================================================================================
LOAN AGREEMENT PROVIDING FOR A
US$218,000,000
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
================================================================================
as of February 4, 2000
CONTENTS
PAGE
----
1. DEFINITIONS..........................................................1
1.1 Specific Definitions.................................................1
1.2 Computation of Time Periods; Other Definitional Provisions..........16
1.3 Accounting Terms....................................................16
1.4 Certain Matters Regarding Materiality...............................16
1.5 Forms of Documents..................................................16
2. REPRESENTATIONS AND WARRANTIES......................................16
2.1 Representations and Warranties......................................16
(a) Due Organization and Power....................................17
(b) Authorization and Consents....................................17
(c) Binding Obligations...........................................17
(d) No Violation..................................................17
(e) Litigation....................................................17
(f) No Default....................................................17
(g) Vessels.......................................................17
(h) Insurance.....................................................18
(i) Financial Information.........................................18
(j) Tax Returns...................................................18
(k) ERISA.........................................................18
(l) Chief Executive Office........................................18
(m) Foreign Trade Control Regulations.............................19
(n) Equity Ownership..............................................19
(o) Environmental Matters and Claims..............................19
(p) Compliance with ISM Code......................................20
(q) Threatened Withdrawal of DOC or SMC...........................20
(r) Liens.........................................................20
(s) Indebtedness..................................................20
(t) Survival......................................................20
3. THE LOAN............................................................20
3.1 (a) Purpose.........................................................20
(b) Making of the Loan............................................20
3.2 Drawdown Notice.....................................................20
3.3 Effect of Drawdown Notice...........................................20
4. CONDITIONS..........................................................21
4.1 Conditions Precedent to Drawdown of the Loan........................21
i
(a) Corporate Authority.............................................21
(b) The Vessels.....................................................22
(c) The Note .......................................................22
(d) Guarantor Documents.............................................22
(e) Pledge Agreement................................................23
(f) Intercreditor Agreement.........................................23
(g) Vessel Appraisals...............................................23
(h) Guarantor Solvency..............................................23
(i) Environmental Claims............................................23
(j) Fees............................................................23
(k) Accounts........................................................23
(l) Vessel Liens....................................................23
(m) Ship Mortgage Indemnity.........................................23
(n) Facility B......................................................23
(o) Charters; Pooling Agreements....................................23
(p) Legal Opinions..................................................23
4.2 Further Conditions Precedent........................................24
4.3 Breakfunding Costs..................................................24
4.4 Satisfaction after Drawdown.........................................24
4.5 Cancellation of Standby Letter of Credit............................24
5. REPAYMENT AND PREPAYMENT............................................24
5.1 Repayment...........................................................24
5.2 Voluntary Prepayment; no re-borrowing...............................25
5.4 Mandatory Prepayment; Sale or Loss of Vessel........................25
(a) Required Percentage Not Satisfied.............................25
(b) Asset Ratio Preserved.........................................25
(c) Loan-to-Value Reduction. if the Ship Mortgage Indemnity
has been obtained and.........................................25
(d) As Excess Cash................................................25
5.5 Interest and Costs with Prepayments/Application of Prepayments......26
6. INTEREST AND RATE...................................................26
6.1 Applicable Rate.....................................................26
6.2 Default Rate........................................................26
6.3 Interest Periods....................................................26
6.4 Interest Payments...................................................26
7. PAYMENTS............................................................26
7.1 Place of Payments, No Set Off.......................................26
ii
7.2 Tax Credits.........................................................27
7.3 Computations; Banking Days..........................................27
8. EVENTS OF DEFAULT...................................................27
8.1 Events of Default. The occurrence of...............................27
(a) Non-Payment of Principal......................................27
(b) Non-Payment of Interest or Other Amounts......................27
(c) Representations...............................................27
(d) Mortgage......................................................28
(e) Covenants.....................................................28
(f) Indebtedness..................................................28
(g) Ownership of Guarantors.......................................28
(h) Bankruptcy....................................................28
(i) Termination of Operations; Sale of Assets.....................28
(j) Judgments.....................................................29
(k) Inability to Pay Debts........................................29
(l) Change in Financial Position..................................29
(m) Change in Control.............................................29
(n) Cross-Default.................................................29
(o) ERISA Debt....................................................29
(p) Standby Letter of Credit/Ship Mortgage Indemnity..............29
8.2 Indemnification.....................................................30
8.3 Application of Moneys...............................................30
(a) first,........................................................30
(b) secondly,.....................................................30
(c) thirdly,......................................................30
(d) fourthly,.....................................................30
(e) fifthly,......................................................30
(g) seventhly,....................................................31
9. COVENANTS...........................................................31
9.1 Affirmative Covenants...............................................31
(a) Performance of Agreements.....................................31
(b) Notice of Default, etc........................................31
(c) Obtain Consents...............................................31
(d) Financial Information.........................................32
(e) Corporate Existence...........................................32
(f) Books and Records.............................................32
(g) Taxes and Assessments.........................................32
(h) Inspection....................................................32
(i) Compliance with Statutes, Agreements, etc.....................32
(j) Environmental Matters.........................................33
(k) ERISA.........................................................33
(l) Vessel Management.............................................33
iii
(m) Funded Debt to Total Capitalization Ratio.....................33
(n) Cash..........................................................33
(o) Consolidated Net Worth........................................34
(p) EBITDA to Interest Expense....................................34
(q) Use of Excess Cash............................................34
(r) Brokerage Commissions, etc....................................34
(s) Deposit Accounts; Assignment..................................34
(t) Future Guaranties.............................................35
(u) Future Pledge Agreements......................................35
(v) Insurance.....................................................35
(w) Ship Mortgage Indemnity.......................................35
9.2 Negative Covenants..................................................35
(a) Liens.........................................................35
(b) Change in Business............................................36
(c) Sale or Pledge of Shares......................................36
(d) Sale of Assets................................................36
(e) Changes in Offices or Names...................................36
(f) Consolidation and Merger......................................36
(g) Chartering-in.................................................36
(h) Chartering-out................................................37
(i) Vessel Pooling................................................37
(j) Distributions on Stock........................................37
(k) Indebtedness..................................................37
(l) Investments...................................................38
(m) Capital Expenditures..........................................38
(n) Deposit Accounts..............................................38
(o) Change Fiscal Year............................................38
9.3 Subsidiary Negative Covenants.......................................38
(a) Limitations on Ability to Make Distributions..................39
(b) Use of Corporate Funds........................................39
(c) Issuance of Shares............................................39
9.4 Vessel Valuations...................................................39
9.5 Asset Maintenance...................................................39
9.6 Inspection and Survey Reports.......................................40
9.7 Vessel Substitution Sales...........................................40
9.8 Tender of Qualified Substitute Vessel...............................40
10. ASSIGNMENT..........................................................41
11. ILLEGALITY, INCREASED COST, NON-AVAILABILITY, ETC...................41
11.1 Illegality..........................................................41
iv
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
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
v
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
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
vi
SCHEDULE
1 The Lenders and the Commitments
2 OMI and Affiliates
3 The Vessels
4 Margin
5 The Facility B Vessels
6 Disclosure
EXHIBITS
A Form of Note
B Form of Guaranty
C Form of Pledge Agreement
D Form of Mortgage
E Form of Earnings Assignment
F Form of Insurances Assignment
G Form of Assignment and Assumption Agreement
H Form of Compliance Certificate
I Form of Drawdown Notice
J Form of Interest Notice
K Form of Intercreditor Agreement
L Form of Standby Letter of Credit
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 Xxxxxxxx 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 administration 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$218,000,000;
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 Xxxxx 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;
"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
G;
"Assignment Notices" means
(i) notices with respect to the Earnings
Assignments substantially in the form
set out in Exhibit 1 thereto;
and
(ii) notices with respect to the Insurances
Assignments substantially in the form
set out in Exhibit 3 thereto;
"Assignments" means the Earnings Assignments and the
Insurances 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 Xxxxxx, Xxxxxxx,
Xxxx Xxxx, Xxxxxxxxx, Xxxxxxx 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;
"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
2
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
date hereof 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 Shipping" means Columbia Shipping LLC, a limited
liability company organized under the laws
of the Republic of the Xxxxxxxx Islands;
"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 Agent from time to time
pursuant to Section 9.1(d) in the form set
out in Exhibit H, or in such other form as
the 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;
"Designated Indebtedness" means Indebtedness that is
(i) incurred by the Designated Vessel
Owner to finance
3
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, (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 has 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 Administrative Agent
as the vessel to be financed on a
non-recourse basis in accordance with the
terms and conditions herein provided;
"Designated Vessel Acquisition" means the acquisition of
the Designated Vessel by 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 Conditions" means, upon or prior to the Designated
Vessel 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 Indebtedness to
finance the
4
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
(vii) immediately prior to the Designated
Vessel Acquisition, the Designated
Vessel Owner has total assets of less
than $500,000 and has no
Subsidiaries;
"Designated Vessel Owner" means the Subsidiary which is the owner of
the Designated Vessel;
"DOC" means a document of compliance issued to an
Operator in accordance with rule 13 of the
ISM Code;
"Dollars" and the sign "$" 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;
5
"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;
"Earnings Assignments" means the assignments in
respect of the earnings of each Vessel from
any and all sources to be executed by the
relevant Guarantor in favor of the Security
Agent pursuant to Section 4.1(d)
substantially in the form set out in Exhibit
E;
"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;
"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 B Administrative Agent" means CBK, in its capacity as administrative
agent for the Facility B Lenders;
"Facility B Agent" means the Facility B Administrative Agent,
the Facility B Security Agent and the
Facility B Syndication Agent;
"Facility B Guaranty" means the guaranty, made by each of the
guarantors of the obligations of the
Borrower under the Facility B Loan
Agreement;
"Facility B Lenders" means the banks and other financial
institutions identified on Schedule 1 to the
Facility B Loan Agreement as lenders;
6
"Facility B Loan Agreement" means the loan agreement to be dated on or
about the date hereof made by and among,
inter alia, the Borrower, as borrower, and
the Facility B Lenders, as lenders, pursuant
to which the Facility B Lenders will make
Facility B available to the Borrower for the
purpose of refinancing existing indebtedness
secured by the Facility B Vessels;
"Facility B Syndication Agent" means DnB, in its capacity as syndication
agent for the Facility B Lenders;
"Facility C" means the convertible letter of credit
facility in the principal amount of
$36,000,000 to be made available to the
Borrower pursuant to the Facility C
Agreement;
"Facility C Administrative Agent" means CBK, in its capacity as administrative
agent for the Facility C Bank;
"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 the
Standby Letter of Credit;
"Facility C Banks" means the banks and other financial
institutions identified on Schedule 1 to the
Facility C Agreement;
"Facility C Issuer" means CBK in its capacity as Issuer for the
Facility C Banks pursuant to the Facility C
Agreement;
"Facility C Security Agent" means MeesPierson, in its capacity as
security agent for the Facility C Banks;
"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
7
the fees referred to therein;
"Final Payment" means the principal amount of One Hundred
Twenty-Three Million Dollars ($123,000,000)
plus such other amounts as may be necessary
to repay the Loan in full 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;
"Final Payment Date" means the date that is five years after the
Drawdown Date;
"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 and thereafter shall also mean
such companies as may execute a Guaranty
pursuant to Section 9.1(t) or otherwise;
"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
8
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;
"Insurances Assignments" means the assignments in respect of the
insurances over the Vessels to be executed
by the respective Guarantor owning same in
favor of the Security Agent pursuant to
Section 4.1(d) substantially in the form set
out in Exhibit F;
"Intercreditor Agreement" means the intercreditor agreement dated on
or about the date hereof entered into by and
among the Agents, the Facility B Agents and
the Facility C Agents substantially in the
form set out in Exhibit K;
"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 and
certifying the current ratio of the
Borrower's Funded Debt to EBITDA and the
corresponding Margin, each substantially in
the form of Exhibit J;
"Interest Period(s)" means period(s) of one, three or six months
selected by the Borrower or, in the Lenders'
discretion, such other
9
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;
"L/C Drawing Event" means (i) the failure of the Administrative
Agent to receive evidence of the
satisfactory placing of the Ship Mortgage
Indemnity within ninety (90) days after the
Drawdown Date, or (ii) the occurrence of an
Event of Default prior to the earlier of (a)
the expiration of the Standby Letter of
Credit or (b) the issuance of the Ship
Mortgage Indemnity;
"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 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
10
("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 Two Hundred Eighteen Million
Dollars ($218,000,000), 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 (which must include at least one
Lender which is not an Arranger);
"Margin" means a margin which will vary based upon
the Borrower's Funded Debt to EBITDA ratio
as set forth in Schedule 4;
"Material Adverse Effect" shall mean 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,
liabilities, operations, condition
(financial or otherwise) or prospects of the
Borrower and other Security Parties taken as
a whole;
"Materials of shall have the meaning ascribed thereto in
Environmental Concern" Section 2.1(o);
"MEGA I" means Hyundai Hull No. 1173, currently under
construction by Hyundai Heavy Industries,
South Korea;
"Mortgages" means the first preferred Xxxxxxxx Islands
or Liberian ship mortgages on the Vessels,
to be executed by the respective Guarantors
as listed in Schedule 3 in favor of the
Security Agent (as trustee for the Lenders)
pursuant to Section 4.1(d) substantially in
the form set out in Exhibit D;
11
"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
set out 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;
"Payment Dates" means the Initial Payment Date and the dates
falling at six month intervals thereafter,
the last of which is the Final Payment Date;
"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 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 Muliemployer Plan or a Multiple Employer
Plan) covered
12
by Title IV of ERISA;
"Pledge Agreement" means the pledge agreement to be executed by
the Borrower 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 C;
"Pledged Shares" means the shares of capital stock, limited
liability company interests or other equity
interests of any Guarantor owning a Vessel,
owned by the Borrower 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;
"Qualified Substitute Vessel" means a vessel or vessels which, as of the
date of the acquisition by the Borrower or a
Guarantor, (i) have aggregate Fair Market
Value at least equal to the Fair Market
Value of the Vessel or Vessels for which
they are being substituted, (ii) each of
which is subject to a Qualified Time Charter
and (iii) each of which is no more than
thirteen (13) years old;
"Qualified Time Charter" means, at any time in respect of a Qualified
Substitute Vessel, a time charter having a
remaining term of not less than twelve (12)
months and providing EBITDA at least equal
to the EBITDA for the immediately preceding
four fiscal quarters attributable to the
Vessel or Vessels for which such Qualified
Substitute Vessel is being substituted;
"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 Payment" shall have the meaning attributed thereto in
Section 9.2(j);
"Second Assignments" means the second priority assignments of
earnings and insurance over the Vessels, to
be executed by the respective Guarantors as
listed in Schedule 3 in favor of the
Facility C Security Agent pursuant to the
Facility C Agreement;
"Second Mortgages" means the second preferred Xxxxxxxx Islands
or Liberian ship mortgages on the Vessels,
to be executed by the respective Guarantors
as listed in Schedule 3 in favor of the
13
Facility C Security Agent (as trustee for
the Facility C Banks) pursuant to the
Facility C Agreement;
"Security Agent" shall have the meaning attributed hereto in
the Preamble;
"Security Documents" means the Pledge Agreement, all 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)" the Borrower and each of the Guarantors;
"Ship Mortgage Indemnity" means a ship mortgage indemnity policy in
favor of the Security Agent for the benefit
of the Lenders, issued by underwriters
satisfactory to the Agents and in form and
substance satisfactory to the Agents, for a
term of not less than three (3) years from
the Drawdown Date, covering an amount not
less than the difference between (I) the
amount of the Loan advanced on the Drawdown
Date and (ii) 65% of the aggregate of the
Fair Market Value of the Vessels as of the
Drawdown Date;
"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;
"SOYANG Subsidiary" means Soyang Shipping LLC, a limited
liability company organized under the laws
of the Republic of the Xxxxxxxx Islands;
"Standby Letter of Credit" means the letter of credit to be issued by
the Facility C Issuer on behalf of the
Facility C Banks to the Security Agent for
the benefit of the Lenders in the event that
the Ship Mortgage Indemnity is not issued on
or before the Drawdown Date, such letter of
credit to be substantially in the form of
Exhibit L;
"Subsidiaries" means, with respect to any Person, any
business entity of which more than 50% of
the outstanding voting stock is
14
owned directly or indirectly by such Person
and/or 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 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 priority assignments of
earnings and insurance over the Vessels, to
be executed by the respective Guarantors as
listed in Schedule 3 in favor of the
Facility B Security Agent pursuant to the
Facility B Loan Agreement;
"Third Mortgages" means the third preferred Xxxxxxxx Islands
or Liberian ship mortgages on the Vessels,
to be executed by the respective Guarantors
as listed on Schedule 3 in favor of the
Facility B Security Agent (as trustee for
the Facility B Lenders) pursuant to the
Facility B Loan Agreement;
"Total Capitalization" shall mean the sum of (i) Funded Debt, plus
(ii) Consolidated Net Worth;
15
"Total Loss" shall have the meaning ascribed thereto in
the Mortgages;
"Vessel(s)" each of the Vessels listed in Schedule 3,
registered in the name of the relevant
Guarantor as set forth in such Schedule; and
"Withdrawal Liabilities" shall have the meaning given to such term
under Part 1 of Subtitle E of Title IV of
ERISA;
1.2 Computation 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 Matters 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
16
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;
(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 (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 Vessels will be in the sole and absolute
ownership of the respective Guarantor as set forth in
Schedule 3 and duly registered in such Guarantor's name
under Xxxxxxxx Islands or Liberian flag, unencumbered,
save and except for the Mortgage, the Second Mortgage
and the Third Mortgage recorded against it and as
permitted thereby;
(ii) each Vessel will be classed in the highest
classification and rating for vessels of the same age
and type with the respective classification
17
society as set forth in Schedule 3 without any material
outstanding recommendations;
(iii) each Vessel will be operationally seaworthy and in every
way fit for its intended service; and
(iv) 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 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 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 Subsidiary are kept is, and will continue
to be, located at Xxx Xxxxxxx Xxxxx, Xxxxxxxx, Xxxxxxxxx County, Connecticut;
18
(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 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 is a wholly owned
direct subsidiary of the Borrower; 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 Environmental
Approval ("Environmental Claim") (other than Environmental Claims that have
19
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) Liens. other than as disclosed on Schedule 6, there are no liens
of any kind on any property owned by the Borrower or any Subsidiary of the
Borrower;
(s) Indebtedness. other than as disclosed in Schedule 6, the
Borrower (and its Subsidiaries on a consolidated basis) has no long-term
Indebtedness; and
(t) 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
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 I 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 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
20
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 the Guaranty and 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 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;
21
(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 Vessels is in the sole and absolute
ownership of the respective Guarantor as set forth in
Schedule 3 and duly registered in such Guarantor's name
under Xxxxxxxx Islands or Liberian flag, unencumbered,
save and except for the Mortgage, the Second Mortgage
and the Third Mortgage recorded against it and as
otherwise permitted thereby;
(ii) 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 without any material outstanding
recommendations;
(iii) each of the Vessels is operationally seaworthy and in
every way fit for its intended service; and
(iv) 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 Documents. each Guarantor shall have duly executed and
delivered to the Administrative Agent:
(i) the Guaranty;
(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;
22
(e) Pledge Agreement. the Borrower shall have duly executed and
delivered to the Security Agent the Pledge Agreement and the Pledged Shares;
(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 Vessel showing the aggregate Fair Market Value of the Vessels to
be not less than one hundred fifteen percent (115%) of the Loan;
(h) Guarantor Solvency. the Administrative Agent shall have received
a certificate of an officer of each Guarantor confirming the representations and
warranties with respect to solvency set forth in its Guaranty and containing
conclusions as to the solvency of such 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 Second Mortgages, the Second
Assignments, the Third Mortgages and the Third Assignments, there are no liens,
charges or encumbrances 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) Ship Mortgage Indemnity/Standby Letter of Credit. the
Administrative Agent shall have received either (i) evidence of the satisfactory
placing of the Ship Mortgage Indemnity or (ii) the Standby Letter of Credit;
(n) Facility B. the Facility B Lenders have advanced Facility B;
(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) Xxxxxxx X. London, Esq.,
in-house counsel for the Security Parties, and (ii) Xxxxxx & Xxxxxx 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,
23
the State of Delaware, the State of New York, the Republic of Liberia and the
Republic of the Xxxxxxxx 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 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).
4.5 Cancellation of Standby Letter of Credit. In the event the Ship Mortgage
Indemnity, in form and substance satisfactory to the Administrative Agent, has
been delivered thereto, subsequent to the Drawdown Date but prior to an L/C
Drawing Event, the Standby Letter of Credit shall be surrendered to the Facility
C Issuer for cancellation.
5. REPAYMENT AND PREPAYMENT
5.1 Repayment. Subject to the provisions of Sections 5.3 and 5.5 regarding
application of prepayments, the Borrower shall repay the principal of the Loan
in ten (10) semi-annual
24
installments on the Payment Dates, the first four (4) such installments each
being in the amount of Five Million Dollars ($5,000,000), the next five (5) such
installments each being in the amount of Twelve Million Five Hundred Thousand
Dollars ($12,500,000) and the last such installment being in the amount of
Twelve Million Five Hundred Thousand Dollars ($12,500,000) plus the Final
Payment, such last installment to be paid on the Final Payment Date.
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; Occurrence of an L/C Drawing Event.
Upon the occurrence of a L/C Drawing Event the Security Agent shall
deliver a notice for demand of payment of Thirty-Six Million ($36,000,000)
pursuant to the Standby Letter of Credit. Such amount shall, upon receipt, be
applied to the prepayment of the Loan by reducing the amount of the installments
due on the first four (4) Payment Dates to One Million Dollars ($1,000,000) and
the installments due on the subsequent two Payment Dates to Two Million Five
Hundred Thousand Dollars ($2,500,000), the amounts due thereafter being
unchanged.
5.4 Mandatory Prepayment; Sale or Loss of Vessel.On (i) any sale of a Vessel
(other than sales made pursuant to Section 9.7, Vessel Substitution Sales), 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 the Security Agent as assignee thereof, such
proceeds shall be applied as follows:
(a) Required Percentage Not Satisfied. if the aggregate Fair Market
Value of the Vessels remaining immediately after such loss or sale is less than
the then Required Percentage of the Loan and any amounts due and owing by the
Borrower in respect of Facility C (determined pursuant to Section 9.5, Asset
Maintenance), entirely and immediately in prepayment of the Loan and Facility C,
pro rata in accordance with amounts then outstanding thereunder;
(b) Asset Ratio Preserved. to prepayment of the Loan and Facility C,
pro rata in accordance with amounts then outstanding thereunder, in the amount
necessary to provide that the ratio, immediately after such sale or loss (and
application of proceeds), of the aggregate Fair Market Value of the remaining
Vessels to the balance of the Loan and the Borrower's obligations in respect of
Facility C is at least equal to the ratio, immediately prior to such sale, of
the aggregate Fair Market Value of the Vessels to the balance of the Loan and
the Borrower's obligations in respect of Facility C;
(c) Loan-to-Value Reduction. if the Ship Mortgage Indemnity has been
obtained and if the Borrower (on a consolidated basis) has cash or Cash
Equivalents of $30.0 million or greater, to prepayment of the Loan in the amount
necessary to provide that the ratio, immediately after such sale or loss (and
application of proceeds), of the balance of the Loan to the aggregate Fair
Market Value of the remaining Vessels does not exceed 0.65; and
(d) As Excess Cash. Otherwise, in accordance with Section 9.1(q) Use
of Excess Cash.
25
5.5 Interest and Costs with Prepayments/Application of Prepayments. Any
prepayment of the Loan made hereunder (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).
All prepayments of the Loan under Section 5.2 or 5.4 shall be applied towards
the installments of the Loan in the inverse order of their due dates for
payment.
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, provided, however, that the Margin shall be
determined concurrently with the delivery of each Compliance Certificate to the
Administrative Agent, and as necessary during any Interest Period the Applicable
Rate shall be re-calculated to reflect the current Margin. 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 that 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) 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 Administrative Agent, not later than 11 a.m. New
York time (any payment received
26
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 00 Xxxx
00xx Xxxxxx, 0xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000 or to such other office of the
Administrative Agent as the Administrative 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. 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 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 or in any of the
Security Documents or in any other instrument, document or other agreement
delivered in connection herewith or therewith proves
27
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 and/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. 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
(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 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 all or substantially all of the
assets of any Security Party are seized or otherwise appropriated; or
28
(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) Cross-Default. any Event of Default (as defined in the Facility
B 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 or any Guarantor defaults under any material contract or
agreement to which it is a party or by which it is bound (including, but not
limited to, the construction contracts in respect of each of the MEGA I and the
SOYANG); or
(o) 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
(p) Standby Letter of Credit/Ship Mortgage Indemnity. the Standby
Letter of Credit, if provided, shall be cancelled (other than cancellation after
either a drawing has been made thereunder or the Ship Mortgage Indemnity has
been issued) or, at any time prior to the third anniversary of the Drawdown
Date, the Ship Mortgage Indemnity, if issued, is cancelled or is not in full
force and effect or any underwriter of the Ship Mortgage Indemnity asserts that
the Ship Mortgage Indemnity is not in full force and effect.
Upon and during the continuance of any Event of Default, the Lenders' obligation
to make the Loan available shall cease and the 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 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
29
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,
(e) fifthly, to the Facility C Security Agent in or towards payment
of any sums which may be owing by the Borrower under or in connection with
Facility C, the Facility C Agreement, or the documents executed in connection
therewith;
(f) sixthly, to the Facility B Security Agent in or towards payment
of any sums which may be owing by the Borrower under or in connection with
Facility B, the Facility B Loan Agreement, or the documents executed in
connection therewith; and
30
(g) seventhly, the surplus (if any) shall be paid to the Borrower or
to whosoever else may be entitled thereto.
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 and the
underwriters of the Ship Mortgage Indemnity as identified by the Administrative
Agent:
(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;
31
(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 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
32
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 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 Administrative Agent, it will submit to
the Administrative 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);
33
(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 new 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 or any Guarantor, and proceeds from the sale of any vessels by the
Borrower or any 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 Loan until the ratio of the balance
of the Loan to the aggregate Fair Market Value of the
Vessels is no greater than 0.65; and then
(E) to the Borrower.
(r) Brokerage Commissions, etc. 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;
(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
34
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;
(t) Future Guaranties. procure that each of the owners of the
Facility B Vessels identified on Schedule 5 executes a Guaranty (and other
relevant Security Documents in respect of its Facility B Vessel) within five (5)
Banking Days following full repayment of Facility B, and further procure that
all other Subsidiaries of the Borrower (other than Designated Subsidiaries, but
only for so long as they remain Designated Subsidiaries), shall execute a
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 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;
(v) Insurance. maintain, and cause each other Security Party 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; and
(w) Ship Mortgage Indemnity. until the third anniversary of the
Drawdown Date, from time to time as requested by the Administrative Agent
provide such information and take such action as necessary to maintain the Ship
Mortgage Indemnity in full force and effect.
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
Subsidiary, to the extent applicable, will, without the prior 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, the Second Mortgages,
the Second Assignments, the Third Mortgages, the Third
Assignments and other liens in favor of the Security
Agent;
(v) liens, charges and encumbrances against their respective
Vessels permitted to exist under the terms of the
Mortgages;
35
(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 or
any of the 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 other than as may be
allowed in accordance with the Pledge Agreement;
(d) Sale of Assets. sell, or otherwise dispose of, any Vessel (other
than the Designated 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;
(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;
(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, 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 vessel for a charter period exceeding
twelve (12) months, or permit any vessel to
36
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 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 existing 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"), provided, however, that the Borrower
may make a Restricted Payment so long as, at the time of and after giving effect
to the proposed Restricted Payment, no Event of Default has occurred and is
continuing or would occur as a consequence of such Restricted Payment, and
(i) the ratio of the Borrower's Funded Debt to EBITDA is
less than 5.0 to 1.0 but greater than 3.5 to 1.0 and the
aggregate amount of all Restricted Payments (to the
extent made other than in cash, the amount thereof to be
determined in good faith by the Board of Directors of
the Borrower) would not exceed twenty-five percent (25%)
of the Borrower's consolidated net income for the
Borrower's most recently completed fiscal year, or
(ii) the ratio of the Borrower's Funded Debt to EBITDA is
less than 3.5 to 1.0 and the aggregate amount of all
Restricted Payments (to the extent made other than in
cash, the amount thereof to be determined in good faith
by the Board of Directors of the Borrower) would not
exceed fifty percent (50%) of the Borrower's
consolidated net income for the Borrower's most recently
completed fiscal year;
(k) Indebtedness. incur any Indebtedness, provided, however, that so
long as, at the time of and after giving effect to the incurrence of any
proposed Indebtedness, no Event of Default has occurred and is continuing or
would occur as a consequence of the incurrence of such Indebtedness,
(i) if the ratio of the Borrower's Funded Debt to EBITDA is
less than 5.0 to 1.0 but greater than 3.5 to 1.0, the
Borrower and its Subsidiaries on a consolidated basis
may incur up to $50.0 million of Indebtedness at any
time outstanding (excluding the Loan, Facility B and
Facility C);
(ii) if the ratio of the Borrower's Funded Debt to EBITDA is
less than 3.5 to 1.0, the Borrower and its Subsidiaries
may incur such proposed Indebtedness; and
37
(iii) provided 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 so
long as, at the time of and after giving effect to the making of any proposed
Investment, no Event of Default has occurred and is continuing or would occur as
a consequence of the making of such Investment,
(i) if the ratio of the Borrower's Funded Debt to EBITDA is
less than 5.0 to 1.0 but greater than 3.5 to 1.0, the
Borrower (and its Subsidiaries on a consolidated basis)
may make such proposed Investment provided that the
aggregate of the Borrower's (and its Subsidiaries' on a
consolidated basis) Investments since the Drawdown Date
does not exceed $10.0 million;
(ii) if the ratio of the Borrower's Funded Debt to EBITDA is
less than 3.5 to 1.0, the Borrower (and its Subsidiaries
on a consolidated basis) may make such proposed
Investment; and
(iii) 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 Section 9.2(1)(iii) above), provided, however, that so long as,
at the time of and after giving effect to the making of any proposed Capital
Expenditure, no Event of Default has occurred and is continuing or would occur
as a consequence of the making of such Capital Expenditure,
(i) if the ratio of the Borrower's Funded Debt to EBITDA is
less than 5.0 to 1.0 but greater than 3.5 to 1.0, the
Borrower (and its Subsidiaries on a consolidated basis)
may make such proposed Capital Expenditure provided that
the aggregate of the Borrower's (and its Subsidiaries'
on a consolidated basis) Capital Expenditures since the
Drawdown Date does not exceed $30.0 million;
(ii) if the ratio of the Borrower's Funded Debt to EBITDA is
less than 3.5 to 1.0, the Borrower (and its Subsidiaries
on a consolidated basis) may make such proposed Capital
Expenditure;
(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:
38
(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 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
(i) 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
(ii) 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.
9.4 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 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
(a) after the Drawdown Date but prior to December 31, 2001, the
aggregate Fair Market Value of the Vessels then mortgaged to the Security Agent
(based upon the 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 fifteen percent (115%) of the Loan, or
(b) if at any time after December 31, 2001 but prior to December 31,
2002 such aggregate Fair Market Value is less than one hundred twenty percent
(120%) of the Loan, or
(c) if at any time thereafter the aggregate Fair Market Value of the
Vessels is less than one hundred thirty percent (130%) of the Loan,
(in each case as applicable, such percentage being 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 (i) 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
39
value to restore compliance with the Required Percentage or (ii) 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 5.4) 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.
9.7 Vessel Substitution Sales. The Borrower will not, and will procure that each
Guarantor will not, sell, assign, convey, transfer or otherwise dispose of
(including through a bareboat charter with a purchase option but excluding
chartering in the ordinary course of business) any Vessel; provided, however,
that a Guarantor may sell a Vessel if such sale is made in compliance with each
of the following conditions:
(a) no Event of Default, or event which, with the giving of notice
or the passage of time, or both, would constitute an Event of
Default, shall have occurred or be continuing;
(b) not later than ten (10) Banking Days prior to such sale, the
Borrower or a Guarantor has entered into a binding contract
for the purchase of a Qualified Substitute Vessel identified
to the Agents;
(c) the entire consideration for such sale shall be cash, in an
amount not less than the Fair Market Value of such Vessel as
of the date of sale;
(d) the cash, net of expenses directly related to the sale,
received for such sale is immediately deposited with the
Syndication Agent in an account as collateral for the Loan;
and
(e) the Majority Lenders as of ten (10) Banking Days prior to such
sale give their written consent prior to such sale.
9.8 Tender of Qualified Substitute Vessel. In the event that the Borrower or any
Guarantor sells a Vessel pursuant to Section 9.7 above, then within thirty (30)
days following the date of such sale, the Borrower or a Guarantor consummates
the acquisition of the Qualified Substitute Vessel identified to the Agents in
respect of such sold Vessel and grants in favor of the Security Agent a
Mortgage, Earnings Assignment, Insurances Assignment and such other Security
Documents as the Security Agent requires in respect of such Qualified Substitute
Vessel. The Syndication Agent will release sale proceeds for use by the Borrower
or a Guarantor in the acquisition of an identified Qualified Substitute Vessel
pursuant to the terms hereof; provided, however, that if the tender of the
identified Qualified Substitute Vessel is not accomplished within thirty (30)
days after the date of sale, the Syndication Agent shall apply all such sale
proceeds in accordance with Section 8.3; provided, further, however, that if the
Borrower identified the MEGA I as a Qualified Substitute Vessel pursuant to
Section 9.7, the above-stated thirty day requirement shall be extended to one
hundred twenty (120) days. In any case where a Qualified Substitute Vessel is
identified in respect of more than one Vessel, the timing requirements of this
Section shall count from the date of sale of the first of such Vessels sold.
40
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; 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 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 Agent 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, the
Guaranty 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 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
43
Agents, or the Arrangers in connection with this 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
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 thereof) has occurred and is continuing. In the event that
an Agent shall have been notified by any
46
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 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,
47
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
Xxx Xxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Telecopy No.: (000) 000-0000
Attention: Xxxxxxx 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 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 to more effectively 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. The parties
hereto agree that no amendment affecting the rights of the underwriters of the
Ship Mortgage Indemnity shall be effective without the prior written consent of
such underwriters.
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:_____________________________________
Xxxxxxx 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
The Lenders:
CHRISTIANIA BANK OG KREDITKASSE ASA
By:___________________________________
Name:
Title:
By:___________________________________
Name:
Title:
DEN NORSKE BANK ASA
By:___________________________________
Name:
Title:
By:___________________________________
Name:
Title:
MEESPIERSON CAPITAL CORP.
By:___________________________________
Name:
Title:
By:___________________________________
Name:
Title:
00
XXXXXXXXXXXX XXXXXXXXXX - XXXXXXXXXXXX-
By:___________________________________
Name:
Title:
LANDESBANK SCHLESWIG-HOLSTEIN
By:___________________________________
Name:
Title:
DE NATIONALE INVESTERINGSBANK (NA) N.V.
By:___________________________________
Name:
Title:
VEREINS-UND WESTBANK AG
By:___________________________________
Name:
Title:
53
CONSENT AND AGREEMENT
Each of the undersigned, referred to in the foregoing Loan Agreement
as the "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.
XXXX SHIPPING LLC,
by OMI Corporation, sole member
By:_____________________________________
Xxxxxxx de Sostoa
Senior Vice President-Treasurer
CAIRO SEA SHIPPING LLC
by OMI Corporation, sole member
By:_____________________________________
Xxxxxxx de Sostoa
Senior Vice President-Treasurer
CZANTORIA SHIPPING LLC
by OMI Corporation, sole member
By:_____________________________________
Xxxxxxx de Sostoa
Senior Vice President-Treasurer
DANUBE SHIPPING LLC
by OMI Corporation, sole member
By:_____________________________________
Xxxxxxx de Sostoa
Senior Vice President-Treasurer
ISERE SHIPPING LLC,
by OMI Corporation, sole member
By:_____________________________________
Xxxxxxx de Sostoa
Senior Vice President-Treasurer
LAUREL SHIPPING LLC
by OMI Corporation, sole member
By:_____________________________________
Xxxxxxx de Sostoa
Senior Vice President-Treasurer
LIMAR SHIPPING LLC,
by OMI Corporation, sole member
By:_____________________________________
Xxxxxxx de Sostoa
Senior Vice President-Treasurer
LOIRE SHIPPING LLC
By OMI Corporation, sole member
By:_____________________________________
Xxxxxxx de Sostoa
Senior Vice President-Treasurer
MENDALA II TRANSPORT, INC.
By OMI Corporation, sole shareholder
By:_____________________________________
Xxxxxxx de Sostoa
Treasurer
PAGODA SHIPPING LLC,
by OMI Corporation, sole member
By:_____________________________________
Xxxxxxx de Sostoa
Senior Vice President-Treasurer
PECOS SHIPPING LLC,
by OMI Corporation, sole member
By:_____________________________________
Xxxxxxx de Sostoa
Senior Vice President-Treasurer
SABINE SHIPPING LLC,
by OMI Corporation, sole member
By:_____________________________________
Xxxxxxx de Sostoa
Senior Vice President-Treasurer
SACRAMENTO SHIPPING LLC,
by OMI Corporation, sole member
By:_____________________________________
Xxxxxxx de Sostoa
Senior Vice President-Treasurer
SEINE SHIPPPING LLC,
by OMI Corporation, sole member
By:_____________________________________
Xxxxxxx de Sostoa
Senior Vice President-Treasurer
SEVERN SHIPPING LLC,
by OMI Corporation, sole member
By:_____________________________________
Xxxxxxx de Sostoa
Senior Vice President-Treasurer
XXXXXXX SHIPPING LLC,
by OMI Corporation, sole member
By:_____________________________________
SOKOLICA SHIPPING LLC,
by OMI Corporation, sole member
By:_____________________________________
Xxxxxxx de Sostoa
Senior Vice President-Treasurer
SOYANG SHIPPING LLC,
by OMI Corporation, sole member
By:_____________________________________
Xxxxxxx de Sostoa
Senior Vice President-Treasurer
TIBER SHIPPING LLC,
by OMI Corporation, sole member
By:_____________________________________
Xxxxxxx de Sostoa
Senior Vice President-Treasurer
TRENT SHIPPING LLC,
by OMI Corporation, sole member
By:_____________________________________
Xxxxxxx de Sostoa
Senior Vice President-Treasurer
TRINIDAD SEA SHIPPING LLC
by OMI Corporation, sole member
By:_____________________________________
Xxxxxxx de Sostoa
Senior Vice President-Treasurer
UBC CHARTERING LTD.
by OMI Corporation, sole shareholder
By:_____________________________________
Xxxxxxx de Sostoa
Treasurer
