Dated 21 December 2004
AVON MARITIME CORP.
as Borrower
- and -
THE ROYAL BANK OF SCOTLAND PLC
as Lender
----------
LOAN AGREEMENT
----------
US$7,150,000
▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
LONDON
INDEX
CLAUSE PAGE
------ ----
1 PURPOSE, DEFINITIONS AND INTERPRETATION..............................1
2 DRAWDOWN.............................................................8
3 INTEREST AND INTEREST PERIODS........................................9
4 REPAYMENT AND PREPAYMENT............................................10
5 CONDITIONS PRECEDENT................................................12
6 REPRESENTATIONS AND WARRANTIES......................................16
7 UNDERTAKINGS........................................................19
8 APPLICATION OF EARNINGS.............................................23
9 EVENTS OF DEFAULT...................................................23
10 FEES AND EXPENSES...................................................27
11 PAYMENTS AND CALCULATIONS...........................................28
12 NO COUNTERCLAIM, TAXATION...........................................28
13 CHANGES IN CIRCUMSTANCES............................................29
14 INDEMNITIES.........................................................31
15 SET-OFF.............................................................32
16 SECURITY AND APPLICATION............................................32
17 COMMUNICATIONS......................................................33
18 ASSIGNMENTS.........................................................34
19 MISCELLANEOUS.......................................................35
20 LAW AND JURISDICTION................................................35
SCHEDULE.....................................................................37
i
THIS LOAN AGREEMENT is made on the 21 day of December 2004
BETWEEN
(1) AVON MARITIME CORP., as Borrower; and
(2) THE ROYAL BANK OF SCOTLAND PLC, as Lender.
WHEREAS the Lender has agreed to make available to the Borrower a loan facility
of Seven million one hundred and fifty thousand United States Dollars
(US$7,150,000) upon and subject to the terms and conditions contained in this
Agreement.
WHEREBY IT IS AGREED
1 PURPOSE, DEFINITIONS AND INTERPRETATION
1.1 The purpose of the Loan shall be to enable the Borrower to refinance fifty
five per cent. (55%) of the purchase price of the vessel m.v. "WICHITA
BELLE" registered on the Panamanian flag in the name of the Borrower;
1.2 In this Agreement, unless the context otherwise requires, the following
expressions shall have the following meanings:
"ACCOUNT CHARGE" means the deed containing, inter alia, a charge in respect
of the Operating Account executed or to be executed by the Corporate
Guarantor in favour of the Lender substantially in the form set out in
Appendix D (or in such other form as the Lender may approve or require);
"APPROVED MANAGER" means, for the time being, Roymar Ship Management Inc.,
a company incorporated under the laws of New York and having a place of
business at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ as
technical manager, or any other company which the Lender may, in its sole
and absolute discretion, approve from time to time as the technical manager
of the Ship;
"AVON TIME CHARTER" means the time charter dated 5 August 2004 and made
between Pacific Rim and the Borrower in respect of the Ship;
"BORROWER" means Avon Maritime Corp., a company organised and existing
under the laws of the ▇▇▇▇▇▇▇▇ Islands and having its registered office at
Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, ▇▇▇▇▇▇▇▇
Islands MH96960 (and includes its successors);
"BUSINESS DAY" means a day (other than a Saturday or Sunday) on which banks
and financial markets in London are open for business and, in respect of a
day on which a payment is required to be made hereunder, also a day on
which banks and financial markets are open for business in New York City;
"CHARTERS" means the Avon Time Charter, the Daiichi Time charter, the
Pacific Rim Time Charter, the TBS Worldwide Time Charter, the TBS Trip Time
Charters and the Viking Bareboat Charter and, in the singular, means any of
them;
"CORPORATE GUARANTEE" means the guarantee executed or to be executed by the
Corporate Guarantor in favour of the Lender substantially in the form set
out in Appendix E (or in such other form as the Lender may approve or
require);
"CORPORATE GUARANTOR" means TBS International Limited, a company
incorporated under the laws of Bermuda having its principal office at Suite
306, Commerce Building, One ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇;
"CREDIT SUPPORT DOCUMENT" has the meaning given to that expression in
section 14 of the Master Agreement;
"CREDIT SUPPORT PROVIDER" has the meaning given to that expression in
section 14 of the Master Agreement;
"DAIICHI TIME CHARTER" means the time charter dated 9 May 2001 as amended
by addendas nos. 1 through to 6 each made between Great Field and DCKK and
novated to the Borrower pursuant to the novation agreement dated 2 August
2004 and made between Great Field, the Borrower, the Corporate Guarantor
and DCKK;
"DCKK" means Daiichi Chuo Kisen Kaisha, a company incorporated under the
laws of Japan having its registered office at Kakihara Asahi Eitai ▇▇▇▇.
▇-▇▇, ▇▇▇▇ ▇-▇▇▇▇▇, ▇▇▇▇-▇▇, ▇▇▇▇▇ ▇▇▇-▇▇▇▇, ▇▇▇▇▇;
"DOLLARS" and "$" means the lawful currency for the time being of the
United States of America;
"DRAWDOWN DATE" means the date upon which the Borrower has requested that
the Loan be advanced to it pursuant to Clause 2, or (as the context
requires) the date on which the Loan is actually advanced to the Borrower
hereunder;
"EARLY TERMINATION DATE" has the meaning given to that expression in
section 14 of the Master Agreement;
"EARNINGS" means all moneys whatsoever due or to become due to or for the
account of the Borrower at any time during the Security Period arising out
of the use or operation of the Ship including (but not limited to) all
freight, hire and passage moneys, compensation payable to the Borrower in
the event of requisition of the Ship for hire, remuneration for salvage and
towage services, demurrage and detention moneys and damages for breach (or
payments for variation or termination) of any charterparty or other
contract for the employment of the Ship and all sums recoverable under
insurances in respect of loss of Earnings (and including, if and whenever
the Ship is employed on terms whereby any or all such moneys as aforesaid
are pooled or shared with any other person, that proportion of the net
receipts of the relevant pooling or sharing arrangement which is
attributable to the Ship);
2
"ENVIRONMENTAL CLAIM" and "ENVIRONMENTAL INCIDENT" each has the meaning
ascribed to such term in the Mortgage;
"EVENT OF DEFAULT" means any one of the events listed in Clause 9.1;
"FINANCIAL INDEBTEDNESS" means, in relation to any person (a) monies
borrowed or raised by such person, (b) any liability of such person under
any debenture, bond, note or other security, (c) any liability of such
person under acceptance credit facilities, financial leases, deferred
purchase consideration arrangements or any other agreement or instrument
having the commercial effect of a borrowing or raising of money by such
person and (d) any guarantee, indemnity or other assurance against
financial loss given by such person in respect of any of the foregoing;
"GREAT FIELD" means Great Field Limited, a company incorporated under the
laws of Hong Kong having its registered office at 802 K. Wah Centre, ▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇;
"INSURANCES" shall have the meaning given to such term in the Mortgage;
"INTEREST PERIOD" means, in relation to the Loan (or any part thereof), a
period the commencement and length of which shall be determined in
accordance with the provisions of Clause 3.3;
"ISM CODE" means in relation to its application to the Borrower, the Ship
and its operation:
(a) The International Management Code for the Safe Operation of Ships and
for 'Pollution Prevention', currently known or referred to as the 'ISM
Code', adopted by the Assembly of the International Maritime
Organisation by Resolution A.741(18) on 4 November 1993 and
incorporated on 19 May 1994 into chapter IX of the International
Convention for the Safety of Life at Sea 1974 (SOLAS 1974); and
(b) all further resolutions, circulars, codes, guidelines, regulations and
recommendations which are now or in the future issued by or on behalf
of the International Maritime Organisation or any other entity with
responsibility for implementing the ISM Code, including without
limitation, the 'Guidelines on implementation or administering of the
International Safety Management (ISM) Code by Administrations'
produced by the International Maritime Organisation pursuant to
Resolution A.788(19) adopted on 25 November 1995,
as the same may be amended, supplemented or replaced from time to time;
"ISM CODE DOCUMENTATION" includes:
(a) the document of compliance (DOC) and safety management certificate
(SMC) issued by a Classification Society in all respects acceptable to
the Lender in its
3
absolute discretion pursuant to the ISM Code in relation to the Ship
within the periods specified by the ISM Code; and
(c) all other documents and data which are relevant to the ISM SMS and its
implementation and verification which the Lender may require by
request; and
(d) any other documents which are prepared or which are otherwise relevant
to establish and maintain the Ship's or the Borrower's compliance with
the ISM Code which the Lender may require by request;
"ISM SMS" means the safety management system which is required to be
developed, implemented and maintained under the ISM Code;
"LENDER" means The Royal Bank of Scotland plc, a company incorporated in
Scotland having its registered office at ▇▇ ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇ acting through the Shipping Business Centre at ▇-▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇ or through any other branch notified
to the Borrower from time to time pursuant to Clause 18.3 (and includes all
persons directly or indirectly deriving title under it (whether by
assignment, amalgamation, operation of law or otherwise);
"LOAN" means the principal amount of the borrowing by the Borrower under
this Agreement or (as the context requires) the principal amount thereof
for the time being advanced and outstanding under this Agreement;
"MANAGER'S UNDERTAKING" means an undertaking executed or to be executed by
the Approved Manager in the form set out in Appendix F (or in such other
form as the Lender may approve or require);
"MANDATORY COST RATE" means the percentage rate, which represents the cost
to the Lender, relative to the Loan, of compliance with the requirements of
the Bank of England, the Financial Services Authority or any other
regulatory authority, as determined by the Lender in accordance with the
formula detailed in the Schedule hereto;
"MARGIN" means one point five per cent. (1.5%) per annum;
"MASTER AGREEMENT" means the Master Agreement (on the 1992 ISDA
(Multicurrency - Crossborder) form as modified) made between the Lender and
the Borrower of even date herewith, and includes all transactions from time
to time entered into and confirmations from time to time exchanged under
the Master Agreement and any amending, supplementing or replacement
agreements made from time to time;
"MASTER AGREEMENT LIABILITIES" means, at any relevant time, all liabilities
actual or contingent, present or future, of the Borrower to the Lender
under the Master Agreement;
"MASTER AGREEMENT SECURITY DEED" means the deed containing, inter alia, a
charge in respect of the Master Agreement executed or to be executed by the
Borrower in favour of the Lender substantially in the form set out in
Appendix G (or in such other form as the Lender may approve or require);
4
"MORTGAGE" means the first preferred Panamanian ship mortgage on the Ship
executed or to be executed by the Borrower in favour of the Lender
substantially in the form set out in Appendix B (or in such other form as
the Lender may approve or require);
"MULTIPARTY DEED" means, a deed containing, inter alia:
(i) an assignment by the Borrower of its interest in the Viking Bareboat
Charter, the Daiichi Time Charter, the Earnings, Insurances and
Requisition Compensation;
(ii) an assignment by Viking of its interest in the Pacific Rim Time
Charter and the Insurances;
(iii) an assignment by Pacific Rim of its interest in the Avon Time Charter
and the TBS Worldwide Time Charter;
(iv) an assignment by TBS Worldwide of its interest in the TBS Trip Time
Charters,
executed or to be executed by the Borrower, Viking, Pacific Rim and TBS
Worldwide in favour of the Lender substantially in the form set out in
Appendix C;
"NOTICE OF DRAWING" means a notice in the form set out in Appendix A (or in
such other form as the Lender may approve or require);
"OPERATING ACCOUNT" means, for the time being, an account opened or to be
opened in the name of the Corporate Guarantor with the Lender designated
"TBS International Limited - Operating Account" TBSINT - USD1 (or such
other account with any other branch of the Lender or with a bank or
financial institution other than the Lender (whether associated with the
Lender or not) substituted therefor pursuant to this Agreement);
"PACIFIC RIM" means Pacific Rim Shipping Corp., a company incorporated in
the ▇▇▇▇▇▇▇▇ Islands whose registered office is at Trust Company Complex,
Ajeltake Road, Ajeltake Island, Majuro, ▇▇▇▇▇▇▇▇ Islands MH96960;
"PACIFIC RIM TIME CHARTER" means the time charter dated 5 August 2004 and
made between Viking and Pacific Rim in respect of the Ship;
"RBS LIBOR" means, for an Interest Period, the rate per annum at which
deposits in Dollars in an amount approximately equal to the Loan (or any
part thereof) are (or would have been) offered by the Lender to leading
banks in the London Interbank Dollar Market at or about 11.00 a.m. (London
time) on the second Business Day prior to the commencement of such Interest
Period for a period equal to such Interest Period and for delivery on the
First Business Day thereof;
"RECEIVING BANK" means American Express Bank Limited, 3 World Financial
Centre, 23rd Floor, New York, NY 10285-2300, USA or such other bank as may
from time to time be notified by the Lender to the Borrower;
5
"RELEVANT INTEREST RATE" means RBS LIBOR or, in the case where a
Transaction is to be, or has been, entered into under the Master Agreement
and the Borrower has not made an election pursuant to Clause 3.5(b),
TELERATE;
"REPAYMENT DATE" means each of the dates specified in Clause 4.1;
"REQUISITION COMPENSATION" shall have the meaning given to such term in the
Mortgage;
"SECURITY DOCUMENTS" means (a) the Corporate Guarantee, the Manager's
Undertaking, the Mortgage, the Account Charge, the Credit Support
Documents, the Multiparty Deed and the Master Agreement Security Deed and
(where the context so permits) this Agreement and (b) any other agreement
or document that may be executed at any time by the Borrower or any other
person as security for all or any part of the Loan, interest thereon,
Master Agreement Liabilities and any other moneys payable to the Lender
under or in connection with this Agreement and/or the Master Agreement
and/or any of the documents referred to in this definition;
"SECURITY INTEREST" means a mortgage, charge (whether fixed or floating),
pledge, lien, hypothecation, encumbrance, assignment, trust arrangement,
title retention or other distress, execution, attachment, arrangement or
process of any kind having the effect of conferring security;
"SECURITY PERIOD" means the period commencing on the Drawdown Date and
terminating on the date upon which all moneys payable or to become payable
at any time and from time to time pursuant to the terms of this Agreement
and/or any of the Security Documents shall have been paid and discharged in
full;
"SHIP" means the tweendecker type vessel of 17,590 gross registered tons
and 10,303 net registered tons named "WICHITA BELLE" and registered in the
name of the Borrower with the Panamanian ship registry and bareboat
registered in the name of Viking under the Philippines flag;
"SUBORDINATED LOANS" means loans made or to be made available from time to
time by the Corporate Guarantor to the Borrower to enable the Borrower to
finance its acquisition of the Ship and to provide general working capital
to the Borrower;
"SUBSIDIARY" means a body corporate from time to time of which another (a)
has direct or indirect control, or (b) owns directly or indirectly more
than fifty (50) per cent. of the share capital or similar right of
ownership (and in this definition "control" means the power to direct the
management and the policies of a body corporate, whether through the
ownership of voting capital, by contract or otherwise);
"TAXES" includes all present and future income, corporation or value-added
taxes and all stamp and other taxes and levies, imposts, deductions,
duties, charges and withholdings whatsoever together with interest thereon
and penalties with respect thereto, if any, and charges, fees or other
amounts made on or in respect thereof (and references to "Taxation" shall
be construed accordingly);
6
"TBS TRIP TIME CHARTERS" means the time charters entered or to be entered
into between TBS Worldwide and various subsidiaries of TBS Worldwide
pursuant to which TBS Worldwide has agreed or shall agree to let, and such
subsidiaries have agreed or shall agree to hire, the Ship on time charter
following its delivery to TBS Worldwide under the TBS Worldwide Charter;
"TBS WORLDWIDE" means TBS Worldwide Services Inc., a company incorporated
in the ▇▇▇▇▇▇▇▇ Islands whose registered office is at Trust Company
Complex, Ajeltake Road, Ajeltake Island, Majuro, ▇▇▇▇▇▇▇▇ Islands MH96960;
"TBS WORLDWIDE TIME CHARTER" means a time charter made or to be made
between Pacific Rim and TBS Worldwide pursuant to which Pacific Rim has
agreed or shall agree to let, and TBS Worldwide has agreed or shall agree
to hire, the Ship on time charter immediately upon its redelivery under the
Daiichi Time Charter and Avon Time Charter;
"TELERATE" means, for an Interest Period:
(a) the rate per annum equal to the offered quotation for deposits in
Dollars for a period equal to, or as near as possible equal to, the
relevant Interest Period which appears on Telerate Page 3750 at or
about 11.00 a.m. (London time) on the second Business Day prior to the
commencement of that Interest Period (and, for the purposes of this
Agreement, "Telerate Page 3750" means the display designated as "page
3750" on the Telerate Service or such other page as may replace Page
3750 on that service for the purpose of displaying rates comparable to
that rate or on such other service as may be nominated by the British
Bankers' Association as the information vendor for the purpose of
displaying British Bankers' Association Interest Settlement Rates for
Dollars); or
(b) if no rate is quoted on Telerate Page 3750, the rate per annum
determined by the Lender to be the rate per annum which leading banks
in the London Interbank Market offer for deposits in Dollars in the
London Interbank Market at or about 11.00 a.m. (London time) on the
second Business Day prior to the commencement of that Interest Period
for a period equal to that Interest Period and for delivery on the
first Business Day of it;
"TOTAL LOSS" has, in relation to the Ship, the meaning ascribed to such
term in the Mortgage;
"TRANSACTION" means a Transaction as defined in the introductory paragraph
of the Master Agreement;
"VIKING" means Viking International Carriers Inc., a company incorporated
in the Philippines whose principal office is at 2nd Floor, Harbour Centre
11, Railroad & ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇; and
"VIKING BAREBOAT CHARTER" means the bareboat charter dated 5 August 2004
and made between the Borrower and Viking in respect of the Ship.
7
1.3 In this Agreement, references to periods of "MONTHS" shall mean a period
beginning in one calendar month and ending in the relevant calendar month
on the day numerically corresponding to the day of the calendar month in
which such period started, provided that (a) if such period started on the
last Business Day in a calendar month, or if there is no such numerically
corresponding day, such period shall end on the last Business Day in the
relevant calendar month and (b) if such numerically corresponding day is
not a Business Day, such period shall end on the next following Business
Day in the same calendar month, or if there is no such Business Day, such
period shall end on the preceding Business Day (and "month" and "monthly"
shall be construed accordingly).
1.4 In this Agreement:
(a) Clause headings are inserted for convenience only and shall not affect the
construction of this Agreement and unless otherwise specified, all
references to Clauses and Appendices are to Clauses of, and Appendices to,
this Agreement;
(b) unless the context otherwise requires, words denoting the singular number
shall include the plural and vice versa;
(c) references to persons include bodies corporate and unincorporate;
(d) references to assets include property, rights and assets of every
description;
(e) references to any document are to be construed as references to such
document as amended or supplemented from time to time; and
(f) references to any enactment include re-enactments, amendments and
extensions thereof.
2 DRAWDOWN
2.1 Subject to the terms of this Agreement, and in reliance (inter alia) on the
representations and warranties of the Borrower set out in Clauses 6.1 and
6.2 and the representations and warranties of the Borrower and the other
parties to the Security Documents set out in the Security Documents, the
Lender agrees to make available to the Borrower a loan facility of Seven
million one hundred and fifty thousand Dollars ($7,150,000) for the
purposes described in Clause 1.1.
2.2 The Borrower may make a request for the advance of the Loan by sending to
the Lender a duly completed Notice of Drawing (which shall be irrevocable)
to be received by the Lender not later than 11.00 a.m. (London time) three
(3) Business Days prior to the Drawdown Date, provided that if the Loan has
not been advanced on a Business Day on or prior to 31 December 2004 (or
such later date as the Lender, in its sole and absolute discretion, shall
agree) the Lender shall be under no further obligation to advance the Loan
under this Agreement.
2.3 Subject to the terms of this Agreement, the Lender shall advance the Loan
to the Borrower on the Drawdown Date by paying the proceeds thereof to the
Operating
8
Account, and the Borrower hereby unconditionally and irrevocably authorises
the Lender to make such payment on its behalf.
3 INTEREST AND INTEREST PERIODS
3.1 Subject to the terms of this Agreement, the rate of interest applicable to
the Loan (or any part thereof) for each Interest Period relating thereto
shall be the rate per annum determined by the Lender to be the aggregate of
(a) the Margin and (b) the Mandatory Cost Rate and (c) the Relevant
Interest Rate.
3.2 Subject to the terms of this Agreement, the Borrower shall pay interest in
respect of the Loan (or the relevant part thereof) for each Interest Period
relating thereto in arrears on the last day of such Interest Period,
provided that where such Interest Period is of a duration of longer than
three months, accrued interest in respect of the Loan (or such part) shall
be paid every three months during such Interest Period and on the last day
of such Interest Period.
3.3 The duration of each Interest Period shall be three (3), six (6) or twelve
(12) months as notified by the Borrower to the Lender not later than 11.00
a.m. (London time) two (2) Business Days prior to the commencement of such
Interest Period (or such other period as the Lender, in its sole and
absolute discretion, may agree), provided that:
(a) the first Interest Period in relation to the Loan shall commence on the
Drawdown Date and each subsequent Interest Period shall commence on the
expiry of the preceding Interest Period relating thereto;
(b) if the Borrower fails to select an Interest Period then, subject as
provided in this Clause 3.3, the Borrower shall be deemed to have selected
an Interest Period of three (3) months;
(c) the selection of Interest Periods under this Clause 3.3 shall be made in
such manner as to ensure that the expiry of an Interest Period in respect
of an amount of the Loan equal to the repayment instalment which is then
due to be repaid under Clause 4.1 shall coincide with each Repayment Date
relating to the Loan (and, for this purpose alone, shall Interest Periods
of different lengths be selected in relation to the Loan); and
(d) the Lender, in its sole and absolute discretion, is satisfied that deposits
in Dollars for a period equal to such Interest Period will be available to
the Lender in the London Interbank Dollar Market at the commencement of
such Interest Period and, if the Lender is not so satisfied, such Interest
Period shall be of such duration as the Lender and the Borrower shall agree
(or, in the absence of such agreement, as the Lender shall specify).
3.4 In the event that the Lender does not receive on the due date any sum due
under this Agreement or any of the Security Documents to which the Borrower
is a party (or any agreement entered into by the Borrower in connection
herewith or therewith), the Borrower shall pay to the Lender on demand
interest on such sum from and including the due date therefor to the date
of actual payment (as well after as before judgment) at the rate per annum
determined by the Lender to be, if such sum is principal, one point five
9
per cent. (1.5%) above the higher of the rates set out at (a) and (b) below
and, if such sum is other than principal, one point five per cent. (1.5%)
above the rate set out at (b) below:
(a) the rate (inclusive of the Margin) applicable to such overdue principal
immediately prior to the due date (and in any event only for the unexpired
part of any Interest Period relative to such overdue principal) together
with the Mandatory Cost Rate;
(b) the Margin plus the rate per annum at which deposits in Dollars in an
amount equal to such overdue amount are offered by the Lender to leading
banks in the London Interbank Dollar Market on call or for successive
periods of any duration up to three months, as the Lender may determine
from time to time together with the Mandatory Cost Rate. Such interest rate
shall be determined on the commencement of each such period. If the Lender
determines that Dollar deposits are not being made available by it to
leading banks in the London Interbank Dollar Market in the ordinary course
of business, such interest rate shall be determined by reference to the
cost of funds to the Lender from such other sources as the Lender may from
time to time determine.
Any such interest which is not paid when due shall be compounded at the end
of each such Interest Period or other period as the case may be (both
before and after any notice of demand by the Lender under Clause 9.2).
3.5
(a) In the event that a Transaction is to be entered into under the Master
Agreement then (subject to Clause 3.5(b) below) the Relevant Interest Rate
for each and every Interest Period applicable to that part of the Loan the
subject of the Transaction (commencing with the first Interest Period
relating to such Transaction) shall be TELERATE.
(b) The Borrower may elect for the Relevant Interest Rate for each and every
Interest Period applicable to that part of the Loan the subject of a
Transaction (commencing with the first Interest Period relating to such
Transaction) to be RBS LIBOR rather than TELERATE provided that such
election (which shall be irrevocable) is notified in writing by the
Borrower to the Lender not later than 11.00 a.m. (London time) three (3)
Business Days prior to the commencement of such first Interest Period (or
such other period as the Lender, in its sole and absolute discretion, may
agree).
4 REPAYMENT AND PREPAYMENT
4.1 The Borrower shall repay the Loan to the Lender by twenty consecutive
quarterly instalments the first nineteen (19) of such instalments each to
be in the amount of Two hundred and fifty five thousand Dollars ($255,000)
and the final such instalment to be in the amount of Two million three
hundred and five thousand Dollars ($2,305,000), the first such instalment
to be repaid on the date falling six (6) months after the Drawdown Date and
the last such instalment to be repaid the date falling sixty three (63)
months after the Drawdown Date. On the final Repayment Date, the Borrower
additionally shall pay to the Lender all other sums then outstanding or
payable hereunder.
10
4.2 The Borrower may prepay the whole or any part of the Loan on any Business
Day, provided that:
(a) the Lender shall have received from the Borrower not less than fourteen
(14) days' prior notice (which shall be irrevocable) of its intention to
make such prepayment and specifying the amount and date on which such
prepayment is to be made;
(b) the amount of any such partial prepayment shall be not less than Two
hundred and fifty thousand Dollars ($250,000) (or a higher integral
multiple of Two hundred and fifty thousand Dollars ($250,000));
(c) no amount prepaid under this Agreement may be reborrowed;
(d) each prepayment under this Agreement shall be made together with accrued
interest on the amount prepaid and all other sums payable thereon under the
terms of this Agreement and, if such prepayment is not made on the last day
of an Interest Period relating to the amount prepaid, together with any
sums payable pursuant to Clause 14.1(d) but without premium or other
payment; and
(e) each partial prepayment under this Agreement shall (unless the Lender
otherwise agrees in writing prior to the date of any relevant repayment) be
applied against the repayment instalments specified in Clause 4.1 in
inverse order of maturity.
4.3 If for any reason any part of the Loan is not drawn down under this
Agreement but nonetheless a Transaction has been entered into under the
Master Agreement then, subject to Clause 4.5, the Lender shall be entitled
but not obliged to amend, supplement, cancel, net out, terminate,
liquidate, transfer or assign all or any part of the rights, benefits and
obligations created by the Master Agreement and/or to obtain or
re-establish any hedge or related trading position in any manner and with
any person the Lender in its absolute discretion decides, and in the event
of the Lender exercising any part of its entitlement aforesaid the
Borrower's continuing obligations under the Master Agreement shall, unless
agreed otherwise by the Lender, be calculated so far as the Lender
considers it practicable by reference to the repayment schedule for the
Loan taking into account the fact that less than the full amount of the
Loan has been advanced.
4.4 In the case of a prepayment of all or part of the Loan under this Agreement
then, subject to Clause 4.5, the Lender shall be entitled but not obliged
to amend, supplement, cancel, net out, transfer or assign all or such part
of the rights, benefits and obligations created by the Master Agreement
which equate or relate to the part of the Loan so prepaid and/or to obtain
or re-establish any hedge or related trading position in any manner and
with any person the Lender in its absolute discretion decides, and in the
case of a partial prepayment and the Lender exercising any part of its
entitlement as aforesaid the Borrower's continuing obligations under the
Master Agreement shall, unless agreed otherwise by the Lender, be
calculated so far as the Lender considers it practicable by reference to
the amended repayment schedule for the Loan taking account of the fact that
less than the full amount of the Loan remains outstanding.
4.5 If:
11
(a) less than the full amount of the Loan remains outstanding following a
prepayment under this Agreement; or
(b) less than the full amount of the Loan is drawndown under this Agreement,
and the Lender in its absolute discretion agrees, following a written
request of the Borrower, that the Borrower may be permitted to maintain all
or part of a Transaction in an amount not wholly matched with or linked to
all or part of the Loan, the Borrower shall within ten (10) days of being
notified by the Lender of such requirement provide the Lender with, or
procure the provision to the Lender of, such additional security as shall
in the opinion of the Lender be adequate to secure the performance of such
Transaction, which additional security shall take such form, be constituted
by such documentation, and be entered into between such parties, as the
Lender in its absolute discretion may approve or require, and each document
comprising such additional security shall constitute a Credit Support
Document.
4.6 The Borrower shall on the first written demand of the Lender indemnify the
Lender in respect of all loss, cost and expense (including the fees of
legal advisers) incurred or sustained by the Lender as a consequence of or
in relation to the effecting of any matters or transactions referred to in
Clauses 4.3, 4.4 and 4.5.
4.7 Without prejudice to or limitation of the obligation of the Borrower under
Clause 4.6, in the event that the Lender exercises any of its rights under
Clauses 4.3 or 4.4 and such exercise results in all or part of a
Transaction being terminated such termination shall be treated under the
Master Agreement in the same manner as if it were a Terminated Transaction
(as defined in section 14 of the Master Agreement) effected by the Lender
after an Event of Default by the Borrower, and, accordingly, the Lender
shall be permitted to recover from the Borrower a payment for early
termination calculated in accordance with the provisions of section 6(e)(i)
of the Master Agreement.
5 CONDITIONS PRECEDENT
5.1 The obligation of the Lender to advance the Loan to the Borrower shall be
subject to the condition that the Lender shall have received the following
documents and evidence in all respects in form and substance satisfactory
to the Lender and its legal advisers, in the case of those referred to in
sub-clauses (a) to (g) (inclusive) below, on or before the date on which
the Notice of Drawing is served by the Borrower and, in the case of the
remainder, on or before the Drawdown Date:
(a) copies of the Articles of Incorporation and By-Laws (or equivalent
documents) (and all amendments thereto) of each of the Borrower, the
Corporate Guarantor, Viking, Pacific Rim and TBS Worldwide and any other
documents required to be filed or registered or issued under the laws of
their respective countries of incorporation to establish the incorporation
and/or good standing of each of the Borrower, the Corporate Guarantor,
Viking, Pacific Rim and TBS Worldwide under the laws of their respective
countries of incorporation;
12
(b) copies of resolutions passed at separate meetings of the board of directors
and shareholders of each of the Borrower, the Corporate Guarantor, Viking,
Pacific Rim and TBS Worldwide evidencing approval of such of this
Agreement, the Master Agreement, the Charters and the Security Documents to
which each is a party and authorising appropriate officers or attorneys to
execute the same and to sign all notices required to be given hereunder or
thereunder on its behalf (or, in the case of the Charters, ratifying the
execution thereof) or other evidence of such approvals and authorisations
as shall be acceptable to the Lender;
(c) the original of any power of attorney issued in favour of any person
executing this Agreement, the Master Agreement, any of the Charters or any
of the Security Documents on behalf of the Borrower, the Charterers,
Viking, Pacific Rim and TBS Worldwide;
(d) a list specifying the directors and officers of each of the Borrower, the
Corporate Guarantor, Viking, Pacific Rim and TBS Worldwide (together with
their specimen signatures) and specifying the authorised and issued share
capital of each of the Borrower, the Corporate Guarantor, Viking, Pacific
Rim and TBS Worldwide;
(e) copies of all governmental and other consents, licences, approvals and
authorisations as may be necessary to authorise the performance by the
Borrower, the Corporate Guarantor, Viking, Pacific Rim and TBS Worldwide of
their respective obligations under those of this Agreement, the Master
Agreement, the Charters and the Security Documents to which each is a party
and the execution, validity and enforceability of this Agreement, the
Master Agreement, the Charters and the Security Documents;
(f) evidence that the Operating Account has been duly opened by the Corporate
Guarantor and that all board resolutions, mandates, signature cards and
other documents or evidence required in connection with the opening,
maintenance and operation of the Operating Account have been duly delivered
to the Lender;
(g) a valuation of the Ship, dated not earlier than ten (10) days prior to the
Drawdown Date, from an independent London sale and purchase shipbroker
selected by the Lender showing a value for the Ship of not less than
Thirteen million Dollars ($13,000,000);
(h) the Master Agreement and all the Security Documents duly executed and
delivered by the parties thereto together with all other items and
documents required to be delivered pursuant to the terms thereof, including
(but without limitation) insurance notices of assignment, acknowledgements
and letters of undertaking pursuant to the Multiparty Deed;
(i) evidence that:
(i) the Ship is registered in the name of the Borrower with the Panamanian
ship registry and bareboat registered in the name of Viking under the
Philippines flag;
(ii) the Ship is in the absolute and unencumbered ownership of the Borrower
save as contemplated by this Agreement and the Security Documents;
13
(iii) the Ship maintains the class NS* MNS* with Nippon Kaiji Kyokai free
of all recommendations and qualifications of such classification
society save those notified to, and approved in writing by, the
Lender;
(iv) the Mortgage has been duly recorded against the Ship as a valid first
preferred Panamanian ship mortgage in accordance with the laws of
Panama;
(v) the Ship is insured in accordance with the provisions of the Mortgage
and that all requirements therein in respect of insurances have been
complied with; and
(vi) the Philippines ship registry recognise that the title to the ship and
the status of the Mortgage are governed by the law of the underlying
registry (namely the law of Panama).
(j) a certificate from the Borrower and the Approved Manager confirming the
representations and warranties in clause 2.2 of the Mortgage;
(k) evidence of the lightweight displacement tonnage of the Ship;
(l) evidence that the Ship will, as from the Drawdown Date, be managed by the
Approved Manager on terms acceptable to the Lender together with:
(i) the Manager's Undertaking duly executed and delivered by the Approved
Manager;
(ii) copies of the document of compliance (DOC) and safety management
certificate (SMC) referred to in paragraph (a) in the definition of
the ISM Code Documentation certified as true and in effect by the
Borrower and the Approved Manager or, in the event that the DOC and
SMC are not legally required by the Borrower for the Ship at the
Drawdown Date, evidence that those documents have been applied for,
accompanied by a statement from a director or officer of the Borrower
and the Approved Manager that none of them is aware of any reason why
such application may be refused; and
(iii) copies of such other ISM Code Documentation as the Lender may by
written notice to the Borrower have requested not later than two (2)
days before the Drawdown Date certified as true and complete in all
material respects by the Borrower and the Approved Manager;
(m) such evidence as the Lender and its legal advisers shall require in
relation to the due authorisation and execution by DCKK of the
acknowledgement to be executed by it pursuant to the Multiparty Deed;
(n) a statement in writing from a person satisfactory to the Lender confirming
the identity of the legal and beneficial owner or owners of the shares in
the Borrower and the Corporate Guarantor and of the ultimate beneficial
owner or owners of the shares in the Borrower and the Corporate Guarantor;
14
(o) a letter from the Borrower to the protection and indemnity association in
which the Ship is or is to be entered instructing it to provide the Lender
with a copy of the certificate of entry of the Ship and any other
information relating to the entry of the Ship in such protection and
indemnity association;
(p) a written confirmation from the Borrower as to which individuals are
authorised to give verbal and/or written instructions to the Lender on
behalf of the Borrower in respect of the selection of any Interest Period
pursuant to Clause 3.3 of this Agreement;
(q) evidence that the agent for service of process named in Clause 20.5 has
accepted its appointment for the purposes of this Agreement and the
Security Documents;
(r) favourable legal opinions from lawyers appointed by the Lender on such
matters concerning the laws of Panama, Philippines, ▇▇▇▇▇▇▇▇ Islands and
Bermuda and such other relevant jurisdictions as the Lender may require in
relation to or in connection with the Loan Agreement, the Master Agreement,
the Security Documents, or any of them;
(s) evidence that the Lender has received the arrangement fee referred to in
Clause 10.1(a) and all accrued commitment fee payable pursuant to Clause
10.1(b);
(t) a favourable opinion from an independent insurance consultant acceptable to
the Lender on such matters relating to the insurances for the Ship as the
Lender may require;
(u) such documents and evidence as the Lender shall require, based on
applicable law and regulations and the Lender's own internal guidelines,
relating to the Lender's knowledge of its customers;
(v) evidence that an amount of not less than One million five hundred thousand
Dollars ($1,500,000) has been credited to the Operating Account which
amount shall not include the proceeds of the Loan;
(w) certified copies of the Charters;
each of the documents specified in sub-clauses (a), (b), (d) and (e) above
shall be certified as a true and up-to-date copy by a Director or Secretary
(or equivalent officer) of the Borrower.
5.2 Without prejudice to any of the other provisions of this Agreement, in the
event that the Lender, in its sole and absolute discretion, advances the
Loan to the Borrower prior to the satisfaction of all or any of the
conditions referred to in Clause 5.1, or enters into any Transaction prior
to the satisfaction of all or any of the conditions referred to in Clause
5.4, the Borrower hereby covenants and undertakes to satisfy or procure the
satisfaction of such condition or conditions within fourteen (14) days
after the Drawdown Date or the date of the relevant Transaction as the case
may be (or such longer period as the Lender may, in its sole and absolute
discretion, agree or specify).
5.3 The obligation of the Lender to advance the Loan is subject to the
following further conditions:
15
(a) that both at the date of the Notice of Drawing and on the Drawdown Date:
(i) no Event of Default (or event which, with the giving of notice and/or
lapse of time or other applicable condition, might constitute an Event
of Default) has occurred and is continuing or might result from the
advance of the Loan; and
(ii) the representations and warranties of the Borrower in Clause 6.1 and
the representations and warranties of the Borrower and other parties
to the Security Documents set out in the Security Documents are true
and accurate as of each such date, as if made on each such date with
reference to the facts then subsisting;
(iii) none of the circumstances specified in Clause 13.3 has occurred and
is continuing; and
(b) that on the Drawdown Date the representations and warranties of the
Borrower in Clause 6.2 are true and accurate; and
(c) that, if the test set out in Clause 7.3 were applied immediately following
advance of the Loan, the Borrower would not be obliged to provide
additional security or prepay part of the Loan as therein provided; and
(d) the Lender has received, and found to be satisfactory to it in all
respects, such further opinions, consents, agreements and documents in
connection with this Agreement, the Master Agreement and the Security
Documents as the Lender may request by notice to the Borrower prior to the
Drawdown Date.
6 REPRESENTATIONS AND WARRANTIES
6.1 The Borrower hereby represents and warrants to the Lender that:
(a) the Borrower is a corporation duly organised and validly existing and in
good standing under the laws of the ▇▇▇▇▇▇▇▇ Islands and is authorised to
issue 500 registered and/or bearer shares without par value all of which
shares have been issued fully paid and are in the legal and beneficial
ownership of ▇▇▇▇▇▇▇▇▇ Holdings Ltd;
(b) the Borrower has full power and authority (i) to execute and deliver this
Agreement, the Master Agreement and the Security Documents to which the
Borrower is a party, (ii) to borrow under this Agreement and (iii) to
comply with the provisions of, and perform all its obligations under, this
Agreement, the Master Agreement and the Security Documents to which the
Borrower is a party;
(c) the Borrower has complied with the ISM Code and all other statutory and
other requirements relative to its business and in particular has obtained
and maintains a valid SMC and DOC and, where at the date of this Agreement
it is not required by law to have obtained an SMC and a DOC, the Borrower
has applied for an SMC and a DOC and has no reason to believe that such
application will be refused within the period allowed to the Borrower to
obtain those items to comply with the ISM Code and does not have an
16
established place of business in any part of the United Kingdom or its
chief executive office in any part of the United States of America;
(d) the Borrower has taken all necessary action to authorise the borrowing of
the Loan and the execution and delivery of this Agreement, the Master
Agreement and the Security Documents to which the Borrower is a party, and
this Agreement, the Master Agreement and the Security Documents to which
the Borrower is a party, constitute or, as the case may be, will, upon
execution and delivery thereof (and, where applicable, registration thereof
as provided for in this Agreement and the Security Documents), constitute
the Borrower's legal, valid and binding obligations enforceable against the
Borrower in accordance with their respective terms, except as such
enforcement may be limited by any relevant bankruptcy, insolvency,
administration or similar laws affecting creditors' rights generally;
(e) the entry into and performance by the Borrower of this Agreement, the
Master Agreement and the Security Documents to which the Borrower is a
party, do not, and will not during the Security Period, violate in any
respect (i) any law or regulation of any governmental or official authority
or body, or (ii) the constitutional documents of the Borrower, or (iii) any
agreement, contract or other undertaking to which the Borrower is a party
or which is binding on the Borrower or any of its assets;
(f) all consents, licences, approvals and authorisations required in connection
with the entry into, performance, validity and enforceability of this
Agreement, the Charters, the Master Agreement and the Security Documents
have been obtained and are in full force and effect;
(g) save for such registrations and filings as are referred to in this
Agreement and the Security Documents, it is not necessary for the legality,
validity, enforceability or admissibility in evidence of this Agreement,
the Master Agreement and the Security Documents that any of them or any
document relating thereto be registered, filed, recorded or enrolled with
any court or authority in any relevant jurisdiction or that any stamp,
registration or similar Taxes be paid on or in relation to this Agreement,
the Master Agreement or any of the Security Documents;
(h) no action, suit, proceeding, litigation or dispute against the Borrower is
currently taking place or pending or, to the Borrower's knowledge,
threatened nor is there subsisting any judgment or award given against the
Borrower before any court, board of arbitration or other body which, in
either case, could or might result in any material adverse change in the
business or condition (financial or otherwise) of the Borrower;
(i) the Borrower is not in default under the Master Agreement or any other
agreement by which it is bound and no Event of Default (or event which,
with the giving of notice and/or lapse of time or other applicable
condition might constitute an Event of Default) has occurred and is
continuing nor will such a default or Event of Default (or such event)
result from the entry by the Borrower into this Agreement, the Master
Agreement and the Security Documents to which the Borrower is a party, the
making of the Loan to the Borrower or the performance by the Borrower of
any of its obligations under this
17
Agreement, the Master Agreement and the Security Documents to which the
Borrower is a party;
(j) all financial and other information furnished by or on behalf of the
Borrower in connection with the negotiation of this Agreement and the
Security Documents or delivered to the Lender pursuant to this Agreement or
any of the Security Documents was true and accurate when given and there
are no other facts or matters the omission of which would have made any
statement or information contained therein misleading;
(k) all payments made or to be made by the Borrower under or pursuant to this
Agreement, the Master Agreement and the Security Documents to which the
Borrower is a party may be made free and clear of, and without deduction or
withholding for or in account of, any Taxes;
(l) the Borrower's chief executive office is located, and the corporate
documents and records of the Borrower are kept, at Suite 306, Commerce
Building, One ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇;
(m) at the date of this Agreement, the Borrower is not liable under or in
respect of any Financial Indebtedness other than under this Agreement, the
Master Agreement and the Security Documents to which it is a party and such
Financial Indebtedness as shall have been notified to, and approved by, the
Lender on or prior to the date of this Agreement;
(n) the Borrower has paid all Taxes applicable to, or imposed on or in relation
to, the Borrower, its business or the Ship; and
(o) the Borrower confirms that it is acting for its own account and that the
borrowing of the Loan and the performance and discharge of the Borrower's
obligations and liabilities under this Agreement and other arrangements
effected or contemplated by this Agreement will not involve or lead to
contravention of any law, official, requirement or other regulatory measure
or procedure implemented to combat "money laundering" (as defined in
Article 1 of the Directive (91/308/EEC) of the Council of the European
Community).
6.2 The Borrower hereby further represents and warrants to the Lender that on
the Drawdown Date:
(a) the Ship will be registered in the name of the Borrower with the Panamanian
ship registry and bareboat registered in the name of Viking under the
Philippines flag;
(b) the Ship will be in the absolute and unencumbered ownership of the Borrower
save as contemplated by this Agreement and the Security Documents;
(c) the Ship will maintain the class NS* MNS* with Nippon Kaiji Kyokai free of
all recommendations and qualifications of such classification society save
those notified to, and approved in writing by, the Lender;
(d) the Ship will be operationally seaworthy;
18
(e) the Ship will comply with all relevant laws, regulations and requirements
(statutory or otherwise) as are applicable to (i) ships registered under
the Panamanian flag and (ii) engaged in the same or a similar service as
the Ship is or is to be engaged;
(f) the Mortgage will have been duly recorded against the Ship as a valid first
preferred Panamanian ship mortgage in accordance with the laws of Panama;
(g) the Ship will be insured in accordance with the provisions of the Mortgage
and the requirements therein in respect of insurances will have been
complied with; and
(h) the Ship will be technically managed by the Approved Manager on terms
acceptable to the Lender.
6.3 The representations and warranties of the Borrower set out in Clauses 6.1
and 6.2 shall survive the execution of this Agreement and the advance of
Loan hereunder and the representations and warranties set out in Clause 6.1
shall be deemed to be repeated at the commencement of each Interest Period,
with respect to the facts and circumstances existing at each such time, as
if made at each such time.
7 UNDERTAKINGS
7.1 The Borrower undertakes that, as and from the date of this Agreement and
throughout the Security Period, it will comply in full with the following
undertakings:
(a) the Borrower will send (or procure that there is sent) to the Lender:
(i) as soon as possible, but in no event later than ninety (90) days after
the end of each financial year of the Corporate Guarantor, the audited
consolidated accounts and financial statements for such financial
year, such accounts and financial statements to be prepared in
accordance with generally accepted accounting principles consistently
applied and certified as to their correctness by certified or
chartered accountants acceptable to the Lender;
(ii) as soon as the same is instituted (or, to the knowledge of the
Borrower, threatened), details of any litigation, arbitration or
administrative proceedings against or involving the Borrower, the
Corporate Guarantor, Pacific Rim, TBS Worldwide, the Approved Manager
or the Ship (including any actual breach of the ISM Code) which is
likely to have a material adverse effect on the Borrower, the
Corporate Guarantor, Pacific Rim, TBS Worldwide, the Approved Manager
or the operation of the Ship and as soon as to the knowledge of the
Borrower the same is instituted or threatened, details of any
litigation, arbitration or administrative proceedings against or
involving Viking which is likely to have a material adverse effect on
Viking;
(iii) promptly upon being sent, copies of all communications to its
shareholders and/or creditors generally (and in their capacities as
such); and
19
(iv) from time to time, and on demand, such additional financial or other
information (including but not limited to the ISM Code Documentation)
relating to the Borrower, the Corporate Guarantor, Viking Pacific Rim,
TBS Worldwide and/or the Ship as may be requested by the Lender
(provided that in the case of Viking the Borrower's obligation shall
be limited only to such information as it shall be able to obtain from
Viking) and, without limiting the foregoing, the Borrower shall
without the need for a specific request from the Lender, advise the
Lender if its application for an SMC or a DOC is refused or made
subject to conditions;
(b) the Borrower will notify the Lender of any Event of Default (or event
which, with the giving of notice and/or lapse of time or other applicable
condition, might constitute an Event of Default) forthwith upon the
occurrence thereof;
(c) the Borrower will maintain its corporate existence as a body corporate duly
organised and validly existing and in good standing under the laws of the
▇▇▇▇▇▇▇▇ Islands and will obtain and promptly renew from time to time, and
will promptly furnish certified copies to the Lender of, all such
authorisations, approvals, consents and licences as may be required under
any applicable law or regulation to enable the Borrower to perform its
obligations under this Agreement, the Master Agreement and the Security
Documents to which the Borrower is a party (or any of them) or required for
the validity or enforceability of this Agreement, the Master Agreement and
the Security Documents to which the Borrower is a party (or any of them) or
required to enable the Borrower to continue to own and operate the Ship,
and the Borrower shall comply with the terms of the same;
(d) the Borrower will not without the prior consent of the Lender, create,
assume or permit to exist any Security Interest upon the Ship, her
Insurances or the Earnings or any of its other assets (whether now owned or
hereafter acquired) (including, but not limited to, the Borrower's rights
against the Lender under the Master Agreement or all or any part of the
Borrower's interest in any amount payable to the Borrower by the Lender
under the Master Agreement) except as contemplated by the Security
Documents;
(e) the Borrower will not (voluntarily or involuntarily) without the prior
consent of the Lender, sell, convey, transfer, lease, or otherwise dispose
of all or a substantial part of its assets (whether by one transaction or a
series of transactions and whether related or not);
(f) the Borrower will procure that the Ship complies with the ISM Code and
notify the Lender in writing in the event that either the DOC or SMC is
withdrawn, cancelled or suspended;
(g) the Borrower will produce such documents and evidence as the Lender shall
from time to time require, based on applicable law and regulations from
time to time and the Lender's own internal guidelines from time to time
relating to the Lender's knowledge of its customers;
(h) the Borrower will not purchase any further tonnage without the prior
written consent of the Lender;
20
(i) the Borrower shall keep the Lender fully informed of any actual or proposed
purchases of further tonnage by any company (other than the Borrower)
within the same beneficial ownership or control as the Borrower at the
earliest possible opportunity and, in any event, at regular intervals of
not more than three months; and
(j) the Borrower shall ensure that throughout the Security Period there is
standing to the credit of the Operating Account a minimum average balance
of One million five hundred thousand ($1,500,000) in any one month.
7.2 The Borrower further undertakes that it shall not, as and from the date of
this Agreement and throughout the Security Period, without the prior
consent of the Lender (such consent not to be unreasonably withheld in the
case of sub paragraphs (b), (c) and (e) below):
(a) conduct any business or activity other than the ownership, chartering and
operation of the Ship; or
(b) declare or pay any dividend or make any other distribution of its assets or
profits to any stockholder; or
(c) repay any stockholders' loans or any other loans advanced to it by any
person, nor make any loans or advances to any person; or
(d) except for indebtedness under this Agreement, the Master Agreement and
those of the Security Documents to which it is a party, incur or agree to
incur or issue any Financial Indebtedness, nor make any commitments, other
than those occurring in the ordinary course of the trading of the Ship
(including, without limitation, commitments in respect of purchases of
ships); or
(e) pay out any funds to any person except in connection with the
administration of the Borrower or the operation and/or repair of the Ship
or the servicing of the Loan or as otherwise permitted by or pursuant to
this Agreement and the other Security Documents; or
(f) assign or otherwise dispose of any of its book debts; or
(g) issue any shares in its capital other than to its shareholder(s); or
(h) reduce its issued share capital; or
(i) form or acquire any Subsidiaries; or
(j) consolidate or amalgamate with, or merge into, any other entity; or
(k) employ a technical manager of the Ship other than the Approved Manager, nor
change the terms and conditions of the technical management of the Ship
other than upon such terms and conditions as the Lender shall approve,
21
provided however that, notwithstanding the above, prior to the occurrence
of an Event of Default (or an event which, with the giving of notice and/or
lapse of time or other applicable condition, might constitute an Event of
Default), the Borrower shall be permitted to make repayments in respect of
Subordinated Loans together with payments of interest thereon.
7.3
(a) The Borrower hereby further undertakes that if, and so often as, the market
value (as determined in accordance with Clause 7.3(b)) of the Ship (plus
the market value of any additional security for the time being actually
provided to the Lender pursuant to this Clause 7.3) falls below one hundred
and forty per cent. (140%) of the aggregate of (i) the Loan and (ii) such
amount (the "TERMINATION AMOUNT") as described by the Lender in its
absolute discretion as the amount due from the Borrower on terminating any
Transaction under the Master Agreement in the same manner as if it were a
Terminated Transaction (as defined in Section 14 of the Master Agreement)
effected by the Lender after an Event of Default, it will within ten (10)
days of being notified by the Lender of such requirement (which
notification shall be conclusive and binding on the Borrower) either:
(i) provide the Lender with, or procure the provision to the Lender of,
such additional security as shall in the opinion of the Lender be
adequate to make up such deficiency, which additional security shall
take such form, be constituted by such documentation and be entered
into between such parties as the Lender in its absolute discretion may
approve or require (and, if the Borrower does not make proposals
satisfactory to the Lender in relation to such additional security
within five (5) days of the date of the Lender's notification to the
Borrower aforesaid, the Borrower shall be deemed to have elected to
prepay in accordance with (ii) below); or
(ii) prepay (subject to, and in accordance with, sub-clauses (c), (d) and
(e) of Clause 4.2) such part of the Loan as will ensure that the
market value (determined as aforesaid) of the Ship and any such
additional security is after such prepayment at least one hundred and
forty per cent. (140%) of the aggregate of (i) the Loan and (ii) the
Termination Amount.
(b) For the purposes of this Clause 7.3, the market value of the Ship shall be
determined (at the expense of the Borrower) at any such time as the Lender
may request by means of a valuation made by such independent sale and
purchase shipbroker as may from time to time be appointed by the Lender.
For this purpose, such valuation shall be made with or without physical
inspection of the Ship (as the Lender may require), on the basis of a sale
for prompt delivery for cash at arm's length on normal commercial terms as
between a willing seller and a willing buyer, free of any existing charter
or other contract of employment. The Borrower agrees to accept any
valuation made by a shipbroker appointed as aforesaid as conclusive
evidence of the market value of the Ship at the date of such valuation. The
Borrower agrees to supply to the Lender and to any such
22
shipbroker such information concerning the Ship and her condition as such
shipbroker may require for the purpose of making such valuation.
(c) For the purpose of this Clause 7.3, the market value of any additional
security provided or to be provided to the Lender shall be determined by
the Lender in its absolute discretion without any necessity for the Lender
assigning any reason therefor.
(d) In connection with any additional security provided in accordance with this
Clause 7.3, the Lender shall be entitled to receive certified copies of
such documents of the kinds referred to in sub-clauses (a), (b), (c), (d)
and (e) (inclusive) of Clause 5.1 and such favourable legal opinions as the
Lender shall in its absolute discretion require.
8 APPLICATION OF EARNINGS
8.1 The Borrower will procure that the Corporate Guarantor complies with any
written requirement of the Lender from time to time as to the location or
re-location of the Operating Account and that the Corporate Guarantor will
from time to time enter into such documentation as the Lender may require
in order to create or maintain in favour of the Lender a Security Interest
in the Operating Account, all at the cost and expense of the Borrower.
8.2 The Borrower will procure that, throughout the Security Period (and subject
only to the provisions of the Multiparty Deed), all the Earnings shall be
paid to the Operating Account.
8.3 Any amounts standing to the credit of the Operating Account shall, provided
that the provisions of Clause 7.1(j) and the foregoing provisions of this
Clause 8 shall have been complied with and provided that no Event of
Default (or event which, with the giving of notice and/or lapse of time or
other applicable condition, might constitute an Event of Default) shall
have occurred, be available to the Borrower and the Corporate Guarantor for
any purpose permitted by this Agreement and the Security Documents.
8.4 Any amounts for the time being standing to the credit of the Operating
Account shall bear interest at the rate from time to time offered by the
Lender to its customers for Dollar deposits of similar amounts and for
periods similar to those for which such amounts are likely to remain
standing to the credit of the Operating Account.
9 EVENTS OF DEFAULT
9.1 Each of the following events shall constitute an Event of Default (whether
such event shall occur or come about voluntarily or involuntarily or by
operation of law or regulation or pursuant to, or in compliance with, any
judgment, decree or order of any court or other authority):
(a) the Borrower or any other party to any of the Security Documents fails to
pay on the due date (or within one (1) Business Day of the due date where
the failure to pay on the due date is caused by an error or omission of an
administrative or operational nature beyond the control of the Borrower or,
in the case of sums expressed to be payable on demand,
23
within three (3) days of the Lender's demand) any sum payable pursuant to
this Agreement or any of the Security Documents (or any agreement entered
into in connection with this Agreement or any of the Security Documents);
or
(b) the Borrower breaches any of the undertakings in Clauses 7.1(d) or (e) or
(h) or 7.2 or the Borrower fails to provide additional security or make a
prepayment of part of the Loan in the circumstances referred to in Clause
7.3 within the time therein prescribed; or
(c) the Borrower defaults under, or in the due and punctual observance and
performance of, any other provision of this Agreement and where, in the
opinion of the Lender, such default is capable of remedy, such default is
not remedied within ten (10) days after written notice from the Lender
requesting action to remedy the same; or
(d) the Borrower or any other party to any of the Security Documents (other
than the Lender) defaults under, or in the due observance and performance
of, any provision of any of the Security Documents; or
(e) any representation or warranty made by the Borrower or any other party to
any of the Security Documents (other than the Lender) in or pursuant to
this Agreement or any of the Security Documents or in any notice,
certificate, instrument or statement contemplated hereby or thereby or made
or delivered pursuant hereto or thereto is, or proves to be, untrue or
incorrect in any respect when made or deemed to be repeated; or
(f) any Financial Indebtedness of the Borrower is not paid when due or becomes
prematurely payable or capable of being prematurely declared payable as a
consequence of a default with respect thereto or any Security Interest over
any assets of the Borrower is enforced or becomes capable of being
enforced; or
(g) (i) any preparatory or other steps are taken by any person to convene a
meeting of the Borrower for the purposes of considering or passing any
resolution or petition for the winding-up or dissolution of the Borrower,
or (ii) a petition is presented or an order is made or a resolution is
passed for the winding-up or dissolution of the Borrower, or (iii) the
Borrower becomes insolvent or is deemed unable to pay its debts within the
meaning of Section 123 of the Insolvency ▇▇▇ ▇▇▇▇ or the Borrower becomes
unable to pay its debts as they fall due, or (iv) the Borrower stops or
threatens to stop making payments generally or declares or threatens to
declare a moratorium or suspension of payments with respect to all or any
part of its debts or enters into any composition, scheme, compromise or
other arrangement with its creditors generally (or any class of them), or
(v) any preparatory or other steps are taken by any person to appoint an
administrative or other receiver or similar official of the Borrower or any
of its assets, or (vi) any notice appointing an administrator or examiner
or any notice of intended appointment or any other notice which is required
by law (generally or in the case concerned) to be filed with the Court or
given to a person prior to, or in connection with, the appointment of an
administrator or examiner is so filed or given in respect of the Borrower
or (vii) any meeting of the Borrower is convened or any other preparatory
or other steps are taken for the purpose of considering an application for
an administration order in relation to the Borrower or such an
administration order is made by a court, or (viii) (in the opinion of
24
the Lender) anything analogous to any of the foregoing events occurs in any
applicable jurisdiction; or
(h) an encumbrancer takes possession of the whole or, in the opinion of the
Lender, any material part of the assets of the Borrower or a Security
Interest (other than in favour of the Lender) is levied or enforced upon or
sued out against the whole or, in the opinion of the Lender, a material
part of the assets of the Borrower; or
(i) the Borrower ceases or threatens to cease, to carry on all or, in the
opinion of the Lender, any material part of its business; or
(j) any of the circumstances described in sub-clauses (f), (g), (h) or (i) of
this Clause 9.1 arises (mutatis mutandis) in relation to the Corporate
Guarantor, Viking, Pacific Rim, TBS Worldwide or the Approved Manager; or
(k) any event occurs which renders it unlawful or impossible for (i) the
Borrower or any other party to any of the Security Documents (other than
the Lender) to perform or observe, or to procure the performance or
observance of, any of its obligations or undertakings contained in this
Agreement or any of the Security Documents, or (ii) the Lender to exercise
any of the rights and remedies conferred on the Lender under this Agreement
or any of the Security Documents; or
(l) any authorisation, approval, consent, licence, exemption, filing or
registration or other requirement necessary to enable the Borrower or any
other party to any of the Security Documents (other than the Lender) to
comply with any of its obligations or undertakings contained in this
Agreement, the Charters or any of the Security Documents is modified,
revoked or withheld or does not remain in full force and effect; or
(m) without the prior consent of the Lender, there is a change in the legal and
beneficial owner or owners of the shares in the Borrower or the Corporate
Guarantor or in the ultimate beneficial ownership of shares in the Borrower
or the Corporate Guarantor from that disclosed to the Lender pursuant to
Clause 5.1(n); or
(n) the Ship shall become a Total Loss and the Lender does not receive within
one hundred and twenty (120) days (or such longer period as the Lender may
agree) following the occurrence of such Total Loss, insurance proceeds
relating to such Total Loss in an amount not less than the amount for which
the Ship is required to be insured under Clause 6 of the Mortgage as at the
date of the event or circumstances giving rise to such Total Loss and for
the purpose of this Clause 9.1(n), (i) an actual Total Loss of the Ship
shall be deemed to have occurred at the date and time when the Ship was
lost but if the date of the loss is unknown the actual Total Loss shall be
deemed to have occurred on the date on which the Ship was last reported,
(ii) a constructive Total Loss shall be deemed to have occurred at the date
and time at which notice of abandonment of the Ship is given to the
insurers of the Ship and (iii) a compromised, agreed or arranged Total Loss
shall be deemed to have occurred on the date of the relevant compromise,
agreement or arrangement; or
25
(o) any Earnings are paid otherwise than to the Operating Account (unless so
directed by the Lender); or
(p) for any reason whatsoever, the Ship ceases to comply with the ISM Code or
to be technically managed by the Approved Manager on terms in all respects
approved by the Lender; or
(q) the security constituted by any of the Security Documents is in the
reasonable opinion of the Lender imperilled or jeopardised in any material
respect; or
(r) this Agreement or any of the other Security Documents ceases at any time to
be the legal, valid and binding obligations of the Borrower or any other
party thereto (other than the Lender);
(s)
(i) notice of an Early Termination Date is given by the Lender under
section 6(a) of the Master Agreement; or
(ii) a person entitled to do so gives notice of an Early Termination Date
under section 6(b)(iv) of the Master Agreement; or
(iii) an Event of Default (as defined in section 14 of the Master
Agreement) occurs; or
(iv) the Master Agreement is terminated, cancelled, suspended, rescinded or
revoked or otherwise ceases to remain in full force and effect for any
reason; or
(t) any other event or events (whether related or not) occurs (including,
without limitation, a material (in the reasonable opinion of the Lender)
adverse change, from the position applicable as at the date of this
Agreement, in the business, affairs or condition (financial or otherwise)
of the Borrower, the Corporate Guarantor, Viking, Pacific Rim, TBS
Worldwide or a Credit Support Provider (including any such change resulting
from an Environmental Incident) the effect of which is, in the reasonable
opinion of the Lender, to impair, delay or prevent the due fulfilment by
the Borrower, the Corporate Guarantor, Viking, Pacific Rim, TBS Worldwide
or a Credit Support Provider of any of their respective obligations or
undertakings contained in this Agreement, the Master Agreement or any of
the Security Documents.
9.2 Upon the occurrence of an Event of Default:
(a) the Lender, by notice to the Borrower, may terminate the obligations of the
Lender under this Agreement, whereupon the same shall be so terminated;
and/or
(b) the Lender, by notice to the Borrower, may declare the Loan, accrued
interest thereon and all other amounts payable under this Agreement either
immediately due and payable or payable on demand, whereupon the Loan,
accrued interest thereon and all other amounts payable under this Agreement
shall become immediately due and payable or (as the case may be) payable on
demand by the Lender; and/or
26
(c) the Lender may take any other action, exercise any other right or pursue
any other remedy conferred upon the Lender by this Agreement, the Master
Agreement and/or by all or any of the Security Documents or by any
applicable law or regulation or otherwise as a consequence of such Event of
Default.
10 FEES AND EXPENSES
10.1 The Borrower shall pay to the Lender:
(a) an arrangement fee of Seventy one thousand five hundred Dollars ($71,500)
on the date of this Agreement and whether or not the Loan is borrowed; and
(b) a commitment fee at the rate of zero point twenty five per cent. (0.25%)
per annum on the maximum amount of the Loan, during the period from (and
including) 27 October 2004 up to the earlier of (i) the Drawdown Date and
(ii) 31 December 2004 (or such later date as the Lender, in its sole and
absolute discretion, shall agree), such commitment fee to be payable on the
last day thereof.
10.2 The Borrower shall reimburse to the Lender on demand all costs, fees and
expenses (including, but not limited to, legal fees and expenses) and Taxes
thereon incurred by the Lender in connection with:
(a) the negotiation, preparation and execution of this Agreement, the Master
Agreement and the Security Documents and the insurance consultant's report
referred to in Clause 5.1(v); and/or
(b) the preserving or enforcing of, or attempting to preserve or enforce, any
of its rights under this Agreement, the Master Agreement and the Security
Documents (or any of them).
10.3 The Borrower shall reimburse to the Lender on demand all costs, fees and
expenses (including, but not limited to, legal fees and expenses) and Taxes
thereon incurred by the Lender in connection with:
(a) any variation of, or amendment or supplement to, any of the terms of this
Agreement, the Master Agreement and the Security Documents (or any of
them); and/or
(b) any consent or waiver required from the Lender in relation to this
Agreement, the Master Agreement and the Security Documents (or any of
them), and in each case, regardless of whether the same is actually
implemented, completed or granted, as the case may be.
10.4 The Borrower shall pay promptly all stamp, documentary and other like
duties and Taxes to which this Agreement, the Master Agreement and the
Security Documents (or any of them) may be subject or give rise and shall
indemnify the Lender on demand against any and all liabilities with respect
to or resulting from any delay or omission on the part of the Borrower to
pay any such duties or Taxes.
27
10.5 The Lender shall, without prejudice to any other of the provisions of this
Agreement, be entitled (but not obliged) at any time and from time to time
(without prior notice) to debit the Operating Account in order to satisfy
all or any amounts payable by the Borrower to the Lender pursuant to this
Clause 10.
11 PAYMENTS AND CALCULATIONS
11.1 All payments to be made by the Borrower to the Lender under this Agreement
and any of the Security Documents to which the Borrower is a party shall be
made by not later than 11.00 a.m. (London time) on the due date in same day
Dollar funds settled through the New York Interbank Payments System (or in
such other Dollar funds and/or settled in such other manner as the Lender
shall specify as being customary at the time for the settlement of
international transactions of the type contemplated by this Agreement) to
the account of the Lender at the Receiving Bank (Account No 000261123), or
to such other account with such other bank as the Lender shall from time to
time notify to the Borrower.
11.2 If any sum payable by the Borrower under this Agreement or any of the
Security Documents to which the Borrower is a party shall become due on a
day which is not a Business Day, the due date therefor shall be extended to
the next succeeding Business Day, unless such Business Day falls in the
next calendar month, in which event such due date shall be the immediately
preceding Business Day, and interest shall be payable on such sum during
any such extension at the rate payable on the original due date.
11.3 The Lender shall maintain accounts showing the amounts from time to time
lent by it under this Agreement and all other sums owing by the Borrower
under this Agreement and the Security Documents and all payments in respect
thereof made by the Borrower from time to time. Such accounts, in the
absence of manifest error, shall be conclusive evidence as to any amounts
from time to time owing by the Borrower under this Agreement and the
Security Documents.
11.4 All payments of interest and commitment fee and any other payments
hereunder of an annual or periodic nature shall accrue from day-to-day and
shall be calculated on the basis of the actual number of days elapsed in a
three hundred and sixty (360) day year.
12 NO COUNTERCLAIM, TAXATION
12.1 All payments to be made by or on behalf of the Borrower to the Lender
pursuant to this Agreement and any of the Security Documents to which the
Borrower is a party shall be made (a) without set-off, counterclaim or
condition whatsoever (including, but not limited to, any set-off,
counterclaim or condition arising under or in relation to or in connection
with the Master Agreement) and (b) free and clear of, and without deduction
for or on account of, any present or future Taxes, unless the Borrower is
required by law or regulation to make any such payment subject to any
Taxes.
12.2 In the event that the Borrower is required by any law or regulation to make
any deduction or withholding on account of any Taxes which arise as a
consequence of any payment
28
due under this Agreement or any of the Security Documents to which the
Borrower is a party, then:
(a) the Borrower shall notify the Lender promptly as soon as it becomes aware
of such requirement;
(b) the Borrower shall remit promptly the amount of such Taxes to the
appropriate taxation authority, and in any event prior to the date on which
penalties attach thereto;
(c) such payment shall be increased by such amount as may be necessary to
ensure that the Lender receives a net amount which, after deducting or
withholding such Taxes, is equal to the full amount which the Lender would
have received had such payment not been subject to such Taxes; and
(d) the Borrower shall indemnify the Lender against any liability of the Lender
in respect of such Taxes.
12.3 Not later than thirty days after each deduction or withholding of any such
Taxes, the Borrower shall forward to the Lender evidence satisfactory to
the Lender that such Taxes have been remitted to the appropriate taxation
authority.
13 CHANGES IN CIRCUMSTANCES
13.1 In the event that by reason of:
(a) the introduction of, or any change in, any applicable law or regulation, or
any change in the interpretation or application thereof; or
(b) compliance by the Lender with any directive, request or requirement
(whether or not having the force of law) of any central bank, government,
fiscal or other authority, it becomes unlawful or it is prohibited or it is
contrary to such directive, request or requirement for the Lender to
maintain or give effect to any of its obligations as contemplated by this
Agreement, then the Lender may notify the Borrower thereof and, if the Loan
has been advanced by the Lender, the Borrower shall prepay the Loan
forthwith in accordance with the terms of this Agreement and the
obligations of the Lender shall thereupon terminate.
13.2 If the Lender shall at any time be of the opinion that:
(a) the effect of any applicable law, regulation or regulatory requirements, or
the interpretation or application thereof, or any change therein (including
the imposition of Taxes on payments hereunder, other than Taxes on the
overall net income of the Lender); or
(b) the effect of complying with any applicable directive, request or
requirement (whether or not having the force of law) of any central bank or
any governmental, monetary or other authority (including any type of
liquidity, stock or capital adequacy controls or other
29
banking or monetary controls or requirements which affects the manner in
which the Lender allocates capital resources to its obligations hereunder),
is:
(i) to increase the cost to the Lender of making, funding or maintaining
its commitment hereunder or the Loan or being a party to this
Agreement; or
(ii) to reduce the amount of any payment to the Lender under this Agreement
or the effective return to the Lender under this Agreement or on its
capital, then, and in any such case, the Lender shall notify the
Borrower as soon as practicable thereof and the Borrower shall from
time to time pay to the Lender on demand such amounts as the Lender
shall specify to be necessary to compensate the Lender for such
increased cost or such reduction.
13.3 If and each time that prior to any Interest Period the Lender shall have
determined that, by reason of circumstances affecting the London Interbank
Dollar Market, either:
(a) adequate and fair means do not exist for ascertaining the rate of interest
applicable to the Loan (or any part thereof) during such Interest Period
pursuant to Clause 3.1; or
(b) Dollars are not available to the Lender in order to fund the Loan (or any
part thereof) during such Interest Period, then the Lender shall as soon as
practicable give notice of such determination to the Borrower and, if such
notice shall be given prior to the Loan being advanced by the Lender, the
Borrower's right to borrow hereunder shall be suspended during the
continuance of such circumstances. In any event, during the thirty days
following the giving of such notice, the Borrower and the Lender shall
negotiate in good faith in order to arrive at an alternative interest rate
or (as the case may be) an alternative basis for the Lender to fund or
continue to fund the Loan (or the relevant part thereof) during such
Interest Period. If within such thirty day period an alternative interest
rate or (as the case may be) an alternative basis to fund or to continue to
fund the Loan (or the relevant part thereof) is agreed upon, then such
alternative interest rate or (as the case may be) such alternative basis
shall take effect in accordance with its terms. If the Borrower and the
Lender fail to agree on such an alternative interest rate or (as the case
may be) alternative basis within such thirty day period and such
circumstances are continuing at the end of such thirty day period, then the
Lender shall set an interest period and interest rate representing the cost
of funding of the Lender in Dollars or in any available currency of the
Loan plus the Margin. If the circumstance shall continue at the end of such
interest period, the procedure in this Clause 13.3 shall be repeated. If
the Borrower shall not agree with such rate then the Borrower may give not
less than fifteen (15) Business Days' irrevocable notice of prepayment to
the Lender in which case the commitment hereunder of the Lender shall
thereupon be cancelled and, if the Loan is outstanding, the Borrower shall
prepay the Loan on the first Business Day after such period in accordance
with the terms of this Agreement and the obligations of the Lender shall
thereupon terminate.
30
14 INDEMNITIES
14.1 The Borrower shall indemnify the Lender on demand against all costs,
expenses, liabilities and losses sustained or incurred as a result of or in
connection with:
(a) any default in payment on the due date of any sum due hereunder (after
giving credit for any default interest paid by the Borrower thereon under
Clause 3.4); and/or
(b) the occurrence and/or continuance of any Event of Default (or event which,
with the giving of notice and/or lapse of time or other applicable
condition, might constitute an Event of Default) and/or the acceleration of
repayment of the Loan pursuant to Clause 9.2; and/or
(c) the Loan not being borrowed on the date specified in the Notice of Drawing,
other than as a result of a default by the Lender; and/or
(d) the payment or other receipt or recovery of all or any part of the Loan or
any part thereof or an overdue sum otherwise than on the last day of an
Interest Period relating thereto or other relevant period,
(including, where appropriate, but not limited to loss of profit and any
losses sustained or incurred in liquidating or employing deposits from
third parties acquired or arranged to effect or maintain the Loan or any
part thereof and, in the applicable circumstances referred to in Clause
14.1(d), an amount equal to the Margin which would, but for prepayment or
other receipt or recovery of all or any part of the Loan, have accrued on
the Loan from the date of such prepayment, receipt or recovery to the end
of the current Interest Period).
14.2 If, under any applicable law or regulation, and whether pursuant to a
judgment being made or registered against the Borrower or the liquidation
of the Borrower or for any other reason, any payment under or in connection
with this Agreement is made or falls to be satisfied in a currency (the
"PAYMENT CURRENCY") other than the currency in which such payment is due
under or in connection with this Agreement (the "CONTRACTUAL CURRENCY"),
then to the extent that the amount of such payment actually received by the
Lender, when converted into the contractual currency at the rate of
exchange, falls short of the amount due under or in connection with this
Agreement, the Borrower, as a separate and independent obligation, shall
indemnify and hold harmless the Lender against the amount of such
shortfall. For the purposes of this Clause 14.2, "RATE OF EXCHANGE" means
the rate at which the Lender is able on or about the date of such payment
to purchase the contractual currency with the payment currency and shall
take into account any premium and other costs of exchange with respect
thereto.
14.3 The Borrower shall indemnify the Lender on demand against all costs,
expenses, liabilities and losses sustained or incurred as a result of or in
connection with any Environmental Claims being made against the Lender or
otherwise howsoever arising out of any Environmental Incident.
31
14.4 The Borrower shall indemnify the Lender on demand against all costs and
expenses arising out of the role of the Receiving Bank in relation to the
Loan.
15 SET-OFF
15.1 The Borrower hereby authorises the Lender (without prior notice) to apply
any credit balance (whether or not then due) which is at any time held by
the Lender for the account of the Borrower at any office of the Lender in
any country in or towards satisfaction of any sum then due from the
Borrower to the Lender under this Agreement, the Master Agreement or any of
the Security Documents to which the Borrower is a party and unpaid. For
that purpose:
(a) the Lender is authorised to use all or any part of a deposit or other
credit balance to buy such other currencies as may be necessary to effect
such application; and
(b) break, or alter the maturity of, all or any part of a deposit or other
credit balance of the Borrower; and
(c) enter into any other transaction or make any entry with regard to a deposit
or other credit balance as the Lender considers appropriate.
15.2 If the Borrower is the defaulting party under the Master Agreement, the
Lender, as the non-defaulting party, may (without prejudice to or
limitation of its right of set-off under section 6(e) of the Master
Agreement and its rights under Clause 15.1) at the same time as, or at any
time after, the Borrower's default set-off any amount due from the Borrower
to the Lender under this Agreement against any amount due from the Lender
to the Borrower under the Master Agreement, and apply the first amount in
discharging the second amount. The effect of any set-off under this Clause
15.2 shall be effective to extinguish or, as the case may require, reduce
the liabilities of the Lender under the Master Agreement.
15.3 The Lender shall not be obliged to exercise any of its rights under Clause
15.1, which shall be without prejudice and in addition to any right of
set-off, combination of accounts, lien or other rights to which the Lender
is at any time otherwise entitled (whether by operation of law, contract or
otherwise).
16 SECURITY AND APPLICATION
16.1 The Borrower hereby undertakes with the Lender to execute, deliver and
perform the provisions of, and procure the execution, delivery and
performance by the other parties thereto (other than the Lender) of, the
Security Documents and the provisions thereof at the times and in the
manner provided in this Agreement and in the Security Documents so that all
such documents shall both at the date of such execution and delivery and at
all times during the Security Period be valid and binding obligations of
the Borrower and such other parties enforceable in accordance with their
respective terms; without prejudice to the foregoing the Borrower hereby
further undertakes that the Borrower will at any time during the Security
Period and on the first written request of the Lender, procure that a
pledge over all the issued shares in the Borrower in favour of the Lender
32
and in such form as the Lender shall approve or require be executed and
delivered to the Lender as additional security for the obligations of the
Borrower under this Agreement together with all proxies, directors' letters
of resignations and share stock certificates as are required by such
pledge.
16.2 All moneys received by the Lender under or pursuant to this Agreement or
any of the Security Documents and expressed to be applicable in accordance
with the provisions of this Clause 16.2 shall (unless the Lender otherwise
requires) be applied by the Lender in the following manner:
FIRST: in or towards satisfaction of any amounts as are then accrued due
and payable under this Agreement, the Master Agreement and the Security
Documents (or any of them) or are then due and payable by virtue of payment
demanded under this Agreement, the Master Agreement and the Security
Documents (or any of them) in such order of application as the Lender shall
think fit;
SECONDLY: at the option of the Lender (i) in retention of an amount equal
to any amounts which are not then accrued due and payable under this
Agreement, the Master Agreement and the Security Documents (or any of them)
or are not then due and payable by virtue of payment demanded under this
Agreement, the Master Agreement and the Security Documents (or any of them)
but which (in the sole and absolute opinion of the Lender) will or may
become due and payable in the future and, upon the same becoming due and
payable, in or towards satisfaction thereof in accordance with the
foregoing provisions of this Clause 16.2 and/or (ii) in or towards
prepayment of the Loan in accordance with sub-clauses (d) and (e) of Clause
4.2; and
THIRDLY: the surplus (if any) shall be paid to the Borrower or to
whomsoever else may be entitled thereto.
17 COMMUNICATIONS
17.1 Except as otherwise provided for in this Agreement, all notices or other
communications under or in respect of this Agreement to either party hereto
shall be in writing (that is by letter, fax or, subject to what is set out
below, by telex) and shall be deemed to be duly given or made when
delivered (in the case of personal delivery or letter) and when despatched
(in the case of telex from the Lender to the Borrower or in the case of a
fax from either party to the other) to such party addressed to it at the
address appearing below (or at such address as such party may hereafter
specify for such purpose to the other by notice in writing):
(a) in the case of the Borrower: Avon Maritime Corp.
▇ ▇ ▇▇▇ ▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇
Fax No: ▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
33
with a copy to:
TBS Shipping Services Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇
Fax: ▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
and
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇ ▇▇▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇
Fax: ▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
(b) in the case of the Lender: Shipping Business Centre
▇-▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇
Fax No: + ▇▇ (▇) ▇▇ ▇▇▇▇ ▇▇▇▇
The Borrower may not send notices or other communications by telex to the
Lender but the Lender reserves the right to send notices or other
communications by telex to the Borrower. A notice or other communication
received on a non-working day or after business hours in the place of
receipt, shall be deemed to be served on the next following working day in
such place.
17.2 All communications and documents delivered pursuant to or otherwise
relating to this Agreement or any of the Security Documents shall either be
in English or accompanied by a certified English translation prepared by a
translator approved by the Lender.
17.3 A certificate or determination of the Lender as to any matter provided for
in this Agreement or any of the Security Documents shall, in the absence of
manifest error, be conclusive and binding on the Borrower.
18 ASSIGNMENTS
18.1 This Agreement shall be binding upon and inure to the benefit of the Lender
and the Borrower and their respective successors and permitted assigns.
18.2 The Borrower may not assign or transfer all or any part of its rights
and/or obligations under this Agreement.
34
18.3 The Lender may assign, transfer or sub-participate all or any part of its
rights or obligations under this Agreement and the Security Documents or
change its lending office, in any such case, without the consent of the
Borrower. The Lender shall notify the Borrower promptly following any such
assignment or transfer or change of lending office.
18.4 The Lender may disclose to any potential assignee or transferee of all or
any part of its rights or obligations under this Agreement and the Security
Documents or to any such sub-participant or any other person who may
otherwise enter into contractual relations with the Lender in relation to
this Agreement and the Security Documents, such information about this
Agreement and/or the Security Documents (or any of them) and the Borrower
and/or its related entities as the Lender thinks fit.
19 MISCELLANEOUS
19.1 Time shall be of the essence in this Agreement. No delay or omission on the
part of the Lender in exercising any right, power or remedy under this
Agreement shall impair such right, power or remedy or be construed as a
waiver thereof nor shall any single or partial exercise of any such right,
power or remedy preclude any further exercise thereof or the exercise of
any other right, power or remedy. The rights, powers and remedies herein
provided are cumulative and not exclusive of any rights, powers and
remedies provided by law and may be exercised from time to time and as
often as the Lender deems expedient.
19.2 Any waiver by the Lender of any provision of this Agreement, or any consent
or approval given by the Lender hereunder, shall only be effective if given
in writing and then only for the purpose and upon the terms for which it is
given.
19.3 If at any time any one or more of the provisions in this Agreement is or
becomes invalid, illegal or unenforceable in any respect under any law or
regulation, the validity, legality and enforceability of the remaining
provisions of this Agreement shall not be in any way affected or impaired
thereby.
19.4 The obligations of the Borrower under this Agreement shall remain in full
force and effect until the Lender shall have received all amounts due or to
become due to it hereunder and under the Security Documents in accordance
with the terms hereof and thereof. Without prejudice to the foregoing, the
obligations of the Borrower under Clauses 3.4, 10, 12, 13.2 and 14 shall
survive the repayment of the Loan.
19.5 A person who is not a party to this Agreement has no right under the
Contracts (Rights of Third Parties) ▇▇▇ ▇▇▇▇ to enforce or to enjoy the
benefit of any term of this Agreement.
20 LAW AND JURISDICTION
20.1 This Agreement shall be governed by, and construed in accordance with,
English law.
20.2 Subject to Clause 20.4, the courts of England shall have exclusive
jurisdiction in relation to all matters which may arise out of or in
connection with this Agreement.
35
20.3 The Borrower shall not commence any proceedings in any country other than
England in relation to a matter which arises out of or in connection with
this Agreement.
20.4 Clause 20.2 is for the exclusive benefit of the Lender which reserves the
rights:
(a) to commence proceedings in relation to any matter which arises out of or in
connection with this Agreement in the courts of any country other than
England and which have or claim jurisdiction to that matter; and
(b) to commence such proceedings in the courts of any such country or countries
concurrently with or in addition to proceedings in England or without
commencing proceedings in England.
20.5 The Borrower irrevocably appoints Globe Maritime Limited at its registered
office for the time being, presently at ▇▇▇▇▇▇ House, ▇▇-▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇ ▇▇▇, ▇▇▇▇▇▇▇ (fax: ▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇▇; Attn: ▇▇▇▇▇ ▇.
▇▇▇▇▇▇), to act as its agent to receive and accept on its behalf any
process or other document relating to any proceedings in the English courts
which are connected with this Agreement.
20.6 In this Clause 20, "PROCEEDINGS" means proceedings of any kind, including
an application for a provisional or protective measure.
36
SCHEDULE
The Mandatory Cost Rate will be calculated in accordance with the following
formula:
F x 0.01
--------
300
where on the day(s) of application of the formula:
F. is the rate of charge payable by the Lender to the Financial Services
Authority pursuant to paragraph 2 of the Fees Regulations (but where for this
purpose, the figure at paragraph 2.02b/2.03b shall be deemed to be zero) and
expressed in pounds per (pound) 1 million of the Fee Base of the Lender.
For the purposes of this Schedule:
Fee Base has the meaning ascribed to it for the purposes of, and all be
calculated in accordance with, the Fees Regulations.
Fees Regulations means, as appropriate, either the Banking Supervision (Fees)
Regulations 2000 or such regulations as from time to time may be in force,
relating to the payment of fees for banking supervision in respect of periods
subsequent to 31 March 2001.
Any reference to a provision of any statute, directive, order or regulation
herein is a reference to that provision as amended or re-enacted from time to
time.
If alternative or additional financial requirements are imposed which in the
Lender's opinion make the formula set out above no longer appropriate, the
Lender shall be entitled to stipulate such other formula as shall be suitable to
apply in substitution for the formula set out above.
37
IN WITNESS whereof the parties hereto have entered into this Agreement the date
first above written.
SIGNED by )
Christophil ▇. ▇▇▇▇▇▇ )
for and on behalf of )
AVON MARITIME CORP. )
in the presence of: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ )
SIGNED by )
▇▇▇▇▇ ▇. ▇▇▇▇ )
for and on behalf of )
THE ROYAL BANK OF )
SCOTLAND PLC )
in the presence of: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ )
38