and 2 deckhands. Docking pilots, unless they function as captain or mate, will not be considered part of the crew for purposes of satisfying manning requirements. b. Manning on each non-automated tugboat shall consist of 1 captain, 1 mate, a chief engineer, 1 assistant engineer and 2 deckhands. c. Two (2) tugs when engaged solely in work in New York Harbor, may be manned with four persons--a Captain and three crew members as specified in subsection below. The New York Harbor means, for purposes of this Section 2-c and of Article XII, the geographic area from Execution Rock on the east to Albany (below the Locks) on the North to the line between Sandy Hook and Rockaway Point on the South. If the Company chooses to take advantage of this provision, it will name the tugs at least one complete tour in advance. Once a year, the Company may substitute different 19 tugboats to be operated with a Captain and three crew members as specified in subsection (i) below under the same restrictions provided herein. If during the course of a year, the Company requests a replacement of one of the four person tugboats due to the retirement, sale, mothballing or major repair of a tugboat, the Union will grant such a request. For each tugboat operated with a Captain and three crew members, the following will apply: (i) Wages for the crew will be increased as follows: captain by $25 per day; engineer/deck hand by $25 per day; deck hand and mate by $15 per day each. This increase in wages shall be fixed for the term of this Agreement and will not be increased from year to year. (ii) Where a tugboat begins a tour with a five person crew (a Captain and four crew members), that tugboat will remain as a five person tugboat for the remainder of the calendar week. (iii) Where a tugboat begins a tour with a four person crew (a Captain and three crew members as specified in subsection (i)), that tugboat may increase crew size to a five person crew (a Captain and four crew members). The pay rates will be adjusted to the contractual rate for a five person crew (a Captain and four crew members) and the tugboat will remain with a five person crew (a Captain and four crew members) for the duration of the calendar week. (iv) Where the fifth crew member is required to travel to or from the tugboat, his travel expenses will be paid if not otherwise reimbursed pursuant to another provision of the agreement. 20 Section 3. Specific Working Conditions a. Grub Money Grub money shall be paid at the following rates to all tugboat and launch crew members: Year 1 - $ 9.00 per day Year 2 - 9.50 per day Year 3 - 10.00 per day b. Twenty-Four Hour Operation Tugboats in this group to be operated 24 hours per day. c. Split Time The Employer shall pay not less than one full day's pay to any Employee, that is, there shall be no split time. Except on crew change day, an Employee shall receive a full day's pay if he works (including being aboard the vessel off watch) for any portion of a calendar day, that is, from midnight to midnight. On crew change day, the Employee boarding the vessel shall receive a full day's pay; the Employee leaving the vessel will not be paid for that day. d. Designated Place to Tie Up The Employer may have up to 3 tie-up locations in New York Harbor which shall be interchangeable for the Employer's equipment. The Employer may change the location of its tie-up 21 points upon notice to the Union. The Employer may add additional tie-up locations, in excess of three, with the Union's consent. e. Carfare Whenever, if it is legally possible, a crew member is given time off, with the permission of the Master, the Employer will, not more frequently than once in thirty (30) days, upon presentation of proper travel vouchers, reimburse the Employee given time off for his necessary expense in getting to and from the railroad, airline, or bus terminal, and for the railroad, airline or bus fare (provided that the means employed in getting to or from the terminal is the most economical from the place where he leaves his vessel) to the base point designated by Employer for the vessel (that is, the place at which the vessel is normally crewed) and from the vessel's base point to the place where he rejoins his vessel. No later than the second pay period after presentation of proper travel vouchers, the Employee will be reimbursed for one (1) round trip per cycle. Carfare must be paid either from the vessel to the home port or, if the Employee travels from the vessel to another city, to that city, whichever is less, or vice versa. No claim for such travel reimbursement shall be made, however, unless the Employee has spent at least two dollars ($2.00) in connection with the round trip. f. Crew Change Time The Company may alter scheduled crew change times upon notification to Employees. Upon failure to notify, the crew 22 change must occur within 24 hours of scheduled change after which the crew member will be deemed to be working. g. Work Schedule Employees shall be entitled to work equal time on and equal time off. The normal tour of duty shall be between one week and three weeks. A voyage may be extended to avoid crew changes at locations that are not scheduled ports of call on that voyage. ARTICLE V. TOWING OF UNMANNED AGGREGATE SCOWS Except as provided herein, should the Employer intend to engage in the business of towing aggregate scows within the geographic area of this Agreement, it will apply the wage and manning provisions of the Great Lakes Towing and Transportation Co. - Local 333 Agreement. However, the Company may tow aggregate scows for not more than 10 hours using the manning and wage provisions of Article IV provided it is towing said aggregate scows for a Company that is regularly engaged in such work and which has a signed agreement with Local 333. Should the tow last longer than 10 hours, the Company will apply the Great Lakes Towing and Transportation Co. scale for all hours worked. Any additional manning required under the Great Lakes Contract shall be operative after the 10-hour period. If delays are incurred in adding such men, then said man's daily wage shall be divided among the remaining crew until said man is added. The Company may not use multiple tugs on a job to avoid 23 the 10-hour limitation. ARTICLE VI. MANNING REOUIREMENTS FOR TUGS TOWING UNMANNED TANK BARGES Delete Article. ARTICLE VII Delete and replace with the following: The Employer and Union agree to establish a procedure, if necessary, to resolve any dispute which should arise as to whether an Employer tug is considered "automated" within the industry. If no procedure is agreed to, the dispute shall be submitted to an AAA-designated Arbitrator. If it is determined that the tugboat is not automated, manning will require an assistant engineer under this agreement. ARTICLE VIII Delete. The Employer does not now intend to operate self-propelled lighters. If the Employer runs self-propelled lighters, it will recognize the Union as the representative of the non-supervisory crew members and it will negotiate with the Union concerning the applicable terms and conditions. ARTICLE IX. TRANSFER PROVISION Delete and substitute the following provisions: 1. A subsidiary or affiliated company, including the 24 mid-Atlantic affiliate, will not perform Current Employer Work unless no suitable Employer vessel is available for the work. A vessel covered by this agreement will not be transferred to a subsidiary or affiliated company or division for the purpose of performing Current Employer Work. 2. Current Employer Work means work done by the Employer as of January 1991 or thereafter acquired by the Employer. Work that the Employer has not done (or in the future ceases to do) for at least two years will no longer be considered Current Employer Work. ARTICLE X. LIST OF OWNERS AND OPERATORS Delete. ARTICLE XI. ADDITIONAL OWNER PARTIES Delete. ARTICLE XII One mid-Atlantic-based tug operated by a Moran affiliated company may perform work in New York Harbor under the following circumstances: (1) the mid-Atlantic boat is in New York Harbor by virtue of an in-and-out voyage towing a barge; (2) all the Employer's tugs are working, are laid up for repairs or are not suitable for the work (i.e., such matters as size and/or horsepower), but the Employer is not required to break out a tug unless there is 12 hours scheduled work for the tug and unless this 25 scheduled work is known the day before; and (3) the mid-Atlantic boat may perform work in New York Harbor for no longer than ten (10) hours commencing with the time that the barge it towed into the Harbor starts transferring cargo. The Company shall designate the tug to which this Article will apply, and if that tug is unavailable for this purpose, the Company may use another tug no more than five times a contract year. ARTICLE XIII If the Union enters into a collective bargaining agreement with another employer with lower wage rates (based on the daily wage for the vessel with comparable manning), then Moran shall be entitled to the same wage scale for the same operations, except that this provision shall not apply to the first year of the initial contract between the Union and a newly-organized company with no more than three boats. ARTICLE XIV. EFFECTIVE DATE OF AGREEMENT AND TERMINATION Modify to provide for effective date of 12:01 a.m., September 26, 1995, and termination date of September 25, 1998. Moran Towing & Transportation Local 333, United Marine Co., Inc. Division, ILA, AFL-CIO By: By: 26 EX-10.12 11 EX-10.12 AGREEMENT INTERNATIONAL ORGANIZATION OF MASTERS, MATES & PILOTS and MORAN TOWING OF FLORIDA A DIVISION OF MORAN TOWING CORPORATION May 1, 1997
INDEX SECTION TITLE PAGE # ------- ----- ------ 1 Recognition................................ Page 2 2 Employment................................. Page 2 3 Handling of Grievances and Disputes........ Page 3 4 Passes to Representatives.................. Page 4 5 Picket Lines............................... Page 4 6 Discharge.................................. Page 4 7 Safety..................................... Page 5 8 Loss of Personal Effects................... Page 5 9 Leave of Absence........................... Page 6 10 Authority to Check Records................. Page 6 11 Days and Hours of Work..................... Page 6 12 Wages...................................... Page 8 13 Working Conditions......................... Page 9 14 Holidays................................... Page 11 15 Minimum Manning Scale...................... Page 11 16 Definition of Out-of-Harbor Towing......... Page 12 17 Transportation............................. Page 12 18 Payment of Wages........................... Page 13 19 Food or Food Allowance..................... Page 13 20 Living Quarters............................ Page 13
INDEX SECTION TITLE PAGE # ------- ----- ------ 21 Vessels in Lay- Up...................................... Page 13 22 Seniority, Continuity of Service, and Layoff.................................. Page 14 23 Qualifications Committee................................ Page 14 24 Roster................................... Page 14 25 Check Off................................ Page 14 26 Personnel Changes........................ Page 15 27 Military or Naval Service................ Page 15 28 Bidding on Vacancies..................... Page 15 29 Dockside Work............................ Page 16 30 Prohibited Work.......................... Page 16 31 Coast Guard Documents................... Page 16 32 Maintenance and Cure.................... Page 17 33 Qualifying for Docking Master........... Page 17 34 Pension, Health and Benefit, Training & Safety Funds............................ Page 17 35 Sick Leave.............................. Page 18 36 Sales and Transfers of Vessels.......... Page 19 37 Savings Clause.......................... Page 20 38 Non-Discrimination...................... Page 20 39 Personal Leave or Personal Day.......... Page 20 40 Probationary Period..................... Page 20 41 Vacation Benefit (I 997, 1998, 1999).... Page 20 42 Duration of Agreement................... Page 21
AGREEMENT This Agreement is made and entered into as of the 1st day of May, 1997, by and between the International Organization of Masters, Mates & Pilots, AFL-CIO, its successors or assigns (hereinafter referred to as the Organization) and Moran Towing of Florida, a Division of Moran Towing Corporation, its successors or assigns (hereinafter referred to as the Company) covering all vessels owned or operated by them for its own account in the Port of Jacksonville, Florida. It is further agreed that during the life of this Agreement the Company will not subcontract or direct work normally performed by personnel covered by this Agreement to any other company without discussing said action with the Organization. WITNESSETH Section 1. Recognition The Company recognizes the Organization as the sole and exclusive collective bargaining representative of all marine personnel employed on all vessels owned or operated by the Company. Section 2. Employment A. The Company agrees that, during the period of this Agreement, it will procure all its marine personnel except Captains through the Organization, retaining the right to reject for cause any applicant referred by the Organization. All referrals for employment shall be on a nondiscriminatory basis without regard to race, color, creed, sex, age or national origin; Union membership or lack thereof, of the applicant for employment. B. Whenever qualified applicants who are registered with the Organization are not readily available when required, the Company may secure employees from any source whatsoever, but shall notify the Organization immediately in writing, of the employment of any such employee. The Company shall make its best effort to give the Organization twenty four (24) hour advance notice of needing personnel. Before the Company hires an employee for a position lasting more than thirty (30) days, it shall provide the Organization at least five (5) days notice of the requirement. This requirement can be waived on a case by case basis on the mutual agreement of the Organization and Company. Company notice to the Organization of all new hires shall include the name, address, telephone number, rating, social security number, and date of hire. C. The Organization agrees that it will furnish the Company with marine personnel believed to be capable, competent, physically fit and with the required rating, and where 2 reasonable notice has been given, to furnish such personnel when and where required in ample time to prevent any delay in the operation of a vessel covered by this agreement. D. The Company with the full support of the Organization shall have sole and unequivocal right and authority to hire, promote, demote, transfer and assign captains. Company decisions in this respect shall not be subject to grievance and/or arbitration procedures. E. The Organization warrants and guarantees that it will maintain, administer and operate its employment offices in accordance with all applicable laws and agrees to indemnify and hold the Company harmless from all claims, liability, damages or losses whatsoever occasioned or resulting directly or indirectly from the Organization's failure to do so. F. During the life of this Agreement, the Organization shall be granted the highest degree of union security permissible under applicable State or Federal law. Section 3. Handling of Grievances and Disputes As this Agreement provides for amicable adjustment of any and all disputes and grievances, the Company agrees not to lock out any employee or group of employees while this Agreement is in effect. The Organization agrees that it will not cause, call or sanction any strike or stoppage of work until all provisions of Section 3 have been exhausted. A. Any employee covered by this Agreement who believes he has been unjustly dealt with or that any provision of this Agreement has not been properly applied or interpreted may present his grievance in writing to his supervisor. Grievances must be presented within seven (7) working days of the incident prompting the grievance, and will receive a decision within seven (7) working days thereafter. B. A representative of the Organization has the right to discuss or file grievances with respect to any item in which he believes the contract has been misinterpreted or violated at any time. C. Should the procedure referred to in (A) and (B) fail to amicably and mutually adjust and settle the grievance or dispute, the matter shall then be submitted to a Board of Arbitration selected as follows: Two arbitrators are to be chosen by the Organization and two arbitrators are to be chosen by the Company; such arbitrators shall meet within twenty-four (24) hours after written notice has been served upon opposing party by the other party hereto (Saturdays, Sundays and holidays excluded) and the arbitrators shall endeavor to adjust the grievance or dispute and, should they fail to satisfactorily adjust said grievance or dispute, they shall within seventy-two (72) hours from the time of beginning of the first meeting on the matter agree on the selection of a fifth arbitrator, who shall be acceptable to the parties of the dispute and who shall be chairman of the Board of Arbitration. However, in the event that no chairman is 3 agreed upon at the end of the seventy-two (72) hours, an impartial chairman will be requested from one of the recognized arbitration services mutually acceptable to the Organization and the Company. The U. S. Mediation and Conciliation Service shall be called upon for the impartial chairman in case of a deadlock. The Board of Arbitration shall within five (5) days (Saturdays, Sundays and holidays excluded) hold a meeting for the purpose of hearing all parties interested in the submission of facts pertinent to the matter in dispute. The decision of the majority of the Board shall be final and binding upon both the Organization and the Company and shall be rendered in writing with all possible promptitude. Each party shall bear the expense of their respective arbitrators, and the expense of the Chairman, together with any other incidental expenses, shall be shared equally by the Organization and the Company. There shall be no strike nor lockout during the arbitration of any dispute. Section 4. Passes to Representatives Authorized representatives of the Organization shall be allowed to go on board vessels of the Company to interview the marine personnel. The Organization agrees to take out insurance and furnish the Company with a certificate of such insurance which will protect the Company, its employees and agents against any claim, loss, damage or liability for loss of life or injury occurring to representatives of the Organization while on the property of or while on board a vessel of the Company. Section 5. Picket Lines No employees shall be expected to pass through a picket line nor to perform work for a member of any union engaged in an industrial dispute. Further, they shall not be required to work under conditions which may endanger their health or safety. Section 6. Discharge It is understood that the Company has the right to discipline or discharge marine personnel for any just and sufficient cause. Any employee so discharged shall be given, on the date of discharge, a written statement advising of the discharge and an explanation of the reasons for the discharge. The Organization shall be given a copy of this written statement immediately. The failure of the Company to furnish such written statement shall presumptively establish that said employee has been discharged without just cause. Should said employee feel that he has been unjustly treated he may, through his representative, have his case considered as a grievance under the procedure outlined in Section 3 to a conclusion. 4 In the event the employee is cleared of the charges against him, he shall be returned to his former position and rating without loss of seniority or any other rights and privileges and if, in the interim, he has been suspended or dismissed, the loss of wages suffered by him shall be restored to him by the Company. The possession of or use of illegal drugs or alcoholic drinks aboard the Company vessels shall be just cause for immediate discharge from employment. Reporting for duty under the influence of illegal drugs or legally intoxicated constitutes grounds for immediate discharge from employment. Section 7. Safety A. Should a condition arise whereby an employee should feel that the equipment under his care or the conditions under which he would be required to work are unsafe, he may have said condition investigated by the Company. Should the Company fail to correct said condition within a reasonable time, the condition shall be reported to the Vice President of the Organization or his designee. If the Company and the Organization fail to work out a prompt settlement, the condition shall be reported to the U. S. Coast Guard, Bureau of Marine Inspection or other appropriate organization for investigation and decision. B. The Organization and the Company agree to cooperate fully at all times in protecting the safety of the marine personnel and protecting the health and welfare of all employees. No employee shall be required to work under conditions which may endanger his health and/or safety. C. First-Aid Kits and adequate safety equipment shall be furnished on boats of the Company and deficiencies shall be brought to the attention of the Company. Section 8. Loss of Personal Effects If the personal effects of any employee become a total loss as a result of fire or sinking of the vessel on which he is employed, he shall be paid by the Company the sum of Three Hundred ($300.00) Dollars in full compensation for such loss, whether or not the loss is greater or less than Three Hundred ($300.00) Dollars, without prejudice to any claim for injury or illness he may have resulting from said fire or sinking. 5 Section 9. Leave of Absence It is agreed that the Company, with the agreement of the Organization, will grant leave of absence for illness or accident whether occupational or non-occupational, death in the immediate family, attendance at schools, obtaining or upgrading licenses, and position with the Organization, without loss of seniority and position on the roster. Any such leave of absence shall be in writing and will be granted for a period of up to three months and is subject to renewal or extension by agreement in writing between the Company and the Organization. Leave of absence for position with the Organization shall be coextensive with the duration of his Organization position provided that the seniority rights of any person on leave of absence for a position with the Organization shall terminate within thirty (30) days should the Organization cease to be the collective bargaining agent for personnel covered herein. Marine personnel on leave for Jury duty shall remain on base wages for the duration of such duty. Section 10. Authority to Check Records Organization representatives shall be permitted to check official records of hours worked and computation of pay and other pertinent related data for marine personnel upon request of such representative to the Company. Section 11. Days and Hours of Work A. Work Day A work day shall be twenty-four (24) hours from 0500 to 0500 or any other twenty-four (24) hour period agreed to between the Organization and the Company. B. Harbor Vessels 1). Vessels with Regular Assigned Crews a). There shall be four (4) vessels with Regular Assigned Crews and relief crews [a total of six (6) crews.] Each crew will be assigned to a vessel or vessels and shall be available for work on a twenty-four (24) hour day basis during his scheduled work period. When determined that a Regular Assigned Crew will not be required for a scheduled work day, the crew shall be ordered off-duty, meaning no wages or benefits are payable to the crew. Notice of being off-duty will be provided prior to 2400 of the evening preceding the scheduled work day, or when the crew is released and the tug is tied up. The Company will maintain and share records of off-duty days to assure an equitable distribution of off-duty days among Regular Assigned Crews over the course of each year. In no 6 event shall a single Regular Assigned Crew be given more than two (2) off-duty days in a single month. b). Regular Assigned Crews when not required aboard their vessels at 0500 on a scheduled work day will routinely report to their assigned vessels at 0700 excluding Saturdays, Sundays and Paid Holidays, unless appropriately notified they are off-duty. Said crews shall be subject to perform maintenance aboard their vessels until 1630. Monday through Friday, excluding Paid Holidays: When a Regular Assigned Crew is released for the day prior to 1700 on a scheduled work day and they have performed less than two (2) towage services, they will be paid at the twelve (12) hour rate for the day. If said crews perform two (2) or more towage services, or are required to work after 1700, they will be paid a 24-hour rate for the day. Saturdays, Sundays, and Paid Holidays: When a Regular Assigned Crew performs one (1) or more towage services, they will be paid a 24-hour rate for the day. Designated Company Holidays shall be treated the same as Saturdays, Sundays, and Paid Holidays with respect to crews routinely reporting for maintenance. Tug Captains shall determine the timing and practicality of assignments to maintenance work based on safety, work schedules, rest for crew members, known towage service requirements, and any other factors he may reasonably use to make his decision. Marine personnel are subject to perform maintenance from 0700 to 1630, Monday through Friday, excluding holidays. Personnel who are required to work (on duty) two (2) hours or more between 0000 and 0700 shall have an equal amount of time for rest but in no event shall the time for rest be less than four (4) hours before being required to perform routine maintenance. Sanitary and housekeeping chores shall be performed as required. c). Crews assigned to Regular Manned Vessels shall be rotated on a two- days on/one-day off formula. Any multiple greater than six-days on/three-days off shall be by mutual agreement between the Organization and the Company. 2). Call-out Vessels Call-out crews shall be called to duty as required and be paid in twelve (12) hour increments commencing at their ordered reporting time. The 0500 to 0500 7 work day of Regular Assigned crews shall not apply to call-out crews. This will not affect the Regular Assigned Crews. C. Out of Harbor Starting Time Regular Assigned Crews which are ordered to report at 0500 or have commenced a 0500 to 0500 work day cycle that are assigned to Ocean and/or coastwise towage service shall remain on that work cycle and be paid at the twenty-four (24) hour wage rate on the basis of 0500 to 0500 calendar days. Regular Assigned Crews called into service for Ocean and/or Coastwise towage service between 0001 and 0459 shall work on 0001 to 2400 calendar days and be paid at the twenty-four (24) hour wage rate per calendar day. In the case of all Ocean and/or Coastwise towage service, marine personnel shall be available for work on a basis of twenty (20) days at work to be followed by ten (10) days off each thirty (30) days. Watches shall be set in the appropriate manner so that hours of work of personnel aboard the vessel are equalized insofar as possible. Marine personnel required to work in excess of twenty (20) days may take one (1) day off for each two (2) days worked or pro-rate thereof. Section 12. Wages The wage rates for marine personnel shall be as follows: May 1,1997 - April 30, 1998
Rating 24-Hour Rate 12-Hour Rate ------ ------------ ------------ (A) Captain $198.00 $99.00 (A) Licensed Engineer/Utility $182.00 $91.00 *Unlicensed Engineer/Utility $140.00 $70.00 (A) Mate Utility $148.00 $74.00 Deckhand -A/B $106.00 $53.00 Deckhand - Ordinary I $102.00 $51.00 Deckhand - Ordinary II $85.00 $42.50 May 1,1998 - April 30, 1999 Rating 24-Hour Rate 12-Hour Rate ------ ------------ ------------ (A) Captain $202.00 $101.00 (A) Licensed Engineer/Utility $186.00 $93.00 *Unlicensed Engineer/Utility $143.00 $71.50 (A) Mate Utility $151.00 $75.50 Deckhand -A/B $108.00 $54.00
8 Deckhand-Ordinary I $104.00 $ 52.00 Deckhand - Ordinary II $ 86.00 $ 43.00 May 1, 1999 - April 30, 2000 Rating 24-Hour Rate 12-Hour Rate ------ ------------ ------------ (A) Captain $206.00 $103.00 (A) Licensed Engineer/Utility $190.00 $95.00 *Unlicensed Engineer/Utility $146.00 $73.00 (A) Mate Utility $154.00 $77.00 Deckhand-A/B $110.00 $55.00 Deckhand-Ordinary 1 $106.00 $53.00 Deckhand - Ordinary II $ 87.00 $43.50
(A) Licensed Position 1. Applicable to Persons Hired Before April 16, 1994 11. *Applicable to Persons Hired After April 16, 1994 Marine personnel assigned to Ocean and Coastwise Service shall be paid a bonus for each day Worked in such service as follows:
Captain $15.00 Licensed Engineer/Utility $12.00 Unlicensed Engineer/Utility $10.00 Mate $10.00 Deckhand $ 8.00
Section 13. Working Conditions A. Marine personnel called for duty on any day shall not be credited with less than twelve hours working time. All night calls shall be issued by the end of the business day or at the conclusion of duty on weekdays whenever practical. B. Orders for duty on Saturday or Sunday, when practical, will be given at the end of the business day or at the conclusion of the tour of duty on Friday or Saturday. C. In cases where it is necessary for a crew or partial crew to be transferred from its original vessel to another in the course of the usual operation of the vessel or if the vessel breaks down, there shall not be an additional day's pay when personnel are so transferred. D. Wheel Watch: A Deckhand standing a six-hour wheel watch on offshore vessels will be entitled to a total of two (2) hours relief at the wheel. 9 E. Rotation of Vessels: Vessels will be rotated consistent with good operating practices, with a view toward equalization of the workload as fairly as possible. Grievances arising under this provision shall be handled in accordance with the procedures of Section 3 of the Agreement. F. In the event a call-out vessel is required in any one day, all personnel shall receive a minimum of twelve hours pay, and the Company shall make appropriate contributions, in accordance with Section 34 to the Plans, whether the marine personnel work a full twelve (12) hours or not. (Section I I.B.2.) G. The letter of April 6, 1977, assuring that certain personnel of the Company will not be required to engage in or perform "sea duty" shall be continued and is expressly incorporated in this Agreement. (See Appendix A for letter and roster of affected personnel.) H. Marine personnel working before 0500 shall not be required to do any maintenance work other than sanitary work. I. Deckhands and Mates shall not be required to maintain the Captain's quarters or engine room. J. The Company agrees that, when vessels are being prepared for sea or when vessels return from sea, the Company will have the shore gang or the sea crew prepare and outfit the vessel for going to sea or returning to harbor work, if possible. K. The Company will make its best effort to change crews as close as possible to or prior to the scheduled crew change time. In the event a ship job is in progress prior to crew change time and the nature of the job prevents changing crews during the job, crews will be changed immediately following the completion of the 'ob or will receive an additional 12-hour pay increment. L. The Mate's position is a licensed position created to assist the Captain in the wheelhouse when necessary as well as to perform Deckhand duties as required. M. Marine personnel working aboard a vessel engaged in one or more services during a day will be permitted to leave their vessel and the area, provided: 1). There is no work scheduled. 2). If work is scheduled, personnel can return to their vessel for the next scheduled service. 10 3). Provided their presence is not required aboard the vessel, In any of these situations personnel are to be available by telephone or beeper at all times while away from the vessel. N. Regular Assigned Crews may when Company requirements necessitate be temporarily assigned to vessels other than their normally assigned vessels. If a Regular Assigned Crew reporting to duty to relieve a crew scheduled to go off duty is assigned to perform a towage service that results in the delay of the crew going off duty: (1). The crew scheduled to go off duty will receive a penalty payment of twelve 12) hour wage increment. (2). The crew scheduled to go off duty shall be dismissed from duty promptly after completing their one assigned job and will not be required to do other work. Regular Assigned Swing Crews can be transferred before 0500, however, it shall not effect the earnings of the crew being relieved early. Section 14. Holidays The following will be observed as holidays: President's Day Memorial Day Independence Day Labor Day Thanksgiving Day Christmas Day New Years Day If worked, employees will receive as a bonus an amount equal to a day's wage in addition to the regular daily wage rate. Section 15. Minimum Manning Scale The minimum manning scale of a vessel shall be a three (3) man crew: 1 Captain 1 Engineer 1 Mate OR 1 Deckhand 11 Any employees hired prior to April 25, 1997 shall not be laid off as a result of this provision. Call-Out Crews shall routinely be manned by three (3) man crews. Any regularly manned vessel may be manned with a three (3) man crew, however, such manning will be carefully considered by the Company in respect to hours the vessel works and its service duty. Regular employees, except Captains, shall remain with their assigned crews except as provided in this Agreement. Extra/Relief personnel shall be available for assignment as required. In addition to the eighteen (1 8) regular crew positions consistent with three (3) man minimum manning, the Company will maintain not less than (3) Extra/Relief billets. Extra/Relief employees shall be assigned as required and can expect an opportunity to work a minimum of one hundred eighty days (180) days per year. These employees are subject to lay off should a regular crew be laid off in accordance with the provision in this Agreement. Regular assigned crewmembers shall be mutually agreed between the Organization and the Company and posted in writing. Section 16. Definition of Out-of-Harbor Towing For the purpose of this Agreement any towage service performed outside the St. Johns Seabuoy lasting in excess of twenty-four (24) hours shall be defined as Ocean and Coastwise Service. Section 17. Transportation A. All vessels shall have a home pier to tie up to or change crews. However, employees will at the Company's option change crews at any Company facility without penalty and the Company will provide prompt, appropriate transportation back to the Company facility where the crew first boarded the vessel. B. In the event marine personnel are required to report for work or return from work at a place outside of the Port of Jacksonville, the Company shall pay for or supply adequate transportation, subsistence and lodging to the home port and traveling time at the employee's straight-time rate of pay. C. The home port shall be Jacksonville, Florida, or such other ports as the Company and the Organization may hereinafter designate. 12 Section 18. Payment of Wages A. Wages shall be paid between 11 00 and 13 00 not later than the fifth day after the first (1st) and fifteenth (15th) day of each month. The pay envelope or statement shall be submitted by the Company at each pay period showing itemized account of wages paid for such period. The itemized account will also show amounts deducted and for what purposes the deductions were made. B. The Company agrees to correct and pay all Company payroll errors within three (3) working days after said errors are brought to the attention of the Company. Section 19. Food or Food Allowance A. The Company will provide a healthful, nutritious, balanced supply of food stores aboard vessels assigned to Ocean and Coastwise service. This shall include fresh vegetables, fresh fruits, fruit juices, fresh milk and fresh cuts of U. S. Choice meats. The Company agrees that these groceries shall be purchased on the basis of ten dollars ($10.00) per man per day. B. In lieu of food stores as provided in (A) above marine personnel assigned to In- Harbor service shall receive a food allowance as follows:
5/1/97-4/30/98 5/1/98-4/30/99 5/1/99-4/30/00 -------------- -------------- -------------- 24-Hour Rate - $11.00 $12.00 $12.50 12-Hour Rate - $5.50 $ 6.00 $6.25
The Company will provide tea, coffee, sugar, and non-dairy creamer aboard all Company vessels. Section 20. Living Quarters A. The Company shall provide adequate living and sleeping quarters on each boat and keep said living and sleeping quarters heated, ventilated or cooled as required to be comfortable at all times. Living and sleeping quarters shall be kept free of vermin and fumigated as required. The Organization agrees that its members should cooperate in keeping the living and sleeping quarters clean and sanitary. B. The Company shall supply marine personnel with full-length lockers, innerspring mattresses, clean blankets, sheets, pillow cases, towels, and soap on all vessels. The Company agrees to re-issue these items when they become worn and are returned. Section 21. Vessels in Lay-Up Marine personnel assigned on boats in repair yards shall not be required to work longer 13 hours than the regular straight time hours of the shop mechanics. Marine personnel so assigned shall not be required to take a boat out other than the boat to which he is assigned in the repair yard. Section 22. Seniority, Continuity of Service, and Layoff A. Seniority shall prevail, subject to fitness and ability, in their respective classes, among the marine personnel employed by the Company, with respect to promotions and reduction in forces. B. Continuity of service shall be broken by resignations, discharge for cause, or layoff in excess of six (6) months, or failure to report to work within one week from mailing by Company (by registered mail, return receipt requested) of notice that a job is available, sent to the employee's last known address as it appears on the Company's records. C. In the event of a major loss of business and the necessary layoff of a tug and layoff of a Regular Assigned Crew, the Company shall give the crewman and the Organization fifteen (I 5) calendar days advance written notice of such tie up and its anticipated duration. In no case will a crewman be laid off less than ten (10) calendar days. If any crewman is laid off and then called back to work in less than ten (10) calendar days he shall be paid six (6) days wages at the twelve (12) hour rate. No call out tugs/crews will be used while a Regular Assigned Crew is laid off. Section 23. Qualifications Committee There shall be a Qualifications Committee consisting of a representative of the Organization and a representative of the Company which shall determine the qualifications and abilities of marine personnel to determine fitness for promotion. In the event marine personnel are determined to be promotable, there shall be a probationary period of sixty (60) days from the time of promotion during which time the Qualifications Committee will monitor performance. In the event an employee's performance is unsatisfactory, such employee has the right to return to his lower classification with no loss of seniority and without recourse to the grievance procedures. Marine personnel may be reconsidered for promotion after achieving additional qualifications. Section 24. Roster The Company shall promptly provide rosters (Seniority Lists) and other lists and information to the Organization upon request. Section 25. Check Off A. The Company agrees to deduct from the earnings of the employees who have so authorized in writing the regular membership dues of the Organization uniformly required 14 and consisting of membership dues, service fees, assessments, and initiation fees and remit same to the Organization. Such authorization, to be valid, shall conform to applicable State and Federal laws. Dues or service fees deducted shall be an amount equal to three (3) percent of the gross earnings of each employee. Monies deducted shall be transmitted to the Organization by the 15th of the month for the preceding month's deductions and shall be accompanied by a report showing, for each employee, (including those not on check off) the gross earnings, dues deducted, Social Security number, and capacity in which served during the period involved. B. It is agreed that the Company will, upon the appropriate written authorization from employees covered by this Agreement, deduct as directed by written authorization contributions of such personnel to the Organization's Credit Union. All funds deducted pursuant to the written authorization of this Section shall be promptly remitted to the Masters, Mates & Pilots Federal Credit Union and such shall be done at the same time that the Company makes their contributions to the various MM&P Plans. Section 26. Personnel Changes The Vice President of the Organization or his designee shall be immediately notified of any additions to or subtractions from the force of marine personnel of the Company in order that the Organization's copy of the Company's rosters may be kept completely up to date. Section 27. Military or Naval Service In the event that any marine employee covered by this Agreement enters into military or naval forces, he shall retain his seniority and right to re-employment upon his request in accordance with applicable law. Section 28. Bidding on Vacancies A vacancy shall be deemed to have occurred when a Regular Assigned employee leaves a position as a result of death, resignation, discharge, promotion or transfer, or when a new Regular Assignment is created. When a vacancy occurs, the assignment of personnel shall be in accordance with seniority, ability, safety record and work record. The Company agrees to post such vacancy within thirty (30) days of occurrence. The vacancy shall remain posted for a two-week period during which time the employees holding seniority with the Company may bid in writing for such vacancy. The period of posting may be increased or decreased by mutual agreement of the Organization and the Company. 15 At the end of the bidding period, the Company shall assign the vacancy to the employee who holds the most seniority and has bid for the job provided he is capable and qualified to hold the new position. Any dispute regarding the bidding process may be resolved by submitting the matter in accordance with Section 3 of this Agreement (Handling of Grievances and Disputes), Section 29. Dockside Work A. Personnel regularly employed by the Company as maintenance men, making repairs and adjustments to the tugboats shall be subject to the provisions of this Agreement and their wage rate shall be equal to those outlined in Section 12 less food allowance. B. Each operator will be given prior notice when maintenance work is to be done on his vessel. Section 30. Prohibited Work Captains and Engineers shall not be required to do any maintenance work normally done by deckhands and mates of the crew. Engineers shall, when required, assist mates and/or deckhands with line handling. Section 31. Coast Guard Documents A. The Company and the Organization agree, each in its own behalf, that, in addition to any applicable laws of the Federal, State or local governments, each employee of the Company shall obtain and carry in his possession at all times a valid U. S. Merchant Mariner's Document ("Seaman's Card" or "Z Card") issued by the United States Coast Guard. It is further agreed that each current employee not presently possessing such a valid Document shall apply for the same within thirty (30) days after the effective date of this Agreement. Likewise it is agreed that any new employees referred to the Company by the Organization in the future shall provide the Company with adequate proof of possession of such a valid Document prior to his being accepted for employment and/or his placement aboard a vessel owned or operated by the Company. B. Deckhands referred by the Organization to permanent assignment on vessels of the company shall have in their possession a valid Able Bodied Seaman's Document prior to such assignment. Deckhands who have permanent assignments on vessels of the Company shall have the right to bid on open Deckhand jobs on a seniority basis whether or not they have a valid AB Document. C. In the event a vessel goes to sea and requires ABs and a Deckhand thereon does not have a valid AB Document, such Deckhand will take a leave from such vessel for the period the vessel is out of Port, at no cost to the Company. 16 Section 32. Maintenance and Cure A. Personnel who are entitled to maintenance under the general maritime law doctrine of wages, maintenance and cure on account of injury or illness incurred in the service of the vessel shall be paid maintenance at the rate of Twenty Two Dollars ($22.00) per day, One Hundred Fifty Four Dollars ($154.00) per week, with payments to be made once weekly. Wages, maintenance and cure, under such doctrine, shall not be withheld in any case merely because the claimant has also submitted a claim for damages or has filed suit for or has taken steps toward that end. B. Personnel may also apply for and shall be paid accrued sick leave while being paid maintenance and cure. Section 33. Qualifying for Docking Master The Company and the Organization agree that it is desirable to encourage marine personnel to pursue and qualify for available Docking Master positions. Marine personnel wishing to be considered as a candidate for a Docking Master position shall notify the Company in writing with details of his licenses, experience and a personal log of ship handling jobs observed from aboard specific vessels. Section 34. Pension, Health and Benefit, Training & Safety Funds All fringe benefits shall be paid on twelve (12) hour increments including Health and Benefit. This shall mean: All fringe benefits shall be payable per twenty-four (24) hour man day worked or where applicable at one-half (1/2) rate for 12 hour man days worked. In no event shall Union benefits be payable on any earnings or payments which are not man days worked. A. Pension Fund: The Company agrees that it shall participate in and contribute to the Atlantic & Gulf Region Benefit Pension Fund for the duration of this Agreement at the following rates:
Rating 24-Hour Rate 12-Hour Rate ------ ------------ ------------ Captain $10.56 $5.28 Licensed Engineer[Utility 10.00 5.00 Unlicensed Engineer/Utility 7.54 3.77 Mate 7.54 3.77 Deckhand-Ordinary 5.90 2.95 Deckhand-A/B 5.90 2.95
17 B. Health and Benefit Plan During the life of this Agreement, the Company shall contribute to the Health and Benefit Plan Nineteen Dollars and Twenty Eight Cents ($19.28) per twenty-four (24) hour man day worked and Ten Dollars and Ninety Three Cents ($10.93) per twelve (12) hour man day worked. The Organization shall select coverages and carrier through which such benefits shall be provided and shall furnish the Company with written directions concerning such payments. The Company agrees to execute any acceptance of escrow or other agreements necessary in connection with the contribution for welfare benefits and to make the contributions at the time, in the manner, with the reports in accordance with the direction from the Organization. C. Training & Safety Fund: The Company agrees that it shall participate in and contribute to the Atlantic & Gulf Maritime Region Educational Training and Safety Fund for the duration of this Agreement. Contributions shall be on a per man day on payroll basis at the following rates:
Twenty-four (24) hour rate $.75 per day Twelve (12) hour rate $.38 per day
Section 35. Sick Leave Marine Personnel will not accrue additional sick leave days after March 31, 1988; however, the sick leave program enumerated below shall continue until each employee has received payment for his last day of benefits. A. The provisions of this section shall cover marine personnel absent from work as a result of disability caused by accident or sickness and shall be in lieu of all prior practices and policies pertaining to the salary continuance during such absences. B. Eligibility. To be eligible for payments under the provisions of this Section, reasonable evidence (including, in appropriate circumstances, a certificate from a licensed medical doctor) of disability due to sickness or accident will be required. NOTE: Marine personnel may be off sick up to two (2) days twice a year without being required to provide a Doctor's Certificate. C. Deckhands and mates retiring from employment with 20 or more years of service shall be paid accumulated sick leave up to 180 days. Marine personnel terminating with 20 years or more service shall be paid their accumulated sick leave up to 90 days. Payment of sick leave shall be made at the time of retirement or termination at the following rates of pay:
Mate $52.68 Deckhand $52.68
18 D. Captains and engineers retiring from employment with twenty (20) or more years of service shall be paid accumulated sick leave up to 216 days. Captains and engineers terminating with twenty (20) or more years of service shall be paid their accumulated sick leave up to ninety (90) days at the following rates of pay per day:
Captain $90.91 Engineer $90.03
E. Marine personnel on maintenance and cure may request to be paid sick leave at the following rates:
Captain $90.91 Engineer $90.03 Mate $52.68 Deckhand $52.68
F. The following rates shall be paid for sick leave until the total accrued amount reaches the maximums outlined for retirement:
Captain $80.51 Engineer $79.72 Mate $45.71 Deckhand $45.71
G. Payments of sick leave shall be made at the time of retirement or termination. Section 36. Sales and Transfers of Vessels Prior to any vessel contracted to the Union being disposed of in any fashion, including but not limited to sale, scrap, transfer, bareboat charter, etc., ninety (90) days notification in writing must be sent to the Vice President, Atlantic & Gulf Maritime Region, IOMM&P, 349 East 20th Street, Jacksonville, Florida 32206. The Union recognizes that the Company may not in all cases be able to provide the Union with ninety (90) days notice as provided above. However, when ninety (90) days notice cannot be given, the Company shall call and notify the Vice President, Atlantic & Gulf Maritime Region, IOMM&P, 349 East 20th Street, Jacksonville, Florida 32206, telephone (904) 356-0041, and confirm in writing as far in advance as possible and in no event any later than the date of sale, scrap, transfer, bareboat charter, etc. In addition, the Company must give the Union the name, address and telephone number of the purchaser and will attempt to assist the Union meeting the buyer. The Company shall provide the Union with a list of the names and owners of record of all vessels covered by this contract within fifteen (I 5) days of the signing thereof and shall provide information on any further changes as provided above. 19 Section 37. Savings Clause Should any part hereof or any provision herein contained be rendered or declared illegal by reason of any existing or subsequently enacted Court Action, legislation, or by any decree of a Court of Competent Jurisdiction, or by decision of any authorized Government Agency, such invalidation shall affect only such part of portions hereof, provided, however, upon such invalidation, the par-ties agree immediately to meet and negotiate substitute provisions for such parts or provisions rendered or declared illegal. The remaining parts or provisions shall remain in full force and effect. Section 38. Non-Discrimination A. The Company and the Organization shall in no way discriminate against any person covered by this Agreement because of race, religion, creed, sex, age, national origin, disability or veteran status. B. It is understood by the parties that whenever the masculine pronoun or gender is used in this Agreement such use includes the feminine pronoun or gender, except where a bona fide occupational requirement exists. Section 39. Personal Leave or Personal Day Each bargaining unit employee shall be given, as a personal paid day off to be compensated at the employee's 24-hour rate of pay, the employee's birthday. At the employee's option, this personal day may be taken on a day other than his birthday, as mutually agreed between the company and the employee. Section 40. Probationary Period Each employee shall serve a probationary period of forty-five (45) work days during which the employee may be terminated for any reason. The termination shall not be subject to the grievance and arbitration provisions of this Agreement. Section 41. Vacation Benefit (1997, 1998, 1999) The Company agrees to provide a vacation bonus to "Regular" employees and those current "Extra/Relief" employees who work a minimum of 212 days during a calendar year provided these employees have three (3) years service with the Company. A day worked shall be either a twelve (12) hour day or a twenty four (24) hour day under this Agreement. 20 The bonus shall be paid within fifteen (I 5) days of the employee working the 212 days minimum. Flat bonus amounts based on the foregoing shall be:
Captains $1500 Licensed Engineer $1350 Unlicensed Engineer $1000 Mate $1200 Deckhand $ 800
Section 42. Duration of Agreement This Agreement shall become effective as of May 1, 1997 and shall continue in full force and effect until May 1, 2000 and shall continue in full force and effect until each succeeding May I thereafter, unless written notice of desire to renegotiate is given by either party hereto to the other at least thirty (3 0) days prior to any expiration date or unless written notice of intention to terminate is given by either party thereto to the other at least sixty (60) days prior to any expiration date. Application to open negotiations for changes in any condition of this Agreement, excluding those provisions in Section 1, 2, 4, and 10, may be made by either party at any time during the term of this Agreement. Such application or applications shall not be deemed cause for termination of this Agreement or any provisions thereof In petitioning for the opening of negotiations for changes in any conditions of this Agreement, both parties agreed to clearly specify the provisions therein to be discussed unless mutually agreeable to both parties. If and when the parties shall have reached an agreement with respect to matters on review, there shall be added to and incorporated in this Agreement such additional provisions as shall have been agreed to with respect to such matters only and no others, and this Agreement, as so modified, shall thereafter continue in full force and effect. IN WITNESS WBEREOF, the parties hereto have set their hands and seals. MORAN TOWING OF FLORIDA INTERNATIONAL ORGANIZATION OF A DIVISION OF MORAN TOWING MASTERS, MATES & PILOTS, CORPORATION AFL-CIO Donald J. Peck Carl T. Sturges Division Vice President and Vice President General Manager 21 MORAN TOWING OF FLORIDA CURRENT ROSTER OF EMPLOYEES - APRIL, 23,1997
ABERCROMBIE, JOHN L. TURNER, BYRON H. BROWARD, CLAY R. WELLS, DALE C.* CROCKETT, DOUGLAS WETHERINGTON, EDWARD H. DAGLEY, LLOYD E. WILLIAMS, GREGORY B. DETYENS, RUTLEDGE A.* DONLAN, JOHN E. EPPLEY, ROY D. HARRIS, WILLIAM* HOLLAND, THOMAS W. JOY, BARRY L. JUREK,KARL LANE, LOWELL T. MCLAUGHLIN, JAMES K. ROHN, RONALD D. ROWE, THOMAS L. SCHILLER, EDMOND L.* STEPHENS, STUART* SWAFFORD, ALLEN R. THOMAS, JERRY JR.
*Indicates Extra/Relief Employees 22 SIDEBAR AGREEMENT BETWEEN INTERNATIONAL ORGANIZATION OF MASTERS, MATES & PILOTS AND MORAN TOWING OF FLORIDA A DIVISION OF MORAN TOWING CORPORATION A. PROBATIONARY PERIOD The Company agrees that the probationary period as provided for in Section 40 of our Agreement is applicable only to employees hired after the effective date of the Agreement, May 1, 1997. B. VACATION BONUS The Company agrees that the Licensed Engineer bonus shall be applicable to the following Engineers hired prior to May 1, 1997, whether licensed or unlicensed, provided they meet the eligibility requirement of Section 41: Lane, T. Joy, B. Dagley, L. Crockett, D. Turner, B. Donlan, J. Engineers hired on May 1, 1997 or later shall, if eligible, be paid in accordance with the licensed or unlicensed rating of said employee.
Moran Towing of Florida International Organization of Masters A division of Moran Mates & Pilots Towing Corporation Donald J. Peck, Division Vice Carl T. Sturges, Vice President President & Atlantic & Gulf Region General Manager
SIDEBAR AGREEMENT BETWEEN INTERNATIONAL ORGANIZATION OF MASTERS, MATES & PILOTS AND MORAN TOWING OF FLORIDA A DIVISION OF MORAN TOWING CORPORATION Subject: Collective Bargaining Agreement - Dated May 1, 1997 Section 11. Days and Hours of Work - Paragraph B (1) (c) Should the Company elect to change crew rotation from four days on/two off to six days on/three days off, the Company will notify the Union in advance. Further, six months after such change, the Company and the Organization will discuss whether the six days on/three days off schedule is satisfactory to the majority of the marine personnel working the schedule. If the majority of the bargaining unit wishes to return to the four on/two schedule, the Company will agree.
Moran Towing of Florida International Organization of Masters, A division of Moran Towing Mates & Pilots Corporation By: Donald J. Peck, Division Vice Carl T. Sturges, Vice President President & General Manager
APPENDIX A Florida Towing Company Independent Square, Suite 3208 One Independent Drive Jacksonville, Florida 32202 (904) 354-0483 April 6, 1977 Captain Allen C. Scott, Regional Director Atlantic and Gulf Region International Organization of Masters, Mates & Pilots - ILA. AFL-CIO 349 East 20th Street Jacksonville, Florida 32206 Dear Captain Scott: This is to clarify the Agreement on regular employees of Florida Towing Company as of June 17, 1976. The sixty seven (67) crew members and six (6) docking masters on the payroll on the above date would have jobs in the harbor subject to the needs and requirements of the harbor workload remaining the same. The above employees may or may not elect to go to sea under the coastwise contracts, subject to their having the proper license and ability. This does not take away any rights of management under the contract or any part of the Agreements. Sincerely, Edmond J. Moran, Jr. EMJ, JC:lc REGULAR EMPLOYEES OF RECORD AS OF JUNE 17, 1976 APPENDIX A DOCKING MASTERS ENGINEERS Ackerman, J. T. J. B. Free Bouchelle, H. P J. E. Avers Moore M. H. Williamson Meares D. E. Griffin Williamson, T. J. H. E. Mays R. B. Sink CAPTAINS H. C. Avera E. Mathis C. R. Taylor H. J. Danforth A. M. Avera J. M. Lane T. E. Davis A. J. Hayes J. Clyatt W. W. Dickinson C. Broward J. G. Furman L. T. Lane W. D. Love H. T. Lewis DECK HANDS R. M. Thomas L. Marlow T. J. Bowen R. H. Tucker C. B. Williams A. D. Danforth R. E. Johnson J. G. Davis L. F. Stephens A. A. Mayers R. D. Eppley J. McLain F. L. Tullis B. J. Walker R. L. Collins T. H. Smith L. Harvey W. A. Hoffman R. McAlister COOKS T. Harvey W. A. Watts E. R. Lewis E. C. Salmon E. R. Lakes L. W. Richards L. McGregor L. W. Salmon A. L. Carter J. W. Coleman H. C. Howell Frank Phillips EX-12.1 12 EX-12.1 EXHIBIT 12.1 MORAN TRANSPORTATION COMPANY Computation of Ratio of Earnings to Fixed Charges (Amounts in thousands)
Period Period Year Jan. 1, 1994 July 1, 1994 Ended Thru Thru Year Ended December 31, Dec 31, July 11, Dec. 31, ------------------------------- 1993 1994 1994 1995 1996 1997 -------- -------- -------- -------- -------- -------- Pretax income from continuing operations ....... $ 9,764 $ 2,054 $ 1,536 $ (136) $ 2,113 2,233 Capitalized interest ........ (28) (62) 0 0 0 0 Undistributed income from affiliiated partnership (Shipmor) ....... (1,149) 0 0 0 0 0 -------- -------- -------- -------- -------- -------- $ 8,587 $ 1,992 $ 1,536 $ (136) $ 2,113 2,233 ======== ======== ======== ======== ======== ======== Fixed charges Interest expense and amortization of debt discount and premium on all indebtedness (a) ............ $ 2,077 $ 975 $ 4,810 $ 10,192 $ 10,132 10,026 Rentals 1/3 rent expense (b) ........ 366 192 173 351 387 632 -------- -------- -------- -------- -------- -------- Total fixed charges ......... $ 2,443 $ 1,167 $ 4,983 $ 10,543 $ 10,519 10,658 ======== ======== ======== ======== ======== ======== Earnings before income taxes and fixed charges ............... $ 11,030 $ 3,159 $ 6,519 $ 10,407 $ 12,632 12,891 ======== ======== ======== ======== ======== ======== Ratio of earnings to fixed charges ............... 4.5 2.7 1.3 1.0 1.2 1.2 ======== ======== ======== ======== ======== ========
(a) Included in interest expense is capitalized interest related to the construction of new equipment. (b) The portion of rentals classified as fixed charges is deemed to be representative of the interest factor. EX-21.1 13 EX-21.1 Exhibit 21-1 Subsidiaries of Moran Transportation Company -------------------------------------------- Moran Towing Corporation Moran Towing of Texas Inc. Seaboard Barge Corporation Petroleum Transport Corporation Moran Insurance Company Limited Moran Services Corporation Moran Towing of Delaware, Inc. Jakobson Shipyard, Inc. Moran Shipyard Corporation Hampton Roads Land Co., Inc. Portsmouth Navigation Corporation Moran Barge Corp. Curtis Bay Towing Company of Virginia Curtis Bay Towing Company of Pennsylvania Florida Towing Company EX-27.1 14 EX-27.1
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM MORGAN TRANSPORTATION COMPANY'S AUDITED CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED DECEMBER 31, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 12-MOS DEC-31-1997 JAN-01-1997 DEC-31-1997 9,945 0 14,319 288 4,161 30,912 119,920 30,114 160,290 13,351 80,000 1,000 0 1 13,643 160,290 100,526 100,526 73,859 87,614 273 0 10,026 2,232 613 0 0 0 0 1,619 36.30 35.20
EX-27.2 15 EX-27.2
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM MORAN TRANSPORTATION COMPANY'S AUDITED AND UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE PERIODS INDICATED AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 12-MOS 12-MOS 3-MOS 6-MOS 9-MOS DEC-31-1995 DEC-31-1996 DEC-31-1996 DEC-31-1996 DEC-31-1996 JAN-01-1995 JAN-01-1996 JAN-01-1996 JAN-01-1996 JAN-01-1996 DEC-31-1995 DEC-31-1996 MAR-31-1996 JUN-30-1996 SEP-30-1996 3,006 5,827 2,568 6,121 2,444 0 0 0 0 0 12,047 12,744 11,846 11,790 12,790 263 323 363 372 429 4,330 4,395 4,229 4,303 4,296 21,331 37,031 20,214 23,483 21,163 126,771 121,325 139,475 126,319 124,877 12,392 22,024 14,891 17,538 0 174,094 172,717 170,690 174,581 172,046 13,723 27,898 12,374 15,938 14,227 80,000 80,000 80,000 80,000 80,000 1,000 1,000 1,000 1,000 1,000 0 0 0 0 0 1 1 1 1 1 10,569 12,024 10,780 11,494 11,828 174,094 172,717 170,690 174,581 172,046 77,343 91,458 20,809 42,105 65,756 77,343 91,458 20,809 42,105 65,756 45,672 57,451 12,666 25,039 40,016 67,305 79,453 18,085 35,951 56,580 0 0 0 0 0 0 0 0 0 0 10,192 10,132 2,564 5,159 7,736 (136) 2,113 138 1,276 1,841 200 808 77 501 732 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 (336) 1,305 61 775 1,109 (7.53) 29.26 1.37 17.38 24.87 (7.53) 28.56 1.34 17.00 24.27
EX-27.3 16 EX-27.3
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM MORGAN TRANSPORTATION COMPANY'S UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR THE PERIODS INDICATED AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 3-MOS 6-MOS 9-MOS DEC-31-1997 DEC-31-1997 DEC-31-1997 JAN-01-1997 JAN-01-1997 JAN-01-1997 MAR-31-1997 JUN-30-1997 SEP-30-1997 3,653 6,558 11,456 0 0 0 14,024 13,362 12,902 383 460 541 4,434 4,443 4,378 29,017 30,758 30,831 120,564 118,900 114,524 23,978 25,947 28,848 159,593 159,732 154,832 16,416 16,625 11,674 80,000 80,000 80,000 1,000 1,000 1,000 0 0 0 1 1 1 12,430 12,980 14,261 159,593 159,732 154,832 24,829 50,048 75,948 24,829 50,048 75,948 15,982 32,108 48,280 21,607 43,366 64,994 0 0 0 0 0 0 2,512 5,020 7,512 645 1,491 3,046 240 536 810 0 0 0 0 0 0 0 0 0 0 0 0 405 955 2,236 9.08 21.41 50.13 8.84 20.85 48.61
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