Date 5 December 2005
EMPIRE SPIRIT LTD.
INDEPENDENT TRADER LTD.
TRIATHLON INC.
SOLEIL TRUST INC.
JUNGLE INVESTMENT LIMITED AND
NORTHERN YIELD SHIPPING LIMITED
as joint and several borrowers
- and -
DNB NOR BANK ASA
as Lender
----------
LOAN AGREEMENT
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relating to a US$50,000,000 facility to refinance part of the acquisition cost
of the LPG carriers "GAS MARATHON", "GAS SINCERITY", "GAS CATHAR" and "GAS
LEGACY" and to refinance the existing indebtedness secured on the LPG carriers
"SWEET DREAM" and "GAS ORACLE"
▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
PIRAEUS
INDEX
CLAUSE PAGE
------ ----
1 INTERPRETATION 1
2 FACILITY 17
3 DRAWDOWN 17
4 INTEREST 18
5 INTEREST PERIODS 20
6 DEFAULT INTEREST 20
7 REPAYMENT AND PREPAYMENT 21
8 CONDITIONS PRECEDENT 23
9 REPRESENTATIONS AND WARRANTIES 25
10 GENERAL UNDERTAKINGS 27
11 CORPORATE UNDERTAKINGS 30
12 INSURANCE 30
13 SHIP COVENANTS 34
14 SECURITY COVER 38
15 PAYMENTS AND CALCULATIONS 40
16 APPLICATION OF RECEIPTS 40
17 APPLICATION OF EARNINGS 41
18 EVENTS OF DEFAULT 42
19 FEES AND EXPENSES 45
20 INDEMNITIES 46
21 NO SET-OFF OR TAX DEDUCTION 48
22 ILLEGALITY, ETC 49
23 INCREASED COSTS 49
24 SET-OFF 50
25 TRANSFERS AND CHANGES IN LENDING OFFICE 51
26 VARIATIONS AND WAIVERS 51
27 NOTICES 52
28 JOINT AND SEVERAL LIABILITY 53
29 SUPPLEMENTAL 54
30 LAW AND JURISDICTION 55
SCHEDULE 1 DRAWDOWN NOTICE 56
SCHEDULE 2 CONDITION PRECEDENT DOCUMENTS 57
EXECUTION PAGE 62
THIS AGREEMENT is made on 5 December 2005
BETWEEN
(1) EMPIRE SPIRIT LTD., INDEPENDENT TRADER LTD. TRIATHLON INC., SOLEIL TRUST
INC., JUNGLE INVESTMENT LIMITED and NORTHERN YIELD SHIPPING LIMITED as
joint and several borrowers (together, the "BORROWERS" and each a
"BORROWER"); and
(2) DNB NOR BANK ASA of Norway acting through its office at ▇▇ ▇▇ ▇▇▇▇▇▇▇'▇
▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇ as "LENDER".
BACKGROUND
(A) The Lender has agreed to make available to the Borrowers a loan facility
of up to $50,000,000 divided into two tranches for the purposes and in
the amounts referred to below:
(1) the first tranche, to be in the amount equal to the lesser of (i)
$36,000,000 and (ii) an amount equal to 65 per cent. of the lesser
of (A) the aggregate Market Values of the New Ships and (B) the
aggregate Purchase Price of the New Ships, shall be made available
in up to four advances for the purpose of refinancing part of the
Purchase Price of each New Ship; and
(2) the second tranche, to be in the amount of $14,000,000 shall be made
available in a single advance to refinance the existing indebtedness
secured on m.vs. "SWEET DREAM" and "GAS ORACLE".
(B) The Borrowers may, if they wish, from time to time hedge their exposure
under this Agreement to interest rate fluctuations by entering into
interest rate swap transactions with the Lender.
IT IS AGREED as follows:
1 INTERPRETATION
1.1 DEFINITIONS. Subject to Clause 1.5, in this Agreement:
"ACCOUNTS SECURITY DEED" means a deed creating security in respect of the
Earnings Accounts and the Retention Account in favour of the Lender, in
such form as the Lender may approve or require;
"ADVANCE" means the principal amount of each borrowing by the Borrowers
under this Agreement;
"APPROVED MANAGER" means, in the case of:
(a) "GAS ORACLE" ,"GAS CATHAR", "GAS MARATHON" and "GAS SINCERITY",
Hanseatic Shipping Co. Ltd. whose principal office is at Hanseatic
House ▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇;
(b) "SWEET DREAM", Samos Steamship Co. whose principal office is at
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇. ▇▇▇▇▇▇, ▇▇▇ ▇▇, ▇▇▇▇▇▇; and
(c) "GAS LEGACY", Swan Shipping Corporation whose principal office is at
▇▇ ▇&▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇
or any other company which the Lender may approve from time to time as
the commercial and/or technical manager of the Ships (or any of them);
"ASSET COVER RATIO" means, at any relevant time, the ratio of (i) the
average of the Loan outstanding for the 90 days immediately prior to and
including a Margin Calculation Date less the aggregate of any amounts
standing to the credit of the Earnings Accounts on that Margin
Calculation Date to (ii) the aggregate Market Value of the Ships subject
to a Mortgage on that Margin Calculation Date;
"AVAILABILITY PERIOD" means the period commencing on the date of this
Agreement and ending on:
(d) (i) in respect of Tranche A, 31 December 2005 and (ii) in respect of
Tranche B, 31 January 2006 (or, in either case, such later date as
the Lender may agree with the Borrowers, such agreement not to be
unreasonably withheld by the Lender); or
(b) if earlier, the date on which the Commitment is fully borrowed,
cancelled or terminated;
"BAREBOAT CHARTERER" means:
(a) in the case of "GAS MARATHON", the Gas Marathon Bareboat Charterer;
and
(b) in the case of "SWEET DREAM", the Sweet Dream Bareboat Charterer,
and, in the plural, means both of them;
"BAREBOAT CHARTERS" means, together, the Gas Marathon Bareboat Charter
and the Sweet Dream Bareboat Charter and, in the singular, means either
of them;
"BORROWERS" means, together, Empire, Independent, Triathlon, Soleil,
Jungle and Yield and in the singular means any of them;
"BUMI" means Bumi Aramda Navigation Son. BHD, a company incorporated in
Malaysia with its principal place of business at ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ Rohas,
▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇;
"BUSINESS DAY" means a day on which banks are open in London and, in
respect of a day on which a payment is required to be made under a
Finance Document, also in New York City;
"▇▇▇▇▇▇" means ▇▇▇▇▇▇ Finance Inc., a corporation incorporated and
existing under the laws of the ▇▇▇▇▇▇▇▇ Islands and having its registered
address at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro,
▇▇▇▇▇▇▇▇ Islands;
"CHARTER" means, in relation to a Ship, any time charter or other
contract for its employment (other than the Gas Marathon Bareboat
Charter, the Sweet Dream Bareboat Charter and the Gas Oracle Charter) for
a term of at least 13 months, or capable of exceeding 13 months, whether
or not already in existence at the date of this Agreement, to be
performed at any time during the Security Period;
2
"CHARTER ASSIGNMENT" means in relation to a Ship, a specific assignment
of the rights of the relevant Borrower under any Charter pursuant to
Clause 13.15 and any guarantee of such Charter, to be executed by the
Borrower owning that Ship in favour of the Lender in such form as the
Lender may approve or require;
"COMMITMENT" means $50,000,000, as that amount may be reduced, cancelled
or terminated in accordance with this Agreement;
"CONFIRMATION" and "EARLY TERMINATION DATE", in relation to any
continuing Transaction, have the meanings given in the Master Agreement;
"CONTRACTUAL CURRENCY" has the meaning given in Clause 20.4;
"CORPORATE GUARANTEE" means the guarantee of the obligations of the
Borrowers under this Agreement and the Finance Documents executed or to
be executed by the Corporate Guarantor in favour of the Lender in such
form as the Lender may approve or require;
"CORPORATE GUARANTOR" means STEALTHGAS INC., a company incorporated and
existing under the laws of the ▇▇▇▇▇▇▇▇ Islands and having its registered
office at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro,
the ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇;
"DEED OF COVENANT" means in relation to each of "GAS CATHAR" and "SWEET
DREAM", a deed of covenant collateral to the Mortgage relating to that
Ship, executed or to be executed by the Owner of such Ship in favour of
the Lender, in such form as the Lender may approve or require and in the
plural means both of them;
"DOLLARS" and "$" means the lawful currency for the time being of the
United States of America;
"DRAWDOWN DATE" means, in relation to Tranche A and an Advance under
Tranche B, the date requested by the Borrowers for Tranche A or, as the
case may be, the relevant Advance to be made, or (as the context
requires) the date on which Tranche A or, as the case may be, the
relevant Advance is actually made;
"DRAWDOWN NOTICE" means a notice in the form set out in Schedule 1 (or in
any other form which the Lender approves or reasonably requires);
"DREW" means Drew International Inc., a corporation incorporated and
existing under the laws of the ▇▇▇▇▇▇▇▇ Islands and having its registered
address at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro,
▇▇▇▇▇▇▇▇ Islands;
"EARNINGS" means, in relation to a Ship, all moneys whatsoever which are
now, or later become, payable (actually or contingently) to the Borrower
owning the Ship and which arise out of the use or operation of the Ship,
including (but not limited to):
(a) all freight, hire and passage moneys, compensation payable to the
Borrower owning the Ship in the event of requisition of the Ship for
hire, remuneration for salvage and towage services, demurrage and
detention moneys and damages for breach (or payments for variation
or termination) of any charterparty or other contract for the
employment of the Ship;
(b) all moneys which are at any time payable under Insurances in respect
of loss of earnings; and
3
(c) if and whenever the Ship is employed on terms whereby any moneys
falling within paragraphs (a) or (b) are pooled or shared with any
other person, that proportion of the net receipts of the relevant
pooling or sharing arrangement which is attributable to the Ship;
"EARNINGS ACCOUNT" means, in relation to a Ship, an account in the name
of the Borrower owning that Ship with the Lender in England designated
"[name of Borrower] - Earnings Account" or any other account (with that
or another office of the Lender) which is designated by the Lender as an
Earnings Account for the purposes of this Agreement, and in the plural
means all of them;
"EMPIRE" means Empire Spirit Ltd, a corporation incorporated and existing
under the laws of the ▇▇▇▇▇▇▇▇ Islands and having its registered address
at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, the
▇▇▇▇▇▇▇▇ Islands;
"ENVIRONMENTAL CLAIM" means:
(a) any claim by any governmental, judicial or regulatory authority
which arises out of an Environmental Incident or an alleged
Environmental Incident or which relates to any Environmental Law; or
(e) any claim by any other person which relates to an Environmental
Incident or to an alleged Environmental Incident,
and "CLAIM" means a claim for damages, compensation, fines, penalties or
any other payment of any kind, whether or not similar to the foregoing;
an order or direction to take, or not to take, certain action or to
desist from or suspend certain action; and any form of enforcement or
regulatory action, including the arrest or attachment of any asset;
"ENVIRONMENTAL INCIDENT" means:
(a) any release of Environmentally Sensitive Material from a Ship; or
(b) any incident in which Environmentally Sensitive Material is released
from a vessel other than a Ship and which involves a collision
between a Ship and such other vessel or some other incident of
navigation or operation, in either case, in connection with which a
Ship is actually or potentially liable to be arrested, attached,
detained or injuncted and/or a Ship and/or any Vessel and/or any
operator or manager of the Ship is at fault or allegedly at fault or
otherwise liable to any legal or administrative action; or
(c) any other incident in which Environmentally Sensitive Material is
released otherwise than from a Ship and in connection with which a
Ship is actually or potentially liable to be arrested and/or where
any Vessel and/or any operator or manager of a Ship is at fault or
allegedly at fault or otherwise liable to any legal or
administrative action;
"ENVIRONMENTAL LAW" means any law relating to pollution or protection of
the environment, to the carriage of Environmentally Sensitive Material or
to actual or threatened releases of Environmentally Sensitive Material;
"ENVIRONMENTALLY SENSITIVE MATERIAL" means oil, oil products and any
other substance (including any chemical, gas or other hazardous or
noxious substance) which is (or is capable of being or becoming)
polluting, toxic or hazardous;
4
"EVENT OF DEFAULT" means any of the events or circumstances described in
Clause 18.1;
"EXISTING LOAN AGREEMENT" means a loan agreement dated 23 May 2005 and
made between (i) Empire and Independent as joint and several borrowers
and (ii) the Lender as lender in respect of a loan facility of
$14,000,000;
"FINANCE DOCUMENTS" means:
(a) this Agreement;
(b) the Corporate Guarantee;
(c) the Master Agreement;
(d) the Mortgages;
(e) the Deeds of Covenant;
(f) the General Assignments;
(g) the Master Agreement Assignment;
(h) the Accounts Security Deed;
(i) the Shares Pledges;
(j) the Gas Marathon Tripartite Agreement;
(k) the Gas Oracle Charter Assignment;
(l) the Sweet Dream Bareboat Charter Assignment;
(m) any Charter Assignment; and
(n) any other document (whether creating a Security Interest or not)
which is executed at any time by any Borrower or any other person as
security for, or to establish any form of subordination or
priorities arrangement in relation to, any amount payable to the
Lender under this Agreement or any of the other documents referred
to in this definition;
"FINANCIAL INDEBTEDNESS" means, in relation to a person (the "DEBTOR"), a
liability of the debtor:
(a) for principal, interest or any other sum payable in respect of any
moneys borrowed or raised by the debtor;
(b) under any loan stock, bond, note or other security issued by the
debtor;
(c) under any acceptance credit, guarantee or letter of credit facility
made available to the debtor;
(d) under a financial lease, a deferred purchase consideration
arrangement or any other agreement having the commercial effect of a
borrowing or raising of money by the debtor;
5
(e) under any foreign exchange transaction any interest or currency swap
or any other kind of derivative transaction entered into by the
debtor or, if the agreement under which any such transaction is
entered into requires netting of mutual liabilities, the liability
of the debtor for the net amount; or
(f) under a guarantee, indemnity or similar obligation entered into by
the debtor in respect of a liability of another person which would
fall within (a) to (e) if the references to the debtor referred to
the other person;
"GAS MARATHON BAREBOAT CHARTER" means the bareboat charterparty agreement
dated 12 August 2005 and entered into between the Gas Marathon Bareboat
Charterer and Brave Maritime Corporation Inc. which has been novated to
Triathlon by a novation agreement entered or to be entered into between
Triathlon, the Gas Marathon Bareboat Charterer and Brave Maritime
Corporation Inc. in relation to "GAS MARATHON";
"GAS MARATHON BAREBOAT CHARTER PERIOD" means the period during which "GAS
MARATHON" is operating under the Gas Marathon Bareboat Charter;
"GAS MARATHON BAREBOAT CHARTERER" means Petredec S.A., a company
incorporated and existing under the laws of Bermuda;
"GAS MARATHON TRIPARTITE AGREEMENT" means an agreement dealing with
(inter alia) the operation of "GAS MARATHON" during the Gas Marathon
Bareboat Charter Period, made or to be made between (i) Triathlon, (ii)
the Gas Marathon Bareboat Charterer and (iii) the Lender, in such form as
the Lender may approve or require;
"GAS ORACLE CHARTER" means the time charter party dated 14 August 2000 as
amended by Addendum 1 dated 8 March 2001, Addendum 2 dated 20 November
2001, Addendum 3 dated 15 March 2002, Addendum 4 dated 12 March 2003 and
Addendum 5 dated 9 April 2004, and entered into between Bumi as original
owner and KSS as time charterer in relation to "GAS ORACLE", as novated
to Independent as new owner pursuant to the terms of a novation agreement
dated 24 March 2005 and entered into by (i) Bumi, (ii) KSS and (iii)
Independent;
"GAS ORACLE CHARTER ASSIGNMENT" means in relation to "GAS ORACLE", a
specific assignment of the rights of Independent under the Gas Oracle
Charter, to be executed by Independent in favour of the Lender, in such
form as the Lender may approve or require;
"GENERAL ASSIGNMENT" means, in relation to each Ship, a general
assignment of the Earnings, the Insurances and any Requisition
Compensation of that Ship, in such form as the Lender may approve or
require, and in the plural means all of them;
"INDEPENDENT" means Independent Trader Ltd, a corporation incorporated
and existing under the laws of the ▇▇▇▇▇▇▇▇ Islands and having its
registered address at Trust Company Complex, Ajeltake Road, Ajeltake
Island, Majuro, the ▇▇▇▇▇▇▇▇ Islands;
"INSURANCES" means, in relation to a Ship:
(a) all policies and contracts of insurance, including entries of the
Ship in any protection and indemnity or war risks association, which
are effected in respect of the Ship, her Earnings or otherwise in
relation to her; and
(b) all rights and other assets relating to, or derived from, any of the
foregoing, including any rights to a return of a premium;
6
"INTEREST PERIOD" means a period determined in accordance with Clause 5;
"ISM CODE" means, in relation to its application to each Borrower, its
Ship and its operation:
(a) 'The International Management Code for the Safe Operation of Ships
and for Pollution Prevention', currently known or referred to as the
'ISM Code', adopted by the Assembly of the International Maritime
Organisation by Resolution A.741(18) on 4 November 1993 and
incorporated on 19 November 1994 into chapter IX of the
International Convention for the Safety of Life at Sea 1974 (SOLAS
1974); and
(b) all further resolutions, circulars, codes, guidelines, regulations
and recommendations which are now or in the future issued by or on
behalf of the International Maritime Organisation or any other
entity with responsibility for implementing the ISM Code, including
without limitation, the 'Guidelines on implementation or
administering of the International Safety Management (ISM) Code by
Administrations' produced by the International Maritime
Organisations pursuant to Resolution A.788(19) adopted on 25
November 1995,
as the same may be amended, supplemented or replaced from time to time;
"ISM CODE DOCUMENTATION" includes:
(a) the document of compliance (DOC) and safety management certificate
(SMC) issued pursuant to the ISM Code in relation to each Ship
within the periods specified by the ISM Code; and
(b) all other documents and data which are relevant to the ISM SMS and
its implementation and verification which the Lender may require;
and
(c) any other documents which are prepared or which are otherwise
relevant to establish and maintain a Ship's or the owner of that
Ship's compliance with the ISM Code which the Lender may require;
"ISM SMS" means the safety management system for each Ship which is
required to be developed, implemented and maintained under the ISM Code;
"JUNGLE" means Jungle Investment Limited, a company incorporated and
existing under the laws of Malta and having its registered address at
▇▇▇/▇ ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇;
"KSS" means KSS Line Ltd, a company organised and existing under the laws
of South Korea with its principal place of business at ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇-▇▇, ▇▇▇▇▇▇▇-▇▇▇▇, ▇▇▇▇▇▇-▇▇, ▇▇▇▇▇, ▇▇▇▇▇;
"LENDER" means DnB NOR Bank ASA, acting through its office at ▇▇ ▇▇.
▇▇▇▇▇▇▇'▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇ (or through another branch
notified to the Borrower under Clause 25.6) or its successor or assign;
"LIBOR" means, for an Interest Period:
(a) the rate per annum equal to the offered quotation for deposits in
Dollars for a period equal to, or as near as possible equal to, the
relevant Interest Period which appears on Telerate Page 3750 at or
about 11.00 a.m. (London time) on the second Business Day prior to
the commencement of that Interest Period (and, for the purposes of
this
7
Agreement, "Telerate Page 3750" means the display designated as
"Page 3750" on the Telerate Service or such other page as may
replace Page 3750 on that service for the purpose of displaying
rates comparable to that rate) or on such other service as may be
nominated by the British Bankers' Association as the information
vendor for the purpose of displaying the British Bankers'
Association Interest Settlement Rates for Dollars; or
(b) in relation to an Interest Period of any other duration or if no
rate is quoted on Telerate Page 3750, the rate per annum determined
by the Lender to be the arithmetic mean (rounded upwards, if
necessary, to the nearest one-sixteenth of one per cent.) of the
rates per annum determined by the Lender as the rate at which
deposits in Dollars are offered to the Lender by leading banks in
the London Interbank Market at the Lender's request at or about
11.00 a.m. (Rotterdam time) on the Quotation Date for that Interest
Period for a period equal to that Interest Period and for delivery
on the first Business Day of it;
"LOAN" means the principal amount for the time being outstanding under
this Agreement;
"MAJOR CASUALTY" means, in relation to a Ship, any casualty to the Ship
in respect of which the claim or the aggregate of the claims against all
insurers, before adjustment for any relevant franchise or deductible,
exceeds $500,000 or the equivalent in any other currency;
"MARGIN" means:
(a) at all times until the earlier of (i) the final Drawdown Date and
(ii) the last day of the Availability Period in respect of Tranche
B, 0.70 per cent. per annum; and
(f) at all times thereafter when the Security Cover Ratio is:
(i) equal to or lower than 130 per cent., 0.85 per cent. per
annum;
(i) higher than 130 per cent. and lower than 150 per cent., 0.75
per cent. per annum; and
(ii) equal to or higher than 150 per cent., 0.70 per cent. per
annum;
"MARGIN CALCULATION DATE" has the meaning given to it in Clause 4.12;
"MARKET VALUE" means the market value of a Ship at any date determined in
accordance with Clause 14.3;
"MASTER AGREEMENT" means the master agreement (on the 1992 ISDA
(Multicurrency - Crossborder) form) made or to be made between the
Borrowers and the Lender and includes all Transactions from time to time
entered into and Confirmations from time to time exchanged thereunder;
"MASTER AGREEMENT ASSIGNMENT" means the assignment of the Master
Agreement in favour of the Lender executed or to be executed by the
Borrowers, in such form as the Lender may approve or require;
"MOA" means in relation to each New Ship, the memorandum of agreement
made between the Owner of such New Ship as buyer and the company referred
to therein as the seller and, in the plural, means all of them;
"MORTGAGE" means:
8
(a) in the case of "SWEET DREAM", a first priority Bahamas statutory
mortgage executed or to be executed by Empire in favour of the
Lender;
(b) in the case of "GAS ORACLE", a first preferred ▇▇▇▇▇▇▇▇ Islands
mortgage, to be executed by Independent in favour of the Lender;
(c) in the case of "GAS CATHAR", a first priority Maltese statutory
mortgage, executed or to be executed by Jungle in favour of the
Lender;
(d) in the case of "GAS LEGACY", a first priority Cyprus statutory
mortgage, executed or to be executed by Yield in favour of the
Lender;
(e) in the case of "GAS SINCERITY", a first preferred Panamanian
mortgage, executed or to be executed by Soleil in favour of the
Lender; and
(f) in the case of "GAS MARATHON", a first preferred Panamanian
mortgage, executed or to be executed by Triathlon in favour of the
Lender,
each to be in such form as the Lender may approve or require and in the
plural means all of them;
"NEGOTIATION PERIOD" has the meaning given in Clause 4.6;
"NEW SHIPS" means:
(a) the 1995-built LPG carrier of 6,500 cubic metres registered under
Panama flag in the ownership of Triathlon with the name "GAS
MARATHON" ("GAS MARATHON");
(b) the 2000-built LPG carrier of 4,100 cubic metres registered under
Panama flag in the ownership of Soleil with the name "GAS SINCERITY"
("GAS SINCERITY");
(c) the 2001-built LPG carrier of 7,500 cubic metres registered under
Malta flag in the ownership of Jungle with the name "GAS CATHAR"
("GAS CATHAR"); and
(d) the 1998-built LPG carrier of 3,514 cubic metres registered under
Cyprus flag in the ownership of Yield with the name "GAS LEGACY"
("GAS LEGACY");
"OWNER" means, in relation to each Ship, the Borrower whose name is set
out below opposite to such Ship:
NAME OF SHIP OWNER
--------------- -----------
"GAS ORACLE" Independent
"SWEET DREAM" Empire
"GAS MARATHON" Triathlon
"GAS SINCERITY" Soleil
"GAS CATHAR" Jungle
9
"GAS LEGACY" Yield
and, in the plural means all of them;
"PAYMENT CURRENCY" has the meaning given in Clause 20.4;
"PERMITTED SECURITY INTERESTS" means:
(a) Security Interests created by the Finance Documents;
(b) liens for unpaid master's and crew's wages in accordance with usual
maritime practice;
(c) liens for salvage;
(d) liens arising by operation of law for not more than 2 months'
prepaid hire under any charter in relation to a Ship not prohibited
by this Agreement;
(e) liens for master's disbursements incurred in the ordinary course of
trading and any other lien arising by operation of law or otherwise
in the ordinary course of the operation, repair or maintenance of a
Ship, provided such liens do not secure amounts more than 30 days
overdue (unless the overdue amount is being contested by the
Borrower in good faith by appropriate steps) and subject, in the
case of liens for repair or maintenance, to Clause 13.12(g);
(f) any Security Interest created in favour of a plaintiff or defendant
in any proceedings or arbitration as security for costs and expenses
where the Borrower is actively prosecuting or defending such
proceedings or arbitration in good faith; and
(g) Security Interests arising by operation of law in respect of taxes
which are not overdue for payment or in respect of taxes being
contested in good faith by appropriate steps and in respect of which
appropriate reserves have been made;
"PERTINENT DOCUMENT" means:
(a) any Finance Document;
(b) any policy or contract of insurance contemplated by or referred to
in Clause 12 or any other provision of this Agreement or another
Finance Document;
(c) any other document contemplated by or referred to in any Finance
Document; and
(d) any document which has been or is at any time sent by or to the
Lender in contemplation of or in connection with any Finance
Document or any policy, contract or document falling within
paragraphs (b) or (c);
"PERTINENT JURISDICTION", in relation to a company, means:
(a) England and Wales;
(b) the country under the laws of which the company is incorporated or
formed;
(c) a country in which the company's central management and control is
or has recently been exercised;
10
(d) a country in which the overall net income of the company is subject
to corporation tax, income tax or any similar tax;
(e) a country in which assets of the company (other than securities
issued by, or loans to, related companies) having a substantial
value are situated, in which the company maintains a permanent place
of business, or in which a Security Interest created by the company
must or should be registered in order to ensure its validity or
priority; and
(f) a country the courts of which have jurisdiction to make a winding
up, administration or similar order in relation to the company or
which would have such jurisdiction if their assistance were
requested by the courts of a country referred to in paragraphs (b)
or (c) above;
"PERTINENT MATTER" means:
(a) any transaction or matter contemplated by, arising out of, or in
connection with a Pertinent Document; or
(b) any statement relating to a Pertinent Document or to a transaction
or matter falling within paragraph (a),
and covers any such transaction, matter or statement, whether entered
into, arising or made at any time before the signing of this Agreement or
on or at any time after that signing;
"POTENTIAL EVENT OF DEFAULT" means an event or circumstance which, with
the giving of any notice, the lapse of time, a determination of the
Lender and/or the satisfaction of any other condition, would constitute
an Event of Default;
"PURCHASE PRICE" means, in relation to a New Ship, the aggregate amount
paid or to be paid by the relevant Borrower to the seller of that New
Ship pursuant to the MOA which relates thereto;
"QUINTA" means Quinta Trading Co., a corporation incorporated and
existing under the laws of the ▇▇▇▇▇▇▇▇ Islands and having its registered
address at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro,
▇▇▇▇▇▇▇▇ Islands;
"QUOTATION DATE" means, in relation to any Interest Period (or any other
period for which an interest rate is to be determined under any provision
of a Finance Document), the day on which quotations would ordinarily be
given by leading banks in the London Interbank Market for deposits in the
currency in relation to which such rate is to be determined for delivery
on the first day of that Interest Period or other period;
"REINA" means Reina Properties Corp., a corporation incorporated and
existing under the laws of the ▇▇▇▇▇▇▇▇ Islands and having its registered
address at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro,
▇▇▇▇▇▇▇▇ Islands;
"RELEVANT PERSON" has the meaning given in Clause 18.7;
"REPAYMENT DATE" means a date on which a repayment is required to be made
under Clause 7;
11
"REQUISITION COMPENSATION" includes all compensation or other moneys
payable by reason of any act or event such as is referred to in paragraph
(b) of the definition of "Total Loss";
"RETENTION ACCOUNT" means an account in the joint names of the Borrowers
with the Lender in England designated "Empire et al US$50m facility -
Retention Account" or any other account (with that or another office of
the Lender) which is designated by the Lender as the Retention Account
for the purposes of this Agreement;
"SECURED LIABILITIES" means all liabilities which the Borrowers, the
Security Parties or any of them have, at the date of this Agreement or at
any later time or times, under or in connection with any Finance Document
or any judgment relating to any Finance Document; and for this purpose,
there shall be disregarded any total or partial discharge of these
liabilities, or variation of their terms, which is effected by, or in
connection with, any bankruptcy, liquidation, arrangement or other
procedure under the insolvency laws of any country;
"SECURITY COVER RATIO" means at any time, the ratio of:
(a) the aggregate of:
(iii) the aggregate Market Values of the Ships then subject to a
Mortgage; and
(iv) the net realisable value of any additional security
previously provided under Clause 14 of this Agreement; to
(b) the aggregate of the Loan and any Swap Exposure at any relevant
time;
"SECURITY INTEREST" means:
(a) a mortgage, charge (whether fixed or floating) or pledge, any
maritime or other lien or any other security interest of any kind;
(b) the security rights of a plaintiff under an action in rem; and
(c) any arrangement entered into by a person (A) the effect of which is
to place another person (B) in a position which is similar, in
economic terms, to the position in which B would have been had he
held a security interest over an asset of A; but this paragraph (c)
does not apply to a right of set off or combination of accounts
conferred by the standard terms of business of a bank or financial
institution;
"SECURITY PARTY" means each of the Corporate Guarantor and each
Shareholder and any other person (except the Lender) who, as a surety or
mortgagor, as a party to any subordination or priorities arrangement, or
in any similar capacity, executes a document falling within the last
paragraph of the definition of "Finance Documents";
"SECURITY PERIOD" means the period commencing on the date of this
Agreement and ending on the date on which the Lender notifies the
Borrowers and the Security Parties that:
(a) all amounts which have become due for payment by any Borrower or any
Security Party under the Finance Documents have been paid;
(b) no amount is owing or has accrued (without yet having become due for
payment) under any Finance Document;
12
(c) neither any Borrower nor any Security Party has any future or
contingent liability under Clause 19, 20, or 21 or any other
provision of this Agreement or another Finance Document; and
(d) the Lender does not consider that there is a significant risk that
any payment or transaction under a Finance Document would be set
aside, or would have to be reversed or adjusted, in any present or
possible future bankruptcy of a Borrower or a Security Party or in
any present or possible future proceeding relating to a Finance
Document or any asset covered (or previously covered) by a Security
Interest created by a Finance Document;
"SHARES PLEDGE" means, in relation to a Borrower, the pledge of all the
shares of and in that Borrower, executed or to be executed by the
relevant Shareholder in favour of the Lender in such form as the Lender
may approve or require and, in the plural, means all of them.
"SHAREHOLDER" means:
(a) in the case of Independent, Reina;
(b) in the case of Empire, Quinta;
(c) in the case of Triathlon, Stealthgas;
(d) in the case of Soleil, Stealthgas;
(e) in the case of Jungle, Drew; and
(f) in the case of Yield, ▇▇▇▇▇▇,
and in the plural means all of them;
"SHIPS" means, together, the New Ships and:
(a) the 1990-built LPG Carrier of 3,000 cubic metres registered under
▇▇▇▇▇▇▇▇ Islands flag in the ownership of Independent with the name
"GAS ORACLE" ("GAS ORACLE"); and
(b) the 1997-built LPG Carrier of 5,000 cubic metres registered under
Bahamas flag in the ownership of Empire with the name "SWEET DREAM"
("SWEET DREAM"),
and, in the singular, means any of them;
"SOLEIL" means Soleil Trust Inc., a corporation incorporated and existing
under the laws of ▇▇▇▇▇▇▇▇ Islands and having its registered address at
Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, ▇▇▇▇▇▇▇▇
Islands;
"STEALTHGAS" means Stealthgas Inc., a company incorporated and existing
under the laws of the ▇▇▇▇▇▇▇▇ Islands and having its registered office
at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, the
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇;
"SWAP EXPOSURE" means, as at any relevant date the aggregate net amount
in Dollars which would be payable by the Borrowers to the Lender under
(and calculated in accordance with) section 6(e) (Payments on Early
Termination) of the Master Agreement if an Early Termination Date had
occurred on the relevant date in relation to all continuing Transactions
entered into between the Borrowers and the Lender;
13
"SWEET DREAM BAREBOAT CHARTER" means the bareboat charterparty agreement
dated 1 March 2005 and entered into between the Sweet Dream Bareboat
Charterer and Empire in relation to "SWEET DREAM";
"SWEET DREAM BAREBOAT CHARTER ASSIGNMENT" means, in relation to "SWEET
DREAM", a specific assignment of the rights of Empire under the Sweet
Dream Bareboat Charter, to be executed by Empire in favour of the Lender
in such form as the Lender may approve or require;
"SWEET DREAM BAREBOAT CHARTER PERIOD" means, the period during which
"SWEET DREAM" is operating under the Sweet Dream Bareboat Charter;
"SWEET DREAM BAREBOAT CHARTERER" means Reo Investments S.A., a company
incorporated and existing under the law of the Republic of Liberia and
having its registered address at ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇;
"TOTAL LOSS" means in relation to a Ship:
(a) actual, constructive, compromised, agreed or arranged total loss of
the Ship;
(b) any expropriation, confiscation, requisition or acquisition of the
Ship, whether for full consideration, a consideration less than its
proper value, a nominal consideration or without any consideration,
which is effected by any government or official authority or by any
person or persons claiming to be or to represent a government or
official authority (excluding a requisition for hire for a fixed
period not exceeding 1 year without any right to an extension)
unless it is within 1 month redelivered to the full control of the
Borrower owning the Ship;
(c) any arrest, capture, seizure or detention of the Ship (including any
hijacking or theft) unless it is within 30 days redelivered to the
full control of the Borrower owning the Ship;
"TOTAL LOSS DATE" means in relation to a Ship:
(a) in the case of an actual loss of the Ship, the date on which it
occurred or, if that is unknown, the date when the Ship was last
heard of;
(b) in the case of a constructive, compromised, agreed or arranged total
loss of the Ship, the earliest of:
(i) the date on which a notice of abandonment is given to the
insurers; and
(ii) the date of any compromise, arrangement or agreement made by
or on behalf of Borrower owning the Ship with the Ship's
insurers in which the insurers agree to treat the Ship as a
total loss; and
(c) in the case of any other type of total loss, on the date (or the
most likely date) on which it appears to the Lender that the event
constituting the total loss occurred;
"TRANCHE" means each of Tranche A and Tranche B and in the plural means
both of them;
14
"TRANCHE A" means an amount of Fourteen million Dollars ($14,000,000) to
be made available by the Lender to the Borrowers in a single Advance in
accordance with Clauses 2.2 and 3.2;
"TRANCHE B" means an amount being equal to the lesser of (a) $36,000,000
and (b) an amount equal to 65 per cent. of the lesser of (i) the
aggregate Market Values of the New Ships and (ii) the aggregate Purchase
Price of the New Ship to be made available by the Lender to the Borrowers
in up to four Advances in accordance with Clauses 2.2 and 3.2;
"TRANSACTION" has the meaning given in the Master Agreement;
"TRIATHLON" means Triathlon Inc., a corporation incorporated and existing
under the laws of ▇▇▇▇▇▇▇▇ Islands and having its registered address at
Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, ▇▇▇▇▇▇▇▇
Islands; and
"YIELD" means Northern Yield Shipping Limited, a company incorporated and
existing under the laws of Cyprus and having its registered address at
Agias Elenis ▇, ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇/▇▇▇▇▇▇ ▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇.
1.2 CONSTRUCTION OF CERTAIN TERMS. In this Agreement:
"APPROVED" means, for the purposes of Clause 12, approved in writing by
the Lender;
"ASSET" includes every kind of property, asset, interest or right,
including any present, future or contingent right to any revenues or
other payment;
"COMPANY" includes any partnership, joint venture and unincorporated
association;
"CONSENT" includes an authorisation, consent, approval, resolution,
licence, exemption, filing, registration, notarisation and legalisation;
"CONTINGENT LIABILITY" means a liability which is not certain to arise
and/or the amount of which remains unascertained;
"DOCUMENT" includes a deed; also a letter or fax;
"EXCESS RISKS" means, in relation to a Ship, the proportion of claims for
general average, salvage and salvage charges not recoverable under the
hull and machinery policies in respect of the Ship in consequence of its
insured value being less than the value at which the Ship is assessed for
the purpose of such claims;
"EXPENSE" means any kind of cost, charge or expense (including all legal
costs, charges and expenses) and any applicable value added or other tax;
"LAW" includes any order or decree, any form of delegated legislation,
any treaty or international convention and any regulation or resolution
of the Council of the European Union, the European Commission, the United
Nations or its Security Council;
"LEGAL OR ADMINISTRATIVE ACTION" means any legal proceeding or
arbitration and any administrative or regulatory action or investigation;
"LIABILITY" includes every kind of debt or liability (present or future,
certain or contingent), whether incurred as principal or surety or
otherwise;
15
"MONTHS" shall be construed in accordance with Clause 1.3;
"OBLIGATORY INSURANCES" means, in relation to a Ship, all insurances
effected, or which the Borrower owning the Ship is obliged to effect,
under Clause 12 or any other provision of this Agreement or another
Finance Document;
"PARENT COMPANY" has the meaning given in Clause 1.4;
"PERSON" includes any company; any state, political sub-division of a
state and local or municipal authority; and any international
organisation;
"POLICY", in relation to any insurance, includes a slip, cover note,
certificate of entry or other document evidencing the contract of
insurance or its terms;
"PROTECTION AND INDEMNITY RISKS" means the usual risks covered by a
protection and indemnity association managed in London, including
pollution risks and the proportion (if any) of any sums payable to any
other person or persons in case of collision which are not recoverable
under the hull and machinery policies by reason of the incorporation in
them of clause 1 of the Institute Time Clauses (Hulls)(1/10/83) or clause
8 of the Institute Time Clauses (Hulls)(1/11/1995) or the Institute
Amended Running Down Clause (1/10/71) or any equivalent provision;
"REGULATION" includes any regulation, rule, official directive, request
or guideline whether or not having the force of law of any governmental,
intergovernmental or supranational body, agency, department or
regulatory, self-regulatory or other authority or organisation;
"SUBSIDIARY" has the meaning given in Clause 1.4;
"TAX" includes any present or future tax, duty, impost, levy or charge of
any kind which is imposed by any state, any political sub-division of a
state or any local or municipal authority (including any such imposed in
connection with exchange controls), and any connected penalty, interest
or fine; and
"WAR RISKS" includes the risk of mines and all risks excluded by clause
23 of the Institute Time Clauses (Hulls)(1/10/83) or clause 24 of the
Institute Time Clauses (Hulls)(1/11/1995).
1.3 MEANING OF "MONTH". A period of one or more "MONTHS" ends on the day in
the relevant calendar month numerically corresponding to the day of the
calendar month on which the period started ("THE NUMERICALLY
CORRESPONDING DAY"), but:
(a) on the Business Day following the numerically corresponding day if the
numerically corresponding day is not a Business Day or, if there is no
later Business Day in the same calendar month, on the Business Day
preceding the numerically corresponding day; or
(b) on the last Business Day in the relevant calendar month, if the period
started on the last Business Day in a calendar month or if the last
calendar month of the period has no numerically corresponding days,
and "MONTH" and "MONTHLY" shall be construed accordingly.
1.4 MEANING OF "SUBSIDIARY". A company (S) is a subsidiary of another company
(P) if:
16
(a) a majority of the issued shares in S (or a majority of the issued shares
in S which carry unlimited rights to capital and income distributions)
are directly owned by P or are indirectly attributable to P; or
(b) P has direct or indirect control over a majority of the voting rights
attaching to the issued shares of S; or
(c) P has the direct or indirect power to appoint or remove a majority of the
directors of S; or
(d) P otherwise has the direct or indirect power to ensure that the affairs
of S are conducted in accordance with the wishes of P,
and any company of which S is a subsidiary is a parent company of S.
1.5 GENERAL INTERPRETATION. In this Agreement:
(a) references in Clause 1.1 to a Finance Document or any other document
being in the form of a particular appendix include references to that
form with any modifications to that form which the Lender approves or
reasonably requires;
(b) references to, or to a provision of, a Finance Document or any other
document are references to it as amended or supplemented, whether before
the date of this Agreement or otherwise;
(c) references to, or to a provision of, any law include any amendment,
extension, re-enactment or replacement, whether made before the date of
this Agreement or otherwise;
(d) words denoting the singular number shall include the plural and vice
versa; and
(e) Clauses 1.1 to 1.5 apply unless the contrary intention appears.
1.6 HEADINGS. In interpreting a Finance Document or any provision of a
Finance Document, all clause, sub-clause and other headings in that and
any other Finance Document shall be entirely disregarded.
2 FACILITY
2.1 AMOUNT OF FACILITY. Subject to the other provisions of this Agreement,
the Lender shall advance to the Borrowers in up to five Advances a loan
facility of up to $50,000,000 divided in two tranches for the purposes
and in the amounts referred to below:
(a) $14,000,000, to refinance the existing indebtedness owed by Empire and
Independent to the Lender under the Existing Loan Agreement; and
(b) an amount equal to the lesser of (i) $36,000,000 and (ii) an amount equal
to 65 per cent. of the lesser of (A) the aggregate Market Value of the
New Ships and (B) the aggregate Purchase Price of the New Ships.
2.2 PURPOSE OF ADVANCES. The Borrowers undertake with the Lender to use each
Advance only for the purpose stated in the preamble to this Agreement.
3 DRAWDOWN
3.1 REQUEST FOR ADVANCE. Subject to the following conditions, the Borrowers
may request an Advance or, as the case may be, Tranche A to be made by
ensuring that the Lender
17
receives a completed Drawdown Notice not later than 11.00 a.m. (London
time) 3 Business Days prior to the intended Drawdown Date.
3.2 AVAILABILITY. The conditions referred to in Clause 3.1 are that:
(a) a Drawdown Date has to be a Business Day during the Availability Period;
(b) Tranche A shall be made available in a single Advance and shall be
applied in refinancing the existing Financial Indebtedness of Empire and
Independent to the Lender under the Existing Loan Agreement;
(c) each Advance under Tranche B shall relate to a different Ship;
(d) no Advance made under Tranche B shall exceed 65 per cent. of the lesser
of (i) the Market Value of the New Ship to which it relates on the
Drawdown Date of the Advance which shall be used to refinance part of the
Purchase Price of the New Ship and (ii) the Purchase Price of that New
Ship; and
(e) the aggregate amount of the Advances shall not exceed the Commitment.
3.3 DRAWDOWN NOTICE IRREVOCABLE. A Drawdown Notice must be signed by a
director or other authorised person of a Borrower; and once served, a
Drawdown Notice cannot be revoked without the prior consent of the
Lender.
3.4 DISBURSEMENT OF ADVANCE. Subject to the provisions of this Agreement, the
Lender shall on each Drawdown Date make available the relevant Advance
or, as the case may be, Tranche A to the Borrowers; and payment to the
Borrowers shall be made to the account which the Borrowers specify in the
relevant Drawdown Notice.
3.5 DISBURSEMENT OF ADVANCE TO THIRD PARTY. The payment of an Advance or, as
the case may be, Tranche A by the Lender under Clause 3.4 shall
constitute the making of the Advance or Tranche A and the Borrowers shall
at that time become indebted, as principal and direct obligors, to the
Lender in an amount equal to that Advance or, as the case may be, Tranche
A.
4 INTEREST
4.1 PAYMENT OF NORMAL INTEREST. Subject to the provisions of this Agreement,
interest on the Loan in respect of each Interest Period shall be paid by
the Borrowers on the last day of that Interest Period.
4.2 NORMAL RATE OF INTEREST. Subject to the provisions of this Agreement, the
rate of interest on the Loan in respect of an Interest Period shall be
the aggregate of the applicable Margin and LIBOR for that Interest
Period.
4.3 PAYMENT OF ACCRUED INTEREST. In the case of an Interest Period longer
than 3 months, accrued interest shall be paid every 3 months during that
Interest Period and on the last day of that Interest Period.
4.4 NOTIFICATION OF MARKET DISRUPTION. The Lender shall promptly notify the
Borrowers if no rate is quoted on Telerate Page 3750 or if for any reason
the Lender is unable to obtain Dollars in the London Interbank Market in
order to fund the Loan (or any part of it) during any Interest Period,
stating the circumstances which have caused such notice to be given.
18
4.5 SUSPENSION OF DRAWDOWN. If the Lender's notice under Clause 4.4 is served
before a Tranche or an Advance is made, the Lender's obligation to make
the Tranche or, as the case may be, the Advance shall be suspended while
the circumstances referred to in the Lender's notice continue.
4.6 NEGOTIATION OF ALTERNATIVE RATE OF INTEREST. If the Lender's notice under
Clause 4.4 is served after a Tranche or an Advance is made, the Borrowers
and the Lender shall use reasonable endeavours to agree, within the 30
days after the date on which the Lender serves its notice under Clause
4.4 (the "NEGOTIATION PERIOD"), an alternative interest rate or (as the
case may be) an alternative basis for the Lender to fund or continue to
fund the Loan during the Interest Period concerned.
4.7 APPLICATION OF AGREED ALTERNATIVE RATE OF INTEREST. Any alternative
interest rate or an alternative basis which is agreed during the
Negotiation Period shall take effect in accordance with the terms agreed.
4.8 ALTERNATIVE RATE OF INTEREST IN ABSENCE OF AGREEMENT. If an alternative
interest rate or alternative basis is not agreed within the Negotiation
Period, and the relevant circumstances are continuing at the end of the
Negotiation Period, then the Lender shall set an interest period and
interest rate representing the cost of funding of the Lender in Dollars
or in any available currency of the Loan plus the applicable Margin; and
the procedure provided for by this Clause 4.8 shall be repeated if the
relevant circumstances are continuing at the end of the interest period
so set by the Lender.
4.9 NOTICE OF PREPAYMENT. If the Borrowers do not agree with an interest rate
set by the Lender under Clause 4.8, the Borrowers may give the Lender not
less than 10 Business Days' notice of their intention to prepay at the
end of the interest period set by the Lender.
4.10 PREPAYMENT. A notice under Clause 4.9 shall be irrevocable; and on the
last Business Day of the interest period set by the Lender, the Borrowers
shall prepay (without premium or penalty) the Loan, together with accrued
interest thereon at the applicable rate plus the applicable Margin.
4.11 APPLICATION OF PREPAYMENT. The provisions of Clause 7 shall apply in
relation to the prepayment.
4.12 CALCULATION OF ASSET COVER RATIO. The Lender shall calculate the Asset
Cover Value Ratio on the Drawdown Date applicable to the final Advance in
respect of Tranche B and every 12 months thereafter (each a "MARGIN
CALCULATION DATE") for the purposes of calculating the Margin and shall
advise the Borrowers in writing, within 10 Business Days of each Margin
Calculation Date, of the Margin which will apply for the 12-month period
commencing on the relevant Margin Calculation Date PROVIDED THAT in
respect of each Margin Calculation Date other than the first Margin
Calculation Date, the Lender shall only be obliged to advise the
Borrowers of the Margin which will apply for the 12-month period
commencing on the relevant Margin Calculation Date if that Margin will be
different to the Margin which applies immediately prior to the relevant
Margin Calculation Date.
For the purposes of calculating the Asset Cover Ratio pursuant to this
Clause 4.12, the Market Value of the Ships shall be determined no more
than 30 days prior to the relevant Margin Calculation Date.
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5 INTEREST PERIODS
5.1 COMMENCEMENT OF INTEREST PERIODS. The first Interest Period applicable to
Tranche A or an Advance shall commence on the Drawdown Date relative to
Tranche A or, as case may be, that Advance and each subsequent Interest
Period shall commence on the expiry of the preceding Interest Period.
5.2 DURATION OF NORMAL INTEREST PERIODS. Subject to Clauses 5.3 and 5.4, each
Interest Period shall be:
(a) 1, 2, 3, 6, 9 or 12 months as notified by the Borrowers to the Lender not
later than 11.00 a.m. (London time) 3 Business Days before the
commencement of the Interest Period;
(b) the first Interest Period in relation to Tranche A (or the first Advance
under Tranche B (if such Advance is drawn down before Tranche A)) shall
commence on the Drawdown Date relative thereto and each subsequent
Interest Period in respect of Tranche A or, as the case may be, such
Advance shall commence on the expiry of the preceding Interest Period
relating thereto;
(c) the first Interest Period in relation to Tranche A (if such Tranche is
drawn down after the first Advance under Tranche B) or, as the case may
be, each Advance under Tranche B shall commence on the Drawdown Date
relative thereto and shall expire on the last day of the Interest Period
which is then current for Tranche A or the Advance or Advances under
Tranche B which are then outstanding and thereafter the Interest Periods
in relation to Tranche A and the Advances under Tranche B which are
outstanding at the relevant time shall commence and expire on the same
dates and shall be consolidated to form one Interest Period;
(d) 3 months, if the Borrowers fail to notify the Lender by the time
specified in paragraph (a); or
(e) such other longer period as the Lender may agree with the Borrowers.
5.3 DURATION OF INTEREST PERIODS FOR REPAYMENT INSTALMENTS. In respect of an
amount due to be repaid under Clause 7 on a particular Repayment Date, an
Interest Period shall end on that Repayment Date.
5.4 NON-AVAILABILITY OF MATCHING DEPOSITS FOR INTEREST PERIOD SELECTED. If,
after the Borrowers have selected and the Lender has agreed an Interest
Period longer than 3 months, the Lender notifies the Borrowers by 11.00
a.m. (London time) on the third Business Day before the commencement of
the Interest Period that it is not satisfied that deposits in Dollars for
a period equal to the Interest Period will be available to it in the
London Interbank Market when the Interest Period commences, the Interest
Period shall be of 3 months.
6 DEFAULT INTEREST
6.1 PAYMENT OF DEFAULT INTEREST ON OVERDUE AMOUNTS. The Borrowers shall pay
interest in accordance with the following provisions of this Clause 6 on
any amount payable by the Borrowers under any Finance Document which the
Lender does not receive on or before the relevant date, that is:
(a) the date on which the Finance Documents provide that such amount is due
for payment; or
20
(b) if a Finance Document provides that such amount is payable on demand, the
date on which the demand is served; or
(c) if such amount has become immediately due and payable under Clause 18.4,
the date on which it became immediately due and payable.
6.2 DEFAULT RATE OF INTEREST. Interest shall accrue on an overdue amount from
(and including) the relevant date until the date of actual payment (as
well after as before judgment) at the rate per annum determined by the
Lender to be 1.5 per cent. above:
(a) in the case of an overdue amount of principal, the higher of the rates
set out at Clauses 6.3(a) and (b); or
(b) in the case of any other overdue amount, the rate set out at Clause
6.3(b).
6.3 CALCULATION OF DEFAULT RATE OF INTEREST. The rates referred to in Clause
6.2 are:
(a) the rate applicable to the overdue principal amount immediately prior to
the relevant date (but only for any unexpired part of any then current
Interest Period applicable to it);
(b) the applicable Margin plus, in respect of successive periods of any
duration (including at call) up to 3 months which the Lender may select
from time to time:
(i) LIBOR; or
(ii) if the Lender determines that Dollar deposits for any such period
are not being made available to it by leading banks in the London
Interbank Market in the ordinary course of business, a rate from
time to time determined by the Lender by reference to the cost of
funds to it from such other sources as the Lender may from time to
time determine.
6.4 NOTIFICATION OF INTEREST PERIODS AND DEFAULT RATES. The Lender shall
promptly notify the Borrowers of each interest rate determined by it
under Clause 6.3 and of each period selected by it for the purposes of
paragraph (b) of that Clause; but this shall not be taken to imply that
the Borrowers are liable to pay such interest only with effect from the
date of the Lender's notification.
6.5 PAYMENT OF ACCRUED DEFAULT INTEREST. Subject to the other provisions of
this Agreement, any interest due under this Clause shall be paid on the
last day of the period by reference to which it was determined.
6.6 COMPOUNDING OF DEFAULT INTEREST. Any such interest which is not paid at
the end of the period by reference to which it was determined shall
thereupon be compounded.
6.7 APPLICATION TO MASTER AGREEMENT. For the avoidance of doubt this Clause 6
does not apply to any amount payable under the Master Agreement in
respect of any continuing Transaction as to which section 2(e) (Default
Interest, Other Amounts) of the Master Agreement shall apply.
7 REPAYMENT AND PREPAYMENT
7.1 AMOUNT OF REPAYMENT INSTALMENTS. The Borrowers shall repay the Loan by:
(a) 20 consecutive six-monthly instalments of:
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(i) in the case of the first and second instalments, $3,600,000 each;
(ii) in the case of the third to sixth instalments (inclusive),
$2,400,000 each; and
(iii) in the case of the seventh to twentieth instalments (inclusive),
$1,800,000 each; and
(b) a balloon instalment of $8,000,000 (as such amount may be increased
through the operation of Clause 7.11, the "BALLOON INSTALMENT").
7.2 REPAYMENT DATES.
(a) The first instalment shall be repaid on the date falling 6 months after
the earlier of:
(i) the Drawdown Date relating to Tranche A or the first Advance under
Tranche B (whichever is drawn down earlier under this Agreement);
and
(ii) 31 January 2006 (or such later date as the Lender may agree with
the Borrowers); and
(b) the last instalment, along with the Balloon Instalment, shall be repaid
on the earlier of:
(i) the date falling on the tenth anniversary of the Drawdown Date
relating to Tranche A or the first Advance under Tranche B
(whichever is drawn down earlier under this Agreement); and
(ii) 31 January 2016 (or such later date as the Lender may agree with
the Borrowers).
7.3 FINAL REPAYMENT DATE. On the final Repayment Date, the Borrowers shall
additionally pay to the Lender all other sums then accrued or owing under
any Finance Document.
7.4 VOLUNTARY PREPAYMENT. Subject to the following conditions, the Borrowers
may prepay the whole or any part of the Loan on the last day of an
Interest Period.
7.5 CONDITIONS FOR VOLUNTARY PREPAYMENT. The conditions referred to in Clause
7.4 are that:
(a) a partial prepayment shall be $500,000 or a multiple of $500,000;
(b) the Lender has received from the Borrowers at least 5 days' prior written
notice specifying the amount to be prepaid and the date on which the
prepayment is to be made; and
(c) the Borrowers have provided evidence satisfactory to the Lender that any
consent required by any Borrower or any Security Party in connection with
the prepayment has been obtained and remains in force, and that any
regulation relevant to this Agreement which affects any Borrower or any
Security Party has been complied with.
7.6 EFFECT OF NOTICE OF PREPAYMENT. A prepayment notice may not be withdrawn
or amended without the consent of the Lender and the amount specified in
the prepayment notice shall become due and payable by the Borrowers on
the date for prepayment specified in the prepayment notice.
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7.7 MANDATORY PREPAYMENT. Without prejudice to the provisions of Clause 14,
the Borrowers shall be obliged to prepay the Relevant Percentage of the
Loan if a Ship is sold or becomes a Total Loss:
(a) in the case of a sale, on or before the date on which the sale is
completed by delivery of the Ship to the buyer; or
(b) in the case of a Total Loss, on the earlier of the date falling 120 days
after the Total Loss Date and the date of receipt by the Lender of the
proceeds of insurance relating to such Total Loss,
and in this Clause 7.7 "RELEVANT PERCENTAGE" means the percentage which
the Market Value of such Ship bears to the aggregate Market Values of
such of the Ships as is subject to a Mortgage on (in the case of the sale
of such Ship) the date such Ship is delivered to the buyer thereof or (in
the case of a Total Loss of such Ship) the Total Loss Date in respect
thereof.
7.8 AMOUNTS PAYABLE ON PREPAYMENT. A prepayment shall be made together with
accrued interest (and any other amount payable under Clause 20 or
otherwise) in respect of the amount prepaid and, if the prepayment is not
made on the last day of an Interest Period together with any sums payable
under Clause 20.1(b) but without premium or penalty.
7.9 APPLICATION OF PARTIAL PREPAYMENT. Each partial prepayment shall be
applied pro rata against the repayment instalments, including, without
limitation, the balloon instalment, specified in Clause 7.1.
7.10 NO REBORROWING. No amount prepaid may be reborrowed.
7.11 DEFERRAL OPTION. The Borrowers may elect to defer the repayment of up to
one third of any three repayment instalments falling due after the
Repayment Date in relation to the seventh repayment instalment subject to
the following terms and conditions:
(a) the Borrowers shall have sent to the Lender a notice at least 10 days
prior to the Repayment Date relative to the repayment instalment the
payment of part of which the Borrowers are electing to defer specifying
the amount to be deferred (which amount shall not exceed one third of the
relevant repayment instalment);
(b) no Event of Default has occurred or is continuing either at the date of
the Borrowers' said request or on the Repayment Date on which the
deferred instalment was due and payable; and
(c) each part of a repayment instalment which is deferred (which shall not
exceed, when added to the parts of all other repayment instalments which
have been deferred, $1,800,000 in aggregate) shall be added to the
Balloon Instalment which shall be increased by such amount.
8 CONDITIONS PRECEDENT
8.1 DOCUMENTS, FEES AND NO DEFAULT. The Lender's obligation to make Tranche A
or an Advance is subject to the following conditions precedent:
(a) that, on or before the service of the Drawdown Notice in respect of the
first Tranche or Advance to be drawn down under this Agreement, the
Lender receives the documents described in Part A of Schedule 2, in form
and substance satisfactory to it and its lawyers;
23
(b) that, on the each Drawdown Date but prior to the making of Tranche A or,
as the case may be, the relevant Advance under Tranche B, the Lender
receives the documents described in Part B of Schedule 2 in relation to
Tranche A or, as the case may be, that Advance, in form and substance
satisfactory to it and its lawyers;
(c) that, on the Drawdown Date relating to Tranche A and the Drawdown Date
relating to the Advance under Tranche B which shall be used to refinance
part of the Purchase Price of "GAS MARATHON" but prior to the making of
Tranche A or, as the case may be, such Advance, the Lender receives (in
addition to those documents described in Part B of Schedule 2 in relation
to the applicable Ship (being, in the case of Tranche A, "SWEET DREAM"
and, in the case of the Advance to refinance part of the Purchase Price
of "GAS MARATHON", "GAS MARATHON") the documents described in Part C of
Schedule 2, in form and substance satisfactory to it and its lawyers;
(d) that, on the Drawdown Date relating to Tranche A but prior to the making
of Tranche A, the Lender receives (in addition to those documents
described in Part B of Schedule 2 in relation to "GAS ORACLE") the
documents described in Part D of Schedule 2, in a form and substance
satisfactory to it and its lawyers;
(e) that, on the date of this Agreement, the Lender receives the arrangement
fee referred to in Clause 19.1 and has received payment of the expenses
referred to in Clause 19.2; and
(f) that both at the date of each Drawdown Notice and at each Drawdown Date:
(i) no Event of Default or Potential Event of Default has occurred and
is continuing or would result from the borrowing of the relevant
Tranche or Advance;
(ii) the representations and warranties in Clause 9.1 and those of any
Borrower or any Security Party which are set out in the other
Finance Documents would be true and not misleading if repeated on
each of those dates with reference to the circumstances then
existing; and
(iii) none of the circumstances contemplated by Clause 4.4 has occurred
and is continuing; and
(g) that, if the ratio set out in Clause 14.1 were applied immediately
following the making of the relevant Tranche or Advance, the Borrowers
would not be obliged to provide additional security or prepay part of the
Loan under that Clause; and
(h) that the Lender has received, and found to be acceptable to it, any
further opinions, consents, agreements and documents in connection with
the Finance Documents which the Lender may request by notice to the
Borrowers prior to the relevant Drawdown Date.
8.2 WAIVERS OF CONDITIONS PRECEDENT. If the Lender, at its discretion,
permits a Tranche or an Advance to be borrowed before certain of the
conditions referred to in Clause 8.1 are satisfied, the Borrowers shall
ensure that those conditions are satisfied within 5 Business Days after
the relevant Drawdown Date (or such longer period as the Lender may
specify).
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9 REPRESENTATIONS AND WARRANTIES
9.1 GENERAL. Each Borrower represents and warrants to the Lender as follows.
9.2 STATUS. Each Borrower is duly incorporated and validly existing and in
good standing under the laws of its country of incorporation.
9.3 SHARE CAPITAL AND OWNERSHIP. Each Borrower has an authorised and issued
share capital of:
(a) in the case of each of Empire, Independent, Triathlon and Soleil, 100
bearer and/or registered shares of no par value, all of which shares have
been issued in bearer form;
(b) in the case of Jungle, 2000 shares of LM1 each, 500 shares of which have
been issued 20 per cent. paid up; and
(c) in the case of Yield, 1000 registered shares of CY(pound)1 each, all of
which shares have been issued,
and the legal title and beneficial ownership of all such issued shares is
held, free of any Security Interest or other claim, by the relevant
Shareholder.
9.4 CORPORATE POWER. Each Borrower, has the corporate capacity, and has taken
all corporate action and obtained all consents necessary for it:
(a) to register its Ship in its name under the relevant flag;
(b) to execute the Finance Documents to which that Borrower is a party; and
(c) to borrow under this Agreement, to enter into Transactions under the
Master Agreement and to make all the payments contemplated by, and to
comply with, those Finance Documents to which that Borrower is a party
and the Master Agreement.
9.5 CONSENTS IN FORCE. All the consents referred to in Clause 9.4 remain in
force and nothing has occurred which makes any of them liable to
revocation.
9.6 LEGAL VALIDITY; EFFECTIVE SECURITY INTERESTS. The Finance Documents to
which each Borrower is a party, do now or, as the case may be, will, upon
execution and delivery (and, where applicable, registration as provided
for in the Finance Documents):
(a) constitute that Borrower's legal, valid and binding obligations
enforceable against that Borrower in accordance with their respective
terms; and
(b) create legal, valid and binding Security Interests enforceable in
accordance with their respective terms over all the assets to which they,
by their terms, relate,
subject to any relevant insolvency laws affecting creditors' rights
generally.
9.7 NO THIRD PARTY SECURITY INTERESTS. Without limiting the generality of
Clause 9.6, at the time of the execution and delivery of each Finance
Document:
(a) each Borrower which is a party to that Finance Document will have the
right to create all the Security Interests which that Finance Document
purports to create; and
25
(b) no third party will have any Security Interest (except for Permitted
Security Interests) or any other interest, right or claim over, in or in
relation to any asset to which any such Security Interest, by its terms,
relates.
9.8 NO CONFLICTS. The execution by each Borrower of each Finance Document to
which it is a party, and the borrowing by that Borrower of the Loan, and
its compliance with each Finance Document to which it is a party will not
involve or lead to a contravention of:
(a) any law or regulation; or
(b) the constitutional documents of that Borrower; or
(c) any contractual or other obligation or restriction which is binding on
that Borrower or any of its assets.
9.9 NO WITHHOLDING TAXES. All payments which each Borrower is liable to make
under the Finance Documents to which it is a party may be made without
deduction or withholding for or on account of any tax payable under any
law of any Pertinent Jurisdiction.
9.10 NO DEFAULT. No Event of Default or Potential Event of Default has
occurred and is continuing.
9.11 INFORMATION. All information which has been provided in writing by or on
behalf of the Borrowers or any Security Party to the Lender in connection
with any Finance Document satisfied the requirements of Clause 10.5; all
audited and unaudited accounts which have been so provided satisfied the
requirements of Clause 10.7; and there has been no material adverse
change in the financial position or state of affairs of any Borrower from
that disclosed in the latest of those accounts.
9.12 NO LITIGATION. No legal or administrative action involving any Borrower
(including action relating to any alleged or actual breach of the ISM
Code) has been commenced or taken or, to any Borrower's knowledge, is
likely to be commenced or taken.
9.13 VALIDITY AND COMPLETENESS OF MOAS, ETC. Each MOA, the Gas Oracle Charter
and each Bareboat Charter constitutes valid, binding and enforceable
obligations of the parties thereto respectively in accordance with their
terms, and:
(a) each copy of an MOA, the Gas Oracle Charter and each Bareboat Charter
delivered to the Lender before the date of this Agreement is a true and
complete copy thereof (including, without limitation, any addenda
thereto); and
(b) no amendments or additions to any MOA, the Gas Oracle Charter or either
Bareboat Charter have been agreed nor has any Borrower or any other party
waived any of their respective rights under an MOA, the Gas Oracle
Charter or either Bareboat Charter.
9.14 NO REBATES ETC. There is no agreement or understanding to allow or pay
any rebate, premium, commission discount or other benefit or payment
(howsoever described) to any Borrower, any seller of a New Ship or any
third party in connection with the purchase by any Borrower of a New Ship
other than as disclosed to the Lender in writing on or prior to the date
of this Agreement.
9.15 COMPLIANCE WITH CERTAIN UNDERTAKINGS. At the date of this Agreement, the
Borrowers are in compliance with Clauses 10.2, 10.4, 10.9 and 10.13.
26
9.16 TAXES PAID. Each Borrower has paid all taxes applicable to, or imposed on
or in relation to that Borrower, its business and the Ship owned by it.
9.17 ISM CODE COMPLIANCE. All requirements of the ISM Code as they relate to
the Borrowers, the Approved Manager, each Bareboat Charterer and each
Ship have been complied with.
10 GENERAL UNDERTAKINGS
10.1 GENERAL. Each Borrower undertakes with the Lender to comply with the
following provisions of this Clause 10 at all times during the Security
Period, except as the Lender may otherwise permit.
10.2 TITLE; NEGATIVE PLEDGE. Each Borrower will:
(a) hold the legal title to, and own the entire beneficial interest in the
Ship owned by it, her Insurances and Earnings, free from all Security
Interests and other interests and rights of every kind, except for those
created by the Finance Documents and the effect of assignments contained
in the Finance Documents and except for Permitted Security Interests; and
(b) not create or permit to arise any Security Interest (except for Permitted
Security Interests) over any other asset, present or future including,
but not limited to, the Borrowers' rights against the Lender under the
Master Agreement or all or any part of the Borrowers' interest in any
amount payable to the Borrowers by the Lender under the Master Agreement.
10.3 NO DISPOSAL OF ASSETS. No Borrower will transfer, lease or otherwise
dispose of:
(a) all or a substantial part of its assets, whether by one transaction or a
number of transactions, whether related or not; or
(b) any debt payable to it or any other right (present, future or contingent
right) to receive a payment, including any right to damages or
compensation.
10.4 NO OTHER LIABILITIES OR OBLIGATIONS TO BE INCURRED. No Borrower will
incur any liability or obligation except liabilities and obligations:
(a) under the Finance Documents to which it is a party; and
(b) liabilities or obligations reasonably incurred in the ordinary course of
operating and chartering the Ship owned by it.
10.5 INFORMATION PROVIDED TO BE ACCURATE. All financial and other information
which is provided in writing by or on behalf of a Borrower under or in
connection with any Finance Document will be true and not misleading and
will not omit any material fact or consideration.
10.6 PROVISION OF FINANCIAL STATEMENTS. The Borrowers will send to the Lender:
(a) as soon as possible, but in no event later than 120 days after the end of
each financial year the audited accounts of the Borrowers and the audited
consolidated accounts of the Corporate Guarantor; and
27
(b) as soon as possible, but in no event later than 60 days after the end of
each quarterly period in each financial year of that Borrower, the
unaudited quarterly accounts of that Borrower and the unaudited quarterly
consolidated accounts of the Corporate Guarantor,
in each case together with a certificate in the form set out in Schedule
3 signed by a director of each Borrower confirming that the Borrowers are
as at the date of that certificate in compliance with the covenants
specified in this Agreement and the Security Documents to which these are
a party and confirming that no Event of Default or Potential Event of
Default has occurred.
10.7 FORM OF FINANCIAL STATEMENTS. All accounts and financial statements
(audited and unaudited) delivered under Clause 10.6 will:
(a) be prepared in accordance with all applicable laws and generally accepted
accounting principles consistently applied;
(b) give a true and fair view of the state of affairs of the relevant parties
at the date of those accounts and of their profit for the period to which
those accounts relate; and
(c) fully disclose or provide for all significant liabilities of the relevant
Borrower.
10.8 SHAREHOLDER AND CREDITOR NOTICES. Each Borrower will send to the Lender,
at the same time as they are despatched, copies of all communications
which are despatched to that Borrower's shareholders or creditors or any
class of them.
10.9 CONSENTS. Each Borrower will maintain in force and promptly obtain or
renew, and will promptly send certified copies to the Lender of, all
consents required:
(a) for that Borrower to perform its obligations under any Finance Document;
(b) for the validity or enforceability of any Finance Document to which it is
a party; and
(c) for that Borrower to continue to own and operate the Ship owned by it,
and
(d) for that Borrower to continue to perform its obligations under the
Bareboat Charter to which it is a party or the Gas Oracle Charter as the
case may be,
and that Borrower will comply with the terms of all such consents.
10.10 MAINTENANCE OF SECURITY INTERESTS. Each Borrower will:
(a) at its own cost, do all that it reasonably can to ensure that any Finance
Document validly creates the obligations and the Security Interests which
it purports to create; and
(b) without limiting the generality of paragraph (a), at its own cost,
promptly register, file, record or enrol any Finance Document with any
court or authority in all Pertinent Jurisdictions, pay any stamp,
registration or similar tax in all Pertinent Jurisdictions in respect of
any Finance Document, give any notice or take any other step which may be
or has become necessary or desirable for any Finance Document to be
valid, enforceable or admissible in evidence or to ensure or protect the
priority of any Security Interest which it creates.
10.11 NOTIFICATION OF LITIGATION. Each Borrower will provide the Lender with
details of any legal or administrative action involving that Borrower,
any Security Party, the Approved Manager or the Ship owned by it, her
Earnings or her Insurances and, in the case of
28
Empire and Triathlon, the Bareboat Charter to which it is a party, as
soon as such action is instituted or it becomes apparent to that Borrower
that it is likely to be instituted, unless it is clear that the legal or
administrative action cannot be considered material in the context of any
Finance Document.
10.12 NO AMENDMENT TO BAREBOAT CHARTERS, ETC. No Borrower will agree to any
amendment or supplement to, or waive or fail to enforce, the Bareboat
Charter or the Gas Oracle Charter to which it is a party or any of its
respective provisions.
10.13 PRINCIPAL PLACE OF BUSINESS. Each Borrower will maintain its place of
business, and keep its corporate documents and records, at the address
stated at the commencement of this Agreement; and no Borrower will
establish, or do anything as a result of which it would be deemed to
have, a place of business in the United Kingdom or the United States of
America.
10.14 CONFIRMATION OF NO DEFAULT. Each Borrower will, within 2 Business Days
after service by the Lender of a written request, serve on the Lender a
notice which is signed by the director of that Borrower and which:
(a) states that no Event of Default or Potential Event of Default has
occurred; or
(b) states that no Event of Default or Potential Event of Default has
occurred, except for a specified event or matter, of which all material
details are given.
10.15 NOTIFICATION OF DEFAULT. Each Borrower will notify the Lender as soon as
that Borrower becomes aware of:
(a) the occurrence of an Event of Default or a Potential Event of Default; or
(b) any matter which indicates that an Event of Default or a Potential Event
of Default may have occurred,
and will keep the Lender fully up-to-date with all developments.
10.16 PROVISION OF FURTHER INFORMATION. Each Borrower will as soon as
practicable after receiving the request, provide the Lender with any
additional financial or other information relating to:
(a) any Borrower, any Ship, any Earnings, or any Insurances, a Bareboat
Charterer, the Gas Oracle Charterer or the Corporate Guarantor; or
(b) to any other matter relevant to, or to any provision of, a Finance
Document,
which may be reasonably requested by the Lender at any time.
10.17 MINIMUM CASH BALANCE. On each Drawdown Date and on the first day of each
Interest Period (and in respect of any Interest Period of more than 6
months, six-monthly), the Borrowers shall pay into the Retention Account
an amount equal to all interest payable on each Tranche, each Advance or
the Loan during such Interest Period (or in the case of an Interest
Period exceeding 6 months, during the following 6 months or up to the end
of such Interest Period, whichever is shorter).
29
11 CORPORATE UNDERTAKINGS
11.1 GENERAL. Each Borrower also undertakes with the Lender to comply, or
procure compliance as the case may be, with the following provisions of
this Clause 11 at all times during the Security Period except as the
Lender may otherwise permit.
11.2 MAINTENANCE OF STATUS. Each Borrower will maintain its separate corporate
existence and remain in good standing under the laws of its country of
incorporation.
11.3 NEGATIVE UNDERTAKINGS. No Borrower will:
(a) carry on any business other than the ownership, chartering and operation
of the Ship owned by it; or
(b) following the occurrence of an Event of Default pay any dividend or make
any other form of distribution or effect any form of redemption, purchase
or return of share capital; or
(c) provide any form of credit or financial assistance to:
(i) a person who is directly or indirectly interested in that
Borrower's share or loan capital; or
(ii) any company in or with which such a person is directly or
indirectly interested or connected,
or enter into any transaction with or involving such a person or company
on terms which are, in any respect, less favourable to that Borrower than
those which it could obtain in a bargain made at arms' length;
(d) open or maintain any account with any bank or financial institution
except accounts with the Lender for the purposes of the Finance
Documents;
(e) issue, allot or grant any person a right to any shares in its capital or
repurchase or reduce its issued share capital;
(f) acquire any shares or other securities other than US or UK Treasury bills
and certificates of deposit issued by major North American or European
banks, or enter into any transaction in a derivative (other than any
Transactions under the Master Agreement);
(g) enter into any form of amalgamation, merger or de-merger or any form of
reconstruction or reorganisation; or
(h) permit any immediate or without change in ownership of the shares from
that existing as at the date of this Agreement.
12 INSURANCE
12.1 GENERAL. Each Borrower also undertakes with the Lender to comply, or as
the case may be, procure compliance, with the following provisions of
this Clause 12 at all times during the Security Period except as the
Lender may otherwise permit.
12.2 MAINTENANCE OF OBLIGATORY INSURANCES. Each Borrower shall keep the Ship
owned by it insured at the expense of that Borrower against:
30
(a) fire and usual marine risks (including hull and machinery and excess
risks);
(b) war risks;
(c) protection and indemnity risks; and
(d) any other risks against which the Lender considers, having regard to
practices and other circumstances prevailing at the relevant time, it
would in the opinion of the Lender be reasonable for that Borrower to
insure and which are specified by the Lender by notice to that Borrower.
12.3 TERMS OF OBLIGATORY INSURANCES. Each Borrower shall effect such
insurances:
(a) in Dollars;
(b) in the case of fire and usual marine risks and war risks, in an amount on
an agreed value basis at least the greater of (i) such amount, which when
aggregated with the amount for which any other Ship then subject to a
Mortgage is insured, is equal to 110 per cent. of the aggregate of the
Loan and the Swap Exposure and (ii) the market value of the Ship owned by
it; and
(c) in the case of oil pollution liability risks, for an aggregate amount
equal to the highest level of cover from time to time available under
basic protection and indemnity club entry (with the international group
of protection and indemnity clubs) and in the international marine
insurance market (currently $1,000,000,000);
(d) in relation to protection and indemnity risks in respect of the full
tonnage of the Ship owned by it;
(e) on approved terms; and
(f) through approved brokers and with approved insurance companies and/or
underwriters or, in the case of war risks and protection and indemnity
risks, in approved war risks and protection and indemnity risks
associations.
12.4 FURTHER PROTECTIONS FOR THE LENDER. In addition to the terms set out in
Clause 12.3, each Borrower shall procure that the obligatory insurances
shall:
(a) whenever the Lender requires, name (or be amended to name) the Lender as
additional named assured for its rights and interests, warranted no
operational interest and with full waiver of rights of subrogation
against the Lender, but without the Lender thereby being liable to pay
(but having the right to pay) premiums, calls or other assessments in
respect of such insurance;
(b) name the Lender as loss payee with such directions for payment as the
Lender may specify;
(c) provide that all payments by or on behalf of the insurers under the
obligatory insurances to the Lender shall be made without set-off,
counterclaim or deductions or condition whatsoever;
(d) provide that such obligatory insurances shall be primary without right of
contribution from other insurances which may be carried by the Lender;
31
(e) provide that the Lender may make proof of loss if any of the Borrowers
fails to do so.
12.5 RENEWAL OF OBLIGATORY INSURANCES. Each Borrower shall:
(a) at least 7 days before the expiry of any obligatory insurance effected by
it:
(i) notify the Lender of the brokers (or other insurers) and any
protection and indemnity or war risks association through or with
whom that Borrower proposes to renew that obligatory insurance and
of the proposed terms of renewal; and
(ii) obtain the Lender's approval to the matters referred to in
paragraph (i);
(b) at least 7 days before the expiry of any obligatory insurance effected by
it, renew that obligatory insurance in accordance with the Lender's
approval pursuant to paragraph (a); and
(c) procure that the approved brokers and/or the war risks and protection and
indemnity associations with which such a renewal is effected shall
promptly after the renewal notify the Lender in writing of the terms and
conditions of the renewal.
12.6 COPIES OF POLICIES; LETTERS OF UNDERTAKING. Each Borrower shall ensure
that all approved brokers provide the Lender with pro forma copies of all
policies relating to the obligatory insurances which they are to effect
or renew and of a letter or letters or undertaking in a form required by
the Lender and including undertakings by the approved brokers that:
(a) they will have endorsed on each policy, immediately upon issue, a loss
payable clause and a notice of assignment complying with the provisions
of Clause 12.4;
(b) they will hold such policies, and the benefit of such insurances, to the
order of the Lender in accordance with the said loss payable clause;
(c) they will advise the Lender immediately of any material change to the
terms of the obligatory insurances;
(d) they will notify the Lender, not less than 10 days before the expiry of
the obligatory insurances, in the event of their not having received
notice of renewal instructions from that Borrower or its agents and, in
the event of their receiving instructions to renew, they will promptly
notify the Lender of the terms of the instructions; and
(e) they will not set off against any sum recoverable in respect of a claim
relating to the Ship owned by that Borrower under such obligatory
insurances any premiums or other amounts due to them or any other person
whether in respect of that Ship or otherwise, they waive any lien on the
policies, or any sums received under them, which they might have in
respect of such premiums or other amounts, and they will not cancel such
obligatory insurances by reason of non-payment of such premiums or other
amounts, and will arrange for a separate policy to be issued in respect
of that Ship forthwith upon being so requested by the Lender.
12.7 COPIES OF CERTIFICATES OF ENTRY. Each Borrower shall ensure that any
protection and indemnity and/or war risks associations in which the Ship
owned by it is entered provides the Lender with:
(a) a certified copy of the certificate of entry for that Ship;
32
(b) a letter or letters of undertaking in such form as may be required or
approved by the Lender; and
(c) (if applicable to, or required in respect of, the relevant Ship) a
certified copy of each certificate of financial responsibility for
pollution by oil or other Environmentally Sensitive Material issued by
the relevant certifying authority in relation to that Ship.
12.8 DEPOSIT OF ORIGINAL POLICIES. Each Borrower shall ensure that all
policies relating to obligatory insurances effected by it are deposited
with the approved brokers through which the insurances are effected or
renewed.
12.9 PAYMENT OF PREMIUMS. Each Borrower shall punctually pay all premiums or
other sums payable in respect of the obligatory insurances effected by it
and produce all relevant receipts when so required by the Lender.
12.10 GUARANTEES. Each Borrower shall ensure that any guarantees required by a
protection and indemnity or war risks association are promptly issued and
remain in full force and effect.
12.11 COMPLIANCE WITH TERMS OF INSURANCES. No Borrower shall do nor omit to do
(nor permit to be done or not to be done) any act or thing which would or
might render any obligatory insurance invalid, void, voidable or
unenforceable or render any sum payable under an obligatory insurance
repayable in whole or in part; and, in particular:
(a) each Borrower shall take all necessary action and comply with all
requirements which may from time to time be applicable to the obligatory
insurances, and (without limiting the obligation contained in Clause
12.7(c)) ensure that the obligatory insurances are not made subject to
any exclusions or qualifications to which the Lender has not given its
prior approval;
(b) No Borrower shall make any changes relating to the classification or
classification society or manager or operator of the Ship owned by it
approved by the underwriters of the obligatory insurances;
(c) each Borrower shall make (and promptly supply copies to the Lender of)
all quarterly or other voyage declarations which may be required by the
protection and indemnity risks association in which the Ship owned by it
is entered to maintain cover for trading to the United States of America
and Exclusive Economic Zone (as defined in the United States Oil
Pollution Act 1990 or any other applicable legislation); and
(d) No Borrower shall employ the Ship owned by it, nor allow it to be
employed, otherwise than in conformity with the terms and conditions of
the obligatory insurances, without first obtaining the consent of the
insurers and complying with any requirements (as to extra premium or
otherwise) which the insurers specify.
12.12 ALTERATION TO TERMS OF INSURANCES. No Borrower shall either make or agree
to any alteration to the terms of any obligatory insurance nor waive any
right relating to any obligatory insurance.
12.13 SETTLEMENT OF CLAIMS. No Borrower shall settle, compromise or abandon any
claim under any obligatory insurance for Total Loss or for a Major
Casualty, and shall do all things necessary and provide all documents,
evidence and information to enable the Lender to collect or recover any
moneys which at any time become payable in respect of the obligatory
insurances.
33
12.14 PROVISION OF COPIES OF COMMUNICATIONS. Each Borrower shall provide the
Lender, promptly following the Lender's reasonable request, copies of all
written communications between that Borrower and:
(a) the approved brokers; and
(b) the approved protection and indemnity and/or war risks associations; and
(c) the approved insurance companies and/or underwriters, which relate
directly or indirectly to:
(i) that Borrower's obligations relating to the obligatory insurances
including, without limitation, all requisite declarations and
payments of additional premiums or calls; and
(ii) any credit arrangements made between that Borrower and any of the
persons referred to in paragraphs (a) or (b) relating wholly or
partly to the effecting or maintenance of the obligatory insurances.
12.15 PROVISION OF INFORMATION. In addition, each Borrower shall promptly
provide the Lender (or any persons which it may designate) with any
information which the Lender (or any such designated person) requests for
the purpose of:
(a) obtaining or preparing any report from an independent marine insurance
broker as to the adequacy of the obligatory insurances effected or
proposed to be effected; and/or
(b) effecting, maintaining or renewing any such insurances as are referred to
in Clause 12.16 below or dealing with or considering any matters relating
to any such insurances,
and the Borrowers shall, forthwith upon demand, indemnify the Lender in
respect of all fees and other expenses incurred by or for the account of
the Lender in connection with any such report as is referred to in
paragraph (a).
12.16 MORTGAGEE'S INTEREST AND ADDITIONAL PERILS. The Lender shall be entitled
from time to time to effect, maintain and renew a mortgagee's interest
additional perils insurance in respect of each Ship, a mortgagee's
political risks insurance and a mortgagee's interest marine insurance
each in an amount equal to 110 per cent. of the aggregate of the Loan and
the Swap Exposure from time to time and on such terms, through such
insurers and generally in such manner as the Lender may from time to time
consider appropriate and the Borrowers shall upon demand fully indemnify
the Lender in respect of all premiums and other expenses which are
incurred in connection with or with a view to effecting, maintaining or
renewing any such insurance or dealing with, or considering, any matter
arising out of any insurance.
13 SHIP COVENANTS
13.1 GENERAL. Each Borrower also undertakes with the Lender to comply with, or
to procure compliance with (as the case may be), with the following
provisions of this Clause 13 at all times during the Security Period,
except as the Lender may otherwise permit, such permission in the case of
Clause 13.2 and 13.12(e) to be in writing.
13.2 SHIP'S NAME AND REGISTRATION. Each Borrower shall keep the Ship owned by
it registered in its name under:
34
(a) in the case of "SWEET DREAM", Bahamas flag;
(b) in the case of "GAS ORACLE", ▇▇▇▇▇▇▇▇ Islands flag;
(c) in the case of "GAS CATHAR", Malta flag;
(d) in the case of "GAS LEGACY", Cyprus flag; and
(e) in the case of each of "GAS SINCERITY" and "GAS MARATHON", Panama flag
and shall not do or allow to be done anything as a result of which such
registration might be cancelled or imperilled; and shall not change the
name or port of registry of the Ship owned by it.
13.3 REPAIR AND CLASSIFICATION. Each Borrower shall keep the Ship owned by it
in a good and safe condition and state of repair:
(a) consistent with first-class ship ownership and management practice;
(b) so as to maintain that Ship's present class (being the highest
classification available for a vessel of the same type, age and
specification as the Ship with a classification society acceptable to the
Lender which is a member of the International Association of
Classification Societies) free of overdue recommendations and conditions
affecting the Ship's class; and
(c) so as to comply with all laws and regulations applicable to vessels
registered at ports in the flag state relevant to that Ship or to vessels
trading to any jurisdiction to which that Ship may trade from time to
time, including but not limited to the ISM Code.
13.4 MODIFICATION. No Borrower shall make or allow any modification or repairs
to, or replacement of, any Ship or equipment installed on any Ship which
would or might materially alter the structure, type or performance
characteristics of any Ship or materially reduce its value.
13.5 REMOVAL OF PARTS. No Borrower shall remove or allow the removal of any
material part of any Ship, or any item of equipment installed on any
Ship, unless the part or item so removed is forthwith replaced by a
suitable part or item which is in the same condition as or better
condition than the part or item removed, is free from any Security
Interest or any right in favour of any person other than the Lender and
becomes on installation on the relevant Ship the property of the relevant
Borrower and subject to the security constituted by the relevant Mortgage
PROVIDED THAT a Borrower may install equipment owned by a third party if
the equipment can be removed without any risk of damage to the Ship owned
by it.
13.6 SURVEYS. Each Borrower shall submit the Ship owned by it regularly to all
periodical or other surveys which may be required for classification
purposes and, if so required by the Lender provide the Lender, with
copies of all survey reports.
13.7 INSPECTION. Each Borrower shall permit the Lender (by surveyors or other
persons appointed by it for that purpose) to board the Ship owned by it
at all reasonable times to inspect its condition or to satisfy themselves
about proposed or executed repairs and shall afford all proper facilities
for such inspections.
13.8 PREVENTION OF AND RELEASE FROM ARREST. Each Borrower shall promptly
discharge:
35
(a) all liabilities which give or may give rise to maritime or possessory
liens on or claims enforceable against the Ship owned by it, her Earnings
or her Insurances;
(b) all taxes, dues and other amounts charged in respect of the Ship owned by
it, her Earnings or her Insurances; and
(c) all other outgoings whatsoever in respect of the Ship owned by it, her
Earnings or her Insurances,
and, forthwith upon receiving notice of the arrest of the Ship owned by
it, or of its detention in exercise or purported exercise of any lien or
claim, that Borrower shall procure its release by providing bail or
otherwise as the circumstances may require.
13.9 COMPLIANCE WITH LAWS ETC. Each Borrower shall:
(a) comply, or procure compliance with the ISM Code, all Environmental Laws
and all other laws or regulations relating to the Ship owned by it, its
ownership, operation and management or to the business of that Borrower;
(b) not employ the Ship owned by it nor allow its employment in any manner
contrary to any law or regulation in any relevant jurisdiction including
but not limited to the ISM Code; and
(c) in the event of hostilities in any part of the world (whether war is
declared or not), not cause or permit the Ship owned by it to enter or
trade to any zone which is declared a war zone by any government or by
the Ship's war risks insurers unless the prior written consent of the
Lender has been given and that Borrower has (at its expense) effected any
special, additional or modified insurance cover and provided the Lender
with evidence that its Ship maintains sufficient cover to enter into and
trade to the war zone.
13.10 PROVISION OF INFORMATION. Each Borrower shall promptly provide the Lender
with any information which it requests regarding:
(a) the Ship owned by it, its employment, position and engagements;
(b) the Earnings and payments and amounts due to the master and crew of the
Ship owned by it;
(c) any expenses incurred, or likely to be incurred, in connection with the
operation, maintenance or repair of the Ship owned by it and any payments
made in respect of that Ship;
(d) any towages and salvages;
(e) its compliance, the Approved Manager's compliance, the compliance of the
Ship owned by it and, in the case of each of "SWEET DREAM" and "GAS
MARATHON", the compliance by the Bareboat Charterer of that Ship, with
the ISM Code,
and, upon the Lender's request, provide copies of any current charter
relating to the Ship owned by it, of any current charter guarantee and of
the Ship's Document of Compliance.
13.11 NOTIFICATION OF CERTAIN EVENTS. Each Borrower shall immediately notify
the Lender by fax, confirmed forthwith, by letter of:
36
(a) any casualty which is or is likely to be or to become a Major Casualty;
(b) any occurrence as a result of which the Ship owned by it has become or
is, by the passing of time or otherwise, likely to become a Total Loss;
(c) any requirement or recommendation made by any insurer or classification
society or by any competent authority which is not immediately complied
with;
(d) any arrest or detention of the Ship owned by it, any exercise or
purported exercise of any lien on that Ship or its Earnings or any
requisition of that Ship for hire;
(e) any intended dry docking of the Ship owned by it which will, or is
reasonably expected to, last more than 14 days;
(f) any Environmental Claim made against that Borrower or in connection with
the Ship owned by it, or any Environmental Incident;
(g) any claim for breach of the ISM Code being made against that Borrower,
the Approved Manager or either Bareboat Charterer (as the case may be) or
otherwise in connection with the Ship owned by it; or
(h) any other matter, event or incident, actual or threatened, the effect of
which will or could lead to the ISM Code not being complied with,
and that Borrower shall keep the Lender advised in writing on a regular
basis and in such detail as the Lender shall require of that Borrower's,
the Approved Manager's, the relevant Bareboat Charterer's or any other
person's response to any of those events or matters.
13.12 RESTRICTIONS ON CHARTERING, APPOINTMENT OF MANAGERS ETC. No Borrower
shall, in relation to the Ship owned by it:
(a) (other than in the case of each of "SWEET DREAM" and "GAS MARATHON",
pursuant to the Bareboat Charter relative to each such Ship), let that
Ship on demise charter for any period;
(b) (other than in the case of "GAS ORACLE" pursuant to the Gas Oracle
Charter), enter into any time or consecutive voyage charter in respect of
that Ship for a term which exceeds, or which by virtue of any optional
extensions may exceed, 18 months;
(c) enter into any charter in relation to that Ship under which more than 2
months' hire (or the equivalent) is payable in advance;
(d) charter that Ship otherwise than on bona fide arm's length terms at the
time when that Ship is fixed;
(e) appoint a manager of that Ship other than the Approved Manager or agree
to any alteration to the terms of the Approved Manager's appointment;
(f) de-activate or lay up that Ship; or
(g) put that Ship into the possession of any person for the purpose of work
being done upon her in an amount exceeding or likely to exceed $500,000
(or the equivalent in any other currency) unless that person has first
given to the Lender and in terms satisfactory to it a
37
written undertaking not to exercise any lien on that Ship or the Earnings
for the cost of such work or any other reason.
13.13 NOTICE OF MORTGAGE. Each Borrower shall:
(a) keep the relevant Mortgage registered against the Ship owned by it as a
valid first priority or, as the case may be, first preferred mortgage;
and
(b) carry on board that Ship a certified copy of the relevant Mortgage and
place and maintain in a conspicuous place in the navigation room and the
Master's cabin of that Ship a framed printed notice stating that that
Ship is mortgaged by that Borrower to the Lender.
13.14 SHARING OF EARNINGS. No Borrower shall enter into any agreement or
arrangement for the sharing of any Earnings (other than with any other
Security Party).
13.15 TIME CHARTER ASSIGNMENT. If any Borrower enters into any Charter (subject
to obtaining the consent of the Lender in accordance with Clause
13.12(b)), the relevant Borrower shall, at the request of the Lender,
execute in favour of the Lender a Charter Assignment in relation to such
Charter, and shall deliver to the Lender such other documents equivalent
to those referred to at paragraphs 3, 4 and 5 of Part A of Schedule 2
hereof as the Lender may require.
13.16 COMPLIANCE WITH INSURANCE AND SHIP COVENANTS. The Borrowers shall procure
the performance by each Bareboat Charterer of all the covenants and
undertakings to be observed, performed and complied with, by or on behalf
of that Bareboat Charterer under Clause 12 (other than Clause 12.16) and
Clause 13 and, to the extent that the Bareboat Charterer duly performs
and discharges its obligations set out in this Clause 13.16 or to the
further extent that the Bareboat Charterer, by its performance of the
Bareboat Charter to which it is a party, performs and discharges further
obligations of the Borrowers contained in the Finance Documents, then
such performance and discharge shall, to that extent, be deemed due
performance and discharge of the Borrowers' obligations under the Finance
Documents.
13.17 FREQUENCY OF VALUATIONS. The Borrowers acknowledge and agree that, for
the purpose of ascertaining the Market Values of the Ships for use in the
calculation of the Asset Cover Ratio pursuant to Clause 4.12, the Lender
may commission valuations of the Ships in accordance with Clause 14.3 up
to once per annum.
14 SECURITY COVER
14.1 MINIMUM REQUIRED SECURITY COVER. Clause 14.2 applies if the Lender
notifies the Borrowers that the Security Cover Ratio is below 1.25 to 1.
14.2 PROVISION OF ADDITIONAL SECURITY; PREPAYMENT. If the Lender serves a
notice on the Borrowers under Clause 14.1, the Borrowers shall, within 1
month after the date on which the Lender's notice is served, either:
(a) provide, or ensure that a third party provides, additional security
which, in the reasonable opinion of the Lender, has a net realisable
value at least equal to the shortfall in the Security Cover Ratio and is
documented in such terms as the Lender may approve or require; or
(b) prepay such part (at least) of the Loan as will eliminate the shortfall
in the Security Cover Ratio.
38
14.3 VALUATION OF SHIPS. The market value of a Ship at any date is that shown
by the arithmetic average of two valuations, each prepared:
(a) in Dollars;
(b) as at a date not more than 14 days previously;
(c) by one of the following independent sale and purchase shipbrokers:
(i) Arrow Shipbroking;
(ii) Fearnleys AS;
(iii) ▇. ▇▇▇▇▇▇▇▇ & Company Limited; and
(iv) ▇▇▇▇▇▇▇▇▇'▇ Limited,
which the Borrower has appointed and the Lender has approved for the
purpose;
(d) with or without physical inspection of the relevant Ship (as the Lender
may require);
(e) on the basis of a sale for prompt delivery for cash on normal arm's
length commercial terms as between a willing seller and a willing buyer,
free of any existing charter or other contract of employment; and
(f) after deducting the estimated amount of the usual and reasonable expenses
which would be incurred in connection with the sale,
PROVIDED THAT if such two valuations differ by more than 15 per cent.
then the Lender will obtain a third independent valuation from a third
independent shipbroker from those listed in Clause 14.3(c) and the market
value of the relevant Ship shall be the arithmetic mean of such 3
valuations.
14.4 VALUE OF ADDITIONAL VESSEL SECURITY. The net realisable value of any
additional security which is provided under Clause 14.2 and which
consists of a Security Interest over a vessel shall be that shown by a
valuation complying with the requirements of Clause 14.3.
14.5 VALUATIONS BINDING. Any valuation under Clause 14.2, 14.3 or 14.4 shall
be binding and conclusive as regards the Borrowers, as shall be any
valuation which the Lender makes of any additional security which does
not consist of or include a Security Interest.
14.6 PROVISION OF INFORMATION. The Borrowers shall promptly provide the Lender
and any shipbroker or expert acting under Clause 13.17, 14.3 or 14.4 with
any information which the Lender or the shipbroker or expert may request
for the purposes of the valuation; and, if the Borrowers fail to provide
the information by the date specified in the request, the valuation may
be made on any basis and assumptions which the shipbroker or the Lender
(or the expert appointed by it) considers prudent.
14.7 PAYMENT OF VALUATION EXPENSES. Without prejudice to the generality of the
Borrowers' obligations under Clauses 19.2, 19.3 and 20.3, the Borrowers
shall, on demand, pay the Lender the amount of the fees and expenses of
any shipbroker or expert instructed by the Lender under this Clause and
Clause 13.17 and all legal and other expenses incurred by the Lender in
connection with any matter arising out of this Clause and Clause 13.17.
39
14.8 APPLICATION OF PREPAYMENT. Clause 7 shall apply in relation to any
prepayment pursuant to Clause 14.2(b).
15 PAYMENTS AND CALCULATIONS
15.1 CURRENCY AND METHOD OF PAYMENTS. All payments to be made by any Borrower
to the Lender under a Finance Document shall be made to the Lender:
(a) by not later than 11.00 a.m. (New York City time) on the due date;
(b) in same day Dollar funds settled through the New York Clearing House
Interbank Payments System (or in such other Dollar funds and/or settled
in such other manner as the Lender shall specify as being customary at
the time for the settlement of international transactions of the type
contemplated by this Agreement); and
(c) to the account of the Lender at The Bank of New York of ▇▇▇▇ ▇▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇, ▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇▇, U.S.A. (SWIFT address: ▇▇▇▇▇▇▇▇;
Account No. 890-0429-585), or to such other account with such other bank
as the Lender may from time to time notify to the Borrowers.
15.2 PAYMENT ON NON-BUSINESS DAY. If any payment by any Borrower under a
Finance Document would otherwise fall due on a day which is not a
Business Day:
(a) the due date shall be extended to the next succeeding Business Day; or
(b) if the next succeeding Business Day falls in the next calendar month, the
due date shall be brought forward to the immediately preceding Business
Day,
and interest shall be payable during any extension under paragraph (a) at
the rate payable on the original due date.
15.3 BASIS FOR CALCULATION OF PERIODIC PAYMENTS. All interest and any other
payments under any Finance Document which are of an annual or periodic
nature shall accrue from day to day and shall be calculated on the basis
of the actual number of days elapsed and a 360 day year.
15.4 LENDER ACCOUNTS. The Lender shall maintain an account showing the amounts
advanced by the Lender and all other sums owing to the Lender from the
Borrowers and each Security Party under the Finance Documents and all
payments in respect of those amounts made by the Borrowers and any
Security Party.
15.5 ACCOUNTS PRIMA FACIE EVIDENCE. If the account maintained under Clauses
15.4 shows an amount to be owing by a Borrower or a Security Party to the
Lender, that account shall be prima facie evidence that that amount is
owing to the Lender.
16 APPLICATION OF RECEIPTS
16.1 NORMAL ORDER OF APPLICATION. Except as any Finance Document may otherwise
provide, any sums which are received or recovered by the Lender under or
by virtue of any Finance Document shall be applied:
(a) FIRST: in or towards satisfaction of any amounts then due and payable
under the Finance Documents (or any of them) in such order of application
and/or such proportions as the Lender may specify by notice to the
Borrowers and the Security Parties;
40
(b) SECONDLY: in retention of an amount equal to any amount not then due and
payable under any Finance Document but which the Lender, by notice to the
Borrowers and the Security Parties, states in its opinion will or may
become due and payable in the future and, upon those amounts becoming due
and payable, in or towards satisfaction of them in accordance with the
provisions of this Clause; and
(c) THIRDLY: any surplus shall be paid to the Borrowers or to any other
person appearing to be entitled to it.
16.2 VARIATION OF ORDER OF APPLICATION. The Lender may, at its reasonable
discretion, by notice to the Borrowers and the Security Parties, provide
for a different manner of application from that set out in Clause 16.1
either as regards a specified sum or sums or as regards sums in a
specified category or categories.
16.3 NOTICE OF VARIATION OF ORDER OF APPLICATION. The Lender may give notices
under Clause 16.2 from time to time; and such a notice may be stated to
apply not only to sums which may be received or recovered in the future,
but also to any sum which has been received or recovered on or after the
third Business Day before the date on which the notice is served.
16.4 APPROPRIATION RIGHTS OVERRIDDEN. This Clause 16 and any notice which the
Lender gives under Clause 16.2 shall override any right of appropriation
possessed, and any appropriation made, by any Borrower or any Security
Party.
17 APPLICATION OF EARNINGS
17.1 PAYMENT OF EARNINGS. Each Borrower undertakes with the Lender to ensure
that, throughout the Security Period:
(a) (subject only to the provisions of the General Assignments to which that
Borrower is a party), all the Earnings of the Ship owned by it are paid
to the relevant Earnings Account; and
(b) all payments by the Lender to a Borrower under each Transaction are paid
to the Earnings Accounts (or any of them).
17.2 RELEASE OF SURPLUS EARNINGS. Subject to no Event of Default or Potential
Event of Default then having occurred (after which the provisions of the
Accounts Security Deed apply), Earnings for the time being credited to
the Earnings Accounts shall be freely available to the Borrowers to be
used firstly to pay the costs of operation of the Ships and then, as to
any remaining surpluses, for any other purposes permitted by the terms of
this Agreement.
17.3 INTEREST ACCRUED ON EARNINGS AND RETENTION ACCOUNTS. Any credit balances
on each Earnings Account and the Retention Account shall bear interest at
the rate from time to time offered by the Lender to its customers for
Dollar deposits of similar amounts and for periods similar to those for
which such balances appear to the Lender likely to remain on the relevant
Account.
17.4 RELEASE OF ACCRUED INTEREST. Interest accruing under Clause 17.3 shall be
credited to the Earnings Accounts (or any of them) monthly unless an
Event of Default or Potential Event of Default has occurred.
17.5 LOCATION OF ACCOUNTS. Each Borrower shall promptly:
41
(a) comply with any requirement of the Lender as to the location or
re-location of an Earnings Account or the Retention Account (or any of
them); and
(b) execute any documents which the Lender specifies to create or maintain in
favour of the Lender a Security Interest over (and/or rights of set-off,
consolidation or other rights in relation to) an Earnings Account and the
Retention Account.
17.6 DEBITS FOR EXPENSES ETC. The Lender shall be entitled (but not obliged)
from time to time to debit the Earnings Accounts without prior notice in
order to discharge any amount due and payable to it under Clause 19 or 20
or payment of which it has become entitled to demand under Clause 19 or
20.
17.7 BORROWERS' OBLIGATIONS UNAFFECTED. The provisions of this Clause 17 do
not affect:
(a) the liability of the Borrowers to make payments of principal and interest
on the due dates; or
(b) either other liability or obligation of the Borrowers or any Security
Party under any Finance Document.
18 EVENTS OF DEFAULT
18.1 EVENTS OF DEFAULT. An Event of Default occurs if:
(a) any Borrower or any Security Party fails to pay when due or (if so
payable) on demand any sum payable under a Finance Document or under any
document relating to a Finance Document; or
(b) any breach occurs of Clause 8.2, 10.2, 10.3, 10.17, 11.2, 11.3 or 14.1;
or
(c) any breach by any Borrower or any Security Party occurs of any provision
of a Finance Document (other than a breach covered by paragraph (a) or
(b)) if, in the opinion of the Lender, such default is capable of remedy
and such default continues unremedied 10 days after written notice from
the Lender requesting action to remedy the same; or
(d) (subject to any applicable grace period specified in any Finance
Document) any breach by any of the Borrowers or any Security Party occurs
of any provision of a Finance Document (other than a breach caused by
paragraph (a), (b) or (c)); or
(e) any representation, warranty or statement made by, or by an officer of, a
Borrower or a Security Party in a Finance Document or in the Drawdown
Notice or any other notice or document relating to a Finance Document is
untrue or misleading when it is made; or
(f) any of the following occurs in relation to any Financial Indebtedness of
a Relevant Person:
(i) any Financial Indebtedness of a Relevant Person is not paid when
due or, if so payable, on demand; or
(ii) any Financial Indebtedness of a Relevant Person becomes due and
payable or capable of being declared due and payable prior to its
stated maturity date as a consequence of any event of default; or
42
(iii) a lease, hire purchase agreement or charter creating any Financial
Indebtedness of a Relevant Person is terminated by the lessor or
owner or becomes capable of being terminated as a consequence of
any termination event; or
(iv) any overdraft, loan, note issuance, acceptance credit, letter of
credit, guarantee, foreign exchange or other facility, or any swap
or other derivative contract or transaction, relating to any
Financial Indebtedness of a Relevant Person ceases to be available
or becomes capable of being terminated as a result of any event of
default, or cash cover is required, or becomes capable of being
required, in respect of such a facility as a result of any event
of default; or
(v) any Security Interest securing any Financial Indebtedness of a
Relevant Person becomes enforceable; or
(g) any of the following occurs in relation to a Relevant Person:
(i) a Relevant Person becomes, in the reasonable opinion of the
Lender, unable to pay its debts as they fall due; or
(ii) any assets of a Relevant Person are subject to any form of
execution, attachment, arrest, sequestration or distress in
respect of a sum of, or sums aggregating, $500,000 or more or
the equivalent in another currency and such execution,
attachment, arrest, sequestration or distress is not withdrawn
within 14 days of its commencement; or
(iii) any administrative or other receiver is appointed over any asset
of a Relevant Person; or
(iv) a Relevant Person makes any formal declaration of bankruptcy or
any formal statement to the effect that it is insolvent or
likely to become insolvent, or a winding up or administration
order is made in relation to a Relevant Person, or the members
or directors of a Relevant Person pass a resolution to the
effect that it should be wound up, placed in administration or
cease to carry on business, save that this paragraph does not
apply to a fully solvent winding up of a Relevant Person other
than a Borrower which is, or is to be, effected for the purposes
of an amalgamation or reconstruction previously approved by the
Lender and effected not later than 3 months after the
commencement of the winding up; or
(v) a petition is presented in any Pertinent Jurisdiction for the
winding up or administration, or the appointment of a
provisional liquidator, of a Relevant Person unless the petition
is being contested in good faith and on substantial grounds and
is dismissed or withdrawn within 30 days of the presentation of
the petition; or
(vi) a Relevant Person petitions a court, or presents any proposal
for, any form of judicial or non-judicial suspension or deferral
of payments, reorganisation of its debt (or certain of its debt)
or arrangement with all or a substantial proportion (by number
or value) of its creditors or of any class of them or any such
suspension or deferral of payments, reorganisation or
arrangement is effected by court order, contract or otherwise;
or
(vii) any meeting of the members or directors of a Relevant Person is
summoned for the purpose of considering a resolution or proposal
to authorise or take any action of a type described in
paragraphs (iii), (iv), (v) or (vi); or
43
(viii) in a Pertinent Jurisdiction other than England, any event occurs
or any procedure is commenced which, in the opinion of the
Lender, is similar to any of the foregoing; or
(h) any Borrower ceases or suspends carrying on its business or a part of its
business which, in the opinion of the Lender, is material in the context
of this Agreement; or
(i) it becomes unlawful in any Pertinent Jurisdiction or impossible:
(i) for any Borrower or any Security Party to discharge any liability
under a Finance Document or to comply with any other obligation
which the Lender considers material under a Finance Document; or
(ii) for the Lender to exercise or enforce any right under, or to
enforce any Security Interest created by, a Finance Document; or
(j) any consent necessary to enable any Borrower or either Bareboat Charterer
to own, operate or charter the Ship owned or chartered by it (as the case
may be) or to enable any Borrower or any Security Party to comply with
any provision which the Lender considers material of a Finance Document,
a Bareboat Charter is not granted, expires without being renewed, is
revoked or becomes liable to revocation or any condition of such a
consent is not fulfilled; or
(k) any provision which the Lender considers, in its reasonable opinion,
material of a Finance Document proves to have been or becomes invalid or
unenforceable, or a Security Interest created by a Finance Document
proves to have been or becomes invalid or unenforceable or such a
Security Interest proves to have ranked after, or loses its priority to,
another Security Interest or any other third party claim or interest; or
(l) the security constituted by a Finance Document is in any way imperilled
or in jeopardy; or
(m) an Event of Default (as defined in Section 14 of the Master Agreement)
occurs;
(n) the Master Agreement is terminated, cancelled, suspended, rescinded or
revoked or otherwise ceases to remain in full force and effect for any
reason except with the consent of the Lender; or
(o) any other event occurs or any other circumstances arise or develop
including, without limitation:
(i) a change in the financial position, state of affairs or prospects
of any Borrower, the ultimate beneficial shareholder of each
Borrower or the Corporate Guarantor; or
(ii) any accident or other event involving any Ship or another vessel
owned, chartered or operated by a Relevant Person,
in the light of which the Lender reasonably considers that there is a
significant risk that the Borrowers or the Corporate Guarantor are, or
will later become, unable to discharge their liabilities under the
Finance Documents as they fall due.
18.2 ACTIONS FOLLOWING AN EVENT OF DEFAULT. On, or at any time after, the
occurrence of an Event of Default the Lender may:
44
(a) serve on the Borrowers a notice stating that all obligations of the
Lender to the Borrowers under this Agreement are terminated; and/or
(b) serve on the Borrowers a notice stating that the Loan, all accrued
interest and all other amounts accrued or owing under this Agreement are
immediately due and payable or are due and payable on demand; and/or
(c) take any other action which, as a result of the Event of Default or any
notice served under paragraph (a) or (b), the Lender is entitled to take
under any Finance Document or any applicable law.
18.3 TERMINATION OF COMMITMENT. On the service of a notice under Clause
18.2(a) the Commitment, and all other obligations of the Lender to the
Borrowers under this Agreement, shall terminate.
18.4 ACCELERATION OF LOAN. On the service of a notice under Clause 18.2(b),
the Loan, all accrued interest and all other amounts accrued or owing
from the Borrowers or any Security Party under this Agreement and every
other Finance Document shall become immediately due and payable or, as
the case may be, payable on demand.
18.5 MULTIPLE NOTICES; ACTION WITHOUT NOTICE. The Lender may serve notices
Clauses 18.2(a) and (b) simultaneously or on different dates and it may
take any action referred to in Clause 18.2 if no such notice is served or
simultaneously with or at any time after the service of both or either of
such notices.
18.6 EXCLUSION OF LENDER LIABILITY. Neither the Lender nor any receiver or
manager appointed by the Lender, shall have any liability to a Borrower
or a Security Party:
(a) for any loss caused by an exercise of rights under, or enforcement of a
Security Interest created by, a Finance Document or by any failure or
delay to exercise such a right or to enforce such a Security Interest; or
(b) as mortgagee in possession or otherwise, for any income or principal
amount which might have been produced by or realised from any asset
comprised in such a Security Interest or for any reduction (however
caused) in the value of such an asset,
except that this does not exempt the Lender or a receiver or manager from
liability for losses shown to have been caused directly and mainly by the
dishonesty or the wilful misconduct of the Lender's own officers and
employees or (as the case may be) such receiver's or manager's own
partners or employees.
18.7 RELEVANT PERSONS. In this Clause 18 a "RELEVANT PERSON" means a Borrower,
a Security Party, and any company which is a subsidiary of the Corporate
Guarantor or a Borrower.
18.8 INTERPRETATION. In Clause 18.1(f) references to an event of default or a
termination event include any event, howsoever described, which is
similar to an event of default in a facility agreement or a termination
event in a finance lease; and in Clause 18.1(g) "PETITION" includes an
application.
19 FEES AND EXPENSES
19.1 ARRANGEMENT FEE. The Borrowers shall pay to the Lender on the date of
this Agreement, a non-refundable arrangement fee of $95,000.
45
19.2 COSTS OF NEGOTIATION, PREPARATION ETC. The Borrowers shall pay to the
Lender in a timely manner the amount of all expenses incurred by the
Lender in connection with the negotiation, preparation, execution or
registration of any Finance Document or any related document or with any
transaction contemplated by a Finance Document or a related document.
19.3 COSTS OF VARIATIONS, AMENDMENTS, ENFORCEMENT ETC. The Borrowers shall pay
to the Lender, on the Lender's demand, the amount of all expenses
incurred by the Lender in connection with:
(a) any amendment or supplement to a Finance Document, or any proposal for
such an amendment to be made;
(b) any consent or waiver by the Lender concerned under or in connection with
a Finance Document, or any request for such a consent or waiver;
(c) the valuation of any security provided or offered under Clause 14 or any
other matter relating to such security; or
(d) any step taken by the Lender with a view to the protection, exercise or
enforcement of any right or Security Interest created by a Finance
Document or for any similar purpose.
There shall be recoverable under paragraph (d) the full amount of all
legal expenses, whether or not such as would be allowed under rules of
court or any taxation or other procedure carried out under such rules.
19.4 DOCUMENTARY TAXES. The Borrowers shall promptly pay any tax payable on or
by reference to any Finance Document, and shall, on the Lender's demand,
fully indemnify the Lender against any claims, expenses, liabilities and
losses resulting from any failure or delay by the Borrowers to pay such a
tax.
19.5 CERTIFICATION OF AMOUNTS. A notice which is signed by 2 officers of the
Lender, which states that a specified amount, or aggregate amount, is due
to the Lender under this Clause 19 and which indicates (without
necessarily specifying a detailed breakdown) the matters in respect of
which the amount, or aggregate amount, is due shall be prima facie
evidence that the amount, or aggregate amount, is due.
20 INDEMNITIES
20.1 INDEMNITIES REGARDING BORROWING AND REPAYMENT OF LOAN. The Borrowers
shall fully indemnify made or brought against the Lender on its demand in
respect of all claims, expenses, liabilities and losses which are
incurred by the Lender, or which the Lender reasonably and with due
diligence estimates that it will incur, as a result of or in connection
with:
(a) a Tranche or an Advance not being borrowed on the date specified in the
Drawdown Notice for any reason other than a default by the Lender;
(b) the receipt or recovery of all or any part of the Loan or an overdue sum
otherwise than on the last day of an Interest Period or other relevant
period;
(c) any failure (for whatever reason) by the Borrowers to make payment of any
amount due under a Finance Document on the due date or, if so payable, on
demand (after giving
46
credit for any default interest paid by the Borrowers on the amount
concerned under Clause 6);
(d) the occurrence and/or continuance of an Event of Default or a Potential
Event of Default and/or the acceleration of repayment of the Loan under
Clause 18,
and in respect of any tax (other than tax on its overall net income) for
which the Lender is liable in connection with any amount paid or payable
to the Lender (whether for its own account or otherwise) under any
Finance Document.
20.2 BREAKAGE COSTS. Without limiting its generality, Clause 20.1 covers any
claim, expense, liability or loss, including a loss of a prospective
profit, incurred by the Lender:
(a) in liquidating or employing deposits from third parties acquired or
arranged to fund or maintain all or any part of the Loan and/or any
overdue amount (or an aggregate amount which includes the Loan or any
overdue amount); and
(b) in terminating, or otherwise in connection with, any interest and/or
currency swap or any other transaction entered into (whether with another
legal entity or with another office or department of the Lender) to hedge
any exposure arising under this Agreement or a number of transactions of
which this Agreement is one.
20.3 MISCELLANEOUS INDEMNITIES. The Borrowers shall fully indemnify the Lender
on its demand in respect of all claims, expenses, liabilities and losses
which may be made or brought against or incurred by the Lender, in any
country, as a result of or in connection with:
(a) any action taken, or omitted or neglected to be taken, under or in
connection with any Finance Document by the Lender or by any receiver
appointed under a Finance Document;
(b) any other Pertinent Matter,
other than claims, expenses, liabilities and losses which are shown to
have been directly and mainly caused by the dishonesty or wilful
misconduct of the officers or employees of the Lender.
Without prejudice to its generality, this Clause 20.3 covers any claims,
expenses, liabilities and losses which arise, or are asserted, under or
in connection with any law relating to safety at sea, the ISM Code or any
Environmental Law.
20.4 CURRENCY INDEMNITY. If any sum due from any Borrower or any Security
Party to the Lender under a Finance Document or under any order or
judgment relating to a Finance Document has to be converted from the
currency in which the Finance Document provided for the sum to be paid
(the "CONTRACTUAL CURRENCY") into another currency (the "PAYMENT
CURRENCY") for the purpose of:
(a) making or lodging any claim or proof against any Borrower or any Security
Party, whether in its liquidation, any arrangement involving it or
otherwise; or
(b) obtaining an order or judgment from any court or other tribunal; or
(c) enforcing any such order or judgment,
47
the Borrowers shall indemnify the Lender against the loss arising when
the amount of the payment actually received by the Lender is converted at
the available rate of exchange into the Contractual Currency.
In this Clause 20.4, the "AVAILABLE RATE OF EXCHANGE" means the rate at
which the Lender is able at the opening of business (London time) on the
Business Day after it receives the sum concerned to purchase the
Contractual Currency with the Payment Currency.
This Clause 20.4 creates a separate liability of the Borrowers which is
distinct from their other liabilities under the Finance Documents and
which shall not be merged in any judgment or order relating to those
other liabilities.
20.5 APPLICATION OF MASTER AGREEMENT. For the avoidance of doubt, Clause 20.4
does not apply in respect of sums due from the Borrowers to the Lender
under or in connection with the Master Agreement as to which sums the
provisions of Section 8 (Contractual Currency) of the Master Agreement
shall apply.
20.6 CERTIFICATION OF AMOUNTS. A notice which is signed by 2 officers of the
Lender, which states that a specified amount, or aggregate amount, is due
to the Lender under this Clause 20 and which indicates (without
necessarily specifying a detailed breakdown) the matters in respect of
which the amount, or aggregate amount, is due shall be prima facie
evidence that the amount, or aggregate amount, is due.
21 NO SET-OFF OR TAX DEDUCTION
21.1 NO DEDUCTIONS. All amounts due from the Borrowers under a Finance
Document shall be paid:
(a) without any form of set-off, cross-claim or condition; and
(b) free and clear of any tax deduction except a tax deduction which a
Borrower is required by law to make.
21.2 GROSSING-UP FOR TAXES. If a Borrower is required by law to make a tax
deduction from any payment:
(a) that Borrower shall notify the Lender as soon as it becomes aware of the
requirement;
(b) that Borrower shall pay the tax deducted to the appropriate taxation
authority promptly, and in any event before any fine or penalty arises;
and
(c) the amount due in respect of the payment shall be increased by the amount
necessary to ensure that the Lender receives and retains (free from any
liability relating to the tax deduction) a net amount which, after the
tax deduction, is equal to the full amount which it would otherwise have
received.
21.3 EVIDENCE OF PAYMENT OF TAXES. Within one month after making any tax
deduction, the Borrower concerned shall deliver to the Lender documentary
evidence satisfactory to the Lender that the tax had been paid to the
appropriate taxation authority.
21.4 EXCLUSION OF TAX ON OVERALL NET INCOME. In this Clause 21 "TAX DEDUCTION"
means any deduction or withholding for or on account of any present or
future tax except tax on the Lender's overall net income.
48
21.5 APPLICATION OF MASTER AGREEMENT. For the avoidance of doubt, Clause 21
does not apply in respect of sums due from the Borrowers to the Lender
under or in connection with the Master Agreement as to which sums the
provisions of Section 2(d) (Deduction or Withholding for Tax) of the
Master Agreement shall apply.
22 ILLEGALITY, ETC
22.1 ILLEGALITY. This Clause 22 applies if the Lender notifies the Borrowers
that it has become, or will with effect from a specified date, become:
(a) unlawful or prohibited as a result of the introduction of a new law, an
amendment to an existing law or a change in the manner in which an
existing law is or will be interpreted or applied; or
(b) contrary to, or inconsistent with, any regulation,
for the Lender to maintain or give effect to any of its obligations under
this Agreement in the manner contemplated by this Agreement.
22.2 NOTIFICATION AND EFFECT OF ILLEGALITY. On the Lender notifying the
Borrowers under Clause 22.1, the Commitment shall terminate; and
thereupon or, if later, on the date specified in the Lender's notice
under Clause 22.1 as the date on which the notified event would become
effective the Borrowers shall prepay the Loan in full in accordance with
Clause 7.
22.3 MITIGATION. If circumstances arise which would result in a notification
under Clause 22.1 then, without in any way limiting the rights of the
Lender under Clause 22.3, the Lender shall use reasonable endeavours to
transfer its obligations, liabilities and rights under this Agreement and
the Finance Documents to another office or financial institution not
affected by the circumstances but the Lender shall not be under any
obligation to take any such action if, in its opinion, to do would or
might:
(a) have an adverse effect on its business, operations or financial
condition; or
(b) involve it in any activity which is unlawful or prohibited or any
activity that is contrary to, or inconsistent with, any regulation; or
(c) involve it in any expense (unless indemnified to its satisfaction) or tax
disadvantage.
23 INCREASED COSTS
23.1 INCREASED COSTS. This Clause 23 applies if the Lender notifies the
Borrowers that it considers that as a result of:
(a) the introduction or alteration after the date of this Agreement of a law
or an alteration after the date of this Agreement in the manner in which
a law is interpreted or applied (disregarding any effect which relates to
the application to payments under this Agreement of a tax on the Lender's
overall net income); or
(b) complying with any regulation (including any which relates to capital
adequacy or liquidity controls or which affects the manner in which the
Lender allocates capital resources to its obligations under this
Agreement) which is introduced, or altered, or the interpretation or
application of which is altered, after the date of this Agreement,
49
the Lender (or a parent company of it) has incurred or will incur an
"INCREASED COST".
23.2 MEANING OF "INCREASED COST". In this Clause 23, "INCREASED COST" means:
(a) an additional or increased cost incurred as a result of, or in connection
with, the Lender having entered into, or being a party to, this Agreement
or having taken an assignment of rights under this Agreement, of funding
or maintaining the Commitment or performing its obligations under this
Agreement, or of having outstanding all or any part of the Loan or other
unpaid sums; or
(b) a reduction in the amount of any payment to the Lender under this
Agreement or in the effective return which such a payment represents to
the Lender or on its capital;
(c) an additional or increased cost of funding all or maintaining all or any
of the advances comprised in a class of advances formed by or including
the Loan or (as the case may require) the proportion of that cost
attributable to the Loan; or
(d) a liability to make a payment, or a return foregone, which is calculated
by reference to any amounts received or receivable by the Lender under
this Agreement,
but not an item attributable to a change in the rate of tax on the
overall net income of the Lender (or a parent company of it) or an item
covered by the indemnity for tax in Clause 20.1 or by Clause 21.
For the purposes of this Clause 23.2 the Lender may in good faith
allocate or spread costs and/or losses among its assets and liabilities
(or any class of its assets and liabilities) on such basis as it
considers appropriate.
23.3 PAYMENT OF INCREASED COSTS. The Borrowers shall pay to the Lender, on its
demand, the amounts which the Lender from time to time notifies the
Borrowers that it has specified to be necessary to compensate it for the
increased cost.
23.4 NOTICE OF PREPAYMENT. If the Borrowers are not willing to continue to
compensate the Lender for the increased cost under Clause 23.3, the
Borrowers may give the Lender not less than 14 days' notice of their
intention to prepay the Loan at the end of an Interest Period.
23.5 PREPAYMENT. A notice under Clause 23.4 shall be irrevocable; and on the
date specified in the Borrowers' notice of intended prepayment, the
Commitment shall terminate and the Borrowers shall prepay (without
premium or penalty) the Loan, together with accrued interest thereon at
the applicable rate plus the applicable Margin.
23.6 APPLICATION OF PREPAYMENT. Clause 7 shall apply in relation to the
prepayment.
24 SET-OFF
24.1 APPLICATION OF CREDIT BALANCES. The Lender may without prior notice:
(a) apply any balance (whether or not then due) which at any time stands to
the credit of any account in the name of a Borrower at any office in any
country of the Lender in or towards satisfaction of any sum then due from
that Borrower to the Lender under any of the Finance Documents; and
(b) for that purpose:
50
(i) break, or alter the maturity of, all or any part of a deposit of
that Borrower;
(ii) convert or translate all or any part of a deposit or other credit
balance into Dollars; and
(iii) enter into any other transaction or make any entry with regard to
the credit balance which the Lender considers appropriate.
24.2 EXISTING RIGHTS UNAFFECTED. The Lender shall not be obliged to exercise
any of its rights under Clause 24.1; and those rights shall be without
prejudice and in addition to any right of set-off, combination of
accounts, charge, lien or other right or remedy to which the Lender is
entitled (whether under the general law or any document).
24.3 NO SECURITY INTEREST. This Clause 24 gives the Lender a contractual right
of set-off only, and does not create any equitable charge or other
Security Interest over any credit balance of the Borrower.
25 TRANSFERS AND CHANGES IN LENDING OFFICE
25.1 TRANSFER BY BORROWERS. No Borrower may, without the consent of the Lender
transfer any of its rights or obligations under any Finance Document.
25.2 ASSIGNMENT BY LENDER. The Lender may assign all or any of the rights and
interests which it has under or by virtue of the Finance Documents
without the consent of any Borrower.
25.3 RIGHTS OF ASSIGNEE. In respect of any breach of a warranty, undertaking,
condition or other provision of a Finance Document, or any
misrepresentation made in or in connection with a Finance Document, a
direct or indirect assignee of any of the Lender's rights or interests
under or by virtue of the Finance Documents shall be entitled to recover
damages by reference to the loss incurred by that assignee as a result of
the breach or misrepresentation irrespective of whether the Lender would
have incurred a loss of that kind or amount.
25.4 SUB-PARTICIPATION; SUBROGATION ASSIGNMENT. The Lender may sub-participate
all or any part of its rights and/or obligations under or in connection
with the Finance Documents without the consent of, or any notice to, any
Borrower; and the Lender may assign, in any manner and terms agreed by
it, all or any part of those rights to an insurer or surety who has
become subrogated to them.
25.5 DISCLOSURE OF INFORMATION. The Lender may disclose to a potential
assignee or sub-participant any information which the Lender has received
in relation to any Borrower, any Security Party or their affairs under or
in connection with any Finance Document, unless the information is
clearly of a confidential nature.
25.6 CHANGE OF LENDING OFFICE. The Lender may change its lending office by
giving notice to the Borrowers and the change shall become effective on
the later of:
(a) the date on which the Borrowers receive the notice; and
(b) the date, if any, specified in the notice as the date on which the change
will come into effect.
26 VARIATIONS AND WAIVERS
51
26.1 VARIATIONS, WAIVERS ETC. BY LENDER. A document shall be effective to
vary, waive, suspend or limit any provision of a Finance Document, or the
Lender's rights or remedies under such a provision or the general law,
only if the document is signed, or specifically agreed to by fax, by the
Borrowers and the Lender and, if the document relates to a Finance
Document to which a Security Party is party, by that Security Party.
26.2 EXCLUSION OF OTHER OR IMPLIED VARIATIONS. Except for a document which
satisfies the requirements of Clause 26.1, no document, and no act,
course of conduct, failure or neglect to act, delay or acquiescence on
the part of the Lender (or any person acting on its behalf) shall result
in the Lender (or any person acting on its behalf) being taken to have
varied, waived, suspended or limited, or being precluded (permanently or
temporarily) from enforcing, relying on or exercising:
(a) a provision of this Agreement or another Finance Document; or
(b) an Event of Default; or
(c) a breach by a Borrower or a Security Party of an obligation under a
Finance Document or the general law; or
(d) any right or remedy conferred by any Finance Document or by the general
law;
and there shall not be implied into any Finance Document any term or
condition requiring any such provision to be enforced, or such right or
remedy to be exercised, within a certain or reasonable time.
27 NOTICES
27.1 GENERAL. Unless otherwise specifically provided, any notice under or in
connection with any Finance Document shall be given by letter or fax; and
references in the Finance Documents to written notices, notices in
writing and notices signed by particular persons shall be construed
accordingly.
27.2 ADDRESSES FOR COMMUNICATIONS. A notice shall be sent:
(a) to a Borrower: ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇
▇▇▇▇▇▇
Fax No: ▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇
(b) to the Lender: DnB NOR Bank ASA
▇▇ ▇▇. ▇▇▇▇▇▇▇'▇ ▇▇▇▇
▇▇▇▇▇▇
▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇
Fax No: ▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇
Attn: Shipping Department
or to such other address as the relevant party may notify the other.
27.3 EFFECTIVE DATE OF NOTICES. Subject to Clauses 27.4 and 27.5:
52
(a) a notice which is delivered personally or posted shall be deemed to be
served, and shall take effect, at the time when it is delivered; and
(b) a notice which is sent by fax shall be deemed to be served, and shall
take effect, 2 hours after its transmission is completed.
27.4 SERVICE OUTSIDE BUSINESS HOURS. However, if under Clause 27.3 a notice
would be deemed to be served:
(a) on a day which is not a business day in the place of receipt; or
(b) on such a business day, but after 5 p.m. local time,
the notice shall (subject to Clause 27.5) be deemed to be served, and
shall take effect, at 9 a.m. on the next day which is such a business
day.
27.5 ILLEGIBLE NOTICES. Clauses 27.3 and 27.4 do not apply if the recipient of
a notice notifies the sender within 1 hour after the time at which the
notice would otherwise be deemed to be served that the notice has been
received in a form which is illegible in a material respect.
27.6 ENGLISH LANGUAGE. Any notice under or in connection with a Finance
Document shall be in English.
27.7 VALID NOTICES. A notice under or in connection with a Finance Document
shall not be invalid by reason that its contents or the manner of serving
it do not comply with the requirements of this Agreement or, where
appropriate, any other Finance Document under which it is served if:
(a) the failure to serve it in accordance with the requirements of this
Agreement or other Finance Document, as the case may be, has not caused
any party to suffer any significant loss or prejudice; or
(b) in the case of incorrect and/or incomplete contents, it should have been
reasonably clear to the party on which the notice was served what the
correct or missing particulars should have been.
27.8 MEANING OF "NOTICE". In this Clause 28 "NOTICE" includes any demand,
consent, authorisation, approval, instruction, waiver or other
communication.
28 JOINT AND SEVERAL LIABILITY
28.1 GENERAL. All liabilities and obligations of the Borrowers under this
Agreement shall, whether expressed to be so or not, be several and, if
and to the extent consistent with Clause 28.2, joint.
28.2 NO IMPAIRMENT OF BORROWER'S OBLIGATIONS. The liabilities and obligations
of a Borrower shall not be impaired by:
(a) this Agreement being or later becoming void, unenforceable or illegal as
regards the other Borrower;
(b) the Lender entering into any rescheduling, refinancing or other
arrangement of any kind with the other Borrower;
53
(c) the Lender releasing the other Borrower or any Security Interest created
by a Finance Document; or
(d) any combination of the foregoing.
28.3 PRINCIPAL DEBTORS. Each Borrower declares that it is and will, throughout
the Security Period, remain a principal debtor for all amounts owing
under this Agreement and the Finance Documents and no Borrower shall in
any circumstances be construed to be a surety for the obligations of the
other Borrower under this Agreement.
28.4 SUBORDINATION. Subject to Clause 28.5, during the Security Period, no
Borrower shall:
(a) claim any amount which may be due to it from the other Borrower whether
in respect of a payment made, or matter arising out of, this Agreement or
any Finance Document, or any matter unconnected with this Agreement or
any Finance Document; or
(b) take or enforce any form of security from the other Borrower for such an
amount, or in any other way seek to have recourse in respect of such an
amount against any asset of the other Borrower; or
(c) set off such an amount against any sum due from it to the other Borrower;
or
(d) prove or claim for such an amount in any liquidation, administration,
arrangement or similar procedure involving the other Borrower or other
Security Party; or
(e) exercise or assert any combination of the foregoing.
28.5 BORROWER'S REQUIRED ACTION. If during the Security Period, the Lender, by
notice to a Borrower, requires it to take any action referred to in
paragraphs (a) to (d) of Clause 28.4, in relation to the other Borrower,
that Borrower shall take that action as soon as practicable after
receiving the Lender's notice.
29 SUPPLEMENTAL
29.1 RIGHTS CUMULATIVE, NON-EXCLUSIVE. The rights and remedies which the
Finance Documents give to the Lender are:
(a) cumulative;
(b) may be exercised as often as appears expedient; and
(c) shall not, unless a Finance Document explicitly and specifically states
so, be taken to exclude or limit any right or remedy conferred by any
law.
29.2 SEVERABILITY OF PROVISIONS. If any provision of a Finance Document is or
subsequently becomes void, unenforceable or illegal, that shall not
affect the validity, enforceability or legality of the other provisions
of that Finance Document or of the provisions of any other Finance
Document.
29.3 COUNTERPARTS. A Finance Document may be executed in any number of
counterparts.
29.4 THIRD PARTY RIGHTS. A person who is not a party to this Agreement has no
right under the Contracts (Rights of Third Parties) ▇▇▇ ▇▇▇▇ to enforce
or to enjoy the benefit of any term of this Agreement.
54
30 LAW AND JURISDICTION
30.1 ENGLISH LAW. This Agreement shall be governed by, and construed in
accordance with, English law.
30.2 EXCLUSIVE ENGLISH JURISDICTION. Subject to Clause 30.3, the courts of
England shall have exclusive jurisdiction to settle any disputes which
may arise out of or in connection with this Agreement.
30.3 CHOICE OF FORUM FOR THE EXCLUSIVE BENEFIT OF THE LENDER. Clause 30.2 is
for the exclusive benefit of the Lender, which reserves the rights:
(a) to commence proceedings in relation to any matter which arises out of or
in connection with this Agreement in the courts of any country other than
England and which have or claim jurisdiction to that matter; and
(b) to commence such proceedings in the courts of any such country or
countries concurrently with or in addition to proceedings in England or
without commencing proceedings in England. No Borrower shall commence any
proceedings in any country other than England in relation to a matter
which arises out of or in connection with this Agreement.
30.4 PROCESS AGENT. Each Borrower irrevocably appoints ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ at its
registered office for the time being, presently at Beaufort House, ▇▇ ▇▇.
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, to act as its agent to receive
and accept on its behalf any process or other document relating to any
proceedings in the English courts which are connected with this
Agreement.
30.5 LENDER'S RIGHTS UNAFFECTED. Nothing in this Clause 30 shall exclude or
limit any right which the Lender may have (whether under the law of any
country, an international convention or otherwise) with regard to the
bringing of proceedings, the service of process, the recognition or
enforcement of a judgment or any similar or related matter in any
jurisdiction.
30.6 MEANING OF "PROCEEDINGS". In this Clause 30, "PROCEEDINGS" means
proceedings of any kind, including an application for a provisional or
protective measure.
THIS AGREEMENT has been entered into on the date stated at the beginning of this
Agreement.
55
SCHEDULE 1
DRAWDOWN NOTICE
To: DnB NOR Bank ASA
▇▇ ▇▇. ▇▇▇▇▇▇▇'▇ ▇▇▇▇
▇▇▇▇▇▇
▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇
Attention: Client Services
2005
DRAWDOWN NOTICE
We refer to the loan agreement (the "LOAN AGREEMENT") dated [_] December 2005
and made between us, as Borrowers, and you, as Lender, in connection with a
facility of up to US$50,000,000. Terms defined in the Loan Agreement have their
defined meanings when used in this Drawdown Notice.
1 We request to borrow [Tranche A]/[an Advance under Tranche B in relation
to "[_]"] as follows:
(a) Amount: US$[_];
(b) Drawdown Date: [_];
(c) Duration of the first Interest Period shall be [_] months;
(d) Payment instructions : account in our name and numbered [_] with [_] of
[_].
2 We represent and warrant that:
(a) the representations and warranties in Clause 9 of the Loan Agreement
would remain true and not misleading if repeated on the date of this
notice with reference to the circumstances now existing;
(b) no Event of Default or Potential Event of Default has occurred or will
result from the borrowing of the Loan.
3 This notice cannot be revoked without the prior consent of the Lender.
[Name of Signatory]
-------------------------------------
Director
for and on behalf of
EMPIRE SPIRIT LTD.
INDEPENDENT TRADER LTD.
TRIATHLON INC.
SOLEIL TRUST INC.
JUNGLE INVESTMENT LIMITED AND
NORTHERN YIELD SHIPPING LIMITED
56
SCHEDULE 2
CONDITION PRECEDENT DOCUMENTS
PART A
The following are the documents referred to in Clause 8.1(a).
1 A duly executed original of each Finance Document (and of each document
required to be delivered by each Finance Document) other than those
referred to in Part B, Part C or Part D.
2 Copies of the constitutional documents of each Borrower and each Security
Party).
3 Copies of resolutions of the shareholders and directors of each Borrower
and each Security Party authorising the execution of each of the Finance
Documents to which that Borrower or that Security Party is a party and,
in the case of a Borrower, authorising named officers to give the
Drawdown Notices and other notices under this Agreement.
4 The original of any power of attorney under which any Finance Document is
executed on behalf of the Borrower or a Security Party.
5 Copies of all consents which any Borrower or any Security Party requires
to enter into, or make any payment under, any Finance Document.
6 The originals of any mandates or other documents required in connection
with the opening or operation of the Earnings Accounts and the Retention
Account and all other information required by the Lender in relation to
its "know your customer" regulations (whether in connection with the
opening of the Earnings Accounts, the Retention Account or otherwise).
7 Copies of the MOAs, the Gas Oracle Charter, each Bareboat Charter and all
addenda thereto and of all documents signed or issued by the Borrowers or
other parties thereto under or in connection with any of them.
8 Documentary evidence that the agent for service of process named in
Clause 30 has accepted its appointment.
9 If the Lender so requires, in respect of any of the documents referred to
above, a certified English translation prepared by a translator approved
by the Lender.
57
PART B
In this Part B of Schedule 2, "RELEVANT SHIP" means (a) in the case of Tranche
A, each of "SWEET DREAM" and "GAS ORACLE" and (b) in the case of any Advance
under Tranche B, the Ship which is to be refinanced by the Advance being drawn
down on the relevant Drawdown Date.
The following are the documents referred to in Clause 8.1(b).
1 A duly executed original of the Mortgage, the General Assignment and, if
applicable, the Deed of Covenant (and of each document to be delivered by
each of them) relating to the Relevant Ship.
2 Documentary evidence that:
(a) the Relevant Ship is definitively and permanently or provisionally
registered in the name of the relevant Borrower under the relevant flag
as specified in Clause 13.2;
(b) the Relevant Ship is in the absolute and unencumbered ownership of the
relevant Borrower save as contemplated by the Finance Documents;
(c) the Relevant Ship maintains the class as set out in Clause 13.3(b) with
the relevant Classification Society free of all overdue recommendations
and conditions of such Classification Society;
(d) the Mortgage relating to the Relevant Ship has been duly registered
against that Ship as a valid first preferred or priority (as the case may
be) ship mortgage in accordance with the laws of the relevant flag state;
and
(e) the Relevant Ship is insured in accordance with the provisions of this
Agreement and all requirements therein in respect of insurances have been
complied with.
3 Documents establishing that the Relevant Ship will, as from the relevant
Drawdown Date, be managed by the applicable Approved Manager on terms
acceptable to the Lender, together with:
(a) a letter of undertaking executed by the Approved Manager in favour of the
Lender in the terms required by the Lender agreeing certain matters in
relation to the management of the Relevant Ship and subordinating the
rights of the Approved Manager against the relevant Borrower to the
rights of the Lender under the Finance Documents; and
(b) copies of the Approved Manager's Document of Compliance and of the
Relevant Ship's Safety Management Certificate (together with any other
details of the applicable safety management system which the Lender
requires).
4 Satisfactory valuations of the Relevant Ship addressed to the Lender,
stated to be for the purposes of this Agreement and dated not earlier
than 30 days before the Drawdown Date for the Tranche or Advance relevant
to that Ship, to be prepared in accordance with the provisions of Clause
14.3 by 2 of the shipbrokers referred to in Clause 14.3 by 2 of the
shipbrokers referred to in Clause 14.3.
5 Favourable legal opinions from lawyers appointed by the Lender on such
matters concerning the laws of the Bahamas, Panama, the ▇▇▇▇▇▇▇▇ Islands,
Cyprus, Malta and such other relevant jurisdiction as the Lender may
require.
58
PART C
In this Part C of Schedule 2, "RELEVANT SHIP" means the Ship to be refinanced by
the Tranche or Advance being drawn down on the relevant Drawdown Date.
The following are the documents referred to in Clause 8.1(c).
1 If the Relevant Ship is "SWEET DREAM":
(a) a duly executed original of the Sweet Dream Bareboat Charter Assignment
(and of each document to be delivered pursuant thereto); and
(b) documentary evidence that such Ship continues to operate under the Sweet
Dream Bareboat Charter.
2 If the Relevant Ship is "GAS MARATHON":
(a) documentary evidence that "GAS MARATHON" has been unconditionally
delivered by Triathlon to, and accepted by, the Gas Marathon Bareboat
Charterer for operation under the Gas Marathon Bareboat Charter;
(c) a duly executed original of the Gas Marathon Tripartite Deed (and of each
document to be delivered pursuant thereto);
(d) copies of the constitutional documents of the Gas Marathon Bareboat
Charterer;
(e) copies of resolutions of the directors of the Gas Marathon Bareboat
Charterer authorising the execution of the Gas Marathon Tripartite
Agreement; and
(f) the original power of attorney under which the Gas Marathon Tripartite
Agreement is executed on behalf of the Gas Marathon Bareboat Charterer.
4 Favourable legal opinions from lawyers appointed by the Lender on such
matters concerning the laws of Bermuda and such other relevant
jurisdiction as the Lender may require.
PART D
The following are the documents referred to in Clause 8.1(d).
1 A duly executed original of the Gas Oracle Charter Assignment (and of
each document to be delivered pursuant thereto).
2 A copy of the Gas Oracle Charter and any addenda thereto.
Each copy document delivered under this Schedule shall be certified as a true
and up to date copy by a director or the secretary (or equivalent officer) of a
Borrower.
59
SCHEDULE 3
COMPLIANCE CERTIFICATE
We, [_] and [_], being directors of Empire Spirit Ltd., Independent Trader Ltd.,
Triathlon Inc., Soleil Trust Inc., Jungle Investment Limited and Northern Yield
Shipping Limited respectively (such companies together being the "BORROWERS"),
hereby confirm that at the date of this certificate:
(a) each Borrower is in compliance with (i) the covenants specified in the
loan agreement dated [_] November 2005 and made between (i) the Borrowers
and (ii) DnB NOR Bank ASA (the "LOAN AGREEMENT") and (ii) the covenants
specified in each Security Document (as defined in the Loan Agreement) to
which a Borrower is a party; and
(b) [no Event of Default or Potential Event of Default has occurred]/[no
Event of Default or Potential Event has occurred other than [_]].
------------------------------------ -----------------------------------------
Director Director
for and on behalf of for and on behalf of
EMPIRE SPIRIT LTD. INDEPENDENT TRADER LTD.
------------------------------------ -----------------------------------------
Director Director
for and on behalf of for and on behalf of
TRIATHLON INC. SOLEIL TRUST INC.
------------------------------------ -----------------------------------------
Director Director
for and on behalf of for and on behalf of
JUNGLE INVESTMENT LIMITED NORTHERN YIELD SHIPPING LIMITED
60
EXECUTION PAGE
BORROWERS
SIGNED by P. Vetsikas ) /s/Panteus Vetsikas
for and on behalf of ) -----------------------------------------
EMPIRE SPIRIT LTD. )
SIGNED by P. Vetsikas ) /s/Panteus Vetsikas
for and on behalf of ) -----------------------------------------
INDEPENDENT TRADER LTD. )
SIGNED by P. Vetsikas ) /s/Panteus Vetsikas
for and on behalf of ) -----------------------------------------
TRIATHLON INC. )
SIGNED by P. Vetsikas ) /s/Panteus Vetsikas
for and on behalf of ) -----------------------------------------
SOLEIL TRUST INC. )
SIGNED by P. Vetsikas ) /s/Panteus Vetsikas
for and on behalf of ) -----------------------------------------
JUNGLE INVESTMENT LIMITED )
SIGNED by P. Vetsikas ) /s/Panteus Vetsikas
for and on behalf of ) -----------------------------------------
NORTHERN YIELD )
SHIPPING LIMITED )
LENDER
SIGNED by ▇▇▇▇▇ Chrysallayarpide ) /s/▇▇▇▇▇ Chrysallayarpide
for and on behalf of ) -----------------------------------------
DNB NOR BANK ASA )
61
Witness to all ) /s/▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
the above signatures: ) -----------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
Solicitor
Address: ▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
2 Defteras ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇ ▇▇ - ▇▇▇▇▇▇
62