Exhibit 10.7
LOAN AGREEMENT
for a
U.S.$100,000,000 Loan
to
AMERICAN EAGLE TANKERS INC. LIMITED
provided by
the banks and financial institutions listed in schedule 1
Arranger and Underwriter
Danmarks Skibskreditfond
Agent
Danmarks Skibskreditfond
Security Trustee
Danmarks Skibskreditfond
▇▇▇▇▇▇ ▇▇▇▇
Contents
Clause Page
1 Purpose and definitions.................................................................. 1
2 The Commitment and the Loan.............................................................. 10
3 Interest and Interest Periods............................................................ 11
4 Repayment and prepayment................................................................. 13
5 Commitment commission, fees and expenses................................................. 15
6 Payments and taxes; accounts and calculations............................................ 16
7 Representations and warranties........................................................... 17
8 Undertakings............................................................................. 21
9 Conditions............................................................................... 25
10 Events of Default........................................................................ 26
11 Indemnities.............................................................................. 29
12 Unlawfulness and increased costs......................................................... 30
13 Security and set-off..................................................................... 32
14 Assignment, substitution and lending office.............................................. 33
15 Agent and Security Trustee............................................................... 36
16 Notices and other matters................................................................ 36
17 Governing law and jurisdiction........................................................... 38
Schedule 1 The Lenders and their Commitments.................................................... 39
Schedule 2 Form of Drawdown Notice.............................................................. 40
Schedule 3 Documents and evidence required as conditions precedent to making
available the Commitment........................................................................ 41
Schedule 4 Form of Substitution Certificate..................................................... 45
Schedule 5 Form of Deed and Covenant............................................................ 49
Schedule 6 Form of Manager's Undertaking........................................................ 50
Schedule 7 Form of Classification Letter........................................................ 57
Schedule 8 Form of Officer's Certificate........................................................ 59
THIS AGREEMENT is dated 29 May 2001 and made BETWEEN:
(1) AMERICAN EAGLE TANKERS INC. LIMITED as Borrower;
(2) the banks and financial institutions whose names and addresses are set out
in schedule 1 as Lenders;
(3) DANMARKS SKIBSKREDITFOND as Arranger and Underwriter;
(4) DANMARKS SKIBSKREDITFOND as Agent; and
(5) DANMARKS SKIBSKREDITFOND as Security Trustee.
IT IS AGREED as follows:
1 Purpose and definitions
1.1 Purpose
This Agreement sets out the terms and conditions upon and subject to which
the Lenders agree to make available to the Borrower, a loan of $100,000,000
to be used for the purpose of financing part of the cost of the purchase of
the Ships.
1.2 Definitions
In this Agreement, unless the context otherwise requires:
"Advance" means each borrowing of a proportion of the Commitment by the
Borrower or (as the context may require) the principal amount of such
borrowing and means:
(a) in relation to Eagle One, the Eagle One Advance; and
(b) in relation to Eagle Two, the Eagle Two Advance.
"Agency Agreement" means the agency agreement executed or (as the context
may require) to be executed between the Agent and the Lenders in the agreed
form;
"Agent" means Danmarks Skibskreditfond of Sankt ▇▇▇▇▇ ▇▇▇▇▇ ▇-▇, ▇▇▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇, ▇▇▇▇▇▇▇ or such other person which is a Lender as
may be appointed agent for the Lenders pursuant to the Agency Agreement and
includes its successors and assigns;
"Approved Manager" means, for the time being, the Borrower, NOL (or any
Subsidiary thereof) or any other company which the Lenders may approve from
time to time (such approval not to be unreasonably withheld or delayed) as
technical and/or commercial manager of the Ships provided that any request
for approval of the appointment has been notified to the Agent at least 15
days prior to such proposed appointment being made and such manager has
duly executed and delivered a Manager's Undertaking to the Security
Trustee;
"Arranger" means Danmarks Skibskreditfond of Sankt ▇▇▇▇ Plads 1-3, ▇▇▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇, ▇▇▇▇▇▇▇ and includes its successors and assigns;
"Assignee" has the meaning ascribed thereto in clause 15.3;
"Banking Day" means a day on which dealings in deposits in Dollars are
carried on in the London Interbank Eurocurrency Market and (other than
Saturday or Sunday) on which banks are open for business in London, New
York City and Copenhagen (or any other relevant place of payment under
clause 6);
1
"Bareboat Charter' means any charterparty by demise entered into by the
Borrower with a Charterer;
"Borrowed Money" means Indebtedness in respect of (a) money borrowed or
raised and debit balances at banks, (b) any bond, note, loan stock,
debenture or similar debt instrument, (C) acceptance or documentary credit
facilities, (d) receivables sold or discounted (otherwise than on a non-
recourse basis), (e) deferred payments for assets or services acquired, (f)
finance leases and hire purchase contracts, (g) swaps, forward exchange
contracts, futures and other derivatives, (h) any other transaction
(including without limitation forward sale or purchase agreements) having
the commercial effect of a borrowing or raising of money or of any of (b)
to (g) above and (i) guarantees in respect of Indebtedness of any person
falling within any of (a) to (h) above;
"Borrower" means American Eagle Tankers Inc. Limited of ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ and includes its successors in title;
"Borrower's Security Documents" means, at any relevant time, such of the
Security Documents as shall have been executed by the Borrower at such
time;
"Builder" means collectively Hyundai Corporation of ▇▇▇-▇, ▇▇▇-▇▇▇▇,
▇▇▇▇▇▇▇-▇▇, ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ and Hyundai Heavy Industries Co., Ltd. of ▇,
▇▇▇▇▇▇▇-▇▇▇▇, ▇▇▇▇-▇▇, ▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇ and includes their successors in title;
"Charterer" means, in relation to a Bareboat Charter, such person as shall
be acceptable to the Agent (such acceptance not to be unreasonably withheld
or delayed) which shall enter into such Bareboat Charter in respect of
either of the Ships during the Security Period;
"Classification" means in relation to each Ship, the classification +100A1
Double Hull Oil Tanker ESP, (SDA, FDA, CM), /LMC, UMS, IGS, *IWS, SCM with
the relevant Classification Society or such other classification being the
highest classification available for vessels of the same type, age and size
of the relevant Ship as the Agent shall, at the request of the Borrower,
have agreed in writing shall be treated as the Classification in relation
to such Ship for the purposes of the Security Documents;
"Classification Letter" means the letter to be sent to the Classification
Society of each Ship in substantially the form set out in schedule 10;
"Classification Society" means in relation to either Ship, Lloyds Register
of Shipping or such other classification society which is a member of the
International Association of Classification Societies (except for the China
Classification Society, the Korean Register of Shipping and the Russian
Maritime Register of Shipping) which the Agent shall, at the request of the
Borrower, have agreed in writing shall be treated as the Classification
Society in relation to the relevant Ship for the purposes of the Security
Documents;
"Code" means the International Safety Management Code for the Safe
Operation of Ships and for Pollution Prevention constituted pursuant to
Resolution A. 741(18) of the International Maritime Organisation and
incorporated into the Safety of Life at Sea Convention and includes any
amendments or extensions thereto and any regulation issued pursuant
thereto;
"Commitment" means the aggregate amount of the Advances which the Lenders
have agreed to lend to the Borrower under clause 2.1 as reduced by any
relevant term of this Agreement;
"Compulsory Acquisition" means requisition for title or other compulsory
acquisition, requisition, appropriation, expropriation, deprivation,
forfeiture or confiscation for any reason of a Ship by any Government
Entity or other competent authority, whether de jure or de facto, unless
such Ship is released and restored to the Borrower from such Compulsory
Acquisition within 45 days after the occurrence thereof, but shall exclude
requisition for use or hire not involving requisition of title;
"Contract" means:
2
(a) in relation to Eagle One, the shipbuilding contract dated 27 April
2000 between the Builder and the Borrower relating to the construction
by the Builder of Eagle One; or
(b) in relation to Eagle Two, the shipbuilding contract dated 5 June 2000
between the Builder and the Borrower relating to the construction by
the Builder of Eagle Two;
"Contract Price" means, in relation to each Ship, the price payable by the
Borrower to the Builder in accordance with the relevant Contract for that
Ship, being (a) in relation to Eagle One, $65,554,000 and (b) in relation
to Eagle Two $66,204,000;
"Contribution" means, in relation to a Lender, the principal amount of the
Loan owing to such Lender at any relevant time;
"Deed of Covenant" means:
(a) in relation to Eagle One, the Eagle One Deed of Covenant;
(b) in relation to Eagle Two, the Eagle Two Deed of Covenant;
and "Deeds of Covenant" means either or both of them;
"Default" means any Event of Default or any event or circumstance which
with the giving of notice or lapse of time or the satisfaction of any other
condition (or any combination thereof) would constitute an Event of
Default;
"Delivery" means the delivery of either of the Ships by the Builder to, and
the acceptance of the relevant Ship by the Borrower, pursuant to ~he
relevant Contract;
"Delivery Date" means, in relation to each Ship, the date on which the
relevant Ship is delivered to the Borrower in accordance with the relevant
Contract;
"DOC" means a document of compliance issued to an Operator in accordance
with rule 13 of the Code;
"Dollars" and "$" mean the lawful currency of the United States of America
and in respect of all payments to be made under any of the Security
Documents mean funds which are for same day settlement in the New York
Clearing House Interbank Payments System (or such other U.S. dollar funds
as may at the relevant time be customary for the settlement of
international banking transactions denominated in U.S. dollars);
"Drawdown Date" means any date, being a Banking Day falling during the
Drawdown Period on which an Advance is, or is to be, made;
Drawdown Notice" means, in relation to each Advance, a notice substantially
in the terms of schedule 2 in respect of such Advance;
"Drawdown Period" means:
(a) in relation to the Eagle One Advance, the period from the date of this
Agreement and ending on 31 August 2002; and
(b) in relation to the Eagle Two Advance, the period from the date of this
Agreement and ending on 31 March 2003,
or such later date as the Agent may in its absolute discretion agree in
writing or the period ending on such earlier date (if any) (i) on which the
aggregate amount of the Advances is equal to the Commitment or (ii) on
which the Commitment is reduced to zero pursuant to clauses 10.2 or 12;
3
"Eagle One" means the 318,000 deadweight tonne double hull crude oil tanker
currently under construction by the Builder pursuant to the Contract, which
is identified during construction as Hull No. 1371 and to be registered at
Delivery in the ownership of the Borrower through the Registry under the
laws and flag of the Flag State;
"Eagle One Advance" means an Advance of $50,000,000 which is to be made
available to the Borrower in relation to the purchase of Eagle One;
"Eagle One Deed of Covenant" means the deed of covenant collateral to the
Eagle One Mortgage executed or (as the context may require) to be executed
by the Borrower in favour of the Security Trustee substantially in the form
set out in schedule 5;
"Eagle One Mortgage" means a first priority statutory or, as the case may
be, a first preferred mortgage of Eagle One executed or (as the context may
require) to be executed by the Eagle One Borrower in favour of the Security
Trustee in form and substance satisfactory to the Security Trustee;
"Eagle Two" means the 318,000 deadweight tonne double hull crude oil tanker
currently under construction by the Builder pursuant to the Contract, which
is identified during construction as Hull No. 1394 and to be registered at
Delivery in the ownership of the Borrower through the Registry under the
laws and flag of the Flag State;
"Eagle Two Advance" means an Advance of $50,000,000 which is to be made
available to the Borrower in relation to the purchase of Eagle Two;
"Eagle Two Deed of Covenant" means the deed of covenant collateral to the
Eagle Two Mortgage executed or (as the context may require) to be executed
by the Borrower in favour of the Security Trustee in the form set out in
schedule 5;
"Eagle Two Mortgage" means a first priority statutory or, as the case may
be, a first preferred mortgage of Eagle Two executed or (as the context may
require) to be executed by the Borrower in favour of the Security Trustee
in form and substance satisfactory to the Security Trustee;
"Encumbrance" means any mortgage, charge (whether fixed or floating),
pledge, lien, hypothecation, assignment, trust arrangement or security
interest or other encumbrance of any kind securing any obligation of any
person or any type of preferential arrangement (including without
limitation title transfer and/or retention arrangements having a similar
effect);
"Environmental Affiliate" means any agent or employee of the Borrower or
any other Relevant Party or any person having a contractual relationship
with the Borrower or any other Relevant Party in connection with any
Relevant Ship or its operation or the carriage of cargo and/or passengers
thereon and/or the provision of goods and/or services on or from the
Relevant Ship;
"Environmental Approval" means any consent, authorisation, licence or
approval of any governmental or public body or authorities or courts
applicable to any Relevant Ship or its Operation or the carriage of cargo
and/or passengers thereon and/or the provision of goods and/or services on
or from the Relevant Ship required under any Environmental Law;
"Environmental Claim" means any and all enforcement, clean-up, removal or
other governmental or regulatory actions or orders instituted or completed
pursuant to any Environmental Law or any Environmental Approval together
with claims made by any third party relating to damage, contribution, loss
or injury, resulting from any actual or threatened emission, spill, release
or discharge of a Pollutant from any Relevant Ship;
"Environmental Laws" means all national, international and state laws,
rules, regulations, treaties and conventions applicable to any Relevant
Ship pertaining to the pollution or protection of human health or the
environment including, without limitation, the carriage of Pollutants and
actual or threatened emissions, spills, releases or discharges of
Pollutants;
"Event of Default" means any of the events or circumstances described in
clause 10.1;
4
"Flag State" means in relation to either Ship, the Republic of Singapore or
the United States of America or such other state or territory as the
Lenders may approve, at the request of the Borrower, such approval not to
be unreasonably withheld or delayed as being the "Flag State" of such Ship
for the purposes of the Security Documents;
"Government Entity" means and includes (whether having a distinct legal
personality or not) any national or local government authority, board,
commission, department, division, organ, instrumentality, court or agency
and any association, organisation or institution of which any of the
foregoing is a member or to whose jurisdiction any of the foregoing is
subject or in whose activities any of the foregoing is a participant;
"Indebtedness" means any obligation for the payment or repayment of money,
whether as principal or as surety and whether present or future, actual or
contingent;
"Interest Payment Date" means the last day of an Interest Period;
"Interest Period" means, in relation to any Advance or the Loan, each
period for the calculation of interest in respect of such Advance or the
Loan ascertained in accordance with clauses 3.2 and 3.3;
"Lenders" means the Lenders listed in schedule 1 and includes their
respective successors in title and Assignees and Substitutes;
"LIBOR" means the rate per annum for the applicable Interest Period as
published on the electronic information system Telerate page 3750 (or in
the event that such quotation is not published, such other widely used
international electronic information system as the Agent may determine) at
the time of day when such rates are published for the first time two (2)
Banking Days prior to commencement of such Interest Period; when LIBOR is
fixed for the first Interest Period for each Advance or any other periods
other than one (1), three (3), six (6), nine (9) and twelve (12) months'
duration, LIBOR for the relevant Interest Period shall be determined by the
Agent (in its sole and absolute discretion) as an interpolation of relevant
quoted LIBOR rates Provided however if no such rate is published in such
information systems described above, LIBOR for the relevant Interest Period
shall be the rate per annum determined by the Agent to be the arithmetic
mean (rounded upward if necessary to five (5) decimal places) of the rates
respectively quoted to the Agent by each of the Reference Banks at the
request of the Agent as such Reference Bank's offered rate for deposits in
Dollars in an amount approximately equal to the amount in relation to which
LIBOR is to be determined for a period equivalent to the relevant Interest
Period to prime banks in the London Interbank Market at or about 11 a.m.
(London time) on the second Banking Day before the first day of such
Interest Period;
"Loan" means the aggregate principal amount owing to the Lenders under this
Agreement at any relevant time;
"Management Agreement" means, in relation to each Ship, the management
agreement between the Borrower and the Approved Manager providing (inter
alia) for the Approved Manager to provide the technical and/or commercial
management of such Ship and includes any future management agreement
relative to such Ship entered into by the Borrower with an Approved Manager
on terms previously approved by the Lenders;
"Manager's Undertaking" means, in relation to each Ship:
(a) where the Approved Manager is NOL or a Subsidiary thereof (unless the
Approved Manager is the Borrower), an undertaking in the form set out
in Part 1 of schedule 6 executed or (as the context may require) to be
executed by the Approved Manager in favour of the Security Trustee as
a condition of the Agent's approval to the Management Agreement for
such Ship; or
(b) where the Approved Manager is not NOL or a Subsidiary thereof, an
undertaking in substantially the form set out in Part 2 of schedule 6
executed or (as the context may
5
require) to be executed by the Approved Manager in favour of the
Security Trustee as a condition of the Agent's approval to the
Management Agreement for such Ship;
"Margin" means 0.875 per cent per annum;
"month" means a period beginning in one calendar month and ending in the
next calendar month on the day numerically corresponding to the day of the
calendar month on which it started, provided that (a) if the period started
on the last Banking Day in a calendar month or if there is no such
numerically corresponding day, it shall end on the last Banking Day in such
next calendar month and (b) if such numerically corresponding day is not a
Banking Day, the period shall end on the next following Banking Day in the
same calendar month but if there is no such Banking Day it shall end on the
preceding Banking Day and "months" and "monthly" shall be construed
accordingly;
"Mortgage" means:
(a) in relation to Eagle One, the Eagle One Mortgage;
(b) in relation to Eagle Two, the Eagle Two Mortgage;
and "Mortgages" means either or both of them;
"Mortgaged Ship" means, at any relevant time, any Ship which is at such
time subject to a Mortgage and/or the Earnings, Insurances and Requisition
Compensation (as defined in the relevant Ship Security Documents) of which
are subject to an Encumbrance pursuant to the relevant Security Documents
and a Ship shall for the purposes of this Agreement be deemed to be a
Mortgaged Ship from the date that the Mortgage of that Ship shall have been
executed and registered in accordance with this Agreement until whichever
shall be the earlier of (i) the payment in full of the amount required to
be paid by the Lenders pursuant to clause 4.3 following the sale or Total
Loss of such Ship and (ii) the date on which all moneys owing under the
Security Documents have been repaid in full;
"NOL" means Neptune Orient Lines Limited of NOL Building, ▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇, #▇▇-▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇;
"Operator" means any person who is from time to time during the Security
Period concerned in the operation of either of the Ships and falls within
the definition of "Company" set out in rule 1.1.2 of the Code;
"Permitted Encumbrance" means any Encumbrance in favour of the Security
Trustee created pursuant to the Security Documents and Permitted Liens;
"Permitted Liens" means:
(a) Encumbrances created by the Security Documents;
(b) liens for unpaid master's and crew's wages in accordance with usual
maritime practice;
(c) liens for salvage;
(d) liens arising by operation of law for not more than 2 months' prepaid
hire under any charter in relation to a Ship not prohibited by this
Agreement;
(e) liens for master's disbursements incurred in the ordinary course of
trading and any other lien arising by operation of law or otherwise in
the ordinary course of the operation, repair or maintenance of a Ship,
provided such liens do not secure amounts more than 30 days overdue
(unless the overdue amount is being contested by the Borrower in good
faith by appropriate steps);
6
(f) any Encumbrance created in favour of a plaintiff or defendant in any
proceedings or arbitration as security for costs and expenses while
the Borrower is actively prosecuting or defending such proceedings or
arbitration in good faith; and
(g) Encumbrances arising by operation of law in respect of Taxes which'
are not overdue for payment or in respect of Taxes being contested in
good faith by appropriate steps and in respect of which appropriate
reserves have been made;
"Pollutant" means and includes pollutants, contaminants, toxic substances,
oil as defined in the United States Oil Pollution Act of 1990 and all
hazardous substances as defined in the United States Comprehensive
Environmental Response, Compensation and Liability ▇▇▇ ▇▇▇▇;
"Prepayment Event" means any of the following events:
(a) voting rights: at any time during the period which commences on the
first Drawdown Date and ends on the date falling 36 months after the
first Drawdown Date (the First Period"), NOL's total legal and
beneficial ownership of issued shares in the capital of the Borrower
and/or total voting rights falls below 51% or, at any time after the
First Period, NOL ceases to be the single largest shareholder of the
Borrower either (i) with the power to appoint directly (or indirectly
through its Subsidiaries) the majority of the board of directors of
the Borrower or (ii) NOL directly (or indirectly through its
Subsidiaries) is able to exercise control of the Borrower in a way
other than by appointing a majority of the board of directors,
provided that such other way of exercising control has to be
acceptable to the Agent, such acceptance not to be unreasonably
withheld or delayed;
(b) seizure: all or a material part of the undertaking, assets, rights or
revenues of, or shares or other ownership interests in, any Security
Party are seized, nationalised, expropriated or compulsorily acquired
by or under the authority of any government; or
(c) invalidity: any of the Security Documents shall at any time and for
any reason become invalid or unenforceable or otherwise cease to
remain in full force and effect, or if the validity or enforceability
of any of the Security Documents shall at any time and for any reason
be contested by any Security Party which is a party thereto, or if any
such Security Party shall deny that it has any, or any further,
liability thereunder; or
(d) unlawfulness: it becomes impossible or unlawful at any time for any
Security Party, to fulfil any of the covenants and obligations
expressed to be assumed by it in any of the Security Documents or for
the Lenders to exercise the rights or any of them vested in it under
any of the Security Documents or otherwise;
"Reference Banks" means The Chase Manhatten Bank of ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇, Deutsche Bank AG, London Branch of ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇ and HSBC Bank plc of ▇▇-▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇ and includes their successors in title;
"Registry" means in relation to each Ship, the offices of the Registrar of
Ships in Singapore (or such other registrar, commissioner or representative
of the relevant Flag State who is duly authorised and empowered to register
the relevant Ship, the Borrower's title to such Ship and the relevant
Mortgage under the laws and flag of the relevant Flag State through the
relevant Registry;
"Related Company" of a person means any Subsidiary of such person and any
Subsidiary of any such company or entity;
"Relevant Jurisdiction" means any jurisdiction in which or where any
Security Party is incorporated resident, domiciled, has a permanent
establishment, carries on, or has a place of business or is otherwise
effectively connected;
"Relevant Party" means the Borrower, Borrower's Related Companies and any
other the Security Party;
7
"Relevant Ship" means the Ships and any other vessel at any relevant time
owned, managed, or chartered to, any Relevant Party;
"Repayment Dates' means, subject to clause 6.4:
(a) in relation to Eagle One a first repayment date falling on 1 June 2002
or such other date as the Agent shall in its absolute discretion
determine) (the "first Eagle One Repayment Date") and each of the
dates failing at 6 monthly intervals thereafter for the Eagle One
Advance up to and including the date falling 138 months after the
first Eagle One Repayment Date; and
(b) in relation to Eagle Two a first repayment date falling on 1 December
2002 or such other date as the Agent shall in its absolute discretion
determine (the "first Eagle Two Repayment Date") and each of the dates
falling at 6 monthly intervals thereafter for the Eagle Two Advance up
to and including the date falling 138 months after the first Eagle Two
Repayment Date;
"Security Documents" means this Agreement, the Agency Agreement, the
Mortgages, the Deeds of Covenant, any Manager's Undertaking and any other
documents as may have been or shall from time to time after the date of
this Agreement be executed to guarantee and/or secure all or any part of
the Loan, interest thereon and other moneys from time to time owing by the
Borrower pursuant to this Agreement (whether or not any such document also
secures moneys from time to time owing pursuant to any other document or
agreement);
"Security Party" means the Borrower or any other person who may at any time
be a party to any of the Security Documents (other than the Agent, the
Lenders, the Security Trustee and the Underwriter);
"Security Period" means the period commencing on the date hereof and
terminating upon discharge of the security created by the Security
Documents by payment of all moneys payable thereunder;
"Security Requirement" means the amount in Dollars (as certified by the
Agent whose certificate shall, in the absence of manifest error, be
conclusive and binding on the Borrower and the Lenders) which is, at any
relevant time, the aggregate of (a) 115% of the Loan and (b) the notional
cost or actual cost (if any) as determined by the Agent in its absolute
discretion of broken funding costs for terminating any interest hedging
arrangement in relation to the Loan extending for a period in excess of 6
months as a result of the Borrower selecting an Interest Period of more
than 6 months pursuant to clause 3.2;
"Security Trustee" means Danmarks Skibskrediffond of Sankt ▇▇▇▇ Plads 1-3,
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇, ▇▇▇▇▇▇▇ or such other person as may be
appointed security agent and trustee for the Lenders pursuant to the Agency
Agreement;
"Security Value" means the amount in Dollars (as certified by the Agent
whose certificate shall, in the absence of manifest error, be conclusive
and binding on the Borrower and the Lenders) which, at any relevant time,
is the aggregate of (a) the market value of each of the Mortgaged Ships as
most recently determined in accordance with clause 8.3 and (b) the market
value of any additional security as determined in accordance with clause
8.3 for the time being actually provided to the Lenders pursuant to clauses
4.3 and 8.3;
"Ships" means Eagle One and Eagle Two or either of them;
"Ship Security Documents" means:
(a) in respect of Eagle One, the Eagle One Mortgage and the Eagle One Deed
of Covenant;
(b) in respect of Eagle Two, the Eagle Two Mortgage and the Eagle Two Deed
of Covenant;
8
"SMC" means a safety management certificate issued in respect of a Ship
in accordance with rule 13 of the Code;
"Subsidiary" of a person means any company or entity directly or
indirectly controlled by such person and for this purpose "control"
means either the ownership of mbre than 50% of the voting share capital
(or equivalent rights of ownership) of such company or entity or the
power to direct its policies and management, whether by contract or
otherwise;
"Substitute" has the meaning ascribed thereto in clause 14;
"Substitution Certificate" means a certificate substantially in the form
of schedule 4 (or in such other form as the Agent and the Lenders shall
approve or require);
"Taxes" includes all present and future taxes, levies, imposts, duties,
fees or charges of whatever nature together with interest thereon and
penalties in respect thereof and "Taxation" shall be construed
accordingly;
"Time Charter" means any time or consecutive voyage charter or other
contract of employment for either Ship for a term which exceeds or by
virtue of any optional extensions therein contained may exceed 24 months
duration;
"Total Loss in relation to a Ship means:
(a) actual constructive compromised or arranged total loss of such
Ship; or
(b) the Compulsory Acquisition of such Ship; or
(c) the hijacking, theft, condemnation, capture, seizure, arrest,
detention or confiscation of such Ship (other than where the same
amounts to the Compulsory Acquisition of such Ship) by any
Government Entity, or by persons acting or purporting to act on
behalf of any Government Entity, unless such Ship be released and
restored to the Borrower from such hijacking theft condemnation
capture seizure arrest detention or confiscation within 45 days
after the occurrence thereof;
"Trust Deed" means the trust deed in the agreed form executed or to be
executed by the Security Trustee; and
"Underwriter" means Danmarks Skibskreditfond of Sankt ▇▇▇▇ Plads 1-3,
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇, ▇▇▇▇▇▇▇ and includes its successors in
title and assigns.
1.3 Headings
Clause headings and the table of contents are inserted for convenience
of reference only and shall be ignored in the interpretation of this
Agreement.
1.4 Construction of certain terms
In this Agreement, unless the context otherwise requires:
1.4.1 references to clauses and schedules are to be construed as references to
clauses of, and schedules to, this Agreement and references to this
Agreement include its schedules;
1.4.2 references to (or to any specified provision of) this Agreement or any
other document shall be Construed as references to this Agreement, that
provision or that document as in force for the time being and as amended
in accordance with terms thereof, or, as the case may be, with the
agreement of the relevant parties;
1.4.3 references to a "regulation" include ny present or future regulation,
rule, directive, requirement, request or guideline (whether or not
having the force of law) of any agency,
9
authority, central bank or government department or any self-regulatory
or other national or supra-national authority;
1.4.4 words importing the plural shall include the singular and vice versa;
1.4.5 references to a time of day are to London time;
1.4.6 references to a person shall be construed as references to an
individual, firm, company, corporation, unincorporated body of persons
or any Government Entity;
1.4.7 references to a "guarantee" include references to an indemnity or other
assurance against financial loss including, without limitation, an
obligation to purchase assets or services as a consequence of a default
by any other person to pay any Indebtedness and "guaranteed" shall be
construed accordingly; and
1.4.8 references to any enactment shall be deemed to include references to
such enactment as reenacted,amended or extended.
1.5 Agreed forms
In this Agreement any document expressed to be in the agreed form means
a document in a form agreed by (and for the purposes of identification
signed by or on behalf of) the Borrower the Agent the Security Trustee
and the Lenders or in the case of a document a draft of which is not in
existence at the date of this Agreement in the form to be agreed between
the Agent and the Borrower or alternatively in any case in the form as
executed by or on behalf of the relevant Security Party and the Security
Trustee.
2 The Commitment and the Loan
2.1 Agreement to lend
The Lenders relying upon each of the representations and warranties in
clause 7 agree to lend to the Borrower or pay to the Builder by way of
loan to the Borrower upon and subject to the terms of this Agreement the
principal sum of $100,000,000 by way of the Advances. The obligation of
each Lender under this Agreement shall be to contribute that portion of
the Loan which its Commitment bears to the total of the Commitments of
all of the Lenders.
2.2 Obligations several
The obligations of each Lender under this Agreement are several; the
failure of any Lender to perform such obligations shall not relieve any
other Lender, the Agent, the Security Trustee or the Borrower of any of
their respective obligations or liabilities under this Agreement nor
shall the Agent or the Security Trustee be responsible for the
obligations of any Lender (except for its own obligations, if any, as a
Lender) nor shall any Lender be responsible for the obligations of any
other Lender under this Agreement.
2.3 Interests several
Notwithstanding any other term of this Agreement the interests of the
Agent, the Security Trustee and the Lenders are several and the amount
due to the Agent, the Security Trustee (each for its own account) and to
each Lender is a separate and independent debt. The Agent, the Security
Trustee and each Lender shall have the right to protect and enforce
their respective rights arising out of this Agreement and it shall not
be necessary for the Agent, the Security Trustee or any Lender (as the
case may be) to be joined as an additional party in any proceedings for
this purpose.
2.4 Drawdown
Subject to the terms and conditions of this Agreement, each Advance
shall be made to the Borrower following receipt by the Agent from the
Borrower of a Drawdown Notice not later than
10
10 a m. on the third Banking Day before the proposed Drawdown Date which
shall be a Banking Day falling within the Drawdown Period. A Drawdown
Notice shall be effective on actual receipt by the Agent and, once
given, shall, subject as provided in clause 3.6.1, be irrevocable.
2.5 Advances
2.5.1 Advances may only be made on Banking Days falling within the Drawdown
Period.
2.5.2 Each Advance shall be made solely for the purpose of paying part of the
final instalment of the Contract Price due under the Contract for the
relevant Ship or to reimburse the Borrower for predelivery instalments
paid by the Borrower under the Contract for the relevant Ship in
accordance with the terms of this Agreement and shall only be made
available on the Delivery Date for such Ship.
2.5.3 Each Advance shall be made in accordance with clause 6.2 and the amount
of each Advance shall be as follows:
(a) the Eagle One Advance shall be $50,000,000; and the Eagle Two
Advance shall be $50,000,000.
(b) the Eagle Two Advance shall be $50,000,000.
2.6 Availability
Upon receipt of a Drawdown Notice complying with the terms of (and
substantially in the form of) schedule 2 or in such other form
acceptable to the Lenders, the Lenders shall, subject to the provisions
of clause 9, on the Drawdown Date for the relevant Advance make such
Advance available to the Borrower in accordance with clause 6.2. The
Borrower acknowledges that payment of each Advance to the Builder or as
directed in the Drawdown Notice shall satisfy the obligation of the
Lenders to lend the corresponding portion of the Commitment to the
Borrower under this Agreement provided always that if payment of the
relevant Advance is to be made other than to the Builder, the Lenders
shall be satisfied that all sums due to the Builder have been or will be
paid to the Builder on the relevant Delivery Date and that such Advance
is to be applied in accordance with the terms of this Agreement.
2.7 Termination of Commitment
If any Advance or the Loan is not drawn down in full by the end of the
Drawdown Period, the undrawn Commitment shall thereupon be automatically
cancelled.
2.8 Application of proceeds
Without prejudice to the Borrower's obligations under clause 8.1.3, the
Lenders shall have no responsibility for the application of proceeds of
the Loan by the Borrower.
3 Interest and Interest Periods
3.1 Normal interest rate
The Borrower shall pay interest on each Advance in respect of each
Interest Period relating thereto on each Interest Payment Date (or, in
the case of Interest Periods of more than 6 months by instalments, the
first 6 months from the commencement of the Interest Period and the
subsequent instalments at intervals of 6 months or, if shorter, the
period from the date of the preceding instalment until the Interest
Payment Date relative to such Interest Period) at the rate per annum
determined by the Agent to be the aggregate of (a) the Margin and (b)
LIBOR for such Interest Period.
3.2 Selection of Interest Periods
The Borrower may by notice received by the Lenders not later than 10
a.m. on the third Banking Day before the beginning of each Interest
Period for each Advance specify whether such
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Interest Period shall have a duration of 3 or 6 months or such other
period as the Borrower may select and the Lenders may reasonably agree
in respect of such other period.
3.3 Determination of Interest Periods
Every Interest Period shall be of the duration specified by the Borrower
pursuant to clause 3.2 but so that:
3.3.1 the initial Interest Period in respect of each Advance shall commence on
the date such Advance is made and each subsequent Interest Period for
each Advance shall commence on the last day of the previous Interest
Period for that Advance;
3.3:2 if any Interest Period for either Advance would otherwise overrun a
Repayment Date for the relevant Advance, then, in the case of the last
Repayment Date for either Advance, such Interest Period shall end on
such Repayment Date, and in the case of any other Repayment Date or
Repayment Dates the relevant Advance shall be divided into parts so that
there is one part in the amount of the repayment instalment due on each
Repayment Date falling during that Interest Period for the relevant
Advance and having an Interest Period ending on the relevant Repayment
Date for the relevant Advance and another part in the amount of the
balance of the Advance having an Interest Period ascertained in
accordance with clause 3.2 and the other provisions of this clause 3.3;
and
3.3.3 if the Borrower fails to specify the duration of an Interest Period in
accordance with the provisions of clause 3.2 and this clause 3.3 such
Interest Period shall have a duration of months or such other period as
shall comply with this clause 3.3.
3.4 Default interest
if the Borrower fails to pay any sum (including without limitation any
sum payable pursuant to 4 this clause 3 4) on its due date for payment
under any of the Security Documents the Borrower shall pay interest on
such sum on demand from the due date up to the date of actual payment
(as well after as before judgment) at a rate determined by the Agent
pursuant to this clause 3.4 The period beginning on such due date and
ending on such date of payment shall be divided into successive periods
of not more than 3 months as selected by the Agent each of which (other
than the first, which shall commence on such due date) shall commence on
the last day of the preceding such period The rate of interest
applicable to each such period shall be the aggregate (as determined by
the Agent) of (a) 2 per cent per annum, (b) the Margin and (c) LIBOR for
such period Such interest shall be due and payable on the last day of
each such period as determined by the Agent and each such day shall for
the purposes of this Agreement be treated as an Interest Payment Date,
by reason of a declaration by the Agent under clause 10.2.2 or a
prepayment pursuant to clauses 4.2 4.3, 8.3 or 12.1 provided that if
such unpaid sum is an amount of principal which became due and payable
on a date other than an Interest Payment Date relating thereto, the
first such period selected by the Agent shall be of a duration equal to
the period between the due date of such principal sum and such Interest
Payment Date and interest shall be payable on such principal sum during
such period at a rate 2 per cent above the rate applicable thereto
immediately before it shall have become so due and payable. If, for the
reasons specified in clause 3.6.1, the Agent is unable to determine a
rate in accordance with the foregoing provisions of this clause 3.4,
interest on any sum not paid on its due date for payment shall be
calculated at a rate determined by the Agent to be 2 per cent per annum
above the aggregate of the Margin and the cost of funds to the Lenders.
3.5 Notification of Interest Periods and interest rate
The Agent shall notify the Borrower promptly of the duration of each
Interest Period and of each rate of interest determined by it under this
clause 3.
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3.6 Market disruption; non-availability
3.6.1 If and whenever, at any time prior to the commencement of any Interest
Period, the Agent shall have determined (which determination shall, in
the absence of manifest error, be conclusive):
(a) that adequate and fair means do not exist for ascertaining LIBOR
during such Interest Period; or
(b) that deposits in Dollars are not available to the Agent in the
London Interbank Market in the ordinary course of business in
sufficient amounts to fund the relevant Advance or the Loan for
such Interest Period;
the Agent shall forthwith give notice (a "Determination Notice") thereof
to the Borrower. A Determination Notice shall contain particulars of the
relevant circumstances giving rise to its issue. After the giving of any
Determination Notice the undrawn amount of the Commitment shall not be
borrowed until notice to the contrary is given to the Borrower by the
Agent.
3.6.2 During the period of 10 days after any Determination Notice has been
given by the Agent under clause 3.6.1, each Lender shall after
consultation and good faith negotiations with the Borrower certify an
alternative basis (the "Substitute Basis") for maintaining its
Contribution. The Substitute Basis may (without limitation) include
alternative interest periods, alternative currencies or alternative
rates of interest but shall include a margin above the cost of funds to
such Lender equivalent to the Margin. Each Substitute Basis so certified
shall be binding upon the Borrower and shall take effect in accordance
with its terms from the date specified in the Determination Notice until
such time as the Agent notifies the Borrower that none of the
circumstances specified in clause 3.6.1 continues to exist whereupon the
normal interest rate fixing provisions of this Agreement shall apply.
4 Repayment and prepayment
4.1 Repayment
The Borrower shall repay each Advance by 24 instalments one such
instalment to be repaid on each of the Repayment Dates relative to such
Advance Subject to the provisions of this Agreement, the first 23 such
instalments in respect of each Advance shall each be in the sum of
$1,666,667 and the final such instalment in respect of each Advance
shall be in the sum of $11,666,659 (comprising in respect to each
Advance a final repayment instalment of $1,666,659 and a balloon payment
of $10,000,000). If an Advance is not drawn in full, the amount of each
repayment instalment shall be reduced proportionately.
4.2 Voluntary prepayment
The Borrower may subject always to the provisions of clause 4.4 prepay
each Advance in whole or part (being not less than a sum equal to 20% of
that Advance) at any time relating to the part of the relevant Advance
to be repaid without prepayment fee or premium or penalty.
4.3 Prepayment on Total Loss and sale
On a Ship becoming a Total Loss before the Advance for such Ship is
drawn down, the obligation of the Lenders to advance the Advance for
such Ship shall immediately cease and the Commitment shall be reduced by
the amount of such Advance. On the date 140 days after that on which a
Mortgaged Ship became a Total Loss or immediately prior to the
completion of the sale of a Mortgaged Ship or, if earlier, on the date
upon which the insurance proceeds in respect of such Total Loss are or
Requisition Compensation (as defined in the relevant Deed of Covenant)
is received by the Borrower (or the Security Trustee pursuant to the
Security Documents), the Borrower shall prepay the relevant Advance
applied against that Ship and all other sums payable by the Borrower to
the Lenders pursuant to the Security Documents Provided however that on
a Ship becoming a Total Loss or being sold the Borrower may, with the
prior written consent of the Agent (such consent not to be unreasonably
withheld or delayed
13
but the terms of which consent if granted shall be determined by the
Agent and include, without limitation, payment by the Borrower to the
Agent of a reasonable restructuring fee of such amount as may be
notified by the Agent to the Borrower), maintain the Loan without
prepayment being required by providing additional security in a form and
substance acceptable to the Agent in its absolute discretion which
additional security shall, as a minimum, result in the Security Value
(following the provision of such additional security) being not less
than the Security Requirement.
For the purpose of this Agreement, a Total Loss shall be deemed to have
occurred:
4.3.1 in the case of an actual total loss of a Ship on the actual date and at
the time such Ship was lost or, if such date is not known, on the date
on which such Ship was last reported;
4.3.2 in the case of a constructive total loss of the Ship, upon the date and
at the time notice of abandonment of the Ship is given to the insurers
of the Ship for the time being (provided a claim for total loss is
admitted by such insurers) or, if such insurers do not forthwith admit
such a claim, at the date and at the time at which either a total loss
is subsequently admitted by the insurers or a total loss is subsequently
adjudged by a competent court of law or arbitration tribunal to have
occurred;
4.3.3 in the case of a compromised or arranged total loss, on the date upon
which a binding agreement as to such compromised or arranged total loss
has been entered into by the insurers of such Ship;
4.3.4 in the case of Compulsory Acquisition, on the date upon which the
relevant requisition of title or other compulsory acquisition occurs;
and
4.3.5 in the case of hijacking, theft, condemnation, capture, seizure, arrest,
detention or confiscation of such Ship (other than where the same
amounts to Compulsory Acquisition of such Ship) by any Government
Entity, or by persons purporting to act on behalf of any Government
Entity, which deprives the Borrower of the use of such Ship for more
than 45 days, upon the expiry of the period of 45 days after the date
upon which the relevant hijacking, theft, condemnation, capture,
seizure, arrest, detention or confiscation occurred.
4.4 Amounts payable on prepayment
Any prepayment of all or part of any Advance or the Loan under this
Agreement shall be made without prepayment fee, premium or penalty
together with (a) accrued interest on the amount to be prepaid to the
date of such prepayment, (b) any additional amount payable under clause
6.7 or 12.2 and (C) all other sums payable by the Borrower to the
Lenders under this Agreement Or any of the other Security Documents
including, without limitation, any accrued commitment commission payable
under clause 5.1.2 and any amounts payable under clause 11.
4.5 Notice of prepayment; reduction of repayment Instalments
No prepayment may be effected under clause 4.2 unless the Borrower shall
have given the Agent at least 14 days' notice of its intention to make
such prepayment. Every notice of prepayment shall be effective only on
actual receipt by the Agent, shall be irrevocable, shall specify the
amount to be prepaid and shall oblige the Borrower to make such
prepayment on the date specified. No amount prepaid may be reborrowed.
Any amount prepaid pursuant to clauses 4.2 or 4.3 or 8.3.1(a) shall be
applied in reducing the repayment instalments (including the balloon
repayments) under clause 4.1 on a pro rata basis. The Borrower may not
prepay the Loan or any part thereof save as expressly provided in this
Agreement.
4.6 Mandatory prepayment
4.6.1 Upon the occurrence of a Prepayment Event, the Borrower shall:
(a) no later than 30 days after a Prepayment Event prepay the Loan and
all other moneys owing under the Security Documents; or
14
(b) procure that NOL provides a guarantee of all of the obligations of
the Borrower under this Agreement and each of the Security
Documents to which it is a party in form and substance acceptable
to the Agent.
The option contained in clause 4.6.1(b) shall only be available to the
Borrower if in the sole absolute discretion of the Agent, NOL is in
such a financial condition as will enable it to meet its obligations
under such guarantee.
5 Commitment commission, fees and expenses
5.1 Fees
The Borrower shall pay to the Agent:
5.1.1 no later than 7 days after the signing of this Agreement, an
arrangement fee of 0.25% of the Commitment; and
5.1.2 quarterly in arrears and at the end of the Drawdown Period or if
earlier on the Drawdown Date for the final Advance, commitment
commission computed from the date of this Agreement at a rate of 0.30%
per annum on the daily undrawn amount of the Commitment calculated on
a 360 day basis; and
5.1.3 on the date of this Agreement and on each of the dates falling at
yearly intervals thereafter so long as any moneys are owing under the
Security Documents, an agency fee of $5,000.
The arrangement fee referred to in clause 5.1.1, the commitment
commission referred to in clause 51.2 and the agency fee in clause 5.1.3
shall be payable by the Borrower to the Agent or not any part of the
Commitment is ever advanced.
5.2 Expenses
The Borrower shall pay to the Agent on demand (a) in the case of clause
5.2.1 all reasonable expenses and (b) in the case of clause 5.2.2 on a
full indemnity basis (including, in each case, all legal, printing and
out-of-pocket expenses) properly incurred by the Arranger, the
Underwriter, the Agent any of the Lenders and the Security Trustee.
5.2.1 in connection with the negotiation, preparation, execution and, where
relevant, registration of the Security Documents and of any amendment
or extension of or the granting of any waiver or consent under, any of
the Security Documents; and
5.2.2 in contemplation of, or otherwise in connection with, the enforcement
of, or preservation of any rights under, any of the Security
Documents, or otherwise in respect of the moneys owing under any of
the Security Documents
together with interest (in the case of clause 5.2.2) at the rate
referred to in clause 3.4 and (in the case of clause 5.2.1) at the rate
referred to in clause 3.1 from the date on which such expenses were
incurred to the date of payment (as well after as before judgment).
5.3 Value added tax
All fees and expenses payable pursuant to this clause 5 shall be paid
together with value added tax or any similar tax (if any) properly
chargeable thereon. Any value added tax chargeable in respect of any
services supplied by the Arranger and/or the Underwriter and/or the
Agent and/or the Lenders and/or the Security Trustee under this
Agreement shall, on delivery of the value added tax invoice, be paid in
addition to any sum agreed to be paid hereunder.
5.4 Stamp and other duties
The Borrower shall pay all stamp, documentary, registration or other
like duties or taxes (including any duties or taxes payable by the
Arranger and/or the Agent and/or the Lenders
15
and/or the Security Trustee) imposed on or in connection with any of the
Contracts, the Security Documents or the Loan and shall indemnify the
Agent and/or the Lenders and/or the Security Trustee against any
liability arising by reason of any delay or omission by the Borrower to
pay such duties or taxes.
6 Payments and taxes; accounts and calculations
6.1 No set-off or counterclaim
The Borrower acknowledges that in performing its obligations under this
Agreement, the Lenders will be incurring liabilities to third parties in
relation to the funding of amounts to the Borrower, such liabilities
matching the liabilities of the Borrower to the Lenders and that it is
reasonable for the Lenders to be entitled to receive payments from the
Borrower gross on the due date in order that the Lenders is put in a
position to perform its matching obligations to the relevant third
parties. Accordingly all payments to be made by the Borrower under any
of the Security Documents shall be made in full, without any set-off or
counterclaim whatsoever and, subject as provided in clause 6.7, free and
clear of any deductions or withholdings, in Dollars on the due date to
the account of the Agent No. ▇▇▇▇▇▇▇▇▇▇ at Danske Bank, Cayman Islands
Branch, do Danske Bank, New York Branch or to such other account at such
other bank in such place as the Agent may from time to time specify for
this purpose.
6.2 Payment by the Lenders
All sums to be advanced by the Lenders to the Borrower under this
Agreement in respect of each Advance or the Loan shall be remitted in
Dollars on the relevant Drawdown Date to the account of the Agent at
such bank as the Agent may have notified to the Lenders and shall be
paid by the Agent on such date in like funds as are received by the
Agent to the account of the Borrower and/or the Builder as specified in
the relevant Drawdown Notice.
6.3 Agent may assume receipt
Where any sum is to be paid under any of the Security Documents to the
Agent for the account of another person, the Agent may assume that the
payment will be made when due and the Agent may (but shall not be
obliged to) make such sum available to the person so entitled. If it
proves to be the case that such payment was not made to the Agent, then
the person to whom such sum was so made available shall on request
refund such sum to the Agent together with interest thereon sufficient
to compensate the Agent for the cost of making available such sum up to
the date of such repayment and the person by whom such sum was payable
shall indemnify the Agent for any and all loss or expense which the
Agent may sustain or incur as a consequence of such sum not having been
paid on its due date. If such a sum is so paid to the Agent by the
Borrower, the Borrower may assume that the Agent has paid such sum to
the other person for whose account it was paid to the Agent.
6.4 Non-Banking Days
When any payment under any of the Security Documents would otherwise be
due on a day which is not a Banking Day, the due date for payment shall
be extended to the next following Banking Day unless such Banking Day
falls in the next calendar month in which case payment shall be made on
the immediately preceding Banking Day.
6.5 Calculations
All interest and other payments of an annual nature under any of the
Security Documents shall accrue from day to day and be calculated on the
basis of actual days elapsed and a 360 day year.
6.6 Certificates conclusive
Any certificate or determination of the Agent or any of the Lenders as
to any rate of interest or any other amount pursuant to and for the
purposes of any of the Security Documents shall, in
16
the absence of manifest error, be conclusive and binding on the Borrower
and (in the case of a certificate or determination by the Agent) on the
Lenders.
6.7 Grossing-UP for Taxes
If at any time the Borrower is required to make any deduction or
withholding in respect of Taxes from any payment due under any of the
Security Documents for the account of any Lender, the Agent or the
Security Trustee (or if the Agent is required to make any deduction or
withholding from a payment to any Lender or the Security Trustee) the
sum due from the Borrower in respect of such payment shall be increased
to the extent necessary to ensure that, after the making of such
deduction or withholding, each Lender, the Agent and the Security
Trustee receives on the due date for such payment (and retains, free
from any liability in respect of such deduction or withholding), a net
sum equal to the sum which it would have received had no such deduction
or withholding been required to be made and the Borrower shall indemnify
each Lender, the Agent and the Security Trustee against any losses or
costs incurred by it by reason of any failure of the Borrower to make
any such deduction or withholding or by reason of any increased payment
not being made on the due date for such payment. The Borrower shall upon
the Agent's reasonable demand promptly deliver to the Agent any
receipts, certificates or other proof evidencing the amounts (if any)
paid or payable in respect of any deduction or withholding as aforesaid.
6.8 Claw-back of the Tax benefit
If following any such deduction or withholding as is referred to in
clause 6.7 from any payment by the Borrower, the Agent, a Lender or the
Security Trustee shall receive or be granted a credit against or
remission for any Taxes payable by it the Agent such Lender or the
Security Trustee (as the case may be) shall subject to the Borrower
having made any increased payment in accordance with clause 6.7 and to
the extent that the Agent, such Lender or the Security Trustee can do so
without prejudicing the retention of the amount of such credit or
remission and without prejudice to the right of the Agent, such Lender
or the Security Trustee to obtain any other relief or allowance which
may be available to it, reimburse the Borrower with such amount as the
Agent, such Lender or the Security Trustee shall in its absolute
discretion certify to be the proportion of such credit or remission as
will leave the Agent, such Lender or the Security Trustee (after such
reimbursement) in no worse position than it would have been in had there
been no such deduction or withholding from the payment by the Borrower
as aforesaid. Such reimbursement shall be made forthwith upon the Agent,
such Lender or the Security Trustee certifying that the amount of such
credit or remission has been received by it. Nothing contained in this
Agreement shall oblige the Agent, such Lender or the Security Trustee to
rearrange its tax affairs or to disclose any information regarding its
tax affairs and computations. Without prejudice to the generality of the
foregoing, the Borrower shall not, by virtue of this clause 6.8, be
entitled to enquire about the Agent's tax affairs.
6.9 Loan account
The Lenders shall maintain, in accordance with its usual practice, an
account (which shall be the account current" referred to in the
Mortgages) evidencing the amounts from time to time lent by, owing to
and paid to it under the Security Documents. The Agent shall maintain a
control account showing the Loan and other sums owing to the Agent, the
Security Trustee and the Lenders under the Security Documents and all
payments in respect thereof made from time to time. The control account
shall, in the absence of manifest error, be conclusive as to the amount
from time to time owing to the Agent, the Security Trustee and the
Lenders under the Security Documents.
7 Representations and warranties
7.1 Continuing representations and warranties
The Borrower represents and warrants to the Lenders, the Agent and the
Security Trustee that:
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7.1.1 Due incorporation
the Borrower is duly incorporated and validly existing in good standing
under the laws of Bermuda as a limited liability company and has power
to carry on its businesses as they are now being conducted and to own
its property and other assets;
7.1.2 Corporate power
the Borrower has power to execute, deliver and perform its obligations
under the relevant Contracts and the Borrower's Security Documents and
to borrow the Commitment; all necessary corporate, shareholder and other
action has been taken to authorise the execution, delivery and
performance of the same and no limitation on the powers of the Borrower
to borrow will be exceeded as a result of borrowing the Loan;
7.1.3 Binding obligations
the Borrower's Security Documents constitute or will, when executed,
constitute valid and legally binding obligations of the Borrower
enforceable in accordance with their respective terms;
7.1.4 No conflict with other obligations
the execution and delivery of, the performance of its obligations under,
and compliance with the provisions of, the relevant Contract and the
Security Documents by the Borrower will not (a) contravene any existing
applicable law, statute, rule or regulation or any judgment, decree or
permit to which the Borrower is subject, (b) conflict with, or result in
any breach of any of the terms of, or constitute a default under, any
agreement or other instrument to which the Borrower is a party or is
subject or by which it or any of its property is bound, (c) contravene
or conflict with any provision of the memorandum and articles of
association or other constitutional documents of the Borrower or (d)
result in the creation or imposition of or oblige the Borrower to create
any Encumbrance (other than a Permitted Encumbrance) on any of the
undertakings, assets, rights or revenues of the Borrower;
7.1.5 No litigation
no litigation, arbitration or administrative proceeding is taking place,
pending or, to the knowledge of the officers of the Borrower, threatened
against the Borrower which could have a material adverse effect on the
financial condition of the Borrower,
7.1.6 No filings required
save for the registration of the Mortgages or registration of the
Security Documents in Bermuda in the relevant register and under the
laws of the relevant Flag State through the relevant Registry it is not
necessary to ensure the legality, validity, enforceability or
admissibility in evidence of either Contract or any of the Security
Documents that they or any other instrument be notarised, filed,
recorded, registered or enrolled in any court, public office or
elsewhere in any Relevant Jurisdiction or that any stamp, registration
or similar tax or charge be paid in any Relevant Jurisdiction on or in
relation to either Contract or the Security Documents and each of the
Contracts and Security Documents is in proper form for its enforcement
in the courts of each Relevant Jurisdiction;
7.1.7 Choice of law
the choice of English law to govern the Contracts and the Security
Documents (other than the Mortgages) and the choice of the law of the
Flag State to govern the Mortgages and the submission by the Borrower to
the non-exclusive jurisdiction of the English courts are valid and
binding;
18
7.1.8 No immunity
neither the Borrower nor any of its assets is entitled to immunity on
the grounds of sovereignty or otherwise from any legal action or
proceeding (which shall include, without limitation, suit, attachment
prior to judgement, execution or other enforcement);
7.1.9 Financial statements correct and complete
the audited financial statements of the Borrower in respect of the
financial year ended on 29 December 2000 as delivered to the Agent have
been prepared in accordance with generally accepted accounting
principles and practices in the United States of America or
internationally which have been consistently applied and present fairly
and accurately the financial position of the Borrower as at such date
and the results of the operations of the Borrower for the financial year
ended on such date and, as at such date, the Borrower did not have any
significant liabilities (contingent or otherwise) or any unrealised or
anticipated losses which are not disclosed by, or reserved against or
provided for in, such financial statements; and
7.1.10 Consents obtained
every consent, authorisation, licence or approval of, or registration
with or declaration to, governmental or public bodies or authorities or
courts required by the Borrower to authorise, or required by the
Borrower in connection with, the execution, delivery, validity,
enforceability or admissibility in evidence of the Contracts and each of
the Security Documents or the performance by the Borrower of its
obligations under the Security Documents has been obtained or will be
obtained and is or will be in full force and effect and there has been
no default in the observance of any of the conditions or restrictions
(if any) imposed in, or in connection with, any of the same.
7.2 Initial representations and warranties
The Borrower further represents and warrants to the Lenders, the Agent
and the Security Trustee that:
7.2.1 Pari passu
save as provided by any applicable laws of bankruptcy, insolvency,
liquidation or similar laws of general application, the obligations of
the Borrower under this Agreement are direct, general and unconditional
obligations of the Borrower and rank at least pan passu with all other
present and future unsecured and unsubordinated Indebtedness of the
Borrower;
7.2.2 the Borrower is not (nor would with the giving of notice or lapse of
time or the satisfaction of any other condition or combination thereof
be) in breach of or in default under any agreement relating to
Indebtedness to which it is a party or by which it may be bound being,
in any such case, an amount, or aggregate amount, at any one time of not
less than $10,000,000;
7.2.3 Information
the information, exhibits and reports furnished by the Borrower and NOL
to the Agent and/or the Lenders in connection with the negotiation and
preparation of the Security Documents are true and accurate in all
material respects and not misleading, do not omit material facts and all
reasonable enquiries have been made to verify the facts and statements
contained therein; there are no other facts the omission of which would
make any fact or statement therein misleading;
7.2.4 No Default
no Default has occurred and is continuing;
19
7.2.5 the Ships
each Ship will on the Drawdown Date of the Advance for such Ship be:
(a) in the absolute ownership of the Borrower who will on and after
such Drawdown Date be the sole, legal and beneficial owner of such
Ship;
(b) registered or, if applicable, provisionally registered, through the
offices of the relevant Registry under the laws and flag of the
relevant Flag State;
(c) operationally seaworthy and in every way fit for service; and
(d) classed with the relevant Classification free of all requirements
and recommendations (which if not rectified in the time specified
by the Classification Society would result in a condition of class)
of the relevant Classification Society;
7.2.6 Ships' employment
neither Ship is nor will on or before the Drawdown Date of the relevant
Advance for such Ship be subject to any Bareboat Charter and on or
before the Drawdown Date for the Advance for such Ship, there will not
be any agreement or arrangement whereby the Earnings (as defined in the
relevant Ship's Security Documents) may be shared with any other person;
7.2.7 Freedom from Encumbrances
neither of the Ships, nor their Earnings, Insurances or Requisition
Compensation (each as defined in the relevant Ship's Security
I5iocuments) nor any other properties or rights which are, or are to be,
the subject of any of the Security Documents nor any part thereof will
be, on the Drawdown Date for the relevant Advance for such Ship, subject
to any Encumbrance;
7.2.8 Compliance with Environmental Laws and Approvals
except as may already have been disclosed by the Borrower in writing to,
and acknowledged in writing by, the Agent:
(a) the Borrower and the other Relevant Parties and to the best of the
Borrower's knowledge and belief (having made due enquiry) its
Environmental Affiliates have complied with the provisions of all
Environmental Laws;
(b) the Borrower and the other Relevant Parties and to the best of the
Borrower's knowledge and belief (having made due enquiry) its
Environmental Affiliates have obtained all Environmental Approvals
and are in compliance with all such Environmental Approvals; and
(c) neither the Borrower nor any other Relevant Party nor to the best
of the Borrower's knowledge and belief (having made due enquiry)
any of its Environmental Affiliates has received notice of any
Environmental Claim that the Borrower or any other Relevant Party
or any such Environmental Affiliate is not in compliance with any
Environmental Law or any Environmental Approval;
7.2.9 No Environmental Claims
except as may already have been disclosed by the Borrower in writing to,
and acknowledged in writing by, the Agent, there is no Environmental
Claim pending or, to the best of the Borrower's knowledge and belief,
threatened against the Borrower or either of the Ships or any other
Relevant Party or any other Relevant Ship or to the best of the
Borrower's knowledge and belief (having made due enquiry) any of its
Environmental Affiliates;
20
7.2.10 No potential Environmental Claims
except as may already have been disclosed by the Borrower in writing to,
and acknowledged in writing by, the Agent, there has been no emission,
spill, release or discharge of a Pollutant from the Ship or any other
Relevant Ship owned by, managed by or chartered to the Borrower nor
(having made due enquiry) to the best of the Borrower's knowledge and
belief from any Relevant Ship owned by, managed or crewed by or
chartered to any other Relevant Party which could give rise to an
Environmental Claim;
7.2.11 No material adverse change
there has been no material adverse change in the consolidated financial
position of the Borrower from that set forth in the financial statements
referred to in clause 7. 1 .9 and/or as described by the Borrower to the
Agent and/or the Lenders in the negotiation of this Agreement;
7.2.12 Parent company
the Borrower is a Subsidiary of NOL; and
7.2.13 Copies true and complete
the copies of the Contracts delivered to the Agent pursuant to clause
9.1 are a true and complete copies of such documents; such documents
will when delivered constitute valid and binding obligations of the
parties thereto enforceable in accordance with their terms and there
have been no material amendments or variations thereof or defaults
thereunder.
7.3 Repetition of representations and warranties
7.3.1 On and as of each Drawdown Date and (except in relation to the
representations and warranties in clause 7.2) on each Interest Payment
Date the Borrower shall be deemed to repeat the representations and
warranties in clauses 7.1 (and so that the representation and warranty
in clause 7.1.9 shall for this purpose refer to the then latest audited
financial statements delivered to the Agent under clause 8.1) and 7.2 as
if made with reference to the facts and circumstances existing on such
day.
8 Undertakings
8.1 General
The Borrower undertakes with the Lenders, the Agent and the Security
Trustee that, from the date of this Agreement and so long as any moneys
are owing under any of the Security Documents and while all or any part
of the Commitment remains outstanding, it will:
8.1.1 Notice of Default
promptly inform the Agent of any occurrence of which it becomes aware
which might adversely affect the ability of any Security Party to
perform its obligations under any of the Security Documents and, without
limiting the generality of the foregoing, will inform the Agent of any
Default which has occurred and is continuing forthwith upon becoming
aware thereof and will from time to time, if so requested by the Agent,
confirm to the Agent in writing that, save as otherwise stated in such
confirmation, no Default has occurred and is continuing;
8.1.2 Consents and licences
without prejudice to clauses 7.1 and 9, obtain or cause to be obtained,
maintain in full force and effect and comply in all material respects
with the conditions and restrictions (if any) imposed in, or in
connection with, every consent, authorisation, licence or approval of
governmental or public bodies or authorities or courts and do, or cause
to be done, all other acts and things which may from time to time be
necessary or desirable under applicable law
21
for the continued due performance of all the obligations of the Security
Parties under each of the Security Documents;
8.1.3 Use of proceeds
use the Loan exclusively for the purpose specified in clause 1.1;
8.1.4 ensure that its obligations under this Agreement shall, at all times
rank at least pan passu with all its other present and future unsecured
and unsubordinated Indebtedness with the exception of any obligations
ations which are mandatorily preferred by law and not by contract;
8.1.5 Financial statements
prepare financial statements of the Borrower in accordance with
generally accepted accounting principles and practices in the United
States of America or internationally consistently applied in respect of
each financial year and cause the same to be reported on by its auditors
and prepare unaudited profit and loss statements of the Borrower in
respect of the first half-year of each financial year on the same basis
as the annual statements and deliver as many copies of the same as the
Agent may reasonably require as soon as practicable but not later than
180 days (in the case of audited financial statements) or 120 days (in
the case of unaudited profit and loss statements) after the end of the
financial period to which they relate;
8.1.6 Delivery of reports
deliver to the Agent as many copies as the Agent may reasonably require
at the time of issue thereof every report, circular, notice or like
document issued by the Borrower to its shareholders or creditors
generally;
8.1.7 Provision of further information
provide the Agent with such financial information concerning the
Borrower and its affairs as the Agent may from time to time reasonably
require, having regard to the Borrower's confidentiality obligations,
market sensitive information and the laws of any stock exchange;
8.1.8 Obligations under Security Documents
duly and punctually perform each of the obligations expressed to be
assumed by it under the Security Documents;
8.1.9 Compliance with Code
procure that any Operator will comply with and ensure that each Ship and
any Operator comply with the requirements of the Code, including (but
not limited to) the maintenance and renewal of valid certificates
pursuant thereto throughout the Security Period;
8.1.10 Withdrawal of DOC and SMC
procure that any Operator will immediately inform the Agent if there is
any threatened or actual withdrawal of the Borrower's or an Operator's
DOC or the SMC in respect of the Ships, or any of them;
8.1.11 Issuance of DOC and SMC
procure that any Operator will promptly inform the Agent upon the issue
to the Borrower or any Operator of a DOC and the issue to the Ships, or
either of them, of an SMC or the receipt by the Borrower or any Operator
of notification that its application for the same has been refused; and
22
8.1.12 Ship's registration
procure the registration of each Ship under the laws and flag of the
Flag State in the name of the Borrower immediately upon Delivery and
ensure that such Ship is kept registered at all times during the
Security Period from the Delivery Date under the laws and flag of the
Flag State.
8.2 Negative undertakings
The Borrower undertakes with the Lenders, the Agent and the Security
Trustee that, from the date of this Agreement and so long as any moneys are
owing under the Security Documents, it will not, without the prior written
consent of the Agent:
8.2.1 Negative pledge
permit any Encumbrance (other than a Permitted Encumbrance) to subsist,
arise or be created or extended over all or any part of either Ship or
its Earnings, Insurances and Requisition Compensation to secure or
prefer any present or future Indebtedness or other liability or
obligation of the Borrower or any other person; or
8.2.2 No merger
merge, demerge or consolidate with any other person which would result
in a material adverse change in the financial condition of the Borrower
which shall affect the ability of the Borrower to perform its payment
and other material obligations under this Agreement and the other
Security Documents; or
8.2.3 Disposals
sell, transfer, abandon, lend or otherwise dispose of or cease to
exercise direct control over any part (being either alone or when
aggregated with all other disposals falling to be taken into account
pursuant to this clause 8.2.3 material in the opinion of the Agent in
relation to the undertakings, assets, rights and revenues of the
Borrower) of its present or future undertaking, assets, rights or
revenues (otherwise than by transfers, sales or disposals for full
consideration in the ordinary course of trading) whether by one or a
series of transactions related or not which would result in a material
adverse change in the financial condition of the Borrower which shall
effect the ability of the Borrower to perform its payment and other
material obligations under this Agreement and the other Security
Documents; or
8.2.4 Other business
undertake any business other than the ownership and operation of vessels
(including the Ships) and the chartering of vessels (including the
Ships) to third parties and any related/ancillary business which would
result in a material adverse change in the financial condition of the
Borrower which shall effect the ability of the Borrower to perform its
payment and other material obligations under this Agreement and the
other Security Documents; or
8.2.5 Sale of a Ship
sell, agree to sell, transfer, abandon or otherwise dispose of any
Mortgaged Ship or any share or interest therein; or
8.2.6 Manager and Management Agreement
appoint any manager of the Ships other than an Approved Manager and not
to agree to any variation of any Management Agreement previously
approved by the Agent; or
23
8.2.7 Contracts
agree to any variation of the Contracts or any substantial variation of
the specification of the Ships (and for the purpose of this clause 8.2.7
any extras, additions or alterations which the Borrower may desire to
effect in the building of either Ship shall be deemed to constitute a
substantial variation if the cost thereof (which shall in every case be
agreed in writing between the Borrower and the Builder before the work
is put in hand irrespective of whether the prior consent of the Agent be
required hereunder) or if the aggregate cost or the proposed work
together with any work already ordered will alter the Contract Price of
either Ship by an amount greater than 5% of the Contract Price for such
Ship); or
8.2.8 Bareboat Charter
enter into any Bareboat Charter and, if the Agent shall consent (which
consent shall not be unreasonably withheld or delayed) to the entering
into of a Bareboat Charter, the Borrower shall execute in favour of the
Security Trustee a charter assignment or (together with the Charterer) a
tripartite agreement in form and substance satisfactory to the Agent in
respect of such Bareboat Charter; or
8.2.9 Time Charter
enter into any Time Charter without notifying the Agent and, if
requested by the Agent, providing a copy of such Time Charter (with any
confidential information deleted).
8.3 Security Value Maintenance
8.3.1 Security shortfall
If at any time the Security Value shall be less than the Security
Requirement (except where this occurs solely as a result of either Ship
becoming a Total Loss in which event this clause 8.3.1 shall apply on
the basis that the Security Value shall be determined by reference to
the remaining Ship and the Security Requirement shall be determined as
though the Borrower had made a prepayment in accordance with the
provisions of clause 4.3), the Agent may give notice to the Borrower
requiring that such deficiency be remedied and then the Borrower shall
(unless both Ships have become a Total Loss) either:
(a) prepay within a period of 21 days of the date of receipt by the
Borrower of the Agent's said notice such sum in Dollars as will
result in the Security Requirement after such prepayment (taking
into account any other repayment of the Loan made between the date
of the notice and the date of such prepayment) being equal to the
Security Value; or
(b) within 21 days of the date of receipt by the Borrower of the
Agent's said notice constitute to the satisfaction of the Agent
such further security for the Loan as shall be acceptable to the
Agent having a value for security purposes (as determined by the
Agent in its absolute discretion) at the date upon which such
further security shall be constituted which, when added to the
Security Value, shall not be less than the Security Requirement as
at such date.
Clauses 4.4 and 4.5 shall apply to prepayments under clause 8.3.1(a).
8.3.2 Valuation of Ship
Each Ship shall, for the purposes of this clause 8.3 (but subject to
clause 8.3.4), be valued in Dollars twice in each year by 2 reputable
and independent sale and purchase ship brokers each nominated and
appointed by the Agent in its sole discretion (each such valuation to be
made without, unless required by the Agent, physical inspection, and on
the basis of a sale for prompt delivery for cash at arms length on
normal commercial terms for a sale of a vessel as between a willing
buyer and a willing seller without taking into account the benefit of
any
24
charterparty or other engagement concerning a Ship). The mean of the
valuations shall constitute the value of a Ship for the purposes of this
clause 8.3.
The value of a Ship determined in accordance with the provisions of
clause 8.3.4 shall be binding upon the parties hereto until such time as
any further such valuations shall be obtained.
8.3.3 Information
The Borrower undertakes to the Agent to supply to the Agent and to any
such shipbrokers such information concerning a Ship and its condition as
such shipbrokers may reasonably require for the purpose of making any
such valuation.
8.3.4 Costs
All costs in connection with the Agent obtaining the valuations of a
Ship referred to in clause 8.3.2, shall be borne by the Lenders,
provided always that once a Default has occurred and is continuing the
Ship shall be valued in accordance with clause 8.3.2 as often as the
Agent shall reasonably require and the Borrower shall bear all costs in
connection with the Agent obtaining any subsequent valuation of the
Ships referred to in clause 8.3.2.
8.3.5 Valuation of additional security
For the purpose of this clause 8.3, the market value of any additional
security provided or to be provided to the Agent, the Lenders or the
Security Trustee shall be determined by the Agent acting reasonably.
Where such additional security is (a) an additional Mortgaged Ship the
security value shall be determined by the Agent in accordance with
clause 8.3.2, (b) in the case of cash deposits charged in favour of the
Security Trustee the security value shall be on a dollar for dollar
basis or (c) in the case of a guarantee or other surety the security
value shall be determined by the Agent in its absolute discretion
without any necessity for the Agent assigning any reason thereto. The
Borrower shall bear all costs in connection with the Agent determining
the value of such additional security.
8.3.6 Documents and evidence
In connection with any additional security provided in accordance with
this clause 8.3, the Agent shall be entitled to receive such evidence
and documents of the kind referred to in schedule 3 as may in the
Agent's reasonable opinion be appropriate and such favourable legal
opinions as the Agent shall reasonably require.
9 Conditions
9.1 Documents and evidence
The obligation of each Lender to make available its Commitment shall be
subject to the condition that:
9.1.1 the Agent, or its duly authorised representative, shall have received,
not later than 1 Banking Days before the day on which the Drawdown
Notice for the first Advance is given, the documents and evidence
specified in Part 1 of schedule 3 in form and substance satisfactory to
the Agent;
9.1.2 the Agent, or its duly authorised representative, shall have received,
on or prior to the Drawdown Date for the relevant Advance, the documents
and evidence specified in Part 2 of schedule 3 in relation to the Ship
against which such Advance shall be applied in form and substance
satisfactory to the Agent.
25
9.2 General conditions precedent
The obligation of each Lender to make available its Commitment shall be
subject to the further conditions that, at the time of the giving of the
Drawdown Notice for such Advance, and at the time of the making of such
Advance:
9.2.1 the representations and warranties contained in (a) clauses 7.1 and 7.2
(and so that the representation and warranty in clause 7.1.9 shall for
this purpose refer to the then latest audited financial statements
delivered to the Agent under clause 8.1.5) are true and correct in all
material respects on and as of each such time as if each was made with
respect to the facts and circumstances existing at such time;
9.2.2 no Default shall have occurred and be continuing or would result from
the making of the relevant Advance; and
9.2.3 the making of such Advance is not contrary to any law or legislation
applicable to any of the parties to this Agreement.
9.3 Waiver of conditions precedent
The conditions specified in this clause 9 are inserted solely for the
benefit of the Lenders and may be waived on their behalf in whole or in
part and with or without conditions by the Agent.
9.4 Further conditions precedent
Not later than 5 Banking Days prior to each Drawdown Date, the Agent may
request and the Borrower shall, on or prior to such date, deliver to the
Agent on such reasonable request further favourable certificates and/or
opinions as to any or all of the matters which are the subject of clauses
7, 8, 9 and 10.
10. Events of Default
10.1 Events
There shall be an Event of Default if:
10.1.1 Non-payment: the Borrower fails to pay any sum payable by it under any
of the Security Documents at the time, in the currency and in the manner
stipulated in the Security Documents save that if such non payment is
attributable solely to delay caused by administrative error or oversight
in transmission of funds, no Event of Default shall occur provided that
the Borrower shall make such payment within 3 Banking Days of demand by
the Agent; or
10.1.2 Breach of Insurance and certain other obligations: the Borrower fails to
obtain and/or maintain the Insurances (as defined in, and in accordance
with the requirements of, the Ship Security Documents) for any of the
Mortgaged Ships or if any insurer in respect of such Insurances cancels
the Insurances or disclaims liability by reason, in either case, of mis-
statement in any proposal for the insurances or for any other failure or
default on the part of the Borrower or any other person; or
10.1.3 Breach of other obligations: any Security Party commits any breach of or
omits to observe any of its obligations or undertakings expressed to be
assumed by it under any of the Security Documents (other than those
referred to in clauses 10.1.1 and 10.1.2 above) and, in respect of any
such breach or omission which in the opinion of the Agent is capable of
remedy, such action as the Agent may require shall not have been taken
within 10 days of the Agent notifying the relevant Security Party of
such default and of such required action; or
10.1.4 Misrepresentation: any representation or warranty made or deemed to be
made or repeated by or in respect of any Security Party in or pursuant
to any of the Security Documents or in
26
any notice, certificate or statement referred to in or delivered under
any of the Security Documents is or proves to have been incorrect or
misleading in any material respect; or
10.1.5 Cross-default: any Indebtedness of any Security Party being, in any such
case, an amount, or aggregate amount at any time, of not less than
$10,000,000 is not paid when due or any indebtedness of any Security
Party being, in any such case, an amount, or aggregate amount at any
time, of not less than $10,000,000 becomes (whether by declaration or
automatically in accordance with the relevant agreement or instrument
constituting the same) due and payable prior to the date when it would
otherwise have become due (unless as a result of the exercise by the
relevant Security Party of a voluntary right of prepayment), or any
creditor of any Security Party becomes entitled to declare any such
Indebtedness due and payable is withdrawn, suspended or cancelled by
reason of any default (however described) of the person concerned unless
the relevant Security Party shall have satisfied the Agent that such
withdrawal, suspension or cancellation will not affect or prejudice in
any way the relevant Security Party's ability to pay its debts as they
fall due and fund its commitments, or any guarantee given by any
Security Party in respect of indebtedness is not honoured when due and
called upon; or
10.1.6 Legal process: any judgment or order for a sum in excess of an
aggregate amount at any time of $10,000,000 or more made against any
Security Party is not stayed or complied with within 14 days or a
creditor attaches or takes possession of, or a distress, execution,
sequestration or other process is levied or enforced upon or sued out
against, any of the undertakings, assets, rights or revenues of any
Security Party and is not discharged within 14 days; or
10.1.7 Insolvency: any Security Party becomes insolvent or stops or suspends
making payments (whether of principal or interest) with respect to all
or any class of its debts or announces an intention to do so; or
10.1.8 Reduction or loss of capital: a meeting is convened by any Security
Party for the purpose of passing any resolution to purchase, reduce or
redeem any of its share capital without the prior written consent of the
Agent which consent not to be unreasonably delayed or withheld; or
10.1.9 Winding up: any petition is presented or other step is taken for the
purpose of winding-up any Security Party (not being a petition which the
relevant Security Party can demonstrate to the satisfaction of the
Agent, by providing an opinion of leading counsel to that effect, is
frivolous, vexatious or an abuse of the process of the court or relates
to a claim to which the relevant Security party has a good defence and
which is being vigorously contested by the relevant Security Party) or
an order is made or resolution passed for the winding up of any Security
Party or a notice is issued convening a meeting for the purpose of
passing any such resolution; or
10.1.10 Administration: any petition is presented or other step is taken for the
purpose of the appointment of an administrator of any Security Party or
an administration order is made in relation to any Security Party; or
10.1.11 Appointment of receivers and managers: any administrative or other
receiver is appointed of any Security Party or any part of its assets
and/or undertakings; or
10.1.12 Compositions: any steps are taken, or negotiations commenced, by any
Security Party or by any of its creditors with a view to the general
readjustment or rescheduling of all or part of its indebtedness or to
proposing any kind of composition, compromise or arrangement involving
such company and any of its creditors without the prior written consent
of the Agent, such consent may be withheld in the absolute discretion of
the Agent; or
10.1.13 Analogous proceedings: there occurs, in relation to any Security Party,
in any country or territory in which any of them carries on business or
to the jurisdiction of whose courts any part of their assets is subject,
any event which, in the reasonable opinion of the Agent, appears in that
country or territory to correspond with, or have an effect equivalent or
similar
27
to, any of those mentioned in clauses 10.1.6 to 10.1.12 (inclusive) or
any Security Party otherwise becomes subject, in any such country or
territory, to the operation of any law relating to insolvency,
bankruptcy or liquidation; or
10.1.14 Cessation of business: the Borrower suspends or ceases or threatens to
suspend or cease to carry on its business; or
10.1.15 Repudiation: any Security Party repudiates any of the Security Documents
or does or causes or permits to be done any act or thing evidencing an
intention to repudiate any of the Security Documents; or
10.1.16 Encumbrances enforceable: any Encumbrance (other than Permitted Liens)
in respect of any of the property (or part thereof) which is the subject
of any of the Security Documents becomes enforceable; or
10.1.17 Material adverse change: there occurs a material adverse change in the
financial condition of the Borrower by reference to the financial
statements referred to in clause 7.1.9 which material adverse change
shall affect the ability of the Borrower to perform its payment and
other material obligations under this Agreement and the other Security
Documents; or
10.1.18 Arrest: either Ship is arrested, confiscated, seized, taken in
execution, impounded, forfeited, detained in exercise or purported
exercise (except in the case of a Compulsory Acquisition or Total Loss)
of any possessory lien or other claim or otherwise taken from the
possession of the Borrower and the Borrower shall fail to procure the
release of such Ship within a period of 14 days thereafter; or
10.1.19 Registration: the registration of either Ship under the laws and flag of
the relevant Flag State is cancelled or terminated without the prior
written consent of the Lenders; or
10.1.20 Environment: the Borrower and/or any other Relevant Party and/or any of
their respective Environmental Affiliates fails to comply with any
Environmental Law or any Environmental Approval or either of the Ships
or any other Relevant Ship is involved in any incident which gives rise
or may give rise to an Environmental Claim if, in any such case, such
non-compliance or incident or the consequences thereof could reasonably
be expected to have a material adverse effect on the ability of the
Borrower to perform its payment and other material obligations under
this Agreement and the other Security Documents or on the security
constituted by any of the Security Documents; or
10.1.21 P&I: the Borrower or any other person fails or omits to comply with any
requirements of the protection and indemnity association or other
insurer with which a Ship is entered for insurance or insured against
protection and indemnity risks (including oil pollution risks) to the
effect that any cover (including, without limitation, any cover in
respect of liability for Environmental Claims arising in jurisdictions
where such Ship operates or trades) is cancelled or such action as is
required by the protection and indemnity association or other such
insurer in any notice threatening cancellation is not taken with the
period specified in such notice.
10.2 Acceleration
The Lenders may (and the Agent with the prior approval of the Lenders
shall), without prejudice to any other rights to the Lenders, at any time
after the happening of an Event of Default by notice to the Borrower
declare that:
10.2.1 the obligation of each Lender to make the Commitment available shall be
terminated, whereupon the Commitment shall be reduced to zero forthwith;
and/or
10.2.2 the Loan and all interest and commitment commission accrued and all
other sums payable under the Security Documents have become due and
payable, whereupon the same shall, immediately or in accordance with the
terms of such notice, become due and payable.
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10.3 Demand basis
10.3.1 If, pursuant to clause 10.2.2, the Lenders (or the Agent with the prior
approval of the Lenders) declares the Loan to be due and payable on
demand, the Lenders may (and the Agent with the prior approval of the
Lenders shall) by written notice to the Borrower (a) call for repayment
of the Loan on such date as may be specified whereupon the Loan shall
become due and payable on the date so specified together with all
interest and commitment commission accrued and all other sums payable
under this Agreement or (b) withdraw such declaration with effect from
the date specified in such notice.
11 Indemnities
11.1 Miscellaneous indemnities
The Borrower shall on demand indemnify each Lender, the Agent and the
Security Trustee, without prejudice to any of their other rights under any
of the Security Documents, against any loss (including loss of Margin
until the end of the then current Interest Period) or expense which such
Lender, the Agent or the Security Trustee shall certify as sustained or
incurred by it as a consequence of:
11.1.1 any default in payment by the Borrower of any sum under any of the
Security Documents when due;
11.1.2 the occurrence of any other Event of Default;
11.1.3 any prepayment of any Advance or part thereof or the Loan being made
under clauses 4.3, 8.3 or 12.1, or any other repayment of any Advance or
part thereof or the Loan being made otherwise than on an Interest
Payment Date relating to the Advance or the Loan prepaid or repaid; or
11.1.4 any Advance not being made for any reason (unless attributable to the
fault of the Lenders) after the relevant Drawdown Notice for such
Advance has been given,
including, in any such case, but not limited to, any loss or expense
sustained or incurred by any Lender in maintaining or funding its
Contribution or any part thereof or in liquidating or re-employing
deposits from third parties acquired or contracted for to fund, effect or
maintain all or any part of its Contribution or any other amount arising
to such Lender.
11.2 Currency indemnity
If any sum due from the Borrower under any of the Security Documents or
any order or judgment given or made in relation thereto has to be
converted from the currency (the "first currency") in which the same is
payable under the relevant Security Document or under such order or
judgment into another currency (the "second currency") for the purpose of
(a) making or filing a claim or proof against the Borrower, (b) obtaining
an order or judgment in any court or other tribunal or (c) enforcing any
order or judgment given or made in relation to any of the Security
Documents, the Borrower shall indemnify and hold harmless the Lenders, the
Agent, the Arranger and the Security Trustee from and against any loss
suffered as a result of any difference between (i) the rate of exchange
used for such purpose to convert the sum in question from the first
currency into the second currency and (ii) the rate or rates of exchange
at which the Lenders, the Agent, the Arranger and the Security Trustee may
in the ordinary course of business purchase the first currency with the
second currency upon receipt of a sum paid to it in satisfaction, in whole
or in part, of any such order, judgment, claim or proof. Any amount due
from the Borrower under this clause 11.2 shall be due as a separate debt
and shall not be affected by judgment being obtained for any other sums
due under or in respect of any of the Security Documents and the term
"rate of exchange" includes any premium and costs of exchange payable in
connection with the purchase of the first currency with the second
currency.
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11.3 Environmental indemnity
The Borrower shall indemnify the Lenders, the Agent, the Arranger, the
Underwriter and the Security Trustee on demand and hold the Lenders, the
Agent, the Arranger, the Underwriter and the Security Trustee harmless
from and against all costs, expenses, payments, charges, losses, demands,
liabilities, actions, proceedings (whether civil or criminal), penalties,
fines, damages, judgments, orders, sanctions or other outgoings of
whatever nature which may be suffered, incurred or paid by, or made or
asserted against the Lenders, the Agent, the Arranger, the Underwriter and
the Security Trustee at any time, whether before or after the repayment in
full of principal and interest under this Agreement, relating to, or
arising directly or indirectly in any manner or for any cause or reason
whatsoever out of an Environmental Claim made or asserted against the
Lenders, the Agent, the Arranger, the Underwriter and the Security Trustee
if such Environmental Claim would not have been, or been capable of being,
made or asserted against the Lenders, the Agent, the Arranger, the
Underwriter or the Security Trustee if it had not entered into any of the
Security Documents and/or exercised any of its rights, powers and
discretions thereby conferred and/or performed any of its obligations
thereunder and/or been involved in any of the transactions contemplated by
the Security Documents.
12 Unlawfulness and increased costs
12.1 Unlawfulness
If it is or becomes contrary to any law or regulation for any Lender to
make any Advance or to maintain its Commitment or fund its Contribution,
such Lender shall promptly, through the Agent, give notice to the Borrower
whereupon (a) such Lender's Commitment shall be reduced to zero and (b)
the Borrower shall be obliged to prepay the Contribution of such Lender
either (i) forthwith or (ii) on a future specified date not being earlier
than the latest date permitted by the relevant law or regulation together
with interest and commitment commission accrued to the date of prepayment
and all other sums payable by the Borrower under this Agreement.
12.2 Increased costs
If the result of any change in, or in the interpretation or application
of, or the introduction of, any law or any regulation, request or
requirement (whether or not having the force of law, but, if not having
the force of law, with which the Agent and/or any Lender or, as the case
may be, its holding company habitually complies), including (without
limitation) those relating to Taxation, capital adequacy, liquidity,
reserve assets, cash ratio deposits and special deposits, is to:
12.2.1 subject any Lender to Taxes or change the basis of Taxation of any
Lender with respect to any payment under any of the Security Documents
(other than Taxes or Taxation on the overall net income, profits or
gains of such Lender); and/or
12.2.2 increase the cost to, or impose an additional cost on, any Lender or its
holding company in making or keeping the Commitment available or
maintaining or funding all or part of the Loan; and/or
12.2.3 reduce the amount payable or the effective return to any Lender under
any of the Security Documents; and/or
12.2.4 reduce any Lender's or its holding company's rate of return on its
overall capital by reason of a change in the manner in which it is
required to allocate capital resources to its obligations under any of
the Security Documents; and/or
12.2.5 require any Lender or its holding company to make a payment or forgo a
return on or calculated by reference to any amount received or
receivable by it under any of the Security Documents; and/or
12.2.6 require any Lender or its holding company to incur or sustain a loss by
reason of being obliged to deduct all or part of the Commitment or the
Loan from its capital for regulatory purposes,
30
then and in each such case (subject to clause 12.3):
(a) such Lender shall notify the Borrower in writing of such event
promptly upon its becoming aware of the same;
(b) the Lenders shall negotiate with the Borrower in good faith with a
view to restructuring the transaction constituted by the Security
Documents in a way which will (in the reasonable opinion of the
Lenders) satisfactorily avoid either the unlawfulness or increased
costs concerned (each as the case may be) without either decreasing
the amounts or net returns due to the Agent and the Lenders under
the Security Documents or which would, but for such unlawfulness or
such increased costs (each as the case may be), have been so due, or
otherwise adversely affecting the rights, interests and security of
the Agent and/or the Security Trustee and/or the Lenders and/or the
Arranger under the transaction as presently constituted and will not
(in the reasonable opinion of the Lenders) increase the cost to the
Borrower of or otherwise adversely affect the rights, and interests
of the Borrower under the transactions (and unless the Lenders
nominate a longer period (which they shall be at liberty to do),
such negotiations shall continue for a period of 30 days after the
Borrower has been given notice under clause 12.2.6(a) or for such
lesser period as is permitted under applicable law having regard to
either the unlawfulness or the increased costs concerned (such
period called the "Negotiation Period");
(c) if at the end of the Negotiation Period the Lenders and the Borrower
have not reached agreement on a restructuring of the transaction on
the basis described in clause 12.2.6(b) above then the Borrower
shall on demand, made at any time after expiry of the Negotiation
Period whether or not the relevant Lender's Contribution has been
repaid, pay to such Lender the amount which such Lender specifies
(in a certificate (which shall be conclusive in the absence of
manifest error) setting forth the basis of the computation of such
amount but not including any matters which such Lender regards as
confidential in relation to its funding arrangements) is required to
compensate such Lender for such alternative funding, increased cost,
reduction, payment or forgone return;
(d) the Lenders shall take all steps as the Agent (or as the case may
be, that Lender) reasonably determines is open to it to mitigate the
effect of such circumstances.
For the purposes of this clause 12.2 "holding company" means the company
or entity (if any) within the consolidated supervision of which such
Lender is included.
12.3 Exception
Nothing in clause 12.2 shall entitle any Lender to receive any amount in
respect of compensation for any such liability to Taxes, increased or
additional cost, reduction, payment, foregone return or loss to the extent
that the same is the subject of an additional payment under clause 6.7 or
which arises as a result of any deterioration in the credit rating of any
Lender.
12.4 Further exceptions
Nothing in clause 12.2.4, shall entitle the Agent or any Lender to receive
any amount in respect of compensation for any such liability to Taxes,
increased or additional cost, reduction, payment, foregone return or loss
which arises as a consequence of (or any law or regulation implementing)
(a) the proposals for international convergence of capital measurement and
capital standards published by the Basle Committee on Banking Regulations
and Supervisory Practices in July 1988 and/or (b) any applicable directive
of the European Union (in each case) unless it results from any change in,
or in the interpretation or application of, such proposals or any such
applicable directive (or any law or regulation implementing the same)
occurring after the date hereof. For the purposes of this clause 12.4 the
term "applicable directive" means (exclusively) each of the Own Funds
Directive (89/299/EEC of 17th April 1989) and the Solvency Ratio Directive
(89/647/EEC of 18th December 1989).
31
13 Security and set-off
13.1 Application of moneys
All moneys received by the Agent and/or the Lenders and/or the Security
Trustee and/or the Arranger under or pursuant to any of the Security
Documents and expressed to be applicable in accordance with the provisions
of this clause 13.1 shall be applied in the following manner:
13.1.1 first in or toward payment of all unpaid fees, commissions and expenses
which may be owing to the Agent or any Lender under any of the Security
Documents;
13.1.2 secondly in or towards payment to any Lender for any loss suffered by
reason of any such payment in respect of principal not being effected on
an Interest Payment Date relating to the part of the Loan repaid;
13.1.3 thirdly in or towards payment of any arrears of interest owing in
respect of the Loan or any part thereof;
13.1.4 fourthly in or towards repayment of the Loan (whether the same is due
and payable or not);
13.1.5 fifthly in or towards payment to any Lender of any other sums owing to
it under any of the Security Documents; and
13.1.6 sixthly the surplus (if any) shall be paid to the Borrower or to
whomsoever else may be entitled to receive such surplus,
or in such other manner as the Agent shall determine.
13.2 Set-off
The Borrower authorizes each Lender (without prejudice to any of such
Lender's rights at law, in equity or otherwise), at any time after the
occurrence of an Event of Default which is continuing and without notice
to the Borrower:
13.2.1 to apply any credit balance to which the Borrower is then entitled
standing upon any account of the Borrower with any branch of such Lender
in or towards satisfaction of any sum due and payable from the Borrower
to such Lender under any of the Security Documents;
13.2.2 in the name of the Borrower and/or such Lender to do all such acts and
to execute all such documents as may be necessary or expedient to effect
such application; and
13.2.3 to combine and/or consolidate all or any accounts in the name of the
Borrower with such Lender.
For such purposes, each such Lender is authorised to purchase with the
moneys standing to the credit of such account such other currencies as may
be necessary to effect such application. No Lender shall be obliged to
exercise any right given to it by this clause 13. Each Lender shall notify
the Agent and the Borrower forthwith upon the exercise or purported
exercise of any right of set-off giving full details in relation thereto.
13.3 Pro-rata payments
If at any time the proportion which any Lender (the "Recovering Lender")
has received or recovered (other than from an Assignee, a Substitute or a
sub-participant in such Lender's Contribution or any other payment of an
amount due to the Recovering Lender for its sole account pursuant to
clauses 3.6, 4.3, 5.1, 6.1, 11.1, 11.2, 12.1 or 12.2) in respect of its
share of any payment to be made for the account of the Recovering Lender
and one or more other Lenders under any of the Security Documents is
greater (the amount of the excess being referred to in this clause 13 as
the "excess amount") than the proportion of the share of such
32
payment received or recovered by the Lender receiving or recovering
the smallest or no proportion of its share, then:
13.3.1 within 2 Banking Days of such receipt or recovery, the
Recovering Lender shall pay to the Agent an amount equal (or
equivalent) to the excess amount;
13.3.2 the Agent shall treat such payment as if it were part of the
payment to be made by the Borrower and shall distribute the
same in accordance with clause 13.1; and
13.3.3 as between the Borrower and the Recovering Lender the excess
amount shall be treated as not having been paid but the
obligations of the Borrower to the other Lenders shall, to the
extent of the amount so paid to them, be treated as discharged.
Each Lender shall forthwith notify the Agent of any such receipt or
recovery by such Lender other than by payment through the Agent. If
any excess amount subsequently has to be wholly or partly refunded
by the Recovering Lender which paid an amount equal thereto to the
Agent under clause 13.3.1 each Lender to which any part of such
amount was distributed shall on request from the Recovering Lender
repay to the Recovering Lender such Lender's pro-rata share of the
amount which has to be refunded by the Recovering Lender. Each Lender
shall on request supply to the Agent such information as the Agent
may from time to time request for the purpose of the clause 13.3.
Notwithstanding the foregoing provisions of this clause 13.3 no
Recovering Lender shall be obliged to share any excess amount which
it receives or recovers pursuant to legal proceedings taken by it to
recover any sums owing to it under this Agreement with any other
party which has a legal right to, but does not, either join in such
proceedings or commence and diligently pursue separate proceedings
to enforce its rights in the same or another court (unless the
proceedings instituted by the Recovering Lender are instituted by it
without prior notice having been given to such party through the
Agent).
13.4 No release
For the avoidance of doubt it is hereby declared that failure by
any Recovering Lender to comply with the provisions of clause 13.3
shall not release any other Recovering Lender from any of its
obligations or liabilities under clause 13.3.
13.5 No charge
The provisions of this clause 13 shall not, and shall not be
construed so as to, constitute a charge by a Lender over all or
any part of a sum received or recovered by it in the circumstances
mentioned in clause 13.3.
13.6 Further assurance
The Borrower undertakes that the Security Documents shall both at
the date of execution and delivery thereof and so long as any moneys
are owing under any of the Security Documents be valid and binding
obligations of the respective parties thereto and the rights of the
Agent, the Security Trustee and the Lenders thereunder enforceable
in accordance with their respective terms and that they will, at
their expense, execute, sign, perfect and do, and will procure the
execution, signing, perfecting and doing by each of the other
Security Parties of, any and every such further assurance, document,
act or thing as in the reasonable opinion of the Agent may be
necessary or desirable for perfecting the security contemplated or
constituted by the Security Documents.
14 Assignment, substitution and lending office
14.1 Benefit and burden
This Agreement shall be binding upon, and enure for the benefit of,
the Lenders, the Agent the Security Trustee and the Borrower and
their respective successors.
33
14.2 No assignment by Borrower
The Borrower may not assign or transfer any of its rights or obligations
under this Agreement without the prior written consent of the Agent,
which consent will be subject to (a) the Borrower providing a full
guarantee of the assignee's obligations under this Agreement and each
Security Document to which it is a party, in form and substance
satisfactory to the Agent and the Security Trustee and (b) to such other
reasonable conditions as the Agent and/or the Security Trustee may
impose.
14.3 Assignment by Lenders
Any Lender may assign all or any part of its rights under this Agreement
or under any of the other Security Documents to any other bank or
financial institution (an "Assignee") without the consent of the
Borrower.
14.4 Substitution
Each Lender may transfer, by way of novation, all or any part of its
rights, benefits and/or obligations under this Agreement to another
person (a "Substitute") with the consent of the other Lenders but subject
to the deletion of clause 8.3 from this Agreement and the prior
consultation with the Borrower in the case of any initial syndication of
the Loan by the Underwriter (in its capacity as sole Lender). Any such
novation shall be effected upon 5 Banking Days' prior notice by delivery
to the Agent of a duly completed Substitution Certificate duly executed
by such Lender, the Substitute and the Agent (for itself, the Borrower,
the Arranger, the Security Trustee, the Underwriter and the other
Lenders). On the effective date specified in a Substitution Certificate
so executed and delivered, to the extent that they are expressed in such
Substitution Certificate to be the subject of the novation effected
pursuant to the clause 14.3:
14.4.1 the existing parties to this Agreement and the Lender party to the
relevant Substitution Certificate shall be released from their
respective obligations towards one another under this Agreement
("discharged obligations") and their respective rights against one
another under this Agreement ("discharged rights") shall be
cancelled;
14.4.2 the Substitute party to the relevant Substitution Certificate and the
existing parties to this Agreement (other than the Lender party to
such Substitution Certificate) shall assume obligations towards each
other which differ from the discharged obligations only insofar as
they are owed to or assumed by such Substitute instead of to or by
such Lender; and
14.4.3 the Substitute party to the relevant Substitution Certificate and the
existing parties to this Agreement (other than the Lender party to
such Substitution Certificate) shall acquire rights against each
other which differ from the discharged rights only insofar as they
are exercisable by or against such Substitute instead of by or
against such Lender,
and, on the date upon which such novation takes effect, the Substitute (unless
such Substitute shall be a Related Company of the Lender party to the relevant
Substitution Certificate) shall pay to the Agent for its own account a fee
agreed between them. The Agent shall promptly notify the other parties hereto of
the receipt by it of any Substitution Certificate and shall promptly deliver a
copy of such Substitution Certificate to the Borrower.
All costs of syndication and assignment by any Lender at any time during the
Security Period shall be borne by the relevant Lender or Lenders.
14.5 Reliance on Substitution Certificate
The Agent, the Lenders, the Arranger, the Security Trustee, the
Underwriter and the Borrowers shall be fully entitled to rely on any
Substitution Certificate delivered to the Agent in accordance with the
foregoing provisions of this clause 14 which is complete and regular on
its face as regards its contents and purportedly signed on behalf of the
relevant Lender and the Substitute and none of the Agent, the Lenders,
the Arranger, the Security Trustee, the Underwriter or the
34
Borrower shall have any liability or responsibility to any party as a
consequence of placing reliance on and acting in accordance with any such
Substitution Certificate if it proves to be the case that the same was
not authentic or duly authorised.
14.6 Signing of Substitution Certificate
Each of the Borrower, the Arranger, the Security Trustee, the Underwriter
and the Lenders irrevocably authorises the Agent to countersign each
Substitution Certificate on its behalf without any further consent of, or
consultation with, the Borrowers, the Arranger, the Security Trustee, the
Underwriter or such Lender (as the case may be).
14.7 Construction of certain references
If any Lender assigns all or any part of its rights or novates all or any
part of its rights, benefits and obligations as provided in clause 14.3
or 14.4 all relevant references in this Agreement to such Lender shall
thereafter be construed as a reference to such Lender and/or its Assignee
or Substitute (as the case may be) to the extent of their respective
interests.
14.8 Documenting assignments and novations
If any Lender assigns all or any part of its rights or novates all or any
part of its rights, benefits and/or obligations as provided in clause
14.3 or 14.4 the Borrower undertakes, immediately on being requested to
do so by the Agent and at the cost of the Lender that has so assigned or
novated all or any part of its rights and/or obligations, to enter into,
and procure that the other Security Parties shall enter into, such
documents as may be necessary or desirable to transfer to the Assignee or
Substitute all or the relevant part of such Lender's interest in the
Security Documents and all relevant references in this Agreement to such
Lender shall thereafter be construed as a reference to the Lender and/or
its Assignee or Substitute (as the case may be) to the extent of their
respective interests.
14.9 Lending office
Each Lender shall lend through its office at the address specified in
schedule 1 or, as the case may be, in any relevant Substitution
Certificate or through any other office of such Lender selected from time
to time by it through which such Lender wishes to lend for the purposes
of this Agreement Provided always that such change of office shall not
result in an increase in the obligations of the Borrower under this
Agreement.
14.10 Disclosure of information
Any Lender or the Agent may disclose to a prospective assignee,
substitute or transferee or to any other person who may propose entering
into contractual relations with such Lender or the Agent in relation to
this Agreement such information about the Borrower as such Lender or the
Agent shall consider appropriate provided that the Agent and/or Lender
shall procure that the recipients of such information undertake to the
Borrower in advance to preserve the confidentiality of all such
information.
14.11 No additional costs
If at any time any assignment by any Lender of all or any part of its
rights or benefits under this Agreement or any transfer by such Lender of
any part of the rights, benefits and/or obligations under this Agreement,
or any change in the office through which it lends for the purposes of
this Agreement, the Borrower would be obliged to pay to the Assignee or
Transferee or (in the case of a change of lending office) the Agent under
clause 6.7 or 12.2 any sum in excess of the sum (if any) which it would
have been obliged to pay to the Agent and/or Lender under the relevant
clause in the absence of such assignment, transfer or change, the
Borrower shall not be obliged to pay that excess.
35
15 Agent and Security Trustee
15.1 Appointment of the Agent and Security Trustee
The Lenders hereby jointly and severally appoint the Agent as
facility agent and the Security Trustee as security agent and trustee
to act on their behalf in the manner as set out in this Agreement and
in the Agency Agreement and hereby authorise the Agent and the
Security Trustee, among other things, to exercise any such rights,
powers, discretions or authorities as are delegated to the Agent
and/or the Security Trustee and by the terms of this Agreement and the
Agency Agreement. The Borrower shall not, at any time during the
Security Period, be liable for any costs associated with the
retirement or replacement of the Agent or the Security Trustee.
15.2 Neither the Agent nor the Security Trustee shall have any duties or
responsibilities except those expressly set forth in this Agreement,
the other Security Documents and the Agency Agreement.
15.3 The Agent and the Security Trustee, as the case may be, shall;
15.3.1 inform each of the Lenders of the contents of any notice,
information or document received by it from the Borrower hereunder
including notices received from the Borrower in accordance with
clause 16;
15.3.2 notify each of the Lenders of the occurrence of any Default of which
the Agent has actual knowledge; and
15.3.3. hold the original Security Documents on behalf of the Lenders.
15.4 Neither the Agent nor the Security Trustee accepts any responsibility
for the accuracy and/or completeness of any information supplied by the
Borrower or any third party in connection with this Agreement or for the
legality, validity, effectiveness, adequacy or enforceability of this
Agreement and neither of them shall be under any liability as a result
of taking or omitting to take any action in relation to this Agreement,
save in the case of gross negligence or wilful misconduct.
15.5 The Lenders agree that they will not assert or seek to assert against
any director, officer or employee of the Agent or the Security Trustee,
as the case may be, any claim they might have against the Agent or the
Security Trustee, as the case may be, in respect of the matters referred
to in this clause 15.
15.6 It is understood and agreed by the Lenders that they have themselves
been, and will continue to be, solely responsible for making their
own independent appraisals of and investigations into the financial
condition, creditworthiness, condition, affairs, status and nature of
the Borrower and, accordingly, the Lenders warrant to the Agent and the
Security Trustee, that they have not relied and will not thereafter
rely on the Agent or the Security Trustee:
15.6.1 to check or inquire on their behalf into the adequacy, accuracy or
completeness of any information provided by the Borrower in
connection with this Agreement or the transactions herein
contemplated (including such information which has been or is
hereafter circulated to the Lenders by the Agent or the Security
Trustee, as the case may be); or
15.6.2 to assess or keep under review on their behalf the financial
condition, creditworthiness, condition, affairs, status or nature
of any of the Borrower.
16 Notices and other matters
16.1 Notices
Every notice, request, demand or other communication under this
Agreement or (unless otherwise provided therein) under any of the other
Security Documents shall:
36
16.1.1 be in writing delivered personally or by first-class prepaid letter
(airmail if available) or facsimile transmission or other means of
telecommunication in permanent written form;
16.1.2 be deemed to have been received, subject as otherwise provided in
the relevant Security Document, in the case of a letter, when
delivered personally or 3 days after it has been put in to the post
and, in the case of facsimile transmission or other means of
telecommunication in permanent written form, at the time of
despatch (provided that if the date of despatch is not a business
day in the country of the addressee or if the time of despatch is
after the close of business in the country of the addressee it
shall be deemed to have been received at the opening of business
on the next such business day); and
16.1.3 be sent:
(a) to the Borrower at:
American Eagle Tankers Inc. Limited
NOL Centre
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇▇-▇▇▇▇
▇▇▇
Fax no: ▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇/▇▇▇ ▇▇▇ ▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
with a copy to:
Neptune Orient Lines Limited
NOL Building
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
#▇▇-▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Fax: ▇▇▇ ▇▇▇ ▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇
(b) to the Agent, the Underwriter (in its capacity as sole
Lender) and the Security Trustee at:
Sankt ▇▇▇▇▇ ▇▇▇▇▇ ▇-▇
▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇
Denmark
Fax no: ▇▇ ▇▇ ▇▇ ▇▇ ▇▇ ▇▇
Attention: Corporate Department
(c) to any other Lender at its address or fax number specified
in any relevant Substitution Certificate,
or to such address and/or numbers as is notified by one party to
the other party under this Agreement.
16.2 No implied waivers, remedies cumulative
No failure or delay on the part of the Agent, the Security Trustee, the
Lenders or any of them to exercise any power, right or remedy under any
of the Security Documents shall operate as a waiver thereof, nor shall
any single or partial exercise by the Agent, the Security Trustee, the
Lenders or any of them of any power, right or remedy preclude any other
or further exercise
37
thereof or the exercise of any other power, right or remedy. The
remedies provided in the Security Documents are cumulative and are not
exclusive of any remedies provided by law.
16.3 Conflicts
In the event of a conflict between this Agreement and any of the other
Security Documents, the provisions of this Agreement shall prevail.
16.4 English Language
All certificates, instruments and other documents to be delivered under
or supplied in connection with any of the Security Documents shall be in
the English language or shall be accompanied by a certified English
translation upon which the Lenders shall be entitled to rely.
16.5 Third party rights
No term of this Agreement shall be enforceable pursuant to the Contracts
(Rights of Third Parties) ▇▇▇ ▇▇▇▇ by a person who is not a party to
this Agreement.
17 Governing law and jurisdiction
17.1 Law
This Agreement is governed by and shall be construed in accordance with
English law.
17.2 Submission to jurisdiction
The Borrower agrees, for the benefit of the Agent, the Security Trustee
and the Lenders, that any legal action or proceedings arising out of or
in connection with this Agreement against the Borrower or any of its
assets may be brought in the English courts. The Borrower irrevocably
and unconditionally submits to the jurisdiction of such courts and
irrevocably designates, appoints and empowers American Eagle Tankers UK
Limited at present of ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇
▇▇▇ ▇▇▇ to receive for it and on its behalf, service of process issued
out of the English courts in any such legal action or proceedings. The
submission to such jurisdiction shall not (and shall not be construed so
as to) limit the right of the Agent, the Security Trustee and the
Lenders to take proceedings against the Borrower in the courts of any
other competent jurisdiction nor shall the taking of proceedings in any
one or more jurisdictions preclude the taking of proceedings in any
other jurisdiction, whether concurrently or not.
The parties further agree that only the courts of England and not those
of any other State shall have jurisdiction to determine any claim which
the Borrower may have against the Agent, the Security Trustee or the
Lenders arising out of or in connection with this Agreement.
IN WITNESS whereof the parties to this Agreement have caused this Agreement to
be duly executed on the date first above written.
38
Schedule 1
The Lenders and their Commitments
------------------------------------------------------------------------------
Name Address, telex and fax Commitment
($)
------------------------------------------------------------------------------
Danmarks Skibskreditfond Sankt ▇▇▇▇▇ ▇▇▇▇▇ ▇-▇ ▇▇▇,▇▇▇,▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇
Denmark
Fax: ▇▇ ▇▇ ▇▇ ▇▇ ▇▇ ▇▇
------------------------------------------------------------------------------
TOTAL 100,000,000
------------------------------------------------------------------------------
39
Schedule 2
Form of Drawdown Notice
(referred to in clause 2.2)
(date)
To: Danmarks Skibskreditfond
Sankt ▇▇▇▇▇ ▇▇▇▇▇ ▇-▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇
▇▇▇▇▇▇▇
U.S.$100,000,000 Loan - Loan Agreement dated o 2001
We refer to the above Loan Agreement and hereby give you notice that we wish to
draw down the [Eagle One/Eagle Two] Advance namely $50,000,000 on {date} [and
select a first Interest Period in respect thereof of o months] [the first
Interest Period in respect thereof to expire on {date}]. The funds should be
credited to [name and number of account] with [details of bank in New York
City].
We confirm that:
(a) no event or circumstance has occurred and is continuing which constitutes
a Default;
(b) the representations and warranties contained in clauses 7.1 and 7.2 of the
Loan Agreement (and so that the representation and warranty in clause
7.1.9 refers for this purpose to the audited financial statements of the
Borrower in respect of the financial year ended on {date}) are true and
correct in all material respects at the date hereof as if made with
respect to the facts and circumstances existing at such date; and
(c) the borrowing to be effected by the drawdown of the [Eagle One][Eagle Two]
Advance will be within our corporate powers, has been validly authorised
by appropriate corporate action and will not cause any limit on our
borrowings (whether imposed by statute, regulation, agreement or
otherwise) to be exceeded; and
(d) there has been no material adverse change in our financial position from
that set forth in the financial statements referred to in (b) above which
change prevents us from performing our payment and other material
obligations under the Loan Agreement or any Security Document.
Words and expressions defined in the Loan Agreement shall have the same
meanings where used herein.
For and on behalf of
AMERICAN EAGLE TANKERS INC. LIMITED
40
Schedule 3
Documents and evidence required as conditions precedent to making available
the Commitment
(referred to in clause 9.1)
Part 1
(a) Secretarial Certificate
a certificate signed by an officer of the Borrower substantially in the
form set out in schedule 8 and dated no earlier than 5 Banking Days prior
to the date of this Agreement;
(b) Certified Contracts and Charters
a certified true and complete copy (by way of a certificate signed by an
officer of the Borrower dated no earlier than 5 Banking Days prior to the
date of this Agreement) of the Contracts (excluding any plans or drawings)
and a certified true and complete copy of any Time Charter (with any
confidential information deleted);
(c) Bermudian opinion
an opinion of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, special legal advisers in Bermuda
to the Lenders;
(d) Borrower's process agent
a letter from the Borrower's agent for receipt of service of proceedings
referred to in clause 17.2 accepting its appointment under the said clause
and under each of the other Security Documents in which it is or is to be
appointed as such Borrower's agent;
(e) Security Party's process agents
a letter from any Security Party's (other than the Borrower's) agent for
receipt of service of proceedings accepting its appointment under each of
the Security Documents in which it is or is to be appointed as each
Security Party's agent; and
(f) Financial statements
a confirmation, in a form and substance satisfactory to the Agent, that the
final financial statements of the Borrower as at 31 December 2000 are
materially the same as the proforma unaudited financial statements
delivered to the Agent on 9 February 2001.
41
Part 2
Documents and evidence required as conditions precedent to all
Advances being made
(a) Drawdown Notice
a Drawdown Notice for the drawdown of the relevant Advance duly executed;
(b) Insurance undertakings
confirmations from the relevant protection and indemnity association, war
risks association and hull and machinery brokers/insurers confirming that
Letters of Undertaking will be issued in respect of the relevant Ship in a
form and substance acceptable to the Agent acting reasonably;
(c) Ship conditions
Evidence that the Ship for which the relevant Advance is to be made:
(i) Registration and Encumbrances
is or will be provisionally registered in the name of the Borrower
under the laws and flag of the Flag State through the Registry and
that such Ship and her Earnings, Insurances and Requisition
Compensation (as defined in the relevant Ship Security Documents) are
free of Encumbrances;
(ii) Classification
maintains the relevant Classification free of all requirements and
recommendations (which if not rectified in the time specified by the
Classification Society would result in a condition of class) of the
relevant Classification Society; and
(iii) Insurance
is insured in accordance with the provisions of the relevant Ship
Security Documents and all requirements of such Ship Security
Documents in respect of such insurance have been complied with
(including without limitation, confirmation from the protection and
indemnity association or other insurer with which such Ship is, or is
to be, entered for insurance or insured against protection and
indemnity risks (including oil pollution risks) that any necessary
declarations required by the association or insurer for the removal
of any oil pollution exclusion have been made and that any such
exclusion does not apply to such Ship); and
(d) Delivery documents and commercial invoice
the Builder's certificate and/or a ▇▇▇▇ of sale in favour of the Borrower
from the Builder and a protocol of delivery and acceptance duly executed
and such other evidence as the Agent may reasonably require (including
evidence of the Builder's corporate authorisations to deliver title to the
relevant Ship) that the Borrower will obtain good title to the relevant
Ship on or before the relevant Delivery Date free of all liens and
Encumbrances and all that all sums due to the Builder have been or will be
paid in full on the Delivery Date;
(e) Security Documents
the Ship Security Documents for such Ship duly executed;
(f) Mortgage registration
evidence that the Mortgage over such Ship has been registered against such
Ship with first priority under the laws and flag of the Flag State through
the Registry;
42
(g) Notices of assignment
copies of duly executed notices of assignment required by the terms of such
Ship Security Documents and in the forms prescribed by such Ship Security
Documents together with evidence that these have been served on all
relevant parties;
(h) Management Agreement and Manager's Undertaking
copies, certified as a true and complete copy by an officer of the Borrower
or other person acceptable to the Agent of any Management Agreement for the
relevant Ship and if the Approved Manager is a company other than the
Borrower, a Manager's Undertaking duly executed by such Approved manager;
(i) Supplemental Bermudian opinion
such written confirmation as the Agent, the Security Trustee and the
Lenders shall require from ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, the special legal
advisers in Bermuda to the Lenders, to confirm (inter alia) that the terms
of their legal opinion described in part 1 of this schedule remain
applicable and complete in all respects as at the date of such confirmation
as if the same referred to the Ship Security Documents in the form in which
the same were executed and registered;
(j) Singapore opinion
if the Flag State is Singapore or if any Security Party is incorporated in
Singapore, an opinion of ▇▇▇▇▇▇ ▇▇ ▇▇▇▇ & Woo, special legal advisers in
Singapore to the Lenders;
(k) United States of America opinion
if the Flag State is the United States of America or if any Security Party
is incorporated in the United States of America, an opinion of ▇▇▇▇▇▇ &
▇▇▇▇▇▇, special legal advisors in the United States of America to the
Lenders;
(l) Further opinions and conditions
any such further opinion or condition as may be reasonably required by the
Agent under clause 9.4;
(m) Registration forms
such statutory forms duly signed by the Borrower and the other Security
Parties as may be required by the Agent and/or Security Trustee to perfect
the security contemplated by the relevant Ship Security Documents;
(n) Certificates of financial responsibility and vessel response plans
no later than 30 days after the Delivery of the relevant Ship, copies of a
certificate of financial responsibility and a vessel response plan
complying with the requirements of the United States Oil Pollution Act 1990
together with evidence of approval thereof by the relevant regulatory
authorities;
(o) Insurance Opinion
an opinion from Messrs. ▇▇▇▇▇▇ of ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇,
insurance consultants to the Lenders (at the Lenders cost), on the
insurances effected or to be effected in respect of such Ship upon and
following the relevant Drawdown Date; and
43
(p) Borrower's authorisation
copies of extracts of resolutions of the directors of the Borrower
evidencing authorisation of the acceptance of the delivery of the Ship and
approval of the Ship Security Documents and the transactions contemplated
therein and any other documents issued or to be issued pursuant thereto and
authorising its appropriate officer or other representative to execute the
same on its behalf, such resolutions to be certified by an officer of the
Borrower in the manner referred to in paragraph 2 of Part 1 of this
schedule and any power of attorney issued pursuant to the said resolutions.
44
Schedule 4
Form of Substitution Certificate
To: DANMARKS SKIBSKREDITFOND on its own behalf, as agent for the Lenders party
to the Loan Agreement mentioned below as Arranger, Security Trustee and
Underwriter and on behalf of American Eagle Tankers Inc. Limited as Borrower
Attention:
[Date]
Substitution Certificate
This Substitution Certificate relates to a $100,000,000 Secured Loan Agreement
(the "Agreement") dated [o 2001] between the banks and financial institutions
whose respective names and addresses are set out in schedule 1 thereto as
Lenders and Danmarks Skibskreditfond as Arranger, Agent, Security Trustee and
Underwriter.
1 [name of Existing Lender] (the "Existing Lender") (a) confirms the accuracy
of the summary of its participation in the Agreement set out in the schedule
below; and (b) requests [name of Substitute Lender] (the "Substitute") to
accept by way of novation the portion of such participation specified in the
schedule hereto by counter-signing and delivering this Substitution
Certificate to the Agent at its address for the service of notices specified
in the Agreement.
2 The Substitute hereby requests the Agent (on behalf of itself, the Borrower
and the Lenders to accept this Substitution Certificate as being delivered
to the Agent pursuant to and for the purposes of clause 14 of the Agreement,
so as to take effect in accordance with the respective terms thereof on
[date of transfer] (the "Effective Date") or on such later date as may be
determined in accordance with the respective terms thereof.
3 The Agent (on behalf of itself, the Borrower, the Lenders, the Arranger, the
Security Trustee, the Underwriter and all other parties to the Agency
Agreement) confirms the novation effected by this Substitution Certificate
pursuant to and for the purposes of clause 14.4 of the Agreement so as to
take effect in accordance with the respective terms thereof.
4 The Substitute confirms:
(a) that it has received a copy of the Agreement and each of the other
Security Documents and all other documentation and information required
by it in connection with the transactions contemplated by this
Substitution Certificate;
(b) that it has made and will continue to make its own assessment of the
validity, enforceability and sufficiency of the Agreement, the other
Security Documents and this Substitution Certificate and has not relied
and will not rely on the Existing Lender or the Agent, the Arranger,
the Security Trustee or the Underwriter or any statements made by any
of them in that respect;
(c) that it has made and will continue to make its own credit assessment of
the Borrower and has not relied and will not rely on the Existing
Lender, the Agent, the Arranger, the Security Trustee or the
Underwriter or any statements made by any of them in that respect; and
45
(d) that, accordingly, none of the Existing Lender, the Agent, the
Arranger, the Security Trustee or the Underwriter shall have any
liability or responsibility to the Substitute in respect of any of the
foregoing matters.
5 Execution of this Substitution Certificate by the Substitute constitutes its
representation to the Existing Lender and all other parties to the Agreement
that it has power to become party to the Agreement as a Lender on the terms
herein and therein set out and has taken all necessary steps to authorise
execution and delivery of this Substitution Certificate.
6 The Existing Lender makes no representation or warranty and assumes no
responsibility with respect to the legality, validity, effectiveness,
adequacy or enforceability of the Agreement or any of the other Security
Documents or any document relating thereto and assumes no responsibility for
the financial condition of the Borrower or any other party to the Agreement
or any of the other Security Documents or for the performance and observance
by the Borrower or any other such party of any of its obligations under the
Agreement or any of the other Security Documents or any document relating
thereto and any and all such conditions and warranties, whether express or
implied by law or otherwise, are hereby excluded.
7 The Substitute hereby undertakes to the Existing Lender, the Borrower, the
Arranger, the Agent, the Security Trustee, the Underwriter and each of the
other parties to the Agreement that it will perform in accordance with their
terms all those obligations which by the respective terms of the Agreement
will be assumed by it after acceptance of this Substitution Certificate by
the Agent.
8 (If not already a lender), the Substitute hereby appoints the Agent to act
as its Facility Agent and the Security Trustee to act as its security agent
and trustee as provided in the Agreement and the Security Documents and
agrees to be bound by the terms of the Agency Agreement.
9 All terms and expressions used but not defined in this Substitution
Certificate shall bear the meaning given to them in the Agreement.
10 This Substitution Certificate and the rights and obligations of the parties
hereunder shall be governed by and construed in accordance with English law.
Note: This Substitution Certificate is not a security, bond, note, debenture,
investment or similar instrument.
AS WITNESS the hands of the authorised signatories of the parties hereto on the
date appearing below.
46
The Schedule
==============================================================================
Commitment: $ Portion Transferred: $
------------------------------------------------------------------------------
Contribution: $ Portion Transferred: $
------------------------------------------------------------------------------
Next Interest Payment Date:
==============================================================================
47
Administrative Details of Substitute
Lending Office:
Account for payments:
Telephone:
Telex:
Attention:
[Existing Lender] [Substitute]
By: By:
-------------------- --------------------
Date: Date:
The Agent
By:
--------------------------
on its own behalf
and on behalf of the Borrower, the Arranger, the Security Trustee, the
Underwriter and the Lenders.
Date:
48
Schedule 5
Form of Deed of Covenant
49
Private & Confidential Draft (3) 24 May 2001
SXLM\128\AA11282
▇▇▇▇▇▇▇▇▇.DOC
Dated 200.
-----------------------
AMERICAN EAGLE TANKERS INC. LIMITED (1)
and
DANMARKS SKIBSKREDITFOND (2)
(as Security Trustee)
---------------------------------
DEED OF COVENANT
relating to m.v.
["EAGLE ONE"]["EAGLE TWO"]
---------------------------------
▇▇▇▇▇▇ ▇▇▇▇
Contents
Clause Page
1 Definitions........................................................... 1
2 Mortgage and assignment............................................... 5
3 Covenant to pay....................................................... 6
4 Continuing security and other matters................................. 6
5 Covenants............................................................. 7
6 Powers of Security Trustee to protect security and remedy defaults.... 14
7 Powers of Security Trustee on Event of Default........................ 15
8 Application of moneys................................................. 17
9 Remedies cumulative and other provisions.............................. 18
10 Costs and indemnity................................................... 19
11 Attorney.............................................................. 19
12 Further assurance..................................................... 20
13 Notices............................................................... 20
14 Counterparts.......................................................... 20
15 Successors and assigns................................................ 20
16 Severability of provisions............................................ 20
17 Law and jurisdiction.................................................. 20
18 Third party rights.................................................... 21
Schedule 1 Names and addresses of Lenders................................. 22
Schedule 2 Forms of Loss Payable Clauses.................................. 23
Schedule 3 Form of Notice of Assignment of Insurances (For attachment by
way of endorsement to the Policy)....................................... 24
Schedule 4 Notice of Assignment of Earnings............................... 25
THIS DEED OF COVENANT is dated 200. and made BETWEEN:
(1) AMERICAN EAGLE TANKERS INC. LIMITED of ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ (▇▇▇ "Owner"); and
(2) DANMARKS SKIBSKREDITFOND a company incorporated in Denmark whose registered
office is at Sankt ▇▇▇▇▇ ▇▇▇▇▇ ▇-▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇, ▇▇▇▇▇▇▇
(the "Security Trustee") (as security agent and trustee on behalf of the
banks and financial institutions whose names and addresses are set out in
schedule 1 (the "Lenders") and the other Finance Parties (as hereinafter
defined)).
WHEREAS:
(A) the Owner is the sole, absolute and unencumbered, legal and beneficial owner
of all the shares in the Ship described in clause 1.2:
(B) by an Agreement (the "Loan Agreement") dated 29 May 2001 and made between
the Owner as Borrower (1), the Lenders (2), Danmarks Skibskreditfond as
Arranger and Underwriter (3), Danmarks Skibskreditfond as Agent (4) and the
Security Trustee (5), the Lenders agreed (inter alia) to advance by way of
loan to the Owner upon the terms and conditions therein contained, sums of
up to $100,000,000 (the "Loan);
(C) the Owner, in order to secure the repayment of the principal amount of Loan
and interest thereon, costs and expenses of collection, as well as sums
resulting from the fluctuations of currencies or mediums of exchange and all
other sums of money from time to time owing to the Finance Parties (as
hereinafter defined) under the said Loan Agreement and the Security
Documents (as hereinafter defined) and the performance of and compliance
with all the covenants, terms and conditions in this Deed, the Loan
Agreement and the other Security Documents, has duly executed in favour of
the Security Trustee (as security agent and trustee on behalf of the Finance
Parties) a [statutory] mortgage of even date herewith in [account current
form] constituting a [first priority] [first preferred] mortgage of all the
shares in the said Ship;
(D) this Deed is supplemental to the Loan Agreement and the Mortgage (as
hereinafter defined) and to the security thereby created and is the [Eagle
One] [Eagle Two] Deed of Covenant referred to in the Loan Agreement but
shall nonetheless continue in full force and effect notwithstanding any
discharge of the Mortgage.
NOW THIS DEED WITNESSES AND IT IS HEREBY AGREED as follows:
1 Definitions
1.1 Defined expressions
Words and expressions defined in the Loan Agreement shall, unless the
context otherwise requires or unless otherwise defined herein, have the same
meanings when used in this Deed.
1.2 Definitions
In this Deed, unless the context otherwise requires:
"Agent" includes the successors in title and assignees of the Agent;
"Agency Agreement" means the Agency Agreement executed or (as the context
may require) to be executed between the Agent, the Security Trustee and the
Lenders in the agreed form;
"Approved Brokers" means such firm of insurance brokers, appointed by the
Owner, as may from time to time be approved (such approval not to be
unreasonably withheld or delayed) in writing by the Lenders for the purposes
of this Deed;
1
"Casualty Amount" means $3,000,000 (or the equivalent in any other currency),
"Collateral Instruments" means notes, bills of exchange, certificates of deposit
and other negotiable and non-negotiable instruments, guarantees, indemnities and
other assurances against financial loss and any other documents or instruments
which contain or evidence an obligation (with or without security) to pay,
discharge or be responsible directly or indirectly for, any indebtedness or
liabilities of the Owner or any other person liable and includes any documents
or instruments creating or evidencing a mortgage, charge (whether fixed or
floating), pledge, lien, hypothecation, assignment, trust arrangement or
security interest of any kind.
"Default" means any Event of Default or any event or circumstance which with the
giving of notice or lapse of time or the satisfaction of any other condition (or
any combination thereof) would constitute an Event of Default;
"Earnings" means any moneys whatsoever from time to time due or payable to the
Owner during the Security Period arising out of the use or operation of the Ship
including (but without limiting the generality of the foregoing) all freight,
hire and passage moneys, income arising under pooling arrangements, compensation
payable to the Owner in the event of requisition of the Ship for hire,
remuneration for salvage and towage services, demurrage and detention moneys,
and damages for breach (or payments for variation or termination) of any
charterparty or other contract for the employment of the Ship;
"Event of Default" means any of the events or circumstances described in clause
10.1 of the Loan Agreement;
"Expenses" means the aggregate at any relevant time (to the extent that the same
have not been received or recovered by the Security Trustee or any of the other
Finance Parties or any Receiver) of:
(a) all losses, liabilities, costs, charges, expenses, damages and outgoings of
whatever nature (including, without limitation, Taxes, repair costs,
registration fees and insurance premiums) properly suffered, incurred or
paid by the Security Trustee or any of the other Finance Parties or any
Receiver in connection with the powers referred to in or granted by this
Deed or otherwise payable by the Owner in accordance with clause 10; and
(b) interest on all such losses, liabilities, costs, charges, expenses, damages
and outgoings from the date on which the same were properly suffered,
incurred or paid by the Security Trustee or any of the other Finance Parties
or any Receiver until the date of receipt or recovery thereof (whether
before or after judgment) at a rate per annum calculated in accordance with
clause 3.4 of the Loan Agreement (as conclusively certified by the Security
Trustee or any of the other Finance Parties or such Receiver, as the case
may be);
"Finance Parties" means the Security Trustee, the Agent, the Lenders, the
Arranger, the Underwriter and "Finance Party" means any of them;
"Insurances" means all policies and contracts of insurance (which expression
includes all entries of the Ship in a protection and indemnity or war risks
association) which are from time to time during the Security Period in place or
taken out or entered into by or for the benefit of the Owner (whether in the
sole name of the Owner or in the joint names of the Owner and the Security
Trustee (as security agent and trustee on behalf of the Finance Parties) or
otherwise) in respect of the Ship and all benefits thereof (including claims of
whatsoever nature and return of premiums);
"Loan" means the principal amount advanced and/or to be advanced by the Lenders
to the Owner pursuant to the Loan Agreement or, as the context may require, the
amount thereof at any time outstanding;
"Loan Agreement" means the agreement dated 29 May 2001 mentioned in recital (B)
hereto;
2
"Loss Payable Clauses" means the provisions regulating the manner of payment of
sums receivable under the Insurances which are to be incorporated in the
relevant insurance documents, such Loss Payable Clauses to be in the forms set
out in schedule 2, or in such other forms as may from time to time be agreed in
writing by the Security Trustee;
"Mortgage" means the statutory mortgage mentioned in recital (C);
"Mortgaged Property" means:
(a) the Ship;
(b) the Insurance;
(c) the Earnings;
(d) any Requisition Compensation;
"Notice of Assignment of Earnings" means a notice of assignment in the form set
out in schedule 4 or in such other form as may from time to time be required or
agreed in writing by the Security Trustee;
"Notice of Assignment of Insurances" means a notice of assignment in the form
set out in schedule 3, or in such other form as may from time to time be
required or agreed in writing by the Security Trustee;
"Outstanding Indebtedness" means the aggregate of the Loan, and interest accrued
and accruing thereon, the Expenses and all other sums of money from time to time
owing to the Security Trustee and/or any of the other Finance Parties, whether
actually or contingently, under the Security Documents or any of them;
"Owner" includes the successors in title of the Owner;
"Receiver" means any receiver and/or manager appointed pursuant to clause 7.2;
"Requisition Compensation" means all sums of money or other compensation from
time to time payable during the Security Period by reason fo the Compulsory
Acquisition of the Ship;
"Security Documents" means the Loan Agreement, the Agency Agreement, this Deed,
the [Eagle One][Eagle Two] Deed of Covenant, the Mortgages, any Manager's
Undertaking and any other such document as is defined in the Loan Agreement as a
Security Document or as may have been or may hereafter be executed to guarantee
and/or secure all or any part of the Loan, interest thereon and other moneys
from time to time owing by the Owner pursuant to the Loan Agreement;
"Security Period" means the period commencing on the date hereof and terminating
upon discharge of the security created by the Security Documents by payment of
all moneys payable thereunder;
"Security Trustee" includes the successors in title and assignees of the
Security Trustee;
"Ship" means the vessel ["EAGLE ONE"]["EAGLE TWO"] registered as a [Singapore]
ship under Official Number * and having IMO Number * and includes any share or
interest therein and her engines, machinery, boats, tackle, outfit, equipment,
spare gear, fuel, consumable or other stores, belongings and appurtenances
whether on board or ashore and whether now owned or hereafter acquired and also
any and all additions, improvements and replacements hereafter made in or to
such vessel or any part thereof or in or to her equipment and appurtenances
aforesaid;
"United Kingdom" means Great Britain and Northern Ireland.
3
1.3 Insurance terms
In clause 5.1.1:
1.3.1 "excess risks" means the proportion (if any) of claims for general
average, salvage and salvage charges and under the ordinary collision
clause not recoverable in consequence of the value at which the Ship is
assessed for the purpose of such claims exceeding her insured value.
1.3.2 "protection and indemnity risks" means the usual risks (including oil
pollution and freight, demurrage and defence cover) covered by a United
Kingdom protection and indemnity association or a protection and indemnity
association which is managed in London (including, without limitation, the
proportion (if any) of any sums payable to any other person or persons in
case of collision which are not recoverable under the hull and machinery
policies by reason of the incorporation therein of Clause 1 of the
Institute Time Clauses (Hulls) (1/10/83) or the Institute Amended Running
Down Clause (1/10/71) or any equivalent provision or (with respect to
Insurances commencing on or after 1/11/95) the Institute Time Clauses
1/11/95 which may be insured by entry with such an association);
1.3.3 "war risks" includes those risks covered by the standard form of English
marine policy with Institute War and Strikes Clauses (Time) (1/10/83)
attached or similar cover; and
1.3.4 "blocking" and "trapping risks" means risk of loss or damage to the Ship
caused by a blockage (or any attempt of a blockade) of any part, place,
canal, channel, river, waterway, sea or other areas whatsoever, or any
part thereof, or of any means of exit there from arising from the
deliberate act of any person or persons.
1.4 Construction of Mortgage terms
In the Mortgage:
1.4.1 [references to "interest" shall be construed as references to interest
covenanted to be paid in accordance with clause 3.1.2 and any interest
specified in paragraph (b) of the definition of "Expenses" in clause 1.2;
1.4.2 references to "principal" shall be construed as references to all moneys
(other than interest) for the time being comprised in the Outstanding
Indebtedness; and
1.4.3 the expression "all sums (whether principal interest commission fees or
otherwise) which are or at any time hereafter may be or become due and owing to
the Lenders and/or the Mortgagee" means the whole of the Outstanding
Indebtedness.]
1.5 Headings
Clause headings and the table of contents are inserted for convenience of
reference only and shall be ignored in the interpretation of this Deed.
1.6 Construction of certain terms
The provisions of clause 1.4 of the Loan Agreement shall apply to this
Deed as if set out herein and as if references therein to "this Agreement" were
references to "this Deed".
1.7 Conflict with Loan Agreement
This Deed shall be read together with the Loan Agreement but in case of
any conflict between the 2 instruments, the provisions of the Loan Agreement
shall prevail.
4
2 Mortgage and assignment
2.1 Mortgage and assignment
By way of security for payment of the Outstanding Indebtedness the Owner
with full title guarantee hereby mortgages and charges to and in favour of
the Security Trustee (as security agent and trustee on behalf of the
Finance Parties) all its rights, title and interest present an future in
and to the Mortgaged Property and, without prejudice to the generality of
the foregoing, hereby assigns and agrees to assign to the Security Trustee
(as security agent and trustee on behalf of the Finance Parties)
absolutely all its rights, title and interest in and to the Earnings, the
Insurances and any Requisition Compensation, and all its benefits and
interests present and future therein. Provided however that:
2.1.1 Earnings
the Earnings shall be payable to the Owner until such time as an Event of
Default shall occur and the Security Trustee shall direct to the contrary
whereupon the Owner shall forthwith, and the Security Trustee may at any
time thereafter (whilst such Event of Default shall be continuing or at
any time following service of a notice upon the Owner pursuant to clause
10.2 of the Loan Agreement), instruct the persons from whom the Earnings
are then payable to pay the same to the Security Trustee (as security
agent and trustee on behalf of the Finance Parties) or as it may direct
and any Earnings then in the hands of the Owner's brokers or other agents
shall be deemed to have been received by them for the use and on behalf of
the Security Trustee (as security agent and trustee on behalf of the
Finance Parties);
2.1.2 Insurances
unless and until an Event of Default shall occur (whereupon all insurance
recoveries shall be receivable by the Security Trustee (as security agent
and trustee on behalf of the Finance Parties) and applied in accordance
with clause 8.1 or clause 8.4 (as the case may be));
(a) any moneys payable under the Insurances other than any moneys payable
under any loss of earnings insurance, shall be payable in accordance
with the terms of the relevant Loss Payable Clause and the Security
Trustee will not in the meantime give any notification to the contrary
to the insurers as contemplated by the Loss Payable Clauses; and
(b) any insurance moneys received by the Security Trustee (as security
agent and trustee on behalf of the Finance Parties) in respect of any
major casualty (as specified in the relevant Loss Payable Clause)
shall, unless prior to receipt or whilst such moneys are in the hands
of the Security Trustee there shall have occurred an Event of Default
(whereupon such insurance moneys shall be applied in accordance with
clause 8.1 or clause 8.4 (as the case may be)), be paid over to the
Owner upon the Owner furnishing evidence satisfactory to the Security
Trustee that all loss and damage resulting from such casualty has been
properly made good and repaired, and that all repair accounts and
other liabilities whatsoever in connection with the casualty have been
fully paid and discharged by the Owner, provided however that the
insurers with whom the fire and usual marine risks insurances are
effected may, in the case of a major casualty, and with the previous
consent in writing of the Security Trustee, make payment on account of
repairs in the course of being effected.
2.2 Notice
The Owner hereby covenants and undertakes with the Security Trustee that
it will from time to time upon the written request of the Security Trustee
give written notice (in such form as the Security Trustee shall
reasonably require) of the assignment herein contained to the persons from
whom any part of the Mortgaged Property is or may be due. For the
avoidance of doubt, no notice of assignment of Earnings will be served on
any charterer of the Ship until there shall have occurred an Event of
Default which is continuing.
5
2.3 Use of Owner's name
The Owner covenants and undertakes with the Security Trustee to do or
permit to be done each and every act or thing which the Security Trustee
may from time to time require to be done for the purpose of enforcing the
Security Trustee's rights under this Deed and to allow its name to be used
as and when required by the Security Trustee for that purpose.
2.4 Reassignment
Upon payment and discharge in full to the satisfaction fo the Security
Trustee of the Outstanding indebtedness, the Security Trustee shall, at
the request and cost of the Owner, re-assign the Earnings, the Insurances
and any Requisition Compensation to the Owner or as it may direct.
3 Covenant to pay
3.1 In consideration of the Lenders' agreement to advance to the Owner the
total principal sum of $100,000,000 (receipt of [$50,000,000 of] which sum
the Owner hereby acknowledges) in accordance with the provisions of the
Loan Agreement, the Owner hereby covenants with the Security Trustee (as
security agent and trustee on behalf of the Finance Parties):
3.1.1 to repay the Loan by the instalments and on the dates referred to and
otherwise in the manner and upon the terms set out in the Loan Agreement;
3.1.2 to pay interest on the Loan, and on any overdue interest or other moneys
payable under the Loan Agreement, at the rate or rates from time to time
applicable thereto in the manner and upon the terms set out in the Loan
Agreement; and
3.1.3 to pay all other moneys payable by the Owner under the Security Documents
or any of them at the times and in the manner therein specified.
4 Continuing security and other matters
4.1 Continuing security
The security created by the Mortgage and this Deed shall:
4.1.1 be held by the Security Trustee as a continuing security for the payment
of the Outstanding indebtedness and the performance and observance of any
compliance with all of the covenants, terms and conditions contained in
the Security Documents, express or implied and the security so created
shall not be satisfied by any intermediate payment or satisfaction of any
part of the amount hereby and thereby secured (or by any settlement of
accounts between the Owner or any other person who may be liable to the
Security Trustee and/or any of the other Finance Parties in respect of the
outstanding Indebtedness or any part thereof and the Security trustee
and/or any of the other Finance parties);
4.1.2 be in addition to, and shall not in any way prejudice or affect, and may
be enforced by the Security Trustee (as security agent and trustee on
behalf of the Finance Parties) without prior recourse to, the security
created by any other of the Security Documents or by any present or future
Collateral Instruments, right or remedy held by or available to the
Security Trustee and/or any of the other Finance Parties or any right or
remedy of the Security Trustee and/or any of the other Finance Parties
thereunder; and
4.1.3 not be in any way prejudiced or affected by the existence of any of the
other Security Documents or any such Collateral Instrument, rights or
remedies or by the same becoming wholly or in part void, voidable or
unenforceable on any ground whatsoever or by the Security Trusted and/or
any of the other Finance Parties dealing with, exchanging, varying or
failing to perfect or enforce any of the same, or giving time for payment
or performance or indulgence or compounding with any other person liable.
6
4.2 Rights additional
All the rights, remedies and powers vested in the Security Trustee
hereunder shall be in addition to and not a limitation of any and every
other right, power or remedy vested in the Security Trustee and/or any
of the other Finance Parties under the Loan Agreement, this Deed, the
other Security Documents or any such Collateral Instrument or at law and
that all the powers so vested in the Security Trustee and/or any of the
other Finance Parties may be exercised from time to time and as often as
the Security Trustee and/or any of the other Finance Parties may deem
expedient.
4.3 No enquiry
Neither the Security Trustee nor any Receiver shall be obliged to make
any enquiry as to the nature or sufficiency of any payment received by
it under the Mortgage and/or this Deed or to make any claim or take any
action to collect any moneys hereby assigned or to enforce any rights or
benefits hereby assigned to the Security Trustee (as security agent and
trustee on behalf of the Finance Parties) or to which the Security
Trustee may at any time be entitled under the Mortgage and/or this Deed.
4.4 Obligations of Owner and Security Trustee
The Owner shall remain liable to perform all the obligations assumed by
it in relation to the Mortgaged Property and the Security Trustee shall
be under no obligation of any kind whatsoever in respect thereof or be
under any liability whatsoever in the event of any failure by the Owner
to perform its obligations in respect thereof.
4.5 Discharge of Mortgage
Notwithstanding that this Deed is expressed to be supplemental to the
Mortgage it shall continue in full force and effect after any discharge
of the Mortgage.
5 Covenants
5.1 The Owner hereby covenants with the Security Trustee (as security agent
and trustee on behalf of the Finance Parties) and undertakes throughout
the Security Period:
5.1.1 Insurance
(a) Insured risks, amounts and terms
to insure and keep the Ship insured free of cost and expense to the
Security Trustee and in the sole name of the Owner or, if so
required by the Security Trustee, in the joint names of the Owner
and the Security Trustee (as security agent and trustee on behalf
of the Finance Parties) (but without liability on the part of the
Security Trustee for premiums or calls):
(i) against fire and usual marine risks (including excess risks)
and war risks, on an agreed value basis, in such amounts (but
not in any event less than whichever shall be the greater of
(A) the market value of the Ship for the time being and (B)
such amount as when aggregated with the insured amounts of
the other Mortgaged Ships shall be at least equal 120% of the
Loan and upon such terms as shall from time to time be
approved (such approval not to be unreasonably withheld or
delayed) in writing by the Security Trustee;
(ii) against protection and indemnity risks (including pollution
risks for the highest amount in respect of which cover is or
may become available for ships of the same type, size, age
and flag as the Ship and a freight, demurrage and defence
cover) for the full value and tonnage of the Ship (as
approved in writing by the Security Trustee) and upon such
terms as shall from time to time be approved (such
7
approval not to be unreasonably withheld or delayed) in
writing by the Security Trustee;
(iii) against blocking and trapping risks in such amounts and upon
such terms as shall from time to time be approved (such
approval not to be unreasonably withheld or delayed) in
writing by the Security Trustee:
(iv) in respect of such other matters of whatsoever nature and
howsoever arising in respect of which insurance would be
maintained by a prudent owner of the Ship:
and to pay to the Security Trustee the cost (as conclusively
certified by the Security Trustee) of:
(aa) any mortgagee's interest insurance which the Security Trustee
(as security agent and trustee on behalf of the Finance
Parties) may from time to time effect in respect of the Ship
upon such terms and in such amounts (but so that the
aggregate amount of such insurance in respect of the Ship and
the other Mortgaged Ships shall not be less than 120% of the
Loan) as the Security Trustee shall deem desirable;
(bb) any mortgagee's interest insurance - additional perils
(pollution) coverage which the Security Trustee (as security
agent and trustee on behalf of the Finance Parties) may from
time to time effect in respect of the Ship upon such terms
and in such amounts (but so that the aggregate amount of such
insurance in respect of the Ship and the other Mortgaged
Ships shall not be less than 120% of the Loan) as the
Security Trustee shall deem desirable; and
(cc) any other insurance cover which the Security Trustee (as
security agent and trustee on behalf of the Finance Parties)
may from time to time effect in respect of the Ship and/or in
respect of its interest or potential third party liability as
mortgagee of the Ship as the Security Trustee shall deem
desirable having regard to any limitations in respect of
amount or extent of cover which may from time to time be
applicable to any of the other insurances referred to in this
clause 5.1.1 provided that such other insurance cover is one
that is customarily taken out by mortgagees of ships of this
type:
notwithstanding clause 5.1.1(aa), (bb) and (cc) above, if the Owner
can show to the satisfaction of the Security Trustee that the Owner
is able to obtain more competitive rates than the Security Trustee,
then the Owner may effect at the Owners cost such insurances for
and on behalf of the Security Trustee;
(b) Approved brokers, insurers and associations
to effect the insurances aforesaid in Dollars or in such currency
as the Security Trustee may approve from time to time and through
the Approved Brokers and with such insurance companies and/or
underwriters as shall from time to time be approved in writing by
the Security Trustee; provided however that the insurances against
war risks and protection and indemnity risks may be effected by the
entry of the Ship with such war risks and protection and indemnity
associations as shall from time to time be approved (such approval
not to be unreasonably withheld or delayed) in writing by the
Security Trustee and to permit as often as may be requested by the
Security Trustee and not restrict in anyway the Security Trustee's
and/or the Lenders' access to all slips, cover notes, policies,
certificates of entry or other instruments of insurance, and all
other records and statistics relating to the Insurances held with
the Approved Brokers and approved war risks and protection and
indemnity associations or any other person;
(c) Payment of premiums and calls
punctually to pay all premiums, calls, contributions or other sums
payable in respect of all such insurances;
8
(d) Renewal
at least 7 days before the relevant policies, contracts or entries
expire, to notify the Security Trustee of the names of the brokers
and/or the war risks and protection and indemnity associations
proposed to be employed by the Owner or any other party for the
purposes of the renewal of such insurances and of the amounts in
which such insurances are proposed to be renewed and the risks to
be covered and, subject to compliance with any requirements of the
Security Trustee pursuant to this clause 5.1.1, to procure that
appropriate instructions for the renewal of such insurances on the
terms so specified are given to the Approved Brokers and/or to the
approved war risks and protection and indemnity associations at
least 5 days before the relevant policies, contracts or entries
expire, and that the Approved Brokers and/or the approved war risks
and protection and indemnity associations will at least 2 days
before such expiry (or within such shorter period as the Security
Trustee may from time to time agree) confirm in writing to the
Security Trustee as and when such renewals have been effected in
accordance with the instructions so given;
(e) Guarantees
to arrange for the execution and delivery of such guarantees or
indemnities as may from time to time be required by any protection
and indemnity or war risks association;
(f) Hull policy documents, notices, loss payable clauses and brokers'
undertakings
to deposit with the Approved Brokers (or procure the deposit of)
all slips, cover notes, policies, certificates of entry or other
instruments of insurance from time to time issued in connection
with such of the insurances referred to in clause 5. 1. 1 (a) as
are effected through the Approved Brokers and procure that the
interest of the Security Trustee (as security agent and trustee on
behalf of the Finance Parties) shall be endorsed thereon by
incorporation of the relevant Loss Payable Clause and, where the
Insurances have been assigned to the Security Trustee (as security
agent and trustee on behalf of the Finance Parties), by means of a
Notice of Assignment of Insurances (signed by the Owner and by any
other assured who shall have assigned its interest in the
Insurances to the Security Trustee (as security agent and trustee
on behalf of the Finance Parties)) and that the Security Trustee
shall be furnished with pro forma copies thereof and a letter or
letters of undertaking from the Approved Brokers in such form as
shall from time to time be required by the Security Trustee;
(g) Associations' loss payable clauses, undertakings and certificates
to procure that any protection and indemnity and/or war risks
associations in which the Ship is for the time being entered shall
endorse the relevant Loss Payable Clause on the relevant
certificate of entry or policy and shall furnish the Security
Trustee with a copy of such certificate of entry or policy and a
letter or letters of undertaking in such form as shall from time to
time be required by the Security Trustee;
(h) Extent of cover and exclusions
to take all necessary action and comply with all requirements which
may from time to time be applicable to the Insurances (including,
without limitation, the making of all requisite declarations within
any prescribed time limits and the payment of any additional
premiums or calls) so as to ensure that the Insurances are not made
subject to any exclusions or qualifications to which the Security
Trustee has not given its prior written consent and are otherwise
maintained on terms and conditions from time to time approved in
writing by the Security Trustee;
(i) Correspondence with brokers and associations
to provide to the Security Trustee, at the time of each such
communication, copies of all material written communications
between the Owner and the Approved Brokers and
9
approved war risks and protection and indemnity associations which
relate to compliance with requirements from time to time applicable
to the Insurances including, without limitation, all requisite
material declarations and payments of additional premiums or calls
referred to in clause 5.1.1(a);
(j) Independent report
to provide or procure that the Approved Brokers provide to the
Security Trustee any information reasonably required by the
Security Trustee or its independent adviser to obtain, at its own
cost and expense, a detailed report signed by an independent firm
of marine insurance brokers appointed by the Security Trustee
dealing with the insurances maintained on the Ship and stating the
opinion of such firm as to the adequacy thereof;
(k) Collection of claims
to do all things necessary and provide all documents, evidence and
information to enable the Security Trustee to collect or recover
any moneys which shall at any time become due in respect of the
Insurances;
(l) Employment of Ship
not to employ the Ship or suffer the Ship to be employed otherwise
than in conformity with the terms of the Insurances (including any
warranties express or implied therein) without first obtaining the
consent of the insurers to such employment and complying with such
requirements as to extra premium or otherwise as the insurers may
prescribe;
(m) Application of recoveries
to apply all sums receivable under the Insurances which are paid to
the Owner in accordance with the Loss Payable Clauses in repairing
all damage and/or in discharging the liability in respect of which
such sums shall have been received;
5.1.2 Ship's name and registration
(a) not to change the name of the Ship without giving prior written
notice to the Security Trustee;
(b) to ensure the Ship is permanently registered as a [Singapore] ship
within 90 days of the date hereof;
(c) to keep the Ship registered as a [Singapore] ship;
(d) not do or suffer to be done anything, or omit to do anything the
doing or omission of which could or might result in such
registration being forfeited or imperilled or which could or might
result in the Ship being required to be registered otherwise than
as a [Singapore] ship; and
(e) not to register the Ship or permit its registration under any other
flag other than the Flag State or at any other port without the
prior written consent of the Security Trustee which shall not be
unreasonably withheld or delayed;
5.1.3 Repair
to keep the Ship in a good and efficient state of repair and procure
that all repairs to or replacement of any damaged, worn or lost parts or
equipment are effected in such manner (both as regards workmanship and
quality of materials) as not to diminish the value of the Ship;
5.1.4 Modification; removal of parts; equipment owned by third parties
not without the prior written consent of the Security Trustee to, or
suffer any other person to:
10
(a) make any modification to the Ship in consequence of which her
structure, type or performance characteristics could or might be
materially altered or her value materially reduced; or
(b) remove any material part of the Ship or any equipment the value of
which is such that its removal from the Ship would materially
reduce the value of the Ship without replacing the same with
equivalent parts or equipment which are owned by the Owner free
from Encumbrances; or
(c) install on the Ship any equipment owned by a third party which
cannot be removed without causing damage to the structure or fabric
of the Ship;
5.1.5 Maintenance of class; compliance with regulations
to maintain the Classification as the class of the Ship free of all
requirements and overdue recommendations of the Classification Society
and to comply with and ensure that the Ship at all times complies with
the provisions of the laws of the Flag State and all regulations and
requirements (statutory or otherwise) from time to time applicable to
vessels registered at the Registry or otherwise applicable to the Ship
and to permit as often as may be requested by the Security Trustee and
not in anyway restrict the Security Trustee's and/or the Lenders' access
to all class certificates and records of the Ship held with the
Classification Society or any other person;
5.1.6 Surveys
to submit the Ship to continuous surveys and such periodical or other
surveys as may be required for classification purposes and, upon
reasonable request, to supply to the Security Trustee copies of all
material survey reports issued in respect thereof;
5.1.7 Inspection
to ensure that the Security Trustee and the Lenders, by surveyors or
other persons appointed by it or them for such purpose, may at the
expense of the Lenders board the Ship at all reasonable times and
without causing any unnecessary delay in the Ship's schedule for the
purpose of inspecting her, her trading and other certificates, class
records, insurance documents, log books and records and to afford all
proper facilities for such inspections and for this purpose to give the
Security Trustee reasonable advance notice of any intended drydocking of
the Ship (whether for the purpose of classification, survey or
otherwise);
5.1.8 Prevention of and release from arrest
promptly to pay and discharge all debts, damages, liabilities and
outgoings whatsoever which have given or may give rise to maritime,
statutory or possessory liens on, or claims enforceable against, the
Ship, her Earnings or Insurances or any part thereof and, in the event
of a writ or libel being filed against the Ship, her Earnings or
Insurances or any part thereof, or of any of the same being arrested,
attached or levied upon pursuant to legal process or purported legal
process or in the event of detention of the Ship in exercise or
purported exercise of any such lien or claim as aforesaid, to procure
the release of the Ship, her Earnings and Insurances from such arrest,
detention, attachment or levy or, as the case may be, the discharge of
the writ or libel forthwith upon receiving notice thereof by providing
bail or procuring the provision of security or otherwise as the
circumstances may require;
5.1.9 Employment
not to employ the Ship or permit her employment in any manner, trade or
business which is forbidden by international law, or which is unlawful
or illicit under the law of any relevant jurisdiction, or in carrying
illicit or prohibited goods, or in any manner whatsoever which may
render her liable to condemnation in a prize court, or to destruction,
seizure, confiscation, penalty or sanctions and, in the event of
hostilities in any part of the world (whether war be declared or not),
not to employ the Ship or permit her employment in carrying any
contraband
11
goods, or enter or trade to or to continue to trade in any zone which
has been declared a war zone by any Government Entity or by the Ship's
war risks insurers without giving such war risk insurers and the
Security Trustee prior written notice of the Ship's proposed entry into
such war zone and to ensure that any such special or additional
insurance cover as the Security Trustee may reasonably require and is
customarily taken out for ships of the same type, size, age and flag as
the Ship shall have been effected by the Owner and at its expense;
5.1.10 Information
promptly to furnish the Security Trustee and/or the Lenders with all
such information as the Security Trustee and/or the Lenders may from
time to time reasonably require regarding the Ship, her employment,
position and engagements, particulars of all towages and salvages, her
insurances (and all records and statistics relating thereto), her
classification records and copies of all charters and other contracts
for her employment, or otherwise howsoever concerning her;
5.1.11 Notification of certain events
to notify the Lenders forthwith by facsimile transmission thereafter
confirmed by letter as soon as it becomes aware of:
(a) any damage to the Ship requiring repairs the cost of which will or
might exceed the Casualty Amount;
(b) any occurrence in consequence of which the Ship has or may become a
Total Loss:
(c) any requisition of the Ship for hire;
(d) any requirement or recommendation made by any insurer or the
Classification Society or by any competent authority which is not,
or cannot be, complied with in accordance with its terms;
(e) any arrest or detention of the Ship or any exercise or purported
exercise of a lien or other claim on the Ship or the Earnings or
Insurances or any part thereof; or
(f) the occurrence of any Environmental Claim against the Owner, the
Ship, any other Relevant Party or any other Relevant Ship or any
incident, event or circumstances which is likely to give rise to
any such Environmental Claim;
5.1.12 Payment of outgoings and evidence of payments
promptly to pay all tolls, dues and other outgoings whatsoever in
respect of the Ship and her Earnings and Insurances and to keep proper
books of account in respect of the Ship and her Earnings and, as and
when the Security Trustee may so require, to make such books available
for inspection on behalf of the Security Trustee, and to furnish
satisfactory evidence that the wages and allotments and the insurance
and pension contributions of the Master and crew are being promptly and
regularly paid and that all deductions from crew's wages in respect of
any applicable tax liability are being properly accounted for and that
the Master has no claim for disbursements other than those incurred by
him in the ordinary course of trading on the voyage then in progress;
5.1.13 Encumbrances
not without the prior written consent of the Security Trustee (and then
only subject to such conditions as the Security Trustee may impose) to
create or purport or agree to create or permit to arise or subsist any
Encumbrance (other than a Permitted Encumbrance) over or in respect of
the Ship, any share or interest therein or in any other part of the
Mortgaged Property otherwise than to or in favour of the Security
Trustee;
12
5.1.14 Sale or other disposal
not without the prior written consent of the Lenders (and then only
subject to such conditions as the Lenders may impose) to sell, agree to
sell, transfer, abandon or otherwise dispose of the Ship or any share or
interest therein except that the Owner shall have the right to sell the
Ship provided the proceeds of such sale shall be sufficient to prepay
the Eagle [One][Two] Advance pursuant to the provisions of clause 4.3 of
the Loan Agreement and all other terms of the Loan Agreement and the
other Security Documents remain satisfied;
5.1.15 Bareboat Charter
not without the prior written consent of the Security Trustee and, if
such consent (which consent not to be unreasonably withheld or delayed)
is given only subject to the conditions as specified in clause 8.2.8 of
the Loan Agreement, to let the Ship under any Bareboat Charter.
5.1.16 Time Charter
enter into any Time Charter without notifying the Agent and, if
requested by the Agent, providing a copy of such Time Charter (with any
confidential information deleted).
5.1.17 Sharing of Earnings
not without the prior written consent of the Security Trustee (such
consent not to be unreasonably withheld or delayed and then only subject
to such conditions as the Security Trustee may reasonably impose) to
enter into any agreement or arrangement whereby the Earnings may be
shared with any other person;
5.1.18 Payment of Earnings
after the occurrence of an Event of Default which is continuing, to
procure that the Earnings are paid to the Security Trustee (as security
agent and trustee on behalf of the Finance Parties) at all times if and
when the same shall be or become so payable in accordance with the
Security Documents and that any Earnings which are so payable and which
are in the hands of the Owner's brokers or agents are duly accounted for
and paid over to the Security Trustee (as security agent and trustee on
behalf of the Finance Parties) forthwith on demand;
5.1.19 Repairs exceeding Casualty Amount
not without the prior written notice given to the Security Trustee to
put the Ship into the possession of any person for the purpose of work
being done upon her in an amount exceeding or likely to exceed the
Casualty Amount;
5.1.20 Approved Manager
(a) not without the prior written consent of the Security Trustee
(which shall not be unreasonably withheld or delayed) to appoint a
technical, commercial or crewing manager of the Ship other than the
Approved Manager or terminate or amend the terms of the relevant
Management Agreement;
(b) duly and punctually perform its obligations under any Management
Agreement;
5.1.21 Notice of Mortgage
to place and at all times and places to retain a properly certified copy
of the Mortgage and this Deed (which shall form part of the Ship's
documents) on board the Ship with her papers and cause such certified
copy of the Mortgage and this Deed to be exhibited to any and all
persons having business with the Ship which might create or imply any
commitment or encumbrance whatsoever on or in respect of the Ship (other
than a lien for crew's wages and salvage) and to any representative of
the Security Trustee and to place and keep prominently displayed in the
13
navigation room and in the Master's cabin of the Ship a framed printed
notice in plain type reading as follows:
"NOTICE OF MORTGAGE"
This Ship is subject to a first priority mortgage and deed of covenant
in favour of DANMARKS SKIBSIKREDITFOND of Sankt ▇▇▇▇▇ ▇▇▇▇▇ ▇-▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇, ▇▇▇▇▇▇▇ (as security agent and trustee
on behalf of a syndicate of banks and financial institutions and other
ancillary parties). Under the said mortgage and deed of covenant,
neither the Owner nor any charterer nor the Master of this Ship has any
right, power or authority to create, incur or permit to be imposed upon
this Ship any commitments or encumbrances whatsoever other than for
crew's wages and salvage"
and in terms of the said notice it is hereby agreed that save and
subject as otherwise herein provided, neither the Owner nor any
charterer nor the Master of the Ship nor any other person has any right,
power or authority to create, incur or permit to be imposed upon the
Ship any lien whatsoever other than for crew's wages and salvage;
5.1.22 Conveyance on default
where the Ship is (or is to be) sold in exercise of any power contained
in this Deed or otherwise conferred an the Security Trustee, to execute,
forthwith upon request by the Security Trustee, such form of conveyance
of the Ship as the Security Trustee may require;
5.1.23 Anti-drug abuse
without prejudice to clause 5.1.9, to take all necessary and proper
precautions to prevent any infringements of the Anti-Drug Abuse Act of
1986 of the United States of America or any similar legislation
applicable to the Ship in any jurisdiction in or to which the Ship shall
be employed or located or trade or which may otherwise be applicable to
the Ship and/or the Owner and, if the Lenders shall so require, to enter
into a "Carrier Initiative Agreement" with the United States Customs
Service and to procure that the same agreement (or any similar agreement
hereafter introduced by any Government Entity of the United States of
America) is maintained in full force and effect and performed by the
Owner; and
5.1.24 Compliance with Environmental Laws
to comply with, and procure that all Environmental Affiliates of the
Owner comply with, all Environmental Laws including, without limitation,
requirements relating to ▇▇▇▇▇▇▇ and establishment of financial
responsibility and to obtain and comply with, and procure that all
Environmental Affiliates of the Owner comply with, all Environmental
Approvals.
6 Powers of Security Trustee to protect security and remedy defaults
6.1 Protective action
The Security Trustee (as security agent and trustee on behalf of the
Finance Parties) shall, without prejudice to its other rights, powers
and remedies under any of the Security Documents, be entitled (but not
bound) at any time, and as often as may be necessary, to take any such
action as it may in its discretion think fit for the purpose of
protecting or maintaining the security created by this Deed and the
other Security Documents, and all Expenses attributable thereto shall be
payable by the Owner on demand.
6.2 Remedy of defaults
Without prejudice to the generality of the provisions of clause 6.1:
6.2.1 if the Owner fails to comply with any of the provisions of clause 5.1.1
the Security Trustee shall be entitled (but not bound) to effect and
thereafter to maintain all such insurances upon the Ship as in its
discretion it may think fit in order to procure the compliance with such
provisions or
14
alternatively, to require the Ship (at the Owner's risk) to remain in,
or to proceed to and remain in a port designated by the Security Trustee
until such provisions are fully complied with;
6.2.2 if the Owner fails to comply with any of the provisions of clauses
5.1.3, 5.1.5 or 5.1.6, the Security Trustee shall be entitled (but not
bound) to arrange for the carrying out of such repairs, changes or
surveys as it may deem expedient or necessary in order to procure the
compliance with such provisions; and
6.2.3 if the Owner fails to comply with any of the provisions of clause 5.1.8
the Security Trustee shall be entitled (but not bound) to pay and
discharge all such debts, damages, liabilities and outgoings as are
therein mentioned and/or to take any such measures as it may deem
expedient or necessary for the purpose of securing the release of the
Ship in order to procure the compliance with such provisions,
and the Expenses attributable to the exercise by the Security Trustee of
any such powers shall be payable by the Owner to the Security Trustee
on demand.
7 Powers of Security Trustee on Event of Default
7.1 Powers
Upon the happening of any Event of Default, the Lenders (or the Agent
with the prior approval of the Lenders) shall become forthwith entitled
by notice given to the Owner in accordance with the provisions of clause
10.2 of the Loan Agreement to declare the Outstanding Indebtedness to be
due and payable immediately or in accordance with such notice, whereupon
the Outstanding Indebtedness shall become so due and payable and
(whether or not the Lenders (or the Agent with the prior approval of the
Lenders) shall have given any such notice) the Security Trustee (as
security agent and trustee on behalf of the Finance Parties) shall
become forthwith entitled, as and when it may see fit, to put into force
and exercise in relation to the Mortgaged Property or any part thereof
all or any of the rights, powers and remedies possessed by it as
mortgagee of the Mortgaged Property (whether at law, by virtue of the
Mortgage and this Deed or otherwise) and in particular (without limiting
the generality of the foregoing):
7.1.1 to take possession of the Ship;
7.1.2 by notice to the Owner and/or the Approved Manager to request that (a)
the crew be ordered to remain on board the Ship and/or (b) the Master of
the Ship be ordered to sail the Ship to any port designated by the
Security Trustee and/or (c) the Owner and/or the Approved Manager do all
such things as may be requested by the Security Trustee;
7.1.3 to require that all policies, contracts, certificates of entry and other
records relating to the Insurances (including details of and
correspondence concerning outstanding claims) be delivered forthwith to
such adjusters and/or brokers and/or other insurers as the Security
Trustee and/or the Lenders may nominate;
7.1.4 to collect, recover, compromise and give a good discharge for, all
claims then outstanding or thereafter arising under the Insurances or
any of them or in respect of any other part of the Mortgaged Property,
and to take over or institute (if necessary using the name of the Owner)
all such proceedings in connection therewith as the Security Trustee in
its absolute discretion thinks fit, and, in the case of the Insurances,
to permit the brokers through whom collection or recovery is effected to
charge the usual brokerage therefor;
7.1.5 to discharge, compound, release or compromise claims in respect of the
Ship or any other part of the Mortgaged Property which have given or may
give rise to any charge or lien or other claim on the Ship or any other
part of the Mortgaged Property or which are or may be enforceable by
proceedings against the Ship or any other part of the Mortgaged
Property;
7.1.6 to sell the Ship or any share or interest therein with or without prior
notice to the Owner, and with or without the benefit of any
charterparty, and free from any claim by the Owner (whether in
admiralty, in equity, at law or by statute) by public auction or private
contract, at such place and
15
upon such terms as the Security Trustee in its absolute discretion may
determine, with power to postpone any such sale, and without being
answerable for any loss occasioned by such sale or resulting from
postponement thereof and with power, where the Security Trustee and/or
any of the Lenders purchase the Ship, to make payment of the sale price
by making an equivalent reduction in the amount of the Outstanding
Indebtedness in the manner referred to in clause 8.1;
7.1.7 to manage, insure, maintain and repair the Ship, and to employ, sail or
lay up the Ship in such manner and for such period as the Security
Trustee, in its absolute discretion, deems expedient accounting only for
net profits arising from any such employment; and
7.1.8 to recover from the Owner on demand all Expenses incurred or paid by the
Security Trustee in connection with the exercise of the powers (or any
of them) referred to in this clause 7.1.
7.2 Receiver
7.2.1 Appointment
At any time after the Outstanding Indebtedness shall have become due and
payable in accordance with a notice given by the Lenders (or the Agent
with the prior approval of the Lenders) to the Owner pursuant to clause
10.2 of the Loan Agreement, the Security Trustee shall be entitled (but
not bound) by writing executed as a deed or under the hand of any
Director or officer of the Security Trustee to appoint any person or
persons to be a receiver and/or manager of the Mortgaged Property or any
part thereof (with power to authorise any joint receiver and/or manager
to exercise any power independently of any other joint receiver and/or
manager) and may from time to time fix his remuneration, and may remove
any receiver and/or manager so appointed and appoint another in his
place. Any receiver and/or manager so appointed shall be the agent of
the Owner and the Owner shall be solely responsible for his acts or
defaults and for his remuneration, and such receiver and/or manager so
appointed shall have all powers conferred by the Law of Property ▇▇▇
▇▇▇▇ without the restrictions contained in sections 93 and 103 of that
Act and, in addition, power on behalf of and at the cost of the Owner
(notwithstanding any liquidation of the Owner) to do or omit to do
anything which the Owner could do or omit to do in relation to the
Mortgaged Property or any part thereof and in particular (but without
prejudice to the generality of the foregoing) any such receiver and/or
manager may exercise all the powers and discretions conferred on the
Security Trustee by the Mortgage and this Deed.
7.2.2 Remuneration
Any Receiver shall be entitled to reasonable remuneration appropriate to
the work and responsibilities involved, upon the basis of charging from
time to time adopted by the Receiver in accordance with the current
practice of his firm, without being limited to the maximum rate
specified in section 109(6) of the Law of Property ▇▇▇ ▇▇▇▇.
7.2.3 Liability of mortgagee in possession
Neither the Security Trustee nor any Receiver shall be liable as
mortgagee in possession in respect of all or any of the Mortgaged
Property to account or be liable for any loss upon realisation or for
any neglect or default of any nature whatsoever in connection therewith
for which a mortgagee in possession may be liable as such.
7.3 Dealings with Security Trustee or Receiver
Upon any sale of the Ship or any share or interest therein by the
Security Trustee pursuant to clause 7.1.6 or pursuant to clause 11.1,
or by any Receiver, the purchaser shall not be bound to see or enquire
whether the Security Trustee's power of sale has arisen in the manner
provided in this Deed and the sale shall be deemed to be within the
power of the Security Trustee (or the Receiver, as the case may be) and
the receipt of the Security Trustee (or the Receiver, as the case may
be) for the purchase money shall effectively discharge the purchaser who
shall not be concerned with the manner of application of the proceeds of
sale or be in any way answerable
16
therefor and the sale shall operate to divest the Owner of all rights,
title and interest of any nature whatsoever in the Ship and to bar any
such interest of the Owner and all persons claiming through or under the
Owner.
8 Application of moneys
8.1 Application
All moneys received by the Security Trustee (as security agent and
trustee on behalf of the Finance Parties) or any Receiver in respect of:
8.1.1 sale of the Ship or any share or interest therein;
8.1.2 recovery under the Insurances (other than under any loss of earnings
insurance and any such sum or sums as may have been received by the
Security Trustee in accordance with the relevant Loss Payable Clause in
respect of a major casualty as therein defined and paid over to the
Owner as provided in clause 2.1.2(b) or which fall to be otherwise
applied under clause 8.4);
8.1.3 Requisition Compensation; and
8.1.4 in respect of the employment of the Ship pursuant to the provisions of
clause 7.1.7.
shall be held by it upon trust in the first place to pay or make good
the Expenses and the balance shall:
(a) in the case of money received in respect of a sale of the Ship or
any share or interest therein which has been requested by the Owner
and approved by the Lenders or in the case of moneys received in
respect of a recovery under the insurances in relation to a Total
Loss of the Ship or Requisition Compensation and in each case if no
Event of Default has occurred:
(i) if no Default has occurred and is continuing, be applied in
accordance with clause 4.3 of the Loan Agreement; or
(ii) if a Default has occurred and is continuing, such moneys
shall be applied in accordance with clause 4.3 of the Loan
Agreement and/or shall be applied by the Security Trustee in
or towards satisfaction of any sums from time to time
accruing due and payable by the Owner under any of the
Security Documents by virtue of payment demanded thereunder,
in each case as the Security Trustee may in its absolute
discretion determine; and
(b) if an Event of Default has occurred, be applied by the Security
Trustee in the manner specified in clause 13.1 of the Loan
Agreement and/or clause 8.1.4(a)(ii) above, as the Security Trustee
may in its absolute discretion determine.
8.2 Shortfalls
In the event that the balance referred to in clause 8.1 is insufficient
to pay in full the whole of the Outstanding Indebtedness, the Security
Trustee or the Receiver, as the case may be, shall be entitled to
collect the shortfall from the Owner or any other person liable for the
time being therefor.
8.3 Application of Earnings received by Security Trustee or Receiver
Any moneys received by the Security Trustee or any Receiver in respect
of the Earnings shall:
8.3.1 if received by the Security Trustee, or in the hands of the Security
Trustee, after a Default has occurred but prior to the occurrence of an
Event of Default, be retained by the Security Trustee and shall be paid
over by the Security Trustee, to the Owner at such times, in such
amounts
17
and for such purposes and/or shall be applied by the Security Trustee,
in or towards satisfaction of any sums from time to time accruing due
and payable by the Owner under the Security Documents or any of them or
by virtue of payment demanded thereunder, in each case as the Security
Trustee, may in its absolute discretion determine;
8.3.2 if received by the Security Trustee or any Receiver, or in the hands of
the Security Trustee or any Receiver, after the occurrence of an Event
of Default, be applied by the Security Trustee or any Receiver, in the
manner specified in clause 8.1 and/or clause 8.3.1, as the Security
Trustee or any Receiver, may in its absolute discretion determine.
8.4 Application of Insurances received by Security Trustee or Receiver
Any moneys received by the Security Trustee or any Receiver in respect
of the Insurances (other than in respect of a Total Loss) shall:
8.4.1 if received by the Security Trustee, or in the hands of the Security
Trustee, after the occurrence of a Default but prior to the occurrence
of an Event of Default, be retained by the Security Trustee, and shall
be paid over by the Security Trustee, to the Owner at such times, in
such amounts and for such purposes and/or shall be applied by the
Security Trustee, in or towards satisfaction of any sums from time to
time accruing due and payable by the Owner under the Security Documents
or any of them or by virtue of payment demanded thereunder, in each case
as the Security Trustee, may in its absolute discretion determine;
8.4.2 if received by the Security Trustee or any Receiver, or in the hands of
the Security Trustee or any Receiver, after the occurrence of an Event
of Default, be applied by the Security Trustee or such Receiver, in the
manner specified in clause 8.1 and/or clause 8.4.1, as the Security
Trustee or any Receiver, may in its absolute discretion determine.
9 Remedies cumulative and other provisions
9.1 No implied waivers; remedies cumulative
No failure or delay on the part of the Security Trustee and/or any of
the other Finance Parties to exercise any right, power or remedy vested
in it or them under any of the Security Documents shall operate as a
waiver thereof, nor shall any single or partial exercise by the Security
Trustee and/or any of the other Finance Parties of any right, power or
remedy nor the discontinuance, abandonment or adverse determination of
any proceedings taken by the Security Trustee and/or any of the other
Finance Parties to enforce any right, power or remedy preclude any other
or further exercise thereof or proceedings to enforce the same or the
exercise of any other right, power or remedy nor shall the giving by the
Security Trustee of any consent to any act which by the terms of this
Deed requires such consent prejudice the right of the Security Trustee
to withhold or give consent to the doing of any other similar act. The
remedies provided in the Security Documents are cumulative and are not
exclusive of any remedies provided by law.
9.2 Delegation
The Security Trustee shall be entitled, at any time and as often as may
be expedient, to delegate all or any of the powers and discretions
vested in it by the Mortgage and this Deed (including the power vested
in it by virtue of clause 11) or any of the other Security Documents in
such manner, upon such terms, and to such persons as the Security
Trustee in its absolute discretion may think fit.
9.3 Incidental powers
The Security Trustee shall be entitled to do all acts and things
incidental or conducive to the exercise of any of the rights, powers or
remedies possessed by it as mortgagee of the Ship (whether at law, under
the Mortgage and/or this Deed or otherwise) and in particular (but
without prejudice to the generality of the foregoing), upon becoming
entitled to exercise any of its powers under clause 7.1, the Security
Trustee shall be entitled to discharge any cargo on
18
board the Ship (whether the same shall belong to the Owner or any other
person) and to enter into such other arrangements in respect of the
Ship, her insurances, management, maintenance, repair, classification
and employment in all respects as if the Security Trustee was the owner
of the Ship, but without being responsible for any loss incurred as a
result of the Security Trustee doing or omitting to do any such acts or
things as aforesaid.
10 Costs and indemnity
10.1 Costs
The Owner shall pay to the Security Trustee (as security agent and
trustee on behalf of the Finance Parties) on demand on a full indemnity
basis all expenses or liabilities of whatsoever nature (including legal
fees, fees of insurance advisers, printing, out-of-pocket expenses,
stamp duties, registration fees and other duties or charges) together
with any value added tax or similar tax payable in respect thereof,
properly incurred by the Security Trustee and/or any of the other
Finance Parties in connection with the enforcement of, or preservation
of any rights under, the Mortgage, this Deed, or otherwise in respect of
the Outstanding Indebtedness and the security therefor or in connection
with the preparation, completion, execution or registration of the
Mortgage and this Deed.
10.2 Security Trustee's and Receiver's Indemnity
The Owner hereby agrees and undertakes to indemnify the Security Trustee
and any Receiver against all losses, actions, claims, expenses, demands,
obligations and liabilities whatever and whenever arising which may now
or hereafter be incurred by the Security Trustee or any such Receiver,
or by any manager, agent, officer or employee for whose liability, act
or omission it or he may be answerable, in respect of, in relation to,
or in connection with anything done or omitted in the exercise or
purported exercise of the powers contained in the Mortgage, this Deed,
or otherwise in connection therewith and herewith or with any part of
the Mortgaged Property or otherwise howsoever in relation to, or in
connection with, any of the matters dealt with in the Mortgage and this
Deed.
11 Attorney
11.1 Power
By way of security, the Owner hereby irrevocably appoints the Security
Trustee (as security agent and trustee on behalf of the Finance Parties)
and any Receiver, jointly and also severally, to be its attorney
generally for and in the name and on behalf of the Owner, and as the act
and deed or otherwise of the Owner to execute, seal and deliver and
otherwise perfect and do all such deeds, assurances, agreements,
instruments, acts and things which may be required for the full exercise
of all or any of the rights, powers or remedies conferred by the
Mortgage, this Deed, the Loan Agreement or any of the other Security
Documents, or which may be deemed proper in or in connection with all or
any of the purposes aforesaid (including, without prejudice to the
generality of the foregoing, the execution and delivery of a ▇▇▇▇ of
sale of the Ship). The power hereby conferred shall be a general power
of attorney under the Powers of ▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇, and the Owner
ratifies and confirms, and agrees to ratify and confirm, any deed,
assurance, agreement, instrument, act or thing which the Security
Trustee or the Receiver may execute or do pursuant thereto. Provided
always that such power shall not be exercisable by or on behalf of the
Security Trustee until the happening of an Event of Default. which is
continuing
11.2 Exercise of power
The exercise of such power by or on behalf of the Security Trustee or
any Receiver shall not put any person dealing with the Security Trustee
or the Receiver upon any enquiry as to whether any Event of Default has
happened, nor shall such person be in any way affected by notice that no
such Event of Default has happened, and the exercise by the Security
Trustee or the Receiver of such power shall be conclusive evidence of
the Security Trustee's or such Receivers right to exercise the same.
19
11.3 Filings
The Owner hereby irrevocably appoints the Security Trustee (as security
agent and trustee on behalf of the Finance Parties) and any Receiver
jointly and also severally to be its attorney in its name and on its
behalf and as its act and deed or otherwise of it, to agree' the form of
and to execute and do all deeds, instruments, acts and things in order
to file, record, register or enroll the Mortgage and/or this Deed in any
court, public office or elsewhere which the Security Trustee may in its
discretion consider necessary or advisable, now or in the future, to
ensure the legality, validity, enforceability or admissibility in
evidence thereof and any other assurance, document, act or thing
required to be executed by the Owner pursuant to clause 12.
12 Further assurance
12.1 The Owner hereby further undertakes at its own expense from time to time
to execute, sign, perfect, do and (if required) register every such
further assurance, document, act or thing as in the opinion of the
Security Trustee may be necessary or desirable for the purpose of more
effectually mortgaging and charging the Mortgaged Property, perfecting
the security constituted or intended to be constituted by the Mortgage
and this Deed or permitting the Security Trustee and/or the Lenders to
have access to the class certificates and records of the Ship or to the
slips, cover notes, policies, certificates of entry or other instruments
of insurance and all other records and statistics relating to the
Insurances.
13 Notices
13.1 The provisions of clause 16.1 of the Loan Agreement shall apply mutatis
mutandis in respect of any certificate, notice, demand or other
communication given or made under this Deed.
14 Counterparts
14.1 This Deed may be entered into in the form of 2 counterparts, each
executed by one of the parties, and, provided both the parties shall so
execute this Deed, each of the executed counterparts, when duly
exchanged or delivered, shall be deemed to be an original but, taken
together, they shall constitute one instrument.
15 Successors and assigns
15.1 Benefit and burden; no assignment by Owner
This Deed shall be binding upon the Owner and its successors, and shall
enure to the benefit of the Security Trustee (as security agent and
trustee on behalf of the Finance Parties), the Finance Parties and their
successors in title, Assignees and Substitutes, except that the Owner
may not assign any of its rights or obligations hereunder without the
prior written consent of the Security Trustee. The Owner expressly
acknowledges and accepts the provisions of clause 14 of the Loan
Agreement and agrees that any person in favour of whom an assignment or
transfer is made in accordance with such clause shall be entitled to the
benefit of this Deed.
16 Severability of provisions
16.1 Each of the provisions in this Deed is severable and distinct from the
others, and if at any time one or more such provisions is or becomes
invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions of this Deed shall not in any
way be affected or impaired thereby.
17 Law and jurisdiction
17.1 Law
This Deed is governed by, and shall be construed in accordance with,
English law.
20
17.2 Submission to jurisdiction
For the benefit of the Security Trustee and the other Finance Parties,
the parties hereto irrevocably agree that any legal action or
proceedings in connection with the Mortgage and/or this Deed may be
brought in the English courts or in the courts of any other country
chosen by the Security Trustee and/or any of the other Finance Parties,
each of which shall have jurisdiction to settle any disputes arising out
of or in connection with the Mortgage and/or this Deed. The Owner
irrevocably and unconditionally submits to the jurisdiction of the
English courts and the courts of any country chosen by the Security
Trustee and/or any of the other Finance Parties and irrevocably
designates, appoints and empowers American Eagle Tankers UK Limited at
present of ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇ to
receive, for it and on its behalf, service of process issued out of the
English courts in any legal action or proceedings arising out of or in
connection with the Mortgage and/or this Deed. The submission to such
jurisdiction shall not (and shall not be construed so as to) limit the
right of the Security Trustee and/or any of the other Finance Parties to
take proceedings against the Owner in any other court of competent
jurisdiction nor shall the taking of proceedings in any one or more
jurisdictions preclude the taking of proceedings in any other
jurisdiction, whether concurrently or not. The parties further agree
that only the courts of England and not those of any other State shall
have jurisdiction to determine any claim which the Owner may have
against the Security Trustee and/or any of the other Finance Parties
arising out of or in connection with the Mortgage and/or this Deed.
18 Third party rights
No term of this Deed shall be enforceable pursuant to the Contracts
(Rights of Third Parties) ▇▇▇ ▇▇▇▇ by a person who is not a party to
this Deed.
IN WITNESS whereof this Deed has been duly executed as a deed the day and year
first above written.
21
Schedule 1
Names and addresses of Lenders
1 Danmarks Skibskreditfond
Sankt ▇▇▇▇▇ ▇▇▇▇▇ ▇-▇
▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ K
Denmark
Fax: ▇▇ ▇▇ ▇▇ ▇▇ ▇▇▇▇
22
Schedule 2
Forms of Loss Payable Clauses
(A) Hull and machinery (marine and war risks)
By a Deed of Covenant dated . 2001 AMERICAN EAGLE TANKERS INC. LIMITED of
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ (▇▇▇ "Owner") has
assigned to DANMARKS SKIBSKREDITFOND of Sankt ▇▇▇▇▇ ▇▇▇▇▇ ▇-▇, ▇▇▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇, ▇▇▇▇▇▇▇ (the "Security Trustee") (as security agent
and trustee on behalf of the Agent, the Arranger, the Underwriter and the
banks and financial institutions listed in schedule 1 to the Deed of
Covenant (the "Finance Parties")) all the Owner's rights, title and
interest in and to all policies and contracts of insurance from time to
time taken out or entered into by or for the benefit of the Owner in
respect of m.v. ["EAGLE ONE"] ["EAGLE TWO"] and accordingly:
(a) all claims hereunder in respect of an actual or constructive or
compromised or arranged total loss, and all claims in respect of a
major casualty (that is to say any casualty the claim in respect of
which exceeds $3,000,000 (or the equivalent in any other currency)
inclusive of any deductible) shall be paid in full to Security Trustee
(on behalf of the Finance Parties) or to the Security Trustee's order;
and
(b) all other claims hereunder shall be paid in full to the Owner or to
its order, unless and until the Security Trustee shall have notified
the insurers hereunder to the contrary, whereupon all such claims
shall be paid to the Security Trustee (on behalf of the Finance
Parties) or to the Security Trustee's order.
(B) War risks
It is noted that DANMARKS SKIBSKREDITFOND of Sankt ▇▇▇▇▇ ▇▇▇▇▇ ▇-▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇, ▇▇▇▇▇▇▇ (the "Security Trustee") is
interested as first assignee (as security agent and trustee on behalf of
the Agent, the Arranger, the Underwriter and the banks and financial
institutions listed in schedule 1 to a Deed of Covenant dated . 2001 (the
"Finance Parties")) in the subject matter of this insurance. Save as
hereinafter provided, all claims (whether in respect of actual,
constructive, arranged or compromised total loss or otherwise) which, but
for this Loss Payable Clause would be payable to AMERICAN EAGLE TANKERS
INC. LIMITED of ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ (▇▇▇
"Owner") shall be payable to or to the Security Trustee's order, provided
always that unless and until notice in writing to the contrary has been
received by the Association, claims (other than total loss claims) not
exceeding $3,000,000 (or the equivalent in any other currency) in respect
of any one claim shall be paid direct to the Owner or to its order.
(C) Protection and indemnity risks
Payment of any recovery which AMERICAN EAGLE TANKERS INC. LIMITED of ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ (▇▇▇ "Owner") is entitled to
make out of the funds of the Association in respect of any liability, costs
or expenses incurred by the Owner, shall be made to the Owner or to its
order, unless and until the Association receives notice to the contrary
from DANMARKS SKIBSKREDITFOND of Sankt ▇▇▇▇▇ ▇▇▇▇▇ ▇-▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇, ▇▇▇▇▇▇▇ (the "Security Trustee") (as security agent and
trustee on behalf of the Agent, the Arranger, the Underwriter and the banks
and financial institutions listed in schedule 1 to a Deed of Covenant
dated . 2001 (the "Finance Parties")) in which event all recoveries shall
thereafter be paid to or to the Security Trustee's order; provided always
that no liability whatsoever shall attach to the Association, its Managers
or their agents for failure to comply with the latter obligation until the
expiry of 2 clear business days from the receipt of such notice.
23
Schedule 3
Form of Notice of Assignment of Insurances
(For attachment by way of endorsement to the Policy)
1 AMERICAN EAGLE TANKERS INC. LIMITED of ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ the Owner of the m.v. ["EAGLE ONE"] ["EAGLE TWO"] (the
"Ship") HEREBY GIVES NOTICE that by a Deed of Covenant dated . 2001 and
entered into by us with DANMARKS SKIBSKREDITFOND of Sankt ▇▇▇▇▇ ▇▇▇▇▇ ▇-▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇, ▇▇▇▇▇▇▇ (the "Security Trustee"), there
has been assigned by us to the Security Trustee (as security agent and
trustee on behalf of the Agent, the Arranger, the Underwriter and the banks
and financial institutions listed in schedule 1 to a Deed of Covenant
dated . 2001 (the "Finance Parties")) as first mortgagees of the said
vessel all insurances in respect thereof, including the insurances
constituted by the Policy whereon this notice is endorsed.
2 You are hereby irrevocably authorised and instructed to pay as from the
date hereof all payments under all insurances and all entries in a
Protection and Indemnity or War Risks Association or Club in accordance
with the enclosed loss payable clause.
3 You are hereby instructed to endorse details of the assignment, notice of
which is given to you herein, on all policies or entries relating to the
Ship.
Signed
For and on behalf of
AMERICAN EAGLE TANKERS INC. LIMITED
................. 200.
24
Schedule 4
Notice of Assignment of Earnings
To whom it may concern
TAKE NOTICE THAT:
By a Deed of Covenant dated 2001 and made between ourselves and
DANMARKS SKIBSKREDITFOND of Sankt ▇▇▇▇▇ ▇▇▇▇▇ ▇-▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇, ▇▇▇▇▇▇▇ (the "Security Trustee") (as security agent and trustee on
behalf of the Agent, the Arranger, the Underwriter and the banks and financial
institutions listed in schedule 1 to a Deed of Covenant dated . 2001 (the
"Finance Parties")) we have assigned to the Security Trustee (as security agent
and trustee on behalf of the Finance Parties) all our rights, title and interest
in and to all earnings of our vessel m.v. ["EAGLE ONE"] ["EAGLE TWO"] Call sign
and Official No. . registered in Singapore and all such
earnings shall be paid to the Owner until such time as a Default (as defined in
the Deed of Covenant) shall occur and the Security Trustee shall direct to the
contrary whereupon all such earnings shall be payable to the Security Trustee
(as security agent and trustee on behalf of the Finance Parties) or as it may
direct.
------------------------------------
For and on behalf of
AMERICAN EAGLE TANKERS INC. LIMITED
25
[SIGNED, SEALED and DELIVERED )
as a DEED by )
for and on behalf of )
AMERICAN EAGLE TANKERS INC. LIMITED )
pursuant to a power of attorney ) ------------------------------
dated 200. ) Attorney-in-Fact)
in the presence of:
SIGNED, SEALED and DELIVERED )
as a DEED by )
for and on behalf of )
DANMARKS SKIBSKREDITFOND )
(as Security Trustee) )
pursuant to a power of attorney ) ------------------------------
dated 200. ) Attorney-in-Fact)
in the presence of:
26
Schedule 6
Form of Manager's Undertaking
Part 1
(If the Approved Manager is NOL or a Subsidiary thereof, other than the
Borrower)
To: Danmarks Skibskreditfond
Sankt ▇▇▇▇▇ ▇▇▇▇▇ ▇-▇
▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ K
Denmark
As Security Trustee on behalf of the Lenders
From: [Insert name and address of the Manager]
{date}
Dear Sirs
US$100,000,000 Loan to American Eagle Tankers Inc. Limited
1 Loan Agreement
We understand that under a Loan Agreement (the "Loan Agreement") dated 29 May
2001 between (1) Danmarks Skibskreditfond in its capacity as agent, (2)
Danmarks Skibskreditfond in its capacity as arranger and underwriter, (3)
Danmarks Skibskreditfond in your capacity as security trustee (the "Security
Trustee") (4) the banks and financial institutions listed in schedule 1
therein (the "Lenders" which expression includes the Lenders' successors and
assigns) and (5) American Eagle Tankers Inc. Limited (the "Borrower"), the
Lenders agreed to make a loan (the "Loan") to the Borrower and that it is a
condition to the Lenders' agreement to make the Loan to the Borrower that we
[insert name of Approved Manager] (the "Manager") enter into this letter in
favour of you as Security Trustee on behalf of the Lenders.
2 Confirmation of appointment
We hereby confirm that:
(a) we have been appointed as the manager of m.v. ["EAGLE [ONE][TWO]"] (the
"Ship" registered under the [Singapore][USA] flag pursuant to a Management
Agreement (the "Management Agreement") dated {date} between ourselves and
the Borrower (as owner of the Ship) and that we have accepted our
appointment thereunder in accordance with the terms and conditions
thereof; and
(b) to the best of our knowledge the representations and warranties made by
the Borrower set out in clauses 7.2.8, 7.2.9 and 7.2.10 of the Loan
Agreement are true and correct.
3 Representation and warranty
We hereby represent and warrant that the copy of the Management Agreement set
out in the Appendix to this letter is a true and complete copy of the Management
Agreement, that the Management Agreement constitutes valid and binding
obligations of the Manager enforceable in accordance with its terms and that
there have been no amendments or variations thereto or defaults thereunder by
the Manager or, to the best of the Manager's knowledge and belief, the Borrower.
50
4 Undertakings
The Manager undertakes with you as Security Trustee on behalf of the
Lenders that:
(a) the manager will not agree or purport to agree to any material
amendment or variation of the Management Agreement without the prior
written consent of the Security Trustee;
(b) the Manager will procure that any sub-manager appointment by it
pursuant to clause * of the Management Agreement or otherwise will, on
or before the date of such appointment, enter into an undertaking in
favour of the Security Trustee in substantially the same form (mutatis
mutandis) as this letter;
(c) the Manager will not, without the prior written consent of the
Security Trustee, take any action or institute any proceedings or make
or assert any claim on or in respect of:
(i) the Ship or its policies and contracts of insurance (which
expression includes all entries of the Ship in a protection and
indemnity or war risks association) which are from time to time
during the Security Period in place or taken out or entered into
by or for the benefit of the Owner (whether in the sole name of
the Borrower, or in the joint names of the Borrower and the
Security Trustee or otherwise) in respect of the Ship and her
Earnings or otherwise howsoever in connection with the Ship and
all benefits thereof (including claims of whatsoever nature and
returns of premiums) (the "Insurances"); or
(ii) all moneys whatsoever from time to time due or payable to the
Borrower during the Security Period arising out of the use or
operation of the Ship including (but5 without limiting the
generality of the foregoing) all freight, hire and passage
moneys, income arising under pooling arrangements, compensation
payable to the Borrower in event of requisition of the Ship for
hire, remuneration for salvage and towage services, demurrage
and detention moneys, and damages for breach (or payments for
variation or termination) of any charterparty or other contract
for the employment of the Ship (the "Earnings"); or
(iii) any other property or other assets of the Borrower which the
Security Trustee has previously advised the Manager are subject
to any encumbrance or right to set-off in favour of the Security
Trustee by virtue of any of the Security Documents;
(d) the Manager will discontinue any such action or proceedings or claim
which may have been taken, instituted or made or asserted, promptly
upon notice from the Security Trustee to do so;
(e) the Manager will promptly notify the Security Trustee if at any time
the amount owed by the Borrower to the Manager pursuant to the
Management Agreement (whether in respect of the Manager's remuneration
or disbursements or otherwise) exceeds $500,000 or the equivalent in
other currencies; and
(f) the Manager will provide the Security Trustee with such information
concerning the Ship as the Security Trustee may from time to time
reasonably require.
5 Law and jurisdiction
(a) The agreement constituted by this letter shall be governed by and
construed in accordance with English law.
(b) The Manage agrees, for the benefit of the Security Trustee and the
Lenders, that any legal action or proceedings arising out of or in
connection with this letter against the Manager or any of its assets
may be brought in the English courts. The Manager irrevocably and
unconditionally submits to the jurisdiction of such courts and whoever
irrevocably designates, appoints and empowers [American Eagle Tankers
UK Limited of ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ House, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇
▇▇▇] to receive for it and on its
51
behalf, service of process issued out of the English courts in any such
legal action or proceedings. The submission to such jurisdiction shall not
(and shall not be construed to as to) limit the rights of the Agent, the
Security Trustee or the Lenders to take any proceedings against the
manager in the courts of any other competent jurisdiction nor shall the
taking of proceedings in any one or more jurisdictions preclude the taking
of proceedings in any other jurisdiction, whether concurrently or not.
6 Third party rights
No term of this letter shall be enforceable pursuant to the Contracts
(Rights of Third Parties) ▇▇▇ ▇▇▇▇ by a person who is not a party to this
letter.
Words and expressions defined in the Loan Agreement shall have the same meanings
when used in this letter unless the context otherwise requires.
Yours faithfully
For and on behalf of
[Name of Approved Manager]
--------------------------------
52
Appendix
Copy of the Management Agreement
53
Part 2
(If the Approved Manager is not an NOL or a Subsidiary thereof)
To: Danmarks Skibskreditfond
Sankt ▇▇▇▇▇ ▇▇▇▇▇ ▇-▇
▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ K
Denmark
As Security Trustee on behalf of the Lenders
From: Insert name and address of the Manager]
{date}
Dear Sirs
US$100,000,000 Loan to American Eagle Tankers Inc. Limited
1 Loan Agreement
We understand that under a Loan Agreement (the "Loan Agreement") dated 29 May
2001 between (1) Danmarks Skibskreditfond in its capacity as agent, (2)
Danmarks Skibskreditfond in its capacity as arranger and underwriter, (3)
Danmarks Skibskreditfond in your capacity as security trustee (the "Security
Trustee") (4) the banks and financial institutions listed in schedule 1
therein (the "Lenders" which expression includes the Lenders' successors and
assigns) and (5) American Eagle Tankers Inc. Limited (the "Borrower"), the
Lenders agreed to make a loan (the "Loan") to the Borrowers and that it is a
condition to the Lenders' agreement to make the Loan to the Borrower that we
[insert name of Approved Manager] (the "Manager") enter into this letter in
favour of you as Security Trustee on behalf of the Lenders.
2 Confirmation of appointment
We hereby confirm that:
(a) we have been appointed as the manager of m.v. ["EAGLE [ONE][TWO]"] (the
"Ship") registered under the [Singapore][USA] flat pursuant to a
Management Agreement (the "Management Agreement") dated {date} between
ourselves and the Borrower (as owner of the Ship) and that we have
accepted our appointment thereunder in accordance with the terms and
conditions thereof; and
(b) to the best of our knowledge the representations and warranties made by
the Borrower set out in clauses 7.2.8, 7.2.9 and 7.2.10 of the Loan
Agreement are true and correct.
3 Representation and warranty
We hereby represent and warrant that the copy of the Management Agreement set
out in the Appendix to this letter is a true and complete copy of the
Management Agreement, that the Management Agreement constitutes valid and
binding obligations of the Manager enforceable in accordance with its terms
and that there have been no amendments or variations thereto or defaults
thereunder by the Manager or, to the best of the Manager's knowledge and
belief, the Borrower.
4 Undertakings
The Manager undertakes with you as Security Trustee on behalf of the Lenders
that:
(a) the Manager will not agree or purport to agree to any material amendment
or variation of the Management Agreement without the prior written consent of
the Security Trustee;
54
(b) the Manager will procure that any sub-manager appointed by it pursuant to
clause . of the Management Agreement or otherwise will, on or before the
date of such appointment, enter into an undertaking in favour of the
Security Trustee in substantially the same form (mutatis mutandis) as this
letter,
(c) the Manager will promptly notify the Security Trustee if at any time the
amount owed by the Borrower to the Manager pursuant to the Management
Agreement (whether in respect of the Manager's remuneration or
disbursements or otherwise) exceeds $500,000 or the equivalent in other
currencies, and
(d) the Manager will provide the Security Trustee with such information
concerning the Ship as the Security Trustee may from time to time
reasonably required.
5 Law and jurisdiction
(a) The agreement constituted by this letter shall be governed by and
construed in accordance with English law.
(b) The Manager agrees, for the benefit of the Security Trustee and the
Lenders, that any legal action or proceedings arising out of or in
connection with this letter against the Manager or any of its assets may
be brought in the English courts. The Manager irrevocably and
unconditionally submits to the jurisdiction of such courts and whoever
irrevocably designates, appoints and empowers [.] of [.] to receive for it
and on its behalf, service of process issued out of the English courts in
any such legal action or proceedings. The submission to such jurisdiction
shall not (and shall not be construed so as to) limit the rights of the
Agent, the Security Trustee or the Lenders to take any proceedings against
the Manager in the courts of any other competent jurisdiction nor shall
the taking of proceedings in any one or more jurisdictions preclude the
taking of proceedings in any other jurisdiction, whether concurrently or
not.
6 Third party rights
No term of the letter shall be enforceable pursuant to the Contracts (Rights
of Third Parties) ▇▇▇ ▇▇▇▇ by a person who is not a party to this letter.
Words and expressions defined in the Loan Agreement shall have the same meanings
when used in this letter unless the context otherwise requires.
Yours faithfully
For and on behalf of
[Name of Approved Manager]
--------------------------
55
Appendix
Copy of the Management Agreement
56
Schedule 7
Form of Classification Letter
To: [Name of Classification Society]
2001
Dear Sirs,
Name of vessel: m.t. "o" (the "Vessel")
Flag: Singapore
Name of Owner: American Eagle Tankers Inc. Limited (the "Owner")
Name of Mortgagee: Danmarks Skibskreditfond as Security Trustee (the "Agent")
-------------------------------------------------------------------------------
We refer to the Vessel, which is registered in the ownership of the Owner, and
which has been entered in and classed by o (the "Classification Society").
The Agent, among others, has agreed to provide mortgage secured finance to the
Owner upon condition that among other things, the Owner issues this letter of
instruction to the Classification Society in this form as presented by the
Agent.
The Owner and the Agent irrevocably and unconditionally instruct and authorise
the Classification Society (notwithstanding any previous instructions whatsoever
which the Owner may have given to the Classification Society to the contrary) as
follows:
1 to send to the Agent, following receipt of a written request from the Agent,
certified true copies of all original certificates of class held by the
Classification Society in relation to the Vessel;
2 to allow the Agent (or its agents), at any time and from time to time, to
inspect the classification reports of the Owner for this Vessel at the
offices of the Classification Society and to take copies of them;
Notwithstanding the above instructions given for the benefit of the Agent, the
Owner shall continue to be responsible to the Classification Society for the
performance and discharge of all its obligations and liabilities relating to or
arising out of or in connection with the contract it has with the Classification
Society, and nothing in this letter should be construed as imposing any
obligation or liability on the Agent to the Classification Society in respect
thereof. The instructions and authorisations which are contained in this notice
shall remain in full force and effect until the Owner and the Agent together
give you notice in writing revoking them.
The Owner undertakes to reimburse the Classification Society in full for any
costs or expenses it may incur in complying with the instructions and
authorisations referred to in this letter.
This letter is governed by English law, the English courts have sole
jurisdiction over any dispute and the terms and conditions attached at Appendix
A apply.
----------------------------------- --------------------------------
For and on behalf of For and on behalf of
American Eagle Tankers Inc. Limited Danmarks Skibskreditfond
57
Appendix A
Form of Letter of Undertaking from the Classification Society
American Eagle Tankers Inc. Limited
and
Danmarks Skibskreditfond (Agent)
Dear Sirs
Name of Vessel: [ ] (the "Vessel")
Flag: Singapore
Name of owner: American Eagle Tankers Inc. Limited (the "Owner")
Name of mortgagee: Danmarks Skibskreditfond as Security Trustee (the "Agent")
We [insert name of classification society], hereby acknowledge receipt of a
letter (a copy of which is attached hereto) dated [ ] sent to us by the
Owner and the Agent (together the "Instructing Parties") regarding to the
Vessel.
In consideration of the payment of US$10 by the Instructing Parties and the
agreement by the Agent to approve the selection of the [insert name of
classification society] (the receipt and adequacy of which is hereby
acknowledged), we undertake to comply with the instructions of the Instructing
Parties contained in such letter.
This letter is governed by English law.
Yours faithfully
----------------------
For and on behalf of
[insert name of classification society]
58
Schedule 8
Form of Officer's Certificate
(to be given by the Borrower)
(Letterhead of Borrower)
To: Danmarks Skibskreditfond
Sankt ▇▇▇▇▇ ▇▇▇▇▇ ▇-▇
▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ K
Denmark
(as Agent on behalf of the Lenders)
{date}
I, [name], [Position] of American Eagle Tankers Inc. Limited of ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ (▇▇▇ "Borrower")
HEREBY CERTIFY that:
(a) attached hereto marked "A", are true, complete and up to date copies
of all documents which contain or establish or relate to the
constitution of the Borrower;
(b) attached hereto marked "B", is a true and correct extract of
resolutions duly passed at meeting[s] of the Board of Directors of the
Borrower duly convened and held approving the, the Contracts [, the
Management Agreement, the Bareboat Charter] and the Borrower's
Security Documents and authorising the signature, delivery and
performance of the Borrower's Security Documents and such resolutions
have not been amended, modified or revoked and are in full force and
effect;
(c) no consents, authorisations, licences or approvals are necessary for
the Borrower to authorise or are required by the Borrower in
connection with the borrowing by the Borrower of the Commitment
pursuant to a Loan Agreement (the "Loan Agreement") dated 29 May 2001
entered into between (1) the Borrower and (2) yourselves as Agent,
Arranger, Security Trustee and Underwriter and (3) the banks and
financial institutions listed in Schedule 1 to the Loan Agreement or
the execution, delivery or performance of the Borrower's Security
Documents;
(d) the following persons are the Directors and Officers of the Borrower
holding the positions specified opposite their names:
Name Position
o o
o o
o o
59
(e) that Neptune Orient Lines Limited is, as of the date of this
certificate, the legal owner and, to the best of our knowledge, the
beneficial owner of not less than 51% of the issued and voting shares
in the capital of the Borrower;
(f) the 7 bareboat charter agreements entered into by the Borrower between
1996 and 1999 in respect of [name of ships] were entered into on arms
length terms and reflect the then prevailing market value of the
respective ships.
Words and expressions defined in the Loan Agreement shall have the same meanings
when used herein:
Signed: ________________________
Name: _________________________
Position held: ________________
60
SIGNED by
for and on behalf of
AMERICAN EAGLE TANKERS INC. LIMITED [ILLEGIBLE]
dated 2001 -----------
Authorised signatory
SIGNED by [ILLEGIBLE]
for and on behalf of -----------
DANMARKS SKIBSKREDITFOND Authorised signatory
as Lender [ILLEGIBLE]
-----------
Authorised signatory
SIGNED by [ILLEGIBLE]
for and on behalf of -----------
DANMARKS SKIBSKREDITFOND Authorised signatory
as Arranger [ILLEGIBLE]
-----------
Authorised signatory
SIGNED by [ILLEGIBLE]
for and on behalf of -----------
DANMARKS SKIBSKREDITFOND Authorised signatory
as Underwriter [ILLEGIBLE]
-----------
Authorised signatory
SIGNED by [ILLEGIBLE]
for and on behalf of -----------
DANMARKS SKIBSKREDITFOND Authorised signatory
as Agent [ILLEGIBLE]
-----------
Authorised signatory
SIGNED by [ILLEGIBLE]
for and on behalf of -----------
DANMARKS SKIBSKREDITFOND Authorised signatory
as Security Trustee [ILLEGIBLE]
-----------
Authorised signatory
61