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Construction Loan Agreement

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Sectors: Transportation
Governing Law: Massachusetts, View Massachusetts State Laws
Effective Date: May 16, 1996
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Exhibit 10.1


CONSTRUCTION LOAN AGREEMENT


dated as of May 16, 1996


among


MORAN BULK CORPORATION
(THE "BORROWER")


MORAN TRANSPORTATION COMPANY
AND
MORAN TOWING CORPORATION
(THE "GUARANTORS")


and


THE FIRST NATIONAL BANK OF BOSTON
(THE "BANK")


TABLE OF CONTENTS


1. DEFINITIONS AND RULES OF INTERPRETATION.................................. 1
1.1. Definitions....................................................... 1
1.2. Rules of Interpretation........................................... 13 2. THE CONSTRUCTION LOAN.................................................... 13
2.1. Agreement to Make Construction Advances........................... 13
2.2. Commitment Fee.................................................... 14
2.3. Reduction of Total Commitment..................................... 14
2.4. The Note.......................................................... 15
2.5. Interest on Construction Advances................................. 15
2.6. Requests for Construction Advances................................ 15
2.7. Conversion Options................................................ 16
2.7.1. Conversion to Different Type of Construction Advance....... 16
2.7.2. Continuation of Type of Construction Advance............... 16
2.7.3. Eurodollar Rate Advances................................... 17
2.8. Funds for Construction Advances................................... 17
2.8.1. Funding Procedures......................................... 17
2.8.2. Construction Advances to Borrower or Builder............... 17
2.8.3. Construction Advances to Others............................ 18
2.8.4. Advances Pursuant to Contract.............................. 18
2.8.5. Construction Advances Do Not Constitute a Waiver........... 18 3. REPAYMENT OF THE CONSTRUCTION LOAN....................................... 19
3.1. Maturity.......................................................... 19
3.2. Mandatory Repayments of Construction Loan......................... 19
3.3. Optional Repayments of Construction Loan.......................... 19 4. CERTAIN GENERAL PROVISIONS............................................... 19
4.1. Closing Fee....................................................... 19
4.2. Funds for Payments................................................ 19
4.2.1. Payments to Bank........................................... 19
4.2.2. No Offset, etc............................................. 20
4.3. Computations...................................................... 20
4.4. Inability to Determine Eurodollar Rate............................ 20
4.5. Illegality........................................................ 21
4.6. Additional Costs, etc............................................. 21
4.7. Capital Adequacy.................................................. 22
4.8. Certificate....................................................... 23
4.9. Indemnity......................................................... 23
4.10. Interest After Default........................................... 23
4.10.1. Overdue Amounts........................................... 23
4.10.2. Amounts Not Overdue....................................... 23
4.11. Right to Retain the Construction Inspector....................... 24 5. SECURITY AND GUARANTIES.................................................. 24
5.1. Security of Borrower.............................................. 24
5.2. Guaranties of the Guarantors...................................... 24


6. REPRESENTATIONS AND WARRANTIES........................................... 24
6.1. Corporate Authority............................................... 25
6.1.1. Incorporation; Good Standing............................... 25
6.1.2. Authorization.............................................. 25
6.1.3. Enforceability............................................. 25
6.2. Governmental Approvals............................................ 25
6.3. Title to Properties............................................... 26
6.4. Financial Statements and Projections.............................. 26
6.4.1. Financial Statements....................................... 26
6.4.2. Budget..................................................... 26
6.5. No Material Changes, etc.......................................... 26
6.6. Franchises, Patents, Copyrights, etc.............................. 27
6.7. Litigation........................................................ 27
6.8. No Materially Adverse Contracts, etc.............................. 27
6.9. Compliance With Other Instruments, Laws, etc...................... 27
6.10. Tax Status....................................................... 28
6.11. No Event of Default.............................................. 28
6.12. Holding Company and Investment Company Acts...................... 28
6.13. Absence of Financing Statements, etc............................. 28
6.14. Perfection of Security Interest.................................. 28
6.15. Certain Transactions............................................. 29
6.16. Employee Benefit Plans........................................... 29
6.16.1. In General................................................ 29
6.16.2. Terminability of Welfare Plans............................ 29
6.16.3. Guaranteed Pension Plans.................................. 29
6.16.4. Multiemployer Plans....................................... 30
6.17. Purpose; Regulations U and X..................................... 30
6.18. Subsidiaries, etc................................................ 30
6.19. Real Property.................................................... 30
6.20. Disclosure....................................................... 30
6.21. Fiscal Year...................................................... 31
6.22. Insurance........................................................ 31
6.23. Contract......................................................... 31 7. AFFIRMATIVE COVENANTS OF THE BORROWER AND THE GUARANTORS................. 31
7.1. Punctual Payment.................................................. 31
7.2. Maintenance of Office............................................. 31
7.3. Records and Accounts.............................................. 32
7.4. Financial Statements, Certificates and Information................ 32
7.5. Notices........................................................... 33
7.5.1. Defaults................................................... 33
7.5.2. Environmental Events....................................... 33
7.5.3. Notification of Claims Against Collateral.................. 34
7.5.4. Notice of Litigation and Judgments......................... 34
7.5.5. Notice of Nonpayment....................................... 34
7.6. Corporate Existence; Maintenance of Properties.................... 34


ii


7.7. Insurance......................................................... 35
7.8. Taxes............................................................. 35
7.9. Inspection of Properties and Books, etc........................... 35
7.9.1. General.................................................... 35
7.9.2. Communication with Accountants............................. 36
7.10. Compliance with Laws, Contracts, Licenses, and Permits........... 36
7.11. Employee Benefit Plans........................................... 36
7.12. Use of Proceeds.................................................. 37
7.13. Commencement, Pursuit and Completion of Construction............. 37
7.14. Approvals........................................................ 37
7.15. Laborers, Subcontractors and Materialmen......................... 37
7.16. Classification................................................... 37
7.17. Further Assurances............................................... 38 8. CERTAIN NEGATIVE COVENANTS OF THE BORROWER AND THE GUARANTORS............ 38
8.1. Restrictions on Indebtedness...................................... 38
8.2. Restrictions on Liens............................................. 39
8.3. Restrictions on Investments....................................... 40
8.4. Distributions; Restricted Prepayments............................. 41
8.4.1. The Borrower............................................... 41
8.4.2. The Guarantors............................................. 41
8.5. Merger; Consolidation; Subsidiaries............................... 42
8.5.1. Mergers and Acquisitions................................... 42
8.5.2. Disposition of Assets...................................... 42
8.5.3. Subsidiaries............................................... 42
8.6. Sale and Leaseback................................................ 42
8.7. Compliance with Environmental Laws................................ 42
8.8. Employee Benefit Plans............................................ 43
8.9. Change of Principal Place of Business or Corporate Name........... 43
8.10. Fiscal Year...................................................... 44
8.11. Restriction on Change Orders..................................... 44
8.12. Transactions with Affiliates..................................... 44
8.13. Business Activities.............................................. 44
8.14. Negative Pledge.................................................. 44 9. FINANCIAL COVENANTS OF THE BORROWER AND THE GUARANTORS................... 44
9.1. Debt Service...................................................... 44
9.2. Leverage.......................................................... 44 10. CLOSING CONDITIONS...................................................... 45
10.1. Loan Documents................................................... 45
10.2. Certified Copies of Charter Documents............................ 45
10.3. Corporate Action................................................. 45
10.4. Incumbency Certificate........................................... 45
10.5. Validity of Liens................................................ 45
10.6. Perfection Certificates and UCC Search Results................... 45


iii


10.7. Certificates of Insurance........................................ 46
10.8. Solvency Certificate............................................. 46
10.9. Permits.......................................................... 46
10.10. Opinions of Counsel............................................. 46
10.11. Payment of Fees................................................. 46
10.12. Construction Inspector Letter................................... 46 11. CONDITIONS TO ALL BORROWINGS............................................ 46
11.1. Representations True; No Event of Default; No Material Changes... 46
11.2. No Legal Impediment.............................................. 47
11.3. Governmental Regulation.......................................... 47
11.4. Proceedings and Documents........................................ 47
11.5. Events Relating to Construction.................................. 47
11.5.1. Loan Documents............................................ 47
11.5.2. Lien Waivers.............................................. 47
11.5.3. Construction Inspector.................................... 47
11.5.4. Effectiveness of Documents................................ 48
11.5.5. Relating to Final Construction Advance.................... 48 12. EVENTS OF DEFAULT; ACCELERATION; ETC.................................... 48
12.1. Events of Default and Acceleration............................... 48
12.2. Termination of Commitment........................................ 52
12.3. Remedies......................................................... 52
12.4. Distribution of Collateral Proceeds.............................. 53 13. SETOFF.................................................................. 54 14. EXPENSES................................................................ 54 15. INDEMNIFICATION......................................................... 55 16. SURVIVAL OF COVENANTS, ETC.............................................. 55 17. ASSIGNMENT AND PARTICIPATION............................................ 56
17.1. Assignment by the Bank........................................... 56
17.2. Participations................................................... 56
17.3. Disclosure....................................................... 56
17.4. Miscellaneous Assignment Provisions.............................. 56
17.5. Assignment by Borrower........................................... 57 18. NOTICES, ETC............................................................ 57 19. GOVERNING LAW........................................................... 57 20. HEADINGS................................................................ 58 21. COUNTERPARTS............................................................ 58 22. ENTIRE AGREEMENT, ETC................................................... 58 23. WAIVER OF JURY TRIAL.................................................... 58 24. CONSENTS, AMENDMENTS, WAIVERS, ETC...................................... 59 25. SEVERABILITY............................................................ 59


iv


SCHEDULES


Schedule 1.1 Project Budget
Schedule 1.1(u) Unrestricted
Subsidiaries
Schedule 6.3 Title to Properties;
Leases
Schedule 6.16 Employee Benefit
Plans
Schedule 6.18 Subsidiaries; Joint
Ventures
Schedule 6.19 Real Property
Schedule 6.22 Insurance
Schedule 7.2 Chief Executive
Offices
Schedule 8.1 Existing Indebtedness
Schedule 8.2 Existing Liens
Schedule 8.3 Existing Investments
Schedule 8.4.2 Individuals Holding
Redeemable Stock


EXHIBITS


Exhibit A Form of Note
Exhibit B Form of Construction Advance Request
Exhibit C Plans and Specifications
Exhibit D Form of Security Agreement
Exhibit E Form of Guaranty
Exhibit F Trinity Guaranty
Exhibit G Form of Collateral Assignment
Exhibit H Form of Compliance Certificate


v


CONSTRUCTION LOAN AGREEMENT
---------------------------


This CONSTRUCTION LOAN AGREEMENT (together with the exhibits and schedules hereto, this "Loan Agreement") is made as of May 16, 1996, by and among MORAN BULK CORPORATION (the "Borrower") a Delaware corporation having its principal place of business at Two Greenwich Plaza, Greenwich, Connecticut 06830, MORAN TRANSPORTATION COMPANY ("Moran"), MORAN TOWING CORPORATION ("Towing" and together with Moran, referred to herein as the "Guarantors"), and THE FIRST NATIONAL BANK OF BOSTON, a national banking association (the "Bank").


DEFINITIONS AND RULES OF INTERPRETATION.
---------------------------------------


1.1 DEFINITIONS. The following terms shall have the meanings set forth
----------- in this (S)1 or elsewhere in the provisions of this Loan Agreement referred to below:


Advance(s). Any advances of the Construction Loan.
----------


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.


Balance Sheet Date. December 31, 1995.
------------------


Bank. As defined in the preamble hereto.
----


Bank's Head Office. The Bank's head office located at 100 Federal
------------------ Street, Boston, Massachusetts 02110, or at such other location as the Bank may designate by written notice to the Borrower from time to time.


Bank's Special Counsel. Bingham, Dana & Gould LLP, or such other
---------------------- counsel as may be approved by the Bank.


Base Rate. The higher of (a) the annual rate of interest announced
--------- from time to time by the Bank 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 the Bank from three funds brokers of recognized standing selected by the Bank.


2


Base Rate Advance. Any Construction Advance or portion thereof
----------------- bearing interest calculated by reference to the Base Rate.


Borrower. As defined in the preamble hereto.
--------


Builder. Trinity Marine Group, Inc., a Nevada corporation, which will
-------- perform the construction of the Vessel pursuant to the Contract.


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 Advances, 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.


CERCLA. See (S)6.18 hereof.
------


Closing Date. The first date on which the conditions set forth in
------------ (S)10 have been satisfied and the first Construction Advance is to be made.


Closing Fee. See (S)4.1.
-----------


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.


Collateral Assignment. The Collateral Assignment of Construction
---------- ---------- Contract and Trinity Guaranty, dated as of the date hereof, entered into among the Borrower, the Builder, Trinity and the Bank, substantially in the form of Exhibit G hereto. - ---------


Commitment. The Bank's commitment to make Construction Advances to
---------- the Borrower, 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 (S)7.4(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


3


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.


Construction Advance. See (S)2.1 hereof.
---------------------


Construction Advance Request. See (S)2.6 hereof.
----------------------------


Construction Inspector. Denholm Ship Management or, if the Bank so
---------------------- elects from time to time, the consulting architect, engineer or inspector appointed by the Bank.


Construction Loan. See (S)2.1 hereof.
-----------------


Construction Loan Advance Date. Each of the dates on which the
------------------------------ Borrower makes a Construction Advance Request under (S)2.1.


Contract. The Vessel Construction Agreement dated as of December 21,
-------- 1995, between the Borrower and the Builder, as may be amended from time to time with the consent of the Bank or changed pursuant to (S)8.11, providing for the construction of the Vessel, a copy of which has been furnished to the Bank.


Contract Price. The total construction price payable for the
-------------- construction of the Vessel pursuant to the Contract, provided, however, that in
-------- ------- no event shall the Contract Price for the Vessel exceed $7,970,000 without the prior written consent of the Bank.


Conversion Request. A notice given by the Borrower to the Bank of the
------------------ Borrower's election to convert or continue an Advance in accordance with (S)2.7.


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


4


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 (S)12 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 Bank's Head Office, thereafter
----------------------- such other office as the Bank may, from time to time, designate by written notice to the Borrower.


Drawdown Date. The date on which any Construction Advance is made or
------------- is to be made, and the date on which any Construction Advance is converted or continued in a
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