Private & Confidential
LOAN AGREEMENT
FOR A LOAN OF UP TO
US$28,000,000
TO
SHIP POWER MARINE S.A.
PROVIDED BY
NATIONAL BANK OF GREECE S.A.
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CONTENTS
CLAUSE PAGE
------ ----
1 Purpose and definitions............................................. 1
2 The Commitment and the Loan......................................... 9
3 Interest and Interest Periods....................................... 10
4 Repayment and prepayment............................................ 11
5 Fees and expenses................................................... 13
6 Payments and taxes; accounts and calculations....................... 13
7 Representations and warranties...................................... 15
8 Undertakings........................................................ 19
9 Conditions.......................................................... 24
10 Events of Default................................................... 25
11 Indemnities......................................................... 28
12 Unlawfulness and increased costs.................................... 29
13 Security and set-off................................................ 30
14 Accounts............................................................ 31
15 Assignment, transfer and lending office............................. 33
16 Notices and other matters........................................... 34
17 Governing law and jurisdiction...................................... 35
Schedule 1 Form of Drawdown Notice....................................... 36
Schedule 2 Documents and evidence required as conditions precedent to
the Loan being made......................................... 37
Schedule 3 Form of Mortgage.............................................. 41
Schedule 4 Form of Deed of Covenant...................................... 42
Schedule 5 Form of Master Swap Agreement................................. 43
THIS AGREEMENT is dated 30 November 2004 and made BETWEEN:
(1) SHIP POWER MARINE S.A. as Borrower; and
(2) NATIONAL BANK OF GREECE S.A. as Bank.
IT IS AGREED as follows:
1 PURPOSE AND DEFINITIONS
1.1 PURPOSE
This Agreement sets out the terms and conditions upon and subject to
which the Bank agrees to make available to the Borrower a loan of up
to Twenty eight million Dollars ($28,000,000) to be used for the
purpose of financing part of the acquisition cost of the Ship.
1.2 DEFINITIONS
In this Agreement, unless the context otherwise requires:
"ACCOUNTS" means, together, the Operating Account and the Retention
Account and "ACCOUNT" means either of them;
"ASSIGNEE" has the meaning ascribed thereto in clause 15.3;
"BALLOON INSTALMENT" has the meaning ascribed thereto in clause 4.1;
"BANK" means National Bank of Greece S.A. whose registered office is
at ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ acting for the purposes of
this Agreement through its shipping branch at ▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ &
▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇ ▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ (or of such other address as may
last have been notified to the Borrower pursuant to clause 15.6) and
includes its successors in title, Assignees and Transferees;
"BANKING DAY" means a day on which dealings in deposits in Dollars are
carried on in the London Interbank Eurocurrency Market and (other than
Saturday or Sunday) on which banks are open for business in London,
Piraeus and New York City (or any other relevant place of payment
under clause 6);
"BORROWED MONEY" means Indebtedness incurred in respect of (i) money
borrowed or raised and debit balances at banks, (ii) any bond, note,
loan stock, debenture or similar debt instrument, (iii) acceptance or
documentary credit facilities, (iv) receivables sold or discounted
(otherwise than on a non-recourse basis), (v) deferred payments for
assets or services acquired, (vi) leases and hire purchase contracts,
(vii) swaps, forward exchange contracts, futures and other
derivatives, (viii) any other transaction (including without
limitation forward sale or purchase agreements) having the commercial
effect of a borrowing or raising of money or of any of (ii) to (vii)
above and (ix) guarantees in respect of Indebtedness of any person
falling within any of (i) to (vii) above;
"BORROWER" means Ship Power Marine S.A. of Trust Company Complex,
Ajeltake Road, Ajeltake Island, Majuro, ▇▇▇▇▇▇▇▇ Islands MH96960 and
includes its successors in title;
"BORROWER'S SECURITY DOCUMENTS" means, at any relevant time, such of
the Security Documents as shall have been executed by the Borrower at
such time;
"CAPITAL" means Capital Ship Management Corp. of Panama City, Republic
of Panama and includes its successors in title;
"CLASSIFICATION" means the highest classification for a vessel of the
same type as the Ship with the Classification Society or such other
classification as the Bank shall, at the request of the
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Borrower, have agreed in writing shall be treated as the
Classification for the purposes of the Security Documents;
"CLASSIFICATION SOCIETY" means Det Norske Veritas or such other
classification society which the Bank shall, at the request of the
Borrower, have agreed in writing shall be treated as the
Classification Society for the purposes of the Security Documents;
"CODE" means the International Management Code for the Safe Operation
of Ships and for Pollution Prevention constituted pursuant to
Resolution A.741(18) of the International Maritime Organization and
incorporated into the International Convention for Safety of Life at
Sea 1974 (as amended) and includes any amendments or extensions
thereto and any regulation issued pursuant thereto;
"COMMITMENT" means the amount which the Bank has agreed to lend to the
Borrower under clause 2.1 as reduced by any relevant term of this
Agreement;
"COMPULSORY ACQUISITION" means requisition for title or other
compulsory acquisition, requisition, appropriation, expropriation,
deprivation, forfeiture or confiscation for any reason of the Ship by
any Government Entity or other competent authority, whether de jure or
de facto, but shall exclude requisition for use or hire not involving
requisition of title;
"CONFIRMATION" shall have, in relation to any continuing Designated
Transaction, the meaning ascribed to it in the Master Swap Agreement;
"CONTRACT" means the memorandum of agreement dated 13 October 2004
made between the Seller as seller and the Borrower as purchaser,
relating to the sale by the Seller, and the purchase by the Borrower,
of the Ship, as the same may be amended and supplemented from time to
time with the prior written consent of the Bank;
"CONTRACT PRICE" means Thirty six million Dollars ($36,000,000) or
such other sum in Dollars as may be payable by the Borrower to the
Seller pursuant to the Contract;
"DEED OF COVENANT" means the deed of covenant collateral to the
Mortgage executed or (as the context may require) to be executed by
the Borrower in favour of the Bank in the form set out in schedule 4;
"DEFAULT" means any Event of Default or any event or circumstance
which with the giving of notice or lapse of time or the satisfaction
of any other condition (or any combination thereof) would constitute
an Event of Default;
"DELIVERY" means the delivery of the Ship by the Seller to, and
acceptance of the Ship by, the Borrower pursuant to the Contract;
"DELIVERY DATE" means the date upon which Delivery occurs;
"DESIGNATED TRANSACTION" means a Transaction which fulfils the
following requirements:
(a) it is entered into by the Borrower pursuant to the Master Swap
Agreement with the Bank as contemplated by clause 2.7; and
(b) its purpose is the hedging of the Borrower's exposure under this
Agreement to fluctuations of LIBOR arising from the funding of
the Loan (or any part thereof) for a period expiring no later
than the final Repayment Date for the Loan or the relevant part
thereof;
"DOC" means a document of compliance issued to an Operator in
accordance with rule 13 of the Code;
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"DOLLARS" and "$" mean the lawful currency of the United States of
America and in respect of all payments to be made under any of the
Security Documents mean funds which are for same day settlement in the
New York Clearing House Interbank Payments System (or such other U.S.
dollar funds as may at the relevant time be customary for the
settlement of international banking transactions denominated in U.S.
dollars);
"DRAWDOWN DATE" means the date, being a Banking Day falling not later
than the Termination Date, on which the Loan is, or is to be, drawn
down;
"DRAWDOWN NOTICE" means a notice substantially in the terms of
schedule 1;
"EARLY TERMINATION DATE" shall have, in relation to any continuing
Designated Transaction, the meaning ascribed to it in the Master Swap
Agreement;
"ENCUMBRANCE" means any mortgage, charge (whether fixed or floating),
pledge, lien, hypothecation, assignment, trust arrangement or security
interest or other encumbrance of any kind securing any obligation of
any person or any type of preferential arrangement (including without
limitation title transfer and/or retention arrangements having a
similar effect);
"ENVIRONMENTAL AFFILIATE" means any agent or employee of the Borrower
or any other Relevant Party or any person having a contractual
relationship with the Borrower or any other Relevant Party in
connection with any Relevant Ship or its operation or the carriage of
cargo and/or passengers thereon and/or the provision of goods and/or
services on or from any Relevant Ship;
"ENVIRONMENTAL APPROVAL" means any consent, authorisation, licence or
approval of any governmental or public body or authorities or courts
applicable to any Relevant Ship or its operation or the carriage of
cargo and/or passengers thereon and/or the provision of goods and/or
services on or from any Relevant Ship required under any Environmental
Law;
"ENVIRONMENTAL CLAIM" means any and all enforcement, clean-up, removal
or other governmental or regulatory actions or orders instituted or
completed pursuant to any Environmental Law or any Environmental
Approval together with claims made by any third party relating to
damage, contribution, loss or injury, resulting from any actual or
threatened emission, spill release or discharge of a Material of
Environmental Concern from any Relevant Ship;
"ENVIRONMENTAL LAWS" means all national, international and state laws,
rules, regulations, treaties and conventions applicable to any
Relevant Ship pertaining to the pollution or protection of human
health or the environment including, without limitation, the carriage
of Materials of Environmental Concern and actual or threatened
emissions, spills, releases or discharges of Materials of
Environmental Concern;
"EVENT OF DEFAULT" means any of the events or circumstances described
in clause 10.1;
"FLAG STATE" means the Commonwealth of the Bahamas or such other state
or territory designated in writing by the Bank, at the request of the
Borrower, as being the "Flag State" of the Ship for the purposes of
the Security Documents;
"GOVERNMENT ENTITY" means and includes (whether having a distinct
legal personality or not) any national or local government authority,
board, commission, department, division, organ, instrumentality, court
or agency and any association, organisation or institution of which
any of the foregoing is a member or to whose jurisdiction any of the
foregoing is subject or in whose activities any of the foregoing is a
participant;
"INDEBTEDNESS" means any obligation for the payment or repayment of
money, whether as principal or as surety and whether present or
future, actual or contingent;
"INTEREST PAYMENT DATE" means the last day of an Interest Period;
"INTEREST PERIOD" means each period for the calculation of interest in
respect of the Loan ascertained in accordance with clauses 3.2 and
3.3;
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"ISPS CODE" means the International Ship and Port facility Security
Code constituted pursuant to resolution A.924(22) of the International
Maritime Organization now set out in Chapter XI-2 of the International
Convention for the Safety of Life at Sea 1974 (as amended) as adopted
by a Diplomatic conference of the International Maritime Organisation
on Maritime Security in December 2002 and includes any amendments or
extensions thereto and any regulation issued pursuant thereto;
"ISSC" means an International Ship Security Certificate issued in
respect of the Ship pursuant to the ISPS Code;
"LIBOR" means in relation to any amount and for any period the offered
rate (if any) for deposits of Dollars for such amount and for such
period which is:
(a) the rate, for such period, appearing on page 3750 of the Telerate
screen at or about 11:00 a.m. on the Quotation Date for such
period (or, if the Bank shall have made a determination pursuant
to clause 3.6, such later time (not being later than 1:00 p.m. on
the first day of such period) as the Bank may determine); or
(b) if the relevant page is not displayed on the Telerate screen or
the Telerate screen is not operating at the relevant time or if
no such offered rate appears on the Telerate screen, the rate
quoted to the Bank by the Reference Bank at the request of the
Bank as the Reference Bank's offered rate for deposits of Dollars
in an amount approximately equal to the amount in relation to
which LIBOR is to be determined for a period equivalent to such
period to prime banks in the London Interbank Market at or about
11:00 a.m. on the Quotation Date for such period (or, if the Bank
shall have made a determination pursuant to clause 3.6, such
later time (not being later than 1:00 p.m. on the first day of
such period) as the Bank may determine);
"LOAN" means the principal amount borrowed by the Borrower on the
Drawdown Date or (as the context may require) the principal amount
owing to the Bank under this Agreement at any relevant time;
"MANAGEMENT AGREEMENT" means:
(a) during the Teekay Period, the agreement or, as the case may be,
the agreements made between the Borrower and Teekay; and
(b) after the Teekay Period, the agreement made or (as the context
may require) to be made between the Borrower and Capital,
or, in either case, any other agreement previously approved in writing
by the Bank between the Borrower and the Manager, in each case
providing (inter alia) for the Manager to carry out the management of
the Ship;
"MANAGER" means:
(a) during the Teekay Period, Teekay; and
(b) after the Teekay Period, Capital,
or, in each case, any other person appointed by the Borrower, with the
prior written consent of the Bank, as the manager of the Ship and
includes their respective successors in title and "MANAGERS" means
either or both of them;
"MANAGER'S UNDERTAKING" means each first priority manager's
undertaking executed or (as the context may require) to be executed by
each Manager in favour of the Bank in such form as the Bank may
require in its sole discretion and "MANAGER'S UNDERTAKINGS" means
either or both of them;
"MARGIN" means One point three five per cent (1.35%) per annum;
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"MASTER SWAP AGREEMENT" means the agreement made or (as the context
may require) to be made between the Bank and the Borrower comprising a
1992 ISDA Master Agreement (Multicurrency-Crossborder) (including the
schedule thereto) in the form or substantially the form set out in
schedule 5 and includes any Designated Transactions from time to time
entered into and any Confirmations (as defined therein) from time to
time exchanged thereunder and governed thereby;
"MATERIAL OF ENVIRONMENTAL CONCERN" means and includes pollutants,
contaminants, toxic substances, oil as defined in the United States
Oil Pollution Act of 1990 and all hazardous substances as defined in
the United States Comprehensive Environmental Response, Compensation
and Liability ▇▇▇ ▇▇▇▇;
"MONTH" means a period beginning in one calendar month and ending in
the next calendar month on the day numerically corresponding to the
day of the calendar month on which it started, provided that (i) if
the period started on the last Banking Day in a calendar month or if
there is no such numerically corresponding day, it shall end on the
last Banking Day in such next calendar month and (ii) if such
numerically corresponding day is not a Banking Day, the period shall
end on the next following Banking Day in the same calendar month but
if there is no such Banking Day it shall end on the preceding Banking
Day and "months" and "monthly" shall be construed accordingly;
"MORTGAGE" means the first priority Bahamian statutory mortgage of the
Ship executed or (as the context may require) to be executed by the
Borrower in favour of the Bank in the form set out in schedule 3;
"OPERATING ACCOUNT" means an interest bearing Dollar account of the
Borrower opened or (as the context may require) to be opened by the
Borrower with the Bank with account number 196/932047-45 and includes
any sub-accounts thereof and any other account designated in writing
by the Bank to be an Operating Account for the purposes of this
Agreement;
"OPERATOR" means any person who is from time to time during the
Security Period (as defined in the Deed of Covenant) concerned in the
operation of the Ship and falls within the definition of "Company" set
out in rule 1.1.2 of the Code;
"PERMITTED ENCUMBRANCE" means any Encumbrance in favour of the Bank
created pursuant to the Security Documents and Permitted Liens;
"PERMITTED LIENS" means any lien on the Ship for master's, officer's
or crew's wages outstanding in the ordinary course of trading, any
lien for salvage and any ship repairer's or outfitter's possessory
lien for a sum not (except with the prior written consent of the Bank)
exceeding Three hundred thousand Dollars ($300,000) (or the equivalent
in any other currency);
"QUOTATION DATE" means, in respect of any period in respect of which
LIBOR falls to be determined under this Agreement, the day falling two
(2) Banking Days before the first day of such period;
"REFERENCE BANK" means the London Branch of National Bank of Greece
S.A. situated at present at ▇▇ ▇▇. ▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇;
"REGISTRY" means the London office of the Bahamas Maritime Authority
or such registrar, commissioner or representative of the Flag State
who is duly authorised and empowered to register the Ship, the
Borrower's title to the Ship and the Mortgage under the laws and flag
of the Flag State;
"RELATED COMPANY":
(a) of a person (other than the Bank) means, at any relevant time,
any person, company or other entity which is at such time
ultimately beneficially owned by the same financial interests as
the Borrower as at the date of this Agreement; and
5
(b) of the Bank, means any Subsidiary of the Bank, any company or
other entity of which the Bank is a Subsidiary and any Subsidiary
of any such company or entity;
"RELEVANT JURISDICTION" means any jurisdiction in which or where any
Security Party is incorporated, resident, domiciled, has a permanent
establishment, carries on, or has a place of business or is otherwise
effectively connected;
"RELEVANT PARTY" means the Borrower, the Borrower's Related Companies
and any other Security Party and any Security Party's Related
Companies;
"Relevant Ship" means the Ship and any other vessel from time to time
(whether before or after the date of this Agreement) owned, managed or
crewed by, or chartered to, any Relevant Party;
"Repayment Dates" means, subject to clause 6.3, each of the dates
falling at six (6) monthly intervals after the Drawdown Date up to and
including the date falling ninety six (96) months after the Drawdown
Date;
"RESTRICTED COMPANY" means the Borrower, the Borrower's Related
Companies and any other Security Party and any Security Party's
Related Companies;
"RETENTION ACCOUNT" means an interest bearing Dollar account of the
Borrower opened or (as the context may require) to be opened by the
Borrower with the Bank and includes any subaccounts thereof and any
other account designated in writing by the Bank to be a Retention
Account for the purposes of this Agreement;
"RETENTION ACCOUNT PLEDGE" means the first priority pledge executed or
(as the context may require) to be executed by the Borrower in favour
of the Bank in respect of the Retention Account in such form as the
Bank may require in its sole discretion;
"RETENTION AMOUNT" means, in relation to any Retention Date, such sum
as shall be the aggregate of;
(a) one-sixth (1/6th) of the repayment instalment falling due for
payment pursuant to clause 4.1 (as the same may have been reduced
by any prepayment) on the next Repayment Date after the relevant
Retention Date; and
(b) the applicable fraction (as hereinafter defined) of the aggregate
amount of interest falling due for payment in respect of each
part of the Loan during and at the end of each Interest Period
current at the relevant Retention Date and, for this purpose, the
expression "APPLICABLE FRACTION" in relation to each Interest
Period shall mean a fraction having a numerator of one and a
denominator equal to the number of Retention Dates falling within
the relevant Interest Period;
"RETENTION DATES" means the date falling thirty (30) days after the
Drawdown Date and each of the dates falling at monthly intervals after
such date and prior to the final Repayment Date;
"SECURITY DOCUMENTS" means this Agreement, the Mortgage, the Deed of
Covenant, the Manager's Undertakings, the Retention Account Pledge,
the Master Swap Agreement and any other documents as may have been or
shall from time to time after the date of this Agreement be executed
to guarantee and/or secure all or any part of the Loan, interest
thereon and other moneys from time to time owing by the Borrower
pursuant to this Agreement (whether or not any such document also
secures moneys from time to time owing pursuant to any other document
or agreement);
"SECURITY PARTY" means the Borrower, each Manager or any other person
who may at any time be a party to any of the Security Documents (other
than the Bank);
"SECURITY REQUIREMENT" means the amount in Dollars (as certified by
the Bank whose certificate shall, in the absence of manifest error, be
conclusive and binding on the Borrowers and the Bank) which is at any
relevant time:
6
(a) during the period commencing on the Drawdown Date and ending on
the date falling twelve (12) months thereafter (the "ADJUSTMENT
DATE"):
(i) if the Borrower and the Bank have not entered into a
Transaction or Transactions, One hundred and eleven point
eleven per cent (111.11%) of the Loan at such time; and
(ii) if the Borrower and the Bank have entered into a Transaction
or Transactions, One hundred and five point two six three
per cent (105.263%) of the aggregate of (A) the Loan and (B)
the Swap Exposure at such time; and
(b) during the period commencing on the date falling immediately
after the Adjustment Date and ending on the last day of the
Security Period (as defined in the Deed of Covenant):
(i) if the Borrower and the Bank have not entered into a
Transaction or Transactions, One hundred and thirty three
point three three per cent (133.33%) of the Loan at such
time; and
(ii) if the Borrower and the Bank have entered into a Transaction
or Transactions, One hundred and twenty five per cent (125%)
of the aggregate of (A) the Loan and (B) the Swap Exposure
at such time;
"SECURITY VALUE" means the amount in Dollars (as certified by the Bank
whose certificate shall, in the absence of manifest error, be
conclusive and binding on the Borrower and the Bank) which is at any
relevant time the aggregate of (i) the market value of the Ship as
most recently determined in accordance with clause 8.3.2 and (ii) the
market value of any additional security for the time being actually
provided to the Bank pursuant to clause 8.3;
"SELLER" means Victoria Spirit L.L.C. of Trust Company Complex,
Ajeltake Road, Ajeltake Island, Majuro, Republic of the ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and includes its successors in title;
"SHIP" means the motor vessel Victoria Spirit, a 103,153 dwt
1993-built ore/bulk/oil (OBO) currently owned by the Seller and
registered under the laws and flag of the Flag State with Official
Number 723135 and to be registered on the Delivery Date in the
ownership of the Borrower through the Registry under the laws and flag
of the Flag State with the same name;
"SHIP SECURITY DOCUMENTS" means the Mortgage, the Deed of Covenant and
the Manager's Undertaking;
"SMC" means a safety management certificate issued in respect of the
Ship in accordance with rule 13 of the Code;
"SUBSIDIARY" of a person means any company or entity directly or
indirectly controlled by such person, and for this purpose "CONTROL"
means either the ownership of more than fifty per cent (50%) of the
voting share capital (or equivalent rights of ownership) of such
company or entity or the power to direct its policies and management,
whether by contract or otherwise;
"SWAP EXPOSURE" means, as at any relevant time, the amount certified
by the Bank to be the aggregate net amount in Dollars which would be
payable by the Borrower to the Bank under (and calculated in
accordance with) section 6(e) (Payments on Early Termination) of the
Master Swap Agreement if an Early Termination Date had occurred at the
relevant time in relation to all continuing Designated Transactions;
"TAXES" includes all present and future taxes, levies, imposts,
duties, fees or charges of whatever nature together with interest
thereon and penalties in respect thereof and "TAXATION" shall be
construed accordingly;
TEEKAY" means, together, Teekay Shipping Limited of The Bahamas (as
technical manager) and Teekay Chartering Limited of the Republic of
the ▇▇▇▇▇▇▇▇ Islands (as commercial manager) and includes their
respective successors in title;
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"TEEKAY PERIOD" means the period during which Teekay shall be the
manager of the Ship, commencing on the Drawdown Date and ending on
such date as the Bank may agree in its sole discretion pursuant to
clause 8.4 or such other later date as the Bank may from time to time
agree in writing;
"TERMINATION DATE" means 31 December 2004 or such later date as the
Bank may in its absolute discretion agree in writing;
"TOTAL LOSS" means:
(a) actual, constructive, compromised or arranged total loss of the
Ship; or
(b) the Compulsory Acquisition of the Ship; or
(c) the hijacking, theft, condemnation, capture, seizure, arrest,
detention or confiscation of the Ship (other than where the same
amounts to the Compulsory Acquisition of the Ship) by any
Government Entity, or by persons acting or purporting to act on
behalf of any Government Entity, unless the Ship be released and
restored to the Borrower from such hijacking, theft,
condemnation, capture, seizure, arrest, detention or confiscation
within thirty (30) days after the occurrence thereof;
"TRANSACTION" has the meaning ascribed to it in the Master Swap
Agreement;
"TRANSFEREE" has the meaning ascribed thereto in clause 15.4; and
"UNDERLYING DOCUMENTS" means, together, the Contract and the
Management Agreement.
1.3 HEADINGS
Clause headings and the table of contents are inserted for convenience
of reference only and shall be ignored in the interpretation of this
Agreement.
1.4 CONSTRUCTION OF CERTAIN TERMS
In this Agreement, unless the context otherwise requires:
1.4.1 references to clauses and schedules are to be construed as references
to clauses of, and schedules to, this Agreement and references to this
Agreement include its schedules;
1.4.2 references to (or to any specified provision of) this Agreement or any
other document shall be construed as references to this Agreement,
that provision or that document as in force for the time being and as
amended in accordance with terms thereof, or, as the case may be, with
the agreement of the relevant parties;
1.4.3 references to a "REGULATION" include any present or future regulation,
rule, directive, requirement, request or guideline (whether or not
having the force of law) of any agency, authority, central bank or
government department or any self-regulatory or other national or
supra-national authority;
1.4.4 words importing the plural shall include the singular and vice versa;
1.4.5 references to a time of day are to London time;
1.4.6 references to a person shall be construed as references to an
individual, firm, company, corporation, unincorporated body of persons
or any Government Entity;
1.4.7 references to a "GUARANTEE" include references to an indemnity or
other assurance against financial loss including, without limitation,
an obligation to purchase assets or services as a
8
consequence of a default by any other person to pay any Indebtedness
and "GUARANTEED" shall be construed accordingly; and
1.4.8 references to any enactment shall be deemed to include references to
such enactment as reenacted, amended or extended.
2 THE COMMITMENT AND THE LOAN
2.1 AGREEMENT TO LEND
The Bank, relying upon each of the representations and warranties in
clause 7, agrees to lend to the Borrower, upon and subject to the
terms of this Agreement, the principal sum of up to Twenty eight
million Dollars ($28,000,000).
2.2 DRAWDOWN
Subject to the terms and conditions of this Agreement, the Loan shall
be advanced in full in one amount on the Drawdown Date following
receipt by the Bank from the Borrower of a Drawdown Notice not later
than 10:00 a.m. on the third Banking Day before the proposed Drawdown
Date. A Drawdown Notice shall be effective on actual receipt by the
Bank and, once given, shall, subject as provided in clause 3.6.1, be
irrevocable.
2.3 AMOUNT
The principal amount specified in the Drawdown Notice for borrowing on
(he Drawdown Date shall, subject to the terms and conditions of this
Agreement, not exceed Twenty eight million Dollars ($28,000,000).
2.4 AVAILABILITY
Upon receipt of a Drawdown Notice complying with the terms of this
Agreement the Bank shall, subject to the provisions of clause 9, on
the Drawdown Date make the Loan available to the Borrower in
accordance with clause 6.2. The Borrower acknowledges that payment of
the Loan to the Seller in accordance with clause 6.2 shall satisfy the
obligation of the Bank to tend the Commitment to the Borrower under
this Agreement.
2.5 TERMINATION OF COMMITMENT
Any undrawn amount of the Commitment at the Termination Date shall
thereupon be automatically cancelled.
2.6 APPLICATION OF PROCEEDS
Without prejudice to the Borrower's obligations under clause 8.1.3,
the Bank shall have no responsibility for the application of the
proceeds of the Loan or any part thereof by the Borrower.
2.7 SWAP TRANSACTIONS
2.7.1 If, at any time during the Security Period (as defined in the Deed of
Covenant), the Borrower wishes to enter into interest rate swap
transactions so as to hedge all or any part of its exposure under this
Agreement to interest rate fluctuations, it shall advise the Bank in
writing.
2.7.2 Any such swap transaction shall be concluded with the Bank under the
Master Swap Agreement provided however that no such swap transaction
shall be concluded unless the Bank first agrees to it in writing. If
and when any such swap transaction has been concluded, it shall
constitute a Designated Transaction, and the Borrower shall sign a
Confirmation with the Bank.
9
3 INTEREST AND INTEREST PERIODS
3.1 NORMAL INTEREST RATE
The Borrower shall pay interest on the Loan in respect of each
Interest Period relating thereto on each Interest Payment Date (or, in
the case of Interest Periods of more than six (6) months, by
instalments, the first six (6) months from the commencement of the
Interest Period and the subsequent instalments at intervals of six (6)
months or, if shorter, the period from the date of the preceding
instalment until the Interest Payment Date relative to such Interest
Period) at the rate per annum determined by the Bank to be the
aggregate of (a) the Margin and (b) LIBOR for such Interest Period.
3.2 SELECTION OF INTEREST PERIODS
The Borrower may by notice received by the Bank not later than 10:00
a.m. on the third Banking Day before the beginning of each Interest
Period specify whether such Interest Period shall have a duration of
one (1) month, three (3) months, six (6) months, nine (9) months or
twelve (12) months or such other period shorter than twelve (12)
months as the Borrower may select and the Bank may, in its absolute
discretion, agree.
3.3 DETERMINATION OF INTEREST PERIODS
Every Interest Period shall be of the duration specified by the
Borrower pursuant to clause 3.2 but so that:
3.3.1 the initial Interest Period shall commence on the Drawdown Date and
each subsequent Interest Period shall commence on the last day of the
previous Interest Period;
3.3.2 if any Interest Period would otherwise overrun a Repayment Date, then,
in the case of the last Repayment Date, such Interest Period shall end
on such Repayment Date, and, in the case of any other Repayment Date
or Repayment Dates, the Loan shall be divided into parts so that there
is one part in the amount of the repayment instalment due on each
Repayment Date falling during that Interest Period and having an
Interest Period ending on the relevant Repayment Date and another part
in the amount of the balance of the Loan having an Interest Period
ascertained in accordance with clause 3.2 and the other provisions of
this clause 3.3; and
3.3.3 if the Borrower fails to specify the duration of an Interest Period in
accordance with the provisions of clause 3.2 and this clause 3.3 such
Interest Period shall have a duration of six (6) months or such other
period as shall comply with this clause 3.3.
3.4 DEFAULT INTEREST
If the Borrower fails to pay any sum (including, without limitation,
any sum payable pursuant to this clause 3.4) on its due date for
payment under any of the Security Documents, the Borrower shall pay
interest on such sum on demand from the due date up to the date of
actual payment (as well after as before judgment) at a rate determined
by the Bank pursuant to this clause 3.4. The period beginning on such
due date and ending on such date of payment shall be divided into
successive periods of not more than six (6) months as selected by the
Bank each of which (other than the first, which shall commence on such
due date) shall commence on the last day of the preceding such period.
The rate of interest applicable to each such period shall be the
aggregate (as determined by the Bank) of (a) two per cent (2%) per
annum, (b) the Margin and (c) LIBOR for such period. Such interest
shall be due and payable on the last day of each such period as
determined by the Bank and each such day shall, for the purposes of
this Agreement, be treated as an Interest Payment Date, provided that
if such unpaid sum is an amount of principal which became due and
payable by reason of a declaration by the Bank under clause 10.2.2 or
a prepayment pursuant to clauses 4.3, 8.3.1(a) or 12.1, on a date
other than an Interest Payment Date relating thereto, the first such
period selected by the Bank shall be of a duration equal to the period
between the due date of such principal sum and such interest Payment
Date and interest shall be payable on such principal sum during such
period at a rate of two per cent (2%) above the rate applicable
thereto immediately before it shall have become
10
so due and payable. If, for the reasons specified in clause 3.6.1, the
Bank is unable to determine a rate in accordance with the foregoing
provisions of this clause 3.4, interest on any sum not paid on its due
date for payment shall be calculated at a rate determined by the Bank
to be two per cent (2%) per annum above the aggregate of the Margin
and the cost of funds to the Bank.
3.5 NOTIFICATION OF INTEREST PERIODS AND INTEREST RATE
The Bank shall notify the Borrower promptly of the duration of each
Interest Period and of each rate of interest determined by it under
this clause 3.
3.6 MARKET DISRUPTION; NON-AVAILABILITY
3.6.1 If and whenever, at any time prior to the commencement of any Interest
Period, the Bank shall have determined (which determination shall, in
the absence of manifest error, be conclusive):
(a) that adequate and fair means do not exist for ascertaining LIBOR
during such Interest Period; or
(b) that, where applicable, the Reference Bank does not supply the
Bank with a quotation for the purpose of calculating LIBOR; or
(c) that deposits in Dollars are not available to the Bank in the
London Interbank Market in the ordinary course of business in
sufficient amounts to fund the Loan for such Interest Period,
the Bank shall forthwith give notice (a "DETERMINATION NOTICE")
thereof to the Borrower. A Determination Notice shall contain
particulars of the relevant circumstances giving rise to its issue.
After the giving of any Determination Notice the undrawn amount of the
Commitment shall not be borrowed until notice to the contrary is given
to the Borrower by the Bank.
3.6.2 During the period of ten (10) days after any Determination Notice has
been given by the Bank under clause 3.6.1, the Bank shall certify an
alternative basis (the "SUBSTITUTE BASIS") for maintaining the Loan.
The Substitute Basis may (without limitation) include alternative
interest periods, alternative currencies or alternative rates of
interest but shall include a margin above the cost of funds to the
Bank equivalent to the Margin. Each Substitute Basis so certified
shall be binding upon the Borrower and shall take effect in accordance
with its terms from the date specified in the Determination Notice
until such time as the Bank notifies the Borrower that none of the
circumstances specified in clause 3.6.1 continues to exist whereupon
the normal interest rate fixing provisions of this Agreement shall
apply.
4 REPAYMENT AND PREPAYMENT
4.1 REPAYMENT
The Borrower shall repay the Loan by sixteen (16) instalments, one
such instalment to be repaid on each of the Repayment Dates, Subject
to the provisions of this Agreement, the amount of each of the first
and second instalments (inclusive) shall be Three million five hundred
thousand Dollars ($3,500,000), the amount of each of the third and
fourth instalments (inclusive) shall be Two million Dollars
($2,000,000), the amount of each of the fifth and sixth instalments
(inclusive) shall be One million five hundred thousand Dollars
($1,500,000), the amount of each of the seventh to fifteenth
instalments (inclusive) shall be One million one hundred thousand
Dollars ($1,100,000) and the amount of the sixteenth and final
instalment shall be Four million one hundred thousand Dollars
($4,100,000) (comprising a repayment instalment of One million one
hundred thousand Dollars ($1,100,000) and a balloon payment of Three
million Dollars ($3,000,000) (the "BALLOON INSTALMENT")). If the
Commitment is not drawn in full, the amount of each of the repayment
instalments (including the Balloon Instalment) shall be reduced
proportionately.
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4.2 VOLUNTARY PREPAYMENT
The Borrower may prepay the Loan in whole or part (being One hundred
thousand Dollars ($100,000) or any larger sum which is an integral
multiple of One hundred thousand Dollars ($100,000) or any other
amount agreed to by the Borrower and the Bank) on any Interest Payment
Date relating to the part of the Loan to be repaid.
4.3 PREPAYMENT ON TOTAL LOSS
On the Ship becoming a Total Loss (or suffering damage or being
involved in an incident which, in the opinion of the Bank, may result
in the Ship subsequently being determined to be a Total Loss), before
the Loan is drawn down, the obligation of the Bank to advance the Loan
shall immediately cease and the Commitment shall be reduced to zero.
On the date falling one hundred and twenty (120) days after that on
which the Ship became a Total Loss or, if earlier, on the date upon
which the insurance proceeds are, or Requisition Compensation (as
defined in the Deed of Covenant) is, received by the Borrower (or the
Bank pursuant to the Security Documents), the Borrower shall prepay
the Loan in full.
For the purpose of this Agreement, a Total Loss shall be deemed to
have occurred:
4.3.1 in the case of an actual total loss of the Ship on the actual date and
at the time the Ship was lost or, if such date is not known, on the
date on which the Ship was last reported;
4.3.2 in the case of a constructive total loss of the Ship, upon the date
and at the time notice of abandonment of the Ship is given to the
insurers of the Ship for the time being;
4.3.3 in the case of a compromised or arranged total loss, on the date upon
which a binding agreement as to such compromised or arranged total
loss has been entered into by the insurers of the Ship;
4.3.4 in the case of Compulsory Acquisition, on the date upon which the
relevant requisition of title or other compulsory acquisition occurs;
and
4.3.5 in the case of hijacking, theft, condemnation, capture, seizure,
arrest, detention or confiscation of the Ship (other than where the
same amounts to Compulsory Acquisition of the Ship) by any Government
Entity, or by persons purporting to act on behalf of any Government
Entity, which deprives the Borrower of the use of the Ship for more
than thirty (30) days, upon the expiry of the period of thirty (30)
days after the date upon which the relevant hijacking, theft,
condemnation, capture, seizure, arrest, detention or confiscation
occurred.
4.4 AMOUNTS PAYABLE ON PREPAYMENT
Any prepayment of all or part of the Loan under this Agreement shall
be made together with (a) accrued interest on the amount to be prepaid
to the date of such prepayment, (b) any additional amount payable
under clauses 6.6 or 12.2 and (c) all other sums payable by the
Borrower to the Bank under this Agreement or any of the other Security
Documents including, without limitation, any amounts payable under
clause 11.
4.5 NOTICE OF PREPAYMENT; REDUCTION OF REPAYMENT INSTALMENTS
No prepayment may be effected under clause 4.2 unless the Borrower
shall have given the Bank at least ten (10) days' notice in writing of
its intention to make such prepayment. Every notice of prepayment
shall be effective only on actual receipt by the Bank, shall be
irrevocable, shall specify the amount to be prepaid and shall oblige
the Borrower to make such prepayment on the date specified. No amount
prepaid under this Agreement may be re-borrowed and any amount
prepaid pursuant to clauses 4.2 or 8.3.1(a) shall be applied in
reducing the repayment instalments under clause 4.1 (including the
Balloon Instalment) proportionately. The Borrower may not prepay the
Loan or any part thereof save as expressly provided in this Agreement.
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4.6 UNWINDING OF DESIGNATED TRANSACTIONS
On or prior to any repayment or prepayment of all or part of the Loan,
the Borrower shall upon the request of the Bank wholly or partially
reverse, offset, unwind, cancel, close out, net out or otherwise
terminate one or more of the continuing Designated Transactions so
that the notional principal amount of the continuing Designated
Transactions thereafter remaining does not and will not in the future
(taking into account the scheduled amortisation) exceed the amount of
the Loan as reducing from time to time thereafter pursuant to clause
4.1.
5 FEES AND EXPENSES
5.1 FEES
The Borrower shall pay to the Bank on the date of this Agreement an
arrangement fee in the amount of Eighty four thousand Dollars
($84,000). The fee referred to in this clause 5.1 shall be
non-refundable and payable by the Borrower to the Bank whether or not
any part of the Commitment is ever advanced.
5.2 EXPENSES
The Borrower shall pay to the Bank on a full indemnity basis on demand
all expenses (including legal, printing and out-of-pocket expenses)
incurred by the Bank (whether or not any part of the Commitment is
ever advanced):
5.2.1 in connection with the negotiation, preparation, execution and, where
relevant, registration of the Security Documents and of any amendment
or extension of or the granting of any waiver or consent under, any of
the Security Documents; and
5.2.2 in contemplation of, or otherwise in connection with, the enforcement
of, or preservation of any rights under, any of the Security Documents
or otherwise in respect of the moneys owing under any of the Security
Documents,
together with interest at the rate referred to in clause 3.4 from the
date on which such expenses were incurred to the date of payment (as
well after as before judgment).
5.3 VALUE ADDED TAX
All fees and expenses payable pursuant to this clause 5 shall be paid
together with value added tax or any similar tax (if any) properly
chargeable thereon.
5.4 STAMP AND OTHER DUTIES
The Borrower shall pay all stamp, documentary, registration or other
like duties or taxes (including any such duties or taxes payable by
the Bank) imposed on or in connection with any of the Underlying
Documents, the Security Documents or the Loan and shall indemnify the
Bank against any liability arising by reason of any delay or omission
by the Borrower to pay such duties or taxes.
6 PAYMENTS AND TAXES; ACCOUNTS AND CALCULATIONS
6.1 NO SET-OFF OR COUNTERCLAIM
The Borrower acknowledges that in performing its obligations under
this Agreement, the Bank will be incurring liabilities to third
parties in relation to the funding of amounts to the Borrower, such
liabilities matching the liabilities of the Borrower to the Bank and
that it is reasonable for the Bank to be entitled to receive payments
from the Borrower gross on the due date in order that the Bank is put
in a position to perform its matching obligations to the relevant
third parties. Accordingly, all payments to be made by the Borrower
under any of the Security Documents shall be made in full, without any
set-off or counterclaim whatsoever and, subject as provided in
13
clause 6.6, free and clear of any deductions or withholdings, in
Dollars on the due date to such account of the Bank at such bank in
such place as the Bank may from time to time specify for this purpose.
6.2 PAYMENT BY THE BANK
All sums to be advanced by the Bank to the Borrower under this
Agreement in respect of the Loan shall be remitted in Dollars on the
Drawdown Date to the account specified in the Drawdown Notice.
6.3 NON-BANKING DAYS
When any payment under any of the Security Documents would otherwise
be due on a day which is not a Banking Day, the due date for payment
shall be extended to the next following Banking Day unless such
Banking Day falls in the next calendar month in which case payment
shall be made on the immediately preceding Banking Day.
6.4 CALCULATIONS
All interest and other payments of an annual nature under any of the
Security Documents shall accrue from day to day and be calculated on
the basis of actual days elapsed and a three hundred and sixty (360)
day year.
6.5 CERTIFICATES CONCLUSIVE
Any certificate or determination of the Bank as to any rate of
interest or any other amount pursuant to and for the purposes of any
of the Security Documents shall, in the absence of manifest error, be
conclusive and binding on the Borrower.
6.6 GROSSING-UP FOR TAXES
6.6.1 If at any time the Borrower is required to make any deduction or
withholding in respect of Taxes from any payment due under any of the
Security Documents, the sum due from the Borrower in respect of such
payment shall be increased to the extent necessary to ensure that,
after the making of such deduction or withholding, the Bank receives
on the due date for such payment (and retains, free from any liability
in respect of such deduction or withholding), a net sum equal to the
sum which it would have received had no such deduction or withholding
been required to be made and the Borrower shall indemnify the Bank
against any losses or costs incurred by it by reason of any failure of
the Borrower to make any such deduction or withholding or by reason of
any increased payment not being made on the due date for such payment.
The Borrower shall promptly deliver to the Bank any receipts,
certificates or other proof evidencing the amounts (if any) paid or
payable in respect of any deduction or withholding as aforesaid.
6.6.2 For the avoidance of doubt, clause 6.6.1 does not apply in respect of
sums due from the Borrower to the Bank under or in connection with the
Master Swap Agreement as to which sums the provisions of section 2(d)
(Deduction or Withholding for Tax) of the Master Swap Agreement shall
apply.
6.7 LOAN ACCOUNT
The Bank shall maintain, in accordance with its usual practice, an
account (being the "Account Current" referred to in the Mortgage
and/or the Deed of Covenant) evidencing the amounts from time to time
lent by, owing to and paid to it under the Security Documents. Such
account shall, in the absence of manifest error, be conclusive as to
the amount from time to time owing by the Borrower under the Security
Documents.
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7 REPRESENTATIONS AND WARRANTIES
7.1 CONTINUING REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Bank that:
7.1.1 Due incorporation
the Borrower and each of the other Security Parties are duly
incorporated and validly existing in good standing under the laws of
their respective countries of incorporation as a ▇▇▇▇▇▇▇▇ Islands
corporation, in the case of the Borrower and Teekay Chartering
Limited, and as companies with limited liability, in the case of each
of the other Security Parties, and have power to carry on their
respective businesses as they are now being conducted and to own their
respective property and other assets;
7.1.2 Corporate power
the Borrower has power to execute, deliver and perform its obligations
under the Underlying Documents and the Borrower's Security Documents
and to borrow the Commitment and each of the other Security Parties
has power to execute and deliver and perform its obligations under the
Security Documents and the Underlying Documents to which it is or is
to be a party; all necessary corporate, shareholder and other action
has been taken to authorise the execution, delivery and performance of
the same and no limitation on the powers of the Borrower to borrow
will be exceeded as a result of borrowing the Loan;
7.1.3 Binding obligations
the Security Documents and the Underlying Documents constitute or
will, when executed, constitute valid and legally binding obligations
of the relevant Security Parties enforceable in accordance with their
respective terms;
7.1.4 No conflict with other obligations
the execution and delivery of, the performance of their obligations
under, and compliance with the provisions of the Underlying Documents
and the Security Documents by the relevant Security Parties will not
(i) contravene any existing applicable law, statute, rule or
regulation or any judgment, decree or permit to which the Borrower or
any other Security Party is subject, (ii) conflict with, or result in
any breach of any of the terms of, or constitute a default under, any
agreement or other instrument to which the Borrower or any other
Security Party is a party or is subject or by which it or any of its
property is bound, (iii) contravene or conflict with any provision of
the constitutional documents of the Borrower or any other Security
Party or (iv) result in the creation or imposition of or oblige the
Borrower or any of its Related Companies or any other Security Party
to create any Encumbrance (other than a Permitted Encumbrance) on any
of the undertakings, assets, rights or revenues of the Borrower or its
Related Companies or any other Security Party;
7.1.5 No litigation
no litigation, arbitration or administrative proceeding is taking
place, pending or, to the knowledge of the officers of the Borrower,
threatened against the Borrower or any of its Related Companies or any
other Security Party which could have a material adverse effect on the
business, assets or financial condition of the Borrower or any of its
Related Companies or any other Security Party;
7.1.6 No filings required
save for the registration of the Mortgage under the laws of the Flag
State through the Registry, it is not necessary to ensure the
legality, validity, enforceability or admissibility in evidence of any
of the Underlying Documents or any of the Security Documents that they
or any other instrument be notarised, filed, recorded, registered or
enrolled in any court, public office or elsewhere in any
15
Relevant Jurisdiction or that any stamp, registration or similar tax
or charge be paid in any Relevant Jurisdiction on or in relation to
the Underlying Documents or the Security Documents and the Underlying
Documents and each of the Security Documents is in proper form for its
enforcement in the courts of each Relevant Jurisdiction;
7.1.7 Choice of law
the choice of English law to govern the Underlying Documents and the
Security Documents (other than the Mortgage and the Retention Account
Pledge), the choice of Bahamian law to govern the Mortgage and the
choice of Greek law to govern the Retention Account Pledge, and the
submissions by the Security Parties to the non-exclusive jurisdiction
of the English courts or, as the case may be, the courts of Piraeus,
are valid and binding;
7.1.8 No immunity
neither the Borrower nor any other Security Party nor any of their
respective assets is entitled to immunity on the grounds of
sovereignty or otherwise from any legal action or proceeding (which
shall include, without limitation, suit, attachment prior to
judgement, execution or other enforcement); and
7.1.9 Consents obtained
every consent, authorisation, licence or approval of, or registration
with or declaration to, governmental or public bodies or authorities
or courts required by any Security Party to authorise, or required by
any Security Party in connection with, the execution, delivery,
validity, enforceability or admissibility in evidence of each of the
Underlying Documents and each of the Security Documents or the
performance by each Security Party of its obligations under the
Underlying Documents and the Security Documents to which it is a party
has been obtained or made and is in full force and effect and there
has been no default in the observance of any of the conditions or
restrictions (if any) imposed in, or in connection with, any of the
same.
7.2 INITIAL REPRESENTATIONS AND WARRANTIES
The Borrower further represents and warrants to the Bank that:
7.2.1 Pari passu
the obligations of the Borrower under this Agreement and the Master
Swap Agreement are direct, general and unconditional obligations of
the Borrower and rank at least pari passu with all other present and
future unsecured and unsubordinated Indebtedness of the Borrower
except for obligations which are mandatorily preferred by law and not
by contract;
7.2.2 No default under other Indebtedness
neither the Borrower nor any of its Related Companies nor any other
Security Party is (nor would with the giving of notice or lapse of
time or the satisfaction of any other condition or combination thereof
be) in breach of or in default under any agreement relating to
Indebtedness to which it is a party or by which it may be bound;
7.2.3 Information
the information, exhibits and reports furnished by any Security Party
to the Bank in connection with the negotiation and preparation of each
of the Security Documents are true and accurate in all material
respects and not misleading, do not omit material facts and all
reasonable enquiries have been made to verify the facts and statements
contained therein; there are no other facts the omission of which
would make any fact or statement therein misleading;
16
7.2.4 No withholding Taxes
no Taxes are imposed by withholding or otherwise on any payment to be
made by any Security Party under the Underlying Documents or the
Security Documents or are imposed on or by virtue of the execution or
delivery by the Security Parties of the Underlying Documents or the
Security Documents or any other document or instrument to be executed
or delivered under any of the Security Documents;
7.2.5 No Default
no Default has occurred and is continuing;
7.2.6 The Ship
the Ship will be on the Drawdown Date:
(a) in the absolute ownership of the Borrower who will on and after
the Drawdown Date be the sole, legal and beneficial owner of the
Ship;
(b) permanently or, as the case may be, provisionally registered in
the name of the Borrower through the offices of the Registry as a
ship under the laws and flag of the Flag State;
(c) operationally seaworthy and in every way fit for service; and
(d) classed with the Classification free of all requirements and
recommendations of the Classification Society;
7.2.7 Ship's employment
the Ship is not and will not, on or before the Drawdown Date, be
subject to any charter or contract or to any agreement to enter into
any charter or contract which, if entered into after the date of the
Ship Security Documents would have required the consent of the Bank
and, on or before the Drawdown Date, there will not be any agreement
or arrangement whereby the Earnings (as defined in the Deed of
Covenant) may be shared with any other person;
7.2.8 Freedom from Encumbrances
neither the Ship, nor her Earnings, Insurances or Requisition
Compensation (each as defined in the Ship Security Documents) nor the
Accounts nor any other properties or rights which are, or are to be,
the subject of any of the Security Documents nor any part thereof will
be, on the Drawdown Date, subject to any Encumbrance;
7.2.9 Compliance with Environmental Laws and Approvals
except as may already have been disclosed by the Borrower in writing
to, and acknowledged in writing by, the Bank:
(a) the Borrower and the other Relevant Parties and, to the best of
the Borrower's knowledge and belief (having made due enquiry),
their respective Environmental Affiliates have complied with the
provisions of all Environmental Laws;
(b) the Borrower and the other Relevant Parties and, to the best of
the Borrower's knowledge and belief (having made due enquiry),
their respective Environmental Affiliates have obtained all
Environmental Approvals and are in compliance with all such
Environmental Approvals; and
(c) neither the Borrower nor any other Relevant Party nor, to the
best of the Borrower's knowledge and belief (having made due
enquiry), any of their respective Environmental Affiliates has
received notice of any Environmental Claim that the Borrower or
any other
17
Relevant Party or any such Environmental Affiliate is not in
compliance with any Environmental Law or any Environmental
Approval;
7.2.10 No Environmental Claims
except as may already have been disclosed by the Borrower in writing
to, and acknowledged in writing by, the Bank, there is no
Environmental Claim pending or, to the best of the Borrower's
knowledge and belief, threatened against the Borrower or the Ship or
any other Relevant Party or any other Relevant Ship or to the best of
the Borrower's knowledge and belief (having made due enquiry) any of
their respective Environmental Affiliates;
7.2.11 No potential Environmental Claims
except as may already have been disclosed by the Borrower in writing
to, and acknowledged in writing by, the Bank, there has been no
emission, spill, release or discharge of a Material of Environmental
Concern from the Ship or any other Relevant Ship owned by, managed or
crewed by or chartered to the Borrower nor, (having made due enquiry)
to the best of the Borrower's knowledge and belief, from any Relevant
Ship owned by, managed or crewed by or chartered to any other Relevant
Party which could give rise to an Environmental Claim;
7.2.12 No material adverse change
there has been no material adverse change in the financial position of
the Borrower or Capital or in the consolidated financial position of
the Borrower, Capital and their respective Related Companies from that
described by the Borrower to the Bank in the negotiation of this
Agreement;
7.2.13 ISPS Code
as of the Delivery Date the Borrower shall have a valid and current
ISSC in respect of the Ship and the Ship shall be in compliance with
the ISPS Code;
7.2.14 Application for DOC and SMC
the Operator will have applied on the Drawdown Date, for a DOC for
itself and an SMC in respect of the Ship and neither the Borrower nor
the Operator is aware of any reason why such application(s) may be
refused; and
7.2.15 Copies true and complete
the copies of the Underlying Documents delivered or to be delivered to
the Bank pursuant to clause 9.1 are, or will when delivered be, true
and complete copies of such documents; such documents constitute valid
and binding obligations of the parties thereto enforceable in
accordance with their respective terms and there will have been no
amendments or variations thereof or defaults thereunder.
7.3 REPETITION OF REPRESENTATIONS AND WARRANTIES
On and as of the Drawdown Date and (except in relation to the
representations and warranties in clause 7.2) on each Interest Payment
Date the Borrower shall (a) be deemed to repeat the representations
and warranties in clauses 7.1 and 7.2 as if made with reference to the
facts and circumstances existing on such day and (b) be deemed to
further represent and warrant to the Bank that the then latest audited
financial statements delivered to the Bank (if any) have been prepared
in accordance with generally accepted international accounting
principles and practices which have been consistently applied and
present fairly and accurately the financial position of the Borrower
and the consolidated financial position of the Borrower, Capital and
their respective Related Companies as at the end of the financial
period to which the same relate and the results of the operations of
the Borrower and the results of the consolidated operations of the
Borrower, Capital and their respective Related Companies for the
financial period to which the same relate and, as at the end of such
financial period, neither the Borrower nor Capital nor any of their
18
respective Related Companies had any significant liabilities
(contingent or otherwise) or any unrealised or anticipated losses
which are not disclosed by, or reserved against or provided for in,
such financial statements.
8 UNDERTAKINGS
8.1 GENERAL
The Borrower hereby undertakes with the Bank that, from the date of
this Agreement and so long as any moneys are owing under any of the
Security Documents and while all or any part of the Commitment remains
outstanding, if will:
8.1.1 Notice of Default
promptly inform the Bank of any occurrence of which it becomes aware
which might adversely affect the ability of any Security Party to
perform its obligations under any of the Security Documents and,
without limiting the generality of the foregoing, will inform the Bank
of any Default forthwith upon becoming aware thereof and will from
time to time, if so requested by the Bank, confirm to the Bank in
writing that, save as otherwise stated in such confirmation, no
Default has occurred and is continuing;
8.1.2 Consents and licences
without prejudice to clauses 7.1 and 9, obtain or cause to be
obtained, maintain in full force and effect and comply in all material
respects with the conditions and restrictions (if any) imposed in, or
in connection with, every consent, authorisation, licence or approval
of governmental or public bodies or authorities or courts and do, or
cause to be done, all other acts and things which may from time to
time be necessary or desirable under applicable law for the continued
due performance of all the obligations of the Security Parties under
each of the Security Documents;
8.1.3 Use of proceeds
use the Loan exclusively for the purpose specified in clause 1.1;
8.1.4 Pari passu
ensure that its obligations under this Agreement and the Master Swap
Agreement shall, without prejudice to clause 8.2 or to the security
created by the Security Documents, at all times rank at least pari
passu with all its other present and future unsecured and
unsubordinated Indebtedness with the exception of any obligations
which are mandatorily preferred by law and not by contract;
8.1.5 Financial statements
prepare or cause to be prepared financial statements of the Borrower
and consolidated financial statements of the Borrower, Capital and
their respective Related Companies in accordance with generally
accepted international accounting principles and practices
consistently applied in respect of each financial year and cause the
same to be reported on by their respective auditors and prepare
unaudited financial statements of the Borrower and unaudited
consolidated financial statements of the Borrower, Capital and their
respective Related Companies for each financial half year on the same
basis as the annual statements and deliver as many copies of the same
as the Bank may reasonably require as soon as practicable but not
later than one hundred and fifty (150) days (in the case of the
audited financial statements) or ninety (90) days (in the case of the
unaudited financial statements) after the end of the financial period
to which they relate;
8.1.6 Delivery of reports
deliver to the Bank as many copies as the Bank may reasonably require,
at the time of issue thereof, of every report, circular, notice or
like document issued by any Security Party or any other Restricted
Company to its respective shareholders or creditors generally;
19
8.1.7 Provision of further information
provide the Bank with such financial or other information concerning
the Borrower, the other Security Parties and the other Restricted
Companies or any of them and their respective affairs as the Bank may
from time to time reasonably require, and keep the Bank advised
regularly of all major financial developments in relation to the
Borrower, the other Security Parties and their respective Related
Companies or any of them including, without limitation, in respect of
new Borrowed Money and the sale and acquisition of assets;
8.1.8 Obligations under Security Documents
duly and punctually perform each of the obligations expressed to be
assumed by it under the Security Documents;
8.1.9 Compliance with Code
and will procure that any Operator will, comply with and ensure that
the Ship and any Operator comply with the requirements of the Code,
including (but not limited to) the maintenance and renewal of valid
certificates pursuant thereto throughout the Security Period (as
defined in the Deed of Covenant);
8.1.10 Withdrawal of DOC and SMC
and will procure that any Operator will, immediately inform the Bank
if there is any threatened or actual withdrawal of its Operator's DOC
or the SMC in respect of the Ship;
8.1.11 Issuance of DOC and SMC
and will procure that any Operator will, promptly inform the Bank upon
the issue to the Borrower or any Operator of a DOC and to the Ship of
an SMC or the receipt by the Borrower or any Operator of notification
that its application for the same has been refused;
8.1.12 ISPS Code compliance
and will procure that the Manager or any Operator will, with effect on
and from the Delivery Date:
(a) maintain at all times a valid and current ISSC in respect of the
Ship;
(b) immediately notify the Bank in writing of any actual or
threatened withdrawal, suspension, cancellation or modification
of the ISSC in respect of the Ship; and
(c) procure that the Ship will comply at all times with the ISPS
Code;
8.1.13 Charters
without prejudice to the rights of the Bank under clause 5.1.15 of the
Deed of Covenant, advise the Bank promptly of any charterparty in
respect of the Ship of eighteen (18) months or longer and (a) deliver
a certified copy of each such charter to the Bank forthwith after its
execution, (b) forthwith following the Bank's demand execute a
specific assignment (in such form as the Bank may in its absolute
discretion require) of any such charterparty in favour of the Bank and
any notice of assignment required in connection therewith, promptly
procure the service of any such notice of assignment on the relevant
charterer and the acknowledgement of such notice by the relevant
charterer and (iii) pay all legal and other costs incurred by the Bank
in connection with or in relation to any such specific charter
assignment; and
8.1.14 Change of Manager
if the Bank has approved pursuant to clause 8.4 that Teekay shall be
the manager of the Ship for the Teekay Period, appoint Capital to be
the manager of the Ship as from the date falling
20
immediately after the end of the Teekay Period and it will provide the
Bank not later than fifteen (15) Banking Days before the end of the
Teekay Period with:
(a) a certified true copy of the Management Agreement between the
Borrower and Capital;
(b) a Manager's Undertaking duly executed by Capital together with
any documents or notices required pursuant thereto; and
(c) such documents and evidence of the type specified in schedule 2,
Part 1, paragraphs 1 to 6 (inclusive) and 11 and such legal
opinions, in each case, in respect of the Manager, the Borrower,
the relevant Management Agreement and the relevant Manager's
Undertaking, as the Bank may require in its sole discretion.
8.2 NEGATIVE UNDERTAKINGS
The Borrower undertakes with the Bank that, from the date of this
Agreement and so long as any moneys are owing under the Security
Documents, it will not, without the prior written consent of the Bank:
8.2.1 Negative pledge
permit any Encumbrance (other than a Permitted Encumbrance) to
subsist, arise or be created or extended over all or any part of their
respective present or future undertakings, assets, rights or revenues
to secure or prefer any present or future Indebtedness or other
liability or obligation of the Borrower or any other person;
8.2.2 No merger
and will procure that no other Restricted Company will, without the
prior written consent of the Bank, merge or consolidate with any other
company or person;
8.2.3 Disposals
and will procure that no other Security Party will, without the prior
written consent of the Bank, sell, transfer, abandon, lend or
otherwise dispose of or cease to exercise direct control over any part
(being either alone or, when aggregated with all other disposals
falling to be taken into account pursuant to this clause 8.2.3,
material in the opinion of the Bank in relation to the undertakings,
assets, rights and revenues of such Security Party taken as a whole)
of its present or future undertaking, assets, rights or revenues
(otherwise than by transfers, sales or disposals for full
consideration in the ordinary course of trading) whether by one or a
series of transactions related or not;
8.2.4 Other business
undertake any business other than the ownership and operation of the
Ship and the chartering of the Ship to third parties;
8.2.5 Acquisitions
acquire any further assets other than the Ship and rights arising
under contracts entered into by or on behalf of the Borrower in the
ordinary course of its business of owning, operating and chartering
the Ship;
8.2.6 Other obligations
incur any obligations except for obligations arising under the
Underlying Documents or the Security Documents or contracts entered
into in the ordinary course of its business of owning, operating and
chartering the Ship and will procure that no other Security Party
will, without the prior written consent of the Bank, incur any
obligations other than in the ordinary course of its business;
21
8.2.7 No borrowing
and will procure that no other Security Party will, without the prior
written consent of the Bank, incur any Borrowed Money except for
Borrowed Money pursuant to the Security Documents;
8.2.8 Repayment of borrowings
and will procure that no other Security Party will, without the prior
written consent of the Bank, repay the principal of, or pay interest
on, or any other sum in connection with, any of its Borrowed Money
except for Borrowed Money pursuant to the Security Documents;
8.2.9 Guarantees
and will procure that no other Security Party will, without the prior
written consent of the Bank, issue any guarantees or indemnities or
otherwise become directly or contingently liable for the obligations
of any person, firm, or corporation except pursuant to the Security
Documents (except, in the case of the Borrower, for guarantees or
indemnities from time to time required in the ordinary course by any
protection and indemnity or war risks association with which the Ship
is entered, guarantees required to procure the release of the Ship
from any arrest, detention, attachment or levy or guarantees or
undertakings required for the salvage of the Ship);
8.2.10 Loans
and will procure that no other Security Party will, without the prior
written consent of the Bank, make any loans or grant any credit (save
for normal trade credit in the ordinary course of business) to any
person or agree to do so;
8.2.11 Sureties
and will procure that no other Security Party will, without the prior
written consent of the Bank, permit any Indebtedness of any Security
Party to be guaranteed or otherwise assured against financial loss by
any person (other than the Bank) (save, in the case of the Borrower,
for guarantees or indemnities from time to time required in the
ordinary course by any protection and indemnity or war risks
association with which the Ship is entered, guarantees required to
procure the release of the Ship from any arrest, detention, attachment
or levy or guarantees or undertakings required for the salvage of the
Ship);
8.2.12 Share capital and distribution
purchase or otherwise acquire for value any shares of its capital or,
following a Default, declare or pay any dividends or distribute any of
its present or future assets, undertakings, rights or revenues to any
of its shareholders;
8.2.13 Subsidiaries
form or acquire any Subsidiaries;
8.2.14 Change of management of Ship - change of name
appoint any person to manage the Ship other than the Manager or change
the name of the Borrower or the Manager; or
8.2.15 Designated Transactions
enter into any derivative transactions other than Designated
Transactions.
22
8.3 SECURITY VALUE MAINTENANCE
8.3.1 Security shortfall
If at any time the Security Value shall be less than the Security
Requirement, the Bank may give notice to the Borrower requiring that
such deficiency be remedied and then the Borrower shall either:
(a) prepay within a period of fourteen (14) days of the date of
receipt by the Borrower of the Bank's said notice such sum in
Dollars as will result in the Security Requirement after such
prepayment (taking into account any other repayment of the Loan
made between the date of the notice and the date of such
prepayment) being equal to the Security Value; or
(b) within fourteen (14) days of the date of receipt by the Borrower
of the Bank's said notice constitute to the satisfaction of the
Bank such further security for the Loan as shall be acceptable to
the Bank having a value for security purposes (as determined by
the Bank in its absolute discretion) at the date upon which such
further security shall be constituted which, when added to the
Security Value, shall not be less than the Security Requirement
as at such date.
The provisions of clauses 4.4 and 4.5 shall apply to prepayments made
under clause 8.3.1(a).
8.3.2 Valuation of Ship
The Ship shall, for the purposes of this clause 8.3, be valued as and
when the Bank shall in its absolute discretion require, by two (2)
independent firms of shipbrokers appointed by the Bank in its sole
discretion (each such valuation to be made without, unless required by
the Bank, physical inspection, and on the basis of a sale for prompt
delivery for cash at arms' length on normal commercial terms as
between a willing buyer and a willing seller without taking into
account the benefit of any charterparty or other engagement concerning
the Ship). The arithmetic mean of such valuations shall constitute the
value of the Ship for the purposes of this clause 8.3, provided
however that if the two (2) valuations in respect of the Ship vary by
more than fifteen per cent (15%), the Bank acting in its sole
discretion shall appoint a third independent firm of shipbrokers to
value the Ship on the same basis as the other two (2) valuations and,
in that case, the arithmetic mean of the three (3) valuations shall
constitute the value of the Ship for the purposes of this clause 8.3.
The value of the Ship determined in accordance with the provisions of
this clause 8.3 shall be binding upon the parties hereto until such
time as any further such valuations shall be obtained.
8.3.3 Information
The Borrower undertakes to the Bank to supply to the Bank and to any
such shipbrokers such information concerning the Ship and its
condition as such shipbrokers may reasonably require for the purpose
of making any such valuations.
8.3.4 Costs
All costs in connection with the Bank obtaining any valuation of the
Ship referred to in clause 8.3.2 and in schedule 2, Part 2, paragraph
8 and any valuation either of any additional security for the purposes
of ascertaining the Security Value at any time or necessitated by the
Borrower electing to constitute additional security pursuant to clause
8.3.1(b) shall be borne by the Borrower.
8.3.5 Valuation of additional security
For the purpose of this clause 8.3, the market value of any additional
security provided or to be provided to the Bank shall be determined by
the Bank in its absolute discretion without any necessity for the Bank
assigning any reason thereto.
23
8.3.6 Documents and evidence
In connection with any additional security provided in accordance with
this clause 8.3, the Bank shall be entitled to receive such evidence
and documents of the kind referred to in schedule 2 as may in the
Bank's opinion be appropriate and such favourable legal opinions as
the Bank shall in its absolute discretion require.
8.4 TEEKAY AS MANAGER
The Borrower may appoint Teekay to be the manager of the Ship for a
period commencing on the Drawdown Date and ending on such date as the
Bank may agree in writing prior to the Drawdown Date following a
request made by the Borrower. If the Borrower does not make any such
request in writing not later than three (3) Banking Days prior to the
Drawdown Date or the Bank does not agree to such request in writing,
the parties hereto agree and acknowledge that the manager of the Ship
throughout the Security Period (as defined in the Deed of Covenant)
shall be Capital.
9 CONDITIONS
9.1 DOCUMENTS AND EVIDENCE
The obligation of the Bank to make the Commitment available shall be
subject to the condition that:
9.1.1 the Bank, or its duly authorised representative, shall have received,
not later than three (3) Banking Days before the day on which the
Drawdown Notice for the Loan is given, the documents and evidence
specified in Part 1 of schedule 2 in form and substance satisfactory
to the Bank; and
9.1.2 the Bank, or its duly authorised representative, shall have received,
on or prior to the Drawdown Date, the documents and evidence specified
in Part 2 of schedule 2 in form and substance satisfactory to the
Bank.
9.2 GENERAL CONDITIONS PRECEDENT
The obligation of the Bank to advance the Loan shall be subject to the
further conditions that, at the time of the giving of the Drawdown
Notice, and at the time of the making of the Loan:
9.2.1 the representations and warranties contained in clauses 7.1, 7.2 and
7.3(b) are true and correct on and as of each such time as if each was
made with respect to the facts and circumstances existing at such
time; and
9.2.2 no Default shall have occurred and be continuing or would result from
the making of the Loan.
9.3 WAIVER OF CONDITIONS PRECEDENT
The conditions specified in this clause 9 are inserted solely for the
benefit of the Bank and may be waived by the Bank in whole or in part
and with or without conditions.
9.4 FURTHER CONDITIONS PRECEDENT
Not later than five (5) Banking Days prior to the Drawdown Date and
not later than five (5) Banking Days prior to each Interest Payment
Date, the Bank may request and the Borrower shall, not later than two
(2) Banking Days prior to such date, deliver to the Bank on such
request further favourable certificates and/or opinions as to any or
all of the matters which are the subject of clauses 7, 8, 9 and 10 of
this Agreement.
24
10 EVENTS OF DEFAULT
10.1 EVENTS
There shall be an Event of Default if:
10.1.1 NON-PAYMENT: the Borrower or any other Security Party fails to pay any
sum payable by it under any of the Security Documents at the time in
the currency and in the manner stipulated in the Security Documents
(and so that, for this purpose, sums payable on demand shall be
treated as having been paid at the stipulated time if paid within
three (3) Banking Days of demand); or
10.1.2 MASTER SWAP AGREEMENT: (a) an Event of Default or Potential Event of
Default (in each case as defined in the Master Swap Agreement) has
occurred and is continuing with the Borrower as the Defaulting Party
(as defined in the Master Swap Agreement) under the Master Swap
Agreement or (b) an Early Termination Date has occurred or been or
become capable of being effectively designated under the Master Swap
Agreement by the Bank or (c) the Master Swap Agreement is terminated,
cancelled, suspended, rescinded or revoked or otherwise ceases to
remain in full force and effect for any reason; or
10.1.3 BREACH OF INSURANCE OBLIGATIONS: the Borrower or the Manager or any
other person fails to obtain and/or maintain the Insurances (as
defined in, and in accordance with the requirements of, the Ship
Security Documents) or if any insurer in respect of such Insurances
cancels the Insurances or disclaims liability by reason, in either
case, of mis-statement in any proposal for the Insurances or for any
other failure or default on the part of the Borrower or the Manager or
any other person or the Borrower commits any breach of or omits to
observe any of the obligations or undertakings expressed to be assumed
by it under clauses 8.2, 8.3 or 8.4; or
10.1.4 BREACH OF OTHER OBLIGATIONS: the Borrower or any other Security Party
commits any breach of or omits to observe any of its obligations or
undertakings expressed to be assumed by it under any of the Security
Documents (other than those referred to in clauses 10.1.1, 10.1.2 and
10.1.3 above) and, in respect of any such breach or omission which in
the opinion of the Bank is capable of remedy, such action as the Bank
may require shall not have been taken within fourteen (14) days of the
Bank notifying the relevant Security Party of such default and of such
required action; or
10.1.5 MISREPRESENTATION: any representation or warranty made or deemed to be
made or repeated by or in respect of the Borrower or any other
Security Party in or pursuant to any of the Security Documents or in
any notice, certificate or statement referred to in or delivered under
any of the Security Documents is or proves to have been incorrect or
misleading in any material respect; or
10.1.6 CROSS-DEFAULT: any Indebtedness of the Borrower or any other Security
Party or any other Restricted Company is not paid when due or any
Indebtedness of any Security Party or any other Restricted Company
becomes (whether by declaration or automatically in accordance with
the relevant agreement or instrument constituting the same) due and
payable prior to the date when it would otherwise have become due
(unless as a result of the exercise by the relevant Security Party or
other Restricted Company of a voluntary right of prepayment), or any
creditor of any Security Party or any other Restricted Company becomes
entitled to declare any such Indebtedness due and payable or any
facility or commitment available to any Security Party or any other
Restricted Company relating to Indebtedness is withdrawn, suspended or
cancelled by reason of any default (however described) of the person
concerned unless the relevant Security Party or other Restricted
Company shall have satisfied the Bank that such withdrawal, suspension
or cancellation will not affect or prejudice in any way the relevant
Security Party's or other Restricted Company's ability to pay its
debts as they fall due and fund its commitments, or any guarantee
given by any Security Party or any other Restricted Company in respect
of Indebtedness is not honoured when due and called upon; or
10.1.7 LEGAL PROCESS: any judgment or order made against the Borrower or any
other Security Party or any other Restricted Company is not stayed or
complied with within seven (7) days or a creditor attaches or takes
possession of, or a distress, execution, sequestration or other
process is levied or enforced upon or sued out against, any of the
undertakings, assets, rights or revenues
25
of the Borrower or any other Security Party or any other Restricted
Company and is not discharged within seven (7) days; or
10.1.8 INSOLVENCY: the Borrower or any other Security Party or any other
Restricted Company is unable or admits inability to pay its debts as
they fall due, suspends making payments on any of its debts or
announces an intention to do so, becomes insolvent, has assets the
value of which is less than the value of its liabilities (taking into
account contingent and prospective liabilities) or suffers the
declaration of a moratorium in respect of any of its Indebtedness; or
10.1.9 REDUCTION OR LOSS OF CAPITAL: a meeting is convened by the Borrower or
any other Security Party or any other Restricted Company for the
purpose of passing any resolution to purchase, reduce or redeem any of
its share capital; or
10.1.10 WINDING UP: any corporate action, legal proceedings or other procedure
or step is taken for the purpose of winding up the Borrower or any
other Security Party or any other Restricted Company or an order is
made or resolution passed for the winding up of the Borrower or any
other Security Party or any other Restricted Company or a notice is
issued convening a meeting for the purpose of passing any such
resolution; or
10.1.11 ADMINISTRATION: any petition is presented, notice given or other step
is taken for the purpose of the appointment of an administrator of the
Borrower or any other Security Party or any other Restricted Company
or the Bank believes that any such petition or other step is imminent
or an administration order is made in relation to the Borrower or any
other Security Party or any other Restricted Company; or
10.1.12 APPOINTMENT OF RECEIVERS AND MANAGERS: any administrative or other
receiver is appointed of the Borrower or any other Security Party or
any other Restricted Company or any part of its assets and/or
undertaking or any other steps are taken to enforce any Encumbrance
over all or any part of the assets of the Borrower or any other
Security Party or any other Restricted Company; or
10.1.13 COMPOSITIONS: any corporate action, legal proceedings or other
procedure or steps are taken, or negotiations commenced, by the
Borrower or any other Security Party or any other Restricted Company
or by any of its creditors with a view to the general readjustment or
rescheduling of all or part of its indebtedness or to proposing any
kind of composition, compromise or arrangement involving such company
and any of its creditors; or
10.1.14 ANALOGOUS PROCEEDINGS: there occurs, in relation to the Borrower or
any other Security Party or any other Restricted Company, in any
country or territory in which any of them carries on business or to
the jurisdiction of whose courts any part of their assets is subject,
any event which, in the opinion of the Bank, appears in that country
or territory to correspond with, or have an effect equivalent or
similar to, any of those mentioned in clauses 10.1.7 to 10.1.13
(inclusive) or the Borrower or any other Security Party or any other
Restricted Company otherwise becomes subject, in any such country or
territory, to the operation of any law relating to insolvency,
bankruptcy or liquidation; or
10.1.15 CESSATION OF BUSINESS: the Borrower or any other Security Party or any
other Restricted Company suspends or ceases or threatens to suspend or
cease to carry on its business; or
10.1.16 INVALIDITY: any of the Security Documents shall at any time and for
any reason become invalid or unenforceable or otherwise cease to
remain in full force and effect, or if the validity or enforceability
of any of the Security Documents shall at any time and for any reason
be contested by the Borrower or any other Security Party which is a
party thereto, or if the Borrower or any such Security Party shall
deny that it has any, or any further, liability thereunder or shall
otherwise repudiate any of the Security Documents or do or cause or
permit to be done any act or thing evidencing an intention to
repudiate any of the Security Documents; or
10.1.17 SEIZURE: all or a material part of the undertakings, assets, rights or
revenues of, or shares or other ownership interests in, the Borrower
or any other Security Party or any other Restricted
26
Company are seized, nationalised, expropriated or compulsorily
acquired by or under the authority of any Government Entity; or
10.1.18 UNLAWFULNESS: it becomes impossible or unlawful at any time for the
Borrower or any other Security Party, to fulfil any of the covenants
and obligations expressed to be assumed by it in any of the Security
Documents or for the Bank to exercise the rights or any of them vested
in it under any of the Security Documents or otherwise; or
10.1.19 REPUDIATION: the Borrower or any other Security Party repudiates any
of the Security Documents or does or causes or permits to be done any
act or thing evidencing an intention to repudiate any of the Security
Documents; or
10.1.20 ENCUMBRANCES ENFORCEABLE: any Encumbrance (other than Permitted Liens)
in respect of any of the property (or part thereof) which is the
subject of any of the Security Documents becomes enforceable; or
10.1.21 MATERIAL ADVERSE CHANGE: there occurs, in the opinion of the Bank, a
material adverse change in the financial condition of any Security
Party or any other Restricted Company or the consolidated financial
position of the Borrower, Capital and their respective Related
Companies by reference to the financial position of such Security
Party or other Restricted Company or, as the case may be, the
consolidated financial position of the Borrower, Capital and their
respective Related Companies as described by the Borrower or any
Security Party or any other Restricted Company to the Bank in the
negotiation of this Agreement; or
10.1.22 FLAG STATE: the Flag State becomes involved in hostilities or civil
war or there is a seizure of civil power in the Flag State by
unconstitutional means if, in any such case, such event could in the
opinion of the Bank reasonably be expected to have a material adverse
effect on the security constituted by any of the Security Documents;
or
10.1.23 ENVIRONMENTAL CLAIM: the Borrower and/or any other Relevant Party
and/or any of their respective Environmental Affiliates fails to
comply with any Environmental Law or any Environmental Approval or the
Ship or any other Relevant Ship is involved in any incident which
gives rise or which may give rise to an Environmental Claim, if in any
such case, such non compliance or incident or the consequences thereof
could (in the opinion of the Bank) reasonably be expected to have a
material adverse effect on the business, assets, operations, property
or financial condition of the Borrower or any other Security Party or
on the security created by any of the Security Documents; or
10.1.24 INSURANCE REQUIREMENTS: the Borrower or any other person fails or
omits to comply with any requirements of the protection and indemnity
association or other insurer with which the Ship is entered for
insurance or insured against protection and indemnity risks (including
oil pollution risks) to the effect that any cover (including, without
limitation, liability for Environmental Claims arising in
jurisdictions where the Ship operates or trades) is or may be liable
to cancellation, qualification or exclusion at any time; or
10.1.25 ARREST: the Ship is arrested, confiscated, seized, taken in execution,
impounded, forfeited, detained in the exercise or purported exercise
of any possessory lien or other claim or otherwise taken from the
possession of the Borrower and the Borrower shall fail to procure the
release of the Ship within a period of fourteen (14) days; or
10.1.26 REGISTRATION: the registration of the Ship under the laws and flag of
the Flag State is cancelled or terminated without the prior written
consent of the Bank; or
10.1.27 ACCOUNTS: any moneys are withdrawn from the either of the Accounts
other than in accordance with clause 14; or
10.1.28 MATERIAL EVENTS: any other event occurs or circumstance arises which,
in the opinion of the Bank, is likely materially and adversely to
affect either (i) the ability of the Borrower or any other Security
Party to perform all or any of their respective obligations under or
otherwise to comply
27
with the terms of any of the Security Documents or (ii) the security
created by any of the Security Documents.
10.2 ACCELERATION
The Bank may, without prejudice to any other rights of the Bank, at
any time after the happening of an Event of Default by notice to the
Borrower declare that:
10.2.1 the obligation of the Bank to make the Commitment available shall be
terminated, whereupon the Commitment shall be reduced to zero
forthwith; and/or
10.2.2 the Loan and all interest accrued and all other sums payable under the
Security Documents have become due and payable, whereupon the same
shall, immediately or in accordance with the terms of such notice,
become due and payable.
10.3 DEMAND BASIS
If, pursuant to clause 10.2.2, the Bank declares the Loan to be due
and payable on demand, the Bank may by written notice to the Borrower
(a) call for repayment of the Loan on such date as may be specified
whereupon the Loan shall become due and payable on the date so
specified together with all interest accrued and all other sums
payable under this Agreement or (b) withdraw such declaration with
effect from the date specified in such notice.
11 INDEMNITIES
11.1 MISCELLANEOUS INDEMNITIES
The Borrower shall on demand indemnify the Bank, without prejudice to
any of the Bank's other rights under any of the Security Documents
against any loss (including loss of Margin) or expense which the Bank
shall certify as sustained or incurred by it as a consequence of:
11.1.1 any default in payment by the Borrower of any sum under any of the
Security Documents when due; or
11.1.2 the occurrence of any other Event of Default; or
11.1.3 any prepayment of the Loan or part thereof being made under clauses
4.3, 8.3.1(a) or 12.1, or any other repayment or prepayment of the
Loan or part thereof being made otherwise than on an Interest Payment
Date relating to the part of the Loan prepaid or repaid; or
11.1.4 the Loan not being made for any reason (excluding any default by the
Bank) after the Drawdown Notice for the Loan has been given,
including, in any such case, but not limited to, any loss or expense
sustained or incurred in maintaining or funding the Loan or any part
thereof or in liquidating or re-employing deposits from third parties
acquired to effect or maintain the Loan or any part thereof.
11.2 CURRENCY INDEMNITY
If any sum due from the Borrower under any of the Security Documents
or any order or judgment given or made in relation thereto has to be
converted from the currency (the "FIRST CURRENCY") in which the same
is payable under the relevant Security Document or under such order or
judgment into another currency (the "SECOND CURRENCY") for the purpose
of (a) making or filing a claim or proof against the Borrower, (b)
obtaining an order or judgment in any court or other tribunal or (c)
enforcing any order or judgment given or made in relation to any of
the Security Documents, the Borrower shall indemnify and hold harmless
the Bank from and against any loss suffered as a result of any
difference between (i) the rate of exchange used for such purpose to
convert the sum in question from the first currency into the second
currency and (ii) the rate or rates of exchange at which the Bank may
in the ordinary course of business purchase the first currency with
the second currency upon receipt of a sum paid to it in
28
satisfaction, in whole or in part, of any such order, judgment, claim
or proof. Any amount due from the Borrower under this clause 11.2
shall be due as a separate debt and shall not be affected by judgment
being obtained for any other sums due under or in respect of any of
the Security Documents and the term "RATE OF EXCHANGE" includes any
premium and costs of exchange payable in connection with the purchase
of the first currency with the second currency.
11.3 ENVIRONMENTAL INDEMNITY
The Borrower shall indemnify the Bank on demand and hold the Bank
harmless from and against all costs, expenses, payments, charges,
losses, demands, liabilities, actions, proceedings (whether civil or
criminal), penalties, fines, damages, judgements, orders, sanctions or
other outgoings of whatever nature which may be suffered, incurred or
paid by, or made or asserted against the Bank at any time, whether
before or after the repayment in full of principal and interest under
this Agreement, relating to, or arising directly or indirectly in any
manner or for any cause or reason whatsoever out of an Environmental
Claim made or asserted against the Bank if such Environmental Claim
would not have been, or been capable of being, made or asserted
against the Bank if it had not entered into any of the Security
Documents and/or exercised any of its rights, powers and discretions
thereby conferred and/or performed any of its obligations thereunder
and/or been involved in any of the transactions contemplated by the
Security Documents.
11.4 CENTRAL BANK OR EUROPEAN CENTRAL BANK RESERVE REQUIREMENTS INDEMNITY
The Borrower shall on demand promptly indemnify the Bank against any
cost incurred or loss suffered by it as a result of its complying with
the minimum reserve requirements of the European Central Bank and/or
with respect to maintaining required reserves with the relevant
national Central Bank to the extent that such compliance relates to
the Commitment or the Loan or deposits obtained by it to fund or
maintain the whole or part of the Loan and such cost or loss is not
recoverable by the Bank under clause 12.2.
12 UNLAWFULNESS AND INCREASED COSTS
12.1 UNLAWFULNESS
If it is or becomes contrary to any law or regulation for the Bank to
advance the Loan or to maintain the Commitment or fund the Loan, the
Bank shall promptly give notice to the Borrower whereupon (a) the
Commitment shall be reduced to zero and (b) the Borrower shall be
obliged to prepay the Loan either (i) forthwith or (ii) on a future
specified date not being earlier than the latest date permitted by the
relevant law or regulation together with interest accrued to the date
of prepayment and all other sums payable by the Borrower under this
Agreement and/or the Master Swap Agreement.
12.2 INCREASED COSTS
If the result of any change in, or in the interpretation or
application of, or the introduction of, any law or any regulation,
request or requirement (whether or not having the force of law, but,
if not having the force of law, with which the Bank, or as the case
may be, its holding company habitually complies), including (without
limitation) those relating to Taxation, capital adequacy, liquidity,
reserve assets, cash ratio deposits and special deposits, is to:
12.2.1 subject the Bank to Taxes or change the basis of Taxation of the Bank
with respect to any payment under any of the Security Documents (other
than Taxes or Taxation on the overall net income, profits or gains of
the Bank imposed in the jurisdiction in which its principal or lending
office under this Agreement is located); and/or
12.2.2 increase the cost to, or impose an additional cost on, the Bank or its
holding company in making or keeping the Commitment available or
maintaining or funding all or part of the Loan; and/or
12.2.3 reduce the amount payable or the effective return to the Bank under
any of the Security Documents; and/or
29
12.2.4 reduce the Bank's or its holding company's rate of return on its
overall capital by reason of a change in the manner in which it is
required to allocate capital resources to the Bank's obligations under
any of the Security Documents; and/or
12.2.5 require the Bank or its holding company to make a payment or forego a
return on or calculated by reference to any amount received or
receivable by the Bank under any of the Security Documents; and/or
12.2.6 require any Bank or its holding company to incur or sustain a loss
(including a loss of future potential profits) by reason of being
obliged to deduct all or part of its Commitment or the Loan from its
capital for regulatory purposes,
then and in each such case:
(a) the Bank shall notify the Borrower in writing of such event
promptly upon its becoming aware of the same; and
(b) the Borrower shall on demand pay to the Bank the amount which the
Bank specifies (in a certificate setting forth the basis of the
computation of such amount but not including any matters which
the Bank or its holding company regards as confidential) is
required to compensate the Bank and/or (as the case may be) its
holding company for such liability to Taxes, cost, reduction,
payment, forgone return or loss.
For the purposes of this clause 12.2 "HOLDING COMPANY" means the
company or entity (if any) within the consolidated supervision of
which a Bank is included.
12.3 EXCEPTION
Nothing in clause 12.2 shall entitle the Bank to receive any amount in
respect of compensation for any such liability to Taxes, increased or
additional cost, reduction, payment, foregone return or loss to the
extent that the same is the subject of an additional payment under
clause 6.6.
13 SECURITY AND SET-OFF
13.1 APPLICATION OF MONEYS
All moneys received by the Bank under or pursuant to any of the
Security Documents and expressed to be applicable in accordance with
the provisions of this clause 13.1 shall be applied by the Bank in the
following manner:
13.1.1 first in or toward payment of all unpaid fees, commissions and
expenses which may be owing to the Bank under any of the Security
Documents;
13.1.2 secondly, in or towards payment of any arrears of interest owing in
respect of the Loan or any part thereof;
13.1.3 thirdly, in or towards payment of any sums owing to the Bank under the
Master Swap Agreement;
13.1.4 fourthly, in or towards repayment of the Loan (whether the same is due
and payable or not);
13.1.5 fifthly, in or towards payment to the Bank for any loss suffered by
reason of any such payment in respect of principal not being effected
on an Interest Payment Date relating to the part of the Loan repaid;
13.1.6 sixthly, in or towards payment to the Bank of any other sums owing to
it under any of the Security Documents; and
13.1.7 seventhly, the surplus (if any) shall be paid to the Borrower or to
whomsoever else may be entitled to receive such surplus.
30
13.2 SET-OFF
13.2.1 The Borrower authorises the Bank (without prejudice to any of the
Bank's rights at law, in equity or otherwise), at any time and without
notice to the Borrower, to apply any credit balance to which the
Borrowers is then entitled standing upon any account of the Borrower
with any branch of the Bank in or towards satisfaction of any sum due
and payable from the Borrower to the Bank under any of the Security
Documents. For this purpose, the Bank is authorised to purchase with
the moneys standing to the credit of such account such other
currencies as may be necessary to effect such application.
13.2.2 Without prejudice to its rights hereunder, the Bank may at the same
time as, or at any time after, any Default occurs under this
Agreement, set-off any amount due now or in the future from the
Borrower to the Bank under this Agreement against any amount due from
the Bank to the Borrower under the Master Swap Agreement and apply the
second amount in discharging the first amount. The effect of any
set-off under this sub-clause 13.2.2 shall be effective to extinguish
or, as the case may require, reduce the liabilities of the Bank under
the Master Swap Agreement.
13.2.3 The Bank shall not be obliged to exercise any right given to it by
this clause 13.2. The Bank shall notify the Borrower forthwith upon
the exercise or purported exercise of any right of set-off giving full
details in relation thereto.
13.2.4 Nothing in this clause 13.2 shall be effective to create a charge on
other security interest.
13.3 FURTHER ASSURANCE
The Borrower undertakes that the Security Documents shall both at the
date of execution and delivery thereof and so long as any moneys are
owing under any of the Security Documents be valid and binding
obligations of the respective parties thereto and rights of the Bank
enforceable in accordance with their respective terms and that it
will, at its expense, execute, sign, perfect and do, and will procure
the execution, signing, perfecting and doing by each of the other
Security Parties of, any and every such further assurance, document,
act or thing as in the reasonable opinion of the Bank may be necessary
or desirable for perfecting the security contemplated or constituted
by the Security Documents.
13.4 CONFLICTS
In the event of any conflict between this Agreement and any of the
other Borrower's Security Documents, the provisions of this Agreement
shall prevail.
14 ACCOUNTS
14.1 GENERAL
The Borrower undertakes that it will:
14.1.1 on or before the Drawdown Date, open each of the Accounts; and
14.1.2 procure that all moneys payable to the Borrower in respect of the
Earnings (as defined in the Deed of Covenant) and any moneys payable
to the Borrower pursuant to the Master Swap Agreement shall, unless
and until the Bank directs to the contrary pursuant to clause 2.1.1 of
the Deed of Covenant, be paid to the Operating Account Provided
however that if any of the moneys paid to the Operating Account are
payable in a currency other than Dollars, the Bank shall convert such
moneys into Dollars at the Bank's spot rate of exchange at the
relevant time for the purchase of Dollars with such currency and the
term "SPOT RATE OF EXCHANGE" shall include any premium and costs of
exchange payable in connection with the purchase of Dollars with such
currency.
31
14.2 OPERATING ACCOUNT: WITHDRAWALS
Unless the Bank otherwise agrees in writing, the Borrower shall not be
entitled to withdraw any moneys from the Operating Account at any time
from the date of this Agreement and so long as any moneys are owing
under the Security Documents save that, unless and until a Default
shall occur and the Bank shall direct to the contrary, the Borrower
may withdraw moneys from the Operating Account for the following
purposes:
14.2.1 to transfer to the Retention Account on each Retention Date all or
part of the Retention Amount for such Retention Date;
14.2.2 to pay any amount to the Bank in or towards payments of any
instalments of interest or the instalment of principal or any other
amounts then payable pursuant to the Security Documents;
14.2.3 to pay the proper and reasonable expenses of the Ship incurred or
budgeted by the relevant Manager pursuant to the relevant Management
Agreement;
14.2.4 to pay the proper and reasonable expenses of administering its
affairs; and
14.2.5 to pay any amounts expressly permitted by clause 8.2.12.
14.3 RETENTION ACCOUNT: CREDITS AND WITHDRAWALS
14.3.1 The Borrower hereby undertakes with the Bank that it will, from the
date of this Agreement and so long as any moneys are owing under the
Security Documents, on each Retention Date, pay to the Bank for credit
to the Retention Account, the Retention Amount for such Retention Date
provided however that, to the extent that there are moneys standing to
the credit of the Operating Account as of the relevant Retention Date
such moneys shall, up to an amount equal to the Retention Amount, be
transferred to the Retention Account on that Retention Date (and the
Borrower hereby irrevocably authorises the Bank to effect each such
transfer) and to that extent the Borrower's obligations to make the
payments referred to in this clause 14.3.1 shall have been fulfilled
upon such transfer being effected and shall be strictly without
prejudice to the obligations of the Borrower to make any such payment
to the extent that the aforesaid transfer by the Bank is insufficient
to meet the same.
14.3.2 Unless and until there shall occur an Event of Default (whereupon the
provisions of clause 14.4 shall apply), all Retention Amounts credited
to the Retention Account together with interest from time to time
accruing or at any time accrued thereon shall be applied by the Bank
(and the Borrower hereby irrevocably authorises the Bank so to apply
the same) upon each Repayment Date, and on each day that interest is
payable pursuant to clause 3.1, in or towards payment to the Bank of
the instalment then falling due for repayment or (as the case may be)
the amount of interest then due. Each such application by the Bank
shall constitute a payment in or towards satisfaction of the
Borrower's corresponding payment obligations under this Agreement but
shall be strictly without prejudice to the obligations of the Borrower
to make any such payment to the extent that the aforesaid application
by the Bank is insufficient to meet the same.
14.3.3 Unless the Bank otherwise agrees in writing and subject to clause
14.3.2, the Borrower shall not be entitled to withdraw any moneys from
the Retention Account at any time from the date of this Agreement and
so long as any moneys are owing under the Security Documents.
14.4 APPLICATION OF ACCOUNTS
At any time after the occurrence of an Event of Default, the Bank may,
without notice to the Borrower, apply all moneys then standing to the
credit of the Accounts (together with interest from time to time
accruing or accrued thereon) in or towards satisfaction of any sums
due to the Bank under the Security Documents in the manner specified
in clause 13.1.
32
14.5 PLEDGING OF RETENTION ACCOUNT
The Retention Account and all amounts from time to time standing to
the credit thereof shall be subject to the security constituted and
the rights conferred by the Retention Account Pledge.
15 ASSIGNMENT, TRANSFER AND LENDING OFFICE
15.1 BENEFIT AND BURDEN
This Agreement shall be binding upon, and shall enure for the benefit
of, the Bank and the Borrower and their respective successors in
title.
15.2 NO ASSIGNMENT BY BORROWER
The Borrower may not assign or transfer any of its rights or
obligations under this Agreement.
15.3 ASSIGNMENT BY BANK
The Bank may assign all or any part of its rights under this Agreement
or under any of the other Security Documents to any other bank or
financial institution (an "ASSIGNEE") without the consent of the
Borrower.
15.4 TRANSFER
The Bank may transfer all or any part of its rights, benefits and/or
obligations under this Agreement and/or any of the other Security
Documents to any one or more banks or other financial institutions (a
"TRANSFEREE") without the prior consent of the Borrower (the Borrower
consenting to any such transfer by its execution of this Agreement)
provided that the Transferee, by delivery of such undertaking as the
Bank may approve, becomes bound by the terms of this Agreement and
agrees to perform all or, as the case may be, part of the Bank's
obligations under this Agreement.
15.5 DOCUMENTING ASSIGNMENTS AND TRANSFERS
If the Bank assigns all or any part of its rights or transfers all or
any part of its rights, benefits and/or obligations as provided in
clauses 15.3 or 15.4, the Borrower undertakes, immediately on being
requested to do so by the Bank and at the cost of the Bank, to enter
into, and procure that the other Security Parties shall enter into,
such documents as may be necessary or desirable to transfer to the
Assignee or Transferee all or the relevant part of the Bank's interest
in the Security Documents and all relevant references in this
Agreement to the Bank shall thereafter be construed as a reference to
the Bank and/or its Assignee or Transferee (as the case may be) to the
extent of their respective interests.
15.6 LENDING OFFICE
The Bank shall lend through its office at the address specified above
or through any other office of the Bank selected from time to time by
it through which the Bank wishes to lend for the purposes of this
Agreement. If the office through which the Bank is lending is changed
pursuant to this clause 15.6, the Bank shall notify the Borrower
promptly of such change.
15.7 DISCLOSURE OF INFORMATION
The Bank may disclose to a prospective assignee, transferee or to any
other person who may propose entering into contractual relations with
the Bank in relation to this Agreement such information about the
Borrower as the Bank shall consider appropriate.
33
16 NOTICES AND OTHER MATTERS
16.1 NOTICES
Every notice, request, demand or other communication under this
Agreement or (unless otherwise provided therein) under any of the
other Security Documents shall:
16.1.1 be in writing delivered personally or by first-class prepaid letter
(airmail if available) or facsimile transmission or other means of
telecommunication in permanent written form;
16.1.2 be deemed to have been received, subject as otherwise provided in the
relevant Security Document, in the case of a letter, when delivered
personally or three (3) days after it has been put in the post and, in
the case of a facsimile transmission or other means of
telecommunication in permanent written form, at the time of despatch
(provided that if the date of despatch is not a business day in the
country of the addressee or if the time of despatch is after the close
of business in the country of the addressee it shall be deemed to have
been received at the opening of business on the next such business
day); and
16.1.3 be sent:
(a) to the Borrower at:
c/o Capital Ship Management Corp.
▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇
Fax no: ▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇
Attention: Mr. Syntychakis
(b) to the Bank at:
National Bank of Greece S.A.
▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇ ▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇
Fax No: ▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇
Attention: Corporate Manager
or to such other address and/or numbers as is notified by one party to
the other party under this Agreement.
16.2 NO IMPLIED WAIVERS, REMEDIES CUMULATIVE
No failure or delay on the part of the Bank to exercise any power,
right or remedy under any of the Security Documents shall operate as a
waiver thereof, nor shall any single or partial exercise by the Bank
of any power, right or remedy preclude any other or further exercise
thereof or the exercise of any other power, right or remedy. The
remedies provided in the Security Documents are cumulative and are not
exclusive of any remedies provided by law.
16.3 ENGLISH LANGUAGE
All certificates, instruments and other documents to be delivered
under or supplied in connection with any of the Security Documents
shall be in the English language or shall be accompanied by a
certified English translation upon which the Bank shall be entitled to
rely.
34
17 GOVERNING LAW AND JURISDICTION
17.1 LAW
This Agreement is governed by, and shall be construed in accordance
with, English law.
17.2 SUBMISSION TO JURISDICTION
The Borrower agrees, for the benefit of the Bank, that any legal
action or proceedings arising out of or in connection with this
Agreement against the Borrower or any of its assets may be brought in
the English courts. The Borrower irrevocably and unconditionally
submits to the jurisdiction of such courts and irrevocably designates,
appoints and empowers Curzon Maritime Ltd at present of St. Clare
House, 30/33 ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇ to receive for
it and on its behalf, service of process issued out of the English
courts in any such legal action or proceedings. The submission to such
jurisdiction shall not (and shall not be construed so as to) limit the
right of the Bank to take proceedings against the Borrower in the
courts of any other competent jurisdiction nor shall the taking of
proceedings in any one or more jurisdictions preclude the taking of
proceedings in any other jurisdiction, whether concurrently or not.
The parties further agree that only the Courts of England and not
those of any other State shall have jurisdiction to determine any
claim which the Borrower may have against the Bank arising out of or
in connection with this Agreement.
17.3 CONTRACTS (RIGHTS OF THIRD PARTIES) ACT 1999
No term of this Agreement is enforceable under the Contracts (Rights
of Third Parties) ▇▇▇ ▇▇▇▇ by a person who is not a party to this
Agreement.
IN WITNESS whereof the parties to this Agreement have caused this Agreement
to be duly executed on the date first above written.
35
SCHEDULE 1
FORM OF DRAWDOWN NOTICE
(referred to in clause 2.2)
To: National Bank of Greece S.A
▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇ ▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇
[________] 2004
U.S.$28,000,000 LOAN
LOAN AGREEMENT DATED 30 NOVEMBER 2004
We refer to the above Loan Agreement and hereby give you notice that we wish to
draw down the Loan, namely $[28,000,000] on [________] 2004 and select a first
Interest Period in respect thereof of [________] months. The funds should be
credited as follows: [INSERT DETAILS].
We confirm that:
(a) no event or circumstance has occurred and is continuing which constitutes a
Default;
(b) the representations and warranties contained in clauses 7.1, 7.2 and 7.3(b)
of the Loan Agreement, are true and correct at the date hereof as if made
with respect to the facts and circumstances existing at such date;
(c) the borrowing to be effected by the drawdown of the Loan will be within our
corporate powers, has been validly authorised by appropriate corporate
action and will not cause any limit on our borrowings (whether imposed by
statute, regulation, agreement or otherwise) to be exceeded; and
(d) there has been no material adverse change in our financial position or in
the financial position of Capital or in the consolidated financial position
of ourselves, Capital and our Related Companies from that described by us
to the Bank in the negotiation of the Loan Agreement.
Words and expressions defined in the Loan Agreement shall have the same meanings
where used herein.
---------------------------------
For and on behalf of
SHIP POWER MARINE S.A.
36
SCHEDULE 2
DOCUMENTS AND EVIDENCE REQUIRED AS CONDITIONS PRECEDENT TO THE
LOAN BEING MADE
(referred to in clause 9.1)
PART 1
1 CONSTITUTIONAL DOCUMENTS
Copies, certified by an officer of each Security Party as true,
complete and up to date copies of all documents which contain or
establish or relate to the constitution of that Security Party;
2 CORPORATE AUTHORISATIONS
copies of resolutions of the directors and shareholders of each
Security Party approving such of the Underlying Documents and the
Security Documents to which such Security Party is, or is to be, a
party and authorising the signature, delivery and performance of such
Security Party's obligations thereunder, certified (in a certificate
dated no earlier than five (5) Banking Days prior to the date of this
Agreement) by an officer of such Security Party as:
2.1 being true and correct;
2.2 being duly passed at meetings of the directors of such Security Party
and of the shareholders of such Security Party each duly convened and
held;
2.3 not having been amended, modified or revoked; and
2.4 being in full force and effect,
together with originals or certified copies of any powers of attorney
issued by any Security Party pursuant to such resolutions;
3 SPECIMEN SIGNATURES
copies of the signatures of the persons who have been authorised on
behalf of each Security Party to sign such of the Underlying Documents
and the Security Documents to which such Security Party is, or is to
be, party and to give notices and communications, including notices of
drawing, under or in connection with the Security Documents, certified
(in a certificate dated no earlier than five (5) Banking Days prior to
the date of this Agreement) by an officer of such Security Party as
being the true signatures of such persons;
4 CERTIFICATE OF INCUMBENCY
a list of directors and officers of each Security Party specifying the
names and positions of such persons, certified (in a certificate dated
no earlier than five (5) Banking Days prior to the date of this
Agreement) by an officer of such Security Party to be true, complete
and up to date;
5 BORROWER'S CONSENTS AND APPROVALS
a certificate (dated no earlier than five (5) Banking Days prior to
the date of this Agreement) from an officer of the Borrower that no
consents, authorisations, licences or approvals are necessary for the
Borrower to authorise or are required by the Borrower in connection
with the borrowing by the Borrower of the Loan pursuant to this
Agreement or the execution, delivery and performance by the Borrower
of the Borrower's Security Documents and the Underlying Documents;
37
6 OTHER CONSENTS AND APPROVALS
a certificate (dated no earlier than five (5) Banking Days prior to
the date of this Agreement) from an officer of each Security Party
(other than the Borrower) that no consents, authorisations, licences
or approvals are necessary for such Security Party to guarantee and/or
grant security for the borrowing by the Borrower of the Commitment
pursuant to this Agreement and execute, deliver and perform the
Security Documents and the Underlying Documents insofar as such
Security Party is a party thereto;
7 SECURITY DOCUMENTS
the Master Swap Agreement and the Retention Account Pledge, each duly
executed;
8 CERTIFIED UNDERLYING DOCUMENTS
a copy, certified (in a certificate dated no earlier than five (5)
Banking Days prior to the date of this Agreement) as a true and
complete copy by an officer of the Borrower of the Contract
(evidencing a Contract Price of Thirty six million Dollars
($36,000,000)) and the Management Agreement with the Manager of the
Ship as of the Drawdown Date;
9 ARRANGEMENT FEE
evidence that the arrangement fee due under clause 5.1 has been paid
in full;
10 BORROWER'S PROCESS AGENT
a letter from the Borrower's agent for receipt of service of
proceedings referred to in clause 17.2 accepting its appointment under
the said clause and under each of the other Security Documents in
which it is or is to be appointed as the Borrower's agent;
11 SECURITY PARTIES' PROCESS AGENT
a letter from each Security Party's agent for receipt of service of
proceedings accepting its appointment under each of the Security
Documents in which it is or is to be appointed as such Security
Party's agent;
12 ACCOUNTS
evidence that the Accounts have been opened, together with duly
completed mandate forms in respect thereof; and
13 FURTHER MATTERS OR OPINIONS
any such other matter or opinion as may be required by the Bank.
38
PART 2
1 SHIP CONDITIONS
Evidence that the Ship:
1.1 REGISTRATION AND ENCUMBRANCES
is registered in the name of the Borrower through the Registry under
the laws and flag of the Flag State and that the Ship and its
Earnings, Insurances and Requisition Compensation (each such term as
defined in the Deed of Covenant) are free of Encumbrances;
1.2 CLASSIFICATION
maintains the Classification free of all requirements and
recommendations of the Classification Society; and
1.3 INSURANCE
is insured in accordance with the provisions of the Ship Security
Documents and all requirements of the Ship Security Documents in
respect of such insurances have been complied with (including without
limitation, confirmation from the protection and indemnity association
or other insurer with which the Ship is, or is to be, entered for
insurance or insured against protection and indemnity risks (including
oil pollution risks) that any necessary declarations required by the
association or insurer for the removal of any oil pollution exclusion
have been made and that any such exclusion does not apply to the
Ship);
2 SHIP SECURITY DOCUMENTS
the Mortgage, the Deed of Covenant and the Manager's Undertaking (by
the Manager of the Ship as of the Drawdown Date), each duly executed;
3 MORTGAGE REGISTRATION
evidence that the Mortgage over the Ship has been registered against
the Ship through the Registry under the laws and flag of the Flag
State;
4 NOTICES OF ASSIGNMENT
copies of duly executed notices of assignment required by the terms of
the Ship Security Documents and in the forms prescribed by the Ship
Security Documents;
5 LEGAL OPINIONS
(i) an opinion of Cozen ▇'▇▇▇▇▇▇, special legal advisers on matters
of ▇▇▇▇▇▇▇▇ Islands law to the Bank;
(ii) an opinion of ▇▇▇▇▇▇, ▇▇▇▇▇▇ & Asvat, special legal advisers on
matters of Panamanian law to the Bank; and
(iii) an opinion of ▇▇▇▇▇▇ ▇▇▇▇▇, special legal advisers on matters of
Bahamian Islands law to the Bank.
39
6 INSURANCE OPINION
an opinion (at the expense of the Borrower) from insurance consultants
to the Bank, on the insurances effected or to be effected in respect
of the Ship upon and following the Drawdown Date;
7 SECURITY PARTIES' PROCESS AGENT
a letter from each Security Party's agent for receipt of service of
proceedings accepting its appointment under each of the Security
Documents in which it is or is to be appointed as such Security
Party's agent;
8 VALUATION
a valuation of the Ship (dated not more than fifteen (15) days prior
to the Drawdown Date) made on the basis and in the manner specified in
clause 8.3.2 and satisfactory to the Bank in all respects;
9 TITLE AND NO ENCUMBRANCE
evidence that the prior registration of the Ship in the name of the
Seller under the Bahamian flag has been cancelled and that the Seller
has transferred good title to the Ship to the Borrower free from
Encumbrances;
10 ▇▇▇▇ OF SALE
the ▇▇▇▇ of sale in respect of the Ship duly executed by the Seller
and the Borrower and evidencing the full Contract Price in the amount
of Thirty six million Dollars ($36,000,000);
11 READINESS AND PAYMENT OF CONTRACT PRICE
evidence that the Ship is in all respects ready for Delivery and that
the Contract Price has been (or upon drawdown of the Loan will have
been) paid in full;
12 SMC/DOC
a copy, certified (in a certificate dated no earlier than five (5)
Banking Days prior to the date of this Agreement) as a true and
complete copy by an officer of the Borrower of the DOC issued to the
Operator and the SMC for the Ship;
13 ISPS CODE COMPLIANCE
(a) evidence satisfactory to the Bank that the Ship is subject to a
ship security plan which complies with the ISPS Code;
(b) a copy, certified (in a certificate dated no earlier than five
(5) Banking Days prior to the Drawdown Date) as a true and
complete copy by an officer of the Borrower of the ISSC for the
Ship and the continuous synopsis record required by the ISPS Code
in respect of the Ship; and
14 FURTHER MATTERS OR OPINIONS
any such other matter or further opinion as may be required by the
Bank.
40
SCHEDULE 3
FORM OF MORTGAGE
41
R208 - Mortgage Registration Form - Version 1.1
--------------------------------------------------------------------------------
[GRAPHIC]
THE COMMONWEALTH OF THE BAHAMAS
MORTGAGE REGISTRATION FORM
(Page 1 of 2)
--------------------------------------------------------------------------------
Official Number IMO Number Name of Ship Port of Registry
--------------------------------------------------------------------------------
723135 Victoria Spirit NASSAU
--------------------------------------------------------------------------------
Propulsion and Engine Details Vessel Dimensions
--------------------------------------------------------------------------------
Propulsion: Length: metres
Type of Engines: Breadth: metres
Total Power: Depth: metres
--------------------------------------------------------------------------------
Particulars of Tonnage
--------------------------------------------------------------------------------
GROSS TONNAGE: tons NET TONNAGE: tons
--------------------------------------------------------------------------------
Whereas (a) there is an account current between Ship Power Marine S.A. whose
registered office is at Trust Company Complex, Ajeltake Road, Ajeltake Island,
Majuro, ▇▇▇▇▇▇▇▇ Islands MH96960 (the "Mortgagor") and National Bank of Greece
S.A. whose registered office is at ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ and
acting for the purposes of this Mortgage through its branch at ▇ ▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ & ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇ ▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ (the "Mortgagee") regulated by a
loan agreement dated 30 November 2004 between the Mortgagee as lender and the
Mortgagor as borrower and an ISDA Master Swap Agreement dated 30 November 2004
between the Mortgagee and the Mortgagor together with any Confirmations (as
defined therein) supplemental thereto (as the same may from time to time be
amended, supplemented or varied, the "Agreements") and a deed of covenants dated
of even date herewith (as the same may from time to time be amended,
supplemented or varied, the "Deed of Covenants") made between the Mortgagor and
the Mortgagee and WHEREAS the Mortgagor has agreed to execute this Mortgage in
favour of the Mortgagee for the purpose of securing payment by the Mortgagor to
the Mortgagee of all sums for the time being owed to the Mortgagee in the manner
and at the times set forth in the Agreements and the Deed of Covenants, and
WHEREAS the amount of principal and interest due at any given time can be
ascertained by reference to the Agreements and the Deed of Covenants and the
books of account (or other accounting records) of the Mortgagee
Now we (b) Ship Power Marine S.A. in consideration of the premises for ourselves
and our successors, covenant with the said (c) National Bank of Greece S.A. and
(d) its assigns to pay to him or them or it the sums for the time being due on
this security whether by way of principal or interest, at the times and manner
aforesaid. And for the purpose of better securing to the said (c) National Bank
of Greece S.A. the payment of such sums as last aforesaid, we do hereby mortgage
to the said (c) National Bank of Greece S.A. 64/64 shares of which we are the
Owners in the Ship above particularly described, and in her boats, guns,
ammunition, small arms and appurtenances.
Lastly, we for ourselves and our successors, covenant with the said (c) National
Bank of Greece S.A. and (d) its assigns that we have the power to mortgage in
manner aforesaid the above mentioned shares, and that the same are free from
encumbrances
In witness whereof we have affixed our common seal this ______ day of
_______________ 2004
--------------------------------------------------------------------------------
Seal Individual/Corporation Attestation
--------------------------------------------------------------------------------
I,(f) _________________________________
name of individual/corporation
of (g) ________________________________
per_____________________________
hereby testify that in my presence
signature as Individual/ (i) this Mortgage was signed by
Director/Secretary/ Officer/ _______________________________________
Attorney-in-fact (h) as Individual/Director/Secretary/
Officer/Attorney-in-fact (h)
and ___________________________________
------------------------------- as Individual/Director/Secretary/
signature as Individual/ Officer/Attorney-in-fact (h)
Director/Secretary/Officer/
Attorney-in-fact (h)
_______________________________
in the presence of the witness and____________________________________
whose attestation is given (ii) the corporate seal (h)/personal
opposite seal (h) of the transferor was affixed
this ______ day of _______________
Signature of witness
------------------
--------------------------------------------------------------------------------
R208 - Mortgage Registration Form - Version 1.1
--------------------------------------------------------------------------------
(a) Here state by way of recital that there is an account current between the
Mortgagor (describing the company and its address) and the Mortgagee (giving
full title, address and description, including all joint mortgages), and
describe the nature of the transaction so as to show how the amount of principal
and interest due at any given time is to be ascertained, and the manner and time
of payment, (b) Name of company, (c) Full name of Mortgagee, (d) "his", "hers"
or "its", (e) If any prior encumbrance add "save as appears by the registry of
the ship", (f) name of witness, (g) address of witness, (h) delete as
applicable.
NOTE: The witness to the execution of the document must be a disinterested
party, independent of the body corporate or individual executing it e.g. Notary
Public, Consular Officer, Magistrate, Justice of Peace. A director, officer or
employee of a transferor which is a body corporate should not be an attesting
witness.
--------------------------------------------------------------------------------
[GRAPHIC]
THE COMMONWEALTH OF THE BAHAMAS
MORTGAGE REGISTRATION FORM
(Page 2 of 2)
--------------------------------------------------------------------------------
Official Number IMO Number Name of Ship Port of Registry
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
TRANSFER OF MORTGAGE
I/we, the within mentioned
in consideration of this
day paid to me/us (a) by ______________________________________
hereby transfer to it/him/her/them (a) the benefit of the within-written
security. In witness whereof I/we (a) have hereto affixed our seal this _____
day of ________________________
--------------------------------------------------------------------------------
Seal Individual/Corporation Attestation
--------------------------------------------------------------------------------
I,(b) _________________________________
name of individual/corporation
of (c) ________________________________
per_____________________________
hereby testify that in my presence
signature as Individual/ (i) this Transfer of mortgage was
Director/Secretary/ Officer/ signed by
Attorney-in-fact _______________________________________
as Individual/Director/Secretary/
Officer/Attorney-in-fact (a)
------------------------------- and ___________________________________
signature as Individual/ as Individual/Director/Secretary/
Director/Secretary/ Officer/ Officer/Attorney-in-fact (a)
Attorney-in-fact
-------------------------------
in the presence of the witness and
whose attestation is given (ii) the corporate seal/personal
opposite seal (a) of the transferor was affixed
this ______ day of _______________
Signature of witness
------------------
--------------------------------------------------------------------------------
MEMORANDUM OF DISCHARGE
By individual or Joint Mortgagees
Received the sum of _________________________________
in discharge of this within-written security. Dated at _________this ______ day
of _______________
In witness whereof we have hereto affixed our common seal this ______ day of
_________________
--------------------------------------------------------------------------------
I,(b) _________________________________
name of individual/corporation
of (c) ________________________________
per_____________________________
hereby testify that in my presence
signature as Individual/ (i) this Discharge of mortgage was
Director/Secretary/ Officer/ signed by
Attorney-in-fact _______________________________________
as Individual/Director/Secretary/
Officer/Attorney-in-fact (a)
------------------------------- and ___________________________________
signature as Individual/ as Individual/Director
Director/Secretary/ Officer/ Attorney-in-fact (a)
Attorney-in-fact
_______________________________
in the presence of the witness and
whose attestation is given (ii) the corporate seal/personal
opposite seal (a) of the mortgagee was affixed
this ______ day of _______________
Signature of witness
------------------
--------------------------------------------------------------------------------
R208 - Mortgage Registration Form - Version 1.1
--------------------------------------------------------------------------------
(a) delete as appropriate, (b) insert name of witness, (c) insert address of
witness
NOTE: The witness to the execution of the document must be a disinterested
party, independent of the body corporate or individual executing it e.g. Notary
Public, Consular Officer, Magistrate, Justice of Peace. A director, officer or
employee of a transferor which is a body corporate should not be an attesting
witness.
--------------------------------------------------------------------------------
Private & Confidential
DATED ______ DECEMBER 2004
SHIP POWER MARINE S.A. (1)
AND
NATIONAL BANK OF GREECE S.A. (2)
----------
DEED OF COVENANT
RELATING TO M.V. VICTORIA SPIRIT
----------
[LOGO OF ▇▇▇▇▇▇ ▇▇▇▇]
CONTENTS
CLAUSE PAGE
------ ----
1 Definitions...........................................................1
2 Mortgage and assignment...............................................5
3 Covenant to pay.......................................................7
4 Continuing security and other matters.................................7
5 Covenants.............................................................8
6 Powers of Mortgagee to protect security and remedy defaults..........15
7 Powers of Mortgagee on Event of Default..............................16
8 Application of moneys................................................17
9 Remedies cumulative and other provisions.............................19
10 Costs and indemnity..................................................19
11 Attorney.............................................................20
12 Further assurance....................................................20
13 Notices..............................................................20
14 Counterparts.........................................................21
15 Severability of provisions...........................................21
16 Law and jurisdiction.................................................21
Schedule 1 Forms of Loss Payable Clauses......................................23
Schedule 2 Form of Notice of Assignment of Insurances.........................25
THIS DEED OF COVENANT is dated ______ December 2004 and made BETWEEN:
(1) SHIP POWER MARINE S.A., a corporation incorporated under the laws of
the Republic of the ▇▇▇▇▇▇▇▇ Islands having its registered office at
Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro,
▇▇▇▇▇▇▇▇ Islands MH96960 (the "OWNER"); and
(2) NATIONAL BANK OF GREECE S.A., a company incorporated under the laws of
Greece having its registered office at ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇ and acting for the purposes of this Guarantee through
its branch at ▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & Akti ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇,
▇▇▇▇▇▇ (the "MORTGAGEE").
WHEREAS:
(A) the Owner is the sole, absolute and unencumbered, legal and beneficial
owner of all shares in the Ship described in clause 1.2;
(B) by a loan agreement dated 30 November 2004 (as the same may from time
to time be amended, supplemented or varied) (the "LOAN AGREEMENT")
made between (1) the Owner (therein referred to as the "BORROWER") and
(2) the Mortgagee (therein referred to as the "BANK"), the Mortgagee
agreed (inter alia) to advance by way of loan to the Owner, upon the
terms and conditions therein contained, the sum of up to Twenty eight
million Dollars ($28,000,000);
(C) by an ISDA master agreement dated as of 30 November 2004 (as the same
may from time to time be amended, supplemented or varied) (the "MASTER
SWAP AGREEMENT") and made between the Owner and the Mortgagee, the
Mortgagee agreed the terms and conditions upon which it would enter
into an interest rate swap transaction or transactions with the Owner
in respect of the Loan (or part thereof as the case may be from time
to time);
(D) the Owner has executed in favour of the Mortgagee a statutory Bahamian
mortgage of even date herewith in account current form (the
"MORTGAGE") constituting a first priority mortgage of sixty-four
sixty-fourth (64/64th) shares in the said Ship; and
(E) this Deed is supplemental to the Loan Agreement, the Master Swap
Agreement and the Mortgage and to the security thereby created and is
the Deed of Covenant referred to in the Loan Agreement but shall
nonetheless continue in full force and effect notwithstanding any
discharge of the Mortgage.
NOW THIS DEED WITNESSES AND IT IS HEREBY AGREED as follows:
1 DEFINITIONS
1.1 DEFINED EXPRESSIONS
Words and expressions defined in the Loan Agreement shall, unless the
context otherwise requires or unless otherwise defined herein, have
the same meanings when used in this Deed.
1.2 DEFINITIONS
In this Deed, unless the context otherwise requires:
"APPROVED BROKERS" means such firm of insurance brokers, appointed by
the Owner, as may from time to time be approved in writing by the
Mortgagee for the purposes of this Deed;
"BANKING DAY" means a day on which dealings in deposits in Dollars are
carried on in the London Interbank Eurocurrency Market and (other than
Saturday or Sunday) on which banks are open for business in London,
Piraeus and New York City (or any other relevant place of payment
under the Loan Agreement);
1
"COLLATERAL INSTRUMENTS" means notes, bills of exchange, certificates
of deposit and other negotiable and non-negotiable instruments,
guarantees, indemnities and other assurances against financial loss
and any other documents or instruments which contain or evidence an
obligation (with or without security) to pay, discharge or be
responsible directly or indirectly for, any indebtedness or
liabilities of the Owner or any other person liable and includes any
documents or instruments creating or evidencing a mortgage, charge
(whether fixed or floating), pledge, lien, hypothecation, assignment,
trust arrangement or security interest of any kind;
"DEFAULT" means any Event of Default or any event or circumstance
which with the giving of notice or lapse of time or the satisfaction
of any other condition (or any combination thereof) would constitute
an Event of Default;
"EARNINGS" means all moneys whatsoever from time to time due or
payable to the Owner during the Security Period arising out of the use
or operation of the Ship including (but without limiting the
generality of the foregoing) all freight, hire and passage moneys,
income arising under pooling arrangements, compensation payable to the
Owner 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;
"ENCUMBRANCE" means any mortgage, charge (whether fixed or floating),
pledge, lien, hypothecation, assignment, trust arrangement or security
interest or other encumbrance of any kind securing any obligation of
any person or any type of preferential arrangement (including, without
limitation, title transfer and/or retention arrangements having a
similar effect);
"EXPENSES" means the aggregate at any relevant time (to the extent
that the same have not been received or recovered by the Mortgagee or
any Receiver) of:
(a) all losses, liabilities, costs, charges, expenses, damages and
outgoings of whatever nature (including, without limitation,
Taxes, repair costs, registration fees and insurance premiums)
suffered, incurred or paid by the Mortgagee or any Receiver in
connection with the exercise of the powers referred to in or
granted by this Deed or otherwise payable by the Owner in
accordance with clause 10; and
(b) interest on all such losses, liabilities, costs, charges,
expenses, damages and outgoings from the date on which the same
were suffered, incurred or paid by the Mortgagee or any Receiver
until the date of receipt or recovery thereof (whether before or
after judgment) at a rate per annum calculated in accordance with
clause 3.4 of the Loan Agreement (as conclusively certified by
the Mortgagee or such Receiver, as the case may be);
"INSURANCES" means all policies and contracts of insurance (which
expression includes all entries of the Ship in a protection and
indemnity or war risks association) which are from time to time during
the Security Period in place or taken out or entered into by or for
the benefit of the Owner (whether in the sole name of the Owner or in
the joint names of the Owner and the Mortgagee or otherwise) in
respect of the Ship and her Earnings or otherwise howsoever in
connection with the Ship and all benefits thereof (including claims of
whatsoever nature and return of premiums);
"LOAN" means the principal amount advanced and/or to be advanced by
the Mortgagee to the Owner pursuant to the Loan Agreement or, as the
context may require, the amount thereof at any time outstanding;
"LOAN AGREEMENT" means the agreement dated 30 November 2004 mentioned
in recital (B) hereto;
"LOSS PAYABLE CLAUSES" means the provisions regulating the manner of
payment of sums receivable under the Insurances which are to be
incorporated in the relevant insurance documents, such provisions to
be in the forms set out in schedule 1 or in such other forms as may
from time to time be agreed in writing by the Mortgagee;
2
"MASTER SWAP AGREEMENT" means the ISDA Master Agreement dated as of 30
November 2004 made between the Mortgagee and the Owner mentioned in
recital (C) hereto, comprising an ISDA Master Agreement (and a
schedule thereto) together with any Confirmations (as defined therein)
supplemental thereto;
"MASTER SWAP AGREEMENT LIABILITIES" means at any relevant time all
liabilities actual or contingent, present or future, owing to the
Mortgagee under the Master Swap Agreement;
"MORTGAGE" means the statutory mortgage mentioned in recital (D);
"MORTGAGED PROPERTY" means:
(a) the Ship;
(b) the Insurances;
(c) the Earnings; and
(d) any Requisition Compensation;
"MORTGAGEE" includes the successors in title, Assignees and/or
Transferees of the Mortgagee;
"NOTICE OF ASSIGNMENT OF INSURANCES" means a notice of assignment in
the form set out in schedule 2 or in such other form as may from time
to time be required or agreed in writing by the Mortgagee;
"OPERATING ACCOUNT" means an interest bearing Dollar account of the
Owner opened or (as the context may require) to be opened by the Owner
with the Mortgagee and with account number 196/932047-45 and includes
any sub-accounts thereof and any other account designated in writing
by the Mortgagee to be an Operating Account for the purposes of this
Deed;
"OUTSTANDING INDEBTEDNESS" means the aggregate of the Loan and
interest accrued and accruing thereon, the Master Swap Agreement
Liabilities, the Expenses and all other sums of money from time to
time owing to the Mortgagee, whether actually or contingently, under
the Loan Agreement, the Master Swap Agreement and the other Security
Documents or any of them;
"OWNER" includes the successors in title of the Owner;
"PORT OF REGISTRY" means the Port of Nassau or such other port of
registry approved in writing by the Mortgagee at which the Ship is, or
is to be, registered on at the date of this Deed, or at any relevant
time hereafter;
"RECEIVER" means any receiver and/or manager appointed pursuant to
clause 7.2;
"REQUISITION COMPENSATION" means all sums of money or other
compensation from time to time payable during the Security Period by
reason of the Compulsory Acquisition of the Ship;
"SECURITY DOCUMENTS" means the Loan Agreement, the Master Swap
Agreement, the Mortgage, this Deed and any other such document as is
defined in the Loan Agreement as a Security Document or as may have
been or may hereafter be executed to guarantee and/or secure all or
any part of the Loan, interest thereon, the Master Swap Agreement
Liabilities and other moneys from time to time owing by the Owner
pursuant to the Loan Agreement and/or the Master Swap Agreement
(whether or not any such document also secures monies from time to
time owing pursuant to any other document or agreement);
"SECURITY PERIOD" means the period commencing on the date hereof and
terminating upon discharge of the security created by the Security
Documents by payment of all moneys payable thereunder;
3
"SHIP" means the vessel Victoria Spirit registered as a Bahamas ship
at the Port of Nassau under Official Number 723135 and includes any
share or interest therein and her engines, machinery, boats, tackle,
outfit, equipment, spare gear, fuel, consumable or other stores,
belongings and appurtenances whether on board or ashore and whether
now owned or hereafter acquired and also any and all additions,
improvements and replacements hereafter made in or to such vessel or
any part thereof or in or to her equipment and appurtenances
aforesaid;
"TAXES" includes all present and future taxes, levies, imposts,
duties, fees or charges of whatever nature together with interest
thereon and penalties in respect thereof and "TAXATION" shall be
construed accordingly; and
"TOTAL LOSS" means:
(a) the actual, constructive, compromised or arranged total loss of
the Ship; or
(b) the Compulsory Acquisition of the Ship; or
(c) the hijacking, theft, condemnation, capture, seizure, arrest,
detention or confiscation of the Ship (other than where the same
amounts to the Compulsory Acquisition of the Ship) by any
Government Entity, or by persons acting or purporting to act on
behalf of any Government Entity, unless the Ship be released and
restored to the Owner from such hijacking, theft, condemnation,
capture, seizure, arrest, detention or confiscation within thirty
(30) days after the occurrence thereof.
1.3 INSURANCE TERMS
In clause 5.1.1:
1.3.1 "EXCESS RISKS" means the proportion (if any) of claims for general
average, salvage and salvage charges and under the ordinary collision
clause not recoverable in consequence of the value at which the Ship
is assessed for the purpose of such claims exceeding her insured
value;
1.3.2 "PROTECTION AND INDEMNITY RISKS" means the usual risks (including oil
pollution and freight, demurrage and defence cover) covered by a
United Kingdom protection and indemnity association or a protection
and indemnity association which is managed in London (including,
without limitation, the proportion (if any) of any sums payable to any
other person or persons in case of collision which are not recoverable
under the hull and machinery policies by reason of the incorporation
in such policies of Clause 8 of the Institute Time Clauses (Hulls)
(1/11/95) or the Institute Amended Running Down Clause (1/10/71) or
any equivalent provision); and
1.3.3 "WAR RISKS" includes those risks covered by the standard form of
English marine policy with Institute War and Strikes Clauses Hulls
- Time (1/11/95) attached or similar cover.
1.4 CONSTRUCTION OF MORTGAGE TERMS
In the Mortgage:
1.4.1 references to "INTEREST" shall be construed as references to interest
covenanted to be paid in accordance with clause 3.2 and any interest
specified in paragraph (b) of the definition of "EXPENSES" in clause
1.2;
1.4.2 references to "PRINCIPAL" shall be construed as references to all
moneys (other than interest) for the time being comprised in the
Outstanding Indebtedness;
1.4.3 the term "ACCOUNT CURRENT" means an account or accounts maintained by
the Mortgagee, in accordance with its usual practice, evidencing the
amounts from time to time lent by, owing to and paid to it under the
Security Documents. Such account or accounts shall, in the absence
4
of manifest error, be conclusive as to the amount from time to time
owing by the Owner to the Mortgagee under the Security Documents and
any certificate from the Mortgagee as to the amount owing by the Owner
under the Security Documents shall be conclusive in the absence of
manifest error, and the sum specified in any such certificate shall be
the certain and liquidated sum owing by the Owner to the Mortgagee;
and
1.4.4 the expression "ALL SUMS FOR THE TIME BEING OWED TO THE MORTGAGEE"
means the whole of the Outstanding Indebtedness.
1.5 HEADINGS
Clause headings and the table of contents are inserted for convenience
of reference only and shall be ignored in the interpretation of this
Deed.
1.6 CONSTRUCTION OF CERTAIN TERMS
In this Deed, unless the context otherwise requires:
1.6.1 references to clauses and schedules are to be construed as references
to clauses of, and schedules to, this Deed and references to this Deed
include its schedules;
1.6.2 references to (or to any specified provision of) this Deed or any
other document shall be construed as references to this Deed, that
provision or that document as in force for the time being and as
amended in accordance with the terms thereof, or, as the case may be,
with the agreement of the relevant parties;
1.6.3 words importing the plural shall include the singular and vice versa;
1.6.4 references to a person shall be construed as references to an
individual, firm, company, corporation, unincorporated body of persons
or any Government Entity;
1.6.5 references to a "GUARANTEE" shall include references to an indemnity
or other assurance against financial loss including, without
limitation, an obligation to purchase assets or services as a
consequence of a default by any other person to pay any Indebtedness
and "GUARANTEED" shall be construed accordingly; and
1.6.6 references to statutory provisions shall be construed as references to
those provisions as replaced or amended or re-enacted from time to
time.
1.7 CONFLICT WITH LOAN AGREEMENT AND MASTER SWAP AGREEMENT
This Deed shall be read together with the Loan Agreement and the
Master Swap Agreement but (a) in case of any conflict between this
Deed and the Loan Agreement, the provisions of the Loan Agreement
shall prevail and (b) in case of any conflict between this Deed and
the Master Swap Agreement, the provisions of the Master Swap Agreement
shall prevail.
2 MORTGAGE AND ASSIGNMENT
2.1 MORTGAGE AND ASSIGNMENT
By way of security for payment of the Outstanding Indebtedness, the
Owner with full title guarantee hereby mortgages and charges to and in
favour of the Mortgagee all its rights, title and interest present and
future in and to the Mortgaged Property and, without prejudice to the
generality of the foregoing, hereby assigns and agrees to assign to
the Mortgagee absolutely all its rights, title and interest in and to
the Earnings, the Insurances and any Requisition Compensation and all
its benefits and interests present and future therein Provided however
that:
5
2.1.1 Earnings
the Earnings shall be payable to the Operating Account until such time
as a Default shall occur and the Mortgagee shall direct to the
contrary whereupon the Owner shall forthwith, and the Mortgagee may at
any time thereafter, instruct the persons from whom the Earnings are
then payable to pay the same to the Mortgagee or as it may direct and
any Earnings then in the hands of the Owner's brokers or other agents
shall be deemed to have been received by them for the use and on
behalf of the Mortgagee;
2.1.2 Insurances
unless and until a Default shall occur (whereupon all insurance
recoveries, other than any moneys payable under any loss of earnings
insurance, shall be receivable by the Mortgagee and applied in
accordance with clause 8.1 or, as the case may be, clause 8.4):
(a) any moneys payable under the Insurances, other than any moneys
payable under any loss of earnings insurance, shall be payable in
accordance with the terms of the relevant Loss Payable Clause and
the Mortgagee will not in the meantime give any notification to
the contrary to the insurers as contemplated by the Loss Payable
Clauses;
(b) any insurance moneys received by the Mortgagee in respect of any
major casually (as specified in the relevant Loss Payable Clause)
shall, unless prior to receipt or whilst such moneys are in the
hands of the Mortgagee there shall have occurred a Default
(whereupon such insurance monies shall be applied in accordance
with clause 8.1 or, as the case may be, clause 8.4), be paid over
to the Owner upon the Owner furnishing evidence satisfactory to
the Mortgagee that all loss and damage resulting from such
casualty has been properly made good and repaired, and that all
repair accounts and other liabilities whatsoever in connection
with the casualty have been fully paid and discharged by the
Owner, provided however that the insurers with whom the fire and
usual marine risks insurances are effected may, in the case of a
major casualty, and with the previous consent in writing of the
Mortgagee, make payment on account of repairs in the course of
being effected; and
(c) any moneys payable under any loss of earnings insurance shall be
payable in accordance with the terms of the relevant Loss Payable
Clause and shall be subject to such provisions of this clause 2
as shall apply to Earnings and the Mortgagee will not give any
notification to the insurers as contemplated in such Loss Payable
Clause unless and until the Mortgagee shall have become entitled
under clause 2.1.1 to direct that the Earnings be paid to the
Mortgagee.
2.2 NOTICE
The Owner hereby covenants and undertakes with the Mortgagee that it
will from time to time upon the written request of the Mortgagee give
written notice (in such form as the Mortgagee shall reasonably
require) of the assignment herein contained to the persons from whom
any part of the Mortgaged Property is or may be due.
2.3 USE OF OWNER'S NAME
The Owner covenants and undertakes with the Mortgagee to do or permit
to be done each and every act or thing which the Mortgagee may from
time to time require to be done for the purpose of enforcing the
Mortgagee's rights under this Deed and to allow its name to be used as
and when required by the Mortgagee for that purpose.
2.4 REASSIGNMENT
Upon payment and discharge in full to the satisfaction of the
Mortgagee of the Outstanding Indebtedness, the Mortgagee shall, at the
request and cost of the Owner, re-assign the Earnings, the Insurances
and any Requisition Compensation to the Owner or as it may direct.
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3 COVENANT TO PAY
In consideration of the advance by the Mortgagee to the Owner on or
before the date hereof of the total principal sum of Twenty eight
million Dollars ($28,000,000) (receipt of which sum the Owner hereby
acknowledges) in accordance with the provisions of the Loan Agreement,
the Owner hereby covenants with the Mortgagee:
3.1 to repay the Loan by the instalments and on the dates referred to and
otherwise in the manner and upon the terms set out in the Loan
Agreement;
3.2 to pay interest on the Loan, and on any overdue interest or other
moneys payable under the Loan Agreement, at the rate or rates from
time to time applicable thereto in the manner and upon the terms set
out in the Loan Agreement; and
3.3 to pay all other moneys payable by the Owner under the Security
Documents or any of them at the times and in the manner therein
specified.
4 CONTINUING SECURITY AND OTHER MATTERS
4.1 CONTINUING SECURITY
The security created by the Mortgage and this Deed shall:
4.1.1 be held by the Mortgagee as a continuing security for the payment of
the Outstanding Indebtedness and the performance and observance of and
compliance with all of the covenants, terms and conditions contained
in the Security Documents, express or implied and the security so
created shall not be satisfied by any intermediate payment or
satisfaction of any part of the amount hereby and thereby secured (or
by any settlement of accounts between the Owner or any other person
who may be liable to the Mortgagee in respect of the Outstanding
Indebtedness or any part thereof and the Mortgagee);
4.1.2 be in addition to, and shall not in any way prejudice or affect, and
may be enforced by the Mortgagee without prior recourse to, the
security created by any of the other Security Documents or by any
present or future Collateral Instruments, right or remedy held by or
available to the Mortgagee or any right or remedy of the Mortgagee
thereunder; and
4.1.3 not be in any way prejudiced or affected by the existence of any of
the other Security Documents or any such Collateral Instrument, rights
or remedies or by the same becoming wholly or in part void, voidable
or unenforceable on any ground whatsoever or by the Mortgagee dealing
with, exchanging, varying or failing to perfect or enforce any of the
same, or giving time for payment or performance or indulgence or
compounding with any other person liable.
4.2 RIGHTS ADDITIONAL
All the rights, remedies and powers vested in the Mortgagee hereunder
shall be in addition to and not a limitation of any and every other
right, power or remedy vested in the Mortgagee under the Loan
Agreement, the Master Swap Agreement, this Deed, the other Security
Documents or any such Collateral Instrument or at law and that all the
powers so vested in the Mortgagee may be exercised from time to time
and as often as the Mortgagee may deem expedient.
4.3 NO ENQUIRY
Neither the Mortgagee nor any Receiver shall be obliged to make any
enquiry as to the nature or sufficiency of any payment received by it
under the Mortgage and/or this Deed or to make any claim or take any
action to collect any moneys hereby assigned or to enforce any rights
or benefits hereby assigned to the Mortgagee or to which the Mortgagee
may at any time be entitled under the Mortgage and/or this Deed.
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4.4 OBLIGATIONS OF OWNER AND MORTGAGEE
The Owner shall remain liable to perform all the obligations assumed
by it in relation to the Mortgaged Property and the Mortgagee shall be
under no obligation of any kind whatsoever in respect thereof or be
under any liability whatsoever in the event of any failure by the
Owner to perform its obligations in respect thereof.
4.5 DISCHARGE OF MORTGAGE
Notwithstanding that this Deed is expressed to be supplemental to the
Mortgage it shall continue in full force and effect after any
discharge of the Mortgage.
5 CONVENANTS
5.1 The Owner hereby covenants with the Mortgagee and undertakes
throughout the Security Period:
5.1.1 Insurance
(a) Insured risks, amounts and terms
to insure and keep the Ship insured free of cost and expense to
the Mortgagee and in the sole name of the Owner or, if so
required by the Mortgagee, in the joint names of the Owner and
the Mortgagee (but without liability on the part of the Mortgagee
for premiums or calls):
(i) against fire and usual marine risks (including excess risks)
and war risks, on an agreed value basis, in such amounts
(but not in any event less than whichever shall be the
greater of (A) the market value of the Ship for the time
being (as determined by the Mortgagee pursuant to clause
8.3.2 of the Loan Agreement) and (B) the amount which:
(aa) if the Owner and the Mortgagee have not entered into a
Transaction or Transactions, shall be equal to at least
One hundred and thirty per cent (130%) of the Loan; and
(bb) if the Owner and the Mortgagee have entered into a
Transaction or Transactions, shall be equal to at least
One hundred and forty per cent (140%) of the aggregate
of (A) the Loan and (B) the Swap Exposure),
and upon such terms as shall from time to time be approved
in writing by the Mortgagee;
(ii) against protection and indemnity risks (including pollution
risks for the highest amount in respect of which cover is or
may become available for ships of the same type, size, age
and flag as the Ship and a freight, demurrage and defence
cover) for the full value and tonnage of the Ship (as
approved in writing by the Mortgagee) and upon such terms as
shall from time to time be approved in writing by the
Mortgagee; and
(iii) in respect of such other matters of whatsoever nature and
howsoever arising in respect of which insurance would be
maintained by a prudent owner of the Ship,
and to pay to the Mortgagee the cost (as conclusively certified
by the Mortgagee) of (aa) any mortgagee's interest insurance
(including, if the Mortgagee shall so require, mortgagee's
additional perils (including all P&I risks) coverage) which the
Mortgagee may from time to time effect in respect of the Ship
upon such terms and in such amounts (not exceeding:
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(a) if the Owner and the Mortgagee have not entered into a
Transaction or Transactions, one hundred and fifteen per
cent (115%) of the Loan; and
(b) if the Owner and the Mortgagee have entered into a
Transaction or Transactions, one hundred and twenty five per
cent (125%) of the aggregate of (A) the Loan and (B) the
Swap Exposure),
as it shall deem desirable and (bb) any other insurance cover
which the Mortgagee may from time to time effect in respect of
the Ship and/or in respect of its interest and potential third
party liability as mortgagee of the Ship as the Mortgagee shall
deem desirable having regard to any limitations in respect of
amount or extent of cover which may from time to time be
applicable to any of the other insurances referred to in this
clause 5.1.1 (a);
(b) Approved brokers, insurers and associations
to effect the insurances aforesaid in such currency as the
Mortgagee may approve and through the Approved Brokers and with
such insurance companies and/or underwriters as shall from time
to time be approved in writing by the Mortgagee; provided however
that the insurances against war risks and protection and
indemnity risks may be effected by the entry of the Ship with
such war risks and protection and indemnity associations as shall
from time to time be approved in writing by the Mortgagee;
(c) Fleet liens, set-off and cancellation
if any of the insurances referred to in clause 5.1.1(a) form part
of a fleet cover, to procure that the Approved Brokers shall
undertake to the Mortgagee that they shall neither set off
against any claims in respect of the Ship any premiums due in
respect of other vessels under such fleet cover or any premiums
due for other insurances, nor cancel the insurance for reason of
non-payment of premiums for other vessels under such fleet cover
or of premiums for such other insurances, and shall undertake to
issue a separate policy in respect of the Ship if and when so
requested by the Mortgagee;
(d) Payment of premiums and calls
punctually to pay all premiums, calls, contributions or other
sums payable in respect of all such insurances and to produce all
relevant receipts or other evidence of payment when so required
by the Mortgagee;
(e) Renewal
at least fourteen (14) days before the relevant policies,
contracts or entries expire, to notify the Mortgagee of the names
of the brokers and/or the war risks and protection and indemnity
associations proposed to be employed by the Owner or any other
party for the purposes of the renewal of such insurances and of
the amounts in which such insurances are proposed to be renewed
and the risks to be covered and, subject to compliance with any
requirements of the Mortgagee pursuant to this clause 5.1.1, to
procure that appropriate instructions for the renewal of such
insurances on the terms so specified are given to the Approved
Brokers and/or to the approved war risks and protection and
indemnity associations at least ten (10) days before the relevant
policies, contracts or entries expire, and that the Approved
Brokers and/or the approved war risks and protection and
indemnity associations will at least seven (7) days before such
expiry (or within such shorter period as the Mortgagee may from
time to time agree) confirm in writing to the Mortgagee as and
when such renewals have been effected in accordance with the
instructions so given;
(f) Guarantees
to arrange for the execution and delivery of such guarantees or
indemnities as may from time to time be required by any
protection and indemnity or war risks association;
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(g) Hull policy documents, notices, loss payable clauses and brokers'
undertakings
to deposit with the Approved Brokers (or procure the deposit of)
all slips, cover notes, policies, certificates of entry or other
instruments of insurance from time to time issued in connection
with such of the insurances referred to in clause 5.1.1(a) as are
effected through the Approved Brokers and procure that the
interest of the Mortgagee shall be endorsed thereon by
incorporation of the relevant Loss Payable Clause and, where the
Insurances have been assigned to the Mortgagee, by means of a
Notice of Assignment of Insurances (signed by the Owner and by
any other assured who shall have assigned its interest in the
Insurances to the Mortgagee) and that the Mortgagee shall be
furnished with pro forma copies thereof and a letter or letters
of undertaking from the Approved Brokers in such form as shall
from time to time be required by the Mortgagee;
(h) Associations' loss payable clauses, undertakings and certificates
to procure that any protection and indemnity and/or war risks
associations in which the Ship is for the time being entered
shall endorse the relevant Loss Payable Clause on the relevant
certificate of entry or policy and shall furnish She Mortgagee
with a copy of such certificate of entry or policy and a letter
or letters of undertaking in such form as shall from time to time
be required by the Mortgagee;
(i) Extent of cover and exclusions
to take all necessary action and comply with all requirements
which may from time to time be applicable to the Insurances
(including, without limitation, the making of all requisite
declarations within any prescribed time limits and the payment of
any additional premiums or calls) so as to ensure that the
Insurances are not made subject to any exclusions or
qualifications to which the Mortgagee has not given its prior
written consent and are otherwise maintained on terms and
conditions from time to time approved in writing by the
Mortgagee;
(j) Correspondence with brokers and associations
to provide to the Mortgagee, at the time of each such
communication, copies of all written communications between the
Owner and the Approved Brokers and approved war risks and
protection and indemnity associations which relate to compliance
with requirements from time to time applicable to the Insurances
including, without limitation, all requisite declarations and
payments of additional premiums or calls referred to in clause
5.1.1(i);
(k) Independent report
if so requested by the Mortgagee, but at the cost of the Owner,
to furnish the Mortgagee from time to time with a detailed report
signed by an independent firm of marine insurance brokers
appointed by the Mortgagee dealing with the insurances maintained
on the Ship and stating the opinion of such firm as to the
adequacy thereof;
(l) Collection of claims
to do all things necessary and provide all documents, evidence
and information to enable the Mortgagee to collect or recover any
moneys which shall at any time become due in respect of the
Insurances;
(m) Employment of Ship
not to employ the Ship or suffer the Ship to be employed
otherwise than in conformity with the terms of the insurances
(including any warranties express or implied therein) without
first obtaining the consent of the insurers to such employment
and complying with such requirements as to extra premium or
otherwise as the insurers may prescribe; and
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(n) Application of recoveries
to apply all sums receivable under the Insurances which are paid
to the Owner in accordance with the Loss Payable Clauses in
repairing all damage and/or in discharging the liability in
respect of which such sums shall have been received;
5.1.2 Ship's name and registration
(a) not to change the name of the Ship;
(b) to ensure the Ship is permanently registered as a Bahamian ship
within ninety (90) days of the date hereof;
(c) to keep the Ship registered as a Bahamian ship at the Port of
Registry;
(d) not do or suffer to be done anything, or omit to do anything the
doing or omission of which could or might result in such
registration being forfeited or imperilled or which could or
might result in the Ship being required to be registered
otherwise than as a Bahamian ship at the Port of Registry;
(e) not to register the Ship or permit its registration under any
other flag or at any other port without the prior written consent
of the Mortgagee;
(f) if the said registration of the Ship is for a limited period, to
renew the registration of the Ship at least forty five (45) days
prior to the expiry of such registration and to provide evidence
of such renewal to the Mortgagee at least thirty (30) days prior
to such expiry;
5.1.3 Repair
to keep the Ship in a good and efficient state of repair and procure
that all repairs to or replacement of any damaged, worn or lost parts
or equipment are effected in such manner (both as regards workmanship
and quality of materials) as not to diminish the value of the Ship;
5.1.4 Modification; removal of parts; equipment owned by third parties
not without the prior written consent of the Mortgagee to, or suffer
any other person to:
(a) make any modification to the Ship in consequence of which her
structure, type or performance characteristics could or might be
materially altered or her value materially reduced; or
(b) remove any material part of the Ship or any equipment the value
of which is such that its removal from the Ship would materially
reduce the value of the Ship without replacing the same with
equivalent parts or equipment which are owned by the Owner free
from Encumbrances; or
(c) install on the Ship any equipment owned by a third party which
cannot be removed without causing damage to the structure or
fabric of the Ship;
5.1.5 Maintenance of class; compliance with regulations
to maintain the Classification as the class of the Ship and to comply
with and ensure that the Ship at all times complies with the
provisions of the Merchant Shipping Acts and all regulations and
requirements (statutory or otherwise) from time to time applicable to
vessels registered at the Port of Registry or otherwise applicable to
the Ship;
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5.1.6 Surveys
to submit the Ship to continuous surveys and such periodical or other
surveys as may be required for classification purposes and to supply
to the Mortgagee copies of all survey reports issued in respect
thereof;
5.1.7 Inspection
to ensure that the Mortgagee, by surveyors or other persons appointed
by it for such purpose, may board the Ship at all reasonable times for
the purpose of inspecting her and to afford all proper facilities for
such inspections and for this purpose to give the Mortgagee reasonable
advance notice of any intended drydocking of the Ship (whether for the
purpose of classification, survey or otherwise);
5.1.8 Prevention of and release from arrest
promptly to pay and discharge all debts, damages, liabilities and
outgoings whatsoever which have given or may give rise to maritime,
statutory or possessory liens on, or claims enforceable against, the
Ship, her Earnings or her Insurances or any part thereof and, in the
event of a writ or libel being filed against the Ship or her Earnings
or Insurances or any part thereof, or of any of the same being
arrested, attached or levied upon pursuant to legal process or
purported legal process or in the event of detention of the Ship in
exercise or purported exercise of any such lien or claim as aforesaid,
to procure the release of the Ship, her Earnings and Insurances from
such arrest, detention attachment or levy or, as the case may be, the
discharge of the writ or libel forthwith upon receiving notice thereof
by providing bail or procuring the provision of security or otherwise
as the circumstances may require;
5.1.9 Employment
not to employ the Ship or permit her employment in any manner, trade
or business which is forbidden by international law, or which is
unlawful or illicit under the law of any relevant jurisdiction, or in
carrying illicit or prohibited goods, or in any manner whatsoever
which may render her liable to condemnation in a prize court, or to
destruction, seizure, confiscation, penalty or sanctions and, in the
event of hostilities in any part of the world (whether war be declared
or not), not to employ the Ship or permit her employment in carrying
any contraband goods, or enter or trade to or to continue to trade in
any zone which has been declared a war zone by any Government Entity
or by the Ship's war risks insurers unless the prior written consent
of the Mortgagee is obtained and such special insurance cover as the
Mortgagee may require shall have been effected by the Owner and at its
expense;
5.1.10 Information
promptly to furnish the Mortgagee with all such information as it may
from time to time require regarding the Ship, her employment, position
and engagements, particulars of all towages and salvages, and copies
of all charters and other contracts for her employment, or otherwise
howsoever concerning her;
5.1.11 Notification of certain events
to notify the Mortgagee forthwith by facsimile thereafter confirmed by
letter of:
(a) any damage to the Ship requiring repairs the cost of which will
or might exceed Three hundred thousand Dollars ($300,000) (or the
equivalent in any other currency);
(b) any occurrence in consequence of which the Ship has or may become
a Total Loss;
(c) any requisition of the Ship for hire;
12
(d) any requirement or recommendation made by any insurer or the
Classification Society or by any competent authority which is
not, or cannot be, complied with in accordance with its terms;
(e) any arrest or detention of the Ship or any exercise or purported
exercise of a lien or other claim on the Ship or the Earnings or
Insurances or any part thereof;
(f) any petition or notice of meeting to consider any resolution to
wind up the Owner (or any event analogous thereto under the laws
of the place of its incorporation);
(g) the occurrence of any Default; or
(h) the occurrence of any Environmental Claim against the Owner, the
Ship, any other Relevant Party or any other Relevant Ship or any
incident, event or circumstances which may give rise to any such
Environmental Claim;
5.1.12 Payment of outgoings and evidence of payments
promptly to pay all tolls, dues and other outgoings whatsoever in
respect of the Ship and her Earnings and Insurances and to keep proper
books of account in respect of the Ship and her Earnings and, as and
when the Mortgagee may so require, to make such books available for
inspection on behalf of the Mortgagee, and to furnish satisfactory
evidence that the wages and allotments and the insurance and pension
contributions of the Master and crew are being promptly and regularly
paid and that all deductions from crew's wages in respect of any
applicable tax liability are being properly accounted for and that the
Master has no claim for disbursements other than those incurred by him
in the ordinary course of trading on the voyage then in progress;
5.1.13 Encumbrances
not without the prior written consent of the Mortgagee (and then only
subject to such conditions as the Mortgagee may impose) to create or
purport or agree to create or permit to arise or subsist any
Encumbrance (other than Permitted Liens) over or in respect of the
Ship, any share or interest therein or in any other part of the
Mortgaged Property otherwise than to or in favour of the Mortgagee;
5.1.14 Sale or other disposal
not without the prior written consent of the Mortgagee (and then only
subject to such conditions as the Mortgagee may impose) to sell, agree
to sell, transfer, abandon or otherwise dispose of the Ship or any
share or interest therein;
5.1.15 Chartering
not without the prior written consent of the Mortgagee (which the
Mortgagee shall have full liberty to withhold) and, if such consent is
given, only subject to such conditions as the Mortgagee may impose, to
let the Ship:
(a) on demise charter for any period;
(b) by any time or consecutive voyage charter for a term which
exceeds or which by virtue of any optional extensions therein
contained may exceed eighteen (18) months' duration;
(c) on terms whereby more than two (2) months' hire (or the
equivalent) is payable in advance;
(d) below the market rate prevailing at the time when the Ship is
fixed or other than on arms' length terms;
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5.1.16 Sharing of Earnings
not without the prior written consent of the Mortgagee (and then only
subject to such conditions as the Mortgagee may impose) to enter into
any agreement or arrangement whereby the Earnings may be shared with
any other person;
5.1.17 Payment of Earnings
to procure that the Earnings are paid to the Operating Account
pursuant to the provisions of clause 14 of the Loan Agreement and to
procure that the same are paid to the Mortgagee at all times if and
when the same shall be or shall have become so payable in accordance
with the Security Documents after the Mortgagee shall have directed
pursuant to clause 2.1.1 that the same shall be no longer receivable
by the Owner and that any Earnings which are so payable and which are
in the hands of the Owner's brokers or agents are duly accounted for
and paid over to the Mortgagee forthwith on demand;
5.1.18 Repairers' liens
not without the prior written consent of the Mortgagee to put the Ship
into the possession of any person for the purpose of work being done
upon her in an amount exceeding or likely to exceed Three hundred
thousand Dollars ($300,000) (or the equivalent in any other currency)
unless such person shall first have given to the Mortgagee in terms
satisfactory to it, a written undertaking not to exercise any lien on
the Ship or the Earnings for the cost of such work or otherwise;
5.1.19 Manager
not without the prior written consent of the Mortgagee to appoint any
manager of the Ship other than either of the Managers (and in the case
of Teekay, only for the Teekay Period) or to terminate, or amend the
terms of, the relevant Management Agreement;
5.1.20 Notice of Mortgage
to place and at all times and places to retain a properly certified
copy of the Mortgage and this Deed (which shall form part of the
Ship's documents) on board the Ship with her papers and cause such
certified copy of the Mortgage and this Deed to be exhibited to any
and all persons having business with the Ship which might create or
imply any commitment or encumbrance whatsoever on or in respect of the
Ship (other than a lien for crew's wages and salvage) and to any
representative of the Mortgagee and to place and keep prominently
displayed in the navigation room and in the Master's cabin of the Ship
a framed printed notice in plain type reading as follows:
"NOTICE OF MORTGAGE
This Ship is subject to a first priority mortgage and deed of covenant
in favour of [HERE INSERT NAME OF MORTGAGEE] of [HERE INSERT ADDRESS
OF MORTGAGEE]. Under the said mortgage and deed of covenant, neither
the Owner nor any charterer nor the Master of this Ship has any right,
power or authority to create, incur or permit to be imposed upon this
Ship any commitments or encumbrances whatsoever other than for crew's
wages and salvage"
and in terms of the said notice it is hereby agreed that save and
subject as otherwise herein provided, neither the Owner nor any
charterer nor the Master of the Ship nor any other person has any
right, power or authority to create, incur or permit to be imposed
upon the Ship any lien whatsoever other than for crew's wages and
salvage;
5.1.21 Conveyance on default
where the Ship is (or is to be) sold in exercise of any power
contained in this Deed or otherwise conferred on the Mortgagee, to
execute, forthwith upon request by the Mortgagee, such form of
conveyance of the Ship as the Mortgagee may require;
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5.1.22 Anti-drug abuse
without prejudice to clause 5.1.9, to take all necessary and proper
precautions to prevent any infringements of the Anti-Drug Abuse Act of
1986 of the United States of America or any similar legislation
applicable to the Ship in any jurisdiction in or to which the Ship
shall be employed or located or trade or which may otherwise be
applicable to the Ship and/or the Owner and, if the Mortgagee shall so
require, to enter into a "Carrier Initiative Agreement" with the
United States Customs Service and to procure that the same agreement
(or any similar agreement hereafter introduced by any Government
Entity of the United States of America) is maintained in full force
and effect and performed by the Owner;
5.1.23 Compliance with Environmental Laws
to comply with, and procure that all Environmental Affiliates of the
Owner comply with, all Environmental Laws including, without
limitation, requirements relating to ▇▇▇▇▇▇▇ and establishment of
financial responsibility and to obtain and comply with, and procure
that all Environmental Affiliates of the Owner obtain and comply with,
all Environmental Approvals; and
5.1.24 Survey reports
to deliver to the Mortgagee on the date falling five (5) years after
the date of this Deed and on each of the dates falling at twelve (12)
months thereafter a report prepared by surveyors or inspectors
appointed by the Mortgagee in relation to the seaworthiness and safe
operation of the Ship, to produce evidence to the Mortgagee that any
recommendations made in such reports have been complied with or will
be complied with in accordance with their terms, in full and
thereafter to procure that such recommendations are so complied with.
6 POWERS OF MORTGAGEE TO PROTECT SECURITY AND REMEDY DEFAULTS
6.1 PROTECTIVE ACTION
The Mortgagee shall, without prejudice to its other rights, powers and
remedies under any of the Security Documents, be entitled (but not
bound) at any time, and as often as may be necessary, to take any such
action as it may in its discretion think fit for the purpose of
protecting or maintaining the security created by this Deed and the
other Security Documents, and all Expenses attributable thereto shall
be payable by the Owner on demand, together with interest thereon at
the rate provided for in clause 3.4 of the Loan Agreement from the
date such expense or liability was incurred by the Mortgagee until the
date of actual receipt whether before or after any relevant judgement.
6.2 REMEDY OF DEFAULTS
Without prejudice to the generality of the provisions of clause 6.1:
6.2.1 if the Owner fails to comply with any of the provisions of clause
5.1.1 the Mortgagee shall be entitled (but not bound) to effect and
thereafter to maintain all such insurances upon the Ship as in its
discretion it may think fit in order to procure the compliance with
such provisions or alternatively, to require the Ship (at the Owner's
risk) to remain in, or to proceed to and remain in a port designated
by the Mortgagee until such provisions are fully complied with;
6.2.2 if the Owner fails to comply with any of the provisions of clauses
5.1.3, 5.1.5 or 5.1.6, the Mortgagee shall be entitled (but not bound)
to arrange for the carrying out of such repairs, changes or surveys as
it may deem expedient or necessary in order to procure the compliance
with such provisions; and
6.2.3 if the Owner fails to comply with any of the provisions of clause
5.1.8 the Mortgagee shall be entitled (but not bound) to pay and
discharge all such debts, damages, liabilities and outgoings as are
therein mentioned and/or to take any such measures as it may deem
15
expedient or necessary for the purpose of securing the release of the
Ship in order to procure the compliance with such provisions,
and the Expenses attributable to the exercise by the Mortgagee of any
such powers shall be payable by the Owner to the Mortgagee on demand.
7 POWERS OF MORTGAGEE ON EVENT OF DEFAULT
7.1 POWERS
Upon the happening of any Event of Default, the Mortgagee shall become
forthwith entitled by notice given to the Owner in accordance with the
provisions of clause 10.2 of the Loan Agreement to declare the
Outstanding Indebtedness to be due and payable immediately or in
accordance with such notice, whereupon the Outstanding Indebtedness
shall become so due and payable and (whether or not the Mortgagee
shall have given any such notice) the Mortgagee shall become forthwith
entitled, as and when it may see fit, to put into force and exercise
in relation to the Mortgaged Property or any part thereof all or any
of the rights, powers and remedies possessed by it as mortgagee of the
Mortgaged Property (whether at law, by virtue of the Mortgage and this
Deed or otherwise) and in particular (without limiting the generality
of the foregoing):
7.1.1 to take possession of the Ship;
7.1.2 to require that all policies, contracts, certificates of entry and
other records relating to the Insurances (including details of and
correspondence concerning outstanding claims) be delivered forthwith
to such adjusters and/or brokers and/or other insurers as the
Mortgagee may nominate;
7.1.3 to collect, recover, compromise and give a good discharge for, all
claims then outstanding or thereafter arising under the Insurances or
any of them or in respect of any other part of the Mortgaged Property,
and to take over or institute (if necessary using the name of the
Owner) all such proceedings in connection therewith as the Mortgagee
in its absolute discretion thinks fit, and, in the case of the
Insurances, to permit the brokers through whom collection or recovery
is effected to charge the usual brokerage therefor;
7.1.4 to discharge, compound, release or compromise claims in respect of the
Ship or any other part of the Mortgaged Property which have given or
may give rise to any charge or lien or other claim on the Ship or any
other part of the Mortgaged Property or which are or may be
enforceable by proceedings against the Ship or any other part of the
Mortgaged Property;
7.1.5 to sell the Ship or any share or interest therein with or without
prior notice to the Owner, and with or without the benefit of any
charterparty, and free from any claim by the Owner (whether in
admiralty, in equity, at law or by statute) by public auction or
private contract, at such place and upon such terms as the Mortgagee
in its absolute discretion may determine, with power to postpone any
such sale, and without being answerable for any loss occasioned by
such sale or resulting from postponement thereof and with power, where
the Mortgagee purchases the Ship, to make payment of the sale price by
making an equivalent reduction in the amount of the Outstanding
Indebtedness in the manner referred to in clause 8.1;
7.1.6 to manage, insure, maintain and repair the Ship, and to employ, sail
or lay up the Ship in such manner and for such period as the
Mortgagee, in its absolute discretion, deems expedient accounting only
for net profits arising from any such employment; and
7.1.7 to recover from the Owner on demand all Expenses incurred or paid by
the Mortgagee in connection with the exercise of the powers (or any of
them) referred to in this clause 7.1.
16
7.2 RECEIVER
7.2.1 Appointment
At any time after the Outstanding Indebtedness shall have become due
and payable in accordance with a notice given by the Mortgagee to the
Owner pursuant to clause 10.2 of the Loan Agreement, the Mortgagee
shall be entitled (but not bound) by writing under its Common Seal or
under the hand of any Director or officer of the Mortgagee to appoint
any person or persons to be a receiver and/or manager of the Mortgaged
Property or any part thereof (with power to authorise any joint
receiver and/or manager to exercise any power independently of any
other joint receiver and/or manager) and may from time to time fix his
remuneration, and may remove any receiver and/or manager so appointed
and appoint another in his place. Any receiver and/or manager so
appointed shall be the agent of the Owner and the Owner shall be
solely responsible for his acts or defaults and for his remuneration,
and such receiver and/or manager so appointed shall have all powers
conferred by the Law of Property ▇▇▇ ▇▇▇▇ without the restrictions
contained in sections 93 and 103 of that Act and, in addition, power
on behalf of and at the cost of the Owner (notwithstanding any
liquidation of the Owner) to do or omit to do anything which the Owner
could do or omit to do in relation to the Mortgaged Property or any
part thereof and in particular (but without prejudice to the
generality of the foregoing) any such receiver and/or manager may
exercise all the powers and discretions conferred on the Mortgagee by
the Mortgage and this Deed.
7.2.2 Remuneration
Any Receiver shall be entitled to remuneration appropriate to the work
and responsibilities involved, upon the basis of charging from time to
time adopted by the Receiver in accordance with the current practice
of his firm, without being limited to the maximum rate specified in
section 109(6) of the Law of Property ▇▇▇ ▇▇▇▇.
7.2.3 Liability of mortgagee in possession
Neither the Mortgagee nor any Receiver shall be liable as mortgagee in
possession in respect of all or any of the Mortgaged Property to
account or be liable for any loss upon realisation or for any neglect
or default of any nature whatsoever in connection therewith for which
a mortgagee in possession may be liable as such.
7.3 DEALINGS WITH MORTGAGEE OR RECEIVER
Upon any sale of the Ship or any share or interest therein by the
Mortgagee pursuant to clause 7.1.5 or pursuant to clause 11.1, or by
any Receiver, the purchaser shall not be bound to see or enquire
whether the Mortgagee's power of sale has arisen in the manner
provided in this Deed and the sale shall be deemed to be within the
power of the Mortgagee (or the Receiver, as the case may be) and the
receipt of the Mortgagee (or the Receiver, as the case may be) for the
purchase money shall effectively discharge the purchaser who shall not
be concerned with the manner of application of the proceeds of sale or
be in any way answerable therefor and the sale shall operate to divest
the Owner of all rights, title and interest of any nature whatsoever
in the Ship and to bar any such interest of the Owner and all persons
claiming through or under the Owner.
8 APPLICATION OF MONEYS
8.1 APPLICATION
All moneys received by the Mortgagee or any Receiver in respect of:
8.1.1 sale of the Ship or any share or interest therein;
8.1.2 recovery under the Insurances (other than under any loss of earnings
insurance and any such sum or sums as may have been received by the
Mortgagee in accordance with the
17
relevant Loss Payable Clause in respect of a major casualty as therein
defined and paid over to the Owner as provided in clause 2.1.2(b) or
which fail to be otherwise applied under clause 8.4);
8.1.3 Requisition Compensation; and
8.1.4 the employment of the Ship pursuant to the provisions of clause 7.1.6,
shall be held by it upon trust in the first place to pay or make good
the Expenses and the balance shall be applied by the Mortgagee in the
manner specified in clause 13.1 of the Loan Agreement.
8.2 SHORTFALLS
In the event that the monies received pursuant to clause 8.1 are
insufficient to pay in full the whole of the Outstanding Indebtedness,
the Mortgagee or the Receiver, as the case may be, shall be entitled
to collect the shortfall from the Owner or any other person liable for
the time being therefor.
8.3 APPLICATION OF EARNINGS RECEIVED BY MORTGAGEE OR RECEIVER
Any moneys received by the Mortgagee or any Receiver in respect of the
Earnings shall:
8.3.1 if received by the Mortgagee, or in the hands of the Mortgagee, prior
to the occurrence of an Event of Default, be retained by the Mortgagee
and shall be paid over by the Mortgagee, to the Operating Account at
such times, in such amounts and for such purposes and/or shall be
applied by the Mortgagee, in or towards satisfaction of any sums from
time to time accruing due and payable by the Owner under the Loan
Agreement, the Master Swap Agreement, this Deed, the Mortgage or any
of the other Security Documents or any of them or by virtue of payment
demanded thereunder, in each case as the Mortgagee, may in its
absolute discretion determine; and
8.3.2 if received by the Mortgagee or any Receiver, or in the hands of the
Mortgagee or any Receiver, after the occurrence of an Event of
Default, be applied by the Mortgagee or any Receiver, in the manner
specified in clause 8.1 and/or clause 8.3.1, as the Mortgagee or any
Receiver, may in its absolute discretion determine.
8.4 APPLICATION OF INSURANCES RECEIVED BY MORTGAGEE OR RECEIVER
Any moneys received by the Mortgagee or any Receiver in respect of the
Insurances (other than in respect of recovery under any loss of
earnings insurance or in respect of a Total Loss) shall:
8.4.1 if received by the Mortgagee, or in the hands of the Mortgagee, after
the occurrence of a Default but prior to the occurrence of an Event of
Default, be retained by the Mortgagee and shall be paid over by the
Mortgagee to the Owner at such times, in such amounts and for such
purposes and/or shall be applied by the Mortgagee, in or towards
satisfaction of any sums from time to time accruing due and payable by
the Owner under the Loan Agreement, the Master Swap Agreement, this
Deed, the Mortgage, the other Security Documents or any of them or by
virtue of payment demanded thereunder, in each case as the Mortgagee,
may in its absolute discretion determine; and
8.4.2 if received by the Mortgagee or any Receiver, or in the hands of the
Mortgagee or any Receiver, after the occurrence of an Event of
Default, be applied by the Mortgagee or such Receiver, in the manner
specified in clause 8.1 and/or clause 8.4.1, as the Mortgagee or any
Receiver, may in its absolute discretion determine.
18
9 REMEDIES CUMULATIVE AND OTHER PROVISIONS
9.1 NO IMPLIED WAIVERS; REMEDIES CUMULATIVE
No failure or delay on the part of the Mortgagee to exercise any
right, power or remedy vested in it under the Loan Agreement, the
Master Swap Agreement, this Deed, the Mortgage, or any of the other
Security Documents shall operate as a waiver thereof, nor shall any
single or partial exercise by the Mortgagee of any right, power or
remedy nor the discontinuance, abandonment or adverse determination of
any proceedings taken by the Mortgagee to enforce any right, power or
remedy preclude any other or further exercise thereof or proceedings
to enforce the same or the exercise of any other right, power or
remedy nor shall the giving by the Mortgagee of any consent to any act
which by the terms of this Deed requires such consent prejudice the
right of the Mortgagee to withhold or give consent to the doing of any
other similar act. The remedies provided in the Loan Agreement, the
Master Swap Agreement, this Deed, the Mortgage and the other Security
Documents are cumulative and are not exclusive of any remedies
provided by law.
9.2 DELEGATION
The Mortgagee shall be entitled, at any time and as often as may be
expedient, to delegate all or any of the powers and discretions vested
in if by the Mortgage and this Deed (including the power vested in it
by virtue of clause 11) or any of the other Security Documents in such
manner, upon such terms, and to such persons as the Mortgagee in its
absolute discretion may think fit.
9.3 INCIDENTAL POWERS
The Mortgagee shall be entitled to do all acts and things incidental
or conducive to the exercise of any of the rights, powers or remedies
possessed by it as mortgagee of the Ship (whether at law, under the
Mortgage and/or this Deed or otherwise) and in particular (but without
prejudice to the generality of the foregoing), upon becoming entitled
to exercise any of its powers under clause 7.1, the Mortgagee shall be
entitled to discharge any cargo on board the Ship (whether the same
shall belong to the Owner or any other person) and to enter into such
other arrangements in respect of the Ship, her insurances, management,
maintenance, repair, classification and employment in all respects as
if the Mortgagee was the owner of the Ship, but without being
responsible for any loss incurred as a result of the Mortgagee doing
or omitting to do any such acts or things as aforesaid.
10 COSTS AND INDEMNITY
10.1 COSTS
The Owner shall pay to the Mortgagee on demand on a full indemnity
basis all expenses or liabilities of whatsoever nature (including
legal fees, fees of insurance advisers, printing, out-of-pocket
expenses, stamp duties, registration fees and other duties or charges)
together with any value added tax or similar tax payable in respect
thereof, incurred by the Mortgagee in connection with the enforcement
of, or preservation of any rights under, the Mortgage, this Deed or
otherwise in respect of the Outstanding Indebtedness and the security
therefor or in connection with the preparation, completion, execution
or registration of the Loan Agreement, the Master Swap Agreement, the
Mortgage or this Deed or any of the other Security Documents.
10.2 MORTGAGEE'S AND RECEIVER'S INDEMNITY
The Owner hereby agrees and undertakes to indemnify the Mortgagee and
any Receiver against all losses, actions, claims, expenses, demands,
obligations and liabilities whatever and whenever arising which may
now or hereafter be incurred by the Mortgagee or any such Receiver, or
by any manager, agent, officer or employee for whose liability, act or
omission it or he may be answerable, in respect of, in relation to, or
in connection with anything done or omitted in the exercise or
purported exercise of the powers contained in the Mortgage, this Deed,
or otherwise in connection therewith and herewith or with any part of
the Mortgaged
19
Property or otherwise howsoever in relation to, or in connection with,
any of the matters dealt with in the Mortgage or this Deed.
11 ATTORNEY
11.1 POWER
By way of security, the Owner hereby irrevocably appoints the
Mortgagee and any Receiver, jointly and also severally, to be its
attorney generally for and in the name and on behalf of the Owner, and
as the act and deed or otherwise of the Owner to execute, seal and
deliver and otherwise perfect and do all such deeds, assurances,
agreements, instruments, acts and things which may be required for the
full exercise of all or any of the rights, powers or remedies
conferred by the Mortgage, this Deed, the Loan Agreement, the Master
Swap Agreement or any of the other Security Documents, or which may be
deemed proper in or in connection with all or any of the purposes
aforesaid (including, without prejudice to the generality of the
foregoing, the execution and delivery of a ▇▇▇▇ of sale of the Ship).
The power hereby conferred shall be a general power of attorney under
the Powers of ▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇, and the Owner ratifies and confirms,
and agrees to ratify and confirm, any deed, assurance, agreement,
instrument, act or thing which the Mortgagee or the Receiver may
execute or do pursuant thereto. Provided always that such power shall
not be exercisable by or on behalf of the Mortgagee until the
happening of an Event of Default.
11.2 EXERCISE OF POWER
The exercise of such power by or on behalf of the Mortgagee or any
Receiver shall not put any person dealing with the Mortgagee or the
Receiver upon any enquiry as to whether any Event of Default has
happened, nor shall such person be in any way affected by notice that
no such Event of Default has happened, and the exercise by the
Mortgagee or the Receiver of such power shall be conclusive evidence
of the Mortgagee's or such Receiver's right to exercise the same.
11.3 FILINGS
The Owner hereby irrevocably appoints the Mortgagee and any Receiver
jointly and also severally to be its attorney in its name and on its
behalf and as its act and deed or otherwise of it, to agree the form
of and to execute and do all deeds, instruments, acts and things in
order to file, record, register or enrol this Deed and the Mortgage in
any court, public office or elsewhere which the Mortgagee may in its
discretion consider necessary or advisable, now or in the future, to
ensure the legality, validity, enforceability or admissibility in
evidence thereof and any other assurance, document, act or thing
required to be executed by the Owner pursuant to clause 12.
12 FURTHER ASSURANCE
The Owner hereby further undertakes at its own expense from time to
time to execute, sign, perfect, do and (if required) register every
such further assurance, document, act or thing as in the opinion of
the Mortgagee may be necessary or desirable for the purpose of more
effectually mortgaging and charging the Mortgaged Property or
perfecting the security constituted or intended to be constituted by
the Mortgage and this Deed or contemplated by the Loan Agreement
and/or the Master Swap Agreement.
13 NOTICES
Every notice, request, demand or other communication under this Deed
shall:
13.1.1 be in writing delivered personally or by first-class prepaid letter
(if available) or facsimile transmission or other means of
telecommunication in permanent written form;
13.1.2 be deemed to have been received, in the case of a letter, when
delivered personally or three (3) days after it has been put in to the
post and, in the case of a facsimile transmission or
20
other means of telecommunication in permanent written form, at the
time of despatch (provided that if the date of despatch is not a
business day in the country of the addressee or if the time of
despatch is after the close of business in the country of the
addressee it shall be deemed to have been received at the opening of
business on the next such business day); and
13.13 be sent:
(a) to the Owner at:
c/o Capital Ship Management Corp.
▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇
Fax no: ▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇
Attention: Mr Syntychakis
(b) to the Mortgagee at:
National Bank of Greece S.A.
▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇ ▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇
Fax No: ▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇
Attention: Corporate Manager
or to such other address and/or numbers as is notified by one party to
the other party under this Deed.
14 COUNTERPARTS
This Deed may be entered into in the form of two counterparts, each
executed by one of the parties, and, provided both the parties shall
so execute this Deed, each of the executed counterparts, when duly
exchanged or delivered, shall be deemed to be an original but, taken
together, they shall constitute one instrument.
15 SEVERABILITY OF PROVISIONS
Each of the provisions in this Deed are severable and distinct from
the others, and if at any time one or more such provisions is or
becomes invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions of this Deed shall not in
any way be affected or impaired thereby.
16 LAW AND JURISDICTION
16.1 LAW
This Deed is governed by, and shall be construed in accordance with,
English law.
16.2 SUBMISSION TO JURISDICTION
For the benefit of the Mortgagee, the parties hereto irrevocably agree
that any legal action or proceedings in connection with the Mortgage
and/or this Deed may be brought in the English courts or in the courts
of any other country chosen by the Mortgagee, each of which shall have
jurisdiction to settle any disputes arising out of or in connection
with the Mortgage and/or this Deed. The Owner irrevocably and
unconditionally submits to the jurisdiction of the English courts and
the courts of any country chosen by the Mortgagee and irrevocably
designates,
21
appoints and empowers Curzon Maritime Ltd at present of St. Clare
House, 30/33 ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇ to receive, for
it and on its behalf, service of process issued out of the English
courts in any legal action or proceedings arising out of or in
connection with the Mortgage and/or this Deed. The submission to such
jurisdiction shall not (and shall not be construed so as to) limit the
right of the Mortgagee to take proceedings against the Owner in any
other court of competent jurisdiction nor shall the taking of
proceedings in any one or more jurisdictions preclude the taking of
proceedings in any other jurisdiction, whether concurrently or not.
The parties further agree that only the courts of England and not
those of any other State shall have jurisdiction to determine any
claim which the Owner may have against the Mortgagee arising out of or
in connection with the Mortgage and/or this Deed.
16.3 CONTRACTS (RIGHTS OF THIRD PARTIES) ACT 1999
No term of this Deed is enforceable under the Contracts (Rights of
Third Parties Act) 1999 by a person who is not a party to this Deed.
IN WITNESS whereof this Deed has been duly executed as a deed the day and
year first above written.
22
SCHEDULE 1
FORMS OF LOSS PAYABLE CLAUSES
1 HULL AND MACHINERY (MARINE AND WAR RISKS)
By a Deed of Covenant dated __ December 2004. SHIP POWER MARINE S.A.
of Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro,
Republic of the ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ (the "OWNER") has assigned to
NATIONAL BANK OF GREECE S.A. of 2 Bouboulinas & ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇ ▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇ (the "MORTGAGEE"), all the Owner's rights, title and
interest in and to all policies and contracts of insurance from time
to time taken out or entered into by or for the benefit of the Owner
in respect of m.v. Victoria Spirit and accordingly:
1.1 all claims hereunder in respect of an actual or constructive or
compromised or arranged total loss, and all claims in respect of
a major casualty (that is to say any casualty the claim in
respect of which exceeds US$500,000 (or the equivalent in any
other currency) inclusive of any deductible) shall be paid in
full to the Mortgagee or to its order; and
1.2 all other claims hereunder shall be paid in full to the Owner or
to its order, unless and until the Mortgagee shall have notified
the insurers hereunder to the contrary, whereupon all such claims
shall be paid to the Mortgagee or to its order.
2 WAR RISKS
It is noted that NATIONAL BANK OF GREECE S.A. of 2 Bouboulinas & ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇ ▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ (the "MORTGAGEE") is interested as
First Mortgagee in the subject matter of this insurance. Save as
hereinafter provided, all claims (whether in respect of actual,
constructive, arranged or compromised total loss or otherwise) which,
but for this Loss Payable Clause would be payable to SHIP POWER MARINE
S.A. of Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro,
Republic of the ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ (the "OWNER") shall be
payable to the Mortgagee, provided always that unless and until notice
in writing to the contrary has been received by the Association,
claims (other than total loss claims) not exceeding US$500,000 (or the
equivalent in any other currency) in respect of any one claim shall be
paid direct to the Owner or to its order.
3 PROTECTION AND INDEMNITY RISKS
Payment of any recovery which SHIP POWER MARINE S.A. of Trust Company
Complex, Ajeltake Road, Ajeltake Island, Majuro, Republic of the
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ (the "OWNER") is entitled to make out of the
funds of the Association in respect of any liability, costs or
expenses incurred by the Owner, shall be made to the Owner or to its
order, unless and until the Association receives notice to the
contrary from NATIONAL BANK OF GREECE S.A. of 2 Bouboulinas & ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇ ▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ (the "MORTGAGEE") in which event all
recoveries shall thereafter be paid to the Mortgagee or its order;
provided always that no liability whatsoever shall attach to the
Association, its Managers or their agents for failure to comply with
the latter obligation until the expiry of two (2) clear business days
from the receipt of such notice.
4 LOSS of EARNINGS
By a Deed of covenant dated __ December 2004 SHIP POWER MARINE S.A. of
Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro,
Republic of the ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ (the "OWNER") has assigned to
NATIONAL BANK OF GREECE S.A. of 2 Bouboulinas & ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇ ▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇ (the "MORTGAGEE") its rights, title and interest in
and to all policies and contracts of insurance from time to time taken
out or entered into by or for the benefit of the Owner in respect of
m.v. Victoria Spirit and accordingly all claims hereunder shall
23
be paid in full to [HERE INSERT DETAILS OF THE OPERATING ACCOUNT]
unless and until the Mortgagee shall have notified the insurers
hereunder to the contrary, whereupon in either case all such claims
shall be paid to the Mortgagee or its order.
24
SCHEDULE 2
FORM OF NOTICE OF ASSIGNMENT OF INSURANCES
(For attachment by way of endorsement to the Policy)
SHIP POWER MARINE S.A., a company incorporated under the laws of the Republic of
the ▇▇▇▇▇▇▇▇ Islands, whose registered office is at Trust Company Complex,
Ajeltake Road, Ajeltake Island, Majuro, Republic of the ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, the Owner of the m.v. Victoria Spirit HEREBY GIVES NOTICE that by a
Deed of Covenant dated _________ December 2004 and entered into by us with
NATIONAL BANK OF GREECE S.A., there has been assigned by us to NATIONAL BANK OF
GREECE S.A. as first mortgagees of the said vessel all insurances in respect
thereof, including the insurances constituted by the Policy whereon this notice
is endorsed.
---------------------------------------
Signed
For and on behalf of
SHIP POWER MARINE S.A.
Dated [_______] 200[_]
25
EXECUTED as a DEED )
by )
for and on behalf of )
SHIP POWER MARINE S.A. ) ----------------
in the presence of: ) Attorney-in-fact
----------------------------
Witness
Name:
Address:
Occupation:
EXECUTED as a DEED ) --------------------
by ) Authorised Signatory
and by )
for and on behalf of )
NATIONAL BANK OF GREECE S.A. ) --------------------
in the presence of: ) Authorised Signatory
----------------------------
Witness
Name:
Address:
Occupation:
26
SCHEDULE 5
FORM OF MASTER SWAP AGREEMENT
43
(Multicurrency-Cross Border)
ISDA(R)
International Swaps & Derivatives Association, Inc.
MASTER AGREEMENT
dated as of 30 November 2004
NATIONAL BANK OF GREECE S.A. AND SHIP POWER MARINE S.A.
have entered and/or anticipate entering into one or more transactions (each a
"Transaction") that are or will be governed by this Master Agreement, which
includes the schedule (the "Schedule"), and the documents and other confirming
evidence (each a "Confirmation") exchanged between the parties confirming those
Transactions.
Accordingly, the parties agree as follows:-
1. INTERPRETATION
(a) Definitions. The terms defined in Section 14 and in the Schedule will have
the meanings therein specified for the purpose of this Master Agreement.
(b) Inconsistency. In the event of any inconsistency between the provisions of
the Schedule and the other provisions of this Master Agreement, the Schedule
will prevail. In the event of any inconsistency between the provisions of any
Confirmation and this Master Agreement (including the Schedule), such
Confirmation will prevail for the purpose of the relevant Transaction.
(c) Single Agreement. All Transactions are entered into in reliance on the fact
that this Master Agreement and all Confirmations form a single agreement between
the parties (collectively referred to as this "Agreement"), and the parties
would not otherwise enter into any Transactions.
2. OBLIGATIONS
(a) General Conditions.
(i) Each party will make each payment or delivery specified in each
Confirmation to be made by it, subject to the other provisions of this
Agreement.
(ii) Payments under this Agreement will be made on the due date for value
on that date in the place of the account specified in the relevant
Confirmation or otherwise pursuant to this Agreement, in freely
transferable funds and in the manner customary for payments in the
required currency. Where settlement is by delivery (that is, other than by
payment), such delivery will be made for receipt on the due date in the
manner customary for the relevant obligation unless otherwise specified in
the relevant Confirmation or elsewhere in this Agreement.
(iii) Each obligation of each party under Section 2(a)(i) is subject to (1)
the condition precedent that no Event of Default or Potential Event of
Default with respect to the other party has occurred and is continuing, (2)
the condition precedent that no Early Termination Date in respect of the
relevant Transaction has occurred or been effectively designated and (3)
each other applicable condition precedent specified in this Agreement.
(b) Change of Account. Either party may change its account for receiving a
payment or delivery by giving notice to the other party at least five Local
Business Days prior to the scheduled date for the payment or delivery to which
such change applies unless such other party gives timely notice of a reasonable
objection to such change.
(c) Netting. If on any date amounts would otherwise be payable:-
(i) in the same currency; and
(ii) in respect of the same Transaction,
by each party to the other, then, on such date, each party's obligation to make
payment of any such amount will be automatically satisfied and discharged and,
if the aggregate amount that would otherwise have been payable by one party
exceeds the aggregate amount that would otherwise have been payable by the other
party, replaced by an obligation upon the party by whom the larger aggregate
amount would have been payable to pay to the other party the excess of the
larger aggregate amount over the smaller aggregate amount.
The parties may elect in respect of two or more Transactions that a net amount
will be determined in respect of all amounts payable on the same date in the
same currency in respect of such Transactions, regardless of whether such
amounts are payable in respect of the same Transaction. The election may be
made in the Schedule or a Confirmation by specifying that subparagraph (ii)
above will not apply to the Transactions identified as being subject to the
election, together with the starting date (in which case subparagraph (ii) above
will not, or will cease to, apply to such Transactions from such date). This
election may be made separately for different groups of Transactions and will
apply separately to each pairing of Offices through which the parties make and
receive payments or deliveries.
(d) Deduction or Withholding for Tax.
(i) Gross-Up. All payments under this Agreement will be made without any
deduction or withholding for or on account of any Tax unless such deduction
or withholding is required by any applicable law, as modified by the
practice of any relevant governmental revenue authority, then in effect. If
a party is so required to deduct or withhold, then that parry ("X") will:-
(1) promptly notify the other party ("Y") of such requirement;
(2) pay to the relevant authorities the full amount required to be
deducted or withheld (including the full amount required to be
deducted or withheld from any additional amount paid by X to Y under
this Section 2(d)) promptly upon the earlier of determining that such
deduction or withholding is required or receiving notice that such
amount has been assessed against Y;
(3) promptly forward to Y an official receipt (or a certified copy),
or other documentation reasonably acceptable to Y, evidencing such
payment to such authorities; and
(4) if such Tax is an Indemnifiable Tax, pay to Y, in addition to the
payment to which Y is otherwise entitled under this Agreement, such
additional amount as is necessary to ensure that the net amount
actually received by Y (free and clear of Indemnifiable Taxes, whether
assessed against X or Y) will equal the full amount Y would have
received had no such deduction or withholding been required. However,
X will not be required to pay any additional amount to Y to the extent
that it would not be required to be paid but for:-
(A) the failure by Y to comply with or perform any agreement
contained in Section 4(a)(i), 4(a)(iii) or 4(d); or
(B) the failure of a representation made by Y pursuant to Section
3(f) to be accurate and true unless such failure would not have
occurred but for (I) any action taken by a taxing authority, or
brought in a court of competent jurisdiction, on or after the
date on which a Transaction is entered into (regardless of
whether such action is taken or brought with respect to a party
to this Agreement) or (II) a Change in Tax Law.
2
(ii) Liability. If:-
(1) X is required by any applicable law, as modified by the practice
of any relevant governmental revenue authority, to make any deduction
or withholding in respect of which X would not be required to pay an
additional amount to Y under Section 2(d)(i)(4);
(2) X does not so deduct or withhold; and
(3) a liability resulting from such Tax is assessed directly against
X, then,
except to the extent Y has satisfied or then satisfies the liability
resulting from such Tax, Y will promptly pay to X the amount of such
liability (including any related liability for interest, but including any
related liability for penalties only if Y has failed to comply with or
perform any agreement contained in Section 4(a)(i), 4(a)(iii) or 4(d)).
(e) Default Interest; Other Amounts. Prior to the occurrence or effective
designation of an Early Termination Date in respect of the relevant Transaction,
a party that defaults in the performance of any payment obligation will, to the
extent permitted by law and subject to Section 6(c), be required to pay interest
(before as well as after judgment) on the overdue amount to the other party on
demand in the same currency as such overdue amount, for the period from (and
including) the original due date for payment to (but excluding) the date of
actual payment, at the Default Rate. Such interest will be calculated on the
basis of daily compounding and the actual number of days elapsed. If, prior to
the occurrence or effective designation of an Early Termination Date in respect
of the relevant Transaction, a party defaults in the performance of any
obligation required to be settled by delivery, it will compensate the other
party on demand if and to the extent provided for in the relevant Confirmation
or elsewhere in this Agreement.
3. REPRESENTATIONS
Each party represents to the other party (which representations will be deemed
to be repeated by each party on each date on which a Transaction is entered into
and, in the case of the representations in Section 3(f), at all times until the
termination of this Agreement) that:-
(a) Basic Representations.
(i) Status. It is duly organised and validly existing under the laws of the
jurisdiction of its organisation or incorporation and, if relevant under
such laws, in good standing;
(ii) Powers. It has the power to execute this Agreement and any other
documentation relating to this Agreement to which it is a party, to deliver
this Agreement and any other documentation relating to this Agreement that
it is required by this Agreement to deliver and to perform its obligations
under this Agreement and any obligations it has under any Credit Support
Document to which it is a party and has taken all necessary action to
authorise such execution, delivery and performance;
(iii) No Violation or Conflict. Such execution, delivery and performance do
not violate or conflict with any law applicable to it, any provision of its
constitutional documents, any order or judgment of any court or other
agency of government applicable to it or any of its assets or any
contractual restriction binding on or affecting it or any of its assets;
(iv) Consents. All governmental and other consents that are required to
have been obtained by it with respect to this Agreement or any Credit
Support Document to which it is a party have been obtained and are in full
force and effect and all conditions of any such consents have been complied
with; and
(v) Obligations Binding. Its obligations under this Agreement and any
Credit Support Document to which it is a party constitute its legal, valid
and binding obligations, enforceable in accordance with their respective
terms (subject to applicable bankruptcy, reorganisation, insolvency,
moratorium or similar laws affecting creditors' rights generally and
subject, as to enforceability, to equitable principles of general
application (regardless of whether enforcement is sought in a proceeding in
equity or at law)).
3
(b) Absence of Certain Events. No Event of Default or Potential Event of Default
or, to its knowledge, Termination Event with respect to it has occurred and is
continuing and no such event or circumstance would occur as a result of its
entering into or performing its obligations under this Agreement or any Credit
Support Document to which it is a party.
(c) Absence of Litigation. There is not pending or, to its knowledge, threatened
against it or any of its Affiliates any action, suit or proceeding at law or in
equity or before any court, tribunal, governmental body, agency or official or
any arbitrator that is likely to affect the legality, validity or enforceability
against it of this Agreement or any Credit Support Document to which it is a
party or its ability to perform its obligation under this Agreement or such
Credit Support Document.
(d) Accuracy of Specified Information. All applicable information that is
furnished in writing by or on behalf of it to the other party and is identified
for the purpose of this Section 3(d) in the Schedule is, as of the date of the
information, true, accurate and complete in every material respect.
(e) Payer Tax Representation. Each representation specified in the Schedule as
being made by it for the purpose of this Section 3(e) is accurate and true.
(f) Payee Tax Representations. Each representation specified in the Schedule as
being made by it for the purpose of this Section 3(f) is accurate and true.
4. AGREEMENTS
Each party agrees with the other that, so long as either party has or may have
any obligation under this Agreement or under any Credit Support Document to
which it is a party:-
(a) Furnish Specified Information. It will deliver to the other party or, in
certain cases under subparagraph (iii) below, to such government or taxing
authority as the other party reasonably directs:-
(i) any forms, documents or certificates relating to taxation specified in
the Schedule or any Confirmation;
(ii) any other documents specified in the Schedule or any Confirmation; and
(iii) upon reasonable demand by such other party, any form or document that
may be required or reasonably requested in writing in order to allow such
other party or its Credit Support Provider to make a payment under this
Agreement or any applicable Credit Support Document without any deduction
or withholding for or on account of any Tax or with such deduction or
withholding at a reduced rate (so long as the completion, execution or
submission of such form or document would not materially prejudice the
legal or commercial position of the party in receipt of such demand), with
any such form or document to be accurate and completed in a manner
reasonably satisfactory to such other party and to be executed and to be
delivered with any reasonably required certification,
in each case by the date specified in the Schedule or such Confirmation or, if
none is specified, as soon as reasonably practicable.
(b) Maintain Authorisations. It will use all reasonable efforts to maintain in
full force and effect all consents of any governmental or other authority that
are required to be obtained by it with respect to this Agreement or any Credit
Support Document to which it is a party and will use all reasonable efforts to
obtain any that may become necessary in the future.
(c) Comply with Laws. It will comply in all material respects with all
applicable laws and orders to which it may be subject if failure so to comply
would materially impair its ability to perform its obligations under this
Agreement or any Credit Support Document to which it is a party.
(d) Tax Agreement. It will give notice of any failure of a representation made
by it under Section 3(f) to be accurate and true promptly upon learning of such
failure.
(e) Payment of Stamp Tax. Subject to Section 11, it will pay any Stamp Tax
levied or imposed upon it or in respect of its execution or performance of this
Agreement by a jurisdiction in which it is incorporated,
4
organised, managed and controlled, or considered to have its seat, or in which a
branch or office through which it is acting for the purpose of this Agreement
is located ("Stamp Tax Jurisdiction") and will indemnify the other party against
any Stamp Tax levied or imposed upon the other party or in respect of the other
party's execution or performance of this Agreement by any such Stamp Tax
Jurisdiction which is not also a Stamp Tax Jurisdiction with respect to the
other party.
5. EVENTS OF DEFAULT AND TERMINATION EVENTS
(a) Events of Default. The occurrence at any time with respect to a party or, if
applicable, any Credit Support Provider of such party or any Specified Entity of
such party of any of the following event constitutes an event of default (an
"Event of Default") with respect to such party:-
(i) Failure to Pay or Deliver. Failure by the party to make, when due, any
payment under this Agreement or delivery under Section 2(a)(i) or 2(e)
required to be made by it if such failure is not remedied on or before the
third Local Business Day after notice of such failure is given to the
party;
(ii) Breach of Agreement. Failure by the party to comply with or perform
any agreement or obligation (other than an obligation to make any payment
under this Agreement or delivery under Section 2(a)(i) or 2(e) or to give
notice of a Termination Event or any agreement or obligation under Section
4(a)(i), 4(a)(iii) or 4(d)) to be complied with or performed by the party
in accordance with this Agreement if such failure is not remedied on or
before the thirtieth day after notice of such failure is given to the
party;
(iii) Credit Support Default.
(1) Failure by the party or any Credit Support Provider of such party
to comply with or perform any agreement or obligation to be complied
with or performed by it in accordance with any Credit Support Document
if such failure is continuing after any applicable grace period has
elapsed;
(2) the expiration or termination of such Credit Support Document or
the failing or ceasing of such Credit Support Document to be in full
force and effect for the purpose of this Agreement (in either case
other than in accordance with its terms) prior to the satisfaction of
all obligations of such party under each Transaction to which such
Credit Support Document relates without the written consent of the
other party; or
(3) the party or such Credit Support Provider disaffirms, disclaims,
repudiates or rejects, in whole or in part, or challenges the validity
of, such Credit Support Document;
(iv) Misrepresentation. A representation (other than a representation under
Section 3(e) or (f)) made or repeated or deemed to have been made or
repeated by the party or any Credit Support Provider of such party in this
Agreement or any Credit Support Document proves to have been incorrect or
misleading in any material respect when made or repeated or deemed to have
been made or repeated;
(v) Default under Specified Transaction. The party, any Credit Support
Provider of such party or any applicable Specified Entity of such party (1)
defaults under a Specified Transaction and, after giving effect to any
applicable notice requirement or grace period, there occurs a liquidation
of, an acceleration of obligations under, or an early termination of, that
Specified Transaction, (2) defaults, after giving effect to any applicable
notice requirement or grace period, in making any payment or delivery due
on the last payment, delivery or exchange date of, or any payment on early
termination of, a Specified Transaction (or such default continues for at
least three Local Business Days if there is no applicable notice
requirement or grace period) or (3) disaffirms, disclaims, repudiates or
rejects, in whole or in part, a Specified Transaction (or such action is
taken by any person or entity appointed or empowered to operate it or act
on its behalf);
(vi) Cross Default. If "Cross Default" is specified in the Schedule as
applying to the party, the occurrence or existence of (1) a default, event
of default or other similar condition or event (however
5
described) in respect of such party, any Credit Support Provider of such
party or any applicable Specified Entity of such party under one or more
agreements or instruments relating to Specified Indebtedness of any of them
(individually or collectively) in an aggregate amount of not less than the
applicable Threshold Amount (as specified in the Schedule) which has
resulted in such Specified Indebtedness becoming, or becoming capable at
such time of being declared, due and payable under such agreements or
instruments, before it would otherwise have been due and payable or (2) a
default by such party, such Credit Support Provider or such Specified
Entity (individually or collectively) in making one or more payments on the
due date thereof in an aggregate amount of not less than the applicable
Threshold Amount under such agreements or instruments (after giving effect
to any applicable notice requirement or grace period);
(vii) Bankruptcy. The party, any Credit Support Provider of such party or
any applicable Specified Entity of such party:-
(1) is dissolved (other than pursuant to a consolidation, amalgamation
or merger); (2) becomes insolvent or is unable to pay its debts or
fails or admits in writing its inability generally to pay its debts as
they become due; (3) makes a general assignment, arrangement or
composition with or for the benefit of its creditors; (4) institutes
or has instituted against it a proceeding seeking a judgment of
insolvency or bankruptcy or any other relief under any bankruptcy or
insolvency law or other similar law affecting creditors' rights, or a
petition is presented for its winding-up or liquidation, and, in the
case of any such proceeding or petition instituted or presented
against it, such proceeding or petition (A) results in a judgment of
insolvency or bankruptcy or the entry of an order for relief or the
making of an order for its winding-up or liquidation or (B) is not
dismissed, discharged, stayed or restrained in each case within 30
days of the institution or presentation thereof; (5) has a resolution
passed for its winding-up, official management or liquidation (other
than pursuant to a consolidation, amalgamation or merger); (6) seeks
or becomes subject to the appointment of an administrator, provisional
liquidator, conservator, receiver, trustee, custodian or other similar
official for it or for all or substantially all its assets; (7) has a
secured party take possession of all or substantially all its assets
or has a distress, execution, attachment, sequestration or other legal
process levied, enforced or sued on or against all or substantially
all its assets and such secured party maintains possession, or any
such process is not dismissed, discharged, stayed or restrained, in
each case within 30 days thereafter; (8) causes or is subject to any
event with respect to it which, under the applicable laws of any
jurisdiction, has an analogous effect to any of the events specified
in clauses (1) to (7) (inclusive); or (9) takes any action in
furtherance of, or indicating its consent to, approval of, or
acquiescence in, any of the foregoing acts; or
(viii) Merger Without Assumption. The party or any Credit Support Provider
of such party consolidates or amalgamates with, or merges with or into, or
transfers all or substantially all its assets to, another entity and, at
the time of such consolidation, amalgamation, merger or transfer:-
(1) the resulting, surviving or transferee entity fails to assume all
the obligations of such party or such Credit Support Provider under
this Agreement or any Credit Support Document to which it or its
predecessor was a party by operation of law or pursuant to an
agreement reasonably satisfactory to the other party to this
Agreement; or
(2) the benefits of any Credit Support Document fail to extend
(without the consent of the other party) to the performance by such
resulting, surviving or transferee entity of its obligations under
this Agreement.
(b) Termination Events. The occurrence at any time with respect to a party or,
if applicable, any Credit Support Provider of such party or any Specified Entity
of such party of any event specified below constitutes an Illegality if the
event is specified in (i) below, a Tax Event if the event is specified in (ii)
below or a Tax Event Upon Merger if the event is specified in (iii) below, and,
if specified to be applicable, a Credit Event
6
Upon Merger if the event is specified pursuant to (iv) below or an Additional
Termination Event if the event is specified pursuant to (v) below:-
(i) Illegality. Due to the adoption of, or any change in, any applicable
law after the date on which a Transaction is entered into, or due to the
promulgation of, or any change in, the interpretation by any court,
tribunal or regulatory authority with competent jurisdiction of any
applicable law after such date, it becomes unlawful (other than as a result
of a breach by the party of Section 4(b)) for such party (which will be the
Affected Party):-
(1) to perform any absolute or contingent obligation to make a payment
or delivery or to receive a payment or delivery in respect of such
Transaction or to comply with any other material provision of this
Agreement relating to such Transaction; or
(2) to perform, or for any Credit Support Provider of such party to
perform, any contingent or other obligation which the party (or such
Credit Support Provider) has under any Credit Support Document
relating to such Transaction;
(ii) Tax Event. Due to (x) any action taken by a taxing authority, or
brought in a court of competent jurisdiction, on or after the date on which
a Transaction is entered into (regardless of whether such action is taken
or brought with respect to a party to this Agreement) or (y) a Change in
Tax Law, the party (which will be the Affected Party) will, or there is a
substantial likelihood that it will, on the next succeeding Scheduled
Payment Date (1) be required to pay to the other party an additional amount
in respect of an Indemnifiable Tax under Section 2(d)(i)(4) (except in
respect of interest under Section 2(e), 6(d)(ii) or 6(e)) or (2) receive a
payment from which an amount is required to be deducted or withheld for or
on account of a Tax (except in respect of interest under Section 2(e),
6(d)(ii) or 6(e)) and no additional amount is required to be paid in
respect of such Tax under Section 2(d)(i)(4) (other than by reason of
Section 2(d)(i)(4)(A) or (B));
(iii) Tax Event Upon Merger. The party (the "Burdened Party") on the next
succeeding Scheduled Payment Date will either (1) be required to pay an
additional amount in respect of an Indemnifiable Tax under Section
2(d)(i)(4) (except in respect of interest under Section 2(e), 6(d)(ii) or
6(e)) or (2) receive a payment from which an amount has been deducted or
withheld for or on account of any Indemnifiable Tax in respect of which the
other party is not required to pay an additional amount (other than by
reason of Section 2(d)(i)(4)(A) or (B)), in either case as a result of a
party consolidating or amalgamating with, or merging with or into, or
transferring all or substantially all its assets to, another entity (which
will be the Affected Party) where such action does not constitute an event
described in Section 5(a)(viii);
(iv) Credit Event Upon Merger. If "Credit Event Upon Merger" is specified
in the Schedule as applying to the party, such party ("X"), any Credit
Support Provider of X or any applicable Specified Entity of X consolidates
or amalgamates with, or merges with or into, or transfers all or
substantially all its assets to, another entity and such action does not
constitute an event described in Section 5(a)(viii) but the
creditworthiness of the resulting, surviving or transferee entity is
materially weaker than that of X, such Credit Support Provider or such
Specified Entity, as the case may be, immediately prior to such action
(and, in such event, X or its successor or transferee, as appropriate, will
be the Affected Party); or
(v) Additional Termination Event. If any "Additional Termination Event" is
specified in the Schedule or any Confirmation as applying, the occurrence
of such event (and, in such event, the Affected Party or Affected Parties
shall be as specified for such Additional Termination Event in the Schedule
or such Confirmation).
(c) Event of Default and Illegality. If an event or circumstance which would
otherwise constitute or give rise to an Event of Default also constitutes an
Illegality, it will be treated as an Illegality and will not constitute an Event
of Default.
7
6. EARLY TERMINATION
(a) Right to Terminate Following Event of Default. If at any time an Event of
Default with respect to a party (the "Defaulting Party") has occurred and is
then continuing, the other party (the "Non-defaulting Party") may, by not more
than 20 days notice to the Defaulting Party specifying the relevant Event of
Default, designate a day not earlier than the day such notice is effective as an
Early Termination Date in respect of all outstanding Transactions. If, however,
"Automatic Early Termination" is specified in the Schedule as applying to a
party, then an Early Termination Date in respect of all outstanding Transactions
will occur immediately upon the occurrence with respect to such party of an
Event of Default specified in Section 5(a)(vii)(1), (3), (5), (6) or, to the
extent analogous thereto, (8), and as of the time immediately preceding the
institution of the relevant proceeding or the presentation of the relevant
petition upon the occurrence with respect to such party of an Event of Default
specified in Section 5(a)(vii)(4) or, to the extent analogous thereto, (8).
(b) Right to Terminate Following Termination Event.
(i) Notice. If a Termination Event occurs, an Affected Party will, promptly
upon becoming aware of it, notify the other party, specifying the nature of
that Termination Event and each Affected Transaction and will also give
such other information about that Termination Event as the other party may
reasonably require.
(ii) Transfer to Avoid Termination Event. If either an Illegality under
Section 5(b)(i)(1) or a Tax Event occurs and there is only one Affected
Party, or if a Tax Event Upon Merger occurs and the Burdened Party is the
Affected Party, the Affected Party will, as a condition to its right to
designate an Early Termination Date under Section 6(b)(iv), use all
reasonable efforts (which will not require such party to incur a loss,
excluding immaterial, incidental expenses) to transfer within 20 days after
it gives notice under Section 6(b)(i) all its rights and obligations under
this Agreement in respect of the Affected Transactions to another of its
Offices or Affiliates so that such Termination Event ceases to exist.
If the Affected Party is not able to make such a transfer it will give
notice to the other party to that effect within such 20 day period,
whereupon the other party may effect such a transfer within 30 days after
the notice is given under Section 6(b)(i).
Any such transfer by a party under this Section 6(b)(ii) will be subject to
and conditional upon the prior written consent of the other party, which
consent will not be withheld if such other party's policies in effect at
such time would permit it to enter into transactions with the transferee on
the terms proposed.
(iii) Two Affected Parties. If an Illegality under Section 5(b)(i)(1) or a
Tax Event occurs and there are two Affected Parties, each party will use
all reasonable efforts to reach agreement within 30 days after notice
thereof is given under Section 6(b)(i) on action to avoid that Termination
Event.
(iv) Right to Terminate. If:-
(1) a transfer under Section 6(b)(ii) or an agreement under Section
6(b)(iii), as the case may be, has not been effected with respect to
all Affected Transactions within 30 days after an Affected Party gives
notice under Section 6(b)(i); or
(2) an Illegality under Section 5(b)(i)(2), a Credit Event Upon Merger
or an Additional Termination Event occurs, or a Tax Event Upon Merger
occurs and the Burdened Party is not the Affected Party,
either party in the case of an Illegality, the Burdened Party in the case
of a Tax Event Upon Merger, any Affected Party in the case of a Tax Event
or an Additional Termination Event if there is more than one Affected
Party, or the party which is not the Affected Party in the case of a Credit
Event Upon Merger or an Additional Termination Event if there is only one
Affected Party may, by not more than 20 days notice to the other party and
provided that the relevant Termination Event is then
8
continuing, designate a day not earlier than the day such notice is
effective as an Early Termination Date in respect of all Affected
Transactions.
(C) Effect of Designation.
(i) If notice designating an Early Termination Date is given under Section
6(a) or (b), the Early Termination Date will occur on the date so
designated, whether or not the relevant Event of Default or Termination
Event is then continuing.
(ii) Upon the occurrence or effective designation of an Early Termination
Date, no further payments or deliveries under Section 2(a)(i) or 2(e) in
respect of the Terminated Transactions will be required to be made, but
without prejudice to the other provisions of this Agreement. The amount, if
any, payable in respect of an Early Termination Date shall be determined
pursuant to Section 6(e).
(d) Calculations.
(i) Statement. On or as soon as reasonably practicable following the
occurrence of an Early Termination Date, each party will make the
calculations on its part, if any, contemplated by Section 6(e) and will
provide to the other party a statement (1) showing, in reasonable detail,
such calculations (including all relevant quotations and specifying any
amount payable under Section 6(e)) and (2) giving details of the relevant
account to which any amount payable to it is to be paid. In the absence of
written confirmation from the source of a quotation obtained in determining
a Market Quotation, the records of the party obtaining such quotation will
be conclusive evidence of the existence and accuracy of such quotation.
(ii) Payment Date. An amount calculated as being due in respect of any
Early Termination Date under Section 6(e) will be payable on the day that
notice of the amount payable is effective (in the case of an Early
Termination Date which is designated or occurs as a result of an Event of
Default and on the day which is two Local Business Days after the day on
which notice of the amount payable is effective (in the case of an Early
Termination Date which is designated as a result of a Termination Event).
Such amount will be paid together with (to the extent permitted under
applicable law) interest thereon (before as well as after judgment) in the
Termination Currency, from (and including) the relevant Early Termination
Date to (but excluding) the date such amount is paid, at the Applicable
Rate. Such interest will be calculated on the basis of daily compounding
and the actual number of days elapsed.
(e) Payments on Early Termination. If an Early Termination Date occurs, the
following provisions shall apply based on the parties' election in the Schedule
of a payment measure, either "Market Quotation" or "Loss", and a payment method,
either the "First Method" or the "Second Method". If the parties fail to
designate a payment measure or payment method in the Schedule, it will be deemed
that "Market Quotation" or the "Second Method", as the case may be, shall apply.
The amount, if any, payable in respect of an Early Termination Date and
determined pursuant to this Section will be subject to any Set-off.
(i) Events of Default. If the Early Termination Date results from an Event
of Default:-
(1) First Method and Market Quotation. If the First Method and Market
Quotation apply, the Defaulting Party will pay to the Non-defaulting
Party the excess, if a positive number, of (A) the sum of the
Settlement Amount (determined by the Non-defaulting Party) in respect
of the Terminated Transactions and the Termination Currency Equivalent
of the Unpaid Amounts owing to the Non-defaulting Party over (B) the
Termination Currency Equivalent of the Unpaid Amounts owing to the
Defaulting Party.
(2) First Method and Loss. If the First Method and Loss apply, the
Defaulting Party will pay to the Non-defaulting Party, if a positive
number, the Non-defaulting Party's Loss in respect of this Agreement.
(3) Second Method and Market Quotation. If the Second Method and
Market Quotation apply, an amount will be payable equal to (A) the sum
of the Settlement Amount (determined by the
9
Non-defaulting Party) in respect of the Terminated Transactions and
the Termination Currency Equivalent of the Unpaid Amounts owing to the
Non-defaulting Party less (B) the Termination Currency Equivalent of
the Unpaid Amounts owing to the Defaulting Party. If that amount is a
positive number, the Defaulting Party will pay it to the
Non-defaulting Party; if it is a negative number, the Non-defaulting
Party will pay the absolute value of that amount to the Defaulting
Party.
(4) Second Method and Loss. If the Second Method and Loss apply, an
amount will be payable equal to the Non-defaulting Party's Loss in
respect of this Agreement. If that amount is a positive number, the
Defaulting Party will pay it to the Non-defaulting Party; if it is a
negative number, the Non-defaulting Party will pay the absolute value
of that amount to the Defaulting Party.
(ii) Termination Events. If the Early Termination Date results from a
Termination Event:-
(1) One Affected Party. If there is one Affected Party, the amount
payable will be determined in accordance with Section 6(e)(i)(3), if
Market Quotation applies, or Section 6(e)(i)(4), if Loss applies,
except that, in either case, references to the Defaulting Party and to
the Non-defaulting Party will be deemed to be references to the
Affected Party and the party which is not the Affected Party,
respectively, and, if Loss applies and fewer than all the Transactions
are being terminated, Loss shall be calculated in respect of all
Terminated Transactions.
(2) Two Affected Parties. If there are two Affected Parties:-
(A) if Market Quotation applies, each party will determine a
Settlement Amount in respect of the Terminated Transactions, and
an amount will be payable equal to (I) the sum of (a) one-half of
the difference between the Settlement Amount of the party with
the higher Settlement Amount ("X") and the Settlement Amount of
the party with the lower Settlement Amount ("Y") and (b) the
Termination Currency Equivalent of the Unpaid Amounts owing to X
less (II) the Termination Currency Equivalent of the Unpaid
Amounts owing to Y; and
(B) if Loss applies, each party will determine its Loss in
respect of this Agreement (or, if fewer than all the Transactions
are being terminated, in respect of all Terminated Transactions)
and an amount will be payable equal to one-half of the difference
between the Loss of the party with the higher Loss ("X") and the
Loss of the party with the lower Loss ("Y").
If the amount payable is a positive number, Y will pay it to X; if it
is a negative number, X will pay the absolute value of that amount to
Y.
(iii) Adjustment for Bankruptcy. In circumstances where an Early
Termination Date occurs because "Automatic Early Termination" applies in
respect of a party, the amount determined under this Section 6(e) will be
subject to such adjustments as are appropriate and permitted by law to
reflect any payments or deliveries made by one party to the other under
this Agreement (and retained by such other party) during the period from
the relevant Early Termination Date to the date for payment determined
under Section 6(d)(ii).
(iv) Pre-Estimate. The parties agree that if Market Quotation applies an
amount recoverable under this Section 6(e) is a reasonable pre-estimate of
loss and not a penalty. Such amount is payable for the loss of bargain and
the loss of protection against future risks and except as otherwise
provided in this Agreement neither party will be entitled to recover any
additional damages as a consequence of such losses.
10
7. TRANSFER
Subject to Section 6(b)(ii), neither this Agreement nor any interest or
obligation in or under this Agreement may be transferred (whether by way of
security or otherwise) by either party without the prior written consent of the
other party, except that:-
(a) a party may make such a transfer of this Agreement pursuant to a
consolidation or amalgamation with, or merger with or into, or transfer of all
or substantially all its assets to, another entity (but without prejudice to any
other right or remedy under this Agreement); and
(b) a party may make such a transfer of all or any part of its interest in any
amount payable to it from a Defaulting Party under Section 6(e).
Any purported transfer that is not in compliance with this Section will be void.
8. CONTRACTUAL CURRENCY
(a) Payment in the Contractual Currency. Each payment under this Agreement will
be made in the relevant currency specified in this Agreement for that payment
(the "Contractual Currency"). To the extent permitted by applicable law, any
obligation to make payments under this Agreement in the Contractual Currency
will not be discharged or satisfied by any tender in any currency other than the
Contractual Currency, except to the extent such tender results in the actual
receipt by the party to which payment is owed, acting in a reasonable manner and
in good faith in converting the currency so tendered into the Contractual
Currency, of the full amount in the Contractual Currency of all amounts payable
in respect of this Agreement. If for any reason the amount in the Contractual
Currency so received falls short of the amount in the Contractual Currency
payable in respect of this Agreement, the party required to make the payment
will, to the extent permitted by applicable law, immediately pay such additional
amount in the Contractual Currency as may be necessary to compensate for the
shortfall. If for any reason the amount in the Contractual Currency so received
exceeds the amount in the Contractual Currency payable in respect of this
Agreement, the party receiving the payment will refund promptly the amount of
such excess.
(b) Judgments. To the extent permitted by applicable law, if any judgment or
order expressed in a currency other than the Contractual Currency is rendered
(i) for the payment of any amount owing in respect of this Agreement, (ii) for
the payment of any amount relating to any early termination in respect of this
Agreement or (iii) in respect of a judgment or order of another court for the
payment of any amount described in (i) or (ii) above, the party seeking
recovery, after recovery in full of the aggregate amount to which such party is
entitled pursuant to the judgment or order, will be entitled to receive
immediately from the other party the amount of any shortfall of the Contractual
Currency received by such party as a consequence of sums paid in such other
currency and will refund promptly to the other party any excess of the
Contractual Currency received by such party as a consequence of sums paid in
such other currency if such shortfall or such excess arises or results from any
variation between the rate of exchange at which the Contractual Currency is
converted into the currency of the judgment or order for the purposes of such
judgment or order and the rate of exchange at which such party is able, acting
in a reasonable manner and in good faith in converting the currency received
into the Contractual Currency, to purchase the Contractual Currency with the
amount of the currency of the judgment or order actually received by such party.
The term "rate of exchange" includes, without limitation, any premiums and costs
of exchange payable in connection with the purchase of or conversion into the
Contractual Currency.
(c) Separate Indemnities. To the extent permitted by applicable law, these
indemnities constitute separate and independent obligations from the other
obligations in this Agreement, will be enforceable as separate and independent
causes of action, will apply notwithstanding any indulgence granted by the party
to which any payment is owed and will not be affected by judgment being obtained
or claim or proof being made for any other sums payable in respect of this
Agreement.
(d) Evidence of Loss. For the purpose of this Section 8, it will be sufficient
for a party to demonstrate that it would have suffered a loss had an actual
exchange or purchase been made.
11
9. MISCELLANEOUS
(a) Entire Agreement. This Agreement constitutes the entire agreement and
understanding of the parties with respect to its subject matter and supersedes
all oral communication and prior writings with respect thereto.
(b) Amendments. No amendment, modification or waiver in respect of this
Agreement will be effective unless in writing (including a writing evidenced by
a facsimile transmission) and executed by each of the parties or confirmed by an
exchange of telexes or electronic messages on an electronic messaging system.
(c) Survival of Obligations. Without prejudice to Sections 2(a)(iii) and
6(c)(ii), the obligations of the parties under this Agreement will survive the
termination of any Transaction.
(d) Remedies Cumulative. Except as provided in this Agreement, the rights,
powers, remedies and privileges provided in this Agreement are cumulative and
not exclusive of any rights, powers, remedies and privileges provided by law.
(e) Counterparts and Confirmations.
(i) This Agreement (and each amendment, modification and waiver in respect
of it) may be executed and delivered in counterparts (including by
facsimile transmission), each of which will be deemed an original.
(ii) The parties intend that they are legally bound by the terms of each
Transaction from the moment they agree to those terms (whether orally or
otherwise). A Confirmation shall be entered into as soon as practicable and
may be executed and delivered in counterparts (including by facsimile
transmission) or be created by an exchange of telexes or by an exchange of
electronic messages on an electronic messaging system, which in each case
will be sufficient for all purposes to evidence a binding supplement to
this Agreement. The parties will specify therein or through another
effective means that any such counterpart, telex or electronic message
constitutes a Confirmation.
(f) No Waiver of Rights. A failure or delay in exercising any right, power or
privilege in respect of this Agreement will not be presumed to operate as a
waiver, and a single or partial exercise of any right, power or privilege will
not be presumed to preclude any subsequent or further exercise, of that right,
power or privilege or the exercise of any other right, power or privilege.
(g) Headings. The headings used in this Agreement are for convenience of
reference only and are not to affect the construction of or to be taken into
consideration in interpreting this Agreement.
10. OFFICES; MULTIBRANCH PARTIES
(a) If Section 10(a) is specified in the Schedule as applying, each party that
enters into a Transaction through an Office other than its head or home office
represents to the other party that, notwithstanding the place of booking office
or jurisdiction of incorporation or organisation of such party, the obligations
of such party are the same as if it had entered into the Transaction through its
head or home office. This representation will be deemed to be repeated by such
party on each date on which a Transaction is entered into.
(b) Neither party may change the Office through which it makes and receives
payments or deliveries for the purpose of a Transaction without the prior
written consent of the other party.
(c) If a party is specified as a Multibranch Party in the Schedule, such
Multibranch Party may make and receive payments or deliveries under any
Transaction through any Office listed in the Schedule, and the Office through
which it makes and receives payments or deliveries with respect to a Transaction
will be specified in the relevant Confirmation.
11. EXPENSES
A Defaulting Party will, on demand, indemnify and hold harmless the other party
for and against all reasonable out-of-pocket expenses, including legal fees and
Stamp Tax, incurred by such other party by reason of the enforcement and
protection of its rights under this Agreement or any Credit Support Document
12
to which the Defaulting Party is a party or by reason of the early termination
of any Transaction, including, but not limited to, costs of collection.
12. NOTICES
(a) Effectiveness. Any notice or other communication in respect of this
Agreement may be given in any manner set forth below (except that a notice or
other communication under Section 5 or 6 may not be given by facsimile
transmission or electronic messaging system) to the address or number or in
accordance with the electronic messaging system details provided (see the
Schedule) and will be deemed effective as indicated:-
(i) if in writing and delivered in person or by courier, on the date it is
delivered;
(ii) if sent by telex, on the date the recipient's answerback is received;
(iii) if sent by facsimile transmission, on the date that transmission is
received by a responsible employee of the recipient in legible form (it
being agreed that the burden of proving receipt will be on the sender and
will not be met by a transmission report generated by the sender's
facsimile machine);
(iv) if sent by certified or registered mail (airmail, if overseas) or the
equivalent (return receipt requested), on the date that mail is delivered
or its delivery is attempted; or
(v) if sent by electronic messaging system, on the date that electronic
message is received, unless the date of that delivery (or attempted
delivery) or that receipt, as applicable, is not a Local Business Day or
that communication is delivered (or attempted) or received, as applicable,
after the close of business on a Local Business Day, in which case that
communication shall be deemed given and effective on the first following
day that is a Local Business Day.
(b) Change of Addresses. Either party may by notice to the other change the
address, telex or facsimile number or electronic messaging system details at
which notices or other communications are to be given to it.
13. GOVERNING LAW AND JURISDICTION
(a) Governing Law. This Agreement will be governed by and construed in
accordance with the law specified in the Schedule.
(b) Jurisdiction. With respect to any suit, action or proceedings relating to
this Agreement ("Proceedings"), each party irrevocably:-
(i) submits to the jurisdiction of the English courts, if this Agreement is
expressed to be governed by English law, or to the non-exclusive
jurisdiction of the courts of the State of New York and the United States
District Court located in the Borough of Manhattan in New York City, if
this Agreement is expressed to be governed by the laws of the State of New
York; and
(ii) waives any objection which it may have at any time to the laying of
venue of any Proceedings brought in any such court, waives any claim that
such Proceedings have been brought in an inconvenient forum and further
waives the right to object, with respect to such Proceedings, that such
court does not have any jurisdiction over such party.
Nothing in this Agreement precludes either party from bringing Proceedings in
any other jurisdiction (outside, if this Agreement is expressed to be governed
by English law, the Contracting States, as defined in Section 1(3) of the Civil
Jurisdiction and Judgments ▇▇▇ ▇▇▇▇ or any modification, extension or
re-enactment thereof for the time being in force) nor will the bringing of
Proceedings in any one or more jurisdictions preclude the bringing of
Proceedings in any other jurisdiction.
(c) Service of Process. Each party irrevocably appoints the Process Agent (if
any) specified opposite its name in the Schedule to receive, for it and on its
behalf, service of process in any Proceedings. If for any
13
reason any party's Process Agent is unable to act as such, such party will
promptly notify the other party and within 30 days appoint a substitute process
agent acceptable to the other party. The parties irrevocably consent to service
of process given in the manner provided for notices in Section 12. Nothing in
this Agreement will affect the right of either party to serve process in any
other manner permitted by law.
(d) Waiver of Immunities. Each party irrevocably waives, to the fullest extent
permitted by applicable law, with respect to itself and its revenues and assets
(irrespective of their use or intended use), all immunity on the grounds of
sovereignty or other similar grounds from (i) suit, (ii) jurisdiction of any
court, (iii) relief by way of injunction, order for specific performance or for
recovery of property, (iv) attachment of its assets (whether before or after
judgment) and (v) execution or enforcement of any judgment to which it or its
revenues or assets might otherwise be entitled in any Proceedings in the courts
of any jurisdiction and irrevocably agrees, to the extent permitted by
applicable law, that it will not claim any such immunity in any Proceedings.
14. DEFINITIONS
As used in this Agreement:-
"Additional Termination Event" has the meaning specified in Section 5(b).
"Affected Party" has the meaning specified in Section 5(b).
"Affected Transactions" means (a) with respect to any Termination Event
consisting of an Illegality, Tax Event or Tax Event Upon Merger, all
Transactions affected by the occurrence of such Termination Event and (b) with
respect to any other Termination Event, all Transactions.
"Affiliate" means, subject to the Schedule, in relation to any person, any
entity controlled, directly or indirectly, by the person, any entity that
controls, directly or indirectly, the person or any entity directly or
indirectly under common control with the person. For this purpose, "control" of
any entity or person means ownership of a majority of the voting power of the
entity or person.
"Applicable Rate" means:-
(a) in respect of obligations payable or deliverable (or which would have been
but for Section 2(a)(iii)) by a Defaulting Party, the Default Rate;
(b) in respect of an obligation to pay an amount under Section 6(e) of either
party from and after the date (determined in accordance with Section 6(d)(ii))
on which that amount is payable, the Default Rate;
(c) in respect of all other obligations payable or deliverable (or which would
have been but for Section 2(a)(iii)) by a Non-defaulting Party, the Non-default
Rate; and
(d) in all other cases, the Termination Rate.
"Burdened Party" has the meaning specified in Section 5(b).
"Change in Tax Law" means the enactment, promulgation, execution or ratification
of, or any change in or amendment to, any law (or in the application or official
interpretation of any law) that occurs on or after the date on which the
relevant Transaction is entered into.
"consent" includes a consent, approval, action, authorisation, exemption,
notice, filing, registration or exchange control consent.
"Credit Event Upon Merger" has the meaning specified in Section 5(b).
"Credit Support Document" means any agreement or instrument that is specified as
such in this Agreement.
"Credit Support Provider" has the meaning specified in the Schedule.
"Default Rate" means a rate per annum equal to the cost (without proof or
evidence of any actual cost) to the relevant payee (as certified by it) if it
were to fund or of funding the relevant amount plus 1% per annum.
14
"Defaulting Party" has the meaning specified in Section 6(a).
"Early Termination Date" means the date determined in accordance with Section
6(a) or 6(b)(iv).
"Event of Default" has the meaning specified in Section 5(a) and, if applicable,
in the Schedule.
"Illegality" has the meaning specified in Section 5(b).
"Indemnifiable Tax" means any Tax other than a Tax that would not be imposed in
respect of a payment under this Agreement but for a present or former connection
between the jurisdiction of the government or taxation authority imposing such
Tax and the recipient of such payment or a person related to such recipient
(including, without limitation, a connection arising from such recipient or
related person being or having been a citizen or resident of such jurisdiction,
or being or having been organised, present or engaged in a trade or business in
such jurisdiction, or having had a permanent establishment or fixed place of
business in such jurisdiction, but excluding a connection arising solely from
such recipient or related person having executed, delivered, performed its
obligations or received a payment under, or enforced, this Agreement or a Credit
Support Document).
"law" includes any treaty, law, rule or regulation (as modified, in the case of
tax matters, by the practice of any relevant governmental revenue authority) and
"lawful" and "unlawful" will be construed accordingly.
"Local Business Day" means, subject to the Schedule, a day on which commercial
banks are open for business (including dealings in foreign exchange and foreign
currency deposits) (a) in relation to any obligation under Section 2(a)(i), in
the place(s) specified in the relevant Confirmation or, if not so specified, as
otherwise agreed by the parties in writing or determined pursuant to provisions
contained, or incorporated by reference, in this Agreement, (b) in relation to
any other payment, in the place where the relevant account is located and, if
different, in the principal financial centre, if any, of the currency of such
payment, (c) in relation to any notice or other communication, including notice
contemplated under Section 5(a)(i), in the city specified in the address for
notice provided by the recipient and, in the case of a notice contemplated by
Section 2(b), in the place where the relevant new account is to be located and
(d) in relation to Section 5(a)(v)(2), in the relevant locations for performance
with respect to such Specified Transaction.
"Loss" means, with respect to this Agreement or one or more Terminated
Transactions, as the case may be, and a party, the Termination Currency
Equivalent of an amount that party reasonably determines in good faith to be its
total losses and costs (or gain, in which case expressed as a negative number)
in connection with this Agreement or that Terminated Transaction or group of
Terminated Transactions, as the case may be, including any loss of bargain, cost
of funding or, at the election of such party but without duplication, loss or
cost incurred as a result of its terminating, liquidating, obtaining or
reestablishing any hedge or related trading position (or any gain resulting from
any of them). Loss includes losses and costs (or gains) in respect of any
payment or delivery required to have been made (assuming satisfaction of each
applicable condition precedent) on or before the relevant Early Termination Date
and not made, except, so as to avoid duplication, if Section 6(e)(i)(1) or (3)
or 6(e)(ii)(2)(A) applies. Loss does not include a party's legal fees and
out-of-pocket expenses referred to under Section 11. A party will determine its
Loss as of the relevant Early Termination Date, or, if that is not reasonably
practicable, as of the earliest date thereafter as is reasonably practicable. A
party may (but need not) determine its Loss by reference to quotations of
relevant rates or prices from one or more leading dealers in the relevant
markets.
"Market Quotation" means, with respect to one or more Terminated Transactions
and a party making the determination, an amount determined on the basis of
quotations from Reference Market-makers. Each quotation will be for an amount,
if any, that would be paid to such party (expressed as a negative number) or by
such party (expressed as a positive number) in consideration of an agreement
between such party (taking into account any existing Credit Support Document
with respect to the obligations of such party) and the quoting Reference
Market-maker to enter into a transaction (the "Replacement Transaction") that
would have the effect of preserving for such party the economic equivalent of
any payment or delivery (whether the underlying obligation was absolute or
contingent and assuming the satisfaction of each applicable condition precedent
by the parties under Section 2(a)(i) in respect of such Terminated Transaction
or group of Terminated Transactions that would, but for the occurrence of the
relevant Early Termination Date, have
15
been required after that date. For this purpose, Unpaid Amounts in respect of
the Terminated Transaction or group of Terminated Transactions are to be
excluded but, without limitation, any payment or delivery that would, but for
the relevant Early Termination Date, have been required (assuming satisfaction
of each applicable condition precedent after that Early Termination Date is to
be included. The Replacement Transaction would be subject to such documentation
as such party and the Reference Market-maker may, in good faith, agree. The
party making the determination (or its agent) will request each Reference
Market-maker to provide its quotation to the extent reasonably practicable as of
the same day and time (without regard to different time zones) on or as soon as
reasonably practicable after the relevant Early Termination Date. The day and
time as of which those quotations are to be obtained will be selected in good
faith by the party obliged to make a determination under Section 6(e), and, if
each party is so obliged, after consultation with the other. If more than three
quotations are provided, the Market Quotation will be the arithmetic mean of the
quotations, without regard to the quotations having the highest and lowest
values. If exactly three such quotations are provided, the Market Quotation will
be the quotation remaining after disregarding the highest and lowest quotations.
For this purpose, if more than one quotation has the same highest value or
lowest value, then one of such quotations shall be disregarded. If fewer than
three quotations are provided, it will be deemed that the Market Quotation in
respect of such Terminated Transaction or group of Terminated Transactions
cannot be determined.
"Non-default Rate" means a rate per annum equal to the cost (without proof or
evidence of any actual cost) to the Non-defaulting Party (as certified by it) if
it were to fund the relevant amount.
"Non-defaulting Party" has the meaning specified in Section 6(a).
"Office" means a branch or office of a party, which may be such party's head or
home office.
"Potential Event of Default" means any event which, with the giving of notice or
the lapse of time or both, would constitute an Event of Default.
"Reference Market-makers" means four leading dealers in the relevant market
selected by the party determining a Market Quotation in good faith (a) from
among dealers of the highest credit standing which satisfy all the criteria that
such party applies generally at the time in deciding whether to offer or to make
an extension of credit and (b) to the extent practicable, from among such
dealers having an office in the same city.
"Relevant Jurisdiction" means, with respect to a party, the jurisdictions (a) in
which the party is incorporated, organised, managed and controlled or considered
to have its seat, (b) where an Office through which the party is acting for
purposes of this Agreement is located, (c) in which the party executes this
Agreement and (d) in relation to any payment, from or through which such payment
is made.
"Scheduled Payment Date" means a date on which a payment or delivery is to be
made under Section 2(a)(i) with respect to a Transaction.
"Set-off" means set-off, offset, combination of accounts, right of retention or
withholding or similar right or requirement to which the payer of an amount
under Section 6 is entitled or subject (whether arising under this Agreement,
another contract, applicable law or otherwise) that is exercised by, or imposed
on, such payer.
"Settlement Amount" means, with respect to a party and any Early Termination
Date, the sum of:-
(a) the Termination Currency Equivalent of the Market Quotations (whether
positive or negative) for each Terminated Transaction or group of Terminated
Transactions for which a Market Quotation is determined; and
(b) such party's Loss (whether positive or negative and without reference to any
Unpaid Amounts) for each Terminated Transaction or group of Terminated
Transactions for which a Market Quotation cannot be determined or would not (in
the reasonable belief of the party making the determination) produce a
commercially reasonable result.
"Specified Entity" has the meaning specified in the Schedule.
16
"Specified Indebtedness" means, subject to the Schedule, any obligation (whether
present or future, contingent or otherwise, as principal or surety or otherwise)
in respect of borrowed money.
"Specified Transaction" means, subject to the Schedule, (a) any transaction
(including an agreement with, respect thereto) now existing or hereafter entered
into between one party to this Agreement (or any Credit Support Provider of such
party or any applicable Specified Entity of such party) and the other party to
this Agreement (or any Credit Support Provider of such other party or any
applicable Specified Entity of such other party) which is a rate swap
transaction, basis swap, forward rate transaction, commodity swap, commodity
option, equity or equity index swap, equity or equity index option, bond option,
interest rate option, foreign exchange transaction, cap transaction, floor
transaction, collar transaction, currency swap transaction, cross-currency rate
swap transaction, currency option or any other similar transaction (including
any option with respect to any of these transactions), (b) any combination of
these transactions and (c) any other transaction identified as a Specified
Transaction in this Agreement or the relevant confirmation.
"Stamp Tax" means any stamp, registration, documentation or similar tax.
"Tax" means any present or future tax, levy, impost, duty, charge, assessment or
fee of any nature (including interest, penalties and additions thereto) that is
imposed by any government or other taxing authority in respect of any payment
under this Agreement other than a stamp, registration, documentation or similar
tax.
"Tax Event" has the meaning specified in Section 5(b).
"Tax Event Upon Merger" has the meaning specified in Section 5(b).
"Terminated Transactions" means with respect to any Early Termination Date (a)
if resulting from a Termination Event, all Affected Transactions and (b) if
resulting from an Event of Default, all Transactions (in either case) in effect
immediately before the effectiveness of the notice designating that Early
Termination Date (or, if "Automatic Early Termination" applies, immediately
before that Early Termination Date).
"Termination Currency" has the meaning specified in the Schedule.
"Termination Currency Equivalent" means, in respect of any amount denominated in
the Termination Currency, such Termination Currency amount and, in respect of
any amount denominated in a currency other than the Termination Currency (the
"Other Currency"), the amount in the Termination Currency determined by the
party making the relevant determination as being required to purchase such
amount of such Other Currency as at the relevant Early Termination Date, or, if
the relevant Market Quotation or Loss (as the case may be), is determined as of
a later date, that later date, with the Termination Currency at the rate equal
to the spot exchange rate of the foreign exchange agent (selected as provided
below) for the purchase of such Other Currency with the Termination Currency at
or about 11:00 a.m. (in the city in which such foreign exchange agent is
located) on such date as would be customary for the determination of such a rate
for the purchase of such Other Currency for value on the relevant Early
Termination Date or that later date. The foreign exchange agent will, if only
one party is obliged to make a determination under Section 6(e), be selected in
good faith by that party and otherwise will be agreed by the parties.
"Termination Event" means an Illegality, a Tax Event or a Tax Event Upon Merger
or, if specified to be applicable, a Credit Event Upon Merger or an Additional
Termination Event.
"Termination Rate" means a rate per annum equal to the arithmetic mean of the
cost (without proof or evidence of any actual cost) to each party (as certified
by such party) if it were to fund or of funding such amounts.
"Unpaid Amounts" owing to any party means, with respect to an Early Termination
Date, the aggregate of (a) in respect of all Terminated Transactions, the
amounts that became payable (or that would have become payable but for Section
2(a)(iii)) to such party under Section 2(a)(i) on or prior to such Early
Termination Date and which remain unpaid as at such Early Termination Date and
(b) in respect of each Terminated Transaction, for each obligation under Section
2(a)(i) which was (or would have been but for Section 2(a)(iii)) required to be
settled by delivery to such party on or prior to such Early Termination Date and
which has not been so settled as at such Early Termination Date, an amount equal
to the fair market
17
value of that which was (or would have been) required to be delivered as of the
originally scheduled date for delivery, in each case together with (to the
extent permitted under applicable law) interest, in the currency of such
amounts, from (and including) the date such amounts or obligations were or would
have been required to have been paid or performed to (but excluding) such Early
Termination Date, at the Applicable Rate. Such, amounts of interest will be
calculated on the basis of daily compounding and the actual number of days
elapsed. The fair market value of any obligation referred to in clause (b) above
shall be reasonably determined by the party obliged to make the determination
under Section 6(e) or, if each party is so obliged, it shall be the average of
the Termination Currency Equivalents of the fair market values reasonably
determined by both parties.
IN WITNESS WHEREOF the parties have executed this document on the respective
dates specified below with effect from the date specified on the first page of
this document.
NATIONAL BANK OF GREECE S.A. SHIP POWER MARINE S.A.
By: By:
---------------------------------- -----------------------------------
Name: Name:
Title: Title:
▇▇▇▇: Date:
BY:
----------------------------------
Name:
Title:
Date:
18
1
ISDA
INTERNATIONAL SWAP DEALERS ASSOCIATION INC.
SCHEDULE
TO THE MASTER AGREEMENT
dated as of 30 November 2004
between NATIONAL BANK OF GREECE S.A. (Party A")
and SHIP POWER MARINE S.A. (Party B")
PART 1. TERMINATION PROVISIONS
(a) "SPECIFIED ENTITY" means in relation to Party A for the purpose of: -
Section 5(a)(v) None
Section 5(a)(vi) None
Section 5(a)(vii) None
Section 5(b)(iv) None
and in relation to Party B for the purpose of:-
Section 5(a)(v) JET MARITIME CORP., FIGARO SHIPPING LTD, MAGIC STAR SHIPPING
CO. LTD, ▇▇▇▇ SHIPPING LTD, VAGUE SHIPPING LTD, ZOOM SHIPPING LTD, OCEAN VILLAGE
MARITIME S.A. and CAPITAL SHIP MANAGEMENT CORP.
Section 5(a)(vi) JET MARITIME CORP., FIGARO SHIPPING LTD, MAGIC STAR SHIPPING
CO. LTD, ▇▇▇▇ SHIPPING LTD, VAGUE SHIPPING LTD, ZOOM SHIPPING LTD, OCEAN VILLAGE
MARITIME S.A. and CAPITAL SHIP MANAGEMENT CORP.
Section 5(a)(vii) JET MARITIME CORP., FIGARO SHIPPING LTD, MAGIC STAR SHIPPING
CO. LTD, ▇▇▇▇ SHIPPING LTD, VAGUE SHIPPING LTD, ZOOM SHIPPING LTD, OCEAN VILLAGE
MARITIME S.A. and CAPITAL SHIP MANAGEMENT CORP.
Section 5(b)(iv) JET MARITIME CORP., FIGARO SHIPPING LTD, MAGIC STAR SHIPPING
CO. LTD, ▇▇▇▇ SHIPPING LTD, VAGUE SHIPPING LTD, ZOOM SHIPPING LTD, OCEAN VILLAGE
MARITIME S.A. and CAPITAL SHIP MANAGEMENT CORP.
2
SPECIFIED TRANSACTION" will have the meaning specified in Section 14 of this
Agreement
(b) The "CROSS DEFAULT" provisions of Section 5(a)(vi)
will not apply to Party A
will apply to Party B
"SPECIFIED INDEBTEDNESS" will have the meaning specified in Section 14 of this
Agreement
"THRESHOLD AMOUNT" means with respect to Party B
USD 500.000
(d) The "CREDIT EVENT UPON MERGER" provisions of Section 5(b)(iv)
will not apply to Party A
will apply to Party B
(e) The "AUTOMATIC EARLY TERMINATION" provision of Section 6(a)
will not apply to Party A
will apply to Party B
(f) PAYMENTS ON EARLY TERMINATION". For the purpose of Section 6(e) of
this Agreement:-
(i) Loss will apply
(ii) the First Method will apply
(g) "TERMINATION CURRENCY" means the currency selected by the party which
is not the Defaulting Party or the Affected Party, or otherwise, United States
Dollars
(h) "ADDITIONAL TERMINATION EVENT"
will not apply
PART2. TAX REPRESENTATIONS
(a) PAYER REPRESENTATIONS. For the purpose of Section 3(e) of this Agreement,
Party A will make the following representation and Party B will make the
following representation:
It is not required by any applicable law, as modified by the practice of any
relevant governmental revenue authority, of any Relevant Jurisdiction to make
any deduction or withholding for or on account of any Tax from any payment
(other than interest under Section 2(e), 6(d)(ii) or 6(e) of this Agreement). In
making this representation, it may rely on (i) the accuracy of any
representations made by the other party pursuant to Section 3(f) of this
Agreement, (ii) the satisfaction of the agreement
3
contained in Section 4(a)(i) or 4(a)(iii) of this Agreement and the accuracy
and effectiveness of any document provided by the other party pursuant to
Section 4(a)(i) or 4(a)(iii) of this Agreement and (iii) the satisfaction of
the agreement of the other party contained in Section 4(d) of this Agreement,
provided that it shall not be a breach of this representation where reliance is
placed on clause (ii) and the other party does not deliver a form or document
under Section 4(a)(iii) by reason of material prejudice to its legal or
commercial position.
(b) PAYEE REPRESENTATION. For the purpose of Section 3(f) of this Agreement,
Party A and Party B each make the following representation with respect to
each Transaction in which the relevant Offices are located in different
jurisdictions:
It is fully eligible for the benefits of the "Business Profits" or "Industrial
and Commercial Profits" provision, as the case may be, the "interest" provision
or the "Other Income" provision (if any) of the Specified Treaty with respect to
any payment described in such provisions and received or to be received by it in
connection with this Agreement and no such payment is attributable to a trade or
business carried on by it through a permanent establishment in the Specified
Jurisdiction.
If such representation applies, then.-
"Specified Treaty" means, with respect to a Transaction, the tax treaty
applicable between the country in Which the Office of the payer under such
Transaction is located and the country in which the payee under the Transaction
is domiciled; and
"Specified Jurisdictions" means with respect to a Transaction, the country in
which the Office of the payer under such Transaction is located.
PART 3. AGREEMENT TO DELIVER DOCUMENTS.
For the purpose of Sections 4(a)(i) and (ii) of this Agreement, each party
agrees to deliver the following documents as applicable; -
(A) TAX FORMS, DOCUMENTS OR CERTIFICATES TO BE DELIVERED ARE; -
PARTY REQUIRED TO FORM/DOCUMENT/ DATE BY WHICH Covered by Section
DELIVERDOCUMENT CERTIFICATE TO BE DELIVERED 3d Repr.
------------------- ----------------- -----------------
Party A and Party B Evidence of On or prior to
authority and execution of Yes
specimen this Agreement
signature
of each person
executing on its
behalf
Party B A copy of the On request, as Yes
annual soon as publicly
Report containing available
audited Financial
statements for
the most Recently
ended financial
year
(b) Other documents to be delivered are:
Party B Credit Support Upon execution Yes
Documents of this Agreement
Legal opinion for
the legality,
good standing and
due authorisation
4
PART 4. MISCELLANEOUS
(a) Addresses for Notices. For the purpose of Section 12(a) of this Agreement:-
Address for notices or communications to Party A; -
i. Address: ▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇ ▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇
Attention: ▇▇. ▇. ▇▇▇▇▇▇▇▇ / ▇▇. ▇. ▇▇▇▇▇▇▇▇▇▇▇▇
Facsimile No. ▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ Telephone No: ▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇
ii. Address: 68, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ (▇▇▇ ▇▇▇▇▇), ▇▇▇ ▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇
Attention: Ms. ▇▇▇▇▇ Zarafeta, Head of Section
Facsimile No. ▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ Telephone No: ▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇
Telex No. 321444 Answerback: NBFXGR
Address for notices or communications to Party B: c/o CAPITAL SHIP
MANAGEMENT CORP.
Address: ▇ ▇▇▇▇▇▇▇▇ ▇▇▇., ▇▇▇▇▇▇▇ ▇▇▇ ▇▇, ▇▇▇▇▇▇
Attention: Mr. Syntychakis
Facsimile No. ▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ Telephone No.: ▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇
(b) "PROCESS AGENT" For the purpose of Section 13(c) of this Agreement
Party A appoints as Process Agent None
Party B appoints as Process Agent Curzon Maritime Ltd
Address: St. Clare House, ▇▇/▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇.
(c) OFFICES. The provisions of Section 10 (a) will not apply to this Agreement.
(d) MULTIBRANCH PARTY. For the purpose of Section 10(c) of this Agreement: _
Party A is not a Multibranch Party, Party B is not a Multibranch Party.
(e) CALCULATION AGENT-The Calculation Agent is Party A unless otherwise
specified in a Confirmation in relation to the relevant Transaction.
(f) CREDIT SUPPORT DOCUMENT. Party B shall deliver a) A' Preferred Mortgage on
the M/V "VICTORIA SPIRIT', b) A' Priority General Assignment of Vessel's
Earnings / Insurances.
CAPITAL SHIP MANAGEMENT CORP. shall deliver a corporate guarantee.
(g) CREDIT SUPPORT PROVIDER. In relation to Party B: a) SHIP POWER MARINE S.A.,
b) Corporate guarantor CAPITAL SHIP MANAGEMENT CORP., c) The holding company
that may be established.
(h) GOVERNING LAW. This Agreement will be governed by and construed in
accordance with Greek Law
(i) NETTING OF PAYMENTS Subparagraph {ii) of Section 2(c) of this Agreement will
not apply.
(j) "AFFILIATE" will have the meaning specified in Section 14 of this Agreement
PART 5.
OTHER PROVISIONS.
(a) Scope of the Agreement
Notwithstanding anything contained in this Master Agreement to the contrary, if
the parties enter into any of the following transactions (whether before or
after this Agreement is entered into); a rate swap transaction, basis swap,
forward rate transaction, commodity swap, commodity option, equity or equity
index swap, equity or equity index option, bond option interest rate option,
foreign exchange transaction cap transaction, floor transaction, collar
transaction, currency swap transaction, cross-currency rate swap transaction,
currency option or any other similar transaction (including any option with
respect to any of these transactions) and any combination of these transactions
or any transaction for which ISDA has issued additional definitions agreed upon
by both parties following the procedure mentioned in Part 5(b) of the present
Schedule, such transaction shall be subject to, governed by and construed in
accordance with the terms of this Agreement even when not so specified in the
confirmation relating thereto. Each such transaction shall be a Transaction for
the purposes of this Agreement.
(b) Definitions.
Unless otherwise specified in a Confirmation, this Agreement and each
Transaction between the parties are subject to the 2000 ISDA Definition as
published by the International Swap Dealers Association, Inc. (the
"Definitions") and will be governed in all relevant respects by the provisions
set forth in the 2000 Definitions as the may be officially amended or
supplemented from time to time by ISDA, provided, however, that other
definitions from time to time published by ISDA shall wholly or partly apply for
certain transactions if and to the extent agreed by the parties, without regard
to any amendment to the Definitions subsequent to the date hereof. The
provisions of the Definitions are incorporated by reference in and shall be
deemed a part of this Agreement, except that references in the Definitions to a
"Swap Transaction" shall be deemed references to a "Transaction" for purposes
of this Agreement. In the event of any inconsistency between the provisions of
this Agreement and the Definitions, this Agreement will prevail.
(b) Confirmations.
Each Confirmation shall be substantially in the form of one of the Exhibits to
the Definitions or in such other form as the parties may agree.
(c) Independent Reliance.
Except as provided in Section 3 of this Agreement, Party A and Party B each
represents to the other that it is entering into this Agreement and will enter
into each Transaction in reliance upon such tax, accounting, regulatory, legal
and financial advice as it deems necessary and not upon any view expressed by
the other.
(d) Change of Account.
Section 2(b) of this Agreement is hereby amended by the addition of the
following after the word "delivery" in the first line thereof:-
"to another account in the same legal and tax jurisdiction as the original
account"
25 ISDA(R) 1992
(d) Escrow Payments.
If (whether by reason of the time difference between the cities in which
payments are to be made or otherwise) it is not possible for simultaneous
payments to be made on any date on which both parties are required to make
payments hereunder, either party may at its option and in its sole discretion
notify the other party that payments on that date are to be made in escrow. In
this case deposit of the payment due earlier on that date shall be made by 2.00
pm (local time at the place for the earlier payment) on that date with an escrow
agent selected by the notifying party, accompanied by irrevocable payment
instructions (i) to release the deposited payment to the intended recipient upon
receipt by the escrow agent of the required deposit of the corresponding payment
from the other party on the same date accompanied by irrevocable payment
instructions to the same effect or (ii) if the required deposit of the
corresponding payment is not made on that same date, to return the payment
deposited to the party that paid it into escrow. The party that elects to have
payments made in escrow shall pay all costs of the escrow arrangements.
(f) Set-off.
Without affecting the provisions of this Agreement requiring the calculation of
certain net payment amounts, all payments under this Agreement will be made
without set-off or counterclaim: provided, however, that upon the designation of
any __________ ____________ ____________ ____________ __ ___ _______ of any
other right or remedy (including any right to set-off, counterclaim, or
otherwise withhold payment) under applicable law:
the Non-defaulting Party or the party that is not the Affected Party (in either
case, "X") may, without prior notice to any person, set off any sum or
obligation (whether or not arising under this Agreement, whether matured or
immatured and irrespective of the currency, place of payment or booking office
of the sum or obligation) owed by the Defaulting Party or Affected Party (in
either case, "Y") to X or to X any Affiliate of X, against any sum or obligation
(whether or not arising under this Agreement, whether matured or immatured and
irrespective of the currency, place of payment or booking office of the sum or
obligation) owed by X or any Affiliate of X to Y, and, for this purpose, may
convert one currency into another. If any sum or obligation is unascertained, X
may in good faith estimate that sum or obligation and set off in respect of that
estimate, subject to X or Y, as the case may be, accounting to the other party
when such sum or obligation is ascertained.
Nothing in this Agreement shall be effective or deemed to create any change
under the English law__
(g) NEGATIVE INTEREST RATES. Party A and Party B agree that:
(i) if, with respect to a Calculation Period for a Transaction, a party ("X") is
obligated to pay a Floating Amount that is a negative number (either by reason
of a negative Floating Rate or the subtraction of a Spread from the Floating
Rate), the Floating Amount with respect to X for that Calculation Period will be
deemed to be zero, and the other party ("Y") will pay to X the absolute value of
the negative Floating Amount, in addition to any amounts otherwise owed by Y to
X, on the Payment Date such Floating Amount would have been payable if it had
been a positive number. Any amounts paid by Y to X pursuant to this provision
will be paid to such account as X may designate (unless Y gives timely notice of
a reasonable objection to such designation) in the currency in which that
Floating Amount would have been paid if it had been a positive number (and
without regard to the currency in which Y is otherwise obligated to make
payments).
(ii) if, with respect to one or more Compounding Periods for a Transaction for
which "Compounding" or "Flat Compounding" is specified to be applicable, the
Compounding Period Amount, the Basic Compounding Period Amount or the Additional
Compounding Period Amount is a negative number (either by reason of a negative
Floating Rate or by the subtraction of a Spread from the Floating Rate), then
the Floating Amount for the Calculation Period in which that Compounding Period
or those Compounding Periods occur will be either the sum of all Compounding
Period
26 ISDA(R) 1992
Amounts, or the sum of all Basic Compounding Period Amounts and all Additional
Compounding Period Amounts in that Calculation Period (whether positive or
negative). If such sum is a negative number, subparagraph (i) of this provision
shall apply in respect of such Floating Amount.
(h) Events of Default
In addition to Section 5(a) of this Agreement the occurrence at any time
with respect to a party, and Credit Support Provider of such party, or, if
applicable, any Specified Entity of such party, of the following event
shall constitute an Event of Default.
There occurs a material adverse change in the assets or the financial
conditions of the party, the Credit Support Provider or the Specified
Entity which threatens or jeopardizes the ordinary fulfillment of the
obligations of the party under this Agreement or of the Credit Support
Provider under any Credit Support Document of the Specified Entity under
any other agreement.
27
8
National Bank of Greece S.A. SHIP POWER MARINE S.A
('Party A') ('Party B')
By: By:
--------------------- --------------------
Name: Name:
Title: Title:
By: By:
--------------------- --------------------
Name: Name:
Title: Title:
SIGNED by ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ) /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
for and on behalf of ) ---------------------------------------
SHIP POWER MARINE S.A. ) Attorney-in-Fact
SIGNED by ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ) /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
and by ▇▇▇▇▇▇ ▇▇▇▇▇ ) ---------------------------------------
for and on behalf of ) Authorised Signatory
NATIONAL BANK OF GREECE S.A. )
) /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
) ---------------------------------------
) Authorised Signatory
44
