Date 12th December 2005
ARLINGTON TANKERS LTD.
as Borrower
- and -
THE ROYAL BANK OF SCOTLAND PLC
as Lender
LOAN AGREEMENT
relating to
a US$229,500,000 facility
to (i) finance the whole of the acquisition cost of m.t's
"STENA CONTEST" and "STENA CONCEPT", (ii) to
refinance existing indebtedness relating to m.t's "STENA
VISION", "STENA VICTORY", "STENA
COMPANION", "STENA COMPATRIOT", "STENA CONCORD" and "STENA CONSUL" and (iii)
for general corporate purposes
XXXXXX, XXXXXX & XXXXXXXX
LONDON
INDEX
CLAUSE PAGE
------ ----
1 INTERPRETATION 1
2 FACILITY 18
3 DRAWDOWN 18
4 INTEREST 19
5 INTEREST PERIODS 20
6 DEFAULT INTEREST 21
7 REPAYMENT AND PREPAYMENT 22
8 MISMATCH BETWEEN LOAN AND TRANSACTIONS 23
9 CONDITIONS PRECEDENT 25
10 REPRESENTATIONS AND WARRANTIES 26
11 GENERAL UNDERTAKINGS 28
12 CORPORATE UNDERTAKINGS 31
13 INSURANCE 33
14 SHIP COVENANTS 37
15 SECURITY COVER 40
16 PAYMENTS AND CALCULATIONS 42
17 APPLICATION OF RECEIPTS 43
18 APPLICATION OF EARNINGS 43
19 EVENTS OF DEFAULT 44
20 FEES AND EXPENSES 48
21 INDEMNITIES 49
22 NO SET-OFF OR TAX DEDUCTION 51
23 ILLEGALITY, ETC 52
24 INCREASED COSTS 52
25 SET-OFF 53
26 TRANSFERS AND CHANGES IN LENDING OFFICE 54
27 VARIATIONS AND WAIVERS 54
28 NOTICES 55
29 SUPPLEMENTAL 56
30 LAW AND JURISDICTION 57
SCHEDULE 1 DRAWDOWN NOTICE 58
SCHEDULE 2 CONDITION PRECEDENT DOCUMENTS 59
EXECUTION PAGE 67
THIS AGREEMENT is made on 12th December 2005
BETWEEN
(1) ARLINGTON TANKERS LTD. a company incorporated Bermuda whose registered
office is at Xxxxxxxxx Xxxxx, Xxxxxxxx XX00, Xxxxxxx (the "BORROWER") and
(2) THE ROYAL BANK OF SCOTLAND PLC acting through its office at Shipping
Business Centre, 0-00 Xxxxx Xxxxx Xxxxxx, Xxxxxx XX0X 0XX, Xxxxxxx (the
"LENDER")
BACKGROUND
The Lender has agreed to make available to the Borrower a facility of up to
$229,500,000 in up to 3 Advances for the purpose of (a) financing the whole of
the purchase price of m.t's. "STENA CONTEST" and "STENA CONCEPT", (b)
refinancing the Existing Indebtedness relating to m.t's. "STENA VISION", "STENA
VICTORY", "STENA COMPANION", "STENA COMPATRIOT", "STENA CONCORD" and "STENA
CONSUL", and (c) general corporate purposes of the Borrower and the Group.
IT IS AGREED as follows:
1 INTERPRETATION
1.1 DEFINITIONS. Subject to Clause 1.5, in this Agreement:
"ACCOUNT BALANCE" means, in relation to the Operating Account, the amount
for the time being standing to the credit of the Operation Account;
"ACCOUNTING INFORMATION" means the quarterly financial statements and/or
the annual audited financial statements to be provided by the Borrower to
the Lender in accordance with this Agreement;
"ACCOUNTING PERIOD" means each consecutive period of approximately 3 months
falling during the Loan Period (ending on the last day in March, June,
September and December of each year) for which quarterly Accounting
Information is required to be delivered pursuant to this Agreement;
"ACCOUNTS SECURITY DEED" means a deed creating security in favour of the
Lender in respect of the Operating Account, in such form as the Lender may
approve or require;
"ADVANCE" means the principal amount of each borrowing by the Borrower
under this Agreement;
"AFFILIATE" means, as to any Person, any other Person that, directly or
indirectly, controls, is controlled by or is under common control with such
Person or is a director or officer of such Person. For purposes of this
definition, the term "control" (including the terms "controlling",
"controlled by" and "under common control with") of a Person means the
possession, direct or indirect, of the power to vote 50 per cent. or more
of the voting stock, membership or partnership interests, or other similar
interests of such Person or to direct or cause direction of the management
and policies of such Person, whether through the ownership of voting stock,
membership or partnership interests, or other similar interests, by
contract or otherwise.
"APPROVED CLASSIFICATION SOCIETY" means a classification society which is a
member of IACS;
"APPROVED MANAGER" means Northern Marine Management Ltd whose registered
office is at 0 Xxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxx, X00 0XX or, where the
context requires, any other company which the Lender may approve from time
to time as the technical and/or commercial manager of a Ship;
"AVAILABILITY PERIOD" means the period commencing on the date of this
Agreement and ending on:
(a) 31 January 2006 (or such later date as the Lender may agree with the
Borrower); or
(b) if earlier, the final Drawdown Date or the date on which the Lender's
obligation to make the Loan is cancelled or terminated;
"BUSINESS DAY" means a day on which banks are open in London and, in
respect of a day on which a payment is required to be made under a Finance
Document, also in New York City;
"CALCULATION PERIOD" means the period commencing on the date on which the
last payment or delivery has been made under Section 2(a)(i) of the Master
Agreement with respect to a Transaction (or in the case of the first such
period the date the relevant Transaction has been entered into) and ending
on the next date upon which such a payment or delivery is to be made;
"CHANGE OF CONTROL" means the occurrence of either of the following:
(a) the Borrower ceasing directly to own 100 per cent. of the shares of
any of the Guarantors; or
(b) a person or group (as such term is defined in Section 13(d)(3) of the
Securities Exchange Act of 1934, as amended) shall at any time become
the owner, directly or indirectly, beneficially or of record, of
shares representing 50 per cent. or more of the outstanding voting or
economic equity interests of the Borrower;
"CHARTER ASSIGNMENT" means, in relation to a Ship, an assignment of the
rights of the Guarantor owning that Ship under the relevant Charter,
Charter Guarantee, Management Agreement, Off-Hire Guarantee and (where
applicable) Charter Substitution Agreement, in such form as the Lender may
approve or require, and in the plural means all of them;
"CHARTER" means:
(a) in relation to "STENA CONTEST", the time charterparty entered into or
to be entered into between Contest and Stena Bulk;
(b) in relation to "STENA CONCEPT", the time charterparty entered into or
to be entered into between Concept and Stena Bulk;
(c) in relation to "STENA VISION", the time charterparty dated 20 October
2004 and entered into between Vision and CV-MAX I, as amended;
(d) in relation to "STENA VICTORY", the time charterparty dated 20 October
2004 and entered into between Victory and XX-XXX XX, as amended;
(e) in relation to "STENA COMPANION", the time charterparty dated 20
October 2004 and entered into between Companion and Stena Bulk, as
amended;
(f) in relation to "STENA COMPATRIOT", the time charterparty dated 20
October 2004 and entered into between Compatriot and Stena Bulk, as
amended;
2
(g) in relation to "STENA CONCORD", the time charterparty dated 20 October
2004 and entered into between Concord and Stena Bulk, as amended; and
(h) in relation to "STENA CONSUL", the time charterparty dated 20 October
2004 and entered into between Consul and Stena Bulk, as amended,
and, in the singular, means any of them;
"CHARTER GUARANTEE" means, in relation to a Charter, a guarantee of the
Charterer's obligations under the Charter, in favour of the relevant
Charter Guarantor and issued by the relevant Charter Guarantor, in such
form as the Lender may approve or require;
"CHARTER GUARANTOR" means:
(a) in relation to "STENA VISION" and "STENA VICTORY", Concordia Maritime
AB; and
(b) in relation to "STENA COMPANION", "STENA COMPATRIOT", "STENA CONCORD",
"STENA CONSUL", "STENA CONTEST" and "STENA CONCEPT", Stena AB;
"CHARTER SUBSTITUTION AGREEMENT" means, in relation to each of "STENA
VISION" and "STENA VICTORY", an agreement entered into between Stena AB and
the relevant Guarantor whereby Stena AB undertakes that in certain
circumstances it will procure that Stena Bulk AB enters into a replacement
time charter in respect of the relevant Ship (the obligations of Stena Bulk
AB thereunder to be guaranteed by Stena AB), in such form as the Lender may
approve or require, and in the plural means both of them;
"CHARTERER" means:
(a) in relation to "STENA VISION", CV-MAX I;
(b) in relation to "STENA VICTORY", XX-XXX XX; and
(c) in relation to each of "STENA COMPANION", "STENA COMPATRIOT", "STENA
CONCORD", "STENA CONSUL", "STENA CONTEST" and "STENA CONCEPT", Stena
Bulk,
and, in the plural, means all of them;
"CM V-MAX I" means CM V-MAX I Limited, a company incorporated and existing
under the laws of Bermuda and having its registered address at Xxxxxxxxx
Xxxxx, 0 Xxxxxx Xxxxxx, Xxxxxxxx XX00, Xxxxxxx:
"CM V-XXX XX" means CM V-XXX XX Limited, a company incorporated and
existing under the laws of Bermuda and having its registered address at
Xxxxxxxxx Xxxxx, 0 Xxxxxx Xxxxxx, Xxxxxxxx XX00, Xxxxxxx:
"COMMITMENT" means the obligation of the Lender to advance the Loan to the
Borrower under this Agreement, as the same may be reduced, terminated or
cancelled in accordance with or pursuant to this Agreement;
"COMPANION" means Companion Ltd., a company incorporated and existing under
the laws of Bermuda and having its registered office at Xxxxxxxxx Xxxxx, 0
Xxxxxx Xxxxxx, Xxxxxxxx XX00, Xxxxxxx;
3
"COMPATRIOT" means Compatriot Ltd., a company incorporated and existing
under the laws of Bermuda and having its registered office at Xxxxxxxxx
Xxxxx, 0 Xxxxxx Xxxxxx, Xxxxxxxx XX00, Xxxxxxx;
"CONCEPT" means Concept Ltd., a company incorporated and existing under the
laws of Bermuda and having its registered office at Xxxxxxxxx Xxxxx, 0
Xxxxxx Xxxxxx, Xxxxxxxx XX00, Xxxxxxx;
"CONCORD" means Concord Ltd., a company incorporated and existing under the
laws of Bermuda and having its registered office at Xxxxxxxxx Xxxxx, 0
Xxxxxx Xxxxxx, Xxxxxxxx XX00, Xxxxxxx;
"CONSUL" means Consul Ltd., a company incorporated and existing under the
laws of Bermuda and having its registered office at Xxxxxxxxx Xxxxx, 0
Xxxxxx Xxxxxx, Xxxxxxxx XX00, Xxxxxxx;
"CONTEST" means Contest Ltd., a company incorporated and existing under the
laws of Bermuda and having its registered office at Xxxxxxxxx Xxxxx, 0
Xxxxxx Xxxxxx, Xxxxxxxx XX00, Xxxxxxx;
"CONTRACTUAL CURRENCY" has the meaning given in Clause 21.4;
"CREDIT SUPPORT DOCUMENT" has the meaning given to that expression in
section 14 of the Master Agreement;
"CREDIT SUPPORT PROVIDER" has the meaning given to that expression in
section 14 of the Master Agreement;
"CURRENT ASSETS" means, in respect of each Accounting Period, the aggregate
of the cash and marketable securities, trade and other receivables from
persons other than a member of the Group realisable within one year,
inventories and prepaid expenses which are to be charged to income within
one year LESS any doubtful debts and any discounts or allowances given as
stated in the then most recent Accounting Information;
"CURRENT LIABILITIES" means, in respect of each Accounting Period, the
aggregate amount of trade and other creditors in respect of operating items
payable within one year, (excluding the Loan), including any accrued
interest as stated in the most recent Accounting Information;
"DEBT" means in relation to any member of the Group (the "DEBTOR");
(a) Financial Indebtedness of the debtor;
(b) liability for any creditor to the debtor from a supplier of goods or
services or under any instalment purchase or payment plan or other
similar arrangement;
(c) contingent liabilities of the debtor (including without limitation any
taxes or other payments under dispute) which have been or, under GAAP,
should be recorded in the notes to the Accounting Information;
(d) deferred tax of the debtor; and
(e) liability under a guarantee, indemnity or similar obligation entered
into by the debtor in respect of a liability of other person who is
not a member of the Group which would fall within (a) to (d) if the
references to the debtor referred to the other person;
4
"DEED OF COVENANT" means, in relation to a Ship, a deed of covenant
collateral to the Mortgage relating to that Ship, in such form as the
Lender may approve or require, and in the plural means all of them;
"DOLLARS" and "$" means the lawful currency for the time being of the
United States of America;
"DRAWDOWN DATE" means, in relation to each Advance, the date requested by
the Borrower for the Advance to be made, or (as the context requires) the
date on which the Advance is actually made;
"DRAWDOWN NOTICE" means a notice in the form set out in Schedule 1 (or in
any other form which the Lender approves or reasonably requires);
"EARLY TERMINATION DATE" has the meaning given to that expression in
section 14 of the Master Agreement;
"EARNINGS" means, in relation to a Ship, all moneys whatsoever which are
now, or later become, payable (actually or contingently) and which arise
out of the use or operation of that Ship, including (but not limited to):
(a) all freight, hire and passage moneys, compensation payable to the
Guarantor owning the Ship in the event of requisition of the Ship for
hire, remuneration for salvage and towage services, demurrage and
detention moneys and damages for breach (or payments for variation or
termination) of any charterparty or other contract for the employment
of the Ship;
(b) all moneys which are at any time payable under Insurances in respect
of loss of earnings; and
(c) if and whenever the Ship is employed on terms whereby any moneys
falling within paragraphs (a) or (b) are pooled or shared with any
other person, that proportion of the net receipts of the relevant
pooling or sharing arrangement which is attributable to the Ship;
"ENVIRONMENTAL CLAIM" means:
(a) any claim by any governmental, judicial or regulatory authority which
arises out of an Environmental Incident or an alleged Environmental
Incident or which relates to any Environmental Law; or
(b) any claim by any other person which relates to an Environmental
Incident or to an alleged Environmental Incident,
and "CLAIM" means a claim for damages, compensation, fines, penalties or
any other payment of any kind, whether or not similar to the foregoing; an
order or direction to take, or not to take, certain action or to desist
from or suspend certain action; and any form of enforcement or regulatory
action, including the arrest or attachment of any asset;
"ENVIRONMENTAL INCIDENT" means:
(a) any release of Environmentally Sensitive Material from a Ship; or
(b) any incident in which Environmentally Sensitive Material is released
from a vessel other than a Ship and which involves a collision between
a Ship and such other vessel or some other incident of navigation or
operation, in either case, in connection with which a Ship is actually
or potentially liable to be arrested, attached, detained or injuncted
and/or a Ship and/or a Guarantor and/or any
5
operator or manager of a Ship is at fault or allegedly at fault or
otherwise liable to any legal or administrative action; or
(c) any other incident in which Environmentally Sensitive Material is
released otherwise than from a Ship and in connection with which a
Ship is actually or potentially liable to be arrested and/or where a
Guarantor and/or any operator or manager of a Ship is at fault or
allegedly at fault or otherwise liable to any legal or administrative
action;
"ENVIRONMENTAL LAW" means any law relating to pollution or protection of
the environment, to the carriage of Environmentally Sensitive Material or
to actual or threatened releases of Environmentally Sensitive Material;
"ENVIRONMENTALLY SENSITIVE MATERIAL" means oil, oil products and any other
substance (including any chemical, gas or other hazardous or noxious
substance) which is (or is capable of being or becoming) polluting, toxic
or hazardous;
"EVENT OF DEFAULT" means any of the events or circumstances described in
Clause 19.1;
"EXISTING INDEBTEDNESS" means a principal amount of up to $135,000,000
owing by the Borrower to the Existing Lenders under the Existing Loan
Agreement;
"EXISTING LENDERS" means the lenders under the Existing Loan Agreement;
"EXISTING LOAN AGREEMENT" means a loan agreement dated 2 November 2004 and
entered into between (i) the Borrower as borrower, (ii) Fortis Bank
(Nederland) N.V. and HSBC Bank plc as mandated lead arrangers, (iii) Fortis
Bank (Nederland) N.V. as agent and security trustee, (iv) the Existing
Lenders, and (v) Fortis Bank (Nederland) N.V. and HSBC Bank plc as swap
providers, such indebtedness being secured on "STENA VISION", "STENA
VICTORY", STENA COMPANION", "STENA COMPATRIOT", "STENA CONCORD" AND "STENA
CONSUL";
"EXISTING SHIPS" means, together, "STENA VISION", "STENA VICTORY", "STENA
COMPANION", "STENA COMPATRIOT", "STENA CONCORD" and "STENA CONSUL" and, in
the singular, means any of them;
"FEE LETTER" means a letter dated on the date hereof issued by the Borrower
to the Lender in respect of fees payable to the Lender in relation to this
Agreement;
"FINANCE DOCUMENTS" means:
(a) this Agreement;
(b) the Master Agreement;
(c) the Guarantees;
(d) the Mortgages;
(e) the Deeds of Covenant;
(f) the General Assignments;
(g) the Accounts Security Deed;
(h) the Charter Assignments;
(i) the Master Agreement Security Deed;
6
(j) the Credit Support Documents; and
(k) any other document (whether creating a Security Interest or not) which
is executed at any time by the Borrower, a Guarantor or any other
person as security for, or to establish any form of subordination or
priorities arrangement in relation to, any amount payable to the
Lender under this Agreement and/or the Master Agreement and/or any of
the other documents referred to in this definition;
"FINANCIAL INDEBTEDNESS" means, in relation to any member of the Group (the
"DEBTOR"), a liability of the debtor:
(a) for principal, interest or any other sum payable in respect of any
moneys borrowed or raised by the debtor;
(b) under any loan stock, bond, note or other security issued by the
debtor;
(c) under any acceptance credit, guarantee or letter of credit facility
made available to the debtor;
(d) under a financial lease, a deferred purchase consideration arrangement
(in each case, other than in respect of assets or services obtained on
normal commercial terms in the ordinary course of business) or any
other agreement having the commercial effect of a borrowing or raising
of money by the debtor;
(e) under any foreign exchange transaction, interest or currency swap or
any other kind of derivative transaction entered into by the debtor
or, if the agreement under which any such transaction is entered into
requires netting of mutual liabilities, the liability of the debtor
for the net amount; or
(f) under a guarantee, indemnity or similar obligation entered into by the
debtor in respect of a liability of another person which would fall
within (a) to (e) if the references to the debtor referred to the
other person;
"GAAP" means accounting principles, concepts, bases and policies generally
adopted and accepted in the United States of America consistently applied;
"GENERAL ASSIGNMENT" means, in relation to a Ship, a general assignment of
the Earnings, the Insurances and any Requisition Compensation relating to
that Ship, in such form as the Lender may approve or require, and in the
plural means all of them;
"GROUP" means the Borrower and its subsidiaries (whether direct or indirect
and including, but not limited to, the Guarantors) from time to time during
the Security Period and "MEMBER OF THE GROUP" shall be construed
accordingly;
"GUARANTEE" means, in relation to a Guarantor, a guarantee of the
Borrower's obligations under this Agreement, the Master Agreement and the
other Finance Documents to which the Borrower is a party, issued by that
Guarantor in favour of the Lender, in such form as the Lender may approve
or require, and in the plural means all of them;
"GUARANTORS" means, together, Contest, Concept, Consul, Concord,
Compatriot, Companion, Victory and Vision, and in the singular means any of
them;
"INSURANCES" means, in relation to a Ship:
(a) all policies and contracts of insurance, including entries of that
Ship in any protection and indemnity or war risks association, which
are effected in respect of that Ship, her Earnings or otherwise in
relation to her; and
7
(b) all rights and other assets relating to, or derived from, any of the
foregoing, including any rights to a return of a premium;
"INTEREST PERIOD" means a period determined in accordance with Clause 5.2;
"ISM CODE" means, in relation to its application to each Guarantor, its
Ship and its operation:
(a) 'The International Management Code for the Safe Operation of Ships and
for Pollution Prevention', currently known or referred to as the 'ISM
Code', adopted by the Assembly of the International Maritime
Organisation by Resolution A.741(18) on 4 November 1993 and
incorporated on 19 May 1994 into chapter IX of the International
Convention for the Safety of Life at Sea 1974 (SOLAS 1974); and
(a) all further resolutions, circulars, codes, guidelines, regulations and
recommendations which are now or in the future issued by or on behalf
of the International Maritime Organisation or any other entity with
responsibility for implementing the ISM Code, including without
limitation, the 'Guidelines on implementation or administering of the
International Safety Management (ISM) Code by Administrations'
produced by the International Maritime Organisations pursuant to
Resolution A.788(19) adopted on 25 November 1995,
as the same may be amended, supplemented or replaced from time to time;
"ISM CODE DOCUMENTATION" includes:
(a) the document of compliance (DOC) and safety management certificate
(SMC) issued pursuant to the ISM Code in relation to the Ships or any
or them within the periods specified by the ISM Code; and
(b) all other documents and data which are relevant to the ISM SMS and its
implementation and verification which the Lender may require; and
(c) any other documents which are prepared or which are otherwise relevant
to establish and maintain the Ships' or the Guarantors' compliance
with the ISM Code which the Lender may require;
"ISM SMS" means the safety management system for each Ship which is
required to be developed, implemented and maintained under the ISM Code;
"ISPS CODE" means the International Ship and Port Facility Security Code
constituted pursuant to resolution A.924 (22) of the International Maritime
Organisation ("IMO") adopted by a Diplomatic conference of the IMO on
Maritime Security on 13 December 2002 and now set out in Chapter XI-2 of
the Safety of Life at Sea Convention (SOLAS) 1974 (as amended);
"ISSC" means a valid and current International Ship Security Certificate
issued under the ISPS Code;
"LENDER" means The Royal Bank of Scotland plc, a company incorporated in
Scotland having its registered office at 00 Xx. Xxxxxx Xxxxxx, Xxxxxxxxx
XX0 0XX, Xxxxxxxx acting through the Shipping Business Centre at 0-00 Xxxxx
Xxxxx Xxxxxx, Xxxxxx XX0X 0XX, Xxxxxxx or through any other branch notified
to the Borrower from time to time pursuant to Clause 26.6 and includes all
persons directly or indirectly deriving title under it (whether by
assignment, amalgamation, operation of law or otherwise);
8
"LOAN" means the principal amount for the time being advanced and
outstanding under this Agreement;
"MAJOR CASUALTY" means, in relation to a Ship, any casualty to that Ship in
respect of which the claim or the aggregate of the claims against all
insurers, before adjustment for any relevant franchise or deductible,
exceeds, in the case of "STENA VISION" or "STENA VICTORY", $5,000,000 and,
in the case of each other Ship, $2,000,000 or, in either case, the
equivalent in any other currency;
"MANAGEMENT AGREEMENT" means, in relation to each Ship, a management
agreement entered into or, as the case may be, to be entered into between
the relevant Guarantor and the Approved Manager, in such form as the Lender
may approve or require, and in the plural means all of them;
"MANDATORY COST RATE" means the percentage rate, which represents the cost
to the Lender, relative to the Loan, of compliance with the requirements of
the Bank of England, the Financial Services Authority or any other
regulatory authority, as determined by the Lender in accordance with the
formula detailed in Schedule 4 hereto;
"MARGIN" means, from the first day of the next Interest Period following
the date on which any adjustment referred to below is made:
(a) when the Security to Exposure Ratio, expressed as a percentage, is
less than 200%, (as most recently determined in accordance with Clause
15.5), 0.85 per cent. per annum; or
(b) when the Security to Exposure Ratio, expressed as a percentage, is
equal to or greater than 200%, (as most recently determined in
accordance with Clause 15.5), 0.75 per cent. per annum;
"MARGIN STOCK" has the meaning specified in Regulation U of the Board of
Governors of the Federal Reserve System and any successor regulations
thereto, as in effect from time to time;
"MASTER AGREEMENT" means the Master Agreement (on the 1992 ISDA
(Multicurrency - Crossborder) form as modified) made between the Lender and
the Borrower of even date herewith, and includes all transactions from time
to time entered into and confirmations from time to time exchanged under
the Master Agreement and any amending, supplementing or replacement
agreements made from time to time;
"MASTER AGREEMENT LIABILITIES" means, at any relevant time, all liabilities
actual or contingent, present or future, of the Borrower to the Lender
under the Master Agreement;
"MASTER AGREEMENT SECURITY DEED" means the deed containing, inter alia, a
charge in respect of the Master Agreement executed or to be executed by the
Borrower in favour of the Lender, in such form as the Lender may approve or
require;
"MINIMUM SECURITY COVER RATIO" has the meaning given in Clause 15.1;
"MOAS" means, together, the STENA CONTEST MOA and the STENA CONCEPT MOA
and, in the singular, means either of them;
"MORTGAGE" means, in relation to a Ship, the first priority Bermudian ship
mortgage on the Ship, in such form as the Lender may approve or require,
and in the plural means all of them;
"NEGOTIATION PERIOD" has the meaning given in Clause 4.7;
9
"NEW OWNERS" means, together, Contest and Concept, and in the singular
means either of them;
"NEW SHIPS" means, together, "STENA CONTEST" and "STENA CONCEPT", and in
the singular, means either of them;
"OFF-HIRE GUARANTEE" means, in relation to each Ship, an agreement entered
into or, as the case may be, to be entered into between Stena AB and the
relevant Guarantor whereby Stena AB guarantees the obligations of the
Approved Manager to make indemnification payments for off-hire or reduced
hire under the relevant Management Agreement, in such form as the Lender
may approve or require, and in the plural means all of them;
"OPERATING ACCOUNT" means an account in the name of the Borrower with the
Lender in London designated "Arlington Tankers Ltd. - Operating Account
ARLTAN-USD1", or any other account (with that or another office of the
Lender) which is designated by the Lender as the Operating Account for the
purposes of this Agreement;
"PAYMENT CURRENCY" has the meaning given in Clause 21.4;
"PERMITTED SECURITY INTERESTS" means:
(a) Security Interests created by the Finance Documents;
(b) liens for unpaid master's and crew's wages not more than 30 days
overdue;
(c) liens for salvage;
(d) liens arising by operation of law for not more than 2 months' prepaid
hire under any charter in relation to a Ship not prohibited by this
Agreement;
(e) liens for master's disbursements incurred in the ordinary course of
trading and any other lien arising by operation of law or otherwise in
the ordinary course of the operation, repair or maintenance of a Ship,
provided such liens do not secure amounts more than 60 days overdue
(unless the overdue amount is being contested by the Borrower or the
relevant Guarantor in good faith by appropriate steps) and subject, in
the case of liens for repair or maintenance, to Clause 14.12(g);
(f) any other Security Interest which is not material (in the context of
the value of the relevant Ship) and for which adequate security has
been provided so as to avoid the risk of arrest of any of the Ships;
"PERSON" means an individual, partnership, corporation (including a
business trust), joint stock company, limited liability company, trust,
unincorporated association, joint venture or other entity, or a government
or any political subdivision or agency thereof.
"PERTINENT DOCUMENT" means:
(a) any Finance Document;
(b) any policy or contract of insurance contemplated by or referred to in
Clause 13 or any other provision of this Agreement or another Finance
Document;
(c) any other document contemplated by or referred to in any Finance
Document; and
10
(d) any document which has been or is at any time sent by or to the Lender
in contemplation of or in connection with any Finance Document or any
policy, contract or document falling within paragraphs (b) or (c);
"PERTINENT JURISDICTION", in relation to a company, means:
(a) England and Wales;
(b) the country under the laws of which the company is incorporated or
formed;
(c) a country in which the company's central management and control is or
has recently been exercised;
(d) a country in which the overall net income of the company is subject to
corporation tax, income tax or any similar tax;
(e) a country in which assets of the company (other than, in the case of
each Guarantor, transitory presence of its Ship in the normal course
of trading) having a substantial value are situated, in which the
company maintains a permanent place of business, or in which a
Security Interest created by the company must or should be registered
in order to ensure its validity or priority; and
(f) a country the courts of which have jurisdiction to make a winding up,
administration or similar order in relation to the company or which
would have such jurisdiction if their assistance were requested by the
courts of a country referred to in paragraphs (b) or (c) above;
"PERTINENT MATTER" means:
(a) any transaction or matter contemplated by, arising out of, or in
connection with a Pertinent Document; or
(b) any statement relating to a Pertinent Document or to a transaction or
matter falling within paragraph (a),
and covers any such transaction, matter or statement, whether entered into,
arising or made at any time before the signing of this Agreement or on or
at any time after that signing;
"POTENTIAL EVENT OF DEFAULT" means an event or circumstance which, with the
giving of any notice, the lapse of time, a determination of the Lender
and/or the satisfaction of any other condition, would constitute an Event
of Default;
"QUALIFYING CHARTER DATE" means, at any time, a date on which each Ship
then subject to a Mortgage is subject to a time charter of at least 12
months remaining duration from and including that date (ignoring any
optional extensions in the discretion of the charterer);
"QUIET ENJOYMENT AGREEMENT" means, in relation to a Ship, an agreement to
be entered into among the relevant Guarantor, the relevant Charterer, the
Approved Manager and the Lender, in such form as the Lender may approve or
require, and in the plural means all of them;
"RBS LIBOR" means, for an Interest Period, the rate per annum at which
deposits in Dollars in an amount approximately equal to the Loan (or any
part thereof) are (or would have been) offered by the Lender to leading
banks in the London Interbank Dollar Market at or about 11.00 a.m. (London
time) on the second Business Day prior to the
11
commencement of such Interest Period for a period equal to such Interest
Period and for delivery on the first Business Day thereof;
"RECEIVING BANK" means American Express Bank Limited, 23rd Floor, American
Express Tower, 000 Xxxxx Xxxxxx, Xxx Xxxx, XX - 00000-0000, U.S.A. or such
other bank as may from time to time be notified by the Lender to the
Borrower;
"RECENT VALUATION" means a valuation of the Ships then subject to a
Mortgage determined in accordance with Clause 15.5 at a date not earlier
than 14 days (or such longer period as the Lender may agree in its
discretion) before the date by reference to which the aggregate value of
the Ships is to be determined for the purposes of any applicable provision
of this Agreement;
"RELEVANT INTEREST RATE" means RBS LIBOR or, in the case where a
Transaction is to be, or has been, entered into under the Master Agreement
and the Borrower has not made an election pursuant to Clause 4.4(b),
TELERATE;
"RELEVANT PERSON" has the meaning given in Clause 19.7;
"REPAYMENT DATE" means the date on which repayment of the Loan is required
to be made in accordance with Clause 7;
"REQUISITION COMPENSATION" includes all compensation or other moneys
payable by reason of any act or event such as is referred to in paragraph
(b) of the definition of "Total Loss";
"SEC" means the United States Securities and Exchange Commission or any
other governmental authority of the United States of America at the time
administrating the Securities Act of 1933, as amended, the Investment
Company Act of 1940, as amended or the Securities Exchange Act of 1934, as
amended;
"SECURED LIABILITIES" means all liabilities which the Borrower, the other
Security Parties or any of them have at the date of this Agreement or at
any later time or times, under or in connection with any Finance Document
or any judgment relating to any Finance Document; and for this purpose,
there shall be disregarded any total or partial discharge of these
liabilities, or variation of their terms, which is effected by, or in
connection with, any bankruptcy, liquidation, arrangement or other
procedure under the insolvency laws of any country;
"SECURITY INTEREST" means:
(a) a mortgage, charge (whether fixed or floating) or pledge, any maritime
or other lien or any other security interest of any kind;
(b) the security rights of a plaintiff under an action in rem; and
(c) any arrangement entered into by a person (A) the effect of which is to
place another person (B) in a position which is similar, in economic
terms, to the position in which B would have been had he held a
security interest over an asset of A; but this paragraph (c) does not
apply to a right of set off or combination of accounts conferred by
the standard terms of business of a bank or financial institution;
"SECURITY PARTY" means the Borrower, each Guarantor, and any other person
(except the Lender) who, as a surety or mortgagor, as a party to any
subordination or priorities arrangement, or in any similar capacity,
executes a document falling within the last paragraph of the definition of
"Finance Documents";
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"SECURITY PERIOD" means the period commencing on the date of this Agreement
and ending on the date on which the Lender notifies the Borrower and the
other Security Parties that:
(a) all amounts which have become due for payment by the Borrower or any
other Security Party under the Finance Documents have been paid;
(b) no amount is owing or has accrued (without yet having become due for
payment) under any Finance Document;
(c) neither the Borrower nor any other Security Party has any future or
contingent liability under Clause 20, 21 or 22 or any other provision
of this Agreement or another Finance Document; and
(d) the Lender, acting reasonably, does not consider that there is a
significant risk that any payment or transaction under a Finance
Document would be set aside, or would have to be adjusted, in any
present or possible future bankruptcy of the Borrower or any other
Security Party or in any present or possible future proceeding
relating to a Finance Document or any asset covered (or previously
covered) by a Security Interest created by a Finance Document;
"SECURITY TO EXPOSURE RATIO" means, from time to time, the ratio of (i) the
aggregate charter-free market value of the Ships (as determined in
accordance with Clause 15.5) plus the market value of any additional
security for the time being actually provided to the Lender pursuant to
Clause 15.2 to (ii) the aggregate Loan and the Termination Amount;
"SELLER" means:
(a) in relation to "STENA CONTEST", Ocean Swift Ltd., a company
incorporated in Bermuda which has its registered office is at
Xxxxxxxxx Xxxxx, 0 Xxxxxx Xxxxxx, Xxxxxxxx XX00, Xxxxxxx; and
(b) in relation to "STENA CONCEPT", Ocean Symphony Ltd., a company
incorporated in Bermuda which has its registered office is at
Xxxxxxxxx Xxxxx, 0 Xxxxxx Xxxxxx, Xxxxxxxx XX00, Xxxxxxx,
and in the singular means either of them;
"SHIPS" means, together:
(a) the 2005-built product tanker of 47,400 deadweight tons registered
under Bermudian flag in the ownership of Ocean Symphony Ltd. with the
name "STENA CONCEPT" and having IMO No. 9272204 to be sold to Concept
pursuant to the STENA CONCEPT MOA and registered under Bermudian flag
in the ownership of Concept with the same name ("STENA CONCEPT");
(b) the 2005-built product tanker of 47,171 deadweight tons registered
under Bermudian flag in the ownership of Ocean Swift Ltd. with the
name "STENA CONTEST" and having IMO No. 9272199 to be sold to Contest
pursuant to the STENA CONTEST MOA and registered under Bermudian flag
in the ownership of Contest with the same name ("STENA CONTEST");
(c) the 2001-built VLCC of 314,000 deadweight tons registered under
Bermudian flag in the ownership of Vision with the name of "STENA
VISION" and having IMO No. 9205081 ("STENA VISION");
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(d) the 2001-built VLCC of 314,000 deadweight tons registered under
Bermudian flag in the ownership of Victory with the name of "STENA
VICTORY" and having IMO No. 9205093 ("STENA VICTORY");
(e) the 0000-xxxxx Xxxxxxx Tanker of 72,000 deadweight tons registered
under Bermudian flag in the ownership of Companion with the name of
"STENA COMPANION" and having IMO No. 9255933 ("STENA COMPANION");
(f) the 0000-xxxxx Xxxxxxx Tanker of 72,000 deadweight tons registered
under Bermudian flag in the ownership of Compatriot with the name of
"STENA COMPATRIOT" and having IMO Xx. 0000000 ("XXXXX XXXXXXXXXX");
(x) the 2004-built Product Tanker of 47,400 deadweight tons registered
under Bermudian flag in the ownership of Concord with the name of
"STENA CONCORD" and having IMO No. 9258600 ("STENA CONCORD");
(h) the 2004-built Product Tanker of 47,000 deadweight tons registered
under Bermudian flag in the ownership of Consul with the name of
"STENA CONSUL" and having IMO No. 9258612 ("STENA CONSUL"),
and, in the singular, means any of them;
"STENA BULK" means Stena Bulk AB, a company incorporated and existing under
the laws of Sweden and having its registered office at Xxxxx Xxxxxxxx,
X-000 00, Xxxxxxxxxx, Xxxxxx;
"STENA CONCEPT MOA" means the memorandum of agreement to be entered into
between Concept and Ocean Swift Ltd., pursuant to which Concept will buy
and Ocean Swift Ltd. will sell "STENA CONCEPT";
"STENA CONTEST MOA" means the memorandum of agreement to be entered into
between Contest and Ocean Symphony Ltd., pursuant to which Contest will buy
and Ocean Symphony Ltd. will sell "STENA CONTEST";
"SUB CHARTER" means:
(a) in relation to "STENA VISION", the sub time charterparty dated 2
November 1998, as amended by a side letter dated 20 October 2004, and
entered into between CV-MAX I and Sun International Limited;
(b) in relation to "STENA VICTORY", the sub time charterparty dated 2
November 1998, as amended by a side letter dated 20 October 2004, and
entered into between XX-XXX XX and Sun International Limited;
"TELERATE" means, for an Interest Period:
(a) the rate per annum equal to the offered quotation for deposits in
Dollars for a period equal to, or as near as possible equal to, the
relevant Interest Period which appears on Telerate Page 3750 at or
about 11.00 a.m. (London time) on the second Business Day prior to the
commencement of that Interest Period (and, for the purposes of this
Agreement, "Telerate Page 3750" means the display designated as "page
3750" on the Telerate Service or such other page as may replace Page
3750 on that service for the purpose of displaying rates comparable to
that rate or on such other service as may be nominated by the British
Bankers' Association as the information vendor for the purpose of
displaying British Bankers' Association Interest Settlement Rates for
Dollars); or
14
(b) if no rate is quoted on Telerate Page 3750, the rate per annum
determined by the Lender to be the rate per annum which leading banks
in the London Interbank Market offer for deposits in Dollars in the
London Interbank Market at or about 11.00 a.m. (London time) on the
second Business Day prior to the commencement of that Interest Period
for a period equal to that Interest Period and for delivery on the
first Business Day of it;
"TERMINATION AMOUNT" means such amount as determined by the Lender in its
absolute discretion as the amount due from the Borrower on terminating any
Transaction under the Master Agreement in the same manner as if it were a
Terminated Transaction (as defined in Section 14 of the Master Agreement)
effected by the Lender after an Event of Default;
"TOTAL CONSOLIDATED ASSETS" means, for an Accounting Period, the total
assets or the Group as shown in the most recent Accounting Information;
"TOTAL CONSOLIDATED LIABILITIES" means, for an Accounting Period, the total
liabilities (including, for the avoidance of doubt, total shareholder's
equity) of the Group as shown in the most recent Accounting Information;
"TOTAL LOSS" means, in relation to a Ship:
(a) actual, constructive, compromised, agreed or arranged total loss of
that Ship;
(b) any expropriation, confiscation, requisition or acquisition of that
Ship, whether for full consideration, a consideration less than its
proper value, a nominal consideration or without any consideration,
which is effected by any government or official authority or by any
person or persons claiming to be or to represent a government or
official authority (excluding a requisition for hire for a fixed
period not exceeding 1 year without any right to an extension) unless
it is within 1 month redelivered to the relevant Guarantor's full
control;
(c) any arrest, capture, seizure or detention of that Ship (including any
hijacking or theft) unless it is within 1 month redelivered to the
relevant Guarantor's full control;
"TOTAL LOSS DATE" means, in relation to a Ship:
(a) in the case of an actual loss of that Ship, the date on which it
occurred or, if that is unknown, the date when that Ship was last
heard of;
(b) in the case of a constructive, compromised, agreed or arranged total
loss of that Ship, the earliest of:
(c) the date on which a notice of abandonment is given to the insurers;
and
(d) the date of any compromise, arrangement or agreement made by or on
behalf of the relevant Guarantor with that Ship's insurers in which
the insurers agree to treat that Ship as a total loss; and
(e) in the case of any other type of total loss, on the date (or the most
likely date) on which it appears to the Lender, acting reasonably,
that the event constituting the total loss occurred;
"TRANSACTION" means a Transaction as defined in the introductory paragraph
of the Master Agreement;
15
"UNDERLYING DOCUMENTS" means, together, the MOAs, the Charters, the Charter
Guarantees, the Management Agreements, the Off-hire Guarantees and the
Charter Substitution Agreements and, in the singular, means any of them;
"VALUE ADJUSTED EQUITY" means, in respect of any Accounting Period, an
amount equal to the Value Adjusted Total Assets less the Total Consolidated
Liabilities;
"VALUE ADJUSTED TOTAL ASSETS" means, in respect of any Accounting Period,
an amount which is equal to the Total Consolidated Assets of the Borrower
less goodwill (if any), adjusted (in the case of the Ships then subject to
a Mortgage) to reflect the current market value of the Ships then subject
to a Mortgage (as determined in accordance with Clause 15.5 by valuations
made as close as is reasonably practicable to the date by reference to
which a calculation is to be made for the purposes of those provisions of
this Agreement where this defined term applies);
"VICTORY" means Victory Ltd., a company incorporated and existing under the
laws of Bermuda and having its registered office at Xxxxxxxxx Xxxxx, 0
Xxxxxx Xxxxxx, Xxxxxxxx XX00, Xxxxxxx;
"VISION" means Vision Ltd., a company incorporated and existing under the
laws of Bermuda and having its registered office at Clarendon House, 0
Xxxxxx Xxxxxx, Xxxxxxxx XX00, Xxxxxxx; and
"WORKING CAPITAL" means, for any Accounting Period, Current Assets less
Current Liabilities.
1.2 CONSTRUCTION OF CERTAIN TERMS. In this Agreement:
"APPROVED" means, for the purposes of Clause 13, approved in writing by the
Lender;
"ASSET" includes every kind of property, asset, interest or right,
including any present, future or contingent right to any revenues or other
payment;
"COMPANY" includes any partnership, joint venture and unincorporated
association;
"CONSENT" includes an authorisation, consent, approval, resolution,
licence, exemption, filing, registration, notarisation and legalisation;
"CONTINGENT LIABILITY" means a liability which is not certain to arise
and/or the amount of which remains unascertained;
"DOCUMENT" includes a deed; also a letter, fax or telex;
"EXCESS RISKS" means the proportion of claims for general average, salvage
and salvage charges not recoverable under the hull and machinery policies
in respect of the Ship in consequence of its insured value being less than
the value at which the Ship is assessed for the purpose of such claims;
"EXPENSE" means any kind of cost, charge or expense (including all legal
costs, charges and expenses) and any applicable value added or other tax;
"LAW" includes any order or decree, any form of delegated legislation, any
treaty or international convention and any regulation or resolution of the
Council of the European Union, the European Commission, the United Nations
or its security council;
"LEGAL OR ADMINISTRATIVE ACTION" means any legal proceeding or arbitration
and any administrative or regulatory action or investigation;
16
"LIABILITY" includes every kind of debt or liability (present or future,
certain or contingent), whether incurred as principal or surety or
otherwise;
"MONTHS" shall be construed in accordance with Clause 1.3;
"OBLIGATORY INSURANCES" means all insurances effected, or which the
Borrower is obliged to procure each Guarantor to effect, under Clause 13 or
any other provision of this Agreement or another Finance Document;
"PARENT COMPANY" has the meaning given in Clause 1.4;
"PERSON" includes any company; any state, political sub-division of a state
and local or municipal authority; and any international organisation;
"POLICY", in relation to any insurance, includes a slip, cover note,
certificate of entry or other document evidencing the contract of insurance
or its terms;
"PROTECTION AND INDEMNITY RISKS" means the usual risks covered by a
protection and indemnity association managed in London, including pollution
risks and the proportion (if any) of any sums payable to any other person
or persons in case of collision which are not recoverable under the hull
and machinery policies by reason of the incorporation in them of clause 1
of the Institute Time Clauses (Hulls)(1/10/83) or (with respect to
Insurances commencing on or after 1/11/1995) clause 8 of the Institute Time
Clauses (Hulls) (1/11/1995) or the Institute Amended Running Down Clause
(1/10/71) or any equivalent provision;
"REGULATION" includes any regulation, rule, official directive, request or
guideline whether or not having the force of law of any governmental,
intergovernmental or supranational body, agency, department or regulatory,
self-regulatory or other authority or organisation;
"SUBSIDIARY" has the meaning given in Clause 1.4;
"TAX" includes any present or future tax, duty, impost, levy or charge of
any kind which is imposed by any state, any political sub-division of a
state or any local or municipal authority (including any such imposed in
connection with exchange controls), and any connected penalty, interest or
fine; and
"WAR RISKS" includes the risk of mines and all risks excluded by clause 23
of the Institute Time Clauses (Hulls)(1/10/83) or (with respect to
Insurances commencing on or after 1/11/1995) clause 24 of the Institute
Time Clauses (Hulls) (1/11/1995).
1.3 MEANING OF "MONTH". A period of one or more "MONTHS" ends on the day in the
relevant calendar month numerically corresponding to the day of the
calendar month on which the period started ("THE NUMERICALLY CORRESPONDING
DAY"), but:
(a) on the Business Day following the numerically corresponding day if the
numerically corresponding day is not a Business Day or, if there is no
later Business Day in the same calendar month, on the Business Day
preceding the numerically corresponding day; or
(b) on the last Business Day in the relevant calendar month, if the period
started on the last Business Day in a calendar month or if the last
calendar month of the period has no numerically corresponding day,
and "MONTH" and "MONTHLY" shall be construed accordingly.
17
1.4 MEANING OF "SUBSIDIARY". A company (S) is a subsidiary of another company
(P) if:
(a) a majority of the issued shares in S (or a majority of the issued shares in
S which carry unlimited rights to capital and income distributions) are
directly or indirectly owned by P; or
(b) P has direct or indirect control over a majority of the voting rights
attaching to the issued shares of S; or
(c) P has the direct or indirect power to appoint or remove a majority of the
directors of S; or
(d) P otherwise has the direct or indirect power to ensure that the affairs of
S are conducted in accordance with the wishes of P,
and any company of which S is a subsidiary is a parent company of S.
1.5 General Interpretation. In this Agreement:
(a) references to, or to a provision of, a Finance Document or any other
document are references to it as amended or supplemented, whether before
the date of this Agreement or otherwise;
(b) references to, or to a provision of, any law include any amendment,
extension, re-enactment or replacement, whether made before the date of
this Agreement or otherwise;
(c) words denoting the singular number shall include the plural and vice versa;
and
(d) Clauses 1.1 to 1.5 apply unless the contrary intention appears.
1.6 HEADINGS. In interpreting a Finance Document or any provision of a Finance
Document, all clause, sub-clause and other headings in that and any other
Finance Document shall be entirely disregarded.
2 FACILITY
2.1 AMOUNT OF FACILITY. Subject to the other provisions of this Agreement and
in reliance (inter alia) on the representations and warranties of the
Borrower and the Guarantors set out in the Finance Documents, the Lender
shall make a loan facility not exceeding $229,500,000 available to the
Borrower in up to 3 Advances.
2.2 PURPOSE OF LOAN. The Borrower undertakes with the Lender to use the loan
only for the purpose stated in the preamble to this Agreement and in
accordance with the provisions of Clause 3.2.
3 DRAWDOWN
3.1 REQUEST FOR ADVANCE. Subject to the following conditions, the Borrower may
request an Advance to be made by ensuring that the Lender receives a
completed Drawdown Notice not later than 11.00 a.m. (London time) 2
Business Days prior to the intended Drawdown Date.
3.2 AVAILABILITY. The conditions referred to in Clause 3.1 are that:
(a) a Drawdown Date has to be a Business Day during the Availability Period;
(b) the Loan shall be made in no more than 3 Advances as follows:
18
(i) an Advance in relation to the financing of the total purchase price of
"STENA CONCEPT" and, at the discretion of the Borrower, for its
general corporate purposes (the "STENA CONCEPT ADVANCE");
(ii) an Advance in relation to the financing of the total purchase price of
"STENA CONTEST" and, at the discretion of the Borrower, for its
general corporate purposes (the "STENA CONTEST ADVANCE"); and
(iii) an Advance in relation to the refinancing of the Existing
Indebtedness, payments of accrued interest and costs and expenses in
respect of the Existing Indebtedness and, at the discretion of the
Borrower, for its general corporate purposes (the "EXISTING
INDEBTEDNESS ADVANCE");
(c) the STENA CONCEPT Advance and the STENA CONTEST Advance shall not be made
before the Existing Indebtedness Advance; and
(d) the aggregate of the Advances shall not exceed $229,500,000.
3.3 DRAWDOWN NOTICE IRREVOCABLE. A Drawdown Notice must be signed by an officer
of the Borrower; and once served, a Drawdown Notice cannot be revoked
without the prior consent of the Lender.
3.4 DISBURSEMENT OF ADVANCE. Subject to the provisions of this Agreement, the
Lender shall on each Drawdown Date make the relevant Advance to the
Borrower; and payment to the Borrower shall be made to the account or
accounts which the Borrower specifies in the Drawdown Notice.
3.5 DISBURSEMENT OF ADVANCE TO THIRD PARTY. The payment by the Lender under
Clause 3.4 shall constitute the making of the Advance (notwithstanding that
the Borrower requests the Lender to make payment direct to a third party
such as a Seller or the Existing Lenders) and the Borrower shall at that
time become indebted, as principal and direct obligor, to the Lender in an
amount equal to the Advance.
4 INTEREST
4.1 PAYMENT OF NORMAL INTEREST. Subject to the provisions of this Agreement,
interest on the Loan in respect of each Interest Period shall be paid by
the Borrower on the last day of that Interest Period.
4.2 NORMAL RATE OF INTEREST. Subject to the provisions of this Agreement, the
rate of interest on the Loan in respect of an Interest Period shall be the
aggregate of (a) the Margin, (b) the Relevant Interest Rate for that
Interest Period, and (c) the Mandatory Cost Rate.
4.3 PAYMENT OF ACCRUED INTEREST. In the case of an Interest Period longer than
3 months, accrued interest shall be paid every 3 months during that
Interest Period and on the last day of that Interest Period.
4.4 INTEREST RATE WHEN TRANSACTIONS UNDER MASTER AGREEMENT.
(a) In the event that a Transaction is to be entered into under the Master
Agreement then (subject to Clause 4.4(b) below) the Relevant Interest Rate
for each and every Interest Period applicable to that part of the Loan the
subject of the Transaction (commencing with the first Interest Period
relating to such Transaction) shall be TELERATE.
(b) The Borrower may elect for the Relevant Interest Rate for each and every
Interest Period applicable to that part of the Loan the subject of a
Transaction (commencing with the first Interest Period relating to such
Transaction) to be RBS LIBOR rather than TELERATE provided that such
election (which shall be irrevocable) is notified in writing by the
19
Borrower to the Lender not later than 11.00 a.m. (London time) 3 Business
Days prior to the commencement of such first Interest Period (or such other
period as the Lender, in its sole and absolute discretion, may agree).
4.5 NOTIFICATION OF MARKET DISRUPTION. The Lender shall promptly notify the
Borrower if for any reason the Lender is unable to obtain Dollars in the
London Interbank Market in order to fund the Loan (or any part of it)
during any Interest Period, stating the circumstances which have caused
such notice to be given.
4.6 SUSPENSION OF DRAWDOWN. If the Lender's notice under Clause 4.5 is served
before an Advance is made, the Lender's obligation to make that Advance
shall be suspended while the circumstances referred to in the Lender's
notice continue.
4.7 NEGOTIATION OF ALTERNATIVE RATE OF INTEREST. If the Lender's notice under
Clause 4.5 is served after an Advance is made, the Borrower and the Lender
shall use reasonable endeavours to agree, within the 30 days after the date
on which the Lender serves its notice under Clause 4.5 (the "NEGOTIATION
PERIOD"), an alternative interest rate or (as the case may be) an
alternative basis for the Lender to fund or continue to fund the Loan
during the Interest Period concerned.
4.8 APPLICATION OF AGREED ALTERNATIVE RATE OF INTEREST. Any alternative
interest rate or an alternative basis which is agreed during the
Negotiation Period shall take effect in accordance with the terms agreed.
4.9 ALTERNATIVE RATE OF INTEREST IN ABSENCE OF AGREEMENT. If an alternative
interest rate or alternative basis is not agreed within the Negotiation
Period, and the relevant circumstances are continuing at the end of the
Negotiation Period, then the Lender shall set an interest period and
interest rate representing the cost of funding of the Lender in Dollars (or
in any available currency) of the Loan plus the Margin and the Mandatory
Cost Rate; and the procedure provided for by this Clause 4.9 shall be
repeated if the relevant circumstances are continuing at the end of the
interest period so set by the Lender.
4.10 NOTICE OF PREPAYMENT. If the Borrower does not agree with an interest rate
set by the Lender under Clause 4.9, the Borrower may give the Lender not
less than 15 Business Days' notice of its intention to prepay at the end of
the interest period set by the Lender.
4.11 PREPAYMENT. A notice under Clause 4.10 shall be irrevocable; and on the
last Business Day of the interest period set by the Lender, the Borrower
shall prepay (without premium or penalty) the Loan, together with accrued
interest thereon at the applicable rate plus the Margin and the Mandatory
Cost Rate.
4.12 APPLICATION OF PREPAYMENT. The provisions of Clause 7 shall apply in
relation to the prepayment.
5 INTEREST PERIODS
5.1 COMMENCEMENT OF INTEREST PERIODS. The first Interest Period applicable to
an Advance shall commence on the Drawdown Date in respect of that Advance
and each subsequent Interest Period shall commence on the expiry of the
preceding Interest Period.
5.2 DURATION OF NORMAL INTEREST PERIODS. Subject to Clauses 5.3 and 5.4, each
Interest Period shall be:
(a) 1, 3 or 6 months as notified by the Borrower to the Lender not later than
11.00 a.m. (London time) 2 Business Days before the commencement of the
Interest Period; or
20
(b) in the case of the first Interest Period applicable to the second and any
subsequent Advance, a period ending on the last day of the Interest Period
then current and applicable to the first Advance, whereupon all of the
Advances shall be consolidated and treated as a single Advance; or
(c) 3 months, if Clause 5.2(b) does not apply and the Borrower fails to notify
the Lender by the time specified in paragraph (a); or
(d) such other period as the Lender may agree with the Borrower.
5.3 DURATION OF INTEREST PERIODS FOR REPAYMENT INSTALMENT. An Interest Period
shall end on the Repayment Date.
5.4 NON-AVAILABILITY OF MATCHING DEPOSITS FOR INTEREST PERIOD SELECTED. If,
after the Borrower has selected and the Lender has agreed an Interest
Period longer than 6 months, the Lender notifies the Borrower by 11.00 a.m.
(London time) on the third Business Day before the commencement of the
Interest Period that it is not satisfied that deposits in Dollars for a
period equal to the Interest Period will be available to it in the London
Interbank Market when the Interest Period commences, the Interest Period
shall be of 6 months.
6 DEFAULT INTEREST
6.1 PAYMENT OF DEFAULT INTEREST ON OVERDUE AMOUNTS. The Borrower shall pay
interest in accordance with the following provisions of this Clause 6 on
any amount payable by the Borrower under any Finance Document which the
Lender does not receive on or before the relevant date, that is:
(a) the date on which the Finance Documents provide that such amount is due for
payment; or
(b) if a Finance Document provides that such amount is payable on demand,
within the period specified in such demand; or
(c) if such amount has become immediately due and payable under Clause 19.4,
the date on which it became immediately due and payable.
6.2 DEFAULT RATE OF INTEREST. Interest shall accrue on an overdue amount from
(and including) the relevant date until the date of actual payment (as well
after as before judgment) at the rate per annum determined by the Lender to
be 1.5 per cent. above:
(a) in the case of an overdue amount of principal, the higher of the rates set
out at Clauses 6.3(a) and (b); or
(b) in the case of any other overdue amount, the rate set out at Clause 6.3(b).
6.3 CALCULATION OF DEFAULT RATE OF INTEREST. The rates referred to in Clause
6.2 are:
(a) the rate applicable to the overdue principal amount immediately prior to
the relevant date (but only for any unexpired part of any then current
Interest Period);
(b) the Margin together with the Mandatory Cost Rate plus, in respect of
successive periods of any duration (including at call) up to 3 months which
the Lender may select from time to time:
(i) RBS LIBOR; or
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(ii) if the Lender determines that Dollar deposits for any such period are
not being made available to it by leading banks in the London
Interbank Market in the ordinary course of business, a rate from time
to time determined by the Lender by reference to the cost of funds to
it from such other sources as the Lender may from time to time
determine.
6.4 NOTIFICATION OF INTEREST PERIODS AND DEFAULT RATES. The Lender shall
promptly notify the Borrower of each interest rate determined by it under
Clause 6.3 and of each period selected by it for the purposes of paragraph
(b) of that Clause; but this shall not be taken to imply that the Borrower
is liable to pay such interest only with effect from the date of the
Lender's notification.
6.5 PAYMENT OF ACCRUED DEFAULT INTEREST. Subject to the other provisions of
this Agreement, any interest due under this Clause shall be paid on the
last day of the period by reference to which it was determined.
6.6 COMPOUNDING OF DEFAULT INTEREST. Any such interest which is not paid at the
end of the period by reference to which it was determined shall thereupon
be compounded.
7 REPAYMENT AND PREPAYMENT
7.1 AMOUNT OF REPAYMENT INSTALMENTS. The Borrower shall repay the Loan by a
single instalment on the Repayment Date.
7.2 REPAYMENT DATE. The Repayment Date shall be the earlier of:
(a) date falling 5 years after the final Drawdown Date; and
(b) 31 January 2011.
7.3 PAYMENT OF OTHER SUMS. On the Repayment Date, the Borrower shall
additionally pay to the Lender all other sums then accrued or owing under
any Finance Document.
7.4 VOLUNTARY PREPAYMENT. Subject to the following conditions, the Borrower may
prepay the whole or any part of the Loan on the last day of an Interest
Period.
7.5 CONDITIONS FOR VOLUNTARY PREPAYMENT. The conditions referred to in Clause
7.4 are that:
(a) a partial prepayment shall be $500,000 or a whole multiple of $500,000;
(b) the Lender has received from the Borrower at least 7 days' prior written
notice specifying the amount to be prepaid and the date on which the
prepayment is to be made;
(c) the Borrower has provided evidence satisfactory to the Lender that any
consent required by the Borrower or any other Security Party in connection
with the prepayment has been obtained and remains in force, and that any
regulation relevant to this Agreement which affects the Borrower or any
other Security Party has been complied with.
7.6 EFFECT OF NOTICE OF PREPAYMENT. A prepayment notice may not be withdrawn or
amended without the consent of the Lender and the amount specified in the
prepayment notice shall become due and payable by the Borrower on the date
for prepayment specified in the prepayment notice.
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7.7 MANDATORY PREPAYMENT. The Borrower shall be obliged to prepay the relevant
proportion of the Loan:
(a) without prejudice to Clause 11.3, if a Ship is sold, on or before the date
on which the sale is completed by delivery of the Ship to the buyer (the
"SALE COMPLETION DATE"); or
(b) if a Ship becomes a Total Loss, on the earlier of the date falling 180 days
after the Total Loss Date and the date of receipt by the Lender of the
proceeds of insurance relating to such Total Loss (the "TOTAL LOSS RECEIPT
DATE"),
and this Clause 7.7 and in Clause 7.8 "RELEVANT PROPORTION" means such
amount necessary to ensure that following the sale or Total Loss of a Ship,
the Security to Exposure Ratio is at least equal to the higher of:
(i) the Security to Exposure Ratio immediately prior to the Sale
Completion Date or the Total Loss Receipt Date (as the case may be);
and
(ii) the Minimum Security Cover Ratio.
7.8 ADDITIONAL PREPAYMENT. If an Event of Default of Potential Event of Default
has occurred and is continuing at the Sale Completion Date or the Total
Loss Receipt Date, the Lender shall, without prejudice to its other rights
under the Finance Documents, be permitted to require an amount greater than
the relevant proportion, as the Lender may determine, to be applied in or
towards prepayment of the Loan.
7.9 AMOUNTS PAYABLE ON PREPAYMENT. A prepayment shall be made together with
accrued interest (and any other amount payable under Clause 21 or
otherwise) in respect of the amount prepaid and, if the prepayment is not
made on the last day of an Interest Period together with any sums payable
under Clause 21.1(b) but without premium or penalty.
7.10 NO REBORROWING. No amount prepaid may be reborrowed.
8 MISMATCH BETWEEN LOAN AND TRANSACTIONS
8.1 FULL AMOUNT OF COMMITMENT NOT BORROWED. If for any reason less than the
full amount of the Commitment as at the date of this Agreement is advanced
under this Agreement but nonetheless a Transaction in respect of the full
amount of the Commitment as at the date of this Agreement has been entered
into under the Master Agreement then, subject to Clause 8.3, the Lender
shall be entitled but not obliged:
(a) to amend, supplement, cancel, net out, terminate, liquidate, transfer or
assign all or any part of the rights, benefits and obligations created by
the Master Agreement; and/or
(b) to obtain or re-establish any hedge or related trading position in any
manner and with any person the Lender in its absolute discretion decides,
and, if the Lender exercises any part of that entitlement, the Borrower's
continuing obligations under the Master Agreement shall, unless agreed
otherwise by the Lender, be calculated so far as the Lender considers
practicable by reference to the repayment schedule for the Loan taking into
account the fact that less than the full amount of the Commitment as at the
date of this Agreement has been advanced under this Agreement.
It is acknowledged, subject to the conditions referred to below, that the
Borrower may enter into a Transaction (either on an immediate or
forward-starting basis) on or after the date of this Agreement and before
the Drawdown Date in respect of the first Advance, in which event the
foregoing provisions of this Clause 8.1 shall, for the avoidance of doubt,
apply. The conditions referred to above are that the Lender shall have
received the
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documents described in paragraphs 2, 3, 4 and 5 (in relation to the
Borrower only), 7, 10 and 11 (but only an opinion on the laws of Bermuda)
of Part A of Schedule 2.
8.2 HEDGING POSITION FOLLOWING PREPAYMENT. In the case of a prepayment of all
or part of the Loan under this Agreement then, subject to Clause 8.3, the
Lender shall be entitled but not obliged:
(a) to amend, supplement, cancel, net out, terminate, liquidate, transfer or
assign all or such part of the rights, benefits and obligations created by
the Master Agreement which equate or relate to the part of the Loan so
prepaid; and/or
(b) to obtain or re-establish any hedge or related trading position in any
manner and with any person the Lender in its absolute discretion decides,
and, in the case of a partial prepayment of the Loan and the Lender
exercising any part of that entitlement, the Borrower's continuing
obligations under the Master Agreement shall, unless agreed otherwise by
the Lender, be calculated so far as the Lender considers practicable by
reference to the amended repayment schedule for the Loan taking account of
the fact that the Loan then constitutes less than the amount drawndown
under this Agreement, after taking into consideration any repayment
instalment previously made under Clauses 7.1 and 7.2.
8.3 OBLIGATION TO PROVIDE ADDITIONAL SECURITY. If:
(a)
(i) the Loan constitutes less than the amount advanced under this
Agreement; or
(ii) less than the full amount of the Commitment as at the date of this
Agreement is advanced under this Agreement; and
(b) in either case, following a written request from the Borrower, the Lender
in its absolute discretion agrees that the Borrower may be permitted to
maintain all or part of a Transaction in an amount not wholly matched with,
or linked to, all or part of the Loan,
the Borrower shall, within 5 Business Days of being notified by the Lender
of such requirement, provide the Lender with, or procure the provision to
the Lender of, such additional security as shall, in the opinion of the
Lender, be adequate to secure the performance of any relevant Transaction.
8.4 FORM OF ADDITIONAL SECURITY. The additional security referred to in Clause
8.3 shall take such form, be constituted by such documentation and be
entered into by such parties, as the Lender may approve or require, and
each document comprising such additional security shall constitute a Credit
Support Document.
8.5 INDEMNITY. The Borrower shall, on the first written demand of the Lender,
indemnify the Lender in respect of all expenses (excluding the fees of
legal advisers) incurred or sustained by the Lender as a consequence of, or
in relation to, the effecting of any matters or transactions referred to in
Clauses 8.1, 8.2, 8.3 and 8.4.
8.6 CONSEQUENCES OF TRANSACTIONS BEING TERMINATED. Without prejudice to or
limitation of the obligations of the Borrower under Clause 8.5, if the
Lender exercises any of its rights under Clauses 8.1 or 8.2 and such
exercise results in all or part of a Transaction being terminated, such
termination shall be treated under the Master Agreement as an agreed
termination (in whole or in part, as the case may be) and, notwithstanding
such treatment as an agreed termination, the Lender shall be permitted to
recover from the Borrower a payment for early termination calculated in
accordance with the provisions of section 6(e)(i) of the Master Agreement
as if it were a Terminated Transaction (as defined in section 15 of the
Master Agreement) effected by the Lender after an Event of Default.
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8.7 MASTER AGREEMENT BENEFITS. If, in the circumstances referred to in Clause
8.6, a net payment is to be made by a Lender to the Borrower in accordance
with the Master Agreement such payment shall, provided that no Event of
Default has occurred and subject to the provisions of the Master Agreement
Security Deed, be made to the Operating Account to be applied in accordance
with the provisions of Clause 18.2.
9 CONDITIONS PRECEDENT
9.1 DOCUMENTS, FEES AND NO DEFAULT. The Lender's obligation to make an Advance
is subject to the following conditions precedent:
(a) that, on or before the service of the first Drawdown Notice, the Lender
receives the documents described in Part A of Schedule 2 in form and
substance satisfactory to it and its lawyers;
(b) that, on the first Drawdown Date but prior to the drawdown of the first
Advance, the Lender receives the documents described in Part B of Schedule
2, in form and Substance satisfactory to it and its lawyers;
(c) that, on or before a Drawdown Date relating to the financing of a New Ship
but prior to the drawdown of the relevant Advance, the Lender receives the
documents described in Part C of Schedule 2 in relation to the New Ship
being financed by that Advance, in form and substance satisfactory to the
Lender and its lawyers (each acting reasonably);
(d) that, on or before the service of the first Drawdown Notice, the Lender
receives the arrangement fee referred to in the Fee Letter and all accrued
commitment fee payable pursuant to the Fee Letter;
(e) that both at the date of each Drawdown Notice and at each Drawdown Date:
(i) no Event of Default or Potential Event of Default has occurred and is
continuing or would result from the borrowing of the Loan;
(ii) the representations and warranties in Clause 10.1 and those of the
Borrower or any other Security Party which are set out in the other
Finance Documents would be true and not misleading if repeated on each
of those dates with reference to the circumstances then existing; and
(iii) none of the circumstances contemplated by Clause 4.5 has occurred and
is continuing; and
(f) that, if the Security to Exposure Ratio were tested immediately following
the making of the relevant Advance, the Borrower would not be obliged to
provide additional security or prepay part of the Loan in accordance with
Clause 15; and
(g) that the Lender has received, and found to be acceptable to it, any further
opinions, consents, agreements and documents in connection with the Finance
Documents and/or the Underlying Documents which the Lender may reasonably
request by notice to the Borrower not less than 2 days prior to an
anticipated Drawdown Date.
9.2 CONDITIONS PRECEDENT TO A TRANSACTION. The obligation of the Lender to
enter into any Transaction after the first Drawdown Date shall be subject
to the condition that the Lender shall have received certified copies of
such documents of the kinds referred to in paragraphs 3, 4 and 5 of Part A
of Schedule 2 and such favourable legal opinions as the Lender may require,
in all respects in form and substance reasonably satisfactory to the Lender
and its legal advisers:
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9.3 WAIVERS OF CONDITIONS PRECEDENT. If the Lender, at its discretion, permits
an Advance to be made before certain of the conditions referred to in
Clause 9.1 are satisfied, or enters into a Transaction prior to the
satisfaction of all or any of the conditions referred to in Clause 9.2, the
Borrower shall ensure that those conditions are satisfied within 5 Business
Days after the Drawdown Date or the date of the relevant Transaction as the
case may be (or such longer period as the Lender may specify).
10 REPRESENTATIONS AND WARRANTIES
10.1 GENERAL. The Borrower represents and warrants to the Lender as follows.
10.2 STATUS. The Borrower is duly incorporated and validly existing and in good
standing under the laws of Bermuda.
10.3 SHARE CAPITAL AND OWNERSHIP. The Borrower has an authorised share capital
of $652,000 divided into 12,000 founder shares of $1 each, of which none
have been issued, 60,000,000 common shares of $0.01 each, of which
15,500,000 have been issued, and 4,000,000 undesignated preference shares
of $0.01 each, of which none have been issued.
10.4 CORPORATE POWER. The Borrower has the corporate capacity, and has taken all
corporate action and obtained all consents necessary for it:
(a) to execute the Finance Documents to which it is a party; and
(b) to borrow under this Agreement and to make all the payments contemplated
by, and to comply with, those Finance Documents to which it is a party.
10.5 CONSENTS IN FORCE. All the consents referred to in Clause 10.4 remain in
force and nothing has occurred which makes any of them liable to
revocation.
10.6 ONLY EXISTING INDEBTEDNESS. The Borrower and the Guarantors have incurred
and have outstanding no Financial Indebtedness other than the Existing
Indebtedness and no Debt other than as is necessary or incidental to its
establishment and operations.
10.7 ASSETS OF BORROWER. The Borrower has no assets other than the shares in
each Guarantor and such other assets as are necessary or incidental to its
establishment and operations.
10.8 ASSETS OF GUARANTORS. Each Guarantor has no assets other than the Ship
which it owns (or, in the case of Concept and Contest, the MOA to which it
is, or is to be, a party) and the other Underlying Documents to which it
is, or is to be, a party and such other assets as are necessary or
incidental to its ownership and operation of its Ship.
10.9 COMPLIANCE WITH LAWS. The Borrower and each Guarantor has complied in all
material respects (in the context of the transaction contemplated by this
Agreement and the other Finance Documents) with all laws and regulations by
which it is bound including, without limitation, all applicable
requirements of the SEC and the provisions of the Xxxxxxxx-Xxxxx Act of
2002.
10.10 LEGAL VALIDITY; EFFECTIVE SECURITY INTERESTS. The Finance Documents to
which the Borrower is a party, do now or, as the case may be, will, upon
execution and delivery (and, where applicable, registration as provided for
in the Finance Documents):
(a) constitute the Borrower's legal, valid and binding obligations enforceable
against the Borrower in accordance with their respective terms; and
(b) create legal, valid and binding Security Interests enforceable in
accordance with their respective terms over all the assets to which they,
by their terms, relates,
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subject to the availability of any equitable remedy and any relevant
insolvency laws affecting creditors' rights generally.
10.11 NO THIRD PARTY SECURITY INTERESTS. Without limiting the generality of
Clause 10.10, at the time of the execution and delivery of each Finance
Document to which the Borrower is a party:
(a) the Borrower will have the right to create all the Security Interests which
that Finance Document purports to create; and
(b) no third party will have any Security Interest (except for Permitted
Security Interests), in or in relation to any asset to which any such
Security Interest, by its terms, relates.
10.12 NO CONFLICTS. The execution by the Borrower of each Finance Document to
which it is a party, and the borrowing by the Borrower of the Loan, and its
compliance with each Finance Document to which it is a party will not
involve or lead to a contravention in any material respect (in the context
of the transaction contemplated by this Agreement and the other Finance
Documents) of:
(a) any applicable law or regulation; or
(b) the constitutional documents of the Borrower; or
(c) any contractual or other obligation or restriction which is binding on the
Borrower or any of its assets.
10.13 NO WITHHOLDING TAXES. All payments which the Borrower is liable to make
under any Finance Document may be made without deduction or withholding for
or on account of any tax payable under any law of any Pertinent
Jurisdiction.
10.14 NO DEFAULT. No Event of Default or Potential Event of Default has occurred
and is continuing, nor is the Borrower in default under the Master
Agreement or any other agreement by which it is bound.
10.15 INFORMATION. All information which has been provided in writing by or on
behalf of the Borrower or any other Security Party to the Lender in
connection with any Finance Document satisfied the requirements of Clause
11.5; all audited and unaudited accounts which have been so provided
satisfied the requirements of Clause 11.7; and there has been no material
adverse change in the financial position or state of affairs of the
Borrower or the Group from that disclosed in the latest of those accounts.
10.16 NO LITIGATION. No legal or administrative action involving the Borrower
has been commenced or taken or, to the Borrower's knowledge, is likely to
be commenced or taken, other than such litigation or administrative action
as would, if adversely determined, not affect the Borrower's ability to
meet its obligations under this Agreement and the other Finance Documents.
10.17 VALIDITY AND COMPLETENESS OF UNDERLYING DOCUMENTS. Each Underlying
Document constitutes valid, binding and enforceable obligations of the
relevant Guarantor, the relevant Charterer, the relevant Seller or the
Manager (as the case may be) in accordance with its terms; and:
(a) the copies of each Underlying Document delivered to the Lender before the
date of this Agreement are true and complete copies; and
(b) no amendments or additions to any Underlying Document have been agreed nor
has any Guarantor, Seller or Charterer waived any of their respective
rights under the Underlying Documents to which they are a party.
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10.18 NO REBATES ETC. There is no agreement or understanding to allow or pay any
rebate, premium, commission, discount or other benefit or payment
(howsoever described) to the Borrower, any Guarantor the Seller or a third
party in connection with the purchase by each New Owner of the relevant New
Ship pursuant to the relevant MOA, other than as disclosed to the Lender in
writing on or prior to the date of this Agreement.
10.19 COMPLIANCE WITH CERTAIN UNDERTAKINGS. At the date of this Agreement, the
Borrower is in compliance with Clauses 11.2, 11.10 and 11.14.
10.20 TAXES PAID. The Borrower has paid all taxes applicable to or imposed on or
in relation to the Borrower or its business.
10.21 MARGIN STOCK. Neither the Borrower nor any Guarantor is engaged in the
business of extending credit for the purpose of purchasing or carrying
Margin Stock and no proceeds of any Advance will be used to purchase or
carry any Margin Stock or to extend credit to others for the purpose of
purchasing or carrying any Margin Stock.
10.22 ERISA. Neither the Borrower nor any Guarantor has ever established or
maintained any employee benefit plan subject to the Employee Retirement
Income Security Act of 1974.
10.23 NOT "INVESTMENT COMPANY". Neither the Borrower nor any Guarantor is an
"investment company", or a company "controlled" by an "investment company",
within the meaning of the Investment Company Act of 1940.
10.24 PLACE OF BUSINESS. Neither the Borrower nor any Guarantor has a place of
business in the United States of America, the District of Columbia, the
United States Virgin Islands, or any territory or insular possession
subject to the jurisdiction of the United States of America other than the
place of business of the Borrower's wholly-owned subsidiary, Arlington
Tankers LLC, at 000 Xxxx Xxxx Xxxx, Xxxxxxxx, Xxxxxxxxxxx, 00000, XXX and
the business office of the Borrower at the same address.
10.25 NO MONEY LAUNDERING. In relation to the borrowing by the Borrower of the
Advances or any of them, the performance and discharge of its obligations
under this Agreement and the other Finance Documents and the transactions
and other arrangements affected or contemplated by this Agreement and the
other Finance Documents, the Borrower confirms that it is acting for its
own account and that the foregoing will not involve or lead to
contravention of any law, official requirement or other regulatory measure
or procedure implemented to combat "money laundering" (as defined in
Article 1 of the Directive (91/308/EEC) of the Council of the European
Communities).
10.26 ISM CODE AND ISPS CODE COMPLIANCE. All requirements of the ISM Code and
the ISPS Code as they relate to each Guarantor, the Approved Manager and
each Ship have been complied with.
11 GENERAL UNDERTAKINGS
11.1 GENERAL. The Borrower undertakes with the Lender to comply with the
following provisions of this Clause 11 at all times during the Security
Period, except as the Lender may otherwise permit.
11.2 TITLE; NEGATIVE PLEDGE. The Borrower will:
(a) hold the legal title to, and own the entire beneficial interest in the
shares in, each Guarantor, free from all Security Interests and other
interests and rights of every kind, except for those created by the Finance
Documents; and
(b) not create or permit to arise any Security Interest over any other asset,
present or future (including, but not limited to, the Borrower's rights
against the Lender under the Master
28
Agreement or all or any part of the Borrower's interest in any amount
payable to the Borrower by the Lender under the Master Agreement), nor sign
nor file, under the Uniform Commercial Code (or analogous statute or law)
of any jurisdiction, a financing statement that names it as debtor, or sign
any security agreement authorising any secured party thereunder to file
such financing statement, or assign any right to receive income, other than
Permitted Security Interests.
11.3 NO DISPOSAL OF ASSETS. The Borrower will not (and will procure that no
Guarantor shall) transfer, lease or otherwise dispose of:
(a) in the case of the Borrower:
(i) any of its shares in a Guarantor other than in accordance with the
terms of this Agreement and on terms approved by the Lender; or
(ii) in relation to any other assets, other than on arm's length terms for
market value; or
(iii) any debt payable to it or any other right (present, future or
contingent right) to receive a payment, including any right to damages
or compensation; and
(b) in the case of a Guarantor, the Ship owned by it or any part thereof, other
than in accordance with the terms of the Finance Documents and on terms
approved by the Lender.
11.4 NO ACQUISITIONS. The Borrower will not acquire an asset outside the
ordinary course of its business other than ships (or the shares in
subsidiary companies acquiring ships) acquired and financed with prior
notification to the Lender.
11.5 INFORMATION PROVIDED TO BE ACCURATE. All financial and other information
which is provided in writing by or on behalf of the Borrower under or in
connection with any Finance Document will be true and not misleading and
will not omit any material fact or consideration.
11.6 PROVISION OF FINANCIAL STATEMENTS. The Borrower will send to the Lender:
(a) as soon as possible, but in no event later than 120 days after the end of
each financial year of the Borrower, the audited consolidated accounts of
the Group and the unaudited individual accounts of the Borrower and each
Guarantor; and
(b) as soon as possible, but in no event later than 60 days after the end of
each Accounting Period, the consolidated management accounts of the Group
prepared in accordance with Clause 11.7 and certified as to their
correctness by the Chief Financial Officer of the Borrower,
and each set of accounts sent to the Lender pursuant to (a) or (b) of this
Clause 11.6 shall be sent together with a compliance certificate signed by
the Borrower's Chief Financial Officer in accordance with Clause 12.6;
11.7 FORM OF FINANCIAL STATEMENTS. All accounts (audited and unaudited)
delivered under Clause 11.6 will:
(a) be prepared in accordance with all applicable laws and GAAP consistently
applied;
(b) give a GAAP presentation of the Borrower and its subsidiaries at the date
of those accounts and of their profit for the period to which those
accounts relate; and
(c) fully disclose or provide for all significant liabilities of the Borrower
and its subsidiaries,
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11.8 KEEPING OF BOOKS. The Borrower shall keep, and procure that each Guarantor
shall keep, proper books of record and account, in which full and correct
entries shall be made in accordance with GAAP of all financial transactions
and the assets and business of the Borrower or the Guarantor (as the case
may be) to the extent necessary to permit the preparation of the Accounting
Information required to be delivered to the Lender pursuant to this
Agreement.
11.9 CREDITOR NOTICES. The Borrower will send the Lender, at the same time as
they are despatched, copies of all communications which are despatched to
the whole or any class of the Borrower's creditors.
11.10 CONSENTS. The Borrower will maintain in force and promptly obtain or renew
(or procure that this is done), and will promptly send certified copies (or
procure that they are sent) to the Lender of, all consents required:
(a) for the Borrower and each Guarantor to perform its obligations under any
Finance Document to which it is a party;
(b) for the validity or enforceability of any Finance Document to which it or
any Guarantor is a party;
(c) for each Guarantor to continue to own and operate the Ship, owned by it,
and the Borrower will comply (or procure compliance) with the terms of all
such consents.
11.11 COMPLIANCE WITH LAWS. The Borrower and each Guarantor will comply with all
laws and regulations by which it is bound including, without limitation,
all applicable requirements of the SEC and the provisions of the
Xxxxxxxx-Xxxxx Act of 2002.
11.12 MAINTENANCE OF SECURITY INTERESTS. The Borrower will:
(a) at its own cost, do all that it reasonably can to ensure that any Finance
Document validly creates the obligations and the Security Interests which
it purports to create; and
(b) without limiting the generality of paragraph (a), at its own cost, promptly
register, file, record or enrol any Finance Document with any court or
authority in all Pertinent Jurisdictions, pay any stamp, registration or
similar tax in all Pertinent Jurisdictions in respect of any Finance
Document, give any notice or take any other step which may be or become
necessary or desirable for any Finance Document to be valid, enforceable or
admissible in evidence or to ensure or protect the priority of any Security
Interest which it creates.
11.13 NOTIFICATION OF LITIGATION. The Borrower will provide the Lender with
details of any legal or administrative action involving the Borrower, any
other Security Party, the Approved Manager or any Ship, any Earnings or any
Insurances as soon as such action is instituted or it becomes apparent to
the Borrower that it is likely to be instituted, unless it is clear that
the legal or administrative action cannot be considered material in the
context of any Finance Document.
11.14 NO AMENDMENT TO MOAS. The Borrower will ensure that the relevant New Owner
shall not agree to any material amendment or supplement to, or waive or
fail to enforce, the MOA to which it is a party or any of its provisions.
11.15 PRINCIPAL PLACE OF BUSINESS. The Borrower will maintain its place of
business, and keep its corporate documents and records, at the address
stated at the commencement of this Agreement.
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11.16 CONFIRMATION OF NO DEFAULT. The Borrower will, within 5 Business Days
after service by the Lender of a written request, serve on the Lender a
notice which is signed by any 2 duly authorised officers of the Borrower
and which:
(a) states that no Event of Default has occurred and, to the best of the
signatories' knowledge following due enquiry, no Potential Event of Default
has occurred; or
(b) states that no Event of Default has occurred and, to the best of the
signatories' knowledge following due enquiry, no Potential Event of Default
has occurred, except for a specified event or matter, of which all material
details are given.
11.17 NOTIFICATION OF DEFAULT. The Borrower will notify the Lender as soon as
the Borrower becomes aware of:
(a) the occurrence of an Event of Default or a Potential Event of Default; or
(b) any matter which indicates that an Event of Default or a Potential Event of
Default may have occurred,
and will keep the Lender fully up-to-date with all developments.
11.18 PROVISION OF INFORMATION REQUIRED BY THE SEC. The Borrower shall send to
the Lender, promptly upon the filing thereof, copies of all registration
statements and reports on Forms 10-K and 10-Q (or their equivalents) and
other material filings which the Borrower shall have filed with the SEC or
any similar governmental authority, or any national securities exchange.
11.19 VISITATION RIGHTS. The Borrower shall permit (and shall procure that each
Guarantor shall permit) the Lender or its representatives, at any
reasonable time and from time to time, upon reasonable prior notice, at the
Lender's risk and cost and to the extent reasonably requested, to:
(a) examine and make copies of and abstracts from the records and books of
account of the Borrower or any Guarantor;
(b) visit the properties of the Borrower or any Guarantor; and
(c) discuss the affairs, finances and accounts of the Borrower or any Guarantor
with any of its officers or representatives and with its independent
certified public accountants.
11.20 PROVISION OF FURTHER INFORMATION. The Borrower will, as soon as
practicable after receiving the request, provide the Lender with any
additional financial or other information:
(a) relating to the Borrower, each Guarantor, each Ship, any Earnings or any
Insurances; or
(b) relating to any other matter relevant to, or to any provision of, a Finance
Document;
(c) required by the Lender in relation to its "know your client" regulations
and other internal guidelines (whether in relation to the opening of the
Operating Account or otherwise),
which may reasonably be requested by the Lender at any time.
12 CORPORATE UNDERTAKINGS
12.1 GENERAL. The Borrower also undertakes with the Lender to comply with the
following provisions of this Clause 12 at all times during the Security
Period except as the Lender may otherwise permit.
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12.2 MAINTENANCE OF STATUS AND PLACE OF BUSINESS. The Borrower will maintain its
separate corporate existence and remain in good standing under the laws of
Bermuda and shall not establish a place of business in the United States of
America, the District of Columbia, the United States Virgin Islands, or any
territory or insular possession subject to the jurisdiction of the United
States of America (other than its presence and that of its wholly owned
subsidiary, Arlington Tankers LLC, at 000 Xxxx Xxxx Xxxx, Xxxxxxxx,
Xxxxxxxxxxx, 00000), unless 60 days' prior written notice of such
establishment is given to the Lender.
12.3 NEGATIVE UNDERTAKINGS. The Borrower will not:
(a) amend or permit any amendment of its articles of incorporation, by-laws, or
any other of its constitutional documents (other than as may be required by
applicable law);
(b) change the nature of its business from the ownership and operation of
ships; or
(c) declare or pay any dividend or make any other form of distribution or
effect any form of redemption, purchase or return of share capital if:
(i) an Event of Default or Potential Event of Default has occurred; or
(ii) the aggregate value of the Ships then subject to a Mortgage (as
determined by a Recent Valuation ) is less than 140 per cent. of the
aggregate of the Loan and the Termination Amount PROVIDED THAT the
restriction set out in this subclause (c)(ii) shall not be applicable
on a Qualifying Charter Date unless the aggregate value of the Ships
as aforesaid is less than 125 per cent. of the aggregate of the Loan
and the Termination Amount;
(d) provide any form of credit or financial assistance to:
(i) an Affiliate;
(ii) a person who is directly or indirectly interested in the Borrower's
share or loan capital; or
(iii) any company in or with which such a person is directly or indirectly
interested or connected,
or enter into any transaction with or involving such a person or company
(including, without limitation, the purchase from, sale to or exchange of
property with, or the rendering of any service by or for, such person or
company) on terms which are, in any respect, less favourable to the
Borrower than those which it could obtain in a bargain made at arms'
length;
(e) enter into any form of amalgamation, merger or de-merger or any form of
reconstruction or reorganisation; or
(f) de-list its shares from NYSE
12.4 SUBORDINATION OF RIGHTS OF BORROWER. All rights which the Borrower at any
time has against any Guarantor or its assets shall be fully subordinated to
the rights of the Lender under the Finance Documents; and in particular,
the Borrower shall not during the Security Period:
(a) claim, or in a bankruptcy of any Guarantor prove for, any amount payable to
the Borrower by a Guarantor, whether in respect of this or any other
transaction;
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(b) take or enforce any Security Interest for any such amount; or
(c) claim to set-off any such amount against any amount payable by the Borrower
to any Guarantor.
12.5 FINANCIAL COVENANTS. The Borrower shall ensure that at the end of each
Accounting Period:
(a) the Value Adjusted Equity shall be equal to or greater than 30 per cent. of
the Value Adjusted Total Assets; and
(b) the Group shall have a positive Working Capital.
12.6 COMPLIANCE CHECK. Compliance with the undertakings contained in Clause 12.5
shall be determined by reference to the latest Accounting Information.
Unless and until the Lender otherwise agrees in writing, at the same time
as it delivers any audited or management accounts to the Lender pursuant to
Clause 11.6, the Borrower shall deliver to the Lender a certificate in the
form set out in Schedule 3 hereto, signed by the Chief Financial Officer of
the Borrower.
12.7 CHANGES IN GAAP. If, during the Security Period, there shall be any change
in GAAP or the interpretation thereof which affects the calculation of the
financial covenants contained in Clause 12.5, the Lender and the Borrower
shall consult in good faith to agree such adjustments (if any) to those
financial covenants and the relevant defined terms as shall be necessary to
make those covenants functionally equivalent to the position which applied
before such change. If, following such good faith consultation for a period
of 3 months, no agreement is reached the financial covenants and the
relevant defined terms shall be amended in such manner as the Lender,
acting reasonably, shall specify in writing to the Borrower and this
Agreement shall be deemed to be amended accordingly.
13 INSURANCE
13.1 GENERAL. The Borrower also undertakes with the Lender to procure that each
Guarantor shall comply with the following provisions of this Clause 13 at
all times during the Security Period except as the Lender may otherwise
permit.
13.2 MAINTENANCE OF OBLIGATORY INSURANCES. The Borrower shall procure that each
Guarantor shall keep the Ship owned by it insured at the expense of that
Guarantor against:
(a) fire and usual marine risks (including hull and machinery and excess
risks);
(b) war risks;
(c) protection and indemnity risks;
(d) any other risks against which the Lender considers, acting reasonably and
having regard to practices and other circumstances prevailing at the
relevant time, it would in the opinion of the Lender be reasonable for the
relevant Guarantor to insure and which are specified by the Lender by
notice to the Borrower.
13.3 TERMS OF OBLIGATORY INSURANCES. The Borrower shall procure that each
Guarantor shall effect such insurances:
(a) in Dollars;
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(b) in the case of fire and usual marine risks and war risks, in an amount on
an agreed value basis at least the greater of (i) such amount, which when
aggregated with the amount for which any other Ship then subject to a
Mortgage is insured, is equal to 125 per cent. of the aggregate of the Loan
and the Termination Amount and (ii) the market value of the Ship owned by
it; and
(c) in the case of oil pollution liability risks, for an aggregate amount equal
to the highest level of cover from time to time available under basic
protection and indemnity club entry (with the international group of
protection and indemnity clubs) and in the international marine insurance
market (currently $1,000,000,000);
(d) in relation to protection and indemnity risks in respect of the full
tonnage of the Ship owned by it;
(e) on approved terms; and
(f) through approved brokers and with approved insurance companies and/or
underwriters or, in the case of war risks and protection and indemnity
risks, in approved war risks and protection and indemnity risks
associations.
13.4 FURTHER PROTECTIONS FOR THE LENDER. In addition to the terms set out in
Clause 13.3, the Borrower shall procure that the obligatory insurances
shall:
(a) whenever the Lender requires name (or be amended to name) the Lender as
additional named assured for its rights and interests, warranted no
operational interest and with full waiver of rights of subrogation against
the Lender, but without the Lender thereby being liable to pay (but having
the right to pay) premiums, calls or other assessments in respect of such
insurance;
(b) name the Lender as loss payee with such directions for payment as the
Lender may specify;
(c) provide that all payments by or on behalf of the insurers under the
obligatory insurances to the Lender shall be made without set-off,
counterclaim or deductions or condition whatsoever;
(d) provide that such obligatory insurances shall be primary without right of
contribution from other insurances which may be carried by the Lender; and
(e) provide that the Lender may make proof of loss if a Guarantor fails to do
so.
13.5 RENEWAL OF OBLIGATORY INSURANCES. The Borrower shall procure that each
Guarantor shall:
(a) at least 21 days before the expiry of any obligatory insurance relating to
the Ship owned by it:
(i) notify the Lender of the brokers (or other insurers) and any
protection and indemnity or war risks association through or with whom
the Guarantor proposes to renew that obligatory insurance and of the
proposed terms of renewal; and
(ii) obtain the Lender's approval to the matters referred to in paragraph
(i);
(b) at least 14 days before the expiry of any obligatory insurance relating to
the Ship owned by it, renew that obligatory insurance in accordance with
the Lender's approval pursuant to paragraph (a); and
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(c) procure that the approved brokers and/or the war risks and protection and
indemnity associations with which such a renewal is effected shall promptly
after the renewal notify the Lender in writing of the terms and conditions
of the renewal.
13.6 COPIES OF POLICIES; LETTERS OF UNDERTAKING. The Borrower shall procure that
each Guarantor shall ensure that all approved brokers provide the Lender
with pro forma copies of all policies relating to the obligatory insurances
which they are to effect or renew and of a letter or letters or undertaking
in a form required by the Lender having regard to current market practice
and including undertakings by the approved brokers that:
(a) they will have endorsed on each policy, immediately upon issue, a loss
payable clause and a notice of assignment complying with the provisions of
Clause 13.4;
(b) they will hold such policies, and the benefit of such insurances, to the
order of the Lender in accordance with the said loss payable clause;
(c) they will advise the Lender immediately of any material change to the terms
of the obligatory insurances;
(d) upon the request of the Lender, they will notify the Lender, not less than
14 days before the expiry of the obligatory insurances, in the event of
their not having received notice of renewal instructions from the Borrower
or its agents and, in the event of their receiving instructions to renew,
they will promptly notify the Lender of the terms of the instructions; and
(e) they will not set off against any sum recoverable in respect of a claim
relating to the Ship owned by it under such obligatory insurances any
premiums or other amounts due to them or any other person whether in
respect of the Ship owned by it or otherwise, they waive any lien on the
policies, or any sums received under them, which they might have in respect
of such premiums or other amounts, and they will not cancel such obligatory
insurances by reason of non-payment of such premiums or other amounts, and
will arrange for a separate policy to be issued in respect of the Ship
owned by it forthwith upon being so requested by the Lender.
13.7 COPIES OF CERTIFICATES OF ENTRY. The Borrower shall procure that each
Guarantor shall ensure that any protection and indemnity and/or war risks
associations in which the Ship owned by it is entered provides the Lender
with:
(a) a certified copy of the certificate of entry for the Ship owned by it;
(b) a letter or letters of undertaking in such form as may be required by the
Lender having regard to current market practice; and
(c) a certified copy of each certificate of financial responsibility for
pollution by oil or other Environmentally Sensitive Material issued by the
relevant certifying authority in relation to the Ship owned by it.
13.8 DEPOSIT OF ORIGINAL POLICIES. The Borrower shall procure that each
Guarantor shall ensure that all policies relating to obligatory insurances
are deposited with the approved brokers through which the insurances are
effected or renewed.
13.9 PAYMENT OF PREMIUMS. The Borrower shall procure that each Guarantor shall
punctually pay all premiums or other sums payable in respect of the
obligatory insurances and produce all relevant receipts when so required by
the Lender.
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13.10 GUARANTEES. The Borrower shall procure that each Guarantor shall ensure
that any guarantees required by a protection and indemnity or war risks
association are promptly issued and remain in full force and effect.
13.11 COMPLIANCE WITH TERMS OF INSURANCES. The Borrower shall procure that no
Guarantor either does or omits to do (or permits to be done or not to be
done) any act or thing which would or might render any obligatory insurance
invalid, void, voidable or unenforceable or render any sum payable under an
obligatory insurance repayable in whole or in part; and, in particular:
(a) the Borrower shall procure that each Guarantor shall take all necessary
action and comply with all requirements which may from time to time be
applicable to the obligatory insurances, and (without limiting the
obligation contained in Clause 13.7 (c)) ensure that the obligatory
insurances are not made subject to any exclusions or qualifications to
which the Lender has not given its prior approval;
(b) the Borrower shall procure that each Guarantor shall not make any changes
relating to the classification or classification society or manager or
operator of the Ship owned by that Guarantor without prior approved of the
underwriters of the obligatory insurances;
(c) the Borrower shall procure that each Guarantor shall make (and promptly
supply copies to the Lender of) all quarterly or other voyage declarations
which may be required by the protection and indemnity risks association in
which the Ship owned by it is entered to maintain cover for trading to the
United States of America and Exclusive Economic Zone (as defined in the
United States Oil Pollution Act 1990 or any other applicable legislation);
and
(d) the Borrower shall procure that each Guarantor shall not employ the Ship
owned by it, nor allow it to be employed, otherwise than in conformity with
the terms and conditions of the obligatory insurances, without first
obtaining the consent of the insurers and complying with any requirements
(as to extra premium or otherwise) which the insurers specify.
13.12 ALTERATION TO TERMS OF INSURANCES. The Borrower shall procure that each
Guarantor shall neither make nor agree to any alteration to the terms of
any obligatory insurance nor waive any right relating to any obligatory
insurance.
13.13 SETTLEMENT OF CLAIMS. The Borrower shall procure that each Guarantor shall
not settle, compromise or abandon any claim under any obligatory insurance
for Total Loss or for a Major Casualty, and shall do all things necessary
and provide all documents, evidence and information to enable the Lender to
collect or recover any moneys which at any time become payable in respect
of the obligatory insurances.
13.14 PROVISION OF COPIES OF COMMUNICATIONS. The Borrower shall procure that
each Guarantor shall provide the Lender, at the time of each such
communication, copies of all written communications between the relevant
Guarantor and:
(a) the approved brokers; and
(b) the approved protection and indemnity and/or war risks associations; and
(c) the approved insurance companies and/or underwriters, which relate directly
or indirectly to:
(i) the relevant Guarantor's obligations relating to the obligatory
insurances including, without limitation, all requisite declarations
and payments of additional premiums or calls; and
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(ii) any credit arrangements made between the relevant Guarantor and any of
the persons referred to in paragraphs (a) or (b) relating wholly or
partly to the effecting or maintenance of the obligatory insurances.
13.15 PROVISION OF INFORMATION. In addition, the Borrower shall procure that
each Guarantor shall promptly provide the Lender (or any persons which it
may designate) with any information which the Lender (or any such
designated person) requests for the purpose of:
(a) obtaining or preparing any report from an independent marine insurance
broker as to the adequacy of the obligatory insurances effected or proposed
to be effected; and/or
(b) effecting, maintaining or renewing any such insurances as are referred to
in Clause 12.16 below or dealing with or considering any matters relating
to any such insurances,
and the Borrower shall, forthwith upon demand, indemnify the Lender in
respect of all fees and other expenses incurred by or for the account of
the Lender in connection with any such report as is referred to in
paragraph (a) PROVIDED THAT such indemnity shall not apply in relation to
the first such report for a Ship.
13.16 MORTGAGEE'S INTEREST AND ADDITIONAL PERILS. The Lender shall be entitled
from time to time to effect, maintain and renew a mortgagee's interest
additional perils insurance and a mortgagee's interest marine insurance in
such amounts, on such terms, through such insurers and generally in such
manner as the Lender may from time to time consider appropriate and the
Borrower shall, in respect of all premiums and other expenses which are
incurred in connection with or with a view to effecting, maintaining or
renewing any such insurance or dealing with, or considering, any matter
arising out of any such insurance, pay the Lender $120,000 per annum
throughout the Security Period, the first such payment to be made on the
first Drawdown Date and each subsequent payment to be made on the
anniversary thereof. The Borrower shall supply, or procure that there is
supplied, to the Lender such information as the Lender may require in
connection with the matters referred to in this Clause 13.16.
14 SHIP COVENANTS
14.1 GENERAL. The Borrower also undertakes with the Lender to procure that each
Guarantor complies with the following provisions of this Clause 14 at all
times during the Security Period except as the Lender may otherwise permit.
14.2 SHIP'S NAME AND REGISTRATION. The Borrower shall procure that each
Guarantor shall keep the Ship owned by it registered in its name as
Bermudian Ship; the Borrower shall procure that each Guarantor shall not do
or allow to be done anything as a result of which such registration might
be cancelled or imperilled; and the Borrower shall procure that each
Guarantor shall not change the name or port of registry of the Ship owned
by it PROVIDED THAT a Guarantor may change the flag of the Ship owned by it
to a flag acceptable to the Lender (in its discretion) subject to the
relevant Guarantor entering into and (where applicable) registering in
favour of the Lender, such Finance Documents as the Lender may require.
14.3 REPAIR AND CLASSIFICATION. The Borrower shall procure that each Guarantor
shall keep the Ship owned by it in a good and safe condition and state of
repair:
(a) consistent with first-class ship ownership and management practice;
(b) so as to maintain the class of the Ship owned by it, free of
recommendations and conditions; and
37
(c) so as to comply with all laws and regulations applicable to vessels
registered at ports in Bermuda or to vessels trading to any jurisdiction to
which the Ship owned by it may trade from time to time including but not
limited to the ISM Code, the ISM Code Documentation and the ISPS Code;
14.4 MODIFICATION. The Borrower shall procure that each Guarantor shall not make
any modification or repairs to, or replacement of, the Ship owned by it or
equipment installed on that Ship which would or might materially alter the
structure, type or performance characteristics of that Ship or materially
reduce its value.
14.5 REMOVAL OF PARTS. The Borrower shall procure that each Guarantor shall not
remove any material part of the Ship owned by it, or any item of equipment
installed on that Ship, unless the part or item so removed is forthwith
replaced by a suitable part or item which is in the same condition as or
better condition than the part or item removed, is free from any Security
Interest or any right in favour of any person other than the Lender and
becomes on installation on that Ship, the property of the relevant
Guarantor, and subject to the security constituted by the Mortgage and the
Deed of Covenant relating to that Ship PROVIDED THAT the relevant Guarantor
may install equipment owned by a third party if the equipment can be
removed without any risk of damage to the Ship owned by it.
14.6 SURVEYS. The Borrower shall procure that each Guarantor shall submit the
Ship owned by it regularly to all periodical or other surveys which may be
required for classification purposes and, if so required by the Lender
provide the Lender, with copies of all survey reports.
14.7 INSPECTION. The Borrower shall procure that each Guarantor shall permit the
Lender (by surveyors or other persons appointed by it for that purpose) to
board the Ship owned by it at all reasonable times and without thereby
interfering with or delaying the operation of the Ship, to inspect its
condition or to satisfy themselves about proposed or executed repairs and
shall afford all proper facilities for such inspections and PROVIDED THAT
in the event that a Guarantor refuses access to the Ship owned by it to the
Lender (or its surveyors or other persons appointed by it for that purpose
of inspecting the Ship) on the grounds that such access will interfere with
or delay the operation of the Ship, the Borrower shall procure that the
relevant Guarantor shall cooperate with the Lender and/or its agent in
agreeing a mutually convenient date (as soon as reasonably practicable) on
which, and place at which, access to the Ship will be permitted.
14.8 PREVENTION OF AND RELEASE FROM ARREST. The Borrower shall procure that each
Guarantor shall promptly discharge:
(a) all liabilities which give or may give rise to maritime or possessory liens
on or claims enforceable against the Ship owned by it, its Earnings or its
Insurances;
(b) all taxes, dues and other amounts charged in respect of the Ship owned by
it, its Earnings or its Insurances; and
(c) all other outgoings whatsoever in respect of the Ship owned by it, its
Earnings or its Insurances,
and, forthwith upon receiving notice of the arrest of the Ship owned by it,
or of its detention in exercise or purported exercise of any lien or claim,
the relevant Guarantor shall procure its release by providing bail or
otherwise as the circumstances may require.
14.9 COMPLIANCE WITH LAWS ETC. The Borrower shall procure that each Guarantor
shall:
(a) comply, or procure compliance with the ISM Code, all Environmental Laws,
the ISPS Code and all other laws or regulations relating to the Ship owned
by it, its ownership, operation and management or to the business of that
Guarantor;
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(b) not employ the Ship owned by it nor allow its employment in any manner
contrary to any law or regulation in any relevant jurisdiction including
but not limited to the ISM Code and the ISPS Code; and
(c) in the event of hostilities in any part of the world (whether war is
declared or not), not cause or permit its to enter or trade to any zone
which is declared a war zone by any government or by the war risks insurers
of the Ship owned by it unless the prior written consent of the Lender has
been given and the relevant Guarantor has (at its expense) effected any
special, additional or modified insurance cover which the Lender may
require.
14.10 PROVISION OF INFORMATION. The Borrower shall procure that each Guarantor
shall promptly provide the Lender with any information which it requests
regarding:
(a) the Ship owned by it, its employment, position and engagements;
(b) the Earnings and payments and amounts due to the master and crew of the
Ship owned by it;
(c) any expenses incurred, or likely to be incurred, in connection with the
operation, maintenance or repair of the Ship owned by it and any payments
made in respect of that Ship;
(d) any towages and salvages;
(e) the relevant Guarantor's, the Approved Manager's or the relevant Ship's
compliance with the ISM Code and the ISPS Code,
and, upon the Lender's request, provide copies of any current charter
relating to the Ship owned by it, of any current charter guarantee and of
that Ship's ISM Documentation and the ISSC.
14.11 NOTIFICATION OF CERTAIN EVENTS. The Borrower shall procure that each
Guarantor shall immediately notify the Lender by fax, confirmed forthwith
by letter, of:
(a) any casualty relating to the Ship owned by it which is or is likely to be
or to become a Major Casualty;
(b) any occurrence as a result of which the Ship owned by it has become or is,
by the passing of time or otherwise, likely to become a Total Loss;
(c) any requirement or recommendation made by any insurer or classification
society or by any competent authority which is not immediately complied
with;
(d) any arrest or detention of the Ship owned by it, any exercise or purported
exercise of any lien on that Ship or its Earnings or any requisition of
that Ship for hire;
(e) any intended dry docking of the Ship owned by it;
(f) any Environmental Claim made against the relevant Guarantor or in
connection with the Ship owned by it, or any Environmental Incident;
(g) any claim for breach of the ISM Code or the ISPS Code being made against
the relevant Guarantor, the Approved Manager or otherwise in connection
with the Ship owned by it;
(h) any other matter, event or incident, actual or threatened, the effect of
which will or could lead to the ISM Code or the ISPS Code not being
complied with,
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and the Borrower shall procure that each Guarantor shall keep the Lender
advised in writing on a regular basis and in such detail as the Lender
shall require of that Guarantor's, the Approved Manager's or any other
person's response to any of those events or matters.
14.12 RESTRICTIONS ON CHARTERING, APPOINTMENT OF MANAGERS ETC. The Borrower
shall procure that each Guarantor shall not:
(a) let the Ship owned by it on demise charter for any period;
(b) other than by way of the relevant Charter, enter into any time or
consecutive voyage charter in respect of the Ship owned by it for a term
which exceeds, or which by virtue of any optional extensions may exceed, 13
months; and other than by way of the relevant Sub Charter, (if applicable)
permit the Ship owned by it to be sub-time chartered for a term which
exceeds, or which by virtue of any optional extensions may exceed, 13
months;
(c) enter into any charter in relation to the Ship owned by it under which more
than 2 months' hire (or the equivalent) is payable in advance;
(d) charter the Ship owned by it otherwise than on bona fide arm's length terms
at the time when that Ship is fixed;
(e) appoint a manager of the Ship owned by it other than the Approved Manager
or agree to any alteration to the terms of the Approved Manager's
appointment;
(f) de-activate or lay up the Ship owned by it; or
(g) following the occurrence and during the continuance of a Potential Event of
Default or an Event of Default (and without prejudice to the Lender's
rights under the other provisions of the Finance Documents) put the Ship
owned by it into the possession of any person for the purpose of work being
done upon her unless that person has first given to the Lender and in terms
satisfactory to it a written undertaking not to exercise any lien on that
Ship or its Earnings for the cost of such work or for any other reason.
14.13 NOTICE OF MORTGAGE. The Borrower shall procure that each Guarantor shall
keep the relevant Mortgage registered against the Ship owned by it as a
valid first priority mortgage, carry on board the Ship owned by it a
certified copy of the Mortgage and place and maintain in a conspicuous
place in the navigation room and the Master's cabin of that Ship a framed
printed notice stating that the Ship is mortgaged by the relevant Guarantor
to the Lender.
14.14 SHARING OF EARNINGS. The Borrower shall procure that, save pursuant to the
Charters and any amendment thereof made in accordance with the Finance
Documents, each Guarantor shall not enter into any agreement or arrangement
for the sharing of any Earnings relating to the Ship owned by it.
15 SECURITY COVER
15.1 MINIMUM REQUIRED SECURITY COVER. If, and so often as, the aggregate,
charter-free market value of the Ships (as determined in accordance with
Clause 15.5 at such times as the Lender may from time to time require) plus
the market value of any additional security for the time being actually
provided to the Lender pursuant to Clause 15.2 falls below 125 per cent. of
the aggregate of:
(a) the Loan; and
(b) the Termination Amount,
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(the above being the "MINIMUM SECURITY COVER RATIO") the Borrower shall,
within 10 days of being notified by the Lender of such requirement (which
notification shall be conclusive and binding on the Borrower), comply with
Clause 15.2 or 15.3.
15.2 PROVISION OF ADDITIONAL SECURITY. Subject to Clause 15.3, on receipt of the
notification referred to in Clause 15.1, the Borrower shall, within 5 days
of receipt of the notification, provide the Lender with, or procure the
provision to the Lender of, such additional security as shall, in the
opinion of the Lender, be adequate to make up such deficiency, which
additional security shall take such form, be constituted by such
documentation and be entered into by such parties as the Lender in its
absolute discretion may approve or require.
15.3 RELEASE OF ADDITIONAL SECURITY. If the Borrower or a third party has
provided additional security in accordance with Clause 15.2 and
subsequently, as evidenced by a Recent Valuation, the Security to Exposure
Ratio, expressed as a percentage, exceeds 130%, such additional security or
part thereof shall be released to the Borrower so that immediately after
such release the Minimum Security Ratio is maintained.
15.4 PREPAYMENT OF LOAN. If the Borrower does not make proposals satisfactory to
the Lender in relation to the additional security referred to in Clause
15.2 within 5 days of the date of the receipt by the Borrower of the
Lender's notification referred to in Clause 15.1, the Borrower shall be
deemed to have elected to prepay (subject to, and in accordance with,
Clauses 7.8 and 7.9), such part of the Loan as will ensure that the
aggregate market value (as determined in accordance with Clauses 15.5) of
the Ships then subject to a Mortgage plus the market value of any
additional security for the time being actually provided to the Lender
pursuant to Clause 15.2 is, after such prepayment, at least 125 per cent.
of the aggregate of (a) the Loan and (b) the Termination Amount.
15.5 VALUATION OF SHIP. The market value of a Ship at any date is that shown by
a valuation prepared:
(a) as at a date not more than 14 days previously;
(b) (subject to the last paragraph of this Clause 15.5) by an independent sale
and purchase shipbroker which the Lender has approved or appointed for the
purpose;
(c) without physical inspection of any Ship;
(d) on the basis of a sale for prompt delivery for cash on normal arm's length
commercial terms as between a willing seller and a willing buyer, free of
any existing charter or other contract of employment;
(e) after deducting the estimated amount of the usual and reasonable expenses
which would be incurred in connection with the sale.
It is agreed that, initially, the Lender shall use Clarksons' on-line
valuation service and any cost of the use of that service shall not be for
the account of the Borrower. Should that service cease to be available, or
be available only in a manner which makes it inappropriate to be used for
the purposes of this Agreement, the Lender shall try to use a similar
service from a source acceptable to it which does not involve any cost
being passed on to the Borrower. If such a service is not available in a
manner which makes it appropriate to be used for the purposes of this
Agreement, the Lender and the Borrower shall agree on a panel of three
first class international shipbrokers (the "PANEL") to provide valuations
in accordance with this Clause 15.5 and the average of the valuations so
provided shall be used for the purposes of this Clause 15. If the Borrower
and the Lender are unable to agree on the members of the Panel within 14
days of a notice from the Lender to the Borrower to that effect, the Panel
shall be selected by the Lender.
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15.6 VALUE OF ADDITIONAL VESSEL SECURITY. The net realisable value of any
additional security which is provided under Clause 15.2 and which consists
of a Security Interest over a vessel shall be that shown by a valuation
complying with the requirements of Clause 15.5.
15.7 VALUATIONS BINDING. Any valuation under Clause 15.5 shall be binding and
conclusive as regards the Borrower, as shall be any valuation which the
Lender makes of any additional security which does not consist of or
include a Security Interest.
15.8 PROVISION OF INFORMATION. The Borrower shall promptly provide (or procure
the provision to, as the case may be) the Lender and any shipbroker or
expert acting under Clause 15.5 who is a member of the Panel with any
information which the Lender or the shipbroker or expert may request for
the purposes of the valuation; and, if the Borrower fails to provide the
information by the date specified in the request, the valuation may be made
on any basis and assumptions which the shipbroker or the Lender (or the
expert appointed by it) considers prudent.
15.9 PAYMENT OF EXPENSES. Without prejudice to the generality of the Borrower's
obligations under Clauses 20.3 and 21.3, the Borrower shall, on demand, pay
the Lender all legal expenses incurred by the Lender in connection with any
matter arising out of this Clause 15 and all the fees and expenses of the
Panel in respect of no more than two valuations in any period of 12 months
and any valuation (other than a Recent Valuation) specifically required for
the purposes of Clause 15.3.
16 PAYMENTS AND CALCULATIONS
16.1 CURRENCY AND METHOD OF PAYMENTS. All payments to be made by the Borrower to
the Lender under a Finance Document shall be made to the Lender:
(a) by not later than 11.00 a.m. (London time) on the due date;
(b) in same day Dollar funds settled through the New York Clearing House
Interbank Payments System (or in such other Dollar funds and/or settled in
such other manner as the Lender shall specify as being customary at the
time for the settlement of international transactions of the type
contemplated by this Agreement); and
(c) to the account of the Lender at the Receiving Bank (Account No 000261123;
SWIFT Code XXXXXX00), or to such other account with such other bank as the
Lender may from time to time notify to the Borrower.
16.2 PAYMENT ON NON-BUSINESS DAY. If any payment by the Borrower under a Finance
Document would otherwise fall due on a day which is not a Business Day:
(a) the due date shall be extended to the next succeeding Business Day; or
(b) if the next succeeding Business Day falls in the next calendar month, the
due date shall be brought forward to the immediately preceding Business
Day,
and interest shall be payable during any extension under paragraph (a) at
the rate payable on the original due date.
16.3 BASIS FOR CALCULATION OF PERIODIC PAYMENTS. All interest and commitment fee
and any other payments under any Finance Document which are of an annual or
periodic nature shall accrue from day to day and shall be calculated on the
basis of the actual number of days elapsed and a 360 day year.
16.4 LENDER ACCOUNTS. The Lender shall maintain an account showing the amounts
advanced by the Lender and all other sums owing to the Lender from the
Borrower and each other
42
Security Party under the Finance Documents and all payments in respect of
those amounts made by the Borrower and any other Security Party.
16.5 ACCOUNTS PRIMA FACIE EVIDENCE. If the account maintained under Clause 16.4
shows an amount to be owing by the Borrower or any other Security Party to
the Lender, that account shall be prima facie evidence that that amount is
owing to the Lender.
17 APPLICATION OF RECEIPTS
17.1 NORMAL ORDER OF APPLICATION. Except as any Finance Document may otherwise
provide, any sums which are received or recovered by the Lender under or by
virtue of any Finance Document shall be applied:
(a) FIRST: in or towards satisfaction of any amounts then due and payable under
the Finance Documents (or any of them) in such order of application and/or
such proportions as the Lender may specify by notice to the Borrower and
the other Security Parties;
(b) SECONDLY: in retention of an amount equal to any amount not then due and
payable under any Finance Document but which the Lender, by notice to the
Borrower and the other Security Parties, states in its opinion will or may
become due and payable in the future and, upon those amounts becoming due
and payable, in or towards satisfaction of them in accordance with the
provisions of this Clause; and
(c) THIRDLY: any surplus shall be paid to the Borrower or to any other person
appearing to be entitled to it.
17.2 VARIATION OF ORDER OF APPLICATION. The Lender may, by notice to the
Borrower and the other Security Parties, provide for a different manner of
application from that set out in Clause 17.1 either as regards a specified
sum or sums or as regards sums in a specified category or categories.
17.3 NOTICE OF VARIATION OF ORDER OF APPLICATION. The Lender may give notices
under Clause 17.2 from time to time; and such a notice may be stated to
apply not only to sums which may be received or recovered in the future,
but also to any sum which has been received or recovered on or after the
third Business Day before the date on which the notice is served.
17.4 APPROPRIATION RIGHTS OVERRIDDEN. This Clause 17 and any notice which the
Lender gives under Clause 17.2 shall override any right of appropriation
possessed, and any appropriation made, by the Borrower or any other
Security Party.
18 APPLICATION OF EARNINGS
18.1 PAYMENT OF EARNINGS. The Borrower undertakes with the Lender to ensure
that, throughout the Security Period (and subject only to the provisions of
the General Assignments), all the Earnings relating to each Ship are paid
to the Operating Account.
18.2 USE OF ACCOUNT BALANCE. Subject to the terms of this Agreement and the
other Finance Documents, until the occurrence of an Event of Default the
Account Balance shall be at the disposal of the Borrower for the purpose of
meeting the operating expenses for each Ship or for any other purpose which
is permitted by the terms of the Finance Documents.
18.3 LOCATION OF ACCOUNTS. The Borrower shall promptly:
(a) comply, or procure compliance, with any requirement of the Lender as to the
location or re-location of the Operating Account; and
43
(b) execute, or procure the execution of, any documents which the Lender
specifies to create or maintain in favour of the Lender a Security Interest
over (and/or rights of set-off, consolidation or other rights in relation
to) the Operating Account,
PROVIDED THAT any cost incurred in relation to this Clause 18.3 shall be
for the account of the Lender.
18.4 DEBITS FOR EXPENSES ETC. The Lender shall be entitled (but not obliged)
from time to time to debit the Operating Account without prior notice in
order to discharge any amount due and payable to it under Clauses 20 or 21
or payment of which it has become entitled to demand under Clauses 20 or
21.
18.5 BORROWER'S OBLIGATIONS UNAFFECTED. The provisions of this Clause 18 do not
affect:
(a) the liability of the Borrower to make payments of principal and interest on
the due dates; or
(b) any other liability or obligation of the Borrower or any other Security
Party under any Finance Document.
19 EVENTS OF DEFAULT
19.1 EVENTS OF DEFAULT. EVENTS OF DEFAULT. An Event of Default occurs if:
(a) the Borrower or any other Security Party fails to pay when due or (if so
payable) on demand any sum payable under a Finance Document or under any
document relating to a Finance Document and, in the event that such failure
to pay is as a result of a banking error, the Borrower or the relevant
Security Party has failed to make the payment due within 2 Business Days of
and including the day on which the payment was due or demanded (as the case
may be); or
(b) any breach occurs of Clause 9.3, 11.2, 11.3, 11.4, 12.2, 12.3, 12.4, 12.5,
12.6, 13, 14.12 or 15; or
(c) any breach by the Borrower or any other Security Party occurs of any
provision of a Finance Document (other than a breach covered by paragraph
(a) or (b) if, in the opinion of the Lender, such default is capable of
remedy and such default continues unremedied 10 days after written notice
from the Lender requesting action to remedy the same; or
(d) (subject to any applicable grace period specified in any Finance Document)
any breach by the Borrower or any other Security Party occurs of any
provision of a Finance Document (other than a breach covered by paragraph
(a), (b) or (c)); or
(e) any representation, warranty or statement made by, or by an officer of, the
Borrower or any other Security Party in a Finance Document or in the
Drawdown Notice or any other notice or document relating to a Finance
Document is untrue or misleading in any material respect when it is made;
or
(f) any of the following occurs in relation to any Financial Indebtedness of a
Relevant Person:
(i) any Financial Indebtedness in excess of an aggregate amount of
$1,000,000 of a Relevant Person is not paid when due or, if so
payable, on demand; or
(ii) any Financial Indebtedness in excess of an aggregate amount of
$1,000,000 of a Relevant Person becomes due and payable or capable of
being declared due and payable prior to its stated maturity date as a
consequence of any event of default; or
44
(iii) a lease, hire purchase agreement or charter creating any Financial
Indebtedness in excess of an aggregate amount of $1,000,000 of a
Relevant Person is terminated by the lessor or owner or becomes
capable of being terminated as a consequence of any termination event;
or
(iv) any overdraft, loan, note issuance, acceptance credit, letter of
credit, guarantee, foreign exchange or other facility, or any swap or
other derivative contract or transaction, relating to any Financial
Indebtedness in excess of an aggregate amount of $1,000,000 of a
Relevant Person ceases to be available or becomes capable of being
terminated as a result of any event of default, or cash cover is
required, or becomes capable of being required, in respect of such a
facility as a result of any event of default; or
(v) any Security Interest securing any Financial Indebtedness in excess of
an aggregate amount of $1,000,000 of a Relevant Person becomes
enforceable; or
(g) any of the following occurs in relation to a Relevant Person:
(i) a Relevant Person becomes, in the opinion of the Lender, unable to pay
its debts as they fall due; or
(ii) any assets of a Relevant Person are subject to any form of execution,
attachment, arrest, sequestration or distress, or any form of freezing
order PROVIDED THAT in relation to a Ship, no Event of Default shall
occur under this Clause 19.1(g)(ii) if the provisions of Clause 14.8
are complied with; or
(iii) any administrative or other receiver is appointed over any asset of a
Relevant Person; or
(iv) an administrator is appointed (whether by the court or otherwise) in
respect of a Relevant Person; or
(v) any formal declaration of bankruptcy or any formal statement to the
effect that a Relevant Person is insolvent or likely to become
insolvent is made by a Relevant Person or by the directors of a
Relevant Person or, in any proceedings, by a lawyer acting for a
Relevant Person; or
(vi) a provisional liquidator is appointed in respect of a Relevant Person,
a winding up order is made in relation to a Relevant Person or a
winding up resolution is passed by a Relevant Person; or
(vii) a resolution is passed, an administration notice is given or filed,
an application or petition to a court is made or presented or any
other step is taken by (aa) a Relevant Person, (bb) the members or
directors of a Relevant Person, (cc) a holder of Security Interests
which together relate to all or substantially all of the assets of a
Relevant Person, or (dd) a government minister or public or regulatory
authority of a Pertinent Jurisdiction for or with a view to the
winding up of that or another Relevant Person or the appointment of a
provisional liquidator or administrator in respect of that or another
Relevant Person, or that or another Relevant Person ceasing or
suspending business operations or payments to creditors, save that
this paragraph does not apply to a fully solvent winding up of a
Relevant Person other than the Borrower which is, or is to be,
effected for the purposes of an amalgamation or reconstruction
previously approved by the Lender and effected not later than 3 months
after the commencement of the winding up; or
(viii) an administration notice is given or filed, an application or
petition to a court is made or presented or any other step is taken by
a creditor of a Relevant Person
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(other than a holder of Security Interests which together relate to
all or substantially all of the assets of a Relevant Person) for the
winding up of a Relevant Person or the appointment of a provisional
liquidator or administrator in respect of a Relevant Person in any
Pertinent Jurisdiction, unless the proposed winding up, appointment of
a provisional liquidator or administration is being contested in good
faith, on substantial grounds and not with a view to some other
insolvency law procedure being implemented instead and either (aa) the
application or petition is dismissed or withdrawn within 30 days of
being made or presented, or (bb) within 30 days of the administration
notice being given or filed, or the other relevant steps being taken,
other action is taken which will ensure that there will be no
administration and (in both cases (aa) or (bb)) the Relevant Person
will continue to carry on business in the ordinary way and without
being the subject of any actual, interim or pending insolvency law
procedure; or
(ix) a Relevant Person or its directors take any steps (whether by making
or presenting an application or petition to a court, or submitting or
presenting a document setting out a proposal or proposed terms, or
otherwise) with a view to obtaining, in relation to that or another
Relevant Person, any form of moratorium, suspension or deferral of
payments, reorganisation of debt (or certain debt) or arrangement
with, or protection from, all or a substantial proportion (by number
or value) of creditors or of any class of them or any such moratorium,
suspension or deferral of payments, reorganisation, arrangement or
protection is effected by court order, by the filing of documents with
a court, by means of a contract or in any other way at all; or
(x) any meeting of the members or directors, or of any committee of the
board or senior management, of a Relevant Person is held or summoned
for the purpose of considering a resolution or proposal to authorise
or take any action of a type described in paragraphs (iv) to (ix) or a
step preparatory to such action, or (with or without such a meeting)
the members, directors or such a committee resolve or agree that such
an action or step should be taken or should be taken if certain
conditions materialise or fail to materialise; or
(xi) in a Pertinent Jurisdiction other than England, any event occurs, any
proceedings are opened or commenced or any step is taken which, in the
opinion of the Lender is similar to any of the foregoing; or
(h) the Borrower or any other Security Party ceases or suspends carrying on its
business or a part of its business which, in the opinion of the Lender, is
material in the context of this Agreement; or
(i) it becomes unlawful or impossible:
(i) for the Borrower or any other Security Party to discharge any
liability under a Finance Document or to comply with any other
obligation which the Lender considers material under a Finance
Document or an Underlying Document; or
(ii) for the Lender to exercise or enforce any right under, or to enforce
any Security Interest created by, a Finance Document; or
(j) any consent necessary to enable a Guarantor to own, operate or charter the
Ship owned by it or to enable the Borrower or any other Security Party to
comply with any provision which the Lender considers material of a Finance
Document or an Underlying Document is not granted, expires without being
renewed, is revoked or any condition of such a consent is not fulfilled; or
(k) it appears to the Lender that, without its prior consent, there is a Change
of Control; or
46
(l) it appears to the Lender that, without its prior consent, a Ship is being
managed by someone other than the Approved Manager;
(m) a Charterer fails to pay when due or (if so payable) on demand any sum
payable under the relevant Charter and such sum remains outstanding 30 days
after the date on which it became due or was demanded (as the case may be);
(n) any provision which the Lender reasonably considers material of a Finance
Document proves to have been or becomes invalid or unenforceable, or a
Security Interest created by a Finance Document proves to have been or
becomes invalid or unenforceable or such a Security Interest proves to have
ranked after, or loses its priority to, another Security Interest or any
other third party claim or interest; or
(o) the security constituted by a Finance Document is in any way imperilled or
in jeopardy; or
(p) the Lender gives notice of an Early Termination Date under Section 6(a) of
the Master Agreement; or
(q) a person entitled to do so gives notice of an Early Termination Date under
Section 6(b)(iv) of the Master Agreement; or
(r) an Event of Default (as defined in Section 14 of the Master Agreement)
occurs; or
(s) the Master Agreement is terminated, cancelled, suspended, rescinded or
revoked or otherwise ceases to remain in full force and effect for any
reason; or
(t) any other event occurs or any other circumstances arise or develop
including, without limitation:
(i) a change in the financial position, state of affairs or prospects of
the Borrower or any other Security Party; or
(ii) any accident or other event involving a Ship or another vessel owned,
chartered or operated by a Relevant Person,
in the light of which the Lender considers that there is a significant risk
that the Borrower or any other Security Party is, or will later become,
unable to discharge its liabilities under the Finance Documents as they
fall due.
19.2 ACTIONS FOLLOWING AN EVENT OF DEFAULT. On, or at any time after, the
occurrence of an Event of Default the Lender may:
(a) serve on the Borrower a notice stating that all obligations of the Lender
to the Borrower under this Agreement are terminated; and/or
(b) serve on the Borrower a notice stating that the Loan, all accrued interest
and all other amounts accrued or owing under this Agreement are immediately
due and payable or are due and payable on demand; and/or
(c) take any other action which, as a result of the Event of Default or any
notice served under paragraph (a) or (b), the Lender is entitled to take
under any Finance Document or any applicable law.
19.3 TERMINATION OF OBLIGATIONS. On the service of a notice under Clause
19.2(a), all the obligations of the Lender to the Borrower under this
Agreement shall terminate.
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19.4 ACCELERATION OF LOAN. On the service of a notice under Clause 19.2(b), the
Loan, all accrued interest and all other amounts accrued or owing from the
Borrower or any other Security Party under this Agreement and every other
Finance Document shall become immediately due and payable or, as the case
may be, payable on demand.
19.5 MULTIPLE NOTICES; ACTION WITHOUT NOTICE. The Lender may serve notices under
Clause 19.2(a) and (b) simultaneously or on different dates and it may take
any action referred to in Clause 19.2 if no such notice is served or
simultaneously with or at any time after the service of both or either of
such notices.
19.6 EXCLUSION OF LENDER LIABILITY. Neither the Lender nor any receiver or
manager appointed by the Lender, shall have any liability to the Borrower
or any other Security Party:
(a) for any loss caused by an exercise of rights under, or enforcement of a
Security Interest created by, a Finance Document or by any failure or delay
to exercise such a right or to enforce such a Security Interest; or
(b) as mortgagee in possession or otherwise, for any income or principal amount
which might have been produced by or realised from any asset comprised in
such a Security Interest or for any reduction (however caused) in the value
of such an asset,
except that this does not exempt the Lender or a receiver or manager from
liability for losses shown to have been caused directly and mainly by the
dishonesty or the wilful misconduct of the Lender's own officers and
employees or ( as the case may be) such receiver's or manager's own
partners or employees.
19.7 RELEVANT PERSONS. In this Clause 19 a "RELEVANT PERSON" means the Borrower,
a Guarantor or any other Security Party and, for the avoidance of doubt,
does not include the Approved Manager, any Charterer or a Charter
Guarantor.
19.8 INTERPRETATION. In Clause 19.1(f) references to an event of default or a
termination event include any event, howsoever described, which is similar
to an event of default in a facility agreement or a termination event in a
finance lease; and in Clause 19.1(g) "PETITION" includes an application.
20 FEES AND EXPENSES
20.1 FEE LETTER. The Borrower shall pay to the Lender the arrangement fee and
all commitment fees due in such amounts and at such times as set out in the
Fee Letter.
20.2 COSTS OF NEGOTIATION, PREPARATION ETC. The Lender shall be liable for all
fees and expenses it incurs in connection with the negotiation, preparation
and execution of this Agreement and the other Finance Documents.
20.3 COSTS OF REGISTRATIONS. The Borrower shall be liable for, and shall
indemnify the Lender for, all fees, costs and expenses in connection with
the registration of any Finance Document PROVIDED THAT the Lender shall
consult with the Borrower in relation to reasonably minimising such fees,
costs and expenses prior to any such registration.
20.4 COSTS OF VARIATION, AMENDMENTS, ENFORCEMENT ETC. The Borrower shall pay to
the Lender, on the Lender's demand, the amount of all expenses incurred by
the Lender in connection with:
(a) any amendment or supplement to a Finance Document which is reasonably and
properly incurred, or any proposal for such an amendment to be made;
48
(b) any consent or waiver by the Lender concerned under or in connection with a
Finance Document which is reasonably and properly incurred, or any request
for such a consent or waiver;
(c) the valuation of any security provided or offered under Clause 15 which is
reasonably and properly incurred or any other matter relating to such
security; or
(d) any step taken by the Lender with a view to the protection, exercise or
enforcement of any right or Security Interest created by a Finance Document
or for any similar purpose.
There shall be recoverable under paragraph (d) the full amount of all legal
expenses, whether or not such as would be allowed under rules of court or
any taxation or other procedure carried out under such rules.
20.5 DOCUMENTARY TAXES. The Borrower shall promptly pay any tax payable on or by
reference to any Finance Document, and shall, on the Lender's demand, fully
indemnify the Lender against any claims, expenses, liabilities and losses
resulting from any failure or delay by the Borrower to pay such a tax.
20.6 FINANCE SERVICES AUTHORITY FEES. The Borrower shall pay to the Lender, on
the Lender's demand, the amounts which the Lender from time to time
notifies the Borrower to be necessary to compensate it for the cost
attributable to the Loan resulting from the imposition from time to time
under or pursuant to the Bank of England Act 1998 and/or by the Bank of
England and/or by the Finance Services Authority (or other United Kingdom
governmental authorities or agencies) of a requirement to pay fees to the
Finance Services Authority calculated by reference to liabilities used to
fund the Loan.
20.7 CERTIFICATION OF AMOUNTS. A notice which is signed by 2 officers of the
Lender, which states that a specified amount, or aggregate amount, is due
to the Lender under this Clause 20 and which indicates (without necessarily
specifying a detailed breakdown) the matters in respect of which the
amount, or aggregate amount, is due shall be prima facie evidence that the
amount, or aggregate amount, is due.
21 INDEMNITIES
21.1 INDEMNITIES REGARDING BORROWING AND REPAYMENT OF LOAN. The Borrower shall
fully indemnify the Lender on its demand in respect of all claims,
expenses, liabilities and losses which are made or brought against or
incurred by the Lender, or which the Lender reasonably and with due
diligence estimates that it will incur, as a result of or in connection
with:
(a) an Advance not being borrowed on the date specified in the Drawdown Notice
for any reason other than a default by the Lender;
(b) the receipt or recovery of all or any part of the Loan or an overdue sum
otherwise than on the last day of an Interest Period or other relevant
period;
(c) any failure (for whatever reason) by the Borrower to make payment of any
amount due under a Finance Document on the due date or, if so payable, on
demand (after giving credit for any default interest paid by the Borrower
on the amount concerned under Clause 6);
(d) the occurrence and/or continuance of an Event of Default or a Potential
Event of Default and/or the acceleration of repayment of the Loan under
Clause 19,
and in respect of any tax (other than tax on its overall net income) for
which the Lender is liable in connection with any amount paid or payable to
the Lender (whether for its own account or otherwise) under any Finance
Document.
49
21.2 BREAKAGE COSTS. Without limiting its generality, Clause 21.1 covers any
claim, expense, liability or loss, including a loss of a prospective
profit, incurred by the Lender:
(a) in liquidating or employing deposits from third parties acquired or
arranged to fund or maintain all or any part of the Loan and/or any overdue
amount (or an aggregate amount which includes the Loan or any overdue
amount); and
(b) in terminating, or otherwise in connection with, any interest and/or
currency swap or any other transaction entered into (whether with another
legal entity or with another office or department of the Lender) to hedge
any exposure arising under this Agreement or a number of transactions of
which this Agreement is one.
If the matters referred to in sub-clause (a) above shall result in a net
gain to the Lender, the Lender shall, subject to Clause 25.1, account to
the Borrower for such gain and the resulting amount shall, provided that no
Event of Default has occurred, be paid to the Operating Account to be
applied in accordance with the provisions of Clause 18.2.
21.3 MISCELLANEOUS INDEMNITIES. The Borrower shall fully indemnify the Lender on
its demand in respect of all claims, expenses, liabilities and losses which
may be made or brought against or incurred by the Lender, in any country,
as a result of or in connection with:
(a) any action taken, or omitted or neglected to be taken, under or in
connection with any Finance Document by the Lender or by any receiver
appointed under a Finance Document;
(b) any other Pertinent Matter,
other than claims, expenses, liabilities and losses which are shown to have
been directly and mainly caused by the dishonesty or wilful misconduct of
the officers or employees of the Lender.
Without prejudice to its generality, this Clause 21.3 covers any claims,
expenses, liabilities and losses which arise, or are asserted, under or in
connection with any law relating to safety at sea, the ISM Code, the ISPS
Code or any Environmental Law.
21.4 CURRENCY INDEMNITY. If any sum due from the Borrower or any other Security
Party to the Lender under a Finance Document or under any order or judgment
relating to a Finance Document has to be converted from the currency in
which the Finance Document provided for the sum to be paid (the
"CONTRACTUAL CURRENCY") into another currency (the "PAYMENT CURRENCY") for
the purpose of:
(a) making or lodging any claim or proof against the Borrower or any Security
Party, whether in its liquidation, any arrangement involving it or
otherwise; or
(b) obtaining an order or judgment from any court or other tribunal; or
(c) enforcing any such order or judgment,
the Borrower shall indemnify the Lender against the loss arising when the
amount of the payment actually received by the Lender is converted at the
available rate of exchange into the Contractual Currency.
In this Clause 21.4, the "AVAILABLE RATE OF EXCHANGE" means the rate at
which the Lender is able at the opening of business (London time) on the
Business Day after it receives the sum concerned to purchase the
Contractual Currency with the Payment Currency.
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This Clause 21.4 creates a separate liability of the Borrower which is
distinct from its other liabilities under the Finance Documents and which
shall not be merged in any judgment or order relating to those other
liabilities.
21.5 CERTIFICATION OF AMOUNTS. A notice which is signed by 2 officers of the
Lender, which states that a specified amount, or aggregate amount, is due
to the Lender under this Clause 21 and which indicates (without necessarily
specifying a detailed breakdown) the matters in respect of which the
amount, or aggregate amount, is due shall be prima facie evidence that the
amount, or aggregate amount, is due.
22 NO SET-OFF OR TAX DEDUCTION
22.1 NO DEDUCTIONS. All amounts due from the Borrower under a Finance Document
shall be paid:
(a) without any form of set-off, cross-claim or condition; and
(b) free and clear of any tax deduction except a tax deduction which the
Borrower is required by law to make.
22.2 GROSSING-UP FOR TAXES. If the Borrower is required by law to make a tax
deduction from any payment:
(a) the Borrower shall notify the Lender as soon as it becomes aware of the
requirement;
(b) the Borrower shall pay the tax deducted to the appropriate taxation
authority promptly, and in any event before any fine or penalty arises;
(c) the amount due in respect of the payment shall be increased by the amount
necessary to ensure that the Lender receives and retains (free from any
liability relating to the tax deduction) a net amount which, after the tax
deduction, is equal to the full amount which it would otherwise have
received.
22.3 EVIDENCE OF PAYMENT OF TAXES. Within one month after making any tax
deduction, the Borrower shall deliver to the Lender documentary evidence
satisfactory to the Lender that the tax had been paid to the appropriate
taxation authority.
22.4 EXCLUSION OF TAX ON OVERALL NET INCOME. In this Clause 22 "TAX DEDUCTION"
means any deduction or withholding for or on account of any present or
future tax except tax on the Lender's overall net income.
22.5 TAX CREDITS. If the Lender receives for its own account a repayment or
credit in respect of tax on account of which the Borrower has made an
increased payment under Clause 22.2, it shall pay to the Borrower a sum
equal to the proportion of the repayment or credit which the Lender
allocates to the amount due from the Borrower in respect of which the
Borrower made the increased payment PROVIDED THAT:
(a) the Lender shall not be obliged to allocate to this transaction any part of
a tax repayment or credit which is referable to a class or number of
transactions;
(b) nothing in this Clause 22.5 shall oblige the Lender to arrange its tax
affairs in any particular manner, to claim any type of relief, credit,
allowance or deduction instead of, or in priority to, another or to make
any such claim within any particular time;
(c) nothing in this Clause 22.5 shall oblige the Lender to make a payment which
would leave it in a worse position than it would have been in if the
Borrower had not been required to make a tax deduction from a payment; and
51
(d) any allocation or determination made by the Lender under or in connection
with this Clause 22.5 shall be conclusive and binding on the Borrower.
23 ILLEGALITY, ETC
23.1 ILLEGALITY. This Clause 23 applies if the Lender notifies the Borrower that
it has become, or will with effect from a specified date, become:
(a) unlawful or prohibited as a result of the introduction of a new law, an
amendment to an existing law or a change in the manner in which an existing
law is or will be interpreted or applied; or
(b) contrary to, or inconsistent with, any regulation,
for the Lender to maintain or give effect to any of its obligations under
this Agreement in the manner contemplated by this Agreement.
23.2 NOTIFICATION AND EFFECT OF ILLEGALITY. On the Lender notifying the Borrower
under Clause 23.1, the Lender's obligation to make any further Advances
shall terminate; and thereupon or, if later, on the date specified in the
Lender's notice under Clause 23.1 as the date on which the notified event
would become effective the Borrower shall prepay the Loan in full in
accordance with Clause 7.
24 INCREASED COSTS
24.1 INCREASED COSTS. This Clause 24 applies if the Lender notifies the Borrower
that it considers that as a result of:
(a) the introduction or alteration after the date of this Agreement of a law or
an alteration after the date of this Agreement in the manner in which a law
is interpreted or applied (disregarding any effect which relates to the
application to payments under this Agreement of a tax on the Lender's
overall net income); or
(b) complying with any regulation (including any which relates to capital
adequacy or liquidity controls or which affects the manner in which the
Lender allocates capital resources to its obligations under this Agreement)
which is introduced, or altered, or the interpretation or application of
which is altered, after the date of this Agreement,
the Lender (or a parent company of it) has incurred or will incur an
"INCREASED COST".
24.2 MEANING OF "INCREASED COSTS". In this Clause 24, "INCREASED COSTS" means:
(a) an additional or increased cost incurred as a result of, or in connection
with, the Lender having entered into, or being a party to, this Agreement
or having taken an assignment of rights under this Agreement, of funding or
maintaining the Loan or performing its obligations under this Agreement, or
of having outstanding all or any part of the Loan or other unpaid sums; or
(b) a reduction in the amount of any payment to the Lender under this Agreement
or in the effective return which such a payment represents to the Lender or
on its capital;
(c) an additional or increased cost of funding all or maintaining all or any of
the advances comprised in a class of advances formed by or including the
Loan or (as the case may require) the proportion of that cost attributable
to the Loan; or
(d) a liability to make a payment, or a return foregone, which is calculated by
reference to any amounts received or receivable by the Lender under this
Agreement,
52
but not an item attributable to a change in the rate of tax on the overall
net income of the Lender (or a parent company of it) or an item covered by
the indemnity for tax in Clause 21.1 or by Clause 22.
For the purposes of this Clause 24.2 the Lender may in good faith allocate
or spread costs and/or losses among its assets and liabilities (or any
class of its assets and liabilities) on such basis as it considers
appropriate.
24.3 PAYMENT OF INCREASED COSTS. The Borrower shall pay to the Lender, on its
demand, the amounts which the Lender from time to time notifies the
Borrower that it has specified to be necessary to compensate it for the
increased cost.
24.4 NOTICE OF PREPAYMENT. If the Borrower is not willing to continue to
compensate the Lender for the increased cost under Clause 24.3, the
Borrower may give the Lender not less than 14 days' notice of its intention
to prepay the Loan at the end of an Interest Period.
24.5 PREPAYMENT. A notice under Clause 24.4 shall be irrevocable; and on the
date specified in its notice of intended prepayment, the Borrower shall
prepay (without premium or penalty) the Loan, together with accrued
interest thereon at the applicable rate plus the Margin.
24.6 APPLICATION OF PREPAYMENT. Clause 7 shall apply in relation to the
prepayment.
25 SET-OFF
25.1 APPLICATION OF CREDIT BALANCES. The Lender may without prior notice:
(a) apply any balance (whether or not then due) which at any time stands to the
credit of any account in the name of the Borrower at any office in any
country of the Lender in or towards satisfaction of any sum then due from
the Borrower to the Lender under any of the Finance Documents; and
(b) for that purpose:
(i) break, or alter the maturity of, all or any part of a deposit of the
Borrower;
(ii) convert or translate all or any part of a deposit or other credit
balance into Dollars; and
(iii) enter into any other transaction or make any entry with regard to the
credit balance which the Lender considers appropriate.
25.2 SET-OFF BETWEEN THIS AGREEMENT AND THE MASTER AGREEMENT. If the Borrower is
the defaulting party under the Master Agreement, the Lender, as the
non-defaulting party, may (without prejudice to or limitation of its right
of set-off under section 6(e) of the Master Agreement and its rights under
Clause 25.1) at the same time as, or at any time after, the Borrower's
default, set-off any amount due from the Borrower to the Lender under this
Agreement against any amount due from the Lender to the Borrower under the
Master Agreement and apply the first amount in discharging the second
amount. The effect of any set-off under this Clause 25.2 shall be effective
to extinguish or, as the case may require, reduce the liabilities of the
Lender under the Master Agreement.
25.3 EXISTING RIGHTS UNAFFECTED. The Lender shall not be obliged to exercise any
of its rights under Clause 25.1; and those rights shall be without
prejudice and in addition to any right of set-off, combination of accounts,
charge, lien or other right or remedy to which the Lender is entitled
(whether under the general law or any document).
53
25.4 NO SECURITY INTEREST. This Clause 25 gives the Lender a contractual right
of set-off only, and does not create any equitable charge or other Security
Interest over any credit balance of the Borrower.
26 TRANSFERS AND CHANGES IN LENDING OFFICE
26.1 TRANSFER BY BORROWER. The Borrower may not, without the consent of the
Lender transfer any of its rights, liabilities or obligations under any
Finance Document.
26.2 ASSIGNMENT BY LENDER. The Lender may assign all or any of the rights and
interests which it has under or by virtue of the Finance Documents:
(a) to any Affiliate of the Lender without the consent of the Borrower; or
(b) to any other bank or financial institution with the consent of the
Borrower, such consent not to be unreasonably withheld or delayed,
PROVIDED THAT in each case any costs incurred in relation to such an
assignment shall be for the account of the Lender and, in the case of an
assignment to an Affiliate of the Lender, the Borrower's liabilities under
the Finance Documents shall not be increased from what they would have been
in the absence of such assignment.
26.3 RIGHTS OF ASSIGNEE. In respect of any breach of a warranty, undertaking,
condition or other provision of a Finance Document, or any
misrepresentation made in or in connection with a Finance Document, a
direct or indirect assignee of any of the Lender's rights or interests
under or by virtue of the Finance Documents shall be entitled to recover
damages by reference to the loss incurred by that assignee as a result of
the breach or misrepresentation irrespective of whether the Lender would
have incurred a loss of that kind or amount.
26.4 SUB-PARTICIPATION; SUBROGATION ASSIGNMENT. The Lender may sub-participate
all or any part of its rights and/or obligations under or in connection
with the Finance Documents without the consent of, or any notice to, the
Borrower; and the Lender may assign, in any manner and terms agreed by it,
all or any part of those rights to an insurer or surety who has become
subrogated to them.
26.5 DISCLOSURE OF INFORMATION. The Lender may disclose to a potential assignee
or sub-participant any information which the Lender has received in
relation to the Borrower, any other Security Party or their affairs under
or in connection with any Finance Document, unless the information is
clearly of a confidential nature, and the Lender shall promptly inform the
Borrower of the information disclosed and to whom pursuant to this Clause
26.5.
26.6 CHANGE OF LENDING OFFICE. The Lender may change its lending office by
giving notice to the Borrower and the change shall become effective on the
later of:
(a) the date on which the Borrower receives the notice; and
(b) the date, if any, specified in the notice as the date on which the change
will come into effect,
PROVIDED THAT any costs incurred in relation to such a change in lending
office shall be for the account of the Lender.
27 VARIATIONS AND WAIVERS
27.1 VARIATIONS, WAIVERS ETC. BY LENDER. A document shall be effective to vary,
waive, suspend or limit any provision of a Finance Document, or the
Lender's rights or remedies
54
under such a provision or the general law, only if the document is signed,
or specifically agreed to by fax, by the Borrower and the Lender and, if
the document relates to a Finance Document to which a Security Party is
party, by that Security Party.
27.2 EXCLUSION OF OTHER OR IMPLIED VARIATIONS. Except for a document which
satisfies the requirements of Clauses 27.1, no document, and no act, course
of conduct, failure or neglect to act, delay or acquiescence on the part of
the Lender (or any person acting on its behalf) shall result in the Lender
(or any person acting on its behalf) being taken to have varied, waived,
suspended or limited, or being precluded (permanently or temporarily) from
enforcing, relying on or exercising:
(a) a provision of this Agreement or another Finance Document; or
(b) an Event of Default; or
(c) a breach by the Borrower or any other Security Party of an obligation under
a Finance Document or the general law; or
(d) any right or remedy conferred by any Finance Document or by the general
law,
and there shall not be implied into any Finance Document any term or
condition requiring any such provision to be enforced, or such right or
remedy to be exercised, within a certain or reasonable time.
28 NOTICES
28.1 GENERAL. Unless otherwise specifically provided, any notice under or in
connection with any Finance Document shall be given by letter or fax; and
references in the Finance Documents to written notices, notices in writing
and notices signed by particular persons shall be construed accordingly.
28.2 ADDRESSES FOR COMMUNICATIONS. A notice shall be sent:
(a) to the Borrower: Xxxxxxx Xxxxxxxx
00 Xxxxxxxxx Xxxx
Xxxxxxxx XX00
Xxxxxxx
Fax No: x0 000 000 0000
Attn: Xxxxx Xxxxxxx
with copy to: Arlington Tankers LLC
000 Xxxx Xxxx Xxxx
Xxxxxxxx
XX 00000
XXX
Fax No: x0 000 000 0000
Attn: Xx Xxxxxx
(b) to the Lender: Shipping Business Centre
0-00 Xxxxx Xxxxx Xxxxxx
Xxxxxx XX0X 0XX
Fax No: x(00) 000 000 0000
55
For the attention of: Head of Ship Finance Portfolio
Management
or to such other address as the relevant party may notify the other.
28.3 EFFECTIVE DATE OF NOTICES. Subject to Clauses 28.4 and 28.5:
(a) a notice which is delivered personally or posted shall be deemed to be
served, and shall take effect, at the time when it is delivered;
(b) a notice which is sent by telex or fax shall be deemed to be served, and
shall take effect, 2 hours after its transmission is completed.
28.4 SERVICE OUTSIDE BUSINESS HOURS. However, if under Clause 28.3 a notice
would be deemed to be served:
(a) on a day which is not a business day in the place of receipt; or
(b) on such a business day, but after 5 p.m. local time,
the notice shall (subject to Clause 28.5) be deemed to be served, and shall
take effect, at 9 a.m. on the next day which is such a business day.
28.5 ILLEGIBLE NOTICES. Clauses 28.3 and 28.4 do not apply if the recipient of a
notice notifies the sender within 1 hour after the time at which the notice
would otherwise be deemed to be served that the notice has been received in
a form which is illegible in a material respect.
28.6 VALID NOTICES. A notice under or in connection with a Finance Document
shall not be invalid by reason that its contents or the manner of serving
it do not comply with the requirements of this Agreement or, where
appropriate, any other Finance Document under which it is served if:
(a) the failure to serve it in accordance with the requirements of this
Agreement or other Finance Document, as the case may be, has not caused any
party to suffer any significant loss or prejudice; or
(b) in the case of incorrect and/or incomplete contents, it should have been
reasonably clear to the party on which the notice was served what the
correct or missing particulars should have been.
28.7 ENGLISH LANGUAGE. Any notice under or in connection with a Finance Document
shall be in English.
28.8 MEANING OF "NOTICE". In this Clause 28 "NOTICE" includes any demand,
consent, authorisation, approval, instruction, waiver or other
communication.
29 SUPPLEMENTAL
29.1 RIGHTS CUMULATIVE, NON-EXCLUSIVE. The rights and remedies which the Finance
Documents give to the Lender are:
(a) cumulative;
(b) may be exercised as often as appears expedient; and
(c) shall not, unless a Finance Document explicitly and specifically states so,
be taken to exclude or limit any right or remedy conferred by any law.
56
29.2 SEVERABILITY OF PROVISIONS. If any provision of a Finance Document is or
subsequently becomes void, unenforceable or illegal, that shall not affect
the validity, enforceability or legality of the other provisions of that
Finance Document or of the provisions of any other Finance Document.
29.3 COUNTERPARTS. A Finance Document may be executed in any number of
counterparts.
29.4 END OF SECURITY PERIOD. The Lender shall notify the Borrower promptly of
the end of the Security Period.
29.5 THIRD PARTY RIGHTS. A person who is not a party to this Agreement has no
right under the Contracts (Rights of Third Parties) Xxx 0000 to enforce or
to enjoy the benefit of any term of this Agreement.
30 LAW AND JURISDICTION
30.1 ENGLISH LAW. This Agreement shall be governed by, and construed in
accordance with, English law.
30.2 EXCLUSIVE ENGLISH JURISDICTION. Subject to Clause 30.3, the courts of
England shall have exclusive jurisdiction to settle any disputes which may
arise out of or in connection with this Agreement.
30.3 CHOICE OF FORUM FOR THE EXCLUSIVE BENEFIT OF THE LENDER. Clause 30.2 is for
the exclusive benefit of the Lender, which reserves the rights:
(a) to commence proceedings in relation to any matter which arises out of or in
connection with this Agreement in the courts of any country other than
England and which have or claim jurisdiction to that matter; and
(b) to commence such proceedings in the courts of any such country or countries
concurrently with or in addition to proceedings in England or without
commencing proceedings in England.
30.4 PROCESS AGENT. The Borrower irrevocably appoints RB Secretariat Limited at
its registered office for the time being, presently at 10th floor, Beaufort
House, 00 Xx. Xxxxxxx Xxxxxx, Xxxxxx XX0X 0XX, Xxxxxxx, to act as its agent
to receive and accept on its behalf any process or other document relating
to any proceedings in the English courts which are connected with this
Agreement.
30.5 LENDER'S RIGHTS UNAFFECTED. Nothing in this Clause 30 shall exclude or
limit any right which the Lender may have (whether under the law of any
country, an international convention or otherwise) with regard to the
bringing of proceedings, the service of process, the recognition or
enforcement of a judgment or any similar or related matter in any
jurisdiction.
30.6 MEANING OF "PROCEEDINGS". In this Clause 30, "PROCEEDINGS" means
proceedings of any kind, including an application for a provisional or
protective measure.
THIS AGREEMENT has been entered into on the date stated at the beginning of this
Agreement.
57
SCHEDULE 1
DRAWDOWN NOTICE
To: The Royal Bank of Scotland plc
Shipping Business Centre
0-00 Xxxxx Xxxxx Xxxxxx
Xxxxxx XX0X 0XX
Attention: Will Xxxxxxxxx, Loans Administration
[date]
DRAWDOWN NOTICE
1 We refer to the loan agreement (the "LOAN AGREEMENT") dated [_____] and
made between us, as Borrower, and you, as Lender, in connection with a
facility of up to US$235,000,000. Terms defined in the Loan Agreement have
their defined meanings when used in this Drawdown Notice.
2 We request to borrow as follows:
(a) Amount: US$[_____] in relation to [name of Advance].
(b) Drawdown Date: [_____].
(c) [The duration of the first Interest Period shall be [_____] months;]
(d) Payment instructions : the Advance shall be paid to the account of [_____]
and numbered [_____] with [_____] of [_____].
3 We represent and warrant that:
(a) the representations and warranties in Clause 10 of the Loan Agreement would
remain true and not misleading if repeated on the date of this notice with
reference to the circumstances now existing;
(b) no Event of Default or Potential Event of Default has occurred or will
result from the borrowing of the Loan.
4 This notice cannot be revoked without the prior consent of the Lender.
5 [We authorise you to deduct the arrangement fee referred to in Clause 20.1
from the amount of the Advance.]
[Name of Signatory]
----------------------------------------
Director/Co-Chief Executive Officer
for and on behalf of
ARLINGTON TANKERS LTD.
58
SCHEDULE 2
CONDITION PRECEDENT DOCUMENTS
PART A
The following are the documents referred to in Clause 9.1(a).
1 A duly executed original of each Finance Document (and of each document
required to be delivered by each Finance Document) other than those
referred to in Part B or Part C.
2 Copies of the certificate of incorporation and constitutional documents of
the Borrower and each other Security Party, each set of such constitutional
documents to be in a form satisfactory to the Lender and its lawyers.
3 Copies of resolutions of the directors of the Borrower and the shareholders
and directors of each Guarantor, authorising the execution of each of the
Finance Documents to which the Borrower or that Guarantor is a party and,
in the case of each Guarantor, authorising or ratifying (as the case may
be) the execution of the Underlying Documents to which that Guarantor is a
party and, in the case of the Borrower, authorising named officers to give
the Drawdown Notices and other notices under this Agreement.
4 The original of any power of attorney under which any Finance Document
and/or any Underlying Document is executed on behalf of the Borrower or a
Security Party.
5 Copies of all consents which the Borrower or any other Security Party
requires to enter into, or make any payment under, any Finance Document or
any Underlying Document.
6 The originals of any mandates or other documents required in connection
with the opening or operation of the Operating Account.
7 Copies of any documents required by the Lender in relation to its "know
your client" regulations and other internal guidelines (whether in relation
to the opening of the Operating Account or otherwise).
8 A copy of each Underlying Document relating to the Existing Ships (and, if
available, relating to the New Ships) and of all documents signed or issued
by each relevant Guarantor, either Charterer or either Charter Guarantor
(as the case may be) under or in connection with each such Underlying
Document, each to be on terms acceptable to the Lender.
9 Evidence of the due authorisation and execution of each Underlying Document
relating to the Existing Ships (and, if available, relating to the New
Ships) by each relevant Guarantor, either Charterer or either Charter
Guarantor (as the case may be).
10 Evidence that the form of the Quiet Enjoyment Agreement has been agreed by
each Guarantor, each Charterer and the Approved Manager in form and
substance satisfactory to the Lender.
11 Documentary evidence that the agent for service of process named in Clause
30 has accepted its appointment.
12 Favourable legal opinions from lawyers appointed by the Lender on such
matters concerning the laws of Bermuda, Sweden, The Netherlands and such
other relevant jurisdictions as the Lender may require.
59
13 If the Lender so requires, in respect of any of the documents referred to
above, a certified English translation prepared by a translator approved by
the Lender.
60
PART B
1 A duly executed original of the Mortgage, Deed of Covenant, General
Assignment and Charter Assignment relating to each Existing Ship (and of
each document to be delivered pursuant to each of them).
2 Without prejudice to the generality of paragraph 1 above, the notices of
assignment and acknowledgements thereof required by the terms of the
Charter Assignment relating to each Existing Ship duly served on, and
acknowledged by, the relevant Charterer and the relevant Charter Guarantor.
3 Documentary evidence that:
(a) each Existing Ship is definitively and permanently registered in the name
of the relevant Guarantor under Bermudian flag;
(b) each Existing Ship is in the absolute and unencumbered ownership of the
relevant Guarantor save as contemplated by the Finance Documents;
(c) each Existing Ship maintains the class highest class for a vessel of that
type with an Approved Classification Society free of all overdue
recommendations and conditions of such Classification Society;
(d) each Existing Ship is continuing in service under the relevant Charter;
(e) a Mortgage has been duly registered against each Existing Ship as a valid
first priority Bermudian ship mortgage in accordance with the laws of
Bermuda; and
(f) each Existing Ship is insured in accordance with the provisions of this
Agreement and the relevant Guarantee and all requirements therein in
respect of insurances have been complied with.
4 Documents establishing that each Existing Ship will, as from the first
Drawdown Date, be managed by the Approved Manager on terms acceptable to
the Lender, together with:
(a) a letter or letters of undertaking executed by the Approved Manager in
favour of the Lender in the terms required by the Lender agreeing certain
matters in relation to the management of each Existing Ship and
subordinating the rights of the Approved Manager against each Existing Ship
and each Guarantor to the rights of the Lender under the Finance Documents;
and
(b) copies of the Approved Manager's Document of Compliance and of each
Existing Ship's Safety Management Certificate (together with any other
details of the applicable safety management system which the Lender
requires).
5 A favourable opinion from an independent insurance consultant acceptable to
the Lender on such matters relating to the insurances for each Existing
Ship as the Lender may require.
6 The Quiet Enjoyment Agreements in relation to each Existing Ship duly
executed by each relevant Guarantor, each relevant Charterer and the
Approved Manager, together with evidence of due authorisation and execution
by those parties.
7 A satisfactory valuation of each Existing Ship, dated not earlier than 10
days prior to the first Drawdown Date, from an independent London sale and
purchase shipbroker selected by the Lender.
61
8 Evidence that the Existing Lenders have, or immediately will, release all
security for the Existing Indebtedness (and have, or immediately will,
given notice thereof to all relevant parties) and will release the Borrower
and each Guarantor from all liabilities under or in respect of the Existing
Loan Agreement.
9 Such further or updating legal opinions from lawyers appointed by the
Lender on such matters concerning the laws of Bermuda, Sweden, The
Netherlands and such other relevant jurisdictions as the Lender may
require.
62
PART C
The following are the documents referred to in Clause 9.1(c).
1 A copy of the MOA and other Underlying Documents relating to the relevant
New Ship and of all document signed or issued by the relevant Guarantor
under or in connection with such MOA, on terms acceptable to the Lender.
2 Evidence of due authorisation and execution of the MOA and other Underlying
Documents relating to the relevant New Ship.
3 A duly executed original of the Mortgage, Deed of Covenant, General
Assignment and Charter Assignment relating to the relevant New Ship (and of
each document to be delivered pursuant to each of them).
4 Without prejudice to the generality of paragraph 1 above, notices of
assignment and acknowledgements thereof required by the terms of the
Charter Assignment relating to the relevant New Ship duly served on, and
acknowledged by, the relevant Charterer and the relevant Charter Guarantor.
5 Documentary evidence that:
(a) the relevant New Ship has been unconditionally delivered by the relevant
Seller to, and accepted by, the relevant Guarantor under the relevant MOA;
(b) the relevant New Ship is definitively and permanently registered in the
name of the relevant Guarantor under Bermudian flag;
(c) the relevant New Ship is in the absolute and unencumbered ownership of the
relevant Guarantor save as contemplated by the Finance Documents;
(d) the relevant New Ship maintains the highest class for a vessel of that type
with an Approved Classification Society free of all overdue recommendations
and conditions of such Classification Society;
(e) the relevant New Ship has entered into service under the relevant Charter;
(f) a Mortgage has been duly registered against the relevant New Ship as a
valid first priority Bermudian ship mortgage in accordance with the laws of
Bermuda; and
(g) the relevant New Ship is insured in accordance with the provisions of this
Agreement and the relevant Guarantee and all requirements therein in
respect of insurances have been complied with.
6 Documents establishing that the relevant New Ship will, as from the
relevant Drawdown Date, be managed by the Approved Manager on terms
acceptable to the Lender, together with:
(a) a letter of undertaking executed by the Approved Manager in favour of the
Lender in the terms required by the Lender agreeing certain matters in
relation to the management of the relevant New Ship and subordinating the
rights of the Approved Manager against that New Ship and the relevant
Guarantor to the rights of the Lender under the Finance Documents; and
(b) copies of the Approved Manager's Document of Compliance and of the relevant
New Ship's Safety Management Certificate and ISCC (together with any other
details of the applicable safety management system which the Lender
requires).
63
7 A favourable opinion from an independent insurance consultant acceptable to
the Lender on such matters relating to the insurances for the relevant New
Ship as the Lender may require.
8 The Quiet Enjoyment Agreement in relation to each New Ship duly executed by
each relevant Guarantor, each relevant Charterer and the Approved Manager,
together with evidence of due authorisation and execution by those parties.
9 A satisfactory valuation of the relevant New Ship, dated not earlier than
10 days prior to the relevant Drawdown Date, from an independent London
sale and purchase shipbroker selected by the Lender.
10 Such further or updating legal opinions from lawyers appointed by the
Lender on such matters covering the laws of Bermuda, Sweden, The
Netherlands and such other relevant jurisdictions as the Lender may
require.
11 The documents referred to in paragraphs 1 and 2 of this Part C need not be
separately delivered if they have previously been delivered pursuant to
paragraphs 8 and 9 of Part A.
Every copy document delivered under this Schedule shall be certified as a
true and up to date copy by a director or the secretary (or equivalent
officer) of the Borrower.
64
SCHEDULE 3
FORM OF COMPLIANCE CERTIFICATE
To: The Royal Bank of Scotland plc
Shipping Business Centre
0-00 Xxxxx Xxxxx Xxxxxx
Xxxxxx XX0X 0XX
[_____] 200[_]
Dear Sirs,
We refer to a loan agreement dated December 2005 (the "LOAN AGREEMENT") made
between (1) us as borrower and (2) you as lender.
Words and expressions defined in the Loan Agreement shall have the same meaning
when used in this compliance certificate.
We enclose with this certificate a copy of the [the audited consolidated
accounts of the Group for the year ended [_____]] [the consolidated management
accounts of the Group for the 3-month period ended [_____]]. The accounts (i)
have been prepared in accordance with all applicable laws and GAAP consistently
applied, (ii) give a GAAP presentation of the Group at the date of the accounts
and of its profit for the period to which the accounts relate and (iii) fully
disclose or provide for all significant liabilities of the Group.
The Borrower represents that no Event of Default has occurred as at the date of
this certificate and, to the best of the knowledge of each of the undersigned
following due enquiry, no Potential Event of Default has occurred as at the date
of this certificate [except for the following matter or event [set out all
material details of matter or event]]. In addition as of [_____], the Borrower
confirms compliance with the financial covenants set out in Clause 12.5 of the
Loan Agreement for the [12] [3] months ending as at the date to which the
enclosed accounts are prepared.
We now certify that, as at [_____]:
(b) the Value Adjusted Equity is equal to or greater than 30 per cent. of the
Value Adjusted Total Assets; and
(c) the Group has a positive Working Capital.
This certificate shall be governed by, and construed in accordance with, English
law.
-------------------------------------
[------------------------]
Chief Financial Officer of
ARLINGTON TANKERS LTD.
-------------------------------------
[------------------------]
Director of
ARLINGTON TANKERS LTD.
65
SCHEDULE 4
MANDATORY COST RATE FORMULA
The Mandatory Cost Rate will be calculated in accordance with the following
formula:
F x 0.01
--------
300
where on the day(s) of application of the formula:
F. is the rate of charge payable by the Lender to the Financial Services
Authority pursuant to paragraph 2 of the Fees Regulations (but where for this
purpose, the figure at paragraph 2.02b/2.03b shall be deemed to be zero) and
expressed in pounds per L1 million of the Fee Base of the Lender.
For the purposes of this Schedule:
Fee Base has the meaning ascribed to it for the purposes of, and all be
calculated in accordance with, the Fees Regulations.
Fees Regulations means, as appropriate, either the Banking Supervision (Fees)
Regulations 2000 or such regulations as from time to time may be in force,
relating to the payment of fees for banking supervision in respect of periods
subsequent to 31 March 2001.
Any reference to a provision of any statute, directive, order or regulation
herein is a reference to that provision as amended or re-enacted from time to
time.
If alternative or additional financial requirements are imposed which in the
Lender's opinion make the formula set out above no longer appropriate, the
Lender shall be entitled to stipulate such other formula as shall be suitable to
apply in substitution for the formula set out above.
66
EXECUTION PAGE
BORROWER
SIGNED by ) /s/ XXXXXX XXXXXX
) ----------------------------------------
for and on behalf of )
ARLINGTON TANKERS LTD. )
in the presence of: )
/s/ Xxxxxx Xxxxxx-Xxxxxx
-------------------------------------
Xxxxxx Xxxxxx-Xxxxxx
Solicitor
Xxxxxx
XX0X 0XX
LENDER
SIGNED by ) /s/ GRAHAM LOCKER
) ----------------------------------------
for and on behalf of )
THE ROYAL BANK OF SCOTLAND PLC )
in the presence of: )
/s/ Xxxxxx Xxxxxx-Xxxxxx
-------------------------------------
Xxxxxx Xxxxxx-Xxxxxx
Solicitor
Xxxxxx
XX0X 0XX
67
