EXHIBIT 10.1
DATED 23 DECEMBER 2004
GULF OFFSHORE N.S. LIMITED (1)
(AS BORROWER)
GULFMARK OFFSHORE INC. (2)
(AS GUARANTOR)
THE BANKS AND FINANCIAL INSTITUTIONS LISTED HEREIN (3)
(AS LENDERS)
NORDEA BANK NORGE ASA (4)
(AS ARRANGER)
AND
NORDEA BANK FINLAND PLC, NEW YORK BRANCH (5)
(AS FACILITY AGENT AND SECURITY TRUSTEE)
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SENIOR SECURED REVOLVING CREDIT
FACILITY AGREEMENT
FOR A
$50,000,000 CREDIT FACILITY
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CONTENTS
CLAUSE PAGE
1 Purpose and definitions........................................................ 1
1.1 Purpose........................................................................ 1
1.2 Definitions.................................................................... 1
1.3 Headings....................................................................... 12
1.4 Construction of certain terms.................................................. 12
1.5 Insurance terms................................................................ 12
1.6 Accounting terms............................................................... 13
1.7 Agreed forms................................................................... 13
1.8 Majority Lenders............................................................... 13
2 The Facility................................................................... 13
2.1 Amount......................................................................... 13
2.2 Obligations several............................................................ 13
2.3 Interests several.............................................................. 14
3 Conditions..................................................................... 14
3.1 Documents and evidence......................................................... 14
3.2 General conditions precedent................................................... 14
3.3 Waiver of conditions precedent................................................. 14
3.4 Notification................................................................... 14
4 Advances....................................................................... 14
4.1 Drawdown....................................................................... 14
4.2 Amount......................................................................... 15
4.3 Termination of Commitments..................................................... 15
4.4 Application of proceeds........................................................ 15
5 Interest and Interest Periods; alternative interest rates; Margin.............. 15
5.1 Normal interest rate........................................................... 15
5.2 Selection of Interest Periods.................................................. 15
5.3 Determination of Interest Periods applicable to the Outstandings............... 15
5.4 Interest for late payment...................................................... 16
5.5 Notification of Interest Periods and interest rate............................. 16
5.6 Reference Bank quotations...................................................... 16
5.7 Market disruption; non-availability............................................ 16
5.8 Variable Margin................................................................ 17
6 Repayment, prepayment and cancellation......................................... 17
6.1 Repayment...................................................................... 17
6.2 Rollover of Advances........................................................... 17
6.3 Voluntary Prepayment........................................................... 18
6.4 Prepayment on Loss and sale, etc............................................... 18
6.5 Amounts payable on prepayment.................................................. 19
6.6 Additional voluntary prepayment................................................ 19
6.7 Notice of prepayment........................................................... 20
6.8 Currency amounts repayable..................................................... 20
6.9 Cancellation................................................................... 20
7 Commitment commission, fees and expenses....................................... 20
7.1 Fees........................................................................... 20
7.2 Expenses....................................................................... 21
7.3 Value Added Tax................................................................ 21
7.4 Stamp and other duties......................................................... 21
8 Payments and taxes; accounts and calculations.................................. 21
8.1 No set-off or counterclaim..................................................... 21
8.2 Payment by the Lenders......................................................... 21
8.3 Non-Banking Days............................................................... 22
8.4 Facility Agent may assume receipt.............................................. 22
8.5 Calculations................................................................... 22
8.6 Certificates conclusive........................................................ 22
8.7 Grossing-up for Taxes.......................................................... 22
8.8 Claw-back of Tax benefit....................................................... 22
8.9 Bank accounts.................................................................. 23
8.10 Partial payments............................................................... 23
9 Representations and warranties................................................. 23
9.1 Continuing representations and warranties...................................... 23
9.2 Initial representations and warranties......................................... 26
9.3 Repetition of representations and warranties................................... 28
9.4 Confirmation of representation and warranties.................................. 28
10 Undertakings................................................................... 28
10.1 General........................................................................ 28
10.3 Vessel Substitution............................................................ 31
10.4 Negative Undertakings.......................................................... 31
10.5 Mortgaged Vessel covenants..................................................... 32
10.6 Financial Covenants of the Guarantor........................................... 41
11 Events of Default.............................................................. 42
11.1 Events......................................................................... 42
11.2 Acceleration................................................................... 45
11.3 Demand basis................................................................... 45
11.4 No restriction on exercise of rights........................................... 45
12 INDEMNITIES.................................................................... 45
12.1 MISCELLANEOUS INDEMNITIES...................................................... 45
12.2 CURRENCY OF ACCOUNT; CURRENCY INDEMNITY........................................ 46
12.3 ENVIRONMENTAL INDEMNITY........................................................ 47
13 Unlawfulness and increased costs............................................... 47
13.1 Unlawfulness................................................................... 47
13.2 Increased costs................................................................ 47
13.3 Exception...................................................................... 48
14 Set-off, pro rata payments..................................................... 48
14.1 Set-off........................................................................ 48
14.2 Pro rata payments.............................................................. 49
14.3 No release..................................................................... 49
14.4 No charge...................................................................... 49
15 Guarantee...................................................................... 49
15.1 Guarantee...................................................................... 49
15.2 GUARANTOR AS PRINCIPAL DEBTOR; INDEMNITY....................................... 50
15.3 Statements of account conclusive............................................... 50
15.4 Interest....................................................................... 50
15.5 Continuing guarantee........................................................... 50
15.6 Liability unconditional........................................................ 50
15.7 Collateral Instruments......................................................... 51
15.8 Waiver of Guarantor's rights................................................... 51
15.9 Suspense accounts.............................................................. 51
15.10 Settlements conditional........................................................ 51
15.11 Guarantor to deliver up certain property....................................... 52
15.12 Changes in constitution or reorganisations of Creditors........................ 52
16 Transfer and lending office.................................................... 52
16.1 Benefit and burden............................................................. 52
16.2 No assignment by Borrower or Guarantor......................................... 52
16.3 Transfers...................................................................... 52
16.4 Reliance on Transfer Certificate............................................... 53
16.5 Transfer fees and expenses..................................................... 54
16.6 Documenting transfers.......................................................... 54
16.7 Sub-participation.............................................................. 54
16.8 Lending office................................................................. 54
16.9 Disclosure of information...................................................... 54
16.10 No additional costs............................................................ 54
17 Facility Agent, Security Trustee and Reference Banks........................... 55
17.1 Appointment of the Facility Agent and the Security Trustee..................... 55
17.2 Reference Banks................................................................ 55
18 Notices and other matters...................................................... 55
18.1 Notices........................................................................ 55
18.2 No implied waivers, remedies cumulative........................................ 56
18.3 Further assurance.............................................................. 56
18.4 Amendments and waivers......................................................... 56
18.5 Conflicts...................................................................... 57
18.6 English language............................................................... 57
18.7 Contracts (Rights of Third Parties) Act 1999................................... 57
18.8 Money laundering............................................................... 57
19 Governing law and jurisdiction................................................. 57
19.1 Law............................................................................ 57
19.2 Submission to jurisdiction..................................................... 57
Schedule 1 The Lenders and their Commitments............................................ 58
Schedule 2 The Mortgaged Vessels........................................................ 59
Schedule 3 Form of Drawdown Notice...................................................... 60
Schedule 4 Documents and evidence required as conditions precedent...................... 61
Schedule 5 Form of Transfer Certificate................................................. 66
Schedule 6 Certificate of Compliance.................................................... 70
THIS AGREEMENT is dated 23 December 2004 and made BETWEEN:
(A) GULF OFFSHORE N.S. LIMITED, as borrower (the "BORROWER");
(B) GULFMARK OFFSHORE INC. as guarantor (the "GUARANTOR");
(C) THE BANKS AND FINANCIAL INSTITUTIONS WHOSE NAMES AND ADDRESSES ARE SET
OUT IN SCHEDULE 1, as lenders (together the "LENDERS" and each a
"LENDER");
(D) NORDEA BANK NORGE ASA, as arranger; and
(E) NORDEA BANK FINLAND PLC, NEW YORK BRANCH, as facility agent and
security trustee.
IT IS AGREED as follows:
1 PURPOSE AND DEFINITIONS
1.1 PURPOSE
This Agreement sets out the terms and conditions upon and subject to
which the Lenders agree to make available to the Borrower a facility of
up to $50,000,000 to be used to finance the acquisition of offshore
supply vessels and/or other related assets in the offshore support
industry.
1.2 DEFINITIONS
In this Agreement, unless the context otherwise requires:
"ADVANCE" means each borrowing hereunder made by the Borrower;
"AGENCY AGREEMENT" means the agency and trust agreement executed or (as
the context may require) to be executed between the Arranger, the
Facility Agent, the Security Trustee, the Lenders, the Borrower and the
Guarantor in the agreed form;
"ANNUAL FINANCIAL STATEMENTS" means annual consolidated financial
statements of the Borrower and the annual consolidated financial
statements of the Guarantor each comprising a profit and loss account
and a balance sheet and cash flow statement and audited by the
Auditors;
"ANNUAL VALUATION DATE" means the date of this Agreement and each
anniversary thereof during the Security Period;
"APPROVED BROKERS" means, in relation to a Mortgaged Vessel, Aon Risk
Services of Texas, Inc and/or such firm of international insurance
brokers, appointed by the Borrower or the Guarantor, as may from time
to time be approved in writing by the Facility Agent on behalf of the
Majority Lenders for the purposes and in accordance with this
Agreement;
"APPROVED VALUER" means Fearnley Offshore AS, ▇.▇. ▇▇▇▇▇▇ Offshore AS
and Seabrokers A.S. or such other firm of international offshore
shipbrokers as may from time to time be approved in writing by the
Facility Agent (acting reasonably) on behalf of the Majority Lenders
for the purposes of and in accordance with this Agreement;
"ARRANGER" means Nordea Bank Norge ASA acting through its office at
Middelthuns gate 17, ▇.▇. ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇;
"AUDITORS" means Messrs Ernst & Young or another firm of international
accountants acceptable to the Facility Agent acting reasonably;
"BANKING DAY" means a day (other than Saturday or Sunday) on which
banks are open for business in London, Oslo and New York City;
"BORROWED MONEY" means, without double-counting, Indebtedness in
respect of:
(a) money borrowed or raised and debit balances at banks;
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(b) any bond, note, loan stock, debenture or similar debt
instrument;
(c) acceptance or documentary credit facilities;
(d) receivables sold or discounted (otherwise than on a
non-recourse basis);
(e) deferred payments for assets or services acquired;
(f) the amount of any liability in respect of any lease or hire
purchase contract which constitutes a Capitalised Lease
Obligation;
(g) Derivatives Contracts;
(h) any counter-indemnity obligation in respect of a guarantee,
indemnity, bond, standby or documentary letter of credit or
any other instrument issued by a lender or financial
institution (other than customs bonds, bid bonds and
performance bonds);
(i) any other transaction (including without limitation forward
sale or purchase agreements) having the commercial effect of a
borrowing or raising of money or of any of (b) to (h) above;
and
(j) guarantees in respect of Indebtedness of any person falling
within any of (a) to (i) above;
"BORROWER" means Gulf Offshore N.S. Limited and includes its successors
in title;
"BREAKAGE COSTS" shall have the meaning ascribed to it in clause 12.1;
"CAPITALISED LEASE OBLIGATION" of any person means the obligation to
pay rent or other payment amounts under a lease of (or other Borrowed
Money arrangements conveying the right to use) real or personal
property which is required to be classified and accounted for as a
capitalised lease or a liability on the face of a balance sheet of such
person in accordance with U.S. GAAP or the generally accepted
accounting principles of any other Relevant Jurisdiction, as the case
may be;
"CASUALTY AMOUNT" means five hundred thousand Dollars ($500,000) (or
the equivalent in any other currency);
"CERTIFICATE OF COMPLIANCE" means a certificate to be issued by the
Guarantor from time to time pursuant to clause 10.1.6 substantially in
the form set out in Schedule 6;
"CHARTERER" means Gulf Offshore Marine International, Inc. being the
bareboat charterer of the Mortgaged Vessels, "HIGHLAND SCOUT" and
"HIGHLAND GUIDE";
"CLASSIFICATION" means, with respect of each Mortgaged Vessel, the
classification specified in Schedule 2 or such other classification as
the Majority Lenders shall, at the request of the Borrower or the
Guarantor, have agreed in writing shall be treated as the
Classification of that Mortgaged Vessel for the purposes of this
Agreement and the other Security Documents;
"CLASSIFICATION SOCIETY" means with respect to each Mortgaged Vessel,
the classification society specified in Schedule 2 or such other
classification society which the Majority Lenders shall, at the request
of the Borrower or the Guarantor, have agreed in writing shall be
treated as the classification society of that Mortgaged Vessel for the
purposes of this Agreement and the Security Documents;
"COLLATERAL DEED" means:
(a) in relation to a Mortgaged Vessel whose Flag State is the
United Kingdom, a deed of covenant in respect of such
Mortgaged Vessel executed or (as the context may require) to
be executed by the Borrower in favour of the Security Trustee
(for the benefit of the Creditors) in the agreed form;
(b) in relation to a Mortgaged Vessel whose Flag State is the
Republic of Panama, a general assignment of the Earnings,
Insurance and Requisition Compensation in respect of such
Mortgaged Vessel executed or (as the context may require) to
be executed by the Guarantor
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and the Charterer in favour of the Security Trustee (for the
benefit of the Creditors) in the agreed form,
and "COLLATERAL DEEDS" means all of such deeds of covenant and general
assignments;
"COLLATERAL INSTRUMENTS" means notes, bills of exchange, certificates
of deposit and other negotiable and non-negotiable instruments,
guarantees and any other documents or instruments which contain or
evidence an obligation (with or without security) to pay, discharge or
be responsible directly or indirectly for, any indebtedness or
liabilities of the Borrower, the Guarantor or any other person liable
and includes documents creating or evidencing Encumbrances;
"COMMITMENT" means, in relation to each Lender, the amount set opposite
its name in Schedule 1 and/or, in the case of a Transferee Lender, the
amount novated as specified in the relevant Transfer Certificate, as
reduced, by any prepayment under clause 6.4 or any cancellation
pursuant to clause 6.9, so that, if at such time the Commitment has
been reduced to zero, references to the Lenders' Commitment in relation
thereto shall be construed as a reference to the Lenders' Commitment
immediately prior to such reduction to zero;
"COMPULSORY ACQUISITION" means requisition for title or other
compulsory acquisition, requisition, appropriation, expropriation,
deprivation, forfeiture or confiscation for any reason of any Mortgaged
Vessel by any Government Entity or other competent authority, whether
de jure or de facto, but shall exclude requisition for use or hire not
involving requisition of title;
"CONSENTS AND ACKNOWLEDGEMENTS" means all notices of assignment and
acknowledgements thereof issued in connection with this Agreement and
any of the other Security Documents;
"CONSOLIDATED EBIT" means, with respect of the Guarantor on a
consolidated basis calculated in accordance with U.S. GAAP, for any
relevant period:
(a) the sum of the amounts for such period of:
(i) consolidated net income;
(ii) provisions for Taxes based on income;
(iii) Consolidated Interest Expense;
(iv) amortisation or write-off deferred financing costs to
the extent deducted in determining consolidated net
income; and
(v) losses on sales of assets (excluding sales in the
ordinary course of business) and other extraordinary
losses;
minus
(b) the sum of the amounts for such period of gains from the sale
of assets (excluding sales in the ordinary course of business)
and other extraordinary gains;
"CONSOLIDATED EBITDA" means, with respect of the Guarantor on a
consolidated basis calculated in accordance with U.S. GAAP, for any
relevant period, the sum of the amounts for such period of:
(a) Consolidated EBIT;
(b) depreciation expense;
(c) amortisation expense; and
(d) non-transactional foreign exchange losses (gains);
"CONSOLIDATED INTEREST EXPENSE" means, with respect to the Guarantor on
a consolidated basis calculated in accordance with U.S. GAAP, for any
relevant period, total interest expense (including that attributable to
Capitalised Lease Obligations) as detailed under consolidated
statements of
3
operations and to include capitalised interest with respect to all
outstanding Indebtedness of the Guarantor and its Subsidiaries,
including, without limitation, all commissions, discounts and other
fees and charges owed with respect to letters of credit and bankers'
acceptance financing;
"CONTROL" when used with respect to any person means either the
ownership of more than 50 percent (or such other amount as may be
specified) of the voting share capital (or equivalent rights of
ownership) of such person or the power to direct the management and
policies of such person, directly or indirectly, whether through the
ownership of voting securities, by contract or otherwise, and the terms
"CONTROL", "CONTROLLING" and "CONTROLLED" shall be construed
accordingly;
"CREDITORS" means the Lenders, the Arranger, the Facility Agent and the
Security Trustee;
"DEFAULT" means any Event of Default or any event or circumstance which
with the giving of notice or lapse of time or the satisfaction of any
other condition (or any combination thereof) would constitute an Event
of Default;
"DERIVATIVES CONTRACT" means a contract, agreement or transaction which
is:
(a) a rate swap, basis swap, commodity swap, forward rate
transaction, commodity option, equity (or equity or other
index) swap or option, bond option, interest rate option,
foreign exchange transaction, cap, collar or floor, currency
swap, currency option or any other similar transaction; and/or
(b) any combination of such transactions,
in each case, whether on-exchange or otherwise;
"DISPOSAL REDUCTION DATE" means:
(a) where a Mortgaged Vessel has become a Total Loss, its Total
Loss Reduction Date; or
(b) where a Mortgaged Vessel is being sold in accordance with
clause 10.5.14 the date upon which the sale of such Mortgaged
Vessel is completed by the transfer of title to such Mortgaged
Vessel to the purchaser in exchange for payment of the
relevant purchase price;
"DISPOSAL REPAYMENT AMOUNT" means in relation to a Disposal Reduction
Date, the amount in Dollars, in relation to a Mortgaged Vessel which
has become a Total Loss or is being sold, which is one hundred and
fifteen percent (115%) of the Relevant Fraction of the Total
Commitments as at the Disposal Reduction Date;
"DOLLARS" and "$" mean the lawful currency of the United States of
America and in respect of all payments to be made under this Agreement
or any of the Security Documents mean funds which are for same day
settlement in the New York Clearing House Interbank Payments System (or
such other U.S. dollar funds as may at the relevant time be customary
for the settlement of international banking transactions denominated in
U.S. dollars);
"DRAWDOWN DATE" means the date on which an Advance is, or is to be,
drawn down;
"DRAWDOWN NOTICE" means a notice substantially in the terms of Schedule
3 duly completed by the Borrower with particulars of the relevant
Advance;
"DRAWDOWN PERIOD" means the period commencing on the date of this
Agreement and ending on the date falling no later than one month before
the Final Maturity Date;
"EARNINGS" means, in relation to any Mortgaged Vessel, all moneys
whatsoever from time to time due or payable to any person during the
Security Period arising out of the use or operation of such Mortgaged
Vessel including (but without limiting the generality of the foregoing)
all freight, hire and passage moneys, or other agreement with any
operator, income arising out of pooling arrangements, compensation
payable to the Borrower or the Guarantor in the event of requisition of
such Mortgaged Vessel for hire, remuneration for salvage or towage
services, demurrage and detention moneys and damages for breach (or
payments for variation or termination) of any charterparty or other
contract for
4
the employment of such Mortgaged Vessel and any sums recoverable under
any loss of earnings insurance;
"ENCUMBRANCE" means any mortgage, charge (whether fixed or floating),
pledge, lien, hypothecation, assignment by way of security, trust
arrangement for the purpose of providing security or other security
interest of any kind securing any obligation of any person or any other
arrangement having the effect of conferring rights of retention or
set-off or other disposal rights over an asset (including without
limitation title transfer and/or retention arrangements having a
similar effect) and includes any agreement to create any of the
foregoing;
"ENVIRONMENTAL AFFILIATE" means any agent or employee of the Borrower
or any other Relevant Party or any person having a contractual
relationship with the Borrower or any other Relevant Party in
connection with any Relevant Vessel or its operation or the carriage of
cargo and/or passengers thereon and/or the provision of goods and/or
services on or from the Relevant Vessel;
"ENVIRONMENTAL APPROVAL" means any consent, authorisation, licence or
approval of any governmental or public body or authorities or courts
applicable to any Relevant Vessel or its operation or the carriage of
cargo and/or passengers thereon and/or the provision of goods and/or
services on or from the Relevant Vessel required under any
Environmental Law;
"ENVIRONMENTAL CLAIM" means any and all enforcement, clean-up, removal
or other governmental or regulatory actions or orders instituted or
completed pursuant to any Environmental Law or any Environmental
Approval together with claims made by any third party relating to
damage, contribution, loss or injury, resulting from any actual or
threatened emission, Spill, release or discharge of a Pollutant from
any Relevant Vessel;
"ENVIRONMENTAL INCIDENT" means any Spill:
(a) from any Vessel; or
(b) from any other vessel in circumstances where:
(i) any Vessel or its owner, operator or manager may be
liable for Environmental Claims arising from the
Spill (other than Environmental Claims arising and
fully satisfied before the date of this Agreement);
and/or
(ii) any Vessel may be arrested or attached in connection
with any such Environmental Claims;
"ENVIRONMENTAL LAWS" means all national, international and state laws,
rules, regulations, treaties and conventions applicable to any Relevant
Vessel pertaining to the pollution or protection of human health or the
environment including, without limitation, the carriage of Pollutants
and actual or threatened emissions, Spills, releases or discharges of
Pollutants;
"EVENT OF DEFAULT" means any of the events or circumstances described
in clause 11.1;
"FACILITY AGENT" means Nordea Bank Finland Plc acting through its New
York branch at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, ▇▇▇ and includes
its successors in title or such other person as may from time to time
be appointed as Facility Agent for the Lenders pursuant to clause 2.17
of the Agency Agreement;
"FAIR MARKET VALUE" means, in relation to each Mortgaged Vessel at any
relevant time, the value of such Mortgaged Vessel as determined in
accordance with the valuation carried out in accordance with clause
10.2.2;
"FINAL MATURITY DATE" means the earlier of 31 January 2008 or three (3)
calendar years from the first Drawdown Date;
"FLAG STATE" means:
(a) the United Kingdom in the case of the Mortgaged Vessels
registered or to be registered in the United Kingdom;
5
(b) the Republic of Panama in the case of Mortgaged Vessels
registered or to be registered in the Republic of Panama;
or such other state or territory as the Lenders may approve at the
request of the Borrower, as being the "Flag State" of any of its
Mortgaged Vessels for the purposes of this Agreement or any of the
Security Documents;
"FUNDED DEBT" means, with respect to the Guarantor and its
Subsidiaries, on a consolidated basis calculated in accordance with
U.S. GAAP, the sum of:
(a) Indebtedness for Borrowed Money which in accordance with U.S.
GAAP would be shown on the liability side of the balance
sheet; and
(b) all Indebtedness of a second person secured by any Encumbrance
on any property of the Guarantor, or any of its Subsidiaries,
whether or not such Indebtedness has been assumed;
"GOVERNMENT ENTITY" means and includes (whether having a distinct legal
personality or not) any national or local government authority, board,
commission, department, division, organ, instrumentality, court or
agency and any association, organisation or institution of which any of
the foregoing is a member or to whose jurisdiction any of the foregoing
is subject or in whose activities any of the foregoing is a
participant;
"GROUP" means the Guarantor and all of its Subsidiaries controlled by
the Guarantor;
"GUARANTEE" means the guarantee of the Guarantor contained at clause 15
and includes each separate or independent stipulation or agreement by
the Guarantor contained in this Agreement;
"GUARANTEED LIABILITIES" means all moneys, obligations and liabilities
expressed to be guaranteed by the Guarantor in clause 15.1; and
"GUARANTOR" means GulfMark Offshore, Inc., a company incorporated in
the State of Delaware in the United States, whose chief executive and
corporate offices are in Houston, Texas and includes its successors in
title;
"INCAPACITY" means in relation to a person the insolvency, liquidation,
dissolution, winding-up, administration, receivership, amalgamation,
reconstruction or other incapacity of that person whatsoever;
"INDEBTEDNESS" means any obligation for the payment or repayment of
money, whether as principal or as surety and whether present or future,
actual or contingent;
"INSURANCES" means all policies and contracts of insurance (which
expression includes all entries of the Mortgaged Vessels in a
protection and indemnity or war risks association) which are from time
to time during the Security Period in place or taken out or entered
into by or for the benefit of, among others, the Borrower or the
Guarantor, (whether in the sole name of the Borrower or the Guarantor,
or in the joint names of the Security Trustee and the Borrower or the
Guarantor or otherwise) in respect of each Mortgaged Vessel and her
Earnings or otherwise howsoever in connection with such Mortgaged
Vessels and all benefits thereof (including claims of whatsoever nature
and return of premiums);
"INTEREST PAYMENT DATE" means, subject to the provisions of clause
5.1and clause 8.3, the last day of an Interest Period;
"INTEREST PERIOD" means, in relation to any Advance or the
Outstandings, each period for the calculation of interest in respect of
the Outstandings ascertained in accordance with clauses 5.2and 5.3;
"INTERMEDIATE VALUATION" has the meaning given at clause 10.2.2;
"ISM CODE" means the International Safety Management Code for the Safe
Operation of Ships and for Pollution Prevention constituted pursuant to
Resolution A.741 (18) of the International Maritime
6
Organisation and incorporated into the Safety of Life at Sea Convention
and includes any amendments or extensions of it and any regulation
issued pursuant to it;
"ISPS CODE" means the International Ship and Port Facility Security
Code constituted pursuant to Resolution A.924 (22) of the International
Maritime Organisation and incorporated into the Safety of Life at Sea
Convention and includes an amendments or extensions of it and any
regulation issued pursuant to it;
"LENDERS" means the banks and financial institutions listed in Schedule
1 and includes their successors in title and permitted assignees and
transferees;
"LEVERAGE RATIO" means the Guarantor's ratio of Funded Debt to Total
Capitalisation;
"LIBOR" means, in relation to a particular period, the rate for
deposits of the relevant currency for a period equivalent to such
period at or about 11 a.m. (London time) on the Quotation Date for 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 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 dated August, 1985)),
provided that if on such date no such rate is so displayed, LIBOR for
such period shall be the arithmetic mean (rounded upward if necessary
to five (5) decimal places) of the rates respectively quoted to the
Facility Agent by each of the Reference Banks at the request of the
Facility Agent as such Reference Bank's offered rate for deposits of
the relevant currency in an amount approximately equal to the amount in
relation to which LIBOR is to be determined for a period equivalent to
such period to prime lenders in the London Interbank Market at or about
11 a.m. (London time) on the Quotation Date for such period;
"LOSS PAYABLE CLAUSES" shall have the meaning given thereto in each of
the Collateral Deeds;
"MAJORITY LENDERS" means at any relevant time Lenders the aggregate of
whose Commitments at such time exceed sixty six and two thirds per cent
(662/3%) of the Total Commitments or, if all of the Commitments have
been reduced to zero at or prior to that time, Lenders the aggregate of
whose Commitments immediately prior to that reduction exceeded sixty
six and two thirds per cent (66 2/3%) of the Total Commitments at that
time;
"MARGIN" means the rates adjusted in accordance with the following
table:
TEST (N.B. BASED ON THE GUARANTOR) MARGIN
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Leverage Ratio equal to or less than 0.50:1.00 1.20%
Leverage Ratio is equal to or less than 0.60:1.00 but
greater than 0.50:1.00 1.30%
Leverage Ratio is greater than 0.60:1.00 1.50%
and as determined in accordance with clause 5.8;
"MARGIN ADJUSTMENT DATE" means, with respect to each Margin
Re-calculation Period, the last day of that period;
"MARGIN RE-CALCULATION PERIOD" means each period of ten (10) days
commencing sixty (60) days after each Quarterly Financial Statements
Preparation Date;
"MATERIAL ADVERSE EFFECT" means the effect of any event or circumstance
or series of events or circumstances which in the reasonable opinion of
the Majority Lenders is likely to have a material adverse effect on:
(a) the business, conditions (financial or otherwise), property,
performance, prospects or results of operation of the person
concerned; or
7
(b) the ability of the person concerned to comply with any of its
material obligations under this Agreement or any Security
Document to which it is a party; or
(c) the legality, validity or enforceability of this Agreement or
any Security Document or the rights or remedies of any
Creditors thereunder.
"MONTH" or "MONTHS" means a period beginning in one calendar month and
ending in the next calendar month on the day numerically corresponding
to the day of the calendar month on which it started, provided that:
(a) if the period started on the last Banking Day in a calendar
month or if there is no such numerically corresponding day, it
shall end on the last Banking Day in such next calendar month;
and
(b) if such numerically corresponding day is not a Banking Day,
the period shall end on the next following Banking Day in the
same calendar month but if there is no such Banking Day it
shall end on the preceding Banking Day and "MONTHS" and
"MONTHLY" shall be construed accordingly;
"MORTGAGE" means in relation to a Vessel, a first priority or first
preferred mortgage of such Vessel executed (or as the context may
require) to be executed by the Borrower or the Guarantor in favour of
the Security Trustee (for the benefit of the Creditors) in the agreed
form and "MORTGAGES" means all of such mortgages;
"MORTGAGED VESSEL" means, at any relevant time, those Vessels listed in
Schedule 2 and any other vessel substituted in accordance with clause
10.3 which become subject to a Mortgage and/or the Earnings, Insurances
and Requisition Compensation of which are subject to an Encumbrance
pursuant to the relevant Mortgage or Collateral Deed in relation
thereto and for the purposes of this Agreement a Vessel shall be deemed
to be a Mortgaged Vessel as from the date that the Mortgage of that
Vessel shall have been executed and registered in accordance with this
Agreement until whichever shall be the earlier of (A) the due
performance by the Borrower or the Guarantor of all its obligations
under clause 6.4 following the sale or Total Loss of such Mortgaged
Vessel as the case may be and (B) the end of the Security Period;
"NET PROCEEDS FROM EQUITY OFFERINGS" means, in the case of the Guarantor
and its Subsidiaries, the proceeds (after deducting the Guarantor's
reasonable costs and expenses and any commissions, fees and other
expenses due in connection therewith) received by the Guarantor or any
of its Subsidiaries from any issue of corporate stock, shares, bonds,
notes, debentures or other securities;
"NET SALE PROCEEDS" means, in relation to a Mortgaged Vessel, the sale
price of such Mortgaged Vessel received by the Borrower or the
Guarantor (after deducting the Borrower's or the Guarantor's reasonable
costs and out-of-pocket expenses incurred in connection with such sale
including reasonable and proper costs of drydocking the relevant
Mortgaged Vessel and carrying out any repairs on such Mortgaged Vessel
for the purposes of complying with its obligations under the relevant
sale agreement);
"NET WORTH" means, with respect to the Guarantor and its Subsidiaries,
on a consolidated basis determined in accordance with U.S. GAAP, its
shareholder equity (excluding treasury stock and cumulative
translation);
"NOTES" means the Guarantor's 7.75% Senior Notes due July 15, 2014
issued pursuant to the Indenture dated July 21, 2004 for an amount of
$160,000,000 between the Guarantor and U.S. Bank National Association
or any exchange notes exchanged therefor;
"OUTSTANDINGS" means the portion of the Total Commitments advanced or
to be advanced (as the context requires) by the Lenders to the Borrower
pursuant to and in accordance with this Agreement;
"PERMITTED CHARTER" means the bareboat charters made between the
Guarantor and the Charterer in respect of the Mortgaged Vessels
"HIGHLAND GUIDE" and "HIGHLAND SCOUT";
"PERMITTED ENCUMBRANCE" means:
8
(a) any Encumbrance in favour of the Lenders created pursuant to
this Agreement and any of the other Security Documents;
(b) any lien on any Mortgaged Vessel for master's, officer's or
crew's wages outstanding in the ordinary course of trading,
any lien for salvage and any ship repairer's or outfitter's
possessory lien for a sum in each case not (except with the
prior written consent of the Facility Agent) exceeding the
Casualty Amount; and
(c) any lien arising by operation of law or otherwise in the
ordinary course of business permitted under this Agreement and
any of the other Security Documents to which the Borrower is a
party, provided such liens do not secure amounts more than
thirty (30) days overdue;
(d) any other Encumbrance created after the date of this Agreement
with the prior written consent of the Lenders; and
(e) any Purchase Money Mortgage created after the date of this
Agreement;
"POLLUTANT" means and includes oil and its products, any other
polluting, toxic or hazardous substance and any other substance whose
release into the environment is regulated or penalised by Environmental
Laws;
"PURCHASE MONEY MORTGAGE" means an Encumbrance on or against any assets
or documents of title thereto securing a Purchase Money Obligation for
such assets, provided that any Encumbrance given in respect of a
Purchase Money Obligation shall not extend to any asset or documents of
title thereto other than:
(a) the asset acquired with the proceeds giving rise to the
creation or assumption of that Purchase Money Obligation
(including any earnings or other receivables derived from that
asset and its insurance or any other compensation for or
relating to its loss, damage, or any other matter whatsoever);
and
(b) fixed or structural improvements or modifications, if any,
made to, erected or constructed on that asset;
"PURCHASE MONEY OBLIGATIONS" means any Indebtedness created or assumed
as part of the non-recourse project financing of the purchase price of
real or tangible property and any extension, renewals or refinancing of
such Indebtedness;
"QUARTERLY FINANCIAL STATEMENTS" means quarterly consolidated financial
statements of the Guarantor prepared as at each Quarterly Financial
Statements Preparation Date comprising a profit and loss account and a
balance sheet;
"QUARTERLY FINANCIAL STATEMENTS PREPARATION DATE" means 31 March, 30
June, 30 September and 31 December in each year (or three, six, nine
and twelve months after the commencement of the Guarantor's accounting
period should its accounting reference date be changed);
"QUOTATION DATE" means, in relation to an Interest Period or other
period for which LIBOR is to be determined, the date (which shall not
in any event be less than two (2) Banking Days before the commencement
of any such Interest Period or other period) on which quotations would
customarily be provided by leading banks in the London or other
relevant Interbank Market for deposits in the relevant currency for
delivery on the first day of that Interest Period or other period;
"REFERENCE BANKS" means the New York branch of Nordea Bank Finland Plc
and/or any other Lender appointed as such pursuant to the Agency
Agreement;
"REGISTRY" means, in relation to each Mortgaged Vessel, such registrar,
commissioner or representative of the relevant Flag State who is duly
authorised and empowered to register the Relevant Vessel, the
Borrower's or the Guarantor's title to such Mortgaged Vessel, and the
relevant Mortgages under the laws and flag of the relevant Flag State;
"RELATED COMPANY" of a person means any Subsidiary of such person, any
company or other entity of which such person is a Subsidiary and any
Subsidiary of any such company or entity;
9
"RELEVANT FRACTION" shall mean a fraction whose numerator is the Fair
Market Value of the relevant Mortgaged Vessel in the case of a
Mortgaged Vessel that has suffered a Total Loss or is being sold
(prevailing immediately before the Total Loss or sale) and whose
denominator is the aggregate of the Fair Market Values of all the
Mortgaged Vessels (including such Mortgaged Vessel) at the relevant
date;
"RELEVANT INSURED AMOUNT" means, in relation to a Mortgaged Vessel as
at any relevant date, an amount in Dollars equal to the Relevant
Fraction as at such date;
"RELEVANT JURISDICTION" means any jurisdiction in which or where any
Security Party is incorporated, resident, domiciled, has a permanent
establishment, carries on, or has a place of business or is otherwise
effectively connected;
"RELEVANT PARTY" means each Security Party and any Security Party's
Related Companies;
"RELEVANT VESSEL" means any Mortgaged Vessel or any other vessel from
time to time (whether before or after the date of this Agreement)
owned, managed or crewed by, or chartered to, any Relevant Party;
"REQUISITION COMPENSATION" means in relation to each Mortgaged Vessel
all sums of money or other compensation from time to time payable
during the Security Period by reason of the Compulsory Acquisition of
such Mortgaged Vessel;
"SEC" means the U.S. Securities and Exchange Commission or any
successor governmental body or agency;
"SECURITY DOCUMENTS" means this Agreement, the Agency Agreement, the
Mortgages, the Collateral Deeds, all Consents and Acknowledgements, and
any other documents as may have been or shall from time to time after
the date of this Agreement be executed to guarantee and/or secure all
or any part of the Outstandings, interest thereon and other moneys from
time to time owing by the Borrower pursuant to this Agreement (whether
or not any such document also secures moneys from time to time owing
pursuant to any other document or agreement);
"SECURITY PARTY" means the Borrower, the Guarantor, the Charterer and
any of the Guarantor's Subsidiaries which may at any time be a party to
this Agreement and/or any of the other Security Documents;
"SECURITY PERIOD" means the period commencing on the date of this
Agreement and so long as all or any part of the Outstandings or the
Commitments, interest thereon or any other moneys are owing, actually
or contingently, under this Agreement and/or any of the other Security
Documents remain outstanding;
"SECURITY REQUIREMENT" means the amount in Dollars (as certified by the
Facility Agent whose certificate shall, in the absence of manifest
error, be conclusive and binding on the Borrower and the Facility
Agent) which is at any relevant time no less than one hundred and forty
percent (140%) of the aggregate of the Outstandings;
"SECURITY TRUSTEE" means Nordea Bank Finland Plc acting through its New
York branch at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, ▇▇▇ and includes
its successors in title or such other person as may from time to time
be appointed as Security Trustee and trustee for the Lenders and the
Creditors pursuant to clause 2.18 of the Agency Agreement;
"SECURITY VALUE" means the amount in Dollars (as certified in good
faith by the Facility Agent whose certificate shall, in the absence of
manifest error, be conclusive and binding on the Borrower and the
Facility Agent) which, at any relevant time, is the aggregate of the
Fair Market Value of the Mortgaged Vessels,
(a) all as most recently determined in accordance with clause
10.2.2; and
(b) the Fair Market Value of any additional security for the time
being actually provided by the Borrower or any Security Party
to the Security Trustee pursuant to clause 10.2.1(b);
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"SEMI-ANNUAL VALUATION DATE" means each day falling six (6) months
after the immediately preceding Annual Valuation Date;
"SPILL" means any actual or threatened emission, spill, release or
discharge of a Pollutant into the environment;
"SUBSIDIARY" means
(a) in the case of the Borrower, a subsidiary within the meaning
of section 736 of the Companies ▇▇▇ ▇▇▇▇; and
(b) in the case of the Guarantor, any business entity of which
more than fifty percent (50%) of the voting stock or other
equity interest is owned directly or indirectly by the
Guarantor and/or one or more other Subsidiary of the
Guarantor;
"TAXES" includes all present and future taxes, levies, imposts, duties,
fees or charges of whatever nature together with interest thereon and
penalties in respect thereof and "TAXATION" shall be construed
accordingly;
"TOTAL COMMITMENTS" means at any relevant time the total of the
Commitments of all the Lenders at such time;
"TOTAL LOSS" means:
(a) the actual, constructive, compromised or arranged total loss
of any Mortgaged Vessel; or
(b) the Compulsory Acquisition of any Mortgaged Vessel; or
(c) the hijacking, theft, condemnation, capture, seizure, arrest,
detention or confiscation of any Mortgaged Vessel (other than
where the same amounts to the Compulsory Acquisition of any
Mortgaged Vessel) by any Government Entity, or by persons
acting or purporting to act on behalf of any Government
Entity, unless any Mortgaged Vessel be released and restored
to the Borrower from such hijacking, theft, condemnation,
capture, seizure, arrest, detention or confiscation within
ninety (90) days or such other time agreed in writing by the
Facility Agent after the occurrence thereof;
"TOTAL LOSS REDUCTION DATE" means, in relation to a Mortgaged Vessel,
the date which is the earlier of:
(a) the date one hundred and twenty (120) days after such
Mortgaged Vessel became a Total Loss or such later date as may
be agreed in writing by the Facility Agent (acting on the
instructions of the Majority Lenders) if they are satisfied
that the relevant Mortgaged Vessel was properly insured at the
time of such Total Loss and that insurance proceeds in respect
of such Total Loss will be recovered in amounts sufficient to
enable the Borrower to comply with its prepayment obligations
under clause 6.4 of this Agreement arising as a consequence of
such Total Loss and will be applied in accordance with this
Agreement and any of the other Security Documents by the later
date so agreed; and
(b) the date upon which insurance proceeds or Requisition
Compensation in respect of such Total Loss are received by the
Borrower (or the Security Trustee as the Borrower's assignee
pursuant to the relevant Collateral Deed),
provided always that in the case of clause 6.4.4(b) the Total Loss
Reduction Date shall not in any event be later than 180 days from the
date on which notice of abandonment of the Mortgaged Vessel was given
to the insurers and in the case of clause 6.4.4(c) the Total Loss
Reduction Date shall not in any event be later than 180 days after the
first date on which discussions were commenced with the insurers
regarding the basis on which the compromised or arranged total loss
would be settled;
"TRANSFER CERTIFICATE" means a transfer certificate for the purposes of
clause 16 substantially in the form set out in Schedule 5 (or such
other form as the Facility Agent may approve or require);
"TRANSFEREE LENDER" has the meaning ascribed thereto in clause 16.3;
11
"UNITED STATES" or "U.S." means the United States of America;
"U.S. GAAP" means generally accepted accounting principles in the
United States;
"VALUATION DATE" means an Annual Valuation Date and/or a Semi-Annual
Valuation Date as the context shall require; and
"VESSELS" means the Mortgaged Vessels or any of them as the context
shall require.
1.3 HEADINGS
Clause headings and the table of contents are inserted for convenience
of reference only and shall be ignored in the interpretation of this
Agreement.
1.4 CONSTRUCTION OF CERTAIN TERMS
In this Agreement, unless specified otherwise or the context otherwise
requires:
1.4.1 references to clauses and Schedules are to be construed as
references to clauses of, and Schedules to, this Agreement and
references to this Agreement include its Schedules;
1.4.2 references to (or to any specified provision of) this Agreement or
any other document shall be construed as references to this
Agreement, that provision or that document as in force for the time
being and as amended in accordance with terms thereof, or, as the
case may be, with the agreement of the relevant parties and (where
such consent is, by the terms of this Agreement or the relevant
document, required to be obtained as a condition to such amendment
being permitted) the prior written consent of the Facility Agent;
1.4.3 references to a "REGULATION" include any present or future
regulation, rule, directive, requirement, request or guideline
(whether or not having the force of law) of any agency, authority,
central bank or government department or any self-regulatory or
other national or supra-national authority;
1.4.4 words importing the plural shall include the singular and vice
versa;
1.4.5 references to a time of day are to London time;
1.4.6 references to a "PERSON" shall be construed as references to an
individual, firm, company, corporation, unincorporated body of
persons or any Government Entity;
1.4.7 references to "ASSETS" include all or part of any business,
undertaking, real property, personal property, uncalled capital and
any rights (whether actual or contingent, present or future) to
receive, or require delivery of, any of the foregoing;
1.4.8 references to a "GUARANTEE" include references to an indemnity or
other assurance against financial loss including, without
limitation, an obligation to purchase assets or services as a
consequence of a default by any other person to pay any
Indebtedness and "guaranteed" shall be construed accordingly;
1.4.9 references to the "EQUIVALENT" of an amount specified in a
particular currency (the "SPECIFIED CURRENCY AMOUNT") shall be
construed as a reference to the amount of the other relevant
currency which can be purchased with the specified currency amount
in the London foreign exchange market at or about 11 a.m. on the
day on which the calculation falls to be made for spot delivery as
determined by the Facility Agent; and
1.4.10 references to any enactment shall be deemed to include references
to such enactment as re-enacted, amended or extended.
1.5 INSURANCE TERMS
In clause 10.5.1:
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1.5.1 "EXCESS RISKS" means the proportion (if any) of claims for general
average salvage and salvage charges and under the ordinary
collision clause not recoverable in consequence of the value at
which a Mortgaged Vessel is assessed for the purpose of such claims
exceeding her insured value;
1.5.2 "PROTECTION AND INDEMNITY RISKS" means the usual risks (including
oil pollution) covered by a United Kingdom protection and indemnity
association or a protection and indemnity association which is
managed in the United Kingdom or Norway (including, without
limitation, the proportion (if any) of any sums payable to any
other person or persons in case of collision which are not
recoverable under the hull and machinery policies by reason of the
incorporation therein of Clause 8 of the Institute Time Clauses
(Hulls) (1/11/95) or the Institute Amended Running Down Clause
(1/10/71) or any equivalent provision) or (if placed on Norwegian
terms) means protection and indemnity risks as defined in the
Norwegian Marine Insurance Plan of 1996 as amended ; and
1.5.3 "WAR RISKS" includes those risks covered by the standard form of
English marine policy with Institute War and Strikes Clauses - time
(1/11/95) attached or similar cover or (if placed on Norwegian
terms means the war risks described in the Norwegian Marine
Insurance Plan of 1966 as amended).
1.6 ACCOUNTING TERMS
All accounting terms not otherwise defined in this Agreement shall have
the meanings assigned to them in accordance with U.S. GAAP (whether or
not such is indicated in this Agreement).
1.7 AGREED FORMS
In this Agreement, any document expressed to be "IN THE AGREED FORM"
means a document in a form agreed by (and for the purposes of
identification signed by or on behalf of) the Borrower and the Facility
Agent (acting on the instructions of the Lenders) or (in the case of
any of the other Security Documents) a document in the form actually
executed by both the relevant Security Party or relevant Security
Parties and the Security Trustee.
1.8 MAJORITY LENDERS
Where this Agreement provides for any matter to be determined by
reference to the opinion of the Majority Lenders or the Lenders or to
be subject to the consent or request of the Majority Lenders or the
Lenders or for any action to be taken on the instructions of the
Majority Lenders or the Lenders, such opinion, consent, request or
instructions shall (as between the Lenders) only be regarded as having
been validly given or issued by the Majority Lenders or the Lenders (as
the case may be) if all the Lenders shall have received prior notice of
the matter on which such opinion, consent, request or instructions are
required to be obtained and the relevant majority of Lenders or all the
Lenders (as the case may be) shall have given or issued such opinion,
consent, request or instructions but so that (as between the Borrower
and the Lenders) the Borrower shall be entitled (and bound) to assume
that such notice shall have been duly received by each Lender and that
the relevant majority shall have been obtained to constitute Majority
Lenders or the Lenders (as the case may be) whether or not this is in
fact the case.
2 THE FACILITY
2.1 AMOUNT
2.1.1 The Lenders, relying upon each of the representations and warranties in
clause 9, agree to lend to the Borrower and upon and subject to the
terms of this Agreement the Total Commitment.
2.1.2 The obligation of each Lender under this Agreement shall be to
contribute that proportion of each Advance which, as at the Drawdown
Date of such Advance, its Commitment bears to the aggregate amount of
the Total Commitments.
2.2 OBLIGATIONS SEVERAL
The obligations of each Lender under this Agreement are several; the
failure of any Lender to perform such obligations shall not relieve any
other Lender, the Arranger, the Facility Agent or the Borrower of any
of their respective obligations or liabilities under this Agreement nor
shall the Facility Agent or the
13
Arranger be responsible for the obligations of any Lender (except for
its own obligations, if any, as a Lender) nor shall any Lender be
responsible for the obligations of any other Lender under this
Agreement.
2.3 INTERESTS SEVERAL
Notwithstanding any other term of this Agreement (but without prejudice
to the provisions of this Agreement relating to or requiring action by
the Majority Lenders or all the Lenders (as the case may be)) the
interests of the Facility Agent, the Arranger and the Lenders are
several and the amount due to the Facility Agent (for its own account)
and to the Arranger and to each Lender is a separate and independent
debt. The Facility Agent, the Arranger and (subject always to the
provisions of the Agency Agreement) each Lender shall have the right to
protect and enforce its rights arising out of this Agreement and it
shall not be necessary for the Facility Agent, the Arranger or any
Lender (as the case may be) to be joined as an additional party in any
proceedings for this purpose.
3 CONDITIONS
3.1 DOCUMENTS AND EVIDENCE
The obligation of each Lender to make its Commitment available shall be
subject to the condition that the Facility Agent, or its duly
authorised representative, shall have received:
3.1.1 on the date of this Agreement (or such later date as the Lenders
may agree in accordance with clause 3.3 but in any event no later
than four (4) Banking Days before the day on which the first
Drawdown Notice is given) the documents and evidence specified in
part 1 of Schedule 4;
3.1.2 not later than four (4) Banking Days before the day on which the
Drawdown Notice in respect of the first Advance is given, (or such
later date as the relevant Lenders may agree in accordance with
clause 3.3) the documents and evidence specified in part 2 of
Schedule 4;
in each case in form and substance satisfactory to the Facility Agent.
3.2 GENERAL CONDITIONS PRECEDENT
The obligation of each Lender to contribute to any Advance is subject
to the further conditions that at the date of each Drawdown Notice and
on each Drawdown Date:
3.2.1 the representations and warranties set out in clause 9.1 (and so
that the representation and warranty in clause 9.1.1 shall for this
purpose refer to the then latest audited financial statements
delivered to the Facility Agent under clause 10.1.5) are true and
correct on and as of each such date as if each were made with
respect to the facts and circumstances existing at such date; and
3.2.2 no Default shall have occurred and be continuing or would result
from the making of such Advance.
3.3 WAIVER OF CONDITIONS PRECEDENT
The conditions specified in this clause 3 are inserted solely for the
benefit of the Lenders and may be waived on their behalf in whole or in
part and with or without conditions by the Facility Agent acting on the
instructions of all the Lenders without prejudicing the right of the
Facility Agent (acting on such instructions) to require fulfilment of
such conditions in whole or in part in respect of any other Advance.
3.4 NOTIFICATION
The Facility Agent shall notify the Lenders and the Borrower promptly
after receipt by it of the documents and evidence referred to in clause
3.1 in form and substance satisfactory to it.
4 ADVANCES
4.1 DRAWDOWN
Subject to the terms and conditions of this Agreement an Advance shall
be made available to the Borrower during the Drawdown Period following
receipt by the Facility Agent from the Borrower of a
14
Drawdown Notice not later than 11 a.m. on the third (3rd) Banking Day
before the proposed Drawdown Date. A Drawdown Notice shall be effective
on actual receipt by the Facility Agent, and, once given, shall,
subject as provided in clause 5.7, be irrevocable.
4.2 AMOUNT
4.2.1 The aggregate amount of each Advance shall be a minimum of two million
Dollars ($2,000,000) or the balance of the Commitments.
4.2.2 No more than six (6) Advances shall be outstanding at the same time.
4.2.3 The aggregate amount of all Advances drawn but unpaid at any time shall
not exceed the Total Commitments at such time.
4.3 TERMINATION OF COMMITMENTS
Any part of the Commitments undrawn and uncancelled at the end of the
Drawdown Period shall thereupon be automatically reduced to zero.
4.4 APPLICATION OF PROCEEDS
Without prejudice to the Borrower's obligations under clause 1.1, none
of the Lenders, the Arranger or the Facility Agent shall have any
responsibility for the application of the proceeds of any Advance by
the Borrower.
5 INTEREST AND INTEREST PERIODS; ALTERNATIVE INTEREST RATES; MARGIN
5.1 NORMAL INTEREST RATE
The Borrower shall pay interest on each Advance or, as the case may be,
the Outstandings in respect of each Interest Period on the relevant
Interest Payment Date (or, in the case of Interest Periods of more than
three (3) months, by instalments, every three (3) months from the
commencement of the Interest Period and on the relevant Interest
Payment Date) at the rate per annum determined by the Facility Agent to
be the aggregate of:
5.1.1 the Margin; and
5.1.2 LIBOR.
5.2 SELECTION OF INTEREST PERIODS
With respect to the Outstandings the Borrower may by notice received by
the Facility Agent not later than 11 a.m. on the third (3rd) Banking
Day before the beginning of each Interest Period or (as appropriate) in
a Drawdown Notice, select a duration of one (1), three (3) or six (6)
months (or such longer period as the Majority Lenders may agree with
the Borrower) for such Interest Period provided that the Borrower shall
not be entitled to select a period of one (1) month more than three (3)
times in any period of twelve (12) months.
5.3 DETERMINATION OF INTEREST PERIODS APPLICABLE TO THE OUTSTANDINGS
Each Interest Period applicable to the Advances shall be of the
duration selected by the Borrower in accordance with clause 5.2 but so
that:
5.3.1 the initial Interest Period in respect of each Advance (or, as the
case may be, the Outstandings) as the case may be, shall commence
on the relevant Drawdown Date and each subsequent Interest Period
in respect of such Advance (or, as the case may be, Outstandings)
shall commence on the expiry of the previous Interest Period;
5.3.2 the initial Interest Period in respect of each Advance after the
first Advance shall end on the same day as the then current
Interest Period of the previous Advance;
15
5.3.3 if the Borrower fails to select the duration of an Interest Period
for any Advance in accordance with the provisions of clause 5.2 and
this clause 5.3 such Interest Period shall, subject to the other
provisions of this clause 5.3, have a duration of three (3) months.
5.4 INTEREST FOR LATE PAYMENT
5.4.1 If the Borrower fails to pay any sum (including, without
limitation, any sum payable pursuant to this clause 5.4) on its due
date for payment under this Agreement the Borrower shall pay
interest on such sum from the due date up to the date of actual
payment (as well after as before judgment) at a rate determined by
the Facility Agent pursuant to this clause 5.4.
5.4.2 The period beginning on such due date and ending on such date of
payment shall be divided into successive periods of not more than
three (3) months as selected by the Facility Agent (after
consultation with the Lenders so far as reasonably practicable in
the circumstances) each of which (other than the first, which shall
commence on such due date) shall commence on the last day of the
preceding such period. The rate of interest applicable to each such
period shall be the aggregate (as determined by the Facility Agent)
of (a) two percent (2%) per annum, (b) the Margin, and (c) LIBOR,
unless such unpaid sum is an amount of principal which shall have
become due and payable, by reason of a declaration by the Facility
Agent under clause 11.2.1 or a prepayment pursuant to clauses 6.4,
6.6 or 13.1, prior to the next succeeding Interest Payment Date
relating thereto, in which case the first such period selected by
the Facility Agent shall end on such Interest Payment Date and
interest shall be payable on such unpaid sum during such period at
a rate two percent (2%) above the rate applicable thereto
immediately before it shall have become so due and payable.
5.4.3 Interest under this clause 5.4 shall be due and payable on the last
day of each period determined by the Facility Agent pursuant to
this clause 5.4 or, if earlier, on the date on which the sum in
respect of which such interest is accruing shall actually be paid.
If, for the reasons specified in clause 5.7.1 or 5.7.2, the
Facility Agent is unable to determine a rate in accordance with the
foregoing provisions of this clause 5.4, each Lender shall promptly
notify the Facility Agent of the cost of funds to such Lender and
interest on any sum not paid on its due date for payment shall be
calculated for each Lender at a rate determined by the Facility
Agent to be two percent (2%) per annum above the aggregate of the
Margin and the cost of funds to such Lender.
5.5 NOTIFICATION OF INTEREST PERIODS AND INTEREST RATE
The Facility Agent shall notify the Borrower and the Lenders promptly
of the duration of each Interest Period or other period for the
calculation of interest (or, as the case may be, default interest) and
of each rate of interest determined by either of them under this clause
5.
5.6 REFERENCE BANK QUOTATIONS
If any Reference Bank is unable or otherwise fails to furnish a
quotation for the purpose of calculating LIBOR (where such a quotation
is required having regard to the definition of LIBOR in clause 1.2) the
interest rate for the relevant Interest Period shall be determined,
subject to clause 5.7, on the basis of the quotations furnished by the
remaining Reference Banks.
5.7 MARKET DISRUPTION; NON-AVAILABILITY
5.7.1 If and whenever, at any time prior to the commencement of any Interest
Period:
(a) at a time when Reference Bank quotations are required for
LIBOR the Facility Agent shall have determined in good faith,
after consultation with the Reference Banks (which
determination shall, in the absence of manifest error, be
conclusive), that adequate and fair means do not exist for
ascertaining LIBOR during such Interest Period; or
(b) none or only one of the Reference Banks supplies the Facility
Agent with a quotation for the purpose of calculating LIBOR
(where such a quotation is required having regard to the
definition of LIBOR in clause 1.2); or
(c) the Facility Agent shall have received notification from the
Lenders with Commitments aggregating not less than one-third
of the Outstandings (or, prior to the first Drawdown Date,
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Commitments aggregating not less than one-third of the
Commitments) that deposits in Dollars are not available to the
Lenders in the London or other relevant Interbank Market (as
the case may be) in the ordinary course of business in
sufficient amounts to fund their Commitments for such Interest
Period or that LIBOR does not accurately reflect the cost to
such Lenders of obtaining such deposits,
the Facility Agent shall forthwith give notice (a "DETERMINATION
NOTICE") to the Borrower and to each of the Lenders. A Determination
Notice shall contain particulars of the relevant circumstances giving
rise to its issue. After the giving of any Determination Notice the
undrawn amount of the Commitments shall not be borrowed until notice to
the contrary is given to the Borrower by the Facility Agent.
5.7.2 During the period of ten (10) days after any Determination Notice has
been given by the Facility Agent under clause 5.7.1 each Lender shall
certify an alternative basis (the "SUBSTITUTE BASIS") for making
available or, as the case may be, maintaining its Commitment. The
Substitute Basis may (without limitation) include alternative interest
periods, alternative currencies or alternative rates of interest but
shall include a margin above the cost of funds including Additional
Cost, if any, to such Lender equivalent to the relevant Margin. Each
Substitute Basis so certified shall be binding upon the Borrower and
shall take effect in accordance with its terms from the date specified
in the Determination Notice until such time as the Facility Agent
notifies the Borrower that none of the circumstances specified in
clause 5.7.1 continues to exist whereupon the normal interest rate
fixing provisions of this Agreement shall apply.
5.8 VARIABLE MARGIN
5.8.1 During each Margin Re-Calculation Period the Facility Agent shall
review the Leverage Ratio (as at the relevant Quarterly Financial
Statements Preparation Date) (for the purpose of this clause 5.8 the
"PREVAILING RATIO") based on the calculations contained in the relevant
Certificate of Compliance accompanying the Quarterly Financial
Statements. If, after reviewing the calculations contained in any
Certificate of Compliance, the Facility Agent is of the opinion that
the Certificate of Compliance does not accurately determine the
Prevailing Ratio, the Facility Agent shall notify the Borrower in
writing and the parties shall in good faith endeavour to resolve the
error in calculation or difference of opinion (as the case may be)
prior to the expiry of the Margin Re-Calculation Period. If the
Facility Agent and the Borrower fail to reach agreement as aforesaid
the Facility Agent shall in good faith determine the Prevailing Ratio.
5.8.2 The Facility Agent shall notify the Borrower and the Lenders in writing
before the expiry of the Margin Re-Calculation Period of the Prevailing
Ratio and whether or not the Prevailing Ratio would result in a change
of the Margin in accordance with the table set out in the definition of
such Margin in clause 1.2.
5.8.3 Any adjustment in the Margin as a result of clauses 5.8.1 and 5.8.2
shall take effect on and with effect from the relevant Margin
Adjustment Date and apply to all of the Advances as at such date until
further adjusted under the provisions of this clause 5.8 and the
Facility Agent's notice referred to in clause 5.8.2) shall include a
statement setting out the re-calculated interest due with respect to
each such Advance.
6 REPAYMENT, PREPAYMENT AND CANCELLATION
6.1 REPAYMENT
The Borrower shall repay any Advances on the last day of the Interest
Period relating to such Advance.
6.2 ROLLOVER OF ADVANCES
6.2.1 This clause 6.2 applies if an Advance is to be drawn on a day
when another Advance is due to be repaid.
6.2.2 The maturing Advance will be deemed to be repaid on the last day of the
Interest Period relating to such Advance either in whole (if the new
Advance is equal to or greater than the maturing Advance) or in part
(if the new Advance is less than the maturing Advance).
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6.2.3 To the extent that the maturing Advance is deemed to be repaid under
clause 6.2.2, the principal amount of the new Advance will be deemed to
be credited to the account of the Borrower by the Facility Agent on
behalf of the Lenders.
6.2.4 If the new Advance is less than the maturing Advance, the Borrower will
repay the difference.
6.2.5 If the new Advance is greater than the maturing Advance, the Lenders
will make the difference available to the Borrower.
6.3 VOLUNTARY PREPAYMENT
The Borrower may prepay its relevant Outstandings or any relevant
Advance in whole or part (being not less than $1,000,000 in any case
calculated in accordance with clause 6.8) on any Interest Payment Date
relating to the part of such Outstandings or Advance to be repaid.
Amounts prepaid pursuant to this clause 6.3 may be re-borrowed subject
always to clause 4.1 and clause 6.1.
6.4 PREPAYMENT ON LOSS AND SALE, ETC.
6.4.1 REDUCTION OF COMMITMENT
If:
(a) a Mortgaged Vessel becomes a Total Loss; or
(b) a Mortgaged Vessel is sold,
the Commitments shall be reduced on the applicable Disposal Reduction
Date by the relevant Disposal Repayment Amount. If, upon reduction of
the Commitments by such Disposal Repayment Amount, the Outstandings at
such time exceed the Commitments as thereby reduced, the Borrower shall
on such Disposal Reduction Date prepay such amount of the Outstandings
or any Advance as will ensure that immediately thereafter the
Outstandings will not exceed the Commitments as so reduced.
6.4.2 VALUATION OF MORTGAGED VESSELS
For the purposes of this clause 6.4 and to determine the Relevant
Fraction of the Commitments, the Mortgaged Vessels shall be valued in
accordance with clause 10.2.2 at the cost of the Borrower save that, in
the case of the sale of such a Mortgaged Vessel, the value of such
Mortgaged Vessel shall, for the purposes of this clause, be deemed to
be the Net Sale Proceeds of such Mortgaged Vessel or, if higher and if
the purchaser is a Subsidiary of the Borrower or the Guarantor, the
value of such Mortgaged Vessel as determined in accordance with clause
10.2.2.
6.4.3 VALUATION CONCLUSIVE AND COSTS
The values determined in accordance with clause 6.4.2 shall be binding
upon the parties hereto for the purposes of determining the Disposal
Reduction Amount for a Disposal Reduction Date and all costs in
connection with the Facility Agent obtaining any valuation for such
purpose shall be borne by the Borrower.
6.4.4 DATE OF TOTAL LOSS
For the purpose of this Agreement, a Total Loss shall be deemed to have
occurred:
(a) in the case of an actual total loss of a Mortgaged Vessel on
the actual date and at the time such Mortgaged Vessel was lost
or, if such date is not known, on the date on which such
Mortgaged Vessel was last reported;
(b) in the case of a constructive total loss of a Mortgaged
Vessel, upon the date and at the time notice of abandonment of
such Mortgaged Vessel is given to the insurers of such
Mortgaged Vessel for the time being (provided a claim for
total loss is admitted by such insurers) or, if such insurers
do not forthwith admit such a claim, at the date and at the
time at which either a total loss is subsequently admitted by
the insurers or a total loss is subsequently adjudged by
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a competent court of law or arbitration panel to have occurred
or, if earlier, the date falling six (6) months after notice
of abandonment of such Mortgaged Vessel was given to the
insurers;
(c) in the case of a compromised or arranged total loss, on the
date upon which a binding agreement as to such compromised or
arranged total loss has been entered into by the insurers of
the relevant Mortgaged Vessel;
(d) in the case of Compulsory Acquisition of a Mortgaged Vessel,
on the date upon which the Compulsory Acquisition of such
Mortgaged Vessel occurs; and
(e) in the case of hijacking, theft, condemnation, capture,
seizure, arrest, detention or confiscation of a Mortgaged
Vessel (other than where the same amounts to Compulsory
Acquisition of such Mortgaged Vessel) by any Government
Entity, or by persons purporting to act on behalf of any
Government Entity, which deprives the owner of the Mortgaged
Vessel of the use of such Mortgaged Vessel for more than
ninety (90) days, upon the expiry of the period of ninety (90)
days after the date upon which the relevant hijacking, theft,
condemnation, capture, seizure, arrest, detention or
confiscation occurred or such other longer period as agreed by
the Facility Agent on behalf of the Majority Lenders.
6.4.5 APPLICATION OF TOTAL LOSS AND SALE PROCEEDS
Default has occurred and is continuing and provided the Borrower shall
have complied with clauses 6.4 and 6.5, any of the following moneys:
(a) insurance moneys or Requisition Compensation in respect of a
Total Loss of a Mortgaged Vessel; or
(b) any proceeds of sale of a Mortgaged Vessel,
received by the Facility Agent or the Security Trustee pursuant to any
Security Document shall be paid to the Borrower or the Guarantor or (if
and to the extent necessary to ensure compliance with clause 6.4)
retained by the Facility Agent for application in or towards making any
prepayment and paying any other moneys required under clauses 6.4and
6.5. For this purpose, any such moneys so received (or the relevant
part thereof) shall be applied, in effecting any prepayment required in
accordance with clause and paying related amounts due under clause 6.5.
6.5 AMOUNTS PAYABLE ON PREPAYMENT
Any prepayment of all or part of the Outstandings under this Agreement
shall be made together with:
6.5.1 accrued interest on the amount to be prepaid to the date of such
prepayment;
6.5.2 any additional amount payable under clause 8.7 or 13.2; and
6.5.3 all others sums payable by the Borrower to the Creditors under this
Agreement or any of the other Security Documents including, without
limitation, any accrued commitment commission payable under clause
7.1.2 and any amounts payable under clause 12.
6.6 ADDITIONAL VOLUNTARY PREPAYMENT
The Borrower may also prepay (in whole but not in part only), without
premium or penalty, but without prejudice to its obligations under
clauses 5.7, 8.7 and 13.2:
6.6.1 the Outstandings of any Lender to which the Borrower shall have
become obliged to pay additional amounts under clauses 8.7 or 13.2;
or
6.6.2 any Lender's Outstandings to which a Substitute Basis applies by
virtue of clause 5.7.2.
Upon any notice of such prepayment being given, the Commitment of the
relevant Lender shall be reduced to zero and for the avoidance of
doubt, any amount prepaid under this clause 6.6 shall be applied in
reducing the Reduction Amounts proportionately amongst the Lenders.
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6.7 NOTICE OF PREPAYMENT
6.7.1 No prepayment may be effected under clause 6.3 unless the Borrower
shall have given the Facility Agent at least three (3) Banking Days'
notice of its intention to make such prepayment. Every notice of
prepayment shall be effective only on actual receipt by the Facility
Agent, shall be irrevocable, shall specify the amount to be prepaid and
shall oblige the Borrower to make such prepayment on the date
specified.
6.7.2 Any amount prepaid pursuant to clauses 6.4, 6.6or 10.2.1(a) or
cancelled pursuant to clause 6.9 shall be applied in reducing the
Advances under clause 6.1 in inverse order of their due dates for
payment/reduction. The Borrower may not prepay the Outstandings or any
part thereof save as expressly provided in this Agreement.
6.8 CURRENCY AMOUNTS REPAYABLE
Each repayment or prepayment of any Advance under this Agreement shall
be made in Dollars.
6.9 CANCELLATION
The Borrower may at any time during the Drawdown Period by notice to
the Facility Agent (effective only on actual receipt) cancel with
effect from a date not less than ten (10) days after the receipt by the
Facility Agent of such notice the whole or any part (being not less
than one million Dollars ($1,000,000) or, if less, the balance) of the
Commitments which has not then been borrowed or requested by the
Borrower in a Drawdown Notice. Any such notice of cancellation, once
given, shall be irrevocable and upon such cancellation taking effect
the Commitment of each Lender shall be reduced proportionately amongst
the Lenders. No amount cancelled under this clause 6.9 may be made
available for borrowing or re-borrowing.
7 COMMITMENT COMMISSION, FEES AND EXPENSES
7.1 FEES
The Borrower shall pay to the Facility Agent:
7.1.1 ARRANGEMENT FEE
for the account of the Arranger an arrangement fee of an amount
agreed between the Borrower and the Arranger in a separate letter
and such amount shall be paid on or before the first Drawdown Date;
7.1.2 COMMITMENT COMMISSION
on the dates falling at three (3) monthly intervals from the date
of this Agreement and for so long as any Commitments remain
available for drawing until the date of cancellation in full of the
Commitments, for the account of each Lender, commitment commission
computed from the date of this Agreement at the percentage rate per
annum on the amount of the daily undrawn and uncancelled amount of
the Commitment which is equal to fifty per cent (50%) of the Margin
applicable during each such period of calculation of commitment
commission; and
7.1.3 AGENCY FEE
an agency fee for the account of the Facility Agent in the amount
agreed between the Borrower and the Facility Agent in a separate
letter payable on the date of the first Transfer Certificate and
then in advance on each anniversary of such date until the end of
the Security Period.
The fees referred to in clause 7.1.1 shall be payable by the Borrower
to the Facility Agent whether or not any part of the relevant
Commitment is ever advanced.
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7.2 EXPENSES
The Borrower shall pay to the Facility Agent on a full indemnity basis
on demand all reasonable expenses (including legal, printing and
out-of-pocket expenses) properly incurred by any of the Creditors:
7.2.1 in connection with due diligence, the negotiation, preparation,
closing and, where relevant, registration of this Agreement and the
other Security Documents, and of any amendment or extension of or
the granting of any waiver or consent under, this Agreement or any
of the other Security Documents; and
7.2.2 in contemplation of, or otherwise in connection with, the
enforcement of, or maintenance and preservation of any rights
under, any of this Agreement and the Security Documents, or
otherwise in respect of the moneys owing under this Agreement and
any of the Security Documents,
together with interest at the rate referred to in clause 5.4 from the
date on which such expenses were invoiced to or otherwise demanded in
writing from the Borrower to the date of payment (as well after as
before judgment).
7.3 VALUE ADDED TAX
All fees and expenses payable pursuant to this clause 7 shall be paid
together with value added tax or any similar tax (if any) properly
chargeable thereon. Any value added tax chargeable in respect of any
services supplied by any Creditor under this Agreement shall, on
delivery of the value added tax invoice, be paid in addition to any sum
agreed to be paid hereunder.
7.4 STAMP AND OTHER DUTIES
The Borrower shall pay all stamp, documentary, registration or other
like duties or Taxes (including any duties or Taxes payable by the
Creditors) imposed on or in connection with this Agreement, the other
Security Documents or the Outstandings and shall indemnify the
Creditors against any liability arising by reason of any delay or
omission by the Borrower to pay such duties or Taxes.
8 PAYMENTS AND TAXES; ACCOUNTS AND CALCULATIONS
8.1 NO SET-OFF OR COUNTERCLAIM
The Borrower acknowledges that in performing their respective
obligations under this Agreement the Lenders will be incurring
liabilities to third parties in relation to the funding of amounts to
the Borrower, such liabilities matching the liabilities of the Borrower
to the Lenders and that it is reasonable for the Lenders to be entitled
to receive payments from the Borrower gross on the due date in order
that the Lenders are put in a position to perform their matching
obligations to the relevant third parties. Accordingly, all payments to
be made by the Borrower under this Agreement or any of the Security
Documents shall be made in full, without any set-off or counterclaim
whatsoever and, subject as provided in clause 8.7, free and clear of
any deductions or withholdings, in Dollars (except for costs, charges
or expenses which shall, at the request of the Facility Agent, be
payable in the currency in which they are incurred) on the due date to
the Facility Agent for the account of each Lender to such account as
the Facility Agent may from time to time specify for this purpose. Save
where this Agreement specifically provides for a payment to be made for
the account of a particular Lender (including, without limitation,
clauses 5.1, 6.3, 6.6, 6.8, 7.2, 8.7, 12.1,12.2, 12.3, 13.1 and 13.2)
in which case the Facility Agent shall distribute the relevant payment
to the Lender concerned, payments to be made by the Borrower under this
Agreement shall be for the account of all the Lenders and the Facility
Agent shall forthwith distribute such payments in like funds as are
received by the Facility Agent to the Lenders rateably in accordance
with their Commitments.
8.2 PAYMENT BY THE LENDERS
All sums to be advanced by the Lenders to the Borrower under this
Agreement shall be remitted in Dollars in the case of the drawdown of
an Advance, on the Drawdown Date to the account of the Facility Agent
at such bank as the Facility Agent may have notified to the Lenders and
shall be paid by the Facility Agent on such date in the funds as are
received by the Facility Agent to the account of the Borrower specified
in the relevant Drawdown Notice.
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8.3 NON-BANKING DAYS
When any payment under this Agreement or any of the other Security
Documents would otherwise be due on a day which is not a Banking Day,
the due date for payment shall be extended to the next following
Banking Day unless such Banking Day falls in the next calendar month in
which case payment shall be made on the immediately preceding Banking
Day.
8.4 FACILITY AGENT MAY ASSUME RECEIPT
Where any sum is to be paid under this Agreement to the Facility Agent
for the account of another person, the Facility Agent may assume that
the payment will be made when due and may (but shall not be obliged to)
make such sum available to the person so entitled. If it proves to be
the case that such payment was not made to the Facility Agent, then the
person to whom such sum was so made available shall on request refund
such sum to the Facility Agent together with interest thereon
sufficient to compensate the Facility Agent for the cost of making
available such sum up to the date of such repayment and the person by
whom such sum was payable shall indemnify the Facility Agent for any
and all loss or expense which the Facility Agent may sustain or incur
as a consequence of such sum not having been paid on its due date.
8.5 CALCULATIONS
All payments of interest in respect of an Advance shall be made in the
currency in which the Advance is outstanding at the relevant time. All
interest and other payments of an annual nature under this Agreement or
any of the other Security Documents shall accrue from day to day and be
calculated on the basis of actual days elapsed and a 360 day year.
8.6 CERTIFICATES CONCLUSIVE
Any certificate or determination of the Facility Agent as to any rate
of interest, rate of exchange or any other amount pursuant to and for
the purposes of this Agreement or any of the other Security Documents
shall be issued or given in good faith and, in the absence of manifest
error, be conclusive and binding on the Borrower.
8.7 GROSSING-UP FOR TAXES
If at any time the Borrower is required to make any deduction or
withholding in respect of Taxes from any payment due under this
Agreement or any of the other Security Documents for the account of any
Lender, the Arranger or the Facility Agent (or if the Facility Agent is
required to make any such deduction or withholding from a payment to
the Arranger or a Lender), the sum due from the Borrower in respect of
such payment shall be increased to the extent necessary to ensure that,
after the making of such deduction or withholding, each Lender, the
Arranger and the Facility Agent receives on the due date for such
payment (and retains, free from any liability in respect of such
deduction or withholding), a net sum equal to the sum which it would
have received had no such deduction or withholding been required to be
made and the Borrower shall indemnify each Lender against any losses or
costs incurred by it by reason of any failure of the Borrower to make
any such deduction or withholding or by reason of any increased payment
not being made on the due date for such payment. The Borrower shall
promptly deliver to the Facility Agent any receipts, certificates or
other proof evidencing the amounts (if any) paid or payable in respect
of any deduction or withholding as aforesaid.
8.8 CLAW-BACK OF TAX BENEFIT
If, following any such deduction or withholding as is referred to in
clause 8.7 from any payment by the Borrower, any Lender shall receive
or be granted a credit against or remission for any Taxes payable by
it, the relevant Lender shall, subject to the Borrower having made any
increased payment in accordance with clause 8.7 and to the extent that
the relevant Lender can do so without prejudicing the retention of the
amount of such credit or remission and without prejudice to the right
of the relevant Lender to obtain any other relief or allowance which
may be available to it, reimburse the Borrower with such amount as the
relevant Lender shall in good faith in its absolute discretion certify
to be the proportion of such credit or remission as will leave the
relevant Lender (after such reimbursement) in no better or worse
position than it would have been in had there been no such deduction or
withholding from the payment by the Borrower as aforesaid. Such
reimbursement shall be made
22
forthwith upon the relevant Lender certifying that the amount of such
credit or remission has been received by it. Nothing contained in this
Agreement shall oblige the relevant Lender to rearrange its tax affairs
or to disclose any information regarding its tax affairs and
computations. Without prejudice to the generality of the foregoing, the
Borrower shall not, by virtue of this clause 8.8, be entitled to
enquire about the relevant Lender's tax affairs.
8.9 BANK ACCOUNTS
Each Lender shall maintain, in accordance with its usual practices, an
account or accounts evidencing the amounts from time to time lent by,
owing to and paid to it under this Agreement. The Facility Agent shall
maintain a control account showing each Advance and other sums owing by
the Borrower under this Agreement and all payments in respect thereof
made by the Borrower from time to time. The control account shall, in
the absence of manifest error, be conclusive as to the amount from time
to time owing by the Borrower under this Agreement.
8.10 PARTIAL PAYMENTS
If, on any date on which a payment is due to be made by the Borrower
under this Agreement and/or any of the other Security Documents, the
amount received by the Facility Agent from the Borrower falls short of
the total amount of the payment due to be made by the Borrower on such
date then, without prejudice to any rights or remedies available to the
Facility Agent and the Lenders under this Agreement and/or any of the
other Security Documents, the Facility Agent shall apply the amount
actually received from the Borrower in or towards discharge of the
obligations of the Borrower under this Agreement in the following
order, notwithstanding any appropriation made, or purported to be made,
by the Borrower:
8.10.1 firstly, in or towards payment, on a pro rata basis, of any unpaid
fees, costs and expenses of the Facility Agent, the Arranger, the
Lenders (including any portion of the arrangement fee payable under
clause 7.1.1 which remains unpaid) and the Security Trustee under
this Agreement and/or the Security Documents;
8.10.2 secondly, in or towards payment to the Lenders, on a pro rata
basis, of any accrued commitment commission payable under clause
7.1.2 which shall have become due but remains unpaid;
8.10.3 thirdly, in or towards payment to the Lenders, on a pro rata basis,
of any accrued interest which shall have become due but remains
unpaid;
8.10.4 fourthly, in or towards payment to the Lenders, on a pro rata
basis, of any principal which shall have become due but remains
unpaid; and
8.10.5 fifthly, in or towards payment of any other sum which shall have
become due but remains unpaid (and, if more than one such sum so
remains unpaid, on a pro rata basis).
The order of application set out in clauses 8.10.1 to 8.10.5 shall be
varied by the Facility Agent if all the Lenders so direct, without any
reference to, or consent or approval from, the Borrower; but once the
order of application has been so varied the Facility Agent shall notify
the Borrower of that fact.
9 REPRESENTATIONS AND WARRANTIES
9.1 CONTINUING REPRESENTATIONS AND WARRANTIES
The Borrower and the Guarantor represents and warrants to the Creditors
that:
9.1.1 DUE INCORPORATION
it is duly incorporated and validly existing in good standing under
the laws of its country of incorporation, in the case of the
Borrower, as a limited liability company and, in the case of the
Guarantor, as a corporation, and has power to carry on its business
as it is now being conducted and to own its property and other
assets; the Borrower does not have a chief executive office in the
United States;
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9.1.2 CORPORATE POWER
it has power to execute, deliver and perform its obligations under
this Agreement and the other Security Documents to which it is a
party and, in the case of the Borrower, to borrow the relevant
Commitment; all necessary corporate, shareholder and other action
has been taken to authorise the execution, delivery and performance
of the same and no limitation on the powers of the Borrower to
borrow will be exceeded as a result of borrowing the relevant
Outstandings;
9.1.3 BINDING OBLIGATIONS
this Agreement and the other Security Documents to which it is a
party constitute or will, when executed, constitute valid and
legally binding obligations of the Borrower and the Guarantor
enforceable by the Security Trustee (for the benefit of the
Lenders) in accordance with their respective terms save as may be
subject to applicable bankruptcy, insolvency, moratorium or other
laws for the protection of debtors and creditors generally, and to
the principles of equity;
9.1.4 NO CONFLICT WITH OTHER OBLIGATIONS
the execution and delivery of, the performance of its obligations
under, and compliance with the provisions of, this Agreement and
the Security Documents to which it is a party will not :
(a) contravene any existing applicable law, statute, rule or
regulation or any judgment, decree or permit to which the
Borrower or the Guarantor is subject;
(b) conflict with, or result in any breach of any of the terms of,
or constitute a default under, any agreement or other
instrument to which the Borrower or the Guarantor is a party
or is subject or by which it or any of its property is bound;
(c) contravene or conflict with any provision of the
constitutional documents or other organisational documents of
the Borrower or the Guarantor; or
(d) result in the creation or imposition of or oblige the Borrower
or the Guarantor to create any Encumbrance (other than a
Permitted Encumbrance) on any of the undertakings, assets,
rights or revenues of the Borrower or the Guarantor;
9.1.5 NO LITIGATION
save as disclosed to the Facility Agent in writing on or before the
date of this Agreement, no litigation, arbitration or
administrative proceeding is taking place, pending or, to the
knowledge of the officers of the Borrower or the Guarantor,
threatened against the Borrower or the Guarantor which is likely to
have a Material Adverse Effect on the Borrower or the Guarantor;
9.1.6 NO FILINGS REQUIRED
save for the registration of each of the Mortgages with the
relevant Registry under the laws of the relevant Flag State it is
not necessary to ensure the legality, validity, enforceability or
admissibility in evidence of this Agreement or any of the other
Security Documents nor that they or any other instrument be
notarised, filed, recorded, registered or enrolled in any court,
public office or elsewhere in any Relevant Jurisdiction or that any
stamp, registration or similar tax or charge be paid in any
Relevant Jurisdiction on or in relation to this Agreement or the
Security Documents and each of this Agreement and the Security
Documents is in proper form for its enforcement in the courts of
each Relevant Jurisdiction;
9.1.7 CHOICE OF LAW
the choice of English law by the Borrower and the Guarantor to
govern this Agreement, and the other Security Documents to which it
is a party (other than those Mortgages relating to Mortgaged
Vessels not registered in the United Kingdom) and the submissions
by the Borrower and each Guarantor to the jurisdiction of the
English courts is valid and binding;
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9.1.8 NO IMMUNITY
neither the Borrower, the Guarantor nor any of their respective
assets are entitled to immunity on the grounds of sovereignty or
otherwise from any legal action or proceeding (which shall include,
without limitation, suit, attachment prior to judgement, execution
or other enforcement);
9.1.9 FINANCIAL STATEMENTS CORRECT AND COMPLETE
the Annual Financial Statements of the Borrower and the Guarantor
in respect of the financial year ended on 31st December 2003 as
delivered to the Facility Agent have been prepared in accordance
with U.S. GAAP (and, in the case of the Borrower, the generally
accepted accounting principles of the jurisdiction in which it is
incorporated) and present fairly and accurately the financial
position of the Guarantor and the consolidated financial position
of the Guarantor and its Related Companies as at such date and the
results of the operations of the Guarantor and the consolidated
results of the operations of the Guarantor and its Related
Companies for the financial year ended on such date and, as at such
date, the Guarantor nor any of the Guarantor's Related Companies
had any significant liabilities (contingent or otherwise) or any
unrealised or anticipated losses which are not disclosed by, or
reserved against or provided for in, such financial statements in
respect of the period to which the financial statements relate;
9.1.10 CONSENTS OBTAINED
every consent, authorisation, licence or approval of, or
registration with or declaration to, governmental or public bodies
or authorities or courts required by the Borrower or the Guarantor
to authorise, or required by the Borrower in connection with, the
execution, delivery, validity, enforceability or admissibility in
evidence of this Agreement and each of the other Security Documents
or the performance by the Borrower or the Guarantor of its
obligations under this Agreement and the other Security Documents
to which it is a party has been obtained or made and is in full
force and effect and there has been no default in the observance of
any of the conditions or restrictions (if any) imposed in, or in
connection with, any of the same;
9.1.11 NO DEFAULT
no Default has occurred and is continuing;
9.1.12 COMPLIANCE WITH ENVIRONMENTAL LAWS AND APPROVALS
except as may already have been disclosed by the Borrower or the
Guarantor in writing to, and acknowledged in writing by, the
Facility Agent:
(a) the Borrower and the Guarantor and the other Relevant Parties
and their respective Environmental Affiliates have complied in
all material respects with the provisions of all applicable
Environmental Laws;
(b) the Borrower and the Guarantor and the other Relevant Parties
and their respective Environmental Affiliates have obtained
all necessary Environmental Approvals and are in compliance in
all material respects with all such Environmental Approvals;
(c) the Borrower or the Guarantor or any other Relevant Party or
any of their respective Environmental Affiliates has received
notice of any Environmental Claim that the Borrower, the
Guarantor or any other Relevant Party or any such
Environmental Affiliate is not in compliance in any material
respect with any Environmental Law or any Environmental
Approval; and
(d) there has been no Environmental Incident;
9.1.13 NO ENVIRONMENTAL CLAIMS
except as may already have been disclosed by the Borrower or the
Guarantor in writing to, and acknowledged in writing by, the
Facility Agent there is no Environmental Claim pending or, to the
best of the Borrowers' or the Guarantor's knowledge and belief,
threatened against:
(a) the Borrower, the Guarantor or any Mortgaged Vessel; or
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(b) (having made due enquiry) any other Relevant Party or any
other Relevant Vessel or any of their respective Environmental
Affiliates which the Borrower or the Guarantor reasonably
believes could be determined by the Majority Lenders as having
a Material Adverse Effect on the Borrower or the Guarantor;
9.1.14 NO POTENTIAL ENVIRONMENTAL CLAIMS
except as may already have been disclosed by the Borrower or the
Guarantor in writing to, and acknowledged in writing by, the
Facility Agent, there has been no emission, Spill, release or
discharge of a Pollutant from any Mortgaged Vessel or any other
Relevant Vessel owned by, managed or crewed by or chartered to the
Borrower or the Guarantor nor to the best of the Borrower's or the
Guarantor's knowledge and belief (having made due enquiry) from any
Relevant Vessel owned by, managed or crewed by or chartered to any
other Relevant Party which could give rise to an Environmental
Claim which might have a Material Adverse Effect on the Borrower or
the Guarantor;
9.1.15 NO OTHER ENVIRONMENTAL PROBLEMS
except as may have already been disclosed by the Borrower prior to
the date of this Agreement in writing to and acknowledged in
writing by, the Facility Agent, to the best of the knowledge and
belief of the Borrower and the Guarantor and their respective
directors and other officers (having made due enquiry) there are no
circumstances arising from any breach of Environmental Laws or
which may give rise to an Environmental Claim which constitutes, or
may give rise to, the Event of Default specified in clause 11.1.27;
9.1.16 NO MATERIAL ADVERSE EFFECT
there has been no event or circumstance during the period of the
negotiation of and prior to the date of this Agreement which the
Borrower or the Guarantor reasonably believes could be determined
by the Majority Lenders as having a Material Adverse Effect on the
Borrower or the Guarantor;
9.1.17 COMPLIANCE WITH ISM CODE AND ISPS CODE
the Borrower and the Guarantor has complied at all material times
in all material respects with the ISM Code and the ISPS Code; and
9.1.18 LIABILITY TO TAXATION
(a) all Taxation for which the Borrower or the Guarantor is liable
has, where such tax was due on or before the date of this
Agreement, been paid or, where such tax was not yet due on or
before the date of this Agreement, been fully provided for in
the Annual Financial Statements; and/or
(b) the Borrower or the Guarantor has not in the period of three
(3) years ending on the date hereof paid or become liable to
pay any penalty or interest charged by virtue of any
provisions relating to Taxation,
except, in either case, such Taxes and/or penalty or interest
charged, as the case may be, which is being disputed in good faith
by the Borrower and/or the Guarantor, as the case may be, and has
been disclosed in writing to the Facility Agent; and
9.1.19 PARENT COMPANY
the Borrower is a wholly owned Subsidiary of the Guarantor.
9.2 INITIAL REPRESENTATIONS AND WARRANTIES
The Borrower and the Guarantor further represents and warrants to the
Creditors that as at the date of this Agreement:
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9.2.1 PARI PASSU
the obligations of the Borrower and the Guarantor under this
Agreement are direct, general and unconditional obligations of the
Borrower and the Guarantor and rank at least pari passu with all
other present and future unsecured and unsubordinated Indebtedness
of the Borrower and the Guarantor, respectively;
9.2.2 INFORMATION
all written information furnished by any Security Party to the
Lenders in connection with the negotiation and preparation of this
Agreement was in the opinion of the Borrower and the Guarantor
(formed on a reasonable basis):
(a) correct and complete in all material respects; and
(b) did not contain any untrue statement of a material fact or, in
relation to its subject matter and the purpose for which it
was provided, omit to state a material fact the absence of
which would make the statements contained in that information
misleading in the light of the circumstances under which they
were made when read by a person interpreting them reasonably;
9.2.3 NO WITHHOLDING TAXES
no Taxes are imposed by withholding or otherwise on any payment to
be made by the Borrower or the Guarantor under this Agreement or
the other Security Documents or are imposed on or by virtue of the
execution or delivery by the Security Parties of this Agreement or
the other Security Documents or any other document or instrument to
be executed or delivered under this Agreement or any of the other
Security Documents;
9.2.4 THE MORTGAGED VESSELS
each Mortgaged Vessel will on the first Drawdown Date be:
(a) in the absolute ownership of the Borrower or the Guarantor who
will on and after the first Drawdown Date be the sole, legal
and beneficial owner of any Mortgaged Vessel;
(b) permanently registered in the name of the Borrower or the
Guarantor through the relevant Registry as a vessel under the
laws and flag of the relevant Flag State;
(c) operationally seaworthy and in every way fit for service
unless undergoing scheduled drydocking and maintenance; and
(d) classed with the Classification free of all conditions and
recommendations of the Classification Society that would
affect the maintenance of class;
9.2.5 MORTGAGED VESSEL'S EMPLOYMENT
no Mortgaged Vessel will on or before the first Drawdown Date be
subject to any charter or contract or to any agreement to enter
into any charter or contract other than a Permitted Charter which,
if entered into after the date of the relevant Mortgage would have
required the consent of the Lenders under clauses 10.5.9 or 10.5.15
and on or before the first Drawdown Date there will not be any
agreement or arrangement whereby the Earnings may be shared with
any other person;
9.2.6 FREEDOM FROM ENCUMBRANCES
none of the Mortgaged Vessels, nor their Earnings, Insurances or
Requisition Compensation nor any other properties or rights which
are, or are to be, the subject of this Agreement or any of the
Security Documents nor any part thereof will be, on the first
Drawdown Date, subject to any Encumbrance other than Permitted
Encumbrances; and
9.2.7 COPIES TRUE AND COMPLETE
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the copies of the documents delivered or to be delivered to the
Facility Agent pursuant to clause 9.1 are, or will when delivered
be, a true and complete copies of such documents; such documents
will when delivered constitute valid and binding obligations of the
parties thereto enforceable in accordance with its terms and there
will have been no amendments or variations thereof or defaults
thereunder.
9.3 REPETITION OF REPRESENTATIONS AND WARRANTIES
On and as of each Drawdown Date and on each Interest Payment Date the
Borrower and the Guarantor shall be deemed to repeat the
representations and warranties in clause 9.1 (and so that the
representation and warranty in clause 9.1.9 and 9.1.18 shall for this
purpose refer to the then latest audited financial statements delivered
to the Creditors under clause 10.1.5 as if made with reference to the
facts and circumstances existing on such day.
9.4 CONFIRMATION OF REPRESENTATION AND WARRANTIES
the Guarantor confirms that the representation and warranties made and
repeated by the Borrower under this Agreement and the other Security
Documents will, when made and repeated by the Borrower, be complete,
accurate, correct and, not materially misleading.
10 UNDERTAKINGS
10.1 GENERAL
The Borrower and the Guarantor undertakes with each of the Creditors
that, from the date of this Agreement and so long as any moneys are
owing under this Agreement or any of the other Security Documents and
while all or any part of the Commitment remains outstanding, it will:
10.1.1 NOTICE OF DEFAULT
promptly inform the Facility Agent of any occurrence of which it
becomes aware which acting reasonably and in good faith it believes
would adversely affect the ability of any Security Party to perform
its obligations under this Agreement or any of the other Security
Documents and, without limiting the generality of the foregoing,
will inform the Facility Agent of any Default forthwith upon
becoming aware thereof and will from time to time, if so requested
by the Facility Agent, confirm to the Facility Agent in writing (in
a certificate signed by one (1) authorised officer (or as otherwise
required by its constitutive documents) of the Borrower and
delivered to the Facility Agent no later than seven (7) days after
having been requested) that, save as otherwise stated in such
confirmation, no Default has occurred and is continuing;
10.1.2 CONSENTS AND LICENCES
without prejudice to clauses 9.1 and 9.3 obtain or cause to be
obtained, maintain in full force and effect and comply in all
material respects with the conditions and restrictions (if any)
imposed in, or in connection with, every consent, authorisation,
licence or approval of governmental or public bodies or authorities
or courts and do, or cause to be done, all other acts and things
which may from time to time be required under applicable law for
the continued due performance of all the obligations of the
Security Parties under this Agreement and each of the other
Security Documents;
10.1.3 USE OF PROCEEDS
use the Outstandings exclusively for the purposes specified in
clause 1.1;
10.1.4 PARI PASSU
ensure that its obligations under this Agreement shall, without
prejudice to the provisions of clause 10.3, at all times rank at
least pari passu with all its other present and future unsecured
and unsubordinated Indebtedness with the exception of any
obligations which are mandatorily preferred by law and not by
contract;
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10.1.5 FINANCIAL STATEMENTS
in the case of the Borrower, prepare Annual Financial Statements in
accordance with generally accepted accounting principles in the
jurisdiction in which the Borrower is incorporated and, in the case
of the Guarantor, prepare Annual Financial Statements in accordance
with U.S. GAAP in respect of each financial year and cause the same
to be reported on by the Auditors and, in the case of the
Guarantor, prepare Quarterly Financial Statements on the same basis
as the Annual Financial Statements and deliver sufficient copies of
the same to the Facility Agent for distribution to the Lenders as
soon as practicable but not later than one hundred and twenty (120)
days (in the case of Annual Financial Statements to be prepared by
the Guarantor) or one hundred and eighty (180) days (in the case of
the Annual Financial Statements to be prepared by the Borrower) or
sixty (60) days (in the case of Quarterly Financial Statements)
(or, in any such case, such longer period as may be agreed in
writing by the Facility Agent) after the end of the financial
period to which they relate;
10.1.6 CERTIFICATE OF COMPLIANCE WITH CLAUSE 10.6
at the same time as the Guarantor delivers to the Facility Agent,
pursuant to clause 10.1.5, copies of the Annual Financial
Statements or Quarterly Financial Statements (as the case may be)
the Guarantor shall provide a statement signed by at least two
officers (including the Chief Financial Officer or another senior
officer) (in substantially the form set out in Schedule 6)
confirming:
(a) that such Annual Financial Statements or Quarterly Financial
Statements were prepared in accordance with U.S. GAAP (and, in
the case of the Borrower, the generally accepted accounting
principles of the jurisdiction in which it is incorporated);
(b) that as at the date to which the relevant financial statements
are made up, the Guarantor was in compliance with the
covenants and undertakings set out in clause 10.6 (or, if it
was not in such compliance, indicating the extent of the
breach and the steps intended to be taken to remedy the same);
and
(c) that, as at the date not more than seven (7) days prior to the
delivery of the certificate, no Default has occurred and is
continuing (or, if such is not the case, specifying the same);
10.1.7 DELIVERY OF REPORTS
deliver to the Facility Agent as many copies as the Facility Agent
may reasonably require of every report, circular, SEC filing,
notice or like document issued by the Guarantor and the Borrower to
their respective shareholders or creditors generally;
10.1.8 PROVISION OF FURTHER INFORMATION
provide the Facility Agent with such financial and other
information concerning the Guarantor and the Borrower, their
respective Related Companies, the other Security Parties and their
respective affairs as the Majority Lenders may from time to time
reasonably require; and
10.1.9 OBLIGATIONS UNDER SECURITY DOCUMENTS
duly and punctually perform each of the obligations expressed to be
assumed by it under this Agreement and any of the other Security
Documents to which it is a party.
10.2 SECURITY VALUE MAINTENANCE
10.2.1 SECURITY SHORTFALL
If at any time any Security Value shall be less than the relevant
Security Requirement, the Facility Agent shall (upon the instructions
of the Lenders) give notice to the Borrower requiring that such
deficiency be remedied and then the Borrower shall (unless any relevant
Mortgaged Vessel has become a Total Loss (in which case clause 6.4
shall apply)) either:
(a) prepay within a period of fifteen (15) days of the date of
receipt by the Borrower of the Facility Agent's said notice
such sum in Dollars as will result in the relevant Security
Requirement
29
after such prepayment (taking into account any other repayment
of the Outstandings made between the date of the notice and
the date of such prepayment) being equal to the corresponding
Security Value; or
(b) within fifteen (15) days of the date of receipt by the
Borrower of the Facility Agent's said notice constitute to the
satisfaction of the Lenders such further security for the
Outstandings as shall be acceptable to the Security Trustee
having a value for security purposes at the date upon which
such further security shall be constituted which, when added
to the relevant Security Value, shall not be less than the
corresponding Security Requirement as at such date,
and until the Facility Agent is satisfied with any action taken
pursuant to paragraph (a) or paragraph (b) above, the Borrower shall
not be entitled to drawdown or continue any further Advances. Clause
6.5 shall apply to prepayments under clause 10.2.1(a);
10.2.2 VALUATION OF MORTGAGED VESSELS
(a) The Mortgaged Vessels shall, for the purposes of this clause
10.2.2, be valued in Dollars, on each Annual Valuation Date by
two (2) of the Approved Valuers selected by the Borrower (each
such valuation to be made without, unless required by the
Facility Agent on behalf of the Lenders, physical inspection,
and on the basis of a sale for prompt delivery for cash at
arms length on normal commercial terms as between a willing
buyer and a willing seller without taking into account the
benefit of any charterparty or other engagement concerning the
Mortgaged Vessels). At any time when:
(i) there are moneys outstanding under this Agreement on a
Semi-Annual Valuation Date; and/or
(ii) a drawdown is requested more than six (6) months after
the most recent Annual Valuation Date when no valuations
have been obtained on the most recent Semi-Annual
Valuation Date,
the Mortgaged Vessels shall be valued on the basis described in
the preceding sentence of this clause 10.2.2(a).
The Borrower shall procure that each valuation obtained under
this clause 10.2.2 shall be delivered by the Approved Valuers to
the Facility Agent at the same time as they are delivered to the
Borrower no later than four (4) days before each Valuation Date.
Subject to clause 10.2.2(b) the mean of the valuations of the
Mortgaged Vessels attributed to the Borrower at any relevant time
pursuant to clause 10.2.2 shall constitute the Security Value for
the purposes of this clause 10.2.
(b) If the Facility Agent is not satisfied with the valuation of
any of the Mortgaged Vessels, the Facility Agent shall be
entitled to request a valuation by a third Approved Valuer in
respect of any such Mortgaged Vessel or Vessels, as the case
may be. The Facility Agent shall (in its absolute discretion)
be entitled to discard one of the earlier valuations and
substitute the third valuation therefore and the mean of the
remaining valuations shall constitute the Security Value for
the purposes of this clause 10.2.
(c) If at any time between valuations of any of the Mortgaged
Vessels, the Lenders are reasonably of the opinion that the
value of any Mortgaged Vessel may have materially deteriorated
since its most recent valuation, the Facility Agent, on behalf
of the Lenders, shall be entitled to request a new valuation
by an Approved Valuer (an "Intermediate Valuation") of such
Mortgaged Vessel or Vessels, as the case may be. The Facility
Agent shall (in its absolute discretion) be entitled to
discard the earlier valuations and substitute the Intermediate
Valuation therefore.
(d) The value of the Mortgaged Vessels determined in accordance
with the provisions of this clause 10.2 shall be binding upon
the parties hereto until such time as any further such
valuations shall be obtained.
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10.2.3 INFORMATION
The Borrower and the Guarantor undertake to the Facility Agent to
supply to the Facility Agent and to any such shipbrokers such
information concerning each relevant Mortgaged Vessel and its condition
as such shipbrokers may reasonably require for the purpose of making
any such valuation.
10.2.4 COSTS
All reasonable costs in connection with the Facility Agent obtaining
any valuation of the Mortgaged Vessels referred to in clause 10.2.2(a)
and 10.2.1(b), and any valuation either of any additional security for
the purposes of ascertaining the Security Value at any time or
necessitated by the Borrower electing to constitute additional security
pursuant to clause 10.2.1(b) shall be borne by the Borrower. All
reasonable costs in connection with the Facility Agent obtaining any
valuation of the Mortgaged Vessels referred to in clause 10.2.2(c)
shall be borne equally by the Lenders and the Borrower.
10.2.5 VALUATION OF ADDITIONAL SECURITY
For the purpose of this clause 10.2, the market value of any additional
security provided or to be provided to the Security Trustee shall be
determined in good faith by the Security Trustee subject to the
approval of the Lenders without any necessity for the Security Trustee
assigning any reason thereto.
10.2.6 DOCUMENTS AND EVIDENCE
In connection with any additional security provided in accordance with
this clause 10.2, the Facility Agent shall be entitled to receive such
evidence and documents of the kind referred to in Schedule 4 as may in
the Facility Agent's reasonable opinion be appropriate and such
favourable legal opinions as the Facility Agent shall in its absolute
discretion require in good faith.
10.3 VESSEL SUBSTITUTION
The Borrower or the Guarantor may substitute one or more vessels
(collectively, the "NEW VESSELS" and each a "NEW VESSEL") for any of
the vessels listed in Schedule 2 (collectively, the "ORIGINAL VESSELS"
and each an "ORIGINAL VESSEL") provided that each New Vessel shall:
10.3.1 be built no earlier than 1996;
10.3.2 be an offshore supply vessel of the Borrower's usual quality and
standard or otherwise approved by the Facility Agent;
10.3.3 have a Fair Market Value equal to or greater than that of the
Original Vessel for which the substitution is made; and
10.3.4 shall maintain a Classification and Flag acceptable to the Facility
Agent,
and for the purposes of this clause 10.3 any New Vessel shall become an
Original Vessel once it has satisfied the requirements of being a
Mortgaged Vessel as listed in the definition thereof.
10.4 NEGATIVE UNDERTAKINGS
The Guarantor shall ensure that, from the date of this Agreement and so
long as any moneys are owing under this Agreement or any of the
Security Documents and while all or any part of the Commitment remains
outstanding, neither it, the Borrower or any Related Company, will,
without the prior written consent of the Facility Agent (acting on the
instructions of the Lenders) (such consent not to be unreasonably
withheld or delayed):
10.4.1 NO MERGER
merge or consolidate with any other person, enter into any demerger
transaction or participate in any other type of corporate
reconstruction other than by and amongst Group companies where the
31
prior written consent of the Lenders has been obtained (such
consent not to be unreasonably withheld);
10.4.2 DISPOSALS
except as permitted by the listed exceptions below, sell, transfer,
abandon, lend or otherwise dispose of or cease to exercise direct
control over a Material Part of the Business of the Guarantor or
the Borrower.
The exceptions referred to above are:
(a) transfers, sales or disposals of assets for full consideration
on an arm's length basis and in the ordinary course of trading
whether by one or a series of transactions related or not,
including transfers, disposals or sales which are made in or
by way of exchange for other assets of comparable or superior
type, value or quality; or
(b) sales, disposals, transfers, abandonments, loans or cessations
or direct control of a Material Part of the Business of the
Borrower to the Guarantor or to any of its directly or
indirectly wholly-owned Subsidiaries; or
(c) the sale, disposal or transfer by the Borrower or the
Guarantor of any Mortgaged Vessel pursuant to clause 10.5.14;
or
(d) any other sale, transfer, abandonment, lending or other
disposal or cessation of direct control of any undertaking,
asset, right or revenue expressly permitted under this
Agreement or any of the other Security Documents.
For the purpose of this clause 10.4.2, in relation to any relevant
person, a "MATERIAL PART OF THE BUSINESS" is any part of the
undertaking, assets, rights and revenues of that person which has a
book value of 15% or more of the book value of the whole); and
10.4.3 OTHER BUSINESS
undertake any business other than the business currently conducted
by it as at the date of this Agreement.
10.5 MORTGAGED VESSEL COVENANTS
The Borrower and the Guarantor hereby covenants with each of the
Creditors and undertakes throughout the Security Period that it will:
10.5.1 INSURANCE
(a) INSURED RISKS, AMOUNTS AND TERMS
insure and keep its Mortgaged Vessels insured free of cost
and expense to the Security Trustee and in the name of the
Borrower or the Guarantor (but in the case of the insurances
referred to in sub-paragraph (i) below, no other person, save
with the prior written consent of the Security Trustee and
subject to such person having executed to the satisfaction of
the Security Trustee, a first priority assignment in favour
of the Security Trustee of such person's interest in the
Insurances of such Mortgaged Vessel on similar terms to the
assignment in the relevant Collateral Deed) or, if so
required by the Security Trustee, in the joint names of the
Borrower or the Guarantor and the Security Trustee, the
Facility Agent and/or the Lenders (but without liability on
the part of the Security Trustee, the Facility Agent and/or
the Lenders for premiums or calls):
(i) the hull and machinery against fire and usual marine
risks (including excess risks) and, subject to clause
10.5.1(o) war risks, on an agreed value basis, in such
amounts (but not in any event less than, in the case of
each Mortgaged Vessel, the higher of (A) one hundred and
twenty five percent (125%) of the Relevant Insured
Amount for such Mortgaged Vessel and (B) its market
value as most recently determined in accordance with
clause 10.2.2 prior to the commencement of the period of
the relevant policy) and
32
upon such terms as shall from time to time be approved
in writing by the Security Trustee; and
(ii) against protection and indemnity risks including
pollution risks for a minimum amount of $500,000,000 or
such higher or lower maximum amount of cover against
pollution risks as shall at any time be available by
entry of the relevant Mortgaged Vessel with, and/or
arrangement by, and/or under any cover arranged by, or
through either a protection and indemnity association
which is a member of either the "International Group" of
protection and indemnity associations (or any successor
organisation designated by the Security Trustee for this
purpose) or the International Group (or such successor
organisation) itself or, if the International Group or
any such successor ceases to exist or ceases to provide
or arrange any cover for pollution risks, or any
supplemental cover for pollution risks over and above
that afforded by the basic entry of the Mortgaged Vessel
with its protection and indemnity association, the
maximum aggregate amount of cover against pollution
risks as shall be available on the open market and by
basic entry with a protection and indemnity association
provided that, if the Mortgaged Vessel in question has
ceased trading or is in lay up (and its cargo fully
discharged) and in either case has discharged all cargo,
the level of pollution risks cover afforded by ordinary
protection and indemnity cover available through a
member of the International Group or such successor
organisation or, as the case may be, on the open market
in such circumstances shall be sufficient for such
purpose) for vessels of the same type, size, age and
flag as the relevant Mortgaged Vessel) for the full
value and tonnage of such Mortgaged Vessel (as approved
in writing by the Security Trustee) and upon such terms
as shall from time to time be approved in writing by the
Security Trustee by reference to customary market
practice;
and pay the Security Trustee the cost (as conclusively
certified by the Security Trustee) of any other insurance
cover which the Security Trustee may from time to time effect
in respect of any Mortgaged Vessel and/or in respect of the
interest of any or all of the Creditors in relation to such
Mortgaged Vessel or potential third party liability of any or
all of the Creditors in relation to such Mortgaged Vessel as
the Security Trustee shall reasonably deem desirable having
regard to (1) any limitations in respect of amount or extent
of cover which may from time to time be applicable to any of
the other insurances referred to in this clause 10.5.1 and
are not customarily applicable on the date of this Agreement
and/or (2) any change in the practice of leading lenders
providing loans to finance vessels of a type or category
similar to the Mortgaged Vessels which carry Pollutants as to
the insurances which they require to be taken out to protect
their security interests in the Mortgaged Vessels and/or
their liability to third parties as a consequence of
financing the Mortgaged Vessels and/or taking a security
interest in such Mortgaged Vessels and/or (3) changes of
applicable laws (or the judicial or official interpretation
thereof) concerning the priority of Environmental Claims as
against vessel mortgages and/or the liability of mortgagees
and lenders in relation to Environmental Claims;
(b) APPROVED BROKERS, INSURERS AND ASSOCIATIONS
effect the Insurances aforesaid in Dollars or such other
currency as the Security Trustee (acting on the instructions
of the Majority Lenders) may approve and through the Approved
Brokers (if any) and with such insurance companies and/or
underwriters as shall from time to time be approved in
writing by the Security Trustee (acting on the instructions
of the Majority Lenders); provided however that the
insurances against war risks and protection and indemnity
risks may be effected by the entry of any Mortgaged Vessel
with such war risks and protection and indemnity associations
as shall from time to time be approved in writing by the
Security Trustee (acting on instructions of the Majority
Lenders);
(c) FLEET LIENS, SET OFF AND CANCELLATION
if any of the insurances referred to in 10.5.1(a) form part
of a fleet cover, procure that the Approved Brokers shall
undertake to the Security Trustee that they shall neither set
off against any claims in respect of any Mortgaged Vessel any
premiums due in respect of other vessels under such fleet
cover or any premiums due for other insurances, nor cancel
the insurance for reason of non-payment of premiums for other
vessels under such fleet cover or of premiums for such other
insurances, and shall undertake to issue a separate policy in
respect of each Mortgaged Vessel;
33
(d) PAYMENT OF PREMIUMS AND CALLS
punctually pay all premiums, calls, contributions or other
sums payable in respect of all such insurances and produce
all relevant receipts or other evidence of payment when so
required by the Security Trustee;
(e) RENEWAL
at least fourteen (14) days (or such shorter period as the
Security Trustee may from time to time agree) before the
relevant policies, contracts or entries expire, notify the
Security Trustee of the names of the brokers and/or the war
risks and protection and indemnity associations proposed to
be employed by the Borrower or the Guarantor or any other
party for the purposes of the renewal of such insurances and
of the amounts in which such insurances are proposed to be
renewed and the risks to be covered and, subject to
compliance with any requirements of the Security Trustee
pursuant to this clause 10.5.1, that the Approved Brokers
and/or the approved war risks and protection and indemnity
associations will at least seven (7) days before such expiry
(or within such shorter period as the Security Trustee may
from time to time agree) confirm in writing to the Security
Trustee whether or not there is likely to be any changes in
the names of the brokers and/or war risks and protection and
indemnity associations and advise when it is expected that
such renewals shall be effected in accordance with the
instructions so given provided always that the renewal is
effected before the then current insurances expire;
(f) GUARANTEES
arrange for the execution and delivery of such guarantees or
indemnities as may from time to time be required by any
protection and indemnity or war risks association;
(g) HULL POLICY DOCUMENTS, NOTICES, LOSS PAYABLE CLAUSES AND
BROKERS' UNDERTAKINGS
deposit with the Approved Brokers (or procure the deposit of)
all slips, cover notes, policies, certificates of entry or
other instruments of Insurance from time to time issued in
connection with such of the insurances referred to in clause
10.5.1 as are effected through the Approved Brokers and
procure that the interest of the Security Trustee, the
Facility Agent and the Lenders shall be endorsed thereon by
incorporation of the relevant Loss Payable Clause and by
means of a Notice of Assignment of Insurances (signed by the
Borrower and by any other assured who shall have assigned its
interest in the Insurances to the Security Trustee) and that
the Security Trustee shall be furnished with pro forma copies
thereof and, unless the insurances are placed, to the
satisfaction of the Security Trustee, upon the terms of the
Norwegian Marine Insurance Plan of 1996 as amended, a letter
or letters of undertaking from the Approved Brokers in such
form as shall from time to time be required by the Security
Trustee by reference to customary market practice;
(h) ASSOCIATIONS' LOSS PAYABLE CLAUSES, UNDERTAKINGS AND
CERTIFICATES
procure that any protection and indemnity and/or war risks
associations in which any Mortgaged Vessel is for the time
being entered shall endorse the relevant Loss Payable Clause
on the relevant certificate of entry or policy and shall
furnish the Security Trustee with a copy of such certificate
of entry or policy and, unless the insurances are placed, to
the satisfaction of the Security Trustee, upon the terms of
the Norwegian Marine Insurance Plan of 1996 as amended, a
letter or letters of undertaking in such form as shall from
time to time be required by the Security Trustee by reference
to customary market practice;
(i) EXTENT OF COVER AND EXCLUSIONS
take all necessary action and comply with all requirements
which may from time to time be applicable to the Insurances
(including, without limitation, the making of all requisite
declarations within any prescribed time limits and the
payment of any additional premiums or calls) so as to ensure
that the Insurances are not made subject to any exclusions or
qualifications to which the Security Trustee has not given
its prior written consent and are otherwise maintained on
terms and conditions from time to time approved in writing by
the Security Trustee pursuant to this Agreement;
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(j) INDEPENDENT REPORT
if so requested by the Security Trustee where there has, in
the reasonable opinion of the Majority Lenders, been a
significant change in circumstances or the insurance
arrangements or the status of any insurer or association
which may, in the reasonable opinion of the Majority Lenders,
adversely affect the interests of the Lenders, but at the
cost of the Borrower, furnish the Security Trustee from time
to time with a detailed report signed by an independent firm
of marine insurance brokers appointed by the Security Trustee
dealing with the Insurances maintained on any Mortgaged
Vessel and stating the opinion of such firm as to the
adequacy thereof;
(k) COLLECTION OF CLAIMS
do all things necessary and provide all documents, evidence
and information to enable the Security Trustee to collect or
recover any moneys which shall at any time become due in
respect of the Insurances;
(l) EMPLOYMENT OF MORTGAGED VESSELS
not employ any Mortgaged Vessel or suffer such Mortgaged
Vessel to be employed otherwise than in conformity with the
terms of the Insurances (including any warranties express or
implied therein) without first obtaining the consent of the
insurers to such employment and complying with such
requirements as to extra premium or otherwise as the insurers
may prescribe;
(m) APPLICATION OF RECOVERIES
apply all sums receivable under the Insurances which are paid
to the Borrower or the Guarantor in accordance with the Loss
Payable Clauses in repairing all damage and/or in discharging
the liability in respect of which such sums shall have been
received;
(n) FURTHER INSURANCE ASSIGNMENTS
unless the relevant Mortgaged Vessel is insured against the
risks referred to in clause 10.5.1(a)(i) upon the terms of
the Norwegian Insurance Plan of 1996 as amended, not permit
the insurances referred to in such clause to be effected in
the name of any person (other than the Security Trustee
and/or the other Creditors) unless such person has to the
satisfaction of the Security Trustee executed a first
priority assignment of the Security Trustee of such person's
interest in the Insurances of such Mortgaged Vessel on
similar terms (mutatis mutandis) to the assignment by the
Borrower or the Guarantor in the relevant Collateral Deed;
(o) UNAVAILABILITY OF INSURANCES
If requested to do so by the Borrower and if in the absolute
discretion of the Facility Agent (acting upon the
instructions of the Lenders) the requirement of the Borrower
and/or of the Guarantor to provide war risk insurance in
accordance with the terms of this Agreement and/or any of the
other Security Documents is not capable of fulfilment by
Insurance placed in the marine insurance market through first
class insurers of internationally recognised responsibility
and standing or is a requirement that is not capable of
fulfilment at premium levels which are commercially sensible
then the Borrower and/or the Guarantor and the Facility Agent
(acting upon the instructions of the Lenders) shall negotiate
together in good faith for a period not exceeding ninety (90)
days with a view to agreeing such amendments to the
requirements of this Agreement and/or any of the other
Security Documents as shall be necessary to take account of
(i) the current practice of the marine insurance market in
respect of war risks; and (ii) levels and scope and terms of
cover available in the marine insurance market, in respect of
war risks, at premium levels which are, in the absolute
discretion of the Facility Agent (acting upon the
instructions of the Lenders), commercially sensible.
35
10.5.2 MORTGAGED VESSEL'S NAME AND REGISTRATION
(a) not change the name of any Mortgaged Vessel without first
notifying the Facility Agent and so long as any such change in
name does not jeopardise the Insurances relating to any such
Mortgaged Vessel;
(b) keep each Mortgaged Vessel registered under the laws of its
Flag State at the relevant port of Registry;
(c) not do or suffer to be done anything, or omit to do anything
the doing or omission of which could or might result in such
registration being forfeited or imperilled or which could or
might result in a Mortgaged Vessel being required to be
registered otherwise than under the laws of its Flag State at
the relevant port of Registry;
(d) not register any Mortgaged Vessel or permit its registration
under any other flag or at any other port without the prior
written consent of the Lenders (such consent not to be
unreasonably withheld or delayed);
(e) if the said registration of a Mortgaged Vessel is for a
limited period, renew the registration of such Mortgaged
Vessel at least fifteen (15) days prior to the expiry of such
registration and provide evidence of such renewal to the
Security Trustee at least five (5) days prior to such expiry;
10.5.3 REPAIR
regularly monitor the condition of each Mortgaged Vessel and keep
each Mortgaged Vessel and its equipment, outfit and appurtenances
in good condition and repair and in all respects seaworthy and fit
for its intended service and procure that all repairs to or
replacement of any damaged, worn or lost parts or equipment are
effected in such manner (both as regards workmanship and quality of
materials) as not to diminish the value of such Mortgaged Vessel;
10.5.4 MODIFICATION; REMOVAL OF PARTS; EQUIPMENT OWNED BY THIRD PARTIES
not without the prior written consent of the Lenders (such consent
not to be unreasonably withheld or delayed):
(a) make any modification to any Mortgaged Vessel in consequence
of which her structure, type or performance characteristics
would be materially altered and her value materially reduced;
or
(b) remove any material part of any Mortgaged Vessel or any
equipment the value of which is such that its removal from
such Mortgaged Vessel would materially reduce the value of
such Mortgaged Vessel without replacing the same with
equivalent parts or equipment which are owned by the Borrower
or the Guarantor free from Encumbrances; or
(c) install on any Mortgaged Vessel any equipment owned by a third
party which cannot be removed without causing damage to the
structure or fabric of such Mortgaged Vessel other than in
circumstances where any damage so caused can be repaired and
made good such that there is no material reduction in the
Mortgaged Vessel's value as a result thereof,
or allow any other person to do any of the above;
10.5.5 MAINTENANCE OF CLASS; COMPLIANCE WITH REGULATIONS
at all times and without cost or expense to any Creditors keep its
Mortgaged Vessel, or cause her to be kept, in such condition as
will entitle her to the highest classification or, with the prior
written consent of the Facility Agent, such other classification
satisfactory to the Facility Agent (acting upon the instructions of
the Lenders), at any time free of any conditions and all
recommendations that affect classification and rating for vessels
of the same age and type in the Classification Society or other
classification society of like standing approved by the Majority
Lenders and to deliver to the Facility Agent within fourteen (14)
days of receipt from the relevant Classification Society a
certificate from such Classification Society showing such
Classification to be maintained and will
36
without cost or expense to the Facility Agent instruct and
authorise each Classification Society to give an undertaking to the
Facility Agent as follows:
(a) to send to the Facility Agent, following receipt of a written
request from the Facility Agent, certified true copies of all
original class records held by the Classification Society
relating to the Mortgaged Vessel;
(b) to allow the Facility Agent (or its agents), at any time and
from time to time, to inspect the original class and related
records of the Borrower or the Guarantor and the Mortgaged
Vessels at the offices of the Classification Society and to
take copies of them;
(c) following receipt of a written request from the Facility Agent
at any time:
(i) to advise of any facts or matters which may result in or
have resulted in a change, suspension, discontinuance,
withdrawal or expiry of any Mortgaged Vessel's class
under the rules or terms and conditions of the
Borrower's, the Guarantor's or the relevant Mortgaged
Vessel's membership of the Classification Society; and
(ii) to confirm that neither the Borrower nor the Guarantor
is in default of any of its contractual obligations or
liabilities to the Classification Society and, without
limiting the foregoing, that it has paid in full all
fees or other charges due and payable to the
Classification Society; and
(iii) if the Borrower or the Guarantor is in default of any of
its contractual obligations or liabilities to the
Classification Society, to specify to the Facility Agent
in reasonable detail the facts and circumstances of such
default, the consequences thereof, and any remedy period
agreed or allowed by the Classification Society; and
(iv) to notify the Facility Agent immediately in writing if
the Classification Society receives notification from
the Borrower, the Guarantor or any other person that a
Mortgaged Vessel's Classification Society is to be
changed.
Neither the Borrower nor the Guarantor shall revoke such
instructions to the Classification Society for any of its
respective Mortgaged Vessels without the prior written consent
of the Majority Lenders (which consent shall not be withheld
or delayed in circumstances where a Mortgaged Vessel is being
disposed of in accordance with clause 10.5.14 and otherwise
shall not be unreasonably withheld or delayed).
Notwithstanding the above instructions and undertaking given
for the benefit of the Facility Agent, the Borrower and the
Guarantor shall continue to be responsible to the
Classification Society for the performance and discharge of
all its obligations and liabilities relating to or arising out
of or in connection with the contract it has with the
Classification Society, and nothing herein or therein shall be
construed as imposing any obligation or liability of the
Facility Agent to the Classification Society;
10.5.6 SURVEYS
submit each Mortgaged Vessel to such periodical or other surveys as
may be required for classification purposes and, if so requested by
the Facility Agent or if the survey report relates to or recommends
or requires repairs and/or other work the cost of which will or may
exceed the Casualty Amount, supply to the Facility Agent copies of
all survey reports issued in respect thereof;
10.5.7 INSPECTION
ensure that the Facility Agent, by surveyors or other persons
appointed by it for such purpose, may, upon giving the Borrower or
the Guarantor reasonable notice of its intention, to board any
Mortgaged Vessel once in each calendar year (for so long as moneys
remain outstanding under this Agreement) at reasonable times
without interfering with the operation of such Mortgaged Vessel for
the purpose of inspecting her and to afford all proper facilities
for such inspections and for this purpose to give to the Facility
Agent reasonable advance notice of any intended drydocking of any
Mortgaged Vessel (whether for the purpose of classification, survey
or otherwise) (provided that any such surveyor or other person
shall undertake confidentiality with respect to disclosure of the
results of such inspection to any third parties other than the
Creditors and their advisers). The cost of such inspections and
surveys shall be paid by the Borrower or the Guarantor. All
37
inspections and surveys of each Mortgaged Vessel shall be carried
out at such times and places and in such manner as to minimise
delaying the use and operation of the Mortgaged Vessel, but the
Facility Agent shall not be obliged to carry out such inspections
only during periods of drydocking. If the Facility Agent requires
any additional inspections then the cost of such further
inspections shall be borne by the Facility Agent (for the account
of the Lenders) if the result of the further inspection does not
reveal a material non-compliance with the terms of this Agreement
but shall be borne by the Borrower or the Guarantor if the result
does indicate a material non-compliance with the terms of this
Agreement;
10.5.8 PREVENTION OF AND RELEASE FROM ARREST
promptly in accordance with good vessel owning practice pay and
discharge all debts, damages, liabilities and outgoings whatsoever
which have given or may give rise to maritime, statutory or
possessory liens on, or claims enforceable against, each Mortgaged
Vessel, her Earnings or Insurances or any part thereof and, in the
event of a writ or libel being filed against any Mortgaged Vessel,
her Earnings or Insurances or any part thereof, or of any of the
same being arrested, attached or levied upon pursuant to legal
process or purported legal process or in the event of detention of
any Mortgaged Vessel in exercise or purported exercise of any such
lien or claim as aforesaid, procure the release of such Mortgaged
Vessel, her Earnings and Insurances from such arrest, detention
attachment or levy or, as the case may be, the discharge of the
writ or libel forthwith upon, or in any event within ten (10)
Banking Days after, receiving notice thereof by providing bail or
procuring the provision of security or otherwise as the
circumstances may require;
10.5.9 EMPLOYMENT
not employ any Mortgaged Vessel or permit her employment in any
manner, trade or business which is forbidden by international law,
or which is unlawful or illicit under the law of any Relevant
Jurisdiction, or in carrying illicit or prohibited goods, or in any
manner whatsoever which may render her liable to condemnation in a
prize court, or to destruction, seizure, confiscation, penalty or
sanctions and, in the event of hostilities in any part of the world
(whether war be declared or not), not employ any Mortgaged Vessel
or permit her employment in carrying any contraband goods, or enter
or trade to or to continue to trade in any zone which has been
declared a war zone by any Government Entity or by the relevant
Mortgaged Vessel's war risks insurers unless the prior written
consent of the Facility Agent is obtained and such special
insurance cover as the Facility Agent may require based on the
advice of its insurance advisors, shall have been effected by the
Borrower or the Guarantor at its expense;
10.5.10 INFORMATION
promptly furnish the Facility Agent with all such information as it
may from time to time reasonably require regarding each Mortgaged
Vessel, her Insurances, her employment, position and engagements,
particulars of all towages and salvages, and copies of all charters
and other contracts for her employment entered into by the Borrower
or the Guarantor, or otherwise howsoever concerning her;
10.5.11 NOTIFICATION OF CERTAIN EVENTS
notify the Facility Agent forthwith by telefax or other means of
telecommunication in permanent written form thereafter confirmed by
letter of:
(a) any Default;
(b) any damage to any Mortgaged Vessel requiring repairs the cost
of which will or might exceed its Casualty Amount;
(c) any occurrence in consequence of which any Mortgaged Vessel
has or may become a Total Loss;
(d) any requisition of any Mortgaged Vessel for hire;
38
(e) any requirement or recommendation made in relation to any
Mortgaged Vessel by any insurer or its Classification Society
or by any competent authority which is not complied with in
accordance with its terms;
(f) any arrest or detention of any Mortgaged Vessel or any
exercise or purported exercise of a lien or other claim on
such Mortgaged Vessel or her Earnings or Insurances or any
part thereof;
(g) the occurrence of any material Environmental Claim against the
Borrower or the Guarantor, any Mortgaged Vessel or any
Relevant Party or any other vessel from time to time owned,
technically managed or crewed by, or bareboat chartered to,
any Relevant Party or any incident, event or circumstances
which may give rise to any such Environmental Claim or an
Event of Default specified in clause 11.1.27;
10.5.12 PAYMENT OF OUTGOINGS AND EVIDENCE OF PAYMENTS
promptly pay all tolls, dues and other outgoings whatsoever in
respect of each Mortgaged Vessel and her Earnings and Insurances
and keep proper books of account in respect of each Mortgaged
Vessel and her Earnings and, as and when the Facility Agent may so
require, make such books available for inspection on behalf of the
Facility Agent, and furnish satisfactory evidence that the wages
and allotments and the insurance and pension contributions of the
Master and crew are being promptly and regularly paid and that all
deductions from crew's wages in respect of any applicable tax
liability are being properly accounted for and that the Master has
no claim for disbursements other than those incurred by him in the
ordinary course of trading on the voyage then in progress;
10.5.13 ENCUMBRANCES
not without the prior written consent of the Facility Agent acting
on the instructions of all of the Lenders (and then only subject to
such conditions as the Facility Agent may impose in accordance with
such instructions) create or purport or agree to create or permit
to arise or subsist any Encumbrance (other than Permitted
Encumbrances) over or in respect of any Mortgaged Vessel, any share
or interest therein or in any other part of the Mortgaged Property
(as defined in the Collateral Deed in respect of such Mortgaged
Vessel);
10.5.14 SALE OR OTHER DISPOSAL
not without the prior written consent of the Facility Agent acting
on the instructions of the Majority Lenders (and then only subject
to such conditions as the Facility Agent may reasonably impose in
accordance with such instructions) sell, agree to sell, transfer,
abandon or otherwise dispose of any Mortgaged Vessel or any share
or interest therein if the Net Sale Proceeds of such Mortgaged
Vessel will or may be insufficient to enable the Borrower or the
Guarantor to comply with its obligations under clause 6.4 of this
Agreement arising upon the sale of such Mortgaged Vessel (including
(without limitation) prepayment in full of the Outstandings if
required by clause 6.4) and the Borrower or the Guarantor has not
first demonstrated to the reasonable satisfaction of the Facility
Agent that the Borrower or the Guarantor will have other funds
available to it to enable it to comply with such obligations upon
completion of the sale of such Mortgaged Vessel;
10.5.15 BAREBOAT CHARTERS
not without the prior written consent of the Facility Agent acting
on the instructions of the Majority Lenders (which the Facility
Agent shall have full liberty to withhold in accordance with such
instructions) and, if such consent is given, only subject to such
conditions as the Facility Agent (acting as aforesaid) may impose:
(a) let any Mortgaged Vessel on demise charter for any period
except for bareboat charters within the Group provided that
the relevant charterer within the Group undertakes to the
Security Agent (for the benefit of the Creditors) to
relinquish possession of the Mortgaged Vessel under such
bareboat charter upon receipt of written notice from the
Facility Agent that the obligations of the Borrower under this
Agreement have been accelerated in accordance with clause 11.2
and/or clause 11.3 of this Agreement;
39
(b) let any Mortgaged Vessel other than on arm's length terms.
10.5.16 LAY UP
in the event of any de-activation or lay up of a Mortgaged Vessel,
the Borrower or the Guarantor shall notify the Facility Agent of
such circumstance and the anticipated period of any such
de-activation or lay up; the Borrower's or the Guarantor's
insurance, maintenance and classification obligations with respect
to any such Mortgaged Vessel under this Agreement shall continue
during any such period;
10.5.17 PAYMENT OF EARNINGS
to procure that the Earnings of any Mortgaged Vessel are paid to
the Security Trustee at all times if and when the same shall be or
shall have become so payable in accordance with this Agreement or
the Security Documents and that any Earnings of any Mortgaged
Vessel which are so payable and which are in the hands of the
Borrower's or the Guarantor's brokers or agents are duly accounted
for and paid over to the Security Trustee forthwith on demand;
10.5.18 REPAIRERS' LIENS
not without the prior written consent of the Facility Agent (acting
on the instructions of the Lenders) put any Mortgaged Vessel into
the possession of any person for the purpose of work being done
upon her unless either:
(a) such person shall first have given to the Facility Agent in
terms satisfactory to it, a written undertaking not to
exercise any lien on the relevant Mortgaged Vessel or her
Earnings for the cost of such work or otherwise; or
(b) any such lien of such person would be a Permitted Encumbrance;
or
(c) the Borrower or the Guarantor demonstrates that it has the
proceeds of insurance or other unencumbered resources
available to it to meet the cost of the work being done or
proposed to be done;
10.5.19 MANAGEMENT
ensure that the Mortgaged Vessels are managed by a company within
the Group;
10.5.20 NOTICE OF MORTGAGE
place and at all times and places retain a properly certified copy
of each Mortgage (which shall form part of the relevant Mortgaged
Vessel's documents) on board each Mortgaged Vessel with her papers
and cause such certified copy of such Mortgage to be exhibited to
any and all persons having business with such Mortgaged Vessel
which might create or imply any commitment or encumbrance
whatsoever on or in respect of such Mortgaged Vessel (other than a
Permitted Encumbrance) and to any representative of the Security
Trustee and place and keep prominently displayed on the bridge and
in the Master's cabin of each Mortgaged Vessel a framed printed
notice in plain type which shall read as specified in the relevant
Mortgage but substantially as follows:
"NOTICE OF MORTGAGE
This Vessel is subject to a first [FOR UK VESSELS: priority] [FOR
PANAMANIAN VESSELS: preferred] mortgage [FOR UK VESSELS: and
collateral deed of covenants] in favour of [INSERT NAME OF SECURITY
TRUSTEE] of [INSERT ADDRESS OF SECURITY TRUSTEE] as security
trustee. Under the said mortgage, neither [FOR UK VESSELS: Gulf
Offshore N.S. Limited] [FOR PANAMANIAN VESSELS: GulfMark Offshore,
Inc.] nor any charterer nor the Master of this Vessel has any
right, power or authority to create, incur or permit to be imposed
upon this Vessel any commitments or encumbrances whatsoever other
than for Permitted Encumbrances as defined in that certain Senior
Secured Reducing Credit Facility Agreement by and among Gulf
Offshore N.S. Limited, GulfMark Offshore, Inc., Nordea Bank Norge
ASA, Nordea Bank Finland plc, New York Branch and
40
the lenders named therein dated December __, 2004, as modified,
amended, or supplemented from time to time."
and in terms of the said notice it is hereby agreed that save and
subject as otherwise herein provided, neither the Borrower, the
Guarantor, any charterer, the Master of any Mortgaged Vessel nor
any other person has any right, power or authority to create, incur
or permit to be imposed upon any Mortgaged Vessel any lien
whatsoever other than for a Permitted Encumbrance;
10.5.21 CONVEYANCE ON DEFAULT
where a Mortgaged Vessel is (or is to be) sold in exercise of any
power contained in the relevant Mortgage or otherwise conferred on
the Security Trustee, execute, forthwith upon request by the
Security Trustee, such form of conveyance of such Mortgaged Vessel
as the Security Trustee may require;
10.5.22 ANTI-DRUG ABUSE
without prejudice to clause 10.5.9, ensure compliance with the
Anti-Drug Abuse Act of 1986 of the United States of America or any
similar legislation applicable to any Mortgaged Vessel in any
jurisdiction in or to which any Mortgaged Vessel shall be employed
or located or trade or which may otherwise be applicable to any
Mortgaged Vessel and/or the Borrower and/or the Guarantor;
10.5.23 COMPLIANCE WITH ENVIRONMENTAL LAWS
to comply in all material respects with all Environmental Laws
applicable to it and/or its Mortgaged Vessel including, without
limitation, requirements relating to ▇▇▇▇▇▇▇ and establishment of
financial responsibility and to obtain and comply with all
Environmental Approvals applicable to it and/or its Mortgaged
Vessel; and
10.5.24 COMPLIANCE WITH ISM CODE AND ISPS CODE
comply at all material times in all material respects with the ISM
Code and ISPS Code.
10.6 FINANCIAL COVENANTS OF THE GUARANTOR
10.6.1 The Guarantor undertakes and agrees with the Creditors that throughout
the Security Period it will ensure that:
10.6.2 on each Quarterly Financial Statements Preparation Date, the ratio
of Consolidated EBITDA (prevailing during the four (4) financial
quarters ending on each Quarterly Financial Statements Preparation
Date) to Consolidated Interest Expense (prevailing during the four
(4) financial quarters ending on each Quarterly Financial
Statements Preparation Date) from the first Drawdown Date until 30
September 2005 inclusive, is equal to or greater than 2.00 to 1.00
and thereafter is equal to or greater than 2.75 to 1.00; and
10.6.3 the ratio of Funded Debt to Total Capitalisation (as at the
relevant Quarterly Financial Statements Preparation Date) is equal
to or less than 0.65 to 1.00; and
10.6.4 Net Worth is at least equal to the aggregate of:
(a) two hundred million Dollars ($200,000,000); and
(b) fifty percent (50%) of positive consolidated net income on an
annual basis from January 1, 2005; and
(c) one hundred percent (100%) of Net Proceeds from Equity
Offerings after January 1, 2005; and
10.6.5 the Security Value shall be no less than the Security Requirement.
41
11 EVENTS OF DEFAULT
11.1 EVENTS
There shall be an Event of Default if:
11.1.1 NON-PAYMENT: any Security Party fails to pay any sum payable by it
under this Agreement or any of the Security Documents at the time,
in the currency and in the manner stipulated in this Agreement or
the relevant Security Document and such amount remains unpaid for
three (3) Banking Days after the date the payment was due; or
11.1.2 BREACH OF INSURANCE OBLIGATIONS: the Borrower or the Guarantor
fails to obtain and/or maintain the Insurances (in accordance with
the requirements of this Agreement or any of the other Security
Documents for any of the Mortgaged Vessels) or if any insurer in
respect of such Insurances cancels the Insurances or disclaims
liability by reason, in either case, of mis-statement in any
proposal for the Insurances or for any other failure or default on
the part of the Borrower, the Guarantor or any other person; or
11.1.3 BREACH OF FINANCIAL COVENANTS AND RELATED UNDERTAKINGS: the
Borrower commits any breach of or omits to observe any of the
obligations or undertakings expressed to be assumed by it under
clauses 10.2 and 10.3 and/or the Guarantor commits any breach of or
omits to observe any of the obligations or undertakings expressed
to be assumed by it under clauses 10.2, 10.3 or 10.6; or
11.1.4 BREACH OF OTHER OBLIGATIONS: any Security Party commits any breach
of or omits to observe any of its obligations or undertakings
expressed to be assumed by it under this Agreement or any of the
Security Documents (other than those referred to in clauses 11.1.1,
11.1.2 or 11.1.3 above) and, in respect of any such breach or
omission which in the reasonable opinion of the Facility Agent
(acting on the instructions of the Majority Lenders in accordance
with the Agency Agreement) is capable of remedy, such action as the
Facility Agent may require shall not have been taken within ten
(10) days (or such longer period as the Facility Agent may specify)
of the Facility Agent notifying the relevant Security Party of such
default and of such required action; or
11.1.5 MISREPRESENTATION: any representation or warranty made or deemed to
be made or repeated by or in respect of any Security Party in or
pursuant to this Agreement or any of the other Security Documents
or in any notice, certificate or statement referred to in or
delivered under this Agreement or any of the other Security
Documents is or proves to have been incorrect or misleading in any
material respect when it was made or repeated; or
11.1.6 CROSS-DEFAULT: any Borrowed Money of any Security Party is not paid
when due or any Borrowed Money of any Security Party becomes
(whether by declaration or automatically in accordance with the
relevant agreement or instrument constituting the same) due and
payable prior to the date when it would otherwise have become due
(unless as a result of the exercise by the relevant Security Party
of a voluntary right of prepayment), or any creditor of any
Security Party becomes entitled to declare any such Borrowed Money
due and payable being, in any such case, an amount, or aggregate
amount at any one time, of not less than (subject to the proviso
below) three million Dollars ($3,000,000), (or its equivalent in
any other currency) or any facility or commitment available to any
Security Party relating to Borrowed Money, being in any such case,
an amount, or aggregate amount at any one time, of not less than
(subject to the proviso below) three million Dollars ($3,000,000),
(or its equivalent in any other currency) is withdrawn, suspended
or cancelled by reason of any default (however described) of the
person concerned unless the relevant Security Party shall have
satisfied the Facility Agent that such withdrawal, suspension or
cancellation will not affect or prejudice in any way the relevant
Security Party's ability to pay its debts as they fall due and fund
its commitments, or any guarantee given by any Security Party in
respect of Borrowed Money is not honoured when due and called upon
in respect of the foregoing; or
11.1.7 LEGAL PROCESS:
(a) any judgment or order made against any Security Party is not
stayed or complied with within fourteen (14) days unless it is
being contested in good faith and with adequate resources; or
(b) a creditor attaches or takes possession of, or a distress,
execution, sequestration or other process is levied or
enforced upon or sued out against, any of the undertakings,
assets,
42
rights or revenues of any Security Party (other than in
respect of a Mortgaged Vessel to which clause 11.1.16 applies)
in an amount which exceeds one million Dollars ($1,000,000)
and is not discharged within fourteen (14) days or such longer
period as the Facility Agent may agree; or
11.1.8 INSOLVENCY: any Security Party:
(a) is unable or admits inability to pay its debt as they fall
due;
(b) suspends making payments on any of its debts or announces an
intention to do so;
(c) becomes insolvent;
(d) has assets the value of which is less than the value of its
liabilities (taking into account contingent and prospective
liabilities); or
(e) suffers the declaration of a moratorium in respect of any of
its Indebtedness; or
11.1.9 REDUCTION OR LOSS OF CAPITAL: a meeting is convened by any Security
Party for the purpose of passing any resolution to purchase, reduce
or redeem any of its share capital other than any share repurchase
program which has been instituted by the Borrower after having
obtained the prior written consent of the Facility Agent (acting on
the instructions of the Lenders); or
11.1.10 WINDING UP: any corporate action, legal proceedings or other
procedure or step is taken for the purpose of winding-up any
Security Party (not being an action, proceedings or procedure which
the relevant Security Party can demonstrate to the satisfaction of
the Facility Agent, by providing an opinion of leading counsel to
that effect, is frivolous, vexatious or an abuse of the process of
the court or relates to a claim to which the relevant Security
Party has a good defence and which is being vigorously contested by
the relevant Security Party) or an order is made or resolution
passed for the winding up of any Security Party or a notice is
issued convening a meeting for the purpose of passing any such
resolution; or
11.1.11 ADMINISTRATION: any petition is presented or other formal step is
taken for the purpose of the appointment of an administrator of any
Security Party or the Facility Agent acting reasonably believes
that any such petition or other formal step is imminent or an
administration order is made in relation to any Security Party; or
11.1.12 APPOINTMENT OF RECEIVERS AND MANAGERS: any administrative or other
receiver is appointed of any Security Party or any material part of
its assets and/or undertaking or any other formal steps are taken
to enforce any Encumbrance over all or any part of the assets of
any Security Party; or
11.1.13 COMPOSITIONS: any corporate action, legal proceedings or other
procedures or steps are taken, or negotiations commenced, by any
Security Party or by any of its creditors with a view to the
general readjustment or rescheduling of all or part of its
indebtedness or to proposing any kind of composition, compromise or
arrangement involving such company and any of its creditors; or
11.1.14 ANALOGOUS PROCEEDINGS: there occurs, in relation to any Security
Party, in any country or territory in which any of them carries on
business or to the jurisdiction of whose courts any part of their
assets is subject, any event which, in the reasonable opinion of
the Majority Lenders, appears in that country or territory to
correspond with, or have an effect equivalent or similar to, any of
those mentioned in clauses 11.1.7 to 11.1.13 (inclusive) or any
Security Party otherwise becomes subject, in any such country or
territory, to the operation of any law relating to insolvency,
bankruptcy or liquidation; or
11.1.15 CESSATION OF BUSINESS: any Security Party suspends or ceases to
carry on its business; or
11.1.16 SEIZURE: all or a material part of the undertaking, assets, rights
or revenues of, or shares or other ownership interests in, any
Security Party are seized, nationalised, expropriated or
compulsorily acquired by or under the authority of any Government
Entity without the affected Security Party receiving adequate (as
reasonably determined by the Facility Agent on behalf of the
Majority Lenders) insurance proceeds or other compensation; or
43
11.1.17 INVALIDITY: this Agreement or any of the other Security Documents
shall at any time and for any reason become invalid or
unenforceable or otherwise cease to remain in full force and
effect, or if the validity or enforceability of this Agreement or
any of the other Security Documents shall at any time and for any
reason be contested by any Security Party which is a party thereto;
11.1.18 UNLAWFULNESS: it becomes impossible or unlawful at any time for any
Security Party, to fulfil any of the covenants and obligations
expressed to be assumed by it in this Agreement or any of the other
Security Documents or for the other Security Trustee to exercise
the rights or any of them vested in it under this Agreement or any
of the Security Documents or otherwise; or
11.1.19 REPUDIATION: any Security Party repudiates this Agreement or any of
the other Security Documents or does or causes or permits to be
done any act or thing evidencing an intention to repudiate this
Agreement or any of the other Security Documents; or
11.1.20 ENCUMBRANCES ENFORCEABLE: any Encumbrance (other than Permitted
Encumbrances) in respect of any of the property (or part thereof)
which is the subject of this Agreement or any of the other Security
Documents becomes enforceable; or
11.1.21 ARREST: any Mortgaged Vessel is arrested, confiscated, seized
(other than a seizure contemplated by clause 11.1.16), taken in
execution, impounded, forfeited, detained in exercise or purported
exercise of any possessory lien or other claim or otherwise taken
from the possession of the Borrower and the Borrower shall fail to
procure the release of any Mortgaged Vessel within a period of
sixty (60) days thereafter (or such longer period as the Lenders
may agree in writing); or
11.1.22 REGISTRATION: the registration of any Mortgaged Vessel under the
laws and flag of the Flag State is cancelled or terminated without
the prior written consent of the Facility Agent or, if any
Mortgaged Vessel is only provisionally registered on the date of
Delivery, such Mortgaged Vessel is not permanently registered under
the laws and flag of the Flag State within such period as is
permitted by those laws or if such registration of any Mortgaged
Vessel is not renewed prior to the expiry of such registration; or
11.1.23 UNREST: any Flag State becomes involved in hostilities or civil war
or there is a seizure of power in any Flag State by
unconstitutional means if, in any such case, such event is
determined by the Majority Lenders to have a Material Adverse
Effect on the Borrower or the Guarantor; or
11.1.24 ENVIRONMENT: the Borrower or any other Relevant Party fails to
comply with any Environmental Law or any Environmental Approval or
any Mortgaged Vessel or any other Relevant Vessel is involved in an
Environmental Incident which gives rise or is likely to give rise
to an Environmental Claim if, in any such case, such non-compliance
or Environmental Incident or the consequences thereof could in the
opinion of the Majority Lenders reasonably be expected to have a
Material Adverse Effect on the Borrower or the Guarantor; or
11.1.25 P&I: the Borrower or the Guarantor or any other person fails or
omits to comply with any requirements of the protection and
indemnity association or other insurer with which a Mortgaged
Vessel is entered for insurance or insured against protection and
indemnity risks (including oil pollution risks) to the effect that
any cover (including, without limitation, any cover in respect of
liability for Environmental Claims arising in jurisdictions where
such Mortgaged Vessel operates or trades) is or may be liable to
cancellation, qualification or exclusion at any time; or
11.1.26 PARENT COMPANY: the Borrower ceases to be a wholly owned Subsidiary
of the Guarantor; or
11.1.27 MATERIAL ADVERSE EFFECT: any other event occurs or circumstance
arises in relation to any Security Party or any Mortgaged Vessel
which is determined by the Lenders to have a Material Adverse
Effect on the Borrower, and the other Security Parties taken as a
whole; or
11.1.28 CHANGE OF CONTROL: any person obtains legal or beneficial ownership
of thirty percent (30%) or more of the issued and outstanding
capital stock of the Guarantor (excluding ▇▇▇▇▇▇ Bros. Inc. and its
Subsidiaries or affiliates, such legal or beneficial ownership not
to exceed fifty one percent (51%) of the issued and outstanding
capital stock of the Guarantor); and
11.1.29 NOTE REDEMPTION: there occurs a mandatory redemption of the Notes
whether by virtue of a repurchase at the option of the holders of
the Notes or a voluntary redemption of the Notes, in
44
either case without the Guarantor having obtained the prior written
consent of the Facility Agent such consent not to be unreasonably
withheld.
11.2 ACCELERATION
11.2.1 Without prejudice to clause 11.2.2 below, the Facility Agent may, and
if so requested by the Majority Lenders, shall without prejudice to any
other rights of the Lenders, at any time after the occurrence of an
Event of Default which is then continuing beyond the relevant cure
period as described in clause 11.2.3 below, if any, by notice to the
Borrower declare that:
(a) the obligation of each Lender to make its Commitments available
to the Borrower shall be terminated, whereupon the relevant
Commitment or Commitments shall be reduced to zero forthwith;
and/or
(b) the relevant Outstandings and all interest and commitment
commission accrued and all other sums payable under this
Agreement and any of the other relevant Security Documents have
become due and payable, whereupon the same shall, immediately or
in accordance with the terms of such notice, become due and
payable.
11.2.2 With respect to the Borrower and the Guarantor, if a Default occurs
under clauses 11.1.8 or 11.1.10 all relevant Outstandings and all
interest and commitment commission accrued and all other sums payable
under this Agreement and any of the other relevant Security Documents
shall be immediately due and payable without declaration or other
notice by the Facility Agent to the Borrower and/or the Guarantor.
11.2.3 If clauses 11.1.16, 11.1.17, 11.1.18, 11.1.19, 11.1.22, or 11.1.23,
apply and the Lenders, in their absolute discretion, consider the
circumstances giving rise to that application are capable of remedy
within fifteen (15) Banking Days, no notice will be given under clause
11.2.1 during that period for so long as the Lenders remain satisfied
all appropriate steps are being taken to remedy the circumstances and
they remain capable of remedy.
11.3 DEMAND BASIS
If, pursuant to clause 11.2.1 the Facility Agent declares any
Outstandings to be due and payable on demand, the Facility Agent may,
(and, if so instructed by the Majority Lenders, shall) by written
notice to the Borrower and/or the Guarantor:
11.3.1 call for repayment of the relevant Outstandings and/or all of the
Outstandings on such date as may be specified whereupon such
Outstandings shall become due and payable on the date so specified
together with all interest and commitment commission accrued and
all other sums payable under this Agreement; or
11.3.2 withdraw such declaration with effect from the date specified in
such notice.
11.4 NO RESTRICTION ON EXERCISE OF RIGHTS
For the avoidance of doubt, upon the occurrence of any Event of
Default, the Facility Agent shall be entitled to exercise its rights
under this clause 11 against the Borrower as it shall in its absolute
discretion determine. The Facility Agent shall also be entitled to
exercise its rights under clause 15 at any time after the occurrence of
an Event of Default which is continuing and shall not be obliged to
commence any proceeding under or enforce any other Encumbrance created
by this Agreement or any other Security Document before claiming or
commencing proceedings under the Guarantee.
12 INDEMNITIES
12.1 MISCELLANEOUS INDEMNITIES
THE BORROWER SHALL ON DEMAND INDEMNIFY EACH CREDITOR, WITHOUT PREJUDICE
TO ANY OF ITS OTHER RIGHTS UNDER THIS AGREEMENT OR ANY OF THE SECURITY
DOCUMENTS, AGAINST ANY LOSS (INCLUDING LOSS OF MARGIN ACCRUING UPON AND
UNTIL SUCH TIME AS ALL SUMS DUE UNDER THIS AGREEMENT HAVE BEEN REPAID
IN FULL)
45
OR EXPENSE WHICH EACH CREDITOR ACTING REASONABLY SHALL CERTIFY AS
SUSTAINED OR INCURRED BY IT AS A CONSEQUENCE OF:
12.1.1 ANY DEFAULT IN PAYMENT BY THE BORROWER OF ANY SUM UNDER THIS
AGREEMENT OR ANY OF THE OTHER SECURITY DOCUMENTS WHEN DUE;
12.1.2 THE OCCURRENCE OF ANY OTHER EVENT OF DEFAULT;
12.1.3 RECEIVING OR RECOVERING ALL OR ANY PART OF A SUM UNPAID OTHERWISE
THAN ON THE DUE DATE FOR THE PAYMENT OF INTEREST IN RESPECT
THEREOF;
12.1.4 ANY PREPAYMENT OF THE OUTSTANDINGS OR PART THEREOF BEING MADE UNDER
CLAUSE 5.7, 6.3, 6.4, 6.6, 6.8, 8.8 OR 13.1, OR ANY OTHER REPAYMENT
OF THE OUTSTANDINGS OR PART THEREOF BEING MADE OTHERWISE THAN ON AN
INTEREST PAYMENT DATE OR ANY DUE DATE RELATING TO THE PART OF THE
OUTSTANDINGS PREPAID OR REPAID;
12.1.5 ANY ADVANCE NOT BEING MADE FOR ANY REASON (EXCLUDING ANY DEFAULT BY
THE RELEVANT CREDITOR) AFTER A DRAWDOWN NOTICE HAS BEEN GIVEN,
INCLUDING, IN ANY SUCH CASE, BUT NOT LIMITED TO, ANY LOSS OR EXPENSE
SUSTAINED OR INCURRED BY SUCH CREDITORS IN MAINTAINING OR FUNDING ALL
OR ANY PART OF ITS COMMITMENT OR IN LIQUIDATING OR RE-EMPLOYING
DEPOSITS FROM THIRD PARTIES ACQUIRED TO EFFECT OR MAINTAIN ITS
COMMITMENT OR ANY PART THEREOF (COLLECTIVELY "BREAKAGE COSTS").
12.2 CURRENCY OF ACCOUNT; CURRENCY INDEMNITY
NO PAYMENT BY THE BORROWER OR THE GUARANTOR UNDER THIS AGREEMENT WHICH
IS MADE IN A CURRENCY OTHER THAN THE CURRENCY ("CONTRACTUAL CURRENCY")
IN WHICH SUCH PAYMENT IS REQUIRED TO BE MADE PURSUANT TO THIS AGREEMENT
SHALL DISCHARGE THE OBLIGATION IN RESPECT OF WHICH IT IS MADE EXCEPT TO
THE EXTENT OF THE NET PROCEEDS IN THE CONTRACTUAL CURRENCY RECEIVED BY
THE FACILITY AGENT UPON THE SALE OF THE CURRENCY SO RECEIVED, AFTER
TAKING INTO ACCOUNT ANY PREMIUM AND COSTS OF EXCHANGE IN CONNECTION
WITH SUCH SALE. FOR THE AVOIDANCE OF DOUBT THE FACILITY AGENT AND THE
LENDERS SHALL NOT BE OBLIGED TO ACCEPT ANY SUCH PAYMENT IN A CURRENCY
OTHER THAN THE CONTRACTUAL CURRENCY NOR SHALL THE FACILITY AGENT OR THE
LENDERS BE LIABLE TO THE BORROWER OR THE GUARANTOR FOR ANY LOSS OR
ALLEGED LOSS ARISING FROM FLUCTUATIONS IN EXCHANGE RATES BETWEEN THE
DATE ON WHICH SUCH PAYMENT IS SO RECEIVED BY THE FACILITY AGENT AND THE
DATE ON WHICH THE FACILITY AGENT EFFECTS SUCH SALE, AS TO WHICH THE
FACILITY AGENT SHALL (AS AGAINST THE BORROWER OR THE GUARANTOR) HAVE AN
ABSOLUTE DISCRETION. IF ANY SUM DUE FROM ANY BORROWER OR THE GUARANTOR
UNDER THIS AGREEMENT OR ANY ORDER OR JUDGMENT GIVEN OR MADE IN RELATION
HERETO IS REQUIRED TO BE CONVERTED FROM THE CONTRACTUAL CURRENCY OR THE
CURRENCY IN WHICH THE SAME IS PAYABLE UNDER SUCH ORDER OR JUDGMENT (THE
"FIRST CURRENCY") INTO ANOTHER CURRENCY (THE "SECOND CURRENCY") FOR THE
PURPOSE OF (A) MAKING OR FILING A CLAIM OR PROOF AGAINST THE BORROWER
OR THE GUARANTOR, (B) OBTAINING AN ORDER OR JUDGMENT IN ANY COURT OR
OTHER TRIBUNAL OR (C) ENFORCING ANY ORDER OR JUDGMENT GIVEN OR MADE IN
RELATION TO THIS AGREEMENT, THE BORROWER OR THE GUARANTOR (AS THE CASE
MAY BE) SHALL INDEMNIFY AND HOLD HARMLESS THE FACILITY AGENT, THE
ARRANGER AND EACH LENDER FROM AND AGAINST ANY LOSS SUFFERED AS A RESULT
OF ANY DIFFERENCE BETWEEN (a) THE RATE OF EXCHANGE USED FOR SUCH
PURPOSE TO CONVERT THE SUM IN QUESTION FROM THE FIRST CURRENCY INTO THE
SECOND CURRENCY AND (b) THE RATE OR RATES OF EXCHANGE AT WHICH THE
FACILITY AGENT, THE ARRANGER OR SUCH LENDER MAY IN THE ORDINARY COURSE
OF BUSINESS PURCHASE THE FIRST CURRENCY WITH THE SECOND CURRENCY UPON
RECEIPT OF A SUM PAID TO IT IN SATISFACTION, IN WHOLE OR IN PART, OF
ANY SUCH ORDER, JUDGMENT, CLAIM OR PROOF. ANY AMOUNT DUE FROM ANY
BORROWER OR THE GUARANTOR UNDER THE INDEMNITY CONTAINED IN THIS CLAUSE
12.2 SHALL BE DUE AS A SEPARATE DEBT AND SHALL NOT BE AFFECTED BY
JUDGMENT BEING OBTAINED FOR ANY OTHER SUMS DUE UNDER OR IN RESPECT OF
THIS AGREEMENT AND THE TERM
46
"RATE OF EXCHANGE" INCLUDES ANY PREMIUM AND COSTS OF EXCHANGE
PAYABLE IN CONNECTION WITH THE PURCHASE OF THE FIRST CURRENCY WITH
THE SECOND CURRENCY.
12.3 ENVIRONMENTAL INDEMNITY
THE BORROWER AND THE GUARANTOR SHALL INDEMNIFY EACH CREDITOR ON DEMAND
AND HOLD EACH CREDITOR HARMLESS FROM AND AGAINST ALL COSTS, EXPENSES,
PAYMENTS, CHARGES, LOSSES, DEMANDS, LIABILITIES, ACTIONS, PROCEEDINGS
(WHETHER CIVIL OR CRIMINAL), PENALTIES, FINES, DAMAGES, JUDGEMENTS,
ORDERS, SANCTIONS OR OTHER OUTGOINGS OF WHATEVER NATURE ("LOSSES")
WHICH MAY BE SUFFERED, INCURRED OR PAID BY, OR MADE OR ASSERTED AGAINST
THE RELEVANT CREDITOR AT ANY TIME, WHETHER BEFORE OR AFTER THE
REPAYMENT IN FULL OF PRINCIPAL AND INTEREST UNDER THIS AGREEMENT,
RELATING TO, OR ARISING DIRECTLY OR INDIRECTLY IN ANY MANNER OR FOR ANY
CAUSE OR REASON WHATSOEVER OUT OF AN ENVIRONMENTAL CLAIM MADE OR
ASSERTED AGAINST SUCH CREDITOR IF SUCH ENVIRONMENTAL CLAIM WOULD NOT
HAVE BEEN, OR BEEN CAPABLE OF BEING, MADE OR ASSERTED AGAINST THE
RELEVANT CREDITOR IF IT HAD NOT ENTERED INTO THIS AGREEMENT OR ANY OF
THE OTHER SECURITY DOCUMENTS AND/OR EXERCISED ANY OF ITS RIGHTS, POWERS
AND DISCRETIONS THEREBY CONFERRED AND/OR PERFORMED ANY OF ITS
OBLIGATIONS THEREUNDER AND/OR BEEN INVOLVED IN ANY OF THE TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT OR ANY OF THE OTHER SECURITY DOCUMENTS.
13 UNLAWFULNESS AND INCREASED COSTS
13.1 UNLAWFULNESS
If it is or becomes contrary to any law or regulation for any Lender to
contribute to Advances or to maintain its Commitment or fund its
contribution in the Outstandings, such Lender shall promptly, through
the Facility Agent, notify the Borrower whereupon:
13.1.1 such Lender's Commitment shall be reduced to zero; and
13.1.2 the Borrower shall be obliged to prepay the Outstandings of such
Lender either (a) forthwith or (b) on a future specified date not
being earlier than the latest date permitted by the relevant law or
regulation together with interest and commitment commission accrued
to the date of prepayment and all other sums payable by the
Borrower under this Agreement.
Any prepayment pursuant to this clause 13.1 shall be made together with
all amounts referred to in clause 6.5.
13.2 INCREASED COSTS
If the result of any change in, or in the interpretation or application
of, or the introduction of, any law or any regulation, request or
requirement (whether or not having the force of law, but, if not having
the force of law, with which any Lender or, as the case may be, its
holding company habitually complies), including (without limitation)
those relating to Taxation, capital adequacy, liquidity, reserve
assets, cash ratio deposits and special deposits, is to:
13.2.1 subject any Lender to Taxes or change the basis of Taxation of any
Lender with respect to any payment under this Agreement or any of
the other Security Documents (other than Taxes or Taxation on the
overall net income, profits or gains of such Lender imposed in the
jurisdiction in which its principal or lending office under this
Agreement is located); and/or
13.2.2 increase the cost to any Lender or its holding company in making or
keeping the Commitment available or maintaining or funding all or
part of such Lender's Outstandings; and/or
13.2.3 reduce the amount payable or the effective return to any Lender
under this Agreement or any of the other Security Documents; and/or
47
13.2.4 reduce any Lender's or its holding company's rate of return on its
overall capital by reason of a change in the manner in which it is
required to allocate capital resources to its obligations under
this Agreement or any of the other Security Documents; and/or
13.2.5 require any Lender or its holding company to make a payment or
forgo a return on or calculated by reference to any amount received
or receivable by it under this Agreement or any of the other
Security Documents; and/or
13.2.6 require any Lender or its holding company to incur or sustain a
loss (including a loss of future potential profits) by reason of
being obliged to deduct all or part of the Commitment or
Outstandings from its capital for regulatory purposes,
then and in each such case (subject to clause 13.3):
(a) such Lender shall notify the Facility Agent who shall notify the
Borrower in writing of such event promptly upon its becoming
aware of the same; and
(b) the Borrower shall on demand, made at any time whether or not the
relevant Lender's Outstandings have been repaid, pay to the
Facility Agent for the account of such Lender the amount which
such Lender specifies (in a certificate setting forth the basis
of the computation of such amount but not including any matters
which such Lender or its holding company regards as confidential)
is required to compensate such Lender and/or (as the case may be)
its holding company for such liability to Taxes, cost, reduction,
payment , forgone return or loss.
For the purposes of this clause 13.2 "HOLDING COMPANY" means the
company or entity (if any) within the consolidated supervision of
which the relevant Lender is included.
13.3 EXCEPTION
Nothing in clause 13.2 shall entitle any Lender to receive any amount
in respect of compensation for any such liability to Taxes, increased
or additional cost, reduction, payment, foregone return or loss (a) to
the extent that the same is taken into account in calculating the
Additional Cost or (b) to the extent that the same is the subject of an
additional payment under clause 8.7.
14 SET-OFF, PRO RATA PAYMENTS
14.1 SET-OFF
14.1.1 The Borrower and the Guarantor authorises each Lender (without
prejudice to any of such Lender's rights at law, in equity or
otherwise), at any time when an Event of Default has occurred for so
long as the same is continuing:
(a) to apply any credit balance to which the Borrower or the
Guarantor is then entitled standing upon any account of the
Borrower or the Guarantor with any branch of such Lender in or
towards satisfaction of any sum due and payable from the
Borrower or the Guarantor to such Lender under this Agreement or
any of the other Security Documents;
(b) in the name of the Borrower or the Guarantor or such Lender to
do all such acts and to execute all such documents as may be
necessary or expedient to effect such application; and
(c) to combine and/or consolidate all or any accounts in the name of
the Borrower or the Guarantor with such Lender.
For such purposes, each Lender is authorised to purchase with the
moneys standing to the credit of such account such other currencies as
may be necessary to effect such application. No Lender shall be obliged
to exercise any right given to it by this clause 14.1. Each Lender
shall notify the Facility Agent and the Borrower or the Guarantor
forthwith upon the exercise or purported exercise of any right of
set-off giving full details in relation thereto and the Facility Agent
shall inform the other Lenders.
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14.2 PRO RATA PAYMENTS
14.2.1 If at any time any Lender (the "Recovering Lender") receives or
recovers any amount owing to it by the Borrower under this Agreement by
direct payment, set-off or in any manner other than by payment through
the Facility Agent pursuant to clause 8.1 or 8.10 (not being a payment
received from a Transferee Lender or a sub-participant in such Lender's
Outstandings or any other payment of an amount due to the Recovering
Lender for its sole account pursuant to clauses 5.1, 5.7, 6.4, 6.6,
6.8, 6.9, 12.1, 12.3, 13.1 and 13.2 the Recovering Lender shall, within
two Banking Days of such receipt or recovery (a "RELEVANT RECEIPT")
notify the Facility Agent of the amount of the Relevant Receipt. If the
Relevant Receipt exceeds the amount which the Recovering Lender would
have received if the Relevant Receipt had been received by the Facility
Agent and distributed pursuant to clause 8.1 or 8.10 as the case may
be) then:
(a) within two (2) Banking Days of demand by the Facility Agent, the
Recovering Lender shall pay to the Facility Agent an amount equal
(or equivalent) to the excess;
(b) the Facility Agent shall treat the excess amount so paid by the
Recovering Lender as if it were a payment made by the Borrower
and shall distribute the same to the Lenders (other than the
Recovering Lender) in accordance with clause 8.10; and
(c) as between the Borrower and the Recovering Lender the excess
amount so re-distributed shall be treated as not having been paid
but the obligations of the Borrower to the other Lenders shall,
to the extent of the amount so re-distributed to them, be treated
as discharged.
14.2.2 If any part of the Relevant Receipt subsequently has to be wholly or
partly refunded by the Recovering Lender (whether to a liquidator or
otherwise) each Lender to which any part of such Relevant Receipt was
so re-distributed shall on request from the Recovering Lender repay to
the Recovering Lender such Lender's pro rata share of the amount which
has to be refunded by the Recovering Lender.
14.2.3 Each Lender shall on request supply to the Facility Agent such
information as the Facility Agent may from time to time request for the
purpose of this clause 14.2.
14.2.4 Notwithstanding the foregoing provisions of this clause 14.2 no Lender
shall be obliged to share any Relevant Receipt which it receives or
recovers pursuant to legal proceedings taken by it to recover any sums
owing to it under this Agreement with any other party which has a legal
right to, but does not, either join in such proceedings or commence and
diligently pursue separate proceedings to enforce its rights in the
same or another court (unless the proceedings instituted by the
Recovering Lender are instituted by it without prior notice having been
given to such party through the Facility Agent).
14.3 NO RELEASE
For the avoidance of doubt it is hereby declared that failure by any
Recovering Lender to comply with the provisions of clause 14.2 shall
not release any other Recovering Lender from any of its obligations or
liabilities under clause 14.2.
14.4 NO CHARGE
The foregoing provisions of this clause 14 shall not, and shall not be
construed so as to, constitute a charge by a Lender over all or any
part of a sum received or recovered by it in the circumstances
mentioned in clause 14.2.
15 GUARANTEE
15.1 GUARANTEE
The Guarantor hereby irrevocably, unconditionally:
(a) guarantees to each Creditor, the due performance by the Borrower
of all its respective obligations under or pursuant to the
Security Documents; and
49
(b) guarantees to each Creditor, the payment of all moneys now or
hereafter due, owing or incurred by the Borrower under or
pursuant to the Security Documents when the same become due
whether by acceleration or otherwise.
If for any reason the Borrower fails to discharge any such obligation
or to pay any such moneys, the Guarantor shall immediately on demand by
the Security Trustee discharge such obligation or, as the case may be,
pay such moneys to the Security Trustee. This is a guarantee of payment
and not of collection only.
15.2 GUARANTOR AS PRINCIPAL DEBTOR; INDEMNITY
AS A SEPARATE AND INDEPENDENT STIPULATION, THE GUARANTOR IRREVOCABLY
AND UNCONDITIONALLY AGREES THAT IF ANY PURPORTED OBLIGATION OR
LIABILITY OF THE BORROWER WHICH WOULD HAVE BEEN THE SUBJECT OF THIS
GUARANTEE HAD IT BEEN VALID AND ENFORCEABLE IS NOT OR CEASES TO BE
VALID OR ENFORCEABLE AGAINST THE BORROWER ON ANY GROUND WHATSOEVER
WHETHER OR NOT KNOWN TO THE CREDITORS OR ANY OF THEM (INCLUDING,
WITHOUT LIMITATION, ANY IRREGULAR EXERCISE OR ABSENCE OF ANY CORPORATE
POWER OR LACK OF AUTHORITY OF, OR BREACH OF DUTY BY, ANY PERSON
PURPORTING TO ACT ON BEHALF OF THE BORROWER OR ANY LEGAL OR OTHER
LIMITATION, WHETHER UNDER THE LIMITATION ACTS OR OTHERWISE OR ANY
DISABILITY OR INCAPACITY OR ANY CHANGE IN THE CONSTITUTION OF THE
BORROWER) THE GUARANTOR SHALL NEVERTHELESS BE LIABLE IN RESPECT OF THAT
PURPORTED OBLIGATION OR LIABILITY AS IF THE SAME WERE FULLY VALID AND
ENFORCEABLE AND THE GUARANTOR WERE THE PRINCIPAL DEBTOR IN RESPECT
THEREOF. THE GUARANTOR HEREBY IRREVOCABLY AND UNCONDITIONALLY AGREES TO
INDEMNIFY AND KEEP INDEMNIFIED THE CREDITORS AGAINST ANY LOSS OR
LIABILITY ARISING FROM ANY FAILURE OF THE BORROWER TO PERFORM OR
DISCHARGE ANY SUCH PURPORTED OBLIGATION OR LIABILITY OR FROM ANY
INVALIDITY OR UNENFORCEABILITY OF ANY OF THE SAME AGAINST THE BORROWER.
15.3 STATEMENTS OF ACCOUNT CONCLUSIVE
Any statement of account of the Borrower, signed as correct by an
officer of the Facility Agent, showing the amount of the Guaranteed
Liabilities shall, in the absence of manifest error, be binding and
conclusive on and against the Guarantor.
15.4 INTEREST
The Guarantor agrees to pay interest on each amount demanded of it
under this Guarantee from the date of such demand until payment (as
well after as before judgment) at the rate specified in clause 5.4
which shall apply to this Guarantee mutatis mutandis provided however
that interest shall not be payable if and to the extent that interest
under clause 5.4 is payable by the Borrower on the demanded amount and
such interest payable by the Borrower is comprised in the Guaranteed
Liabilities.
15.5 CONTINUING GUARANTEE
This Guarantee shall extend to the ultimate balance from time to time
owing to the Creditors by the Borrower and shall be a continuing
guarantee, notwithstanding any intermediate payment, partial settlement
or other matter whatsoever.
15.6 LIABILITY UNCONDITIONAL
The liability of the Guarantor shall not be affected nor shall this
Guarantee be discharged or reduced by reason of:
15.6.1 the Incapacity or any change in the name, style or constitution of
the Borrower or any other person liable;
15.6.2 any of the Creditors granting any time, indulgence or concession to,
or compounding with, discharging, releasing or varying the liability
of the Borrower or any other person liable; or
50
15.6.3 any amendment, variation or waiver (however material or
fundamental) of the Security Documents; or
15.6.4 any act or omission which would not have discharged or affected the
liability of the Guarantor had it been a principal debtor instead
of the Borrower or by anything done or omitted which but for this
provision might operate to exonerate the Guarantor.
15.7 COLLATERAL INSTRUMENTS
None of the Creditors shall be obliged to make any claim or demand on
the Borrower or to resort to any Collateral Instrument or other means
of payment before enforcing this Guarantee and no action taken or
omitted in connection with any such Collateral Instrument or other
means of payment shall discharge, reduce, prejudice or affect the
liability of the Guarantor under this Guarantee. None of the Creditors
shall be obliged to apply any money or other property received or
recovered in consequence of any enforcement or realisation of any such
Collateral Instrument or other means of payment in reduction of the
Guaranteed Liabilities.
15.8 WAIVER OF GUARANTOR'S RIGHTS
Until all the Guaranteed Liabilities have been paid, discharged or
satisfied in full (and notwithstanding payment of a dividend in any
liquidation or under any compromise or arrangement) the Guarantor
agrees that, without the prior written consent of the Security Trustee,
it will not:
15.8.1 exercise any rights of subrogation, contribution or indemnity
against the Borrower or any other person liable;
15.8.2 demand or accept any Encumbrance to be executed or created in
respect of any of its obligations under this Guarantee or any other
Indebtedness now or hereafter due to the Guarantor from the
Borrower or from any other person liable;
15.8.3 take any step to enforce any right against the Borrower or any
other person liable in respect of any Guaranteed Liabilities; or
15.8.4 exercise any right of set-off or counterclaim against the Borrower
or any other person liable or claim or prove or vote as a creditor
in competition with any of the Creditors in the liquidation,
administration or other insolvency proceeding of the Borrower or
any other person liable or have the benefit of, or share in, any
payment from or composition with, the Borrower or any other person
liable or any Collateral Instrument now or hereafter held by any of
the Creditors for any Guaranteed Liabilities or for the obligations
or liabilities of any other person liable.
15.9 SUSPENSE ACCOUNTS
Any money received in connection with this Guarantee (whether before or
after any Incapacity of the Borrower or the Guarantor) may be placed to
the credit of an interest-bearing suspense account with a view to
preserving the rights of the Creditors to prove for the whole of their
respective claims against the Borrower or any other person liable or
may be applied in or towards satisfaction of such of the Guaranteed
Liabilities as the Security Trustee may from time to time conclusively
determine in its absolute discretion (but acting on the instructions of
the Lenders) notwithstanding any appropriation (or purported
appropriation) by the Guarantor.
15.10 SETTLEMENTS CONDITIONAL
Any release, discharge or settlement between the Guarantor and the
Security Trustee or any of the Creditors shall be conditional upon no
security, disposition or payment to any of the Creditors by the
Borrower or any other person liable being void, set aside or ordered to
be refunded pursuant to any enactment or law relating to bankruptcy,
liquidation, administration or insolvency or for any other reason
whatsoever and if such condition is not fulfilled the Creditors shall
be entitled to enforce this Guarantee as if such release, discharge or
settlement had not occurred and such payment had not been made.
51
15.11 GUARANTOR TO DELIVER UP CERTAIN PROPERTY
If, contrary to clause 15.8, the Guarantor takes or receives the
benefit of any Encumbrance or receives or recovers any money or other
property, such Encumbrance, money or other property shall be held on
trust for the Creditors and shall be delivered to the Security Trustee
on demand.
15.12 CHANGES IN CONSTITUTION OR REORGANISATIONS OF CREDITORS
For the avoidance of doubt and without prejudice to the provisions of
clause 16, this Guarantee shall remain binding on the Guarantor
notwithstanding any change in the constitution of the Creditors or any
of them or their or its absorption in, or amalgamation with, or the
acquisition of all or part of their or its undertaking or assets by,
any other person, or any reconstruction or reorganisation of any kind,
to the intent that this Guarantee shall remain valid and effective in
all respects in favour of any assignee, transferee or other successor
in title of the Creditors in the same manner as if such assignee,
transferee or other successor in title had been named in this Guarantee
as a party instead of, or in addition to, the relevant Creditor.
16 TRANSFER AND LENDING OFFICE
16.1 BENEFIT AND BURDEN
This Agreement shall be binding upon, and enure for the benefit of,
each of the Creditors, the Borrower and the Guarantor and their
respective successors.
16.2 NO ASSIGNMENT BY BORROWER OR GUARANTOR
Neither the Borrower nor the Guarantor may assign or transfer any of
their respective rights or obligations under this Agreement or any of
the Security Documents.
16.3 TRANSFERS
16.3.1 Any Lender (the "TRANSFEROR LENDER") may at any time, transfer all or
any part of its rights, benefits and/or obligations under this
Agreement and the Security Documents to its Subsidiaries, affiliates or
associates or to a federal reserve bank, central bank or other monetary
or regulatory authority having jurisdiction over such Lender or to any
other Lender without the consent of the Borrower.
16.3.2 So long as no Default has occurred and is then continuing, any other
transfers to any other bank or financial institution shall require the
consent of the Borrower (such consent not to be unreasonably withheld
or delayed (and for the purposes of this clause 16.3, it shall be
deemed unreasonable for the Borrower to withhold or delay such consent
on the grounds that any proposed transfer by a Lender of part of its
rights, benefits and/or obligations would result in the number of
Lenders being increased if, after such transfer, there would be no more
than eight (8) Lenders) provided always that there shall not at any
time be more than eight (8) Lenders unless all of the parties to this
Agreement have otherwise agreed).
16.3.3 Transfers to any lender or financial institution (a "TRANSFEREE
LENDER") shall be effected by the Transferor Lender delivering to the
Facility Agent a Transfer Certificate duly completed and duly executed
by the Transferor Lender and the Transferee Lender.
16.3.4 Any transfer by a Lender shall be offered and effected in compliance
with all applicable laws and regulations. If the Borrower fails to
respond to a request for such consent within ten (10) days of such
request being made, the Borrower shall be deemed to have given such
consent. No such transfer is binding on, or effective in relation to,
the Guarantor, the Borrower, the Facility Agent, or the Security
Trustee unless it is effected or evidenced by a Transfer Certificate
which complies with the provisions of this clause 16.3 and is signed by
or on behalf of the Transferor Lender, the Transferee Lender and the
Facility Agent (on behalf of itself, the Guarantor, the Borrower, the
Security Trustee and the other Lenders). Upon signature of any such
Transfer Certificate by the Facility Agent, which signature shall be
effected as promptly as is practicable after such Transfer Certificate
has been delivered to the Facility Agent, and subject to the terms of
such Transfer Certificate, such Transfer Certificate shall have effect
as set out below.
16.3.5 The following further provisions shall have effect in relation to any
Transfer Certificate:
52
(a) a Transfer Certificate may be in respect of a Lender's rights in
respect of all or part, of its Commitment and shall be in respect
of the same proportion of its Outstandings;
(b) a Transfer Certificate shall only be in respect of rights and
obligations of the Transferor Lender in its capacity as a Lender
and shall not transfer its rights and obligations as Facility
Agent or Security Trustee or in any other capacity, as the case
may be and such other rights and obligations may only be
transferred in accordance with any applicable provisions of the
Agency Agreement;
(c) a Transfer Certificate shall take effect in accordance with
English law as follows:
(i) to the extent specified in the Transfer Certificate, the
Transferor Lender's payment rights and all its other
rights (other than those referred to in paragraph (b)
above) under this Agreement are assigned to the
Transferee Lender absolutely, free of any defects in the
Transferor Lender's title and of any rights or equities
which the Borrower had against the Transferor Lender;
(ii) the Transferor Lender's Commitment is discharged to the
extent specified in the Transfer Certificate;
(iii) the Transferee Lender becomes a Lender with Outstandings
and an undrawn Commitment of the amount specified in the
Transfer Certificate;
(iv) the Transferee Lender becomes bound by all the
provisions of this Agreement and the Security Documents
which are applicable to the Lenders generally, including
those about pro-rata sharing and the exclusion of
liability on the part of, and the indemnification of,
the Facility Agent and the Security Trustee in
accordance with the provisions of the Agency Agreement
and to the extent that the Transferee Lender becomes
bound by those provisions, the Transferor Lender ceases
to be bound by them;
(v) the contribution to the Outstandings which the
Transferee Lender makes after the Transfer Certificate
comes into effect rank in point of priority and security
in the same way as it would have ranked had it been made
by the Transferor Lender, assuming that any defects in
the Transferor Lender's title and any rights or equities
of any Security Party against the Transferor Lender had
not existed; and
(vi) the Transferee Lender becomes entitled to all the rights
under this Agreement which are applicable to the Lenders
generally, including but not limited to those relating
to the Majority Lenders and those under clauses 5.7, 7
and 13, and to the extent that the Transferee Lender
becomes entitled to such rights, the Transferor Lender
ceases to be entitled to them;
(d) the rights and equities of the Borrower or of any other Security
Party referred to above include, but are not limited to, any
right of set off and any other kind of cross-claim; and
(e) the Guarantor, the Borrower, the Security Trustee and the Lenders
hereby irrevocably authorise and instruct the Facility Agent to
sign any such Transfer Certificate on its behalf (and, in the
case of the Security Trustee, on behalf of any Security Party
which has in the relevant Security Document given a corresponding
authorisation and instruction to the Security Trustee) and
undertake not to withdraw, revoke or qualify such authority or
instruction at any time. Promptly upon its signature of any
Transfer Certificate, the Facility Agent shall notify the
Guarantor, the Borrower, the Security Trustee the Transferor
Lender, the Transferee Lender and the other Lenders.
16.4 RELIANCE ON TRANSFER CERTIFICATE
16.4.1 The Facility Agent shall be entitled to rely on any Transfer
Certificate believed by it to be genuine and correct and to have been
presented or signed by the persons by whom it purports to have been
presented or signed, and shall not be liable to any of the parties to
this Agreement and the Security Documents for the consequences of such
reliance.
53
16.4.2 The Facility Agent shall at all times during the continuation of this
Agreement maintain a register in which it shall record the name,
Commitments, or, as the case may be, Outstandings and administrative
details (including the lending office) from time to time of each Lender
holding Transfer Certificates and the date at which the transfer
referred to in such Transfer Certificate held by each Lender was
transferred to such Lender, and the Facility Agent shall make the said
register available for inspection by any Lender, the Security Trustee
and the Borrower during normal banking hours upon receipt by the
Facility Agent of reasonable prior notice requesting the Facility Agent
to do so.
16.4.3 The entries on the said register shall, in the absence of manifest
error, be conclusive in determining the identities of the Commitments
or, as the case may be, the Outstandings and the Transfer Certificates
held by the Lenders from time to time and the principal amounts of such
Transfer Certificates and may be relied upon by the Facility Agent, the
Security Trustee and the other Security Parties for all purposes in
connection with this Agreement and the Security Documents.
16.5 TRANSFER FEES AND EXPENSES
If any Lender causes the transfer of all or any part of its rights,
benefits and/or obligations under this Agreement or the Security
Documents, it shall pay or procure that the Transferee Lender pays to
the Facility Agent for its own account a registration fee of one
thousand Dollars ($1,000) for each transfer, and shall also pay to the
Facility Agent on demand all out of pocket costs, fees and expenses
(including, but not limited to, legal fees and expenses), and all value
added tax thereon, certified by the Facility Agent as having been
reasonably and properly incurred by it in connection with such
transfer.
16.6 DOCUMENTING TRANSFERS
If any Lender transfers all or any part of its rights, benefits and/or
obligations as provided in clause 16.3 the Guarantor and the Borrower
undertakes, immediately on being requested to do so by the Facility
Agent and at the cost of the Transferor Lender, to enter into, and
procure that the other Security Parties shall enter into, such
documents as may be necessary or desirable to transfer to the
Transferee Lender all or the relevant part of such Lender's interest in
this Agreement and the Security Documents and all relevant references
in this Agreement to such Lender shall thereafter be construed as a
reference to the Lender and/or its Transferee Lender (as the case may
be) to the extent of their respective interests.
16.7 SUB-PARTICIPATION
A Lender may sub-participate all or any part of its rights and/or
obligations under this Agreement and the Security Documents to another
bank or financial institution with the prior consent of the Borrower
and the Facility Agent (such consent not to be unreasonably withheld or
delayed).
16.8 LENDING OFFICE
Each Lender shall lend through its office at the address specified in
Schedule 1 or, as the case may be, in any relevant Transfer Certificate
or through any other office of such Lender selected from time to time
by it through which such Lender wishes to lend for the purposes of this
Agreement. If the office through which such Lender is lending is
changed pursuant to this clause 16.8, such Lender shall notify the
Facility Agent promptly of such change and the Facility Agent shall
notify the Borrower.
16.9 DISCLOSURE OF INFORMATION
Any Lender may (with the prior written consent of the Borrower such
consent not to be unreasonable withheld or delayed) disclose to a
prospective assignee, substitute or transferee or to any other person
who may propose entering into contractual relations with such Lender in
relation to this Agreement such information about the Guarantor and the
Borrower as such Lender shall consider appropriate.
16.10 NO ADDITIONAL COSTS
If at the time of, or immediately after, any assignment by any Lender
of all or any part of its rights or benefits under this Agreement or
any transfer by any Lender of any part of the rights, benefits and/or
obligations under this Agreement, or any change in the office through
which it lends for the purposes of this Agreement, the Borrower would
be obliged to pay to the assignee or Transferee Lender or (in
54
the case of a change of lending office) the Lender under clause 8.9 or
13.2 any sum in excess of the sum (if any) which it would have been
obliged to pay to such Lender under the relevant clause in the absence
of such assignment, transfer or change, the Borrower shall not be
obliged to pay that excess.
17 FACILITY AGENT, SECURITY TRUSTEE AND REFERENCE BANKS
17.1 APPOINTMENT OF THE FACILITY AGENT AND THE SECURITY TRUSTEE
The terms and basis on which the Facility Agent and the Security
Trustee have been appointed by the Lenders as Facility Agent and as
Security Trustee respectively are set out in the Agency Agreement
including, among other things, the manner in which any decision to
exercise any right, powers, discretion or authority or to carry out any
duty are to be made between the Lenders, the Facility Agent and the
Security Trustee.
17.2 REFERENCE BANKS
If:
17.2.1 the Outstandings (if any) of any Reference Bank is prepaid; or
17.2.2 the Commitments (if any) of any Reference Bank are reduced to zero
in accordance with clause 13; or
17.2.3 a Reference Bank transfers the whole of its rights and obligations
(if any) as a Lender under this Agreement; or
17.2.4 where applicable, any Reference Bank ceases to provide quotations
to the Facility Agent for the purposes of determining LIBOR,
the Facility Agent may, acting on the instructions of the Majority
Lenders, terminate the appointment of such Reference Bank and appoint
another Lender to replace such Reference Bank.
18 NOTICES AND OTHER MATTERS
18.1 NOTICES
Every notice, request, demand or other communication under this
Agreement or (unless otherwise provided therein) under any of the other
Security Documents shall:
18.1.1 be in writing delivered personally or by first-class prepaid letter
(airmail if available) or facsimile transmission or other means of
telecommunication in permanent written form;
18.1.2 be deemed to have been received, subject as otherwise provided in
any relevant Security Document, in the case of a letter, when
delivered personally or seven (7) days after it has been put in to
the post and, in the case of a facsimile transmission or other
means of telecommunication in permanent written form, at the time
of despatch (provided that if the date of despatch is not a
business day in the country of the addressee or if the time of
despatch is after the close of business in the country of the
addressee it shall be deemed to have been received at the opening
of business on the next such business day); and
18.1.3 be sent:
(a) to the Borrower at:
Gulf Offshore N.S. Limited
▇▇▇-▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇
Fax No: + ▇▇ ▇▇▇▇-▇▇▇-▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
55
(b) to the Guarantor at:
GulfMark Offshore, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Fax No: ▇▇▇-▇▇▇-▇▇▇▇
Attention:▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
(c) to the Security Trustee or Facility Agent at:
Nordea Bank Finland Plc
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇
▇▇ ▇▇▇▇▇
▇▇▇
If in respect of credit matters:
Fax: ▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇
Attn: Shipping, Offshore and Oil Services
If in respect of loan administration matters:
Fax no: ▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇
Attention: Loan Administration
(d) to each Lender at its address or fax number specified in
Schedule 1 or in any relevant Transfer Certificate,
or to such other address and/or numbers as is notified by one party
to the other party under this Agreement.
18.2 NO IMPLIED WAIVERS, REMEDIES CUMULATIVE
No failure or delay on the part of any Creditor to exercise any power,
right or remedy under this Agreement or any of the other Security
Documents shall operate as a waiver thereof, nor shall any single or
partial exercise by any Creditor of any power, right or remedy preclude
any other or further exercise thereof or the exercise of any other
power, right or remedy. The remedies provided in this Agreement or the
other Security Documents are cumulative and are not exclusive of any
remedies provided by law.
18.3 FURTHER ASSURANCE
The Guarantor and the Borrower undertake that this Agreement and each
of the other Security Documents shall both at the date of execution and
delivery thereof and so long as any moneys are owing under this
Agreement or any of the other Security Documents, be valid and binding
obligations of the respective parties thereto and the rights of the
Creditors thereunder enforceable in accordance with their respective
terms and that they will, at their expense, execute, sign, perfect and
do, and will procure the execution, signing, perfecting and doing by
each of the other Security Parties of, any and every such further
assurance, document, act or thing as in the reasonable opinion of the
Security Trustee may be necessary or desirable for perfecting the
security contemplated or constituted by this Agreement or the Security
Documents.
18.4 AMENDMENTS AND WAIVERS
Amendments to and waivers under this Agreement may only be agreed in
accordance with clause 2.4.2 of the Agency Agreement.
56
18.5 CONFLICTS
In the event of any conflict between this Agreement and any of the
other Security Documents, the provisions of this Agreement shall
prevail.
18.6 ENGLISH LANGUAGE
All certificates, instruments and other documents to be delivered under
or supplied in connection with this Agreement or any of the other
Security Documents shall be in the English language or shall be
accompanied by a certified English translation upon which the Facility
Agent shall be entitled to rely.
18.7 CONTRACTS (RIGHTS OF THIRD PARTIES) ACT 1999
No term of this Agreement is enforceable under the Contracts (Rights of
Third Parties) ▇▇▇ ▇▇▇▇ by a person who is not a party to this
Agreement.
18.8 MONEY LAUNDERING
Without prejudice to the generality of the foregoing in relation to the
borrowing by the Borrower of the Outstandings, the performance and
discharge of their respective obligations and liabilities under this
Agreement and the other Security Documents, and the transactions and
other arrangements effected or contemplated by this Agreement and the
other Security Documents to which the Borrower is a party, the Borrower
confirms it is acting for its own account and that the foregoing will
not involve or lead to contravention of any law, official requirement
or other regulatory measure or procedure implemented to combat "MONEY
LAUNDERING" (as defined in Article 1 of the Directive (91/308/EEC) of
the Council of the European Communities).
19 GOVERNING LAW AND JURISDICTION
19.1 LAW
This Agreement is governed by and shall be construed in accordance with
English law.
19.2 SUBMISSION TO JURISDICTION
The Borrower and the Guarantor agree, for the benefit of the Creditors,
that any legal action or proceedings arising out of or in connection
with this Agreement against the Borrower or the Guarantor and any of
their respective assets may be brought in the English courts. The
Borrower and the Guarantor irrevocably and unconditionally submit to
the jurisdiction of such courts and the Guarantor irrevocably
designates, appoints and empowers the Borrower at present of ▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ to receive for
it and on its behalf, service of process issued out of the English
courts in such legal action or proceedings. The submission to such
jurisdiction shall not (and shall not be construed so as to) limit the
right of any Creditor to take proceedings against the Borrower and/or
the Guarantor in the courts of any other competent jurisdiction nor
shall the taking of proceedings in any one or more jurisdictions
preclude the taking of proceedings in any other jurisdiction, whether
concurrently or not. The parties further agree that only the courts of
England and not those of any other state shall have jurisdiction to
determine any claim which the Borrower and/or the Guarantor may have
against any Creditor arising out of or in connection with this
Agreement.
IN WITNESS whereof the parties to this Agreement have caused this Agreement to
be duly executed on the date first above written.
57
SCHEDULE 1
THE LENDERS AND THEIR COMMITMENTS
TOTAL COMMITMENT
NAME ADDRESS AND FAX NUMBER USD
----------------------- -------------------------------- ----------------
Nordea Bank Finland Plc ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ 50,000,000
▇▇▇ ▇▇▇▇
▇▇ ▇▇▇▇▇
▇▇▇
Credit Matters:
Fax: ▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇
Attn: Shipping, Offshore and Oil
Services
Loan Administration Matters:
Fax: ▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇
Attn: Loan Administration
TOTAL COMMITMENTS 50,000,000
----------
58
SCHEDULE 2
THE MORTGAGED VESSELS
CLASSIFICATION
VESSEL OWNER FLAG STATE SOCIETY CLASSIFICATION
----------------- --------- -------------- --------------------------- ---------------------------
HIGHLAND DRUMMER Borrower United Kingdom Det Norske [-]
Veritas
HIGHLAND FORTRESS Borrower United Kingdom Det Norske [-]
Veritas
HIGHLAND ROVER Borrower United Kingdom Det Norske [-]
Veritas
HIGHLAND SPIRIT Borrower United Kingdom Det Norske [-]
Veritas
HIGHLAND PIPER Borrower United Kingdom Det Norske [-]
Veritas
HIGHLAND CITADEL Borrower United Kingdom Det Norske [-]
Veritas
HIGHLAND GUIDE Guarantor Panama American Bureau of Shipping +A1, Fighting Vessel, Class
I, E (circled) + AMS
HIGHLAND SCOUT Guarantor Panama American Bureau of Shipping +A1, E (circled) + AMS
59
SCHEDULE 3
FORM OF DRAWDOWN NOTICE
(referred to in clause 3.1)
(DATE)
To: [Name and address of Facility Agent]
U.S.$50,000,000 SENIOR SECURED REVOLVING CREDIT FACILITY DATED - December 2004
("AGREEMENT")
We refer to the above Agreement and hereby give you notice that we wish to draw
down an Advance of $- [NB: SPECIFY DOLLAR AMOUNT] on - [NB: SPECIFY DATE] and
[select a first Interest Period in respect thereof of - months] [the first
Interest Period in respect thereof to expire on - [NB: SPECIFY]]. The funds
should be credited to [NB: NAME AND NUMBER OF ACCOUNT] with - [NB: SPECIFY
DETAILS OF LENDER IN NEW YORK CITY].
We confirm that:
(a) no event or circumstance has occurred and is continuing which constitutes
a Default;
(b) the representations and warranties contained in clauses 9.1 of the
Facility Agreement (and so that the representation and warranty in clause
9.1.9 refers for this purpose to the audited financial statements of the
Guarantor [and the consolidated financial statements of the Guarantor and
its Subsidiaries] in respect of the financial year ended on - [NB: INSERT
DATE]) are true and correct at the date hereof as if made with respect to
the facts and circumstances existing at such date;
(c) the borrowing to be effected by the drawdown of such Advance will be
within our corporate powers, has been validly authorised by appropriate
corporate action and will not cause any limit on our borrowings (whether
imposed by statute, regulation, agreement or otherwise) to be exceeded;
and
(d) there has been no event or occurrence which would have a Material Adverse
Effect upon the Borrower or on the Guarantor.
Words and expressions defined in the Agreement shall have the same meanings
where used herein.
For and on behalf of
GULF OFFSHORE N.S. LIMITED
60
SCHEDULE 4
DOCUMENTS AND EVIDENCE REQUIRED AS CONDITIONS PRECEDENT
(referred to in clause 3.1.1)
PART 1
(a) CONSTITUTIONAL DOCUMENTS
copies, certified by an officer of each Security Party as true,
complete and up to date copies of all documents which contain or
establish or relate to the constitution of that Security Party;
(b) CORPORATE AUTHORISATIONS
copies of resolutions of the directors of each Security Party approving
this Agreement and the Security Documents to which such Security Party
is, or is to be, party and authorising the signature, delivery and
performance of such Security Party's obligations thereunder, certified
(in a certificate dated no earlier than five (5) Banking Days prior to
the date of this Agreement) by an officer of such Security Party as:
(i) being true and correct;
(ii) being duly passed at meetings of the directors of such
Security Party each duly convened and held;
(iii) not having been amended, modified or revoked; and
(iv) being in full force and effect
together with originals or certified copies of any powers of attorney
issued by any Security Party pursuant to such resolutions;
(c) SPECIMEN SIGNATURES
copies of the signatures of the persons who have been authorised on
behalf of each Security Party to sign this Agreement and the Security
Documents to which such Security Party is, or is to be, party and to
give notices and communications, including notices of drawing, under or
in connection with this Agreement and the Security Documents, certified
(in a certificate dated no earlier than five (5) Banking Days prior to
the date of this Agreement) by an officer of such Security Party as
being the true signatures of such persons;
(d) CERTIFICATE OF INCUMBENCY
a list of directors and officers of each Security Party specifying the
names and positions of such persons, certified (in a certificate dated
no earlier than five (5) Banking Days prior to the date of this
Agreement) by an officer of such Security Party to be true, complete
and up to date;
(e) IDENTIFICATION PAPERS
the certificates of incumbency (and any power of attorney of
individuals acting on behalf of any Security Party) should be
accompanied by certified copies of identification papers (such as
passports and identification cards) of each individual acting on behalf
of any Security Party;
(f) BORROWER CONSENTS AND APPROVALS
a certificate (dated no earlier than five (5) Banking Days prior to the
date of this Agreement) from an officer of the Borrower that no
consents, authorisations, licences or approvals are necessary for the
Borrower to authorise or are required by the Borrower in connection
with the
61
borrowing by the Borrower of its Commitment pursuant to this Agreement
or the execution, delivery and performance of the Security Documents;
(g) OTHER CONSENTS AND APPROVALS
a certificate (dated no earlier than five (5) Banking Days prior to the
date of this Agreement) from an officer of each Security Party (other
than the Borrower) that no consents, authorisations, licences or
approvals are necessary for such Security Party to guarantee and/or
grant security for the borrowing by the Borrower of the Commitment
pursuant to this Agreement and execute, deliver and perform the
Security Documents insofar as such Security Party is a party thereto;
(h) FEE LETTERS
the fee letters referred to in clause 7.1 duly executed by the parties
thereto;
(i) FEES AND EXPENSES
evidence that the fees due on or before the First Drawdown Date under
the fee letters referred to above have been paid in full;
(j) VALUATIONS
valuation reports dated no more than thirty (30) days before the date
of this Agreement for each of the Vessels listed in Schedule 2
evidencing the Fair Market Value of the relevant Vessels in form and
substance satisfactory to the Facility Agent;
(k) GUARANTOR'S PROCESS AGENT
an original letter from the Guarantor's agent for receipt of service of
proceedings referred to in clause 19.2 accepting its appointment under
clause 19 and under each of the other Security Documents in which it is
or is to be appointed as the Guarantor's agent.
62
PART 2
(referred to in clause 3.1.2)
(a) VESSEL CONDITIONS
evidence that each Mortgaged Vessel:
(i) REGISTRATION AND ENCUMBRANCES
is permanently registered in the name of the Borrower or the
Guarantor under the laws and flag of the Flag State and that
any such Mortgaged Vessel and its Earnings, and Insurances and
Requisition Compensation are free of Encumbrances (other than
any Permitted Encumbrance and the relevant Mortgage);
(ii) CLASSIFICATION
maintains the Classification as required by this Agreement;
and
(iii) INSURANCE
is insured in accordance with the provisions of this Agreement
and the Security Documents and all requirements of this
Agreement and the Security Documents in respect of such
insurance have been complied with;
(b) SECURITY DOCUMENTS
the Mortgages, the Collateral Deeds, any Consents and Acknowledgements
relating to each Mortgaged Vessel and the Agency Agreement duly
executed;
(c) MORTGAGE REGISTRATION
under the laws of each Flag State evidence that each Mortgage has been
registered against each Mortgaged Vessel in its Flag State so that such
Vessel has become a Mortgaged Vessel;
(d) ENGLISH OPINION
an opinion of Messrs ▇▇▇▇▇▇ ▇▇▇▇, legal advisers in England to the
Facility Agent and of Messrs ▇▇▇▇▇▇▇ & Co., legal advisers to the
Borrower in England, in each case addressed to the Facility Agent (for
the benefit of itself and the Lenders) dated no earlier than five (5)
days earlier than the date of drawdown of the first Advance;
(e) UNITED STATES OPINION
an opinion of Messrs Holland & Knight special legal advisers regarding
United States law to the Facility Agent and an opinion of ▇▇▇▇▇▇▇▇▇▇▇ &
Price, LLP legal advisers to the Borrower and the Guarantor in the
United States, in each case addressed to the Facility Agent (for the
benefit of itself and the Lenders) dated no earlier than five (5) days
prior to the date of drawdown of the first Advance;
(f) PANAMANIAN OPINION
an opinion of Messrs ▇▇▇▇▇▇, ▇▇▇▇▇▇ & Asvat special legal advisers
regarding Panamanian law to the Facility Agent addressed to the
Facility Agent (for the benefit of itself and the Lenders) dated no
earlier than five (5) days prior to the date of drawdown of the first
Advance;
(g) FURTHER OPINIONS
any such further opinion as may be reasonably required by the Facility
Agent;
63
(h) INSURANCE OPINION
an opinion from ▇▇▇▇▇ Marine & Energy AS, insurance consultants to the
Facility Agent, evidencing that the Insurances for the Mortgaged
Vessels have been placed in accordance with customary market practices
and the provisions of this Agreement and otherwise in accordance with
market practice (such opinion to be at the cost of the Borrower);
(i) VALUATIONS
such further valuation reports as may be required pursuant to clause
10.2.2;
(j) CERTIFICATE OF COMPLIANCE
a Certificate of Compliance in the agreed form from the Guarantor;
(k) NON-CONTRAVENTION STATEMENT
a "non-contravention statement" from the Guarantor's external U.S.
counsel (approved by the Facility Agent) as to certain matters arising
out of the Indenture relating to the Notes in form and substance
satisfactory to the Lenders; (N.B. may be contained in the legal
opinion issued by ▇▇▇▇▇▇▇▇▇▇▇ & Price, LLP under (e) above);
(l) FEES AND COMMISSIONS
evidence that any fees and commissions due but unpaid under the letters
referred to in clause 7 have been, or will be, paid in full;
(m) MATERIAL ADVERSE CHANGE
the Facility Agent being satisfied that no event or circumstance has
occurred during the period commencing on the date of this Agreement and
ending on the date of the first Advance which would constitute a
Material Adverse Effect on any Security Party;
(n) NO OUTSTANDING LITIGATION
a certificate from the Guarantor and the Borrower certifying that no
litigation, arbitration or administrative proceedings are taking place,
pending or threatened against the Guarantor or the Borrower which would
have a Material Adverse Effect on any Security Party;
(o) UCC FILINGS
evidence, satisfactory to the Facility Agent that all applicable
Uniform Commercial Code US filings required to perfect the security
interests of the Lenders under the Security Documents have been or will
be made (as the case may be);
(p) GOOD STANDING
a certificate confirming that the Guarantor is in good standing in the
state of Texas and the state of Delaware;
(q) GULF OFFSHORE MARINE INTERNATIONAL, INC.'S PROCESS AGENT
an original letter from Gulf Offshore Marine International, Inc.'s
agent for receipt of service of proceedings referred to in the relevant
Collateral Deeds accepting its appointment under such Collateral Deed
in which it is or is to be appointed as Gulf Offshore Marine
International, Inc.'s agent; and
64
(r) CHARTERS
a certified copy of each Permitted Charter.
65
SCHEDULE 5
FORM OF TRANSFER CERTIFICATE
(referred to in clause 16.3)
TRANSFER CERTIFICATE
[Note: Lenders are advised not to employ Transfer Certificates or otherwise to
assign or transfer interests in the Facility Agreement without further ensuring
that the transaction complies with all applicable laws and regulations,
including the Financial Services and Markets ▇▇▇ ▇▇▇▇ and regulations made
thereunder and similar statutes which may be in force in other jurisdictions]
To: [-], as Facility Agent on its own behalf and for and on behalf of the
Guarantor, the Borrower, the Security Trustee and the Lenders defined
in the Facility Agreement referred to below.
- 200 -
Attention: [-]
This certificate ("TRANSFER CERTIFICATE") relates to a Facility Agreement dated
[-] 2004 (the "FACILITY AGREEMENT") and made between (1) Gulf Offshore N.S.
Limited (the "BORROWER"), (2) GulfMark Offshore Inc. as guarantor (the
"GUARANTOR"), (3) the banks and financial institutions defined therein as
lenders (the "LENDERS"), (4) Nordea Bank Norge ASA as arranger and (5) Nordea
Bank Finland Plc as Facility Agent and Security Trustee, for a loan facility of
up to USD50,000,000. Terms defined in the Facility Agreement shall, unless
otherwise defined herein, have the same meanings herein as therein.
In this Certificate:
the "TRANSFEROR" means [FULL NAME] of [LENDING OFFICE]; and
the "TRANSFEREE" means [FULL NAME] of [LENDING OFFICE].
1 The Transferor with full title guarantee assigns to the Transferee
absolutely all rights and interests (present, future or contingent)
which the Transferor has as a Lender under or by virtue of the Facility
Agreement and all the Security Documents in relation to [-] percent
([-]%) of the Outstandings of the Transferor (or its predecessors in
title) which are set out below:
DATE OF CONTRIBUTION TO OUTSTANDINGS AMOUNT
[-] USD [-]
2 By virtue of this Transfer Certificate and clause 16 of the Facility
Agreement, the Transferor is discharged [entirely from its undrawn
Commitment which amounts to USD[-]] [from [-] percent ([-]%) of its
undrawn Commitment, which percentage represents USD[-]].]
3 The Transferee hereby requests the Borrower, the Guarantor, the
Facility Agent, the Security Trustee and the Lenders to accept the
executed copies of this Transfer Certificate as being delivered
pursuant to and for the purposes of clause 16.3 of the Facility
Agreement so as to take effect in accordance with the terms thereof on
[-][DATE OF TRANSFER].
4 The Transferee:
(a) confirms that it has received a copy of the Facility Agreement
and the Security Documents together with such other documents
and information as it has required in connection with the
transaction contemplated thereby;
(b) confirms that it has not relied and will not hereafter rely on
the Transferor, the Facility Agent or the Security Trustee to
check or enquire on its behalf into the legality, validity,
66
effectiveness, adequacy, accuracy or completeness of the
Facility Agreement, any of the Security Documents or any such
documents or information;
(c) agrees that it has not relied and will not rely on the
Transferor, the Facility Agent, the Security Trustee or the
Lenders to assess or keep under review on its behalf the
financial condition, creditworthiness, condition, affairs,
status or nature of the Borrower or any other Security Party
(save as otherwise expressly provided therein);
(d) warrants that it has power and authority to become a party to
the Facility Agreement and has taken all necessary action to
authorise execution of this Transfer Certificate and to obtain
all necessary approvals and consents to the assumption of its
obligations under the Facility Agreement and the Security
Documents;
(e) acknowledges and accepts the provisions of paragraph 4(c)
above; and
(f) if not already a Lender, appoints the Facility Agent to act as
its agent and the Security Trustee to act as its trustee as
provided in the Facility Agreement and the Security Documents
and agrees to be bound by the terms of the Agency Agreement.
5 The Transferor:
(a) warrants to the Transferee that it has full power to enter
into this Transfer Certificate and has taken all corporate
action necessary to authorise it to do so;
(b) warrants to the Transferee that this Transfer Certificate is
binding on the Transferor under the laws of England, [and o]
[(IF DIFFERENT) THE COUNTRY IN WHICH THE TRANSFEROR IS
INCORPORATED AND THE COUNTRY IN WHICH ITS LENDING OFFICE IS
LOCATED]; and
(c) agrees that it will, at its own expense, execute any documents
which the Transferee reasonably requests for perfecting in any
relevant jurisdiction the Transferee's title under this
Transfer Certificate or for a similar purpose.
6 The Transferee hereby undertakes with the Transferor and each of the
other parties to the Facility Agreement and the other Security
Documents that it will perform in accordance with its terms all those
obligations which by the terms of the Facility Agreement and the other
Security Documents will be assumed by it after delivery of the executed
copies of this Transfer Certificate to the Facility Agent and
satisfaction of the conditions (if any) subject to which this Transfer
Certificate is expressed to take effect.
7 By execution of this Transfer Certificate on their behalf by the
Facility Agent and in reliance upon the representations and warranties
of the Transferee, the Borrower, the Guarantor, the Facility Agent, the
Security Trustee and the Lenders accept the Transferee as a party to
the Facility Agreement and the Security Documents with respect to all
those rights and/or obligations which by the terms of the Facility
Agreement and the Security Documents will be assumed by the Transferee
(including those about pro-rata sharing and the exclusion of liability
on the part of, and the indemnification of, the Facility Agent and the
Security Trustee as provided by the Agency Agreement and the Facility
Agreement) after delivery of the executed copies of this Transfer
Certificate to the Facility Agent and satisfaction of the conditions
(if any) subject to which this Transfer Certificate is expressed to
take effect.
8 None of the Transferor, the Facility Agent, the Security Trustee or the
Lenders:
(a) makes any representation or warranty nor assumes any
responsibility with respect to the legality, validity,
effectiveness, adequacy or enforceability of the Facility
Agreement or any of the Security Documents or any document
relating thereto;
(b) assumes any responsibility for the financial condition of the
Borrower or any other Security Party or any party to any such
other document or for the performance and observance by the
Borrower or any other Security Party or any party to any such
other document (save as otherwise expressly provided therein)
and any and all such conditions
67
and warranties, whether express or implied by law or
otherwise, are hereby excluded (except as aforesaid).
9 The Transferor and the Transferee each undertake that they will on
demand fully indemnify the Facility Agent and the Security Trustee in
respect of any claim, proceeding, liability or expense which relates to
or results from this Transfer Certificate or any matter concerned with
or arising out of it unless caused by the Facility Agent's or Security
Trustee's gross negligence or wilful misconduct, as the case may be.
10 The agreements and undertakings of the Transferee in this Transfer
Certificate are given to and for the benefit of and made with each of
the other parties to the Facility Agreement and the Security Documents.
11 This Transfer Certificate shall be governed by, and construed in
accordance with, English law.
TRANSFEROR TRANSFEREE
By: By:
Dated: Dated:
Facility Agent
Agreed for and on behalf of itself as Facility Agent,
the Borrower, the Guarantor, the Security Trustee,
the Lenders and all other parties to the Facility Agreement and the
Agency Agreement
NORDEA BANK NORGE ASA
By:
Dated:
NOTE: The execution of this Transfer Certificate alone may not
transfer a proportionate share of the Transferor's
interest in the security constituted by the Facility
Agreement the Security Documents in the Transferor's or
Transferee's jurisdiction. It is the responsibility of
each individual Lender to ascertain whether any other
documents are required to perfect a transfer of such a
share in the Transferor's interest in such security in
any such jurisdiction and, if so, to seek appropriate
advice and arrange for execution of the same.
68
THE SCHEDULE
Outstandings USD [-]
Undrawn Commitment ($) USD [-]
Portion Transferred [-]%
ADMINISTRATIVE DETAILS OF TRANSFEREE
Name of Transferee:
Lending Office:
Contact Person
(Loan Administration Department):
Telephone:
Fax:
Contact Person
(Credit Administration Department):
Telephone:
Fax:
Account for payments:
69
SCHEDULE 6
CERTIFICATE OF COMPLIANCE
To: Nordea Bank Norge ASA
Middelthuns gate 17
▇.▇. ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇
▇-▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇
Attn: Shipping Department
Date: [ ]
Dear Sirs
CERTIFICATE OF COMPLIANCE - US$50,000,000 CREDIT FACILITY MADE AVAILABLE TO GULF
OFFSHORE N.S. LIMITED (THE "FACILITY AGREEMENT")
Words and expressions defined in the Facility Agreement shall, unless the
context otherwise requires or unless otherwise defined herein, have the same
meanings when used in this Certificate of Compliance.
We refer to clause 10.6 of the Facility Agreement and hereby confirm that on
each date of the calculation specified below in paragraphs 1, 2 and 3 and,
during the period which is 12 months prior to such date, the covenants of the
Guarantor under the Facility Agreement were satisfied as follows:
1. CONSOLIDATED EBITDA/ CONSOLIDATED INTEREST EXPENSE
Date of Calculation:_________________
A CONSOLIDATED EBITDA
(a) CONSOLIDATED EBIT:
(i) Consolidated Net Income USD_________________
Plus
(ii) provisions for taxes based on income USD_________________
Plus
(iii) Consolidated Interest Expense USD_________________
Plus
(iv) amortisation or write-off deferred financing costs to the extent
deducted in determining Consolidated Net Income USD_________________
Plus
(v) losses on sales of assets (excluding sales in the ordinary course
of business) and other extraordinary losses USD_________________
Minus
70
(vi) the sum of the amounts for such period of gains from the sale of
assets (excluding sales in the ordinary course of business) and other
extraordinary gains
USD_________________
TOTAL (a) USD_________________
Plus
(b) Depreciation expense USD_________________
Plus
(c) Amortisation Expense USD_________________
Plus
(d) Non-transactional foreign exchange losses (gains) USD ________________
TOTAL A: USD_________________
B CONSOLIDATED INTEREST EXPENSE
(a) Consolidated Interest Expense in accordance with Profit & Loss Statement
USD_________________
Plus
(b) Consolidated Capitalised Interest Expense
USD_________________
TOTAL B: USD_________________
A DIVIDED BY B ____________________
REQUIREMENT: [from first Drawdown Date to 30 September 2005: > or = 2.00:1.00]
[thereafter: > or = 2.75:1.00]
2. NET WORTH
Date of Calculation:_________________
NET WORTH AS OF___/___/___: USD_________________
REQUIREMENT:
(a) USD 200,000,000
Plus
(b) fifty percent (50%) of accumulated positive consolidated net income
calculated on an annual basis.
USD_________________
(c) one hundred percent (100%) of Net Proceeds from Equity Offerings
USD_________________
TOTAL REQUIRED NET WORTH: USD_________________
71
3. SECURITY VALUE
The Security Value is no less than the Security Requirement.
Yours faithfully,
for and on behalf of
GULFMARK OFFSHORE INC.
_________________________________ ____________________
[Director] [Chief Financial Officer] [Director]
72
SIGNING PAGE
SIGNED for and on behalf of )
GULF OFFSHORE N.S. LIMITED )
by its duly authorised officer ) /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇ ) --------------------------------
in the presence of: ) Duly authorised officer
Signature of witness: /s/ ▇▇▇▇▇▇ [illegible]
Name of witness: ▇▇▇▇▇▇ [illegible]
Address of witness: ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ -- ▇▇▇▇▇▇
Occupation of witness: Despatch Courier
EXECUTED AS A DEED )
for and on behalf of )
GULFMARK OFFSHORE INC. )
(as Guarantor) )
by its duly authorised officer ) /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ) --------------------------------
in the presence of: ) Duly authorised officer
Signature of witness: /s/ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇
Name of witness: ▇▇▇▇ ▇▇▇ ▇▇▇▇▇
Address of witness: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Occupation of witness: Executive Assistant
SIGNED by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ )
for and on behalf of )
NORDEA BANK NORGE ASA )
(as Arranger) )
pursuant to a Power of Attorney ) /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
dated 21 December 2004 ) --------------------------------
in the presence of: ) Attorney-in-fact
Signature of witness: /s/ Mdramed Yousef
Name of witness: Mdramed Yousef
Address of witness: ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇
Occupation of witness: Trainee Solicitor
73
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
SIGNED by ▇▇▇▇▇▇ ▇▇▇▇▇▇ ) --------------------------------
and by ▇▇▇▇▇▇ ▇▇▇▇▇▇ ) Authorised Signatory
for and on behalf of )
NORDEA BANK FINLAND PLC ) /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
(as Lender, Facility Agent and --------------------------------
Security Trustee) ) Authorised Signatory
in the presence of: )
Signature of witness: /s/ Hans Chr. Kjelsrud
Name of witness: /s/ Hans Chr. Kjelsrud
Address of witness: ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇.
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Occupation of witness: Banker
74