<PAGE>1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1998
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number 000-22853
GULFMARK OFFSHORE, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 76-0526032
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5 POST OAK PARK, SUITE 1170 77027
Houston, Texas
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(713) 963-9522
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the Registrant was required to file such reports)
and (2) has been subject to such filing requirements for the past 90
days. YES /X/ NO / /
Number of shares of Common Stock, $0.01 Par Value, outstanding as
of August 11, 1998: 8,123,365.
(Exhibit Index Located on Page 24)
<PAGE>2
PART 1. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The unaudited condensed consolidated financial statements
included herein have been prepared by the Company. In the opinion of
management, all adjustments, which include reclassifications and
normal recurring adjustments necessary to present fairly the financial
statements for the periods indicated have been made. Certain
information relating to the Company's organization and footnote
disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles has been
condensed or omitted in this Form 10-Q pursuant to such rules and
regulations. However, the Company believes that the disclosures
herein are adequate to make the information presented not misleading.
It is recommended that these financial statements be read in
conjunction with the financial statements and notes thereto included
in the Company's Annual Report on Form 10-K for the year ended
December 31, 1997.
2
<PAGE>3
GULFMARK OFFSHORE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION> June 30, December 31,
1998 1997
--------- -------
(Unaudited) (Audited)
<S> <C> <C>
ASSETS (In thousands)
CURRENT ASSETS:
Cash and cash equivalents............................................... $ 22,829 $ 25,885
Accounts receivable..................................................... 19,825 10,505
Prepaids and other...................................................... 1,442 633
------- -------
Total current assets.................................................. 44,096 37,023
VESSELS AND EQUIPMENT, at cost, net of accumulated depreciation
of $27,810,000(unaudited) in 1998 and $23,641,000 in 1997................ 184,888 105,262
INVESTMENT IN UNCONSOLIDATED SUBSIDIARY................................... -- 8,388
GOODWILL, NET............................................................. 17,831 --
DEFERRED ISSUANCE COSTS................................................... 4,422 --
OTHER ASSETS.............................................................. 2,564 3,988
------- -------
$ 253,801 $ 154,661
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term borrowings and current portion of long-term debt............. $ 63 $ 10,506
Accounts payable........................................................ 5,137 3,839
Other accrued liabilities............................................... 4,498 3,261
------- -------
Total current liabilities............................................. 9,698 17,606
------- -------
LONG-TERM DEBT............................................................ 563 42,918
SENIOR NOTES PAYABLE, net of discount..................................... 129,572 --
DEFERRED TAXES AND OTHER.................................................. 18,564 8,255
MINORITY INTEREST......................................................... 844 610
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred stock, no par value; 2,000,000 authorized; no
shares issued......................................................... -- --
Common stock, $.01 par value; 15,000,000 shares authorized;
7,988,237 and 7,915,962 shares issued and outstanding................. 80 79
Additional paid-in capital.............................................. 60,646 60,487
Retained earnings....................................................... 35,068 26,271
Cumulative translation adjustment....................................... (1,234) (1,565)
------- -------
Total stockholders' equity............................................ 94,560 85,272
------- -------
$ 253,801 $ 154,661
======= =======
</TABLE>
The accompanying notes are an integral part of these condensed
consolidated financial statements.
3
<PAGE>4 GULFMARK OFFSHORE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE> <CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
---------------------- ----------------------
1998 1997 1998 1997
------ ------- ------ -------
(In thousands, except per share amounts)
<S> <C> <C> <C> <C>
REVENUES............................................... $22,447 $11,352 $38,493 $21,031
COSTS AND EXPENSES:
Direct operating expenses............................ 7,846 4,584 13,640 8,886
General and administrative expenses.................. 1,418 1,389 2,787 2,670
Depreciation and amortization........................ 2,967 1,680 5,326 3,284
------- ------- ------- -------
12,231 7,653 21,753 14,840
------- ------- ------- -------
OPERATING INCOME....................................... 10,216 3,699 16,740 6,191
OTHER INCOME (EXPENSE):
Interest expense..................................... (2,437) (1,390) (4,075) (2,616)
Interest income...................................... 216 121 472 215
Minority interest.................................... (142) (37) (238) 26
Other................................................ -- (1) 26 18
------- ------- ------- -------
(2,363) (1,307) (3,815) (2,357)
------- ------- ------- -------
Income from continuing operations before taxes......... 7,853 2,392 12,925 3,834
INCOME TAX PROVISION................................... (2,523) (722) (4,128) (1,120)
------- ------- ------- -------
INCOME FROM CONTINUING OPERATIONS...................... 5,330 1,670 8,797 2,714
LOSS FROM DISCONTINUED OPERATIONS,
NET OF TAXES.......................................... -- -- -- (648)
LOSS ON DISPOSAL OF DISCONTINUED OPERATIONS,
NET OF TAXES.......................................... -- -- -- (1,426)
------- ------- ------- -------
NET INCOME ............................................ $ 5,330 $1,670 $ 8,797 $ 640
======= ======= ======= ========
BASIC EARNINGS (LOSS) PER SHARE:
Income from continuing operations..................... $ 0.67 $ 0.25 $ 1.10 $ 0.40
Loss from discontinued operations,
net of taxes........................................ -- -- -- (0.09)
Loss on disposal of discontinued operations,
net of taxes........................................ -- -- -- (0.21)
------- ------- ------- -------
$ 0.67 $ 0.25 $ 1.10 $ 0.10
======= ======= ======= ========
WEIGHTED AVERAGE SHARES OUTSTANDING (BASIC)............ 7,988 6,730 7,984 6,705
======= ======= ======= ========
DILUTED EARNINGS (LOSS) PER SHARE:
Income from continuing operations.................... $ 0.65 $ 0.24 $ 1.07 $ 0.39
Loss from discontinued operations,
net of taxes........................................ -- -- -- (0.09)
Loss on disposal of discontinued operations,
net of taxes........................................ -- -- -- (0.21)
------- ------- ------- -------
$ 0.65 $ 0.24 $ 1.07 $ 0.09
======= ======= ======= =======
WEIGHTED AVERAGE SHARES OUTSTANDING (DILUTED)......... 8,251 6,981 8,246 6,891
======= ======= ======= =======
</TABLE>
The accompanying notes are an integral part of these condensed
consolidated financial statements.
4
<PAGE>5
GULFMARK OFFSHORE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE> <CAPTION>
Six Months Ended
June 30,
----------------------
1998 1997
------- ---------
(In thousands)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income ............................................................... $ 8,797 $ 640
Loss from discontinued operations, net.................................... -- 2,074
------- -------
Income from continuing operations......................................... 8,797 2,714
Adjustments to reconcile income from continuing operations to
net cash provided by continuing operations:
Depreciation and amortization............................................ 5,326 3,284
Deferred and other income tax provision.................................. 4,049 882
Minority interest........................................................ 238 (26)
Change in operating assets and liabilities:
Accounts receivable.................................................. (6,366) (2,665)
Inventory, prepaids and other........................................ (612) 51
Accounts payable..................................................... 1,441 446
Other accrued liabilities............................................ (873) 101
Other, net............................................................... 421 32
------- -------
Cash provided by continuing operations............................... 12,421 4,819
Cash flow from discontinued operations............................... -- (1,360)
------- -------
Net cash provided by operating activities............................ 12,421 3,459
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of vessels and equipment....................................... (25,374) (15,422)
Purchase of Brovig stock, net of cash acquired........................... (25,543) --
Expenditures for drydocking and main engine overhaul..................... -- (2,238)
------- -------
Net cash used in investing activities................................ (50,917) (17,660)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from Senior Notes, net of offering costs........................ 125,150 --
Repayments of debt....................................................... (103,759) (3,966)
Proceeds from debt, net of direct financing cost......................... 14,832 7,086
Proceeds from exercise of options........................................ 160 223
------- -------
Net cash provided by financing activities............................. 36,383 3,343
Effect of exchange rate changes on cash.................................... (943) (445)
------- -------
NET DECREASE IN CASH AND CASH EQUIVALENTS.................................. (3,056) (11,303)
CASH AND CASH EQUIVALENTS AT BEGINNING OF THE PERIOD....................... 25,885 17,234
------- -------
CASH AND CASH EQUIVALENTS AT END OF THE PERIOD............................. $ 22,829 $ 5,931
======= =======
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid, net of interest capitalized................................. $ 2,498 $ 2,463
======= =======
Income taxes paid.......................................................... $ 57 $ 26
======= =======
</TABLE>
The accompanying notes are an integral part of these condensed
consolidated financial statements.
5
<PAGE>6
GULFMARK OFFSHORE, INC. AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(1) BACKGROUND AND ORGANIZATION
GulfMark Offshore, Inc., ("GulfMark" or the "Company") was formed
on April 30, 1997, when its predecessor, GulfMark International, Inc.
spun-off its marine operations. The Consolidated Financial Statements
presented herein reflect the net assets, results of operations and
cash flows of the non-marine operations as discontinued operations.
(2) EARNINGS (LOSS) PER SHARE
In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 128 "Earnings Per
Share" ("SFAS 128"). SFAS 128 revises the methodology to be used in
computing earnings per share ("EPS") such that the computations
required for primary and fully diluted EPS were replaced with "basic"
and "diluted" EPS. Basic EPS is computed by dividing net income by
the weighted average number of shares of common stock outstanding
during the period. Diluted EPS is computed using the treasury stock
method for common stock equivalents. The Company adopted SFAS 128 in
the fourth quarter of 1997 and restated EPS for all prior periods. The
following reconciles basic and diluted weighted average shares:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ------------------
1998 1997 1998 1997
------- ------- ------- -------
<S> <C> <C> <C> <C>
Weighted Average Shares:
Basic shares outstanding................ 7,988 6,730 7,984 6,705
Effect of dilutive securities:
Common stock options.................. 263 251 262 186
-------- ------- ------- -------
Diluted shares outstanding............ 8,251 6,981 8,246 6,891
======= ======= ======= =======
</TABLE>
(3) NEWLY ISSUED ACCOUNTING PRONOUNCEMENTS
In June 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 131 "Disclosures about
Segments of an Enterprise and Related Information" ("SFAS 131"). SFAS
131 redefines how operating segments are determined and requires
6
<PAGE>7
disclosure of certain additional financial and descriptive information
about a company's operating segments. SFAS 131 may require additional
footnote disclosures and will be adopted by the Company in December of
1998.
In June 1998 the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 133, "Accounting for
Derivative Instruments and Hedging Activities" ("SFAS 133"). This new
standard is required to be adopted by the Company January 1, 2000.
SFAS 133 requires that all derivative instruments be recorded on the
balance sheet at their fair value. Changes in the fair value of
derivatives are recorded each period in current earnings or other
comprehensive income, depending on whether a derivative is designated
as part of a hedge transaction and, if so, the type of hedge
transaction. The Company is currently evaluating the impact of the
adoption of this new standard.
(4) COMPREHENSIVE INCOME
Effective January 1, 1998 the Company adopted SFAS 130,
"Reporting Comprehensive Income". SFAS 130 establishes new rules for
the reporting and display of comprehensive income and its components.
The adoption of this Statement requires unrealized gains or losses on
the Company's foreign currency translation adjustments to be included
in other comprehensive income.
The components of comprehensive income, net of related tax are as
follows:
<TABLE> <CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ------------------
1998 1997 1998 1997
------- ------- ------- -------
<S> <C> <C> <C> <C>
Net Income.................................. $ 5,530 $ 1,670 $ 8,797 $ 640
Foreign currency translation adjustments,
net of tax 534 1,300 331 (45)
------- ------- ------- -------
Comprehensive Income........................ $ 6,064 $ 2,970 $ 9,128 $ 595
======= ======= ======= =======
</TABLE>
Currently, the Company's only accumulated comprehensive income item
relates to its cumulative foreign currency translation adjustment.
7
<PAGE>8
(5) LONG-TERM DEBT
8.75% Senior Notes Due 2008
On June 8, 1998, the Company completed the sale of $130,000,000
aggregate principal amount of its 8.75% Senior Notes Due 2008 (the
"Notes") which will mature on June 1, 2008. The offering was made
pursuant to Rule 144A of the Securities Act of 1933. The Notes were
issued at a discount to yield 8.8%. Interest on the Notes is payable
semiannually on June 1 and December 1 of each year commencing December
1, 1998. Up to 35% of the Notes may be redeemed prior to June 1, 2001
at the option of the Company at a price of 108.75% with proceeds from
a public equity offering. Otherwise, the Notes are not redeemable
until June 1, 2003. Thereafter, at the Company's option, the Notes
will be subject to redemption in whole or in part, at redemption
prices expressed as a percentage of principal amounts plus accrued and
unpaid interest, if any, to the redemption date. If redeemed during
the twelve month period beginning on June 1 of the years indicated
below, the redemption amount is as follows:
<TABLE>
<CAPTION>
Year Percentage
---- ----------
<C> <C>
2003 104.375%
2004 102.917%
2005 101.458%
2006 and thereafter 100.000%
</TABLE>
On July 24, 1998, the Company commenced an exchange offer through
which it offered to exchange all of the Notes for a series of 8.75%
Senior Notes which are identical in all material respects to the
Notes, except that they are registered under the Securities Act of
1933, as amended.
The Company incurred approximately $4.5 million in costs
associated with the sale of the Notes including $3,900,000 of
underwriters' discount. These debt issuance costs are reported in the
condensed consolidated balance sheet as deferred issuance costs and
will be amortized over the life of the Notes. The Notes were issued
under an indenture (the "Indenture") between the Company and State
Street Bank and Trust Company, N.A., as Trustee. The Indenture
contains covenants including, among other provisions, limitations on
liens and sale and leasebacks of certain properties and certain
restrictions on the Company consolidating with or merging into another
entity.
8
<PAGE>9
Bank Credit Facility
On June 8, 1998, the Company entered into an agreement for a
reducing revolving credit facility (the "Credit Facility") with
certain banks (the "Lenders"). The Credit Facility contains two
tranches. As of June 30, 1998, none of the Credit Facility has been
drawn.
Tranche 1 is available for general corporate purposes and is
unsecured. The maximum committed amount is initially $25 million.
Interest accrues at LIBOR plus a margin ranging from 1.0% to 1.375%
per annum based upon the Company's ratio of funded debt to total
capitalization ("Leverage Ratio").
Tranche 2 is available for financing acquisitions and if drawn,
will be secured by either the capital stock of the acquired company or
with respect to acquired vessel assets, (i) a first priority mortgage,
(ii) an assignment of earnings and insurance and (iii) an assignment
of charters over one year. The maximum committed amount under Tranche
2 is initially $25 million. The interest rate on Tranche 2 is LIBOR
plus a margin of 0.80% to 1.25% per annum as determined by the
Company's Leverage Ratio.
Under certain circumstances, the maximum committed amounts under
tranche 1 and 2 may be increased to $30 million and $45 million,
respectively. Both tranches shall begin to reduce 39 months after
closing. Each quarter thereafter, the Credit Facility shall further
reduce such that the Credit Facility shall be fully amortized after
five years.
Until termination of the Credit Facility, a commitment fee is
payable on a quarterly basis, at a rate of 0.5 percent per annum on
the average unfunded portion of the Credit Facility.
The Credit Facility requires the Company, on a consolidated
basis, to a maximum Leverage Ratio, a specified interest coverage
ratio, and a minimum net worth.
(6) BROVIG SUPPLY ACQUISITION
As of December 31, 1997, the Company owned approximately 25
percent of the outstanding shares of Brovig Supply ASA, renamed Gulf
Offshore Norge AS, a publicly traded Norwegian company ("Brovig"). On
February 10, 1998, the Company completed its acquisition of
approximately 96 percent of the Brovig shares. The remaining four
percent was acquired on March 26, 1998.
9
<PAGE>10
Total consideration for the acquisition was approximately $73.0
million, which included the assumption of debt of approximately NOK
277 million ($37.4 million). Approximately $16.4 million of the
purchase price was funded through a Floating Rate Bridge Loan Facility
dated February 4, 1998 (the "Bridge Loan") with a bank. The balance
of the purchase price was funded by the Company's cash on hand. The
shares were acquired pursuant to a public bid made by GulfMark in
accordance with Norwegian law and the requirements of the Oslo Stock
Exchange.
In connection with the sale of the Notes referred to in Note 5,
the Company repaid the Bridge Loan and all debt assumed with the
acquisition of Brovig. Brovig owns five offshore support vessels,
including one newly built vessel which was delivered on December 19,
1997, and provides marine support and transportation services to
companies engaged in offshore exploration and production of oil and
natural gas in the North Sea.
The acquisition has been accounted for as a purchase and
accordingly, the purchase price has been allocated to the assets and
liabilities of Brovig based on their estimated fair market values on
February 10, 1998. The excess of the purchase price over the fair
market value of the net tangible assets acquired has been recorded as
goodwill ($18.2 million) and is subject to final determination.
Goodwill is being amortized over 40 years. A final determination of
required purchase accounting adjustments for the acquisition including
the allocation of purchase price to the assets acquired and
liabilities assumed based on their fair values has not yet been made.
Goodwill is being amortized over 40 years.
The financial statements included herein include the results of
Brovig from February 10, 1998. The following unaudited pro forma
results of operations have been prepared assuming that the acquisition
had occurred at the beginning of each period. This pro forma
information is not necessarily indicative of the results of operations
that would have occurred had the acquisition been made on those dates
or of results which may occur in the future.
10
<PAGE>11
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
-------------------- --------------------
1998 1997 1998 1997
------ ------ ------ ------
(In thousands except per share data)
<S> <C> <C> <C> <C>
Revenues................................... $ 22,447 $ 14,650 $ 40,348 $ 27,625
Operating income........................... 10,216 4,029 17,159 7,019
Income from continuing operations.......... 5,330 1,178 8,969 1,894
Per share data:
Income from continuing operations(basic)... $ 0.67 $ 0.18 $ 1.12 0.28
Income from continuing operations(diluted). 0.65 0.17 1.09 0.27
</TABLE>
(7) VESSEL ACQUISITIONS
In April 1997 the Company purchased an unfinished supply vessel
hull from a Singapore shipyard. In October 1997, the hull was
delivered to a shipyard in England for completion. The anticipated
cost of completing the hull including the cost of the hull is
approximately $16.0 million, excluding capitalized interest. Delivery
of the vessel is expected in October 1998.
Additionally, the Company has entered into an agreement with
Bender Shipbuilding & Repair, Inc, of Mobile, Alabama, for the
construction of two 217' offshore support vessels at an approximate
total cost of $22 million, excluding capitalized interest. Delivery
of the first vessel is anticipated early in 1999 and the second vessel
is anticipated in mid-1999. The specifications of these vessels were
developed jointly between the Company and the shipyard for use in
international applications. The Company also has an option to
construct two additional vessels under this agreement.
Interest is capitalized in connection with the construction of
vessels. During the three and six months ended June 30, 1998 $384,000
and $613,000 was capitalized, respectively, compared to the previous
year when no amounts were capitalizable amounts were immaterial.
In addition to owned vessels, the Company will from time to time
enter into bareboat charter arrangements whereby the Company pays the
vessel owner a set rate for the vessel only. The Company currently
has two vessels under long term bareboat charters. One vessel was
delivered in June 1998 and the other was delivered in July 1998. Both
of these vessels are chartered for an initial term of three years and
have begun working under three year contracts.
11
<PAGE>12
(8) DISCONTINUED OPERATIONS
The following selected financial information for discontinued
operations relates to the non-marine operations of the Company's
predecessor and is presented for informational purposes only. The
operations were disposed of on May 1, 1997. The information does not
necessarily reflect what the results of operations would have been had
such discontinued operations operated as a stand-alone entity.
Summary Operating Data of Discontinued Operations
<TABLE>
<CAPTION> Six Months Ended
June 30,
-------------------------
1998 1997
-------- --------
(In Millions)
<S> <C> <C>
Total revenue............................ $ -- $ 1.1
Loss, net of taxes....................... $ -- $ (0.6)
</TABLE>
(9) SUBSEQUENT EVENT
Subsequent to the close of the quarter ended June 30, 1998, the
Company sold for $3 million cash, its interest in a 51% owned joint
venture, SeaMark Ltd., which operated two bareboat chartered vessels
in Southeast Asia. Gain from the transaction is expected to
approximate the proceeds of the sale and will be included in the
Company's results for the quarter ended September 30, 1998.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The Company provides marine support and transportation services
to companies involved in the offshore exploration and production of
oil and natural gas. The Company's vessels transport drilling
materials, supplies and personnel to offshore facilities, as well as
move and position drilling structures. The majority of its operations
are conducted in the North Sea and, with the exception of one vessel
operating in Brazil, the balance of the Company's operations are
conducted in Southeast Asia. The Company's fleet has grown in size
and capability from an original 11 vessels acquired in late 1990 to
its present level of 34 vessels through strategic acquisitions and new
construction of technologically advanced vessels, partially offset by
dispositions of certain older, less profitable vessels. Twenty-seven
vessels in GulfMark's fleet are owned, two are bareboat chartered and
five are managed.
12
<PAGE>13
The Company's results of operations are affected primarily by day
rates, fleet utilization and the number and type of vessels in its
fleet. These factors are driven by trends within the oil and natural
gas exploration and production industry, which generally affect the
demand for vessels, as well as by trends impacting the broader economy
and capital markets, which generally affect the supply of vessels.
While offshore support vessels service existing oil and natural gas
production platforms and exploration and development activities,
incremental demand depends primarily upon drilling activity, which, in
turn is related to both short-term and long-term trends in oil and
natural gas prices. As a result, trends in oil and natural gas prices
may significantly affect fleet utilization and day rates. While the
declines in the oil and natural gas prices in 1998 have not
significantly affected the Company's operations, any prolonged
depression in oil and natural gas prices could have a material adverse
effect on the Company.
An additional factor affecting operating earnings is the mix of
vessels owned versus bareboat chartered by the Company. Owned and
bareboat chartered vessels generate operating revenues and may incur
expenses at similar rates. However, chartered vessels also incur
bareboat charter expense rather than depreciation expense. Bareboat
charter expense is generally more than depreciation expense.
In addition, the Company provides management services to other
vessel owners for a fee. Charter revenues and vessel expenses of such
vessels are not included in the Company's operating results, however
management fees are included in operating revenues. These vessels
have been excluded for purposes of calculating fleet rates per day
worked and utilization in the applicable periods as shown in the
following table.
The Company's operating costs are primarily a function of fleet
size and utilization levels. The most significant direct operating
costs are wages paid to vessel crews, maintenance and repairs and
marine insurance. Generally, fluctuations in vessel utilization
affect only that portion of the Company's direct operating costs that
are incurred when the vessels are active. As a result, direct
operating costs as a percentage of revenues may vary substantially due
to changes in day rates and utilization.
In addition to these variable costs, the Company incurs fixed
charges related to the depreciation of its fleet and costs for routine
drydock inspections, maintenance and repairs designed to ensure
compliance with applicable regulations and maintaining certifications
for its vessels with various international classification societies.
13
<PAGE>14
Maintenance and repair expenses and marine inspection amortization
charges are generally determined by the aggregate number of
drydockings and other repairs undertaken in a given period. Costs
incurred for drydock inspection and regulatory compliance are
capitalized and amortized over the period between such drydockings,
typically two to three years.
Under applicable maritime regulations, vessels must be drydocked
twice in a five-year period for inspection and routine maintenance and
repairs. Should the Company undertake a large number of drydockings
in a particular fiscal quarter, comparative results may be affected.
For the three months ended June 30, 1998, no vessels were required to
be drydocked compared to the three months ended June 30, 1997 when the
Company drydocked four vessels at an aggregate cost of $1.0 million.
Results of Operations
The table below sets forth, by region, the average day and
utilization rates for the Company's vessels and the average number of
vessels owned or chartered during the periods indicated. These
vessels generate substantially all of the Company's revenues and
operating profit. The information detailed below is utilized by the
Company's management to evaluate the performance of the business.
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
-------------------- --------------------
1998 1997 1998 1997
------ ------ ------ ------
<S> <C> <C> <C> <C>
Rates Per Day Worked (a)(b):
North Sea Capable Fleet (c)(e) $ 12,545 $ 10,283 $ 11,654 (e) $ 9,949
Other (primarily Southeast Asia) 5,021 3,635 4,814 3,505
Overall Utilization(a)(b):
North Sea Capable Fleet (percent)(e) 98.5% 96.8% 98.6%(e) 94.9%
Other (primarily Southeast Asia)(percent) 87.3% 69.2% 86.6% 64.6%
Average Owned/Chartered Vessels(a)(d)
North Sea Capable Fleet (e) 15.3 9.0 13.7 (e) 9.0
Other (primarily Southeast Asia) 14.0 14.0 14.0 14.0
------ ------ ------ ------
Total 29.3 23.0 27.7 23.0
====== ====== ====== ======
</TABLE>
14
<PAGE>15
- ----------------------
(a) Includes all owned or bareboat chartered vessels.
(b) Rates per day worked is defined as total charter revenues divided by
number of days worked, and utilization rate is total days worked
divided by total days of availability in the period.
(c) Revenues for vessels in the North Sea fleet are primarily earned in
Sterling (GBP) and have been converted to US Dollars (US$) at the average
exchange rate (US$/GBP) for the periods indicated. The average
rates were GBP=$1.6539 and GBP=$1.6365 for the quarters ended June 30,
1998 and 1997, respectively. The average rates were GBP=$1.6498 and
GBP=$1.6344 for the six months ended June 30,1998 and 1997, respectively.
(d) Adjusted for vessel additions and dispositions occurring during
each period.
(e) Includes the acquisition of Brovig calculated from February 10, 1998
and forward.
Comparison of the Three Months Ended June 30, 1998 with the Three
Months Ended June 30, 1997.
Revenues in the quarter ended June 30, 1998 increased by $11.1
million, or 98% over the same period in 1997. Net income increased
219% from $1.7 million, $0.24 per share (diluted) in 1997 to $5.3
million, $0.65 per share (diluted) in 1998. The Brovig Supply
acquisition accounted for almost one-half of the revenue and operating
income improvements. Other increases came from the recently delivered
Highland Rover (March 1998). Day rate improvements of 22% in the
North Sea capable vessels and 38% for other vessels also contributed
to the improvements over the prior year quarter.
The Company's depreciation and amortization expense for the
period increased by $1.3 million primarily as a result of the newly
acquired Brovig vessels and the delivery of the Highland Rover.
Interest expense increased by $1.0 million over the same period last
year due to the increase in debt balances related to the acquisition
of Brovig, the delivery of the Highland Rover and the impact of the
Notes offering as further described in Liquidity and Capital
Resources. The increase in interest expense was partially offset by
increased interest income due to higher cash balances.
Comparison of the Six Months Ended June 30, 1998 with the Six Months
Ended June 30, 1997.
Changes in the Company's fleet were significant between the two
periods. The 1998 period included more than four month's operations
of the five vessels acquired as part of the acquisition of Brovig
Supply in February of 1998. Additionally, the Company added the
Highland Rover to the North Sea fleet on March 7, 1998.
15
<PAGE>16
Revenues for the six months ended June 30, 1998 increased 83%
over the same period in 1997. Income from continuing operations
increased $6.1 million to $8.8 million ($1.07 per share) in 1998 from
$2.7 million ($0.39 per share) in 1997.
The North Sea fleet accounted for almost 71% of the increases in
revenues and over one-half of the increases in earnings. Brovig
vessels represented just over 70% of the North Sea revenue increases
and over three-fourths of the earnings increases with the remaining
increases coming from a 17% improvement in day rates.
The Company's depreciation expense for the period increased by
$2.0 million primarily as a result of the newly acquired vessels.
Interest expense for the period was up $1.5 million from the
comparable period related to the debt for the acquisition of the new
vessels.
In the six month period ended June 30, 1997, the Company
reflected a loss from discontinued operations, net of taxes, of $0.6
million related to the non-marine operations of the Company's
predecessor.
Liquidity and Capital Resources
The Company's ongoing liquidity requirements are generally
associated with its need to service debt, fund working capital,
acquire or improve equipment and make other investments. Since its
inception, the Company has been active in the acquisition of
additional vessels through both the resale market and new
construction. Bank financing and internally generated funds have
provided funding for these activities. In June 1998, the Company sold
$130 million in 8.75% Senior Notes due June 1, 2008, pursuant to Rule
144A of the Securities Act of 1933 (the "Offering"). The net proceeds
of the Offering were used to repay the Company's outstanding
indebtedness under its existing facilities. At June 30, 1998, the
Company had total outstanding debt of $130.2 million. On July 24,
1998, the Company commenced an exchange offer through which it offered
to exchange all of the Notes for a series of 8.75% Senior Notes,
identical in all material respects to the Notes, except that the notes
are registered under the Securities Act of 1933, as amended.
In addition to the Senior Notes, on June 8, 1998, the Company
entered into an agreement for a reducing revolving credit facility
(the "Credit Facility") with certain banks (the "Lenders"). The
Credit Facility contains two tranches.
16
<PAGE>17
Tranche 1 is unsecured and is available for general corporate
purposes. The maximum committed amount is initially limited to $25
million. Interest on outstanding balances accrues at LIBOR plus a
margin ranging from 1.0% to 1.375% per annum as determined by the
Company's ratio of funded debt to total capitalization ("Leverage
Ratio").
Tranche 2 is available for financing acquisitions and if drawn,
will be secured by either the capital stock of the acquired company or
with respect to acquired vessel assets, (i) a first priority mortgage,
(ii) an assignment of earnings and insurance and (iii) an assignment
of charters over one year. The maximum committed amount under Tranche
2 is initially $25 million. The interest rate on outstanding balances
under Tranche 2 is LIBOR plus a margin of 0.80% to 1.25% per annum as
determined by the Company's Leverage Ratio.
Under certain circumstances, the maximum committed amounts under
Tranche 1 and 2 shall be increased to $30 million and $45 million
respectively. Both tranches shall begin to reduce 39 months after
closing. Each quarter thereafter, the Credit Facility shall ratably
reduce such that the Credit facility shall be fully reduced after five
years.
In April 1997, the Company acquired an unfinished supply vessel
hull from a Singapore shipyard (the "Gallant Project"). In October of
the same year, the hull was delivered to a shipyard in the United
Kingdom for completion. The anticipated cost of the completed hull,
including the acquisition cost of the hull, is approximately $16.0
million, excluding capitalized interest. A total of $14.4 million of
the cost has been paid as of June 30, 1998, with the balance to be
paid in the remainder of 1998, based on the completion of certain
construction milestones. Delivery of the completed vessel is
anticipated in October of 1998.
In October 1997, the Company entered into a contract for the
construction and delivery of two platform supply vessels (the "Bender
Vessels") with Bender Shipbuilding and Repair, Inc., of Mobile,
Alabama. The contract cost for the completion of each of these
vessels is approximately $11.0 million, excluding capitalized
interest. Delivery of the first vessel is expected in early 1999, and
the second vessel is anticipated in mid-1999. To date a total of $4.4
million has been paid related to these vessels. The Company also has
an option for the construction of two additional vessels. An
additional $12.3 million is expected to be remitted in 1998 with the
balance due in 1999.
17
<PAGE>18
Net cash provided by operating activities of continuing
operations was $12.4 million for the six month period ended June 30,
1998, as compared to $4.8 million for the same period in 1997.
Net cash used in investing activities was $50.9 million and $17.7
million for the six months ended June 30, 1998 and 1997, respectively.
In the 1998 period, the Company completed its acquisition of Brovig
requiring cash, net of cash acquired, in the amount of $25.5 million.
This acquisition was funded through a nine-month bridge facility with
a bank totaling GBP 10 million ($16.4 million) and from funds on hand.
Additionally, the Company made the final payment on the Highland Rover
of approximately $14.0 million in March 1998 and made progress
payments during the six months in 1998 toward the completion of the
Highland Spirit (formerly described as the Gallant Project) as well as
the Bender Vessels. In the comparable 1997 period, the Company made
the final payment on the Highland Drummer of approximately $12.9
million including a portion which was subsequently reimbursed in the
form of a subsidy from the Norwegian government. In the three month
period ended June 30, 1998, the Company had no vessels drydocked
compared to four drydockings in the same prior year period.
Net cash provided by financing activities was $36.4 million for
the six month period ended June 30, 1998 and $3.3 million for the
period ended June 30, 1997. The 1998 period includes proceeds from a
nine-month bridge facility for the purchase of Brovig as well as from
new debt for the delivery of the Highland Rover. Additionally, in
connection with the acquisition of Brovig, the Company assumed
approximately NOK 277 million ($37.4 million) of Brovig's long-term
debt. The Company repaid these facilities with the net proceeds from
the Offering. In the comparable 1997 period, the Company took
delivery of the Highland Drummer which was partially funded from the
Company's debt facilities.
Substantially all of the Company's tax provision is for deferred
taxes. The net operating loss available in the United Kingdom is
primarily the result of accelerated depreciation allowances under
United Kingdom tax law.
The Company believes that its current reserves of cash and short
term investments, cash flows from operations and access to various
credit arrangements will provide sufficient resources to finance
internal operating requirements.
Currency Fluctuations and Inflation
18
<PAGE>19
Substantially all of the operations of the Company are
international; therefore it is exposed to currency fluctuations and
exchange rate risks. Charters for vessels in the North Sea fleet are
primarily denominated in Sterling with a much smaller portion
denominated in Norwegian Kroner subsequent to the acquisition of
Brovig. Operating costs are substantially denominated in the same
currency as charter hire in order to reduce the risk of currency
fluctuations. For the three months ended June 30, 1998, currency
fluctuations in Norwegian Kroner did not have a material impact on the
results of the Company's operations. As of June 30, 1998, the
Norwegian Kroner/U.S. Dollar exchange rate was Norwegian Kroner =
$0.1305. The North Sea operations generated $16.6 million in
revenues, $8.4 million in operating income and $1.9 million of cash
flows from operations for the three months ended June 30, 1998. In
the second quarter of 1998 the Sterling/U.S. Dollar exchange rate
ranged from a high of GBP = U.S.$1.6913 to a low of GBP = U.S.
$1.6217. For the three month period ended June 30, 1998, the average
Sterling to U.S. Dollar exchange rate was 1.6539. The exchange rate
in the comparable 1997 period was 1.6365. As of June 30, 1998, the
Sterling/U.S. Dollar exchange rate was GBP = U.S.$1.6677.
Reflected in the accompanying balance sheet for June 30, 1998, is
a $1.2 million cumulative translation adjustment primarily relating to
the lower Sterling exchange rate as of June 30, 1998 in comparison to
the exchange rate when the Company invested capital in its United
Kingdom subsidiaries. Changes in the cumulative translation
adjustment are non-cash items that are primarily attributable to
investments in vessels and are partially offset by the debt
denominated in the same currency as the assets in the North Sea fleet.
The Company generates a substantial portion of its revenues in
non-U.S. dollar currencies. Although a portion of the costs related
to non-U.S. dollar revenues are denominated in their respective non-
U.S. currencies, the Company is exposed to risks from currency
fluctuations on the portion of the revenues in excess of these costs.
In order to mitigate the foreign currency risk, the Company may enter
into hedging transactions designed to offset the risks from
fluctuations in foreign currencies, although historically, the Company
has not entered into any such hedging transactions.
Portions of certain of the Company's Southeast Asia charters are
denominated in Malaysian ringgits as are a portion of its operating
costs. Beginning in 1998, charters in Malaysia have been fixed in
U.S. dollars with only a portion approximately equal to local expenses
fixed in Malaysian ringgit. Revenues fixed in this currency were
approximately $1.1 million for all of 1997 while revenues fixed in
Malaysian ringgit in the three month period ended June 30, 1998 were
$0.1 million.
19
<PAGE>20
The Company does not currently hedge this currency. In areas where
currency risks are potentially high, the Company accepts only a small
percentage of charter hire in local currency and the
remainder is paid in U.S. dollars.
To date, general inflationary trends have not had a material
effect on the operating revenues or expenses of the Company.
Forward-Looking Statements
This Form 10-Q contains certain forward-looking statements and
other statements that are not historical facts concerning, among other
things, market conditions, the demand for marine support services and
future capital expenditures. Such statements are subject to certain
risks, uncertainties and assumptions, including, without limitation,
dependence on the oil and gas industry, oil and gas prices, ongoing
capital expenditure requirements, uncertainties surrounding
environmental and government regulation, risk relating to leverage,
risk of foreign operations assumptions concerning competition and risk
of currency fluctuations and other matters. There can be no assurance
that the Company has accurately identified and properly weighted all
of the factors which affect market conditions and demand for the
Company's vessels, that the information upon which the Company has
relied is accurate or complete, that the Company's analysis of the
market and demand for its vessels is correct or that the strategy
based on such analysis will be successful.
PART II
OTHER INFORMATION
Item 4. Submission of Matters of a Vote of Security Holders
At the Company's Annual meeting of Stockholders held on May 14,
1998, the stockholders of the Company approved the election of all
nominated directors as follows:
<TABLE>
<CAPTION>
<S>
Nominee In Favor Against
- ------- -------- -------
<C> <C>
David J. Butters 6,263,753 3,503
Norman G. Cohen 6,263,865 3,391
Marshall A. Crowe 6,263,865 3,391
Louis S. Gimbel, 3rd 6,263,865 3,391
Robert B. Millard 6,263,857 3,399
Bruce A. Streeter 6,263,865 3,391
</TABLE>
20
<PAGE>21
In addition the stockholders approved and adopted the GulfMark
Offshore, Inc. 1997 Equity Plan. The results of the voting with
respect to the matter were 6,227,885 for, 23,192 against, 16,179
abstained.
Item 5. Other Information
Notice of Shareholder Proposals
The Securities and Exchange Commission recently adopted amendments
to the discretionary voting provisions of Rule 14a-4 of the proxy rules.
The changes became effective June 29, 1998. The amendments were
intended to clarify when management may use the discretionary authority
customarily contained in a proxy to vote against shareholder proposals
made outside the mechanism of Rule 14a-8, such as proposals made by a
shareholder from the floor of the meeting or through an independent
proxy solicitation.
Rule 14a-4(c) has always clearly authorized management to use
discretionary authority granted in a proxy to vote against any
shareholder proposal validly omitted from the Company's proxy materials
pursuant to Rule 14a-8. With respect to proposals made entirely outside
the mechanism of Rule 14a-8, such as a proposal that the proponent makes
only from the floor of the meeting or a proposal that is the subject of
an independent proxy solicitation by the proponent, Rule 14a-4(c) was
somewhat ambiguous.
Under revised Rule 14a-4(c), management may exercise discretionary
authority to vote against any shareholder proposal of which they did not
have notice at least 45 days before the date on which the Company first
mailed its proxy materials for the prior year's annual meeting. The
Company's proxy statement or proxy card must simply state that
management intends to use its discretionary authority in this way as a
general matter.
If management receives notice of a non-14a-8 proposal on or before
the required date, revised Rule 14a-4(c) still permits management to use
discretionary voting authority to vote against the proposal. To do so,
however, the Company's proxy materials must also include advice on the
nature of the particular matter and how the Company intends to exercise
its discretion on it.
21
<PAGE>22
Management my not use discretionary authority under revised Rule
14a-4(c) to vote against a proposal with respect to which timely notice
has been given, if, in addition, the proponent (1) provides the Company
by the notice date with a written statement that it intends to solicit
proxies from the holders of at least the percentage of the Company's
voting shares required to carry the proposal, (2) includes a statement
to that effect in the proponent's proxy statement, and (3) thereafter
provides the registrant with a verification that such a solicitation has
occurred. In such a case, management would have to solicit specific
proxy authority in its own proxy materials in order to vote against the
proposal rather than rely on discretion.
Revised Rule 14a-4(c) further provides that in the event of any
advance notice bylaw requiring that notice of a shareholder proposal be
given by a certain date, then the date designated in the advance notice
bylaw will apply in lieu of the 45 days designated in revised Rule 14a-
4(c). The Company's Bylaws do not currently include an advance notice
requirement for shareholder proposals. Therefore, the 45-day period
described above will apply for purposes of determining the ability of
management to exercise discretionary authority with respect to
shareholder proposals pursuant to revised Rule 14a-4(c).
At the next annual meeting of shareholders, management may exercise
discretionary authority under its proxies, pursuant to revised Rule 14a-
4(c), to vote against any shareholder proposal of which the Company does
not have notice on or before February 15, 1999, which is 45 days before
the date on which the Company first mailed its proxy materials for the
prior year's annual meeting.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
*10.1 - Multi-Currency Revolving Loan Agreement dated June 8,
1998 among the Company, Christiania Bank og Kreditkasse
ASA, The Chase Manhattan Bank, London Branch and others
named therein.
*27.1 - Financial Data Schedule.
* Filed herewith.
22
<PAGE>23
(b) Reports on Form 8-K.
On May 12, 1998, the Company filed a report on Form 8-K
announcing it was offering to sell $130 million principal amount of
Senior Notes due 2008.
On June 23, 1998, the Company filed a report on Form 8-K
announcing that it sold in a private offering pursuant to Rule 144A
$130 million 8-3/4% Senior Notes due 2008, priced to yield 8.8% to
maturity.
On July 30, 1998, the Company filed a report on Form 8-K
announcing the release of the results of its operations for the
quarter ended June 30, 1998.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Company has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
GulfMark Offshore, Inc.
(Registrant)
By: /s/ Frank R. Pierce
-----------------------------
Frank R. Pierce
Executive Vice President
(Principal Financial Officer)
Date: August 12, 1998
23
<PAGE>24
EXHIBIT INDEX
Exhibit No.
*10.1 - Multi-Currency Revolving Loan Agreement dated June 8, 1998
among the Company, Christiania Bank og Kreditkasse ASA, The
Chase Manhattan Bank, London Branch and others named therein.
*27.1 - Financial Data Schedule.
* Filed herewith.
24
10
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE FOLLOWING SETS FORTH CERTAIN SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF GULFMARK OFFSHORE, INC. AS OF
JUNE 30,1998, AND THE CONDENSED CONSOLIDATED STATEMENT OF INCOME FOR THE SIX
MONTHS ENDED JUNE 30, 1998, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 22,829
<SECURITIES> 0
<RECEIVABLES> 19,825
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 44,096
<PP&E> 212,698
<DEPRECIATION> 27,810
<TOTAL-ASSETS> 253,801
<CURRENT-LIABILITIES> 9,698
<BONDS> 0
0
0
<COMMON> 80
<OTHER-SE> 35,068
<TOTAL-LIABILITY-AND-EQUITY> 94,560
<SALES> 38,493
<TOTAL-REVENUES> 38,493
<CGS> 13,640
<TOTAL-COSTS> 21,753
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,075
<INCOME-PRETAX> 12,925
<INCOME-TAX> 4,128
<INCOME-CONTINUING> 8,797
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 8,797
<EPS-PRIMARY> 1.10
<EPS-DILUTED> 1.07
</TABLE>
EXECUTION COPY (Private)
DATED 8 JUNE 1998
GULFMARK OFFSHORE, INC.
as Parent, the Tranche 1 Borrower and a Tranche 2 Borrower
CHRISTIANIA BANK OG KREDITKASSE ASA
as Administrative Agent and Arranger
THE CHASE MANHATTAN BANK, LONDON BRANCH
as Security and Documentation Agent and Arranger
and
OTHERS
.............
- -------------
U.S.$50,000,000
MULTICURRENCY REVOLVING LOAN AGREEMENT
...............
- ---------------
CLIFFORD CHANCE
CONTENTS
Clause Page No.
1. DEFINITIONS AND INTERPRETATION 1
2. THE FACILITY 18
3. UTILISATION OF THE FACILITY 21
4. PAYMENT AND CALCULATION OF INTEREST 23
5. MARKET DISRUPTION AND ALTERNATIVE INTEREST RATES 23
6. NOTIFICATION 24
7. REPAYMENT 25
8. CANCELLATION AND PREPAYMENT 26
9. TAXES 27
10. TAX RECEIPTS 29
11. INCREASED COSTS 30
12. ILLEGALITY 31
13. MITIGATION 31
14. REPRESENTATIONS 32
15. FINANCIAL INFORMATION 36
16. FINANCIAL CONDITION 38
17. COVENANTS 40
18. EVENTS OF DEFAULT 43
19. GUARANTEE AND INDEMNITY 46
20. COMMITMENT COMMISSION AND FEES 49
21. COSTS AND EXPENSES 49
22. DEFAULT INTEREST AND BREAK COSTS 50
23. PARENT'S INDEMNITIES 51
24. CURRENCY OF ACCOUNT AND PAYMENT 52
25. PAYMENTS 53
26. SET-OFF 55
27. SHARING 56
28. THE ADMINISTRATIVE AGENT, THE ARRANGERS AND THE BANKS 57
29. ASSIGNMENTS AND TRANSFERS 62
30. ADDITIONAL BORROWERS 64
31. ADDITIONAL GUARANTORS 65
32. ECONOMIC AND MONETARY UNION 66
33. CALCULATIONS AND EVIDENCE OF DEBT 67
34. REMEDIES AND WAIVERS, PARTIAL INVALIDITY 69
35. NOTICES 69
36. COUNTERPARTS 70
37. AMENDMENTS 70
38. GOVERNING LAW 72
39. JURISDICTION 72
THE SCHEDULES
Schedule 1: The Companies
Schedule 2: The Banks
Part I - Tranche 1
Part II - Tranche 2A
Part III - Tranche 2B
Schedule 3: Form of Transfer Certificate
Schedule 4: Conditions Precedent
Part I - Conditions Precedent to Drawdown
Part II - Conditions Precedent to Tranche 2A Advance
Part III - Conditions Precedent to Tranche 2B Advance
Schedule 5: Additional Conditions Precedent for New Borrowers
Schedule 6: Notice of Drawdown
Schedule 7: Ecu
Schedule 8: Existing Encumbrances
Schedule 9: Form of Compliance Certificate
Schedule 10: Form of Borrower Accession Memorandum
Schedule 11: Form of Guarantor Accession Memorandum
Schedule 12: Form of Resignation Notice
THIS AGREEMENT is made on 8 June 1998
BETWEEN
(1) GULFMARK OFFSHORE, INC. a company incorporated in the state of
Delaware, United States of America and having its registered
office at 5 Post Oak Park, Suite 1170, Houston, Texas 77027 (the
"Tranche 1 Borrower", a "Tranche 2 Borrower" and, acting in a
separate capacity, the "Parent");
(2) CHRISTIANIA BANK OG KREDITKASSE ASA as administrative agent
and as arranger of the Facility (in each separate capacity, the
"Administrative Agent" and the "Arranger");
(3) THE CHASE MANHATTAN BANK, LONDON BRANCH as security and
documentation agent and as arranger of the Facility (in each
separate capacity, the "Security and Documentation Agent" and the
"Arranger"); and
(4) THE BANKS (as defined below).
IT IS AGREED as follows.
1. DEFINITIONS AND INTERPRETATION
1.1Definitions
In this Agreement:
"Accession Memorandum" means a Borrower Accession Memorandum or a
Guarantor Accession Memorandum.
"Additional Borrower" means any company which has become an
Additional Borrower in accordance with Clause 30 (Additional
Borrowers).
"Additional Guarantor" means any company which has become an
Additional Guarantor in accordance with Clause 31 (Additional
Guarantors).
"Additional Obligor" means an Additional Borrower or Additional
Guarantor.
"Advance" means a Tranche 1 Advance and/or a Tranche 2 Advance
made or to be made by the Banks hereunder.
"Applicable Margin" is
(a) with respect to Tranche 1
(i) if the Leverage Ratio is equal to or less than
0.50 to 1.00 1.00% p.a.
(ii) if the Leverage Ratio is equal to or less than 0.60
but greater than 0.50 1.125% p.a.
(iii) if the Leverage Ratio is greater than 0.60 1.375% p.a.
(b) with respect to Tranche 2
(i) if the Leverage Ratio is equal to or less than
0.50 to 1.00 0.80% p.a.
(ii) if the Leverage Ratio is equal to or less than 0.60
but greater than 0.50 1.00% p.a.
(iii) if the Leverage Ratio is greater than 0.60 1.25% p.a.
"Approved Stock Exchange" means, in relation to a Share a stock
exchange approved by the Security and Documentation Agent.
"Associated Costs Rate" means in relation to each Advance or
Unpaid Sum the percentage rate from time to time determined by the
Administrative Agent (in its sole discretion) as reflecting the
loss or difference in return which would be suffered by the
Administrative Agent, and/or such Bank or Banks as it may from
time to time determine (if the Administrative Agent or such Bank
or Banks funded such Advance or Unpaid Sum), as a result of:
(a) funding (at LIBOR and on a match-funded basis) (a) any special
deposits and (b) any cash ratio deposits required to be placed
with the Bank of England (or any other authority which replaces
all or any of its functions); and/or
(b) any charge imposed by the Financial Services Authority (or any
other authority which replaces all or any of its functions), in
respect of eligible liabilities which relate to funding such
Advance or Unpaid Sum.
"Authorised Signatory" means, in relation to an Obligor or
proposed Obligor, any person who is duly authorised (in such
manner as may be reasonably acceptable to the Administrative
Agent) and in respect of whom the Administrative Agent has
received a certificate signed by a director or another Authorised
Signatory of such Obligor or proposed Obligor setting out the name
and signature of such person and confirming such person's
authority to act.
"Available Commitment" means, in relation to a Bank at any time
and save as otherwise provided herein, the aggregate of the
Tranche 1 Commitments and Tranche 2 Commitments at such time less
the aggregate of its portions of the Dollar Amounts of the
Advances which are then outstanding, provided that such amount
shall not be less than zero.
"Available Facility" means, at any time, the aggregate amount of
the Available Commitments adjusted, in the case of any proposed
drawdown, so as to take into account:
(a) any reduction in the Commitment of a Bank pursuant to the
terms hereof;
(b) the Dollar Amount of any Advance which, pursuant to any other
drawdown, is to be made; and
(c) the Dollar Amount of any Advance which is due to be repaid,
on or before the proposed drawdown date.
"Available Tranche 1 Facility" means, at any time, the aggregate
amount of the Available Tranche 1 Commitments adjusted, in the
case of any proposed drawdown, so as to take into account:
(a) any reduction in the Tranche 1 Commitment of a Tranche 1 Bank
pursuant to the terms hereof;
(b) the Dollar Amount of any Tranche 1 Advance which, pursuant to
any other drawdown, is to be made; and
(c) the Dollar Amount of any Tranche 1 Advance which is due to be
repaid,on or before the proposed drawdown date.
"Available Tranche 2 Facility" means, at any time, the aggregate
amount of the Available Tranche 2 Commitments adjusted, in the
case of any proposed drawdown, so as to take into account:
(a) any reduction in the Tranche 2 Commitment of a Tranche 2 Bank
pursuant to the terms hereof;
(b) the Dollar Amount of any Tranche 2 Advance which,
pursuant to any other drawdown, is to be made; and
(c) the Dollar Amount of any Tranche 2 Advance which is due
to be repaid,
on or before the proposed drawdown date.
"Available Tranche 1 Commitment" means, in relation to a Bank
at any time and save as otherwise provided herein, the
aggregate of the Tranche 1 Commitment at each time less the
aggregate of its portions of the Dollar Amount of the Tranche
1 Advances which are then outstanding, provided that each
amount shall not be less than zero.
"Available Tranche 2 Commitment" means, in relation to a Bank
at any time and save as otherwise provided herein, the
aggregate of the Tranche 2 Commitment at each time less the
aggregate of its portions of the Dollar Amount of the Tranche
2 Advances which are then outstanding, provided that each
amount shall not be less than zero.
"Bank" means any financial institution:
(a) named in Schedule 2 (The Banks); or
(b) which has become a party hereto in accordance with
Clause 29.5 (Assignments by Banks) or Clause 29.6
(Transfers by Banks),
and which has not ceased to be a party hereto in accordance
with the terms hereof.
"Borrower" means either of the Tranche 1 Borrower or the
Tranche 2 Borrower, and each Additional Borrower provided
that such Company has not been released from its rights and
obligations hereunder in accordance with Clause 30.3
(Resignation of a Borrower).
"Borrower Accession Memorandum" means a memorandum
substantially in the form set out in Schedule 10 (Form of
Borrower Accession Memorandum).
"Business Day" means a day (other than a Saturday or Sunday)
on which (a) banks generally are open for business in London,
Oslo and New York City and (b) if such reference relates to a
date for the payment or purchase of any sum denominated in:
(i) an Optional Currency other than ecu Provided banks
generally are open for business in the principal
financial centre of the country of such Optional
Currency; or
(ii) ecu Provided (1) the Ecu Clearing and Settlement System
operated by the Ecu Banking Association (or if such
clearing system ceases to be operative, such other
clearing system (if any) determined by the
Administrative Agent to be a suitable replacement) is
open for business and (2) banks generally are open for
business in the financial centre specified by the
Administrative Agent from time to time.
"Code" means the United States Internal Revenue Code of 1986,
as amended from time to time.
"Commitment" means, in relation to a Bank at any time and
save as otherwise provided herein, the aggregate amount of
the Tranche 1 Commitment and Tranche 2 Commitment set
opposite its name in Schedule 2 (The Banks).
"Compliance Certificate" means a certificate substantially in
the form set out in Schedule 9 (Form of Compliance
Certificate).
"Dispute" means any dispute referred to in Clause 39
(Jurisdiction).
"Dollar Amount" means:
(a) in relation to any Advance, its Original Dollar Amount
as reduced by the proportion (if any) of such Advance
which has been repaid; and
(b) in relation to the Loan, the aggregate of the Dollar
Amounts of the outstanding Advances.
"eligible liabilities" shall bear the meaning given to it in
the Bank of England Act 1998 or by the Bank of England (as
may be appropriate) for the time being.
"Encumbrance" means (a) a mortgage, charge, pledge, security
interest, lien or other encumbrance securing any obligation
of any person or any financial statement filed in respect of
any of the foregoing, (b) any arrangement under which money
or claims to, or the benefit of, a bank or other account may
be applied, set off or made subject to a combination of
accounts so as to effect discharge of any sum owed or payable
to any person or (c) any other type of preferential
arrangement (including any title transfer and retention
arrangement) having a similar effect.
"Environmental Claim" means any claim, proceedings, or
investigation by any person pursuant to any Environmental
Law.
"Environmental Law" means any applicable law in any
jurisdiction in which any member of the Group conducts
business or owns, uses, leases or operates property which law
relates to the pollution or protection of the environment or
harm to or the protection of human health or the health of
animals or plants.
"Environmental Permits" means any permit, licence, consent,
approval and other authorisation and the filing of any
notification, report or assessment required under any
Environmental Law for the operation of the business of any
member of the Group conducted on or from the properties
owned, used, leased or operated by the relevant member of the
Group.
"Event of Default" means any circumstance described as such
in Clause 18 (Events of Default).
"Facility" means the Tranche 1 senior unsecured multicurrency
revolving loan facility granted to the Tranche 1 Borrower and
the Tranche 2 senior multicurrency revolving loan facility
granted to the Tranche 2 Borrowers in this Agreement.
"Facility Office" means, in relation to the Administrative
Agent, the office identified with its signature below or such
other office as it may select by notice and, in relation to
any Bank, the office notified by it to the Administrative
Agent in writing prior to the date hereof (or, in the case of
a Transferee, at the end of the Transfer Certificate to which
it is a party as Transferee) or such other office as it may
from time to time select by notice to the Administrative
Agent.
"Final Maturity Date" means the day which is sixty (60)
months after the date hereof.
"Finance Documents" means this Agreement, the Security
Documents, any Borrower Accession Memorandum and any
Guarantor Accession Memorandum.
"Finance Parties" means the Administrative Agent, the
Security and Documentation Agent, the Arrangers (acting in
their separate capacities) and the Banks.
"Financial Indebtedness" means any indebtedness for or in
respect of:
(a) Indebtedness for Borrowed Money;
(b) any documentary credit facility;
(c) any interest rate swap, currency swap, forward foreign
exchange transaction, cap, floor, collar or option
transaction or any other treasury transaction or any
combination thereof or any other transaction entered
into in connection with protection against or benefit
from fluctuation in any rate or price (and the amount
of the Financial Indebtedness in relation to any such
transaction shall be calculated by reference to the
mark-to-market valuation of such transaction at the
relevant time); and
(d) any guarantee, indemnity, bond, standby letter of
credit or any other instrument issued in connection
with the performance of any contract or other
obligation.
"Group" means the Parent and its subsidiaries for the time
being.
"Guarantors" means the Parent and any Additional Guarantor,
provided that such company has not been released from its
rights and obligations hereunder in accordance with Clause
31.3 (Resignation of a Guarantor).
"Guarantor Accession Memorandum" means a memorandum
substantially in the form set out in Schedule 10 (Form of
Guarantor Accession Memorandum).
"Indebtedness for Borrowed Money" shall be construed so as to
include, without limitation, any indebtedness of any person
for or in respect of:
(i) amounts raised by acceptance under any acceptance
credit facility;
(ii) amounts raised under any note purchase facility;
(iii) the amount of any liability in respect of leases or
hire purchase contracts which would, in accordance
with generally accepted accounting standards in the
United States (as used in the Parent's most recent
audited annual consolidated financial statements from
time to time), be treated as finance or capital
leases;
(iv) the amount of any liability in respect of any purchase
price for assets or services the payment of which is
deferred for a period in excess of one hundred and
eighty days; and
(v) amounts raised under any other transaction (including,
without limitation, any forward sale or purchase
agreement) having the commercial effect of a borrowing
(excluding, for the avoidance of doubt, indebtedness
incurred in relation to commercial transactions).
"Instructing Group" means:
(a) whilst no Advances are outstanding, a Bank or Banks
whose Commitments amount (or, if each Bank's
Commitment has been reduced to zero, did immediately
before such reduction to zero, amount) in aggregate to
more than sixty-six and two thirds per cent. (66?%) of
the Total Commitments; and
(b) whilst at least one Advance is outstanding, a Bank or
Banks to whom in aggregate more than sixty-six and two
thirds per cent. (66?%) of the Dollar Amount of the
Loan is owed.
"LIBOR" means, in relation to any amount owed by an Obligor
hereunder on which interest for a given period is to accrue:
(a) the percentage rate per annum equal to the offered
quotation which appears on the page of the Telerate
Screen which displays an average British Bankers
Association Interest Settlement Rate for the currency
of the relevant amount (being currently "3740" or, as
the case may be, "3750") for such period at or about
11.00 a.m. on the Quotation Date for such period or,
if such page or such service shall cease to be
available, such other page or such other service for
the purpose of displaying an average British Bankers
Association Interest Settlement Rate for such currency
as the Administrative Agent, after consultation with
the Banks and the Borrower shall select; or
(b) if no quotation for the relevant currency and the
relevant period is displayed and the Administrative
Agent has not selected an alternative service on which
a quotation is displayed, the arithmetic mean (rounded
upwards to four decimal places) of the rates (as
notified to the Administrative Agent) each of the
Reference Banks was offering to prime banks in the
London Interbank Market deposits in the currency of
such amount and for such period at or about 11.00 a.m.
on the Quotation Date for such period.
"Loan" means the aggregate principal amount for the time
being outstanding hereunder.
"Market Price of a Share" means, at any time, in relation to
any Share, the price in dollars (or its equivalent in
dollars) (a) as most recently published on the Approved Stock
Exchange on which such share is quoted or (b) as most
recently determined by an independent and internationally
recognised firm of investment bankers acceptable to the
Administrative Agent.
"Market Value of a Vessel" means, at any date, the value
shown in a certificate of valuation (the "Borrower's
Valuation Certificate") prepared:
(a) as at a date not more than fourteen (14) days
previously;
(b) by an independent sale and purchase shipbroker which
the Borrower has appointed;
(c) with or without physical inspection of that Vessel (as
the Banks may require);
(d) on the basis of a sale for prompt delivery for cash on
normal arm's length commercial terms as between a
willing seller and a willing buyer, free of any
existing charter or other contract of employment;
(e) after deducting the estimated amount of the usual and
reasonable expenses which would be incurred in
connection with the sale,
Provided that if the Banks at any time obtain a certificate
of valuation (the "Banks' Valuation Certificate") from an
independent sale and purchase shipbroker, prepared on the
same basis as that prepared by the independent sale and
purchase shipbroker appointed by the Borrower, the Market
Value of a Vessel shall mean the arithmetic mean of the
values shown in the Borrower's Valuation Certificate and the
Banks' Valuation Certificate.3
"Material Adverse Effect" means a material adverse effect on
(a) the ability of the Obligors to meet their obligations to
any of the Finance Parties hereunder or under any of the
Security Documents to which any Obligor is a party or (b) the
validity or enforceability of the Finance Documents or the
rights or remedies of any Finance Party thereunder.
"Material Subsidiary" means, at any time, a subsidiary of the
Parent resident for tax purposes in the United States of
America which has:
(a) profits before interest and tax representing 10 per
cent. or more of the consolidated profits before
interest and tax of the Group;
(b) tangible net worth representing 10 per cent. or more of
consolidated tangible net worth of the Group; and/or
(c) turnover representing 10 per cent. or more of
consolidated turnover of the Group,
in each case calculated on a consolidated basis. Compliance
with the conditions set out in paragraphs (a), (b) and (c)
above shall be determined by reference to the most recent
Compliance Certificate executed by the Parent's auditors
and/or the latest audited financial statements of such
subsidiary (consolidated in the case of a subsidiary which
itself has subsidiaries) and the latest audited consolidated
financial statements of the Group provided that:
(i) if a subsidiary has been acquired since the date as at
which the latest audited consolidated financial
statements of the Group were prepared, such financial
statements shall be adjusted in order to take into
account the acquisition of such subsidiary (such
adjustment being certified by the Group's auditors as
representing an accurate reflection of the revised
consolidated profits before interest and tax or
turnover of the Group);
(ii) if, in the case of any subsidiary which itself has
subsidiaries, no consolidated financial statements are
prepared and audited, its consolidated profits before
interest and tax, consolidated tangible net worth and
turnover shall be determined on the basis of pro forma
consolidated financial statements of the relevant
subsidiary and its subsidiaries, prepared for this
purpose by the auditors of the Parent or the auditors
for the time being of the relevant subsidiary; and
(iii) if any intra-group transfer or re-organisation takes
place, the audited financial statements of the Group
and of all relevant subsidiaries shall be adjusted by
the Group's auditors in order to take into account
such intra-group transfer or reorganisation.
A report by the auditors of the Parent that a subsidiary is
or is not a Material Subsidiary shall, in the absence of
manifest error, be conclusive and binding on all parties
hereto.
Notwithstanding the foregoing, GMRK Inc., a Delaware company
and wholly owned subsidiary of the Parent, shall not, for the
purposes of this Agreement, be deemed to be a Material
Subsidiary of the Parent.
"Minimum Scheduled Reduction Repayment" means, in relation to
any Reduction Date, the minimum instalment of the Loan which
must be repaid to ensure the Total Tranche 1 Commitments and
the Total Tranche 2 Commitments shall have been reduced by
the aggregate percentage set opposite such Reduction Date in
the table in Clause 7.2 (Scheduled Reduction Payment).
"Notice of Drawdown" means a notice substantially in the form
set out in Schedule 4 (Notice of Drawdown).
"Obligors" means the Borrowers and the Guarantors.
"Optional Currency" means domestic sterling, Norwegian Kroner
and ecu (except dollars) which is freely transferable and
freely convertible into dollars, which is available to banks
in the London Interbank Market and any other currency which
has been previously approved in writing by the Administrative
Agent (acting on the instructions of all the Banks) as an
optional currency for the purposes of any drawdown at least
three Business Days prior to delivery of the Notice of
Drawdown for such Advance.
"Original Dollar Amount" means, in relation to an Advance,
the amount thereof requested in the Notice of Drawdown
relating thereto (as the same may be reduced pursuant to
Clause 3.6 (Reduction of Available Commitment)) or, if such
Advance is not denominated in dollars, the equivalent of such
amount (as the same may be so reduced) in dollars, calculated
as at the date of such Notice of Drawdown.
"Original Financial Statements" means:
(a) in relation to the Parent, its audited consolidated
financial statements for its financial year ended 31
December 1997;
(b) in relation to any Additional Obligor, its financial
statements, audited (if required by the Security and
Documentation Agent) delivered pursuant to Schedule 5
(Additional Conditions Precedent).
"Original Market Value" means an amount equal to the original
purchase price or cost of the Vessel.
"Permitted Encumbrance" means:
(a) any Encumbrance specified in Schedule 8 (Existing
Encumbrances), provided that the amount thereby
secured is not increased;
(b) Encumbrances securing Project Finance Indebtedness;
(c) Encumbrances securing refinancing indebtedness,
provided that the principal amount of such
indebtedness is not increased and such Encumbrance
does not extend to any assets other than those that
were subject to the Encumbrance securing the
indebtedness to be refinanced;
(d) any netting or set-off arrangement entered into by any
member of the Group in the normal course of its
banking arrangements for the purpose of netting debit
and credit balances;
(e) any title transfer or retention of title arrangement
entered into by any member of the Group in the normal
course of its trading activities on the counterparty's
standard or usual terms;
(f) Encumbrances created with the prior written consent of
the Banks;
(g) Encumbrances arising from the Security Documents;
(h) any lien (excluding any tax liens arising under U.S.
Federal laws) arising by operation of law and in the
normal course of business, provided that such lien is
discharged within thirty days of arising or, if
contested in good faith, suitable security
satisfactory to the Banks is provided therefor; and
(i) any other encumbrance securing obligations up to an
amount of $1,000,000.
"Potential Event of Default" means any event which may become
(with the passage of time, the giving of notice, the making
of any determination hereunder or any combination thereof) an
Event of Default.
"Proportion" means, in relation to a Bank:
(a) whilst no Advances are outstanding, the proportion
borne by such Bank's Commitment to the Total
Commitments (or, if the Total Commitments are then
zero, by its Commitment to the Total Commitments
immediately prior to their reduction to zero); or
(b) whilst at least one Advance is outstanding, the
proportion borne by such Bank's share of the Dollar
Amount of the Loan to the Dollar Amount of the Loan.
"Project Finance Indebtedness" means any indebtedness
incurred to finance the ownership, acquisition, construction,
development and/or operation of an asset in respect of which
the person or persons to whom such indebtedness is or may be
owed by the relevant debtor (whether or not a member of the
Group) have no recourse whatsoever for the repayment of or
payment of any sum relating to such indebtedness other than:
(i) recourse to such debtor for amounts limited to the
aggregate cash flow or net cash flow (other than
historic cash flow or historic net cash flow) from
such asset; and/or
(ii) recourse to such debtor for the purpose only of
enabling amounts to be claimed in respect of such
indebtedness in an enforcement of any Encumbrance
given by such debtor over such asset or the income,
cash flow or other proceeds deriving therefrom to
secure such indebtedness or any recourse referred to
in (iii) below, Provided that (A) the extent of such
recourse to such debtor is limited solely to the
amount of any recoveries made on any such enforcement,
and (B) such person or persons are not entitled, by
virtue of any right or claim arising out of or in
connection with such indebtedness, to commence
proceedings for the winding-up or dissolution of the
debtor or to appoint or procure the appointment of any
receiver, trustee or similar person or officer in
respect of the debtor or any of its assets (save for
the assets the subject of such encumbrance); and/or
(iii) recourse to such debtor generally, which recourse is
limited to a claim for damages (other than liquidated
damages and damages required to be calculated in a
specified way) for breach of an obligation (not being
a payment obligation or an obligation to procure
payment by another or an obligation to comply or to
procure compliance by another with any financial
ratios or other test of financial condition) by the
person against whom such recourse is available.
"Quotation Date" means, in relation to any period for which
an interest rate is to be determined hereunder, the day on
which quotations would ordinarily be given by prime banks in
the London Interbank Market for deposits in the currency in
relation to which such rate is to be determined for delivery
on the first day of that period, provided that, if, for any
such period, quotations would ordinarily be given on more
than one date, the Quotation Date for that period shall be
the last of those dates.
"Reduction Date" shall have the meaning given to such term in
Clause 7.2 (Scheduled Reduction Repayment).
"Reference Banks" means the principal London office of The
Chase Manhattan Bank, and the principal Oslo office of
Christiania Bank og Kreditkasse ASA.
"Relevant Jurisdiction" means, in relation to an Obligor, the
jurisdiction of incorporation of such Obligor, together with
those jurisdictions where such Obligor has substantial
operations or assets.
"Repayment Date" means, in relation to any Advance, the last
day of the Term thereof.
"Repeated Representations" means each of the representations
set out in Clause 14.1 (Status) to, and including, Clause
14.24 (Year 2000).
"Resignation Notice" means a notice substantially in the form
set out in Schedule 11 (Form of Resignation Notice).
"Rollover Advance" means an Advance which is used to
refinance a maturing Advance and which is in the same amount
and the same currency as such maturing Advance and is to be
drawn on the day such maturing Advance is to be repaid.
"Security Documents" means the security document and
associated arrangements to be entered into pursuant to Clause
2.3(b) and 2.3(c) (Conditions Precedent).
"Selected Currency" is defined in Clause 24.2 (Unavailability
of ECU/ecu).
"Shares" means the shares acquired by a Borrower, pursuant to
utilisation of the Tranche 2 Facility, in companies operating
within the same industry as the Parent.
"Term" means, save as otherwise provided herein:
(a) in relation to any Advance, the period for which such
Advance is borrowed as specified in the Notice of
Drawdown relating thereto; and
(b) in relation to an Unpaid Sum, any of those periods
mentioned in Clause 22.1 (Default Interest Periods).
"Total Commitments" means, at any time, the aggregate of the
Total Tranche 1 Commitments and the Total Tranche 2
Commitments (as the same may be increased pursuant to Clause
2.6).
"Total Tranche 1 Commitments" means the aggregate of the
Tranche 1 Commitments of the Banks (as the same may be
increased pursuant to Clause 2.6).
"Total Tranche 2A Commitments" means the aggregate of the
Tranche 2A Commitments of the Banks (as the same may be
increased pursuant to Clause 2.6).
"Total Tranche 2B Commitments" means the aggregate of the
Tranche 2B Commitments of the Banks (as the same may be
increased pursuant to Clause 2.6).
"Total Tranche 2 Commitments" means the aggregate of the
Total Tranche 2A Commitments and the Total Tranche 2B
Commitments (as the same may be increased pursuant to Clause
2.6) divided by two.
"Tranche 1 Advance" means an advance made or to be made by
the Banks under Tranche 1.
"Tranche 2 Advance" means a Tranche 2A Advance and/or a
Tranche 2B Advance made or to be made by the Banks under
Tranche 2.
"Tranche 2A Advance" means an advance made or to be made by
the Banks in relation to a Vessel under Tranche 2.
"Tranche 2B Advance" means the advance made or to be made by
the Banks in relation to Shares under Tranche 2.
"Tranche 2 Borrower" means the Parent and/or any subsidiary
of the Parent (a list of which as at the date hereof are set
out in Schedule 1) who may become an Additional Borrower
pursuant to Clause 30.
"Tranche 1 Commitment" means in relation to a Bank at any
time the amount set opposite its name in Part I in Schedule 2
(as the same may be increased pusuant to Clause 2.6 (Increase
of the Facility Amount)).
"Tranche 2A Commitment" means in relation to a Bank at any
time the amount set opposite its name in Part II in Schedule
2 (as the same may be increased pursuant to Clause 2.6
(Increase of the Facility Amount)).
"Tranche 2B Commitment" means in relation to a Bank at
anytime the amount set opposite its name in Part III in
Schedule 2 (as the same may be increased pursuant to Clause
2.6 (Increase of the Facility Amount)).
"Tranche 1 Facility" means the Tranche 1 senior unsecured
multicurrency revolving loan facility granted to the Tranche
1 Borrower.
"Tranche 2 Facility" means the Tranche 2 senior secured
multicurrency revolving loan facility granted to the Tranche
2 Borrower.
"Transfer Certificate" means a certificate substantially in
the form set out in Schedule 3 (Form of Transfer Certificate)
signed by a Bank and a Transferee under which:
(a) such Bank seeks to procure the transfer to such
Transferee of all or a part of such Bank's rights,
benefits and obligations hereunder upon and subject to
the terms and conditions set out in Clause 29.3
(Assignments and Transfers by Banks); and
(b) such Transferee undertakes to perform the obligations
it will assume as a result of delivery of such
certificate to the Administrative Agent as
contemplated in Clause 29.6 (Transfers by Banks).
"Transfer Date" means, in relation to any Transfer
Certificate, the date for the making of the transfer as
specified in such Transfer Certificate.
"Transferee" means a person to which a Bank seeks to transfer
by novation all or part of such Bank's rights, benefits and
obligations hereunder.
"Unpaid Sum" means the unpaid balance of any of the sums
referred to in Clause 22.1 (Default Interest Periods).
"Valuation Day" means the day two Business Days before the
relevant payment is due or such other day as the
Administrative Agent considers appropriate.
"Vessel" means a vessel of certain specifications, such
specifications to be agreed by the Administrative Agent and
the Parent.
1.2 Interpretation
Any reference in this Agreement to:
the "Administrative Agent", the "Security and Documentation
Agent or any "Bank" shall be construed so as to include its
and any subsequent successors and permitted transferees in
accordance with their respective interests;
"continuing", in relation to an Event of Default, shall be
construed as a reference to an Event of Default which has not
been waived in accordance with the terms hereof and, in
relation to a Potential Event of Default, one which has not
been remedied within the relevant grace period or waived in
accordance with the terms hereof;
a "currency" includes the ecu and any other currency unit
which is freely traded by banks internationally;
the "equivalent" on any date in one currency (the "first
currency") of an amount denominated in another currency (the
"second currency") is a reference to the amount of the first
currency which could be purchased with the amount of the
second currency at the spot rate of exchange quoted by the
Administrative Agent at or about 11.00 a.m. on such date for
the purchase of the first currency with the second currency;
a "holding company" of a company or corporation shall be
construed as a reference to any company or corporation of
which the first-mentioned company or corporation is a
subsidiary;
"indebtedness" shall be construed so as to include any
obligation (whether incurred as principal or as surety) for
the payment or repayment of money, whether present or future,
actual or contingent;
a "law" shall be construed as any law (including common or
customary law), statute, constitution, decree, judgment,
treaty, regulation, directive, bye-law, order or any other
legislative measure of any government, supranational, local
government, statutory or regulatory body or court;
a "month" is a reference to a period starting on one day in a
calendar month and ending on the numerically corresponding
day in the next succeeding calendar month save that, where
any such period would otherwise end on a day which is not a
Business Day, it shall end on the next succeeding Business
Day, unless that day falls in the calendar month succeeding
that in which it would otherwise have ended, in which case it
shall end on the immediately preceding Business Day, provided
that, if a period starts on the last Business Day in a
calendar month or if there is no numerically corresponding
day in the month in which that period ends, that period shall
end on the last Business Day in that later month (and
references to "months" shall be construed accordingly);
a "person" shall be construed as a reference to any person,
firm, company, corporation, government, state or agency of a
state or any association or partnership (whether or not
having separate legal personality) of two or more of the
foregoing;
"repay" (or any derivative form thereof) shall, subject to
any contrary indication, be construed to include "prepay"
(or, as the case may be, the corresponding derivative form
thereof);
a "subsidiary" of a company or corporation shall be construed
as a reference to any company or corporation:
(a) which is controlled, directly or indirectly, by the
first-mentioned company or corporation;
(b) more than half the issued share capital of which is
beneficially owned, directly or indirectly, by the
first-mentioned company or corporation; or
(c) which is a subsidiary of another subsidiary of the
first-mentioned company or corporation
and, for these purposes, a company or corporation shall be
treated as being controlled by another if that other company
or corporation is able to direct its affairs and/or to
control the composition of its board of directors or
equivalent body;
a "successor" shall be construed so as to include an assignee
or successor in title of such party and any person who under
the laws of its jurisdiction of incorporation or domicile has
assumed the rights and obligations of such party under this
Agreement or to which, under such laws, such rights and
obligations have been transferred;
"tax" shall be construed so as to include any tax, levy,
impost, duty or other charge of a similar nature (including
any penalty or interest payable in connection with any
failure to pay or any delay in paying any of the same);
"VAT" shall be construed as a reference to value added tax
including any similar tax which may be imposed in place
thereof from time to time;
a "wholly-owned subsidiary" of a company or corporation shall
be construed as a reference to any company or corporation
which has no other members except that other company or
corporation and that other company's or corporation's
wholly-owned subsidiaries or persons acting on behalf of that
other company or corporation or its wholly-owned
subsidiaries; and
the "winding-up", "dissolution" or "administration" of a
company or corporation shall be construed so as to include
any equivalent or analogous proceedings under the law of the
jurisdiction in which such company or corporation is
incorporated or any jurisdiction in which such company or
corporation carries on business including the seeking of
liquidation, winding-up, reorganisation, dissolution,
administration, arrangement, adjustment, protection or relief
of debtors.
1.3 Currency Symbols
"$", "dollars" and "Dollars" denote lawful currency of the
United States of America, "sterling" denotes lawful currency
of the United Kingdom, "NOK" denotes lawful currency of the
Kingdom of Norway, "ecu" denotes a unit of account identical
in value to the ECU (or European Currency Unit) and "ECU"
denotes the unit of account for the time being used in the
European Communities and described in Schedule 7 (Ecu).
1.4 Agreements and Statutes
Any reference in this Agreement to:
1.4.1 this Agreement or any other agreement or document shall
be construed as a reference to this Agreement or, as
the case may be, such other agreement or document as
the same may have been, or may from time to time be,
amended, varied, novated or supplemented; and
1.4.2 a statute or treaty shall be construed as a reference
to such statute or treaty as the same may have been,
or may from time to time be, amended or, in the case
of a statute, re-enacted.
1.5 Headings
Clause and Schedule headings are for ease of reference only.
1.6 Time
Any reference in this Agreement to a time of day shall,
unless a contrary indication appears, be a reference to Oslo
time.
1.7 Economic and Monetary Union Definitions
In Clause 32 (Economic and Monetary Union) and in each other
provision of this Agreement to which reference is made in
Clause 32 expressly or impliedly:
"Commencement Date" means the date of commencement of the
third stage of EMU (at the date of this Agreement expected to
be 1 January 1999) or on which circumstances arise which (in
the opinion of an Instructing Group) have substantially the
same effect and result in substantially the same consequences
as commencement of the third stage of EMU as contemplated by
the Treaty on European Union.
"EMU" means Economic and Monetary Union as contemplated in
the Treaty on European Union.
"EMU legislation" means legislative measures of the European
Council for the introduction of, changeover to or operation
of a single or unified European currency (whether known as
the euro or otherwise), being in part the implementation of
the third stage of EMU.
"euro" means the single currency of participating member
states of the European Union.
"euro unit" means the currency unit of the euro.
"national currency unit" means the unit of currency (other
than a euro unit) of a participating member state.
"participating member state" means each state so described in
any EMU legislation.
"Treaty on European Union" means the Treaty of Rome of 25
March 1957, as amended by the Single European Act 1986 and
the Maastricht Treaty (which was signed at Maastricht on 7
February 1992 and came into force on 1 November 1993).
PRIVATE 2. THE FACILITY
2.1 Grant of the Facility
The Banks grant to the Tranche 1 Borrower and, with respect
to Tranche 2, grant to the Borrowers, upon the terms and
subject to the conditions hereof, a senior multicurrency
revolving loan facility in an aggregate principal amount
outstanding at any one time of up to $50,000,000 or its
equivalent from time to time in Optional Currencies which
shall be made available in two tranches of $25,000,000
(hereafter referred to as "Tranche 1" and "Tranche 2"), and
which amount may be increased pursuant to Clause 2.6
(Increase of the Facility Amount).
2.2 Purpose and Application
2.2.1 The proceeds of Tranche 1 are intended for general
corporate purposes and, accordingly, the Tranche 1
Borrower shall apply all amounts raised by it
hereunder in or towards satisfaction of its general
corporate financing requirements and none of the
Finance Parties shall be obliged to concern themselves
with such application.
2.2.2 The proceeds of Tranche 2 are intended to be used
towards either financing the acquisition of up to
fifty (50) per cent of the acquisition cost of Shares
or the financing of up to sixty five (65) per cent of
the purchase price of, or cost of, a Vessel.
2.3 Conditions Precedent
Save as the Banks may otherwise agree:
(a) the Tranche 1 Borrower may not deliver any Notice of
Drawdown in respect of Tranche 1 unless the
Administrative Agent has confirmed to the Parent and
the Banks that it has received all of the documents
and other evidence listed in Part I of Schedule 4
(Conditions Precedent);
(b) a Tranche 2A Borrower may not deliver any Notice of
Drawdown in respect of Tranche 2A unless the
Administrative Agent has confirmed to the Parent and
the Banks that it has received all of the documents
and other evidence listed in Part II of Schedule 4
(Conditions Precedent);
(c) a Tranche 2B Borrower may not deliver any Notice of
Drawdown in respect of Tranche 2B unless the
Administrative Agent has confirmed to the Parent and
the Banks that it has received all of the documents
and other evidence listed in Part III of Schedule 4
(Conditions Precedent);
(d) any Additional Borrower may not deliver any Notice of
Drawdown unless the Administrative Agent has confirmed
to the Parent it has received all of the documents
listed in Schedule 5 relating to such Borrowers,
and that each is, in form and substance, reasonably
satisfactory to the Administrative Agent.
2.4 Banks' Obligations Several
The obligations of each Bank are several and the failure by a
Bank to perform its obligations hereunder shall not affect
the obligations of an Obligor towards any other party hereto
nor shall any other party be liable for the failure by such
Bank to perform its obligations hereunder.
2.5 Banks' Rights Several
The rights of each Bank are several and any debt arising
hereunder at any time from an Obligor to any of the other
parties hereto shall be a separate and independent debt.
Each such party shall be entitled to protect and enforce its
individual rights arising out of this Agreement independently
of any other party (so that it shall not be necessary for any
party hereto to be joined as an additional party in any
proceedings for this purpose).
2.6 Increase of the Facility Amount
(a) Increase Request
The Borrower may prior to the first Reduction Date
request the Administrative Agent in writing (an
"Increase Request") to increase the Total Commitments:
(i) with respect to Tranche 1, at any time through the
participation of one or more additional banks, an
amount of up to $5,000,000; and/or
(ii) with respect to Tranche 2, at any time through the
participation of one or more additional banks, an
amount of up to $20,000,000,
provided that the aggregate increase in Total
Commitments pursuant to Clauses 2.6(a)(i) and (ii)
shall not exceed $25,000,000.
The Increase Request shall specify the amount (the
"Increase Amount") by which the Borrower wishes to
increase the Total Commitments, the purpose to which
such additional amounts shall be applied and such
other information as the Borrower believes the Banks
may require to evaluate the request.
(b) Bank Consent
The Administrative Agent shall promptly notify the
Banks of receipt of an Increase Request and will
inform each Bank of the Increase Amount requested
therein. Each Bank shall notify the Administrative
Agent in writing whether or not it will participate in
such increase to the Total Commitments and, if it will
not, whether or not it consents to the increase in the
Total Commitments. Any increase in the Total
Commitments under this Clause 2.6 (Increase of the
Facility Amount) shall require the consent of all the
Banks and any participation by a Bank shall be at the
sole discretion of such Bank and none of the Banks
shall be obliged to participate in an Increase Amount.
If some but not all the Banks do consent to a request
for an increase in the Total Commitments then the
terms and conditions concerning any such increase
shall require the consent of all the Banks.
(c) Dissenting Banks
If any Bank (a "Dissenting Bank") does not consent to
an increase in the Total Commitments and any other
Bank(s) and/or other financial institution(s)
acceptable to the Borrower (each an "Acceptable Bank")
are willing to assume all of the Commitments of such
Dissenting Bank, the Dissenting Bank shall upon
request by the Borrower (which request shall be given
in writing to the Administrative Agent who shall
promptly notify the Dissenting Bank of the same)
transfer all of its rights, benefits and obligations
hereunder to such Banks and/or Acceptable Banks. This
paragraph (c) (Dissenting Banks) shall not apply to a
Bank which consents to but does not participate in an
increase to the Total Commitments.
(d) Accession of New Bank
If the Total Commitments are to be increased under this
Clause 2.6 (Increase of the Facility Amount) and an
Acceptable Bank has agreed to participate in such
increase but no rights, benefits or obligations of a
person which is then a Bank hereunder will be
transferred to such Acceptable Bank, such Acceptable
Bank shall accede to this Agreement by executing and
delivering an Accession Memorandum to the
Administrative Agent. Such Acceptable Bank shall
become a Bank hereunder upon execution of such
Accession Memorandum and its Commitment on the date of
execution shall be the amount specified in the notice
referred to in paragraph (e) (Commitment Increase)
below.
(e) Commitment Increase
The Administrative Agent, the Banks and the Acceptable
Banks which wish to participate in the increase in the
Total Commitments will, in consultation with the
Borrower, agree the participation by each Bank or
Acceptable Bank in such increase and the
Administrative Agent shall notify each of the Banks
and the Acceptable Banks of the amount of its
participation in such increase (its "Increase
Commitment") and, the Increase Commitment of each
other Bank or Acceptable Bank and any other change to
the Commitments.
(f) New Borrowing
The Administrative Agent shall notify the Borrower in
writing of the proportion of the Increase Amount in
which the Banks and/or Acceptable Banks have agreed to
participate (the "New Borrowing") and the date on
which such New Borrowing will be made available (the
"Effective Date"). Subject to the terms and
conditions hereof, the Total Commitments shall be
increased by an amount equal to the New Borrowing as
of the Effective Date and as from such date the
Commitment of each Bank or Acceptable Bank (provided
such Acceptable Bank has complied with Clause 2.6(d)
(Accession of New Bank) shall be increased by or, as
the case may be, shall be an amount equal to its
Increase Commitment.
PRIVATE 3. UTILISATION OF THE FACILITY
3.1 Delivery of Notice of Drawdown
The Borrower may from time to time request the making of an
Advance by the delivery to the Administrative Agent, not more
than ten nor less than three Business Days before the
proposed date for the making of such Advance, of a completed
Notice of Drawdown therefor.
3.2 Drawdown Details
Each Notice of Drawdown delivered to the Administrative Agent
pursuant to Clause 3.1 (Delivery of Notice of Drawdown) shall
specify:
3.2.1 the proposed date for the making of the Advance
requested, which shall be a Business Day falling one
month or more before the Final Maturity Date and which
shall be at least five Business Days after the date
upon which the previous Advance (if any) was made;
3.2.2 the currency of denomination of the Advance requested,
which shall be dollars or an Optional Currency,
provided that, if the Borrower selects an Optional
Currency, the Borrower may also select dollars to
apply if its first selection becomes ineffective
pursuant to Clause 3.3 (Conditions for Drawing in an
Optional Currency);
3.2.3 the amount of the Advance requested, which shall be:
(i) in respect of any Tranche 1 Advance, which shall
be (a) (if less than the Available Tranche 1
Facility) an amount of not less than $2,500,000
(or if the Tranche 1 Advance is to be denominated
in an Optional Currency, such comparable and
convenient amount thereof as the Administrative
Agent may from time to time specify) or (b) equal
to the amount of the Available Tranche 1 Facility;
(ii) in respect of any Tranche 2A Advance, (a) (if less
than the Available Tranche 2A Facility) an amount
of not less than $2,500,000 (or, if the Tranche 2A
Advance is to be denominated in an Optional
Currency, such comparable and convenient amount
thereof as the Administrative Agent may from time
to time specify) or (b) equal to the amount of the
Available Tranche 2A Facility;
(iii) in respect of any Tranche 2B Advance, (a) (if less
than the Available Tranche 2B Facility) an amount
of not less than $2,500,000 (or, if the Tranche 2B
is to be denominated in an Optional Currency, such
comparable and convenient amount thereof as the
Administrative Agent may from time to time
specify) or (b) equal to the amount of the
Available Tranche 2B Facility;
3.2.4 the proposed Term of the Advance requested, which shall
be a period of one, three, six months or such longer
period as may be agreed by the Banks ending on or
before the Final Maturity Date; and
3.2.5 the account to which the proceeds of the proposed
drawdown are to be paid.
3.3 Conditions for Drawing in an Optional Currency
If the Borrower requests that an Advance be denominated in an
Optional Currency but:
3.3.1 no later than 11.00 a.m. on the Quotation Date for such
Advance, the Administrative Agent notifies the
Borrower and the Banks that the Administrative Agent
is of the opinion that it is not feasible for such
Advance to be denominated in such Optional
Currency; or
3.3.2 to give effect to such request would cause the Loan to
be denominated in more than 4 Optional Currencies,
then, unless the Borrower and the Banks otherwise agree, such
Advance shall not be made unless the Borrower specified in
the Notice of Drawdown in respect of such Advance that in
such event such Advance should be denominated in dollars in
which case such Advance shall be made in dollars in an amount
equal to the Original Dollar Amount relating to such Notice
of Drawdown.
3.4 Drawdown Conditions
Subject to Clause 2.3 (Conditions Precedent), if the Borrower
requests an Advance in accordance with the preceding
provisions of this Clause 3 and, on the proposed date for the
making of such Advance:
3.4.1 (save in relation to a Rollover Advance) neither of the
events mentioned in sub-clauses 5.1.1 and 5.1.2 of
Clause 5.1 (Market Disruption) shall have occurred;
3.4.2 the Original Dollar Amount of such Advance does not
exceed the Available Facility; and
3.4.3 on and as of the proposed date for the making of such
Advance (i) no Event of Default or (save in relation
to a Rollover Advance) Potential Event of Default is
continuing and (ii) the Repeated Representations are
true in all material respects,
then, save as otherwise provided herein, such Advance will be
made in accordance with the provisions hereof.
3.5 Each Bank's Participation
Each Bank will participate through its Facility Office in
each Advance made pursuant to this Clause 3 (Utilisation of
the Facility) in the proportion borne by its Available
Commitment to the Available Facility immediately prior to the
making of that Advance.
3.6 Reduction of Available Commitment
If a Bank's Commitment is reduced in accordance with the
terms hereof after the Administrative Agent has received the
Notice of Drawdown for an Advance and such reduction was not
taken into account in the Available Facility, then both the
Original Dollar Amount and the amount of that Advance shall
be reduced accordingly.
PRIVATE 4. PAYMENT AND CALCULATION OF INTEREST
4.1 Payment of Interest
On the Repayment Date relating to each Advance (and, if the
Term of such Advance exceeds six months, on the expiry of
each period of six months during such Term) the Borrower
shall pay accrued interest on that Advance.
4.2 Calculation of Interest
The rate of interest applicable to an Advance from time to
time during its Term shall be the rate per annum which is the
sum of the Applicable Margin at such time, the Associated
Costs Rate in respect thereof at such time and LIBOR on the
Quotation Date therefor.
PRIVATE 5. MARKET DISRUPTION AND ALTERNATIVE INTEREST RATES
5.1 Market Disruption
If, in relation to any Advance or Unpaid Sum:
5.1.1 LIBOR is to be determined by reference to Reference
Banks and at or about 11.00 a.m. on the Quotation Date
for the relevant Term none or only one of the
Reference Banks supplies a rate for the purpose of
determining LIBOR for the relevant Term; or
5.1.2 before the close of business in London on the Quotation
Date for such Advance or Unpaid Sum the Administrative
Agent has been notified by a Bank or each of a group
of Banks to whom in aggregate thirty-five per cent. or
more of such Advance if made would be owed (or such
Unpaid Sum is owed) that the LIBOR rate does not
accurately reflect the cost of funding its
participation in such Advance or Unpaid Sum,
then, the Administrative Agent shall notify the other parties
hereto of such event and, notwithstanding anything to the
contrary in this Agreement, Clause 5.2 (Substitute Term and
Interest Rate) shall apply to such Advance (if it is a
Rollover Advance) or Unpaid Sum. If sub-clauses 5.1.1 or
5.1.2 applies to a proposed Advance, such Advance other than
a Rollover Advance shall not be made.
5.2 Substitute Term and Interest Rate
If sub-clause 5.1.1 of Clause 5.1 (Market Disruption) applies
to a Rollover Advance, the duration of the relevant Term
shall be one month or, if less, such that it shall end on the
Final Maturity Date. If either sub-clause 5.1.1 or 5.1.2 of
Clause 5.1 (Market Disruption) applies to a Rollover Advance
or an Unpaid Sum, the rate of interest applicable to each
Bank's portion of such Rollover Advance or Unpaid Sum during
the relevant Term shall (subject to any agreement reached
pursuant to Clause 5.3 (Alternative Rate)) be the rate per
annum which is the sum of:
5.2.1 the Applicable Margin at such time; and
5.2.2 the rate per annum notified to the Administrative Agent
by such Bank before the last day of such Term to be
that which expresses as a percentage rate per annum
the cost to such Bank of funding from whatever sources
it may select its portion of such Rollover Advance or
Unpaid Sum during such Term.
5.3 Alternative Rate
If (a) either of those events mentioned in sub-clauses 5.1.1
and 5.1.2 of Clause 5.1 (Market Disruption) occurs in
relation to an Advance or Unpaid Sum or (b) by reason of
circumstances affecting the London Interbank Market during
any period of three consecutive Business Days LIBOR is not
available for dollars to prime banks in the London Interbank
Market, then if the Administrative Agent or the Parent so
requires, the Administrative Agent and the Parent shall enter
into negotiations with a view to agreeing a substitute basis
(i) for determining the rates of interest from time to time
applicable to the Advances and Unpaid Sums and/or (ii) upon
which the Advances and Unpaid Sums may be maintained (whether
in dollars or some other currency) thereafter and any such
substitute basis that is agreed shall take effect in
accordance with its terms and be binding on each party
hereto, provided that the Administrative Agent may not agree
any such substitute basis without the prior consent of each
Bank.
PRIVATE 6. NOTIFICATION
6.1 Advances and Term
Not less than three Business Days before an Advance is to be
made the Administrative Agent shall notify each Bank of the
proposed Dollar Amount of the relevant Advance, its proposed
Term, whether or not such Advance is to be denominated in an
Optional Currency (and, if so, the amount of such Advance in
the relevant Optional Currency) and the aggregate principal
amount of the relevant Advance allocated to such Bank
pursuant to Clause 3.5 (Each Bank's Participation).
6.2 Interest Rate Determination
The Administrative Agent shall promptly notify the Parent and
the Banks of each determination of LIBOR and the Applicable
Margin.
6.3 Changes to Currency or Interest Rates
The Administrative Agent shall promptly notify the Parent and
the Banks of any change (a) to the proposed currency of an
Advance occasioned by the operation of Clause 3.3 (Conditions
for Drawing in an Optional Currency) or (b) in interest rate
or Term occasioned by the operation of Clause 5 (Market
Disruption and Alternative Interest Rates).
PRIVATE 7. REPAYMENT
7.1 Scheduled Repayments
Each Borrower to which an Advance has been made shall repay
each Advance made to it in full on the Repayment Date
relating thereto.
7.2 Scheduled Reduction Repayment
(a) On or prior to the close of business in New York on
each of the following dates (the "Reduction Dates")
(i) the Total Tranche 1 Commitments and the Total
Tranche 2 Commitments shall be irrevocably reduced
(and the Tranche 1 Commitments and Tranche 2
Commitments of the Banks shall be reduced rateably) by
an aggregate amount such that the aggregate reduction,
expressed as a percentage, of the Total Tranche 1
Commitments and the Total Tranche 2 Commitments at the
date hereof (or as increased pursuant to Clause 2.6
(Increase of the Facility Amount)) is equal to or
greater than the Aggregate Percentage Reduction set
out below the percentage figure and (ii) the Borrowers
shall ensure the Loan is repaid in an instalment equal
to the amount (if any) required to ensure the Total
Tranche 1 Commitments and the Total Tranche 2
Commitments shall be so reduced (the "Scheduled
Reduction Repayment").
Reduction Date Aggregate Percentage
(from the date of this Agreement) Reduction
%
39 months 12.5
42 months 25.0
45 months 37.5
48 months 50.0
51 months 62.5
54 months 75.0
57 months 87.5
60 months 100.0
(b) Any Scheduled Reduction Repayment made on a Reduction
Date shall not be available for reborrowing thereafter.
7.3 Mandatory Repayments in respect of Vessels
In the event any Vessel financed through the Tranche 2A
Facility is sold or is or becomes or is declared an actual or
constructive or comprised or agreed total loss then the
Parent shall apply or procure the application of the proceeds
of sale or insurance proceeds or any requisition compensation
in respect thereof:
7.3.1 if the Tranche 2A Facility has been utilised in respect
of a single Vessel or alternatively if no other Vessel
will remain after such sale or loss, in repayment of
all amounts owed under the Tranche 2A Facility; and
7.3.2 otherwise, in repayment of that proportion of the
aggregate principal amounts outstanding under any
Tranche 2A Facility which is equal to the Market Value
of the Vessel sold or so lost, divided by the aggregate
Market Value of the remaining Vessel or Vessels
including the Vessel sold or lost,
together, with such amount (if any) as is necessary to ensure
compliance with Clause 16.2 (Minimum Value).
7.4 Mandatory Repayments in respect of Shares
In the event any of the Shares financed through the Tranche
2B Facility are sold then the Parent shall apply, or procure
the application of, the proceeds of sale in respect thereof:
7.4.1 if all of the Shares, in repayment of all amounts owed
under the Tranche 2B Facility; and
7.4.2 otherwise, if part of the Shares are sold, in repayment
of that proportion of the aggregate amounts outstanding
under Tranche 2B Facility which is equal to the
proportion by value of those Shares sold,
together, with such amount (if any) as is necessary to ensure
compliance with Clause 16.2 (Minimum Value).
7.5 Redrawing of Amounts Mandatorily Repaid
Save as otherwise provided herein, amounts repaid pursuant to
Clause 7.3 (Mandatory Repayments in respect of Vessels) and
Clause 7.4 (Mandatory Repayments in respect of Shares) shall
be available for reborrowing hereunder.
PRIVATE 8. CANCELLATION AND PREPAYMENT
8.1 Cancellation
The Parent may, by giving to the Administrative Agent not
less than ten Business Days' prior notice to that effect,
cancel the whole or any part (being an amount or integral
multiple of $1,000,000) of the Available Facility. Any such
cancellation shall reduce the Available Commitment and
Commitment of each Bank rateably.
8.2 Prepayment
The Borrower may, by giving to the Administrative Agent not
less than ten Business Days prior notice to that effect,
prepay the whole or any part of an Advance (being an amount
such that the Dollar Amount of such Advance will be reduced
by an amount of not less than $1,000,000 and an integral
multiple of $500,000).
8.3 Notice of Cancellation or Prepayment
Any notice of cancellation or prepayment given by the
Borrower pursuant to Clause 8.1 (Cancellation) or Clause 8.2
(Prepayment) shall be irrevocable and shall specify the date
upon which such cancellation or prepayment is to be made and
the amount of such cancellation or prepayment.
8.4 Cancellation of a Bank's Commitment
If:
8.4.1 any sum payable to any Bank by an Obligor is
required to be increased pursuant to Clause 9.1 (Tax
Gross-up); or
8.4.2 any Bank claims indemnification from the Borrower
under Clause 9.2 (Tax Indemnity) or Clause 11.1
(Increased Costs),
the Borrower may, whilst such circumstance continues, by not
less than ten Business Days' prior notice to the
Administrative Agent (which notice shall be irrevocable),
cancel such Bank's Commitment whereupon such Bank shall cease
to be obliged to participate in further Advances and its
Commitment shall be reduced to zero.
8.5 Prepayment of a Bank's Commitment
If the Borrower gives notice pursuant to Clause 8.4
(Cancellation of a Bank's Commitment), it shall, at the time
such notice expires prepay the relevant Bank's portion of all
outstanding Advances together with accrued interest thereon
and all other amounts owing to such Bank hereunder.
8.6 No Other Repayments
The Borrower shall not repay all or any part of any Advance
except at the times and in the manner expressly provided
herein.
PRIVATE 9. TAXES
9.1 Tax Gross-up
All payments to be made by an Obligor to any person hereunder
shall be made free and clear of and without deduction for or
on account of tax unless such Obligor is required to make
such a payment subject to the deduction or withholding of
tax, in which case the sum payable by such Obligor (in
respect of which such deduction or withholding is required to
be made) shall be increased to the extent necessary to ensure
that after the making of the required deduction or
withholding, such person receives and retains (free from any
liability in respect of any such deduction or withholding) a
sum net equal to the sum which it would have received and so
retained had no such deduction or withholding been made or
required to be made.
9.2 Tax Indemnity
Without prejudice to Clause 9.1 (Tax Gross-up), if any person
or the Administrative Agent on its behalf is required to make
any payment on account of tax (not being a tax imposed on the
net income of its Facility Office in the jurisdiction in
which it is incorporated or in which its Facility Office is
located) or otherwise or in relation to any sum received or
receivable hereunder (including any sum deemed for purposes
of tax to be received or receivable) by such person or the
Administrative Agent on its behalf hereunder (including,
without limitation, any sum received or receivable under this
Clause 9) or if any liability in respect of any such payment
is asserted, imposed, levied or assessed against such person
or the Administrative Agent on its behalf, the Parent shall,
upon demand of the Administrative Agent, promptly indemnify
against such payment or liability, together with any
interest, penalties, costs and expenses payable or incurred
in connection therewith.
9.3 Claims by Banks
A Bank intending to make a claim pursuant to Clause 9.2 (Tax
Indemnity) shall notify the Administrative Agent of the event
by reason of which it is entitled to make such claim,
whereupon the Administrative Agent shall notify the Parent
thereof Provided that nothing herein shall require any Bank
to disclose any confidential information relating to the
organisation of its affairs.
9.4 Banks' Tax Status Confirmation
Each Bank confirms in favour of the Administrative Agent (on
the date hereof or, in the case of a Bank which becomes a
party hereto pursuant to a transfer or assignment, on the
date on which the relevant transfer or assignment becomes
effective) that either:
9.4.1 it is not resident for tax purposes in the United
Kingdom and is beneficially entitled to its share of
the Loan and the interest thereon; or
9.4.2 it is a bank as defined for the purposes of Section 349
of the Income and Corporation Taxes Act 1988 and is
beneficially entitled to its share of the Loan and the
interest thereon,
and each Bank shall promptly notify the Administrative Agent
if there is any change in its position from that set out
above.
9.5 Withholding Tax
Each Bank agrees to furnish (if it is organised under the
laws of any jurisdiction other than the United States or any
State thereof) to the Administrative Agent and the Borrowers
prior to the time that the Borrowers are required to make any
payment of principal, interest or fees hereunder, to such
Bank, duplicate executed originals of either U.S. Internal
Revenue Service Form 4224 or U.S. Internal Revenue Service
Form 1001 (wherein such Bank claims entitlement to the
benefits of a tax treaty that provides for a complete
exemption from U.S. federal income withholding tax on all
payments hereunder) and a Form W-8 and agrees to provide new
Forms 4224 or 1001 and Form W-8, upon the expiration of any
previously delivered from or comparable statements in
accordance with applicable U.S. law and regulations and
amendments thereto, and agrees to comply with all applicable
U.S. laws and regulations with regard to such withholding tax
exemption.
PRIVATE 10. TAX RECEIPTS
10.1 Notification of Requirement to Deduct Tax
If, at any time, an Obligor is required by law to make any
deduction or withholding from any sum payable by it hereunder
(or if thereafter there is any change in the rates at which
or the manner in which such deductions or withholdings are
calculated), such Obligor shall promptly notify the
Administrative Agent.
10.2 Evidence of Payment of Tax
If an Obligor makes any payment hereunder in respect of which
it is required to make any deduction or withholding, it shall
pay the full amount required to be deducted or withheld to
the relevant taxation or other authority within the time
allowed for such payment under applicable law and shall
deliver to the Administrative Agent for each Bank, within
thirty days after it has made such payment to the applicable
authority, an original receipt (or a certified copy thereof)
issued by such authority evidencing the payment to such
authority of all amounts so required to be deducted or
withheld in respect of such payment.
10.3 Tax Credit Payment
If an additional payment is made under Clause 9 (Taxes) by
the Borrower for the benefit of any Finance Party and such
Finance Party, in its sole discretion, determines that it has
obtained (and has derived full use and benefit from) a credit
against, a relief or remission for, or repayment of, any tax,
then, if and to the extent that such Finance Party, in its
sole opinion, determines that:
10.3.1 such credit, relief, remission or repayment is in
respect of or calculated with reference to the
additional payment made pursuant to Clause 9 (Taxes);
and
10.3.2 its tax affairs for its tax year in respect of
which such credit, relief, remission or repayment was
obtained have been finally settled,
such Finance Party shall, to the extent that it can do so
without prejudice to the retention of the amount of such
credit, relief, remission or repayment, pay to the Borrower
such amount as such Finance Party shall, in its sole opinion,
determine to be the amount which will leave such Finance
Party (after such payment) in no worse after-tax position
than it would have been in had the additional payment in
question not been required to be made by the Borrower.
10.4 Tax Credit Clawback
If any Finance Party makes any payment to the Borrower
pursuant to Clause 10.3 (Tax Credit Payment) and such Finance
Party subsequently determines, in its sole opinion, that the
credit, relief, remission or repayment in respect of which
such payment was made was not available or has been withdrawn
or that it was unable to use such credit, relief, remission
or repayment in full, the Borrower shall reimburse such
Finance Party such amount as such Finance Party determines,
in its sole opinion, is necessary to place it in the same
after-tax position as it would have been in if such credit,
relief, remission or repayment had been obtained and fully
used and retained by such Finance Party.
10.5 Tax and Other Affairs
No provision of this Agreement shall interfere with the right
of any Finance Party to arrange its tax or any other affairs
in whatever manner it thinks fit, oblige any Finance Party to
claim any credit, relief, remission or repayment in respect
of any payment under Clause 9.1 (Tax Gross-up) in priority to
any other credit, relief, remission or repayment available to
it nor oblige any Finance Party to disclose any information
relating to its tax or other affairs or any computations in
respect thereof.
PRIVATE 11. INCREASED COSTS
11.1 Increased Costs
If, by reason of (a) any change in law or in its
interpretation or administration and/or (b) compliance with
any request from or requirement of any central bank or other
fiscal, monetary or other authority (including, without
limitation, a request or requirement which affects the manner
in which a Bank or any holding company of such Bank is
required to or does maintain capital resources having regard
to such Bank's obligations hereunder and to amounts owing to
it hereunder):
11.1.1 a Bank or any holding company of such Bank is
unable to obtain the rate of return on its overall
capital which it would have been able to obtain but for
such Bank's entering into and/or performing its
obligations under this Agreement and/or assuming or
maintaining a commitment under this Agreement;
11.1.2 a Bank or any holding company of such Bank incurs
a cost as a result of such Bank's entering into and/or
performing its obligations under this Agreement and/or
assuming or maintaining a commitment under this
Agreement;
11.1.3 there is any increase in the cost to a Bank or any
holding company of such Bank of funding or maintaining
all or any of the advances comprised in a class of
advances formed by or including the Advances or any
Unpaid Sum' or
11.1.4 a Bank or any holding company of such Bank becomes
liable to make any payment on account of tax or
otherwise (not being a tax imposed on the net income of
its Facility Office by the jurisdiction in which it is
incorporation or in which its Facility Office is
located) on or calculated by reference to the amount of
the Advances and/or to any sum received or receivable
by it hereunder,
then the Parent shall, from time to time on demand of the
Administrative Agent, promptly pay to the Administrative
Agent for the account of that Bank amounts sufficient to
indemnify that Bank or to enable that Bank to indemnify its
holding company from and against, as the case may be, (i)
such reduction in such rate of return of capital (or such
proportion of such reduction as is, in the opinion of that
Bank, attributable to its obligations hereunder) (ii) such
cost or (iii) such increased cost (or such proportion of such
increased cost as is, in the opinion of that Bank
attributable to its funding or maintaining Advances) or (iv)
such liability.
11.2 Increased Costs Claims
A Bank intending to make a claim pursuant to Clause 11.1
(Increased Costs) shall notify the Administrative Agent of
the event giving rise to such claim, whereupon the
Administrative Agent shall notify the Parent thereof.
PRIVATE 12. ILLEGALITY
If, at any time, it is or will become unlawful for a Bank to
make, fund or allow to remain outstanding all or part of its
share of the Advances, then that Bank shall, promptly after
becoming aware of the same, deliver to the Borrower through
the Administrative Agent a notice to that effect and:12.1
Do not delete the paragraph number at the end of the above line.
It is white in colour and will not be visible in the
printed document.
12.1.1 such Bank shall not thereafter be obliged to
participate in the making of any Advances and the
amount of its Commitment shall be immediately reduced
to zero; and
12.1.2 if the Administrative Agent on behalf of such Bank
so requires, the Borrower shall on such date as the
Administrative Agent shall have specified repay such
Bank's share of any outstanding Advances together with
accrued interest thereon and all other amounts owing to
such Bank hereunder.
PRIVATE 13. MITIGATION
If, in respect of any Bank, circumstances arise which would
or would upon the giving of notice result in:13.1
Do not delete the paragraph number at the end of the above line.
It is white in colour and will not be visible in the
printed document.
13.1.1 an increase in any sum payable to it or for its
account pursuant to Clause 9.1 (Tax Gross-up);
13.1.2 a claim for indemnification pursuant to Clause 9.2
(Tax Indemnity) or Clause 11.1 (Increased Costs); or
13.1.3 the reduction of its Available Commitment to zero
or any repayment to be made by the Borrower pursuant to
Clause 12 (Illegality),
then, without in any way limiting, reducing or otherwise
qualifying the rights of such Bank or the obligations of the
Obligors under any of the Clauses referred to in sub-clauses
13.1.1, 13.1.2 and 13.1.3, such Bank shall promptly upon
becoming aware of such circumstances notify the
Administrative Agent thereof and, in consultation with the
Administrative Agent and the Parent and to the extent that it
can do so lawfully and without prejudice to its own position,
take reasonable steps (including a change of location of its
Facility Office or the transfer of its rights, benefits and
obligations hereunder to another financial institution
acceptable to the Borrower and willing to participate in the
Facility) to mitigate the effects of such circumstances,
provided that such Bank shall be under no obligation to take
any such action if, in the opinion of such Bank, to do so
might have any adverse effect upon its business, operations
or financial condition (other than any minor costs and
expenses of an administrative nature).
PRIVATE 14. REPRESENTATIONS
Each Obligor makes the representations and warranties set out
in Clause 14.1 (Status) to Clause 14.24 (Year 2000) and
acknowledges that the Finance Parties have entered into this
Agreement in reliance on those representations and
warranties. The Obligors acknowledge that the Finance
Parties have entered into this Agreement in reliance on those
representations and warranties.
14.1 Status
It is a corporation duly organised, existing and in good
standing under the laws of the state of Delaware in the case
of the Parent, with power to enter into this Agreement and
the Security Documents to which it is a party and to exercise
its rights and perform its obligations hereunder and all
corporate and other action required to authorise its
execution of this Agreement and the Security Documents to
which it is a party and its performance of its obligations
hereunder has been duly taken. The Parent and each of its
subsidiaries is qualified to conduct business and is in good
standing in each state of the United States in which its
ownership or use of property or conduct of business requires
such qualification.
14.2 Governing Law and Judgments
In any proceedings taken in its Relevant Jurisdiction in
relation to this Agreement and any of the Security Documents
expressed to be governed by English law, the choice of
English law as the governing law of this Agreement and such
Security Documents and any judgment obtained in England will
be recognised and enforced.
14.3 Binding Obligations
The obligations expressed to be assumed by it in this
Agreement and the Security Documents to which it is a party
are legal and valid obligations binding on it and enforceable
against it in accordance with the terms hereof.
14.4 Execution of this Agreement
Its execution of this Agreement and its exercise of its
rights and performance of its obligations hereunder do not
and will not:
14.4.1 conflict with any agreement, mortgage, bond or
other instrument or treaty to which it is a party or
which is binding upon it or any of its assets;
14.4.2 conflict with its constitutive documents; or
14.4.3 conflict with any applicable law.
It has the power to enter into this Agreement and all
corporate and other action required to authorise the
execution of this Agreement and the performance of its
obligations hereunder has been duly taken.
14.5 No Winding-up
No member of the Group has taken any corporate action nor
have any other steps been taken or legal proceedings been
started or (to the best of its knowledge and belief)
threatened against any member of the Group for its
winding-up, dissolution, administration or re-organisation
(whether by voluntary arrangement, scheme of arrangement or
otherwise) or the appointment of a receiver, administrator,
administrative receiver, conservator, custodian, trustee or
similar officer of it or of any or all of its assets or
revenues.
14.6 No Material Defaults
No member of the Group is in breach of or in default under
any agreement to which it is a party or which is binding on
it or any of its assets to an extent or in a manner which
might have a Material Adverse Effect on the business or
financial condition of any member of the Group.
14.7 No Material Proceedings
No action or administrative proceeding of or before any court
or agency which might have a Material Adverse Effect on the
business or financial condition of any member of the Group
has been started or threatened.
14.8 Audited Financial Statements
The most recent audited financial statements of the Obligors
(other than the Parent) and the most recent audited
consolidated financial statements of the Parent:
14.8.1 were prepared in accordance with accounting
principles generally accepted in the United States of
America and consistently applied;
14.8.2 disclose all liabilities to the extent required by
US GAAP (contingent or otherwise) and all unrealised or
anticipated losses of the Parent or, as the case may
be, any member of the Group; and
14.8.3 save as disclosed therein, give a true and fair
view of the financial condition and operations of the
Parent or, as the case may be, the Group during the
relevant financial year.
14.9 No Material Adverse Change
Since the date as at which the most recent audited financial
statements of the Borrower and the most recent audited
consolidated financial statements of the Parent were stated
to be prepared, there has been no material adverse change in
the business or financial condition of the Parent or, as the
case may be, any member of the Group.
14.10 Written Information
All written information supplied by any member of the Group
is true, complete and accurate in all material respects as at
the date it was given and is not misleading in any respect.
14.11 Validity and Admissibility in Evidence
All acts, conditions and things required to be done,
fulfilled and performed in order (a) to enable it lawfully to
enter into, exercise its rights under and perform and comply
with the obligations expressed to be assumed by it in this
Agreement, (b) to ensure that the obligations expressed to be
assumed by it in this Agreement and the Security Documents
are legal, valid, binding and enforceable and (c) to make
this Agreement and the Security Documents admissible in
evidence in its jurisdiction of incorporation have been done,
fulfilled and performed.
14.12 Claims Pari Passu
Under the laws of its Relevant Jurisdiction in force at the
date hereof, the claims of the Finance Parties against it
under this Agreement and under the Security Documents to
which it is a party will rank at least pari passu with the
claims of all its other unsecured and unsubordinated
creditors save those whose claims are preferred solely by any
bankruptcy, insolvency, liquidation or other similar laws of
general application or pursuant to Permitted Encumbrances.
14.13 No Filing or Stamp Taxes
Under the laws of its Relevant Jurisdiction in force at the
date hereof, it is not necessary that this Agreement be
filed, recorded or enrolled with any court or other authority
in such jurisdiction or that any stamp, registration or
similar tax be paid on or in relation to this Agreement or
any Security Document. It has filed all tax returns, unless
duly and properly extended or deferred in accordance with
applicable law, each of which correctly represents all taxes
payable, and has paid all taxes of every kind and nature
required to be filed or paid by it.
14.14 Encumbrances
Save for Permitted Encumbrances, no Encumbrance exists over
all or any of the present or future revenues or assets of any
member of the Group.
14.15 No Deduction or Withholding
Under the laws of its Relevant Jurisdictions in force at the
date hereof, it will not be required to make any deduction or
withholding from any payment it may make hereunder.
14.16 Environmental Compliance
Each member of the Group has duly performed and observed in
all material respects all Environmental Law, Environmental
Permits and all other material covenants, conditions,
restrictions or agreements directly or indirectly concerned
with any contamination, pollution or waste or the release or
discharge of any toxic or hazardous substance in connection
with any real property which is or was at any time owned,
leased or occupied by any member of the Group or on which any
member of the Group has conducted any activity where failure
to do so might reasonably be expected to have a Material
Adverse Effect.
14.17 Environmental Claims
No Environmental Claim has been commenced or (to the best of
the Parent's knowledge and belief) is threatened against any
member of the Group where such claim would be reasonably
likely, if determined against such member of the Group, to
have a Material Adverse Effect.
14.18 No action required
No action, consent or approval of, registration or filing
with or any other action by any governmental authority is or
will be required in connection with the transactions
contemplated by this Agreement except for such as will have
been made or obtained and will be in force and effect as of
the making of the first Advance.
14.19 Good title
Each Obligor has good and indefeasible title to, or valid
leasehold interests in, all of its material properties and
assets, except for Permitted Encumbrances and except for
minor defects in title that do not materially interfere with
its ability to conduct its business as currently conducted or
to utilise such properties and assets for their intended
purposes.
14.20 Subsidiaries
Schedule 1 sets forth as of the date of making of each
Advance a list of all subsidiaries of the Parent. Each such
subsidiary is a wholly-owned subsidiary. The shares of
capital stock or other ownership interests issued by each
such subsidiary are fully paid and non-assessable and are
owned of record and beneficially by the Parent or a
subsidiary thereof, free and clear of all Encumbrances other
than Permitted Encumbrances.
14.21 Violation of Rules or Regulations
Neither any Obligor nor any material property of any Obligor
is in violation of, nor will the continued operation of their
material properties or assets as currently conducted violate
any rule or regulation (including any zoning, building,
Environmental Law, ordinance, code or approval or any
building permits), or is in default with respect to any
judgment, writ, injunction, decree or order of any
governmental authority, where such violation could reasonably
be expected to result in a Material Adverse Effect.
14.22 Margin Stock
No Obligor is engaged principally, or as one of its important
activities, in the business of extending credit for the
purpose of buying or carrying Margin Stock (as such term is
defined in Regulation U of the Regulations of the Board of
Governors of the Federal Reserve System of the United States
of America) and no part of the proceeds of any Advance will
be used, whether directly or indirectly, and whether
immediately, incidentally or ultimately, for any purpose that
entails a violation of, or is inconsistent with, the
provisions of Regulations T, U or X of such Regulations.
14.23 Investment Company
No Obligor is (a) an "investment company" as defined in, or
subject to regulation under, the Investment Company Act of
1940 of the United States of America or (b) a "holding
company" as defined in, or subject to regulation under, the
Public Utility Holding Company Act of 1935 of the United
States of America.
14.24 Year 2000
The Group's computer systems which are dependent on
government satellites are not yet confirmed as Year 2000
compliant. Save as aforesaid, any reprogramming required to
permit the proper functioning, in and following the Year
2000, of (a) the Group's computer systems and (b) equipment
containing embedded microchips (including systems and
equipment supplied by others or with which the Group's
systems interface) and the testing of all such systems and
equipment, as so reprogrammed, will be completed by 1
September 1999. The cost to the Group of such reprogramming
and testing and of the reasonably foreseeable consequences of
Year 2000 to the Group (excluding the failure of others'
systems or equipment) should not result in an Event of
Default or Potential Event of Default or a Material Adverse
Effect. Except for such of the reprogramming referred to in
the preceding sentence as may be necessary, the computer and
management information systems of the Group are and, with
ordinary course upgrading and maintenance, should continue
for the term of this Agreement to be sufficient to permit the
Borrower to conduct its business without Material Adverse
Effect.
14.25 Repetition of Representations
The Repeated Representations shall be deemed to be repeated
by each Obligor by reference to the facts and circumstances
then existing on each date on which an Advance is or is to be
made.
PRIVATE 15. FINANCIAL INFORMATION
15.1 Statements
15.1.1 Each Obligor shall as soon as the same become
available, but in any event within 120 days after the
end of each of its financial years, deliver to the
Administrative Agent in sufficient copies for the Banks
its financial statements (or, in the case of the
Parent, the consolidated audited financial statements
of the Group) for such financial year, audited (if
required by the Security and Documentation Agent), by
an internationally recognised firm of independent
auditors licensed to practice in its jurisdiction of
incorporation.
15.1.2 The Parent shall as soon as the same become
available, but in any event within 60 days, after the
end of the first three quarters in each financial year
deliver to the Administrative Agent in sufficient
copies for the Banks the unaudited consolidated
financial statements of the Group for such period.
15.2 Requirements as to Financial Statements
Each Obligor shall ensure that each set of financial
statements delivered by it pursuant to this Clause 15 is
certified by an Authorised Signatory of such Obligor as
giving a true and fair view of its financial condition (or,
in the case of financial statements of the Parent, the
financial condition of the Group) as at the end of the period
to which those financial statements relate and of the results
of its (or, as the case may be, the Group's) operations
during such period.
15.3 Compliance Certificates
The Parent shall ensure that each set of annual financial
statements delivered by it pursuant to Clause 15.1
(Statements) is accompanied by a Compliance Certificate
signed by its President or Chief Financial Officer.
15.4 Other Financial Information
Each Obligor shall from time to time on the request of the
Administrative Agent, furnish the Administrative Agent with
such information about the business and financial condition
of the Group as the Administrative Agent may reasonably
require.
15.5 Accounting Policies
Each Obligor shall ensure that each set of financial
statements delivered pursuant to this Clause 15 is prepared
using accounting policies, practices, procedures and
reference period consistent with those applied in the
preparation of the Original Financial Statements unless, in
relation to any such set of financial statements, the
relevant Obligor, notifies the Administrative Agent that
there have been one or more changes in any such accounting
policies, practices, procedures or reference period and the
auditors of such Obligor provide:
15.5.1 a description of the changes and the adjustments
which would be required to be made to those financial
statements in order to cause them to use the accounting
policies, practices, procedures and reference period
upon which the Original Financial Statements were
prepared; and
15.5.2 sufficient information, in such detail and format
as may be reasonably required by the Administrative
Agent, to enable the Banks to make an accurate
comparison between the financial position indicated by
those financial statements and the Original Financial
Statements,
and any reference in this Agreement to those financial
statements shall be construed as a reference to those
financial statements as adjusted to reflect the basis upon
which the Original Financial Statements were prepared.
15.6 Information as to Guarantors
The Parent shall from time to time, on the request of the
Administrative Agent, furnish the Administrative Agent with a
report issued by its President or Chief Financial Officer
confirming which of its subsidiaries are (i) Material
Subsidiaries and (ii) whether any such Material Subsidiaries
are tax resident in the United States of America.
PRIVATE 16. FINANCIAL CONDITION
16.1 Financial Condition
The Parent shall ensure that the financial condition of the
Group, shall be such that:
16.1.1 Maximum Leverage Ratio
The ratio of (a) Funded Debt to (b) Total
Capitalisation is equal to or less than 0.65 to 1.00
for the first twelve months after the date hereof and
is equal to or less than 0.60 to 1.00 at all times
thereafter.
16.1.2 Interest Cover Ratio
The ratio of (a) Consolidated EBITDA to (b)
Consolidated Interest Expense is equal to or greater
than 2.75 to 1.0.
16.1.3 Minimum Net Worth
Net Worth shall at all times be at least $80,000,000.
16.2 Minimum Value
16.2.1 If the Administrative Agent at any time determines
that the aggregate of the Market Value of each of the
Vessels as determined by reference to the most up-to-
date valuation on an ongoing basis of the Vessels is
less than 150% of the aggregate amount of all Tranche
2A Advances then outstanding (or the dollar equivalent
thereof) (such requirement being the "Required Vessel
Security Coverage") then the Borrowers shall within ten
business days after a request therefor from the
Administrative Agent either:
(a) prepay an amount of the Tranche 2A Advance or
Tranche 2A Advances then outstanding which shall
be applied pro-rata in prepayment thereof,
together with interest thereon and any amounts
falling due as a result of such prepayment; or
(b) provide additional security acceptable to the
Administrative Agent
such that the Required Vessel Security Coverage is met.
16.2.2 If the Administrative Agent at any time determines
that the aggregate of the Market Value of the Shares as
determined by reference to the most up-to-date
valuation of the Shares is less than 175% of the
aggregate amount of all Tranche 2B Advances then
outstanding (or the dollar equivalent thereof) (such
requirement being the "Required Share Security
Coverage") then the Borrower shall within ten business
days after a request therefor from the Administrative
Agent either:
(a) prepay an amount of the Tranche 2B Advance or
Tranche 2B Advances then outstanding which shall
be applied pro-rata in prepayment thereof,
together with interest thereon and any amounts
falling due as a result of such prepayment; or
(b) provide additional security acceptable to the
Administrative Agent
such that the Required Share Security Coverage is met.
16.3 Financial Definitions
In Clause 16.1 (Financial Condition) the following terms have
the following meanings:
"Consolidated EBITDA" means, for any period, the sum of the
amounts for such period of (i) Consolidated EBIT, (ii)
depreciation expense and (iii) amortisation expense all as
determined for the Parent and its subsidiaries on a
consolidated basis in accordance with U.S. GAAP.
"Consolidated EBIT" means, for any period, the sum of the
amounts for such period of (i) consolidated net income, (ii)
provisions for taxes based on income, (iii) Consolidated
Interest Expense, (iv) amortisation or write-off deferred
financing costs to the extent deducted in determining
consolidated net income and (v) losses on sales of assets
(excluding sales in the ordinary course of business) and
other extraordinary gains, all as determined for the Parent
and its subsidiaries on a consolidated basis in accordance
with U.S. GAAP.
"Consolidated Interest Expense" means, for any period, total
interest expense (including that attributable to capital
leases) of the Parent and its subsidiaries in accordance with
U.S. GAAP on a consolidated basis with respect to all
outstanding indebtedness of the Parent and its subsidiaries,
including, without limitation, all commissions, discounts and
other fees and charges owed with respect to letters of credit
and banker acceptance financing.
"Funded Debt" means, on a consolidated basis for the Parent,
the sum of (i) indebtedness for borrowed money, (ii) the
deferred purchase price of assets or services which in
accordance with U.S. GAAP would be shown on the liability
side of the balance sheet, (iii) the face amount of all
letters of credit and, without duplication, all drafts drawn
thereunder, (iv) all indebtedness of a second person secured
by any lien on any property of the Parent, or any of its
subsidiaries, whether or not such indebtedness has been
assumed, (v) all capitalised lease obligations, (vi) all
obligations to pay a specific purchase price for goods or
services whether or not delivered or accepted, i.e. take-or-
pay and similar obligations, and (viii) all net obligations
under interest rate agreements.
"Leverage Ratio" means the Parent's ratio of Funded Debt to
Total Capitalisation.
"Net Worth" means, on a consolidated basis for the Parent,
its shareholder equity (excluding treasury stock and
cumulative translation) determined in accordance with U.S.
GAAP.
"Total Capitalisation" means the sum of Funded Debt and Net
Worth.
16.4 Financial Testing
The financial covenants set out in Clause 16.1 (Financial
Condition) shall be tested by reference to each of the
financial statements and each Compliance Certificate
delivered pursuant to Clause 15 (Financial Information). The
minimum value covenant set out in Clause 16.2 (Minimum Value)
shall be confirmed in each Compliance Certificate delivered
with each of the semi-annual financial statements pursuant to
Clause 15 (Financial Information).
16.5 Accounting Terms
All accounting expressions which are not otherwise defined
herein shall be construed in accordance with generally
accepted accounting principles in the United States of
America ("U.S. GAAP").
PRIVATE 17. COVENANTS
17.1 Maintenance of Legal Validity
Each Obligor shall obtain, comply with the terms of and do
all that is necessary to maintain in full force and effect
all authorisations, approvals, licences and consents required
in or by the laws of its jurisdiction of incorporation to
enable it lawfully to enter into and perform its obligations
under this Agreement and to ensure the legality, validity,
enforceability or admissibility in evidence in its
jurisdiction of incorporation of this Agreement.
17.2 Insurance
The Parent shall procure that each member of the Group
maintains insurances on and in relation to its business and
assets with reputable underwriters or insurance companies
against such risks and to such extent as is usual for
companies carrying on a business such as that carried on by
such member of the Group.
17.3 Environmental Compliance
The Parent shall ensure that each member of the Group shall
comply in all material respects with all Environmental Law
and obtain and maintain any Environmental Permits and take
all reasonable steps in anticipation of known or expected
future changes to or obligations under the same, breach of
which (or failure to obtain, maintain or take which) might
reasonably be expected to have a Material Adverse Effect.
17.4 Environmental Claims
The Parent shall inform the Administrative Agent in writing
as soon as reasonably practicable upon becoming aware of the
same if any Environmental Claim has been commenced or (to the
best of the Parent's knowledge and belief) is threatened
against any member of the Group in any case where such claim
would be reasonably likely, if determined against such member
of the Group, to have a Material Adverse Effect or of any
facts or circumstances which will or are reasonably likely to
result in any Environmental Claim being commenced or
threatened against any member of the Group in any case where
such claim would be reasonably likely, if determined against
such member of the Group, to have a Material Adverse Effect.
17.5 Notification of Events of Default
Each Obligor shall promptly inform the Administrative Agent
of the occurrence of any Event of Default or Potential Event
of Default and, upon receipt of a written request to that
effect from the Administrative Agent, confirm to the
Administrative Agent that, save as previously notified to the
Administrative Agent or as notified in such confirmation, no
Event of Default or Potential Event of Default has occurred.
17.6 Claims Pari Passu
Each Obligor shall ensure that at all times the claims of the
Finance Parties against it under this Agreement rank at least
pari passu with the claims of all its other unsecured and
unsubordinated creditors save those whose claims are,
preferred by any bankruptcy, insolvency, liquidation or other
similar laws of general application or pursuant to Permitted
Encumbrances.
17.7 Negative Pledge
17.7.1 The Parent shall ensure that no member of the
Group shall, without the prior written consent of the
Instructing Group, create or permit to subsist any
Encumbrance over all or any of its present or future
revenues or assets;
17.7.2 The prohibition in Clause 17.7.1 above shall not
apply to the following:
(i) Encumbrances disclosed in writing to the Banks
prior to the date hereof;
(ii) Permitted Encumbrances; and
(iii) Amounts payable by the Obligor under this
Agreement which are equally and rateably secured
by the Encumbrance to the satisfaction of the
Administrative Agent or such other Encumbrance is
provided as the Administrative Agent shall in its
absolute discretion deem not materially less
beneficial to the interests of the Banks.
17.8 Disposals
The Parent shall ensure that (disregarding sales of stock in
trade in the ordinary course of business) no member of the
Group shall, without the prior written consent of the
Instructing Group sell, lease, transfer or otherwise dispose
of, by one or more transactions or series of transactions
(whether related or not), the whole or any part (the book
value of which is 10 per cent. or more of the book value of
the whole) of its revenues or its assets subject to any
disposal pursuant to Clause 7.3 (Mandatory Repayments).
17.9 Mergers
The Parent shall ensure that no member of the Group shall,
without the prior written consent of the Security and
Documentation Agent merge or consolidate with any other
person, enter into any demerger transaction or participate in
any other type of corporate reconstruction provided, however,
nothing herein shall prohibit, nor shall prior written
consent of the Security and Documentation Agent be required
if (i) Gmrk, Inc., a Delaware company and wholly-owned
subsidiary of the Parent, shall be merged or consolidated
with and into the Parent, (ii) any Borrower and/or Guarantor,
excluding the Parent, may consolidated with, merge into or
transfer all or a part of its properties and assets to the
Parent and/or any other Borrower and/or Guarantor and (iii)
any Borrower and/or Guarantor, excluding the Parent, may
merge with a wholly-owned subsidiary of the Parent that has
no significant assets or liabilities and was incorporated
solely for purpose of reincorporating or redomesticating such
Borrower and/or Guarantor in a state of the United States of
America or, if such Borrower and/or Guarantor was organised
under the laws of a jurisdiction other than a state of the
United States of America, in any such foreign country in
which any other existing Borrower and/or Guarantor shall then
be incorporated, provided further that in each case such
merged entity continues to be a Borrower and/or Guarantor as
provided herein.
17.10 Material Subsidiary
The Parent shall procure that each Material Subsidiary which
is resident for tax purposes in the United States of America
shall accede as a Guarantor in accordance with Clause 31
(Additional Guarantors).
17.11 Completion of Acquisition of Subsidiary, Alternative Security
Requirement
In respect of the acquisition of Shares, for which funds have
been advanced under Tranche 2B, when, under the relevant
jurisdiction a sufficient proportion of Shares are owned by
the Group to effect a de-listing of the company whose shares
which have been purchased by the Group or if, in the
reasonable opinion of the Administrative Agent, there are no
adequate minority shareholder rights in the relevant
jurisdiction to prevent a corporate restructuring or sale of
assets by such company and such actions are the intention of
the company, the Parent shall procure that alternative
security (in form and substance acceptable to the Banks) to
the share pledge granted in favour of the Banks in connection
with such acquisition, is promptly given in favour of the
Banks.
17.12 Market Value of a Vessel
The Parent shall provide or procure the provision of, in
relation to each Vessel, at the request of the Administrative
Agent, but no more frequently than semi-annually, a
Borrower's Valuation Certificate, at the sole cost of the
Parent.
PRIVATE 18. EVENTS OF DEFAULT
Each of Clause 18.1 (Failure to Pay) to Clause
18.17 (Material Adverse Change) describes circumstances which
constitute an Event of Default for the purposes of this
Agreement.
18.1 Failure to Pay
An Obligor fails to pay any sum due from it hereunder at the
time, in the currency and in the manner specified herein or
if such failure results solely from technical or
administrative difficulties relating to the transfer of such
sums, such failure is not remedied within three days.
18.2 Misrepresentation
Any representation or statement made or deemed to be made by
an Obligor in this Agreement or in any notice or other
document, certificate or statement delivered by it pursuant
hereto or in connection herewith is or proves to have been
incorrect or misleading in any material respect when made or
deemed to be made.
18.3 Specific Covenants
An Obligor fails duly to perform or comply with any of the
obligations expressed to be assumed by it in Clause 15
(Financial Information) or Clause 17 (Covenants).
18.4 Financial Condition
At any time any of the requirements of Clause 16.1 (Financial
Condition) is not satisfied.
18.5 Other Obligations
An Obligor fails duly to perform or comply with any other
obligation expressed to be assumed by it in this Agreement or
any other Finance Document and such failure, if capable of
remedy, is not remedied within fourteen (14) days after the
Administrative Agent has given notice thereof to such
Obligor.
18.6 Cross Default
Any Financial Indebtedness of any member of the Group (other
than indebtedness due to trade creditors incurred in the
normal course of business which is disputed in good faith and
by appropriate proceedings diligently conducted) is not paid
when due, any Financial Indebtedness of any member of the
Group is declared to be or otherwise becomes due and payable
prior to its specified maturity, any commitment for any
Financial Indebtedness of any member of the Group is
cancelled or suspended by a creditor of any member of the
Group or any creditor of any member of the Group becomes
entitled to declare any Financial Indebtedness of any member
of the Group due and payable prior to its specified maturity,
provided that it shall not constitute an Event of Default if
the aggregate amount (or its equivalent in dollars) of all
such Financial Indebtedness is less than $500,000.
18.7 Insolvency and Rescheduling
Any member of the Group is unable to pay its debts as they
fall due, commences negotiations with any one or more of its
creditors with a view to the general readjustment or
rescheduling of its indebtedness or makes a general
assignment for the benefit of or a composition with its
creditors.
18.8 Winding-up
Any member of the Group takes any corporate action or other
steps are taken or legal proceedings are started for its
winding-up, dissolution, administration or re-organisation
(whether by way of voluntary arrangement, scheme of
arrangement or otherwise) or for the appointment of a
liquidator, receiver, administrator, administrative receiver,
conservator, custodian, trustee or similar officer of it or
of any or all of its revenues and assets.
18.9 Execution or Distress
Any execution or distress is levied against, or an
encumbrancer takes possession of, the whole or any part of,
the property, undertaking or assets of any member of the
Group or any event occurs which under the laws of any
jurisdiction has a similar or analogous effect.
18.10 Ownership
Any Obligor (other than the Parent) ceases to be wholly owned
by the Parent.
18.11 The Group's Business
Any member of the Group ceases to carry on the business it
carries on at the date hereof or enters into any unrelated
business.
18.12 Repudiation
An Obligor repudiates this Agreement or does or causes to be
done any act or thing evidencing an intention to repudiate
this Agreement.
18.13 Illegality
At any time it is or becomes unlawful for an Obligor to
perform or comply with any or all of its obligations
hereunder or under any other Finance Document to which such
Obligor is a party or any of the obligations of an Obligor
hereunder or under any such other Finance Document are not or
cease to be legal, valid, binding and enforceable.
18.14 Material Adverse Change
Any circumstances arise which give grounds in the reasonable
opinion of the Administrative Agent for belief that (a) the
Parent may not (or may be unable to) perform or comply with
its obligations hereunder, or any of the Security Documents
to which it is a party, (b) the Administrative Agent shall
have given to the Parent notice that it is of such opinion
setting out in reasonable detail the grounds upon which such
opinion is based and (c) after having given due regard to any
representation made by the Parent during the period of ten
days after the giving of such notice by the Administrative
Agent, the Administrative Agent is of the same opinion upon
the expiration of such period.
18.15 Change of Control
Any person obtains legal or beneficial ownership of 30 per
cent. or more of the issued and outstanding capital stock of
the Parent (excluding Lehman Bros. Inc. and its subsidiaries
or affiliates, such legal or beneficial ownership not to
exceed 51 per cent. of the issued and outstanding capital
stock of the Parent).
18.16 Acceleration and Cancellation
Upon the occurrence of an Event of Default at any time
thereafter, the Administrative Agent may (and, if so
instructed by an Instructing Group, shall) by notice to the
Borrower:
18.16.1 declare all or any part of the Advances to be
immediately due and payable (whereupon the same
shall become so payable together with accrued
interest thereon and any other sums then owed by
the Borrower hereunder) or declare all or any part
of the Advances to be due and payable on demand of
the Administrative Agent; and/or
18.16.2 declare that the Facility shall be cancelled,
whereupon the same shall be cancelled and the
Commitment of each Bank shall be reduced to zero.
18.17 Advances Due on Demand
If, pursuant to Clause 18.15 (Acceleration and Cancellation),
the Administrative Agent declares all or any part of the
Advances to be due and payable on demand of the
Administrative Agent, then, and at any time thereafter, the
Administrative Agent may (and, if so instructed by an
Instructing Group, shall) by notice to the Borrower:
18.17.1 require repayment of all or such part of the
Advances on such date as it may specify in such
notice (whereupon the same shall become due and
payable on the date specified together with
accrued interest thereon and any other sums then
owed by the Borrower hereunder) or withdraw its
declaration with effect from such date as it may
specify; and/or
18.17.2 declare that the Facility shall be cancelled,
whereupon the same shall be cancelled and the
Commitment of each Bank reduced to zero.
18.18 Length of Terms
If, pursuant to Clause 18.15 (Acceleration and Cancellation),
the Administrative Agent declares the Advances to be due and
payable on demand of the Administrative Agent, the Term in
respect of any such Advance shall, if the Administrative
Agent subsequently demands payment before the scheduled
Repayment Date in respect of such Advance, be deemed (except
for the purposes of Clause 22.4 (Break Costs) to be of such
length that it ends on the date that such demand is made.
PRIVATE 19. GUARANTEE AND INDEMNITY
19.1 Parent Guarantee and Indemnity
The Parent irrevocably and unconditionally:
19.1.1 guarantees to each Finance Party the due and
punctual observance and performance of all the terms,
conditions and covenants on the part of each Borrower
(other than the Parent) contained in the Finance
Documents and agrees to pay from time to time on demand
any and every sum or sums of money which each Borrower
(other than the Parent) is at any time liable to pay to
any Finance Party under or pursuant to the Finance
Documents and which has become due and payable but has
not been paid at the time such demand is made; and
19.1.2 agrees as a primary obligation to indemnify each
Finance Party from time to time on demand from and
against any loss incurred by any Finance Party as a
result of any of the obligations of each Borrower
(other than the Parent) under or pursuant to the
Finance Documents being or becoming void, voidable,
unenforceable or ineffective as against such Borrower
for any reason whatsoever, whether or not known to any
Finance Party or any other person, the amount of such
loss being the amount which the person or persons
suffering it would otherwise have been entitled to
recover from such Borrower.
19.2 Other Guarantors Guarantee and Indemnity
Each of the Guarantors (other than the Parent) irrevocably
and unconditionally:
19.2.1 guarantees to each Finance Party the due and
punctual observance and performance of all the terms,
conditions and covenants on the part of the Parent
contained in the Finance Documents and agrees to pay
from time to time on demand any and every sum or sums
of money which the Parent is at any time liable to pay
to any Finance Party under or pursuant to the Finance
Documents and which has become due and payable but has
not been paid at the time such demand is made; and
19.2.2 agrees as primary obligation to indemnify each
Finance Party from time to time on demand by the
Administrative Agent from and against any loss incurred
by any Finance Party as a result of any of the
obligations of the Parent under or pursuant to the
Finance Documents being or becoming void, voidable,
unenforceable or ineffective as against the Parent for
any reason whatsoever, whether or not known to any
Finance Party or any other person, the amount of such
loss being the amount which the person or persons
suffering it would otherwise have been entitled to
recover from the Parent.
19.3 Additional Security
The obligations of each Guarantor herein contained shall be
in addition to and independent of every other security which
any Finance Party may at any time hold in respect of any of
any Obligor's obligations under the Finance Documents.
19.4 Continuing Obligations
The obligations of each Guarantor herein contained shall
constitute and be continuing obligations notwithstanding any
settlement of account or other matter or thing whatsoever and
shall not be considered satisfied by any intermediate payment
or satisfaction of all or any of the obligations of the
Obligors under the Finance Documents and shall continue in
full force and effect until final payment in full of all
amounts owing by any Obligor under the Finance Documents and
total satisfaction of all the Obligors' actual and contingent
obligations under the Finance Documents.
19.5 Obligations not Discharged
Neither the obligations of each Guarantor herein contained
nor the rights, powers and remedies conferred in respect of
each Guarantor upon any Finance Party by the Finance
Documents or by law shall be discharged, impaired or
otherwise affected by:
19.5.1 the winding-up, dissolution, administration or
re-organisation of any Obligor or any other person or
any change in its status, function, control or
ownership;
19.5.2 any of the obligations of any Obligor or any other
person under the Finance Documents or under any other
security taken in respect of any of its obligations
under the Finance Documents being or becoming illegal,
invalid, unenforceable or ineffective in any respect;
19.5.3 time or other indulgence being granted or agreed
to be granted to any Obligor in respect of its
obligations under the Finance Documents or under any
such other security;
19.5.4 any amendment to, or any variation, waiver or
release of, any obligation of any Obligor under the
Finance Documents or under any such other security;
19.5.5 any failure to take, or fully to take, any
security contemplated hereby or otherwise agreed to be
taken in respect of any Obligor's obligations under the
Finance Documents;
19.5.6 any failure to realise or fully to realise the
value of, or any release, discharge, exchange or
substitution of, any security taken in respect of any
Obligor's obligations under the Finance Documents; or
19.5.7 any other act, event or omission which, but for
this Clause 19.5, might operate to discharge, impair or
otherwise affect any of the obligations of each
Guarantor herein contained or any of the rights, powers
or remedies conferred upon any of the Finance Parties
by the Finance Documents or by law.
19.6 Settlement Conditional
Any settlement or discharge between an Obligor and any of the
Finance Parties shall be conditional upon no security or
payment to any Finance Party by an Obligor or any other
person on behalf of an Obligor being avoided or reduced by
virtue of any laws relating to bankruptcy, insolvency,
liquidation or similar laws of general application and, if
any such security or payment is so avoided or reduced, each
Finance Party shall be entitled to recover the value or
amount of such security or payment from such Obligor
subsequently as if such settlement or discharge had not
occurred.
19.7 Exercise of Rights
No Finance Party shall be obliged before exercising any of
the rights, powers or remedies conferred upon them in respect
of any Guarantor by the Finance Documents or by law:
19.7.1 to make any demand of any Obligor;
19.7.2 to take any action or obtain judgment in any court
against any Obligor;
19.7.3 to make or file any claim or proof in a winding-up
or dissolution of any Obligor; or
19.7.4 to enforce or seek to enforce any other security
taken in respect of any of the obligations of any
Obligor under the Finance Documents.
19.8 Deferral of Guarantor's Rights
Each of the Guarantors agrees that, so long as any amounts
are or may be owed by an Obligor under the Finance Documents
or an Obligor is under any actual or contingent obligations
under the Finance Documents, it shall not exercise any rights
which it may at any time have by reason of performance by it
of its obligations under the Finance Documents:
19.8.1 to be indemnified by an Obligor; and/or
19.8.2 to claim any contribution from any other guarantor
of any Obligor's obligations under the Finance
Documents; and/or
19.8.3 to take the benefit (in whole or in part and
whether by way of subrogation or otherwise) of any
rights of the Finance Parties under the Finance
Documents or of any other security taken pursuant to,
or in connection with, the Finance Documents by all or
any of the Finance Parties.
19.9 Suspense Accounts
All moneys received, recovered or realised by a Bank by
virtue of Clause 19.1 (Parent Guarantee and Indemnity) or
Clause 19.2 (Other Guarantors Guarantee and Indemnity) may,
in that Bank's discretion, be credited to a suspense or
impersonal account and may be held in such account for so
long as such Bank thinks fit pending the application from
time to time (as such Bank may think fit) of such moneys in
or towards the payment and discharge of any amounts owing by
an Obligor to such Bank hereunder. Each Obligor which has
provided any such payment agrees that such Obligor shall have
no interest in any such payment following payment whether or
not such Bank has applied same and to the extent such Obligor
has an interest in any such payment it grants the recipient
Bank a security interest in same and in all claims in respect
thereof.
PRIVATE 20. COMMITMENT COMMISSION AND FEES
20.1 Commitment Commission
The Parent shall procure that the Borrower shall pay to the
Administrative Agent for account of each Bank a commitment
commission on the amount of such Bank's Available Commitment
from day to day during the period beginning on the date
hereof and ending on the Final Maturity Date, such commitment
commission to be calculated at the rate of one half of one
(1) per cent. per annum and payable in arrear on the undrawn
amount of the Facility on the last day of each successive
period of three months which ends during such period and on
the Final Maturity Date.
20.2 Arrangement Fee
The Parent shall procure that the Borrower shall pay to The
Chase Manhattan Bank, and Christiania Bank og Kreditkasse ASA
the fees specified in the letter of even date herewith from
The Chase Manhattan Bank and Christiania Bank og Kreditkasse
ASA to the Borrower at the times, and in the amounts,
specified in such letter.
20.3 Agency Fee
The Parent shall procure that the Borrower shall pay to the
Administrative Agent for its own account the agency fees
specified in the letter of even date herewith from the
Administrative Agent to the Borrower at the times, and in the
amounts, specified in such letter.
20.4 Security Agency Fee
The Parent shall procure that the Borrower shall pay to the
Security and Documentation Agent for its own account the sums
set out in and on the dates specified in a letter from the
Parent to the Security and Documentation Agent.
20.5 Documentation Fee
The Parent shall procure that the Borrower shall pay the sums
set out in and on the dates specified in a letter from the
Parent to the Security and Documentation Agent.
PRIVATE 21. COSTS AND EXPENSES
21.1 Transaction Expenses
The Parent shall procure that the Borrower shall, from time
to time on demand of the Administrative Agent, reimburse the
Administrative Agent for all reasonable costs and expenses
(including legal fees) together with any VAT (when properly
assessed) thereon incurred by it in connection with the
negotiation, preparation and execution of this Agreement, any
other document referred to in this Agreement and the
completion of the transactions herein contemplated. The
Administrative Agent or the Arrangers may pay for any such
costs and expenses (including legal fees) together with any
VAT thereon prior to receiving payment in respect thereof
from the Borrower and (without prejudice to the provisions of
this Agreement) the Administrative Agent or the Arrangers may
debit an amount equal to any such reasonable costs and
expenses (including legal fees) together with any VAT thereon
to any account maintained by the Parent with any of them.
21.2 Preservation and Enforcement of Rights
The Parent shall, from time to time on demand of the
Administrative Agent, reimburse the Finance Parties for all
costs and expenses (including legal fees) on a full indemnity
basis together with any VAT thereon incurred in or in
connection with the preservation and/or enforcement of any of
the rights of the Finance Parties under this Agreement and
any other document referred to in this Agreement (including,
without limitation, any costs and expenses relating to any
investigation as to whether or not an Event of Default might
have occurred or is likely to occur or any steps necessary or
desirable in connection with any proposal for remedying or
otherwise resolving an Event of Default or Potential Event of
Default).
21.3 Stamp Taxes
The Parent shall pay all stamp, registration and other taxes
to which this Agreement, any other document referred to in
this Agreement or any judgment given in connection therewith
is or at any time may be subject and shall, from time to time
on demand of the Administrative Agent, indemnify the Finance
Parties against any liabilities, costs, claims and expenses
resulting from any failure to pay or any delay in paying any
such tax.
21.4 Amendment Costs
If an Obligor requests any amendment, waiver or consent then
the Parent shall, within five Business Days of demand by the
Administrative Agent, reimburse the Finance Parties for all
reasonable costs and expenses (including legal fees) together
with any VAT (when properly assessed) thereon incurred by
such person in responding to or complying with such request.
21.5 Banks' Liabilities for Costs
If the Parent fails to perform any of its obligations under
this Clause 21, each Bank shall, in its Proportion, indemnify
each of the Administrative Agent and the Arrangers against
any loss incurred by any of them as a result of such failure.
PRIVATE 22. DEFAULT INTEREST AND BREAK COSTS
22.1 Default Interest Periods
If any sum due and payable by an Obligor hereunder is not
paid on the due date therefor in accordance with Clause 25
(Payments) or if any sum due and payable by an Obligor under
any judgment of any court in connection herewith is not paid
on the date of such judgment, the period beginning on such
due date or, as the case may be, the date of such judgment
and ending on the date upon which the obligation of such
Obligor to pay such sum is discharged shall be divided into
successive periods, each of which (other than the first)
shall start on the last day of the preceding such period and
the duration of each of which shall (except as otherwise
provided in this Clause 22) be selected by the Administrative
Agent.
22.2 Default Interest
An Unpaid Sum shall bear interest during each Term in respect
thereof at the rate per annum which is one per cent. per
annum above the percentage rate which would apply to an
Advance in the amount and currency of such Unpaid Sum and for
the same Term, provided that if such Unpaid Sum relates to an
Advance which became due and payable on a day other than the
last day of the Term thereof:
22.2.1 the first such Term applicable to such Unpaid Sum
shall be of a duration equal to the unexpired portion
of the current Term relating to that Advance; and
22.2.2 the percentage rate of interest applicable thereto
from time to time during such period shall be that
which exceeds by one per cent. the rate which would
have been applicable to it had it not so fallen due
save that the Applicable Margin shall be, or be deemed
to be, the highest rate specified in the definition
thereof.
22.3 Payment of Default Interest
Any interest which shall have accrued under Clause 22.2
(Default Interest) in respect of an Unpaid Sum shall be due
and payable and shall be paid by the Obligor owing such
Unpaid Sum on the last day of its Term or on such other dates
as the Administrative Agent may specify by notice to such
Obligor.
22.4 Break Costs
If any Bank or the Administrative Agent on its behalf
receives or recovers all or any part of such Bank's share of
an Advance or Unpaid Sum otherwise than on the last day of
the Term thereof, the Parent shall pay to the Administrative
Agent on demand for account of such Bank an amount equal to
the amount (if any) by which (a) the additional interest
which would have been payable on the amount so received or
recovered had it been received or recovered on the last day
of the Term thereof exceeds (b) the amount of interest which
in the opinion of the Administrative Agent would have been
payable to the Administrative Agent on the last day of the
Term thereof in respect of a deposit in the currency of the
amount so received or recovered equal to the amount so
received or recovered placed by it with a prime bank in
London for a period starting on the third Business Day
following the date of such receipt or recovery and ending on
the last day of the Term thereof.
PRIVATE 23. PARENT'S INDEMNITIES
23.1 Parent's Indemnity
The Parent undertakes to indemnify:
23.1.1 each Finance Party against any cost, claim, loss,
expense (including legal fees) or liability together
with any VAT thereon, whether or not reasonably
foreseeable which it may sustain or incur as a
consequence of the occurrence of any Event of Default
or any default by the Parent in the performance of any
of the obligations expressed to be assumed by it in
this Agreement;
23.1.2 the Administrative Agent against any cost or loss
it may suffer or incur as a result of (a) its entering
into, or performing, any foreign exchange contract for
the purposes of Clause 25 (Payments) or (b) its
implementing Clause 24.2 (Unavailability of ECU/ecu);
23.1.3 each Bank against any cost or loss it may suffer
under Clause 21.5 (Banks' Liabilities for Costs) or
Clause 28.6 (Indemnification);
23.1.4 each Bank against any cost or loss it may suffer
or incur as a result of its funding or making
arrangements to fund its portion of an Advance
requested by the Parent hereunder but not made by
reason of the operation of any one or more of the
provisions hereof; and
23.1.5 each Bank against any loss it may suffer or incur
as a result of its funding its portion of any Advance
which is denominated in dollars by reason of Clause 3.3
(Conditions for Drawing in an Optional Currency).
23.2 Currency Indemnity
If any sum (a "Sum") due from an Obligor under this Agreement
or any order or judgment given or made in relation hereto has
to be converted from the currency (the "First Currency") in
which such Sum is payable into another currency (the "Second
Currency") for the purpose of:
23.2.1 making or filing a claim or proof against such
Obligor;
23.2.2 obtaining an order or judgment in any court or
other tribunal; or
23.2.3 enforcing any order or judgment given or made in
relation hereto,
the Parent shall indemnify each person to whom such Sum is
due from and against any loss suffered or incurred as a
result of any discrepancy between (a) the rate of exchange
used for such purpose to convert such Sum from the First
Currency into the Second Currency and (b) the rate or rates
of exchange available to such person at the time of receipt
of such Sum.
PRIVATE 24. CURRENCY OF ACCOUNT AND PAYMENT
24.1 Currency of Account
The dollar is the currency of account and payment for each
and every sum at any time due from an Obligor hereunder,
provided that:
24.1.1 each repayment of an Advance or Unpaid Sum or a
part thereof shall be made in the currency in which
such Advance or Unpaid Sum is denominated at the time
of that repayment;
24.1.2 each payment of interest shall be made in the
currency in which the sum in respect of which such
interest is payable is denominated;
24.1.3 each payment in respect of costs and expenses
shall be made in the currency in which the same were
incurred;
24.1.4 each payment pursuant to Clause 9.2 (Tax
Indemnity) or Clause 11.1 (Increased Costs) shall be
made in the currency specified by the party claiming
thereunder; and
24.1.5 any amount expressed to be payable in a currency
other than dollars shall be paid in that other
currency.
24.2 Unavailability of ECU/ecu
If the Administrative Agent at any time prior to the
Commencement Date determines (after consultation with the
Reference Banks and the Banks) that:
24.2.1 the ECU has ceased to be utilised as the basic
accounting unit of the European Community;
24.2.2 for reasons affecting the market in ecu generally,
ecu are not freely traded between banks
internationally; or
24.2.3 it is illegal, impossible or impracticable for
payments to be made hereunder in ecu,
then the Administrative Agent may, in its discretion but
after consultation with the Borrower and the Banks, declare
(such declaration to be binding on all the parties hereto)
that any payment made or to be made thereafter which, but for
this provision, would have been payable in ecu shall be made
in a component currency of the ecu or dollars (as selected by
the Administrative Agent after consultation with the
Reference Banks and the Banks) (the "Selected Currency").
The calculation of any amount to be paid in a Selected
Currency shall be made by the Administrative Agent on the
Valuation Day for value on the day that such payment is due
(or, if such day is not a Business Day in the relevant
Selected Currency, the next succeeding Business Day). The
amount of the Selected Currency shall be the equivalent on
the Valuation Day of the components of the ECU when it was
most recently used in the European Monetary System, provided
that if the ECU is being used by public institutions of or
within the European Communities on the Valuation Day, the
Administrative Agent shall calculate the equivalent of such
payment in the Selected Currency by using the currency
amounts that are components of the ECU which are used by such
public institutions on the Valuation Day.
PRIVATE 25. PAYMENTS
25.1 Notification of Payments
Without prejudice to the liability of each party hereto
promptly to pay each amount owing by it hereunder on the due
date therefor, whenever a payment is expected to be made by
any of the parties hereto, the Administrative Agent shall, at
least two Business Days prior to the expected date for such
payment, notify all the parties hereto of the amount,
currency and timing of such payment and the identity of the
party liable to make such payment.
25.2 Payments to the Administrative Agent
On each date on which this Agreement requires an amount
denominated in dollars to be paid by an Obligor or any of the
Banks, such Obligor or, as the case may be, such Bank shall
make the same available to the Administrative Agent by
payment in dollars and in same day funds (or in such other
funds as may for the time being be customary in New York City
for the settlement in New York City of international banking
transactions in dollars) by 10.00 a.m. New York time to the
Administrative Agent's account number 10934173 with Citibank,
N.A. in the name of Christiania Bank og Kreditkasse, ASA (or
such other account or bank as the Administrative Agent may
have specified for this purpose). On each date on which this
Agreement requires an amount denominated in a currency other
than dollars to be paid by an Obligor or any of the Banks,
such Obligor or, as the case may be, such Bank shall make the
same available to the Administrative Agent for value on the
due date at such time and in such funds and to such account
with such bank as the Administrative Agent shall specify from
time to time.
25.3 Payments by the Administrative Agent
Save as otherwise provided herein, each payment received by
the Administrative Agent pursuant to Clause 25.2 (Payments to
the Administrative Agent) shall:
25.3.1 in the case of a payment received for the account
of a Borrower, be made available by the Administrative
Agent to an Obligor by application:
(a) first, in or towards payment (on the date, and in
the currency and funds, of receipt) of any amount
then due from such Borrower hereunder to the
person from whom the amount was so received or in
or towards the purchase of any amount of any
currency to be so applied; and
(b) secondly, in or towards payment (on the date, and
in the currency and funds, of receipt) to such
account with such bank in the principal financial
centre of the country of the currency of such
payment (or, in the case of ecu, in the financial
centre designated by the Administrative Agent for
this purpose) as such Obligor shall have
previously notified to the Administrative Agent
for this purpose; and
25.3.2 in the case of any other payment, be made
available by the Administrative Agent to the person
entitled to receive such payment in accordance with
this Agreement (in the case of a Bank, for the account
of the Facility Office) for value the same day by
transfer to such account of such person with such bank
in the principal financial centre of the country of the
currency of such payment (or, in the case of ecu, in
the financial centre designated by the Administrative
Agent for this purpose) as such person shall have
previously notified to the Administrative Agent.
25.4 No Set-off
All payments required to be made by an Obligor hereunder
shall be calculated without reference to any set-off or
counterclaim and shall be made free and clear of and without
any deduction for or on account of any set-off or
counterclaim.
25.5 Clawback
Where a sum is to be paid hereunder to the Administrative
Agent for account of another person, the Administrative Agent
shall not be obliged to make the same available to that other
person or to enter into or perform any exchange contract in
connection therewith until it has been able to establish to
its satisfaction that it has actually received such sum, but
if it does so and it proves to be the case that it had not
actually received such sum, then the person to whom such sum
or the proceeds of such exchange contract was so made
available shall on request refund the same to the
Administrative Agent together with an amount sufficient to
indemnify the Administrative Agent against any cost or loss
it may have suffered or incurred by reason of its having paid
out such sum or the proceeds of such exchange contract prior
to its having received such sum.
25.6 Partial Payments
If and whenever a payment is made by an Obligor hereunder the
Administrative Agent may apply the amount received towards
the obligations of the Obligors under this Agreement in the
following order:
25.6.1 first, in or towards payment of any unpaid costs
and expenses of the Administrative Agent;
25.6.2 secondly, in or towards payment pro rata of any
accrued interest due but unpaid;
25.6.3 thirdly, in or towards payment pro rata of any
principal due but unpaid; and
25.6.4 fourthly, in or towards payment pro rata of any
other sum due but unpaid.
25.7 Variation of Partial Payments
The order of payments set out in Clause 25.6 (Partial
Payments) shall override any appropriation made by the
Obligor to which the partial payment relates but the order
set out in sub-clauses 25.6.2, 25.6.3 and 25.6.4 of
Clause 25.6 (Partial Payments) may be varied if agreed by all
the Banks.
PRIVATE 26. SET-OFF
26.1 Contractual Set-off
Each Obligor authorises each Bank to apply any credit balance
to which such Obligor is entitled on any account of such
Obligor with such Bank in satisfaction of any sum due and
payable from such Obligor to such Bank hereunder but unpaid.
For this purpose, each Bank is authorised to purchase with
the moneys standing to the credit of any such account such
other currencies as may be necessary to effect such
application.
26.2 Set-off not Mandatory
No Bank shall be obliged to exercise any right given to it by
Clause 26.1 (Contractual Set-off).
PRIVATE 27. SHARING
27.1 Payments to Banks
If a Bank (a "Recovering Bank") applies any receipt or
recovery from an Obligor to a payment due under this
Agreement and such amount is received or recovered other than
in accordance with Clause 25 (Payments), then such Recovering
Bank shall:
27.1.1 notify the Administrative Agent of such receipt or
recovery;
27.1.2 at the request of the Administrative Agent,
promptly pay to the Administrative Agent an amount (the
"Sharing Payment") equal to such receipt or recovery
less any amount which the Administrative Agent
determines may be retained by such Recovering Bank as
its share of any payment to be made in accordance with
Clause 25.6 (Partial Payments).
27.2 Redistribution of Payments
The Administrative Agent shall treat the Sharing Payment as
if it had been paid by the relevant Obligor and distribute it
between the Finance Parties (other than the Recovering Bank)
in accordance with Clause 25.6 (Partial Payments).
27.3 Recovering Bank's Rights
The Recovering Bank will be subrogated into the rights of the
parties which have shared in a redistribution pursuant to
Clause 27.2 (Redistribution of Payments) in respect of the
Sharing Payment (and the relevant Obligor shall be liable to
the Recovering Bank in an amount equal to the Sharing
Payment).
27.4 Repayable Recoveries
If any part of the Sharing Payment received or recovered by a
Recovering Bank becomes repayable and is repaid by such
Recovering Bank, then:
27.4.1 each party which has received a share of such
Sharing Payment pursuant to Clause 27.2 (Redistribution
of Payments) shall, upon request of the Administrative
Agent, pay to the Administrative Agent for account of
such Recovering Bank an amount equal to its share of
such Sharing Payment; and
27.4.2 such Recovering Bank's rights of subrogation in
respect of any reimbursement shall be cancelled and the
relevant Obligor will be liable to the reimbursing
party for the amount so reimbursed.
27.5 Exception
This Clause 27 shall not apply if the Recovering Bank would
not, after making any payment pursuant to this Clause 27,
have a valid and enforceable claim against the relevant
Obligor
27.6 Recoveries Through Legal Proceedings
If any Bank intends to commence any action in any court it
shall give prior notice to the Administrative Agent and the
other Banks. If any Bank shall commence any action in any
court to enforce its rights hereunder and, as a result
thereof or in connection therewith, receives any amount, then
such Bank shall not be required to share any portion of such
amount with any Bank which has the legal right to, but does
not, join in such action or commence and diligently prosecute
a separate action to enforce its rights in another court.
PRIVATE 28. THE ADMINISTRATIVE AGENT, THE ARRANGERS AND THE
BANKS
28.1 Appointment of the Administrative Agent
Each of the Arrangers and the Banks hereby appoints the
Administrative Agent to act as its agent in connection
herewith and authorises the Administrative Agent to exercise
such rights, powers, authorities and discretions as are
specifically delegated to the Administrative Agent by the
terms hereof together with all such rights, powers,
authorities and discretions as are reasonably incidental
thereto.
28.2 Administrative Agent's Discretions
The Administrative Agent may:
28.2.1 assume, unless it has, in its capacity as agent
for the Banks, received notice to the contrary from any
other party hereto, that (a) any representation made or
deemed to be made by an Obligor in connection herewith
is true, (b) no Event of Default or Potential Event of
Default has occurred, (c) no Obligor is in breach of or
default under its obligations hereunder and (d) any
right, power, authority or discretion vested herein
upon an Instructing Group, the Banks or any other
person or group of persons has not been exercised;
28.2.2 assume that the Facility Office of each Bank is
that notified to it by such Bank in writing prior to
the date hereof (or, in the case of a Transferee, at
the end of the Transfer Certificate to which it is a
party as Transferee) until it has received from such
Bank a notice designating some other office of such
Bank to replace its Facility Office and act upon any
such notice until the same is superseded by a further
such notice;
28.2.3 engage and pay for the advice or services of any
lawyers, accountants, surveyors or other experts whose
advice or services may to it seem necessary, expedient
or desirable and rely upon any advice so obtained;
28.2.4 rely as to any matters of fact which might
reasonably be expected to be within the knowledge of an
Obligor upon a certificate signed by or on behalf of
such Obligor;
28.2.5 rely upon any communication or document believed
by it to be genuine;
28.2.6 refrain from exercising any right, power or
discretion vested in it as agent hereunder unless and
until instructed by an Instructing Group as to whether
or not such right, power or discretion is to be
exercised and, if it is to be exercised, as to the
manner in which it should be exercised;
28.2.7 refrain from acting in accordance with any
instructions of an Instructing Group to begin any legal
action or proceeding arising out of or in connection
with this Agreement until it shall have received such
security as it may require (whether by way of payment
in advance or otherwise) for all costs, claims, losses,
expenses (including legal fees) and liabilities
together with any VAT thereon which it will or may
expend or incur in complying with such instructions;
and
28.2.8 assume (unless it has specific notice to the
contrary) that any notice or request made by the Parent
is made on behalf of all the Obligors.
28.3 Administrative Agent's Obligations
The Administrative Agent shall:
28.3.1 promptly inform each Bank of the contents of any
notice or document received by it in its capacity as
Administrative Agent from an Obligor hereunder;
28.3.2 promptly notify each Bank of the occurrence of any
Event of Default or any default by an Obligor in the
due performance of or compliance with its obligations
under this Agreement of which the Administrative Agent
has notice from any other party hereto;
28.3.3 save as otherwise provided herein, act as agent
hereunder in accordance with any instructions given to
it by an Instructing Group, which instructions shall be
binding on the Arrangers and the Banks; and
28.3.4 if so instructed by an Instructing Group, refrain
from exercising any right, power or discretion vested
in it as agent hereunder.
The Administrative Agent's duties under this Agreement are
solely mechanical and administrative in nature.
28.4 Excluded Obligations
Notwithstanding anything to the contrary expressed or implied
herein, neither the Administrative Agent nor the Arrangers
shall:
28.4.1 be bound to enquire as to (a) whether or not any
representation made or deemed to be made by an Obligor
in connection herewith is true, (b) the occurrence or
otherwise of any Event of Default or Potential Event of
Default, (c) the performance by an Obligor of its
obligations hereunder or (d) any breach of or default
by an Obligor of or under its obligations hereunder;
28.4.2 be bound to account to any Bank for any sum or the
profit element of any sum received by it for its own
account;
28.4.3 be bound to disclose to any other person any
information relating to any member of the Group if (a)
such person, on providing such information expressly
stated to the Administrative Agent or, as the case may
be, the Arrangers, that such information was
confidential or (b) such disclosure would or might in
its opinion constitute a breach of any law or be
otherwise actionable at the suit of any person;
28.4.4 be under any obligations other than those for
which express provision is made herein; or
28.4.5 be or be deemed to be a fiduciary for any other
party hereto.
28.5 Delegation
The Administrative Agent may delegate, transfer or assign to
any subsidiary of Christiania Bank og Kreditkasse ASA or its
successor from time to time all or any of the rights, powers,
authorities and discretions vested in it hereunder and the
performance of its duties in accordance herewith, and such
delegation, transfer or assignment may be made upon such
terms and subject to such conditions (including the power to
sub-delegate) and subject to such regulations as the
Administrative Agent may think fit (and the term
"Administrative Agent" as used in this Agreement shall
include any such delegate).
28.6 Indemnification
Each Bank shall, in its Proportion, from time to time on
demand by the Administrative Agent, indemnify the
Administrative Agent, against any and all costs, claims,
losses, expenses (including legal fees) and liabilities
together with any VAT thereon which the Administrative Agent
may incur, otherwise than by reason of its own gross
negligence or wilful misconduct, in acting in its capacity as
agent hereunder (other than any which have been reimbursed by
the Borrower pursuant to Clause 23.1 (Parent's Indemnity)).
28.7 Exclusion of Liabilities
Each of the Banks accepts that it is entering into this
Agreement in reliance only on the representations of the
Obligors in this Agreement and on its own investigations,
that it has not relied on the Arrangers and that, except that
in the case of fraud, it neither has nor will have any claims
against the Arrangers arising from or in connection with this
Agreement.
Except in the case of gross negligence or wilful default,
none of the Administrative Agent and the Arrangers accepts
any responsibility:
28.7.1 for the adequacy, accuracy and/or completeness of
any information supplied by the Administrative Agent or
the Arrangers, by an Obligor or by any other person in
connection with this Agreement, the transactions herein
contemplated or any other agreement, arrangement or
document entered into, made or executed in anticipation
of, pursuant to or in connection with this Agreement;
28.7.2 for the legality, validity, effectiveness,
adequacy or enforceability of this Agreement or any
other agreement, arrangement or document entered into,
made or executed in anticipation of, pursuant to or in
connection with this Agreement; or
28.7.3 for the exercise of, or the failure to exercise,
any judgement, discretion or power given to any of them
by or in connection with this Agreement or any other
agreement, arrangement or document entered into, made
or executed in anticipation of, pursuant to or in
connection with this Agreement.
Accordingly, none of the Administrative Agent and the
Arrangers shall be under any liability (whether in negligence
or otherwise) in respect of such matters, save in the case of
gross negligence or wilful misconduct.
28.8 No Actions
Each of the Banks agrees that it will not assert or seek to
assert against any director, officer or employee of the
Administrative Agent or any Arranger any claim it might have
against any of them in respect of the matters referred to in
Clause 28.7 (Exclusion of Liabilities).
28.9 Business with the Group
The Administrative Agent and each of the Arrangers may accept
deposits from, lend money to and generally engage in any kind
of banking or other business with any member of the Group
whether or not it may or does lead to a conflict with the
interests of any of the Banks. Similarly, the Administrative
Agent or the Arrangers may undertake business with or for
others even though it may lead to a conflict with the
interests of any of the Banks.
28.10 Resignation
The Administrative Agent may resign its appointment hereunder
at any time without assigning any reason therefor by giving
not less than thirty days' prior notice to that effect to
each of the other parties hereto, provided that no such
resignation shall be effective until a successor for the
Administrative Agent is appointed in accordance with the
succeeding provisions of this Clause 28.
28.11 Successor Agent
If the Administrative Agent gives notice of its resignation
pursuant to Clause 28.10 (Resignation), then any reputable
and experienced bank or other financial institution may be
appointed as a successor to the Administrative Agent by an
Instructing Group during the period of such notice but, if no
such successor is so appointed, the Administrative Agent may
appoint such a successor itself.
28.12 Rights and Obligations
If a successor to the Administrative Agent is appointed under
the provisions of Clause 28.11 (Successor Agent), then
(a) the retiring Administrative Agent shall be discharged
from any further obligation hereunder but shall remain
entitled to the benefit of the provisions of this Clause 28
and (b) its successor and each of the other parties hereto
shall have the same rights and obligations amongst themselves
as they would have had if such successor had been a party
hereto.
28.13 Own Responsibility
It is understood and agreed by each Bank that at all times it
has itself been, and will continue to be, solely responsible
for making its own independent appraisal of and investigation
into all risks arising under or in connection with this
Agreement including, but not limited to:
28.13.1 the financial condition, creditworthiness,
condition, affairs, status and nature of each
member of the Group;
28.13.2 the legality, validity, effectiveness, adequacy
and enforceability of this Agreement and any other
agreement, arrangement or document entered into,
made or executed in anticipation of, pursuant to
or in connection with this Agreement;
28.13.3 whether such Bank has recourse, and the nature and
extent of that recourse, against an Obligor or any
other person or any of their respective assets
under or in connection with this Agreement, the
transactions herein contemplated or any other
agreement, arrangement or document entered into,
made or executed in anticipation of, pursuant to
or in connection with this Agreement; and
28.13.4 the adequacy, accuracy and/or completeness of any
information provided by the Administrative Agent
or the Arrangers, an Obligor, or by any other
person in connection with this Agreement, the
transactions contemplated herein or any other
agreement, arrangement or document entered into,
made or executed in anticipation of, pursuant to
or in connection with this Agreement.
Accordingly, each Bank acknowledges to the Administrative
Agent and the Arrangers that it has not relied on and will
not hereafter rely on the Administrative Agent and the
Arrangers or any of them in respect of any of these matters.
28.14 Agency Division Separate
In acting as agent hereunder for the Banks, the
Administrative Agent shall be regarded as acting through its
agency division which shall be treated as a separate entity
from any other of its divisions or departments and,
notwithstanding the foregoing provisions of this Clause 28,
any information received by some other division or department
of the Administrative Agent may be treated as confidential
and shall not be regarded as having been given to the
Administrative Agent's agency division.
PRIVATE 29. ASSIGNMENTS AND TRANSFERS
29.1 Binding Agreement
The Finance Documents shall be binding upon and enure to the
benefit of each party hereto and its or any subsequent
successors and Transferees.
29.2 No Assignments and Transfers by the Obligors
No Obligor shall be entitled to assign or transfer all or any
of its rights, benefits and obligations under the Finance
Documents.
29.3 Assignments and Transfers by Banks
Any Bank may, at any time, assign all or any of its rights
and benefits hereunder or transfer in accordance with
Clause 29.5 (Transfers by Banks) all or any of its rights,
benefits and obligations under the Finance Documents to a
bank or financial institution, subject to the Parent's
consent, such consent not to be unreasonably withheld
Provided the principal amount so assigned or transferred is
not less than $10,000,000 and the principal amount of the
principal amount (if any) retained by such Bank and the
participation of the assignee or transferee is not less than
$10,000,000.
29.4 Assignments by Banks
If any Bank assigns all or any of its rights and benefits
under the Finance Documents in accordance with Clause 29.3
(Assignments and Transfers by Banks), then, unless and until
the assignee has delivered a notice to the Administrative
Agent confirming in favour of the Administrative Agent, the
Arrangers and the other Banks that it shall be under the same
obligations towards each of them as it would have been under
if it had been an original party hereto as a Bank (whereupon
such assignee shall become a party hereto as a "Bank"), the
Administrative Agent, the Arrangers and the other Banks shall
not be obliged to recognise such assignee as having the
rights against each of them which it would have had if it had
been such a party hereto.
29.5 Transfers by Banks
If any Bank wishes to transfer all or any of its rights,
benefits and/or obligations under the Finance Documents as
contemplated in Clause 29.3 (Assignments and Transfers by
Banks), then such transfer may be effected by the delivery to
the Administrative Agent of a duly completed Transfer
Certificate executed by such Bank and the relevant Transferee
in which event, on the later of the Transfer Date specified
in such Transfer Certificate and the fifth Business Day after
(or such earlier Business Day endorsed by the Administrative
Agent on such Transfer Certificate falling on or after) the
date of delivery of such Transfer Certificate to the
Administrative Agent:
29.5.1 to the extent that in such Transfer Certificate
the Bank party thereto seeks to transfer by novation
its rights, benefits and obligations hereunder, each of
the Obligors and such Bank shall be released from
further obligations towards one another under the
Finance Documents and their respective rights against
one another shall be cancelled (such rights and
obligations being referred to in this Clause 29.5 as
"discharged rights and obligations");
29.5.2 each of the Obligors and the Transferee party
thereto shall assume obligations towards one another
and/or acquire rights against one another which differ
from such discharged rights and obligations only
insofar as such Obligor and such Transferee have
assumed and/or acquired the same in place of such
Obligor and such Bank;
29.5.3 the Administrative Agent, the Arrangers, such
Transferee and the other Banks shall acquire the same
rights and benefits and assume the same obligations
between themselves as they would have acquired and
assumed had such Transferee been an original party
hereto as a Bank with the rights, benefits and/or
obligations acquired or assumed by it as a result of
such transfer and to that extent the Administrative
Agent, the Arrangers and the relevant Bank shall each
be released from further obligations to each other
under the Finance Documents; and
29.5.4 such Transferee shall become a party hereto as a
"Bank".
29.6 Assignment and Transfer Fees
On the date upon which an assignment takes effect pursuant to
Clause 29.4 (Assignments by Banks) or a transfer takes effect
pursuant to Clause 29.5 (Transfers by Banks) the relevant
assignee or Transferee shall pay to the Administrative Agent
for its own account a fee of $2,500.
29.7 Disclosure of Information
29.7.1 Any information disclosed by the Borrower to any
of the Banks in connection herewith or in connection
with the Security Documents shall be kept confidential
by each of the Banks, Provided that:
(i) subject to the terms hereof each of the Banks may
disclose to any other of the Banks any information
about the Borrower or any of them;
(ii) each of the Banks shall be entitled to disclose
such information:
(a) in connection with any proceedings arising
out of or in connection with any Finance
Document;
b) if required to do so by an order of a court
of competent jurisdiction whether in
pursuance of any procedure for discovering
documents or otherwise;
(c) pursuant to any law or regulation in
accordance with which that party is required
or accustomed to act;
(d) to any governmental, banking or taxation
authority;
(e) to its auditors or legal or other
professional advisers; or
(f) if the information is in the public domain.
29.7.2 Any of the Banks may, at any time with the prior
consent of the Administrative Agent, such consent not
to be unreasonably withheld, disclose to any actual or
potential assignee or transferee which has executed a
confidentiality undertaking in favour of the
Administrative Agent in a form acceptable to the
Administrative Agent any information such Bank has
obtained about the Obligor Provided always that no
person may disclose any information that they may have
obtained about the Obligor or any of them, to any
person which it is aware is a supplier, competitor or
customer of any member of the Group.
29.8 Notification
The Administrative Agent shall within fourteen days of
receiving a Transfer Certificate notify the Borrower of any
assignment or transfer completed pursuant to this Clause 29
(Assignments and Transfers).
PRIVATE 30. ADDITIONAL BORROWERS
30.1 Request for Additional Borrower
The Parent may request that any of its subsidiaries become an
Additional Borrower by delivering to the Administrative Agent
a Borrower Accession Memorandum duly executed by the Parent
and such subsidiary, together with the documents and other
evidence listed in Schedule 5 (Additional Conditions
Precedent) in relation to such subsidiary.
30.2 Borrower Conditions Precedent
A company, in respect of which the Parent has delivered a
Borrower Accession Memorandum to the Administrative Agent,
shall become an Additional Borrower and assume all the
rights, benefits and obligations of a Borrower as if it had
been a Borrower on the date on which the Administrative Agent
notifies the Parent that:
30.2.1 an Instructing Group accepts the Parent's request
in respect of such subsidiary; and
30.2.2 the Administrative Agent has received, in form and
substance satisfactory to it, all documents and other
evidence listed in Schedule 5 (Additional Conditions
Precedent) in relation to such subsidiary,
unless on such date an Event of Default or Potential Event of
Default is continuing or would occur as a result of such
subsidiary becoming an Additional Borrower.
30.3 Resignation of a Borrower
If at any time a Borrower (other than the Parent) is under no
actual or contingent obligation under or pursuant to any
Finance Document, the Parent may request that such Borrower
shall cease to be a Borrower by delivering to the
Administrative Agent a Resignation Notice. Such Resignation
Notice shall be accepted by the Administrative Agent on the
date on which it notifies the Parent that it is satisfied
that such Borrower is under no actual or contingent
obligation under or pursuant to any Finance Document and such
Borrower shall immediately cease to be a Borrower and shall
have no further rights, benefits or obligations hereunder
save for those which arose prior to such date.
PRIVATE 31. ADDITIONAL GUARANTORS
31.1 Request for Additional Guarantor
The Parent may request that any of its subsidiaries become an
Additional Guarantor by delivering to the Administrative
Agent a Guarantor Accession Memorandum duly executed by the
Parent and such subsidiary, together with the documents and
other evidence listed in Schedule 5 (Additional Conditions
Precedent) in relation to such subsidiary.
31.2 Guarantor Conditions Precedent
A company, in respect of which the Parent has delivered a
Guarantor Accession Memorandum to the Administrative Agent,
shall became an Additional Guarantor and assume all the
rights, benefits and obligations of a Guarantor as if it had
been an original party hereto as a Guarantor on the date on
which the Administrative Agent notifies the Parent that it
has received, in form and substance satisfactory to it, all
the documents and other evidence listed in Schedule 5
(Additional Conditions Precedent).
31.3 Resignation of a Guarantor
The Parent may request that a Guarantor (other than the
Parent) ceases to be a Guarantor by delivering to the Agent a
Resignation Notice. The Agent shall accept such Resignation
Notice and notify the Parent of its acceptance (whereupon
such Guarantor shall immediately cease to be a Guarantor and
shall have no further rights, benefits or obligations
hereunder save for those which arose prior to such date) if:
31.3.1 the Parent's auditors have confirmed that, as at
the date of such Resignation Notice, such Guarantor is
not a Material Subsidiary; and
31.3.2 an Instructing Group has consented to such
request,
unless on such date an Event of Default or Potential Event of
Default is continuing or would occur as a result of such
cessation.
PRIVATE 32. ECONOMIC AND MONETARY UNION
32.1 Coming into Effect of Provisions
Clause 32.2 (Redenomination and Alternative Currencies) to
Clause 32.8 (Rounding and Other Consequential Changes)
(inclusive) shall come into effect on the Commencement Date
provided that, if and to the extent that any such Clause
relates to any state (or the currency of such state) which
shall not be a participating member state on the Commencement
Date, such Clause shall come into effect in relation to such
state (and the currency of such state) on and from the date
on which such state becomes a participating member state.
32.2 Redenomination and Alternative Currencies
Each obligation under this Agreement which has been
denominated in a national currency unit shall be
redenominated into the euro unit in accordance with EMU
legislation. However if and to the extent that any EMU
legislation provides that an amount (which is (a) denominated
either in the euro or in the national currency unit of a
participating member state and (b) payable within that
participating member state by crediting an account of the
creditor) can be paid by the debtor either in the euro unit
or in that national currency unit, each party to this
Agreement shall be entitled to pay or repay any such amount
either in the euro unit or in such national currency unit.
32.3.Advances
Any Advance in the currency of a participating member state
shall be made in the euro unit.
32.4 Business Days
In relation to any amount denominated or to be denominated in
the euro or a national currency unit, any reference to a
Business Day shall be construed as a reference to a day
(other than a Saturday or Sunday) on which banks are
generally open for business in:
32.4.1 London, Oslo and New York City; and
32.4.2 the principal financial centre in such
participating member state or states as the
Administrative Agent shall from time to time nominate
for this purpose.
32.5 Payments to the Agent
Clause 25.2 (Payments to the Administrative Agent)] shall be
construed so that, in relation to the payment of any amount
of euro units or national currency units, such amount shall
be made available to the Administrative Agent in immediately
available, freely transferable, cleared funds to such account
with such bank in such principal financial centre in such
participating member state (or in London) as the
Administrative Agent shall from time to time nominate for
this purpose.
32.6 Payments by the Administrative Agent to the Banks
Any amount payable by the Administrative Agent to the Banks
under this Agreement in the currency of a participating
member state shall be paid in the euro unit.
32.7 Payments System and the Administrative Agent
In relation to the payment of any amount denominated in the
euro or in a national currency unit, the Administrative Agent
shall not be liable to the Borrower or any of the Banks for
any delay, or the consequences of any delay, in the crediting
to any account of any amount required by this Agreement to be
paid by the Administrative Agent if the Administrative Agent
shall have taken all relevant steps to achieve, on the date
required by this Agreement, the payment of such amount in
immediately available, freely transferable, cleared funds (in
the euro unit or, as the case may be, in a national currency
unit) to the account with the bank in the principal financial
centre in the participating member state which the Borrower
or, as the case may be, any Bank shall have specified for
such purpose. In this Clause 32.7, "all relevant steps"
means all such steps as may be prescribed from time to time
by the regulations or operating procedures of such clearing
or settlement system as the Administrative Agent may from
time to time determine for the purpose of clearing or
settling payments of the euro.
32.8 Rounding and Other Consequential Changes
Without prejudice and in addition to any method of conversion
or rounding prescribed by any EMU legislation:
32.8.1 each reference in this Agreement to a minimum
amount (or an integral multiple thereof) in a national
currency unit to be paid to or by the Administrative
Agent shall be replaced by a reference to such
reasonably comparable and convenient amount (or an
integral multiple thereof) in the euro unit as the
Agent may from time to time specify; and
32.8.2 save as expressly provided in this Clause 32, this
Agreement shall be subject to such reasonable changes
of construction as the Administrative Agent may from
time to time specify to be necessary or appropriate to
reflect the introduction of or changeover to the euro
in participating member states,
provided that this Clause shall not reduce or increase any
actual or contingent liability arising under this Agreement.
PRIVATE 33. CALCULATIONS AND EVIDENCE OF DEBT
33.1 Basis of Accrual
Interest and commitment commission shall accrue from day to
day and shall be calculated on the basis of a year of
360 days or, in any case where market practice differs, in
accordance with market practice) and the actual number of
days elapsed.
33.2 Proportionate Reductions
Any repayment of an Advance denominated in an Optional
Currency shall reduce the amount of such Advance by the
amount of such Optional Currency repaid and shall reduce the
Dollar Amount of such Advance proportionately.
33.3 Quotations
If on any occasion a Reference Bank or Bank fails to supply
the Administrative Agent with a quotation required of it
under the foregoing provisions of this Agreement, the rate
for which such quotation was required shall be determined
from those quotations which are supplied to the
Administrative Agent, provided that, in relation to
determining LIBOR, this Clause 33.3 shall not apply if only
one Reference Bank supplies a quotation.
33.4 Evidence of Debt
Each Bank shall maintain in accordance with its usual
practice accounts evidencing the amounts from time to time
lent by and owing to it hereunder.
33.5 Control Accounts
The Administrative Agent shall maintain on its books a
control account or accounts in which shall be recorded
(a) the amount of any Advance or Unpaid Sum and each Bank's
share therein, (b) the amount of all principal, interest and
other sums due or to become due from an Obligor and each
Bank's share therein and (c) the amount of any sum received
or recovered by the Administrative Agent hereunder and each
Bank's share therein.
33.6 Prima Facie Evidence
In any legal action or proceeding arising out of or in
connection with this Agreement, the entries made in the
accounts maintained pursuant to Clause 33.4 (Evidence of
Debt) and Clause 33.5 (Control Accounts) shall be prima facie
evidence of the existence and amounts of the specified
obligations of the Obligors.
33.7 Certificates of Banks
A certificate of a Bank as to (a) the amount by which a sum
payable to it hereunder is to be increased under Clause 9.1
(Tax Gross-up), (b) the amount for the time being required to
indemnify it against any such cost, payment or liability as
is mentioned in Clause 9.2 (Tax Indemnity) or Clause 11.1
(Increased Costs) or (c) the amount of any credit, relief,
remission or repayment as is mentioned in Clause 10.3 (Tax
Credit Payment) or Clause 10.4 (Tax Credit Clawback) shall,
in the absence of manifest error, be prima facie evidence of
the existence and amounts of the specified obligations of the
Obligors.
33.8 Administrative Agent's Certificates
A certificate of the Administrative Agent as to the amount at
any time due from the Borrower or the Parent hereunder or the
amount which, but for any of the obligations of such Borrower
hereunder being or becoming void, voidable, unenforceable or
ineffective, at any time would have been due from the
Borrower hereunder shall, in the absence of manifest error,
be conclusive for the purposes of Clause 19 (Guarantee and
Indemnity).
PRIVATE 34. REMEDIES AND WAIVERS, PARTIAL INVALIDITY
34.1 Remedies and Waivers
No failure to exercise, nor any delay in exercising, on the
part of any Finance Party, any right or remedy hereunder
shall operate as a waiver thereof, nor shall any single or
partial exercise of any right or remedy prevent any further
or other exercise thereof or the exercise of any other right
or remedy. The rights and remedies herein provided are
cumulative and not exclusive of any rights or remedies
provided by law.
34.2 Partial Invalidity
If, at any time, any provision hereof is or becomes illegal,
invalid or unenforceable in any respect under the law of any
jurisdiction, neither the legality, validity or
enforceability of the remaining provisions hereof nor the
legality, validity or enforceability of such provision under
the law of any other jurisdiction shall in any way be
affected or impaired thereby.
PRIVATE 35. NOTICES
35.1 Communications in Writing
Each communication to be made under the Finance Documents
shall be made in writing and, unless otherwise stated, shall
be made by fax or letter.
35.2 Addresses
Any communication or document to be made or delivered
pursuant to the Finance Documents shall (unless the recipient
of such communication or document has, by fifteen days'
written notice to the Administrative Agent, specified another
address or fax number) be made or delivered to the address or
fax number:
35.2.1 in the case of the Obligors and the Administrative
Agent, identified with its name below;
35.2.2 in the case of each Bank, notified in writing to
the Administrative Agent prior to the date hereof (or,
in the case of a Transferee, at the end of the Transfer
Certificate to which it is a party as Transferee); and
35.2.3 in the case of each Acceding Obligor, in the
relevant Accession Memorandum;
provided that not more than one address may be specified by
each party pursuant to this Clause 35.2 at any time.
35.3 Delivery
Any communication or document to be made or delivered by one
person to another pursuant to this Agreement shall:
35.3.1 if by way of fax, be deemed to have been received
when transmission has been completed; and
35.3.2 if by way of letter, be deemed to have been
delivered when left at the relevant address or, as the
case may be, ten days after being deposited in the post
postage prepaid in an envelope addressed to it at such
address,
provided that any communication or document to be made or
delivered to the Administrative Agent shall be effective only
when received by its agency division and then only if the
same is expressly marked for the attention of the department
or officer identified with the Administrative Agent's
signature below (or such other department or officer as the
Agent shall from time to time specify for this purpose).
35.4 Indemnity for Faxes not received
The Borrower shall indemnify each of the Administrative
Agent, the Arrangers and the Banks against any cost, claim,
loss, expense (including legal fees) or liability together
with any VAT thereon which any of them may sustain or incur
as a consequence of any fax originating from an Obligor not
being actually received by the intended recipient hereof or
any fax purporting to originate from an Obligor being made or
delivered fraudulently.
35.5 Notification of Changes
Promptly upon receipt of notification of a change of address
or fax number pursuant to Clause 35.2 (Addresses) or changing
its own address or fax number, the Administrative Agent shall
notify the other parties hereto of such change.
35.6 English Language
Each communication and document made or delivered by one
party to another pursuant to the Finance Documents shall be
in the English language or accompanied by a translation
thereof into English certified (by an officer of the person
making or delivering the same) as being a true and accurate
translation thereof.
35.7 Deemed Receipt by the Obligors
Any communications or document made or delivered to the
Parent in accordance with Clause 35.3 (Delivery) shall be
deemed to have been made or delivered to each of the
Obligors.
PRIVATE 36. COUNTERPARTS
This Agreement may be executed in any number of counterparts,
all of which taken together shall constitute one and the same
instrument.
PRIVATE 37. AMENDMENTS
37.1 Amendments
The Administrative Agent, if it has the prior consent of an
Instructing Group, and the Obligors may from time to time
agree in writing to amend this Agreement or to waive,
prospectively or retrospectively, any of the requirements of
this Agreement and any amendments or waivers so agreed shall
be binding on all the Finance Parties and the Obligors,
provided that no such waiver or amendment shall subject any
party hereto to any new or additional obligations without the
consent of such party.
37.2 Amendments Requiring the Consent of all the Banks
An amendment or waiver which relates to:
37.2.1 Clause 27 (Sharing) or this Clause 37;
37.2.2 reducing the proportion of any amount received or
recovered in respect of any amount due from the
Borrower hereunder to which any Bank is entitled;
37.2.3 a change in the principal amount of or currency of
any Advance, or extending the term of the Facility or
the Term of any Advance;
37.2.4 a change in the Applicable Margin, the amount or
currency of any payment of interest, fees or any other
amount payable hereunder to any Finance Party or
deferral of the date for payment thereof;
37.2.5 Clause 16 (Financial Condition) or Clause 17.7
(Negative Pledge);
37.2.6 the conditions set out in Clause 3.4 (Drawdown
Conditions) if an Event of Default or Potential Event
of Default which relates to a Repeated Representation,
Clause 16.1 (Financial Condition) or Clause 17.7
(Negative Pledge) is continuing;
37.2.7 the definition of Event of Default, Instructing
Group, Permitted Encumbrance, Potential Event of
Default, Encumbrance or Financial Indebtedness; or
37.2.8 any provision which contemplates the need for the
consent or approval of all the Banks,
shall not be made without the prior consent of all the Banks.
37.3 Exceptions
Notwithstanding any other provisions hereof, the
Administrative Agent shall not be obliged to agree to any
such amendment or waiver if the same would:
37.3.1 amend or waive this Clause 37, Clause 21 (Costs
and Expenses) or Clause 28 (The Administrative Agent,
the Arrangers and the Banks); or
37.3.2 otherwise amend or waive any of the Administrative
Agent's rights hereunder or subject the Administrative
Agent or the Arrangers to any additional obligations
hereunder;
37.3.3 any release of any Guarantor from its obligations
under Clause 19 (Guarantee and Indemnity); and
37.3.4 amend or waive Clause 30 (Additional Borrowers) or
Clause 31 (Additional Guarantors).
PRIVATE 38. GOVERNING LAW
This Agreement are governed by English law.
PRIVATE 39. JURISDICTION
39.1 English Courts
The courts of England have jurisdiction to settle any dispute
(a "Dispute") arising out of or in connection with, this
Agreement (including a dispute regarding the existence,
validity or termination of this Agreement or the consequences
of its nullity).
39.2 Convenient Forum
Each Obligor waives, in any proceeding referred to in Clause
39.1 (English Courts) (each a "Proceeding"), any claim or
defence that the courts of England are not the proper venue
or are not the most appropriate and convenient forum.
39.3 Non-Exclusive Jurisdiction
This Clause 39 is for the benefit of the Finance Parties
only. As a result and notwithstanding Clause 39.1 (English
Courts), it does not prevent any Finance Party from taking
Proceedings in any other courts with jurisdiction. To the
extent allowed by law, the Finance Parties may take
concurrent Proceedings in any number of jurisdictions.
39.4 Service of Process in England
Each Obligor agrees that the documents which start any
Proceedings in England and any other documents required to be
served in relation to those Proceedings may be served on it:
39.4.1 in the case of each Borrower, on Gulf Offshore
N.S. Limited, 10 Charlotte Street, London SW13 9Q5 or,
if different, its registered office;
39.4.2 in the case of a Guarantor, on name of process
agent in England at address of process agent or, if
different, its registered office.
39.5 Default Process Agents
If the appointment of any of the persons mentioned in Clause
39.4 (Service of Process in England) ceases to be effective,
the relevant Obligor shall immediately appoint another person
in England to accept service of process on its behalf. If an
Obligor fails to do so (and such failure continues for a
period of not less than fourteen days), the Administrative
Agent shall be entitled to appoint such a person by notice to
such Obligor. Nothing contained herein shall restrict the
right to serve process in any other manner allowed by law.
Clause 39.4 (Service of Process in England) and this Clause
39.5 apply to Proceedings in England and elsewhere.
AS WITNESS the hands of the duly authorised representatives of the
parties hereto the day and year first before written.
SCHEDULE 1
The Companies
1. Gulf Offshore Marine International Inc.
2. Gulf Offshore N.S. Limited
3. GulfMark Norges A.S.
SCHEDULE 2
Part 1
Tranche 1
The Banks
Bank Commitment ($)
The Chase Manhattan Bank, London Branch 12,500,000
Christiania Bank og Kreditkasse ASA 12,500,000
Part II
Tranche 2A
The Banks
Bank Commitment ($)
The Chase Manhattan Bank, London Branch 12,500,000
Christiania Bank og Kreditkasse ASA 12,500,000
Part III
Tranche 2B
The Banks
Bank Commitment ($)
The Chase Manhattan Bank, London Branch 12,500,000
Christiania Bank og Kreditkasse ASA 12,500,000
SCHEDULE 3
Form of Transfer Certificate
To: [ ]
TRANSFER CERTIFICATE
relating to the agreement (as from time to time amended, varied,
novated or supplemented, the "Loan Agreement") dated [ ] June
1998 whereby a U.S.$50,000,000 multicurrency revolving loan
facility was made available to GulfMark Offshore, Inc. as Tranche
1 Borrower, Tranche 2 Borrower and Parent, Christiania Bank og
Kreditkasse ASA as Administrative Agent and Arranger and The Chase
Manhattan Bank, London as Security and Documentation Agent, and as
Arrangers..
1. Terms defined in the Loan Agreement shall, subject to any
contrary indication, have the same meanings herein. The
terms Bank and Transferee are defined in the schedule hereto.
2. The Bank (a) confirms that the details in the schedule
hereto, Parts I and II, under the heading "Bank's Commitment"
or "Advance(s)" accurately summarises its Commitment and/or,
as the case may be, its participation in, and the Term and
Repayment Date of, one or more existing Advances and (b)
requests the Transferee to accept and procure the transfer by
novation to the Transferee of the portion specified in the
schedule hereto of, as the case may be, its Commitment and/or
its participation in such Advance(s) by counter-signing and
delivering this Transfer Certificate to the Administrative
Agent at its address for the service of notices specified in
the Loan Agreement.
3. The Transferee hereby requests the Administrative Agent to
accept this Transfer Certificate as being delivered to the
Administrative Agent pursuant to and for the purposes of
Clause 29.6 (Transfers by Banks) of the Loan Agreement so as
to take effect in accordance with the terms thereof on the
Transfer Date or on such later date as may be determined in
accordance with the terms thereof.
4. The Transferee confirms that it has received a copy of the
Loan Agreement together with such other information as it has
required in connection with this transaction and that it has
not relied and will not hereafter rely on the Bank to check
or enquire on its behalf into the legality, validity,
effectiveness, adequacy, accuracy or completeness of any such
information and further agrees that it has not relied and
will not rely on the Bank to assess or keep under review on
its behalf the financial condition, creditworthiness,
condition, affairs, status or nature of the Obligors.
5. The Transferee hereby undertakes with the Bank and each of
the other parties to the Loan Agreement that it will perform
in accordance with their terms all those obligations which by
the terms of the Loan Agreement will be assumed by it after
delivery of this Transfer Certificate to the Administrative
Agent and satisfaction of the conditions (if any) subject to
which this Transfer Certificate is expressed to take effect.
6. The Bank makes no representation or warranty and assumes no
responsibility with respect to the legality, validity,
effectiveness, adequacy or enforceability of the Loan
Agreement or any document relating thereto and assumes no
responsibility for the financial condition of the Obligors or
for the performance and observance by the Obligors of any of
its obligations under the Loan Agreement or any document
relating thereto and any and all such conditions and
warranties, whether express or implied by law or otherwise,
are hereby excluded.
7. The Bank hereby gives notice that nothing herein or in the
Loan Agreement (or any document relating thereto) shall
oblige the Bank to (a) accept a re-transfer from the
Transferee of the whole or any part of its rights, benefits
and/or obligations under the Loan Agreement transferred
pursuant hereto or (b) support any losses directly or
indirectly sustained or incurred by the Transferee for any
reason whatsoever including the non-performance by an Obligor
or any other party to the Loan Agreement (or any document
relating thereto) of its obligations under any such document.
The Transferee hereby acknowledges the absence of any such
obligation as is referred to in (a) or (b).
8. This Transfer Certificate and the rights, benefits and
obligations of the parties hereunder shall be governed by and
construed in accordance with English law.
THE SCHEDULE
1. Bank:
2. Transferee:
3. Transfer Date:
4. Commitment:
Bank's Commitment Portion Transferred
5. Advance(s):
Amount of Term and
Bank's Participation Repayment Date Portion Transferred
[Transferor Bank] [Transferee Bank]
By: By:
Date: Date:
ADMINISTRATIVE DETAILS OF TRANSFEREE
Address:
Contact Name:
Account for Payments
in dollars:
Telex:
[Fax:]
Telephone:
SCHEDULE 4
Part I
Conditions Precedent to Drawdown
1. In relation to each Obligor:
(a) a copy, certified as at the date of this Agreement a
true and up-to-date copy by an Authorised Signatory of
such Obligor, of the constitutional documents of such
Obligor;
(b) a copy, certified as at the date of this Agreement a
true and up-to-date copy by an Authorised Signatory of
such Obligor, of a board resolution of such Obligor
approving the execution, delivery and performance of
this Agreement and the terms and conditions hereof and
authorising a named person or persons to sign this
Agreement and any documents to be delivered by such
Obligor pursuant hereto;
(c) a certificate of an Authorised Signatory of such
Obligor setting out the names and signatures of the
persons authorised to sign, on behalf of such Obligor,
this Agreement and any documents to be delivered by
such Obligor pursuant hereto; and
(d) a certificate of an Authorised Signatory of such
Obligor confirming that utilisation of the Facility
would not breach any restriction of its borrowing
powers.
2. A copy, certified a true copy by or on behalf of each
Obligor, of each such law, decree, consent, licence,
approval, registration or declaration as is, in the opinion
of counsel to the Banks, necessary to render this Agreement
legal, valid, binding and enforceable, to make this Agreement
admissible in evidence in each Obligor's jurisdiction of
incorporation and to enable each Obligor to perform its
obligations hereunder.
3. An opinion of the Bank's local Counsel in the jurisdiction of
incorporation of each Obligor which is incorporated in a
jurisdiction other than England and Wales satisfactory in
form and substance to the Administrative Agent and in
substantially the form distributed to the Banks prior to the
signing of this Agreement.
4. A letter from the Parent to the Administrative Agent
(attaching supporting advice from the Parent's English
solicitors) confirming that no Guarantor is prohibited by
section 151 of the Companies Act 1985 from entering into this
Agreement and performing its obligations hereunder.
5. An opinion of Clifford Chance, solicitors to the
Administrative Agent, in substantially the form distributed
to the Banks prior to the signing of this Agreement.
6. Evidence that the fees, costs and expenses required to be
paid by the Borrower pursuant to Clause 21 have been paid.
7. A copy, certified a true copy by an Authorised Signatory of
each Obligor, of the Original Financial Statements of such
Obligor.
8. A copy, certified a true copy by an Authorised Signatory of
each Obligor, of the Original Financial Statements of such
Obligor.
9. Evidence that Gulf Offshore N.S. Limited has agreed to act as
the agent of the Obligors for the service of process in
England.
10. A certificate of the Parent's auditors confirming which
Companies within the Group are material subsidiaries.
11. Confirmation of closing of the senior note to be sold by the
Parent and the raising of a minimum gross amount of
$129,569,700.
12. Repayment of existing indebtedness and release of
Encumbrances (excluding indebtedness relating to Permitted
Encumbrances and Permitted Encumbrances) pursuant to:
(i) a Loan Agreement dated 11 June 1997 with, inter alia,
the Christiania Bank og Kreditkasse S.A. a party
thereto;
(ii) a Loan Agreement dated 4 February 1998 with, inter
alia, the Christiania Bank og Kreditkasse S.A. a party
thereto;
(iii) a Facility Agreement dated 26 July 1996 with, inter
alia, The Chase Manhattan Bank a party thereto;
(iv) a Facility Agreement dated 20 October 1995 with, inter
alia, The Chase Manhattan Bank a party thereto;
(v) a Loan Agreement dated 17 December 1997, as amended,
with, inter alia, Nordlandsbanken ASA a party thereto.
Part II
Condition precedent to Tranche 2A Advance
Such additional conditions precedent as the Administrative Agent
and the Security and Documentation Agent may normally require.
Part III
Conditions precedent to Tranche 2B Advance
Condition precedent to contain repetition of those listed in Part
II of this Schedule together with specific conditions precedent
relating to the Shares.
SCHEDULE 5
Additional Conditions Precedent for New Borrowers
1. A copy, certified as at the date of the relevant Accession
Memorandum a true and up-to-date copy by an Authorised
Signatory of the proposed Additional Obligor, of the
constitutional documents of such proposed Additional Obligor.
2. A copy, certified as at the date of the relevant Accession
Memorandum a true and up-to-date copy by an Authorised
Signatory of the proposed Additional Obligor, of a board
resolution of such proposed Additional Obligor approving the
execution and delivery of an Accession Memorandum, the
accession of such proposed Additional Obligor to this
Agreement and the performance of its obligations under the
Finance Documents and authorising a named person or persons
to sign such Accession Memorandum, any other Finance
Document and any other documents to be delivered by such
proposed Additional Obligor pursuant thereto.
3. A certificate of an Authorised Signatory of the proposed
Additional Obligor setting out the names and signatures of
the person or persons authorised to sign, on behalf of such
proposed Additional Obligor, the Accession Memorandum, any
other Finance Documents and any other documents to be
delivered by such proposed Additional Obligor pursuant
thereto.
4. A certificate of an Authorised Signatory of the proposed
Additional Obligor confirming that the utilisation of the
Facilities would not breach any restriction of its borrowing
powers.
5. If the proposed Additional Obligor is incorporated in a
jurisdiction other than England and Wales, a copy, certified
a true copy by or on behalf of the proposed Additional
Obligor, of each such law, decree, consent, licence,
approval, registration or declaration as is, in the opinion
of counsel to the Banks, necessary to render the relevant
Accession Memorandum legal, valid, binding and enforceable,
to make such Accession Memorandum admissible in evidence in
the proposed Additional Obligor's jurisdiction of
incorporation and to enable the proposed Additional Obligor
to perform its obligations thereunder and under the other
Finance Documents.
6. A copy, certified a true copy by an Authorised Signatory of
the proposed Additional Obligor, of its latest financial
statements.
7. If the proposed Additional Obligor is incorporated in a
jurisdiction other than England and Wales, an opinion of the
Banks' local counsel in the relevant jurisdiction in form and
substance satisfactory to the Administrative Agent.
8. If the proposed Additional Obligor is to become a Guarantor
and is incorporated in England and Wales, a letter from the
Parent to the Administrative Agent (attaching supporting
advice from the Parent's English solicitors) confirming that
such proposed Additional Obligor is not prohibited by section
151 of the Companies Act 1985 from entering into the Finance
Documents and performing its obligations thereunder.
9. An opinion of Clifford Chance, solicitors to the
Administrative Agent, in form and substance satisfactory to
the Administrative Agent.
10. If the proposed Additional Obligor is incorporated in a
jurisdiction other than England and Wales, evidence that the
process agent specified in the relevant Accession Memorandum
has agreed to act as its agent for the service of process in
England.
SCHEDULE 6
Notice of Drawdown
From: GulfMark Offshore, Inc.
To: Christiania Bank og Kreditkasse ASA
Dated:
Dear Sirs,
1. We refer to the agreement (the "Loan Agreement") dated
[ ] June 1998 and made between GulfMark Offshore, Inc.
as borrower, Christiania Bank og Kreditkasse ASA as
administrative agent and the financial institutions named
therein as banks. Terms defined in the Loan Agreement shall
have the same meaning in this notice.
2. This notice is irrevocable.
3. We hereby give you notice that, pursuant to the Loan
Agreement and upon the terms and subject to the conditions
contained therein, we wish an Advance to be made to us as
follows:
(a) Currency and Amount:
(b) Drawdown Date:
(c) Term:
4. The proceeds of this drawdown should be credited to [insert
account details].
Yours faithfully
.............................
Authorised Signatory
for and on behalf of
GulfMark Offshore, Inc.
SCHEDULE 7
Ecu
The ECU is from time to time used as the unit of account of the
European Communities. Changes to the ECU may be made by the
European Communities, in which event the ECU will change
accordingly. However, under Article 109G of the Treaty
establishing the European Communities, as amended by the Treaty on
European Union (the "Treaty"), the currency composition of the ECU
may not be changed. The Treaty contemplates that European
monetary union will occur in three stages, the second of which
began on 1 January 1994 (following the entry into force of the
Treaty on European Union). The Treaty provides that, at the start
of the third stage of European monetary union, the value of the
ECU as against the currencies of the member states participating
in the third stage (and the conversion rates at which such
currencies shall be substituted by the ECU) will be irrevocably
fixed, and the ECU will become a currency in its own right. In
contemplation of that third stage, the European Council meeting in
Madrid on 16 December 1995 decided that the name of that currency
will be the euro and that, in accordance with the Treaty,
substitution of the euro for the ECU (and of references to the
euro for references to the ECU) will be at the rate of one euro
for one ECU. From the start of the third stage of European
monetary union, all payments expressed to be payable in ECU, or
sums to be calculated by reference to ECU, will be payable in, or
calculated by reference to, euro at the rate then established in
accordance with the Treaty.
SCHEDULE 8
Existing Encumbrances
1. Security deposit (bond) of $51,000 from the Chase Manhattan
Bank, London Branch to British Marine Mutual Shipowners'
Protection and Indemnity Association for the benefit of
GulfMark Offshore, Inc. and its subsidiaries and affiliates
to secure the payment of an "exit and release call", if any.
2. First Standard Security (legal charge) over Gulf Offshore
N.S. Limited's (GONS) interest in 186 to 190 Market Street,
Aberdeen in favour of The Royal Bank of Scotland plc to
secure a loan of ?380,000 made by the bank to GONS.
SCHEDULE 9
Form of Compliance Certificate
To: Christiania Bank og Kreditkasse ASA
Date:
Dear Sirs,
We refer to an agreement (the "Loan Agreement" dated [ ]
June, 1998 and made between GulfMark Offshore, Inc. as borrower,
Christiania Bank og Kreditkasse ASA as administrative agent and
the financial institutions defined therein as Banks.
Terms defined in the Loan Agreement shall bear the same meaning
herein.
We confirm that:
[Insert details of financial covenants to be certified]
We confirm that the following companies constitute Material
Subsidiaries for the purposes of this Loan Agreement:
[ ]
Signed: ............... ...............
Director Director
or
.....................
for and on behalf of
name of auditors of the Parent
SCHEDULE 10
Form of Borrower Accession Memorandum
To: Christiania Bank og Kreditkasse ASA
as Administrative Agent
From: Subsidiary
and
Parent
Dated:
Dear Sirs,
1. We refer to an agreement (the "Loan Agreement") dated [
], 1998 and made between a group of borrowers
including GulfMark Offshore, Inc. (the "Parent"), Christiania
Bank og, Kreditkasse ASA as administrative agent, the
financial institutions defined therein as Banks and others.
2. Terms defined in the Loan Agreement shall bear the same
meaning herein.
3. The Parent requests that [Subsidiary] become an Additional
Borrower pursuant to Clause 30.1 (Request for Additional
Borrowers) of the Loan Agreement.
4. [Subsidiary] is a company duly organised under the laws of
[name of relevant jurisdiction].
5. [Subsidiary] confirms that it has received from the Parent a
true and up-to-date copy of the Loan Agreement.
6. [Subsidiary] undertakes, upon its becoming a Borrower, to
perform all the obligations expressed to be undertaken under
the Loan Agreement by a Borrower and agrees that it shall be
bound by the Loan Agreement in all respects as if it had been
an original party thereto.
7. The Parent confirms that, if [Subsidiary] is accepted as an
Additional Borrower, its guarantee obligations pursuant to
Clause 19 (Guarantee and Indemnity) of the Loan Agreement
will apply to all the obligations of Subsidiary under the
Finance Documents in all respects in accordance with the
terms of the Loan Agreement.
8. The Parent:
8.1 repeats the Repeated Representations; and
8.2 confirms that no Event of Default or Potential Event of
Default is continuing or would occur as a result of
[Subsidiary] becoming an Additional Borrower.
9. [Subsidiary] makes the representations and warranties set out
in Clause 14.1 (Status) to Clause 14.21 (Year 2000).
10. [Subsidiary's] administrative details are as follows:
Address:
Fax No.:
11. Process Agent
[Subsidiary] agrees that the documents which start any
Proceedings and any other documents required to be served in
relation to those Proceedings may be served on it at name of
process agent in England at address of process agent or, if
different, its registered office. If the appointment of the
person mentioned above ceases to be effective, [Subsidiary]
shall immediately appoint another person in England to accept
service of process on its behalf in England. If it fails to
do so (and such failure continues for a period of not less
than fourteen days), the Administrative Agent shall be
entitled to appoint such a person by notice. Nothing
contained herein shall restrict the right to serve process in
any other manner allowed by law. This applies to Proceedings
in England and to Proceedings elsewhere.]
12. This Memorandum shall be governed by English law.
[Parent] [Subsidiary]
By: ........................By:
................................
SCHEDULE 11
Form of Guarantor Accession Memorandum
To: Christiania Bank og, Kreditkasse ASA
as Administrative Agent
From: [Subsidiary]
and
[Parent]
Dated:
Dear Sirs,
1. We refer to an agreement (the "Loan Agreement") dated [
], 1998 and made between a group of borrowers
including GulfMark Offshore, Inc. (the "Parent"), Christiania
Bank og, Kreditkasse ASA as administrative agent, the
financial institutions defined therein as Banks and others.
2. Terms defined in the Loan Agreement shall bear the same
meaning herein.
3. The Parent requests that [Subsidiary] become an Additional
Guarantor pursuant to Clause 31.1 (Request for Additional
Guarantors) of the Loan Agreement.
4. [Subsidiary] is a company duly organised under the laws of
[name of relevant jurisdiction].
5. [Subsidiary] confirms that it has received from the Parent a
true and up-to-date copy of the Loan Agreement and a list of
the Borrowers as at the date hereof.
6. [Subsidiary] undertakes, upon its becoming a Guarantor, to
perform all the obligations expressed to be undertaken under
the Loan Agreement by a Guarantor and agrees that it shall be
bound by the Loan Agreement in all respects as if it had been
an original party thereto.
7. The Parent:
(a) repeats the Repeated Representations; and
(b) confirms that no Event of Default or Potential Event of
Default is continuing or would occur as a result of
[Subsidiary] becoming an Additional Guarantor.
8. [Subsidiary] makes the representations and warranties set out
in Clause 14.1 (Status) to Clause 14.24 (Year 2000).
9. [Subsidiary's] administrative details are as follows:
Address:
Fax No.:
10. Process Agent
[Subsidiary] agrees that the documents which start any
Proceedings and any other documents required to be served in
relation to those Proceedings may be served on it at name of
process agent in England at address of process agent or, if
different, its registered office. If the appointment of the
person mentioned above ceases to be effective], [Subsidiary]
shall immediately appoint another person in England to accept
service of process on its behalf in England. If it fails to
do so (and such failure continues for a period of not less
than fourteen days), the Administrative Agent shall be
entitled to appoint such a person by notice. Nothing
contained herein shall restrict the right to serve process in
any other manner allowed by law. This applies to Proceedings
in England and to Proceedings elsewhere.]
11. This Memorandum shall be governed by English law.
[Parent] [Subsidiary]
By: .............................By:
................................
SCHEDULE 12
Form of Resignation Notice
To: Christiania Bank og, Kreditkasse ASA
From: [Parent]
Dated:
Dear Sirs,
1. We refer to an agreement (the "Loan Agreement") dated [ ],
1998 and made between a group of borrowers including GulfMark
Offshore, Inc. (the "Parent"), Christiania Bank og,
Kreditkasse ASA as administrative agent, the financial
institutions defined therein as Banks and others.
2. Terms defined in the Loan Agreement shall bear the same
meaning herein.
3. We declare that [name of Borrower] is under no actual or
contingent obligation under any Finance Document in its
capacity as a Borrower.
4. Pursuant to Clause 30.3 (Resignation of Borrower)]/31.3
(Resignation of Guarantor)] we hereby request that [name of
Obligor] shall cease to be a [Borrower]/[Guarantor] under the
Loan Agreement.
5. We hereby confirm that [[name of resigning Guarantor] is not
a Material Subsidiary.
Yours faithfully
[the Parent]
SIGNATURES
The Tranche 1 Borrower, the Tranche 2 Borrower and the Parent
GULFMARK OFFSHORE, INC.
By:
Address:
Fax:
The Administrative Agent, Arranger and as a Bank
CHRISTIANIA BANK OG KREDITKASSE ASA
By: ULE E. AASLAND
TOM C. KUHNLE
Address:
Fax:
The Security and Documentation Agent, Arranger and as a Bank
THE CHASE MANHATTAN BANK, LONDON BRANCH
By: JAMES G. HAYNES
Address: 125 LONDON WALL
LONDON EC2Y 5AJ
Fax: 0171 777 1598
