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LOAN AGREEMENT PROVIDING FOR A
US$46,500,000
SECURED TERM LOAN FACILITY
TO BE MADE AVAILABLE TO
OMI CORPORATION
BY
CHRISTIANIA BANK OG KREDITKASSE ASA,
acting through its New York branch,
as Arranger and Administrative Agent,
DEN NORSKE BANK ASA,
acting through its New York branch,
as Arranger and Syndication Agent,
MEESPIERSON CAPITAL CORP.,
as Arranger and Security Agent,
and the Banks and Financial Institutions
identified on Schedule 1, as Lenders
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as of February 4, 2000
CONTENTS
PAGE
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1. DEFINITIONS..............................................................1
1.1 Specific Definitions...................................................1
1.2 Computations of Time Periods; Other Definitional Provisions...........18
1.3 Accounting Terms......................................................18
1.4 Certain Matter Regarding Materiality..................................18
1.5 Forms of Documents....................................................18
2. REPRESENTATIONS AND WARRANTIES..........................................18
2.1 Representations and Warranties........................................18
(a) Due Organization and Power......................................18
(b) Authorization and Consents......................................19
(c) Binding Obligations.............................................19
(d) No Violation....................................................19
(e) Litigation......................................................19
(f) No Default......................................................19
(g) Vessels.........................................................19
(h) Insurance.......................................................20
(i) Financial Information...........................................20
(j) Tax Returns.....................................................20
(k) ERISA...........................................................20
(l) Chief Executive Office..........................................20
(m) Foreign Trade Control Regulations...............................20
(n) Equity Ownership................................................21
(o) Environmental Matters and Claims................................21
(p) Compliance with ISM Code........................................22
(q) Threatened Withdrawal of DOC or SMC.............................22
(r) Approved Business Plan..........................................22
(s) Liens...........................................................22
(t) Indebtedness....................................................22
(u) Survival........................................................22
3. THE LOAN................................................................22
3.1 (a) Purpose...........................................................22
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(b) Making of the Loan..............................................22
3.2 Drawdown Notice.......................................................22
3.3 Effect of Drawdown Notice.............................................23
4. CONDITIONS..............................................................23
4.1 Conditions Precedent to Drawdown of the Loan..........................23
(a) Corporate Authority...............................................23
(b) The Vessels.......................................................24
(c) The Note..........................................................24
(d) Guarantor and Subordinated Guarantor Documents....................24
(e) Pledge Agreement..................................................25
(f) Coordination Agreement............................................25
(g) Vessel Appraisals.................................................25
(h) Guarantor and Subordinated Guarantor Solvency.....................25
(i) Environmental Claims..............................................25
(j) Fees..............................................................25
(k) Accounts..........................................................25
(l) Vessel Liens......................................................25
(m) Approved Business Plan............................................26
(n) Facility A........................................................26
(o) Charters; Pooling Agreements......................................26
(p) Legal Opinions....................................................26
4.2 Further Conditions Precedent..........................................26
4.3 Breakfunding Costs....................................................26
4.4 Satisfaction after Drawdown...........................................27
5. REPAYMENT AND PREPAYMENT................................................27
5.1 Repayment.............................................................27
5.2 Voluntary Prepayment; no re-borrowing.................................27
5.3 Mandatory Prepayment; Sale or Loss of Vessel..........................27
(a) First Vessel....................................................27
(b) Third Vessel....................................................27
5.4 Mandatory Prepayment; New Capital.....................................27
5.5 Demand Conversion.....................................................28
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5.6 Interest and Costs with Prepayments...................................28
6. INTEREST AND RATE.......................................................28
6.1 Applicable Rate.......................................................28
6.2 Default Rate..........................................................28
6.3 Interest Periods......................................................28
6.4 Interest Payments.....................................................28
7. PAYMENTS................................................................29
7.1 Place of Payments, No Set Off.........................................29
7.2 Tax Credits...........................................................29
7.3 Computations; Banking Days. (a)......................................29
8. EVENTS OF DEFAULT.......................................................29
8.1 Events of Default.....................................................29
(a) Non-Payment of Principal........................................29
(b) Non-Payment of Interest or Other Amounts........................29
(c) Representations.................................................30
(d) Mortgage........................................................30
(e) Covenants.......................................................30
(f) Indebtedness....................................................30
(g) Ownership of Guarantors and Subordinated Guarantors.............30
(h) Bankruptcy......................................................30
(i) Termination of Operations; Sale of Assets.......................31
(j) Judgments.......................................................31
(k) Inability to Pay Debts..........................................31
(l) Change in Financial Position....................................31
(m) Change in Control...............................................31
(n) ERISA Debt......................................................31
(o) Approved Business Plan..........................................31
(p) Cross-Default...................................................31
8.2 Indemnification.......................................................32
8.3 Application of Moneys.................................................32
(a) first,..........................................................32
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(b) secondly,.......................................................32
(c) thirdly,........................................................32
(d) fourthly,.......................................................32
(e) fifthly,........................................................32
9. COVENANTS...............................................................33
9.1 Affirmative Covenants.................................................33
(a) Performance of Agreements.......................................33
(b) Notice of Default, etc..........................................33
(c) Obtain Consents.................................................33
(d) Financial Information...........................................33
(e) Corporate Existence.............................................34
(f) Books and Records...............................................34
(g) Taxes and Assessments...........................................34
(h) Inspection......................................................34
(i) Compliance with Statutes, Agreements, etc.......................34
(j) Environmental Matters...........................................35
(k) ERISA...........................................................35
(l) Vessel Management...............................................35
(m) Funded Debt to Total Capitalization Ratio.......................35
(n) Cash............................................................36
(o) Consolidated Net Worth..........................................36
(p) EBITDA to Interest Expense......................................36
(q) Use of Excess Cash..............................................36
(r) Brokerage Commissions, etc......................................37
(s) Deposit Accounts; Assignment....................................37
(t) Future Guaranties...............................................37
(u) Future Pledge Agreements........................................37
(v) Insurance.......................................................37
9.2 Negative Covenants....................................................37
(a) Liens...........................................................37
(b) Change in Business..............................................38
(c) Sale or Pledge of Shares........................................38
(d) Sale of Assets..................................................38
(e) Changes in Offices or Names.....................................38
(f) Consolidation and Merger........................................39
(g) Chartering-in...................................................39
(h) Chartering-out..................................................39
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(i) Vessel Pooling..................................................39
(j) Distributions on Stock..........................................39
(k) Indebtedness....................................................39
(l) Investments.....................................................39
(m) Capital Expenditures............................................39
(n) Deposit Accounts................................................39
(o) Change Fiscal Year..............................................39
9.3 Subsidiary Negative Covenants.........................................39
(a) Limitations on Ability to Make Distributions....................39
(b) Use of Corporate Funds..........................................40
(c) Issuance of Shares..............................................40
9.4 First Vessel Valuations...............................................40
9.5 Asset Maintenance.....................................................40
9.6 Inspection and Survey Reports.........................................40
10. ASSIGNMENT..............................................................41
11. ILLEGALITY, INCREASED COST, NON-AVAILABILITY, ETC.......................41
11.1 Illegality............................................................41
11.2 Increased Costs.......................................................41
11.3 Nonavailability of Funds..............................................42
11.4 Lender's Certificate Conclusive.......................................42
11.5 Compensation for Losses...............................................42
12. CURRENCY INDEMNITY......................................................43
12.1 Currency Conversion...................................................43
12.2 Change in Exchange Rate...............................................43
12.3 Additional Debt Due...................................................43
12.4 Rate of Exchange......................................................43
13. FEES AND EXPENSES.......................................................43
13.1 Fees..................................................................43
13.2 Expenses..............................................................43
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14. APPLICABLE LAW, JURISDICTION AND WAIVER.................................44
14.1 Applicable Law........................................................44
14.2 Jurisdiction..........................................................44
14.3 WAIVER OF JURY TRIAL..................................................44
15. THE AGENTs..............................................................44
15.1 Appointment of Agents.................................................44
15.2 Security Agent as Trustee.............................................45
15.3 Distribution of Payments..............................................45
15.4 Holder of Interest in Note............................................45
15.5 No Duty to Examine, Etc...............................................45
15.6 Agents as Lenders.....................................................45
15.7 Acts of the Agents....................................................45
15.8 Certain Amendments....................................................46
15.9 Assumption re Event of Default........................................46
15.10 Limitations of Liability.............................................47
15.11 Indemnification of the Agents........................................47
15.12 Consultation with Counsel............................................47
15.13 Resignation..........................................................47
15.14 Representations of Lenders...........................................48
15.15 Notification of Event of Default.....................................48
16. NOTICES AND DEMANDS.....................................................48
16.1 Notices...............................................................48
17. MISCELLANEOUS...........................................................49
17.1 Time of Essence.......................................................49
17.2 Unenforceable, etc., Provisions - Effect..............................49
17.3 References............................................................49
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17.4 Further Assurances....................................................49
17.5 Prior Agreements, Merger..............................................49
17.6 Entire Agreement; Amendments..........................................49
17.7 Indemnification.......................................................49
17.8 Release of Designated Vessel Owner Guaranty...........................50
17.9 Headings..............................................................50
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SCHEDULE
1 The Lenders and the Commitments
2 OMI and Affiliates
3 The First Vessels
4 The Third Vessels
5 Planned Reduction Dates and Amounts
6 Disclosure
EXHIBITS
A Form of Note
B Form of Guaranty
C Form of Subordinated Guaranty
D Form of Pledge Agreement
E Form of First Mortgage
F Form of Third Mortgage
G Form of First Earnings Assignment
H Form of Third Earnings Assignment
I Form of First Insurances Assignment
J Form of Third Insurances Assignment
K Form of Assignment and Assumption Agreement
L Form of Compliance Certificate
M Form of Drawdown Notice
N Form of Interest Notice
LOAN AGREEMENT
THIS LOAN AGREEMENT is made as of the 4th day of February, 2000, by
and among (1) OMI CORPORATION, a corporation incorporated under the laws of the
Republic of the ▇▇▇▇▇▇▇▇ Islands (the "Borrower"), (2) the banks and financial
institutions listed on Schedule 1, as lenders (together with any bank or
financial institution which becomes a Lender pursuant to Article 10, the
"Lenders"), (3) CHRISTIANIA BANK OG KREDITKASSE ASA, acting through its New York
branch ("CBK"), as Administrative Agent for the Lenders (in such capacity, the
"Administrative Agent") and as arranger, (4) DEN NORSKE BANK ASA, acting through
its New York branch ("DnB"), as syndication agent for the Lenders (in such
capacity, the "Syndication Agent") and as arranger, and (5) MEESPIERSON CAPITAL
CORP. ("MeesPierson"), as arranger (in such capacity, together with CBK and DnB
as arrangers, the "Arrangers") and as security agent for the Lenders (in such
capacity, the "Security Agent" and, together with the Administrative Agent and
the Syndication Agent, the "Agents").
WITNESSETH THAT:
WHEREAS, at the request of the Borrower, the Arrangers have arranged
for the Agents to serve in their respective capacities under the terms of this
Agreement and for the Lenders to provide to the Borrower a secured term loan
facility in the amount of up to US$46,500,000;
NOW, THEREFORE, in consideration of the premises set forth above,
the covenants and agreements hereinafter set forth, and other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
parties hereto agree as set forth below:
1. DEFINITIONS
1.1 Specific Definitions. In this Agreement the words and expressions specified
below shall, except where the context otherwise requires, have the meanings
attributed to them below:
"Acceptable Accounting Firm" means Deloitte & Touche LLP, or such other
recognized international accounting firm as shall
be approved by the Administrative Agent, such
approval not to be unreasonably withheld;
"Affiliate" means with respect to any Person, any other
Person directly or indirectly controlled by or
under common control with such Person. For the
purposes of this definition, "control"
(including, with correlative meanings, the terms
"controlled by" and "under common control with")
as applied to any Person means the possession
directly or indirectly of the power to direct or
cause the direction of the management and
policies of that Person whether through ownership
of voting securities or by contract or otherwise;
for purposes of Section 8.1(f), "Affiliate" shall
also include each of Alliance Chartering LLC,
International Product Carriers Limited, Geraldton
Navigation Company Incorporated, Amazon
Transport, Inc. and ▇▇▇▇▇ Navigation Co. Pte.
Ltd. unless and until the Borrower's direct or
indirect interest in and to such company has
ceased;
"Agreement" means this Agreement, as the same shall be
amended, modified or supplemented from time to
time;
"Applicable Rate" means any rate of interest applicable to the Loan
from time to time pursuant to Section 6.1;
"Approved Business Plan" means a detailed business plan for reducing
leverage and increasing liquidity, in form and in
substance satisfactory to the Agents, specifying,
among other things, the Planned Reduction Dates
and Planned Reduction Amounts;
"Assigned Moneys" means sums assigned to or received by any Agent
pursuant to any Security Document;
"Assignment and Assumption means the Assignment and Assumption Agreement(s)
Agreement(s)" executed pursuant to Section 10 substantially in
the form set out in Exhibit K;
"Assignment Notices" means
(i) notices with respect to the First Earnings
Assignments substantially in the form of
Exhibit 1 thereto;
(ii) notices with respect to the Third Earnings
Assignments, substantially in the form of
Exhibit 1 thereto;
(iii) notices with respect to the First
Insurances Assignments substantially in
the form of Exhibit 3 thereto; and
(iv) notices with respect to the Third
Insurances Assignments in the form of
Exhibit 3 thereto;
"Assignments" means the First Assignments and the Third
Assignments;
"Availability Period" means the period commencing the date hereof and
ending February 29, 2000;
"Banking Day(s)" means day(s) on which banks are open for the
transaction of business in ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ and New York, New York;
"Capital Expenditures" means all capital expenditures except for (i)
normal maintenance of Vessels and other
properties and (ii) Permitted Drydocking Costs;
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"Cash Equivalents" means (i) securities issued or directly and fully
guaranteed or insured by the United States of
America or any agency or instrumentality thereof
(provided that the full faith and credit of the
United States of America is pledged in support
thereof), and (ii) time deposits, certificates of
deposit or deposits in the interbank market of
any commercial bank of recognized standing
organized under the laws of the United States of
America, any state thereof or any foreign
jurisdiction having capital and surplus in excess
of $500,000,000, and rated at least A or the
equivalent thereof by Standard & Poor's Rating
Services in respect of both (i) and (ii) above,
in each case having maturities of not more than
ninety (90) days from the date of acquisition;
"Change of Control" means (a) any "person" (as such term is used in
Sections 13(d) and 14(d) of the Exchange Act)
becomes the beneficial owner (as defined in Rules
13d-3 and 13d-5 under the Exchange Act), directly
or indirectly, of more than 35% of the total
voting power of the Borrower or (b) the Board of
Directors of the Borrower ceases to consist of a
majority of the directors existing on the
Drawdown Date or directors nominated by at least
two-thirds (2/3) of the then existing directors;
"Classification Society" shall mean a member of the International
Association of Classification Societies with whom
the Vessels are entered and who conducted
periodic physical surveys and/or inspections of
the Vessels;
"Code" means the Internal Revenue Code of 1986, as
amended, and any successor statute and regulation
promulgated thereunder;
"Collateral" means, all property or other assets, real or
personal, tangible or intangible, whether now
owned or hereafter acquired in which any Agent or
Lender has been granted a security interest
pursuant to a Security Document;
"Columbia Lease" means that certain charter agreement dated as of
June 30, 1999 made by and between Sea Trade
Limited, as owner, and Columbia Shipping, as
charterer, in respect of the ▇▇▇▇▇▇▇▇
Islands-registered suezmax tanker COLUMBIA,
official number 1272;
"Columbia Shipping" means Columbia Shipping LLC, a limited liability
company organized under the laws of the Republic
of the ▇▇▇▇▇▇▇▇ Islands;
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"Commitment(s)" means in relation to a Lender, the portion of the
Loan set out opposite its name in Schedule 1 or,
as the case may be, in any relevant Assignment
and Assumption Agreement;
"Compliance Certificate" means a certificate certifying the compliance by
the Borrower with all of its covenants contained
herein and showing the calculations thereof in
reasonable detail, delivered by the chief
financial officer of the Borrower to the
Administrative Agent from time to time pursuant
to Section 9.1(d) in the form set out in Exhibit
L, or in such other form as the Administrative
Agent may agree;
"Consolidated Net Worth" means, at any time, shareholders equity
(excluding treasury stock) of the Borrower on a
consolidated basis determined in accordance with
GAAP;
"Default Rate" shall have the meaning ascribed thereto in
Section 6.2;
"Designated Indebtedness" means Indebtedness that is
(i) incurred by the Designated Vessel Owner to
finance the Designated Vessel Acquisition,
(ii) non-recourse to the Borrower and the
Borrower's Subsidiaries (other than the
Designated Vessel Owner),
and
(iii) in an amount not exceeding $30.0 million;
"Designated Subsidiary" means (i) during the term of the Columbia Lease,
Columbia Shipping, (ii) while the Designated
Indebtedness is outstanding, the Designated
Vessel Owner, and (iii) any Subsidiary of the
Borrower (A) which is not a Guarantor or a
Subordinated Guarantor, (B) which has total
assets of $1,000 or less, (C) which is not
engaged in any financing that is recourse to the
Borrower or any other Subsidiary of the
Borrower, (D) in respect of which the Borrower
has requested that the Administrative Agent
permit such Subsidiary's designation as a
Designated Subsidiary, and (E) in respect of
which the Administrative Agent had consented in
writing to such designation;
"Designated Vessel" means the MEGA I or the SOYANG, whichever thereof
is designated by the Borrower by written notice
to the
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Administrative Agent as the vessel to be financed
on a non-recourse basis in accordance with the
terms and conditions herein provided;
"Designated Vessel means the acquisition of the Designated Vessel by
Acquisition" the Designated Vessel Owner, occurring not later
than June 30, 2000, or such other date as may be
agreed by the Administrative Agent;
"Designated Vessel means, upon or prior to the Designated Vessel
Conditions" Acquisition,
(i) the Borrower having received not less than
$18.0 million net cash proceeds from the
issuance of equity securities of the
Borrower after the Drawdown Date;
(ii) in the event the Designated Vessel is the
SOYANG, the Borrower (and its Subsidiaries
on a consolidated basis) not having
contributed more than the amount of the
SOYANG Investment to the Designated Vessel
Acquisition;
(iii) the Borrower (and its Subsidiaries on a
consolidated basis) not having incurred any
Indebtedness other than the Designated
Vessel Indebtedness to finance the
Designated Vessel Acquisition;
(iv) the Designated Vessel being accepted for
service under a time charter of not less
than twelve (12) months duration at a rate
of hire sufficient to pay reasonably
anticipated operating expenses and to
amortize (on a level-debt service basis),
on a maximum 15-years profile, all
Indebtedness incurred to finance the
Designated Vessel Acquisition for the
duration of such time charter;
(v) true and complete copies of all contracts,
agreements or other documents entered into
by the Borrower or any Subsidiary in
connection with the Designated Vessel
Acquisition being delivered to and approved
by the Administrative Agent;
(vi) not later than ten (10) Banking Days prior
to the date of the Designated Vessel
Acquisition, the Borrower having delivered
to the Administration Agent a Compliance
Certificate as of such date and after
considering the effect of the Designated
Vessel Acquisition; and
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(vii) immediately prior to the Designated Vessel
Acquisition, the Designated Vessel owner
has total assets of less that $500,000 and
has no Subsidiaries;
"Designated Vessel Owner" means the Subsidiary which is the owner of the
Designated Vessel;
"DOC" means a document of compliance issued to an
Operator in accordance with rule 13 of the ISM
Code;
"Dollars" and the sign "$" means the legal currency, at any relevant time
hereunder, of the United States of America and,
in relation to all payments hereunder, in same
day funds settled through the New York Clearing
House Interbank Payments System (or such other
Dollar funds as may be determined by the
Administrative Agent to be customary for the
settlement in New York City of banking
transactions of the type herein involved);
"Drawdown Date" means the date, being a Banking Day during the
Availability Period, upon which the Borrower has
requested that the Loan be made available to the
Borrower, and the Loan is made, as provided in
Section 3;
"Drawdown Notice" shall have the meaning ascribed thereto in
Section 3.2;
"EBITDA" means, with respect to any Person for any period,
operating income, plus depreciation, amortization
and other non-cash charges, but excluding any
gains or losses on vessel sales, any writedown
amounts, or any impairment reserves;
"Environmental Affiliate" means any person or entity, the liability of
which for Environmental Claims any Security Party
or Subsidiary of any Security Party may have
assumed by contract or operation of law;
"Environmental Approvals" shall have the meaning ascribed thereto in
Section 2.1(o);
"Environmental Claim(s)" shall have the meaning ascribed thereto in
Section 2.1(o);
"Environmental Laws" shall have the meaning ascribed thereto in
Section 2.1(o);
"ERISA" means the Employment Retirement Income Security
Act of 1974, as amended;
"ERISA Affiliate" means a trade or business (whether or not
incorporated) which is under common control with
the Borrower within the meaning of Sections
414(b), (c), (m) or (o) of the Code;
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"Event(s) of Default" means any of the events set out in Section 8.1;
"Exchange Act" shall mean the Securities and Exchange Act of
1934, as amended;
"Facility A" means the loan facility in the principal
amount of up to $218,000,000 to be made available
to the Borrower pursuant to the Facility A Loan
Agreement;
"Facility A means CBK, in its capacity as administrative
Administrative Agent" agent for the Facility A Lenders;
"Facility A Agents" means the Facility A Administrative Agent, the
Facility A Syndication Agent and the Facility A
Security Agent;
"Facility A Guaranty" means the guaranty made by each of the guarantors
of the obligations of the Borrower under the
Facility A Loan Agreement;
"Facility A Lenders" means the banks and financial institutions
identified in Schedule 1 to the Facility A Loan
Agreement, each in its capacity as a lender
pursuant to the Facility A Loan Agreement;
"Facility A Loan Agreement" means the loan agreement to be dated on or about
the date hereof made by and among, inter alios,
the Borrower, as borrower, and the Facility A
Lenders, as lenders, pursuant to which the
Facility A Lenders will make Facility A available
to the Borrower for the purpose of refinancing
existing indebtedness secured by the Third
Vessels;
"Facility A Mortgages" means the first preferred Liberian and/or
▇▇▇▇▇▇▇▇ Islands ship mortgages on the Third
Vessels, to be executed by the relevant
Subordinated Guarantor in favor of the Facility A
Security Agent pursuant to the Facility A Loan
Agreement;
"Facility A Pledge Agreement" means any pledge agreement executed by the
Borrower in favor of the Facility A Security
Agent pursuant to the Facility A Loan Agreement
and pursuant to which the Borrower pledges
shares, limited liability company interests or
other equity interests in any Guarantor or
Subordinated Guarantor;
"Facility A Security Agent" means MeesPierson, in its capacity as security
agent for the Facility A Lenders;
"Facility A Security means the Security Documents as defined in the
Documents" Facility A Loan Agreement;
7
"Facility A Syndication Agent" means DnB, in its capacity as syndication agent
for the Facility A Lenders;
"Facility C" means the convertible letter of credit facility
in the principal amount of $36,00,000 to be made
available to the Borrower pursuant to the
Facility C Agreement;
"Facility C Administrative means CBK, in its capacity as administrative
Agent" agent for the Facility C Banks;
"Facility C Agents" means the Facility C Administrative Agent, the
Facility C Security Agent and the Facility C
Syndication Agent;
"Facility C Agreement" means the facility agreement to be dated on or
about the date hereof made by and among, inter
alia, the Borrower and the Facility C Banks,
pursuant to which the Facility C Banks will make
Facility C available to the Borrower for the
purpose of issuing a standby letter of credit in
favor of the Facility A Security Agent;
"Facility C Banks" means the banks and other financial institutions
identified on Schedule 1 to the Facility C
Agreement;
"Facility C Security Agent" means MeesPierson, in its capacity as security
agent for the Facility C Banks;
"Facility C Security means the Security Documents as defined in the
Documents" Facility C Agreement;
"Facility C Syndication Agent" means DnB, in its capacity as syndication agent
for the Facility C Banks;
"Fair Market Value" means, in respect of any vessel, means the
average of three charter-free appraisals of such
vessel from independent ship brokers approved by
the Administrative Agent, no such appraisal to be
dated more than thirty (30) days prior to the
date on which such appraisal is required pursuant
to this Agreement unless the Administrative Agent
consents in writing (on each occasion) to the use
of an older appraisal;
"Fee Letter" means the letter dated November 15, 1999 and
entered into by the Borrower, the Arrangers and
the Agents in respect of the fees referred to
therein;
"Final Payment Date" means the date that is two years after the
Drawdown Date, provided, however, that if the
Loan is converted to a
8
demand loan pursuant to Section 5.5, then the
Final Payment Date shall be such date as the
Administrative Agent demands repayment of the
Loan;
"First Assignments" means the First Earnings Assignments and the
First Insurances Assignments;
"First Earnings Assignments" means the first priority assignments in respect
of the earnings of each First Vessel (other than
the SETTEBELLO) from any and all sources, to be
executed in favor of the Security Agent pursuant
to Section 4.1(d), substantially in the form of
Exhibit G;
"First Insurances Assignments" means the first priority assignments in respect
of the insurances over the First Vessels (other
than the SETTEBELLO), to be executed by the
relevant Guarantor in favor of the Security Agent
pursuant to Section 4.1(d), substantially in the
form of Exhibit I;
"First Mortgages" means the first preferred Liberian ship mortgages
on the First Vessels, to be executed by the
relevant Guarantor in favor of the Security Agent
(as trustee for the Lenders), substantially in
the form of Exhibit E;
"First Vessels" means the vessels listed in Schedule 3,
registered in the ownership of the relevant
Guarantor as set forth in Schedule 3;
"Funded Debt" shall mean on a consolidated basis for the
Borrower (without duplication), the sum of (i)
all Indebtedness of the Borrower (on a
consolidated basis), (ii) all obligations to pay
a specific purchase price for goods or services
whether or not delivered or accepted, i.e.,
take-or-pay and similar obligations which in
accordance with GAAP would be shown on the
liability side of the balance sheet, (iii) all
net obligations under Interest Rate Agreements,
and (iv) all guarantees of non-consolidated
entity obligations; provided, however, that
balance sheet accruals for future drydock
expenses shall not be classified as Funded Debt;
"GAAP" shall have the meaning ascribed thereto in
Section 1.3;
"Guarantor(s)" means, as of the date of this Agreement, each of
the companies listed in Schedule 2 as Guarantors
(including the SETTEBELLO Guarantor) and
thereafter shall also mean such companies as may
execute a Guaranty pursuant to Section 9.1(t) or
otherwise;
9
"Guaranty(ies)" means the guaranty to be executed by each
Guarantor in respect of the obligations of the
Borrower under and in connection with this
Agreement and the Note in favor of the Security
Agent pursuant to Section 4.l(d), and any
guaranty executed thereafter pursuant to Section
9.1(t) or otherwise, each substantially in the
form of Exhibit B;
"Indebtedness" means, with respect to any Person at any date of
determination (without duplication), (i) all
indebtedness of such Person for borrowed money,
(ii) all obligations of such Person evidenced by
bonds, debentures, notes or other similar
instruments, (iii) all obligations of such Person
in respect of letters of credit or other similar
instruments (including reimbursement obligations
with respect thereto), (iv) all obligations of
such Person to pay the deferred and unpaid
purchase price of property or services, which
purchase price is due more than six months after
the date of placing such property in service or
taking delivery thereof or the completion of such
services, except trade payables, (v) all
obligations on account of principal of such
Person as lessee under capitalized leases, (vi)
all indebtedness of other Persons secured by a
lien on any asset of such Person, whether or not
such indebtedness is assumed by such Person;
provided that the amount of such indebtedness
shall be the lesser of (a) the fair market value
of such asset at such date of determination and
(b) the amount of such indebtedness, and (vii)
all indebtedness of other Persons guaranteed by
such Person to the extent guaranteed; the amount
of Indebtedness of any Person at any date shall
be the outstanding balance at such date of all
unconditional obligations as described above and,
with respect to contingent obligations, the
maximum liability upon the occurrence of the
contingency giving rise to the obligation,
provided that the amount outstanding at any time
of any indebtedness issued with original issue
discount is the face amount of such indebtedness
less the remaining unamortized portion of the
original issue discount of such indebtedness at
such time as determined in conformity with GAAP;
and provided further that Indebtedness shall not
include any liability for current or deferred
federal, state, local or other taxes, or any
trade payables;
"Initial Payment Date" means the date which is six months after the
Drawdown Date;
"Intercreditor Agreement" means the intercreditor agreement dated on or
about the date hereof entered into by and among
the Agents, the
10
Facility A Agents and the Facility C Agents;
"Interest Expense" means for any period, all interest charges,
including the interest component of capitalized
leases;
"Interest Notice" means a notice from the Borrower to the
Administrative Agent specifying the duration of
any relevant Interest Period, each substantially
in the form of Exhibit N;
"Interest Period(s)" means period(s) of one, three or six months
selected by the Borrower or, in the Lenders'
discretion, such other period(s) as may be
agreed;
"Interest Rate Agreements" means any interest rate protection agreement,
interest rate future agreement, interest rate
option agreement, interest rate swap agreement,
interest rate cap agreement, interest rate collar
agreement, interest rate hedge agreement or other
similar agreement or arrangement designed to
protect the Borrower or any of its Subsidiaries
against fluctuations in interest rates to or
under which the Borrower or any of its
Subsidiaries is a party or a beneficiary on the
date of this Agreement or becomes a party or a
beneficiary hereafter;
"Investment" means any direct or indirect advance, loan or
other extension of credit (including by way of
guarantee or similar arrangement) or capital
contribution to (by means of any transfer of cash
or other property to others or any payment for
property or services for the account or use of
others), or any purchase or acquisition of
capital stock (or other equity interest),
Indebtedness or other similar instruments;
"ISM Code" means the International Safety Management Code
for the Safe Operating of Ships and for Pollution
Prevention constituted pursuant to Resolution
A.741(18) of the International Maritime
Organization and incorporated into the Safety of
Life at Sea Convention and includes any
amendments or extensions thereto and any
regulation issued pursuant thereto;
"LIBOR" means the rate (rounded upward to the nearest
1/16th of one percent) for deposits of Dollars
for a period equivalent to the relevant Interest
Period at or about 11:00 a.m. (London time) on
the second London Banking Day before the first
day of such period as displayed on Telerate page
3750 (British Bankers' Association Interest
Settlement Rates) (or such other page as may
replace such page 3750 on such system or on any
other system of the
11
information vendor for the time being designated
by the British Bankers' Association to calculate
the BBA Interest Settlement Rate (as defined in
the British Bankers' Association's Recommended
Terms and Conditions ("BBAIRS" terms) dated
August 1985)), provided that if on such date no
such rate is so displayed for the relevant
Interest Period, LIBOR for such period shall be
the arithmetic mean (rounded upward if necessary
to four decimal places) of the rates respectively
quoted to the Administrative Agent by each of the
Reference Banks at the request of the
Administrative Agent as the offered rate for
deposits of Dollars in an amount approximately
equal to the amount in relation to which LIBOR is
to be determined for a period equivalent to the
relevant Interest Period to prime banks in the
London Interbank Market at or about 11:00 a.m.
(London time) on the second Banking Day before
the first day of such period;
"Loan" means the loan facility to be made available by
the Lenders to the Borrower pursuant to Section 3
in the original principal amount of up to
Forty-Six Million Five Hundred Thousand Dollars
(US$46,500,000), or the balance thereof from time
to time outstanding;
"Majority Lenders" at any time means Lenders holding an aggregate of
more then 50% of the Loan then outstanding;
"Margin" means
(i) until the first anniversary of the
Drawdown Date, three percent (3%) per
annum; and
(ii) thereafter, four percent (4%) per annum;
provided, however, that after the first Planned
Reduction Date, if and so long as (A) no Event of
Default has occurred and is continuing, (B) each
Planned Reduction Amount has been paid to the
Administrative Agent in full not later than the
relevant Planned Reduction Date, and (C) the
ratio of the Loan to the aggregate of the most
recently determined Fair Market Values of the
First Vessels is less than 0.65 to 1.0, the
Margin shall be one and three-quarter percent
(1.75%) per annum;
"Material Adverse Effect" means a material adverse effect on (I) the
ability of the Borrower to repay the Loan or
perform any of its obligations hereunder or under
the Note, (ii) the ability of any Security Party
to perform its obligations under any Security
Documents or (iii) the business, property,
assets,
12
liabilities, operations, condition (financial or
otherwise) or prospects of the Borrower and the
other Security Parties taken as a whole;
"Materials of Environmental shall have the meaning ascribed thereto in
Concern" Section 2.1(o);
"Mortgages" means the First Mortgages and the Third
Mortgages;
"Multiemployer Plan" means, at any time, a "multiemployer plan" as
defined in Section 4001(a)(3) of ERISA to which
the Borrower or any ERISA Affiliate is making or
accruing an obligation to make contributions or
has within any of the three preceding plan years
made or accrued an obligation to make
contributions;
"Multiple Employer Plan" means, at any time, an employee benefit plan,
other than a Multiemployer Plan, subject to Title
IV or ERISA, to which the Borrower or any ERISA
Affiliate, and one or more employers other than
the Borrower or an ERISA Affiliate, is making or
accruing an obligation to make contributions or,
in the event that any such plan has been
terminated, to which the Borrower or any ERISA
Affiliate made or accrued an obligation to make
contributions during any of the five plan years
preceding the date of termination of such plan;
"Note" means the promissory note to be executed by the
Borrower to the order of the Security Agent
pursuant to Section 4.1(c), to evidence the Loan,
substantially in the form of Exhibit A;
"Operator" means, in respect of any Vessel, the Person who
is concerned with the operation of such Vessel
and falls within the definition of "Company" set
out in rule 1.1.2 of the ISM Code;
"PBGC" means the Pension Benefit Guaranty Corporation;
"Permitted Drydocking Costs" means (i) in respect of any one Vessel, $2.0
million in any calendar year, and (ii) in respect
of all Vessels on an aggregated basis, $5.0
million in any calendar year, expended for
drydocking costs;
"Person" means any individual, sole proprietorship,
corporation, partnership (general or limited),
limited liability company, business trust, bank,
trust company, joint venture, association, joint
stock company, trust or other
13
unincorporated organization, whether or not a
legal entity, or any government or agency or
political subdivision thereof;
"Plan" means any employee benefit plan (other than a
Multiemployer Plan or a Multiple Employer Plan)
covered by Title IV of ERISA;
"Planned Reduction Amounts" means the Dollar amounts specified in the
Approved Business Plan to be applied in repayment
of the Loan by the Planned Reduction Dates, as
set forth in Schedule 5;
"Planned Reduction Dates" means the dates specified in the Approved
Business Plan by which the Planned Reduction
Amounts will be applied in repayment of the Loan,
as set forth in Schedule 5;
"Pledge Agreement(s)" means the pledge agreements in respect of the
Pledged Shares to be executed by the Borrower and
the SETTEBELLO Guarantor in favor of the Security
Agent pursuant to Section 4.1(e), and any pledge
agreement executed thereafter pursuant to Section
9.1(u), each substantially in the form of Exhibit
D;
"Pledged Shares" means the shares of capital stock, limited
liability company interests or other equity
interests of the Guarantors that own the Facility
B Vessels and the SETTEBELLO Pledged Shares,
owned by the Borrower (or, in respect of the
SETTEBELLO Pledged Shares, by the SETTEBELLO
Guarantor) and pledged to the Security Agent
pursuant to a Pledge Agreement;
"Prime Rate" means, from time to time, the rate of interest
publicly announced by the Administrative Agent in
New York City, New York, as its prime rate;
"Reference Banks" means Den norske Bank ASA, Christiania Bank og
Kreditkasse ASA and MeesPierson N.V.;
"Required Percentage" shall have the meaning set forth for such term in
Section 9.5;
"Restricted Payments" shall have the meaning attributed thereto in
Section 9.2(j);
14
"Security Documents" means the Pledge Agreement, the Guaranties, the
Subordinated Guaranties, the Mortgages, the
Assignments and any other documents that may be
executed as security for the Loan and the
Borrower's obligations in connection therewith;
"Security Party(ies)" means the Borrower, each of the Guarantors and
each of the Subordinated Guarantors;
"SETTEBELLO Guarantor" means Loire Shipping LLC, a limited liability
company organized under the laws of the Republic
of the ▇▇▇▇▇▇▇▇ Islands;
"SETTEBELLO Owner" means Amazon Transport, Inc., a corporation
organized under the laws of the Republic of
Liberia;
"SETTEBELLO Partner" means ▇▇▇▇▇▇▇▇ ▇.▇. ASA, a corporation organized
under the laws of the Kingdom of Norway;
"SETTEBELLO Partner Consent" means a written consent of the SETTEBELLO Partner
to the pledge by the SETTEBELLO Guarantor of its
shares in the SETTEBELLO Owner in favor of the
Security Agent, which consent may be conditioned
upon a purchase option for such shares in favor
of the SETTEBELLO Partner at a price to be
determined by the Administrative Agent based on
the Administrative Agent's assessment of the
value of such shares;
"SETTEBELLO Pledged Shares" means the shares of capital stock of the
SETTEBELLO Owner owned by the SETTEBELLO
Guarantor;
"SMC" means the safety management certificate issued in
respect of a Vessel in accordance with rule 13 of
the ISM code;
"SOYANG" means Daewoo Hull No. 5152, currently under
construction by Daewoo Heavy Industries Ltd.,
South Korea;
"SOYANG Investment" means the contribution by the Borrower (and its
Subsidiaries on a consolidated basis) of not more
than $10.0 million of cash or Cash Equivalents
(in addition to contributions made prior to the
date of this Agreement) to the acquisition of the
SOYANG, made no earlier than the date of
acquisition thereof or three (3) days prior
thereto as required by the construction contract
for the SOYANG;
15
"SOYANG Subsidiary" means Soyang Shipping LLC, a limited liability
company organized under the laws of the Republic
of the ▇▇▇▇▇▇▇▇ Islands;
"Subordinated Guarantor(s)" means, as of the date of this Agreement, each of
the companies listed in Schedule 2 as
Subordinated Guarantors and thereafter shall also
mean such companies as may execute a Subordinated
Guaranty pursuant to Section 9.1(t) or otherwise;
"Subordinated Guaranty" means the guaranty to be executed by each
Subordinated Guarantor in respect to the
obligations of the Borrower under and in
connection with this Agreement and the Note in
favor of the Security Agent pursuant of Section
4.1(d), and any subordinated guaranty executed
thereafter pursuant to Section 9.1(t) or
otherwise, each substantially in the form of
Exhibit C, the Security Agent's rights in respect
of each such guaranty being subordinated to the
rights of the Facility B Lenders pursuant to the
Intercreditor Agreement;
"Subsidiaries" means, with respect to any Person, any business
entity of which more than 50% of the outstanding
voting stock is owned directly or indirectly by
such Person and one or more other Subsidiaries of
such Person;
"Taxes" means any present or future income or other
taxes, levies, duties, charges, fees, deductions
or withholdings of any nature now or hereafter
imposed, levied, collected, withheld or assessed
by any taxing authority whatsoever, except for
taxes on or measured by the overall net income of
each Lender imposed by its jurisdiction of
incorporation or applicable lending office, the
United States of America, the State or City of
New York or any governmental subdivision or
taxing authority of any thereof or by any other
taxing authority having jurisdiction over such
Lender (unless such jurisdiction is asserted by
reason of the activities of the Borrower or any
of the Subsidiaries);
"Termination Event" means (i) a "reportable event," as defined in
Section 403 of ERISA (other than a "reportable
event" not subject to the provision for 30-day
notice to the PBGC), (ii) the withdrawal of the
Borrower or any ERISA Affiliate from a
Multiemployer Plan during a plan year in which it
was a "substantial employer," as defined in
Section 4001(a)(2) of ERISA, or the incurrence of
liability by the Borrower or any ERISA Affiliate
under Section 4064 of ERISA upon the termination
of a Multiple Employer Plan, (iii) the filing
16
of a notice of intent to terminate a Plan under
Section 4041of ERISA or the treatment of a
Multiemployer Plan amendment as a termination
under Section 4041A of ERISA, (iv) the
institution of proceedings to terminate a Plan or
a Multiemployer Plan, or (v) any other event or
condition which might constitute grounds under
Section 4042 of ERISA for the termination of, or
the appointment of a trustee to administer, any
Plan or Multiemployer Plan;
"Third Assignments" means the Third Earnings Assignments and the
Third Insurances Assignments;
"Third Earnings Assignments" means the third priority assignments in respect
of the earnings of each Third Vessel from any and
all sources, to be executed by the relevant
Subordinated Guarantor in favor of the Security
Agent pursuant to Section 4.1(d), substantially
in the form of Exhibit H;
"Third Insurances Assignments" means the third priority assignments in respect
of the insurances over the Third Vessels, to be
executed by the relevant Subordinated Guarantor
in favor of the Security Agent pursuant to
Section 4.1(d), substantially in the form of
Exhibit J;
"Third Mortgages" means the third preferred Liberian and/or
▇▇▇▇▇▇▇▇ Islands ship mortgages on the Third
Vessels, to be executed by the relevant
Subordinated Guarantor in favor of the Security
Agent (as trustee for the Lenders) substantially
in the form of Exhibit F;
"Third Vessels" means the vessels listed in Schedule 4,
registered in the ownership of the relevant
Subordinated Guarantor as set forth in Schedule
4;
"Total Capitalization" shall mean the sum of (i) Funded Debt, plus (ii)
Consolidated Net Worth;
"Total Loss" shall have the meaning ascribed thereto in the
Mortgages;
"Vessel(s)" means the First Vessels and the Third Vessels, or
any thereof, as the context may require;
"Withdrawal Liabilities" shall have the meaning given to such term under
Part 1 of Subtitle E of Title IV of ERISA;
17
1.2 Computations of Time Periods; Other Definitional Provisions. In this
Agreement, the Note and the other Security Documents, in the computation of
periods of time from a specified date to a later specified date, the word "from"
means "from and including" and the words "to" and "until" each mean "to but
excluding"; words importing either gender include the other gender; references
to "writing" include printing, typing, lithography and other means of
reproducing words in a tangible visible form; the words "including," "includes"
and "include" shall be deemed to be followed by the words "without limitation";
references to articles, sections (or subdivisions of sections), exhibits,
annexes or schedules are to this Agreement, the Note or such Security Document,
as applicable; references to agreements and other contractual instruments
(including this Agreement, the Note and the Security Documents) shall be deemed
to include all subsequent amendments, amendments and restatements, supplements,
extensions, replacements and other modifications to such instruments (without,
however, limiting any prohibition on any such amendments, extensions and other
modifications by the terms of this Agreement, the Note or any Security
Document); references to any matter that is "approved" or requires "approval" of
a party shall mean approval given in the sole and absolute discretion of such
party unless otherwise specified.
1.3 Accounting Terms. Unless otherwise specified herein, all accounting terms
used in this Agreement, the Note and in the Security Documents shall be
interpreted, and all financial statements and certificates and reports as to
financial matters required to be delivered to the Administrative Agent or to the
Lenders under this Agreement shall be prepared, in accordance with generally
accepted accounting principles for the United States ("GAAP").
1.4 Certain Matter Regarding Materiality. To the extent that any representation,
warranty, covenant or other undertaking of the Borrower in this Agreement is
qualified by reference to those which are not reasonably expected to result in a
"Material Adverse Effect" or language of similar import, no inference shall be
drawn therefrom that any Agent or Lender has knowledge or approves of any
noncompliance by the Borrower with any governmental rule.
1.5 Forms of Documents. Except as otherwise expressly provided in this
Agreement, references to documents or certificates "substantially in the form"
of Exhibits to another document shall mean that such documents or certificates
are duly completed in the form of the related Exhibits with substantive changes
subject to the provisions of Section 17.6 of this Agreement, as the case may be,
or the correlative provisions of the Security Documents.
2. REPRESENTATIONS AND WARRANTIES
2.1 Representations and Warranties. In order to induce the Arrangers, the Agents
and the Lenders to enter into this Agreement and to induce the Lenders to make
the Loan available, the Borrower hereby represents and warrants to the
Arrangers, the Agents and the Lenders (which representations and warranties
shall survive the execution and delivery of this Agreement and the Note and the
drawdown of the Loan hereunder) that:
(a) Due Organization and Power. each Subsidiary is duly formed and
is validly existing in good standing under the laws of its jurisdiction of
incorporation or formation, has full power to carry on its business as now being
conducted and to enter into and perform its obligations under this Agreement,
the Note and the Security Documents to which it is a party, and has complied
with all statutory, regulatory and other requirements relative to such business
and such agreements;
18
(b) Authorization and Consents. all necessary corporate action has
been taken to authorize, and all necessary consents and authorities have been
obtained and remain in full force and effect to permit, each Security Party to
enter into and perform its obligations under this Agreement, the Note and the
Security Documents and, in the case of the Borrower, to borrow, service and
repay the Loan and, as of the date of this Agreement, no further consents or
authorities are necessary for the service and repayment of the Loan or any part
thereof;
(c) Binding Obligations. this Agreement, the Note and the Security
Documents constitute or will, when executed and delivered, constitute the legal,
valid and binding obligations of each Security Party as is a party thereto
enforceable against such Security Party in accordance with their respective
terms, except to the extent that such enforcement may be limited by equitable
principles, principles of public policy or applicable bankruptcy, insolvency,
reorganization, moratorium or other laws affecting generally the enforcement of
creditors' rights;
(d) No Violation. the execution and delivery of, and the performance
of the provisions of, this Agreement, the Note, and those of the Security
Documents to which it is to be a party by each Security Party do not contravene
any applicable law or regulation existing at the date hereof or any contractual
restriction binding on such Security Party or the certificate of incorporation
or by-laws, certificate of formation and operating agreement (or equivalent
instruments) thereof;
(e) Litigation. no action, suit or proceeding is pending or
threatened against the Borrower or any Subsidiary before any court, board of
arbitration or administrative agency which could or might result in any Material
Adverse Effect;
(f) No Default. Neither the Borrower nor any Subsidiary is in
default under any material agreement by which it is bound, or is in default in
respect of any material financial commitment or obligation;
(g) Vessels. upon the date of the making of the Loan:
(i) each of the First Vessels will be in the sole and
absolute ownership of the relevant Guarantor as set
forth in Schedule 3 and duly registered in such
Guarantor's name under Liberian flag, unencumbered, save
and except for the First Mortgage and the Facility C
Mortgage recorded against it and as permitted thereby;
(ii) each of the Third Vessels will be in the sole and
absolute ownership of the relevant Subordinated
Guarantor as set forth in Schedule 4 and duly registered
in such Subordinated Guarantor's name under Liberian
and/or ▇▇▇▇▇▇▇▇ Islands flag, unencumbered, save and
except for the Facility A Mortgage, the Facility C
Mortgage and the Third Mortgage recorded against it and
as permitted thereby;
(iii) each Vessel will be classed in the highest
classification and rating for vessels of the same age
and type with the respective classification society as
set forth in Schedule 3 or Schedule 4, as the case may
be, without any material outstanding recommendations;
19
(iv) each Vessel will be operationally seaworthy and in every
way fit for its intended service; and
(v) each Vessel will be insured in accordance with the
provisions of the Mortgage recorded against it and the
requirements thereof in respect of such insurances will
have been complied with;
(h) Insurance. the Borrower and each Subsidiary has insured its
properties and assets against such risks and in such amounts as are customary
for companies engaged in similar businesses;
(i) Financial Information. except as otherwise disclosed in writing
to the Agents on or prior to the date hereof, all financial statements,
information and other data furnished by the Borrower to the Agents are complete
and correct, such financial statements have been prepared in accordance with
GAAP and accurately and fairly present the financial condition of the parties
covered thereby as of the respective dates thereof and the results of the
operations thereof for the period or respective periods covered by such
financial statements, and since the date of the Borrower's financial statements
most recently delivered to the Administrative Agent, there has been no Material
Adverse Effect as to any of such parties and none thereof has any contingent
obligations, liabilities for taxes or other outstanding financial obligations
which are material in the aggregate except as disclosed in such statements,
information and data;
(j) Tax Returns. the Borrower and each Subsidiary has filed all
material tax returns required to be filed thereby and has paid all taxes payable
thereby which have become due, other than those not yet delinquent or the
nonpayment of which would not have a Material Adverse Effect on the Borrower and
or such Subsidiary and except for those taxes being contested in good faith and
by appropriate proceedings or other acts and for which adequate reserves shall
have been set aside on its books;
(k) ERISA. the execution and delivery of this Agreement and the
consummation of the transactions hereunder will not involve any prohibited
transaction within the meaning of ERISA or Section 4975 of the Code and no
condition exists or event or transaction has occurred in connection with any
Plan maintained or contributed to by any the Borrower or any Subsidiary or any
ERISA Affiliate resulting from the failure of any thereof to comply with ERISA
insofar as ERISA applies thereto which is reasonably likely to result in the
Borrower or any such Subsidiary or any ERISA Affiliate incurring any liability,
fine or penalty which individually or in the aggregate would have a Material
Adverse Effect. Prior to the date hereof, the Borrower has delivered to the
Administrative Agent a list of all the employee benefit plans to which the
Borrower or any Subsidiary or any ERISA Affiliate is a "party in interest"
(within the meaning of Section 3(14) of ERISA) or a "disqualified person"
(within the meaning of Section 4975(e)(2) of the Code);
(l) Chief Executive Office. the Borrower's chief executive office
and chief place of business and the office in which the records relating to the
earnings and other receivables of each Security Party are kept is, and will
continue to be, located at One Station Place, Stamford, Fairfield County,
Connecticut;
(m) Foreign Trade Control Regulations to the best of the Borrower's
knowledge, none of the transactions contemplated herein will violate any of the
provisions of the Foreign Assets
20
Control Regulations of the United States of America (Title 31, Code of Federal
Regulations, Chapter V, Part 500, as amended), any of the provisions of the
Cuban Assets Control Regulations of the United States of America (Title 31, Code
of Federal Regulations, Chapter V, Part 515, as amended), any of the provisions
of the Libyan Assets Control Regulations of the United States of America (Title
31, Code of Federal Regulations, Chapter V, Part 550, as amended), any of the
provisions of the Iranian Transaction Regulations of the United States of
America (Title 31, Code of Federal Regulations, Chapter V, Part 560, as
amended), any of the provisions of the Iraqi Sanctions Regulations (Title 31,
Code of Federal Regulations, Chapter V, Part 575, as amended), any of the
provisions of the Federal Republic of Yugoslavia (Serbia and Montenegro) Assets
Control Regulations (Title 31, Code of Federal Regulations, Chapter V, Part 585
as amended) or any of the provisions of the Regulations of the United States of
America Governing Transactions in Foreign Shipping of Merchandise (Title 31,
Code of Federal Regulations, Chapter V, Part 505, as amended);
(n) Equity Ownership. each of the Guarantors and each of the
Subordinated Guarantors is a wholly owned direct subsidiary of the Borrower; the
SETTEBELLO Guarantor owns 49.0% of the issued and outstanding capital stock of
the SETTEBELLO Owner; on the Drawdown Date, the Borrower will not own any shares
of capital stock, limited liability company interest, partnership interest or
any other direct or indirect equity interest in any corporation, limited
liability company, partnership or other entity except the Security Parties and
the other companies listed on Schedule 2;
(o) Environmental Matters and Claims. (a) except as heretofore
disclosed in writing to the Agents (i) the Borrower, each of its Subsidiaries
and their Affiliates will, when required to operate their business as then being
conducted, be in compliance with all applicable United States federal and state,
local, foreign and international laws, regulations, conventions and agreements
relating to pollution prevention or protection of human health or the
environment (including, without limitation, ambient air, surface water, ground
water, navigable waters, waters of the contiguous zone, ocean waters and
international waters), including, without limitation, laws, regulations,
conventions and agreements relating to (1) emissions, discharges, releases or
threatened releases of chemicals, pollutants, contaminants, wastes, toxic
substances, hazardous materials, oil, hazardous substances, petroleum and
petroleum products and by-products ("Materials of Environmental Concern"), or
(2) the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Materials of Environmental Concern
("Environmental Laws"); (ii) the Borrower, each of its Subsidiaries and their
Affiliates will, when required, have all permits, licenses, approvals, rulings,
variances, exemptions, clearances, consents or other authorizations required
under applicable Environmental Laws ("Environmental Approvals") and will, when
required, be in compliance with all Environmental Approvals required to operate
their business as then being conducted; (iii) none of the Borrower, any
Subsidiary nor any Affiliate thereof has received any notice of any claim,
action, cause of action, investigation or demand by any person, entity,
enterprise or government, or any political subdivision, intergovernmental body
or agency, department or instrumentality thereof, alleging potential liability
for, or a requirement to incur, material investigator costs, cleanup costs,
response and/or remedial costs (whether incurred by a governmental entity or
otherwise), natural resources damages, property damages, personal injuries,
attorneys' fees and expenses, or fines or penalties, in each case arising out
of, based on or resulting from (1) the presence, or release or threat of release
into the environment, of any Materials of Environmental Concern at any location,
whether or not owned by such person, or (2) circumstances forming the basis of
any violation, or alleged violation, of any Environmental Law or
21
Environmental Approval ("Environmental Claim") (other than Environmental Claims
that have been fully and finally adjudicated or otherwise determined and all
fines, penalties and other costs, if any, payable by the Security Parties in
respect thereof have been paid in full or which are fully covered by insurance
(including permitted deductibles)); and (iv) there are no circumstances that may
prevent or interfere with such full compliance in the future; and (b) except as
heretofore disclosed in writing to the Agent there is no Environmental Claim
pending or threatened against the Borrower, any Subsidiary or any Affiliate
thereof and there are no past or present actions, activities, circumstances,
conditions, events or incidents, including, without limitation, the release,
emission, discharge or disposal of any Materials of Environmental Concern, that
could form the basis of any Environmental Claim against such persons the adverse
disposition of which may result in a Material Adverse Effect;
(p) Compliance with ISM Code. each Vessel and each Operator complies
with the requirements of the ISM Code including (but not limited to) the
maintenance and renewal of valid certificates pursuant thereto;
(q) Threatened Withdrawal of DOC or SMC. there is no threatened or
actual withdrawal of any Operator's DOC or SMC in respect of any Vessel;
(r) Approved Business Plan. the Approved Business Plan has been duly
approved by resolution of the Board of Directors of the Borrower, which approval
has not been amended or rescinded and remains in full force and effect;
(s) Liens. other than as disclosed on Schedule 6, there are no liens
of any kind on any property owned by the Borrower or the Subsidiary;
(t) Indebtedness. other than as disclosed in Schedule 6, the
Borrower (and its Subsidiaries on a consolidated basis) has no long-term
Indebtedness; and
(u) Survival. all representations, covenants and warranties made
herein and in any certificate or other document delivered pursuant hereto or in
connection herewith shall survive the making of the Loan and the issuance of the
Note.
3. THE LOAN
3.1 (a) Purpose. The Lenders shall make the Loan available to the Borrower for
the purpose of refinancing the indebtedness currently secured against the First
Vessels.
(b) Making of the Loan. Each of the Lenders, relying upon each of
the representations and warranties set out in Section 2, hereby severally and
not jointly agrees with the Borrower that, subject to and upon the terms of this
Agreement, it will on the Drawdown Date make the Loan available through the
Administrative Agent to the Borrower in an aggregate amount not to exceed its
Commitment ratably with the other Lenders according to their respective
Commitments.
3.2 Drawdown Notice. The Borrower shall, at least three (3) Banking Days before
the Drawdown Date, serve a notice (a "Drawdown Notice") substantially in the
form of Exhibit M on the Administrative Agent which notice shall (a) be in
writing addressed to the Administrative Agent, (b) be effective on receipt by
the Administrative Agent, (c) specify the amount of the Loan to be
22
drawn, (d) specify the Banking Day on which the Loan is to be drawn and the
initial Interest Period, (e) specify the disbursement instructions and (f) be
irrevocable.
3.3 Effect of Drawdown Notice. The Drawdown Notice shall be deemed to constitute
a warranty by the Borrower (a) that the representations and warranties stated in
Section 2 (updated mutatis mutandis) are true and correct on and as of the date
of the Drawdown Notice and will be true and correct on and as of the Drawdown
Date as if made on such date, and (b) that no Event of Default nor any event
which with the giving of notice or lapse of time or both would constitute an
Event of Default has occurred and is continuing.
4. CONDITIONS
4.1 Conditions Precedent to Drawdown of the Loan. The obligation of the Lenders
to make the Loan available to the Borrower under this Agreement shall be
expressly subject to the following conditions precedent:
(a) Corporate Authority. The Administrative Agent shall have
received the following documents in form and substance satisfactory to the
Administrative Agent:
(i) copies, certified as true and complete by an officer of
the Borrower, of the resolutions of the board of
directors of the Borrower evidencing approval of this
Agreement and the Note and authorizing an appropriate
officer or officers or attorney-in-fact or
attorneys-in-fact to execute the same on its behalf, or
other evidence of such approvals and authorizations;
(ii) copies, certified as true and complete by an officer of
each Security Party (other than the Borrower), of the
resolutions of the board of directors and shareholder,
or management committee and member, as the case may be,
thereof evidencing approval of those Security Documents
to which it is to be a party and authorizing an
appropriate officer or officers or attorney-in-fact or
attorneys-in-fact to execute the same on its behalf, or
other evidence of such approvals and authorizations;
(iii) copies, certified as true and complete by an officer of
the Borrower, of all documents evidencing any other
necessary action (including actions by such parties
thereto other than the Borrower as may be required by
the Administrative Agent), approvals or consents with
respect to this Agreement, the Note and the Security
Documents;
(iv) copies, certified as true and complete by an officer of
the respective Security Party of the certificate of
incorporation and by-laws, certificate of formation and
operating agreement, or equivalent instruments thereof;
(v) certificate of the Secretary of the Borrower certifying
that it legally and beneficially owns, directly or
indirectly, all of the issued and
23
outstanding capital stock, or limited liability company
membership interests, as the case may be, of each of the
other Security Parties and that such capital stock or
membership interests are free and clear of any liens,
claims, pledges or other encumbrances whatsoever other
than as disclosed to the Administrative Agent in writing
on or before the date hereof;
(vi) certificate of the Secretary of each Security Party
(other than the Borrower) certifying as to the record
ownership of all of its issued and outstanding capital
stock, or limited liability company membership
interests, as the case may be; and
(vii) certificates of the jurisdiction of incorporation or
formation, as the case may be, of each Security Party as
to the good standing thereof.
(b) The Vessels. the Administrative Agent shall have received
evidence satisfactory to it that:
(i) each of the First Vessels is in the sole and absolute
ownership of the relevant Guarantor as set forth in
Schedule 3 and duly registered in such Guarantor's name
under Liberian flag, unencumbered, save and except for
the First Mortgage and the Facility C Mortgage recorded
against it and as otherwise permitted thereby;
(ii) each of the Third Vessels is in the sole and absolute
ownership of the relevant Subordinated Guarantor as set
forth in Schedule 4 and duly registered in such
Subordinated Guarantor's name under ▇▇▇▇▇▇▇▇ Islands or
Liberian flag, unencumbered, save and except for the
Facility A Mortgage, the Facility C Mortgage and the
Third Mortgage recorded against it and as permitted
thereby;
(iii) each Vessel is classed in the highest classification and
rating for vessels of the same age and type with the
respective classification society as set forth in
Schedule 3 or Schedule 4, as the case may be, without
any material outstanding recommendations;
(iv) each of the Vessels is operationally seaworthy and in
every way fit for its intended service; and
(v) each of the Vessels is insured in accordance with the
provisions of the Mortgage recorded against it and the
requirements thereof in respect of such insurances have
been complied with;
(c) The Note. the Borrower shall have duly executed and delivered
this Agreement and the Note;
(d) Guarantor and Subordinated Guarantor Documents. each Guarantor
and each Subordinated Guarantor shall have duly executed and delivered to the
Administrative Agent:
24
(i) the Guaranty or the Subordinated Guaranty, as
appropriate;
(ii) the Mortgage over its Vessel(s);
(iii) an Insurances Assignment with respect to its Vessel(s);
(iv) an Earnings Assignment with respect to its Vessel(s);
(v) its Assignment Notices; and
(vi) Uniform Commercial Code Financing Statements for filing
with the State and County of New York, the State of
Connecticut, Fairfield County, Connecticut and in such
other jurisdictions as the Administrative Agent may
reasonably require;
(e) Pledge Agreements. each of the Borrower and the SETTEBELLO
Guarantor shall have duly executed and delivered to the Security Agent a Pledge
Agreement and its Pledged Shares, and the SETTEBELLO Partner shall have duly
executed and delivered to the Administrative Agent the SETTEBELLO Partner
Consent;
(f) Intercreditor Agreement. the Intercreditor Agreement shall have
been executed and delivered to the Administrative Agent;
(g) Vessel Appraisals. the Administrative Agent shall have received
appraisals, in form and substance satisfactory to the Agents, of the Fair Market
Value of each First Vessel showing the aggregate Fair Market Value of the First
Vessels to be not less than one hundred percent (100%) of the Loan;
(h) Guarantor and Subordinated Guarantor Solvency. the
Administrative Agent shall have received a certificate of an officer of each
Guarantor and of each Subordinated Guarantor confirming the representations and
warranties with respect to solvency set forth in its Guaranty or its
Subordinated Guaranty, as the case may be, and containing conclusions as to the
solvency of such Guarantor or Subordinated Guarantor;
(i) Environmental Claims. the Administrative Agent shall be
satisfied that neither the Borrower nor any of its Subsidiaries is subject to
any Environmental Claim which could have a Material Adverse Effect;
(j) Fees. the Administrative Agent shall have received payment in
full of all fees and expenses due to the Agents, the Arrangers and the Lenders
under Section 13 and the Fee Letter;
(k) Accounts. each Security Party shall have established an
operating account with the Syndication Agent into which Assigned Moneys are to
be paid;
(l) Vessel Liens. the Administrative Agent shall have received
evidence satisfactory to it and to its legal advisor that, save for the liens
created by the Mortgages, the Assignments, the Facility A Mortgages, the other
Facility A Security Documents, the Facility C Mortgages and the other Facility C
Security Documents there are no liens, charges or encumbrances
25
of any kind whatsoever on any of the Vessels or on their respective earnings
except as permitted hereby or by any of the Security Documents;
(m) Approved Business Plan. not later than fourteen (14) days prior
to the Drawdown Date, the Administrative Agent shall have received a copy of the
Approved Business Plan, certified by the Secretary of the Borrower to be true
and complete;
(n) Facility A. the Facility A Lenders have advanced Facility A;
(o) Charters; Pooling Agreements. the Borrower shall have delivered
to the Administrative Agent true and complete copies of (i) all charters having
a term longer than twelve (12) months from the date of execution and (ii) all
vessel pooling agreements, in each case to which the Borrower or any Subsidiary
is a party; and
(p) Legal Opinions. the Administrative Agent shall have received
legal opinions addressed to the Agents from (i) ▇▇▇▇▇▇▇ ▇. London, Esq.,
in-house counsel for the Security Parties, and (ii) ▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP, special
counsel to the Agents and Lenders, in each case in such form as the
Administrative Agent may require, as well as such other legal opinions as the
Administrative Agent shall have required as to all or any matters under the laws
of the United States of America, the State of Delaware, the State of New York,
the Republic of Liberia and the Republic of the ▇▇▇▇▇▇▇▇ Islands covering the
representations and conditions which are the subjects of Sections 2 and 4.1.
4.2 Further Conditions Precedent. The obligation of the Lenders to make the Loan
available to the Borrower under this Agreement shall be expressly and separately
subject to the following further conditions precedent on the Drawdown Date:
(a) the Administrative Agent having received a Drawdown Notice in
accordance with the terms of Section 3.2;
(b) the representations stated in Section 2 (updated mutatis
mutandis to such date) being true and correct as if made on and as of that date;
(c) no Event of Default having occurred and being continuing and no
event having occurred and being continuing which, with the giving of notice or
lapse of time, or both, would constitute an Event of Default;
(d) the Administrative Agent being satisfied that no change in any
applicable laws, regulations, rules or in the interpretation thereof shall have
occurred which make it unlawful for any Security Party to make any payment as
required under the terms of this Agreement, the Note, the Security Documents or
any of them; and
(e) there having been no Material Adverse Effect since the date
hereof.
4.3 Breakfunding Costs. In the event that, on the date specified for the making
of the Loan in the Drawdown Notice, the Lenders shall not be obliged under this
Agreement to make the Loan available, the Borrower shall indemnify and hold the
Lenders fully harmless against any losses which the Lenders (or any thereof) may
sustain as a result of borrowing or agreeing to borrow funds
26
to meet the drawdown requirement of the Drawdown Notice and the certificate of
the relevant Lender or Lenders shall, absent manifest error, be conclusive and
binding on the Borrower as to the extent of any such losses.
4.4 Satisfaction after Drawdown. Without prejudice to any of the other terms and
conditions of this Agreement, in the event the Lenders, in their sole
discretion, advance the Loan prior to the satisfaction of all or any of the
conditions referred to in Sections 4.1 or 4.2, the Borrower hereby covenants and
undertakes to satisfy or procure the satisfaction of such condition or
conditions within fourteen (14) days after the Drawdown Date (or such longer
period as the Lenders, in their sole discretion, may agree).
5. REPAYMENT AND PREPAYMENT
5.1 Repayment. On the Final Payment Date, the Borrower shall repay in full the
then outstanding principal balance of the Loan, together with accrued but unpaid
interest and any other amounts owing by the Borrower or any other Security Party
to any Arranger, Agent or Lender pursuant to this Agreement, the Note or any
Security Document.
5.2 Voluntary Prepayment; no re-borrowing. The Borrower may prepay, upon five
(5) Banking Days written notice, the Loan or any portion thereof. Each
prepayment shall be in a minimum amount of One Million Dollars ($1,000,000) plus
any One Million Dollar ($1,000,000) multiple thereof or the full amount of the
Loan. No part of the Loan will be available for re-borrowing.
5.3 Mandatory Prepayment; Sale or Loss of Vessel. On (i) any sale of a Vessel
(which in any event shall require the prior consent of the Agents) or (ii) the
earlier of (x) ninety (90) days after the Total Loss of a Vessel or (y) the date
on which the insurance proceeds in respect of such loss are received by the
Borrower (or a Guarantor or Subordinated Guarantor) or the Security Agent as
assignee thereof, such proceeds shall be applied as follows:
(a) First Vessel. in respect of a First Vessel immediately to
repayment of the Loan in accordance with Section 8.3, provided, however, that in
respect of the sale of either of the SETTEBELLO or COLORADO, after repayment of
the indebtedness secured by the mortgages against them in favor of CBK, (i) if
such sale occurs prior to the Drawdown Date, up to $8,000,000 of such sale
proceeds may be retained by the Borrower and (ii) if such sales occur on or
after the Drawdown Date, up to 30% of such sale proceeds may be retained by the
Borrower;
(b) Third Vessel. in respect of a Third Vessel first in accordance
with the terms of the Facility A Loan Agreement, if any amounts thereunder
remain outstanding, otherwise in accordance with the Facility C Agreement, and
thereafter any remaining proceeds shall be applied to repayment of the Loan in
accordance with Section 9.1(q).
5.4 Mandatory Prepayment; New Capital. In the event that the Borrower or any
Subsidiary issues securities whether debt or equity, after the date thereof, the
proceeds (which proceeds must be entirely cash), net of reasonable expenses
directly related to such issuance, shall be applied immediately to repayment of
the Loan in accordance with Section 8.3; provided, however, that provided that
the Designated Vessel is the SOYANG, and the Designated Vessel Conditions are
met, the Borrower may apply up to $10.0 million from the proceeds of issuance
after the Drawdown Date of equity securities of the Borrower to making the
SOYANG Investment.
27
5.5 Demand Conversion. In the event that the Administrative Agent determines
that (a) a Material Adverse Effect has occurred, (b) any Planned Reduction
Amount has not been paid in full to the Administrative Agent on or before the
corresponding Planned Reduction Date, or (c) the Borrower has failed to meet any
objective specified in the Approved Business Plan by the target date thereof
specified in the Approved Business Plan to the satisfaction of the Majority
Lenders, then the Administrative Agent may on such date or any time thereafter
convert the Loan to a demand loan by sending notice to the Borrower. Upon the
sending of such a notice, the Loan shall be converted to a demand loan, and full
repayment of the Loan and all other obligations of the Borrower or any other
Security Party under this Agreement, the Note or any Security Document shall be
due upon demand by the Administrative Agent.
5.6 Interest and Costs with Prepayments. Any repayment or prepayment of the Loan
made pursuant to this Agreement (including, without limitation, those made
pursuant to Sections 5 and 9) shall be subject to the condition that on the date
of prepayment all accrued interest to the date of such prepayment shall be paid
in full with respect to the Loan or portions thereof being prepaid, together
with any and all actual costs or expenses incurred by any Lender in connection
with any breaking of funding (as certified by such Lender, which certification
shall, absent any manifest error, be conclusive and binding on the Borrower).
6. INTEREST AND RATE
6.1 Applicable Rate. The Loan shall bear interest at the Applicable Rate which
shall be the rate per annum which is equal to the aggregate of (a) LIBOR for the
relevant Interest Period plus (b) the Margin. The Applicable Rate shall be
determined by the Administrative Agent two Banking Days prior to the first day
of the relevant Interest Period. The Administrative Agent shall promptly notify
the Borrower in writing of the Applicable Rate as and when determined. Each such
determination, absent manifest error, shall be conclusive and binding upon the
Borrower.
6.2 Default Rate. Any amounts due under this Agreement, not paid when due,
whether by acceleration or otherwise, shall bear interest thereafter from the
due date thereof until the date of payment at a rate per annum equal to (i) the
Prime Rate (as notified to the Borrower by the Administrative Agent), plus (ii)
the Margin, plus (iii) two percent (2%) (the "Default Rate"). Following the
occurrence of any Event of Default, the Administrative Agent, upon instruction
of the Majority Lenders, may deliver a notice to the Borrower advising the
Borrower than an Event of Default has occurred. From the date of any such notice
until each such Event of Default is cured to the satisfaction of the Majority
Lenders, the Loan shall bear interest at the Default Rate.
6.3 Interest Periods. The Borrower shall give the Administrative Agent an
Interest Notice specifying the Interest Period selected at least three (3)
Banking Days prior to the end of any then existing Interest Period. If at the
end of any then existing Interest Period the Borrower fails to give an Interest
Notice the relevant Interest Period shall be three (3) months. The Borrower's
right to select an Interest Period shall be subject to the restriction that no
selection of an Interest Period shall be effective unless each Lender is
satisfied that the necessary funds will be available to such Lender for such
period and that no Event of Default or event which, with the giving of notice or
lapse of time, or both, would constitute an Event of Default shall have occurred
and be continuing.
6.4 Interest Payments. Accrued interest on the Loan shall be payable in arrears
on the last day of each Interest Period, except that if the Borrower shall
select an Interest Period in excess of three (3)
28
months, accrued interest shall be payable during such Interest Period on each
three (3) month anniversary of the commencement of such Interest Period and upon
the end of such Interest Period.
7. PAYMENTS
7.1 Place of Payments, No Set Off. All payments to be made hereunder by the
Borrower shall be made to the Syndication Agent, not later than 11 a.m. New York
time (any payment received after 11 a.m. New York time shall be deemed to have
been paid on the next Banking Day) on the due date of such payment, at its
office located at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ or to such other
office of the Syndication Agent as the Syndication Agent may direct, without
set-off or counterclaim and free from, clear of, and without deduction for, any
Taxes, provided, however, that if the Borrower shall at any time be compelled by
law to withhold or deduct any Taxes from any amounts payable to the Lenders
hereunder, then the Borrower shall pay such additional amounts in Dollars as may
be necessary in order that the net amounts received after withholding or
deduction shall equal the amounts which would have been received if such
withholding or deduction were not required and, in the event any withholding or
deduction is made, whether for Taxes or otherwise, the Borrower shall promptly
send to the Administrative Agent such documentary evidence with respect to such
withholding or deduction as may be required from time to time by the Lenders.
7.2 Tax Credits. If any Lender obtains the benefit of a credit against the
liability thereof for federal income taxes imposed by any taxing authority for
all or part of the Taxes as to which the Borrower has paid additional amounts as
aforesaid (and each Lender agrees to use its best efforts to obtain the benefit
of any such credit which may be available to it, provided it has knowledge that
such credit is in fact available to it), then such Lender shall reimburse the
Borrower for the amount of the credit so obtained. Each Lender agrees that in
the event that Taxes are imposed on account of the situs of its loans hereunder,
such Lender, upon acquiring knowledge of such event, shall, if commercially
reasonable, shift such loans on its books to another office of such Lender so as
to avoid the imposition of such Taxes.
7.3 Computations; Banking Days. (a) All computations of interest and fees shall
be made by the Agents or the Lenders, as the case may be, on the basis of a
360-day year, in each case for the actual number of days (including the first
day but excluding the last day) occurring in the period for which interest or
fees are payable. Each determination by the Agents or the Lenders of an interest
rate or fee hereunder shall be conclusive and binding for all purposes, absent
manifest error.
(b) Whenever any payment hereunder or under the Note shall be stated
to be due on a day other than a Banking Day, such payment shall be due and
payable on the next succeeding Banking Day unless the next succeeding Banking
Day falls in the following calendar month, in which case it shall be payable on
the immediately preceding Banking Day.
8. EVENTS OF DEFAULT
8.1 Events of Default. The occurrence of any of the following events shall be an
Event of Default:
(a) Non-Payment of Principal. any payment of principal is not paid
when due; or
(b) Non-Payment of Interest or Other Amounts. any interest or any
other amount becoming payable to the Agents, the Arrangers or any Lender under
this Agreement, under the
29
Note, or under any of the Security Documents is not paid on the due date or date
of demand (as the case may be), and such default continues unremedied for a
period of five (5) Banking Days; or
(c) Representations. any representation, warranty or other statement
made by the Borrower in this Agreement or by any Security Party in any of the
Security Documents or in any other instrument, document or other agreement
delivered in connection herewith or therewith proves to have been untrue or
misleading in any material respect as at the date as of which made or confirmed;
or
(d) Mortgage. there is an event of default under any Mortgage; or
(e) Covenants. any Security Party defaults in the due and punctual
observance or performance of any other term, covenant or agreement contained in
this Agreement, in the Note, in any of the Security Documents or in any other
instrument, document or other agreement delivered in connection herewith or
therewith, or it becomes impossible or unlawful for any Security Party to
fulfill any such term, covenant or agreement or there occurs any other event
which constitutes a default under this Agreement, under the Note or under any of
the Security Documents, in each case other than an Event of Default referred to
elsewhere in this Section 8.1, and such default, impossibility and/or
unlawfulness, in the reasonable opinion of the Majority Lenders, could have a
material adverse effect on the Lenders' rights hereunder, under the Note or
under the Security Documents or on the Lenders' right to enforce this Agreement,
the Note, and/or the Security Documents, and continues unremedied or unchanged,
as the case may be, for a period of thirty (30) days; or
(f) Indebtedness. any Security Party, any Subsidiary or any
Affiliate shall default in the payment when due (subject to any applicable grace
period) of any Indebtedness or of any other indebtedness, in either case, in the
outstanding principal amount equal to or exceeding Five Hundred Thousand Dollars
($500,000) or such Indebtedness or indebtedness is, or by reason of such default
is subject to being, accelerated or any party becomes entitled to enforce the
security for any such Indebtedness or indebtedness and such party shall take
steps to enforce the same, unless such default or enforcement is being contested
in good faith and by appropriate proceedings or other acts and the Security
Party, Subsidiary or Affiliate, as the case may be, shall set aside on its books
adequate reserves with respect thereto; or
(g) Ownership of Guarantors and Subordinated Guarantors. the
Borrower shall cease to own (except as otherwise expressly permitted by this
Agreement), directly or indirectly, one hundred percent (100%) of any of the
Guarantors or Subordinated Guarantors; the SETTEBELLO Guarantor shall cease to
own, directly or indirectly, 49.0% of the SETTEBELLO Owner; or
(h) Bankruptcy. the Borrower or any Affiliate commences any
proceeding under any reorganization, arrangement or readjustment of debt,
dissolution, winding up, adjustment, composition, bankruptcy or liquidation law
or statute of any jurisdiction, whether now or hereafter in effect (a
"Proceeding"), or there is commenced against any thereof any Proceeding and such
Proceeding remains undismissed or unstayed for a period of thirty (30) days or
any receiver, trustee, liquidator or sequestrator of, or for, any thereof or any
substantial portion of the property of any thereof is appointed and is not
discharged within a period of thirty (30) days or any thereof by any act
indicates consent to or approval of or acquiescence in any Proceeding or the
appointment of any
30
receiver, trustee, liquidator or sequestrator of, or for, itself or of, or for,
any substantial portion of its property; or
(i) Termination of Operations; Sale of Assets. except as expressly
permitted under this Agreement, any Security Party ceases its operations or
sells or otherwise disposes of all or substantially all of its assets (other
than such a sale by one Guarantor to another or by one Subordinated Guarantor to
another) or all or substantially all of the assets of any Security Party are
seized or otherwise appropriated; or
(j) Judgments. any judgment or order is made the effect whereof
would be to render ineffective or invalid this Agreement, the Note or any of the
Security Documents or any material provision thereof, or the Borrower or any
Security Party asserts that any such agreement or provision thereof is invalid;
or
(k) Inability to Pay Debts. any Security Party is unable to pay or
admits its inability to pay its debts as they fall due or a moratorium shall be
declared in respect of any material indebtedness of any Security Party; or
(l) Change in Financial Position. any change in the financial
position of any Security Party which, in the reasonable opinion of the Majority
Lenders, shall have a Material Adverse Effect; or
(m) Change in Control. a Change of Control shall occur with respect
to the Borrower; or
(n) ERISA Debt. (i) the Borrower or any ERISA Affiliate fails to pay
when due an amount or amounts aggregating in excess of $1,000,000 which it or
they have become liable to pay under Title IV of ERISA or (ii) the Borrower or
any ERISA Affiliate, individually or collectively, incurs, or should reasonably
expect to incur, any Withdrawal Liability or liability upon the happening of a
Termination Event and the aggregate of all such Withdrawal Liabilities and such
other liabilities exceeds $10,000,000; or
(o) Approved Business Plan. at any time the Board of Directors of
the Borrower passes any resolution amending or rescinding any part of the
Approved Business Plan or the Borrower otherwise rejects or rescinds any part of
the Approved Business Plan; or
(p) Cross-Default. any Event of Default (as defined in the Facility
A Loan Agreement or the Facility C Agreement) or event which, with the giving of
notice or passage of time on both, would constitute such an Event of Default,
occurs or the Borrower, any Guarantor or any Subordinated Guarantor defaults
under any material contract or agreement to which it is a party or by which it
is bound.
Upon and during the continuance of any Event of Default, the Lenders' obligation
to make the Loan available shall cease and the Administrative Agent on the
instructions of the Majority Lenders may, by notice to the Borrower, declare the
entire unpaid balance of the then outstanding Loan, accrued interest and any
other sums payable by the Borrower hereunder or under the Note due and payable,
whereupon the same shall forthwith be due and payable without presentment,
demand, protest or notice of any kind, all of which are hereby expressly waived;
provided that upon the happening of
31
an event specified in subsections (h) or (k) of this Section 8.1 with respect to
the Borrower, the Note shall be immediately due and payable without declaration
or other notice to the Borrower. In such event, the Lenders may proceed to
protect and enforce their rights by action at law, suit in equity or in
admiralty or other appropriate proceeding, whether for specific performance of
any covenant contained in this Agreement, in the Note or in any Security
Document, or in aid of the exercise of any power granted herein or therein, or
the Lenders may proceed to enforce the payment of the Note or to enforce any
other legal or equitable right of the Lenders, or proceed to take any action
authorized or permitted under the terms of any Security Document or by
applicable law for the collection of all sums due, or so declared due, on the
Note, including, without limitation, the right to appropriate and hold or apply
(directly, by way of set-off or otherwise) to the payment of the obligations of
the Borrower to the Lenders hereunder and/or under the Note (whether or not then
due) all moneys and other amounts of the Borrower then or thereafter in
possession of any Lender, the balance of any deposit account (demand or time,
mature or unmatured) of the Borrower then or thereafter with any Lender and
every other claim of the Borrower then or thereafter against any of the Lenders.
8.2 Indemnification. The Borrower agrees to, and shall, indemnify and hold the
Agents, the Arrangers and the Lenders harmless against any loss, as well as
against any reasonable costs or expenses (including reasonable legal fees and
expenses), which any of the Agents, the Arrangers or the Lenders sustains or
incurs as a consequence of any default in payment of the principal amount of the
Loan, interest accrued thereon or any other amount payable hereunder, under the
Note or under any Security Documents including, but not limited to, all actual
losses incurred in liquidating or re-employing fixed deposits made by third
parties or funds acquired to effect or maintain the Loan or any portion thereof.
Any Lenders' certification of such costs and expenses shall, absent any manifest
error, be conclusive and binding on the Borrower.
8.3 Application of Moneys. Except as otherwise provided in any Security
Document, all moneys received by the Agents, the Arrangers or the Lenders under
or pursuant to this Agreement, the Note or any of the Security Documents after
the happening of any Event of Default (unless cured to the satisfaction of the
Majority Lenders) shall be applied by the Agents in the following manner:
(a) first, in or towards the payment or reimbursement of any
expenses or liabilities incurred by the Agents, the Arrangers or the Lenders in
connection with the ascertainment, protection or enforcement of its rights and
remedies hereunder, under the Note and under any of the Security Documents,
(b) secondly, in or towards payment of any interest owing in respect
of the Loan,
(c) thirdly, in or towards repayment of principal of the Loan,
(d) fourthly, in or towards payment of all other sums which may be
owing to the Agents, the Arrangers or the Lenders under this Agreement, under
the Note, under the Fee Letter or under any of the Security Documents, and
(e) fifthly, the surplus (if any) shall be paid to the Borrower or
to whosoever else may be entitled thereto.
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9. COVENANTS
9.1 Affirmative Covenants. The Borrower hereby covenants and undertakes with the
Lenders that, from the date hereof and so long as any principal, interest or
other moneys are owing in respect of this Agreement, under the Note or under any
of the Security Documents, the Borrower will:
(a) Performance of Agreements. duly perform and observe, and procure
the observance and performance by all other parties thereto (other than the
Lenders) of, the terms of this Agreement, the Note and the Security Documents;
(b) Notice of Default, etc. promptly upon obtaining knowledge
thereof, inform the Administrative Agent of the occurrence of (a) any Event of
Default or of any event which, with the giving of notice or lapse of time, or
both, would constitute an Event of Default, (b) any litigation or governmental
proceeding pending or threatened against it or against any of its Subsidiaries
which could reasonably be expected to have a Material Adverse Effect, (c) the
withdrawal of any Vessel's rating by its Classification Society or the issuance
by the Classification Society of any material recommendation or notation
affecting class and (d) any other event or condition which is reasonably likely
to have a Material Adverse Effect;
(c) Obtain Consents. without prejudice to Section 2.1 and this
Section 9.1, obtain every consent and do all other acts and things which may
from time to time be necessary or advisable for the continued due performance of
all its and the other Security Parties' respective obligations under this
Agreement, under the Note and under the Security Documents;
(d) Financial Information. deliver to each Lender:
(i) as soon as available but not later than ninety (90) days
after the end of each fiscal year of the Borrower,
complete copies of the consolidated financial reports of
the Borrower and its Subsidiaries (together with a
Compliance Certificate), all in reasonable detail, which
shall include at least the consolidated balance sheet of
the Borrower and its Subsidiaries as of the end of such
year and the related consolidated statements of income
and sources and uses of funds for such year, which shall
be audited reports prepared by an Acceptable Accounting
Firm;
(ii) as soon as available but not less than forty-five (45)
days after the end of each of the first three quarters
of each fiscal year of the Borrower, a quarterly interim
consolidated balance sheet of the Borrower and its
Subsidiaries and the related consolidated profit and
loss statements and sources and uses of funds (together
with a Compliance Certificate), all in reasonable
detail, unaudited, but certified to be true and complete
by the chief financial officer of the Borrower;
(iii) within ten (10) days of the filing thereof, copies of
all registration statements and reports on Forms 10-K,
10-Q and 8-K (or their equivalents) and other material
filings which the Borrower shall have
33
filed with the Securities and Exchange Commission or any
similar governmental authority;
(iv) promptly upon the mailing thereof to the shareholders of
the Borrower, copies of all financial statements,
reports, proxy statements and other communications
provided to the Borrower's shareholders;
(v) within ten (10) days of the Borrower's receipt thereof,
copies of all audit letters or other correspondence from
any external auditors including material financial
information in respect of the Borrower;
(vi) at any time upon the request of any Agent, a Compliance
Certificate; and
(vii) such other statements (including, without limitation,
monthly consolidated statements of operating revenues
and expenses), lists of assets and accounts, budgets,
forecasts, reports and other financial information with
respect to its business as the Administrative Agent may
from time to time reasonably request, certified to be
true and complete by the chief financial officer of the
Borrower;
(e) Corporate Existence. do or cause to be done, and procure that
each Subsidiary shall do or cause to be done, all things necessary to preserve
and keep in full force and effect its corporate existence, or limited liability
company existence, as the case may be, and all licenses, franchises, permits and
assets necessary to the conduct of its business;
(f) Books and Records. at all times keep, and cause each Subsidiary
to keep, proper books of record and account into which full and correct entries
shall be made in accordance with GAAP;
(g) Taxes and Assessments. pay and discharge, and cause each
Subsidiary to pay and discharge, all material taxes, assessments and
governmental charges or levies imposed upon it or upon its income or property
prior to the date upon which penalties attach thereto; provided, however, that
it shall not be required to pay and discharge, or cause to be paid and
discharged, any such tax, assessment, charge or levy so long as the legality
thereof shall be contested in good faith and by appropriate proceedings or other
acts and it shall set aside on its books adequate reserves with respect thereto;
(h) Inspection. allow, and cause each Subsidiary to allow, any
representative or representatives designated by any Agent, subject to applicable
laws and regulations, to visit and inspect any of its properties, and, on
request, to examine its books of account, records, reports and other papers and
to discuss its affairs, finances and accounts with its officers, all at such
reasonable times and as often as any Agent reasonably requests;
(i) Compliance with Statutes, Agreements, etc. do or cause to be
done, and cause each Subsidiary to do and cause to be done, all things necessary
to comply with all material contracts or agreements to which it or any
Subsidiary is a party, and all material laws, and the rules and regulations
thereunder, applicable to the Borrower or such Subsidiary, including, without
34
limitation, those laws, rules and regulations relating to employee benefit plans
and environmental matters;
(j) Environmental Matters. promptly upon the occurrence of any of
the following conditions, provide to the Administrative Agent a certificate of a
chief executive officer thereof, specifying in detail the nature of such
condition and its proposed response or the response of its Environmental
Affiliates: (a) its receipt or the receipt by any other Security Party or any
Environmental Affiliates of the Borrower or any other Security Party of any
written communication whatsoever that alleges that such person is not in
compliance with any applicable Environmental Law or Environmental Approval, if
such noncompliance could reasonably be expected to have a Material Adverse
Effect, (b) knowledge by it, or by any other Security Party or any Environmental
Affiliates of the Borrower or any other Security Party that there exists any
Environmental Claim pending or threatened against any such person, which could
reasonably be expected to have a Material Adverse Effect, or (c) any release,
emission, discharge or disposal of any material that could form the basis of any
Environmental Claim against it, any other Security Party or against any
Environmental Affiliates of the Borrower or any other Security Party, if such
Environmental Claim could reasonably be expected to have a Material Adverse
Effect. Upon the written request by the Agent, it will submit to the Agent at
reasonable intervals, a report providing an update of the status of any issue or
claim identified in any notice or certificate required pursuant to this
subsection;
(k) ERISA. forthwith upon learning of the occurrence of any material
liability of the Borrower, any Subsidiary or any ERISA Affiliate pursuant to
ERISA in connection with the termination of any Plan or withdrawal or partial
withdrawal of any multi-employer plan (as defined in ERISA) or of a failure to
satisfy the minimum funding standards of Section 412 of the Code or Part 3 of
Title I of ERISA by any Plan for which the Borrower, any Subsidiary or any ERISA
Affiliate is plan administrator (as defined in ERISA), furnish or cause to be
furnished to the Lenders written notice thereof;
(l) Vessel Management. cause each of the Vessels to be managed both
commercially and technically by the Borrower, a wholly-owned subsidiary thereof
or its existing manager;
(m) Funded Debt to Total Capitalization Ratio. maintain at all times
on a consolidated basis a ratio of Funded Debt to Total Capitalization of not
more than 0.6 to 1 provided, that for purposes of compliance with this covenant
only, Funded Debt shall (i) exclude unsecured, subordinated debt, and (ii)
include the present value of the Borrower's (or any of the Borrower's
Subsidiaries') liability for all payments under synthetic leases other than the
Columbia Lease;
(n) Cash. maintain at all times on a consolidated basis readily
available cash and/or Cash Equivalents as follows:
(i) through December 31, 2000, not less than Ten Million
Dollars ($10,000,000);
(ii) thereafter, through June 30, 2001, not less than Fifteen
Million Dollars ($15,000,000);
35
(iii) thereafter, not less than Twenty Million Dollars
($20,000,000);
(o) Consolidated Net Worth. maintain at all times a Consolidated Net
Worth of not less than One Hundred Sixty Million Dollars ($160,000,000) plus 50%
of the Borrower's positive net income (on a consolidated basis) earned after
December 31, 1999 plus 100% of the net proceeds received by the Borrower (or any
of the Borrower's Subsidiaries) from the issuance of equity securities after the
Drawdown Date;
(p) EBITDA to Interest Expense. maintain a ratio of EBITDA to
Interest Expense as follows:
(i) through December 31, 2000, not less than 1.1 to 1.0;
(ii) thereafter, through December 31, 2002, not less than
1.75 to 1.0;
(iii) thereafter, not less than 2.5 to 1.0;
measured not less than quarterly, in each instance based on the four
most recent fiscal quarters for which financial information is available;
(q) Use of Excess Cash. apply all cash and Cash Equivalents of the
Borrower (on a consolidated basis), proceeds from the issuance of securities by
the Borrower, any Guarantor or any Subordinated Guarantor, and (subject to
Section 5.3, Mandatory Prepayment; Sale or Loss of Vessel) proceeds from the
sale of any vessels by the Borrower, any Guarantor or any Subordinated Guarantor
(net of indebtedness secured by a mortgage on such vessel) as follows:
(A) to the extent the Borrower chooses to do so, to
retention by the Borrower as cash or Cash Equivalents up
to $20.0 million until Facility C has been repaid or
cancelled, and thereafter up to $30.0 million; and then
(B) to prepayment of Facility C until Facility C is fully
repaid; and then
(C) to prepayment of Facility B until Facility B is fully
repaid; and then
(D) to prepayment of the Facility A Loan until the ratio of
the balance of the Facility A Loan to the aggregate Fair
Market Value of the Third Vessels is no greater than
0.65; and then
(E) to the Borrower.
(r) Brokerage Commissions, etc. the Borrower agrees to indemnify and
hold the Arrangers, the Agents and the Lenders harmless from any claim for any
brokerage commission, fee, or compensation from any broker or third party
resulting from the transactions contemplated hereby;
36
(s) Deposit Accounts; Assignment. maintain, and procure that each
other Security Party shall maintain its operating accounts with the Syndication
Agent and shall procure, and shall cause each other Security Party to procure,
that all earnings of any Vessels shall be paid into such operating accounts and
the Borrower, and by its execution of the Consent and Agreement hereto, each
other Security Party, hereby pledges, assigns and grants to the Syndication
Agent, for the benefit of the Lenders, a security interest in all funds from
time to time in such accounts (such security interest in accounts of the
Subordinated Guarantors being subject to the terms of the Intercreditor
Agreement);
(t) Future Guaranties. procure that all Subsidiaries of the Borrower
(other than Designated Subsidiaries, and only for so long as remaining a
Designated Subsidiary), shall execute a Guaranty (or, if and only if such
Subsidiary executes a Guaranty as defined in the Facility A Loan Agreement or
the Facility C Agreement, a Subordinated Guaranty) and other relevant Security
Documents in respect of any vessel owned thereby within thirty (30) days of
formation, acquisition or otherwise becoming a Subsidiary, or ceasing to be a
Designated Subsidiary, of the Borrower;
(u) Future Pledge Agreements. concurrent with the execution of any
Guaranty or Subordinated Guaranty pursuant to Section 9.1(t), execute and
deliver to the Security Agent a Pledge Agreement and the Pledged Shares in
respect of the relevant Guarantor or Subordinated Guarantor, unless the
Borrower's ownership interest therein is subject to a Facility A Pledge
Agreement; and
(v) Insurance. maintain, and cause each Subsidiary to maintain, with
financially sound and reputable insurance companies, insurance on all their
respective properties and against all such risks and in at least such amounts as
are usually insured against by companies of established reputation engaged in
the same or similar business from time to time
9.2 Negative Covenants. The Borrower hereby covenants and undertakes with the
Lenders that, from the date hereof and so long as any principal, interest or
other moneys are owing in respect of this Agreement, under the Note or under any
of the Security Documents, the Borrower will not, and will procure that no other
Subsidiary, to the extent applicable, will, without prior the written consent of
the Administrative Agent (or the Majority Lenders or all of the Lenders if
required by Section 15.8):
(a) Liens. create, assume or permit to exist, any mortgage, pledge,
lien, charge, encumbrance or any security interest whatsoever upon any
Collateral or other property except:
(i) liens disclosed in Schedule 6;
(ii) liens on the Designated Vessel securing the Designated
Vessel Indebtedness;
(iii) liens for taxes not yet payable for which adequate
reserves have been maintained;
(iv) the Mortgages, the Assignments, and other liens in favor
of the Security Agent;
37
(v) liens, charges and encumbrances against their respective
Vessels permitted to exist under the terms of the
Mortgages;
(vi) pledges of certificates of deposit or other cash
collateral securing any Security Party's reimbursement
obligations in connection with letters of credit now or
hereafter issued for the account of such Security Party
in connection with the establishment of the financial
responsibility of the Security Parties under 33 C.F.R.
Part 130 or 46 C.F.R. Part 540, as the case may be, as
the same may be amended or replaced;
(vii) pledges or deposits to secure obligations under
workmen's compensation laws or similar legislation,
deposits to secure public or statutory obligations,
warehousemen's or other like liens, or deposits to
obtain the release of such liens and deposits to secure
surety, appeal or customs bonds on which the Borrower,
any of the Guarantors or any of the Subordinated
Guarantors is the principal, as to all of the foregoing,
only to the extent arising and continuing in the
ordinary course of business; and
(viii) other liens, charges and encumbrances incidental to the
conduct of the business of each such party, the
ownership of any such party's property and assets and
which do not in the aggregate materially detract from
the value of each such party's property or assets or
materially impair the use thereof in the operation of
its business;
(b) Change in Business. materially change the nature of its business
or commence any business materially different from its current business;
(c) Sale or Pledge of Shares. sell, assign, transfer, pledge or
otherwise convey or dispose of any of the shares (including by way of spin-off,
installment sale or otherwise) of the capital stock, or limited liability
company interests, as the case may be, of any Guarantor or Subordinated
Guarantor other than as may be allowed in accordance with the Pledge Agreement
or the Facility A Pledge Agreement;
(d) Sale of Assets. sell, or otherwise dispose of, any Vessel (other
than the Designated Vessel, sales of Third Vessels made in accordance with the
terms of the Facility A Loan Agreement and sales of First Vessels the proceeds
of which are applied in accordance with Section 5.3, Mandatory Prepayment; Sale
or Loss of Vessel) or any other asset (including by way of spin-off, installment
sale or otherwise) which is substantial in relation to its assets taken as a
whole including without limitation, any material foreign Subsidiary or foreign
assets or interest in an Affiliate, other than such sales by one Guarantor to
another or by one Subordinated Guarantor to another;
(e) Changes in Offices or Names. change the location of the chief
executive office of any Security Party, the office of the chief place of
business any such parties, the office of the Security Parties in which the
records relating to the earnings or insurances of the Vessels are kept unless
the Lenders shall have received sixty (60) days prior written notice of such
change;
38
(f) Consolidation and Merger. consolidate with, or merge into, any
corporation or other entity, or merge any corporation or other entity into it
provided, however that any Guarantor shall be permitted to merge into or
consolidate with any other Guarantor, and any Subordinated Guarantor shall be
permitted to merge into or consolidate with any other Subordinated Guarantor, so
long as no Event of Default would result therefrom;
(g) Chartering-in. other than pursuant to charters disclosed in
Schedule 6, charter, as charterer, any one vessel for a charter period exceeding
twelve (12) months; or permit any vessel to be chartered into any vessel pool
(in which the Borrower or any Subsidiary is a member) for a term exceeding three
(3) months;
(h) Chartering-out. and will procure that each other Subsidiary will
not, other than pursuant to charters disclosed in Schedule 6, charter, as owner,
any vessel (other than the Designated Vessel) on demise or bareboat charter, or
on time charter for a period in excess of twelve (12) months;
(i) Vessel Pooling. and will procure that each Subsidiary will not,
enter any vessel into any vessel pooling arrangement other than as disclosed in
Schedule 6, or at any time amend any vessel pooling agreement;
(j) Distributions on Stock. in the case of the Borrower only,
directly or indirectly declare or pay any dividend or make any distribution on
its capital stock (a "Restricted Payment");
(k) Indebtedness. incur any Indebtedness, provided, however, that if
no Event of Default has occurred and is continuing, and that the other
Designated Vessel Conditions are met, the Designated Vessel Owner may incur the
Designated Vessel Indebtedness at the time of the Designated Vessel Acquisition;
(l) Investments. make any Investment provided, however, that if no
Event of Default has occurred and is continuing, the Borrower may make the
SOYANG Investment at the time the SOYANG is acquired;
(m) Capital Expenditures. make any Capital Expenditure (other than
as provided in (l) above);
(n) Deposit Accounts. other than as disclosed in Schedule 6,
maintain any deposit account other than with the Syndication Agent; provided,
that this covenant shall not apply to the Designated Vessel Owner; and
(o) Change Fiscal Year. change its fiscal year.
9.3 Subsidiary Negative Covenants. The Borrower hereby covenants and undertakes
with the Lenders that, from the date hereof and so long as any principal,
interest or other moneys are owing in respect of this Agreement, under the Note
or under any of the Security Documents, the Borrower will procure that no
Subsidiary will:
(a) Limitations on Ability to Make Distributions. create or
otherwise cause or permit to exist or become effective any consensual
encumbrance or restriction on the ability of any
39
Subsidiary (other than a Designated Subsidiary) to (i) pay dividends or make any
other distributions on its capital stock or limited liability company interests,
as the case may be, to the Borrower or any Subsidiary or pay any Indebtedness
owed to the Borrower, (ii) make any loans or advances to the Borrower, or (iii)
transfer any of its property or assets to the Borrower;
(b) Use of Corporate Funds. (except for the SOYANG Investment and
Permitted Drydocking Costs) pay out any funds to any company or person except
(a) in the ordinary course of business in connection with the management of the
business of the Borrower and its Subsidiaries, including the operation and/or
repair of the Vessels and other vessels owned or operated by such parties and
(b) the servicing of the Indebtedness permitted hereunder (but excluding, any
prepayments of any Indebtedness other than the Loan);
(c) Issuance of Shares. issue or dispose of any shares of its own
capital stock or limited liability company interests, as the case may be, to any
person other than the Borrower; or
9.4 First Vessel Valuations. For inclusion with each Compliance Certificate
delivered pursuant to Section 9.1(d)(i), and each Compliance Certificate in
respect of the second quarter of each fiscal year delivered pursuant to Section
9.1(d)(ii), and in any event upon the request of any Agent, the Borrower shall
obtain appraisals of the Fair Market Value of the First Vessels. The first three
such valuations in any year are to be at the Borrower's cost, provided, that
following and during the continuance of any Event of Default, all such
valuations are to be at the Borrower's cost. In the event the Borrower fails or
refuses to obtain the valuations requested pursuant to this Section 9.4 within
ten (10) days of an Agent's request therefor, any Agent will be authorized to
obtain such valuations, at the Borrower's cost, from three independent
shipbrokers selected by the Agents, which valuations shall be deemed the
equivalent of valuations duly obtained by the Borrower pursuant to this Section
9.4, but any Agent's actions in doing so shall not excuse any default of the
Borrower under this Section 9.4.
9.5 Asset Maintenance. If at any time after the Drawdown Date but prior to
December 15, 2000, the aggregate Fair Market Value of the First Vessels then
mortgaged to the Security Agent (based upon valuations obtained pursuant to
Section 9.4) (together with the value of any additional collateral theretofore
provided under this Section) is less than one hundred percent (100%) of the
Loan, or if at any time after December 15, 2000 such aggregate Fair Market Value
is less than one hundred ten percent (110%) of the Loan (in either such case,
such percentage herein called the "Required Percentage"), the Borrower shall,
within a period of thirty (30) days following receipt by the Borrower of written
notice from the Administrative Agent notifying the Borrower of such shortfall
and specifying the amount thereof (which amount shall, in the absence of
manifest error, be deemed to be conclusive and binding on the Borrower), either
(a) deliver to the Security Agent, upon the Administrative Agent's request, such
additional collateral as may be satisfactory to the Lenders in their sole
discretion of sufficient value to restore compliance with the Required
Percentage or (b) the Borrower shall prepay such amount of the Loan (together
with interest thereon and any other monies payable in respect of such prepayment
pursuant to Section 5.6) as shall result in the Fair Market Value of the Vessels
then mortgaged to the Security Agent being not less than the Required
Percentage.
9.6 Inspection and Survey Reports. If the Lenders shall so request, the
Borrowers shall provide the Lenders with copies of all internally generated
inspection or survey reports on the Vessels.
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10. ASSIGNMENT.
This Agreement shall be binding upon, and inure to the benefit of,
the Borrower and the Lenders, the Arrangers and the Agents and their respective
successors and assigns, except that the Borrower may not assign any of its
rights or obligations hereunder. Each Lender shall be entitled to assign its
rights and obligations under this Agreement or grant participation(s) in the
Loan to any subsidiary, holding company or other affiliate of such Lender, to
any subsidiary or other affiliate company of any thereof or, with the consent of
the Borrower and the Agents, not to be unreasonably withheld, to any other bank
or financial institution (in a minimum amount of not less than $5,000,000), and
such Lender shall forthwith give notice of any such assignment or participation
to the Borrower; and provided, however, that any such assignment must be made
pursuant to an Assignment and Assumption Agreement. The Borrower will take all
reasonable actions requested by any Agent or any Lender to effect such
assignment, including, without limitation, the execution of a written consent to
any Assignment and Assumption Agreement.
11. ILLEGALITY, INCREASED COST, NON-AVAILABILITY, ETC.
11.1 Illegality. In the event that by reason of any change in any applicable
law, regulation or regulatory requirement or in the interpretation thereof, a
Lender has a reasonable basis to conclude that it has become unlawful for any
Lender to maintain or give effect to its obligations as contemplated by this
Agreement, such Lender shall inform the Agent and the Borrower to that effect,
whereafter the liability of such Lender to make its Commitment available shall
forthwith cease and the Borrower shall be required either to repay to such
Lender that portion of the Loan advanced by such Lender immediately or, if such
Lender so agrees, to repay such portion of the Loan to the Lender on the last
day of any then current Interest Period in accordance with and subject to the
provisions of Section 11.5. In any such event, but without prejudice to the
aforesaid obligations of the Borrower to repay such portion of the Loan, the
Borrower and the relevant Lender shall negotiate in good faith with a view to
agreeing on terms for making such portion of the Loan available from another
jurisdiction or otherwise restructuring such portion of the Loan on a basis
which is not unlawful.
11.2 Increased Costs. If any change in applicable law, regulation or regulatory
requirement, or in the interpretation or application thereof by any governmental
or other authority, shall:
(i) subject any Lender to any Taxes with respect to its income
from the Loan, or any part thereof, or
(ii) change the basis of taxation to any Lender of payments of
principal or interest or any other payment due or to become
due pursuant to this Agreement (other than a change in the
basis effected by the jurisdiction of organization of such
Lender, the jurisdiction of the principal place of business of
such Lender, the United States of America, the State or City
of New York or any governmental subdivision or other taxing
authority having jurisdiction over such Lender (unless such
jurisdiction is asserted by reason of the activities of the
Borrower or any of the other Security Parties) or such other
jurisdiction where the Loan may be payable), or
41
(iii) impose, modify or deem applicable any reserve requirements or
require the making of any special deposits against or in
respect of any assets or liabilities of, deposits with or for
the account of, or loans by, a Lender, or
(iv) impose on any Lender any other condition affecting the Loan or
any part thereof,
and the result of the foregoing is either to increase the cost to such Lender of
making available or maintaining its Commitment or any part thereof or to reduce
the amount of any payment received by such Lender, then and in any such case if
such increase or reduction in the opinion of such Lender materially affects the
interests of such Lender under or in connection with this Agreement:
(a) the Lender shall notify the Agent and the Borrower of the
happening of such event, and
(b) the Borrower agrees forthwith upon demand to pay to such Lender
such amount as such Lender certifies to be necessary to compensate such Lender
for such additional cost or such reduction; PROVIDED, however, that the
foregoing provisions shall not be applicable in the event that increased costs
to the Lender result from the exercise by the Lender of its right to assign its
rights or obligations under Section 10.
11.3 Nonavailability of Funds. If the Administrative Agent shall determine that,
by reason of circumstances affecting the London Interbank Market generally,
adequate and reasonable means do not or will not exist for ascertaining the
Applicable Rate for the Loan for any Interest Period, the Administrative Agent
shall give notice of such determination to the Borrower. The Borrower and the
Administrative Agent shall then negotiate in good faith in order to agree upon a
mutually satisfactory interest rate and/or Interest Period to be substituted for
those which would otherwise have applied under this Agreement. If the Borrower
and the Administrative Agent are unable to agree upon such a substituted
interest rate and/or Interest Period within thirty (30) days of the giving of
such determination notice, the Administrative Agent shall set an interest rate
and Interest Period to take effect from the expiration of the Interest Period in
effect at the date of determination, which rate shall be equal to the Margin
plus the cost to the Lenders (as certified by each Lender) of funding the Loan.
In the event the state of affairs referred to in this Section 11.3 shall extend
beyond the end of the Interest Period, the foregoing procedure shall continue to
apply until circumstances are such that the Applicable Rate may be determined
pursuant to Section 6.
11.4 Lender's Certificate Conclusive. A certificate or determination notice of
any Lender as to any of the matters referred to in this Section 11 shall, absent
manifest error, be conclusive and binding on the Borrower.
11.5 Compensation for Losses. Where the Loan or any portion thereof is to be
repaid by the Borrower pursuant to this Section 11, the Borrower agrees
simultaneously with such repayment to pay to the relevant Lender all accrued
interest to the date of actual payment on the amount repaid and all other sums
then payable by the Borrower to the relevant Lender pursuant to this Agreement,
together with such amounts as may be certified by the relevant Lender to be
necessary to compensate such Lender for any actual loss, premium or penalties
incurred or to be incurred thereby on account of funds borrowed to make, fund or
maintain its Commitment or such portion thereof for
42
the remainder (if any) of the then current Interest Period or Periods, if any,
but otherwise without penalty or premium.
12. CURRENCY INDEMNITY
12.1 Currency Conversion. If for the purpose of obtaining or enforcing a
judgment in any court in any country it becomes necessary to convert into any
other currency (the "judgment currency") an amount due in Dollars under this
Agreement, the Note or any of the Security Documents then the conversion shall
be made, in the discretion of the Administrative Agent, at the rate of exchange
prevailing either on the date of default or on the day before the day on which
the judgment is given or the order for enforcement is made, as the case may be
(the "conversion date"), provided that the Administration Lenders shall not be
entitled to recover under this section any amount in the judgment currency which
exceeds at the conversion date the amount in Dollars due under this Agreement,
the Note and/or any of the Security Documents.
12.2 Change in Exchange Rate. If there is a change in the rate of exchange
prevailing between the conversion date and the date of actual payment of the
amount due, the Borrower shall pay such additional amounts (if any, but in any
event not a lesser amount) as may be necessary to ensure that the amount paid in
the judgment currency when converted at the rate of exchange prevailing on the
date of payment will produce the amount then due under this Agreement, the Note
and/or any of the Security Documents in Dollars; any excess over the amount due
received or collected by the Lenders shall be remitted to the Borrower.
12.3 Additional Debt Due. Any amount due from the Borrower under this Section 12
shall be due as a separate debt and shall not be affected by judgment being
obtained for any other sums due under or in respect of this Agreement, the Note
and/or any of the Security Documents.
12.4 Rate of Exchange. The term "rate of exchange" in this Section 12 means the
rate at which the Administrative Agent in accordance with its normal practices
is able on the relevant date to purchase Dollars with the judgment currency and
includes any premium and costs of exchange payable in connection with such
purchase.
13. FEES AND EXPENSES
13.1 Fees. The Borrower shall pay to the Arrangers and the Agents such fees as
the parties have agreed pursuant to the Fee Letter.13.2 Expenses. The Borrower
agrees, whether or not the transactions hereby contemplated are consummated, on
demand to pay, or reimburse the Agents and the Arrangers for their payment of,
the reasonable expenses of the Agents, the Arrangers and (after the occurrence
and during the continuance of an Event of Default) the Lenders incident to said
transactions (and in connection with any supplements, amendments, waivers or
consents relating thereto or incurred in connection with the enforcement or
defense of any of the Agents', the Arrangers' and the Lenders' rights or
remedies with respect thereto or in the preservation of the Agents', the
Arrangers' and the Lenders' priorities under the documentation executed and
delivered in connection therewith) including, without limitation, all reasonable
costs and expenses of preparation, negotiation, execution and administration of
this Agreement and the documents referred to herein, the reasonable fees and
disbursements of the Agents' counsel in connection therewith, as well as the
reasonable fees and expenses of any independent appraisers, surveyors, engineers
and other consultants retained by the Agents, or the Arrangers in connection
with this
43
transaction, all reasonable costs and expenses, if any, in connection with the
enforcement of this Agreement, the Note and the Security Documents and stamp and
other similar taxes, if any, incident to the execution and delivery of the
documents (including, without limitation, the Note) herein contemplated and to
hold the Agents, the Arrangers and the Lenders free and harmless in connection
with any liability arising from the nonpayment of any such stamp or other
similar taxes. Such taxes and, if any, interest and penalties related thereto as
may become payable after the date hereof shall be paid immediately by the
Borrower to the Agents, the Arrangers or the Lenders, as the case may be, when
liability therefor is no longer contested by such party or parties or reimbursed
immediately by the Borrower to such party or parties after payment thereof (if
the Agents, the Arrangers or the Lenders, at their sole discretion, chooses to
make such payment).
14. APPLICABLE LAW, JURISDICTION AND WAIVER
14.1 Applicable Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York.
14.2 Jurisdiction. The Borrower hereby irrevocably submits to the jurisdiction
of the courts of the State of New York and of the United States District Court
for the Southern District of New York in any action or proceeding brought
against it by any of the Lenders, the Agents or the Arrangers under this
Agreement or under any document delivered hereunder and hereby irrevocably
agrees that valid service of summons or other legal process on it may be
effected by serving a copy of the summons and other legal process in any such
action or proceeding on the Borrower by mailing or delivering the same by hand
to the Borrower at the address indicated for notices in Section 16.1. The
service, as herein provided, of such summons or other legal process in any such
action or proceeding shall be deemed personal service and accepted by the
Borrower as such, and shall be legal and binding upon the Borrower for all the
purposes of any such action or proceeding. Final judgment (a certified or
exemplified copy of which shall be conclusive evidence of the fact and of the
amount of any indebtedness of the Borrower to the Lenders, the Agents or the
Arrangers) against the Borrower in any such legal action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment.
The Borrower will advise the Administrative Agent promptly of any change of
address for the purpose of service of process. Notwithstanding anything herein
to the contrary, the Lenders may bring any legal action or proceeding in any
other appropriate jurisdiction.
14.3 WAIVER OF JURY TRIAL. IT IS MUTUALLY AGREED BY AND AMONG THE BORROWER, THE
OTHER SECURITY PARTIES, THE ARRANGERS, THE AGENTS AND THE LENDERS THAT EACH OF
THEM HEREBY WAIVES TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM
BROUGHT BY ANY PARTY HERETO AGAINST ANY OTHER PARTY HERETO ON ANY MATTER
WHATSOEVER ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS AGREEMENT, THE NOTE,
THE GUARANTY OR THE SECURITY DOCUMENTS.
15. THE AGENTs
15.1 Appointment of Agents. Each of the Lenders irrevocably appoints and
authorizes the Agents severally each to take such action as agent on its behalf
and to exercise such powers under this Agreement, the Note and the Security
Documents as are delegated to such Agent by the terms hereof and thereof,
including execution of the Intercreditor Agreement. No Agent nor any of their
44
respective directors, officers, employees or agents shall be liable for any
action taken or omitted to be taken by it or them under this Agreement, the Note
or the Security Documents or in connection therewith, except for its or their
own gross negligence or willful misconduct.
15.2 Security Agent as Trustee. Each of the Lenders irrevocably appoints the
Security Agent as trustee on its behalf with regard to (i) the security, powers,
rights, titles, benefits and interests (both present and future) constituted by
and conferred on the Lenders or any of them or for the benefit thereof under or
pursuant to this Agreement, the Note or any of the Security Documents
(including, without limitation, the benefit of all covenants, undertakings,
representations, warranties and obligations given, made or undertaken to any
Lender in the Agreement, the Note or any Security Document), (ii) all moneys,
property and other assets paid or transferred to or vested in any Lender or any
agent of any Lender or received or recovered by any Lender or any agent of any
Lender pursuant to, or in connection with, this Agreement, the Note or the
Security Documents whether from any Security Party or any other person and (iii)
all money, investments, property and other assets at any time representing or
deriving from any of the foregoing, including all interest, income and other
sums at any time received or receivable by any Lender or any agent of any Lender
in respect of the same (or any part thereof). The Security Agent hereby accepts
such appointment.
15.3 Distribution of Payments. Whenever any payment is received by any Agent
from the Borrower or any other Security Party for the account of the Lenders, or
any of them, whether of principal or interest on the Note, commissions, fees
under Section 13 or otherwise, it will thereafter cause to be distributed on the
same day if received before 11 a.m. New York time, or on the next day if
received thereafter, like funds relating to such payment ratably to the Lenders
according to their respective Commitments, in each case to be applied according
to the terms of this Agreement.
15.4 Holder of Interest in Note. The Agents may treat each Lender as the holder
of all of the interest of such Lender in the Note.
15.5 No Duty to Examine, Etc. The Agents shall not be under a duty to examine or
pass upon the validity, effectiveness or genuineness of any of this Agreement,
the Note, the Security Documents or any instrument, document or communication
furnished pursuant to this Agreement or in connection therewith or in connection
with the Note or any Security Document, and the Agents shall be entitled to
assume that the same are valid, effective and genuine, have been signed or sent
by the proper parties and are what they purport to be.
15.6 Agents as Lenders. With respect to that portion of the Loan made available
by it, each Agent shall have the same rights and powers hereunder as any other
Lender and may exercise the same as though it were not an Agent, and the term
"Lender" or "Lenders" shall include each Agent in its capacity as a Lender. Each
Agent and its affiliates may accept deposits from, lend money to and generally
engage in any kind of business with, the Borrower and the other Security Parties
as if it were not an Agent.
15.7 Acts of the Agents. Each Agent shall have duties and discretion, and shall
act as follows:
(a) Obligations of the Agents. The obligations of each Agent under this
Agreement, under the Note and under the Security Documents are only
those expressly set forth herein and therein.
45
(b) No Duty to Investigate. No Agent shall at any time be under any duty
to investigate whether an Event of Default, or an event which with
the giving of notice or lapse of time, or both, would constitute an
Event of Default, has occurred or to investigate the performance of
this Agreement, the Note or any Security Document by any Security
Party.
(c) Discretion of the Agents. Each Agent shall be entitled to use its
discretion with respect to exercising or refraining from exercising
any rights which may be vested in it by, and with respect to taking
or refraining from taking any action or actions which it may be able
to take under or in respect of, this Agreement, the Note and the
Security Documents, unless the Agent shall have been instructed by
the Majority Lenders to exercise such rights or to take or refrain
from taking such action; provided, however, that no Agent shall be
required to take any action which exposes such Agent to personal
liability or which is contrary to this Agreement or applicable law.
(d) Instructions of Majority Lenders. Each Agent shall in all cases be
fully protected in acting or refraining from acting under this
Agreement, under the Note, or under any Security Document in
accordance with the instructions of the Majority Lenders, and any
action taken or failure to act pursuant to such instructions shall
be binding on all of the Lenders.
15.8 Certain Amendments. Neither this Agreement the Note nor any of the Security
Documents nor any terms hereof or thereof may be amended unless such amendment
is approved by the Borrower and the Majority Lenders, provided that no such
amendment shall, without the consent of each Lender affected thereby, (i) reduce
the interest rate or extend the time of payment of principal or interest or fees
on the Loan, or reduce the principal amount of the Loan or any fees hereunder,
(ii) increase or decrease the Commitment of any Lender or subject any Lender to
any additional obligation (it being understood that a waiver of any Event of
Default or any mandatory repayment of Loan shall not constitute a change in the
terms of any Commitment of any Lender), (iii) amend, modify or waive any
provision of this Section 15.8, (iv) amend the definition of Majority Lenders,
(v) consent to the assignment or transfer by the Borrower of any of its rights
and obligations under this Agreement, (vi) release any Security Party from any
of its obligations under any Security Document except as expressly provided
herein or in such Security Document or (vii) amend any provision relating to the
maintenance of collateral under Section 9.5. All amendments approved by the
Majority Lenders under this Section 15.8 must be in writing and signed by the
Borrower and each of the Lenders. In the event that any Lender is unable to or
refuses to sign an amendment approved by the Majority Lenders hereunder, such
Lender hereby appoints the Administrative Agent as its Attorney-In-Fact for the
purposes of signing such amendment. No provision of this Section 15 or any other
provisions relating to the Agents may be modified without the consent of each
Agent.
15.9 Assumption re Event of Default. Except as otherwise provided in Section
15.15, each Agent shall be entitled to assume that no Event of Default, or event
which with the giving of notice or lapse of time, or both, would constitute an
Event of Default, has occurred and is continuing, unless such Agent has been
notified by any Security Party of such fact, or has been notified by a Lender
that such Lender considers that an Event of Default or such an event (specifying
in detail the nature
46
thereof) has occurred and is continuing. In the event that an Agent shall have
been notified by any Security Party or any Lender in the manner set forth in the
preceding sentence of any Event of Default or of an event which with the giving
of notice or lapse of time, or both, would constitute an Event of Default, such
Agent shall notify the Lenders and shall take action and assert such rights
under this Agreement, under the Note and under Security Documents as the
Majority Lenders shall request in writing.
15.10 Limitations of Liability. Neither any Agent nor any of the Lenders shall
be under any liability or responsibility whatsoever:
(a) to any Security Party or any other person or entity as a consequence
of any failure or delay in performance by, or any breach by, any
other Lenders or any other person of any of its or their obligations
under this Agreement or under any Security Document;
(b) to any Lender or Lenders as a consequence of any failure or delay in
performance by, or any breach by, any Security Party of any of its
respective obligations under this Agreement, under the Note or under
the Security Documents; or
(c) to any Lender or Lenders for any statements, representations or
warranties contained in this Agreement, in any Security Document or
in any document or instrument delivered in connection with the
transaction hereby contemplated; or for the validity, effectiveness,
enforceability or sufficiency of this Agreement, the Note, any
Security Document or any document or instrument delivered in
connection with the transactions hereby contemplated.
15.11 Indemnification of the Agents. The Lenders agree to indemnify each Agent
(to the extent not reimbursed by the Security Parties or any thereof), pro rata
according to the respective amounts of their Commitments, from and against any
and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or nature
whatsoever (including legal fees and expenses incurred in investigating claims
and defending itself against such liabilities) which may be imposed on, incurred
by or asserted against, such Agent in any way relating to or arising out of this
Agreement, the Note or any Security Document, any action taken or omitted by
such Agent thereunder or the preparation, administration, amendment or
enforcement of, or waiver of any provision of, this Agreement, the Note or any
Security Document, except that no Lender shall be liable for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting from such Agent's gross negligence or
willful misconduct.
15.12 Consultation with Counsel. Each Agent may consult with legal counsel
selected by such Agent and shall not be liable for any action taken, permitted
or omitted by it in good faith in accordance with the advice or opinion of such
counsel.
15.13 Resignation. Any Agent may resign at any time by giving sixty (60) days'
written notice thereof to the other Agents, the Lenders and the Borrower. Upon
any such resignation, the Lenders shall have the right to appoint a successor
Agent. If no successor Agent shall have been so
47
appointed by the Lenders and shall have accepted such appointment within sixty
(60) days after the retiring Agent's giving notice of resignation, then the
retiring Agent may, on behalf of the Lenders, appoint a successor Agent which
shall be a bank or trust company of recognized standing. The appointment of any
successor Agent shall be subject to the prior written consent of the Borrower,
such consent not to be unreasonably withheld. After any retiring Agent's
resignation as Agent hereunder, the provisions of this Section 15 shall continue
in effect for its benefit with respect to any actions taken or omitted by it
while acting as Agent.
15.14 Representations of Lenders. Each Lender represents and warrants to each
other Lender and each Agent that:
(a) in making its decision to enter into this Agreement and to make its
Commitment available hereunder, it has independently taken whatever
steps it considers necessary to evaluate the financial condition and
affairs of the Security Parties, that it has made an independent
credit judgment and that it has not relied upon any statement,
representation or warranty by any other Lender or any Agent; and
(b) so long as any portion of its Commitment remains outstanding, it
will continue to make its own independent evaluation of the
financial condition and affairs of the Security Parties.
15.15 Notification of Event of Default. Each Agent hereby undertakes to promptly
notify the Lenders, and the Lenders hereby promptly undertake to notify each
Agent and the other Lenders, of the existence of any Event of Default which
shall have occurred and be continuing of which such Agent or Lender has actual
knowledge.
16. NOTICES AND DEMANDS
16.1 Notices. All notices, requests, demands and other communications to any
party hereunder shall be in writing (including prepaid overnight courier,
facsimile transmission or similar writing) and shall be given to the Borrower at
the address or telecopy number set forth below and to the Lenders and the Agents
at their address and telecopy numbers set forth in Schedule 1 or at such other
address or telecopy numbers as such party may hereafter specify for the purpose
by notice to each other party hereto. Each such notice, request or other
communication shall be effective (i) if given by telecopy, when such telecopy is
transmitted to the telecopy number specified in this Section and telephonic
confirmation of receipt thereof is obtained or (ii) if given by mail, prepaid
overnight courier or any other means, when received at the address specified in
this Section or when delivery at such address is refused.
If to the Borrower:
OMI Corporation
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ de Sostoa
Senior Vice President - Treasurer
48
17. MISCELLANEOUS
17.1 Time of Essence. Time is of the essence of this Agreement but no failure or
delay on the part of any Lender, the Agents or the Arrangers to exercise any
power or right under this Agreement shall operate as a waiver thereof, nor shall
any single or partial exercise by any Lender, the Agents or the Arrangers of any
power or right hereunder preclude any other or further exercise thereof or the
exercise of any other power or right. The remedies provided herein are
cumulative and are not exclusive of any remedies provided by law.
17.2 Unenforceable, etc., Provisions - Effect. In case any one or more of the
provisions contained in this Agreement, the Note or in any Security Document
would, if given effect, be invalid, illegal or unenforceable in any respect
under any law applicable in any relevant jurisdiction, said provision shall not
be enforceable against the relevant Security Party, but the validity, legality
and enforceability of the remaining provisions herein or therein contained shall
not in any way be affected or impaired thereby.
17.3 References. References herein to Sections, Exhibits and Schedules are to be
construed as references to sections of, exhibits to, and schedules to, this
Agreement, unless the context otherwise requires.
17.4 Further Assurances. The Borrower agrees that if this Agreement, the Note or
any Security Document shall, in the reasonable opinion of the Lenders, at any
time be deemed by the Lenders for any reason insufficient in whole or in part to
carry out the true intent and spirit hereof or thereof, it will execute or cause
to be executed such other and further assurances and documents as in the opinion
of the Lenders may be required in order more effectively to accomplish the
purposes of this Agreement, the Note or any Security Document.
17.5 Prior Agreements, Merger. Any and all prior understandings and agreements
heretofore entered into between the Security Parties on the one part, and the
Agents, the Arrangers or the Lenders, on the other part, whether written or
oral, other than the Fee Letter are superseded by and merged into this Agreement
and the other agreements (the forms of which are exhibited hereto) to be
executed and delivered in connection herewith to which the Security Parties, the
Arrangers, the Agents and/or the Lenders are parties, which alone fully and
completely express the agreements between the Security Parties, the Arrangers,
the Agents and the Lenders.
17.6 Entire Agreement; Amendments. This Agreement constitutes the entire
agreement of the parties hereto including all parties added hereto pursuant to
an Assignment and Assumption Agreement. Subject to Section 15.8, any provision
of this Agreement, the Note or any Security Document may be amended or waived
if, but only if, such amendment or waiver is in writing and is signed by the
Borrower, the Administration Agent and the Majority Lenders (and, if the rights
or duties of the Security Agent or the Syndication Agent are affected thereby,
by such Agent, as applicable). This Agreement may be executed in any number of
counterparts, each of will shall be deemed an original, but all such
counterparts together shall constitute one and the same instrument.
17.7 Indemnification. The Borrower and, by its execution and delivery of the
Consent and Agreement set forth below, each of the other Security Parties
jointly and severally agree to indemnify each Lender, each Agent and each
Arranger, their respective successors and assigns, and
49
their respective officers, directors, employees, representatives and agents
(each an "Indemnitee") from, and hold each of them harmless against, any and all
losses, liabilities, claims, damages, expenses, obligations, penalties, actions,
judgments, suits, costs or disbursements of any kind or nature whatsoever
(including, without limitation, the fees and disbursements of counsel for such
Indemnitee in connection with any investigative, administrative or judicial
proceeding commenced or threatened, whether or not such Indemnitee shall be
designated a party thereto) that may at any time (including, without limitation,
at any time following the payment of the obligations of the Borrower hereunder)
be imposed on, asserted against or incurred by, any Indemnitee as a result of,
or arising out of or in any way related to or by reason of, (a) any violation by
any Security Party (or any charterer or other operator of any Vessel) of any
applicable Environmental Law, (b) any Environmental Claim arising out of the
management, use, control, ownership or operation of property or assets by any
Security Party (or, after foreclosure, by any Lender, any Agent or any Arranger
or any of their respective successors or assigns), (c) the breach of any
representation, warranty or covenant set forth in Sections 2.1 (o) or 9.1(j),
(d) the Loan (including the use of the proceeds of the Loan and any claim made
for any brokerage commission, fee or compensation from any Person), of (e) the
execution, delivery, performance or non-performance of this Agreement, the Note,
any Security Document, or any of the documents referred to herein or
contemplated hereby (whether or not the Indemnitee is a party thereto). If and
to the extent that the obligations of the Security Parties under this Section
are unenforceable for any reason, the Borrower and, by its execution and
delivery of the Consent and Agreement set forth below, each of the other
Security Parties jointly and severally agree to make the maximum contribution to
the payment and satisfaction of such obligations which is permissible under
applicable law. The obligations of the Security Parties under this Section 17.7
shall survive the termination of this Agreement and the repayment to the Lenders
of all amounts owing thereto under or in connection herewith.
17.8 Release of Designated Vessel Owner Guaranty. Notwithstanding Section 17.6,
Entire Agreement, Amendments, upon the Designated Vessel Acquisition, the
Security Agent shall release the Designated Vessel Owner from its Guaranty.
17.9 Headings. In this Agreement, Section headings are inserted for convenience
of reference only and shall not be taken into account in the interpretation of
this Agreement.
50
IN WITNESS whereof the parties hereto have caused this Agreement to be
duly executed by their duly authorized representatives as of the day and year
first above written.
OMI CORPORATION
By:_____________________________________
▇▇▇▇▇▇▇ de Sostoa
Senior Vice President-Treasurer
CHRISTIANIA BANK OG KREDITKASSE ASA,
as Arranger and Administrative Agent
By:_____________________________________
Name:
Title:
By:_____________________________________
Name:
Title:
DEN NORSKE BANK ASA,
as Arranger and Syndication Agent
By:_____________________________________
Name:
Title:
By:_____________________________________
Name:
Title:
MEESPIERSON CAPITAL CORP.,
as Arranger and Security Agent
By:_____________________________________
Name:
Title:
By:_____________________________________
Name:
Title:
51
CONSENT AND AGREEMENT
Each of the undersigned, referred to in the foregoing Loan Agreement
as the "Guarantors" and the "Subordinated Guarantors", hereby consents and
agrees to said Agreement and to the documents contemplated thereby and to the
provisions contained therein relating to conditions to be fulfilled and
obligations to be performed by the undersigned pursuant to or in connection with
said Agreement and agrees particularly to be bound by the representations,
warranties and covenants relating to the undersigned contained in Sections 2 and
9 of said Agreement to the same extent as if the undersigned were a party to
said Agreement, and expressly agrees to the grant of a security interest in
favor of the Syndication Agent in the undersigned's accounts pursuant to Section
9.1(s) of said Agreement.
Guarantors:
COLORADO SHIPPING LLC,
by OMI Corporation, sole member
By:_____________________________________
▇▇▇▇▇▇▇ de Sostoa
Senior Vice President-Treasurer
ELBE SHIPPING LLC
by OMI Corporation, sole member
By:_____________________________________
▇▇▇▇▇▇▇ de Sostoa
Senior Vice President-Treasurer
LOIRE SHIPPING LLC,
by OMI Corporation, sole member
By:_____________________________________
▇▇▇▇▇▇▇ de Sostoa
Senior Vice President-Treasurer
NILE SHIPPING LLC,
by OMI Corporation, sole member
By:_____________________________________
▇▇▇▇▇▇▇ de Sostoa
Senior Vice President-Treasurer
▇▇▇▇▇▇▇▇ SHIPPING LLC,
by OMI Corporation, sole member
By:_____________________________________
▇▇▇▇▇▇▇ de Sostoa
Senior Vice President-Treasurer
PAULINA SHIIPING LLC,
by OMI Corporation, sole member
By:_____________________________________
▇▇▇▇▇▇▇ de Sostoa
Senior Vice President-Treasurer
VOLGA SHIPPING LLC,
by OMI Corporation, sole member
By:_____________________________________
▇▇▇▇▇▇▇ de Sostoa
Senior Vice President-Treasurer
Subordinated Guarantors:
▇▇▇▇ SHIPPING LLC,
by OMI Corporation, sole member
By:_____________________________________
▇▇▇▇▇▇▇ de Sostoa
Senior Vice President-Treasurer
DANUBE SHIPPING LLC
by OMI Corporation, sole member
By:_____________________________________
▇▇▇▇▇▇▇ de Sostoa
Senior Vice President-Treasurer
ISERE SHIPPING LLC,
by OMI Corporation, sole member
By:_____________________________________
▇▇▇▇▇▇▇ de Sostoa
Senior Vice President-Treasurer
LIMAR SHIPPING LLC,
by OMI Corporation, sole member
By:_____________________________________
▇▇▇▇▇▇▇ de Sostoa
Senior Vice President-Treasurer
PAGODA SHIPPING LLC,
by OMI Corporation, sole member
By:_____________________________________
▇▇▇▇▇▇▇ de Sostoa
Senior Vice President-Treasurer
PECOS SHIPPING LLC,
by OMI Corporation, sole member
By:_____________________________________
▇▇▇▇▇▇▇ de Sostoa
Senior Vice President-Treasurer
SABINE SHIPPING LLC,
by OMI Corporation, sole member
By:_____________________________________
▇▇▇▇▇▇▇ de Sostoa
Senior Vice President-Treasurer
SACRAMENTO SHIPPING LLC,
by OMI Corporation, sole member
By:_____________________________________
▇▇▇▇▇▇▇ de Sostoa
Senior Vice President-Treasurer
SEINE SHIPPPING LLC,
by OMI Corporation, sole member
By:_____________________________________
▇▇▇▇▇▇▇ de Sostoa
Senior Vice President-Treasurer
SEVERN SHIPPING LLC,
by OMI Corporation, sole member
By:_____________________________________
▇▇▇▇▇▇▇ de Sostoa
Senior Vice President-Treasurer
▇▇▇▇▇▇▇ SHIPPING LLC,
by OMI Corporation, sole member
By:_____________________________________
▇▇▇▇▇▇▇ de Sostoa
Senior Vice President-Treasurer
TIBER SHIPPING LLC,
by OMI Corporation, sole member
By:_____________________________________
▇▇▇▇▇▇▇ de Sostoa
Senior Vice President-Treasurer
TRENT SHIPPING LLC,
by OMI Corporation, sole member
By:_____________________________________
▇▇▇▇▇▇▇ de Sostoa
Senior Vice President-Treasurer
CAIRO SEA SHIPPING LLC
By:_____________________________________
▇▇▇▇▇▇▇ de Sostoa
Senior Vice President-Treasurer
CZANTORIA SHIPPING LLC
by OMI Corporation, sole member
By:_____________________________________
▇▇▇▇▇▇▇ de Sostoa
Senior Vice President-Treasurer
LAUREL SHIPPING LLC
By:_____________________________________
▇▇▇▇▇▇▇ de Sostoa
Senior Vice President-Treasurer
MENDALA II TRANSPORT, INC.
By:_____________________________________
▇▇▇▇▇▇▇ de Sostoa
Senior Vice President-Treasurer
SOKOLICA SHIPPING LLC
by OMI Corporation, Sole Member
By:_____________________________________
▇▇▇▇▇▇▇ de Sostoa
Senior Vice President-Treasurer
SOYANG SHIPPING LLC
by OMI Corporation, Sole Member
By:_____________________________________
▇▇▇▇▇▇▇ de Sostoa
Senior Vice President-Treasurer
TRINIDAD SEA SHIPPING LLC
By:_____________________________________
▇▇▇▇▇▇▇ de Sostoa
Senior Vice President-Treasurer
UBC CHARTERING LTD.
By:_____________________________________
▇▇▇▇▇▇▇ de Sostoa
Senior Vice President-Treasurer
