Exhibit 10.34

 

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AGREEMENT TO ACQUIRE AND CHARTER

 

Dated as of December 21, 2001

 

by and among

 

GTC CONNECTICUT STATUTORY TRUST,

 

Shipowner

 

FLEET CAPITAL CORPORATION,

 

Owner Participant

 

GULFCOAST TRANSIT COMPANY,

 

Seller and Charterer

 

and

 

TECO ENERGY, INC.,

 

Guarantor

 

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Lease Financing of the United States Flag

dry-bulk cargo vessels named

BARBARA KESSEL, Official No. 583310

GAYLE EUSTACE, Official No. 587045

PEGGY PALMER, Official No. 641530

MARY TURNER, Official No. 646730

 

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TABLE OF CONTENTS

 

 

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ARTICLE I

 

DEFINITIONS

   2

ARTICLE II

 

DEMISE CHARTER OF VESSEL; PAYMENT OF LESSOR'S COST

   2

ARTICLE III

 

CONDITIONS TO OBLIGATIONS OF OWNER PARTICIPANT AND SHIPOWNER

   3

ARTICLE IV

 

REPRESENTATIONS AND WARRANTIES

   8

ARTICLE V

 

COVENANTS

   13

ARTICLE VI

 

EXPENSES

   21

ARTICLE VII

 

TRANSFER OF TRUSTEE'S AND OWNER PARTICIPANT'S INTEREST

   21

ARTICLE VIII

 

MISCELLANEOUS

   23

SCHEDULE A

 

Definitions

    

SCHEDULE 1

 

Seller's Payment Instructions

    

SCHEDULE 2

 

Lessor's Cost

    

EXHIBIT A-1

 

Form of Opinion of Sheila M. McDevitt, General Counsel to the Guarantor

    

EXHIBIT A-2

 

Form of Opinion of Milbank, Tweed, Hadley & McCloy LLP, Special New York Counsel
to the Obligors

    

EXHIBIT A-3

 

Form of Opinion of Jones, Walker, Waechter, Poitevent, Carrere & Denegre, LLP,
Maritime Counsel to the Charterer

    

EXHIBIT A-4

 

Form of Opinion of Thompson Coburn LLP, Special Maritime Counsel to the Owner
Participant

    

EXHIBIT A-5

 

Form of Opinion of Bingham Dana LLP, Special Counsel to the Trust Company

    

EXHIBIT B

 

Form of Certificate of Delivery and Acceptance

    

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AGREEMENT TO ACQUIRE AND CHARTER

 

AGREEMENT TO ACQUIRE AND CHARTER, dated as of December 21, 2001, by and among
STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, a
national banking association, in its individual capacity only as expressly
stated herein and otherwise solely as Trustee of the GTC CONNECTICUT STATUTORY
TRUST (the “Shipowner”), FLEET CAPITAL CORPORATION, a Rhode Island corporation
(the “Owner Participant”), GULFCOAST TRANSIT COMPANY, a Florida corporation (as
seller of the Vessels, the “Seller”; and as demise charterer of the Vessels, the
“Charterer”), and TECO ENERGY, INC., a Florida corporation, (the “Guarantor”;
the Charterer and the Guarantor being hereinafter sometimes collectively
referred to as the “Obligors”).

 

WHEREAS, capitalized terms used herein are defined as provided in Article I
below;

 

WHEREAS, Seller is the owner of the Vessels;

 

WHEREAS, to provide for the acquisition and charter of the Vessels by the Trust,
as Shipowner, the Owner Participant and the Trust Company have entered into the
Trust Agreement;

 

WHEREAS, Seller proposes to sell and deliver, and the Shipowner proposes to
purchase and take delivery of, the Vessels, and concurrently with such purchase
and delivery the Shipowner and the Charterer have agreed to execute and deliver
a Demise Charter of the Vessels and the Charterer has agreed to accept delivery
of the Vessels under the Demise Charter, all subject to, and on the terms and
conditions herein and in the other Transaction Documents set forth;

 

WHEREAS, to induce the Owner Participant to cause the Shipowner to acquire the
Vessels from the Seller and charter the Vessels to the Charterer, the Charterer
will enter into the Tax Indemnity Agreement, the Charterer will enter into the
Assignments, and the Guarantor will enter into the Guarantee, all in favor of
the Shipowner for the benefit of the Owner Participant, and the other
Transaction Documents will be executed and delivered by the respective parties
thereto;

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NOW, THEREFORE, the parties hereto hereby agree as follows:

 

ARTICLE I

 

DEFINITIONS

 

SECTION 1.1. Definitions. Unless otherwise defined herein and unless the context
shall otherwise require, capitalized terms used herein shall have the respective
meanings assigned thereto in Schedule A attached to this Agreement and made a
part hereof for all purposes hereof (such definitions to be equally applicable
to both the singular and the plural forms of the terms defined).

 

ARTICLE II

 

DEMISE CHARTER OF VESSEL;

PAYMENT OF LESSOR’S COST

 

SECTION 2.1. Payment of Lessor’s Cost. Subject to the terms and conditions of
this Agreement and in reliance on the representations and warranties contained
herein or made pursuant hereto, on the Closing Date the Owner Participant will
advance funds to the Shipowner to enable the Shipowner to make payments in
accordance with Section 2.3 for the Vessels accepted by the Charterer on behalf
of the Shipowner as provided in this Agreement in an aggregate amount equal to
the sum of the Lessor’s Cost of each Vessel ; provided, however, that the
aggregate amount paid by the Shipowner pursuant to this Section 2.1 shall not
exceed $45,000,000.00.

 

SECTION 2.2. Closings. All documents and instruments required to be delivered on
the Closing Date pursuant to this Agreement shall be delivered at the offices of
Shipman & Goodwin LLP, One American Row, Hartford, CT 06103-2819, special
counsel to the Owner Participant, or at such other location as may be determined
by counsel for the Owner Participant.

 

SECTION 2.3. Application of Funds. On the Closing Date, payment of Lessor’s Cost
for each Vessel shall be made by the Shipowner by wire transfer of immediately
available funds to the account of the Seller specified in Schedule 1.

 

SECTION 2.4. Agreement to Charter. Subject to the terms and conditions set forth
in this Section and in Section 3, the Shipowner agrees to acquire and demise to
the Charterer, and the Charterer agrees to charter from the Shipowner, the
Vessels, such deliveries and acceptances to be evidenced by the Certificate of
Delivery and Acceptance.

 

SECTION 2.5. Delivery; Inspection and Acceptance. The Shipowner hereby appoints
the Charterer as the authorized agent of the Shipowner to inspect and accept
delivery of the Vessels from Seller hereunder and under the Demise Charter for
all purposes thereof. The Charterer shall cause one or more authorized
representatives of the Charterer to inspect each Vessel upon delivery thereof to
the Charterer and, if such Vessel is found to be in good order, to accept such
Vessel as aforesaid; provided, however, that the Charterer shall

 

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not be authorized to accept any Vessel on behalf of the Shipowner unless the
conditions precedent set forth in Sections 3.1 and 3.2 shall have been satisfied
at or prior to such acceptance. Acceptance by the Charterer of the Vessels in
accordance with this Agreement shall, without further act, constitute (a)
delivery by the Shipowner to the Charterer of the Vessels under the Demise
Charter, and (b) irrevocable acceptance by the Charterer of the Vessels for
charter to the Charterer under, and otherwise for all purposes of, the Demise
Charter. If any Vessel is found by the Charterer not to be in good order, the
Charterer shall not accept any of the Vessels on behalf of the Shipowner under
and in accordance with the terms hereof.

 

SECTION 2.6. Revocation of Authority. If any Event of Default shall have
occurred and be continuing, the Shipowner may revoke the appointment and
authorization of the Charterer to accept the Vessels by Notice to the Charterer.

 

SECTION 2.7. Owner Participant Direction. Owner Participant confirms that the
making available of the Lessor’s Cost for each of the Vessels in accordance with
Section 2.1 constitutes, without further act (unless otherwise instructed by the
Owner Participant), authorization and direction by the Owner Participant to the
Shipowner to take the actions specified in Section 4.1 of the Trust Agreement.

 

ARTICLE III

 

CONDITIONS TO OBLIGATIONS OF

OWNER PARTICIPANT AND SHIPOWNER

 

SECTION 3.1. Conditions with Respect to Closing Date. It is a condition
precedent to the obligation of the Owner Participant to advance funds to enable
the Shipowner to acquire the Vessels and to the occurrence of the Closing Date
hereunder that all the following conditions shall have been fulfilled to the
Owner Participant’s satisfaction on or before the Closing Date:

 

(a) Due Authorization, etc. All the Transaction Documents to which each of the
Obligors is or will be a party shall have been duly authorized by the relevant
Obligor. This Agreement, the Demise Charter, the Tax Indemnity Agreement, the
Guarantee, the Assignments, and each of the other Transaction Documents shall
have been duly executed and delivered by the parties thereto and shall be in
full force and effect on the Closing Date, and an executed counterpart of each
shall have been delivered to the Shipowner.

 

(b) Certain Closing Documents. The Owner Participant shall have received the
following, in each case in form and substance satisfactory to it:

 

(i) a copy of the resolutions of the Board of Directors of the Charterer
authorizing the execution, delivery and performance by the Charterer of the
Transaction Documents to which it is a party, certified by an

 

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appropriate officer of the Charterer on the Closing Date, together with an
incumbency certificate as to the individual or individuals executing and
delivering such instruments or any other instruments delivered or to be
delivered in connection with the transactions contemplated by such Transaction
Documents on behalf of the Charterer;

 

(ii) a copy of the resolutions of the Board of Directors of the Guarantor
authorizing the execution, delivery and performance by the Guarantor of the
Transaction Documents to which it is a party, certified by the Secretary or an
Assistant Secretary of the Guarantor on the Closing Date, together with an
incumbency certificate as to the individual or individuals executing and
delivering such instruments or any other instruments delivered or to be
delivered in connection with the transactions contemplated by such Transaction
Documents on behalf of the Guarantor;

 

(iii) any and all documentation required to be delivered to the Shipowner
pursuant to Article 9 of the Demise Charter respecting insurance, including
cover notes, certificates of insurance, amendments to policies or entries naming
the Shipowner as an additional insured, and, where appropriate, loss payee,
evidence of innocent owner’s protection insurance in respect of all insurances
required pursuant to said Article 9, and a written report of Charterer’s marine
insurance broker with respect to the insurance carried with respect to the
Vessels and the operation thereof and stating in effect that such insurance
complies in all respects with the requirements of said Article 9, and, if
requested by the Owner Participant, as soon as possible after the Closing Date,
a copy of all policies evidencing the underlying coverage referred to in said
cover notes or in said reports of the Charterer’s brokers;

 

(iv) certificates evidencing the good standing or legal existence, as
applicable, of each Obligor;

 

(v) certificates of the chief financial officer, in the case of the Guarantor,
and the Vice President-Controller, in the case of the Charterer, confirming as
of the Closing Date the matters referred to in Section 4.1(c);

 

(vi) the financial statements referred to in Section 4.1(d) certified by the
chief financial officer of the Guarantor and confirming to be true the matters
referred to in clause (ii) of Section 4.1(d);

 

(vii) the litigation letters referred to in Section 4.1(e), if required;

 

(viii) due evidence of the transfer of title of the Vessels from the Seller to
the Shipowner, and of the documentation of the Vessels in the name of the
Shipowner for operation in the coastwise trade of the United States, together
with a Certificate of Documentation and an Abstract of Title issued

 

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by the USCG for each Vessel showing Shipowner to be the registered owner thereof
subject to no Liens of record; provided, however, that the Abstracts of Title
may be provided promptly after recording of the applicable conveyancing
documents and the Certificates of Documentation with respect to the Vessels may
be provided to the Owner Participant after the Closing Date, but no later than
January 18, 2002, if the letter from the USCG described in subsection (h)(iv) of
this Section 3.1 is provided to the Owner Participant on the Closing Date; and

 

(ix) such other documents and evidence with respect to each Obligor as the Owner
Participant may reasonably request in connection with the consummation of the
transactions contemplated by the Transaction Documents, and the taking of all
corporate proceedings in connection therewith and compliance with the conditions
set forth in this Section 3.1.

 

(c) Consents; Approvals, etc. All approvals and consents of any trustees or
holders of any indebtedness or obligations of any Obligor that are required in
connection with any transactions contemplated by this Agreement or the
Transaction Documents shall have been duly obtained, and copies thereof, in form
and substance satisfactory to the Owner Participant, shall have been delivered
to the Owner Participant. The execution and delivery of this Agreement and any
Transaction Document, the consummation by the Obligors of any of the
transactions contemplated hereby and thereby and the compliance by the Obligors
with any of the terms and provisions hereof and thereof shall not contravene any
law, governmental rule or regulation of the United States or any political
subdivision thereof, and no consent or approval of, giving of notice to,
registration with, recording or filing of any document with, or taking of any
other action in respect of, any such governmental authority or agency shall be
required other than those that have been obtained and are in full force and
effect on the Closing Date.

 

(d) Opinions of Counsel to Charterer and Guarantors. The Owner Participant and
the Shipowner shall have received opinions from Sheila M. McDevitt, General
Counsel to the Guarantor, Milbank, Tweed, Hadley & McCloy LLP, special New York
counsel to the Obligors, Jones, Walker, Waechter, Poitevent, Carrere & Denegre,
LLP, maritime counsel to the Charterer, Thomspon Coburn LLP, special maritime
counsel to Owner Participant, and Bingham Dana LLP, special counsel to the Trust
Company, substantially in the respective forms set forth in Exhibits A-1, A-2,
A-3, A-4 and A-5 annexed hereto and made a part hereof.

 

(e) Bill of Sale. There shall have been delivered to the Shipowner in duplicate,
in recordable form, a bill of sale for the Vessels signed by the Seller
transferring to the Shipowner title to each of the Vessels and warranting to the
Shipowner that the Seller had legal title thereto and good and lawful right to
sell the same and that as of the Closing Date (immediately prior to the transfer
of title to the Shipowner) title thereto was free and clear of all Liens other
than Permitted Liens.

 

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(f) Appraisal. The Owner Participant shall have received copies of an opinion of
an independent expert appraiser selected by the Owner Participant, satisfactory
in form and substance to the Owner Participant, concluding that (i) the
estimated economic useful life of each Vessel at the inception of the Demise
Charter is equal to at least one hundred twenty-five percent (125%) of the base
Term thereof; (ii) the fair market value of each Vessel at the inception of the
Demise Charter is not less than Lessor’s Cost of such Vessel; and (iii) at the
end of the base Term of the Demise Charter and without giving effect to
inflation, each Vessel will have a fair market value of not less than twenty
percent (20%) of the fair market value of such Vessel at the inception of the
Demise Charter.

 

(g) Transaction Costs. If the transactions contemplated by this Agreement are
consummated, Transaction Costs incurred through the Closing Date and not
exceeding in the aggregate 2% of Lessor’s Cost of the Vessels shall be funded by
the Owner Participant to Shipowner and shall be paid by Shipowner at the
direction of the Owner Participant on the Closing Date (or as soon thereafter as
is practicable). In the event the transactions contemplated by this Agreement
are not consummated, the Seller shall pay all Transaction Costs, subject to the
limitations and qualifications expressly set forth in Section 6.1.

 

(h) Recordation. (i) The Shipowner shall have completed application for
documentation of the Vessels on Form CG-1258 (and such other documents in
support of such applications as the Coast Guard may require), the Charterer
shall have certified to the Secretary of Transportation as required by 46
U.S.C.A. § 12106(e)(1)(C) that each Vessel is under demise charter to it for a
period of at least three (3) years and that it is a “citizen of the United
States” for engaging in the coastwise trade under Section 2 of the Shipping Act,
(ii) such Demise Charter and any amendments to it shall have been filed as
prescribed by 46 U.S.C.A. § 12106(e)(2), (iii) the applicable conveyancing
documents shall have been duly filed at the National Vessel Documentation Center
of the United States Coast Guard in Falling Waters, West Virginia, and (iv) the
Owner Participant shall have received a letter from the USCG to the effect that,
notwithstanding the fact that the USCG will be unable to deliver Certificates of
Documentation with respect to the Vessels until its computer system is again
operational after January 2, 2002, each of the Vessels is deemed documented in
the name of the Shipowner with coastwise endorsement as of the Closing Date.

 

SECTION 3.2. Additional Conditions with Respect to the Closing Date. On the
Closing Date the Charterer shall not accept the Vessels on the Shipowner’s
behalf or charter the same under the Demise Charter, and the Owner Participant
shall not be obligated to advance funds to enable the Shipowner to acquire the
Vessels or make any payment with respect thereto, unless all the following
conditions shall have been fulfilled on or prior to the Closing Date:

 

(a) Conveyance of Title, etc. Good and marketable title to the Vessels shall be
duly, effectively and validly conveyed and transferred to the Shipowner, free
and clear of all Liens other than Permitted Liens.

 

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(b) Compliance with Documents. Each Obligor shall have complied with all the
terms of the Transaction Documents required to have been complied with by them
on or prior to the Closing Date.

 

(c) No Change in Applicable Laws. Since the date of execution of this Agreement,
no change shall have occurred in applicable laws or in interpretations thereof
by regulatory authorities that would make it illegal for the Owner Participant
or the Shipowner to acquire or charter the Vessels in accordance with the
Transaction Documents.

 

(d) Changes in Tax Assumptions. Since the date of execution of this Agreement,
no change shall have occurred, or shall have been proposed, in applicable tax
laws, regulations or interpretations that, in the sole judgment of Owner
Participant, would change in a manner adverse to Owner Participant the
availability of the tax benefits to Owner Participant assumed at the date of
execution hereof.

 

(e) No Material Adverse Change. Except for matters disclosed publicly, to the
Securities and Exchange Commission or to the Owner Participant in writing prior
to the execution hereof, nothing shall have occurred subsequent to September 30,
2001, that, either in any case or in the aggregate, has had, or would be
reasonably expected to have, a Material Adverse Effect on either of the
Obligors.

 

(f) Compliance with Terms of Agreements. The representations and warranties of
each of the Obligors set forth in Article IV of this Agreement and in the other
Transaction Documents shall be true and correct on and as of the Closing Date
with the same effect as if made on the Closing Date (except to the extent that
they relate to a different time, in which case such representations and
warranties shall have been true on and as of such time); and no Event of Default
shall have occurred and be continuing or would occur as a result of the
acceptance or the charter of the Vessels on the Closing Date.

 

(g) Certificates of Citizenship. The Trust Company and the Charterer each shall
have certified that it is a “citizen of the United States” qualified to engage
in the coastwise trade within the meaning of Section 2 of the Shipping Act, and
the Owner Participant shall have certified that it is a Maritime Citizen
pursuant to clause (ii) of the definition thereof.

 

(h) Financing Statements. The Charterer shall have delivered to the Shipowner
such protective financing statements as shall have been requested by the Owner
Participant with respect to the interests of the Shipowner in the Vessels and
under the Assignments, duly executed and in proper form for filing.

 

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SECTION 3.3. Closing Date. As of the Closing Date with respect to the Vessels
accepted by the Charterer on behalf of the Shipowner as provided in this
Agreement, subject to the fulfillment to the satisfaction of Owner Participant
of the conditions on the part of Obligors under this Agreement and the other
Transaction Documents, the Shipowner shall be unconditionally obligated to make
payment of Lessor’s Cost for such Vessels as herein provided.

 

ARTICLE IV

 

REPRESENTATIONS AND WARRANTIES

 

SECTION 4.1. Representations and Warranties of the Obligors. Each Obligor makes
the following representations and warranties to the Owner Participant and the
Shipowner, in each case to the extent any such representation or warranty is
applicable to it:

 

(a) Legal Existence; Corporate or Other Legal Power. Each Obligor is duly
incorporated, formed or organized, as the case may be, and existing in the
jurisdiction of its incorporation, formation or organization and has duly
qualified to do business in each jurisdiction in which such qualification is
necessary or where failure to be so qualified would have a material adverse
effect on its business, financial condition, operations or properties and/or its
ability to perform its obligations under the Transaction Documents. Each Obligor
has corporate or other legal power and authority to execute, deliver and perform
this Agreement and the other Transaction Documents to which it is a party.

 

(b) Citizenship. Charterer is a “Citizen of the United States” eligible to
engage in the coastwise trade within the meaning of Section 2 of the Shipping
Act.

 

(c) Authority; Binding Obligations. Each of the Transaction Documents has been
duly authorized, executed and delivered by the respective Obligor or Obligors
party thereto, and each constitutes the legal, valid and binding obligation of
each such Obligor enforceable in accordance with its terms, except as
enforcement may be affected by the laws of bankruptcy and other laws affecting
the rights of creditors generally and by equitable principles. The execution,
delivery and performance by each Obligor of this Agreement and the other
Transaction Documents to which it is a party do not and will not violate any
provision of applicable laws or any provision of the articles or certificate of
incorporation or organization, by-laws, operating agreement or other
organizational documents of such Obligor, or result in the breach or violation
of, or constitute a default or require any consent (other than consents that
have heretofore been given and consents with respect to the Demise Charter
Assignment which the Charterer has agreed therein to use commercially reasonable
efforts to obtain after the Closing Date), under, or result in the creation of
any lien, charge or encumbrance upon any property or asset of such Obligor
pursuant to, any indenture, loan or credit agreement, mortgage or other
agreement or

 

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instrument to which such Obligor is a party or by which such Obligor or any of
their properties may be bound or affected. Neither of the Obligors is in default
under or in breach or violation of (and no event or condition exists which
would, with the giving of notice or lapse of time or both, constitute such a
default under or breach or violation of) (i) any provision of this Agreement or
the other Transaction Documents, or (ii) any indenture, lease, deed of trust,
mortgage, bond or other evidence of indebtedness or other agreement or
instrument by which the property of either of the Obligors is bound or affected
or any law, decree, order, rule or regulation where the continuation of such
default, breach or violation would reasonably be expected to have a Material
Adverse Effect (except for the matters disclosed in Guarantor’s Current Report
filed with the Securities and Exchange Commission on Form 8-K dated December 7,
2001, or to the Owner Participant in writing prior to the Closing Date).

 

(d) Financial Condition. (i) The audited consolidated balance sheets of the
Guarantor and its Subsidiaries as of December 31, 1999 and December 31, 2000,
and the related statements of income and retained earnings and changes in
financial position for the fiscal year then ended, and the unaudited
consolidated balance sheet of the Guarantor and its Subsidiaries as of September
30, 2001, and the related statements of income and retained earnings and changes
in financial position for the nine-month period then ended, heretofore furnished
to the Owner Participant, fairly present the financial condition of the
Guarantor and its consolidated Subsidiaries as of each such date and the results
of operations of the Guarantor and its consolidated Subsidiaries for the period
ended on each such date, all in accordance with GAAP throughout the periods
involved; and (ii) since September 30, 2001, there has been no change in the
business, operations, properties or financial condition of the Guarantor or its
Subsidiaries that has had, or would be reasonably expected to have, a Material
Adverse Effect (except for matters disclosed publicly, to the Securities and
Exchange Commission or to the Owner Participant in writing prior to the
execution hereof).

 

(e) Litigation; Other Proceedings. Except as set forth in letters of the
Obligors delivered to the Owner Participant, or otherwise disclosed in writing
to the Owner Participant prior to the execution hereof, there are no actions,
suits, proceedings or investigations pending or, to the knowledge of either of
the Obligors, threatened against or affecting either of the Obligors or of any
of their respective Subsidiaries or any of their respective properties, at law
or in equity, before or by any court or administrative or governmental body
which relate to any action taken or to be taken by either of the Obligors under
this Agreement or the other Transaction Documents (or which otherwise relate to
any Transaction Document), or which relate to any of the Vessels or the use or
operation thereof, or which in the aggregate would reasonably be expected (after
taking into consideration insurance coverage) to have a Material Adverse Effect
on either of the Obligors, and, to the knowledge of each Obligor, it is not in
default with respect to any order of any court, governmental body or arbitrator
relating to any of the Vessels, or if not relating to the Vessels, applicable to
it, which default would reasonably be expected to have a Material Adverse Effect
on either of the Obligors. For the purposes of this Section, the term
“governmental

 

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body” includes any Federal, state, municipal or other governmental or
intergovernmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign; and the term “order” includes any
judgment, order, writ, injunction, award, determination, direction, decree or
demand.

 

(f) Encumbrances. The Guarantor and its Subsidiaries have good title to their
respective properties as are reflected in the most recent balance sheet referred
to in Section 4.1(d) hereof (except (i) as sold or otherwise disposed of in the
ordinary course of business, (ii) leased assets that are capitalized on such
balance sheet and (iii) assets not in the aggregate forming a material portion
of the assets shown on such balance sheet). As of the Closing Date, except
pursuant to or as contemplated by the Transaction Documents, there shall be no
assignment, pledge, security interest in, or other encumbrance of any of
Charterer’s right, title or interest in, to or under, the Demise Charter, or of
or with respect to any Vessel or any part of any thereof, to or in favor of any
Person, except for Permitted Liens.

 

(g) Approvals. No authorization, consents, approvals, licenses, filings or
registrations by or with any governmental authority or administrative body are
required to be obtained by either of the Obligors for or in connection with the
execution or delivery of this Agreement or any other Transaction Document or for
the performance thereof by the Obligors or the validity and enforceability of
any of such agreements and instruments in accordance with their respective
terms, except for such authorizations, consents, approvals, licenses, filings or
registrations that have been duly obtained, sent, registered, filed or taken, as
the case may be.

 

(h) Investment Company Act. Each of the Obligors is not, and is not directly or
indirectly controlled by or acting on behalf of any person that is, an
“investment company” within the meaning of the Investment Company Act of 1940.

 

(i) Title to the Vessels. On the Closing Date (i) all right, title and interest
of Seller in and to the Vessels shall have been transferred or assigned to the
Shipowner pursuant to, and subject to the terms and conditions of, the Bills of
Sale, (ii) the Shipowner will acquire good and marketable title to each Vessel
free and clear of all Liens (other than Permitted Liens), and (iii) no filing or
recording of any document will then be necessary in order to establish,
preserve, protect and perfect the Shipowner’s good and marketable title to the
Vessels other than the due documentation of the Vessels in the name of the
Shipowner with the USCG. The foregoing representation and warranty as to the
absence of Liens as of the Closing Date is qualified by reference to the Todd
Shipyards Lien, which has been disclosed to Owner Participant and which shall
constitute an exception to such representation and warranty (and to any
comparable representation and warranty herein, in the bill of sale with respect
to the Vessels or in the Demise Charter relating to the absence of Liens) as
such representations and warranties relate to the MARY TURNER, Official No.
646730; provided, however, that (x) Charterer hereby represents and warrants
that, after due investigation, Charterer reasonably believes that the Todd
Shipyard Lien has, in fact, been discharged and extinguished, whether by
payment, operation of

 

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law or otherwise, notwithstanding the fact that it has not been release of
record, (y) Charterer will use commercially reasonable efforts in an effort to
effect the release of the Todd Shipyards Lien of record by December 31, 2002,
and (z) Charterer hereby agrees to indemnify and hold harmless each Indemnified
Person from and against any claim, demand, loss, liability or expense, including
counsel fees and expenses, based on, arising from or relating to the Todd
Shipyards Lien or the obligations purported to be secured thereby.

 

(j) Tax Returns, etc. Each of the Obligors has filed all material income tax
returns and all other material tax returns which are required to be filed by it
and have paid or made provision for the payment of all material taxes which have
become due and payable pursuant to such returns or pursuant to any assessment in
respect thereof received by such Obligor or its respective Subsidiaries, except
such taxes, if any, as are being contested in good faith by appropriate
proceedings conducted with due diligence, which proceedings do not involve any
material risk of the sale, forfeiture or loss (or loss of the use) of the
Vessels or any interest therein or any payment of Charter Hire, and for the
payment of which adequate reserves have been provided in accordance with GAAP.

 

(k) Use. The Vessels will not be used during the Charter Period outside of the
trading range established by Article 3 of the Demise Charter without the prior
written consent of Shipowner, which consent shall not be unreasonably withheld.

 

(l) No Improvements. At the commencement of the Demise Charter and on the
Closing Date, no improvements, modifications or additions to the Vessels are
required in order to render the Vessels complete for the intended use by the
Charterer as an integrated blue-water dry-bulk tug-barge unit in the case of the
BARBARA KESSEL and the GAYLE EUSTACE, and blue-water dry-bulk barges in the case
of the PEGGY PALMER and the MARY TURNER.

 

(m) Vessel Information. All written information supplied by the Seller to the
Owner Participant or to any independent appraiser or surveyor furnishing any
report or appraisal to the Owner Participant with respect to any Vessel or any
part thereof was accurate and complete at the time given in all material
respects and, if the Seller later determined that any such information, at the
time given, was inaccurate or incomplete in any material respect, the Seller has
notified each such party of such material change in any such information so
supplied.

 

(n) Other Charters; Modifications. As of the Closing Date, except as disclosed
in writing by Seller to Owner Participant, no Vessel is subject to (i) any Other
Charter; (ii) any management agreement, operating agreement or similar agreement
relating to crewing or operation of such Vessel; or (iii) any claim for money
due and unpaid with respect to any Modification to such Vessel which claim could
form the basis for any Lien, other than Permitted Liens.

 

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(o) Brokers. Except for Credit Suisse First Boston, no broker, placement agent,
arranger or other third party has been retained or engaged by the Obligors or
otherwise has any claim through the Obligors for any broker’s, placement
agent’s, arranger’s or similar fee with respect to the sale and leaseback of the
Vessels, and the Obligors agree to indemnify and defend the Owner Participant,
the Shipowner and the Trust Company from and against any such claim.

 

(p) Ownership of Charterer. As of the Closing Date, the Charterer is a
wholly-owned subsidiary of TECO Transport Corporation; TECO Transport
Corporation is a wholly-owned subsidiary of TECO Diversified, Inc.; and TECO
Diversified, Inc. is a wholly-owned subsidiary of the Guarantor. Each of TECO
Transport Corporation and TECO Diversified, Inc. is a corporation duly
incorporated and in good standing in the State of Florida.

 

SECTION 4.2. Representations and Warranties of Owner Participant. The Owner
Participant represents, warrants and covenants that:

 

(a) it is a corporation duly organized, validly existing and in good standing
under the laws of the State of Rhode Island;

 

(b) it is a Maritime Citizen pursuant to clause (ii) of the definition thereof;

 

(c) it has the corporate power and authority to enter into and perform its
obligations under each of the Transaction Documents to which it is a party; and

 

(d) each of the Transaction Documents to which it is a party has been duly
authorized by all necessary corporate action on the part of the Owner
Participant, has been duly executed and delivered by the Owner Participant and
constitutes the legal, valid and binding obligation of the Owner Participant
enforceable against the Owner Participant in accordance with its terms.

 

(e) the execution and delivery by it of the Transaction Documents to which it is
a party do not and will not result in any violation of, conflict with, or
default under, any term of any charter instrument, by-law or other material
agreement or instrument to which it is a party or by which it or its properties
may be bound, or any judgment or order binding upon or affecting it or its
properties, or any federal or Rhode Island state law or regulation relating to
its investment as Owner Participant; and

 

(f) neither the execution and delivery by it of the Transaction Documents to
which it is party nor the consummation of any of the transactions contemplated
thereby requires the consent, authorization, approval or other action by, or
notice to or filing, registration or qualification with, any federal or Rhode
Island governmental authority or regulatory body pursuant to any federal or
Rhode Island law governing its investment as Owner Participant or any Person not
already obtained, including any holders of any Indebtedness of Owner
Participant.

 

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SECTION 4.3 Representations and Warranties of the Trust Company. The Trust
Company, in its individual capacity, represents, warrants and covenants that:

 

(a) it is a national banking association duly organized, validly existing and in
good standing under the laws of the United States, and has all requisite banking
and trust power, authority and legal right to enter into and perform its
obligations under the Transaction Documents to which it is a party;

 

(b) it is a “citizen of the United States” qualified to engage in the coastwise
trade within the meaning of Section 2 of the Shipping Act;

 

(c) it has duly authorized by all necessary corporate action, executed and
delivered the Transaction Documents to which it is a party in its individual
capacity or as Trustee, as and to the extent specified in such Transaction
Documents; and each of the Transaction Documents to which it is a party in its
individual capacity constitutes the legal, valid and binding obligation of the
Trust Company, enforceable against the Trust Company in accordance with the
terms thereof;

 

(d) the execution and delivery by it, in its individual capacity or as Trustee,
as the case may be, of the Transaction Documents to which it is a party do not
and will not result in any violation of, conflict with, or default under, any
term of any charter instrument, by-law or other material agreement or instrument
to which it is a party or by which it or its properties may be bound, or any
judgment or order binding upon or affecting it or its properties, or any federal
or Connecticut state law or regulation relating to its banking and trust powers;
and

 

(e) other than the filing of a certificate of trust with the Secretary of the
State of the State of Connecticut, which filing has been duly effected, neither
the execution and delivery by it, in its individual capacity or as Trustee, as
the case may be, of the Transaction Documents to which it is party nor the
consummation of any of the transactions contemplated thereby requires the
consent, authorization, approval or other action by, or notice to or filing,
registration or qualification with, any federal, Connecticut governmental
authority or regulatory body pursuant to any federal or Connecticut law
governing its banking or trust powers.

 

ARTICLE V

 

COVENANTS

 

SECTION 5.1. General. (a) Financing Statements. On or before the Closing Date,
the Charterer, as lessee, shall execute protective Uniform Commercial Code
financing statements covering the Charterer’s interests in the Vessels and the
property covered by the Assignments, and, on or before the Closing Date, the
Charterer shall execute and deliver to counsel to the Owner Participant such
financing statements in form for filing in the appropriate locations in the
State of Florida.

 

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(b) Further Assurances, etc. The Obligors will cause promptly and duly to be
taken, executed, acknowledged or delivered all such further acts, conveyances,
documents and assurances as the Shipowner may from time to time request in order
more effectively to carry out the intent and purposes of any of the Transaction
Documents and the transactions contemplated thereby.

 

(c) Certain Duties of Charterer. The Charterer will take, or cause to be taken,
such action with respect to the recording, filing, re-recording and refiling of
any financing statements, continuation statements or other instruments as shall
be necessary to maintain the interest of the Shipowner in the Vessels and the
property covered by the Assignments (subject to the terms thereof), or will
furnish to the Shipowner timely notice of the necessity of such action, together
with such instruments, in execution form, and such other information as may be
required to enable it to take such action.

 

(d) Obligors to Maintain Corporate or Other Legal Existence. Each Obligor shall
at all times maintain its respective corporate or other legal existence except
as permitted by subsection (e) below. Except for actions permitted under
subsection (e) below, each of the Obligors will do or cause to be done all
things necessary to preserve and keep in full force and effect its full
corporate or other legal power and authority to carry on its business as
presently conducted, to own and hold under lease and operate its properties and
assets, and to perform its respective obligations under the Transaction
Documents.

 

(e) Merger, Consolidation, Assignment, Transfer, Change of Control, Line of
Business, etc.

 

(i) Neither Obligor may merge or consolidate with any Person or convey, transfer
or lease substantially all of its assets to any Person without the prior written
consent of the Shipowner, except so long as no Event of Default has occurred and
is continuing:

 

(A) the Guarantor may merge or consolidate with or into any of its wholly-owned
subsidiaries; provided in each instance that the Guarantor is the surviving
entity;

 

(B) the Guarantor may merge or consolidate with or into another Person provided
that (i) the surviving corporation or entity, if not Guarantor, shall have
executed and delivered to each of the other parties hereto an agreement in form
and substance reasonably satisfactory to the Owner Participant containing an
assumption by the surviving corporation of the due and punctual performance and
observance of each covenant and condition of the Transaction Documents to be
performed and observed by the Guarantor, and (ii) the surviving corporation or
entity has a Tangible Net Worth, after giving effect to such merger or
consolidation, not less than the Tangible Net Worth of the Guarantor prior to
such merger or consolidation.

 

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(C) The Charterer may merge or consolidate with or into any other subsidiary
that is wholly-owned, either directly or indirectly, by the Guarantor.

 

(D) The Charterer may convey or transfer substantially all of its assets,
including all of the Charterer’s rights and interests in the Vessels and under
the Transaction Documents, to a Person which (i) is a solvent corporation duly
organized under the laws of a jurisdiction in the United States, (ii) has the
corporate authority to enter into and carry out the transactions contemplated by
the Transaction Documents to which the Charterer is a party, and (iii) expressly
assumes the obligations of the Charterer with respect to the Vessels and under
the Transaction Documents pursuant to an agreement reasonably satisfactory to
the Owner Participant.

 

(ii) Any Person formed by the consolidation of the Charterer, or into which
Charterer is merged, or which acquires substantially all of the assets of the
Charterer, including the Charterer’s rights and interests in the Vessels and
under the Transaction Documents, shall be “citizen of the United States”
eligible to engage in the coastwise trade within the meaning of Section 2 of the
Shipping Act.

 

(iii) No such merger, consolidation or conveyance or transfer of assets by the
Charterer shall release or otherwise limit or impair any obligation of the
Guarantor under the Guarantee.

 

(iv) Nothing contained herein shall permit any charter, subcharter or other
arrangement for the use, operation or possession of the Vessels except in
compliance with the applicable provisions of the Demise Charter.

 

(v) Without the prior written consent of the Owner Participant, there shall be
no sale, assignment or other transfer by either Obligor, for purposes of
security or otherwise, of any of the Transaction Documents or of any right,
title and interest in, to or under any of the Transaction Documents, except
pursuant to the express provisions of the Transaction Documents.

 

SECTION 5.2. Certain Tax Assumptions; Inconsistent Actions; Records. The
Transaction Documents are being entered into on the assumption that the Demise
Charter is a “true lease” and not a conditional sale or other agreement intended
as security and that Shipowner and not the Charterer will be treated as the
owner of the Vessels for Federal income tax purposes. The Charterer agrees that
neither it nor any Affiliate will at any time take any action for Federal income
tax purposes or file any returns or other documents in connection therewith
inconsistent with the assumptions set forth in this Section 5.2.

 

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SECTION 5.3. Financial Statements. (a) As soon as available, and in any event
within sixty (60) days after the end of the first, second and third quarterly
accounting periods in each fiscal year, the Guarantor shall furnish to the Owner
Participant copies of its unaudited consolidated balance sheet and its
consolidated Subsidiaries as of the end of such accounting period and copies of
the related statements of income and retained earnings and changes in financial
position for the portion of its fiscal year ended with the last day of such
quarterly accounting period and for such period, all in reasonable detail,
certified by its controller or other accounting officer and stating in
comparative form the figures for the corresponding date and periods in the
previous fiscal year.

 

(b) As soon as available after the end of each fiscal year, and in any event
within one hundred twenty (120) days thereafter, the Guarantor shall furnish to
the Owner Participant copies of its audited financial statements and its
consolidated Subsidiaries in comparative form certified as fairly presented by a
nationally recognized firm of independent certified public accountants, together
with a certificate signed by its President, any Vice President, the Treasurer or
other accounting officer, stating that he or she has reviewed the activities
during such year and that to the best of his or her knowledge each Obligor
during such year has kept, observed, performed and fulfilled each and every
covenant, obligation and condition contained in this Agreement or any other of
the Transaction Documents, that no Event of Default shall have existed during
such year and that no Event of Default exists or if such a Default or Event of
Default shall have so existed or shall exist specifying the nature and status
thereof.

 

(c) If at any time the Charterer ceases to be a consolidated Subsidiary of
Guarantor for financial reporting purposes, Charterer shall thereafter provide
to Owner Participant its quarterly and annual financial statements at the times
and pursuant to the same reporting requirements as are set forth with respect to
the Guarantor in subsections (a) and (b) above.

 

(d) Each Obligor shall furnish to the Owner Participant:

 

(i) promptly after learning of the occurrence of any Event of Default, telex,
telecopy, cable or other written notice thereof;

 

(ii) promptly after the sending or filing thereof, at any time when the stock of
such Obligor shall be publicly traded, copies of all reports which such Obligor
sends to any of its security holders, and copies of all reports and registration
statements which such Obligor files with the Securities and Exchange Commission
or any national securities exchange; and

 

(iii) forthwith upon the request of the Owner Participant, such other
information respecting the financial condition and operations of such Obligor as
the Owner Participant may from time to time reasonably request.

 

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(e) Notwithstanding the foregoing, financial statements, reports or registration
statements required to be furnished to Owner Participant pursuant to this
Section 5.3 shall be deemed furnished when made available by Guarantor to Owner
Participant by electronic notification and transmission over the internet or
when posted electronically on a Web site designated by the Guarantor to which
Owner Participant has access, provided that the Guarantor or the Charterer, as
the case may be, shall, upon specific written request of the Owner Participant,
promptly provide to Owner Participant a written copy of any such financial
statement, report or registration statement.

 

SECTION 5.4. Inspection. The Charterer will permit any authorized representative
designated by the Owner Participant upon reasonable prior notice to visit it and
to discuss its financial affairs, finances and accounts with its officers and
its auditors, and to inspect its books and records and make copies of the same
or any other documents relevant to the Vessels or the Transaction Documents, or
to inspect any of the Vessels if they are then in port, all at such reasonable
times during normal business hours and as often as may be reasonably requested
and all at the expense of the Person requesting the same but without interfering
with the normal operation of the Vessels or disrupting the business operations
of the Charterer; provided, however, (i) that such inspection shall be at the
expense of the Charterer to the extent that such inspection is undertaken as a
result of an Event of Default and the costs and expenses thereof are payable by
the Charterer pursuant to Article 15 of the Demise Charter, (ii) that any such
visit or inspection shall be limited to the Vessels and matters related to
compliance with or performance of the terms and conditions of the Transaction
Documents and shall not extend to unrelated parts of the Charterer’s business,
(iii) that any such visit or inspection shall be subject to applicable laws and
regulations governing the operation of the Vessels, and (iv) the Charterer shall
not be liable to the Owner Participant or its employees, representatives and
agents, and Owner Participant shall release Charterer from any and all liability
to Owner Participant for any personal injury to any employee, representative or
agent of Owner Participant suffered in connection with any such visit or
inspection. No party hereto shall have any duty to make any such examination or
inspection or shall incur any liability by reason of not making the same.

 

SECTION 5.5. Shipowner’s Liens. The Trust Company, the Shipowner and the Owner
Participant, each severally and not jointly, agrees that it shall not, directly
or indirectly, create, incur, assume or suffer to exist and, at its own cost and
expense, shall promptly take such action as may be necessary duly to discharge,
any Shipowner’s Liens on or in respect of the Vessels in each case attributable
to it; provided, however, that Trust Company, the Shipowner and the Owner
Participant may contest any such Shipowner’s Lien in good faith by appropriate
proceedings diligently conducted where such proceedings do not involve a
material risk of the sale, forfeiture or loss of any Vessel or which interfere
with the use and possession of any Vessel by the Charterer, or, if such
proceedings do involve such material danger or such material interference, where
such Shipowner’s Lien has been bonded to the reasonable satisfaction of the
Charterer and, if such Lien is not a result of a Shipowner’s Lien attributable
to the Owner Participant, to the reasonable satisfaction of the Owner
Participant.

 

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SECTION 5.6. Citizenship. (a) The Owner Participant covenants and agrees that if
(i) it shall cease to be a Maritime Citizen or it shall obtain knowledge of
events or circumstances that would be likely to result in a cessation of its
status as a Maritime Citizen, and (ii) the Vessels shall or would therefore
become ineligible for documentation in the name of the Shipowner under United
States flag or ineligible for use by the Charterer in the United States
coastwise trade, then the Owner Participant shall, forthwith upon obtaining
knowledge of such cessation of its status as a Maritime Citizen, or, in the
event Owner Participant shall obtain knowledge of events or circumstances that
would be likely to result in such cessation, at least forty-five (45) days
before such cessation or as soon thereafter as Owner Participant obtains
knowledge of such events or circumstances if such knowledge is obtained later
than forty-five (45) days before such cessation, notify Charterer thereof. In
the event that Owner Participant ceases to be a Maritime Citizen (or notifies
Charterer that it has obtained knowledge of events or circumstances that would
be likely to result in a cessation of its status as a Maritime Citizen), and
Charterer does not exercise its option set forth in Article 10(h) of the Demise
Charter by the expiration of the sixty (60) day period referred to therein, or
if prior to the end of such sixty (60) day period Charterer notifies Owner
Participant in writing that it does not intend to exercise such option, and the
Owner Participant is then required to do so by law or by the USCG or other
authority having jurisdiction, or if the Vessels would otherwise not be entitled
to continue to be documented under the laws of the United States or eligible for
the coastwise trade, then Owner Participant shall forthwith transfer its
beneficial interest in the Trust (or such portion thereof as may be necessary in
the circumstances) to a purchaser or other transferee (which may be an Affiliate
of Owner Participant) in accordance with Section 7.2 and cause such purchaser or
transferee to be substituted (fully or partially, as the case may be) for Owner
Participant hereunder and under the Trust Agreement. For purposes of this
Section 5.6, “knowledge” of the Owner Participant shall mean actual knowledge of
a Responsible Officer thereof. Other than the undertakings and obligations of
the Owner Participant in this Section 5.6, neither Owner Participant nor
Shipowner shall have any obligation under any circumstances whatsoever to any of
the Obligors or any other Person by reason of the cessation of the status of the
Owner Participant as a Maritime Citizen, and no such cessation shall in any way
diminish or adversely affect the obligations of any Obligor under any provision
of this Agreement or any of the other Transaction Documents.

 

(b) The Charterer covenants and agrees that if (i) it shall cease to be a
“citizen of the United States” qualified to engage in the United States
coastwise trade within the meaning of Section 2 of the Shipping Act, and (ii)
the Vessels shall or would therefore become ineligible for documentation in the
name of the Shipowner under United States flag or ineligible for use by
Charterer in the United States coastwise trade, then the Charterer shall (at its
own expense and without any reimbursement or indemnification from any Person)
promptly take such action as may be necessary to prevent any loss of
documentation or to maintain the United States documentation of the Vessels for
use by the Charterer in the United States coastwise trade, and the Charterer
shall furnish to the Trustee and the Owner Participant an opinion of counsel
addressed to and in form and substance satisfactory to such Persons, stating
that all actions required to be taken to prevent such loss of documentation or
to maintain such documentation have been duly taken. Each party hereto agrees,
upon the request and at the sole expense of the Charterer, to cooperate with the
Charterer in complying with its obligations under the provisions of this Section
5.6(b).

 

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(c) The Trust Company covenants and agrees that if (i) the Trust Company shall
have reason to believe that it shall cease to be, or shall cease to be, a
Maritime Citizen, and (ii) the Vessels shall or would therefore become
ineligible for documentation in the name of the Shipowner under United States
flag or ineligible for use by Charterer in the United States coastwise trade,
then it shall (at its own expense and without any reimbursement or
indemnification form any Person) promptly resign as Trustee under the Trust
Agreement, effective upon the appointment of a successor trustee thereunder,
which shall be a Maritime Citizen.

 

SECTION 5.7. Transaction Events of Default. The following shall constitute
“Transaction Events of Default” for purposes of the Demise Charter:

 

(a) any material representation or warranty made by or on behalf of the
Guarantor in any of the Transaction Documents shall prove to be inaccurate in
any material respect when made, and, if the same is susceptible to cure in a
manner that is not prejudicial to any right or interest of Shipowner, Owner
Participant or the Trust Company, the Guarantor fails to effect such cure within
thirty (30) days after it receives written notice thereof, or such longer period
(not to exceed one hundred twenty (120) days from the date of such notice)
during which the Guarantor is making diligent efforts to cure the same; or

 

(b) the Guarantor (i) shall fail to perform or observe any covenant, condition
or agreement to be performed or observed by it under any of the Transaction
Documents and such failure continues for thirty (30) days after receipt by it of
written notice thereof from Shipowner or Owner Participant, or such longer
period (not to exceed one hundred twenty (120) days from the date of such
notice) during which the Guarantor is making diligent efforts to cure the same,
or (ii) shall be in default pursuant to the terms of any of the Transaction
Documents after the giving of notice and the passage of any grace period, if
any, provided therein with respect to such default; or

 

(c) the entry of a decree or order by a court having jurisdiction in the
premises adjudging the Guarantor as bankrupt or insolvent, or approving as
properly filed a petition seeking reorganization, arrangement, adjustment or
composition of or in respect of the Guarantor under the Federal Bankruptcy Code
or any other applicable Federal, State or foreign law, or appointing a receiver,
liquidator, assignee, trustee, sequestrator or other similar official of the
Guarantor or of any substantial part of its property, or ordering the winding-up
or liquidation of the affairs of the Guarantor, and the continuance of such
decree or order unstayed and in effect for a period of ninety (90) consecutive
days; or an involuntary petition shall have been filed against the Guarantor
seeking reorganization, arrangement, adjustment or composition of or in respect
of the Guarantor under the Federal Bankruptcy Code or any other applicable
Federal, State or foreign law and such petition shall not have been withdrawn,
dismissed or stayed within ninety (90) days of filing; or

 

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(d) the institution by the Guarantor of proceedings to be adjudicated a bankrupt
or insolvent, or the consent by the Guarantor to the institution of bankruptcy
or insolvency proceedings against it, or the filing by the Guarantor of a
petition or answer or consent seeking reorganization or relief under the Federal
Bankruptcy Code or any other applicable Federal, State or foreign law, or the
consent by the Guarantor to the filing of any such petition or to the
appointment of a receiver, liquidator, assignee, trustee, sequestrator or other
similar official of the Guarantor or of any substantial part of its property, or
the making by the Guarantor of an assignment for the benefit of creditors, or
the admission by the Guarantor in writing of an inability to pay debts generally
as they become due, or the taking of corporate action by the Guarantor in
furtherance of any such action; or

 

(e) the Guarantor, or any Affiliate of any thereof, shall default (after the
expiration of any applicable period of grace with respect thereto) in the
payment of any Indebtedness in excess of $10,000,000.00 or in the payment of any
Indebtedness due to the Owner Participant or any of its Affiliates or, to the
extent not covered in any other subsection of this Section 5.7, shall default in
the performance of any other material obligation to, or observance of any
material covenant for the benefit of, the Owner Participant or any of its
Affiliates which results in the acceleration of the Indebtedness due under any
loan, note, indenture, security agreement, lease, guarantee, title retention or
conditional sales agreement or other instrument or agreement evidencing such
indebtedness or obligation.

 

SECTION 5.8. Liabilities of the Owner Participant, Shipowner and Trust Company.
Neither the Owner Participant nor the Shipowner shall have any obligation or
duty to the Obligors or to any other Person with respect to the transactions
contemplated hereby except those obligations or duties specifically set forth in
the Transaction Documents. Without limitation of the generality of the
foregoing, under no circumstances whatsoever shall the Owner Participant as such
be liable to the Obligors or any other Person for any action or inaction on the
part of the Trust Company in connection with the Trust Agreement, this
Agreement, or the administration of the Trust Estate or otherwise, whether or
not such action or inaction is caused by the willful misconduct or gross
negligence of the Trust Company unless such action or inaction constituting such
willful misconduct or gross negligence was at the direction of the Owner
Participant. No recourse shall be had against Trust Company (or any successor
thereto) with respect to the duties and obligations specifically set forth in
the Transaction Documents or for any amounts payable hereunder or under the
Transaction Documents, or any other document, agreement or instrument relating
to the transactions contemplated by any of the aforementioned documents, or for
any claim based hereon or thereon or otherwise in respect hereof or thereof;
provided, however, that (i) nothing herein shall prevent recourse to and the
enforcement against Trust Company for performance of agreements made in its
individual capacity and set forth in any Transaction Document to which it is a
party or for its own gross negligence (or negligence in the case of handling of
money) or willful misconduct or for injuries resulting from the inaccuracy of
any

 

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representation or warranty made by it in its individual capacity herein, and
(ii) upon Charterer’s exercise of the purchase option set forth in Article
10(a), Article 10(h) or Article 16(h) of the Demise Charter, the Owner
Participant (or if there is then more than one Owner Participant, each Owner
Participant) shall cause Shipowner to transfer title to the Vessels to the
Charterer including, without limitation, Shipowner’s execution and delivery to
Charterer or Charterer’s Legally Eligible Designee of a bill of sale for each
Vessel, in recordable form and, in connection with and at the time of delivery
of such bills of sale, Shipowner’s execution and delivery to Charterer or its
Legally Eligible Designee of such appropriate instruments of assignment or
reassignment (without recourse or warranty) of Shipowner’s rights, title and
interests under the Assignments as may be reasonably requested by Charterer.

 

ARTICLE VI

 

EXPENSES

 

SECTION 6.1. Transaction Costs; Amendments; Waivers; etc. The Charterer will pay
on demand (a) all reasonable, out-of-pocket costs and expenses incurred in
connection with the negotiations, preparation and entering into of the
Transactions Documents, (b) the reasonable fees and expenses of the Trust
Company, (c) all placement, arrangement or similar fees due Credit Suisse First
Boston with respect to the sale and leaseback financing of the Vessels as set
forth in the engagement letter dated December 6, 2001, and (d) all reasonable,
out-of-pocket costs and expenses incurred in connection with the entering into
or the giving or withholding of any future amendments, supplements, waivers or
consents with respect to the Transaction Documents requested by the Charterer or
the Guarantor (herein together called “Transaction Costs”); subject, however, to
the obligation of Owner Participant to fund certain initial Transaction Costs as
part of Lessor’s Cost pursuant to Section 3.1(g) hereof. Transaction Costs shall
include the reasonable fees and disbursements of Shipman & Goodwin LLP, special
counsel to the Owner Participant (not to exceed $50,000), Thompson Coburn LLP,
special maritime counsel to the Owner Participant, and Bingham Dana LLP, counsel
to the Trust Company.

 

ARTICLE VII

 

TRANSFER OF TRUSTEE’S AND OWNER

PARTICIPANT’S INTEREST

 

SECTION 7.1. Transfer of Trustee’s Interest. The Trustee shall have the right to
assign, convey, or otherwise transfer any of Trustee’s right, title and interest
in and to this Agreement, any other Transaction Document or the Vessels without
the prior consent of either Obligor to any successor as Trustee under the Trust
Agreement, provided only that no such assignment, conveyance or transfer shall
be made in violation of applicable law or adversely affect the right to operate
the Vessels under U.S. flag in the coastwise trade of the United States and
provided that any institution acting as successor trustee agrees to assume all
obligations, liabilities, warranties and representations and covenants made
herein or in any of the other Transaction Documents by the Trust Company.

 

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SECTION 7.2. Transfer of Owner Participant’s Interest. Unless an Event of
Default shall have occurred and be continuing (in which case no transfer
restrictions shall apply), no Owner Participant shall transfer all or any
portion of its right, title or interest in and to the Trust, the Trust Estate or
the Transaction Documents during the Charter Period unless: (a) the transferee
shall be (i) a Person having a Tangible Net Worth, calculated in accordance with
GAAP, in excess of $75,000,000 and (ii) any other Person if the obligations of
such Person under the Transaction Documents are guaranteed by a Person that has
a tangible net worth, calculated in accordance with GAAP, in excess of
$75,000,000; (b) the transferee enters into a transfer agreement, copies of
which are provided to the Trustee, the Charterer, the Guarantors and any Owner
Participant, which shall state the conditions that (i) the transferee has the
requisite legal power and authority to enter into and carry out the transactions
contemplated by the Transaction Documents, (ii) the transferee makes
representations and warranties comparable to those set forth in Section 4.2, and
(iii) the Charterer and Guarantor shall have received an opinion of transferee’s
counsel with respect to the foregoing matters in a form reasonably satisfactory
to Charterer and Guarantor; (c) the transferee is a Maritime Citizen; (d) such
transfer complies in all respects with, and does not violate any, applicable
law; (e) the transferring or transferee Owner Participant shall pay all
reasonable documented fees, expenses and charges of the Owner Participant, the
Charterer and the Trustee (including, without limitation, reasonable documented
legal fees and expenses of special counsel); and (f) such transferee is a bank,
bank affiliate, finance or leasing company or other financial institution not
engaged in the operation of a business in direct competition with Charterer
(except that such restriction shall not apply to any proposed transferee simply
because such transferee, as part of its normal financing or investment
activities, makes loans or provides lease financing to, or invests in, companies
that may compete with Charterer). No such transfer of Owner Participant’s
interest shall result in their being more than three (3) Owner Participants at
any one time and after given effect to any such transfer each Owner Participant
shall hold an interest equal to its pro rata share of Lessor’s Cost of each
Vessel.

 

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ARTICLE VIII

 

MISCELLANEOUS

 

SECTION 8.1. (a) Notices. Except as otherwise provided herein, any notices or
other communications required or permitted under the terms and provisions hereof
shall be in writing and shall become effective when delivered by hand or
received by telex or telecopier or registered first-class mail, postage prepaid,
addressed as follows:

 

To Shipowner:

 

GTC CONNECTICUT STATUTORY TRUST

c/o State Street Bank and Trust Company of Connecticut,

National Association, as Trustee

Goodwin Square

225 Asylum Street

Hartford, Connecticut 06103

 

Attention: Corporate Trust Department

Telecopy: (860) 244-1889

 

with a copy to:

 

FLEET CAPITAL CORPORATION

Fleet Capital Leasing

One Financial Plaza

2nd Floor

Providence, Rhode Island 02903

 

Attention: Senior Credit Officer

Telecopy: (401) 278-8022

 

To Charterer:

 

GULFCOAST TRANSIT COMPANY

702 North Franklin Street

Tampa, Florida 33602

 

Attention: Secretary

Telecopy: (813) 228-1328

 

with a copy to:

 

TECO ENERGY, INC.

702 North Franklin Street

Tampa, Florida 33602

 

Attention: General Counsel

Telecopy: (813) 228-4811

 

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To the Guarantor:

 

TECO ENERGY, INC.

702 North Franklin Street

Tampa, Florida 33602

 

Attention: Corporate Secretary

Telecopy: (813) 228-1328

 

with a copy to:

 

Attention: General Counsel

Telecopy: (813) 228-4811

 

or such other address as any of the foregoing Persons shall from time to time
designate in writing to the other parties hereto.

 

(b) Governing Law. This Agreement shall in all respects be governed by, and
construed in accordance with, the internal laws of the State of New York, except
where federal maritime law otherwise governs.

 

(c) Amendment. The terms of this Agreement shall not be altered, modified,
amended, supplemented or terminated in any manner whatsoever except by written
instrument signed by the party against which such alteration, modification,
amendment, supplement or termination is sought.

 

(d) Successors and Assigns. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their successors and assigns.

 

(e) Headings. Section headings and the Table of Contents are for convenience
only and shall not be construed as part of this Agreement.

 

(f) Counterparts. This Agreement may be executed by the parties hereto in
separate counterparts, each of which when so executed and delivered shall be an
original for all purposes, but all such counterparts shall together constitute
but one and the same instrument.

 

(g) Severability. If any term or provision hereof or the application thereof to
any circumstances shall, in any jurisdiction and to any extent, be invalid or
unenforceable, such term or such provision shall be ineffective as to such
jurisdiction to the extent such invalidity or unenforceability without
invalidating or rendering unenforceable such term or provisions hereof or the
application of such term or provision to circumstances other than those as to
which it is held invalid or unenforceable. To the extent permitted by applicable
laws, the parties hereto hereby waive any provision of law that renders any term
or provision hereof invalid or unenforceable in any respect.

 

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(h) Survival of Representations and Warranties. All representations, warranties,
covenants and agreements of any Person made herein and in certificates delivered
pursuant hereto shall be considered to have been relied upon by the other
parties hereto and shall survive the execution and delivery of this Agreement
regardless of any investigation or inspection made by or on behalf of the
Shipowner and the acceptance hereunder of the Vessels on behalf of the
Shipowner, and shall continue in full force and effect until all the obligations
of the Charterer under the Demise Charter shall be fully performed in accordance
with the terms thereof.

 

(i) Non-Recourse to the Trust Company. It is understood and agreed that the
Trust Company is entering into this Agreement solely in its capacity as Trustee
under the Trust Agreement and that all of the representations, warranties,
undertakings and agreements by and for the purpose of binding the Shipowner are
not the responsibility of the Trust Company individually but are intended solely
for the purpose of binding the Trust and that the Trust Company shall not be
liable or accountable in its individual capacity in any circumstances whatsoever
except as otherwise expressly provided in this Agreement or in the Trust
Agreement. It is further agreed that all Persons having any claims against the
Shipowner as a result of transactions contemplated by any Transaction Document
shall look solely to the Trust Estate for satisfaction thereof, except as
provided in the first sentence of this subparagraph. It is also understood and
agreed that, absent written instructions from the Owner Participant pursuant to
the Trust Agreement, the Shipowner shall not be under any obligation to exercise
any of the permissive rights or powers granted to it under this Agreement or any
of the other Transaction Documents.

 

[The signature page follows]

 

- 25 -

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IN WITNESS WHEREOF, the parties hereto have each caused this Agreement to be
duly executed as of the day and year first above written.

 

STATE STREET BANK AND TRUST COMPANY, in its individual capacity only as
expressly stated herein and otherwise solely as Trustee of the GTC CONNECTICUT
STATUTORY TRUST, Shipowner

By:

 

 

--------------------------------------------------------------------------------

Name:

   

Title:

    FLEET CAPITAL CORPORATION, Owner Participant

By:

 

 

--------------------------------------------------------------------------------

Name:

   

Title:

    GULFCOAST TRANSIT COMPANY, Charterer

By:

 

 

--------------------------------------------------------------------------------

Name:

   

Title:

   

TECO ENERGY, INC., Guarantor

By:

 

 

--------------------------------------------------------------------------------

Name:

   

Title:

   

--------------------------------------------------------------------------------

SCHEDULE A

 

Definitions

 

“ABS” shall mean the American Bureau of Shipping or any successor organization.

 

“Adjustment Factor” shall mean the percentage adjustment calculated, upward or
downward, by multiplying the Adjustment Factor Percentage for each one basis
point (.01%) corresponding change in the Relevant Treasury Rate from the
Reference Rate.

 

“Adjustment Factor Percentage” shall mean the number 0.003272 expressed as a
percentage.

 

“Affiliate” shall mean any Person directly or indirectly controlling, controlled
by or under direct or indirect common control with another Person. For the
purpose of this definition, “control” when used with respect to any specified
Person means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise; and the terms “controlling” and “controlled” shall have
meanings correlative to the foregoing.

 

“Agreement” shall mean that certain Agreement to Acquire and Charter dated as of
December 21, 2001 by and among Shipowner, Owner Participant, the Seller,
Charterer and the Guarantor, providing, among other things, for the agreement of
Shipowner to purchase the Vessels from the Seller and of Charterer concurrently
therewith to enter into the Demise Charter and to accept delivery of the Vessels
from Shipowner under the Demise Charter.

 

“Appraisal Procedure” means the procedure specified in the succeeding sentences
for determining an amount or value hereunder. The parties shall consult for the
purpose of determining such amount or value by mutual agreement. In the absence
of such agreement after thirty (30) days, either party may give written notice
to the other requesting determination of such amount or value by appraisal and
in such event the parties shall consult for the purpose of appointing a mutually
acceptable qualified independent appraiser (which shall include the Appraiser).
If the parties are unable to agree on an appraiser within twenty (20) days of
the giving of such notice, such amount or value shall be determined by each of
two independent appraisers, one of whom shall be selected by Charterer and the
other of whom shall be selected by Shipowner, on or before the twenty-first
(21st) day following the giving of such notice. If the determination made by the
appraiser reaching the greater value does not exceed the lower value by more
than ten percent of the lower value, the two values shall be averaged and such
determination shall constitute the determination of the appraisers. If such
excess shall be greater than ten percent of the lower value, a third appraiser
shall be selected by the two appraisers or by the Society of Maritime
Arbitrators, Inc., if the other two are unable to agree upon a third appraiser
within ten days. The third appraiser shall make his determination within fifteen
(15) days of his appointment. Of the three appraisals, the determination of the
appraiser which differs most from the other two appraisers shall be excluded,
the remaining two determinations shall be averaged and such average shall
constitute the determination of the appraisers.

--------------------------------------------------------------------------------

“Appraiser” shall mean ABS Consulting Ltd.

 

“Assignments” shall mean the Demise Charter Assignment and the Insurances
Assignment.

 

“Base Rental Factor” shall mean the percentage set forth in the column entitled
“Total Base Rental Factor” in Schedule C to the Demise Charter for the relevant
Basic Hire Payment Date.

 

“Basic Hire” with respect to any Vessel shall mean payments of charter hire
under the Demise Charter payable on each Basic Hire Payment Date, each in an
amount equal to Lessor’s Cost of such Vessel multiplied by the Base Rental
Factor applicable to such Basic Hire Payment Date; provided, however, that (i)
if Charterer does not exercise the early termination option with respect to the
Vessels pursuant to Article 10(a) of the Demise Charter, Basic Hire shall then
be reset as provided in Article 10(b) of the Demise Charter to an amount equal
to Lessor’s Cost multiplied by the Remaining Rental Factor, and (ii) if
Charterer exercises its option to renew in Article 16 of the Demise Charter,
Basic Hire for such renewal term shall be determined in accordance with Article
16.

 

“Basic Hire Payment Date” shall mean each Basic Hire Payment Date set forth in
Schedule C to the Demise Charter; provided, however, that if a Basic Hire
Payment Date is not a Business Day, the Basic Hire payable by Charterer on such
Basic Hire Payment Date shall be made at the opening of business on the next
following Business Day.

 

“Business Day” shall mean a day which is not a Saturday, Sunday, or other day on
which banking institutions doing business in Providence, Rhode Island, New York,
New York or Tampa, Florida, are authorized or obligated by law or required by
executive order to remain closed.

 

“Certificate of Delivery And Acceptance” shall mean that certain Certificate
substantially in the form of Exhibit B to the Agreement whereby (i) Charterer
accepts delivery of the Vessels from Seller on behalf of Shipowner under the
Agreement, and (ii) Charterer irrevocably and unconditionally accepts delivery
of the Vessels under the Demise Charter.

 

“Charter Hire” shall mean Basic Hire and Supplemental Hire.

 

“Charter Period” shall mean the Term plus a period of time, if any, reasonably
required to effect Redelivery (including the time necessary to remove any
Severable Modifications to which Charterer has title pursuant to Article
6(c)(i)); provided, however, that the Charter Period shall not exceed the Term
by more than fifteen (15) days, absent force majeure.

 

SA-2

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“Charterer” shall mean Gulfcoast Transit Company, a Florida corporation,
together with its permitted successors and assigns under the Demise Charter.

 

“Classification Society” shall mean the recognized classification society which
at any time is designated for purposes of surveying the Vessels and is
acceptable to Shipowner, and may include ABS and DNV, provided such
classification society is at the time a member of the International Association
of Classification Societies and approved by the USCG.

 

“Closing Date” shall mean the date and time on which concurrently (i) Seller
delivered the Vessels to Shipowner under the Agreement at the direction of
Charterer, and (ii) Shipowner shall have delivered and Charterer shall have
accepted the Vessels pursuant to Article 2 of the Demise Charter, which in no
event shall occur later than 5:00 p.m. EST on December 31, 2001.

 

“Code” shall mean the Internal Revenue Code of 1986, as amended.

 

“Consolidated or consolidated” shall mean with reference to any term defined
herein, shall mean that term as applied to the accounts of any Person and its
Subsidiaries, consolidated in accordance with GAAP.

 

“Crew’s Wages” shall mean crew’s wages, including the wages of the master, to
the extent provided by Public Law 90-293, approved April 25, 1968.

 

“Default Interest Rate” shall mean a variable interest rate equal to the Prime
Rate plus two percent (2%) per annum.

 

“Delivery” shall mean the delivery of the Vessels by Shipowner to Charterer
under the Demise Charter on the Closing Date, which shall be concurrent as to
time and place with delivery of the Vessels from Seller to Shipowner under the
Agreement.

 

“Demise Charter” shall mean the Demise Charter between Shipowner and Charterer,
providing for the demise charter by Charterer from Shipowner of the Vessels, as
originally executed or as modified, amended or supplemented in accordance with
the applicable provisions thereof.

 

“Demise Charter Assignment” means the General Assignment of Freights, Charters
and Hires from Charterer to Shipowner.

 

“Designated Taxes” shall have the meaning set forth in Article 2 of the
Guarantee.

 

“DNV” shall mean Det Norske Veritas or any successor organization.

 

“Documentation Citizen” shall mean a corporation established under the laws of
the United States or of a State thereof, whose president or other chief
executive officer, by whatever title, and chairman of its board of directors are
citizens of the United States, as well as any officers authorized to act in
their absence or disability, and no more of its directors are non-citizens than
a minority of the number necessary to constitute a quorum.

 

SA-3

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“Dollars” shall mean any coin or currency which at the time of payment is legal
tender for the payment of public and private debts in the United States, and
shall be represented by the sign “$”.

 

“Early Purchase Amount” shall mean 83.61988618% of Lessor’s Cost.

 

“Early Termination Date” means January 2, 2007.

 

“Environmental Claim” means any administrative, regulatory or judicial suit,
proceeding, action, judgment, notice of violation, claim, demand, abatement
order, direction, investigation, litigation or any other proceeding by any
governmental authority or any other Person, based on any Environmental Law or
any violation thereof, for personal injury (including sickness, disease or
death), tangible or intangible property damage, damage to environmental or
natural resources, reimbursement of environmental cleanup costs, nuisance,
pollution, contamination, fines, penalties, restrictions, attorneys’ fees,
health effects, monitoring or any other adverse effects on the environment.

 

“Environmental Law” means any applicable foreign, federal, state or local
statute, law (including common law), ordinance, rule, regulation, order (whether
voluntary or not) relating to the environment, natural resources, or human
health and safety, including the Comprehensive Environmental Response,
Compensation, and Liability Act (42 U.S.C. § 9601 et seq.), the Oil Pollution
Act of 1990 (33 U.S.C. § 2701 et seq.), the Hazardous Material Transportation
Act (49 U.S.C. § 1801 et seq.), the Resource Conservation and Recovery Act, also
known as the Solid Waste Disposal Act (42 U.S.C. § 6901 et seq.), the Federal
Water Pollution Control Act (33 U.S.C. § 1251 et seq.), the Clean Air Act
(U.S.C. § 7401 et seq.), the Toxic Substances Control Act (15 U.S.C. § 2601 et
seq.), the Occupational Safety and Health Act (29 U.S.C. § 651 et seq.) and any
analogous state or local law, as such laws have been or will be amended or
supplemented now or in the future, and expressly including any additional law
(including common law), ordinance, rule, or regulation relating to the
environment, natural resources, or human health and safety which may be enacted,
pronounced or promulgated in the future.

 

“Environmental Lien” shall have the meaning set forth in Article 18(a) of the
Demise Charter.

 

“Event of Default” shall mean any of the Events of Defaults specified in Article
15(a) of the Demise Charter.

 

“Event of Loss” shall mean any of the following events occurring during the
Charter Period: (i) the actual or constructive total loss of any Vessel, which
shall include damages to an extent determined in good faith by Charterer, and
accepted by such Vessel’s underwriter, to make repairs uneconomical or to render
such Vessel unfit for normal use or the compromised or agreed total loss (as
determined in accordance with such Vessel’s Policies of

 

SA-4

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Insurance) of such Vessel during the Charter Period (even though Charterer shall
have been deprived of, or limited in, the use of such Vessel in any respect at
the time of such loss by reason of any act or omission of Shipowner), (ii) the
requisition of the title to or other compulsory acquisition of any of the
Vessels otherwise than by a requisition for use of the Vessels as described in
Article 12 of the Demise Charter, or the capture, seizure, arrest (other than by
reason of a claim, the failure of Charterer to discharge which, would constitute
an Event of Default under the Demise Charter), detention by the operation of
political or executive act or confiscation of any Vessel by any government or
Persons acting or purporting to act on behalf of any government unless such
Vessel be released and restored to Shipowner or Charterer, as the case may be,
from such requisition, capture, seizure, arrest, detention or confiscation
within ninety (90) days after the occurrence thereof, or (iii) the imposition,
by governmental action, change in applicable law or change in the applicable
requirements of the USCG or the Classification Society, of the obligation to
make Modifications to a Vessel that (A) cost more than $1,000,000, and (B) in
the reasonable good faith judgment of Charterer would be uneconomical solely as
a consequence of the age and type of the Vessel; provided that Charterer as a
result of such determination of economic obsolescence ceases operation of such
Vessel and sells such Vessel for scrap or otherwise (in an arm’s length
transaction to a non-Affiliate of Charterer). An Event of Loss shall be deemed
to have occurred (w) in the event of an actual total loss of any of the Vessels,
on the date of such loss; (x) in the event of a constructive total loss; (y) in
the case of a compromised or agreed total loss, on the date agreed upon by
underwriter; or on such ninetieth (90th) day in the case of such a requisition,
capture, seizure, arrest, detention or confiscation; or (z) upon the date of
sale in the case of economic obsolescence under clause (iii) above.

 

“Excluded Cargoes” with respect to any Vessel shall mean cargoes that are (i)
Hazardous Materials, and (ii) either (A) are excluded from or would invalidate
applicable insurance carried, or required by the Demise Charter to be carried,
with respect to such Vessel and its operations, (B) are not permitted by such
Vessel’s certificate of inspection, or (C) are liquid cargoes (including, but
not limited to, petroleum, petroleum products and chemicals).

 

“Fair Market Bareboat Charter Value” and “Fair Market Sales Value” shall mean,
respectively, the fair market value which would be realized by the owner of the
Vessels for a bareboat charter or upon a sale of the Vessels, determined by the
Appraisal Procedure. For purposes of this Demise Charter, fair market value
shall be determined on the basis of, and shall be equal in amount to, the value
which would be obtained in an arm’s length transaction between an informed and
willing charterer or buyer, as the case may be, of the Vessels for use as U.S.
flag vessels eligible to engage in the coastwise trade of the United States
(other than a charterer or buyer currently in possession) and an informed and
willing lessor or seller under no compulsion to charter or sell and, in such
determination, any costs of removal from the location(s) of current use shall
not be a deduction from fair market value, provided, however, that the
determinations of Fair Market Bareboat Charter Value and Fair Market Sales Value
for purposes of Articles 15 and 16 of the Charter shall be based upon the actual
condition of the Vessels at the time of such determination and shall take into
account any legal impediments to the prompt sale or chartering of such Vessels.

 

SA-5

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“Federal Bankruptcy Code” shall mean the United States Bankruptcy Code, Title 11
United States Code, as amended.

 

“Fees, Taxes and/or Other Charges” shall mean any and all fees (including,
without limitation, documentation, license and registration fees) and any and
all taxes (including, without limitation, income, gross receipts, franchise,
sales, use, personal property (tangible or intangible), stamp and interest
equalization taxes), levies, imposts, duties, charges or withholdings of any
nature whatsoever, together with any and all penalties, fines or interest
thereon.

 

“GAAP” shall mean generally accepted accounting principles as in effect in the
United States, consistently applied.

 

“Guarantee” shall mean that certain Guarantee Agreement entered into between
Guarantor and Shipowner dated the Closing Date.

 

“Guaranteed Agreement” and “Guaranteed Agreements” shall have the meanings set
forth in the second recital of the Guarantee.

 

“Guaranteed Obligation” and “Guaranteed Obligations” shall have the meanings set
forth in Section 1.1 of the Guarantee.

 

“Guaranteed Party” and “Guaranteed Parties” shall have the meaning set forth in
the third recital of the Guarantee.

 

“Guarantor” shall mean TECO Energy, Inc., a Florida corporation.

 

“Hazardous Material” shall mean any material or substance that, whether by its
nature or use, is at any time subject to regulation, or for which liability is
imposed, under any Environmental Law or other applicable legal requirements,
including without limitation crude petroleum, any petroleum products (whether or
not refined or otherwise processed), asbestos, flammables, volatile
hydrocarbons, industrial solvents, explosive or radioactive materials, hazardous
wastes, toxic substances or related materials.

 

“Indebtedness” shall mean with respect to any Person, without duplication, (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 sixty (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 Indenture), (e) interest accrued after the

 

SA-6

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commencement of any bankruptcy, insolvency, receivership or similar proceedings
and other interest that would have accrued but for the commencement of such
proceedings, (f) the maximum fixed redemption or repurchase price of preferred
stock of such Person at the time of determination, (g) every obligation of the
type referred to in clauses (a) through (h) 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.

 

“Indemnified Persons” shall mean the Trust Company, in its individual capacity
and as Trustee, the Trust, Owner Participant, and their respective Affiliates,
officers, directors, agents, servants, employees, and their successors and
assigns.

 

“Institute Warranties and Clauses” shall mean the trading warranty clauses in
general use and promulgated by the American Institute of Marine Underwriters or
the Institute of London Underwriters or other underwriters approved in
accordance with the provisions of Article 9 of the Demise Charter, whichever is
applicable with respect to the United States placed or foreign placed hull
insurance.

 

“Insurances Assignment” shall mean that certain Assignment of Insurances whereby
Charterer assigns to Shipowner all of its right, title and interest in, to, and
under, all Policies of Insurance.

 

“Legally Eligible Designee” shall mean a Person which at the time in question is
permitted by applicable United States laws and regulations to purchase and take
title to the Vessels.

 

“Lessor’s Cost” shall mean with respect to each Vessel the fair market value of
such Vessel as determined by the Appraiser, as set forth on Schedule 2 to the
Agreement.

 

“Liens” shall mean any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), charge or other security
interest or any preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever (including, without limitation, any
conditional sale or other title retention agreement and any capitalized lease
having substantially the same economic effect as any of the foregoing), or
rights of others.

 

“Maritime Citizen” shall mean any Person who either (i) is a citizen of the
United States within the meaning of Section 2 of the Shipping Act, 1916, as
amended, 46 App. U.S.C. 802, for the purpose of engaging in coastwise trade, or
(ii) is a Documentation Citizen which is, or whose parent entity is, or whose
parent entity has a subsidiary which is, primarily engaged in leasing or
financing transactions within the meaning of 46 U.S.C. 12106(e)(1)(B).

 

SA-7

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“Material Adverse Effect” means any event or circumstance which (a) constitutes
or would result in an Event of Default, or (b) materially and adversely effects
(i) the assets, liabilities, financial condition or operations of an Obligor,
or, if applicable, an Obligor and its Subsidiaries taken as a whole, (ii) the
ability of an Obligor to perform its obligations under the Transaction Documents
to which it is a party, or (iii) the condition, value, utility or operation of,
or title to, any Vessel.

 

“Modification” means any improvement, modification, alteration or addition to
any Vessel.

 

“Non-Severable Modification” means, with respect to any Vessel, any Modification
that is not a Severable Modification.

 

“Notice” shall mean any written notice given by one Person to any other Person
or Persons in the manner set forth in one or the other of the manners set forth
in the Notice provisions of any applicable Transaction Document.

 

“Obligations” shall mean the joint and/or several obligations of the Obligors
under, pursuant or relating to, the Transaction Documents.

 

“Obligors” shall mean Charterer and the Guarantor.

 

“Officer’s Certificate” shall mean, when used with respect to any corporation, a
certificate signed by the chairman of the board, the managing director, any
director, the president, any vice president, the secretary, or the treasurer of
such corporation.

 

“Opinion of Counsel” shall mean the opinion of counsel to Charterer and the
Guarantor addressing the matters described in Exhibit A to the Agreement.

 

“Option Closing Date” shall have the meaning set forth in Article 10(h) of this
Demise Charter.

 

“Other Charter” shall mean any bareboat charter or bareboat subcharter, entered
into with respect to any Vessel, other than the Demise Charter.

 

“Other Interested Persons” shall mean, for purposes of any policies of insurance
required to be maintained on or with respect to the Vessel, (1) Owner
Participant, (2) Trust Company, and (3) any other permitted charterer
(individually, an “Other Interested Person”).

 

“Owner Participant” shall mean Fleet Capital Corporation, a Rhode Island
corporation.

 

“Parts” means appliances, parts, instruments, appurtenances, accessories and
equipment of whatever nature, whether or not constituting Modifications.

 

SA-8

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“Per Diem Rate” means a per diem rate calculated on the basis of the average of
Basic Hire for the last seven (7) years of the Term.

 

“Permitted Liens” shall mean (1) liens for Crew’s Wages and salvage (including
contract salvage), general average and damages arising out of maritime torts
which are either unclaimed or covered by insurance, (2) liens incident to
current operations and not more than thirty (30) days past due unless same is
being contested in good faith by Charterer and Charterer has set aside adequate
reserves in accordance with GAAP with respect to same, (3) liens for wages of
stevedores when employed directly by the Vessels, Charterer, or the master(s) of
the Vessels, (4) liens covered by insurance and any deductible applicable
thereto, (5) the Charters Assignment and the Insurances Assignment, (6) liens
for repairs or for changes made in the Vessels to comply with law, the
requirements of the Vessels’ classification society in order to maintain their
class as required by Article 4 of the Demise Charter, or in accordance with
Article 6 of the Demise Charter, provided that any liens permitted by this
clause (6) shall be discharged in the ordinary course of business of Charterer
and in any event shall secure claims not more than thirty (30) days past due
unless same is being contested in good faith by Charterer and Charterer has set
aside adequate reserves in accordance with GAAP with respect to same, and (7)
the encumbrances, if any, constituted by the Demise Charter.

 

“Person” means any individual, corporation, partnership, limited partnership,
limited liability partnership, joint venture, association, joint-stock company,
company, limited liability company, trust, unincorporated organization or
government or any agency or political subdivision thereof.

 

“Plans and Specifications” shall mean the plans and specifications for the
Vessels furnished by Seller to Owner Participant.

 

“Policies of Insurance” and “Policies” shall mean all cover notes, binders,
policies of insurance and certificates of entry in protection and indemnity
associations, clubs or syndicates with respect to the Vessels including all
endorsements and riders to any thereof.

 

“Prime Rate” shall mean the interest rate announced from time to time by Fleet
National Bank as its prime rate, notwithstanding the fact that such bank may
regularly make loans at rates of interest less than such prime rate.

 

“Redelivery” shall mean redelivery of the Vessels by Charterer to Shipowner upon
the termination of the Charter Period free and clear of all liens, encumbrances
and rights of others for which Charterer is responsible under the terms of the
Demise Charter and in all respects in the condition required by the Demise
Charter, and the term “Redelivered” shall have a meaning correlative to the
foregoing. The term “Redelivery” shall include retaking of the Vessels in
accordance with Article 15(b)(i) of the Demise Charter.

 

“Reference Rate” shall mean 3.12%.

 

SA-9

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“Relevant Treasury Rate” shall mean the Treasury Constant Maturity rate for a
2-year period, as published in the Selected Interest Rates table of Federal
Reserve statistical release H.15(519) (or similar successor publication) in
effect thirty (30) days prior to the Early Termination Date.

 

“Remaining Rental Factor” shall mean the Base Rental Factor, adjusted (upward or
downward) by the Adjustment Factor.

 

“Request” shall mean a written request to a Person for the action therein
specified, signed when made by any Person by the chairman of the board, the
president, any vice president, the secretary, or the treasurer of such Person.

 

“Responsible Officer” shall mean with respect to any Person the chairman of the
board, the president, any vice president, the secretary, or treasurer of such
Person, and with respect to the Trust Company or the Trustee, means any officer
in its corporate trust administration department.

 

“Sales Value” means with respect to any Vessel 45.34125% of Lessor’s Cost of
such Vessel.

 

“Seller” means Gulfcoast Transit Company, a Florida corporation, as owner (prior
to the Closing Date) and seller of the Vessels.

 

“Severable Modification” shall mean any Modification (i) the cost of which was
not included in Lessor’s Cost, and (ii) that can be readily removed from any of
the Vessels (or any part thereof) without causing damage to or diminishment of
the value, utility or remaining useful life of such Vessel.

 

“Shipowner” shall mean the Trust, acting by and through the Trust Company, not
in its individual capacity but solely as Trustee under the Trust Agreement,
together with its permitted successors and assigns.

 

“Shipowner’s Liens” shall mean Liens arising solely as the result of Owner
Participant’s or Shipowner’s acts or omissions (other than acts or omissions for
which Shipowner or Owner Participant is indemnified pursuant to the terms of the
Transaction Documents) or of claims or demands against Owner Participant or
Shipowner unrelated to (i) Shipowner’s ownership of the Vessels, (ii) the
administration of the Trust Estate, or (iii) the transactions contemplated by
the Transaction Documents.

 

“Shipping Act” shall mean the Shipping Act, 1916, as at any time amended, Title
46, United States Code, §801 et seq., or any successor statute thereto.

 

“Stipulated Loss Value” with respect to any Vessel shall mean at any date during
the Term, if such date is a Basic Hire Payment Date, the amount determined by
multiplying Lessor’s Cost for such Vessel times the percentage set forth
opposite such date under the heading “Stipulated Loss Value” on Schedule B and
if such date is not a Basic Hire Payment

 

SA-10

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Date the percentage set forth opposite the date next preceding such date under
the heading “Stipulated Loss Value” on Schedule B, plus interest at the Default
Rate on such amount from such date to the date of payment of Stipulated Loss
Value (and each reference in the Demise Charter to Stipulated Loss Value
calculated as of a particular date shall be deemed to include such interest
factor to the date of payment).

 

“Subsidiary” shall mean any corporation, association, trust, or other business
entity of which the designated parent shall at any time own directly or
indirectly through a Subsidiary or Subsidiaries at least a majority (by number
of votes) of the outstanding voting stock or shall otherwise have a majority
interest therein.

 

“Supplemental Hire” shall mean all amounts at any time payable to Shipowner
under or pursuant to the terms of the Demise Charter other than Basic Hire,
including, without limitation, interest on late payments, payments on accounts
of indemnities, legal fees, expenses of investigation, out-of-pocket expenses,
the fees and expenses of the Trust Company, and all other amounts of whatsoever
kind and nature payable under, pursuant to, or by reason of the Demise Charter
or any provision thereof, but excluding Basic Hire.

 

“Tangible Net Worth” for any Person, shall mean the shareholder’s equity of such
Person and its Subsidiaries determined on a consolidated basis in accordance
with GAAP.

 

“Tax Indemnity Agreement” shall mean the Tax Indemnity Agreement dated as of
December 21, 2001 between Charterer and Owner Participant.

 

“Taxes” shall have the meaning set forth in Article 17 of the Demise Charter.

 

“Term” shall mean a period commencing with the Closing Date, and ending on the
twelfth (12th) anniversary of the Closing Date, or, if Charterer has exercised
its option to renew in Article 16, on the last day of such renewal term,
provided, however, that the Term shall end prior to said day in the event of a
termination thereof in accordance with Articles 10, 11 or 15 of the Demise
Charter.

 

“Todd Shipyards Lien” shall mean a maritime lien on the MARY TURNER, Official
No. 646730, filed on October 9, 1985 in favor of Todd Shipyards Corporation in
the amount of $160,000.

 

“Transaction Costs” shall have the meaning set forth in Section 6.1 of the
Agreement.

 

“Transaction Documents” shall mean the Agreement, the Demise Charter, the
Guarantee, the Tax Indemnity Agreement, the Assignments, the Certificate of
Delivery and Acceptance, the Bills of Sale, including any and all schedules and
exhibits thereto, and all other certificates, affidavits, applications,
agreements, writings and documents in any way pertaining to any of the
transactions referred to in the foregoing enumerated documents, and “Transaction
Document” shall mean any of the foregoing.

 

SA-11

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“Transaction Event of Default” shall mean any of the “Transaction Events of
Default” specified in Section 5.7 of the Agreement

 

“Trust” shall mean the GTC CONNECTICUT STATUTORY TRUST, a Connecticut statutory
trust created by and existing pursuant to the Trust Agreement.

 

“Trust Agreement” shall mean the Amended and Restated Trust Agreement dated as
of December 21, 2001, between Owner Participant and the Trust Company.

 

“Trust Company” shall mean State Street Bank and Trust Company of Connecticut,
National Association, in its individual capacity.

 

“Trust Estate” shall have the meaning assigned to that term in the Trust
Agreement.

 

“Trustee” shall mean the Trust Company, not in its individual capacity but
solely as trustee of the Trust.

 

“USC” shall mean the United States Code.

 

“USCG” shall mean the United States Coast Guard, Department of Transportation,
or any successor agency thereto.

 

“Vessels” or “Vessel” shall mean the following United States flag dry-bulk cargo
marine transportation vessels:

 

  (i) the BARBARA KESSEL, a 7,200 horsepower integrated blue-water tug-barge
unit, built in 1977, Official No. 583310;

 

  (ii) the GAYLE EUSTACE, a 36,686 short-ton cargo capacity integrated
blue-water barge, built in 1977, Official No. 587045;

 

  (iii) the PEGGY PALMER, a 37,700 short-ton cargo capacity blue-water barge,
built in 1981, Official No. 641530;

 

  (iv) the MARY TURNER, a 42,800 short-ton cargo capacity blue-water barge,
built in 1982, Official No. 646730;

 

or each or any such vessel as the context may require, and in each case shall
include, subject to Sections 5(c), 6(b) and 6(c) of the Demise Charter, all of
their engines, boilers, machinery, masts, boats, anchors, cables, chains,
rigging, tackle, apparel, furniture, capstans, outfit, tools, pumps, pumping and
other equipment, gear, furnishings, appliances, fittings and spare and
replacement parts and all other appurtenances to said vessels appertaining or
belonging, whether now owned or hereafter acquired, whether on board or not on
board, and also any and all additions, improvements and replacements hereafter
made in or to said vessels or any part thereof, including all items and
appurtenances as aforesaid. If the Demise Charter terminates with respect to any
such vessel upon the occurrence of an Event of Loss and

 

SA-12

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payment to Shipowner of all amounts due with respect to such vessel as a result
of such Event of Loss pursuant to Article 11(a) of the Demise Charter, such
vessel shall thereafter be excluded from the definition of “Vessels” or
“Vessel”, as the case may be.

 

SCHEDULE 1

 

Seller’s Payment Instructions

 

SA-13

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SCHEDULE 2

 

Lessor’s Cost

 

BARBARA KESSEL

   $ 5,050,031.84

GAYLE EUSTACE

   $ 10,104,387.34

PEGGY PALMER

   $ 12,893,146.37

MARY TURNER

   $ 15,189,008.45     

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--------------------------------------------------------------------------------

Total Lessor’s Cost

   $ 43,236,574.00     

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

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EXHIBIT A-1

 

Form of Opinion of Sheila M. McDevitt,

General Counsel to the Guarantor

--------------------------------------------------------------------------------

EXHIBIT A-2

 

Form of Opinion of Milbank, Tweed, Hadley & McCloy LLP,

Special New York Counsel to the Obligors

--------------------------------------------------------------------------------

EXHIBIT A-3

 

Form of Opinion of Jones, Walker, Waechter, Poitevent, Carrere & Denegre, LLP,

Maritime Counsel to the Charterer

--------------------------------------------------------------------------------

EXHIBIT A-4

 

Form of Opinion of Thompson Coburn LLP,

Special Maritime Counsel to the Owner Participant

--------------------------------------------------------------------------------

EXHIBIT A-5

 

Form of Opinion of Bingham Dana LLP,

Special Counsel to the Trust Company

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EXHIBIT B

 

Form of Certificate of Delivery and Acceptance