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CREDIT AGREEMENT
MILLENIUM SEACARRIERS, INC.
the Company
and
THE BANK OF NEW YORK,
the Bank
July 20, 1998
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TABLE OF CONTENTS
SECTION PAGE
1. DEFINITIONS.....................................................................................1
2. REPRESENTATIONS, COVENANTS AND WARRANTIES.......................................................9
3. THE LINE OF CREDIT.............................................................................13
4. THE SECURITY...................................................................................14
5. CONDITIONS.....................................................................................14
6. REPAYMENT, PREPAYMENT AND REDUCTION OF FACILITY................................................20
7. INTEREST.......................................................................................20
8. PAYMENTS.......................................................................................21
9. ILLEGALITY, INCREASED COST, NON-AVAILABILITY, ETC..............................................22
10. AFFIRMATIVE COVENANTS..........................................................................23
(a) Maintenance of Existence..............................................................23
(b) Perform Agreements....................................................................23
(c) Maintenance of Books, Records,
Providing of Financial Statements, etc................................................23
(d) Inspection of Property, Books and Records.............................................24
(e) Payment of Taxes......................................................................25
(f) Notice of Actions, Suits, Proceedings and Environmental Claims........................25
(g) Compliance with ISM Code..............................................................26
(h) Management of the Vessels.............................................................26
(i) Confirmation of Class Certificates....................................................26
(j) Maintenance of Properties.............................................................26
(k) Payment of Indebtedness...............................................................26
(l) Compliance with Agreements............................................................26
(m) Operating Accounts....................................................................26
(n) Addressing the Year 2000 Issue........................................................26
(o) Compliance with Obligations...........................................................27
(p) Additional Guaranties, etc............................................................27
11. NEGATIVE COVENANTS.............................................................................27
(a) Indebtedness..........................................................................27
(b) Guaranties, etc.......................................................................27
(c) Liens, etc............................................................................27
(d) Consolidation, Merger or Sale of Assets...............................................28
(e) Dividends.............................................................................28
(f) Loans or Advances.....................................................................28
(g) Investments...........................................................................28
(h) Engagement in Business................................................................28
(i) Sale/Leaseback Transactions...........................................................28
12. OPERATING ACCOUNTS.............................................................................28
13. APPLICATION OF FUNDS...........................................................................28
14. EVENTS OF DEFAULT AND REMEDIES.................................................................29
15. SUNDRY PROVISIONS..............................................................................32
(a) Further Assurances....................................................................32
(b) Notices...............................................................................32
(c) Further Panamanian and Cypriot Counsel Opinions.......................................32
(d) Payment of Costs, Expenses, etc.......................................................33
(e) Successors and Assigns................................................................33
(f) GOVERNING LAW.........................................................................33
(g) Submission to Jurisdiction............................................................33
(h) WAIVER OF TRIAL BY JURY...............................................................34
(i) Execution in Counterparts.............................................................34
(j) Vessel Trading Prohibitions...........................................................34
(k) Assignments and Participations by the Bank............................................34
(l) Severability..........................................................................35
(m) Indemnification.......................................................................35
(n) Information Disclosure................................................................36
(o) No Claims for Consequential Damages...................................................36
(p) Entire Agreement......................................................................36
(q) Rights Cumulative, Non-Waiver, etc....................................................36
(r) International Financing Transaction...................................................37
(s) Headings; Table of Contents...........................................................37
Consent and Agreement of the Initial Guarantors
Schedules
SCHEDULES
SCHEDULE
1 FORM OF DRAWDOWN NOTICE
2 FORM OF NOTE
3 FORM OF GUARANTEES
4 LIST OF COMMITTED VESSELS
5 LIST OF OTHER INITIAL GUARANTORS
CREDIT AGREEMENT
CREDIT AGREEMENT, dated July 20, 1998, between MILLENIUM
SEACARRIERS, INC. (the "Company"), a company incorporated under the laws of the
Cayman Islands, and THE BANK OF NEW YORK (the "Bank"), a trust company organized
and existing under the laws of the State of New York.
1. DEFINITIONS
(a) In this Agreement the words and expressions specified
below shall, except where the context otherwise requires, have the meanings
attributed to them below:
"Agreement" this Agreement, as the same shall be amended
or supplemented from time to time; "Alternate
Base Rate" for each day, at a rate per annum
equal to the higher of (i) the Prime Rate in
effect for such day and (ii) 1/2%, plus the
Federal Funds Rate in effect for such day;
"Applicable Rate" the rate of interest on the Loans, or any
portion thereof, from time to time applicable
pursuant to Section 7(a);
"Approved Classification Society" any of the American Bureau of Shipping,
Nippon Kaiji Kyokai, Germanischer ▇▇▇▇▇,
Lloyd's Register of Shipping, Bureau Veritas
or Det Norske Veritas;
"Business Days" a day on which dealings in dollar deposits of
the United States of America are carried on
in the London interbank market and on which
commercial banks are open for domestic and
international business (including dealings in
dollar deposits of the United States of
America) in London, England and in New York,
New York;
"Change of Control" shall have the meaning ascribed thereto in
the Indenture;
"CLIPPER ATLANTIC" shall have the meaning ascribed thereto in
Section 2(b);
"CLIPPER ATLANTIC
Insurances Assignment" the assignment of all right, title and
interest of Conifer in and to the insurances
covering the CLIPPER ATLANTIC and all
proceeds thereof to be executed by Conifer in
favor of the Collateral Agent pursuant to
Section 5(a)(xi) and to be in form and
substance satisfactory to the Bank;
"CLIPPER ATLANTIC
Mortgage" the statutory first mortgage and deed of
covenants collateral thereto covering the
CLIPPER ATLANTIC to be executed
by Conifer in favor of the Collateral Agent
pursuant to Section 5(a) (viii) and to be in
form and substance satisfactory to the Bank;
CLIPPER GOLDEN HIND" shall have the meaning ascribed thereto in
Section 2(c);
"CLIPPER GOLDEN HIND
Insurances Assignment" the assignment of all right, title and
interest of Ivy in and to the insurances
covering the CLIPPER GOLDEN HIND and all
proceeds thereof to be executed by Ivy in
favor of the Collateral Agent pursuant to
Section 5(a)(xi) and to be in form and
substance satisfactory to the Bank;
"CLIPPER GOLDEN HIND
Mortgage" the first preferred mortgage covering the
CLIPPER GOLDEN HIND to be executed by Ivy in
favor of the Collateral Agent pursuant to
Section 5(a)(x) and to be in form and
substance satisfactory to the Bank;
"CLIPPER HARMONY" shall have the meaning ascribed thereto in
Section 2(d);
"CLIPPER HARMONY
Insurances Assignment" the assignment of all right, title and
interest of Rapid in and to the insurances
covering the CLIPPER HARMONY and all proceeds
thereof to be executed by Rapid in favor of
the Collateral Agent pursuant to Section
5(a)(xi) and to be in form and substance
satisfactory to the Bank;
"CLIPPER HARMONY
Mortgage" the first naval mortgage covering CLIPPER
HARMONY to be executed by Rapid in favor of
the Collateral Agent pursuant to Section
5(a)(ix) and to be in form and substance
satisfactory to the Bank;
"CLIPPER
PACIFIC" shall have the meaning ascribed thereto in
Section 2(e);
"CLIPPER PACIFIC
Insurances Assignment" the assignment of all right, title and
interest of Topscale in and to the insurances
covering the CLIPPER PACIFIC and all proceeds
thereof to be executed by Topscale in favor
of the Collateral Agent pursuant to Section
5(a)(xi) and to be in form and substance
satisfactory to the Bank;
"CLIPPER PACIFIC
Mortgage"
the statutory first mortgage and deed of
covenants collateral thereto covering the
CLIPPER PACIFIC to be executed by Topscale in
favor of the Collateral Agent pursuant to
Section 5(a)(viii) and to be in form and
substance satisfactory to the Bank;
"Collateral Agency and
Intercreditor Agreement" the Collateral Agency and Intercreditor
Agreement, dated as of July 1, 1998, by and
among the Collateral Agent, the
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Bank, the Company and the Initial Guarantors
as to the rights of the parties thereto in
the Collateral Property, which Collateral
Agency and Intercreditor Agreement shall be
in form and substance satisfactory to the
Bank and shall provide the Bank with a first
priority position in the case of a sale,
Total Loss or foreclosure of any Vessel;
"Collateral Agent" The First National Bank of Maryland, in its
capacity as collateral agent and trustee
under the Collateral Agency and Intercreditor
Agreement;
"Collateral Documents" the Mortgages, the Insurances Assignments and
the Guarantees, together with any other
documents which may be executed and delivered
to the Collateral Agent or the Bank from time
to time mortgaging, assigning or otherwise
transferring thereto additional assets as
security for the obligations of the Company
to the Bank under this Agreement and under
the Note or as security for the obligations
of any Guarantor under its Guaranty of the
obligations of the Company to the Bank under
this Agreement and under the Note;
"Collateral Property" the assets mortgaged or assigned to the
Collateral Agent or the Bank pursuant to the
terms of the Collateral Documents, together
with any other assets which may be held by
the Collateral Agent or the Bank from time to
time as additional security for the
obligations of the Company to the Bank under
this Agreement and under the Note or as
security for the obligations of any Guarantor
under its Guaranty of the obligations of the
Company to the Bank under this Agreement and
under the Note;
"Committed Vessels" the Vessels listed on Schedule 4;
"Conifer" Conifer Shipping Company Limited, a company
organized and existing under the laws of the
Republic of Cyprus;
"Default Rate" shall have the same meaning ascribed thereto
in Section 7(b);
"DOC" a Document of Compliance issued in accordance
with Rule 13 of the ISM Code;
"Dollars" and the sign "$" the legal currency, at any relevant time
hereunder, of the United States of America
and, in relation to all payments hereunder,
in same day funds settled through the New
York Clearing House Interbank Payments System
(or such other
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Dollar funds as may be determined by the Bank
to be customary for the settlement in New
York City of banking transactions of the type
herein involved);
"Drawdown Date(s)" the dates, each being a Business Day not
later than July , 1999, upon which the
Company has requested that any Loan be made
available to the Company as provided in
Section 3;
"Drawdown Notice" shall have the meaning ascribed thereto in
Section 3(c);
"Environmental Approvals" all permits, licenses, approvals, rulings,
variances, exemptions, clearances, consents
or other authorizations required under
applicable Environmental Laws;
"Environmental Claim" any claim arising out of, based on or
resulting from (i) the presence, or release
or threat of release into the environment, of
any Material of Environmental Concern at any
location, whether or not owned by the party
against which the claim is asserted, or (ii)
circumstances forming the basis of any
violation, or alleged violation, of any
Environmental Law or Environmental Approval;
"Environmental Laws" United States, federal and state, local,
foreign and international laws, regulations,
conventions and agreements relating to
pollution prevention or protection of human
health and the environment (including,
without limitation, ambient air, surface
water, ground water, navigable waters, waters
of the contiguous zone, ocean waters and
international waters), including, without
limitation, laws, regulations, conventions
and agreements relating to (i) emissions,
discharges, releases or threatened releases
of Materials of Environmental Concern or (ii)
the manufacture, processing, distribution,
use, treatment, storage, disposal,
transportation or handling of Materials of
Environmental Concern;
"Event of Default" the occurrence of any of the events set out
in Section 14;
"Federal Funds Rate" for any day, the weighted average of the
rates on overnight Federal funds transactions
with members of the Federal Reserve System
arranged by Federal funds brokers, as
published for such day (or if such day is not
a Business Day, for the next preceding
Business Day) by the Federal Reserve Bank of
New York, or if such rate is not so published
for any day which is a Business Day, the
average of quotations for such day on such
transactions received by the Bank from
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three Federal funds brokers of recognized
standing selected by the Bank;
"Final Payment Date" July , 1999 or, if such day is not a Business
Day, the next following Business Day unless
such next following Business Day falls in the
following month in which case the Final
Payment Date will be the Business Day
immediately preceding such day;
"Guarantees" the Initial Guaranty and each additional
guaranty to be executed in favor of the Bank
by a Guarantor acquiring an Additional Vessel
(as such term is utilized in the Offering
Circular) of the payment and performance of
the obligations of the Company to the Bank
under this Agreement and under the Note
pursuant to Section 10(p) and to be
substantially in the form set out in Schedule
3 or in such other form as the Bank may
agree;
"Guarantors" the Initial Guarantors and each additional
wholly-owned subsidiary of the Company which
acquires an Additional Vessel;
"Indenture" the Indenture, dated as of July , 1998, among
the Company, the Subsidiary Guarantors (as
defined therein) and the Trustee, pursuant to
which the Senior Secured Notes will be
issued;
"Initial
Guarantors" Conifer, Ivy, Oakmont, Rapid, Topscale and
the other Initial Guarantors listed on
Schedule 5;
"Initial Guaranty" the guaranty of the payment and performance
of the obligations of the Company to the Bank
under this Agreement and under the Note to be
executed by the Initial Guarantors in favor
of the Bank pursuant to Section 5(a)(xi) and
to be substantially in the form set out in
Schedule 3 or in such other form as the
Initial Guarantors and the Bank may agree;
"Initial Vessels" the CLIPPER ATLANTIC, the CLIPPER GOLDEN
HIND, the CLIPPER HARMONY, the CLIPPER
PACIFIC and the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇;
"Insurances Assignments" the CLIPPER ATLANTIC Insurances Assignment,
the CLIPPER GOLDEN HIND Insurances
Assignment, the CLIPPER HARMONY Insurances
Assignment, the CLIPPER PACIFIC Insurances
Assignment, the ▇▇▇▇▇▇
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▇▇▇▇▇▇▇ Insurances Assignment and each
additional assignment to be executed in favor
of the Collateral Agent by a Guarantor
acquiring a Committed Vessel or an Additional
Vessel of all right, title and interest of
such Guarantor in and to the insurances
covering such Vessel and all proceeds thereof
and to be in form and substance satisfactory
to the Bank;
"Interest Notice" a notice to the Bank specifying the interest
option selected and the duration of any
relevant Interest Period; "Interest Payment
Date(s)" shall have the meaning ascribed
thereto in Section 7(d); "Interest Period(s)"
shall have the meaning ascribed thereto in
Section 7(c); "ISM Code" the International
Management Code for the Safe Operation of
Ships and for Pollution Prevention; "Ivy" Ivy
Navigation, Inc., a corporation organized and
existing under the laws of the Republic of
Liberia; "LIBOR" means the rate of interest
for deposits, in Dollars, of an amount equal
to the relevant Loan (or portion thereof),
for periods equivalent to the applicable
Interest Period, which appear at or about
11:00 a.m. (London Time) on the date falling
two Business Days prior to the first day of
the relevant Interest Period as displayed on
Telerate page 3750 (British Bankers'
Association Interest Settlement Rates) (or
such other page as may replace such page
3750) on such system or on any other system
of the information vendor for the time being
designated by the British Bankers'
Association's Recommended Terms and
Conditions (BBAIRS) (dated August 1985)),
PROVIDED, HOWEVER, that, if on any date of
determination of an Applicable Rate, no rate
is so displayed for amounts equivalent to the
relevant Loan (or portion thereof) and for
periods equivalent to the applicable Interest
Period, LIBOR shall be equal to the rate
quoted by the Bank as the offered rate for
deposits, in Dollars, in an amount
approximately equal to the amount in relation
to which LIBOR is to be determined for a
period equivalent to such period to prime
banks in the London interbank market on the
second Business Day before the first day of
such period;
"Loans" the loans, not to exceed at any one time
outstanding
6
$7,000,000, to be made by the Bank to the
Company pursuant to Section 3(a);
"Manager" shall have the meaning ascribed thereto in
Section 10(h);
"Margin" shall have the meaning ascribed thereto in
Section 7(a);
"Materials of
Environmental Concern" chemicals, pollutants, contaminants, wastes,
toxic substances, hazardous materials, oil,
hazardous substances, petroleum and petroleum
products and by-products;
"▇▇▇▇▇▇ ▇▇▇▇▇▇▇" shall have the meaning ascribed thereto in
Section 2(g);
"▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Insurances Assignment" the assignment of all right, title and
interest of Oakmont in and to the insurances
covering the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and all proceeds
thereof to be executed by Oakmont in favor of
the Collateral Agent pursuant to Section
5(a)(xi) and to be in form and substance
satisfactory to the Bank;
"▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Mortgage" the first naval mortgage covering the ▇▇▇▇▇▇
▇▇▇▇▇▇▇ to be executed by Oakmont in favor of
the Collateral Agent pursuant to Section
5(a)(ix) and to be in form and substance
satisfactory to the Bank;
"Mortgages" the CLIPPER ATLANTIC Mortgage, the CLIPPER
GOLDEN HIND Mortgage, the CLIPPER HARMONY
Mortgage, the CLIPPER PACIFIC Mortgage and
the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage and each
additional mortgage (and any deed of
covenants collateral thereto) to be executed
in favor of the Collateral Agent by a
Guarantor acquiring a Committed Vessel or an
Additional Vessel and to be in form and
substance satisfactory to the Bank;
"Note" the secured promissory note to be executed by
the Company to the order of the Bank pursuant
to Section 5(xi) evidencing the Loans and to
be substantially in the form set out in
Schedule 2 or in such other form as the Bank
may agree;
"Oakmont" Oakmont Shipping and Trading, Inc., a
corporation organized and existing under the
laws of the Republic of Liberia;
"Offering Circular" the Offering Circular, dated July 20, 1998,
covering the Senior Secured Notes;
"Operating Accounts" shall have the meaning ascribed thereto in
Section 12;
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"Permitted Liens" the liens permitted by the Indenture;
"Prime Rate" the prime commercial lending rate of the Bank
as publicly announced to be in effect from
time to time, such rate to be adjusted
automatically, without notice, on the
effective date of any change in such rate;
"Restricted Payments" shall have the meaning ascribed thereto in
the Indenture;
"Rapid" Rapid Ocean Carriers Inc., a corporation
organized and existing under the laws of the
Republic of Liberia;
"Sale/Leaseback Transaction" shall have the meaning ascribed thereto in
the Indenture;
"Senior Secured Notes" the notes to be issued under the Indenture;
"Shipping Business" shall have the meaning ascribed thereto in
the Indenture;
"SMC" a Safety Management Certificate issued in
accordance with Rule 13 of the ISM Code;
"Topscale" Topscale Shipping Company Limited, a company
organized and existing under the laws of the
Republic of Cyprus;
"Total Loss" with respect to any of the Vessels, its
actual or constructive total loss, including
arranged or compromised total loss, or its
requisition, taking, capture, seizure or
forfeiture;
"Trustee" The First National Bank of Maryland, a
national banking association;
"Vessels" the Initial Vessels and each Committed Vessel
and each Additional Vessel acquired by a
Guarantor; and
"Year 2000 Issue" the failure of computer software, hardware
and firmware systems and equipment containing
embedded computer chips to properly receive,
transmit, process, manipulate, store,
retrieve, re-transmit or in any other way
utilize data and information due to the
occurrence of the year 2000 or the inclusion
of dates on or after January 1, 2000.
(b) Words importing the singular number only shall include the
plural and vice versa. Words importing persons shall include companies, firms,
corporations and their respective successors and assigns.
8
(c) All accounting terms not specifically defined herein shall
be construed in accordance with generally accepted accounting principles as in
effect from time to time in the United States of America ("GAAP") consistently
applied and all financial data submitted pursuant to this Agreement shall be
prepared in accordance with GAAP.
2. REPRESENTATIONS, COVENANTS AND WARRANTIES
The Company hereby represents, covenants and warrants as
follows:
(a) The Company is duly incorporated, validly existing and in
good standing under the laws of the Cayman Islands without limitation on the
duration of its existence. Each of the Initial Guarantors is a corporation or a
company duly organized or incorporated, validly existing and in good standing
under the laws of its jurisdiction of incorporation without limitation on the
duration of its existence. The Company and each of the Initial Guarantors have
the corporate power and authority to lease their respective properties and to
carry on their respective businesses as now being conducted and to execute,
deliver and perform their respective obligations under this Agreement (which
term as used herein includes the Consent and Agreement of the Initial Guarantors
annexed hereto) and under each of the documents executed or to be executed
thereby as contemplated herein; and this Agreement and each of such documents
when executed and delivered will constitute the legal, valid and binding
obligation of the Company and/or the Initial Guarantor or Guarantors as is a
party hereto, as the case may be, enforceable in accordance with their
respective terms.
(b) Conifer is the sole owner of the 1975 built, 7,923 dwt
Cypriot flag vessel CLIPPER ATLANTIC, gross tonnage 6,157, net tonnage 3,004,
Official No. 708620 and RCS No. 6259.
(c) Ivy is the sole owner of the 1978 built, 16,560 dwt
Liberian flag vessel CLIPPER GOLDEN HIND, Official No. 10245.
(d) Rapid is the sole owner of the 1978 built, 16,711 dwt
Panamanian flag vessel CLIPPER HARMONY.
(e) Topscale is the sole owner of the 1976 built, 7,923 dwt
Cypriot flag vessel CLIPPER PACIFIC, gross tonnage 6,157, net tonnage 3,004,
Official No. 708918 and RCS No. 6465.
(f) Oakmont is the sole owner of the 1973 built, 55,057 dwt
Panamanian flag vessel ▇▇▇▇▇▇ ▇▇▇▇▇▇▇.
(g) Each of the Initial Vessels is in good condition, working
order and repair and is classed by an Approved Classification Society with
respect to hull and machinery in the highest classification and rating for
vessels of the same age and type.
(h) There are no actions, suits or proceedings (in arbitration
or otherwise) pending or, to the knowledge of the Company, threatened against or
affecting the Company or any of the
9
Initial Guarantors or their respective properties, at law, in equity or in
admiralty, before any court or before or by any federal, state, municipal or
other governmental department, commission, board, bureau, agency or other
instrumentality, domestic or foreign, or before any privately constituted panel,
which may result in (i) any material adverse change in the business, operations,
properties or assets or in the condition, financial or otherwise, of any
thereof, or (ii) any liability which could materially impair their respective
abilities to satisfy their respective obligations; and none thereof is in
default with respect to any order, writ, decision, injunction, decree or demand
of any court or federal, state, municipal or other governmental department,
commission, board, bureau, agency or other instrumentality, domestic or foreign,
or of any privately constituted panel.
(i) The consummation of the transactions herein contemplated
and the fulfillment of the terms hereof and the compliance by the Company and
each of the Initial Guarantors with all of the terms and provisions of this
Agreement and of the other documents contemplated herein will not (i) violate or
conflict with any provision of law, statute, rule, regulation, treaty or
convention or any order, writ, injunction, license, permit, ruling, regulation,
decree or judgment of any court or governmental or regulatory body, agency,
commission, tribunal or other authority of the Cayman Islands, the Republic of
Panama, the Republic of Liberia, the Republic of Cyprus, the United States of
America or the State of New York, (ii) result in, or require, the creation or
imposition of any mortgage, lien, pledge, assignment, charge, security interest
or other encumbrance on any of the properties or assets of any thereof, now
owned or hereafter acquired, except in favor of the Collateral Agent or the
Trustee pursuant to the terms of this Agreement and the Indenture, (iii) violate
or conflict with the Memorandum or Articles of Association or the Articles of
Incorporation or Bylaws, as the case may be, of any thereof or (iv) violate or
conflict with, or constitute, with the giving of notice or lapse of time, or
both, a default under, the terms, conditions or provisions or any agreement,
judgment, injunction, order, decree or other instrument to which any thereof is
a party or by which any thereof is bound or to which any of the properties,
assets or businesses of any thereof are subject.
(j) No consent, license, approval or authorization of any
nature of, or other formal action by, any governmental authority, bureau or
agency is or will be required to be obtained by the Company or the Initial
Guarantors in connection with the execution, delivery, validity or performance
of this Agreement or any of the documents referred to herein or the carrying out
of the transactions contemplated hereby or thereby except as shall have been
duly and timely obtained.
(k) Neither the Company nor any of the Initial Guarantors is
in violation of any material provision of applicable law or of any decree or
order of any court or of any government or governmental agency or official,
domestic or foreign, or of any material provision of any indenture, agreement or
other instrument to which any thereof is a party or by which any thereof or any
of their respective properties may be bound or affected.
(l) Neither the Company nor any of the Initial Guarantors (i)
is a national of any foreign country designated in Presidential Executive Order
▇▇. ▇▇▇▇, ▇▇. ▇▇▇▇▇, No. 12722, ▇▇. ▇▇▇▇▇, ▇▇. ▇▇▇▇▇ or ▇▇. ▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇, as amended, respectively, within the meaning of any of said
Executive Orders, as amended, or any regulations thereunder, (ii) is presently
in violation of any of the provisions of any of said Executive Orders, (iii) is
a national of any designated foreign country within the meaning of the Foreign
Assets Control Regulations of
10
the United States of America (Title 31, Code of Federal Regulations, Chapter V,
Part 500, as amended) or the Cuban Assets Control Regulations of the United
States of America (Title 31, Code of Federal Regulations, Chapter V, Part 515,
as amended), or (iv) is presently in violation of any of the provisions of said
Foreign Assets Control Regulations, as amended, any of the provisions of said
Cuban Assets Control Regulations, as amended, any of the provisions of the
Libyan Assets Control Regulations of the United States of America (Title 31,
Code of Federal Regulations, Chapter V, Part 550, as amended), any of the
provisions of the Iranian Transactions Regulations of the United States of
America (Title 31, Code of Federal Regulations, Chapter V, Part 560, as
amended), any of the provisions of the Iraqi Sanctions Regulations of the United
States of America (Title 31, Code of Federal Regulations, Chapter V, Part 575)
or any of the provisions of the Regulations of the United States of America
Governing Transactions in Foreign Shipping of Merchandise (Title 31, Code of
Federal Regulations, Chapter V, Part 505, as amended).
(m) No default exists and no event has occurred which, with
the giving of notice or lapse of time, or both would constitute a material
default under any material instrument or agreement to which the Company or any
of the Initial Guarantors is a party or by the terms of which any thereof or any
of their respective properties may be bound.
(n) The execution and delivery of this Agreement and all
documents contemplated herein to which the Company or any of the Initial
Guarantors is or is to be a party and the carrying out of the transactions
contemplated hereby and thereby have been duly authorized by all proper
corporate action by the Company and the Initial Guarantors.
(o) The financial statements of the Company and its
subsidiaries (including certain of the Initial Guarantors), heretofore furnished
to the Bank, are complete and correct and present fairly in accordance with GAAP
the financial condition of the Guarantor and its subsidiaries as at the dates of
such statements and the results of their operations for the periods covered
thereby.
(p) All of the issued and outstanding shares of the capital
stock of the Company have been duly authorized, are validly issued and are fully
paid and nonassessable and are owned free of any liens, charges or other
encumbrances thereon or affecting title thereto.
(q) Neither the Company nor any of the Initial Guarantors now
maintains, or in the future will maintain, any office in the United States of
America or now maintains, or will in the future maintain, any financial records
in the United States of America outside the State of New York, County of New
York and neither the Company nor any of the Initial Guarantors has any security
agreements or financing statements outstanding under the Uniform Commercial Code
of any state of the United States of America with respect to its assets.
(r) None of the proceeds of any of the Loans shall be used to
purchase or carry, or to reduce or retire or refinance any credit incurred to
purchase or carry, any margin stock (within the meaning of Regulations U and X
of the Board of Governors of the Federal Reserve System) or to extend credit to
others for the purpose of purchasing or carrying any margin stock. If requested
by the Bank, the Company will furnish to the Bank statements in conformity with
the requirements of Federal Reserve Form U-1 referred to in said Regulation U.
11
(s) The Company and the Initial Guarantors have filed all tax
returns required to be filed thereby and have paid all taxes payable thereby
which have become due, other than those not yet delinquent or the nonpayment of
which would not have a material adverse effect thereon and except for those
taxes being contested in good faith and by appropriate proceedings or other acts
and for which adequate reserves have been set aside on the books thereof.
(t) There is no tax, duty, fee, assessment or other
governmental charge, or any deduction or withholding, imposed by the Cayman
Islands, the Republic of Panama, the Republic of Liberia or the Republic of
Cyprus or any political subdivision or taxing authority of any thereof or
therein (i) on or by virtue of the execution, delivery, acquisition,
registration or enforcement of this Agreement, the Note or any of the Collateral
Documents or (ii) on any payment to be made by the Company or any of the Initial
Guarantors pursuant to this Agreement, the Note or any of the Collateral
Documents.
(u) To ensure the enforceability or admissibility in evidence
of this Agreement, the Note or any of the Collateral Documents, it is not
necessary that this Agreement, the Note or any of the Collateral Documents be
filed or recorded with any court or other authority in the Cayman Islands, the
Republic of Panama, the Republic of Liberia or the Republic of Cyprus, except
for the recording of each of the CLIPPER HARMONY Mortgage and the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Mortgage in the Republic of Panama, the recording of the CLIPPER GOLDEN HIND
Mortgage in the Republic of Liberia and the recording of each of the CLIPPER
ATLANTIC Mortgage and the CLIPPER PACIFIC Mortgage in the Republic of Cyprus.
(v) (i) The Company and each of the Initial Guarantors is now
and will continue to be, to the extent required, in full compliance with all
applicable Environmental Laws; (ii) the Company and each of the Initial
Guarantors now has and will continue to have, to the extent required, all
necessary Environmental Approvals required under applicable Environmental Laws
to operate their respective businesses as now or then being conducted, is now
and will continue to be, to the extent required, in full compliance with all
Environmental Approvals; (iii) neither the Company nor any of the Initial
Guarantors has received any notice, claim, action, cause of action,
investigation or demand by any person, entity, enterprise or government,
political subdivision, intergovernmental body or agency, department or
instrumentality thereof alleging potential liability for, or a requirement to
incur, investigatory costs, cleanup costs, response and/or remedial costs
(whether incurred by a governmental entity or otherwise) in connection with,
natural resources damages, property damages, personal injuries, attorneys' fees
and expenses, or fines or penalties, in each case arising out of, based on or
resulting from any Environmental Claim (other than Environmental Claims that
have been fully and finally adjudicated or otherwise determined and all fines,
penalties and other costs, if any, payable by the Company and/or the Initial
Guarantors in respect thereof have been paid in full); and (iv) there are no
circumstances that may prevent or interfere with such full compliance in the
future.
(w) There is no Environmental Claim pending or, to the
knowledge of the Company, threatened against the Company or any of the Initial
Guarantors.
(x) There are no past or present actions, activities,
circumstances, conditions, events or incidents, including, without limitation,
the release, emission, discharge or disposal of any
12
Material of Environmental Concern, that could form the basis of any
Environmental Claim against the Company or any of the Initial Guarantors.
(y) The Company and each of the Initial Guarantors have
reviewed the effect of the Year 2000 Issue on the computer software, hardware
and firmware systems and equipment containing embedded microchips owned or
operated by or for the Company or the Initial Guarantors or used or relied upon
in the conduct of their business (including systems and equipment supplied by
others or with which such computer systems of the Company or the Initial
Guarantors interface). The costs to the Company and the Initial Guarantors of
any reprogramming required as a result of the Year 2000 Issue to permit the
proper functioning of such systems and equipment and the proper processing of
data, and the testing of such reprogramming, and of the reasonably foreseeable
consequences of the Year 2000 Issue to the Company and the Initial Guarantors
(including reprogramming errors and the failure of systems or equipment supplied
by others) are not reasonably expected to result in an Event of Default or to
have a material adverse effect on the business, assets, operations, prospects or
condition (financial or otherwise) of the Company or the Initial Guarantors.
(z) Each of Conifer, Ivy, Oakmont, Rapid, Topscale or the
Manager, as the case may be, has obtained a DOC for itself and a SMC for each of
the Initial Vessels.
All representations, covenants and warranties made herein and
in any certificate or other document delivered pursuant hereto or in connection
herewith shall survive the execution and delivery of this Agreement, the making
of the Loans to be made by the Bank hereunder and the issuance of the Note to be
issued by the Company hereunder.
3. THE LINE OF CREDIT
(a) Subject to the terms and conditions hereof, and in
reliance upon the foregoing representations, covenants and warranties and each
of them, the Bank agrees to establish on the date hereof and make available to
the Company at and through one or more of its offshore branches or through its
international banking facility, such branch, branches or facility to be selected
at the option of the Bank, a line of credit, in offshore dollars of the United
States of America, pursuant to which the Company may make borrowings, not to
exceed in the aggregate at any one time outstanding $7,000,000; provided,
however, that during the period from January , 1999 through the Final Payment
Date, there shall be no Loans outstanding under this Agreement for a period of
at least 30 consecutive days. Each Loan shall be in a minimum amount of $250,000
and shall be evidenced by the Note. Within the limit of this Section 3(a) and
upon the conditions herein provided, the Company may from time to time borrow
pursuant to this Section 3(a), repay such borrowings pursuant to Section 5 and
reborrow pursuant to this Section 3(a).
(b) The proceeds of the Loans shall be utilized solely and
exclusively to provide working capital to the Company, for operating expenses
and to pay interest on the Senior Secured Notes.
(c) The Company shall give to the Bank at least three Business
Days' prior written notice (the "Drawdown Notice"), substantially in the form
set out in Schedule 1 or in such other form as the Bank may agree, of the
Business Day on which any Loan is to be made, which
13
notice shall (i) be in writing addressed to the Bank, (ii) be effective upon
receipt by the Bank as aforesaid, provided it is received before 11:00 a.m. New
York time (otherwise it shall be deemed to have been received on the next
Business Day), (iii) specify the Business Day on which the Loan is to be drawn
down and the initial Interest Period, (iv) specify the disbursement instructions
and (v) be irrevocable.
(d) Each Drawdown Notice shall be deemed to constitute a
warranty by the Company (a) that the representations and warranties stated in
Section 2 and in each of the Guarantees then outstanding (updated MUTATIS
MUTANDIS in each instance) are true and correct on the date of such Drawdown
Notice and will be true and correct on the relevant Drawdown Date as if made on
such date, and (b) that no Event of Default or any event which with the giving
of notice or lapse of time, or both, would constitute an Event of Default has
occurred and is continuing.
(e) Each Loan made by the Bank to the Company may be evidenced
by a notation of the same made by the Bank on the grid attached to the Note,
which notation, absent manifest error, shall be PRIMA FACIE evidence of the
amount of the relevant Loan.
(f) Anything heretofore to the contrary notwithstanding, the
obligation of the Bank to make Loans hereunder, if not previously terminated,
shall terminate immediately and without notice to the Company if any change in
applicable law (which expression as used in this Section includes statutes and
regulations thereunder by any competent court or by any governmental body or
official charged with the administration thereof) shall make it unlawful for the
Bank to comply with its obligations hereunder, but no such termination shall
prejudice the rights of the Bank acquired prior thereto or impair the
obligations of the Company hereunder.
(g) The Company covenants and agrees to pay to the Bank on the
date of the making of the initial Loan hereunder a financing fee of $35,000.
(h) The Company also covenants and agrees to pay to the Bank a
commitment fee computed at the rate of 3/8 of 1% per annum from the date hereof
on the unused portion of the line of credit facility from time to time available
under subsection (a) of this Section 3, such commitment fee to be payable
quarterly in arrears commencing October , 1998 and on the Final Payment Date.
4. THE SECURITY
The obligations of the Company to the Bank hereunder and under
the Note and of the Guarantors to the Bank under the Guarantees shall be secured
by the Collateral Property being mortgaged or assigned to the Collateral Agent
pursuant to the Collateral Documents, and each of the Collateral Documents shall
be in form and substance satisfactory to the Bank.
5. CONDITIONS
(a) The obligation of the Bank to make the initial Loan under
subsection (a) of Section 3 shall be subject to the following conditions
precedent:
14
(i) All representations and warranties of the Company
contained in Section 2 or of any of the Initial Guarantors contained in
any of the Collateral Documents shall be true on and as of the date of
the making of such Loan, with the same effect as though made on such
date, except as the same may be changed by the transactions
contemplated by this Agreement, and any consents, licenses, approvals
or authorizations required by subsection (j) of Section 2 to have been
obtained on or before such date shall have been duly and timely
obtained, and the Bank shall have received a certificate of a duly
authorized officer, director or attorney-in-fact of the Company to such
effect.
(ii) The Company shall have performed all agreements required
to be performed thereby on or before the date of the making of such
Loan under this Agreement and under the documents contemplated herein
to which it is or is to be a party; and no Event of Default or event
which, with the giving of notice or lapse of time, or both, would
become an Event of Default shall have occurred and be continuing or
will have occurred immediately upon or after the making of such Loan,
and the Bank shall have received a certificate of a duly authorized
officer, director or attorney-in-fact of each of the Company to such
effect.
(iii) The CLIPPER ATLANTIC (A) shall be owned by Conifer free
and clear of all liens, charges or other encumbrances except for (1)
the CLIPPER ATLANTIC Mortgage, (2) liens for crew's wages remaining
unpaid in accordance with reasonable commercial practices, (3) liens
for the costs of fuel, supplies and other services furnished thereto in
the ordinary course of business (none of the suppliers thereof having
evidenced an intention to enforce any such liens), (4) liens for
repairs and tort claims fully covered by insurance as to which coverage
has been acknowledged by the applicable insurer and (5) liens for
repairs and tort claims not fully covered by such insurance, in the
aggregate not to exceed $200,000, and the Bank shall have received a
certificate of a duly authorized officer, director or attorney-in-fact
of Conifer to such effect, (B) shall be duly registered in the name of
Conifer under the laws of the Republic of Cyprus, (C) shall be duly
covered by insurance in compliance with the terms of the CLIPPER
ATLANTIC Mortgage, and the Bank shall have received evidence of such
coverage satisfactory to it, including a report or reports in
reasonable detail by independent marine insurance brokers (who may be
marine insurance brokers regularly employed by Conifer) with respect to
the insurances maintained with respect to the CLIPPER ATLANTIC and its
operation and the Bank shall be satisfied with such report or reports,
and (D) shall have the highest classification and rating of an Approved
Classification Society for vessels of the same age and type, as
evidenced by a certificate of such classification society as to such
classification and rating being in full force and effect without any
outstanding recommendations or requirements other than those consented
to, in writing, by the Bank.
(iv) The CLIPPER GOLDEN HIND (A) shall be owned by Ivy free
and clear of all liens, charges or other encumbrances except for (1)
the CLIPPER GOLDEN HIND Mortgage, (2) liens for crew's wages remaining
unpaid in accordance with reasonable commercial practices, (3) liens
for the costs of fuel, supplies and other services furnished thereto in
the ordinary course of business (none of the suppliers thereof having
evidenced an intention to enforce any such liens), (4) liens for
repairs and tort claims fully covered by insurance as to which coverage
has been acknowledged by the applicable insurer and (5) liens for
repairs and tort claims not fully covered by such insurance, in the
aggregate not
15
to exceed $200,000, and the Bank shall have received a certificate of a
duly authorized officer or attorney-in-fact of Ivy to such effect, (B)
shall be duly registered in the name of Ivy under the laws of the
Republic of Liberia, (C) shall be duly covered by insurance in
compliance with the terms of the CLIPPER GOLDEN HIND Mortgage, and the
Bank shall have received evidence of such coverage satisfactory to it,
including a report or reports in reasonable detail by independent
marine insurance brokers (who may be marine insurance brokers regularly
employed by Ivy) with respect to the insurances maintained with respect
to the CLIPPER GOLDEN HIND and its operation and the Bank shall be
satisfied with such report or reports, and (D) shall have the highest
classification and rating of an Approved Classification Society for
vessels of the same age and type, as evidenced by a certificate of such
classification society as to such classification and rating being in
full force and effect without any outstanding recommendations or
requirements other than those consented to, in writing, by the Bank.
(v) The CLIPPER HARMONY (A) shall be owned by Rapid free and
clear of all liens, charges or other encumbrances except for (1) the
CLIPPER HARMONY Mortgage, (2) liens for crew's wages remaining unpaid
in accordance with reasonable commercial practices, (3) liens for the
costs of fuel, supplies and other services furnished thereto in the
ordinary course of business (none of the suppliers thereof having
evidenced an intention to enforce any such lien), (4) liens for repairs
and tort claims fully covered by insurance as to which coverage has
been acknowledged by the applicable insurer and (5) liens for repairs
and tort claims not fully covered by such insurance, in the aggregate
not to exceed $200,000, and the Bank shall have received a certificate
of a duly authorized officer or attorney-in-fact of Rapid to such
effect, (B) shall be duly registered in the name of Rapid under the
laws of the Republic of Panama, (C) shall be duly covered by insurance
in compliance with the terms of the CLIPPER HARMONY Mortgage, and the
Bank shall have received evidence of such coverage satisfactory to it,
including a report or reports in reasonable detail by independent
marine insurance brokers (who may be marine insurance brokers regularly
employed by Rapid) with respect to the insurances maintained with
respect to the CLIPPER HARMONY and its operation, and the Bank shall be
satisfied with such report or reports, and (D) shall have the highest
classification and rating of an Approved Classification Society for
vessels of the same age and type, as evidenced by a certificate of such
classification society as to such classification and rating being in
full force and effect without any outstanding recommendations or
requirements other than those consented to, in writing, by the Bank.
(vi) The CLIPPER PACIFIC (A) shall be owned by Topscale free
and clear of all liens, charges or other encumbrances except (1) the
CLIPPER PACIFIC Mortgage, (2) liens for crew's wages remaining unpaid
in accordance with reasonable commercial practices, (3) liens for the
costs of fuel, supplies and other services furnished thereto in the
ordinary course of business (none of the suppliers thereof having
evidenced an intention to enforce any such lien), (4) liens for repairs
and tort claims fully covered by insurance as to which coverage has
been acknowledged by the applicable insurer and (5) liens for repairs
and tort claims not fully covered by such insurance, in the aggregate
not to exceed $200,000, and the Bank shall have received a certificate
of a duly authorized officer, director or attorney-in-fact of Topscale
to such effect, (B) shall be duly registered in the name of Topscale
under the laws of the Republic of Cyprus, (C) shall be duly covered by
insurance in compliance with
16
the terms of the CLIPPER PACIFIC Mortgage, and the Bank shall have
received evidence of such coverage satisfactory to it, including a
report or reports in reasonable detail by independent marine insurance
brokers (who may be marine insurance brokers regularly employed by
Topscale) with respect to the insurances maintained with respect to the
CLIPPER PACIFIC and its operation, and the Bank shall be satisfied with
such report or reports, and (D) shall have the highest classification
and rating of an Approved Classification Society for vessels of the
same age and type, as evidenced by a certificate of such classification
society as to such classification and rating being in full force and
effect without any outstanding recommendations or requirements other
than those consented to, in writing, by the Bank.
(vii) The ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ (A) shall be owned by Oakmont free
and clear of any liens, charges or other encumbrances except for (1)
the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage, (2) liens for crew's wages remaining
unpaid in accordance with reasonable commercial practices, (3) liens
for the costs of fuel, supplies and other services furnished thereto in
the ordinary course of business (none of the suppliers thereof having
evidenced an intention to enforce any such lien), (4) liens for repairs
and tort claims fully covered by insurance as to which coverage has
been acknowledged by the applicable insurer and (5) liens for repairs
and tort claims not so fully covered by such insurance, in the
aggregate not to exceed $200,000, and the Bank shall have received a
certificate of a duly authorized officer or attorney-in-fact of Oakmont
to such effect, (B) shall be duly registered in the name of Oakmont
under the laws of the Republic of Panama, (C) shall be duly covered by
insurance in compliance with the terms of the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage
and the Bank shall have received evidence of such coverage satisfactory
to it, including a report or reports in reasonable detail by
independent marine insurance brokers (who may be marine insurance
brokers regularly employed by Oakmont) with respect to the insurances
maintained with respect to the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and its operation, and
the Bank shall be satisfied with such report or reports, and (D) shall
have the highest classification and rating of an Approved
Classification Society for vessels of the same age and type, as
certified by a certificate of such classification society as to such
classification and rating being in full force and effect without any
outstanding recommendations or requirements other than those consented
to, in writing, by the Bank.
(viii) Each of the CLIPPER ATLANTIC Mortgage and the CLIPPER
PACIFIC Mortgage shall have been duly executed, delivered and recorded
and arrangements satisfactory to the Bank shall have been made with
special Cypriot counsel referred to in subparagraph (xvii) of this
subsection (a) of this Section 5 for the filing within 42 days of the
execution thereof with the Registrar of Companies in Nicosia, Cyprus of
a certified copy of each of the CLIPPER ATLANTIC Mortgage and the
CLIPPER PACIFIC Mortgage, and all other actions required to be taken
shall have been taken so as to constitute each of the CLIPPER ATLANTIC
Mortgage and the CLIPPER PACIFIC Mortgage a statutory first mortgage
lien on the CLIPPER ATLANTIC or the CLIPPER PACIFIC, as the case may
be, under the laws of the Republic of Cyprus and so that each of such
mortgages shall qualify as a preferred mortgage under Chapter 313 of
Title 46 of the United States Code (46 U.S.C.
ss.31301 ET SEQ.).
17
(ix) Each of the CLIPPER HARMONY Mortgage and the ▇▇▇▇▇▇
▇▇▇▇▇▇▇ Mortgage shall have been duly executed, delivered and
provisionally recorded and arrangements satisfactory to the Bank shall
have been made with special Panamanian counsel referred to in
subparagraph (xvii) of this subsection (a) of this Section 5 for the
permanent recordation thereof with the appropriate Panamanian
authorities and all other actions required to be taken shall have been
taken so as to constitute each of such mortgages a first naval mortgage
lien on the CLIPPER HARMONY or the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, as the case may be,
under the laws of the Republic of Panama and so that each of such
mortgages shall qualify as a preferred mortgage under Chapter 313 of
Title 46 of the United States Code (46 U.S.C. ss.31301 ET SEQ.).
(x) The CLIPPER GOLDEN HIND Mortgage shall have been duly
executed, delivered and recorded and all other actions required to be
taken shall have been taken so as to constitute the CLIPPER GOLDEN HIND
Mortgage a first preferred mortgage lien on the CLIPPER GOLDEN HIND
under the laws of the Republic of Liberia and so that the CLIPPER
GOLDEN HIND Mortgage shall qualify as a preferred mortgage under
Chapter 313 of Title 46 of the United States Code (46 U.S.C.ss.31301 ET
SEQ.).
(xi) Each of this Agreement, the Note, the Collateral Agency
and Intercreditor Agreement, the Initial Guaranty, the CLIPPER ATLANTIC
Insurances Assignment, the CLIPPER GOLDEN HIND Insurances Assignment,
the CLIPPER HARMONY Insurances Assignment, the CLIPPER PACIFIC
Insurances Assignment and the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Insurances Assignment
shall have been duly executed and delivered and shall be in full force
and effect and arrangements satisfactory to the Bank shall have been
made with special Cypriot counsel referred to in subparagraph (xvii) of
this subsection (a) of this Section 5 for the filing within 42 days of
execution thereof with the Registrar of Companies in Nicosia, Cyprus of
a certified copy of the CLIPPER ATLANTIC Insurances Assignment and the
CLIPPER PACIFIC Insurances Assignment.
(xii) The Bank shall have received evidence satisfactory to it
that $100,000,000 of Senior Secured Notes have been issued under terms
and conditions satisfactory to the Bank in all respects.
(xiii) The Bank shall have received payment in full of the
fees and expenses due to the Bank on or prior to the date thereof,
including, without limitation, the financing fee due under Section
3(g).
(xiv) No material adverse change shall have occurred and be
continuing in the business, operations or financial condition of the
Company or any of the Initial Guarantors since the date of the last
financial statements of the Company and its subsidiaries heretofore
delivered to the Bank which in the reasonable opinion of the Bank, if
not remedied, would prevent or materially impair the ability of the
Company or any of the Initial Guarantors to comply with any of their
respective material obligations under this Agreement, under the Note or
under any of the Collateral Documents.
18
(xv) The Bank shall have received (A) a Drawdown Notice, (B)
certified copies of all corporate action taken by the Company and by
each of the Initial Guarantors to authorize the transactions herein
contemplated and (C) such other documents as the Bank shall reasonably
request, and all instruments and proceedings incident to the making of
such Loan shall be satisfactory in form and substance to the Bank.
(xvi) All corporate proceedings and all other legal matters
(including the form and sufficiency of documents) incident to the
making of such Loan shall have been found satisfactory by Messrs.
▇▇▇▇▇▇ & ▇▇▇▇▇▇, special counsel for the Bank.
(xvii) The Bank shall have received from Messrs. Thacher,
▇▇▇▇▇▇▇ & ▇▇▇▇, counsel for the Company and the Initial Guarantors,
from Messrs. ▇▇▇▇▇▇ and Calder, special Cayman Islands Counsel, from
Messrs. ▇▇▇▇▇▇ ▇▇▇▇▇▇ & Asvat, special Panamanian counsel, and from
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ Law Offices, special Cypriot counsel, favorable
opinions, satisfactory in scope, form and substance to the Bank and its
counsel, as to all legal matters incident to the making of such Loan,
including, but not limited to, (A) the due organization, existence and
good standing of the Company and of each of the Initial Guarantors, (B)
the corporate power, authority and legal right of the Company and of
each of the Initial Guarantors to execute, deliver and perform their
respective obligations under this Agreement and under each of the
documents referred to herein to which such corporation is a party, (C)
the due authorization of all acts and things to be done by the Company
and by each of the Initial Guarantors in connection with the
transactions hereby contemplated, (D) the due execution and delivery
and the validity, binding effect and enforceability of this Agreement,
the Note and those of the Collateral Documents being executed and
delivered on the date of the making of such Loan, (E) the due
registration of the CLIPPER ATLANTIC and the title thereto of Conifer,
subject to no liens or other encumbrances of record, except the CLIPPER
ATLANTIC Mortgage, (F) the status of the CLIPPER ATLANTIC Mortgage as a
valid and perfected statutory first mortgage lien on the CLIPPER
ATLANTIC under the laws of the Republic of Cyprus, (G) the due
registration of the CLIPPER GOLDEN HIND and the title thereto of Ivy,
subject to no liens or other encumbrances of record, except the CLIPPER
GOLDEN HIND Mortgage, (H) the status of the CLIPPER GOLDEN HIND
Mortgage as a valid and perfected first preferred mortgage lien on the
CLIPPER GOLDEN HIND under the laws of the Republic of Liberia, (I) the
due registration of the CLIPPER HARMONY and the title thereto of
Topscale, subject to no liens or other encumbrances of record, except
the CLIPPER HARMONY Mortgage, (J) the status of the CLIPPER HARMONY
Mortgage as a valid and perfected first naval mortgage lien on the
CLIPPER HARMONY under the laws of the Republic of Panama, (K) the due
registration of the CLIPPER PACIFIC and the title thereto of Rapid,
subject to no liens or other encumbrances of record, except the CLIPPER
PACIFIC Mortgage, (L) the status of the CLIPPER PACIFIC Mortgage as a
valid and perfected statutory first mortgage lien on the CLIPPER
PACIFIC under the laws of the Republic of Cyprus, (M) the due
registration of the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and the title thereto of Oakmont,
subject to no liens or other encumbrances of record, except the ▇▇▇▇▇▇
▇▇▇▇▇▇▇ Mortgage and (N) the status of the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage as a
valid and perfected first naval mortgage lien on the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
under the laws of the Republic of Panama.
19
(b) The obligation of the Bank to make any other Loan
available to the Company hereunder shall be subject to receipt by the Bank of a
Drawdown Notice and to the matters certified therein being true as of the date
of the making of such Loan.
6. REPAYMENT, PREPAYMENT AND REDUCTION OF FACILITY
(a) Each Loan may be repaid at any time and from time to time
(in multiples of $100,000) on not less than two Business Days' notice to the
Bank (which notice shall be irrevocable) specifying the amount and date of
repayment and must be paid on or before the Final Payment Date.
(b) In the event of a sale or Total Loss of any of the Vessels
and the proceeds from such sale or Total Loss are required pursuant to the terms
of the Indenture to prepay a portion of the Senior Secured Notes, if the
Company, at its option, uses any portion of the net cash proceeds of a public
equity offering to prepay a portion of the Senior Secured Notes or the Company
is required to redeem a portion of the principal amount due under the Senior
Secured Notes from amounts on deposit in the Escrow Account (as such term is
utilized in the Offering Circular) then, in any such case, such proceeds or
amounts on deposit in the Escrow Account, as the case may be, shall be utilized
on a pro rata basis to prepay the Senior Secured Notes and to repay the
outstanding Loans (any amount so repaid not to be available for further
borrowings) hereunder and/or permanently reduce the amount then available for
additional Loans under Section 3(a), Company's option.
(c) In the event of any repayment under subsection (a) of this
Section or any prepayment under subsection (b) of this Section, under Section 9
or under the terms of any of the Collateral Documents, the Company shall include
with such repayment of prepayment interest on the amount repaid or prepaid to
the date of such repayment or prepayment and shall also hold the Bank harmless
for the amount of any loss of interest or other costs incurred by the Bank in
respect of such repayment or prepayment for the balance of the applicable
Interest Period or Periods in effect with respect to the amount repaid or
prepaid.
(d) The Company shall have the right, at any time and from
time to time, upon giving to the Bank not less than three Business Days' prior
written notice (which notice shall be irrevocable) to terminate in whole, or
permanently reduce the available unused portion of, the line of credit
established under Section 3(a); provided, however, that each partial reduction
shall be in a minimum amount of $250,000.
7. INTEREST
(a) The Loans shall bear interest for each day on the
principal amounts thereof from time to time outstanding from the date of the
making of the initial Loan hereunder until the Final Payment Date, at the
Applicable Rate, which shall be the rate per annum which is equal to LIBOR for
the applicable Interest Period, plus 1-1/2% (the "Margin").
(b) Any payment with respect to the Loans not paid when due,
whether on the Final Payment Date, by acceleration or otherwise, shall bear
interest thereafter at a rate per annum equal to the Applicable Rate in effect
with respect to such payment at the time of such default, plus
20
2% (the "Default Rate"), or, if the Bank so elects, in its sole option, the
Default Rate shall be the Alternate Base Rate, plus 2%.
(c) The Company may select an applicable interest period or
periods of 1, 3 and 6 months (or such other duration as shall be mutually
acceptable to the Company and the Bank) (each an "Interest Period"), provided,
however, that no Interest Period may extend beyond the Final Payment Date. The
Company shall give the Bank an Interest Notice at least three Business Days
prior to the end of any then existing Interest Period, which Interest Notice
shall set forth the Interest Period or Periods selected. If at the end of any
then existing Interest Period, the Company fails to give an Interest Notice as
provided in the preceding sentence, the following Interest Period shall have a
duration of the lesser of (i) 3 months and (ii) the number of days remaining
until the Final Payment Date. The Company's right to select an Interest Period
shall be further subject to the restriction that no selection of an Interest
Period shall be effective unless the Bank is satisfied that the necessary funds
will be available to the Bank for such period and the Bank is satisfied that no
Event of Default or event which with the giving of notice or lapse of time, or
both, would constitute an Event of Default shall have occurred and be
continuing.
(d) The Company covenants and agrees that it will pay interest
on each of the Loans (each an "Interest Payment Date") on the last day of each
Interest Period and, if any Interest Period exceeds three months, also on each
three month anniversary of the date of the commencement of such Interest Period.
In each case, interest shall be payable on each Interest Payment Date only on
the portion of the Loans covered by such Interest Period and/or Periods and/or
covered by such Interest Period and/or Periods having a duration in excess of
three months.
(e) Interest shall be computed on the actual number of days
elapsed on the basis of a 360 day year.
(f) Nothing contained in this Agreement or in the Note shall
require the Company to pay interest at a rate exceeding the maximum rate
permitted by applicable law. If the interest payable to the Bank on any Interest
Payment Date shall exceed the maximum permissible amount, it shall be
automatically reduced to the maximum permissible amount, and interest for any
subsequent period, to the extent less than that permitted by applicable law,
shall, to that extent, be increased by the amount of such reduction.
8. PAYMENTS
All payments of the principal, interest and other amounts
payable upon or in respect of the Loans shall be made to the Bank, in
immediately available funds, at its office at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇ ▇▇▇▇▇, Attention: Marine Transportation Division, for the account of the
designated lending office, or at such other office of the Bank as the Bank shall
direct. Whenever any payment to be made hereunder or under the Note shall be due
on a day other than a Business Day (unless the next succeeding Business Day
falls in the next calendar month, in which event such payment shall be made on
the next preceding Business Day), such payment may be made on the next
succeeding Business Day and any extension of time shall be included in computing
interest with respect to such payment. All payments shall be made without
set-off or counterclaim and free and clear of, and without deduction for, any
taxes, levies, imposts, duties, charges, fees, deductions,
21
withholdings, restrictions or conditions of any nature heretofore or hereafter
imposed by any governmental authority or by any political subdivision thereof or
taxing authority therein, unless the Company is compelled by law to make such
deduction or withholding. In the event that any such obligation is imposed upon
the Company, the Company will pay to the Bank such additional amount as may be
necessary to enable the Bank to receive the same net amount (after taking into
account any credit, repayment, relief or rebate in respect of taxation by the
taxing authority imposing any such tax or duty which the Bank may be entitled to
claim, as reasonably determined by the Bank, arising directly or indirectly as a
result of any such deduction as aforesaid) which the Bank would have received if
no such obligation had been imposed; provided that the foregoing provisions of
this sentence shall not apply in the case of amounts deducted from interest in
respect of taxes charged upon or by reference to the income, profits or gains of
the Bank and imposed by the United States of America or the State or City of New
York. The Company agrees that it will pay and save the Bank harmless from all
liabilities with respect to or resulting from any delay or omission to pay any
such tax, levy, impost, duty, charge or fee or to make any such deduction or
withholding required by law. The obligations of the Company under this Section 8
shall survive the termination of this Agreement and the repayment in full of the
Loans.
9. ILLEGALITY, INCREASED COST, NON-AVAILABILITY, ETC.
(a) In the event that by reason of any change in any
applicable law, regulation or regulatory requirement or in the interpretation
thereof the Bank has a reasonable basis to conclude that it has become unlawful
for the Bank to maintain or give effect to its obligations as contemplated by
this Agreement, the Bank shall inform the Company to that effect whereafter the
Company shall be required to prepay immediately the then outstanding Loans. In
any such event, but without prejudice to the aforesaid obligation of the Company
to prepay the outstanding Loans, the Company and the Bank shall negotiate in
good faith with a view to agreeing on terms for making the Loans available from
another jurisdiction or otherwise restructuring the Loans on a basis which is
not unlawful.
(b) If after the date of this Agreement any change in
applicable law, regulation, directive or request (whether or not having the
force of law) or in the interpretation thereof by any governmental authority
charged with the administration thereof shall (i) subject the Bank to any taxes
imposed by any jurisdiction on the debt acquisition of a foreign obligor, (ii)
materially change the basis of taxation of payments of principal of or interest
on the Loans (except for taxes charged in respect of or by reference to the
income, profits or gains of the Bank and imposed by the United States of America
or the State or City of New York), (iii) impose or increase or render applicable
any official reserve, special deposit, assessment, capital adequacy or other
requirements against foreign assets held by or deposits in or for the account of
or loans or commitments to make loans by an office of the Bank or (iv) impose on
the Bank any other condition or requirement with respect to this Agreement or
the Note, the result of which is (A) to increase by an amount deemed material by
the Bank the cost to the Bank of making or carrying the Loans, (B) to reduce the
amount of any payment (whether principal, interest or otherwise) received or
receivable by the Bank hereunder or under the Note by an amount deemed material
by the Bank or (C) to otherwise reduce the rate of return to the Bank by an
amount deemed material by the Bank then the Company, upon receipt of notice from
the Bank of such change in law, regulation, directive, request or interpretation
and a demand by the Bank arising therefrom, will pay to the Bank, in lawful
money of the United States
22
of America, an amount or amounts (in addition to the principal and interest
payable hereunder and under the Note) sufficient to compensate the Bank for the
additional cost or reduction which the Bank incurs or suffers subsequent to the
date of receipt of such notice by the Company by virtue of such change in
applicable law, regulation, directive, request or interpretation. A certificate
signed by an officer of the Bank setting forth the additional amount or amounts
required, submitted to the Company, shall be conclusive evidence thereof. The
obligations of the Company under this Section 9(b) shall survive the termination
of this Agreement and the repayment in full of the Loans.
(c) Notwithstanding anything to the contrary contained in this
Agreement or in the Note, if the Bank shall determine that, by reason of
circumstances affecting the London interbank market generally, adequate and
reasonable means do not and will not exist for ascertaining the Applicable Rate
for any Interest Period, the Bank shall give notice of such determination to the
Company. The Company and the Bank shall then negotiate in good faith in order to
agree upon a mutually agreeable basis for funding the Loan or Loans in question
and/or for determining the interest rate and/or Interest Period(s) to be
substituted for those which would otherwise have applied under this Agreement.
If the Company and the Bank are unable to agree upon such a substituted funding
base, interest rate and/or Interest Period(s) within 30 days of the giving of
such notice, the Company shall repay the Loans, or the relevant portion hereof,
as the case may be, to the Bank immediately; provided, however, that if the
Company fails to make such repayment, the Bank shall determine a funding basis,
set an interest rate and/or set an Interest Period(s), as the case may be, all
to take effect from the expiration of the relevant Interest Period(s) in effect
at the date of said determination notice, which rate shall be equal to the
aggregate of the Margin and the cost to the Bank of funding the relevant Loan or
Loans.
10. AFFIRMATIVE COVENANTS
From the date hereof and until payment in full of the
obligations of the Company to the Bank under this Agreement and under the Note,
the Company will:
(a) MAINTENANCE OF EXISTENCE. At all times maintain its
corporate existence and right to carry on business and do or cause to be done
all things necessary to preserve the Collateral Property and keep in full force
and effect each of the Collateral Documents.
(b) PERFORM AGREEMENTS. Observe and perform all the agreements
and conditions on its part to be observed and performed under this Agreement and
under the Note.
(c) MAINTENANCE OF BOOKS, RECORDS, PROVIDING OF FINANCIAL
STATEMENTS, ETC. Keep proper books of record and account into which full and
correct entries shall be made, in accordance with GAAP consistently applied
throughout the period during which this Agreement is in effect, and will
furnish, or cause to be furnished, to the Bank, at the sole expense of the
Company:
(i) within 120 days after the end of each fiscal year of the
Company (A) a consolidated balance sheet as at the end of such fiscal
year of the Company and of each of its vessel owning affiliates and (B)
consolidated statements of income and retained earnings of the Company
and each of its vessel owning affiliates for such fiscal year, setting
forth in each case in comparative form the corresponding figures as at
the end of and for the previous
23
fiscal year all in reasonable detail, unaudited, but certified as
correct by a chief financial officer of the Company to the best of his
knowledge and belief;
(ii) within 60 days after the end of each fiscal quarter of
the Company (A) a consolidated balance sheet as at the end of such
quarter of the Company and each of its vessel owning affiliates and (B)
consolidated statements of income and retained earnings of the Company
and each of its vessel owning affiliates for such quarter, unaudited,
but certified as correct by a chief financial officer of the Company to
the best of his knowledge and belief;
(iii) concurrently with each delivery of financial statements
pursuant to subparagraphs (i) and (ii) of this subsection, a
certificate of a principal executive officer of the Company, in form
and substance satisfactory to the Bank, stating that he has reviewed
the provisions of this Agreement, of the Note and of the Collateral
Documents and the performance or observance thereof and either stating
that to his knowledge no event has occurred and no condition exists
which constitutes or with the giving of notice or lapse of time, or
both, would constitute an Event of Default or if any such event has
occurred or condition exists, specifying the nature and period of
existence of such event or condition of which he has knowledge and what
action the Company is taking or proposes to take with respect thereto;
(iv) promptly upon the occurrence thereof, notice from the
principal executive officer of the Company of the occurrence of any
condition or event which constitutes an Event of Default or which, with
the giving of notice or lapse of time, or both, would constitute an
Event of Default specifying in such notice the nature and period of
such condition or event and what action the Company is taking or
proposes to take with respect thereto;
(v) promptly upon the institution thereof, notice from the
Company of any material litigation against, or investigation by any
public regulatory body or commission involving, the Company or any of
the Guarantors and, promptly upon the request of the Company, an
opinion of counsel as to the nature thereof and the extent of the
potential liability, if any, of the Company and/or any of the
Guarantors, as the case may be, in relation to the subject matter
thereof; and
(vi) with reasonable promptness, such other information
respecting its business, assets, financial condition and the results of
operations of the Company and the Guarantors as the Bank may from time
to time reasonably request, including, without limitation, all reports
(including all annual reports on Form 20-F and all 6-K reports) filed
by the Company with the United States Securities and Exchange
Commission, Vessel employment information, lists of operating expenses,
lists of all vessels owned or on order by the Company or by any of its
affiliates and statements as to total indebtedness of the Company and
its vessel owning affiliates.
(d) INSPECTION OF PROPERTY, BOOKS AND RECORDS. Allow any
representative or representatives designated by the Bank, subject to applicable
laws and regulations, to visit and inspect any of the properties of the Company
and, on request, to examine the books of account,
24
records, reports and other papers thereof (and to make copies thereof and to
take extracts therefrom) and to discuss the affairs, finances and accounts
thereof with its officers and executive employees all at such reasonable times
and as often as the Bank reasonably requests.
(e) PAYMENT OF TAXES. Pay and discharge, or cause to be paid
and discharged, all taxes, assessments and governmental charges or levies
imposed upon it or upon its income or property, prior to the date upon which
penalties attach thereto; PROVIDED, HOWEVER, that it shall not be required to
pay and discharge, or cause to be paid and discharged, any such tax, assessment,
charge or levy so long as the legality thereof shall be contested in good faith
and by appropriate proceedings or other acts and it shall set aside on its books
adequate reserves with respect thereto, and so long as such deferment in payment
shall not subject any of the Vessels to forfeiture or loss.
(f) NOTICE OF ACTIONS, SUITS, PROCEEDINGS AND ENVIRONMENTAL
CLAIMS:
(i) within 10 days after the commencement thereof, notify the
Bank in writing of any actions, suits or proceedings (in arbitration or
otherwise) commenced against the Company or any of the Guarantors at
law, in equity, in admiralty or before any governmental department,
commission, board, bureau, agency or other instrumentality, domestic or
foreign, which involves the possibility of any judgment or liability,
not fully covered by insurance as to which coverage has been
acknowledged by the appropriate insurers, in excess of $200,000 or
which may result in any material adverse change in the business,
operations, properties or assets or in the condition, financial or
otherwise, of any thereof;
(ii) within 5 Business Days after the occurrence of any of the
following conditions, provide the Bank with a certificate of an
authorized officer of the Company, and/or the affected Guarantor or
Guarantors, as the case may be, specifying in detail the nature of such
condition and its or their proposed response thereto: (A) the receipt
by the Company or any of the Guarantors of any Environmental Claim, if
such Environmental Claim could reasonably be expected to have a
material adverse effect upon the business, operations, properties,
assets or condition, financial or otherwise, of any thereof or upon the
ability of any thereof to perform, or of the Bank or the Collateral
Agent to enforce, the obligations of any thereof to the Bank hereunder,
under the Note or under any of the Collateral Documents to which such
corporation is a party, (B) the Company or any of the Guarantors shall
obtain actual knowledge that there exists any Environmental Claim
pending, threatened or reasonably likely against any thereof, which
individually or in the aggregate could reasonably be expected to have a
material adverse effect upon the business, operations, properties,
assets or condition, financial or otherwise, of any thereof or upon the
ability of any thereof to perform, or of the Bank or the Collateral
Agent to enforce, the obligations of any thereof to the Bank hereunder,
under the Note or under any of the Collateral Documents to which such
corporation is a party, or (C) any release, emission, discharge or
disposal of any Material of Environmental Concern that could form the
basis of any Environmental Claim against the Company or any of the
Guarantors relating to any of the Collateral Property, if such
Environmental Claim could reasonably be expected to have a material
adverse effect upon the business, operations, properties, assets or
condition, financial or otherwise, of any thereof or upon the ability
of any thereof to perform, or of the Bank or the Collateral Agent to
enforce, the obligations of any thereof to the Bank hereunder, under
the
25
Note or under any of the Collateral Documents to which such corporation
is a party. Upon the written request of the Bank, the Company, and/or
the affected Guarantor or Guarantors, as the case may be, will submit
to the Bank at reasonable intervals a report providing an update of the
status of any issue or claim identified in any notice or certificate
required pursuant to this subsection.
(g) COMPLIANCE WITH ISM CODE. Procure that the Guarantors and
the Manager comply with, and insure that the Vessels when mortgaged to the
Collateral Agent will comply with, the requirements of the ISM Code within the
time periods prescribed thereby, including, without limitation, the maintenance
and renewal of valid certificates pursuant thereto and will immediately inform
the Bank if there is a threatened or actual withdrawal of any Guarantor's and/or
the Manager's DOC or the SMC in respect of any Vessel mortgaged to the Trustee
or if notification has been received that any Guarantor's or the Manager's
application for a DOC or SMC has been refused.
(h) MANAGEMENT OF THE VESSELS. Cause each of the Vessels when
mortgaged to the Collateral Agent to be managed and operated by Millenium
Management, Inc., a company organized and existing under the laws of the Cayman
Islands, or by another entity satisfactory to the Bank (the "Manager").
(i) CONFIRMATION OF CLASS CERTIFICATES. If requested by the
Bank, furnish, or cause to be furnished, to the Bank a confirmation of class
certificate covering each of the Vessels mortgaged to the Collateral Agent.
(j) MAINTENANCE OF PROPERTIES. Maintain and keep all
properties used or useful in the conduct of its business in good condition,
repair and working order and supplied with all necessary equipment and will
cause to be made all necessary repairs, renewals and replacements thereof so
that the business carried on in connection therewith and every portion thereof
may be properly and advantageously conducted at all times.
(k) PAYMENT OF INDEBTEDNESS. Pay, or cause to be paid, the
principal of, and premium, if any, and interest on, any indebtedness thereof for
borrowed monies at the times and in the manner specified in the agreements
regarding such indebtedness.
(l) COMPLIANCE WITH AGREEMENTS. Make all payments and comply
with all other terms, conditions and provisions on its part to be performed
under, and will not allow any default to exist or any right of termination to
accrue under, this Agreement, the Note, any of the Collateral Documents or any
other agreement to which it shall be a party or by which it may be bound.
(m) OPERATING ACCOUNTS. Cause the operating accounts for each
of the Vessels mortgaged to the Collateral Agent to be maintained with the Bank.
(n) ADDRESSING THE YEAR 2000 ISSUE. The Company shall take and
shall cause each of the Guarantors to take all necessary action to complete in
all material respects the reprogramming of computer software, hardware and
firmware systems and equipment containing embedded microchips owned or operated
by or for the Company and the Guarantors or used or relied
26
upon in the conduct of their business (including systems and equipment supplied
by others or with which such systems of the Company and the Guarantors
interface) required as a result of the Year 2000 Issue to permit the proper
functioning of such computer systems and other equipment and the testing of such
systems and equipment, as so reprogrammed. At the request of the Bank, the
Company shall provide, and shall cause the Guarantors to provide, the Bank
reasonable assurance of its compliance with the preceding sentence.
(o) COMPLIANCE WITH OBLIGATIONS. Use its reasonable best
commercial efforts to cause all parties to the Collateral Documents to comply
with their obligations thereunder.
(p) ADDITIONAL GUARANTIES, ETC. Cause each wholly-owned
subsidiary of the Company which acquires an Additional Vessel subsequent to the
date hereof (i) to execute and deliver to the Bank a Guaranty and a Consent and
Agreement to this Agreement in the form of the Consent and Agreement attached
hereto and (ii) to execute and deliver to the Collateral Agent a first mortgage
and an assignment of insurances covering such Additional Vessel.
11. NEGATIVE COVENANTS.
From the date hereof and until payment in full of the
obligations of the Company to the Bank under this Agreement and under the Note,
the Company will not, without the prior written consent of the Bank:
(a) INDEBTEDNESS. Create, assume, incur or become or be or
remain liable, directly or indirectly, in respect of any indebtedness except:
(i) indebtedness to the Bank evidenced by the Note or
otherwise incurred under or in connection with this Agreement or any of
the Collateral Documents;
(ii) indebtedness evidenced by the Senior Secured Notes;
(iii) current indebtedness or obligations (other than
indebtedness for borrowed monies) incurred in the normal course of its
business so long as the relevant creditors have evidenced no intention
to enforce any of their rights against the Company if such enforcement
could have a material adverse effect on the business, operations or
financial condition of the Company; and
(iv) any other indebtedness to the extent permitted by the
Indenture.
(b) GUARANTIES, ETC. Directly or indirectly assume, guaranty,
endorse or become liable on the obligation of any person, firm or corporation,
or suffer to exist any such assumption, guaranty, endorsement or liability,
except in favor of the Bank or as otherwise permitted by the Indenture.
(c) LIENS, ETC. Create, assume or incur, or suffer to be
created, assumed or incurred or to exist, any mortgage, lien, pledge, charge or
other security interest or encumbrance of any kind in respect of any of its
properties, whether heretofore or hereafter acquired, except for (i)
27
Permitted Liens and (ii) mortgages, liens, pledges, charges or other security
interests or encumbrances in favor of the Bank or expressly provided for herein
or in the documents referred to herein.
(d) CONSOLIDATION, MERGER OR SALE OF ASSETS. Consolidate with
or merge into any other corporation or sell, lease or transfer or otherwise
dispose of all or any substantial portion of its assets or any shares of capital
stock of any Guarantor, except as otherwise permitted by the Indenture.
(e) DIVIDENDS. Declare or pay any dividend of any kind or make
any purchase or redemption of or distribution on any of its stock, except that
so long as no Event of Default has occurred and is continuing, it may at any
time pay dividends in an amount not to exceed in the aggregate 50% of the
consolidated cumulative net income of the Company and its subsidiaries from the
beginning of the Company's fiscal quarter commencing immediately after the
issuance of the Senior Secured Notes to the end of the Company's most recent
fiscal quarter for which internal financial statements are available and have
been delivered to the Bank, but only so long as the Company is permitted to make
Restricted Payments under the Indenture.
(f) LOANS OR ADVANCES. Make or suffer to exist any loan,
advance or extension of credit to any person, firm or corporation, by loan,
guaranty or otherwise, except for advances in the normal course of its business
or as otherwise permitted under the Indenture.
(g) INVESTMENTS. Make or suffer to exist any investment in any
person, firm or corporation, whether by acquisition of stock or indebtedness,
except as permitted by the Indenture.
(h) ENGAGEMENT IN BUSINESS. Engage in any business other than
the Shipping Business.
(i) SALE/LEASEBACK TRANSACTIONS. Enter into any Sale/Leaseback
Transaction, except to the extent permitted by the Indenture.
12. OPERATING ACCOUNTS
The Company agrees to cause to be opened with the Bank on or
prior to the date of the making of the initial Loan under Section 3(a) one or
more special accounts (collectively the "Operating Account") into which all
earnings of the Vessels when mortgaged to the Collateral Agent shall be
deposited.
13. APPLICATION OF FUNDS
All monies received by or on behalf of the Bank in respect of
any of the Collateral Property shall be applied as follows:
(a) So long as no Event of Default shall have occurred and be
continuing the Bank (subject to applicable provisions of any of the Collateral
Documents and to subparagraph (b) of Section 5) may deduct from such monies
received sums sufficient to pay, or reimburse itself for
28
its payment of, any expenses incurred by it hereunder or in connection herewith
and the balance of such monies shall be available to the Company for any
business purpose whatsoever consistent with the terms of this Agreement.
(b) If and so long as an Event of Default shall have occurred
and be continuing the Bank shall, in its sole discretion, either apply such
monies as provided in subparagraph (i) of this subsection or apply such monies
(subject to applicable provisions of any of the Collateral Documents and to
subparagraph (b) of Section 5), (i) to the payment of the Bank's costs and
expenses incurred in the protection of its rights hereunder, under the Note or
under any of the Collateral Documents, including, but not by way of limitation,
reasonable compensation and expenses for the Bank, its agents and attorneys and
court costs and other expenses incurred or made by the Bank or its agents or
attorneys in exercising any trust or power hereunder or in collecting said
monies, (ii) to the payment of all interest then due on the Note, (iii) to the
payment of all amounts of principal of the Note, whether or not then due and
payable, (iv) to the payment of any other obligations of the Company, to the
Bank and (v) the remainder, if any, shall be remitted to, or upon the order of,
the Company or to whomsoever may be entitled thereto.
14. EVENTS OF DEFAULT AND REMEDIES
The occurrence of any one or more of the following events
shall constitute an "Event of Default":
(a) Any principal of or interest on the Note shall not be paid
when due.
(b) Any fee or other amount payable hereunder, under the Note
or under any of the Collateral Documents shall not be paid when due and such
default shall continue unremedied for more than 10 days after written notice
thereof from the Bank.
(c) Any representation or warranty made by the Company herein
or by the Company or any of the Guarantors in any certificate delivered pursuant
hereto or in any of the Collateral Documents proves to have been untrue or
misleading in any material respect as at the date as of which made.
(d) The Company shall default in the performance or observance
of any covenant or condition contained in Sections 11 or 15(c) and (j) or shall
default in the performance or observance of any covenant or condition contained
in Section 10 and such default under Section 10 continue unremedied for a period
of 14 days.
(e) Any of the Guarantors shall default in the performance or
observance of any covenant or condition contained in Sections 4 or 5 of its
Guaranty or shall attempt to repudiate, rescind, limit or annul any of its
obligations under its Guaranty or any Guaranty shall be declared to be, or shall
become, null and void.
(f) The Company or any of the Guarantors shall default in the
performance or compliance with any other covenant or condition contained in this
Agreement, in the Note or in any
29
of the Collateral Documents and such default shall continue unremedied for more
than 30 days after written notice thereof from the Bank.
(g) A default shall occur and be continuing under any of the
Mortgages or any legislation, decree or regulation is enacted or promulgated the
effect of which is to repudiate, rescind, limit or annul any of the Mortgages
unless the Company, within a period of 30 days after such enactment or
promulgation, shall have obtained a waiver or other relief satisfactory to the
Bank from such legislation, decree or regulation or shall have restructured such
Mortgage or Mortgages on terms and conditions satisfactory to the Bank in a
manner which would not be illegal and which would avoid any such repudiation,
rescission, limitation or annulment.
(h) An Event of Default shall have occurred and be continuing
under the Indenture.
(i) The capital stock of the Company, or any portion thereof,
shall be pledged to any person or shall otherwise be encumbered or, without the
prior written consent of the Bank, there shall occur a Change in Control of the
Company.
(j) Contemporaneously with the acquisition by a Guarantor of a
Committed Vessel or an Additional Vessel, such Vessel shall not have been
mortgaged to the Collateral Agent and its insurances assigned to the Collateral
Agent as security for the obligations of such Guarantor to the Bank under its
Guaranty.
(k) The Company or any of its affiliates shall default in the
payment when due (subject to any applicable grace period) of any indebtedness
for borrowed monies, whether directly incurred or guaranteed, and whether at
maturity or at any other time if, in such latter event, such indebtedness is, or
by reason of such default is subject to being, accelerated, and such default
shall continue unremedied for a period of 7 days after written notice of such
default from the Bank to the Company, unless such default is being contested in
good faith and by appropriate proceedings or other acts and there are set aside
on its books adequate reserves with respect thereto.
(l) A material adverse change shall occur in the business,
operations or financial condition of the Company or any of the Guarantors which,
in the reasonable opinion of the Bank, if not remedied, would prevent or
materially impair the ability of the Company or any of the Guarantors to perform
their respective material obligations under this Agreement, under the Note and
under any of the Collateral Documents, and such shall not have been remedied
within 15 days after written notice thereof from the Bank.
(m) A judgment or order for the payment of money shall be
entered against the Company or any of the Guarantors by any court, and such
judgment or order shall continue undischarged, unstayed or unappealed for a
period of 10 days in which the aggregate of all such judgments or orders exceeds
$5,000,000.
(n) The Company or any of the Guarantors shall make an
assignment for the benefit of creditors, become insolvent or be unable, or admit
in writing its inability, to pay its debts as they mature, or shall file a
petition in voluntary bankruptcy or a petition or answer or consent
30
seeking reorganization or readjustment of indebtedness thereof under applicable
bankruptcy laws now or hereafter existing, or shall consent to the appointment
by a court of a receiver, administrator or trustee of the property thereof or of
a substantial part of such property, or corporate action or other action shall
be taken by any thereof for the purpose of effecting any of the foregoing.
(o) By order or decree of a court of competent jurisdiction
the Company or any of the Guarantors shall be adjudicated a bankrupt or
insolvent, or a petition for proceedings in bankruptcy or for the reorganization
thereof or the readjustment of the indebtedness thereof under applicable
bankruptcy laws now or hereafter existing shall be filed against any thereof and
any thereof shall admit the material allegations thereof, such petition shall
not have been dismissed within 60 days of its filing or an order, judgment or
decree shall be made approving such petition or a receiver or trustee shall be
appointed by a court for any thereof or the property of any thereof, or any part
thereof, and shall remain in possession thereof for 60 days.
If an Event of Default shall have occurred and be continuing;
(x) The Bank's obligation to make Loans available hereunder
shall cease and the Bank may, by giving notice to the Company, declare the
unpaid principal amount of the Note and the interest accrued thereon to be
immediately due and payable. Thereupon, such principal and interest and all
other, if any, sums payable hereunder or in respect of the Note (if not already
due and payable) shall forthwith become and be due and payable without further
notice and without presentment for payment, demand, protest or notice of protest
or other conditions precedent to the enforcement or collection thereof, all of
which are hereby expressly waived by the Company and the Guarantors; provided
that upon the happening of an event specified in subsections (n) and (o) of this
Section 14, the Note and all other amounts payable hereunder or under any of the
Collateral Documents shall automatically be immediately due and payable without
declaration and without presentment for payment, demand, protest or notice of
protest.
(y) The Bank may proceed to protect and enforce its rights by
action at law, suit in equity or in admiralty or other appropriate proceeding,
whether for specific performance of any covenant contained in this Agreement, in
the Note or in any of the Collateral Documents, or in aid of the exercise of any
power granted herein or therein, or the Bank may proceed to enforce the payment
of the Note when due or to enforce any other legal or equitable right of the
Bank, or proceed to take any action authorized or permitted under the terms of
any of the Collateral Documents or by applicable law for the collection of all
sums due, or so declared due, on the Note, including, without limitation, the
right to appropriate and hold, or apply (directly, by way of setoff or
otherwise) to the payment of the obligations of the Company to the Bank
hereunder, under the Note and/or under the Collateral Documents (whether or not
then due), all monies and other amounts of the Company, or any thereof, then or
thereafter in possession of the Bank, the balance of every deposit account
(demand or time, matured or unmatured) of the Company, then or thereafter with
the Bank and every other claim of the Company, then or thereafter against the
Bank; and the Company will pay the Bank all costs and expenses of collection,
including, without limitation, reasonable attorneys' fees, court costs and
expenses.
(z) The Bank shall not be required to marshal any present or
future security for, or guaranties of, the Loans, or to resort to any such
security or guaranties in any particular order.
31
15. SUNDRY PROVISIONS
(a) FURTHER ASSURANCES. The Company and each of the Initial
Guarantors by its Consent and Agreement hereto jointly and severally agree that
at any time and from time to time, upon the written request of the Bank, the
Company and/or the Initial Guarantors, or any of them, will promptly and duly
execute and deliver to the Bank and/or the Collateral Agent any and all further
instruments and documents as the Bank may reasonably deem desirable in obtaining
and perfecting the full benefits of this Agreement, of the Note and/or of any of
the Collateral Documents and of the rights and powers granted herein and
therein.
(b) NOTICES. All notices, requests and other communications
pursuant to this Agreement shall be in writing, either by letter (if mailed,
such letter to be registered or certified) or telecopy, addressed as follows:
If to the Company,
▇/▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ Street
▇▇▇▇▇▇ Town, Grand Cayman
Cayman Islands, British West Indies
Telecopy No. ▇▇▇-▇▇▇-▇▇▇▇
If to the Bank,
Marine Transportation Division
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telecopy No. ▇▇▇-▇▇▇-▇▇▇▇
or to such other address as the party to receive any such notice, request or
other communication may have designated by written notice to the other party.
All periods of notice shall be measured from the date of
delivery thereof, if delivered by hand or by courier service, or from the date
of receipt thereof, if sent by certified or registered mail or by telecopy.
(c) FURTHER PANAMANIAN AND CYPRIOT COUNSEL OPINIONS. The
Company agrees at its expense (i) to have Messrs. ▇▇▇▇▇▇ ▇▇▇▇▇▇ & Asvat, special
Panamanian counsel, deliver further opinions to the Bank within 120 days from
the date hereof with respect to (A) the due and valid permanent recordation of
the CLIPPER HARMONY Mortgage under Panamanian law, (B) the status of the CLIPPER
HARMONY Mortgage as a valid and perfected first naval mortgage lien on the
CLIPPER HARMONY under Panamanian law, (C) the due registration of the CLIPPER
HARMONY and the title thereto of Rapid subject to no mortgage, lien or other
encumbrance of record, except the CLIPPER HARMONY Mortgage, (D) the due and
valid permanent recordation of the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage under Panamanian law,
(E) the status of the ▇▇▇▇▇▇
32
▇▇▇▇▇▇▇ Mortgage as a valid and perfected first naval mortgage lien on the
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ under Panamanian law and (F) the due registration of the ▇▇▇▇▇▇
▇▇▇▇▇▇▇ and the title thereto of Oakmont subject to no mortgage, lien or other
encumbrance of record, except the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage and (ii) to have
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ Law Offices, special Cypriot counsel, deliver a further
opinion to the Bank as soon as each of the CLIPPER ATLANTIC Mortgage, the
CLIPPER PACIFIC Mortgage, the CLIPPER ATLANTIC Insurances Assignment and the
CLIPPER PACIFIC Insurances Assignment has been filed with the Registrar of
Companies in Nicosia, Cyprus, such opinion to cover such matters as the Bank
shall reasonably request.
(d) PAYMENT OF COSTS, EXPENSES, ETC. The Company agrees,
whether or not the transactions hereby contemplated are consummated, on demand
to pay, or reimburse the Bank for its payment of, the reasonable expenses of the
Bank incident to said transactions (and in connection with any supplements,
amendments, waivers or consents relating thereto or incurred in connection with
the defense of any of the Bank's rights or remedies with respect thereto or in
the preservation of the Bank's priorities under the documentation executed and
delivered in connection therewith) including, without limitation, the reasonable
fees and disbursements of the Bank's counsel in connection therewith, including
special Cayman Islands, Panamanian and Cypriot counsel, any loss of interest on
the Note or other costs incurred by the Bank occasioned by any delay in closing
any of the Loans requested by the Company hereunder, all costs and expenses, if
any, in connection with the enforcement of this Agreement, the Note and the
other documents provided for herein and stamp and other similar taxes, if any,
incident to the execution and delivery of the documents (including, without
limitation, the Note) herein contemplated and to hold the Bank free and harmless
in connection with any liability arising from the nonpayment of any such stamp
or other similar taxes. Such taxes and, if any, interest and penalties related
thereto as may become payable after the date hereof shall be paid immediately by
the Company to the Bank when liability therefor is no longer contested by the
Bank or reimbursed immediately by the Company to the Bank after payment thereof
by the Bank (if the Bank, at its sole discretion, chooses to make such payment).
(e) SUCCESSORS AND ASSIGNS. This Agreement and the Consent and
Agreement annexed hereto shall be binding upon the Company and the Initial
Guarantors and their respective successors and assigns and shall be binding upon
and inure to the benefit of the Bank and its successors and assigns; PROVIDED,
HOWEVER, that neither the Company nor any of the Initial Guarantors may transfer
any of their respective obligations or assign any of their respective rights
hereunder or thereunder without the prior written consent of the Bank.
(f) GOVERNING LAW. THIS AGREEMENT SHALL BE DEEMED TO HAVE BEEN
MADE UNDER AND SHALL BE GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK
AS TO ALL MATTERS OF CONSTRUCTION, VALIDITY, EFFECT AND PERFORMANCE WITHOUT ANY
REFERENCE TO CONFLICTS OF LAW PRINCIPLES.
(g) SUBMISSION TO JURISDICTION. The Company and each of the
Initial Guarantors by its Consent and Agreement annexed hereto jointly and
severally agree that any legal action or proceeding brought by the Bank or on
behalf of the Bank against any thereof hereunder, under the Note or under any of
the Collateral Documents, may be brought in the courts of the State of New York
or of the United States of America for the Southern District of New York, as the
plaintiff in
33
such action or proceeding may elect, and by execution and delivery of this
Agreement and such Consent and Agreement the Company and each of the Initial
Guarantors jointly and severally submit to each such jurisdiction and agree that
any summons or other process against any thereof may be served by registered
mail addressed thereto at,
c/o Kylco Maritime (USA), Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
The foregoing, however, shall not limit or impair the right of the Bank to bring
any legal action or proceeding in any other appropriate jurisdiction or to
effect service of process in any other manner which may be lawful in the
jurisdiction in which any such legal action or proceeding may be brought.
(h) WAIVER OF TRIAL BY JURY. IT IS MUTUALLY AGREED BY AND
BETWEEN THE COMPANY AND THE BANK THAT EACH OF THEM HEREBY WAIVES TRIAL BY JURY
IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY ANY PARTY HERETO AGAINST
ANY OTHER PARTY HERETO ON ANY MATTER WHATSOEVER ARISING OUT OF OR IN ANY WAY
CONNECTED WITH THIS AGREEMENT, THE NOTE OR ANY OF THE COLLATERAL DOCUMENTS.
(i) EXECUTION IN COUNTERPARTS. This Agreement and the Consent
and Agreement annexed hereto may be executed in several counterparts with the
same effect as if the parties executing such counterparts shall have all
executed one agreement on the date hereof, each of which counterparts when
executed and delivered shall be deemed to be an original and all of such
counterparts together shall constitute this Agreement.
(j) VESSEL TRADING PROHIBITIONS. The Company and each of the
Initial Guarantors by its Consent and Agreement annexed hereto jointly and
severally agree that none of the Vessels when mortgaged to the Collateral Agent
will engage in any trade or business with any country or area which may expose
the Bank to any penalty, fine, sanction or other liability, whether civil or
criminal, under any applicable law, rule, treaty or convention, or engage in any
trade or business which shall have been or may be declared to be illegal or
which shall or may render any of such Vessels liable to confiscation, seizure,
detention or destruction or which may render any of the Collateral Documents
with respect to any of such Vessels liable to nullification. In the event that,
for any reason, any of such Vessels has engaged, is engaging or is about to
engage in any such trade or business, the Company and each of the Initial
Guarantors shall, immediately upon acquiring knowledge thereof, give written
notice thereof to the Bank. Upon receipt of such notice by the Bank or upon the
Bank acquiring knowledge thereof from any source whatsoever, the Bank shall have
the right to surrender its interest in such Vessel and the Company and the
Initial Guarantors shall have the unconditional obligation to provide the Bank,
simultaneously with such surrender, with other substitute security equivalent
thereto in value, such equivalence to be determined by the Bank in its sole
discretion prior to such substitution.
(k) ASSIGNMENTS AND PARTICIPATIONS BY THE BANK. It is
understood and agreed that, with the prior written consent of the Company, which
consent shall not be unreasonably withheld, the Bank may assign a portion of its
rights hereunder, under the Note and under the Collateral
34
Documents to one or more banking or other financial institutions; provided,
however, that without such consent it may assign its rights, or any portion
thereof, hereunder, under the Note and under the Collateral Documents to any
Federal Reserve Bank of the United States of America as collateral for the
Bank's obligations thereto, and the Bank may, without such consent, also enter
into one or more loan participation agreements with respect to this Agreement,
the Note and the Collateral Documents with one or more participating banking or
other financial institutions and each participant shall, with respect to its
participation, be entitled to all of the rights of the Bank and may exercise any
and all rights of set-off or banker's lien with respect thereto, in each case as
fully as though the Company were directly indebted to the holder of such
participation in the amount of such participation.
(l) SEVERABILITY. Any provision of this Agreement which is
prohibited or is unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provisions in any other
jurisdiction. To the extent permitted by the laws of any such jurisdiction, the
Company hereby waives any provisions of law which renders any provision hereof
prohibited or unenforceable in any respect.
(m) INDEMNIFICATION. (i) The Company and each of the Initial
Guarantors by its Consent and Agreement annexed hereto jointly and severally
agree to indemnify the Bank, its successors and assigns, and their respective
officers, directors, employees, representatives and agents (each an
"Indemnitee") from, and hold each of them harmless against, any and all losses,
liabilities, claims, damages, expenses, obligations, penalties, actions,
judgments, suits, costs or disbursements of any kind or nature whatsoever
(including, without limitation, the fees and disbursements of counsel for such
Indemnitee in connection with any investigative, administrative or judicial
proceeding commenced or threatened, whether or not such Indemnitee shall be
designated a party thereto) that may at any time (including, without limitation,
at any time following the repayment of the Loans) be imposed on, asserted
against or incurred by, any Indemnitee as a result of, or arising out of or in
any way related to or by reason of, (A) any violation by the Company or any of
the Guarantors of any applicable Environmental Law, (B) any Environmental Claim
arising out of the management, use, control, ownership or operation of property
or assets by the Company or any of the Guarantors (or, after foreclosure, by the
Bank or its successors or assigns) and (C) the breach by the Company and/or any
of the Guarantors of any representation or warranty set forth in Sections 2(y),
(w) or (x).
(ii) The Company and each of the Initial Guarantors by its
Consent and Agreement annexed hereto jointly and severally agree to
indemnify each Indemnitee from and against any and all losses, claims,
damages and liabilities, including without limitation, the reasonable
fees and disbursements of counsel for such Indemnitee in connection
with any investigative, administrative or judicial proceeding commenced
or threatened, whether or not such Indemnitee shall be designated a
party thereto, to which any such Indemnitee may become subject arising
out of or in connection with any claim, litigation, investigation or
proceeding relating to (A) the Loans (including, the use of the
proceeds of the Loans) or (B) the execution, delivery or performance of
this Agreement, the Note or any of the other documents referred to
herein or contemplated hereby (whether or not the Indemnitee is a party
thereto); PROVIDED, HOWEVER, that the indemnification provided for in
this subparagraph (ii) of this subsection (m) of this Section 15 shall
not be available to an
35
Indemnitee to the extent any loss, cost, damages, liability or expense
subject to indemnification arises out of the gross negligence or
willful misconduct of such Indemnitee.
(iii) If, and to the extent that, the obligations of the
Company and/or the Initial Guarantors under this Section are
unenforceable for any reason, the Company and each of the Initial
Guarantors by its Consent and Agreement annexed hereto jointly and
severally agree to make the maximum contribution to the payment and
satisfaction of such obligations which is permissible under applicable
law.
(iv) The obligations of the Company and each of the Initial
Guarantors under this Section 15(m) shall survive the termination of
this Agreement and the repayment of the Loans.
(n) INFORMATION DISCLOSURE. The Bank may disclose to, or
exchange or discuss with, any other corporation, partnership, individual or
governmental entity (the Bank and each such other corporation, partnership,
individual and/or governmental entity being hereby irrevocably authorized to do
so) any information concerning the Company or any of the Guarantors (whether
received by the Bank or such other corporation, partnership, individual or
governmental entity in connection with or pursuant to this Agreement or
otherwise) for the purpose of protecting, preserving, exercising or enforcing
any rights hereunder, under the Note or under any of the Collateral Documents,
or consulting with respect to any such rights or any rights of the Company or
any of the Guarantors and the Bank may disclose to any such other corporation,
partnership, individual or governmental entity any such information as may be
required by applicable law or in accordance with normal Bank procedures.
(o) NO CLAIMS FOR CONSEQUENTIAL DAMAGES. The Company and each
of the Initial Guarantors by its Consent and Agreement annexed hereto jointly
and severally agree that none thereof will make any claim (whether based on
contract, tort or duty imposed by law) against the Bank for any special,
indirect or consequential damages in respect of any breach or wrongful conduct
in any way related to this Agreement and the transactions contemplated hereby or
any act by, or omission of, the Bank occurring in connection herewith, and the
Company and each of the Initial Guarantors by its Consent and Agreement annexed
hereto waive and jointly and severally agree not to ▇▇▇ upon any such claim for
any such damages, whether or not known or not known or suspected to exist in
favor thereof.
(p) ENTIRE AGREEMENT. Any and all prior understandings and
agreements heretofore entered into between the Company, the Initial Guarantors
and the Bank, whether written or oral, are, so far as the same relate directly
to the transactions contemplated by this Agreement, superseded by and merged
into this Agreement and the other agreements being executed and delivered
pursuant to this Agreement to which the Company and the Initial Guarantors, or
any of them, and the Bank are parties, which alone fully and completely
expresses the agreements between the Company, the Initial Guarantors and the
Bank.
(q) RIGHTS CUMULATIVE, NON-WAIVER, ETC. Each and every right
granted to the Bank hereunder or under any other document delivered hereunder or
in connection herewith, or allowed it by law or equity, shall be cumulative and
may be exercised from time to time. No failure
36
or delay on the part of the Bank in exercising any power or right hereunder,
under the Note or under any of the Collateral Documents shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right or
power preclude any other or further exercise of any other right or power
hereunder or thereunder. No modification or waiver of any provision of this
Agreement, the Note or any of the Collateral Documents nor any consent to any
departure by any party to any provision thereof shall in any event be effective
unless the same shall be in writing and signed by the Bank and then such waiver
or consent shall be effective only in the specific instance and for the purpose
for which given. No notice to or demand on any party in any case shall entitle
such party to any other or further notice or demand in similar or other
circumstances.
(r) INTERNATIONAL FINANCING TRANSACTION. This is an
international financing transaction in accordance with which the specification
of United States dollars is of the essence, and United States dollars shall be
the currency of account in the case of all of the Company's obligations and
payments due under this Agreement, under the Note and under the Collateral
Documents. The payment obligations of the Company hereunder or thereunder shall
not be discharged by an amount paid in a currency or in a place other than that
specified with respect to such obligations, whether pursuant to a judgment or
otherwise, to the extent that the amount so paid on prompt conversion to United
States dollars and transferred to the specified place of payment under normal
banking procedures does not yield the amount of United States dollars, in such
place, due under this Agreement, under the Note or under any of the Collateral
Documents, as the case may be.
(s) HEADINGS; TABLE OF CONTENTS. The table of contents and the
headings of Sections and subsections are not a part of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on the date first above written.
MILLENIUM SEACARRIERS, INC.
By /s/ ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------
THE BANK OF NEW YORK
By /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------
37
CONSENT AND AGREEMENT
OF
THE INITIAL GUARANTORS
The undersigned, referred to in the within Credit Agreement as
the "Initial Guarantors", hereby consent and agree to said Credit Agreement and
to the documents contemplated thereby and to the provisions contained therein
relating to conditions to be fulfilled and obligations to be performed by the
undersigned pursuant to or in connection with said Credit Agreement and agree
particularly to be bound by the representations, warranties, covenants and
waivers relating to, or made on behalf of, the undersigned contained in Sections
2, 10 and 15 of said Credit Agreement to the same extent as if each of the
undersigned were a party to said Credit Agreement.
CONIFER SHIPPING COMPANY LIMITED
By /s/ ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------------
IVY NAVIGATION INC.
By /s/ ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------------
OAKMONT SHIPPING & TRADING, INC.
By /s/ ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------------
RAPID OCEAN CARRIERS INC.
By /s/ ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------------
TOPSCALE SHIPPING COMPANY LIMITED
By /s/ ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------------
MILLENIUM ▇▇▇▇▇▇▇▇▇▇, INC.
By /s/ ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------------
MILLENIUM ELMAR, INC.
By /s/ ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------------
38
MILLENIUM III, INC.
By /s/ ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------------
MILLENIUM II, INC.
By /s/ ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------------
MILLENIUM VII, INC.
By /s/ ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------------
MILLENIUM VI, INC.
By /s/ ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------------
MILLENIUM V, INC.
By /s/ ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------------
MILLENIUM IV, INC.
By /s/ ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------------
MILLENIUM AMETHYST, INC.
By /s/ ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------------
MILLENIUM YAMA, INC.
By /s/ ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------------
MILLENIUM MAJESTIC, INC,
By /s/ ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------------
39
SCHEDULE 4
COMMITTED VESSELS
Vessel Name To Be Named Guarantor Flag Year Built
----------- ----------- --------- ---- ----------
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Millenium ▇▇▇▇▇▇▇▇▇▇ Millenium ▇▇▇▇▇▇▇▇▇▇, Inc. Cayman Islands 1988
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Millenium Elmar Millenium Elmar, Inc. Cayman Islands 1987
LT ▇▇▇▇▇▇▇ Millenium Leader Millenium III, Inc. Cayman Islands 1984
LT Argosy Millenium Hawk Millenium II, Inc. Cayman Islands 1984
▇▇▇▇▇▇ ▇▇▇▇▇ Millenium Eagle Millenium VII, Inc. Cayman Islands 1983
LT Odyssey Millenium Osprey Millenium VI, Inc. Cayman Islands 1984
Soren Toubro Millenium Falcon Millenium V, Inc. Cayman Islands 1981
▇▇▇▇ ▇▇▇▇▇▇ Millenium Condor Millenium IV, Inc. Cayman Islands 1981
Clipper Amethyst Millenium Amethyst Millenium Amethyst, Inc. Bahamas 1978
Clipper Yama Millenium Yama Millenium Yama, Inc. Bahamas 1979
Clipper Majestic Millenium Majestic Millenium Majestic, Inc. Bahamas 1979
