EXHIBIT 2.36
AMENDED AND RESTATED
REIMBURSEMENT AGREEMENT
AMONG
BARRINGTON (AUSTRALIA) PTY LIMITED
PALMERSTON (AUSTRALIA) PTY LIMITED
VSSI AUSTRALIA LIMITED
VSSI TRANSPORT INC.
ALLIANCE CHARTERING PTY LIMITED,
as Account Parties,
NEDSHIP BANK (AMERICA) N.V.,
as Agent, Security Trustee and Issuer
AND
THE BANKS
as provided herein.
===============================================================================
April 16, 1998
01029.004 #79655
5
INDEX
PAGE
CLAUSE 1 DEFINITIONS......................................................... 3
1.1 Defined Terms........................................................... 3
1.2 Construction............................................................ 18
1.3 Accounting Terms........................................................ 18
CLAUSE 2 LETTER OF CREDIT.................................................... 19
2.1 Issuance of the Amended Letter of Credit................................ 19
2.2 Several Obligations; Drawings........................................... 19
2.3 Reimbursement Obligation; Interest...................................... 20
2.4 Commission and Fees..................................................... 21
2.5 Increased Cost ......................................................... 22
2.6 Illegality.............................................................. 24
2.7 Substitution of Banks................................................... 24
2.8 General Provisions as to Payment........................................ 25
2.9 Obligations Absolute.................................................... 26
2.10 Determination of Losses................................................. 27
CLAUSE 3 REPRESENTATIONS AND WARRANTIES...................................... 27
3.1(a) Due Organization and Power............................................ 27
3.1(b) Authorization and Consents........................................... 27
3.1(c) Filings, etc......................................................... 28
3.1(d) Binding Obligations.................................................. 28
3.1(e) No Violation......................................................... 28
3.1(f) No Immunity.......................................................... 28
3.1(g) Litigation............................................................ 29
3.1(h) No Default............................................................ 29
3.1(i) Charters.............................................................. 29
3.1(j) Vessel Ownership, Classification, Seaworthiness and Insurance......... 29
3.1(k) Financial Statements.................................................. 30
3.1(l) Tax Returns and Payments.............................................. 30
3.1(m) Insurance............................................................. 30
3.1(n) Offices............................................................... 31
3.1(o) Not an Investment Company............................................. 31
3.1(p) Equity Ownership...................................................... 31
3.1(q) Environmental Matters................................................. 31
3.1(r) Pending or Threatened Environmental Claims............................ 32
3.1(s) Limited Purpose....................................................... 32
3.1(t) Permitted Indebtedness................................................ 32
3.1(u) Survival.............................................................. 32
CLAUSE 4 CONDITIONS PRECEDENT................................................ 32
4.1 Conditions Precedent to Issuance of Amended Letter of Credit............. 32
CLAUSE 5 PAYMENTS............................................................ 36
5.1 Place of Payments, No Set Off........................................... 36
5.2 Tax Credits............................................................. 38
5.3 Sharing of Setoffs...................................................... 38
CLAUSE 6 EVENTS OF DEFAULT................................................... 39
6.1(a) Repayments............................................................ 39
6.1(b) Other Payments........................................................ 39
6.1(c) Loan Agreements....................................................... 39
6.1(d) Representations, etc.................................................. 39
6.1(e) Impossibility, Illegality............................................. 39
6.1(f) Covenants............................................................. 39
6.1(g) Indebtedness.......................................................... 40
6.1(h) Stock Ownership....................................................... 40
6.1(i) Default under the Security Documents.................................. 40
6.1(j) Bankruptcy............................................................ 40
6.1(k) Sale of Assets........................................................ 40
6.1(l) Judgments............................................................. 41
6.1(m) Inability to Pay Debts................................................ 41
6.1(n) Financial Position.................................................... 41
6.1(o) Amendment or Assignment of Charters................................... 41
6.1(p) Termination or Default Under Charters................................. 41
6.2 Indemnification......................................................... 42
6.3 Application of Moneys................................................... 42
CLAUSE 7 COVENANTS........................................................... 43
7.1 Covenants............................................................... 43
7.1(A)(i) Performance of Agreements........................................ 43
7.1(A)(ii) Notice of Default; Change in Classification of Vessel............ 44
7.1(A)(iii) Obtain Consents.................................................. 44
7.1(A)(iv) Financial Statements............................................. 44
7.1(A)(v) Corporate Existence.............................................. 45
7.1(A)(vi) Books, Records, etc.............................................. 45
7.1(A)(vii) Inspection....................................................... 45
7.1(A)(viii)Taxes .................................................... 45
7.1(A)(ix) Compliance with Statutes, etc.................................... 46
7.1(A)(x) Environmental Matters............................................ 46
7.1(A)(xi) Accountants...................................................... 47
7.1(A)(xii) Continue Charters................................................ 47
7.1(A)(xiii)Class Certificate................................................ 47
7.1(A)(xiv) Maintenance of Properties........................................ 47
7.1(A)(xv) Vessel Management................................................ 48
7.1(A)(xvi) ISM Compliance................................................... 48
7.1(A)(xvii)Limitation on Restricted Payments................................ 48
7.1(B)(i) Liens............................................................ 50
7.1(B)(ii) Loans and Advances............................................... 51
7.1(B)(iii) Limitation on Indebtedness....................................... 51
7.1(B)(iv) Guarantees, etc.................................................. 53
7.1(B)(v) Changes in Business.............................................. 53
7.1(B)(vi) Use of Corporate Funds........................................... 53
7.1(B)(vii) Issuance of Shares............................................... 53
7.1(B)(viii)Consolidation, Merger............................................ 54
7.1(B)(ix) Changes in Offices or Names...................................... 54
7.1(B)(x) Limitation on Transactions with Shareholders and Affiliates...... 54
7.1(B)(xi) Change of Flag................................................... 55
7.1(B)(xii) Sale of Vessel................................................... 55
7.1(b)(xiii)Modification of Agreements....................................... 55
7.2 Valuation of the Vessels................................................ 55
7.3 Collateral Maintenance.................................................. 55
7.4 Substitution of Collateral.............................................. 56
CLAUSE 8 ASSIGNMENT/PARTICIPATIONS........................................... 56
8.1 Assignment............................................................... 56
8.2 Participations........................................................... 57
CLAUSE 9 CURRENCY INDEMNITY.................................................. 57
9.1 Currency Conversion..................................................... 57
9.2 Change in Exchange Rate................................................. 58
9.3 Additional Debt Due..................................................... 58
9.4 Rate of Exchange........................................................ 58
CLAUSE 10 EXPENSES........................................................... 58
10.1 Expenses................................................................ 58
CLAUSE 11 APPLICABLE LAW, JURISDICTION AND WAIVER............................ 59
11.1 Applicable Law.......................................................... 59
11.2 Jurisdiction ........................................................... 59
11.3 WAIVER OF JURY TRIAL.................................................... 59
CLAUSE 12 THE AGENT.......................................................... 60
12.1 Appointment of Agent.................................................... 60
12.2 Distribution of Payments................................................ 60
12.3 No Duty to Examine, Etc................................................. 60
12.4 Agent as Banks.......................................................... 60
12.5(a) Obligations of Agent................................................. 60
12.5(b) No Duty to Investigate............................................... 60
12.6(a) Discretion of Agent.................................................. 61
12.6(b) Instructions of Majority Banks....................................... 61
12.7 Assumption re Event of Default.......................................... 61
12.8 No Liability of Agent or Banks.......................................... 61
12.9 Indemnification of Agent................................................ 62
12.10Consultation with Counsel............................................... 62
12.11Resignation ............................................................ 62
12.12Representations of Banks................................................ 63
12.13Notification of Event of Default........................................ 63
12.14Distributing Financial Statements, etc.................................. 63
CLAUSE 13 APPOINTMENT OF SECURITY TRUSTEE.................................... 63
CLAUSE 14 NOTICES AND DEMANDS................................................ 64
14.1 Notices................................................................. 64
CLAUSE 15 MISCELLANEOUS...................................................... 64
15.1 Time of Essence......................................................... 64
15.2 Unenforceable, etc., Provisions - Effect................................ 64
15.3 References ............................................................. 65
15.4 Further Assurances...................................................... 65
15.5 Prior Agreements, Merger................................................ 65
15.6 Joint and Several Obligations........................................... 65
15.7 Limitation of Liability................................................. 65
15.8 Release of Palmstar Thistle............................................. 67
15.9 Entire Agreement; Amendments............................................ 67
15.10Headings ........................................................... 67
EXHIBITS
A Amended Letter of Credit
B Guaranty
C1 Form of Bahamian Deed of Covenants
C2 Form of Australian Mortgage
C3 Form of Mortgage Amendment
D1 Form of Bahamian Vessels Earnings Assignment
D2Form of Australian Vessels Earnings Assignment
E Form of Insurances Assignment
F Form of Sub-Charter Assignment
G1Form of Consent and Agreement to the Earnings Assignment
G2Form of Consent and Agreement to the Sub- Charter Assignment
H Form of Share Pledge
I Form of Assignment and Assumption Agreement
J Form of Compliance Certificate
K Accession Agreement
01029.004 #79655
AMENDED AND RESTATED
REIMBURSEMENT AGREEMENT
THIS AMENDED AND RESTATED REIMBURSEMENT AGREEMENT dated April __, 1998
(this "Agreement") is made among BARRINGTON (AUSTRALIA) PTY LIMITED (ACN 080 850
559) ("Barrington") and PALMERSTON (AUSTRALIA) PTY LIMITED (ACN ▇▇▇ ▇▇▇ ▇▇▇)
("Palmerston" and with Barrington collectively referred to as the "Original
Borrowers"), each a company organized and existing under the laws of New South
Wales, Commonwealth of Australia, and VSSI AUSTRALIA LIMITED, a company
organized and existing under the laws of the Republic of Liberia ("VSSI
Australia" and with the Original Borrowers collectively referred to as the
"Borrowers"), VSSI TRANSPORT INC., a company organized and existing under the
laws of the Republic of Liberia ("VSSI Transport" and with the Borrowers
collectively referred to as the "Owners"), and ALLIANCE CHARTERING PTY LIMITED
(ACN 080 850 540) ("Alliance"), a company organized and existing under the laws
of New South Wales, Commonwealth of Australia, as account parties ("Alliance"
and with the Owners individually referred to as an "Obligor" and collectively as
the "Obligors"), the BANKS listed on the signature pages hereof and any
additional banks as may become a party hereto pursuant to Clause 8 (the "Banks")
and NEDSHIP BANK (AMERICA) N.V. ("Nedship"), as agent (the "Agent") and security
trustee (the "Security Trustee"), which Agreement amends and restates that
certain reimbursement agreement dated December 17, 1997 (the "Original
Reimbursement Agreement") made among, inter alia, the Original Borrowers,
Palmstar Thistle Inc., a company organized and existing under the laws of the
Republic of Liberia ("Palmstar Thistle"), Alliance, certain of the Banks, the
Agent and the Security Trustee.
WHEREAS the Original Borrowers and Rabo Bank Australia Ltd. (the "Lender")
are parties to a loan agreement dated December 17, 1997 (the "First Loan
Agreement") providing for (among other things) the making of a loan of
US$44,000,000 (the "First Loan") by the Lender to the Original Borrowers to
enable the Original Borrowers to acquire the Australian flag vessels BARRINGTON
and PALMERSTON;
WHEREAS, a condition precedent to the making of the First Loan was that
Nedship (the "Loan Guarantor") deliver to the Lender a letter of guarantee (the
"Letter of Guarantee") which secured the obligations of the Original Borrowers
under the First Loan Agreement;
WHEREAS, a condition precedent to the issuance of the Letter of Guarantee
by the Loan Guarantor was that the Loan Guarantor, as beneficiary (the
"Beneficiary") receive a standby letter of credit in the maximum stated amount
of US$46,000,000 (of which US$44,000,000 secured the amount guaranteed by the
Loan Guarantor of the First Loan and $2,000,000 secured interest and expenses)
(the "Letter of Credit") from the Agent on behalf of certain banks (the
"Original Banks") as security for the obligations of the Original Borrowers to
the Loan Guarantor in respect of the Letter of Guarantee;
WHEREAS, the the Agent on behalf of the Original Banks issued the Letter of
Credit on the terms and conditions of the Original Reimbursement Agreement;
WHEREAS, VSSI Australia and the Lender are parties to a loan agreement
dated as of the date hereof (the "Second Loan Agreement" and with the First Loan
Agreement collectively referred to as the "Loan Agreements") providing for
(among other things) the making of a loan of up to US$30,000,000 (the "Second
Loan" and with the First Loan collectively referred to as the "Loans") by the
Lender to VSSI Australia to enable VSSI Australia to finance the Bahamian flag
vessel DAMPIER SPIRIT;
WHEREAS, it is a condition precedent to the making of the Second Loan that
the Loan Guarantor deliver to the Lender an amended and restated letter of
guarantee (the "Amended Letter of Guarantee"), which Amended Letter of Guarantee
amends and restates the Letter of Guarantee to provide for the guarantee of the
obligations of the Original Borrowers under the First Loan Agreement and the
obligations of VSSI Australia under the Second Loan Agreement;
WHEREAS, it is a condition precedent to the issuance of the Amended Letter
of Guarantee by the Loan Guarantor that the Loan Guarantor receive an amended
and restated standby letter of credit in the maximum stated amount of
US$78,000,000, (of which $74,000,000 secures the amount guaranteed by the Loan
Guarantor of the Loans and $4,000,000 secures interest and expenses) (the
"Amended Letter of Credit") from the Agent on behalf of the Banks as security
for the obligations of the Borrowers to the Loan Guarantor in respect of the
Amended Letter of Guarantee;
WHEREAS, the Obligors have requested the Agent on behalf of the Banks to
issue the Amended Letter of Credit; and
WHEREAS, the Banks are willing to to have the Agent issue the Amended
Letter of Credit on their behalf on the terms and conditions of this Agreement;
NOW, THEREFORE, the parties hereto agree as follows:
WITNESSETH THAT:
1. DEFINITIONS
1.1 Defined Terms. In this Agreement the words and expressions specified below
shall, except where the context otherwise requires, have the meanings
attributed to them below:
"Acceptable Accounting Firm"
means Ernst & Young, or such other recognized international accounting firm
as shall be approved by the Majority Banks, such approval not to be
unreasonably withheld;
"Accession Agreement"
an agreement substantially in the form of Exhibit K hereto pursuant to
which a wholly-owned subsidiary of the Guarantor is made an Obligor in
accordance with the terms hereof; "Adjusted Consolidated Net Income" means
the aggregate net income (or loss) of the Guarantor and its consolidated
Subsidiaries determined in accordance with GAAP; provided that the
following items shall be excluded in computing Adjusted Consolidated Net
Income (without duplication): (i) the effects of foreign currency exchange
adjustments under GAAP, (ii) any gains or losses (on an after-tax basis)
attributable to vessel sales or to prepayment of Indebtedness and (iii) any
extraordinary gains (or losses).
"Adjusted Stated Amount"
means the Stated Amount less the aggregate of (i) $4,000,000 and (ii) any
principal amount of the Loans theretofore prepaid;
"Affiliate"
means, with respect to any Person, any other Person directly or indirectly
controlling, controlled by or under common control with such Person. For
the purposes of this definition, "control" (including, with correlative
meanings, the terms "controlled by" and "under common control with") as
applied to any Person means the possession directly or indirectly of the
power to direct or cause the direction of the management and policies of
that Person whether through ownership of voting securities or by contract
or otherwise;
"Agent"
has the meaning ascribed thereto in the Preamble to this Agreement;
"Agreement"
means this Agreement as such term is used in the Preamble hereto as the
same shall be amended, modified or supplemented from time to time;
"Alliance"
has the meaning ascribed thereto in the Recitals to this Agreement;
"Amended Letter of Credit"
means the amended and restated irrevocable letter of credit in the maximum
stated amount of $78,000,000 referred to in the Recitals of this Agreement,
to be issued by the Agent on behalf of the Banks to the Beneficiary
pursuant to this Agreement, substantially in the form of Exhibit A, as
amended and in effect from time to time and any letter of credit
substituted therefor pursuant to Clause 2.7;
"Amended Letter of Guarantee"
has the meaning ascribed thereto in the Recitals to this Agreement;
"Ampol"
means Australian Petroleum Pty Ltd. (ACN 000 032 128), a corporation
incorporated and existing under the laws of New South Wales, Australia;
"Apache"
means Apache Energy Limited (ACN 009 301 964), a corporation incorporated
and existing under the laws of Western Australia;
"Apache Charter"
the charterparty agreement dated December 10, 1997 entered into by VSSI
Australia with Apache relating to the DAMPIER SPIRIT, as the same may be
modified or amended in accordance with this Agreement;
"Applicable Office"
means, as to each Bank, its office located at its address set forth on the
signature pages hereof or such other office as such Bank may hereafter
designate as its Applicable Office by notice to the Obligors and the Agent;
"Assignment and Assumption Agreement(s)"
means the Assignment and Assumption Agreement(s) executed pursuant to
Clause 8 substantially in the form of Exhibit I;
"Assignment Notices"
means:
a) the notices with respect to the Earnings Assignments executed by the
Owners pursuant to Clause 4.1(c) substantially in the form set out in
Exhibit 1 thereto or in such other form as the Agent may agree;
b) the notices with respect to the Subcharter Assignments executed by
Alliance pursuant to Clause 4.1(d) substantially in the form set out
in Exhibit 1 thereto or in such other form as the Agent may agree; and
c) the notices with respect to the Insurances Assignments executed by the
Owners pursuant to Clause 4.1(c) substantially in the form set out in
Exhibit 1 thereto or in such other form as the Agent may agree;
"Assignments"
means the Earnings Assignments, the Subcharter Assignments and the
Insurances Assignments;
"Australian Vessels"
means the BARRINGTON and PALMERSTON;
"Bahamian Vessels"
means the DAMPIER SPIRIT and NASSAU SPIRIT;
"Banking Day(s)"
means day(s) on which banks are open for the transaction of business of the
nature required by this Agreement in Vancouver, Canada, Rotterdam, the
Netherlands, Curacao, Netherlands Antilles, Sydney, Australia and New York,
New York;
"Banks"
has the meaning ascribed thereto in the Preamble to this Agreement;
"BARRINGTON"
means the Australian registered tanker vessel BARRINGTON, Official No.
853229;
"Beneficiary"
has the meaning ascribed thereto in the Preamble to this Agreement;
"Bond Offering"
means that certain issue by the Guarantor of US$225,000,000 of 8.32%
First Preferred Mortgage Notes due February 1, 2008 made pursuant to
the Prospectus dated January 19, 1996;
"Borrowers"
has the meaning ascribed thereto in the Preamble to this Agreement;
"Charter(s)"
means
(a) the time charterparty agreements dated December 17, 1997 entered into
by each of the Original Borrowers with Alliance relating to such
Original Borrower's Vessel, or any substitute charter acceptable to
the Majority Banks in their sole discretion,
(b) the charterparty agreement dated January 10, 1998 entered into by VSSI
Transport with Palm Shipping relating to the NASSAU SPIRIT or any
substitute charter acceptable to the Majority Banks in their sole
discretion, and (c) the Apache Charter or any substitute charter
acceptable to the Majority Banks in their sole discretion;
"Charterers"
means Alliance and/or Palm Shipping and/or Apache;
"Code"
means the Internal Revenue Code of 1986, as amended, and any successor
statute and regulations promulgated thereunder;
"Commitment"
in relation to a Bank, means the portion of the Letter of Credit
Amount set out opposite its name on the signature pages hereto or, as
the case may be, in any relevant Assignment and Assumption Agreement;
"Compliance Certificate"
has the meaning ascribed thereto in Clause 7.1A(iv)(a);
"Consents"
means
(i) the Consent and Agreement to each of the Earnings Assignments
executed by the relevant Charterer substantially in the form set out
in Exhibit G1 and (ii) the Consent and Agreements to the Subcharter
Assignments executed or to be executed by Ampol to the Subcharter
Assignments substantially in the form of Exhibit G2 together with any
amendments thereto;
"Consolidated EBITDA"
means, with respect to any Person for any period, the sum of
(i) income from vessel operations, (ii) depreciation expense and
(iii) amortization expense, as presented in the financial statements
of such Person;
"Consolidated Interest Expense"
means, with respect to any Person for any period, the aggregate amount of
(i) interest expense and (ii) losses on marketable securities less
(iii) interest income and (iv) gains on marketable securities as disclosed
on the financial statements of such Person;
"Currency Agreement"
means any foreign exchange contract, currency swap agreement or other
similar agreement or arrangement designed to protect the Guarantor or any
of its Subsidiaries against fluctuations in currency values to or under
which the Guarantor or any of its Subsidiaries is a party or a beneficiary
on the date of this Agreement or becomes a party or a beneficiary
thereafter;
"DAMPIER SPIRIT"
means the Bahamian registered vessel DAMPIER SPIRIT, Official No. 730939;
"Date of Issuance"
means the date on which the Amended Letter of Credit is issued pursuant to
Clause 2.1;
"DOC"
means a document of compliance issued to an Operator in accordance with
rule 13 of the ISM Code;
"Dollars" and the sign "$"
means the legal currency, at any relevant time hereunder, of the United
States of America and, in relation to all payments hereunder, in same day
funds settled through the New York Clearing House Interbank Payments System
(or such other Dollar funds as may be determined by the Banks to be
customary for the settlement in New York City of banking transactions of
the type herein involved);
"Earnings Assignments"
means the assignments in respect of the earnings of each Vessel from any
and all sources, including, but not limited to, the respective Charter
relating to such Vessel, executed or to be executed by the relevant Owner
in favor of the Security Trustee for the benefit of the Banks pursuant to
Clause 4.1(c)(iii), substantially in the form of Exhibits D1 and D2;
"Environmental Approvals"
shall have the meaning ascribed thereto in Clause 3.1(r);
"Environmental Claim"
shall have the meaning ascribed thereto in Clause 3.1(r);
"Environmental Laws"
shall have the meaning ascribed thereto in Clause 3.1(r);
"Equity"
means, for any Person, such Person's shareholders' equity (inclusive of
retained earnings) as reflected on such Person's most recent quarterly
unaudited or annual audited financial statements, as the case may be, as
prepared in accordance with GAAP;
"Event(s) of Default"
means any of the events set out in Clause 6;
"Expiration Date"
has the meaning set forth in Clause 2.1(b);
"First Loan Agreement"
has the meaning ascribed thereto in the Recitals to this Agreement;
"GAAP"
has the meaning ascribed thereto in Clause 1.3;
"Guarantor"
means Teekay Shipping Corporation, a corporation organized and existing
under the laws of the Republic of Liberia;
"Guaranty"
means the amended and restated guaranty in respect of the joint and several
obligations of the Obligors under this Agreement to be executed by the
Guarantor in favor of the Security Trustee for the benefit of the Banks
pursuant to Clause 4.1(e) substantially in the form of Exhibit B;
"Indebtedness"
means, with respect to any Person at any date of determination (without
duplication), (i) all indebtedness of such Person for borrowed money,
(ii) all obligations of such Person evidenced by bonds, debentures, notes
or other similar instruments, (iii) all obligations of such Person in
respect of letters of credit or other similar instruments (including
reimbursement obligations with respect thereto), (iv) all obligations of
such Person to pay the deferred and unpaid purchase price of property or
services, which purchase price is due more than six months after the date
of placing such property in service or taking delivery thereof or the
completion of such services, except trade payables, (v) all obligations on
account of principal of such Person as lessee under capitalized leases,
(vi) all indebtedness of other Persons secured by a lien on any asset of
such Person, whether or not such indebtedness is assumed by such Person;
provided that the amount of such indebtedness shall be the lesser of
(a) the fair market value of such asset at such date of determination and
(b) the amount of such indebtedness, (vii) all indebtedness of other
Persons guaranteed by such Person to the extent such indebtedness is
guaranteed by such Person, and (viii) to the extent not otherwise included
in this definition, the net obligations under Currency Agreements and
Interest Rate Agreements. The amount of Indebtedness of any Person at any
date shall be the outstanding balance at such date of all unconditional
obligations as described above and, with respect to contingent obligations,
the maximum liability upon the occurrence of the contingency giving rise to
the obligation, provided that the amount outstanding at any time of any
indebtedness issued with original issue discount shall be the face amount
of such indebtedness less the remaining unamortized portion of the original
issue discount of such indebtedness at such time as determined in
conformity with GAAP; and provided further that Indebtedness shall not
include any liability for federal, state, local or other taxes;
"Indenture"
means that certain Indenture dated as of January 29, 1996 by and among,
inter alia, the Guarantor and United States Trust Company of New York
executed pursuant to the Bond Offering;
"Insurances Assignments"
means the assignments in respect of the insurances of each Vessel, executed
or to be executed by the relevant Borrower in favor of the Security Trustee
for the benefit of the Banks pursuant to Clause 4.1(c)(ii), substantially
in the form of Exhibit E;
"Interest Coverage Ratio"
means, with respect to any Person on any date, the ratio of (i) the
aggregate amount of Consolidated EBITDA of such Person for the four fiscal
quarters for which financial information in respect thereof is available
immediately prior to such date to (ii) the aggregate Consolidated Interest
Expense of such Person during such four fiscal quarters. In making the
foregoing calculation, (A) pro forma effect shall be given to (1) any
Indebtedness incurred subsequent to the end of the four-fiscal-quarter
period referred to in clause (i) and prior to such date (other than
Indebtedness incurred under a revolving credit or similar arrangement to
the extent of the commitment thereunder (or under any predecessor revolving
credit or similar arrangement) in effect on the last day of such period),
(2) any Indebtedness incurred during such period to the extent such
Indebtedness is outstanding at such date and (3) any Indebtedness to be
incurred on such date, in each case as if such Indebtedness had been
incurred on the first day of such four-fiscal-quarter period and after
giving pro forma effect to the application of the proceeds thereof as if
such application had occurred on such first day; (B) Consolidated Interest
Expense attributable to interest on any Indebtedness (whether existing or
being incurred) computed on a pro forma basis and if bearing a floating
interest rate shall be computed as if the rate in effect on such date
(taking into account any Interest Rate Agreement applicable to such
Indebtedness if such Interest Rate Agreement has a remaining term in excess
of 12 months) had been the applicable rate of the entire period; (C) there
shall be excluded from Consolidated Interest Expense any Consolidated
Interest Expense related to any amount of Indebtedness that was outstanding
during such four-fiscal-quarter period or thereafter but that is not
outstanding or is to be repaid on such date, except for Consolidated
Interest Expense accrued (as adjusted pursuant to clause (B)) during such
four-fiscal-quarter period under a revolving credit or similar arrangement
to the extent of the commitment thereunder (or under any successor
revolving credit or similar arrangement) in effect on such date; and
(D) pro forma effect shall be given to asset dispositions and asset
acquisitions (including giving pro forma effect to the application of
proceeds of any asset disposition) that occur during such
four-fiscal-quarter period or thereafter and prior to such date as if they
had occurred and such proceeds had been applied on the first day of such
four-fiscal-quarter period; provided that to the extent that clause (D) of
this sentence requires that pro forma effect be given to an asset
acquisition or asset disposition, such pro forma calculation shall be based
upon the four full fiscal quarters immediately preceding such date of the
Person, or division or line of business of the Person, that is acquired or
disposed for which financial information is available; and provided further
that for purposes of determining the Interest Coverage Ratio with respect
to the acquisition of a Vessel or the financing thereof, the Guarantor may
apply Consolidated EBITDA for such Vessel based upon historical earnings of
such Vessel or, if none, of its most comparable Vessel during the
applicable four-fiscal-quarter period, or if, in the good faith
determination of the board of directors of the Guarantor, the Guarantor
does not have a comparable Vessel, based upon industry average earnings for
comparable vessels;
"Interest Rate Agreements"
means any interest rate protection agreement, interest rate future
agreement, interest rate option agreement, interest rate swap agreement,
interest rate cap agreement, interest rate collar agreement, interest rate
hedge agreement or other similar agreement or arrangement designed to
protect the Guarantor or any of its Subsidiaries against fluctuations in
interest rates to or under which the Guarantor or any of its Subsidiaries
is a party or a beneficiary on the date of this Agreement or becomes a
party or a beneficiary hereafter;
"ISM Code"
means the International Safety Management Code for the Safe Operating of
Ships and for Pollution Prevention constituted pursuant to Resolution A.
741(18) of the International Maritime Organization and incorporated into
the Safety of Life at Sea Convention and includes any amendments or
extensions thereto and any regulation issued pursuant thereto;
"L/C Fee"
shall have the meaning ascribed thereto in Clause 2.4;
"Lender"
has the meaning ascribed thereto in the Preamble to this Agreement;
"Letter of Credit Amount"
means, with respect to any Bank at any time, (i) prior to the Date of
Issuance, the amount set forth opposite the name of such Bank on the
signature pages hereof and (ii) on or after the Date of Issuance, such
Bank's Percentage Share of the Stated Amount at such time;
"Letter of Credit Liabilities"
means, as of any date, the sum of (i) the Stated Amount as of such date
plus (ii) the aggregate unpaid amount of all Reimbursement Obligations
(together with accrued interest thereon) as of such date payable to all
Banks in respect of drawings or other payments made under or pursuant to
the Amended Letter of Credit on or prior to such date;
"Loan Agreements"
has the meaning ascribed thereto in the Recitals to this Agreement;
"Loans"
has the meaning ascribed thereto in the Recitals to this Agreement;
"Majority Banks"
means Banks whose Commitments exceed fifty percent (50%) of total
Commitments;
"Management Agreement(s)"
means the agreement(s) entered into between the respective Manager and each
Borrower in respect of the commercial and technical management of the
Vessels;
"Manager"
means Australian Tankships Pty. Ltd. (ACN 079 641 580), an Australian
corporation and a Wholly Owned Subsidiary of the Guarantor, in respect of
the Australian Vessels and Teekay Shipping Limited, a Bahamian company and
also a Wholly Owned Subsidiary of the Guarantor, in respect of the Bahamian
Vessels;
"Materials of Environmental Concern"
has the meaning ascribed thereto in Clause 3.1(r);
"Mortgage Amendments"
means the amendment no. 1 to the first priority Australian ship mortgages
dated December 18, 1997 with respect to each Australian Vessel, in each
case executed or to be executed by the relevant Owner in favor of the
Security Trustee for the benefit of the Banks, pursuant to
Clause 4.1(c)(i), and to be substantially in the form of Exhibit C3 ;
"Mortgages" means (i) the first priority statutory Bahamian mortgage and
deed of covenants collateral thereto with respect to each Bahamian Vessel
and (ii) the first priority Australian ship mortgages with respect to each
Australian Vessel, in each case executed or to be executed by the relevant
Owner in favor of the Security Trustee for the benefit of the Banks,
pursuant to Clause 4.1(c)(i), and to be substantially in the form of
Exhibits C1 and C2, respectively;
"NASSAU SPIRIT"
means the Bahamian registered vessel NASSAU SPIRIT, Official No. 730910;
"Net Debt"
means (x) the sum of long term debt and capital leases (including the
current portions) less (y) to the extent positive, the sum of cash
(including cash held in retention accounts for the payment of debt and cash
pledged as collateral against balance sheet obligations) and marketable
securities less the sum of the current portion of long term debt and
capital leases (excluding the current portion of advances outstanding under
any revolving credit facilities);
"Net Debt to Equity Ratio"
means, the ratio of the Guarantor's consolidated Net Debt to its
consolidated Equity as reflected on the most recent quarterly unaudited or
annual audited financial statements, as the case may be, as calculated by
the Guarantor, which calculation shall be set forth in the Compliance
Certificate accompanying such financial statements, and agreed by the
Agent;
"Obligor(s)"
has the meaning ascribed thereto in the Recitals to this Agreement;
"Operator"
means any Person who is from time to time concerned in the operation of a
Vessel and falls within the definition of "Company" set out in rule 1.1.2
of the ISM Code;
"Original Banks"
has the meaning ascribed thereto in the Recitals to this Agreement;
"Original Borrowers"
has the meaning ascribed thereto in the Recitals to this Agreement;
"Original Reimbursement Agreement"
has the meaning ascribed thereto in the Recitals to this Agreement;
"Owner"
means the relevant registered owner of a Vessel;
"Palm Shipping"
means Palm Shipping Inc., a corporation organized and existing under the
laws of the Republic of Liberia and an affiliate of the Obligors and a
Wholly Owned Subsidiary of the Guarantor;
"PALMERSTON"
means the Australian registered tanker vessel PALMERSTON, Official No.
853755;
"Palmstar Thistle"
has the meaning ascribed thereto in the Preamble to this Agreement;
"Parent"
means, with respect to any Bank, any Person controlling such Bank;
"Percentage Share"
means, with respect to any Bank, the percentage specified as such Bank's
Percentage Share on the signature pages hereof or in any Assignment and
Assumption Agreement executed in connection herewith;
"Person"
means any individual, sole proprietorship, corporation, partnership
(general or limited), limited liability company, business trust, bank,
trust company, joint venture, association, joint stock company, trust or
other unincorporated organization, whether or not a legal entity, or any
government or agency or political subdivision thereof;
"Pledge"
means the pledge of shares of VSSI Australia and VSSI Transport to be
executed by the Guarantor pursuant to Clause 4.1(e)(ii) substantially in
the form of Exhibit H;
"Prime Rate"
means the rate of interest announced by the Reference Bank in New York City
from time to time as its base, prime or reference rate;
"Reference Bank"
means Rabobank International, New York branch;
"Reimbursement Obligations"
means, with respect to any Bank as of any date, the obligations of the
Obligors then outstanding and unpaid to reimburse such Bank pursuant to
Clause 2.3 for the amounts paid by such Bank in respect of all drawings or
other payments made under or pursuant to the Amended Letter of Credit;
"Reimbursement Period"
means the period from the Date of Issuance until the Expiration Date;
"Security Documents"
means the Guaranty, the Pledge, the Mortgages, the Mortgage Amendments, the
Assignments, the Assignment Notices, the Consents, and any other documents
that may be executed as security for the Obligors' obligations hereunder;
"Security Trustee"
has the meaning ascribed thereto in the Preamble to this Agreement;
"SMC"
means a safety management certificate issued in respect of a Vessel in
accordance with rule 13 of the ISM Code;
"Stated Amount"
means the amount reflected in Column 1 of Schedule A to the Amended Letter
of Credit in the initial amount of $78,000,000, such amount being reduced
six months after each installment date under the Loan Agreements by the
aggregate of the scheduled amount of principal due under the Loan
Agreements on such date;
"Subcharter Assignments"
means the assignments in respect of the Sub-Charters executed or to be
executed by Alliance in favor of the Security Trustee for the benefit of
the Banks pursuant to Clause 4.1(d) substantially in the form of Exhibit F
;
"Sub-Charters"
means the sub-charter agreements relating to each of the Australian
Vessels, entered into between Alliance and Ampol;
"Subsidiary"
is defined to mean, with respect to any Person, any business entity of
which more than 50% of the outstanding voting stock is owned directly or
indirectly by such Person and one or more other Subsidiaries of such
Person;
"Taxes"
means any present or future income or other taxes, levies, duties, charges,
fees, deductions or withholdings of any nature now or hereafter imposed,
levied, collected, withheld or assessed by any taxing authority whatsoever;
"Transaction Documents"
means this Agreement, the Amended Letter of Guarantee, the Amended Letter
of Credit, the Security Documents and any Assignment and Assumption
Agreement;
"VSSI Australia"
has the meaning ascribed thereto in the Preamble to this Agreement;
"VSSI Transport"
has the meaning ascribed thereto in the Preamble to this Agreement;
"Vessels"
means the Australian Vessels and the Bahamian Vessels; and
"Wholly Owned"
means, with respect to any Subsidiary of any Person, such Subsidiary of
such Person if all of the outstanding common stock or other similar equity
ownership interests (but not including preferred stock) in such Subsidiary
(other than any director's qualifying share or investments by foreign
nationals mandated by applicable law) is owned directly or indirectly by
such Person.
1.2 Construction. Words importing the singular number only shall include the
plural and vice versa. Words importing persons shall include companies,
firms, corporations, partnerships, unincorporated associations and their
respective successors and assigns.
1.3 Accounting Terms. All accounting terms not specifically defined herein
shall be construed in accordance with generally accepted accounting
principles as in effect from time to time in the United States of America
consistently applied ("GAAP") and all financial statements submitted
pursuant to this Agreement shall be prepared in accordance with, and all
financial data submitted pursuant hereto shall be derived from financial
statements prepared in accordance with, GAAP.
2. LETTER OF CREDIT
2.1 Issuance of the Amended Letter of Credit.
(a) Subject to the terms and conditions of this Agreement and in reliance
on the representations, warranties and covenants herein contained, the
Banks hereby agree, upon satisfaction of the conditions precedent
contained in Clause 4 to procure that the Agent shall issue on behalf
of the Banks the Amended Letter of Credit in favor of the Beneficiary.
(b) The Agent, on behalf of the Banks,shall issue the Amended Letter of
Credit upon three Business Days' prior written notice from the
Obligors to the Agent requesting the issuance of the Amended Letter of
Credit and setting forth the Date of Issuance, which date shall be no
later than May 31, 1998, with respect thereto and the date on which
such Amended Letter of Credit is to expire which date shall be no
later than June 17, 2006 (the "Expiration Date"). Each Bank severally
and not jointly agrees, on the terms and conditions set forth herein,
to cause the Agent to issue on behalf of the Banks on such date the
Amended Letter of Credit to the Beneficiary in the amount of
$78,000,000, effective on the Date of Issuance and expiring on the
Expiration Date. The commitment of each Bank to cause the Agent to
issue on behalf of the Banks the Amended Letter of Credit and its
obligations hereunder and under the Amended Letter of Credit shall be
limited to its Letter of Credit Amount as in effect from time to time.
(c) Upon receipt of the Notice of Issuance, the Agent shall promptly
notify each Bank of the contents thereof and of its Percentage Share
of the amount of the Amended Letter of Credit.
(d) In the event that the Borrowers prepay part of the Loans pursuant to
the terms of the relevant Loan Agreement and the Beneficiary consents
to a corresponding reduction of the Stated Amount of the Amended
Letter of Credit, the Banks agree that they shall cause the Agent to
issue on their behalf an amended letter of credit with a reduced
Stated Amount.
2.2. Several Obligations; Drawings.
(a) The obligations of the Banks hereunder and under or in respect of the
Amended Letter of Credit are several and not joint, and no Bank shall
be liable for the failure of any other Bank to perform its obligations
hereunder or thereunder. The failure of any Bank to honor its
obligations hereunder or in respect of the Amended Letter of Credit
shall not excuse the several obligations of the other Banks hereunder
or thereunder.
(b) Upon receipt from the Beneficiary of any demand for payment under the
Amended Letter of Credit made in accordance with the terms thereof,
the Agent shall promptly notify the Obligors and each Bank as to the
amount to be paid by such Bank as a result of such demand and the date
for such payment (which shall be a Business Day). Upon receipt of such
notice from the Agent, each Bank shall promptly transfer the amount to
be paid by it as a result of such demand in immediately available
funds to the account specified in or pursuant to Clause 5.1 or such
other account as the Agent shall have specified in such notice. Unless
the Agent shall have received notice from a Bank prior to the date for
such payment that such Bank will not make available to the Agent such
Bank's Percentage Share of such payment, the Agent may assume that
such Bank has made an amount equal to such Percentage Share available
to the Agent on the date for such payment in accordance with this
subclause (b) and the Agent may, in reliance upon such assumption,
make available to the Beneficiary on such date a corresponding amount.
If and to the extent that the Agent in reliance upon such assumption
shall have made available to the Beneficiary, on behalf of any Bank,
an amount equal to such Bank's Percentage Share of any payment
pursuant to this Clause and such Bank shall not have made an amount
equal to such Percentage Share available to the Agent and the Agent
shall not have been reimbursed by the Obligors for such amount, such
Bank agrees to pay to the Agent forthwith on demand such amount,
together with interest thereon, for each day from the date such amount
is made available to the Beneficiary until the date such amount is
repaid to the Agent at a rate per annum equal to the Prime Rate for
each such day.
2.3. Reimbursement Obligation; Interest.
(a) The Obligors agree to pay to the Agent, for the account of the Banks,
immediately after (and on the same Business Day as) (i) any amount is
drawn under, or otherwise paid pursuant to, the Amended Letter of
Credit, a sum equal to the amount so drawn or paid and interest on
such amount as provided in subclauses (b) and (c) below and (ii) any
Event of Default shall have occurred and be continuing, an amount
equal to the aggregate amount (if any) paid or prepaid by the Agent
pursuant to Clause 6.1, and interest on such amount as provided in
subclauses (b) and (c) below; provided that if the Agent shall receive
such payment from the Obligors later than 3:00 P.M. (New York City
time) on such Business Day, such payment shall be deemed to have been
received by the Agent on the next succeeding Business Day and interest
shall accrue thereon pursuant to subclauses (b) and (c) below from the
date such payment was due. The Obligors agree that all payments
required hereunder shall be free and clear of all set-offs,
withholdings, taxes, claims or other deductions of any kind
whatsoever.
(b) Any amount owing by the Obligors pursuant to subclause (a) and not
paid when due shall bear interest, payable upon demand, for each day
from and including the date payment thereof was due to but excluding
the date of actual payment thereof in full at a rate per annum equal
to the sum of 2% plus the Prime Rate for such day.
(c) Until payment of any amount due hereunder is made, the Obligors'
obligations to the Agent and the Banks under Clause 2.3(a) shall be
evidenced by a loan account ledger maintained by the Agent in the name
of the Obligors. The Agent shall determine any amounts payable by the
Obligors under this Clause 2.3 and any such determination shall be
conclusive absent manifest error.
2.4 Commission and Fees. (a) L/C Fee. The Obligors agree to pay the Agent, for
distribution to the Banks, a letter of credit fee (the "L/C Fee"), on the
Adjusted Stated Amount quarterly in arrears for the period from the Date of
Issuance of the Amended Letter of Credit until the earlier of (i) the
Expiration Date or (ii) termination of the Amended Letter of Credit in
accordance with the terms hereof or thereof, at the rate as determined in
accordance with this Clause 2.4; provided, however, that the Obligors shall
not be obligated to pay the L/C Fee for the period from the maturity date
or prepayment of the Loans until the Expiration Date if the Loans have been
repaid in full. The L/C Fee will vary based upon the Net Debt to Equity
Ratio in accordance with the following schedule:
Net Debt to Equity Ratio: L/C Fee
If greater than or equal to 1.5 to 1.0 0.85% p.a.
If greater than or equal to 1.0 to 1.0 but less than 1.5 to 1.0 0.70% p.a.
If less than 1.0 to 1.0 0.60% p.a.
The L/C Fee shall be determined based on the most recent financial
information delivered to the Agent in accordance with Clause 7.1A(iv)(a)
and shall change, effective as of the beginning of any fiscal quarter
following the quarter during which a change in such ratio occurred.
(b) Commitment Commission. The Obligors agree to pay on the Date of
Issuance a commitment commission on the available but unissued amount
of the Adjusted Stated Amount for the period commencing on the date of
execution of this Agreement by the Obligors and ending on the Date of
Issuance. The Commitment Commission shall accrue from day to day and
be calculated on the actual number of days elapsed and a three hundred
sixty (360) day year. The Commitment Commission will vary based upon
the Net Debt to Equity Ratio in accordance with the following
schedule:
Net Debt to Equity Ratio: Commitment Commission
If greater than or equal to 1.5 to 1.0 0.34% p.a.
If greater than or equal to 1.0 to 1.0 but less than 1.5 to 1.0 0.28% p.a.
If less than 1.0 to 1.0 0.24% p.a.
The Commitment Commission shall be determined based on the most recent
financial information delivered to the Agent and shall change, effective as
of the beginning of any fiscal quarter following the quarter during which a
change in such ratio occurred.
(c) Front-End Fee. The Obligors agree to pay a non-refundable front-end
fee equal to .25% of the Adjusted Stated Amount (the "Front-End Fee")
as of the Date of Issuance, payable to the Banks on the Date of
Issuance, to be allocated (including the Original Front End Fee (as
hereinafter defined) by the Agent based upon their Commitments. The
front-end fee (the "Original Front-End Fee") paid by the Original
Borrowers, Palmstar Thistle and Alliance in connection with the First
Loan Agreement pursuant to a fee letter dated December 17, 1997
executed by the Guarantor on their behalf shall be credited against
the Front-End Fee due hereunder.
2.5 Increased Cost. If any change in applicable law, regulation or regulatory
requirement or in the interpretation or application thereof by any
governmental or other authority, shall:
(i) change the basis of taxation (excluding any change in the rate of any
Tax) to any of the Banks with respect to the Amended Letter of Credit
or any drawing or payment thereunder or pursuant thereto or its
obligations to make payments under or in respect of the Amended Letter
of Credit or to issue the Amended Letter of Credit pursuant to this
Agreement or with respect to payments of principal or interest or any
other payment due or to become due pursuant to this Agreement (other
than a change in taxation of the overall net income of such Bank
effected by the jurisdiction of organization or the jurisdiction of
the principal place of business of such Bank, the United States of
America, the State or City of New York or any governmental subdivision
or other taxing authority having jurisdiction over the Bank (unless
such jurisdiction is asserted solely by reason of the activities of
any of the Obligors) or such other jurisdiction where the obligations
under this Agreement may be payable), or
(ii) impose, modify or deem applicable any reserve requirements (including,
without limitation, any such requirement imposed by the Board of
Governors of the Federal Reserve System or other comparable
governmental authority against letters of credit or letters of
commitment issued by, or assets of, or deposits with or for the
account of, or credit extended by, any Bank) or require the making of
any special deposits against or in respect of any assets or
liabilities of, deposits with or for the account of, or loans by, any
of the Banks, or
(iii)impose on any of the Banks any other condition affecting its
obligations under or in respect of this Agreement, or the Amended
Letter of Credit or any part thereof, and the result of the foregoing
is either to increase the cost to such Bank of making available or
maintaining the Amended Letter of Credit or any part thereof or to
reduce the amount of any payment received by such Bank, then and in
any such case if such increase or reduction in the opinion of such
Bank materially affects the interests of such Bank under or in
connection with this Agreement, then:
(a) such Bank shall notify the Agent and Obligors of the happening of
such event,
(b) the Obligors agree forthwith upon demand to pay to the Agent or
such Bank such amount as such Bank certifies to be necessary to
compensate such Bank, for such additional cost or such reduction,
and
(c) any such demand as is referred to in sub-clause (b) of this
Clause 2.5 may be made by such Bank at any time before or after
any repayment of the Letter of Credit Liabilities.
2.6 Illegality. In the event that by reason of any change in any applicable
law, regulation or regulatory requirement or in the interpretation thereof
any of the Banks reasonably concludes that it has become unlawful for such
Bank to maintain or give effect to its obligations as contemplated by this
Agreement, such Bank shall inform the Agent, the Agent shall forthwith give
notice thereof to the other Banks and the Obligors to that effect,
whereafter the liability of such Bank to make payments under or in respect
of the Amended Letter of Credit or to issue the Amended Letter of Credit
pursuant to this Agreement shall forthwith cease and the Obligors shall be
required to (x) replace such Bank with one or more banks pursuant to the
provisions of Clause 2.7(a),(y) pay to the Agent an amount in Dollars equal
to such Bank's Letter of Credit Amount as of such date which amount shall
be retained by the Agent until such time as this Agreement is terminated
pursuant to Clause 2.7 and applied by the Agent from time to time to pay
such Bank's Percentage Share of any drawings or other payments under or
pursuant to the Amended Letter of Credit or (z) obtain the Beneficiary's
consent to the discharge of such Bank from its obligations under the
Amended Letter of Credit; provided that, upon any such discharge (except if
such Bank is replaced pursuant to (x) above), the Stated Amount shall be
reduced by the amount of such Bank's Letter of Credit Amount. In any such
event, but without prejudice to the aforesaid obligations of the Obligors
to prepay such Bank's Letter of Credit Amount, the Obligors and such Bank
shall negotiate in good faith with a view to agreeing on terms for making
its Letter of Credit Amount available from another jurisdiction or
otherwise restructuring the obligations under this Agreement on a basis
which is not unlawful with respect to such Bank and Agent shall use
reasonable efforts to replace such Bank with a bank for which the making
and performance of this Agreement would not be illegal.
2.7 Substitution of Banks. If (i) any Bank has demanded compensation under
Clause 2.5 or (ii) the Obligors are obligated to replace a Bank pursuant to
clause (x) of Clause 2.6(a) the Obligors shall have the right, upon twenty
(20) Business Days' prior notice to such Bank (or five Business Days' prior
notice in the case of any substitution pursuant to the foregoing clause
(ii)), to cause one or more banks (which may be one or more of the Banks),
each such bank to be acceptable to the Beneficiary and, if there shall at
such time be more than one Bank hereunder, reasonably satisfactory to the
Majority Banks (determined for this purpose as if such Bank had no Letter
of Credit Amount and no Reimbursement Obligation was payable to such Bank
hereunder), in each case with the written acknowledgment of the Agent, to
assume the obligations of the Bank to be replaced (the "Old Bank(s)") under
this Agreement and, if required by the Beneficiary, to issue (together with
the other Banks hereto) a letter of credit in the form of the Amended
Letter of Credit then outstanding but in an amount equal to the Stated
Amount then in effect. If one or more such banks in each case acceptable to
the Beneficiary are identified by the Obligors and, if required pursuant to
this Clause, approved as being reasonably satisfactory to the Majority
Banks (determined as provided above), the Banks shall consent to such
assumption and issuance pursuant to a written instrument. Upon (i) the
execution and delivery of such instrument by the Obligors, the Banks, and
the Agent, (ii) the return by the Beneficiary of the Amended Letter of
Credit, (iii) the execution and delivery to the Beneficiary of a new letter
of credit by the Banks (including the new banks but excluding the Old
Banks) and (iv) payment by the new banks (the "Substitution Banks") to the
Old Banks of all accrued fees to but excluding the date of such assumption
and issuance, each of such Substitution Banks shall become a bank party to
this Agreement (if it is not already a party hereto) and shall from the
date of such substitution have all the rights and obligations of a Bank
with a Letter of Credit Amount and Percentage Share (which, if such
Substitution Bank is already a party hereto, shall take into account such
Substitution Bank's existing Letter of Credit Amount and Percentage Share)
and the Old Bank shall from date of such substitution be released from its
obligations under this Agreement and the Amended Letter of Credit, and no
further consent or action by any other Person shall be required; provided
that on the date of such assumption and issuance (x) all amounts payable
under Clause 2.3 shall have been paid in full and (y) no Event of Default
shall have occurred and be continuing on such date. In the event that there
is more than one Bank party hereto and the entity which is the Agent, in
its capacity as a Bank, is required to transfer all of its rights and
obligations hereunder pursuant to this Clause 2.7, the Agent shall,
promptly upon the consummation of any assumption pursuant to this Clause
2.7, resign as Agent hereunder and the Majority Banks (determined as if the
Bank resigning as Agent had no Letter of Credit Amount and no Reimbursement
Obligation was payable to such Bank hereunder) shall (subject to the
consent of the Obligors), have the right to appoint another Bank as
successor Agent, all in accordance with Clause 12.11.
2.8 General Provisions as to Payment. (a) All Payments to be made by the
Obligors shall be made in Dollars and in immediately available funds to the
Agent at its address specified in or pursuant to Clause 7.1. The Agent
shall promptly distribute to each of the Banks its pro rata share in
accordance with its Percentage Share of each such Payment (other than a
Payment pursuant to Clause 2.6) received by the Agent for the account of
the Bank.
(b) Whenever any payment hereunder, including without limitation, any
payment due to the Agent pursuant to Clause 2.3, 2.4, 2.5, or 2.6,
shall be due on a day which is not a Business Day, the date for
payment thereof shall be extended to the next succeeding Business Day
and any interest payable thereon shall be payable for such extended
time at the specified rate. If the date for any payment is extended by
operation of law or otherwise, interest thereon shall be payable for
such extended time.
(c) Interest and any fees payable hereunder shall be computed on the basis
of a year of 360 days and paid for the actual number of days elapsed
from and including the first day of the period for which they are due
to but excluding the last day thereof.
(d) Any amount owed to the Agent or any Bank under this Agreement not paid
when due shall bear interest, payable upon demand, for each day from
and including the date payment thereof was due to but excluding the
date of actual payment thereof in full as provided in subclause (b) of
Clause 2.3.
2.9 Obligations Absolute. The obligations of the Obligors under this Agreement
shall be absolute, unconditional and irrevocable, and shall be performed
strictly in accordance with the terms of this Agreement, under all
circumstances whatsoever, including without limitation the following
circumstances:
(a) unenforceability for any reason of this Agreement or the Amended Letter
of Credit;
(b) any modification, amendment or waiver of, or any consent to, departure
from, or supplement to, this Agreement or the Amended Letter of
Credit; provided that neither the Agent nor any Bank shall enter into
any written amendment to, or written modification or waiver of, the
Amended Letter of Credit without the consent of the Obligors;
(c) the existence of any claim, set-off, defense or other right which the
Obligors may have at any time against the Beneficiary (or any Person
for whom the Beneficiary may be acting), any Affiliate of the
Beneficiary, the Agent, any Bank or any other Person, whether in
connection with this Agreement, the Amended Letter of Credit, or the
Loan Agreements or any unrelated transaction; provided that nothing
herein shall prevent the assertion of any such claim by separate suit
or compulsory counterclaim;
(d) any statement or any other document presented under the Amended Letter
of Credit proving to be forged, fraudulent, invalid or insufficient in
any respect or any statement therein being untrue or inaccurate in any
respect whatsoever;
(e) payment by the Agent or any Bank under the Amended Letter of Credit
against presentation of a draft or certificate which does not comply
with the terms of the Amended Letter of Credit; and
(f) any other act or omission to act or delay of any kind by any Bank, the
Agent or any other Person or any other event or circumstance
whatsoever which might, but for the provisions of this Clause 2.9,
constitute a legal or equitable discharge of the Obligors' obligations
hereunder;provided that, with respect to clauses (d), (e) and (f)
above, the Obligors shall not be obligated with respect to any
Reimbursement Obligation or other obligation hereunder arising solely
out of the gross negligence, willful misconduct or bad faith of the
Agent or any Bank to which such Reimbursement Obligation or such other
obligation is payable, as the case may be. Nothing in this Agreement
and no failure by the Obligors to perform any of their obligations
hereunder shall affect the several obligations of the Banks hereunder
or under the Amended Letter of Credit.
2.10 Determination of Losses. A certificate or determination notice of any
affected Bank(s) or the Agent, as the case may be, as to any matters
referred to in this Clause 2 shall, absent in manifest error, be conclusive
and binding on the Obligors.
3 REPRESENTATIONS AND WARRANTIES
3.1 In order to induce the Banks and the Agent to enter into this Agreement and
to make the Amended Letter of Credit available, each of the Obligors hereby
represents and warrants (which representations and warranties shall survive
the execution and delivery of this Agreement and the issuance of the
Amended Letter of Credit hereunder) that:
(a) Due Organization and Power. Each of the Obligors and the Guarantor is
duly formed and validly existing in good standing under the laws of
its respective jurisdiction of incorporation, has duly qualified and,
insofar as the Obligors are aware, is authorized to do business as a
foreign corporation in each jurisdiction wherein the nature of the
business transacted thereby makes such qualification necessary, has
full power to carry on its business as now being conducted and to
enter into and perform its respective obligations under the
Transaction Documents to which it is or is to be a party, and has
complied with all statutory, regulatory and other requirements
relative to such business and such agreements the noncompliance with
which could reasonably be expected to have a material adverse effect
on its business, assets or operations, condition (financial or
otherwise).
(b) Authorization and Consents. All necessary corporate action has been
taken to authorize, and all necessary consents and authorizations have
been obtained and remain in full force and effect to permit, each of
the Obligors and the Guarantor to enter into and perform its
obligations under the Transaction Documents to which it is a party
and, in the case of the Obligors, to make all payments required under
this Agreement and, as of the date of this Agreement, no further
consents or authorizations are necessary for the repayment of their
obligations under this Agreement.
(c) Filings, etc. It is not necessary to ensure (i) the legality, validity
or enforceability of this Agreement or any of the Security Documents
that any of them be filed, recorded, registered or enrolled with any
governmental, state or local authority or agency (other than (A) the
recordation of the Mortgages with the relevant ship registry and (B)
the filing of (1) the Earnings Assignments with respect to the
BARRINGTON and the PALMERSTON, (2) the Subcharter Assignments and
(3) the Insurance Assignments with respect to each Vessel, with the
Australian Securities Commission within 45 days of the execution
thereof) or that this Agreement or any Security Document be stamped
with any stamp or similar transaction tax or (ii) the admissibility in
evidence of this Agreement or any Security Document in the courts of
the State of New York, courts of New South Wales, Australia or the
Commonwealth of Australia, that any of them be filed, recorded,
registered or enrolled with any governmental, state or local authority
or agency (other than usual and customary filings and submissions in
the courts of such jurisdictions);
(d) Binding Obligations. The Transaction Documents constitute or, when
executed and delivered, will constitute, legal, valid and binding
obligations of each of the Obligors and the Guarantor as is a party
thereto enforceable against each thereof as is a party thereto in
accordance with their terms, except to the extent that such
enforcement may be limited by equitable principles, principles of
public policy or applicable bankruptcy, insolvency, reorganization,
moratorium or other laws affecting generally the enforcement of
creditors' rights.
(e) No Violation. The execution and delivery of, and the performance of
the provisions of, the Transaction Documents by each of the Obligors
and the Guarantor as is a party thereto, do not, and will not during
the term of this Agreement, contravene (i) any applicable
law,regulation or judicial order existing at the date hereof, (ii) any
material agreement or document to which such Obligor is a party or
which is binding upon it or any of its assets,or (iii)the articles of
incorporation or by-laws (or equivalent documents) of any thereof, nor
will it result in the creation or imposition of any mortgage, charge
(whether fixed or floating) or pledge, any maritime or other lien or
any other security interest of any kind on the assets of any Obligors
(except for those in favor of the Security Trustee on behalf of the
Banks) pursuant to the provisions of any such agreement or document;
(f) No immunity. Neither any of the Obligors nor the Guarantor nor any of
their respective assets are entitled to immunity on the grounds of
sovereignty or otherwise from any legal action or proceeding (which
shall include, without limitation, suit, attachment prior to judgment,
execution or other enforcement);
(g) Litigation. Except as otherwise disclosed in writing to the Banks on
or before the date hereof, no action, suit or proceeding is pending or
threatened against any of the Obligors or the Guarantor before or by
any court, board of arbitration or administrative agency which has a
reasonable likelihood of resulting in any material adverse change in
the business or condition (financial or otherwise) of any of the
Obligors or the Guarantor.
(h) No Default. None of the Obligors or the Guarantor is in default under
any agreement by which it is bound, nor is any thereof in default in
respect of any financial commitment or obligation.
(i) Charters. Each Vessel is subject to a Charter and the Australian
Vessels are also subject to a Sub-Charter. The certified copies of the
Charters and Subcharters delivered to the Agent on or prior to the
date of this Agreement are true and complete copies thereof and
constitute legal, valid and binding obligations of the parties thereto
enforceable against the parties thereto in accordance with their
respective terms, except to the extent that such enforcement may be
limited by equitable principles, principles of public policy or
applicable bankruptcy, insolvency, reorganization, moratorium or other
laws affecting generally the enforcement of creditors' rights, and no
amendments thereof or variations thereto have been proposed or agreed
prior to the date hereof other than immaterial changes, details of
which shall have been forwarded to the Agent. The right of each Owner
to all moneys payable under its respective Charter and the right of
Alliance to payment under the Subcharters are not subject to any right
of set-off or counterclaim or any lien, charge, security interest,
assignment or other encumbrance except in favor of the Agent, the
Security Trustee or the Banks. There are no material defaults on the
part of any party to the Charters or the Subcharters and there is no
accrued right of any Owner to terminate its respective Charter with
the respective Charterers or of Alliance to terminate either
Subcharter with Ampol.
(j) Vessel Ownership, Classification, Seaworthiness and Insurance. On the
Issuance Date:
(i) each Vessel will be in the sole and absolute ownership of the
respective Owner, unencumbered, save and except for the Mortgage
(and the respective Mortgage Amendment in the case of the
Australian Vessels) thereon, and duly registered in the name of
the respective Owner under the laws and flag of the Commonwealth
of Australia or the Commonwealth of the Bahamas, as the case may
be;
(ii) each Vessel will be classed in the highest classification and
rating for vessels of the same age and type with its
classification society (which shall be a member of the
International Association of Classification Societies) or such
other classification society acceptable to the Majority Banks
without any outstanding recommendations deemed material by the
Majority Banks;
(iii)each Vessel will be operationally seaworthy and in every way fit
for service; and
(iv) each Vessel will be insured in accordance with the provisions of
the Mortgage thereon and the requirements thereof in respect of
such insurances will have been complied with.
(k) Financial Statements. Except as otherwise disclosed in writing to the
Banks on or prior to the date hereof, all information and other data
furnished by the Obligors and the Guarantor to the Banks are complete
and correct, and all financial statements furnished by the Obligors
and the Guarantor have been prepared in accordance with GAAP and
accurately and fairly present the financial condition of the parties
covered thereby as of the respective dates thereof and the results of
the operations thereof for the period or respective periods covered by
such financial statements. Since such date or dates there has been no
material adverse change in the financial condition or results of the
operations of any of such parties and none thereof has any contingent
obligations, liabilities for taxes or other outstanding financial
obligations which are material in the aggregate except as disclosed in
such statements, information and data.
(l) Tax Returns and Payments. Each of the Obligors and the Guarantor has
filed all tax returns required to be filed thereby and has paid all
taxes payable thereby which have become due, other than those not yet
delinquent or the nonpayment of which would not have a material
adverse effect on any such party, as the case may be, and except for
those taxes being contested in good faith and by appropriate
proceedings or other acts and for which adequate reserves have been
set aside on its books.
(m) Insurance. Each of the Obligors and the Guarantor has insured its
properties and assets against such risks and in such amounts as are
customary for companies engaged in similar businesses.
(n) Offices. The chief executive office and chief place of business of
each of the Obligors, and the office in which the financial records
relating to the Vessels are kept, is, and will continue to be, located
at Ernst & Young at Ernst & ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇ or Teekay Shipping Limited at ▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇.▇. ▇▇▇ ▇▇ ▇▇▇▇,
▇▇▇▇▇▇, the Bahamas, as the case may be; none of the Obligors
maintains a place of business in Canada, the United States or the
United Kingdom.
(o) Not an Investment Company. Neither the Guarantor, nor any of the
Obligors is an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
(p) Equity Ownership. Each of the Obligors is a Wholly Owned Subsidiary of
the Guarantor. On the Issuance Date, none of the Obligors will own any
shares of capital stock, partnership interest or other direct or
indirect equity interest in any corporation, partnership or other
entity.
(q) Environmental Matters. Except as heretofore disclosed in writing to
the Banks (i) each of the Obligors will, when required, be in
compliance with all applicable United States federal and state, local,
foreign and international laws, regulations, conventions and
agreements relating to pollution prevention or protection of human
health or the environment (including, without limitation, ambient air,
surface water, ground water, navigable waters, waters of the
contiguous zone, ocean waters and international waters), including,
without limitation, laws, regulations, conventions and agreements
relating to (1) emissions, discharges, releases or threatened releases
of chemicals, pollutants, contaminants, wastes, toxic substances,
hazardous materials, oil, hazardous substances, petroleum and
petroleum products and by-products ("Materials of Environmental
Concern"), or (2) the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of Materials of
Environmental Concern ("Environmental Laws"); (ii) each of the
Obligors will, when required, have all permits, licenses, approvals,
rulings, variances, exemptions, clearances, consents or other
authorizations required under applicable Environmental Laws
("Environmental Approvals") and will, when required, be in full
compliance with all Environmental Approvals required to operate their
business as then being conducted; (iii) none of the Obligors has
received any notice of any claim, action, cause of action,
investigation or demand by any person, entity, enterprise or
government, or any political subdivision, intergovernmental body or
agency, department or instrumentality thereof, alleging potential
liability for, or a requirement to incur, investigatory costs, cleanup
costs, response and/or remedial costs (whether incurred by a
governmental entity or otherwise), natural resources damages, property
damages, personal injuries, attorneys' fees and expenses, or fines or
penalties, in each case arising out of, based on or resulting from
(1) the presence, or release or threat of release into the
environment, of any Materials of Environmental Concern at any
location, whether or not owned by such person, or (2) circumstances
forming the basis of any violation, or alleged violation, of any
Environmental Law or Environmental Approval ("Environmental Claim")
(other than Environmental Claims that have been fully and finally
adjudicated or otherwise determined and all fines, penalties and other
costs, if any, payable by the Obligors in respect thereof have been
paid in full or are fully covered by insurance (including permitted
deductibles)); and (iv) there are no circumstances that may prevent or
interfere with such full compliance in the future.
(r) Pending or Threatened Environmental Claims. Except as heretofore
disclosed in writing to the Banks there is no Environmental Claim
pending or threatened against any Obligor or past or present actions,
activities, circumstances, conditions, events or incidents, including,
without limitation, the release, emission, discharge or disposal of
any Materials of Environmental Concern, that could form the basis of
any Environmental Claim against any Obligor.
(s) Limited Purpose. Each Owner is a special purpose company whose sole
capital asset is its Vessel; no Owner engages in any business other
than the owning of its Vessel.
(t) Permitted Indebtedness. The Loans and the Guaranty thereof are
Indebtedness of the Original Borrowers, VSSI Australia and the
Guarantor, respectively, the incurrence of which is permitted by
Clause 4.3 of the Indenture because the Interest Coverage Ratio (as
such term is defined in the Indenture) shall be greater than 2:1 after
consummation of the transactions contemplated herein.
(u) Survival. All representations, covenants and warranties made herein
and in any certificate or other document delivered pursuant hereto or
in connection herewith shall survive the issuance of the Amended
Letter of Credit.
4 CONDITIONS PRECEDENT
4.1 Conditions Precedent to Issuance of Amended Letter of Credit. The
obligation of the Agent on behalf of the Banks, to issue the Amended Letter
of Credit to the Beneficiary under this Agreement shall be expressly
subject to the following conditions precedent:
(a) the Agent shall have received the following documents in form and
substance satisfactory to the Agent and its counsel:
(i) copies, certified as true and complete by an officer of each of
the Obligors and the Guarantor of excerpts of the resolutions of
each such company's board of directors (and, if any necessary
under appropriate law, shareholders) evidencing approval of the
Transaction Documents to which such company is or is to be a
party and authorizing an appropriate officer or officers or
attorney-in-fact or attorneys-in-fact to execute the same on its
behalf;
(ii) copies, certified as true and complete by an officer of each of
the Obligors and the Guarantor or other applicable party, of all
documents evidencing any other necessary action (including
actions by such parties thereto other than the Obligors or the
Guarantor as may be required by the Agent), approvals or consents
with respect to this Agreement, the Loan Agreements, the Security
Documents and the transactions contemplated hereby and thereby;
(iii)copies, certified as true and complete by an officer of each of
the Obligors and the Guarantor, of the articles or certificate of
incorporation and by-laws (or the equivalent thereof) of each
thereof (unless such Obligor or Guarantor previously provided
such documents in connection with the Original Reimbursement
Agreement, in which case such Obligor or Guarantor shall provide
a certificate from an officer of such Obligor or Guarantor
stating that such documents have not been amended or rescinded
since the date of the Original Reimbursement Agreement);
(iv) good standing certificates or the equivalent thereof with respect
to each of the Obligors and the Guarantor issued by the
appropriate authorities of the respective jurisdiction of
incorporation of such parties; and
(v) executed copies, certified as true and complete by an officer of
the relevant Owner, of the Charter, Subcharter and Management
Agreement relating to its Vessel (unless such Owner previously
provided such documents in connection with the Original
Reimbursement Agreement, in which case such Owner shall provide a
certificate from an officer of such Owner stating that such
documents have not been amended or rescinded since the date of
the Original Reimbursement Agreement);
(vi) on the Date of Issuance, a certificate from an officer or
director of each of the Obligors stating that the representations
and warranties stated in Clause 2 (updated mutatis mutandis to
such date) are true and correct as if made on that date;
(b) the Agent shall have received evidence (unless such evidence shall
have previously been delivered to the Agent and its counsel in
connection with the Original Reimbursement Agreement, in which case
the relevant Obligor shall certify that such evidence continues to
exist and has not in any way been changed or amended) satisfactory to
the Agent and its counsel that:
(i) each of the Vessels is registered in the name of the relevant
Owner under the Australian or Bahamian flag, as the case may be,
and that each Vessel is free and clear of all liens and
encumbrances of record except for the Mortgage (and respective
Mortgage Amendment in the case of the Australian Vessels) thereon
in favor of the Security Trustee for the benefit of the Banks,
each such Mortgage having been recorded and constituting a first
mortgage lien over the relevant Vessel;
(ii) each Vessel is classed in the highest classification and rating
for vessels of the same age and type with its classification
society without any material outstanding recommendations;
(iii)each Vessel is operationally seaworthy and in every way fit for
service; and
(iv) each Vessel is insured in accordance with the provisions of its
respective Mortgage (evidence of which shall include, without
limitation, cover notes, Certificates of Entry and brokers'
letters of undertaking and an opinion of an insurance consultant
retained by the Agent or such other evidence as shall be
reasonably satisfactory to the Agent) and all requirements
thereof in respect of such insurances have been fulfilled;
(c) each Owner shall have duly executed and delivered:
(i) the Mortgage and/or Mortgage Amendment relating to its Vessel,
(ii) the Insurances Assignment relating to its Vessel,
(iii)the Earnings Assignment relating to its Vessel, and
(iv) the Assignment Notices relating to (ii) and (iii) above;
(d) Alliance shall have executed and delivered the Subcharter Assignments,
the Assignment Notices relating thereto and its Consents;
(e) the Guarantor shall have duly executed and delivered:
(i) the Guaranty, and
(ii) the Pledge and related irrevocable proxies and stock powers and
shall have delivered to the Agent the undated resignations of
officers and directors required to be so delivered pursuant to
the Pledge;
(f) Ampol shall have duly executed and delivered its Consents;
(g) Palm Shipping shall have duly executed and delivered its Consent;
(h) the Agent shall have received payment in full of all fees and expenses
due to the Agent and the Banks on the date thereof including, without
limitation, all fees and expenses due under Clause 2.4 and all fees
due the Agent and the Original Banks under the Original Reimbursement
Agreement shall have been paid;
(i) the Banks shall have received evidence satisfactory to them and their
legal advisers that, save for the liens created by the respective
Mortgage, Mortgage Amendment, Earnings Assignment and Insurances
Assignment, there are no liens, charges or encumbrances of any kind
whatsoever on any Vessel or its earnings or insurances except as
permitted hereby or by any of the Security Documents;
(j) the Banks shall be satisfied that none of the Obligors or the
Guarantor is subject to any Environmental Claim which could have a
material adverse effect on the business, assets or results of
operations of any thereof;
(k) the Banks shall have received a complete copy of the consolidated
audited financial report of the Guarantor for the year ending
March 31, 1997, which shall include at least the balance sheet of such
corporation as of the end of such year and the related statements of
income, cash flow and retained earnings for such year all in
reasonable detail, certified by an Acceptable Accounting Firm,
together with their opinion (containing no qualifications which the
Banks deem material);
(l) the Obligors shall have provided such evidence as the Banks may
require documenting the current legal and beneficial ownership of the
shares of the Obligors and the legal ownership of the shares of the
Guarantor; and
(m) the Banks shall have received opinions from (i) ▇▇▇▇▇▇, ▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇, counsel to the Obligors and the Guarantor on matters of New
York law, the Federal law of the United States and Liberian law,
(ii) Norton ▇▇▇▇▇ & Co., special counsel to the Banks on New South
Wales law and Australian law, (iii) ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & Co., special
counsel to the Banks on Bahamian law and (iv) ▇▇▇▇▇▇ & ▇▇▇▇▇▇, special
counsel to the Banks, in each case in such form as the Banks may
require, as well as such other legal opinions as the Banks shall have
required as to all or any matters under the laws of the United States
of America, the State of New York, the Republic of Liberia, the
Commonwealth of Australia, the State of New South Wales and the
Commonwealth of the Bahamas covering the representations and
conditions which are the subjects of Clauses 3 and 4.
5 PAYMENTS
5.1 Place of Payments, No Set Off. (a) All payments to be made hereunder by the
Obligors shall be made on the due dates of such payments to the Agent at
its account located at Republic National Bank; in favor of Nedship Bank
(America) N.V. Account No. 608 202 444 or to such other place as the Agent
may direct, for the account of the Banks, without set-off or counterclaim
and free from, clear of and without deduction for, any Taxes, provided,
however, that if the Obligors shall at any time be compelled by law to
withhold or deduct any Taxes from any amounts payable to the Banks
hereunder, then, subject to Clause 5.2, the Obligors shall pay such
additional amounts in Dollars as may be necessary in order that the net
amounts received after withholding or deduction shall equal the amounts
which would have been received if such withholding or deduction were not
required and, in the event any withholding or deduction is made, whether
for Taxes or otherwise, the Obligors shall promptly send to the Banks such
documentary evidence with respect to such withholding or deduction as may
be required from time to time by any of the Banks. Notwithstanding the
preceding sentence, the Obligors shall not be required to pay additional
amounts or otherwise indemnify the Banks for or on account of:
(i) Taxes based on or measured by the overall net income of any Bank or
Taxes in the nature of franchise taxes or taxes for the privilege of
doing business imposed by any jurisdiction or any political
subdivision or taxing authority therein unless such are imposed as a
result of the activities of the Obligors within the relevant taxing
jurisdiction;
(ii) Taxes imposed by any jurisdiction or any political subdivision or
taxing authority therein on any Bank that would not have been imposed
but for such Bank's being organized in or conducting business in or
maintaining a place of business in the relevant taxing jurisdiction,
or engaging in activities or transactions in the relevant taxing
jurisdiction that are unrelated to the transactions contemplated by
the Transaction Documents, but only to the extent such Taxes are not
imposed as a result of the activities of any of the Obligors within
the relevant taxing jurisdiction or the jurisdiction of any of the
Obligors under the laws of the taxing jurisdiction;
(iii)Taxes imposed on or with respect to a Bank as a result of a transfer,
sale, assignment, or other disposition by such Bank of any interest in
any Transaction Document, any Note or any Vessel (other than a
transfer pursuant to an exercise of remedies upon an Event of
Default);
(iv) Taxes imposed on, or with respect to, a transferee (or a subsequent
transferee) of an original Bank (and including as such a transferee a
Bank whose shares of stock have been transferred or the purchaser of a
participation in the Loans) to the extent of the excess of such Tax
over the amount of such Tax that would have been imposed on, or with
respect to, such original Bank had there not been a transfer, sale,
assignment or other disposition of the shares of such Bank or a
transfer, sale, assignment or other disposition by such original Bank
of any interest in any Vessel, any Note or any Transaction Document
(in each case, other than any transfer pursuant to the exercise of
remedies as a result of an Event of Default that shall have occurred
and be continuing); or
(v) Taxes imposed on any Bank that would not have been imposed but for any
failure of such Bank to comply with any return filing requirement or
any certification, information, documentation, reporting or other
similar requirement known to such Bank, if such compliance is required
to obtain or establish relief or exemption from or reduction in such
Taxes.
(b) In the event that any Obligor has actual knowledge that the Obligors
are required to, or there arises in any Obligor's reasonable opinion a
substantial likelihood that the Obligors will be required to, pay an
additional amount or otherwise indemnify any Bank for or on account of
any Tax pursuant to Clause 5.1(a), such Obligor will promptly notify
the Agent and each relevant Bank of the nature of such Tax, and shall
furnish such information to the Agent and such Bank with respect to
such Tax, as the Agent or such Bank may reasonably request. In the
event of any knowledge or opinion of an Obligor described in the
preceding sentence, the Obligors, the Agent and each relevant Bank
shall consult in good faith to determine what may be required to avoid
or reduce such Tax, and each shall use reasonable efforts to avoid or
reduce such Tax (so long as such efforts do not, in the reasonable
opinion of any relevant Bank, result in any cost to such Bank or any
modification of the terms or repayment of the Loans).
5.2 Tax Credits. If any Bank obtains the benefit of a credit against its
liability for Taxes imposed by any taxing authority for all or part of the
Taxes as to which the Obligors have paid additional amounts as aforesaid
then such Bank shall reimburse the Obligors for the amount of the credit so
obtained. Each Bank shall use reasonable efforts to file such tax returns
as are necessary to obtain any such credit. In connection therewith, the
Banks may consult with their legal advisers, all fees and expenses of which
shall be for the account of the Obligors.
5.3 Sharing of Setoffs. Each Bank agrees that if it shall, through the exercise
of a right of banker's lien, setoff or counterclaim or pursuant to a
secured claim under Section 506 of the Federal Bankruptcy Code or other
security or interest arising from, or in lieu of, such secured claim,
exercised or received by such Bank under any applicable bankruptcy,
insolvency or other similar law or otherwise, or by any other means other
than pursuant to Clause 2.7 and Clause 8, obtain payment (voluntary or
involuntary) in respect of any of its Reimbursement Obligations as a result
of which the unpaid principal portion of its Reimbursement Obligations (and
accrued and unpaid L/C Fees thereon) shall be proportionately less than the
unpaid principal portion of the Reimbursement Obligations (and accrued and
unpaid L/C Fees thereon) of any other Bank, it shall be deemed
simultaneously to have purchased from such other Bank at face value, and
shall promptly pay to such other Bank the purchase price for, a
participation in the Reimbursement Obligations of such other Bank so that
the aggregate unpaid principal amount of the Reimbursement Obligations (and
accrued and unpaid L/C Fees thereon) and participations in the
Reimbursement Obligations held by each Bank shall be in the same proportion
to the aggregate unpaid principal amount of all Reimbursement Obligations
then outstanding as the principal amount of its Reimbursement Obligations
(and accrued and unpaid L/C Fees thereon) prior to such exercise of
banker's lien, setoff or counterclaim or other event was to the principal
amount of all Reimbursement Obligations outstanding (and accrued and unpaid
L/C Fees thereon) prior to such exercise of banker's lien, setoff or
counterclaim or other event; provided, however, that, if any such purchase
or purchases or adjustments shall be made pursuant to this Clause 5.3 and
the payment giving rise thereto shall thereafter be recovered, such
purchase or purchases or adjustments shall be rescinded to the extent of
such recovery and the purchase price or prices or adjustment restored
without interest. Any Bank holding a participation in any of the
Reimbursement Obligations deemed to have been so purchased may exercise any
and all rights of banker's lien, setoff or counterclaim with respect to any
and all moneys owing to such Bank by reason thereof as fully as if such
Bank had made payment with respect to the Amended Letter of Credit in the
amount of such participation. The Obligors expressly consent to the
foregoing arrangement.
6 EVENTS OF DEFAULT
6.1 In the event that any of the following events shall occur and be
continuing:
(a) Repayments. Any payment due under Clause 2.3 is not paid on the due
date; or
(b) Other Payments. Any fees or other amount becoming payable to the
Agent, the Security Trustee or the Banks under this Agreement (other
than any payment due under Clause 2.3) or under any of the Security
Documents or under any of them is not paid on the due date or within
three (3) Banking Days after the date of demand (as the case may be);
or
(c) Loan Agreement. An Event of Default (as defined in either of the Loan
Agreements) shall occur and be continuing; or
(d) Representations, etc. Any representation, warranty or other statement
made by the Obligors or the Guarantor in this Agreement or in any of
the Security Documents to which it is a party or in any other
instrument, document or other agreement delivered in connection
herewith or therewith proves to have been untrue or misleading in any
material respect as at the date as of which it was made or delivered;
or
(e) Impossibility, Illegality. It becomes impossible or unlawful for the
Obligors or the Guarantor or any of them to fulfill any of the
covenants and obligations contained herein or in any of the Security
Documents to which it is a party or for the Agent, the Security
Trustee or the Banks to exercise any of the rights vested in any of
them hereunder or under any of the Security Documents and such
impossibility or illegality, in the reasonable opinion of the Agent,
the Security Trustee or the Majority Banks, will have a material
adverse effect on their rights hereunder or under any of the Security
Documents or on their right to enforce any thereof; or
(f) Covenants. The Obligors or the Guarantor or any of them defaults in
the performance of any term, covenant or agreement contained in this
Agreement or in any of the Security Documents to which they are a
party or in any of them, or in any other instrument, document or other
agreement delivered in connection herewith or therewith, or there
occurs any other event which constitutes a default under this
Agreement or any of the Security Documents, in each case other than an
Event of Default referred to elsewhere in this Clause 6.1, and such
default, in the reasonable opinion of the Majority Banks, could have a
material adverse effect on their rights hereunder or under any of the
Security Documents or on their right to enforce any thereof and
continues unremedied for a period of thirty (30) days; or
(g) Indebtedness. The Obligors, the Guarantor, or any Wholly Owned
Subsidiary of the Guarantor shall default in the payment when due
(subject to any applicable grace period), whether by acceleration or
otherwise, of any Indebtedness having an outstanding principal amount
of $5,000,000 or more or any party becomes entitled to enforce the
security for any such Indebtedness and such party shall take steps to
enforce the same, unless such default or enforcement is being
contested in good faith and by appropriate proceedings or other acts
and the relevant Obligors, the Guarantor or such Wholly Owned
Subsidiary of the Guarantor as the case may be, shall set aside on its
books adequate reserves with respect thereto, and so long as such
default or enforcement shall not subject any Vessel to material risk
of forfeiture or loss; or
(h) Stock Ownership. There is, without the prior written consent of the
Majority Banks (i) any change in the legal or beneficial stock
ownership or the voting control of the Obligors or (ii) any pledge of
the shares of the Obligors in favor of a party other than the Security
Trustee for the benefit of the Banks or (iii) less than fifty-one
percent (51%) of the issued and outstanding shares of the Guarantor is
held beneficially and of record by the Cirrus Trust and the JTK Trust;
or
(i) Default under the Security Documents. There is an event of default
under any of the Security Documents which shall have occurred and be
continuing; or
(j) Bankruptcy. Any of the Obligors or the Guarantor commences any
proceeding relating to any substantial portion of its property under
any reorganization, arrangement or readjustment of debt, dissolution,
winding up, adjustment, composition, bankruptcy or liquidation law or
statute of any jurisdiction, whether now or hereafter in effect
("Proceeding"), or there is commenced against any of the Obligors or
the Guarantor any Proceeding and such Proceeding remains undismissed
or unstayed for a period of thirty (30) days; or any receiver,
trustee, liquidator or sequestrator of, or for, any of the Obligors or
the Guarantor or any substantial portion of the property of any
thereof is appointed and is not discharged within a period of thirty
(30) days; or any of the Obligors or the Guarantor by any act
indicates consent to or approval of or acquiescence in any Proceeding
or to the appointment of any receiver, trustee, liquidator or
sequestrator of, or for, itself or any substantial portion of its
property; or
(k) Sale of Assets. Any of the Obligors or the Guarantor ceases, or
threatens to cease, its operations or sells or otherwise disposes of,
or threatens to sell or otherwise dispose of, all or substantially all
of its assets or all or substantially all of its assets are seized or
otherwise appropriated; or
(l) Judgments. Any judgment or order is made the effect whereof would be
to render ineffective or invalid this Agreement or the Security
Documents or any of them; or
(m) Inability to Pay Debts. Any of the Obligors or the Guarantor is unable
to pay or admits its inability to pay its debts as they fall due or if
a moratorium shall be declared in respect of any Indebtedness thereof;
or
(n) Financial Position. Any change in the financial position of the
Guarantor which, in the reasonable opinion of the Majority Banks, is
likely to have a material adverse effect on the ability of the
Obligors or the Guarantor to perform its material obligations under
this Agreement, the Security Documents or the Charters; or
(o) Amendment or Assignment of Charters. Any of the Charters or
Subcharters is materially amended or modified or assigned without the
prior written consent of the Majority Banks; or
(p) Termination or Default Under Charters. Any of the Charters or
Subcharters is terminated without the prior written consent of the
Majority Banks, or any party to any thereof defaults or ceases to
perform thereunder for any reason whatsoever, unless, provided that no
other Event of Default has occurred and is continuing, (A) within 180
days of the termination of the Apache Charter by Apache in accordance
therewith, Apache pays to the Security Trustee on behalf of the Banks,
the Termination Payment (as such term is defined in the Apache
Charter) or (B) within 30 days of any default or non-performance of
(1) Ampol under a Subcharter or (2) Apache under the Apache Charter,
the Obligors replace such Subcharter or Apache Charter, as the case
may be, with a charter or subcharter, as the case may be, acceptable
to the Banks;then the Banks' obligation to cause the Agent on their
behalf to issue the Amended Letter of Credit shall cease and the Agent
shall, upon the instructions of the Majority Banks, by notice to the
Obligors, (i) direct the Obligors to pay to the Agent for the benefit
of the Banks, and the Obligors shall immediately pay, an amount equal
to all Letter of Credit Liabilities as of such date less the value of
any cash collateral previously provided to the Banks or Security Agent
on behalf of the Banks hereunder, to be kept as collateral for the
Obligors' obligations in respect of the Amended Letter of Credit until
the Banks' obligations in respect of the Amended Letter of Credit are
canceled and all of the Reimbursement Obligations of the Obligors are
repaid, and declare all sums payable by the Obligors hereunder due and
payable whereupon the same shall forthwith be due and payable without
presentment, demand, protest or notice of any kind, all of which are
hereby expressly waived, and (ii) pay or prepay all other amounts
owing under or in connection with this Agreement and the Security
Documents; provided that upon the happening of an event specified in
subclause (j) or (m) of this Clause 6.1, the Reimbursement
Obligations, accrued interest and any other sums payable hereunder
shall be immediately due and payable without presentment, demand,
protest, declaration or other notice to the Obligors. In any such
event, the Banks, the Agent and/or the Security Trustee may (i)
proceed to protect and enforce their rights by action at law, suit in
equity or in admiralty or other appropriate proceeding, whether for
specific performance of any covenant contained in this Agreement or in
any of the Security Documents, or to enforce any other legal or
equitable right of the Banks, the Agent and/or the Security Trustee,
or (ii) proceed to take any action authorized or permitted under the
terms of any of the Security Documents or by applicable laws for the
collection of all sums due, including, without limitation, the right
to appropriate and hold or apply (directly, by way of set-off or
otherwise) to the payment of the obligations of the Obligors to the
Banks, the Agent and/or the Security Trustee hereunder and/or under
any of the Security Documents (whether or not then due) all moneys and
other amounts of the Obligors, then or thereafter in possession of the
Banks, the Agent and/or Security Trustee, inclusive of the balance of
any deposit account (demand or time, matured or unmatured) of the
Obligors, then or thereafter with the Banks, the Agent and/or Security
Trustee.
6.2 Indemnification. The Obligors agree to, and shall, indemnify and hold
harmless the Agent, the Security Trustee and the Banks against any loss or
costs or expenses (including legal fees and expenses) which the Agent, the
Security Trustee and the Banks sustain or incur as a consequence of any
default in payment of the Reimbursement Obligations or interest accrued
thereon or any other amount payable hereunder or under the Security
Documents (other than costs and expenses caused by the gross negligence or
willful misconduct of the Agent, the Security Trustee or any Bank). The
Agent's, Security Trustee's or Banks' certification of such costs and
expenses shall, absent any manifest error, be conclusive and binding on the
Obligors.
6.3 Application of Moneys. (a) Except as otherwise provided in any Security
Document, all moneys received by the Agent, Security Trustee or Banks under
or pursuant to this Agreement or any of the Security Documents after the
happening of any Event of Default (unless cured to the satisfaction of the
Banks) shall be applied by the Agent in the following manner:
(i) first, in or towards the payment or reimbursement of any expenses or
liabilities incurred by the Agent, the Security Trustee or the Banks
in connection with the ascertainment, protection or enforcement of
their rights and remedies hereunder and under any of the Security
Documents,
(ii) secondly, in or towards the payment of all fees payable by the
Obligors under Clause 2.4;
(iii)thirdly, in or towards payment of any interest owing in respect of
the Reimbursement Obligations,
(iv) fourthly, in or towards payment of any Reimbursement Obligations,
(v) fifthly, in or towards payment of all sums which may be owing to the
Banks, the Agent or the Security Trustee on behalf of the Banks under
this Agreement or into a cash collateral account maintained by the
Agent for amounts which the Banks, in their sole discretion deem
necessary to secure against future claims under the Amended Letter of
Credit,
(vi) sixthly, in or towards payment of all other sums which may be owing to
the Agent, the Security Trustee or the Banks under this Agreement or
under any of the Security Documents, and
(vii)seventhly, the surplus (if any) shall be paid to the Obligors or to
whomsoever else may be entitled thereto.
(b) With respect to any moneys received by the Agent pursuant to the
Security Documents prior to the occurrence of an Event of Default
the Agent shall hold such moneys as collateral in respect of the
Obligors' obligations hereunder, provided, however, that so long
as no Event of Default shall have occurred and be continuing and
the Obligors are in compliance with their obligations under
Clause 7.3, the Agent shall release any such moneys to the
Obligors or to whomsoever the Obligors may direct.
7 COVENANTS
7.1 Each Obligor hereby covenants and undertakes with the Banks, the Agent and
Security Trustee that, from the date hereof and so long as any principal,
interest or other monies are owing in respect of this Agreement and the
Security Documents or any of them:
A. The Obligors will each:
(i) Performance of Agreements. Duly perform and observe, and procure
the observance and performance by all other parties thereto
(other than the Agent, the Security Trustee and the Banks) of,
the terms of this Agreement and the Security Documents;
(ii) Notice of Default; Change in Classification of Vessel. Promptly
inform the Agent of the occurrence of (a) any Event of Default or
of any event which with the giving of notice or lapse of time, or
both, would constitute an Event of Default, (b) the withdrawal of
any Vessel's rating by its classification society or the issuance
by such classification society of any recommendation or notation
affecting class, (c) any litigation or governmental proceeding
pending or threatened against any of the Obligors or the
Guarantor which could reasonably be expected to have a material
adverse effect on the business, assets, operations, property or
financial condition of any such party and (d) any other event or
condition of which it becomes aware which is reasonably likely to
have a material adverse effect on its ability, or the ability of
any other party thereto, to perform its obligations under this
Agreement and the Security Documents or any of them;
(iii)Obtain Consents. Obtain every consent and do all other acts and
things which may from time to time be necessary or advisable for
the continued due performance of all its and any other party's
(other than the Agent's, the Security Trustee's or the Banks')
respective obligations under this Agreement and the Security
Documents;
(iv) Financial Statements. Deliver or cause to be delivered to the
Agent to be distributed by the Agent in accordance with
Clause 12.14:
(a) as soon as available but not later than ninety (90) days
after the end of each fiscal year of the Guarantor complete
copies of the financial reports of the Guarantor (together
with a Compliance Certificate substantially in the form of
Exhibit J, signed by the Chief Financial Officer of the
Guarantor), on a consolidated basis, which shall include at
least the consolidated balance sheet of the Guarantor as of
the end of such year and the related consolidated statements
of income, cash flow and retained earnings for such year,
all in reasonable detail, certified by an Acceptable
Accounting Firm, together with their opinion (without
material qualifications) thereon;
(b) as soon as available but not later than forty-five (45) days
after the end of each of the first three quarters of each
fiscal year of the Guarantor, a balance sheet of the
Guarantor, on a consolidated basis, as at the end of such
quarter and the related consolidated statements of income,
cash flow and retained earnings for such quarter, all in
reasonable detail, unaudited, but certified by the chief
financial officer of the Guarantor, together, in each
instance, with a Compliance Certificate, signed by such
chief financial officer of the Guarantor;
(c) as soon as available, copies of all reports, statements or
other instruments filed with the United States Securities
and Exchange Commission; and
(d) such other statement or statements, lists of property and
accounts, budgets, forecasts, reports and financial
information with respect to the operation and management of
the Vessels and any other vessels owned or operated directly
or indirectly by the Guarantor, as the Agent may from time
to time reasonably request;
(v) Corporate Existence. Do or cause to be done, and procure that the
Guarantor shall do or cause to be done, all things necessary to
preserve and keep in full force and effect their respective
corporate existence, and all licenses, franchises, permits and
assets necessary to the conduct of the business of each such
corporation;
(vi) Books, Records, etc. Keep, and procure that the Guarantor shall
keep, proper books of record and account into which full and
correct entries shall be made, in accordance with GAAP;
(vii)Inspection. Allow, and procure that the Guarantor shall allow,
any representative or representatives designated by the Agent or
any of the Banks, subject to applicable laws and regulations, to
visit and inspect any of the properties of any such party, and,
on request, to examine the books of account, records, reports and
other papers (and to make copies thereof and to take extracts
therefrom) of each such corporation and to discuss the affairs,
finances and accounts of each such corporation, with the officers
and executive employees of each such corporation all at such
reasonable times and as often as the Agent or such Bank
reasonably requests;
(viii) Taxes. Pay and discharge, and cause the Guarantor to pay and
discharge, all taxes, assessments and governmental charges or
levies imposed upon each such corporation or upon such
corporation's income or property prior to the date upon which
penalties attach thereto; provided, however, that such
corporations shall not be required to pay and discharge, or cause
to be paid and discharged, any such tax, assessment, charge or
levy so long as the legality or amount thereof shall be contested
in good faith and by appropriate proceedings or other acts and it
shall set aside on its books adequate reserves with respect
thereto, and so long as such deferment in payment shall not
subject any Vessel to material risk of forfeiture or loss;
(ix) Compliance with Statutes, etc. Do or cause to be done, and
procure that the Guarantor shall do or cause to be done, all
things necessary to comply with all material laws, and the rules
and regulations thereunder, applicable to the Obligors and the
Guarantor and including, without limitation, those laws, rules
and regulations relating to employee benefit plans and
environmental matters;
(x) Environmental Matters. Promptly upon the occurrence of any of the
following conditions, provide to the Agent a certificate of the
chief executive officer thereof, specifying in detail the nature
of such condition and the Obligors' or the Guarantor's proposed
response or the proposed response of any Environmental Affiliate
(as such term is hereinafter defined) of any thereof, as the case
may be: (a) the Obligors' or the Guarantor's receipt or the
receipt by any Environmental Affiliate of any thereof of any
communication whatsoever that alleges that such Person is not in
compliance with any applicable environmental law or environmental
approval, if such noncompliance could reasonably be expected to
have a material adverse effect on the business, assets,
operations, property or financial condition of the Obligors or
the Guarantor, (b) knowledge by the Obligors or the Guarantor or
any Environmental Affiliate of any thereof that there exists any
Environmental Claim pending or threatened against any such Person
which could reasonably be expected to have a material adverse
effect on the business, assets, operations, property or financial
condition of the Guarantor or (c) any release, emission,
discharge or disposal of any material that could form the basis
of any Environmental Claim against the Guarantor or any
Environmental Affiliate if such Environmental Claim could
reasonably be expected to have a material adverse effect on the
business, assets, operations, property or financial condition of
the Guarantor. Upon the written request by the Agent, each
Obligor will submit, and procure that the Guarantor shall submit,
to the Agent at reasonable intervals, a report providing an
update of the status of any issue or claim identified in any
notice or certificate required pursuant to this subclause. For
the purposes of this subclause, "Environmental Claim" shall mean
any claim under federal, state and local environmental, health
and safety laws, statutes or regulations and "Environmental
Affiliate" shall mean any person or entity the liability of which
for Environmental Claims the Obligors or the Guarantor may have
assumed by contract or operation of law;
(xi) Accountants. Retain an Acceptable Accounting Firm as its
independent certified accountants;
(xii)Continue Charters. Continue to charter the Vessels to the
respective Charterer and procure that Alliance shall subcharter
the Australian Vessels to Ampol, and ensure that the terms of
such Charters and Sub-Charters include, inter alia, that the
payments of the Charterers to the Owners under the Charters will,
in the aggregate, be sufficient to cover all payments of the
Owners under this Agreement and any operating and other expenses
of such Owner and that payments by Ampol to Alliance under the
Subcharters will be sufficient to allow Alliance to meet its
obligations under the Charters;
(xiii) Class Certificate. Furnish, or cause to be furnished, to the
Agent, upon any change of a Vessel's classification status or the
issuance of a recommendation affecting class by a Vessel's
classification society or upon the Agent's reasonable request (to
be made no more than once in any calendar year), a confirmation
of class certificate covering each Vessel and evidencing
compliance with the applicable provisions of the Mortgage thereon
within thirty (30) days of such change or such request;
(xiv)Maintenance of Properties. Maintain, or cause to be maintained,
and keep, or cause to be kept, and procure that the Guarantor and
shall maintain, or cause to be maintained, and keep, or cause to
be kept, all properties used or useful in the conduct of its
business in good condition, repair and working order and supplied
with all necessary equipment and will cause to be made necessary
repairs, renewals and replacements thereof so that the business
carried on and in connection therewith and every portion thereof
may be properly and advantageously conducted at all times. In
addition, each Owner shall cause its Vessel to be drydocked as
often as required by such Vessel's classification society and as
a prudent shipowner would require;
(xv) Vessel Management. Cause its Vessel to be managed by the Manager
or such ship manager selected by the Owners and satisfactory to
the Majority Banks pursuant to a written management agreement
acceptable to the Majority Banks;
(xvi) ISM Compliance. Procure:
(a) that any Operator will comply with and ensure that each
Vessel and any Operator by not later than July 1, 1998
comply with the requirements of the ISM Code, including (but
not limited to) the maintenance and renewal of valid
certificates pursuant thereto;
(b) that any Operator will immediately inform the Agent if there
is any threatened or actual withdrawal of its or an
Operator's DOC or the SMC in respect of any Vessel; and
(c) that any Operator will promptly inform the Agent upon the
issuance to the Borrower or any Operator of a DOC and to any
Vessel of an SMC or the receipt by the Borrower or any
Operator of notification that its application for the same
has been realized;
(xvii) Limitation on Restricted Payments.
Procure that the Guarantor will not directly or indirectly declare or
pay any dividend or make any distribution on its capital stock (such
payments being defined as "Restricted Payments") if, at the time of,
and after giving effect to, the proposed Restricted Payment: (A) a
default or Event of Default shall have occurred and be continuing or
(B) the aggregate amount expended for all Restricted Payments (the
amount so expended, if other than in cash, to be determined in good
faith by the Board of Directors, whose determination shall be
conclusive and be evidenced by a Board Resolution) after the date
hereof shall exceed the sum of (1) 50% of the aggregate amount of the
Adjusted Consolidated Net Income (or if Adjusted Consolidated Net
Income is a loss, minus one hundred percent (100%) of such amount) of
the Guarantor accrued on a cumulative basis during the period (taken
as one accounting period) beginning February 1, 1996 and ending on the
last day of the last fiscal quarter preceding such date plus (2) the
aggregate net proceeds (including the fair market value of non-cash
proceeds as determined in good faith by the Board of Directors)
received by the Guarantor (including the amount of any dividends
reinvested in the capital stock of the Guarantor) from the issuance
and sale permitted by the Indenture of capital stock of the Guarantor
(other than redeemable stock), including an issuance or sale for cash
or other property upon the conversion of any Indebtedness of the
Guarantor subsequent to the date hereof, or from the issuance of any
options, warrants or other rights to acquire capital stock of the
Guarantor (in each case, exclusive of any redeemable stock or any
options, warrants or other rights that are redeemable at the option of
the holder, or are required to be redeemed, prior to the Maturity
Date) plus (3) $50,000,000.
The foregoing provision shall not take into account, and shall not be
violated by reason of:
(a) the payment of any dividend within 60 days after the date of
declaration thereof if, at said date of declaration, such payment
would comply with the foregoing paragraph;
(b) the redemption, repurchase, defeasance or other acquisition or
retirement for value of Indebtedness of the Guarantor that is
subordinated in right of payment to the Reimbursement
Obligations, with the proceeds of, or in exchange for,
Indebtedness incurred under Clause 7.1(B)(iii)(III);
(c) the repurchase, redemption or other acquisition by the Guarantor
of capital stock of the Guarantor in exchange for, or out of the
proceeds of a substantially concurrent offering of, shares of
capital stock of the Guarantor (other than redeemable stock);
(d) the acquisition by the Guarantor of its Indebtedness that is
subordinated in right of payment to the Reimbursement Obligations
in exchange for or out of the proceeds of a substantial
concurrent offering of shares of capital stock of the Guarantor
(other than redeemable shares);
(e) payments or distributions pursuant to or in connection with a
consolidation, merger or transfer of assets that complies with
the applicable provisions herein; or
(f) certain purchases, redemptions, acquisitions, cancellations or
other retirements for a nominal value per right of any rights
granted pursuant to any shareholders' rights plan (i.e., a
"poison pill"); provided that in the case of the foregoing
clauses (a) and (b), no Event of Default shall have occurred and
be continuing or occur as a consequence of the actions or
payments set forth therein.
B. None of the Obligors, without the prior written consent of the Majority
Banks, will:
(i) Liens. Create, assume or permit to exist any mortgage, pledge, lien,
charge, encumbrance or any security interest whatsoever upon any of
such party's property or other assets, real or personal, tangible or
intangible, whether now owned or hereafter acquired except:
(a) liens for taxes not yet payable for which adequate reserves have
been maintained;
(b) the Mortgages, the Mortgage Amendments, the Assignments and other
liens in favor of the Security Trustee;
(c) liens, charges and encumbrances against their respective Vessels
permitted to exist under the terms of the Mortgages;
(d) pledges of certificates of deposit or other cash collateral
securing the Obligors' reimbursement obligations in connection
with letters of credit hereafter issued for the account of the
Obligors in connection with the establishment of the financial
responsibility of the Obligors under Title 33 Code of Federal
Regulations ("C.F.R.") Part 130 or Title 46 C.F.R. Part 540, as
the case may be, as the same may be amended or replaced; and
(e) other liens, charges and encumbrances incidental to the conduct
of the business of each such party or the ownership of any such
party's property and assets and which do not in the aggregate
materially detract from the value of each such party's property
or assets or materially impair the use thereof in the operation
of its business;
(ii) Loans and Advances. Make any loans or advances to, or any
investments in, any person, firm, corporation, joint venture
or other entity (including, without limitation, any loan or
advance to any officer, director, stockholder, employee or
customer of any company affiliated with the Obligors or the
Guarantor) except for advances and investments in the normal
course of its business and loans or advances to the
Guarantor;
(iii)Limitation on Indebtedness. (a) Incur, and shall procure
that the Guarantor will not incur, any Indebtedness
excluding Indebtedness hereunder to the Agent, the Security
Trustee or the Banks, Indebtedness under or in connection
with the Loan Agreements and Indebtedness existing (or for
which a written commitment has been made on or before the
date hereof) on the date hereof; provided that the Guarantor
or any of its Subsidiaries may incur Indebtedness if, after
giving effect to the incurrence of such Indebtedness and the
receipt and application of the proceeds therefrom, the
Interest Coverage Ratio of the Guarantor would be greater
than 2:1.
Notwithstanding the foregoing, the Guarantor (or in the case of subclause
(VI) below, Alliance) may incur each and all of the following:
(I) Indebtedness in an aggregate principal amount such that the aggregate
principal amount of the Indebtedness of the Guarantor outstanding
immediately after such incurrence does not exceed the aggregate
principal amount of Indebtedness existing on the date hereof plus
$50,000,000;
(II) Indebtedness of the Guarantor to any Wholly-Owned Subsidiary;
(III)Indebtedness issued in exchange for, or the net proceeds of which are
used to refinance or refund, outstanding Indebtedness of the
Guarantor, other than Indebtedness incurred under clause (I) or (V) of
this paragraph and any refinancings thereof, in an amount not to
exceed the principal amount so exchanged, refinanced or refunded (plus
premiums, accrued and unpaid interest, fees and expenses thereon);
(IV) Indebtedness (A) in respect of performance, surety or appeal bonds
provided in the ordinary course of business, (B) under Currency
Agreements and Interest Rate Agreements; provided that, in the case of
Currency Agreements that relate to other Indebtedness, such Currency
Agreements do not increase the Indebtedness of the Guarantor
outstanding at any time other than as a result of fluctuations in
foreign currency exchange rates or by reason of fees, indemnities and
compensation payable thereunder, and (C) arising from agreements
providing for indemnification, adjustment of purchase price or similar
obligations, or from guarantees or letters of credit, surety bonds or
performance bonds securing any obligations of the Guarantor pursuant
to such agreements, in any case incurred in connection with the
disposition of any business or assets of the Guarantor and not
exceeding the gross proceeds therefrom, other than guarantees of
Indebtedness incurred by any Person acquiring all or any portion of
such business or assets of the Guarantor for the purpose of financing
such acquisition;
(V) Indebtedness in connection with the acquisition of any new
Wholly-Owned Subsidiary; provided that, with respect to this
Clause 7.1(B)(iii)(a)(V), after giving effect to the Incurrence
thereof, the Guarantor could incur at least $1.00 of Indebtedness
pursuant to the first paragraph of this Clause 7.1(B)(iii)(a); and
(VI) Indebtedness of Alliance incurred in the ordinary course of the
operation of vessels or Indebtedness of Alliance to the Guarantor
resulting from advances to Alliance by the Guarantor made in the
ordinary course of business;
(b) For purposes of determining any particular amount of Indebtedness
under this Clause 7.1(B)(iii), guarantees or obligations with
respect to letters of credit supporting Indebtedness otherwise
included in the determination of such particular amount shall not
be included. For purposes of determining compliance with this
Clause 7.1(B)(iii), (i) in the event that an item of Indebtedness
meets the criteria of more than one of the types of Indebtedness
described above in this Clause 7.1(B)(iii), the Guarantor, in its
sole discretion, shall classify such item of Indebtedness and
only be required to include the amount and type of such
Indebtedness in one of such clauses and (ii) the amount of
Indebtedness issued at a price that is less than the principal
amount thereof shall be equal to the amount of the liability in
respect thereof determined in conformity with GAAP.
Notwithstanding any other provision of this Clause 7.1(B)(iii),
the maximum amount of Indebtedness that the Guarantor may incur
pursuant to this Clause 7.1(B)(iii) shall not be deemed to be
exceeded due solely to fluctuations in the exchange rates of
currencies.
(c) The Guarantor shall not incur any Indebtedness that is expressly
subordinated to any other Indebtedness of the Guarantor unless
such Indebtedness, by its terms or the terms of any agreement or
instrument pursuant to which such Indebtedness is issued or
remains outstanding, is also expressly made subordinate to the
Indebtedness of the Guarantor under the Guaranty.
(iv) Guarantees, etc. Assume, guarantee or (other than in the ordinary
course of its business) endorse or otherwise become or remain liable
in connection with any obligation of any Person, firm, company or
other entity except for guaranties in favor of the Banks or the
Security Trustee on behalf of the Banks;
(v) Changes in Business. Change the nature of its business or commence any
other business;
(vi) Use of Corporate Funds. Pay out any funds to any company or Person
except (a) in the ordinary course of business in connection with the
management of the business of the Obligors and the Guarantor,
including the operation and/or repair of the Vessels and (b) the
servicing of the Indebtedness to the Banks;
(vii)Issuance of Shares. Issue or dispose of any shares of its own capital
stock to any Person;
(viii) Consolidation, Merger. Consolidate with, or merge into any Person;
(ix) Changes in Offices or Names. Change the location of the chief
executive office of the Obligors or the Guarantor, the office of the
chief place of business any such parties, or the office of the
Obligors in which the records relating to the earnings or insurances
of the Vessels are kept unless the Banks shall have received thirty
(30) days prior written notice of such change;
(x) Limitation on Transactions with Shareholders and Affiliates. None of
the Obligors will and will procure that the Guarantor will not,
directly or indirectly, enter into, renew or extend any transaction
(including, without limitation, the purchase, sale, lease or exchange
of property or assets, or the rendering of any service) or series of
related transactions with any holder (or any Affiliate of such holder)
of 5% or more of any class of capital stock of the Guarantor or with
any Affiliate of the Guarantor, except upon fair and reasonable terms
no less favorable to the Obligors or the Guarantor than could be
obtained, at the time of such transaction or series of related
transactions or at the time of the execution of the agreement
providing therefor, in a comparable arm's-length transaction with a
Person that is not such a holder or Affiliate.
The foregoing limitation does not limit, and shall not apply to:
(a) transactions or series of related transactions (I) approved by a
majority of the disinterested members of the Board of Directors
as fair to the Obligors or the Guarantor or (II) for which the
Obligors or the Guarantor, as the case may be, delivers to the
Agent a written opinion of a nationally recognized investment
banking firm stating that the transaction is fair to the Obligors
or the Guarantor, as the case may be, from a financial point of
view;
(b) the payment of reasonable and customary regular fees to directors
of the Obligors or the Guarantor who are not employees of the
Obligors or the Guarantor; or
(c) any Restricted Payments not prohibited by Clause 7.1(A)(xvi);
(xi) Change of Flag. Change the flag of any Vessel or the management of
such Vessel;
(xii) Sale of Vessel. Sell, transfer or otherwise dispose of a Vessel; or
(xiii) Modification of Agreements. Except as contemplated by this
Agreement, amend, modify or otherwise change, or allow the Guarantor
to amend, modify or change, any of the Transaction Documents to which
it is a party.
7.2 Valuation of the Vessels. The aggregate fair market value ("FMV") of the
Vessels during the Reimbursement Period shall be greater than or equal to
130% of the Adjusted Stated Amount (at any time, the "Relevant
Percentage"). The FMV of each Vessel shall be determined at the Agent's
discretion, but no less frequently than annually, on the basis of a
valuation (the "Valuation") provided by the Agent. In the event the
Majority Banks or the Obligors disagree with the Agent's Valuation, then
the Obligors and the Agent shall each obtain a separate valuation (the
"Additional Valuations") from separate independent shipbrokers, and the FMV
shall be determined to be the arithmetic average of the Additional
Valuations. Any valuation obtained with respect to the ▇▇▇▇▇▇▇ SPIRIT
pursuant to this Clause 7.2 shall be made on the basis of the ▇▇▇▇▇▇▇
SPIRIT as a non-converted trading tanker. The cost of all valuations
obtained hereunder shall be for the account of the Obligors.
7.3 Collateral Maintenance. If the FMV of the Vessels, as determined pursuant
to Clause 7.2 falls below the Relevant Percentage, within a period of ten
(10) Banking Days following receipt by the Obligors of written notice from
the Agent notifying the Obligors of such shortfall and specifying the
amount thereof (which amount shall, in the absence of manifest error, be
deemed to be conclusive and binding on the Obligors) (a) the Obligors shall
deliver to the Agent, upon its request, additional collateral satisfactory
to the Banks, in their sole discretion (including the deposit of cash in a
cash collateral account maintained with the Agent), such that (x) the sum
of (i) the value of the Vessels, as determined in accordance with the
latest valuation delivered pursuant to Clause 7.2, plus (ii) the value of
additional collateral other than cash collateral, such value to be
determined by the Banks when divided by (y) the Adjusted Stated Amount
(less any cash collateral held by the Agent in a cash collateral account)
shall be equal to or greater than the Relevant Percentage or (b) the
Obligors shall prepay the Letter of Credit Liabilities or part thereof
(together with interest thereon) as shall result in the FMV of the Vessels
being not less than the Relevant Percentage.
7.4 Substitution of Collateral. In the event of the sale by VSSI Transport of
the NASSAU SPIRIT or the release of the NASSAU SPIRIT from the lien of the
Mortgage thereon at VSSI Transport's request, VSSI Transport shall
substitute a vessel approved by the Banks (the "Substitute Vessel") and
which meets the following conditions:
(i) the Substitute Vessel complies with the requirements of Clause 4.1(b);
(ii) the aggregate of the FMV of the Substitute Vessel and the BARRINGTON,
PALMERSTON and ▇▇▇▇▇▇▇ SPIRIT shall be greater than or equal to the
Relevant Percentage;
(iii)the owner of the Substitute Vessel, if other than VSSI Transport, has
executed an Accession Agreement and has executed a counterpart of the
Note, a Mortgage, an Assignment of Earnings and an Assignment of
Insurances (and related notices and has obtained consents and
agreements relating thereto) and the Guarantor has pledged the shares
of such owner in favor of the Security Trustee as provided with
respect to each other Owner hereunder and has met the conditions,
updated mutadis mutandis, of Clauses 4.1(a), (b), (c), (d), (e), (g),
(h), (i), (j), (k), (l) and (m); and
(iv) the relevant charterer of the Substitute Vessel has executed an
assignment of any subcharter of the Substitute Vessel (and related
notices and has obtained consents and agreements relating thereto).
Upon the satisfaction of the foregoing conditions of this Clause 7.4, the
Security Trustee, on behalf of the Banks, shall release the Mortgage and any
Security Documents relating tothe NASSAU SPIRIT and shall release VSSI Transport
from its obligations hereunder.
8 ASSIGNMENT/PARTICIPATIONS
8.1 Assignment. This Agreement shall be binding upon, and inure to the benefit
of, the Obligors, the Agent, the Security Trustee and the Banks and their
respective successors and assigns, except that the Obligors may not assign
any of their rights or obligations hereunder . The Banks may, with the
prior written consent of the Obligors (such consent not to be unreasonably
withheld) assign a portion of their rights and obligations under this
Agreement to any one or more commercial lenders (the expenses of the Banks
in connection with any such assignment shall be for their own account),
provided, however, in the event of any such assignment, such assignment is
to be made pursuant to an Assignment and Assumption Agreement substantially
in the form of Exhibit I . The Obligors will take all reasonable actions
requested by the Banks to effect such assignment, including, without
limitation, the execution of a written consent to such Assignment and
Assumption Agreement.
8.2 Participations. Any Bank may, with the prior written consent of the
Obligors (such consent not to be unreasonably withheld), at any time sell
to one or more commercial banks or other financial institutions (each of
such commercial banks and other financial institutions being herein called
a "Participant") participating interests in any of its Commitment or other
interests of such Bank hereunder; provided, however, that
(a) no participation contemplated in this Section 8.2 shall relieve such
Bank from its Commitment or its other obligations hereunder,
(b) such Bank shall remain solely responsible for the performance of its
Commitment and such other obligations,
(c) no Participant, unless such Participant is an affiliate of such Bank,
shall be entitled to require such Bank to take or refrain from taking
any action hereunder, except that such Bank may agree with any
Participant that such Bank will not, without such Participant's
consent, take any of the following actions: (i) increase the
Commitment of such Bank, reduce any fees described in Section 2, or
extend the Expiration Date, (ii) extend the due date for, or reduce
the amount of, any scheduled repayment or prepayment of fees,
principal of or interest on any of the Reimbursement Obligations, or
(iii) release any guarantor from its obligations under any guarantee,
and
(d) none of the Obligors shall be required to pay any amount under
Clauses 2.5, 2.6 or 10 that is greater than the amount which it would
have been required to pay had no participating interest been sold.
9 CURRENCY INDEMNITY
9.1 Currency Conversion. If for the purpose of obtaining or enforcing a
judgment in any court in any country it becomes necessary to convert into
any other currency (the "judgment currency") an amount due in Dollars under
this Agreement or any of the Security Documents then the conversion shall
be made, in the discretion of the Banks, at the rate of exchange prevailing
either on the date of default or on the day before the day on which the
judgment is given or the order for enforcement is made, as the case may be
(the "conversion date"), provided that the Banks shall not be entitled to
recover under this clause any amount in the judgment currency which exceeds
at the conversion date the amount in Dollars due under this Agreement
and/or any of the Security Documents.
9.2 Change in Exchange Rate. If there is a change in the rate of exchange
prevailing between the conversion date and the date of actual payment of
the amount due, the Obligors shall pay such additional amounts (if any, but
in any event not a lesser amount) as may be necessary to ensure that the
amount paid in the judgment currency when converted at the rate of exchange
prevailing on the date of payment will produce the amount then due under
this Agreement and/or any of the Security Documents in Dollars; any excess
over the amount due received or collected by the Banks shall be remitted to
the Obligors.
9.3 Additional Debt Due. Any amount due from the Obligors under Clause 9.2
shall be due as a separate debt and shall not be affected by judgment being
obtained for any other sums due under or in respect of this Agreement, the
Loan Agreements and/or any of the Security Documents.
9.4 Rate of Exchange. The term "rate of exchange" in this Clause 9 means the
rate at which the Banks in accordance with their normal practices are able
on the relevant date to purchase Dollars with the judgment currency and
includes any premium and costs of exchange payable in connection with such
purchase.
10 EXPENSES
10.1 The Obligors jointly and severally agree, whether or not the transactions
hereby contemplated are consummated, on demand to pay, or reimburse the
Agent, the Security Trustee and the Banks for their payment of, the
reasonable expenses of the Agent, the Security Trustee and the Banks
incident to said transactions (and in connection with any supplements,
amendments, waivers or consents relating thereto or incurred in connection
with the enforcement or defense of any of the Agent's, Security Trustee's
and Banks' rights or remedies with respect thereto or in the preservation
of the Agent's, the Security Trustee's and the Banks' priorities under the
documentation executed and delivered in connection therewith) including,
without limitation, all reasonable costs and expenses of preparation,
negotiation, execution and administration of this Agreement and the
documents referred to herein, the reasonable fees and disbursements of the
Banks' counsel in connection therewith, including ▇▇▇▇▇▇ & ▇▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇▇ & Co. and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & Co. as well as the reasonable fees and
expenses of any independent appraisers, surveyors, engineers and other
consultants retained by the Agent, the Security Trustee and the Banks in
connection with this transaction, all costs and expenses, if any, in
connection with the enforcement of this Agreement, and the Security
Documents and stamp and other similar taxes, if any, incident to the
execution and delivery of the documents herein contemplated and to hold the
Banks free and harmless in connection with any liability arising from the
nonpayment of any such stamp or other similar taxes. Such taxes and, if
any, interest and penalties related thereto as may become payable after the
date here of shall be paid immediately by the Obligors to the Agent, the
Security Trustee or the Banks, as the case may be, when liability therefor
is no longer contested by such party or parties or reimbursed immediately
by the Obligors to such party or parties after payment thereof (if the
Agent, the Security Trustee or the Banks, at their sole discretion, chooses
to make such payment).
11 APPLICABLE LAW, JURISDICTION AND WAIVER
11.1 Applicable Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York.
11.2 Jurisdiction. Each of the Obligors hereby irrevocably submits to the
jurisdiction of the courts of the State of New York and of the United
States District Court for the Southern District of New York in any action
or proceeding brought against it by the Banks under this Agreement or under
any document delivered hereunder and hereby irrevocably agrees that service
of summons or other legal process on it may be served by registered mail
addressed thereto, c/o ▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇. The service, as herein provided, of such summons or
other legal process in any such action or proceeding shall be deemed
personal service and accepted by the Obligors as such, and shall be legal
and binding upon the Obligors for all the purposes of any such action or
proceeding. Final judgment (a certified or exemplified copy of which shall
be conclusive evidence of the fact and of the amount of any indebtedness of
the Obligors to the Banks) against the Obligors in any such legal action or
proceeding shall be conclusive and may be enforced in other jurisdictions
by suit on the judgment. The Obligors will advise the Banks promptly of any
change of address for the purpose of service of process. Notwithstanding
anything herein to the contrary, the Banks may bring any legal action or
proceeding in any other appropriate jurisdiction.
11.3 WAIVER OF JURY TRIAL. IT IS MUTUALLY AGREED BY AND AMONG THE OBLIGORS, THE
GUARANTOR, THE AGENT, THE SECURITY TRUSTEE AND THE BANKS THAT EACH OF THEM
HEREBY WAIVES TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM
BROUGHT BY ANY PARTY HERETO AGAINST ANY OTHER PARTY HERETO ON ANY MATTER
WHATSOEVER ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS AGREEMENT OR
THE SECURITY DOCUMENTS.
12. THE AGENT
12.1 Appointment of Agent. Each of the Banks hereby irrevocably appoints and
authorizes the Agent (which for purposes of this Clause 12 shall be deemed
to include the Agent acting in its capacity as Security Trustee pursuant to
Clause 13) to take such action as agent on its behalf and to exercise such
powers under this Agreement and the Security Documents as are delegated to
the Agent by the terms hereof and thereof. Neither the Agent nor any of its
directors, officers, employees or agents shall be liable for any action
taken or omitted to be taken by it or them under this Agreement, the
Amended Letter of Credit or the Security Documents or in connection
therewith, except for its or their own gross negligence or willful
misconduct.
12.2 Distribution of Payments. Whenever any payment is received by the Agent
from the Obligors for the account of the Banks, or any of them, whether of
Reimbursement Obligations, commissions, fees or otherwise, it will
thereafter cause to be distributed on the same day if received before 11
a.m. New York time, or on the next day if received thereafter, like funds
relating to such payment ratably to the Banks according to their respective
Commitments, as the case may be, in each case to be applied according to
the terms of this Agreement.
12.3 No Duty to Examine, Etc. The Agent shall not be under a duty to examine or
pass upon the validity, effectiveness or genuineness of any of the Security
Documents or any instrument, document or communication furnished pursuant
to this Agreement or in connection therewith or in connection with any
Security Document, and the Agent shall be entitled to assume that the same
are valid, effective and genuine, have been signed or sent by the proper
parties and are what they purport to be.
12.4 Agent as Banks. With respect to that portion of the Amended Letter of
Credit made available by it as a "Bank", the entity which is the Agent
shall have the same rights and powers hereunder as any other Banks and may
exercise the same as though it were not the Agent, and the term "Banks" or
"Banks" shall include the entity which is the Agent in its capacity as a
Bank. The entity which is the Agent and its affiliates may accept deposits
from, lend money to and engage in any kind of business with the Obligors
and the Guarantor as if it were not the Agent.
12.5 (a) Obligations of Agent. The obligations of the Agent under this Agreement
and under the Security Documents are only those expressly set forth herein
and therein.
(b) No Duty to Investigate. The Agent shall not at any time be under any
duty to investigate whether an Event of Default, or an event which
with the giving of notice or lapse of time, or both, would constitute
an Event of Default, has occurred or to investigate the performance of
this Agreement, the Loan Agreements or any of the Security Documents
by the Obligors or the Guarantor.
12.6 (a) Discretion of Agent. The Agent shall be entitled to use its discretion
with respect to exercising or refraining from exercising any rights which
may be vested in it by, and with respect to taking or refraining from
taking any action or actions which it may be able to take under or in
respect of, this Agreement, the Amended Letter of Credit, and the Security
Documents, unless the Agent shall have been instructed by the Majority
Banks or all Banks, as appropriate hereunder, to exercise such rights or to
take or refrain from taking such action; provided, however, that the Agent
shall not be required to take any action which exposes the Agent to
personal liability or which is contrary to this Agreement or applicable
law.
(b) Instructions of Majority Banks. The Agent shall in all cases be fully
protected in acting or refraining from acting under this Agreement,
under the Amended Letter of Credit, under the Guaranty or under any
Security Document in accordance with the instructions of the Majority
Banks or all Banks, as appropriate hereunder, and any action taken or
failure to act pursuant to such instructions shall be binding on all
of the Banks.
12.7 Assumption re Event of Default. Except as otherwise provided in
Clause 12.13, the Agent shall be entitled to assume that no Event of
Default, or event which with the giving of notice or lapse of time, or
both, would constitute an Event of Default, has occurred and is continuing,
unless the Agent has been notified by the Obligors or the Guarantor of such
fact, or has been notified by a Bank that such Bank considers that an Event
of Default or such an event (specifying in detail the nature thereof) has
occurred and is continuing. In the event that the Agent shall have been
notified by the Obligors or any Bank in the manner set forth in the
preceding sentence of any Event of Default or of an event which with the
giving of notice or lapse of time, or both, would constitute an Event of
Default, the Agent shall notify the Banks and shall take action and assert
such rights under this Agreement and under the Security Documents as the
Majority Banks or all Banks, as appropriate hereunder, shall request in
writing.
12.8 No Liability of Agent or Banks. Neither the Agent nor any of the Banks
shall be under any liability or responsibility whatsoever:
(A) To the Obligors or the Guarantor or any other Person or entity as a
consequence of any failure or delay in performance by, or any breach
by, any other Bank or any other Person of any of its or their
obligations under this Agreement or under any Security Document;
(B) To any Bank or Banks, as a consequence of any failure or delay in
performance by, or any breach by, the Obligors or the Guarantor of any
of their respective obligations under this Agreement or under the
Security Documents; or
(C) To any Bank or Banks, for any statements, representations or
warranties contained in this Agreement, in any Security Document or
any document or instrument delivered in connection with the
transaction hereby contemplated; or for the validity, effectiveness,
enforceability or sufficiency of this Agreement, or any Security
Document or any document or instrument delivered in connection with
the transactions hereby contemplated.
12.9 Indemnification of Agent. The Banks agree to indemnify the Agent in its
capacity as Agent and Security Trustee (to the extent not reimbursed by the
Obligors or the Guarantor), pro rata according to the respective amounts of
their Commitments, from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever (including legal fees and
expenses incurred in investigating claims and defending itself against such
liabilities) which may be imposed on, incurred by or asserted against the
Agent in any way relating to or arising out of this Agreement, the Amended
Letter of Credit, or any Security Document, any action taken or omitted by
the Agent thereunder or the preparation, administration, amendment or
enforcement of, or waiver of any provision of, this Agreement, the Amended
Letter of Credit, or any Security Document, except that no Banks shall be
liable for any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements
resulting from the Agent's or the Security Trustee's gross negligence or
willful misconduct.
12.10Consultation with Counsel. The Agent may consult with legal counsel
selected by it and shall not be liable for any action taken, permitted or
omitted by it in good faith in accordance with the advice or opinion of
such counsel.
12.11Resignation. The Agent may resign at any time by giving 60 days' written
notice thereof to the Banks and the Obligors. Upon any such resignation,
the Majority Banks shall have the right to appoint a successor Agent. If no
successor Agent shall have been so appointed by the Majority Banks and
shall have accepted such appointment within 60 days after the retiring
Agent's giving notice of resignation, then the retiring Agent may, on
behalf of the Banks, appoint a successor Agent which shall be a bank or
trust company of recognized standing. The appointment of any successor
Agent shall be subject to the prior written consent of the Obligors, such
consent not to be unreasonably withheld. After any retiring Agent's
resignation as Agent hereunder, the provisions of this Clause 12 shall
continue in effect for its benefit with respect to any actions taken or
omitted by it while acting as Agent.
12.12Representations of Banks. Each Bank represents and warrants to each other
Bank and the Agent that:
(i) In making its decision to enter into this Agreement and to make its
portion of the Amended Letter of Credit available hereunder, it has
independently taken whatever steps it considers necessary to evaluate
the financial condition and affairs of the Obligors and the Guarantor,
that it has made an independent credit judgment and that it has not
relied upon any statement, representation or warranty by any other
Bank or the Agent; and
(ii) So long as any portion of its Commitments remain outstanding, it will
continue to make its own independent evaluation of the financial
condition and affairs of the Obligors and the Guarantor.
12.13Notification of Event of Default. The Agent hereby undertakes to promptly
notify the Bank, and the Bank hereby promptly undertake to notify the Agent
and the other Banks, of the existence of any Event of Default which shall
have occurred and be continuing of which the Agent or any Bank has actual
knowledge.
12.14Distributing Financial Statements, etc. The Agent shall, upon receipt of
financial statements pursuant to Clause 7.1 A(iv) or other notices received
thereunder, deliver or cause to be delivered copies of such documents to
the Banks without delay.
13 APPOINTMENT OF SECURITY TRUSTEE
Each of the Banks irrevocably appoints the Security Trustee as security
trustee on their respective behalf with regard to the (i) security, powers,
rights, titles, benefits and interests (both present and future)
constituted by and conferred on the Banks or any of them or for the benefit
thereof under or pursuant to this Agreement, the Amended Letter of Credit
or any Security Documents (including, without limitation, the benefit of
all covenants, undertakings, representations, warranties and obligations
given, made or undertaken to any Bank in this Agreement or any Security
Document), (ii) all moneys, property and other assets paid or transferred
to or vested in any Bank or any agent of any Bank or received or recovered
by any Bank or any agent of any Bank pursuant to, or in connection with,
this Agreement or the Security Documents whether from any Obligor or the
Guarantor or any other Person and (iii) all money, investments, property
and other assets at any time representing or deriving from any of the
foregoing, including all interest, income and other sums at any time
received or receivable by any Bank or any agent of any Bank in respect of
the same (or any part thereof). The Security Trustee hereby accepts such
appointment.
14 NOTICES AND DEMANDS
14.1 Notices. All notices, requests, demands and other communications to any
party hereunder shall be in writing (including prepaid overnight courier,
facsimile transmission or similar writing) and shall be given to the
Obligors at the address or telecopy number set out below and to the Banks,
the Agent and the Security Trustee at their address and telecopy number set
out below its name on the signature pages hereto or at such other address
or telecopy number as such party may hereafter specify for the purpose by
notice to each other party hereto. Each such notice, request or other
communication shall be effective (i) if given by telecopy, when such
telecopy is transmitted to the telecopy number specified in this Clause and
telephonic confirmation of receipt thereof is obtained or (ii) if given by
mail, prepaid overnight courier or any other means, when received at the
address specified in this Clause or when delivery at such address is
refused.
If to the Obligors at:
c/o Teekay Shipping Limited
▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ and Navy ▇▇▇▇ ▇▇▇▇
▇.▇. ▇▇▇ ▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
15 MISCELLANEOUS
15.1 Time of Essence. Time is of the essence of this Agreement but no failure or
delay on the part of the Banks to exercise any power or right under this
Agreement shall operate as a waiver thereof, nor shall any single or
partial exercise by the Banks of any power or right hereunder preclude any
other or further exercise thereof or the exercise of any other power or
right. The remedies provided herein are cumulative and are not exclusive of
any remedies provided by law.
15.2 Unenforceable, etc., Provisions - Effect. In case any one or more of the
provisions contained in this Agreement or in any of the Security Documents
would, if given effect, be invalid, illegal or unenforceable in any respect
under any law applicable in any relevant jurisdiction, said provision shall
not be enforceable against the Obligors but the validity, legality and
enforceability of the remaining provisions herein or therein contained
shall not in any way be affected or impaired thereby.
15.3 References. References herein to Clauses, Schedules and Exhibits are to be
construed as references to clauses of, and schedules and exhibits to, this
Agreement.
15.4 Further Assurances. Each of the Obligors agrees that if this Agreement or
any of the Security Documents shall, in the reasonable opinion of the Agent
or the Majority Banks, at any time be deemed by the Agent or the Majority
Banks for any reason insufficient in whole or in part to carry out the true
intent and spirit hereof or thereof, it will execute or cause to be
executed such other and further assurances and documents as in the opinion
of the Agent or the Majority Banks may be required in order more
effectively to accomplish the purposes of this Agreement or any of the
Security Documents.
15.5 Prior Agreements, Merger. Any and all prior understandings and agreements
heretofore entered into between the Obligors and the Guarantor on the one
part, and the Agent, the Security Trustee or the Banks, on the other part,
whether written or oral, are superseded by and merged into this Agreement
and the other agreements (the forms of which are exhibited hereto) to be
executed and delivered in connection herewith to which the Obligors and the
Guarantor, the Security Trustee and/or Agent and/or the Banks are parties,
which alone fully and completely express the agreements between the
Obligors and the Security Trustee, the Agent and the Banks.
15.6 Joint and Several Obligations. The obligations of the Obligors under this
Agreement and under each provision hereof are joint and several whether or
not so specified in any provision hereof. Each Obligor shall be entitled to
rights of contribution as against the other Obligor, provided, however,
that such rights of contribution shall (a) not in any way condition or
lessen the liability of any Obligor as a joint and several borrower for the
whole of the obligations owed to the Banks hereunder or under the Security
Documents and (b) be fully subject and subordinate to the rights of the
Banks hereunder and under the Security Documents.
15.7 Limitation of Liability. Notwithstanding anything to the contrary contained
in this Agreement or any of the other Security Documents, in the event that
any court or other judicial body of competent jurisdiction determines that
legal principles of fraudulent conveyances, fraudulent transfers or similar
concepts are applicable in evaluating the enforceability against any
particular Obligor or its assets of this Agreement or any Security Document
granted by such Obligor as security for its obligations hereunder and that
under such principles, this Agreement or such Security Documents would not
be enforceable against such Obligor or its assets unless the following
provisions of this Clause 15.7 had effect, then, the maximum liability of
each Obligor hereunder (the "Maximum Liability Amount") shall be limited so
that in no event shall such amount exceed the lesser of (i) the
Indebtedness and (ii) an amount equal to the aggregate, without double
counting, of (a) ninety-five percent (95%) of the such Obligor's Adjusted
Net Worth (as hereinafter defined) on the date hereof, or on the date
enforcement of this Agreement is sought (the "Determination Date"),
whichever is greater, (b) the aggregate fair value of such Obligor's
Subrogation and Contribution Rights (as hereinafter defined) and (c) the
amount of any Valuable Transfer (as hereinafter defined) to such Obligor,
provided that such Obligor's liability under this Agreement shall be
further limited to the extent, if any, required so that the obligations of
such Obligor under this Agreement shall not be subject to being set aside
or annulled under any applicable law relating to fraudulent transfers or
fraudulent conveyances. In determining the limitations, if any, on the
amount of any of such Obligor's obligations hereunder pursuant to the
preceding sentence, any rights of subrogation or contribution (collectively
the "Subrogation and Contribution Rights") which such Obligor may have on
the Determination Date with respect to any other guarantor of the
Indebtedness under applicable law shall be taken into account. As used in
this Clause 15.7, "Indebtedness" of the Obligor shall mean, all of the
Obligor's present or future indebtedness whether for principal, interest,
fees, expenses or otherwise, to the Banks under this Agreement and the
Security Documents. As used herein "Adjusted Net Worth" of the respective
Obligor shall mean, as of any date of determination thereof, an amount
equal to the lesser of (a) an amount equal to the excess of (i) the amount
of the present fair saleable value of the assets of such Obligor over (ii)
the amount that will be required to pay such Obligor's probable liability
on its then existing debts, including contingent liabilities, as they
become absolute and matured, and (b) an amount equal to (i) the excess of
the sum of such Obligor's property at a fair valuation over (ii) the amount
of all liabilities of such Obligor, contingent or otherwise, as such terms
are construed in accordance with applicable laws governing determinations
of the insolvency of debtors. In determining the Adjusted Net Worth of such
Obligor for purposes of calculating the Maximum Liability Amount for such
Obligor, the liabilities of such Obligor to be used in such determination
pursuant to each clause (ii) of the preceding sentence shall in any event
exclude (a) the liability of such Obligor under this Agreement and the
Security Documents to which it is a party, (b) the liabilities of such
Obligor subordinated in right of payment to this Agreement and (c) any
liabilities of such Obligor for Subrogation and Contribution Rights to any
of the other guarantors. As used herein "Valuable Transfer" shall mean, in
respect of any Obligor, (a) all loans, advances or capital contributions
made to such Obligor with proceeds of the Loans, (b) all debt securities or
other obligations of such Obligor acquired from such Obligor or retired by
such Obligor with proceeds of the Loans, (c) the fair market value of all
property acquired with proceeds of the Loans and transferred, absolutely
and not as collateral, to such Obligor, (d) all equity securities of such
Obligor acquired from such Obligor with proceeds of the Loans, and (e) the
value of any other economic benefits in accordance with applicable laws
governing determinations of the insolvency of debtors, in each such case
accruing to such Obligor as a result of this Agreement.
15.8 Release of Palmstar Thistle. Upon satisfaction of the conditions set forth
in Clause 4.1 and issuance of the Amended Letter of Credit, any and all
obligations of Palmstar Thistle under and in connection with the Original
Reimbursement Agreement and any of the security documents executed by
Palmstar Thistle in connection therewith shall be deemed satisfied and
released and the Agent and the Banks shall execute and deliver such
releases and other documents as may reasonably be required to release and
terminate any mortgage and assignments heretofore granted by Palmstar
Thistle in connection with the Original Reimbursement Agreement.
15.9 Entire Agreement; Amendments. This Agreement constitutes the entire
agreement of the parties hereto including all parties added hereto pursuant
to an Assignment and Assumption Agreement. This Agreement may be executed
in any number of counterparts, each of will shall be deemed an original,
but all such counterparts together shall constitute one and the same
instrument. Any provision of this Agreement may be amended or waived if,
but only if, such amendment or waiver is in writing and is signed by the
Obligors and the Majority Banks (and, if the rights or duties of the Banks,
the Agent or the Security Trustee are affected thereby, by the Banks, Agent
or the Security Trustee, as applicable); provided that no amendment or
waiver shall, unless signed by all the Banks, (i) increase or decrease the
Commitment of any Bank or subject any Bank to any additional obligation,
(ii) reduce the Amended Letter of Credit Fee or any other fees hereunder,
(iii) postpone the date fixed for any payment hereunder or for any
termination of any Commitment, (iv) amend Clause 8, (v) waive any condition
precedent to the making of the Loans, (vi) release any collateral or the
Guarantor or (vii) amend or modify this Clause 14.8 or otherwise change the
percentage of the Commitments or the number or category of Banks, which
shall be required for the Banks or any of them to take any action under
this Clause or any other provision of this Agreement.
15.10Headings. In this Agreement, Clause headings are inserted for convenience
of reference only and shall not be taken into account in the interpretation
of this Agreement.
IN WITNESS whereof the parties hereto have caused this Agreement to be duly
executed by their duly authorized representatives as of the day and year first
above written.
BARRINGTON (AUSTRALIA) PTY LIMITED
(ACN 080 850 559)
By
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Attorney-in-Fact
PALMERSTON (AUSTRALIA) PTY LIMITED
(ACN ▇▇▇ ▇▇▇ ▇▇▇)
By
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Attorney-in-Fact
VSSI AUSTRALIA LIMITED
By
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Attorney-in-Fact
VSSI TRANSPORT INC.
By
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Attorney-in-Fact
ALLIANCE CHARTERING PTY LIMITED
(ACN 080 850 540)
By
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Attorney-in-Fact
COMMITMENTS/PERCENTAGE AMOUNT
Commitment: $26,878,379 NEDSHIP BANK (America) N.V.
Percentage Amount: 34.45946% as Agent, Security Trustee and Bank
▇▇▇▇▇▇▇▇▇▇▇ ▇▇
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ Antilles
Attention: Managing Director
Telecopy: (▇▇▇) ▇-▇▇▇-▇▇▇
By_______________________________
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇
Title: Attorney-in-Fact
copies of all notices to:
Nedship International, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: President
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Commitment: $24,770,270 THE BANK OF NEW YORK, as a Bank
Percentage Amount: 31.75676% ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇.▇. ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
By_______________________________
Name:
Title:
Commitment: $26,351,351 LANDESBANK SCHLESWIG-HOLSTEIN,
Percentage Amount: 33.78378% as a Bank
▇▇▇▇▇▇▇▇▇▇▇ ▇
▇-▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇
Telecopy: ▇▇-▇▇▇-▇▇▇-▇▇▇▇
with a copy of all notices to
Landesbank Schleswig-Holstein
United Kingdom
Representative Office
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇
Telecopy: 011-44-1-71-600-7020
By_______________________________
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇
Title:Attorney-in-Fact
01029.004 #79655
CONSENT AND AGREEMENT
The undersigned, referred to in the foregoing Amended and Restated
Reimbursement Agreement as the "Guarantor", hereby consents and agrees to said
Agreement and to the documents contemplated thereby and to the provisions
contained therein relating to conditions to be fulfilled and obligations to be
performed by the undersigned pursuant to or in connection with said Agreement
and agrees particularly to be bound by the representations, warranties and
covenants relating to the undersigned contained in Clauses 3, 7 and 10.4 of said
Agreement to the same extent as if the undersigned were a party to said
Agreement.
TEEKAY SHIPPING CORPORATION
By___________________________
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Attorney-in-fact
01029.004 #79655