================================================================================
FACILITY AGREEMENT PROVIDING FOR A
US$36,000,000
CONVERTIBLE LETTER OF CREDIT FACILITY
TO BE MADE AVAILABLE TO
OMI CORPORATION
BY
CHRISTIANIA BANK OG KREDITKASSE ASA,
acting through its New York branch,
as Arranger, Administrative Agent and Issuer,
DEN NORSKE BANK ASA,
acting through its New York branch,
as Arranger and Syndication Agent,
MEESPIERSON CAPITAL CORP.,
as Arranger and Security Agent,
and the Banks and Financial Institutions
identified on Schedule 1, as Banks
================================================================================
as of February 4, 2000
CONTENTS
PAGE
1. DEFINITIONS..............................................................1
1.1 Specific Definitions...................................................1
1.2 Computations of Time Periods; Other Definitional Provisions...........17
1.3 Accounting Terms......................................................17
1.4 Certain Matter Regarding Materiality..................................17
1.5 Forms of Documents....................................................17
2. REPRESENTATIONS AND WARRANTIES..........................................18
2.1 Representations and Warranties........................................18
3. THE LETTER OF CREDIT....................................................22
3.1 Issuance of the Letter of Credit......................................22
3.2 Several Obligations; Drawing..........................................22
3.3 Reimbursement Obligation..............................................23
3.4 Fees..................................................................23
4. conversion of facility..................................................23
5. CONDITIONS..............................................................24
5.1 Conditions Precedent to Issuance of Letter of Credit..................24
(a) Corporate Authority...............................................24
(b) The Vessels.......................................................25
(c) The Note..........................................................25
(d) Subordinated Guarantor Documents..................................25
(e) Mega I Assignment.................................................26
(f) Intercreditor Agreement...........................................26
(g) Facility A/Facility B.............................................26
(h) Subordinated Guarantor Solvency...................................26
(i) Environmental Claims..............................................26
(j) Fees..............................................................26
(k) Accounts..........................................................26
(l) Vessel Liens......................................................26
(m) Approved Business Plan............................................26
(n) Charters; Pooling Agreements......................................26
(o) Legal Opinions....................................................27
5.2 Further Conditions Precedent..........................................27
5.3 Breakfunding Costs....................................................27
5.4 Satisfaction after Issuance or Conversion.............................27
6. REPAYMENT AND PREPAYMENT OF LOAN........................................27
i
6.1 Repayment.............................................................27
6.2 Voluntary Prepayment; no re-borrowing.................................28
6.3 Mandatory Prepayment; Sale or Loss of Vessel..........................28
6.4 Demand Conversion.....................................................28
6.5 Interest and Costs with Prepayments...................................28
7. INTEREST AND RATE.......................................................29
7.1 Applicable Rate.......................................................29
7.2 Default Rate..........................................................29
7.3 Interest Periods......................................................29
7.4 Interest Payments.....................................................29
8. PAYMENTS................................................................29
8.1 Place of Payments, No Set Off.........................................29
8.2 Tax Credits...........................................................30
8.3 Computations; Banking Days. (a)......................................30
9. EVENTS OF DEFAULT.......................................................30
9.1 Events of Default.....................................................30
9.2 Indemnification.......................................................33
9.3 Application of Moneys.................................................33
10. COVENANTS...............................................................33
10.1 Affirmative Covenants.................................................33
10.2 Negative Covenants....................................................37
(a) Liens.............................................................37
10.3 Subsidiary Negative Covenants.........................................40
10.4 Vessel Valuations.....................................................40
10.5 Asset Maintenance.....................................................40
(a) If at any time....................................................40
(b) 41
10.6 Inspection and Survey Reports.........................................41
11. ASSIGNMENT..............................................................41
12. ILLEGALITY, INCREASED COST, NON-AVAILABILITY, ETC.......................41
12.1 Illegality............................................................41
12.2 Increased Costs.......................................................42
12.3 Nonavailability of Funds..............................................43
12.4 Bank's Certificate Conclusive.........................................43
12.5 Compensation for Losses...............................................43
13. CURRENCY INDEMNITY......................................................43
ii
13.1 Currency Conversion...................................................43
13.2 Change in Exchange Rate...............................................43
13.3 Additional Debt Due...................................................44
13.4 Rate of Exchange......................................................44
14. FEES AND EXPENSES.......................................................44
14.1 Fees..................................................................44
14.2 Expenses..............................................................44
15. APPLICABLE LAW, JURISDICTION AND WAIVER.................................44
15.1 Applicable Law........................................................44
15.2 Jurisdiction..........................................................44
15.3 WAIVER OF JURY TRIAL..................................................45
16. THE AGENTS..............................................................45
16.1 Appointment of Agents.................................................45
16.2 Security Agent as Trustee.............................................45
16.3 Distribution of Payments..............................................45
16.4 Holder of Interest in Note............................................46
16.5 No Duty to Examine, Etc...............................................46
16.6 Agents as Banks.......................................................46
16.7 Acts of the Agents....................................................46
16.8 Certain Amendments....................................................47
16.9 Assumption re Event of Default........................................47
16.10 Limitations of Liability.............................................47
16.11 Indemnification of the Agents........................................48
16.12 Consultation with Counsel............................................48
16.13 Resignation..........................................................48
16.14 Representations of Banks.............................................48
16.15 Notification of Event of Default.....................................49
17. NOTICES AND DEMANDS.....................................................49
17.1 Notices...............................................................49
18. MISCELLANEOUS...........................................................49
18.1 Time of Essence.......................................................49
18.2 Unenforceable, etc., Provisions - Effect..............................49
18.3 References............................................................50
18.4 Further Assurances....................................................50
18.5 Prior Agreements, Merger..............................................50
18.6 Entire Agreement; Amendments..........................................50
iii
18.7 Indemnification.......................................................50
18.8 Release of Designated Vessel Owner Guaranty...........................51
18.9 Headings..............................................................51
iv
SCHEDULE
1 The Banks and the Commitments
2 OMI and Affiliates
3 The Facility A Vessels
4 The Facility B Vessels
5 Disclosure
EXHIBITS
A Form of Letter of Credit
B Form of Note
C Form of Guaranty
D Form of Mortgage
E Form of Earnings Assignment
F Form of Insurances Assignment
G Form of Assignment and Assumption Agreement
H Form of Compliance Certificate
I Form of Interest Notice
J Form of Mega I Assignment
FACILITY AGREEMENT
THIS FACILITY AGREEMENT is made as of the 4th day of February, 2000,
by and among (1) OMI CORPORATION, a corporation incorporated under the laws of
the Republic of the ▇▇▇▇▇▇▇▇ Islands (the "Borrower"), (2) the banks and
financial institutions listed on Schedule 1 (together with any bank or financial
institution which becomes a party hereto pursuant to Article 10, the "Banks"),
(3) CHRISTIANIA BANK OG KREDITKASSE ASA, acting through its New York branch
("CBK"), as Administrative Agent for the Banks (in such capacity, the
"Administrative Agent"), and letter of credit issuer for the Banks (in such
capacity, the "Issuer") and as arranger, (4) DEN NORSKE BANK ASA, acting through
its New York branch ("DnB"), as syndication agent (in such capacity, the
"Syndication Agent") and as arranger, and (5) MEESPIERSON CAPITAL CORP.
("MeesPierson"), as arranger (in such capacity, together with CBK and DnB as
arrangers, the "Arrangers") and as security agent for the Banks (in such
capacity, the "Security Agent" and, together with the Administrative Agent and
the Syndication Agent, (the "Agents").
WITNESSETH THAT:
WHEREAS, at the request of the Borrower, the Arrangers have arranged
for the Agents to serve in their respective capacities under the terms of this
Agreement and for the Issuer, on behalf of the Banks, to issue a letter of
credit in the stated amount of US$36,000,000 to the Facility A Security Agent
(as defined below), as agent for the Facility A Lenders (as defined below);
NOW, THEREFORE, in consideration of the premises set forth above,
the covenants and agreements hereinafter set forth, and other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
parties hereto agree as set forth below:
1. DEFINITIONS
1.1 Specific Definitions. In this Agreement the words and expressions specified
below shall, except where the context otherwise requires, have the meanings
attributed to them below:
"Acceptable Accounting Firm" means Deloitte & Touche LLP, or such other
recognized international accounting firm as
shall be approved by the Administrative Agent,
such approval not to be unreasonably withheld;
"Affiliate" means with respect to any Person, any other
Person directly or indirectly controlled by or
under common control with such Person. For the
purposes of this definition, "control"
(including, with correlative meanings, the
terms "controlled by" and "under common
control with") as applied to any Person means
the possession directly or indirectly of the
power to direct or cause the direction of the
management and policies of that Person whether
through ownership of voting securities or by
contract or otherwise; for purposes of Section
9.1(f), "Affiliate" shall also include each of
Alliance Chartering LLC, International Product
Carriers
Limited, Geraldton Navigation Company
Incorporated, Amazon Transport, Inc. and ▇▇▇▇▇
Navigation Co. Pte. Ltd. unless and until the
Borrower's direct or indirect interest in and
to such company has ceased;
"Agreement" means this Agreement, as the same shall be
amended, modified or supplemented from time to
time;
"Applicable Rate" means any rate of interest applicable to the
Loan from time to time pursuant to Section
7.1;
"Approved Business Plan" means a detailed business plan for reducing
leverage and increasing liquidity, in form and
in substance satisfactory to the Agents,
specifying, among other things, the Planned
Reduction Dates and Planned Reduction Amounts;
"Assigned Moneys" means sums assigned to or received by any
Agent pursuant to any Security Document;
"Assignment and Assumption means the Assignment and Assumption
Agreement(s)" Agreement(s) executed pursuant to Section 11
substantially in the form set out in Exhibit
G;
"Assignment Notices" means
(i) notices with respect to the
Earnings Assignments, substantially
in the form of Exhibit 1 thereto;
(ii) notices with respect to the
Insurances Assignments in the form
of Exhibit 3 thereto; and
(iii) notice with respect to the Mega I
Assignment in the form of Exhibit 1
thereto;
"Assignments" means the Earnings Assignments and the
Insurance Assignments;
"Availability Period" means the period commencing the date hereof
and ending February 29, 2000;
"Banking Day(s)" means day(s) on which banks are open for the
transaction of business in ▇▇▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ and New York,
New York;
"Capital Expenditures" means all capital expenditures except for (i)
normal maintenance of Vessels and other
properties and (ii) Permitted Drydocking
Costs;
"Cash Equivalents" means (i) securities issued or directly and
fully guaranteed or insured by the United
States of America or any agency or
instrumentality thereof (provided that the
full faith and
2
credit of the United States of America is
pledged in support thereof), and (ii) time
deposits, certificates of deposit or deposits
in the interbank market of any commercial bank
of recognized standing organized under the
laws of the United States of America, any
state thereof or any foreign jurisdiction
having capital and surplus in excess of
$500,000,000, and rated at least A or the
equivalent thereof by Standard & Poor's Rating
Services in respect of both (i) and (ii)
above, in each case having maturities of not
more than ninety (90) days from the date of
acquisition;
"Change of Control" means (a) any "person" (as such term is used
in Sections 13(d) and 14(d) of the Exchange
Act) becomes the beneficial owner (as defined
in Rules 13d-3 and 13d-5 under the Exchange
Act), directly or indirectly, of more than 35%
of the total voting power of the Borrower or
(b) the Board of Directors of the Borrower
ceases to consist of a majority of the
directors existing on the Date of Issuance or
directors nominated by at least two-thirds
(2/3) of the then existing directors;
"Classification Society" shall mean a member of the International
Association of Classification Societies with
whom the Vessels are entered and who conducted
periodic physical surveys and/or inspections
of the Vessels;
"Code" means the Internal Revenue Code of 1986, as
amended, and any successor statute and
regulation promulgated thereunder;
"Collateral" means, all property or other assets, real or
personal, tangible or intangible, whether now
owned or hereafter acquired in which any Agent
or Bank has been granted a security interest
pursuant to a Security Document;
"Columbia Lease" means that certain charter agreement dated as
of June 30, 1999 made by and between Sea Trade
Limited, as owner, and Columbia Shipping, as
charterer, in respect of the ▇▇▇▇▇▇▇▇
Islands-registered suezmax tanker COLUMBIA,
official number 1272;
"Columbia Shipping" means Columbia Shipping LLC, a limited
liability company organized under the laws of
the Republic of the ▇▇▇▇▇▇▇▇ Islands;
"Commitment(s)" means in relation to a Bank, the portion of
the Stated Amount or the Loan, as the case may
be, set out opposite its name in Schedule 1
or, as the case may be, in any
3
relevant Assignment and Assumption Agreement;
"Compliance Certificate" means a certificate certifying the compliance
by the Borrower with all of its covenants
contained herein and showing the calculations
thereof in reasonable detail, delivered by the
chief financial officer of the Borrower to the
Administrative Agent from time to time
pursuant to Section 10.1(d) in the form set
out in Exhibit H, or in such other form as the
Administrative Agent may agree;
"Consolidated Net Worth" means, at any time, shareholders equity
(excluding treasury stock) of the Borrower on
a consolidated basis determined in accordance
with GAAP;
"Construction Contract" means that certain contract dated November 10,
1997 between Mega Tankers Newbuilding AS and
the Shipyard as novated in favor of Loire
pursuant to an Assignment and Novation
Agreement dated November 24, 1999 and to be
novated further in favor of Laurel, providing
for the construction of the MEGA I;
"Conversion Date" means the date on which the Reimbursement
Obligations are converted into the Loan
pursuant to Section 4;
"Conversion" means the conversion of the Reimbursement
Obligations into the Loan pursuant to Section
4;
"Date of Issuance" means the date, being a Banking Day during the
Availability Period, on which the Letter of
Credit is issued pursuant to Section 3.1;
"Default Rate" shall have the meaning ascribed thereto in
Section 7.2;
"Designated Indebtedness" means Indebtedness that is
(i) incurred by the Designated Vessel
Owner to finance the Designated
Vessel Acquisition,
(ii) non-recourse to the Borrower and
the Borrower's Subsidiaries (other
than the Designated Vessel Owner),
and
(iii) in an amount not exceeding $30.0
million;
"Demand Notice" shall have the meaning ascribed thereto in
Section 3.2;
"Designated Subsidiary" means (i) during the term of the Columbia
Lease, Columbia Shipping, (ii) while the
Designated Indebtedness is
4
outstanding, the Designated Vessel Owner, and
(iii) any Subsidiary of the Borrower (A) which
is not a Guarantor or a Guarantor, (B) which
has total assets of $1,000 or less, (C) which
is not engaged in any financing that is
recourse to the Borrower or any other
Subsidiary of the Borrower, (D) in respect of
which the Borrower has requested that the
Administrative Agent permit such Subsidiary's
designation as a Designated Subsidiary, and
(E) in respect of which the Administrative
Agent had consented in writing to such
designation;
"Designated Vessel" means the MEGA I or the SOYANG, whichever
thereof is designated by the Borrower by
written notice to the Administrative Agent as
the vessel to be financed on a non-recourse
basis in accordance with the terms and
conditions herein provided;
"Designated Vessel means the acquisition of the Designated Vessel
Acquisition" by the Designated Vessel Owner, occurring not
later than June 30, 2000, or such other date
as may be agreed by the Administrative Agent;
"Designated Vessel Conditions" means, upon or prior to the Designated Vessel
Acquisition,
(i) the Borrower having received not
less than $18.0 million net cash
proceeds from the issuance of
equity securities of the Borrower
after the Date of Issuance;
(ii) in the event the Designated Vessel
is the SOYANG, the Borrower (and
its Subsidiaries on a consolidated
basis) not having contributed more
than the amount of the SOYANG
Investment to the Designated Vessel
Acquisition;
(iii) the Borrower (and its Subsidiaries
on a consolidated basis) not having
incurred any Indebtedness other
than the Designated Vessel
Indebtedness to finance the
Designated Vessel Acquisition;
(iv) the Designated Vessel being
accepted for service under a time
charter of not less than twelve
(12) months duration at a rate of
hire sufficient to pay reasonably
anticipated operating expenses and
to amortize (on a level-debt
service basis), on a maximum
15-years profile, all Indebtedness
incurred to finance the Designated
Vessel Acquisition for the duration
of such time charter;
5
(v) true and complete copies of all
contracts, agreements or other
documents entered into by the
Borrower or any Subsidiary in
connection with the Designated
Vessel Acquisition being delivered
to and approved by the
Administrative Agent;
(vi) not later than ten (10) Banking
Days prior to the date of the
Designated Vessel Acquisition, the
Borrower having delivered to the
Administration Agent a Compliance
Certificate as of such date and
after considering the effect of the
Designated Vessel Acquisition; and
(vii) immediately prior to the Designated
Vessel Acquisition, the Designated
Vessel owner has total assets of
less that $500,000 and has no
Subsidiaries;
"Designated Vessel Owner" means the Subsidiary which is the owner of the
Designated Vessel;
"DOC" means a document of compliance issued to an
Operator in accordance with rule 13 of the ISM
Code;
"Dollars" and the sign "$" means the legal currency, at any relevant time
hereunder, of the United States of America
and, in relation to all payments hereunder, in
same day funds settled through the New York
Clearing House Interbank Payments System (or
such other Dollar funds as may be determined
by the Administrative Agent to be customary
for the settlement in New York City of banking
transactions of the type herein involved);
"Earnings Assignments" means the second priority assignments in
respect of the earnings of each Vessel (other
than the SETTEBELLO) from any and all sources,
to be executed by the relevant Guarantor in
favor of the Security Agent pursuant to
Section 5.1(d), substantially in the form of
Exhibit E;
"EBITDA" means, with respect to any Person for any
period, operating income, plus depreciation,
amortization and other non-cash charges, but
excluding any gains or losses on vessel sales,
any writedown amounts, or any impairment
reserves;
"Environmental Affiliate" means any person or entity, the liability of
which for Environmental Claims any Security
Party or Subsidiary of any Security Party may
have assumed by contract or operation of law;
6
"Environmental Approvals" shall have the meaning ascribed thereto in
Section 2.1(o);
"Environmental Claim(s)" shall have the meaning ascribed thereto in
Section 2.1(o);
"Environmental Laws" shall have the meaning ascribed thereto in
Section 2.1(o);
"ERISA Affiliate" means a trade or business (whether or not
incorporated) which is under common control
with the Borrower within the meaning of
Sections 414(b), (c), (m) or (o) of the Code;
"ERISA" means the Employment Retirement Income
Security Act of 1974, as amended;
"Event(s) of Default" means any of the events set out in Section
9.1;
"Exchange Act" means the Securities and Exchange Act of 1934,
as amended;
"Expiration Date" means the Banking Day which immediately
precedes the date which is the three month
anniversary of the Date of Issuance;
"Facility A" means the loan facility in the principal
amount of up to $218,000,000 to be made
available to the Borrower pursuant to the
Facility A Loan Agreement;
"Facility A Administrative means CBK, in its capacity as administrative
Agent" agent for the Facility A Lenders;
"Facility A Agents" means the Facility A Administrative Agent, the
Facility A Syndication Agent and the Facility
A Security Agent;
"Facility A Guaranty" means the guaranty made by each of the
guarantors of the obligations of the Borrower
under the Facility A Loan Agreement;
"Facility A Lenders" means the banks and financial institutions
identified in Schedule 1 to the Facility A
Loan Agreement, each in its capacity as a
Lender pursuant to the Facility A Loan
Agreement;
"Facility A Loan Agreement" means the loan agreement to be dated on or
about the date hereof made by and among, inter
alios, the Borrower, as borrower, and the
Facility A Lenders, as Lenders, pursuant to
which the Facility A Lenders will make
Facility A available to the Borrower for the
purpose of refinancing existing indebtedness
secured by the Facility A Vessels;
"Facility A Mortgages" means the first preferred ▇▇▇▇▇▇▇▇ Island or
Liberian ship
7
mortgages on the Facility A Vessels, to
be executed by the relevant Guarantor in favor
of the Facility A Security Agent pursuant to
the Facility A Loan Agreement;
"Facility A Pledge Agreement" means any pledge agreement executed by the
Borrower in favor of the Facility A Security
Agent pursuant to the Facility A Loan
Agreement and pursuant to which the Borrower
pledges shares, limited liability company
interests or other equity interests in any
Guarantor;
"Facility A Security Agent" means MeesPierson, in its capacity as security
agent for the Facility A Lenders;
"Facility A Security means the Security Documents as defined in the
Documents" Facility A Loan Agreement;
"Facility A Syndication Agent" means DnB, in its capacity as syndication
agent for the Facility A Lenders;
"Facility A Vessels" means, as of the date of this Agreement, the
vessels identified on Schedule 3, and
thereafter shall also mean any vessel
mortgaged to the Facility A Security Agent
pursuant to the terms of the Facility A Loan
Agreement;
"Facility B Administrative means CBK, in its capacity as administrative
Agent" agent for the Facility B Lenders;
"Facility B Agents" means the Facility B Administrative Agent, the
Facility B Syndication Agent and the Facility
B Security Agent;
"Facility B Guaranty" means the guaranty made by each of the
guarantors of the obligations of the Borrower
under the Facility B Loan Agreement;
"Facility B Lenders" means the banks and financial institutions
identified in Schedule 1 to the Facility B
Loan Agreement, each in its capacity as a
Lender pursuant to the Facility B Loan
Agreement;
"Facility B Loan Agreement" means the loan agreement to be dated on or
about the date hereof made by and among, inter
alios, the Borrower, as borrower, and the
Facility B Lenders, as Banks, pursuant to
which the Facility B Lenders will make
Facility B available to the Borrower for the
purpose of refinancing existing indebtedness
secured by the Facility B Vessels;
"Facility B Mortgages" means the first preferred or Liberian ship
mortgages on the Facility B Vessels and the
third preferred ▇▇▇▇▇▇▇▇ Islands or Liberian
ship mortgages on the Facility A Vessels, to
be
8
executed by the relevant Guarantor in favor of
the Facility B Security Agent pursuant to the
Facility B Loan Agreement;
"Facility B Pledge Agreement" means any pledge agreement executed by the
Borrower in favor of the Facility B Security
Agent pursuant to the Facility B Loan
Agreement and pursuant to which the Borrower
pledges shares, limited liability company
interests or other equity interests in any
Guarantor;
"Facility B Security Agent" means MeesPierson, in its capacity as security
agent for the Facility B Lenders;
"Facility B Security means the Security Documents as defined in the
Documents" Facility B Loan Agreement;
"Facility B Syndication Agent" means DnB, in its capacity as syndication
agent for the Facility B Lenders;
"Facility B Vessels" means, as of the date of this Agreement, the
vessels identified on Schedule 4, and
thereafter shall also mean any vessel
mortgaged on a first priority basis to the
Facility B Security Agent pursuant to the
terms of the Facility B Loan Agreement;
"Fair Market Value" means, in respect of any vessel, means the
average of three charter-free appraisals of
such vessel from independent ship brokers
approved by the Administrative Agent, no such
appraisal to be dated more than thirty (30)
days prior to the date on which such appraisal
is required pursuant to this Agreement unless
the Administrative Agent consents in writing
(on each occasion) to the use of an older
appraisal;
"Fee Letter" means the letter dated the date hereof and
entered into by the Borrower, the Arrangers
and the Agents in respect of the fees referred
to therein;
"Final Payment Date" means the date that is three years after the
Date of Issuance;
"Funded Debt" shall mean on a consolidated basis for the
Borrower (without duplication), the sum of (i)
all Indebtedness of the Borrower (on a
consolidated basis), (ii) all obligations to
pay a specific purchase price for goods or
services whether or not delivered or accepted,
i.e., take-or-pay and similar obligations
which in accordance with GAAP would be shown
on the liability side of the balance sheet,
(iii) all net obligations under Interest Rate
Agreements, and (iv) all guarantees of
non-consolidated entity obligations;
9
provided, however, that balance sheet accruals
for future drydock expenses shall not be
classified as Funded Debt;
"GAAP" shall have the meaning ascribed thereto in
Section 1.3;
"Guarantor(s)" means, as of the date of this Agreement, each
of the companies listed in Schedule 2 as
Guarantors (including the SETTEBELLO
Guarantor) and thereafter shall also mean such
companies as may execute a Guaranty pursuant
to Section 9.1(t) or otherwise;
"Guaranty(ies)" means the guaranty to be executed by each
Guarantor in respect of the obligations of the
Borrower under and in connection with this
Agreement and the Note in favor of the
Security Agent pursuant to Section 4.l(d), and
any guaranty executed thereafter pursuant to
Section 9.1(t) or otherwise, each
substantially in the form of Exhibit B;
"Indebtedness" means, with respect to any Person at any date
of determination (without duplication), (i)
all indebtedness of such Person for borrowed
money, (ii) all obligations of such Person
evidenced by bonds, debentures, notes or other
similar instruments, (iii) all obligations of
such Person in respect of letters of credit or
other similar instruments (including
reimbursement obligations with respect
thereto), (iv) all obligations of such Person
to pay the deferred and unpaid purchase price
of property or services, which purchase price
is due more than six months after the date of
placing such property in service or taking
delivery thereof or the completion of such
services, except trade payables, (v) all
obligations on account of principal of such
Person as lessee under capitalized leases,
(vi) all indebtedness of other Persons secured
by a lien on any asset of such Person, whether
or not such indebtedness is assumed by such
Person; provided that the amount of such
indebtedness shall be the lesser of (a) the
fair market value of such asset at such date
of determination and (b) the amount of such
indebtedness, and (vii) all indebtedness of
other Persons guaranteed by such Person to the
extent guaranteed; the amount of Indebtedness
of any Person at any date shall be the
outstanding balance at such date of all
unconditional obligations as described above
and, with respect to contingent obligations,
the maximum liability upon the occurrence of
the contingency giving rise to the obligation,
provided that the amount outstanding at any
time of any indebtedness issued with original
issue discount is the face amount of such
indebtedness less the remaining unamortized
portion of the original issue discount of such
10
indebtedness at such time as determined in
conformity with GAAP; and provided further
that Indebtedness shall not include any
liability for current or deferred federal,
state, local or other taxes, or any trade
payables;
"Initial Payment Date" means the date which is six months after the
Date of Issuance;
"Insurances Assignments" means the second priority assignments in
respect of the insurances over the Vessels
(other than the SETTEBELLO), to be executed by
the relevant Guarantor in favor of the
Security Agent pursuant to Section 5.1(d),
substantially in the form of Exhibit F;
"Intercreditor Agreement" means the intercreditor agreement dated on or
about the date hereof entered into by and
among the Agents, the Facility A Agents and
the Facility B Agents;
"Interest Expense" means for any period, all interest charges,
including the interest component of
capitalized leases;
"Interest Notice" means a notice from the Borrower to the
Administrative Agent specifying the duration
of any relevant Interest Period, each
substantially in the form of Exhibit I;
"Interest Period(s)" means period(s) of one, three or six months
selected by the Borrower or, in the Banks'
discretion, such other period(s) as may be
agreed;
"Interest Rate Agreements" means any interest rate protection agreement,
interest rate future agreement, interest rate
option agreement, interest rate swap
agreement, interest rate cap agreement,
interest rate collar agreement, interest rate
hedge agreement or other similar agreement or
arrangement designed to protect the Borrower
or any of its Subsidiaries against
fluctuations in interest rates to or under
which the Borrower or any of its Subsidiaries
is a party or a beneficiary on the date of
this Agreement or becomes a party or a
beneficiary hereafter;
"Investment" means any direct or indirect advance, loan or
other extension of credit (including by way of
guarantee or similar arrangement) or capital
contribution to (by means of any transfer of
cash or other property to others or any
payment for property or services for the
account or use of others), or any purchase or
acquisition of capital stock (or other equity
interest), Indebtedness or other similar
instruments;
11
"ISM Code" means the International Safety Management Code
for the Safe Operating of Ships and for
Pollution Prevention constituted pursuant to
Resolution A.741(18) of the International
Maritime Organization and incorporated into
the Safety of Life at Sea Convention and
includes any amendments or extensions thereto
and any regulation issued pursuant thereto;
"Laurel" means Laurel Shipping LLC, a ▇▇▇▇▇▇▇▇ Islands
limited liability company;
"Letter of Credit" means the irrevocable letter of credit in the
stated amount of $36,000,000, to be issued by
the Issuer, on behalf of the Banks, to the
Facility A Security Agent pursuant to this
Agreement, substantially in the form of
Exhibit A;
"LIBOR" means the rate (rounded upward to the nearest
1/16th of one percent) for deposits of Dollars
for a period equivalent to the relevant
Interest Period at or about 11:00 a.m. (London
time) on the second London Banking Day before
the first day of such period as displayed on
Telerate page 3750 (British Bankers'
Association Interest Settlement Rates) (or
such other page as may replace such page 3750
on such system or on any other system of the
information vendor for the time being
designated by the British Bankers' Association
to calculate the BBA Interest Settlement Rate
(as defined in the British Bankers'
Association's Recommended Terms and Conditions
("BBAIRS" terms) dated August 1985)), provided
that if on such date no such rate is so
displayed for the relevant Interest Period,
LIBOR for such period shall be the arithmetic
mean (rounded upward if necessary to four
decimal places) of the rates respectively
quoted to the Administrative Agent by each of
the Reference Banks at the request of the
Administrative Agent as the offered rate for
deposits of 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 11:00
a.m. (London time) on the second Banking Day
before the first day of such period;
"Loan" means the amount of the Borrower's
Reimbursement Obligations hereunder as
pursuant to Section 4, or the balance thereof
from time to time outstanding;
"Loire" means Loire Shipping LLC, a Delaware limited
liability
12
company;
"Majority Banks" at any time means Banks holding an aggregate
of more then 50% of the Reimbursement
Obligations or Loan, as the case may be, then
outstanding;
"Margin" means four percent (4%) per annum for the
first six (6) months following the Date of
Issuance, six percent (6%) per annum for the
following six (6) months and eight percent
(8%) thereafter; provided, however, that if
the Loan is prepaid by at least Eight Million
Dollars ($8,000,000) within six months of the
Date of Issuance each increase in the Margin
shall be deferred by six months; provided,
further, that if, and for so long as, the
amounts outstanding in respect of Facility A
and this Facility are equal to or less than
seventy percent (70%) of the Fair Market Value
of the Facility A Vessels, the Margin shall
remain at, or reduce to, as the case may be,
four percent (4%) (for the subsequent Interest
Period and each Interest Period thereafter
during which such ratio is maintained);
"Material Adverse Effect" means a material adverse effect on (i) the
ability of the Borrower to repay the Loan or
the Reimbursement Obligations, as the case may
be, or perform any of its obligations
hereunder or under the Note, (ii) the ability
of any Security Party to perform its
obligations under any Security Documents or
(iii) the business, property, assets,
liabilities, operations, condition (financial
or otherwise) or prospects of the Borrower and
the other Security Parties taken as a whole;
"Materials of Environmental shall have the meaning ascribed thereto in
Concern" Section 2.1(o);
"MEGA I" means Hyundai Hull No. 1173 under construction
by the Shipyard;
"Mega I Assignment" means the assignment by Loire and Laurel of
the Construction Contract to the Security
Agent pursuant to Section 5.1(e) to be
substantially in the form set out in Exhibit
J;
"Mortgages" means the second preferred ship mortgages on
each of the Vessels (other than the
SETTEBELLO), to be executed by the relevant
Guarantor in favor of the Security Agent (as
trustee for the Banks) substantially in the
form of
13
Exhibit D;
"Multiemployer Plan" means, at any time, a "multiemployer plan" as
defined in Section 4001(a)(3) of ERISA to
which the Borrower or any ERISA Affiliate is
making or accruing an obligation to make
contributions or has within any of the three
preceding plan years made or accrued an
obligation to make contributions;
"Multiple Employer Plan" means, at any time, an employee benefit plan,
other than a Multiemployer Plan, subject to
Title IV or ERISA, to which the Borrower or
any ERISA Affiliate, and one or more employers
other than the Borrower or an ERISA Affiliate,
is making or accruing an obligation to make
contributions or, in the event that any such
plan has been terminated, to which the
Borrower or any ERISA Affiliate made or
accrued an obligation to make contributions
during any of the five plan years preceding
the date of termination of such plan;
"Note" means the promissory note to be executed by
the Borrower to the order of the Security
Agent and delivered thereto pursuant to
Section 5.1(c), to evidence the Loan if and
when made, substantially in the form of
Exhibit B;
"Operator" means, in respect of any Vessel, the Person
who is concerned with the operation of such
Vessel and falls within the definition of
"Company" set out in rule 1.1.2 of the ISM
Code;
"PBGC" means the Pension Benefit Guaranty
Corporation;
"Permitted Drydocking Costs" means (i) in respect of any one Vessel, $2.0
million in any calendar year, and (ii) in
respect of all Vessels on an aggregated basis,
$5.0 million in any calendar year, expended
for drydocking costs;
"Person" means any individual, sole proprietorship,
corporation, partnership (general or limited),
limited liability company, business trust,
bank, trust company, joint venture,
association, joint stock company, trust or
other unincorporated organization, whether or
not a legal entity, or any government or
agency or political subdivision thereof;
"Plan" means any employee benefit plan (other than a
Multiemployer Plan or a Multiple Employer
Plan) covered
14
by Title IV of ERISA;
"Prime Rate" means, from time to time, the rate of interest
publicly announced by the Administrative Agent
in New York City, New York, as its prime rate;
"Reference Banks" means Den norske Bank ASA, Christiania Bank og
Kreditkasse ASA and MeesPierson N.V.;
"Reimbursement Obligations" means the obligations of the Borrower then
outstanding and unpaid to reimburse the Banks
pursuant to Section 3.3 for the amounts paid
by the Issuer on behalf of the Banks in
respect of all drawings or other payments made
under or pursuant to the Letter of Credit;
"Required Percentage" shall have the meaning set forth for such term
in Section 10.5;
"Restricted Payments" shall have the meaning attributed thereto in
Section 10.2(j);
"Security Documents" means the Subordinated Guaranties, the
Mortgages, the Assignments and any other
documents that may be executed as security for
the Reimbursement Obligations or the Loan and
the Borrower's obligations in connection
therewith;
"Security Party(ies)" means the Borrower, and each of the
Guarantors;
"SETTEBELLO Guarantor" means Laurel Shipping LLC, a limited liability
company organized under the laws of the
Republic of the ▇▇▇▇▇▇▇▇ Islands;
"SETTEBELLO Owner" means Amazon Transport, Inc., a corporation
organized under the laws of the Republic of
Liberia;
"Shipyard" means Hyundai Heavy Industries Co. Ltd of
Ulsan, South Korea, and Hyundai Corporation of
Seoul, South Korea, collectively;
"SMC" means the safety management certificate issued
in respect of a Vessel in accordance with rule
13 of the ISM code;
"SOYANG Investment" means the contribution by the Borrower (and
its Subsidiaries on a consolidated basis) of
not more than $10.0 million of cash or Cash
Equivalents (in addition to contributions made
prior to the date of this Agreement) to the
acquisition of the SOYANG, made no earlier
than the date of acquisition thereof or three
(3) days prior thereto as
15
required by the construction contract for the
SOYANG;
"SOYANG Subsidiary" means Soyang Shipping LLC, a limited liability
company organized under the laws of the
Republic of the ▇▇▇▇▇▇▇▇ Islands;
"SOYANG" means Daewoo Hull No. 5152, currently under
construction by Daewoo Heavy Industries Ltd.,
South Korea;
"Stated Amount" means thirty-six million United States Dollars
($36,000,000);
"Subsidiaries" means, with respect to any Person, any
business entity of which more than 50% of the
outstanding voting stock is owned directly or
indirectly by such Person and one or more
other Subsidiaries of such Person;
"Taxes" means any present or future income or other
taxes, levies, duties, charges, fees,
deductions or withholdings of any nature now
or hereafter imposed, levied, collected,
withheld or assessed by any taxing authority
whatsoever, except for taxes on or measured by
the overall net income of each Bank imposed by
its jurisdiction of incorporation or
applicable lending office, the United States
of America, the State or City of New York or
any governmental subdivision or taxing
authority of any thereof or by any other
taxing authority having jurisdiction over such
Bank (unless such jurisdiction is asserted by
reason of the activities of the Borrower or
any of the Subsidiaries);
"Termination Event" means (i) a "reportable event," as defined in
Section 403 of ERISA (other than a "reportable
event" not subject to the provision for 30-day
notice to the PBGC), (ii) the withdrawal of
the Borrower or any ERISA Affiliate from a
Multiemployer Plan during a plan year in which
it was a "substantial employer," as defined in
Section 4001(a)(2) of ERISA, or the incurrence
of liability by the Borrower or any ERISA
Affiliate under Section 4064 of ERISA upon the
termination of a Multiple Employer Plan, (iii)
the filing of a notice of intent to terminate
a Plan under Section 4041of ERISA or the
treatment of a Multiemployer Plan amendment as
a termination under Section 4041A of ERISA,
(iv) the institution of proceedings to
terminate a Plan or a Multiemployer Plan, or
(v) any other event or condition which might
constitute grounds under Section 4042 of ERISA
for the termination of, or the appointment of
a trustee to administer, any Plan or
Multiemployer Plan;
16
"Total Capitalization" shall mean the sum of (i) Funded Debt, plus
(ii) Consolidated Net Worth;
"Total Loss" shall have the meaning ascribed thereto in the
Mortgages;
"Vessels" means the vessels listed in Schedules 3 and 4,
registered in the ownership of the relevant
Guarantor as set forth in Schedule 2;
"Withdrawal Liabilities" shall have the meaning given to such term
under Part 1 of Subtitle E of Title IV of
ERISA;
1.2 Computations of Time Periods; Other Definitional Provisions. In this
Agreement, the Note and the other Security Documents, in the computation of
periods of time from a specified date to a later specified date, the word "from"
means "from and including" and the words "to" and "until" each mean "to but
excluding"; words importing either gender include the other gender; references
to "writing" include printing, typing, lithography and other means of
reproducing words in a tangible visible form; the words "including," "includes"
and "include" shall be deemed to be followed by the words "without limitation";
references to articles, sections (or subdivisions of sections), exhibits,
annexes or schedules are to this Agreement, the Note or such Security Document,
as applicable; references to agreements and other contractual instruments
(including this Agreement, the Note and the Security Documents) shall be deemed
to include all subsequent amendments, amendments and restatements, supplements,
extensions, replacements and other modifications to such instruments (without,
however, limiting any prohibition on any such amendments, extensions and other
modifications by the terms of this Agreement, the Note or any Security
Document); references to any matter that is "approved" or requires "approval" of
a party shall mean approval given in the sole and absolute discretion of such
party unless otherwise specified.
1.3 Accounting Terms. Unless otherwise specified herein, all accounting terms
used in this Agreement, the Note and in the Security Documents shall be
interpreted, and all financial statements and certificates and reports as to
financial matters required to be delivered to the Administrative Agent or to the
Banks under this Agreement shall be prepared, in accordance with generally
accepted accounting principles for the United States ("GAAP").
1.4 Certain Matter Regarding Materiality. To the extent that any representation,
warranty, covenant or other undertaking of the Borrower in this Agreement is
qualified by reference to those which are not reasonably expected to result in a
"Material Adverse Effect" or language of similar import, no inference shall be
drawn therefrom that any Agent or Bank has knowledge or approves of any
noncompliance by the Borrower with any governmental rule.
1.5 Forms of Documents. Except as otherwise expressly provided in this
Agreement, references to documents or certificates "substantially in the form"
of Exhibits to another document shall mean that such documents or certificates
are duly completed in the form of the related Exhibits with substantive changes
subject to the provisions of Section 17.6 of this Agreement, as the case may be,
or the correlative provisions of the Security Documents.
17
2. REPRESENTATIONS AND WARRANTIES
2.1 Representations and Warranties. In order to induce the Arrangers, the Agents
and the Banks to enter into this Agreement and to induce the Issuer to issue the
Letter of Credit, the Borrower hereby represents and warrants to the Arrangers,
the Agents, the Issuer and the Banks (which representations and warranties shall
survive the execution and delivery of this Agreement that:
(a) Due Organization and Power. each Subsidiary is duly formed
and is validly existing in good standing under the laws of its jurisdiction of
incorporation or formation, has full power to carry on its business as now being
conducted and to enter into and perform its obligations under this Agreement,
the Note and the Security Documents to which it is a party, and has complied
with all statutory, regulatory and other requirements relative to such business
and such agreements;
(b) Authorization and Consents. all necessary corporate action
has been taken to authorize, and all necessary consents and authorities have
been obtained and remain in full force and effect to permit, each Security Party
to enter into and perform its obligations under this Agreement, the Note and the
Security Documents and, in the case of the Borrower, to borrow, service and
repay the Loan and, as of the date of this Agreement, no further consents or
authorities are necessary for the service and repayment of the Reimbursement
Obligations or the Loan or any part thereof;
(c) Binding Obligations. this Agreement, the Note and the
Security Documents constitute or will, when executed and delivered, constitute
the legal, valid and binding obligations of each Security Party as is a party
thereto enforceable against such Security Party in accordance with their
respective terms, except to the extent that such enforcement may be limited by
equitable principles, principles of public policy or applicable bankruptcy,
insolvency, reorganization, moratorium or other laws affecting generally the
enforcement of creditors' rights;
(d) No Violation. the execution and delivery of, and the
performance of the provisions of, this Agreement, the Note, and those of the
Security Documents to which it is to be a party by each Security Party do not
contravene any applicable law or regulation existing at the date hereof or any
contractual restriction binding on such Security Party or the certificate of
incorporation or by-laws, certificate of formation and operating agreement (or
equivalent instruments) thereof;
(e) Litigation. no action, suit or proceeding is pending or
threatened against the Borrower or any Subsidiary before any court, board of
arbitration or administrative agency which could or might result in any Material
Adverse Effect;
(f) No Default. Neither the Borrower nor any Subsidiary is in
default under any material agreement by which it is bound, or is in default in
respect of any material financial commitment or obligation;
(g) Vessels. upon the Date of Issuance:
(i) each of the Facility A Vessels will be in the sole and
absolute ownership of the relevant Guarantor as set forth in
Schedule 3 and duly registered in such Guarantor's name under
▇▇▇▇▇▇▇▇ Island or
18
Liberian flag, unencumbered, save and except for the Facility
A Mortgage, the Facility B Mortgage and the Mortgage recorded
against it and as permitted thereby;
(ii) each of the Facility B Vessels will be in the sole and
absolute ownership of the relevant Guarantor as set forth in
Schedule 4 and duly registered in such Guarantor's name under
Liberian flag, unencumbered, save and except for the Facility
B Mortgage and the Mortgage recorded against it and as
permitted thereby;
(iii) each Vessel will be classed in the highest classification and
rating for vessels of the same age and type with the
respective classification society as set forth in Schedule 3
or Schedule 4, as the case may be, without any material
outstanding recommendations;
(iv) each Vessel will be operationally seaworthy and in every way
fit for its intended service; and
(v) each Vessel will be insured in accordance with the provisions
of the Mortgage recorded against it and the requirements
thereof in respect of such insurances will have been complied
with;
(h) Insurance. the Borrower and each Subsidiary has insured
its properties and assets against such risks and in such amounts as are
customary for companies engaged in similar businesses;
(i) Financial Information. except as otherwise disclosed in
writing to the Agents on or prior to the date hereof, all financial statements,
information and other data furnished by the Borrower to the Agents are complete
and correct, such financial statements have been prepared in accordance with
GAAP and accurately and fairly present the financial condition of the parties
covered thereby as of the respective dates thereof and the results of the
operations thereof for the period or respective periods covered by such
financial statements, and since the date of the Borrower's financial statements
most recently delivered to the Administrative Agent, there has been no Material
Adverse Effect as to any of such parties and none thereof has any contingent
obligations, liabilities for taxes or other outstanding financial obligations
which are material in the aggregate except as disclosed in such statements,
information and data;
(j) Tax Returns. the Borrower and each Subsidiary has filed
all material tax returns required to be filed thereby and has paid all taxes
payable thereby which have become due, other than those not yet delinquent or
the nonpayment of which would not have a Material Adverse Effect on the Borrower
and or such Subsidiary and except for those taxes being contested in good faith
and by appropriate proceedings or other acts and for which adequate reserves
shall have been set aside on its books;
(k) ERISA. the execution and delivery of this Agreement and
the consummation of the transactions hereunder will not involve any prohibited
transaction within the meaning of ERISA or Section 4975 of the Code and no
condition exists or event or transaction has occurred in connection with any
Plan maintained or contributed to by any the Borrower or any
19
Subsidiary or any ERISA Affiliate resulting from the failure of any thereof to
comply with ERISA insofar as ERISA applies thereto which is reasonably likely to
result in the Borrower or any such Subsidiary or any ERISA Affiliate incurring
any liability, fine or penalty which individually or in the aggregate would have
a Material Adverse Effect. Prior to the date hereof, the Borrower has delivered
to the Administrative Agent a list of all the employee benefit plans to which
the Borrower or any Subsidiary or any ERISA Affiliate is a "party in interest"
(within the meaning of Section 3(14) of ERISA) or a "disqualified person"
(within the meaning of Section 4975(e)(2) of the Code);
(l) Chief Executive Office. the Borrower's chief executive
office and chief place of business and the office in which the records relating
to the earnings and other receivables of each Security Party are kept is, and
will continue to be, located at One Station Place, Stamford, Fairfield County,
Connecticut;
(m) Foreign Trade. Control Regulations. to the best of the
Borrower's knowledge, none of the transactions contemplated herein will violate
any of the provisions of the Foreign Assets Control Regulations of the United
States of America (Title 31, Code of Federal Regulations, Chapter V, Part 500,
as amended), any of the provisions of the Cuban Assets Control Regulations of
the United States of America (Title 31, Code of Federal Regulations, Chapter V,
Part 515, as amended), any of the provisions of the Libyan Assets Control
Regulations of the United States of America (Title 31, Code of Federal
Regulations, Chapter V, Part 550, as amended), any of the provisions of the
Iranian Transaction Regulations of the United States of America (Title 31, Code
of Federal Regulations, Chapter V, Part 560, as amended), any of the provisions
of the Iraqi Sanctions Regulations (Title 31, Code of Federal Regulations,
Chapter V, Part 575, as amended), any of the provisions of the Federal Republic
of Yugoslavia (Serbia and Montenegro) Assets Control Regulations (Title 31, Code
of Federal Regulations, Chapter V, Part 585 as amended) or any of the provisions
of the Regulations of the United States of America Governing Transactions in
Foreign Shipping of Merchandise (Title 31, Code of Federal Regulations, Chapter
V, Part 505, as amended);
(n) Equity Ownership. each of the Guarantors is a wholly owned
direct subsidiary of the Borrower; the SETTEBELLO Guarantor owns 49.0% of the
issued and outstanding capital stock of the SETTEBELLO Owner; on the Date of
Issuance, the Borrower will not own any shares of capital stock, limited
liability company interest, partnership interest or any other direct or indirect
equity interest in any corporation, limited liability company, partnership or
other entity except the Security Parties and the other companies listed on
Schedule 2;
(o) Environmental Matters and Claims. (a) except as heretofore
disclosed in writing to the Agents (i) the Borrower, each of its Subsidiaries
and their Affiliates will, when required to operate their business as then being
conducted, be in compliance with all applicable United States federal and state,
local, foreign and international laws, regulations, conventions and agreements
relating to pollution prevention or protection of human health or the
environment (including, without limitation, ambient air, surface water, ground
water, navigable waters, waters of the contiguous zone, ocean waters and
international waters), including, without limitation, laws, regulations,
conventions and agreements relating to (1) emissions, discharges, releases or
threatened releases of chemicals, pollutants, contaminants, wastes, toxic
substances, hazardous materials, oil, hazardous substances, petroleum and
petroleum products and by-products ("Materials of Environmental Concern"), or
(2) the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Materials of Environmental Concern
("Environmental Laws");
20
(ii) the Borrower, each of its Subsidiaries and their Affiliates will, when
required, have all permits, licenses, approvals, rulings, variances, exemptions,
clearances, consents or other authorizations required under applicable
Environmental Laws ("Environmental Approvals") and will, when required, be in
compliance with all Environmental Approvals required to operate their business
as then being conducted; (iii) none of the Borrower, any Subsidiary nor any
Affiliate thereof has received any notice of any claim, action, cause of action,
investigation or demand by any person, entity, enterprise or government, or any
political subdivision, intergovernmental body or agency, department or
instrumentality thereof, alleging potential liability for, or a requirement to
incur, material investigator costs, cleanup costs, response and/or remedial
costs (whether incurred by a governmental entity or otherwise), natural
resources damages, property damages, personal injuries, attorneys' fees and
expenses, or fines or penalties, in each case arising out of, based on or
resulting from (1) the presence, or release or threat of release into the
environment, of any Materials of Environmental Concern at any location, whether
or not owned by such person, or (2) circumstances forming the basis of any
violation, or alleged violation, of any Environmental Law or Environmental
Approval ("Environmental Claim") (other than Environmental Claims that have been
fully and finally adjudicated or otherwise determined and all fines, penalties
and other costs, if any, payable by the Security Parties in respect thereof have
been paid in full or which are fully covered by insurance (including permitted
deductibles)); and (iv) there are no circumstances that may prevent or interfere
with such full compliance in the future; and (b) except as heretofore disclosed
in writing to the Agent there is no Environmental Claim pending or threatened
against the Borrower, any Subsidiary or any Affiliate thereof and there are no
past or present actions, activities, circumstances, conditions, events or
incidents, including, without limitation, the release, emission, discharge or
disposal of any Materials of Environmental Concern, that could form the basis of
any Environmental Claim against such persons the adverse disposition of which
may result in a Material Adverse Effect;
(p) Compliance with ISM Code. each Vessel and each Operator
complies with the requirements of the ISM Code including (but not limited to)
the maintenance and renewal of valid certificates pursuant thereto;
(q) Threatened Withdrawal of DOC or SMC. there is no
threatened or actual withdrawal of any Operator's DOC or SMC in respect of any
Vessel;
(r) Approved Business Plan. the Approved Business Plan has
been duly approved by resolution of the Board of Directors of the Borrower,
which approval has not been amended or rescinded and remains in full force and
effect;
(s) Liens. other than as disclosed on Schedule 5, there are no
liens of any kind on any property owned by the Borrower or the Subsidiary;
(t) Indebtedness. other than as disclosed in Schedule 5, the
Borrower (and its Subsidiaries on a consolidated basis) has no long-term
Indebtedness; and
(u) Survival. all representations, covenants and warranties
made herein and in any certificate or other document delivered pursuant hereto
or in connection herewith shall survive the making of the Loan and the issuance
of the Note.
21
3. THE LETTER OF CREDIT
3.1 Issuance of the Letter of Credit.
(a) Subject to the terms and conditions of this Agreement and in reliance
on the representations, warranties and covenants herein contained, the Banks
hereby agree, upon the request of the Borrower and the satisfaction of the
conditions precedent contained in Section 5.1 to procure that the Issuer, on
behalf of the Banks, issue the Letter of Credit in favor of the Facility A
Security Agent, as trustee for the Facility A Banks.
(b) The Issuer, on behalf of the Banks, shall issue the Letter of Credit
upon three (3) Banking Days' prior written notice from the Borrower to the
Issuer requesting the issuance of the Letter of Credit and setting forth the
Date of Issuance with respect thereto. Each Bank severally and not jointly
agrees, on the terms and conditions set forth herein, to cause the Issuer to
issue on behalf of the Banks on such date the Letter of Credit to the Facility A
Security Agent, as trustee for the Facility A Banks, in the amount of
$36,000,000, effective on the Date of Issuance and expiring on the Expiration
Date. The commitment of each Bank to cause the Issuer to issue on behalf of the
Banks the Letter of Credit and its obligations hereunder and under the Letter of
Credit shall be limited to its Commitment as in effect from time to time.
3.2 Several Obligations; Drawing.
(a) The obligations of the Banks hereunder and under or in respect of the
Letter of Credit are several and not joint, and no Bank shall be liable for the
failure of any other Bank to perform its obligations hereunder or thereunder.
The failure of any Bank to honor its obligations hereunder or in respect of the
Letter of Credit shall not excuse the several obligations of the other Banks
hereunder or thereunder.
(b) Upon receipt from the Facility A Security Agent of notice of a demand
for payment (the "Demand Notice") under the Letter of Credit made in accordance
with the terms thereof, the Issuer shall promptly notify the Borrower and each
Bank as to the amount to be paid by such Bank (which amount shall be equal to
the Commitment of such Bank) as a result of such demand and the date for such
payment (which shall be a Banking Day). Upon receipt of such notice from the
Issuer, each Bank shall promptly transfer the amount of its Commitment in
immediately available funds to the account specified in or pursuant to the
Demand Notice or such other account as the Issuer shall have specified in such
notice. Unless the Issuer shall have received notice from a Bank prior to the
date for such payment that such Bank will not make available to the Issuer an
amount equal to such Bank's Commitment, the Issuer may assume that such Bank has
made an amount equal to its Commitment available to the Issuer on the date for
such payment in accordance with this subsection (b) and the Issuer may, in
reliance upon such assumption, make available to the Facility A Security Agent
on such date a corresponding amount. If and to the extent that the Issuer in
reliance upon such assumption shall have made available to the Facility A
Security Agent, on behalf of any Bank, an amount equal to such Bank's Commitment
pursuant to this Section and such Bank shall not have made an amount equal to
its Commitment available to the Issuer and the Issuer shall not have been
reimbursed by the Borrower for such amount, such Bank agrees to pay to the
Issuer forthwith on demand such amount, together with interest thereon, for each
day from the date such amount is made available to the Facility A Security Agent
until the date such amount is repaid to the Issuer at a rate per annum equal to
the Prime Rate for each such day.
22
3.3 Reimbursement Obligation.
(a) Unless the Conversion has occurred pursuant to Section 4, the Borrower
agrees to pay to the Issuer, for the account of the Banks, immediately after
(and on the same Banking Day as) any amount is drawn under, or otherwise paid
pursuant to, the Letter of Credit, a sum equal to the amount so drawn or paid
and interest on such amount as provided in subsections (b) and (c) below;
provided that if the Issuer shall receive such payment from the Borrower later
than 3:00 P.M. (New York City time) on such Banking Day, such payment shall be
deemed to have been received by the Issuer on the next succeeding Banking Day
and interest shall accrue thereon pursuant to subsections (b) and (c) below from
the date such payment was due. The Borrower agrees that all payments required
hereunder shall be free and clear of all set-offs, withholdings, taxes, claims
or other deductions of any kind whatsoever.
(b) Any amount owing by the Borrower pursuant to subsection (a) and not
paid when due shall bear interest, payable upon demand, for each day from and
including the date payment thereof was due to but excluding the date of actual
payment thereof in full at the Default Rate.
(c) Until payment of any amount due hereunder is made, the Borrower's
obligations to the Issuer and the Banks under Section 3.3(a) shall be evidenced
by a loan account ledger maintained by the Issuer in the name of the Borrower.
The Issuer shall determine any amounts payable by the Borrower under this
Section 3.3 and any such determination shall be conclusive absent manifest
error.
3.4 Fees.
L/C Fee. The Borrower agrees to pay the Issuer, for distribution to the
Banks, a letter of credit fee (the "L/C Fee"), on the Stated Amount monthly in
arrears from the date hereof and on the earliest of (i) the Expiration Date,
(ii) the Conversion Date or (iii) termination of the Letter of Credit in
accordance with the terms hereof or thereof, at the rate of three percent (3%)
per annum (calculated on the basis of actual number of days elapsed over a year
of 360 days).
4. conversion of facility
(a) This facility shall automatically convert from a letter of credit
facility to a junior secured term loan facility and the outstanding
Reimbursement Obligations shall automatically convert to the Loan on
the date on which payment by the Issuer, on behalf of the Banks, is
made under the Letter of Credit pursuant to Section 3.2, provided,
that (i) prior to such date, the Borrower has used its best efforts
(to the satisfaction of the Agents) to obtain commitments which
would permit the Borrower to receive not less than $15,000,000 net
cash proceeds from the issuance of equity securities (excluding and
in addition to the approximately $15,000,000 in cash equity
previously committed to by First Reserve Corporation) prior to the
Initial Payment Date and (ii) the conditions set forth in Section
5.2 shall have been satisfied.
23
(b) Upon the Conversion, (i) the Banks shall be deemed to have made the
Loan to the Borrower and the Borrower shall be obligated to repay
the Loan pursuant to the terms hereof, (ii) the Letter of Credit
shall terminate, (iii) the amount of Reimbursement Obligations
outstanding shall be reduced to zero, and (iv) the Administrative
Agent shall complete the grid attached to the Note.
5. CONDITIONS
5.1 Conditions Precedent to Issuance of Letter of Credit. The obligation of the
Issuer, on behalf of the Banks, to issue the Letter of Credit to the Facility A
Security Agent under this Agreement shall be expressly subject to the following
conditions precedent:
(a) Corporate Authority. The Administrative Agent shall have
received the following documents in form and substance satisfactory to the
Administrative Agent:
(i) copies, certified as true and complete by an officer of the
Borrower, of the resolutions of the board of directors of the
Borrower evidencing approval of this Agreement and the Note
and authorizing an appropriate officer or officers or
attorney-in-fact or attorneys-in-fact to execute the same on
its behalf, or other evidence of such approvals and
authorizations;
(ii) copies, certified as true and complete by an officer of each
Security Party (other than the Borrower), of the resolutions
of the board of directors and shareholder, or management
committee and member, as the case may be, thereof evidencing
approval of those Security Documents to which it is to be a
party and authorizing an appropriate officer or officers or
attorney-in-fact or attorneys-in-fact to execute the same on
its behalf, or other evidence of such approvals and
authorizations;
(iii) copies, certified as true and complete by an officer of the
Borrower, of all documents evidencing any other necessary
action (including actions by such parties thereto other than
the Borrower as may be required by the Administrative Agent),
approvals or consents with respect to this Agreement, the Note
and the Security Documents;
(iv) copies, certified as true and complete by an officer of the
respective Security Party of the certificate of incorporation
and by-laws, certificate of formation and operating agreement,
or equivalent instruments thereof;
(v) certificate of the Secretary of the Borrower certifying that
it legally and beneficially owns, directly or indirectly, all
of the issued and outstanding capital stock, or limited
liability company membership interests, as the case may be, of
each of the other Security Parties and that such capital stock
or membership interests are free and clear of
24
any liens, claims, pledges or other encumbrances whatsoever
other than as disclosed to the Administrative Agent in writing
on or before the date hereof;
(vi) certificate of the Secretary of each Security Party (other
than the Borrower) certifying as to the record ownership of
all of its issued and outstanding capital stock, or limited
liability company membership interests, as the case may be;
and
(vii) certificates of the jurisdiction of incorporation or
formation, as the case may be, of each Security Party as to
the good standing thereof.
(b) The Vessels. the Administrative Agent shall have received
evidence satisfactory to it that:
(i) each of the Vessels is in the sole and absolute ownership of
the relevant Guarantor as set forth in Schedule 3 or Schedule
4, as the case may be, and duly registered in such Guarantor's
name under ▇▇▇▇▇▇▇▇ Islands or Liberian flag, unencumbered,
save and except for each of the Facility A Mortgage, in the
case of the Facility A Vessels, the Facility B Mortgage and
the Mortgage recorded against it and as permitted thereby;
(ii) each Vessel is classed in the highest classification and
rating for vessels of the same age and type with the
respective classification society as set forth in Schedule 3
or Schedule 4, as the case may be, without any material
outstanding recommendations;
(iii) each of the Vessels is operationally seaworthy and in every
way fit for its intended service; and
(iv) each of the Vessels is insured in accordance with the
provisions of the Mortgage recorded against it and the
requirements thereof in respect of such insurances have been
complied with;
(c) The Note. the Borrower shall have duly executed and
delivered this Agreement and the Note, to the Administrative Agent;
(d) Guarantor Documents. each Guarantor shall have duly
executed and delivered to the Administrative Agent:
(i) the Guaranty;
(ii) the Mortgage over its Vessel(s);
(iii) an Insurances Assignment with respect to its Vessel(s);
(iv) an Earnings Assignment with respect to its Vessel(s);
25
(v) its Assignment Notices; and
(vi) Uniform Commercial Code Financing Statements for filing with
the State and County of New York, the State of Connecticut,
Fairfield County, Connecticut and in such other jurisdictions
as the Administrative Agent may reasonably require;
(e) Mega I Assignment. Loire shall have been executed and
delivered to the Security Agent the Mega I Assignment and its Assignment Notoce.
(f) Intercreditor Agreement. the Intercreditor Agreement shall
have been executed and delivered to the Administrative Agent;
(g) Facility A/Facility B. each of Facility A and Facility B
shall have been borrowed by the Borrower and/or all conditions to the borrowing
thereof shall have been complied with other than issuance of the Letter of
Credit.
(h) Guarantor Solvency. the Administrative Agent shall have
received a certificate of an officer of each Guarantor confirming the
representations and warranties with respect to solvency set forth in its
Guaranty and containing conclusions as to the solvency of such Guarantor;
(i) Environmental Claims. the Administrative Agent shall be
satisfied that neither the Borrower nor any of its Subsidiaries is subject to
any Environmental Claim which could have a Material Adverse Effect;
(j) Fees. the Administrative Agent shall have received payment
in full of all fees and expenses due to the Agents, the Arrangers and the Banks
under Section 14 and the Fee Letter;
(k) Accounts. each Security Party shall have established an
operating account with the Syndication Agent into which Assigned Moneys are to
be paid;
(l) Vessel Liens. the Administrative Agent shall have received
evidence satisfactory to it and to its legal advisor that, save for the liens
created by the Mortgages, the Assignments, the Facility A Mortgages, the other
Facility A Security Documents, the Facility B Mortgages and the other Facility B
Security Documents, there are no liens, charges or encumbrances of any kind
whatsoever on any of the Vessels or on their respective earnings except as
permitted hereby or by any of the Security Documents;
(m) Approved Business Plan. not later than fourteen (14) days
prior to the Date of Issuance, the Administrative Agent shall have received a
copy of the Approved Business Plan, certified by the Secretary of the Borrower
to be true and complete;
(n) Charters; Pooling Agreements. the Borrower shall have
delivered to the Administrative Agent true and complete copies of (i) all
charters having a term longer than twelve (12) months from the date of execution
and (ii) all vessel pooling agreements, in each case to which the Borrower or
any Subsidiary is a party; and
26
(o) Legal Opinions. the Administrative Agent shall have
received legal opinions addressed to the Agents from (i) ▇▇▇▇▇▇▇ ▇. London,
Esq., in-house counsel for the Security Parties, and (ii) ▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP,
special counsel to the Agents and Banks, in each case in such form as the
Administrative Agent may require, as well as such other legal opinions as the
Administrative Agent shall have required as to all or any matters under the laws
of the United States of America, the State of Delaware, the State of New York,
the Republic of Liberia and the Republic of the ▇▇▇▇▇▇▇▇ Islands covering the
representations and conditions which are the subjects of Sections 2 and 5.1.
5.2 Further Conditions Precedent. The Conversion of the Reimbursement
Obligations into the Loan under this Agreement shall be expressly and separately
subject to the following further conditions precedent on the Conversion Date:
(a) the representations stated in Section 2 (updated mutatis
mutandis to such date) being true and correct as if made on
and as of that date;
(b) no Event of Default having occurred and being continuing and
no event having occurred and being continuing which, with the
giving of notice or lapse of time, or both, would constitute
an Event of Default;
(c) the Administrative Agent being satisfied that no change in any
applicable laws, regulations, rules or in the interpretation
thereof shall have occurred which make it unlawful for any
Security Party to make any payment as required under the terms
of this Agreement, the Note, the Security Documents or any of
them; and
(d) there having been no Material Adverse Effect since the date
hereof.
5.3 Breakfunding Costs. In the event that, on the date specified in the Demand
Notice for the payment of the Stated Amount pursuant to the Letter of Credit,
the Banks shall not be obliged under the Letter of Credit to make such payment,
the Borrower shall indemnify and hold the Banks fully harmless against any
losses which the Banks (or any thereof) may sustain as a result of borrowing or
agreeing to borrow funds to meet the payment requirement of the Demand Notice
and the certificate of the relevant Bank or Banks shall, absent manifest error,
be conclusive and binding on the Borrower as to the extent of any such losses.
5.4 Satisfaction after Issuance or Conversion. Without prejudice to any of the
other terms and conditions of this Agreement, in the event the Banks, in their
sole discretion, cause the Issuer to issue the Letter of Credit or permit the
Conversion to occur prior to the satisfaction of all or any of the conditions
referred to in Sections 5.1 or 5.2, the Borrower hereby covenants and undertakes
to satisfy or procure the satisfaction of such condition or conditions within
fourteen (14) days after the Date of Issuance, in the case of issuance of the
Letter of Credit, or the Conversion Date, in the case of occurrence of the
Conversion (or such longer period as the Banks, in their sole discretion, may
agree).
6. REPAYMENT AND PREPAYMENT OF LOAN
6.1 Repayment. If the Reimbursement Obligations are converted into the Loan as
provided in Section 4, the Borrower shall repay the principal of the Loan in six
(6) semi-annual installments on
27
six (6) consecutive Payment Dates, commencing with the Initial Payment Date. The
first four (4) such installments shall be in the amount of Four Million dollars
($4,000,000), the next such installment shall be in the amount of Ten Million
Dollars ($10,000,000) and the last such installment shall be in the amount of
Ten Million Dollars ($10,000,000) plus such other amounts as may be necessary to
repay the Loan in full together with accrued but unpaid interest and any other
amounts owing by the Borrower or any other Security Party to any Arranger, Agent
or Bank pursuant to this Agreement, the Note or any Security Document, such last
installment to be paid on the Final Payment Date.
6.2 Voluntary Prepayment; no re-borrowing. The Borrower may prepay, upon five
(5) Banking Days written notice, the Loan or any portion thereof. Each
prepayment shall be in a minimum amount of One Million Dollars ($1,000,000) plus
any One Million Dollar ($1,000,000) multiple thereof or the full amount of the
Loan. No part of the Loan will be available for re-borrowing.
6.3 Mandatory Prepayment; Sale or Loss of Vessel. On (i) any sale of a Vessel
(which in any event shall require the prior consent of the Agents) or (ii) the
earlier of (x) ninety (90) days after the Total Loss of a Vessel or (y) the date
on which the insurance proceeds in respect of such loss are received by the
Borrower (or a Guarantor) or the Security Agent as assignee thereof, such
proceeds shall be applied as follows:
(a) Facility A Vessel. in respect of a Facility A Vessel first
in accordance with Section 5.4 of the Facility A Loan Agreement, then in
repayment of amounts due hereunder in the inverse order of their due dates for
payment;
(b) Facility B Vessel. in respect of a Facility B Vessel first
in accordance with Section 5.3 of the Facility B Loan Agreement, then in
repayment of amounts due hereunder in the inverse order of their due dates for
payment
6.4 Demand Conversion. In the event that the Administrative Agent determines
that (a) a Material Adverse Effect has occurred, or (b) the Borrower has failed
to meet any objective specified in the Approved Business Plan by the target date
thereof specified in the Approved Business Plan to the satisfaction of the
Majority Banks, then the Administrative Agent may on such date or any time
thereafter convert the Loan to a demand loan by sending notice to the Borrower.
Upon the sending of such a notice, the Loan shall be converted to a demand loan,
and full repayment of the Loan and all other obligations of the Borrower or any
other Security Party under this Agreement, the Note or any Security Document
shall be due upon demand by the Administrative Agent.
6.5 Interest and Costs with Prepayments. Any repayment or prepayment of the Loan
made pursuant to this Agreement (including, without limitation, those made
pursuant to Sections 6 and 10) shall be subject to the condition that on the
date of prepayment all accrued interest to the date of such prepayment shall be
paid in full with respect to the Loan or portions thereof being prepaid,
together with any and all actual costs or expenses incurred by any Bank in
connection with any breaking of funding (as certified by such Bank, which
certification shall, absent any manifest error, be conclusive and binding on the
Borrower).
28
7. INTEREST AND RATE
7.1 Applicable Rate. The Loan shall bear interest at the Applicable Rate which
shall be the rate per annum which is equal to the aggregate of (a) LIBOR for the
relevant Interest Period plus (b) the Margin. The Applicable Rate shall be
determined by the Administrative Agent two Banking Days prior to the first day
of the relevant Interest Period. The Administrative Agent shall promptly notify
the Borrower in writing of the Applicable Rate as and when determined. Each such
determination, absent manifest error, shall be conclusive and binding upon the
Borrower.
7.2 Default Rate. Any amounts due under this Agreement, not paid when due,
whether by acceleration or otherwise, shall bear interest thereafter from the
due date thereof until the date of payment at a rate per annum equal to (i) the
Prime Rate (as notified to the Borrower by the Administrative Agent), plus (ii)
the Margin, plus (iii) two percent (2%) (the "Default Rate"). Following the
occurrence of any Event of Default, the Administrative Agent, upon instruction
of the Majority Banks, may deliver a notice to the Borrower advising the
Borrower than an Event of Default has occurred. From the date of any such notice
until each such Event of Default is cured to the satisfaction of the Majority
Banks, the Loan shall bear interest at the Default Rate.
7.3 Interest Periods. The Borrower shall give the Administrative Agent an
Interest Notice specifying the Interest Period selected at least three (3)
Banking Days prior to the end of any then existing Interest Period. If at the
end of any then existing Interest Period the Borrower fails to give an Interest
Notice the relevant Interest Period shall be three (3) months. The Borrower's
right to select an Interest Period shall be subject to the restriction that no
selection of an Interest Period shall be effective unless each Bank is satisfied
that the necessary funds will be available to such Bank for such period and that
no Event of Default or event which, with the giving of notice or lapse of time,
or both, would constitute an Event of Default shall have occurred and be
continuing.
7.4 Interest Payments. Accrued interest on the Loan shall be payable in arrears
on the last day of each Interest Period, except that if the Borrower shall
select an Interest Period in excess of three (3) months, accrued interest shall
be payable during such Interest Period on each three (3) month anniversary of
the commencement of such Interest Period and upon the end of such Interest
Period.
8. PAYMENTS
8.1 Place of Payments, No Set Off. All payments to be made hereunder by the
Borrower shall be made to the Administrative Agent, not later than 11 a.m. New
York time (any payment received after 11 a.m. New York time shall be deemed to
have been paid on the next Banking Day) on the due date of such payment, at its
office located at ▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ or to
such other office of the Administrative Agent as the Administrative Agent may
direct, without set-off or counterclaim and free from, clear of, and without
deduction for, any Taxes, provided, however, that if the Borrower shall at any
time be compelled by law to withhold or deduct any Taxes from any amounts
payable to the Banks hereunder, then the Borrower shall pay such additional
amounts in Dollars as may be necessary in order that the net amounts received
after withholding or deduction shall equal the amounts which would have been
received if such withholding or deduction were not required and, in the event
any withholding or deduction is made, whether for Taxes or otherwise, the
Borrower shall promptly send to the Administrative Agent such documentary
evidence with respect to such withholding or deduction as may be required from
time to time by the Banks.
29
8.2 Tax Credits. If any Bank obtains the benefit of a credit against the
liability thereof for federal income taxes imposed by any taxing authority for
all or part of the Taxes as to which the Borrower has paid additional amounts as
aforesaid (and each Bank agrees to use its best efforts to obtain the benefit of
any such credit which may be available to it, provided it has knowledge that
such credit is in fact available to it), then such Bank shall reimburse the
Borrower for the amount of the credit so obtained. Each Bank agrees that in the
event that Taxes are imposed on account of the situs of its loans hereunder,
such Bank, upon acquiring knowledge of such event, shall, if commercially
reasonable, shift such loans on its books to another office of such Bank so as
to avoid the imposition of such Taxes.
8.3 Computations; Banking Days. (a) All computations of interest and fees shall
be made by the Agents or the Banks, as the case may be, on the basis of a
360-day year, in each case for the actual number of days (including the first
day but excluding the last day) occurring in the period for which interest or
fees are payable. Each determination by the Agents or the Banks of an interest
rate or fee hereunder shall be conclusive and binding for all purposes, absent
manifest error.
(b) Whenever any payment hereunder or under the Note shall be stated
to be due on a day other than a Banking Day, such payment shall be due and
payable on the next succeeding Banking Day unless the next succeeding Banking
Day falls in the following calendar month, in which case it shall be payable on
the immediately preceding Banking Day.
9. EVENTS OF DEFAULT
9.1 Events of Default. The occurrence of any of the following events shall be an
Event of Default:
(a) Non-Payment of Principal. any payment of principal is not
paid when due; or
(b) Non-Payment of Interest or Other Amounts. any interest or
any other amount becoming payable to the Agents, the Arrangers or any Bank under
this Agreement, under the Note, or under any of the Security Documents is not
paid on the due date or date of demand (as the case may be), and such default
continues unremedied for a period of five (5) Banking Days; or
(c) Representations. any representation, warranty or other
statement made by the Borrower in this Agreement or by any Security Party in any
of the Security Documents or in any other instrument, document or other
agreement delivered in connection herewith or therewith proves to have been
untrue or misleading in any material respect as at the date as of which made or
confirmed; or
(d) Mortgage. there is an event of default under any Mortgage;
or
(e) Covenants. any Security Party defaults in the due and
punctual observance or performance of any other term, covenant or agreement
contained in this Agreement, in the Note, in any of the Security Documents or in
any other instrument, document or other agreement delivered in connection
herewith or therewith, or it becomes impossible or unlawful for any Security
Party to fulfill any such term, covenant or agreement or there occurs any other
event which constitutes a default under this Agreement, under the Note or under
any of the Security Documents, in each case other than an Event of Default
referred to elsewhere in this Section 9.1,
30
and such default, impossibility and/or unlawfulness, in the reasonable opinion
of the Majority Banks, could have a material adverse effect on the Banks' rights
hereunder, under the Note or under the Security Documents or on the Banks' right
to enforce this Agreement, the Note, and/or the Security Documents, and
continues unremedied or unchanged, as the case may be, for a period of thirty
(30) days; or
(f) Indebtedness. any Security Party, any Subsidiary or any
Affiliate shall default in the payment when due (subject to any applicable grace
period) of any Indebtedness or of any other indebtedness, in either case, in the
outstanding principal amount equal to or exceeding Five Hundred Thousand Dollars
($500,000) or such Indebtedness or indebtedness is, or by reason of such default
is subject to being, accelerated or any party becomes entitled to enforce the
security for any such Indebtedness or indebtedness and such party shall take
steps to enforce the same, unless such default or enforcement is being contested
in good faith and by appropriate proceedings or other acts and the Security
Party, Subsidiary or Affiliate, as the case may be, shall set aside on its books
adequate reserves with respect thereto; or
(g) Ownership of Guarantors. the Borrower shall cease to own
(except as otherwise expressly permitted by this Agreement), directly or
indirectly, one hundred percent (100%) of any of the Guarantors or the
SETTEBELLO Guarantor shall cease to own, directly or indirectly, 49.0% of the
SETTEBELLO Owner; or
(h) Bankruptcy. the Borrower or any Affiliate commences any
proceeding under any reorganization, arrangement or readjustment of debt,
dissolution, winding up, adjustment, composition, bankruptcy or liquidation law
or statute of any jurisdiction, whether now or hereafter in effect (a
"Proceeding"), or there is commenced against any thereof any Proceeding and such
Proceeding remains undismissed or unstayed for a period of thirty (30) days or
any receiver, trustee, liquidator or sequestrator of, or for, any thereof or any
substantial portion of the property of any thereof is appointed and is not
discharged within a period of thirty (30) days or any thereof by any act
indicates consent to or approval of or acquiescence in any Proceeding or the
appointment of any receiver, trustee, liquidator or sequestrator of, or for,
itself or of, or for, any substantial portion of its property; or
(i) Termination of Operations; Sale of Assets. except as
expressly permitted under this Agreement, any Security Party ceases its
operations or sells or otherwise disposes of all or substantially all of its
assets (other than such a sale by one Guarantor to another) or all or
substantially all of the assets of any Security Party are seized or otherwise
appropriated; or
(j) Judgments. any judgment or order is made the effect
whereof would be to render ineffective or invalid this Agreement, the Letter of
Credit, the Note or any of the Security Documents or any material provision
thereof, or the Borrower or any Security Party asserts that any such agreement
or provision thereof is invalid; or
(k) Inability to Pay Debts. any Security Party is unable to
pay or admits its inability to pay its debts as they fall due or a moratorium
shall be declared in respect of any material indebtedness of any Security Party;
or
31
(l) Change in Financial Position. any change in the financial
position of any Security Party which, in the reasonable opinion of the Majority
Banks, shall have a Material Adverse Effect; or
(m) Change in Control. a Change of Control shall occur with
respect to the Borrower; or
(n) ERISA Debt. (i) the Borrower or any ERISA Affiliate fails
to pay when due an amount or amounts aggregating in excess of $1,000,000 which
it or they have become liable to pay under Title IV of ERISA or (ii) the
Borrower or any ERISA Affiliate, individually or collectively, incurs, or should
reasonably expect to incur, any Withdrawal Liability or liability upon the
happening of a Termination Event and the aggregate of all such Withdrawal
Liabilities and such other liabilities exceeds $10,000,000; or
(o) Approved Business Plan. at any time the Board of Directors
of the Borrower passes any resolution amending or rescinding any part of the
Approved Business Plan or the Borrower otherwise rejects or rescinds any part of
the Approved Business Plan; or
(p) Cross-Default. any Event of Default (as defined in either
the Facility A Loan Agreement or the Facility B Loan Agreement) or event which,
with the giving of notice or passage of time on both, would constitute such an
Event of Default, occurs or the Borrower or any Guarantor defaults under any
material contract or agreement to which it is a party or by which it is bound.
Upon and during the continuance of any Event of Default, the Banks' obligation
to make the Letter of Credit Available or convert the Reimbursement Obligations
into the Loan available shall cease and the Administrative Agent on the
instructions of the Majority Banks may, by notice to the Borrower, direct the
Borrower to pay to the Administrative Agent for the benefit of the Banks the
Stated Amount to be kept as collateral for the Borrower's Reimbursement
Obligations, or should the same have been converted into the Loan, declare the
entire unpaid balance of the then outstanding Loan, accrued interest and any
other sums payable by the Borrower hereunder or under the Note due and payable,
whereupon the same shall forthwith be due and payable without presentment,
demand, protest or notice of any kind, all of which are hereby expressly waived;
provided that upon the happening of an event specified in subsections (h) or (k)
of this Section 9.1 with respect to the Borrower, the Note (provided that the
Conversion had occurred) shall be immediately due and payable without
declaration or other notice to the Borrower. In such event, the Banks may
proceed to protect and enforce their rights by action at law, suit in equity or
in admiralty or other appropriate proceeding, whether for specific performance
of any covenant contained in this Agreement, in the Note (provided that the
Conversion had occurred) or in any Security Document, or in aid of the exercise
of any power granted herein or therein, or the Banks may proceed to enforce the
payment of the Note (provided that the Conversion had occurred) or the
Reimbursement Obligations or to enforce any other legal or equitable right of
the Banks, or proceed to take any action authorized or permitted under the terms
of any Security Document or by applicable law for the collection of all sums
due, or so declared due, on the Note (provided that the Conversion had occurred)
or with respect to the Reimbursement Obligations, including, without limitation,
the right to appropriate and hold or apply (directly, by way of set-off or
otherwise) to the payment of the obligations of the Borrower to the Banks
hereunder and/or under the Note (provided that the Conversion had occurred)
(whether or not then due) all moneys and other amounts of the Borrower then or
thereafter
32
in possession of any Bank, the balance of any deposit account (demand or time,
mature or unmatured) of the Borrower then or thereafter with any Bank and every
other claim of the Borrower then or thereafter against any of the Banks.
9.2 Indemnification. The Borrower agrees to, and shall, indemnify and hold the
Agents, the Arrangers and the Banks harmless against any loss, as well as
against any reasonable costs or expenses (including reasonable legal fees and
expenses), which any of the Agents, the Arrangers or the Banks sustains or
incurs as a consequence of any default in payment of the principal amount of the
Loan, interest accrued thereon or any other amount payable hereunder, under the
Note or under any Security Documents including, but not limited to, all actual
losses incurred in liquidating or re-employing fixed deposits made by third
parties or funds acquired to effect or maintain the Loan or any portion thereof.
Any Banks' certification of such costs and expenses shall, absent any manifest
error, be conclusive and binding on the Borrower.
9.3 Application of Moneys. Except as otherwise provided in any Security
Document, all moneys received by the Agents, the Arrangers or the Banks under or
pursuant to this Agreement, the Note or any of the Security Documents after the
happening of any Event of Default (unless cured to the satisfaction of the
Majority Banks) shall be applied by the Agents in the following manner:
(a) first, in or towards the payment or reimbursement of any
expenses or liabilities incurred by the Agents, the Arrangers or the Banks in
connection with the ascertainment, protection or enforcement of its rights and
remedies hereunder, under the Note and under any of the Security Documents,
(b) secondly, in or towards payment of any interest owing in
respect of the Loan or the Reimbursement Obligations, as the case may be,
(c) thirdly, in or towards repayment of principal of the Loan
or the Reimbursement Obligations, as the case may be,
(d) fourthly, in or towards payment of all other sums which
may be owing to the Agents, the Arrangers or the Banks under this Agreement,
under the Note, under the Fee Letter or under any of the Security Documents, and
(e) fifthly, the surplus (if any) shall be paid to the
Borrower or to whosoever else may be entitled thereto.
10. COVENANTS
10.1 Affirmative Covenants. The Borrower hereby covenants and undertakes with
the Banks that, from the date hereof and so long as any principal, interest or
other moneys are owing in respect of this Agreement, under the Note or under any
of the Security Documents, the Borrower will:
(a) Performance of Agreements. duly perform and observe, and
procure the observance and performance by all other parties thereto (other than
the Banks) of, the terms of this Agreement, the Note and the Security Documents;
(b) Notice of Default, etc. promptly upon obtaining knowledge
thereof, inform the Administrative Agent of the occurrence of (a) any Event of
Default or of any event
33
which, with the giving of notice or lapse of time, or both, would constitute an
Event of Default, (b) any litigation or governmental proceeding pending or
threatened against it or against any of its Subsidiaries which could reasonably
be expected to have a Material Adverse Effect, (c) the withdrawal of any
Vessel's rating by its Classification Society or the issuance by the
Classification Society of any material recommendation or notation affecting
class and (d) any other event or condition which is reasonably likely to have a
Material Adverse Effect;
(c) Obtain Consents. without prejudice to Section 2.1 and this
Section 10.1, obtain every consent and do all other acts and things which may
from time to time be necessary or advisable for the continued due performance of
all its and the other Security Parties' respective obligations under this
Agreement, under the Note and under the Security Documents;
(d) Financial Information. deliver to each Bank:
(i) as soon as available but not later than ninety (90) days after
the end of each fiscal year of the Borrower, complete copies
of the consolidated financial reports of the Borrower and its
Subsidiaries (together with a Compliance Certificate), all in
reasonable detail, which shall include at least the
consolidated balance sheet of the Borrower and its
Subsidiaries as of the end of such year and the related
consolidated statements of income and sources and uses of
funds for such year, which shall be audited reports prepared
by an Acceptable Accounting Firm;
(ii) as soon as available but not less than forty-five (45) days
after the end of each of the first three quarters of each
fiscal year of the Borrower, a quarterly interim consolidated
balance sheet of the Borrower and its Subsidiaries and the
related consolidated profit and loss statements and sources
and uses of funds (together with a Compliance Certificate),
all in reasonable detail, unaudited, but certified to be true
and complete by the chief financial officer of the Borrower;
(iii) within ten (10) days of the filing thereof, copies of all
registration statements and reports on Forms 10-K, 10-Q and
8-K (or their equivalents) and other material filings which
the Borrower shall have filed with the Securities and Exchange
Commission or any similar governmental authority;
(iv) promptly upon the mailing thereof to the shareholders of the
Borrower, copies of all financial statements, reports, proxy
statements and other communications provided to the Borrower's
shareholders;
(v) within ten (10) days of the Borrower's receipt thereof, copies
of all audit letters or other correspondence from any external
auditors including material financial information in respect
of the Borrower;
(vi) at any time upon the request of any Agent, a Compliance
Certificate; and
34
(vii) such other statements (including, without limitation, monthly
consolidated statements of operating revenues and expenses),
lists of assets and accounts, budgets, forecasts, reports and
other financial information with respect to its business as
the Administrative Agent may from time to time reasonably
request, certified to be true and complete by the chief
financial officer of the Borrower;
(e) Corporate Existence. do or cause to be done, and procure
that each Subsidiary shall do or cause to be done, all things necessary to
preserve and keep in full force and effect its corporate existence, or limited
liability company existence, as the case may be, and all licenses, franchises,
permits and assets necessary to the conduct of its business;
(f) Books and Records. at all times keep, and cause each
Subsidiary to keep, proper books of record and account into which full and
correct entries shall be made in accordance with GAAP;
(g) Taxes and Assessments. pay and discharge, and cause each
Subsidiary to pay and discharge, all material taxes, assessments and
governmental charges or levies imposed upon it or upon its income or property
prior to the date upon which penalties attach thereto; provided, however, that
it shall not be required to pay and discharge, or cause to be paid and
discharged, any such tax, assessment, charge or levy so long as the legality
thereof shall be contested in good faith and by appropriate proceedings or other
acts and it shall set aside on its books adequate reserves with respect thereto;
(h) Inspection. allow, and cause each Subsidiary to allow, any
representative or representatives designated by any Agent, subject to applicable
laws and regulations, to visit and inspect any of its properties, and, on
request, to examine its books of account, records, reports and other papers and
to discuss its affairs, finances and accounts with its officers, all at such
reasonable times and as often as any Agent reasonably requests;
(i) Compliance with Statutes, Agreements, etc. do or cause to
be done, and cause each Subsidiary to do and cause to be done, all things
necessary to comply with all material contracts or agreements to which it or any
Subsidiary is a party, and all material laws, and the rules and regulations
thereunder, applicable to the Borrower or such Subsidiary, including, without
limitation, those laws, rules and regulations relating to employee benefit plans
and environmental matters;
(j) Environmental Matters. promptly upon the occurrence of any
of the following conditions, provide to the Administrative Agent a certificate
of a chief executive officer thereof, specifying in detail the nature of such
condition and its proposed response or the response of its Environmental
Affiliates: (a) its receipt or the receipt by any other Security Party or any
Environmental Affiliates of the Borrower or any other Security Party of any
written communication whatsoever that alleges that such person is not in
compliance with any applicable Environmental Law or Environmental Approval, if
such noncompliance could reasonably be expected to have a Material Adverse
Effect, (b) knowledge by it, or by any other Security Party or any Environmental
Affiliates of the Borrower or any other Security Party that there exists any
Environmental Claim pending or threatened against any such person, which could
reasonably be expected to have a Material Adverse Effect, or (c) any release,
emission, discharge or disposal of any material that
35
could form the basis of any Environmental Claim against it, any other Security
Party or against any Environmental Affiliates of the Borrower or any other
Security Party, if such Environmental Claim could reasonably be expected to have
a Material Adverse Effect. Upon the written request by the Agent, it will submit
to the Agent at reasonable intervals, a report providing an update of the status
of any issue or claim identified in any notice or certificate required pursuant
to this subsection;
(k) ERISA. forthwith upon learning of the occurrence of any
material liability of the Borrower, any Subsidiary or any ERISA Affiliate
pursuant to ERISA in connection with the termination of any Plan or withdrawal
or partial withdrawal of any multi-employer plan (as defined in ERISA) or of a
failure to satisfy the minimum funding standards of Section 412 of the Code or
Part 3 of Title I of ERISA by any Plan for which the Borrower, any Subsidiary or
any ERISA Affiliate is plan administrator (as defined in ERISA), furnish or
cause to be furnished to the Banks written notice thereof;
(l) Vessel Management. cause each of the Vessels to be managed
both commercially and technically by the Borrower, a wholly-owned subsidiary
thereof or its existing manager;
(m) Funded Debt to Total Capitalization Ratio. maintain at all
times on a consolidated basis a ratio of Funded Debt to Total Capitalization of
not more than 0.6 to 1 provided, that for purposes of compliance with this
covenant only, Funded Debt shall (i) exclude unsecured, subordinated debt, and
(ii) include the present value of the Borrower's (or any of the Borrower's
Subsidiaries') liability for all payments under synthetic leases other than the
Columbia Lease;
(n) Cash. maintain at all times on a consolidated basis
readily available cash and/or Cash Equivalents as follows:
(i) through December 31, 2000, not less than Ten Million Dollars
($10,000,000);
(ii) thereafter, through June 30, 2001, not less than Fifteen
Million Dollars ($15,000,000);
(iii) thereafter, not less than Twenty Million Dollars
($20,000,000);
(o) Consolidated Net Worth. maintain at all times a
Consolidated Net Worth of not less than One Hundred Sixty Million Dollars
($160,000,000) plus 50% of the Borrower's positive net income (on a consolidated
basis) earned after December 31, 1999 plus 100% of the net proceeds received by
the Borrower (or any of the Borrower's Subsidiaries) from the issuance of equity
securities after the Date of Issuance;
(p) EBITDA to Interest Expense. maintain a ratio of EBITDA to
Interest Expense as follows:
(i) through December 31, 2000, not less than 1.1 to 1.0;
(ii) thereafter, through December 31, 2002, not less than 1.75 to
1.0;
36
(iii) thereafter, not less than 2.5 to 1.0;
measured not less than quarterly, in each instance based on the four
most recent fiscal quarters for which financial information is available;
(q) Use of Excess Cash. apply all cash and Cash Equivalents of
the Borrower (on a consolidated basis), proceeds from the issuance of securities
by the Borrower, any Guarantor or any Guarantor, and proceeds from the sale of
any vessels by the Borrower, any Guarantor or any Guarantor (net of indebtedness
secured by a mortgage on such vessel) as follows:
(i) to the extent the Borrower chooses to do so, to retention by
the Borrower as cash or Cash Equivalents up to $20.0 million;
and then
(ii) to prepayment of the Loan until the Loan is fully repaid.
(r) Brokerage Commissions, etc. the Borrower agrees to
indemnify and hold the Arrangers, the Agents and the Banks harmless from any
claim for any brokerage commission, fee, or compensation from any broker or
third party resulting from the transactions contemplated hereby;
(s) Deposit Accounts; Assignment. maintain, and procure that
each other Security Party shall maintain its operating accounts with the
Syndication Agent and shall procure, and shall cause each other Security Party
to procure, that all earnings of any Vessels shall be paid into such operating
accounts and the Borrower, and by its execution of the Consent and Agreement
hereto, each other Security Party, hereby pledges, assigns and grants to the
Syndication Agent, for the benefit of the Banks, a security interest in all
funds from time to time in such accounts (such security interest in accounts of
the Guarantors being subject to the terms of the Intercreditor Agreement);
(t) Future Guaranties. procure that all Subsidiaries of the
Borrower (other than Designated Subsidiaries, and only for so long as remaining
a Designated Subsidiary), shall execute a Guaranty and other relevant Security
Documents in respect of any vessel owned thereby within thirty (30) days of
formation, acquisition or otherwise becoming a Subsidiary, or ceasing to be a
Designated Subsidiary, of the Borrower; and
(u) Insurance. maintain, and cause each Subsidiary to
maintain, with financially sound and reputable insurance companies, insurance on
all their respective properties and against all such risks and in at least such
amounts as are usually insured against by companies of established reputation
engaged in the same or similar business from time to time
10.2 Negative Covenants. The Borrower hereby covenants and undertakes with the
Banks that, from the date hereof and so long as any principal, interest or other
moneys are owing in respect of this Agreement, under the Note or under any of
the Security Documents, the Borrower will not, and will procure that no other
Subsidiary, to the extent applicable, will, without prior the written consent of
the Administrative Agent (or the Majority Banks or all of the Banks if required
by Section 16.8):
(a) Liens. create, assume or permit to exist, any mortgage, pledge,
lien, charge, encumbrance or any security interest whatsoever upon any
Collateral or other property except:
37
(i) liens disclosed in Schedule 5;
(ii) liens on the Designated Vessel securing the Designated Vessel
Indebtedness;
(iii) liens for taxes not yet payable for which adequate reserves
have been maintained;
(iv) the Mortgages, the Assignments, and other liens in favor of
the Security Agent;
(v) liens, charges and encumbrances against their respective
Vessels permitted to exist under the terms of the Mortgages;
(vi) pledges of certificates of deposit or other cash collateral
securing any Security Party's reimbursement obligations in
connection with letters of credit now or hereafter issued for
the account of such Security Party in connection with the
establishment of the financial responsibility of the Security
Parties under 33 C.F.R. Part 130 or 46 C.F.R. Part 540, as the
case may be, as the same may be amended or replaced;
(vii) pledges or deposits to secure obligations under workmen's
compensation laws or similar legislation, deposits to secure
public or statutory obligations, warehousemen's or other like
liens, or deposits to obtain the release of such liens and
deposits to secure surety, appeal or customs bonds on which
the Borrower or any of the Guarantors is the principal, as to
all of the foregoing, only to the extent arising and
continuing in the ordinary course of business; and
(viii) other liens, charges and encumbrances incidental to the
conduct of the business of each such party, the ownership of
any such party's property and assets and which do not in the
aggregate materially detract from the value of each such
party's property or assets or materially impair the use
thereof in the operation of its business;
(b) Change in Business. materially change the nature of its
business or commence any business materially different from its current
business;
(c) Sale or Pledge of Shares. sell, assign, transfer, pledge
or otherwise convey or dispose of any of the shares (including by way of
spin-off, installment sale or otherwise) of the capital stock, or limited
liability company interests, as the case may be, of any Guarantor other than as
may be allowed in accordance with the Facility A Pledge Agreement or the
Facility B Pledge Agreement;
(d) Sale of Assets. sell, or otherwise dispose of, any Vessel
(other than the Designated Vessel, sales of Facility A Vessels made in
accordance with the terms of the Facility A Loan Agreement and sales of Facility
B Vessels made in accordance with the terms of the Facility B Loan Agreement the
proceeds of which are applied in accordance with Section 6.3
38
hereof) or any other asset (including by way of spin-off, installment sale or
otherwise) which is substantial in relation to its assets taken as a whole
including without limitation, any material foreign Subsidiary or foreign assets
or interest in an Affiliate, other than such sales by one Guarantor to another;
(e) Changes in Offices or Names. change the location of the
chief executive office of any Security Party, the office of the chief place of
business any such parties, the office of the Security Parties in which the
records relating to the earnings or insurances of the Vessels are kept unless
the Banks shall have received sixty (60) days prior written notice of such
change;
(f) Consolidation and Merger. consolidate with, or merge into,
any corporation or other entity, or merge any corporation or other entity into
it provided, however that any Guarantor shall be permitted to merge into or
consolidate with any other Guarantor, so long as no Event of Default would
result therefrom;
(g) Chartering-in. other than pursuant to charters disclosed
in Schedule 5, charter, as charterer, any one vessel for a charter period
exceeding twelve (12) months; or permit any vessel to be chartered into any
vessel pool (in which the Borrower or any Subsidiary is a member) for a term
exceeding three (3) months;
(h) Chartering-out. and will procure that each other
Subsidiary will not, other than pursuant to charters disclosed in Schedule 5,
charter, as owner, any vessel (other than the Designated Vessel) on demise or
bareboat charter, or on time charter for a period in excess of twelve (12)
months;
(i) Vessel Pooling. and will procure that each Subsidiary will
not, enter any vessel into any vessel pooling arrangement other than as
disclosed in Schedule 5, or at any time amend any vessel pooling agreement;
(j) Distributions on Stock. in the case of the Borrower only,
directly or indirectly declare or pay any dividend or make any distribution on
its capital stock (a "Restricted Payment");
(k) Indebtedness. incur any Indebtedness, provided, however,
that if no Event of Default has occurred and is continuing, and that the other
Designated Vessel Conditions are met, the Designated Vessel Owner may incur the
Designated Vessel Indebtedness at the time of the Designated Vessel Acquisition;
(l) Investments. make any Investment provided, however, that
if no Event of Default has occurred and is continuing, the Borrower may make the
SOYANG Investment at the time the SOYANG is acquired;
(m) Capital Expenditures. make any Capital Expenditure (other
than as provided in (l) above);
(n) Deposit Accounts. other than as disclosed in Schedule 5,
maintain any deposit account other than with the Syndication Agent; provided,
that this covenant shall not apply to the Designated Vessel Owner; and
39
(o) Change Fiscal Year. change its fiscal year.
10.3 Subsidiary Negative Covenants. The Borrower hereby covenants and undertakes
with the Banks that, from the date hereof and so long as any principal, interest
or other moneys are owing in respect of this Agreement, under the Note or under
any of the Security Documents, the Borrower will procure that no Subsidiary
will:
(a) Limitations on Ability to Make Distributions. create or
otherwise cause or permit to exist or become effective any consensual
encumbrance or restriction on the ability of any Subsidiary (other than a
Designated Subsidiary) to (i) pay dividends or make any other distributions on
its capital stock or limited liability company interests, as the case may be, to
the Borrower or any Subsidiary or pay any Indebtedness owed to the Borrower,
(ii) make any loans or advances to the Borrower, or (iii) transfer any of its
property or assets to the Borrower;
(b) Use of Corporate Funds. (except for the SOYANG Investment
and Permitted Drydocking Costs) pay out any funds to any company or person
except (a) in the ordinary course of business in connection with the management
of the business of the Borrower and its Subsidiaries, including the operation
and/or repair of the Vessels and other vessels owned or operated by such parties
and (b) the servicing of the Indebtedness permitted hereunder (but excluding,
any prepayments of any Indebtedness other than the Loan);
(c) Issuance of Shares. issue or dispose of any shares of its
own capital stock or limited liability company interests, as the case may be, to
any person other than the Borrower; or
10.4 Vessel Valuations. For inclusion with each Compliance Certificate delivered
pursuant to Section 10.1(d)(i), and each Compliance Certificate in respect of
the second quarter of each fiscal year delivered pursuant to Section
10.1(d)(ii), and in any event upon the request of any Agent, the Borrower shall
obtain appraisals of the Fair Market Value of the Vessels. The first three such
valuations in any year are to be at the Borrower's cost, provided, that
following and during the continuance of any Event of Default, all such
valuations are to be at the Borrower's cost. In the event the Borrower fails or
refuses to obtain the valuations requested pursuant to this Section 10.4 within
ten (10) days of an Agent's request therefor, any Agent will be authorized to
obtain such valuations, at the Borrower's cost, from three independent
shipbrokers selected by the Agents, which valuations shall be deemed the
equivalent of valuations duly obtained by the Borrower pursuant to this Section
10.4, but any Agent's actions in doing so shall not excuse any default of the
Borrower under this Section 10.4.
10.5 Asset Maintenance.
(a) If at any time after the Issuance Date but prior to December 31,
2001, the aggregate Fair Market Value of the Facility A Vessels then mortgaged
to the Security Agent (based upon the valuations obtained pursuant to Section
10.4) (together with the value of any additional collateral theretofore provided
under this Section) is less than one hundred fifteen percent (115%) of the
aggregate of the Facility A Loan and the Loan, or
40
(b) if at any time after December 31, 2001 but prior to December 31,
2002 such aggregate Fair Market Value is less than one hundred twenty percent
(120%) of the aggregate of the Facility A Loan and the Loan, or
(c) if at any time thereafter the aggregate Fair Market Value of the
Facility Vessels is less than one hundred thirty percent (130%) of the aggregate
of the Facility A Loan and the Loan,
(in each case as applicable, such percentage being the "Required
Percentage") the Borrower shall, within a period of thirty (30) days following
receipt by the Borrower of written notice from the Administrative Agent
notifying the Borrower of such shortfall and specifying the amount thereof
(which amount shall, in the absence of manifest error, be deemed to be
conclusive and binding on the Borrower), either (i) deliver to the Security
Agent, upon the Administrative Agent's request, such additional collateral as
may be satisfactory to the Lenders in their sole discretion of sufficient value
to restore compliance with the Required Percentage or (ii) the Borrower shall
prepay such amount of the Loan (together with interest thereon and any other
monies payable in respect of such prepayment pursuant to Section 5.4) as shall
result in the Fair Market Value of the Facility A Vessels then mortgaged to the
Security Agent being not less than the Required Percentage. The Borrower shall
provide the Agents with its calculation as to its compliance with these
provisions with each Interest Notice and each Compliance Certificate.
10.6 Inspection and Survey Reports. If the Banks shall so request, the Borrowers
shall provide the Banks with copies of all internally generated inspection or
survey reports on the Vessels.
11. ASSIGNMENT.
This Agreement shall be binding upon, and inure to the benefit of,
the Borrower and the Banks, the Arrangers and the Agents and their respective
successors and assigns, except that the Borrower may not assign any of its
rights or obligations hereunder. Each Bank shall be entitled to assign its
rights and obligations under this Agreement or grant participation(s) in the
Loan to any subsidiary, holding company or other affiliate of such Bank, to any
subsidiary or other affiliate company of any thereof or, with the consent of the
Borrower and the Agents, not to be unreasonably withheld, to any other bank or
financial institution (in a minimum amount of not less than $5,000,000), and
such Bank shall forthwith give notice of any such assignment or participation to
the Borrower; and provided, however, that any such assignment must be made
pursuant to an Assignment and Assumption Agreement. The Borrower will take all
reasonable actions requested by any Agent or any Bank to effect such assignment,
including, without limitation, the execution of a written consent to any
Assignment and Assumption Agreement.
12. ILLEGALITY, INCREASED COST, NON-AVAILABILITY, ETC.
12.1 Illegality. In the event that by reason of any change in any applicable
law, regulation or regulatory requirement or in the interpretation thereof, a
Bank has a reasonable basis to conclude that it has become unlawful for any Bank
to maintain or give effect to its obligations as contemplated by this Agreement
or the Letter of Credit, such Bank shall inform the Agent and the Borrower to
that effect, whereafter the liability of such Bank to make its Commitment
available shall forthwith cease and the Borrower shall be required either to
repay to such Bank that portion of the Loan advanced by such Bank immediately
or, if such Bank so agrees, to repay such portion of
41
the Loan to the Bank on the last day of any then current Interest Period in
accordance with and subject to the provisions of Section 12.5. In any such
event, but without prejudice to the aforesaid obligations of the Borrower to
repay such portion of the Loan, the Borrower and the relevant Bank shall
negotiate in good faith with a view to agreeing on terms for making such portion
of the Loan available from another jurisdiction or otherwise restructuring such
portion of the Loan on a basis which is not unlawful.
12.2 Increased Costs. If any change in applicable law, regulation or regulatory
requirement, or in the interpretation or application thereof by any governmental
or other authority, shall:
(i) subject any Bank to any Taxes with respect to its income from
the Loan or the Reimbursement Obligations, or any part
thereof, or
(ii) change the basis of taxation to any Bank of payments of
principal or interest or any other payment due or to become
due pursuant to this Agreement (other than a change in the
basis effected by the jurisdiction of organization of such
Bank, the jurisdiction of the principal place of business of
such Bank, the United States of America, the State or City of
New York or any governmental subdivision or other taxing
authority having jurisdiction over such Bank (unless such
jurisdiction is asserted by reason of the activities of the
Borrower or any of the other Security Parties) or such other
jurisdiction where the Loan or the Reimbursement Obligations
may be payable), or
(iii) impose, modify or deem applicable any reserve requirements or
require the making of any special deposits against or in
respect of any assets or liabilities of, deposits with or for
the account of, or loans by, a Bank, or
(iv) impose on any Bank any other condition affecting the Loan or
the Reimbursement Obligations or any part thereof,
and the result of the foregoing is either to increase the cost to such Bank of
making available or maintaining its Commitment or any part thereof or to reduce
the amount of any payment received by such Bank, then and in any such case if
such increase or reduction in the opinion of such Bank materially affects the
interests of such Bank under or in connection with this Agreement:
(a) the Bank shall notify the Agent and the Borrower of the
happening of such event, and
(c) the Borrower agrees forthwith upon demand to pay to such Bank
such amount as such Bank certifies to be necessary to
compensate such Bank for such additional cost or such
reduction; PROVIDED, however, that the foregoing provisions
shall not be applicable in the event that increased costs to
the Bank result from the exercise by the Bank of its right to
assign its rights or obligations under Section 11.
42
12.3 Nonavailability of Funds. If the Administrative Agent shall determine that,
by reason of circumstances affecting the London Interbank Market generally,
adequate and reasonable means do not or will not exist for ascertaining the
Applicable Rate for the Loan for any Interest Period, the Administrative Agent
shall give notice of such determination to the Borrower. The Borrower and the
Administrative Agent shall then negotiate in good faith in order to agree upon a
mutually satisfactory interest rate and/or Interest Period to be substituted for
those which would otherwise have applied under this Agreement. If the Borrower
and the Administrative Agent are unable to agree upon such a substituted
interest rate and/or Interest Period within thirty (30) days of the giving of
such determination notice, the Administrative Agent shall set an interest rate
and Interest Period to take effect from the expiration of the Interest Period in
effect at the date of determination, which rate shall be equal to the Margin
plus the cost to the Banks (as certified by each Bank) of funding the Loan. In
the event the state of affairs referred to in this Section 12.3 shall extend
beyond the end of the Interest Period, the foregoing procedure shall continue to
apply until circumstances are such that the Applicable Rate may be determined
pursuant to Section 7.
12.4 Bank's Certificate Conclusive. A certificate or determination notice of any
Bank as to any of the matters referred to in this Section 12 shall, absent
manifest error, be conclusive and binding on the Borrower.
12.5 Compensation for Losses. Where the Loan or any portion thereof is to be
repaid by the Borrower pursuant to this Section 12, the Borrower agrees
simultaneously with such repayment to pay to the relevant Bank all accrued
interest to the date of actual payment on the amount repaid and all other sums
then payable by the Borrower to the relevant Bank pursuant to this Agreement,
together with such amounts as may be certified by the relevant Bank to be
necessary to compensate such Bank for any actual loss, premium or penalties
incurred or to be incurred thereby on account of funds borrowed to make, fund or
maintain its Commitment or such portion thereof for the remainder (if any) of
the then current Interest Period or Periods, if any, but otherwise without
penalty or premium.
13. CURRENCY INDEMNITY
13.1 Currency Conversion. If for the purpose of obtaining or enforcing a
judgment in any court in any country it becomes necessary to convert into any
other currency (the "judgment currency") an amount due in Dollars under this
Agreement, the Note or any of the Security Documents then the conversion shall
be made, in the discretion of the Administrative Agent, at the rate of exchange
prevailing either on the date of default or on the day before the day on which
the judgment is given or the order for enforcement is made, as the case may be
(the "conversion date"), provided that the Administration Banks shall not be
entitled to recover under this section any amount in the judgment currency which
exceeds at the conversion date the amount in Dollars due under this Agreement,
the Note and/or any of the Security Documents.
13.2 Change in Exchange Rate. If there is a change in the rate of exchange
prevailing between the conversion date and the date of actual payment of the
amount due, the Borrower shall pay such additional amounts (if any, but in any
event not a lesser amount) as may be necessary to ensure that the amount paid in
the judgment currency when converted at the rate of exchange prevailing on the
date of payment will produce the amount then due under this Agreement, the Note
and/or any of the Security Documents in Dollars; any excess over the amount due
received or collected by the Banks shall be remitted to the Borrower.
43
13.3 Additional Debt Due. Any amount due from the Borrower under this Section 13
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 this Agreement, the Note
and/or any of the Security Documents.
13.4 Rate of Exchange. The term "rate of exchange" in this Section 13 means the
rate at which the Administrative Agent in accordance with its normal practices
is able on the relevant date to purchase Dollars with the judgment currency and
includes any premium and costs of exchange payable in connection with such
purchase.
14. FEES AND EXPENSES
14.1 Fees. The Borrower shall pay to the Arrangers and the Agents such fees set
forth in Section 3.4 hereof as the parties have agreed pursuant to the Fee
Letter.
14.2 Expenses. The Borrower agrees, whether or not the transactions hereby
contemplated are consummated, on demand to pay, or reimburse the Agents and the
Arrangers for their payment of, the reasonable expenses of the Agents, the
Arrangers and (after the occurrence and during the continuance of an Event of
Default) the Banks incident to said transactions (and in connection with any
supplements, amendments, waivers or consents relating thereto or incurred in
connection with the enforcement or defense of any of the Agents', the Arrangers'
and the Banks' rights or remedies with respect thereto or in the preservation of
the Agents', the Arrangers' and the Banks' priorities under the documentation
executed and delivered in connection therewith) including, without limitation,
all reasonable costs and expenses of preparation, negotiation, execution and
administration of this Agreement and the documents referred to herein, the
reasonable fees and disbursements of the Agents' counsel in connection
therewith, as well as the reasonable fees and expenses of any independent
appraisers, surveyors, engineers and other consultants retained by the Agents,
or the Arrangers in connection with this transaction, all reasonable costs and
expenses, if any, in connection with the enforcement of this Agreement, the Note
and the Security Documents and stamp and other similar taxes, if any, incident
to the execution and delivery of the documents (including, without limitation,
the Note) herein contemplated and to hold the Agents, the Arrangers and the
Banks free and harmless in connection with any liability arising from the
nonpayment of any such stamp or other similar taxes. Such taxes and, if any,
interest and penalties related thereto as may become payable after the date
hereof shall be paid immediately by the Borrower to the Agents, the Arrangers or
the Banks, as the case may be, when liability therefor is no longer contested by
such party or parties or reimbursed immediately by the Borrower to such party or
parties after payment thereof (if the Agents, the Arrangers or the Banks, at
their sole discretion, chooses to make such payment).
15. APPLICABLE LAW, JURISDICTION AND WAIVER
15.1 Applicable Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York.
15.2 Jurisdiction. The Borrower hereby irrevocably submits to the jurisdiction
of the courts of the State of New York and of the United States District Court
for the Southern District of New York in any action or proceeding brought
against it by any of the Banks, the Agents or the Arrangers under this Agreement
or under any document delivered hereunder and hereby irrevocably agrees that
valid service of summons or other legal process on it may be effected by serving
a copy of the
44
summons and other legal process in any such action or proceeding on the Borrower
by mailing or delivering the same by hand to the Borrower at the address
indicated for notices in Section 17.1. The service, as herein provided, of such
summons or other legal process in any such action or proceeding shall be deemed
personal service and accepted by the Borrower as such, and shall be legal and
binding upon the Borrower for all the purposes of any such action or proceeding.
Final judgment (a certified or exemplified copy of which shall be conclusive
evidence of the fact and of the amount of any indebtedness of the Borrower to
the Banks, the Agents or the Arrangers) against the Borrower in any such legal
action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment. The Borrower will advise the
Administrative Agent promptly of any change of address for the purpose of
service of process. Notwithstanding anything herein to the contrary, the Banks
may bring any legal action or proceeding in any other appropriate jurisdiction.
15.3 WAIVER OF JURY TRIAL. IT IS MUTUALLY AGREED BY AND AMONG THE BORROWER, THE
OTHER SECURITY PARTIES, THE ARRANGERS, THE AGENTS AND THE BANKS THAT EACH OF
THEM HEREBY WAIVES TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM
BROUGHT BY ANY PARTY HERETO AGAINST ANY OTHER PARTY HERETO ON ANY MATTER
WHATSOEVER ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS AGREEMENT, THE NOTE,
THE GUARANTY OR THE SECURITY DOCUMENTS.
16. THE AGENTS
16.1 Appointment of Agents. Each of the Banks irrevocably appoints and
authorizes the Agents severally each to take such action as agent on its behalf
and to exercise such powers under this Agreement, the Note and the Security
Documents as are delegated to such Agent by the terms hereof and thereof,
including execution of the Intercreditor Agreement. No Agent nor any of their
respective directors, officers, employees or agents shall be liable for any
action taken or omitted to be taken by it or them under this Agreement, the Note
or the Security Documents or in connection therewith, except for its or their
own gross negligence or willful misconduct.
16.2 Security Agent as Trustee. Each of the Banks irrevocably appoints the
Security Agent as trustee on its behalf with regard to (i) the security, powers,
rights, titles, benefits and interests (both present and future) constituted by
and conferred on the Banks or any of them or for the benefit thereof under or
pursuant to this Agreement, the Note or any of the Security Documents
(including, without limitation, the benefit of all covenants, undertakings,
representations, warranties and obligations given, made or undertaken to any
Bank in the Agreement, the Note or any Security Document), (ii) all moneys,
property and other assets paid or transferred to or vested in any Bank or any
agent of any Bank or received or recovered by any Bank or any agent of any Bank
pursuant to, or in connection with, this Agreement, the Note or the Security
Documents whether from any Security Party or any other person and (iii) all
money, investments, property and other assets at any time representing or
deriving from any of the foregoing, including all interest, income and other
sums at any time received or receivable by any Bank or any agent of any Bank in
respect of the same (or any part thereof). The Security Agent hereby accepts
such appointment.
16.3 Distribution of Payments. Whenever any payment is received by any Agent
from the Borrower or any other Security Party for the account of the Banks, or
any of them, whether of principal or interest on the Reimbursement Obligations
or the Note, commissions, fees under
45
Section 14 or otherwise, it will thereafter cause to be distributed on the same
day if received before 11 a.m. New York time, or on the next day if received
thereafter, like funds relating to such payment ratably to the Banks according
to their respective Commitments, in each case to be applied according to the
terms of this Agreement.
16.4 Holder of Interest in Note. The Agents may treat each Bank as the holder of
all of the interest of such Bank in the Note.
16.5 No Duty to Examine, Etc. The Agents shall not be under a duty to examine or
pass upon the validity, effectiveness or genuineness of any of this Agreement,
the Note, the Security Documents or any instrument, document or communication
furnished pursuant to this Agreement or in connection therewith or in connection
with the Letter of Credit, the Note or any Security Document, and the Agents
shall be entitled to assume that the same are valid, effective and genuine, have
been signed or sent by the proper parties and are what they purport to be.
16.6 Agents as Banks. With respect to that portion of the Stated Amount or the
Loan made available by it, each Agent shall have the same rights and powers
hereunder as any other Bank and may exercise the same as though it were not an
Agent, and the term "Bank" or "Banks" shall include each Agent in its capacity
as a Bank. Each Agent and its affiliates may accept deposits from, lend money to
and generally engage in any kind of business with, the Borrower and the other
Security Parties as if it were not an Agent.
16.7 Acts of the Agents. Each Agent shall have duties and discretion, and shall
act as follows:
(a) Obligations of the Agents. The obligations of each Agent under this
Agreement, under the Letter of Credit, under the Note and under the
Security Documents are only those expressly set forth herein and
therein.
(b) No Duty to Investigate. No Agent shall at any time be under any duty
to investigate whether an Event of Default, or an event which with
the giving of notice or lapse of time, or both, would constitute an
Event of Default, has occurred or to investigate the performance of
this Agreement, the Note or any Security Document by any Security
Party.
(c) Discretion of the Agents. Each Agent shall be entitled to use its
discretion with respect to exercising or refraining from exercising
any rights which may be vested in it by, and with respect to taking
or refraining from taking any action or actions which it may be able
to take under or in respect of, this Agreement, the Letter of
Credit, the Note and the Security Documents, unless the Agent shall
have been instructed by the Majority Banks to exercise such rights
or to take or refrain from taking such action; provided, however,
that no Agent shall be required to take any action which exposes
such Agent to personal liability or which is contrary to this
Agreement or applicable law.
(d) Instructions of Majority Banks. Each Agent shall in all cases be
fully protected in acting or refraining from acting under this
Agreement, under the Letter of Credit, under the Note, or under any
Security Document in accordance with the instructions of the
Majority Banks, and any action taken
46
or failure to act pursuant to such instructions shall be binding on
all of the Banks.
16.8 Certain Amendments. Neither this Agreement, the Note nor any of the
Security Documents nor any terms hereof or thereof may be amended unless such
amendment is approved by the Borrower and the Majority Banks, provided that no
such amendment shall, without the consent of each Bank affected thereby, (i)
reduce the interest rate or extend the time of payment of principal or interest
or fees on the Reimbursement Obligations or the Loan, as the case may be, or
reduce the principal amount of the Reimbursement Obligations or the Loan, as the
case may be, or any fees hereunder, (ii) increase or decrease the Commitment of
any Bank or subject any Bank to any additional obligation (it being understood
that a waiver of any Event of Default or any mandatory repayment of the
Reimbursement Obligations or Loan, as the case may be, shall not constitute a
change in the terms of any Commitment of any Bank), (iii) amend, modify or waive
any provision of this Section 16.8, (iv) amend the definition of Majority Banks,
(v) consent to the assignment or transfer by the Borrower of any of its rights
and obligations under this Agreement, (vi) release any Security Party from any
of its obligations under any Security Document except as expressly provided
herein or in such Security Document or (vii) amend any provision relating to the
maintenance of collateral under Section 10.5. All amendments approved by the
Majority Banks under this Section 16.8 must be in writing and signed by the
Borrower and each of the Banks. In the event that any Bank is unable to or
refuses to sign an amendment approved by the Majority Banks hereunder, such Bank
hereby appoints the Administrative Agent as its Attorney-In-Fact for the
purposes of signing such amendment. No provision of this Section 16 or any other
provisions relating to the Agents may be modified without the consent of each
Agent.
16.9 Assumption re Event of Default. Except as otherwise provided in Section
16.15, each Agent shall be entitled to assume that no Event of Default, or event
which with the giving of notice or lapse of time, or both, would constitute an
Event of Default, has occurred and is continuing, unless such Agent has been
notified by any Security Party of such fact, or has been notified by a Bank that
such Bank considers that an Event of Default or such an event (specifying in
detail the nature thereof) has occurred and is continuing. In the event that an
Agent shall have been notified by any Security Party or any Bank in the manner
set forth in the preceding sentence of any Event of Default or of an event which
with the giving of notice or lapse of time, or both, would constitute an Event
of Default, such Agent shall notify the Banks and shall take action and assert
such rights under this Agreement, under the Letter of Credit, under the Note and
under Security Documents as the Majority Banks shall request in writing.
16.10 Limitations of Liability. Neither any Agent nor any of the Banks shall be
under any liability or responsibility whatsoever:
(a) to any Security Party or any other person or entity as a consequence
of any failure or delay in performance by, or any breach by, any
other Banks or any other person of any of its or their obligations
under this Agreement, under the Letter of Credit or under any
Security Document;
(b) to any Bank or Banks as a consequence of any failure or delay in
performance by, or any breach by, any Security Party of any of its
respective obligations under this Agreement, under the Note or under
the Security Documents; or
47
(c) to any Bank or Banks for any statements, representations or
warranties contained in this Agreement, in any Security
Document or in any document or instrument delivered in
connection with the transaction hereby contemplated; or for
the validity, effectiveness, enforceability or sufficiency of
this Agreement, the Letter of Credit, the Note, any Security
Document or any document or instrument delivered in connection
with the transactions hereby contemplated.
16.11 Indemnification of the Agents. The Banks agree to indemnify each Agent (to
the extent not reimbursed by the Security Parties or any thereof), pro rata
according to the respective amounts of their Commitments, from and against any
and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or nature
whatsoever (including legal fees and expenses incurred in investigating claims
and defending itself against such liabilities) which may be imposed on, incurred
by or asserted against, such Agent in any way relating to or arising out of this
Agreement, the Letter of Credit, the Note or any Security Document, any action
taken or omitted by such Agent thereunder or the preparation, administration,
amendment or enforcement of, or waiver of any provision of, this Agreement, the
Letter of Credit, the Note or any Security Document, except that no Bank shall
be liable for any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements resulting
from such Agent's gross negligence or willful misconduct.
16.12 Consultation with Counsel. Each Agent may consult with legal counsel
selected by such Agent and shall not be liable for any action taken, permitted
or omitted by it in good faith in accordance with the advice or opinion of such
counsel.
16.13 Resignation. Any Agent may resign at any time by giving sixty (60) days'
written notice thereof to the other Agents, the Banks and the Borrower. Upon any
such resignation, the Banks shall have the right to appoint a successor Agent.
If no successor Agent shall have been so appointed by the Banks and shall have
accepted such appointment within sixty (60) days after the retiring Agent's
giving notice of resignation, then the retiring Agent may, on behalf of the
Banks, appoint a successor Agent which shall be a bank or trust company of
recognized standing. The appointment of any successor Agent shall be subject to
the prior written consent of the Borrower, such consent not to be unreasonably
withheld. After any retiring Agent's resignation as Agent hereunder, the
provisions of this Section 16 shall continue in effect for its benefit with
respect to any actions taken or omitted by it while acting as Agent.
16.14 Representations of Banks. Each Bank represents and warrants to each other
Bank and each Agent that:
(a) in making its decision to enter into this Agreement and to make its
Commitment available hereunder, it has independently taken whatever
steps it considers necessary to evaluate the financial condition and
affairs of the Security Parties, that it has made an independent
credit judgment and that it has not relied upon any statement,
representation or warranty by any other Bank or any Agent; and
48
(b) so long as any portion of its Commitment remains outstanding, it
will continue to make its own independent evaluation of the
financial condition and affairs of the Security Parties.
16.15 Notification of Event of Default. Each Agent hereby undertakes to promptly
notify the Banks, and the Banks hereby promptly undertake to notify each Agent
and the other Banks, of the existence of any Event of Default which shall have
occurred and be continuing of which such Agent or Bank has actual knowledge.
17. NOTICES AND DEMANDS
17.1 Notices. All notices, requests, demands and other communications to any
party hereunder shall be in writing (including prepaid overnight courier,
facsimile transmission or similar writing) and shall be given to the Borrower at
the address or telecopy number set forth below and to the Banks and the Agents
at their address and telecopy numbers set forth in Schedule 1 or at such other
address or telecopy numbers as such party may hereafter specify for the purpose
by notice to each other party hereto. Each such notice, request or other
communication shall be effective (i) if given by telecopy, when such telecopy is
transmitted to the telecopy number specified in this Section and telephonic
confirmation of receipt thereof is obtained or (ii) if given by mail, prepaid
overnight courier or any other means, when received at the address specified in
this Section or when delivery at such address is refused.
If to the Borrower:
OMI Corporation
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ de Sostoa
Senior Vice President - Treasurer
18. MISCELLANEOUS
18.1 Time of Essence. Time is of the essence of this Agreement but no failure or
delay on the part of any Bank, the Agents or the Arrangers to exercise any power
or right under this Agreement shall operate as a waiver thereof, nor shall any
single or partial exercise by any Bank, the Agents or the Arrangers of any power
or right hereunder preclude any other or further exercise thereof or the
exercise of any other power or right. The remedies provided herein are
cumulative and are not exclusive of any remedies provided by law.
18.2 Unenforceable, etc., Provisions - Effect. In case any one or more of the
provisions contained in this Agreement, the Letter of Credit, the Note or in any
Security Document would, if given effect, be invalid, illegal or unenforceable
in any respect under any law applicable in any relevant jurisdiction, said
provision shall not be enforceable against the relevant Security Party, but the
validity, legality and enforceability of the remaining provisions herein or
therein contained shall not in any way be affected or impaired thereby.
49
18.3 References. References herein to Sections, Exhibits and Schedules are to be
construed as references to sections of, exhibits to, and schedules to, this
Agreement, unless the context otherwise requires.
18.4 Further Assurances. The Borrower agrees that if this Agreement, the Letter
of Credit, the Note or any Security Document shall, in the reasonable opinion of
the Banks, at any time be deemed by the Banks for any reason insufficient in
whole or in part to carry out the true intent and spirit hereof or thereof, it
will execute or cause to be executed such other and further assurances and
documents as in the opinion of the Banks may be required in order more
effectively to accomplish the purposes of this Agreement, the Letter of Credit,
the Note or any Security Document.
18.5 Prior Agreements, Merger. Any and all prior understandings and agreements
heretofore entered into between the Security Parties on the one part, and the
Agents, the Arrangers or the Banks, on the other part, whether written or oral,
other than the Fee Letter are superseded by and merged into this Agreement and
the other agreements (the forms of which are exhibited hereto) to be executed
and delivered in connection herewith to which the Security Parties, the
Arrangers, the Agents and/or the Banks are parties, which alone fully and
completely express the agreements between the Security Parties, the Arrangers,
the Agents and the Banks.
18.6 Entire Agreement; Amendments. This Agreement constitutes the entire
agreement of the parties hereto including all parties added hereto pursuant to
an Assignment and Assumption Agreement. Subject to Section 16.8, any provision
of this Agreement, the Note or any Security Document may be amended or waived
if, but only if, such amendment or waiver is in writing and is signed by the
Borrower, the Administration Agent and the Majority Banks (and, if the rights or
duties of the Security Agent or the Syndication Agent are affected thereby, by
such Agent, as applicable). This Agreement may be executed in any number of
counterparts, each of will shall be deemed an original, but all such
counterparts together shall constitute one and the same instrument.
18.7 Indemnification. The Borrower and, by its execution and delivery of the
Consent and Agreement set forth below, each of the other Security Parties
jointly and severally agree to indemnify each Bank, each Agent and each
Arranger, their respective successors and assigns, and their respective
officers, directors, employees, representatives and agents (each an
"Indemnitee") from, and hold each of them harmless against, any and all losses,
liabilities, claims, damages, expenses, obligations, penalties, actions,
judgments, suits, costs or disbursements of any kind or nature whatsoever
(including, without limitation, the fees and disbursements of counsel for such
Indemnitee in connection with any investigative, administrative or judicial
proceeding commenced or threatened, whether or not such Indemnitee shall be
designated a party thereto) that may at any time (including, without limitation,
at any time following the payment of the obligations of the Borrower hereunder)
be imposed on, asserted against or incurred by, any Indemnitee as a result of,
or arising out of or in any way related to or by reason of, (a) any violation by
any Security Party (or any charterer or other operator of any Vessel) of any
applicable Environmental Law, (b) any Environmental Claim arising out of the
management, use, control, ownership or operation of property or assets by any
Security Party (or, after foreclosure, by any Bank, any Agent or any Arranger or
any of their respective successors or assigns), (c) the breach of any
representation, warranty or covenant set forth in Sections 2.1 (o) or 10.1(j),
(d) the Loan (including the use of the proceeds of the Loan and any claim made
for any brokerage commission, fee or compensation from any Person), of (e) the
execution, delivery, performance or non-performance of this Agreement, the Note,
any Security Document, or any of the documents referred to herein or
contemplated hereby
50
(whether or not the Indemnitee is a party thereto). If and to the extent that
the obligations of the Security Parties under this Section are unenforceable for
any reason, the Borrower and, by its execution and delivery of the Consent and
Agreement set forth below, each of the other Security Parties jointly and
severally agree to make the maximum contribution to the payment and satisfaction
of such obligations which is permissible under applicable law. The obligations
of the Security Parties under this Section 18.7 shall survive the termination of
this Agreement and the repayment to the Banks of all amounts owing thereto under
or in connection herewith.
18.8 Release of Designated Vessel Owner Guaranty. Notwithstanding Section 18.6,
Entire Agreement, Amendments, upon the Designated Vessel Acquisition, the
Security Agent shall release the Designated Vessel Owner from its Guaranty.
18.9 Headings. In this Agreement, Section headings are inserted for convenience
of reference only and shall not be taken into account in the interpretation of
this Agreement.
51
IN WITNESS whereof the parties hereto have caused this Agreement to
be duly executed by their duly authorized representatives as of the day and year
first above written.
OMI CORPORATION
By:_____________________________________
▇▇▇▇▇▇▇ de Sostoa
Senior Vice President-Treasurer
CHRISTIANIA BANK OG KREDITKASSE ASA,
as Arranger, Administrative Agent and Issuer
By:_____________________________________
Name:
Title:
By:_____________________________________
Name:
Title:
DEN NORSKE BANK ASA,
as Arranger and Syndication Agent
By:_____________________________________
Name:
Title:
By:_____________________________________
Name:
Title:
MEESPIERSON CAPITAL CORP.,
as Arranger and Security Agent
By:_____________________________________
Name:
Title:
By:_____________________________________
Name:
Title:
52
The Lenders:
CHRISTIANIA BANK OG KREDITKASSE ASA
By:_____________________________________
Name:
Title:
By:_____________________________________
Name:
Title:
DEN NORSKE BANK ASA
By:_____________________________________
Name:
Title:
By:_____________________________________
Name:
Title:
MEESPIERSON CAPITAL CORP.
By:_____________________________________
Name:
Title:
By:_____________________________________
Name:
Title:
53
CONSENT AND AGREEMENT
Each of the undersigned, referred to in the foregoing Loan Agreement
as the "Guarantors", hereby consents and agrees to said Agreement and to the
documents contemplated thereby and to the provisions contained therein relating
to conditions to be fulfilled and obligations to be performed by the undersigned
pursuant to or in connection with said Agreement and agrees particularly to be
bound by the representations, warranties and covenants relating to the
undersigned contained in Sections 2 and 10 of said Agreement to the same extent
as if the undersigned were a party to said Agreement, and expressly agrees to
the grant of a security interest in favor of the Syndication Agent in the
undersigned's accounts pursuant to Section 10.1(s) of said Agreement.
COLORADO SHIPPING LLC,
by OMI Corporation, sole member
By:_____________________________________
▇▇▇▇▇▇▇ de Sostoa
Senior Vice President-Treasurer
ELBE SHIPPING LLC
by OMI Corporation, sole member
By:_____________________________________
▇▇▇▇▇▇▇ de Sostoa
Senior Vice President-Treasurer
LOIRE SHIPPING LLC,
by OMI Corporation, sole member
By:_____________________________________
▇▇▇▇▇▇▇ de Sostoa
Senior Vice President-Treasurer
NILE SHIPPING LLC,
by OMI Corporation, sole member
By:_____________________________________
▇▇▇▇▇▇▇ de Sostoa
Senior Vice President-Treasurer
▇▇▇▇▇▇▇▇ SHIPPING LLC,
by OMI Corporation, sole member
By:_____________________________________
▇▇▇▇▇▇▇ de Sostoa
Senior Vice President-Treasurer
PAULINA SHIIPING LLC,
by OMI Corporation, sole member
By:_____________________________________
▇▇▇▇▇▇▇ de Sostoa
Senior Vice President-Treasurer
VOLGA SHIPPING LLC,
by OMI Corporation, sole member
By:_____________________________________
▇▇▇▇▇▇▇ de Sostoa
Senior Vice President-Treasurer
▇▇▇▇ SHIPPING LLC,
by OMI Corporation, sole member
By:_____________________________________
▇▇▇▇▇▇▇ de Sostoa
Senior Vice President-Treasurer
DANUBE SHIPPING LLC
by OMI Corporation, sole member
By:_____________________________________
▇▇▇▇▇▇▇ de Sostoa
Senior Vice President-Treasurer
2
ISERE SHIPPING LLC,
by OMI Corporation, sole member
By:_____________________________________
▇▇▇▇▇▇▇ de Sostoa
Senior Vice President-Treasurer
LIMAR SHIPPING LLC,
by OMI Corporation, sole member
By:_____________________________________
▇▇▇▇▇▇▇ de Sostoa
Senior Vice President-Treasurer
PAGODA SHIPPING LLC,
by OMI Corporation, sole member
By:_____________________________________
▇▇▇▇▇▇▇ de Sostoa
Senior Vice President-Treasurer
PECOS SHIPPING LLC,
by OMI Corporation, sole member
By:_____________________________________
▇▇▇▇▇▇▇ de Sostoa
Senior Vice President-Treasurer
3
SABINE SHIPPING LLC,
by OMI Corporation, sole member
By:_____________________________________
▇▇▇▇▇▇▇ de Sostoa
Senior Vice President-Treasurer
SACRAMENTO SHIPPING LLC,
by OMI Corporation, sole member
By:_____________________________________
▇▇▇▇▇▇▇ de Sostoa
Senior Vice President-Treasurer
SEINE SHIPPPING LLC,
by OMI Corporation, sole member
By:_____________________________________
▇▇▇▇▇▇▇ de Sostoa
Senior Vice President-Treasurer
SEVERN SHIPPING LLC,
by OMI Corporation, sole member
By:_____________________________________
▇▇▇▇▇▇▇ de Sostoa
Senior Vice President-Treasurer
▇▇▇▇▇▇▇ SHIPPING LLC,
by OMI Corporation, sole member
By:_____________________________________
▇▇▇▇▇▇▇ de Sostoa
Senior Vice President-Treasurer
4
TIBER SHIPPING LLC,
by OMI Corporation, sole member
By:_____________________________________
▇▇▇▇▇▇▇ de Sostoa
Senior Vice President-Treasurer
TRENT SHIPPING LLC,
by OMI Corporation, sole member
By:_____________________________________
▇▇▇▇▇▇▇ de Sostoa
Senior Vice President-Treasurer
CAIRO SEA SHIPPING LLC
By:_____________________________________
▇▇▇▇▇▇▇ de Sostoa
Senior Vice President-Treasurer
CZANTORIA SHIPPING LLC
by OMI Corporation, sole member
By:_____________________________________
▇▇▇▇▇▇▇ de Sostoa
Senior Vice President-Treasurer
LAUREL SHIPPING LLC
by OMI Corporation, sole member
By:_____________________________________
▇▇▇▇▇▇▇ de Sostoa
Senior Vice President-Treasurer
5
MENDALA II TRANSPORT, INC.
by OMI Corporation, sole member
By:_____________________________________
▇▇▇▇▇▇▇ de Sostoa
Treasurer
SOKOLICA SHIPPING LLC,
by OMI Corporation, sole member
By:_____________________________________
▇▇▇▇▇▇▇ de Sostoa
Senior Vice President-Treasurer
SOYANG SHIPPING LLC,
by OMI Corporation, sole member
By:_____________________________________
▇▇▇▇▇▇▇ de Sostoa
Senior Vice President-Treasurer
TRINIDAD SEA SHIPPING LLC
By:_____________________________________
▇▇▇▇▇▇▇ de Sostoa
Senior Vice President-Treasurer
UBC CHARTERING LTD.
By:_____________________________________
▇▇▇▇▇▇▇ de Sostoa
Treasurer