EXHIBIT 10.1
================================================================================
CREDIT AGREEMENT PROVIDING FOR A
SECURED CREDIT FACILITY
OF UP TO $10,000,000
LCI SHIPHOLDINGS INC.,
as Borrower
AND
The Banks and Financial Institutions listed on Schedule I hereto,
as Lenders
AND
DEN NORSKE BANK ASA
acting through its New York branch,
as Arranger, Agent and Security Trustee,
AND
INTERNATIONAL SHIPHOLDING CORPORATION
as Guarantor
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November 14, 2002
CONTENTS
PAGE
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1. DEFINITIONS.................................................................................................1
1.1 Specific Definitions...............................................................................1
1.2 Computation of Time Periods; Other Definitional Provisions........................................11
1.3 Accounting Terms..................................................................................12
1.4 Certain Matters Regarding Materiality.............................................................12
2. REPRESENTATIONS AND WARRANTIES.............................................................................12
2.1 Representations and Warranties....................................................................12
(a) Due Organization and Power........................................................................12
(b) Authorization and Consents........................................................................12
(c) Binding Obligations...............................................................................12
(d) No Violation......................................................................................13
(e) Filings; Stamp Taxes..............................................................................13
(f) Litigation........................................................................................13
(g) No Default........................................................................................13
(h) Vessels...........................................................................................13
(i) Insurance.........................................................................................14
(j) Financial Information.............................................................................14
(k) Tax Returns.......................................................................................14
(l) ERISA.............................................................................................14
(m) Chief Executive Office............................................................................14
(n) Foreign Trade Control Regulations.................................................................14
(o) Equity Ownership..................................................................................15
(p) Environmental Matters and Claims..................................................................15
(q) Compliance with ISM Code..........................................................................16
(r) Threatened Withdrawal of DOC or SMC...............................................................16
(s) Liens.............................................................................................16
(t) Indebtedness......................................................................................16
(u) Payment Free of Taxes.............................................................................16
(v) No Proceedings to Dissolve........................................................................16
(w) Solvency..........................................................................................16
(x) Compliance with Laws..............................................................................16
(y) Survival..........................................................................................16
3. THE FACILITY...............................................................................................16
3.1 (a) Purposes......................................................................................16
(b) Making of the Advance.............................................................................17
3.2 Drawdown Notice...................................................................................17
3.3 Effect of Drawdown Notice.........................................................................17
3.4 Several Obligations...............................................................................17
3.5 Pro Rata Treatment................................................................................17
4. CONDITIONS.................................................................................................17
4.1 Conditions Precedent to the Effectiveness of this Agreement.......................................17
(a) Corporate Authority...............................................................................17
(b) The Agreement.....................................................................................18
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(c) The Note..........................................................................................18
(d) The Creditors.....................................................................................18
(e) Fees..............................................................................................18
(f) Environmental Claims..............................................................................18
(g) Legal Opinions....................................................................................18
(h) Officer's Certificate.............................................................................18
4.2 Further Conditions Precedent......................................................................19
(a) Drawdown Notice...................................................................................19
(b) Representations and Warranties True...............................................................19
(c) No Default........................................................................................19
(d) Vessel Documents..................................................................................19
(e) Vessel Owner Security Documents...................................................................19
(f) Chartered Vessel Security Document................................................................20
(g) Vessel Appraisals.................................................................................20
(h) ISM DOC...........................................................................................20
(i) Vessel Liens......................................................................................20
(j) Charters; Pooling Agreements......................................................................20
4.3 Breakfunding Costs................................................................................20
4.4 Satisfaction after Drawdown.......................................................................20
5. REPAYMENT AND PREPAYMENT...................................................................................21
5.1 Repayment.........................................................................................21
5.2 Voluntary Prepayment..............................................................................21
5.3 Mandatory Prepayment; Sale or Loss of Vessel......................................................21
5.4 Prepayments Generally.............................................................................21
5.5 Borrower's Obligation Absolute....................................................................22
6. INTEREST AND RATE..........................................................................................22
6.1 Payment of Interest; Interest Rate................................................................22
6.2 Maximum Interest..................................................................................22
7. PAYMENTS ..................................................................................................22
7.1 Place of Payments, No Set Off.....................................................................22
7.2 Tax Credits.......................................................................................23
7.3 Computations; Banking Days........................................................................23
8. EVENTS OF DEFAULT..........................................................................................23
8.1 Events of Default.................................................................................23
(a) Principal Payments................................................................................23
(b) Interest and other Payments.......................................................................23
(c) Representations, etc..............................................................................24
(d) Impossibility, Illegality.........................................................................24
(e) Mortgage..........................................................................................24
(f) Certain Covenants.................................................................................24
(g) Covenants.........................................................................................24
(h) Indebtedness and Other Obligations................................................................24
(i) Bankruptcy........................................................................................24
(j) Judgments.........................................................................................24
(k) Inability to Pay Debts............................................................................25
(l) Termination of Operations; Sale of Assets.........................................................25
(m) Change in Financial Position......................................................................25
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(n) Change in Control.................................................................................25
(o) Cross-Default.....................................................................................25
(p) ERISA Debt........................................................................................25
8.2 Indemnification...................................................................................26
8.3 Application of Moneys.............................................................................26
9. COVENANTS..................................................................................................26
9.1 Affirmative Covenants.............................................................................26
(a) Performance of Agreements.........................................................................26
(b) Notice of Default, etc............................................................................26
(c) Obtain Consents...................................................................................27
(d) Financial Information.............................................................................27
(e) Vessel Valuations.................................................................................27
(f) Corporate Existence...............................................................................28
(g) Books and Records.................................................................................28
(h) Taxes and Assessments.............................................................................28
(i) Inspection........................................................................................28
(j) Inspection and Survey Reports.....................................................................28
(k) Compliance with Statutes, Agreements, etc.........................................................28
(l) Environmental Matters.............................................................................28
(m) Insurance.........................................................................................29
(n) Vessel Management.................................................................................29
(o) Brokerage Commissions, etc........................................................................29
(p) ISM Code Matters..................................................................................29
(q) Consolidated Indebtedness to Consolidated EBITDA Ratio............................................29
(r) Working Capital...................................................................................29
(s) Consolidated Net Worth............................................................................29
(t) Consolidated EBITDA to Interest Expense...........................................................29
(u) ERISA.............................................................................................30
(v) Retirement of ISH Notes...........................................................................30
(w) Evidence of Current COFR..........................................................................30
9.2 Negative Covenants................................................................................30
(a) Liens.............................................................................................30
(b) Change of Flag, Class, Management or Ownership....................................................31
(c) Chartering........................................................................................31
(d) Change in Business................................................................................31
(e) Sale of Assets....................................................................................31
(f) Changes in Offices or Names.......................................................................31
(g) Consolidation and Merger..........................................................................31
(h) Change Fiscal Year................................................................................31
(i) Indebtedness......................................................................................31
(j) Limitations on Ability to Make Distributions......................................................32
9.3 Asset Maintenance.................................................................................32
10. GUARANTEE..................................................................................................32
10.1 The Guarantee.....................................................................................32
10.2 Obligations Unconditional.........................................................................32
10.3 Reinstatement.....................................................................................33
10.4 Subrogation.......................................................................................33
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10.5 Remedies..........................................................................................33
10.6 Instrument for the Payment of Money...............................................................34
10.7 Continuing Guarantee..............................................................................34
11. ASSIGNMENT.................................................................................................34
12. ILLEGALITY, INCREASED COST, NON-AVAILABILITY, ETC..........................................................34
12.1 Illegality........................................................................................34
12.2 Increased Costs...................................................................................35
12.3 Nonavailability of Funds..........................................................................35
12.4 Lender's Certificate Conclusive...................................................................36
12.5 Compensation for Losses...........................................................................36
12.6 Compensation for Breakage Costs...................................................................36
13. CURRENCY INDEMNITY.........................................................................................37
13.1 Currency Conversion...............................................................................37
13.2 Change in Exchange Rate...........................................................................37
13.3 Additional Debt Due...............................................................................37
13.4 Rate of Exchange..................................................................................37
14. FEES AND EXPENSES..........................................................................................37
14.1 Fees..............................................................................................37
14.2 Expenses..........................................................................................37
15. APPLICABLE LAW, JURISDICTION AND WAIVER....................................................................38
15.1 Applicable Law....................................................................................38
15.2 Jurisdiction......................................................................................38
15.3 WAIVER OF JURY TRIAL..............................................................................38
16. THE AGENT AND THE SECURITY TRUSTEE.........................................................................38
16.1 Appointment of Agent..............................................................................38
16.2 Appointment of Security Trustee..................................................................39
16.3 Distribution of Payments..........................................................................39
16.4 Holder of Interest in Note........................................................................39
16.5 No Duty to Examine, Etc. Neither.................................................................39
16.6 Agent as Lender...................................................................................39
16.7 Acts of the Agent and the Security Trustee........................................................39
16.8 Certain Amendments................................................................................40
16.9 Assumption re Event of Default....................................................................41
16.10 Limitations of Liability..........................................................................41
16.11 Indemnification of the Agent and Security Trustee.................................................41
16.12 Consultation with Counsel.........................................................................42
16.13 Resignation.......................................................................................42
16.14 Representations of Lenders........................................................................42
16.15 Notification of Event of Default..................................................................42
16.16 No Agency or Trusteeship until Syndication........................................................42
17. NOTICES AND DEMANDS........................................................................................42
17.1 Notices...........................................................................................42
18. FRAUDULENT CONVEYANCES; FRAUDULENT TRANSFERS...............................................................43
19. MISCELLANEOUS..............................................................................................44
19.1 Time of Essence...................................................................................44
19.2 Unenforceable, etc., Provisions - Effect..........................................................44
19.3 References........................................................................................44
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19.4 Further Assurances................................................................................44
19.5 Prior Agreements, Merger..........................................................................44
19.6 Entire Agreement; Amendments......................................................................44
19.7 Indemnification...................................................................................45
19.8 Headings..........................................................................................45
v
SCHEDULE
I The Lenders and the Commitments
II The Applicable Margin
III The Vessels
IV Approved Ship Brokers
V Liens
VI Indebtedness
EXHIBITS
A Form of Promissory Note
B Form of Drawdown Notice
C Form of Compliance Certificate
D Form of Assignment and Assumption Agreement
E-1 Form of Earnings Assignment - Rhine Forest
E-2 Form of Earnings Assignment - Chartered Vessels
E-3 Form of Earnings Assignment - Atlantic Forest
F-1 Form of Insurances Assignment - Rhine Forest
F-2 Form of Insurances Assignment - Chartered Vessels
F-3 Form of Insurances Assignment -Atlantic Forest
G -1 Form of Mortgage -Rhine Forest
G -2 Form of Mortgage - Chartered Vessels and Atlantic Forest
H Form of Interest Notice
vi
CREDIT AGREEMENT
THIS
CREDIT AGREEMENT (this "
Credit Agreement" or "Agreement")
is made as of the 14th day of November 2002, by and among (1) LCI SHIPHOLDINGS
INC., a corporation incorporated under the laws of the Republic of Liberia, as
borrower (the "Borrower"), (2)
INTERNATIONAL SHIPHOLDING CORPORATION, a
corporation organized and existing under the laws of the State of Delaware
("ISH" or the "Guarantor"), as guarantor, (3) the banks and financial
institutions listed on Schedule I, as lenders (together with any bank or
financial institution which becomes a Lender pursuant to Article 11, the
"Lenders" and each a "Lender") and (4) DEN NORSKE BANK ASA, acting through its
New York branch ("DnB"), as agent for the Lenders (in such capacity, the
"Agent") and as security trustee for the Lenders (in such capacity, the
"Security Trustee") and as arranger.
WITNESSETH THAT:
WHEREAS, at the request of the Borrower, the Agent has agreed
to serve in such capacity under the terms of this Agreement and the Lenders have
agreed to provide to the Borrower a secured credit facility in the amount of up
to US$10,000,000;
NOW, THEREFORE, in consideration of the premises set forth
above, the covenants and agreements hereinafter set forth, and other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto agree as set forth below:
1. DEFINITIONS
1.1 Specific Definitions. In this Agreement the words and expressions
specified below shall, except where the context otherwise requires,
have the meanings attributed to them below:
"Acceptable Accounting Firm" shall mean Ernst & Young LLP, or such other
recognized international accounting firm as
shall be approved by the Agent, such
approval not to be unreasonably withheld;
"Advance(s)" shall mean any amount advanced to the
Borrower pursuant to Section 3.1;
"Affiliate" shall mean with respect to any Person, any
other Person directly or indirectly
controlled by or under common control with
such Person. For the purposes of this
definition, "control" (including, with
correlative meanings, the terms "controlled
by" and "under common control with") as
applied to any Person means the possession
directly or indirectly of the power to
direct or cause the direction of the
management and policies of that Person
whether through ownership of voting
securities or by contract or otherwise;
"Agreement" shall mean this Agreement, as the same shall
be amended, modified or supplemented from
time to time;
"Applicable Margin" shall mean a margin which will vary as set
forth on Schedule II attached hereto;
"Applicable Rate" shall mean any rate of interest applicable
to the Facility from time to time pursuant
to Section 6.1;
"Assigned Moneys" shall mean sums assigned to or received by
the Security Trustee pursuant to any
Security Document;
"Assignment and Assumption shall mean means any Assignment and
Agreement(s)" Assumption Agreement(s) executed pursuant to
Section 11 substantially in the form set out
in Exhibit D;
"Assignment Notices" shall mean (i) notices with respect to the
Earnings Assignments substantially in the
form set out in Exhibit 1 thereto and (ii)
notices with respect to the Insurances
Assignments substantially in the form set
out in Exhibit 3 thereto;
"Assignments" shall mean the Earnings Assignments and the
Insurances Assignments;
"Atlantic Forest" shall mean m.v. ATLANTIC FOREST listed on
Schedule III and registered in the name of
▇▇▇▇▇▇▇▇;
"Banking Day(s)" shall mean any day that is not a Saturday,
Sunday or other day on which (a) banks in
New York,
New York are authorized or
required by law to remain closed, or (b)
banks are not generally open for dealing in
dollar deposits in the London interbank
market;
"Central Gulf" shall mean Central Gulf Lines, Inc., a
corporation organized and existing under the
laws of the State of Delaware;
"Change of Control" shall mean (a) any "person" (as such term is
used in Sections 13(d) and 14(d) of the
Exchange Act), other than the existing
owners, that becomes the beneficial owner
(as defined in Rules 13d-3 and 13d-5 under
the Exchange Act), directly or indirectly,
of more than 30% of the total voting power
of the Borrower or ISH or (b) the Board of
Directors of the Borrower or ISH ceases to
consist of a majority of the directors
existing on the date hereof or directors
nominated by at least two-thirds (2/3) of
the then existing directors;
2
"Chartered Vessels" shall mean each of the Vessels listed on
Schedule III registered in the name of
either Central Gulf or ▇▇▇▇▇▇▇▇ which have
been bareboat chartered to the Borrower;
"Classification Society" shall mean a member of the International
Association of Classification Societies with
whom the Vessels are entered and who
conducted periodic physical surveys and/or
inspections of the Vessels;
"Closing Date" shall mean the day and year first written
above;
"Code" shall mean the Internal Revenue Code of
1986, as amended, and any successor statute
and regulation promulgated thereunder;
"Collateral" shall mean, all property or other assets,
real or personal, tangible or intangible,
whether now owned or hereafter acquired in
which the Security Trustee or any Lender has
been granted a security interest pursuant to
a Security Document;
"Commitment(s)" shall mean in relation to a Lender, the
portion of the Facility set out opposite its
name in Schedule I hereto or, as the case
may be, in any relevant Assignment and
Assumption Agreement, as changed from time
to time pursuant to the terms of this
Agreement;
"Compliance Certificate" shall mean a certificate certifying the
compliance by each of the Security Parties
with all of its covenants contained herein
and showing the calculations thereof in
reasonable detail, delivered by the chief
financial officer of ISH to the Agent from
time to time pursuant to Section 9.1(d) in
the form set out in Exhibit C or in such
other form as the Agent may agree;
"Consent and Agreement" means the consent and agreement relating to
this Credit Facility Agreement to be
executed by Central Gulf and ▇▇▇▇▇▇▇▇ in the
form attached hereto;
"Consolidated EBITDA" shall mean, for any period, with respect to
ISH and the Subsidiaries, the sum of
(without duplication) (a) Consolidated Net
Income; (b) all Interest Expenses of ISH and
the Subsidiaries; (c) income taxes of ISH
and the Subsidiaries and (d) depreciation
and amortization of ISH and the Subsidiaries
determined on a consolidated basis in
accordance with GAAP for such period;
provided that if any Subsidiary is not
wholly-owned by ISH, Consolidated EBITDA
shall be reduced (to the extent not
otherwise reduced in accordance with GAAP)
by an amount equal to
3
(i) the amount of Consolidated Net Income
attributable to such Subsidiary multiplied
by (ii) the percentage ownership interest in
the income of such Subsidiary not owned by
ISH on the last day of such period;
"Consolidated Indebtedness" all Indebtedness of ISH and the Subsidiaries
determined on a consolidated basis in
accordance with GAAP;
"Consolidated Net Income" for any period shall mean the consolidated
net income of ISH and the Subsidiaries for
such period, as shown on the consolidated
financial statements of ISH and the
Subsidiaries delivered in accordance with
Section 9.1 (d);
"Consolidated Net Worth" shall mean, at any time, the total of
stockholders' equity (excluding treasury
stock) of ISH and its Subsidiaries on a
consolidated basis determined in accordance
with GAAP;
"Creditors" shall mean, together, the Agent, the
Security Trustee and the Lenders, each a
"Creditor";
"Default" shall mean any event that would, with the
giving of notice or passage of time, or
both, be an Event of Default;
"Default Rate" shall mean a rate per annum equal to two
percent (2%) over the Applicable Rate then
in effect;
"DOC" shall mean a document of compliance issued
to an Operator in accordance with rule 13 of
the ISM Code;
"Dollars" and the sign "$" shall mean the legal currency, at any
relevant time hereunder, of the United
States of America and, in relation to all
payments hereunder, in same day funds
settled through the
New York Clearing House
Interbank Payments System (or such other
Dollar funds as may be determined by the
Agent to be customary for the settlement in
New York City of banking transactions of the
type herein involved);
"Drawdown Date" shall mean the date, being a Banking Day,
upon which the Borrower has requested that
the Advance be made available to the
Borrower, and the Advance is made, as
provided in Section 3;
"Drawdown Notice" shall have the meaning ascribed thereto in
Section 3.2;
"Earnings Assignment(s)" shall mean the first priority assignments in
respect of the earnings of each Vessel from
any and all sources to be executed by the
owner thereof and, in the case of the
Chartered Vessels, also to be executed by
the Borrower all
4
in favor of the Security Trustee pursuant to
Section 4.2(e) and (f) substantially in the
form set out in Exhibit E;
"Environmental Affiliate(s)" shall mean, with respect to a Security
Party, any Person or entity, the liability
of which for Environmental Claims any
Security Party may have assumed by contract
or operation of law;
"Environmental Approval(s)" shall have the meaning ascribed thereto in
Section 2.1(p);
"Environmental Claim(s)" shall have the meaning ascribed thereto in
Section 2.1(p);
"Environmental Law(s)" shall have the meaning ascribed thereto in
Section 2.1(p);
"ERISA" shall mean the Employment Retirement Income
Security Act of 1974, as amended;
"ERISA Affiliate" shall mean a trade or business (whether or
not incorporated) which is under common
control with the Borrower within the meaning
of Sections 414(b), (c), (m) or (o) of the
Code;
"ERISA Group" shall mean ISH and its subsidiaries within
the meaning of Section 424(f) of the Code;
"Event(s) of Default" shall mean any of the events set out in
Section 8.1;
"Exchange Act" shall mean the Securities and Exchange Act
of 1934, as amended;
"Fair Market Value" shall mean, in respect of any Vessel, the
appraisal of such Vessel on a stand alone
basis, free and clear of any liens, charters
or other encumbrances and with no value
given to any pooling arrangements, from any
ship broker listed in Schedule IV or such
other independent ship brokers approved by
the Majority Lenders, no such appraisal to
be dated more than thirty (30) days prior to
the date on which such appraisal is required
pursuant to this Agreement;
"Facility" shall mean the sum to be made available in a
single Advance by the Lenders to the
Borrower in the principal amount not to
exceed Ten Million Dollars ($10,000,000)
pursuant to Section 3.1;
"Facility Balance" shall mean the Dollar amount of the Facility
outstanding at any time;
"Fee Letter" shall mean the letter of even date herewith
and entered into by and among the Borrower
and the Agent in respect of the fees
referred to therein;
5
"Final Repayment Date" shall mean June 30, 2007 or, if such date is
not a Banking Day the Final Repayment Date
shall be the immediately preceding Banking
Day;
"GAAP" shall have the meaning ascribed thereto in
Section 1.3;
"Indebtedness" shall mean, with respect to any Person at
any date of determination (without
duplication), (i) all indebtedness of such
Person for borrowed money, (ii) all
obligations of such Person evidenced by
bonds, debentures, notes or other similar
instruments, (iii) all obligations of such
Person in respect of letters of credit or
other similar instruments (including
reimbursement obligations with respect
thereto), (iv) all obligations of such
Person to pay the deferred and unpaid
purchase price of property or services,
which purchase price is due more than six
months after the date of placing such
property in service or taking delivery
thereof or the completion of such services,
except trade payables, (v) all obligations
on account of principal of such Person as
lessee under capitalized leases, (vi) all
indebtedness of other Persons secured by a
lien on any asset of such Person, whether or
not such indebtedness is assumed by such
Person; provided that the amount of such
indebtedness shall be the lesser of (a) the
fair market value of such asset at such date
of determination and (b) the amount of such
indebtedness, and (vii) all indebtedness of
other Persons guaranteed by such Person to
the extent guaranteed; the amount of
Indebtedness of any Person at any date shall
be the outstanding balance at such date of
all unconditional obligations as described
above and, with respect to contingent
obligations, the maximum liability upon the
occurrence of the contingency giving rise to
the obligation, provided that the amount
outstanding at any time of any indebtedness
issued with original issue discount is the
face amount of such indebtedness less the
remaining unamortized portion of the
original issue discount of such indebtedness
at such time as determined in conformity
with GAAP; and provided further that
Indebtedness shall not include any liability
for current or deferred federal, state,
local or other taxes, or any trade payables;
"Indemnitee" shall have the meaning ascribed thereto in
Section 19.7;
"Initial Repayment Date" shall mean December 31, 2002;
6
"Insurance Assignments" shall mean the first priority assignments in
respect of the insurances over the Vessels
to be executed by the owner thereof and, in
the case of the Chartered Vessels also by
the Borrower, in favor of the Security
Trustee pursuant to Section 4.2(d)
substantially in the form set out in Exhibit
F;
"Interest Expense" shall mean, with respect to ISH and the
Subsidiaries, on a consolidated basis, for
any period (without duplication), interest
expense, whether paid or accrued (including
the interest component of capitalized
leases), on all Indebtedness of ISH and the
Subsidiaries for such period, net of
interest income, all determined in
accordance with GAAP;
"Interest Notice" shall mean a notice form the Borrower to the
Agent to be delivered at least three (3)
Banking Days prior to the end of the then
existing Interest Period and specifying the
duration of the next Interest Period,
substantially in the form of Schedule H;
"Interest Period" shall mean with respect to the Advance, each
period commencing on the Drawdown Date or
the last day of the next preceding Interest
Period and ending on the same day in the
first, third, or sixth calendar month
thereafter, in each case, as selected by the
Borrower. If at the end of any then existing
Interest Period the Borrower fails to give
notice of a selected Interest Period or an
Event of Default shall have occurred and be
continuing, the relevant Interest Period
shall be three months or such other period
as the Agent may select. The Borrower's
right to select the Interest Period is
further subject to the requirement that if
the Borrower selects an Interest Period
which extends beyond the next one (1) or
more Repayment Dates (other than the last)
there shall be in respect of such part of
the Facility an amount as shall be
equivalent to the amount of each installment
of principal falling due for payment before
the expiry of that Interest Period such
separate Interest Period or Periods so as to
ensure that an Interest Period shall expire
in respect of each such part of the Facility
on the relevant Repayment Date.
Notwithstanding the foregoing, (i) no
Interest Period may extend beyond the Final
Payment Date; and (ii) each Interest Period
which would otherwise end on a day which is
not a Banking Day shall end on the next
succeeding Banking Day (or, if such next
succeeding Banking Day falls in the next
succeeding calendar month, on the next
preceding Banking Day);
7
"ISH Notes" shall mean the 9% Senior Notes due 2003 and
issued under that certain indenture dated as
of July 9, 1993 made by and between ISH and
The Bank of
New York, as trustee;
"ISM Code" shall mean the International Safety
Management Code for the Safe Operating of
Ships and for Pollution Prevention
constituted pursuant to Resolution A.741(18)
of the International Maritime Organization
and incorporated into the Safety of Life at
Sea Convention and includes any amendments
or extensions thereto and any regulation
issued pursuant thereto;
"LIBOR Rate" shall mean the rate (rounded upward to the
nearest 1/16th of one percent) for deposits
of Dollars for a period equivalent to the
relevant Interest Period at or about 11:00
a.m. (London time) on the second London
Banking Day before the first day of such
period as displayed on Telerate page 3750
(British Bankers' Association Interest
Settlement Rates) (or such other page as may
replace such page 3750 on such system or on
any other system of the information vendor
for the time being designated by the British
Bankers' Association to calculate the BBA
Interest Settlement Rate (as defined in the
British Bankers' Association's Recommended
Terms and Conditions ("BBAIRS" terms) dated
August 1985)), provided that if on such date
no such rate is so displayed for the
relevant Interest Period, LIBOR for such
period shall be the arithmetic mean (rounded
upward if necessary to four decimal places)
of the rates quoted to the Agent by the
Reference Bank at the request of the Agent
as the offered rate for deposits of Dollars
in an amount approximately equal to the
amount in relation to which LIBOR is to be
determined for a period equivalent to the
relevant Interest Period to prime banks in
the London Interbank Market at or about
11:00 a.m. (London time) on the second
Banking Day before the first day of such
period;
"Majority Lenders" at any time means Lenders holding an
aggregate of more than 51% of the Facility
Balance;
"Material Adverse Effect" shall mean a material adverse effect on the
ability of the Borrower and/or the Guarantor
to meet any of their obligations with regard
to (i) the Facility and the financing
arrangements established in connection
therewith or (ii) any of their respective
other obligations that are material to the
Borrower and the Guarantor considered as a
whole;
8
"Materials of Environmental shall have the meaning ascribed thereto in
Concern" Section 2.1(p);
"Mortgages" shall mean the first preferred Liberian or
United States ship mortgages on the Vessels,
to be executed by the respective Vessel
Owner as listed in Schedule III in favor of
the Security Trustee pursuant to Section
4.2(d), substantially in the form set out in
Exhibit G;
"Multiemployer Plan" shall mean, at any time, a "multiemployer
plan" as defined in Section 4001(a)(3) of
ERISA to which the Borrower or any ERISA
Affiliate is making or accruing an
obligation to make contributions or has
within any of the three preceding plan years
made or accrued an obligation to make
contributions;
"Multiple Employer Plan" shall mean, at any time, an employee benefit
plan, other than a Multiemployer Plan,
subject to Title IV or ERISA, to which the
Borrower or ERISA Affiliate, and one or more
employers other than the Borrower or ERISA
Affiliate, is making or accruing an
obligation to make contributions or, in the
event that any such plan has been
terminated, to which the Borrower or ERISA
Affiliate made or accrued an obligation to
make contributions during any of the five
plan years preceding the date of termination
of such plan;
"Note" shall mean the promissory note to be
executed by the Borrower to the order of the
Agent pursuant to Section 4.1(c), to
evidence the Facility substantially in the
form set out Exhibit A;
"Operator" shall mean, in respect of any Vessel, the
Person who is concerned with the operation
of such Vessel and falls within the
definition of "Company" set out in rule
1.1.2 of the ISM Code;
"Owned Vessel" shall mean the Vessel listed in Schedule III
registered in the name of the Borrower;
"PBGC" shall mean the Pension Benefit Guaranty
Corporation;
"Person" shall mean any individual, sole
proprietorship, corporation, partnership
(general or limited), limited liability
company, business trust, bank, trust
company, joint venture, association, joint
stock company, trust or other unincorporated
organization, whether or not a legal entity,
or any government or agency or political
subdivision thereof;
9
"Plan" shall mean any employee benefit plan (other
than a Multiemployer Plan or a Multiple
Employer Plan) covered by Title IV of ERISA;
"Proceeding" shall have the meaning ascribed thereto in
Section 8.1(i);
"Reference Bank" shall mean Den norske Bank ASA;
"Repayment Dates" shall mean with respect to the Facility the
Initial Repayment Date and thereafter the
dates falling at intervals of three (3)
months after the Initial Repayment Date; if
such Date is not a Banking Day, the next
following Banking Day, unless such next
following Banking Day falls in the following
calendar month, in which case the relevant
Repayment Date shall be the immediately
preceding Banking Day;
"Security Document(s)" shall mean the Mortgages, the Assignments
and any other documents that may be executed
as security for the Facility and the
Borrower's obligations in connection
therewith;
"Security Party(ies)" shall mean the Borrower, the Guarantor,
Central Gulf and ▇▇▇▇▇▇▇▇;
"SMC" shall mean the safety management certificate
issued in respect of a Vessel in accordance
with rule 13 of the ISM code;
"Subsidiary" shall mean, with respect to any Person, any
business entity of which more than 50% of
the outstanding voting stock or other equity
interest is owned directly or indirectly by
such Person and/or one or more other
subsidiaries of such Person;
"Subsidiary(ies)" shall mean a/the subsidiary(ies) of ISH;
"Taxes" shall mean any present or future income or
other taxes, levies, duties, charges, fees,
deductions or withholdings of any nature now
or hereafter imposed, levied, collected,
withheld or assessed by any taxing authority
whatsoever, except for taxes on or measured
by the overall net income of each Lender
imposed by its jurisdiction of incorporation
or applicable lending office, the United
States of America, the State or City of
New
York or any governmental subdivision or
taxing authority of any thereof or by any
other taxing authority having jurisdiction
over such Lender (unless such jurisdiction
is asserted by reason of the activities of
the Borrower or any of the Subsidiaries);
10
"Title XI Agreement" shall mean the Title XI Reserve Fund and
Financial Agreement, Contract No. MA-12901,
dated as of October 26, 1994 and made by and
between Sulphur Carriers, Inc. and the
United States of America;
"Termination Event" shall mean (i) a "reportable event," as
defined in Section 403 of ERISA, (ii) the
withdrawal of the Borrower or any ERISA
Affiliate from a Multiemployer Plan during a
plan year in which it was a "substantial
employer," as defined in Section 4001(a)(2)
of ERISA, or the incurrence of liability by
the Borrower or any ERISA Affiliate under
Section 4064 of ERISA upon the termination
of a Multiple Employer Plan, (iii) the
filing of a notice of intent to terminate a
Plan under Section 4041 of ERISA or the
treatment of a Multiemployer Plan amendment
as a termination under Section 4041A of
ERISA, (iv) the institution of proceedings
to terminate a Plan or a Multiemployer Plan,
or (v) any other event or condition which
might constitute grounds under Section 4042
of ERISA for the termination of, or the
appointment of a trustee to administer, any
Plan or Multiemployer Plan;
"Total Loss" shall have the meaning ascribed thereto in
the Mortgages;
"Transaction Documents" shall mean each of this Agreement, the Note
and the Security Documents;
"Vessel(s)" shall mean each of the Chartered Vessels,
the Owned Vessel and Atlantic Forest;
"Vessel Owner" shall mean, as applicable, any of the
Borrower, Central Gulf and ▇▇▇▇▇▇▇▇; and
"▇▇▇▇▇▇▇▇" shall mean ▇▇▇▇▇▇▇▇ Steamship Corporation, a
corporation organized and existing under the
laws of the State of
New York;
"Withdrawal Liability(ies)" shall have the meaning given to such term
under Part 1 of Subtitle E of Title IV of
ERISA; and
1.2 Computation of Time Periods; Other Definitional Provisions. In this
Agreement, the Note and the other Security Documents, in the computation of
periods of time from a specified date to a later specified date, the word "from"
means "from and including" and the words "to" and "until" each mean "to but
excluding"; words importing either gender include the other gender; references
to "writing" include printing, typing, lithography and other means of
reproducing words in a tangible visible form; the words "including," "includes"
and "include" shall be deemed to be followed by the words "without limitation";
references to articles, sections (or subdivisions of sections), exhibits,
11
annexes or schedules are to this Agreement, the Note or such Security Document,
as applicable; references to agreements and other contractual instruments
(including this Agreement, the Note and the Security Documents) shall be deemed
to include all subsequent amendments, amendments and restatements, supplements,
extensions, replacements and other modifications to such instruments (without,
however, limiting any prohibition on any such amendments, extensions and other
modifications by the terms of this Agreement, the Note or any Security
Document); references to any matter that is "approved" or requires "approval" of
a party shall mean approval given in the sole and absolute discretion of such
party unless otherwise specified.
1.3 Accounting Terms. Unless otherwise specified herein, all accounting terms
used in this Agreement, the Note and in the Security Documents shall be
interpreted, and all financial statements and certificates and reports as to
financial matters required to be delivered to the Agent or to the Lenders under
this Agreement shall be prepared, in accordance with generally accepted
accounting principles for the United States ("GAAP").
1.4 Certain Matters Regarding Materiality. To the extent that any
representation, warranty, covenant or other undertaking of the Borrower in this
Agreement is qualified by reference to those which are not reasonably expected
to result in a "Material Adverse Effect" or language of similar import, no
inference shall be drawn therefrom that the Agent or Lender has knowledge or
approves of any noncompliance by the Borrower with any governmental rule.
2. REPRESENTATIONS AND WARRANTIES
2.1 Representations and Warranties. In order to induce the Creditors to enter
into this Agreement and to make the Facility available, each of the Borrower and
the Guarantor and each of Central Gulf and ▇▇▇▇▇▇▇▇ by its execution of the
Consent and Agreement hereby represents and warrants to the Creditors (which
representations and warranties shall survive the execution and delivery of this
Agreement and the Note and the drawdown of the Facility) that:
(a) Due Organization and Power. Each Security Party is duly
formed and is validly existing in good standing under the laws of its
jurisdiction of incorporation or formation, has full power to carry on its
business as now being conducted and to enter into and perform its obligations
under this Agreement, the Note and the Security Documents to which it is a
party, and has complied with all statutory, regulatory and other requirements
relative to such business and such agreements;
(b) Authorization and Consents. All necessary corporate action
has been taken to authorize, and all necessary consents and authorities have
been obtained and remain in full force and effect to permit, each Security Party
to enter into and perform its obligations under this Agreement, the Note and the
Security Documents and, in the case of the Borrower to borrow, service and repay
the Facility and, as of the date of this Agreement, no further consents or
authorities are necessary for the service and repayment of the Facility or any
part thereof;
(c) Binding Obligations. This Agreement, the Note and the
Security Documents constitute or will, when executed and delivered, constitute
the legal, valid and binding obligations of each Security Party that is a party
thereto enforceable against such Security Party in accordance with their
respective terms, except to the extent that such enforcement may be limited by
equitable
12
principles, principles of public policy or applicable bankruptcy, insolvency,
reorganization, moratorium or other laws affecting generally the enforcement of
creditors' rights;
(d) No Violation. The execution and delivery of, and the
performance of the provisions of, this Agreement, the Note and those of the
Security Documents to which it is to be a party by each Security Party do not
contravene any applicable law or regulation existing at the date hereof or any
contractual restriction binding on such Security Party or the certificate of
incorporation or by-laws (or equivalent instruments) thereof and that the
proceeds of the Facility shall be used by the Borrower exclusively for its own
account or for the account of a Subsidiary or Affiliate of the Borrower;
(e) Filings; Stamp Taxes. Other than the recording of the
Mortgages with the appropriate authorities for the Republic of Liberia or the
United States, as the case may be, and the filing of UCC Financing Statements in
the District of Columbia, the State of
New York and the State of Delaware in
respect of the Assignments, and the payment and filing or recording fees
consequent thereto, it is not necessary for the legality, validity,
enforceability or admissibility into evidence of this Agreement, the Notes or
the Security Documents that any of them or any document relating thereto be
registered, filed, recorded or enrolled with any court or authority in any
relevant jurisdiction or that any stamp, registration or similar Taxes be paid
on or in relation to this Agreement, the Notes or any of the Security Documents;
(f) Litigation. No action, suit or proceeding is pending or
threatened against any Security Party before any court, board of arbitration or
administrative agency which could or might have a Material Adverse Effect;
(g) No Default. No Security Party is in default under any
material agreement by which it is bound, or is in default in respect of any
material financial commitment or obligation;
(h) Vessels. Upon the Drawdown Date, each Vessel:
(i) will be in the sole and absolute ownership
of the respective Vessel Owner as set forth
on Schedule III and duly registered in such
Vessel Owner's name under United States or
Liberian flag, as the case may be,
unencumbered, save and except for the
Mortgage, recorded against it and as
permitted thereby;
(ii) will be classed in the highest
classification and rating for vessels of the
same age and type with its Classification
Society without any material outstanding
recommendations;
(iii) will be operationally seaworthy and in every
way fit for its intended service; and
(iv) will be insured in accordance with the
provisions of the Mortgage recorded against
it and the requirements thereof in respect
of such insurances will have been complied
with;
13
(i) Insurance. Each of the Security Parties has insured its
properties and assets against such risks and in such amounts as are customary
for companies engaged in similar businesses;
(j) Financial Information. Except as otherwise disclosed in
writing to the Agent on or prior to the date hereof, all financial statements,
information and other data furnished by any Security Party to the Agent are
complete and correct, such financial statements have been prepared in accordance
with GAAP and accurately and fairly present the financial condition of the
parties covered thereby as of the respective dates thereof and the results of
the operations thereof for the period or respective periods covered by such
financial statements, and since the date of ISH's financial statements most
recently delivered to the Agent there has been no Material Adverse Effect as to
any of such parties and none thereof has any contingent obligations, liabilities
for taxes or other outstanding financial obligations which are material in the
aggregate except as disclosed in such statements, information and data;
(k) Tax Returns. Each Security Party has filed all material
tax returns required to be filed thereby and has paid all taxes payable thereby
which have become due, other than those not yet delinquent or the nonpayment of
which would not have a Material Adverse Effect and except for those taxes being
contested in good faith and by appropriate proceedings or other acts and for
which adequate reserves shall have been set aside on its books;
(l) ERISA. The execution and delivery of this Agreement and
the consummation of the transactions hereunder will not involve any prohibited
transaction within the meaning of ERISA or Section 4975 of the Code and no
condition exists or event or transaction has occurred in connection with any
Plan maintained or contributed to by any member of the ERISA Group or any ERISA
Affiliate resulting from the failure of any thereof to comply with ERISA which
is reasonably likely to result in any member of the ERISA Group or any ERISA
Affiliate incurring any liability, fine or penalty which individually or in the
aggregate could have a Material Adverse Effect. No member of the ERISA Group nor
any ERISA Affiliate, individually or collectively, has incurred, or reasonably
expects to incur, Withdrawal Liabilities or liabilities upon the happening of a
Termination Event the aggregate of which for all such Withdrawal Liabilities and
other liabilities exceeds or would exceed $30,000,000. With respect to any
Multiemployer Plan, Multiple Employer Plan or Plan, no member of the ERISA Group
nor any ERISA Affiliate is aware of or has been notified that any "variance"
from the "minimum funding standard" has been requested (each such term as
defined in Part 3, Subtitle B, of Title 1 of ERISA). No member of the ERISA
Group nor any ERISA Affiliate has received any notice that any Multiemployer
Plan is in reorganization, within the meaning of Title IV of ERISA, which
reorganization could have a Material Adverse Effect;
(m) Chief Executive Office. The chief executive office and
chief place of business of each Security Party and the office in which the
records relating to the earnings and other receivables of each Security Party
are kept is, and will continue to be, located at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇;
(n) Foreign Trade Control Regulations. To the best knowledge
of each of the Security Parties, none of the transactions contemplated herein
will violate any of the provisions of the Foreign Assets Control
14
Regulations of the United States of America (Title 31, Code of Federal
Regulations, Chapter V, Part 500, as amended), any of the provisions of the
Cuban Assets Control Regulations of the United States of America (Title 31, Code
of Federal Regulations, Chapter V, Part 515, as amended), any of the provisions
of the Libyan Assets Control Regulations of the United States of America (Title
31, Code of Federal Regulations, Chapter V, Part 550, as amended), any of the
provisions of the Iranian Transaction Regulations of the United States of
America (Title 31, Code of Federal Regulations, Chapter V, Part 560, as
amended), any of the provisions of the Iraqi Sanctions Regulations (Title 31,
Code of Federal Regulations, Chapter V, Part 575, as amended), any of the
provisions of the Federal Republic of Yugoslavia (Serbia and Montenegro) and
Bosnia Serb-controlled areas of the Republic of Bosnia and Herzegovina Assets
Control Regulations (Title 31, Code of Federal Regulations, Chapter V, Part 585
as amended) or any of the provisions of the Regulations of the United States of
America Governing Transactions in Foreign Shipping of Merchandise (Title 31,
Code of Federal Regulations, Chapter V, Part 505, as amended);
(o) Equity Ownership. Each of the Borrower, Central Gulf and
▇▇▇▇▇▇▇▇ are owned 100% by ISH;
(p) Environmental Matters and Claims. (a) Except as heretofore
disclosed in writing to the Agent (i) the Borrower and its Affiliates (which for
purposes of this Section 2(q) shall be deemed to include ISH and its respective
Affiliates) will, when required to operate their business as then being
conducted, be in compliance with all applicable United States federal and state,
local, foreign and international laws, regulations, conventions and agreements
relating to pollution prevention or protection of human health or the
environment (including, without limitation, ambient air, surface water, ground
water, navigable waters, waters of the contiguous zone, ocean waters and
international waters), including, without limitation, laws, regulations,
conventions and agreements relating to (1) emissions, discharges, releases or
threatened releases of chemicals, pollutants, contaminants, wastes, toxic
substances, hazardous materials, oil, hazardous substances, petroleum and
petroleum products and by-products ("Materials of Environmental Concern"), or
(2) the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Materials of Environmental Concern
("Environmental Laws"); (ii) the Borrower and its Affiliates will, when
required, have all permits, licenses, approvals, rulings, variances, exemptions,
clearances, consents or other authorizations required under applicable
Environmental Laws ("Environmental Approvals") and will, when required, be in
compliance with all Environmental Approvals required to operate their business
as then being conducted; (iii) neither the Borrower nor any Affiliate thereof
has received any notice of any claim, action, cause of action, investigation or
demand by any person, entity, enterprise or government, or any political
subdivision, intergovernmental body or agency, department or instrumentality
thereof, alleging potential liability for, or a requirement to incur, material
investigator costs, cleanup costs, response and/or remedial costs (whether
incurred by a governmental entity or otherwise), natural resources damages,
property damages, personal injuries, attorneys' fees and expenses, or fines or
penalties, in each case arising out of, based on or resulting from (1) the
presence, or release or threat of release into the environment, of any Materials
of Environmental Concern at any location, whether or not owned by such person,
or (2) circumstances forming the basis of any violation, or alleged violation,
of any Environmental Law or Environmental Approval ("Environmental Claim")
(other than Environmental Claims that have been fully and finally adjudicated or
otherwise determined and all fines, penalties and other costs, if any, payable
by the Security Parties in respect thereof have been paid in full or which are
fully covered by insurance (including permitted deductibles)); and (iv) there
are no circumstances that may prevent or interfere with such full compliance in
the future; and (b) except as heretofore disclosed in writing to the Agent there
is no Environmental Claim pending or threatened against the Borrower or any
Affiliate thereof and there are no past or present
15
actions, activities, circumstances, conditions, events or incidents, including,
without limitation, the release, emission, discharge or disposal of any
Materials of Environmental Concern, that could form the basis of any
Environmental Claim against such persons the adverse disposition of which may
result in a Material Adverse Effect;
(q) Compliance with ISM Code. Each Vessel and each Operator
complies with the requirements of the ISM Code including (but not limited to)
the maintenance and renewal of valid certificates pursuant thereto;
(r) Threatened Withdrawal of DOC or SMC. There is no
threatened or actual withdrawal of any Operator's DOC or SMC in respect of any
Vessel;
(s) Liens. Other than as disclosed in Schedule V, there are no
liens of any kind on any property owned by any Security Party other than those
liens created pursuant to this Agreement or the Security Documents or permitted
thereby;
(t) Indebtedness. Other than as disclosed in Schedule VI, none
of the Security Parties has any Indebtedness;
(u) Payment Free of Taxes. All payments made or to be made by
the Security Parties under or pursuant to this Agreement, the Notes and the
Security Documents shall be made free and clear of, and without deduction or
withholding for an account of, any Taxes;
(v) No Proceedings to Dissolve. There are no proceedings or
actions pending or contemplated by any Security Party or, to the best knowledge
of any Security Party, contemplated by any third party, to dissolve or terminate
any Security Party.
(w) Solvency. On the Closing Date, in the case of each of the
Security Parties, (a) the sum of its assets, at a fair valuation, does and will
exceed its liabilities, including, to the extent they are reportable as such in
accordance with GAAP, contingent liabilities, (b) the present fair market
salable value of its assets is not and shall not be less than the amount that
will be required to pay its probable liability on its then existing debts,
including, to the extent they are reportable as such in accordance with GAAP,
contingent liabilities, as they mature, (c) it does not and will not have
unreasonably small working capital with which to continue its business and (d)
it has not incurred, does not intend to incur and does not believe it will incur
debts beyond its ability to pay such debts as they mature;
(x) Compliance with Laws. Each of the Security Parties is in
compliance with all Applicable Laws, except where any failure to comply with any
such Applicable Laws would not, alone or in the aggregate, have a Material
Adverse Effect; and
(y) Survival. All representations, covenants and warranties
made herein and in any certificate or other document delivered pursuant hereto
or in connection herewith shall survive the making of the Facility and the
issuance of the Note.
3. THE FACILITY
3.1 (a) Purposes. The Lenders shall make the Facility available to the Borrower
in a single Advance for the purpose of reconditioning the Vessels and retiring
the ISH Notes.
16
(b) Making of the Advance. Each of the Lenders, relying upon
each of the representations and warranties set out in Section 2, hereby
severally and not jointly agrees with the Borrower that, subject to and upon the
terms of this Agreement, it will on the Drawdown Date make its portion of the
Advance available through the Agent to the Borrower in an amount not to exceed
its Commitment ratably with the other Lenders according to their respective
Commitments.
3.2 Drawdown Notice. The Borrower shall, in respect of the Advance, serve a
written notice (a "Drawdown Notice") on the Agent (which shall promptly furnish
a copy to each Lender) not later than 11:00 A.M., New York City time, at least
three (3) Banking Days prior to the date of the proposed Advance. Each Drawdown
Notice shall specify (a) the date of the proposed borrowing (which shall be a
Banking Day), (b) the principal amount of the Advance to be made by the Lenders
on that date, (c) the Interest Period requested by the Borrower, and (d) the
disbursement instructions for the proceeds of such Advance. Such Drawdown Notice
shall be effective upon receipt by the Agent, shall be irrevocable and shall be
in the form set out in Exhibit B.
3.3 Effect of Drawdown Notice. Such Drawdown Notice shall be deemed to
constitute a warranty by the Borrower (a) that the representations and
warranties stated in Section 2 (updated mutatis mutandis) are true and correct
on and as of the date of such Drawdown Notice and will be true and correct on
and as of relevant Drawdown Date as if made on such date, and (b) that no Event
of Default nor any event which with the giving of notice or lapse of time or
both would constitute an Event of Default has occurred and is continuing.
3.4 Several Obligations. The failure of any Lender to make its pro rata portion
of the Advance on the date specified therefore shall not relieve any other
Lender of its obligation to make its pro rata portion of such Advance on such
date, and none of the Agents nor any Lender shall be responsible for the failure
of any other Lender to make its pro rata portion of an Advance.
3.5 Pro Rata Treatment. Each borrowing from the Lenders hereunder shall be made
from the Lenders and each payment of other fees and expenses under Section 14
shall be made for account of the Lenders; each payment or prepayment of
principal of the Advance by the Borrower shall be made for account of the
Lenders pro rata in accordance with the respective unpaid principal amounts of
the Advance held by the Lenders; and each payment of interest on the Advance by
the Borrower shall be made for the account of the Lenders pro rata in accordance
with the amounts of interest due and payable to the respective Lenders.
4. CONDITIONS
4.1 Conditions Precedent to the Effectiveness of this Agreement. The obligation
of the Lenders to make the Facility available to the Borrower under this
Agreement shall be expressly subject to the following conditions precedent:
(a) Corporate Authority. The Agent shall have received the
following documents in form and substance satisfactory to the Agent and its
legal advisers:
(i) copies, certified as true and complete by an
officer of each of the Security Parties, of
the resolutions of its board of directors
and, other than ISH, shareholders evidencing
approval of the Transaction Documents to
which each is a party and authorizing an
appropriate
17
officer or officers or attorney-in-fact or
attorneys-in-fact to execute the same on its
behalf;
(ii) copies, certified as true and complete by an
officer of each of the Security Parties, of
the certificate or articles of incorporation
and by-laws or similar constituent document
thereof;
(iii) certificate of the jurisdiction of
incorporation or formation, as the case may
be, of each Security Party as to the good
standing thereof; and
(iv) a certificate signed by the Chairman,
President, Treasurer, Comptroller,
Controller or chief financial officer of
each of the Security Parties to the effect
that (A) no Default or Event of Default
shall have occurred and be continuing and
(B) the representations and warranties of
such Security Party contained in this
Agreement are true and correct as of the
date of such certificate.
(b) The Agreement. Each of the Security Parties shall have
duly executed and delivered this Agreement to the Agent.
(c) The Note. The Borrower shall have duly executed and
delivered the Note to the Agent.
(d) The Creditors. The Agent shall have received executed
counterparts of this Agreement from each of the Lenders (or, in the case of any
Lender as to which an executed counterpart shall not have been received, the
Agent shall have received in form satisfactory to it a telex, facsimile or other
written confirmation from such Lender of the execution of a counterpart of this
Agreement by such Lender).
(e) Fees. The Creditors shall have received payment in full of
all fees and expenses due to each thereof pursuant to the terms hereof on the
date when due including, without limitation, all fees and expenses due under
Section 14 and the Fee Letter.
(f) Environmental Claims. The Lenders shall be satisfied that
none of the Security Parties is subject to any Environmental Claim which could
reasonably be expected to have a Material Adverse Effect.
(g) Legal Opinions. The Agent shall have received opinions
addressed to the Agent and the Lenders from (i) Jones, Walker, Waechter,
Poitevent, Carrere & ▇▇▇▇▇▇▇, L.L.P., special counsel to the Security Parties,
and (ii) ▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP, special counsel to the Agent, in such form as the
Agent may agree, as well as such other legal opinions as the Lenders shall have
required as to all or any matters under the laws of the Republic of Liberia, the
State of Delaware, the United States of America and the State of New York
covering certain of the conditions and representations and warranties which are
the subjects of Sections 2 and 4, respectively.
(h) Officer's Certificate. The Agent shall have received a
certificate signed by the President or other duly authorized executive officer
of the Borrower certifying that under applicable law existing on the date
hereof, the Borrower shall not be compelled by law to withhold or deduct
18
any Taxes from any amounts to become payable to the Agent for the account of the
Creditors hereunder.
4.2 Further Conditions Precedent. On the Drawdown Date, the obligation of the
Lenders to make the Advance available to the Borrower shall also be expressly
conditional upon:
(a) Drawdown Notice. The Agent having received a Drawdown
Notice in accordance with the terms of Section 3.2.
(b) Representations and Warranties True. The representations
stated in Section 2 being true and correct as if made on that date.
(c) No Default. No Default or Event of Default having occurred
and being continuing or would result from the making of the Advance.
(d) Vessel Documents. The Agent shall have received evidence
satisfactory to it and its counsel that each Vessel:
(i) is in the sole and absolute ownership of the
respective Vessel Owner as set forth in
Schedule III and is duly registered in such
Vessel Owner's name under United States or
Liberian flag, as the case may be, free of
all liens and encumbrances of record other
than its Mortgage;
(ii) is insured in accordance with the provisions
of its Mortgage and all requirements of its
Mortgage in respect of such insurance have
been fulfilled (including, but not limited
to, letters of undertaking from the
insurance brokers, including confirmation
notices of assignment, notices of
cancellation and loss payable clauses
acceptable to the Agent);
(iii) is classed in the highest classification and
rating for vessels of the same age and type
with its Classification Society without any
material outstanding recommendations; and
(iv) is operationally seaworthy and in every way
fit for its intended service;
(e) Vessel Owner Security Documents. Each Vessel Owner shall
have executed and delivered to the Agent:
(i) the Mortgage on each of its Vessels, which
shall have been recorded in accordance with
the laws of the Republic of Liberia or the
United States, as the case may be, so as to
constitute a first preferred mortgage lien
under Liberian or United States law and, in
the case of the Vessels registered in
Liberia, also a foreign "preferred mortgage"
under Chapter 313 of Title 46 of the United
States Code (46 U.S.C. Sections 3101 et
seq.);
19
(ii) the Insurances Assignment in respect of each
Vessel;
(iii) the Earnings Assignment in respect of each
Vessel;
(iv) the Assignment Notices with respect to each
Vessel; and
(v) such Uniform Commercial Code Financing
Statements (Forms UCC-1) as the Agent shall
require.
(f) Chartered Vessel Security Document. The Borrower shall
have executed and delivered to the Agent:
(i) the Earnings Assignment in respect of each
Chartered Vessel;
(ii) the Insurances Assignment in respect of each
Chartered Vessel
(iii) the Assignment Notices with respect to each
Chartered Vessel; and
(iv) such Uniform Commercial Code Financing
Statements (Forms UCC-1) as the Agent shall
require.
(g) Vessel Appraisals. The Agent shall have received
appraisals, in form and substance satisfactory to the Agent, as to the Fair
Market Value of each Vessel.
(h) ISM DOC. To the extent required to be obtained by the ISM
Code the Agent shall have received a copy of the DOC for each Vessel.
(i) Vessel Liens. The Agent shall have received evidence
satisfactory to it and to its legal advisor that, save for the liens created by
the Mortgages and the Assignments, there are no liens, charges or encumbrances
of any kind whatsoever on any of the Vessels or on their respective earnings
except as permitted hereby or by any of the Security Documents; and
(j) Charters; Pooling Agreements. The Security Parties shall,
for the Owned Vessel and Atlantic Forest, have delivered to the Agent true and
complete copies of (i) all charters having a term longer than twelve (12) months
from the date of execution and (ii) all vessel pooling agreements, in each case
to which any Security Party is a party;
4.3 Breakfunding Costs. In the event that, on the date specified for the making
of the Advance in the Drawdown Notice, the Lenders shall not be obliged under
this Agreement to make such Advance available under this Agreement, the Borrower
shall indemnify and hold the Lenders fully harmless against any losses which the
Lenders (or any thereof) may sustain as a result of borrowing or agreeing to
borrow funds to meet the drawdown requirement of such Drawdown Notice and the
certificate of the relevant Lender or Lenders shall, absent manifest error, be
conclusive and binding on the Borrower as to the extent of any such losses.
4.4 Satisfaction after Drawdown. Without prejudice to any of the other terms and
conditions of this Agreement, in the event all of the Lenders elect, in their
sole discretion, to make an Advance prior to the satisfaction of all or any of
the conditions referred to in Sections 4.1 and 4.2, the Borrower hereby
covenants and undertakes to satisfy or procure the satisfaction of such
condition or
20
conditions within seven (7) days after the Drawdown Date (or such longer period
as the Majority Lenders, in their sole discretion, may agree).
5. REPAYMENT AND PREPAYMENT
5.1 Repayment. The Borrower shall repay the principal amount of the Facility
with interest thereon in nineteen (19) consecutive quarterly installments on the
Repayment Dates commencing on the Initial Repayment Date, the first eighteen of
which shall be in the principal amount of Five Hundred Thousand Dollars
($500,000) and the nineteenth and last installment shall be in a principal
amount sufficient to repay the unpaid principal amount of the Facility. Any
amounts due under this Agreement not paid when due, whether by acceleration or
otherwise, shall bear interest thereafter until paid at the Default Rate.
5.2 Voluntary Prepayment. The Borrower may, at its option, on any Banking Day,
prepay all or any portion of the principal of the Facility Balance. The Borrower
shall compensate the Lenders or any thereof for any loss, cost or expense
incurred by them as a result of a prepayment made on any day other than the last
day of an Interest Period in accordance with the provisions of Section 12.6.
Prepayments made on the last day of any Interest Period shall be without penalty
or premium. Any prepayment shall be in an integral multiple of Five Hundred
Thousand Dollars ($500,000) with a minimum amount of Five Hundred Thousand
Dollars ($500,000). The Borrower shall give to the Agent (which shall promptly
furnish a copy to each Lender) not less than seven (7) Banking Days prior
written notice of any such prepayment (which notice shall be irrevocable and
shall specify the date and amount of prepayment). Any amounts received by the
Lenders as a prepayment of the principal of the Facility under this Section 5.2
shall be applied to the unpaid quarterly installments of principal due on the
Note in the inverse order of their maturities.
5.3 Mandatory Prepayment; Sale or Loss of Vessel. Upon (i) the sale of a Vessel
or (ii) the earlier of (x) ninety (90) days after the Total Loss (as such term
is defined in the Mortgages) of a Vessel or (y) the date on which the insurance
proceeds in respect of such loss are received by the Borrower or the Security
Trustee as assignee thereof, the Borrower shall repay the outstanding Facility
Balance in an amount equal to the net sale proceeds or the net insurance
proceeds due, as the case may be, such prepayment to be applied to the unpaid
quarterly installments of principal in the inverse order of their maturities;
provided however, that if all Vessels have been sold or lost, the Borrower shall
repay the entire remaining outstanding Facility Balance. So long as no event has
occurred which constitutes or, with giving of notice or lapse of time or both,
would constitute an Event of Default or which adversely affect the Borrower's
ability to perform its obligations under this Agreement, the Note and the
Security Documents or any of them, any surplus proceeds shall be paid to the
Borrower.
5.4 Prepayments Generally. Any and all prepayments hereunder, whether mandatory
or voluntary, are subject to the following:
(a) any amounts prepaid shall not be available for
reborrowing; and
(b) on the date of prepayment all accrued interest to the date
of such prepayment shall be paid in full with respect to the portion of the
principal being prepaid together with any loss incurred by the Lenders in
connection with any breaking of funding.
21
5.5 Borrower's Obligation Absolute. The Borrower's obligation to pay each
Creditor hereunder and under the Note shall be absolute, unconditional and
irrevocable, and shall be paid strictly in accordance with the terms hereof and
thereof, under any and all circumstances and irrespective of any set-off,
counterclaim or defense to payment which the Borrower may have or may have had
against the Creditors.
6. INTEREST AND RATE
6.1 Payment of Interest; Interest Rate. (a) (a) The Borrower hereby promises to
pay to the Lenders interest on the unpaid principal amount of the Facility
Balance for the period commencing on the Drawdown Date until but not including
the stated maturity thereof (whether by acceleration or otherwise) or the date
of prepayment thereof at the Applicable Rate which shall be the rate per annum
which is equal to the aggregate of (a) the LIBOR Rate for the relevant Interest
Period plus (b) the Applicable Margin. The Applicable Rate with respect to the
Advance shall be determined by the Agent two Banking Days prior to the first day
of each relevant Interest Period. The Agent shall promptly notify the Borrower
and the Lenders in writing of the Applicable Rate and the duration of each
Interest Period as and when determined. Each such determination, absent manifest
error, shall be conclusive and binding upon the Borrower.
(b) Notwithstanding the foregoing, the Borrower agrees that
after the occurrence and during the continuance of an Event of Default, the
Facility Balance shall bear interest at a rate per annum equal to the greater of
(A) the Default Rate and (B) two percent (2%) plus the sum of (x) the Applicable
Margin plus (y) the LIBOR Rate for overnight or weekend deposits. In addition,
the Borrower hereby promises to pay interest (to the extent that the payment of
such interest shall be legally enforceable) on any overdue interest, and on any
other amount payable by the Borrower hereunder which shall not be paid in full
when due (whether at stated maturity, by acceleration or otherwise), for the
period commencing on the due date thereof until but not including the date the
same is paid in full at the Default Rate.
(c) Except as provided in the next sentence, accrued interest
on the Facility Balance shall be payable (i) on the last day of each Interest
Period, except that if the Borrower shall select an Interest Period in excess of
three (3) months, accrued interest shall be payable during such Interest Period
on each three (3) month anniversary of the commencement of such Interest Period
and upon the last day of such Interest Period, and (ii) with each repayment of
principal thereof. Interest payable at the Default Rate shall be payable from
time to time on demand of the Agent.
6.2 Maximum Interest. Anything in this Agreement or the Note to the contrary
notwithstanding, the interest rate on the Advance shall in no event be in excess
of the maximum rate permitted by Applicable Law.
7. PAYMENTS
7.1 Place of Payments, No Set Off. All payments to be made hereunder by the
Borrower shall be made to the Agent, not later than 11 a.m. New York time (any
payment received after 11 a.m. New York time shall be deemed to have been paid
on the next Banking Day) on the due date of such payment, at its office located
at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ or to such other office of the
Agent as the Agent may direct, without set-off or counterclaim and free from,
clear of, and without deduction for, any Taxes, provided, however, that if the
Borrower shall at any time be
22
compelled by law to withhold or deduct any Taxes from any amounts payable to the
Lenders hereunder, then the Borrower shall pay such additional amounts in
Dollars as may be necessary in order that the net amounts received after
withholding or deduction shall equal the amounts which would have been received
if such withholding or deduction were not required and, in the event any
withholding or deduction is made, whether for Taxes or otherwise, the Borrower
shall promptly send to the Agent such documentary evidence with respect to such
withholding or deduction as may be required from time to time by the Lenders.
7.2 Tax Credits. If any Lender obtains the benefit of a credit against the
liability thereof for federal income taxes imposed by any taxing authority for
all or part of the Taxes as to which the Borrower has paid additional amounts as
aforesaid (and each Lender agrees to use its best efforts to obtain the benefit
of any such credit which may be available to it, provided it has knowledge that
such credit is in fact available to it), then such Lender shall reimburse the
Borrower for the amount of the credit so obtained. Each Lender agrees that in
the event that Taxes are imposed on account of the situs of its loans hereunder,
such Lender, upon acquiring knowledge of such event, shall, if commercially
reasonable, shift such loans on its books to another office of such Lender so as
to avoid the imposition of such Taxes.
7.3 Computations; Banking Days.
(a) All computations of interest and fees shall be made by the
Agent or the Lenders, as the case may be, on the basis of a 360-day year, in
each case for the actual number of days (including the first day but excluding
the last day) occurring in the period for which interest or fees are payable.
Each determination by the Agent or the Lenders of an interest rate or fee
hereunder shall be conclusive and binding for all purposes, absent manifest
error.
(b) Whenever any payment hereunder or under the Note shall be
stated to be due on a day other than a Banking Day, such payment shall be due
and payable on the next succeeding Banking Day unless the next succeeding
Banking Day falls in the following calendar month, in which case it shall be
payable on the immediately preceding Banking Day.
8. EVENTS OF DEFAULT
8.1 Events of Default. In the event that any of the following events shall occur
and be continuing:
(a) Principal Payments. Any principal of the Facility Balance
is not paid on the due date therefor; or
(b) Interest and other Payments. Any interest on the Facility
Balance or any other amount becoming payable under this Agreement and under any
Transaction Document or under any of them, is not paid within three (3) Banking
Days from the date when due; or
(c) Representations, etc. Any representation, warranty or
other statement made by any of the Security Parties in this Agreement or in any
other instrument, document or other agreement delivered in connection herewith
proves to have been untrue or misleading in any material respect as at the date
as of which it was made; or
23
(d) Impossibility, Illegality. It becomes impossible or
unlawful for any of the Security Parties to fulfill any of the covenants and
obligations contained herein or in any Transaction Document, or for any of the
Lenders to exercise any of the rights vested in any of them hereunder or under
the other Transaction Documents and such impossibility or illegality, in the
reasonable opinion of such Lender, will have a Material Adverse Effect on any of
its rights hereunder or under the other Transaction Documents or on any of its
rights to enforce any thereof; or
(e) Mortgage. There is any default under any Mortgage; or
(f) Certain Covenants. Any Security Party defaults in the
performance or observance of any covenant contained in Section 9.1(b), 9.1(m)
and 9.1(q) through (t) inclusive; or
(g) Covenants. One or more of the Security Parties default in
the performance of any term, covenant or agreement contained in this Agreement
or in the other Transaction Documents, or in any other instrument, document or
other agreement delivered in connection herewith or therewith, in each case
other than an Event of Default referred to elsewhere in this Section 8.1, and
such default continues unremedied for a period of fifteen (15) days after
written notice thereof has been given to the relevant Security Party or Parties
by the Agent at the request of any Lender; or
(h) Indebtedness and Other Obligations. Any Security Party
defaults in the payment when due (subject to any applicable grace period) of any
Indebtedness or of any other indebtedness, in either case, in an outstanding
principal amount equal to or exceeding Two Million Dollars ($2,000,000) or such
Indebtedness or other indebtedness is, or by reason of such default is subject
to being, accelerated or any party becomes entitled to enforce the security for
any such Indebtedness or other indebtedness and such party shall take steps to
enforce the same, unless such default or enforcement is being contested in good
faith and by appropriate proceedings or other acts and such Security Party has
set aside on its books adequate reserves with respect thereto; or
(i) Bankruptcy. Any Security Party commences any proceedings
relating to any substantial portion of its property under any reorganization,
arrangement or readjustment of debt, dissolution, winding up, adjustment,
composition, bankruptcy or liquidation law or statute of any jurisdiction,
whether now or hereafter in effect (a "Proceeding"), or there is commenced
against any thereof any Proceeding and such Proceeding remains undismissed or
unstayed for a period of sixty (60) days; or any receiver, trustee, liquidator
or sequestrator of, or for, any thereof or any substantial portion of the
property of any thereof is appointed and is not discharged within a period of
sixty (60) days; or any thereof by any act indicates consent to or approval of
or acquiescence in any Proceeding or to the appointment of any receiver,
trustee, liquidator or sequestrator of, or for, itself or any substantial
portion of its property; or
(j) Judgments. Any judgment or order is made the effect
whereof would be to render invalid this Agreement or any other Transaction
Document or any material provision thereof or any Security Party asserts that
any such agreement or provision thereof is invalid; or judgments or orders for
the payment of money (not paid or fully covered by insurance, subject to
applicable deductibles) in excess of $2,500,000 in the aggregate for ISH or its
Subsidiaries (or its equivalent in any other currency) shall be rendered against
ISH and/or any of its Subsidiaries and such judgments or orders shall continue
unsatisfied and unstayed for a period of 30 days; or
24
(k) Inability to Pay Debts. Any Security Party is unable to
pay or admits its inability to pay its debts as they fall due or a moratorium
shall be declared in respect of any Indebtedness of any thereof; or
(l) Termination of Operations; Sale of Assets. Except as
expressly permitted under this Agreement, any Security Party ceases its
operations or sells or otherwise disposes of all or substantially all of its
assets or all or substantially all of the assets of any Security Party are
seized or otherwise appropriated; or
(m) Change in Financial Position. Any change in the financial
position of any Security Party which, in the reasonable opinion of the Majority
Lenders, shall have a Material Adverse Effect; or
(n) Change in Control. A Change of Control shall occur with
respect to the Borrower or ISH; or
(o) Cross-Default. Any Security Party defaults under any
material contract or agreement to which it is a party or by which it is bound;
or
(p) ERISA Debt. Any member of the ERISA Group or any ERISA
Affiliate shall (i) fail to pay when due an amount or amounts aggregating in
excess of $1,000,000 which it or they shall have become liable to pay under
Title IV of ERISA or (ii) any member of the ERISA Group or any ERISA Affiliate,
individually or collectively, shall incur, or shall reasonably expect to incur,
any Withdrawal Liability or liability upon the happening of a Termination Event
and the aggregate of all such Withdrawal Liabilities and such other liabilities
shall be in excess of $10,000,000;
then, the Lenders' obligation to make the Facility available
shall cease and the Agent on behalf of the Lenders may, with the Majority
Lenders' consent and shall, upon the Majority Lenders' instruction, by notice to
the Borrower, declare the entire Facility Balance, accrued interest and any
other sums payable by the Borrower hereunder, under the Note and under the other
Transaction Documents due and payable whereupon the same shall forthwith be due
and payable without presentment, demand, protest or notice of any kind, all of
which are hereby expressly waived; provided that upon the happening of an event
specified in subclauses (i) or (j) of this Section 8.1, the Facility Balance,
accrued interest and any other sums payable by the Borrower hereunder, under the
Note and under the other Transaction Documents shall be immediately due and
payable without declaration, presentment, demand, protest or other notice to the
Borrower all of which are expressly waived. In such event, the Creditors may
proceed to protect and enforce their rights by action at law, suit in equity or
in admiralty or other appropriate proceeding, whether for specific performance
of any covenant contained in this Agreement or in the Note or in any other
Transaction Document or in aid of the exercise of any power granted herein or
therein, or the Lenders or the Agent may proceed to enforce the payment of the
Note when due or to enforce any other legal or equitable right of the Lenders,
or proceed to take any action authorized or permitted by Applicable Law for the
collection of all sums due, or so declared due, including, without limitation,
the right to appropriate and hold or apply (directly, by way of set-off or
otherwise) to the payment of the obligations of the Borrower to any of the
Creditors hereunder, under the Note and/or under the other Transaction Documents
(whether or not then due) all moneys and other amounts of the Borrower then or
thereafter in possession of any Creditor, the balance of any deposit account
25
(demand or time, matured or unmatured) of the Borrower then or thereafter with
any Creditor and every other claim of the Borrower then or thereafter against
any of the Creditors.
8.2 Indemnification. The Borrower agrees to, and shall, indemnify and hold each
of the Creditors harmless against any loss, as well as against any reasonable
costs or expenses (including reasonable legal fees and expenses), which any of
the Creditors sustains or incurs as a consequence of any default in payment of
the principal amount of the Facility, interest accrued thereon or any other
amount payable hereunder, under the Note or under the other Transaction
Documents including, but not limited to, all actual losses incurred in
liquidating or re-employing fixed deposits made by third parties or funds
acquired to effect or maintain the Facility or any portion thereof. Any
Creditor's certification of such costs and expenses shall, absent any manifest
error, be conclusive and binding on the Borrower.
8.3 Application of Moneys. Except as otherwise provided in any Security
Document, all moneys received by the Creditors under or pursuant to this
Agreement, the Note or any of the Security Documents after the happening of any
Event of Default (unless cured to the satisfaction of the Majority Lenders)
shall be applied by the Agent in the following manner
(a) first, in or towards the payment or reimbursement of any
expenses or liabilities incurred by any of the Creditors in connection with the
ascertainment, protection or enforcement of its rights and remedies hereunder,
under the Note and under the other Transaction Documents;
(b) secondly, in or towards payment of any interest owing in
respect of the Facility;
(c) thirdly, in or towards repayment of the principal of the
Facility;
(d) fourthly, in or towards payment of all other sums which
may be owing to any of the Creditors under this Agreement, under the Note and
under the other Transaction Documents; and
(e) fifthly, the surplus (if any) shall be paid to the
Borrower or to whomsoever else may be entitled thereto.
9. COVENANTS
9.1 Affirmative Covenants. Each of the Security Parties hereby jointly and
severally covenants and undertakes with the Lenders that, from the date hereof
and so long as any principal, interest or other moneys are owing in respect of
this Agreement, the Note or any of the Security Documents, it will:
(a) Performance of Agreements. Duly perform and observe, and
procure the observance and performance by all other parties thereto (other than
the Lenders) of, the terms of this Agreement, the Note and the Security
Documents;
(b) Notice of Default, etc. Promptly upon obtaining knowledge
thereof, inform the Agent of the occurrence of (a) any Event of Default or of
any event which, with the giving of notice or lapse of time, or both, would
constitute an Event of Default, (b) any litigation or governmental proceeding
pending or threatened against any Security Party which could reasonably be
expected to have a Material Adverse Effect, (c) the withdrawal of any Vessel's
rating by its Classification
26
Society or the issuance by the Classification Society of any material
recommendation or notation affecting class and (d) any other event or condition
which is reasonably likely to have a Material Adverse Effect, in each case
promptly, and in any event within three (3) Banking Days after becoming aware of
the occurrence thereof;
(c) Obtain Consents. Without prejudice to Section 2.1 and this
Section 9.1, obtain every consent and do all other acts and things which may
from time to time be necessary or advisable for the continued due performance of
all its and the other Security Parties' respective obligations under this
Agreement, under the Note and under the Security Documents;
(d) Financial Information. Deliver to the Agent with
sufficient copies for the Lenders to be distributed to the Lenders by the Agent
promptly upon the receipt thereof:
(i) as soon as available but not later than
ninety (90) days after the end of each
fiscal year of ISH, complete copies of the
consolidated financial reports of ISH and
its Subsidiaries (together with a Compliance
Certificate), all in reasonable detail which
shall include at least the consolidated
balance sheet of ISH and its Subsidiaries as
of the end of such year and the related
consolidated statements of income and
sources and uses of funds for such year,
each as prepared in accordance with GAAP,
all in reasonable detail, which shall be
audited reports prepared by an Acceptable
Accounting Firm;
(ii) as soon as available, but not less than
forty-five (45) days after the end of each
of the first three quarters of each fiscal
year of ISH, a quarterly interim balance
sheets and profit and loss statements of ISH
and its Subsidiaries and the related profit
and loss statements and sources and uses of
funds (together with a Compliance
Certificate), all in reasonable detail,
unaudited, but certified to be true and
complete by the chief financial officer of
ISH;
(iii) promptly upon the mailing thereof to the
shareholders of the ISH, copies of all
financial statements, reports, proxy
statements and other communications provided
to ISH's shareholders;
(iv) within ten (10) days of the ISH's receipt
thereof, copies of all audit letters or
other correspondence from any external
auditors including material financial
information in respect of ISH and its
Subsidiaries; and
(v) such other statements (including, without
limitation, monthly consolidated statements
of operating revenues and expenses), lists
of assets and accounts, budgets, forecasts,
reports and other financial information with
respect to its business as the Agent may
from time to time reasonably request,
certified to be true and complete by the
chief financial officer of ISH;
(e) Vessel Valuations. For inclusion with each Compliance
Certificate delivered pursuant to Section 9.1(d)(i), and in any event upon the
reasonable request of the Agent, the
27
Borrower shall obtain appraisals of the Fair Market Value of the Vessels. One of
such valuations in any year is to be at the Borrower's cost, provided, that
following and during the continuance of any Event of Default, all such
valuations are to be at the Borrower's cost. In the event the Borrower fails or
refuses to obtain the valuations requested pursuant to this Section 9.1 within
ten (10) days of the Agent's request therefor, the Agent will be authorized to
obtain such valuations, at the Borrower's cost, from one approved ship brokers
listed on Schedule IV, which valuations shall be deemed the equivalent of
valuations duly obtained by the Borrower pursuant to this Section 9.1(e), but
the Agent's actions in doing so shall not excuse any default of the Borrower
under this Section 9.1(e);
(f) Corporate Existence. Do or cause to be done all things
necessary to preserve and keep in full force and effect its corporate existence
and all licenses, franchises, permits and assets necessary to the conduct of its
business;
(g) Books and Records. At all times keep proper books of
record and account into which full and correct entries shall be made in
accordance with GAAP;
(h) Taxes and Assessments. Pay and discharge all material
taxes, assessments and governmental charges or levies imposed upon it or upon
its income or property prior to the date upon which penalties attach thereto;
provided, however, that it shall not be required to pay and discharge, or cause
to be paid and discharged, any such tax, assessment, charge or levy so long as
the legality thereof shall be contested in good faith and by appropriate
proceedings or other acts and it shall set aside on its books adequate reserves
with respect thereto;
(i) Inspection. Allow any representative or representatives
designated by the Agent, subject to applicable laws and regulations, to visit
and inspect any of its properties, and, on request, to examine its books of
account, records, reports and other papers and to discuss its affairs, finances
and accounts with its officers, all at such reasonable times and as often as the
Agent reasonably requests;
(j) Inspection and Survey Reports. If the Lenders shall so
request, the Borrower shall provide the Lenders with copies of all internally
generated inspection or survey reports on the Vessels;
(k) Compliance with Statutes, Agreements, etc. Do or cause to
be done all things necessary to comply with all material contracts or agreements
to which any of the Security Parties is a party, and all material laws, and the
rules and regulations thereunder, applicable to such Security Party, including,
without limitation, those laws, rules and regulations relating to employee
benefit plans and environmental matters except where failure to do so would not
be reasonably likely to have a Material Adverse Effect;
(l) Environmental Matters. Promptly upon the occurrence of any
of the following conditions, provide to the Agent a certificate of a chief
executive officer the Borrower, specifying in detail the nature of such
condition and its proposed response or the proposed response of any
Environmental Affiliate: (a) its receipt or the receipt by any Environmental
Affiliate of any written communication whatsoever that alleges that such Person
is not in compliance with any applicable Environmental Law or Environmental
Approval, if such noncompliance could reasonably be expected to have a Material
Adverse Effect, (b) knowledge by it or any Environmental Affiliate that there
exists any Environmental Claim pending or threatened against any such Person,
which could
28
reasonably be expected to have a Material Adverse Effect, or (c) any release,
emission, discharge or disposal of any material that could form the basis of any
Environmental Claim against it or against any Environmental Affiliate, if such
Environmental Claim could reasonably be expected to have a Material Adverse
Effect. Upon the written request by the Agent, the Borrower will submit to the
Agent at reasonable intervals, a report providing an update of the status of any
issue or claim identified in any notice or certificate required pursuant to this
subsection;
(m) Insurance. Maintain with financially sound and reputable
insurance companies insurance on all its properties and against all such risks
and in at least such amounts and with such deductibles as are usually insured
against by companies of established reputation engaged in the same or similar
business from time to time;
(n) Vessel Management. Cause the Vessels to be managed both
commercially and technically by ISH, a wholly-owned subsidiary thereof or its
existing manager;
(o) Brokerage Commissions, etc. Indemnify and hold the Agent
and the Lenders harmless from any claim for any brokerage commission, fee or
compensation from any broker or third party resulting from the transactions
contemplated hereby;
(p) ISM Code Matters (i) Procure that the Operator will comply
with and ensure that each of the Vessels will comply with the requirements of
the ISM Code in accordance with the implementation schedule thereof, including
(but not limited to) the maintenance and renewal of valid certificates pursuant
thereto throughout the Facility Period; and (ii) will procure that the Operator
will immediately inform the Agent if there is any threatened or actual
withdrawal of its DOC or the SMC in respect of any Vessel; and (iii) will
procure that the Operator will promptly inform the Agent upon the issuance to
the Borrower or Operator of a DOC and to a Vessel of an SMC;
(q) Consolidated Indebtedness to Consolidated EBITDA Ratio. In
the case of the Guarantor, maintain, on a consolidated basis, until December 31,
2002 a ratio of Consolidated Indebtedness to Consolidated EBITDA of not more
than 5.00 to 1.00 and thereafter maintain, on a consolidated basis, a ratio of
Consolidated Indebtedness to Consolidated EBITDA of not more than 4.25 to 1.00,
as measured at the end of each fiscal quarter based on the four most recent
fiscal quarters for which financial information is available;
(r) Working Capital. In the case of the Guarantor, maintain on
a consolidated basis a ratio of current assets to current liabilities of not
less than 1.00 to 1.00, as measured at the end of each fiscal quarter;
(s) Consolidated Net Worth. In the case of the Guarantor,
maintain a Consolidated Net Worth, as measured at the end of each fiscal
quarter, in an amount of not less than the sum of One Hundred Million Dollars
($100,000,000) and 50% of all net income of ISH (on a consolidated basis) earned
after July 1, 2001;
(t) Consolidated EBITDA to Interest Expense. In the case of
the Guarantor, maintain a ratio of Consolidated EBITDA to Interest Expense of
not less than 2.00 to 1.00 until December 31, 2002 and thereafter of not less
than 2.50 to 1.00, measured each fiscal quarter based on the four most recent
fiscal quarters for which financial information is available;
29
(u) ERISA. Forthwith upon learning of the occurrence of any
material liability of any member of the ERISA Group or any ERISA Affiliate
pursuant to ERISA in connection with the termination of any Plan or withdrawal
or partial withdrawal of any multi-employer plan (as defined in ERISA) or of a
failure to satisfy the minimum funding standards of Section 412 of the Code or
Part 3 of Title I of ERISA by any Plan for which any member of the ERISA Group
or any ERISA Affiliate is plan administrator (as defined in ERISA), furnish or
cause to be furnished to the Lenders written notice thereof;
(v) Retirement of ISH Notes. Retire the ISH Notes within
ninety (90) days of the Drawdown Date; and
(w) Evidence of Current COFR. If the Lenders shall so request,
provide the Lenders with copies of the current Certificate of Financial
Responsibility pursuant to the Oil Pollution ▇▇▇ ▇▇▇▇ for each of the Vessels.
9.2 Negative Covenants. Each of the Security Parties hereby jointly and
severally covenants and undertakes with the Lenders that, from the date hereof
and so long as any principal, interest or other moneys are owing in respect of
this Agreement, the Note or any other Transaction Documents, it will not,
without the prior written consent of the Agent (or the Majority Lenders or all
of the Lenders if required pursuant to Section 16.8):
(a) Liens. Create, assume or permit to exist, any mortgage,
pledge, lien, charge, encumbrance or any security interest whatsoever upon any
Collateral or, in respect of the Borrower and the Guarantor, other property
except:
(i) liens disclosed in Schedule V;
(ii) liens to secure Indebtedness under Section
9.2(i), such liens to be limited to the
vessels constructed or acquired;
(iii) liens for taxes not yet payable for which
adequate reserves have been maintained;
(iv) the Mortgages, the Assignments and other
liens in favor of the Security Trustee or
the Lenders;
(v) liens, charges and encumbrances against the
Vessels permitted to exist under the terms
of the Mortgages;
(vi) pledges of certificates of deposit or other
cash collateral securing reimbursement
obligations in connection with letters of
credit now or hereinafter issued for its
account in connection with the establishment
of its financial responsibility under
33C.F.R. Part 130 or 46 C.F.R. Part 540, as
the case may be, as the same may be amended
and replaced;
(vii) pledges or deposits to secure obligations
under workmen's compensation laws or similar
legislation, deposits to secure public or
statutory obligations, warehousemen's or
other like liens, or deposits
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to obtain the release of such liens and
deposits to secure surety, appeal or customs
bonds on which it is the principal, as to
all of the foregoing, only to the extent
arising and continuing in the ordinary
course of business; and
(viii) other liens, charges and encumbrances
incidental to the conduct of its business,
the ownership of its property and assets and
which do not in the aggregate materially
detract from the value of its property or
assets or materially impair the use thereof
in the operation of its business;
(b) Change of Flag, Class, Management or Ownership. Change the
flag of any of the Vessels other than to an jurisdiction reasonable acceptable
to the Majority Lenders, their Classification Society other than to another
member of the International Association of Classification Societies, the
technical management of any Vessel other than to one or more technical
management companies reasonably acceptable to the Majority Lenders or the
immediate or ultimate ownership of any Vessel;
(c) Chartering. Enter into any demise or bareboat charter with
any party other than ISH or its Subsidiaries with respect to any Vessel having a
duration of, including any options to extend such charter, more than twenty-five
(25) months without the prior consent of the Agent, which consent shall not be
unreasonably withheld;
(d) Change in Business. In the case of the Borrower or the
Guarantor, materially change the nature of its business or commence any business
materially different from its current business;
(e) Sale of Assets. Other than as reasonably acceptable to the
Majority Lenders, sell, or otherwise dispose of, any Vessel (except for sales to
third parties in arm's length transactions) or, in respect of the Borrower or
Guarantor, any other asset (including by way of spin-off, installment sale or
otherwise) which is substantial in relation to its assets taken as a whole;
(f) Changes in Offices or Names. Change the location of its
chief executive office, its chief place of business or the office in which its
records relating to the earnings or insurances of the Vessels are kept unless
the Agent shall have received sixty (60) days prior written notice of such
change;
(g) Consolidation and Merger. In the case of the Borrower or
the Guarantor, consolidate with, or merge into, any corporation or other entity,
or merge any corporation or other entity into it; provided, however, that the
Guarantor may merge with any Subsidiary or any other Person if (A) at the time
of such transaction and after giving effect thereto, no Default or Event of
Default shall have occurred or be continuing, (B) the surviving entity of such
consolidation or merger shall be the Guarantor and (C) after giving effect to
the transaction, the Guarantor's net worth shall be greater or equal to its net
worth prior to the merger;
(h) Change Fiscal Year. In the case of the Guarantor, change
its fiscal year;
(i) Indebtedness. In the case of the Borrower, Central Gulf
and ▇▇▇▇▇▇▇▇, incur any new Indebtedness other than Indebtedness incurred to
finance the acquisition and/or
31
construction of any vessels, provided that the principal amount of such
indebtedness shall not exceed eighty percent (80%) of such acquisition and/or
construction price; and
(j) Limitations on Ability to Make Distributions. Except as
provided in Section 13(c)(1) of the Title XI Agreement, create or otherwise
cause or permit to exist or become effective any consensual encumbrance or
restriction on the ability of any Subsidiary to pay dividends or make any other
distributions on its capital stock or limited liability company interests, as
the case may be, to the Borrower or the Guarantor.
9.3 Asset Maintenance. If at any time during the Facility Period, the aggregate
Fair Market Value of the Vessels (to be determined annually as at the date of
each anniversary of this Agreement by charter-free appraisals obtained by, and
delivered to, the Agent) (together with the value of any additional collateral
theretofore provided under this Section) is less than 125% of the Facility
Balance together with interest thereon in accordance with Section 6.1 (such
percentage herein called the "Required Percentage"), the Borrower shall, within
a period of thirty (30) days following receipt by the Borrower of written notice
from the Agent notifying the Borrower of such shortfall and specifying the
amount thereof (which amount shall, in the absence of manifest error, be deemed
conclusive and binding on the Borrower) either (a) deliver to the Agent, such
additional collateral as may be satisfactory to the Lenders in their sole
discretion of sufficient value to restore compliance with the Required
Percentage or (b) prepay the Facility Balance or part thereof (together with
interest thereon and any monies payable in respect of such prepayment pursuant
to Section 5.4) as shall result in the Fair Market Value of the Vessels then
mortgaged to the Agent being not less than the Required Percentage.
10. GUARANTEE
10.1 The Guarantee. The Guarantor hereby guarantees to each of the Creditors and
their respective successors and assigns the prompt payment in full when due
(whether at stated maturity, by acceleration or otherwise) of the principal of
and interest on the Advance made by the Lenders to the Borrower and evidenced by
the Note and all other amounts from time to time owing to the Creditors by the
Borrower under this Agreement, under the Note and under any of the Security
Documents, in each case strictly in accordance with the terms thereof (such
obligations being herein collectively called the "Guaranteed Obligations"). The
Guarantor hereby further agrees that if the Borrower shall fail to pay in full
when due (whether at stated maturity, by acceleration or otherwise) any of the
Guaranteed Obligations, the Guarantor will promptly pay the same, without any
demand or notice whatsoever, and that in the case of any extension of time of
payment or renewal of any of the Guaranteed Obligations, the same will be
promptly paid in full when due (whether at extended maturity, by acceleration or
otherwise) in accordance with the terms of such extension or renewal.
10.2 Obligations Unconditional. The obligations of the Guarantor under Section
10.1 are absolute, unconditional and irrevocable, irrespective of the value,
genuineness, validity, regularity or enforceability of the obligations of the
Borrower under this Agreement, the Note or any other agreement or instrument
referred to herein or therein, or any substitution, release or exchange of any
other guarantee of, or security for, any of the Guaranteed Obligations, and, to
the fullest extent permitted by applicable law, irrespective of any other
circumstance whatsoever that might otherwise constitute a legal or equitable
discharge or defense of a surety or guarantor, it being the intent of this
Section 10.2 that the obligations of the Guarantor hereunder shall be absolute,
unconditional and irrevocable, under any and all circumstances. Without limiting
the generality of the foregoing, it is
32
agreed that the occurrence of any one or more of the following shall not alter
or impair the liability of the Guarantor hereunder, which shall remain absolute,
unconditional and irrevocable as described above:
a) at any time or from time to time, without notice to the
Guarantor, the time for any performance of or compliance with
any of the Guaranteed Obligations shall be extended, or such
performance or compliance shall be waived;
b) any of the acts mentioned in any of the provisions of this
Agreement or the Note or any other agreement or instrument
referred to herein or therein shall be done or omitted;
c) the maturity of any of the Guaranteed Obligations shall be
accelerated, or any of the Guaranteed Obligations shall be
modified, supplemented or amended in any respect, or any right
under this Agreement or the Note or any other agreement or
instrument referred to herein or therein shall be waived or
any other guarantee of any of the Guaranteed Obligations or
any security therefor shall be released or exchanged, in whole
or in part, or otherwise dealt with; or
d) any lien or security interest granted to, or in favor of, the
Security Trustee or any Lender or Lenders as security for any
of the Guaranteed Obligations shall fail to be perfected.
The Guarantor hereby expressly waives diligence, presentment, demand of payment,
protest and all notices whatsoever, and any requirement that the Agent, the
Security Trustee or any Lender exhaust any right, power or remedy or proceed
against the Borrower under this Agreement or the Note or any other agreement or
instrument referred to herein or therein, or against any other Person under any
other guarantee of, or security for, any of the Guaranteed Obligations.
10.3 Reinstatement. The obligations of the Guarantor under this Section 10 shall
be automatically reinstated if and to the extent that for any reason any payment
by or on behalf of the Borrower in respect of the Guaranteed Obligations is
rescinded or must be otherwise restored by any holder of any of the Guaranteed
Obligations, whether as a result of any Proceedings and the Guarantor agrees
that it will indemnify each Creditor on demand for all reasonable costs and
expenses (including, without limitation, fees of counsel) incurred by such
Creditor in connection with such recission or restoration, including any such
costs and expenses incurred in defending against any claim alleging that such
payment constituted a preference, fraudulent transfer or similar payment under
any bankruptcy, insolvency or similar law.
10.4 Subrogation. The Guarantor hereby irrevocably waives, but only until all
amounts payable hereunder by the Guarantor to the Creditors (or any of them)
have been paid in full, any and all rights to which any of them may be entitled
by operation of law or otherwise, upon making any payment hereunder to be
subrogated to the rights of the payee against the Borrower with respect to such
payment or to be reimbursed, indemnified or exonerated by the Borrower in
respect thereof.
10.5 Remedies. The Guarantor agrees that, as between the Guarantor and the
Lenders, the obligations of the Borrower under this Agreement and the Note may
be declared to be forthwith due and payable as provided in Section 8 (and shall
be deemed to have become automatically due and payable in the circumstances
provided in said Section 8) for purposes of Section 10.1 notwithstanding any
stay, injunction or other prohibition preventing such declaration (or such
obligations from becoming automatically due and payable) as against the Borrower
and that, in the
33
event of such declaration (or such obligations being deemed to have become
automatically due and payable), such obligations (whether or not due and payable
by the Borrower) shall forthwith become due and payable by the Guarantor for
purposes of Section 10.1.
10.6 Instrument for the Payment of Money. The Guarantor hereby acknowledges that
the guarantee in this Clause 10 constitutes an instrument for the payment of
money, and consents and agrees that any Creditor, at its sole option, in the
event of a dispute by the Guarantor in the payment of any moneys due hereunder,
shall have the right to bring motion-action under New York CPLR Section 3213.
10.7 Continuing Guarantee. The guarantee in this Section 10 is a continuing
guarantee, and shall apply to all Guaranteed Obligations whenever arising.
11. ASSIGNMENT.
This Agreement shall be binding upon, and inure to the benefit
of, each of the Security Parties and each of the Creditors and their respective
successors and assigns, except that none of the Security Parties may assign any
of its rights or obligations hereunder without the written consent of the
Lenders. Each Lender shall be entitled to assign its rights and obligations
under this Agreement or grant participation(s) in the Facility to any
subsidiary, holding company or other affiliate of such Lender, to any subsidiary
or other affiliate company of any thereof or, with the consent of the Borrower
(except upon the occurrence and during the continuation of an Event of Default,
in which case the Borrower's consent shall not be required) and the Agent, in
the case of the Borrower such consent not to be unreasonably withheld, to any
other bank or financial institution (in a minimum amount of not less than
$1,000,000), and such Lender shall forthwith give notice of any such assignment
or participation to the Borrower and pay the Agent an assignment fee of $3,000
for each such assignment or participation; provided, however, that any such
assignment must be made pursuant to an Assignment and Assumption Agreement. The
Borrower will take all reasonable actions requested by the Agent or any Lender
to effect such assignment, including, without limitation, the execution of a
written consent to any Assignment and Assumption Agreement.
12. ILLEGALITY, INCREASED COST, NON-AVAILABILITY, ETC.
12.1 Illegality. In the event that by reason of any change in any applicable
law, regulation or regulatory requirement or in the interpretation thereof, a
Lender has a reasonable basis to conclude that it has become unlawful for any
Lender to maintain or give effect to its obligations as contemplated by this
Agreement, such Lender shall inform the Agent and the Borrower to that effect,
whereafter the liability of such Lender to make its Commitment available shall
forthwith cease and the Borrower shall be required either to repay to such
Lender that portion of the Facility advanced by such Lender immediately or, if
such Lender so agrees, to repay such portion of the Facility to the Lender on
the last day of any then current Interest Period in accordance with and subject
to the provisions of Section 12.5. In any such event, but without prejudice to
the aforesaid obligations of the Borrower to repay such portion of the Facility,
the Borrower and the relevant Lender shall negotiate in good faith with a view
to agreeing on terms for making such portion of the Facility available from
another jurisdiction or otherwise restructuring such portion of the Facility on
a basis which is not unlawful.
34
12.2 Increased Costs. If any change in applicable law, regulation or regulatory
requirement, or in the interpretation or application thereof by any governmental
or other authority, shall:
(i) subject any Lender to any Taxes with respect
to its income from the Facility, or any part
thereof, or
(ii) change the basis of taxation to any Lender
of payments of principal or interest or any
other payment due or to become due pursuant
to this Agreement (other than a change in
the basis effected by the jurisdiction of
organization of such Lender, the
jurisdiction of the principal place of
business of such Lender, the United States
of America, the State or City of New York or
any governmental subdivision or other taxing
authority having jurisdiction over such
Lender (unless such jurisdiction is asserted
by reason of the activities of any Security
Party) or such other jurisdiction where the
Facility may be payable), or
(iii) impose, modify or deem applicable any
reserve requirements or require the making
of any special deposits against or in
respect of any assets or liabilities of,
deposits with or for the account of, or
loans by, a Lender, or
(iv) impose on any Lender any other condition
affecting the Facility or any part thereof,
and the result of the foregoing is either to increase the cost
to such Lender of making available or maintaining its Commitment or any part
thereof or to reduce the amount of any payment received by such Lender, then and
in any such case if such increase or reduction in the opinion of such Lender
materially affects the interests of such Lender under or in connection with this
Agreement:
(a) such Lender shall notify the Agent and the Borrower of the
happening of such event, and
(b) the Borrower agrees forthwith upon demand to pay to such
Lender such amount as such Lender certifies to be necessary to compensate such
Lender for such additional cost or such reduction; PROVIDED, however, that the
foregoing provisions shall not be applicable in the event that increased costs
to the Lender result from the exercise by the Lender of its right to assign its
rights or obligations under Section 11.
12.3 Nonavailability of Funds. If the Agent shall determine that, by reason of
circumstances affecting the London Interbank Market generally, adequate and
reasonable means do not or will not exist for ascertaining the Applicable Rate
for the Facility for any Interest Period, the Agent shall give notice of such
determination to the Borrower. The Borrower and the Agent shall then negotiate
in good faith in order to agree upon a mutually satisfactory interest rate
and/or Interest Period to be substituted for those which would otherwise have
applied under this Agreement. If the Borrower and the Agent are unable to agree
upon such a substituted interest rate and/or Interest Period within thirty (30)
days of the giving of such determination notice, the Agent shall set an interest
rate and Interest Period to take effect from the expiration of the Interest
Period in effect at the date of
35
determination, which rate shall be equal to the Applicable Margin plus the cost
to the Lenders (as certified by each Lender) of funding the Facility. In the
event the state of affairs referred to in this Section 12.3 shall extend beyond
the end of the Interest Period, the foregoing procedure shall continue to apply
until circumstances are such that the Applicable Rate may be determined pursuant
to Section 6.
12.4 Lender's Certificate Conclusive. A certificate or determination notice of
the Agent or any Lender, as the case may be, as to any of the matters referred
to in this Section 12 shall, absent manifest error, be conclusive and binding on
the Borrower.
12.5 Compensation for Losses. Where any portion of the Facility Balance is to be
repaid by the Borrower pursuant to this Section 12, the Borrower agrees
simultaneously with such repayment to pay to the relevant Lender all accrued
interest to the date of actual payment on the amount repaid and all other sums
then payable by the Borrower to the relevant Lender pursuant to this Agreement,
together with such amounts as may be certified by the relevant Lender to be
necessary to compensate such Lender for any actual loss, premium or penalties
incurred or to be incurred thereby on account of funds borrowed to make, fund or
maintain its Commitment or such portion thereof for the remainder (if any) of
the then current Interest Period or Interest Periods, if any, but otherwise
without penalty or premium.
12.6 Compensation for Breakage Costs. The Borrower shall pay to the Lenders or
any thereof, upon the request of any thereof, such amount or amounts as shall be
sufficient (in the reasonable opinion of the relevant Lenders) to compensate
them for any loss, cost or expense incurred by them as a result of:
(a) any payment or prepayment (including any such prepayment
made pursuant to Sections 5.1, 5.2, 5.3 and 8.1) of the Advance on a date other
than the last day of an Interest Period; or
(b) any failure by the Borrower to borrow (including without
limitation any such failure resulting from a condition precedent set forth in
Section 4) or prepay the Advance held by any Lenders on the date for such
borrowing or prepayment specified in the relevant request for such Advance or
notice of prepayment delivered under Sections 3.2 or 5.2, respectively;
such compensation to include, without limitation, an amount
equal to the excess, if any, of (i) the amount of interest which would have
accrued on the principal amount so paid, prepaid or not borrowed for the period
from the date of such payment, prepayment or failure to borrow to the last day
of the then current Interest Period for such Advance or, in the case of a
failure to borrow, the Interest Period for such Advance which would have
commenced on the date of such failure to borrow, in each case at the applicable
rate of interest for such Advance provided for herein over (ii) the amount of
interest which otherwise would have accrued on such principal amount at a rate
per annum equal to the interest component (as reasonably determined by the
relevant Lenders) of the amount (as reasonably determined by such Lenders) the
Lenders would have bid in the Eurocurrency market for Dollar deposits of amounts
comparable to such principal amount and maturities comparable to such Interest
Period. Any certification of a relevant Lender shall, absent manifest error, be
conclusive.
36
13. CURRENCY INDEMNITY
13.1 Currency Conversion. If for the purpose of obtaining or enforcing a
judgment in any court in any country it becomes necessary to convert into any
other currency (the "judgment currency") an amount due in Dollars under this
Agreement or the other Transaction Documents then the conversion shall be made,
in the discretion of the Agent, at the rate of exchange prevailing either on the
date of default or on the day before the day on which the judgment is given or
the order for enforcement is made, as the case may be (the "conversion date"),
provided that the Agent shall not be entitled to recover under this section any
amount in the judgment currency which exceeds at the conversion date the amount
in Dollars due under this Agreement, the Note and/or the other Transaction
Documents.
13.2 Change in Exchange Rate. If there is a change in the rate of exchange
prevailing between the conversion date and the date of actual payment of the
amount due, the Borrower shall pay such additional amounts (if any, but in any
event not a lesser amount) as may be necessary to ensure that the amount paid in
the judgment currency when converted at the rate of exchange prevailing on the
date of payment will produce the amount then due under this Agreement, the Note
and/or the other Transaction Documents in Dollars; any excess over the amount
due received or collected by the Lenders shall be remitted to the Borrower.
13.3 Additional Debt Due. Any amount due from the Borrower under this Section 13
shall be due as a separate debt and shall not be affected by judgment being
obtained for any other sums due under or in respect of this Agreement, the Note
and/or any of the Security Documents.
13.4 Rate of Exchange. The term "rate of exchange" in this Section 13 means the
rate at which the Agent in accordance with its normal practices is able on the
relevant date to purchase Dollars with the judgment currency and includes any
premium and costs of exchange payable in connection with such purchase.
14. FEES AND EXPENSES
14.1 Fees. The Borrower shall pay to the Agent such fees as the parties have
agreed pursuant to the Fee Letter.
14.2 Expenses. The Borrower agrees, whether or not the transactions hereby
contemplated are consummated, on demand to pay, or reimburse the Agent for its
payment of, the reasonable expenses of the Agent, the Security Trustee and
(after the occurrence and during the continuance of an Event of Default) the
Lenders incident to said transactions (and in connection with any supplements,
amendments, waivers or consents relating thereto or incurred in connection with
the enforcement or defense of any of the Agent's, the Security Trustee's and the
Lenders' rights or remedies with respect thereto or in the preservation of the
Agent's, the Security Trustee's and the Lenders' priorities under the
documentation executed and delivered in connection therewith) including, without
limitation, all reasonable costs and expenses of preparation, negotiation,
execution and administration of this Agreement and the documents referred to
herein, the reasonable fees and disbursements of the Agent's counsel in
connection therewith, as well as the reasonable fees and expenses of any
independent appraisers, surveyors, engineers and other consultants retained by
the Agent in connection with this transaction, all reasonable costs and
expenses, if any, in connection with the enforcement of this Agreement and the
other Transaction Documents and stamp
37
and other similar taxes, if any, incident to the execution and delivery of the
documents (including, without limitation, the other Transaction Documents)
herein contemplated and to hold the Agent, the Security Trustee and the Lenders
free and harmless in connection with any liability arising from the nonpayment
of any such stamp or other similar taxes. Such taxes and, if any, interest and
penalties related thereto as may become payable after the date hereof shall be
paid immediately by the Borrower to the Agent, the Security Trustee or the
Lenders, as the case may be, when liability therefor is no longer contested by
such party or parties or reimbursed immediately by the Borrower to such party or
parties after payment thereof (if the Agent, the Security Trustee or the
Lenders, at their sole discretion, chooses to make such payment).
15. APPLICABLE LAW, JURISDICTION AND WAIVER
15.1 Applicable Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York.
15.2 Jurisdiction. The Borrower and the Guarantor hereby irrevocably submit to
the jurisdiction of the courts of the State of New York and of the United States
District Court for the Southern District of New York in any action or proceeding
brought against it by any Creditor under this Agreement or under any document
delivered hereunder and each hereby irrevocably agrees that valid service of
summons or other legal process on it may be effected by serving a copy of the
summons and other legal process in any such action or proceeding by mailing or
delivering the same by hand to it at the address indicated for notices in
Section 17.1. The service, as herein provided, of such summons or other legal
process in any such action or proceeding shall be deemed personal service and
accepted by the Security Parties as such, and shall be legal and binding upon
the Security Parties for all the purposes of any such action or proceeding.
Final judgment (a certified or exemplified copy of which shall be conclusive
evidence of the fact and of the amount of any indebtedness of the Borrower or
the Guarantor to any of the Creditors) against the Security Parties in any such
legal action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment. In the event that any of the Security
Parties shall not be conveniently available for such service, each Security
Party hereby irrevocably appoints the Person who is the Secretary of State of
the State of New York as its attorney-in-fact and agent. The Borrower will
advise the Agent promptly of any change of address for the purpose of service of
process. Notwithstanding anything herein to the contrary, the Lenders may bring
any legal action or proceeding in any other appropriate jurisdiction.
15.3 WAIVER OF JURY TRIAL. IT IS MUTUALLY AGREED BY AND AMONG EACH OF THE
SECURITY PARTIES AND EACH OF THE CREDITORS THAT EACH OF THEM HEREBY WAIVES TRIAL
BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY ANY PARTY HERETO
AGAINST ANY OTHER PARTY HERETO ON ANY MATTER WHATSOEVER ARISING OUT OF OR IN ANY
WAY CONNECTED WITH THIS AGREEMENT OR THE OTHER TRANSACTION DOCUMENTS.
16. THE AGENT AND the security trustee
16.1 Appointment of Agent. Each of the Lenders irrevocably appoints and
authorizes the Agent to take such action as agent on its behalf and to exercise
such powers under this Agreement and the other Transaction Documents as are
delegated to the Agent by the terms hereof and thereof. Neither the Agent nor
any of its directors, officers, employees or agents shall be liable for any
action taken
38
or omitted to be taken by it or them under this Agreement or the other
Transaction Documents or in connection therewith, except for its or their own
gross negligence or willful misconduct.
16.2 Appointment of Security Trustee. Each of the Lenders irrevocably appoints,
designates and authorizes the Security Trustee to act as security trustee on its
behalf with regard to (i) the security, powers, rights, titles, benefits and
interests (both present and future) constituted by and conferred on the Lenders
or any of them or for the benefit thereof under or pursuant to this Agreement or
any of the other Transaction Documents (including, without limitation, the
benefit of all covenants, undertakings, representations, warranties and
obligations given, made or undertaken to any Lender in the Agreement or the
other Transaction Documents), (ii) all moneys, property and other assets paid or
transferred to or vested in any Lender or any agent of any Lender or received or
recovered by any Lender or any agent of any Lender pursuant to, or in connection
with, this Agreement or the other Transaction Documents whether from any
Security Party or any other person and (iii) all money, investments, property
and other assets at any time representing or deriving from any of the foregoing,
including all interest, income and other sums at any time received or receivable
by any Lender or any agent of any Lender in respect of the same (or any part
thereof). The Security Trustee hereby accepts such appointment but shall have no
obligations under this Agreement, under the Note or under any of the Security
Documents except those expressly set forth herein and therein.
16.3 Distribution of Payments. Whenever any payment is received by the Agent or
the Security Trustee from the Borrower or any other Security Party for the
account of the Lenders, or any of them, whether of principal or interest on the
Note, commissions, fees under Section 14 or otherwise, it will thereafter cause
to be distributed on the same day if received before 11 a.m. New York time, or
on the next day if received thereafter, like funds relating to such payment
ratably to the Lenders according to their respective Commitments, in each case
to be applied according to the terms of this Agreement.
16.4 Holder of Interest in Note. The Agent may treat each Lender as the holder
of all of the interest of such Lender in the Note.
16.5 No Duty to Examine, Etc. Neither the Agent nor the Security Trustee shall
be under a duty to examine or pass upon the validity, effectiveness or
genuineness of any of this Agreement, the other Transaction Documents or any
instrument, document or communication furnished pursuant to this Agreement or in
connection therewith or in connection with any other Transaction Document, and
the Agent and the Security Trustee shall be entitled to assume that the same are
valid, effective and genuine, have been signed or sent by the proper parties and
are what they purport to be.
16.6 Agent as Lender. With respect to that portion of the Facility made
available by it, the Agent shall have the same rights and powers hereunder as
any other Lender and may exercise the same as though it were not the Agent, and
the term "Lender" or "Lenders" shall include the Agent in its capacity as a
Lender. The Agent and its affiliates may accept deposits from, lend money to and
generally engage in any kind of business with, the Borrower and the other
Security Parties as if it were not the Agent.
16.7 Acts of the Agent and the Security Trustee. The Agent and the Security
Trustee shall have duties and discretion, and shall act as follows:
39
(a) Obligations of the Agent and the Security Trustee.
The obligations of the Agent and the Security Trustee
under this Agreement and the other Transaction
Documents are only those expressly set forth herein
and therein;
(b) No Duty to Investigate. Neither the Agent nor the
Security Trustee shall at any time, unless requested
to do so by a Lender or Lenders, be under any duty to
investigate whether an Event of Default, or an event
which with the giving of notice or lapse of time, or
both, would constitute an Event of Default, has
occurred or to investigate the performance of this
Agreement, the Note or any Security Document by any
Security Party; and
(c) Discretion of the Agent and the Security Trustee.
Each of the Agent and the Security Trustee shall be
entitled to use its discretion with respect to
exercising or refraining from exercising any rights
which may be vested in it by, and with respect to
taking or refraining from taking any action or
actions which it may be able to take under or in
respect of, this Agreement and the other Transaction
Documents, unless the Agent shall have been
instructed by the Majority Lenders to exercise such
rights or to take or refrain from taking such action;
provided, however, that neither the Agent nor the
Security Trustee shall be required to take any action
which exposes it to personal liability or which is
contrary to this Agreement or applicable law;
(d) Instructions of Majority Lenders. Each of the Agent
and the Security Trustee shall in all cases be fully
protected in acting or refraining from acting under
this Agreement or under any other Transaction
Document in accordance with the instructions of the
Majority Lenders, and any action taken or failure to
act pursuant to such instructions shall be binding on
all of the Lenders.
16.8 Certain Amendments. Neither this Agreement, the Note nor any of the
Security Documents nor any terms hereof or thereof may be amended unless such
amendment is approved by the Borrower and the Majority Lenders, provided that no
such amendment shall, without the consent of each Lender affected thereby, (i)
reduce the interest rate or extend the time of payment of scheduled principal
payments or interest or fees on the Facility, or reduce the principal amount of
the Facility or any fees hereunder, (ii) increase or decrease the Commitment of
any Lender or subject any Lender to any additional obligation (it being
understood that a waiver of any Event of Default or any mandatory repayment of
Facility shall not constitute a change in the terms of any Commitment of any
Lender), (iii) amend, modify or waive any provision of this Section 16.8, (iv)
amend the definition of Majority Lenders or any other definition referred to in
this Section 16.8, (v) consent to the assignment or transfer by the Borrower of
any of its rights and obligations under this Agreement, (vi) release any
Security Party from any of its obligations under any Security Document except as
expressly provided herein or in such Security Document, (vii) amend any
provision relating to the maintenance of collateral under Section 9.3 or (viii)
amend the definition of Available Amount. All amendments approved by the
Majority Lenders under this Section 16.8 must be in writing and signed by the
Borrower and each of the Lenders. In the event that any Lender is unable to or
refuses to sign an amendment approved by the Majority Lenders hereunder, such
Lender hereby appoints the Agent as its Attorney-In-Fact for the purposes of
signing such amendment. No provision of this Section 16 or any other provisions
relating to the Agent may be modified without the consent of the Agent.
40
16.9 Assumption re Event of Default. Except as otherwise provided in Section
16.15, each of the Agent and the Security Trustee shall be entitled to assume
that no Event of Default, or event which with the giving of notice or lapse of
time, or both, would constitute an Event of Default, has occurred and is
continuing, unless it has been notified by any Security Party of such fact, or
has been notified by a Lender that such Lender considers that an Event of
Default or such an event (specifying in detail the nature thereof) has occurred
and is continuing. In the event that either thereof shall have been notified by
any Security Party or any Lender in the manner set forth in the preceding
sentence of any Event of Default or of an event which with the giving of notice
or lapse of time, or both, would constitute an Event of Default, the Agent shall
notify the Lenders and shall take action and assert such rights under this
Agreement, under the Note and under Security Documents as the Majority Lenders
shall request in writing.
16.10 Limitations of Liability. Neither the Agent, the Security Trustee nor any
of the Lenders shall be under any liability or responsibility whatsoever:
(a) to any Security Party or any other person or entity
as a consequence of any failure or delay in
performance by, or any breach by, any other Lenders
or any other person of any of its or their
obligations under this Agreement or under any
Security Document;
(b) to any Lender or Lenders as a consequence of any
failure or delay in performance by, or any breach by,
any Security Party of any of its respective
obligations under this Agreement or under the other
Transaction Documents; or
(c) to any Lender or Lenders for any statements,
representations or warranties contained in this
Agreement, in any Security Document or in any
document or instrument delivered in connection with
the transaction hereby contemplated; or for the
validity, effectiveness, enforceability or
sufficiency of this Agreement, any other Transaction
Document or any document or instrument delivered in
connection with the transactions hereby contemplated.
16.11 Indemnification of the Agent and Security Trustee. The Lenders agree to
indemnify the Agent and the Security Trustee (to the extent not reimbursed by
the Security Parties or any thereof), pro rata according to the respective
amounts of their Commitments, from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever (including legal fees
and expenses incurred in investigating claims and defending itself against such
liabilities) which may be imposed on, incurred by or asserted against, the Agent
or the Security Trustee in any way relating to or arising out of this Agreement
or any other Transaction Document, any action taken or omitted by the Agent or
the Security Trustee thereunder or the preparation, administration, amendment or
enforcement of, or waiver of any provision of, this Agreement or any other
Transaction Document, except that no Lender shall be liable for any portion of
such liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements resulting from the gross negligence or
willful misconduct of either the Agent or the Security Trustee.
41
16.12 Consultation with Counsel. Each of the Agent and the Security Trustee may
consult with legal counsel selected by the Agent and shall not be liable for any
action taken, permitted or omitted by it in good faith in accordance with the
advice or opinion of such counsel.
16.13 Resignation. The Agent may resign at any time by giving sixty (60) days'
written notice thereof to the Lenders and the Borrower. Upon any such
resignation, the Lenders shall have the right to appoint a successor Agent. If
no successor Agent shall have been so appointed by the Lenders and shall have
accepted such appointment within sixty (60) days after the retiring Agent's
giving notice of resignation, then the retiring Agent may, on behalf of the
Lenders, appoint a successor Agent which shall be a bank or trust company of
recognized standing. The appointment of any successor Agent shall be subject to
the prior written consent of the Borrower, such consent not to be unreasonably
withheld. After any retiring Agent's resignation as Agent hereunder, the
provisions of this Section 16 shall continue in effect for its benefit with
respect to any actions taken or omitted by it while acting as Agent.
16.14 Representations of Lenders. Each Lender represents and warrants to each
other Lender and the Agent that:
(a) in making its decision to enter into this Agreement
and to make its Commitment available hereunder, it
has independently taken whatever steps it considers
necessary to evaluate the financial condition and
affairs of the Security Parties, that it has made an
independent credit judgment and that it has not
relied upon any statement, representation or warranty
by any other Lender or the Agent; and
(b) so long as any portion of its Commitment remains
outstanding, it will continue to make its own
independent evaluation of the financial condition and
affairs of the Security Parties.
16.15 Notification of Event of Default. Each of the Agent and the Security
Trustee hereby undertakes to promptly notify the Lenders, and the Lenders hereby
promptly undertake to notify the Agent, the Security Trustee and the other
Lenders, of the existence of any Event of Default which shall have occurred and
be continuing of which such party has actual knowledge.
16.16 No Agency or Trusteeship until Syndication. Unless and until the Facility
is syndicated, all references in this Agreement to the terms "Agent" and
"Security Trustee" shall be deemed to be references to DnB as a Lender and not
as agent and security trustee.
17. NOTICES AND DEMANDS
17.1 Notices. All notices, requests, demands and other communications to any
party hereunder shall be in writing (including prepaid overnight courier,
facsimile transmission or similar writing) and shall be given to the Borrower or
the Guarantor at the address or telecopy number set forth below and to the
Lenders and the Agent at their address and telecopy numbers set forth in
Schedule 1 or at such other address or telecopy numbers as such party may
hereafter specify for the purpose by notice to each other party hereto. Each
such notice, request or other communication shall be effective (i) if given by
telecopy, when such telecopy is transmitted to the telecopy number specified in
this Section and telephonic confirmation of receipt thereof is obtained or (ii)
if given by
42
mail, prepaid overnight courier or any other means, when received at the address
specified in this Section or when delivery at such address is refused.
If to the Borrower or the Guarantor:
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇ ▇▇▇▇
Attention: Chief Financial Officer
With a copy to
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
18. FRAUDULENT COnveyances; fraudulent transfers
Notwithstanding anything to the contrary contained in this
Agreement or any other Transaction Documents, in the event that any court or
other judicial body of competent jurisdiction determines that legal principles
of fraudulent conveyances, fraudulent transfers or similar concepts are
applicable in evaluating the enforceability against any Security Party (for
purposes of this Section 18 only, references to the defined term "Security
Party" shall be deemed not to include the Borrower) or its assets of this
Agreement and that under such principles, this Agreement would not be
enforceable against such Security Party or its assets unless the following
provisions of this Section 18 had effect, then, the maximum liability of each
Security Party hereunder (the "Maximum Liability Amount") shall be limited so
that in no event shall such amount exceed the lesser of (i) the aggregate
outstanding principal amount of the Facility and (ii) an amount equal to the
aggregate, without double counting, of (a) ninety-five percent (95%) of such
Security Party's Adjusted Net Worth (as hereinafter defined) on the date hereof,
or on the date enforcement of this Agreement is sought (the "Determination
Date"), whichever is greater and (b) the amount of any Valuable Transfer (as
hereinafter defined) to such Security Party; provided that such Security Party's
liability under this Agreement shall be further limited to the extent, if any,
required so that the obligations of such Security Party under this Agreement
shall not be subject to being set aside or annulled under any applicable law
relating to fraudulent transfers or fraudulent conveyances. As used herein
"Adjusted Net Worth" of the respective Security Party shall mean, as of any date
of determination thereof, an amount equal to the lesser of (a) an amount equal
to the excess of (i) the amount of the present fair saleable value of the assets
of such Security Party over (ii) the amount that will be required to pay such
Security Party's probable liability on its then existing debts, including
contingent liabilities (exclusive of its contingent liabilities hereunder), as
they become absolute and matured, and (b) an amount equal to (i) the excess of
the sum of such Security Party's property at a fair valuation over (ii) the
amount of all liabilities of such Security Party, contingent or otherwise
(exclusive of its contingent liabilities hereunder), as such terms are construed
in accordance with applicable laws governing determinations of the insolvency of
debtors. In determining the Adjusted Net Worth of a Security Party for purposes
of calculating the Maximum Liability Amount for such Security Party, the
liabilities of such Security Party to be used in such determination pursuant to
43
each clause (ii) of the preceding sentence shall in any event exclude (a) the
liability of such Security Party under this Agreement and (b) the liabilities of
such Security Party subordinated in right of payment to this Agreement. As used
herein "Valuable Transfer" shall mean, in respect of such Security Party, (a)
all loans, advances or capital contributions made to such Security Party with
proceeds of the Facility, (b) all debt securities or other obligations of such
Security Party acquired from such Security Party or retired by such Security
Party with proceeds of the Facility, (c) the fair market value of all property
acquired with proceeds of the Facility and transferred, absolutely and not as
collateral, to such Security Party, (d) all equity securities of such Security
Party acquired from such Security Party with proceeds of the Facility, and (e)
the value of any other economic benefits in accordance with applicable laws
governing determinations of the insolvency of debtors, in each such case
accruing to such Security Party as a result of the Facility and this Agreement.
19. MISCELLANEOUS
19.1 Time of Essence. Time is of the essence of this Agreement but no failure or
delay on the part of any Creditor to exercise any power or right under this
Agreement shall operate as a waiver thereof, nor shall any single or partial
exercise by any Creditor of any power or right hereunder preclude any other or
further exercise thereof or the exercise of any other power or right. The
remedies provided herein are cumulative and are not exclusive of any remedies
provided by law.
19.2 Unenforceable, etc., Provisions - Effect. In case any one or more of the
provisions contained in this Agreement or in the other Transaction Documents
would, if given effect, be invalid, illegal or unenforceable in any respect
under any law applicable in any relevant jurisdiction, said provision shall not
be enforceable against the relevant Security Party, but the validity, legality
and enforceability of the remaining provisions herein or therein contained shall
not in any way be affected or impaired thereby.
19.3 References. References herein to Articles, Sections, Exhibits and Schedules
are to be construed as references to articles, sections of, exhibits to, and
schedules to, this Agreement or the other Transaction Documents as applicable,
unless the context otherwise requires.
19.4 Further Assurances. Each of the Security Parties hereby agrees that if this
Agreement or any of the other Transaction Documents shall, in the reasonable
opinion of the Lenders, at any time be deemed by the Lenders for any reason
insufficient in whole or in part to carry out the true intent and spirit hereof
or thereof, it will execute or cause to be executed such other and further
assurances and documents as in the opinion of the Lenders may be required in
order to more effectively accomplish the purposes of this Agreement and/or the
other Transaction Documents.
19.5 Prior Agreements, Merger. Any and all prior understandings and agreements
heretofore entered into between the Security Parties on the one part, and the
Creditors, on the other part, whether written or oral, are superseded by and
merged into this Agreement and the other agreements (the forms of which are
exhibited hereto) to be executed and delivered in connection herewith to which
the Security Parties, the Agent, the Security Trustee and/or the Lenders are
parties, which alone fully and completely express the agreements between the
Security Parties, the Agent, the Security Trustee and the Lenders.
19.6 Entire Agreement; Amendments. This Agreement constitutes the entire
agreement of the parties hereto including all parties added hereto pursuant to
an Assignment and Assumption
44
Agreement. Subject to Section 16.8, any provision of this Agreement or any other
Transaction Document may be amended or waived if, but only if, such amendment or
waiver is in writing and is signed by the Borrower, the Agent, the Security
Trustee and the Majority Lenders. This Agreement may be executed in any number
of counterparts, each of which shall be deemed an original, but all such
counterparts together shall constitute one and the same instrument.
19.7 Indemnification. Neither any Creditor nor any of its directors, officers,
agents or employees shall be liable to any of the Security Parties for any
action taken or not taken thereby in connection herewith in the absence of its
own gross negligence or willful misconduct. The Borrower and the Guarantor
hereby jointly and severally agree to indemnify the Creditors, their respective
affiliates and the respective directors, officers, agents and employees of the
foregoing (each an "Indemnitee") and hold each Indemnitee harmless from and
against any and all liabilities, losses, damages, costs and expenses of any
kind, including, without limitation, the reasonable fees and disbursements of
counsel, which may be incurred by such Indemnitee in connection with any
investigative, administrative or judicial proceeding (whether or not such
Indemnitee shall be designated a party thereto) brought or threatened relating
to or arising out of this Agreement, any actual or proposed use of proceeds of
the Advance hereunder, or any related transaction or claim; provided that (i) no
Indemnitee shall have the right to be indemnified hereunder for such
Indemnitee's own gross negligence or willful misconduct as determined by a court
of competent jurisdiction and (ii) to the extent permitted by law, the
Indemnitee shall provide the Security Parties with prompt notice of any such
investigative, administrative or judicial proceeding after the Indemnitee
becomes aware of such proceeding; provided, however, that the Indemnitee's
failure to provide such notice in a timely manner shall not relieve the Security
Parties of their obligations hereunder.
19.8 Headings. In this Agreement, Section headings are inserted for convenience
of reference only and shall not be taken into account in the interpretation of
this Agreement.
[Remainder of Page Intentionally Left Blank]
45
IN WITNESS whereof the parties hereto have caused this
Agreement to be duly executed by their duly authorized representatives as of the
day and year first above written.
LCI SHIPHOLDINGS INC.,
as Borrower
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chairman
INTERNATIONAL SHIPHOLDING CORPORATION,
as Guarantor
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chairman
DEN NORSKE BANK ASA
acting through its New York Branch, as
Agent, Security Trustee and Lender
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Senior Vice President
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
Name: ▇▇▇▇▇▇ ▇▇▇▇▇
Title: Senior Vice President
46
CONSENT AND AGREEMENT
Each of Central Gulf Lines, Inc. and ▇▇▇▇▇▇▇▇ Steamship Corporation,
hereby consents and agrees to said Credit Facility Agreement and to the
documents contemplated thereby and to the provisions contained therein
relating to conditions to be fulfilled and obligations to be performed
by the undersigned pursuant to or in connection with said Credit
Facility Agreement and agrees particularly to be bound by the
representations, warranties and covenants relating to the undersigned
contained in Sections 2 and 9 of said Credit Facility Agreement to the
same extent as if the undersigned were a party to said Credit Facility
Agreement.
CENTRAL GULF LINES, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chairman
▇▇▇▇▇▇▇▇ STEAMSHIP CORPORATION
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
SCHEDULE I
LENDERS COMMITMENT
------- ----------
Den norske Bank ASA $10,000,000
New York Branch
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: Shipping Department
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
SCHEDULE II
APPLICABLE MARGIN
The Applicable Margin will vary as set forth hereunder based upon ISH's
Consolidated Indebtedness to Consolidated EBITDA ratio:
Consolidated Indebtedness/
Consolidated EBITDA Applicable Margin
-------------------------- -----------------
greater than 4.50 187.5 bps
greater than 4.00 but less than or 175.0 bps
equal to 4.50
less than 4:00 150.0 bps
The Applicable Margin for the Advance shall be determined by the Agent based on
each Interest Notice and such determination of the Applicable Margin, absent
manifest error, shall be conclusive and binding upon the Borrower. Each
Applicable Margin shall be effective as of the start of each fiscal quarter;
provided, however, that until December 31, 2002 the Applicable Margin shall be
187.5 bps.
SCHEDULE III
SCHEDULE IV
Approved Shipbrokers
▇.▇. ▇▇▇▇▇▇ Shipbrokers a.s.
▇▇▇▇▇▇ ▇▇▇'▇ ▇▇▇▇ ▇▇
▇▇▇▇, ▇▇▇▇▇▇
Telephone No.: ▇▇▇ ▇▇ ▇▇ ▇▇ ▇▇
Facsimile No.: ▇▇▇ ▇▇ ▇▇ ▇▇ ▇▇
Fearnleys A/S
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇
▇▇▇▇, ▇▇▇▇▇▇
Telephone No.: ▇▇▇ ▇▇ ▇▇ ▇▇ ▇▇
Facsimile No.: ▇▇▇ ▇▇ ▇▇ ▇▇ ▇▇
▇. ▇▇▇▇▇▇▇▇ & Company
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇
Telephone No.: ▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇
Facsimile No.: ▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇
Braemar Shipbrokers Ltd.
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇
Telephone No.: ▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇
Facsimile No.: ▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇
Jacq. Pierot Jr. & Sons, Inc. (USA)
▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇ ▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇ ▇▇▇▇
SCHEDULE V
SECURITY PARTY LIENS
AT OCTOBER 31, 2002
SECURITY
PARTY VESSEL LIEN HELD BY
CGL Green Cove Mortgage, Earnings Assignment Deutsche Schiffsbank Aktiengesellschaft
Insurance Assignment
CGL Green Lake Mortgage, Earnings Assignment Hong Kong Shanghai Banking Corporation
Insurance Assignment
CGL 318 Lash Barges Mortgage Bank of America Leasing
LCI Asian Emperor Mortgage, Earnings Assignment Citibank, N.A. as agent
Insurance Assignment
SCHEDULE VI
SECURITY PARTY INDEBTEDNESS
AT OCTOBER 31, 2002
OUTSTANDING FINAL PAYMENT
COMPANY BANK VESSEL AMOUNT DATE
---------------------------------------------------------------------------------------------------------------------------------
CGL Deutsche Schiffsbank Aktiengesellschaft Green Cove 18,666,668 28-Jun-10
CGL Hong Kong Shanghai Banking Corp. Green Lake 24,750,000 23-Aug-11
CGL Bank of America Leasing Lash Barges 1,272,000 31-Jul-03
ISC Bank of New York (as Trustee) 9% Senior Notes Due 2003 9,076,000 01-Jul-03
ISC Bank of New York (as Trustee) 7.75% Senior Notes Due 2007 84,730,000 15-Oct-07
ISC Whitney National Bank Unsecured Line of Credit 7,000,000 23-Apr-04
LCI Citibank Asian Emperor 37,130,000 26-May-09
WSC Whitney National Bank Sulphur Enterprise 12,000,000 30-Jun-06
WSC Whitney National Bank Standby Letter of Credit 200,000 01-Feb-03
EXHIBIT A
PROMISSORY NOTE
New York, New York US$10,000,000
____________, 2002
FOR VALUE RECEIVED, the undersigned, LCI SHIPHOLDINGS INC., a
corporation organized under the laws of the Republic of Liberia (the
"Borrower"), hereby promises to pay to the order of DEN NORSKE BANK ASA, a
corporation organized under the laws of the Kingdom of Norway, as agent (the
"Agent") for the Lenders, at its office at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇-▇▇▇▇, or as it may otherwise direct, the principal sum of Ten Million
United States Dollars (US$10,000,000). The Borrower shall repay the indebtedness
represented by this Note as provided in Section 5 of that certain
credit
agreement dated as of November _____, 2002 (the "
Credit Agreement") made by and
among (i) the Borrower, (ii)
International Shipholding Corporation, as
guarantor, (iii) the banks and financial institutions listed on Schedule I of
the
Credit Agreement, as lenders (together with any bank or financial
institution which becomes a Lender pursuant to Section 11 of the
Credit
Agreement, (the "Lenders") and (iv) Den norske Bank ASA, acting through its New
York branch, as arranger, as security trustee and as Agent. This Note may be
prepaid on such terms as provided in the
Credit Agreement. Interest shall be
paid on the indebtedness represented by this Note at the rate (the "Applicable
Rate") determined from time to time in accordance with Section 6 of the
Credit
Agreement and at the times provided in Section 6 of the Credit Agreement, which
provisions are incorporated herein with full force and effect as if they were
more fully set forth herein at length.
Any principal payment not paid when due, whether on the maturity date
thereof or by acceleration, shall bear interest thereafter at a rate per annum
equal to the Default Rate (as defined in the Credit Agreement). All interest
shall accrue and be calculated on the actual number of days elapsed and on the
basis of a 360 day year.
Words and expressions used herein and defined in the Credit Agreement
shall have the same meaning herein as therein defined.
Both principal and interest are payable in Dollars to the Agent, for
the account of the Lenders, as the Agent may direct, in immediately available
same day funds.
If this Note or any payment required hereunder becomes due and payable
on a day which is not a Banking Day the due date thereof shall be extended until
the next following Banking Day (in which event, interest shall be payable during
such extension at the rate applicable immediately prior thereto), unless such
next following Banking Day falls in the following month, in which case such
payment shall be payable immediately preceding the Banking Day.
This Note is the Note referred to in, and is entitled to the security
and benefits of, the Credit Agreement and the Security Documents. Upon the
occurrence of any Event of Default under the Credit Agreement, the principal
hereof and accrued interest hereon may be declared to be, and shall thereupon
become, forthwith, due and payable.
Presentment, demand, protest and notice of dishonor of this Note or any
other notice of any kind are hereby expressly waived.
EACH OF THE BORROWER AND, BY ITS ACCEPTANCE HEREOF, THE AGENT HEREBY
WAIVES TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY ANY
PARTY HERETO OR ANY BENEFICIARY HEREOF ON ANY MATTER WHATSOEVER ARISING OUT OF
OR IN ANY WAY CONNECTED WITH THIS NOTE.
This Promissory Note shall be governed by, and construed in accordance
with, the laws of the State of New York, without giving effect to principles of
conflicts of law.
IN WITNESS WHEREOF, the Borrower has executed and delivered this
Promissory Note on the date and year first above written.
LCI SHIPHOLDINGS INC.
By:
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Name:
Title:
2
EXHIBIT B
Drawdown Notice
______ __, 200_
Den norske Bank ASA,
New York Branch
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Ladies and Gentlemen:
Please be advised that, in accordance with Section 3 of the
credit agreement between, inter alia, (1) you, as agent (the "Agent"), security
trustee and arranger, (2) LCI Shipholdings Inc., as borrower (the "Borrower"),
(3) the banks and financial institutions listed on Schedule I of the credit
agreement, as lenders, and (4)
International Shipholding Corporation, as
guarantor, to be dated as of November __, 2002 (the "Credit Agreement"), the
undersigned hereby requests the Advance (as defined in the Credit Agreement) in
the aggregate principal amount of Ten Million United States Dollars
($10,000,000) be advanced to the Borrower as follows:
Drawdown Date:
Interest Period:
Amount to be drawndown: US$10,000,000
Disbursement Instructions:
The undersigned hereby represents and warrants that (a) the
representations and warranties stated in Section 2 of the Credit Agreement
(updated mutatis mutandis) are true and correct on the date hereof and will be
true and correct on the Drawdown Date specified above as if made on such date,
and (b) no Event of Default has occurred and is continuing or will have occurred
and be continuing on the Drawdown Date, and no event has occurred or is
continuing which, with the giving of notice or lapse of time, or both, would
constitute an Event of Default.
The undersigned hereby covenants and undertakes that, in the
event that on the date specified for making available the Advance as stated
above, the Lenders (as defined in the Credit Agreement) shall not be obliged
under the Credit Agreement to make the Advance available, the undersigned shall
indemnify and hold the Lenders fully harmless against any losses which the
Lenders may sustain as a result of borrowing or agreeing to borrow funds to meet
the drawdown requirements as stated above, and the certificate of the Agent
shall (save and except for manifest error) be conclusive and binding on the
undersigned as to the extent of any losses sustained by the Lenders.
This Drawdown Notice is effective upon receipt by you and
shall be irrevocable.
Very truly yours,
LCI SHIPHOLDINGS INC.
By:
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Name:
Title:
2
EXHIBIT C
FORM OF COMPLIANCE CERTIFICATE
EXHIBIT D
ASSIGNMENT AND ASSUMPTION AGREEMENT
ASSIGNMENT AND ASSUMPTION AGREEMENT (this "Agreement"), dated
as of _____________, 200_ among [NAME OF ASSIGNOR], a [bank]/[corporation]
organized under the laws of [JURISDICTION OF ASSIGNOR] (the "Assignor"), and
[NAME OF ASSIGNEE], a [bank]/[corporation] organized under the laws of
[JURISDICTION OF ASSIGNEE] (the "Assignee"), supplemental to:
(i) that certain credit agreement, dated as of
November ___, 2002 (the "Credit Agreement"),
made among (1) LCI Shipholdings Inc., a
Liberian corporation (the "Borrower"), as
borrower, (2)
International Shipholding
Corporation, as guarantor, (3) the banks and
financial institutions listed on Schedule I
of the Credit Agreement, as lenders
(together with any bank or financial
institution which becomes a Lender pursuant
to Section 11 of the Credit Agreement, the
"Lenders"), (4) Den norske Bank ASA, acting
through its New York Branch, as agent for
the Lenders (in such capacity, the "Agent"),
as security agent for the Lenders and as
arranger, pursuant to which the Agent has
agreed to serve in such capacity under the
Credit Agreement and the Lenders have agreed
to provide to the Borrower a secured credit
facility in the amount of up to
US$10,000,000 (the "Facility");
(ii) the promissory note from the Borrower in
favor of the Agent dated November __, 2002
(the "Note") evidencing the Facility;
(iii) the Security Documents (as such term is
defined in the Credit Agreement).
Except as otherwise defined herein, terms defined in the
Credit Agreement shall have the same meaning when used herein.
In consideration of the premises and of other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
1. The Assignor hereby sells, transfers and assigns -% of its
right, title and interest in, to and under the Credit Agreement, under
the Note (including, without limitation, its interest in the
indebtedness evidenced by the Note) and under the Security Documents to
the Assignee. Simultaneously herewith, the Assignee shall pay to the
Assignor an amount equal to the product derived by multiplying (a)
US$-, being the sum of the present outstanding principal balance of all
Advances, by (b) the Assignor's percentage of interest in the Facility
transferred pursuant hereto.
2. The Assignee hereby assumes -% of the obligations of the
Assignor under the Credit Agreement (including, but not limited to, the
obligation to advance its respective percentage of any Advance as and
when required) and shall hereinafter be deemed a "Lender" for all
purposes of the Credit Agreement, the Note, the Security Documents and
any other Assignment and Assumption Agreement(s), the Assignee's
Commitment thereunder being U.S.$- in respect of the Facility.
3. The Assignee shall pay an administrative fee of U.S. $3,000
to the Agent to reimburse the Agent for its cost in processing the
assignment and assumption herein contained.
4. All references in the Note and in each of the other
Security Documents to the Credit Agreement shall be deemed to be
references to the Credit Agreement as assigned and assumed pursuant to
the terms hereof.
5. The Assignee irrevocably designates and appoints the Agent
as its agent and irrevocably authorizes the Agent to take such action
on its behalf and to exercise such powers on its behalf under the
Credit Agreement, under the Note and under the other Security
Documents, each as supplemented hereby, as are delegated to the Agent
by the terms of each thereof, together with such powers as are
reasonably incidental thereto all as provided in Section 16 of the
Credit Agreement.
6. Every notice or demand under this Agreement shall be in
writing and may be given by telecopy and shall be sent as follows:
If to the Assignor:
[NAME OF ASSIGNOR]
[ADDRESS]
Telecopy No.:
Attention:
If to the Assignee
[NAME OF ASSIGNEE]
[ADDRESS]
Telecopy No.:
Attention:
Every notice or demand hereunder shall be deemed to have been
received at the time of receipt thereof.
EACH OF THE ASSIGNOR, AND BY ITS ACCEPTANCE HEREOF, THE ASSIGNEE, HEREBY WAIVES
TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY ANY PARTY
HERETO OR ANY BENEFICIARY HEREOF ON ANY MATTER WHATSOEVER ARISING OUT OF OR IN
ANY WAY CONNECTED WITH THIS AGREEMENT.
2
This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York.
This Agreement may be executed in several counterparts with
the same effect as if the parties executing such counterparts shall have all
executed one agreement as of the date hereof, each of which counterparts when
executed and delivered shall be deemed to be an original and all of such
counterparts together shall constitute this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this
instrument to be duly executed as of the day and year first above written.
[NAME OF ASSIGNOR]
By
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Name:
Title:
[NAME OF ASSIGNEE]
By
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Name:
Title:
3
EXHIBIT E
FORM OF EARNINGS ASSIGNMENT
EXHIBIT F
FORM OF INSURANCES ASSIGNMENT
EXHIBIT G
FORM OF MORTGAGE
EXHIBIT H
Interest Notice
[Date]
Den norske Bank ASA,
as Agent
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Attention: Loan Administration
Ladies and Gentlemen:
Please be advised that, in accordance with the Credit
Agreement dated as of October __, 2002 (the "Credit Agreement"), by and among
(i) LCI Shipholdings Inc., as borrower (the "Borrower"), (ii)
International
Shipholding Corporation ("ISH"), as guarantor (iii) the banks and financial
institutions listed on Schedule I of the Credit Agreement, as lenders (together
with any bank or financial institution which becomes a Lender pursuant to
Section 11 of the Credit Agreement, (the "Lenders") and (iv) Den norske Bank
ASA, acting through its New York branch, as arranger, as security trustee and
agent, the Borrower hereby notifies you that the duration of the next Interest
Period to commence [insert date of commencement of next Interest Period] shall
be as follows:
Interest Period: [one, three or six] months
The undersigned hereby represents and warrants that (a) the
representations and warranties stated in Section 2 of the Credit Agreement
(updated mutatis mutandis) are true and correct on the date hereof and will be
true and correct on the Drawdown Date specified above as if made on such date,
and (b) no Event of Default has occurred and is continuing or will have occurred
and be continuing on the Drawdown Date, and no event has occurred or is
continuing which, with the giving of notice or lapse of time, or both, would
constitute an Event of Default.
Very truly yours,
LCI SHIPHOLDINGS INC.
By
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Name:
Title: