As filed with the Securities and Exchange Commission on April 30, 1997
Registration No. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------
Forms S-4 and F-4*
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------
GOLDEN STATE PETROLEUM TRANSPORT CORPORATION
GOLDEN STATE PETRO (IOM I-A) PLC
GOLDEN STATE PETRO (IOM I-B) PLC
(Exact Names of Registrants as Specified in Their Charters)
DELAWARE 9999 N/A
ISLE OF MAN 8611 N/A
ISLE OF MAN 8611 N/A
(State or Other Jurisdiction (Primary Standard (I.R.S. Employer
of Incorporation or Industrial Classification Identification Nos.)
Organization) Code Number)
C/O CAMBRIDGE FUND C/O 15-19 ATHOL STREET
MANAGEMENT LLC DOUGLAS, ISLE OF MAN IM1 1LB
PARK AVENUE TOWER 011-44-1-62-4628575
65 EAST 55TH STREET (Address, including zip code, and
NEW YORK, NEW YORK 10022 telephone number, including area code,
212-508-6500 of principal executive offices of
(Address, including zip code, and Golden State Petro (IOM I-A) PLC
telephone number, including area code, and Golden State Petro (IOM I-B) PLC
of principal executive offices of
Golden State Petroleum Transport
Corporation)
CT Corporation System
1623 Broadway
New York, New York 10019
212-246-5070
(Name, address, including zip code, and
telephone number, including area code,
of agent for service of Golden State Petroleum
Transport Corporation, Golden State Petro (IOM I-A)
PLC and Golden State Petro
(IOM I-B) PLC)
------------------
Copies to:
LAURIS G. L. RALL BJORN AASEROD
CHARLES A. DIETZGEN CAMBRIDGE FUND MANAGEMENT LLC
THACHER PROFFITT & WOOD PARK AVENUE TOWER
TWO WORLD TRADE CENTER 65 EAST 55TH STREET
NEW YORK, NEW YORK 10048 NEW YORK, NEW YORK 10022
212-912-7400 212-508-6500
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: AS SOON
as practicable after this Registration Statement becomes effective
------------------
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
====================================================================================================================================
Proposed Proposed
maximum maximum
Title of each class of Amount to offering price aggregate Amount of
securities to be registered be registered per unit(1) offering price(1) Registration Fee
- - - - - ------------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C>
8.04% First Preferred Exchange Mortgage Notes Due 2019... $127,100,000 100% $127,100,000 $39,718.75
====================================================================================================================================
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457 under the Securities Act of 1933, as amended.
------------------
The registrants hereby amend this Registration Statement on such date or
dates as may be necessary to delay its effective date until the registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933, as amended, or until the Registration Statement
shall become effective on such date as the Commission, acting pursuant to said
Section 8(a), may determine.
------------------
* This Registration Statement constitutes a filing on Form S-4 by Golden State
Petroleum Transport Corporation and a filing on Form F-4 by Golden State
Petro (IOM I-A) PLC and Golden State Petro (IOM I-B) PLC.
================================================================================
<PAGE>
CROSS REFERENCE SHEET FURNISHED PURSUANT TO RULE 404(a)
ITEMS AND CAPTIONS IN FORM S-4 AND F-4 LOCATION IN PROSPECTUSES
1. Forepart of Registration Statement and
Outside Front Cover Page of
Prospectus................................. Forepart of Registration
Statement and Outside Front
Cover Page of Prospectus*
2. Inside Front and Outside Back Cover Pages
of Prospectus.............................. Inside Front Cover Page of
Prospectus and Outside Back
Cover Page of Prospectus*
3. Risk Factors, Ratio of Earnings to Fixed
Charges, and Other
Information................................ Prospectus Summary; Risk
Factors
4. Terms of the Transaction................... Prospectus Summary;
Description of the Exchange
Notes
5. Pro Forma Financial Information............ Capitalization of the Owners,
Management;'s Division and
Analysis of Final
Contribution and Rents of
operations.
6. Material Contacts with Company Being
Acquired................................... *
7. Additional Information Required for
Reoffering by Persons and Parties Deemed
to be Underwriters......................... Prospectus Summary; the
Exchange offer; Plan of
Distribution
8. Interests of Named Experts and
Counsel.................................... *
9. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities................................ See page II-2
10. Information with Respect to S-3
Registrants................................ *
11. Incorporation of Certain Information by
Reference.................................. *
12. Information With Respect to S-2 or S-3
Registrants................................ *
13. Incorporation of Certain Information by
Reference.................................. *
<PAGE>
14. Information With Respect to Registrants
Other than S-3 or S-2 Registrants
(a) Description of Business............... Prospectus Summary,
Investment Considerations,
Golden State Petroleum and
the Owners, Management's
Discussion and Analysis of
Financial Condition
(b) Description of Property............... Golden State Petroleum and
the Owners
(c) Legal Proceedings..................... *
(d) Market Price of and Dividends on the
Registrants' Common Equity and Related
Stockholder Matters................... *
(e) Financial Information................. *
(f) Selected Financial Data............... +
(g) Supplementary Financial Information... +
(h) Management's Discussion and Analysis of
Financial Condition and Results of
Operations............................ Management's Discussion and
Analysis of Financial
Condition and Results of
Operations
(i) Change in and Disagreements With
Accountants on Accounting and
Financial Disclosures................. *
(j) Quantitative and Qualitative
Disclosures About Market
Desk.................................. *
15. Information With Respect to S-3
Companies.................................. *
16. Information With Respect to S-2 or S-3
Companies.................................. *
17. Information if Proxies, Consents or
Authorizations are to be
Solicited.................................. *
<PAGE>
18. Information if Proxies, Consents or
Authorizations Are Not to be Solicited,
or in an Exchange Offer.................... Summary of Prospectus; The
Exchange Offer; Description
of the Exchange Notes
- - - - - -------------------
* Answer negative or item inapplicable.
+To be filed.
<PAGE>
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
SUBJECT TO COMPLETION, DATED ________, 1997
PROSPECTUS
_________ __, 1997
OFFER FOR ALL OUTSTANDING
8.04% FIRST PREFERRED MORTGAGE NOTES DUE 2019
($127,100,000 PRINCIPAL AMOUNT OUTSTANDING)
IN EXCHANGE FOR
8.04% FIRST PREFERRED EXCHANGE MORTGAGE NOTES DUE 2019
OF
GOLDEN STATE PETROLEUM TRANSPORT CORPORATION
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME,
ON , 1997, UNLESS EXTENDED.
Golden State Transport Corporation, a Delaware corporation ("Golden State
Petroleum"), as agent for each of Golden State Petro (IOM I-A) PLC and Golden
State Petro (IOM I-B) PLC (each, an "Owner"), hereby offers, upon the terms and
subject to the conditions set forth in this Prospectus and the accompanying
Letter of Transmittal (the "Letter of Transmittal," which together with this
Prospectus constitute the "Exchange Offer"), to exchange up to $127,100,000 in
aggregate principal amount of its registered 8.04% First Preferred Exchange
Mortgage Notes Due 2019 (the "Exchange Notes"), for a like principal amount of
its unregistered 8.04% First Preferred Mortgage Notes Due 2019 (the "Existing
Notes"), of which an aggregate principal amount of $127,100,000 is outstanding.
The form and terms of the Exchange Notes are identical to the form and terms of
the Existing Notes except that (i) the offer of the Exchange Notes will be
registered under the Securities Act of 1933, as amended (the "Securities Act"),
and therefore the Exchange Notes will not be subject to certain transfer
restrictions, and (ii) Holders of Exchange Notes will not be entitled to certain
rights of Holders of Existing Notes under the Registration Rights Agreement
relating to the Existing Notes. The Exchange Offer is being made in order to
satisfy certain contractual undertakings of Golden State Petroleum and the
Owners (collectively, the "Companies"). See "The Exchange Offer" and
"Description of the Exchange Notes." Concurrently with the issuance of the
Existing Notes, Serial First Preferred Mortgage Notes Due February 1, 2000 to
2006 in the aggregate principal amount of $51,700,000 (collectively, the "Serial
Notes" and, collectively with the Exchange Notes and the Existing Notes, the
"Notes") were issued by Golden State Petroleum, as agent for the Owners,
pursuant to a separate offering memorandum.
The Exchange Notes mature on February 1, 2019. Interest on the Exchange
Notes will be deemed to accrue from December 24, 1996 or from the date of the
last periodic payment of interest on the Existing Notes, whichever is later, at
a rate of 8.04% per annum, except that from June 23, 1997 until consummation of
the Exchange Offer interest will be deemed to accrue at a rate of 8.29% per
annum to reflect Special Interest (as hereinafter defined). Interest on the
Exchange Notes is payable on February 1 and August 1 of each year, commencing
August 1, 1997 (each, a "Payment Date"). The Exchange Notes will be subject to
redemption through operation of a mandatory sinking fund at a redemption price
of 100% of the principal amount thereof plus accrued and unpaid interest on each
Payment Date, commencing on August 1, 2007, to and including August 1, 2018,
according to the applicable schedule of sinking fund payments set forth herein.
Final Payment on the Exchange Notes is due February 1, 2019 (the "Maturity
Date").
The Exchange Notes will be secured senior obligations of the Owners. See
"Description of the Exchange Notes."
The Companies will accept for exchange any and all Existing Notes validly
tendered and not withdrawn prior to 5:00 p.m., New York City time, on , 1997,
unless extended (as so extended, the "Expiration Date"). Tenders of Existing
Notes may be withdrawn at any time prior to 5:00 p.m., New York City time, on
the Expiration Date. The Exchange Offer is subject to certain customary
conditions. See "The Exchange Offer".
Based on interpretations by the staff of the Securities and Exchange
Commission (the "Commission") set forth in no-action letters issued to third
parties, the Companies believe that Exchange Notes issued pursuant to the
Exchange Offer may be offered for resale, resold or otherwise transferred by a
Holder who is not an "affiliate" of the Companies (within the meaning of Rule
405 under the Securities Act) without compliance with the registration and
prospectus delivery provisions of the Securities Act, provided that the Holder
is acquiring the Exchange Notes in its ordinary course of business and has no
arrangement or understanding with any person to participate in the distribution
(within the meaning of the Securities Act) of the Exchange Notes. However, the
staff of the Commission has not considered the Exchange Offer in the context of
a no-action letter addressed to the Companies, and there can be no assurance
that the staff of the Commission would make a similar determination with respect
to the Exchange Offer as it has in its prior interpretations. Persons who desire
to exchange Existing Notes in the Exchange Offer must represent to the
Companies, among other things, that such conditions have been met.
Each broker-dealer that receives Exchange Notes for its own account pursuant
to the Exchange Offer must acknowledge that it will deliver a prospectus in
connection with any resale of such Exchange Notes. The Letter of Transmittal
accompanying this Prospectus states that by so acknowledging and by delivering a
prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act. This Prospectus, as it
may be amended or supplemented from time to time, may be used by a broker-dealer
in connection with resales of Exchange Notes received in exchange for Existing
Notes where such Existing Notes were acquired by such broker-dealer as a result
of market-making activities or other trading activities. The Companies have
agreed that, starting on the Expiration Date and ending on the close of business
on the
<PAGE>
first anniversary of the Expiration Date, they will make this Prospectus, as
supplemented or amended, available to any broker-dealer for use in connection
with any resale. See "Plan of Distribution."
------------------
SEE "RISK FACTORS" BEGINNING ON PAGE 19 FOR A DISCUSSION OF CERTAIN
FACTORS THAT PROSPECTIVE INVESTORS IN EXCHANGE NOTES SHOULD CONSIDER.
------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is , 1997
No public market has existed for the Exchange Notes before the Exchange
Offer. The Companies currently do not intend to list the Exchange Notes on any
securities exchange or to seek approval for quotation through any automated
quotation system, and no active public market for the Exchange Notes is
currently anticipated. There will be no proceeds to the Owners from this
Exchange Offer. The Manager will pay all expenses incident to the Exchange
Offer.
The Exchange Offer is not conditioned upon any minimum principal amount
of Existing Notes being tendered for exchange pursuant to the Exchange Offer.
The Existing Notes were sold by Golden State Petroleum, as agent on
behalf of the Owners, on December 24, 1996, in transactions not registered under
the Securities Act in reliance upon the exemption provided in Section 4(2) of
the Securities Act. The Existing Notes were subsequently placed with qualified
institutional buyers in reliance upon Rule 144A under the Securities Act.
Accordingly, the Existing Notes may not be reoffered, resold or otherwise
transferred in the United States unless so registered or unless an applicable
exemption from the registration requirements of the Securities Act is available.
Any Existing Notes not tendered and accepted in the Exchange Offer will
remain outstanding. To the extent that any Existing Notes are tendered and
accepted in the Exchange Offer, a Holder's ability to sell untendered Existing
Notes could be adversely affected. Following consummation of the Exchange Offer,
the Holders of Existing Notes will continue to be subject to the existing
restrictions upon transfer thereof and the Companies generally will have no
further obligations to such Holders to provide for the registration under the
Securities Act of the Existing Notes held by them. See "The Exchange
Offer--Consequences of Failure to Exchange."
The Exchange Notes issued pursuant to this Exchange Offer initially
will be issued in the form of a global Exchange Note, which will be deposited
with, or on behalf of, The Depository Trust Company ("DTC") and registered in
its name or in the name of Cede & Co., its nominee. Beneficial interests in the
global Exchange Note representing the Exchange Notes will be shown on, and
transfers thereof will be effected through, records maintained by DTC and its
participants. After the initial issuance of the global Exchange Note, Exchange
Notes in certificated form may be issued in exchange for the global Exchange
Note on the terms set forth in the Indenture. See "Description of the Exchange
Notes--Book-Entry Registration."
THE EXCHANGE OFFER DESCRIBED IN THIS PROSPECTUS (THE "PROSPECTUS") IS
NOT DIRECTED TO, NOR WILL THE COMPANIES ACCEPT ANY TENDER FOR EXCHANGE FROM, ANY
PERSON IN ANY JURISDICTION IN WHICH PARTICIPATION IN SUCH EXCHANGE OFFER WOULD
BE UNLAWFUL. NEITHER THE DELIVERY OF THE PROSPECTUS NOR ANY EXCHANGE MADE
PURSUANT HERETO SHALL UNDER ANY CIRCUMSTANCES IMPLY THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF THE COMPANIES OR THAT THE INFORMATION SET FORTH HEREIN
IS CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE HEREOF.
------------------
A copy of this document, together with certain other documents, has
been delivered to the Registrar of Companies in the Isle of Man for registration
as a prospectus in accordance with Section 38 of the Isle of Man Companies Act
1931.
------------------
None of Golden State Petroleum, the Owners or any of their respective
representatives is making any representation to any offeree of the Exchange
Notes offered hereby regarding the legality of an investment by such offeree or
purchaser under appropriate legal investment or similar laws. Each investor
should consult with its own advisors as to legal, tax, business, financial and
related aspects of participation in the Exchange Offer.
------------------
(ii)
<PAGE>
The principal executive offices of Golden State Petroleum are located
at c/o Cambridge Fund Management LLC, Park Avenue Tower, 65 East 55th Street,
New York, New York 10022, and the telephone number at the address is
212-508-6500. The principal executive offices of the Owners are located at c/o
15-19 Anthol Street, Douglas, Isle of Man, IM1 1LB, and the telephone number at
that address is 011-44-1-62-4628575.
ENFORCEABILITY OF CIVIL LIABILITIES
Each of Golden State Petro (IOM I-A) PLC and Golden State Petro (IOM
I-B) PLC is organized under the laws of the Isle of Man. A substantial portion
of the assets of each Owner is or may be located outside the United States. As a
result, it may be difficult for investors to enforce outside the United States
judgments against either of the Owners obtained in the United States in any
actions, including actions predicated on the civil liability provisions of the
federal securities laws of the United States. Certain directors of each Owner
are residents of jurisdictions other than the United States, and all or a
significant portion of the assets of such persons are or may be located outside
the United States. As a result, it may be difficult for investors to effect
service of process within the United States upon such persons or to enforce
against them in United States courts judgments predicated upon the civil
liability provisions of the federal securities laws of the United States. There
is currently no treaty between the United States and the Isle of Man providing
for reciprocal recognition and enforcement of judgments in civil and commercial
matters, and therefore a final judgment for the payment of money rendered by any
federal or state court in the United States based on civil liability, whether or
not predicated solely upon the federal securities laws, would not be
automatically enforceable in the Isle of Man. The Owners have been advised by
their Isle of Man counsel, Cains, that there is doubt as to the enforceability,
in original actions in Isle of Man courts, of liabilities predicated solely on
the U.S. federal securities laws and as to the enforceability in Isle of Man
courts of judgments of United States courts predicated upon the civil liability
provisions of the U.S. federal securities laws. Each Owner has irrevocably
submitted to the non-exclusive jurisdiction of the federal and state courts in
The City of New York for the purpose of any legal suit, action or proceeding
against such Owner in connection with the offering and sale of the Notes.
The foregoing discussion is based on the advice of Cains, counsel to
the Owners with respect to matters of Isle of Man law.
AVAILABLE INFORMATION
Golden State Petroleum and the Owners are not currently
subject to the periodic reporting and other informational requirements of the
Exchange Act. Each of the Owners has agreed that, whether or not it is required
to do so by the rules and regulations of the Commission, for so long as any of
the Notes and Additional Notes remain outstanding, it will furnish to the
Indenture Trustee and the Holders of the Notes and Additional Notes and file
with the Commission, or cause to be so filed as part of the financial statements
of the Owners (i) all quarterly and annual financial information that would be
required to be contained in a filing with the Commission on Forms 10-Q and 10-K
if the Owners were required to file such forms, including a "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and,
with respect to the annual information only, a report thereon by independent
public accountants and (ii) all reports that would be required to be filed with
the Commission on Form 8-K if the Owners were required to file such reports.
Copies of the Indenture, the Registration Rights Agreement, the Chevron
Registration Rights Agreement, the Chevron Guarantees, the Initial Charters, the
Security Documents and any other document referred to herein can be obtained
without charge by any recipient of this Prospectus by contacting Golden State
Petroleum Transport Corporation c/o Cambridge Fund Management, LLC, Park Avenue
Tower, 65 East 55th Street, Suite 3300, New York, New York 10022.
AVAILABLE INFORMATION RELATING TO
CHEVRON AND THE INITIAL CHARTERER
The Exchange Notes are not obligations of, and are not guaranteed by,
Chevron Transport Corporation (the "Initial Charterer") or Chevron Corporation
("Chevron"). Neither the Initial Charterer nor Chevron is responsible for the
statements made in this Prospectus.
Chevron is subject to the informational requirements of the Exchange
Act and is required to file reports and other information with the Commission.
Copies of such reports and other information may be inspected and copied at
certain offices of the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549, and at the Commission's regional offices located at Citicorp Center, 500
West Madison, 14th Floor, Chicago, Illinois 60661 and Seven World Trade Center,
13th Floor, New York, New York 10048. Copies of such material can be obtained
from the Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549 at prescribed rates. Such material may also be accessed
electronically by means of the Commission's home page on the Internet at
http://www.sec.gov and at the offices of the New York Stock Exchange, Inc., 20
Broad Street, New York, New York 10015; the Chicago Stock Exchange, 440 South
LaSalle Street, Chicago, Illinois 60605; and The Pacific Stock Exchange, Inc.,
301 Pine Street, San Francisco, California 94104 and 618 South Spring Street,
Los Angeles, California 90014. Chevron is not required to, and will not, provide
annual reports to holders of the Notes.
(iii)
<PAGE>
Summarized financial information concerning the Initial Charterer is
currently included in the footnotes to Chevron's consolidated financial
statements. Chevron has no obligation to the holders of the Notes to continue to
provide such summarized financial information regarding the Initial Charterer.
THIS PROSPECTUS RELATES ONLY TO THE EXCHANGE NOTES OFFERED HEREBY AND
DOES NOT RELATE TO ANY SECURITIES OF CHEVRON OR OF THE INITIAL CHARTERER. ALL
DISCLOSURES CONTAINED IN THIS PROSPECTUS REGARDING CHEVRON AND THE INITIAL
CHARTERER ARE DERIVED FROM THE PUBLICLY AVAILABLE DOCUMENTS DESCRIBED IN THE
PRECEDING PARAGRAPHS. NONE OF GOLDEN STATE PETROLEUM OR EITHER OWNER HAS
PARTICIPATED IN THE PREPARATION OF SUCH DOCUMENTS NOR MADE ANY DUE DILIGENCE
INQUIRY WITH RESPECT TO THE INFORMATION PROVIDED THEREIN. NONE OF GOLDEN STATE
PETROLEUM OR EITHER OWNER MAKES ANY REPRESENTATION THAT SUCH PUBLICLY AVAILABLE
DOCUMENTS OR ANY OTHER PUBLICLY AVAILABLE INFORMATION REGARDING CHEVRON OR THE
INITIAL CHARTERER ARE ACCURATE OR COMPLETE. FURTHERMORE, THERE CAN BE NO
ASSURANCE THAT ALL EVENTS OCCURRING PRIOR TO THE DATE HEREOF (INCLUDING EVENTS
THAT WOULD AFFECT THE ACCURACY OR COMPLETENESS OF THE PUBLICLY AVAILABLE
DOCUMENTS DESCRIBED IN THE PRECEDING PARAGRAPHS) THAT WOULD AFFECT THE CREDIT
RATING OF CHEVRON OR THE INITIAL CHARTERER HAVE BEEN PUBLICLY DISCLOSED.
SUBSEQUENT DISCLOSURE OF ANY SUCH EVENTS OR THE DISCLOSURE OF OR FAILURE TO
DISCLOSE MATERIAL FUTURE EVENTS CONCERNING CHEVRON OR THE INITIAL CHARTERER
COULD AFFECT THE TRADING PRICES, IF ANY, OF THE EXCHANGE NOTES.
NONE OF GOLDEN STATE PETROLEUM OR EITHER OWNER MAKES ANY REPRESENTATION
TO ANY HOLDER OF EXCHANGE NOTES AS TO THE PERFORMANCE OF CHEVRON UNDER THE
CHEVRON GUARANTEES OR OF THE INITIAL CHARTERER UNDER THE INITIAL CHARTERS.
DEFINED TERMS
All capitalized terms used in this Prospectus and not otherwise defined
have the meanings assigned in Appendix A hereto, beginning on page A-1 of this
Prospectus.
(iv)
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by, and should be
read in conjunction with, the more detailed information and financial
statements, including the related notes, appearing elsewhere in this Prospectus.
In addition, the following summary and the Prospectus generally contain certain
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934,
as amended, and are qualified by reference to the cautionary statements with
respect thereto contained elsewhere herein. See the second paragraph under "Risk
Factors." Unless otherwise indicated, all currency amounts set forth in this
Prospectus are stated in United States dollars. Reference is made to the
Glossary of Certain Terms in Appendix A for definitions of certain terms used in
this Prospectus.
Overview
Golden State Petroleum, a recently formed special purpose Delaware
corporation, issued the Existing Notes as agent on behalf of the Owners. The
proceeds from the offering and sale of the Existing Notes, together with the
proceeds of the sale of the Serial Notes, will be used by the Owners to fund the
construction of two very large crude carriers (each, a "Vessel") to be
constructed by Samsung Corporation ("Samsung") and Samsung Heavy Industries
("SHI" and, together with Samsung, the "Builders") under the technical
supervision of Chevron Shipping Company (the "Technical Advisor"), as agent for
the Initial Charterer as well as to pay capitalized interest on the Exchange
Notes, the untendered Existing Notes, if any, and the Serial Notes through the
delivery date for each Vessel (each, a "Delivery Date"). The Vessels, upon their
acceptance by the Owners under the ship building contracts (each, a "Building
Contract"), will be chartered to the Initial Charterer pursuant to two separate
initial charters (each, an "Initial Charter"), each of which is first terminable
by the Initial Charterer on the eighth anniversary of the Delivery Date for the
related Vessel. The Initial Charterer's obligations under each Initial Charter
will be guaranteed by Chevron under two separate Chevron guarantees (each, a
"Chevron Guarantee"). The Initial Charterer is an indirect, wholly-owned
subsidiary of Chevron.
The Exchange Notes and the Existing Notes are issuable pursuant to the
Indenture. The obligations of the Owners under the Exchange Notes and Existing
Notes (and the Additional Notes, if any) are secured by a statutory first
mortgage on each Vessel, an assignment of the Charters and certain other
assignments to the Indenture Trustee in trust for the benefit of the Holders of
the Notes. In accordance with the Indenture, the Indenture Trustee will exercise
remedies with respect to such collateral. See "--Summary of Terms of the
Exchange Notes--Security," "Description of the Exchange Notes--Security" and
"The Mortgages."
The Exchange Notes are not obligations of, and are not guaranteed by,
the Initial Charterer or Chevron. Neither the Initial Charterer nor Chevron is
responsible for the statements made in this Prospectus.
The Owners and the Manager
Each Owner was formed as an Isle of Man public limited company for the
purpose of acquiring and chartering one of the Vessels. The Owners and Golden
State Petroleum are wholly-owned subsidiaries of Golden State Holdings I, Ltd.,
an Isle of Man holding company (the "Ship Holding Company"), that is a
wholly-owned subsidiary of Cambridge Petroleum Transport Corporation, a closely
held Cayman Islands corporation ("CPTC"). Under a management agreement (a
"Management Agreement") with each Owner, Cambridge Fund Management L.L.C., a
Delaware limited liability company (the "Manager") and an affiliate of CPTC,
will provide administrative, ship management and advisory services to the
Owners. The Manager was established in 1995, and arranges and manages investment
banking opportunities primarily in the
<PAGE>
international shipping industry, including the financing of existing and newly
built vessels. Each of the Manager, CPTC and the Ship Holding Company is an
Affiliate of Cambridge Partners, L.L.C.
The Vessels
Each Vessel to be acquired by the respective Owner listed below is a
very large crude carrier ("VLCC"). VLCCs are large-sized vessels ranging from
approximately 200,000 to 320,000 deadweight tonnes ("dwt"). Each Vessel will be
constructed pursuant to a Building Contract entered into by each Owner and the
Builders. Pursuant to an agreement (each, a "Technical Supervision Agreement"),
the Vessels' construction will be supervised by and will meet the technical
specifications of the Technical Supervisor. Those specifications have been
designed to enhance safety and reduce operating and maintenance costs, including
such features as high performance rudders, extra steel (minimal use of high
tensile steels), additional fire safety equipment, redundant power generation
equipment, extra coating and electrolytic corrosion monitoring and protection
systems and additional crew quarters to facilitate added manning and to comply
with all material existing and currently proposed regulatory requirements
affecting the Vessels and their operations such as the United States Oil
Pollution Act of 1990 ("OPA"). The delivered cost and expenses of issuance with
respect to each Owner's Allocated Principal Amount of the Mortgage Notes is
approximately $93.9 million for Vessel A and approximately $95.8 million for
Vessel B. If the Technical Supervisor or the Initial Charterer wish to alter the
specifications of a Vessel after the date of the issuance of the Existing Notes
(the "Original Closing Date") and prior to the date such Vessel is to be
delivered to the related Owner, and such alteration results in an increase in
the construction costs of such Vessel, additional notes (the "Additional Notes")
may be issued by the Owners to finance such increased costs, which shall not
exceed $250,000 per Vessel without the consent of the related Owner. In the
event the Builders fail to deliver a Vessel on or before 180 days from the
Contractual Delivery Date for such Vessel and the Contractual Delivery Date is
not extended as provided in the Building Contract, then the Builders are
required to refund to the related Owner an amount equal to the installments made
by such Owner, together with certain other amounts described herein. The
obligations of the Builders to refund these amounts are guaranteed by The Korea
Development Bank, Seoul, South Korea, pursuant to an Irrevocable Installment
Payment Letter of Guarantee (each, a "Building Contract Guarantee").
<TABLE>
<CAPTION>
VESSEL OWNER, SIZE AND DELIVERY DATE
APPROXIMATE
DEADWEIGHT CONTRACTUAL
OWNER TONNES CONSTRUCTION DELIVERY DATE
<S> <C> <C> <C> <C>
Vessel A Golden State 308,500 Double Hull February 1, 1999
Petro (IOM
I-A) PLC
Vessel B Golden State 308,500 Double Hull July 1, 1999
Petro (IOM I-B)
PLC
</TABLE>
<TABLE>
<CAPTION>
VESSEL TECHNICAL INFORMATION
(All figures are approximate)
LENGTH BREADTH DRAFT
REGISTRATION (METERS) (METERS) (METERS)
<S> <C> <C> <C> <C>
Vessel A Liberia 333.0 58.0 21.4
Vessel B Liberia 333.0 58.0 21.4
</TABLE>
-2-
<PAGE>
THE BUILDERS
Samsung Corporation is one of the major affiliated companies of the
Samsung Group, which is the world's 14th largest conglomerate (Fortune 1994
global list). Samsung Corporation's main businesses are represented by general
trade, construction & engineering, motor sales & marketing, and fashion &
retails with total revenues of $24.8 billion in 1995 with 115 offices and
facilities throughout 60 countries.
Samsung Heavy Industries Co., Ltd. ("SHI") is also an affiliated
company of the Samsung Group, which manufactures a wide range of products,
including industrial plant, ships, offshore structures, construction equipment
and commercial vehicles. As of 1995, SHI had 13,400 employees and annual sales
in excess of $3.8 billion. SHI shipbuilding capacity was increased to 1.8
million gross tons in 1995, making SHI one of the world's leading shipbuilders.
SHI operates four technologically advanced research and development centers and
one integrated engineering center where highly economical, next-generation ships
like high-speed cargo and passenger ships, and offshore-related ships, such as
the drillship and Floating Production Storage Offtake (FPSO) vessels, are
developed.
THE BUILDING CONTRACT GUARANTOR
The Korea Development Bank ("KDB") was established as a government
financial institution pursuant to The Korea Development Bank Act (the "KDB
Act"). All of KDB's paid-in capital is owned by the government of the Republic
of Korea pursuant to the KDB Act.
CHEVRON AND THE INITIAL CHARTERER
Chevron, a Delaware corporation, a major international oil company,
will guarantee the payment and performance obligations of the Initial Charterer
under each Initial Charter. According to publicly available information, Chevron
provides administrative, financial and management support for, and manages its
investments in, U.S. and foreign subsidiaries and affiliates, which engage in
fully integrated petroleum operations, chemical operations and coal mining.
Chevron operates in the United States and approximately 90 other countries.
Petroleum operations consist of exploring for, developing and producing crude
oil and natural gas; transporting crude oil, natural gas and petroleum products
by pipelines, marine vessels and motor equipment; refining crude oil into
finished petroleum products; and marketing crude oil, natural gas and the many
products derived from petroleum. Chemical operations include the manufacture and
marketing of a wide range of chemicals for industrial uses.
According to publicly available information, the Initial Charterer is
engaged in the marine transportation of oil and refined petroleum products. At
any given time, the Initial Charterer operates between 25 and 35 internationally
flagged vessels which it owns or bareboat charters. The Initial Charterer's
primary transportation routes are from the Middle East, Indonesia, Mexico, West
Africa and the North Sea to ports in the United States, Europe, the United
Kingdom and Asia. Refined petroleum products are transported worldwide. The
Initial Charterer, a Liberian corporation, is an indirect, wholly-owned
subsidiary of Chevron. See "Chevron and the Initial Charterer."
The Exchange Notes are not obligations of, and are not guaranteed by,
the Initial Charterer or Chevron. Neither the Initial Charterer nor Chevron is
responsible for the statements made in this Prospectus.
-3-
<PAGE>
THE INITIAL CHARTERS
Pursuant to the Initial Charters, the Initial Charterer has agreed to
charter each Vessel commencing on its respective Delivery Date and ending, in
each case, on the eighteenth anniversary of such Delivery Date. Pursuant to the
Initial Charters, the Initial Charterer has the right to terminate each Initial
Charter on five dates (each, an "Optional Termination Date") beginning on the
expiration of the period commencing on the Delivery Date for such Vessel and
terminating on the eighth anniversary thereof (each, a "Fixed Period") and on
each of the four subsequent two-year anniversaries thereof. During the Fixed
Period, the charter hire shall be $27,199 per day for Vessel A and $27,199 per
day for Vessel B. If Additional Notes are issued due to the incurrence of
additional construction costs for a Vessel ("Additional Construction Costs"),
Additional Charter Hire will become payable during the Fixed Period under the
related Initial Charter in an amount that, together with investment income
thereon, will be sufficient to cover the debt service on the Additional Notes.
If there is a Net Reduction in Construction Costs for a Vessel resulting in a
mandatory redemption of the Notes in an amount equal to the Net Reduction in
Construction Costs, the Charter Hire will be reduced by an amount necessary to
reflect the amortization of the Net Reduction in Construction Costs over the
term of the Exchange Notes. Charter Hire after the Fixed Period will be $28,500.
See "The Initial Charters--Charter Hire." During the term of the Initial
Charters, the Owners are not liable for any expense in operating, registering,
documenting, insuring, repairing or maintaining the Vessels and are not required
to supply a vessel or any part thereof if a Vessel or any part thereof is lost,
damaged, rendered unfit for use, confiscated, seized, requisitioned, restrained
or appropriated. The Charter Hire payable in respect of each Vessel shall
continue to be payable notwithstanding loss or damage (not amounting to a Total
Loss) to such Vessel or any part thereof and notwithstanding that such Vessel or
any part thereof is rendered unfit for use or is requisitioned for hire.
SECURITY
Prior to the Delivery Date of each Vessel, the Exchange Notes and the
untendered Existing Notes, if any, will (subject to the priority of payment
described herein) be secured, equally and ratably with the Serial Notes and the
Additional Notes, if any, by (i) amounts held in the Pre-Funding Account, (ii)
an assignment of the Building Contracts and the Technical Supervision Agreement
and (iii) an assignment of the Building Contract Guarantees. See "Description of
the Exchange Notes--Trust Accounts" and "--Application of Proceeds." After the
Delivery Date of each Vessel and assuming both Vessels have been accepted by the
related Owner thereof, the Exchange Notes will (subject as aforesaid) be
secured, equally and ratably with the Serial Notes and the Additional Notes, if
any, by (i) a Mortgage on each Vessel granted by the related Owner to the
Indenture Trustee (as described herein), (ii) an assignment of the Initial
Charters, (iii) an assignment of the Charter Supplements, if any, (iv) an
assignment of the Chevron Guarantees, (v) the Debt Service Reserve Fund and (vi)
other collateral described herein. See "Description of the Exchange
Notes--Security."
-4-
<PAGE>
THE EXCHANGE OFFER
SUMMARY OF TERMS OF THE EXCHANGE OFFER
The Exchange Offer..................... Up to $127,100,000 aggregate
principal amount of 8.04% First
Preferred Exchange Mortgage Notes
Due 2019 (the "Exchange Notes") will
be issued in minimum denominations
of $100,000 and integral multiples
of $1,000 in excess thereof. Subject
to such minimum denominations,
$1,000 principal amount of Exchange
Notes is offered in exchange for
each $1,000 principal amount of
Existing Notes. As of the date
hereof, Existing Notes representing
$127,100,000 aggregate principal
amount are outstanding. The form and
terms of the Exchange Notes and the
Existing Notes are identical, except
that (i) the offer of the Exchange
Notes will be registered under the
Securities Act and therefore the
Exchange Notes will not be subject
to certain transfer restrictions and
(ii) Holders of Exchange Notes will
not be entitled to certain rights of
Holders of the Existing Notes under
the Registration Rights Agreement.
Based on interpretations by the
Commission's staff set forth in no-
action letters issued to third
parties unrelated to the Companies,
the Companies believe that the
Exchange Notes issued pursuant to
the Exchange Offer in exchange for
the Existing Notes may be offered
for resale, resold or otherwise
transferred by any Holder (other
than any such Holder or such other
person (i) that is an "affiliate" of
the Companies within the meaning of
Rule 405 under the Securities Act or
(ii) that is a broker-dealer who
acquired such Existing Notes
directly from the Companies (or any
affiliate thereof)), without
compliance with the registration and
prospectus delivery provisions of
the Securities Act, provided that
(i) the Exchange Notes are acquired
in the ordinary course of business
of the Holder and (ii) the Holder is
not engaged in and does not intend
to engage in a distribution of the
Exchange Notes and has no
arrangement or understanding with
any person to participate in the
distribution of the Exchange Notes.
The Commission, however, has not
considered the Exchange Offer in the
context of a no-action letter, and
there can be no assurance that the
staff of the Commission would make a
similar determination with respect
to the Exchange Offer as in such
other circumstances. See "The
Exchange Offer--Purpose and Effect
of the Exchange Offer." Each
broker-dealer that receives Exchange
Notes for its own account in
exchange for Existing Notes, where
those Existing Notes were acquired
by the broker-dealer as a result of
its market-making activities or
other trading activities, must
acknowledge that it will deliver a
prospectus in connection with any
resale of those Exchange Notes. See
"Plan of Distribution."
Registration Rights Agreement.......... The Existing Notes were sold by the
Owners in December 1996 in a private
placement. In connection with the
sale of the Existing Notes, the
Companies entered into a
Registration Rights Agreement for
the benefit of the purchasers
thereof (the "Registration Rights
-5-
<PAGE>
Agreement"), under which the
Companies agreed to use their
respective reasonable best efforts
to effect the Exchange Offer. See
"The Exchange Offer-- Purpose and
Effect of the Exchange Offer" and
"Description of the Exchange
Notes--Registration Rights."
Pursuant to the Registration Rights
Agreement, the Companies are
required to file a registration
statement for a continuous offering
pursuant to Rule 415 under the
Securities Act in respect of the
Existing Notes under certain
circumstances, including if existing
Commission interpretations are
changed such that the Exchange Notes
received by Holders in the Exchange
Offer are not or would not be, upon
receipt, transferable by each such
Holder (other than an affiliate of
the Companies) without restriction
under the Securities Act. See "The
Exchange Offer--Purpose and Effect
of the Exchange Offer" and
"Description of the Exchange
Notes--Registration Rights."
Expiration Date........................ The Exchange Offer will expire at
5:00 p.m., New York City time, on ,
1997, or such later date and time to
which it is extended. Any Existing
Notes not accepted for exchange for
any reason will be returned without
expense to the tendering Holder
thereof as promptly as practicable
after the expiration or termination
of the Exchange Offer.
Withdrawal............................. The tender of Existing Notes
pursuant to the Exchange Offer may
be withdrawn at any time prior to
5:00 p.m., New York City time, on
the Expiration Date.
Interest on the Exchange Notes......... Interest on each Exchange Note will
be deemed to accrue from December
24, 1996 (the date of issuance of
the Existing Notes) or from the date
of the last periodic payment of
interest on the Existing Notes,
whichever is later.
Special Interest on the Existing
Notes................................ Pursuant to the terms of the
Registration Rights Agreement,
additional special interest
("Special Interest") on the Existing
Notes will accrue from June 23, 1997
(180 days after the date of issuance
of the Existing Notes) to the date
the Exchange Offer is consummated.
Special Interest will accrue at a
rate of 0.25% of the outstanding
principal amount of the Existing
Notes per annum and is payable
semiannually, commencing on August
1, 1997. See "Description of the
Exchange Notes--Maturity, Interest
and Principal" and "--Registration
Rights."
Conditions to the Exchange Offer....... The Exchange Offer is subject to
certain customary conditions,
certain of which may be waived by
the Companies. See "The Exchange
Offer--Conditions." The Exchange
Offer is not conditioned upon any
minimum aggregate principal amount
of Existing Notes being tendered for
exchange.
Procedures for Tendering Existing
Notes................................ Each Holder of Existing Notes who
desires to accept the Exchange Offer
must complete, sign and date the
Letter of Transmittal, or a copy
thereof, in accordance with the
instructions contained herein and
therein, and mail or otherwise
deliver the Letter of Transmittal or
the copy, together with the Existing
Notes and any other
-6-
<PAGE>
required documentation, to the
Exchange Agent at the address set
forth herein. Persons holding
Existing Notes through DTC and
wishing to accept the Exchange Offer
must do so pursuant to DTC's
Automated Tender Offer Program
("ATOP"), by which each tendering
participant will agree to be bound
by the Letter of Transmittal. By
executing or agreeing to be bound by
the Letter of Transmittal, each
Holder will represent to the
Companies that, among other things,
(i) the Exchange Notes acquired
pursuant to the Exchange Offer are
being obtained in the ordinary
course of business of the Holder of
the Existing Notes, (ii) the Holder
is not engaging in and does not
intend to engage in a distribution
of such Exchange Notes, (iii) the
Holder has no arrangement or
understanding with any person to
participate in the distribution of
such Exchange Notes, (iv) the Holder
is not an "affiliate," as defined
under Rule 405 promulgated under the
Securities Act, of any of the
Companies and (v) if such Holder is
a broker-dealer, that it acquired
the Existing Notes as a result of
market making activities or other
trading activities.
Acceptance of Existing Notes and
Delivery of Exchange Notes.......... The Companies will accept for
exchange any and all Existing Notes
which are properly tendered in the
Exchange Offer prior to 5:00 p.m.,
New York City time, on the
Expiration Date. The Exchange Notes
issued pursuant to the Exchange
Offer will be delivered promptly
following the Expiration Date. See
"The Exchange Offer--Terms of the
Exchange Offer."
Exchange Agent......................... United States Trust Company of New
York is serving as Exchange Agent in
connection with the Exchange Offer.
U.S. Tax Considerations................ The exchange pursuant to the
Exchange Offer will not be a taxable
event for U.S. federal income tax
purposes. See "Material United
States Federal Income Tax
Consequences."
Effect of Not Tendering................ Existing Notes that are not tendered
or that are not properly tendered
will, following the completion of
the Exchange Offer, continue to be
subject to the existing restrictions
upon transfer thereof. Upon
completion of the Exchange Offer,
the Companies generally will have no
further obligation to provide for
the registration under the
Securities Act of such Existing
Notes.
SUMMARY OF TERMS OF THE EXCHANGE NOTES
Securities Offered........................... $127,100,000 aggregate
principal amount of 8.04% First
Preferred Exchange Mortgage
Notes Due 2019 (the "Exchange
Notes").
Owners....................................... Golden State Petro (IOM I-A)
PLC and Golden State Petro (IOM
I-B) PLC, each an Isle of Man
public limited company.
Issuers...................................... Golden State Petroleum
Transport Corporation, a
Delaware corporation, as agent
for the Owners, and each of the
Owners.
Indenture Trustee............................ United States Trust Company of
New York.
-7-
<PAGE>
Maturity Date......................... February 1, 2019.
Denominations......................... The Exchange Notes will be
issued in minimum denominations of
$100,000 and multiples of $1,000 in
excess thereof.
Interest Payment Dates................ February 1 and August 1,
commencing August 1, 1997.
Mandatory Sinking Fund Payments........ The Exchange Notes and the
untendered Existing Notes, if any,
are subject to redemption through
operation of the mandatory sinking
fund on February 1 and August 1 of
each year, commencing on August 1,
2007, to and including August 1,
2018, according to the applicable
schedule of sinking fund payments
set forth herein. The sinking fund
redemption price is 100% of the
principal amount of the Exchange
Notes and the untendered Existing
Notes, if any, being redeemed,
together with accrued and unpaid
interest to the date fixed for
redemption.
The amortization schedule will
approximate level debt service with
an additional principal payment on
the Maturity Date of $10,995,000 per
Vessel. The table below provides the
scheduled sinking fund redemption
amounts and final principal payment
on the Exchange Notes and the
untendered Existing Notes, if any,
(assuming both Vessels are accepted
by the Owners under the Building
Contracts) allocated to each Vessel.
Sinking Fund Redemption Amounts
and Final Principal Payment
(Dollars in Thousands)
----------------------
Scheduled
Payment Date Amount
------------ ------
August 1, 2007 $ 1,340.0
February 1, 2008 2,825.0
August 1, 2008 2,940.0
February 1, 2009 3,060.0
August 1, 2009 3,180.0
February 1, 2010 3,310.0
August 1, 2010 3,445.0
February 1, 2011 3,580.0
August 1, 2011 3,725.0
February 1, 2012 3,870.0
August 1, 2012 4,030.0
February 1, 2013 4,195.0
August 1, 2013 4,360.0
February 1, 2014 4,535.0
August 1, 2014 4,720.0
February 1, 2015 4,905.0
August 1, 2015 5,105.0
February 1, 2016 5,310.0
August 1, 2016 5,525.0
February 1, 2017 5,745.0
August 1, 2017 5,975.0
February 1, 2018 6,220.0
August 1, 2018 6,465.0
February 1, 2019 28,735.0
--------
$127,100.0
==========
-8-
<PAGE>
Mandatory Redemption.................. If (a) a Vessel is not accepted by
the related Owner on or before 180
days from the Contractual Delivery
Date for such Vessel and the
Contractual Delivery Date is not
extended as provided in the Building
Contract or (b) a casualty or
certain other events occur with
respect to a Vessel as a result of
which the Vessel is a Total Loss,
then the Exchange Notes and the
untendered Existing Notes, if any,
will be subject to mandatory
redemption in part, equally and
ratably with the Serial Notes and
the Additional Notes, in an
aggregate principal amount equal to
the Allocated Principal Amount of
the Mortgage Notes for such Vessel,
at a redemption price of 100% of the
principal amount thereof plus
accrued and unpaid interest through
the date of redemption. Subject to
certain exceptions, if the Initial
Charterer exercises any of its
termination options, an Acceptable
Replacement Charter is not entered
into and the Owner has not elected
to redeem Exchange Notes and the
untendered Existing Notes, if any,
in part in an aggregate principal
amount equal to the Allocated
Principal Amount of the Notes for
the related Vessel, at 100% of the
principal amount thereof plus
accrued and unpaid interest to the
date fixed for redemption, then, if
all Holders of the Exchange Notes
and the untendered Existing Notes,
if any, have directed the Indenture
Trustee to sell the related Vessel
at the highest bid price received by
the Indenture Trustee from the
Manager, the Allocated Principal
Amount of the Notes for the related
Vessel will be subject to mandatory
redemption at an aggregate
redemption price equal to the net
proceeds received from such sale,
together with the Allocable Portion
of the Debt Service Reserve Fund.
There can be no assurance that such
redemption price will not be less
than 100% of the principal amount
thereof plus accrued and unpaid
interest through the date of
redemption. In addition, the
Exchange Notes and the untendered
Existing Notes, if any, will be
subject to mandatory redemption in
part, equally and ratably with the
Serial Notes, in an aggregate
principal amount equal to the Net
Reduction in Construction Costs if
such a Net Reduction in Construction
Costs occurs, at a redemption price
of 100% of the principal amount
thereof plus accrued and unpaid
interest through the date of
redemption. See "Description of the
Exchange Notes--Mandatory
Redemption."
Optional Redemption................... The Exchange Notes and the
untendered Existing Notes, if any,
may be redeemed in whole or in part,
at the direction of the Owners on
any Payment Date on or after the
later of (a) August 1, 1999 and (b)
the Delivery Date of the last Vessel
to be delivered at a redemption
price equal to 100% of the principal
amount thereof plus accrued and
unpaid interest to the date fixed
for redemption, provided that if
-9-
<PAGE>
(i) such redemption occurs prior to
February 1, 2018 and (ii) a Vessel
is then subject to the related
Initial Charter or to an Acceptable
Replacement Charter pursuant to
which the charterer thereunder is
required to pay charter hire equal
to or greater than the Charter Hire
payable by the Initial Charterer
during the Fixed Period, then the
Make-Whole Premium shall be payable
with respect to Mortgage Notes in an
amount equal to Allocated Principal
Amount of the Mortgage Notes for
such Vessel. The Owners may not
exercise such optional redemption if
such optional redemption would
adversely affect the then applicable
ratings on the Serial Notes. See
"Description of the Exchange
Notes--Optional Redemption." In
addition, Exchange Notes and
untendered Existing Notes, if any,
may be redeemed in part in an
aggregate principal amount equal to
the Allocated Principal Amount of
the Notes for a Vessel if the
Initial Charter for such Vessel is
terminated and an Acceptable
Replacement Charter is not entered
into, at a redemption price equal to
100% of the principal amount of the
Exchange Notes and the untendered
Existing Notes, if any, plus accrued
and unpaid interest to the date
fixed for redemption.
Purchase at the Option
of the Holder......................... On August 1, 2014, if neither
Initial Charter has been terminated
by the Initial Charterer, the
Holders of the Exchange Notes and
the untendered Existing Notes, if
any, will have a one-time option to
cause the Owners to purchase the
Exchange Notes and the untendered
Existing Notes, if any, at a
purchase price equal to 100% of the
principal amount thereof plus
accrued and unpaid interest through
the date of purchase.
Construction of Vessels............... The Vessels will be constructed
pursuant to two separate Building
Contracts. Under each Building
Contract, the purchase price for the
related Vessel is payable in
installments.
If a Vessel is not delivered on or
before 180 days from the Contractual
Delivery Date for such Vessel and
the Contractual Delivery Date is not
extended as provided in the Building
Contract or if an Owner rejects or
cancels the related Building
Contract pursuant to the terms and
conditions set forth therein, the
Builders must reimburse to such
Owner an amount that, together with
the amounts held in the Pre-Funding
Account (subject to the priority
described herein) (see "Description
of the Exchange Notes--Trust
Accounts" and "--Application of
Proceeds") with respect to such
Vessel, shall be sufficient to
redeem the Allocated Principal
Amount of the Notes for the related
Vessel in full in the event such
Vessel is not delivered (the "Refund
Amount"). See "Building Contracts."
-10-
<PAGE>
The Building Contract Guarantees...... The Builders' obligation to pay the
Refund Amount is guaranteed by The
Korea Development Bank (the
"Building Contract Guarantor")
pursuant to the Building Contract
Guarantee. See "Building Contract
Guarantees."
The Initial Charters and Chevron
Guarantees............................ On the date an Owner accepts a
Vessel under the related Building
Contract, the Initial Charterer is
required to accept such Vessel under
the related Initial Charter. Each
Initial Charter has a term
commencing on the date the Vessel is
accepted by the Initial Charterer
under the related Initial Charter
and terminating on the eighteenth
anniversary of the related Delivery
Date, subject to the Initial
Charterer's right to terminate such
Initial Charter on the eighth
anniversary thereof and on each of
the four subsequent two-year
anniversaries thereof. The
obligations of the Initial Charterer
under each Initial Charter will be
guaranteed by Chevron pursuant to
the related Chevron Guarantee. The
Initial Charterer is an indirect,
wholly-owned subsidiary of Chevron.
Termination Options Under the
Initial
Charters............................
Pursuant to the Initial Charters,
the Initial Charterer has the right
to terminate each Initial Charter on
five Optional Termination Dates
beginning on the expiration of the
Fixed Period and on each of the four
subsequent two-year anniversaries
thereof. The Initial Charterer is
required to give the related Owner
(i) non-binding notice of its intent
to exercise such termination option,
determined on a good faith basis, at
least twelve months prior to the
first Optional Termination Date or
nine months prior to each successive
Optional Termination Date and (ii)
irrevocable notice of such exercise
nine months prior to the first
Optional Termination Date or six
months prior to each successive
Optional Termination Date. There can
be no assurance that the Initial
Charterer will not exercise such
termination option on the first, or
any subsequent, Optional Termination
Date. Therefore, Holders of the
Exchange Notes should assume that
each Initial Charter will be
terminated as of its first Optional
Termination Date.
Security.............................. The obligations of the Owners under
the Exchange Notes and the
untendered Existing Notes, if any,
will (subject to the priority of
payment described herein, see
"Description of the Exchange
Notes--Trust Accounts" and
"--Application of Proceeds") be
secured, equally and ratably with
the Serial Notes and the Additional
Notes, by the Pre-Funding Account,
the assignment of the Building
Contracts and the Technical
Supervision Agreements and the
assignment of the Building Contract
Guarantees prior to the delivery of
a Vessel and thereafter, by the Debt
Service Reserve Fund, the first
preferred ship mortgage on each
Vessel, an assignment
-11-
<PAGE>
of any charters for the Vessels
including an assignment of the
Initial Charters and the Charter
Supplements and an assignment of the
related Chevron Guarantee, as well
as certain other collateral,
including an assignment of the
earnings and insurance proceeds, an
assignment of the Management
Agreements relating to the Vessels
and a pledge of all of the
outstanding stock of the Owners
(collectively, the "Collateral").
In accordance with the Indenture,
the Indenture Trustee will exercise
remedies with respect to the
Collateral, including the sale or
other disposition of the Collateral,
upon the occurrence of an event of
default (an "Indenture Event of
Default") under the Indenture. The
right of the Indenture Trustee to
enforce the Mortgages will be
subject to the rights of the
charterer under each charter
(including the Initial Charterer
under the Initial Charter) to the
continued use and operation of the
related Vessel under such charter,
so long as no event of default has
occurred and is continuing under
such charter and so long as the
charterer is performing its
obligations thereunder. See
"Description of the Exchange
Notes--Security."
Enforcement of Obligations............ The Exchange Notes and the
untendered Existing Notes, if any,
will be full recourse obligations of
the Owners, secured, equally and
ratably with the Serial Notes and
the Additional Notes, solely by the
Collateral. The Exchange Notes and
the untendered Existing Notes, if
any, will not be obligations of, or
guaranteed by, Golden State
Petroleum, the Initial Charterer or
Chevron. The Owners will not have
any significant source of income
other than investment income from
the Trust Accounts and payments to
them under the Initial Charters and
Chevron Guarantees or under any
Acceptable Replacement Charters or
other charters. If the Owners
default in their payment obligations
under the Exchange Notes, the
Indenture Trustee, at the direction
of the holders of 25% in aggregate
principal amount of the Exchange
Notes, the untendered Existing
Notes, if any, the Serial Notes and
Additional Notes, if any, then
outstanding (the "Required
Noteholders"), may pursue any
available remedy, including
acceleration of the entire principal
of and interest accrued on all of
the Exchange Notes, the untendered
Existing Notes, if any, the Serial
Notes and the Additional Notes, if
any, and taking any available action
or proceeding to collect such
amounts, and the Indenture Trustee
will proceed to exercise remedies
with respect to the Collateral,
subject to the limitations described
herein. See "Description of the
Exchange Notes--Indenture Events of
Default" and "--Indenture Remedies"
for a discussion of the exercise of
remedies by the Indenture Trustee.
-12-
<PAGE>
Pre-Funding Account .................. The Pre-Funding Account was
established on the Original Closing
Date. The proceeds from the sale of
the Existing Notes and the Serial
Notes, after the payment of certain
fees and expenses, were deposited
into the Pre-Funding Account. In
addition, any proceeds from a
Building Contract or a Building
Contract Guarantee will be deposited
therein. On each Payment Date, the
Indenture Trustee will withdraw an
amount equal to the interest payable
on the Notes and deposit such amount
into the Revenue Account for
distribution to the Holders of the
Exchange Notes, the Holders of the
untendered Existing Notes, if any,
and the holders of the Serial Notes.
The Indenture Trustee shall also
withdraw amounts from the
Pre-Funding Account to pay the
installments of the purchase price
of each Vessel due under each
Building Contract and to redeem the
Notes in the event of a rejection of
a Vessel.
Debt Service Reserve Fund............. The Debt Service Reserve Fund was
established on the Original Closing
Date. Funds will be deposited into
the Debt Service Reserve Fund on
each Payment Date, to the extent of
available funds, until the balance
of the Debt Service Reserve Fund
equals an amount, together with
interest earned thereon, sufficient
to provide for the payment of
average annual sinking fund payments
and interest on the Exchange Notes
and the untendered Existing Notes,
if any, for a period of 1.2 years
(the "Debt Service Reserve
Requirement"). In addition, on each
Payment Date, all excess funds after
the payment of all Recurring Fees,
interest amounts, sinking fund
redemption amounts and Indenture
Trustee's and Manager's fees, will
be deposited into the Debt Service
Reserve Fund. See "Description of
the Exchange Notes--Payment Dates."
The Debt Service Reserve Fund will
be held by the Indenture Trustee for
the benefit of the holders of the
Mortgage Notes.
Certain Covenants..................... The Indenture will include certain
covenants that, among other things,
prohibit Golden State Petroleum and
the Owners from (i) incurring any
indebtedness other than the Exchange
Notes, the Existing Notes, the
Serial Notes and the Additional
Notes (collectively, the "Mortgage
Notes"), (ii) making any
investments, loans or advances or
(iii) creating any Liens other than
their obligations under the Mortgage
Notes, the Indenture and the
Security Documents.
Under each Mortgage, the related
Owner is required to keep its Vessel
free and clear of all Liens other
than liens arising thereunder and
under the Indenture and liens for
crew's wages accrued for not more
than three months, suppliers' or
other similar liens arising in the
ordinary course of its business and
accrued for not more than three
months, liens
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for collision or salvage, or liens
for loss, damage or expense that are
fully covered by insurance or
bonded. Notwithstanding the
preceding sentence, during the term
of the related Initial Charter, any
Lien permitted under the Initial
Charter will be permitted under the
related Mortgage. Under each Initial
Charter, the Initial Charterer may
not allow, or permit to be
continued, any Lien incurred by it
that might have priority over the
title and interest of the Owner in
the related Vessel. See "The Initial
Charters--Covenants."
RestrictedPayments.................... So long as the Mortgage Notes remain
outstanding, neither of the Owners
may (i) declare or pay any dividend
or other distribution on any shares
of its capital stock, (ii) make any
loans or advances to, or enter into
any contract not described herein
with, any affiliate of such Owner or
(iii) purchase, redeem or otherwise
acquire or retire for value any
shares of its capital stock (each, a
"Restricted Payment").
Certain Liabilities................... Under each Initial Charter, the
Initial Charterer will be liable for
oil or other pollution damage
resulting from its operation of the
related Vessel under such Initial
Charter and will indemnify and hold
harmless the related Owner against
any and all losses, damages and
expenses incurred by such Owner as a
result of any oil or other pollution
damage resulting from the Initial
Charterer's operation of such Vessel
under such Initial Charter
(including, without limitation, such
Owner's liability under the United
States Oil Pollution Act of 1990, as
amended ("OPA 90"), or under the
laws of any other jurisdiction
relating to oil spills).
After the termination, if any, of
the Initial Charter relating to a
Vessel, the related Owner will be
required under the related Mortgage
to insure or cause such Vessel to be
insured against all protection and
indemnity risks including
liabilities to persons who have
suffered any loss, damage or injury
whatsoever in connection with
anything done or not done by the
Vessel, any charterer or the Owner
in connection with the Vessel or the
employment or use thereof (including
in connection with any oil or other
substance emanating from the Vessel
or any other vessel with which the
Vessel may be involved in collision)
and against liability under laws
(including environmental laws)
applicable to the use of the Vessel.
Serial Notes.......................... Golden State Petroleum, as agent for
the Owners has, pursuant to the
Indenture, issued Serial Notes on
the Original Closing Date in the
principal amounts and maturities
stated below:
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$5,200,000 principal amount of
6.360% Serial First Preferred
Mortgage Notes Due 2000.
$6,800,000 principal amount of
6.465% Serial First Preferred
Mortgage Notes Due 2001.
$7,300,000 principal amount of
6.550% Serial First Preferred
Mortgage Notes Due 2002.
$7,800,000 principal amount of
6.610% Serial First Preferred
Mortgage Notes Due 2003.
$8,300,000 principal amount of
6.700% Serial First Preferred
Mortgage Notes Due 2004.
$8,800,000 principal amount of
6.800% Serial First Preferred
Mortgage Notes Due 2005.
$7,500,000 principal amount of
6.855% Serial First Preferred
Mortgage Notes Due 2006.
Interest will be due on the Serial
Notes on each February 1 and August
1, commencing August 1, 1997.
Principal on the Serial Notes will
be due on February 1 in the year of
maturity.
Additional Notes...................... Golden State Petroleum, as agent for
the Owners, shall be entitled to
issue additional series of first
preferred mortgage notes (each, a
"Series of Additional Notes") on a
Delivery Date for a Vessel pursuant
to supplements (each, a
"Supplemental Indenture") to the
Indenture upon the satisfaction of
certain terms and conditions set
forth in the Indenture.
Each Series of Additional Notes will
mature no later than the expiration
of the Fixed Period. The proceeds of
each Series of Additional Notes,
after the payment of the cost of
issuance of such Series of
Additional Notes, will be used by
the related Owner to fund any
Additional Construction Costs of a
Vessel, which Additional
Construction Costs shall not exceed
$250,000 per Vessel without the
consent of the related Owner. Each
Series of Additional Notes will be
secured by the Collateral equally
and ratably with the Serial Notes,
the Exchange Notes, the untendered
Existing Notes, if any, and each
other Series of Additional Notes.
Each Series of Additional Notes will
be subject to mandatory redemption
by the Owners when, as and if the
Exchange Notes, the untendered
Existing Notes, if any, and the
Serial Notes are subject to
mandatory redemption. See
"Additional Notes."
Material Federal Income Tax
Consequences.......................... In the opinion of Thacher Proffitt &
Wood, counsel to the Owners, based
on the application of existing law,
and
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assuming compliance with all
provisions of the Indenture, the
Initial Charters and other relevant
documents, and the facts set forth
in this Prospectus, the Exchange
Notes will be characterized as
indebtedness of the Owners for
federal income tax purposes.
Consequently, Holders of the
Exchange Notes will be required to
include interest paid or accrued on
the Exchange Notes in gross income
in accordance with their method of
accounting for federal income tax
purposes. See "Material United
States Federal Income Tax
Consequences" regarding the
foregoing and additional information
concerning the application of
federal income tax laws.
Use of Proceeds....................... See "Prospectus Summary--Sources and
Uses of Funds Through the Delivery
Dates" for a discussion of the
application of the net proceeds of
the offering of the Existing Notes
to the cost of acquiring the
Vessels.
Ratings............................... The Exchange Notes have been
prospectively rated "Baa2", by
Moody's Investors Service, Inc.
("Moody's"), "BBB" by Standard &
Poor's Rating Group, a division of
McGraw-Hill Co., Inc. ("Standard &
Poor's") and "BBB" by Duff & Phelps
Credit Rating Co. ("Duff & Phelps")
at their initial issuance. A
security rating is not a
recommendation to buy, sell or hold
securities and may be subject to
revision or withdrawal at any time.
The ratings do not address the
possibility that Holders of the
Exchange Notes may suffer a lower
than anticipated yield.
Risk Factors.......................... Prospective Holders of the Exchange
Notes should carefully consider the
matters set forth in this Prospectus
under the caption "Risk Factors."
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Sources and Uses of Funds
Through the Delivery Dates(1)
Sources of Funds:
Proceeds from Serial Notes............................... $ 51,700,000
Proceeds from Existing Notes............................. 127,100,000
Contribution of Broker's Commissions(3).................. 4,835,208
Contribution of Services by Technical Supervisor(4)...... 2,000,000
Contribution of Owners' Items(4)......................... 4,000,000
-----------
Total Sources................................... $189,635,208
============
Use of Funds:
Delivered Cost for the Vessels(2)(3)(4)(5)............... $184,916,785
Initial Purchaser's Discounts and Commissions and
Financial Advisory Fees......................... 2,563,925
886,000
Legal, Printing, Rating and Other Fees(6).........................
Initial Debt Service Reserve Fund Amounts(7)............. 1,268,498
-----------
Total Uses...................................... $189,635,208
============
- - - - - ---------------------
(1) See "Capitalization of the Owners." Amounts shown are net of
pre-issuance accrued interest on Existing Notes subject to delayed
delivery. See "Plan of Distribution."
(2) Delivered Costs include contracted purchase price, capitalized interest
(net of interest earned on the Pre-Funding Account) on the Notes prior
to the Delivery Dates, technical supervision services, and other items
(the "Owners' Items") and Recurring Fees payable prior to the Delivery
Dates.
(3) The Builders have agreed to pay CPTC a brokerage commission of
approximately $2.4 million per Vessel based on the contracted purchase
price of the Vessels, payable in installments proportionate with
payments made to the Builders by the Owners. CPTC has agreed to
contribute all brokerage fees to the Owners and such fees will be
deposited as they are received into the Pre-Funding Account.
(4) Pursuant to the Technical Supervision Agreement, the Technical
Supervisor will contribute technical supervision services and the
Owners' Items which are reflected at their fair market value.
(5) Capitalized interest on the Notes includes, through the Delivery Date
for Vessel A, $3,473,889 and $10,743,975 to be paid on the Allocated
Principal Amount of Notes with respect to the Serial Notes and Existing
Notes, respectively, and includes, through the Delivery Date for Vessel
B, $4,486,242 and $12,872,900 to be paid on the Allocated Principal
Amount of Notes with respect to the Serial Notes and Existing Notes,
respectively.
(6) Includes estimated costs payable by the Companies in connection with
the Exchange Offer Registration Statement and/or the Shelf Registration
Statement, as the case may be.
(7) Initial Debt Service Reserve Fund Amounts includes $274,430 to be
transferred to the Debt Service Reserve Fund in respect of Vessel A and
$302,069 to be transferred to the Debt Service Reserve Fund in respect
of Vessel B, on the Delivery Date of the last Vessel. Also includes
pre-funded Special Interest of $692,000.
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Certain statistical and graphical information set forth in this
Prospectus has been supplied by R.S. Platou Economic Research a.s. ("Platou")
and McQuilling Brokerage Partners, Inc. ("McQuilling"). Each of Platou and
McQuilling has advised Golden State Petroleum and the Owners that (i) some of
the information provided is based on estimates or subjective judgments, (ii) the
information in the databases of other maritime data collection agencies may
differ from the information in their databases, (iii) while each has taken
reasonable care in the compilation of such statistical information and believes
it to be correct, data collection is subject to limited audit and validation
procedures and (iv) the provision of such information does not obviate the need
to make further appropriate inquiries.
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<PAGE>
RISK FACTORS
Prospective investors should carefully consider the risk factors
described below, in addition to the other information set forth in this
Prospectus, in connection with an investment in the Exchange Notes.
This Prospectus includes certain statements that may be deemed to be
"forward-looking statements" within the meaning of Section 27A of the Securities
Act and Section 21E of the Exchange Act. All statements, other than statements
of historical facts, included in this Prospectus that address activities, events
or developments that a party expects, believes or anticipates will or may occur
in the future, including such matters as future capital expenditures and
investments in multi-client data (including the amount and nature thereof),
backlog, repayment of debt, expansion and other development trends of the
petroleum industry, business strategies, expansion and growth of operations and
other such matters are forward-looking statements. These statements are based on
certain assumptions and analyses made by such party in light of its experience
and its perception of historical trends, current conditions, expected future
developments and other factors it believes are appropriate in the circumstances.
Such statements are subject to a number of assumptions, risks and uncertainties,
including the risk factors discussed below, general economic and business
conditions, the business opportunities (or lack thereof) that may be presented
to and pursued by such party, changes in laws or regulations and other factors,
many of which are beyond the control of such party. Prospective investors are
cautioned that any such statements are not guarantees of future performance and
that actual results or developments may differ materially from those projected
in the forward-looking statements.
LIMITED PURPOSE NATURE OF THE OWNERS
The Exchange Notes and the untendered Existing Notes, if any, represent
obligations of the Owners secured, equally and ratably with the Serial Notes and
the Additional Notes, if any, by the Collateral. See "Description of the
Exchange Notes--Security." The Exchange Notes and the untendered Existing Notes,
if any, do not represent obligations of Golden State Petroleum, the Initial
Charterer, Chevron or any person other than the Owners. The activity of the
Owners is limited to issuing the Mortgage Notes, contracting for the
construction of the Vessels with the Builders, acquiring the Vessels and
chartering the Vessels initially to the Initial Charterer and thereafter to
other charterers pursuant to Acceptable Replacement Charters or other charters.
Upon the delivery of each Vessel to the related Owner, holders must rely for
repayment upon charter hire payments from the charter of the Vessels or the
proceeds, if any, from any sale of the Vessels. Neither of the Owners has any
operating history or financial statements for any period prior to the current
period. See "Description of the Exchange Notes--Certain Covenants."
NON-PERFORMANCE BY BUILDERS
Pursuant to the Vessel A Building Contract, the Contractual Delivery
Date for Vessel A is February 1, 1999 and pursuant to the Vessel B Building
Contract, the Contractual Delivery Date for Vessel B is July 1, 1999. If the
delivery of a Vessel is or will be delayed for any reason for more than 180 days
after the Contractual Delivery Date therefor, the related Owner may either
cancel the related Building Contract and receive the Refund Amount (as described
herein) or may extend the Contractual Delivery Date and reserve the right to
liquidated damages in an amount equal to $24,200 per day; provided, however,
that such extension does not adversely affect the then current rating of the
Notes. See "Building Contracts." In the event the Owner elects to cancel a
Building Contract and receives the Refund Amount either from the Builders or
under the related Building Contract Guarantee, the Allocated Principal Amount of
the Notes for the related Vessel will be subject to mandatory redemption.
Amounts held in the Pre-Funding Account, together with proceeds of the related
Building Contract or Building Contract Guarantee, will be used to redeem Serial
Notes comprising a portion of such Notes and then the Exchange Notes and the
untendered Existing Notes, if any, comprising the remainder of such Notes.
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<PAGE>
TERMINATION OPTIONS UNDER THE INITIAL CHARTERS
Each Initial Charter has a fixed term of eighteen years. After the
Fixed Period, the Initial Charterer has the right to terminate such Initial
Charter on five Optional Termination Dates, beginning on the expiration of the
Fixed Period and on each of the four subsequent two-year anniversaries thereof.
See "The Initial Charters--Term of the Initial Charters."
The exercise of such termination options under each Initial Charter is
completely within the Initial Charterer's discretion. The Initial Charterer and
Chevron will not owe any fiduciary or other duty to the Holders and accordingly,
in making a decision whether to terminate an Initial Charter with respect to any
or all subsequent periods thereunder (each, an "Optional Period"), the Initial
Charterer will consider its own interests and not how its decision will affect
the Holders. Prospective Holders of the Exchange Notes should not base their
investment decision solely on the Initial Charters or the related Chevron
Guarantees because each Initial Charter is first terminable by the Initial
Charterer more than 11 years in advance of the Maturity Date for the Exchange
Notes and there can be no assurance that the Initial Charterer will not elect to
terminate either or both Initial Charters on the first, or any subsequent,
Optional Termination Date.
In the event that the Initial Charters are terminated, Holders of the
Exchange Notes must rely for sinking fund and interest payments and the final
principal payment on a combination of charter hire payments, if any, from the
recharter of the Vessels, the proceeds, if any, from any sale of the Vessels,
and amounts held in the Debt Service Reserve Fund. Assuming no withdrawals from
the Debt Service Reserve Fund, the amount on deposit in the Debt Service Reserve
Fund on August 1, 2007 will be no less than the Debt Service Reserve
Requirement.
The Owners cannot predict the factors that the Initial Charterer will
consider in deciding whether to exercise any of its termination options under
any Initial Charter. It is likely, however, that the Initial Charterer would
consider a variety of factors, which may include the following:
(i) Whether or not the related Vessel is surplus to the
Initial Charterer's requirements. This in turn will depend on factors such as
the general state of Chevron's business, including its refining and marketing
businesses, the locations of crude oil sources necessary to meet Chevron's
requirements at the time such termination option becomes exercisable and the
tanker market and the market for petroleum products. See "Business--The
International Tanker Market." If the Initial Charterer is faced with the need to
reduce the size of its tanker fleet, terminating an Initial Charter may be an
economically attractive option for the Initial Charterer.
(ii) Whether or not the related Vessel is suitable for the
Initial Charterer's requirements at the time such termination option becomes
exercisable. Although the Vessels have been designed to meet the Initial
Charterer's specifications, there can be no assurance that the Initial
Charterer's requirements will not change over time, or that developments in the
tanker industry or other developments such as new environmental and safety
regulations will not render the Vessels obsolete. If the Initial Charterer
decides to modernize or otherwise upgrade its tanker fleet or if market
conditions favor the use of tankers that are larger or smaller than the related
Vessel, terminating the related Initial Charter may be an economically
attractive option for the Initial Charterer.
(iii) Whether or not competitive charter hire rates are
available for the Initial Charterer in the open market. Charter hire rates are
very volatile. If, at the time a termination option becomes exercisable, oil
tankers similar to, or better than, the related Vessel are available to the
Initial Charterer on the open market at charter hire rates which are lower than
or competitive with those provided for under the Initial Charters, terminating
the related Initial Charter may be an economically attractive option for the
Initial Charterer. See "Business--The International Tanker Market" for a
discussion of the factors affecting charter hire rates.
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CERTAIN RISKS NOT RELATED TO THE INITIAL CHARTERER
The Indenture Events of Default specified in the Indenture include, in
addition to a default by the Initial Charterer under any Initial Charter or the
termination of the related Chevron Guarantee other than pursuant to its terms,
certain other events which do not depend on the Initial Charterer's compliance
with the Initial Charters or the effectiveness of the related Chevron Guarantee.
Such Indenture Events of Default include (i) the occurrence and continuance of a
Mortgage Event of Default (not involving a Charter Event of Default), (ii) a
breach of any representation, warranty or covenant of Golden State Petroleum or
the Owners in the Indenture, the Mortgage Notes or any Security Document which
continues uncured for a specified period, (iii) the occurrence of specified
events of bankruptcy with respect to Golden State Petroleum or the Owners and
(iv) the termination of any of the Security Documents other than pursuant to
their terms. See "Description of the Exchange Notes--Indenture Events of
Default." The activities of the Owners have been limited as described under "The
Owners," and each Owner will covenant to engage in no activities other than
those permitted. See "Description of the Exchange Notes--Certain Covenants" for
a description of the applicable covenants.
Any of the Indenture Events of Default discussed above could occur even
if the Initial Charterer is in full compliance with the terms of the Initial
Charters or any subsequent charterer is in full compliance under an Acceptable
Replacement Charter. For example, after the Vessels are accepted by the Owners
under the Building Contracts and at least until the first Optional Termination
Date under the Initial Charters, the Owners will rely entirely on the Initial
Charterer's charter hire payments under the Initial Charters and any earnings on
Permitted Investments to pay their expenses and make scheduled payments of
principal and interest on the Exchange Notes, the untendered Existing Notes, if
any, the Serial Notes and the Additional Notes, if any, and interest on the
Exchange Notes. Such expenses will include Recurring Fees and any other expenses
for which the Initial Charterer is not responsible under the Initial Charters.
Under each Initial Charter, the Initial Charterer will be responsible for, among
other things, all costs and expenses of operating and maintaining the related
Vessel and the costs and expenses of maintaining the documentation of the
related Vessel under the laws of the Registration Jurisdiction. See "The Initial
Charters--Flag and Name of Vessel" and "--Indemnity." While the Owners expect
that such charter hire payments and earnings will be sufficient to meet their
requirements, substantial unanticipated expenses or increases in expenses that
are not payable by the Initial Charterer under the Initial Charters could result
in the bankruptcy of an Owner, which would result in an Indenture Event of
Default. Upon the occurrence and continuance of such an Indenture Event of
Default, all principal and accrued interest on the Mortgage Notes would become
immediately due and payable. Thereafter, any amounts received by the Indenture
Trustee in the exercise of its remedies, including, for example, charter hire
payments from the Initial Charterer or any substitute charterer or proceeds from
the sale of the Vessels, would be subject to the claims of the holders of the
Mortgage Notes, equally and ratably. There can be no assurance that amounts
received by the Indenture Trustee following an Indenture Event of Default would
be sufficient to pay the principal of and accrued interest on the outstanding
Mortgage Notes.
SALE OR OPERATION OF VESSELS AFTER TERMINATION OF AN INITIAL CHARTER
If the Initial Charterer decides to exercise a termination option with
respect to either of the Initial Charters, the Initial Charterer is required to
give the related Owner (i) non-binding notice of such intent, determined on a
good faith basis, at least 12 months prior to the termination of the Fixed
Period or nine months prior to the expiration of the prior Optional Period, as
the case may be, and (ii) irrevocable notice of such exercise nine months prior
to the termination of the Fixed Period or six months prior to the termination of
the prior Optional Period, as the case may be. Upon such notice, the Manager,
pursuant to the Management Agreement, will attempt to arrange for an Acceptable
Replacement Charter. If an Acceptable Replacement Charter is commercially
unavailable, the Owner shall have the option to redeem Exchange Notes and the
untendered Existing Notes, if any, in an aggregate principal amount equal to the
Allocated Principal Amount of the Notes for the Vessel or shall direct the
Manager, pursuant to the
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Management Agreement, to solicit bids for the sale of the Vessel in respect of
which the Initial Charter is being terminated. If no bid provides net proceeds
that, together with an amount equal to the Allocable Portion of the Debt Service
Reserve Fund, at least equals the Allocated Principal Amount of the Notes for
such Vessel, plus interest accrued but unpaid thereon, the Manager will forward
to the Indenture Trustee copies of all bids for the sale of the Vessel. Unless
instructed by all of the Holders of the Exchange Notes and the untendered
Existing Notes, if any, to accept a sale bid that is below the required minimum
bid, the Manager will attempt to recharter the Vessel on such terms as the
Manager, in its discretion, deems appropriate, provided that (i) such charter
shall be at arms length, (ii) such charter shall have a termination date no
later than February 1, 2019 and (iii) the charter hire payable thereunder during
the term thereof is an amount sufficient to (A) make the mandatory sinking fund
payments, together with all interest payments on the Allocated Principal Amount
of the Notes for such Vessel, (B) pay Recurring Fees for such Vessel and the
cost of insurance not maintained by the charterer under such charter, (C) pay
the Management Fees for such Vessel and (D) pay the amount of fees and expenses
of the Indenture Trustee allocable to such Vessel. There can be no assurance
that, upon termination of the Initial Charter relating to any Vessel, an
Acceptable Replacement Charter for such Vessel will be available, that such
Vessel can be sold for an amount that, together with the Allocable Portion of
the Debt Service Reserve Fund, will be sufficient to redeem the Allocated
Principal Amount of the Notes for such Vessel and accrued interest or that,
after paying certain related operating expenses, sufficient revenues to make the
remaining sinking fund and interest payments and the final principal payment on
the Allocated Principal Amount of the Notes for such Vessel can be derived by
rechartering such Vessel.
For a discussion of some of the factors influencing the supply of and
demand for oil tanker capacity, see "Business--The International Tanker Market"
and "Cyclicality and Volatility of Tanker Industry; Dependence on Oil Market"
below.
VOLATILITY OF VESSEL VALUES
Upon the acceptance of the Vessels by the Owners under the Building
Contracts, the Exchange Notes and the untendered Existing Notes, if any, will be
secured, equally and ratably with the Serial Notes and the Additional Notes, if
any, by a Mortgage on each Vessel granted by the related Owner to the Indenture
Trustee. There can be no assurance that the value of each Vessel will at any
time equal or exceed the Allocated Principal Amount of the Mortgage Notes for
such Vessel. The fair market value of oil tankers, including the Vessels, can be
expected to fluctuate, depending upon general economic and market conditions
affecting the tanker industry and competition from other shipping companies,
types and sizes of vessels, and other modes of transportation. In addition, as
vessels grow older, they may be expected to decline significantly in value.
There can be no assurance that the proceeds from the sale of any Vessel in
connection with the Indenture Trustee's exercise of remedies following an
Indenture Event of Default would be sufficient to redeem the Allocated Principal
Amount of the Mortgage Notes for such Vessel or that any buyers would be
available under the circumstances in which such sale would occur.
See "Business--The International Tanker Market--Supply and Demand."
CYCLICALITY AND VOLATILITY OF TANKER INDUSTRY; DEPENDENCE ON OIL MARKET
Historically, the overall oil tanker business has been highly cyclical,
with attendant volatility in profitability and asset values resulting from
changes in the supply of and demand for vessel capacity. The supply of vessel
capacity is influenced by the number of new vessels built, the scrapping of
older vessels, the efficiency of the world fleet and government and industry
regulation of maritime transportation practices. The demand for vessel capacity
is influenced by global and regional economic conditions, increases and
decreases in industrial production and demand for crude oil and refined
petroleum products, political changes and armed conflicts, developments in
international trade and changes in seaborne and other transportation patterns.
Consumption of crude oil and petroleum products is affected by, among other
things, general economic conditions, oil prices, environmental concerns, weather
patterns and competition from alternative energy sources. Because many of the
factors influencing the supply of and
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demand for vessel capacity are unpredictable, the nature, timing and degree of
changes in tanker industry conditions are also unpredictable. See "Business--The
International Tanker Market." Whether or not the Initial Charterer exercises its
right to terminate either Initial Charter and whether or not the Manager and the
respective Owner will be able to find an Acceptable Replacement Charter will
likely be influenced by some or all of the foregoing factors. See "Termination
Options under the Initial Charters" above and "The Initial Charters--Term of the
Initial Charters."
PREPAYMENT CONSIDERATIONS
The Exchange Notes and the untendered Existing Notes, if any, are
subject to optional redemption (a) in whole on any Payment Date on and after the
later of August 1, 1999 or the Delivery Date of the last Vessel to be delivered
at the redemption prices described herein and through operation of the mandatory
sinking fund commencing August 1, 2007 and (b) in part if an Initial Charter is
terminated for a Vessel and an Acceptable Replacement Charter is not entered
into. See "Description of the Exchange Notes--Optional Redemption." The Notes
are subject to mandatory redemption in part if a Vessel is not accepted by the
related Owner on or before 180 days from the Contractual Delivery Date for such
Vessel or if such Vessel suffers a casualty or certain other events resulting in
a Total Loss. The Exchange Notes and the untendered Existing Notes, if any, are
also subject to mandatory redemption in part under certain other circumstances
following the termination of an Initial Charter and in the event of a Net
Reduction in Construction Costs for a Vessel. See "Description of the Exchange
Notes--Mandatory Redemption."
ENVIRONMENTAL AND OTHER REGULATIONS
The Vessels and the operation of the Vessels must comply with extensive
and changing environmental protection laws and regulations. Compliance with
these laws and regulations may entail significant expenses, including expenses
for ship modifications and changes in operating procedures. These laws and
regulations could have a material adverse effect on the business and the
operations of the Owners and any charterer of the Vessels. In particular, the
United States Oil Pollution Act of 1990, as amended ("OPA 90"), provides for
strict liability for owners, operators and demise charterers of any vessel for
certain oil pollution incidents in the waters of the United States or adjoining
shorelines or the exclusive economic zone. The United States Coast Guard has
adopted a final rule (the "Final Rule") under OPA 90 published on March 7, 1996
which requires owners, operators and demise charterers of self-propelled tanker
vessels operating in United States waters to meet the aggregate financial
responsibility requirements required under OPA 90 as well as under the
Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA").
The Initial Charterer has agreed, pursuant to the Initial Charters, to furnish
evidence of financial responsibility with respect to the Vessels to the United
States Coast Guard as required by the Final Rule.
The Final Rule requires owners, operators and demise charterers to
furnish the United States Coast Guard with evidence of financial responsibility
in compliance with the limits specified by OPA 90 and CERCLA. Owners, operators
and demise charterers can demonstrate their financial responsibility through
types of self-insurance that require that tangible assets located within the
United States be measured against worldwide liabilities, as well as through
insurance, guaranties or surety bond guaranties. Insurance has been one of the
principal methods used to satisfy financial responsibility. The Final Rule
subjects insurers and other guarantors to direct actions and would require
insurers and other guarantors to waive certain customary insurance policy
defenses. In the event that the insurer, surety or other party is sued directly,
it is limited to asserting the following defenses: (i) that the incident was
caused by the willful misconduct of the responsible party; (ii) those available
to the responsible party under OPA or CERCLA; (iii) that the claim exceeds the
amount of the guarantee; (iv) that the claim exceeds the proper amount of the
guarantee based on the gross tonnage of the vessel; and (v) that the claim is
not one made under either OPA or CERCLA. Most of the protection and indemnity
organizations ("P & I Clubs") that provide insurance to ship owners and
operators have refused to furnish evidence of insurance to owners
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and operators of vessels entering United States ports under these terms.
However, certain newly formed insurance companies, which have been deemed
acceptable guarantors by the United States Coast Guard, have furnished the
guaranties pursuant to the Final Rule. If any charterer of the Vessels is unable
to comply with the Final Rule it would have a material adverse effect on the
Owners and the Holders of the Exchange Notes. See "Business--Environmental
Regulation."
The International Maritime Organization, an agency of the United
Nations (the "IMO"), recently adopted regulations designed to reduce oil
pollution in international waters. In complying with OPA 90, the IMO regulations
and other regulations that may be adopted, the Owners and any charterer of the
Vessels may be forced to incur additional costs in meeting new maintenance and
inspection requirements, in developing contingency arrangements for potential
spills and in obtaining insurance coverage. Certain states in the United States,
the European Community and certain other countries have adopted or are also
considering adopting stricter technical and operational requirements for
tankers. Additional laws and regulations may be adopted which may have a
material adverse effect on the business and the operations of the Owners and any
charterer of the Vessels. See "Business--Environmental Regulation."
RISK OF LOSS AND LIABILITY; INSURANCE
The operation of any ocean-going vessel carries an inherent risk of
catastrophic marine disasters, environmental mishaps, cargo and property losses
or damage and business interruptions caused by adverse weather and ocean
conditions, mechanical failures, human error, political action in various
countries, war, terrorism, piracy, labor strikes and other circumstances or
events. Pursuant to the Initial Charters, the Vessels may be operated throughout
the world in any lawful trade for which the Vessels are suitable, including
carrying oil and its products. In the past, political conflicts in many regions,
particularly in the Arabian Gulf, have included attacks on tankers, mining of
waterways and other efforts to disrupt shipping in the area. Vessels trading in
such regions have also been subject to acts of terrorism and piracy. In
addition, the carriage of petroleum products is subject to the risk of spillage
and leakage. Any such event may result in increased costs or the loss of
revenues or assets, including a Vessel.
Under the Initial Charters, the Initial Charterer is entitled to
self-insure against marine and war risks relating to the Vessels and against
protection and indemnity risks relating to the Vessels during the term of the
Initial Charters and, accordingly, purchasers of the Notes cannot rely on the
existence of third-party insurance. See "The Initial Charters--Insurance" and
"--Covenants." There can be no assurance that all risks will be adequately
insured against, that any particular loss will be covered or that the Owners
will be able to procure adequate insurance coverage at commercially reasonable
rates in the future. In particular, stricter environmental regulations may
result in increased costs for, or the lack of availability of, insurance against
the risks of environmental damage or pollution. See "Environmental and Other
Regulations" above.
The Initial Charterer will, pursuant to the Initial Charters, indemnify
each Owner from damages arising from a failure to maintain any financial
responsibility requirements whether relating to oil or other pollution damage.
The Initial Charterer will also indemnify the Owners to the extent losses,
damages or expenses are incurred by the Owners relating to oil or other
pollution damage as a result of the operation of the Vessels by the Initial
Charterer.
Under OPA 90, vessel owners, operators and demise charterers are
"responsible parties" with strict liability on a joint and several basis
(subject to certain exceptions and qualifications) for all oil spill containment
and clean-up costs and other damages arising from actual or threatened oil
spills pertaining to these vessels. Although OPA 90 does not by its terms impose
liability on lenders or the holders of mortgages on vessels, there is no
specific exclusion for such entities under OPA 90. In addition, if the Indenture
Trustee or any holder exercises remedies and becomes an "owner" or "operator" or
"demise charterer" of a Vessel following a Mortgage Event of Default, such
person or entity may be subject to liability as responsible parties under OPA
90. OPA 90 limits the liability of responsible parties to the greater of $1,200
per gross ton or $10 million per tanker (subject to possible adjustment for
inflation);
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however, that limit would not apply if the incident were proximately caused by
violation of applicable United States federal safety, construction or operating
regulations or by the responsible party's gross negligence or willful
misconduct, or if the responsible party fails or refuses to report an incident
which the responsible party knows or has reason to know of, or to provide all
reasonable cooperation and assistance requested by a responsible official in
connection with oil removal activities. See "Business--Environmental
Regulation."
ENFORCEMENT OF MORTGAGES
Each of the Vessels will be registered under the laws of the Republic
of Liberia. The Mortgages will be recorded pursuant to the laws of the Republic
of Liberia and will create preferred mortgage liens under the maritime law
thereof. In addition, in order to perfect the Mortgages granted by the Owners,
the Mortgages will also be filed in the Isle of Man. Liberian law provides that
the lien of a preferred mortgage may be enforced by the mortgagee by a suit in
rem in admiralty in a proceeding against a vessel. Historically, Liberian ship
mortgages have been enforced in major commercial ports throughout the world.
However, the priority that such mortgages will have against the claims of other
lien creditors in an enforcement proceeding is generally determined by, and will
vary in accordance with, the laws of the country where a proceeding is brought.
Generally, such a preferred mortgage lien will rank prior to all subsequent
maritime liens other than certain other preferred maritime liens, including
liens for damages arising out of tort (including claims for oil pollution),
liens for crew's wages, liens for general average and salvage. Under Liberian
law, a preferred mortgage will also rank after certain other maritime liens,
including maritime liens for failure to pay tonnage taxes and annual fees. Under
United States law, a foreign preferred ship mortgage will also rank after
certain other maritime liens, including those for repairs, supplies, towage, use
of drydock or marine railways or other necessaries, performed or supplied in the
United States. Since each Vessel will trade throughout the world and since a
mortgage generally will be enforceable against a Vessel only in the jurisdiction
in which it is physically present, there can be no assurance that if enforcement
proceedings are commenced against a Vessel, the Vessel will be located in a
jurisdiction having the same mortgage enforcement procedures and lien priorities
as, for example, Liberia or the United States. However, upon the occurrence of a
Mortgage Event of Default relating to a Vessel, the Indenture Trustee may be
able to effect control over the Vessel to direct it to a desirable jurisdiction
to arrest the Vessel pursuant to judicial foreclosure proceedings. See
"Description of the Exchange Notes--Indenture Remedies."
Although each of the Vessels is owned by a separate Owner, under
certain circumstances a parent company and all of the shipowning affiliates in a
group under common control could be held liable for damages or debts owed by one
of the affiliates, including liabilities for spills under OPA 90 or other
environmental laws. Therefore, it is possible that all of the assets of an Owner
could be subject to execution upon a judgment against such Owner and any other
Owner, and that such judgment lien could rank ahead of the Mortgages. See "Risk
of Loss and Liability; Insurance" above.
FRAUDULENT CONVEYANCE STATUTES
The granting of the security interest in and to the Collateral could be
subject to review under relevant fraudulent conveyance statutes and other
applicable insolvency laws (the "Fraudulent Conveyance Laws") in a bankruptcy or
other proceeding involving one or more of the Owners. Due to the nature of the
business of the Owners and uncertainty as to where a bankruptcy, vessel
foreclosure or other relevant proceeding might be commenced, it is not possible
to predict where any such proceeding or attack might be brought or made or the
law that the court might apply.
Under the fraudulent conveyance law of the Isle of Man (the
jurisdiction in which each of the Owners is incorporated), if a court were to
find that, with respect to either Owner, at the time the interests in the
Collateral were granted (the "Transfer"), it (a) made such Transfer with actual
intent to prefer or defraud any present or future creditor or (b) received less
than a reasonably equivalent value or fair consideration for the Transfer or (c)
intended to incur, or believed that it would incur, debts
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beyond its ability to pay as they matured (as the foregoing terms are defined in
or interpreted under the relevant Fraudulent Conveyance Laws), such court could
avoid the Transfer in whole or in part. To the extent that a Transfer by either
Owner exceeds the consideration received by it, the determination of whether the
Transfer in question is a fraudulent conveyance depends on (1) whether the
Transfer so exceeds the value and benefit received by such Owner that, at least
to the extent of such excess, the Owner did not receive reasonably equivalent
value or fair consideration for the Transfer; and, if so, then (2) whether
following the valuation of the assets and liabilities of such Owner it is
determined that such Owner is or has been rendered insolvent. While there can be
no assurance that a court, viewing the transaction with hindsight, would
determine that a particular Owner received fair value for its Transfer, or was
not rendered insolvent by the pertinent Transfer, to the extent it exceeded the
value of the consideration received by that Owner, each Owner believes that it
will receive proper consideration for its respective Transfer and that no such
Owner will be rendered insolvent by the contemplated Transfers. No assurance,
however, can be given that a court would concur with such belief.
RISKS RELATING TO ENFORCEMENT OF JUDGMENTS AGAINST THE OWNERS
The Owners are incorporated in the Isle of Man. As a result, it may be
difficult to obtain a judgment in the Isle of Man in an original action or to
enforce in the Isle of Man judgments obtained in the United States courts,
predicated upon United States securities laws.
ABSENCE OF PUBLIC MARKET FOR THE EXCHANGE NOTES
The Existing Notes are currently owned by a relatively small number of
beneficial owners. The Existing Notes have not been registered under the
Securities Act and will continue to be subject to restrictions on
transferability to the extent that they are not exchanged for the Exchange
Notes. The Exchange Notes will constitute a new issue of securities with no
established trading market. Although the Exchange Notes will be permitted to be
resold or otherwise transferred by Holders who have met the conditions of the
Exchange Offer without compliance with the registration requirements under the
Securities Act, Golden State Petroleum and the Owners do not intend to list the
Exchange Notes on any national securities exchange or to seek the admission
thereof to trading on the Nasdaq National Market. Accordingly, no assurance can
be given that an active public or other market will develop for the Exchange
Notes or as to the existence of or liquidity of the trading market for the
Exchange Notes. See "Plan of Distribution."
EXCHANGE OFFER PROCEDURE
The issuance of the Exchange Notes pursuant to the Exchange Offer will
be made only after a timely receipt by the Companies or their agents of a
properly completed and duly executed Letter of Transmittal, or an agreement to
be bound thereby, and all other required documents. Therefore, Holders of
Existing Notes desiring to tender such Existing Notes in exchange for Exchange
Notes should allow sufficient time to ensure timely delivery. The Companies are
under no duty to give notification of defects or irregularities with respect to
tenders of Existing Notes for exchange. Existing Notes that are not tendered or
are tendered but not accepted will, following the consummation of the Exchange
Offer, continue to be subject to the existing restrictions on transfer thereof,
and upon consummation of the Exchange Offer, the registration rights under the
Registration Rights Agreement generally will terminate. In addition, any Holder
of Existing Notes who tenders in the Exchange Offer for the purpose of
participating in a distribution of the Exchange Notes may be deemed to have
received restricted securities and, if so, will be required to comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any resale transaction. Each broker-dealer that receives
Exchange Notes for its own account in exchange for Existing Notes, where such
Existing Notes were acquired by such broker-dealer as a result of market-making
activities or other trading activities, must acknowledge that it will deliver a
prospectus in connection with any resale of such Exchange Notes. To the extent
that Existing Notes are tendered and accepted in the Exchange Offer, the
liquidity of untendered and tendered but unaccepted Existing Notes could be
adversely affected. See "The Exchange Offer."
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THE EXCHANGE OFFER
PURPOSE AND EFFECT OF THE EXCHANGE OFFER
The Existing Notes were issued by Golden State Petroleum, as agent on
behalf of the Owners, in December 1996, to Donaldson, Lufkin & Jenrette
Securities Corporation (the "Initial Purchaser"). The Initial Purchaser
subsequently placed the Existing Notes with qualified institutional buyers in
reliance on Rule 144A under the Securities Act. As a condition to the purchase
of the Existing Notes by the Initial Purchaser, the Companies entered into the
Registration Rights Agreement with the Initial Purchaser, which requires, among
other things, that promptly following the sale of the Existing Notes to the
Initial Purchaser, the Companies would (i) file with the Commission a
registration statement under the Securities Act with respect to a registered
offer to exchange the Existing Notes for the Exchange Notes of Golden State
Petroleum identical in all material respects to the Existing Notes, (ii) use
their respective reasonable best efforts to cause such registration statement to
become effective under the Securities Act and (iii) use their respective
reasonable best efforts to cause the Exchange Offer to be consummated on the
earliest practical date after such registration statement becomes effective. A
copy of the Registration Rights Agreement has been filed as an exhibit to the
Registration Statement of which this Prospectus is a part.
The Companies have entered into an agreement pursuant to which the
Companies have designated the Manager on behalf of the Companies, to take
actions, make decisions and give consents relating to the Registration Rights
Agreement. In circumstances where the Registration Rights Agreement fails to
specify how such action is to be taken, such decision is to be made or such
consent is to be granted among the Companies. In consideration for such
designation, the Manager has agreed to pay all expenses of this Exchange Offer.
A copy of such agreement has been filed as an exhibit to the Registration
Statement of which this Prospectus is a part.
Following the consummation of the Exchange Offer, Holders of the
Existing Notes who did not tender their Existing Notes generally will not have
any further registration rights under the Registration Rights Agreement, and
such Existing Notes will continue to be subject to certain restrictions on
transfer. Accordingly, the liquidity of the market for such Existing Notes could
be adversely affected.
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions set forth in this
Prospectus and in the Letter of Transmittal, the Companies will accept for
exchange any and all Existing Notes validly tendered and not withdrawn prior to
5:00 p.m., New York City time, on the Expiration Date. Golden State Petroleum,
as agent on behalf of the Owners, will issue up to $127,100,000 principal amount
of Exchange Notes in exchange for a like principal amount of outstanding
Existing Notes accepted in the Exchange Offer. Holders may tender all or a
portion of their Existing Notes pursuant to the Exchange Offer. However,
Existing Notes may be tendered only in minimum denominations of $100,000 and
integral multiples of $1,000 in excess thereof.
The form and terms of the Exchange Notes will be identical to the form
and terms of the Existing Notes except that (i) the Exchange Notes have been
registered under the Securities Act and hence will not bear legends restricting
the transfer thereof and (ii) the Holders of the Exchange Notes will not be
entitled to certain rights under the Registration Rights Agreement, which rights
generally will terminate upon consummation of the Exchange Offer. The Exchange
Notes will evidence the same debt as the Existing Notes tendered in exchange
therefor and will be entitled to the benefits of the Indenture.
As of the date of this Prospectus, $127,100,000 aggregate principal
amount of the Existing Notes was outstanding and registered in the name of Cede
& Co., as nominee for DTC. The Companies have fixed the close of business on
_________________, 1997, as the record date for the Exchange Offer for purposes
of determining the persons to whom this Prospectus, the Letter of Transmittal,
the Notice of Guaranteed Delivery and the Isle of Man Information will be mailed
initially.
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Holders of Existing Notes do not have any appraisal or dissenters'
rights under the General Corporation Law of the Isle of Man or the Indenture in
connection with the Exchange Offer. The Companies intend to conduct the Exchange
Offer in accordance with the applicable requirements of the Exchange Act and the
rules and regulations of the Commission thereunder, including Rule 14e-1
thereunder.
The Companies shall be deemed to have accepted validly tendered
Existing Notes when, as and if the Companies have given oral or written notice
thereof to the Exchange Agent. The Exchange Agent will act as agent for the
tendering Holders for the purpose of receiving the Exchange Notes from the
Companies.
If any tendered Existing Notes are not accepted for exchange because of
an invalid tender, the occurrence of certain other events set forth herein or
otherwise, the certificates for any such unaccepted Existing Notes will be
returned, without expense, to the tendering Holder thereof as promptly as
practicable after the Expiration Date.
Holders who tender Existing Notes in the Exchange Offer will not be
required to pay brokerage commissions or fees or, subject to the instructions in
the Letter of Transmittal, transfer taxes with respect to the exchange of Notes
pursuant to the Exchange Offer. The Manager has agreed to pay all charges and
expenses in connection with the Exchange Offer. See "--Fees and Expenses" and
"--Transfer Taxes."
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The term "Expiration Date" shall mean 5:00 p.m., New York City time, on
_________________, 1997, unless the Companies, in their sole discretion, extend
the Exchange Offer, in which case the term "Expiration Date" shall mean the
latest date and time to which the Exchange Offer is extended.
The Companies reserve the right, in their sole discretion, (i) to delay
the acceptance of any Existing Notes, to extend the Exchange Offer or to
terminate the Exchange Offer if any of the conditions set forth below under
"--Conditions" shall not have been satisfied, by giving oral or written notice
of such delay, extension or termination to the Exchange Agent or (ii) to amend
the terms of the Exchange Offer in any manner. The Companies will give oral or
written notice of any extension, amendment, non-acceptance or termination to the
Holders of the Existing Notes as promptly as practicable, such notice in the
case of any extension to be issued by means of a press release or other public
announcement no later than 9:00 a.m., New York City time, on the next business
day after the previously scheduled Expiration Date.
If the Exchange Offer is amended in a manner determined by the
Companies to constitute a material change, the Companies will promptly disclose
such amendment by means of a prospectus supplement that will be distributed to
the registered Holders, and, depending upon the significance of the amendment
and the manner of disclosure to the registered Holders, the Companies will
extend the Exchange Offer for a period of five to ten Business Days if the
Exchange Offer would otherwise expire during such five to ten Business Day
period.
Without limiting the manner in which the Companies may choose to make
public announcement of any delay, extension, amendment or termination of the
Exchange Offer, the Companies shall have no obligation to publish, advertise or
otherwise communicate any such public announcement, other than by making a
timely release to the Dow Jones News Service.
Holders of Existing Notes do not have any appraisal or dissenters'
rights in connection with the Exchange Offer. The Company intends to conduct the
Exchange Offer in accordance with the applicable requirements of the Exchange
Act and the rules and regulations of the Commission thereunder.
INTEREST ON THE EXCHANGE NOTES
The Exchange Notes will be deemed to accrue interest from December 24,
1996 (the date of original issuance of the Existing Notes) or from the date of
the last periodic payment of interest on such
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Existing Notes, whichever is later. Interest on the Exchange Notes will be
payable semi-annually on each February 1 and August 1, commencing on August 1,
1997.
PROCEDURES FOR TENDERING
Only a Holder of Existing Notes may tender such Existing Notes in the
Exchange Offer. To tender in the Exchange Offer, a Holder must either (i)
complete, sign and date the Letter of Transmittal, or a facsimile thereof, have
the signatures thereon guaranteed (if required by the Letter of Transmittal) and
mail or otherwise deliver such Letter of Transmittal or such facsimile, together
with the Existing Notes and any other required documents, to the Exchange Agent
or (ii) in the case of a book-entry transfer, confirm book-entry transfer of the
Existing Notes into an equal principal amount of Exchange Notes into the
Exchange Agent's account at DTC, in either case prior to 5:00 p.m., New York
City time, on the Expiration Date. To be tendered effectively, the Existing
Notes, Letter of Transmittal and other required documents must be received by
the Exchange Agent at the address set forth below under "--Exchange Agent" or,
if book-entry transfer is used, electronic instructions with regard to the
Existing Notes, the Letter of Transmittal and all other required documents must
be received by DTC, in each case prior to 5:00 p.m., New York City time, on the
Expiration Date. A Holder of Existing Notes may also tender in the Exchange
Offer by complying with the procedure set forth under "--Guaranteed Delivery
Procedures."
The Companies understand that the Exchange Agent will make a request
promptly after the date of this Prospectus to establish accounts with respect to
the Existing Notes at DTC for the purpose of facilitating the Exchange Offer,
and subject to the establishment thereof, any financial institution that is a
participant in DTC's system may make book-entry delivery of the Existing Notes
by causing DTC to transfer such Existing Notes into the Exchange Agent's account
with respect to the Existing Notes in accordance with DTC's procedures for such
transfer.
DTC's Automated Tender Offer Program is the only method of processing
exchange offers through DTC. To accept the Exchange Offer through ATOP,
participants in DTC must send electronic instructions to DTC through DTC's
communication system in place of sending a signed, hard copy Letter of
Transmittal. DTC is obligated to communicate those electronic instructions to
the Exchange Agent. To tender Existing Notes through ATOP, the electronic
instructions sent to DTC and transmitted by DTC to the Exchange Agent must
contain the character by which the participant acknowledges its receipt of, and
agrees to be bound by, the Letter of Transmittal.
By executing or electronically confirming the Letter of Transmittal,
each Holder will make to the Companies the representations set forth below in
the second paragraph under "--Resale of Exchange Notes."
The tender by a Holder and the acceptance thereof by the Companies will
constitute agreement between such Holder and the Companies in accordance with
the terms and subject to the conditions set forth herein and in the Letter of
Transmittal.
THE METHOD OF DELIVERY OF EXISTING NOTES, THE LETTER OF TRANSMITTAL AND
ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH DTC, TO THE EXCHANGE
AGENT IS AT THE ELECTION AND RISK OF THE HOLDER. INSTEAD OF DELIVERY BY MAIL, IT
IS RECOMMENDED THAT HOLDERS USE AN OVERNIGHT OR HAND DELIVERY SERVICE. IN ALL
CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE DELIVERY TO THE EXCHANGE
AGENT BEFORE THE EXPIRATION DATE. NO LETTER OF TRANSMITTAL OR EXISTING NOTES
SHOULD BE SENT TO ANY OF THE COMPANIES. HOLDERS MAY REQUEST THEIR RESPECTIVE
BROKERS, DEALERS, COMMERCIAL BANKS, TRUST COMPANIES OR NOMINEES TO EFFECT THE
ABOVE TRANSACTIONS FOR SUCH HOLDERS.
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Any beneficial owner whose Existing Notes are registered in the name of
a broker, dealer, commercial bank, trust company or other nominee and who wishes
to tender should contact the registered Holder promptly and instruct such
registered Holder to tender on such beneficial owner's behalf.
Signatures on the Letter of Transmittal or a notice of withdrawal, as
the case may be, must be guaranteed by an Eligible Institution (as defined
below) unless the Existing Notes tendered pursuant thereto are tendered (i) by a
registered Holder who has not completed the box entitled "Special Registration
Instructions" or "Special Delivery Instructions" on the Letter of Transmittal or
(ii) for the account of an Eligible Institution. In the event that signatures on
a Letter of Transmittal or a notice of withdrawal, as the case may be, are
required to be guaranteed, such guarantee must be by a member firm of a
registered national securities exchange or of the National Association of
Securities Dealers, Inc., a commercial bank or trust company having an office or
correspondent in the United States or an "eligible guarantor institution" within
the meaning of Rule 17Ad-15 under the Exchange Act (an "Eligible Institution").
If the Letter of Transmittal is signed by a person other than the
registered Holder of any Existing Notes listed therein, such Existing Notes must
be endorsed or accompanied by a properly completed bond power, signed by such
registered Holder as such registered Holder's name appears on such Existing
Notes with the signature thereon guaranteed by an Eligible Institution.
If the Letter of Transmittal or any Existing Notes or bond powers are
signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity, such persons should so indicate when signing, and unless waived by the
Companies, evidence satisfactory to the Companies of their authority to so act
must be submitted with the Letter of Transmittal.
All questions as to the validity, form, eligibility (including time of
receipt), acceptance of tendered Existing Notes and withdrawal of tendered
Existing Notes will be determined by the Companies, in their sole discretion,
which determination will be final and binding. The Companies reserve the
absolute right to reject any and all Existing Notes not properly tendered or any
Existing Notes the acceptance of which would, in the opinion of counsel for the
Companies, be unlawful. The Companies also reserve the right to waive any
defects, irregularities or conditions of tender as to particular Existing Notes.
The Companies' interpretation of the terms and conditions of the Exchange Offer
(including the instructions in the Letter of Transmittal) will be final and
binding on all parties. Unless waived, any defects or irregularities in
connection with tenders of Existing Notes must be cured within such time as the
Companies shall determine. Although the Companies intend to notify Holders of
defects or irregularities with respect to tenders of Existing Notes, none of the
Companies, the Exchange Agent or any other person shall incur any liability for
failure to give such notification. Tenders of Existing Notes will not be deemed
to have been made until such defects or irregularities have been cured or
waived. Any Existing Notes received by the Exchange Agent that are not properly
tendered and as to which the defects or irregularities have not been cured or
waived will be returned by the Exchange Agent to the tendering Holders, unless
otherwise provided in the Letter of Transmittal, as soon as practicable
following the Expiration Date.
GUARANTEED DELIVERY PROCEDURES
Holders not holding through DTC or Cede & Co. who wish to tender their
Existing Notes and (i) whose Existing Notes are not immediately available, (ii)
who cannot deliver their Existing Notes, the Letter of Transmittal or any other
required documents to the Exchange Agent or (iii) who cannot complete the
procedures for book-entry transfer, prior to the Expiration Date, may effect a
tender if:
(a) the tender is made through an Eligible Institution;
(b) prior to the Expiration Date, the Exchange Agent receives
from such Eligible Institution a properly completed and duly executed
Notice of Guaranteed Delivery (by facsimile
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transmission, mail or hand delivery) setting forth the name and address
of the Holder, the certificate number(s) of such Existing Notes and the
principal amount of Existing Notes tendered, stating that the tender is
being made thereby and guaranteeing that, within five New York Stock
Exchange trading days after the Expiration Date or the execution of the
Notice of Guaranteed Delivery, the Letter of Transmittal (or facsimile
thereof), together with the certificate(s) representing the Existing
Notes (or a confirmation of book-entry transfer of such Existing Notes
into the Exchange Agent's account at the Book-Entry Transfer Facility)
and any other documents required by the Letter of Transmittal, will be
deposited by the Eligible Institution with the Exchange Agent; and
(c) such properly completed and executed Letter of Transmittal
(or facsimile thereof), as well as the certificate(s) representing all
tendered Existing Notes in proper form for transfer (or a confirmation
of book-entry transfer of such Existing Notes into the Exchange Agent's
account at the Book-Entry Transfer Facility) and all other documents
required by the Letter of Transmittal, are received by the Exchange
Agent within five New York Stock Exchange trading days after the
Expiration Date.
WITHDRAWALS OF TENDERS
Except as otherwise provided herein, tenders of Existing Notes may be
withdrawn at any time prior to 5:00 p.m., New York City time, on the Expiration
Date.
To withdraw a tender of Existing Notes in the Exchange Offer, a written
or facsimile transmission notice of withdrawal (or a written or electronic ATOP
transmission notice of withdrawal for DTC participants) must be received by the
Exchange Agent at its address set forth herein (or received into the Exchange
Agent's account at DTC) prior to 5:00 p.m., New York City time, on the
Expiration Date. Any such notice of withdrawal must (i) specify the name of the
person having deposited the Existing Notes to be withdrawn (the "Depositor"),
(ii) identify the Existing Notes to be withdrawn, (iii) be signed or confirmed
by the Holder in the same manner as the original signature on or confirmation of
the Letter of Transmittal by which such Existing Notes were tendered (including
any required signature guarantees) or be accompanied by documents of transfer
sufficient to have the Indenture Trustee with respect to the Existing Notes
register the transfer of such Existing Notes into the name of the person
withdrawing the tender and (iv) specify the name in which any such Existing
Notes are to be registered, if different from that of the Depositor. If Existing
Notes have been delivered pursuant to the procedures for book-entry transfer
described above, any notice of withdrawal must also specify the name and number
of the account at DTC, and must otherwise comply with DTC's procedures. All
questions as to the validity, form and eligibility (including time of receipt)
of such notices will be determined by the Companies, whose determination shall
be final and binding on all parties. Any Existing Notes so withdrawn will be
deemed not to have been validly tendered for purposes of the Exchange Offer and
no Exchange Notes will be issued with respect thereto unless the Existing Notes
so withdrawn are validly retendered. Any Existing Notes which have been tendered
but which are not accepted for exchange, will be returned to the Holder thereof
without cost to such Holder as soon as practicable after withdrawal, rejection
of tender or termination of the Exchange Offer. Properly withdrawn Existing
Notes may be retendered by following one of the procedures described above under
"--Procedures for Tendering" at any time prior to the Expiration Date.
CONDITIONS
Notwithstanding any other term of the Exchange Offer, the Companies
shall not be required to accept for exchange, or to Exchange Notes for, any
Existing Notes, and may terminate or amend the Exchange Offer as provided herein
before the acceptance of such Existing Notes, if:
(a) any action or proceeding is instituted or threatened in
any court or by or before any governmental agency with respect to the
Exchange Offer which, in the sole judgment of the
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Companies, might materially impair the ability of the Companies to
proceed with the Exchange Offer or any material adverse development has
occurred in any existing action or proceeding with respect to the
Companies or any of their respective subsidiaries; or
(b) any change, or any development involving a prospective
change, in the business or financial affairs of the Companies or any of
their respective subsidiaries has occurred which, in the sole judgment
of the Companies might materially impair the ability of the Companies
to proceed with the Exchange Offer; or
(c) any law, statute, rule, regulation or interpretation by
the staff of the Commission is proposed, adopted or enacted, which, in
the sole judgment of the Companies, might materially impair the ability
of the Companies to proceed with the Exchange Offer or materially
impair the contemplated benefits of the Exchange Offer to the
Companies; or
(d) any governmental approval has not been obtained, which
approval the Companies shall, in their sole discretion, deem necessary
for the consummation of the Exchange Offer as contemplated hereby; or
(e) the Companies believe there has been a change in law or
applicable interpretation thereof by the staff of the Commission such
that the Exchange Notes to be received by Holders in the Exchange Offer
would not be, upon receipt, transferable by each such Holder (other
than any Holder who is an affiliate of the Companies, who acquires the
Exchange Notes outside the ordinary course of its business or who has
any arrangement or understanding with any person to participate in the
Exchange Offer for the purpose of distributing the Exchange Notes)
without restrictions under the Securities Act.
If the Companies determine in their sole discretion that any of the
conditions are not satisfied, the Companies may (i) refuse to accept any
Existing Notes and return all tendered Existing Notes to the tendering Holders,
(ii) extend the Exchange Offer and retain all Existing Notes tendered prior to
the expiration of the Exchange Offer, subject, however, to the rights of Holders
to withdraw such Existing Notes (see "--Withdrawals of Tenders") or (iii) waive
such unsatisfied conditions with respect to the Exchange Offer and accept all
properly tendered Existing Notes which have not been withdrawn. If such waiver
constitutes a material change to the Exchange Offer, the Companies will promptly
disclose such waiver by means of a prospectus supplement that will be
distributed to the registered Holders, and, depending upon the significance of
the waiver and the manner of disclosure to the registered Holders, the Companies
will extend the Exchange Offer for a period of five to ten Business Days if the
Exchange Offer would otherwise expire during such five to ten-day period.
EXCHANGE AGENT
United States Trust Company of New York has been appointed as Exchange
Agent for the Exchange Offer. Questions and requests for assistance or for
additional copies of this Prospectus, the Letter of Transmittal or the Notice of
Guaranteed Delivery should be directed to the Exchange Agent addressed as
follows:
By Registered or Certified Mail:
United States Trust Company of New York
P.O. Box 844
Cooper Station
New York, NY 10276-0844
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BY HAND:
United States Trust Company of New York
111 Broadway
Lower Level
Corporate Trust Window
New York, NY 10006
BY OVERNIGHT MAIL OR COURIER:
United States Trust Company of New York
770 Broadway
13th Floor
New York, NY 10003
Attn: Corporate Trust Services
BY FACSIMILE:
United States Trust Company of New York
(212) 420-6152; confirm by telephone (800) 548-6565
FEES AND EXPENSES
The principal solicitation is being made by mail; however, additional
solicitation may be made by telegraph, telephone or in person by officers and
regular employees of the Companies and their affiliates. No additional
compensation will be paid to any such officers and employees who engage in
soliciting tenders. The Companies have not retained any dealer-manager in
connection with the Exchange Offer and will not make any payments to brokers or
others soliciting acceptances of the Exchange Offer. The Manager, however, will
pay the Exchange Agent reasonable and customary fees for its services and will
reimburse it for its reasonable out-of-pocket expenses in connection therewith
and pay other registration expenses, including fees and expenses of the
Indenture Trustee, filing fees, blue sky fees and printing and distribution
expenses.
The estimated cash expenses to be incurred in connection with the
Exchange Offer will be paid by the Companies and are estimated in the aggregate
to be $_________.
TRANSFER TAXES
The Manager will pay all transfer taxes, if any, applicable to the
exchange of the Existing Notes pursuant to the Exchange Offer. If, however,
certificates representing the Exchange Notes or the Existing Notes for principal
amounts not tendered or accepted for exchange are to be delivered to, or are to
be issued in the name of, any person other than the registered Holder of the
Existing Notes tendered, or if tendered Existing Notes are registered in the
name of any person other than the person signing the Letter of Transmittal, or
if a transfer tax is imposed for any reason other than the exchange of the Notes
pursuant to the Exchange Offer, then the amount of any such transfer taxes
(whether imposed on the registered Holder or any other person) will be payable
by the tendering Holder.
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ACCOUNTING TREATMENT
The Exchange Notes will be recorded at the same carrying value as the
Existing Notes, which is face value, as reflected in the accounting records of
the Owners on the date of exchange. Accordingly, no gain or loss for accounting
purposes will be recognized.
RESALE OF EXCHANGE NOTES
Based on interpretations by the staff of the Commission set forth in
no-action letters issued to third parties, the Companies believe that Exchange
Notes issued pursuant to the Exchange Offer in exchange for the Existing Notes
may be offered for resale, resold or otherwise transferred by any Holder of such
Exchange Notes (other than any such Holder which is an "affiliate" of the
Companies within the meaning of Rule 405 under the Securities Act) without
compliance with the registration and prospectus delivery provisions of the
Securities Act, provided that such Exchange Notes are acquired in the ordinary
course of such Holder's business and such Holder does not intend to participate
and has no arrangement or understanding with any person to participate in the
distribution of such Exchange Notes. Any Holder who is an affiliate of the
Companies, who acquires the Exchange Notes outside the ordinary course of its
business or who tenders in the Exchange Offer with the intention to participate,
or for the purpose of participating, in a distribution of the Exchange Notes may
not rely on the position of the staff of the Commission enunciated in Exxon
Capital Holdings Corporation (available May 13, 1988) and Morgan Stanley & Co.
Incorporated (available June 5, 1991), or similar no-action letters, but rather
must comply with the registration and prospectus delivery requirements of the
Securities Act in connection with a secondary resale transaction. In addition,
any such resale transaction should be covered by an effective registration
statement containing the selling security holders information required by the
applicable provisions of Item 507 or 508, as appropriate, of Regulation S-K of
the Securities Act. Each broker-dealer that receives Exchange Notes for its own
account in exchange for Existing Notes, where such Existing Notes were acquired
by such broker-dealer as a result of market-making activities or other trading
activities, may be a statutory underwriter and must acknowledge that it will
deliver a prospectus in connection with any resale of such Exchange Notes. See
"Plan of Distribution."
By tendering in the Exchange Offer, each Holder will represent to the
Companies that, among other things, (i) the Exchange Notes acquired pursuant to
the Exchange Offer are being obtained in the ordinary course of business of the
person receiving such Exchange Notes, (ii) the Holder has no arrangement or
understanding with any person to participate in the distribution of such
Exchange Notes and (iii) the Holder acknowledges that if it participates in the
Exchange Offer for the purpose of distributing the Exchange Notes (a) it must,
in the absence of an exemption therefrom, comply with the registration and
prospectus delivery requirements of the Securities Act in connection with any
resale of the Exchange Notes and cannot rely on the no-action letters referenced
above and (b) failure to comply with such requirements in such instance could
result in such Holder incurring liability under the Securities Act for which
such Holder is not indemnified by the Companies. Further, by tendering in the
Exchange Offer, each Holder represents to the Companies either that it is not an
"affiliate" (as defined under Rule 405 of the Securities Act) of the Companies
or, if it may be deemed an "affiliate" of the Companies that such Holder
understands and acknowledges that the Exchange Notes may not be offered for
resale, resold or otherwise transferred by that Holder without complying with
the applicable registration and prospectus delivery requirements of the
Securities Act. A Holder who is a broker-dealer must also acknowledge to the
Companies that it acquired the Existing Notes as a result of market-making
activities or other trading activities.
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CONSEQUENCES OF FAILURE TO EXCHANGE
As a result of the making of this Exchange Offer, the Companies
generally will have fulfilled their obligations under the Registration Rights
Agreement, and Holders of Existing Notes who do not tender their Existing Notes
generally will not have any further registration rights under the Registration
Rights Agreement or otherwise. Accordingly, any Holder of Existing Notes that
does not exchange such Existing Notes for Exchange Notes will continue to hold
such Existing Notes and will be entitled to all the rights, and subject to all
the limitations, applicable thereto under the Indenture, except to the extent
such rights or limitations, by their terms, terminate or cease to have further
effectiveness as a result of the Exchange Offer.
Existing Notes that are not exchanged for Exchange Notes pursuant to
the Exchange Offer will remain restricted securities. Accordingly, such Existing
Notes may be resold only (i) to Golden State Petroleum, as agent on behalf of
the Owners (upon redemption thereof or otherwise), (ii) pursuant to an effective
registration statement under the Securities Act, (iii) so long as the Existing
Notes are eligible for resale pursuant to Rule 144A, to a qualified
institutional buyer within the meaning of Rule 144A under the Securities Act in
a transaction meeting the requirements of Rule 144A, (iv) outside the United
States to a foreign person pursuant to the exemption from the registration
requirements of the Securities Act provided by Regulation S thereunder or (v)
pursuant to another available exemption from the registration requirements of
the Securities Act, in each case in accordance with any applicable securities
laws of any state of the United States.
Because the Exchange Offer is for any and all Existing Notes, the
number of Existing Notes tendered and exchanged in the Exchange Offer will
reduce the principal amount of Existing Notes outstanding. As a result, the
liquidity of any remaining Existing Notes may be substantially reduced.
OTHER
Participation in the Exchange Offer is voluntary, and Holders should
carefully consider whether to accept. Holders of the Existing Notes are urged to
consult their financial and tax advisors in making their own decision on what
action to take.
Golden State Petroleum, as agent on behalf of the Owners, may in the
future seek to acquire untendered Existing Notes in open market or privately
negotiated transactions, through subsequent exchange offers or otherwise. Golden
State Petroleum, as agent on behalf of the Owners, has no present plans to
acquire any Existing Notes that are not tendered in the Exchange Offer or to
file a registration statement to permit resales of any untendered Existing
Notes.
USE OF PROCEEDS
The Exchange Offer is intended to satisfy certain of the Companies'
obligations under the Registration Rights Agreement. The Owners will not receive
any cash proceeds from the issuance of the Exchange Notes offered hereby. In
consideration for issuing the Exchange Notes as contemplated in this Prospectus,
the Owners will receive in exchange Existing Notes in like principal amount, the
form and terms of which are substantially the same as the form and terms of the
Exchange Notes, except as otherwise described herein. The Existing Notes
surrendered in exchange for the Exchange Notes will be retired and canceled and
cannot be reissued. Accordingly, issuance of the Exchange Notes will not result
in any increase in the indebtedness of the Owners.
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CAPITALIZATION OF THE OWNERS
The following unaudited table sets forth the capitalization of the
Owners at December 19, 1996, and as adjusted to give effect to the sale of the
Existing Notes (assuming all Existing Notes were delivered on the Original
Closing Date) and the application of the estimated net proceeds therefrom. See
also "Prospectus Summary--Sources and Uses of Funds Through the Delivery Dates,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Capital Resources and Liquidity" and "Plan of Distribution."
Golden State Petro (IOM I-A) PLC*
December 19, 1996
-----------------------------------------------------
Actual As Adjusted
Serial Notes............... - $24,900,000
Existing Notes............. - 63,550,000
Total debt........ - $88,450,000
Golden State Petro (IOM I-B) PLC*
December 19, 1996
-----------------------------------------------------
Actual As Adjusted
Serial Notes............... - $26,800,000
Existing Notes............. - 63,550,000
Total debt........ - $90,350,000
* The above capitalization table does not reflect approximately $5.4 million per
Vessel in contributed brokerage commissions, technical services and Owners'
Items that are expected to be contributed during the construction of the
Vessels. The Owners anticipate that a portion of these amounts will be reflected
as a reduction of the Delivered Cost of the Vessels for financial reporting
purposes.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
Each Owner was formed as an Isle of Man public limited company for the
purpose of acquiring and chartering one of the Vessels. As of the Original
Closing Date, the Owners had no operating history and had nominal
capitalization.
On the Original Closing Date, the Owners (i) received the proceeds, net
of the Initial Purchaser's discounts and commissions and financial advisory
fees, from the sale of the Serial Notes and the Existing Notes, (ii) paid the
first installment of the purchase price of the Vessels, (iii) paid certain
legal, printing, rating and other fees and expenses, (iv) received, as a
contribution from CPTC, the brokerage commissions payable by the Builders in
respect of the first installment of the purchase price of the Vessels and (v)
deposited the balance of the net proceeds from the sale of the Notes into the
Pre-Funding Account. See "Capitalization of the Owners" and "Prospectus
Summary--Sources and Uses of Funds Through the Delivery Dates." In addition, the
Owners entered into the Building Contracts, the Technical Supervision
Agreements, the Initial Charters, the Management Agreements and certain security
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agreements for the benefit of the holders of the Notes and became the
beneficiaries of the Building Contract Guarantees and the Chevron Guarantees.
Between the Original Closing Date and the Delivery Date of its Vessel,
the operations of each Owner will consist solely of (i) making payments of
interest on the Notes, (ii) making payments of Recurring Fees and Management
Fees, (iii) making additional installments under the Building Contracts, (iv)
receiving interest on amounts held in the Pre-Funding Account, (v) receiving
additional contributions from CPTC reflecting brokerage commissions payable by
the Builders in respect of subsequent installments of the purchase price of the
Vessels, (vi) receiving certain non-cash contributions from the Technical
Supervisor of services and Owners' Items and (vii) fulfilling its obligations
under the Registration Rights Agreement.
On and after the Delivery Date of its Vessel, the operations of each
Owner will consist solely of (i) receiving charter hire payments under its
Initial Charter, Acceptable Replacement Charters and other charters, (ii)
receiving proceeds from the sale, if any, of either Vessel, (iii) making
payments of interest and principal on the Mortgage Notes (including Additional
Notes, if any are issued on the Delivery Date), (iv) making payments of
Recurring Fees and Management Fees and (v) receiving interest income on amounts
held in the Trust Accounts.
CAPITAL RESOURCES AND LIQUIDITY
Through the Contractual Delivery Date of the Vessels, interest on the
Notes will be payable from amounts on deposit in the Pre-Funding Account. To the
extent the Delivery Date for a Vessel is delayed, payments by the Builders under
the related Building Contracts will be reflected as a decrease in the amount of
the final installment due under such Building Contract. After the Delivery Date,
the Owners' sources of funds will be charter hire payments for the Vessels,
earnings on Permitted Investments and the proceeds from the sale, if any, of any
Vessel. The Owners do not have, nor will they have in the future, any other
source of capital for payment of the Mortgage Notes. See "Risk Factors--Limited
Purpose Nature of the Owners."
On the Original Closing Date, Golden State Petro (IOM I-A) PLC (i)
received $87.2 million reflecting the proceeds from the sale of the Serial Notes
and the Existing Notes, net of the Initial Purchaser's discounts and commissions
and financial advisory fees, (ii) paid $35.3 million which represents the first
installment of the contract purchase price of its Vessel net of the first
installment of the brokerage commission payable to CPTC by the Builders, (iii)
paid $0.5 million in legal, printing, rating and other fees and expenses and
(iv) deposited $51.5 million into the Pre-Funding Account.
On the Original Closing Date, Golden State Petro (IOM I-B) PLC (i)
received $89.1 million reflecting the proceeds net of the Initial Purchaser's
discounts and commissions and financial advisory fees, from the sale of the
Serial Notes and the Existing Notes, (ii) paid $38.9 million which represents
the first installment of the contract purchase price of its Vessel net of the
first installment of the brokerage commission payable to CPTC by the Builders,
(iii) paid $0.5 million in legal, printing, rating and other fees and expenses
and (iv) deposited $49.7 million into the Pre-Funding Account.
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From the Original Closing Date to the Delivery Date of its Vessel, the
respective Owners will use amounts held in the Pre-Funding Account, plus
interest earned thereon to fund (i) the subsequent installments of the purchase
price of the Vessels, (ii) capitalized interest payable on the Notes prior to
the respective Contractual Delivery Dates estimated at $31.6 million and (iii)
Recurring Fees, fees and expenses of the Indenture Trustee and Management Fees
payable prior to the respective Contractual Delivery Dates. The costs of
registration of the Existing Notes will be paid by the Manager.
From the Delivery Date of its Vessel to the end of the Fixed Period of
its Initial Charter, the respective Owners will use an estimated $158.9 million
in Charter Hire payments under the Initial Charter and an estimated $5.2 million
in interest earned on the Trust Accounts to: (i) make payments of interest on
the Notes estimated at $95.7 million, (ii) make payments of principal on the
Serial Notes of $51.7 million, which payments will retire all such Serial Notes
and (iii) make an estimated $0.8 million in payments of Recurring Fees and
Management Fees. On the first Optional Termination Date with respect to Vessel
B, the Owners will have a balance in the Debt Service Reserve Fund of at least
$18.2 million, assuming no prior withdrawals from the Debt Service Reserve Fund,
and will have outstanding an aggregate principal amount of Exchange Notes and
the untendered Existing Notes, if any, of $127.1 million.
To the extent that the Initial Charterer does not terminate either
Initial Charter, the balance of funds on deposit in the Debt Service Reserve
Fund will exceed the amount of the Exchange Notes and the untendered Existing
Notes, if any, outstanding by approximately August 1, 2014. To the extent that
the Initial Charterer terminates both Initial Charters at the first Optional
Termination Date thereof, the average daily bareboat charter hire rate that
would be sufficient to permit timely payments of principal and interest on the
Exchange Notes and the untendered Existing Notes, if any, until their maturity
date is approximately $18,569.
Charter Hire payments under each Initial Charter, and progress payments
under each Building Contract, have been structured so that approximately $50,000
annually will be available to pay anticipated expenses with respect to the
related Vessel which are not directly payable by the Initial Charterer under
such Initial Charter.
The foregoing determination assumes that amounts remaining in the Trust
Accounts will be invested in Permitted Investments that will provide a return of
7.0% per annum compounded monthly for funds on deposit in the Pre-Funding
Account and a return of 6.0% per annum compounded monthly for funds on deposit
in the Revenue Account and the Debt Service Reserve Fund. On the Original
Closing Date, guaranteed investment contracts for funds on deposit in the
Pre-Funding Account and Revenue Account (until the latest maturity date of the
Serial Note) rated at least "Aa" or "AA" by Moody's or Standard & Poor's,
respectively, were available with at least the assumed annual rate of return and
the Owners believe that guaranteed investment contracts for certain funds on
deposit with the Indenture Trustee other than in the Pre-Funding Account or the
Revenue Account (until the latest maturity date of the Serial Notes) rated at
least "A" by Moody's or Standard & Poor's will be available with at least the
assumed annual rate of return for such amounts until the latest maturity date of
the Exchange Notes and the untendered Existing Notes, if any. The annual rate of
return on Permitted Investments of amounts remaining in any Trust Account on or
after August 1, 2014 cannot be predicted.
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RESULTS OF OPERATIONS
Each Owner's results of operations will depend on the charter hire
payments for its Vessel under the related Initial Charter and, upon any
termination of such Initial Charter, any charter hire under any subsequent
charter or proceeds from any sale of such Vessel, earnings on Permitted
Investments and the level of operating expenses.
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BUSINESS
THE VESSELS
VERY LARGE CRUDE CARRIERS
Both of the Vessels will be VLCCs which are capable of calling at a
large number of ports. The main trading patterns of VLCCs are as follows. See
"The International Tanker Market--Overview" and "--Charter Rates" below.
VESSEL QUALITY
Both of the Vessels will be modern, high-quality tankers which are
being designed to the Initial Charterer's specifications to enhance safety and
reduce operating and maintenance costs, including such features as high
performance rudders, extra steel (minimal use of high tensile steels),
additional fire safety equipment, redundant power generation equipment, extra
coating and electrolytic corrosion monitoring and protection systems and
additional crew quarters to facilitate added manning. The Technical Supervisor
(an affiliate of the Initial Charterer) is supervising the construction of each
of the Vessels. Personnel of this affiliate will be present at the shipyards
during the construction periods, monitoring construction with respect to
compliance with the Initial Charterer's specifications. The Vessels will be
designed and constructed to increase fuel efficiency, lower operating costs and
meet the stringent operating and safety standards of charterers, including the
Initial Charterer, and regulatory agencies. See "--The International Tanker
Market--Supply and Demand" and "--Environmental Regulation" below.
VESSEL MAINTENANCE
The Vessels will be maintained during the term of the Initial Charters
by the Initial Charterer in accordance with good commercial maintenance practice
commensurate with other vessels in the Initial Charterer's fleet of similar size
and trade, as required by the Initial Charters. See "The Initial
Charters--Covenants." The Initial Charters require the Initial Charterer to
return any Vessel whose Initial Charter has been terminated to its respective
Owner in class under the rules of the American Bureau of Shipping (or other
classification society previously approved by the Owner). In addition, the Owner
has the right to inspect the Vessel and to require surveys upon redelivery, and
the Initial Charterer will be responsible for making or compensating the Owner
for certain necessary repairs in connection with such redelivery.
THE INTERNATIONAL TANKER MARKET
OVERVIEW
International seaborne oil and petroleum products transportation
services are mainly provided by two types of operators: major oil company
captive fleets (both private and state-owned) and independent shipowner fleets.
Both types of operators transport oil under short-term contracts (including
single-voyage "spot charters") and long-term time charters with oil companies,
oil traders, large oil consumers, petroleum product producers and government
agencies. The oil companies own, or control through long-term time or bareboat
charters, approximately one-third of the current world tanker capacity, while
independent companies own or control the balance of the fleet. The oil companies
use their fleets not only to transport their own oil, but also to transport oil
for third-party charterers in direct competition with independent owners and
operators in the tanker charter market.
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The oil transportation industry has historically been subject to
regulation by national authorities and through international conventions. Over
recent years, however, an environmental protection regime has evolved which
could have a significant impact on the operations of participants in the
industry in the form of increasingly more stringent inspection requirements,
closer monitoring of pollution-related events, and generally higher costs and
potential liabilities for the owners and operators of tankers.
In order to benefit from economies of scale, tanker charterers will
typically charter the largest possible vessel to transport oil or products,
consistent with port and canal dimensional restrictions and optimal cargo lot
sizes. The oil tanker fleet is generally divided into the following five major
types of vessels, based on vessel carrying capacity: (i) ULCC-size of more than
320,000 dwt; (ii) VLCC-size range of approximately 200,000 to 320,000 dwt; (iii)
Suezmax-size range of approximately 120,000 to 200,000 dwt; (iv) Aframax-size
range of approximately 60,000 to 120,000 dwt; and (v) small tankers of less than
approximately 60,000 dwt. ULCCs and VLCCs typically transport crude oil in
long-haul trades, such as from the Arabian Gulf to Europe, the United States or
the Far East. Suezmax-size tankers also engage in long-haul crude oil trades as
well as in medium-haul crude oil trades, such as from West Africa to the East
Coast of the United States. Aframax-size vessels generally engage in both
medium- and short-haul trades of less than 1,500 miles and carry crude oil or
petroleum products. Smaller tankers mostly transport petroleum products in
short-haul to medium-haul trades.
International tanker charter rates have historically been cyclical and
volatile. A peak in charter rates was reached in the early 1970s as the volume
of oil imported by developed countries expanded, followed by a downturn
resulting from the economic consequences of the first "oil shock" and compounded
by the massive ordering of new tonnage. A second upward movement in charter
rates and vessel values that began in the late 1970s was halted in the early
1980s and was followed by several years of falling tonne-miles demand and
depressed charter rates and vessel values due to reduced overall oil demand as a
result of the recession during the early 1980s and the glut of vessel capacity
available after the dramatic expansion of the world fleet in the 1970s.
The tanker time charter and spot markets showed substantial improvement
from the late 1980s through 1991, from the low levels reached in the mid 1980s
as vessels were running close to or at their maximum speed and minimum time
between charters suggesting there was little excess vessel capacity. However,
the world tanker market experienced a severe decline in 1992 and daily tanker
spot rates, as well as time charter rates, fell dramatically for all tanker
sizes mainly due to the decline in the use of tankers for storage after the end
of the Gulf War and a higher net fleet expansion in the first half of the year
as a result of reduced scrap sales. Charter rates improved somewhat by 1993,
although still far below early 1991 averages, mainly due to the gradual increase
in world oil consumption (excluding the countries of the former Soviet Union and
Eastern Europe) and the increase in tonne-miles demand as more oil produced in
the Middle East was exported and carried over long-haul routes to the Far East.
After a decline in 1994, charter rates have improved to the highest levels since
the 1991 Gulf War peak.
SUPPLY AND DEMAND
The world oil-carrying fleet is aging. According to Platou, a
substantial portion of existing tonnage will exceed 20 years of age within the
next five years. Contracting for newbuildings to be delivered by 1999 is
moderate. If scrapping continues at current or higher levels, there will be a
reduction or at most limited growth in the total world oil-carrying fleet over
the next two to three years. Environmental regulations (including OPA 90) will
continue to reduce the capacity and efficiency of many older vessels which,
together with the expected increase in the expense of repair and maintenance
costs for older vessels, could be expected to result in higher levels of vessel
scrapping.
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In addition, worldwide economic growth has led to an increase in oil
demand. The rates of economic growth for countries in the Far East, particularly
in the developing countries, are likely to lead to continuing growth in total
energy consumption and demand for oil in such countries. Increasing dependence
of these countries on exports from the Middle East is expected to lead to
greater growth in seaborne transportation of crude oil.
TANKER SUPPLY
As of October 1996, the world oil-carrying fleet was as follows:
Total Capacity
Vessel Size Number of Vessels (000's dwt)
10,000 to 59,999 dwt 1,333 40,990
60,000 to 119,999 dwt 706 59,147
120,000 to 199,999 dwt 298 39,535
200,000 to 319,999 dwt 388 101,175
320,000 dwt or more 59 23,255
--- ------
Totals 2,784 264,102
===== =======
- - - - - -------------------------------
Source: Platou
As of October 1996, according to Platou, the VLCC fleet consisted of
388 vessels totalling approximately 101.2 million dwt. Strong market conditions
facilitated the building of approximately 44.2% of current VLCC capacity within
the short time period between 1974 and 1977. Few orders were placed thereafter
owing to a prolonged period of depressed charter hire rates. As a result,
approximately 47% of the current VLCC capacity exceeds 15 years of age and an
additional 4.2% of this fleet is between 10 and 15 years old. The number of VLCC
vessels on order and scheduled to be delivered through 1999 represents 21
vessels with a total capacity of less than 6 million dwt or approximately 5.4%
of current VLCC capacity. This small order book as such is insufficient to
significantly reduce this age profile.
The following table shows the age profile of the oil-carrying fleet:
Current Age Profile
- - - - - ----------------------------------------------------------------------------
Capacity
Period Built Vessels (Million dwt)
- - - - - ---------------------------------------------------------------------------
-1975 714 61
- - - - - ---------------------------------------------------------------------------
1976-80 591 65
- - - - - ---------------------------------------------------------------------------
1981-85 441 25
- - - - - ---------------------------------------------------------------------------
1986-90 393 35
- - - - - ---------------------------------------------------------------------------
1991-96 645 79
- - - - - ---------------------------------------------------------------------------
Source: R.S. Platou
-42-
<PAGE>
The major newbuilding program carried out during the strong market
conditions of the early 1970s created an age profile currently heavily weighted
toward older tonnage. Much of this older tonnage will need to undergo extensive
repairs in order to be able to continue operating. Special survey costs
amounting to a significant portion of the market value of vessels could result
in the scrapping of ships in greater numbers and increased use as permanent
storage or lay-up since the substantial investment in repair, maintenance and
upgrading of a vessel will need to be recovered in the relatively short
remaining useful life of the vessel.
The following table shows the trend in scrapping (excluding total
losses) since 1980:
Tanker Tonnage Scrapped
- - - - - -----------------------------------------------------------------
Year Million dwt
- - - - - -----------------------------------------------------------------
1980 7.878
- - - - - -----------------------------------------------------------------
1981 12.859
- - - - - -----------------------------------------------------------------
1982 23.180
- - - - - -----------------------------------------------------------------
1983 24.520
- - - - - -----------------------------------------------------------------
1984 18.601
- - - - - -----------------------------------------------------------------
1985 26.600
- - - - - -----------------------------------------------------------------
1986 10.951
- - - - - -----------------------------------------------------------------
1987 6.700
- - - - - -----------------------------------------------------------------
1988 3.272
- - - - - -----------------------------------------------------------------
1989 1.693
- - - - - -----------------------------------------------------------------
1990 1.079
- - - - - -----------------------------------------------------------------
1991 2.741
- - - - - -----------------------------------------------------------------
1992 10.436
- - - - - -----------------------------------------------------------------
1993 10.741
- - - - - -----------------------------------------------------------------
1994 11.774
- - - - - -----------------------------------------------------------------
1995 10.643
- - - - - -----------------------------------------------------------------
1996 6.657
- - - - - -----------------------------------------------------------------
Source: R.S. Platou
Note: 1996 data is estimated.
According to Platou, scrapping rates fell to a low level in 1990 and
remained relatively low through the end of 1991, principally as a result of the
relatively high freight rates that prevailed at the time. However, scrapping
rates rose significantly in 1992 and remained at those levels through 1995 as a
result of generally low freight rates and the high cost of upgrading. Scrapping
rates should decline modestly in 1996. If these levels of vessel scrapping
result in excessive contracting for newbuildings, the resale value of the
Vessels at the time the Initial Charters are eligible for termination may be
diminished.
-43-
<PAGE>
Increasingly stringent environmental regulations may also lead to
significantly increased costs to upgrade existing vessels or to purchase new
vessels. These regulations are also likely to reduce the capacity and efficiency
of existing vessels. See "--Environmental Regulations" below.
The following table shows the amount of oil-carrying tonnage in lay-up
since 1974:
Tanker Fleet Lay-Up
- - - - - ---------------------------------------------------------------------
Year Million dwt
- - - - - ---------------------------------------------------------------------
1974 0.490
- - - - - ---------------------------------------------------------------------
1975 1.500
- - - - - ---------------------------------------------------------------------
1976 39.030
- - - - - ---------------------------------------------------------------------
1977 29.180
- - - - - ---------------------------------------------------------------------
1978 30.670
- - - - - ---------------------------------------------------------------------
1979 22.270
- - - - - ---------------------------------------------------------------------
1980 7.370
- - - - - ---------------------------------------------------------------------
1981 6.560
- - - - - ---------------------------------------------------------------------
1982 22.720
- - - - - ---------------------------------------------------------------------
1983 58.330
- - - - - ---------------------------------------------------------------------
1984 55.060
- - - - - ---------------------------------------------------------------------
1985 49.660
- - - - - ---------------------------------------------------------------------
1986 29.660
- - - - - ---------------------------------------------------------------------
1987 12.890
- - - - - ---------------------------------------------------------------------
1988 10.020
- - - - - ---------------------------------------------------------------------
1989 2.021
- - - - - ---------------------------------------------------------------------
1990 2.200
- - - - - ---------------------------------------------------------------------
1991 1.860
- - - - - ---------------------------------------------------------------------
1992 3.240
- - - - - ---------------------------------------------------------------------
1993 5.400
- - - - - ---------------------------------------------------------------------
1994 3.940
- - - - - ---------------------------------------------------------------------
1995 4.040
- - - - - ---------------------------------------------------------------------
1996 7.660
- - - - - ---------------------------------------------------------------------
10/1996 6.640
- - - - - ---------------------------------------------------------------------
Source: R.S. Platou
-44-
<PAGE>
As of October 1996, tonnage in lay-up constituted less than 2.5% of the
total fleet according to Platou. Accordingly, the supply of tankers is unlikely
to materially increase due to vessels being returned to the market from lay-up.
The following table compares the level of orders for newbuildings with
freight rates since 1985:
New Tanker Orders vs. Time Charter-Equivalents
- - - - - --------------------------------------------------------------------------
Capacity Contracted VLCC Rates
Year (Millions dwt) ($000s per day)
- - - - - --------------------------------------------------------------------------
1985 4.760 7.3
- - - - - --------------------------------------------------------------------------
1986 10.900 14.7
- - - - - --------------------------------------------------------------------------
1987 11.250 8.0
- - - - - --------------------------------------------------------------------------
1988 4.230 15.2
- - - - - --------------------------------------------------------------------------
1989 15.910 13.2
- - - - - --------------------------------------------------------------------------
1990 23.530 20.0
- - - - - --------------------------------------------------------------------------
1991 14.090 24.8
- - - - - --------------------------------------------------------------------------
1992 8.800 9.6
- - - - - --------------------------------------------------------------------------
1993 10.730 12.6
- - - - - --------------------------------------------------------------------------
1994 13.440 6.4
- - - - - --------------------------------------------------------------------------
1995 5.950 13.0
- - - - - --------------------------------------------------------------------------
1996 12.000 16.1
- - - - - --------------------------------------------------------------------------
Source: R.S. Platou
According to Platou, contracting for new oil tankers has declined
significantly from a recent peak of 23.5 million dwt in 1990 in response to the
depressed market conditions and low freight rates that prevailed in 1992 and
1993. Although newbuilding orders showed some upturn in 1993 and 1994, this
upturn was partly due to the number of single-hulled vessels ordered prior to
the deadline set by IMO for contracting for single-hulled vessels. As of October
1996, the order book for tankers to be delivered through 1999 amounted to 17.5
million dwt, representing 6.6% of the total world oil-carrying fleet. Shipyard
capacity has decreased significantly from its peak level in 1975 and new vessel
prices have not supported additions to existing shipyard capacity. Based on
current levels of newbuilding and scrapping, therefore, there should be, at
most, limited growth in the world fleet over the next two to three years.
DEMAND FOR OIL TRANSPORTATION
Between 1985 and 1995 worldwide oil consumption grew at an average rate
of 1.6% per annum. Worldwide consumption is expected to grow by 2.4% in 1996.
Despite renewed growth in North America and Western Europe, most of this rise in
demand has been generated from areas other than the main industrialized
countries, particularly in the developing countries of Asia, such as China,
India, Taiwan, Thailand and South Korea. With its heavy dependency on long-haul
Middle East crude, a
-45-
<PAGE>
continuance of the growth of oil consumption in Asia would increase the overall
demand for tankers, particularly VLCCs.
CHARTER RATES
Historically, tanker charter rates have reflected changes in the supply
and demand characteristics of the tanker trade. Spot charter rates are
negotiated and fixed around the clock in a highly competitive and efficient
global spot charter market through brokers acting as intermediaries between
shipowners and charterers. Time charters are negotiated and fixed in a similar
manner and are influenced by, among other things, owners' and charterers'
expectations for future spot charter rates and do not reflect certain operating
costs borne by owners.
According to McQuilling, historical average (calculated quarterly) time
charter rates for VLCC tankers, adjusted to reflect the specifications and
trading patterns of the Vessels are set forth in the chart below.
Average VLCC Time Charter Rates (calculated quarterly)
- - - - - ---------------------------------------------------------------------
Average VLCC Rates
Year ($000s per day)
- - - - - ---------------------------------------------------------------------
1986 20200
- - - - - ---------------------------------------------------------------------
18467
- - - - - ---------------------------------------------------------------------
26867
- - - - - ---------------------------------------------------------------------
13500
- - - - - ---------------------------------------------------------------------
1987 14233
- - - - - ---------------------------------------------------------------------
20333
- - - - - ---------------------------------------------------------------------
30533
- - - - - ---------------------------------------------------------------------
28100
- - - - - ---------------------------------------------------------------------
1988 22800
- - - - - ---------------------------------------------------------------------
22433
- - - - - ---------------------------------------------------------------------
22967
- - - - - ---------------------------------------------------------------------
32767
- - - - - ---------------------------------------------------------------------
1989 31700
- - - - - ---------------------------------------------------------------------
17500
- - - - - ---------------------------------------------------------------------
25867
- - - - - ---------------------------------------------------------------------
41300
- - - - - ---------------------------------------------------------------------
1990 36033
- - - - - ---------------------------------------------------------------------
40767
- - - - - ---------------------------------------------------------------------
32467
- - - - - ---------------------------------------------------------------------
36833
- - - - - ---------------------------------------------------------------------
1991 66700
- - - - - ---------------------------------------------------------------------
37900
- - - - - ---------------------------------------------------------------------
41700
-46-
<PAGE>
Average VLCC Time Charter Rates (calculated quarterly)
- - - - - ---------------------------------------------------------------------
Average VLCC Rates
Year ($000s per day)
- - - - - ---------------------------------------------------------------------
33833
- - - - - ---------------------------------------------------------------------
1992 25033
- - - - - ---------------------------------------------------------------------
18500
- - - - - ---------------------------------------------------------------------
21500
- - - - - ---------------------------------------------------------------------
25333
- - - - - ---------------------------------------------------------------------
1993 29700
- - - - - ---------------------------------------------------------------------
23667
- - - - - ---------------------------------------------------------------------
25300
- - - - - ---------------------------------------------------------------------
22267
- - - - - ---------------------------------------------------------------------
1994 16333
- - - - - ---------------------------------------------------------------------
17167
- - - - - ---------------------------------------------------------------------
21033
- - - - - ---------------------------------------------------------------------
25600
- - - - - ---------------------------------------------------------------------
1995 25600
- - - - - ---------------------------------------------------------------------
22200
- - - - - ---------------------------------------------------------------------
38200
- - - - - ---------------------------------------------------------------------
33333
- - - - - ---------------------------------------------------------------------
1996 36633
- - - - - ---------------------------------------------------------------------
31600
- - - - - ---------------------------------------------------------------------
38567
- - - - - ---------------------------------------------------------------------
Source: McQuilling Brokerage Partners, Inc.
VLCC time charter rates rose during the late 1980s due to a substantial
increase in oil exports from the Middle East. Time charter rates further
increased during the Gulf War as a substantial amount of tonnage was used for
floating storage. Furthermore, the war had the effect of increasing total
transportation demand as the blockade on exports through the pipeline from Iraq
to the eastern Mediterranean created additional demands for shipments of oil
from the Arabian Gulf. Time charter rates fell in 1992 due to the release of
tonnage from floating storage and the increase of supply of VLCCs. The impact of
the additional capacity was exacerbated by the deepening of the recession,
particularly in Europe and Japan. With worldwide economic growth and increasing
oil consumption, particularly in developing Asia, VLCC time charter rates have
increased steadily since 1994.
-47-
<PAGE>
VESSEL VALUES AND NEWBUILDING PRICES
Historically, secondhand vessel values and newbuilding prices have also
reflected changes in the fundamental supply and demand characteristics of the
tanker trade and have exhibited a strong correlation to changes in charter
rates. Changes in charter rates influence potential buyers' and sellers'
estimates of future operating cash flows from vessels, and, therefore, vessel
values. Newbuilding prices are also influenced by shipbuilding capacity and
shipyard costs. The following table shows VLCC tanker newbuilding prices since
1978:
-48-
<PAGE>
Newbuilding Costs
- - - - - -------------------------------------------------------------------------
Year Single-Hull Double-Hull
Newbuilding ($ Newbuilding ($
millions) millions)
- - - - - -------------------------------------------------------------------------
1978 49
- - - - - -------------------------------------------------------------------------
1979 62.5
- - - - - -------------------------------------------------------------------------
1980 70
- - - - - -------------------------------------------------------------------------
1981 70
- - - - - -------------------------------------------------------------------------
1982 50
- - - - - -------------------------------------------------------------------------
1983 47
- - - - - -------------------------------------------------------------------------
1984 39
- - - - - -------------------------------------------------------------------------
1985 37
- - - - - -------------------------------------------------------------------------
1986 37
- - - - - -------------------------------------------------------------------------
1987 43
- - - - - -------------------------------------------------------------------------
1988 55
- - - - - -------------------------------------------------------------------------
1989 76
- - - - - -------------------------------------------------------------------------
1990 87
- - - - - -------------------------------------------------------------------------
1991 88 105.5
- - - - - -------------------------------------------------------------------------
1992 87 102
- - - - - -------------------------------------------------------------------------
1993 80 93
- - - - - -------------------------------------------------------------------------
1994 72.25 85
- - - - - -------------------------------------------------------------------------
1995 86
- - - - - -------------------------------------------------------------------------
1996 84
- - - - - -------------------------------------------------------------------------
10/1996 84
- - - - - -------------------------------------------------------------------------
Source: R.S. Platou
As the above tables illustrate, the average price of VLCC newbuildings
increased steadily from 1985 through 1991. This was due to the cost levels of
Japanese shipyards as the yen strengthened against the dollar and as newbuilding
orders rose following the increase in time charter rates. The relatively high
level of newbuilding prices forced the entire market upward as secondhand
vessels of good quality could be sold at attractive prices. Recently,
newbuilding prices have been stable and since 1992, eight-year-old VLCC vessels
have sold, on average, for a price approximately 94% of their newbuilding prices
(in 1982-1986). Although VLCC vessels of this age have retained great value
there is no assurance that such trend will continue in the future.
-49-
<PAGE>
OPERATIONS
MANAGEMENT
Cambridge Fund Management, L.L.C. (the "Manager") has agreed to provide
administrative management and advisory services to the Owners pursuant to the
Management Agreements. The Manager is an Affiliate of Golden State Petroleum and
the Owners. Pursuant to each Management Agreement, the Manager will be entitled
to a fee (the "Management Fee") of $50,000 per year per Vessel for all periods
commencing on the Original Closing Date. All Recurring Fees are payable by the
Manager from the Management Fee. The Management Fee will be payable
semi-annually on each Payment Date. See "Description of the Exchange
Notes--Trust Accounts."
REMARKETING
In the event the Initial Charterer gives notice to an Owner of its
intent to terminate an Initial Charter, the Manager, pursuant to the related
Management Agreement, is required to engage a remarketing agent. McQuilling
Brokerage Partners, Inc. ("McQuilling") and ACM Shipping Limited ("ACM
Shipping") have agreed to provide on a non-exclusive basis remarketing services
if the Initial Charterer exercises its option to terminate the Initial Charter
for any Vessel. McQuilling, established in 1972, is a leading New York-based
ship broker whose activities encompass all aspects of chartering, sale and
purchase, ship finance, demolition and project development. ACM Shipping is a
leading London ship broker which has strong relationships with the major oil
companies. ACM Shipping has been in the ship brokerage business since 1982.
BUSINESS STRATEGY
The Owners' strategy is to acquire the Vessels and charter them to the
Initial Charterer under the Initial Charters which are expected to provide, so
long as the Initial Charters are in effect, (a) charter hire payments sufficient
(x) to pay (i) the Owners' obligations under the Mortgage Notes, (ii) the
Management Fees under the Management Agreements, (iii) the estimated Recurring
Fees, (iv) the estimated fees payable to the Indenture Trustee and (v) any other
costs and expenses incidental to the ownership and chartering of the Vessels
that are to be paid by the Owners and (y) to fund the Debt Service Reserve Fund
and (b) that the Vessels will be maintained in accordance with good commercial
maintenance practices, and to arrange for vessel management and remarketing
services to be available in case any Initial Charter is terminated or any Vessel
is for any other reason returned to the possession and use of the related Owner.
If the Initial Charterer elects to terminate an Initial Charter for
either Vessel on the first Optional Termination Date for such Initial Charter,
the Allocated Principal Amount of the Notes for such Vessel will be
approximately $63.55 million. All of the Serial Notes and all of the Additional
Notes, if any, will have matured on or prior to such date. If (i) the Initial
Charterer elects to terminate the Initial Charter for a Vessel, (ii) an
Acceptable Replacement Charter has not been entered into and (iii) such Vessel
has not been sold, then in order to make scheduled sinking fund and interest
payments on the Exchange Notes and the untendered Existing Notes, if any, and to
pay estimated ship expenses for the related Vessel, minimum bareboat charter
hire payments of approximately $18,569 per day per Vessel, would be required
upon recharter. The foregoing charter hire rates would not cover $10,995,000 of
the final principal payment allocated to each Vessel. The $10,995,000 is less
than current estimates of the approximate residual value of the respective
Vessels on the date of the final payment. No assurance can be given as to the
residual or scrap value of the Vessels on such date of the final payment and no
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<PAGE>
assurance can be given that the Manager would be able to obtain charters at the
foregoing charter hire rates.
ENVIRONMENTAL REGULATION
The business and the operations of the Owners and any charterer of the
Vessels are materially affected by government regulation in the form of
international conventions, national, state and local laws and regulations in
force in the jurisdictions in which the Vessels operate, as well as in the
country or countries of their registration. Because such conventions, laws and
regulations are often revised, the Owners cannot predict the ultimate cost of
complying with such revised conventions, laws and regulations or the impact
thereof on the resale price or useful life of the Vessels.
OPA 90
The United States Oil Pollution Act of 1990 was enacted and became
effective in 1990 (as amended, "OPA 90"). OPA 90 applies to all vessels that
trade in the United States or its territories or possessions or operate in
United States waters, which include the United States territorial seas and the
two hundred nautical mile exclusive economic zone of the United States. Under
OPA 90, vessel owners, operators and demise charterers are "responsible parties"
with strict liability on a joint and several basis (unless the spill results
solely from the act or omission of a third party (subject to certain statutory
qualifications), an act of God or an act of war) for all oil spill containment
and clean-up costs and other damages arising from actual and threatened oil
spills pertaining to their vessels. These other damages include (i) natural
resources damages and the costs of assessment thereof, (ii) real and personal
property damages, (iii) net loss of taxes, royalties, rent, fees and other lost
government revenues, (iv) lost profits or impairment of earning capacity due to
property or natural resource damage, (v) net cost of public services
necessitated by a spill response, such as protection from fire, safety or health
hazards, and (vi) loss of subsistence use of natural resources. OPA 90 limits
the liability of responsible parties to the greater of $1,200 per gross ton or
$10 million per tanker (subject to possible adjustment for inflation); however,
that limit would not apply if the incident were proximately caused by violation
of applicable United States federal safety, construction or operating
regulations or by the responsible party's gross negligence or willful
misconduct, or if the responsible party fails or refuses to report an incident
which the responsible party knows or has reason to know of, or to provide all
reasonable cooperation and assistance requested by a responsible official in
connection with oil removal activities. OPA 90 does not by its terms impose
liability on lenders or the holders of mortgages on vessels; however, there is
no specific exclusion for such entities under OPA 90. In addition, if the
Indenture Trustee or any holder exercises remedies and becomes an "owner" or
"operator" or "demise charterer" of a Vessel following a Mortgage Event of
Default, such persons or entities may be subject to liability under OPA 90. A
catastrophic spill could exceed the liability limits of any insurance coverage
available, in which event there could be a material adverse effect on the owner
and the operator of the vessel involved in the spill.
See "Risk Factors--Risk of Loss and Liability; Insurance."
OPA 90 requires owners and operators of vessels to establish and
maintain with the United States Coast Guard evidence of insurance or of
qualification as a self-insurer or other evidence of financial responsibility
sufficient to meet their potential strict liability limit under OPA 90 and
CERCLA. The United States Coast Guard has adopted a final rule (the "Final
Rule") published on March 7, 1996 which requires evidence of financial
responsibility equal to the aggregate of OPA 90's strict liability limit and
CERCLA's limits demonstrated by insurance, surety bond, self-insurance or
guarantee. Failure to furnish such certificates would have the effect of
preventing vessels from trading to United States ports or in United States
waters. The Initial Charterer has agreed, pursuant to the Initial Charters, to
furnish evidence
-51-
<PAGE>
of financial responsibility with respect to the Vessels to the United States
Coast Guard as required by the Final Rule.
The Final Rule states that claimants may bring suit directly against an
insurer or guarantor that furnishes certificates of financial responsibility and
requires insurers to waive certain customary insurance policy defenses. In the
event that the insurer, surety or other party is sued directly, it is limited to
asserting the following defenses: (i) that the incident was caused by the
willful misconduct of the responsible party; (ii) those available to the
responsible party under OPA or CERCLA; (iii) that the claim exceeds the amount
of the guarantee; (iv) that the claim exceeds the proper amount of the guarantee
based on the gross tonnage of the vessel; and (v) that the claim is not one made
under either OPA or CERCLA. Most of the P&I Clubs that typically provide
certificates of financial responsibility have refused to furnish evidence of
insurance for vessel owners and operators if such insurance organizations are
subject to direct actions or required to waive insurance policy defenses.
However, certain newly formed insurance companies, which have been deemed
acceptable guarantors by the United States Coast Guard, have furnished the
guaranties pursuant to the Final Rule.
The Final Rule may also be satisfied by evidence of a surety bond or
guarantee. However, the financial credit of some owners and operators may make
the furnishing of surety bonds or guaranties economically infeasible.
Additionally, vessel owners and operators may give evidence of self-insurance to
satisfy the United States Coast Guard's regulations. Under these provisions, the
shipowner or operator must have net worth and working capital, measured in
assets located in the United States against liabilities located anywhere in the
world, that exceeds the applicable amount of financial responsibility.
If the prospective recharterers of the Vessels fail to comply with the
Final Rule, it would have a material adverse effect on the Owners and Holders of
the Exchange Notes and Holders of the untendered Existing Notes, if any.
Owners or operators of tankers operating in United States waters must
file vessel response plans with the United States Coast Guard and their tankers
must operate in compliance with their United States Coast Guard approved plans.
Such response plans must, among other things, (i) identify and ensure, through
contract or other approved means, the availability of necessary private response
resources to respond to a "worst case" discharge, (ii) describe crew training
and drills, (iii) identify a qualified individual with full authority to
implement removal actions and (iv) describe mitigation and response actions.
Vessel response plans have been approved for the Vessels.
OPA 90 specifically permits individual states to impose their own
liability regimes with regard to oil pollution incidents occurring within their
boundaries, and many states have enacted legislation providing for unlimited
liability for oil spills. In some cases, states which have enacted such
legislation have not yet issued implementing regulations defining tanker owners'
responsibilities under these laws. Additionally, under OPA 90 the liability of
responsible parties, United States or foreign, with regard to oil pollution
damage in the United States is not preempted by any international convention.
IMO
The International Maritime Organization ("IMO") is an agency organized
in 1958 by the United Nations. Over 100 national governments are members of the
IMO, whose purpose is to provide for international regulations and practices
affecting shipping and international trade and to encourage the adoption of
standards of safety and navigation. During the last 35 years the IMO has
initiated over 700 resolutions and 30 major conventions and protocols. All IMO
agreements must be ratified by the individual government constituents. Outside
the United States, many countries have ratified and follow
-52-
<PAGE>
the liability scheme adopted by the IMO and set out in the International
Convention on Civil Liability for Oil Pollution Damage of 1969 ("CLC"), as
amended by the 1992 Protocol, which entered into force May 30, 1996. Under the
CLC, an oil tanker's registered owner is strictly liable for pollution damage
caused on the territorial waters of a contracting state by a discharge of oil,
subject to certain defenses and limits. The current limit for a ship not
exceeding 5,000 gross tons is 3 million Special Drawing Rights ("SDR") and, for
each additional ton on a larger vessel, an additional 420 SDRs, up to a maximum
of 59.7 SDRs. (An SDR is defined by the International Monetary Fund on the basis
of a basket of currencies. The exchange rate in effect on December 16, 1996 for
the dollar equivalent of the SDR was approximately 1.4, making the maximum
liability approximately $84 million.) The right to limit liability is forfeited
only where the spill is caused by the owner's actual fault or the fault of a
third party with whom the owner has a direct contractual relationship. Vessels
trading to contracting states must establish evidence of insurance covering the
limited liability of the owner.
In jurisdictions where the CLC has not been adopted, various
legislative schemes or common law govern and liability is imposed either on the
basis of fault or in a manner similar to the CLC.
On March 6, 1992, the IMO adopted regulations which set forth new and
upgraded requirements for pollution prevention for tankers. These regulations
went into effect on July 6, 1995. Both Vessels will comply with such IMO
regulations.
The IMO continues to review and introduce new regulations on a regular
basis. It is impossible to predict what additional regulations, if any, may be
passed by the IMO, whether those regulations will be adopted by member countries
and what effect, if any, such regulations might have on the operation of oil
tankers.
GOLDEN STATE PETROLEUM TRANSPORT CORPORATION
Golden State Petroleum is a special purpose corporation that was
organized in Delaware solely for the purpose of issuing, as agent on behalf of
the Owners, the Notes to facilitate the acquisition of the Vessels by the
related Owners and the charter of the Vessels as described herein. The Notes
will not be obligations of, or guaranteed by, Golden State Petroleum.
Furthermore, as part of the consideration for the Notes, recourse under the
Indenture and the Notes against the incorporators, directors, officers and
stockholders of Golden State Petroleum and its stockholders has been expressly
waived under the Indenture by the Indenture Trustee and by acceptance of the
Notes by all holders and, accordingly, the incorporators, directors, officers
and stockholders of Golden State Petroleum and its stockholders will not be
liable for any payments of debt service on the Notes.
The following table summarizes the beneficial ownership of Golden State
Petroleum as of April 30, 1997.
<TABLE>
<CAPTION>
Name and Address of Beneficial Owner Title of Class of Securities Number of Shares
- - - - - ------------------------------------ ---------------------------- ----------------
<S> <C> <C>
Golden State Holdings I, Ltd.(1) Ordinary Shares Two
15-19 Athol Street
Douglas, Isle of Man
</TABLE>
(1) All of the issued and outstanding shares of Golden State Holdings I, Ltd.
are held by CPTC.
-53-
<PAGE>
THE OWNERS
Each of the Owners was recently organized as a limited liability
company under the laws of the Isle of Man. All of each Owner's issued and
outstanding ordinary shares have been pledged to the Indenture Trustee as part
of the Collateral. The Notes will be full recourse obligations of the Owners,
secured solely by the Collateral. However, recourse under the Indenture and the
Notes against the incorporators, directors, officers and stockholders of the
Owners and their respective successors will be expressly waived in the manner
discussed above under "Golden State Petroleum Transport Corporation."
Accordingly, the incorporators, directors, officers and stockholders of the
Owners and their respective successors will not be liable for any payments of
debt service on the Notes.
Pursuant to the terms of the Indenture, each of the Owners will agree
to limit its activities to (i) entering into, or becoming a party, to a Building
Contract for its Vessel, (ii) entering into and performing the Agency Agreement,
(iii) assigning, granting, transferring, pledging, mortgaging or conveying its
Vessel and its freights and earnings to the Indenture Trustee, (iv) entering
into and performing its obligations under the Indenture, (v) registering its
Vessel under and pursuant to the laws of the Republic of Liberia, (vi) entering
into, performing and delivering its Initial Charter, (vii) entering into and
performing its obligations under the Security Documents, (viii) entering into
other charters, contracts of affreightment or sale agreements relating to the
Vessel upon the termination of the Initial Charter in a form conforming to the
requirements of the Indenture, (ix) carrying out, entering into, performing and
delivering any and all applications, licenses, agreements and instruments
related to and in the furtherance of the foregoing and (x) engaging in those
activities, including the entering into of agreements, necessary, suitable or
convenient to accomplish the foregoing or incidental thereto or connected
therewith.
The following table summarizes the beneficial ownership of each of the
Owners as of April 30, 1997.
<TABLE>
<CAPTION>
Name and Address of Beneficial Owner Title of Class of Securities Number of Shares
- - - - - ------------------------------------ ---------------------------- ----------------
<S> <C> <C>
Golden State Holdings I, Ltd.(1) Ordinary Shares Two
15-19 Athol Street
Douglas, Isle of Man
</TABLE>
(1) All of the issued and outstanding shares of Golden State Holdings I, Ltd.
are held by CPTC.
THE BUILDERS
Samsung Corporation is one of the major affiliated companies of the
Samsung Group, which is the world's 14th largest conglomerate (Fortune 1994
global list). Samsung Corporation's main businesses are represented by general
trade, construction & engineering, motor sales & marketing, and fashion &
retails with total revenues of US$ 24.8 billion in 1995 with 115 offices and
facilities throughout 60 countries.
SHI is also an affiliated company of the Samsung Group, which
manufactures a wide range of products, including industrial plant, ships,
offshore structures, construction equipment and commercial vehicles. As of 1995,
SHI had 13,400 employees and annual sales in excess of US $3.8 billion. SHI's
shipbuilding capacity was increased to 1.8 million gross tons in 1995, making
SHI one of the world's leading shipbuilders. SHI operates four technologically
advanced research and development centers and one integrated engineering center
where highly economical, next-generation ships like high-speed cargo
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and passenger ships, and offshore-related ships, such as the drillship and
Floating Production Storage Offtake (FPSO) vessels, are developed.
BUILDING CONTRACTS
Each Vessel will be constructed pursuant to the terms and
specifications of the Building Contracts. The Vessels are being constructed to
meet the specifications of the Initial Charterer (the "Specifications"). The
Technical Supervisor, as agent for the Initial Charterer, shall monitor the
construction of the Vessel. The construction of the Vessels will be held at the
Builders' Koje Shipyard in South Korea. Upon delivery each Vessel, including its
machinery, equipment and outfitting, is required to be classed with the American
Bureau of Shipping Class A1, (E), Oil Carrier, + AMS, +ACCU, and SH. Each Vessel
is required to comply with the laws, rules, regulations, recommendations and
requirements as stated in the specifications attached to the related Building
Contract.
The purchase price for each Vessel shall be paid in installments.
Pursuant to the Building Contract relating to Vessel A, the Contractual
Delivery Date for Vessel A is February 1, 1999. Pursuant to the Building
Contract relating to Vessel B, the Contractual Delivery Date for Vessel B is
July 1, 1999. If delivery of a Vessel is or will be delayed for any reason
whatsoever, other than delays caused by the related Owner or alterations to the
Specifications, for a period more than 180 days beyond the Contractual Delivery
Date therefor, such Owner has two options exercisable not later than either (a)
10 days after the expiration of such 180-day period or (b) 20 days after such
Owner has been notified by the Builders and the Builders and such Owner agree
that the delivery of such Vessel will be delayed 180 days beyond the Contractual
Delivery Date therefor, whichever first occurs. The Owner may either cancel the
Building Contract and receive the Refund Amount described below or subject to
the agreement of the Builders, may extend the Contractual Delivery Date and
reserve the right to liquidated damages in an amount equal to $24,200 per day of
delay beyond the 180-day period, which amount is sufficient to pay interest on
the Notes until the actual Delivery Date of such Vessel.
In the event that a Vessel is rejected by the related Owner, or a
Building Contract is canceled by the related Owner, all in accordance with the
terms of the related Building Contract, or if the Builders should default in the
delivery of a Vessel or is guilty of breach of a Building Contract justifying a
recision thereof by the related Owner then, and in any such event, the Builders
shall refund to such Owner an amount (the "Refund Amount") that, together with
the amounts held in the Pre-Funding Account with respect to such Vessel, shall
be sufficient to redeem the Allocated Principal Amount of the Notes for the
related Vessel in full.
BUILDING CONTRACT GUARANTEES
Pursuant to the Building Contract Guarantees, The Korea Development
Bank, Seoul, South Korea (the "Building Contract Guarantor") shall guarantee
payment to the Owners of the Refund Amount payable by the Builders to the Owners
under the Building Contracts.
Each Building Contract Guarantee shall be a continuing guarantee and
provide that it (i) shall not be impaired or discharged by the granting of time
or any other indulgence to the Builders, or any other forbearance (whether as to
payment, time, performance, or otherwise) which might, but for this provision,
have any such effect, (ii) shall not be conditioned or contingent upon the
Owner's pursuit of any remedy that it has against the Builders, and (iii) shall
be unconditional irrespective of any other
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<PAGE>
circumstance that might otherwise constitute a legal or equitable discharge of a
surety or guarantor under applicable law.
CHEVRON AND THE INITIAL CHARTERER
The Exchange Notes are not obligations of, and are not guaranteed by,
the Initial Charterer or Chevron. Neither the Initial Charterer nor Chevron is
responsible for the statements made in this Prospectus. The following
information on Chevron and the Initial Charterer was obtained from publicly
available information contained in the Chevron 10-Q for the fiscal year ending
December 31, 1996.
Chevron, a Delaware corporation, a major international oil company,
will guarantee the payment and performance obligations of the Initial Charterer
under each Initial Charter. According to publicly available information, Chevron
provides administrative, financial and management support for, and manages its
investments in, U.S. and foreign subsidiaries and affiliates, which engage in
fully integrated petroleum operations, chemical operations and coal mining.
Chevron operates in the United States and approximately 90 other countries.
Petroleum operations consist of exploring for, developing and producing crude
oil and natural gas; transporting crude oil, natural gas and petroleum products
by pipelines, marine vessels and motor equipment; refining crude oil into
finished petroleum products; and marketing crude oil, natural gas and the many
products derived from petroleum. Chemical operations include the manufacture and
marketing of a wide range of chemicals for industrial uses.
According to publicly available information, the Initial Charterer is
engaged in the marine transportation of oil and refined petroleum products. At
any given time, the Initial Charterer operates between 25 and 35 internationally
flagged vessels which it owns or bareboat charters. The Initial Charterer's
primary transportation routes are from the Middle East, Indonesia, Mexico, West
Africa and the North Sea to ports in the United States, Europe, the United
Kingdom and Asia. Refined petroleum products are transported worldwide. The
Initial Charterer, a Liberian corporation, is an indirect, wholly-owned
subsidiary of Chevron.
SELECTED FINANCIAL DATA OF THE INITIAL CHARTERER AND CHEVRON
THE INITIAL CHARTERER
Year ended December 31,
-----------------------
1996 1995 1994
---- ---- ----
Sales and other operating revenues.... 512 462 440
Total costs and other deductions...... 564 477 504
Net income (loss)..................... 11 (23) (58)
At December 31,
---------------
1996 1995
---- ----
Current assets........................ $ 99 $ 37
Other assets.......................... 1,622 1,561
Current liabilities................... 617 459
Other liabilities..................... 385 431
Net equity............................ 719 708
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<TABLE>
<CAPTION>
CHEVRON
Five-Year Financial Summary(1)
Millions of dollars, except per-share amounts 1996 1995 1994 1993 1992
- - - - - -----------------------------------------------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF INCOME DATA
REVENUES
<S> <C> <C> <C> <C> <C>
Sales and other operating revenues
Refined products $15,785 $13,471 $14,328 $16,089 $16,821
Crude oil 12,397 9,376 8,249 8,501 10,031
Natural gas 3,299 2,019 2,138 2,156 1,995
Natural gas liquids 1,167 1,285 1,180 1,235 1,190
Other petroleum 1,184 1,144 944 967 927
Chemicals 3,422 3,758 3,065 2,708 2,872
Coal and other minerals 340 358 416 447 397
Excise taxes 5,202 4,988 4,790 4,068 3,964
Corporate and other (14) (89) 20 20 15
Total sales and other operating revenues 42,782 36,310 35,130 36,191 38,212
Equity in net income of affiliated companies 767 553 440 440 406
Other income 344 219 284 451 1,059
- - - - - -----------------------------------------------------------------------------------------------------------------
TOTAL REVENUES 43,893 37,082 35,854 37,082 39,677
COSTS, OTHER DEDUCTIONS AND INCOME
TAXES 41,286 36,152 34,161 35,817 37,467
- - - - - -----------------------------------------------------------------------------------------------------------------
INCOME BEFORE CUMULATIVE EFFECT
OF CHANGES IN ACCOUNTING
PRINCIPLES CUMULATIVE EFFECT $2,607 $930 $1,693 $1,265 $2,210
OF CHANGES IN ACCOUNTING PRINCIPLES - - - - (641)
- - - - - -----------------------------------------------------------------------------------------------------------------
NET INCOME (LOSS) $2,607 $930 $1,693 $1,265 $1,569
- - - - - -----------------------------------------------------------------------------------------------------------------
PER SHARE OF COMMON STOCK:
INCOME BEFORE CUMULATIVE EFFECT
OF CHANGES IN ACCOUNTING PRINCIPLES $3.99 $1.43 $2.60 $1.94 $3.26
CUMULATIVE EFFECT OF CHANGES
IN ACCOUNTING PRINCIPLES - - - - (0.95)
- - - - - -----------------------------------------------------------------------------------------------------------------
NET INCOME (LOSS) PER SHARE OF
COMMON STOCK $3.99 $1.43 $2.60 $1.94 $2.31
- - - - - -----------------------------------------------------------------------------------------------------------------
CASH DIVIDENDS PER SHARE $2.08 $1.925 $1.85 $1.75 $1.65
- - - - - -----------------------------------------------------------------------------------------------------------------
CONSOLIDATED BALANCE SHEET DATA (YEAR-END)
Current assets $7,942 $7,867 $7,591 $8,682 $8,722
Properties, plant and equipment (net) 21,496 21,696 22,173 21,865 22,188
Total assets 34,854 34,330 34,407 34,736 33,970
Short-term debt 2,706 3,806 4,014 3,456 2,888
Other current liabilities 6,201 5,639 5,378 7,150 6,947
Long-term debt and capital lease obligations 3,988 4,521 4,128 4,082 4,953
Stockholders' equity 15,623 14,355 14,596 13,997 13,728
Per share $23.92 $22.01 $22.40 $21.49 $21.11
- - - - - -----------------------------------------------------------------------------------------------------------------
SELECTED DATA
Return on average stockholders' equity 17.4% 6.4% 11.8% 9.1% 11.0%
Return on average capital employed 12.7% 5.3% 8.7% 6.8% 8.5%
Total debt/total debt plus equity 30.0% 36.7% 35.8% 35.0% 36.4%
Capital and exploratory expenditures(2) $4,840 $4,800 $4,819 $4,440 $4,423
Common stock price - High $68 3/8 $53 5/8 $49 3/16 $49 3/8 $37 11/16
- Low $51 $43 3/8 $39 7/8 $33 11/16 $30 1/16
- Year-end $65 $52 3/8 $44 5/8 $43 9/16 $34 3/4
Common shares outstanding at year-end
(in thousands) 653,086 652,327 651,751 651,478 650,348
Weighted average shares outstanding
for the year (in thousands) 652,769 652,084 651,672 650,958 677,955
Number of employees at year-end(3) 40,820 43,019 45,758 47,576 49,245
- - - - - -----------------------------------------------------------------------------------------------------------------
(1) Comparability between years is affected by changes in accounting methods:
1995 and 1996 reflect adoption of Statement of Financial Accounting
Standards (SFAS) No. 121, "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed Of"; 1992 and subsequent
years reflect adoption of SFAS No. 106, "Employers' Accounting for
Postretirement Benefits Other Than Pensions," and SFAS No. 109, "Accounting
for Income Taxes." Share and per-share amounts reflect the two-for-one
stock split in May 1994.
<CAPTION>
<C> <C> <C> <C> <C> <C>
(2) Includes equity in affiliates' expenditures.$983 $912 $846 $701 $621
</TABLE>
(3) Includes service station personnel.
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THE INITIAL CHARTERS
DELIVERY AND ACCEPTANCE OF THE VESSELS FROM THE OWNERS
The Owner of a Vessel shall give and the Initial Charterer shall take
delivery of such Vessel concurrently with delivery of such Vessel by the
Builders to the Owner when the Vessel is ready for delivery by the Builders.
Pursuant to the terms of the Initial Charter, the Initial Charterer warrants
that upon delivery of the Vessel, such Vessel shall be in Initial Charterer's
custody and under its control.
If for any reason other than a default by the Owner under the Building
Contract, the Builders become entitled under the Building Contract not to
deliver the Vessel to the Owner, the Owner shall, upon giving to the Initial
Charterer written notice thereof, thereby be excused from giving delivery of the
Vessel to the Initial Charterer and upon receipt of such notice by the Initial
Charterer the related Initial Charter shall cease to have effect.
If for any reason the Owner becomes entitled under the Building
Contract to reject a Vessel, the Owner shall, before exercising such right of
rejection, give written notice thereof to the Initial Charterer and consult the
Initial Charterer and thereupon:
(i) If the Initial Charterer does not wish to take delivery of
such Vessel, it shall inform the Owner within seven (7) days of notice
from the Owner by notice in writing and upon receipt by the Owner of
such notice the related Initial Charter shall cease to have effect; or
(ii) If the Initial Charterer wishes to take delivery of such
Vessel, it may by notice in writing within seven (7) days of notice
from the Owner require the Owner to negotiate with the Builders as to
the terms on which delivery should be taken and during such period
refrain from exercising its right of rejection and upon receipt of
such notice the Owner shall commence such negotiations; provided
however, the Owner shall not be required to accept delivery of a
Vessel from the Builders unless the terms of such delivery are
acceptable to it in its sole discretion.
In no circumstances is the Initial Charterer entitled to reject a
Vessel unless the Owner is able to reject such Vessel from the Builders.
TERM OF THE INITIAL CHARTERS
On the Delivery Date for a Vessel, the related Owner will charter to
the Initial Charterer and the Initial Charterer will charter from such Owner
such Vessel. Each Initial Charter shall be for a period of eighteen years from
the Delivery Date of the related Vessel and ending on the eighteenth anniversary
of such Delivery Date. Pursuant to the Initial Charters, the Initial Charterer
has the right to terminate each Initial Charter on five Optional Termination
Dates beginning on the expiration of the period commencing on the Delivery Date
for such Vessel and terminating on the eighth anniversary thereof (each, a
"Fixed Period") and on each of the four subsequent two-year anniversaries
thereof. The Initial Charterer shall not be able to terminate either Initial
Charter prior to the final maturity date of the Serial Notes and Additional
Notes, if any. The Initial Charterer shall have the option of terminating the
Initial Charter upon the expiration of the Fixed Period or any of the Optional
Periods (each, an "Optional Termination Date"). If the Optional Termination Date
is the first Optional Termination Date, the Initial Charterer must give the
related Owner (i) non-binding notice of its intent to exercise such option,
determined on a good faith basis, at least 12 months prior to such Optional
Termination Date and (ii) irrevocable notice of such exercise nine (9) months
prior to such Optional Termination Date. If the Optional Termination Date is any
subsequent Optional Termination Date, the Initial Charterer must give
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the related Owner (i) non-binding notice of its intent to exercise such option,
determined on a good faith basis, at least nine (9) months prior to such
Optional Termination Date and (ii) irrevocable notice of such exercise six (6)
months prior to such Optional Termination Date.
BUILDERS' WARRANTIES
During the term of the Initial Charter, except during periods when a
Charter Event of Default shall have occurred and be continuing and except in
respect of a Total Loss (unless the Initial Charterer shall have made all
payments required by the Initial Charter in respect of a Total Loss), the
related Owner will assign to the Initial Charterer the right to enforce and
exercise all rights of warranty, guaranty and indemnity which such Owner may
have in respect of such Vessel or otherwise directly against the Builder or any
manufacturer of any part of such Vessel. The Initial Charterer shall be entitled
to take such action in the name of Owner against the Builder or any manufacturer
of any part of such Vessel in relation to the terms of purchase of, the
condition of or any patent infringement or alleged patent infringement in
relation to such Vessel or any part thereof as Initial Charterer sees fit but
subject to the Owner being indemnified and secured to its satisfaction by the
Initial Charterer against all losses, costs, damages and expenses thereby
incurred or to be incurred. If as a result of any such action any moneys are
received from the Builder or any such other manufacturer of the Vessel as
aforesaid the same shall be received by the Initial Charterer. The Initial
Charterer shall use diligence to assert and enforce all such rights which have a
material effect upon the value of the Vessel.
The Owner, however, shall be entitled to receive from the Builders an
amount (the "Liquidated Damages Rebate") equal to all liquidated damages related
to a Vessel's failure to satisfy the Builders' contract deadweight, speed and/or
fuel consumption guarantees. Notwithstanding the foregoing, the Initial
Charterer shall be entitled to receive from the Owner an amount (the "Charterer
Rebate Amount") equal to the Liquidated Damages Rebate times a fraction equal to
8/18 on the date such Liquidated Damages Rebate is received from the Builders.
The Charterer Rebate Amount shall be deposited by the Owner into a separate
escrow account established with a financial institution and subject to an escrow
agreement acceptable to both the Initial Charterer and the Owner (the "Escrow
Account") and invested until no earlier than the last day of the Fixed Period
and shall be disbursed as follows: on the first day of any Optional Period, the
Initial Charterer shall be entitled to receive an amount equal to the Escrow
Account Balance times a fraction the numerator of which is the number of years
of the related Optional Period and the denominator of which is the number of
years remaining on the Initial Charter. Any balance shall remain in the Escrow
Account and shall be invested until the end of the related Optional Period.
USE AND TRADE OF THE VESSEL
The Initial Charterer will have full use of each Vessel during the term
of the Initial Charter and will have the right to operate the Vessel throughout
the world (within Institute Warranty Limits) in the carriage of suitable lawful
merchandise. As to those trades in which a Vessel is employed, the Initial
Charterer shall comply with any and all requirements regarding financial
responsibility or security in respect of oil or other pollution damage as
required by any government, any state or other political subdivision thereof, or
any entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government and any other
governmental entity with authority over the Initial Charterer or the related
Owner, as the case may be, or ownership, use and operation of such Vessel
(whether or not such requirement has been lawfully imposed or not) to enable
such Vessel, without penalty or charges, lawfully to enter, remain at, or leave
any port, place, territorial or contiguous waters of any country, state or
municipality in performance of the related Initial Charter without delay. The
Initial Charterer shall make and maintain all arrangements for a security bond
or otherwise as may be necessary to satisfy such requirements at the Initial
Charterer's sole expense and the Initial Charterer shall indemnify the related
Owner against any and all losses, damages, claims, expenses or liabilities
incurred by reason of the Initial Charterer's failure to comply with the
requirements described in this paragraph.
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<PAGE>
The Initial Charterer shall enter and maintain each Vessel under the TOVALOP
Scheme or under any similar scheme during the term of each Initial Charter. In
no event will the Initial Charterer carry on board a Vessel nuclear fuels or
radioactive products during the term of the related Initial Charter; provided,
however, with the prior written consent of the related Owner, the Initial
Charterer may carry on board a Vessel radioisotopes used or intended to be used
for any industrial, agricultural, medical or scientific purposes.
FLAG AND NAME OF VESSEL
The Initial Charterer shall, throughout the term of each Initial
Charter, maintain the documentation of the Vessel under the laws of the
Registration Jurisdiction at the Initial Charterer's cost and expense. The
related Owner will agree to do such things whatsoever and execute and deliver
all such documents whatsoever to enable the Initial Charterer to maintain such
documentation. The Initial Charterer will not change the registry or port of
documentation of the Vessel without prior written consent of the related Owner,
which consent shall not be unreasonably withheld, or do or suffer or permit to
be done anything which will injuriously affect the documentation of the Vessel
as a vessel documented under the laws and regulations of the Registration
Jurisdiction. If the Initial Charterer changes the registry or port of
documentation of the Vessel, it shall, at the time of redelivery, if the related
Owner so requests and at the Initial Charterer's expense, change the registry
and port of documentation back to that of the Registration Jurisdiction.
The Initial Charterer shall have the right to re-name each Vessel, to
paint each Vessel in its own colors, install and display its funnel insignia and
fly its own house flag.
COVENANTS
Each Initial Charter will contain certain covenants pursuant to which
the Initial Charterer will agree, among other things, that:
(a) The Initial Charterer will at its expense maintain the Vessel in a
good state of repair and in efficient operating condition in accordance with
good commercial maintenance practice commensurate with other vessels in the
Initial Charterer's fleet of similar size and trade, ordinary wear and tear
excepted;
(b) The Initial Charterer will at its expense keep the Vessel with
unexpired classification in accordance with the highest classification of the
American Bureau of Shipping (or such other classification society as shall
previously have been approved in writing by the related Owner) and other
required certificates in force and shall make any improvement or structural
changes or acquire equipment necessary to comply with the requirements of such
classification;
(c) The Initial Charterer shall not permit the Vessel to proceed to any
port which shall have been the subject of a prohibition by the Registration
Jurisdiction;
(d) In the event of hostilities in any part of the world the Initial
Charterer will not employ the Vessel nor suggest her employment in carrying any
goods which are declared contraband nor suffer her to enter to trade to any zone
which is declared a war zone by the war risks insurers unless the Initial
Charterer has made arrangements with the said insurers for the payment of such
additional premiums as said insurers may require to maintain the relevant
insurances in force or in any zone in respect of which the war risks insurers
have withdrawn coverage for the Vessel;
(e) The Initial Charterer will not use the Vessel in any manner or for
any purpose excepted from any insurance policy or policies taken out in
compliance with the Initial Charter or for the purpose of
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<PAGE>
carriage of goods of any description excepted from such insurance policy or
policies and shall not do or permit to be done anything which could reasonably
be expected to invalidate any of such insurance policy or policies;
(f) The Initial Charterer shall man, victual, navigate, operate,
supply, fuel and repair the Vessel whenever required and shall be responsible
for all charges and expenses of every kind and nature whatsoever incidental to
its use and operation of the Vessel under the Initial Charter, including any
foreign, general, municipal, value added or other taxes, except that the Initial
Charterer shall not be responsible for Owner Taxes;
(g) The Initial Charterer shall drydock the Vessel and clean and paint
her underwater parts in accordance with good commercial practice, but not less
than as may be required by the American Bureau of Shipping (or such other
classification society as shall previously have been approved in writing by the
related Owner) in order to maintain the Vessel's highest classification; and
(h) The Initial Charterer will not allow, nor permit to be continued,
any Lien incurred by the Initial Charterer or its agents, which might have
priority over the title and interest of the Owner in the related Vessel, and
will indemnify and hold the Owner harmless against any Lien arising upon such
Vessel while the Vessel is under the control of the Initial Charterer and
against any claims against the Owner arising out of or in relation to the
operation of the Vessel by the Initial Charterer.
In general, all amounts, excluding certain indemnification payments,
payable by the Initial Charterer shall be made without deduction for any taxes
(including value added, turnover, sales and use taxes) except as required by law
and the Initial Charterer shall, in addition to the sums payable by the Initial
Charterer under each Initial Charter, pay such taxes as aforesaid as are
required from time to time by law to be paid by the Initial Charterer. Under
each Initial Charter, the related Owner will agree to take any lawful action to
the extent necessary to prevent or avoid the imposition of any taxes, including
any withholding tax with respect to charter hire, by any taxing jurisdiction
(including the Registration Jurisdiction for such Owner), including changing its
jurisdiction of incorporation or residence; provided that it shall not be
required to take, or fail to take, any action (i) if in the opinion of counsel
such act or failure to act would violate applicable law or (ii) if in the
reasonable opinion of the Owner the actions necessary to avoid or prevent
imposition of such taxes would be unduly burdensome. For purposes of clause (ii)
above, a requirement to change the jurisdiction of the Owner's incorporation or
residence shall not be treated as unduly burdensome.
CHARTER HIRE
The Initial Charterer shall pay, without offset or deduction, whether
or not the Vessel is under arrest, Charter Hire for the use and hire of the
Vessel. During the Fixed Period, Charter Hire shall be $27,199 per day for
Vessel A and $27,199 for Vessel B. Additional Charter Hire shall be payable in
the event Additional Construction Costs are incurred with respect to a Vessel
and shall be in an amount, together with investment income thereon, sufficient
to amortize the Additional Notes, and pay interest thereon, during the Fixed
Period of the related Initial Charter. The Fixed Charter Hire payable during the
Fixed Period and each Optional Period shall be reduced by an amount (the
"Charter Hire Reduction") equal to the amortization of the Net Reduction in
Construction Costs over the term of the Exchange Notes and the untendered
Existing Notes, if any. During each Optional Period, Charter Hire shall be
$28,500 per day for Vessel A and $28,500 per day for Vessel B. If any payment of
Charter Hire under the Initial Charter shall not be paid when due, interest
shall accrue thereon at the Default Rate from and including the due date to the
date of actual payment (after as well as before judgment).
If, on or before a date on which the Initial Charterer is obligated to
give the Owner irrevocable notice of its intent to terminate the Initial Charter
(a "Termination Notice Date"), and if (i) the Charter
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Hire during the applicable Optional Period is above the then current market
level and (ii) the Initial Charterer desires to have a vessel on charter for a
term equal to the applicable Optional Period and of a size, age, condition, and
performance characteristics similar or equivalent to those of the Vessel, then
the Initial Charterer shall so notify the Owner in writing no later than the
Termination Notice Date. Then, from the Termination Notice Date until the
commencement of the applicable Optional Period, the Initial Charterer and Owner
shall work together in good faith to agree on a mutually acceptable charter hire
rate for the applicable Optional Period.
INSURANCE
Each Initial Charter provides that the Initial Charterer may
self-insure against the risks required to be covered thereunder. Therefore,
there can be no assurance that any insurance for such risks will be carried for
any Vessel or, if it is carried, as to the amount of such insurance.
INSURANCE PROCEEDS
The proceeds of any insurances referred to in the Initial Charters will
be applied as follows:
Until the termination of an Initial Charter, any proceeds under any
such insurance in respect of the related Vessel (other than in respect of Total
Loss) shall be paid directly to the Initial Charterer. The Initial Charterer
shall be liable for any loss of any part of or damage to the Vessel (other than
a Total Loss) from whatsoever cause such loss or damage may arise, unless the
same shall have been caused by the negligence or wilful act of the Owners, their
servants or agents (except where the Initial Charterer or its servants and
agents are acting as agents of the Owners).
Any claim in respect of a Total Loss shall be paid directly to the
related Owner or the Collateral Trustee, as assignee.
PAYMENT ON TOTAL LOSS
The amount payable on the date which is 90 days after the occurrence of
a Total Loss with respect to a Vessel (the "Loss Date") by the Initial Charterer
shall be the sum of (i) any deficiency between (A) the Stipulated Loss Value in
relation to the period in question calculated by the application of Schedule 2
to the Initial Charter and (B) all insurance proceeds for damage to or loss of
the Vessel and amounts paid by any governmental authority in connection with any
requisition, seizure or forfeiture actually received in hand by the Owner or the
Indenture Trustee prior to or on such Loss Date; and (ii) all Charter Hire
accrued (on a daily basis) but unpaid hereunder to such Loss Date and any other
sums due under any provisions of the Initial Charter, together with interest
thereon at the Default Rate from the date upon which any such Charter Hire or
other sums was due until the date upon which the calculations are made for the
purposes of determining the amount payable on the Loss Date. In the event of a
Total Loss, the Initial Charter and the obligation of the Initial Charterer to
pay charter hire shall continue and be payable until the Initial Charterer has
paid the amounts described above. The obligations of the Initial Charterer
described above will apply regardless of whether or not any moneys are payable
under the insurances effected in compliance with the Initial Charter in respect
of the Vessel, regardless also of the amount payable thereunder, regardless also
of the cause of the Total Loss and regardless of whether or not any of such
compensation shall be payable.
CHARTER EVENTS OF DEFAULT
The following constitute events of default under each Initial Charter
("Charter Events of Default"):
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(a) The Initial Charterer shall default for two Business Days in the
payment of Charter Hire or other amounts due under the terms of the Initial
Charter;
(b) The Initial Charterer shall fail for a period of 30 Business Days
after written notice to perform and observe any of the covenants, conditions,
agreements or stipulations on the part of the Initial Charterer to be performed
or observed contained in the Initial Charter, other than those referred to in
clause (a) or (e) of this paragraph;
(c) The Initial Charterer ceases doing business as a going concern or
generally ceases to pay its debts as they become due or any proceedings under
any bankruptcy or insolvency laws are instituted against the Initial Charterer
or if a receiver or trustee is appointed for the Initial Charterer for any of
its assets or properties, and such proceeding is not dismissed, vacated or fully
stayed within 60 days;
(d) The Initial Charterer shall create or suffer to exist any mortgage,
charge, pledge or other like encumbrance over the Vessel or any part thereof or
shall have abandoned the Vessel (not including any notice of abandonment which
the Initial Charterer may give to insurers under the provisions of the Initial
Charter regarding insurance in the event of a Total Loss);
(e) The Initial Charterer fails to comply with any of its obligations
as to insurance contained in the Initial Charter; and
(f) The Initial Charterer shall within 30 days of any scheduled date of
redelivery under the Initial Charter fail to provide adequate bail or security
when required to do so in respect of any maritime lien, possessory lien or
statutory right in rem which may be acquired over the Vessel in order to prevent
the Vessel being arrested, impounded or seized or if any such lien, right or
claim over the Vessel is exercised by the arrest, attachment, detention,
impounding or seizure of the Vessel under any distress, execution or other
process, or any distress or execution is levied thereon, and the Initial
Charterer fails to use its best endeavors to procure the release of the Vessel
therefrom within 30 days of any scheduled date of redelivery under the Initial
Charter.
REMEDIES
If any Charter Event of Default shall have occurred and be continuing,
the Owner under the related Initial Charter may, by written notice to the
Initial Charterer, declare such Initial Charter to be in default and enforce any
or all of the remedies under such Initial Charter, including:
(a) requiring the Initial Charterer, at its expense, to redeliver the
Vessel to the related Owner with the Initial Charterer to have the same
obligations in connection with such redelivery as described below in connection
with redelivery of the Vessel at the termination of the Initial Charter;
(b) retaking the Vessel by the related Owner or its agent, without
prior demand or legal process;
(c) holding the Initial Charterer liable for all charter hire payments
payable before, during or after exercise of the foregoing remedies and the
remedy described in paragraph (d) below and for all reasonable costs and
expenses incurred by the related Owner (including legal fees) by reason of the
occurrence of any default or the exercise of remedies by the related Owner; and
(d) the related Owner or its agent may sell the Vessel at public or
private sale, with or without notice to the Initial Charterer, advertisement or
publication, as such Owner may determine, or otherwise may dispose of, hold,
use, operate, charter to others or keep the Vessel idle.
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REDELIVERY
Unless a Vessel is a Total Loss, the Initial Charterer shall at the
termination of the Initial Charter redeliver the Vessel to the related Owner at
a safe and ice-free port or a place selected by the Initial Charterer within the
Vessel's trading limits (within 10 steaming days from a recognized loading area)
or at such other safe port as shall be agreed between the Initial Charterer and
the related Owner.
At or about the time of redelivery if the related Owner so requires, a
survey shall be made to determine the condition and fitness of the Vessel, her
machinery and equipment. In the event that such Vessel has been dry-docked
within 30 months prior to redelivery and the Initial Charterer certifies in
writing that, to the best of its knowledge, the Vessel has had no bottom
touching since such dry-docking, such survey may be conducted while the Vessel
is afloat. The related Owner may require a divers' survey of the Vessel. The
Initial Charterer shall bear all expenses of any such survey only if repairs are
found to be required. Otherwise, the cost of a diver's survey shall be paid by
the Owner. The Initial Charterer shall at its expense make all such repairs and
do all such work so found to be necessary before redelivery or, at the related
Owner's option, shall discharge its obligations by payment of a sum sufficient
to provide, at the prices current at the time of redelivery, for the work and
repairs necessary to place the Vessel in the required structure, state and
condition. The Initial Charter Period shall be extended until the completion of
any such repairs and work found to be necessary or the payment of the amounts
described above. Each Vessel upon redelivery shall have her survey cycles up to
date and class certificates valid for at least six calendar months and the
Initial Charterer shall ensure that Vessel shall have been dry-docked within 30
months prior to redelivery.
ASSIGNMENT AND SUB-CHARTER
The Initial Charterer may not assign all or part of its rights and
obligations under any Initial Charter nor may it charter the related Vessel by
demise to any other entity without the prior written consent of the related
Owner, such consent not to be unreasonably withheld, subject always to the
Vessel being maintained and insured to the same standards as are adopted by the
Initial Charterer in respect of the vessels owned by it; provided, however, that
the Initial Charterer may assign its rights and obligations under any Initial
Charter to a corporation more than 50% of which is owned directly or indirectly
by Chevron so long as Chevron continues to guarantee the payment and performance
of such Initial Charter pursuant to the related Chevron Guarantee. The Initial
Charterer may otherwise charter the Vessel without the prior consent of the
related Owner provided that the Initial Charterer remains responsible as
principal (or appoints another person to be responsible in its stead) for
navigating and managing the Vessel throughout the period of such charter and for
defraying all expenses in connection with the Vessel throughout such period or
substantially all such expenses other than those directly incidental to a
particular voyage or to the employment of the Vessel during that period.
LIQUIDATED DAMAGES
Whether or not the related Owner shall have exercised, or shall
thereafter at any time exercise, any options, rights or remedies described
above, upon or as a consequence of a breach of contract by the Initial Charterer
amounting to repudiation by the Initial Charterer of the Initial Charter, the
related Owner may immediately require the Initial Charterer to pay to such Owner
as liquidated damages for loss of a bargain and not as a penalty, an amount
equal to (i) the sum of (A) the applicable Stipulated Loss Value, (B) all
outstanding accrued and unpaid Charter Hire and (C) any other amounts due to
such Owner under the Initial Charter on or prior to the date of payment and (ii)
interest thereon (before and after judgment) at the Default Rate from the date
such amounts were payable to the actual date of payment. The Initial Charterer
shall not be entitled to any part of the net proceeds of the Vessel (if any)
whether by way of rebate of charter hire or otherwise.
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INDEMNITY
Pursuant to each Initial Charter, the Initial Charterer will indemnify
the related Owner against the following:
(a) all costs and expenses of operating and maintaining the related
Vessel and of operating, maintaining and replacing all parts including (but
without prejudice to the generality of the foregoing) all fuel, oil, port
charges, fees, taxes, levies, fines, penalties, charges, insurance premiums,
victualing, crew, navigation, manning, operating and freight expenses and all
other outgoings whatsoever payable by the Owner or the Initial Charterer in
respect of the possession or operation of a Vessel or any part thereof, or the
purchase, ownership, delivery, chartering, possession and operation, import to
or export from any country, return, sale or disposition of such Vessel or any
part thereof or upon the hire, receipts or earnings arising therefrom (other
than Owner Taxes);
(b) all liabilities, claims, proceedings (whether civil or criminal),
penalties, fines or other sanctions, judgments, charges, taxes, impositions,
liens, salvage, general average, costs and expenses whatsoever which may at any
time be made or claimed by the Initial Charterer or any employee, servant, agent
or sub-contractor, passenger, owner, shipper, consignee, and receiver of goods
or any third party (including governments or other authorities) or by their
respective dependents arising directly or indirectly in any manner out of the
design, construction, possession, management, repair, certification, manning,
provisioning, supply or servicing of the Vessel (whether at sea or not) or the
chartering thereof under the Initial Charter whether such liability, claims,
proceedings, penalties, fines, sanctions, judgments, charges, taxes,
impositions, liens, salvage, general average, costs or expenses may be
attributable to any defect in such Vessel or the design, construction, testing
or use thereof from any maintenance, service, repair, overhaul or otherwise and
regardless of when or where the same shall arise and whether or not such Vessel
or the relevant part thereof is in the possession or control of the Initial
Charterer (other than Owner Taxes); and
(c) any and all losses, damages and expenses which Owner may incur as a
result of any oil or other pollution damage resulting from the Initial
Charterer's operation of the Vessel under the Initial Charter, including, but
not limited to, such Owner's liability under OPA 90 or the laws of any other
jurisdiction relating to oil spills.
The Initial Charterer's indemnity under each Initial Charter shall
extend to claims of persons (including governments or other bodies whether
corporate or otherwise) who have suffered or allege that they have suffered
loss, damage or injury in connection with any thing done or not done by a
Vessel, including in connection with any oil or other substance emanating or
threatening to emanate from such Vessel, and shall extend to levies,
impositions, calls or contributions on or required to be made by the Owner
during or in respect of the term of the Initial Charter.
CHEVRON GUARANTEES
Chevron will fully and unconditionally guarantee the due and faithful
performance by the Initial Charterer under each Initial Charter of all of the
Initial Charterer's liabilities and responsibilities thereunder and under any
supplement, amendment, change or modification thereof agreed to by the Initial
Charterer.
GOVERNING LAW
Each Initial Charter and each Chevron Guarantee shall be governed by
and be construed in accordance with the federal laws of the United States of
America and the laws of the State of New York.
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NON-DISTURBANCE
Pursuant to the terms of each Initial Charter, each Owner agrees that
the related Mortgage and any other mortgage thereafter placed on the Vessel by
such Owner will contain a provision to the effect that throughout the term of
the related Initial Charter, so long as no Charter Event of Default shall have
occurred and be continuing and so long as the Initial Charterer shall have
performed its obligations thereunder, the Initial Charterer shall be entitled to
the quiet enjoyment of the Vessel.
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<PAGE>
DESCRIPTION OF THE EXCHANGE NOTES
GENERAL
The Exchange Notes will be issued, and the Existing Notes were issued,
under an Indenture dated as of December 1, 1996, among Golden State Petroleum,
the Owners and United States Trust Company of New York as Indenture Trustee. The
Exchange Notes have been registered under the Securities Act and, accordingly,
will not be subject to certain restrictions on transfer applicable to the
Existing Notes. Except (i) as provided in the previous sentence and (ii) that
the Existing Notes are entitled to the benefit of the Registration Rights
Agreement, the Exchange Notes have terms and conditions identical in all
material respects to those of the Existing Notes. Accordingly, unless
specifically stated to the contrary, the following description of the Notes
applies equally to the Existing Notes and the Exchange Notes, and the Exchange
Notes and the Existing Notes will be treated as one series for purposes of the
Indenture. The statements under this section relating to the Existing Notes, the
Exchange Notes and the Indenture are summaries and do not purport to be a
complete description of the Indenture, the Existing Notes or the Exchange Notes
and are subject to the detailed provisions of, and are qualified in their
entirety by reference to, the provisions of the Existing Notes, the Exchange
Notes and the Indenture, including the definitions therein of certain terms.
Wherever particular provisions or definitions of the Indenture, the Existing
Notes, the Exchange Notes or terms defined therein are referred to herein, such
provisions or definitions are incorporated herein by reference. Capitalized
terms that are used but not otherwise defined herein have the meanings assigned
to them in the Indenture. For information on how to obtain a copy of the
Indenture, see "Available Information."
The Exchange Notes are not obligations of, and are not guaranteed by,
the Initial Charterer or Chevron. Neither the Initial Charterer nor Chevron is
responsible for the statements made in this Prospectus.
MATURITY, INTEREST AND PRINCIPAL
The Exchange Notes will be issued by Golden State Petroleum, acting as
agent for the Owners, in an aggregate principal amount of up to $127,100,000 and
will be secured, equally and ratably with the Serial Notes and the Additional
Notes, if any, by the Collateral. See "--Security." The Exchange Notes are not
obligations of, and are not guaranteed by, the Initial Charterer or Chevron.
The Exchange Notes will be issued only in fully registered form,
without coupons, in denominations of $100,000 and multiples of $1,000 in excess
thereof. No service charge will be made to any Holder for any registration of
transfer or exchange of Exchange Notes, but Golden State Petroleum, as agent for
the Owners, or the Indenture Trustee may require payment of a sum sufficient to
cover any taxes or other governmental charge payable in connection therewith.
Initially, the Indenture Trustee will act as paying agent and registrar
with respect to the Exchange Notes. The Exchange Notes may be presented for
registration of transfer or exchange at the offices of the Registrar.
Payments by Golden State Petroleum, as agent of the Owners, in respect
of the Exchange Notes (including principal, sinking fund payments and optional
or mandatory prepayments) will be made at the office or agency maintained by
Golden State Petroleum by delivery of a check on the Payment Date against
surrender of such Exchange Notes and, at the option of Golden State Petroleum,
any interest on the Exchange Notes will be paid at the office or agency of
Golden State Petroleum by mailing a check to the Holder entitled thereto at the
address appearing in the Note Register; provided, that notwithstanding the
foregoing, all payments in respect of the Global Notes shall be made by wire
transfer of immediately available funds. Secondary trading in the Exchange Notes
will be required by DTC to be settled in immediately available funds.
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Interest on the Exchange Notes will accrue from the Original Closing
Date at a rate per annum equal to 8.04%, and will be payable on the unpaid
principal amount thereof on each February 1 and August 1 (each, a "Payment
Date"), commencing August 1, 1997 to the Holders of record of the Exchange Notes
at the close of business on the record date (January 15 and July 15,
respectively) for such Payment Date. Interest on the Exchange Notes will accrue
from the most recent date to which interest has been paid or, if no interest has
been paid, from December 24, 1996. Interest will be computed on the basis of a
360-day year comprised of twelve 30-day months. Interest on overdue principal
and (to the extent permitted by law) on overdue installments of interest, will
accrue at the Default Rate. In certain circumstances, Special Interest will be
payable on the Existing Notes. See "Notice to Investors; Registration Rights."
Such Special Interest will be deemed to be interest on the Existing Notes for
all purposes under the Indenture.
The Exchange Notes will be subject to redemption through the operation
of a mandatory sinking fund on each Payment Date commencing August 1, 2007 (the
"First Term Note Sinking Fund Payment Date") to and including August 1, 2018,
according to the schedule of sinking fund redemption payments set forth below.
The sinking fund redemption price is 100% of the principal amount of Exchange
Notes being redeemed, together with accrued and unpaid interest to the date
fixed for redemption. The Exchange Notes will mature, and the final payment of
principal and interest on the Exchange Notes will be due, on February 1, 2019.
The amortization schedule will approximate level debt service through the
Maturity Date with an additional principal payment on the Maturity Date of
$10,995,000 per Vessel. The table below provides the scheduled sinking fund
redemption amounts and final principal payment on the Exchange Notes.
<TABLE>
<CAPTION>
Sinking Fund Redemption Amounts
and Final Principal Payment*
(Dollars in Thousands)
-------------------------------------------------------------------------------------
Scheduled
Payment Date Vessel A Vessel B Total
<S> <C> <C> <C>
August 1, 2007 $1,340.0 $ 0.0 $1,340.0
February 1, 2008 1,395.0 1,430.0 2,825.0
August 1, 2008 1,450.0 1,490.0 2,940.0
February 1, 2009 1,510.0 1,550.0 3,060.0
August 1, 2009 1,570.0 1,610.0 3,180.0
February 1, 2010 1,635.0 1,675.0 3,310.0
August 1, 2010 1,700.0 1,745.0 3,445.0
February 1, 2011 1,765.0 1,815.0 3,580.0
August 1, 2011 1,840.0 1,885.0 3,725.0
February 1, 2012 1,910.0 1,960.0 3,870.0
August 1, 2012 1,990.0 2,040.0 4,030.0
February 1, 2013 2,070.0 2,125.0 4,195.0
August 1, 2013 2,150.0 2,210.0 4,360.0
February 1, 2014 2,240.0 2,295.0 4,535.0
August 1, 2014 2,330.0 2,390.0 4,720.0
February 1, 2015 2,420.0 2,485.0 4,905.0
August 1, 2015 2,520.0 2,585.0 5,105.0
February 1, 2016 2,620.0 2,690.0 5,310.0
August 1, 2016 2,725.0 2,800.0 5,525.0
February 1, 2017 2,835.0 2,910.0 5,745.0
August 1, 2017 2,950.0 3,025.0 5,975.0
February 1, 2018 3,070.0 3,150.0 6,220.0
August 1, 2018 3,190.0 3,275.0 6,465.0
February 1, 2019 14,325.0 14,410.0 28,735.0
-------- -------- --------
$63,550.0 $63,550.0 $127,100.0
========= ========= ==========
</TABLE>
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If a Vessel is not delivered on or before 180 days from the Contractual
Delivery Date for such Vessel and the Contractual Delivery Date is not extended
as provided in the Building Contract or is a Total Loss or if there is a Net
Reduction in Construction Costs, Exchange Notes will be subject to redemption as
described under "--Mandatory Redemption." Thereafter, the sinking fund
redemption amounts and the final principal payment on the Maturity Date will be
recalculated to fully amortize the Allocated Principal Amount of the Mortgage
Notes of the remaining Vessel.
MANDATORY REDEMPTION
The Exchange Notes, together with the Serial Notes and the Additional
Notes, will be subject to mandatory redemption on a pro rata basis in an
aggregate principal amount equal to the Allocated Principal Amount of the
Mortgage Notes of a Vessel that is not delivered on or before 180 days from the
Contractual Delivery Date for such Vessel and the Contractual Delivery Date is
not extended as provided in the Building Contract or is a Total Loss at a
redemption price equal to 100% of the principal amount thereof, plus accrued and
unpaid interest (including default interest) to the date fixed for redemption.
For either Vessel, if the Initial Charterer exercises any of its
termination options, the related Owner does not enter into an Acceptable
Replacement Charter for such Vessel on or before the date which is one week
prior to the next sinking fund payment date for the Exchange Notes following the
effective date of such termination and such Vessel is sold, with the consent of
all the holders of the Exchange Notes then the outstanding Exchange Notes will
be redeemed in part, from the net proceeds of the sale of such Vessel and the
Allocable Portion of the Debt Service Reserve Fund, in an aggregate principal
amount of Exchange Notes equal to the Allocated Principal Amount of the Mortgage
Notes for such Vessel, at an aggregate redemption price equal to the sum of such
net proceeds and the Allocable Portion of the Debt Service Reserve Fund. In the
case of such a redemption, there can be no assurance that the Holders of the
Exchange Notes will not receive less than 100% of the principal of and interest
on the Exchange Notes redeemed. If all Holders of the Exchange Notes do not
consent to such a sale, then the Manager will attempt to recharter the Vessel on
such terms as the Manager, in its discretion, deems appropriate, provided that
(i) such charter shall be at arms length, (ii) such charter shall have a
termination date no later than February 1, 2019 and (iii) the charter hire
payable thereunder during the term thereof is an amount sufficient to (A) make
the mandatory sinking fund payments, together with all interest payments on the
Allocated Principal Amount of the Mortgage Notes for such Vessel, (B) pay
Recurring Fees for such Vessel and the cost of insurance not maintained by the
charterer under such charter, (C) pay the Management Fees for such Vessel and
(D) pay the amount of fees and expenses of the Indenture Trustee allocable to
such Vessel.
If such a Net Reduction in Construction Cost occurs, the Owners shall
redeem Outstanding Exchange Notes and Serial Notes, on a pro rata basis, in an
aggregate principal amount equal to the Net Reduction in Construction Costs, at
a redemption price of 100% of the principal amount thereof, together with
accrued and unpaid interest on such Notes to be redeemed, to the date fixed for
redemption.
OPTIONAL REDEMPTION
The Exchange Notes may be redeemed in whole or in part, at the
direction of the Owners on any Payment Date on or after the later of (a) August
1, 1999 and (b) the Delivery Date of the last Vessel to be delivered at a
redemption price equal to 100% of the principal amount thereof plus accrued and
unpaid interest to the date fixed for redemption, provided that if (i) such
redemption occurs prior to February 1, 2018 and (ii) a Vessel is then subject to
the related Initial Charter or to an Acceptable Replacement Charter pursuant to
which the charterer thereunder is required to pay charter hire equal to or
greater than the Charter Hire payable by the Initial Charterer during the Fixed
Period, then the Make-Whole Premium
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shall be payable with respect to Mortgage Notes in an amount equal to Allocated
Principal Amount of the Mortgage Notes for such Vessel. The Owners may not
exercise such optional redemption if such optional redemption would adversely
affect the then applicable ratings on the Serial Notes. In addition, Exchange
Notes may be redeemed in part in an aggregate principal amount equal to the
Allocated Principal Amount of the Notes for a Vessel if the Initial Charter for
such Vessel is terminated and an Acceptable Replacement Charter is not entered
into, at a redemption price equal to 100% of the principal amount of the
Exchange Notes plus accrued and unpaid interest to the date fixed for
redemption.
PURCHASE AT OPTION OF THE HOLDER
On August 1, 2014, (the "Optional Purchase Date") if neither Initial
Charter has been terminated by the Initial Charterer, each Holder of the
Exchange Notes will have a one-time option to cause the Owners to purchase all
or a part of such Holders' Exchange Notes at a purchase price equal to 100% of
the principal amount thereof plus accrued and unpaid interest through the date
of purchase. The Exchange Notes will be purchased in multiples of $1,000
principal amount, provided that the principal amount of Exchange Notes not so
purchased must be of an authorized denomination.
Golden State Petroleum, at the direction of the Owners, shall mail to
all holders of record of the Exchange Notes a notice of the availability or
non-availability of the purchase option on or before the 60th day prior to the
Optional Purchase Date. Golden State Petroleum shall deliver to the Indenture
Trustee a copy of such notice. To exercise the purchase right, Holders of
Exchange Notes must deliver, on or before the 30th day after the date of Golden
State Petroleum's notice, the Exchange Notes to be redeemed, duly endorsed for
transfer, together with the form provided with such notice duly completed, to
Golden State Petroleum (or an agent designated by Golden State Petroleum for
such purpose).
SELECTION AND NOTICE
In the event that the Mortgage Notes are to be redeemed at any time in
part, the Indenture Trustee shall select Mortgage Notes to be redeemed ratably
from each holder such that the ratio of the principal amount of Mortgage Notes
to be redeemed from each holder to the aggregate principal amount of Mortgage
Notes held by such holder shall, as nearly as practicable and subject to
rounding, equal the ratio of the aggregate principal amount of Mortgage Notes to
be redeemed on such redemption date to the aggregate principal amount of
Mortgage Notes then outstanding, provided that Mortgage Notes may be redeemed in
multiples of $1,000 only. Notice of redemption shall be mailed by first class
mail by the Indenture Trustee at least 30 but not more than 60 days before the
redemption date to each holder of Mortgage Notes to be redeemed at its
registered address. If any Mortgage Note is to be redeemed in part only, the
notice of redemption that related to such Mortgage Note shall state the portion
of the principal amount thereof to be redeemed. On and after the redemption
date, interest will cease to accrue on Mortgage Notes or portions thereof called
for redemption.
REGISTRATION RIGHTS
In connection with the issuance of the Existing Notes, the Companies
entered into a Registration Rights Agreement with the Initial Purchaser pursuant
to which the Companies agreed, for the benefit of the Holders of the Existing
Notes, at the Companies' expense, to use their reasonable best efforts to cause
the Registration Statement of which this Prospectus forms a part to be declared
effective under the Securities Act.
Promptly after the Registration Statement of which this Prospectus
forms a part is declared effective, the Companies have agreed to commence the
Exchange Offer.
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In the event that any changes in law or applicable interpretations of
the staff of the Commission do not permit the Companies to effect the Exchange
Offer or in certain other circumstances, the Companies have agreed, at the
Manager's expense, to (i) as promptly as practicable, and in any event on or
prior to 30 days after such filing obligation arises, file or cause to be filed
with the Commission the Shelf Registration Statement covering resales of the
Existing Notes, (ii) use their respective reasonable best efforts to cause the
Shelf Registration Statement to be declared effective under the Securities Act
on or prior to 90 days after the filing obligation arises and (iii) use their
respective reasonable best efforts to keep effective the Shelf Registration
Statement for up to two years after its effective date (or such shorter period
that will terminate when all the Existing Notes covered thereby have been sold
pursuant thereto or in certain other circumstances). The Companies have agreed
to use their respective reasonable best efforts in the event of the filing of a
Shelf Registration Statement, to provide to each Holder of the Existing Notes
covered by the Shelf Registration Statement copies of the prospectus that is a
part of the Shelf Registration Statement, notify each such Holder when the Shelf
Registration Statement for the Existing Notes has become effective and take
certain other actions as are required to permit unrestricted resales of the
Existing Notes. A Holder of Existing Notes that sells such Existing Notes
pursuant to the Shelf Registration Statement generally will be required to be
named as a selling securityholder in the related prospectus and to deliver a
prospectus to the purchaser, will be subject to certain of the civil liability
provisions under the Securities Act in connection with such sales and will be
bound by the provisions of the Registration Rights Agreement that are applicable
to such Holder (including certain indemnification obligations). In addition,
each Holder of the Existing Notes will be required to deliver certain
information to be used in connection with the Shelf Registration Statement in
order to have its Existing Notes included thereunder.
If the Exchange Offer is not consummated within 180 days of the initial
sale of the Existing Notes, Special Interest will accrue on the Existing Notes
from June 23, 1997 to the date the Exchange Offer is consummated, at a rate of
0.25% of the principal amount thereof per annum, which Special Interest is
payable semiannually in arrears on each Payment Date. Additional charter hire
payments are or will be payable under the Charters in an aggregate amount, in
each case, equal to such Special Interest.
Upon consummation of the Exchange Offer, the Companies generally will
have satisfied their obligations under the Registration Rights Agreement with
respect to registration of the Existing Notes and generally will have no further
obligation to register the Existing Notes.
A copy of the Registration Rights Agreement has been filed as an
exhibit to the Registration Statement of which this Prospectus forms a part.
SECURITY
Pursuant to the Indenture, the Indenture Trustee will hold the
Collateral (as defined below) for the benefit of the Holders of the Exchange
Notes and the holders of the Serial Notes and the Additional Notes. The Trust
Accounts will be established under the Indenture and maintained for the deposit
and application of Trust Funds as described under "--Trust Accounts" and
"--Application of Proceeds."
On the Original Closing Date, each Owner granted, assigned, bargained,
sold, transferred, conveyed, mortgaged, pledged and granted a security interest
to the Indenture Trustee, in trust for the benefit of the holders of the
Mortgage Notes all estate, right, title and interest of such Owner in, to and
under each of the following assets owned by such Owner on the Original Closing
Date, or acquired by such Owner thereafter (collectively, the "Original Closing
Date Collateral"): (i) each Building Contract and Technical Supervision
Agreement, in accordance with the terms and conditions of the related Assignment
of Building Contract; (ii) each Building Contract Guarantee, in accordance with
the terms and conditions of the related Assignment of Building Contract
Guarantee; (iii) each Initial Charter, in accordance with the terms and
conditions of the related Assignment of Charter; (iv) each Charter
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Supplement, in accordance with the terms and conditions of the related
Assignment of Charter Supplement; (v) each Chevron Guarantee, in accordance with
the terms and conditions of the related Assignment of Chevron Guarantee; (vi)
each Management Agreement, in accordance with the terms of the related
Assignment of Management Agreement; (vii) each Issue of One Debenture; (viii)
any additional security agreement, assignment or mortgage document entered into
by either Owner from time to time in connection with the Indenture; (ix) all
rights of such Owner to receive payments of any kind, to execute any election or
option or to give or receive any notice, consent, waiver or approval under or in
respect of any of the foregoing documents and instruments; (x) all moneys and
securities, including the Trust Accounts and any Permitted Investments, paid or
deposited or required to be paid or deposited to or with the Indenture Trustee
by or for the account of such Owner, or otherwise pursuant to any term of any
Security Document, and held or required to be held by the Indenture Trustee
under the Indenture; and (xi) all income, payments and proceeds of the
foregoing. All of the issued and outstanding shares of such Owner will be
pledged to the Indenture Trustee for the benefit of the holders of the Mortgage
Notes.
On the Delivery Date for a Vessel, the related Owner will grant,
assign, bargain, sell, transfer, convey, mortgage, pledge and grant a security
interest to the Indenture Trustee, in trust for the benefit of the holders of
the Mortgage Notes all estate, right, title and interest of such Owner in, to
and under each of the following assets owned by such Owner on the Original
Closing Date, or acquired by such Owner thereafter (collectively, the "Delivery
Collateral" and, collectively with the Original Closing Date Collateral, the
"Collateral"): (i) each Vessel, in accordance with the terms and conditions of
the related Mortgage; (ii) each Assignment of Earnings and Insurances; (iii) all
the charter hire, tolls, rents, issues, profits, products, revenues and other
income (including insurance, warranty and sale proceeds) of the property
subjected or required to be subjected to the Lien of the Indenture, and all of
the estate, right, title and interest of such Owner in and to the same and every
part of said property; (iv) all requisition proceeds with respect to either
Vessel or any part thereof (to the extent of the Indenture Trustee's interest
therein, as mortgagee of such Vessel, pursuant to the terms of the Mortgage) and
all insurance proceeds with respect to either Vessel or any part thereof (to the
extent of the Indenture Trustee's interest therein, as mortgagee of such Vessel,
pursuant to the terms of the Mortgage); (v) any charter assigned to the
Indenture Trustee pursuant to the Assignment of Earnings and Insurances; and
(vi) all income, payments and proceeds of the foregoing.
The Holders of the Exchange Notes and the holders of the Serial Notes
and the Additional Notes will have an equal and ratable interest in all of the
Collateral (subject to the priority of payment described herein). See "--Trust
Accounts" and "--Application of Proceeds."
During the term of the Indenture, if a Vessel is a Total Loss, the
Indenture Trustee is obligated to release such Vessel and the related Collateral
upon the Indenture Trustee's receipt of the Total Loss Payment.
PAYMENT DATES
On each Payment Date prior to the Delivery Date of a Vessel, the
Indenture Trustee shall withdraw funds from the Pre-Funding Account and deposit
such funds in the Revenue Account as described under "--Trust
Accounts--Pre-Funding Account." On each Payment Date, the Indenture Trustee
shall make the payments from amounts on deposit first in the Revenue Account and
with respect to the payments described in (a) through (e) and (g) below, then
from the Debt Service Reserve Fund, in each case to the extent of funds
available therein, in the priority set forth below:
(a) if the Delivery Date for a Vessel has occurred, to pay
Recurring Fees for such Vessel that the Manager certifies to the
Indenture Trustee are then due and payable up to an amount equal to
$50,000;
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(b) (i) to pay all interest (including default interest) then
due and payable on the Serial Notes to the holders of the Serial Notes,
ratably in the proportion that the amount of such payment then due
under each Serial Note bears to the aggregate amount of the payments
then due under all such Serial Notes, (ii) to pay all interest
(including default interest) then due and payable on each Series of
Additional Notes to the holders of such Series of Additional Notes,
ratably in the proportion that the amount of such payment then due
under such Series of Additional Notes bears to the aggregate amount of
the payments then due under such Series of Additional Notes, and (iii)
to pay all interest (including default interest and Special Interest)
then due and payable on the Exchange Notes to the holders of the
Exchange Notes ratably in the proportion that the amount of such
payment then due under each Exchange Note bears to the aggregate amount
of the payments then due under all such Exchange Notes.
(c) (i) if such Payment Date is a maturity date of a Class of
Serial Notes, to the holders of such Class of Serial Notes, on a pro
rata basis in proportion to the principal balance of each Serial Note
then Outstanding within such Class, an amount equal to the aggregate
principal balance of such Class and (ii) to pay the aggregate sinking
fund redemption amount or amounts of principal then due and payable on
each Series of Additional Notes (as indicated on the Schedule of
Sinking Fund Payments attached to the related Supplemental Indenture as
such Schedule may be adjusted pursuant to the terms and subject to the
conditions of the Indenture) to the holders of such Series of
Additional Notes, ratably in the proportion that the amount of such
principal then due under each Additional Note of such Series bears to
the aggregate amount of such principal then due under such Series of
the Additional Notes;
(d) commencing on the First Term Note Sinking Fund Payment
Date, to pay the aggregate sinking fund redemption amount or amounts of
principal then due and payable on the Exchange Notes to the holders of
the Exchange Notes ratably in the proportion that the amount of such
principal then due under each Exchange Note bears to the aggregate
amount of such principal then due under all the Exchange Notes;
(e) to pay Recurring Fees for each Vessel that are then due
and payable, to the extent not paid pursuant to (a) above;
(f) if the Delivery Date for a Vessel has occurred, to deposit
into the Operating Account the estimated Recurring Fees certified by
the Manager to the Indenture Trustee to become due and payable for such
Vessel prior to the next succeeding Payment Date;
(g) to pay to the Indenture Trustee, the Trustee Fees;
(h) to deposit into the Debt Service Reserve Fund, an amount
equal to the positive difference, if any, between (i) the Debt Service
Reserve Requirement and (ii) the amount then on deposit in the Debt
Service Reserve Fund (after giving effect to the distributions
described in (a) through (g) hereof);
(i) if the Delivery Date for a Vessel has occurred, to pay to
the Manager, the positive difference, if any, between (i) the
Management Fee then due and payable for such Vessel and (ii) the
aggregate amount paid pursuant to clauses (a), (e) and (f); and
(j) to deposit the excess, if any, into the Debt Service
Reserve Fund.
After the foregoing payments have been made, the Indenture Trustee will
invest (and reinvest, as applicable) any balance remaining in each of the Trust
Accounts in Permitted Investments that will mature on or before the next
succeeding Payment Date.
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TRUST ACCOUNTS
Pursuant to the terms of the Indenture, the Indenture Trustee is
obligated to establish and maintain each of the Trust Accounts in its name for
the benefit of the holders of the Mortgage Notes.
REVENUE ACCOUNT
There shall be deposited into the Revenue Account for each Vessel, (i)
any and all Charter Hire (including any Additional Charter Hire) payments under
the Initial Charters and any charter hire received pursuant to an Acceptable
Replacement Charter, (ii) any and all charter hire payments received by an Owner
under any other charters of the Vessels, (iii) any amounts transferred to the
Revenue Account from the Pre-Funding Account as described below under
"--Pre-Funding Account," and (iv) any and all income from the investment of
amounts held in the Revenue Account and the Debt Service Reserve Fund. Funds on
deposit in the Revenue Account shall be disbursed by the Indenture Trustee as
described above under "--Payment Dates."
DEBT SERVICE RESERVE FUND
On each Payment Date, the amounts described above in (h) and (j) shall
be withdrawn from the Revenue Account by the Indenture Trustee and deposited
into the Debt Service Reserve Fund. If any Recurring Fees, fees and expenses of
the Indenture Trustee, sinking fund payment, payment of principal, premium (if
any) or interest on the Mortgage Notes is due and payable and the moneys
available in the Revenue Account are insufficient for such payment, the
Indenture Trustee shall withdraw cash from the Debt Service Reserve Fund for the
purpose of making up such deficiency. In addition, if the Initial Charter for
such Vessel is terminated on any Optional Termination Date and the related Owner
does not enter into an Acceptable Replacement Charter and the Vessel is sold
pursuant to the terms of the Management Agreement and the Indenture, then the
Allocable Portion of the Debt Service Reserve Fund shall be released to
effectuate the redemption of the Mortgage Notes.
OPERATING ACCOUNT
Funds deposited into the Operating Account on each Payment Date will be
disbursed by the Indenture Trustee, from time to time, to pay the Recurring Fees
as such amounts become due and payable upon presentation of invoices therefor by
the Manager pursuant to the Management Agreement.
CASUALTY ACCOUNT
The Indenture Trustee will deposit into the Casualty Account any
insurance proceeds payable to the Indenture Trustee in connection with the
occurrence of a Total Loss to either Vessel. Funds deposited into the Casualty
Account in respect of a Total Loss of a Vessel will be disbursed by the
Indenture Trustee in the following order of priority: first, an amount equal to
the related Total Loss Payment will be deposited into the Termination Account
and second, the remainder, if any, will be remitted to the Initial Charterer.
TERMINATION ACCOUNT
There shall be deposited for each Vessel if the related Vessel is a
Total Loss, the Total Loss Payment, payable under the related Initial Charter or
Acceptable Replacement Charter. Any such amounts deposited into the Termination
Account will be disbursed by the Indenture Trustee in accordance with the
Indenture. See "--Mandatory Redemption."
COLLATERAL ACCOUNT
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The amount payable by the Initial Charterer under the Initial Charter
upon the occurrence of a Charter Event of Default, the cash proceeds of any sale
of, or other realization upon, all or any part of the Collateral upon the
exercise by the Indenture Trustee of any of the rights and remedies described
below (see "--Indenture Remedies"), any other amounts received by the Indenture
Trustee during the continuation of an Indenture Event of Default not otherwise
applied as indicated under "--Payment Dates" and any other amounts received by
the Indenture Trustee pursuant to any of the Security Documents for which the
Indenture does not specify another Trust Account into which such amount is to be
deposited, will be deposited into the Collateral Account.
PRE-FUNDING ACCOUNT
There was deposited into the Pre-Funding Account on the Original
Closing Date an amount equal to $60,003,347 by Golden State Petro (IOM I-A) PLC
and $61,886,728 by Golden State Petro (IOM I-B) PLC and on January 6, 1997 (the
date of the delivery of the Delayed Delivery Existing Notes) an amount equal to
$26,730,000 by Golden State Petro (IOM I-A) PLC and $26,730,000 by Golden State
Petro (IOM I-B) PLC. In addition, if and to the extent any proceeds become
payable by the Builder or the Building Contract Guarantor pursuant to any
Building Contract or Building Contract Guarantee, such amounts will be deposited
into the Pre-Funding Account. On each Payment Date prior to the Delivery Date
for each Vessel, the Indenture Trustee shall withdraw from the Pre-Funding
Account an amount equal to the interest accrued on the Allocated Principal
Amount of the Notes for such Vessel and shall deposit such amount in the Revenue
Account. On each Installment Date for each Vessel, the Indenture Trustee shall,
provided that no material default under the related Building Contract exists,
withdraw from the Pre-Funding Account an amount equal to the installment then
due and shall remit such amount to the Builder as an installment payment of the
purchase price of the related Vessel. On the Delivery Date for each Vessel, the
Indenture Trustee shall, provided that the conditions precedent set forth in the
Indenture shall have been satisfied, withdraw from the Pre-Funding Account (i)
an amount equal to the final installment of the Purchase Price and shall remit
such amount to the Builder and (ii) an amount equal to the fees and expenses
incurred in connection with the recordation and filing of the related Security
Documents in the jurisdiction where such Vessel will be registered and shall
remit it to the Manager. If the Delivery Date of a Vessel does not occur on or
before 180 days from the Contractual Delivery Date for such Vessel and the
Contractual Delivery Date is not extended as provided in the Building Contracts
or if an Owner rejects or cancels the related Building Contract pursuant to the
terms and conditions set forth therein, then the Indenture Trustee (i) shall
withdraw from the Pre-Funding Account an amount equal to the sum of (A) the
Allocated Principal Amount of the Notes for such Vessel and (B) all interest
accrued and unpaid with respect to such Notes and (ii) shall redeem the
Allocated Principal Amount of the Notes for such Vessel, first with respect to
the Serial Notes comprising such Notes, and then of the Exchange Notes
comprising such Notes at a redemption price of 100% of the principal amount
thereof plus accrued and unpaid interest through the date of redemption. If and
to the extent that payments due under the Building Contract or Building Contract
Guarantee are not paid when due, the aggregate principal amount of Notes to be
redeemed may be less than the Allocated Principal Amount thereof. If such unpaid
amounts under the Building Contract or Building Contract Guarantee are
subsequently paid, then the balance of such Allocated Principal Amount of Notes
shall be redeemed at a redemption price of 100% of the principal amount thereof
plus accrued and unpaid interest through the date of redemption. Amounts held in
the Pre-Funding Account on such 180th date will be sufficient to redeem the
Serial Notes allocable to such Vessel together with all accrued and unpaid
interest thereon. The Owners may not extend past such 180th day if such
extension would adversely affect the then current ratings of the Notes.
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PERMITTED INVESTMENTS
Permitted Investments include any of the following:
(a) direct general obligations of, or obligations fully and
unconditionally guaranteed as to the timely payment of principal and
interest by, the United States or any agency or instrumentality
thereof, provided such obligations are backed by the full faith and
credit of the United States, Federal Housing Administration debentures,
Federal Home Loan Mortgage Corporation senior debt obligations or
Federal National Mortgage Association senior debt obligations, but
excluding any of such securities whose terms do not provide for payment
of a fixed dollar amount upon maturity or call for redemption;
(b) federal funds, certificates of deposit, time and demand
deposits and banker's acceptances (having original maturities of not
more than one year) of any bank or trust company incorporated under the
laws of the United States or any state thereof, provided that the
short-term debt obligations of such bank or trust company at the dates
of acquisition thereof have been rated at least "A-1" or "P-1" (or the
equivalent) or better by Standard & Poor's and Moody's, respectively;
(c) commercial paper (having original maturities of not more
than one year) rated at least "A-1" or "P-1" (or the equivalent) or
better by Standard & Poor's and Moody's, respectively; or
(d) guaranteed investment contracts, investment agreements or
similar agreements initially rated at least "A" or "A-2" or better by
Standard & Poor's or Moody's, respectively, that are treated as
indebtedness for United States federal income tax purposes;
provided, however, that in the event amounts on deposit in the Pre-Funding
Account or the Revenue Account (until the latest maturity date of the Serial
Notes) are invested pursuant to clauses (b), (c) or (d), then such investments
must initially be rated at least "AA" or "Aa" (or the equivalent) or better by
Standard & Poor's or Moody's, respectively.
For purposes of determining whether a Permitted Investment matures on
or before the next succeeding Payment Date, each payment received under a
Permitted Investment described in clause (d) above will be considered to be the
maturity of such Permitted Investment. A guaranteed investment contract,
investment agreement or similar agreement that constitutes a senior unsecured
long-term debt obligation of a Person shall be deemed to have the same rating as
such Person's other senior unsecured long-term debt obligations, if any, that
are rated by a Rating Agency. Notwithstanding the foregoing, "Permitted
Investments" do not include "stripped securities" or investments which
contractually may return less than the purchase price therefor.
CERTAIN COVENANTS
The Indenture will contain, among other things, the following
covenants:
(a) Golden State Petroleum and each Owner will not create,
incur, assume or issue, directly or indirectly, guarantee or in any
manner become, directly or indirectly, liable for or with respect to
the payment of any Indebtedness, except for their obligations under the
Indenture, the Security Documents and the Mortgage Notes.
(b) Golden State Petroleum and each Owner will not (i)
commence any case, proceeding or other action under any existing or
future bankruptcy, insolvency or similar law seeking to have
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an order for relief entered with respect to it, or seeking
reorganization, arrangement, adjustment, wind-up, liquidation,
dissolution, composition or other relief with respect to it or its
debts, (ii) seek appointment of a receiver, trustee, custodian or other
similar official for it or any part of its assets, (iii) make a general
assignment for the benefit of creditors or (iv) take any action in
furtherance of, or consenting or acquiescing in, any of the foregoing.
(c) Neither Owner will make a Restricted Payment.
(d) Neither Owner will make any capital contributions,
advances or loans to, or investments or purchases of capital stock in,
any Person.
(e) Other customary covenants regarding changes in a Vessel's
registration jurisdiction, maintenance of existence, payment of taxes,
maintenance of books and records, right of the Indenture Trustee to
inspect the property, compliance with laws, opinions of counsel
regarding the maintenance of recordation and filings, and providing
further assurances and delivery of financial statements, compliance
certificates, reports and notices of certain material subsequent
events.
INDENTURE EVENTS OF DEFAULT
The following constitute Indenture Events of Default:
(a) If any Mortgage Event of Default shall have occurred and
be continuing.
(b) A default in the payment of any sinking fund installments,
or all or any part of the principal of, premium, if any, or interest on
any of the Mortgage Notes as and when such payment becomes due and
payable either at maturity, upon any redemption, by declaration or
otherwise and, with respect to any such payments other than payments on
maturity, the continuance of such default for a period of two Business
Days.
(c) A failure on the part of Golden State Petroleum or either
Owner duly to observe or perform in any material respect any of the
other agreements or covenants on the part of Golden State Petroleum or
such Owner contained in any Mortgage Note, the Indenture, any Security
Document or any document or certificate delivered pursuant thereto for
a period of 30 days after the earlier of (i) actual knowledge by Golden
State Petroleum or either Owner of such failure and (ii) the date on
which written notice specifying such failure and stating that such
notice is a "Notice of Default" under the Indenture has been given by
registered or certified mail, return receipt requested, to Golden State
Petroleum and the Owners by the Indenture Trustee, or to Golden State
Petroleum, the Owners and the Indenture Trustee by the holders of at
least 25% in aggregate principal amount of the Mortgage Notes at the
time outstanding.
(d) If any representation or warranty of Golden State
Petroleum or either Owner made in the Indenture, any Security Document
or any document or certificate delivered pursuant thereto proves to
have been inaccurate in any material respect when made, remains
inaccurate in such material respect for a period of 30 days after the
earlier of (i) actual knowledge by Golden State Petroleum or either
Owner of such inaccuracy and (ii) the date on which written notice
specifying such inaccuracy and stating that such notice is a "Notice of
Default" under the Indenture has been given by registered or certified
mail, return receipt requested, to Golden State Petroleum and the
Owners by the Indenture Trustee, or to Golden State Petroleum, the
Owners and the Indenture Trustee by the holders of at least 25% in
aggregate principal amount of the Mortgage Notes at the time
outstanding.
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(e) If a court having jurisdiction in the premises shall enter
a decree or order for relief in respect of Golden State Petroleum or
either Owner in an involuntary case under any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect, or
appointing a receiver, liquidator, assignee, custodian, trustee,
sequestrator (or similar official) of Golden State Petroleum or such
Owner or for any substantial part of its property or ordering the
winding up or liquidation of its affairs, and such decree or order
shall remain unstated and in effect for a period of 60 consecutive
days.
(f) If Golden State Petroleum or either Owner shall commence a
voluntary case under any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect, or consent to the entry of an
order for relief in an involuntary case under any such law, or consent
to the appointment or taking possession by a receiver, liquidator,
assignee, custodian, trustee, sequestrator (or similar official) of
Golden State Petroleum or such Owner or for any substantial part of its
property, or make any general assignment for the benefit of creditors.
(g) If a Charter Event of Default shall have occurred and be
continuing or if either of the Initial Charters is repudiated by the
Initial Charterer in writing or in a public statement or filing or
ceases to be in full force and effect, other than pursuant to the terms
thereof.
(h) If any Security Document is repudiated by an Owner in
writing or in a public statement or filing or ceases to be in full
force and effect or any of such Security Documents ceases to give the
Indenture Trustee, in any material respect, the Liens, rights, powers
and privileges purported to be created thereby, in each case other than
pursuant to the terms thereof.
(i) If the Builders fail to make any payment when due under
either Building Contract and such payment is not made pursuant to the
Building Contract Guarantee and the continuance of such default for a
period of two Business Days.
(j) If an event of default shall have occurred and be
continuing under the Chevron Guarantees or if either of the Chevron
Guarantees is repudiated by Chevron in writing or in a public statement
or filing or ceases to be in full force and effect, other than pursuant
to the terms thereof.
(k) A breach of the Companies' obligations under the
Registration Rights Agreement to use reasonable best efforts to cause
the Registration Statement of which this Prospectus forms a part or the
Shelf Registration Statement, as the case may be, to become effective
and the continuance of such breach for a period of 30 days after the
date the Companies receive written notice thereof.
INDENTURE REMEDIES
If an Indenture Event of Default (other than an Indenture Event of
Default specified in clause (e) or (f) above) occurs and is continuing, then and
in each and every such case, unless the principal of all of the Mortgage Notes
shall have already become due and payable, either the Indenture Trustee or the
holders of not less than 25% in aggregate principal amount of the Mortgage Notes
then outstanding under the Indenture, by notice in writing to Golden State
Petroleum and the Owners (and to the Indenture Trustee if given by the
Noteholders), may declare the entire principal of all the Mortgage Notes and the
interest accrued thereon, to be due and payable immediately, and upon any such
declaration the same shall become immediately due and payable. If an Indenture
Event of Default specified in clause (e) or (f) above occurs and is continuing,
then and in each and every such case, unless the principal of all of the
Mortgage Notes shall have already become due and payable, the entire principal
of all the Mortgage Notes and the interest accrued thereon, shall immediately
and without further act become due and
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payable, without presentment, demand, protest or notice by the Indenture Trustee
or any holder of Mortgage Notes. After a declaration of acceleration and before
any judgment or decree for the payment of money due has been obtained or
entered, if Golden State Petroleum shall pay or deposit with the Indenture
Trustee a sum sufficient to pay all matured sinking fund installments in respect
of the Mortgage Notes, all matured installments of interest upon all of the
Mortgage Notes and the principal of all the Mortgage Notes that shall have
become due otherwise than by acceleration (with interest on such principal and,
to the extent permitted by law, on overdue installments of interest, at the same
rate for each Mortgage Note as the rate of interest specified in such Mortgage
Note, to the date of such payment or deposit) and all amounts sufficient to
cover reasonable compensation to the Indenture Trustee and each predecessor
Indenture Trustee, their respective agents, attorneys and counsel, and all other
expenses and liabilities incurred, and all advances made, by the Indenture
Trustee and any predecessor Indenture Trustee except as result of bad faith or
negligence, under the Indenture, and if any and all Indenture Events of Default,
other than the non-payment of the principal of the Mortgage Notes that shall
become due by acceleration, shall have been cured, waived or otherwise remedied,
then the holders of a majority in aggregate principal amount of outstanding
Mortgage Notes may, by written notice, rescind and annul such declaration of
acceleration and its consequences, but no such waiver, rescission and annulment
shall extend to or shall affect any subsequent default or shall impair any right
consequent thereon. If an Indenture Event of Default has occurred and is
continuing, the Indenture Trustee may pursue any available remedy by proceeding
at law or in equity to collect the payment of principal of and interest on the
Mortgage Notes or to enforce the performance of any provision of the Mortgage
Notes or the Indenture.
The Indenture contains certain covenants pursuant to which the
Indenture Trustee will agree that, prior to the date which is one year and one
day after the payment in full of all outstanding Mortgage Notes, it will not
institute against, or join any other person in instituting against, Golden State
Petroleum or either Owner any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceeding or other similar proceeding under the laws
of the United States or any other applicable jurisdiction. No holder has any
right to institute any proceeding at law or in equity or in bankruptcy or
otherwise with respect to the Indenture or any remedy thereunder, unless the
holders of the Mortgage Notes of at least 25% in aggregate principal amount of
the outstanding Mortgage Notes have made written request, and offered reasonable
indemnity, to the Indenture Trustee to institute such proceeding as Indenture
Trustee, the Indenture Trustee has failed to institute such proceeding within 60
days after receipt of such notice and the Indenture Trustee has not within such
60-day period received directions inconsistent with such written request by the
holders of a majority in aggregate principal amount of the outstanding Mortgage
Notes. Such limitations do not apply, however, to a suit instituted by a holder
of a Mortgage Note for the enforcement of the payment of the principal of or
accrued interest on, such Mortgage Note on or after the respective due dates
expressed in such Mortgage Note.
The holders of a majority in aggregate principal amount of the
outstanding Mortgage Notes have the right to direct the time, method and place
of conducting any proceeding for any remedy available to the Indenture Trustee,
or exercising any trust or power conferred on the Indenture Trustee by the
Indenture. The Indenture provides that, subject to the duty of the Indenture
Trustee during a default to act with the required standard of care, the
Indenture Trustee is entitled to reasonable security or indemnity from the
holders before proceeding to exercise any right or power under the Indenture at
the request of the holders. The Indenture Trustee may decline to follow any such
directions from the holders if it determines that the actions so directed would
result in liability to the Indenture Trustee, would be unduly prejudicial to
holders not joining in such direction or would be unlawful.
So long as an Indenture Event of Default has occurred and is
continuing, the Indenture Trustee (to the extent directed to do so by the
appropriate holders, as discussed above), whether in its own right or as
assignee of the Owners, will proceed to exercise all the powers, remedies and
rights available under the Indenture and the Security Documents, including,
without limitation, taking possession of and selling
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the Collateral thereunder or any portion thereof or rights or interests therein,
at one or more public or private sales called and conducted in any manner
permitted by law and, during the continuance of a Mortgage Event of Default,
exercising any of its remedies under such Mortgage.
Pursuant to the terms of the Initial Charters and the Mortgages, the
right of the Indenture Trustee to enforce each Mortgage will be subject to the
right of the Initial Charterer to the continued use and operation of the related
Vessel under such Initial Charter so long as no Charter Event of Default shall
have occurred and be continuing under such Initial Charter and so long as the
Initial Charterer is performing its obligations thereunder.
APPLICATION OF PROCEEDS
Pursuant to the Indenture, all amounts in the Trust Accounts
distributable pursuant to an Indenture Event of Default will be distributed on
any distribution date fixed by the Indenture Trustee or at the request of the
Majority Noteholders in the following order of priority, to the extent of funds
available therein:
First: to the Indenture Trustee, an amount equal to any due and unpaid
trustee fees and all reasonable expenses and charges incurred by or on behalf of
the Indenture Trustee in connection with the ascertainment or protection of its
rights and the pursuance of its remedies under the Indenture or under any of the
Security Documents (including, without limitation, the reasonable fees and
disbursements of counsel);
Second: to the holders of the Serial Notes and the holders of the
Additional Notes, on a pro rata basis, an amount equal to the due and unpaid
interest (including default interest) on the Serial Notes and Additional Notes
then outstanding;
Third: to the Holders of the Exchange Notes an amount equal to the due
and unpaid interest (including default interest) on the Exchange Notes then
outstanding;
Fourth: to the holders of each Class of Serial Notes and the holders of
the Additional Notes, on a pro rata basis, an amount equal to the due and unpaid
principal of the Serial Notes and Additional Notes then outstanding;
Fifth: to the Holders of the Exchange Notes an amount equal to the due
and unpaid principal on the Exchange Notes then outstanding; and
Sixth: to the Owners or their respective successors or assigns or to
whomsoever may be lawfully entitled to receive the same or as a court of
competent jurisdiction may direct, the excess.
BOOK-ENTRY REGISTRATION
The Existing Notes sold to Qualified Institutional Buyers were, and the
Exchange Notes will be, originally issued in fully registered book-entry form,
and each of the Existing Notes and the Exchange Notes will be represented by a
global note (each a "Global Note") registered in the name of Cede & Co. ("Cede")
as the nominee of the Depository Trust Company ("DTC"). All references to
actions by holders shall, in respect of the applicable Global Note, refer to
actions taken by DTC upon instruction from DTC Participants (as defined below),
and all references herein to distributions, notices, reports and statements to
holders shall refer, as the case may be, to distributions, notices, reports and
statements to DTC or Cede, as the registered holder of the Exchange Notes or to
DTC Participants for distribution to Beneficial Owners in accordance with DTC
procedures. DTC has advised Golden State Petroleum that DTC is a limited-purpose
trust company organized under the laws of the State of New York, a member of the
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Federal Reserve System, a "clearing corporation" within the meaning of the New
York Uniform Commercial Code, and a "clearing agency" registered pursuant to the
provisions of Section 17A of the Exchange Act. DTC accepts securities for
deposit from its participating organizations ("Participants") and facilitates
the clearance and settlement of securities transactions between Participants in
such securities through electronic book-entry changes in accounts of
Participants, thereby eliminating the need for physical movement of
certificates. Participants include securities brokers and dealers, banks and
trust companies and clearing corporations and may include certain other
organizations. Indirect access to the DTC system is also available to others
such as banks, brokers, dealers and trust companies that clear through or
maintain a custodial relationship with a Participant, either directly or
indirectly ("Indirect Participants").
Golden State Petroleum expects that pursuant to procedures established
by the DTC, (i) upon deposit of the applicable Global Note, DTC will credit the
accounts of Participants designated by the Exchange Agent with portions of the
principal amount of the applicable Global Note and (ii) ownership of the
Exchange Notes evidenced by the applicable Global Note will be shown on, and the
transfer of ownership thereof will be effected only through, records maintained
by DTC (with respect to the interests of DTC's Participants), DTC's Participants
and DTC's Indirect Participants. Consequently, the ability to transfer Notes
evidenced by the applicable Global Note will be limited to such extent.
So long as Cede is the registered owner of any Exchange Notes, Cede
will be considered the sole holder under the Indenture of any Exchange Notes
evidenced by the applicable Global Note. Beneficial owners of Exchange Notes
evidenced by the applicable Global Note will not be considered the owners or
holders thereof under the Indenture for any purpose, including with respect to
the giving of any directions, instructions or approvals to the Indenture Trustee
thereunder. Neither Golden State Petroleum nor the Indenture Trustee will have
any responsibility or liability for any aspect of the records of the DTC or for
maintaining, supervising or reviewing any records of the DTC relating to the
Exchange Notes. Payments in respect of the principal of, premium, if any, and
interest, on any Exchange Notes registered in the name of Cede on the applicable
record date will be payable by the Indenture Trustee to or at the direction of
Cede in its capacity as the registered holder under the Indenture. Under the
terms of the Indenture, Golden State Petroleum, as agent of the Owners, and the
Indenture Trustee may treat the persons in whose names Exchange Notes including
the applicable Global Note, are registered as the owners thereof for the purpose
of receiving such payments. Consequently, none of Golden State Petroleum, the
Owners or the Indenture Trustee has or will have any responsibility or liability
for the payment of such amounts to beneficial owners of Exchange Notes. Golden
State Petroleum believes, however, that it is currently the policy of the DTC to
immediately credit the accounts of the relevant Participants with such payments,
in amounts proportionate to their respective holdings of beneficial interests in
the relevant security as shown on the records of the DTC. Payments by DTC's
Participants and DTC's Indirect Participants to the beneficial owners of
Exchange Notes will be governed by standing instructions and customary practice
and will be the responsibility of DTC's Participants or DTC's Indirect
Participants. Subject to certain conditions, any beneficial owner of the
applicable Global Note may obtain, through the Direct Participant through which
such beneficial owner directly or indirectly holds beneficial interest, a
certificated Exchange Note or Exchange Notes, in exchange for all or part of
such beneficial interest. In addition, the Exchange Notes will be issued in
fully registered, certificated form to beneficial owners, or their nominees,
rather than to DTC or its nominee, if DTC advises the Indenture Trustee in
writing that it is no longer willing or able or qualified to discharge properly
its responsibilities as depository with respect to the Exchange Notes and Golden
State Petroleum, as agent of the Owners, is unable to locate a qualified
successor or if Golden State Petroleum, as agent for the Owners, elects to
terminate the book-entry system through DTC. In such event, the Indenture
Trustee will notify all beneficial owners through DTC Participants of the
availability of such certificated Exchange Notes. Upon surrender by DTC of the
registered global certificates representing the Exchange Notes and receipt of
instructions for re-registration, the Indenture Trustee will re-issue the
Exchange Notes in certificated form to beneficial owners or their nominees. Such
certificated Exchange Notes will be transferable and
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exchangeable at the office of the Indenture Trustee upon compliance with the
requirements set forth in the Indenture.
TRANSFER, REGISTRATION AND EXCHANGE
A holder may transfer or exchange the Mortgage Notes in accordance with
the procedures set forth in the Indenture. The Registrar, which initially shall
be the Indenture Trustee, may require a holder, among other things, to furnish
appropriate endorsements and transfer documents, and to pay any taxes and fees
required by law or permitted by the Indenture. The Registrar is not required to
transfer or exchange any Mortgage Note selected for redemption. Also, the
Registrar is not required to transfer or exchange any Mortgage Note for a period
of 15 days before a selection of the Mortgage Notes to be redeemed or between a
record date and the next succeeding Payment Date. The registered holder of a
Mortgage Note will be treated as the owner of such Mortgage Note for all
purposes. No service charge will be imposed for any registration of transfer or
exchange, but payment of a sum sufficient to cover any transfer tax or other
governmental charge may be required.
MODIFICATION OF THE INDENTURE
The Indenture provides that Golden State Petroleum, as agent for the
Owners, and when authorized by the Owners, and the Indenture Trustee may enter
into a supplemental indenture to amend the Indenture or the Mortgage Notes
without the consent of any holder: (a) to convey, transfer, assign, mortgage or
pledge to the Indenture Trustee as security for the Mortgage Notes any property
or assets, (b) to cure any ambiguity, defect or inconsistency, (c) to comply
with the requirements of the Commission in order to maintain the qualification
of the Indenture under the Trust Indenture Act or (d) to issue a Series of
Additional Notes. The Indenture and the rights and obligations of Golden State
Petroleum, the Owners, the Indenture Trustee and the holders may be modified or
amended at any time with the consent of the holders of Mortgage Notes of not
less than a majority in aggregate principal amount of all outstanding Mortgage
Notes; provided that without the consent of the holder of each Mortgage Note
affected, no such modification or amendment shall, among other things, change
the final maturity or redemption date thereof, reduce the rate of interest
thereon, extend the time of payment of interest, reduce the principal amount
thereof, reduce any amount payable upon the redemption thereof, change the
sinking fund redemption amount, or impair the right to institute suit for the
enforcement of any such payment, or reduce the percentage of the holders of such
Mortgage Notes whose consent is required for any such modification or amendment
or modify any provisions of the Indenture relating to the amendment thereof or
the creation of a supplemental indenture (unless the change increases the rights
of the holders).
SATISFACTION AND DISCHARGE
The Indenture will be discharged and will cease to be of further effect
as to all outstanding Mortgage Notes when either (a) the Owners shall have paid
or caused to be paid the principal of, premium, if any, and interest on all the
Mortgage Notes outstanding, as and when the same shall have become due and
payable, (b) all such Mortgage Notes theretofore authenticated and delivered
(except lost, stolen or destroyed Mortgage Notes which have been replaced or
paid and Mortgage Notes for whose payment money has theretofore been deposited
in trust or segregated and held in trust by the Indenture Trustee and thereafter
repaid or discharged from such trust) have been delivered to the Indenture
Trustee for cancellation; or (c)(i) all such Mortgage Notes not theretofore
delivered to the Indenture Trustee for cancellation have become due and payable
and the Owners irrevocably deposited or caused to be deposited with the
Indenture Trustee as trust funds in trust for the purpose an amount of cash or
direct obligations of the United States, backed by its full faith credit,
maturing as to principal and interest in such amounts and at such times as will
insure the availability of cash sufficient to pay and discharge the entire
indebtedness on the Mortgage Notes not theretofore delivered to the Indenture
Trustee for
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cancellation, for principal, premium, if any, and accrued interest to the date
of such deposit; (ii) the Owners have paid all sums payable by them under the
Indenture; and (iii) the Owners have delivered irrevocable instructions to the
Indenture Trustee to apply the deposited money toward the payment of the
Mortgage Notes at maturity or the redemption date, as the case may be. In
addition, the Owners must deliver an Officers' Certificate and an opinion of
counsel stating that all conditions precedent to satisfaction and discharge have
been complied with.
INDENTURE TRUSTEE
United States Trust Company of New York will serve as Indenture Trustee
under the Indenture.
GOVERNING LAW
The Indenture and each of the Security Documents, other than the
Mortgages and the Issue of One Debenture, provide that they will be governed by
the laws of the State of New York.
CONSENT TO JURISDICTION AND SERVICE
Pursuant to the Indenture and the Security Documents of Golden State
Petroleum and each of the Owners will irrevocably appoint CT Corporation System
as its respective agent for service of process in any suit, action or proceeding
with respect to the Indenture, the Notes or the Security Documents to which it
may be a party brought in any federal or state court located in New York City
and will submit to such jurisdiction.
ADDITIONAL NOTES
GENERAL
On the Delivery Date for a Vessel, Golden State Petroleum, as agent for
the Owners, may enter into a supplement to the Indenture (each, a "Supplemental
Indenture") pursuant to which Golden State Petroleum will issue additional
series of first preferred mortgage notes (each, a "Series of Additional Notes").
Each Series of Additional Notes will mature no later than the expiration of the
Fixed Period of the related Initial Charter and will be entitled to receive
semiannual sinking fund payments. An amount equal to the Allocated Principal
Amount of the Additional Notes for a Series for each Vessel, if any, after the
payment of the costs of issuance of such Series of Additional Notes, will be
used by the related Owner, to fund the Additional Construction Costs of a
Vessel, which Additional Construction Costs shall not exceed $250,000 per Vessel
without the consent of the related Owner. Pursuant to the terms of the
Indenture, Golden State Petroleum, as agent for the Owners, will be permitted to
issue a Series of Additional Notes only if, among other things, (a) the original
principal amount of such Series of Additional Notes is equal to or less than the
sum of (i) the aggregate Additional Construction Costs for a Vessel and (ii) the
aggregate costs of issuance of such Series of Additional Notes, (b) the Rating
Agency Condition shall have been satisfied in connection with the issuance of
such Series, (c) the maturity date of the Additional Notes for such Series will
be no later than the expiration of the Fixed Period of the related Initial
Charter, (d) the additional charter hire payable by the Initial Charterer under
the related Charter Supplement will be sufficient to pay the debt service
payable on the related Series, and (e) the principal amount of the related
Series of Additional Notes will be amortized on the basis of an approximately
level mortgage-style semi-annual amortization to their maturity date and the
mandatory and optional redemption provisions shall be the same as those for the
Notes.
Each Series of Additional Notes generally will have terms substantially
identical to those described under "Description of the Notes," except for
changes to (i) the name or designation of such series; (ii) the initial
principal amount of the Additional Notes to be issued for such series (or method
for
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calculating such amount); (iii) the interest rate to be paid with respect to the
Additional Notes for such series (or method for the determination thereof); (iv)
the Allocated Principal Amount of the Additional Notes for a Series for each
Vessel; (v) if applicable, whether any Additional Notes of such series (a) will
be issued in the form of Global Notes or (b) will be Transfer Restricted
Securities and the manner of applying the provisions of the Indenture to the
transfer of such Additional Notes, and (vi) such other terms as the parties to
the applicable Supplemental Indenture deem necessary or appropriate.
SECURITY
Each Series of Additional Notes will be secured by the Collateral
equally and ratably with the Notes and each other Series of Additional Notes.
MANDATORY REDEMPTION
The Notes and Additional Notes will be subject to mandatory redemption
on a pro rata basis in an amount equal to the Allocated Principal Amount of the
Mortgage Notes of a Vessel that is a Total Loss at a redemption price equal to
100% of the principal amount thereof, plus accrued and unpaid interest to the
date fixed for redemption.
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THE MORTGAGES
GENERAL
On the Delivery Date of each Vessel, the related Owner will
grant to the Indenture Trustee a Mortgage on its Vessel to secure its
obligations under the Indenture. The Mortgages will be recorded in accordance
with the provisions of the law of the Registration Jurisdiction.
CERTAIN COVENANTS
So long as the Initial Charterer is the charterer of a Vessel,
the related Mortgage provides that the provisions of the related Initial
Charter, including, without limitation, provisions regarding the trade,
operation, documentation, registration, use, maintenance and insurance of such
Vessel, supersede the Owner's covenants with respect to such matters in the
related Mortgage. Certain Initial Charter requirements differ materially from
the Mortgage covenants described below. See "The Initial Charters."
Each Mortgage contains, among other things, certain covenants
of the Owner of the related Vessel, including the following:
(a) The Owner will not cause or permit its Vessel to be
operated in any manner contrary to law, will not engage in unlawful
trade, violate any applicable law or carry any cargo that would expose
the Vessel to penalty, confiscation, forfeiture, capture or
condemnation and will not do, suffer or permit to be done anything
which can or may injuriously affect the registration or enrollment of
its Vessel under the laws and regulations of the Registration
Jurisdiction.
(b) Except for the lien of the Mortgage and the Indenture and
Permitted Liens, the Owner will not have any right, power or authority
to create, incur or permit to be placed or imposed or continued any
Lien on its Vessel and will keep such Vessel free from any such Lien.
(c) The Owner will at all times and without cost or expense to
the Indenture Trustee maintain and preserve, or cause to be maintained
and preserved, its Vessel in good running order and repair, so that the
Vessel shall be, in so far as due diligence can make her so, tight,
staunch, strong and well and sufficiently tackled, apparelled,
furnished, equipped and in every respect seaworthy and in good
operating condition, as will entitle her to the highest classification
of The American Bureau of Shipping or such other classification society
of like standing agreeable to the Indenture Trustee, and annually will
furnish the Indenture Trustee a certificate by the Classification
Society that such classification is maintained in the highest category
for ships of the same type as the Owner's Vessel free of
recommendations and notations which have not been complied with in
accordance with their terms and shall furnish the Indenture Trustee,
from time to time and at any time upon demand, with all such
information and copies of all such documents as the Indenture Trustee
may require concerning the classification of the Owner's Vessel.
(d) Unless required to do so pursuant to the terms of the
related Initial Charter, the Owner will not transfer or change the flag
or port of documentation of its Vessel or through any action or
inaction cause the registration of its Vessel under the laws of its
Registration Jurisdiction to be void or voidable or to lapse without
the prior written consent of the Indenture Trustee.
(e) Until such time as the Indenture has been satisfied and
discharged in accordance with its terms, the Owner shall take all
actions that are necessary in order to establish and
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maintain the Mortgage or any other mortgage on the Vessel as a first
preferred mortgage lien on the Vessel under the laws of the
Registration Jurisdiction, subject only to Permitted Liens.
(f) Such Owner will not, without the prior written consent of
the Indenture Trustee, charter its Vessel by demise charter or by
period, time or voyage charter for any period other than to the Initial
Charterer under the Initial Charter or any other charterer under an
Acceptable Replacement Charter. The Owner will not modify or amend the
terms of the related Initial Charter (other than a Charter Supplement)
without the prior written consent of the Indenture Trustee.
INSURANCE
So long as a Vessel is subject to an Initial Charter, the
insurance requirements of the related Initial Charter will supersede the Owner's
covenants regarding insurance in the related Mortgage. The insurance
requirements of the Initial Charters differ materially from the Owner's Mortgage
covenants described below. See "The Initial Charters-- Insurance."
If a Vessel is no longer subject to the Initial Charter, the
requirements under the related Mortgage, which are summarized in this paragraph,
would be applicable to insurance coverage. Each Owner, at its own expense, will
maintain hull and machinery insurance (including coverage for war risks) and
will insure its Vessel against all customary risks arising from the usage and
trading of the Vessel. In addition, each Owner shall also keep its Vessel
insured against all customary protection and indemnity risks. The protection and
indemnity insurance shall include coverage against liabilities to persons who
have suffered any loss, damage or injury whatsoever in connection with anything
done or not done by the Vessel, any charterer or the Owner in connection with
the Vessel or the employment or use thereof (including in connection with any
oil or other substance emanating from the Vessel or any other vessel with which
the Vessel may be involved in collision) and against liability under OPA or any
reenactment or modification thereof under the law of any country into whose
jurisdiction the Vessel is permitted to come under the terms of the related
charter. Each insurance policy shall also provide that 14 days' written notice
be given to the Indenture Trustee prior to the cancellation or modification of
any insurance.
INSURANCE PROCEEDS
Pursuant to the Mortgage, the proceeds of any insurances or
entries referred to in the Mortgage will be applied as follows:
Until the occurrence of an Event of Default:
(a) Any claim under any such insurance (other than in respect
of a Total Loss) whether or not such claim is under the terms of the
relevant loss payable clause payable directly to the Owner, will be
applied by the Owner in making good the loss or damage in respect of
which it has been paid to the Owner in reimbursement of money expended
by it for such purpose; and
(b) Any claim in respect of protection and indemnity insurance
shall be paid directly to the person, firm or company to which the
liability covered by such insurance was incurred or the Owner in
reimbursement of moneys expended by it in satisfaction of such
liability;
provided always that for as long as the Initial Charter in respect of the Vessel
remains in force, all payments shall be in accordance with the terms of the
Initial Charter. See "Initial Charters--Insurance Proceeds. "
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Upon the occurrence of an Event of Default, subject as
provided above, any claim under any such insurance and entry (including in
respect of a Total Loss) will be paid to the Indenture Trustee, and will be
applied by the Indenture Trustee pursuant to the terms of the related Initial
Charter unless the Initial is in default thereunder in which event the Indenture
Trustee shall apply such proceeds against payment of the Notes.
Any claim under such insurance and entry in respect of a Total
Loss will be paid to the Indenture Trustee, and will be applied by the Indenture
Trustee, pursuant to the terms of the Indenture.
The Owner will not alter so as to in any way restrict the
cover of any insurances or entries referred to in the Mortgage except to the
extent expressly permitted by the Indenture Trustee.
MORTGAGE EVENTS OF DEFAULT
The following constitute Mortgage Events of Default:
(a) Default in the payment of any sums payable under the
Mortgage or the Indenture and the continuance of such default for a
period of two Business Days after such amount is due.
(b) Default by the related Owner in the due observance or
performance of any covenant with respect to maintaining insurance on
its Vessel, maintaining the Vessel free of all Liens other than
Permitted Liens, chartering the Vessel, changing the flag of the Vessel
or maintaining the Mortgage as a first preferred ship mortgage under
the laws of the Registration Jurisdiction.
(c) Default by the related Owner in the due observance or
performance of any covenant other than those described in (b) above and
the continuance of such default for a period of 30 days after the
receipt of notice thereof from the Indenture Trustee.
(d) The Vessel is deemed a Total Loss and the insurance
proceeds thereof have not been received by the Indenture Trustee within
90 days after the date on which the Vessel was deemed a Total Loss;
provided, however, if the Vessel is under charter to the Initial
Charterer pursuant to the Initial Charter or to another charterer under
an Acceptable Replacement Charter, such an event shall be an Event of
Default if the Indenture Trustee has not received the amounts payable
by the Initial Charterer or charterer, as the case may be, in the event
of a Total Loss pursuant to the Initial Charter or an Acceptable
Replacement Charter within five business days of the date on which such
amounts are due pursuant to the terms of the Initial Charter or
Acceptable Replacement Charter, as the case may be.
(e) The Owner shall abandon its Vessel.
(f) The Mortgage or any material provision thereof shall be
deemed invalidated in whole or in part by any present or future law of
the Registration Jurisdiction, or by any decision of any competent
court.
(g) An Indenture Event of Default.
REMEDIES
In the event any one or more Mortgage Events of Default shall
have occurred and be continuing, then, in each and every such case the Indenture
Trustee will have the right under each Mortgage, subject in all instances to the
rights of the Initial Charterer or another charterer to the
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continued use and operation of the related Vessel under the related Initial
Charter or Acceptable Replacement Charter so long as no Initial Charter Event of
Default shall have occurred and be continuing under such Initial Charter or
Acceptable Replacement Charter and so long as the Initial Charterer or other
charterer is performing its obligations thereunder (See "Initial
Charters--Non-Disturbance"), to:
(a) Exercise all of the rights and remedies in foreclosure and
otherwise given to mortgagees by the provisions of applicable law;
(b) Take and enter into possession of the related Vessel, at
any time, wherever the same may be, without court decision or other
legal process and without being responsible for loss or damage and the
Indenture Trustee may, without being responsible for loss or damage,
hold, lay-up, lease, charter, operate or otherwise use such Vessel for
such time and upon such terms as it may deem to be for its best
advantage, and demand, collect and retain all hire, freights, earnings,
issues, revenues, income, profits, return premiums, salvage awards or
recoveries, recoveries in general average and all other sums due or to
become due in respect of such Vessel or in respect of any insurance
thereon from any person whomsoever, accounting only for the net
profits, if any, arising from such use of such Vessel and charging upon
all receipts from use of such Vessel or from the sale thereof by court
proceedings or by private sale all costs, expenses, charges, damages or
losses by reason of such use, and if at any time the Indenture Trustee
avails itself of the right given to it to take such Vessel: (i) the
Indenture Trustee will have the right to dock such Vessel for a
reasonable time at any dock, pier or other premises of the Owner
without charge, or to dock her at any other place at the cost and
expense of the Owner, and (ii) the Indenture Trustee will have the
right to require the Owner to deliver, and the Owner will on demand, at
its own cost and expense, deliver to the Indenture Trustee such Vessel
as demanded; and the Owner will irrevocably instruct the master of the
Vessel so long as the Mortgage is outstanding to deliver such Vessel to
the Indenture Trustee as demanded; and
(c) Sell the related Vessel or any share therein with or
without the benefit of any charterparty or other engagement by public
auction or private contract without legal process at any place in the
world and upon such terms as the Indenture Trustee in its absolute
discretion may determine with power to postpone any such sale and
without being answerable for any loss occasioned by such sale or
resulting from the postponement thereof and at any such public auction
the Indenture Trustee may become the purchaser and shall have the right
to set off the purchase price against the Notes. Any sale of the
related Vessel or any shares therein made by the Indenture Trustee in
pursuance of the Mortgage will operate to divest all title, right and
interest of any nature whatsoever of the Owner therein and thereto and
shall bar the Owner, its successors and assigns, and all persons
claiming by, through or under them, provided such sale is by auction.
Upon any such sale, the purchaser will not be bound to see or inquire
whether the Indenture Trustee's power of sale has risen in the manner
provided by the Mortgage and the sale will be within the power of the
Indenture Trustee and the receipt of the Indenture Trustee for the
purchase money will effectively discharge the purchaser, who will not
be responsible for the manner of application of the proceeds of sale or
be in any way answerable or otherwise liable therefor.
ENFORCEMENT OF MORTGAGE
Each of the Vessels will be registered under the laws of the Republic
of Liberia. The Mortgages will be recorded pursuant to the laws of the Republic
of Liberia and will create preferred mortgage liens under the maritime law
thereof. In addition, in order to perfect the Mortgages granted by the Owners,
the Mortgages will also be filed in the Isle of Man. Liberian law provides that
the lien of a preferred mortgage may be enforced by the mortgagee by a suit in
rem in admiralty in a proceeding against a vessel. Historically, Liberian ship
mortgages have been enforced in major commercial ports throughout
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the world. However, the priority that such mortgages will have against the
claims of other lien creditors in an enforcement proceeding is generally
determined by, and will vary in accordance with, the laws of the country where a
proceeding is brought. Generally, such a preferred mortgage lien will rank prior
to all subsequent maritime liens other than certain other preferred maritime
liens, including liens for damages arising out of tort (including claims for oil
pollution), liens for crew's wages, liens for general average and salvage. Under
Liberian law, a preferred mortgage will also rank after certain other maritime
liens, including maritime liens for failure to pay tonnage taxes and annual
fees. Under United States law, a foreign preferred ship mortgage will also rank
after certain other maritime liens, including those for repairs, supplies,
towage, use of drydock or marine railways or other necessaries, performed or
supplied in the United States. Since each Vessel will trade throughout the world
and since a mortgage generally will be enforceable against a Vessel only in the
jurisdiction in which it is physically present, there can be no assurance that
if enforcement proceedings are commenced against a Vessel, the Vessel will be
located in a jurisdiction having the same mortgage enforcement procedures and
lien priorities as, for example, Liberia or the United States. However, upon the
occurrence of a Mortgage Event of Default relating to a Vessel, the Indenture
Trustee may be able to effect control over the Vessel to direct it to a
desirable jurisdiction to arrest the Vessel pursuant to judicial foreclosure
proceedings. See "Description of the Exchange Notes--Indenture Remedies."
Although each of the Vessels is owned by a separate Owner, under
certain circumstances a parent company and all of the shipowning affiliates in a
group under common control could be held liable for damages or debts owed by one
of the affiliates, including liabilities for spills under OPA 90 or other
environmental laws. Therefore, it is possible that all of the assets of an Owner
could be subject to execution upon a judgment against such Owner and any other
Owner, and that such judgment lien could rank ahead of the Mortgages. See "Risk
of Loss and Liability; Insurance" above.
MATERIAL UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
In the opinion of Thacher Proffitt & Wood, counsel to the Owners, the
following disclosure summarizes the material federal income tax consequences
under the Internal Revenue Code of 1986 (the "Code") of the acquisition,
ownership and disposition of the Exchange Notes and the Existing Notes. This
disclosure is based upon the provisions of the Code, the Treasury regulations
thereunder, and published rulings and court decisions in effect as of the date
hereof, all of which authorities are subject to change or differing
interpretations, which could apply retroactively. The disclosure below does not
purport to deal with federal income tax consequences applicable to all
categories of investors and is directed solely to holders that hold the Notes as
capital assets within the meaning of Section 1221 of the Code, and acquire such
Notes for investment and not as a dealer or for resale. This disclosure is not
intended to address every aspect of the federal income tax laws that may be
relevant to holders in light of their particular investment circumstances or to
certain types of holders subject to special treatment under the federal income
tax laws such as banks, insurance companies, holders that will hold the Notes as
a position in a "straddle" for tax purposes or as a part of a "synthetic
security" or "conversion transaction" or other integrated investment comprised
of the Notes and one or more other investments, certain financial institutions,
dealers in securities or holders that have a functional currency other than the
U.S. dollar. Prospective investors should note that no rulings have been or will
be sought from the Internal Revenue Service (the "IRS") with respect to any of
the federal income tax consequences discussed below, and no assurance can be
given that the IRS will not take contrary positions. Accordingly, investors
should consult their own tax advisors in determining the tax consequences to
them of an investment in the Notes and the purchase, ownership and disposition
thereof.
Holders and preparers of tax returns should be aware that under
applicable Treasury regulations a provider of advice on specific issues of law
is not considered an income tax return preparer unless the advice is (i) given
with respect to events that have occurred at the time the advice is rendered and
is not given with respect to the consequences of contemplated actions, and (ii)
directly relevant to the
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determination of an entry on a tax return. Accordingly, holders should consult
their own tax advisors and tax return preparers regarding the preparation of any
item on a tax return.
EXCHANGE OFFER
Pursuant to Treasury regulations recently issued under Section 1001 of
the Code, the exchange of an Existing Note for an Exchange Note in connection
with the Exchange Offer will not constitute a significant modification of the
Existing Note and thus will not be treated as a sale or exchange of the Existing
Note for federal income tax purposes. As a result, the Exchange Notes will have
the same issue price (and adjusted issue price immediately after the exchange)
and the same amount of original issue discount, if any, as the Existing Notes,
each Holder will have the same adjusted basis and holding period in the Exchange
Notes as it had in the Existing Notes immediately before the exchange, and
accrued and unpaid interest on the Existing Notes will not be recognized in
income by a cash-basis Holder by reason of the exchange. The following
discussion assumes that the exchange of Existing Notes for Exchange Notes
pursuant to the Exchange Offer will not be treated as a sale or exchange for
federal income tax purposes.
CHARACTERIZATION OF THE NOTES AS INDEBTEDNESS
In the opinion of Thacher Proffitt & Wood, counsel to the Owners, based
on the application of existing law, and assuming compliance with all provisions
of the Indenture, the Initial Charters and other relevant documents, and the
facts set forth above in this Prospectus, the Notes will be characterized as
indebtedness for federal income tax purposes. Furthermore, such counsel has
advised that, because Golden State Petroleum is executing the Notes solely in
its capacity as agent of the Owners pursuant to the Agency Agreement (and
pursuant to its articles of incorporation is authorized to act only in such
capacity and to engage in no other activity), the proceeds of the Notes will be
used to fund the Owners' acquisition of the Vessels, and will be secured by the
Vessels, the Initial Charters (and the charter hire thereunder) and other
property of the Owners (see "Description of the Exchange Notes--Security"), and
based upon the facts set forth above in this Prospectus and additional
information (including valuation assumptions relating to the Vessels and
financial calculations relating to the Initial Charters) provided by the Owners,
the Notes will be treated as indebtedness of the Owners for federal income tax
purposes.
TAXATION OF HOLDERS
Assuming that the Notes are characterized as indebtedness, generally,
interest on the Notes will be taxable as ordinary income for federal income tax
purposes when received by holders using the cash method of accounting and when
accrued by holders using the accrual method of accounting.
ORIGINAL ISSUE DISCOUNT
The Existing Notes were not, and the Exchange Notes will not be, issued
with original issue discount within the meaning of Section 1273 of the Code.
MARKET DISCOUNT
A subsequent holder who purchases a Note at a discount may be subject
to the "market discount" rules of the Code. These rules provide, in part, for
the treatment of gain attributable to accrued market discount as ordinary income
upon the receipt of partial principal payments or on the sale or other
disposition of a Note, and for the deferral of interest deductions with respect
to debt incurred to acquire or carry such market discount Note. In particular,
under Section 1276 of the Code, a holder who purchases a Note at a discount that
exceeds de minimis market discount (as defined below) generally will be required
to allocate a portion of each such partial principal payment or proceeds of
disposition to
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accrued market discount not previously included in income, and to recognize
ordinary income to that extent. Accordingly, holders are advised to consult
their own tax advisors regarding the impact of such requirement if the Notes are
purchased at a discount. A holder may elect to include such market discount
(including de minimus market discount, as defined below) in income currently as
it accrues rather than including it on a deferred basis in accordance with the
foregoing. If made, such election will apply to all market-discount bonds
acquired by such holder on or after the first day of the first taxable year to
which such election applied and may be revoked only with the consent of the
Internal Revenue Service. If such election is made, the interest deferral rule
described above will not apply.
If a Note is purchased at a de minimis market discount, the actual
discount will be required to be allocated among the principal payments to be
made on such Note, and the portion of such discount allocated to each principal
payment will be required to be reported as income as each principal payment is
made (unless the above described election to accrue market discount in income
currently is made). Market discount with respect to a Note will be considered to
be de minimis for purposes of Section 1276 of the Code if such market discount
is less than .25% of the principal payment of such Note multiplied by the number
of complete years to maturity remaining after the date of its purchase.
PREMIUM
In the event that a Note is purchased at a premium (i.e., generally,
the purchase price exceeds the sum of principal payments to be made thereon),
such premium will be amortizable by a holder as an offset to interest income
(with a corresponding reduction in the holder's basis) under a constant yield
method over the term of such Note if the holder makes (or has in effect) an
election under Section 171 of the Code. An election to amortize bond premium
applies to all taxable debt obligations then owned and thereafter acquired by
the taxpayer and may be revoked only with the consent of the Internal Revenue
Service.
CONSTANT YIELD ELECTION
Under Treasury Regulations, a holder may make an election (the
"Constant Yield Election") to include in gross income all interest, discount
(including de minimis market or original issue discount) and premium that
accrues on a Note in accordance with a constant yield method based on the
compounding of interest. If a holder makes a Constant Yield Election for a Note
with amortizable bond premium or market discount, such election will result in a
deemed election to amortize bond premium or accrue market discount for all of
the holder's debt instruments with amortizable bond premium or market discount
and may be revoked only with the permission of the Internal Revenue Service.
DISPOSITIONS OF EXCHANGE NOTES
Except as described above with respect to the market discount rules and
as provided under Section 582(c) of the Code in the case of banks and other
financial institutions, any gain or loss, equal to the difference between the
amount realized on the sale or exchange and the adjusted basis of an Exchange
Note, recognized on the sale or exchange of such Exchange Note by an investor
who holds such Exchange Note as a capital asset will be capital gain or loss.
For these purposes, amount realized does not include amounts attributable to
accrued but unpaid interest. Such amounts are treated as interest as described
above. The adjusted basis of an Exchange Note generally will equal its cost,
increased by any income previously reported (including any market discount
income) by the selling holder and reduced (but not below zero) by any deduction
previously allowed for losses and any amortized premium and by any payments
previously received with respect to such Exchange Note. Principal payments on
the Exchange Notes will be treated as amounts received upon a sale or exchange
of the Exchange Notes under the foregoing rules.
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INFORMATION REPORTING
The Indenture Trustee is required to furnish or cause to be furnished
to each holder with each payment a statement setting forth the amount of such
payment allocable to principal on the Note and to interest thereon at the
applicable interest rate. In addition, the Indenture Trustee is required to
furnish or cause to be furnished, within a reasonable time after the end of each
calendar year, to each holder who was such a holder at any time during such
year, a report indicating such other customary factual information as the
Indenture Trustee deems necessary to enable holders of Note to prepare their tax
returns. Holders should consult their own tax advisors to determine the amount
of any market discount includible in income during a calendar year.
FOREIGN INVESTORS
A holder that is not a "United States person" (as defined below) and is
not subject to federal income tax as a result of any direct or indirect
connection to the United States in addition to its ownership of a Note generally
will not be subject to United States federal income or withholding tax in
respect of interest (including accrued market discount) paid on a Note provided
that the holder complies to the extent necessary with certain identification
requirements by delivery (or causing to be delivered) to the Indenture Trustee
an appropriate form (such as of an IRS Form W-8 (or any successor form) or
substantially similar statement, signed by the holder under penalties of
perjury, certifying that such holder is not a United States person, and
providing the name and address of such holder). Notwithstanding the foregoing,
United States withholding tax may be imposed with respect to interest paid on
Notes held by a holder that directly or indirectly owns a 10% or greater
interest in either of the Owners, is a controlled foreign corporation related,
directly or indirectly, to the company through stock ownership or is a bank
receiving interest described in Section 881(c)(3)(A) of the Code. Such a holder
may be subject to a United States withholding tax on interest paid on the Notes
at a 30% rate, subject to rate reduction available under any applicable tax
treaty.
Amounts allocable to interest received by a holder that is not a United
States person, which constitute income that is effectively connected with a
United States trade or business carried on by the holder, will not be subject to
withholding tax, but rather will be subject to United States income tax at the
graduated rates applicable to United States persons, provided the holder
supplies (at the time of its initial purchase, and at such subsequent times as
are required under the Treasury regulations) a completed IRS Form 4224 (or any
successor form) to report its exemption from withholding.
For these purposes, "United States person" means a citizen or resident
of the United States, a corporation, partnership or other entity created or
organized in, or under the laws of, the United States or any political
subdivision thereof, or an estate whose income is subject to United States
federal income tax regardless of its source, or a trust if a court within the
United States is able to exercise primary supervision over the administration of
the trust and one or more United States fiduciaries have the authority to
control all substantial decisions of the trust. Holders who are not United
States persons should consult their own tax advisors regarding the tax
consequences of purchasing, owning or disposing of a Note.
BACKUP WITHHOLDING
Payments of interest and principal, as well as payments of proceeds
from the sale of Notes, may be subject to the "backup withholding tax" under
Section 3406 of the Code at a rate of 31% if recipients of such payments fail to
furnish to the payor certain information, including their taxpayer
identification numbers, or otherwise fail to establish an exemption from such
tax. Any amounts deducted and withheld from a distribution to a recipient would
be allowed as a credit against such recipient's federal income tax liability.
Furthermore, certain penalties may be imposed by the IRS on a recipient of
payments that is
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required to supply information but that does not do so in the proper manner.
Information returns will be sent annually to the IRS and each holder setting
forth the amount of interest paid on the Notes and the amount of any tax
withheld thereon.
STATE, LOCAL, FOREIGN AND OTHER TAXES
Investors should consult their own tax advisors regarding whether the
purchase of the Notes, either alone or in conjunction with an investor's other
activities, may subject an investor to any state or local taxes, or to taxes
imposed by any taxing jurisdiction outside the United States, based on an
assertion that the investor is either "doing business" in, or deriving income
from a source located in, any state, local or foreign jurisdiction, including
any such assertion arising from the presence, use, trading or operation of any
of the Vessels in such jurisdiction or any activities in such jurisdiction of an
Owner or any other person. Additionally, potential investors should consider the
state, local, foreign and other tax consequences of purchasing, owning or
disposing of a Note. State, local and foreign tax law may differ substantially
from the corresponding federal tax law, and the foregoing discussion does not
purport to describe any aspect of the tax laws of any state or other
jurisdiction. Accordingly, potential investors should consult their own tax
advisors with regard to such matters.
CERTAIN ISLE OF MAN TAX CONSEQUENCES
Special Isle of Man counsel has advised the Owners that no withholding
taxes will be imposed on sinking fund payments or payments of principal,
interest or premium, if any, thereon with respect to the Mortgage Notes and that
the holders will not be subject to any income taxes imposed by the Isle of Man
solely as a result of owning the Mortgage Notes. Investors should consult their
own tax advisors regarding whether the purchase of the Mortgage Notes in
conjunction with an investor's other activities in the Isle of Man, may subject
an investor to any taxes imposed by the Isle of Man.
To the extent the Isle of Man in the future does impose a withholding
tax with respect to sinking fund payments or payments of principal, interest or
premium (if any) on the Mortgage Notes, the Owners will make the required
withholding and are not required to gross-up or indemnify holders for amounts
withheld. Pursuant to the Indenture, in the event the Isle of Man does impose a
withholding tax with respect to such payments, the Owners are obligated to take
any lawful action to the extent necessary to prevent or avoid the imposition of
any withholding taxes, including changing their jurisdiction of incorporation or
residence; provided however, that the Owners will not be required to take, or
fail to take, any action (x) if in the opinion of counsel such act or failure to
act would violate applicable law or (y) if in the reasonable opinion of the
Owners the actions necessary to avoid or prevent imposition of such taxes would
be unduly burdensome. For purposes of clause (y) of the immediately preceding
sentence, a requirement to change the jurisdiction of the Owners' incorporation
or residence will not be treated as unduly burdensome unless changing the
Owners' jurisdiction of incorporation or residence to such other jurisdiction or
location would (i) subject the Owners to charges in such other jurisdiction,
including but not limited to taxes imposed on or measured by its income,
receipts, property, assets, capital, sales or value-added or (ii) cause the
Initial Charterer to be required to withhold or deduct charges with respect to
charter hire payable under the Initial Charters.
MANAGEMENT AGREEMENTS
Cambridge Fund Management LLC has agreed to provide administrative,
management and advisory services to the Owners pursuant to the Management
Agreements. The Manager is an Affiliate of Golden State Petroleum and the
Owners. Pursuant to each Management Agreement, the Manager will be entitled to a
fee (the "Management Fee") of $50,000 per year per Vessel for all periods
commencing on the Original Closing Date. All Recurring Fees are payable by the
Manager from the Management Fee. The Management Fee will be payable
semi-annually on each Payment Date from amounts on deposit
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in the Ship Management Reserve Fund. See "Description of the Exchange
Notes--Trust Accounts--Ship Management Reserve Fund." In connection with the
offering and sale of the Existing Notes, Cambridge Petroleum Transport
Corporation provided financial advisory services to Golden State Petroleum and
the Owners for which it received a fee. See "Prospectus Summary--Sources and
Uses of Funds Through the Delivery Dates." Cambridge Petroleum Transport
Corporation is an Affiliate of Golden State Petroleum and the Owners.
PLAN OF DISTRIBUTION
Each broker-dealer that receives Exchange Notes for its own account
pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such Exchange Notes. This
Prospectus, as it may be amended or supplemented from time to time, may be used
by a broker-dealer in connection with resales of Exchange Notes received in
exchange for Exchange Notes where such Exchange Notes were acquired as a result
of market-making activities or other trading activities. The Companies have
agreed that, starting on the Expiration Date and ending on the close of business
of the first anniversary of the Expiration Date, they will make this Prospectus,
as amended or supplemented, available to any broker-dealer for use in connection
with any such resale.
The Owners will not receive any proceeds from any sale of Exchange
Notes by broker-dealers. Exchange Notes received by broker-dealers for their own
account pursuant to the Exchange Offer may be sold from time to time in one or
more transactions in the over-the-counter market, in negotiated transactions,
through the writing of options on the Exchange Notes or a combination of such
methods of resale, at market prices prevailing at the time of resale, at prices
related to such prevailing market prices or at negotiated prices. Any such
resale may be made directly to purchasers or to or through brokers or dealers
who may receive compensation in the form of commissions or concessions from any
such broker-dealer and/or the purchasers of any such Exchange Notes. Any
broker-dealer that resells Exchange Notes that were received by it for its own
account pursuant to the Exchange Offer and any broker or dealer that
participates in a distribution of such Exchange Notes may be deemed to be an
"underwriter" within the meaning of the Securities Act, and any profit on any
such resale of Exchange Notes and any commissions or concessions received by any
such persons may be deemed to be underwriting compensation under the Securities
Act. The Letter of Transmittal states that by acknowledging that it will deliver
and by delivering a prospectus, a broker-dealer will not be deemed to admit that
it is an "underwriter" within the meaning of the Securities Act.
For a period of one year after the Expiration Date, the Companies will
promptly send additional copies of this Prospectus and any amendment or
supplement to this Prospectus to any broker-dealer that requests such documents
in the Letter of Transmittal. The Manager has agreed to pay all expenses
incident to the Exchange Offer (including the expenses of one counsel for the
Holders of the Exchange Notes) other than commissions or concessions of any
brokers or dealers and fees.
RATING
The Exchange Notes have been rated "Baa2" by Moody's, "BBB" by Standard
& Poor's and "BBB-" by Duff & Phelps. A security rating is not a recommendation
to buy, sell or hold securities and may be subject to revision or withdrawal at
any time. The ratings of the Rating Agencies assigned to the Notes address the
likelihood of the receipt by Holders of the Notes of all distributions to which
such Holders are entitled. The ratings assigned to the Notes do not represent
any assessment of the likelihood that principal prepayments might differ from
those originally anticipated or address the possibility that Holders might
suffer a lower than anticipated yield. In the event that the rating initially
assigned to any of the Notes is subsequently lowered for any reason, no person
or entity is obligated to provide any additional support or credit enhancement
with respect to such Note. The ratings do not address the possibility that
Holders of the Notes may suffer a lower than anticipated yield.
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The Owners have not requested a rating on the Notes by any rating
agencies other than the Rating Agencies. However, there can be no assurance as
to whether any other rating agency will rate the Notes, or, if it does, what
rating would be assigned by any such other rating agency. A rating on the Notes
by another rating agency, if assigned at all, may be lower than the ratings
assigned to the Note by the Rating Agencies.
LEGAL MATTERS
Certain legal matters will be passed upon for Golden State Petroleum,
the Owners and the Manager by Thacher Proffitt & Wood, New York, New York and
Cains, Douglas, Isle of Man.
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APPENDIX A
CERTAIN SHIPPING TERMS
The following shipping terms are used in this Prospectus.
"AFRAMAX TANKER" means a vessel of approximately 60,000 to 120,000 dwt.
"BAREBOAT CHARTER" means the contract for hire of a ship for a certain
period of time during which the charterer is responsible for the operating costs
and voyage costs of the ship. Sometimes called a demise charter.
"CERCLA" means the Comprehensive Environmental Response, Compensation
and Liability Act.
"CHARTER" means the hire of a ship for a specified period of time or to
carry a cargo for a fixed fee from a loading port to a discharging port. The
contract for a charter is called a charter party.
"CLASSIFICATION SOCIETY" means a private organization which has as its
purpose the supervision of vessels during their construction and afterward, in
respect to their seaworthiness and upkeep, and the placing of vessels in grades
or "classes" according to the society's rules for each particular type of
vessel.
"DOUBLE HULL" means hull construction technique by which a ship has an
inner and outer hull separated by void space, usually several feet in width.
"DWT (DEADWEIGHT TONNE)" means a unit of a vessel's capacity, for
cargo, fuel oil, stores and crew, measured in metric tonnes of 1,000 kilograms.
A vessel's dwt or total deadweight is the total weight the vessel can carry when
loaded to a particular load line.
"FREIGHT" means the compensation for carriage of cargo.
"IMO" means International Maritime Organization, a United Nations
agency that issues, inter alia, international trade standards for shipping.
"LAY-UP" means mooring a ship at a protected anchorage, shutting down
substantially all of its operating systems and taking measures to protect
against corrosion and other deterioration.
"NEWBUILDING" means a new vessel under construction.
"OPA 90" means the United States Oil Pollution Act of 1990, as amended.
"PROTECTION AND INDEMNITY INSURANCE" means the insurance obtained
through a mutual association formed by shipowners to provide protection from
financial loss to one member by contribution towards that loss by all members.
"SPECIAL SURVEY" means the inspection of a vessel by a classification
society surveyor which takes place at a minimum every four years and at a
maximum every five years.
"SPOT MARKET" means the market for immediate chartering of a vessel.
"SUEZMAX TANKER" means a vessel of approximately 120,000 to 200,000
dwt, of a maximum length, breadth and draught capable of passing through the
Suez Canal.
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"TANKER" means a ship designed for the carriage of liquid cargoes in
bulk, her cargo space consisting of many tanks. Tankers carry a variety of
products including crude oil, refined products, liquid chemicals and liquid gas.
Tankers load their cargo by gravity from the shore or by pumps and discharge
using their own pumps.
"TIME CHARTER" means the hire of a ship for a specified period of time.
The owner provides the ship with crew, stores and provisions, ready in all
aspects to load cargo and proceed on a voyage. The charterer pays for bunkering
and all voyage related expenses including canal tolls and port charges.
"TONNE" means a metric tonne of 1,000 kilograms.
"TONNE-MILES" means a measure of tanker demand. Cargo tonnes carried by
a vessel multiplied by the distance traveled.
"TOVALOP Scheme" means the Tankers Owners Voluntary Agreement
concerning Liability for Oil Pollution dated January 7, 1969, as amended.
"ULCC" means ultra-large crude carriers.
"VLCC" means very large crude carriers.
"VOYAGE CHARTER" means a contract of carriage in which the charterer
pays for the use of a ship's cargo capacity for one, or sometimes more than one,
voyage. Under this type of charter, the shipowner pays all the operating costs
of the ship (including bunkers, canal and port changes, pilotage, towage and
ship's agency) while payment for cargo handling charges are subject of agreement
between the parties. Freight is generally paid per unit of cargo, such as a
tonne, based on an agreed quantity, or as a lump sum irrespective of the
quantity loaded.
Shipping terms supplied by the Dictionary of Shipping Terms and other
sources.
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GLOSSARY OF CERTAIN TERMS
The following is a glossary of certain terms used in this Prospectus.
The definitions of terms used in this glossary that are also used in the
Indenture, the Initial Charters or the Mortgages are qualified in their entirety
by reference to the definition of such terms contained therein.
"ACCEPTABLE REPLACEMENT CHARTER" means any replacement charter which
satisfies each of the following requirements: (i) the charter is a bareboat
charter and requires that the charterer thereunder "gross up" charter hire
payments to indemnify and hold the holders of the Mortgage Notes harmless from
any withholding tax imposed on the charter hire payments or on the payments of
the Mortgage Notes, (ii) the charter hire payments payable during the
non-cancelable term of such replacement charter, after giving effect to (1) any
"gross up" of such amounts as a result of any withholding, transportation or
excise tax on such charter hire payments, (2) the Allocable Portion of the Debt
Service Reserve Fund and (3) all fees and expenses incurred in connection with
the recharter of the Vessel, provide sufficient funds for the payment in full
when due of (A) the Allocated Principal Amount of the Mortgage Notes for the
related Vessel and interest thereon in accordance with the revised schedule of
sinking fund and principal payments, that is applicable upon termination of the
related Initial Charter, (B) the amount of Recurring Fees for such Vessel, (C)
the amount of Management Fees for such Vessel, (D) the amount of fees and
expenses of the Indenture Trustee and Trustee Fees allocable to such Vessel and
(E) an amount at least equal to 30% of the estimated amounts, on a per annum
basis, referred to in clauses (B), (C) and (D) above for miscellaneous or
unexpected expenses and (iii) the Rating Agencies shall have confirmed in
writing to the Indenture Trustee that the terms and conditions of such proposed
charter will not result in the withdrawal or reduction of the then current
ratings of the Mortgage Notes.
"ADDITIONAL CHARTER HIRE" means additional charter hire payable
pursuant to a Charter Supplement in an amount sufficient to allow the related
Owner to service the aggregate debt incurred on any Additional Notes in
connection with any Additional Construction Costs.
"ADDITIONAL CONSTRUCTION COSTS" means any net increases in construction
costs for a Vessel which (i) result from actions by the Initial Charterer or the
Technical Supervisor; (ii) are approved by the related Owner, such approval not
to be unreasonably withheld; and (iii) occur after execution of the related
Building Contract on the Original Closing Date but prior to the related Delivery
Date.
"ADDITIONAL NOTE" means each first preferred mortgage note issued
pursuant to a Supplemental Indenture to finance the Additional Construction
Costs of a Vessel.
"AFFILIATE" means, with respect to any Person (the "relevant Person"),
(i) any other Person that directly, or indirectly through one or more
intermediaries, controls the relevant Person (a "Controlling Person") or (ii)
any Person (other than the relevant Person) which is controlled by or is under
common control with a Controlling Person. As used herein, the term "control"
means possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of a Person, whether through the
ownership of voting securities, by contract or otherwise.
"ALLOCATED PRINCIPAL AMOUNT OF THE ADDITIONAL NOTES" means, when used
with reference to the Additional Notes and either Vessel at any date of
determination, the product of (a) the aggregate outstanding principal amount of
Additional Notes as of such date and (b) a fraction (i) the numerator of which
is the aggregate outstanding principal amount of Additional Notes for such
Vessel as specified with respect to such Vessel in the related Supplemental
Indenture and (ii) the denominator of which is the aggregate initial principal
amount of all Additional Notes.
"ALLOCATED PRINCIPAL AMOUNT OF THE MORTGAGE NOTES" means, when used
with reference to the Mortgage Notes and either Vessel at any date of
determination, the sum of (a) the Allocated Principal
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Amount of the Notes for such Vessel and (b) the Allocated Principal Amount of
the Additional Notes for such Vessel.
"ALLOCATED PRINCIPAL AMOUNT OF THE NOTES" means, when used with
reference to the Notes and either Vessel amounts indicated on Schedule 1
attached hereto.
"ASSIGNMENT OF BUILDING CONTRACT" means, for each Vessel, the Building
Contract Assignment, dated as of December 1, 1996, between the related Owner and
the Indenture Trustee, pursuant to which such Owner collaterally assigns its
rights, title and interests in the related Building Contract and the Technical
Supervision Agreement to the Indenture Trustee.
"ASSIGNMENT OF BUILDING CONTRACT GUARANTEE" means, for each Building
Contract Guarantee, the Assignment of Building Contract Guarantee, dated as of
December 1, 1996, between the related Owner and the Indenture Trustee, as the
same may be amended from time to time, pursuant to which such Owner collaterally
assigns its rights, title and interest in the related Building Contract
Guarantee therein to the Indenture Trustee.
"ASSIGNMENT OF CHARTER" means, for each Initial Charter, the Assignment
of Charter, dated as of December 1, 1996, between the Owner of the related
Vessel and the Indenture Trustee, as the same may be amended from time to time,
pursuant to which such Owner collaterally assigns its rights, title and interest
therein to the Indenture Trustee.
"ASSIGNMENT OF CHARTER SUPPLEMENT" means, for the Charter Supplement,
the Assignment of Charter Supplement, dated the date of the related Supplemental
Indenture, between the Owner of the related Vessel and the Indenture Trustee, as
the same may be amended from time to time, pursuant to which such Owner
collaterally assigns its right, title and interest therein to the Indenture
Trustee.
"ASSIGNMENT OF EARNINGS AND INSURANCES" means, for each Vessel, the
Assignment of Earnings and Insurances, dated the Delivery Date for such Vessel,
between the related Owner and the Indenture Trustee, as the same may be amended
from time to time, pursuant to which such Owner collaterally assigns its right,
title and interest in the earnings and insurances on such Vessel to the
Indenture Trustee.
"ASSIGNMENT OF GUARANTEE" means, for each Chevron Guarantee, the
Assignment of Guarantee, dated as of December 1, 1996, between the Owner of the
related Vessel and the Indenture Trustee, as the same may be amended from time
to time, pursuant to which such Owner collaterally assigns its right, title and
interest therein to the Indenture Trustee.
"ASSIGNMENT OF MANAGEMENT AGREEMENT" means, for each Management
Agreement, the Assignment of Management Agreement, dated as of December 1, 1996,
between the Owner of the related Vessel and the Indenture Trustee, as the same
may be amended from time to time, pursuant to which such Owner collaterally
assigns its right, title and interest therein to the Indenture Trustee.
"BUILDING CONTRACT GUARANTEE" means, for each Vessel, the Building
Contract Guarantee, dated the Original Closing Date, given by the Building
Contract Guarantor to the Owner in connection with the related Vessel.
"BUILDING CONTRACT GUARANTOR" means The Korea Development Bank.
"BUSINESS DAY" means any day except a Saturday, a Sunday or a day on
which banking institutions in New York, New York, San Francisco, California or
in the city and state where the Indenture Trustee's principal offices are
located, are authorized or are obligated by law, executive order or governmental
decree to be closed.
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"CHARTER EVENT OF DEFAULT" means, for each Initial Charter, each of the
events designated as a default in Clause 17 of such Initial Charter.
"CHARTER HIRE" means, for each Initial Charter, the scheduled payments
of charter hire thereunder, as may be increased from time to time pursuant to a
Charter Supplement or reduced by the Charter Hire Reduction during the Fixed
Period and by the Charter Hire Reduction during each Optional Period.
"CHARTER HIRE REDUCTION" means an amount equal to the amount necessary
to reflect the amortization of the Net Reduction in Construction Costs over the
term of the related Initial Charter.
"CHARTER SUPPLEMENT" means, with respect to each Initial Charter, the
Initial Charter Supplement dated the date of the related Supplemental Indenture,
between the Owner of the related Vessel and the Initial Charterer.
"CHEVRON GUARANTEE" means, for either Vessel, the Guarantee, dated the
Original Closing Date, given by Chevron to the related Owner in connection with
the related Initial Charter.
"CLASS" means each class of Securities constituting a separate issuance
by Golden State Petroleum, as agent for the Owners, of serial first preferred
mortgage notes or first preferred mortgage notes under the Indenture or
additional first preferred mortgage notes under a Supplemental Indenture,
provided that the Exchange Notes and the Existing Notes shall constitute one
class for purposes of this definition.
"COMPULSORY ACQUISITION" means requisition for title or other
compulsory acquisition of either Vessel (otherwise than by requisition for
hire), capture, seizure, condemnation, destruction, detention or confiscation of
such Vessel by any Governmental Authority or by persons acting or purporting to
act on behalf of any Governmental Authority.
"CONTRACTUAL DELIVERY DATE" means, for Vessel A, February 1, 1999, and
for Vessel B, July 1, 1999.
"DEFAULT PAYMENT" means, as of any date of determination and as
calculated by the Manager, with respect to each Vessel and the related Initial
Charter, the sum of (a) the sum of (i) the Stipulated Loss Value in relation to
the period in question calculated pursuant to the related Initial Charter, (ii)
all charter hire accrued (on a daily basis) but unpaid under such Initial
Charter to the actual date of payment and (iii) any other amounts due to the
related Owner under such Initial Charter on or prior to the actual date of
payment, and (b) interest on the amount described in (a) (after as well as
before judgment) at the Default Rate from the date such amounts were payable to
the actual date of payment.
"DEFAULT RATE" means, with respect to a Mortgage Note, a rate per annum
for each day from the date of a default in any payment hereunder until such
payment shall be paid in full equal to the lesser of (a) 1.0% above the interest
rate indicated in such Mortgage Note and (b) the sum of 1.5% and LIBOR.
"DUFF & PHELPS" means Duff & Phelps Credit Rating Co.
"GOVERNMENTAL APPROVAL" means any authorization, consent, approval,
license, franchise, lease, ruling, permit, tariff, rate, certification,
exemption, filing or registration by or with any Governmental Authority relating
to the ownership of the Collateral or to the execution, delivery or performance
of this Indenture or any Security Document.
"GOVERNMENTAL AUTHORITY" means the United States federal or any foreign
government, any state or other political subdivision thereof, and any entity
exercising executive, legislative, judicial, regulatory
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or administrative functions of or pertaining to government and any other
governmental entity with authority over an Owner, the Initial Charterer or
operation of a Vessel.
"HOLDER" means a registered holder of any Term Note.
"HOLDER" means a registered holder of any Mortgage Note.
"INDEBTEDNESS" means, with respect to any Person, all obligations,
whether or not contingent, of such Person (i)(a) for borrowed money (including,
but not limited to, any indebtedness secured by a Lien on the assets of such
person which is (1) given to secure all or part of the purchase price of
property subject thereto, whether given to the vendor of such property or to
another, or (2) existing on property at the time of acquisition thereof), (b)
evidenced by a note, debenture, bond or written instrument, (c) under a lease
required to be capitalized on the balance sheet of the lessee under generally
accepted accounting principles or under any lease or related document (including
a purchase agreement) which provides that such person is contractually obligated
to purchase or to cause a third party to purchase such leased property, (d) in
respect of letters of credit, bank guarantees or bankers' acceptances (including
reimbursement obligations with respect to any of the foregoing), (e) with
respect to indebtedness secured by a Lien affecting title or resulting in an
encumbrance to which the property or assets of such Person are subject, whether
or not the obligation secured thereby shall have been assumed or guaranteed by
or shall otherwise be such person's legal liability, (f) in respect of the
balance of deferred and unpaid purchase price of any property or assets, and (g)
under interest rate or currency swap agreements, cap, floor and collar
agreements, spot and forward contracts and similar agreements and arrangements;
(ii) with respect to any obligation of others of the type described in the
preceding clause (i) assumed by or guaranteed in any manner by such Person or in
effect guaranteed by such Person through an agreement to purchase (including,
without limitation, "take or pay" and similar arrangements), contingent or
otherwise (and the obligations of such Person under any such assumptions,
guarantees or other such arrangements); and (iii) any and all deferrals,
renewals, extensions, refinancings and refundings of, or amendments,
modifications or supplements to, any of the foregoing.
"INITIAL CHARTER" means, for each Vessel, the bareboat charter between
the related Owner and the Initial Charterer, dated the Original Closing Date, as
the same may be amended, supplemented and modified from time to time.
"ISSUE OF ONE DEBENTURE" means, for each Owner, the Issue of One
Debenture, dated as of December 1, 1996, between such Owner and the Indenture
Trustee, as the same may be amended from time to time.
"LAW" means any statute, law, rule, regulation, ordinance, order, code,
policy or rule of common law, now or hereafter in effect, and any judicial or
administrative interpretation thereof by a Governmental Authority or otherwise,
including any judicial or administrative order, consent decree or judgment.
"LIBOR" means the rate calculated on the basis of the offered rates for
deposits in dollars for a one-month period which appear on the Reuters Screen
LIBO Page as of 11:00 A.M., London time, on the date that is two London Banking
Days preceding the date of calculation. If at least two such offered rates
appear on the Reuters Screen LIBO Page, LIBOR will be the arithmetic mean of
such offered rates (rounded to the nearest .0001 percentage point). If, at any
time of determination, the Reuters Screen LIBO Page is not available, LIBOR will
be calculated as the average (rounded upward, if necessary, to the next higher
1/16 of 1%) of the respective ratio per annum at which deposits in dollars for a
one month period are offered to each of three reference banks in the London
interbank market at approximately 11:00 A.M., London time, on the date that is
two London Banking Days preceding the date of calculation. Each of the Initial
Charterer and the Indenture Trustee will select a reference bank
A-6
<PAGE>
and the third reference bank will be selected by the Initial Charterer and the
Indenture Trustee together or, failing agreement, by the previously selected
reference banks together.
"LIEN" means, with respect to any asset, any mortgage, lien (statutory
or otherwise), pledge, security interest, claim, hypothecation, assignment for
security, deposit arrangement or security interest of any kind in respect of
such asset. For the purposes of this Indenture, a Person shall be deemed to own
subject to a Lien any asset which it has acquired or holds subject to the
interest of a vendor or lessor under any conditional sale agreement, capital
lease or other title retention agreement relating to such asset.
"LONDON BANKING DAY" means any day on which dealings in deposits in
United States dollars are carried on in the London interbank market and on which
commercial banks are open for domestic and international business (including
dealings in United States dollar deposits) in London and New York.
"LOSS PAYMENT DATE" means, with respect to a Total Loss, the date which
is 90 days after the occurrence of such Total Loss.
"MAKE-WHOLE PREMIUM," if applicable to the optional redemption of any
Term Note, means the excess, if any, of (i) the aggregate present value as of
the date of such redemption of each dollar of principal of such Term Note being
redeemed and the amount of interest (exclusive of interest accrued to the date
of redemption) that would have been payable in respect of such dollar if such
redemption had not been made, determined by discounting, on a semiannual basis,
such principal and interest at a rate equal to the sum of the Treasury Yield
(determined on the Business Day immediately preceding the date of such
redemption) plus 0.375% (three-eighths of one percent) from the respective dates
on which such principal and interest would have been payable if such redemption
had not been made, over (ii) the aggregate principal amount of such Exchange
Notes and such untendered Existing Notes, if any, being redeemed.
"MANAGEMENT AGREEMENT" means, for each Owner, the Management Agreement,
dated the Original Closing Date, between such Owner and the Manager, as the same
may be amended from time to time.
"MANAGEMENT FEE" means, with respect to each Vessel, an amount per year
payable semi-annually in arrears on each Payment Date equal to $50,000.
"MANAGER" means Cambridge Fund Management, L.L.C., a Delaware limited
liability company, or any other Person acting from time to time as Manager in
accordance with the terms of the Management Agreement.
"MOODY'S" means Moody's Investors Service, Inc.
"MORTGAGE" means, for each Vessel, the First Preferred Ship Mortgage
for such Vessel, dated the Delivery Date of such Vessel, between the related
Owner and the Indenture Trustee, as the same may be amended from time to time.
"MORTGAGE EVENT OF DEFAULT" means an event of default as defined in the
Mortgage.
"NET REDUCTION IN CONSTRUCTION COSTS" means any net decreases in
construction costs for a Vessel which (i) result from actions by the Initial
Charterer or Technical Supervisor, (ii) are approved by the related Owner, such
approval to not be unreasonably withheld; and (iii) occur after the execution of
the related Building Contract on the Original Closing Date but prior to the
related Delivery Date.
A-7
<PAGE>
"OWNER TAXES" means any income, franchise or equivalent tax, imposed
upon or measured by the net income, stated capital or earned surplus of an Owner
by any federal, state, local or other taxing authority of any jurisdiction
worldwide, or any taxes that result from the willful misconduct or gross
negligence of such Owner or from the inaccuracy or breach of any representation,
warranty or covenant of such Owner contained in any of Clauses 6, 20, 21(a)(iv),
or 22(k) of the Initial Charter or in any document furnished in connection with
such Clauses by such Owner, or any taxes that would not have been imposed but
for the failure of such Owner (a) to provide to the Initial Charterer (for
filing by the Initial Charterer with the taxing jurisdiction imposing such taxes
or retention in the Initial Charterer's records) upon the Initial Charterer's
timely request such certifications, information, documentation or reports
concerning such Owner's identity, jurisdiction of incorporation or residency, or
connection with such taxing jurisdiction or (b) to promptly file upon the
Initial Charterer's timely request such reports or returns (which shall be
prepared with reasonable care in accordance with the Initial Charterer's written
instructions) claiming (or availing itself of) any applicable extensions or
exemptions (to the extent that timely notice thereof is provided by the Initial
Charterer); provided that Owner Taxes shall not include any such tax imposed on
any amount that is (i) an indemnity or reimbursement of such Owner, (ii) an
operating or maintenance expense, (iii) any tax imposed pursuant to Section 887
of the United States Internal Revenue Code of 1986, as amended, or (iv) a tax
for which the Initial Charterer is otherwise liable under the Initial Charter;
and provided further that Owner Taxes shall not include any such tax imposed by
any government, jurisdiction or taxing authority other than the United States
Federal government solely as a result of the location of the Vessel or the
Vessel's use by the Initial Charterer.
"PERMITTED LIENS" means, for each Owner, Liens created under the
related Mortgage and Security Documents, the Initial Charter for the related
Vessel or other charter or conditional sale contracts and agreements for such
Vessel permitted under the Mortgage and Charter Permitted Liens.
"PERSON" means an individual, a corporation, a partnership, a joint
venture, unincorporated association, a joint stock company, a trust or any other
entity or a Governmental Authority.
"PLEDGED STOCK" means all of the capital stock of each Owner, including
any additional or substitute shares of capital stock of any such Owner now owned
or hereafter acquired by the Ship Holding Company, issued and outstanding at any
time or from time to time.
"RATING AGENCY" means, at any time of determination, each rating agency
then rating the Mortgage Notes which shall always include at least one of
Moody's or Standard & Poor's or their respective successors.
"RATING AGENCY CONDITION" means, with respect to any action, that the
Rating Agency then rating the Mortgage Notes (of which one must be Standard &
Poor's or Moody's) shall have notified Golden State Petroleum, the Owners,
Chevron and the Indenture Trustee in writing that such action will not result in
a reduction or withdrawal of the rating of any Outstanding Mortgage Note or a
placement of the Mortgage Notes on credit watch or surveillance with respect to
which it is a Rating Agency.
"RECURRING FEES" means, for either Vessel, any periodic fees necessary
or appropriate to maintain the corporate status of the related Owner, any filing
or other fees necessary or appropriate to maintain the status of such Owner as a
reporting company under the Exchange Act and to comply with any covenants of
such Owner under the related Mortgage, any fees and expenses (including the cost
of insurance required by the related Mortgage and not maintained by the
charterer under the charter to which such Vessel is then subject) necessary to
comply with any covenants under the related Mortgage, any other fees and
expenses contemplated to be paid pursuant to the Management Agreement (other
than the Management Fee) which the Manager certifies to the Indenture Trustee
are qualified to be paid thereunder and any accounting or other professional
fees and other expenses, including any fees and expenses of the Rating Agencies,
incurred in connection with the foregoing. In addition, each Owner's Recurring
Fees
A-8
<PAGE>
will include a pro rata portion of the fees and expenses, including any
accounting, administrative or other professional fees, necessary or appropriate
to maintain the registration of the Mortgage Notes under the Securities Act, to
effect a mandatory redemption, if any, of the Mortgage Notes, to maintain the
corporate status of Golden State Petroleum and the status of Golden State
Petroleum as a reporting company (if necessary) under the Exchange Act and to
comply with any covenants under the Indenture.
"REMAINING AVERAGE LIFE" means, with respect to the Exchange Notes and
the untendered Existing Notes, if any, the number of years (calculated to the
nearest one-twelfth year) obtained by dividing (i) the principal amount of the
Existing Notes to be redeemed into (ii) the sum of the products obtained by
multiplying (a) the principal component of each payment that would have been
made on the Exchange Notes and the untendered Existing Notes, if any, (including
payments to be made through operation of the mandatory sinking fund) assuming
such Exchange Notes and the untendered Existing Notes, if any, were not subject
to early redemption other than by operation of the mandatory sinking fund by (b)
the number of years (calculated to the nearest one-twelfth year) that will
elapse between the date on which the Exchange Notes and the untendered Existing
Notes, if any, are to be redeemed (the "Settlement Date") and the scheduled due
date of such principal payment.
"REQUIRED NOTEHOLDERS" means the Holders of a 25% or more in aggregate
principal amount of the Outstanding Mortgage Notes.
"REQUIREMENT OF LAW" means, as to any Person, the certificate of
incorporation and by-laws or partnership agreement or other organizational or
governing documents of such Person, and any Law applicable to or binding upon
such Person or any of its properties or to which such Person or any of its
properties is subject.
"SECURITY DOCUMENTS" means the Mortgages, the Assignments of Charter,
the Assignments of Charter Supplements, the Assignments of Earnings and
Insurances, the Assignments of Guarantee, the Assignments of Management
Agreement, each Issue of One Debenture, the Stock Pledge, the Assignments of
Building Contract, Assignments of Building Contract Guarantee, and any
additional security agreement, assignment or mortgage document entered into by
either Owner from time to time in connection with the Secured Instruments.
"SERIES OF ADDITIONAL NOTES" or "SERIES" means each series of
Additional Notes issued pursuant to a Supplemental Indenture.
"STANDARD & POOR'S" means Standard & Poor's Rating Group, a division of
McGraw-Hill Company, Inc.
"STIPULATED LOSS VALUE" means, for any Vessel on any date, the amount
specified in the related Initial Charter as the "Stipulated Loss Value" for such
date, which amount will be at least sufficient to redeem in full the Allocated
Principal Amount of Mortgage Notes for such Vessel.
"STOCK PLEDGE" means the Stock Pledge Agreement, dated as of December
1, 1996, between the Ship Holding Company and the Indenture Trustee, as the same
may be amended from time to time.
"TOTAL LOSS" means, with respect to a Vessel, either (a) actual or
constructive or compromised or arranged total loss of the Vessel, (b) Compulsory
Acquisition of the Vessel or (c) if so declared by the Initial Charterer at any
time and in its sole discretion a requisition by a Governmental Authority for
hire of the Vessel for a period in excess of 180 days. Any actual loss of the
Vessel shall be deemed to have occurred at 1200 hours Greenwich Mean Time
("GMT") on the actual date on which the Vessel was lost or in the event of the
date of the loss being unknown then the actual total loss shall be deemed to
have occurred at 1200 hours GMT on the day next following the day on which the
Vessel was last heard
A-9
<PAGE>
of. A constructive total loss shall be deemed to have occurred at 1200 hours GMT
on the earliest of: (1) the date that notice of abandonment of the Vessel is
given to the insurers, provided a claim for total loss is admitted by the
insurers, (2) if the insurers do not admit such a claim, at the date and time
GMT at which a total loss is subsequently adjudged by a competent court of law
or arbitration tribunal to have occurred, or (3) the date that a report is
rendered by one or more experts in marine surveying and vessel valuation (said
experts to be appointed by the Initial Charterer at its expense and approved by
the Owner, such approval not to be unreasonably withheld) concluding that
salvage, repair and associated costs in restoring the Vessel to the condition
specified in each Initial Charter exceed the Vessel's fair market value in sound
condition.
"TOTAL LOSS PAYMENT" means, with respect to each Vessel, the related
Initial Charter and a Loss Payment Date, the sum of (a) any deficiency between
(i) the Stipulated Loss Value in relation to the period in question calculated
pursuant to the related Initial Charter and (ii) all insurance proceeds for
damage to or loss of the Vessel and amounts paid by any governmental authority
in connection with any requisition, seizure or forfeiture actually received in
hand by Owners prior to or on such Loss Payment Date; and (b) all Charter Hire
and Additional Charter Hire accrued (on a daily basis) but unpaid hereunder to
such Loss Payment Date and any other sums due under any provisions of the
related Initial Charter, together with interest thereon at the Default Rate from
the date upon which any such Charter Hire and Additional Charter Hire or other
sums was due until the Loss Payment Date.
"TREASURY YIELD" means, in connection with the calculation of any
Make-Whole Premium on the Exchange Notes and the untendered Existing Notes, if
any, the yield to maturity at the time of computation of United States Treasury
securities with a constant maturity (as compiled by and published in the most
recent Federal Reserve Statistical Release H.15 (519) which has become publicly
available at least two Business Days prior to the date fixed for redemption (or,
if such Statistical Release is no longer published, any publicly available
source of similar data)) equal to the Remaining Average Life of the Exchange
Notes and the untendered Existing Notes, if any; provided that if no United
States Treasury security is available with such a constant maturity and for
which a closing yield is given, the Treasury Yield shall be obtained by linear
interpolation (calculated to the nearest one-twelfth of a year) from the closing
yields of United States Treasury securities for which such yields are given,
except that if the average life of the Exchange Notes and the untendered
Existing Notes, if any, is less than one year, the weekly average yield on
actually traded United States Treasury securities adjusted to a constant
maturity of one year shall be used.
"TRUST ACCOUNTS" means the Revenue Account, the Termination Account,
the Casualty Account, the Collateral Account, the Debt Service Reserve Fund, the
Operating Account and the Pre-Funding Account.
A-10
<PAGE>
<TABLE>
<CAPTION>
Schedule 1
Allocated Principal Amount of the Notes
Serial Notes Existing Notes Total Notes
Date Vessel A Vessel B Vessel A Vessel B Vessel A Vessel B
---- -------- -------- -------- -------- -------- --------
<C> <C> <C> <C> <C> <C> <C>
24-Dec-96 24,900,000 26,800,000 63,550,000 63,550,000 88,450,000 90,350,000
01-Feb-97 24,900,000 26,800,000 63,550,000 63,550,000 88,450,000 90,350,000
01-Aug-97 24,900,000 26,800,000 63,550,000 63,550,000 88,450,000 90,350,000
01-Feb-98 24,900,000 26,800,000 63,550,000 63,550,000 88,450,000 90,350,000
01-Aug-98 24,900,000 26,800,000 63,550,000 63,550,000 88,450,000 90,350,000
01-Feb-99 24,900,000 26,800,000 63,550,000 63,550,000 88,450,000 90,350,000
01-Aug-99 24,900,000 26,800,000 63,550,000 63,550,000 88,450,000 90,350,000
01-Feb-2000 22,350,000 24,150,000 63,550,000 63,550,000 85,900,000 87,700,000
01-Aug-2000 22,350,000 24,150,000 63,550,000 63,550,000 85,900,000 87,700,000
01-Feb-2001 19,000,000 20,700,000 63,550,000 63,550,000 82,550,000 84,250,000
01-Aug-2001 19,000,000 20,700,000 63,550,000 63,550,000 82,550,000 84,250,000
01-Feb-2002 15,400,000 17,000,000 63,550,000 63,550,000 78,950,000 80,550,000
01-Aug-2002 15,400,000 17,000,000 63,550,000 63,550,000 78,950,000 80,550,000
01-Feb-2003 11,550,000 13,050,000 63,550,000 63,550,000 75,100,000 76,600,000
01-Aug-2003 11,550,000 13,050,000 63,550,000 63,550,000 75,100,000 76,600,000
01-Feb-2004 7,450,000 8,850,000 63,550,000 63,550,000 71,000,000 72,400,000
01-Aug-2004 7,450,000 8,850,000 63,550,000 63,550,000 71,000,000 72,400,000
01-Feb-2005 3,100,000 4,400,000 63,550,000 63,550,000 66,650,000 67,950,000
01-Aug-2005 3,100,000 4,400,000 63,550,000 63,550,000 66,650,000 67,950,000
01-Feb-2006 0 0 63,550,000 63,550,000 63,550,000 63,550,000
01-Aug-2006 0 0 63,550,000 63,550,000 63,550,000 63,550,000
01-Feb-2007 0 0 63,550,000 63,550,000 63,550,000 63,550,000
01-Aug-2007 0 0 62,210,000 63,550,000 62,210,000 63,550,000
01-Feb-2008 0 0 60,815,000 62,120,000 60,815,000 62,120,000
01-Aug-2008 0 0 59,365,000 60,630,000 59,365,000 60,630,000
01-Feb-2009 0 0 57,855,000 59,080,000 57,855,000 59,080,000
01-Aug-2009 0 0 56,285,000 57,470,000 56,285,000 57,470,000
01-Feb-2010 0 0 54,650,000 55,795,000 54,650,000 55,795,000
01-Aug-2010 0 0 52,950,000 54,050,000 52,950,000 54,050,000
01-Feb-2011 0 0 51,185,000 52,235,000 51,185,000 52,235,000
01-Aug-2011 0 0 49,345,000 50,350,000 49,345,000 50,350,000
01-Feb-2012 0 0 47,435,000 48,390,000 47,435,000 48,390,000
01-Aug-2012 0 0 45,445,000 46,350,000 45,445,000 46,350,000
01-Feb-2013 0 0 43,375,000 44,225,000 43,375,000 44,225,000
01-Aug-2013 0 0 41,225,000 42,015,000 41,225,000 42,015,000
01-Feb-2014 0 0 38,985,000 39,720,000 38,985,000 39,720,000
01-Aug-2014 0 0 36,655,000 37,330,000 36,655,000 37,330,000
01-Feb-2015 0 0 34,235,000 34,845,000 34,235,000 34,845,000
01-Aug-2015 0 0 31,715,000 32,260,000 31,715,000 32,260,000
01-Feb-2016 0 0 29,095,000 29,570,000 29,095,000 29,570,000
01-Aug-2016 0 0 26,370,000 26,770,000 26,370,000 26,770,000
01-Feb-2017 0 0 23,535,000 23,860,000 23,535,000 23,860,000
01-Aug-2017 0 0 20,585,000 20,835,000 20,585,000 20,835,000
01-Feb-2018 0 0 17,515,000 17,685,000 17,515,000 17,685,000
01-Aug-2018 0 0 14,325,000 14,410,000 14,325,000 14,410,000
01-Feb-2019 0 0 10,995,000 10,995,000 10,995,000 10,995,000
</TABLE>
A-11
<PAGE>
================================================================================
No dealer, salesperson or other person has been authorized to give any
information or to make any representations other than those contained in this
Prospectus, and if given or made, such information or representations must not
be relied upon as being authorized by the Companies. This Prospectus does not
constitute an offer to sell or a solicitation of an offer to buy any securities
other than those to which it relates or an offer to any person in any
jurisdiction where such offers would be unlawful. Neither the delivery of this
Prospectus nor any sale hereunder shall under any circumstances create any
implication that the information contained herein is correct as of any time
subsequent to the date hereof.
TABLE OF CONTENTS
Page
----
ENFORCEABILITY OF CIVIL LIABILITIES........................................ iii
AVAILABLE INFORMATION...................................................... iii
AVAILABLE INFORMATION RELATING TO
CHEVRON AND THE INITIAL CHARTERER............................ iii
DEFINED TERMS.............................................................. iv
PROSPECTUS SUMMARY......................................................... 1
RISK FACTORS............................................................... 19
THE EXCHANGE OFFER......................................................... 27
USE OF PROCEEDS............................................................ 35
CAPITALIZATION OF THE OWNERS............................................... 36
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF
FINANCIAL CONDITION AND RESULTS OF
OPERATIONS................................................................. 36
GOLDEN STATE PETROLEUM TRANSPORT
CORPORATION....................................................... 53
THE OWNERS................................................................. 54
THE BUILDERS............................................................... 54
BUILDING CONTRACTS......................................................... 55
BUILDING CONTRACT GUARANTEES............................................... 55
CHEVRON AND THE INITIAL CHARTERER.......................................... 56
THE INITIAL CHARTERS....................................................... 58
DESCRIPTION OF THE EXCHANGE NOTES.......................................... 67
ADDITIONAL NOTES........................................................... 83
THE MORTGAGES.............................................................. 85
MATERIAL UNITED STATES FEDERAL INCOME
TAX CONSEQUENCES.................................................. 89
CERTAIN ISLE OF MAN TAX CONSEQUENCES....................................... 93
MANAGEMENT AGREEMENTS...................................................... 93
PLAN OF DISTRIBUTION....................................................... 94
RATING .................................................................. 94
LEGAL MATTERS.............................................................. 95
APPENDIX A ................................................................ 94
CERTAIN SHIPPING TERMS .................................................... 94
GLOSSARY OF CERTAIN TERMS ................................................. 94
================================================================================
$127,100,000
Golden State Pertoleum
Transport Corporation
8.04% First Preferred Exchange
Mortgage Notes
Due 2019
-----------------------
Prospectus
-----------------------
Cambridge Partners, L.L.C.
________ __, 1997
<PAGE>
PART II
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
GOLDEN STATE PETROLEUM TRANSPORT CORPORATION
Golden State Petroleum is a corporation organized under the General
Corporation Law of the State of Delaware. Reference is made to Section 145 of
the Delaware General Corporation Law as to indemnification by Golden State
Petroleum of its officers and directors.
Section VIII of the By-Laws of Golden State Petroleum provides for
indemnification of its directors and officers as follows:
The corporation shall (i) indemnify any person who was or is a party or
is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the corporation to
procure a judgment in its favor by reason of the fact that he or she is
or was a director or officer of the corporation, or is or was serving
at the request of the corporation as a director or officer of another
corporation, partnership, joint venture, trust or other enterprise
against expenses (including attorneys' fees) actually and reasonably
incurred by him or her in connection with the defense or settlement of
such action or suit, and (ii) indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the
right of the corporation) by reason of the fact that he or she is or
was a director or officer of the corporation, or is or was serving at
the request of the corporation as a director or officer of another
corporation, partnership, joint venture, trust or other enterprise,
against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by him or
her in connection with such action, suit or proceeding, in each case to
the fullest extent permissible under subsections (a) through (e) of
Section 145 of the Delaware General Corporation Law, as the same exists
or may hereafter be amended (but, in the case of any such amendments,
only to the extent such amendment permits the corporation to broader
indemnification rights than permitted prior thereto). The foregoing
right of indemnification and advancement of expenses shall not be
deemed exclusive of any other rights to which those seeking
indemnification or advancement of expenses may now or hereafter be
entitled under any bylaw, agreement, vote of stockholders or
disinterested directors or otherwise, both as to action in his or her
official capacity and as to action in another capacity while holding
such office.
GOLDEN STATE PETRO (IOM I-A) PLC AND GOLDEN STATE PETRO (IOM I-B) PLC
Each of the Owners is a corporation incorporated under the laws of the
Isle of Man. Section 151 of the Isle of Man Companies Act 1931 provides that any
provision (whether contained in the articles of association of the corporation
or elsewhere) exempting any director, officer or auditor (collectively,
"Officer") or indemnifying him or her against any liability which would attach
to him or her in relation to any negligence, default, breach of duty or breach
of trust is void. However, Section 151 also provides that an Isle of Man
corporation may indemnify any Officer against any liability incurred by him or
her in defending any proceedings, whether civil or criminal, in which judgment
is given in his or her favor or in which he or she is acquitted or in connection
with any application under Section 337 of the Isle of Man Companies Act 1931 in
which relief is granted by a court. Section 337 provides that, if in any
<PAGE>
proceedings for negligence, default, breach of duty or breach of trust against
any Officer it appears to the court hearing the case that the person is or may
be liable in respect of the negligence, default, breach of duty or breach of
trust, but that he or she has acted honestly and reasonably and that, having
regard to all the circumstances of the case, including those connected with his
appointment, he or she ought fairly be excused, that court may relieve him or
her either wholly or partly his or her liability on such terms as the court
thinks fit. Additionally, under Section 337, where any Officer has reason to
believe that any claim will or might be made against him or her, he or she may
apply to court for relief as if an action had already been brought against him.
An Isle of Man corporation has the power to purchase and maintain
insurance on behalf of an Officer against any liability alleged against him or
her for negligence, default, breach of duty or breach of trust.
Article 126 of the Articles of Association of each of the Owners
provides for indemnification of directors and officers as follows:
Every director or other officer of the Company shall be entitled to be
indemnified out of the assets of the Company against all losses or
liabilities (including any such liability as is mentioned in paragraph
(c) of the proviso to Section 151 of the Companies Act, 1931), which he
may sustain or incur in or about the execution of the duties of his
office or otherwise in relation thereto, and no director or other
officer shall be liable for any loss, damage or misfortune which may
happen to or be incurred by the Company in the execution of the duties
of his office or in relation thereto, but this Article shall only have
effect insofar as its provisions are not avoided by the said section.
The effectiveness of such article is subject to the provisions of
Section 151 of the Isle of Man Companies Act 1931 as discussed above.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(A) EXHIBITS
3.1 -- Certificate of Incorporation of Golden State
Petroleum.
3.2 -- Bylaws of Golden State Petroleum.
3.3 -- Memorandum and Articles of Association of Golden
State Petro (IOM I-A) PLC.
3.4 -- Memorandum and Articles of Association of Golden
State Petro (IOM I-B) PLC.
4.1 -- Indenture, dated as of December 1, 1996, among Golden
State Petroleum, the Owners and the Indenture
Trustee, in respect of the 8.04% First Preferred
Mortgage Notes due 2019.
4.2 -- Stock Pledge Agreement between Golden State Holdings
I Ltd. and the Indenture Trustee.
4.3 -- Issue of One Debenture, dated as of December 1, 1997,
between Golden State Petro (IOM I-A) PLC and the
Indenture Trustee.
*4.4 -- Issue of One Debenture, dated as of December 1, 1996,
between Golden State Petro (IOM I-B) PLC and the
Indenture Trustee.
4.5 -- Assignment of Charter, dated as of December 1, 1996,
between Golden
<PAGE>
State Petro (IOM I-A) PLC and the Indenture Trustee.
*4.6 -- Assignment of Charter, dated as of December 1, 1996,
between Golden State Petro (IOM I-B) PLC and the
Indenture Trustee.
4.7 -- Assignment of Shipbuilding Contract and Agreement on
Contract for Technical Matters, dated as of December
1, 1996, among Golden State Petro (IOM-IA) PLC and
the Indenture Trustee.
*4.8 -- Assignment of Shipbuilding Contract and Agreement on
Contract for Technical Matters, dated as of December
1, 1996, among Golden State Petro (IOM-IB) PLC and
the Indenture Trustee.
4.9 -- Assignment of Building Contract Guarantee, dated as
of December 1, 1996, between Golden State Petro (IOM
I-A) PLC and the Initial Charterer.
*4.10 -- Assignment of Building Contract Guarantee, dated as
of December 1, 1996, between Golden State Petro (IOM
I-B) PLC and the Initial Charterer.
4.11 -- Guarantee, made as of December 24, 1996, from Chevron
to Golden State Petro (IOM I-A) PLC.
*4.12 -- Guarantee, made as of December 24, 1996, from Chevron
to Golden State Petro (IOM I-B) PLC.
4.13 -- Assignment of Management Agreement, dated as of
December 1, 1996, between Golden State Petro (IOM
I-A) PLC and the Indenture Trustee.
*4.14 -- Assignment of Management Agreement, dated as of
December 1, 1996, between Golden State Petro (IOM
I-B) PLC and the Indenture Trustee.
4.15 -- Form of Exchange Note.
5.1 -- Opinion of Thacher Proffitt & Wood, counsel to the
Owners, as to the validity of the Exchange Notes.
10.1 -- Serial Note Purchase Agreement, dated December 19,
1996, among Donaldson, Lufkin & Jenrette Securities
Corporation, Golden State Petroleum and each Owner.
10.2 -- Term Note Purchase Agreement, dated December 19,
1996, among Donaldson, Lufkin & Jenrette Securities
Corporation, Golden State Petroleum and each Owner.
10.3 -- Shipbuilding Contract, made as of December 24, 1996,
among Golden State Petro (IOM I-A) PLC and the
Builders.
*10.4 -- Shipbuilding Contract, made as of December 24, 1996,
among Golden State Petro (IOM I-B) PLC and the
Builders.
10.5 -- Promissory Note from Golden State Petro (IOM I-A) PLC
to Samsung Heavy Industries Co. Ltd.
10.6 -- Agreement on Contract for Technical Matters, made as
of December 24, 1996, among Golden State Petro
(IOM-IA) PLC, Samsung Heavy Industries Co., Ltd and
Chevron Shipping company, as agent for the Initial
Charterer.
*10.7 -- Agreement on Contract for Technical Matters, made as
of December 24, 1996, among Golden State Petro
(IOM-IB) PLC, Samsung Heavy Industries Co., Ltd and
Chevron Shipping company, as agent for the Initial
Charterer.
10.8 -- Bareboat Charter, made as of December 24, 1996,
between Golden State Petro (IOM I-A) PLC and the
Initial Charterer.
<PAGE>
*10.9 -- Bareboat Charter, made as of December 24, 1996, by
and between Golden State Petro (IOM I-B) PLC and the
Initial Charterer.
10.10 -- Management Agreement, dated as of December 1, 1996,
between Golden State Petro (IOM I-A) PLC and
Cambridge Fund Management LLC.
*10.11 -- Management Agreement, dated as of December 1, 1996,
between Golden State Petro (IOM I-B) PLC and
Cambridge Fund Management LLC.
10.12 -- Agency Agreement, dated as of December 24, 1996,
between the Owners and Golden State Petroleum.
10.13 -- Registration Rights Agreement, dated as of December
24, 1996, among Golden State Petroleum, Donaldson,
Lufkin & Jenrette Securities Corporation and each
Owner.
+23.1 -- Consent of Coopers & Lybrand L.L.P. (New York)
+23.3 -- Consent of Coopers & Lybrand LLP (Isle of Man)
23.5 -- Consent of Thacher Proffitt & Wood (contained in
Exhibit 5.1).
23.6 -- Consent of Cains.
25.1 -- Statement of eligibility of trustee on Form T-1.
99.1 -- Letter of Transmittal.
99.2 -- Notice of Guaranteed Delivery.
- - - - - -----------
* Substantially identical to corresponding document of Golden State Petro
(IOM I-A) PLC, except as to the parties thereto.
+ To be filed.
ITEM 22. UNDERTAKINGS
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
Golden State Petroleum, an undersigned registrant, hereby undertakes to
respond to requests for information that is incorporated by reference into the
Prospectus pursuant to Items 4, 10(b), 11 or 13 of Form S-4, within one business
day of receipt of such request, and to send the incorporated documents by first
class mail or other equally prompt means. This includes information contained in
documents filed subsequent to the effective date of the Registration Statement
through the date of responding to the request.
Each of Golden State Petro (IOM I-A) PLC and Golden State Petro (IOM
I-B) PLC, each an undersigned registrant, hereby undertakes: (i) to respond to
requests for information that is incorporated by reference into the Prospectus
pursuant to Items 4, 10(b), 11 or 13 of Form F-4, within one business
<PAGE>
day of receipt of such request, and to send the incorporated documents by first
class mail or other equally prompt means; and (ii) to arrange or provide for a
facility in the U.S. for the purpose of responding to such requests. The
undertaking in subparagraph (i) above includes information contained in
documents filed subsequent to the effective date of the Registration Statement
through the date of responding to the request.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has
duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, on April 30, 1997.
GOLDEN STATE PETROLEUM TRANSPORT
CORPORATION
By: /s/ John McFadden
-----------------------------
John McFadden
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons, in the
capacities indicated on April 30, 1997.
NAME TITLE
---- -----
/s/ John McFadden President (Principal Executive Officer)
-------------------------
John McFadden
/s/ Joseph Avantario Treasurer and Director (Principal Financial
------------------------- and Accounting Officer)
Joseph Avantario
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has
duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, on April 30, 1997.
GOLDEN STATE PETRO (IOM I-A) PLC
By:/s/ John McFadden
-----------------------------
John McFadden
President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons, in the
capacities indicated on April 30, 1997.
NAME TITLE
---- -----
/s/ John McFadden President and Director (Principal Executive
- - - - - ----------------------------- Officer)
John McFadden
/s/ Joseph Avantario Treasurer (Principal Financial and Accounting
- - - - - ----------------------------- Officer)
Joseph Avantario
/s/ Nunzio Lipomi Director
- - - - - -----------------------------
Nunzio Lipomi
/s/ Andrew Baker Director
- - - - - -----------------------------
Andrew Baker
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has
duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, on April 30, 1997.
GOLDEN STATE PETRO (IOM I-B) PLC
By:/s/ John McFadden
-----------------------------
John McFadden
President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons, in the
capacities indicated on April 30, 1997.
NAME TITLE
---- -----
/s/ John McFadden President (Principal Executive Officer)
----------------------------
John McFadden
/s/ Joseph Avantario Treasurer and Director (Principal Financial
---------------------------- and Accounting Officer)
Joseph Avantario
/s/ Andrew Baker Director
----------------------------
Andrew Baker
<PAGE>
INDEX TO EXHIBITS
3.1 -- Certificate of Incorporation of Golden State Petroleum.
3.2 -- Bylaws of Golden State Petroleum.
3.3 -- Memorandum and Articles of Association of Golden State Petro
(IOM I-A) PLC.
3.4 -- Memorandum and Articles of Association of Golden State Petro
(IOM I-B) PLC.
4.1 -- Indenture, dated as of December 1, 1996, among Golden State
Petroleum, the Owners and the Indenture Trustee, in respect
of the 8.04% First Preferred Mortgage Notes due 2019.
4.2 -- Stock Pledge Agreement between Golden State Holdings I Ltd.
and the Indenture Trustee.
4.3 -- Issue of One Debenture, dated as of December 1, 1997, between
Golden State Petro (IOM I-A) PLC and the Indenture Trustee.
4.4 -- Issue of One Debenture, dated as of December 1, 1996, between
Golden State Petro (IOM I-B) PLC and the Indenture Trustee.
4.5 -- Assignment of Charter, dated as of December 1, 1996, between
Golden State Petro (IOM I-A) PLC and the Indenture Trustee.
4.6 -- Assignment of Charter, dated as of December 1, 1996, between
Golden State Petro (IOM I-B) PLC and the Indenture Trustee.
4.7 -- Assignment of Shipbuilding Contract and Agreement on Contract
for Technical Matters, dated as of December 1, 1996, among
Golden State Petro (IOM-IA) PLC and the Indenture Trustee.
4.8 -- Assignment of Shipbuilding Contract and Agreement on Contract
for Technical Matters, dated as of December 1, 1996, among
Golden State Petro (IOM-IB) PLC and the Indenture Trustee.
4.9 -- Assignment of Building Contract Guarantee, dated as of
December 1, 1996, between Golden State Petro (IOM I-A) PLC
and the Initial Charterer.
4.10 -- Assignment of Building Contract Guarantee, dated as of
December 1, 1996, between Golden State Petro (IOM I-B) PLC
and the Initial Charterer.
4.11 -- Guarantee, made as of December 24, 1996, from Chevron to
Golden State Petro (IOM I-A) PLC.
4.12 -- Guarantee, made as of December 24, 1996, from Chevron to
Golden State Petro (IOM I-B) PLC.
4.13 -- Assignment of Management Agreement, dated as of December 1,
1996, between Golden State Petro (IOM I-A) PLC and the
Indenture Trustee.
4.14 -- Assignment of Management Agreement, dated as of December 1,
1996, between Golden State Petro (IOM I-B) PLC and the
Indenture Trustee.
4.15 -- Form of Exchange Note.
5.1 -- Opinion of Thacher Proffitt & Wood, counsel to the Owners, as
to the validity of the Exchange Notes.
10.1 -- Serial Note Purchase Agreement, dated December 19, 1996,
among Donaldson, Lufkin & Jenrette Securities Corporation,
Golden State Petroleum and each Owner.
10.2 -- Term Note Purchase Agreement, dated December 19, 1996, among
<PAGE>
Donaldson, Lufkin & Jenrette Securities Corporation, Golden
State Petroleum and each Owner.
10.3 -- Shipbuilding Contract, made as of December 24, 1996, among
Golden State Petro (IOM I-A) PLC and the Builders.
10.4 -- Shipbuilding Contract, made as of December 24, 1996, among
Golden State Petro (IOM I-B) PLC and the Builders.
10.5 -- Promissory Note from Golden State Petro (IOM I-A) PLC to
Samsung Heavy Industries Co. Ltd.
10.6 -- Agreement on Contract for Technical Matters, made as of
December 24, 1996, among Golden State Petro (IOM-IA) PLC,
Samsung Heavy Industries Co., Ltd and Chevron Shipping
company, as agent for the Initial Charterer.
10.7 -- Agreement on Contract for Technical Matters, made as of
December 24, 1996, among Golden State Petro (IOM-IB) PLC,
Samsung Heavy Industries Co., Ltd and Chevron Shipping
company, as agent for the Initial Charterer.
10.8 -- Bareboat Charter, made as of December 24, 1996, between
Golden State Petro (IOM I-A) PLC and the Initial Charterer.
10.9 -- Bareboat Charter, made as of December 24, 1996, by and
between Golden State Petro (IOM I-B) PLC and the Initial
Charterer.
10.10 -- Management Agreement, dated as of December 1, 1996, between
Golden State Petro (IOM I-A) PLC and Cambridge Fund
Management LLC.
10.11 -- Management Agreement, dated as of December 1, 1996, between
Golden State Petro (IOM I-B) PLC and Cambridge Fund
Management LLC.
10.12 -- Agency Agreement, dated as of December 24, 1996, between the
Owners and Golden State Petroleum.
10.13 -- Registration Rights Agreement, dated as of December 24, 1996,
among Golden State Petroleum, Donaldson, Lufkin & Jenrette
Securities Corporation and each Owner.
23.1 -- Consent of Coopers & Lybrand L.L.P. (New York)
23.3 -- Consent of Coopers & Lybrand LLP (Isle of Man)
23.5 -- Consent of Thacher Proffitt & Wood (contained in Exhibit
5.1).
23.6 -- Consent of Cains.
25.1 -- Statement of eligibility of trustee on Form T-1.
99.1 -- Letter of Transmittal.
99.2 -- Notice of Guaranteed Delivery.
- - - - - --------------------------------------------------------------------------------
[LOGO]
- - - - - -----------------
No. 081800C
- - - - - -----------------
GENERAL REGISTRY
ISLE OF MAN
CERTIFICATE OF INCORPORATION
----------------------
I CERTIFY that Golden State Holdings I Limited
IS THIS DAY INCORPORATED UNDER THE COMPANIES
ACT 1931 TO 1993 AND THAT THE COMPANY IS LIMITED.
This 7th day of NOVEMBER 1996
Deputy Assistant Chief Registrar
General Registry
- - - - - --------------------------------------------------------------------------------
<PAGE>
G E N E R A L R E G I S T R Y
I S L E O F M A N
----------
COMPANIES ACTS 1931 - 1993
----------
Company Name : GOLDEN STATE HOLDINGS I LIMITED
The Company hereby undertakes to comply with the conditions of approval as
follows: --
Approved provided written proof is given to the Chief Registrar within six
months of incorporation that the company is a holding company within the meaning
of section 1 of the Companies Act 1974. Failure to meet this requirement may
result in a direction being issued to change the name. Please complete and
return this form.
The Company understands that if the above undertaking is not fulfilled within
the specified time, it will be directed to change its name in accordance with
section 19(2a) of the Companies Act 1931.
Signed.........................................................
Designation....................................................
Date...........................................................
(THIS FORM IS TO BE COMPLETED AND SHOULD BE PRESENTED WITH THE
INCORPORATION DOCUMENTS.)
Your Ref :
Our Ref : 072040N
Date : 30th OCTOBER 96
<PAGE>
3
THE COMPANIES ACTS 1931 to 1993
ISLE OF MAN
A COMPANY LIMITED BY SHARES
MEMORANDUM OF ASSOCIATION
OF
GOLDEN STATE HOLDINGS I LIMITED
1. The name of the Company is:
GOLDEN STATE HOLDINGS I LIMITED
2. The Company is a private company.
3. The liability of the members is limited.
4. Restrictions, if any, on the exercise of the rights, powers and
privileges of the Company:
None unless and until decided upon by Special Resolution of the Company
in accordance with Section 6 of the Companies Act 1986.
5. The Share Capital of the Company is US$2,000.00 divided into 2,000
Ordinary shares of US$1.00 each.
I, the subscriber to this memorandum of association
(a) wish to be formed into a Company pursuant to this memorandum;
(b) agree to take the number of shares shown opposite my name;
(c) declare that all the requirements of the Companies Acts 1931 to 1993 in
respect of matters relating to registration and of matters precedent
and incidental thereto have been complied with.
<PAGE>
4
- - - - - --------------------------------------------------------------------------------
Name and address Signature Number of
of Subscriber Shares taken
- - - - - --------------------------------------------------------------------------------
JOHN MICHAEL KILLIP ONE
15-19 Athol Street
Douglas
Isle of Man
- - - - - --------------------------------------------------------------------------------
Dated this 31st day of October 1996
Witness to the above signature
DENISE HANDS
15-19 Athol Street
Douglas
Isle of Man
<PAGE>
5
THE COMPANIES ACTS 1931 to 1993
ISLE OF MAN
PRIVATE COMPANY LIMITED BY SHARES
ARTICLES OF ASSOCIATION
OF
GOLDEN STATE HOLDINGS I LIMITED
PRELIMINARY
1. Table A shall not apply to the Company but the articles hereinafter
contained shall constitute the regulations of the Company.
2. The Company is a "Private Company" within the meaning of the Act, and
accordingly no invitation shall be issued to the public to subscribe for any
shares or debentures of the Company.
INTERPRETATION
3.(1) In these regulations --
"the Act" means the Companies Acts 1931-1993 including any statutory
modifications or reenactments thereof for the time being in force;
"the articles" means the articles of the Company;
"clear days" in relation to the period of a notice means that period excluding
the day when the notice is given or deemed to be given and the day for which it
is given or on which it is to take effect;
"executed" includes any mode of execution;
"office" means the registered office of the Company;
"the holder" in relation to shares means the member whose name is entered in the
register of members as the holder of the shares;
"the seal" means the common seal of the Company;
"secretary" means the secretary of the Company or any other person appointed to
perform the duties of the secretary of the Company, including a joint, assistant
or deputy secretary.
<PAGE>
6
(2) Unless the context otherwise requires, words or expressions contained
in these regulations bear the same meaning as in the Act but excluding any
statutory modification thereof not in force when these regulations become
binding on the Company.
(3) In these regulations, unless there is something in the subject of
context inconsistent with such construction:
(a) words importing the plural number shall be deemed to include
the singular number and words importing the singular number
shall be deemed to include the plural number;
(b) words importing the masculine gender only include the feminine
gender;
(c) words importing persons include companies or associations or
bodies of persons whether corporate or unincorporate.
4. Statutory references used in these articles shall be read to include
any statutory or legislative modification or re-enactment thereof or any
substitution therefor.
SHARE CAPITAL
5. (1) Subject to the provisions of the Act and without prejudice to
any rights attached to any existing shares, any share may be issued
with such rights or restrictions as the Company may by ordinary
resolution determine.
(2) Subject to the provisions of the Act, shares may be issued in
fractional denominations to the same extent as whole shares.
6. Subject to the provisions of the Act and the articles, redeemable
preference shares may be issued on such terms and in such manner as may be
provided by the articles.
7. The Company may exercise the powers of paying commissions conferred by
the Act. Subject to the provisions of the Act, any such commissions may be
satisfied by the payment of cash or by the allotment of fully or partly paid
shares or partly in one way and partly in the other.
8. Except as required by law, no person shall be recognised by the Company
as holding any share upon any trust and (except as otherwise provided by the
articles or by law) the Company shall not be bound by or recognise any interest
in any share except an absolute right to the entirety thereof in the holder.
9. The shares shall be at the disposal of the Directors, and (save as
otherwise directed by the Company in General Meeting) they may allot or
otherwise dispose of them to such persons at such times and generally on such
terms and conditions as they think proper, subject nevertheless to article 2 and
provided that no shares shall be issued at a discount, except as provided by
Section 47 of the Act.
<PAGE>
7
10. If at any time the share capital is divided into different classes of
shares, the rights attached to any class (unless otherwise provided by the terms
of issue of the shares of that class) may be varied with the consent in writing
of the holders of all of the issued shares of that class, or with the sanction
of an extraordinary resolution passed at a separate general meeting of the
holders of the shares of the class. To every such separate general meeting the
provisions of these regulations relating to general meetings shall in the case
of the number of holders of a particular class of shares being two or more
mutatis mutandis apply, but so that the necessary quorum shall be two persons at
least holding or representing by proxy one-third of the issued shares of the
class, and that any holder of shares of the class present in person or by proxy
may demand a poll. In the case of the number of holders of a particular class of
shares being one, one person holding or representing all the issued shares of
the class shall be a quorum.
11. The Company may issue share warrants to bearer in respect of any fully
paid-up shares of the Company, stating that the bearer of the warrant is
entitled to the shares therein specified. Such warrants shall be issued upon
such terms and subject to such conditions as may be resolved upon by the
Directors. Subject to the provisions of the Act and of these articles the holder
of a share warrant shall be deemed to be a member of the Company and shall be
entitled to the same rights and privileges as he would have had if his name had
been included in the share register of the Company as the holder of the shares.
SHARE CERTIFICATES
12. (1) Every member, upon becoming the holder of any shares shall be
entitled
(a) without payment, to one certificate for all the shares of each
class held by him (and, upon transferring a part of his
holding of shares of any class, to a certificate for the
balance of such holding); or
(b) to several certificates each for one or more of his shares
upon payment, for every certificate after the first, of such
reasonable sum as the Directors may determine.
(2) Every certificate shall be sealed with the seal and shall
specify the number, class and distinguishing numbers (if any) of the
shares to which it relates and the amount or respective amounts paid up
thereon.
(3) The Company shall not be bound to issue more than one
certificate for shares held jointly by several persons and delivery of
a certificate to one joint holder shall be a sufficient delivery to all
of them.
13. If a share certificate is defaced, worn-out, lost or destroyed, it may
be renewed on such terms (if any) as to evidence and indemnity and payment of
the expenses reasonably incurred by the Company in investigating evidence as the
Directors may determine but otherwise free of charge, and (in the case of
defacement or wearing-out) on delivery up of the old certificate.
14. The Company shall have a first and paramount lien on every share for
all moneys (whether presently payable or not) payable at a fixed time or called
in respect of that share.
<PAGE>
8
The Directors may at any time declare any share to be wholly or in part exempt
from the provisions of this regulation. The Company's lien on a share shall
extend to any amount payable in respect of it.
15. The Company may sell in such manner as the Directors determine any
shares on which the Company has a lien if a sum in respect of which the lien
exists is presently payable and is not paid within fourteen clear days after
notice has been given to the holder of the share or to the person entitled to it
in consequence of the death or bankruptcy of the holder, demanding payment and
stating that if the notice is not complied with the shares may be sold.
16. To give effect to a sale the Directors may authorise some person to
execute an instrument of transfer of the shares, sold to, or in accordance with
the directions of, the purchaser. The title of the transferee to the shares
shall not be affected by any irregularity in or invalidity of the proceedings in
reference to the sale.
17. The net proceeds of the sale, after payment of the costs, shall be
applied in payment of so much of the sum for which the lien exists as is
presently payable, and any residue shall (upon surrender to the Company for
cancellation of the certificate for the shares sold and subject to a like lien
for any moneys not presently payable as existed upon the shares before the sale)
be paid to the person entitled to the shares at the date of the sale.
CALLS ON SHARES AND FORFEITURE
18. Subject to the terms of allotment, the Directors may make calls upon
the members in respect of any moneys unpaid on their shares (whether in respect
of nominal value or premium) and each member shall (subject to receiving at
least fourteen clear days notice specifying when and where payment is to be
made) pay to the Company as required by the notice the amount called on his
shares. A call may be required to be paid by installments. A call may, before
receipt by the Company of any sum due thereunder, be revoked in whole or in part
and payment of a call may be postponed in whole or in part. A person upon whom a
call is made shall remain liable for calls made upon him notwithstanding the
subsequent transfer of the shares in respect whereof the call was made.
19. A call shall be deemed to have been made at the time when the
resolution of the Directors authorising the call was passed.
20. The joint holders of a share shall be jointly and severally liable to
pay all calls in respect thereof.
21. If a call remains unpaid after it has become due and payable the person
from whom it is due and payable shall pay interest on the amount unpaid from the
day it became due and payable until it is paid at the rate fixed by the terms of
allotment of the share or in the notice of the call or, if no rate is fixed, at
the rate of (pound)5 per centum per annum but the Directors may waive payment of
the interest wholly or in part.
22. An amount payable in respect of a share on allotment or at any fixed
date, whether in respect of nominal value or premium or as an instalment of a
call, shall be deemed to be a call
<PAGE>
9
and if it is not paid the provisions of the articles shall apply as if that
amount had become due and payable by virtue of a call.
23. Subject to the terms of allotment, the Directors may make arrangements
on the issue of shares for a difference between the holders in the amounts and
times of payment of calls on their shares.
24. If a call remains unpaid after it has become due and payable the
Directors may give to the person from whom it is due not less than fourteen
clear days' notice requiring payment of the amount unpaid together with any
interest which may have accrued. The notice shall name the place where payment
is to be made and shall state that if the notice is not complied with the shares
in respect of which the call was made will be liable to be forfeited.
25. If the notice is not complied with any share in respect of which it was
given may, before the payment required by the notice has been made, be forfeited
by a resolution of the Directors and the forfeiture shall include all dividends
or other moneys payable in respect of the forfeited shares and not paid before
the forfeiture
26. Subject to the provisions of the Act, a forfeited share may be sold,
re-allotted or otherwise disposed of on such terms and in such manner as the
Directors determine either to the person who was before the forfeiture the
holder or to any other person and at any time before sale, re-allotment or other
disposition, the forfeiture may be cancelled on such terms as the Directors
think fit. Where for the purposes of its disposal a forfeited share is to be
transferred to any person the Directors may authorise some person to execute an
instrument of transfer of the share to that person.
27. A person any of whose shares have been forfeited shall cease to be a
member in respect of them and shall surrender to the Company for cancellation
the certificate for the shares forfeited but shall remain liable to the Company
for all moneys which at the date of forfeiture were presently payable by him to
the Company in respect of those shares with interest at the rate at which
interest was payable on those moneys before the forfeiture or, if no interest
was so payable, at the rate of (pound)5 per centum per annum from the date of
forfeiture until payment but the Directors may waive payment wholly or in part
or enforce payment without any allowance for the value of the shares at the time
of forfeiture or for any consideration received on their disposal.
28. A statutory declaration by a Director or the secretary that a share has
been forfeited on a specified date shall be conclusive evidence of the facts
stated in it as against all persons claiming to be entitled to the share and the
declaration shall (subject to the execution of an instrument of transfer if
necessary) constitute a good title to the share and the person to whom the share
is disposed of shall not be bound to see to the application of the
consideration, if any, nor shall his title to the share be affected by any
irregularity in or invalidity of the proceedings in reference to the forfeiture
or disposal of the share.
<PAGE>
10
TRANSFER OF SHARES
29. The instrument of transfer of a share may be in any usual form or in
any other form which the Directors may approve and shall be executed by or on
behalf of the transferor and, unless the share is fully paid, by or on behalf of
the transferee.
30. No transfer of any share in the capital of the Company to any person
not already a member of the Company shall be made or registered without the
previous sanction of the Directors, who may without assigning any reason,
decline to give any such sanction. The Directors may also suspend the
registration of transfers during the fourteen days immediately preceding the
Ordinary General Meeting in each year. The Directors may decline to recognise
any instrument of transfer unless accompanied by the certificate of the shares
to which it relates, and such other evidence as the Directors may reasonably
require to show the right of the transferor to make the transfer. The Directors
may decline to register a transfer of any shares on which the Company has a
lien. If the Directors refuse to register a transfer of any share they shall
within two months after the date on which the transfer was lodged with the
Company send to the transferee notice of the refusal as required by section 67
of the Act.
31. The Company shall be entitled to retain any instrument of transfer
which is registered, but any instrument of transfer which the Directors refuse
to register shall be returned to the person lodging it when notice of the
refusal is given.
TRANSMISSION OF SHARES
32. If a member dies the survivor or survivors where he was a joint holder,
and his personal representatives where he was a sole holder or the only survivor
of joint holders, shall be the only persons recognised by the Company as having
any title to his interest; but nothing herein contained shall release the estate
of a deceased member from any liability in respect of any share which had been
jointly held by him.
33. A person becoming entitled to a share in consequence of the death or
bankruptcy of a member may, upon such evidence being produced as the Directors
may properly require, elect either to become the holder of the share or to have
some person nominated by him registered as the transferee. If he elects to
become the holder he shall give notice to the Company to that effect. If he
elects to have another person registered he shall execute an instrument of
transfer of the share to that person. All articles relating to the transfer of
shares shall apply to the notice or instrument of transfer as if it were an
instrument of transfer executed by the member and the death or bankruptcy of the
member had not occurred.
34. A person becoming entitled to a share in consequence of the death or
bankruptcy of a member shall have the rights to which he would be entitled if he
were the holder of the share, except that he shall not, before being registered
as the holder of the share, be entitled in respect of it to attend or vote at
any meeting of the Company or at any separate meeting of the holders of any
class of shares in the Company.
<PAGE>
11
ALTERATION OF SHARE CAPITAL
35. The Company may by ordinary resolution --
(a) increase its share capital by new shares of such amount as the
resolution prescribes;
(b) consolidate and divide all or any or its share capital into
shares of larger amount than its existing shares;
(c) subject to the provisions of the Act, sub-divide its shares,
or any of them, into shares of smaller amount and the
resolution may determine that, as between the shares resulting
from the sub-division, any of them may have any preference or
advantage as compared with the others; and
(d) cancel shares which, at the date of the passing of the
resolution, have not been taken or agreed to be taken by any
person and diminish the amount of its share capital by the
amount of the shares so cancelled.
36. Whenever as a result of a consolidation of shares any members would
become entitled to fractions of a share, the Directors may, instead of issuing
the fractions of a share, on behalf of those members, sell the shares
representing the fractions for the best price reasonably obtainable to any
person (including, subject to the provisions of the Act, the Company) and
distribute the net proceeds of sale in due proportion among those members, and
the Directors may authorise some person to execute an instrument of transfer of
the shares to, or in accordance with the directions of, the purchaser. The
transferee shall not be bound to see to the application of the purchase money
nor shall his title to the shares be affected by any irregularity in or
invalidity of the proceedings in reference to the sale.
37. Subject to the provisions of the Act, the Company may by special
resolution reduce its share capital, any capital redemption reserve and any
share premium account in any way.
CONVERSION OF SHARES INTO STOCK
38. The Company may by ordinary resolution convert any paid-up shares into
stock and reconvert any stock into paid-up shares of any denomination.
39. The holders of stock may transfer the same, or any part thereof, in the
same manner, and subject to the same regulations, as, and subject to which, the
shares from which the stock arose might previously to conversion have been
transferred, or as near thereto as circumstances admit; but the Directors may
from time to time fix the minimum amount of stock transferable and restrict or
forbid the transfer of fractions of that minimum, but the minimum shall not
exceed the nominal amount of the shares from which the stock arose.
40. The holders of stock shall, according to the amount of the stock held
by them, have the same rights, privileges and advantages as regards dividends,
voting at meetings of the Company and other matters as if they held the shares
from which the stock arose, but no such privilege or advantage (except
participation in the dividends and profits of the Company) shall
<PAGE>
12
be conferred by any such aliquot part of stock as would not, if existing in
shares, have conferred that privilege or advantage.
41. Such of the regulations of the Company as are applicable to paid-up
shares shall apply to stock and the words "shares" and "shareholder" therein
shall include "stock" and "stockholder".
REDEMPTION OF PREFERENCE SHARES
42. Subject to the provisions of the Act, the redemption of redeemable
preference shares shall be effected on such terms and in such manner, as may be
provided by the articles.
GENERAL MEETINGS
43. All general meetings other than annual general meetings shall be called
extraordinary general meetings.
44. The Directors may call general meetings, and on the requisition of a
member pursuant to the provisions of the Act, shall forthwith proceed to convene
an extraordinary general meeting for a date not later than eight weeks after
receipt of the requisition. If there are not within the Isle of Man sufficient
Directors to call a general meeting, any Director or any member of the Company
may call a general meeting.
NOTICE OF GENERAL MEETINGS
45. An annual general meeting and an extraordinary general meeting called
for the passing of a special resolution or a resolution appointing a person as a
Director shall be called by at least twenty-one clear days' notice. All other
extraordinary general meetings shall be called by at least fourteen clear days'
notice but a general meeting may be called by shorter notice if it is so agreed
- - - - - --
(a) In the case of an annual general meeting, by all the members
entitled to attend and vote thereat; and
(b) In the case of any other meeting by a majority in number of
the members having a right to attend and vote being a majority
together holding not less than ninety five per cent in nominal
value of the shares giving that right.
The notice shall specify the time and place of the meeting and the general
nature of the business to be transacted and, in the case of an annual general
meeting, shall specify the meeting as such.
Subject to the provisions of the articles and to any restrictions imposed on any
shares, the notice shall be given to all the members, to all persons entitled to
a share in consequence of the death or bankruptcy of a member and to the
Directors and auditors.
<PAGE>
13
46. The accidental omission to give notice of a meeting to or the
non-receipt of notice of a meeting by any person entitled to receive notice
shall not invalidate the proceedings at that meeting.
PROCEEDINGS AT GENERAL MEETINGS
47. No business shall be transacted at any meeting unless a quorum is
present. Two persons entitled to vote upon the business to be transacted, each
being a member or a proxy for a member or a duly authorised representative of a
corporation which is a member, shall be a quorum. When the Company has a single
member, the member or the proxy for the member or a duly authorised
representative of the corporation which is the member, shall be a quorum.
48. If such a quorum is not present within half an hour from the time
appointed for the meeting or if during a meeting such a quorum ceases to be
present, the meeting shall stand adjourned to the same day in the next week at
the same time and place or to such time and place as the Directors may
determine.
49. The Chairman, if any, of the Board of Directors or in his absence some
other Director nominated by the Directors shall preside as Chairman of the
meeting, but if neither the Chairman nor such other Director (if any) be present
within fifteen minutes after the time appointed for holding the meeting and
willing to act, the Directors present shall elect one of their number to be
Chairman and if there is only one Director present and willing to act, he shall
be Chairman.
50. If no Director is willing to act as Chairman, or if no Director is
present within fifteen minutes after the time appointed for holding the meeting,
the members present and entitled to vote shall choose one of their number to be
Chairman.
51. A Director shall, notwithstanding that he is not a member, be entitled
to attend and speak at any general meeting and at any separate meeting of the
holders of any class of shares in the Company.
52. The Chairman may, with the consent of a meeting at which a quorum is
present (and shall if so directed by the meeting), adjourn the meeting from time
to time and from place to place, but no business shall be transacted at an
adjourned meeting other than business which might properly have been transacted
at the meeting had the adjournment not taken place. When a meeting is adjourned
for fourteen days or more, at least seven clear days' notice shall be given
specifying the time and place of the adjourned meeting and the general nature of
the business to be transacted. Otherwise it shall not be necessary to give any
such notice.
53. A resolution put to the vote of a meeting shall be decided on a show of
hands unless before, or on the declaration of the result of, the show of hands a
poll is duly demanded. Subject to the provisions of the Act, a poll may be
demanded --
(a) by the Chairman; or
(b) by at least two members having the right to vote at the
meeting; or
<PAGE>
14
(c) by a member or members representing no less than one-tenth of
the total voting rights of all the members having the right to
vote at the meeting; or
(d) by a member or members holding shares conferring a right to
vote at the meeting being shares on which an aggregate sum has
been paid up equal to not less than one-tenth of the total sum
paid up on all the shares conferring that right;
and a demand by a person as proxy for a member shall be the same as a demand by
the member.
54. Unless a poll is duly demanded a declaration by the Chairman that a
resolution has been carried or carried unanimously, or by a particular majority,
or lost, or not carried by a particular majority and an entry to that effect in
the minutes of the meeting shall be conclusive evidence of the fact without
proof of the number or proportion of the votes recorded in favour of or against
the resolution.
55. The demand for a poll may, before the poll is taken, be withdrawn but
only with the consent of the Chairman and a demand so withdrawn shall not be
taken to have invalidated the result of a show of hands declared before the
demand was made.
56. A poll shall be taken as the Chairman directs and he may appoint
scrutineers (who need not be members) and fix a time and place for declaring the
result of the poll. The result of the poll shall be deemed to be the resolution
of the meeting at which the poll was demanded.
57. In the case of an equality of votes, whether on a show of hands or on a
poll, the Chairman shall be entitled to a casting vote in addition to any other
vote he may have.
58. A poll demanded on the election of a Chairman or on a question of
adjournment shall be taken forthwith. A poll demanded on any other question
shall be taken either forthwith or at such time and place as the Chairman
directs not being more than thirty days after the poll is demanded. The demand
for a poll shall not prevent the continuance of a meeting for the transaction of
any business other than the question on which the poll was demanded. If a poll
is demanded before the declaration of the result of a show of hands and the
demand is duly withdrawn, the meeting shall continue as if the demand had not
been made.
59. No notice need be given of a poll not taken forthwith if the time and
place at which it is to be taken are announced at the meeting at which it is
demanded. In any other case at least seven clear days notice shall be given
specifying the time and place at which the poll is to be taken.
60. A resolution in writing executed by or on behalf of each member who
would have been entitled to vote upon it if it had been proposed at a general
meeting at which he was present shall be as effectual as if it had been passed
at a general meeting duly convened and held and may consist of several
instruments in the like form each executed by or on behalf of one or more
members, provided the provisions of Section 118B of the Act are complied with
and that such resolution is received by the Company at its registered office
within seven days of the date of its execution in terms hereof.
<PAGE>
15
VOTES OF MEMBERS
61. Subject to any rights or restrictions attached to any shares, on a show
of hands every member who (being an individual) is present in person or by proxy
or (being a corporation) is present by a duly authorised representative, not
being himself a member, shall have one vote and on a poll every member entitled
to vote shall have one vote for every share of which he is the holder.
62. In the case of joint holders the vote of the senior who tenders a vote,
whether in person or by proxy, shall be accepted to the exclusion of the votes
of the other joint holders; and seniority shall be determined by the order in
which the names of the holders stand in the register of members.
63. A member in respect of whom an order has been made by any court having
jurisdiction (whether in the Isle of Man or elsewhere) in matters concerning
mental disorder may vote, whether on a show of hands or on a poll, by his
receiver, curator bonis or other person authorised in that behalf appointed by
that court, and any such receiver, curator bonis or other person may, on a poll,
vote by proxy. Evidence to the satisfaction of the Directors of the authority of
the person claiming to exercise the right to vote shall be deposited at the
office, or at such other place as is specified in accordance with the articles
for the deposit of instruments of proxy, not less than 48 hours before the time
appointed for holding the meeting or adjourned meeting at which the right to
vote is to be exercised and in default the right to vote shall not be
exercisable.
64. No member shall vote at any general meeting or at any separate meeting
of the holders of any class of shares in the Company, either in person or by
proxy, in respect of any share held by him unless all moneys presently payable
by him in respect of that share have been paid.
65. No objections shall be raised to the qualification of any voter except
at the meeting or adjourned meeting at which the vote objected to is tendered,
and every vote not disallowed at the meeting shall be valid. Any objection made
in due time shall be referred to the Chairman whose decision shall be final and
conclusive.
66. On a poll votes may be given either personally or by proxy. A member
may appoint more than one proxy to attend on the same occasion.
67. An instrument appointing a proxy shall be in writing, executed by or on
behalf of the appointor and shall be in the following form (or in a form as near
thereto as circumstances allow or in any other form which is usual or which the
Directors may approve) --
Limited
I/We, , of
, being a member/members of the above-
named Company, hereby appoint of
, or failing him,
<PAGE>
16
of , as my/our proxy to vote
in my/our name(s) and on my/our behalf at the annual/extraordinary general
meeting of the Company to be held on 19 , and at any adjournment
thereof.
signed on 19
68. Where it is desired to afford members an opportunity of instructing the
proxy how he shall act the instrument appointing a proxy shall be in the
following form (or in a form as near thereto as circumstances allow or in any
other form which is usual or which the Directors may approve) --
Limited
I/We, , of
member/members of the above-named Company, hereby appoint
of
, or failing him, of
, as my/our proxy to vote in my/our name(s) and on
my/our behalf at the annual/extraordinary general meeting of the Company to be
held on 19 , and at any adjournment thereof.
This form is to be used in respect of the resolutions mentioned below as
follows:
Resolution No. 1 *for *against
Resolution No. 2 *for *against
* strike out whichever is not desired.
Unless otherwise instructed, the proxy may vote as he thinks fit or abstain from
voting.
Signed this day of 19
69. The instrument appointing a proxy and any authority under which it is
executed or a copy of such authority certified notarially or in some other way
approved by the Directors may --
(a) be deposited at the office or at such other place within the
Isle of Man as is specified in the notice convening the
meeting or in any instrument of proxy sent out by the Company
in relation to the meeting not less than 48 hours before the
time for holding the meeting or adjourned meeting at which the
person named in the instrument proposes to vote; or
(b) in the case of a poll taken more than 48 hours after it is
demanded, be deposited as aforesaid after the poll has been
demanded and not less than 24 hours before the time appointed
for the taking of the poll; or
<PAGE>
17
(c) where the poll is not taken forthwith but is taken not more
than 48 hours after it was demanded, be delivered at the
meeting at which the poll was demanded, to the Chairman or to
the Secretary or to any Director;
and an instrument of proxy which is not deposited or delivered in a manner so
permitted shall be invalid.
70. A vote given or poll demanded by proxy or by the duly authorised
representative of a corporation shall be valid notwithstanding the previous
determination of the authority of the person voting or demanding a poll unless
notice of the determination was received by the Company at the office or at such
other place at which the instrument of proxy was duly deposited before the
commencement of the meeting or adjourned meeting at which the vote is given or
the poll demanded or (in the case of a poll taken otherwise than on the same day
as the meeting or adjourned meeting) the time appointed for taking the poll.
71. Where the Company is a single member company and the sole member takes
any decision which may be taken by the Company in general meeting and which has
effect as if agreed by the Company in general meeting he shall subject to
article 60 provide the Company with a written record of that decision by
forwarding such record to the Company at its registered office within seven days
of the date upon which the decision was taken.
NUMBER OF DIRECTORS
72. Unless otherwise determined by ordinary resolution, the number of
Directors (other than alternate Directors) shall not be subject to any maximum.
ALTERNATE DIRECTORS
73. Any Director (other than an alternate Director) may appoint any other
Director, or any other person approved by resolution of the Directors and
willing to act, to be an alternate Director and may remove from office an
alternate Director so appointed by him.
74. An alternate Director shall be entitled to receive notice of all
meetings of Directors and of all meetings of committees of Directors of which
his appointor is a member, to attend and vote at any such meeting at which the
Director appointing him is not personally present and generally to perform all
the functions of his appointor as a Director in his absence but shall not be
entitled to receive any remuneration from the Company for his services as an
alternate Director.
75. An alternate Director shall cease to be an alternate Director if his
appointor ceases to be a Director; but, if a Director retires by rotation or
otherwise but is reappointed or deemed to have been reappointed at the meeting
at which he retires; any appointment of an alternate Director made by him which
was in force immediately prior to his retirement shall continue after his
reappointment.
<PAGE>
18
76. Any appointment or removal of an alternate Director shall be by notice
to the Company signed by the Director making or revoking the appointment or in
any other manner approved by the Directors.
77. Save as otherwise provided in the articles, an alternate Director shall
be deemed for all purposes to be a Director and shall alone be responsible for
his own acts and defaults and he shall not be deemed to be the agent of the
Director appointing him.
POWERS OF DIRECTORS
78. Subject to the provisions of the Act, the memorandum and the articles
and to any directions given by special resolution the business of the Company
shall be managed by the Directors who may exercise all the powers of the
Company. No alteration of the memorandum or articles and no such direction shall
invalidate any prior act of the Directors which would have been valid if that
alteration had not been made or that direction had not been given. The powers
given by this regulation shall not be limited by any special power given to the
Directors by the articles and a meeting of Directors at which a quorum is
present may exercise all powers exercisable by the Directors.
79. Without prejudice to the generality of the foregoing article the
Directors may from time to time at their discretion, raise or borrow, without
the consent of the members in General Meeting, such sum or sums of money for the
purposes of the Company's business as they may think fit and may secure the
repayment of or raise any such sum or sums as aforesaid in such manner and upon
such terms and conditions and in all other respects as they may think fit, and
in particular by mortgages, deeds of bond and security, or other charges upon
the whole or any part of the property and assets of the Company, present or
future, including its uncalled or unissued capital, or by the issue at such
price as they may think fit, of bonds or debentures or debenture stock of the
Company, either charged upon the whole or any part of the property and assets of
the Company, or not so charged, or in any other way that the Directors may think
expedient, and the Directors may issue debentures or debenture stock or paid-up
shares to any person or persons as consideration for the purchase of any
goodwill, business or property purchased by the Company.
80. The Directors may, by power of attorney or otherwise, appoint any
person to be the agent of the Company for such purposes and on such conditions
as they determine, including authority for the agent to delegate all or any of
his powers. The Company may exercise the powers conferred by Sections 32 and 104
of the Companies Act, 1931 and those powers shall accordingly be exercisable by
the Directors.
DELEGATION OF DIRECTORS' POWERS
81. The Directors may delegate any of their powers to any committee
consisting of one or more Directors. They may also delegate to any Managing
Director or any Director holding any other executive office such of their powers
as they consider desirable to be exercised by him. Any such delegation may be
made subject to any conditions the Directors may impose and either collaterally
with or to the exclusion of their own powers and may be revoked or altered.
Subject to any such conditions, the proceedings of a committee with two or more
members
<PAGE>
19
shall be governed by the articles regulating the proceedings of Directors so far
as they are capable of applying.
DIRECTORS GENERALLY
82. The Company may from time to time in general meeting increase or reduce
the number of Directors. The Company may by special resolution remove any
Director or by ordinary resolution appoint any person to be a Director.
83. No person other than a first Director shall be appointed a Director in
general meeting unless at least seven days' and not more than fourteen days'
notice shall have been left at the registered office of the Company of the
intention to propose him, together with a notice in writing by the person to be
proposed of his willingness to be appointed.
84. The Directors shall have power at any time, and from time to time, to
fill any casual vacancy occurring in the Board of Directors or to appoint a
person as an additional Director.
85. A Director may hold any other office or place or profit under the
Company, except that of Auditor, upon such terms as to remuneration, tenure of
office and otherwise as may be determined by the Board.
86. The remuneration of the Directors shall from time to time be determined
by the Company in general meeting and unless otherwise directed any such
remuneration shall be divided amongst them as they may agree, or, failing
agreement, equally. The Directors shall also be entitled to be repaid all
travelling and hotel expenses reasonably incurred by them respectively in or
about the performance of their duties as Directors.
DISQUALIFICATION AND REMOVAL OF DIRECTORS
87. The office of a Director shall be vacated if --
(a) he ceases to be a Director by virtue of any provision of the
Act or he becomes prohibited by law from being a Director; or
(b) he becomes bankrupt or makes any arrangement or composition
with his creditors generally; or
(c) he is, or may be, suffering from mental disorder and either --
(i) he is admitted to hospital in pursuance of an
application for admission for treatment under the
Mental Health Act 1974; or
(ii) an Order is made by a Court having jurisdiction
(whether in the Isle of Man or elsewhere) in matters
concerning mental disorder for his detention or for
the appointment of a receiver, curator bonis or other
person to exercise powers with respect to his
property or affairs; or
<PAGE>
20
(d) he resigns his office by notice to the Company; or
(e) he shall for more than six consecutive months have been absent
without permission of the Directors from meetings of Directors
held during that period and the Directors resolve that his
office be vacated.
88. The shareholding qualification for Directors may be fixed by the
Company in general meeting, and unless and until so fixed no qualification shall
be required.
DIRECTORS' APPOINTMENTS AND INTERESTS
89. Subject to the provisions of the Act, the Directors may appoint one or
more of their number to the office of Managing Director or to any other
executive office under the Company and may enter into an agreement or
arrangement with any Director for his employment by the Company or for the
provision by him of any services outside the scope of the ordinary duties of a
Director. Any such appointment, agreement or arrangement may be made upon such
terms as the Directors determine and they may remunerate any such Director for
his services as they think fit. Any appointment of a Director to an executive
office shall terminate if he ceases to be a Director but without prejudice to
any claim to damages for breach of the contract of service between the Director
and the Company.
90. Subject to the provisions of the Act and provided that he has disclosed
to the Directors the nature and extent of any material interest of his, a
Director notwithstanding his office --
(a) may be a party to, or otherwise interested in, any transaction
or arrangement with the Company or in which the Company is
otherwise interested;
(b) may be a Director or other officer of, or employed by, or a
party to any transaction or arrangement with, or otherwise
interested in, any body corporate promoted by the Company or
in which the Company is otherwise interested; and
(c) shall not, by reason of his office, be accountable to the
Company for any benefit which he derives from any such office
or employment or from any such transaction or arrangement or
from any interest in any such body corporate and no such
transaction or arrangement shall be liable to be avoided on
the ground of any such interest or benefit.
91. For the purposes of the foregoing article --
(a) a general notice given to the Directors that a Director is to
be regarded as having an interest of the nature and extent
specified in the notice in any transaction or arrangement in
which a specified person or class of persons is interested
shall be deemed to be a disclosure that the Director has an
interest in any such transaction of the nature and extent so
specified; and
<PAGE>
21
(b) an interest of which a Director has no knowledge and of which
it is unreasonable to expect him to have knowledge shall not
be treated as an interest of his.
92. Subject to article 90 hereof and the Act if the Company is a single
member company and having one member it enters into a contract with the sole
member otherwise than in the ordinary course of the Company's business and the
sole member is also a director of the Company, the Company should, unless the
contract is in writing, ensure that the terms of the contract are either set out
in a written memorandum or are recorded in the minutes of the first meeting of
the directors of the Company following the making of the contract.
DIRECTORS' GRATUITIES AND PENSIONS
93. Subject to the provisions of the Act, the Directors may provide
benefits, whether by the payment of gratuities or pensions or by insurance or
otherwise, for any Director who has held but no longer holds any executive
office or employment with the Company or with any body corporate which is or has
been a subsidiary of the Company or a predecessor of the Company or of any such
subsidiary and for any member of his family (including a spouse and a former
spouse) or any person who is or was dependent on him, and may (as well before as
after he ceases to hold such office or employment) contribute to any fund and
pay premiums for the purchase or provision of any such benefit.
PROCEEDINGS OF DIRECTORS
94. Subject to the provisions of the articles, the Directors may regulate
their proceedings as they think fit. A Director may, and the secretary at the
request of a Director shall, call a meeting of the Directors. Questions arising
at a meeting shall be decided by a majority of votes. In the case of an equality
of votes, the Chairman shall have a second or casting vote. A Director who is
also an alternate Director shall be entitled in the absence of his appointor to
a separate vote on behalf of his appointor in addition to his own vote.
95. The quorum for the transaction of the business of the Directors may be
fixed by the Directors and unless so fixed at any other number shall be two. A
person who holds office only as an alternate Director shall, if his appointor is
not present, be counted in the quorum.
96. The continuing Directors or a sole continuing Director may act
notwithstanding any vacancies in their number, but, if the number of Directors
is less than the number fixed as the quorum, the continuing Directors or
Director may act only for the purpose of filling vacancies or of calling a
general meeting.
97. The Directors may appoint one of their number to be the Chairman of the
Board of Directors and may at any time remove him from that office. Unless he is
unwilling to do so, the Director so appointed shall preside at every meeting of
Directors at which he is present. But if there is no Director holding that
office, or if the Director holding it is unwilling to preside or is not present
within five minutes after the time appointed for the meeting, the Directors
present may appoint one of their number to be Chairman of the meeting.
<PAGE>
22
98. All acts done by a meeting of Directors, or of a committee of
Directors, or by a person acting as a Director shall, notwithstanding that it be
afterwards discovered that there was a defect in the appointment of any Director
or that any of them were disqualified from holding office, or had vacated
office, or were not entitled to vote, be valid as if every such person had been
duly appointed and was qualified and had continued to be a Director and had been
entitled to vote.
99. A resolution in writing signed by all the Directors entitled to receive
notice of a meeting of Directors or of a committee of Directors shall be as
valid and effectual as if it had been passed at a meeting of Directors or (as
the case may be) a committee of Directors duly convened and held and may consist
of several documents in the like form each signed by one or more Directors, but
a resolution signed by an alternate need not also be signed by his appointor
and, if it is signed by a Director who has appointed an alternate Director, it
need not be signed by the alternate Director in that capacity.
100. Save as otherwise provided by the articles, a Director shall not vote
at a meeting of Directors or of a committee of Directors on any resolution
concerning a matter in which he has, directly or indirectly, an interest or duty
which is material and which conflicts or may conflict with the interest of the
Company unless he has declared the nature of his interest in the manner required
by Section 148 of the Act.
101. A Director shall not be counted in the quorum present at a meeting in
relation to a resolution on which he is not entitled to vote.
102. The Company may by ordinary resolution suspend or relax to any extent,
either generally or in respect of any particular matter, any provision of the
articles prohibiting a Director from voting at a meeting of Directors or of a
committee of Directors.
103. If a question arises at a meeting of Directors or of a committee of
Directors as to the right of a Director to vote, the question may, before the
conclusion of the meeting, be referred to the Chairman of the meeting and his
ruling in relation to any Director other than himself shall be final and
conclusive.
104. Any Director or member of a committee of the Directors may participate
in a meeting of the Directors or such committee by means of telephonic or
similar communications whereby all persons participating in the meeting can hear
each other and participation in a meeting in this manner shall be deemed to
constitute presence in person at such meeting. The location of such a telephonic
meeting shall be deemed to be the place at which the Chairman of the meeting was
located at the time of the meeting.
MANAGEMENT AND CONTROL
105. The management and control of the business of the Company shall be in
and from the Isle of Man or in and from such other place as the Directors shall
decide.
<PAGE>
23
SECRETARY
106. Subject to the provisions of the Act, the secretary shall be appointed
by the Directors for such term, at such remuneration and upon such conditions as
they may think fit; and any secretary so appointed may be removed by them.
MINUTES
107. The Directors shall cause Minutes to be made in books kept for the
purpose --
(a) of all appointments of officers made by the Directors; and
(b) of all proceedings at meetings of the Company, of the holders
of any class of shares in the Company and of the Directors,
and of committees of Directors, including the names of the
Directors present at such meeting.
THE SEAL
108. The Company shall have a Company Seal.
109. The seal shall only be used by the authority of the Directors or of a
committee of Directors authorised by the Directors. The Directors may determine
who shall sign any instrument to which the seal is affixed and unless otherwise
so determined it shall be signed by a Director and by the secretary or by a
second Director.
DIVIDENDS
110. Subject to the provisions of the Act, the Company may by ordinary
resolution declare dividends in accordance with the respective rights of the
members, but no dividend shall exceed the amount recommended by the Directors.
111. Subject to the provisions of the Act, the Directors may pay interim
dividends if it appears to them that they are justified by the profits of the
Company available for distribution. If the share capital is divided into
different classes, the Directors may pay interim dividends on shares which
confer deferred or non-preferred rights with regard to dividend as well as on
shares which confer preferential rights with regard to dividend, but no interim
dividend shall be paid on shares carrying deferred or nonpreferential rights if,
at the time of payment, any preferential dividend is in arrear. The Directors
may also pay at intervals settled by them any dividend payable at a fixed rate
if it appears to them that the profits available for distribution justify the
payment. Provided the Directors act in good faith they shall not incur any
liability to the holders of shares conferring preferred rights for any loss they
may suffer by the lawful payment of an interim dividend on any shares having
deferred or non-preferred rights.
112. Except as otherwise provided by the rights attached to shares, all
dividends shall be declared and paid according to the amounts paid up on the
shares on which the dividend is paid. All dividends shall be apportioned and
paid proportionately to the amounts paid up on
<PAGE>
24
the shares during any portion or portions of the period in respect of which the
dividend is paid; but, if any share is issued on terms providing that it shall
rank for dividend as from a particular date, that share shall rank for dividend
accordingly.
113. A general meeting declaring a dividend may, upon the recommendation of
the Directors, direct that it shall be satisfied wholly or partly by the
distribution of assets and where any difficulty arises in regard to the
distribution, the Directors may settle the same and in particular may issue
fractional certificates and fix the value for distribution of any assets and may
determine that cash shall be paid to any member upon the footing of the value so
fixed in order to adjust the rights of members and may vest any assets in
trustees.
114. Any dividend or other moneys payable in respect of a share may be paid
by cheque sent by post to the registered address of the person entitled or, if
two or more persons are the holders of the share or are jointly entitled to it
by reason of the death or bankruptcy of the holder, to the registered address of
that one of those persons who is first named in the register of members or to
such person and to such address as the person or persons entitled may in writing
direct. Every cheque shall be made payable to the order of the person or persons
entitled or to such other person as the person or persons entitled may in
writing direct and payment of the cheque shall be a good discharge to the
Company. Any joint holder or other person jointly entitled to a share as
aforesaid may give receipts for any dividend or other moneys payable in respect
of the share.
115. No dividend or other moneys payable in respect of a share shall bear
interest against the Company unless otherwise provided by the rights attached to
the share.
116. Any dividend which has remained unclaimed for twelve years from the
date when it became due for payment shall, if the Directors so resolve, be
forfeited and cease to remain owing by the Company.
ACCOUNTS
117. (a) No member shall (as such) have any right of inspecting any
accounting records or other book or document of the Company
except as conferred by statute or authorised by the Directors
or by ordinary resolution of the Company.
(b) The Company shall prepare such accounts as may be required by
the Act and the laws of the Isle of Man.
(c) Subject to the Act and the laws of the Isle of Man the Company
may elect to dispense with compliance with the requirements of
the Act which relate to the audit of the accounts of the
Company.
CAPITALISATION OF PROFITS
118. The Directors may with the authority of an ordinary resolution of the
Company
<PAGE>
25
(a) subject as hereinafter provided, resolve to capitalise any
undivided profits of the Company not required for paying any
preferential dividend (whether or not they are available for
distribution) or any sum standing to the credit of the
Company's share premium account or capital redemption reserve;
(b) appropriate the sum resolved to be capitalised to the members
who would have been entitled to it if it were distributed by
way of dividend and in the same proportions and apply such sum
on their behalf either in or towards paying up the amounts, if
any, for the time being unpaid on any shares held by them
respectively, or in paying up in full unissued shares or
debentures of the Company of a nominal amount, equal to that
sum, and allot the shares or debentures credited as fully paid
to those members, or as they may direct, in those proportions,
or partly in one way and partly in the other: but the share
premium account, the capital redemption reserve and any
profits which are not available for distribution may, for the
purposes of this regulation, only be applied in paying up
unissued shares to be allotted to members credited as fully
paid;
(c) make such provision by the issue of fractional certificates or
by payment in cash or otherwise as they determine in the case
of shares or debentures becoming distributable under this
regulation in fractions; and
(d) authorise any person to enter on behalf of all the members
concerned into an agreement with the Company providing for the
allotment to them respectively, credited as fully paid, of any
shares or debentures to which they are entitled upon such
capitalisation, any agreement made under such authority being
binding on all such members.
NOTICES
119. Any notice to be given to or by any person pursuant to the articles
shall be in writing except that a notice calling a meeting of the Directors need
not be in writing.
120. The Company may give any notice to a member either personally or by
sending it by post in a prepaid envelope addressed to the member at his
registered address or by leaving it at that address. In the case of joint
holders of a share, all notices shall be given to the joint holder whose name
stands first in the register of members in respect of the joint holding and
notice so given shall be sufficient notice to all the joint holders. A member
whose registered address is not within the British Islands and who gives to the
Company an address within the British Islands at which notices may be given to
him shall be entitled to have notices given to him at that address, but
otherwise no such member shall be entitled to receive any notice from the
Company.
121. A member present, either in person or by proxy, at any meeting of the
Company or of the holders of any class of shares in the Company shall be deemed
to have received notice of the meeting and, where requisite, of the purposes for
which it was called.
<PAGE>
26
122. Every person who becomes entitled to a share shall be bound by any
notice in respect of that share which, before his name is entered in the
register of members, has been duly given to a person from whom he derives his
title.
123. Proof that an envelope containing a notice was properly addressed,
prepaid and posted shall be conclusive evidence that the notice was given. A
notice shall be deemed to be given at the expiration of 48 hours after the
envelope containing it was posted.
124. A notice may be given by the Company to the persons entitled to a share
in consequence of the death or bankruptcy of a member by sending or delivering
it, in any manner authorised by the articles for the giving of notice to a
member, addressed to them by name, or by the title of representatives of the
deceased, or trustee of the bankrupt or by any like description at the address,
if any, within the British Islands supplied for that purpose by the persons
claiming to be so entitled. Until such an address has been supplied, a notice
may be given in any manner in which it might have been given if the death or
bankruptcy had not occurred.
WINDING UP
125. If the Company is wound up, the liquidator may, with the sanction of an
extraordinary resolution of the Company and any other sanction required by the
Act, divide among the members in specie the whole or any part of the assets of
the Company and may, for that purpose, value any assets and determine how the
division shall be carried out as between the members or different classes of
members. The liquidator may, with the like sanction, vest the whole or any part
of the assets in trustees upon such trusts for the benefit of the members as he
with the like sanction determines, but no member shall be compelled to accept
any assets upon which there is a liability.
INDEMNITY
126. Every Director or other officer of the Company shall be entitled to be
indemnified out of the assets of the Company against all losses or liabilities
(including any such liability as is mentioned in paragraph (c) of the proviso to
Section 151 of the Act) which he may sustain or incur in or about the execution
of the duties of his office or otherwise in relation thereto, and no Director or
other officer shall be liable for any loss, damage or misfortune which may
happen to or be incurred by the Company in the execution of the duties of his
office or in relation thereto. But this Article shall only have effect in so far
as its provisions are not avoided by the said Section.
127. The Company may purchase and maintain indemnity insurance for the
benefit of each Director or other officer of the Company.
<PAGE>
27
- - - - - --------------------------------------------------------------------------------
Name and address Signature
of Subscriber
- - - - - --------------------------------------------------------------------------------
JOHN MICHAEL KILLIP
15-19 Athol Street
Douglas
Isle of Man
- - - - - --------------------------------------------------------------------------------
Dated this 31st day of October 1996
Witness to the above signature
DENISE HANDS
15-19 Athol Street
Douglas
Isle of Man
================================================================================
BY-LAWS
OF
GOLDEN STATE PETROLEUM TRANSPORT CORPORATION
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I
OFFICES...................................................................... 1
Section 1. Registered Office.......................................... 1
Section 2. Other Offices.............................................. 1
ARTICLE II
STOCKHOLDERS................................................................. 1
Section 1. Time and Place of Meetings................................. 1
Section 2. Annual Meetings............................................ 1
Section 3. Special Meetings........................................... 2
Section 4. Notice of Meeting.......................................... 2
Section 5. Quorum..................................................... 2
Section 6. Voting..................................................... 3
Section 7. Voting Rights.............................................. 3
Section 8. Proxies.................................................... 3
Section 9. Written Consent............................................ 4
Section 10. Class Voting............................................... 4
Section 11. Record Date................................................ 5
Section 12. Registered Stockholders.................................... 6
ARTICLE III
DIRECTORS.................................................................... 7
Section 1. Management................................................. 7
Section 2. Number..................................................... 7
Section 3. Election and Tenure........................................ 7
Section 4. Vacancies and Newly Created Directorships.................. 7
Section 5. Removal and Resignation.................................... 8
Section 6. Place of Meetings.......................................... 8
Section 7. First Meeting.............................................. 8
Section 8. Regular Meetings........................................... 9
Section 9. Special Meetings........................................... 9
Section 10. Quorum and Voting.......................................... 9
Section 11. Written Consent............................................ 10
Section 12. Telephonic Participation................................... 10
Section 13. Committees of Directors.................................... 10
Section 14. Compensation............................................... 11
(i)
<PAGE>
ARTICLE IV
NOTICES...................................................................... 11
Section 1. Notice..................................................... 11
Section 2. Waiver of Notice........................................... 12
ARTICLE V
OFFICERS..................................................................... 12
Section 1. Officers................................................... 12
Section 2. Tenure; Resignation; Removal; Vacancies.................... 13
Section 3. Compensation............................................... 13
Section 4. Authority and Duties....................................... 13
Section 5. The Chairman of the Board.................................. 14
Section 6. The President.............................................. 14
Section 7. The Vice Presidents........................................ 15
Section 8. The Assistant Vice Presidents.............................. 16
Section 9. The Treasurer.............................................. 16
Section 10. The Assistant Treasurers................................... 16
Section 11. The Secretary.............................................. 16
Section 12. The Assistant Secretaries.................................. 17
Section 13. Action with Respect to Securities of Other Corporations.... 17
ARTICLE VI
STOCK CERTIFICATES........................................................... 18
Section 1. Certificates............................................... 18
Section 2. Lost Certificates.......................................... 18
Section 3. Transfers of Stock......................................... 19
ARTICLE VII
GENERAL PROVISIONS........................................................... 19
Section 1. Dividends.................................................. 19
Section 2. Reserves................................................... 19
Section 3. Fiscal Year................................................ 20
Section 4. Seal....................................................... 20
ARTICLE VIII
INDEMNIFICATION.............................................................. 20
(ii)
<PAGE>
ARTICLE IX
AMENDMENTS................................................................... 21
RECORD OF AMENDMENTS
(iii)
<PAGE>
GOLDEN STATE PETROLEUM TRANSPORT CORPORATION
BY-LAWS
-------
ARTICLE I
OFFICES
-------
Section 1. REGISTERED OFFICE. The registered office shall be
in the City of Wilmington, County of New Castle, State of Delaware.
Section 2. OTHER OFFICES. The corporation may also have
offices at such other places both within and without the State of Delaware as
the board of directors may from time to time determine or the business of the
corporation may require.
ARTICLE II
STOCKHOLDERS
------------
Section 1. TIME AND PLACE OF MEETINGS. All meetings of
stockholders for the election of directors and for any other purpose shall be
held at such time (except as otherwise provided by Section 2 of this Article)
and at such place, either within or without the State of Delaware, as shall be
designated from time to time by the board of directors and stated in the notice
of the meeting or in a duly executed waiver of notice thereof.
Section 2. ANNUAL MEETINGS. Annual meetings of stockholders,
commencing with the year 1997 shall be held on the third Wednesday of March if
such day is not a legal holiday in the state where the meeting is to be held,
and, if a legal holiday, on the next business day following, at 10:00 A.M., or
at such other date and time as shall be designated from time
<PAGE>
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to time by the board of directors and stated in the notice of the meeting. At
each annual meeting, stockholders shall elect a board of directors, and transact
such other business as may properly be brought before the meeting.
Section 3. SPECIAL MEETINGS. Special meetings of stockholders,
for any purpose or purposes, unless otherwise prescribed by statute or by the
certificate of incorporation, may be called by the chairman of the board, the
president or the board of directors and shall be called by the chairman of the
board, the president or the secretary at the request in writing of stockholders
owning at least twenty-five percent (25%) in amount of the entire capital stock
of the corporation issued and outstanding and entitled to vote. Such request
shall state the purpose or purposes of the proposed meeting. Business transacted
at any special meeting of stockholders shall be limited to the purposes stated
in the notice.
Section 4. NOTICE OF MEETING. Written notice of each meeting
of stockholders stating the place, date and hour thereof and, in the case of a
special meeting, specifying the purpose or purposes for which the meeting is
called, shall be given to each stockholder entitled to vote at such meeting not
less than ten nor more than sixty days before the date of the meeting, except
that where a matter to be acted on is a merger or consolidation of the
corporation or a sale, lease or exchange of all or substantially all of its
assets, such notice shall be given not less than twenty nor more than sixty days
prior to such meeting.
Section 5. QUORUM. Except as otherwise provided by statute or
by the certificate of incorporation, the holders of record of a majority of the
stock issued and outstanding and entitled to vote thereat, present in person or
represented by proxy, shall constitute a quorum for the transaction of business
at each meeting of stockholders. If such quorum shall not be present at any
meeting of stockholders, a majority of stockholders entitled to vote thereat,
present in person or represented by proxy, shall have the power to adjourn the
<PAGE>
-3-
meeting from time to time, without notice other than an announcement at the
meeting, until a quorum shall be present or represented. At such adjourned
meeting at which a quorum shall be present any business may be transacted which
might have been transacted at the meeting as originally notified. If the
adjournment is for more than thirty days, or if after the adjournment a new
record date is fixed for the adjourned meeting, a notice of the adjourned
meeting shall be given to each stockholder of record entitled to vote at the
meeting. A quorum, once present to organize a meeting, is not broken by the
subsequent withdrawal of any stockholders.
Section 6. VOTING. At any meeting of stockholders at which a
quorum is present, all elections of directors shall be determined by a plurality
vote and all other matters shall be determined by the affirmative vote of the
holders of a majority of the stock having voting power present in person or
represented by proxy, except as otherwise provided by statute or by the
certificate of incorporation.
Section 7. VOTING RIGHTS. Unless otherwise provided by the
certificate of incorporation and except as otherwise provided by statute, each
stockholder of record shall at every meeting of stockholders be entitled to one
vote in person or by proxy for each share of the capital stock having voting
power held by such stockholder.
Section 8. PROXIES. Each stockholder entitled to vote at a
meeting of stockholders or to express consent or dissent to corporate action in
writing without a meeting may authorize another person or persons to act for
such stockholder by proxy, but no proxy shall be voted or acted upon after three
years from its date, unless the proxy provides for a longer period.
Section 9. WRITTEN CONSENT. Any action required to be taken at
any annual or special meeting of stockholders, or any action which may be taken
at any annual or special meeting of stockholders, may be taken without a
meeting, without prior notice and without a
<PAGE>
-4-
vote, if a consent or consents in writing, setting forth the action so taken,
shall be signed by the holders of outstanding stock having not less than the
minimum number of votes that would be necessary to authorize or take such action
at a meeting at which all shares entitled to vote thereon were present and voted
and shall be delivered to the corporation by delivery to its registered office
in the State of Delaware, its principal place of business, or an officer or
agent of the corporation having custody of the book in which proceedings of
meetings of stockholders are recorded. Delivery made to a corporation's
registered office shall be by hand or by certified or registered mail, return
receipt requested. Every written consent shall bear the date of signature of
each stockholder who signs the consent, and no written consent shall be
effective to take the corporate action referred to therein unless, within sixty
days of the earliest dated consent delivered in the manner required by this
Section to the corporation, written consents signed by a sufficient number of
holders to take action are delivered in the manner required by this Section.
Prompt notice of the taking of the corporate action without a meeting by less
than unanimous written consent shall be given to those stockholders who have not
consented in writing.
Section 10. CLASS VOTING. Where a separate vote by a class or
classes is required, a majority of the outstanding shares of such class or
classes, present in person or represented by proxy, shall constitute a quorum
entitled to take action with respect to that vote on that matter and the
affirmative vote of the majority of shares of such class or classes present in
person or represented by proxy at the meeting shall be the act of such class.
Section 11. RECORD DATE. (a) In order that the corporation may
determine stockholders entitled to notice of or to vote at any meeting of
stockholders or any adjournment thereof, the board of directors may fix a record
date, which record date shall not precede the date upon which the resolution
fixing the record date is adopted by the board of directors, and
<PAGE>
-5-
which record date shall not be more than sixty nor less than ten days before the
date of such meeting. If no record is fixed by the board of directors, the
record date for determining stockholders entitled to notice of or to vote at a
meeting of stockholders shall be at the close of business on the day next
preceding the day on which notice is given, or, if notice is waived, at the
close of business on the day next preceding the day on which the meeting is
held. A determination of stockholders of record entitled to notice of or to vote
at a meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the board of directors may fix a new record date for the
adjourned meeting. (b) In order that the corporation may determine stockholders
entitled to consent to corporate action in writing without a meeting, the board
of directors may fix a record date, which record date shall not precede the date
upon which the resolution fixing the record date is adopted by the board of
directors, and which date shall not be more than ten days after the date upon
which the resolution fixing the record date is adopted by the board of
directors. If no record date has been fixed by the board of directors, the
record date for determining stockholders entitled to consent to corporate action
in writing without a meeting, when no prior action by the board of directors is
required by this chapter, shall be the first date on which a signed written
consent setting forth the action taken or proposed to be taken is delivered to
the corporation by delivery to its registered office in this State, its
principal place of business, or an officer or agent of the corporation having
custody of the book in which proceedings of meetings of stockholders are
recorded. Delivery made to a corporation's registered office shall be by hand or
by certified or registered mail, return receipt requested. If no record date has
been fixed by the board of directors and prior action by the board of directors
is required by this chapter, the record date for determining stockholders
entitled to consent to corporate action in writing without a meeting shall be at
the close of business on the day on which the board of directors adopts the
resolution taking such
<PAGE>
-6-
prior action. (c) In order that the corporation may determine stockholders
entitled to receive payment of any dividend or other distribution or allotment
of any rights or stockholders entitled to exercise any rights in respect of any
change, conversion or exchange of stock, or for the purpose of any other lawful
action, the board of directors may fix a record date, which record date shall
not precede the date upon which the resolution fixing the record date is
adopted, and which record date shall be not more than sixty days prior to such
action. If no record date is fixed, the record date for determining stockholders
for any such purpose shall be at the close of business on the day on which the
board of directors adopts the resolution relating thereto.
Section 12. REGISTERED STOCKHOLDERS. The corporation shall be
entitled to recognize the exclusive right of a person registered on its books as
the owner of shares to receive dividends, and to vote as such owner, and to hold
liable for calls and assessments a person registered on its books as the owner
of shares, and shall not be bound to recognize any equitable or other claim to
or interest in such share or shares on the part of any other person, regardless
of whether it shall have knowledge or notice of any such claim or interest,
except as otherwise provided by law.
ARTICLE III
DIRECTORS
---------
Section 1. MANAGEMENT. The business and affairs of the
corporation shall be managed by or under the direction of its board of
directors, which may exercise all such powers of the corporation and do all such
lawful acts and things as are not by statute or by the certificate of
incorporation or by these by-laws directed or required to be exercised or done
by stockholders.
<PAGE>
-7-
Section 2. NUMBER. The total number of directors which shall
constitute the whole board of directors shall not be less than one (1) nor more
than three (3). The first board of directors shall consist of one (1) director,
and shall be elected by the incorporator or incorporators of the corporation.
Thereafter, within the limits above specified, the number of directors shall be
determined by resolution of the board of directors or by stockholders.
Section 3. ELECTION AND TENURE. The directors shall be elected
at the annual meeting of stockholders, except as provided in Section 4 of this
Article, and each director elected shall hold office until such director's
successor is elected and qualified or until such director's earlier resignation
or removal. Directors need not be stockholders.
Section 4. VACANCIES AND NEWLY CREATED DIRECTORSHIPS.
Vacancies and newly created directorships resulting from any increase in the
authorized number of directors elected by all of stockholders having the right
to vote as a single class may be filled by a majority of the directors then in
office, although less than a quorum, or by a sole remaining director. Whenever
the holders of any class or classes of stock or series thereof are entitled to
elect one or more directors by the certificate of incorporation, vacancies and
newly created directorships of such class or classes or series may be filled by
a majority of the directors elected by such class or classes or series thereof
then in office, or by a sole remaining director so elected. Each director so
chosen shall hold office until the next annual election and until such
director's successor is duly elected and shall qualify or until such director's
earlier resignation or removal.
Section 5. REMOVAL AND RESIGNATION. Except as otherwise
provided by the certificate of incorporation or by statute, any director or the
entire board of directors may be removed, with or without cause, by the holders
of a majority of the shares then entitled to vote at any election of directors.
A director may resign at any time by giving written notice to the board of
directors, the chairman of the board, the president or the secretary of the
corporation.
<PAGE>
-8-
Unless otherwise specified in the notice, the resignation shall take effect upon
receipt thereof by the board of directors or such officer, and acceptance of the
resignation shall not be necessary to make it effective.
Section 6. PLACE OF MEETINGS. The board of directors may hold
meetings, both regular and special, either within or without the State of
Delaware.
Section 7. FIRST MEETING. The first meeting of each newly
elected board of directors shall be held at such time and place as shall be
fixed by the vote of stockholders at the annual meeting and no notice of such
meeting shall be necessary to the newly elected directors in order legally to
constitute the meeting, provided a quorum shall be present. In the event of the
failure of stockholders to fix the time or place of such first meeting of the
newly elected board of directors, or in the event such meeting is not held at
the time and place so fixed by stockholders, the meeting may be held at such
time and place as shall be specified in a notice given as hereinafter provided
for special meetings of the board of directors, or as shall be specified in a
written waiver signed by all of the directors.
Section 8. REGULAR MEETINGS. Regular meetings of the board of
directors may be held without notice at such time and at such place as shall
from time to time be determined by the board of directors.
Section 9. SPECIAL MEETINGS. Special meetings of the board of
directors may be called by the chairman of the board or the president on at
least twenty-four hours notice to each director, in accordance with Article IV
of these by-laws. Special meetings shall be called by the chairman of the board,
the president or the secretary in like manner and on like notice on the written
request of two directors, or one-third of the directors constituting the whole
board of directors, whichever is less.
<PAGE>
-9-
Section 10. QUORUM AND VOTING. At all meetings of the board of
directors, a majority of the total number of the whole board of directors shall
constitute a quorum for the transaction of business and the act of a majority of
the directors present at any meeting at which there is a quorum shall be the act
of the board of directors, except as may be otherwise provided by statute or by
the certificate of incorporation. If a quorum shall not be present at any
meeting of the board of directors, a majority of the directors present thereat
may adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present.
Section 11. WRITTEN CONSENT. Unless otherwise restricted by
the certificate of incorporation or these by-laws, any action required or
permitted to be taken at any meeting of the board of directors or of any
committee thereof may be taken without a meeting, if all members of the board of
directors or committee, as the case may be, consent thereto in writing, and the
writing or writings are filed with the minutes of proceedings of the board of
directors or committee.
Section 12. TELEPHONIC PARTICIPATION. Unless otherwise
restricted by the certificate of incorporation or these by-laws, members of the
board of directors, or any committee designated by the board of directors, may
participate in a meeting of the board of directors, or any committee, by means
of conference telephone or similar communications equipment by means of which
all persons participating in the meeting can hear each other, and such
participation in a meeting shall constitute presence in person at the meeting.
Section 13. COMMITTEES OF DIRECTORS. The board of directors
may, by resolution passed by a majority of the whole board of directors,
designate one or more committees, each committee to consist of one or more of
the directors of the corporation. The board of directors may designate one or
more directors as alternate members of any committee,
<PAGE>
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who may replace any absent or disqualified member at any meeting of the
committee. In the absence or disqualification of a member of a committee, the
member or members present at any meeting and not disqualified from voting,
whether or not such director or directors constitute a quorum, may unanimously
appoint another member of the board of directors to act at the meeting in the
place of any such absent or disqualified member. Any such committee, to the
extent provided in the resolution of the board of directors, shall have and may
exercise all the powers and authority of the board of directors in the
management of the business and affairs of the corporation, and may authorize the
seal of the corporation to be affixed to all papers which may require it; but no
such committee shall have the power or authority in reference to amending the
certificate of incorporation, adopting an agreement of merger or consolidation,
recommending to stockholders the sale, lease or exchange of all or substantially
all of the corporation's property and assets, recommending to stockholders a
dissolution of the corporation or a revocation of a dissolution, or amending the
by-laws of the corporation; and, unless the resolution, these by-laws or the
certificate of incorporation expressly so provide, no such committee shall have
the power or authority to declare a dividend or to authorize the issuance of
stock. Such committee or committees shall have such name or names as may be
determined from time to time by resolution adopted by the board of directors.
Each committee shall keep regular minutes of its meetings and report the same to
the board of directors when required.
Section 14. COMPENSATION. Unless otherwise restricted by the
certificate of incorporation or these by-laws, the board of directors shall have
the authority to fix the compensation of directors in such one or more forms as
the board of directors may determine.
ARTICLE IV
NOTICES
-------
<PAGE>
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Section 1. NOTICE. Whenever notice is required by statute, the
certificate of incorporation or these by-laws to be given to any director or
stockholder, such notice shall be in writing and may be given personally or by
mail or courier. Notice by mail shall be deemed to be given, in the case of a
director, four days after depositing, and, in the case of a stockholder, at the
time when deposited, in the post office or a postal service letter box, enclosed
in a post-paid sealed wrapper, and addressed to such director or stockholder at
such director's or stockholder's address appearing on the books of the
corporation. Notice by courier shall be deemed to be given two days after
delivering same to the courier service, if marked for delivery within two days
thereafter. Notice to directors may also be given by telex, facsimile or other
electronic transmission, and shall be deemed given when transmitted. A day, for
purposes of these by-laws, shall be deemed to include Saturday, Sunday and all
legal holidays.
Section 2. WAIVER OF NOTICE. Whenever any notice is required
to be given by statute, the certificate of incorporation or these by-laws, a
waiver thereof in writing, signed by the person or persons entitled to said
notice, whether before or after the time stated therein, shall be deemed
equivalent thereto. Attendance of a person at a meeting of stockholders,
directors or any committee of the board of directors shall constitute a waiver
of notice of such meeting, except where the person is attending for the express
purpose of objecting, at the beginning of the meeting, to the transaction of any
business because the meeting was not lawfully called or convened. Neither the
business to be transacted at, nor the purpose of, any regular or special meeting
of stockholders, directors, or members of a committee of directors need be
specified in any written waiver of notice.
ARTICLE V
OFFICERS
--------
<PAGE>
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Section 1. OFFICERS. The officers of the corporation shall be
chosen by the board of directors and shall be a president and a secretary. The
board of directors may also choose a chairman of the board, one or more
vice-presidents, one or more assistant secretaries and a treasurer and one or
more assistant treasurers, and any other officers and agents as it shall deem
necessary. Any number of offices may be held by the same person, unless the
certificate of incorporation or these by-laws otherwise provide.
Section 2. TENURE; RESIGNATION; REMOVAL; VACANCIES. Each
officer of the corporation shall hold office until such officer's successor is
chosen and qualified, or until such officer's earlier resignation or removal,
or, if the term of any such officer shall have been fixed by the board of
directors or by the chief executive officer acting under authority delegated to
the chief executive officer by the board of directors, until the date of the
expiration of such term. Any officer elected or appointed by the board of
directors may be removed at any time by the board of directors or the chief
executive officer authorized to appoint such officer; provided that any such
removal shall be without prejudice to the rights, if any, of the officer so
removed under any employment contract or other agreement with the corporation.
Any vacancy occurring in the office of president or secretary of the corporation
shall be filled by the board of directors. Any other vacancy may be filled by
the board of directors.
Section 3. COMPENSATION. The compensation of all officers,
employees and agents of the corporation shall be fixed by the board of directors
or by any committee or officer to whom such authority has been delegated by the
board of directors.
Section 4. AUTHORITY AND DUTIES. All officers as between
themselves and the corporation shall have such authority and perform such duties
in the management and operation of the corporation as may be provided in these
by-laws, or, to the extent not so provided, as may be prescribed by the board of
directors. The board of directors may from time to time
<PAGE>
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delegate the powers or duties of any officer to any other officers or agents,
notwithstanding any provision hereof.
Section 5. THE CHAIRMAN OF THE BOARD. The chairman of the
board, if there be a chairman, shall preside at all meetings of stockholders and
the directors, and the chairman of the board shall have such other powers and
duties as the board of directors may from time to time prescribe.
Section 6. THE PRESIDENT. The president shall be the chief
executive officer of the corporation. The president shall have general and
active management of the business of the corporation, shall see to it that all
resolutions and orders of the board of directors are carried into effect, and in
connection therewith, shall be authorized to delegate to the other executive
officers of the corporation such powers and duties of the president as the
president at such times and in such manner may deem advisable. In the absence or
disability of the chairman of the board, or, if there be no chairman, the
president shall preside at all meetings of stockholders and the directors.
Section 7. THE VICE PRESIDENTS. The vice president, if any, or
if there by more than one, the vice presidents, shall assist the chief executive
officer in the management of the business of the corporation and the
implementation of resolutions and orders of the board of directors at such times
and in such manner as the chief executive officer may deem advisable. If there
be more than one vice president, the board of directors may designate one of
them as executive vice president, in which case such vice president shall be
first in order of seniority, and may also grant to others such titles as shall
be descriptive of their respective functions or indicative of their relative
seniority. The vice president, or, if there by more than one, the vice
presidents in the order of their seniority as indicated by their titles or as
otherwise determined by the board of directors shall, in the absence or
disability of the chief executive officer,
<PAGE>
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exercise the powers and perform the duties of such officer; and such vice
president or vice presidents shall have such other powers and duties as the
board of directors or the chief executive officer may from time to time
prescribe.
Section 8. THE ASSISTANT VICE PRESIDENTS. The assistant vice
president, if any, or, if there be more than one, the assistant vice presidents,
shall perform such duties as the board of directors or the chief executive
officer may from time to time prescribe.
Section 9. THE TREASURER. The treasurer shall have the care
and custody of the corporate funds, and other valuable effects, including
securities, and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the corporation and shall deposit all moneys
and other valuable effects in the name and to the credit of the corporation in
such depositories as may be designated by the board of directors. The treasurer
shall disburse the funds of the corporation as may be ordered by the board of
directors, taking proper vouchers for such disbursements, and shall render to
the chief executive officer and the board of directors, at meetings or whenever
they may require it, an account of all the treasurer's transactions as treasurer
and of the financial condition of the corporation.
Section 10. THE ASSISTANT TREASURERS. The assistant treasurer,
if any, or, if there be more than one, the assistant treasurers, in the order
determined by the board of directors or by the chief executive officer, shall,
in the absence or disability of the treasurer, exercise the powers and duties of
the treasurer, and such assistant treasurer or treasurers shall perform such
other duties as the board of directors or the chief executive officer may from
time to time prescribe.
Section 11. THE SECRETARY. The secretary shall attend all
meetings of stockholders and the board of directors and shall record, or cause
to be recorded, the minutes of all proceedings taken at such meetings, and
maintain all documents evidencing corporate
<PAGE>
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actions taken by written consent of stockholders or of the board of directors,
in a book to be kept for that purpose; and the secretary shall perform like
duties for any committees of the board of directors when required. The secretary
shall see to it that all notices of meetings of stockholders and of special
meetings of the board of directors are duly given in accordance with these
by-laws or as required by statute; the secretary shall be the custodian of the
seal of the corporation, and, when authorized by the board of directors, the
secretary shall cause the corporate seal to be affixed to any document requiring
it, and, when so affixed, attested by the secretary's signature as secretary or
by the signature of an assistant secretary; and the secretary shall perform such
other duties as are generally incident to the office of secretary and as the
board of directors or the chief executive officer may from time to time
prescribe.
Section 12. THE ASSISTANT SECRETARIES. The assistant
secretary, if any, or, if there be more than one, the assistant secretaries, in
the order determined by the board of directors or by the chief executive
officer, shall, in the absence or disability of the secretary, exercise the
powers and perform the duties of the secretary; and the assistant secretary or
assistant secretaries shall perform such other duties as the board of directors
or the chief executive officer may from time to time prescribe.
Section 13. ACTION WITH RESPECT TO SECURITIES OF OTHER
CORPORATIONS. Unless otherwise directed by the board of directors, the chief
executive officer or any officer of the corporation authorized by the chief
executive officer shall have power to vote and otherwise act on behalf of the
corporation, in person or by proxy, at any meeting of stockholders, or with
respect to any action of stockholders, of any other corporation in which this
corporation may hold securities and otherwise to exercise any and all rights and
powers which this corporation may possess by reason of its ownership of
securities in such other corporation.
<PAGE>
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ARTICLE VI
STOCK CERTIFICATES
------------------
Section 1. CERTIFICATES. The shares of the corporation's
capital stock shall be represented by certificates, which shall be in such form
as the board of directors shall determine, provided that the board of directors
may provide by resolution or resolutions that some or all of any or all classes
or series of its stock shall be uncertificated shares. Any such resolution shall
not apply to shares represented by a certificate until such certificate is
surrendered to the corporation. Notwithstanding the adoption of such a
resolution by the board of directors, every holder of stock represented by
certificates and, upon request, every holder of uncertificated shares shall be
entitled to have a certificate signed by, or in the name of the corporation by
the chairman or vice-chairman of the board of directors, or the president or
vice-president, and by the treasurer or an assistant treasurer, or the secretary
or an assistant secretary of the corporation representing the number of shares
registered in certificate form. Any or all of the signatures on the certificate
may be a facsimile. In case any officer, transfer agent or registrar who has
signed or whose facsimile signature has been placed upon a certificate shall
have ceased to be such officer, transfer agent or registrar before such
certificate is issued, it may be issued by the corporation with the same effect
as if such officer, transfer agent or registrar were such officer, transfer
agent or registrar at the date of issue.
Section 2. LOST CERTIFICATES. The board of directors may issue
a new certificate of stock or uncertificated shares in place of any certificate
therefore issued by it, alleged to have been lost, stolen or destroyed, and the
board of directors may require the owner of the lost, stolen, or destroyed
certificate, or such owner's legal representative to give the corporation a bond
sufficient to indemnify it against any claim that may be made against it on
<PAGE>
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account of the alleged loss, theft or destruction of any such certificate or the
issuance of such new certificate or uncertificated shares.
Section 3. TRANSFERS OF STOCK. Upon surrender to the
corporation or the transfer agent of the corporation of a certificate for shares
duly endorsed or accompanied by proper evidence of succession, assignation or
authority to transfer, it shall be the duty of the corporation to issue a new
certificate to the person entitled thereto, cancel the old certificate and
record the transaction upon its books.
ARTICLE VII
GENERAL PROVISIONS
------------------
Section 1. DIVIDENDS. Dividends upon the capital stock of the
corporation, subject to the provisions of the certificate of incorporation, if
any, may be declared by the board of directors at any regular or special
meeting, pursuant to law. Dividends may be paid in cash, in property, or in
shares of the capital stock, subject to the provisions of the certificate of
incorporation.
Section 2. RESERVES. Before payment of any dividend, there may
be set aside out of any funds of the corporation available for dividends such
sum or sums as the board of directors from time to time, in its absolute
discretion, think proper as a reserve or reserves to meet contingencies, or for
equalizing dividends, or for repairing or maintaining any property of the
corporation, or for such other purpose as the board of directors shall believe
conducive to the interest of the corporation, and the board of directors may
modify or abolish any such reserve in the manner in which it was created.
Section 3. FISCAL YEAR. The fiscal year of the corporation
shall be fixed, and may from time to time be changed, by resolution of the board
of directors.
<PAGE>
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Section 4. SEAL. The corporate seal shall have inscribed
thereon the name of the corporation, the year of its organization and the words
"Corporate Seal, Delaware". The seal may be used by causing it or a facsimile
thereof to be impressed or affixed or reproduced or otherwise.
ARTICLE VIII
INDEMNIFICATION
---------------
The corporation shall (i) indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the corporation to procure a
judgment in its favor by reason of the fact that he or she is or was a director
or officer, employee or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer or employee or agent of
another corporation, partnership, joint venture, trust or other enterprise
against expenses (including attorneys' fees) actually and reasonably incurred by
him or her in connection with the defense or settlement of such action or suit,
and (ii) indemnify any person who was or is a party or is threatened to be made
a party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative (other than an action
by or in the right of the corporation) by reason of the fact that he or she is
or was a director or officer, employee or agent of the corporation, or is or was
serving at the request of the corporation as a director or officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by him or her in
connection with such action, suit or proceeding, in each case to the fullest
extent permissable under subsections (a) through (e) of Section 145 of the
Delaware General Corporation Law, as the
<PAGE>
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same exists or may hereafter be amended (but, in the case of any such
amendments, only to the extent such amendment permits the corporation to broader
indemnification rights than permitted prior thereto). The foregoing right of
indemnification and advancement of expenses shall not be deemed exclusive of any
other rights to which those seeking indemnification or advancement of expenses
may now or hereafter be entitled under any bylaw, agreement, vote of
stockholders or disinterested directors or otherwise, both as to action in his
or her official capacity and as to action in another capacity while holding such
office.
ARTICLE IX
AMENDMENTS
----------
Except as otherwise provided by statute or the certificate of
incorporation, these by-laws may be amended or repealed or new by-laws may be
adopted by stockholders entitled to vote; provided, however, that, if the
certificate of incorporation confers the power to adopt, amend or repeal by-laws
upon the board of directors, the fact that such power has been so conferred
shall not divest stockholders of the power, nor limit their power to adopt,
amend or repeal any by-law.
<PAGE>
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RECORD OF AMENDMENTS
TO BY-LAWS
ARTICLE- MEETING AT
SECTION CONTENT OF AMENDMENT WHICH ADOPTED
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[LOGO]
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No. 081717C
- - - - - ------------------------------
GENERAL REGISTRY
ISLE OF MAN
CERTIFICATE OF INCORPORATION
--------------------------
I CERTIFY that Golden State Petro (IOM I-A) PLC
IS THIS DAY INCORPORATED UNDER THE COMPANIES
ACT 1931 TO 1993 AND THAT THE COMPANY IS LIMITED.
This 4th day of NOVEMBER 1996
Deputy Assistant Chief Registrar
General Registry
- - - - - --------------------------------------------------------------------------------
<PAGE>
2
THE COMPANIES ACTS 1931 to 1993
ISLE OF MAN
A COMPANY LIMITED BY SHARES
MEMORANDUM OF ASSOCIATION
OF
GOLDEN STATE PETRO (IOM I-A) PLC
1. The name of the Company is:
GOLDEN STATE PETRO (IOM I-A) PLC
2. The Company is a public company.
3. The liability of the members is limited.
4. Restrictions, if any, on the exercise of the rights, powers and
privileges of the Company:
None unless and until decided upon by Special Resolution of the Company
in accordance with Section 6 of the Companies Act 1986.
5. The Share Capital of the Company is US$2,000.00 divided into 2,000
Ordinary shares of US$1.00 each.
We, the subscribers to this memorandum of association
(a) wish to be formed into a Company pursuant to this memorandum;
(b) agree to take the number of shares shown opposite our respective names;
(c) declare that all the requirements of the Companies Acts 1931 to 1993 in
respect of matters relating to registration and of matters precedent
and incidental thereto have been complied with.
<PAGE>
3
- - - - - --------------------------------------------------------------------------------
Names and addresses Signatures Number of
of Subscribers Shares taken
- - - - - --------------------------------------------------------------------------------
ANDREW JAMES BAKER ONE
15-19 Athol Street
Douglas
Isle of Man
JOHN MICHAEL KILLIP ONE
15-19 Athol Street
Douglas
Isle of Man
- - - - - --------------------------------------------------------------------------------
Dated this 31st day of October 1996
Witness to the above signatures
DENISE HANDS
15-19 Athol Street
Douglas
Isle of Man
<PAGE>
4
THE COMPANIES ACTS 1931 to 1993
ISLE OF MAN
PUBLIC COMPANY LIMITED BY SHARES
ARTICLES OF ASSOCIATION
OF
GOLDEN STATE PETRO (IOM I-A) PLC
PRELIMINARY
1. Table A shall not apply to the Company but the articles hereinafter
contained shall constitute the regulations of the Company.
2. The Company is a "Public Company" within the meaning of the Act, and
accordingly invitation may be issued to the public to subscribe for any shares
or debentures of the Company.
INTERPRETATION
3.(1) In these regulations --
"the Act" means the Companies Acts 1931-1993 including any statutory
modifications or reenactments thereof for the time being in force;
"the articles" means the articles of the Company;
"clear days" in relation to the period of a notice means that period excluding
the day when the notice is given or deemed to be given and the day for which it
is given or on which it is to take effect;
"executed" includes any mode of execution;
"office" means the registered office of the Company;
"the holder" in relation to shares means the member whose name is entered in the
register of members as the holder of the shares;
"the seal" means the common seal of the Company;
"secretary" means the secretary of the Company or any other person appointed to
perform the duties of the secretary of the Company, including a joint, assistant
or deputy secretary.
<PAGE>
5
(2) Unless the context otherwise requires, words or expressions contained in
these regulations bear the same meaning as in the Act but excluding any
statutory modification thereof not in force when these regulations become
binding on the Company.
(3) In these regulations, unless there is something in the subject of context
inconsistent with such construction:
(a) words importing the plural number shall be deemed to include
the singular number and words importing the singular number
shall be deemed to include the plural number;
(b) words importing the masculine gender only include the feminine
gender;
(c) words importing persons include companies or associations or
bodies of persons whether corporate or unincorporate.
4. Statutory references used in these articles shall be read to include
any statutory or legislative modification or re-enactment thereof or any
substitution therefor.
SHARE CAPITAL
5. (1) Subject to the provisions of the Act and without prejudice to
any rights attached to any existing shares, any share may be issued
with such rights or restrictions as the Company may by ordinary
resolution determine.
(2) Subject to the provisions of the Act, shares may be issued in
fractional denominations to the same extent as whole shares.
6. Subject to the provisions of the Act and the articles, redeemable
preference shares may be issued on such terms and in such manner as may be
provided by the articles.
7. The Company may exercise the powers of paying commissions conferred by the
Act. Subject to the provisions of the Act, any such commissions may be satisfied
by the payment of cash or by the allotment of fully or partly paid shares or
partly in one way and partly in the other.
8. Except as required by law, no person shall be recognised by the Company as
holding any share upon any trust and (except as otherwise provided by the
articles or by law) the Company shall not be bound by or recognise any interest
in any share except an absolute right to the entirety thereof in the holder.
9. The shares shall be at the disposal of the Directors, and (save as otherwise
directed by the Company in General Meeting) they may allot or otherwise dispose
of them to such persons at such times and generally on such terms and conditions
as they think proper, subject nevertheless to article 2 and provided that no
shares shall be issued at a discount, except as provided by Section 47 of the
Act.
<PAGE>
6
10. If at any time the share capital is divided into different classes of
shares, the rights attached to any class (unless otherwise provided by the terms
of issue of the shares of that class) may be varied with the consent in writing
of the holders of all of the issued shares of that class, or with the sanction
of an extraordinary resolution passed at a separate general meeting of the
holders of the shares of the class. To every such separate general meeting the
provisions of these regulations relating to general meetings shall in the case
of the number of holders of a particular class of shares being two or more
mutatis mutandis apply, but so that the necessary quorum shall be two persons at
least holding or representing by proxy one-third of the issued shares of the
class, and that any holder of shares of the class present in person or by proxy
may demand a poll. In the case of the number of holders of a particular class of
shares being one, one person holding or representing all the issued shares of
the class shall be a quorum.
11. The Company may issue share warrants to bearer in respect of any fully
paid-up shares of the Company, stating that the bearer of the warrant is
entitled to the shares therein specified. Such warrants shall be issued upon
such terms and subject to such conditions as may be resolved upon by the
Directors. Subject to the provisions of the Act and of these articles the holder
of a share warrant shall be deemed to be a member of the Company and shall be
entitled to the same rights and privileges as he would have had if his name had
been included in the share register of the Company as the holder of the shares.
SHARE CERTIFICATES
12. (1) Every member, upon becoming the holder of any shares shall be
entitled
(a) without payment, to one certificate for all the shares of each
class held by him (and, upon transferring a part of his
holding of shares of any class, to a certificate for the
balance of such holding); or
(b) to several certificates each for one or more of his shares
upon payment, for every certificate after the first, of such
reasonable sum as the Directors may determine.
(2) Every certificate shall be sealed with the seal and shall specify
the number, class and distinguishing numbers (if any) of the shares to
which it relates and the amount or respective amounts paid up thereon.
(3) The Company shall not be bound to issue more than one certificate
for shares held jointly by several persons and delivery of a
certificate to one joint holder shall be a sufficient delivery to all
of them.
13. If a share certificate is defaced, worn-out, lost or destroyed, it may be
renewed on such terms (if any) as to evidence and indemnity and payment of the
expenses reasonably incurred by the Company in investigating evidence as the
Directors may determine but otherwise free of charge, and (in the case of
defacement or wearing-out) on delivery up of the old certificate.
14. The Company shall have a first and paramount lien on every share for all
moneys (whether presently payable or not) payable at a fixed time or called in
respect of that share.
<PAGE>
7
The Directors may at any time declare any share to be wholly or in part exempt
from the provisions of this regulation. The Company's lien on a share shall
extend to any amount payable in respect of it.
15. The Company may sell in such manner as the Directors determine any shares on
which the Company has a lien if a sum in respect of which the lien exists is
presently payable and is not paid within fourteen clear days after notice has
been given to the holder of the share or to the person entitled to it in
consequence of the death or bankruptcy of the holder, demanding payment and
stating that if the notice is not complied with the shares may be sold.
16. To give effect to a sale the Directors may authorise some person to execute
an instrument of transfer of the shares, sold to, or in accordance with the
directions of, the purchaser. The title of the transferee to the shares shall
not be affected by any irregularity in or invalidity of the proceedings in
reference to the sale.
17. The net proceeds of the sale, after payment of the costs, shall be applied
in payment of so much of the sum for which the lien exists as is presently
payable, and any residue shall (upon surrender to the Company for cancellation
of the certificate for the shares sold and subject to a like lien for any moneys
not presently payable as existed upon the shares before the sale) be paid to the
person entitled to the shares at the date of the sale.
CALLS ON SHARES AND FORFEITURE
18. Subject to the terms of allotment, the Directors may make calls upon the
members in respect of any moneys unpaid on their shares (whether in respect of
nominal value or premium) and each member shall (subject to receiving at least
fourteen clear days notice specifying when and where payment is to be made) pay
to the Company as required by the notice the amount called on his shares. A call
may be required to be paid by installments. A call may, before receipt by the
Company of any sum due thereunder, be revoked in whole or in part and payment of
a call may be postponed in whole or in part. A person upon whom a call is made
shall remain liable for calls made upon him notwithstanding the subsequent
transfer of the shares in respect whereof the call was made.
19. A call shall be deemed to have been made at the time when the resolution of
the Directors authorising the call was passed.
20. The joint holders of a share shall be jointly and severally liable to pay
all calls in respect thereof.
21. If a call remains unpaid after it has become due and payable the person from
whom it is due and payable shall pay interest on the amount unpaid from the day
it became due and payable until it is paid at the rate fixed by the terms of
allotment of the share or in the notice of the call or, if no rate is fixed, at
the rate of (pound)5 per centum per annum but the Directors may waive payment of
the interest wholly or in part.
22. An amount payable in respect of a share on allotment or at any fixed date,
whether in respect of nominal value or premium or as an instalment of a call,
shall be deemed to be a call
<PAGE>
8
and if it is not paid the provisions of the articles shall apply as if that
amount had become due and payable by virtue of a call.
23. Subject to the terms of allotment, the Directors may make arrangements on
the issue of shares for a difference between the holders in the amounts and
times of payment of calls on their shares.
24. If a call remains unpaid after it has become due and payable the Directors
may give to the person from whom it is due not less than fourteen clear days'
notice requiring payment of the amount unpaid together with any interest which
may have accrued. The notice shall name the place where payment is to be made
and shall state that if the notice is not complied with the shares in respect of
which the call was made will be liable to be forfeited.
25. If the notice is not complied with any share in respect of which it was
given may, before the payment required by the notice has been made, be forfeited
by a resolution of the Directors and the forfeiture shall include all dividends
or other moneys payable in respect of the forfeited shares and not paid before
the forfeiture
26. Subject to the provisions of the Act, a forfeited share may be sold,
re-allotted or otherwise disposed of on such terms and in such manner as the
Directors determine either to the person who was before the forfeiture the
holder or to any other person and at any time before sale, re-allotment or other
disposition, the forfeiture may be cancelled on such terms as the Directors
think fit. Where for the purposes of its disposal a forfeited share is to be
transferred to any person the Directors may authorise some person to execute an
instrument of transfer of the share to that person.
27. A person any of whose shares have been forfeited shall cease to be a member
in respect of them and shall surrender to the Company for cancellation the
certificate for the shares forfeited but shall remain liable to the Company for
all moneys which at the date of forfeiture were presently payable by him to the
Company in respect of those shares with interest at the rate at which interest
was payable on those moneys before the forfeiture or, if no interest was so
payable, at the rate of (pound)5 per centum per annum from the date of
forfeiture until payment but the Directors may waive payment wholly or in part
or enforce payment without any allowance for the value of the shares at the time
of forfeiture or for any consideration received on their disposal.
28. A statutory declaration by a Director or the secretary that a share has been
forfeited on a specified date shall be conclusive evidence of the facts stated
in it as against all persons claiming to be entitled to the share and the
declaration shall (subject to the execution of an instrument of transfer if
necessary) constitute a good title to the share and the person to whom the share
is disposed of shall not be bound to see to the application of the
consideration, if any, nor shall his title to the share be affected by any
irregularity in or invalidity of the proceedings in reference to the forfeiture
or disposal of the share.
<PAGE>
9
TRANSFER OF SHARES
29. The instrument of transfer of a share may be in any usual form or in any
other form which the Directors may approve and shall be executed by or on behalf
of the transferor and, unless the share is fully paid, by or on behalf of the
transferee.
30. No transfer of any share in the capital of the Company to any person not
already a member of the Company shall be made or registered without the previous
sanction of the Directors, who may without assigning any reason, decline to give
any such sanction. The Directors may also suspend the registration of transfers
during the fourteen days immediately preceding the Ordinary General Meeting in
each year. The Directors may decline to recognise any instrument of transfer
unless accompanied by the certificate of the shares to which it relates, and
such other evidence as the Directors may reasonably require to show the right of
the transferor to make the transfer. The Directors may decline to register a
transfer of any shares on which the Company has a lien. If the Directors refuse
to register a transfer of any share they shall within two months after the date
on which the transfer was lodged with the Company send to the transferee notice
of the refusal as required by section 67 of the Act.
31. The Company shall be entitled to retain any instrument of transfer which is
registered, but any instrument of transfer which the Directors refuse to
register shall be returned to the person lodging it when notice of the refusal
is given.
TRANSMISSION OF SHARES
32. If a member dies the survivor or survivors where he was a joint holder, and
his personal representatives where he was a sole holder or the only survivor of
joint holders, shall be the only persons recognised by the Company as having any
title to his interest; but nothing herein contained shall release the estate of
a deceased member from any liability in respect of any share which had been
jointly held by him.
33. A person becoming entitled to a share in consequence of the death or
bankruptcy of a member may, upon such evidence being produced as the Directors
may properly require, elect either to become the holder of the share or to have
some person nominated by him registered as the transferee. If he elects to
become the holder he shall give notice to the Company to that effect. If he
elects to have another person registered he shall execute an instrument of
transfer of the share to that person. All articles relating to the transfer of
shares shall apply to the notice or instrument of transfer as if it were an
instrument of transfer executed by the member and the death or bankruptcy of the
member had not occurred.
34. A person becoming entitled to a share in consequence of the death or
bankruptcy of a member shall have the rights to which he would be entitled if he
were the holder of the share, except that he shall not, before being registered
as the holder of the share, be entitled in respect of it to attend or vote at
any meeting of the Company or at any separate meeting of the holders of any
class of shares in the Company.
<PAGE>
10
ALTERATION OF SHARE CAPITAL
35. The Company may by ordinary resolution --
(a) increase its share capital by new shares of such amount as the
resolution prescribes;
(b) consolidate and divide all or any or its share capital into
shares of larger amount than its existing shares;
(c) subject to the provisions of the Act, sub-divide its shares,
or any of them, into shares of smaller amount and the
resolution may determine that, as between the shares resulting
from the sub-division, any of them may have any preference or
advantage as compared with the others; and
(d) cancel shares which, at the date of the passing of the
resolution, have not been taken or agreed to be taken by any
person and diminish the amount of its share capital by the
amount of the shares so cancelled.
36. Whenever as a result of a consolidation of shares any members would become
entitled to fractions of a share, the Directors may, instead of issuing the
fractions of a share, on behalf of those members, sell the shares representing
the fractions for the best price reasonably obtainable to any person (including,
subject to the provisions of the Act, the Company) and distribute the net
proceeds of sale in due proportion among those members, and the Directors may
authorise some person to execute an instrument of transfer of the shares to, or
in accordance with the directions of, the purchaser. The transferee shall not be
bound to see to the application of the purchase money nor shall his title to the
shares be affected by any irregularity in or invalidity of the proceedings in
reference to the sale.
37. Subject to the provisions of the Act, the Company may by special resolution
reduce its share capital, any capital redemption reserve and any share premium
account in any way.
CONVERSION OF SHARES INTO STOCK
38. The Company may by ordinary resolution convert any paid-up shares into stock
and reconvert any stock into paid-up shares of any denomination.
39. The holders of stock may transfer the same, or any part thereof, in the same
manner, and subject to the same regulations, as, and subject to which, the
shares from which the stock arose might previously to conversion have been
transferred, or as near thereto as circumstances admit; but the Directors may
from time to time fix the minimum amount of stock transferable and restrict or
forbid the transfer of fractions of that minimum, but the minimum shall not
exceed the nominal amount of the shares from which the stock arose.
40. The holders of stock shall, according to the amount of the stock held by
them, have the same rights, privileges and advantages as regards dividends,
voting at meetings of the Company and other matters as if they held the shares
from which the stock arose, but no such privilege or advantage (except
participation in the dividends and profits of the Company) shall
<PAGE>
11
be conferred by any such aliquot part of stock as would not, if existing in
shares, have conferred that privilege or advantage.
41. Such of the regulations of the Company as are applicable to paid-up shares
shall apply to stock and the words "shares" and "shareholder" therein shall
include "stock" and "stockholder".
REDEMPTION OF PREFERENCE SHARES
42. Subject to the provisions of the Act, the redemption of redeemable
preference shares shall be effected on such terms and in such manner, as may be
provided by the articles.
GENERAL MEETINGS
43. All general meetings other than annual general meetings shall be called
extraordinary general meetings.
44. The Directors may call general meetings, and on the requisition of a member
pursuant to the provisions of the Act, shall forthwith proceed to convene an
extraordinary general meeting for a date not later than eight weeks after
receipt of the requisition. If there are not within the Isle of Man sufficient
Directors to call a general meeting, any Director or any member of the Company
may call a general meeting.
NOTICE OF GENERAL MEETINGS
45. An annual general meeting and an extraordinary general meeting called for
the passing of a special resolution or a resolution appointing a person as a
Director shall be called by at least twenty-one clear days' notice. All other
extraordinary general meetings shall be called by at least fourteen clear days'
notice but a general meeting may be called by shorter notice if it is so agreed
- - - - - --
(a) In the case of an annual general meeting, by all the members
entitled to attend and vote thereat; and
(b) In the case of any other meeting by a majority in number of
the members having a right to attend and vote being a majority
together holding not less than ninety five per cent in nominal
value of the shares giving that right.
The notice shall specify the time and place of the meeting and the general
nature of the business to be transacted and, in the case of an annual general
meeting, shall specify the meeting as such.
Subject to the provisions of the articles and to any restrictions imposed on any
shares, the notice shall be given to all the members, to all persons entitled to
a share in consequence of the death or bankruptcy of a member and to the
Directors and auditors.
<PAGE>
12
46. The accidental omission to give notice of a meeting to or the non-receipt of
notice of a meeting by any person entitled to receive notice shall not
invalidate the proceedings at that meeting.
PROCEEDINGS AT GENERAL MEETINGS
47. No business shall be transacted at any meeting unless a quorum is present.
Two persons entitled to vote upon the business to be transacted, each being a
member or a proxy for a member or a duly authorised representative of a
corporation which is a member, shall be a quorum. When the Company has a single
member, the member or the proxy for the member or a duly authorised
representative of the corporation which is the member, shall be a quorum.
48. If such a quorum is not present within half an hour from the time appointed
for the meeting or if during a meeting such a quorum ceases to be present, the
meeting shall stand adjourned to the same day in the next week at the same time
and place or to such time and place as the Directors may determine.
49. The Chairman, if any, of the Board of Directors or in his absence some other
Director nominated by the Directors shall preside as Chairman of the meeting,
but if neither the Chairman nor such other Director (if any) be present within
fifteen minutes after the time appointed for holding the meeting and willing to
act, the Directors present shall elect one of their number to be Chairman and if
there is only one Director present and willing to act, he shall be Chairman.
50. If no Director is willing to act as Chairman, or if no Director is present
within fifteen minutes after the time appointed for holding the meeting, the
members present and entitled to vote shall choose one of their number to be
Chairman.
51. A Director shall, notwithstanding that he is not a member, be entitled to
attend and speak at any general meeting and at any separate meeting of the
holders of any class of shares in the Company.
52. The Chairman may, with the consent of a meeting at which a quorum is present
(and shall if so directed by the meeting), adjourn the meeting from time to time
and from place to place, but no business shall be transacted at an adjourned
meeting other than business which might properly have been transacted at the
meeting had the adjournment not taken place. When a meeting is adjourned for
fourteen days or more, at least seven clear days' notice shall be given
specifying the time and place of the adjourned meeting and the general nature of
the business to be transacted. Otherwise it shall not be necessary to give any
such notice.
53. A resolution put to the vote of a meeting shall be decided on a show of
hands unless before, or on the declaration of the result of, the show of hands a
poll is duly demanded.
Subject to the provisions of the Act, a poll may be demanded --
(a) by the Chairman; or
(b) by at least two members having the right to vote at the
meeting; or
<PAGE>
13
(c) by a member or members representing no less than one-tenth of
the total voting rights of all the members having the right to
vote at the meeting; or
(d) by a member or members holding shares conferring a right to
vote at the meeting being shares on which an aggregate sum has
been paid up equal to not less than one-tenth of the total sum
paid up on all the shares conferring that right;
and a demand by a person as proxy for a member shall be the same as a demand by
the member.
54. Unless a poll is duly demanded a declaration by the Chairman that a
resolution has been carried or carried unanimously, or by a particular majority,
or lost, or not carried by a particular majority and an entry to that effect in
the minutes of the meeting shall be conclusive evidence of the fact without
proof of the number or proportion of the votes recorded in favour of or against
the resolution.
55. The demand for a poll may, before the poll is taken, be withdrawn but only
with the consent of the Chairman and a demand so withdrawn shall not be taken to
have invalidated the result of a show of hands declared before the demand was
made.
56. A poll shall be taken as the Chairman directs and he may appoint scrutineers
(who need not be members) and fix a time and place for declaring the result of
the poll. The result of the poll shall be deemed to be the resolution of the
meeting at which the poll was demanded.
57. In the case of an equality of votes, whether on a show of hands or on a
poll, the Chairman shall be entitled to a casting vote in addition to any other
vote he may have.
58. A poll demanded on the election of a Chairman or on a question of
adjournment shall be taken forthwith. A poll demanded on any other question
shall be taken either forthwith or at such time and place as the Chairman
directs not being more than thirty days after the poll is demanded. The demand
for a poll shall not prevent the continuance of a meeting for the transaction of
any business other than the question on which the poll was demanded. If a poll
is demanded before the declaration of the result of a show of hands and the
demand is duly withdrawn, the meeting shall continue as if the demand had not
been made.
59. No notice need be given of a poll not taken forthwith if the time and place
at which it is to be taken are announced at the meeting at which it is demanded.
In any other case at least seven clear days notice shall be given specifying the
time and place at which the poll is to be taken.
60. A resolution in writing executed by or on behalf of each member who would
have been entitled to vote upon it if it had been proposed at a general meeting
at which he was present shall be as effectual as if it had been passed at a
general meeting duly convened and held and may consist of several instruments in
the like form each executed by or on behalf of one or more members, provided the
provisions of Section 118B of the Act are complied with and that such resolution
is received by the Company at its registered office within seven days of the
date of its execution in terms hereof.
<PAGE>
14
VOTES OF MEMBERS
61. Subject to any rights or restrictions attached to any shares, on a show of
hands every member who (being an individual) is present in person or by proxy or
(being a corporation) is present by a duly authorised representative, not being
himself a member, shall have one vote and on a poll every member entitled to
vote shall have one vote for every share of which he is the holder.
62. In the case of joint holders the vote of the senior who tenders a vote,
whether in person or by proxy, shall be accepted to the exclusion of the votes
of the other joint holders; and seniority shall be determined by the order in
which the names of the holders stand in the register of members.
63. A member in respect of whom an order has been made by any court having
jurisdiction (whether in the Isle of Man or elsewhere) in matters concerning
mental disorder may vote, whether on a show of hands or on a poll, by his
receiver, curator bonis or other person authorised in that behalf appointed by
that court, and any such receiver, curator bonis or other person may, on a poll,
vote by proxy. Evidence to the satisfaction of the Directors of the authority of
the person claiming to exercise the right to vote shall be deposited at the
office, or at such other place as is specified in accordance with the articles
for the deposit of instruments of proxy, not less than 48 hours before the time
appointed for holding the meeting or adjourned meeting at which the right to
vote is to be exercised and in default the right to vote shall not be
exercisable.
64. No member shall vote at any general meeting or at any separate meeting of
the holders of any class of shares in the Company, either in person or by proxy,
in respect of any share held by him unless all moneys presently payable by him
in respect of that share have been paid.
65. No objections shall be raised to the qualification of any voter except at
the meeting or adjourned meeting at which the vote objected to is tendered, and
every vote not disallowed at the meeting shall be valid. Any objection made in
due time shall be referred to the Chairman whose decision shall be final and
conclusive.
66. On a poll votes may be given either personally or by proxy. A member may
appoint more than one proxy to attend on the same occasion.
67. An instrument appointing a proxy shall be in writing, executed by or on
behalf of the appointor and shall be in the following form (or in a form as near
thereto as circumstances allow or in any other form which is usual or which the
Directors may approve) --
Plc
I/We, , of
, being a member/members of the above-
named Company, hereby appoint of
, or failing him,
<PAGE>
15
of , as my/our proxy to vote
in my/our name(s) and on my/our behalf at the annual/extraordinary general
meeting of the Company to be held on 19 , and at any adjournment thereof.
signed on 19
68. Where it is desired to afford members an opportunity of instructing the
proxy how he shall act the instrument appointing a proxy shall be in the
following form (or in a form as near thereto as circumstances allow or in any
other form which is usual or which the Directors may approve) --
Plc
I/We, , of
member/members of the above-named Company, hereby appoint
of
, or failing him, of
, as my/our proxy to vote in my/our name(s) and on
my/our behalf at the annual/extraordinary general meeting of the Company to be
held on 19 , and at any adjournment thereof.
This form is to be used in respect of the resolutions mentioned below as
follows:
Resolution No. 1 *for *against
Resolution No. 2 *for *against
* strike out whichever is not desired.
Unless otherwise instructed, the proxy may vote as he thinks fit or abstain from
voting.
Signed this day of 19
69. The instrument appointing a proxy and any authority under which it is
executed or a copy of such authority certified notarially or in some other way
approved by the Directors may --
(a) be deposited at the office or at such other place within the
Isle of Man as is specified in the notice convening the
meeting or in any instrument of proxy sent out by the Company
in relation to the meeting not less than 48 hours before the
time for holding the meeting or adjourned meeting at which the
person named in the instrument proposes to vote; or
(b) in the case of a poll taken more than 48 hours after it is
demanded, be deposited as aforesaid after the poll has been
demanded and not less than 24 hours before the time appointed
for the taking of the poll; or
<PAGE>
16
(c) where the poll is not taken forthwith but is taken not more
than 48 hours after it was demanded, be delivered at the
meeting at which the poll was demanded, to the Chairman or to
the Secretary or to any Director;
and an instrument of proxy which is not deposited or delivered in a manner so
permitted shall be invalid.
70. A vote given or poll demanded by proxy or by the duly authorised
representative of a corporation shall be valid notwithstanding the previous
determination of the authority of the person voting or demanding a poll unless
notice of the determination was received by the Company at the office or at such
other place at which the instrument of proxy was duly deposited before the
commencement of the meeting or adjourned meeting at which the vote is given or
the poll demanded or (in the case of a poll taken otherwise than on the same day
as the meeting or adjourned meeting) the time appointed for taking the poll.
71. Where the Company is a single member company and the sole member takes any
decision which may be taken by the Company in general meeting and which has
effect as if agreed by the Company in general meeting he shall subject to
article 60 provide the Company with a written record of that decision by
forwarding such record to the Company at its registered office within seven days
of the date upon which the decision was taken.
NUMBER OF DIRECTORS
72. Unless otherwise determined by ordinary resolution, the number of Directors
(other than alternate Directors) shall not be subject to any maximum.
ALTERNATE DIRECTORS
73. Any Director (other than an alternate Director) may appoint any other
Director, or any other person approved by resolution of the Directors and
willing to act, to be an alternate Director and may remove from office an
alternate Director so appointed by him.
74. An alternate Director shall be entitled to receive notice of all meetings of
Directors and of all meetings of committees of Directors of which his appointor
is a member, to attend and vote at any such meeting at which the Director
appointing him is not personally present and generally to perform all the
functions of his appointor as a Director in his absence but shall not be
entitled to receive any remuneration from the Company for his services as an
alternate Director.
75. An alternate Director shall cease to be an alternate Director if his
appointor ceases to be a Director; but, if a Director retires by rotation or
otherwise but is reappointed or deemed to have been reappointed at the meeting
at which he retires; any appointment of an alternate Director made by him which
was in force immediately prior to his retirement shall continue after his
reappointment.
<PAGE>
17
76. Any appointment or removal of an alternate Director shall be by notice to
the Company signed by the Director making or revoking the appointment or in any
other manner approved by the Directors.
77. Save as otherwise provided in the articles, an alternate Director shall be
deemed for all purposes to be a Director and shall alone be responsible for his
own acts and defaults and he shall not be deemed to be the agent of the Director
appointing him.
POWERS OF DIRECTORS
78. Subject to the provisions of the Act, the memorandum and the articles and to
any directions given by special resolution the business of the Company shall be
managed by the Directors who may exercise all the powers of the Company. No
alteration of the memorandum or articles and no such direction shall invalidate
any prior act of the Directors which would have been valid if that alteration
had not been made or that direction had not been given. The powers given by this
regulation shall not be limited by any special power given to the Directors by
the articles and a meeting of Directors at which a quorum is present may
exercise all powers exercisable by the Directors.
79. Without prejudice to the generality of the foregoing article the Directors
may from time to time at their discretion, raise or borrow, without the consent
of the members in General Meeting, such sum or sums of money for the purposes of
the Company's business as they may think fit and may secure the repayment of or
raise any such sum or sums as aforesaid in such manner and upon such terms and
conditions and in all other respects as they may think fit, and in particular by
mortgages, deeds of bond and security, or other charges upon the whole or any
part of the property and assets of the Company, present or future, including its
uncalled or unissued capital, or by the issue at such price as they may think
fit, of bonds or debentures or debenture stock of the Company, either charged
upon the whole or any part of the property and assets of the Company, or not so
charged, or in any other way that the Directors may think expedient, and the
Directors may issue debentures or debenture stock or paid-up shares to any
person or persons as consideration for the purchase of any goodwill, business or
property purchased by the Company.
80. The Directors may, by power of attorney or otherwise, appoint any person to
be the agent of the Company for such purposes and on such conditions as they
determine, including authority for the agent to delegate all or any of his
powers. The Company may exercise the powers conferred by Sections 32 and 104 of
the Companies Act, 1931 and those powers shall accordingly be exercisable by the
Directors.
DELEGATION OF DIRECTORS' POWERS
81. The Directors may delegate any of their powers to any committee consisting
of one or more Directors. They may also delegate to any Managing Director or any
Director holding any other executive office such of their powers as they
consider desirable to be exercised by him. Any such delegation may be made
subject to any conditions the Directors may impose and either collaterally with
or to the exclusion of their own powers and may be revoked or altered. Subject
to any such conditions, the proceedings of a committee with two or more members
<PAGE>
18
shall be governed by the articles regulating the proceedings of Directors so far
as they are capable of applying.
DIRECTORS GENERALLY
82. The Company may from time to time in general meeting increase or reduce the
number of Directors. The Company may by special resolution remove any Director
or by ordinary resolution appoint any person to be a Director.
83. No person other than a first Director shall be appointed a Director in
general meeting unless at least seven days' and not more than fourteen days'
notice shall have been left at the registered office of the Company of the
intention to propose him, together with a notice in writing by the person to be
proposed of his willingness to be appointed.
84. The Directors shall have power at any time, and from time to time, to fill
any casual vacancy occurring in the Board of Directors or to appoint a person as
an additional Director.
85. A Director may hold any other office or place or profit under the Company,
except that of Auditor, upon such terms as to remuneration, tenure of office and
otherwise as may be determined by the Board.
86. The remuneration of the Directors shall from time to time be determined by
the Company in general meeting and unless otherwise directed any such
remuneration shall be divided amongst them as they may agree, or, failing
agreement, equally. The Directors shall also be entitled to be repaid all
travelling and hotel expenses reasonably incurred by them respectively in or
about the performance of their duties as Directors.
DISQUALIFICATION AND REMOVAL OF DIRECTORS
87. The office of a Director shall be vacated if --
(a) he ceases to be a Director by virtue of any provision of the
Act or he becomes prohibited by law from being a Director; or
(b) he becomes bankrupt or makes any arrangement or composition
with his creditors generally; or
(c) he is, or may be, suffering from mental disorder and either --
(i) he is admitted to hospital in pursuance of an
application for admission for treatment under the
Mental Health Act 1974; or
(ii) an Order is made by a Court having jurisdiction
(whether in the Isle of Man or elsewhere) in matters
concerning mental disorder for his detention or for
the appointment of a receiver, curator bonis or other
person to exercise powers with respect to his
property or affairs; or
<PAGE>
19
(d) he resigns his office by notice to the Company; or
(e) he shall for more than six consecutive months have been absent
without permission of the Directors from meetings of Directors
held during that period and the Directors resolve that his
office be vacated.
88. The shareholding qualification for Directors may be fixed by the Company in
general meeting, and unless and until so fixed no qualification shall be
required.
DIRECTORS' APPOINTMENTS AND INTERESTS
89. Subject to the provisions of the Act, the Directors may appoint one or more
of their number to the office of Managing Director or to any other executive
office under the Company and may enter into an agreement or arrangement with any
Director for his employment by the Company or for the provision by him of any
services outside the scope of the ordinary duties of a Director. Any such
appointment, agreement or arrangement may be made upon such terms as the
Directors determine and they may remunerate any such Director for his services
as they think fit. Any appointment of a Director to an executive office shall
terminate if he ceases to be a Director but without prejudice to any claim to
damages for breach of the contract of service between the Director and the
Company.
90. Subject to the provisions of the Act and provided that he has disclosed to
the Directors the nature and extent of any material interest of his, a Director
notwithstanding his office --
(a) may be a party to, or otherwise interested in, any transaction
or arrangement with the Company or in which the Company is
otherwise interested;
(b) may be a Director or other officer of, or employed by, or a
party to any transaction or arrangement with, or otherwise
interested in, any body corporate promoted by the Company or
in which the Company is otherwise interested; and
(c) shall not, by reason of his office, be accountable to the
Company for any benefit which he derives from any such office
or employment or from any such transaction or arrangement or
from any interest in any such body corporate and no such
transaction or arrangement shall be liable to be avoided on
the ground of any such interest or benefit.
91. For the purposes of the foregoing article --
(a) a general notice given to the Directors that a Director is to
be regarded as having an interest of the nature and extent
specified in the notice in any transaction or arrangement in
which a specified person or class of persons is interested
shall be deemed to be a disclosure that the Director has an
interest in any such transaction of the nature and extent so
specified; and
<PAGE>
20
(b) an interest of which a Director has no knowledge and of which
it is unreasonable to expect him to have knowledge shall not
be treated as an interest of his.
92. Subject to article 90 hereof and the Act if the Company is a single member
company and having one member it enters into a contract with the sole member
otherwise than in the ordinary course of the Company's business and the sole
member is also a director of the Company, the Company should, unless the
contract is in writing, ensure that the terms of the contract are either set out
in a written memorandum or are recorded in the minutes of the first meeting of
the directors of the Company following the making of the contract.
DIRECTORS' GRATUITIES AND PENSIONS
93. Subject to the provisions of the Act, the Directors may provide benefits,
whether by the payment of gratuities or pensions or by insurance or otherwise,
for any Director who has held but no longer holds any executive office or
employment with the Company or with any body corporate which is or has been a
subsidiary of the Company or a predecessor of the Company or of any such
subsidiary and for any member of his family (including a spouse and a former
spouse) or any person who is or was dependent on him, and may (as well before as
after he ceases to hold such office or employment) contribute to any fund and
pay premiums for the purchase or provision of any such benefit.
PROCEEDINGS OF DIRECTORS
94. Subject to the provisions of the articles, the Directors may regulate their
proceedings as they think fit. A Director may, and the secretary at the request
of a Director shall, call a meeting of the Directors. Questions arising at a
meeting shall be decided by a majority of votes. In the case of an equality of
votes, the Chairman shall have a second or casting vote. A Director who is also
an alternate Director shall be entitled in the absence of his appointor to a
separate vote on behalf of his appointor in addition to his own vote.
95. The quorum for the transaction of the business of the Directors may be fixed
by the Directors and unless so fixed at any other number shall be two. A person
who holds office only as an alternate Director shall, if his appointor is not
present, be counted in the quorum.
96. The continuing Directors or a sole continuing Director may act
notwithstanding any vacancies in their number, but, if the number of Directors
is less than the number fixed as the quorum, the continuing Directors or
Director may act only for the purpose of filling vacancies or of calling a
general meeting.
97. The Directors may appoint one of their number to be the Chairman of the
Board of Directors and may at any time remove him from that office. Unless he is
unwilling to do so, the Director so appointed shall preside at every meeting of
Directors at which he is present. But if there is no Director holding that
office, or if the Director holding it is unwilling to preside or is not present
within five minutes after the time appointed for the meeting, the Directors
present may appoint one of their number to be Chairman of the meeting.
<PAGE>
21
98. All acts done by a meeting of Directors, or of a committee of Directors, or
by a person acting as a Director shall, notwithstanding that it be afterwards
discovered that there was a defect in the appointment of any Director or that
any of them were disqualified from holding office, or had vacated office, or
were not entitled to vote, be valid as if every such person had been duly
appointed and was qualified and had continued to be a Director and had been
entitled to vote.
99. A resolution in writing signed by all the Directors entitled to receive
notice of a meeting of Directors or of a committee of Directors shall be as
valid and effectual as if it had been passed at a meeting of Directors or (as
the case may be) a committee of Directors duly convened and held and may consist
of several documents in the like form each signed by one or more Directors, but
a resolution signed by an alternate need not also be signed by his appointor
and, if it is signed by a Director who has appointed an alternate Director, it
need not be signed by the alternate Director in that capacity.
100. Save as otherwise provided by the articles, a Director shall not vote at a
meeting of Directors or of a committee of Directors on any resolution concerning
a matter in which he has, directly or indirectly, an interest or duty which is
material and which conflicts or may conflict with the interest of the Company
unless he has declared the nature of his interest in the manner required by
Section 148 of the Act.
101. A Director shall not be counted in the quorum present at a meeting in
relation to a resolution on which he is not entitled to vote.
102. The Company may by ordinary resolution suspend or relax to any extent,
either generally or in respect of any particular matter, any provision of the
articles prohibiting a Director from voting at a meeting of Directors or of a
committee of Directors.
103. If a question arises at a meeting of Directors or of a committee of
Directors as to the right of a Director to vote, the question may, before the
conclusion of the meeting, be referred to the Chairman of the meeting and his
ruling in relation to any Director other than himself shall be final and
conclusive.
104. Any Director or member of a committee of the Directors may participate in a
meeting of the Directors or such committee by means of telephonic or similar
communications whereby all persons participating in the meeting can hear each
other and participation in a meeting in this manner shall be deemed to
constitute presence in person at such meeting. The location of such a telephonic
meeting shall be deemed to be the place at which the Chairman of the meeting was
located at the time of the meeting.
MANAGEMENT AND CONTROL
105. The management and control of the business of the Company shall be in and
from the Isle of Man or in and from such other place as the Directors shall
decide.
<PAGE>
22
SECRETARY
106. Subject to the provisions of the Act, the secretary shall be appointed by
the Directors for such term, at such remuneration and upon such conditions as
they may think fit; and any secretary so appointed may be removed by them.
MINUTES
107. The Directors shall cause Minutes to be made in books kept for the
purpose --
(a) of all appointments of officers made by the Directors; and
(b) of all proceedings at meetings of the Company, of the holders
of any class of shares in the Company and of the Directors,
and of committees of Directors, including the names of the
Directors present at such meeting.
THE SEAL
108. The Company shall have a Company Seal.
109. The seal shall only be used by the authority of the Directors or of a
committee of Directors authorised by the Directors. The Directors may determine
who shall sign any instrument to which the seal is affixed and unless otherwise
so determined it shall be signed by a Director and by the secretary or by a
second Director.
DIVIDENDS
110. Subject to the provisions of the Act, the Company may by ordinary
resolution declare dividends in accordance with the respective rights of the
members, but no dividend shall exceed the amount recommended by the Directors.
111. Subject to the provisions of the Act, the Directors may pay interim
dividends if it appears to them that they are justified by the profits of the
Company available for distribution. If the share capital is divided into
different classes, the Directors may pay interim dividends on shares which
confer deferred or non-preferred rights with regard to dividend as well as on
shares which confer preferential rights with regard to dividend, but no interim
dividend shall be paid on shares carrying deferred or nonpreferential rights if,
at the time of payment, any preferential dividend is in arrear. The Directors
may also pay at intervals settled by them any dividend payable at a fixed rate
if it appears to them that the profits available for distribution justify the
payment. Provided the Directors act in good faith they shall not incur any
liability to the holders of shares conferring preferred rights for any loss they
may suffer by the lawful payment of an interim dividend on any shares having
deferred or non-preferred rights.
112. Except as otherwise provided by the rights attached to shares, all
dividends shall be declared and paid according to the amounts paid up on the
shares on which the dividend is paid. All dividends shall be apportioned and
paid proportionately to the amounts paid up on
<PAGE>
23
the shares during any portion or portions of the period in respect of which the
dividend is paid; but, if any share is issued on terms providing that it shall
rank for dividend as from a particular date, that share shall rank for dividend
accordingly.
113. A general meeting declaring a dividend may, upon the recommendation of the
Directors, direct that it shall be satisfied wholly or partly by the
distribution of assets and where any difficulty arises in regard to the
distribution, the Directors may settle the same and in particular may issue
fractional certificates and fix the value for distribution of any assets and may
determine that cash shall be paid to any member upon the footing of the value so
fixed in order to adjust the rights of members and may vest any assets in
trustees.
114. Any dividend or other moneys payable in respect of a share may be paid by
cheque sent by post to the registered address of the person entitled or, if two
or more persons are the holders of the share or are jointly entitled to it by
reason of the death or bankruptcy of the holder, to the registered address of
that one of those persons who is first named in the register of members or to
such person and to such address as the person or persons entitled may in writing
direct. Every cheque shall be made payable to the order of the person or persons
entitled or to such other person as the person or persons entitled may in
writing direct and payment of the cheque shall be a good discharge to the
Company. Any joint holder or other person jointly entitled to a share as
aforesaid may give receipts for any dividend or other moneys payable in respect
of the share.
115. No dividend or other moneys payable in respect of a share shall bear
interest against the Company unless otherwise provided by the rights attached to
the share.
116. Any dividend which has remained unclaimed for twelve years from the date
when it became due for payment shall, if the Directors so resolve, be forfeited
and cease to remain owing by the Company.
ACCOUNTS
117. (a) No member shall (as such) have any right of inspecting any
accounting records or other book or document of the Company
except as conferred by statute or authorised by the
Directors or by ordinary resolution of the Company.
(b) The Company shall prepare such accounts as may be required by
the Act and the laws of the Isle of Man.
(c) Subject to the Act and the laws of the Isle of Man the Company
may elect to dispense with compliance with the requirements of
the Act which relate to the audit of the accounts of the
Company.
CAPITALISATION OF PROFITS
118. The Directors may with the authority of an ordinary resolution of the
Company
<PAGE>
24
(a) subject as hereinafter provided, resolve to capitalise any
undivided profits of the Company not required for paying any
preferential dividend (whether or not they are available for
distribution) or any sum standing to the credit of the
Company's share premium account or capital redemption reserve;
(b) appropriate the sum resolved to be capitalised to the members
who would have been entitled to it if it were distributed by
way of dividend and in the same proportions and apply such
sum on their behalf either in or towards paying up the
amounts, if any, for the time being unpaid on any shares
held by them respectively, or in paying up in full unissued
shares or debentures of the Company of a nominal amount,
equal to that sum, and allot the shares or debentures
credited as fully paid to those members, or as they may
direct, in those proportions, or partly in one way and
partly in the other: but the share premium account, the
capital redemption reserve and any profits which are not
available for distribution may, for the purposes of this
regulation, only be applied in paying up unissued shares to
be allotted to members credited as fully paid;
(c) make such provision by the issue of fractional certificates or
by payment in cash or otherwise as they determine in the case
of shares or debentures becoming distributable under this
regulation in fractions; and
(d) authorise any person to enter on behalf of all the members
concerned into an agreement with the Company providing for the
allotment to them respectively, credited as fully paid, of any
shares or debentures to which they are entitled upon such
capitalisation, any agreement made under such authority being
binding on all such members.
NOTICES
119. Any notice to be given to or by any person pursuant to the articles shall
be in writing except that a notice calling a meeting of the Directors need not
be in writing.
120. The Company may give any notice to a member either personally or by sending
it by post in a prepaid envelope addressed to the member at his registered
address or by leaving it at that address. In the case of joint holders of a
share, all notices shall be given to the joint holder whose name stands first in
the register of members in respect of the joint holding and notice so given
shall be sufficient notice to all the joint holders. A member whose registered
address is not within the British Islands and who gives to the Company an
address within the British Islands at which notices may be given to him shall be
entitled to have notices given to him at that address, but otherwise no such
member shall be entitled to receive any notice from the Company.
121. A member present, either in person or by proxy, at any meeting of the
Company or of the holders of any class of shares in the Company shall be deemed
to have received notice of the meeting and, where requisite, of the purposes for
which it was called.
<PAGE>
25
122. Every person who becomes entitled to a share shall be bound by any notice
in respect of that share which, before his name is entered in the register of
members, has been duly given to a person from whom he derives his title.
123. Proof that an envelope containing a notice was properly addressed, prepaid
and posted shall be conclusive evidence that the notice was given. A notice
shall be deemed to be given at the expiration of 48 hours after the envelope
containing it was posted.
124. A notice may be given by the Company to the persons entitled to a share in
consequence of the death or bankruptcy of a member by sending or delivering it,
in any manner authorised by the articles for the giving of notice to a member,
addressed to them by name, or by the title of representatives of the deceased,
or trustee of the bankrupt or by any like description at the address, if any,
within the British Islands supplied for that purpose by the persons claiming to
be so entitled. Until such an address has been supplied, a notice may be given
in any manner in which it might have been given if the death or bankruptcy had
not occurred.
WINDING UP
125. If the Company is wound up, the liquidator may, with the sanction of an
extraordinary resolution of the Company and any other sanction required by the
Act, divide among the members in specie the whole or any part of the assets of
the Company and may, for that purpose, value any assets and determine how the
division shall be carried out as between the members or different classes of
members. The liquidator may, with the like sanction, vest the whole or any part
of the assets in trustees upon such trusts for the benefit of the members as he
with the like sanction determines, but no member shall be compelled to accept
any assets upon which there is a liability.
INDEMNITY
126. Every Director or other officer of the Company shall be entitled to be
indemnified out of the assets of the Company against all losses or liabilities
(including any such liability as is mentioned in paragraph (c) of the proviso to
Section 151 of the Act) which he may sustain or incur in or about the execution
of the duties of his office or otherwise in relation thereto, and no Director or
other officer shall be liable for any loss, damage or misfortune which may
happen to or be incurred by the Company in the execution of the duties of his
office or in relation thereto. But this Article shall only have effect in so far
as its provisions are not avoided by the said Section.
127. The Company may purchase and maintain indemnity insurance for the benefit
of each Director or other officer of the Company.
<PAGE>
26
- - - - - --------------------------------------------------------------------------------
Names and addresses Signatures
of Subscribers
- - - - - --------------------------------------------------------------------------------
ANDREW JAMES BAKER
15-19 Athol Street
Douglas
Isle of Man
JOHN MICHAEL KILLIP
15-19 Athol Street
Douglas
Isle of Man
- - - - - --------------------------------------------------------------------------------
Dated this 31st day of October 1996
Witness to the above signatures
DENISE HANDS
15-19 Athol Street
Douglas
Isle of Man
- - - - - --------------------------------------------------------------------------------
[LOGO]
- - - - - -----------------
No. 081718C
- - - - - -----------------
GENERAL REGISTRY
ISLE OF MAN
CERTIFICATE OF INCORPORATION
--------------------
I CERTIFY that Golden State Petro (IOM I-B) PLC
IS THIS DAY INCORPORATED UNDER THE COMPANIES
ACT 1931 TO 1993 AND THAT THE COMPANY IS LIMITED.
This 4th day of NOVEMBER 1996
Deputy Assistant Chief Registrar
General Registry
- - - - - --------------------------------------------------------------------------------
<PAGE>
2
THE COMPANIES ACTS 1931 to 1993
ISLE OF MAN
A COMPANY LIMITED BY SHARES
MEMORANDUM OF ASSOCIATION
OF
GOLDEN STATE PETRO (IOM I-B) PLC
1. The name of the Company is:
GOLDEN STATE PETRO (IOM I-B) PLC
2. The Company is a public company.
3. The liability of the members is limited.
4. Restrictions, if any, on the exercise of the rights, powers and
privileges of the Company:
None unless and until decided upon by Special Resolution of the Company
in accordance with Section 6 of the Companies Act 1986.
5. The Share Capital of the Company is US$2,000.00 divided into 2,000
Ordinary shares of US$1.00 each.
We, the subscribers to this memorandum of association
(a) wish to be formed into a Company pursuant to this memorandum;
(b) agree to take the number of shares shown opposite our respective names;
(c) declare that all the requirements of the Companies Acts 1931 to 1993 in
respect of matters relating to registration and of matters precedent
and incidental thereto have been complied with.
<PAGE>
3
- - - - - --------------------------------------------------------------------------------
Names and addresses Signatures Number of
of Subscribers Shares taken
- - - - - --------------------------------------------------------------------------------
ANDREW JAMES BAKER ONE
15-19 Athol Street
Douglas
Isle of Man
JOHN MICHAEL KILLIP ONE
15-19 Athol Street
Douglas
Isle of Man
- - - - - --------------------------------------------------------------------------------
Dated this 31st day of October 1996
Witness to the above signatures
DENISE HANDS
15-19 Athol Street
Douglas
Isle of Man
<PAGE>
4
THE COMPANIES ACTS 1931 to 1993
ISLE OF MAN
PUBLIC COMPANY LIMITED BY SHARES
ARTICLES OF ASSOCIATION
OF
GOLDEN STATE PETRO (IOM I-B) PLC
PRELIMINARY
1. Table A shall not apply to the Company but the articles hereinafter
contained shall constitute the regulations of the Company.
2. The Company is a "Public Company" within the meaning of the Act, and
accordingly invitation may be issued to the public to subscribe for any shares
or debentures of the Company.
INTERPRETATION
3.(1) In these regulations --
"the Act" means the Companies Acts 1931-1993 including any statutory
modifications or reenactments thereof for the time being in force;
"the articles" means the articles of the Company;
"clear days" in relation to the period of a notice means that period excluding
the day when the notice is given or deemed to be given and the day for which it
is given or on which it is to take effect;
"executed" includes any mode of execution;
"office" means the registered office of the Company;
"the holder" in relation to shares means the member whose name is entered in the
register of members as the holder of the shares;
"the seal" means the common seal of the Company;
"secretary" means the secretary of the Company or any other person appointed to
perform the duties of the secretary of the Company, including a joint, assistant
or deputy secretary.
<PAGE>
5
(2) Unless the context otherwise requires, words or expressions contained
in these regulations bear the same meaning as in the Act but excluding any
statutory modification thereof not in force when these regulations become
binding on the Company.
(3) In these regulations, unless there is something in the subject of
context inconsistent with such construction:
(a) words importing the plural number shall be deemed to include
the singular number and words importing the singular number
shall be deemed to include the plural number;
(b) words importing the masculine gender only include the feminine
gender;
(c) words importing persons include companies or associations or
bodies of persons whether corporate or unincorporate.
4. Statutory references used in these articles shall be read to include
any statutory or legislative modification or re-enactment thereof or any
substitution therefor.
SHARE CAPITAL
5. (1) Subject to the provisions of the Act and without prejudice to
any rights attached to any existing shares, any share may be issued
with such rights or restrictions as the Company may by ordinary
resolution determine.
(2) Subject to the provisions of the Act, shares may be issued in
fractional denominations to the same extent as whole shares.
6. Subject to the provisions of the Act and the articles, redeemable
preference shares may be issued on such terms and in such manner as may be
provided by the articles.
7. The Company may exercise the powers of paying commissions conferred by
the Act. Subject to the provisions of the Act, any such commissions may be
satisfied by the payment of cash or by the allotment of fully or partly paid
shares or partly in one way and partly in the other.
8. Except as required by law, no person shall be recognised by the Company
as holding any share upon any trust and (except as otherwise provided by the
articles or by law) the Company shall not be bound by or recognise any interest
in any share except an absolute right to the entirety thereof in the holder.
9. The shares shall be at the disposal of the Directors, and (save as
otherwise directed by the Company in General Meeting) they may allot or
otherwise dispose of them to such persons at such times and generally on such
terms and conditions as they think proper, subject nevertheless to article 2 and
provided that no shares shall be issued at a discount, except as provided by
Section 47 of the Act.
<PAGE>
6
10. If at any time the share capital is divided into different classes of
shares, the rights attached to any class (unless otherwise provided by the terms
of issue of the shares of that class) may be varied with the consent in writing
of the holders of all of the issued shares of that class, or with the sanction
of an extraordinary resolution passed at a separate general meeting of the
holders of the shares of the class. To every such separate general meeting the
provisions of these regulations relating to general meetings shall in the case
of the number of holders of a particular class of shares being two or more
mutatis mutandis apply, but so that the necessary quorum shall be two persons at
least holding or representing by proxy one-third of the issued shares of the
class, and that any holder of shares of the class present in person or by proxy
may demand a poll. In the case of the number of holders of a particular class of
shares being one, one person holding or representing all the issued shares of
the class shall be a quorum.
11. The Company may issue share warrants to bearer in respect of any fully
paid-up shares of the Company, stating that the bearer of the warrant is
entitled to the shares therein specified. Such warrants shall be issued upon
such terms and subject to such conditions as may be resolved upon by the
Directors. Subject to the provisions of the Act and of these articles the holder
of a share warrant shall be deemed to be a member of the Company and shall be
entitled to the same rights and privileges as he would have had if his name had
been included in the share register of the Company as the holder of the shares.
SHARE CERTIFICATES
12. (1) Every member, upon becoming the holder of any shares shall be
entitled
(a) without payment, to one certificate for all the shares of each
class held by him (and, upon transferring a part of his
holding of shares of any class, to a certificate for the
balance of such holding); or
(b) to several certificates each for one or more of his shares
upon payment, for every certificate after the first, of such
reasonable sum as the Directors may determine.
(2) Every certificate shall be sealed with the seal and shall
specify the number, class and distinguishing numbers (if any) of the
shares to which it relates and the amount or respective amounts paid up
thereon.
(3) The Company shall not be bound to issue more than one
certificate for shares held jointly by several persons and delivery of
a certificate to one joint holder shall be a sufficient delivery to all
of them.
13. If a share certificate is defaced, worn-out, lost or destroyed, it may
be renewed on such terms (if any) as to evidence and indemnity and payment of
the expenses reasonably incurred by the Company in investigating evidence as the
Directors may determine but otherwise free of charge, and (in the case of
defacement or wearing-out) on delivery up of the old certificate.
14. The Company shall have a first and paramount lien on every share for
all moneys (whether presently payable or not) payable at a fixed time or called
in respect of that share.
<PAGE>
7
The Directors may at any time declare any share to be wholly or in part exempt
from the provisions of this regulation. The Company's lien on a share shall
extend to any amount payable in respect of it.
15. The Company may sell in such manner as the Directors determine any
shares on which the Company has a lien if a sum in respect of which the lien
exists is presently payable and is not paid within fourteen clear days after
notice has been given to the holder of the share or to the person entitled to it
in consequence of the death or bankruptcy of the holder, demanding payment and
stating that if the notice is not complied with the shares may be sold.
16. To give effect to a sale the Directors may authorise some person to
execute an instrument of transfer of the shares, sold to, or in accordance with
the directions of, the purchaser. The title of the transferee to the shares
shall not be affected by any irregularity in or invalidity of the proceedings in
reference to the sale.
17. The net proceeds of the sale, after payment of the costs, shall be
applied in payment of so much of the sum for which the lien exists as is
presently payable, and any residue shall (upon surrender to the Company for
cancellation of the certificate for the shares sold and subject to a like lien
for any moneys not presently payable as existed upon the shares before the sale)
be paid to the person entitled to the shares at the date of the sale.
CALLS ON SHARES AND FORFEITURE
18. Subject to the terms of allotment, the Directors may make calls upon
the members in respect of any moneys unpaid on their shares (whether in respect
of nominal value or premium) and each member shall (subject to receiving at
least fourteen clear days notice specifying when and where payment is to be
made) pay to the Company as required by the notice the amount called on his
shares. A call may be required to be paid by installments. A call may, before
receipt by the Company of any sum due thereunder, be revoked in whole or in part
and payment of a call may be postponed in whole or in part. A person upon whom a
call is made shall remain liable for calls made upon him notwithstanding the
subsequent transfer of the shares in respect whereof the call was made.
19. A call shall be deemed to have been made at the time when the
resolution of the Directors authorising the call was passed.
20. The joint holders of a share shall be jointly and severally liable to
pay all calls in respect thereof.
21. If a call remains unpaid after it has become due and payable the person
from whom it is due and payable shall pay interest on the amount unpaid from the
day it became due and payable until it is paid at the rate fixed by the terms of
allotment of the share or in the notice of the call or, if no rate is fixed, at
the rate of (pound)5 per centum per annum but the Directors may waive payment of
the interest wholly or in part.
22. An amount payable in respect of a share on allotment or at any fixed
date, whether in respect of nominal value or premium or as an instalment of a
call, shall be deemed to be a call
<PAGE>
8
and if it is not paid the provisions of the articles shall apply as if that
amount had become due and payable by virtue of a call.
23. Subject to the terms of allotment, the Directors may make arrangements
on the issue of shares for a difference between the holders in the amounts and
times of payment of calls on their shares.
24. If a call remains unpaid after it has become due and payable the
Directors may give to the person from whom it is due not less than fourteen
clear days' notice requiring payment of the amount unpaid together with any
interest which may have accrued. The notice shall name the place where payment
is to be made and shall state that if the notice is not complied with the shares
in respect of which the call was made will be liable to be forfeited.
25. If the notice is not complied with any share in respect of which it was
given may, before the payment required by the notice has been made, be forfeited
by a resolution of the Directors and the forfeiture shall include all dividends
or other moneys payable in respect of the forfeited shares and not paid before
the forfeiture
26. Subject to the provisions of the Act, a forfeited share may be sold,
re-allotted or otherwise disposed of on such terms and in such manner as the
Directors determine either to the person who was before the forfeiture the
holder or to any other person and at any time before sale, re-allotment or other
disposition, the forfeiture may be cancelled on such terms as the Directors
think fit. Where for the purposes of its disposal a forfeited share is to be
transferred to any person the Directors may authorise some person to execute an
instrument of transfer of the share to that person.
27. A person any of whose shares have been forfeited shall cease to be a
member in respect of them and shall surrender to the Company for cancellation
the certificate for the shares forfeited but shall remain liable to the Company
for all moneys which at the date of forfeiture were presently payable by him to
the Company in respect of those shares with interest at the rate at which
interest was payable on those moneys before the forfeiture or, if no interest
was so payable, at the rate of (pound)5 per centum per annum from the date of
forfeiture until payment but the Directors may waive payment wholly or in part
or enforce payment without any allowance for the value of the shares at the time
of forfeiture or for any consideration received on their disposal.
28. A statutory declaration by a Director or the secretary that a share has
been forfeited on a specified date shall be conclusive evidence of the facts
stated in it as against all persons claiming to be entitled to the share and the
declaration shall (subject to the execution of an instrument of transfer if
necessary) constitute a good title to the share and the person to whom the share
is disposed of shall not be bound to see to the application of the
consideration, if any, nor shall his title to the share be affected by any
irregularity in or invalidity of the proceedings in reference to the forfeiture
or disposal of the share.
<PAGE>
9
TRANSFER OF SHARES
29. The instrument of transfer of a share may be in any usual form or in
any other form which the Directors may approve and shall be executed by or on
behalf of the transferor and, unless the share is fully paid, by or on behalf of
the transferee.
30. No transfer of any share in the capital of the Company to any person
not already a member of the Company shall be made or registered without the
previous sanction of the Directors, who may without assigning any reason,
decline to give any such sanction. The Directors may also suspend the
registration of transfers during the fourteen days immediately preceding the
Ordinary General Meeting in each year. The Directors may decline to recognise
any instrument of transfer unless accompanied by the certificate of the shares
to which it relates, and such other evidence as the Directors may reasonably
require to show the right of the transferor to make the transfer. The Directors
may decline to register a transfer of any shares on which the Company has a
lien. If the Directors refuse to register a transfer of any share they shall
within two months after the date on which the transfer was lodged with the
Company send to the transferee notice of the refusal as required by section 67
of the Act.
31. The Company shall be entitled to retain any instrument of transfer
which is registered, but any instrument of transfer which the Directors refuse
to register shall be returned to the person lodging it when notice of the
refusal is given.
TRANSMISSION OF SHARES
32. If a member dies the survivor or survivors where he was a joint holder,
and his personal representatives where he was a sole holder or the only survivor
of joint holders, shall be the only persons recognised by the Company as having
any title to his interest; but nothing herein contained shall release the estate
of a deceased member from any liability in respect of any share which had been
jointly held by him.
33. A person becoming entitled to a share in consequence of the death or
bankruptcy of a member may, upon such evidence being produced as the Directors
may properly require, elect either to become the holder of the share or to have
some person nominated by him registered as the transferee. If he elects to
become the holder he shall give notice to the Company to that effect. If he
elects to have another person registered he shall execute an instrument of
transfer of the share to that person. All articles relating to the transfer of
shares shall apply to the notice or instrument of transfer as if it were an
instrument of transfer executed by the member and the death or bankruptcy of the
member had not occurred.
34. A person becoming entitled to a share in consequence of the death or
bankruptcy of a member shall have the rights to which he would be entitled if he
were the holder of the share, except that he shall not, before being registered
as the holder of the share, be entitled in respect of it to attend or vote at
any meeting of the Company or at any separate meeting of the holders of any
class of shares in the Company.
<PAGE>
10
ALTERATION OF SHARE CAPITAL
35. The Company may by ordinary resolution --
(a) increase its share capital by new shares of such amount as the
resolution prescribes;
(b) consolidate and divide all or any or its share capital into
shares of larger amount than its existing shares;
(c) subject to the provisions of the Act, sub-divide its shares,
or any of them, into shares of smaller amount and the
resolution may determine that, as between the shares resulting
from the sub-division, any of them may have any preference or
advantage as compared with the others; and
(d) cancel shares which, at the date of the passing of the
resolution, have not been taken or agreed to be taken by any
person and diminish the amount of its share capital by the
amount of the shares so cancelled.
36. Whenever as a result of a consolidation of shares any members would
become entitled to fractions of a share, the Directors may, instead of issuing
the fractions of a share, on behalf of those members, sell the shares
representing the fractions for the best price reasonably obtainable to any
person (including, subject to the provisions of the Act, the Company) and
distribute the net proceeds of sale in due proportion among those members, and
the Directors may authorise some person to execute an instrument of transfer of
the shares to, or in accordance with the directions of, the purchaser. The
transferee shall not be bound to see to the application of the purchase money
nor shall his title to the shares be affected by any irregularity in or
invalidity of the proceedings in reference to the sale.
37. Subject to the provisions of the Act, the Company may by special
resolution reduce its share capital, any capital redemption reserve and any
share premium account in any way.
CONVERSION OF SHARES INTO STOCK
38. The Company may by ordinary resolution convert any paid-up shares into
stock and reconvert any stock into paid-up shares of any denomination.
39. The holders of stock may transfer the same, or any part thereof, in the
same manner, and subject to the same regulations, as, and subject to which, the
shares from which the stock arose might previously to conversion have been
transferred, or as near thereto as circumstances admit; but the Directors may
from time to time fix the minimum amount of stock transferable and restrict or
forbid the transfer of fractions of that minimum, but the minimum shall not
exceed the nominal amount of the shares from which the stock arose.
40. The holders of stock shall, according to the amount of the stock held
by them, have the same rights, privileges and advantages as regards dividends,
voting at meetings of the Company and other matters as if they held the shares
from which the stock arose, but no such privilege or advantage (except
participation in the dividends and profits of the Company) shall
<PAGE>
11
be conferred by any such aliquot part of stock as would not, if existing in
shares, have conferred that privilege or advantage.
41. Such of the regulations of the Company as are applicable to paid-up
shares shall apply to stock and the words "shares" and "shareholder" therein
shall include "stock" and "stockholder".
REDEMPTION OF PREFERENCE SHARES
42. Subject to the provisions of the Act, the redemption of redeemable
preference shares shall be effected on such terms and in such manner, as may be
provided by the articles.
GENERAL MEETINGS
43. All general meetings other than annual general meetings shall be called
extraordinary general meetings.
44. The Directors may call general meetings, and on the requisition of a
member pursuant to the provisions of the Act, shall forthwith proceed to convene
an extraordinary general meeting for a date not later than eight weeks after
receipt of the requisition. If there are not within the Isle of Man sufficient
Directors to call a general meeting, any Director or any member of the Company
may call a general meeting.
NOTICE OF GENERAL MEETINGS
45. An annual general meeting and an extraordinary general meeting called
for the passing of a special resolution or a resolution appointing a person as a
Director shall be called by at least twenty-one clear days' notice. All other
extraordinary general meetings shall be called by at least fourteen clear days'
notice but a general meeting may be called by shorter notice if it is so agreed
- - - - - --
(a) In the case of an annual general meeting, by all the members
entitled to attend and vote thereat; and
(b) In the case of any other meeting by a majority in number of
the members having a right to attend and vote being a majority
together holding not less than ninety five per cent in nominal
value of the shares giving that right.
The notice shall specify the time and place of the meeting and the general
nature of the business to be transacted and, in the case of an annual general
meeting, shall specify the meeting as such.
Subject to the provisions of the articles and to any restrictions imposed on any
shares, the notice shall be given to all the members, to all persons entitled to
a share in consequence of the death or bankruptcy of a member and to the
Directors and auditors.
<PAGE>
12
46. The accidental omission to give notice of a meeting to or the
non-receipt of notice of a meeting by any person entitled to receive notice
shall not invalidate the proceedings at that meeting.
PROCEEDINGS AT GENERAL MEETINGS
47. No business shall be transacted at any meeting unless a quorum is
present. Two persons entitled to vote upon the business to be transacted, each
being a member or a proxy for a member or a duly authorised representative of a
corporation which is a member, shall be a quorum. When the Company has a single
member, the member or the proxy for the member or a duly authorised
representative of the corporation which is the member, shall be a quorum.
48. If such a quorum is not present within half an hour from the time
appointed for the meeting or if during a meeting such a quorum ceases to be
present, the meeting shall stand adjourned to the same day in the next week at
the same time and place or to such time and place as the Directors may
determine.
49. The Chairman, if any, of the Board of Directors or in his absence some
other Director nominated by the Directors shall preside as Chairman of the
meeting, but if neither the Chairman nor such other Director (if any) be present
within fifteen minutes after the time appointed for holding the meeting and
willing to act, the Directors present shall elect one of their number to be
Chairman and if there is only one Director present and willing to act, he shall
be Chairman.
50. If no Director is willing to act as Chairman, or if no Director is
present within fifteen minutes after the time appointed for holding the meeting,
the members present and entitled to vote shall choose one of their number to be
Chairman.
51. A Director shall, notwithstanding that he is not a member, be entitled
to attend and speak at any general meeting and at any separate meeting of the
holders of any class of shares in the Company.
52. The Chairman may, with the consent of a meeting at which a quorum is
present (and shall if so directed by the meeting), adjourn the meeting from time
to time and from place to place, but no business shall be transacted at an
adjourned meeting other than business which might properly have been transacted
at the meeting had the adjournment not taken place. When a meeting is adjourned
for fourteen days or more, at least seven clear days' notice shall be given
specifying the time and place of the adjourned meeting and the general nature of
the business to be transacted. Otherwise it shall not be necessary to give any
such notice.
53. A resolution put to the vote of a meeting shall be decided on a show of
hands unless before, or on the declaration of the result of, the show of hands a
poll is duly demanded. Subject to the provisions of the Act, a poll may be
demanded --
(a) by the Chairman; or
(b) by at least two members having the right to vote at the
meeting; or
<PAGE>
13
(c) by a member or members representing no less than one-tenth of
the total voting rights of all the members having the right to
vote at the meeting; or
(d) by a member or members holding shares conferring a right to
vote at the meeting being shares on which an aggregate sum has
been paid up equal to not less than one-tenth of the total sum
paid up on all the shares conferring that right;
and a demand by a person as proxy for a member shall be the same as a demand by
the member.
54. Unless a poll is duly demanded a declaration by the Chairman that a
resolution has been carried or carried unanimously, or by a particular majority,
or lost, or not carried by a particular majority and an entry to that effect in
the minutes of the meeting shall be conclusive evidence of the fact without
proof of the number or proportion of the votes recorded in favour of or against
the resolution.
55. The demand for a poll may, before the poll is taken, be withdrawn but
only with the consent of the Chairman and a demand so withdrawn shall not be
taken to have invalidated the result of a show of hands declared before the
demand was made.
56. A poll shall be taken as the Chairman directs and he may appoint
scrutineers (who need not be members) and fix a time and place for declaring the
result of the poll. The result of the poll shall be deemed to be the resolution
of the meeting at which the poll was demanded.
57. In the case of an equality of votes, whether on a show of hands or on a
poll, the Chairman shall be entitled to a casting vote in addition to any other
vote he may have.
58. A poll demanded on the election of a Chairman or on a question of
adjournment shall be taken forthwith. A poll demanded on any other question
shall be taken either forthwith or at such time and place as the Chairman
directs not being more than thirty days after the poll is demanded. The demand
for a poll shall not prevent the continuance of a meeting for the transaction of
any business other than the question on which the poll was demanded. If a poll
is demanded before the declaration of the result of a show of hands and the
demand is duly withdrawn, the meeting shall continue as if the demand had not
been made.
59. No notice need be given of a poll not taken forthwith if the time and
place at which it is to be taken are announced at the meeting at which it is
demanded. In any other case at least seven clear days notice shall be given
specifying the time and place at which the poll is to be taken.
60. A resolution in writing executed by or on behalf of each member who
would have been entitled to vote upon it if it had been proposed at a general
meeting at which he was present shall be as effectual as if it had been passed
at a general meeting duly convened and held and may consist of several
instruments in the like form each executed by or on behalf of one or more
members, provided the provisions of Section 118B of the Act are complied with
and that such resolution is received by the Company at its registered office
within seven days of the date of its execution in terms hereof.
<PAGE>
14
VOTES OF MEMBERS
61. Subject to any rights or restrictions attached to any shares, on a show
of hands every member who (being an individual) is present in person or by proxy
or (being a corporation) is present by a duly authorised representative, not
being himself a member, shall have one vote and on a poll every member entitled
to vote shall have one vote for every share of which he is the holder.
62. In the case of joint holders the vote of the senior who tenders a vote,
whether in person or by proxy, shall be accepted to the exclusion of the votes
of the other joint holders; and seniority shall be determined by the order in
which the names of the holders stand in the register of members.
63. A member in respect of whom an order has been made by any court having
jurisdiction (whether in the Isle of Man or elsewhere) in matters concerning
mental disorder may vote, whether on a show of hands or on a poll, by his
receiver, curator bonis or other person authorised in that behalf appointed by
that court, and any such receiver, curator bonis or other person may, on a poll,
vote by proxy. Evidence to the satisfaction of the Directors of the authority of
the person claiming to exercise the right to vote shall be deposited at the
office, or at such other place as is specified in accordance with the articles
for the deposit of instruments of proxy, not less than 48 hours before the time
appointed for holding the meeting or adjourned meeting at which the right to
vote is to be exercised and in default the right to vote shall not be
exercisable.
64. No member shall vote at any general meeting or at any separate meeting
of the holders of any class of shares in the Company, either in person or by
proxy, in respect of any share held by him unless all moneys presently payable
by him in respect of that share have been paid.
65. No objections shall be raised to the qualification of any voter except
at the meeting or adjourned meeting at which the vote objected to is tendered,
and every vote not disallowed at the meeting shall be valid. Any objection made
in due time shall be referred to the Chairman whose decision shall be final and
conclusive.
66. On a poll votes may be given either personally or by proxy. A member
may appoint more than one proxy to attend on the same occasion.
67. An instrument appointing a proxy shall be in writing, executed by or on
behalf of the appointor and shall be in the following form (or in a form as near
thereto as circumstances allow or in any other form which is usual or which the
Directors may approve) --
Plc
I/We, , of
, being a member/members of the above-
named Company, hereby appoint of
, or failing him,
<PAGE>
15
of , as my/our proxy to vote
in my/our name(s) and on my/our behalf at the annual/extraordinary general
meeting of the Company to be held on 19 , and at any adjournment
thereof.
signed on 19
68. Where it is desired to afford members an opportunity of instructing the
proxy how he shall act the instrument appointing a proxy shall be in the
following form (or in a form as near thereto as circumstances allow or in any
other form which is usual or which the Directors may approve) --
Plc
I/We, , of
member/members of the above-named Company, hereby appoint
of
, or failing him, of
, as my/our proxy to vote in my/our name(s) and on
my/our behalf at the annual/extraordinary general meeting of the Company to be
held on 19 , and at any adjournment thereof.
This form is to be used in respect of the resolutions mentioned below as
follows:
Resolution No. 1 *for *against
Resolution No. 2 *for *against
* strike out whichever is not desired.
Unless otherwise instructed, the proxy may vote as he thinks fit or abstain from
voting.
Signed this day of 19
69. The instrument appointing a proxy and any authority under which it is
executed or a copy of such authority certified notarially or in some other way
approved by the Directors may --
(a) be deposited at the office or at such other place within the
Isle of Man as is specified in the notice convening the
meeting or in any instrument of proxy sent out by the Company
in relation to the meeting not less than 48 hours before the
time for holding the meeting or adjourned meeting at which the
person named in the instrument proposes to vote; or
(b) in the case of a poll taken more than 48 hours after it is
demanded, be deposited as aforesaid after the poll has been
demanded and not less than 24 hours before the time appointed
for the taking of the poll; or
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16
(c) where the poll is not taken forthwith but is taken not more
than 48 hours after it was demanded, be delivered at the
meeting at which the poll was demanded, to the Chairman or to
the Secretary or to any Director;
and an instrument of proxy which is not deposited or delivered in a manner so
permitted shall be invalid.
70. A vote given or poll demanded by proxy or by the duly authorised
representative of a corporation shall be valid notwithstanding the previous
determination of the authority of the person voting or demanding a poll unless
notice of the determination was received by the Company at the office or at such
other place at which the instrument of proxy was duly deposited before the
commencement of the meeting or adjourned meeting at which the vote is given or
the poll demanded or (in the case of a poll taken otherwise than on the same day
as the meeting or adjourned meeting) the time appointed for taking the poll.
71. Where the Company is a single member company and the sole member takes
any decision which may be taken by the Company in general meeting and which has
effect as if agreed by the Company in general meeting he shall subject to
article 60 provide the Company with a written record of that decision by
forwarding such record to the Company at its registered office within seven days
of the date upon which the decision was taken.
NUMBER OF DIRECTORS
72. Unless otherwise determined by ordinary resolution, the number of
Directors (other than alternate Directors) shall not be subject to any maximum.
ALTERNATE DIRECTORS
73. Any Director (other than an alternate Director) may appoint any other
Director, or any other person approved by resolution of the Directors and
willing to act, to be an alternate Director and may remove from office an
alternate Director so appointed by him.
74. An alternate Director shall be entitled to receive notice of all
meetings of Directors and of all meetings of committees of Directors of which
his appointor is a member, to attend and vote at any such meeting at which the
Director appointing him is not personally present and generally to perform all
the functions of his appointor as a Director in his absence but shall not be
entitled to receive any remuneration from the Company for his services as an
alternate Director.
75. An alternate Director shall cease to be an alternate Director if his
appointor ceases to be a Director; but, if a Director retires by rotation or
otherwise but is reappointed or deemed to have been reappointed at the meeting
at which he retires; any appointment of an alternate Director made by him which
was in force immediately prior to his retirement shall continue after his
reappointment.
<PAGE>
17
76. Any appointment or removal of an alternate Director shall be by notice
to the Company signed by the Director making or revoking the appointment or in
any other manner approved by the Directors.
77. Save as otherwise provided in the articles, an alternate Director shall
be deemed for all purposes to be a Director and shall alone be responsible for
his own acts and defaults and he shall not be deemed to be the agent of the
Director appointing him.
POWERS OF DIRECTORS
78. Subject to the provisions of the Act, the memorandum and the articles
and to any directions given by special resolution the business of the Company
shall be managed by the Directors who may exercise all the powers of the
Company. No alteration of the memorandum or articles and no such direction shall
invalidate any prior act of the Directors which would have been valid if that
alteration had not been made or that direction had not been given. The powers
given by this regulation shall not be limited by any special power given to the
Directors by the articles and a meeting of Directors at which a quorum is
present may exercise all powers exercisable by the Directors.
79. Without prejudice to the generality of the foregoing article the
Directors may from time to time at their discretion, raise or borrow, without
the consent of the members in General Meeting, such sum or sums of money for the
purposes of the Company's business as they may think fit and may secure the
repayment of or raise any such sum or sums as aforesaid in such manner and upon
such terms and conditions and in all other respects as they may think fit, and
in particular by mortgages, deeds of bond and security, or other charges upon
the whole or any part of the property and assets of the Company, present or
future, including its uncalled or unissued capital, or by the issue at such
price as they may think fit, of bonds or debentures or debenture stock of the
Company, either charged upon the whole or any part of the property and assets of
the Company, or not so charged, or in any other way that the Directors may think
expedient, and the Directors may issue debentures or debenture stock or paid-up
shares to any person or persons as consideration for the purchase of any
goodwill, business or property purchased by the Company.
80. The Directors may, by power of attorney or otherwise, appoint any
person to be the agent of the Company for such purposes and on such conditions
as they determine, including authority for the agent to delegate all or any of
his powers. The Company may exercise the powers conferred by Sections 32 and 104
of the Companies Act, 1931 and those powers shall accordingly be exercisable by
the Directors.
DELEGATION OF DIRECTORS' POWERS
81. The Directors may delegate any of their powers to any committee
consisting of one or more Directors. They may also delegate to any Managing
Director or any Director holding any other executive office such of their powers
as they consider desirable to be exercised by him. Any such delegation may be
made subject to any conditions the Directors may impose and either collaterally
with or to the exclusion of their own powers and may be revoked or altered.
Subject to any such conditions, the proceedings of a committee with two or more
members
<PAGE>
18
shall be governed by the articles regulating the proceedings of Directors so far
as they are capable of applying.
DIRECTORS GENERALLY
82. The Company may from time to time in general meeting increase or reduce
the number of Directors. The Company may by special resolution remove any
Director or by ordinary resolution appoint any person to be a Director.
83. No person other than a first Director shall be appointed a Director in
general meeting unless at least seven days' and not more than fourteen days'
notice shall have been left at the registered office of the Company of the
intention to propose him, together with a notice in writing by the person to be
proposed of his willingness to be appointed.
84. The Directors shall have power at any time, and from time to time, to
fill any casual vacancy occurring in the Board of Directors or to appoint a
person as an additional Director.
85. A Director may hold any other office or place or profit under the
Company, except that of Auditor, upon such terms as to remuneration, tenure of
office and otherwise as may be determined by the Board.
86. The remuneration of the Directors shall from time to time be determined
by the Company in general meeting and unless otherwise directed any such
remuneration shall be divided amongst them as they may agree, or, failing
agreement, equally. The Directors shall also be entitled to be repaid all
travelling and hotel expenses reasonably incurred by them respectively in or
about the performance of their duties as Directors.
DISQUALIFICATION AND REMOVAL OF DIRECTORS
87. The office of a Director shall be vacated if --
(a) he ceases to be a Director by virtue of any provision of the
Act or he becomes prohibited by law from being a Director; or
(b) he becomes bankrupt or makes any arrangement or composition
with his creditors generally; or
(c) he is, or may be, suffering from mental disorder and either --
(i) he is admitted to hospital in pursuance of an
application for admission for treatment under the
Mental Health Act 1974; or
(ii) an Order is made by a Court having jurisdiction
(whether in the Isle of Man or elsewhere) in matters
concerning mental disorder for his detention or for
the appointment of a receiver, curator bonis or other
person to exercise powers with respect to his
property or affairs; or
<PAGE>
19
(d) he resigns his office by notice to the Company; or
(e) he shall for more than six consecutive months have been absent
without permission of the Directors from meetings of Directors
held during that period and the Directors resolve that his
office be vacated.
88. The shareholding qualification for Directors may be fixed by the
Company in general meeting, and unless and until so fixed no qualification shall
be required.
DIRECTORS' APPOINTMENTS AND INTERESTS
89. Subject to the provisions of the Act, the Directors may appoint one or
more of their number to the office of Managing Director or to any other
executive office under the Company and may enter into an agreement or
arrangement with any Director for his employment by the Company or for the
provision by him of any services outside the scope of the ordinary duties of a
Director. Any such appointment, agreement or arrangement may be made upon such
terms as the Directors determine and they may remunerate any such Director for
his services as they think fit. Any appointment of a Director to an executive
office shall terminate if he ceases to be a Director but without prejudice to
any claim to damages for breach of the contract of service between the Director
and the Company.
90. Subject to the provisions of the Act and provided that he has disclosed
to the Directors the nature and extent of any material interest of his, a
Director notwithstanding his office --
(a) may be a party to, or otherwise interested in, any transaction
or arrangement with the Company or in which the Company is
otherwise interested;
(b) may be a Director or other officer of, or employed by, or a
party to any transaction or arrangement with, or otherwise
interested in, any body corporate promoted by the Company or
in which the Company is otherwise interested; and
(c) shall not, by reason of his office, be accountable to the
Company for any benefit which he derives from any such office
or employment or from any such transaction or arrangement or
from any interest in any such body corporate and no such
transaction or arrangement shall be liable to be avoided on
the ground of any such interest or benefit.
91. For the purposes of the foregoing article --
(a) a general notice given to the Directors that a Director is to
be regarded as having an interest of the nature and extent
specified in the notice in any transaction or arrangement in
which a specified person or class of persons is interested
shall be deemed to be a disclosure that the Director has an
interest in any such transaction of the nature and extent so
specified; and
<PAGE>
20
(b) an interest of which a Director has no knowledge and of which
it is unreasonable to expect him to have knowledge shall not
be treated as an interest of his.
92. Subject to article 90 hereof and the Act if the Company is a single
member company and having one member it enters into a contract with the sole
member otherwise than in the ordinary course of the Company's business and the
sole member is also a director of the Company, the Company should, unless the
contract is in writing, ensure that the terms of the contract are either set out
in a written memorandum or are recorded in the minutes of the first meeting of
the directors of the Company following the making of the contract.
DIRECTORS' GRATUITIES AND PENSIONS
93. Subject to the provisions of the Act, the Directors may provide
benefits, whether by the payment of gratuities or pensions or by insurance or
otherwise, for any Director who has held but no longer holds any executive
office or employment with the Company or with any body corporate which is or has
been a subsidiary of the Company or a predecessor of the Company or of any such
subsidiary and for any member of his family (including a spouse and a former
spouse) or any person who is or was dependent on him, and may (as well before as
after he ceases to hold such office or employment) contribute to any fund and
pay premiums for the purchase or provision of any such benefit.
PROCEEDINGS OF DIRECTORS
94. Subject to the provisions of the articles, the Directors may regulate
their proceedings as they think fit. A Director may, and the secretary at the
request of a Director shall, call a meeting of the Directors. Questions arising
at a meeting shall be decided by a majority of votes. In the case of an equality
of votes, the Chairman shall have a second or casting vote. A Director who is
also an alternate Director shall be entitled in the absence of his appointor to
a separate vote on behalf of his appointor in addition to his own vote.
95. The quorum for the transaction of the business of the Directors may be
fixed by the Directors and unless so fixed at any other number shall be two. A
person who holds office only as an alternate Director shall, if his appointor is
not present, be counted in the quorum.
96. The continuing Directors or a sole continuing Director may act
notwithstanding any vacancies in their number, but, if the number of Directors
is less than the number fixed as the quorum, the continuing Directors or
Director may act only for the purpose of filling vacancies or of calling a
general meeting.
97. The Directors may appoint one of their number to be the Chairman of the
Board of Directors and may at any time remove him from that office. Unless he is
unwilling to do so, the Director so appointed shall preside at every meeting of
Directors at which he is present. But if there is no Director holding that
office, or if the Director holding it is unwilling to preside or is not present
within five minutes after the time appointed for the meeting, the Directors
present may appoint one of their number to be Chairman of the meeting.
<PAGE>
21
98. All acts done by a meeting of Directors, or of a committee of
Directors, or by a person acting as a Director shall, notwithstanding that it be
afterwards discovered that there was a defect in the appointment of any Director
or that any of them were disqualified from holding office, or had vacated
office, or were not entitled to vote, be valid as if every such person had been
duly appointed and was qualified and had continued to be a Director and had been
entitled to vote.
99. A resolution in writing signed by all the Directors entitled to receive
notice of a meeting of Directors or of a committee of Directors shall be as
valid and effectual as if it had been passed at a meeting of Directors or (as
the case may be) a committee of Directors duly convened and held and may consist
of several documents in the like form each signed by one or more Directors, but
a resolution signed by an alternate need not also be signed by his appointor
and, if it is signed by a Director who has appointed an alternate Director, it
need not be signed by the alternate Director in that capacity.
100. Save as otherwise provided by the articles, a Director shall not vote
at a meeting of Directors or of a committee of Directors on any resolution
concerning a matter in which he has, directly or indirectly, an interest or duty
which is material and which conflicts or may conflict with the interest of the
Company unless he has declared the nature of his interest in the manner required
by Section 148 of the Act.
101. A Director shall not be counted in the quorum present at a meeting in
relation to a resolution on which he is not entitled to vote.
102. The Company may by ordinary resolution suspend or relax to any extent,
either generally or in respect of any particular matter, any provision of the
articles prohibiting a Director from voting at a meeting of Directors or of a
committee of Directors.
103. If a question arises at a meeting of Directors or of a committee of
Directors as to the right of a Director to vote, the question may, before the
conclusion of the meeting, be referred to the Chairman of the meeting and his
ruling in relation to any Director other than himself shall be final and
conclusive.
104. Any Director or member of a committee of the Directors may participate
in a meeting of the Directors or such committee by means of telephonic or
similar communications whereby all persons participating in the meeting can hear
each other and participation in a meeting in this manner shall be deemed to
constitute presence in person at such meeting. The location of such a telephonic
meeting shall be deemed to be the place at which the Chairman of the meeting was
located at the time of the meeting.
MANAGEMENT AND CONTROL
105. The management and control of the business of the Company shall be in
and from the Isle of Man or in and from such other place as the Directors shall
decide.
<PAGE>
22
SECRETARY
106. Subject to the provisions of the Act, the secretary shall be appointed
by the Directors for such term, at such remuneration and upon such conditions as
they may think fit; and any secretary so appointed may be removed by them.
MINUTES
107. The Directors shall cause Minutes to be made in books kept for the
purpose --
(a) of all appointments of officers made by the Directors; and
(b) of all proceedings at meetings of the Company, of the holders
of any class of shares in the Company and of the Directors,
and of committees of Directors, including the names of the
Directors present at such meeting.
THE SEAL
108. The Company shall have a Company Seal.
109. The seal shall only be used by the authority of the Directors or of a
committee of Directors authorised by the Directors. The Directors may determine
who shall sign any instrument to which the seal is affixed and unless otherwise
so determined it shall be signed by a Director and by the secretary or by a
second Director.
DIVIDENDS
110. Subject to the provisions of the Act, the Company may by ordinary
resolution declare dividends in accordance with the respective rights of the
members, but no dividend shall exceed the amount recommended by the Directors.
111. Subject to the provisions of the Act, the Directors may pay interim
dividends if it appears to them that they are justified by the profits of the
Company available for distribution. If the share capital is divided into
different classes, the Directors may pay interim dividends on shares which
confer deferred or non-preferred rights with regard to dividend as well as on
shares which confer preferential rights with regard to dividend, but no interim
dividend shall be paid on shares carrying deferred or nonpreferential rights if,
at the time of payment, any preferential dividend is in arrear. The Directors
may also pay at intervals settled by them any dividend payable at a fixed rate
if it appears to them that the profits available for distribution justify the
payment. Provided the Directors act in good faith they shall not incur any
liability to the holders of shares conferring preferred rights for any loss they
may suffer by the lawful payment of an interim dividend on any shares having
deferred or non-preferred rights.
112. Except as otherwise provided by the rights attached to shares, all
dividends shall be declared and paid according to the amounts paid up on the
shares on which the dividend is paid. All dividends shall be apportioned and
paid proportionately to the amounts paid up on
<PAGE>
23
the shares during any portion or portions of the period in respect of which the
dividend is paid; but, if any share is issued on terms providing that it shall
rank for dividend as from a particular date, that share shall rank for dividend
accordingly.
113. A general meeting declaring a dividend may, upon the recommendation of
the Directors, direct that it shall be satisfied wholly or partly by the
distribution of assets and where any difficulty arises in regard to the
distribution, the Directors may settle the same and in particular may issue
fractional certificates and fix the value for distribution of any assets and may
determine that cash shall be paid to any member upon the footing of the value so
fixed in order to adjust the rights of members and may vest any assets in
trustees.
114. Any dividend or other moneys payable in respect of a share may be paid
by cheque sent by post to the registered address of the person entitled or, if
two or more persons are the holders of the share or are jointly entitled to it
by reason of the death or bankruptcy of the holder, to the registered address of
that one of those persons who is first named in the register of members or to
such person and to such address as the person or persons entitled may in writing
direct. Every cheque shall be made payable to the order of the person or persons
entitled or to such other person as the person or persons entitled may in
writing direct and payment of the cheque shall be a good discharge to the
Company. Any joint holder or other person jointly entitled to a share as
aforesaid may give receipts for any dividend or other moneys payable in respect
of the share.
115. No dividend or other moneys payable in respect of a share shall bear
interest against the Company unless otherwise provided by the rights attached to
the share.
116. Any dividend which has remained unclaimed for twelve years from the
date when it became due for payment shall, if the Directors so resolve, be
forfeited and cease to remain owing by the Company.
ACCOUNTS
117. (a) No member shall (as such) have any right of inspecting any
accounting records or other book or document of the Company
except as conferred by statute or authorised by the Directors
or by ordinary resolution of the Company.
(b) The Company shall prepare such accounts as may be required by
the Act and the laws of the Isle of Man.
(c) Subject to the Act and the laws of the Isle of Man the Company
may elect to dispense with compliance with the requirements of
the Act which relate to the audit of the accounts of the
Company.
CAPITALISATION OF PROFITS
118. The Directors may with the authority of an ordinary resolution of the
Company
<PAGE>
24
(a) subject as hereinafter provided, resolve to capitalise any
undivided profits of the Company not required for paying any
preferential dividend (whether or not they are available for
distribution) or any sum standing to the credit of the
Company's share premium account or capital redemption reserve;
(b) appropriate the sum resolved to be capitalised to the members
who would have been entitled to it if it were distributed by
way of dividend and in the same proportions and apply such sum
on their behalf either in or towards paying up the amounts, if
any, for the time being unpaid on any shares held by them
respectively, or in paying up in full unissued shares or
debentures of the Company of a nominal amount, equal to that
sum, and allot the shares or debentures credited as fully paid
to those members, or as they may direct, in those proportions,
or partly in one way and partly in the other: but the share
premium account, the capital redemption reserve and any
profits which are not available for distribution may, for the
purposes of this regulation, only be applied in paying up
unissued shares to be allotted to members credited as fully
paid;
(c) make such provision by the issue of fractional certificates or
by payment in cash or otherwise as they determine in the case
of shares or debentures becoming distributable under this
regulation in fractions; and
(d) authorise any person to enter on behalf of all the members
concerned into an agreement with the Company providing for the
allotment to them respectively, credited as fully paid, of any
shares or debentures to which they are entitled upon such
capitalisation, any agreement made under such authority being
binding on all such members.
NOTICES
119. Any notice to be given to or by any person pursuant to the articles
shall be in writing except that a notice calling a meeting of the Directors need
not be in writing.
120. The Company may give any notice to a member either personally or by
sending it by post in a prepaid envelope addressed to the member at his
registered address or by leaving it at that address. In the case of joint
holders of a share, all notices shall be given to the joint holder whose name
stands first in the register of members in respect of the joint holding and
notice so given shall be sufficient notice to all the joint holders. A member
whose registered address is not within the British Islands and who gives to the
Company an address within the British Islands at which notices may be given to
him shall be entitled to have notices given to him at that address, but
otherwise no such member shall be entitled to receive any notice from the
Company.
121. A member present, either in person or by proxy, at any meeting of the
Company or of the holders of any class of shares in the Company shall be deemed
to have received notice of the meeting and, where requisite, of the purposes for
which it was called.
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25
122. Every person who becomes entitled to a share shall be bound by any
notice in respect of that share which, before his name is entered in the
register of members, has been duly given to a person from whom he derives his
title.
123. Proof that an envelope containing a notice was properly addressed,
prepaid and posted shall be conclusive evidence that the notice was given. A
notice shall be deemed to be given at the expiration of 48 hours after the
envelope containing it was posted.
124. A notice may be given by the Company to the persons entitled to a share
in consequence of the death or bankruptcy of a member by sending or delivering
it, in any manner authorised by the articles for the giving of notice to a
member, addressed to them by name, or by the title of representatives of the
deceased, or trustee of the bankrupt or by any like description at the address,
if any, within the British Islands supplied for that purpose by the persons
claiming to be so entitled. Until such an address has been supplied, a notice
may be given in any manner in which it might have been given if the death or
bankruptcy had not occurred.
WINDING UP
125. If the Company is wound up, the liquidator may, with the sanction of an
extraordinary resolution of the Company and any other sanction required by the
Act, divide among the members in specie the whole or any part of the assets of
the Company and may, for that purpose, value any assets and determine how the
division shall be carried out as between the members or different classes of
members. The liquidator may, with the like sanction, vest the whole or any part
of the assets in trustees upon such trusts for the benefit of the members as he
with the like sanction determines, but no member shall be compelled to accept
any assets upon which there is a liability.
INDEMNITY
126. Every Director or other officer of the Company shall be entitled to be
indemnified out of the assets of the Company against all losses or liabilities
(including any such liability as is mentioned in paragraph (c) of the proviso to
Section 151 of the Act) which he may sustain or incur in or about the execution
of the duties of his office or otherwise in relation thereto, and no Director or
other officer shall be liable for any loss, damage or misfortune which may
happen to or be incurred by the Company in the execution of the duties of his
office or in relation thereto. But this Article shall only have effect in so far
as its provisions are not avoided by the said Section.
127. The Company may purchase and maintain indemnity insurance for the
benefit of each Director or other officer of the Company.
<PAGE>
26
- - - - - --------------------------------------------------------------------------------
Names and addresses Signatures
of Subscribers
- - - - - --------------------------------------------------------------------------------
ANDREW JAMES BAKER
15-19 Athol Street
Douglas
Isle of Man
JOHN MICHAEL KILLIP
15-19 Athol Street
Douglas
Isle of Man
- - - - - --------------------------------------------------------------------------------
Dated this 31st day of October 1996
Witness to the above signatures
DENISE HANDS
15-19 Athol Street
Douglas
Isle of Man
================================================================================
Indenture
Dated as of December 1, 1996
AMONG
GOLDEN STATE PETROLEUM TRANSPORT CORPORATION, as Agent
GOLDEN STATE PETRO (IOM I-A) PLC
AND
GOLDEN STATE PETRO (IOM I-B) PLC
AND
UNITED STATES TRUST COMPANY OF NEW YORK
as Indenture Trustee,
----------
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
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ARTICLE ONE
DEFINITIONS............................... 1
SECTION 1.1 CERTAIN TERMS DEFINED....................................... 1
SECTION 1.2 INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT........... 18
ARTICLE TWO
THE MORTGAGE NOTES........................... 18
SECTION 2.1 FORMS AND DATING............................................ 18
SECTION 2.2 TITLE AND TERMS............................................. 19
SECTION 2.3 EXECUTION, AUTHENTICATION AND DELIVERY...................... 20
SECTION 2.4 TEMPORARY NOTES............................................. 20
SECTION 2.5 REGISTRAR, DEPOSITORY AND PAYING AGENT...................... 21
SECTION 2.6 PAYING AGENT TO HOLD MONEY IN TRUST......................... 21
SECTION 2.7 HOLDER LISTS................................................ 21
SECTION 2.8 TRANSFER AND EXCHANGE....................................... 22
SECTION 2.9 MUTILATED, DESTROYED, LOST AND STOLEN NOTES................. 27
SECTION 2.10 PAYMENT OF INTEREST; INTEREST RIGHTS PRESERVED.............. 28
SECTION 2.11 PERSONS DEEMED OWNERS....................................... 29
SECTION 2.12 CANCELLATION................................................ 29
SECTION 2.13 COMPUTATION OF INTEREST..................................... 29
SECTION 2.14 MANNER OF PAYMENTS IN RESPECT OF MORTGAGE NOTES............. 29
SECTION 2.15 CUSIP AND CINS NUMBERS...................................... 29
i
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ARTICLE THREE
THE TRUST ACCOUNTS; DISTRIBUTIONS................... 30
SECTION 3.1 THE TRUST ACCOUNTS.......................................... 30
SECTION 3.2 INVESTMENT OF FUNDS DEPOSITED IN TRUST ACCOUNTS............. 32
SECTION 3.3 PAYMENT DATES............................................... 32
SECTION 3.4 APPLICATION OF MONEYS IN THE TRUST ACCOUNT.................. 34
ARTICLE FOUR
SECURITY................................ 37
SECTION 4.1 GRANT OF SECURITY INTEREST.................................. 37
SECTION 4.2 RECORDING, ETC.............................................. 39
SECTION 4.3 PROTECTION OF THE TRUST ESTATE.............................. 40
SECTION 4.4 RELEASE OF LIEN............................................. 40
SECTION 4.5 LIMITATION ON INDENTURE TRUSTEE'S DUTY IN RESPECT
OF COLLATERAL............................................... 41
ARTICLE FIVE
REPRESENTATIONS AND WARRANTIES OF GOLDEN STATE PETROLEUM
AND THE OWNERS.............................. 41
SECTION 5.1 ORGANIZATION, POWER AND STATUS OF GOLDEN STATE PETROLEUM
AND EACH OWNER.............................................. 41
SECTION 5.2 AUTHORIZATION; ENFORCEABILITY; EXECUTION AND DELIVERY....... 41
SECTION 5.3 NO CONFLICTS; LAWS AND CONSENTS; NO DEFAULT................. 42
SECTION 5.4 GOVERNMENTAL APPROVALS...................................... 42
SECTION 5.5 LITIGATION.................................................. 42
SECTION 5.6 TAXES....................................................... 42
SECTION 5.7 TRADE OR BUSINESS........................................... 42
ii
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ARTICLE SIX
COVENANTS............................... 43
SECTION 6.1 PAYMENT OF PRINCIPAL AND INTEREST........................... 43
SECTION 6.2 CORPORATE EXISTENCE; COMPLIANCE WITH LAWS................... 43
SECTION 6.3 PERFORMANCE OF OBLIGATIONS.................................. 43
SECTION 6.4 ACTIVITIES OF THE OWNERS.................................... 43
SECTION 6.5 BOOKS AND RECORDS........................................... 44
SECTION 6.6 RESTRICTED PAYMENTS......................................... 44
SECTION 6.7 WAIVER OF STAY, EXTENSION OR USURY LAWS..................... 44
SECTION 6.8 REPORTS BY GOLDEN STATE PETROLEUM AND THE OWNERS............ 45
SECTION 6.9 NOTICE OF DEFAULT........................................... 45
SECTION 6.10 NEGATIVE COVENANTS.......................................... 46
SECTION 6.11 APPOINTMENT TO FILL A VACANCY IN OFFICE OF INDENTURE
TRUSTEE..................................................... 46
SECTION 6.12 NOTEHOLDERS' LISTS.......................................... 46
SECTION 6.13 REPORTS BY THE INDENTURE TRUSTEE............................ 47
SECTION 6.14 CHANGE OF FLAG.............................................. 47
ARTICLE SEVEN
REMEDIES OF THE INDENTURE TRUSTEE AND
NOTEHOLDERS ON INDENTURE EVENT OF DEFAULT................ 48
SECTION 7.1 INDENTURE EVENT OF DEFAULT DEFINED; ACCELERATION OF MATURITY;
WAIVER OF DEFAULT........................................... 48
SECTION 7.2 COLLECTION OF INDEBTEDNESS BY INDENTURE TRUSTEE; INDENTURE
TRUSTEE MAY PROVE DEBT...................................... 50
SECTION 7.3 GENERAL AUTHORITY OF THE INDENTURE TRUSTEE OVER THE
COLLATERAL.................................................. 52
iii
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Page
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SECTION 7.4 SUITS FOR ENFORCEMENT....................................... 53
SECTION 7.5 RESTORATION OF RIGHTS ON ABANDONMENT OF PROCEEDINGS......... 54
SECTION 7.6 LIMITATIONS ON SUITS BY NOTEHOLDERS......................... 54
SECTION 7.7 POWERS AND REMEDIES CUMULATIVE; DELAY OR OMISSION NOT WAIVER
OF DEFAULT.................................................. 54
SECTION 7.8 CONTROL BY NOTEHOLDERS...................................... 55
SECTION 7.9 WAIVER OF PAST DEFAULTS..................................... 55
SECTION 7.10 UNCONDITIONAL RIGHTS OF HOLDERS TO RECEIVE PRINCIPAL AND
INTEREST.................................................... 55
SECTION 7.11 LIMITATION BY LAW........................................... 56
SECTION 7.12 APPLICATION OF PROCEEDS..................................... 56
SECTION 7.13 NON-DISTURBANCE............................................. 56
ARTICLE EIGHT
CONCERNING THE INDENTURE TRUSTEE............................. 56
SECTION 8.1 DUTIES AND RESPONSIBILITIES OF THE INDENTURE TRUSTEE........ 56
SECTION 8.2 CERTAIN RIGHTS OF THE INDENTURE TRUSTEE..................... 58
SECTION 8.3 INDENTURE TRUSTEE NOT RESPONSIBLE FOR RECITALS, DISPOSITION
OF MORTGAGE NOTES OR APPLICATION OF PROCEEDS THEREOF........ 59
SECTION 8.4 INDENTURE TRUSTEE AND AGENTS MAY HOLD MORTGAGE NOTES;
COLLECTIONS; ETC............................................ 59
SECTION 8.5 MONEYS HELD BY INDENTURE TRUSTEE............................ 59
SECTION 8.6 COMPENSATION AND EXPENSES................................... 59
SECTION 8.7 RIGHT OF INDENTURE TRUSTEE TO RELY ON OFFICERS'
CERTIFICATE, ETC............................................ 60
SECTION 8.8 PERSONS ELIGIBLE FOR APPOINTMENT AS INDENTURE TRUSTEE....... 61
iv
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Page
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SECTION 8.9 RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR INDENTURE
TRUSTEE..................................................... 61
SECTION 8.10 ACCEPTANCE OF APPOINTMENT BY SUCCESSOR INDENTURE TRUSTEE.... 62
SECTION 8.11 MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS
OF INDENTURE TRUSTEE........................................ 63
SECTION 8.12 COMMENCEMENT OF BANKRUPTCY PROCEEDINGS...................... 63
SECTION 8.13 NOT ACTING IN INDIVIDUAL CAPACITY........................... 63
SECTION 8.14 CO-TRUSTEES AND SEPARATE TRUSTEES........................... 63
ARTICLE NINE
CONCERNING THE NOTEHOLDERS........................ 65
SECTION 9.1 EVIDENCE OF ACTION TAKEN BY NOTEHOLDERS..................... 65
SECTION 9.2 PROOF OF EXECUTION OF INSTRUMENTS AND OF HOLDING OF
MORTGAGE NOTES; RECORD DATE................................. 65
SECTION 9.3 HOLDERS TO BE TREATED AS OWNERS............................. 65
SECTION 9.4 MORTGAGE NOTES DEEMED NOT OUTSTANDING....................... 66
SECTION 9.5 RIGHT OF REVOCATION OF ACTION TAKEN......................... 66
ARTICLE TEN
SUPPLEMENTAL INDENTURES........................ 66
SECTION 10.1 SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF NOTEHOLDERS...... 66
SECTION 10.2 SUPPLEMENTAL INDENTURES WITH CONSENT OF NOTEHOLDERS......... 67
SECTION 10.3 EFFECT OF SUPPLEMENTAL INDENTURE............................ 68
SECTION 10.4 DOCUMENTS TO BE GIVEN TO INDENTURE TRUSTEE.................. 68
SECTION 10.5 NOTATION ON MORTGAGE NOTES IN RESPECT OF SUPPLEMENTAL
INDENTURES.................................................. 68
v
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SECTION 10.6 ISSUANCE OF SERIES OF ADDITIONAL NOTES...................... 69
ARTICLE ELEVEN
SATISFACTION AND DISCHARGE OF
INDENTURE; UNCLAIMED MONEYS....................... 70
SECTION 11.1 SATISFACTION AND DISCHARGE OF INDENTURE..................... 70
SECTION 11.2 APPLICATION BY INDENTURE TRUSTEE OF FUNDS DEPOSITED FOR
PAYMENT OF MORTGAGE NOTES................................... 71
SECTION 11.3 REPAYMENT OF MONEYS HELD BY PAYING AGENT.................... 71
SECTION 11.4 RETURN OF MONEYS HELD BY INDENTURE TRUSTEE AND PAYING AGENT
UNCLAIMED FOR TWO YEARS..................................... 71
ARTICLE TWELVE
REDEMPTION OF MORTGAGE NOTES...................... 72
SECTION 12.1 OPTIONAL REDEMPTION; MANDATORY REDEMPTION; PRICES........... 72
SECTION 12.2 NOTICE OF REDEMPTION; PARTIAL REDEMPTIONS................... 73
SECTION 12.3 PAYMENT OF MORTGAGE NOTES CALLED FOR REDEMPTION............. 74
SECTION 12.4 TERM NOTE MANDATORY SINKING FUND............................ 75
SECTION 12.5 ADDITIONAL NOTE MANDATORY SINKING FUND...................... 76
ARTICLE THIRTEEN
MISCELLANEOUS PROVISIONS........................ 77
SECTION 13.1 INCORPORATORS, STOCKHOLDERS, OFFICERS AND DIRECTORS OF
GOLDEN STATE PETROLEUM AND THE OWNERS EXEMPT FROM
INDIVIDUAL LIABILITY........................................ 77
SECTION 13.2 PROVISIONS OF INDENTURE FOR THE SOLE BENEFIT OF PARTIES
AND NOTEHOLDERS............................................. 77
SECTION 13.3 SUCCESSORS AND ASSIGNS OF THE OWNERS BOUND BY INDENTURE..... 77
SECTION 13.4 NOTICES AND DEMANDS ON GOLDEN STATE PETROLEUM, INDENTURE
TRUSTEE AND NOTEHOLDERS..................................... 77
vi
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Page
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SECTION 13.5 OFFICERS' CERTIFICATES AND OPINIONS OF COUNSEL; STATEMENTS
TO BE CONTAINED THEREIN..................................... 78
SECTION 13.6 PAYMENTS DUE ON SATURDAYS, SUNDAYS AND HOLIDAYS............. 79
SECTION 13.7 CONFLICT OF ANY PROVISION OF INDENTURE WITH TRUST INDENTURE
ACT......................................................... 79
SECTION 13.8 NEW YORK LAW TO GOVERN...................................... 80
SECTION 13.9 COUNTERPARTS................................................ 80
SECTION 13.10 EFFECT OF HEADINGS.......................................... 80
SECTION 13.11 SEPARABILITY CLAUSE......................................... 80
SECTION 13.12 CONSENT TO JURISDICTION..................................... 80
EXHIBITS AND SCHEDULES
EXHIBIT A - Form of Mortgage Note
EXHIBIT B - Form of Transfer Certification
EXHIBIT C - Form of Acknowledgement
EXHIBIT D - Form of Mortgage
EXHIBIT E - Form of Assignment of Charter
EXHIBIT F - Form of Assignment of Charter Supplements
EXHIBIT G - Form of Assignment of Earnings and Insurances
EXHIBIT H - Form of Assignment of Guarantee
EXHIBIT I - Form of Assignment of Management Agreement
EXHIBIT J - Form of Issue of One Debenture
EXHIBIT K - Form of Stock Pledge
EXHIBIT L - Form of Assignment of Building Contract
EXHIBIT M - Form of Assignment of Building Contract Guarantee
SCHEDULE 1 - Sinking Fund Redemption Amounts and Final Principal
Payment Schedule
SCHEDULE 2 - Allocated Principal Amount of the Note
vii
<PAGE>
This Indenture, dated as of December 1, 1996, among Golden
State Petro (IOM I-A) PLC, an Isle of Man company ("Golden State Petro I-A" or
an "Owner"), Golden State Petro (IOM I-B) PLC, an Isle of Man company ("Golden
State Petro I-B" or an "Owner" and, collectively with Golden State Petro I-A,
the "Owners"), Golden State Petroleum Transport Corporation, a Delaware
corporation, as agent for the Owners, a Delaware corporation ("Golden State
Petroleum"), and United States Trust Company of New York, as trustee, a bank and
trust company organized under the New York Banking Law (the "Indenture
Trustee").
W I T N E S S E T H :
WHEREAS, capitalized terms used herein shall have the
respective meanings set forth or referred to in Article One hereof;
WHEREAS, each of the Owners has authorized the issuance by
Golden State Petroleum, as its agent, of its Notes and each of the Owners has
duly appointed Golden State Petroleum as its duly authorized agent to issue the
Mortgage Notes and undertake certain other actions set forth in this Indenture
on behalf of the Owners;
WHEREAS, all things necessary to make the Notes, when executed
by Golden State Petroleum, as agent for the Owners, and authenticated and
delivered by the Indenture Trustee as provided in this Indenture, the valid,
binding and legal obligations of the Owners, and to constitute this Indenture a
valid indenture and agreement according to its terms, have been done; and
WHEREAS, from time to time as specified herein, pursuant to
one or more Supplemental Indentures, Golden State Petroleum, as agent for the
Owners, may issue one or more Series of Additional Notes, and, in accordance
therewith, Golden State Petroleum, the Owners and the Indenture Trustee intend
to do all things necessary to make the Additional Notes subject thereto, when
executed by Golden State Petroleum, as agent for the Owners, and authenticated
and delivered by the Indenture Trustee as provided in this Indenture, as
supplemented, the valid, binding and legal obligations of the Owners, and to
constitute this Indenture, as supplemented, a valid indenture and agreement
according to its terms.
NOW, THEREFORE:
In consideration of the foregoing and the purchase of the
Mortgage Notes by the holders thereof from time to time, Golden State Petroleum,
the Owners and the Indenture Trustee mutually covenant and agree for the equal
and proportionate benefit of the respective Holders from time to time of the
Mortgage Notes as follows:
ARTICLE ONE
DEFINITIONS
SECTION 1.1 CERTAIN TERMS DEFINED. The following terms (except
as otherwise expressly provided or unless the context otherwise clearly
requires) for all purposes
1
<PAGE>
of this Indenture and of any indenture supplemental hereto shall have the
respective meanings specified in this Section. All other terms used in this
Indenture which are defined in the Trust Indenture Act or the definitions of
which in the Securities Act are referred to in the Trust Indenture Act (except
as herein otherwise expressly provided or unless the context otherwise clearly
requires), shall have the meanings assigned to such terms in said Trust
Indenture Act and in said Securities Act as in force at the date of this
Indenture and at the date of any indenture supplemental hereto, as applicable .
All accounting terms used herein and not expressly defined shall have the
meanings given to them in accordance with generally accepted accounting
principles, and the term "generally accepted accounting principles" shall mean
such accounting principles which are generally accepted in the United States of
America at the date or time of any computation. The words "herein", "hereof" and
"hereunder" and other words of similar import refer to this Indenture as a whole
and not to any particular Article, Section or other subdivision. All references
to Articles or Sections refer to Articles or Sections of this Indenture unless
otherwise indicated. The terms defined in this Article include the plural as
well as the singular.
"ACCEPTABLE REPLACEMENT CHARTER" means any replacement charter
which satisfies each of the following requirements: (i) the charter is a
bareboat charter and requires that the charterer thereunder "gross up"
charterhire payments to indemnify and hold the holders of the Mortgage Notes
harmless from any withholding, transportation or excise tax imposed on the
charterhire payments or on the payments of the Mortgage Notes, (ii) the
charterhire payments payable during the non-cancelable term of such replacement
charter, after giving effect to (1) any "gross up" of such amounts as a result
of any withholding tax on such charterhire payments, (2) the Allocable Portion
of the Debt Service Reserve Fund and (3) all fees and expenses incurred in
connection with the recharter of the Vessel, provide sufficient funds for the
payment in full when due of (A) the Allocated Principal Amount of the Mortgage
Notes for the related Vessel and interest thereon in accordance with the revised
schedule of sinking fund and principal payments, that is applicable upon
termination of the related Charter, (B) the amount of Recurring Fees for such
Vessel, (C) the amount of Management Fees for such Vessel, (D) the amount of
fees and expenses of the Indenture Trustee and Trustee Fees allocable to such
Vessel and (E) an amount at least equal to 30% of the estimated amounts, on a
per annum basis, referred to in clauses (B), (C) and (D) above for miscellaneous
or unexpected expenses and (iii) the Rating Agencies shall have confirmed in
writing to the Indenture Trustee that the terms and conditions of such proposed
charter will not result in the withdrawal or reduction of the then current
ratings of the Mortgage Notes.
"ACKNOWLEDGEMENT TO ASSIGNMENT OF CHARTERS" means, with
respect to each Charter, the acknowledgement executed by the Charterer, wherein
the Charterer acknowledges the assignment of such Charter to the Indenture
Trustee.
"ACKNOWLEDGEMENT TO ASSIGNMENT OF CHEVRON GUARANTEE" means,
with respect to each Chevron Guarantee, the acknowledgement executed by Chevron,
wherein Chevron acknowledges the assignment of such Chevron Guarantee to the
Indenture Trustee.
"ADDITIONAL CONSTRUCTION COSTS" means any net increases in
construction costs for a Vessel which (i) result from actions by the Charterer
or the Technical Supervisor; (ii) are approved by the related Owner, such
approval not to be unreasonably withheld; and (iii) occur
2
<PAGE>
after execution of the related Building Contract on the Closing Date but prior
to the related Delivery Date.
"ADDITIONAL NOTE" means each first preferred mortgage note
issued pursuant to a Supplemental Indenture to finance the Additional
Construction Costs of a Vessel.
"AFFILIATE" means, with respect to any Person (the "relevant
Person"), (i) any other Person that directly, or indirectly through one or more
intermediaries, controls the relevant Person (a "Controlling Person") or (ii)
any Person (other than the relevant Person) which is controlled by or is under
common control with a Controlling Person. As used herein, the term "control"
means possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of a Person, whether through the
ownership of voting securities, by contract or otherwise.
"AGENT" means Golden State Petroleum, a Delaware corporation.
"ALLOCABLE PORTION OF THE DEBT SERVICE RESERVE FUND" means, as
of any date of determination and for each Vessel, that portion of the Debt
Service Reserve Fund funded from charterhire or earnings of the related Vessel.
"ALLOCATED PRINCIPAL AMOUNT OF THE ADDITIONAL NOTES" means,
when used with reference to the Additional Notes and either Vessel at any date
of determination, the product of (a) the aggregate outstanding principal amount
of Additional Notes as of such date and (b) a fraction (i) the numerator of
which is the aggregate outstanding principal amount of Additional Notes for such
Vessel as specified with respect to such Vessel in the related Supplemental
Indenture and (ii) the denominator of which is the aggregate initial principal
amount of all Additional Notes.
"ALLOCATED PRINCIPAL AMOUNT OF THE MORTGAGE NOTES" means, when
used with reference to the Mortgage Notes and either Vessel at any date of
determination, the sum of (a) the Allocated Principal Amount of the Notes for
such Vessel and (b) the Allocated Principal Amount of the Additional Notes for
such Vessel.
"ALLOCATED PRINCIPAL AMOUNT OF THE NOTES" means, when used
with reference to the Notes and either Vessel at any date of determination,
amounts indicated on Schedule 2 attached hereto.
"ASSIGNMENT OF BUILDING CONTRACT" means, for each Vessel, the
Building Contract Assignment, dated as of December 1, 1996, between the related
Owner and the Indenture Trustee, pursuant to which such Owner collaterally
assigns its rights, title and interests in the related Building Contract and the
Technical Supervision Agreement to the Indenture Trustee.
"ASSIGNMENT OF BUILDING CONTRACT GUARANTEE" means, for each
Building Contract Guarantee, the Assignment of Building Contract Guarantee,
dated as of December 1, 1996, between the related Owner and the Indenture
Trustee, as the same may be amended from time to time, pursuant to which such
Owner collaterally assigns its rights, title and interest in the related
Building Contract Guarantee therein to the Indenture Trustee.
3
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"ASSIGNMENT OF CHARTER" means, for each Charter, the
Assignment of Charter, dated as of December 1, 1996, between the Owner of the
related Vessel and the Indenture Trustee, as the same may be amended from time
to time, pursuant to which such Owner collaterally assigns its rights, title and
interest therein to the Indenture Trustee.
"ASSIGNMENT OF CHARTER SUPPLEMENT" means, for the Charter
Supplement, the Assignment of Charter Supplement, dated the date of the related
Supplemental Indenture, between the Owner of the related Vessel and the
Indenture Trustee, as the same may be amended from time to time, pursuant to
which such Owner collaterally assigns its right, title and interest therein to
the Indenture Trustee.
"ASSIGNMENT OF EARNINGS AND INSURANCES" means, for each
Vessel, the Assignment of Earnings and Insurances, dated as of the Delivery Date
for such Vessel, between the related Owner and the Indenture Trustee, as the
same may be amended from time to time, pursuant to which such Owner collaterally
assigns its right, title and interest in the earnings and insurances on such
Vessel to the Indenture Trustee.
"ASSIGNMENT OF GUARANTEE" means, for each Chevron Guarantee,
the Assignment of Guarantee, dated as of December 1, 1996, between the Owner of
the related Vessel and the Indenture Trustee, as the same may be amended from
time to time, pursuant to which such Owner collaterally assigns its right, title
and interest therein to the Indenture Trustee.
"ASSIGNMENT OF MANAGEMENT AGREEMENT" means, for each
Management Agreement, the Assignment of Management Agreement, dated as of
December 1, 1996, between the Owner of the related Vessel and the Indenture
Trustee, as the same may be amended from time to time, pursuant to which such
Owner collaterally assigns its right, title and interest therein to the
Indenture Trustee.
"AUTHORIZED FINANCIAL OFFICER" of any Person means the Chief
Financial Officer, Treasurer or Controller of such Person.
"AUTHORIZED OFFICER" of any Person means the President, any
Vice President or Authorized Financial Officer of such Person.
"BANKRUPTCY CODE" means Title 11 of the United States Code.
"BOARD OF DIRECTORS" means either the Board of Directors of a
Person or any committee of such Board duly authorized to act hereunder.
"BUILDER" means, collectively, Samsung Corporation and Samsung
Heavy Industries, Ltd.
"BUILDING CONTRACT" means either the Golden State Petro I-A
Building Contract or the Golden State Petro I-B Building Contract.
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"BUILDING CONTRACT GUARANTEE" means, for each Vessel, the
Building Contract Guarantee, dated the Closing Date, given by the Building
Contract Guarantor to the Owner in connection with the related Vessel.
"BUILDING CONTRACT GUARANTOR" means The Korean Development
Bank.
"BUSINESS DAY" means any day except a Saturday, a Sunday or a
day on which banking institutions in New York, New York, San Francisco,
California or in the city and state where the Indenture Trustee's principal
offices are located, are authorized or are obligated by law, executive order or
governmental decree to be closed.
"CASUALTY ACCOUNT" means the account established and
maintained by the Indenture Trustee pursuant to Section 3.1(d).
"CHARTER" means, for each Vessel, the bareboat charter between
the related Owner and the Charterer, dated the Closing Date, as the same may be
amended, supplemented and modified from time to time.
"CHARTER EVENT OF DEFAULT" means, for each Charter, each of
the events designated as a default in Clause 17 of such Charter.
"CHARTER PERIOD" means, for any Charter, the period from the
date of commencement of such Charter to the expiration or earlier termination of
such Charter pursuant to the terms and conditions thereof.
"CHARTER PERMITTED LIENS", with respect to each Charter, has
the meaning specified in such Charter.
"CHARTER SUPPLEMENT" means, with respect to each Charter, the
Charter Supplement dated the date of the related Supplemental Indenture, between
the Owner of the related Vessel and the Charterer.
"CHARTERER" means Chevron Transport Corporation, a Liberian
corporation.
"CHARTERHIRE" means, for each Charter, the scheduled payments
of charterhire thereunder, as may be increased from time to time pursuant to a
Charter Supplement.
"CHEVRON" means Chevron Corporation, a Delaware corporation,
and its successors and assigns.
"CHEVRON GUARANTEE" means, for either Vessel, the Guarantee,
dated the Closing Date, given by Chevron to the related Owner in connection with
the related Charter.
"CLASS" means each class of securities constituting a separate
issuance by Golden State Petroleum, as agent for the Owners, of serial first
preferred mortgage notes or first preferred mortgage notes hereunder or
additional first preferred mortgage notes under a Supplemental Indenture,
provided that (i) any first preferred mortgage notes have identical terms
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(other than their date of issuance) shall constitute one class for purposes of
this definition and (ii) the Initial Term Notes and the Exchange Term Notes
shall constitute one class for purposes of this definition.
"CLOSING DATE" means December 24, 1996.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COLLATERAL" means the property in which the Indenture Trustee
is granted a Lien from time to time hereunder or under any Security Document,
which lien or security interest has not been released in accordance with the
terms hereof or thereof.
"COLLATERAL ACCOUNT" means the account established and
maintained by the Indenture Trustee pursuant to Section 3.1(e).
"COMMISSION" means the United States Securities and Exchange
Commission.
"COMPANY ORDER" means a written request or order signed in the
name of Golden State Petroleum or an Owner by any Director, its Chairman of the
Board, its President or any Vice President, and by its Controller, its
Treasurer, an Assistant Treasurer, its Secretary or an Assistant Secretary, and
delivered to the Indenture Trustee.
"COMPULSORY ACQUISITION" means requisition for title or other
compulsory acquisition of either Vessel (otherwise than by requisition for
hire), capture, seizure, condemnation, destruction, detention or confiscation of
such Vessel by any Governmental Authority or by persons acting or purporting to
act on behalf of any Governmental Authority.
"CORPORATE TRUST OFFICE" means the corporate trust office of
the Indenture Trustee at which the corporate trust business of the Indenture
Trustee shall, at any particular time, be principally administered, which office
is, at the date of this Indenture, located at 114 West 47th Street, New York,
New York 10036-1532, Attention: Corporate Trust Department.
"DEBT SERVICE RESERVE FUND" means the account established and
maintained by the Indenture Trustee pursuant to Section 3.1(f).
"DEBT SERVICE RESERVE REQUIREMENT" means an amount, together
with interest earned thereon, that is sufficient to provide for the payment of
average annual sinking fund payments and interest on the Term Notes for a period
of 1.2 years.
"DEFAULT" means any Indenture Event of Default or any event or
condition which, with the giving of notice or lapse of time, or both, would
constitute an Indenture Event of Default.
"DEFAULT PAYMENT" means, as of any date of determination and
as calculated by the Manager, with respect to each Vessel and the related
Charter, the sum of (a) the sum of (i) the Stipulated Loss Value in relation to
the period in question calculated pursuant to the related Charter, (ii) all
Charter Hire accrued (on a daily basis) but unpaid under such Charter to the
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actual date of payment and (iii) any other amounts due to the related Owner
under such Charter on or prior to the actual date of payment, and (b) interest
on the amount described in (a) (after as well as before judgment) at the Default
Rate from the date such amounts were payable to the actual date of payment.
"DEFAULT RATE" means, with respect to a Mortgage Note, a rate
per annum for each day from the date of a default in any payment hereunder until
such payment shall be paid in full equal to the lesser of (a) 1.0% above the
interest rate indicated in such Mortgage Note and (b) the sum of 1.5% and LIBOR.
"DEFINITIVE NOTES" means with respect to each Class of
Mortgage Notes, Mortgage Notes that are substantially in the form of Exhibits
A-1 and A-2 attached hereto that do not include the information called for by
the footnotes thereof.
"DELIVERY DATE" means the Vessel A Delivery Date or the Vessel
B Delivery Date.
"DEPOSITORY" means the depository of the Global Notes
representing the Mortgage Notes and any successor to such depository appointed
pursuant to Section 2.5. The Depository initially shall be The Depository Trust
Company, a New York corporation.
"DISTRIBUTION DATE" means each date fixed by the Indenture
Trustee for a distribution to the Noteholders of funds, if any, held in the
Collateral Account pursuant to Section 3.1(e), which shall be the date from time
to time determined by the Indenture Trustee or requested by the Majority
Noteholders.
"EXCHANGE ACT" means the United States Securities Exchange Act
of 1934, as amended.
"EXCHANGE OFFER" means the offer registered by Golden State
Petroleum, as agent for the Owners and the Owners pursuant to the Exchange Offer
Registration Statement in which Golden State Petroleum, as agent for the Owners,
offers to the Holders of the outstanding Initial Term Notes the opportunity to
exchange such outstanding Initial Term Notes for Exchange Term Notes in an
aggregate principal amount equal to the aggregate principal amount of the
Initial Term Notes tendered in such offer by such Holders.
"EXCHANGE OFFER REGISTRATION STATEMENT" means the registration
statement under the Securities Act relating to the Exchange Offer, including the
related prospectus.
"EXCHANGE TERM NOTE" means any of the 8.04% First Preferred
Mortgage Notes due 2019 of Golden State Petroleum, as agent for the Owners, to
be issued pursuant to this Indenture (i) in the Exchange Offer, (ii) in exchange
for Exchange Term Notes or (iii) at the request of a Holder of Initial Term
Notes covered by a Shelf Registration Statement, in exchange for such Initial
Term Notes.
"FIRST TERM NOTE SINKING FUND PAYMENT DATE" means August 1,
2007.
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"FIXED PERIOD" means, with respect to each Charter, the period
commencing on the Delivery Date of the related Vessel and expiring on the eighth
anniversary thereof.
"GLOBAL NOTES" means, with respect to each Class, Mortgage
Notes that are in the form of Exhibits A-1 and A-2 attached hereto that contains
the paragraph referred to in footnote l and the additional schedule referred to
in footnote 3 of such Exhibit A.
"GOLDEN STATE PETRO I-A" means Golden State Petro (IOM I-A)
PLC, an Isle of Man public limited company.
"GOLDEN STATE PETRO I-B" means Golden State Petro (IOM I-B)
PLC, an Isle of Man public limited company.
"GOLDEN STATE PETRO I-A BUILDING CONTRACT" means the
Shipbuilding Contract between the Builder and Golden State Petro I-A.
"GOLDEN STATE PETRO I-B BUILDING CONTRACT" means the
Shipbuilding Contract between the Builder and Golden State Petro I-B.
"GOVERNMENTAL APPROVAL" means any authorization, consent,
approval, license, franchise, lease, ruling, permit, tariff, rate,
certification, exemption, filing or registration by or with any Governmental
Authority relating to the ownership of the Collateral or to the execution,
delivery or performance of this Indenture or any Security Document.
"GOVERNMENTAL AUTHORITY" means the United States federal or
any foreign government, any state or other political subdivision thereof, and
any entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government and any other
governmental entity with authority over an Owner, the Charterer or operation of
a Vessel.
"HOLDER", "HOLDER OF MORTGAGE NOTES", "NOTEHOLDER" or other
similar terms means a registered holder of any Mortgage Note.
"INDEBTEDNESS" means, with respect to any Person, all
obligations, whether or not contingent, of such Person (i)(a) for borrowed money
(including, but not limited to, any indebtedness secured by a Lien on the assets
of such person which is (1) given to secure all or part of the purchase price of
property subject thereto, whether given to the vendor of such property or to
another, or (2) existing on property at the time of acquisition thereof), (b)
evidenced by a note, debenture, bond or written instrument, (c) under a lease
required to be capitalized on the balance sheet of the lessee under generally
accepted accounting principles or under any lease or related document (including
a purchase agreement) which provides that such person is contractually obligated
to purchase or to cause a third party to purchase such leased property, (d) in
respect of letters of credit, bank guarantees or bankers' acceptances (including
reimbursement obligations with respect to any of the foregoing), (e) with
respect to indebtedness secured by a Lien affecting title or resulting in an
encumbrance to which the property or assets of such Person are subject, whether
or not the obligation secured thereby shall have been assumed or guaranteed by
or shall otherwise be such person's legal liability, (f) in respect of the
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balance of deferred and unpaid purchase price of any property or assets, and (g)
under interest rate or currency swap agreements, cap, floor and collar
agreements, spot and forward contracts and similar agreements and arrangements;
(ii) with respect to any obligation of others of the type described in the
preceding clause (i) assumed by or guaranteed in any manner by such Person or in
effect guaranteed by such Person through an agreement to purchase (including,
without limitation, "take or pay" and similar arrangements), contingent or
otherwise (and the obligations of such Person under any such assumptions,
guarantees or other such arrangements); and (iii) any and all deferrals,
renewals, extensions, refinancings and refundings of, or amendments,
modifications or supplements to, any of the foregoing.
"INDENTURE" means this Indenture dated as of December 1, 1996
among the Owners, Golden State Petroleum, as agent, and the Indenture Trustee,
as the same may be amended or supplemented from time to time, and which shall
include any Supplemental Indenture or supplemental indenture.
"INDENTURE EVENT OF DEFAULT" means any event or condition
specified as such in Section 7.1 which shall have continued for the period of
time, if any, therein designated.
"INDENTURE TRUSTEE" means United States Trust Company of New
York, not in its individual capacity but solely as Indenture Trustee under this
Indenture, or any other Person acting from time to time as Indenture Trustee
hereunder.
"INITIAL NOTE" means either a Serial Note or an Initial Term
Note.
"INITIAL TERM NOTE" means any of the 8.04% First Preferred
Mortgage Notes due 2019 of Golden State Petroleum, as agent for the Owners, to
be originally issued, authenticated and delivered pursuant to this Indenture and
Term Notes subsequently issued in exchange therefor, other than the Exchange
Term Notes.
"INITIAL PURCHASER" means Donaldson, Lufkin & Jenrette
Securities Corporation.
"ISSUE OF ONE DEBENTURE" means, for each Owner, the Issue of
One Debenture, dated as of December 1, 1996, between such Owner and the
Indenture Trustee, as the same may be amended from time to time.
"LAW" means any statute, law, rule, regulation, ordinance,
order, code, policy or rule of common law, now or hereafter in effect, and any
judicial or administrative interpretation thereof by a Governmental Authority or
otherwise, including any judicial or administrative order, consent decree or
judgment.
"LIBOR" means the rate calculated on the basis of the offered
rates for deposits in dollars for a one-month period which appear on the Reuters
Screen LIBO Page as of 11:00 A.M., London time, on the date that is two London
Banking Days preceding the date of calculation. If at least two such offered
rates appear on the Reuters Screen LIBO Page, LIBOR will be the arithmetic mean
of such offered rates (rounded to the nearest .0001 percentage point). If, at
any time of determination, the Reuters Screen LIBO Page is not available, LIBOR
will be calculated as the average (rounded upward, if necessary, to the next
higher 1/16 of 1%)
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of the respective ratio per annum at which deposits in dollars for a one month
period are offered to each of three reference banks in the London interbank
market at approximately 11:00 A.M., London time, on the date that is two London
Banking Days preceding the date of calculation. Each of the Charterer and the
Indenture Trustee will select a reference bank and the third reference bank will
be selected by the Charterer and the Indenture Trustee together or, failing
agreement, by the previously selected reference banks together.
"LIEN" means, with respect to any asset, any mortgage, lien
(statutory or otherwise), pledge, security interest, claim, hypothecation,
assignment for security, deposit arrangement or security interest of any kind in
respect of such asset. For the purposes of this Indenture, a Person shall be
deemed to own subject to a Lien any asset which it has acquired or holds subject
to the interest of a vendor or lessor under any conditional sale agreement,
capital lease or other title retention agreement relating to such asset.
"LONDON BANKING DAY" means any day on which dealings in
deposits in United States dollars are carried on in the London interbank market
and on which commercial banks are open for domestic and international business
(including dealings in United States dollar deposits) in London and New York.
"LOSS PAYMENT DATE" means, with respect to a Total Loss, the
date which is 90 days after the occurrence of such Total Loss.
"MAKE-WHOLE PREMIUM," if applicable to the optional redemption
of any Term Note, means the excess, if any, of (i) the aggregate present value
as of the date of such redemption of each dollar of principal of such Term Note
being redeemed and the amount of interest (exclusive of interest accrued to the
date of redemption) that would have been payable in respect of such dollar if
such redemption had not been made, determined by discounting, on a semiannual
basis, such principal and interest at a rate equal to the sum of the Treasury
Yield (determined on the Business Day immediately preceding the date of such
redemption) plus 0.375% (three-eighths of one percent) from the respective dates
on which such principal and interest would have been payable if such redemption
had not been made, over (ii) the aggregate principal amount of such Term Notes
being redeemed.
"MANAGEMENT AGREEMENT" means, for each Owner, the Management
Agreement, dated the Closing Date, between such Owner and the Manager, as the
same may be amended from time to time.
"MANAGEMENT FEE" means, with respect to each Vessel, an amount
per year payable semi-annually in arrears on each Payment Date equal to $50,000.
"MANAGER" means Cambridge Fund Management, L.L.C., a Delaware
limited liability company, or any other Person acting from time to time as
Manager in accordance with the terms of the Management Agreement.
"MOODY'S" means Moody's Investors Service, Inc.
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"MORTGAGE" means, for each Vessel, the First Preferred Ship
Mortgage for such Vessel, dated the Delivery Date for such Vessel, between the
related Owner and the Indenture Trustee, as the same may be amended from time to
time in substantially the form of Exhibit D hereto.
"MORTGAGE EVENT OF DEFAULT" means, for any Mortgage, each of
the events designated as an "Event of Default" in Section 5.01 of such Mortgage.
"MORTGAGE NOTES" means any Serial Notes, Term Notes and any
Additional Notes.
"NET REDUCTION IN CONSTRUCTION COSTS" means any net decreases
in construction costs for a Vessel which (i) result from actions by the
Charterer or the Technical Supervisor; (ii) are approved by the related Owner,
such approval not to be unreasonably withheld; and (iii) occur after the
execution of the related Building Contract on the Closing Date but prior to the
related Delivery Date.
"NOTE" means a Serial Note or a Term Note.
"NOTE CUSTODIAN" has the meaning specified in Section 2.5
"NOTE PURCHASE AGREEMENT" means the Purchase Agreements, dated
December 19, 1996, among Golden State Petroleum, the Owners and the Initial
Purchaser relating to the issuance and sale of $127,100,000 aggregate principal
amount of Initial Term Notes and (ii) the Purchase Agreement, dated December 19,
1996, among Golden State Petroleum, the Owners and the Initial Purchaser
relating to the issuance and sale of $51,700,000 aggregate principal amount of
Serial Notes.
"NOTE REGISTER" has the meaning specified in Section 2.5.
"OFFICERS' CERTIFICATE" means a certificate signed by a
Responsible Officer of Golden State Petroleum or two Responsible Officers of an
Owner, as the case may be, and delivered to the Indenture Trustee. Each such
certificate shall include the statements provided for in Section 13.5 and, to
the extent required pursuant to Section 314 of the Trust Indenture Act, shall
comply with Section 314 of the Trust Indenture Act.
"OPINION OF COUNSEL" means an opinion in writing signed by
legal counsel satisfactory to the Indenture Trustee. Each such opinion shall
include the statements provided for in Section 13.5 and to the extent required
pursuant to Section 314 of the Trust Indenture Act, shall comply with Section
314 of the Trust Indenture Act.
"OUTSTANDING", when used with reference to the Mortgage Notes,
shall, subject to the provisions of Section 9.4, mean, as of any particular
time, all Mortgage Notes authenticated and delivered by the Indenture Trustee
under this Indenture, except:
(a) Mortgage Notes theretofore canceled by the Indenture
Trustee or delivered to the Indenture Trustee for cancellation;
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(b) Mortgage Notes, or portions thereof, for the payment or
redemption of which moneys in the necessary amount shall have been
deposited in trust with the Indenture Trustee or with any paying agent,
PROVIDED that if such Mortgage Notes are to be redeemed prior to the
maturity thereof, notice of such redemption shall have been given as
herein provided, or provision satisfactory to the Indenture Trustee
shall have been made for giving such notice; and
(c) Mortgage Notes in substitution for which other Mortgage
Notes shall have been authenticated and delivered, or which shall have
been paid, pursuant to the terms of Section 2.3 (unless proof
satisfactory to the Indenture Trustee is presented that any of such
Mortgage Notes are held by a Person in whose hands such Mortgage Note
is a legal, valid and binding obligation of the Owners).
"OWNER" means Golden State Petro I-A, in the case of Vessel A
and Golden State Petro I-B, in the case of Vessel B.
"PAYING AGENT" has the meaning specified in Section 2.5.
"PAYMENT DATE" means each February 1 and August 1, commencing
August 1, 1997.
"PERMITTED INVESTMENTS" means any of the following:
(a) direct general obligations of, or obligations fully and
unconditionally guaranteed as to the timely payment of principal and interest
by, the United States or any agency or instrumentality thereof, PROVIDED such
obligations are backed by the full faith and credit of the United States,
Federal Housing Administration debentures, Federal Home Loan Mortgage
Corporation senior debt obligations or Federal National Mortgage Association
senior debt obligations, but excluding any of such securities whose terms do not
provide for payment of a fixed dollar amount upon maturity or call for
redemption;
(b) federal funds, certificates of deposit, time and demand
deposits and banker's acceptances (having original maturities of not more than
one year) of any bank or trust company incorporated under the laws of the United
States or any state thereof, PROVIDED that the short-term debt obligations of
such bank or trust company at the dates of acquisition thereof have been rated
at least "A-l" or "P-1" or better (or the equivalent) by Standard & Poor's and
Moody's, respectively;
(c) commercial paper (having original maturities of not more
than one year) rated at least "A-1" or "P-l" or better (or the equivalent) by
Standard & Poor's and Moody's, respectively; or
(d) guaranteed investment contracts, investment agreements or
similar agreements initially rated at least "A" or "A-2" or better (or the
equivalent) by Standard & Poor's or Moody's, respectively, that are treated as
indebtedness for United States federal income tax purposes;
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provided, however, that in the event amounts on deposit in the Pre-Funding
Account or the Revenue Account (until the latest maturity date of the Serial
Notes) are invested pursuant to clauses (b), (c) or (d), then such investments
must initially be rated at least "AA" or "Aa" (or the equivalent) or better by
Standard & Poor's or Moody's, respectively.
For purposes of clause (d) above, (i) each payment received will be considered
to be the maturity of such Permitted Investment and (ii) a guaranteed investment
contract, investment agreement or similar agreement that constitutes a senior
unsecured long-term debt obligation of a Person shall be deemed to have the same
rating as such Person's other senior unsecured long-term debt obligations, if
any, that are rated by a Rating Agency. Notwithstanding the foregoing,
"Permitted Investments" shall not include "stripped securities" or investments
which contractually may return less than the purchase price therefor.
"PERMITTED LIENS" means, for each Owner, Liens created under
the related Mortgage and Security Documents, the Charter for the related Vessel
or other charter or conditional sale contracts and agreements for such Vessel
permitted under the Mortgage and Charter Permitted Liens.
"PERSON" means an individual, a corporation, a partnership, a
joint venture, unincorporated association, a joint stock company, a trust or any
other entity or a Governmental Authority.
"PLEDGED STOCK" means all of the capital stock of each Owner,
including any additional or substitute shares of capital stock of any such Owner
now owned or hereafter acquired by Golden State Holdings I Ltd., issued and
outstanding at any time or from time to time.
"PRE-FUNDING ACCOUNT" means the account established and
maintained by the Indenture Trustee pursuant to Section 3.5.
"PRINCIPAL TERMS" means, with respect to any Series, (i) the
name or designation of such Series; (ii) the initial principal amount of the
Additional Notes to be issued for such Series (or method for calculating such
amount); (iii) the interest rate to be paid with respect to the Additional Notes
for such Series (or method for the determination thereof); (iv) the Allocated
Principal Amount of the Additional Notes for a Series for each Vessel; (v) if
applicable, whether any Additional Notes of such Series (a) will be issued in
the form of Global Notes or (b) will be Transfer Restricted Notes and the manner
of applying the provisions of Article Two hereof to the transfer of such
Additional Notes and (vi) any other terms of such Series.
"RATING AGENCY" means, at any time of determination, each
rating agency then rating the Mortgage Notes which shall always include at least
one of Moody's or Standard & Poor's or their respective successors.
"RATING AGENCY CONDITION" means, with respect to any action,
that the Rating Agency then rating the Mortgage Notes (of which one must be
Standard & Poor's or Moody's) shall have notified Golden State Petroleum, the
Owners, Chevron and the Indenture Trustee in writing that such action will not
result in a reduction or withdrawal of the rating of any
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Outstanding Mortgage Note or a placement of the Mortgage Notes on credit watch
or surveillance with respect to which it is a Rating Agency.
"RECORD DATE" means, with respect to any Payment Date, the
January 15 or July 15 (whether or not a Business Day), as the case may be, next
preceding such Payment Date.
"RECURRING FEES" means, for either Vessel, any periodic fees
necessary or appropriate to maintain the corporate status of the related Owner,
any filing or other fees necessary or appropriate to maintain the status of such
Owner as a reporting company under the Exchange Act and to comply with any
covenants of such Owner under the related Mortgage, any fees and expenses
(including the cost of insurance required by the related Mortgage and not
maintained by the charterer under the charter to which such Vessel is then
subject) necessary to comply with any covenants under the related Mortgage, any
other fees and expenses contemplated to be paid pursuant to the Management
Agreement (other than the Management Fee) which the Manager certifies to the
Indenture Trustee are qualified to be paid thereunder and any accounting or
other professional fees and other expenses, including any fees and expenses of
the Rating Agencies, incurred in connection with the foregoing. In addition,
each Owner's Recurring Fees will include a pro rata portion of the fees and
expenses, including any accounting, administrative or other professional fees,
necessary or appropriate to maintain the registration of the Mortgage Notes
under the Securities Act, to effect a mandatory redemption, if any, of the
Mortgage Notes, to maintain the corporate status of Golden State Petroleum and
the status of Golden State Petroleum as a reporting company (if necessary) under
the Exchange Act and to comply with any covenants under the Indenture.
"REGISTRAR" has the meaning specified in Section 2.5.
"REGISTRATION JURISDICTION" means, with respect to each
Vessel, the jurisdiction under the laws of which such Vessel is registered from
time to time. Initially, the Registration Jurisdiction for each Vessel means the
Republic of Liberia.
"REGISTRATION RIGHTS AGREEMENT" means the Registration Rights
Agreement, dated the Closing Date, among the Owners, Golden State Petroleum and
the Initial Purchasers, as initial purchasers of the Initial Term Notes.
"REGISTRATION STATEMENT" means either an Exchange Offer
Registration Statement or a Shelf Registration Statement.
"REMAINING AVERAGE LIFE" means, with respect to the Term Notes
the number of years (calculated to the nearest one-twelfth year) obtained by
dividing (i) the principal amount of the Term Notes to be redeemed into (ii) the
sum of the products obtained by multiplying (a) the principal component of each
payment that would have been made on the Term Notes (including payments to be
made through operation of the mandatory sinking fund) assuming such Term Notes
were not subject to early redemption other than by operation of the mandatory
sinking fund by (b) the number of years (calculated to the nearest one-twelfth
year) that will elapse between the date on which the Term Notes are to be
redeemed (the "Settlement Date") and the scheduled due date of such principal
payment.
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"REQUIRED NOTEHOLDERS" means the Holders of a majority in
aggregate principal amount of the Outstanding Mortgage Notes.
"REQUIREMENT OF LAW" means, as to any Person, the certificate
of incorporation and by-laws or partnership agreement or other organizational or
governing documents of such Person, and any Law applicable to or binding upon
such Person or any of its properties or to which such Person or any of its
properties is subject.
"RESPONSIBLE OFFICER" of any Person other than the Indenture
Trustee, means the President or any other officer with authority of at least a
Vice President; or, in the case of the Indenture Trustee, means an officer or
assistant officer of the Indenture Trustee in its Corporate Trust Department.
"RESTRICTED PAYMENT" means, with respect to each Owner, (a)
the declaration or payment of any dividend or other distribution on any shares
of such Owner's capital stock, or (b) the purchase, redemption or other
acquisition or retirement for value of its capital stock.
"RESTRICTED SECURITY" means each Term Note, until the earliest
to occur of (a) the date on which such Term Note is exchanged in the Exchange
Offer and entitled to be resold to the public by the Holder thereof without
complying with the prospectus delivery requirements of the Act, (b) the date on
which such Term Note has been disposed of in accordance with a Shelf
Registration Statement, (c) the date on which such Term Note is disposed of by a
broker-dealer registered under the Exchange Act pursuant to the "Plan of
Distribution" contemplated by the Exchange Offer Registration Statement
(including delivery of the prospectus contained therein) or (d) the date on
which such Term Note is distributed to the public pursuant to Rule 144 under the
Act.
"REVENUE ACCOUNT" means the account established and maintained
by the Indenture Trustee pursuant to Section 3.1(a).
"SECURED INSTRUMENTS" means, at any time, the Indenture and
the Outstanding Mortgage Notes.
"SECURITIES ACT" means the United States Securities Act of
1933, as amended.
"SECURITY DOCUMENTS" means the Mortgages, the Assignments of
Charter, the Assignments of Charter Supplements, the Assignments of Earnings and
Insurances, the Assignments of Guarantee, the Assignments of Management
Agreement, each Issue of One Debenture, the Stock Pledge, the Assignments of
Building Contract, Assignments of Building Contract Guarantee, and any
additional security agreement, assignment or mortgage document entered into by
either Owner from time to time in connection with the Secured Instruments.
"SERIAL NOTE" means any of the 6.360% Serial First Preferred
Mortgage Notes Due 2000, 6.465% Serial First Preferred Mortgage Notes Due 2001,
6.550% Serial First Preferred Mortgage Notes Due 2002, 6.610% Serial First
Preferred Mortgage Notes Due 2003, 6.700% Serial First Preferred Mortgage Notes
Due 2004, 6.800% Serial First Preferred Mortgage Notes Due 2005 and 6.855%
Serial First Preferred Mortgage Notes Due 2006 of
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Golden State Petroleum, as agent for the Owners, to be originally issued,
authenticated and delivered pursuant to this Indenture.
"SERIES ISSUANCE DATE" means, with respect to any Series, the
date on which the Additional Notes of such Series are to be originally issued in
accordance with Section 10.6.
"SERIES OF ADDITIONAL NOTES" or "SERIES" means each series of
Additional Notes issued pursuant to a Supplemental Indenture.
"SHELF REGISTRATION STATEMENT" means a shelf registration
statement under the Securities Act relating to the Term Notes, including the
related prospectus, filed in accordance with the Registration Rights Agreement.
"STANDARD & POOR'S" means Standard & Poor's Rating Group, a
division of McGraw-Hill Co. Inc.
"STATED MATURITY" means, when used with respect to a Mortgage
Note or any installment of interest thereon, the date specified in such Mortgage
Note as the fixed date on which the principal of such Mortgage Note or such
installment of interest is due and payable. The Stated Maturity of each Class of
Notes is set forth opposite such Class in Section 2.2.
"STIPULATED LOSS VALUE" means, for any Vessel on any date, the
amount specified in the related Charter as the "Stipulated Loss Value" for such
date, which amount will be at least sufficient to redeem in full the Allocated
Principal Amount of the Mortgage Notes for such Vessel.
"STOCK PLEDGE" means the Stock Pledge Agreement, dated as of
December 1, 1996, between Golden State Holdings I, Ltd. and the Indenture
Trustee, as the same may be amended from time to time.
"SUPPLEMENTAL INDENTURE" means each supplement to this
Indenture pursuant to which a Series of Additional Notes is issued by Golden
State Petroleum, as agent for the Owners.
"TECHNICAL SUPERVISION AGREEMENT" means, for each Vessel, the
Agreement on Contract for Technical Matters, dated as of the Closing Date, 1996,
among the related Owner, the Builder and Chevron Shipping Company.
"TERM NOTE" means either an Initial Term Note or an Exchange
Term Note.
"TERMINATION ACCOUNT" means the account established and
maintained by the Indenture Trustee pursuant to Section 3.1(b).
"TOTAL LOSS" means, with respect to a Vessel, either (a)
actual or constructive or compromised or arranged total loss of the Vessel, (b)
Compulsory Acquisition of the Vessel or (c) if so declared by the Charterer at
any time and in its sole discretion a requisition by a Governmental Authority
for hire of the Vessel for a period in excess of 180 days. Any actual
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loss of the Vessel shall be deemed to have occurred at 1200 hours Greenwich Mean
Time ("GMT") on the actual date on which the Vessel was lost or in the event of
the date of the loss being unknown then the actual total loss shall be deemed to
have occurred at 1200 hours GMT on the day next following the day on which the
Vessel was last heard of. A constructive total loss shall be deemed to have
occurred at 1200 hours GMT on the earliest of: (1) the date that notice of
abandonment of the Vessel is given to the insurers, provided a claim for total
loss is admitted by the insurers, (2) if the insurers do not admit such a claim,
at the date and time GMT at which a total loss is subsequently adjudged by a
competent court of law or arbitration tribunal to have occurred, or (3) the date
that a report is rendered by one or more experts in marine surveying and vessel
valuation (said experts to be appointed by the Charterer at its expense and
approved by the Owner, such approval not to be unreasonably withheld) concluding
that salvage, repair and associated costs in restoring the Vessel to the
condition specified in each Charter exceed the Vessel's fair market value in
sound condition.
"TOTAL LOSS PAYMENT" means, with respect to each Vessel, the
related Charter and a Loss Payment Date, the sum of (a) any deficiency between
(i) the Stipulated Loss Value in relation to the period in question calculated
pursuant to the related Charter and (ii) all insurance proceeds for damage to or
loss of the Vessel and amounts paid by any governmental authority in connection
with any requisition, seizure or forfeiture actually received in hand by Owners
prior to or on such Loss Payment Date; and (b) all Charterhire and Additional
Charterhire accrued (on a daily basis) but unpaid hereunder to such Loss Payment
Date and any other sums due under any provisions of the related Charter,
together with interest thereon at the Default Rate from the date upon which any
such Charterhire and Additional Charterhire or other sums was due until the Loss
Payment Date.
"TRANSFER RESTRICTED NOTE" means any Mortgage Note that bears
or is required to bear the legend set forth in Section 2.8(g).
"TREASURY YIELD" means, in connection with the calculation of
any Make-Whole Premium on the Term Notes, the yield to maturity at the time of
computation of United States Treasury securities with a constant maturity (as
compiled by and published in the most recent Federal Reserve Statistical Release
H.15 (519) which has become publicly available at least two Business Days prior
to the date fixed for redemption (or, if such Statistical Release is no longer
published, any publicly available source of similar data)) equal to the
Remaining Average Life of the Term Notes; provided that if no United States
Treasury security is available with such a constant maturity and for which a
closing yield is given, the Treasury Yield shall be obtained by linear
interpolation (calculated to the nearest one-twelfth of a year) from the closing
yields of United States Treasury securities for which such yields are given,
except that if the average life of the Term Notes is less than one year, the
weekly average yield on actually traded United States Treasury securities
adjusted to a constant maturity of one year shall be used.
"TRUST ACCOUNTS" means the Revenue Account, the Termination
Account, the Casualty Account, the Collateral Account, the Debt Service Reserve
Fund, the Operating Account and the Pre-Funding Account.
"TRUST ESTATE" has the meaning specified in Section 4.1.
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"TRUST FUNDS" means the funds, together with any income
thereon from Permitted Investments, deposited in the Trust Accounts.
"TRUST INDENTURE ACT" means the United States Trust Indenture
Act of 1939, as amended.
"TRUSTEE FEES" means those fees and expenses of the Trustee as
set forth in a separate letter agreement between the Trustee and the Owners.
"UCC" means the Uniform Commercial Code as in effect on the
date hereof in the State of New York; provided, however, that if by reason of
mandatory provisions of law, the validity or perfection of the Indenture
Trustee's security interest in any item of Collateral is governed by the UCC as
is then in effect in a jurisdiction other than New York, "UCC" means the Uniform
Commercial Code (or equivalent Law) as is in effect in such other jurisdiction
for purposes of the provisions hereof relating to such validity or perfection.
"VESSEL A" means the vessel being constructed pursuant to the
Golden State Petro I-A Building Contract.
"VESSEL A DELIVERY DATE" means the date when Vessel A is ready
in fact for delivery by the Builders after completion of trials.
"VESSEL A INSTALLMENT DATE" means the date an installment of
the purchase price for Vessel A is due under the Golden State Petro I-A Building
Contract.
"VESSEL A PURCHASE DATE" means the date (if any) on which the
Builder sells Vessel A to Golden State Petro I-A pursuant to the related
Building Contract and such Vessel becomes part of the Trust Estate.
"VESSEL B" means the vessel being constructed pursuant to the
Golden State Petro I-B Building Contract.
"VESSEL B DELIVERY DATE" means the date when Vessel B is ready
in fact for delivery by the Builders after completion of trials.
"VESSEL B INSTALLMENT DATE" means the date an installment of
the purchase price for Vessel B is due under the Golden State Petro I-B Building
Contract.
"VESSEL B PURCHASE DATE" means the date (if any) on which the
Builder sells Vessel B to Golden State Petro I-B pursuant to the related
Building Contract and such Vessel becomes part of the Trust Estate.
"VESSELS" means, collectively, the Vessel A and Vessel B, Hull
Numbers 1228 and 1229 respectively, together, in each case, with all her
engines, boilers, machinery, masts, anchors, cables, rigging, tackle, apparel,
furniture, electronics, small boats and all her other appurtenances, whether
aboard or removed from such Vessel, together with any and all additions,
improvements and/or replacements made to, on or in such Vessel.
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SECTION 1.2 INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT.
This Indenture is subject to the mandatory provisions of the Trust Indenture Act
which are incorporated by reference in and made a part of this Indenture.
All terms used in this Indenture that are defined by the Trust
Indenture Act, defined by the Trust Indenture Act reference to another statute
or defined under rules promulgated by the Commission have the meanings assigned
to them by such definitions.
ARTICLE TWO
THE MORTGAGE NOTES
SECTION 2.1 FORMS AND DATING. The Mortgage Notes and the
Indenture Trustee's certificate of authentication shall be in substantially the
form set forth in Exhibit A hereto, with such appropriate insertions, omissions,
substitutions and other variations as are required or permitted by this
Indenture and may have such letters, numbers or other marks of identification
and such legends or endorsements placed thereon as may be required to comply
with the rules of any securities exchange or as may, consistently herewith, be
determined by the officers executing such Mortgage Notes as evidenced by their
execution of the Mortgage Notes. Any such legend or endorsement shall be
delivered in writing to the Indenture Trustee by Golden State Petroleum. Each
Mortgage Note shall be dated the date of its authentication. The Mortgage Notes
will be issued only in fully registered form without coupons, in denominations
of $100,000 and multiples of $1,000 in excess thereof. All payments with respect
to the Mortgage Notes shall be in United States Dollars.
The Serial Notes and Initial Term Notes offered and sold to
"qualified institutional buyers" (as defined in Rule 144A under the Securities
Act) will be issued initially in global form, substantially in the form of
Exhibits A-1 and A-2, respectively, attached hereto (including footnotes 1
through 4 thereto), respectively. Each Global Note shall represent such of the
Outstanding Initial Notes as shall be specified therein and each shall provide
that it shall represent the aggregate amount of Outstanding Initial Notes from
time to time endorsed thereon and that the aggregate amount of Outstanding
Initial Notes represented thereby may from time to time be reduced or increased,
as appropriate, to reflect exchanges and redemptions. Any endorsement of a
Global Note to reflect the amount of any increase or decrease in the amount of
Outstanding Initial Notes represented thereby shall be made by the Indenture
Trustee or the Note Custodian, at the direction of the Indenture Trustee, in
accordance with instructions given by the Holder thereof as required by Section
2.8. The Initial Notes offered and sold pursuant to Regulation S under the
Securities Act pursuant to the Purchase Agreement will be issued in the form of
Definitive Notes.
SECTION 2.2 TITLE AND TERMS. The aggregate principal amount of
Serial Notes and Initial Term Notes which may be authenticated and delivered
under this Indenture is limited to $51,700,000 and $127,100,000, respectively,
except for Notes authenticated and delivered upon registration of transfer of,
or in exchange for, or in lieu of, other Notes pursuant to Sections 2.4, 2.8 or
2.9. The aggregate principal amount of any Series of Additional Notes
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which may be authenticated and delivered under any Supplemental Indenture shall
be specified therein.
The Serial Notes shall be known and designated as the "6.360%
Serial First Preferred Mortgage Notes Due 2000", "6.465% Serial First Preferred
Mortgage Notes Due 2001", "6.550% Serial First Preferred Mortgage Notes Due
2002", "6.610% Serial First Preferred Mortgage Notes Due 2003", "6.700% Serial
First Preferred Mortgage Notes Due 2004", "6.800% Serial First Preferred
Mortgage Notes Due 2005" and "6.855% Serial First Preferred Mortgage Notes Due
2006" of Golden State Petroleum, as agent for the Owners. The Initial Term Notes
shall be known and designated as the "8.04% First Preferred Mortgage Notes Due
2019" of Golden State Petroleum, as agent for the Owners. The Exchange Term
Notes shall be known and designated as the "8.04% Exchange First Preferred
Mortgage Notes due 2019" of Golden State Petroleum, as agent for the Owners. The
Additional Notes shall be known and designated as provided in the relevant
Supplemental Indenture. Each Serial Note shall bear interest at the rate per
annum indicated on the face of each such Serial Note from the date of issuance
thereof or from the most recent Payment Date to which interest has been paid or
duly provided for, as the case may be, payable semi-annually on February 1 and
August 1, commencing on August 1, 1997, until the principal thereof is paid or
made available for payment. Each Term Note shall bear interest at the rate per
annum indicated on the face of each such Term Note from the date of issuance
thereof or from the most recent Payment Date to which interest has been paid or
duly provided for, as the case may be, payable semi-annually on February 1 and
August 1, commencing, with respect to the Initial Term Notes, on August 1, 1997,
until the principal thereof is paid or made available for payment. Each
Additional Note shall bear interest at the rate per annum indicated on the face
of each such Additional Note from the date of issuance thereof or from the most
recent Payment Date to which interest has been paid or duly provided for, as the
case may be, payable semi-annually on February 1 and August 1, commencing on the
Payment Date after which such Additional Notes are issued. The Stated Maturity
for each Class of Initial Note is set forth below:
Class Stated Maturity Date
----- --------------------
6.360% Serial First Preferred Mortgage Note Due 2000 February 1, 2000
6.465% Serial First Preferred Mortgage Note Due 2001 February 1, 2001
6.550% Serial First Preferred Mortgage Note Due 2002 February 1, 2002
6.610% Serial First Preferred Mortgage Note Due 2003 February 1, 2003
6.700% Serial First Preferred Mortgage Note Due 2004 February 1, 2004
6.800% Serial First Preferred Mortgage Note Due 2005 February 1, 2005
6.855% Serial First Preferred Mortgage Note Due 2006 February 1, 2006
8.04% First Preferred Mortgage Note Due 2019 February 1, 2019
SECTION 2.3 EXECUTION, AUTHENTICATION AND DELIVERY. The
Mortgage Notes shall be signed on behalf of Golden State Petroleum by its
Chairman of the Board of Directors, its Vice Chairman of the Board of Directors,
its President, any Vice President or its
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Treasurer under its corporate seal and attested by its Secretary or an Assistant
Secretary. Such signatures may be manual or facsimile signatures of the present
or any future such authorized officers and may be imprinted or otherwise
reproduced on the Mortgage Notes. The seal of Golden State Petroleum may be in
the form of a facsimile thereof and may be impressed, affixed, imprinted or
otherwise reproduced on the Mortgage Notes.
Only such Mortgage Notes as shall bear thereon a certificate
of authentication substantially in the form recited in Exhibit A hereto,
manually executed by the Indenture Trustee, shall be entitled to the benefits of
this Indenture or be valid or obligatory for any purpose. Such certificate by
the Indenture Trustee upon any Mortgage Note executed by Golden State Petroleum
shall be conclusive evidence that the Mortgage Note so authenticated has been
duly authenticated and delivered hereunder.
Mortgage Notes bearing the manual or facsimile signatures of
individuals who were at any time the proper officers of Golden State Petroleum
shall bind the Owners, notwithstanding that such individuals or any of them have
ceased to hold such offices prior to the authentication and delivery of such
Mortgage Notes or did not hold such offices at the date of such Mortgage Notes.
The Indenture Trustee may appoint an authenticating agent to authenticate the
Mortgage Notes. An authenticating agent may authenticate Mortgage Notes whenever
the Indenture Trustee may do so. Each reference in this Indenture to
authentication by the Indenture Trustee includes authentication by such
authenticating agent.
At any time and from time to time after the execution and
delivery of this Indenture, Golden State Petroleum may deliver Mortgage Notes
executed by Golden State Petroleum to the Indenture Trustee for authentication.
The Indenture Trustee shall thereupon authenticate and deliver such Mortgage
Notes to Golden State Petroleum as directed by a Company Order, without any
further action by Golden State Petroleum.
SECTION 2.4 TEMPORARY NOTES. Pending the preparation of
definitive Mortgage Notes, Golden State Petroleum may prepare and execute, and
upon Company Order the Indenture Trustee shall authenticate and deliver,
temporary Mortgage Notes substantially of the tenor of the definitive Mortgage
Notes in lieu of which they are issued, which are printed, lithographed,
typewritten, mimeographed or otherwise produced, in any authorized denomination,
and with such appropriate insertions, omissions, substitutions and other
variations as the officers executing such Mortgage Notes may determine, as
evidenced by their execution of such Mortgage Notes.
If temporary Mortgage Notes are issued, Golden State Petroleum
will cause definitive Mortgage Notes to be prepared without unreasonable delay.
After the preparation of definitive Mortgage Notes, the temporary Mortgage Notes
shall be exchangeable for definitive Mortgage Notes upon surrender of the
temporary Mortgage Notes at the office or agency of Golden State Petroleum
maintained by Golden State Petroleum for the purpose pursuant to Section 2.5.
Upon surrender for cancellation of any one or more temporary Mortgage Notes,
Golden State Petroleum shall execute and the Indenture Trustee shall
authenticate and deliver in exchange therefor a like principal amount of
definitive Mortgage Notes of authorized denominations and of like tenor. Until
so exchanged, the temporary Mortgage Notes shall in all respects be entitled to
the same benefits under this Indenture as definitive Mortgage Notes.
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SECTION 2.5 REGISTRAR, DEPOSITORY AND PAYING AGENT. Golden
State Petroleum shall maintain in the Borough of Manhattan, in The City of New
York, an office or agency where Mortgage Notes may be presented for registration
of transfer or for exchange ("Registrar") and an office or agency where Mortgage
Notes may be presented for payment ("Paying Agent"). The Registrar shall keep a
register of the Mortgage Notes (the "Note Register") and of their transfer and
exchange. Golden State Petroleum may appoint one or more co-registrars and one
or more additional paying agents; provided, however, in no event shall the
Paying Agent be an Affiliate of Chevron. The term "Registrar" includes any
co-registrar, and the term "Paying Agent" includes any additional paying agent.
Golden State Petroleum may change any Paying Agent or Registrar without notice
to any Holder. Golden State Petroleum shall notify the Indenture Trustee in
writing of the name and address of any Paying Agent or Registrar. If Golden
State Petroleum fails to appoint or maintain another entity as Registrar or
Paying Agent, the Indenture Trustee shall act as such.
Golden State Petroleum initially appoints The Depository Trust
Company to act as Depository with respect to the Global Notes.
Golden State Petroleum initially appoints the Indenture
Trustee to act as the Registrar and Paying Agent and to act as the note
custodian (the "Note Custodian") with respect to the Global Notes.
SECTION 2.6 PAYING AGENT TO HOLD MONEY IN TRUST. Golden State
Petroleum shall require each Paying Agent other than the Indenture Trustee to
agree in writing that the Paying Agent will hold in trust for the benefit of
Holders or the Indenture Trustee all money held by the Paying Agent for the
payment of principal, premium, if any, or interest (including default interest)
on the Mortgage Notes, and will notify the Indenture Trustee of any default by
Golden State Petroleum, as agent for the Owners, in making any such payment.
While any such default continues, the Indenture Trustee may require a Paying
Agent to pay all money held by it to the Indenture Trustee. Golden State
Petroleum at any time may require a Paying Agent to pay all money held by it to
the Indenture Trustee. Upon payment over to the Indenture Trustee, the Paying
Agent shall have no further liability for the money.
SECTION 2.7 HOLDER LISTS. The Indenture Trustee shall preserve
in as current a form as is reasonably practicable the most recent list available
to it of the names and addresses of all Holders and shall otherwise comply with
Section 312(a) of the Trust Indenture Act. If the Indenture Trustee is not the
Registrar, Golden State Petroleum shall furnish to the Indenture Trustee at
least seven Business Days before each Payment Date, and at such other times as
the Indenture Trustee may request in writing a list in such form and as of such
date as the Indenture Trustee may reasonably require of the names and addresses
of the Holders and Golden State Petroleum shall otherwise comply with Section
312(a) of the Trust Indenture Act.
SECTION 2.8 TRANSFER AND EXCHANGE.
(a) TRANSFER AND EXCHANGE OF DEFINITIVE NOTES. When Definitive
Notes are presented by a Holder to the Registrar with a request:
(x) to register the transfer of the Definitive Notes; or
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(y) to exchange such Definitive Notes for an equal principal
amount of Definitive Notes of other authorized denominations of the
same Class,
the Registrar shall register the transfer or make the exchange as requested if
its requirements for such transactions are met; PROVIDED, HOWEVER, that the
Definitive Notes presented or surrendered for register of transfer or exchange:
(i) shall be duly endorsed or accompanied by a written
instruction of transfer in form satisfactory to the Registrar duly
executed by such Holder or by his attorney, duly authorized in writing;
and
(ii) except in the case of the Exchange Offer or
pursuant to Section 2.8(g)(iii)(y), in the case of a Definitive Note
that is a Transfer Restricted Note, such request shall be accompanied
by the following additional information and documents, as applicable:
(A) if such Transfer Restricted Note is being
delivered to the Registrar by a Holder for registration in the
name of such Holder, without transfer, a certification to that
effect from such Holder (in substantially the form of Exhibit
B hereto); or
(B) if such Transfer Restricted Note is being
transferred to (1) a "qualified institutional buyer" (as
defined in Rule 144A under the Securities Act) in accordance
with Rule 144A under the Securities Act or (2) pursuant to an
exemption from registration in accordance with (x) Rule 144 or
(y) Rule 904 under the Securities Act or pursuant to an
effective registration statement under the Securities Act, a
certification to that effect from such Holder (in
substantially the form of Exhibit B hereto) and, in case of
(2)(y), the transferee; or
(C) if such Transfer Restricted Note is being
transferred in reliance on another exemption from the
registration requirements of the Securities Act, a
certification to that effect from such Holder (in
substantially the form of Exhibit B hereto) and an Opinion of
Counsel from such Holder or the transferee reasonably
acceptable to Golden State Petroleum and to the Registrar to
the effect that such transfer is in compliance with the
Securities Act.
(b) TRANSFER OF A DEFINITIVE NOTE FOR A BENEFICIAL INTEREST IN
A GLOBAL NOTE. A Definitive Note may not be exchanged for a beneficial interest
in a Global Note of the same Class, except upon satisfaction of the requirements
set forth below. Upon receipt by the Indenture Trustee of a Definitive Note,
duly endorsed or accompanied by appropriate instruments of transfer, in form and
substance satisfactory to the Indenture Trustee, together with:
(i) except in the case of the Exchange Offer or
pursuant to Section 2.8(g)(iii)(y), if such Definitive Note is a
Transfer Restricted Note, a certification from the Holder thereof (in
substantially the form of Exhibit B hereto) to the effect that such
Definitive Note is being transferred by such Holder to a "qualified
institutional buyer"
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(as defined in Rule 144A under the Securities Act) in accordance with
Rule 144A under the Securities Act; and
(ii) whether or not such Definitive Note is a Transfer
Restricted Note, written instructions from the Holder thereof directing
the Indenture Trustee to make, or to direct the Note Custodian to make,
an endorsement on the Global Note to reflect an increase in the
aggregate principal amount of the Mortgage Notes represented by the
Global Note,
the Indenture Trustee shall cancel such Definitive Note and cause, or direct the
Note Custodian to cause, in accordance with the standing instructions and
procedures existing between the Depository and the Note Custodian, the aggregate
principal amount of Mortgage Notes represented by the Global Note to be
increased accordingly. If no Global Notes are then outstanding, Golden State
Petroleum shall issue and the Indenture Trustee shall authenticate a new Global
Note in the appropriate principal amount.
(c) TRANSFER AND EXCHANGE OF GLOBAL NOTES. The transfer and
exchange of each Class of Global Notes or beneficial interests therein shall be
effected through the Depository, in accordance with this Indenture (including
the restrictions on transfer set forth herein) and with the procedures of the
Depository therefor.
(d) TRANSFER OF A BENEFICIAL INTEREST IN A GLOBAL NOTE FOR A
DEFINITIVE NOTE. Any Person having a beneficial interest in a Global Note may
upon request exchange such beneficial interest for a Definitive Note of the same
Class. Upon receipt by the Indenture Trustee of written instructions or such
other form of instructions as is customary for the Depository, from the
Depository or its nominee on behalf of any Person having a beneficial interest
in a Global Note and upon receipt by the Indenture Trustee of a written order or
such other form of instructions as is customary for the Depository or the Person
designated by the Depository as having such a beneficial interest containing
registration instructions and, in the case of a Transfer Restricted Note only,
the following additional information and documents (all of which may be
submitted by facsimile);
(i) if such beneficial interest is being transferred to the
Person designated by the Depository as being the beneficial owner, a
certification to that effect from such Person (in substantially the
form of Exhibit B hereto); or
(ii) except in the case of the Exchange Offer or pursuant to
Section 2.8(g)(iii)(y), if such beneficial interest is being
transferred (1) to a "qualified institutional buyer" (as defined in
Rule 144A under the Securities Act) in accordance with Rule 144A under
the Securities Act, or (2) pursuant to an exemption from registration
in accordance with (x) Rule 144 or (y) Rule 904 under the Securities
Act or pursuant to an effective registration statement under the
Securities Act, a certification to that effect from the transferor (in
substantially the form of Exhibit B hereto) and in the case of (2)(y),
the transferee; or
(iii) if such beneficial interest is being transferred in
reliance on another exemption from the registration requirements of the
Securities Act, a certification to that
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effect from the transferor and the transferee (in substantially the
form of Exhibit B hereto) and an Opinion of Counsel from the transferee
or transferor reasonably acceptable to Golden State Petroleum and to
the Registrar to the effect that such transfer is in compliance with
the Securities Act,
the Indenture Trustee or the Note Custodian, at the direction of the Indenture
Trustee, shall cause, in accordance with the standing instructions and
procedures existing between the Depository and the Note Custodian, the aggregate
principal amount of the Class represented by Global Notes to be reduced
accordingly and, following such reduction, Golden State Petroleum shall execute
and the Indenture Trustee shall authenticate and deliver to the transferee a
Definitive Note in the appropriate principal amount.
(e) RESTRICTIONS ON TRANSFER AND EXCHANGE OF GLOBAL NOTES.
Notwithstanding any other provision of this Indenture (other than the provisions
set forth in subsection (f) of this Section 2.8), a Global Note may not be
transferred as a whole except by the Depository to a nominee of the Depository
or by a nominee of the Depository to the Depository or another nominee of the
Depository or by the Depository or any such nominee to a successor Depository or
a nominee of such successor Depository.
(f) AUTHENTICATION OF DEFINITIVE NOTES IN ABSENCE OF
DEPOSITORY. If at any time:
(i) the Depository for a Class of the Mortgage Notes
notifies Golden State Petroleum that the Depository is unwilling or
unable to continue as Depository for such Class of the Global Notes and
a successor Depository for such Global Notes is not appointed by Golden
State Petroleum within 90 days after delivery of such notice; or
(ii) Golden State Petroleum, at its sole discretion,
notifies the Indenture Trustee in writing that it elects to cause the
issuance of Definitive Notes for a Class of Mortgage Notes under this
Indenture,
then Golden State Petroleum shall execute, and the Indenture Trustee, upon
receipt of an Officers' Certificate requesting the authentication and delivery
of Definitive Notes for such Class, shall authenticate and deliver, Definitive
Notes for such Class in an aggregate principal amount equal to the principal
amount of the Global Notes for such Class, in exchange for such Global Notes for
such Class.
(g) LEGENDS.
(i) Except as permitted by paragraph (iii), each
Mortgage Note evidencing Global Notes and Definitive Notes (and all
Mortgage Notes issued in exchange therefor or substitution thereof)
shall bear a legend in substantially the following form:
"THE MORTGAGE NOTE (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY ISSUED
IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE UNITED STATES
SECURITIES ACT OF 1933 (THE "SECURITIES ACT"), AND THE MORTGAGE NOTE EVIDENCED
HEREBY MAY NOT BE OFFERED,
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SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN
APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THE MORTGAGE NOTE EVIDENCED
HEREBY IS HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION FROM
THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A
THEREUNDER. THE HOLDER OF THE MORTGAGE NOTE EVIDENCED HEREBY AGREES FOR THE
BENEFIT OF GOLDEN STATE PETROLEUM AND THE OWNERS THAT, UNTIL THE LATER OF
[DECEMBER 24, 1999/JANUARY 6, 2000]* OR THREE YEARS SINCE THE DATE THIS MORTGAGE
NOTE WAS LAST HELD BY AN AFFILIATE OF GOLDEN STATE PETROLEUM (OR, IN EACH CASE,
SUCH EARLIER DATE AS RESALES HEREOF ARE PERMITTED PURSUANT TO RULE 144(K) OR THE
SUCCESSOR RULE THERETO) (A) SUCH MORTGAGE NOTE MAY BE RESOLD, PLEDGED OR
OTHERWISE TRANSFERRED, ONLY (1) (a) TO A PERSON WHO THE SELLER REASONABLY
BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (b) IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (c)
OUTSIDE THE UNITED STATES TO A FOREIGN PERSON IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 904 UNDER THE SECURITIES ACT OR (d) IN ACCORDANCE WITH
ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND,
IN THE CASE OF CLAUSE (b), (c) OR (d), BASED ON AN OPINION OF COUNSEL AND/OR
CERTIFICATES TO THE EXTENT PROVIDED IN THE INDENTURE), (2) TO THE OWNERS, (3)
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE
WITH THE APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY
OTHER APPLICABLE JURISDICTION AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT
HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THE MORTGAGE NOTE
EVIDENCED HEREBY OR ANY MORTGAGE NOTE ISSUED IN EXCHANGE FOR OR IN SUBSTITUTION
HEREOF OF THE RESALE RESTRICTIONS SET FORTH IN (A) ABOVE."
(ii) Each Global Note shall also bear the legend
referred to in footnote 1 or 3 of Exhibit A.
(iii) Notwithstanding the foregoing, (x) upon
consummation of the Exchange Offer, Golden State Petroleum, as agent
for the Owners, shall issue and, upon receipt of an authentication
order in accordance with Section 2.3 hereof, the Indenture Trustee
shall authenticate Exchange Term Notes in exchange for Initial Term
Notes accepted for exchange in the Exchange Offer, which Exchange Term
Notes shall not bear the legends set forth in (i) above, (y) upon the
transfer of any Initial Term Note pursuant to an effective Shelf
Registration Statement and if the Holder thereof so requests, the
Indenture Trustee shall remove the legends set forth in (i) above from
such Initial Term Note or exchange such Initial Term Note for an
Exchange Term Note and (z) at any time
- - - - - --------
* December 24, 1999 shall be with respect to the Serial Notes and January
6, 2000 shall be with respect to the Term Notes.
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there is delivered to the Owners such satisfactory evidence, which may
include an Opinion of Counsel, as may reasonably be requested by the
Owners, confirming that neither such legend nor the restrictions on
transfer set forth therein are required to ensure that transfers of a
Mortgage Note will violate the registration and prospectus delivery
requirements of the Securities Act; provided that the Indenture Trustee
shall not be required to determine (but may rely on a determination
made by the Owners with respect to) the sufficiency of any such
evidence; and upon provision of such evidence, the Indenture Trustee
shall authenticate and deliver in exchange for such Mortgage Note, one
or more Mortgage Notes (representing the same aggregate principal
amount of the Mortgage Note being exchanged) without such legend, and
the Registrar shall rescind any restriction on the transfer of such
Term Notes, in each case unless the Holder of such Mortgage Notes is
either (A) a broker-dealer who purchased such Mortgage Notes directly
from Golden State Petroleum, as agent for the Owners, to resell
pursuant to Rule 144A or any other available exemption under the
Securities Act, (B) a Person participating in the distribution of the
Mortgage Notes or (C) a Person who is an affiliate (as defined in Rule
144A) of the Owners, the Charterer or Chevron.
(h) CANCELLATION AND/OR ADJUSTMENT OF GLOBAL NOTES. At such
time as all beneficial interests in Global Notes of a Class have either been
exchanged for Definitive Notes for such Class, redeemed, repurchased or
cancelled, all Global Notes of such Class shall be returned to or retained and
cancelled by the Indenture Trustee. At any time prior to such cancellation, if
any beneficial interest in a Global Note of such Class is exchanged for
Definitive Notes of such Class, redeemed, repurchased or cancelled, the
principal amount of Mortgage Notes represented by such Global Note shall be
reduced accordingly and an endorsement shall be made on such Global Note, by the
Indenture Trustee or the Note Custodian, at the direction of the Indenture
Trustee, to reflect such reduction.
(i) GENERAL PROVISIONS RELATING TO TRANSFERS AND EXCHANGES.
(i) To permit registrations of transfers and exchanges,
Golden State Petroleum shall execute and the Indenture Trustee shall
authenticate Definitive Notes and Global Notes at the Registrar's
request.
(ii) No service charge shall be made to a Holder for any
registration of transfer or exchange, but Golden State Petroleum may
require payment of a sum sufficient to cover any transfer tax or
similar governmental charge payable in connection therewith (other than
any such transfer taxes or similar governmental charge payable upon
exchange or transfer pursuant to Section 12.1).
(iii) The Registrar shall not be required:
(A) to register the transfer or exchange of any
Mortgage Note selected for redemption in whole or in part,
except the unredeemed portion of any Mortgage Note being
redeemed in part;
(B) to register the transfer of or to exchange
Mortgage Notes during a period beginning at the opening of 15
days before the day of the mailing of a
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notice of redemption of a Mortgage Note of such Class selected
for redemption under Section 12.2 and ending at the close of
business on the day of such mailing; or
(C) to register the transfer or exchange of a
Mortgage Note between a Record Date and the next succeeding
Payment Date.
(iv) All Definitive Notes and Global Notes issued upon
any registration of transfer or exchange of Definitive Notes or Global
Notes shall be the valid obligations of the Owners, evidencing the same
debt, and entitled to the same benefits under this Indenture, as the
Definitive Notes or Global Notes surrendered upon such registration of
transfer or exchange.
(v) Golden State Petroleum, as agent for the Owners,
shall not be required to issue Mortgage Notes during a period beginning
at the opening of 15 days before the day of the mailing of a notice of
redemption of a Mortgage Note of such Class selected for redemption
under Section 12.2 and ending at the close of business on the day of
such mailing.
SECTION 2.9 MUTILATED, DESTROYED, LOST AND STOLEN NOTES. If
any mutilated Mortgage Note is surrendered to the Indenture Trustee, Golden
State Petroleum shall execute, and the Indenture Trustee shall authenticate and
deliver in exchange therefor, a new Mortgage Note of like tenor, principal
amount, Class and Stated Maturity and bearing a number not contemporaneously
outstanding.
If there shall be delivered to Golden State Petroleum and the
Indenture Trustee (i) evidence to their satisfaction of the destruction, loss or
theft of any Mortgage Note and (ii) such security or indemnity as may be
required by them to hold each of them and any agent of either of them harmless,
then, in the absence of notice to Golden State Petroleum or the Indenture
Trustee that such Mortgage Note has been acquired by a bona fide purchaser,
Golden State Petroleum shall execute and upon its request the Indenture Trustee
shall authenticate and deliver, in lieu of any such destroyed, lost or stolen
Mortgage Note, a new security of like tenor, principal amount, Class and Stated
Maturity and bearing a number not contemporaneously outstanding. If after the
delivery of such new Mortgage Note, a bona fide purchaser of the original
Mortgage Note in lieu of which such new Mortgage Note was issued presents for
payment such original Mortgage Note, Golden State Petroleum and the Indenture
Trustee shall be entitled to recover such new Mortgage Note from the person to
whom it was delivered or any transferee thereof, except a bona fide purchaser,
and shall be entitled to recover upon the security or indemnity provided
therefor to the extent of any loss, damage, cost or expense incurred by Golden
State Petroleum or the Indenture Trustee in connection therewith.
In case any such mutilated, destroyed, lost or stolen Mortgage
Note has become or is about to become due and payable, Golden State Petroleum in
its discretion may, instead of issuing a new Mortgage Note, pay such Mortgage
Note.
Upon the issuance of any new Mortgage Note under this Section,
Golden State Petroleum may require the payment of a sum sufficient to cover any
tax or other governmental
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charge that may be imposed in relation thereto and any other expenses (including
the fees and expenses of the Indenture Trustee) connected therewith.
Except as provided above, every new Mortgage Note issued
pursuant to this Section in lieu of any destroyed, lost or stolen Mortgage Note
shall constitute an original additional contractual obligation of the Owners,
whether or not the destroyed, lost or stolen Mortgage Note shall be at any time
enforceable by anyone, and shall be entitled to all the benefits of this
Indenture equally and proportionately with any and all other Mortgage Notes duly
issued hereunder.
The provisions of this Section are exclusive and shall
preclude (to the extent lawful) all other rights and remedies with respect to
the replacement or payment of mutilated, destroyed, lost or stolen Mortgage
Notes.
SECTION 2.10 PAYMENT OF INTEREST; INTEREST RIGHTS PRESERVED.
(a) Interest (including default interest) on any Mortgage Note is payable on
each Payment Date to the Person in whose name that Mortgage Note is registered
at the close of business on the Record Date for such interest.
(b) Each Mortgage Note delivered under this Indenture upon
registration of transfer of or in exchange for or in lieu of any other Mortgage
Note shall carry the rights to interest (including default interest) accrued and
unpaid, and to accrue, which were carried by such other Mortgage Note.
(c) Any overdue installment of interest, sinking fund payment,
principal or other amount payable by the Owners hereunder shall accrue interest
at the Default Rate from the date such amount was due to but not including the
actual date of payment.
(d) If (i) the Exchange Offer is not consummated within 180
days of the Closing Date, (ii) a Shelf Registration Statement required under the
Registration Rights Agreement is not declared effective within the time period
specified therein, (iii) the Shelf Registration Statement or the Exchange Offer
Registration Statement is declared effective but thereafter ceases to be
effective during the periods specified in the Registration Rights Agreement, or
(iv) the Commission determines that nether the consummation of the Exchange
Offer nor continued effectiveness of the Shelf Registration Statement will
permit the free resale of the Exchange Term Notes or the Term Notes, as the case
may be, without additional registration under the Securities Act then a
"Registration Event" event will be deemed to have occurred. During any time that
a Registration Event has occurred and is continuing, until the Exchange Term
Notes or the Term Notes may be freely resold pursuant to Rule 144(k) by a person
who is not an affiliate of the issuer (within the meaning of Rule 144(k)),
special interest ("Special Interest") will accrue on such Term Notes which
constitute Restricted Securities at a rate of 0.25% of the principal amount
thereof per annum payable semiannually in arrears on each Payment Date. If, and
during this period that, Special Interest is accruing to Term Notes that
constitute Restricted Securities, any payments of interest to the holders
thereof shall include payments of all accrued and unpaid Special Interest.
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SECTION 2.11 PERSONS DEEMED OWNERS. Prior to due presentation
of a Mortgage Note for registration of transfer, Golden State Petroleum, the
Owners, the Indenture Trustee and any agent of Golden State Petroleum, the
Owners or the Indenture Trustee may treat the Person in whose name any Mortgage
Note is registered as the owner of such Mortgage Note for the purpose of
receiving payment of principal of and (subject to Section 2.10) interest
(including default interest) on such Mortgage Note and for all other purposes
whatsoever, whether or not such Mortgage Note be overdue, and neither Golden
State Petroleum, the Owners, the Indenture Trustee nor any agent of Golden State
Petroleum, the Owners or the Indenture Trustee shall be affected by notice to
the contrary.
SECTION 2.12 CANCELLATION. All Mortgage Notes surrendered for
payment, registration of transfer or exchange shall, if surrendered to any
Person other than the Indenture Trustee, be delivered to the Indenture Trustee
and shall be promptly cancelled by it. Golden State Petroleum may at any time
deliver to the Indenture Trustee for cancellation any Mortgage Notes previously
authenticated and delivered hereunder which Golden State Petroleum may have
acquired in any manner whatsoever, and all Mortgage Notes so delivered shall be
promptly cancelled by the Indenture Trustee. No Mortgage Notes shall be
authenticated in lieu of or in exchange for any Mortgage Notes cancelled as
provided in this Section, except as expressly permitted by this Indenture. All
cancelled Mortgage Notes held by the Indenture Trustee shall be disposed of as
directed by a Company Order. Golden State Petroleum shall, within 120 days of a
request therefor by the Indenture Trustee, deliver a Company Order directing the
destruction of cancelled Mortgage Notes. If Golden State Petroleum fails to
respond to such a request within such 120-day period, the Indenture Trustee may
destroy any or all cancelled Mortgage Notes, in which case the Indenture Trustee
shall deliver a certificate as to such destruction to Golden State Petroleum.
SECTION 2.13 COMPUTATION OF INTEREST. Interest on the Mortgage
Notes shall be computed on the basis of a 360-day year of twelve 30-day months.
SECTION 2.14 MANNER OF PAYMENTS IN RESPECT OF MORTGAGE NOTES.
Payment of principal of the Mortgage Notes will be made at the office or agency
maintained by Golden State Petroleum pursuant to Section 2.5 by delivery of a
check on the Payment Date against surrender of such Mortgage Notes, and, at the
option of Golden State Petroleum, any interest (including default interest) on
any Mortgage Note will be paid at the office or agency maintained by Golden
State Petroleum pursuant to Section 2.5 by mailing a check to the Holder
entitled thereto at the address of such Holder appearing on the Note Register;
provided, that notwithstanding the foregoing, all payments in respect of Global
Notes shall be made by wire transfer of immediately available funds to the
accounts specified by the Holders thereof.
SECTION 2.15 CUSIP AND CINS NUMBERS. Golden State Petroleum,
as agent for the Owners, in issuing the Mortgage Notes, may use a "CUSIP" or
"CINS" number for the Initial Notes, the Exchange Notes and each Class of
Mortgage Notes and, if so, the Indenture Trustee shall use the relevant CUSIP or
CINS number in any notices to Holders as a convenience to such Holders; PROVIDED
that any such notice may state that no representation is made as to the
correctness or accuracy of the CUSIP or CINS numbers printed in the notice or on
the Mortgage Notes and that reliance may be placed only on the other
identification
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numbers printed on the Mortgage Notes. Golden State Petroleum shall promptly
notify the Indenture Trustee of any change in any CUSIP or CINS number used.
ARTICLE THREE
THE TRUST ACCOUNTS; DISTRIBUTIONS
SECTION 3.1 THE TRUST ACCOUNTS. (a) There is hereby
established and, at all times hereafter until the trusts created by this
Indenture shall have terminated, there shall be maintained with the Indenture
Trustee at the Corporate Trust Office, a trust account (the "Revenue Account")
in the name and under the control of the Indenture Trustee for the benefit of
the Noteholders into which there shall be deposited for each Vessel (i) any and
all Charterhire payments under the Charters and any charterhire received
pursuant to an Acceptable Replacement Charter, (ii) any and all charterhire
payments received by an Owner under any other charters of the Vessels, (iii) any
and all income from the investment of amounts held in the Revenue Account and
the Debt Service Reserve Fund and (iv) any amounts transferred to the Revenue
Account from the Pre-Funding Account pursuant to Section 3.5. Notwithstanding
anything to the contrary contained herein, any such amounts shall be held for
the benefit of the Holders of the Term Notes. Funds on deposit in the Revenue
Account shall be disbursed by the Indenture Trustee on each Payment Date in
accordance with Section 3.3.
(b) There is hereby established and, at all times hereafter
until the trusts created by this Indenture shall have terminated, there shall be
maintained with the Indenture Trustee at the Corporate Trust Office, a trust
account (the "Termination Account") in the name and under the control of the
Indenture Trustee for the benefit of the Noteholders into which there shall be
deposited for each Vessel, if such Vessel is a Total Loss, the Total Loss
Payment. Any Total Loss Payment deposited into the Termination Account shall be
disbursed by the Indenture Trustee in accordance with Section 12.1(c). Any funds
remaining in the Termination Account after application in accordance with
Section 12.1(c) and after providing for the expenses of the Indenture Trustee as
a result of the mandatory redemption of Mortgage Notes in accordance with
Section 12.1(c) shall be transferred to the Owner of the Vessel that is a Total
Loss.
(c) There is hereby established and, at all times hereafter
until the trusts created by this Indenture shall have terminated, there shall be
maintained with the Indenture Trustee at the Corporate Trust Office, a trust
account (the "Operating Account") in the name and under the control of the
Indenture Trustee for the benefit of the Noteholders into which the Indenture
Trustee shall deposit the amounts described in Section 3.3(e) on each Payment
Date following the Delivery Date for each Vessel. Funds deposited into the
Operating Account will be disbursed by the Indenture Trustee from time to time,
to pay Recurring Fees for each Vessel as such amounts become due and payable
upon presentation of invoices therefor pursuant to the Management Agreement.
(d) There is hereby established and, at all times hereafter
until the trusts created by this Indenture shall have terminated, there shall be
maintained with the Indenture Trustee at the Corporate Trust Office, a trust
account (the "Casualty Account) in the name and under the control of the
Indenture Trustee for the benefit of the Noteholders into which there shall be
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deposited, pursuant to the provisions of the related Security Documents,
insurance proceeds and all payments in connection with the occurrence of a Total
Loss to either Vessel. Funds deposited into the Casualty Account in respect of a
Total Loss of a Vessel will be disbursed by the Indenture Trustee in the
following order of priority: first, an amount equal to the related Total Loss
Payment will be deposited into the Termination Account and second, the
remainder, if any, will be remitted to the Charterer.
(e) There is hereby established and, at all times hereafter
until the trusts created by this Indenture shall have terminated, there shall be
maintained with the Indenture Trustee at the Corporate Trust Office, a trust
account (the "Collateral Account") in the name and under the control of the
Indenture Trustee for the benefit of the Noteholders into which there shall be
deposited from time to time (i) the Default Payment, (ii) the cash proceeds of
any sale of, or other realization upon, all or any part of the Collateral upon
the exercise by the Indenture Trustee of any of the rights and remedies
described in Article Seven and (iii) any other amount received by the Indenture
Trustee pursuant to any of the Security Documents for which this Indenture does
not specify another Trust Account into which such amount is to be deposited.
While an Indenture Event of Default is in effect, all moneys which are required
by any Security Document to be delivered to the Indenture Trustee or which are
received by the Indenture Trustee or any agent or nominee of the Indenture
Trustee in respect of the Collateral, whether in connection with the exercise of
the remedies provided in any Security Document or otherwise, shall be deposited
in the Collateral Account and held by the Indenture Trustee as part of the Trust
Estate and applied in accordance with the terms of this Indenture.
(f) There is hereby established and, at all times hereafter
until the trusts created by this Indenture shall have terminated, there shall be
maintained with the Indenture Trustee at the Corporate Trust Office, a trust
account (the "Debt Service Reserve Fund") in the name and under the control of
the Indenture Trustee for the benefit of Noteholders into which there shall be
deposited (i) by Golden State Petro I-A on the Vessel A Delivery Date, an amount
equal to any liquidated damages paid by the Builder to Golden State Petro I-A
pursuant to the Golden State Petro I-A Building Contract, (ii) by Golden State
Petro I-B on the Vessel B Delivery Date, an amount equal to any liquidated
damages paid by the Builder to Golden State Petro I-B pursuant to the Golden
State Petro I-B Building Contract and (iii) by the Indenture Trustee, from time
to time on a Payment Date, the amount described in Section 3.3(h) and (j)
hereof. Funds on deposit in the Debt Service Reserve Fund shall be disbursed by
the Indenture Trustee on each Payment Date to the extent required, to make the
payments set forth in Section 3.3.
(g) Any income received by the Indenture Trustee with respect
to the balance from time to time standing to the credit of any Trust Account,
including any interest or capital gains on Permitted Investments, shall be
deposited, in the Revenue Account. All cash amounts on deposit from time to time
in the Trust Accounts, together with any Permitted Investments from time to time
made with amounts on deposit therein as provided herein, shall constitute part
of the Collateral. The deposit or holding of such amounts in any Trust Account
shall not constitute payment of the Mortgage Notes until applied to the payment
of the Mortgage Notes as provided herein. The parties to this Indenture agree
that all income from Permitted Investments shall be income of the Owners, to be
held in the sole and exclusive control of the Indenture Trustee pursuant to this
Indenture.
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SECTION 3.2 INVESTMENT OF FUNDS DEPOSITED IN TRUST ACCOUNTS.
Amounts on deposit in the Trust Accounts shall be invested and re-invested from
time to time in such Permitted Investments as the Owners shall direct by written
instruction to the Indenture Trustee, which Permitted Investments shall be held
in the name and be under the control of the Indenture Trustee or a co-trustee or
separate trustee permitted under Section 8.14. If the amounts on deposit in any
of the Trust Accounts are invested in a Permitted Investment described in
paragraph (d) of the definition thereof and the rating thereof falls below the
rating that is indicated in such paragraph, the Owners may direct the Indenture
Trustee to re-invest such amounts in another Permitted Investment and if the
Majority Noteholders so direct the Indenture Trustee in writing, the Owners
shall re-invest such amounts in another Permitted Investment. Each Permitted
Investment in which the Trust Funds are invested must mature on or before the
next succeeding Payment Date. In order to provide the Indenture Trustee, for the
benefit of the Holders, with a perfected security interest in any Permitted
Investment, each Permitted Investment shall be either:
(A) evidenced by negotiable certificates or instruments, or if
nonnegotiable then issued in the name of the Indenture Trustee, which (together
with any appropriate instruments of transfer) are delivered to, and held by, the
Indenture Trustee or any agent thereof in the State of New York; or
(B) in book-entry form and issued by the United States or any
agency thereof and backed by the full faith and credit of the United States, and
subject to pledge under applicable state law and Treasury regulations and as to
which appropriate measures shall have been taken for perfection of the security
interests.
In the absence of negligence or willful misconduct, the Indenture Trustee shall
not be responsible for any loss resulting from any such Permitted Investment.
SECTION 3.3 PAYMENT DATES. On each Payment Date, the Indenture
Trustee shall make the payments from amounts on deposit first in the Revenue
Account and with respect to the payments described in clauses (a) through (e)
and (g) below, then from the Debt Service Reserve Fund, in each case to the
extent of funds available therein, in the priority set forth below:
(a) if the Delivery Date for a Vessel has occurred, to pay
Recurring Fees for such Vessel that the Manager certifies to the
Indenture Trustee are then due and payable up to an amount equal to
$50,000;
(b) (i) to pay all interest (including default interest) then
due and payable on the Serial Notes to the holders of the Serial Notes,
ratably in the proportion that the amount of such payment then due
under each Serial Note bears to the aggregate amount of the payments
then due under all Serial Notes; (ii) to pay all interest (including
default interest) then due and payable on each Series of Additional
Notes to the holders of such Series of Additional Notes, ratably in the
proportion that the amount of such payment then due under such Series
of Additional Notes bears to the aggregate amount of the payments then
due under such Series of Additional Notes and (iii) to pay all interest
(including default interest) then due and payable on the Term Notes to
the holders of the
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Term Notes, ratably in the proportion that the amount of such payment
then due under each Term Note bears to the aggregate amount of the
payments then due under all such Term Notes;
(c) (i) if such Payment Date is a maturity date of a Class of
Serial Notes, to the holders of such Class of Serial Notes, on a PRO
RATA basis in proportion to the principal balance of each Serial Note
then outstanding within such Class, an amount equal to the aggregate
principal balance of such Class and (ii) to pay the aggregate sinking
fund redemption amount or amounts of principal then due and payable on
each Series of Additional Notes (as indicated on the Schedule of
Sinking Fund Payments attached to the related Supplemental Indenture as
such Schedule may be adjusted pursuant to the terms and subject to the
conditions of this Indenture) to the holders of such Series of
Additional Notes, ratably in the proportion that the amount of such
principal then due under each Additional Note of such Series bears to
the aggregate amount of such principal then due under such Series of
the Additional Notes;
(d) commencing on the First Term Note Sinking Fund Payment
Date, to pay the aggregate sinking fund redemption amount or amounts of
principal then due and payable on the Term Notes (as indicated on
Schedule 1 attached hereto and made a part hereof as such Schedule may
be adjusted pursuant to the terms and subject to the conditions of the
Indenture) to the holders of the Term Notes, ratably in the proportion
that the amount of such principal then due under each Term Note bears
to the aggregate amount of such principal then due under all the Term
Notes;
(e) to pay Recurring Fees for each Vessel that are then due
and payable, to the extent not paid pursuant to (a) above;
(f) if the Delivery Date for a Vessel has occurred, to deposit
into the Operating Account the estimated Recurring Fees certified by
the Manager to the Indenture Trustee to become due and payable for such
Vessel prior to the next succeeding Payment Date;
(g) to pay to the Indenture Trustee, the Trustee Fees;
(h) to deposit into the Debt Service Reserve Fund, an amount
equal to the positive difference, if any, between (i) the Debt Service
Reserve Requirement and (ii) the amount then on deposit in the Debt
Service Reserve Fund (after giving effect to the distributions
described in (a) through (g) hereof);
(i) if the Delivery Date for a Vessel has occurred, to pay to
the Manager, the positive difference, if any, between (i) the
Management Fee then due and payable for such Vessel and (ii) the
aggregate amount paid pursuant to clauses (a), (e) and (f); and
(j) to deposit the excess, if any, into the Debt Service
Reserve Fund.
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Any amounts payable to the Holders of the Term Notes pursuant to clause
(b) above shall include any amounts received pursuant to the Chevron
Registration Rights Agreement, ratably to each Holder of Term Notes.
After the foregoing payments have been made, the Indenture Trustee will
invest (and reinvest, as applicable) any balance remaining in each of the Trust
Accounts in Permitted Investments that will mature on or before the next
succeeding Payment Date.
SECTION 3.4 APPLICATION OF MONEYS IN THE TRUST ACCOUNT. Upon
the occurrence of an Indenture Event of Default and to the extent amounts are
distributable pursuant to the terms of this Indenture, any moneys held by the
Indenture Trustee in the Trust Accounts shall, to the extent available for
distribution (it being understood that the Indenture Trustee may liquidate
Permitted Investments prior to maturity in order to make a distribution pursuant
to this Section 3.4), be distributed by the Indenture Trustee on each
Distribution Date, to the extent of available funds, in the following order of
priority:
FIRST: to the Indenture Trustee, an amount equal to any due
and unpaid trustee fees and all reasonable expenses and charges
incurred by or on behalf of the Indenture Trustee in connection with
the ascertainment or protection of its rights and the pursuance of its
remedies under this Indenture or under any of the Security Documents
(including, without limitation, the reasonable fees and disbursements
of counsel);
SECOND: to the Holders of the Serial Notes and Additional
Notes, on a pro rata basis, an amount equal to the due and unpaid
interest (including default interest) on the Serial Notes and
Additional Notes then outstanding;
THIRD: to the Holders of the Term Notes, on a pro rata basis,
an amount equal to the due and unpaid interest (including default
interest) on the Term Notes then outstanding;
FOURTH: to the Holders of each Class of Serial Notes and the
Additional Notes, on a PRO RATA basis, an amount equal to the due and
unpaid principal of the Serial Notes and the Additional Notes then
outstanding;
FIFTH: to the Holders of the Term Notes, on a pro rata basis,
an amount equal to the due and unpaid principal on the Term Notes then
outstanding; and
SIXTH: to the Owners or their respective successors or assigns
or to whomsoever may be lawfully entitled to receive the same or as a
court of competent jurisdiction may direct, the excess.
SECTION 3.5 PRE-FUNDING ACCOUNT.
(a) There is hereby established with the Indenture Trustee a
trust account (the "Pre-Funding Account") in the name and under the control of
the Indenture Trustee for the benefit of the Noteholders, into which there shall
be deposited (i) on the Closing Date by Golden State Petro I-A and Golden State
Petro I-B, the net proceeds of the Notes issued on the Closing
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Date, (ii) on January 6, 1997 by Golden State Petro I-A an amount equal to
$26,730,000, (iii) on January 6, 1997 by Golden State Petro I-B an amount equal
to $26,730,000, (iv) any investment income from Permitted Investments of amounts
held therein from time to time and (v) any proceeds payable pursuant to either
Building Contract or Building Contract Guarantee. The Indenture Trustee may
withdraw an amount equal to the expenses payable by the Owners with respect to
the Exchange Offer upon the presentation of invoices therefor or a payment
direction letter executed by the Owners; provided that the aggregate amount of
such expenses shall not exceed $240,000. To the extent such expenses are less
than $240,000, the Indenture Trustee shall withdraw the excess from the
Pre-Funding Account and shall remit such amount to the Owners' designee,
Cambridge Petroleum Transport Corporation.
(b) (i) On each Payment Date prior to the Delivery Date for
each Vessel, the Indenture Trustee shall withdraw from the Pre-Funding Account
an amount equal to the interest accrued on the Allocated Principal Amount of the
Notes for such Vessel and shall deposit such amount in the Revenue Account. (ii)
On each Payment Date on which Special Interest is payable on a Term Note which
constitutes a Restricted Security, the Indenture Trustee should withdraw from
the Pre-Funding Account an amount equal to the aggregate Special Interest
payable on all Term Notes which constitute Restricted Securities and shall
deposit such amount in the Revenue Account. (iii) On the later to occur of the
Delivery Date of the last Vessel or the date on which the last Vessel is
rejected by the related Owner, all amounts then or deposit in the Pre-Funding
Account (after giving effect to the other withdrawals set forth in this Section
3.5) will be withdrawn by the Indenture Trustee and deposited into the Debt
Service Reserve Fund.
(c) On or before three Business Days prior to each Vessel A
Installment Date, Golden State Petro I-A shall give the Indenture Trustee
written notice of such Vessel A Installment Date. On each Vessel A Installment
Date the Indenture Trustee shall, provided that no material default under the
Golden State Petro I-A Building Contract exists, withdraw from the Pre-Funding
Account an amount equal to the installment of the purchase price due on such
date as indicated in the Golden State Petro I-A Building Contract and shall
remit such amount to the Builder, or to the Builder's order, as an installment
payment of the purchase price of the Vessel A.
(d) On or before three Business Days prior to each Vessel B
Installment Date, Golden State Petro I-B shall give the Indenture Trustee
written notice of such Vessel B Installment Date. On each Vessel B Installment
Date, the Indenture Trustee shall, provided that no material default under the
Golden State Petro I-B Building Contract exists, withdraw from the Pre-Funding
Account an amount equal to the installment of the purchase price due on such
date as indicated in the Golden State Petro I-B Building Contract and shall
remit such amount to the Builder, or to the Builder's order, as an installment
payment of the purchase price of the Vessel B.
(e) On the Vessel A Delivery Date, the Indenture Trustee
shall, provided that the conditions precedent set forth in Section 3.5(g) shall
have been satisfied, withdraw from the Pre-Funding Account (i) an amount equal
to the final installment of the Purchase Price for Vessel A and shall remit such
amount to the Builder, or to the Builder's order, as the final purchase price of
Vessel A and (ii) an amount equal to the fees and expenses incurred in
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connection with the recordation and filing of the related Security Documents in
the Registration Jurisdiction and shall remit it to the Manager.
(f) On the Vessel B Delivery Date, the Indenture Trustee
shall, provided that the conditions precedent set forth in Section 3.5(g) shall
have been satisfied, withdraw from the Pre-Funding Account (i) an amount equal
to the final installment of the Purchase Price for Vessel B and shall remit such
amount to the Builder, or to the Builder's order, as the final purchase price of
Vessel B and (ii) an amount equal to the fees and expenses incurred in
connection with the recordation and filing of the related Security Documents in
the Registration Jurisdiction and shall remit it to the Manager.
(g) The remittances described in Sections 3.5(e) and (f) shall
be subject to the Indenture Trustee's receipt of the following items on or prior
to the Delivery Date for such Vessel:
(i) executed originals of the Security Documents (in the forms
attached hereto as Exhibits D through M) relating to such Vessel to the
extent not previously delivered to the Indenture Trustee;
(ii) evidence (including an Opinion of Counsel) that the
Vessel has been registered in the name of Golden State Petro I-A or
Golden State Petro I-B, as the case may be, under the laws of the
Registration Jurisdiction;
(iii) evidence (including an Opinion of Counsel) that the
related Mortgage has been properly recorded under the laws of the
Registration Jurisdiction and constitutes a first preferred mortgage
subject only to Permitted Liens;
(iv) executed originals of the related Charter, Chevron
Guarantee, Acknowledgement of the Assignment of Charter and the
Acknowledgement of the Assignment to Chevron Guarantee to the extent
not previously delivered to the Indenture Trustee, together with
evidence that the Charterer has accepted such Vessel under the related
Charter;
(v) evidence that such Vessel is classed in the highest
category for ships of the same type as the Vessel with The American
Bureau of Shipping free of recommendations and notations affecting
class;
(vi) evidence that all necessary governmental or regulatory
approvals, licenses and authorities which are necessary to the
operation of the Vessel have been obtained;
(vii) evidence that the Builder has no claims of any nature in
respect of the Vessel and that there are no disputes relating to the
Building Contract; and
(viii) such other items as the Indenture Trustee may
reasonably require.
(h) If the Indenture Trustee shall not have received the items
described in Section 3.5(g) on or before August 1, 2000, for Vessel A, or on or
before January 1, 2001, for
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Vessel B then (unless in either case such date has been extended by the related
Owner pursuant to the terms of the related Building Contract and the Owners have
provided the Indenture Trustee with evidence that such extension would not
downgrade the then current rating of the Notes, in which case on or before such
extended Delivery Date) the Indenture Trustee (i) shall withdraw from the
Pre-Funding Account an amount equal to the sum of (A) the Allocated Principal
Amount of the Mortgage Notes for the such Vessel and (B) all interest accrued
and unpaid to the date fixed for redemption of the Mortgage Notes and (ii) shall
redeem the Allocated Principal Amount of the Mortgage Notes for such Vessel in
an amount equal to (i) above in the following order of priority: first, with
respect to Serial Notes comprising such Notes, and second, the Term Notes
comprising such Notes at a redemption price of 100% of the principal amount
thereof plus accrued and interest through the date of redemption. The redemption
date for any redemption pursuant to this Section 3.5(h) shall be on August 1,
2000 for Vessel A and January 1, 2001 for Vessel B.
SECTION 3.6 INDENTURE TRUSTEE'S CALCULATIONS. All
distributions made by the Indenture Trustee pursuant to this Article Three shall
(subject to any decree of any court of competent jurisdiction) be final, and the
Indenture Trustee shall have no duty to inquire as to the application of any
amounts so distributed. However, if at any time the Indenture Trustee determines
that an allocation or distribution previously made pursuant to this Article
Three was based on a mistake of fact, the Indenture Trustee may in its
discretion, but shall not be obligated to, adjust subsequent allocations and
distributions thereunder upon written confirmation from the Owners of the amount
of such allocations and distributions so that, on a cumulative basis, the
Holders receive the distributions to which they would have been entitled if such
mistake of fact had not been made.
SECTION 3.7 DISTRIBUTION TO OWNERS. Except as specifically set
forth in Sections 3.1 and 3.4 so long as the Mortgage Notes remain Outstanding,
the Indenture Trustee shall not distribute any amounts held in the Trust
Accounts to the Owners.
ARTICLE FOUR
SECURITY
SECTION 4.1 GRANT OF SECURITY INTEREST. (a) To secure the
payment of the principal of, premium, if any, and interest on the Mortgage
Notes, the payment of any other amounts due under this Indenture or any other
Security Document and the performance of all covenants, terms and conditions
under this Indenture and the other Security Documents, each Owner does hereby
grant, bargain, sell, assign, transfer, convey, mortgage, pledge and grant a
security interest in and confirm to the Indenture Trustee, its successors and
assigns, in trust for the Noteholders, a first priority security interest in and
first Lien on all estate, right, title and interest of such Owner in, to and
under the following described property, rights and privileges (the "Trust
Estate"), whether now owned or existing or hereafter acquired or arising and
regardless of where located, which collectively, including all property
specifically subjected to the Lien of this Indenture by the terms hereof, by any
supplement or amendment hereto, are included within the Trust Estate, subject to
the other terms and conditions of this Indenture:
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(i) Each Vessel, in accordance with the terms and conditions
of the related Mortgage;
(ii) Each Charter, in accordance with the terms and conditions
of the related Assignment of Charter;
(iii) Each Charter Supplement, in accordance with the terms
and conditions of the related Assignment of Charter Supplement;
(iv) Each Chevron Guarantee, in accordance with the terms and
conditions of the related Assignment of Chevron Guarantee;
(v) Each Management Agreement, in accordance with the terms of
the related Assignment of Management Agreement;
(vi) Each Building Contract and Technical Supervision
Agreement, in accordance with the terms of the related Assignment of
Building Contract;
(vii) Each Building Contract Guarantee, in accordance with the
terms and conditions of the related Assignment of Building Contract
Guarantee;
(viii) Each Assignment of Earnings and Insurances;
(ix) Each Issue of One Debenture;
(x) The Pledged Stock, in accordance with the Stock Pledge;
(xi) Any additional security agreement, assignment or mortgage
document entered into by such Owner from time to time in connection
herewith;
(xii) All rights of such Owner to receive payments of any
kind, to execute any election or option or to give or receive any
notice, consent, waiver or approval under or in respect of any of the
foregoing documents and instruments;
(xiii) All the charterhire, tolls, rents, issues, profits,
products, revenues and other income (including insurance, warranty and
sales proceeds) of the property subjected or required to be subjected
to the Lien of this Indenture, and all of the estate, right, title and
interest of such Owner in and to the same and every part of said
property;
(xiv) All moneys and securities, including the Trust Accounts
and any Permitted Investments, now or hereafter paid or deposited or
required to be paid or deposited to or with the Indenture Trustee by or
for the account of such Owner or otherwise pursuant to any term of any
Security Document, and held or required to be held by the Indenture
Trustee hereunder;
(xv) All requisition proceeds with respect to either Vessel or
any part thereof (to the extent of the Indenture Trustee's interest
therein, as mortgagee of such Vessel,
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pursuant to the terms of the Mortgage) and all insurance proceeds with
respect to either Vessel or any part thereof (to the extent of the
Indenture Trustee's interest therein, as mortgagee of such Vessel,
pursuant to the terms of the Mortgage);
(xvi) Any charter assigned to the Indenture Trustee pursuant
to the Assignment of Earnings and Insurances; and
(xvii) All income, payments and proceeds of the foregoing.
(b) It is expressly agreed that anything contained in this
Indenture to the contrary notwithstanding, each Owner shall remain liable under
the Security Documents to which such Owner is a party to perform all of the
obligations assumed by it under any of those documents, all in accordance with
and pursuant to the terms and provisions of those documents, and the Indenture
Trustee and the Noteholders shall have no obligation or liability under the
Security Documents by reason of or arising out of the assignment under this
Indenture, nor shall the Indenture Trustee or the Noteholders be required or
obligated in any manner to perform or fulfill any obligations of the Owners
under or pursuant to the Security Documents or, except as expressly provided in
this Indenture, to make any payment, or to make any inquiry as to the nature or
sufficiency of any payment received by it, or present or file any claim, or take
any action to collect or enforce the payment of any amounts which may have been
assigned to it or to which it may be entitled at any time or times.
SECTION 4.2 RECORDING, ETC. (a) The Owners will cause the
applicable Security Documents, including the Mortgages and any financing
statements, all amendments or supplements to each of the foregoing and any other
similar security documents as necessary, to be registered, recorded and filed or
re-recorded, re-filed and renewed in such manner and in such place or places, if
any, as may be required by law or reasonably requested by the Indenture Trustee
and shall take all further action that may be necessary and desirable in order
fully to preserve, protect and perfect the Lien of the Indenture Trustee
securing the Mortgage Notes (for the ratable benefit of the Noteholders) and to
effectuate and preserve the security of the Noteholders and all rights of the
Indenture Trustee.
(b) Golden State Petroleum, as agent for the Owners, shall
furnish the Indenture Trustee:
(i) promptly after the execution and delivery of this
Indenture, and promptly after the execution and delivery of any other
instrument of further assurance or amendment, an Opinion of Counsel
either (i) stating that, in the opinion of such counsel, and as of the
date of such opinion, this Indenture and the applicable Security
Documents and all other instruments of further assurance or amendment
have been properly recorded, registered and filed, as appropriate, to
the extent necessary to make effective the Lien intended to be created
by such Security Documents and reciting the details of such action or
referring to prior Opinions of Counsel in which such details are given,
and stating that as to such Security Documents and such other
instruments such recording, registering and filing are the only
recordings, registerings and filings necessary to give notice thereof
and that no re-recordings, re-registerings or re-filings are necessary
to maintain such notice, and further stating that all financing
statements and continuation
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statements have been executed and filed that are necessary fully to
preserve and protect the rights of the Noteholders, the Indenture
Trustee hereunder and under the Security Documents or (ii) stating
that, in the opinion of such counsel, no such action is necessary to
make any other Lien created under any of the Security Documents
effective as intended by such Security Documents.
(ii) within 30 days after January 1 in each year beginning
with the year 1998, an Opinion of Counsel, dated as of such date,
either (i) stating that, in the opinion of such counsel, such action
has been taken with respect to the recording, registering, filing,
re-recording, re-registering and re-filing of this Indenture and all
supplemental indentures, financing statements, continuation statements
or other instruments of further assurance as is necessary to maintain
the Lien of this Indenture and the Security Documents and reciting the
details of such action or referring to prior Opinions of Counsel in
which such details are given, and stating that all financing statements
and continuation statements have been executed and filed that are
necessary fully to preserve and protect the rights of the Noteholders,
the Indenture Trustee hereunder and under the Security Documents or
(ii) stating that, in the opinion of such counsel, no such action is
necessary to maintain such Lien.
SECTION 4.3 PROTECTION OF THE TRUST ESTATE. The Indenture
Trustee shall have the power to enforce the obligations of the Owners under this
Indenture and under the Security Documents, to the extent permitted hereunder
and thereunder, to institute and maintain such suits and proceedings as it may
deem expedient to prevent any impairment of the Collateral under any of the
Security Documents and in the profits, rents, revenues and other income arising
therefrom, including the power to institute and maintain suits or proceedings to
restrain the enforcement of or compliance with any legislative or other
governmental enactment, rule or order that may be unconstitutional or otherwise
invalid if the enforcement of, or compliance with, such enactment, rule or order
would impair any Collateral or be prejudicial to the interests of the
Noteholders or the Indenture Trustee.
SECTION 4.4 RELEASE OF LIEN. (a) Subject to the provisions of
Section 6.14 and 7.2 and so long as no Indenture Event of Default is in effect,
Collateral may be released from the Lien and security created by this Indenture
and the Security Documents, as the case may be, at any time or from time to time
in accordance with the provisions of the Indenture, the Security Documents and
the Trust Indenture Act. In the case of Collateral consisting of cash or
Permitted Investments in the Trust Accounts, such Collateral shall be released
as provided herein without the need for any Officer's Certificate, Opinion of
Counsel, release, waiver or other action.
(b) Upon the request of Golden State Petroleum and pursuant to
an Officer's Certificate and an Opinion of Counsel certifying that all
conditions precedent hereunder have been met (to be provided at the sole cost
and expense of Golden State Petroleum) and upon the satisfaction of such
conditions precedent hereunder, the Indenture Trustee shall release (i) any
portion of the Collateral as to the release of which the consent of Noteholders
has been obtained, and (ii) all Collateral (except as provided in Article Eleven
hereof) upon discharge or defeasance of this Indenture in accordance with
Article Eleven hereof.
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(c) Upon receipt of such Officer's Certificate and Opinion of
Counsel, the Indenture Trustee must execute, deliver or acknowledge any
necessary or proper instruments of termination, satisfaction or release to
evidence the release of any Collateral permitted to be released pursuant to this
Indenture or the Indenture and the Security Documents, as the case may be.
Whenever Collateral is to be released pursuant to this Section 4.4, the
Indenture Trustee will execute any document or termination statement reasonably
necessary to release the Lien of this Indenture or this Indenture and the
Security Documents, as the case may be.
(d) The release of any Collateral from the terms of this
Indenture or this Indenture and the Security Documents, as the case may be, will
not be deemed to impair the security under this Indenture in contravention of
the provisions hereof if and to the extent the Collateral is released pursuant
to the terms hereof and of the Security Documents. To the extent applicable,
Golden State Petroleum and any other obligor shall cause Section 314(d) of the
Trust Indenture Act relating to the release of property from the Lien arising
out of the Security Documents to be complied with. Any certificate or opinion
required by Section 314(d) of the Trust Indenture Act may be made by any
Responsible Officer of Golden State Petroleum, PROVIDED that to the extent
required by Section 314(d) of the Trust Indenture Act, any such certificate or
opinion shall be made by an independent engineer, appraiser or other expert (as
such terms are set forth in Section 314(d) of the Trust Indenture Act), who is
not an Affiliate of Golden State Petroleum or any other obligor.
(e) Notwithstanding the other provisions of this Section 4.4,
if no Charter Event of Default has occurred and is continuing, upon the
Indenture Trustee's receipt of the Total Loss Payment for a Vessel, together
with all other amounts owing under the Indenture in respect of such Vessel, the
Indenture Trustee shall (i) release such Vessel and the related Collateral from
the Lien of this Indenture and (ii) release the related Owner from any and all
of its obligations hereunder, under the Mortgage Notes and the related Security
Documents.
SECTION 4.5 LIMITATION ON INDENTURE TRUSTEE'S DUTY IN RESPECT
OF COLLATERAL. Beyond its duties as to the custody thereof expressly provided
herein or in any Security Document and to account to the Noteholders and the
Owners for moneys and other property received by it under any Security Document,
the Indenture Trustee shall not have any duty to the Owners or the Noteholders
as to any Collateral in its possession or control or in the possession or
control of any of its agents or nominees, or any income thereon or as to the
preservation of rights against prior parties or any other rights pertaining
thereto. The Indenture Trustee shall be deemed to have exercised reasonable care
in the custody of the Collateral in its possession if the Collateral is accorded
treatment substantially equal to that which it accords its own property.
ARTICLE FIVE
REPRESENTATIONS AND WARRANTIES OF GOLDEN STATE PETROLEUM
AND THE OWNERS
Golden State Petroleum and each Owner each hereby represents
and warrants to the Indenture Trustee as follows:
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SECTION 5.1 ORGANIZATION, POWER AND STATUS OF GOLDEN STATE
PETROLEUM AND EACH OWNER. It (a) is an entity duly formed, validly existing and
in good standing under the laws of the jurisdiction of its organization and (b)
is duly authorized, to the extent necessary, to do business in each jurisdiction
where the character of its properties or the nature of its activities makes such
qualification necessary. Golden State Petroleum and each Owner has all requisite
corporate power and authority to own and operate the property it purports to own
and to carry on its business as now being conducted and, in the case of an
Owner, as proposed to be conducted in respect of the related Vessel.
SECTION 5.2 AUTHORIZATION; ENFORCEABILITY; EXECUTION AND
DELIVERY. (a) It has all necessary corporate power and authority to execute,
deliver and perform its obligations under this Indenture and each other Security
Document to which it is a party.
(b) All action on its part that is required for the
authorization, execution, delivery and performance of this Indenture and each
other Security Document to which it is a party, in each case has been duly and
effectively taken; and the execution, delivery and performance of this Indenture
and each such other Security Document does not require the approval or consent
of any Person except for such consents and approvals as shall have been obtained
on or prior to the Closing Date.
(c) This Indenture and each other Security Document to which
it is a party has been duly executed and delivered by it. Each of this Indenture
and each other Security Document to which it is a party constitutes its legal,
valid and binding obligation, enforceable against it in accordance with the
terms thereof.
SECTION 5.3 NO CONFLICTS; LAWS AND CONSENTS; NO DEFAULT. (a)
Neither the execution, delivery and performance of this Indenture and each other
Security Document to which it is a party nor the consummation of any of the
transactions contemplated hereby or thereby nor performance of or compliance
with the terms and conditions hereof or thereof (i) contravenes any Requirement
of Law applicable to it or any of the Collateral, (ii) constitutes a default
under any Security Document or (iii) results in the creation or imposition of
any Lien on any of the Collateral (other than a Permitted Lien) or results in
the acceleration of any of its obligations.
(b) It is in compliance with and not in default under any and
all Requirements of Law applicable to it and all terms and provisions applicable
to it of this Indenture and all other Security Documents to which it is a party.
SECTION 5.4 GOVERNMENTAL APPROVALS. All Governmental Approvals
which are required to be obtained in its name in connection with (a) in the case
of the Owners, the construction, operation and maintenance of the Vessel and (b)
in the case of Golden State Petroleum and the Owners its execution, delivery and
performance of this Indenture and the Security Documents have been obtained and
are in effect on the Closing Date.
SECTION 5.5 LITIGATION. There are no actions, suits or
proceedings at law or in equity or by or before any Governmental Authority now
pending against it or any of its property or other assets or rights or, to the
best of its knowledge, threatened against it or any
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of its property or other assets or rights, in either case with respect to this
Indenture and any other Security Document.
SECTION 5.6 TAXES. It has filed, or caused to be filed, all
tax and information returns that are required to have been filed by it in any
jurisdiction and has paid, or caused to be paid, all taxes shown to be due and
payable on such returns and all other taxes and assessments payable by it,
including, with respect to the Owners, without limitation, any taxes payable by
such Owner with respect to its Vessel and its interest in the related Charter,
to the extent the same have become due and payable.
SECTION 5.7 TRADE OR BUSINESS; EXECUTIVE OFFICE. (a) With
respect to the Owners, neither Owner is engaged in a trade or business in the
United States (and does not have any gross income as effectively connected with
the conduct of a trade or business in the United States) within the meaning of
section 884(f) of the Code and does not have an office or fixed place of
business in the United States within the meaning of sections 864 or 887(b)(4) of
the Code (including any office or fixed place of business attributed to either
Owner as a result of the activities of the Manager or Golden State Petroleum, as
agent of the Owners).
(b) With respect to the Owners, neither Owner has an executive
office in the United States as defined in Section 9-103 of the UCC.
ARTICLE SIX
COVENANTS
SECTION 6.1 PAYMENT OF PRINCIPAL AND INTEREST. Each of the
Owners jointly and severally covenants and agrees that it will duly and
punctually pay or cause to be paid the premium, if any, principal of, and
interest on, each of the Mortgage Notes at the place or places, at the time and
in the manner provided in this Indenture and the Mortgage Notes. Each of the
Owners jointly and severally covenants and agrees (a) to pay on demand interest
at the applicable Default Rate on any overdue payment of principal of, interest
or any other amount payable on any Mortgage Note from the due date for such
payment to the date such amount is paid in full and (b) not to deduct any
pre-issuance accrued interest on any Mortgage Notes for United States federal
income tax purposes.
SECTION 6.2 CORPORATE EXISTENCE; COMPLIANCE WITH LAWS. Golden
State Petroleum and each Owner covenants and agrees that it will: (a) do or
cause to be done all things necessary to preserve and keep in full force and
effect its corporate existence and the rights (charter and statutory), licenses
and franchises; (b) pay or discharge or cause to be paid or discharged, before
the same shall become delinquent (i) all taxes, assessments and governmental
charges levied or imposed upon it or upon its income, profits or property and
(ii) all lawful claims against it for labor, materials, supplies or services;
(c) endeavor to have the Mortgage Notes rated by the Rating Agency at all times;
and (d) comply with all applicable Laws in respect of its business and the
ownership of its properties.
SECTION 6.3 PERFORMANCE OF OBLIGATIONS. Golden State Petroleum
and each Owner each agree that it shall not take, or fail to take, any action,
and will use its best
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efforts not to permit any action to be taken by others, which would release any
Person from any of such Person's covenants or obligations under any agreement or
instrument included in the Collateral, or which would result in the amendment,
hypothecation, subordination, termination or discharge of, or impair the
validity or effectiveness of, any such agreement or instrument, except as
expressly permitted in this Indenture.
SECTION 6.4 ACTIVITIES OF THE OWNERS. (a) Each Owner agrees
that it shall not engage in any activities other than (i) to enter into, or
become a party to, a Building Contract and Technical Supervision Agreement for
its Vessel, (ii) to register its Vessel under and pursuant to the laws of the
Registration Jurisdiction, (iii) to enter into, or become a party to, the
Charter with the Charterer and any additional charters or contracts of
affreightment occasioned by the termination of the Charter, (iv) to enter into
and perform the Agency Agreement, (v) to assign, grant, transfer, pledge,
mortgage or convey its Vessel and its freights and earnings to the Indenture
Trustee, (vi) to enter into, perform its obligations under, and perform any
other activities contemplated by, this Indenture and the Security Documents and
(vii) to engage only in those activities, including the entering into,
performing and/or delivering any and all applications, licenses, agreements,
necessary, suitable or convenient to accomplish the foregoing or incidental
thereto or connected therewith.
(b) Each Owner agrees that it shall at all times have at least
one director who is not an employee of either Owner, Golden State Petroleum or
the Manager.
(c) Each Owner agrees that in the event the Isle of Man
imposes a withholding tax with respect to sinking fund payments or payments of
principal, interest or premium, if any, on the Mortgage Notes, it shall take any
lawful action to the extent necessary to prevent or avoid the imposition of any
such withholding tax, including changing its jurisdiction of incorporation or
residence; PROVIDED HOWEVER, that neither Owner will be required to take, or
fail to take, any action (x) if in the opinion of counsel such act or failure to
act would violate applicable law or (y) if in the reasonable opinion of such
Owner the actions necessary to avoid or prevent imposition of such taxes would
be unduly burdensome. For purposes of clause (y) of the immediately preceding
sentence, a requirement to change the jurisdiction of such Owner's incorporation
or residence will not be treated as unduly burdensome unless changing such
Owner's jurisdiction of incorporation or residence (I.E., to reincorporate under
the laws of another jurisdiction) to such other jurisdiction or location would
(i) subject such Owner to charges in such other jurisdiction, including but not
limited to taxes imposed on or measured by its income, receipts, property,
assets, capital, sales or value-added or (ii) cause the Charterer to be required
to withhold or deduct charges with respect to charterhire payable under the
related Charter.
SECTION 6.5 BOOKS AND RECORDS. Each Owner agrees that it shall
at all times keep proper books and records of all of its business and financial
affairs in accordance with generally accepted accounting principles of the
United States, as in effect on the date thereof. Each Owner shall keep books of
account or records concerning its accounts, inventory, contract rights,
equipment and proceeds at its offices located at 15-19 Athol Street, Isle of
Man.
SECTION 6.6 RESTRICTED PAYMENTS. Each Owner agrees, so long as
any Mortgage Note is Outstanding, that it shall not make any Restricted Payment.
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SECTION 6.7 WAIVER OF STAY, EXTENSION OR USURY LAWS. Golden
State Petroleum and each of the Owners each covenants (to the extent that it may
lawfully do so) that it will not at any time insist upon, or plead, or in any
manner whatsoever claim, and will actively resist any and all efforts to be
compelled to take the benefit or advantage of, any stay or extension law or any
usury law or other law, which would prohibit or forgive Golden State Petroleum,
as agent for the Owners, from paying all or any portion of the principal of,
premium, if any, and interest (including default interest) on the Mortgage Notes
as contemplated herein, wherever enacted, now or at any time hereafter in force,
or which may affect the covenants or the performance of this Indenture; and (to
the extent that it may lawfully do so) Golden State Petroleum and each of the
Owners hereby expressly waive all benefit or advantage of any such law, and
covenants that it will not hinder, delay or impede the execution of any power
herein granted to the Indenture Trustee, but will suffer and permit the
execution of every such power as though no such law had been enacted.
SECTION 6.8 REPORTS BY GOLDEN STATE PETROLEUM AND THE OWNERS.
Golden State Petroleum and each Owner each covenants:
(a) to file with the Indenture Trustee, within 15 days after
Golden State Petroleum or such Owner is required to file the same with
the Commission, copies of the annual reports and of the information,
documents, and other reports (or copies of such portions of any of the
foregoing as the Commission may from time to time by rules and
regulations prescribe) which Golden State Petroleum or either Owner, as
the case may be, may be required to file with the Commission pursuant
to Section 13 or 15(d) of the Exchange Act, or, if Golden State
Petroleum or either Owner is not required to file information,
documents, or reports pursuant to either of such Sections of the
Exchange Act, then to file with the Indenture Trustee and the
Commission, in accordance with rules and regulations prescribed from
time to time by the Commission, such of the supplementary and periodic
information, documents, and reports which may be required pursuant to
Section 13 of the Exchange Act in respect of a security listed and
registered on a national securities exchange, as may be prescribed from
time to time in such rules and regulations;
(b) to file with the Indenture Trustee and the Commission, in
accordance with rules and regulations prescribed from time to time by
the Commission, such additional information, documents, and reports
with respect to compliance by Golden State Petroleum and each Owner
with the conditions and covenants provided for in this Indenture as may
be required from time to time by such rules and regulations;
(c) to transmit to the holders of the Mortgage Notes in the
manner and to the extent required by Section 313(c) of the Trust
Indenture Act, within 30 days after the filing thereof with the
Indenture Trustee, such summaries of any information, documents and
reports required to be filed by Golden State Petroleum or such Owner
pursuant to subsections (a) and (b) of this Section 6.8 as may be
required by rules and regulations prescribed from time to time by the
Commission; and
(d) to furnish to the Indenture Trustee, on or before each
January 1, commencing in 1998, a brief certificate from the principal
executive officer, principal
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financial officer or principal accounting officer of Golden State
Petroleum and each Owner as to his or her knowledge of Golden State
Petroleum's or such Owner's compliance with all conditions and
covenants under this Indenture. For purposes of this subsection (d),
such compliance shall be determined without regard to any period of
grace or requirement of notice provided under this Indenture.
(e) to furnish to the Indenture Trustee, on each January 15
and July 15 commencing January 15, 2002, the charter hire payable under
the then current charter of the Vessels.
The Indenture Trustee shall furnish the Rating Agencies a copy
of the items described in this Section 6.8.
SECTION 6.9 NOTICE OF DEFAULT. Golden State Petroleum or
either Owner shall promptly give written notice to the Indenture Trustee of any
Default of which Golden State Petroleum or such Owner has actual knowledge.
SECTION 6.10 NEGATIVE COVENANTS. Golden State Petroleum and
each Owner will maintain its corporate existence and will not:
(a) create, incur, assume or issue, directly or indirectly,
guarantee or in any manner become, directly or indirectly, liable for or with
respect to the payment of any Indebtedness, except for its obligations under
this Indenture, the Security Documents and the Mortgage Notes;
(b) (i) commence any case, proceeding or other action under
any existing or future bankruptcy, insolvency or similar law seeking to have an
order for relief entered with respect to it, or seeking reorganization,
arrangement, adjustment, wind-up, liquidation, dissolution, composition or other
relief with respect to it or its debts, (ii) seek appointment to a receiver,
trustee, custodian or other similar official for it or any part of its assets,
(iii) make a general assignment for the benefit of creditors or (iv) take any
action in furtherance of, or consenting or acquiescing in, any of the foregoing;
(c) create, incur, assume or suffer to exist any Lien on any
of its assets or properties or on any of the Collateral, except for the Liens
created in connection with this Indenture and Permitted Liens;
(d) consolidate with, or merge with or into, any other Person
or, except as contemplated hereby, convey or transfer to any Person all or any
part of its assets including the Collateral;
(e) make any capital contributions, advances or loans to, or
investments or purchases of capital stock in, any Person; and
(f) amend or modify its certificate of incorporation or
articles of association without the prior written consent of the Indenture
Trustee.
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SECTION 6.11 APPOINTMENT TO FILL A VACANCY IN OFFICE OF
INDENTURE TRUSTEE. Golden State Petroleum, as agent for the Owners, whenever
necessary to avoid or fill a vacancy in the office of Indenture Trustee, will
appoint, in the manner provided in Section 8.9, an Indenture Trustee, so that
there shall at all times be an Indenture Trustee hereunder.
SECTION 6.12 NOTEHOLDERS' LISTS. If and so long as the
Indenture Trustee shall not be the Registrar, Golden State Petroleum, as agent
for the Owners, will furnish or cause to be furnished to the Indenture Trustee a
list in such form as the Indenture Trustee may reasonably require of the names
and addresses of the Holders pursuant to Section 312 of the Trust Indenture Act
(a) semi-annually not more than five days after each Record Date, as of such
Record Date, and (b) at such other times as the Indenture Trustee may request in
writing, within 30 days after receipt by Golden State Petroleum, as agent for
the Owners, of any such request as of a date not more than 15 days prior to the
time such information is furnished.
SECTION 6.13 REPORTS BY THE INDENTURE TRUSTEE.
(a) The Indenture Trustee shall on or before each August 1,
commencing in 1997, transmit in the manner and to the extent required
by Section 313(c) or 313(d) of the Trust Indenture Act, any report
required by Section 313(a) or Section 313(b) of the Trust Indenture Act
to be transmitted by the Indenture Trustee to the holders of the
Mortgage Notes.
(b) A copy of each report required under this Section shall,
at the time of such transmission to holders of Mortgage Notes be filed
by the Indenture Trustee with the Commission and with each securities
exchange, if any, upon which the Mortgage Notes are listed. Golden
State Petroleum, as agent for the Owners, will notify the Indenture
Trustee when the Mortgage Notes are listed on any securities exchange.
(c) The Indenture Trustee shall supply to the Manager and the
Rating Agencies within 15 days of receipt the documents referred to in
(a) and (b) above as well as any documents supplied to the Indenture
Trustee by Chevron pursuant to the Acknowledgement of Assignment of
Chevron Guarantee.
(d) The Indenture Trustee shall provide a statement to the
Rating Agencies on each February 1 and August 1 commencing February 1, 2006
indicating (i) the amounts held in the Trust Accounts and (ii) based solely on
the information provided to the Indenture Trustee pursuant to Section 6.8(e) the
charter hire payable under the then current charter of the Vessels.
SECTION 6.14 CHANGE OF FLAG. Each Owner shall have the right to change
the registry and flag of its Vessel to the registry and flag of the Republic of
Panama, the Republic of Liberia, the Republic of Vanuatu, the Commonwealth of
The Bahamas, The United Kingdom, the Isle of Man and any other jurisdiction with
laws and regulations affording rights and remedies in favor of mortgagees
substantially similar to those afforded by any of the jurisdictions named in the
preceding part of this sentence; PROVIDED, that the right of each Owner to
change the registry and flag of its Vessel to a jurisdiction other than those
named in the preceding part of this sentence shall be subject to the requirement
that the Owner shall have demonstrated, by providing opinion(s) of counsel or
other evidence requested by the Indenture Trustee, to the
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satisfaction of the Indenture Trustee that the requirements of this Section 6.14
(including the last sentence hereof) have been satisfied. Prior to any such
change in registry and flag, the Owner shall (i) obtain all necessary approvals
of Governmental Authorities including, without limitation, those of the then
current Registration Jurisdiction and otherwise comply with all applicable law,
if any, (ii) execute and deliver to the Indenture Trustee, in form and substance
reasonably satisfactory to the Indenture Trustee, and after execution by the
Indenture Trustee and immediately after the registration of the Vessel, file for
recordation, a replacement mortgage (the "Replacement Mortgage") with terms and
conditions substantially similar to the terms and conditions of Mortgage to
which such Vessel is subject, which Replacement Mortgage shall constitute a
first priority lien on the Vessel and shall be in compliance with all applicable
laws and regulations of any such country where the Vessel is re-registered and
re-flagged, and immediately after the filing of the Replacement Mortgage for
recordation deliver to the Indenture Trustee (A) an opinion of counsel
reasonably satisfactory to the Indenture Trustee confirming that any Replacement
Mortgage constitutes such a first priority lien under the laws and regulations
of such country and is a "preferred mortgage" within the meaning of 46 U.S.C.
Section 31301(b)(B), and that, if there shall have been any change in the
applicable laws and regulations of such country of re-registration and
re-flagging after the Closing Date, such change does not materially adversely
affect the interests of the Indenture Trustee with respect to the Vessel, and
(B) a certificate of the Owner that the Vessel is duly documented under the laws
of the country where the Vessel is re-registered and re-flagged, and that the
Vessel is free of any Lien (except the Replacement Mortgage) other than
Permitted Liens. In connection with any such change of registry and flag, the
Indenture Trustee shall, at the request of the Owner and at the Owner's cost and
expense, and upon compliance with subclauses (i) and (ii) of this Section 6.14,
execute and deliver to the Owner the Replacement Mortgage, an instrument in
recordable form duly acknowledging the satisfaction and discharge of Mortgage,
and any other instrument or document necessary or appropriate for the orderly
consummation of the change in registry and flag and replacement of the Mortgage.
Notwithstanding the foregoing, no such reflagging shall be permitted (x) if an
Indenture Event of Default shall have occurred and be continuing or (y) if in
the sole opinion of the Indenture Trustee such reflagging will, or may be
expected to, adversely affect the rights or remedies of the Indenture Trustee
under the Security Documents, the value of the Vessel, or will be or may
otherwise be expected to be, disadvantageous to the Indenture Trustee.
ARTICLE SEVEN
REMEDIES OF THE INDENTURE TRUSTEE AND
NOTEHOLDERS ON INDENTURE EVENT OF DEFAULT
SECTION 7.1 INDENTURE EVENT OF DEFAULT DEFINED; ACCELERATION
OF MATURITY; WAIVER OF DEFAULT. An Indenture Event of Default means any of the
following events (whatever the reason for such Indenture Event of Default and
whether it shall be voluntary or involuntary or be effected by operation of law
or pursuant to any judgment, decree or order of any court or any order, rule or
regulation of any administrative or governmental body):
(a) if any Mortgage Event of Default shall have occurred and
be continuing;
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(b) a default in the payment of any sinking fund installments,
or all or any part of the principal of, premium, if any, or interest on
any of the Mortgage Notes as and when such payment becomes due and
payable either at maturity, upon any redemption, by declaration or
otherwise and, with respect to any such payments other than payments on
maturity, the continuance of such default for a period of two Business
Days;
(c) a failure on the part of Golden State Petroleum or either
Owner duly to observe or perform in any material respect any of the
other agreements or covenants on the part of Golden State Petroleum or
such Owner contained in any Mortgage Note, this Indenture, any Security
Document or any document or certificate delivered pursuant hereto or
thereto for a period of 30 days after the earlier of (i) actual
knowledge by Golden State Petroleum or either Owner of such failure and
(ii) the date on which written notice specifying such failure and
stating that such notice is a "Notice of Default" hereunder has been
given by registered or certified mail, return receipt requested, to
Golden State Petroleum and the Owners by the Indenture Trustee, or to
Golden State Petroleum, the Owners and the Indenture Trustee by the
holders of at least 25% in aggregate principal amount of the Mortgage
Notes at the time Outstanding;
(d) if any representation or warranty of Golden State
Petroleum or either Owner made in this Indenture, any Security Document
or any document or certificate delivered pursuant hereto or thereto
proves to have been inaccurate in any material respect when made,
remains inaccurate in such material respect for a period of 30 days
after the earlier of (i) actual knowledge by Golden State Petroleum or
either Owner of such inaccuracy and (ii) the date on which written
notice specifying such inaccuracy and stating that such notice is a
"Notice of Default" hereunder has been given by registered or certified
mail, return receipt requested, to Golden State Petroleum and the
Owners by the Indenture Trustee, or to Golden State Petroleum, the
Owners and the Indenture Trustee by the holders of at least 25% in
aggregate principal amount of the Mortgage Notes at the time
Outstanding;
(e) if a court having jurisdiction in the premises shall enter
a decree or order for relief in respect of Golden State Petroleum or
either Owner in an involuntary case under any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect, or
appointing a receiver, liquidator, assignee, custodian, trustee,
sequestrator (or similar official) of Golden State Petroleum or such
Owner or for any substantial part of its property or ordering the
winding up or liquidation of its affairs, and such decree or order
shall remain unstayed and in effect for a period of 60 consecutive
days;
(f) if Golden State Petroleum or either Owner shall commence a
voluntary case under any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect, or consent to the entry of an
order for relief in an involuntary case under any such law, or consent
to the appointment or taking possession by a receiver, liquidator,
assignee, custodian, trustee, sequestrator (or similar official) of
Golden State Petroleum or such Owner or for any substantial part of its
property, or make any general assignment for the benefit of creditors;
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(g) if a Charter Event of Default shall have occurred and be
continuing or if either of the Charters is repudiated by the Charterer
in writing or in a public statement or ceases to be in full force and
effect, other than pursuant to the terms thereof;
(h) if any Security Document is repudiated by an Owner in
writing or in a public statement or ceases to be in full force and
effect or any of such Security Documents ceases to give the Indenture
Trustee, in any material respect, the Liens, rights, powers and
privileges purported to be created thereby, in each case other than
pursuant to the terms thereof;
(i) if the Builders fail to make any payment when due under
either Building Contract and such payment is not made pursuant to the
Building Contract Guarantee and the continuance of such default for a
period of two Business Days;
(j) if an event of default shall have occurred and be
continuing under the Chevron Guarantees or if either of the Chevron
Guarantees is repudiated by Chevron in writing or in a public statement
or ceases to be in full force and effect, other than pursuant to the
terms thereof; or
(k) A breach of the Companies' obligations under the
Registration Rights Agreement (as defined in the Indenture) to use
reasonable best efforts to cause the Exchange Registration Statement
(as defined in the Indenture) or Shelf Registration Statement (as
defined in the Indenture), as the case may be, to become effective and
the continuance of such breach for a period of 30 days after the date
the Companies receive written notice thereof.
If an Indenture Event of Default (other than an Indenture
Event of Default specified in clause (e) or (f) above occurs and is continuing,
then and in each and every such case, unless the principal of all of the
Mortgage Notes shall have already become due and payable, either the Indenture
Trustee or the holders of not less than 25% in aggregate principal amount of the
Mortgage Notes then Outstanding hereunder, by notice in writing to Golden State
Petroleum and the Owners (and to the Indenture Trustee if given by the
Noteholders), may declare the entire principal of all the Mortgage Notes and the
interest accrued thereon, to be due and payable immediately, and upon any such
declaration the same shall become immediately due and payable. If an Indenture
Event of Default specified in clause (e) or (f) above occurs and is continuing,
then and in each and every such case, unless the principal of all of the
Mortgage Notes shall have already become due and payable, the entire principal
of all the Mortgage Notes and the interest accrued thereon, shall immediately
and without further act become due and payable, without presentment, demand,
protest or notice by the Indenture Trustee or any holder of Mortgage Notes, all
of which are hereby waived.
This provision, however, is subject to the condition that if,
at any time after the principal of the Mortgage Notes shall have been so
declared due and payable, and before any judgment or decree for the payment of
the moneys due shall have been obtained or entered as hereinafter provided,
Golden State Petroleum shall pay or shall deposit with the Indenture Trustee a
sum sufficient to pay all matured installments of interest and sinking fund
installments
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upon all the Mortgage Notes and the principal of any and all Mortgage Notes
which shall have become due otherwise than by acceleration with interest upon
such principal and, to the extent that payment of such interest is enforceable
under applicable law, on overdue installments of interest, at the same rate for
each Mortgage Note as the rate of interest specified in such Mortgage Note, to
the date of such payment or deposit) and such amount as shall be sufficient to
cover reasonable compensation to the Indenture Trustee and each predecessor
Indenture Trustee, their respective agents, attorneys and counsel, and all other
expenses and liabilities incurred, and all advances made, by the Indenture
Trustee and each predecessor Indenture Trustee except as a result of negligence
or bad faith, and if any and all Events of Default under this Indenture, other
than the non-payment of the principal of the Mortgage Notes which shall have
become due by acceleration, shall have been cured, waived or otherwise remedied
as provided herein -- then and in every such case the holders of a majority in
aggregate principal amount of the Mortgage Notes then Outstanding, by written
notice to Golden State Petroleum and the Owners and to the Indenture Trustee,
may waive all defaults and rescind and annul such declaration and its
consequences, but no such waiver or rescission and annulment shall extend to or
shall affect any subsequent default or shall impair any right consequent
thereon.
SECTION 7.2 COLLECTION OF INDEBTEDNESS BY INDENTURE TRUSTEE;
INDENTURE TRUSTEE MAY PROVE DEBT. Each of the Owners covenants that if an
Indenture Event of Default specified in clause (b) of Section 7.1 occurs and is
continuing, then upon demand of the Indenture Trustee, the Owners will pay to
the Indenture Trustee for the benefit of the Holders the whole amount that then
shall have become due and payable on all the Mortgage Notes for principal or
interest, as the case may be (with interest to the date of such payment upon the
overdue principal and, to the extent that payment of such interest is
enforceable under applicable law, on overdue installments of interest at the
same rate for each Mortgage Note as the rate of interest specified in such
Mortgage Note); and in addition thereto, such further amount as shall be
sufficient to cover the costs and expenses of collection, including reasonable
compensation to the Indenture Trustee and each predecessor Indenture Trustee,
their respective agents, attorneys and counsel, and any expenses and liabilities
incurred, and all advances made, by the Indenture Trustee and each predecessor
Indenture Trustee except as a result of its negligence or bad faith.
Until such demand is made by the Indenture Trustee, the Owners
may pay the principal of and interest on the Mortgage Notes to the Holders,
whether or not the Mortgage Notes are overdue.
In case the Owners shall fail forthwith to pay such amounts
upon such demand, the Indenture Trustee, in its own name and as trustee of an
express trust, shall be entitled and empowered to institute any action or
proceedings at law or in equity for the collection of the sums so due and
unpaid, and may prosecute any such action or proceedings to judgment or final
decree, and may enforce any such judgment or final decree against the Owners or
other obligor upon the Mortgage Notes and collect in the manner provided by law
out of the property of the Owners or other obligor upon the Mortgage Notes,
wherever situated, the moneys adjudged or decreed to be payable.
In case there shall be pending proceedings relative to Golden
State Petroleum, either Owner or any other obligor upon the Mortgage Notes under
the Bankruptcy Code or any
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other applicable Federal or state bankruptcy, insolvency or other similar law,
or any applicable laws of any applicable jurisdiction, or in case a receiver,
assignee or trustee in bankruptcy or reorganization, liquidator, sequestrator or
similar official shall have been appointed for or taken possession of Golden
State Petroleum, the Owners or their respective property or such other obligor,
or in case of any other comparable judicial proceedings relative to Golden State
Petroleum, the Owners or other obligor upon the Mortgage Notes, or to the
creditors or property of Golden State Petroleum, the Owners or such other
obligor, the Indenture Trustee, irrespective of whether the principal of the
Mortgage Notes shall then be due and payable as therein expressed or by
declaration or otherwise and irrespective of whether the Indenture Trustee shall
have made any demand pursuant to the provisions of this Section, shall be
entitled and empowered, by intervention in such proceedings or otherwise:
(a) to file and prove a claim or claims for the whole amount
of principal and interest (including default interest) owing and unpaid
in respect of the Mortgage Notes, and to file such other papers or
documents as may be necessary or advisable in order to have the claims
of the Indenture Trustee (including any claim for reasonable
compensation to the Indenture Trustee and each predecessor Indenture
Trustee, and their respective agents, attorneys and counsel, and for
reimbursement of all expenses and liabilities incurred, and all
advances made, by the Indenture Trustee and each predecessor Indenture
Trustee, except as a result of negligence or bad faith) and of the
Noteholders allowed in any judicial proceedings relative to the Owners
or other obligor upon the Mortgage Notes, or to the creditors or
property of Golden State Petroleum or such other obligor;
(b) unless prohibited by applicable law and regulations, to
vote on behalf of the Holders in any election of a trustee or a standby
trustee in arrangement, reorganization, liquidation or other bankruptcy
or insolvency proceedings or Person performing similar functions in
comparable proceedings; and
(c) to collect and receive any moneys or other property
payable or deliverable on any such claims, and to distribute all
amounts received with respect to the claims of the Noteholders and of
the Indenture Trustee on their behalf; and any trustee, receiver, or
liquidator, custodian or other similar official is hereby authorized by
each of the Noteholders to make payments to the Indenture Trustee, and,
in the event that the Indenture Trustee shall consent to the making of
payments directly to the Noteholders, to pay to the Indenture Trustee
such amounts as shall be sufficient to cover reasonable compensation to
the Indenture Trustee, each predecessor Indenture Trustee and their
respective agents, attorneys and counsel, and all other expenses and
liabilities incurred, and all advances made, by the Indenture Trustee
and each predecessor Indenture Trustee except as a result of negligence
or bad faith.
Nothing herein contained shall be deemed to authorize the
Indenture Trustee to authorize or consent to or vote for or accept or adopt on
behalf of any Noteholder any plan of reorganization, arrangement, adjustment or
composition affecting the Mortgage Notes or the rights of any Holder thereof, or
to authorize the Indenture Trustee to vote in respect of the claim of any
Noteholder in any such proceeding except, as aforesaid, to vote for the election
of a trustee in bankruptcy or similar person.
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All rights of action and of asserting claims under this
Indenture, or under any of the Mortgage Notes, may be enforced by the Indenture
Trustee without the possession of any of the Mortgage Notes or the production
thereof on any trial or other proceedings relative thereto, and any such action
or proceedings instituted by the Indenture Trustee shall be brought in its own
name as trustee of an express trust, and any recovery of judgment, subject to
the payment of the expenses, disbursements and compensation of the Indenture
Trustee, each predecessor Indenture Trustee and their respective agents and
attorneys, shall be for the ratable benefit of the Holders.
In any proceedings brought by the Indenture Trustee (and also
any proceedings involving the interpretation of any provision of this Indenture
to which the Indenture Trustee shall be a party) the Indenture Trustee shall be
held to represent all the Holders, and it shall not be necessary to make any
Holders parties to any such proceedings.
SECTION 7.3 GENERAL AUTHORITY OF THE INDENTURE TRUSTEE OVER
THE COLLATERAL. Each of the Owners hereby irrevocably constitutes and appoints
the Indenture Trustee and any officer or agent thereof, with full power of
substitution, as its respective true and lawful attorney-in-fact with full power
and authority in the name of such Owner or in its own name, as the case may be,
from time to time in the Indenture Trustee's discretion, so long as any
Indenture Event of Default is in effect, to take any and all appropriate action
directed by the Majority Noteholders and to execute any and all documents and
instruments which may be necessary or desirable to carry out the terms hereof
and accomplish the purposes hereof and, without limiting the generality of the
foregoing or any of the rights conferred on the Indenture Trustee, whether in
its own right or as assignee of the Owners; pursuant to the other Security
Documents, each of the Owners hereby gives the Indenture Trustee the power and
right on its behalf, without notice to or further assent by either Owner, so
long as any Indenture Event of Default is in effect, to do the following (to the
extent the Indenture Trustee is directed to do so by the Majority Noteholders):
(i) to ask for, demand, sue for, collect, receive and give
acquittance for any and all moneys due or to become due upon, or in
connection with, the Collateral;
(ii) to receive, take, endorse, assign and deliver any and all
checks, notes, drafts, acceptances, documents and other negotiable and
non-negotiable instruments taken or received by the Indenture Trustee
as, or in connection with, the Collateral;
(iii) to commence, prosecute, defend, settle, compromise,
compound or adjust any claim, suit, action or proceeding with respect
to, or in connection with, the Collateral;
(iv) to sell, transfer, assign or otherwise deal in or with
the Collateral or any part thereof as fully and effectively as if the
Indenture Trustee were the absolute owner thereof;
(v) to do, at its option and at the expense and for the
account of the Owners, at any time or from time to time, all acts and
things which the Indenture Trustee shall
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deem necessary or advisable to protect or preserve the Collateral and
to realize upon the Collateral;
(vi) to extend the time of payment of any or all of the
Collateral and to make any allowance and other adjustments with
reference thereto; and
(vii) to exercise any of the remedies set forth in the
Security Documents;
PROVIDED that the Indenture Trustee shall give each of the Owners not less than
thirty days' prior written notice of the time and place of any sale or other
intended disposition of any Collateral. Each of the Owners agrees that such
notice constitutes "reasonable notification" within the meaning of Section
9-504(3) of the UCC.
SECTION 7.4 SUITS FOR ENFORCEMENT. In case an Indenture Event
of Default has occurred, has not been waived and is continuing, the Indenture
Trustee may in its discretion proceed to protect and enforce the rights vested
in it by this Indenture by such appropriate judicial proceedings as the
Indenture Trustee shall deem most effectual to protect and enforce any of such
rights, either at law or in equity or in bankruptcy or otherwise, whether for
the specific enforcement of any covenant or agreement contained in this
Indenture or in aid of the exercise of any power granted in this Indenture or to
enforce any other legal or equitable right vested in the Indenture Trustee by
this Indenture or by law.
SECTION 7.5 RESTORATION OF RIGHTS ON ABANDONMENT OF
PROCEEDINGS. In case the Indenture Trustee shall have proceeded to enforce any
right under this Indenture and such proceedings shall have been discontinued or
abandoned for any reason, or shall have been determined adversely to the
Indenture Trustee, then and in every such case the Owners and the Indenture
Trustee shall be restored respectively to their former positions and rights
hereunder, and all rights, remedies and powers of the Owners, the Indenture
Trustee and the Noteholders shall continue as though no such proceedings had
been taken.
SECTION 7.6 LIMITATIONS ON SUITS BY NOTEHOLDERS. Subject to
the provisions of Section 7.10, no Holder of any Mortgage Note shall have any
right by virtue or by availing of any provision of this Indenture to institute
any action or proceeding at law or in equity or in bankruptcy or otherwise upon
or under or with respect to this Indenture, or for the appointment of a trustee,
receiver, liquidator, custodian or other similar official or for any other
remedy hereunder, unless such holder previously shall have given to the
Indenture Trustee written notice of default and of the continuance thereof, as
hereinbefore provided, and unless also the Holders of not less than 25% in
aggregate principal amount of the Mortgage Notes then Outstanding shall have
made written request upon the Indenture Trustee to institute such action or
proceedings in its own name as trustee hereunder and shall have offered to the
Indenture Trustee such reasonable indemnity as it may require against the costs,
expenses and liabilities to be incurred therein or thereby and the Indenture
Trustee for 60 days after its receipt of such notice, request and offer of
indemnity shall have failed to institute any such action or proceedings and no
direction inconsistent with such written request shall have been given to the
Indenture Trustee pursuant to Section 7.8; it being understood and intended, and
being expressly covenanted by the Holder of every Mortgage Note with every other
Holder and the Indenture Trustee, that no one or more Holders of Mortgage Notes
shall have any right in any manner
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whatever by virtue or by availing of any provision of this Indenture to affect,
disturb or prejudice the rights of any other Holder of Mortgage Notes, or to
obtain or seek to obtain priority over or preference to any other such Holder or
to enforce any right under this Indenture, except in the manner herein provided
and for the equal, ratable and common benefit of all Holders. For the protection
and enforcement of the provisions of this Section, each and every Noteholder and
the Indenture Trustee shall be entitled to such relief as can be given either at
law or in equity.
SECTION 7.7 POWERS AND REMEDIES CUMULATIVE; DELAY OR OMISSION
NOT WAIVER OF DEFAULT. Except as provided in Section 7.6, no right or remedy
herein conferred upon or reserved to the Indenture Trustee or to the Noteholders
is intended to be exclusive of any other right or remedy, and every right and
remedy shall, to the extent permitted by law, be cumulative and in addition to
every other right and remedy given hereunder or now or hereafter existing at law
or in equity or otherwise. The assertion or employment of any right or remedy
hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
No delay or omission of the Indenture Trustee or of any Holder
of any of the Mortgage Notes to exercise any right or power accruing upon any
Indenture Event of Default occurring and continuing as aforesaid shall impair
any such right or power or shall be construed to be a waiver of any such
Indenture Event of Default or an acquiescence therein; and, subject to Section
7.6, every power and remedy given by this Indenture or by law to the Indenture
Trustee or to the Noteholders may be exercised from time to time, and as often
as shall be deemed expedient, by the Indenture Trustee or by the Noteholders.
SECTION 7.8 CONTROL BY NOTEHOLDERS. The Majority Noteholders
shall have the right to direct the time, method, and place of conducting any
proceeding for any remedy available to the Indenture Trustee, or exercising any
trust or power conferred on the Indenture Trustee by this Indenture; PROVIDED
that such direction shall not be otherwise than in accordance with law and the
provisions of this Indenture and PROVIDED FURTHER that (subject to the
provisions of Section 8.1) the Indenture Trustee shall have the right to decline
to follow any such direction if the Indenture Trustee, being advised by counsel,
shall determine that the action or proceeding so directed may not lawfully be
taken or if the Indenture Trustee in good faith by its board of directors, the
executive committee, or a trust committee of directors or responsible officers
of the Indenture Trustee shall determine that the action or proceedings so
directed would involve the Indenture Trustee in personal liability or if the
Indenture Trustee in good faith shall so determine that the actions or
forebearances specified in or pursuant to such direction shall be unduly
prejudicial to the interests of Holders of the Mortgage Notes not joining in the
giving of said direction, it being understood that (subject to Section 8.1) the
Indenture Trustee shall have no duty to ascertain whether or not such actions or
forebearances are unduly prejudicial to such Holders.
Nothing in this Indenture shall impair the right of the
Indenture Trustee in its discretion to take any action deemed proper by the
Indenture Trustee and which is not inconsistent with such direction by
Noteholders.
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SECTION 7.9 WAIVER OF PAST DEFAULTS. Prior to the declaration
of the maturity of the Mortgage Notes as provided in Section 7.1, the Majority
Noteholders may on behalf of the Holders of all the Mortgage Notes waive any
past Default or Indenture Event of Default hereunder and its consequences,
except a default (a) in the payment of principal of, premium, if any, sinking
fund installment or interest on any of the Mortgage Notes or (b) in respect of a
covenant or provision hereof which cannot be modified or amended without the
consent of the Holder of each Mortgage Note affected. In the case of any such
waiver, the Owners, the Indenture Trustee and the Holders of the Mortgage Notes
shall be restored to their former positions and rights hereunder, respectively;
but no such waiver shall extend to any subsequent or other Default or impair any
right consequent thereon.
Upon any such waiver, such Default shall cease to exist and be
deemed to have been cured and not to have occurred, and any Indenture Event of
Default arising therefrom shall be deemed to have been cured, and not to have
occurred for every purpose of this Indenture; but no such waiver shall extend to
any subsequent or other Default or Indenture Event of Default or impair any
right consequent thereon.
SECTION 7.10 UNCONDITIONAL RIGHTS OF HOLDERS TO RECEIVE
PRINCIPAL AND INTEREST. Notwithstanding any other provision in this Indenture,
the Holder of any Mortgage Note shall have the right, to the extent permitted by
applicable law, which right is absolute and unconditional except to the extent
restricted by applicable law, (i) to receive payments of interest on such
Mortgage Note on each interest payment date, (ii) to receive payments of
principal on such Mortgage Note on such principal or sinking fund payment date
(or, in the case of any Mortgage Note called for redemption, on or after the
date fixed for such redemption) and (iii) to institute suit for the enforcement
of any such payment, and such right shall not be impaired without the consent of
such Holder; provided, however, no Holder of a Mortgage Note shall have any
right to institute any such suit, if and to the extent that the institution or
prosecution thereof or the entry of a judgment therein would, under applicable
law, result in the surrender, impairment, or waiver of the Lien of this
Indenture upon the Trust Estate.
SECTION 7.11 LIMITATION BY LAW. All rights, remedies and
powers provided herein may be exercised only to the extent that the exercise
thereof does not violate any applicable provision of law, and all the provisions
hereof are intended to be subject to all applicable mandatory provisions of law
which may be controlling and to be limited to the extent necessary so that they
will not render this Indenture invalid, unenforceable in whole or in part or not
entitled to be recorded, registered or filed under provisions of any applicable
law.
SECTION 7.12 APPLICATION OF PROCEEDS. All proceeds received by
the Indenture Trustee in the exercise of its rights, remedies and powers
hereunder and under any Security Document shall be deposited into the Collateral
Account and shall be distributed pursuant to Section 3.4
SECTION 7.13 NON-DISTURBANCE. So long as no Charter Event of
Default shall have occurred and be continuing under the Charter or any
Acceptable Replacement Charter, the Charterer or charterer shall be entitled to
quiet enjoyment of the Vessel.
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ARTICLE EIGHT
CONCERNING THE INDENTURE TRUSTEE
SECTION 8.1 DUTIES AND RESPONSIBILITIES OF THE INDENTURE
TRUSTEE. The Indenture Trustee, prior to the occurrence of an Indenture Event of
Default and after the curing or waiving of all Indenture Events of Default which
may have occurred, undertakes to perform such duties and only such duties as are
specifically set forth in this Indenture. In case an Indenture Event of Default
has occurred (which has not been cured or waived) the Indenture Trustee shall
exercise such of the rights and powers vested in it by this Indenture, and use
the same degree of care and skill in their exercise, as a prudent person would
exercise or use under the circumstances in the conduct of its own affairs.
No provision of this Indenture shall be construed to relieve
the Indenture Trustee from liability for its own negligent action, its own
negligent failure to act or its own willful misconduct, except that
(a) prior to the occurrence of an Indenture Event of Default
and after the curing or waiving of all such Indenture Events of Default
which may have occurred:
(i) the duties and obligations of the
Indenture Trustee shall be determined solely by the express
provisions of this Indenture, and the Indenture Trustee shall
not be liable except for the performance of such duties and
obligations as are specifically set forth in this Indenture,
and no implied covenants or obligations shall be read into
this Indenture against the Indenture Trustee; and
(ii) in the absence of bad faith on the part of
the Indenture Trustee, the Indenture Trustee may conclusively
rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon any statements,
certificates or opinions furnished to the Indenture Trustee
and conforming to the requirements of this Indenture; but in
the case of any such statements, certificates or opinions
which by any provision hereof are specifically required to be
furnished to the Indenture Trustee, the Indenture Trustee
shall be under a duty to examine the same to determine whether
or not they conform to the requirements of this Indenture;
(b) the Indenture Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer or Responsible
Officers of the Indenture Trustee, unless it shall be proved that the
Indenture Trustee was negligent in ascertaining the pertinent facts;
(c) the Indenture Trustee shall not be liable with respect to
any action taken or omitted to be taken by it in good faith in
accordance with the direction of the Holders of not less than a
majority in principal amount of the Mortgage Notes at the time
Outstanding relating to the time, method and place of conducting any
proceeding for any remedy available to the Indenture Trustee, or
exercising any trust or power conferred upon the Indenture Trustee,
under this Indenture;
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(d) the Indenture Trustee shall have no duty to see to any
filing of any financing or continuation statements in respect of any
such filing;
(e) the Indenture Trustee shall have no duty to see to any
insurance, or to effect or maintain any such insurance, whether or not
the Charterer shall be in default with respect thereto;
(f) the Indenture Trustee shall have no duty to see to the
payment or discharge of any tax, assessment or other governmental
charge or any Lien of any kind owing with respect to, or assessed or
levied against, any part of the Trust Estate;
(g) the Indenture Trustee shall have no duty to see to confirm
or verify or to inquire into the failure to receive any financial
statements of the Charterer; and
(h) the Indenture Trustee shall have no duty to inspect any of
the Vessels at any time or ascertain or inquire as to the performance
or observance of the Charterer's covenants under the Charter.
None of the provisions contained in this Indenture shall
require the Indenture Trustee to expend or risk its own funds or otherwise incur
personal financial liability in the performance of any of its duties or in the
exercise of any of its rights or powers, if there shall be reasonable ground for
believing that the repayment of such funds or adequate indemnity against such
liability is not reasonably assured to it.
This Section 8.1 is in furtherance of and subject to Sections
315 and 316 of the Trust Indenture Act.
SECTION 8.2 CERTAIN RIGHTS OF THE INDENTURE TRUSTEE. In
furtherance of and subject to the Trust Indenture Act, and subject to Section
8.1:
(a) the Indenture Trustee may rely and shall be protected in
acting or refraining from acting upon any resolution, Officers'
Certificate or any other certificate, statement, instrument, opinion,
report, notice, request, consent, order, bond, debenture, note, coupon,
security or other paper or document believed by it to be genuine and to
have been signed or presented by the proper party or parties;
(b) any request, direction, order or demand of Golden State
Petroleum or the Owners mentioned herein shall be sufficiently
evidenced by an Officers' Certificate (unless other evidence in respect
thereof be herein specifically prescribed); and any resolution of the
Board of Directors may be evidenced to the Indenture Trustee by a copy
thereof certified by the secretary or an assistant secretary of Golden
State Petroleum;
(c) the Indenture Trustee may consult with counsel and any
advice or Opinion of Counsel shall be full and complete authorization
and protection in respect of any action taken, suffered or omitted to
be taken by it hereunder in good faith and in accordance with such
advice or Opinion of Counsel;
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(d) the Indenture Trustee shall be under no obligation to
exercise any of the trusts or powers vested in it by this Indenture at
the request, order or direction of any of the Noteholders pursuant to
the provisions of this Indenture, unless such Noteholders shall have
offered to the Indenture Trustee reasonable security or indemnity
against the costs, expenses and liabilities which might be incurred
therein or thereby;
(e) the Indenture Trustee shall not be liable for any action
taken or omitted by it in good faith and believed by it to be
authorized or within the discretion, rights or powers conferred upon it
by this Indenture;
(f) prior to the occurrence of an Indenture Event of Default
hereunder and after the curing or waiving of all Indenture Events of
Default, the Indenture Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
consent, order, approval, appraisal, bond, debenture, note, coupon,
security, or other paper or document unless requested in writing so to
do by the holders of not less than a majority in aggregate principal
amount of the Mortgage Notes then Outstanding; PROVIDED that, if the
payment within a reasonable time to the Indenture Trustee of the costs,
expenses or liabilities likely to be incurred by it in the making of
such investigation is, in the opinion of the Indenture Trustee, not
reasonably assured to the Indenture Trustee by the security afforded to
it by the terms of this Indenture, the Indenture Trustee may require
reasonable indemnity against such expenses or liabilities as a
condition to proceeding; the reasonable expenses of every such
examination shall be paid by Golden State Petroleum or, if paid by the
Indenture Trustee or any predecessor trustee, shall be repaid by Golden
State Petroleum upon demand; and
(g) the Indenture Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either directly or by
or through agents or attorneys not regularly in its employ and the
Indenture Trustee shall not be responsible for any misconduct or
negligence on the part of any such agent or attorney appointed with due
care by it hereunder.
SECTION 8.3 INDENTURE TRUSTEE NOT RESPONSIBLE FOR RECITALS,
DISPOSITION OF MORTGAGE NOTES OR APPLICATION OF PROCEEDS THEREOF. The recitals
contained herein and in the Mortgage Notes, except the Indenture Trustee's
certificates of authentication, shall be taken as the statements of the Owners,
and the Indenture Trustee assumes no responsibility for the correctness of the
same. The Indenture Trustee makes no representation as to the validity or
sufficiency of this Indenture or of the Mortgage Notes. The Indenture Trustee
shall not be accountable for the use or application by the Owners of any of the
Mortgage Notes or of the proceeds thereof.
SECTION 8.4 INDENTURE TRUSTEE AND AGENTS MAY HOLD MORTGAGE
NOTES; COLLECTIONS; ETC. The Indenture Trustee or any agent of Golden State
Petroleum, the Owners or the Indenture Trustee, in its individual or any other
capacity, may become the owner or pledgee of Mortgage Notes with the same rights
it would have if it were not the Indenture Trustee or such agent and may
otherwise deal with Golden State Petroleum and the Owners and receive,
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collect, hold and retain collections from the Owners with the same rights it
would have if it were not the Indenture Trustee or such agent.
SECTION 8.5 MONEYS HELD BY INDENTURE TRUSTEE. Subject to the
provisions of Section 11.4 hereof, all moneys received by the Indenture Trustee
shall, until used or applied as herein provided, be held in trust for the
purposes for which they were received, but need not be segregated from other
funds except to the extent required by mandatory provisions of law. Neither the
Indenture Trustee nor any agent of Golden State Petroleum, the Owners or the
Indenture Trustee shall be under any liability for interest on any moneys
received by it hereunder.
SECTION 8.6 COMPENSATION AND EXPENSES. (a) The Owners shall on
demand pay or reimburse the Indenture Trustee for (i) reasonable compensation to
the Indenture Trustee, to the extent permitted by law (which shall not be
limited by any provision of law in regard to compensation of fiduciaries or of a
trustee of an express trust), for its services hereunder and (ii) all of the
reasonable costs and expenses of the Indenture Trustee (including, without
limitation, the reasonable compensation and expenses and disbursements of its
counsel and of all agents and other persons not regularly in its employ) (A) in
connection with the preparation, execution and delivery of this Indenture or the
other Security Documents, any waiver or consent thereunder, any modification or
termination thereof, or any Default or alleged Default; (B) if an Indenture
Event of Default occurs, in connection with such Indenture Event of Default and
collection, bankruptcy, insolvency and other enforcement proceedings relating
thereto; (C) in connection with the administration or protection of the Trust
Estate, the sale or other disposition of any Collateral or the preservation,
protection or defense of the Indenture Trustee's or the Indenture Trustee's
rights under the Security Documents or in and to the Trust Estate pursuant
hereto; or (D) in connection with any removal of the Indenture Trustee pursuant
to subsection 8.9(a) hereof.
(b) The Owners shall indemnify and hold harmless the Indenture
Trustee from and against any and all liabilities, obligations, losses, damages,
penalties, judgments, actions, suits, proceedings, reasonable costs and expenses
(including reasonable fees and disbursements of counsel) of any kind whatsoever
which may be incurred by the Indenture Trustee in connection with any
investigative, administrative or judicial proceeding (whether or not such
indemnified party is designated a party to such proceeding) relating to this
Indenture, the Mortgage Notes, the Trust Estate, the Collateral or the Security
Documents, PROVIDED that the Indenture Trustee shall not have the right to be
indemnified hereunder for its own negligence or bad faith as determined by a
court of competent jurisdiction. In any suit, proceeding or action brought by
the Indenture Trustee under or with respect to any contract, agreement, interest
or obligation constituting part of the Collateral for any sum owing thereunder
or hereunder, or to enforce any provisions thereof, the Owners agree to save,
indemnify and keep the Indenture Trustee harmless from and against all expense,
loss or damage suffered by reason of any defense, setoff, counterclaim,
recoupment or reduction of liability whatsoever of the Owners thereunder,
arising out of a breach by the Owners of any obligation thereunder or arising
out of any other agreement, indebtedness or liability at any time owing to, from
or in favor of the Owner or its successors, and all such obligations of the
Owners shall be and remain enforceable against and only against the Owners and
shall not be enforceable against the Indenture Trustee.
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(c) In addition to, but without duplication of, its
obligations under subsection (b) above, the Owners shall indemnify and hold
harmless the Indenture Trustee and the holders from and against any and all
losses, damages and expenses incurred by the Indenture Trustee and the holders
as a result of any oil or other environmental damage resulting from the
operation of any Vessel, including, without limitation, any liability under the
United States Oil Pollution Act of 1990, as amended, or the laws of any other
jurisdiction relating to oil spills.
(d) The agreements in this Section 8.6 shall survive the
termination of the other provisions of this Indenture but shall not be secured
by any Lien on the Collateral.
SECTION 8.7 RIGHT OF INDENTURE TRUSTEE TO RELY ON OFFICERS'
CERTIFICATE, ETC. Subject to Sections 8.1 and 8.2, whenever in the
administration of the trusts of this Indenture the Indenture Trustee shall deem
it necessary or desirable that a matter be proved or established prior to taking
or suffering or omitting any action hereunder, such matter (unless other
evidence in respect thereof be herein specifically prescribed) may, in the
absence of negligence or bad faith on the part of the Indenture Trustee, be
deemed to be conclusively proved and established by an Officers' Certificate
delivered to the Indenture Trustee, and such certificate, in the absence of
negligence or bad faith on the part of the Indenture Trustee, shall be full
warrant to the Indenture Trustee for any action taken, suffered or omitted by it
under the provisions of this Indenture upon reliance thereon.
SECTION 8.8 PERSONS ELIGIBLE FOR APPOINTMENT AS INDENTURE
TRUSTEE. The Indenture Trustee hereunder shall at all times be a bank or trust
company in good standing, having power to act as Indenture Trustee hereunder and
which is eligible to do so within the provisions of Section 310(a) of the Trust
Indenture Act, incorporated under the laws of the United States of America or
any State thereof or the District of Columbia and having its principal corporate
trust office within the 48 contiguous States and shall also have capital,
surplus and undivided profits of not less than $10,000,000, if there be such an
institution with such capital, surplus and undivided profits willing, qualified
and able to accept the trust hereunder upon reasonable or customary terms.
SECTION 8.9 RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR
INDENTURE TRUSTEE. (a) The Indenture Trustee may at any time resign by giving
written notice of resignation to the Owners and Golden State Petroleum and by
mailing notice thereof by first-class mail to Holders of Mortgage Notes at their
last addresses as they shall appear on the Mortgage Note register. Upon
receiving such notice of resignation (i) Golden State Petroleum, as agent for
the Owners, if no Indenture Event of Default exists, or (ii) the Holders of a
majority in aggregate principal amount of Mortgage Notes, if an Indenture Event
of Default exists, shall promptly appoint a successor trustee by an instrument
in writing delivered to the resigning Indenture Trustee, the successor trustee,
Golden State Petroleum and the Owners. If no successor trustee shall have been
so appointed and have accepted appointment within 30 days after the mailing of
such notice of resignation, the resigning trustee may petition any court of
competent jurisdiction for the appointment of a successor trustee, or Golden
State Petroleum, as agent for the Owners, the Indenture Trustee or any
Noteholder who has been a bona fide holder of a Mortgage Note or Mortgage Notes
for at least six months, on behalf of himself and all others similarly situated,
may petition any such court for the appointment of a successor
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trustee. Such court may thereupon, after such notice, if any, as it may deem
proper and prescribe, appoint a successor trustee.
(b) In case at any time any of the following shall occur:
(i) the Indenture Trustee shall fail to comply with the
provisions of Section 310(b) of the Trust Indenture Act after written
request therefor by Golden State Petroleum, as agent for the Owners, or
by any Noteholder who has been a bona fide Holder of a Mortgage Note or
Mortgage Notes for at least six months; or
(ii) the Indenture Trustee shall cease to be eligible in
accordance with the provisions of Section 8.8 and shall fail to resign
after written request therefor by Golden State Petroleum, as agent for
the Owners, or by any such Noteholder; or
(iii) the Indenture Trustee shall become incapable of
acting, or shall be adjudged bankrupt or insolvent, or a receiver or
liquidator of the Indenture Trustee or of its property shall be
appointed, or any public officer shall take charge or control of the
Indenture Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation;
then, in any such case (x) Golden State Petroleum, as agent for the Owners, if
no Indenture Event of Default shall be continuing, or (y) the Majority
Noteholders, if an Indenture Event of Default shall be continuing, may remove
the Indenture Trustee and appoint a successor trustee by an instrument in
writing delivered to the Indenture Trustee so removed, the successor trustee and
the Indenture Trustee, or, subject to Section 315(e) of the Trust Indenture Act,
the Indenture Trustee or any Noteholder who has been a bona fide Holder of a
Mortgage Note or Mortgage Notes for at least six months may on behalf of himself
and all others similarly situated, petition any court of competent jurisdiction
for the removal of the Indenture Trustee and the appointment of a successor
trustee. Such court may thereupon, after such notice, if any, as it may deem
proper and prescribe, remove the Indenture Trustee and appoint a successor
trustee.
(c) The Majority Noteholders may at any time remove the
Indenture Trustee and appoint a successor trustee by delivering to the Indenture
Trustee so removed, to the successor trustee so appointed, to Golden State
Petroleum, the Owners and the Indenture Trustee, the evidence provided for in
Section 9.1 of the action in that regard taken by the Noteholders.
(d) Any resignation or removal of the Indenture Trustee and
any appointment of a successor trustee pursuant to any of the provisions of this
Section 8.9 shall become effective only upon acceptance of appointment by the
successor trustee as provided in Section 8.10.
SECTION 8.10 ACCEPTANCE OF APPOINTMENT BY SUCCESSOR INDENTURE
TRUSTEE. Any successor indenture trustee appointed as provided in Section 8.9
shall execute and deliver to Golden State Petroleum, the Owners, the Indenture
Trustee, and its predecessor indenture trustee an instrument accepting such
appointment hereunder, and thereupon the resignation or removal of the
predecessor indenture trustee shall become effective and such successor
indenture trustee, without any further act, deed or conveyance, shall become
vested with all rights,
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powers, duties and obligations of its predecessor hereunder, with like effect as
if originally named as trustee herein; but, nevertheless, on the written request
of Golden State Petroleum, as agent of the Owners, or of the successor indenture
trustee, upon payment of its charges then unpaid, the indenture trustee ceasing
to act shall, subject to Section 11.4, pay over to the successor trustee all
moneys at the time held by it hereunder and shall execute and deliver an
instrument transferring to such successor trustee all such rights, powers,
duties and obligations. Upon request of any such successor trustee, Golden State
Petroleum, as agent of the Owners, shall execute any and all instruments in
writing for more fully and certainly vesting in and conferring to such successor
trustee all such rights and powers. Any indenture trustee ceasing to act shall,
nevertheless, retain a prior claim upon all property or funds held or collected
by such indenture trustee to secure any amounts then due it pursuant to the
provisions of Section 8.6.
Upon acceptance of appointment by a successor indenture
trustee as provided in this Section 8.10, Golden State Petroleum, as agent of
the Owners, shall mail notice thereof by first-class mail to the Holders of
Mortgage Notes at their last addresses as they shall appear in the Mortgage Note
register. If the acceptance of appointment is substantially contemporaneous with
the resignation, then the notice called for by the preceding sentence may be
combined with the notice called for by Section 8.9. If Golden State Petroleum
fails to mail such notice within 10 days after acceptance of appointment by the
successor indenture trustee, the successor indenture trustee shall cause such
notice to be mailed at the expense of the Owners.
SECTION 8.11 MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION
TO BUSINESS OF INDENTURE TRUSTEE. Any corporation into which the Indenture
Trustee may be merged or converted or with which it may be consolidated, or any
corporation resulting from any merger, conversion or consolidation to which the
Indenture Trustee shall be a party, or any corporation succeeding to the
corporate trust business of the Indenture Trustee, shall be the successor of the
Indenture Trustee hereunder, PROVIDED that such corporation shall be eligible
under the provisions of Section 8.8, without the execution or filing of any
paper or any further act on the part of any of the parties hereto, anything
herein to the contrary notwithstanding.
In case, at the time such successor to the Indenture Trustee
shall succeed to the trusts created by this Indenture, any of the Mortgage Notes
shall have been authenticated but not delivered, any such successor to the
Indenture Trustee may adopt the certificate of authentication of any predecessor
Indenture Trustee and deliver such Mortgage Notes so authenticated; and, in case
at that time any of the Mortgage Notes shall not have been authenticated, any
successor to the Indenture Trustee may authenticate such Mortgage Notes either
in the name of any predecessor hereunder or in the name of the successor
Indenture Trustee; and in all such cases such certificate shall have the full
force which it is anywhere in the Mortgage Notes or in this Indenture provided
that the certificate of the Indenture Trustee shall have; PROVIDED, that the
right to adopt the certificate of authentication of any predecessor Indenture
Trustee or to authenticate Mortgage Notes in the name of any predecessor
Indenture Trustee shall apply only to its successor or successors by merger,
conversion or consolidation.
SECTION 8.12 COMMENCEMENT OF BANKRUPTCY PROCEEDINGS. The
Indenture
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Trustee hereby agrees that, prior to the date which is one year and one day
after the payment in full of all of the Outstanding Mortgage Notes, it will not
institute against, or join any other person in instituting against Golden State
Petroleum or either Owner any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceeding or other similar proceeding under the Laws
of the United States or any other applicable jurisdiction.
SECTION 8.13 NOT ACTING IN INDIVIDUAL CAPACITY. Except as
otherwise provided in this Indenture, the Indenture Trustee acts hereunder
solely as trustee as herein provided and not in its individual capacity, and all
persons, other than the Noteholders as provided in this Indenture, having any
claim against the Indenture Trustee by reason of the transactions contemplated
hereby shall, subject to priorities of payment as herein provided, look only to
the Collateral for payment or satisfaction thereof.
SECTION 8.14 CO-TRUSTEES AND SEPARATE TRUSTEES. (a) At any
time or times, for the purpose of meeting the legal requirements of any
jurisdiction in which any of the Trust Estate may at the time be located or
maintaining the situs of Permitted Investments in a particular jurisdiction,
Golden State Petroleum, as agent for the Owners, and the Indenture Trustee shall
have power to appoint, and, upon the written request of the Indenture Trustee or
of the Holders of at least 25% in principal amount of the Mortgage Notes
Outstanding, Golden State Petroleum, as agent for the Owners, shall for such
purpose join with the Indenture Trustee in the execution, delivery and
performance of all instruments and agreements necessary or proper to appoint,
one or more Persons approved by the Indenture Trustee either to act as
co-trustee, jointly with the Indenture Trustee, or all or any part of the Trust
Estate, or to act as separate trustee of any such property, in either case with
such powers as may be provided in the instrument of appointment, and to vest in
such Person or Persons in the capacity aforesaid, any property, title, right or
power deemed necessary or desirable, subject to the other provisions of this
Section. If Golden State Petroleum, as agent for the Owners, does not join in
such appointment within 15 days after the receipt by it of a request so to do,
or in case an Event of Default has occurred and is continuing, the Indenture
Trustee alone shall have power to make such appointment.
(b) Should any written instrument from Golden State Petroleum, as agent
for the Owners, be required by any co-trustee or separate trustee so appointed
for more fully confirming to such co-trustee or separate trustee such property,
title, right or power, any and all such instruments shall, on request, be
executed, acknowledged and delivered by Golden State Petroleum.
(c) Every co-trustee or separate trustee shall, to the extent permitted
by law, but to such extent only, be appointed subject to the following terms,
namely:
(i) The Mortgage Notes shall be authenticated and delivered,
and all rights, powers, duties and obligations hereunder in respect of
the custody of securities, cash and other personal property held by, or
required to be deposited or pledged with, the Indenture Trustee
hereunder, shall be exercised solely, by the Indenture Trustee.
(ii) The rights, powers, duties and obligations hereby
conferred or imposed upon the Indenture Trustee in respect of any
property covered by such appointment shall
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be conferred or imposed upon and exercised or performed by the
Indenture Trustee or by the Indenture Trustee and such co-trustee or
separate trustee jointly or with the written consent of the Indenture
Trustee, as shall be provided in the instrument appointing such
co-trustee or separate trustee, except to the extent that under any law
of any jurisdiction in which any particular act is to be performed, the
Indenture Trustee shall be incompetent or not qualified to perform such
act, in which event such rights, powers, duties and obligations shall
be exercised and performed by such co-trustee or separate trustee.
(iii) The Indenture Trustee at any time, by an instrument in
writing executed by it, with the concurrence of the Golden State
Petroleum, as agent for the Owners, evidenced by a Board Resolution,
may accept the resignation or remove any co-trustee or separate trustee
appointed under this Section, and, in case an Indenture Event of
Default has occurred and is continuing, the Indenture Trustee shall
have power to accept the resignation of, or remove, any such co-trustee
or separate trustee without the concurrence of Golden State Petroleum,
as agent for the Owners. Upon the written request of the Indenture
Trustee, Golden State Petroleum, as agent for the Owners, shall join
with the Indenture Trustee in the execution, delivery and performance
of all instruments and agreements necessary or proper to effectuate
such resignation or removal. A successor to any co-trustee or separate
trustee so resigned or removed may be appointed in the manner provided
in this Section.
(iv) No co-trustee or separate trustee hereunder shall be
personally liable by reason of any act or omission of the Indenture
Trustee, or any other such trustee hereunder.
(v) Any act of Noteholders delivered to the Indenture Trustee
shall be deemed to have been delivered to each such co-trustee and
separate trustee.
ARTICLE NINE
CONCERNING THE NOTEHOLDERS
SECTION 9.1 EVIDENCE OF ACTION TAKEN BY NOTEHOLDERS. Any
request, demand, authorization, direction, notice, consent, waiver or other
action provided by this Indenture to be given or taken by Noteholders may be
embodied in and evidenced by one or more instruments of substantially similar
tenor signed by such Noteholders in person or by an agent duly appointed in
writing; and, except as herein otherwise expressly provided, such action shall
become effective when such instrument or instruments are delivered to the
Indenture Trustee. Proof of execution of any instrument or of a writing
appointing any such agent shall be sufficient for any purpose of this Indenture
and (subject to Sections 8.1 and 8.2) conclusive in favor of the Indenture
Trustee, the Owners and Golden State Petroleum, if made in the manner provided
in this Article.
SECTION 9.2 PROOF OF EXECUTION OF INSTRUMENTS AND OF HOLDING
OF MORTGAGE NOTES; RECORD DATE. Subject to Sections 8.1 and 8.2, the execution
of any instrument by a Noteholder or his agent or proxy may be proved in
accordance with such reasonable rules
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and regulations as may be prescribed by the Indenture Trustee or in such manner
as shall be satisfactory to the Indenture Trustee. The holding of Mortgage Notes
shall be proved by the Mortgage Note register or by a certificate of the
Registrar thereof. Golden State Petroleum, as agent of the Owners, may set a
record date for purposes of determining the identity of Holders entitled to vote
or consent to any action referred to in Section 9.1, which record date may be
set at any time or from time to time by notice to the Indenture Trustee, for any
date or dates (in the case of any adjournment or resolicitation) not more than
60 days nor less than five days prior to the proposed date of such vote or
consent, and thereafter, notwithstanding any other provisions hereof, only
Holders on such record date shall be entitled to so vote or give such consent or
to withdraw such vote or consent.
SECTION 9.3 HOLDERS TO BE TREATED AS OWNERS. Golden State
Petroleum, the Owners, the Indenture Trustee and any agent of Golden State
Petroleum, the Owners or the Indenture Trustee may deem and treat the Person in
whose name any Mortgage Note shall be registered upon the Mortgage Note register
as the absolute owner of such Mortgage Note (whether or not such Mortgage Note
shall be overdue and notwithstanding any notation of ownership or other writing
thereon) for the purpose of receiving payment of or on account of the principal
of and, subject to the provisions of this Indenture, interest (including default
interest) on such Mortgage Note and for all other purposes; and none of Golden
State Petroleum, the Owners or the Indenture Trustee nor any agent of Golden
State Petroleum, the Owners or the Indenture Trustee shall be affected by any
notice to the contrary. All such payments so made to any such Person, or upon
his order, shall be valid, and, to the extent of the sum or sums so paid,
effectual to satisfy and discharge the liability for moneys payable upon any
such Mortgage Note.
SECTION 9.4 MORTGAGE NOTES DEEMED NOT OUTSTANDING. In
determining whether the Holders of the requisite aggregate principal amount of
Mortgage Notes have concurred in any direction, consent or waiver under this
Indenture, Mortgage Notes which are owned by Golden State Petroleum, either
Owner or any Affiliate of them, or Chevron, or any Affiliate thereof, shall be
disregarded and deemed not to be Outstanding for the purpose of any such
determination, except that for the purpose of determining whether the Indenture
Trustee shall be protected in relying on any such direction, consent or waiver
only Mortgage Notes which the Indenture Trustee knows are so owned shall be so
disregarded. In case of a dispute as to such right, the advice of counsel shall
be full protection in respect of any decision made by the Indenture Trustee in
accordance with such advice. Upon request of the Indenture Trustee, the Owners
shall furnish to the Indenture Trustee promptly an Officers' Certificate listing
and identifying all Mortgage Notes, if any, known by Golden State Petroleum to
be owned or held by or for the account of any of the above-described Persons;
and, subject to Sections 8.1 and 8.2, the Indenture Trustee shall be entitled to
accept such Officers' Certificate as conclusive evidence of the facts therein
set forth and of the fact that all Mortgage Notes not listed therein are
Outstanding for the purpose of any such determination.
SECTION 9.5 RIGHT OF REVOCATION OF ACTION TAKEN. At any time
prior to (but not after) the evidencing to the Indenture Trustee, as provided in
Section 9.1, of the taking of any action by the Holders of the percentage in
aggregate principal amount of the Mortgage Notes specified in this Indenture in
connection with such action, any Holder of a Mortgage Note, the serial number of
which is shown by the evidence to be included among the serial numbers
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of the Mortgage Notes the Holders of which have consented to such action may, by
filing written notice at the Corporate Trust Office and upon proof of holding as
provided in this Article, revoke such action so far as concerns such Mortgage
Note. Except as aforesaid any such action taken by the Holder of any Mortgage
Note shall be conclusive and binding upon such Holder and upon all future
Holders and owners of such Mortgage Note and of any Mortgage Notes issued in
exchange or substitution therefor, irrespective of whether or not any notation
in regard thereto is made upon any such Mortgage Note. Any action taken by the
Holders of the percentage in aggregate principal amount of the Mortgage Notes
specified in this Indenture in connection with such action shall be conclusively
binding upon Golden State Petroleum, the Owners, the Indenture Trustee and the
Holders of all the Mortgage Notes.
ARTICLE TEN
SUPPLEMENTAL INDENTURES
SECTION 10.1 SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF
NOTEHOLDERS. Without the prior written consent of or notice to any Holder of
Mortgage Notes, Golden State Petroleum, as agent for the Owners, when authorized
by the Owners, and the Indenture Trustee may from time to time and at any time
enter into an indenture or indentures supplemental hereto for one or more of the
following purposes:
(a) to convey, transfer, assign, mortgage or pledge to the
Indenture Trustee as security for the Mortgage Notes any property or
assets;
(b) to cure any ambiguity or to correct or supplement any
provision contained herein, in any supplemental indenture or any
Security Document (including any document assigned thereby) which may
be defective or inconsistent with any other provision contained herein,
in any supplemental indenture or any Security Document (including any
document assigned thereby); or to make such other provisions in regard
to matters or questions arising under this Indenture, under any
supplemental indenture or under any Security Document (including any
document assigned thereby) as they may deem necessary or desirable and
which shall not adversely affect the interests of the Holders of the
Mortgage Notes;
(c) to comply with the requirements of the Commission in order
to effect or maintain the qualification of this Indenture under the
Trust Indenture Act or, if such qualification is not required, to
comply with the requirements of the Commission so that the Indentures
would be so qualified;
(d) to issue Additional Notes pursuant to Supplemental
Indentures in accordance with Section 10.6 of this Indenture; or
(e) to evidence and provide for the acceptance of appointment
of a successor trustee hereunder.
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The Indenture Trustee is hereby authorized to join in the
execution of any such supplemental indenture, to make any further appropriate
agreements and stipulations which may be therein contained and to accept the
conveyance, transfer, assignment, mortgage or pledge of any property thereunder,
but the Indenture Trustee shall not be obligated to enter into any such
supplemental indenture which affects the Indenture Trustee's own rights, duties
or immunities under this Indenture or otherwise.
Any supplemental indenture authorized by the provisions of
this Section may be executed without the consent of the holders of any of the
Mortgage Notes at the time Outstanding, notwithstanding any of the provisions of
Section 10.2.
SECTION 10.2 SUPPLEMENTAL INDENTURES WITH CONSENT OF
NOTEHOLDERS. With the consent (evidenced as provided in Article Nine) of the
Majority Noteholders, Golden State Petroleum, as agent of the Owners, when
authorized by the Owners, and the Indenture Trustee may, from time to time and
at any time, enter into an indenture or indentures supplemental hereto for the
purpose of adding any provisions to, changing or eliminating any provisions of
or modifying in any manner the rights of the holders of the Mortgage Notes under
this Indenture, any supplemental indenture or Security Document (including any
document assigned thereby); PROVIDED that if any such addition, change,
elimination or modification disproportionately adversely affects the Serial
Notes and the Additional Notes on the one hand or the Term Notes on the other
hand, it shall not be effective against such Notes unless it shall have been
approved by the holders of a majority of the Outstanding Notes so
disproportionately adversely affected; and PROVIDED FURTHER that, without the
consent of the Holders of each Mortgage Note affected, no such supplemental
indenture shall extend the final maturity or redemption date thereof, reduce the
rate of interest thereon, extend the time of payment of interest, reduce the
principal amount thereof, reduce any amount payable upon the redemption thereof,
change the sinking fund redemption amount, or impair the right to institute suit
for the enforcement of any such payment, or reduce the percentage of the Holders
whose consent is required for any such modification or amendment or modify any
provisions of this Indenture relating to the amendment thereof or the creation
of a supplemental indenture (unless the change increases the rights of the
Holders).
Upon the request of Golden State Petroleum, as agent of the
Owners, accompanied by a copy of a resolution of the Board of Directors of the
Owners certified by the Secretary or an Assistant Secretary of the Owners
authorizing the execution of any such supplemental indenture, and upon the
filing with the Indenture Trustee of evidence of the consent of Noteholders and
other documents, if any, required by Section 9.1, the Indenture Trustee shall
join with Golden State Petroleum, as agent of the Owners, in the execution of
such supplemental indenture unless such supplemental indenture affects the
Indenture Trustee's own rights, duties or immunities under this Indenture or
otherwise, in which case the Indenture Trustee may in its discretion, but shall
not be obligated to, enter into such supplemental indenture.
It shall not be necessary for the consent of the Noteholders
under this Section to approve the particular form of any proposed supplemental
indenture, but it shall be sufficient if such consent shall approve the
substance thereof.
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Promptly after the execution by Golden State Petroleum, as
agent of the Owners, and the Indenture Trustee of any supplemental indenture
pursuant to the provisions of this Section 10.2, Golden State Petroleum, as
agent of the Owners, shall mail a notice thereof by first-class mail to the
Holders of Mortgage Notes at their addresses as they shall appear on the
registry books of Golden State Petroleum, setting forth in general terms the
substance of such supplemental indenture. Any failure of Golden State Petroleum
to mail such notice, or any defect therein, shall not, however, in any way
impair or affect the validity of any such supplemental indenture.
SECTION 10.3 EFFECT OF SUPPLEMENTAL INDENTURE. Upon the
execution of any supplemental indenture pursuant to the provisions of this
Article, this Indenture shall be and be deemed to be modified and amended in
accordance therewith and the respective rights, limitations of rights,
obligations, duties and immunities under this Indenture of the Indenture
Trustee, Golden State Petroleum, the Owners and the Holders of Mortgage Notes
shall thereafter be determined, exercised and enforced hereunder subject in all
respects to such modifications and amendments, and all the terms and conditions
of any such supplemental indenture shall be and be deemed to be part of the
terms and conditions of this Indenture for any and all purposes.
SECTION 10.4 DOCUMENTS TO BE GIVEN TO INDENTURE TRUSTEE. In
executing, or accepting the additional trusts created by, any supplemental
indenture permitted by this Article or the modifications thereby of the trusts
created by this Indenture, the Indenture Trustee shall be entitled to receive,
and, subject to Sections 8.1 and 8.2, shall be fully protected in relying upon,
an Opinion of Counsel stating that the execution of such supplemental indenture
is authorized or permitted by this Indenture.
SECTION 10.5 NOTATION ON MORTGAGE NOTES IN RESPECT OF
SUPPLEMENTAL INDENTURES. Mortgage Notes authenticated and delivered after the
execution of any supplemental indenture pursuant to the provisions of this
Article may bear a notation in form approved by the Indenture Trustee as to any
matter provided for by such supplemental indenture. If Golden State Petroleum or
the Indenture Trustee shall so determine, new Mortgage Notes so modified as to
conform, in the opinion of the Indenture Trustee and Golden State Petroleum, to
any modification of this Indenture contained in any such supplemental indenture
may be prepared by Golden State Petroleum, as agent of the Owners, authenticated
by the Indenture Trustee and delivered in exchange for the Mortgage Notes then
Outstanding.
SECTION 10.6 ISSUANCE OF SERIES OF ADDITIONAL NOTES. (a)
Notwithstanding the provisions of Sections 10.1 and 10.2 hereof, upon the terms
and subject to the conditions of this Section 10.6, Golden State Petroleum, as
agent of the Owners, may, on a Delivery Date for a Vessel, direct the Indenture
Trustee to execute and authenticate one or more Series of Additional Notes
(each, a "Series"). Pursuant to each Charter, the Additional Construction Costs
to which a Series relates shall not exceed $250,000 without the consent of the
related Owner.
(b) On or before the Series Issuance Date relating to any
Series, the parties hereto will execute and deliver a Supplemental Indenture
which will specify the Principal Terms of such Series. The terms of such
Supplemental Indenture may modify or amend the terms of this Indenture solely as
applied to such Series. The obligation of the Indenture Trustee to
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authenticate, execute and deliver the Additional Notes of such Series and to
execute and deliver the related Supplemental Indenture is subject to the
satisfaction of the following conditions:
(i) on or before the tenth Business Day immediately
preceding the Series Issuance Date (unless the parties to be notified
agree to a shorter notice period), Golden State Petroleum, as agent of
the Owners, shall have given the Indenture Trustee, Chevon and each
Rating Agency, pursuant to the relevant Supplemental Indenture, notice
of the Series and the Series Issuance Date;
(ii) the original principal amount of such Series of
Additional Notes is equal to or less than the sum of (A) the aggregate
Additional Construction Costs for a Vessel and (B) the aggregate costs
of issuance of such Series of Additional Notes;
(iii) Golden State Petroleum, as agent of the Owners,
shall have delivered to the Indenture Trustee executed originals of the
related Supplemental Indenture, the related Charter Supplement and the
related Assignment of Charter Supplement, in form satisfactory to the
Indenture Trustee;
(iv) the Rating Agency Condition shall have been
satisfied with respect to the Series;
(v) Golden State Petroleum, as agent of the Owners,
shall deliver to the parties hereto an Officer's Certificate stating
that the above conditions have been satisfied;
(vi) Golden State Petroleum, as agent of the Owners,
shall have delivered an Opinion of Counsel to the Indenture Trustee
stating that the security interest of the Indenture Trustee in any new
collateral acquired in connection with the issuance of such Series of
Additional Notes, upon the issuance of the Additional Notes and
application of the proceeds therefrom, shall be a first priority
perfected security interest;
(vii) the maturity date of the Additional Notes
issued pursuant to such Series will be no later than the last day of
the Fixed Period of the related Charter;
(viii) all Collateral securing the obligations of the
Owners with respect to such Additional Notes will also secure on an
equal and ratable basis the Mortgage Notes then Outstanding;
(ix) the Collateral securing the Mortgage Notes then
outstanding will secure the Additional Notes issued pursuant to such
Series on an equal and ratable basis;
(x) the additional charterhire payable under the
related Charter Supplement is sufficient to pay the debt service
payable on the related Series of Additional Notes to the Maturity Date;
and
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(xi) the principal amount of the related Series of
Additional Notes will be amortized on the basis of an approximately
level mortgage-style semi-annual amortization to the Maturity Date.
Upon satisfaction of the above conditions, the Indenture Trustee shall execute
the Supplemental Indenture and authenticate, execute and deliver the Additional
Notes of such Series.
ARTICLE ELEVEN
SATISFACTION AND DISCHARGE OF
INDENTURE; UNCLAIMED MONEYS
SECTION 11.1 SATISFACTION AND DISCHARGE OF INDENTURE. If at
any time (a) the Owners shall have paid or caused to be paid the principal of,
premium, if any, and interest on all the Mortgage Notes Outstanding hereunder,
as and when the same shall have become due and payable, or (b) the Owners shall
have delivered to the Indenture Trustee for cancellation all Mortgage Notes
theretofore authenticated and delivered (except lost, stolen or destroyed
Mortgage Notes which have been replaced or paid and Mortgage Notes for whose
payment money has theretofore been deposited in trust or segregated and held in
trust by the Indenture Trustee and thereafter repaid or discharged from such
trust); or (c)(i) all Mortgage Notes not theretofore delivered to the Indenture
Trustee for cancellation have become due and payable and the Owners irrevocably
deposited or caused to be deposited with the Indenture Trustee as trust funds in
trust for the purpose an amount of cash or direct obligations of the United
States, backed by its full faith and credit, maturing as to principal and
interest in such amounts and at such times as will insure the availability of
cash sufficient to pay and discharge the entire indebtedness on the Mortgage
Notes not theretofore delivered to the Indenture Trustee for cancellation, for
principal, premium, if any, and accrued interest to the date of such deposit;
(ii) the Owners have paid all sums payable by them under the Indenture; and
(iii) the Owners have delivered irrevocable instructions to the Indenture
Trustee to apply the deposited money toward the payment of the Mortgage Notes at
maturity or the redemption date, as the case may be, then this Indenture and the
Security Documents (except to the extent specifically set forth therein) shall
cease to be of further effect (except as to (i) rights of registration of
transfer and exchange, (ii) substitution of apparently mutilated, destroyed,
lost or stolen Mortgage Notes, (iii) rights of Holders to receive payments of
principal, premium, if any, and interest thereon, upon the original stated due
dates therefor (but not upon acceleration), (iv) the rights, obligations and
immunities of the Indenture Trustee hereunder and (v) the rights of the
Noteholders as beneficiaries hereof with respect to the property so deposited
with or on behalf the Indenture Trustee payable to all or any of them), and the
Indenture Trustee, on demand of the Owners accompanied by an Officers'
Certificate and an Opinion of Counsel and at the cost and expense of the Owners,
shall execute proper instruments acknowledging such satisfaction of and
discharging this Indenture. In connection with the satisfaction and discharge of
this Indenture, the Owners must deliver an Officers' Certificate and an Opinion
of Counsel to the Indenture Trustee stating that all conditions precedent to
satisfaction and discharge have been complied with. Each of the Owners agrees to
reimburse the Indenture Trustee for any costs or expenses thereafter reasonably
and properly incurred and to compensate the Indenture Trustee for any
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services thereafter reasonably and properly rendered by the Indenture Trustee in
connection with this Indenture or the Mortgage Notes.
SECTION 11.2 APPLICATION BY INDENTURE TRUSTEE OF FUNDS
DEPOSITED FOR PAYMENT OF MORTGAGE NOTES. Subject to Section 11.4, all moneys
deposited with the Indenture Trustee (or the Paying Agent on behalf of the
Indenture Trustee) pursuant to Section 11.1 shall be held in trust and applied
by it (or the Paying Agent on behalf of the Indenture Trustee) to the payment,
either directly or through any Paying Agent (including the Indenture Trustee),
to the Holders of the particular Mortgage Notes for the payment or redemption of
which such moneys have been deposited with the Indenture Trustee (or the Paying
Agent on behalf of the Indenture Trustee), of all sums due and to become due
thereon for principal, premium, if any, and interest (including default
interest); but such money need not be segregated from other funds except to the
extent required by law.
SECTION 11.3 REPAYMENT OF MONEYS HELD BY PAYING AGENT. In
connection with the satisfaction and discharge of this Indenture, all moneys
then held by any Paying Agent in accordance with this Indenture shall be paid to
the Persons entitled thereto pursuant to the Security Documents and thereupon
such Paying Agent shall be released from all further liability with respect to
such moneys.
SECTION 11.4 RETURN OF MONEYS HELD BY INDENTURE TRUSTEE AND
PAYING AGENT UNCLAIMED FOR TWO YEARS. Any moneys deposited with or paid to the
Indenture Trustee or any Paying Agent for the payment of the principal of,
premium, if any, or interest (including default interest) on any Mortgage Note
and not applied but remaining unclaimed for two years after the date upon which
such principal, premium, if any, or interest shall have become due and payable,
shall, upon the written request of the Owners and unless otherwise required by
mandatory provisions of applicable escheat or abandoned or unclaimed property
law, be repaid to the Owners by the Indenture Trustee or such paying agent, and
the Holder of such Mortgage Note shall, unless otherwise required by mandatory
provisions of applicable escheat or abandoned or unclaimed property laws,
thereafter look only to the Owners for any payment which such Holder may be
entitled to collect, and all liability of the Indenture Trustee or any Paying
Agent with respect to such moneys shall thereupon cease.
ARTICLE TWELVE
REDEMPTION OF MORTGAGE NOTES
SECTION 12.1 OPTIONAL REDEMPTION; MANDATORY REDEMPTION;
PRICES.
(a) GENERAL. Except as provided in this Section 12.1 and
Section 12.4, the Mortgage Notes may not be redeemed prior to maturity.
(b) OPTIONAL REDEMPTION. The Owners at their option may, on
any Payment Date on or after the later of (i) August 1, 1999 and (ii) the
Delivery Date of the last Vessel to be delivered, redeem the Term Notes in whole
or in part upon payment of a redemption price equal to 100% of the principal
amount thereof plus accrued and unpaid interest to the date fixed for
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redemption, provided that if (i) such redemption occurs prior to February 1,
2018 and (ii) a Vessel is then subject to the related Charter or to an
Acceptable Replacement Charter pursuant to which the charterer thereunder is
required to pay charter hire equal to or greater than the Charter Hire payable
by the Charterer during the Fixed Period, then the Make-Whole Premium shall be
payable with respect to Mortgage Notes in an amount equal to Allocated Principal
Amount of the Mortgage Notes for such Vessel. The owners may not exercise such
optional redemption if such optional redemption would adversely affect the then
applicable ratings on the Serial Notes. In addition, in the event a Charter is
terminated and an Acceptable Replacement Charter is commercially unavailable,
the Owners, at their option, may redeem the Mortgage Notes in part in an amount
equal to the Allocated Principal Amount of the Mortgage Notes for such Vessel
upon payment of a redemption price equal to 100% of the principal amount
thereof, together with accrued interest (including default interest) to the date
fixed for redemption.
(c) PARTIAL MANDATORY REDEMPTION ON A TOTAL LOSS. For either
Vessel, the Owners shall redeem Outstanding Mortgage Notes in an aggregate
principal amount equal to the Allocated Principal Amount of the Mortgage Notes
for such Vessel, on a pro rata basis at 100% of the principal amount thereof
together with accrued interest (including default interest) to the date fixed
for redemption, if a Total Loss occurs or is declared with respect to such
Vessel. The redemption date for any redemption pursuant to this Section 12.1(c)
shall be the date which is no later than 90 days after the occurrence of the
Total Loss.
(d) MANDATORY REDEMPTION IN CERTAIN CIRCUMSTANCES. For either
Vessel, if the Charter for such Vessel is terminated at the option of the
Charterer in accordance with the terms of such Charter and the related Owner
does not enter into an Acceptable Replacement Charter for such Vessel on or
before the date which is one week prior to the next Payment Date under the
Mortgage Notes and the Manager has not received offers for the purchase of such
Vessel in an amount, together with the Allocable Portion of the Debt Service
Reserve Fund and after deducting fees and expenses relating to such termination
and sale, at least sufficient to redeem the Allocated Principal Amount of
Mortgage Notes for such Vessel, then within one year following the effective
date of such termination, the Indenture Trustee shall solicit the consent
(evidenced as provided in Article Nine) of all the Holders of Outstanding
Mortgage Notes. If such consent is so received, then, after the Manager has
certified to the Indenture Trustee, based on an appraisal, that the sale amount
is at least equal to the fair market value of such Vessel, the Mortgage Notes
shall be redeemed in part, from the net proceeds of the sale of such Vessel and
the Allocable Portion of the Debt Service Reserve Fund. The aggregate principal
amount of Mortgage Notes to be redeemed pursuant to this Section 12.1(d) shall
equal the Allocated Principal Amount of Mortgage Notes for the related Vessel.
The redemption price for Mortgage Notes to be redeemed pursuant to this Section
12.1(d)(ii) shall equal the product of (A) 100% of the principal amount thereof
and (B) the ratio obtained by dividing (1) the sum of the Allocable Portion of
the Debt Service Reserve Fund and the net proceeds from the sale of such Vessel
(after deducting fees and expenses relating to the sale of such Vessel) by (2)
the Allocated Principal Amount of Mortgage Notes being so redeemed; no
additional interest shall be paid on such Mortgage Notes redeemed pursuant to
this Section 12.1(d). The redemption date for any redemption pursuant to this
Section 12.1(d) shall be the date which is 90 days after the sale of the related
Vessel.
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(e) MANDATORY REDEMPTION UPON A NET REDUCTION IN CONSTRUCTION
COSTS. For either Vessel, the Owners shall redeem Outstanding Term Notes and
Serial Notes, on a PRO RATA basis, in an aggregate principal amount equal to the
Net Reduction in Construction Costs if such a Net Reduction in Construction
Costs occurs. The purchase price for such redemption shall be 100% of the Net
Reduction in Construction Costs, together with accrued and unpaid interest on
such Initial Notes to be redeemed to the date fixed for redemption.
SECTION 12.2 NOTICE OF REDEMPTION; PARTIAL REDEMPTIONS. Notice
of redemption to the Holders of Mortgage Notes to be redeemed in whole or in
part shall be given by mailing notice of such redemption by first class mail,
postage prepaid, at least 30 days and not more than 60 days prior to the date
fixed for redemption to such Holders of Mortgage Notes at their last addresses
as they shall appear upon the registry books. Any notice which is mailed in the
manner herein provided shall be conclusively presumed to have been duly given,
whether or not the holder receives the notice. Failure to give notice by mail,
or any defect in the notice to the holder of any Mortgage Note designated for
redemption as a whole or in part, shall not affect the validity of the
proceedings for the redemption of any other Mortgage Note.
The notice of redemption to each such Holder shall specify the
principal amount of each Mortgage Note held by such Holder to be redeemed, the
date fixed for redemption, the redemption price, the place or places of payment,
that payment will be made upon presentation and surrender of such Mortgage
Notes, that such redemption is pursuant to the mandatory sinking fund, if such
be the case, that interest (including default interest) accrued to the date
fixed for redemption will be paid as specified in said notice and that on and
after said date interest thereon (including default interest) or on the portions
thereof to be redeemed will cease to accrue and, that if any Mortgage Note
contains a CUSIP number as provided in Section 2.16, no representation is being
made as to the correctness of the CUSIP number either as printed on the Mortgage
Notes or as contained in the notice of redemption and that reliance may be
placed only on the other identification numbers printed on the Mortgage Notes.
If any Mortgage Note is to be redeemed in part only the notice of redemption
shall state the portion of the principal amount thereof to be redeemed and shall
state that on and after the date fixed for redemption, upon surrender of such
Mortgage Note, a new Mortgage Note or Notes in principal amount equal to the
unredeemed portion thereof will be issued.
The notice of redemption of Mortgage Notes to be redeemed
shall be given by Golden State Petroleum, as agent of the Owners, or, at the
Owner's request, by the Indenture Trustee in the name and at the expense of the
Owners.
On or before the redemption date specified in the notice of
redemption given as provided in this Section, the Owners shall deposit or cause
to be deposited with the Indenture Trustee or with the paying agent an amount of
money sufficient to redeem on the redemption date all the Mortgage Notes so
called for redemption at the appropriate redemption price, together with accrued
and unpaid interest (including default interest) to the date fixed for
redemption.
If less than all the Mortgage Notes are to be redeemed, the
Indenture Trustee shall select Mortgage Notes from each Class of Mortgage Notes
to be redeemed ratably from each Holder of the same Class such that the ratio of
the principal amount of Mortgage Notes of a
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Class to be redeemed from each Holder to the aggregate principal amount of
Mortgage Notes Outstanding of such Class held by such Holder shall, as nearly as
practicable and subject to rounding, equal the ratio of the aggregate principal
amount of Mortgage Notes from each Class of Mortgage Notes to be redeemed on
such redemption date to the aggregate principal amount of Mortgage Notes from
each Class of Mortgage Notes Outstanding. Mortgage Notes may be redeemed in part
in multiples of $1,000 only. The Indenture Trustee shall promptly notify the
Owners in writing of the Mortgage Notes selected for redemption and, in the case
of any Mortgage Notes selected for partial redemption, the principal amount
thereof to be redeemed. For all purposes of this Indenture, unless the context
otherwise requires, all provisions relating to the redemption of Mortgage Notes
shall relate, in the case of any Mortgage Note redeemed or to be redeemed only
in part, to the portion of the principal amount of such Mortgage Note which has
been or is to be redeemed.
SECTION 12.3 PAYMENT OF MORTGAGE NOTES CALLED FOR REDEMPTION.
If notice of redemption has been given as above provided, the Mortgage Notes or
portions of Mortgage Notes specified in such notice shall become due and payable
on the date and at the place stated in such notice at the applicable redemption
price, together with interest (including default interest accrued and unpaid to
the date fixed for redemption, and on and after said date (unless the Owners
shall default in the payment of such Mortgage Notes at the redemption price,
together with interest accrued and unpaid to said date) interest (including
default interest) on the Mortgage Notes or portions of Mortgage Notes so called
for redemption shall cease to accrue and, except as provided in Sections 8.5 and
11.4, such Mortgage Notes shall cease from and after the date fixed for
redemption to be entitled to any benefit or security under this Indenture, and
the Holders thereof shall have no right in respect of such Mortgage Notes except
the right to receive the redemption price thereof and unpaid interest (including
default) to the date fixed for redemption. On presentation and surrender of such
Mortgage Notes at a place of payment specified in said notice, said Mortgage
Notes or the specified portions thereof shall be paid and redeemed by Golden
State Petroleum at the applicable redemption price, together with interest
accrued (including default interest) thereon to the date fixed for redemption;
PROVIDED that any semi-annual payment of interest becoming due on the date fixed
for redemption shall be payable to the Holders of such Mortgage Notes registered
as such on the relevant record date subject to the terms and provisions of
Section 2.5 hereof.
If any Mortgage Note called for redemption shall not be so
paid upon surrender thereof for redemption, the principal shall, until paid or
duly provided for, bear interest from the date fixed for redemption at the
applicable Default Rate.
Upon presentation of any Mortgage Note redeemed in part only,
Golden State Petroleum, as agent of the Owners, shall execute and the Indenture
Trustee shall authenticate and deliver to or on the order of the holder thereof,
at the expense of the Owners, a new Mortgage Note or Mortgage Notes, of
authorized denominations, in a principal amount or amounts equal to the
unredeemed portion of the Mortgage Note so presented.
SECTION 12.4 TERM NOTE MANDATORY SINKING FUND. The Term Notes
shall also be subject to redemption in part on each date and in the amount
specified in Schedule I hereto (subject to adjustment by the Indenture Trustee
upon the occurrence of a Total Loss of either Vessel and of any mandatory
redemption of the Term Notes), which Schedule I is hereby
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incorporated by reference herein, through the operation of the sinking fund as
set forth in this Section, at a sinking fund redemption price equal to 100% of
the principal amount thereof (the "sinking fund redemption price"), together
with accrued and unpaid interest to the date fixed for redemption.
As and for a mandatory sinking fund for the retirement of the
Term Notes and so long as any of the Term Notes remain outstanding and unpaid,
the Owners will, except as hereinafter provided, pay to the Indenture Trustee,
on or before the First Term Note Sinking Fund Payment Date, and on each February
1 and August 1 thereafter to and including August 1, 2018 prior to 11:00 a.m. on
such date an amount sufficient to redeem on such sinking fund redemption date, a
principal amount of Term Notes specified in Schedule I hereto (subject to
adjustment as aforesaid), or such lesser amount as shall then be outstanding, at
100% of the principal amount thereof, the sinking fund redemption price,
together with accrued and unpaid interest to the date fixed for redemption. Each
date on which a sinking fund payment is to be made in each year is herein
referred to as the "sinking fund payment date".
On or before each sinking fund payment date, the Owners shall
pay to the Indenture Trustee in cash or shall otherwise provide for the payment
of all interest accrued to the date fixed for redemption on Term Notes to be
redeemed on such sinking fund payment date.
The Indenture Trustee shall not redeem or cause to be redeemed
any Term Notes with sinking fund moneys or mail any notice of redemption of Term
Notes by operation of the sinking fund during the continuance of a default in
payment of interest on the Mortgage Notes or of any other Indenture Event of
Default of which the Indenture Trustee shall have knowledge except that, where
the mailing of notice of redemption of any Term Notes shall theretofore have
been made, the Indenture Trustee shall redeem or cause to be redeemed such Term
Notes, provided that it shall have received from the Owners a sum sufficient for
such redemption. Except as aforesaid, any moneys in the sinking fund at the time
when any such Indenture Event of Default shall occur, and any moneys thereafter
paid into the sinking fund, shall, during the continuance of such Indenture
Event of Default, be deemed to have been collected under Article Seven and held
for the payment of all the Term Notes. In case such Indenture Event of Default
shall have been waived as provided in Section 7.9 or the Default cured on or
before the sixtieth day preceding the sinking fund payment date in any year,
such moneys shall thereafter be applied on the next succeeding sinking fund
payment date in accordance with this Section to the redemption of Term Notes.
SECTION 12.5 ADDITIONAL NOTE MANDATORY SINKING FUND. Each
Series of Additional Notes shall also be subject to redemption in part on each
date and in the amount specified in the schedule attached to the related
Supplemental Indenture (subject to adjustment by the Indenture Trustee upon the
Total Loss of the related Vessel and of any mandatory redemption of the
Additional Notes), through the operation of the sinking fund as set forth in
this Section, at a sinking fund redemption price equal to 100% of the principal
amount thereof (the "sinking fund redemption price"), together with accrued and
unpaid interest to the date fixed for redemption.
As and for a mandatory sinking fund for the retirement of a
Series of Additional Notes and so long as any Additional Notes in such Series
remain outstanding and unpaid, the
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Owners will, except as hereinafter provided, pay to the Indenture Trustee, on or
before each Payment Date immediately succeeding the date such Series of
Additional Notes were issued, and on each February 1 and August 1 thereafter to
and including the Payment Date immediately prior to the Maturity Date thereof
prior to 11:00 a.m. on such date an amount sufficient to redeem on such sinking
fund redemption date, a principal amount of Additional Notes specified in
schedule attached to the related Supplemental Indenture (subject to adjustment
as aforesaid), or such lesser amount as shall then be outstanding, at 100% of
the principal amount thereof, the sinking fund redemption price, together with
accrued and unpaid interest to the date fixed for redemption. Each date on which
a sinking fund payment is to be made in each year is herein referred to as the
"sinking fund payment date".
On or before each sinking fund payment date, the Owners shall
pay to the Indenture Trustee in cash or shall otherwise provide for the payment
of all interest accrued to the date fixed for redemption on such Additional
Notes to be redeemed on such sinking fund payment date.
The Indenture Trustee shall not redeem or cause to be redeemed
any Additional Notes with sinking fund moneys or mail any notice of redemption
of Additional Notes by operation of the sinking fund during the continuance of a
default in payment of interest on the Mortgage Notes or of any other Indenture
Event of Default of which the Indenture Trustee shall have knowledge except
that, where the mailing of notice of redemption of any Additional Notes shall
theretofore have been made, the Indenture Trustee shall redeem or cause to be
redeemed such Additional Notes, provided that it shall have received from the
Owners a sum sufficient for such redemption. Except as aforesaid, any moneys in
the sinking fund at the time when any such Indenture Event of Default shall
occur, and any moneys thereafter paid into the sinking fund, shall, during the
continuance of such Indenture Event of Default, be deemed to have been collected
under Article Seven and held for the payment of all the Additional Notes. In
case such Indenture Event of Default shall have been waived as provided in
Section 7.9 or the Default cured on or before the sixtieth day preceding the
sinking fund payment date in any year, such moneys shall thereafter be applied
on the next succeeding sinking fund payment date in accordance with this Section
to the redemption of Additional Notes.
SECTION 12.6 PURCHASE OPTION OF HOLDERS. On August 1, 2014,
(the "Optional Purchase Date") if neither Charter has been terminated by the
Charterer, each Holder of the Term Notes will have a one-time option to cause
the Owners to purchase all or a part of such Holder's Term Notes at a purchase
price equal to 100% of the principal amount thereof plus accrued and unpaid
interest through the date of purchase. The Term Notes will be purchased in
multiples of $1,000 principal amount, provided that the principal amount of Term
Notes not so purchased must be of an authorized denomination.
Golden State Petroleum, at the direction of the Owners, shall
mail to all holders of record of the Term Notes a notice of the availability or
non-availability of the purchase option on or before the 60th day prior to the
Optional Purchase Date. Golden State Petroleum shall deliver to the Indenture
Trustee a copy of such notice. To exercise the purchase right, Holders of Term
Notes must deliver, on or before the 30th day after the date of Golden State
Petroleum's notice, the Term Notes to be redeemed, duly endorsed for transfer,
together with
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the form provided with such notice duly completed, to Golden State Petroleum (or
agent designated by the Companies for such purpose).
ARTICLE THIRTEEN
MISCELLANEOUS PROVISIONS
SECTION 13.1 INCORPORATORS, STOCKHOLDERS, OFFICERS AND
DIRECTORS OF GOLDEN STATE PETROLEUM AND THE OWNERS EXEMPT FROM INDIVIDUAL
LIABILITY. No recourse under or upon any obligation, covenant or agreement
contained in this Indenture, or in any Mortgage Note, or because of any
indebtedness evidenced thereby, shall be had against any incorporator, as such
or against any past, present or future stockholder, officer or director, as
such, of Golden State Petroleum, the Owners or of any successor, either directly
or through Golden State Petroleum, the Owners, or any successor, under any rule
of law, statute or constitutional provision or by the enforcement of any
assessment or by any legal or equitable proceeding or otherwise, all such
liability being expressly waived and released by the Indenture Trustee and by
the acceptance of the Mortgage Notes by the Holders thereof and as part of the
consideration for the issue of the Mortgage Notes.
SECTION 13.2 PROVISIONS OF INDENTURE FOR THE SOLE BENEFIT OF
PARTIES AND NOTEHOLDERS. Nothing in this Indenture or in the Mortgage Notes,
expressed or implied, shall give or be construed to give to any person, firm or
corporation, other than the parties hereto and their successors and the Holders
of the Mortgage Notes, any legal or equitable right, remedy or claim under this
Indenture or under any covenant or provision herein contained, all such
covenants and provisions being for the sole benefit of the parties hereto and
their successors and of the Holders of the Mortgage Notes.
SECTION 13.3 SUCCESSORS AND ASSIGNS OF THE OWNERS BOUND BY
INDENTURE. All the covenants, stipulations, promises and agreements in this
Indenture contained by or in behalf of Golden State Petroleum and the Owners
shall bind their respective successors and assigns, whether so expressed or not.
SECTION 13.4 NOTICES AND DEMANDS ON GOLDEN STATE PETROLEUM,
INDENTURE TRUSTEE AND NOTEHOLDERS. Any notice or demand which by any provision
of this Indenture is required or permitted to be given or served by the
Indenture Trustee or by the Holders of Mortgage Notes to or on Golden State
Petroleum or the Owners may be given or served by being deposited postage
prepaid, first-class mail (except as otherwise specifically provided herein)
addressed (until another address of Golden State Petroleum or the Owners, as the
case may be, is filed by Golden State Petroleum or the Owners, as the case may
be, with the Indenture Trustee) to Golden State Petroleum Transport Corporation
c/o Cambridge Fund Management LLC, 55 East 65th Street, Suite 3300, New York,
New York 10022 and to the Owners at [15-19 Athol Street, Douglas, Isle of Man].
Any notice, direction, request or demand by Golden State Petroleum or any
Noteholder to or upon the Indenture Trustee shall be deemed
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to have been sufficiently given or made, for all purposes, if given or made at
the Corporate Trust Department at 114 West 47th Street, New York, New York
10036-1532.
Where this Indenture provides for notice to Holders, such
notice shall be sufficiently given (unless otherwise herein expressly provided)
if in writing and mailed, first-class postage prepaid, to each Holder entitled
thereto, at his last address as it appears in the Mortgage Note register. In any
case where notice to Holders is given by mail, neither the failure to mail such
notice, nor any defect in any notice so mailed, to any particular Holder shall
affect the sufficiency of such notice with respect to other Holders. Where this
Indenture provides for notice in any manner, such notice may be waived in
writing by the person entitled to receive such notice, either before or after
the event, and such waiver shall be the equivalent of such notice. Waivers of
notice by Holders shall be filed with the Indenture Trustee, but such filing
shall not be a condition precedent to the validity of any action taken in
reliance upon such waiver.
In case, by reason of the suspension of or irregularities in
regular mail service, it shall be impracticable to mail notice to Golden State
Petroleum, the Owners and Noteholders, when such notice is required to be given
pursuant to any provision of this Indenture, then any manner of giving such
notice as shall be satisfactory to the Indenture Trustee shall be deemed to be a
sufficient giving of such notice.
SECTION 13.5 OFFICERS' CERTIFICATES AND OPINIONS OF COUNSEL;
STATEMENTS TO BE CONTAINED THEREIN. Upon any application or demand by Golden
State Petroleum or the Owners to the Indenture Trustee to take any action under
any of the provisions of this Indenture, Golden State Petroleum or the Owners,
as the case may be, shall furnish to the Indenture Trustee an Officers'
Certificate stating that all conditions precedent provided for in this Indenture
relating to the proposed action have been complied with and an Opinion of
Counsel stating that in the opinion of such counsel all such conditions
precedent have been complied with, except that in the case of any such
application or demand as to which the furnishing of such documents is
specifically required by any provision of this Indenture relating to such
particular application or demand, no additional certificate or opinion need be
furnished.
Each certificate or opinion provided for in this Indenture and
delivered to the Indenture Trustee with respect to compliance with a condition
or covenant provided for in this Indenture shall include (a) a statement that
the Person making such certificate or opinion has read such covenant or
condition, (b) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based, (c) a statement that, in the opinion of such
Person, such Person has made such examination or investigation as is necessary
to enable such Person to express an informed opinion as to whether or not such
covenant or condition has been complied with and (d) a statement as to whether
or not, in the opinion of such Person, such condition or covenant has been
complied with and such other opinions as the Indenture Trustee may reasonably
request.
Any certificate, statement or opinion of an officer of Golden
State Petroleum or the Owners may be based, insofar as it relates to legal
matters, upon a certificate or opinion of or representations by counsel, unless
such officer knows that the certificate or opinion or representations with
respect to the matters upon which such officer's certificate, statement or
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opinion may be based as aforesaid are erroneous, or in the exercise of
reasonable care should know that the same are erroneous. Any certificate,
statement or opinion of counsel may be based, insofar as it relates to factual
matters with respect to information which is in the possession of Golden State
Petroleum or the Owners, as the case may be, upon the certificate, statement or
opinion of or representations by an officer or officers of Golden State
Petroleum, as the case may be, unless such counsel knows that the certificate,
statement or opinion or representations with respect to the matters upon which
such counsel certificate, statement or opinion may be based as aforesaid are
erroneous, or in the exercise of reasonable care should know that the same are
erroneous.
Any certificate, statement or opinion of an officer of Golden
State Petroleum, the Owners or of counsel may be based, insofar as it relates to
accounting matters, upon a certificate or opinion of or representations by an
accountant or firm of accountants in the employ of Golden State Petroleum or the
Owners, as the case may be, unless such officer or counsel, as the case may be,
knows that the certificate or opinion or representations with respect to the
accounting matters upon which such officer's or counsel's certificate, statement
or opinion may be based as aforesaid are erroneous, or in the exercise of
reasonable care should know that the same are erroneous.
Any certificate or opinion of any independent firm of public
accountants filed with the Indenture Trustee shall contain a statement that such
firm is independent.
SECTION 13.6 PAYMENTS DUE ON SATURDAYS, SUNDAYS AND HOLIDAYS.
If the date of maturity of interest on or principal of the Mortgage Notes, the
date fixed for redemption of any Mortgage Note or the date for the payment of
any other amount due thereunder or hereunder shall not be a Business Day, then
such payment need not be made on such date, but may be made on the next
succeeding Business Day with the same force and effect as if made on the date of
maturity, the date fixed for redemption or such other date for payment, and,
provided that payment is made on such next succeeding Business Day, no interest
shall accrue for the period of such extension.
SECTION 13.7 CONFLICT OF ANY PROVISION OF INDENTURE WITH TRUST
INDENTURE ACT. If and to the extent that any provision of this Indenture limits,
qualifies or conflicts with another provision included in this Indenture by
operation of Section 318, inclusive, of the Trust Indenture Act (an
"incorporated provision"), such incorporated provision shall control
notwithstanding that at the time of the issuance of the Notes this Indenture is
not required to be qualified under the Trust Indenture Act, it being the intent
of the parties that this Indenture contain all terms and conditions as are
required of indentures under the Trust Indenture Act.
SECTION 13.8 NEW YORK LAW TO GOVERN. THIS INDENTURE AND EACH
MORTGAGE NOTE SHALL BE DEEMED TO BE A CONTRACT UNDER THE LAWS OF THE STATE OF
NEW YORK (WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAWS).
SECTION 13.9 COUNTERPARTS. This Indenture may be executed in
any number of counterparts, each of which shall be an original; but such
counterparts shall together constitute but one and the same instrument.
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SECTION 13.10 EFFECT OF HEADINGS. The Article and Section
headings herein and the Table of Contents are for convenience only and shall not
affect the construction hereof.
SECTION 13.11 SEPARABILITY CLAUSE. In case any provision in
this Indenture or in the Mortgage Notes shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
SECTION 13.12 CONSENT TO JURISDICTION. Any legal suit, action
or proceeding against either Owner arising out of or relating to this Indenture,
or any transaction contemplated hereby, may be instituted in any federal or
state court in The City of New York, State of New York, and each Owner hereby
irrevocably submits to the jurisdiction of any such court in any such suit,
action or proceeding. Each Owner hereby waives, to the fullest extent permitted
by applicable law, any defense which it may now or hereafter have based upon
lack of personal jurisdiction or venue or FORUM NON CONVENIENS. Each Owner
hereby irrevocably appoints and designates CT Corporation System, having an
address at 1633 Broadway, New York, New York, its true and lawful
attorney-in-fact and duly authorized agent for the limited purpose of accepting
servicing of legal process and each Owner agrees that service of process upon
such party shall constitute personal service of such process on such Person.
Each Owner shall maintain the designation and appointment of such authorized
agent until all amounts payable under this Indenture shall have been paid in
full. If such agent shall cease to so act, each Owner shall immediately
designate and appoint another such agent satisfactory to the Indenture Trustee
and shall promptly deliver to the Indenture Trustee evidence in writing of such
other agent's acceptance of such appointment.
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IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed this __th day of ______, 1996 by their respective
officers thereunto duly authorized and acknowledge that this Indenture has been
made and delivered in The City of New York, and this Indenture shall be
effective only upon such execution and delivery.
GOLDEN STATE PETROLEUM TRANSPORT
CORPORATION, as agent for the Owners
By: /s/ John McFadden
-----------------------------
Name: John McFadden
Title: President
GOLDEN STATE PETRO (IOM I-A) PLC
By:/s/ Joseph Avantario
-----------------------------
Name: Joseph Avantario
Title: Treasurer
GOLDEN STATE PETRO (IOM I-B) PLC
By:/s/ Nunzio Lipomi
-----------------------------
Name: Nunzio Lipomi
Title: Assistant Secretary
UNITED STATES TRUST COMPANY OF NEW
YORK,
not in its individual capacity,
except as expressly provided herein,
but as Indenture Trustee
By:/s/ Christine C. Collins
-----------------------------
Name: Christine C. Collins
Title: Assistant Vice President
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EXHIBIT A-1
FACE OF MORTGAGE NOTE
(Serial Note)
[THIS MORTGAGE NOTE IS A GLOBAL NOTE WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITORY OR A
NOMINEE THEREOF. THIS MORTGAGE NOTE MAY NOT BE EXCHANGED IN WHOLE OR IN PART FOR
A MORTGAGE NOTE REGISTERED, AND NO TRANSFER OF THIS MORTGAGE NOTE IN WHOLE OR IN
PART MAY BE REGISTERED, IN THE NAME OF ANY PERSON OTHER THAN SUCH DEPOSITORY OR
A NOMINEE THEREOF, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE
INDENTURE.
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR MORTGAGE NOTES IN
DEFINITIVE FORM, THIS MORTGAGE NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY
THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY OR BY A NOMINEE OF THE DEPOSITORY
TO THE DEPOSITORY OR ANOTHER NOMINEE OF THE DEPOSITORY OR BY THE DEPOSITORY OR
ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITORY OR A NOMINEE OF SUCH SUCCESSOR
DEPOSITORY. UNLESS AND UNTIL THIS MORTGAGE NOTE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY ("DTC"), TO GOLDEN STATE
PETROLEUM TRANSPORT CORPORATION, AS AGENT FOR GOLDEN STATE PETRO (IOM I-A) PLC
AND GOLDEN STATE PETRO (IOM I-B) PLC, OR ITS AGENTS FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND ANY MORTGAGE NOTE ISSUED IS REGISTERED IN THE
NAME OF CEDE & CO. OR SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO.), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.]**
No. ___ $________________
CUSIP ___________
Golden State Petroleum Transport Corporation, as agent for
Golden State Petro (IOM I-A) PLC and Golden State Petro (IOM I-B) PLC
____% Serial First Preferred Mortgage Notes Due [____]
THE MORTGAGE NOTE (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS
ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER
SECTION 5 OF THE UNITED STATES SECURITIES ACT OF 1933 (THE "SECURITIES
- - - - - --------
**These two paragraphs should be included only if this Mortgage Note is issued
in global form.
A-1-1
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ACT"), AND THE MORTGAGE NOTE EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR
OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE
EXEMPTION THEREFROM. EACH PURCHASER OF THE MORTGAGE NOTE EVIDENCED HEREBY IS
HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION FROM THE
PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.
THE HOLDER OF THE MORTGAGE NOTE EVIDENCED HEREBY AGREES FOR THE BENEFIT OF
GOLDEN STATE PETROLEUM AND THE OWNERS THAT, UNTIL THE LATER OF DECEMBER 24, 1999
OR THREE YEARS SINCE THE DATE THIS MORTGAGE NOTE WAS LAST HELD BY AN AFFILIATE
OF GOLDEN STATE PETROLEUM (OR, IN EACH CASE, SUCH EARLIER DATE AS RESALES HEREOF
ARE PERMITTED PURSUANT TO RULE 144(K) OR THE SUCCESSOR RULE THERETO) (A) SUCH
MORTGAGE NOTE MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (1) (a) TO A
PERSON WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS
DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144A, (b) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE
144 UNDER THE SECURITIES ACT, (c) OUTSIDE THE UNITED STATE STATES TO A FOREIGN
PERSON IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 UNDER THE
SECURITIES ACT OR (d) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT (AND (a) IN THE CASE OF CLAUSE (b), (c) OR
(d), BASED ON AN OPINION OF COUNSEL AND/OR CERTIFICATES TO THE EXTENT PROVIDED
IN THE INDENTURE), (2) TO THE OWNERS, (3) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH THE APPLICABLE SECURITIES LAWS
OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND (B)
THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER
FROM IT OF THE MORTGAGE NOTE EVIDENCED HEREBY OR ANY MORTGAGE NOTE ISSUED IN
EXCHANGE FOR OR IN SUBSTITUTION HEREOF OF THE RESALE RESTRICTIONS SET FORTH IN
(A) ABOVE.
Golden State Petroleum Transport Corporation, a Delaware
corporation ("Golden State Petroleum"), solely as agent for Golden State Petro
(IOM I-A) PLC (an "Owner") and Golden State Petro (IOM I-B) PLC (an "Owner" and,
together with Golden State Petro (IOM I-A) PLC, the "Owners"), for value
received hereby promises to pay to CEDE & CO. or registered assigns the
principal sum of _____________________ on February 1, ____ at the office or
agency of United States Trust Company of New York (the "Indenture Trustee") or
its paying agent under the Indenture dated as of December 1, 1996 by and among
Golden State Petroleum, the Owners and the Indenture Trustee (the "Indenture";
terms defined in the Indenture are used herein as so defined) maintained for
such purpose in New York, in such coin or currency of the United States of
America as at the time of payment shall be legal tender for the payment of
public and private debts, and to pay interest (computed on the basis of a
360-day year of twelve 30-day months), semi-annually on February 1 and August 1
of each year commencing August 1, 1997 on said principal sum in like coin or
currency at the rate per annum set forth above at said office or agency from the
February 1 or the August 1, as the case may be, next preceding the date of this
Mortgage Note to which interest on the Mortgage Notes has been paid or duly
provided for, unless the date hereof is a date to which interest on the
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Mortgage Notes has been paid or duly provided for, in which case from the date
of this Mortgage Note, or unless no interest has been paid or duly provided for
on the Mortgage Notes, in which case from December 24, 1996 until payment of
said principal sum has been made or duly provided for. Notwithstanding the
foregoing, if the date hereof is after any February 1 or August 1 and before the
following February 1 or August 1, as the case may be, this Mortgage Note shall
bear interest from such February 1 or August 1. The interest so payable on any
February 1 or August 1 will, except as otherwise provided in the Indenture, be
paid to the person in whose name this Mortgage Note is registered at the close
of business on the January 15 or July 15 preceding such February 1 or August 1,
whether or not such day is a Business Day.
Interest is payable on demand at the Default Rate on any
overdue payment of principal of, interest or any other amount payable on this
Mortgage Note from the due date for such payment to the date such amount is paid
in full.
If any amount payable under this Mortgage Note or under the
Indenture falls due on a day that is not a Business Day, then such amount shall
be payable on the next succeeding Business Day without additional interest
thereon for the period of such extension (provided that payment is made on such
next succeeding Business Day).
Reference is made to the further provisions of this Mortgage
Note set forth on the reverse hereof. Such further provisions shall for all
purposes have the same effect as though fully set forth at this place.
This Mortgage Note shall not be valid or obligatory until the
certificate of authentication hereon shall have been duly signed by the
Indenture Trustee acting under the Indenture.
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IN WITNESS WHEREOF, Golden State Petroleum, as agent on behalf
of the Owners, has caused this instrument to be duly executed under its
corporate seal.
Dated:
Golden State Petroleum Transport Corporation,
as agent on behalf of the Owners
______________________________________
Name:
Title:
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Mortgage Notes described in the
within-mentioned Indenture.
UNITED STATES TRUST COMPANY OF NEW YORK, as
Indenture Trustee
______________________________________
Authorized Officer
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REVERSE OF MORTGAGE NOTE
Golden State Petroleum Transport Corporation, as agent for
Golden State Petro (IOM I-A) PLC and Golden State Petro (IOM I-B) PLC
____% Serial First Preferred Mortgage Notes Due [____]
This Mortgage Note is one of a duly authorized issue of debt
securities of Golden State Petroleum, as agent for the Owners, limited to the
aggregate principal amount of ________________ (except as otherwise provided in
the Indenture), issued or to be issued pursuant to the Indenture. Reference is
hereby made to the Indenture and all indentures supplemental thereto for a
description of the rights, limitations of rights, obligations, duties and
immunities thereunder of the Indenture Trustee, Golden State Petroleum, the
Owners and the Holders of the Mortgage Notes.
This Mortgage Note is secured by the Collateral pursuant to
the Indenture and the other Security Documents. Each Holder of this Mortgage
Note, by its acceptance thereof, consents and agrees to the terms of the
Security Documents (including without limitation the provisions providing for
the release of the Collateral provided for herein and therein) as the same may
be in effect or may be amended from time to time in accordance with their terms
and authorizes and directs the Indenture Trustee to perform its obligations and
exercise its rights under the Indenture and the other Security Documents in
accordance therewith; PROVIDED that in the event the terms thereof limit,
qualify or conflict with the duties imposed by the incorporated provisions of
the Trust Indenture Act, the incorporated provisions of the Trust Indenture Act
shall control.
In case an Indenture Event of Default shall have occurred and
be continuing, the principal of all the Mortgage Notes may be declared due and
payable, in the manner and with the effect, and subject to the conditions,
provided in the Indenture. The Indenture provides that in certain events such
declaration and its consequences may be waived by the Majority Noteholders and
that, prior to any such declaration, such Holders may waive any past default
under the Indenture and its consequences except a default in the payment of
principal of or interest on any of the Mortgage Notes. Any such consent or
waiver by the Holder of this Mortgage Note (unless revoked as provided in the
Indenture) shall be conclusive and binding upon such Holder and upon all future
holders and owners of this Mortgage Note and any Mortgage Note which may be
issued in exchange or substitution herefor, whether or not any notation thereof
is made upon this Mortgage Note or such other Mortgage Notes.
The Indenture permits Golden State Petroleum, the Owners and
the Indenture Trustee, with the consent of the Majority Noteholders, evidenced
as provided in the Indenture, to execute supplemental indentures adding any
provisions to or changing in any manner or eliminating any of the provisions of
the Indenture or of any supplemental indenture or modifying in any manner the
rights of the holders of the Mortgage Notes; PROVIDED that no such supplemental
indenture shall extend the final maturity or redemption dates of any Mortgage
Note, or reduce the principal amount thereof, or reduce the rate of interest
thereon or extend the time of payment of interest thereon, or reduce any amount
payable upon the redemption hereof, or impair or affect the right to institute
suit for the enforcement of any such payment,
A-1-5
<PAGE>
or reduce the percentage of the Holders whose consent is required for any such
modification or amendment or modify any provision of the Indenture relating to
the amendment thereof or the creation of a supplemental indenture (unless the
change increases the rights of the Holders).
No reference herein to the Indenture and no provision of this
Mortgage Note or of the Indenture shall alter or impair the obligation of Golden
State Petroleum, as agent for the Owners, which is absolute and unconditional,
to pay the principal of and interest on this Mortgage Note at the place, times,
and rate, and in the currency, herein prescribed.
The Mortgage Notes are issuable only as registered Mortgage
Notes without coupons in denominations of $100,000 and any multiple of $1,000 in
excess thereof.
Mortgage Notes may be exchanged for a like aggregate principal
amount of Mortgage Notes of other authorized denominations at the office or
agency of the Indenture Trustee maintained for such purpose and in the manner
and subject to the limitations provided in the Indenture.
Upon due presentment for registration of transfer of this
Mortgage Note as provided in the Indenture, a new Mortgage Note or Mortgage
Notes of authorized denominations, for a like aggregate principal amount, will
be issued to the transferee as provided in the Indenture. No service charge
shall be made for any such transfer, but the Indenture Trustee may require
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in relation thereto.
The Mortgage Notes are not subject to optional redemption
prior to the maturity date hereof.
In connection with the optional termination of a Charter by
the Charterer, under certain circumstances more fully set forth in the
Indenture, the Mortgage Notes are also subject to mandatory redemption, in part
on a pro rata basis, in an amount equal to 100% of the Allocated Principal
Amount of the Mortgage Notes for the related Vessel, together with accrued and
unpaid interest to the date fixed for redemption.
The Mortgage Notes are also subject to redemption in part on a
pro rata basis, in an amount equal to the Allocated Principal Amount of the
Mortgage Notes for the related Vessel, on notice as all as provided in the
Indenture if a Total Loss occurs or is declared with respect to such Vessel. The
aggregate principal amount of Mortgage Notes to be redeemed pursuant to this
paragraph shall equal the Allocated Principal Amount of Mortgage Notes for the
related Vessel. The redemption date for any redemption pursuant to this
paragraph shall be the date which is on or prior to 90 days after the occurrence
of the Total Loss. The Mortgage Notes are also subject to redemption in part if
a Vessel is not part of the Collateral in accordance with the Indenture on or
before the date which is 180 days after the date such Vessel was scheduled to be
delivered under the related Building Contract.
The Mortgage Notes are also subject to redemption in part on a
pro rata basis, in an amount equal to the Net Reduction in Construction Costs,
under certain circumstances more fully set forth in the Indenture, at a
redemption price equal to 100% of the Net Reduction
A-1-6
<PAGE>
in Construction Costs, together with accrued and unpaid interest to the date
fixed for redemption.
Subject to payment by Golden State Petroleum, as agent for the
Owners, of a sum sufficient to pay the amount due on redemption, interest on
this Mortgage Note (or portion hereof if this Mortgage Note is redeemed in part)
shall cease to accrue upon the date duly fixed for redemption of this Mortgage
Note (or portion hereof if this Mortgage Note is redeemed in part).
Golden State Petroleum, the Indenture Trustee, the Owners, and
any authorized agent of Golden State Petroleum or the Indenture Trustee, may
deem and treat the registered holder hereof as the absolute owner of this
Mortgage Note (whether or not this Mortgage Note shall be overdue and
notwithstanding any notation of ownership or other writing hereon made by anyone
other than Golden State Petroleum, as agent for the Owners, or the Indenture
Trustee or any authorized agent of Golden State Petroleum or the Indenture
Trustee), for the purpose of receiving payment of, or on account of, the
principal hereof and, subject to the provisions on the face hereof, interest
hereon and for all other purposes, and none of Golden State Petroleum, the
Owners or the Indenture Trustee nor any authorized agent of Golden State
Petroleum, the Owners or the Indenture Trustee shall be affected by any notice
to the contrary.
No recourse under or upon any obligation, covenant or
agreement contained in the Indenture or this Mortgage Note, or because of any
indebtedness evidenced thereby, shall be had against any incorporator, as such
or against any past, present or future stockholder, officer or director, as
such, of Golden State Petroleum, the Owners or of any successor, either directly
or through Golden State Petroleum, the Owners, or any successor, under any rule
of law, statute or constitutional provision or by the enforcement of any
assessment or by any legal or equitable proceeding or otherwise, all such
liability being expressly waived and released by the Indenture Trustee and by
the acceptance of this Mortgage Note by the Holder hereof and as part of the
consideration for the issue of the Mortgage Notes.
A-1-7
<PAGE>
SCHEDULE OF EXCHANGES FOR DEFINITIVE NOTES***
The following exchanges of a part of this Global Note for Definitive
Notes have been made:
<TABLE>
<CAPTION>
Principal Amount of this Signature of
Amount of decrease in Amount of increase in Global Note following authorized officer of
Principal Amount of this Principal Amount of this such decrease (or Indenture Trustee or
Date of Exchange Global Note Global Notes increase) Note Custodian
- - - - - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
</TABLE>
- - - - - ----------
*** This should be included only if the Mortgage Note is issued in global form.
A-1-8
<PAGE>
ASSIGNMENT FORM
To assign this Mortgage Note, fill in the form below:
(I) or (we) assign and transfer this Mortgage Note to
- - - - - --------------------------------------------------------------------------------
(Insert assignee's social security or tax I.D. no.)
- - - - - --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint _____________________ agent to transfer this Mortgage
Note on the books of Golden State Petroleum, as agent for the Owners. The agent
may substitute another to act for him.
Your Signature:_________________________________________________________________
(Sign exactly as your name appears on the other side of this Mortgage Note.)
Date:______________________________________
Signature Guarantee:______________
<PAGE>
EXHIBIT A-2
FACE OF MORTGAGE NOTE
(Term Note)
[THIS MORTGAGE NOTE IS A GLOBAL NOTE WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITORY OR A
NOMINEE THEREOF. THIS MORTGAGE NOTE MAY NOT BE EXCHANGED IN WHOLE OR IN PART FOR
A MORTGAGE NOTE REGISTERED, AND NO TRANSFER OF THIS MORTGAGE NOTE IN WHOLE OR IN
PART MAY BE REGISTERED, IN THE NAME OF ANY PERSON OTHER THAN SUCH DEPOSITORY OR
A NOMINEE THEREOF, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE
INDENTURE.
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR MORTGAGE NOTES IN
DEFINITIVE FORM, THIS MORTGAGE NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY
THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY OR BY A NOMINEE OF THE DEPOSITORY
TO THE DEPOSITORY OR ANOTHER NOMINEE OF THE DEPOSITORY OR BY THE DEPOSITORY OR
ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITORY OR A NOMINEE OF SUCH SUCCESSOR
DEPOSITORY. UNLESS AND UNTIL THIS MORTGAGE NOTE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY ("DTC"), TO GOLDEN STATE
PETROLEUM TRANSPORT CORPORATION, AS AGENT FOR GOLDEN STATE PETRO (IOM I-A) PLC
AND GOLDEN STATE PETRO (IOM I-B) PLC, OR ITS AGENTS FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND ANY MORTGAGE NOTE ISSUED IS REGISTERED IN THE
NAME OF CEDE & CO. OR SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO.), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.]****
No. ___ $________________
CUSIP ___________
Golden State Petroleum Transport Corporation, as agent for
Golden State Petro (IOM I-A) PLC and Golden State Petro (IOM I-B) PLC
____% First Preferred Mortgage Notes Due 2019
THE MORTGAGE NOTE (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS
ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER
SECTION 5 OF THE UNITED STATES SECURITIES ACT OF 1933 (THE "SECURITIES
- - - - - ----------
****These two paragraphs should be included only if this Mortgage Note is issued
in global form.
A-2-1
<PAGE>
ACT"), AND THE MORTGAGE NOTE EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR
OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE
EXEMPTION THEREFROM. EACH PURCHASER OF THE MORTGAGE NOTE EVIDENCED HEREBY IS
HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION FROM THE
PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.
THE HOLDER OF THE MORTGAGE NOTE EVIDENCED HEREBY AGREES FOR THE BENEFIT OF
GOLDEN STATE PETROLEUM AND THE OWNERS THAT, UNTIL THE LATER OF JANUARY 6, 2000
OR THREE YEARS SINCE THE DATE THIS MORTGAGE NOTE WAS LAST HELD BY AN AFFILIATE
OF GOLDEN STATE PETROLEUM (OR, IN EACH CASE, SUCH EARLIER DATE AS RESALES HEREOF
ARE PERMITTED PURSUANT TO RULE 144(K) OR THE SUCCESSOR RULE THERETO) (A) SUCH
MORTGAGE NOTE MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (1) (a) TO A
PERSON WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS
DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144A, (b) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE
144 UNDER THE SECURITIES ACT, (c) OUTSIDE THE UNITED STATE STATES TO A FOREIGN
PERSON IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 UNDER THE
SECURITIES ACT OR (d) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT (AND (a) IN THE CASE OF CLAUSE (b), (c) OR
(d), BASED ON AN OPINION OF COUNSEL AND/OR CERTIFICATES TO THE EXTENT PROVIDED
IN THE INDENTURE), (2) TO THE OWNERS, (3) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH THE APPLICABLE SECURITIES LAWS
OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND (B)
THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER
FROM IT OF THE MORTGAGE NOTE EVIDENCED HEREBY OR ANY MORTGAGE NOTE ISSUED IN
EXCHANGE FOR OR IN SUBSTITUTION HEREOF OF THE RESALE RESTRICTIONS SET FORTH IN
(A) ABOVE.
Golden State Petroleum Transport Corporation, a Delaware
corporation ("Golden State Petroleum"), solely as agent for Golden State Petro
(IOM I-A) PLC (an "Owner") and Golden State Petro (IOM I-B) PLC (an "Owner" and,
together with Golden State Petro (IOM I-A) PLC, the "Owners"), for value
received hereby promises to pay to CEDE & CO. or registered assigns the
principal sum of One Hundred Sixty-Five Million, Seven Hundred Thousand Dollars
in sinking fund payments as provided in the Indenture, together with a final
payment of principal on February 1, 2019 at the office or agency of United
States Trust Company of New York (the "Indenture Trustee") or its paying agent
under the Indenture dated as of December 1, 1996 by and among Golden State
Petroleum, the Owners and the Indenture Trustee (the "Indenture"; terms defined
in the Indenture are used herein as so defined) maintained for such purpose in
New York, in such coin or currency of the United States of America as at the
time of payment shall be legal tender for the payment of public and private
debts, and to pay interest (computed on the basis of a 360-day year of twelve
30-day months), semi-annually on February 1 and August 1 of each year commencing
August 1, 1997 on said principal sum in like coin or currency at the rate per
annum set forth above at said office or agency from the February 1 or the August
1, as the case may be, next preceding the date of this
A-2-2
<PAGE>
Mortgage Note to which interest on the Mortgage Notes has been paid or duly
provided for, unless the date hereof is a date to which interest on the Mortgage
Notes has been paid or duly provided for, in which case from the date of this
Mortgage Note, or unless no interest has been paid or duly provided for on the
Mortgage Notes, in which case from December 24, 1996 until payment of said
principal sum has been made or duly provided for. Notwithstanding the foregoing,
if the date hereof is after any February 1 or August 1 and before the following
February 1 or August 1, as the case may be, this Mortgage Note shall bear
interest from such February 1 or August 1. The interest so payable on any
February 1 or August 1 will, except as otherwise provided in the Indenture, be
paid to the person in whose name this Mortgage Note is registered at the close
of business on the January 15 or July 15 preceding such February 1 or August 1,
whether or not such day is a Business Day.
If (i) the Exchange Offer is not consummated within 180 days
of the Closing Date, (ii) a Shelf Registration Statement required under the
Registration Rights Agreement is not declared effective within the time period
specified therein, (iii) the Shelf Registration Statement or the Exchange Offer
Registration Statement is declared effective but thereafter ceases to be
effective during the periods specified in the Registration Rights Agreement, or
(iv) the Commission determines that neither the consummation of the Exchange
Offer nor continued effectiveness of the Shelf Registration Statement will
permit the free resale of the Exchange Term Notes or the Term Notes, as the case
may be, without additional registration under the Securities Act then a
"Registration Event" event will be deemed to have occurred. During any time that
a Registration Event has occurred and is continuing, until the Exchange Term
Notes or the Term Notes may be freely resold pursuant to Rule 144(k) by a person
who is not an affiliate of the issuer (within the meaning of Rule 144(k)),
special interest ("Special Interest") will accrue on such Term Notes which
constitute Restricted Securities at a rate of 0.25% of the principal amount
thereof per annum payable semiannually in arrears on each Payment Date.
Interest is payable on demand at the Default Rate on any
overdue payment of principal of, interest or any other amount payable on this
Mortgage Note from the due date for such payment to the date such amount is paid
in full.
If any amount payable under this Mortgage Note or under the
Indenture falls due on a day that is not a Business Day, then such amount shall
be payable on the next succeeding Business Day without additional interest
thereon for the period of such extension (provided that payment is made on such
next succeeding Business Day).
Reference is made to the further provisions of this Mortgage
Note set forth on the reverse hereof. Such further provisions shall for all
purposes have the same effect as though fully set forth at this place.
This Mortgage Note shall not be valid or obligatory until the
certificate of authentication hereon shall have been duly signed by the
Indenture Trustee acting under the Indenture.
A-2-3
<PAGE>
IN WITNESS WHEREOF, Golden State Petroleum, as agent on behalf
of the Owners, has caused this instrument to be duly executed under its
corporate seal.
Dated:
Golden State Petroleum Transport
Corporation, as agent on behalf of the
Owners
_______________________________________
Name:
Title:
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Mortgage Notes described in the
within-mentioned Indenture.
UNITED STATES TRUST COMPANY OF
NEW YORK,
as Indenture Trustee
_______________________________________
Authorized Officer
A-2-4
<PAGE>
REVERSE OF MORTGAGE NOTE
Golden State Petroleum Transport Corporation, as agent for
Golden State Petro (IOM I-A) PLC and Golden State Petro (IOM I-B) PLC
8.04% First Preferred Mortgage Notes Due 2019
This Mortgage Note is one of a duly authorized issue of debt
securities of Golden State Petroleum, as agent for the Owners, limited to the
aggregate principal amount of $________________ (except as otherwise provided in
the Indenture), issued or to be issued pursuant to the Indenture. Reference is
hereby made to the Indenture and all indentures supplemental thereto for a
description of the rights, limitations of rights, obligations, duties and
immunities thereunder of the Indenture Trustee, Golden State Petroleum, the
Owners and the Holders of the Mortgage Notes.
This Mortgage Note is secured by the Collateral pursuant to
the Indenture and the other Security Documents. Each Holder of this Mortgage
Note, by its acceptance thereof, consents and agrees to the terms of the
Security Documents (including without limitation the provisions providing for
the release of the Collateral provided for herein and therein) as the same may
be in effect or may be amended from time to time in accordance with their terms
and authorizes and directs the Indenture Trustee to perform its obligations and
exercise its rights under the Indenture and the other Security Documents in
accordance therewith; PROVIDED that in the event the terms thereof limit,
qualify or conflict with the duties imposed by the incorporated provisions of
the Trust Indenture Act, the incorporated provisions of the Trust Indenture Act
shall control.
In case an Indenture Event of Default shall have occurred and
be continuing, the principal of all the Mortgage Notes may be declared due and
payable, in the manner and with the effect, and subject to the conditions,
provided in the Indenture. The Indenture provides that in certain events such
declaration and its consequences may be waived by the Majority Noteholders and
that, prior to any such declaration, such Holders may waive any past default
under the Indenture and its consequences except a default in the payment of
principal of or interest on any of the Mortgage Notes. Any such consent or
waiver by the Holder of this Mortgage Note (unless revoked as provided in the
Indenture) shall be conclusive and binding upon such Holder and upon all future
holders and owners of this Mortgage Note and any Mortgage Note which may be
issued in exchange or substitution herefor, whether or not any notation thereof
is made upon this Mortgage Note or such other Mortgage Notes.
The Indenture permits Golden State Petroleum, the Owners and
the Indenture Trustee, with the consent of the Majority Noteholders, evidenced
as provided in the Indenture, to execute supplemental indentures adding any
provisions to or changing in any manner or eliminating any of the provisions of
the Indenture or of any supplemental indenture or modifying in any manner the
rights of the holders of the Mortgage Notes; PROVIDED that no such supplemental
indenture shall extend the final maturity or redemption dates of any Mortgage
Note, or reduce the principal amount thereof, or reduce the rate of interest
thereon or extend the time of payment of interest thereon, or reduce any amount
payable upon the redemption hereof, change the sinking fund redemption amount
hereof, or impair or affect the right to
A-2-5
<PAGE>
institute suit for the enforcement of any such payment, or reduce the percentage
of the Holders whose consent is required for any such modification or amendment
or modify any provision of the Indenture relating to the amendment thereof or
the creation of a supplemental indenture (unless the change increases the rights
of the Holders).
No reference herein to the Indenture and no provision of this
Mortgage Note or of the Indenture shall alter or impair the obligation of Golden
State Petroleum, as agent for the Owners, which is absolute and unconditional,
to pay the principal of and interest on this Mortgage Note at the place, times,
and rate, and in the currency, herein prescribed.
The Mortgage Notes are issuable only as registered Mortgage
Notes without coupons in denominations of $100,000 and any multiple of $1,000 in
excess thereof.
Mortgage Notes may be exchanged for a like aggregate principal
amount of Mortgage Notes of other authorized denominations at the office or
agency of the Indenture Trustee maintained for such purpose and in the manner
and subject to the limitations provided in the Indenture.
Upon due presentment for registration of transfer of this
Mortgage Note as provided in the Indenture, a new Mortgage Note or Mortgage
Notes of authorized denominations, for a like aggregate principal amount, will
be issued to the transferee as provided in the Indenture. No service charge
shall be made for any such transfer, but the Indenture Trustee may require
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in relation thereto.
The Mortgage Notes may be redeemed at the option of the
Owners, in whole and in part, on any Payment Date on or after the later to occur
of (a) August, 1999 and (b) the Delivery Date of the last Vessel to be delivered
upon mailing a notice of such redemption not less than 30 nor more than 60 days
prior to the date fixed for redemption to the holders of Mortgage Notes to be
redeemed, all as provided in the Indenture, at a redemption price equal to (a)
100% of the principal amount thereof plus accrued and unpaid interest to the
date fixed for redemption, plus in the event that (i) such redemption occurs
prior to February 1, 2018 and (ii) a Vessel is then subject to the related
Charter or to an Acceptable Replacement Charter pursuant to which the charterer
thereunder is required to pay charter hire equal to or greater than the Charter
Hire payable by the Charterer during the Fixed Period, then the Make-Whole
Premium shall be payable with respect to Mortgage Notes in an amount equal to
Allocated Principal Amount of the Mortgage Notes for such Vessel.
In connection with the optional termination of a Charter by
the Charterer, under certain circumstances more fully set forth in the
Indenture, the Mortgage Notes are also subject to mandatory redemption, in part
on a pro rata basis, in an amount equal to 100% of the Allocated Principal
Amount of the Mortgage Notes for the related Vessel, together with accrued and
unpaid interest to the date fixed for redemption.
The Mortgage Notes are also subject to redemption in part on a
pro rata basis, in an amount equal to the Allocated Principal Amount of the
Mortgage Notes for the related Vessel, on notice as all as provided in the
Indenture if a Total Loss occurs or is declared with
A-2-6
<PAGE>
respect to such Vessel. The aggregate principal amount of Mortgage Notes to be
redeemed pursuant to this paragraph shall equal the Allocated Principal Amount
of Mortgage Notes for the related Vessel. The redemption date for any redemption
pursuant to this paragraph shall be the date which is on or prior to 90 days
after the occurrence of the Total Loss. The Mortgage Notes are also subject to
redemption in part if a Vessel is not part of the Collateral in accordance with
the Indenture on or before the date which is 180 days after the date such Vessel
was scheduled to be delivered under the related Building Contract.
The Mortgage Notes are also subject to redemption in part on a
pro rata basis, in an amount equal to the Net Reduction in Construction Costs,
under certain circumstances more fully set forth in the Indenture, at a
redemption price equal to 100% of the Net Reduction in Construction Costs,
together with accrued and unpaid interest to the date fixed for redemption.
The Mortgage Notes are also subject to redemption through the
operation of the sinking fund provided for in the Indenture, on August 1, 2007,
and on each August 1 and February 1 thereafter to and including August 1, 2018,
on notice as set forth above and at 100% of the principal amount thereof, the
sinking fund redemption price, together with accrued interest to the date fixed
for redemption. The aggregate principal amount of Mortgage Notes to be redeemed
on any such sinking fund redemption date shall be as set forth in the Indenture
and is subject to change if one or more of the Charters is terminated.
On August 1, 2014, (the "Optional Purchase Date") if neither
Charter has been terminated by the Charterer, each Holder of the Term Notes will
have a one-time option to cause the Owners to purchase all or a part of such
Holder's Term Notes at a purchase price equal to 100% of the principal amount
thereof plus accrued and unpaid interest through the date of purchase. The Term
Notes will be purchased in multiples of $1,000 principal amount, provided that
the principal amount of Term Notes not so purchased must be of an authorized
denomination.
Subject to payment by Golden State Petroleum, as agent for the
Owners, of a sum sufficient to pay the amount due on redemption, interest on
this Mortgage Note (or portion hereof if this Mortgage Note is redeemed in part)
shall cease to accrue upon the date duly fixed for redemption of this Mortgage
Note (or portion hereof if this Mortgage Note is redeemed in part).
Golden State Petroleum, the Indenture Trustee, the Owners, and
any authorized agent of Golden State Petroleum or the Indenture Trustee, may
deem and treat the registered holder hereof as the absolute owner of this
Mortgage Note (whether or not this Mortgage Note shall be overdue and
notwithstanding any notation of ownership or other writing hereon made by anyone
other than Golden State Petroleum, as agent for the Owners, or the Indenture
Trustee or any authorized agent of Golden State Petroleum or the Indenture
Trustee), for the purpose of receiving payment of, or on account of, the
principal hereof and, subject to the provisions on the face hereof, interest
hereon and for all other purposes, and none of Golden State Petroleum, the
Owners or the Indenture Trustee nor any authorized agent of Golden State
Petroleum, the Owners or the Indenture Trustee shall be affected by any notice
to the contrary.
A-2-7
<PAGE>
No recourse under or upon any obligation, covenant or
agreement contained in the Indenture or this Mortgage Note, or because of any
indebtedness evidenced thereby, shall be had against any incorporator, as such
or against any past, present or future stockholder, officer or director, as
such, of Golden State Petroleum, the Owners or of any successor, either directly
or through Golden State Petroleum, the Owners, or any successor, under any rule
of law, statute or constitutional provision or by the enforcement of any
assessment or by any legal or equitable proceeding or otherwise, all such
liability being expressly waived and released by the Indenture Trustee and by
the acceptance of this Mortgage Note by the Holder hereof and as part of the
consideration for the issue of the Mortgage Notes.
A-2-8
<PAGE>
SCHEDULE OF EXCHANGES FOR DEFINITIVE NOTES*****
The following exchanges of a part of this Global Note for Definitive
Notes have been made:
<TABLE>
<CAPTION>
Principal Amount of this Signature of
Amount of decrease in Amount of increase in Global Note following authorized officer of
Principal Amount of this Principal Amount of this such decrease (or Indenture Trustee or
Date of Exchange Global Note Global Note increase) Note Custodian
- - - - - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
</TABLE>
- - - - - --------
***** This should be included only if the Mortgage Note is issued in global
form.
A-2-9
<PAGE>
ASSIGNMENT FORM
To assign this Mortgage Note, fill in the form below:
(I) or (we) assign and transfer this Mortgage Note to
- - - - - --------------------------------------------------------------------------------
(Insert assignee's social security or tax I.D. no.)
- - - - - --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint _______________________ agent to transfer this Mortgage
Note on the books of Golden State Petroleum, as agent for the Owners. The agent
may substitute another to act for him.
Your Signature:_________________________________________________________________
(Sign exactly as your name appears on the other side of this Mortgage Note.)
Date:______________________________________
Signature Guarantee:______________
<PAGE>
EXHIBIT B
FORM OF TRANSFER CERTIFICATE
FOR TRANSFER TO A QIB
United States Trust Company of New York,
as Indenture Trustee
114 West 47th Street
New York, New York 10036-1532
Attention: Corporate Trust Department
Re: [Golden State Petroleum Transport Corporation ___% First
Preferred Notes Due _______] [Golden State Petroleum
Transport Corporation __% Senior First Preferred Notes
Due ___] (the "Notes")
Ladies and Gentlemen:
Reference is hereby made to the Indenture dated as of ______
1, 1996 (the "Indenture") among Golden State Petro (IOM I-A) PLC (an "Owner"),
Golden State Petro (IOM I-B) PLC (an "Owner" and, collectively with Golden State
Petro (IOM I-A) PLC, the "Owners"), Golden State Petroleum Transport
Corporation, as agent for the Owners ("Golden State Petroleum") and United
States Trust Company of New York as trustee (the "Indenture Trustee").
Capitalized terms used but not defined herein shall have the meanings given them
in the Indenture.
This letter relates to $___ aggregate principal amount of
Transfer Restricted Notes which are held in the name of [name of transferor]
(the Transferor") to effect the transfer of such Transfer Restricted Notes in
exchange for an equivalent beneficial interest in the Global Note.
In connection with such request, and in respect to such
Transfer Restricted Notes, the transferor does hereby certify that such Transfer
Restricted Notes are being transferred in accordance with (i) the transfer
restrictions set forth in the Notes and (ii) Rule 144A under the United States
Securities Act of 1933, as amended ("Rule 144A"), to a transferee that the
Transferor reasonably believes is purchasing the Transfer Restricted Notes for
its own account or an account with respect to which the transferee exercises
sole investment discretion and the transferee and any such account is a
"qualified institutional buyer" within the meaning of Rule 144A, in a
transaction meeting the requirements of Rule 144A and in accordance with
applicable securities laws of any state of the United States or any other
jurisdiction.
B-1
<PAGE>
You, Golden State Petroleum and the Owners are entitled to rely upon
this letter and are irrevocably authorized to produce this letter or a copy
hereof to any interested party in any administrative or legal proceeding or
official inquiry with respect to the matters covered hereby.
__________________________________
[Name of Transferor]
By:_______________________________
Name:_____________________________
Title:____________________________
Date: _______________________
B-2
<PAGE>
FORM OF TRANSFER CERTIFICATE
FOR TRANSFER TO A NON-U.S. PERSON
United States Trust Company of New York,
as Indenture Trustee
114 West 47th Street
New York, New York 10036-1532
Attention: Corporate Trust Department
Re: [Golden State Petroleum Transport Corporation ___% First
Preferred Notes Due _______] [Golden State Petroleum
Transport Corporation __% Senior First Preferred Notes
Due ___] (the "Notes")
Ladies and Gentlemen:
Reference is hereby made to the Indenture dated as of ______
1, 1996 (the "Indenture") among Golden State Petro (IOM I-A) PLC (an "Owner"),
Golden State Petro (IOM I-B) PLC (an "Owner" and, collectively with Golden State
Petro (IOM I-A) PLC, the "Owners"), Golden State Petroleum Transport
Corporation, as agent for the Owners ("Golden State Petroleum") and United
States Trust Company of New York as trustee (the "Indenture Trustee").
Capitalized terms used but not defined herein shall have the meanings given them
in the Indenture.
This letter relates to $___ aggregate principal amount of
Transfer Restricted Notes which are held in the name of [name of transferor]
(the Transferor") to effect the transfer of such Transfer Restricted Notes in
exchange for an equivalent beneficial interest in the Global Note.
In connection with such request, the Transferor does hereby
certify that such Transfer Restricted Notes are being transferred in accordance
with (i) the transfer restrictions set forth in the Transfer Restricted Notes
and (ii) Regulation S ("Regulation S") under the United States Securities Act of
1933, as amended (the "Securities Act") and does hereby further certify that:
(1) the offer of the Transfer Restricted Notes was not made
to a person in the United States;
(2) the transaction was executed in, on or through the
facilities of a designated offshore securities market
and neither the Transferor nor any
B-3
<PAGE>
person acting on its behalf knows that the transaction
was pre-arranged with a buyer in the United States;
(3) no directed selling efforts have been made in
contravention of the requirements of Rule 903(b) or
904(b) of Regulation S, as applicable; and
(4) the transaction is not part of a plan or scheme to evade
the registration requirements of the Securities Act.
In addition, if the sale is made during a Restricted Period
(as defined in Regulation S) and the provisions of Rule 903(c)(2) or (3) or Rule
904(c)(1) of Regulation S are applicable thereto, we confirm that such sale has
been made in accordance with the applicable provisions of Rule 903(c)(2) or (3)
or Rule 904(c)(l), as the case may be.
You, Golden State Petroleum and the Owners are entitled to
rely upon this letter and are irrevocably authorized to produce this letter or a
copy hereof to any interested party in any administrative or legal proceeding or
official inquiry with respect to the matters covered hereby.
__________________________________
[Name of Transferor]
By:____________________________
Name:__________________________
Title:_________________________
Date: ____________________________
B-4
<PAGE>
FORM OF INVESTMENT LETTER FOR REGULATION S PURCHASERS
United States Trust Company of New York,
as Indenture Trustee
114 West 47th Street
New York, New York 10036-1532
Attention: Corporate Trust Department
Re: [Golden State Petroleum Transport Corporation ___% First
Preferred Notes Due _______] [Golden State Petroleum
Transport Corporation __% Senior First Preferred Notes
Due ___] (the "Notes")
Ladies and Gentlemen:
Reference is hereby made to the Indenture dated as of ______
1, 1996 (the "Indenture") among Golden State Petro (IOM I-A) PLC (an "Owner"),
Golden State Petro (IOM I-B) PLC (an "Owner" and, collectively with Golden State
Petro (IOM I-A) PLC, the "Owners"), Golden State Petroleum Transport
Corporation, as agent for the Owners ("Golden State Petroleum") and United
States Trust Company of New York as trustee (the "Indenture Trustee").
Capitalized terms used but not defined herein shall have the meanings given them
in the Indenture.
In connection with our proposed purchased of S aggregate principal
amount of the Transfer Restricted Notes which are held in certificated form in
the name of [name of transferor] (the "Transferor")] [through the beneficial
interest of [name of transferor] in the Global Note], we hereby certify that we
are (or we will hold such Transfer Restricted Notes on behalf of) a person
outside the United States to whom the Transfer Restricted Notes could be
transferred in accordance with Rule 904 of Regulation S promulgated under the
United States Securities Act of 1933, as amended.
B-5
<PAGE>
You, Golden State Petroleum and the Owners are entitled to rely upon
this letter and are irrevocably authorized to produce this letter or a copy
hereof to any interested party in any administrative or legal proceeding or
official inquiry with respect to the matters covered hereby.
Very truly yours,
__________________________________
[Name of Purchaser]
By:_______________________________
Authorized Signature
Date:_____________________________
<PAGE>
SCHEDULE I
SINKING FUND REDEMPTION AMOUNTS
AND FINAL PRINCIPAL PAYMENT
The table below provides the scheduled sinking fund redemption amounts and final
principal payments on the Term Notes assuming neither Vessel is a Total Loss and
neither of the Charters is terminated.
Sinking Fund Redemption Amounts and Final Principal Payment
(Dollars in Thousands)
- - - - - --------------------------------------------------------------------------
Scheduled Scheduled
Payment Date Principal Payment Date Principal
------------ --------- ------------ ---------
<PAGE>
EXHIBIT A
---------
[Name of Shipowner]
Shipowner
and
UNITED STATES TRUST COMPANY OF NEW YORK
Mortgagee
------------------
FIRST PREFERRED SHIP MORTGAGE
on the
m.t. "[Name of Vessel]"
------------------
[Date]
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS............................... 1
Section 1.01 Definitions.................................................... 1
ARTICLE II
MORTGAGE.................................. 1
Section 2.01 Grant of Mortgage.............................................. 1
Section 2.02 Obligations.................................................... 2
ARTICLE III
REPRESENTATIONS AND WARRANTIES....................... 3
Section 3.01 Organization, Power and Status of the Shipowner................ 3
Section 3.02 Authorization; Enforceability; Execution and Delivery.......... 3
Section 3.03 No Conflicts; Laws and Consents; No Default.................... 4
Section 3.04 Governmental Approvals......................................... 4
Section 3.05 Litigation..................................................... 4
Section 3.06 Title to Vessel................................................ 4
Section 3.07 Priority of Mortgage........................................... 4
ARTICLE IV
COVENANTS................................. 4
Section 4.01 Performance of Agreements...................................... 5
Section 4.02 Insurance...................................................... 5
Section 4.03 Defense of Title............................................... 11
Section 4.04 Discharge of Liens............................................. 11
Section 4.05. Liens.......................................................... 11
<PAGE>
-3-
Page
----
Section 4.06 Use of Vessel.................................................. 11
Section 4.07 Notifications.................................................. 12
Section 4.08 Payment of Crew's Wages and Allotments......................... 13
Section 4.09 Charter of Vessel.............................................. 13
Section 4.10 Maintenance of Vessel.......................................... 13
Section 4.11 Statement of Classification Society............................ 14
Section 4.12 Surveys of Vessel.............................................. 14
Section 4.13 Access to Vessel............................................... 14
Section 4.14 Registration of Mortgage; Recordation of Mortgage.............. 14
Section 4.15 Notice of Mortgage............................................. 15
Section 4.16 Further Assurances............................................. 15
Section 4.17 Notice of Default.............................................. 16
ARTICLE V
EVENTS OF DEFAULT; REMEDIES................................... 16
Section 5.01 Events of Default.............................................. 16
Section 5.02 Remedies....................................................... 17
Section 5.03 Sale of the Vessel............................................. 19
Section 5.04 Mortgagee as Attorney-in Fact.................................. 19
Section 5.05 Appointment of Receiver........................................ 20
Section 5.06 Arrest or Detention of Vessel.................................. 20
Section 5.07 Defense of Suits............................................... 20
<PAGE>
-4-
Page
----
Section 5.08 Cumulative Rights, Powers and Remedies......................... 20
Section 5.09 Application of Proceeds........................................ 21
Section 5.10 Mortgagee's Right to Remedy Defaults........................... 21
Section 5.11 Delegation of Powers........................................... 22
Section 5.12 Legal Actions.................................................. 22
Section 5.13 Mortgage Subject to Rights of Initial Charterer Under the
Initial Charter................................................ 22
ARTICLE VI
MISCELLANEOUS PROVISIONS............................... 22
Section 6.01 Performance by Initial Charterer or Charterer Under an
Acceptable Replacement Charter................................. 22
Section 6.02 Discharge of Mortgage.......................................... 23
Section 6.03 Governing Law.................................................. 23
Section 6.04 Severability................................................... 23
Section 6.05 Notices........................................................ 23
Section 6.06 Headings....................................................... 24
Section 6.07 General Interpretive Principles................................ 24
Section 6.08 Successors and Assigns......................................... 24
Section 6.09 Consent to Jurisdiction........................................ 24
Section 6.10 Payment........................................................ 25
Section 6.11 Recorded Amount................................................ 25
Section 6.12 No Waiver of Preferred Status.................................. 26
<PAGE>
-5-
Exhibit A BROKER'S LETTER OF UNDERTAKING
Schedule 1 Additional Defined Terms Used in the Mortgage
<PAGE>
First Preferred Ship Mortgage, dated _____________ (as amended
or supplemented from time to time, the "Mortgage"), from [Name of Owner], a
public liability company organized under the laws of the Isle of Man whose
registered office is at 15-19 Athol Street, Douglas, Isle of Man (hereinafter
called "the Shipowner") to United States Trust Company of New York (the
"Mortgagee").
WHEREAS, the Shipowner is the owner of the whole of the motor
tanker "[Name of Vessel]" (the "Vessel") duly registered in the name of the
Shipowner under the laws and flag of Liberia on ______________, built in 199_,
having the following approximate dimensions and tonnages: length _____ meters,
breadth _____ meters, depth _____ meters, gross tonnage ______, net tonnage
_____, and more particularly described in the Certificate of Registration with
Official Number _____ and with International Code Signal _____ and home port of
Monrovia, Liberia;
WHEREAS, in order to secure the prompt and due payment to the
Mortgagee of the Obligations and any and all other sums which may be or become
due to the Mortgagee under or pursuant to the Indenture, this Mortgage and any
other Security Documents and also to secure the exact performance and observance
and compliance with all and any of the covenants and agreements and terms and
conditions contained in the Indenture, this Mortgage and in the other Security
Documents, the Shipowner has duly authorized the execution and delivery of this
Mortgage in favor of the Mortgagee under and pursuant to Chapter 3 of Title 22
of the Code of Laws of 1956, as at any time amended, of the laws of the Republic
of Liberia.
NOW, THEREFORE, in consideration of the premises and of the
covenants herein contained, the parties hereto covenant and agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01 DEFINITIONS. Unless otherwise defined in Schedule
1 to this Mortgage, capitalized terms used in this Mortgage shall have the
meanings assigned to such terms in the Indenture.
ARTICLE II
MORTGAGE
Section 2.01 GRANT OF MORTGAGE. In consideration of the
premises and of other good and valuable consideration, the adequacy and receipt
whereof are hereby acknowledged, and in order to secure the payment of the
Obligations and the repayment of any costs of foreclosure or of retaking the
Vessel, and the payment of all such other amounts as may hereafter become
secured by this Mortgage in accordance with the terms hereof, and to secure the
performance and observance of and compliance with the covenants, terms and
conditions contained in this Mortgage, the Indenture, and the other Security
Documents to which the Shipowner is a party, the Shipowner has granted,
conveyed, pledged and mortgaged and does
<PAGE>
-2-
by these presents grant, convey, pledge and mortgage to and in favor of the
Mortgagee, its successors and assigns the whole of the Vessel, together with all
of the boilers, engines, machinery, masts, spars, rigging, boats, cables,
anchors, chains, tackle, apparel, furniture, fittings, freights and equipment
thereunto appertaining or belonging, whether now owned or hereafter acquired,
whether on board or not, and all additions, improvements and replacements
hereafter made in or to the Vessel (the term "Vessel", as used herein, shall
include the Vessel together with all of the foregoing and the Vessel's freights)
To Have And To Hold the same unto the Mortgagee, its successors and assigns,
forever upon the terms set forth in this Mortgage for the enforcement of the
payment of the Obligations, the payment of any costs of foreclosure or retaking
of the Vessel and all such other amounts as may hereafter become secured by this
Mortgage in accordance with the terms hereof and to secure the performance and
observance of and compliance with the covenants, terms and conditions contained
in this Mortgage and the Security Documents, it being agreed that if any amount
payable by the Shipowner under the Indenture is not paid on its due date
(whether formally demanded or not) the whole or the balance of the Obligations
and all other amounts payable under the Indenture and the Security Documents
shall forthwith on demand become payable; provided, however, and the conditions
of these presents are such that, if the Shipowner shall pay or cause to be paid
to the Mortgagee all of the Obligations as set forth in the Indenture and the
other Security Documents, and if the Shipowner shall pay all such other amounts
as may hereafter become secured by this Mortgage and all expenses which the
Mortgagee shall have paid or incurred to protect the security granted hereunder,
and if the Shipowner shall perform, observe and comply with all and singular of
the covenants, terms and conditions in this Mortgage, the Indenture and the
other Security Documents contained, expressed or implied, to be performed,
observed or complied with by and on the part of the Shipowner or its successors
or assigns, all without delay or fraud and according to the true intent and
meaning hereof and therefor, then these presents and the rights of the Mortgagee
under this Mortgage, the Indenture and the other Security Documents shall cease
and, in such event, the Mortgagee agrees by accepting this Mortgage to execute,
at the expense of the Shipowner, all such documents as the Shipowner may
reasonably require to discharge this Mortgage under the laws of the Republic of
Liberia; otherwise this Mortgage shall remain in full force and effect.
Section 2.02 OBLIGATIONS. (a) The Shipowner acknowledges that
pursuant to the Indenture it is jointly and severally liable with [Name of other
Owner] to the Mortgagee for the obligations of the Shipowner and [Name of other
Owner] under the Indenture and the Notes issued in the original principal amount
of __________________________ United States Dollars (US$___________). The
Shipowner further agrees to pay all other sums comprising the Obligations in
accordance with terms, conditions and provisions of the Indenture and in this
Mortgage and to perform, observe and comply with the covenants, terms and
obligations and conditions on its part to be performed, observed and complied
with contained or implied herein and in the Indenture and in the other Security
Documents.
<PAGE>
-3-
(b) The Shipowner shall also pay to the Mortgagee upon the
Mortgagee's first written demand all stamp duties, registration and/or recording
fees, charges for certificates, valuation fees, costs and expenses (including,
the reasonable fees and expenses of its attorneys) of any nature whatsoever
incurred by the Mortgagee in connection with the preparation, completion,
execution and registration of this Mortgage and all other claims, expenses,
costs, payments, disbursements, losses, damages or liabilities which may be
incurred by the Mortgagee by reason of the covenants and conditions contained
herein, in the Indenture or in the other Security Documents, together with
interest thereon as herein or therein provided, and confirms that such
obligations are secured by this Mortgage.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
The Shipowner hereby represents and warrants to the Mortgagee
as follows:
Section 3.01 ORGANIZATION, POWER AND STATUS OF THE SHIPOWNER.
The Shipowner (a) is a corporation duly formed, validly existing and in good
standing under the laws of the Isle of Man and (b) is duly authorized, to the
extent necessary, to do business in each jurisdiction where the character of its
properties or the nature of its activities makes such qualification necessary.
The Shipowner has all requisite corporate power and authority to own and operate
the property it purports to own and to carry on its business as now being
conducted and as proposed to be conducted in respect of the Vessel.
Section 3.02 AUTHORIZATION; ENFORCEABILITY; EXECUTION AND
DELIVERY. (a) The Shipowner has all necessary corporate power and authority to
execute, deliver and perform under this Mortgage.
(b) All action on the part of the Shipowner that is required
for the authorization, execution, delivery and performance of this Mortgage has
been duly and effectively taken; and the execution, delivery and performance of
this Mortgage does not require the approval or consent of any Person except for
such consents and approvals as have been obtained on or prior to the date
hereof.
(c) This Mortgage has been duly executed and delivered by the
Shipowner. This Mortgage constitutes the legal, valid and binding obligation of
the Shipowner, enforceable against it in accordance with its terms, except as
such enforceability (i) may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium and other similar laws affecting the enforcement of
creditors' rights and remedies generally and (ii) is subject to general
principles of equity (regardless of whether enforceability is considered in a
proceeding in equity or at law).
<PAGE>
-4-
Section 3.03 NO CONFLICTS; LAWS AND CONSENTS; NO DEFAULT. (a)
Neither the execution, delivery and performance of this Mortgage nor the
consummation of any of the transactions contemplated hereby nor performance of
or compliance with the terms and conditions hereof (i) contravenes any
Requirement of Law applicable to the Shipowner or (ii) constitutes a default
under the Indenture or any Security Document.
(b) The Shipowner is in compliance with and not in default
under any and all Requirements of Law applicable to the Shipowner and all terms
and provisions of this Mortgage.
Section 3.04 GOVERNMENTAL APPROVALS. All Governmental
Approvals which are required to be obtained in the name of the Shipowner in
connection with the operation and maintenance of the Vessel and the execution,
delivery and performance by the Shipowner of this Mortgage have been obtained
and are in effect as of the date hereof.
Section 3.05 LITIGATION. There are no actions, suits or
proceedings at law or in equity or by or before any Governmental Authority now
pending against the Shipowner or, to the best of the Shipowner's knowledge,
threatened against the Shipowner or pending or threatened against any property
or other assets or rights of the Shipowner with respect to this Mortgage.
Section 3.06 TITLE TO VESSEL. The Shipowner is the sole and
lawful owner of the whole of the Vessel, free from all liens, security
interests, mortgages, charges or encumbrances (other than this Mortgage, the
Indenture and Permitted Liens). The Shipowner shall defend for the benefit of
the Mortgagee the title and possession of the Vessel and every part thereof
against the claims and demands of all Persons.
Section 3.07 PRIORITY OF MORTGAGE. The Shipowner is, by this
Mortgage and the recordation thereof, constituting in favor of the Mortgagee,
among other things, all the rights of a first preferred ship mortgage of the
Vessel to secure the due and punctual payment of all amounts due and to become
due to the Mortgagee pursuant to the terms and conditions of this Mortgage, the
Indenture, the other Security Documents and the documents contemplated hereby
and thereby and the payment of all commissions and fees, costs, charges,
expenses, expenditures and interest owing to the Mortgagee hereunder and
thereunder, and the performance and observance of and compliance with all the
covenants, terms, conditions and provisions of this Mortgage, the Indenture, the
other Security Documents and the documents contemplated hereby and thereby.
ARTICLE IV
COVENANTS
So long as any of the Obligations are outstanding, the
Shipowner covenants and agrees, subject to Section 6.01, with the Mortgagee as
follows:
<PAGE>
-5-
Section 4.01 PERFORMANCE OF AGREEMENTS. The Shipowner shall
keep, perform and observe the covenants, conditions and agreements in this
Mortgage and the other Security Documents contained, expressed or implied on its
part to be kept, performed and observed.
Section 4.02 INSURANCE. (a) The Shipowner, at its expense
(including payment of all premiums, costs and club calls, if any) shall effect
or cause to be effected the following insurances and keep the following in full
force and effect:
(i) hull and machinery insurance equal to the Total Loss
Payment. Such Hull and Machinery insurance shall include the "Institute
Pollution Hazard Clause" and the "Institute Liner Negligence and
Additional Perils Clause". If the Vessel is laid up in port for an
extended period, then, with the prior written consent of the Mortgagee,
the Shipowner may obtain in lieu of the hull and machinery insurance
referred to in this Section 4.02(a)(i) port risk insurance equal to the
Total Loss Payment. Such Port Risk insurance shall be effected on
Institute of London Underwriters "Institute Port Risk Clauses" or
American Institute "Port Risk Endorsement";
(ii) war risk hull and machinery insurance (including risks of
mines) equal to the Total Loss Payment. Such war risk insurance shall
be effected with a War Risks Association approved by the Mortgagee or
on the full Institute of London Underwriters "Institute War and Strikes
Clauses" or American Institute "Hull War Risks and Strikes Clauses";
and
(iii) protection and indemnity insurance in the name of the
Shipowner on a full entry basis with an International Group P&I Club,
which shall include freight, demurrage and defense coverage in an
unlimited amount and coverage in respect of pollution risks for a limit
of five hundred million dollars ($500,000,000) coverage for protection
and indemnity insurance on a full entry basis with an International
Group P&I Club. Such insurance shall include, but not be limited to,
coverage for injuries to or death of masters, mates and crew; full
(4/4ths) collision liabilities and pollution liabilities imposed by any
applicable Governmental Authority. Such insurance shall be unlimited as
per International Group P&I Club rules except for pollution
liabilities, which shall be limited to $500 million or, if less, the
maximum pollution limit offered by and through the P&I Clubs of the
International Group;
provided, however, that if the Vessel is subject to the Initial Charter or an
Acceptable Replacement Charter, the insurance requirements of the related
Initial Charter or Acceptable Replacement Charter will supersede the above
insurance requirements.
(b) All insurance taken out or effected in connection with the
Vessel pursuant to the provisions of Section 4.02(a) hereof shall be in a form
and upon terms acceptable to the Mortgagee and shall, without limitation, be
subject to the following:
<PAGE>
-6-
(i) all such insurance shall be taken out in the name of
the Shipowner with the Mortgagee's interest noted on the policies and
cover notes;
(ii) all such insurance shall be placed in the English or
American markets through first-class brokers and with first-class
underwriters, insurance companies, protection and indemnity
associations or protection and indemnity clubs. All insurance policies
or entries shall provide that they are payable in Dollars. All
insurance policies shall be valued policies and none shall provide for
a deductible amount in excess of One Hundred Thousand United States
Dollars (US$100,000) or such other amount as prudent shipowners of
vessels similar to the Vessel shall maintain. No insurance shall
exclude liability for negligence of the master, officers, crew or
pilots. Each policy or entry shall contain or be accompanied by a
waiver, as against the Mortgagee, of any and all premiums and calls for
which the Mortgagee might otherwise be or become liable as a loss payee
or otherwise;
(iii) each policy shall provide that it may not lapse, be
terminated, cancelled or materially modified without fourteen (14)
days' prior telex or telegraphic notice to the Mortgagee and any
assignee, except only such notice as war risk underwriters shall be
required to give pursuant to the automatic termination clause of
current war risk policies; and
(iv) each policy shall include a provision agreeing that no
breach of warranty or condition or want of due diligence on the part of
the Shipowner or any agent of the Shipowner shall defeat recovery of
any claim by the Mortgagee unless such provision shall conflict with
the available reinsurance arrangements of the issuers of such policy.
(c) Each insurance policy taken out pursuant to Sections
4.02(a)(i) and (ii) shall contain the following notice of assignment and loss
payable clause:
Notice of Assignment/Loss Payable Clause
United States Trust Company of New York, not in its
individual capacity but solely as Indenture Trustee, as
mortgagee (the "Mortgagee"), under an Indenture (the
"Indenture"), dated as of December __, 1996, among the
Mortgagee, [Name of Other Owner] ("___________"), [Name of
Owner] (the "Shipowner") and Golden State Petroleum Transport
Corporation ("Golden State Petroleum"), as agent for the
Shipowner and [Name of the Other Owner], and the Shipowner,
owner of the m.t. "_____________" (the "Vessel"), hereby give
notice that by an assignment contained in an Assignment of
Earnings and Insurances, dated as of __________, between the
Shipowner and the Mortgagee, the
<PAGE>
-7-
Shipowner assigned to the Mortgagee as mortgagee of the
Vessel, INTER ALIA, all of its right, title and interest
under, to and in all policies and contracts of insurance of
whatsoever nature and all entries with protection and
indemnity clubs or societies now or hereafter taken out in
respect of the Vessel, its rights, disbursements, profits or
otherwise.
All claims payable shall be subject to the following
conditions:
(i) Any claim payable up to an amount equal to the
Total Loss Payment of the Vessel in respect of an actual or
constructive or arranged or agreed or compromised total loss,
or loss in the event of the confiscation, compulsory
acquisition or requisition of the Vessel, for title or use, by
any Governmental Authority, pursuant to any present or future
law, proclamation, order, decree or otherwise, shall be
payable to the Mortgagee as mortgagee of the Vessel, provided
always that the written consent of the Mortgagee shall be
obtained prior to the arranged or agreed or compromised total
loss being agreed with the underwriters (insurers);
(ii) The Mortgagee shall be advised if any Hull War
Risks insurer cancels or gives notice of cancellation of any
insurance or entry at least fourteen (14) days before such
cancellation is to take effect; and
(iii) The Mortgagee shall be advised if any default
occurs in the payment of any Hull and Machinery premium or
call or failure to renew any such insurance or entry fourteen
(14) days prior to the date of renewal thereof.
Notwithstanding the foregoing, if there exists an Event of
Default under the First Preferred Ship Mortgage, dated
___________, on the Vessel given by the Shipowner in favor of
the Mortgagee and the brokers and/or underwriters (insurers)
have been so notified by the Mortgagee, all claims shall be
payable to the Mortgagee as mortgagee of the Vessel.
The underwriters (insurers) agree that the Mortgagee
shall be advised immediately of the variation or termination
of this policy (entry), and in the event of any failure by the
Shipowner to
<PAGE>
-8-
pay premiums (dues or Club calls) as and when due the
Mortgagee shall be given at least fourteen (14) days' prior
telegraphic or telex notice of the cancellation or material
alteration of this policy (entry).
The Mortgagee shall have no obligations whatsoever to
pay any premiums or costs (dues or Club calls), but shall have
the right to do so in the event of non-payment by the
Shipowner. The underwriters (insurers) shall promptly advise
the Mortgagee of any act of omission of which the Underwriters
(insurers) are aware that might void this policy (entry) or
make the same invalid or unenforceable in whole or in part.
(d) Each entry or insurance policy taken out pursuant to
Section 4.02(a)(iii) shall bear the following Endorsement:
Endorsement
United States Trust Company of New York, not in its
individual capacity but solely as Indenture Trustee, as
mortgagee (the "Mortgagee"), under an Indenture (the
"Indenture"), dated as of December __, 1996, among the
Mortgagee, [Name of Other Owner] ("___________"), [Name of
Owner] (the "Shipowner") and Golden State Petroleum Transport
Corporation ("Golden State Petroleum"), as agent for the
Shipowner and [Name of the Other Owner], and the Shipowner,
owner of the m.t. "_____________" (the "Vessel"), hereby give
notice that by an assignment contained in an Assignment of
Earnings and Insurances, dated as of _________, between the
Shipowner and the Mortgagee, the Shipowner assigned to the
Mortgagee as mortgagee of the Vessel all of its right, title
and interest under, to and in all policies and contracts of
insurance of whatsoever nature and all entries with protection
and indemnity clubs or societies now or hereafter taken out in
respect of the Vessel, its rights, disbursements, profits or
otherwise.
It is hereby noted that all claims shall be paid to the
Shipowner unless and until the Mortgagee shall have given
notice in writing that the Shipowner is in default under the
First Preferred Ship Mortgage, _____________, on the Vessel
given by the Shipowner in favor of the Mortgagee in which
event such claims shall be payable to the Mortgagee as
mortgagee of the Vessel. Any
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modification of the terms of this insurance or cancellation or
termination by reason of nonpayment of premiums, dues,
assessments, contributions or other amounts which may become
due shall not become effective against the interests of the
Mortgagee, its successors or assigns unless and until fourteen
(14) days' prior telegraphic or telex notice is given to the
Mortgagee, its successors or assigns of such modification,
cancellation or termination.
(e) Certified copies of all binders and cover notes or other
satisfactory written evidence showing that the required insurance of each type
has been placed, maintained or renewed and that the premiums thereon have been
paid shall be submitted to the Mortgagee on or before the date of this Mortgage
and subsequently pro forma policies shall be submitted for approval at least
seven (7) days before liability under any current or renewed insurance expires.
No change shall be made in any insurance without the prior written approval of
the Mortgagee. Certified copies of all policies, certificates of entry,
contracts of insurance, cover notes and renewals thereof shall be delivered to
and held by the Mortgagee, and the Shipowner shall furnish the Mortgagee with
the original of the policies, when and if requested by the Mortgagee. On the
Closing Date, on each date the Insurances are renewed as required by the terms
hereof and each time there is a significant change in the insurance coverage
carried on the Vessel, the Shipowner shall arrange for a detailed report signed
by independent marine insurance brokers acceptable to the Mortgagee, describing
the insurance coverage then carried and maintained on the Vessel (including the
types of risk covered by such policies, the amount insured thereunder and the
expiration date thereof) and stating that in the opinion of said insurance
brokers such insurance is adequate and reasonable for the protection of the
Mortgagee and that the Shipowner is in compliance with the insurance terms
hereof.
(f) The Mortgagee is hereby authorized, but not required, in
its own name and/or the Shipowner's name to demand, collect, give receipt for
and prosecute all necessary actions in the courts to recover any and all
insurance monies which may become due and payable to the Shipowner under any
insurance required or permitted hereunder.
(g) If the Shipowner shall at any time fail to pay or to cause
to be paid when due any insurance premiums, club calls or other costs related to
obtaining or maintaining the insurance required hereunder, or to obtain any
required insurance or to deliver to the Mortgagee all policies, certificates of
entry, contracts of insurance, binders and cover notes and all renewals thereof
as required by the provisions of this Mortgage, the Mortgagee may, but shall not
be required to, procure such insurances and/or pay unpaid premiums and other
costs, and the cost and expense thereof, with interest at the Default Rate,
shall be an indebtedness due from the Shipowner to the Mortgagee secured by this
Mortgage and shall be paid by the Shipowner promptly on demand.
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(h) The Shipowner shall cause each of its insurance brokers to
deliver to the Mortgagee its undertaking substantially in the form of the letter
attached hereto as Exhibit A and made a part hereof.
(i) The Shipowner shall not do any act or cause or permit
any act to be done whereby any insurance shall be or may be suspended, impaired
or defeated.
(j) The Shipowner agrees to do all such things whatsoever and
prepare, execute and deliver all such documents whatsoever to enable the
Mortgagee to collect and recover any monies which may become due in respect of
the policies of insurance and entries and for that purpose (but without
limitation) to permit the Mortgagee if necessary to sue in the name of the
Shipowner.
(k) The Shipowner agrees not to employ the Vessel or suffer
the Vessel to be employed otherwise than in conformity with the terms of the
instruments of insurance aforesaid (including any warranties express or implied
therein) without first obtaining the consent to such employment of the insurers
and complying with such requirements as to extra premium or otherwise as the
insurers may prescribe.
(l) The proceeds of any Insurances or entries shall be
applied as follows:
(i) Until the occurrence of an Event of Default:
(A) Any claim under any such insurances (other
than in respect of a Total Loss) whether or
not such claim is under the terms of the
relevant loss payable clause payable
directly to the Shipowner, will be applied
by the Shipowner in making good the loss or
damage in respect of which it has been paid
to the Shipowner in reimbursement of money
expended by it for such purpose; and
(B) Any claim in respect of protection and
indemnity insurance shall be paid directly
to the person, firm or company to which the
liability covered by such insurance was
incurred or the Shipowner in reimbursement
of moneys expended by it in satisfaction of
such liability;
provided always that for as long as the Initial Charter in
respect of the Vessel remains in force, all payments other
than in respect of a Total Loss (which shall be made to the
Mortgagee) shall be made to the Initial Charterer.
(ii) Upon the occurrence of an Event of Default, subject as
provided above, any claim under any such insurance and entry shall be paid to
the Mortgagee, and will be
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applied by the Mortgagee pursuant to the terms of the Initial Charter unless the
Initial Charterer is in default thereunder in which event the Mortgagee shall
apply such proceeds against payment of the Obligations.
Section 4.03 DEFENSE OF TITLE. The Shipowner lawfully owns and
is lawfully possessed of the Vessel free from any Lien whatsoever except this
Mortgage and Permitted Liens and shall warrant and defend the title and
possession thereto and to every part thereof for the benefit of the Mortgagee
against the claims and demands of all persons whomsoever.
Section 4.04 DISCHARGE OF LIENS. The Shipowner shall pay and
discharge or cause to be paid and discharged when due and payable unless
contested in good faith from time to time all debts, damages and liabilities
whatsoever which may have given or may give rise to maritime or possessory Liens
on or claims enforceable against the Vessel and all taxes, assessments,
governmental charges, fines and penalties legally imposed on the Vessel or any
income or proceeds therefrom or on the Shipowner, the Earnings and in event of
arrest of the Vessel pursuant to legal process or in event of her detention in
exercise or purported exercise of any such Lien as aforesaid to procure the
release of the Vessel from such arrest or detention as soon as possible upon
receiving notice thereof but in any event within fifteen (15) days of receiving
such notice by providing bail or otherwise as the circumstances may require.
Section 4.05. LIENS. (a) Neither the Shipowner nor its agent
nor the master of the Vessel nor any charterer of the Vessel has or shall have
any right, power or authority to create, incur or permit to be placed or imposed
upon the property or any part thereof subject or intended to be subject to this
Mortgage, any Liens whatsoever without the prior written consent of the
Mortgagee, other than Permitted Liens. A properly certified copy of this
Mortgage shall be carried with the ship's papers on board the Vessel, shall be
exhibited to any person having business with the Vessel which might give rise to
any Lien other than Permitted Liens and shall be exhibited to any representative
of the Mortgagee on demand during normal business hours.
Section 4.06 USE OF VESSEL. The Shipowner shall not cause or
permit the Vessel to be operated in such a way as to jeopardize the safety of
the Vessel, its Insurances or in any manner contrary to law, shall not engage in
any unlawful trade or violate any applicable law, rule or regulation of any
Governmental Authority or any other jurisdiction in which the Vessel may operate
from time to time or which may otherwise be applicable to the Vessel or the
Shipowner or carry any cargo that shall expose the Vessel to penalty,
confiscation, forfeiture, capture or condemnation, shall not do or suffer or
permit to be done anything which can or may injuriously affect the registration
or enrollment of the Vessel under the laws and regulations of the Republic of
Liberia and shall at all times keep the Vessel duly documented thereunder.
(b) The Shipowner shall not employ the Vessel or suffer her
employment in any trade or business which is forbidden by international law or
is otherwise illicit or in carrying illicit or prohibited goods or otherwise use
the Vessel in any manner whatsoever which renders
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her liable to condemnation or to destruction, seizure or confiscation and in
event of hostilities in any part of the world (whether war is declared or not)
not allow the Vessel to enter any zone which is declared a war zone unless the
Mortgagee shall have first given its consent thereto in writing and there shall
have been effected by the Shipowner and at its expense such special insurance
cover as the Mortgagee may require.
(c) The Shipowner shall not, during hostilities (whether or
not a state of war shall have been formally declared) between any two or more
nations or in which the United Nations Organization may be involved, or during
any civil war, employ or permit the Vessel to be employed in any manner in
carrying any goods that shall or may be declared to be contraband of war or that
shall or may render her liable to confiscation, seizure, detention or
destruction unless prior to such employment special war risks policies effected
with such underwriters as the Mortgagee may approve and in all respects to the
satisfaction of the Mortgagee shall have been effected, assigned and delivered
to the Mortgagee.
(d) Upon request, the Shipowner shall give to the Mortgagee
all information regarding the Vessel, her position and engagements in the
possession of or available to the Shipowner.
(e) The Shipowner shall comply with and satisfy all of the
material provisions of any applicable law, regulation, proclamation or order
concerning financial responsibility for liabilities imposed on the Shipowner or
the Vessel with respect to pollution by any state or nation or political
subdivision thereof, including, if applicable, the United States Federal Water
Pollution Control Act, OPA and the United States Comprehensive Environmental
Response, Compensation and Liability Act ("CERCLA"), as any of the foregoing may
at any time be amended, and shall maintain all certificates or other evidence of
financial responsibility as may be required by any such law, regulation,
proclamation or order with respect to the trade in which the Vessel is from time
to time engaged and the cargo carried by it and shall upon request, furnish the
Mortgagee with evidence that the Shipowner has acted in compliance with OPA and
CERCLA.
Section 4.07 NOTIFICATIONS. The Shipowner shall
immediately notify the Mortgagee of:
(a) any marine disaster involving the Vessel that has
occurred, or any serious damage suffered by the Vessel (such notice by
the Shipowner to be given within twenty-four (24) hours after the event
shall have come to its knowledge and shall furnish the Mortgagee with
full information regarding any loss of life, other accidents or damage
to the Vessel), and in such event the Mortgagee shall have the right to
have an independent survey of the damage to the Vessel at the
Shipowner's expense provided that the same shall not cause any undue
delay in respect of the operation of the Vessel, and if such survey be
requested, the Shipowner shall lend all needed assistance;
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(b) any occurrence in consequence whereof the Vessel has
become or is likely to become a Total Loss;
(c) any requirement or recommendation made by any insurer or
classification society or by any competent authority that is not
complied with accordingly and/or within the state time limit; and
(d) any complaint or libel filed against the Vessel, or any
levy against the Vessel, or the fact that the Vessel has been taken
into custody or detained by any proceedings in any court or tribunal or
by any government of any country or other authority, any arrest of the
Vessel or the exercise or purported exercise of any lien on the Vessel.
Section 4.08 PAYMENT OF CREW'S WAGES AND ALLOTMENTS. The
Shipowner shall promptly pay all tolls, dues and other outgoings whatsoever in
respect of the Vessel and, as and when the Mortgagee may so require, furnish
satisfactory evidence that the wages and allotment and insurance and pension
contributions of the Master and crew are being regularly paid and that all
deductions from crew's wages in respect of any tax liability are being properly
accounted for.
Section 4.09 CHARTER OF VESSEL. The Shipowner shall not,
without the prior written consent of the Mortgagee, charter the Vessel by demise
charter or by period, time or voyage charter for any period other than to the
Initial Charterer under the Initial Charter or any other charterer under an
Acceptable Replacement Charter. The Shipowner shall not modify, amend or
supplement the terms of the Initial Charter without the prior written consent of
the Mortgagee.
Section 4.10 MAINTENANCE OF VESSEL. The Shipowner shall at all
times and without cost or expense to the Mortgagee maintain and preserve, or
cause to be maintained and preserved, the Vessel, her equipment and machinery in
good running order and repair so that the Vessel shall be, in so far as due
diligence can make her so, tight, staunch, strong and well and sufficiently
tackled, apparelled, furnished, equipped and in every respect seaworthy and in
good operating condition as will entitle her to the highest classification of
The American Bureau of Shipping or such other classification society of like
standing agreeable to the Mortgagee. The Vessel shall, and the Shipowner
covenants that it shall, at all times comply strictly with all applicable laws,
treaties and conventions of the Republic of Liberia and rules and regulations
issued thereunder and shall have on board as and when required by such rules and
regulations valid certificates showing compliance therewith. The Shipowner shall
not make or permit to be made any substantial change in the structure, type or
speed of the Vessel or change in any of her rigs without first obtaining the
written approval of the Mortgagee. The Shipowner shall cause all repairs to
and/or replacements of any damaged worn or lost parts or equipment of the Vessel
be effected in such manner both as regards workmanship and quality of materials
so as not to diminish the value or class of the Vessel. The Shipowner shall
submit the Vessel to such
<PAGE>
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periodical or other surveys as may be required for classification purposes and
shall if so required by the Mortgagee supply to the Mortgagee on request copies
of all surveys or reports issued in respect thereof.
Section 4.11 STATEMENT OF CLASSIFICATION SOCIETY. The
Shipowner shall furnish to the Mortgagee annually from the date hereof a
certificate by The American Bureau of Shipping or such other classification
society acceptable to the Mortgagee that such classification is maintained in
the highest category for ships of the same type as the Vessel free of
recommendations and notations which have not been complied with in accordance
with their terms and to furnish the Mortgagee from time to time and at any time
upon demand with all such information and copies of all such documents as the
Mortgagee may require concerning the classification of the Vessel.
Section 4.12 SURVEYS OF VESSEL. The Shipowner shall submit the
Vessel or cause the Vessel to be submitted regularly to such periodical or other
surveys as may be required for classification purposes and if so required supply
and cause to be supplied to the Mortgagee copies of all survey reports issued in
respect thereof.
Section 4.13 ACCESS TO VESSEL. The Shipowner shall use all
reasonable endeavors to afford the Mortgagee and such Persons as the Mortgagee
shall from time to time appoint for that purpose full and complete access to the
Vessel at any time, on reasonable notice and in a manner which shall not
interfere with the Vessel's trading requirements to view the state and condition
thereof and her cargo and papers and to ascertain whether the Vessel is being
properly repaired and maintained, and if default shall be made in keeping her in
such good state of repair and in such working order and condition as herein
mentioned (without prejudice however to any of the Mortgagee's rights under this
Mortgage) the Mortgagee may (but shall not be obligated to) effect such repairs
as shall in its opinion be necessary, and the Shipowner shall on demand repay to
the Mortgagee every sum of money expended for the above purpose with interest at
the Default Rate.
Section 4.14 REGISTRATION OF MORTGAGE; RECORDATION OF
MORTGAGE. (a) Unless required to do so by the Initial Charter, the Shipowner
shall not change the flag or port of documentation of the Vessel or through any
action or inaction cause the registration of the Vessel under the laws of the
Republic of Liberia to be void or voidable or to lapse;
(b) The Shipowner shall cause this Mortgage to be recorded
with the Deputy Commissioner for Maritime Affairs of the Republic of Liberia as
prescribed by Chapter 3 of Title 22 of the Liberian Code of Laws of 1956 as
amended and otherwise comply with and satisfy all the requirements and
formalities established by the said Liberian Code of Laws and any other
pertinent legislation of the Republic of Liberia to perfect this Mortgage as a
valid and enforceable first and preferred Lien upon the Vessel, subject only to
Permitted Liens, and shall
<PAGE>
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furnish to the Mortgagee from time to time such evidence to the Mortgagee's
satisfaction with respect to the Shipowner's compliance with the provisions of
this Section.
Section 4.15 NOTICE OF MORTGAGE. (a) The Shipowner shall at
all times carry on board the Vessel a duly certified copy of this Mortgage and
any assignment thereof (which shall form a part of the Vessel's papers) and
cause the same to be shown to any person having business with the Vessel which
might create or imply any commitment or encumbrance whatsoever on the Vessel and
place and maintain in a frame in a conspicuous place in the navigation room and
in the cabin of the Master of the Vessel a printed notice such that the printed
area covers a space not less than six inches wide by nine inches high in the
following form:
"NOTICE OF FIRST MORTGAGE"
"This Vessel is owned by [Name of Owner] and is
subject to a First Preferred Mortgage in favor of
United States Trust Company of New York, as
mortgagee. Under the terms of the Mortgage, neither
the Shipowner nor any charterer nor the master of
this Vessel nor any other person has any power,
right or authority whatever to create, incur or
permit to be imposed on this Vessel any lien or
encumbrance except for Master's and crew's wages for
not more than three (3) months and salvage."
(b) Notwithstanding the requirement for the Shipowner to
maintain the Notice of Mortgage described in Section 4.15(a), so long as the
Initial Charter or Acceptable Replacement Charter is in effect, the Shipowner
shall maintain the Notice of First Mortgage described in Clause 14 of the
Initial Charter or the Notice of First Preferred Mortgage described in the
Acceptable Replacement Charter, as the case may be.
Section 4.16 FURTHER ASSURANCES. (a) The Shipowner shall pay
to the Mortgagee on demand on a full indemnity basis all moneys whatsoever which
the Mortgagee shall or may expend, be put to or become liable for in or about
the protection maintenance or enforcement of the security created by this
Mortgage and the other Security Documents or in or about the exercise by the
Mortgagee of any of the powers vested in the Mortgagee hereunder or thereunder
including any and all reasonable costs, charges, legal fees and expenses of the
Mortgagee and shall pay interest thereon at the Default Rate until the date of
repayment by the Shipowner both before and after judgment.
(b) The Shipowner shall do and permit to be done each and
every act or thing whatsoever which the Mortgagee may require to be done for the
purpose of enforcing the Mortgagee's rights hereunder and to allow the Mortgagee
to use the Shipowner's name as may be required for that purpose.
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Section 4.17 NOTICE OF DEFAULT. Promptly after learning of the
occurrence or existence of an Event of Default or an event which but for notice
or lapse of time or both would constitute an Event of Default, the Shipowner
shall so notify the Mortgagee, which notice shall set forth in reasonable detail
the circumstances surrounding such Event of Default or event and shall specify
what actions the Shipowner intends to take to cure such Event of Default or such
event.
ARTICLE V
EVENTS OF DEFAULT; REMEDIES
Section 5.01 EVENTS OF DEFAULT. The following shall
constitute Events of Default hereunder:
(a) Default in the payment of any sums payable under the Mortgage
or the Indenture within two (2) Business Days after such
amount is due;
(b) Default by the Shipowner in the due observance or performance
of any covenant described in Sections 4.02, 4.03, 4.09 and
4.14;
(c) Default by the Shipowner in the due observance or performance
of any covenant other than those described in (b) above which
default shall continue for a period thirty (30) days after
written notice has been given to the Shipowner;
(d) The Vessel is deemed a Total Loss and the insurance proceeds
thereof have not been received by the Mortgagee within
ninety (90) days after the date on which the Vessel was
deemed a Total Loss; provided, however, if the Vessel is
under charter to the Initial Charterer pursuant to the
Initial Charter or to a charterer under an Acceptable
Replacement Charter, such an event shall be an Event of
Default under this Mortgage if the Mortgagee has not
received the amounts payable by the Initial Charterer or
charterer, as the case may be, in the event of a Total Loss
pursuant to the Initial Charter or an Acceptable Replacement
Charter within five (5) business days of the date on which
such amounts are due pursuant to the Initial Charter or
Acceptable Replacement Charter, as the case may be;
(e) The Shipowner shall abandon the Vessel;
(f) This Mortgage or any material provision hereof shall be deemed
invalidated in whole or in part by any present or future law
of the Republic of Liberia or decision of any competent court;
(g) The occurrence of an Indenture Event of Default.
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Section 5.02 REMEDIES. In the event any one or more Events of
Default shall have occurred and be continuing, then, in each and every such case
the Mortgagee, subject to the rights of the Initial Charterer or the charterer
under an Acceptable Replacement Charter, shall have the right to:
(a) declare immediately due and payable all of the Obligations (in
which case all of the same shall be immediately due), and
bring suit at law, in equity or in admiralty, as it may be
advised, to recover judgment for the Obligations and collect
the same out of any and all property of the Shipowner whether
covered by the Mortgage or otherwise;
(b) exercise all of the rights and remedies in foreclosure and
otherwise given to mortgagees by the provisions of applicable
law;
(c) take and enter into possession of the Vessel, at any time,
wherever the same may be, without court decision or other
legal process and without being responsible for loss or damage
and the Mortgagee may, without being responsible for loss or
damage, hold, lay-up, lease, charter, operate or otherwise use
such Vessel for such time and upon such terms as it may deem
to be for its best advantage, and demand, collect and retain
all hire, freights, earnings, issues, revenues, income,
profits, return premiums, salvage awards or recoveries,
recoveries in general average, and all other sums due or to
become due in respect of such Vessel or in respect of any
insurance thereon from any person whomsoever, accounting only
for the net profits, if any, arising from such use of the
Vessel and charging upon all receipts from use of the Vessel
or from the sale thereof by court proceedings or by private
sale all costs, expenses, charges, damages or losses by reason
of such use, and if at any time the Mortgagee avails itself of
the right given to it to take the Vessel: (i) the Mortgagee
shall have the right to dock the Vessel for a reasonable time
at any dock, pier or other premises of the Shipowner without
charge, or to dock her at any other place at the cost and
expense of the Shipowner; and (ii) the Mortgagee shall have
the right to require the Shipowner to deliver, and the
Shipowner shall on demand, at its own cost and expense,
deliver to the Mortgagee the Vessel as demanded; and (iii) the
Shipowner shall irrevocably instruct the master of the Vessel
so long as the Mortgage is outstanding to deliver the Vessel
to the Mortgagee as demanded;
(d) sell the Vessel or any share therein with or without the
benefit of any charter party or other engagement by public
auction or private contract without legal process at any place
in the world and upon such terms as the Mortgagee in its
absolute discretion may determine with power to postpone any
such sale and without being answerable for any loss occasioned
by such sale or resulting from the postponement thereof and at
any such public auction the Mortgagee may
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become the purchaser and shall have the right to set off the
purchase price against the Obligations;
(e) to require that all policies, contracts and other records
relating to the Insurance (including details of and
correspondence concerning outstanding claims) be forthwith
delivered to such brokers as the Mortgagee may nominate;
(f) to collect, recover, compromise and give a good discharge for
all claims then outstanding or thereafter arising under any of
the Insurance and to take over or institute (if necessary
using the name of the Shipowner) all such proceedings in
connection therewith as the Mortgagee in its absolute
discretion thinks fit and to permit the brokers through whom
collection or recovery is effected to charge and retain the
usual brokerage therefor;
(g) to discharge, compound, release or compromise claims in
respect of the Vessel which have given or may give rise to any
charge or Lien on the Vessel or which are or may be
enforceable by proceedings against the Vessel under the laws
of all countries to whose jurisdiction the Vessel may from
time to time become subject;
(h) pending sale of the Vessel to remove the Vessel or to require
the Vessel to be removed from any place where she may be or be
lying to any port, harbor, dock or other location for the
purposes of the Vessel docking, laying up, repair, management,
employment, maintenance, or sale or to preserve or maintain
the Mortgagee's security in the Vessel in such manner as the
Mortgagee may in its complete discretion deem necessary;
(i) to discharge, store, load, tranship and otherwise handle any
cargo for the time being on board the Vessel without liability
to any third party with regard thereto;
(j) pending sale of the Vessel to manage, insure, maintain and
repair the Vessel and to hold, lease, charter, operate,
employ, lay up or otherwise use the Vessel in such manner and
for such period as the Mortgagee in its absolute discretion
deems expedient accounting only for the net profits (if any)
of such use and for the purposes aforesaid the Mortgagee shall
be entitled to do all acts and things incidental or conducive
thereto and in particular to enter into such arrangements
respecting the Vessel, her insurance, management, maintenance,
repair, classification and employment and generally to do and
cause to be done all such acts and things whatsoever and to
make all such arrangements whatsoever in respect of the Vessel
or the working of the same in all respects as if the Mortgagee
were the absolute and sole owner of the Vessel and without
being responsible for any loss and damage thereby incurred;
and
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(k) to recover from the Shipowner on demand all reasonable
expenses, payments, disbursements, costs, losses and damages
as may be incurred by the Mortgagee whether the Mortgagee be
in possession of the Vessel or not or in exercise by the
Mortgagee of any of the powers herein contained together with
interest thereon at the Default Rate and such expenses,
payments, disbursements, costs, losses and damages together
with the said interest thereon shall, until paid by the
Shipowner to the Mortgagee, be secured on the Vessel by this
Mortgage.
Section 5.03 SALE OF THE VESSEL. (a) A sale of the Vessel made
in pursuance of this Mortgage whether under the power of sale hereby granted or
any judicial proceedings shall operate to divest all right, title and interest
of any nature whatsoever of the Shipowner herein and thereto and shall bar the
Shipowner, its successors and assigns and all persons claiming by, through or
under them (subject, however, to the rights of the Initial Charterer or
charterer under an Acceptable Replacement Charterer) provided such sale is by
auction and that nothing herein shall be deemed to derogate from the Shipowner's
duty to the Mortgagee. Upon any such sale, the purchaser shall not be bound to
see or inquire whether the Mortgagee's power of sale has risen in the manner
provided by the Mortgage and the sale shall be within the power of the Mortgagee
and the receipt of the Mortgagee for the purchase money shall effectively
discharge the purchaser who shall not be concerned with the manner of
application of the proceeds of sale or be in any way answerable or otherwise
liable therefor. The Mortgagee may bid for and purchase the Vessel and upon
compliance with the terms of sale may hold, retain and dispose of the Vessel
without further accountability therefor.
(b) The Shipowner hereby irrevocably appoints the Mortgagee
and its assigns as its true and lawful attorney with full power to act alone and
with full power of substitution until the due discharge of this Mortgage in
accordance with the laws of the Republic of Liberia to make all necessary
transfers of the Vessel sold pursuant to Section 5.02, including, without
limitation, executing and delivering all instruments of assignment and transfer
or quitclaim as the Mortgagee may require and the Shipowner hereby does ratify
and confirm all that its said attorneys shall lawfully do by virtue hereof.
Nevertheless, the Shipowner shall if so requested by the Mortgagee ratify and
confirm any such sale by executing and delivering to the purchaser or purchasers
of the Vessel such proper bills of sale, conveyances, instruments of assignment
and transfer or quitclaim and releases as may be designated in such request.
Section 5.04 MORTGAGEE AS ATTORNEY-IN FACT. The Mortgagee is
hereby appointed attorney-in-fact of the Shipowner and upon the Obligations
becoming due and payable in the name of the Shipowner to demand, collect,
receive, compromise and sue for so far as may be permitted by law all freights,
hire, earnings, issues, revenues, income and profits of the Vessel and all
amounts due from underwriters under any insurance thereon as payment of losses
or as return premiums or otherwise salvage awards and recoveries in general
average or otherwise and all other sums due or to become due upon the
Obligations becoming due and payable in respect of the Vessel or in respect of
any insurance thereon from any person whomsoever and to make
<PAGE>
-20-
and give and execute in the name of the Shipowner acquittance, receipts,
releases or other discharges for the same whether under seal or otherwise and to
endorse and accept in the name of the Shipowner all checks, notes, drafts,
warrants, agreements and all other instruments in writing with respect to the
foregoing.
Section 5.05 APPOINTMENT OF RECEIVER. Whenever any right to
enter and take possession of the Vessel accrues to the Mortgagee, the Mortgagee
may require the Shipowner to deliver and the Shipowner shall on demand at its
own cost and expense deliver to the Mortgagee the Vessel as demanded. If any
legal proceedings shall be taken to enforce any right under this Mortgage, the
Mortgagee shall be entitled as a matter of right to the appointment of a
receiver of the Vessel and the freights, hire, earnings, issues, revenues,
income and profits due or to become due and arising from the operation thereof.
Section 5.06 ARREST OR DETENTION OF VESSEL. In the event that
the Vessel shall be arrested or detained by any marshal or other officer of any
court of law, equity or admiralty jurisdiction in any country or nation of the
world or by any government or other authority and shall not be released from
arrest or detention within fifteen (15) days from the date of arrest or
detention, the Shipowner hereby authorizes and empowers the Mortgagee, its
successors or assigns, to apply for and receive possession of or to take
possession of the Vessel with all the rights and powers that the Shipowner or
its successors or assigns may have, possess and exercise in any such event, and
this power of attorney shall be irrevocable and may be exercised not only by the
Mortgagee but also by an assignee or appointee of the Mortgagee with full power
of substitution to the same extent and effect as if such assignee or appointee
has been named by express designation.
Section 5.07 DEFENSE OF SUITS. The Shipowner also authorizes
and empowers the Mortgagee, and its successors, assigns and appointees, to
appear in the name of the Shipowner, and its successors and assigns, in any
court of any country or nation of the world where a suit is pending against the
Vessel because of or on account of any alleged Lien against the Vessel from
which the Vessel has not been released and to take such proceedings and do such
things as to them or any of them may seem proper toward the defense of such suit
and the discharge of such Lien, and all monies expended by them or any of them
for the purpose of such defense and/or discharge shall be a debt due from the
Shipowner, and its successors and assigns, to the Mortgagee, and its successors
and assigns, and payment thereof together with interest thereon at the Default
Rate (to the extent permitted by law) from time to time in effect shall be
secured by the Lien of this Mortgage in like manner and extent as if the amount
and description thereof were written herein.
Section 5.08 CUMULATIVE RIGHTS, POWERS AND REMEDIES. (a) Each
and every right, power and remedy herein given to the Mortgagee shall be
cumulative and shall be in addition to every other right, power and remedy
herein given or now or hereafter existing at law, in equity, admiralty or by
statute and each and every power and remedy whether herein
<PAGE>
-21-
given or otherwise existing may be exercised from time to time and as often and
in such order as may be deemed expedient by the Mortgagee, and the exercise or
the beginning of the exercise of any right, power or remedy shall not be
construed to be a waiver of the right to exercise at the same time or thereafter
any other power or remedy.
(b) No delay or omission of the Mortgagee to exercise any
right or power vested in it under the Security Documents or any of them shall
impair such right or power or be construed as a waiver of or as acquiescence in
any default by the Shipowner, nor shall the acceptance by the Mortgagee of any
security or any payment on account of the Obligations, although made after
default, be deemed a waiver of any right arising out of any future default or of
any past default, and in the event of the Mortgagee at any time agreeing to
waive any such right or power such waiver shall be revocable by the Mortgagee at
any time and the right or power shall henceforth be again exercisable as though
there had been no such waiver.
(c) In the event the Mortgagee shall have proceeded to enforce
any right or pursue any power under this Mortgage by foreclosure, entry or
otherwise and such proceedings shall have been discontinued or abandoned for any
reason, or shall have been determined adversely to the Mortgagee, then and in
every such case the Shipowner and the Mortgagee shall be restored to their
former positions and rights hereunder with respect to the property subject or
intended to be subject to this Mortgage and all rights, remedies and powers of
the Mortgagee shall continue as if no such proceedings had been taken.
Section 5.09 APPLICATION OF PROCEEDS. The proceeds of any sale
made either under the power of sale hereby granted to the Mortgagee or under a
judgment or decree in any judicial proceeding for the foreclosure of this
Mortgage or for the enforcement of any remedy granted to the Mortgagee
hereunder, or any net earnings arising from the management, charter or other use
of the Vessel by the Mortgagee under any of the powers herein reserved, any
amounts on deposit to the credit of the Shipowner or the Mortgagee from earnings
of the Vessel as provided herein and any other moneys received by the Mortgagee
pursuant to the terms of this Mortgage, the application of which is not
elsewhere herein specifically provided for, shall be applied pursuant to the
terms of the Indenture.
Section 5.10 MORTGAGEE'S RIGHT TO REMEDY DEFAULTS. If the
Shipowner shall default in the performance or observance of any of the covenants
in this Mortgage on its part to be performed or observed, the Mortgagee may in
its discretion do any act or make any expenditures necessary to remedy such
default, and the Shipowner shall promptly reimburse the Mortgagee, with interest
at the Default Rate from time to time in effect, for any and all expenditures so
made or incurred and until the Shipowner has so reimbursed the Mortgagee for
such expenditures, the amount thereof shall be a debt due from the Shipowner to
the Mortgagee and payment thereof shall be secured by the Lien of this Mortgage
in like manner and extent as if the amount and description thereof were written
herein, but the Mortgagee, although privileged to do so, shall be under no
obligation to the Shipowner to make any such expenditures
<PAGE>
-22-
and the making thereof shall not relieve the Shipowner of any default in that or
any other respect. The Shipowner also shall reimburse the Mortgagee promptly
with interest at the rates referred to above for any and all advances and
expenses made or incurred by the Mortgagee at any time in taking the Vessel or
otherwise protecting its rights hereunder and for any and all damages sustained
by the Mortgagee from or by reason of any default or defaults of the Shipowner.
Section 5.11 DELEGATION OF POWERS. The Mortgagee may delegate
to any person or persons all or any of the trusts, powers or discretions vested
in it pursuant to this Mortgage and any such delegations may be made upon such
terms and conditions and subject to such regulations (including power to
sub-delegate) as the Mortgagee may in its absolute discretion deem appropriate.
Section 5.12 LEGAL ACTIONS. In addition to the other
provisions hereof for enforcement of the rights of the Mortgagee under this
Mortgage, the Mortgagee may, at its option, in the event of any default by the
Shipowner, bring an action, suit or other proceeding IN REM against the Vessel
to foreclose this Mortgage and sell the Vessel in any court in the Republic of
Liberia or any other country in which the Vessel may be found; or an action,
suit or other proceeding IN PERSONAM against the Shipowner or any other person
obligated under the Security Documents to recover payment of any amount owing by
the Shipowner or such other person and/or to foreclose this Mortgage and sell
the Vessel in any country in which the Vessel or the Shipowner or any person so
obligated may be found.
Section 5.13 MORTGAGE SUBJECT TO RIGHTS OF INITIAL CHARTERER
UNDER THE INITIAL CHARTER. So long as the Initial Charter is in effect, the
rights of the Mortgagee set forth in this Article V are and shall be subject to
the rights of the Initial Charterer under the Initial Charter. So long as the
Initial Charterer or a replacement charterer under an Acceptable Replacement
Charter shall not be in default under and pursuant to the terms of the Initial
Charter or the terms of the Acceptable Replacement Charter, as the case may be,
the Initial Charterer or replacement charterer shall be entitled to quiet
enjoyment of the Vessel.
ARTICLE VI
MISCELLANEOUS PROVISIONS
Section 6.01 PERFORMANCE BY INITIAL CHARTERER OR CHARTERER
UNDER AN ACCEPTABLE REPLACEMENT CHARTER. (a) It is hereby agreed by the parties
hereto that, for the duration of the Initial Charter, when the Initial
Charterer, or any charterer under an Acceptable Replacement Charter, performs
and discharges its obligations under the Initial Charter respecting the Vessel,
such performance of the said obligations by the Initial Charterer or by such
charterer shall be deemed to be proper and due performance of the same
obligations of the Shipowner under this Mortgage, the Assignment of Earnings and
Insurances and other Security Documents, notwithstanding that the extent or
manner of performance of the Shipowner's obligations may
<PAGE>
-23-
differ from that of the Initial Charterer under the Initial Charter or of the
charterer under an Acceptable Replacement Charter.
(b) So long as the Initial Charter is in effect, to the extent
the Shipowner's approval under the Initial Charter is not to be unreasonably
withheld, the approval by the Mortgagee under the corresponding provisions of
this Mortgage also shall not be unreasonably withheld.
(c) So long as the Initial Charter is in effect, where any
obligation with respect to the Vessel is undertaken by the Shipowner under this
Mortgage or any other of the Security Documents but such obligation is not
undertaken by the Initial Charterer under the Initial Charter, then the
Shipowner shall not be treated as in default under this Mortgage if such
obligation cannot be performed by virtue of the Initial Charter.
(d) The insurance coverage required under an Acceptable
Replacement Charter or maintained by the Shipowner or charterer in connection
with any other charter entered into after the termination of the related Initial
Charter must be sufficient to maintain the credit rating of the Mortgage Notes
by the Rating Agencies at least at the rating applicable to the Mortgage Notes
immediately prior to the effectiveness of such Acceptable Replacement Charter or
other charter.
Section 6.02 DISCHARGE OF MORTGAGE. The Mortgagee agrees that
upon payment of the Obligations it shall at the expense of the Shipowner
discharge this Mortgage and transfer or release to the Shipowner all insurance
policies and certificates of entry relating to the Vessel freed and discharged
from the provisions herein contained.
Section 6.03 GOVERNING LAW. THIS MORTGAGE SHALL BE CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE REPUBLIC OF LIBERIA AND THE OBLIGATIONS,
RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE
WITH SUCH LAWS, WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAW.
Section 6.04 SEVERABILITY. If any provision of this Mortgage
is held to be in conflict with any applicable statute or rule of law or is
otherwise held to be unenforceable for any reason whatsoever, such circumstances
shall not have the effect of rendering the provision in question inoperative or
unenforceable in any other case or circumstance, or of rendering any other
provision or provisions herein contained invalid, inoperative, or unenforceable
to any extent whatsoever. The invalidity of any one or more phrases, sentences,
clauses or Sections of this Mortgage, shall not affect the remaining portions of
this Mortgage, or any part thereof.
Section 6.05 NOTICES. All demands, notices and
communications hereunder shall be in writing, personally delivered or mailed by
certified mail-return receipt requested, and shall
<PAGE>
-24-
be deemed to have been duly given upon receipt (a) in the case of the Mortgagee,
at the following address: 114 West 47th Street, New York, New York 10036, (b) in
the case of the Shipowner, at the following address: 15-19 Athol Street,
Douglas, Isle of Man, British Isles, or at other such address as shall be
designated by such party in a written notice to the other parties.
Section 6.06 HEADINGS. The captions or headings in this
Mortgage are for convenience only and in no way define, limit or describe the
scope or intent of any provisions or sections of this Mortgage.
Section 6.07 GENERAL INTERPRETIVE PRINCIPLES. For purposes of
this Mortgage except as otherwise expressly provided or unless the context
otherwise requires:
(a) the defined terms in this Mortgage shall include the
plural as well as the singular, and the use of any gender herein shall be deemed
to include any other gender;
(b) accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted accounting
principles as in effect on the date hereof;
(c) references herein to "Articles", "Sections",
"Subsections", "paragraphs", and other subdivisions without reference to a
document are to designated Articles, Sections, Subsections, paragraphs and other
subdivisions of this Mortgage;
(d) a reference to a Subsection without further reference to a
Section is a reference to such Subsection as contained in the same Section in
which the reference appears, and this rule shall also apply to paragraphs and
other subdivisions;
(e) the words "herein", "hereof", "hereunder" and other
words of similar import refer to this Mortgage as a whole and not to any
particular provision; and
(f) the term "include" or "including" shall mean without
limitation by reason of enumeration.
Section 6.08 SUCCESSORS AND ASSIGNS. This Mortgage shall inure
to the benefit of and be binding upon the Shipowner and the Mortgagee and their
respective successors and assigns.
Section 6.09 CONSENT TO JURISDICTION. Any legal suit, action
or proceeding against the Shipowner arising out of or relating to this Mortgage,
the Indenture or any other Security Document, or any transaction contemplated
hereby or thereby, may be instituted in any federal or state court in The City
of New York, State of New York and the Shipowner hereby waives any objection
which it may now or hereafter have to the laying of venue of any such suit,
<PAGE>
-25-
action or proceeding, and the Shipowner hereby irrevocably submits to the
jurisdiction of any such court in any such suit, action or proceeding. The
Shipowner hereby waives, to the fullest extent permitted by applicable law, any
defense which it now or hereafter have based upon lack of personal jurisdiction
or venue or FORUM NON CONVENIENS. The Shipowner hereby irrevocably appoints and
designates CT Corporation System, having an address at 1633 Broadway, New York,
New York, its true and lawful attorney-in-fact and duly authorized agent for the
limited purpose of accepting service of legal process and the Shipowner agrees
that service of process upon such party shall constitute personal service of
such process on the Shipowner. The Shipowner shall maintain the designation and
appointment of such authorized agent until all amounts payable under this
Mortgage, the Indenture and the other Security Documents shall have been paid in
full. If such agent shall cease to so act, the Shipowner shall immediately
designate and appoint another such agent satisfactory to the Mortgagee and shall
promptly deliver to the Mortgagee evidence in writing of such other agent's
acceptance of such appointment.
Section 6.10 PAYMENT. All monies payable by the Shipowner to
the Mortgagee shall be paid in Dollars without deduction for or on account of
any present or future taxes or imposts whatsoever levied or assessed by or
within any state or nation or any political subdivision or taxing authority
thereof or therein and the Shipowner shall indemnify the Mortgagee against all
such taxes or imposts. The Shipowner shall, subject to the prior written
approval of the Mortgagee (such approval not to be unreasonably withheld), be
entitled to take action in the name of the Mortgagee at the Shipowner's expense
against any taxing authority in respect of any withholding or other taxes for
which the Shipowner have indemnified the Mortgagee, and the Mortgagee agrees to
reasonably cooperate with the Shipowner in taking such action. If as a result of
any such action any moneys are received that are attributable to such
indemnified taxes (including any interest thereon paid by such taxing authority)
the same shall be recovered by the Shipowner.
Section 6.11 RECORDED AMOUNT. For the purposes of the
recording of this First Preferred Ship Mortgage as required by Chapter 3 of
Title 22 (Maritime Law) of the Liberian Code of Laws of 1956, as amended, the
total amount of this Mortgage is __________________________ United States
Dollars (US$__________), and interest and the performance of the Mortgage
covenants; the maturity date is the ___________, and the discharge amount is the
same as the total amount. It is not intended that this Mortgage shall include
property other than the Vessel, and it shall not include property other than the
Vessel as the term "vessel" is used in Subsection (2) of Section 106 of the
Title 22 of the Liberian Code of Laws of 1956, as amended. Notwithstanding the
foregoing, for property other than the Vessel, if any should be determined to be
covered by this Mortgage, the discharge amount is zero point zero one percent
(0.01%) of the total amount.
<PAGE>
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Section 6.12 NO WAIVER OF PREFERRED STATUS. No provision of
this Mortgage shall be deemed to be a stipulation that the Mortgagee waives the
preferred status of this Mortgage given by Title 22 (Maritime Law) of the
Liberian Code of Laws of 1956, as amended. Any provision of this Mortgage which
would otherwise constitute such a stipulation, to such extent, shall have no
force or effect.
<PAGE>
-27-
IN WITNESS WHEREOF the Shipowner has signed this Mortgage on
the day and year first before written.
[NAME OF OWNER]
By:_______________________________________
Name:_____________________________________
Title:____________________________________
<PAGE>
ACKNOWLEDGEMENT
---------------
STATE OF NEW YORK )
)ss.:
COUNTY OF NEW YORK )
On this ____ day of ___________, before me personally came
_____________ to me known, and known to me to be the person who executed the
foregoing instrument, who being by me duly sworn, did depose and say that he
resides at
that he is the _______________ of _____________ the corporation described
in, and which executed the foregoing instrument; that it was so affixed by order
of the Board of Directors of said corporation and that he signed his name
thereto by like order.
<PAGE>
EXHIBIT A
BROKER'S LETTER OF UNDERTAKING
(date)
Re: [Name of Owner], Owner of m.t. _____________ (the
"Vessel")
We confirm that we have effected insurances for the account of
the above Owner as set out in Appendix "A" attached hereto.
Pursuant to instructions received from the Owner, and in
consideration of your approving our appointment as Brokers in connection with
the insurances covered by this letter, we hereby undertake:
1. to hold the Insurance Slips or Contracts, the
Policies when issued, and any renewals of such
Policies or new Policies or any Policies substituted
(with your consent) therefor and the benefit of the
insurance thereunder to your order in accordance with
the terms of the Notice of Assignment and Loss
Payable Clause set out in Appendix "B" attached
hereto; and
2. to have endorsed on each and every Policy as and when
the same is issued a copy of the Notice of Assignment
and Loss Payable Clause in the form of Appendix "B"
attached hereto dated and signed by the Shipowner and
acknowledged by Underwriters in accordance with
market practice; and
3. to advise you immediately of any material changes
which may be made to the terms of the insurances or
if we cease to be Brokers for purposes of said
insurances; and
4. to advise you, not later than one month before expiry
of said insurances, in the event of our not having
received notice of renewal instructions from the
Shipowner and/or its agents, and in the event of our
receiving instructions to renew said insurances to
advise you promptly of the details thereof.
Our above undertakings are given subject to our lien on the
Policies for premiums for the Vessel and subject to our right of cancellation on
default in payment of such premiums. We undertake to advise you immediately if
any premiums are not paid to us by the applicable due date and not to exercise
such rights of cancellation without giving you (i) fourteen (14) days' prior
notice in writing, either by letter to the above address or by telex or cable to
<PAGE>
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, respectively, and (ii) a reasonable opportunity of paying any
premiums outstanding except it is understood that in the case of War Risks the
terms of the Automatic Termination of Cover Clause contained in the War Risks
Policies shall override any undertakings given by us as Brokers. We further
undertake and agree that in the event of a total loss of the Vessel, or an
arranged, compromised or constructive total loss, our lien on the Policies and
the proceeds thereof shall be limited to any other premiums or other amounts due
in respect of Vessel or interest insured under the Policies.
Notwithstanding the terms of the said Loss Payable clause and
the said Notice of Assignment, unless and until we receive notice from you to
the contrary, we shall be empowered to arrange for a collision and/or salvage
guaranty to be given in the event of bail being required in order to prevent the
arrest of the Vessel or to secure the release of the Vessel from arrest
following a casualty. We undertake to advise you immediately in the event of our
having arranged for a collision and/or salvage guaranty. Where a guaranty has
been given as aforesaid and the guarantor has paid an amount under the guaranty
in respect of such claim, there shall be payable directly to the guarantor out
of the proceeds of the said Policies an amount equal to the amount so paid.
Finally, it is understood that all claims shall be collected
through us, as Brokers, and that in collecting such claims we are acting on your
behalf as assignee of the insurances covered by this letter.
Yours faithfully,
[insert name of Broker]
By:______________________________________
Director
<PAGE>
SCHEDULE 1
ADDITIONAL DEFINED TERMS USED IN THE MORTGAGE
"CLASSIFICATION SOCIETY" means The American Bureau of Shipping or any
other private organization which has as its purpose the supervision of vessels
during their construction and afterward, in respect to their seaworthiness and
upkeep, and the placing of vessels in grades or "classes" according to the
society's rules for each particular type of vessel.
"EARNINGS" includes all monies whatsoever due or to become due to the
Shipowner at any time arising out of the use or operation of the Vessel or
otherwise including (but without prejudice to the generality of the foregoing)
all sums due and payable to the Shipowner under and pursuant to the Initial
Charter and all freight, hire and passage monies and compensation payable to the
Shipowner in the event of requisition of the Vessel for hire, remuneration for
salvage and towage, services, demurrage and detention moneys and any other
damages for breach (or payments for variation or termination) of any
charterparty or any contract of employment of the Vessel and all earnings of the
Vessel due or to become due to the Shipowner.
"OBLIGATIONS" means the payment, performance or other obligations of
any kind whatsoever of the Shipowner under and pursuant to the Indenture, the
Security Documents, and any instrument, agreement or document referred to
therein.
"INSURANCE" means any policies and contracts of insurance and entries
in any protection and indemnity or war risks association which are effected by
or on behalf of the Shipowner in respect of the Vessel or otherwise in
connection with the Vessel, including but not limited to any insurance monies
received by the Shipowner pursuant to clauses 12 and 13 of the Initial Charter
and including all claims and returns of premiums thereunder and including any
compensation payable by whomsoever to the Shipowner by virtue of requisition of
the Vessel for title or confiscation or seizure of the Vessel by any government
or person or agency purporting to act on behalf of any government.
"PERMITTED LIENS" means the Charter, any Acceptable Replacement Charter
or other charter for the Vessel, liens for crew's wages accrued for not more
than three months or for collision or salvage, liens in favor of suppliers of
necessaries or other similar liens arising in the ordinary course of its
business (accrued for not more than three months) or liens for loss, damage or
expense, which are fully covered by insurance or, in respect of which, a bond or
other security has been posted by the Shipowner with the appropriate court or
other tribunal to prevent the arrest or secure the release of the Vessel from
arrest on account of such claim or lien; provided, however, that so long as the
Initial Charter is in effect "Permitted Liens" shall mean those liens, claims
and encumbrances permitted under the Initial Charter.
"REQUIREMENT OF LAW" means, as to any Person, the certificate of
incorporation and by-laws or partnership agreement or other organizational or
governing documents of such Person, and, any Law applicable to or binding upon
such Person or any of its properties or to which such Person or any of its
properties is subject.
<PAGE>
EXHIBIT B
---------
===============================================================================
UNITED STATES TRUST COMPANY OF NEW YORK,
AS INDENTURE TRUSTEE
and
GOLDEN STATE PETRO (IOM I-A) PLC
-----------------------------------
ASSIGNMENT OF CHARTER
Dated as of December 1, 1996
-----------------------------------
================================================================================
<PAGE>
Assignment of Charter, dated as of December 1, 1996 (the
"Assignment"), between Golden State Petro (IOM I-A) PLC (the "Owner") and United
States Trust Company of New York (the "Indenture Trustee"), not in its
individual capacity but solely as trustee under the Indenture (the "Indenture"),
dated as of the date hereof, among the Owner, the Indenture Trustee, Golden
State Petro (IOM I-B) PLC ("Golden State Petro B") and Golden State Petroleum
Transport Corporation ("Golden State Petroleum"), as agent for the Owner and
Golden State Petro B.
PRELIMINARY STATEMENT
On the Closing Date, Golden State Petroleum, as agent for the
Owner and Golden State Petro B, will issue Notes in connection with the
financing of the construction of the Vessel. The net proceeds of such issuance
will be deposited into the Pre-Funding Account. Pursuant to the Indenture, the
Allocated Principal Amount of the Mortgage Notes for the Vessel will be used,
INTER ALIA, to make the installments due under the Shipbuilding Contract for the
Vessel. As of the date of this Assignment, the Owner agreed to bareboat charter
the Vessel to Chevron Transport Corporation (the "Initial Charterer") pursuant
to the Initial Charter. The obligations of the Initial Charterer under the
Initial Charter are guaranteed by Chevron Corporation (the "Guarantor") pursuant
to the Chevron Guarantee. The Vessel will be managed by Cambridge Fund
Management L.L.C. (the "Manager") pursuant to the Management Agreement, dated as
of the date hereof, between the Owner and the Manager. As collateral security
for its obligations under the Indenture, the Owner has and will assign, pledge,
mortgage and grant the Indenture Trustee a security interest in, INTER ALIA, the
Vessel, the Initial Charter and the Chevron Guarantee.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained and of other valuable consideration, receipt of
which is hereby acknowledged, the Owner and the Indenture Trustee hereby agree
as follows:
ARTICLE I
DEFINITIONS
Unless otherwise defined in Schedule 1 to this Assignment,
capitalized terms used in this Assignment shall have the meanings assigned to
such terms in the Indenture.
ARTICLE II
ASSIGNMENT
Section 2.01 SECURITY INTEREST. This Assignment is made and
delivered as security for the Obligations.
Section 2.02 ASSIGNMENT. In order to provide for the payment
of and as security for the Obligations, the Owner has granted, bargained,
assigned, transferred, conveyed, mortgaged, pledged and granted a security
interest in and confirmed, and does hereby grant, bargain, assign, transfer,
convey, mortgage, pledge and grant a security interest in and confirm, to the
Indenture Trustee, its successors and assigns, for its and their respective
successors' and assigns' own proper use and benefit, all of the Owner's right,
title and interest in and to the
<PAGE>
-2-
Initial Charter, including without limitation any moneys whatsoever payable to
the Owner under the Initial Charter, together with the income and proceeds
thereof and all other rights and benefits whatsoever accruing to the Owner under
the Initial Charter; PROVIDED, HOWEVER, that the Owner shall keep the Indenture
Trustee fully and effectively indemnified from and against all actions, losses,
claims, proceedings, costs, demands and liabilities which may be suffered by the
Indenture Trustee under or by virtue of the Initial Charter or this Assignment.
Section 2.03 OWNER TO REMAIN LIABLE. Anything in this
Assignment contained to the contrary notwithstanding, the Owner shall remain
liable under the Initial Charter, and shall observe, perform and fulfill all of
the conditions and obligations to be observed, performed and fulfilled by it
thereunder, and the Indenture Trustee shall have no obligation or liability of
any kind whatsoever thereunder or by reason of or arising out of this
Assignment, nor shall the Indenture Trustee be under any liability whatsoever in
the event of any failure by the Owner to perform its obligations thereunder or
be required or obligated in any manner to observe, perform or fulfill any of the
conditions or obligations of the Owner thereunder or pursuant thereto, or to
make any payment or to make any inquiry as to the nature or sufficiency of any
payment received by it or the Owner thereunder, or to present or file any claim,
or to take any other action to collect or enforce the payment of any amounts
which may have been assigned to the Indenture Trustee or to which the Indenture
Trustee may be entitled hereunder at any time or times.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE OWNER
The Owner hereby represents and warrants to the Indenture
Trustee as follows:
Section 3.01 ORGANIZATION, POWER AND STATUS OF THE OWNER. The
Owner (a) is a corporation duly formed, validly existing and in good standing
under the laws of the Isle of Man and (b) is duly authorized, to the extent
necessary, to do business in each jurisdiction where the character of its
properties or the nature of its activities makes such qualification necessary.
The Owner has all requisite corporate power and authority to own and operate the
property it purports to own and to carry on its business as now being conducted
and as proposed to be conducted in respect of the Vessel.
Section 3.02 AUTHORIZATION; ENFORCEABILITY; EXECUTION AND
DELIVERY. (a) The Owner has all necessary corporate power and authority to
execute, deliver and perform under this Assignment.
(b) All action on the part of the Owner that is required for
the authorization, execution, delivery and performance of this Assignment has
been duly and effectively taken; and the execution, delivery and performance of
this Assignment does not require the approval or consent of any Person except
for such consents and approvals as have been obtained on or prior to the Closing
Date.
<PAGE>
-3-
(c) This Assignment has been duly executed and delivered by
the Owner. This Assignment constitutes the legal, valid and binding obligation
of the Owner, enforceable against it in accordance with the terms thereof.
Section 3.03 NO CONFLICTS; LAWS AND CONSENTS; NO DEFAULT. (a)
Neither the execution, delivery and performance of this Assignment nor the
consummation of any of the transactions contemplated hereby nor performance of
or compliance with the terms and conditions hereof (i) contravenes any
Requirement of Law applicable to the Owner or (ii) constitutes a default under
the Indenture or any Security Document.
(b) The Owner is in compliance with and not in default under
any and all Requirements of Law applicable to the Owner and all terms and
provisions of this Assignment.
Section 3.04 GOVERNMENTAL APPROVALS. All Governmental
Approvals which are required to be obtained in the name of the Owner in
connection with the execution, delivery and performance by the Owner of this
Assignment have been obtained and are in effect on the Closing Date.
Section 3.05 LITIGATION. There are no actions, suits or
proceedings at law or in equity or by or before any Governmental Authority now
pending against the Owner or, to the best of the Owner's knowledge, threatened
against the Owner or pending or threatened against any property or other assets
or rights of the Owner with respect to this Assignment.
Section 3.06 NO PRIOR ASSIGNMENT. The Owner has not assigned
or pledged, and hereby covenants that it will not assign or pledge, so long as
this Assignment shall remain in effect, the Initial Charter or any part of the
rights, titles and interests hereby assigned, to anyone other than the Indenture
Trustee, or its successors or assigns.
Section 3.07 THE INITIAL CHARTER. The Initial Charter
constitutes the legal, valid and binding obligation of the Owner as "Owner"
thereunder and is in full force and effect in the form of Exhibit "A" attached
hereto; there are no amendments, additions, addenda or modifications thereto and
neither of the parties thereto is in default thereunder.
ARTICLE IV
COVENANTS OF THE OWNER
The Owner hereby covenants and agrees that so long as any of
the Obligations remains outstanding:
Section 4.01 CONSENT OF INITIAL CHARTERER. On the Closing
Date, the Owner shall deliver to the Initial Charterer a copy of this Assignment
and shall procure the execution by the Initial Charterer of the Consent and
Acknowledgment set out in Exhibit A hereto and deliver said Consent and
Acknowledgment to the Indenture Trustee on the Closing Date.
<PAGE>
-4-
Section 4.02 ENFORCEMENT OF INITIAL CHARTER. (a) The Owner
will do or permit to be done each and every act or thing which the Indenture
Trustee may from time to time require to be done for the purpose of enforcing
the Indenture Trustee's rights under the Initial Charter and this Assignment.
(b) The Owner shall cause all moneys hereby assigned or agreed
to be assigned or arising from or in connection with any of the rights, title,
interest and benefits of the Owner under the Initial Charter shall be paid to
the credit of Chase Manhattan Bank NYC, ABA #021000021, A/C #920-1-073195,
credit U.S. Trust Co NY, further credit to A/C #04692300, Golden State Petroleum
Transport Revenue Account, Attention: Chris Collins or to such other account as
the Indenture Trustee may from time to time direct.
(c) The Owner will not exercise any right or powers conferred
on it by the Initial Charter in connection with any default or alleged default
by the Initial Charterer thereunder (including without limitation the right of
termination and substitution) unless and until requested so to do by the
Indenture Trustee whereupon the Owner agrees that it will do so provided always
that the Indenture Trustee shall not be responsible in any way whatsoever in the
event that the exercise of any right or power (including the right of
termination and substitution) be thereafter adjudged improper or to constitute a
repudiation of the Initial Charter by the Owner.
Section 4.03 AMENDMENT OF INITIAL CHARTER; ASSIGNMENT OF
INITIAL CHARTER. (a) The Owner will not, except with the previous written
consent of the Indenture Trustee, agree to any variation of the Initial Charter
or release the Initial Charterer from any of its obligations thereunder or waive
any breach of the Initial Charterer's obligations thereunder or consent to any
such act or omission of the Initial Charterer as would otherwise constitute such
breach.
(b) The Owner will not, except with the previous written
consent of the Indenture Trustee, assign the Initial Charter to any other
Person.
Section 4.04 PERFORMANCE OF OBLIGATIONS. The Owner will
perform its obligations under the Initial Charter and will use its best efforts
to cause the Initial Charterer to perform its obligations under the Initial
Charter.
Section 4.05 NOTICES. The Owner will send a copy of all
notices received or given by it under the Initial Charter forthwith to the
Indenture Trustee.
Section 4.06 FURTHER ASSURANCES. The Owner will at any time
and from time to time, upon the written request of the Indenture Trustee,
promptly and duly execute and deliver any and all such further instruments and
documents and take such action as the Indenture Trustee may deem desirable in
order to obtain the full benefits of this Assignment and of the rights and
powers herein granted.
Section 4.07 INDENTURE TRUSTEE AS ATTORNEY-IN-FACT OF
OWNER. The Owner hereby constitutes the Indenture Trustee, and its successors
and assigns, its true and lawful
<PAGE>
-5-
attorney-in-fact, irrevocably, with full power in its own name, in the name of
its agents or nominees or in the name of the Owner or otherwise, to ask,
require, demand, receive, enforce and give acquittance for, any and all moneys
and claims for moneys due and to become due and payable under or arising out of
the Initial Charter, to endorse any checks or other instruments or orders in
connection therewith and to file any claims or take any action or institute any
proceedings which to the Indenture Trustee may seem to be necessary or advisable
under this Assignment. Any action or proceeding brought by the Indenture Trustee
pursuant to any of the provisions of this Assignment or otherwise and any claim
made by the Indenture Trustee hereunder may be compromised, withdrawn or
otherwise dealt with by the Indenture Trustee without any notice to or approval
of the Owner.
ARTICLE V
MISCELLANEOUS PROVISIONS
Section 5.01 AMENDMENT. This Assignment may be amended from
time to time by written agreement signed by the parties hereto.
Section 5.02 SEVERABILITY. If any provision of this Assignment
is held to be in conflict with any applicable statute or rule of law or is
otherwise held to be unenforceable for any reason whatsoever, such circumstances
shall not have the effect of rendering the provision in question inoperative or
unenforceable in any other case or circumstance, or of rendering any other
provision or provisions herein contained invalid, inoperative, or unenforceable
to any extent whatsoever. The invalidity of any one or more phrases, sentences,
clauses or Sections of this Assignment contained, shall not affect the remaining
portions of this Assignment, or any part thereof.
Section 5.03 NOTICES. All demands, notices and communications
hereunder shall be in writing, personally delivered or mailed by certified
mail-return receipt requested, and shall be deemed to have been duly given upon
receipt (a) in the case of the Indenture Trustee, at the following address: 114
West 47th Street, New York, New York 10036, Attention: Corporate Trust
Department, (b) in the case of the Owner, at the following address: 15-19 Athol
Street, Douglas, Isle of Man, or at other such address as shall be designated by
such party in a written notice to the other parties.
Section 5.04 CONSENT TO JURISDICTION. Any legal suit, action
or proceeding against the Owner arising out of or relating to this Assignment,
or any transaction contemplated hereby, may be instituted in any federal or
state court in The City of New York, State of New York, and the Owner hereby
irrevocably submits to the jurisdiction of any such court in any such suit,
action or proceeding. The Owner hereby waives, to the fullest extent permitted
by applicable law, any defense which it may now or hereafter have based upon
lack of personal jurisdiction or venue or FORUM NON CONVENIENS. The Owner hereby
irrevocably appoints and designates CT Corporation System, having an address at
1633 Broadway, New York, New York, its true and lawful attorney-in-fact and duly
authorized agent for the limited purpose of accepting servicing of legal process
and the Owner agrees that service of process upon such party shall constitute
personal service of such process on such Person. The Owner shall
<PAGE>
-6-
maintain the designation and appointment of such authorized agent until all
amounts payable under this Assignment shall have been paid in full. If such
agent shall cease to so act, the Owner shall immediately designate and appoint
another such agent satisfactory to the Indenture Trustee and shall promptly
deliver to the Indenture Trustee evidence in writing of such other agent's
acceptance of such appointment.
Section 5.05 CAPTIONS. The captions or headings in this
Assignment are for convenience only and in no way define, limit or describe the
scope or intent of any provisions or sections of this Assignment.
Section 5.06 GOVERNING LAW. This Assignment shall be governed
by and interpreted in accordance with the laws of the State of New York, without
giving effect to the principles of conflicts of law.
Section 5.07 NO PARTNERSHIP. Nothing herein contained shall be
deemed or construed to create a partnership or joint venture among the parties
hereto, and the services of each party shall be rendered as an independent
contractor and not as agent for any other party.
Section 5.08 COUNTERPARTS. This Assignment may be executed in
any number of counterparts and by different parties hereto on separate
counterpart, each of which shall be deemed to be an original. Such counterparts
shall constitute one and the same agreement.
Section 5.09 SURVIVAL. The representations, covenants and
agreements contained in or made pursuant to this Assignment in respect of either
party hereto shall survive the execution and delivery of this Assignment and
shall continue in effect so long as such party's obligations hereunder remain
outstanding.
Section 5.10 INTEGRATION. This Assignment and the Schedule and
Exhibits hereto constitute the entire agreement and understanding between the
parties hereto with respect to the subject matter hereof and supersede all prior
agreements, understandings or representations pertaining to the subject matter
hereof, whether oral or written. There are no warranties, representations or
other agreements between the parties in connection with the subject matter
hereof except as specifically set forth or incorporated herein.
Section 5.11 REPRODUCTION OF DOCUMENTS. This Assignment and
all documents relating thereto, including, without limitation, (a) consents,
waivers and modifications which may hereafter be executed, (b) documents
received by any party at the closing, and (c) financial statements, certificates
and other information previously or hereafter furnished, may be reproduced by
any photographic, photostatic, microfilm, micro-card, miniature photographic or
other similar process. The parties agree that any such reproduction shall be
admissible in evidence as the original itself in any judicial or administrative
proceeding (whether or not the original is in existence and whether or not such
reproduction was made in the regular course of business) and that any
enlargement, facsimile or further reproduction of such reproduction shall
likewise be admissible in evidence.
<PAGE>
-7-
Section 5.12 SUCCESSORS AND ASSIGNS; ASSIGNMENT. This
Assignment shall be binding upon and inure to the benefit of the Owner and the
Indenture Trustee and their respective successors and assigns. The Owner shall
not have the right to assign its rights hereunder or any interest herein without
the prior written consent of the Indenture Trustee. The Indenture Trustee, at
its sole option, shall have the right to assign this Assignment, the Indenture,
the Security Documents and any of its rights and interest hereunder in
accordance with the terms and provisions of the Indenture and the Security
Documents.
Section 5.13 GENERAL INTERPRETIVE PRINCIPLES. For
purposes of this Assignment except as otherwise expressly provided or unless the
context otherwise requires:
(a) the defined terms in this Assignment shall include the
plural as well as the singular, and the use of any gender herein shall be deemed
to include any other gender;
(b) accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted accounting
principles as in effect on the date hereof;
(c) references herein to "Articles", "Sections",
"Subsections", "paragraphs", and other subdivisions without reference to a
document are to designated Articles, Sections, Subsections, paragraphs and other
subdivisions of this Assignment;
(d) a reference to a Subsection without further reference to a
Section is a reference to such Subsection as contained in the same Section in
which the reference appears, and this rule shall also apply to paragraphs and
other subdivisions;
(e) the words "herein", "hereof", "hereunder" and other words
of similar import refer to this Assignment as a whole and not to any particular
provision; and
(f) the term "include" or "including" shall mean without
limitation by reason of enumeration.
Section 5.14 EFFECTIVE DATE OF TRANSACTION. Notwithstanding
the fact that this Assignment is dated as of December 24, 1996, the transactions
set forth herein shall not be effective until the Closing Date.
<PAGE>
IN WITNESS WHEREOF, the Owner and the Indenture Trustee have
caused this Assignment to be duly executed and delivered by their respective
officers thereunto duly authorized all as of the day and year first above
written.
United States Trust Company of New York,
as Indenture Trustee
By:/s/ Christine C. Collins
-----------------------------
Name: Christine C. Collins
Title: Assistant Vice President
Golden State Petro (IOM I-A) PLC, as Owner
By:/s/ Joseph Avantario
-----------------------------
Name: Joseph Avantario
Title: Treasurer
<PAGE>
Exhibit A
LETTER OF ACKNOWLEDGMENT
TO ASSIGNMENT OF CHARTER
[Date]
United States Trust Company of New York,
as Indenture Trustee
Dear Sirs:
The undersigned hereby consents to and acknowledges receipt of
a signed copy of the Assignment of Charter (the "Assignment"), dated as of
December 1, 1996, between Golden State Petro (IOM I-A) PLC (the "Owner") and
United States Trust Company of New York, not in its individual capacity but
solely as trustee (the "Indenture Trustee") as adequate notice of such
assignment to the Indenture Trustee of the Initial Charter (as defined in the
Assignment) and of all the right, title and interest of the Owner in, to and
under the Initial Charter.
So long as the Assignment remains effective, we hereby agree
that (a) we shall pay any and all sums which we are legally obligated to pay to
the Owner or otherwise as stated in and according to the Initial Charter
directly to _______________________ Golden State Petroleum Revenue Account,
Attention: ___________________, or otherwise to such other account as you may at
any time or from time to time, designate by notice to us in writing, (b) with
respect to each of the insurances obtained pursuant to Clause 11 of the Initial
Charter, the Indenture Trustee shall be named as an additional assured and the
provisions of Clause 11(b) shall be equally applicable to the Indenture Trustee
as if it were named in addition to the Owner in each case where the Owner is so
named, (c) the Indenture Trustee, as assignee of the Owner, is the loss payee to
the extent that the Owner is the loss payee under such insurances and (d) the
Indenture Trustee and each of the Noteholders shall be entitled to the
indemnifications by the Initial Charterer set forth in the Initial Charter to
the same extent as if they were named indemnified parties therein.
Payments of moneys under the Initial Charter may be adjusted,
reduced or withheld only as expressly provided therein. Payments to the
Indenture Trustee shall not be subject to any right of set-off or defense by way
of counterclaim or otherwise which the undersigned may have against the Owner or
any entity substituted for it other than under the Initial Charter, and all
payments once made to you will be final, and once paid the undersigned will not,
for any reason whatsoever, seek to recover from the Indenture Trustee any such
payment made to the Indenture Trustee by virtue of the Assignment or this Letter
of Consent.
We confirm that the terms of the Initial Charter remain in
full force and effect that the Owner is not presently to our knowledge in breach
of the terms of the Initial Charter. We further confirm that the terms of the
Initial Charter have not been varied or modified and that
<PAGE>
-2-
the terms of the Initial Charter will not after the date hereof be varied or
modified without the prior written consent of the Indenture Trustee.
We confirm that we have received no prior notice of any
assignment by the Owner of any interest in the Initial Charter.
The undersigned will not permit any amendment, modification,
cancellation or other alteration in the Initial Charter, nor will it consent to
or accept the substitution thereunder of any party for the Owner without your
prior written consent.
CHEVRON TRANSPORT CORPORATION, as Initial
Charterer
By:________________________________
Name:______________________________
Title:_____________________________
<PAGE>
SCHEDULE 1
ADDITIONAL DEFINED TERMS USED IN THE ASSIGNMENT
"AGREEMENT ON CONTRACT FOR TECHNICAL MATTERS" means, the Agreement
Regarding Technical Matters, dated as of the Closing Date, between the Owner,
Samsung Heavy Industries Co., LTD and Chevron Shipping Company, San Francisco,
U.S.A. (as Agent for the Initial Charterer).
"ASSIGNMENT" or "ASSIGNMENT OF CHARTER" means the assignment between
the Owner and the Indenture Trustee, as amended from time to time in accordance
with the terms thereof, pursuant to which the Owner collaterally assigns to the
Indenture Trustee all of the Owner's right, title and interest in, to and under
the Initial Charter to secure its obligations under the Indenture.
"ASSIGNMENT OF BUILDING CONTRACT" means, for each Vessel, the Building
Contract Assignment, dated as of the Closing Date, between the related Owner and
the Indenture Trustee, pursuant to which such Owner collaterally assigns its
rights, title and interests in the related Building Contract and the Agreement
on Contract for Technical Matters to the Indenture Trustee.
"ASSIGNMENT OF BUILDING CONTRACT GUARANTEE" means, for each Building
Contract Guarantee, the Assignment of Building Contract Guarantee, dated as of
the Closing Date, between the related Owner and the Indenture Trustee, as the
same may be amended from time to time, pursuant to which such Owner collaterally
assigns its rights, title and interest in the related Building Contract
Guarantee therein to the Indenture Trustee.
"ASSIGNMENT OF CHARTER SUPPLEMENT" means, for each Charter Supplement,
the Assignment of Charter Supplement, dated the date of the Supplemental
Indenture, between the Owner of the Vessel and the Indenture Trustee, as the
same may be amended from time to time pursuant to which the Owner collaterally
assigns all of the Owner's right, title and interest therein to the Indenture
Trustee.
"ASSIGNMENT OF CHEVRON GUARANTEE" means the assignment between the
Owner and the Indenture Trustee, as amended from time to time in accordance with
the terms thereof, pursuant to which the Owner collaterally assigns to the
Indenture Trustee all of the Owner's right, title and interest in, to and under
the Chevron Guarantee to secure its obligations under the Indenture.
"ASSIGNMENT OF EARNINGS AND INSURANCES" means the assignment between
the Owner and the Indenture Trustee, as amended from time to time in accordance
with the terms thereof, pursuant to which the Owner collaterally assigns to the
Indenture Trustee all of the Owner's right, title and interest in, to and under
the freights and hires (as well as any charters entered into after the Delivery
Date) with respect to the Vessel to secure its obligations under the Indenture.
<PAGE>
-2-
"ASSIGNMENT OF MANAGEMENT AGREEMENT" means the assignment between the
Owner and the Indenture Trustee, as amended from time to time in accordance with
the terms thereof, pursuant to which the Owner collaterally assigns to the
Indenture Trustee all of the Owner's right, title and interest in, to and under
the Management Agreement to secure its obligations under the Indenture.
"BUILDER" means, collectively, Samsung Corporation and Samsung Heavy
Industries, Ltd.
"BUILDING CONTRACT" means the Shipbuilding Contract, dated December 24,
1996, between the Builder and the Owner.
"BUILDING CONTRACT GUARANTEE" means the Irrevocable Installment Payment
Letter of Guarantee, dated December 24, 1996, given by the Building Contract
Guarantor to the Owner in connection with the Vessel.
"BUILDING CONTRACT GUARANTOR" means Korea Development Bank.
"CHEVRON" means Chevron Corporation, a Delaware corporation, and its
successors and assigns.
"CHEVRON GUARANTEE" means the Guarantee, dated the Closing Date, given
by Chevron to the Owner in connection with the Initial Charter and the Charter
Supplement.
"CLOSING DATE" means December 24, 1996.
"COLLATERAL" means the collateral assigned, pledged or granted to the
Indenture Trustee pursuant to (i) this Assignment of Charter, (ii) the
Assignment of Earnings and Insurances, (iii) the Assignment of Charter
Supplement, (iv) the Mortgage, (v) the Assignment of Chevron Guarantee, (vi) the
Assignment of Management Agreement, (vii) the Assignment of Building Contract,
(viii) the Assignment of Building Contract Guarantee, (ix) the Issue of One
Debenture and (x) the Stock Pledge, together with all income and proceeds
thereof.
"DELIVERY DATE" means the date the Vessel is accepted by the Owner from
the Builder under the Building Contract, which is the date of this Assignment.
"INDENTURE" means the Indenture, dated as of December 1, 1996 among the
Indenture Trustee, the Owner, Golden State Petro B and Golden State Petroleum,
pursuant to which the Notes were issued.
"INDENTURE TRUSTEE" means United States Trust Company of New York.
"INITIAL CHARTER" means with respect to each Vessel, the bareboat
charter, dated as of December 24, 1996, between the Initial Charterer and the
Owner.
"INITIAL CHARTERER" means Chevron Transport Corporation, a Liberian
corporation.
<PAGE>
-3-
"ISSUE OF ONE DEBENTURE" means each Issue of One Debenture between the
Owner and the Indenture Trustee, as amended from time to time in accordance with
the terms thereof, pursuant to which the Owner grants to the Indenture Trustee a
security interest in all of its assets.
"MANAGEMENT AGREEMENT" means the agreement, dated the Closing Date,
between the Owner and the Manager pursuant to which the Manager agrees to
provide certain services to the Owner.
"MANAGER" means the Person performing the duties of the Manager under
the Management Agreement, initially Cambridge Fund Management L.L.C.
"MORTGAGE" means, with respect to the Vessel, the first preferred ship
mortgage on the Vessel granted by the Owner to the Indenture Trustee, as amended
from time to time in accordance with the terms of such Mortgage.
"OBLIGATIONS" means the payment, performance or obligations of any kind
or nature whatsoever of the Owner under and pursuant to the Indenture, any
Security Document and any instrument, agreement or document referred to therein.
"OWNER" means Golden State Petro (IOM I-A) PLC, a company organized
under the laws of the Isle of Man.
"SECURITY DOCUMENTS" means the Indenture, the Mortgage, this Assignment
of Charter, the Assignments of Charter Supplements, the Assignment of Earnings
and Insurances, the Assignment of Chevron Guarantee, the Assignment of
Management Agreement, the Assignment of Building Contract, the Issue of One
Debenture, the Stock Pledge and the Assignment of Building Contract Guarantee,
collectively.
"VESSEL" means Hull No. 1228.
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS
ARTICLE II
ASSIGNMENT
Section 2.01 SECURITY INTEREST.......................................... 1
-----------------
Section 2.02 ASSIGNMENT................................................. 1
----------
Section 2.03 OWNER TO REMAIN LIABLE..................................... 2
----------------------
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE OWNER
Section 3.01 ORGANIZATION, POWER AND STATUS OF THE OWNER................ 2
-------------------------------------------
Section 3.02 AUTHORIZATION; ENFORCEABILITY; EXECUTION AND DELIVERY...... 2
-----------------------------------------------------
Section 3.03 NO CONFLICTS; LAWS AND CONSENTS; NO DEFAULT................ 3
-------------------------------------------
Section 3.04 GOVERNMENTAL APPROVALS..................................... 3
----------------------
Section 3.05 LITIGATION................................................. 3
----------
Section 3.06 NO PRIOR ASSIGNMENT........................................ 3
-------------------
Section 3.07 THE INITIAL CHARTER........................................ 3
-------------------
ARTICLE IV
COVENANTS OF THE OWNER........................ 3
Section 4.01 CONSENT OF INITIAL CHARTERER............................... 3
----------------------------
Section 4.02 ENFORCEMENT OF INITIAL CHARTER............................. 4
------------------------------
Section 4.03 AMENDMENT OF INITIAL CHARTER; ASSIGNMENT OF INITIAL
----------------------------------------------------
CHARTER.................................................... 4
-------
<PAGE>
Section 4.04 PERFORMANCE OF OBLIGATIONS................................. 4
--------------------------
Section 4.05 NOTICES.................................................... 4
-------
Section 4.06 FURTHER ASSURANCES......................................... 4
------------------
Section 4.07 INDENTURE TRUSTEE AS ATTORNEY-IN-FACT OF OWNER............. 4
----------------------------------------------
ARTICLE V
MISCELLANEOUS PROVISIONS................................. 5
Section 5.01 AMENDMENT.................................................. 5
---------
Section 5.02 SEVERABILITY............................................... 5
------------
Section 5.03 NOTICES.................................................... 5
-------
Section 5.04 CONSENT TO JURISDICTION.................................... 5
-----------------------
Section 5.05 CAPTIONS................................................... 6
--------
Section 5.06 GOVERNING LAW.............................................. 6
-------------
Section 5.07 NO PARTNERSHIP............................................. 6
--------------
Section 5.08 COUNTERPARTS............................................... 6
------------
Section 5.09 SURVIVAL................................................... 6
--------
Section 5.10 INTEGRATION................................................ 6
-----------
Section 5.11 REPRODUCTION OF DOCUMENTS.................................. 6
-------------------------
Section 5.12 SUCCESSORS AND ASSIGNS; ASSIGNMENT......................... 6
----------------------------------
Section 5.13 GENERAL INTERPRETIVE PRINCIPLES............................ 7
-------------------------------
Section 5.14 EFFECTIVE DATE OF TRANSACTION.............................. 7
-----------------------------
<PAGE>
EXHIBIT C
---------
================================================================================
UNITED STATES TRUST COMPANY OF NEW YORK,
AS INDENTURE TRUSTEE
and
[Name of Owner]
-----------------------------------
FORM OF
ASSIGNMENT OF CHARTER SUPPLEMENT
Dated as of ______________
-----------------------------------
================================================================================
<PAGE>
Assignment of Charter Supplement, dated as of __________ (the
"Assignment"), between [Name of Owner] (the "Owner") and United States Trust
Company of New York (the "Indenture Trustee"), not in its individual capacity
but solely as trustee under the Indenture (the "Indenture"), dated as of
December 1, 1996, among the Owner, the Indenture Trustee, [Name of Other Owner]
("[Name of Other Owner]") and Golden State Petroleum Transport Corporation
("Golden State Petroleum"), as agent for the Owner and [Name of Other Owner].
PRELIMINARY STATEMENT
On the Closing Date, Golden State Petroleum, as agent for the
Owner and [Name of Other Owner], issued Notes in connection with the financing
of the construction of the Vessel. The net proceeds of such issuance was
deposited into the Pre-Funding Account. Pursuant to the Indenture, the Allocated
Principal Amount of the Mortgage Notes for the Vessel has been used, INTER ALIA,
to make the installments due under the Shipbuilding Contract for the Vessel. As
of the date of this Assignment, the Owner has bareboat charted the Vessel to
Chevron Transport Corporation (the "Initial Charterer") pursuant to the Initial
Charter and the related Charter Supplement. The obligations of the Initial
Charterer under the Initial Charter and Charter Supplement are guaranteed by
Chevron Corporation (the "Guarantor") pursuant to the Chevron Guarantee. The
Vessel will be managed by Cambridge Fund Management L.L.C. (the "Manager")
pursuant to the Management Agreement, dated as of December 1, 1996, between the
Owner and the Manager. As collateral security for its obligations under the
Indenture, the Owner has and will assign, pledge, mortgage and grant the
Indenture Trustee a security interest in, INTER ALIA, the Vessel, the Initial
Charter, the Charter Supplement and the Chevron Guarantee.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained and of other valuable consideration, receipt of
which is hereby acknowledged, the Owner and the Indenture Trustee hereby agree
as follows:
ARTICLE I
DEFINITIONS
Unless otherwise defined in Schedule 1 to this Assignment,
capitalized terms used in this Assignment shall have the meanings assigned to
such terms in the Indenture.
ARTICLE II
ASSIGNMENT
Section 2.01 SECURITY INTEREST. This Assignment is made and
delivered as security for the Obligations.
Section 2.02 ASSIGNMENT. In order to provide for the payment
of and as security for the Obligations, the Owner has granted, bargained,
assigned, transferred, conveyed, mortgaged, pledged and granted a security
interest in and confirmed, and does hereby grant, bargain, assign, transfer,
convey, mortgage, pledge and grant a security interest in and confirm, to the
Indenture Trustee, its successors and assigns, for its and their respective
successors' and assigns' own proper use and benefit, all of the Owner's right,
title and interest in and to the
<PAGE>
-2-
Charter Supplement, including without limitation any moneys whatsoever payable
to the Owner under the Charter Supplement, together with the income and proceeds
thereof and all other rights and benefits whatsoever accruing to the Owner under
the Charter Supplement; PROVIDED, HOWEVER, that the Owner shall keep the
Indenture Trustee fully and effectively indemnified from and against all
actions, losses, claims, proceedings, costs, demands and liabilities which may
be suffered by the Indenture Trustee under or by virtue of the Charter
Supplement or this Assignment.
Section 2.03 OWNER TO REMAIN LIABLE. Anything in this
Assignment contained to the contrary notwithstanding, the Owner shall remain
liable under the Charter Supplement, and shall observe, perform and fulfill all
of the conditions and obligations to be observed, performed and fulfilled by it
thereunder, and the Indenture Trustee shall have no obligation or liability of
any kind whatsoever thereunder or by reason of or arising out of this
Assignment, nor shall the Indenture Trustee be under any liability whatsoever in
the event of any failure by the Owner to perform its obligations thereunder or
be required or obligated in any manner to observe, perform or fulfill any of the
conditions or obligations of the Owner thereunder or pursuant thereto, or to
make any payment or to make any inquiry as to the nature or sufficiency of any
payment received by it or the Owner thereunder, or to present or file any claim,
or to take any other action to collect or enforce the payment of any amounts
which may have been assigned to the Indenture Trustee or to which the Indenture
Trustee may be entitled hereunder at any time or times.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE OWNER
The Owner hereby represents and warrants to the Indenture
Trustee as follows:
Section 3.01 ORGANIZATION, POWER AND STATUS OF THE OWNER. The
Owner (a) is a corporation duly formed, validly existing and in good standing
under the laws of the Isle of Man and (b) is duly authorized, to the extent
necessary, to do business in each jurisdiction where the character of its
properties or the nature of its activities makes such qualification necessary.
The Owner has all requisite corporate power and authority to own and operate the
property it purports to own and to carry on its business as now being conducted
and as proposed to be conducted in respect of the Vessel.
Section 3.02 AUTHORIZATION; ENFORCEABILITY; EXECUTION AND
DELIVERY. (a) The Owner has all necessary corporate power and authority to
execute, deliver and perform under this Assignment.
(b) All action on the part of the Owner that is required for
the authorization, execution, delivery and performance of this Assignment has
been duly and effectively taken; and the execution, delivery and performance of
this Assignment does not require the approval or consent of any Person except
for such consents and approvals as have been obtained on or prior to the
Delivery Date.
<PAGE>
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(c) This Assignment has been duly executed and delivered by
the Owner. This Assignment constitutes the legal, valid and binding obligation
of the Owner, enforceable against it in accordance with the terms thereof.
Section 3.03 NO CONFLICTS; LAWS AND CONSENTS; NO DEFAULT. (a)
Neither the execution, delivery and performance of this Assignment nor the
consummation of any of the transactions contemplated hereby nor performance of
or compliance with the terms and conditions hereof (i) contravenes any
Requirement of Law applicable to the Owner or (ii) constitutes a default under
the Indenture or any Security Document.
(b) The Owner is in compliance with and not in default under
any and all Requirements of Law applicable to the Owner and all terms and
provisions of this Assignment.
Section 3.04 GOVERNMENTAL APPROVALS. All Governmental
Approvals which are required to be obtained in the name of the Owner in
connection with the execution, delivery and performance by the Owner of this
Assignment have been obtained and are in effect on the Delivery Date.
Section 3.05 LITIGATION. There are no actions, suits or
proceedings at law or in equity or by or before any Governmental Authority now
pending against the Owner or, to the best of the Owner's knowledge, threatened
against the Owner or pending or threatened against any property or other assets
or rights of the Owner with respect to this Assignment.
Section 3.06 NO PRIOR ASSIGNMENT. The Owner has not assigned
or pledged, and hereby covenants that it will not assign or pledge, so long as
this Assignment shall remain in effect, the Charter Supplement or any part of
the rights, titles and interests hereby assigned, to anyone other than the
Indenture Trustee, or its successors or assigns.
Section 3.07 THE CHARTER SUPPLEMENT. The Charter Supplement
constitutes the legal, valid and binding obligation of the Owner as "Owner"
thereunder and is in full force and effect in the form of Exhibit "A" attached
hereto; there are no amendments, additions, addenda or modifications thereto and
neither of the parties thereto is in default thereunder.
ARTICLE IV
COVENANTS OF THE OWNER
The Owner hereby covenants and agrees that so long as any of
the Obligations remains outstanding:
Section 4.01 CONSENT OF INITIAL CHARTERER. On the Delivery
Date, the Owner shall deliver to the Initial Charterer a copy of this Assignment
and shall procure the execution by the Initial Charterer of the Consent and
Acknowledgment set out in Exhibit A hereto and deliver said Consent and
Acknowledgment to the Indenture Trustee on the Delivery Date.
<PAGE>
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Section 4.02 ENFORCEMENT OF CHARTER SUPPLEMENT. (a) The Owner
will do or permit to be done each and every act or thing which the Indenture
Trustee may from time to time require to be done for the purpose of enforcing
the Indenture Trustee's rights under the Charter Supplement and this Assignment.
(b) The Owner shall cause all moneys hereby assigned or agreed
to be assigned or arising from or in connection with any of the rights, title,
interest and benefits of the Owner under the Charter Supplement shall be paid to
the credit of Chase Manhattan Bank, NYC, ABA #021000021, A/C #920-1-073195,
credit U.S. Trust Co. New York, further credit to A/C #04692300, Golden State
Petroleum Transp. Corp. Rev., Attention: Chris Collins or to such other account
as the Indenture Trustee may from time to time direct.
(c) The Owner will not exercise any right or powers conferred
on it by the Charter Supplement in connection with any default or alleged
default by the Initial Charterer thereunder (including without limitation the
right of termination and substitution) unless and until requested so to do by
the Indenture Trustee whereupon the Owner agrees that it will do so provided
always that the Indenture Trustee shall not be responsible in any way whatsoever
in the event that the exercise of any right or power (including the right of
termination and substitution) be thereafter adjudged improper or to constitute a
repudiation of the Charter Supplement by the Owner.
Section 4.03 AMENDMENT OF INITIAL CHARTER; ASSIGNMENT OF
INITIAL CHARTER. (a) The Owner will not, except with the previous written
consent of the Indenture Trustee, agree to any variation of the Charter
Supplement or release the Initial Charterer from any of its obligations
thereunder or waive any breach of the Initial Charterer's obligations thereunder
or consent to any such act or omission of the Initial Charterer as would
otherwise constitute such breach.
(b) The Owner will not, except with the previous written
consent of the Indenture Trustee, assign the Charter Supplement to any other
Person.
Section 4.04 PERFORMANCE OF OBLIGATIONS. The Owner will
perform its obligations under the Charter Supplement and will use its best
efforts to cause the Initial Charterer to perform its obligations under the
Charter Supplement.
Section 4.05 NOTICES. The Owner will send a copy of all
notices received or given by it under the Charter Supplement forthwith to the
Indenture Trustee.
Section 4.06 FURTHER ASSURANCES. The Owner will at any time
and from time to time, upon the written request of the Indenture Trustee,
promptly and duly execute and deliver any and all such further instruments and
documents and take such action as the Indenture Trustee may deem desirable in
order to obtain the full benefits of this Assignment and of the rights and
powers herein granted.
<PAGE>
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Section 4.07 INDENTURE TRUSTEE AS ATTORNEY-IN-FACT OF OWNER.
The Owner hereby constitutes the Indenture Trustee, and its successors and
assigns, its true and lawful attorney-in-fact, irrevocably, with full power in
its own name, in the name of its agents or nominees or in the name of the Owner
or otherwise, to ask, require, demand, receive, enforce and give acquittance
for, any and all moneys and claims for moneys due and to become due and payable
under or arising out of the Charter Supplement, to endorse any checks or other
instruments or orders in connection therewith and to file any claims or take any
action or institute any proceedings which to the Indenture Trustee may seem to
be necessary or advisable under this Assignment. Any action or proceeding
brought by the Indenture Trustee pursuant to any of the provisions of this
Assignment or otherwise and any claim made by the Indenture Trustee hereunder
may be compromised, withdrawn or otherwise dealt with by the Indenture Trustee
without any notice to or approval of the Owner.
ARTICLE V
MISCELLANEOUS PROVISIONS
Section 5.01 AMENDMENT. This Assignment may be amended from
time to time by written agreement signed by the parties hereto.
Section 5.02 SEVERABILITY. If any provision of this Assignment
is held to be in conflict with any applicable statute or rule of law or is
otherwise held to be unenforceable for any reason whatsoever, such circumstances
shall not have the effect of rendering the provision in question inoperative or
unenforceable in any other case or circumstance, or of rendering any other
provision or provisions herein contained invalid, inoperative, or unenforceable
to any extent whatsoever. The invalidity of any one or more phrases, sentences,
clauses or Sections of this Assignment contained, shall not affect the remaining
portions of this Assignment, or any part thereof.
Section 5.03 NOTICES. All demands, notices and communications
hereunder shall be in writing, personally delivered or mailed by certified
mail-return receipt requested, and shall be deemed to have been duly given upon
receipt (a) in the case of the Indenture Trustee, at the following address: 114
West 47th Street, New York, New York, Attention: Corporate Trust Department, (b)
in the case of the Owner, at the following address: 15-19 Athol Street, Douglas,
Isle of Man, or at other such address as shall be designated by such party in a
written notice to the other parties.
Section 5.04 CONSENT TO JURISDICTION. Any legal suit, action
or proceeding against the Owner arising out of or relating to this Assignment,
or any transaction contemplated hereby, may be instituted in any federal or
state court in The City of New York, State of New York, and the Owner hereby
irrevocably submits to the jurisdiction of any such court in any such suit,
action or proceeding. The Owner hereby waives, to the fullest extent permitted
by applicable law, any defense which it may now or hereafter have based upon
lack of personal jurisdiction or venue or FORUM NON CONVENIENS. The Owner hereby
irrevocably appoints and designates CT Corporation System, having an address at
1633 Broadway, New York, New York, its true and lawful attorney-in-fact and duly
authorized agent for the limited purpose of
<PAGE>
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accepting servicing of legal process and the Owner agrees that service of
process upon such party shall constitute personal service of such process on
such Person. The Owner shall maintain the designation and appointment of such
authorized agent until all amounts payable under this Assignment shall have been
paid in full. If such agent shall cease to so act, the Owner shall immediately
designate and appoint another such agent satisfactory to the Indenture Trustee
and shall promptly deliver to the Indenture Trustee evidence in writing of such
other agent's acceptance of such appointment.
Section 5.05 CAPTIONS. The captions or headings in this
Assignment are for convenience only and in no way define, limit or describe the
scope or intent of any provisions or sections of this Assignment.
Section 5.06 GOVERNING LAW. This Assignment shall be governed
by and interpreted in accordance with the laws of the State of New York, without
giving effect to the principles of conflicts of law.
Section 5.07 NO PARTNERSHIP. Nothing herein contained shall be
deemed or construed to create a partnership or joint venture among the parties
hereto, and the services of each party shall be rendered as an independent
contractor and not as agent for any other party.
Section 5.08 COUNTERPARTS. This Assignment may be executed in
any number of counterparts and by different parties hereto on separate
counterpart, each of which shall be deemed to be an original. Such counterparts
shall constitute one and the same agreement.
Section 5.09 SURVIVAL. The representations, covenants and
agreements contained in or made pursuant to this Assignment in respect of either
party hereto shall survive the execution and delivery of this Assignment and
shall continue in effect so long as such party's obligations hereunder remain
outstanding.
Section 5.10 INTEGRATION. This Assignment and the Schedule and
Exhibits hereto constitute the entire agreement and understanding between the
parties hereto with respect to the subject matter hereof and supersede all prior
agreements, understandings or representations pertaining to the subject matter
hereof, whether oral or written. There are no warranties, representations or
other agreements between the parties in connection with the subject matter
hereof except as specifically set forth or incorporated herein.
Section 5.11 REPRODUCTION OF DOCUMENTS. This Assignment and
all documents relating thereto, including, without limitation, (a) consents,
waivers and modifications which may hereafter be executed, (b) documents
received by any party at the closing, and (c) financial statements, certificates
and other information previously or hereafter furnished, may be reproduced by
any photographic, photostatic, microfilm, micro-card, miniature photographic or
other similar process. The parties agree that any such reproduction shall be
admissible in evidence as the original itself in any judicial or administrative
proceeding (whether or not the original is in existence and whether or not such
reproduction was made in the regular course of
<PAGE>
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business) and that any enlargement, facsimile or further reproduction of such
reproduction shall likewise be admissible in evidence.
Section 5.12 SUCCESSORS AND ASSIGNS; ASSIGNMENT. This
Assignment shall be binding upon and inure to the benefit of the Owner and the
Indenture Trustee and their respective successors and assigns. The Owner shall
not have the right to assign its rights hereunder or any interest herein without
the prior written consent of the Indenture Trustee. The Indenture Trustee, at
its sole option, shall have the right to assign this Assignment, the Indenture,
the Security Documents and any of its rights and interest hereunder in
accordance with the terms and provisions of the Indenture and the Security
Documents.
Section 5.13 GENERAL INTERPRETIVE PRINCIPLES. For purposes of
this Assignment except as otherwise expressly provided or unless the context
otherwise requires:
(a) the defined terms in this Assignment shall include the
plural as well as the singular, and the use of any gender herein shall be deemed
to include any other gender;
(b) accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted accounting
principles as in effect on the date hereof;
(c) references herein to "Articles", "Sections",
"Subsections", "paragraphs", and other subdivisions without reference to a
document are to designated Articles, Sections, Subsections, paragraphs and other
subdivisions of this Assignment;
(d) a reference to a Subsection without further reference to a
Section is a reference to such Subsection as contained in the same Section in
which the reference appears, and this rule shall also apply to paragraphs and
other subdivisions;
(e) the words "herein", "hereof", "hereunder" and other words
of similar import refer to this Assignment as a whole and not to any particular
provision; and
(f) the term "include" or "including" shall mean without
limitation by reason of enumeration.
Section 5.14 EFFECTIVE DATE OF TRANSACTION. Notwithstanding
the fact that this Assignment is dated as of _____________, the transactions set
forth herein shall not be effective until the Delivery Date.
<PAGE>
IN WITNESS WHEREOF, the Owner and the Indenture Trustee have
caused this Assignment to be duly executed and delivered by their respective
officers thereunto duly authorized all as of the day and year first above
written.
United States Trust Company of New York, as
Indenture Trustee
By:____________________________________
Name:__________________________________
Title:_________________________________
[Name of Owner], as Owner
By:____________________________________
Name:__________________________________
Title:_________________________________
<PAGE>
Exhibit A
LETTER OF ACKNOWLEDGMENT
TO ASSIGNMENT OF CHARTER SUPPLEMENT
[Date]
United States Trust Company of New York,
as Indenture Trustee
Dear Sirs:
The undersigned hereby consents to and acknowledges receipt of
a signed copy of the Assignment of Charter Supplement (the "Assignment"), dated
as of _________, between [Name of Owner] (the "Owner") and United States Trust
Company of New York, not in its individual capacity but solely as trustee (the
"Indenture Trustee") as adequate notice of such assignment to the Indenture
Trustee of the Charter Supplement (as defined in the Assignment) and of all the
right, title and interest of the Owner in, to and under the Charter Supplement.
So long as the Assignment remains effective, we hereby agree
that we shall pay any and all sums which we are legally obligated to pay to the
Owner or otherwise as stated in and according to the Charter Supplement directly
to Chase Manhattan Bank, NYC, ABA #021000021, A/C #920-1-073195, credit U.S.
Trust Co. New York, further credit to A/C #04692300, Golden State Petroleum
Transp. Corp. Rev., Attention: Chris Collins or otherwise to such accounts as
you may at any time or from time to time, designate by notice to us in writing.
Payments of moneys under the Charter Supplement may be
adjusted, reduced or withheld only as expressly provided therein. Payments to
the Indenture Trustee shall not be subject to any right of set-off or defense by
way of counterclaim or otherwise which the undersigned may have against the
Owner or any entity substituted for it other than under the Charter Supplement,
and all payments once made to you will be final, and once paid the undersigned
will not, for any reason whatsoever, seek to recover from the Indenture Trustee
any such payment made to the Indenture Trustee by virtue of the Assignment or
this Letter of Consent.
We confirm that the terms of the Charter Supplement remain in
full force and effect that the Owner is not presently to our knowledge in breach
of the terms of the Charter Supplement. We further confirm that the terms of the
Charter Supplement have not been varied or modified and that the terms of the
Charter Supplement will not after the date hereof be varied or modified without
the prior written consent of the Indenture Trustee.
We confirm that we have received no prior notice of any
assignment by the Owner of any interest in the Charter Supplement.
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The undersigned will not permit any amendment, modification,
cancellation or other alteration in the Charter Supplement, nor will it consent
to or accept the substitution thereunder of any party for the Owner without your
prior written consent.
CHEVRON TRANSPORT CORPORATION, as Initial
Charterer
By:____________________________________
Name:__________________________________
Title:_________________________________
<PAGE>
SCHEDULE 1
ADDITIONAL DEFINED TERMS USED IN THE ASSIGNMENT
"AGREEMENT ON CONTRACT FOR TECHNICAL MATTERS" means, the Agreement
Regarding Technical Matters, dated as of December 24, 1996, between the Owner,
Samsung Heavy Industries Co., LTD and Chevron Shipping Company, San Francisco,
U.S.A. (as Agent for the Initial Charterer).
"ASSIGNMENT" or "ASSIGNMENT OF CHARTER SUPPLEMENT" means the assignment
between the Owner and the Indenture Trustee, as amended from time to time in
accordance with the terms thereof, pursuant to which the Owner collaterally
assigns to the Indenture Trustee all of the Owner's right, title and interest
in, to and under the Charter Supplement to secure its obligations under the
Indenture.
"ASSIGNMENT OF BUILDING CONTRACT" means, for each Vessel, the Building
Contract Assignment, dated as of December 1, 1996, between the related Owner and
the Indenture Trustee, pursuant to which such Owner collaterally assigns its
rights, title and interests in the related Building Contract and the Agreement
on Contract for Technical Matters to the Indenture Trustee.
"ASSIGNMENT OF BUILDING CONTRACT GUARANTEE" means, for each Building
Contract Guarantee, the Assignment of Building Contract Guarantee, dated as of
December 1, 1996, between the related Owner and the Indenture Trustee, as the
same may be amended from time to time, pursuant to which such Owner collaterally
assigns its rights, title and interest in the related Building Contract
Guarantee therein to the Indenture Trustee.
"ASSIGNMENT OF CHARTER" means the assignment between the Owner and the
Indenture Trustee, as amended from time to time in accordance with the terms
thereof, pursuant to which the Owner collaterally assigns to the Indenture
Trustee all of the Owner's right, title and interest in, to and under the
Initial Charter to secure its obligations under the Indenture.
"ASSIGNMENT OF CHEVRON GUARANTEE" means the assignment between the
Owner and the Indenture Trustee, as amended from time to time in accordance with
the terms thereof, pursuant to which the Owner collaterally assigns to the
Indenture Trustee all of the Owner's right, title and interest in, to and under
the Chevron Guarantee to secure its obligations under the Indenture.
"ASSIGNMENT OF EARNINGS AND INSURANCES" means the assignment between
the Owner and the Indenture Trustee, as amended from time to time in accordance
with the terms thereof, pursuant to which the Owner collaterally assigns to the
Indenture Trustee all of the Owner's right, title and interest in, to and under
the freights and hires (as well as any charters entered into after the Delivery
Date) with respect to the Vessel to secure its obligations under the Indenture.
"ASSIGNMENT OF MANAGEMENT AGREEMENT" means the assignment between the
Owner and the Indenture Trustee, as amended from time to time in accordance with
the terms thereof,
<PAGE>
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pursuant to which the Owner collaterally assigns to the Indenture Trustee all of
the Owner's right, title and interest in, to and under the Management Agreement
to secure its obligations under the Indenture.
"BUILDER" means, collectively, Samsung Corporation and Samsung Heavy
Industries, Ltd.
"BUILDING CONTRACT" means the Shipbuilding Contract, dated December 24,
1996, between the Builder and the Owner.
"BUILDING CONTRACT GUARANTEE" means the Irrevocable Installment Payment
Letter of Guarantee, dated December 24, 1996, given by the Building Contract
Guarantor to the Owner in connection with the Vessel.
"BUILDING CONTRACT GUARANTOR" means Korea Development Bank.
"CHEVRON" means Chevron Corporation, a Delaware corporation, and its
successors and assigns.
"CHEVRON GUARANTEE" means the Guarantee, dated the Closing Date, given
by Chevron to the Owner in connection with the Initial Charter and the Charter
Supplement.
"CLOSING DATE" means December 24, 1996.
"COLLATERAL" means the collateral assigned, pledged or granted to the
Indenture Trustee pursuant to (i) this Assignment of Charter Supplement, (ii)
the Assignment of Earnings and Insurances, (iii) the Assignment of Charter, (iv)
the Mortgage, (v) the Assignment of Chevron Guarantee, (vi) the Assignment of
Management Agreement, (vii) the Assignment of Building Contract, (viii) the
Assignment of Building Contract Guarantee, (ix) the Issue of One Debenture and
(x) the Stock Pledge, together with all income and proceeds thereof.
"DELIVERY DATE" means the date the Vessel is accepted by the Owner from
the Builder under the Building Contract, which is the date of this Assignment.
"INDENTURE" means the Indenture, dated as of December 1, 1996, among
the Indenture Trustee, the Owner, [Name of Other Owner] and Golden State
Petroleum, pursuant to which the Notes were issued.
"INDENTURE TRUSTEE" means United States Trust Company of New York.
"INITIAL CHARTER" means with respect to each Vessel, the bareboat
charter, dated as of December 24, 1996, between the Initial Charterer and the
Owner.
"INITIAL CHARTERER" means Chevron Transport Corporation, a Liberian
corporation.
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"ISSUE OF ONE DEBENTURE" means each Issue of One Debenture between the
Owner and the Indenture Trustee, as amended from time to time in accordance with
the terms thereof, pursuant to which the Owner grants to the Indenture Trustee a
security interest in all of its assets.
"MANAGEMENT AGREEMENT" means the agreement, dated as of December 1,
1996, between the Owner and the Manager pursuant to which the Manager agrees to
provide certain services to the Owner.
"MANAGER" means the Person performing the duties of the Manager under
the Management Agreement, initially Cambridge Fund Management L.L.C.
"MORTGAGE" means, with respect to the Vessel, the first preferred ship
mortgage on the Vessel granted by the Owner to the Indenture Trustee, as amended
from time to time in accordance with the terms of such Mortgage.
"OBLIGATIONS" means the payment, performance or obligations of any kind
or nature whatsoever of the Owner under and pursuant to the Indenture, any
Security Document and any instrument, agreement or document referred to therein.
"OWNER" means [Name of Owner], a company organized under the laws of
the Isle of Man.
"SECURITY DOCUMENTS" means the Indenture, the Mortgage, the Assignment
of Charter, this Assignment of Charter Supplement, the Assignment of Earnings
and Insurances, the Assignment of Chevron Guarantee, the Assignment of
Management Agreement, the Assignment of Building Contract, the Issue of One
Debenture, the Stock Pledge and the Assignment of Building Contract Guarantee,
collectively.
"VESSEL" means _________________.
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS............................... 1
ARTICLE II
ASSIGNMENT................................ 1
Section 2.01 Security Interest.......................................... 1
Section 2.02 Assignment................................................. 1
Section 2.03 Owner to Remain Liable..................................... 2
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE OWNER................ 2
Section 3.01 Organization, Power and Status of the Owner................ 2
Section 3.02 Authorization; Enforceability; Execution and Delivery...... 2
Section 3.03 No Conflicts; Laws and Consents; No Default................ 3
Section 3.04 Governmental Approvals..................................... 3
Section 3.05 Litigation................................................. 3
Section 3.06 No Prior Assignment........................................ 3
Section 3.07 The Charter Supplement..................................... 3
ARTICLE IV
COVENANTS OF THE OWNER........................... 3
Section 4.01 Consent of Initial Charterer............................... 3
Section 4.02 Enforcement of Charter Supplement.......................... 4
Section 4.03 Amendment of Initial Charter; Assignment of Initial
Charter.................................................... 4
Section 4.04 Performance of Obligations................................. 4
Section 4.05 Notices.................................................... 4
Section 4.06 Further Assurances......................................... 4
<PAGE>
Page
----
Section 4.07 Indenture Trustee as Attorney-in-Fact of Owner............. 4
ARTICLE V
MISCELLANEOUS PROVISIONS......................... 5
Section 5.01 Amendment.................................................. 5
Section 5.02 Severability............................................... 5
Section 5.03 Notices.................................................... 5
Section 5.04 Consent to Jurisdiction.................................... 5
Section 5.05 Captions................................................... 6
Section 5.06 Governing Law.............................................. 6
Section 5.07 No Partnership............................................. 6
Section 5.08 Counterparts............................................... 6
Section 5.09 Survival................................................... 6
Section 5.10 Integration................................................ 6
Section 5.11 Reproduction of Documents.................................. 6
Section 5.12 Successors and Assigns; Assignment......................... 7
Section 5.13 General Interpretive Principles............................ 7
Section 5.14 Effective Date of Transaction.............................. 7
<PAGE>
EXHIBIT D
---------
===============================================================================
UNITED STATES TRUST COMPANY OF NEW YORK,
as INDENTURE TRUSTEE
and
[Name of Owner]
-----------------------------------
FORM OF
ASSIGNMENT OF EARNINGS AND INSURANCES
Dated as of ___________
-----------------------------------
==============================================================================
<PAGE>
Assignment of Earnings and Insurances, dated as of the
Delivery Date (the "Assignment"), between [Name of Owner] (the "Owner") and
United States Trust Company of New York (the "Indenture Trustee"), not in its
individual capacity but solely as trustee under the Indenture (the "Indenture"),
dated as of December 1, 1996, among the Owner, the Indenture Trustee, [Name of
Other Owner] ("[Name of Other Owner]") and Golden State Petroleum Transport
Corporation ("Golden State Petroleum"), as agent for the Owner and [Name of
Other Owner].
PRELIMINARY STATEMENT
On the Closing Date, Golden State Petroleum, as agent for the
Owner and [Name of Other Owner], issued Notes in connection with the financing
of the construction of the Vessel. The net proceeds of such issuance were
deposited into the Pre-Funding Account. Pursuant to the Indenture, the Allocated
Principal Amount of the Mortgage Notes for the Vessel was used, INTER ALIA, to
make the installments due under the Shipbuilding Contract for the Vessel. As of
the date of this Assignment, the Owner has bareboat charted the Vessel to
Chevron Transport Corporation (the "Initial Charterer") pursuant to the Initial
Charter. The obligations of the Initial Charterer under the Initial Charter will
be guaranteed by Chevron Corporation (the "Guarantor") pursuant to the Chevron
Guarantee. The Vessel will be managed by Cambridge Fund Management L.L.C. (the
"Manager") pursuant to the Management Agreement, dated as of December 1, 1996,
between the Owner and the Manager. As collateral security for its obligations
under the Indenture, the Owner has and will assign, pledge, mortgage and grant
the Indenture Trustee a security interest in, INTER ALIA, the Vessel, the
Initial Charter, the Chevron Guarantee and the earnings and insurances of the
Vessel.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained and of other valuable consideration, receipt of
which is hereby acknowledged, the Owner and the Indenture Trustee hereby agree
as follows:
ARTICLE I
DEFINITIONS
Unless otherwise defined in Schedule 1 to this Assignment,
capitalized terms used in this Assignment shall have the meanings assigned to
such terms in the Indenture.
ARTICLE II
ASSIGNMENT
Section 2.01 SECURITY INTEREST. This Assignment is made and
delivered as security for the Obligations.
Section 2.02 ASSIGNMENT OF EARNINGS. In order to provide for
the payment of and as security for the Obligations, the Owner has granted,
bargained, assigned, transferred, conveyed, mortgaged, pledged and granted a
security interest in and confirmed, and does hereby grant, bargain, assign,
transfer, convey, mortgage, pledge and grant a security interest in and confirm,
to the Indenture Trustee, its successors and assigns, for its and their
respective successors' and assigns' own proper use and benefit, all of the
Owner's right, title and interest
<PAGE>
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in and to (a) any and all moneys due and to become due to the Owner under any
and all present and future charter parties, bills of lading, contracts and other
engagements of affreightment or for the carriage or transportation of cargo,
salvage and other operations of every kind whatsoever of the Vessel; and (b) any
and all claims and causes of action for money, loss or damages that may accrue
arising out of or in any way connected with the present or future use, operation
or management of the Vessel (including proceeds of insurance against requisition
for or other loss of hire or use of the Vessel) or arising out of or in any way
connected with any and all such present and future charter parties, bills of
lading, contracts and other engagements of affreightment or for the carriage or
transportation of cargo, salvage and other operations of the Vessel and any and
all guaranties with respect to any of the foregoing, together with the income
and proceeds of any and all of the foregoing (all such right, title and interest
herein called the "Freights").
Section 2.03 ASSIGNMENT OF INSURANCES. In addition to the
foregoing, in order to provide for the payment of and as security for the
Obligations, the Owner has granted, bargained, assigned, transferred, conveyed,
mortgaged, pledged and granted a security interest in and confirmed, and does
hereby grant, bargain, assign, transfer, convey, mortgage, pledge and grant a
security interest in and confirm, to Indenture Trustee, its successors and
assigns, for its and their respective successors' and assigns' own proper use
and benefit, all of the Owner's right, title and interest in and to (a) all
moneys and claims for moneys due and to become due to the Owner with respect to
the actual, constructive, agreed, arranged or compromised total loss, or
requisition for title, seizure, condemnation, confiscation, sequestration or
compulsory acquisition or otherwise of ownership (but not including proceeds of
insurance against requisition for or other loss of hire or use of the Vessel) by
act of any country or any governmental authority or otherwise, of the Vessel,
and all claims for damages or compensation with respect thereto, and (b) all
policies and contracts of insurance of whatsoever nature and all entries with
protection and indemnity clubs or societies (to the extent that the rules of the
relevant club or society allow such assignment) that have been or may hereafter
during the subsistence of this Assignment be taken out in respect of the Owner's
interests in the Vessel, including all machinery, materials, equipment,
appurtenances and outfits thereon, including without being limited to hull and
machinery, off hire, war risks, protection and indemnity and title requisition
or otherwise howsoever and all the benefits thereof, including all claims of
whatsoever nature and return of premiums, together with the income and proceeds
of any and all of the foregoing (all such right, title and interest herein
called the "Insurances"). The foregoing assignment is in addition to, and not in
substitution for, the provisions with respect to insurance on the Vessel
contained in the Mortgage.
Section 2.04 ASSIGNMENT OF PROCEEDS OF REQUISITION OF USE. In
addition to the foregoing, in order to provide for the payment of and as
security for the Obligations, the Owner has granted, bargained, assigned,
transferred, conveyed, mortgaged, pledged and granted a security interest in and
confirmed, and does hereby grant, bargain, assign, transfer, convey, mortgage,
pledge and grant a security interest in and confirm, to Indenture Trustee, its
successors and assigns, for its and their respective successors' and assigns'
own proper use and benefit, all of the Owner's right, title and interest in and
to all charter hire and compensation resulting from a requisition of use arising
during the continuance of this security, together with
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the income and proceeds of any and all of the foregoing. If, as a result of such
requisition, the requisitioner shall pay or become liable to pay any amount by
reason of the loss of or injury to or depreciation of the Vessel, any such
amount is hereby made payable to the Indenture Trustee.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE OWNER
The Owner hereby represents and warrants to the Indenture
Trustee as follows:
Section 3.01 ORGANIZATION, POWER AND STATUS OF THE OWNER. The
Owner (a) is a corporation duly formed, validly existing and in good standing
under the laws of the Isle of Man and (b) is duly authorized, to the extent
necessary, to do business in each jurisdiction where the character of its
properties or the nature of its activities makes such qualification necessary.
The Owner has all requisite corporate power and authority to own and operate the
property it purports to own and to carry on its business as now being conducted
and as proposed to be conducted in respect of the Vessel.
Section 3.02 AUTHORIZATION; ENFORCEABILITY; EXECUTION AND
DELIVERY. (a) The Owner has all necessary corporate power and authority to
execute, deliver and perform under this Assignment.
(b) All action on the part of the Owner that is required for
the authorization, execution, delivery and performance of this Assignment has
been duly and effectively taken; and the execution, delivery and performance of
this Assignment does not require the approval or consent of any Person except
for such consents and approvals as have been obtained on or prior to the
Delivery Date.
(c) This Assignment has been duly executed and delivered by
the Owner. This Assignment constitutes the legal, valid and binding obligation
of the Owner, enforceable against it in accordance with the terms thereof.
Section 3.03 NO CONFLICTS; LAWS AND CONSENTS; NO DEFAULT. (a)
Neither the execution, delivery and performance of this Assignment nor the
consummation of any of the transactions contemplated hereby nor performance of
or compliance with the terms and conditions hereof (i) contravenes any
Requirement of Law applicable to the Owner or (ii) constitutes a default under
the Indenture or any Security Document.
(b) The Owner is in compliance with and not in default under
any and all Requirements of Law applicable to the Owner and all terms and
provisions of this Assignment.
Section 3.04 GOVERNMENTAL APPROVALS. All Governmental
Approvals which are required to be obtained in the name of the Owner in
connection with the execution, delivery and performance by the Owner of this
Assignment have been obtained and are in effect on the Delivery Date.
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Section 3.05 LITIGATION. There are no actions, suits or
proceedings at law or in equity or by or before any Governmental Authority now
pending against the Owner or, to the best of the Owner's knowledge, threatened
against the Owner or pending or threatened against any property or other assets
or rights of the Owner with respect to this Assignment.
Section 3.06 NO PRIOR ASSIGNMENT. The Owner has not assigned
or pledged, and hereby covenants that it will not assign or pledge, so long as
this Assignment shall remain in effect, the earnings or insurances or any part
of the rights, titles and interests hereby assigned, to anyone other than the
Indenture Trustee, or its successors or assigns.
ARTICLE IV
COVENANTS OF THE OWNER
The Owner hereby covenants and agrees that so long as any of
the Obligations remains outstanding:
Section 4.01 COVENANTS OF OWNER. (a) The Owner covenants (i)
that it shall forthwith give, or cause its broker to give, in the form attached
as Appendix I hereto, notice of this Assignment to all insurers, underwriters,
clubs and associations, with respect to all that is assigned pursuant to the
terms hereof and it shall cause its interest in all Insurances and moneys hereby
assigned to be paid over promptly to the Indenture Trustee or as it may direct
and that it shall cause its interest in all policies of insurance on the Vessel
to be assigned to the Indenture Trustee or as it may direct; provided, however,
that so long as the Initial Charter is in effect, the notices may be in the form
set forth in the Initial Charter, (ii) that it shall cause all moneys and
Freights hereby assigned to be paid over promptly to the Indenture Trustee or as
it may direct unless otherwise provided in the Initial Charter and that it shall
(A) deliver to any charterer (other than the Initial Charterer) a Notice in the
form annexed hereto as Appendix II and (B) cause any charterer (other than the
Initial Charterer) to execute and deliver to the Indenture Trustee a Consent in
the form annexed hereto as Appendix III or in such other form as agreed to by
the Indenture Trustee and (iii) that it shall promptly execute and deliver to
the Indenture Trustee such documents, if any, and shall do and perform such
acts, if any, as in the opinion of counsel for the Indenture Trustee may be
necessary or useful to facilitate or expedite the collection by the Indenture
Trustee of such claims arising out of any requisition of use.
(b) All moneys and Freights and Insurances received by the
Indenture Trustee under this Assignment shall be treated and applied as provided
in the Indenture.
Section 4.02 OWNER TO REMAIN LIABLE. Anything in this
Assignment contained to the contrary notwithstanding, the Owner shall remain
liable under any existing charters, and any future charter parties, bills of
lading, contracts and other engagements of affreightment or other carriage or
transportation of cargo and other operations of every kind whatsoever of the
Vessel and any such policies of insurance, and shall observe, perform and
fulfill all of the conditions and obligations to be observed, performed and
fulfilled by them thereunder, and the Indenture Trustee shall have no obligation
or liability thereunder or by reason of or arising out of this Assignment, nor
shall the Indenture Trustee be required or obligated in any manner to
<PAGE>
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observe, perform or fulfill any of the conditions or obligations of the Owner
thereunder or pursuant thereto, or to make any payment or to make any inquiry as
to the nature or sufficiency of any payment or to make any inquiry as to the
nature or sufficiency of any payment received by the Owner, or to present or
file any claim, or to take any other action to collect or enforce the payment of
any amounts which may have been assigned to the Indenture Trustee or to which
the Indenture Trustee may be entitled hereunder at any time or times. The
obligations of the Owner under any policies of insurance may (at the sole
election of the Indenture Trustee) be performed by the Indenture Trustee or its
nominee, without releasing the Owner therefrom, but the Indenture Trustee or its
nominee shall be under no duty whatsoever to perform or incur any such
obligations.
Section 4.03 FURTHER ASSURANCES. The Owner will at any time
and from time to time, upon the written request of the Indenture Trustee,
promptly and duly execute and deliver any and all such further instruments and
documents and take such action as the Indenture Trustee may deem desirable in
order to obtain the full benefits of this Assignment and of the rights and
powers herein granted.
Section 4.04 INDENTURE TRUSTEE AS ATTORNEY-IN-FACT OF OWNER.
The Owner hereby constitutes the Indenture Trustee, and its successors and
assigns, its true and lawful attorney-in-fact, irrevocably, with full power in
its own name, in the name of its agents or nominees or in the name of the Owner
or otherwise, to ask, require, demand, receive, enforce and give acquittance
for, any and all moneys and claims for moneys due and to become due and payable
under or arising out of any Freights, Insurances or requisition of the Vessel,
to endorse any checks or other instruments or orders in connection therewith and
to file any claims or take any action or institute any proceedings which to the
Indenture Trustee may seem to be necessary or advisable under this Assignment.
Any action or proceeding brought by the Indenture Trustee pursuant to any of the
provisions of this Assignment or otherwise and any claim made by the Indenture
Trustee hereunder may be compromised, withdrawn or otherwise dealt with by the
Indenture Trustee without any notice to or approval of the Owner.
ARTICLE V
MISCELLANEOUS PROVISIONS
Section 5.01 AMENDMENT. This Assignment may be amended from
time to time by written agreement signed by the parties hereto.
Section 5.02 SEVERABILITY. If any provision of this Assignment
is held to be in conflict with any applicable statute or rule of law or is
otherwise held to be unenforceable for any reason whatsoever, such circumstances
shall not have the effect of rendering the provision in question inoperative or
unenforceable in any other case or circumstance, or of rendering any other
provision or provisions herein contained invalid, inoperative, or unenforceable
to any extent whatsoever. The invalidity of any one or more phrases, sentences,
clauses or Sections of this Assignment contained, shall not affect the remaining
portions of this Assignment, or any part thereof.
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Section 5.03 NOTICES. All demands, notices and communications
hereunder shall be in writing, personally delivered or mailed by certified
mail-return receipt requested, and shall be deemed to have been duly given upon
receipt (a) in the case of the Indenture Trustee, at the following address: 114
West 47th Street, New York, New York 10036, Attention: Corporate Trust
Department, (b) in the case of the Owner, at the following address: 15-19 Athol
Street, Douglas, Isle of Man, or at other such address as shall be designated by
such party in a written notice to the other parties.
Section 5.04 CONSENT TO JURISDICTION. Any legal suit, action
or proceeding against the Owner arising out of or relating to this Assignment,
or any transaction contemplated hereby, may be instituted in any federal or
state court in The City of New York, State of New York, and the Owner hereby
irrevocably submits to the jurisdiction of any such court in any such suit,
action or proceeding. The Owner hereby waives, to the fullest extent permitted
by applicable law, any defense which it may now or hereafter have based upon
lack of personal jurisdiction or venue or FORUM NON CONVENIENS. The Owner hereby
irrevocably appoints and designates CT Corporation System, having an address at
1633 Broadway, New York, New York, its true and lawful attorney-in-fact and duly
authorized agent for the limited purpose of accepting servicing of legal process
and the Owner agrees that service of process upon such party shall constitute
personal service of such process on such Person. The Owner shall maintain the
designation and appointment of such authorized agent until all amounts payable
under this Assignment shall have been paid in full. If such agent shall cease to
so act, the Owner shall immediately designate and appoint another such agent
satisfactory to the Indenture Trustee and shall promptly deliver to the
Indenture Trustee evidence in writing of such other agent's acceptance of such
appointment.
Section 5.05 CAPTIONS. The captions or headings in this
Assignment are for convenience only and in no way define, limit or describe the
scope or intent of any provisions or sections of this Assignment.
Section 5.06 GOVERNING LAW. This Assignment shall be governed
by and interpreted in accordance with the laws of the State of New York, without
giving effect to the principles of conflicts of law.
Section 5.07 NO PARTNERSHIP. Nothing herein contained shall be
deemed or construed to create a partnership or joint venture among the parties
hereto, and the services of each party shall be rendered as an independent
contractor and not as agent for any other party.
Section 5.08 COUNTERPARTS. This Assignment may be executed in
any number of counterparts and by different parties hereto on separate
counterpart, each of which shall be deemed to be an original. Such counterparts
shall constitute one and the same agreement.
Section 5.09 SURVIVAL. The representations, covenants and
agreements contained in or made pursuant to this Assignment in respect of either
party hereto shall survive the execution and delivery of this Assignment and
shall continue in effect so long as such party's obligations hereunder remain
outstanding.
<PAGE>
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Section 5.10 INTEGRATION. This Assignment and the Schedule and
Exhibits hereto constitute the entire agreement and understanding between the
parties hereto with respect to the subject matter hereof and supersede all prior
agreements, understandings or representations pertaining to the subject matter
hereof, whether oral or written. There are no warranties, representations or
other agreements between the parties in connection with the subject matter
hereof except as specifically set forth or incorporated herein.
Section 5.11 REPRODUCTION OF DOCUMENTS. This Assignment and
all documents relating thereto, including, without limitation, (a) consents,
waivers and modifications which may hereafter be executed, (b) documents
received by any party at the closing, and (c) financial statements, certificates
and other information previously or hereafter furnished, may be reproduced by
any photographic, photostatic, microfilm, micro-card, miniature photographic or
other similar process. The parties agree that any such reproduction shall be
admissible in evidence as the original itself in any judicial or administrative
proceeding (whether or not the original is in existence and whether or not such
reproduction was made in the regular course of business) and that any
enlargement, facsimile or further reproduction of such reproduction shall
likewise be admissible in evidence.
Section 5.12 SUCCESSORS AND ASSIGNS; ASSIGNMENT. This
Assignment shall be binding upon and inure to the benefit of the Owner and the
Indenture Trustee and their respective successors and assigns. The Owner shall
not have the right to assign its rights hereunder or any interest herein without
the prior written consent of the Indenture Trustee. The Indenture Trustee, at
its sole option, shall have the right to assign this Assignment, the Indenture,
the Security Documents and any of its rights and interest hereunder in
accordance with the terms and provisions of the Indenture and the Security
Documents.
Section 5.13 GENERAL INTERPRETIVE PRINCIPLES. For purposes
of this Assignment except as otherwise expressly provided or unless the context
otherwise requires:
(a) the defined terms in this Assignment shall include the
plural as well as the singular, and the use of any gender herein shall be deemed
to include any other gender;
(b) accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted accounting
principles as in effect on the date hereof;
(c) references herein to "Articles", "Sections",
"Subsections", "paragraphs", and other subdivisions without reference to a
document are to designated Articles, Sections, Subsections, paragraphs and other
subdivisions of this Assignment;
(d) a reference to a Subsection without further reference to a
Section is a reference to such Subsection as contained in the same Section in
which the reference appears, and this rule shall also apply to paragraphs and
other subdivisions;
<PAGE>
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(e) the words "herein", "hereof", "hereunder" and other words
of similar import refer to this Assignment as a whole and not to any particular
provision; and
(f) the term "include" or "including" shall mean without
limitation by reason of enumeration.
Section 5.14 EFFECTIVE DATE OF TRANSACTION. Notwithstanding
the fact that this Assignment is dated as of _____________________, the
transactions set forth herein shall not be effective until the Delivery Date.
<PAGE>
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IN WITNESS WHEREOF, the Owner and the Indenture Trustee have
caused this Assignment to be duly executed and delivered by their respective
officers thereunto duly authorized all as of the day and year first above
written.
United States Trust Company of New York,
as Indenture Trustee
By:________________________________
Name:______________________________
Title:_____________________________
[Name of Owner], as Owner
By:________________________________
Name:______________________________
Title:_____________________________
<PAGE>
Appendix I
NOTICE OF ASSIGNMENT
United States Trust Company of New York, as indenture trustee
(the "Indenture Trustee") and [Name of Owner] (the "Owner"), owner of the m.v.
"______________" (the "Vessel"), hereby give notice that by an assignment
contained in an Assignment of Earnings and Insurances, dated as of
______________, between the Owner and the Indenture Trustee, the Owner assigned
to the Indenture Trustee all of its right, title and interest under, to and in
all policies and contracts of insurance of whatsoever nature and all entries
with protection and indemnity clubs or societies now or hereafter taken out in
respect of the Vessel, its rights, disbursements, profits, including all claims
of whatsoever nature thereunder or otherwise. This Notice is to be endorsed on
all policies and certificates of entry evidencing such insurances.
All claims payable shall be subject to the following
conditions:
(i) Any claim payable in respect of an actual or
constructive or arranged or agreed or compromised total loss,
or loss in the event of the confiscation, compulsory
acquisition or requisition of the Vessel, for title or use, by
any government of any country or any department, agency or
representative thereof, pursuant to any present or future law,
proclamation, order, decree or otherwise, shall be payable to
the Owner, provided always that the written consent of the
Owner shall be obtained prior to the arranged or agreed or
compromised total loss being agreed with the underwriters
(insurers);
(ii) All other claims shall be released to the
repairer or salvor for the repair, salvage or other charges
involved or to the Owner as reimbursement if it has fully
repaired the damages and paid all of the salvage and other
charges;
Notwithstanding the foregoing, if there exists an Event of Default
under the Mortgage, dated _________, on the Vessel given by the Owner in favor
of the Indenture Trustee and the brokers and/or Underwriters (insurers) have
been so notified by the Indenture Trustee in writing, all claims shall be
payable to the Indenture Trustee.
The underwriters (insurers) agree that the Indenture Trustee shall be
advised immediately of the termination of this policy (entry), and in the event
of any failure by the Owner to pay premiums (dues or Club calls) as and when due
the Indenture Trustee shall be given at least fourteen (14) days' prior
telegraphic or telex notice of the cancellation or material alteration of this
policy (entry).
The Indenture Trustee shall have no obligations whatsoever to pay any
premiums or costs (dues or Club calls), but shall have the right to do so in the
event of non-payment by the Owner. The underwriters (insurers) shall promptly
advise the Indenture Trustee of any act of omission of which the Underwriters
(insurers) are aware that might void this policy (entry) or make the same
invalid or unenforceable in whole or in part.
<PAGE>
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Endorsement
United States Trust Company of New York, as indenture trustee (the
"Indenture Trustee") and [Name of Owner] (the "Owner"), owner of the m.v.
"______________" (the "Vessel"), hereby give notice that by an assignment
contained in an Assignment of Earnings and Insurances, dated as of the Delivery
Date, between the Owner and the Indenture Trustee, the Owner assigned to the
Indenture Trustee all of its right, title and interest under, to and in all
policies and contracts of insurance of whatsoever nature and all entries with
protection and indemnity clubs or societies now or hereafter taken out in
respect of the Vessel, its rights, disbursements, profits or otherwise.
It is hereby noted that all claims shall be paid to the Owner
unless and until the Indenture Trustee, as mortgagee, shall have given notice in
writing that the Owner is in default under the First Preferred Ship Mortgage,
dated _____________ on the Vessel given by the Owner in favor of the Indenture
Trustee, as mortgagee, in which event such claims shall be payable to the
Indenture Trustee, as mortgagee. Any modification of the terms of this insurance
or cancellation or termination by reason of nonpayment of premiums, dues,
assessments, contributions or other amounts which may become due shall not
become effective against the interests of the Indenture Trustee, as mortgagee
its successors or assigns unless and until fourteen (14) days' prior telegraphic
or telex notice is given to the Indenture Trustee, as mortgagee its successors
or assigns of such modification, cancellation or termination.
[Name of Owner], as Owner
By:________________________________
Name:______________________________
Title:_____________________________
<PAGE>
APPENDIX II
NOTICE OF ASSIGNMENT
United State Trust Company of New York, as indenture trustee (the
"Indenture Trustee") and [Name of Owner] (the "Owner"), owner of the m.v.
"_____________" (the "Vessel"), hereby give notice that by an assignment
contained in an Assignment of Earnings and Insurances, dated as of _________,
between the Owner and the Indenture Trustee,the Owner assigned to the Indenture
Trustee all of its right, title and interest under, to and in (a) any and all
moneys due and to become due to the Owner under any and all present and future
charter parties, bills of lading, contracts and other engagements of
affreightment or for the carriage or transportation of cargo, salvage and other
operations of every kind whatsoever of the Vessel; and (b) any and all claims
and causes of action for money, loss or damages that may accrue arising out of
or in any way connected with the present or future use, operation or management
of the Vessel (including proceeds of insurance against requisition for or other
loss of hire or use of the Vessel) or arising out of or in any way connected
with any and all such present and future charter parties, bills of lading,
contracts and other engagements of affreightment or for the carriage or
transportation of cargo, salvage and other operations of the Vessel and any and
all guaranties with respect to any of the foregoing, together with the income
and proceeds of any and all of the foregoing (all such right, title and interest
herein called the "Freights").
So long as the Assignment remains effective, upon your receipt of notice
of the occurrence of an Indenture Event of Default under the Indenture referred
to in the Assignment, pay any and all sums under your charter with the Owner
directly to or Chase Manhattan Bank, NYC, ABA #021000021, A/C #920-1-073195,
credit U.S. Trust Co. New York, further credit to A/C #04692300, Golden State
Petroleum Transp. Corp. Rev., Attention: Chris Collins otherwise to such other
account as you may be notified in writing at any time or from time to time.
Please execute the attached Letter of Consent and Acknowledgement of
Assignment and return it to the undersigned.
[Name of Owner], as Owner
By:________________________________
Name:______________________________
Title:_____________________________
<PAGE>
Appendix III
LETTER OF CONSENT AND ACKNOWLEDGEMENT OF ASSIGNMENT
United States Trust Company of New York, indenture trustee
Dear Sirs:
The undersigned hereby consents to and acknowledges receipt of a signed
copy of the Assignment of Earnings and Insurances (the "Assignment"), dated as
of ___________, between [Name of Owner] (the "Owner") and yourselves as adequate
notice of such assignment to you of the Charter (the "Charter"), dated as of
December __, 1996, between us and the Owner and of all the right, title and
interest of the Owner in, to and under the Charter.
So long as the Assignment remains effective, we hereby agree that, upon
your notification to us in writing of the occurrence of an Indenture Event of
Default under the Indenture referred to in the Assignment, we shall pay any and
all sums which we are legally obligated to pay to the Owner or otherwise as
stated in and according to the Charter directly to ______________________ Golden
State Petroleum Revenue Account, Attention: _____________, or otherwise to such
other account as you may at any time or from time to time, designate by notice
to us in writing.
Payments of moneys under the Charter may be adjusted, reduced or
withheld only as expressly provided therein. Payments to you shall not be
subject to any right of set-off or defense by way of counterclaim or otherwise
which the undersigned may have against the Owner or any entity substituted for
it other than under the Charter and all payments once made to you will be final,
and once paid we will not, for any reason whatsoever, seek to recover from you
any such payment made to you by virtue of the Assignment or this Letter of
Consent.
We confirm that the terms of the Charter remain in full force and
effect and that the Owner is not presently in breach of the terms of the
Charter. We further confirm that the terms of the Charter have not been varied
or modified and that the terms of the Charter will not after the date hereof be
varied or modified without your prior written consent.
We confirm that we have received no prior notice of any assignment by
the Owner of any interest in the Charter.
The undersigned will not permit any amendment, modification,
cancellation or other alteration in the Charter, nor will it consent to or
accept the substitution thereunder of any party for the Owner without your prior
written consent.
Date: ______________ [Name of Charterer], as Charterer
By:________________________________
Name:______________________________
Title:_____________________________
<PAGE>
SCHEDULE 1
ADDITIONAL DEFINED TERMS USED IN THE ASSIGNMENT
"AGREEMENT ON CONTRACT FOR TECHNICAL MATTERS" means, the Agreement
Regarding Technical Matters, dated as of the December 24, 1996 between the
Owner, Samsung Heavy Industries Co., LTD and Chevron Shipping Company, San
Francisco, U.S.A. (as Agent for the Initial Charterer).
"ASSIGNMENT" or "ASSIGNMENT OF EARNINGS AND INSURANCES" means the
assignment between the Owner and the Indenture Trustee, as amended from time to
time in accordance with the terms thereof, pursuant to which the Owner
collaterally assigns to the Indenture Trustee all of the Owner's right, title
and interest in, to and under the freights and hires (as well as any charters
entered into after the Delivery Date) with respect to the Vessel to secure its
obligations under the Indenture.
"ASSIGNMENT OF BUILDING CONTRACT" means, for each Vessel, the Building
Contract Assignment, dated as of December 1, 1996, between the related Owner and
the Indenture Trustee, pursuant to which such Owner collaterally assigns its
rights, title and interests in the related Building Contract and the Agreement
on Contract for Technical Matters to the Indenture Trustee.
"ASSIGNMENT OF BUILDING CONTRACT GUARANTEE" means, for each Building
Contract Guarantee, the Assignment of Building Contract Guarantee, dated as of
December 1, 1996, between the related Owner and the Indenture Trustee, as the
same may be amended from time to time, pursuant to which such Owner collaterally
assigns its rights, title and interest in the related Building Contract
Guarantee therein to the Indenture Trustee.
"ASSIGNMENT OF CHARTER" means the assignment between the Owner and the
Indenture Trustee, as amended from time to time in accordance with the terms
thereof, pursuant to which the Owner collaterally assigns to the Indenture
Trustee all of the Owner's right, title and interest in, to and under the
Initial Charter to secure its obligations under the Indenture.
"ASSIGNMENT OF CHARTER SUPPLEMENT" means, for each Charter Supplement,
the Assignment of Charter Supplement, dated the date of the Supplemental
Indenture, between the Owner of the Vessel and the Indenture Trustee, as the
same may be amended from time to time pursuant to which the Owner collaterally
assigns all of the Owner's right, title and interest therein to the Indenture
Trustee.
"ASSIGNMENT OF CHEVRON GUARANTEE" means the assignment between the
Owner and the Indenture Trustee, as amended from time to time in accordance with
the terms thereof, pursuant to which the Owner collaterally assigns to the
Indenture Trustee all of the Owner's right, title and interest in, to and under
the Chevron Guarantee to secure its obligations under the Indenture.
"ASSIGNMENT OF MANAGEMENT AGREEMENT" means the assignment between the
Owner and the Indenture Trustee, as amended from time to time in accordance with
the terms thereof, pursuant to which the Owner collaterally assigns to the
Indenture Trustee all of the Owner's
<PAGE>
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right, title and interest in, to and under the Management Agreement to secure
its obligations under the Indenture.
"BUILDER" means, collectively, Samsung Corporation and Samsung Heavy
Industries, Ltd.
"BUILDING CONTRACT" means the Shipbuilding Contract, dated December 24,
1996, between the Builder and the Owner.
"BUILDING CONTRACT GUARANTEE" means the Irrevocable Installment Payment
Letter of Guarantee, dated December 24, 1996, given by the Building Contract
Guarantor to the Owner in connection with the Vessel.
"BUILDING CONTRACT GUARANTOR" means Korea Development Bank.
"CHEVRON" means Chevron Corporation, a Delaware corporation, and its
successors and assigns.
"CHEVRON GUARANTEE" means the Guarantee, dated December 24, 1996, given
by Chevron to the Owner in connection with the Initial Charter and the Charter
Supplement.
"CLOSING DATE" means December 24, 1996.
"COLLATERAL" means the collateral assigned, pledged or granted to the
Indenture Trustee pursuant to (i) this Assignment of Earnings and Insurances,
(ii) the Assignment of Charter, (iii) the Assignment of Charter Supplement, (iv)
the Mortgage, (v) the Assignment of Chevron Guarantee, (vi) the Assignment of
Management Agreement, (vii) the Assignment of Building Contract, (viii) the
Assignment of Building Contract Guarantee, (ix) the Issue of One Debenture and
(x) the Stock Pledge, together with all income and proceeds thereof.
"DELIVERY DATE" means the date the Vessel is accepted by the Owner from
the Builder under the Building Contract, which is the date of this Assignment.
"INDENTURE" means the Indenture, dated as of December 1, 1996 among the
Indenture Trustee, the Owner, [Name of Other Owner] and Golden State Petroleum,
pursuant to which the Notes were issued.
"INDENTURE TRUSTEE" means United States Trust Company of New York.
"INITIAL CHARTER" means with respect to each Vessel, the bareboat
charter, dated as of December 1, 1996, between the Initial Charterer and the
Owner.
"INITIAL CHARTERER" means Chevron Transport Corporation, a Liberian
corporation.
"ISSUE OF ONE DEBENTURE" means each Issue of One Debenture between the
Owner and the Indenture Trustee, as amended from time to time in accordance with
the terms thereof,
<PAGE>
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pursuant to which the Owner grants to the Indenture Trustee a security interest
in all of its assets.
"MANAGEMENT AGREEMENT" means the agreement, dated as of December 1,
1996, between the Owner and the Manager pursuant to which the Manager agrees to
provide certain services to the Owner.
"MANAGER" means the Person performing the duties of the Manager under
the Management Agreement, initially Cambridge Fund Management L.L.C.
"MORTGAGE" means, with respect to the Vessel, the first preferred ship
mortgage on the Vessel granted by the Owner to the Indenture Trustee, as amended
from time to time in accordance with the terms of such Mortgage.
"OBLIGATIONS" means the payment, performance or obligations of any kind
or nature whatsoever of the Owner under and pursuant to the Indenture, any
Security Document and any instrument, agreement or document referred to therein.
"OWNER" means [Name of Owner], a company organized under the laws of
the Isle of Man.
"SECURITY DOCUMENTS" means the Indenture, the Mortgage, the Assignment
of Charter, the Assignments of Charter Supplements, this Assignment of Earnings
and Insurances, the Assignment of Chevron Guarantee, the Assignment of
Management Agreement, the Assignment of Building Contract, the Issue of One
Debenture, the Stock Pledge and the Assignment of Building Contract Guarantee,
collectively.
"VESSEL" means _________________.
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS............................... 1
ARTICLE II
ASSIGNMENT................................. 1
Section 2.01 Security Interest.......................................... 1
Section 2.02 Assignment of Earnings..................................... 1
Section 2.03 Assignment of Insurances................................... 2
Section 2.04 Assignment of Proceeds of Requisition of Use............... 2
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE OWNER................ 3
Section 3.01 Organization, Power and Status of the Owner................ 3
Section 3.02 Authorization; Enforceability; Execution and Delivery...... 3
Section 3.03 No Conflicts; Laws and Consents; No Default................ 3
Section 3.04 Governmental Approvals..................................... 3
Section 3.05 Litigation................................................. 4
Section 3.06 No Prior Assignment........................................ 4
ARTICLE IV
COVENANTS OF THE OWNER........................... 4
Section 4.01 Covenants of Owner......................................... 4
Section 4.02 Owner to Remain Liable..................................... 4
Section 4.03 Further Assurances......................................... 5
Section 4.04 Indenture Trustee as Attorney-in-Fact of Owner............. 5
<PAGE>
Page
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ARTICLE V
MISCELLANEOUS PROVISIONS........................... 5
Section 5.01 Amendment.................................................. 5
Section 5.02 Severability............................................... 5
Section 5.03 Notices.................................................... 6
Section 5.04 Consent to Jurisdiction.................................... 6
Section 5.05 Captions................................................... 6
Section 5.06 Governing Law.............................................. 6
Section 5.07 No Partnership............................................. 6
Section 5.08 Counterparts............................................... 6
Section 5.09 Survival................................................... 6
Section 5.10 Integration................................................ 7
Section 5.11 Reproduction of Documents.................................. 7
Section 5.12 Successors and Assigns; Assignment......................... 7
Section 5.13 General Interpretive Principles............................ 7
Section 5.14 Effective Date of Transaction.............................. 8
<PAGE>
EXHIBIT E
---------
===============================================================================
UNITED STATES TRUST COMPANY OF NEW YORK,
AS INDENTURE TRUSTEE
and
Golden State Petro (IOM I-A) PLC
-----------------------------------
ASSIGNMENT OF GUARANTEE
Dated as of December 1, 1996
-----------------------------------
===============================================================================
<PAGE>
Assignment of Guarantee, dated as of December 1, 1996 (the
"Assignment"), between Golden State Petro (IOM I-A) PLC (the "Owner") and United
States Trust Company of New York (the "Indenture Trustee"), not in its
individual capacity but solely as trustee under the Indenture (the "Indenture"),
dated as of the date hereof, among the Owner, the Indenture Trustee, Golden
State Petro (IOM I-B) PLC ("Golden State Petro B") and Golden State Petroleum
Transport Corporation ("Golden State Petroleum"), as agent for the Owner and
Golden State Petro B.
PRELIMINARY STATEMENT
On the Closing Date, Golden State Petroleum, as agent for the
Owner and Golden State Petro B, will issue Notes in connection with the
financing of the construction of the Vessel. The net proceeds of such issuance
will be deposited into the Pre-Funding Account. Pursuant to the Indenture, the
Allocated Principal Amount of the Mortgage Notes for the Vessel will be used,
INTER ALIA, to make the installments due under the Shipbuilding Contract for the
Vessel. As of the date of this Assignment, the Owner has agreed to bareboat
charter the Vessel to Chevron Transport Corporation (the "Initial Charterer")
pursuant to the Initial Charter. The obligations of the Initial Charterer under
the Initial Charter are guaranteed by Chevron Corporation (the "Guarantor")
pursuant to the Chevron Guarantee. The Vessel will be managed by Cambridge Fund
Management L.L.C. (the "Manager") pursuant to the Management Agreement, dated as
of the date hereof, between the Owner and the Manager. As collateral security
for its obligations under the Indenture, the Owner has and will assign, pledge,
mortgage and grant the Indenture Trustee a security interest in, INTER ALIA, the
Vessel, the Initial Charter and the Chevron Guarantee.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained and of other valuable consideration, receipt of
which is hereby acknowledged, the Owner and the Indenture Trustee hereby agree
as follows:
ARTICLE I
DEFINITIONS
Unless otherwise defined in Schedule 1 to this Assignment,
capitalized terms used in this Assignment shall have the meanings assigned to
such terms in the Indenture.
ARTICLE II
ASSIGNMENT
Section 2.01 SECURITY INTEREST. This Assignment is made and
delivered as security for the Obligations.
Section 2.02 ASSIGNMENT. In order to provide for the payment
of and as security for the Obligations, the Owner has granted, bargained,
assigned, transferred, conveyed, mortgaged, pledged and granted a security
interest in and confirmed, and does hereby grant, bargain, assign, transfer,
convey, mortgage, pledge and grant a security interest in and confirm, to the
Indenture Trustee, its successors and assigns, for its and their respective
successors' and assigns' own proper use and benefit, all of the Owner's right,
title and interest in and to the
<PAGE>
-2-
Chevron Guarantee, including without limitation any moneys whatsoever payable to
the Owner under the Chevron Guarantee, together with the income and proceeds
thereof and all other rights and benefits whatsoever accruing to the Owner under
the Chevron Guarantee; PROVIDED, HOWEVER, that the Owner shall keep the
Indenture Trustee fully and effectively indemnified from and against all
actions, losses, claims, proceedings, costs, demands and liabilities which may
be suffered by the Indenture Trustee under or by virtue of the Chevron Guarantee
or this Assignment.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE OWNER
The Owner hereby represents and warrants to the Indenture
Trustee as follows:
Section 3.01 ORGANIZATION, POWER AND STATUS OF THE OWNER. The
Owner (a) is a corporation duly formed, validly existing and in good standing
under the laws of the Isle of Man and (b) is duly authorized, to the extent
necessary, to do business in each jurisdiction where the character of its
properties or the nature of its activities makes such qualification necessary.
The Owner has all requisite corporate power and authority to own and operate the
property it purports to own and to carry on its business as now being conducted
and as proposed to be conducted in respect of the Vessel.
Section 3.02 AUTHORIZATION; ENFORCEABILITY; EXECUTION AND
DELIVERY. (a) The Owner has all necessary corporate power and authority to
execute, deliver and perform under this Assignment.
(b) All action on the part of the Owner that is required for
the authorization, execution, delivery and performance of this Assignment has
been duly and effectively taken; and the execution, delivery and performance of
this Assignment does not require the approval or consent of any Person except
for such consents and approvals as have been obtained on or prior to the Closing
Date.
(c) This Assignment has been duly executed and delivered by
the Owner. This Assignment constitutes the legal, valid and binding obligation
of the Owner, enforceable against it in accordance with the terms thereof.
Section 3.03 NO CONFLICTS; LAWS AND CONSENTS; NO DEFAULT. (a)
Neither the execution, delivery and performance of this Assignment nor the
consummation of any of the transactions contemplated hereby nor performance of
or compliance with the terms and conditions hereof (i) contravenes any
Requirement of Law applicable to the Owner or (ii) constitutes a default under
the Indenture or any Security Document.
(b) The Owner is in compliance with and not in default under
any and all Requirements of Law applicable to the Owner and all terms and
provisions of this Assignment.
<PAGE>
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Section 3.04 GOVERNMENTAL APPROVALS. All Governmental
Approvals which are required to be obtained in the name of the Owner in
connection with the execution, delivery and performance by the Owner of this
Assignment have been obtained and are in effect on the Closing Date.
Section 3.05 LITIGATION. There are no actions, suits or
proceedings at law or in equity or by or before any Governmental Authority now
pending against the Owner or, to the best of the Owner's knowledge, threatened
against the Owner or pending or threatened against any property or other assets
or rights of the Owner with respect to this Assignment.
Section 3.06 NO PRIOR ASSIGNMENT. The Owner has not assigned
or pledged, and hereby covenants that it will not assign or pledge, so long as
this Assignment shall remain in effect, the Chevron Guarantee or any part of the
rights, titles and interests hereby assigned, to anyone other than the Indenture
Trustee, or its successors or assigns.
ARTICLE IV
COVENANTS OF THE OWNER
The Owner hereby covenants and agrees that so long as any of
the Obligations remains outstanding:
Section 4.01 CONSENT OF GUARANTOR. On the Closing Date, the
Owner shall deliver to the Guarantor a copy of this Assignment and shall procure
the execution by the Guarantor of the Consent and Acknowledgment set out in
Exhibit A hereto and deliver said Consent and Acknowledgment to the Indenture
Trustee on the Closing Date.
Section 4.02 ENFORCEMENT OF CHEVRON GUARANTEE. (a) The Owner
will do or permit to be done each and every act or thing which the Indenture
Trustee may from time to time require to be done for the purpose of enforcing
the Indenture Trustee's rights under the Chevron Guarantee and this Assignment.
(b) The Owner shall cause all moneys hereby assigned or agreed
to be assigned or arising from or in connection with any of the rights, title,
interest and benefits of the Owner under the Chevron Guarantee shall be paid to
the credit of Chase Manhattan Bank NYC, ABA #021000021, A/C #920-1-073195,
credit U.S. Trust Co NY, further credit to A/C #04692300, Golden State Petroleum
Transport Revenue Account, Attention: Chris Collins or to such other account as
the Indenture Trustee may from time to time direct.
(c) The Owner will not exercise any right or powers conferred
on it by the Chevron Guarantee in connection with any default or alleged default
by the Guarantor thereunder (including without limitation the right of
termination and substitution) unless and until requested so to do by the
Indenture Trustee whereupon the Owner agrees that it will do so provided always
that the Indenture Trustee shall not be responsible in any way whatsoever in the
event that the exercise of any right or power (including the right of
termination and substitution) be thereafter adjudged improper or to constitute a
repudiation of the Chevron Guarantee by the Owner.
<PAGE>
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Section 4.03 AMENDMENT OF CHEVRON GUARANTEE; ASSIGNMENT OF
CHEVRON GUARANTEE. (a) The Owner will not, except with the previous written
consent of the Indenture Trustee, agree to any variation of the Chevron
Guarantee or release the Guarantor from any of its obligations thereunder or
waive any breach of the Guarantor's obligations thereunder or consent to any
such act or omission of the Guarantor as would otherwise constitute such breach.
(b) The Owner will not, except with the previous written
consent of the Indenture Trustee, assign the Chevron Guarantee to any other
Person.
Section 4.04 FURTHER ASSURANCES. The Owner will at any time
and from time to time, upon the written request of the Indenture Trustee,
promptly and duly execute and deliver any and all such further instruments and
documents and take such action as the Indenture Trustee may deem desirable in
order to obtain the full benefits of this Assignment and of the rights and
powers herein granted.
Section 4.05 INDENTURE TRUSTEE AS ATTORNEY-IN-FACT OF OWNER.
The Owner hereby constitutes the Indenture Trustee, and its successors and
assigns, its true and lawful attorney-in-fact, irrevocably, with full power in
its own name, in the name of its agents or nominees or in the name of the Owner
or otherwise, to ask, require, demand, receive, enforce and give acquittance
for, any and all moneys and claims for moneys due and to become due and payable
under or arising out of the Chevron Guarantee, to endorse any checks or other
instruments or orders in connection therewith and to file any claims or take any
action or institute any proceedings which to the Indenture Trustee may seem to
be necessary or advisable under this Assignment. Any action or proceeding
brought by the Indenture Trustee pursuant to any of the provisions of this
Assignment or otherwise and any claim made by the Indenture Trustee hereunder
may be compromised, withdrawn or otherwise dealt with by the Indenture Trustee
without any notice to or approval of the Owner.
ARTICLE V
MISCELLANEOUS PROVISIONS
Section 5.01 AMENDMENT. This Assignment may be amended from
time to time by written agreement signed by the parties hereto.
Section 5.02 SEVERABILITY. If any provision of this Assignment
is held to be in conflict with any applicable statute or rule of law or is
otherwise held to be unenforceable for any reason whatsoever, such circumstances
shall not have the effect of rendering the provision in question inoperative or
unenforceable in any other case or circumstance, or of rendering any other
provision or provisions herein contained invalid, inoperative, or unenforceable
to any extent whatsoever. The invalidity of any one or more phrases, sentences,
clauses or Sections of this Assignment contained, shall not affect the remaining
portions of this Assignment, or any part thereof.
Section 5.03 NOTICES. All demands, notices and communications
hereunder shall be in writing, personally delivered or mailed by certified
mail-return receipt requested, and shall
<PAGE>
-5-
be deemed to have been duly given upon receipt (a) in the case of the Indenture
Trustee, at the following address: 114 West 47th Street, New York, New York
10036, Attention: Corporate Trust Department, (b) in the case of the Owner, at
the following address: 15-19 Athol Street, Douglas, Isle of Man, or at other
such address as shall be designated by such party in a written notice to the
other parties.
Section 5.04 CONSENT TO JURISDICTION. Any legal suit, action
or proceeding against the Owner arising out of or relating to this Assignment,
or any transaction contemplated hereby, may be instituted in any federal or
state court in The City of New York, State of New York, and the Owner hereby
irrevocably submits to the jurisdiction of any such court in any such suit,
action or proceeding. The Owner hereby waives, to the fullest extent permitted
by applicable law, any defense which it may now or hereafter have based upon
lack of personal jurisdiction or venue or FORUM NON CONVENIENS. The Owner hereby
irrevocably appoints and designates CT Corporation System, having an address at
1633 Broadway, New York, New York, its true and lawful attorney-in-fact and duly
authorized agent for the limited purpose of accepting servicing of legal process
and the Owner agrees that service of process upon such party shall constitute
personal service of such process on such Person. The Owner shall maintain the
designation and appointment of such authorized agent until all amounts payable
under this Assignment shall have been paid in full. If such agent shall cease to
so act, the Owner shall immediately designate and appoint another such agent
satisfactory to the Indenture Trustee and shall promptly deliver to the
Indenture Trustee evidence in writing of such other agent's acceptance of such
appointment.
Section 5.05 CAPTIONS. The captions or headings in this
Assignment are for convenience only and in no way define, limit or describe the
scope or intent of any provisions or sections of this Assignment.
Section 5.06 GOVERNING LAW. This Assignment shall be governed
by and interpreted in accordance with the laws of the State of New York, without
giving effect to the principles of conflicts of law.
Section 5.07 NO PARTNERSHIP. Nothing herein contained shall be
deemed or construed to create a partnership or joint venture among the parties
hereto, and the services of each party shall be rendered as an independent
contractor and not as agent for any other party.
Section 5.08 COUNTERPARTS. This Assignment may be executed in
any number of counterparts and by different parties hereto on separate
counterpart, each of which shall be deemed to be an original. Such counterparts
shall constitute one and the same agreement.
Section 5.09 SURVIVAL. The representations, covenants and
agreements contained in or made pursuant to this Assignment in respect of either
party hereto shall survive the execution and delivery of this Assignment and
shall continue in effect so long as such party's obligations hereunder remain
outstanding.
<PAGE>
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Section 5.10 INTEGRATION. This Assignment and the Schedule and
Exhibits hereto constitute the entire agreement and understanding between the
parties hereto with respect to the subject matter hereof and supersedes all
prior agreements, understandings or representations pertaining to the subject
matter hereof, whether oral or written. There are no warranties, representations
or other agreements between the parties in connection with the subject matter
hereof except as specifically set forth or incorporated herein.
Section 5.11 REPRODUCTION OF DOCUMENTS. This Assignment and
all documents relating thereto, including, without limitation, (a) consents,
waivers and modifications which may hereafter be executed, (b) documents
received by any party at the closing, and (c) financial statements, certificates
and other information previously or hereafter furnished, may be reproduced by
any photographic, photostatic, microfilm, micro-card, miniature photographic or
other similar process. The parties agree that any such reproduction shall be
admissible in evidence as the original itself in any judicial or administrative
proceeding (whether or not the original is in existence and whether or not such
reproduction was made in the regular course of business) and that any
enlargement, facsimile or further reproduction of such reproduction shall
likewise be admissible in evidence.
Section 5.12 SUCCESSORS AND ASSIGNS; ASSIGNMENT. This
Assignment shall be binding upon and inure to the benefit of the Owner and the
Indenture Trustee and their respective successors and assigns. The Owner shall
not have the right to assign its rights hereunder or any interest herein without
the prior written consent of the Indenture Trustee. The Indenture Trustee, at
its sole option, shall have the right to assign this Assignment, the Indenture,
the Security Documents and any of its rights and interest hereunder in
accordance with the terms and provisions of the Indenture and the Security
Documents.
Section 5.13 GENERAL INTERPRETIVE PRINCIPLES. For purposes of
this Assignment except as otherwise expressly provided or unless the context
otherwise requires:
(a) the defined terms in this Assignment shall include the
plural as well as the singular, and the use of any gender herein shall be deemed
to include any other gender;
(b) accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted accounting
principles as in effect on the date hereof;
(c) references herein to "Articles", "Sections",
"Subsections", "paragraphs", and other subdivisions without reference to a
document are to designated Articles, Sections, Subsections, paragraphs and other
subdivisions of this Assignment;
(d) a reference to a Subsection without further reference to a
Section is a reference to such Subsection as contained in the same Section in
which the reference appears, and this rule shall also apply to paragraphs and
other subdivisions;
<PAGE>
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(e) the words "herein", "hereof", "hereunder" and other
words of similar import refer to this Assignment as a whole and not to any
particular provision; and
(f) the term "include" or "including" shall mean without
limitation by reason of enumeration.
Section 5.14 EFFECTIVE DATE OF TRANSACTION. Notwithstanding
the fact that this Assignment is dated as of December 24, 1996, the transactions
set forth herein shall not be effective until the Closing Date.
<PAGE>
IN WITNESS WHEREOF, the Owner and the Indenture Trustee have
caused this Assignment to be duly executed and delivered by their respective
officers thereunto duly authorized all as of the day and year first above
written.
United States Trust Company of New York,
as Indenture Trustee
By:/s/ Christine C. Collins
-----------------------------
Name: Christine C. Collins
Title: Assistant Vice President
Golden State Petro (IOM I-A) PLC, as Owner
By:/s/ Joseph Avantario
-----------------------------
Name: Joseph Avantario
Title: Treasurer
<PAGE>
Exhibit A
LETTER OF ACKNOWLEDGMENT
TO ASSIGNMENT OF GUARANTEE
[Date]
United States Trust Company of New York,
as Indenture Trustee
Dear Sirs:
Chevron Corporation (the "Guarantor") hereby consents to and
acknowledges receipt of a signed copy of the Assignment of Guarantee (the
"Assignment"), dated as of December 1, 1996, between Golden State Petro (IOM
I-A) PLC (the "Owner") and United States Trust Company of New York, not in its
individual capacity but solely as trustee (the "Indenture Trustee") as adequate
notice of such assignment to the Indenture Trustee of the Chevron Guarantee (as
defined in the Assignment) and of all the right, title and interest of the Owner
in, to and under the Chevron Guarantee. Any capitalized term not otherwise
defined herein shall have the meaning assigned to such term in the Assignment.
The Guarantor confirms that it (a) has reviewed the terms of
the Initial Charter and (b) understands the rights and obligations of Chevron
Transport Corporation (the "Charterer") pursuant to the terms and conditions
thereof.
Notwithstanding anything to the contrary contained in the
Chevron Guarantee including without limitation the Guarantor's right to
terminate the Chevron Guarantee as provided therein, so long as the Initial
Charter and the Assignment are each in effect, the Guarantor hereby agrees that
the Chevron Guarantee will continue in full force and effect and that, upon
notification to the Guarantor of the occurrence of an Event of Default under the
Initial Charter, the Guarantor shall (i) perform any and all obligations which
the Guarantor is obligated to perform according to the Chevron Guarantee and
(ii) pay any and all sums which the Guarantor is legally obligated to pay to the
Owner or otherwise as stated in and according to the Chevron Guarantee directly
to _______________________ Golden State Petroleum Revenue Account, Attention:
___________________, or otherwise to such other account as you may at any time
or from time to time, designate by notice to the Guarantor in writing. Payments
to the Indenture Trustee shall not be subject to any right of set-off or defense
by way of counterclaim or otherwise which the Guarantor may have against the
Owner or any entity substituted for it and all payments once made to the
Indenture Trustee will be final, and once paid the Guarantor will not, for any
reason whatsoever, seek to recover from the Indenture Trustee any such payment
made to the Indenture Trustee by virtue of the Assignment or this Letter of
Consent.
The Guarantor confirms to the Indenture Trustee that (a) the
Guarantor is a corporation duly organized and existing in good standing under
the laws of the State of Delaware, (b) the making and performance of this Letter
of Consent in accordance with its terms
<PAGE>
-2-
have been duly authorized by all necessary corporate action on the part of the
Guarantor, do not contravene the Guarantor's Certificate of Incorporation or any
indenture, credit agreement or other contractual agreement to which the
Guarantor is a party or by which it is bound or any law binding on the
Guarantor, (c) the making and performance of the Chevron Guarantee in accordance
with its terms have been duly authorized by all necessary corporate action on
the part of the Guarantor, do not require any stockholder approval, do not
contravene the Guarantor's Certificate of Incorporation or any indenture, credit
agreement or other contractual agreement to which the Guarantor is a party or by
which it is bound, and do not, as to the making thereof, contravene any law
binding on the Guarantor and, to the best knowledge of the Guarantor do not, as
to the performance thereof, contravene any law binding on the Guarantor, (d) the
Chevron Guarantee constituted as of the date thereof and at all times
thereafter, to and including the date of this Letter of Consent, a binding
obligation of the Guarantor enforceable against the Guarantor in accordance with
its terms, and this Letter of Consent is a binding obligation of the Guarantor
enforceable against the Guarantor in accordance with its terms, (e) the terms of
the Chevron Guarantee remain in full force and effect and it constitutes, as
modified by this Letter of Consent, the entire agreement between the parties
thereto, (f) the terms of the Chevron Guarantee have not been varied or
modified, other than pursuant to the terms of this Letter of Consent, and the
terms of the Chevron Guarantee will not after the date hereof be varied or
modified without the prior written consent of the Indenture Trustee and (g) the
Guarantor has received no prior notice of any assignment by the Owner of any
interest in the Chevron Guarantee.
The Guarantor covenants, so long as any Initial Charter is in effect:
(a) to file with the Indenture Trustee, within 15 days after
the Guarantor is required to file the same with the Commission, copies
of the annual reports and of the information, documents, and other
reports (or copies of such portions of any of the foregoing as the
Commission may from time to time by rules and regulations prescribe)
which the Guarantor may be required to file with the Commission
pursuant to Section 13 or 15(d) of the Exchange Act, or, if the
Guarantor is not required to file information, documents, or reports
pursuant to either of such Sections of the Exchange Act, then to file
with the Indenture Trustee and the Commission, in accordance with rules
and regulations prescribed from time to time by the Commission, such of
the supplementary and periodic information, documents, and reports
which may be required pursuant to Section 13 of the Exchange Act in
respect of a security listed and registered on a national securities
exchange, as may be prescribed from time to time in such rules and
regulations;
(b) to file with the Indenture Trustee and the Commission, in
accordance with the rules and regulations prescribed from time to time
by the Commission, such additional information, documents and reports
with respect to compliance by the Guarantor with the conditions and
covenants provided for in the Serial Indenture as may be required from
time to time by such rules and regulations;
<PAGE>
-3-
(c) to transmit to the holders of the Serial Notes in the
manner and to the extent required by Section 313(c) of the Trust
Indenture Act, within 30 days after the filing thereof with the
Indenture Trustee, such summaries of any information, documents and
reports required to be filed by the Guarantor pursuant to subsections
(a) and (b) of this Letter of Consent as may be required by rules and
regulations prescribed from time to time by the Commission; and
(d) furnish to the Indenture Trustee, on or before each August
1, commencing in 1997, a brief certificate from the principal executive
officer, principal financial officer or principal accounting officer of
the Guarantor as to his or her knowledge of the Guarantor's compliance
with all conditions and covenants under the Serial Indenture. For
purposes of this subsection (d), such compliance shall be determined
without regard to any period of grace or requirement of notice provided
under the Serial Indenture.
CHEVRON CORPORATION, as Guarantor
By: _____________________________________
Name: ___________________________________
Title: __________________________________
<PAGE>
SCHEDULE 1
ADDITIONAL DEFINED TERMS USED IN THE ASSIGNMENT
"AGREEMENT ON CONTRACT FOR TECHNICAL MATTERS" means, the Agreement
Regarding Technical Matters, dated as of the Closing Date, between the Owner,
Samsung Heavy Industries Co., LTD and Chevron Shipping Company, San Francisco,
U.S.A. (as Agent for the Initial Charterer).
"ASSIGNMENT" or "ASSIGNMENT OF CHARTER" means the assignment between
the Owner and the Indenture Trustee, as amended from time to time in accordance
with the terms thereof, pursuant to which the Owner collaterally assigns to the
Indenture Trustee all of the Owner's right, title and interest in, to and under
the Initial Charter to secure its obligations under the Indenture.
"ASSIGNMENT OF BUILDING CONTRACT" means, for each Vessel, the Building
Contract Assignment, dated as of the Closing Date, between the related Owner and
the Indenture Trustee, pursuant to which such Owner collaterally assigns its
rights, title and interests in the related Building Contract and the Agreement
on Contract for Technical Matters to the Indenture Trustee.
"ASSIGNMENT OF BUILDING CONTRACT GUARANTEE" means, for each Building
Contract Guarantee, the Assignment of Building Contract Guarantee, dated as of
the Closing Date, between the related Owner and the Indenture Trustee, as the
same may be amended from time to time, pursuant to which such Owner collaterally
assigns its rights, title and interest in the related Building Contract
Guarantee therein to the Indenture Trustee.
"ASSIGNMENT OF CHARTER SUPPLEMENT" means, for each Charter Supplement,
the Assignment of Charter Supplement, dated the date of the Supplemental
Indenture, between the Owner of the Vessel and the Indenture Trustee, as the
same may be amended from time to time pursuant to which the Owner collaterally
assigns all of the Owner's right, title and interest therein to the Indenture
Trustee.
"ASSIGNMENT OF CHEVRON GUARANTEE" means the assignment between the
Owner and the Indenture Trustee, as amended from time to time in accordance with
the terms thereof, pursuant to which the Owner collaterally assigns to the
Indenture Trustee all of the Owner's right, title and interest in, to and under
the Chevron Guarantee to secure its obligations under the Indenture.
"ASSIGNMENT OF EARNINGS AND INSURANCES" means the assignment between
the Owner and the Indenture Trustee, as amended from time to time in accordance
with the terms thereof, pursuant to which the Owner collaterally assigns to the
Indenture Trustee all of the Owner's right, title and interest in, to and under
the freights and hires (as well as any charters entered into after the Delivery
Date) with respect to the Vessel to secure its obligations under the Indenture.
<PAGE>
-2-
"ASSIGNMENT OF MANAGEMENT AGREEMENT" means the assignment between the
Owner and the Indenture Trustee, as amended from time to time in accordance with
the terms thereof, pursuant to which the Owner collaterally assigns to the
Indenture Trustee all of the Owner's right, title and interest in, to and under
the Management Agreement to secure its obligations under the Indenture.
"BUILDER" means, collectively, Samsung Corporation and Samsung Heavy
Industries, Ltd.
"BUILDING CONTRACT" means the Shipbuilding Contract, dated December 24,
1996, between the Builder and the Owner.
"BUILDING CONTRACT GUARANTEE" means the Irrevocable Installment Payment
Letter of Guarantee, dated December 24, 1996, given by the Building Contract
Guarantor to the Owner in connection with the Vessel.
"BUILDING CONTRACT GUARANTOR" means Korea Development Bank.
"CHEVRON" means Chevron Corporation, a Delaware corporation, and its
successors and assigns.
"CHEVRON GUARANTEE" means the Guarantee, dated the Closing Date, given
by Chevron to the Owner in connection with the Initial Charter and the Charter
Supplement.
"CLOSING DATE" means December 24, 1996.
"COLLATERAL" means the collateral assigned, pledged or granted to the
Indenture Trustee pursuant to (i) this Assignment of Charter, (ii) the
Assignment of Earnings and Insurances, (iii) the Assignment of Charter
Supplement, (iv) the Mortgage, (v) the Assignment of Chevron Guarantee, (vi) the
Assignment of Management Agreement, (vii) the Assignment of Building Contract,
(viii) the Assignment of Building Contract Guarantee, (ix) the Issue of One
Debenture and (x) the Stock Pledge, together with all income and proceeds
thereof.
"DELIVERY DATE" means the date the Vessel is accepted by the Owner from
the Builder under the Building Contract, which is the date of this Assignment.
"INDENTURE" means the Indenture, dated as of December 1, 1996 among the
Indenture Trustee, the Owner, Golden State Petro B and Golden State Petroleum,
pursuant to which the Notes were issued.
"INDENTURE TRUSTEE" means United States Trust Company of New York.
"INITIAL CHARTER" means with respect to each Vessel, the bareboat
charter, dated as of December 24, 1996, between the Initial Charterer and the
Owner.
"INITIAL CHARTERER" means Chevron Transport Corporation, a Liberian
corporation.
<PAGE>
-3-
"ISSUE OF ONE DEBENTURE" means each Issue of One Debenture between the
Owner and the Indenture Trustee, as amended from time to time in accordance with
the terms thereof, pursuant to which the Owner grants to the Indenture Trustee a
security interest in all of its assets.
"MANAGEMENT AGREEMENT" means the agreement, dated the Closing Date,
between the Owner and the Manager pursuant to which the Manager agrees to
provide certain services to the Owner.
"MANAGER" means the Person performing the duties of the Manager under
the Management Agreement, initially Cambridge Fund Management L.L.C.
"MORTGAGE" means, with respect to the Vessel, the first preferred ship
mortgage on the Vessel granted by the Owner to the Indenture Trustee, as amended
from time to time in accordance with the terms of such Mortgage.
"OBLIGATIONS" means the payment, performance or obligations of any kind
or nature whatsoever of the Owner under and pursuant to the Indenture, any
Security Document and any instrument, agreement or document referred to therein.
"OWNER" means Golden State Petro (IOM I-A) PLC, a company organized
under the laws of the Isle of Man.
"SECURITY DOCUMENTS" means the Indenture, the Mortgage, this Assignment
of Charter, the Assignments of Charter Supplements, the Assignment of Earnings
and Insurances, the Assignment of Chevron Guarantee, the Assignment of
Management Agreement, the Assignment of Building Contract, the Issue of One
Debenture, the Stock Pledge and the Assignment of Building Contract Guarantee,
collectively.
"VESSEL" means Hull 1228.
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS
............................................................................. 1
ARTICLE II
ASSIGNMENT
............................................................................. 1
Section 2.01 SECURITY INTEREST.......................................... 1
-----------------
Section 2.02 ASSIGNMENT................................................. 1
----------
ARTICLE III
............................................................................. 2
REPRESENTATIONS AND WARRANTIES OF THE OWNER
............................................................................. 2
Section 3.01 ORGANIZATION, POWER AND STATUS OF THE OWNER................ 2
-------------------------------------------
Section 3.02 AUTHORIZATION; ENFORCEABILITY; EXECUTION AND DELIVERY...... 2
-----------------------------------------------------
Section 3.03 NO CONFLICTS; LAWS AND CONSENTS; NO DEFAULT................ 2
-------------------------------------------
Section 3.04 GOVERNMENTAL APPROVALS..................................... 2
----------------------
Section 3.05 LITIGATION................................................. 3
----------
Section 3.06 NO PRIOR ASSIGNMENT........................................ 3
-------------------
ARTICLE IV
COVENANTS OF THE OWNER............................... 3
Section 4.01 CONSENT OF GUARANTOR....................................... 3
--------------------
Section 4.02 ENFORCEMENT OF CHEVRON GUARANTEE........................... 3
--------------------------------
Section 4.03 AMENDMENT OF CHEVRON GUARANTEE; ASSIGNMENT OF
----------------------------------------------
CHEVRON GUARANTEE.......................................... 3
-----------------
Section 4.04 FURTHER ASSURANCES......................................... 4
------------------
<PAGE>
Section 4.05 INDENTURE TRUSTEE AS ATTORNEY-IN-FACT OF OWNER............. 4
----------------------------------------------
ARTICLE V
MISCELLANEOUS PROVISIONS................................. 4
Section 5.01 AMENDMENT.................................................. 4
---------
Section 5.02 SEVERABILITY............................................... 4
------------
Section 5.03 NOTICES.................................................... 4
-------
Section 5.04 CONSENT TO JURISDICTION.................................... 5
-----------------------
Section 5.05 CAPTIONS................................................... 5
--------
Section 5.06 GOVERNING LAW.............................................. 5
-------------
Section 5.07 NO PARTNERSHIP............................................. 5
--------------
Section 5.08 COUNTERPARTS............................................... 5
------------
Section 5.09 SURVIVAL................................................... 5
--------
Section 5.10 INTEGRATION................................................ 6
-----------
Section 5.11 REPRODUCTION OF DOCUMENTS.................................. 6
-------------------------
Section 5.12 SUCCESSORS AND ASSIGNS; ASSIGNMENT......................... 6
----------------------------------
Section 5.13 GENERAL INTERPRETIVE PRINCIPLES............................ 6
-------------------------------
Section 5.14 EFFECTIVE DATE OF TRANSACTION.............................. 7
-----------------------------
<PAGE>
EXHIBIT F
---------
================================================================================
UNITED STATES TRUST COMPANY OF NEW YORK,
as INDENTURE TRUSTEE
and
GOLDEN STATE PETRO (IOM I-A) PLC
-----------------------------------
ASSIGNMENT OF MANAGEMENT AGREEMENT
Dated as of December 1, 1996
-----------------------------------
================================================================================
<PAGE>
Assignment of Management Agreement, dated as of December 1,
1996 (the "Assignment"), between Golden State Petro (IOM I-A) PLC (the "Owner")
and United States Trust Company of New York (the "Indenture Trustee"), not in
its individual capacity but solely as trustee under the Indenture (the
"Indenture"), dated as of the date hereof, among the Owner, the Indenture
Trustee, Golden State Petro (IOM I-B) PLC ("Golden State Petro (IOM I-B) PLC")
and Golden State Petroleum Transport Corporation ("Golden State Petroleum"), as
agent for the Owner and Golden State Petro (IOM I-B) PLC.
PRELIMINARY STATEMENT
On the Closing Date, Golden State Petroleum, as agent for the
Owner and Golden State Petro (IOM I-B) PLC, will issue Notes in connection with
the financing of the construction of the Vessel. The net proceeds of such
issuance will be deposited into the Pre-Funding Account. Pursuant to the
Indenture, the Allocated Principal Amount of the Mortgage Notes for the Vessel
will be used, INTER ALIA, to make the installments due under the Shipbuilding
Contract for the Vessel. As of the date of this Assignment, the Owner has agreed
to bareboat charter the Vessel to Chevron Transport Corporation (the "Initial
Charterer") pursuant to the Initial Charter. The obligations of the Initial
Charterer under the Initial Charter will be guaranteed by Chevron Corporation
(the "Guarantor") pursuant to the Chevron Guarantee. The Vessel will be managed
by Cambridge Fund Management L.L.C. (the "Manager") pursuant to the Management
Agreement, dated as of the date hereof, between the Owner and the Manager. As
collateral security for its obligations under the Indenture, the Owner has and
will assign, pledge, mortgage and grant the Indenture Trustee a security
interest in, INTER ALIA, the Vessel, the Initial Charter, the Chevron Guarantee
and the Management Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained and of other valuable consideration, receipt of
which is hereby acknowledged, the Owner and the Indenture Trustee hereby agree
as follows:
ARTICLE I
DEFINITIONS
Unless otherwise defined in Schedule 1 to this Assignment,
capitalized terms used in this Assignment shall have the meanings assigned to
such terms in the Indenture.
ARTICLE II
ASSIGNMENT
Section 2.01 SECURITY INTEREST. This Assignment is made and
delivered as security for the Obligations.
Section 2.02 ASSIGNMENT. In order to provide for the payment
of and as security for the Obligations, the Owner has granted, bargained,
assigned, transferred, conveyed, mortgaged, pledged and granted a security
interest in and confirmed, and does hereby grant, bargain, assign, transfer,
convey, mortgage, pledge and grant a security interest in and confirm, to the
Indenture Trustee, its successors and assigns, for its and their respective
successors' and assigns' own proper use and benefit, all of the Owner's right,
title and interest in and to the
<PAGE>
-2-
Management Agreement, including without limitation any moneys whatsoever payable
to the Owner under the Management Agreement, together with the income and
proceeds thereof and all other rights and benefits whatsoever accruing to the
Owner under the Management Agreement; PROVIDED, HOWEVER, that the Owner shall
keep the Indenture Trustee fully and effectively indemnified from and against
all actions, losses, claims, proceedings, costs, demands and liabilities which
may be suffered by the Indenture Trustee under or by virtue of the Management
Agreement or this Assignment.
Section 2.03 OWNER TO REMAIN LIABLE. Anything in this
Assignment contained to the contrary notwithstanding, the Owner shall remain
liable under the Management Agreement, and shall observe, perform and fulfill
all of the conditions and obligations to be observed, performed and fulfilled by
it thereunder, and the Indenture Trustee shall have no obligation or liability
of any kind whatsoever thereunder or by reason of or arising out of this
Assignment, nor shall the Indenture Trustee be under any liability whatsoever in
the event of any failure by the Owner to perform its obligations thereunder or
be required or obligated in any manner to observe, perform or fulfill any of the
conditions or obligations of the Owner thereunder or pursuant thereto, or to
make any payment or to make any inquiry as to the nature or sufficiency of any
payment received by it or the Owner thereunder, or to present or file any claim,
or to take any other action to collect or enforce the payment of any amounts
which may have been assigned to the Indenture Trustee or to which the Indenture
Trustee may be entitled hereunder at any time or times.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE OWNER
The Owner hereby represents and warrants to the Indenture
Trustee as follows:
Section 3.01 ORGANIZATION, POWER AND STATUS OF THE OWNER. The
Owner (a) is a corporation duly formed, validly existing and in good standing
under the laws of the Isle of Man and (b) is duly authorized, to the extent
necessary, to do business in each jurisdiction where the character of its
properties or the nature of its activities makes such qualification necessary.
The Owner has all requisite corporate power and authority to own and operate the
property it purports to own and to carry on its business as now being conducted
and as proposed to be conducted in respect of the Vessel.
Section 3.02 AUTHORIZATION; ENFORCEABILITY; EXECUTION AND
DELIVERY. (a) The Owner has all necessary corporate power and authority to
execute, deliver and perform under this Assignment.
(b) All action on the part of the Owner that is required for
the authorization, execution, delivery and performance of this Assignment has
been duly and effectively taken; and the execution, delivery and performance of
this Assignment does not require the approval or consent of any Person except
for such consents and approvals as have been obtained on or prior to the Closing
Date.
<PAGE>
-3-
(c) This Assignment has been duly executed and delivered by
the Owner. This Assignment constitutes the legal, valid and binding obligation
of the Owner, enforceable against it in accordance with the terms thereof.
Section 3.03 NO CONFLICTS; LAWS AND CONSENTS; NO DEFAULT. (a)
Neither the execution, delivery and performance of this Assignment nor the
consummation of any of the transactions contemplated hereby nor performance of
or compliance with the terms and conditions hereof (i) contravenes any
Requirement of Law applicable to the Owner or (ii) constitutes a default under
the Indenture or any Security Document.
(b) The Owner is in compliance with and not in default under
any and all Requirements of Law applicable to the Owner and all terms and
provisions of this Assignment.
Section 3.04 GOVERNMENTAL APPROVALS. All Governmental
Approvals which are required to be obtained in the name of the Owner in
connection with the execution, delivery and performance by the Owner of this
Assignment have been obtained and are in effect on the Closing Date.
Section 3.05 LITIGATION. There are no actions, suits or
proceedings at law or in equity or by or before any Governmental Authority now
pending against the Owner or, to the best of the Owner's knowledge, threatened
against the Owner or pending or threatened against any property or other assets
or rights of the Owner with respect to this Assignment.
Section 3.06 NO PRIOR ASSIGNMENT. The Owner has not assigned
or pledged, and hereby covenants that it will not assign or pledge, so long as
this Assignment shall remain in effect, the Management Agreement or any part of
the rights, titles and interests hereby assigned, to anyone other than the
Indenture Trustee, or its successors or assigns.
Section 3.07 THE MANAGEMENT AGREEMENT. The Management
Agreement constitutes the legal, valid and binding obligation of the Owner as
"Owner" thereunder and is in full force and effect in the form of Exhibit "A"
attached hereto; there are no amendments, additions, addenda or modifications
thereto; said Exhibit "A" represents the entirety of the management arrangements
referred to therein; and neither of the parties thereto is in default
thereunder.
ARTICLE IV
COVENANTS OF THE OWNER
The Owner hereby covenants and agrees that so long as any of
the Obligations remains outstanding:
Section 4.01 CONSENT OF MANAGER. On the Closing Date, the
Owner shall deliver to the Manager a copy of this Assignment and shall procure
the execution by the Manager of the Letter of Consent and Acknowledgment set out
in Exhibit A hereto and deliver said Letter of Consent and Acknowledgment to the
Indenture Trustee on the [Closing/Delivery] Date.
<PAGE>
-4-
Section 4.02 ENFORCEMENT OF MANAGEMENT AGREEMENT. (a) The
Owner will do or permit to be done each and every act or thing which the
Indenture Trustee may from time to time require to be done for the purpose of
enforcing the Indenture Trustee's rights under the Management Agreement and this
Assignment.
(b) The Owner shall cause all moneys hereby assigned or agreed
to be assigned or arising from or in connection with any of the rights, title,
interest and benefits of the Owner under the Management Agreement shall be paid
to the credit of Chase Manhattan Bank NYC, ABA # 02100021, A/C # 920-1-073195,
credit U.S. Trust Co. NY, further credit to A/C # 04692300, Golden State
Petroleum Transp. Corp. Rev., Attention: Chris Collins or to such other account
as the Indenture Trustee may from time to time direct.
(c) The Owner will not exercise any right or powers conferred
on it by the Management Agreement in connection with any default or alleged
default by the Manager thereunder (including without limitation the right of
termination and substitution) unless and until requested so to do by the
Indenture Trustee whereupon the Owner agrees that it will do so provided always
that the Indenture Trustee shall not be responsible in any way whatsoever in the
event that the exercise of any right or power (including the right of
termination and substitution) be thereafter adjudged improper or to constitute a
repudiation of the Management Agreement by the Owner.
Section 4.03 AMENDMENT OF MANAGEMENT AGREEMENT; ASSIGNMENT OF
MANAGEMENT AGREEMENT. (a) The Owner will not, except with the previous written
consent of the Indenture Trustee, agree to any variation of the Management
Agreement or release the Manager from any of its obligations thereunder or waive
any breach of the Manager's obligations thereunder or consent to any such act or
omission of the Manager as would otherwise constitute such breach.
(b) The Owner will not, except with the previous written
consent of the Indenture Trustee, assign the Management Agreement to any other
Person.
Section 4.04 PERFORMANCE OF OBLIGATIONS. The Owner will
perform its obligations under the Management Agreement and will use its best
efforts to cause the Manager to perform its obligations under the Management
Agreement.
Section 4.05 NOTICES. The Owner will send a copy of all
notices received or given by it under the Management Agreement forthwith to the
Indenture Trustee.
Section 4.06 FURTHER ASSURANCES. The Owner will at any time
and from time to time, upon the written request of the Indenture Trustee,
promptly and duly execute and deliver any and all such further instruments and
documents and take such action as the Indenture Trustee may deem desirable in
order to obtain the full benefits of this Assignment and of the rights and
powers herein granted.
<PAGE>
-5-
Section 4.07 INDENTURE TRUSTEE AS ATTORNEY-IN-FACT OF OWNER.
The Owner hereby constitutes the Indenture Trustee, and its successors and
assigns, its true and lawful attorney-in-fact, irrevocably, with full power in
its own name, in the name of its agents or nominees or in the name of the Owner
or otherwise, to ask, require, demand, receive, enforce and give acquittance
for, any and all moneys and claims for moneys due and to become due and payable
under or arising out of the Management Agreement, to endorse any checks or other
instruments or orders in connection therewith and to file any claims or take any
action or institute any proceedings which to the Indenture Trustee may seem to
be necessary or advisable under this Assignment. Any action or proceeding
brought by the Indenture Trustee pursuant to any of the provisions of this
Assignment or otherwise and any claim made by the Indenture Trustee hereunder
may be compromised, withdrawn or otherwise dealt with by the Indenture Trustee
without any notice to or approval of the Owner.
ARTICLE V
MISCELLANEOUS PROVISIONS
Section 5.01 AMENDMENT. This Assignment may be amended from
time to time by written agreement signed by the parties hereto.
Section 5.02 SEVERABILITY. If any provision of this Assignment
is held to be in conflict with any applicable statute or rule of law or is
otherwise held to be unenforceable for any reason whatsoever, such circumstances
shall not have the effect of rendering the provision in question inoperative or
unenforceable in any other case or circumstance, or of rendering any other
provision or provisions herein contained invalid, inoperative, or unenforceable
to any extent whatsoever. The invalidity of any one or more phrases, sentences,
clauses or Sections of this Assignment contained, shall not affect the remaining
portions of this Assignment, or any part thereof.
Section 5.03 NOTICES. All demands, notices and communications
hereunder shall be in writing, personally delivered or mailed by certified
mail-return receipt requested, and shall be deemed to have been duly given upon
receipt (a) in the case of the Indenture Trustee, at the following address: 114
West 47th Street, New York, New York 10036, Attention: Corporate Trust
Department, (b) in the case of the Owner, at the following address: 15-19 Athol
Street, Douglas, Isle of Man, or at other such address as shall be designated by
such party in a written notice to the other parties.
Section 5.04 CONSENT TO JURISDICTION. Any legal suit, action
or proceeding against the Owner arising out of or relating to this Assignment,
or any transaction contemplated hereby, may be instituted in any federal or
state court in The City of New York, State of New York, and the Owner hereby
irrevocably submits to the jurisdiction of any such court in any such suit,
action or proceeding. The Owner hereby waives, to the fullest extent permitted
by applicable law, any defense which it may now or hereafter have based upon
lack of personal jurisdiction or venue or FORUM NON CONVENIENS. The Owner hereby
irrevocably appoints and designates CT Corporation System, having an address at
1633 Broadway, New York, New York, its true and lawful attorney-in-fact and duly
authorized agent for the limited purpose of
<PAGE>
-6-
accepting servicing of legal process and the Owner agrees that service of
process upon such party shall constitute personal service of such process on
such Person. The Owner shall maintain the designation and appointment of such
authorized agent until all amounts payable under this Assignment shall have been
paid in full. If such agent shall cease to so act, the Owner shall immediately
designate and appoint another such agent satisfactory to the Indenture Trustee
and shall promptly deliver to the Indenture Trustee evidence in writing of such
other agent's acceptance of such appointment.
Section 5.05 CAPTIONS. The captions or headings in this
Assignment are for convenience only and in no way define, limit or describe the
scope or intent of any provisions or sections of this Assignment.
Section 5.06 GOVERNING LAW. This Assignment shall be governed
by and interpreted in accordance with the laws of the State of New York, without
giving effect to the principles of conflicts of law.
Section 5.07 NO PARTNERSHIP. Nothing herein contained shall be
deemed or construed to create a partnership or joint venture among the parties
hereto, and the services of each party shall be rendered as an independent
contractor and not as agent for any other party.
Section 5.08 COUNTERPARTS. This Assignment may be executed in
any number of counterparts and by different parties hereto on separate
counterpart, each of which shall be deemed to be an original. Such counterparts
shall constitute one and the same agreement.
Section 5.09 SURVIVAL. The representations, covenants and
agreements contained in or made pursuant to this Assignment in respect of either
party hereto shall survive the execution and delivery of this Assignment and
shall continue in effect so long as such party's obligations hereunder remain
outstanding.
Section 5.10 INTEGRATION. This Assignment and the Schedule and
Exhibits hereto constitute the entire agreement and understanding between the
parties hereto with respect to the subject matter hereof and supersede all prior
agreements, understandings or representations pertaining to the subject matter
hereof, whether oral or written. There are no warranties, representations or
other agreements between the parties in connection with the subject matter
hereof except as specifically set forth or incorporated herein.
Section 5.11 REPRODUCTION OF DOCUMENTS. This Assignment and
all documents relating thereto, including, without limitation, (a) consents,
waivers and modifications which may hereafter be executed, (b) documents
received by any party at the closing, and (c) financial statements, certificates
and other information previously or hereafter furnished, may be reproduced by
any photographic, photostatic, microfilm, micro-card, miniature photographic or
other similar process. The parties agree that any such reproduction shall be
admissible in evidence as the original itself in any judicial or administrative
proceeding (whether or not the original is in existence and whether or not such
reproduction was made in the regular course of
<PAGE>
-7-
business) and that any enlargement, facsimile or further reproduction of such
reproduction shall likewise be admissible in evidence.
Section 5.12 SUCCESSORS AND ASSIGNS; ASSIGNMENT. This
Assignment shall be binding upon and inure to the benefit of the Owner and the
Indenture Trustee and their respective successors and assigns. The Owner shall
not have the right to assign its rights hereunder or any interest herein without
the prior written consent of the Indenture Trustee. The Indenture Trustee, at
its sole option, shall have the right to assign this Assignment, the Indenture,
the Security Documents and any of its rights and interest hereunder in
accordance with the terms and provisions of the Indenture and the Security
Documents.
Section 5.13 GENERAL INTERPRETIVE PRINCIPLES. For purposes of
this Assignment except as otherwise expressly provided or unless the context
otherwise requires:
(a) the defined terms in this Assignment shall include the
plural as well as the singular, and the use of any gender herein shall be deemed
to include any other gender;
(b) accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted accounting
principles as in effect on the date hereof;
(c) references herein to "Articles", "Sections",
"Subsections", "paragraphs", and other subdivisions without reference to a
document are to designated Articles, Sections, Subsections, paragraphs and other
subdivisions of this Assignment;
(d) a reference to a Subsection without further reference to a
Section is a reference to such Subsection as contained in the same Section in
which the reference appears, and this rule shall also apply to paragraphs and
other subdivisions;
(e) the words "herein", "hereof", "hereunder" and other words
of similar import refer to this Assignment as a whole and not to any particular
provision; and
(f) the term "include" or "including" shall mean without
limitation by reason of enumeration.
Section 5.14 EFFECTIVE DATE OF TRANSACTION. Notwithstanding
the fact that this Assignment is dated as of December 1, 1996, the transactions
set forth herein shall not be effective until the Closing Date.
<PAGE>
IN WITNESS WHEREOF, the Owner and the Indenture Trustee have
caused this Assignment to be duly executed and delivered by their respective
officers thereunto duly authorized all as of the day and year first above
written.
United States Trust Company of New York, as
Indenture Trustee
By:/s/ Christine C. Collins
-----------------------------
Name: Christine C. Collins
Title: Assistant Vice President
Golden State Petro (IOM I-A) PLC, as Owner
By:/s/ Joseph Avantario
-----------------------------
Name: Joseph Avantario
Title: Treasurer
<PAGE>
Exhibit A
LETTER OF ACKNOWLEDGMENT
TO ASSIGNMENT OF MANAGEMENT AGREEMENT
__________ __, 1996
United States Trust Company of New York, as Indenture Trustee
Dear Sirs:
The undersigned hereby consents to and acknowledges receipt of a signed
copy of the Assignment of Management Agreement (the "Assignment"), dated as of
December 1, 1996, between Golden State Petro (IOM I-A) PLC (the "Owner") and
United States Trust Company of New York, not in its individual capacity but
solely as trustee (the "Indenture Trustee") as adequate notice of such
assignment to the Indenture Trustee of the Management Agreement (as defined in
the Assignment) and of all the right, title and interest of the Owner in, to and
under the Management Agreement.
We confirm that the terms of the Management Agreement remain in full
force and effect and that the Owner is not presently to our knowledge in breach
of the terms of the Management Agreement. We further confirm that the terms of
the Management Agreement have not been varied or modified and that the terms of
the Management Agreement will not after the date hereof be varied or modified
without the prior written consent of the Indenture Trustee.
We confirm that we have received no prior notice of any assignment by
the Owner of any interest in the Management Agreement.
The undersigned will not permit any amendment, modification,
cancellation or other alteration in the Management Agreement, nor will it
consent to or accept the substitution thereunder of any party for the Owner
without your prior written consent.
Cambridge Fund Management L.L.C., as Manager
By:____________________________________
Name:__________________________________
Title:_________________________________
<PAGE>
SCHEDULE 1
ADDITIONAL DEFINED TERMS USED IN THE ASSIGNMENT
"AGREEMENT ON CONTRACT FOR TECHNICAL MATTERS" means, the Agreement
Regarding Technical Matters, dated as of December 24, 1996, between the Owner,
Samsung Heavy Industries Co., LTD and Chevron Shipping Company, San Francisco,
U.S.A. (as Agent for the Initial Charterer).
"ASSIGNMENT" or "ASSIGNMENT OF MANAGEMENT AGREEMENT" means the
assignment between the Owner and the Indenture Trustee, as amended from time to
time in accordance with the terms thereof, pursuant to which the Owner
collaterally assigns to the Indenture Trustee all of the Owner's right, title
and interest in, to and under the Management Agreement to secure its obligations
under the Indenture.
"ASSIGNMENT OF BUILDING CONTRACT" means, for each Vessel, the Building
Contract Assignment, dated as of December 1, 1996, between the related Owner and
the Indenture Trustee, pursuant to which such Owner collaterally assigns its
rights, title and interests in the related Building Contract and the Agreement
on Contract for Technical Matters to the Indenture Trustee.
"ASSIGNMENT OF BUILDING CONTRACT GUARANTEE" means, for each Building
Contract Guarantee, the Assignment of Building Contract Guarantee, dated as of
December 1, 1996, between the related Owner and the Indenture Trustee, as the
same may be amended from time to time, pursuant to which such Owner collaterally
assigns its rights, title and interest in the related Building Contract
Guarantee therein to the Indenture Trustee.
"ASSIGNMENT OF CHARTER" means the assignment between the Owner and the
Indenture Trustee, as amended from time to time in accordance with the terms
thereof, pursuant to which the Owner collaterally assigns to the Indenture
Trustee all of the Owner's right, title and interest in, to and under the
Initial Charter to secure its obligations under the Indenture.
"ASSIGNMENT OF CHARTER SUPPLEMENT" means, for each Charter Supplement,
the Assignment of Charter Supplement, dated the date of the Supplemental
Indenture, between the Owner of the Vessel and the Indenture Trustee, as the
same may be amended from time to time pursuant to which the Owner collaterally
assigns all of the Owner's right, title and interest therein to the Indenture
Trustee.
"ASSIGNMENT OF CHEVRON GUARANTEE" means the assignment between the
Owner and the Indenture Trustee, as amended from time to time in accordance with
the terms thereof, pursuant to which the Owner collaterally assigns to the
Indenture Trustee all of the Owner's right, title and interest in, to and under
the Chevron Guarantee to secure its obligations under the Indenture.
"ASSIGNMENT OF EARNINGS AND INSURANCES" means the assignment between
the Owner and the Indenture Trustee, as amended from time to time in accordance
with the terms thereof, pursuant to which the Owner collaterally assigns to the
Indenture Trustee all of the Owner's right, title and interest in, to and under
the freights and hires (as well as any charters entered
<PAGE>
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into after the Delivery Date) with respect to the Vessel to secure its
obligations under the Indenture.
"BUILDER" means, collectively, Samsung Corporation and Samsung Heavy
Industries, Ltd.
"BUILDING CONTRACT" means the Shipbuilding Contract, dated December 24,
1996, between the Builder and the Owner.
"BUILDING CONTRACT GUARANTEE" means the Irrevocable Installment Payment
Letter of Guarantee, dated December 24, 1996, given by the Building Contract
Guarantor to the Owner in connection with the Vessel.
"BUILDING CONTRACT GUARANTOR" means Korea Development Bank.
"CHEVRON" means Chevron Corporation, a Delaware corporation, and its
successors and assigns.
"CHEVRON GUARANTEE" means the Guarantee, dated the Closing Date, given
by Chevron to the Owner in connection with the Initial Charter and the Charter
Supplement.
"CLOSING DATE" means December 24, 1996.
"COLLATERAL" means the collateral assigned, pledged or granted to the
Indenture Trustee pursuant to (i) this Assignment of Management Agreement, (ii)
the Assignment of Charter, (iii) the Assignment of Charter Supplement, (iv) the
Mortgage, (v) the Assignment of Chevron Guarantee, (vi) the Assignment of
Earnings and Insurances, (vii) the Assignment of Building Contract, (viii) the
Assignment of Building Contract Guarantee, (ix) the Issue of One Debenture and
(x) the Stock Pledge, together with all income and proceeds thereof.
"DELIVERY DATE" means the date the Vessel is accepted by the Owner from
the Builder under the Building Contract, which is the date of this Assignment.
"INDENTURE" means the Indenture, dated as of December 1, 1996 among the
Indenture Trustee, the Owner, Golden State Petro (IOM I-B) PLC and Golden State
Petroleum, pursuant to which the Notes were issued.
"INDENTURE TRUSTEE" means United States Trust Company of New York.
"INITIAL CHARTER" means with respect to each Vessel, the bareboat
charter, dated as of December 24, 1996, between the Initial Charterer and the
Owner.
"INITIAL CHARTERER" means Chevron Transport Corporation, a Liberian
corporation.
"ISSUE OF ONE DEBENTURE" means each Issue of One Debenture between the
Owner and the Indenture Trustee, as amended from time to time in accordance with
the terms thereof,
<PAGE>
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pursuant to which the Owner grants to the Indenture Trustee a security interest
in all of its assets.
"MANAGEMENT AGREEMENT" means the agreement, dated the Closing Date,
between the Owner and the Manager pursuant to which the Manager agrees to
provide certain services to the Owner.
"MANAGER" means the Person performing the duties of the Manager under
the Management Agreement, initially Cambridge Fund Management L.L.C.
"MORTGAGE" means, with respect to the Vessel, the first preferred ship
mortgage on the Vessel granted by the Owner to the Indenture Trustee, as amended
from time to time in accordance with the terms of such Mortgage.
"OBLIGATIONS" means the payment, performance or obligations of any kind
or nature whatsoever of the Owner under and pursuant to the Indenture, any
Security Document and any instrument, agreement or document referred to therein.
"OBLIGATIONS" means the payment, performance or obligations of any kind
or nature whatsoever of the Owner under and pursuant to the Indenture, any
Security Document and any instrument, agreement or document referred to therein.
"OWNER" means Golden State Petro (IOM I-A) PLC, a company organized
under the laws of the Isle of Man.
"SECURITY DOCUMENTS" means the Indenture, the Mortgage, the Assignment
of Charter, the Assignments of Charter Supplements, the Assignment of Earnings
and Insurances, the Assignment of Chevron Guarantee, this Assignment of
Management Agreement, the Assignment of Building Contract, the Issue of One
Debenture, the Stock Pledge and the Assignment of Building Contract Guarantee,
collectively.
"VESSEL" means Hull No. 1228.
<PAGE>
TABLE OF CONTENTS
Page No.
ARTICLE I
DEFINITIONS............................... 1
ARTICLE II
ASSIGNMENT................................ 1
Section 2.01 Security Interest............................................. 1
Section 2.02 Assignment.................................................... 1
Section 2.03 Owner to Remain Liable........................................ 2
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE OWNER................ 2
Section 3.01 Organization, Power and Status of the Owner................... 2
Section 3.02 Authorization; Enforceability; Execution and Delivery......... 2
Section 3.03 No Conflicts; Laws and Consents; No Default................... 3
Section 3.04 Governmental Approvals........................................ 3
Section 3.05 Litigation.................................................... 3
Section 3.06 No Prior Assignment........................................... 3
Section 3.07 The Management Agreement...................................... 3
ARTICLE IV
COVENANTS OF THE OWNER.......................... 3
Section 4.01 Consent of Manager............................................ 3
Section 4.02 Enforcement of Management Agreement........................... 4
Section 4.03 Amendment of Management Agreement; Assignment of
Management Agreement.......................................... 4
Section 4.04 Performance of Obligations.................................... 4
Section 4.05 Notices....................................................... 4
i
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Page No.
Section 4.06 Further Assurances............................................ 4
Section 4.07 Indenture Trustee as Attorney-in-Fact of Owner................ 5
ARTICLE V
MISCELLANEOUS PROVISIONS......................... 5
Section 5.01 Amendment..................................................... 5
Section 5.02 Severability.................................................. 5
Section 5.03 Notices....................................................... 5
Section 5.04 Consent to Jurisdiction....................................... 5
Section 5.05 Captions...................................................... 6
Section 5.06 Governing Law................................................. 6
Section 5.07 No Partnership................................................ 6
Section 5.08 Counterparts.................................................. 6
Section 5.09 Survival...................................................... 6
Section 5.10 Integration................................................... 6
Section 5.11 Reproduction of Documents..................................... 6
Section 5.12 Successors and Assigns; Assignment............................ 7
Section 5.13 General Interpretive Principles............................... 7
Section 5.14 Effective Date of Transaction................................. 7
ii
<PAGE>
EXHIBIT G
---------
================================================================================
UNITED STATES TRUST COMPANY OF NEW YORK,
as INDENTURE TRUSTEE
and
GOLDEN STATE PETRO (IOM I-A) PLC
-----------------------------------
ISSUE OF ONE DEBENTURE
Dated as of December 1, 1996
-----------------------------------
================================================================================
<PAGE>
This Issue of One Debenture, dated as of December 1, 1996 (the
"Debenture"), from Golden State Petro (IOM I-A) PLC, a company organized under
the laws of the Isle of Man (the "Owner") to United States Trust Company of New
York, as indenture trustee, a bank and trust company organized under the New
York Banking Law (the "Indenture Trustee").
PRELIMINARY STATEMENT
On the Closing Date, Golden State Petroleum, as agent for the
Owner and Golden State Petro (IOM I-B) PLC, will issue Notes in connection with
the financing of the construction of the Vessel. The net proceeds of such
issuance will be deposited into the Pre-Funding Account. Pursuant to the
Indenture, the Allocated Principal Amount of the Mortgage Notes for the Vessel
will be used, INTER ALIA, to make the installments due under the Shipbuilding
Contract for the Vessel. As of the date of this Assignment, the Owner has agreed
to bareboat charter the Vessel to Chevron Transport Corporation (the "Initial
Charterer") pursuant to the Initial Charter. The obligations of the Initial
Charterer under the Initial Charter are guaranteed by Chevron Corporation (the
"Guarantor") pursuant to the Chevron Guarantee. The Vessel will be managed by
Cambridge Fund Management L.L.C. (the "Manager") pursuant to the Management
Agreement, dated as of the date hereof, between the Owner and the Manager. As
collateral security for its obligations under the Indenture, the Owner has and
will assign, pledge, mortgage and grant the Indenture Trustee a security
interest in, INTER ALIA, the Vessel, the Initial Charter, the Chevron Guarantee
and the earnings and insurances of the Vessel and will grant this debenture in
favor of the Indenture Trustee.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained and of other valuable consideration, receipt of
which is hereby acknowledged, the Owner and the Indenture Trustee hereby agree
as follows:
ARTICLE I
DEFINITIONS
Capitalized terms used in this Debenture shall have the
meanings assigned to such terms in Schedule 1 to this Debenture, and the
definitions of such terms shall be equally applicable to both the singular and
plural forms of such terms.
ARTICLE II
COVENANT TO PAY
Section 2.1. COVENANT TO PAY. The Owner hereby covenants and
agrees to pay and discharge each sum owing under the Obligations as and when the
same shall fall due, whether at maturity, by acceleration or otherwise.
<PAGE>
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ARTICLE III
MORTGAGE, CHARGE AND ASSIGNMENT
Section 3.1. CHARGE. As continuing security for the
Obligations, the Owner hereby:
(a) conveys, transfers and assigns absolutely to and unto the
Indenture Trustee all rights of the Owner in and to the
Current Receivables by way of fixed charge;
(b) mortgages, charges and assigns, and agrees to mortgage, charge
and assign to the Indenture Trustee all present and future
rights of the Owner in and to all freehold or leasehold
property of the Owner and all other estates or interests
therein together with all trade fixtures and fixed plant and
machinery now and for the time being thereon, by way of a
fixed charge;
(c) mortgages, charges and assigns, and agrees to mortgage, charge
and assign, to the Indenture Trustee all rights now owned or
hereafter acquired in and to the goodwill, franchises, patent
rights, copyrights, trademarks and other intangible Assets of
the Owner by way of fixed charge;
(d) mortgages, charges and assigns, and agrees to mortgage, charge
and assign, to the Indenture Trustee all rights relating to
the aforesaid property specified in Sections 3.1(a), (b) and
(c) including, INTER ALIA, negotiable instruments, legal and
equitable charges, reservations of property rights, rights of
action, collection, recovery or security, rights of tracing
and unpaid vendor's liens and similar and associated rights,
by way of fixed legal mortgage and charge; and
(e) mortgages and charges in favor of the Indenture Trustee all
rights of the Owner now owned or hereafter acquired in and to
all other Security Assets for the time being of the Owner not
subject to the fixed securities created by Sections 3.1(a),
(b), (c) and (d) wheresoever situate (including, INTER ALIA,
all undertakings and businesses of the Owner) by way of a
floating charge and the Owner shall not be at liberty to
create any mortgage or charge on any of the securities created
by this Section 3.1(e) and no Encumbrance shall in any case or
in any manner arise on or affect any part of the said
securities in priority to or PARI PASSU with all charges
hereby created, it being the intention that the Owner shall
have no power, without the written consent of the Indenture
Trustee, to part with or dispose of any part of the said
securities except by way of sale in the ordinary course of its
business;
<PAGE>
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PROVIDED, HOWEVER, that upon the unconditional payment and satisfaction
of the Obligations the rights of the Indenture Trustee hereunder will
terminate and the Indenture Trustee will at the direction, cost and
expense of the Owner release or reassign to the Owner all remaining
rights of the Indenture Trustee in and to the balance of the Security
Assets.
Section 3.2. LEGAL SECURITIES. The Owner will forthwith at the
request of the Indenture Trustee execute a legal mortgage, charge or assignment
over all or any of the Security Assets subject to or intended to be subject to
any fixed security hereby created in favor of the Indenture Trustee in such form
as the Indenture Trustee may reasonably require.
Section 3.3. CONVERSION OF FLOATING CHARGE. The Indenture
Trustee may at any time by notice to the Owner convert the floating charge
hereby created into a fixed charge as regards any Assets specified in the notice
which the Indenture Trustee shall consider to be in danger of being seized or
sold under any form of distress, attachment, execution or other legal process or
to be otherwise in jeopardy and (whether or not this security has become
enforceable) may at any time appoint a Receiver (as defined in Section 7.1
hereof) thereof.
Section 3.4. NEGATIVE PLEDGE. Except as otherwise provided in
the Mortgage or the Indenture, the Owner shall not, without the prior written
consent of the Indenture Trustee, permit the sale, transfer, assignment lease or
other disposition of any Security Asset, or any Encumbrance or other right in or
over any Security Asset to subsist, arise or be created, other than such
Encumbrance as is created by this Debenture.
Section 3.5. NEW ACCOUNTS. If the Indenture Trustee receives
or is deemed to be affected by notice whether actual or constructive of any
subsequent Encumbrance or other interest affecting any Security Asset or the
proceeds of sale thereof, the Indenture Trustee may open a new account or
accounts for the Owner. If the Indenture Trustee does not open a new account it
shall nevertheless be treated as if it had done so at the time when it received
or was deemed to have received notice and as from that time all payments made to
the Indenture Trustee shall be credited or be treated as having been credited to
the new account and shall not operate to reduce the amount for which this
Debenture is security.
ARTICLE IV
PRESERVATION OF SECURITY
Section 4.1. CONTINUING SECURITY. The security constituted by
this Debenture shall be a continuing security and shall not be satisfied by any
intermediate payment or satisfaction of the Obligations but shall secure the
ultimate balance of the Obligations. The security hereby given shall be in
addition to and shall not be discharged, released, prejudiced or otherwise
affected by any other security or Encumbrance now or hereafter held by the
Indenture Trustee for the Obligations.
<PAGE>
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Section 4.2. WAIVER OF DEFENSES. The obligations of the Owner
under this Debenture and this security shall not be discharged, released,
prejudiced or otherwise affected by any act, omission or circumstance which but
for this provision might so operate or otherwise release or discharge the Owner
from the Obligations, or the security created under this Debenture including
without limitation and whether or not known to or discoverable by the Owner or
the Indenture Trustee:
(a) any time, indulgence, waiver, consent or other relief granted
to or composition with the Owner or any other Person;
(b) the taking, variation, extension, compromise, renewal or
release of, or refusal or neglect to perfect or enforce, any
rights under the Indenture, this Debenture, any Security
Document or any other guarantee, agreement or obligation or
any right against, or any security granted by, the Owner or
any other Person;
(c) any irregularity, invalidity or unenforceability of any
obligation of the Owner under the Indenture, any Security
Document, this Debenture or any other guarantee, of any
government or authority (whether of right or in fact)
purporting to reduce or otherwise affect any such obligation
to the extent that such obligation and this security shall
remain in full force and this Debenture shall be construed
accordingly as if there were no such irregularity,
unenforceability, invalidity, law or order;
(d) any legal limitation, disability, incapacity or other
circumstance relating to the Owner, any guarantor or any other
Person;
(e) any defect in or invalidity or inadequacy of the constitution
or incorporation or borrowing powers of the Owner or of its
board of directors, executive committee or other equivalent or
analogous body or in the authorization, execution or delivery
of the Indenture, any Security Document, this Debenture or any
other guarantee, agreement or obligation; or
(f) any supplement, amendment or modification to the terms of the
Indenture, this Debenture, any other Security Document or any
other guarantee, agreement or obligation.
Section 4.3. IMMEDIATE RECOURSE. The Owner waives any right it
may have of first requiring the Indenture Trustee to proceed against or claim
payment from the Owner or enforce the Indenture, any Security Documents or other
guarantee, agreement or obligation before enforcing this Debenture.
<PAGE>
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Section 4.4. PRESERVATION OF RIGHTS. Until the Obligations
have been irrevocably paid and discharged in full, the Indenture Trustee may:
(a) refrain from applying or enforcing any other security, money
or right held or received by the Indenture Trustee in respect
of the Obligations or apply and enforce the same in such
manner and order as the Indenture Trustee sees fit; and
(b) hold in a suspense account (without liability to pay interest
thereon) any moneys received or on account of this Debenture
by way of a partial payment.
Section 4.5. ADDITIONAL SECURITY. This Debenture shall be in
addition to and shall not in any way be prejudiced by any other security now or
hereafter held by the Indenture Trustee.
Section 4.6. CERTIFICATE. A certificate of the Indenture
Trustee setting forth the amount due from the Owner in respect of the
Obligations shall, in the absence of manifest error, be PRIMA FACIE evidence of
such amount.
Section 4.7. DISCHARGE. Where any discharge (whether in
respect of the Indenture, the Obligations, this Debenture, or any other
guarantee, agreement, obligation or security or otherwise) is made in whole or
in part or any arrangement is made on the faith of any payment, security or
other disposition which is avoided or must be repaid on bankruptcy, liquidation,
winding-up, dissolution or otherwise, this security and the obligations of the
Owner under this Debenture shall continue as if there had been no such discharge
or arrangement.
Section 4.8. REGISTRATION. The Owner hereby agrees to arrange
for this Debenture, any Security Asset or any agreement, document or instrument
relating thereto to be registered with or notified to any Person to preserve or
perfect the Indenture Trustee's security in any Security Asset.
Section 4.9. INDENTURE TRUSTEE'S POWER'S WITH RESPECT TO
SECURITY ASSETS. The Indenture Trustee may without demand or notice to the Owner
being required at any time after this security becomes enforceable exercise at
its discretion (in the name of the Owner or otherwise) and without any further
consent or authority by the Owner, any right which may be exercised by the
Person in whose name any Security Asset is registered or who is the holder
thereof under the terms thereof or otherwise including, but without limitation,
all the powers given to trustees by statute in respect of securities or property
subject to a trust; PROVIDED, HOWEVER, that until the security hereby
constituted becomes enforceable, the Indenture Trustee shall procure that the
rights attached to each such Security Asset are exercised in such manner as the
Owner shall direct so long as the same is not inconsistent with any term of the
Indenture or this Debenture and account to the Owner for any sum or other
distribution paid in respect of such Security Asset.
<PAGE>
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Section 4.10. CALLS. The Owner will for so long as the
Obligations remain outstanding pay all sums which may become due in respect of
the Security Assets and in the event of default the Indenture Trustee may if it
thinks fit make such payments on behalf of the Owner. Any sums so paid by the
Indenture Trustee shall be immediately due and payable by the Owner to the
Indenture Trustee without demand or notice being required.
Section 4.11. DELEGATION BY INDENTURE TRUSTEE. The Indenture
Trustee may at any time and from time to time delegate by power of attorney or
in any other manner to any Person or Persons all or any of the rights and
discretions which are for the time being exercisable by the Indenture Trustee
under this Debenture in relation to any Security Asset. Any such delegation may
be made upon such terms (including power to sub-delegate) and subject to such
regulations as the Indenture Trustee may think fit. The Indenture Trustee shall
not be in any way liable or responsible to the Owner for any loss or damage
arising from any act, default, omission or misconduct on the part of any such
delegate or sub-delegate.
Section 4.12. FURTHER ASSURANCES. The Owner shall at its own
expense execute and deliver all such agreements, documents and instruments and
do all such assurances, acts and things as the Indenture Trustee may require for
perfecting or protecting this security over any Security Asset or for
facilitating the realization of such property and in the exercise of all rights
vested in the Indenture Trustee or in any sub-delegate as aforesaid. The Owner
shall in particular execute all transfers, conveyances, assignments and
assurances of such property whether to the Indenture Trustee or its nominees and
give all notices, orders and directions which the Indenture Trustee may think
expedient and, for the purposes of this Section, a certificate in writing by the
Indenture Trustee to the effect that any particular assurance, act or thing
required by it is reasonably required shall be conclusive evidence of such fact
in favor of all third parties.
Section 4.13. REDEMPTION OF PRIOR MORTGAGES. The Indenture
Trustee may at any time after the security hereby constituted has become
enforceable redeem any prior Encumbrances against any Security Asset or procure
the transfer thereof to itself and may settle and pass the accounts of the prior
Encumbrances. Any accounts so settled and passed shall be conclusive and binding
on the Owner. All principal moneys, interest, costs, charges and expenses of and
incidental to such redemption and transfer shall be immediately due by the Owner
to the Indenture Trustee without notice or demand being required.
Section 4.14. POWER OF ATTORNEY. (a) The Owner hereby by way
of security irrevocably nominates, constitutes and appoints the Indenture
Trustee and every Receiver of any Security Asset appointed hereunder and every
such delegate or sub-delegate as aforesaid, each of them acting alone or jointly
with any other of them, to be its attorney (the "Attorney") and on its behalf
and in its name or otherwise to sign under seal or otherwise and deliver all
such agreements, documents and instruments and do all such assurances, acts and
things which the Owner ought to do but fails to do under the covenants and
provisions contained in the Indenture or this Debenture (including without
prejudice to the generality of the foregoing to make any
<PAGE>
-7-
demand upon or give any notice or receipt to any Person owing moneys to the
Owner and to execute and deliver any charges, legal and equitable generally in
its name and on its behalf to exercise all or any of the rights conferred by or
pursuant to this Debenture or by statute on the Attorney and (without prejudice
to the generality of the foregoing) to sign under seal or otherwise and deliver
and otherwise perfect any assurance, agreement, instrument or act which the
Attorney may deem proper in or for the purpose of exercising any of such rights.
(b) The Owner hereby ratifies and confirms and agrees to
ratify and confirm any such Attorney described in Section 4.14(a).
Section 4.15. AVOIDANCE OF PAYMENTS. No assurance, security or
payment which may be avoided under any enactment relating to bankruptcy, and no
release, settlement or discharge given or made by the Indenture Trustee on the
faith of any such assurance, security or payment, shall prejudice or affect the
right of the Indenture Trustee to enforce the security created by or pursuant to
this Debenture in respect of the full extent of the moneys thereby secured. The
Indenture Trustee shall be at liberty at its absolute discretion to retain the
security so created as security for the Obligations for a period of seven months
in the case of fixed security and thirteen months in the case of floating
security after the Obligations shall have been paid in full, notwithstanding any
release, settlement, discharge or arrangement given or made by the Indenture
Trustee on or as a consequence of, such termination of liability. If at any time
within the period of six months in the case of fixed security and twelve months
in the case of floating security after such termination a petition shall be
presented to a competent court for an order for the winding up of the Owner or
the Owner shall commence to be wound up voluntarily, the Indenture Trustee shall
be at liberty, notwithstanding as aforementioned, to continue to retain such
security or any part thereof for and during such further period as the Indenture
Trustee in its absolute discretion shall determine. The Owner agrees that such
security shall be deemed to have been and to have remained held by the Indenture
Trustee as and by way of security for the payment to the Indenture Trustee of
all or any sums which are now or may become due and owing to the Indenture
Trustee under the Indenture and the rest of the Security Documents.
Section 4.16. POWERS TO LEND. The Indenture Trustee may
advance money on the security of any Security Asset for the purpose of defraying
any costs, charges, losses and expenses which shall be paid or incurred by it in
relation to this Debenture (including the remuneration of any Receiver) or which
the Indenture Trustee anticipates may be paid or incurred in the exercise of the
rights vested in it or for all other purposes of this Debenture or any of them
and the Indenture Trustee may advance such moneys at such rates of interest and
generally on such terms and conditions as it shall think fit.
<PAGE>
-8-
ARTICLE V
DEALINGS WITH SECURITY ASSETS
Section 5.1. CHARGED ACCOUNTS. The Owner shall cause all sums
hereafter received or recovered by or for it in respect of any Current
Receivable to be directly credited to a separate and distinct account as the
Indenture Trustee may from time to time designate and, if called upon to do so
by notice in writing from the Indenture Trustee, shall execute an absolute
assignment of any such Current Receivable in favor of the Indenture Trustee, all
at the cost of the Owner. Until the security hereby constituted is fully
discharged in accordance with the terms hereof, the Owner shall not be entitled
to withdraw any sum standing to the credit of any such account established as
aforesaid without the prior written consent of the Indenture Trustee.
Section 5.2. DEPOSIT OF PROPRIETARY RIGHTS. The Owner shall,
if the Indenture Trustee so requires, deposit with the Indenture Trustee all
certificates and other documents of title or evidence of ownership in relation
to the patents and rights referred to in Section 3.1(c).
Section 5.3. LIABILITY TO PERFORM. Notwithstanding any other
provision herein contained to the contrary, the Owner shall remain liable to
observe and perform all of the respective conditions and obligations assumed by
it in respect of each Security Asset and the Indenture Trustee shall be under no
obligation by reason of this Debenture, nor shall the Indenture Trustee be
required in any manner, to perform or fulfil any obligation of the Owner in
respect of any Security Asset or to make any payment or make any enquiry as to
the maturity, amount, nature or sufficiency of any rental, interest, proceeds,
payments or receipts received by it or them or the Owner or to present or file
any claim or take any other action or give any notice to collect, exercise or
enforce the payment of any amount or the taking up of any rights or property to
which the Owner may have been or to which it may be now or hereafter entitled
thereunder at any time.
ARTICLE VI
ENFORCEMENT
Section 6.1. WHEN SECURITY BECOMES ENFORCEABLE. The security
hereby conferred shall become immediately enforceable and the floating charge
created by this Debenture shall be deemed to have crystallized and the power of
sale and other powers conferred by statute as varied or amended or granted by
this Debenture shall be immediately exercisable (i) if the Owner fails to meet
the Obligations in the manner specified in Section 2.1 or (ii) upon and after
the occurrence of any Indenture Event of Default as defined in the Indenture.
After this security has become enforceable, the Indenture Trustee may in its
discretion enforce all or any part of this security, and exercise all or any
rights of enforcement hereby granted, in such manner as the Indenture Trustee
sees fit.
<PAGE>
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Section 6.2. ENFORCEMENT OF SECURITY. For the purposes of all
powers implied by statute the Obligations shall be deemed to have become due and
payable on the date hereof and any statutory restrictions on the power of sale
and restrictions on the right of consolidation shall not apply to this security.
Section 6.3. REMEDIES, WAIVERS AND CONSENTS. No delay or
omission of the Indenture Trustee in exercising any right under this Debenture
shall impair or be construed as a waiver of such right nor shall any single or
partial exercise of any such right preclude any further exercise thereof or the
exercise of any other right. The rights provided in this Debenture are
cumulative and not exclusive of any rights provided by law, agreement or
otherwise. Any waiver and any consent by the Indenture Trustee under this
Debenture must be in writing and may be given subject to any conditions thought
fit by the Indenture Trustee. Any waiver or consent shall be effective only in
the instance and for the purpose for which it is given.
ARTICLE VII
RECEIVER
Section 7.1. APPOINTMENT AND POWERS OF RECEIVER. At any time
after this security becomes enforceable the Indenture Trustee may without
further notice appoint in writing under the hand of its duly authorized officer
any one or more Person(s) to be a receiver or receiver and manager (hereinafter
each called "a Receiver") as the Indenture Trustee at its sole discretion may
see fit of any Security Asset in like manner in every respect as if the
Indenture Trustee had become entitled under statute to exercise the power of
sale thereby conferred. Every Receiver so appointed shall, in addition to any
powers conferred by statute or common law, have and be entitled to exercise all
rights to do any or all of the following things:
(a) TAKE POSSESSION. Enter upon and take immediate possession of,
get in and collect any Security Asset and undertake any works
of demolition, building, reconstruction, repair or decoration
thereon;
(b) SELL ASSETS. Subject to any necessary consent or approval of
any judicial, administrative, governmental or other regulatory
body, office or agency, sell, convert into money and realize
any Security Asset by public auction or private contract,
dispose of, grant options and other rights in respect of and
exercise all other rights conferred on an owner under any
statute, at common law or otherwise, in respect of any
Security Asset and generally in such manner and on such terms
(which may consist wholly or partly of shares or securities of
any company or body corporate) as the Receiver shall think fit
and transfer, convey, assign or grant an assurance of the same
in the name and on behalf of the Owner. Without prejudice to
the generality of the foregoing, the Receiver may do any of
these things for a consideration consisting of cash,
debentures or other obligations, shares or other valuable
consideration in cash or in any other form
<PAGE>
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whatsoever and any such consideration may be payable in a lump
sum or by installments spread over such period as the Receiver
may think fit;
(c) COMPROMISE. Settle, adjust, refer to arbitration, compromise
and arrange any claims, accounts, disputes, questions and
demands with or by any Person who is or claims to be a
creditor of the Owner or relating in any way to any Security
Asset;
(d) BORROW AND CREATE SECURITY. Borrow or raise money and secure
the repayment thereof and interest thereon by mortgaging,
sub-mortgaging or otherwise charging any Security Asset or
this Debenture (whether or not in priority to the sums and
obligations secured by this Debenture) in such manner and on
such terms as the Receiver shall think fit; PROVIDED, HOWEVER,
that:
(i) no Receiver shall exercise such right without first
obtaining the written consent of the Person
appointing him and the Indenture Trustee shall not
incur any responsibility to the Owner or any other
Person by reason of giving or refusing its consent,
whether directly or subject to any limitation or
condition; and
(ii) no Person lending such money shall be concerned to
enquire as to the existence of such consent or the
terms thereof or as to the propriety or purpose of
the exercise thereof or to see to the application of
any money so borrowed or raised;
(e) EMPLOY AGENTS. Employ solicitors, managers, agents and others
as the Receiver shall deem necessary;
(f) RECEIPTS. Give valid receipts and discharges for all moneys
and claims and execute all assurances and things which may be
proper or desirable for realizing any Security Assets;
(g) CONSIDERATION. Receive or pay any consideration in cash or
other valuable consideration and so that the same may be
receivable or payable either immediately or at a later time
and in a lump sum or by installments spread over such period
as the Receiver shall think fit;
(h) DEALINGS. Generally to deal with and effect any transaction or
arrangement of any kind whatsoever in respect of any Security
Asset;
(i) LEGAL PROCEEDINGS. Settle, arrange, compromise and submit to
arbitration any accounts, claims, questions or disputes
whatsoever which may arise in connection
<PAGE>
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with any Security Asset or in any way relating to the security
constituted by this Debenture, to bring, take, defend,
compromise, submit to and discontinue any actions, suits,
arbitration or proceedings whatsoever whether civil or
criminal in relation to the matters aforesaid, to enter into,
complete, disclaim, abandon or disregard, determine or rectify
all or any of the outstanding agreements or arrangements of
the Owner in any way relating to or affecting the Security
Assets or any part thereof and to allow time for payment of
any debts either with or without security as the Receiver
shall think expedient;
(j) IN OWNER'S NAME. Generally at his option to use the name of
the Owner in the exercise of all or any of the rights hereby
conferred;
(k) EXERCISE OF RIGHTS. Exercise, or permit the Owner or any
nominee of the Owner to exercise, any rights incident to the
ownership of any Security Asset in such manner as the Receiver
may think fit and in particular (as regards shares, stock and
securities) any voting rights conferred by the same and (as
regards securities) any rights of enforcing the same by
foreclosure, sale or otherwise;
(l) CORPORATE TRANSFERS. Transfer any Security Asset to any other
company or body corporate, whether or not formed or acquired
for the purpose;
(m) CARRY ON BUSINESS. Generally manage and carry on and conduct
any of the undertakings and businesses of the Owner;
(n) CALLS. Make calls, conditionally or unconditionally, on the
members of the Owner in respect of all or any part of its
uncalled capital with such and the same rights of enforcement
as are conferred by the Memorandum of Association and Articles
of Association of the Owner upon its directors in this
respect;
(o) GENERAL POWERS. Sign under seal or otherwise and deliver all
such agreements, documents and instruments and do all such
other acts and things as the Receiver may consider desirable
or necessary for realizing any Security Asset or incidental or
conducive to any of the matters or rights conferred on a
Receiver under or by virtue of this Debenture and to exercise
in relation to any Security Asset all such rights as the
Receiver should be capable of exercising if the Receiver were
the beneficial owner of the same; and
(p) MONEYS RECEIVED BY RECEIVER. All moneys received by a Receiver
shall after providing for the matters specified by any law be
applied by him in or towards satisfaction of this Debenture
and thereafter of any other Encumbrance of which he shall have
notice and thereafter the Receiver shall pay the residue of
the moneys received by him to the Owner.
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Section 7.2. COMPLY WITH INSTRUCTIONS. Any Receiver shall in
the exercise of the Receiver's rights conform to any regulations and directions
from time to time made and given by the Indenture Trustee as appointer but so
that no Person dealing with the Indenture Trustee or any Receiver shall be
concerned to enquire whether the Receiver has so conformed to any such
regulations or directions.
Section 7.3. REMOVAL AND REMUNERATION. The Indenture Trustee
may from time to time by writing under its hand remove any Receiver appointed by
it and may whenever it may deem it expedient appoint a new Receiver in the place
of any Receiver whose appointment may for any reason have terminated and may
from time to time fix the remuneration of any Receiver appointed by it.
Section 7.4. INDENTURE TRUSTEE MAY EXERCISE RECEIVER'S POWERS.
All or any of the rights which are conferred by this Debenture (either expressly
or impliedly) upon a Receiver of any Security Asset may be exercised after the
security hereby created becomes enforceable by the Indenture Trustee in relation
to any Security Asset without first appointing a Receiver of the same or
notwithstanding the appointment of a Receiver of the same.
Section 7.5. NO LIABILITY AS MORTGAGEE IN POSSESSION. The
Indenture Trustee shall not nor shall any Receiver appointed as aforesaid by
reason of the Indenture Trustee or the Receiver entering into possession of any
Security Asset be liable to account as mortgagee in possession or be liable for
any loss or realization or for any default or omission for which a mortgagee in
possession might be liable. Every Receiver duly appointed by the Indenture
Trustee shall be deemed to be the agent of the Owner for all purposes and shall
as such agent be deemed to be in the same position as a Receiver duly appointed
by a mortgagee under statute. The Owner alone shall be responsible for its
agreements, obligations, acts, omissions, defaults and losses and the Indenture
Trustee shall not incur any responsibility therefor (either to the Owner or to
any other Person whatsoever) by reason of appointing such Receiver or for any
other reason whatsoever. Every such Receiver and the Indenture Trustee shall be
entitled to all the rights, privileges and immunities by statute conferred on
mortgagees and receivers when such receivers have been duly appointed.
Section 7.6. PROTECTION OF THIRD PARTIES. No purchaser,
mortgagee or other Person dealing with the Indenture Trustee or the Receiver or
the agents of the Indenture Trustee or the Receiver shall be concerned to
enquire whether any of the Obligations are due or owing, the right which the
Indenture Trustee or the Receiver is purporting to exercise has become
exercisable or any money remains due under this Debenture, as to the propriety
or regularity of the actions of the Indenture Trustee or such Receiver, or to
see to the application of any money paid to the Indenture Trustee or to such
Receiver.
Section 7.7. EXPENSES. All costs, charges and expenses
incurred and all payments made by the Indenture Trustee or any Receiver
appointed hereunder in the exercise
<PAGE>
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in good faith of any right hereby conferred whether or not occasioned by any
act, neglect or default of the Indenture Trustee or such Receiver shall bear
interest from the date of the same being incurred or becoming due at the Default
Rate. The amount of all such costs, charges, expenses and payments and all
interest thereon and all remuneration payable hereunder shall be payable by the
Owner on demand. All such costs, charges, expenses and payments shall be paid
and charged as between the Indenture Trustee and the Owner on the basis of a
full indemnity and not on the basis of party and party or any other kind of
taxation.
Section 7.8. INDEMNITY. Each of the Indenture Trustee and
every Receiver, attorney, manager, agent or other Person appointed by the
Indenture Trustee hereunder shall be entitled to be indemnified out of the
Security Assets in respect of all obligations, costs, charges and expenses
incurred and payments made by such Person in good faith in the execution or
purported execution of any right vested in such Person pursuant hereto and
against all actions, proceedings, obligations, costs, claims and demands in
respect of any matter or thing done or omitted in anyway relating to any
Security Asset and the Indenture Trustee and any such Receiver may retain and
pay all sums in respect of the same out of any moneys received under the rights
hereby conferred.
ARTICLE VIII
APPLICATION OF PROCEEDS
Section 8.1. ORDER OF APPLICATION. Any moneys received by the
Indenture Trustee pursuant to this Debenture or under the powers hereby
conferred shall after the security hereby constituted shall have become
enforceable but subject to the payment of any claims having priority to this
security be applied for the following purposes and in the following order of
priority (but without prejudice to the right of the Indenture Trustee to recover
any shortfall from the Owner):
(a) in satisfaction of or provision for all costs, charges and
expenses incurred and payments made by the Indenture Trustee
or any Receiver appointed hereunder and of all remuneration
due hereunder with interest on such costs, charges, expenses
and payments at the Default Rate;
(b) in or towards payment of interest on the Obligations;
(c) in or towards payment of principal on the Obligations; and
(d) in payment of the surplus (if any) to the Owner or other
Person entitled thereto.
Section 8.2. SUSPENSE ACCOUNTS. Any moneys received under the
rights hereby conferred may, at the discretion of the Indenture Trustee, be
placed in a suspense account and kept there for so long as the Indenture Trustee
thinks fit.
<PAGE>
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ARTICLE IX
MISCELLANEOUS PROVISIONS
Section 9.1. AMENDMENT. This Debenture may be amended from
time to time by written agreement signed by the parties hereto.
Section 9.2. SEVERABILITY. If any provision of this Debenture
is held to be in conflict with any applicable statute or rule of law or is
otherwise held to be unenforceable for any reason whatsoever, such circumstances
shall not have the effect of rendering the provision in question inoperative or
unenforceable in any other case or circumstance, or of rendering any other
provision or provisions herein contained invalid, inoperative, or unenforceable
to any extent whatsoever. The invalidity of any one or more phrases, sentences,
clauses or Sections of this Debenture contained, shall not affect the remaining
portions of this Debenture, or any part thereof.
Section 9.3. NOTICES. All demands, notices and communications
hereunder shall be in writing, personally delivered or mailed by certified
mail-return receipt requested, and shall be deemed to have been duly given upon
receipt (a) in the case of the Indenture Trustee, at the following address: 114
West 47th Street, New York, New York 10036, Attention: Corporate Trust
Department, (b) in the case of the Owner, at the following address: 15-19 Athol
Street, Douglas, Isle of Man, or at other such address as shall be designated by
such party in a written notice to the other parties.
Section 9.4. CONSENT TO JURISDICTION. Any legal suit, action
or proceeding against the Owner arising out of or relating to this Debenture, or
any transaction contemplated hereby, may be instituted in any federal or state
court in The City of New York, State of New York and the Owner hereby waives any
objection which it may now or hereafter have to the laying of venue of any such
suit, action or proceeding, and the Owner hereby irrevocably submits to the
jurisdiction of any such court in any such suit, action or proceeding. The Owner
hereby irrevocably appoints and designates CT Corporation System, having an
address at 1633 Broadway, New York, New York, its true and lawful
attorney-in-fact and duly authorized agent for the limited purpose of accepting
servicing of legal process and the Owner agrees that service of process upon
such party shall constitute personal service of such process on the Owner. The
Owner shall maintain the designation and appointment of such authorized agent
until all amounts payable under this Debenture shall have been paid in full. If
such agent shall cease to so act, the Owner shall immediately designate and
appoint another such agent satisfactory to the Indenture Trustee and shall
promptly deliver to the Indenture Trustee evidence in writing of such other
agent's acceptance of such appointment.
Section 9.5. CAPTIONS. The captions or headings in this
Debenture are for convenience only and in no way define, limit or describe the
scope or intent of any provisions or sections of this Debenture.
<PAGE>
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Section 9.6. GOVERNING LAW. This Debenture shall be governed
by and interpreted in accordance with the laws of the Isle of Man, without
giving effect to the principles of conflicts of law.
Section 9.7. NO PARTNERSHIP. Nothing herein contained shall be
deemed or construed to create a partnership or joint venture among the parties
hereto and the services of each party shall be rendered as an independent
contractor and not as agent for any other party.
Section 9.8. COUNTERPARTS. This Debenture may be executed in
any number of counterparts and by different parties hereto on separate
counterpart, each of which shall be deemed to be an original. Such counterparts
shall constitute one and the same agreement.
Section 9.9. SURVIVAL. The representations, covenants and
agreements contained in or made pursuant to this Debenture in respect of either
party hereto shall survive the execution and delivery of this Debenture and
shall continue in effect so long as such party's obligations hereunder remain
outstanding.
Section 9.10. INTEGRATION. This Debenture and the Schedule and
Exhibits hereto, the Indenture and the Security Documents constitute the entire
agreement and understanding between the parties hereto with respect to the
subject matter hereof and supersedes all prior agreements, understandings or
representations pertaining to the subject matter hereof, whether oral or
written. There are no warranties, representations or other agreements between
the parties in connection with the subject matter hereof except as specifically
set forth or incorporated herein.
Section 9.11. REPRODUCTION OF DOCUMENTS. This Debenture and
all documents relating thereto, including, without limitation, (a) consents,
waivers and modifications which may hereafter be executed, (b) documents
received by any party at the closing, and (c) financial statements, certificates
and other information previously or hereafter furnished, may be reproduced by
any photographic, photostatic, microfilm, micro-card, miniature photographic or
other similar process. The parties agree that any such reproduction shall be
admissible in evidence as the original itself in any judicial or administrative
proceeding (whether or not the original is in existence and whether or not such
reproduction was made in the regular course of business) and that any
enlargement, facsimile or further reproduction of such reproduction shall
likewise be admissible in evidence.
Section 9.12. SUCCESSORS AND ASSIGNS; ASSIGNMENT. This
Debenture shall be binding upon and inure to the benefit of the Owner and the
Indenture Trustee and their respective successors and assigns. The Owner shall
not have the right to assign its rights hereunder or any interest herein without
the prior written consent of the Indenture Trustee. The Indenture Trustee, at
its sole option, shall have the right to assign this Debenture, Indenture, the
Security Documents and any of its rights and interest hereunder and thereunder.
<PAGE>
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Section 9.13. GENERAL INTERPRETIVE PRINCIPLES. For purposes of
this Debenture except as otherwise expressly provided or unless the context
otherwise requires:
(a) the defined terms in this Debenture shall include the
plural as well as the singular, and the use of any gender herein shall be deemed
to include any other gender;
(b) accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted accounting
principles as in effect on the date hereof;
(c) references herein to "Articles", "Sections",
"Subsections", "paragraphs", and other subdivisions without reference to a
document are to designated Articles, Sections, Subsections, paragraphs and other
subdivisions of this Debenture;
(d) a reference to a Subsection without further reference to a
Section is a reference to such Subsection as contained in the same Section in
which the reference appears, and this rule shall also apply to paragraphs and
other subdivisions;
(e) the words "herein", "hereof", "hereunder" and other words
of similar import refer to this Debenture as a whole and not to any particular
provision; and
(f) the term "include" or "including" shall mean without
limitation by reason of enumeration.
<PAGE>
IN WITNESS WHEREOF this Debenture has been executed by the
Owner the day and year first above written.
SIGNED, SEALED and DELIVERED )
as a Deed and Debenture ) /s/ Joseph Avantario
by )
for and on behalf of )
Golden State Petro (IOM I-A) PLC ) /s/ John McFadden
in the presence:- )
SIGNED by )
for and on behalf of )
United States Trust Company of New York /s/ Christine C. Collins
as Indenture Trustee )
in the presence of:- ) /s/ Adam Levine
<PAGE>
SCHEDULE 1
DEFINED TERMS USED IN THE DEBENTURE
"ADDITIONAL NOTE" means each first preferred mortgage note issued
pursuant to a Supplemental Indenture to finance the Additional Construction
Costs of a Vessel.
"ADDITIONAL CONSTRUCTION COSTS" means any net increases in construction
costs for the Vessel which (i) result from actions by the Initial Charterer or
the Technical Supervisor; (ii) are approved by the Owner, such approval not to
be unreasonably withheld; and (iii) occur after execution of the Building
Contract but prior to the Delivery Date.
"ALLOCATED PRINCIPAL AMOUNT OF THE ADDITIONAL NOTES" means, when used
with reference to the Additional Notes and the Vessel at any date of
determination, the product of (a) the aggregate outstanding principal amount of
Additional Notes as of such date and (b) a fraction (i) the numerator of which
is the aggregate outstanding principal amount of Additional Notes for the Vessel
as specified with respect to the Vessel in the related Supplemental Indenture
and (ii) the denominator of which is the aggregate initial principal amount of
all Additional Notes.
"ALLOCATED PRINCIPAL AMOUNT OF THE MORTGAGE NOTES" means, when used
with reference to the Mortgage Notes and the Vessel at any date of
determination, the sum of (a) the Allocated Principal Amount of the Notes for
the Vessel and (b) the Allocated Principal Amount of the Additional Notes for
the Vessel.
"ALLOCATED PRINCIPAL AMOUNT OF THE NOTES" means, when used with
reference to the Notes and either Vessel, amounts indicated on Schedule 1
attached to the Indenture.
"AGREEMENT ON CONTRACT FOR TECHNICAL MATTERS" means, the Agreement
Regarding Technical Matters, dated as of the Closing Date, between the Owner,
Samsung Heavy Industries Co., LTD and Chevron Shipping Company, San Francisco,
California (as Agent for the Initial Charterer).
"ASSETS" means, in relation to any person, the whole or any part of its
business, undertaking, property and assets and includes, without limitation, any
right to receive revenues.
"ASSIGNMENT OF BUILDING CONTRACT" means, for each Vessel, the Building
Contract Assignment, dated as of the Closing Date, between the related Owner and
the Indenture Trustee, pursuant to which such Owner collaterally assigns its
rights, title and interests in the related Building Contract and the Agreement
on Contract for Technical Matters to the Indenture Trustee.
"ASSIGNMENT OF BUILDING CONTRACT GUARANTEE" means, for each Building
Contract Guarantee, the Assignment of Building Contract Guarantee, dated as of
the Closing Date, between the related Owner and the Indenture Trustee, as the
same may be amended from time
<PAGE>
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to time, pursuant to which such Owner collaterally assigns its rights, title and
interest in the related Building Contract Guarantee therein to the Indenture
Trustee.
"ASSIGNMENT OF CHARTER" means the assignment between the Owner and the
Indenture Trustee, as amended from time to time in accordance with the terms
thereof, pursuant to which the Owner collaterally assigns to the Indenture
Trustee all of the Owner's right, title and interest in, to and under the
Initial Charter to secure its obligations under the Indenture.
"ASSIGNMENT OF CHARTER SUPPLEMENT" means, for each Charter Supplement,
the Assignment of Charter Supplement, dated the date of the Supplemental
Indenture, between the Owner of the Vessel and the Indenture Trustee, as the
same may be amended from time to time pursuant to which the Owner collaterally
assigns all of the Owner's right, title and interest therein to the Indenture
Trustee.
"ASSIGNMENT OF CHEVRON GUARANTEE" means the assignment between the
Owner and the Indenture Trustee, as amended from time to time in accordance with
the terms thereof, pursuant to which the Owner collaterally assigns to the
Indenture Trustee all of the Owner's right, title and interest in, to and under
the Chevron Guarantee to secure its obligations under the Indenture.
"ASSIGNMENT OF EARNINGS AND INSURANCES" means the assignment between
the Owner and the Indenture Trustee, as amended from time to time in accordance
with the terms thereof, pursuant to which the Owner collaterally assigns to the
Indenture Trustee all of the Owner's right, title and interest in, to and under
the freights and hires (as well as any charters entered into after the Delivery
Date) with respect to the Vessel to secure its obligations under the Indenture.
"ASSIGNMENT OF MANAGEMENT AGREEMENT" means the assignment between the
Owner and the Indenture Trustee, as amended from time to time in accordance with
the terms thereof, pursuant to which the Owner collaterally assigns to the
Indenture Trustee all of the Owner's right, title and interest in, to and under
the Management Agreement to secure its obligations under the Indenture.
"BUILDER" means, collectively, Samsung Corporation and Samsung Heavy
Industries, Ltd.
"BUILDING CONTRACT" means the Shipbuilding Contract, dated December 19,
1996, between the Builder and the Owner.
"BUILDING CONTRACT GUARANTEE" means the Irrevocable Installment Payment
Letter of Guarantee, dated December 19, 1996, given by the Building Contract
Guarantor to the Owner in connection with the Vessel.
"BUILDING CONTRACT GUARANTOR" means Korea Development Bank.
<PAGE>
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"CHEVRON" means Chevron Corporation, a Delaware corporation, and its
successors and assigns.
"CHEVRON GUARANTEE" means the Guarantee, dated the Closing Date, given
by Chevron to the Owner in connection with the Initial Charter and the Charter
Supplement.
"CLOSING DATE" means December 24, 1996.
"CURRENT RECEIVABLES" means (a) all obligations of the trade debtors of
the Owner due or owing to the Owner on account of the prevailing debit balances
of the present book debts of the Owner and (b) all rights relating to the
aforesaid property specified in clause (a), including, INTER ALIA, negotiable
instruments, legal and equitable charges, reservations of property rights,
rights of action, collection, recovery or security, rights of tracing an unpaid
vendor's liens and similar and associated rights (and each reference to a
"Current Receivable" shall be construed as a reference to the whole or any part
of any one or more of them).
"DEFAULT RATE" means, with respect to a Mortgage Note, a rate per annum
for each day from the date of a default in any payment hereunder until such
payment shall be paid in full equal to the lesser of (a) 1.0% above the interest
rate indicated in such Mortgage Note and (b) the sum of 1.5% and LIBOR.
"DELIVERY DATE" means the date the Vessel is accepted by the Owner from
the Builder under the Building Contract.
"ENCUMBRANCE" means any encumbrance and includes any mortgage, charge
(whether fixed or floating, pledge, lien, hypothecation, title retention or
other security agreement or security interest of any kind whatsoever and
howsoever arising and any equivalent or analogous interest to any of the
foregoing.
"INDENTURE" means the Indenture, dated as of December 1, 1996 among the
Indenture Trustee, the Owner, Golden State Petro (IOM I-B) and Golden State
Petroleum, pursuant to which the Notes were issued.
"INDENTURE TRUSTEE" means United States Trust Company of New York.
"INITIAL CHARTER" means with respect to each Vessel, the bareboat
charter, dated as of December 1, 1996, between the Initial Charterer and the
Owner.
"INITIAL CHARTERER" means Chevron Transport Corporation, a Liberian
corporation.
"ISSUE OF ONE DEBENTURE" means each Issue of One Debenture between the
Owner and the Indenture Trustee, as amended from time to time in accordance with
the terms thereof,
<PAGE>
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pursuant to which the Owner grants to the Indenture Trustee a security interest
in all of its assets.
"LIBOR" means the rate calculated on the basis of the offered rates for
deposits in dollars for a one-month period which appear on the Reuters Screen
LIBO Page as of 11:00 A.M., London time, on the date that is two London Banking
Days preceding the date of calculation. If at least two such offered rates
appear on the Reuters Screen LIBO Page, LIBOR will be the arithmetic mean of
such offered rates (rounded to the nearest .0001 percentage point). If, at any
time of determination, the Reuters Screen LIBO Page is not available, LIBOR will
be calculated as the average (rounded upward, if necessary, to the next higher
1/16 of 1%) of the respective ratio per annum at which deposits in dollars for a
one month period are offered to each of three reference banks in the London
interbank market at approximately 11:00 A.M., London time, on the date that is
two London Banking Days preceding the date of calculation. Each of the Initial
Charterer and the Owners (or the Owners' assignee) will select a reference bank
and the third reference bank will be selected by the Initial Charterer and the
Owners (or Owners' assignee) together or, failing agreement, by the previously
selected reference banks together.
"LONDON BANKING DAY" means any day on which dealings in deposits in
United States dollars are carried on in the London interbank market and on which
commercial banks are open for domestic and international business (including
dealings in United States dollar deposits) in London and New York.
"MANAGEMENT AGREEMENT" means the agreement, dated the Closing Date,
between the Owner and the Manager pursuant to which the Manager agrees to
provide certain services to the Owner.
"MANAGER" means the Person performing the duties of the Manager under
the Management Agreement, initially Cambridge Fund Management L.L.C.
"MORTGAGE" means, with respect to the Vessel, the first preferred ship
mortgage on the Vessel granted by the Owner to the Indenture Trustee, as amended
from time to time in accordance with the terms of such Mortgage.
"MORTGAGE NOTES" means, collectively, the Serial First Preferred
Mortgage Notes maturing serially from 2000 to 2006 (the "Serial Notes") and the
8.04% First Preferred Mortgage Notes due 2019 (the "Term Notes") issued in the
initial aggregate principal amount of $178,800,000 and any other notes issued
pursuant to a supplement to the Indenture or pursuant to the Registration Rights
Agreement.
"NOTES" means, collectively, the Serial Notes and Term Notes.
<PAGE>
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"OBLIGATIONS" means the payment, performance or obligations of any kind
or nature whatsoever of the Owner under and pursuant to the Indenture, any
Security Document and any instrument, agreement or document referred to therein.
"OWNER" means Golden State Petro (IOM I-A) PLC, a company organized
under the laws of the Isle of Man.
"PERSON" means an individual, a partnership, a corporation, a joint
venture, unincorporated association, a joint stock company, a trust or any other
entity or a Governmental Authority.
"REGISTRATION JURISDICTION" means the jurisdiction in which the Vessel
is or will be registered.
"REGISTRATION RIGHTS AGREEMENT" means the Registration Rights
Agreement, dated the Closing Date, among the Owners and Cambridge Partners,
L.L.C., Salomon Brothers Inc and Donaldson, Lufkin & Jenrette Securities
Corporation, as initial purchaser of the Initial Notes.
"SECURITY ASSETS" means all of the present and future Assets of the
Owner, including, INTER ALIA, the Current Receivables (and each reference to a
"Security Asset" shall be construed as a reference to the whole or any part of
any one or more of them).
"SECURITY DOCUMENTS" means the Indenture, the Mortgage, the Assignment
of Charter, the Assignments of Charter Supplements, the Assignment of Earnings
and Insurances, the Assignment of Chevron Guarantee, the Assignment of
Management Agreement, the Assignment of Building Contract, the Issue of One
Debenture, the Stock Pledge and the Assignment of Building Contract Guarantee,
collectively.
"VESSEL" means Hull No. 1228.
<PAGE>
TABLE OF CONTENTS
Page
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ARTICLE I
DEFINITIONS............................... 1
ARTICLE II
COVENANT TO PAY.............................. 1
Section 2.1. Covenant to Pay............................................... 1
ARTICLE III
MORTGAGE, CHARGE AND ASSIGNMENT..................... 2
Section 3.1. Charge........................................................ 2
Section 3.2. Legal Securities.............................................. 3
Section 3.3. Conversion of Floating Charge................................. 3
Section 3.4. Negative Pledge............................................... 3
Section 3.5. New Accounts.................................................. 3
ARTICLE IV
PRESERVATION OF SECURITY......................... 3
Section 4.1. Continuing Security........................................... 3
Section 4.2. Waiver of Defenses............................................ 4
Section 4.3. Immediate Recourse............................................ 4
Section 4.4. Preservation of Rights........................................ 5
Section 4.5. Additional Security........................................... 5
Section 4.6. Certificate................................................... 5
Section 4.7. Discharge..................................................... 5
Section 4.8. Registration.................................................. 5
<PAGE>
Page
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Section 4.9. Indenture Trustee's Power's With Respect to Security Assets... 5
Section 4.10. Calls......................................................... 6
Section 4.11. Delegation By Indenture Trustee............................... 6
Section 4.12. Further Assurances............................................ 6
Section 4.13. Redemption of Prior Mortgages................................. 6
Section 4.14. Power of Attorney............................................. 6
Section 4.15. Avoidance of Payments......................................... 7
Section 4.16. Powers to Lend................................................ 7
ARTICLE V
DEALINGS WITH SECURITY ASSETS...................... 8
Section 5.1. Charged Accounts.............................................. 8
Section 5.2. Deposit of Proprietary Rights................................. 8
Section 5.3. Liability to Perform.......................................... 8
ARTICLE VI
ENFORCEMENT............................... 8
Section 6.1. When Security Becomes Enforceable............................. 8
Section 6.2. Enforcement of Security....................................... 9
Section 6.3. Remedies, Waivers and Consents................................ 9
ARTICLE VII
RECEIVER................................. 9
Section 7.1. Appointment and Powers of Receiver............................ 9
Section 7.2. Comply with Instructions...................................... 12
<PAGE>
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Section 7.3. Removal and Remuneration...................................... 12
Section 7.4. Indenture Trustee May Exercise Receiver's Powers.............. 12
Section 7.5. No Liability As Mortgagee In Possession....................... 12
Section 7.6. Protection Of Third Parties................................... 12
Section 7.7. Expenses...................................................... 12
Section 7.8. Indemnity..................................................... 13
ARTICLE VIII
APPLICATION OF PROCEEDS.......................... 13
Section 8.1. Order of Application.......................................... 13
Section 8.2. Suspense Accounts............................................. 13
ARTICLE IX
MISCELLANEOUS PROVISIONS......................... 14
Section 9.1. Amendment..................................................... 14
Section 9.2. Severability.................................................. 14
Section 9.3. Notices....................................................... 14
Section 9.4. Consent to Jurisdiction....................................... 14
Section 9.5. Captions...................................................... 14
Section 9.6. Governing Law................................................. 15
Section 9.7. No Partnership................................................ 15
Section 9.8. Counterparts.................................................. 15
Section 9.9. Survival...................................................... 15
Section 9.10. Integration................................................... 15
<PAGE>
Page
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Section 9.11. Reproduction of Documents..................................... 15
Section 9.12. Successors and Assigns; Assignment............................ 15
Section 9.13. General Interpretive Principles............................... 16
<PAGE>
EXHIBIT H
---------
===============================================================================
UNITED STATES TRUST COMPANY OF NEW YORK,
AS INDENTURE TRUSTEE
and
Golden State Petro (IOM I-A) PLC
-----------------------------------
ASSIGNMENT OF BUILDING CONTRACT
Dated as of December 1, 1996
-----------------------------------
===============================================================================
<PAGE>
Assignment of Building Contract, dated as of December 1, 1996
(the "Assignment"), between Golden State Petro (IOM I-A) PLC (the "Owner") and
United States Trust Company of New York (the "Indenture Trustee"), not in its
individual capacity but solely as trustee under the Indenture (the "Indenture"),
dated as of the date hereof, among the Owner, the Indenture Trustee, Golden
State Petro (IOM I-B) PLC ("Golden State Petro B") and Golden State Petroleum
Transport Corporation ("Golden State Petroleum"), as agent for the Owner and
Golden State Petro B.
PRELIMINARY STATEMENT
On the Closing Date, Golden State Petroleum, as agent for the
Owner and Golden State Petro B, will issue Notes in connection with the
financing of the construction of the Vessel. The Vessel will be constructed
pursuant to the terms and conditions of the Building Contract. Pursuant to the
Agreement on Contract for Technical Matters, Chevron Shipping Company (the
"Technical Supervisor") will supervise the construction of the Vessel. Pursuant
to the Building Contract Guarantee, the Building Contract Guarantor is
guaranteeing the obligations of the Builder under the Building Contract. The
Allocated Principal Amount of the Mortgage Notes for the Vessel will be used,
INTER ALIA, to make the installments due under the Building Contract for the
Vessel. As collateral security for its obligations under the Indenture, the
Owner has and will assign, pledge, mortgage and grant the Indenture Trustee a
security interest in, INTER ALIA, the Building Contract, the Agreement on
Contract for Technical Matters and the Building Contract Guarantee.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained and of other valuable consideration, receipt of
which is hereby acknowledged, the Owner and the Indenture Trustee hereby agree
as follows:
ARTICLE I
DEFINITIONS
Unless otherwise defined in Schedule 1 to this Assignment,
capitalized terms used in this Assignment shall have the meanings assigned to
such terms in the Indenture.
ARTICLE II
ASSIGNMENT
Section 2.01 SECURITY INTEREST. This Assignment is made and
delivered as security for the Obligations.
Section 2.02 ASSIGNMENT. In order to provide for the payment
of and as security for the Obligations, the Owner has granted, bargained,
assigned, transferred, conveyed, mortgaged, pledged and granted a security
interest in and confirmed, and does hereby grant, bargain, assign, transfer,
convey, mortgage, pledge and grant a security interest in and confirm, to the
Indenture Trustee, its successors and assigns, for its and their respective
successors' and assigns' own proper use and benefit, all of the Owner's right,
title and interest in and to the Building Contract and the Agreement on Contract
for Technical Matters, including without limitation any moneys whatsoever
payable to the Owner thereunder, together with the income
<PAGE>
-2-
and proceeds thereof and all other rights and benefits whatsoever accruing to
the Owner thereunder; PROVIDED, HOWEVER, that the Owner shall keep the Indenture
Trustee fully and effectively indemnified from and against all actions, losses,
claims, proceedings, costs, demands and liabilities which may be suffered by the
Indenture Trustee under or by virtue of the Building Contract, the Agreement on
Contract for Technical Matters or this Assignment.
Section 2.03 OWNER TO REMAIN LIABLE. Anything in this
Assignment contained to the contrary notwithstanding, the Owner shall remain
liable under the Building Contract and the Agreement on Contract for Technical
Matters, and shall observe, perform and fulfill all of the conditions and
obligations to be observed, performed and fulfilled by it thereunder, and the
Indenture Trustee shall have no obligation or liability of any kind whatsoever
thereunder or by reason of or arising out of this Assignment, nor shall the
Indenture Trustee be under any liability whatsoever in the event of any failure
by the Owner to perform its obligations thereunder or be required or obligated
in any manner to observe, perform or fulfill any of the conditions or
obligations of the Owner thereunder or pursuant thereto, or to make any payment
or to make any inquiry as to the nature or sufficiency of any payment received
by it or the Owner thereunder, or to present or file any claim, or to take any
other action to collect or enforce the payment of any amounts which may have
been assigned to the Indenture Trustee or to which the Indenture Trustee may be
entitled hereunder at any time or times.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE OWNER
The Owner hereby represents and warrants to the Indenture
Trustee as follows:
Section 3.01 ORGANIZATION, POWER AND STATUS OF THE OWNER. The
Owner (a) is a corporation duly formed, validly existing and in good standing
under the laws of the Isle of Man and (b) is duly authorized, to the extent
necessary, to do business in each jurisdiction where the character of its
properties or the nature of its activities makes such qualification necessary.
The Owner has all requisite corporate power and authority to own and operate the
property it purports to own and to carry on its business as now being conducted
and as proposed to be conducted in respect of the Vessel.
Section 3.02 AUTHORIZATION; ENFORCEABILITY; EXECUTION AND
DELIVERY. (a) The Owner has all necessary corporate power and authority to
execute, deliver and perform under this Assignment.
(b) All action on the part of the Owner that is required for
the authorization, execution, delivery and performance of this Assignment has
been duly and effectively taken; and the execution, delivery and performance of
this Assignment does not require the approval or consent of any Person except
for such consents and approvals as have been obtained on or prior to the Closing
Date.
<PAGE>
-3-
(c) This Assignment has been duly executed and delivered by
the Owner. This Assignment constitutes the legal, valid and binding obligation
of the Owner, enforceable against it in accordance with the terms thereof.
Section 3.03 NO CONFLICTS; LAWS AND CONSENTS; NO DEFAULT. (a)
Neither the execution, delivery and performance of this Assignment nor the
consummation of any of the transactions contemplated hereby nor performance of
or compliance with the terms and conditions hereof (i) contravenes any
Requirement of Law applicable to the Owner or (ii) constitutes a default under
the Indenture or any Security Document.
(b) The Owner is in compliance with and not in default under
any and all Requirements of Law applicable to the Owner and all terms and
provisions of this Assignment.
Section 3.04 GOVERNMENTAL APPROVALS. All Governmental
Approvals which are required to be obtained in the name of the Owner in
connection with the execution, delivery and performance by the Owner of this
Assignment have been obtained and are in effect on the Closing Date.
Section 3.05 LITIGATION. There are no actions, suits or
proceedings at law or in equity or by or before any Governmental Authority now
pending against the Owner or, to the best of the Owner's knowledge, threatened
against the Owner or pending or threatened against any property or other assets
or rights of the Owner with respect to this Assignment.
Section 3.06 NO PRIOR ASSIGNMENT. The Owner has not assigned
or pledged, and hereby covenants that it will not assign or pledge, so long as
this Assignment shall remain in effect, the Building Contract or the Agreement
on Contract for Technical Matters or any part of the rights, titles and
interests hereby assigned, to anyone other than the Indenture Trustee, or its
successors or assigns.
Section 3.07 THE AGREEMENTS. Each of the Building Contract and
the Agreement on Contract for Technical Matters constitutes the legal, valid and
binding obligation of the Owner as "Owner" thereunder and is in full force and
effect in the form of Exhibit "A" attached hereto; there are no amendments,
additions, addenda or modifications thereto and neither of the parties thereto
is in default thereunder.
ARTICLE IV
COVENANTS OF THE OWNER
The Owner hereby covenants and agrees that so long as any of
the Obligations remains outstanding:
Section 4.01 CONSENT OF PARTIES TO ASSIGNMENT. On the Closing
Date, the Owner shall deliver to the Builder and the Technical Supervisor a copy
of this Assignment and shall procure the execution by each of the Builder and
the Technical Supervisor of the Consent and
<PAGE>
-4-
Acknowledgment set out in Exhibits A-1 and A-2 hereto and deliver said Consent
and Acknowledgment to the Indenture Trustee on the Closing Date.
Section 4.02 ENFORCEMENT OF AGREEMENT. (a) The Owner will do
or permit to be done each and every act or thing which the Indenture Trustee may
from time to time require to be done for the purpose of enforcing the Indenture
Trustee's rights under the Building Contract, the Agreement on Contract for
Technical Matters and this Assignment.
(b) The Owner shall cause all moneys hereby assigned or agreed
to be assigned or arising from or in connection with any of the rights, title,
interest and benefits of the Owner under the Building Contract and the Agreement
on Contract for Technical Matters shall be paid to the credit of Chase Manhattan
Bank NYC, ABA #021000021, A/C #920-1- 073195, credit U.S. Trust Co NY, further
credit to A/C #04692300, Golden State Petroleum Transport Revenue Account,
Attention: Chris Collins or to such other account as the Indenture Trustee may
from time to time direct.
(c) The Owner will not exercise any right or powers conferred
on it by the Building Contract and the Agreement on Contract for Technical
Matters in connection with any default or alleged default by the Builder or
Technical Supervisor, respectively, thereunder (including without limitation the
right of termination and substitution) unless and until requested so to do by
the Indenture Trustee whereupon the Owner agrees that it will do so provided
always that the Indenture Trustee shall not be responsible in any way whatsoever
in the event that the exercise of any right or power (including the right of
termination and substitution) be thereafter adjudged improper or to constitute a
repudiation of the Building Contract and the Agreement on Contract for Technical
Matters, as the case may be, by the Owner.
Section 4.03 AMENDMENT OF AGREEMENTS; ASSIGNMENT OF
AGREEMENTS. (a) The Owner will not, except with the previous written consent of
the Indenture Trustee, agree to any variation of the Building Contract or the
Agreement on Contract for Technical Matters or release any party thereto from
any of its obligations thereunder or waive any breach of any party thereto's
obligations thereunder or consent to any such act or omission of such party as
would otherwise constitute such breach.
(b) The Owner will not, except with the previous written
consent of the Indenture Trustee, assign the Building Contract or the Agreement
on Contract for Technical Matters to any other Person.
Section 4.04 PERFORMANCE OF OBLIGATIONS. The Owner will
perform its obligations under the Building Contract and the Agreement on
Contract for Technical Matters and will use its best efforts to cause the other
parties thereto to perform their respective obligations thereunder.
Section 4.05 NOTICES. The Owner will send a copy of all
notices received or given by it under the Building Contract or the Agreement on
Contract for Technical Matters forthwith to the Indenture Trustee.
<PAGE>
-5-
Section 4.06 FURTHER ASSURANCES. The Owner will at any time
and from time to time, upon the written request of the Indenture Trustee,
promptly and duly execute and deliver any and all such further instruments and
documents and take such action as the Indenture Trustee may deem desirable in
order to obtain the full benefits of this Assignment and of the rights and
powers herein granted.
Section 4.07 INDENTURE TRUSTEE AS ATTORNEY-IN-FACT OF OWNER.
The Owner hereby constitutes the Indenture Trustee, and its successors and
assigns, its true and lawful attorney-in-fact, irrevocably, with full power in
its own name, in the name of its agents or nominees or in the name of the Owner
or otherwise, to ask, require, demand, receive, enforce and give acquittance
for, any and all moneys and claims for moneys due and to become due and payable
under or arising out of the Building Contract and the Agreement on Contract for
Technical Matters, to endorse any checks or other instruments or orders in
connection therewith and to file any claims or take any action or institute any
proceedings which to the Indenture Trustee may seem to be necessary or advisable
under this Assignment. Any action or proceeding brought by the Indenture Trustee
pursuant to any of the provisions of this Assignment or otherwise and any claim
made by the Indenture Trustee hereunder may be compromised, withdrawn or
otherwise dealt with by the Indenture Trustee without any notice to or approval
of the Owner.
ARTICLE V
MISCELLANEOUS PROVISIONS
Section 5.01 AMENDMENT. This Assignment may be amended from
time to time by written agreement signed by the parties hereto.
Section 5.02 SEVERABILITY. If any provision of this Assignment
is held to be in conflict with any applicable statute or rule of law or is
otherwise held to be unenforceable for any reason whatsoever, such circumstances
shall not have the effect of rendering the provision in question inoperative or
unenforceable in any other case or circumstance, or of rendering any other
provision or provisions herein contained invalid, inoperative, or unenforceable
to any extent whatsoever. The invalidity of any one or more phrases, sentences,
clauses or Sections of this Assignment contained, shall not affect the remaining
portions of this Assignment, or any part thereof.
Section 5.03 NOTICES. All demands, notices and communications
hereunder shall be in writing, personally delivered or mailed by certified
mail-return receipt requested, and shall be deemed to have been duly given upon
receipt (a) in the case of the Indenture Trustee, at the following address: 114
West 47th Street, New York, New York 10036, Attention: Corporate Trust
Department, (b) in the case of the Owner, at the following address: 15-19 Athol
Street, Douglas, Isle of Man, or at other such address as shall be designated by
such party in a written notice to the other parties.
Section 5.04 CONSENT TO JURISDICTION. Any legal suit, action
or proceeding against the Owner arising out of or relating to this Assignment,
or any transaction contemplated
<PAGE>
-6-
hereby, may be instituted in any federal or state court in The City of New York,
State of New York, and the Owner hereby irrevocably submits to the jurisdiction
of any such court in any such suit, action or proceeding. The Owner hereby
waives, to the fullest extent permitted by applicable law, any defense which it
may now or hereafter have based upon lack of personal jurisdiction or venue or
FORUM NON CONVENIENS. The Owner hereby irrevocably appoints and designates CT
Corporation System, having an address at 1633 Broadway, New York, New York, its
true and lawful attorney-in-fact and duly authorized agent for the limited
purpose of accepting servicing of legal process and the Owner agrees that
service of process upon such party shall constitute personal service of such
process on such Person. The Owner shall maintain the designation and appointment
of such authorized agent until all amounts payable under this Assignment shall
have been paid in full. If such agent shall cease to so act, the Owner shall
immediately designate and appoint another such agent satisfactory to the
Indenture Trustee and shall promptly deliver to the Indenture Trustee evidence
in writing of such other agent's acceptance of such appointment.
Section 5.05 CAPTIONS. The captions or headings in this
Assignment are for convenience only and in no way define, limit or describe the
scope or intent of any provisions or sections of this Assignment.
Section 5.06 GOVERNING LAW. This Assignment shall be governed
by and interpreted in accordance with the laws of the State of New York, without
giving effect to the principles of conflicts of law.
Section 5.07 NO PARTNERSHIP. Nothing herein contained shall be
deemed or construed to create a partnership or joint venture among the parties
hereto, and the services of each party shall be rendered as an independent
contractor and not as agent for any other party.
Section 5.08 COUNTERPARTS. This Assignment may be executed in
any number of counterparts and by different parties hereto on separate
counterpart, each of which shall be deemed to be an original. Such counterparts
shall constitute one and the same agreement.
Section 5.09 SURVIVAL. The representations, covenants and
agreements contained in or made pursuant to this Assignment in respect of either
party hereto shall survive the execution and delivery of this Assignment and
shall continue in effect so long as such party's obligations hereunder remain
outstanding.
Section 5.10 INTEGRATION. This Assignment and the Schedule and
Exhibits hereto constitute the entire agreement and understanding between the
parties hereto with respect to the subject matter hereof and supersede all prior
agreements, understandings or representations pertaining to the subject matter
hereof, whether oral or written. There are no warranties, representations or
other agreements between the parties in connection with the subject matter
hereof except as specifically set forth or incorporated herein.
<PAGE>
-7-
Section 5.11 REPRODUCTION OF DOCUMENTS. This Assignment and
all documents relating thereto, including, without limitation, (a) consents,
waivers and modifications which may hereafter be executed, (b) documents
received by any party at the closing, and (c) financial statements, certificates
and other information previously or hereafter furnished, may be reproduced by
any photographic, photostatic, microfilm, micro-card, miniature photographic or
other similar process. The parties agree that any such reproduction shall be
admissible in evidence as the original itself in any judicial or administrative
proceeding (whether or not the original is in existence and whether or not such
reproduction was made in the regular course of business) and that any
enlargement, facsimile or further reproduction of such reproduction shall
likewise be admissible in evidence.
Section 5.12 SUCCESSORS AND ASSIGNS; ASSIGNMENT. This
Assignment shall be binding upon and inure to the benefit of the Owner and the
Indenture Trustee and their respective successors and assigns. The Owner shall
not have the right to assign its rights hereunder or any interest herein without
the prior written consent of the Indenture Trustee. The Indenture Trustee, at
its sole option, shall have the right to assign this Assignment, the Indenture,
the Security Documents and any of its rights and interest hereunder in
accordance with the terms and provisions of the Indenture and the Security
Documents.
Section 5.13 GENERAL INTERPRETIVE PRINCIPLES. For purposes of
this Assignment except as otherwise expressly provided or unless the context
otherwise requires:
(a) the defined terms in this Assignment shall include the
plural as well as the singular, and the use of any gender herein shall be deemed
to include any other gender;
(b) accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted accounting
principles as in effect on the date hereof;
(c) references herein to "Articles", "Sections",
"Subsections", "paragraphs", and other subdivisions without reference to a
document are to designated Articles, Sections, Subsections, paragraphs and other
subdivisions of this Assignment;
(d) a reference to a Subsection without further reference to a
Section is a reference to such Subsection as contained in the same Section in
which the reference appears, and this rule shall also apply to paragraphs and
other subdivisions;
(e) the words "herein", "hereof", "hereunder" and other words
of similar import refer to this Assignment as a whole and not to any particular
provision; and
(f) the term "include" or "including" shall mean without
limitation by reason of enumeration.
<PAGE>
-8-
Section 5.14 EFFECTIVE DATE OF TRANSACTION. Notwithstanding
the fact that this Assignment is dated as of December 24, 1996, the transactions
set forth herein shall not be effective until the Closing Date.
<PAGE>
IN WITNESS WHEREOF, the Owner and the Indenture Trustee have
caused this Assignment to be duly executed and delivered by their respective
officers thereunto duly authorized all as of the day and year first above
written.
United States Trust Company of New York,
as Indenture Trustee
By:/s/ Christine C. Collins
-----------------------------
Name: Christine C. Collins
Title: Assistant Vice President
Golden State Petro (IOM I-A) PLC, as Owner
By:/s/ Joseph Avantario
-----------------------------
Name: Joseph Avantario
Title: Treasurer
<PAGE>
Exhibit A-1
LETTER OF ACKNOWLEDGMENT
TO ASSIGNMENT OF BUILDING CONTRACT
[Date]
United States Trust Company of New York,
as Indenture Trustee
Dear Sirs:
The undersigned hereby consents to and acknowledges receipt of
a signed copy of the Assignment of Building Contract (the "Assignment"), dated
as of _________, between Golden State Petro (IOM I-A) PLC (the "Owner") and
United States Trust Company of New York, not in its individual capacity but
solely as trustee (the "Indenture Trustee") as adequate notice of such
assignment to the Indenture Trustee of the Building Contract (as defined in the
Assignment) and of all the right, title and interest of the Owner in, to and
under the Building Contract.
So long as the Assignment remains effective, we hereby agree
that we shall pay any and all sums which we are legally obligated to pay to the
Owner or otherwise as stated in and according to the Building Contract directly
to _______________________ Golden State Petroleum Revenue Account, Attention:
___________________, or otherwise to such other account as you may at any time
or from time to time, designate by notice to us in writing.
We confirm that the terms of the Building Contract remain in
full force and effect that the Owner is not presently to our knowledge in breach
of the terms of the Building Contract. We further confirm that the terms of the
Building Contract have not been varied or modified and that the terms of the
Building Contract will not after the date hereof be varied or modified without
the prior written consent of the Indenture Trustee.
We confirm that we have received no prior notice of any
assignment by the Owner of any interest in the Building Contract.
The undersigned will not permit any amendment, modification,
cancellation or other alteration in the Building Contract, nor will it consent
to or accept the substitution thereunder of any party for the Owner without your
prior written consent.
SAMSUNG CORPORATION
By: ______________________________________
Name:_____________________________________
Title:____________________________________
SAMSUNG HEAVY INDUSTRIES, LTD.
By: ______________________________________
Name:_____________________________________
Title:____________________________________
<PAGE>
Exhibit A-2
LETTER OF ACKNOWLEDGMENT
TO ASSIGNMENT OF AGREEMENT ON CONTRACT FOR TECHNICAL MATTERS
[Date]
United States Trust Company of New York,
as Indenture Trustee
Dear Sirs:
The undersigned hereby consents to and acknowledges receipt of
a signed copy of the Assignment of Building Contract (the "Assignment"), dated
as of _________, between Golden State Petro (IOM I-A) PLC (the "Owner") and
United States Trust Company of New York, not in its individual capacity but
solely as trustee (the "Indenture Trustee") as adequate notice of such
assignment to the Indenture Trustee of the Agreement on Contract for Technical
Matters (as defined in the Assignment) and of all the right, title and interest
of the Owner in, to and under the Agreement on Contract for Technical Matters.
So long as the Assignment remains effective, we hereby agree
that (a) we shall pay any and all sums which we are legally obligated to pay to
the Owner or otherwise as stated in and according to the Agreement on Contract
for Technical Matters directly to _______________________ Golden State Petroleum
Revenue Account, Attention: ___________________, or otherwise to such other
account as you may at any time or from time to time, designate by notice to us
in writing.
We confirm that the terms of the Agreement on Contract for
Technical Matters remain in full force and effect that the Owner is not
presently to our knowledge in breach of the terms of the Agreement on Contract
for Technical Matters. We further confirm that the terms of the Agreement on
Contract for Technical Matters have not been varied or modified and that the
terms of the Agreement on Contract for Technical Matters will not after the date
hereof be varied or modified without the prior written consent of the Indenture
Trustee.
We confirm that we have received no prior notice of any
assignment by the Owner of any interest in the Agreement on Contract for
Technical Matters.
The undersigned will not permit any amendment, modification,
cancellation or
<PAGE>
-2-
other alteration in the Agreement on Contract for Technical Matters, nor will it
consent to or accept the substitution thereunder of any party for the Owner
without your prior written consent.
SAMSUNG CORPORATION
By: ______________________________________
Name:_____________________________________
Title:____________________________________
SAMSUNG HEAVY INDUSTRIES, LTD.
By: ______________________________________
Name:_____________________________________
Title:____________________________________
CHEVRON SHIPPING COMPANY
By: ______________________________________
Name:_____________________________________
Title:____________________________________
<PAGE>
SCHEDULE 1
ADDITIONAL DEFINED TERMS USED IN THE ASSIGNMENT
"AGREEMENT ON CONTRACT FOR TECHNICAL MATTERS" means, the Agreement
Regarding Technical Matters, dated as of the Closing Date, between the Owner,
Samsung Heavy Industries Co., LTD and the Technical Supervisor.
"ASSIGNMENT" or "ASSIGNMENT OF BUILDING CONTRACT" means, for each
Vessel, the Building Contract Assignment, dated as of the Closing Date, between
the related Owner and the Indenture Trustee, pursuant to which such Owner
collaterally assigns its rights, title and interests in the related Building
Contract and the Agreement on Contract for Technical Matters to the Indenture
Trustee.
"ASSIGNMENT OF BUILDING CONTRACT GUARANTEE" means, for each Building
Contract Guarantee, the Assignment of Building Contract Guarantee, dated as of
the Closing Date, between the related Owner and the Indenture Trustee, as the
same may be amended from time to time, pursuant to which such Owner collaterally
assigns its rights, title and interest in the related Building Contract
Guarantee therein to the Indenture Trustee.
"ASSIGNMENT OF CHARTER" means the assignment between the Owner and the
Indenture Trustee, as amended from time to time in accordance with the terms
thereof, pursuant to which the Owner collaterally assigns to the Indenture
Trustee all of the Owner's right, title and interest in, to and under the
Initial Charter to secure its obligations under the Indenture.
"ASSIGNMENT OF CHARTER SUPPLEMENT" means, for each Charter Supplement,
the Assignment of Charter Supplement, dated the date of the Supplemental
Indenture, between the Owner of the Vessel and the Indenture Trustee, as the
same may be amended from time to time pursuant to which the Owner collaterally
assigns all of the Owner's right, title and interest therein to the Indenture
Trustee.
"ASSIGNMENT OF CHEVRON GUARANTEE" means the assignment between the
Owner and the Indenture Trustee, as amended from time to time in accordance with
the terms thereof, pursuant to which the Owner collaterally assigns to the
Indenture Trustee all of the Owner's right, title and interest in, to and under
the Chevron Guarantee to secure its obligations under the Indenture.
"ASSIGNMENT OF EARNINGS AND INSURANCES" means the assignment between
the Owner and the Indenture Trustee, as amended from time to time in accordance
with the terms thereof, pursuant to which the Owner collaterally assigns to the
Indenture Trustee all of the Owner's right, title and interest in, to and under
the freights and hires (as well as any charters entered into after the Delivery
Date) with respect to the Vessel to secure its obligations under the Indenture.
"ASSIGNMENT OF MANAGEMENT AGREEMENT" means the assignment between the
Owner and the Indenture Trustee, as amended from time to time in accordance with
the terms thereof, pursuant to which the Owner collaterally assigns to the
Indenture Trustee all of the Owner's
<PAGE>
-2-
right, title and interest in, to and under the Management Agreement to secure
its obligations under the Indenture.
"BUILDER" means, collectively, Samsung Corporation and Samsung Heavy
Industries, Ltd.
"BUILDING CONTRACT" means the Shipbuilding Contract, dated December 24,
1996, between the Builder and the Owner.
"BUILDING CONTRACT GUARANTEE" means the Irrevocable Installment Payment
Letter of Guarantee, dated December 24, 1996, given by the Building Contract
Guarantor to the Owner in connection with the Vessel.
"BUILDING CONTRACT GUARANTOR" means Korea Development Bank.
"CHEVRON" means Chevron Corporation, a Delaware corporation, and its
successors and assigns.
"CHEVRON GUARANTEE" means the Guarantee, dated the Closing Date, given
by Chevron to the Owner in connection with the Initial Charter.
"CLOSING DATE" means December 24, 1996.
"COLLATERAL" means the collateral assigned, pledged or granted to the
Indenture Trustee pursuant to (i) the Assignment of Charter, (ii) the Assignment
of Earnings and Insurances, (iii) the Assignment of Charter Supplement, (iv) the
Mortgage, (v) the Assignment of Chevron Guarantee, (vi) the Assignment of
Management Agreement, (vii) this Assignment of Building Contract, (viii) the
Assignment of Building Contract Guarantee, (ix) the Issue of One Debenture and
(x) the Stock Pledge, together with all income and proceeds thereof.
"DELIVERY DATE" means the date the Vessel is accepted by the Owner from
the Builder under the Building Contract.
"INDENTURE" means the Indenture, dated as of December 1, 1996 among the
Indenture Trustee, the Owner, Golden State Petro B and Golden State Petroleum,
pursuant to which the Notes were issued.
"INDENTURE TRUSTEE" means United States Trust Company of New York.
"INITIAL CHARTER" means with respect to each Vessel, the bareboat
charter, dated as of December 24, 1996, between the Initial Charterer and the
Owner.
"INITIAL CHARTERER" means Chevron Transport Corporation, a Liberian
corporation.
"ISSUE OF ONE DEBENTURE" means each Issue of One Debenture between the
Owner and the Indenture Trustee, as amended from time to time in accordance with
the terms thereof,
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pursuant to which the Owner grants to the Indenture Trustee a security interest
in all of its assets.
"MANAGEMENT AGREEMENT" means the agreement, dated the Closing Date,
between the Owner and the Manager pursuant to which the Manager agrees to
provide certain services to the Owner.
"MANAGER" means the Person performing the duties of the Manager under
the Management Agreement, initially Cambridge Fund Management L.L.C.
"MORTGAGE" means, with respect to the Vessel, the first preferred ship
mortgage on the Vessel granted by the Owner to the Indenture Trustee, as amended
from time to time in accordance with the terms of such Mortgage.
"OBLIGATIONS" means the payment, performance or obligations of any kind
or nature whatsoever of the Owner under and pursuant to the Indenture, any
Security Document and any instrument, agreement or document referred to therein.
"OWNER" means Golden State Petro (IOM I-A) PLC, a company organized
under the laws of the Isle of Man.
"SECURITY DOCUMENTS" means the Indenture, the Mortgage, the Assignment
of Charter, the Assignments of Charter Supplements, the Assignment of Earnings
and Insurances, the Assignment of Chevron Guarantee, the Assignment of
Management Agreement, this Assignment of Building Contract, the Issue of One
Debenture, the Stock Pledge and the Assignment of Building Contract Guarantee,
collectively.
"TECHNICAL SUPERVISOR" means Chevron Shipping Company, San Francisco,
California (as Agent for the Initial Charterer).
"VESSEL" means Hull No. 1228.
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE I
DEFINITIONS............................... 1
ARTICLE II
ASSIGNMENT................................. 1
Section 2.01 Security Interest.......................................... 1
Section 2.02 Assignment................................................. 1
Section 2.03 Owner to Remain Liable..................................... 2
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE OWNER....................... 2
Section 3.01 Organization, Power and Status of the Owner................ 2
Section 3.02 Authorization; Enforceability; Execution and Delivery...... 2
Section 3.03 No Conflicts; Laws and Consents; No Default................ 3
Section 3.04 Governmental Approvals..................................... 3
Section 3.05 Litigation................................................. 3
Section 3.06 No Prior Assignment........................................ 3
Section 3.07 The Agreements............................................. 3
ARTICLE IV
COVENANTS OF THE OWNER........................... 3
Section 4.01 Consent of Parties to Assignment........................... 3
Section 4.02 Enforcement of Agreement................................... 3
Section 4.03 Amendment of Agreements; Assignment of Agreements.......... 4
Section 4.04 Performance of Obligations................................. 4
Section 4.05 Notices.................................................... 4
Section 4.06 Further Assurances......................................... 4
<PAGE>
PAGE
Section 4.07 Indenture Trustee as Attorney-in-Fact of Owner............. 5
ARTICLE V
MISCELLANEOUS PROVISIONS....................... 5
Section 5.01 Amendment.................................................. 5
Section 5.02 Severability............................................... 5
Section 5.03 Notices.................................................... 5
Section 5.04 Consent to Jurisdiction.................................... 5
Section 5.05 Captions................................................... 6
Section 5.06 Governing Law.............................................. 6
Section 5.07 No Partnership............................................. 6
Section 5.08 Counterparts............................................... 6
Section 5.09 Survival................................................... 6
Section 5.10 Integration................................................ 6
Section 5.11 Reproduction of Documents.................................. 6
Section 5.12 Successors and Assigns; Assignment......................... 7
Section 5.13 General Interpretive Principles............................ 7
Section 5.14 Effective Date of Transaction.............................. 7
<PAGE>
EXHIBIT I
---------
================================================================================
UNITED STATES TRUST COMPANY OF NEW YORK,
AS INDENTURE TRUSTEE
and
GOLDEN STATE PETRO (IOM I-A) PLC
-----------------------------------
ASSIGNMENT OF BUILDING CONTRACT GUARANTEE
Dated as of December 1, 1996
-----------------------------------
================================================================================
<PAGE>
Assignment of Building Contract Guarantee, dated as of
December 1, 1996 (the "Assignment"), between Golden State Petro (IOM I-A) PLC
(the "Owner") and United States Trust Company of New York (the "Indenture
Trustee"), not in its individual capacity but solely as trustee under the
Indenture (the "Indenture"), dated as of the date hereof, among the Owner, the
Indenture Trustee, Golden State Petro (IOM I-B) PLC ("Golden State Petro B") and
Golden State Petroleum Transport Corporation ("Golden State Petroleum"), as
agent for the Owner and Golden State Petro B.
PRELIMINARY STATEMENT
On the Closing Date, Golden State Petroleum, as agent for the
Owner and Golden State Petro B, will issue Notes in connection with the
financing of the construction of the Vessel. The Vessel will be constructed
pursuant to the terms and conditions of the Building Contract. Pursuant to the
Agreement on Contract for Technical Matters, the Technical Supervisor will
supervise the construction of the Vessel. Pursuant to the Building Contract
Guarantee, Korea Development Bank (the "Building Contract Guarantor") will
guarantee the obligations of the Builder under the Building Contract. The
Allocated Principal Amount of the Mortgage Notes for the Vessel will be used,
INTER ALIA, to make the installments due under the Building Contract for the
Vessel. As collateral security for its obligations under the Indenture, the
Owner has and will assign, pledge, mortgage and grant the Indenture Trustee a
security interest in, INTER ALIA, the Building Contract, the Agreement on
Contract for Technical Matters and the Building Contract Guarantee.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained and of other valuable consideration, receipt of
which is hereby acknowledged, the Owner and the Indenture Trustee hereby agree
as follows:
ARTICLE I
DEFINITIONS
Unless otherwise defined in Schedule 1 to this Assignment,
capitalized terms used in this Assignment shall have the meanings assigned to
such terms in the Indenture.
ARTICLE II
ASSIGNMENT
Section 2.01 SECURITY INTEREST. This Assignment is made and
delivered as security for the Obligations.
Section 2.02 ASSIGNMENT. In order to provide for the payment
of and as security for the Obligations, the Owner has granted, bargained,
assigned, transferred, conveyed, mortgaged, pledged and granted a security
interest in and confirmed, and does hereby grant, bargain, assign, transfer,
convey, mortgage, pledge and grant a security interest in and confirm, to the
Indenture Trustee, its successors and assigns, for its and their respective
successors' and assigns' own proper use and benefit, all of the Owner's right,
title and interest in and to the Building Contract Guarantee, including without
limitation any moneys whatsoever payable to the Owner thereunder, together with
the income and proceeds thereof and all other rights and
<PAGE>
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benefits whatsoever accruing to the Owner thereunder; PROVIDED, HOWEVER, that
the Owner shall keep the Indenture Trustee fully and effectively indemnified
from and against all actions, losses, claims, proceedings, costs, demands and
liabilities which may be suffered by the Indenture Trustee under or by virtue of
the Building Contract Guarantee or this Assignment.
Section 2.03 OWNER TO REMAIN LIABLE. Anything in this
Assignment contained to the contrary notwithstanding, the Owner shall remain
liable under the Building Contract Guarantee, and shall observe, perform and
fulfill all of the conditions and obligations to be observed, performed and
fulfilled by it thereunder, and the Indenture Trustee shall have no obligation
or liability of any kind whatsoever thereunder or by reason of or arising out of
this Assignment, nor shall the Indenture Trustee be under any liability
whatsoever in the event of any failure by the Owner to perform its obligations
thereunder or be required or obligated in any manner to observe, perform or
fulfill any of the conditions or obligations of the Owner thereunder or pursuant
thereto, or to make any payment or to make any inquiry as to the nature or
sufficiency of any payment received by it or the Owner thereunder, or to present
or file any claim, or to take any other action to collect or enforce the payment
of any amounts which may have been assigned to the Indenture Trustee or to which
the Indenture Trustee may be entitled hereunder at any time or times.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE OWNER
The Owner hereby represents and warrants to the Indenture
Trustee as follows:
Section 3.01 ORGANIZATION, POWER AND STATUS OF THE OWNER. The
Owner (a) is a corporation duly formed, validly existing and in good standing
under the laws of the Isle of Man and (b) is duly authorized, to the extent
necessary, to do business in each jurisdiction where the character of its
properties or the nature of its activities makes such qualification necessary.
The Owner has all requisite corporate power and authority to own and operate the
property it purports to own and to carry on its business as now being conducted
and as proposed to be conducted in respect of the Vessel.
Section 3.02 AUTHORIZATION; ENFORCEABILITY; EXECUTION AND
DELIVERY. (a) The Owner has all necessary corporate power and authority to
execute, deliver and perform under this Assignment.
(b) All action on the part of the Owner that is required for
the authorization, execution, delivery and performance of this Assignment has
been duly and effectively taken; and the execution, delivery and performance of
this Assignment does not require the approval or consent of any Person except
for such consents and approvals as have been obtained on or prior to the Closing
Date.
(c) This Assignment has been duly executed and delivered by
the Owner. This Assignment constitutes the legal, valid and binding obligation
of the Owner, enforceable against it in accordance with the terms thereof.
<PAGE>
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Section 3.03 NO CONFLICTS; LAWS AND CONSENTS; NO DEFAULT. (a)
Neither the execution, delivery and performance of this Assignment nor the
consummation of any of the transactions contemplated hereby nor performance of
or compliance with the terms and conditions hereof (i) contravenes any
Requirement of Law applicable to the Owner or (ii) constitutes a default under
the Indenture or any Security Document.
(b) The Owner is in compliance with and not in default under
any and all Requirements of Law applicable to the Owner and all terms and
provisions of this Assignment.
Section 3.04 GOVERNMENTAL APPROVALS. All Governmental
Approvals which are required to be obtained in the name of the Owner in
connection with the execution, delivery and performance by the Owner of this
Assignment have been obtained and are in effect on the Closing Date.
Section 3.05 LITIGATION. There are no actions, suits or
proceedings at law or in equity or by or before any Governmental Authority now
pending against the Owner or, to the best of the Owner's knowledge, threatened
against the Owner or pending or threatened against any property or other assets
or rights of the Owner with respect to this Assignment.
Section 3.06 NO PRIOR ASSIGNMENT. The Owner has not assigned
or pledged, and hereby covenants that it will not assign or pledge, so long as
this Assignment shall remain in effect, the Building Contract Guarantee or any
part of the rights, titles and interests hereby assigned, to anyone other than
the Indenture Trustee, or its successors or assigns.
Section 3.07 THE BUILDING CONTRACT GUARANTEE. The Building
Contract Guarantee constitutes the legal, valid and binding obligation of the
Owner as "Owner" thereunder and is in full force and effect in the form of
Exhibit "A" attached hereto; there are no amendments, additions, addenda or
modifications thereto and neither of the parties thereto is in default
thereunder.
ARTICLE IV
COVENANTS OF THE OWNER
The Owner hereby covenants and agrees that so long as any of
the Obligations remains outstanding:
Section 4.01 CONSENT OF PARTIES TO ASSIGNMENT. On the Closing
Date, the Owner shall deliver to the Building Contract Guarantor a copy of this
Assignment and shall procure the execution by the Building Contract Guarantor of
the Consent and Acknowledgment set out in Exhibit A hereto and deliver said
Consent and Acknowledgment to the Indenture Trustee on the Closing Date.
Section 4.02 ENFORCEMENT OF BUILDING CONTRACT GUARANTEE. (a)
The Owner will do or permit to be done each and every act or thing which the
Indenture Trustee may from time
<PAGE>
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to time require to be done for the purpose of enforcing the Indenture Trustee's
rights under the Building Contract Guarantee and this Assignment.
(b) The Owner shall cause all moneys hereby assigned or agreed
to be assigned or arising from or in connection with any of the rights, title,
interest and benefits of the Owner under the Building Contract Guarantee shall
be paid to the credit of Chase Manhattan Bank NYC, ABA #021000021, A/C
#920-1-073195, credit U.S. Trust Co NY, further credit to A/C #04692300, Golden
State Petroleum Transport Revenue Account, Attention: Chris Collins or to such
other account as the Indenture Trustee may from time to time direct.
(c) The Owner will not exercise any right or powers conferred
on it by the Building Contract Guarantee in connection with any default or
alleged default by the Building Contract Guarantor thereunder (including without
limitation the right of termination and substitution) unless and until requested
so to do by the Indenture Trustee whereupon the Owner agrees that it will do so
provided always that the Indenture Trustee shall not be responsible in any way
whatsoever in the event that the exercise of any right or power (including the
right of termination and substitution) be thereafter adjudged improper or to
constitute a repudiation of the Building Contract Guarantee by the Owner.
Section 4.03 AMENDMENT OF BUILDING CONTRACT GUARANTEE;
ASSIGNMENT OF BUILDING CONTRACT GUARANTEE. (a) The Owner will not, except with
the previous written consent of the Indenture Trustee, agree to any variation of
the Building Contract Guarantee or release the Building Contract Guarantor
thereto from any of its obligations thereunder or waive any breach of the
Building Contract Guarantor's obligations thereunder or consent to any such act
or omission of such party as would otherwise constitute such breach.
(b) The Owner will not, except with the previous written
consent of the Indenture Trustee, assign the Building Contract Guarantee to any
other Person.
Section 4.04 PERFORMANCE OF OBLIGATIONS. The Owner will
perform its obligations under the Building Contract Guarantee and will use its
best efforts to cause the Building Contract Guarantor to perform its obligations
thereunder.
Section 4.05 NOTICES. The Owner will send a copy of all
notices received or given by it under the Building Contract Guarantee forthwith
to the Indenture Trustee.
Section 4.06 FURTHER ASSURANCES. The Owner will at any time
and from time to time, upon the written request of the Indenture Trustee,
promptly and duly execute and deliver any and all such further instruments and
documents and take such action as the Indenture Trustee may deem desirable in
order to obtain the full benefits of this Assignment and of the rights and
powers herein granted.
Section 4.07 INDENTURE TRUSTEE AS ATTORNEY-IN-FACT OF OWNER.
The Owner hereby constitutes the Indenture Trustee, and its successors and
assigns, its true and lawful attorney-in-fact, irrevocably, with full power in
its own name, in the name of its agents or
<PAGE>
-5-
nominees or in the name of the Owner or otherwise, to ask, require, demand,
receive, enforce and give acquittance for, any and all moneys and claims for
moneys due and to become due and payable under or arising out of the Building
Contract Guarantee, to endorse any checks or other instruments or orders in
connection therewith and to file any claims or take any action or institute any
proceedings which to the Indenture Trustee may seem to be necessary or advisable
under this Assignment. Any action or proceeding brought by the Indenture Trustee
pursuant to any of the provisions of this Assignment or otherwise and any claim
made by the Indenture Trustee hereunder may be compromised, withdrawn or
otherwise dealt with by the Indenture Trustee without any notice to or approval
of the Owner.
ARTICLE V
MISCELLANEOUS PROVISIONS
Section 5.01 AMENDMENT. This Assignment may be amended from
time to time by written agreement signed by the parties hereto.
Section 5.02 SEVERABILITY. If any provision of this Assignment
is held to be in conflict with any applicable statute or rule of law or is
otherwise held to be unenforceable for any reason whatsoever, such circumstances
shall not have the effect of rendering the provision in question inoperative or
unenforceable in any other case or circumstance, or of rendering any other
provision or provisions herein contained invalid, inoperative, or unenforceable
to any extent whatsoever. The invalidity of any one or more phrases, sentences,
clauses or Sections of this Assignment contained, shall not affect the remaining
portions of this Assignment, or any part thereof.
Section 5.03 NOTICES. All demands, notices and communications
hereunder shall be in writing, personally delivered or mailed by certified
mail-return receipt requested, and shall be deemed to have been duly given upon
receipt (a) in the case of the Indenture Trustee, at the following address: 114
West 47th Street, New York, New York 10036, Attention: Corporate Trust
Department, (b) in the case of the Owner, at the following address: 15-19 Athol
Street, Douglas, Isle of Man, or at other such address as shall be designated by
such party in a written notice to the other parties.
Section 5.04 CONSENT TO JURISDICTION. Any legal suit, action
or proceeding against the Owner arising out of or relating to this Assignment,
or any transaction contemplated hereby, may be instituted in any federal or
state court in The City of New York, State of New York, and the Owner hereby
irrevocably submits to the jurisdiction of any such court in any such suit,
action or proceeding. The Owner hereby waives, to the fullest extent permitted
by applicable law, any defense which it may now or hereafter have based upon
lack of personal jurisdiction or venue or FORUM NON CONVENIENS. The Owner hereby
irrevocably appoints and designates CT Corporation System, having an address at
1633 Broadway, New York, New York, its true and lawful attorney-in-fact and duly
authorized agent for the limited purpose of accepting servicing of legal process
and the Owner agrees that service of process upon such party shall constitute
personal service of such process on such Person. The Owner shall maintain the
designation and appointment of such authorized agent until all amounts payable
<PAGE>
-6-
under this Assignment shall have been paid in full. If such agent shall cease to
so act, the Owner shall immediately designate and appoint another such agent
satisfactory to the Indenture Trustee and shall promptly deliver to the
Indenture Trustee evidence in writing of such other agent's acceptance of such
appointment.
Section 5.05 CAPTIONS. The captions or headings in this
Assignment are for convenience only and in no way define, limit or describe the
scope or intent of any provisions or sections of this Assignment.
Section 5.06 GOVERNING LAW. This Assignment shall be governed
by and interpreted in accordance with the laws of the State of New York, without
giving effect to the principles of conflicts of law.
Section 5.07 NO PARTNERSHIP. Nothing herein contained shall be
deemed or construed to create a partnership or joint venture among the parties
hereto, and the services of each party shall be rendered as an independent
contractor and not as agent for any other party.
Section 5.08 COUNTERPARTS. This Assignment may be executed in
any number of counterparts and by different parties hereto on separate
counterpart, each of which shall be deemed to be an original. Such counterparts
shall constitute one and the same agreement.
Section 5.09 SURVIVAL. The representations, covenants and
agreements contained in or made pursuant to this Assignment in respect of either
party hereto shall survive the execution and delivery of this Assignment and
shall continue in effect so long as such party's obligations hereunder remain
outstanding.
Section 5.10 INTEGRATION. This Assignment and the Schedule and
Exhibits hereto constitute the entire agreement and understanding between the
parties hereto with respect to the subject matter hereof and supersede all prior
agreements, understandings or representations pertaining to the subject matter
hereof, whether oral or written. There are no warranties, representations or
other agreements between the parties in connection with the subject matter
hereof except as specifically set forth or incorporated herein.
Section 5.11 REPRODUCTION OF DOCUMENTS. This Assignment and
all documents relating thereto, including, without limitation, (a) consents,
waivers and modifications which may hereafter be executed, (b) documents
received by any party at the closing, and (c) financial statements, certificates
and other information previously or hereafter furnished, may be reproduced by
any photographic, photostatic, microfilm, micro-card, miniature photographic or
other similar process. The parties agree that any such reproduction shall be
admissible in evidence as the original itself in any judicial or administrative
proceeding (whether or not the original is in existence and whether or not such
reproduction was made in the regular course of business) and that any
enlargement, facsimile or further reproduction of such reproduction shall
likewise be admissible in evidence.
<PAGE>
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Section 5.12 SUCCESSORS AND ASSIGNS; ASSIGNMENT. This
Assignment shall be binding upon and inure to the benefit of the Owner and the
Indenture Trustee and their respective successors and assigns. The Owner shall
not have the right to assign its rights hereunder or any interest herein without
the prior written consent of the Indenture Trustee. The Indenture Trustee, at
its sole option, shall have the right to assign this Assignment, the Indenture,
the Security Documents and any of its rights and interest hereunder in
accordance with the terms and provisions of the Indenture and the Security
Documents.
Section 5.13 GENERAL INTERPRETIVE PRINCIPLES. For purposes of
this Assignment except as otherwise expressly provided or unless the context
otherwise requires:
(a) the defined terms in this Assignment shall include the
plural as well as the singular, and the use of any gender herein shall be deemed
to include any other gender;
(b) accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted accounting
principles as in effect on the date hereof;
(c) references herein to "Articles", "Sections",
"Subsections", "paragraphs", and other subdivisions without reference to a
document are to designated Articles, Sections, Subsections, paragraphs and other
subdivisions of this Assignment;
(d) a reference to a Subsection without further reference to a
Section is a reference to such Subsection as contained in the same Section in
which the reference appears, and this rule shall also apply to paragraphs and
other subdivisions;
(e) the words "herein", "hereof", "hereunder" and other words
of similar import refer to this Assignment as a whole and not to any particular
provision; and
(f) the term "include" or "including" shall mean without
limitation by reason of enumeration.
Section 5.14 EFFECTIVE DATE OF TRANSACTION. Notwithstanding
the fact that this Assignment is dated as of December 24, 1996, the transactions
set forth herein shall not be effective until the Closing Date.
<PAGE>
IN WITNESS WHEREOF, the Owner and the Indenture Trustee have
caused this Assignment to be duly executed and delivered by their respective
officers thereunto duly authorized all as of the day and year first above
written.
United States Trust Company of New York, as
Indenture Trustee
By:/s/ Christine C. Collins
-----------------------------
Name: Christine C. Collins
Title: Assistant Vice President
Golden State Petro (IOM I-A) PLC, as Owner
By:/s/ Joseph Avantario
-----------------------------
Name: Joseph Avantario
Title: Treasurer
<PAGE>
Exhibit A
LETTER OF ACKNOWLEDGMENT
TO ASSIGNMENT OF BUILDING CONTRACT GUARANTEE
[Date]
United States Trust Company of New York,
as Indenture Trustee
Dear Sirs:
The undersigned hereby consents to and acknowledges receipt of
a signed copy of the Assignment of Building Contract Guarantee (the
"Assignment"), dated as of December 1, 1996, between Golden State Petro (IOM
I-A) PLC (the "Owner") and United States Trust Company of New York, not in its
individual capacity but solely as trustee (the "Indenture Trustee") as adequate
notice of such assignment to the Indenture Trustee of the Building Contract
Guarantee (as defined in the Assignment) and of all the right, title and
interest of the Owner in, to and under the Building Contract Guarantee.
So long as the Assignment remains effective, we hereby agree
that we shall pay any and all sums which we are legally obligated to pay to the
Owner or otherwise as stated in and according to the Building Contract Guarantee
directly to _______________________ Golden State Petroleum Revenue Account,
Attention: ___________________, or otherwise to such other account as you may at
any time or from time to time, designate by notice to us in writing.
We confirm that the terms of the Building Contract Guarantee
remain in full force and effect that the Owner is not presently to our knowledge
in breach of the terms of the Building Contract Guarantee. We further confirm
that the terms of the Building Contract Guarantee have not been varied or
modified and that the terms of the Building Contract Guarantee will not after
the date hereof be varied or modified without the prior written consent of the
Indenture Trustee.
We confirm that we have received no prior notice of any
assignment by the Owner of any interest in the Building Contract Guarantee.
The undersigned will not permit any amendment, modification,
cancellation or other alteration in the Building Contract Guarantee, nor will it
consent to or accept the substitution thereunder of any party for the Owner
without your prior written consent.
Korea Development Bank
By:_______________________________
Name:_____________________________
Title:____________________________
<PAGE>
SCHEDULE 1
ADDITIONAL DEFINED TERMS USED IN THE ASSIGNMENT
"AGREEMENT ON CONTRACT FOR TECHNICAL MATTERS" means, the Agreement
Regarding Technical Matters, dated as of the Closing Date, between the Owner,
Samsung Heavy Industries Co., LTD and the Technical Supervisor.
"ASSIGNMENT" or "ASSIGNMENT OF BUILDING CONTRACT GUARANTEE" means, for
each Building Contract Guarantee, the Assignment of Building Contract Guarantee,
dated as of the Closing Date, between the related Owner and the Indenture
Trustee, as the same may be amended from time to time, pursuant to which such
Owner collaterally assigns its rights, title and interest in the related
Building Contract Guarantee therein to the Indenture Trustee.
"ASSIGNMENT OF BUILDING CONTRACT" means, for each Vessel, the Building
Contract Assignment, dated as of the Closing Date, between the related Owner and
the Indenture Trustee, pursuant to which such Owner collaterally assigns its
rights, title and interests in the related Building Contract and the Agreement
on Contract for Technical Matters to the Indenture Trustee.
"ASSIGNMENT OF CHARTER" means the assignment between the Owner and the
Indenture Trustee, as amended from time to time in accordance with the terms
thereof, pursuant to which the Owner collaterally assigns to the Indenture
Trustee all of the Owner's right, title and interest in, to and under the
Initial Charter to secure its obligations under the Indenture.
"ASSIGNMENT OF CHARTER SUPPLEMENT" means, for each Charter Supplement,
the Assignment of Charter Supplement, dated the date of the Supplemental
Indenture, between the Owner of the Vessel and the Indenture Trustee, as the
same may be amended from time to time pursuant to which the Owner collaterally
assigns all of the Owner's right, title and interest therein to the Indenture
Trustee.
"ASSIGNMENT OF CHEVRON GUARANTEE" means the assignment between the
Owner and the Indenture Trustee, as amended from time to time in accordance with
the terms thereof, pursuant to which the Owner collaterally assigns to the
Indenture Trustee all of the Owner's right, title and interest in, to and under
the Chevron Guarantee to secure its obligations under the Indenture.
"ASSIGNMENT OF EARNINGS AND INSURANCES" means the assignment between
the Owner and the Indenture Trustee, as amended from time to time in accordance
with the terms thereof, pursuant to which the Owner collaterally assigns to the
Indenture Trustee all of the Owner's right, title and interest in, to and under
the freights and hires (as well as any charters entered into after the Delivery
Date) with respect to the Vessel to secure its obligations under the Indenture.
"ASSIGNMENT OF MANAGEMENT AGREEMENT" means the assignment between the
Owner and the Indenture Trustee, as amended from time to time in accordance with
the terms thereof, pursuant to which the Owner collaterally assigns to the
Indenture Trustee all of the Owner's
<PAGE>
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right, title and interest in, to and under the Management Agreement to secure
its obligations under the Indenture.
"BUILDER" means, collectively, Samsung Corporation and Samsung Heavy
Industries, Ltd.
"BUILDING CONTRACT" means the Shipbuilding Contract, dated December 24,
1996, between the Builder and the Owner.
"BUILDING CONTRACT GUARANTEE" means the Irrevocable Installment Payment
Letter of Guarantee, dated December 24, 1996, given by the Building Contract
Guarantor to the Owner in connection with the Vessel.
"BUILDING CONTRACT GUARANTOR" means Korea Development Bank.
"CHEVRON" means Chevron Corporation, a Delaware corporation, and its
successors and assigns.
"CHEVRON GUARANTEE" means the Guarantee, dated the Closing Date, given
by Chevron to the Owner in connection with the Initial Charter.
"CLOSING DATE" means December 24, 1996.
"COLLATERAL" means the collateral assigned, pledged or granted to the
Indenture Trustee pursuant to (i) the Assignment of Charter, (ii) the Assignment
of Earnings and Insurances, (iii) the Assignment of Charter Supplement, (iv) the
Mortgage, (v) the Assignment of Chevron Guarantee, (vi) the Assignment of
Management Agreement, (vii) the Assignment of Building Contract, (viii) this
Assignment of Building Contract Guarantee, (ix) the Issue of One Debenture and
(x) the Stock Pledge, together with all income and proceeds thereof.
"DELIVERY DATE" means the date the Vessel is accepted by the Owner from
the Builder under the Building Contract.
"INDENTURE" means the Indenture, dated as of December 1, 1996, among
the Indenture Trustee, the Owner, Golden State Petro B and Golden State
Petroleum, pursuant to which the Notes were issued.
"INDENTURE TRUSTEE" means United States Trust Company of New York.
"INITIAL CHARTER" means with respect to each Vessel, the bareboat
charter, dated as of December 24, 1996, between the Initial Charterer and the
Owner.
"INITIAL CHARTERER" means Chevron Transport Corporation, a Liberian
corporation.
"ISSUE OF ONE DEBENTURE" means each Issue of One Debenture between the
Owner and the Indenture Trustee, as amended from time to time in accordance with
the terms thereof,
<PAGE>
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pursuant to which the Owner grants to the Indenture Trustee a security interest
in all of its assets.
"MANAGEMENT AGREEMENT" means the agreement, dated the Closing Date,
between the Owner and the Manager pursuant to which the Manager agrees to
provide certain services to the Owner.
"MANAGER" means the Person performing the duties of the Manager under
the Management Agreement, initially Cambridge Fund Management L.L.C.
"MORTGAGE" means, with respect to the Vessel, the first preferred ship
mortgage on the Vessel granted by the Owner to the Indenture Trustee, as amended
from time to time in accordance with the terms of such Mortgage.
"OBLIGATIONS" means the payment, performance or obligations of any kind
or nature whatsoever of the Owner under and pursuant to the Indenture, any
Security Document and any instrument, agreement or document referred to therein.
"OWNER" means Golden State Petro (IOM I-A) PLC, a company organized
under the laws of the Isle of Man.
"SECURITY DOCUMENTS" means the Indenture, the Mortgage, the Assignment
of Charter, the Assignments of Charter Supplements, the Assignment of Earnings
and Insurances, the Assignment of Chevron Guarantee, the Assignment of
Management Agreement, the Assignment of Building Contract, the Issue of One
Debenture, the Stock Pledge and this Assignment of Building Contract Guarantee,
collectively.
"TECHNICAL SUPERVISOR" means Chevron Shipping Company, San Francisco,
California (as Agent for the Initial Charterer).
"VESSEL" means Hull No. 1228.
<PAGE>
TABLE OF CONTENTS
Page
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ARTICLE I
DEFINITIONS............................... 1
ARTICLE II
ASSIGNMENT................................ 1
Section 2.01 Security Interest............................................. 1
Section 2.02 Assignment.................................................... 1
Section 2.03 Owner to Remain Liable........................................ 2
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE OWNER................ 2
Section 3.01 Organization, Power and Status of the Owner................... 2
Section 3.02 Authorization; Enforceability; Execution and Delivery......... 2
Section 3.03 No Conflicts; Laws and Consents; No Default................... 3
Section 3.04 Governmental Approvals........................................ 3
Section 3.05 Litigation.................................................... 3
Section 3.06 No Prior Assignment........................................... 3
Section 3.07 The Building Contract Guarantee............................... 3
ARTICLE IV
COVENANTS OF THE OWNER.......................... 3
Section 4.01 Consent of Parties to Assignment.............................. 3
Section 4.02 Enforcement of Building Contract Guarantee.................... 3
Section 4.03 Amendment of Building Contract Guarantee; Assignment of
Building Contract Guarantee................................... 4
Section 4.04 Performance of Obligations.................................... 4
Section 4.05 Notices....................................................... 4
<PAGE>
Page
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Section 4.06 Further Assurances............................................ 4
Section 4.07 Indenture Trustee as Attorney-in-Fact of Owner................ 4
ARTICLE V
MISCELLANEOUS PROVISIONS........................ 5
Section 5.01 Amendment..................................................... 5
Section 5.02 Severability.................................................. 5
Section 5.03 Notices....................................................... 5
Section 5.04 Consent to Jurisdiction....................................... 5
Section 5.05 Captions...................................................... 6
Section 5.06 Governing Law................................................. 6
Section 5.07 No Partnership................................................ 6
Section 5.08 Counterparts.................................................. 6
Section 5.09 Survival...................................................... 6
Section 5.10 Integration................................................... 6
Section 5.11 Reproduction of Documents..................................... 6
Section 5.12 Successors and Assigns; Assignment............................ 6
Section 5.13 General Interpretive Principles............................... 7
Section 5.14 Effective Date of Transaction................................. 7
================================================================================
GOLDEN STATE HOLDINGS I LTD.
and
UNITED STATES TRUST COMPANY OF NEW YORK
-------------------------------
STOCK PLEDGE AGREEMENT
Dated as of December 1, 1996
-------------------------------
================================================================================
<PAGE>
STOCK PLEDGE AGREEMENT
This Stock Pledge Agreement dated as of December 1, 1996 (the
"Agreement"), among Golden State Holdings I Ltd., an Isle of Man holding company
(the "Pledgor"), United States Trust Company of New York, not in its individual
capacity but solely as trustee under the Indenture (as hereinafter defined), a
bank and trust company organized under the New York Banking Law (the "Secured
Party"), and Andrew James Baker of 15-19 Athol Street, Douglas, Isle of Man (the
"Stock Trustee").
PRELIMINARY STATEMENT
On the Closing Date, Golden State Petro (IOM I-A) PLC and
Golden State Petro (IOM I-B) PLC (each, "Owner", and collectively, the "Owners")
will enter into an Indenture by and among the Owners, the Secured Party and
Golden State Petroleum Transport Corporation, as agent of the Owners, dated as
of the date hereof (the "Indenture"), pursuant to which the Owners will issue
Serial First Preferred Mortgage Notes maturing serially from 2000 to 2006 and
First Preferred Mortgage Notes due 2019.
The Pledgor is the registered legal owner of one of the
Pledged Shares of each of the Owners and the Stock Trustee is the registered
legal owner of the other of the Pledged Shares of each of the Owners who holds
such shares for the Pledgor as bare trustee (subject to the terms of this
Agreement). The Pledgor is the beneficial owner of all of the outstanding shares
of the capital stock of each of the Owners.
The Pledgor has agreed to grant to the Secured Party a
security interest in the Pledged Shares (as hereinafter defined), upon the terms
and conditions herein set forth.
NOW, THEREFORE, in consideration of the premises and of the
mutual representations, covenants and agreements herein set forth, the Pledgor
hereby agrees with the Secured Party as follows:
ARTICLE I
DEFINITIONS AND INTERPRETATION
Section 1.1. DEFINITIONS. For the purposes of this Agreement,
the following words and terms shall have the meanings set forth below, and terms
not defined herein shall have the meanings ascribed to them in the Indenture or
the Uniform Commercial Code adopted by the State of New York, as amended from
time to time in accordance therewith (the "Code").
"Obligations" means, with respect to each Owner, such Owner's
payment, performance or obligations of any kind or nature whatsoever under and
pursuant to the Indenture, any Security Document and any instrument, agreement
or document referred to therein.
"Pledged Collateral" has the meaning set forth in Section 2.1
of this Agreement.
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"Pledged Shares" means all of the shares of the Owners
beneficially owned by the Pledgor and pledged to the Secured Party pursuant to
Section 2.1 of this Agreement.
Section 1.2. INTERPRETATION. In this Agreement, unless the
context otherwise requires:
(1) The terms "hereby", "hereof", "hereto", "herein",
"hereunder" and any similar terms, as used in this Agreement refer to
this Agreement as a whole and not to any particular provisions and the
term "hereafter" means after, and the term "heretofore" means before,
the date of this Agreement. "Including" or "including" shall mean
without limitation by reason of enumeration.
(2) Words of the masculine gender mean and include correlative
words of the feminine and neuter genders and words importing the
singular number mean and include the plural number and vice versa.
(3) Any headings preceding the texts of the several Articles
and Sections of this Agreement, and the table of contents appended to
this Agreement, shall be solely for convenience of reference and shall
not constitute a part of this Agreement nor shall they affect its
meaning, construction or effect.
(4) References herein to "Articles", "Sections",
"Subsections", "paragraphs", and other subdivisions without reference
to a document are to designated Articles, Sections, Subsections,
paragraphs and other subdivisions of this Agreement. A reference to a
Subsection without further reference to a Section is a reference to
such Subsection as contained in the same Section in which the reference
appears, and this rule shall also apply to paragraphs and other
subdivisions.
(5) Accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted
accounting principles as in effect on the date hereof.
(6) All approvals, consents and acceptances required to be
given or made by any person or party hereunder shall be at the sole
discretion of the party whose approval, consent or acceptance is
required.
(7) Exhibits, if any, to this Agreement are an integral part
of this Agreement.
<PAGE>
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ARTICLE II
SECURITY INTEREST
Section 2.1. SECURITY INTEREST. As security for the prompt and
unconditional payment and performance of the Obligations, the Pledgor does
hereby assign, pledge and grant to the Secured Party a valid perfected security
interest in and to and the Pledgor directs the Stock Trustee to (who hereby
accepts such direction and does hereby) assign, pledge and grant such interest
in and to the following (collectively, the "Pledged Collateral"):
(1) the Pledged Shares and the certificates representing the
Pledged Shares, and all dividends, cash, instruments and other property
from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of the Pledged Shares;
(2) all additional shares of stock of any issuer of the
Pledged Shares from time to time acquired by the Pledgor or the Stock
Trustee for the Pledgor in any manner, and the certificates
representing such additional shares, and all dividends, cash,
instruments and other property from time to time received, receivable
or otherwise distributed in respect of or in exchange for any or all of
such shares; and
(3) all proceeds of any and all of the foregoing (including,
without limitation, proceeds that constitute property of the types
described above).
Section 2.2. DELIVERY OF PLEDGED COLLATERAL. Concurrently with
the execution and delivery of this Agreement, the Pledgor shall deliver or cause
to be delivered to the Secured Party all stock certificates representing the
Pledged Shares together with an executed stock transfer form for each stock
certificate, representing any of the Pledged Shares in favor of the Secured
Party. The Secured Party shall have the right, at any time in its discretion and
without notice to the Pledgor, to transfer to or to register in the name of the
Secured Party or any of its nominees any or all of the Pledged Collateral. In
addition, the Secured Party shall have the right at any time to exchange
certificates or instruments representing or evidencing the Pledged Collateral
for certificates or instruments of smaller or larger denominations. The Pledgor
shall also deliver or cause to be delivered to the Secured Party the following
documents:
(i) executed undated resignations of each director and
officer of each of the Owners from time to time
substantially in the form annexed hereto marked
"Exhibit A"; and
(ii) an irrevocable proxy ("the Irrevocable Proxy") from
each of the Pledgor and the Stock Trustee in respect
of all the Pledged Shares in the form annexed hereto
marked "Exhibit B".
<PAGE>
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Provided that the Pledgor and the Stock Trustee will, if so
required and so far as it may be within their power so to do, procure for the
Secured Party and/or its duly authorized representatives access to each of the
share registers of the Owners at any reasonable time for the purposes of
inspection and supply of copies thereof.
Section 2.3. VOTING RIGHTS; DIVIDENDS; ETC. (a) So long as no
Event of Default shall have occurred and be continuing:
(1) The Pledgor and the Stock Trustee on behalf of the Pledgor
shall be entitled to exercise or refrain from exercising any and all
voting and other consensual rights pertaining to the Pledged Collateral
or any part thereof for any purpose not inconsistent with the terms of
this Agreement; PROVIDED, HOWEVER, that the Pledgor and the Stock
Trustee shall not exercise or refrain from exercising any such right
if, in the Secured Party's reasonable judgment, such action would have
a material adverse effect on the value of the Pledged Collateral or any
part thereof;
(2) The Pledgor shall be entitled to receive and retain any
and all dividends, distributions and other amounts paid in respect of
the Pledged Collateral, PROVIDED, HOWEVER, that any and all property of
the type listed in paragraphs (A), (B) and (C) below shall be, and
shall forthwith be delivered to the Secured Party to hold as Pledged
Collateral, as security for the Obligations, and shall, if received by
the Pledgor or the Stock Trustee, be received in trust for the benefit
of the Secured Party, be segregated from the other property or funds of
the Pledgor and be forthwith delivered to the Secured Party as Pledged
Collateral, as security for the Obligations, in the same form as so
received, with any necessary indorsement or assignment:
(A) dividends paid or payable other than in cash in
respect of, and instruments and other property
received, receivable or otherwise distributed in
respect of, or in exchange for, the Pledged
Collateral;
(B) dividends and other distributions paid or payable in
cash in respect of any Pledged Collateral in
connection with a partial or total liquidation or
dissolution;
(C) cash paid in redemption of, or in exchange for, any
Pledged Collateral; and
(3) The Secured Party shall execute and deliver (or cause to
be executed and delivered) to the Pledgor all such proxies and other
instruments as the Pledgor may reasonably request for the purpose of
enabling the Pledgor to exercise the voting and other rights which it
is entitled to exercise pursuant to paragraph (1) above and to receive
the dividends which it is authorized to receive and retain pursuant to
paragraph (2) above;
<PAGE>
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(4) The Pledgor and the Stock Trustee on behalf of the Pledgor
shall ensure that all notices received by them in their capacities as
registered legal owners of the Pledged Collateral shall be copied to
the Secured Party within a reasonable period.
(b) Upon the occurrence and during the continuance of an Event
of Default:
(1) All rights of the Pledgor or the Stock Trustee to exercise
or refrain from exercising the voting and other consensual rights which
would otherwise be available for exercise pursuant to Section 2.3(a)(1)
and to receive the dividends, distributions and other payments which he
or she would otherwise be authorized to receive and retain pursuant to
Section 2.3(a)(2) shall cease and all such rights shall thereupon
become vested in the Secured Party who shall thereupon have the sole
right to exercise or refrain from exercising such voting and other
consensual rights and to receive and hold as Pledged Collateral such
dividends, as security for the Obligations.
(2) All dividends, distributions and other payments which are
received by the Pledgor or the Stock Trustee contrary to the provisions
of paragraph (1) of this Section 2.3(b) shall be received in trust for
the benefit of the Secured Party, shall be segregated from other funds
of the Pledgor and shall be forthwith paid over to the Secured Party as
Pledged Collateral, as security for the Obligations, in the same form
as so received (with any necessary indorsement).
Section 2.4. CAPITAL ADJUSTMENTS. If, prior to the payment in
full of the Obligations, there shall be any stock split, combination or exchange
of shares, consolidation, recapitalization, reorganization, or stock dividend or
any other like event by or of any of the Owners and as often as the same shall
occur, then the number, class and kind of shares of stock pledged pursuant to
this Agreement shall be appropriately adjusted to reflect such event, and
certificates, representing such shares, together with corresponding stock
powers, shall be delivered to the Secured Party in the same manner as the
Pledged Shares originally pledged under this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE PLEDGOR
Section 3.1. REPRESENTATIONS AND WARRANTIES. The Pledgor
represents and warrants to the Secured Party that:
(1) The authorized capital of Golden State Petro (IOM I-A) PLC
consists solely of ____ ordinary shares of one dollar par value, of
which there are 2 such shares issued and outstanding and no shares held
by Golden State Petro (IOM I-A) PLC as treasury shares. All such issued
and outstanding ordinary shares have been duly authorized and validly
issued and are fully paid and nonassessable. There are no
<PAGE>
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subscriptions, options, warrants, rights, or other agreements
outstanding providing for the purchase, sale, or issuance of, nor any
security convertible into ordinary shares or any other security of
Golden State Petro (IOM I-A) PLC.
(2) The authorized capitalization of Golden State Petro (IOM
I-B) PLC consists solely of ____ ordinary shares of one dollar par
value, of which there are 2 such shares issued and outstanding and no
shares held by Golden State Petro (IOM I-B) PLC as treasury shares. All
such issued and outstanding ordinary shares have been duly authorized
and validly issued and are fully paid and nonassessable. There are no
subscriptions, options, warrants, rights, or other agreements
outstanding providing for the purchase, sale, or issuance of, nor any
security convertible into, ordinary shares or any other security of
Golden State Petro (IOM I-B) PLC.
(3) The Pledgor and the Stock Trustee have together the power
to transfer all right, title and interest in and to the Pledged Shares
beneficially owned by the Pledgor, without the consent of any other
Person except for the acting directors of each Owner.
(4) The provisions of this Agreement (including the delivery
of stock certificates under Section 2.2 hereof) are effective to create
in favor of the Secured Party a valid, legally enforceable and fully
perfected first security interest in and to the Pledged Shares, free
and clear of all liens, encumbrances and claims of any kind other than
any liens created under the Indenture.
(5) The Pledgor and the Stock Trustee together have the full
power and authority to enter into and perform their obligations under
this Agreement. This Agreement has been duly executed by the Pledgor
and the Stock Trustee and constitutes the legal, valid and binding
obligation of the Pledgor and the Stock Trustee, enforceable against
each of the Pledgor and the Stock Trustee in accordance with its terms,
except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium and other laws affecting creditors' rights
generally and by general principles of equity (whether enforcement is
sought in equity or at law). The execution, delivery and performance of
this Agreement will not conflict with any agreement or orders or any
law applicable to the Pledgor and the Stock Trustee.
(6) Collectively, the Pledged Shares include all of the issued
and outstanding shares of each of the Owners.
<PAGE>
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ARTICLE IV
COVENANTS OF THE PLEDGOR
The Pledgor covenants and agrees that, unless the Secured
Party otherwise consents in writing, so long as this Agreement shall remain in
effect or any of the Obligations shall be outstanding:
Section 4.1. TRANSFERS AND OTHER LIENS. The Pledgor agrees
that it will not sell, assign (by operation of law or otherwise) or otherwise
dispose of, or grant any option with respect to, any of the Pledged Collateral,
or create or permit to exist any lien, security interest, option or other charge
or encumbrance upon or with respect to any of the Pledged Collateral, except for
the security interest created under this Agreement and the Indenture; PROVIDED,
HOWEVER, the Pledgor may transfer its interest in the Pledged Collateral so long
as (a) the Rating Agencies provide the Secured Party with written approval of
such transfer, (b) the Pledgor furnishes to the Secured Party any opinions of
counsel requested by the Secured Party or any Rating Agency and (c) the
transferee agrees in writing that the Pledged Collateral will remain subject to
the security interest of the Secured Party hereunder.
Section 4.2. ADDITIONAL SHARES. The Pledgor agrees that it
will cause each of the Owners not to issue any stock or other securities in
addition to or in substitution for the Pledged Shares.
Section 4.3. FURTHER ASSURANCES. The Pledgor agrees that at
any time and from time to time, at the expense of the Pledgor, the Pledgor will
promptly execute and deliver and cause to be executed and delivered all further
instruments and documents, and take all further action, that may be necessary or
desirable, in order to perfect and protect any security interest granted or
purported to be granted hereby or to enable the Secured Party to exercise and
enforce its rights and remedies hereunder with respect to any Pledged
Collateral.
Section 4.4 COVENANTS. The Pledgor agrees to notify the
Secured Party immediately upon the appointment of any further Director or
Officer of any of the Owners and promptly to deliver to the Secured Party the
undated resignations and letters of undertaking referred to in clause 2.2 hereof
signed by such persons.
Section 4.5. RIGHT OF SECURED PARTY TO PERFORM FOR PLEDGOR.
The Secured Party may, but shall not be obligated to, pay any amount which the
Pledgor has failed to pay or perform any act which the Pledgor has failed to
perform hereunder. Any charges so paid or losses incurred by the Secured Party
as a result of any nonperformance by the Pledgor of its obligations under this
Agreement shall be secured by this Agreement and shall be payable by the Pledgor
on the Secured Party's demand, with interest at the Default Rate.
Section 4.6. AMENDMENT OF CORPORATE DOCUMENTS. The Pledgor
agrees that it will not amend, modify or terminate and will procure that no
amendment, modification or
<PAGE>
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termination is made to any or all of the Memorandum of Association or the
Articles of Association of any of the Owners.
ARTICLE V
DEFAULTS; REMEDIES
Section 5.1. DEFAULTS. Any one or more of the following events
shall constitute an "Event of Default" hereunder:
(1) failure of the Owners to pay when due any amount payable
upon or in connection with any of the Obligations, after the expiration
of the applicable grace and/or cure period, if any, provided in the
Indenture with respect thereto;
(2) default by the Pledgor or the Stock Trustee in the
performance or observance of any covenant, agreement or condition
contained herein (other than Section 4.3);
(3) default by the Pledgor in the performance or observance of
Section 4.3 and such default shall continue for a period of 30 days or
more after the Pledgor's receipt of written notice from the Secured
Party;
(4) if any representation or warranty made by the Pledgor
herein shall prove to have been false, incorrect or misleading in any
material respect on the date as of which made; and
(5) an Event of Default under the Indenture.
Section 5.2. REMEDIES ON DEFAULT. If an Event of Default shall
have occurred and be continuing, the Secured Party may, in addition to any other
remedy it may have, take any one or more of the following remedial steps:
(a) Transfer all or any part of the Pledged Collateral into
the name of the Secured Party or its nominee, with or without disclosing that
the Pledged Collateral is subject to the lien and security interest hereunder;
(b) Take control of any proceeds of any of the Pledged
Collateral;
(c) Exercise in respect of the Pledged Collateral, in addition
to other rights and remedies provided for herein or otherwise available to it,
all the rights and remedies of a secured party on default under the Code;
<PAGE>
-9-
(d) Hold any cash held by the Secured Party as Pledged
Collateral and all cash proceeds received by the Secured Party in respect of any
sale of, collection from, or other realization upon all or any part of the
Pledged Collateral, in the discretion of the Secured Party, as collateral for,
and/or then or at any time thereafter to be applied in whole or in part by the
Secured Party in accordance with Section 3.4 of the Indenture between the
Secured Party and the Owner of the related Pledged Collateral, or portion
thereof; and
(e) Complete the undated resignations referred to in Section
2.2 hereof and to appoint Directors and Officers of the Company and to exercise
through such Directors of Officers the powers of management of any of the
Owners.
Section 5.3. SALE OF PLEDGED COLLATERAL. (a) The sale of
Pledged Collateral or any portion thereof may be made at any public or private
sale or at any broker's board or on any securities exchange, for cash, upon
credit or for future delivery, as the Secured Party shall deem appropriate. The
Secured Party shall be authorized at any such sale (to the extent it deems it
advisable to do so) to restrict the prospective bidders or purchasers to persons
who will represent and agree that they are purchasing such Pledged Collateral
then being sold for their own account for investment and not with a view to the
distribution or resale thereof, and upon consummation of any such sale the
Secured Party shall have the right to assign, transfer and deliver to the
purchaser or purchasers thereof of the Pledged Collateral so sold. Each such
purchaser at any such sale shall hold the property sold absolutely, free from
any claim or right on the part of the Pledgor, and the Pledgor hereby waives (to
the extent permitted by law) all rights of redemption, stay and/or appraisal
that it now has or may at any time in the future have under any rule of law or
statute now existing or hereafter enacted. Except in the case of Pledged
Collateral which threatens to decline speedily in value or is of a type
customarily sold on a recognized exchange, the Secured Party shall give to the
Pledgor at least ten (10) Business Days' written notice of the Secured Party's
intention to make any such public or private sale or sale at a broker's board or
on any such securities exchange. Such notice, in the case of public sale, shall
state the time and place fixed for such sale and, in the case of sale at a
broker's board or on a securities exchange, shall state the board or exchange at
which such sale is to be made and the day on which the Pledged Collateral, or
portion thereof to be sold, will first be offered for sale at such board or
exchange. Any such public sale shall be held at such time or times within
ordinary business hours, and at such place or places, as the Secured Party may
fix in the notice of such sale. At any such sale, the Pledged Collateral, or
portion thereof to be sold, may be sold in one lot as an entirety or in separate
parcels, as the Secured Party may determine. The Secured Party may bid for and
purchase the whole or any part of the Pledged Collateral and may, in paying the
purchase price therefor, apply such purchase price directly to the payment or
discharge in whole or in part of the Obligations. The Secured Party may, without
notice or publication, adjourn any public or private sale or cause the same to
be adjourned from time to time by announcement at the time and place fixed for
sale, and such sale may, without further notice, be made at the time and place
to which the same was so adjourned. In case the sale of all or any part of the
Pledged Collateral is made on credit or for future delivery, the Pledged
Collateral so sold may be retained by the Secured Party until the sale price is
paid by the purchaser or purchasers thereof, but the Secured Party shall not
incur any liability in case any
<PAGE>
-10-
such purchaser or purchasers shall fail to take up and pay for the Pledged
Collateral so sold and, in the case of any such failure, the Pledged Collateral
may be sold again upon like notice. In case the sale of all or any part of the
Pledged Collateral is made on credit, the amounts actually realized by the
Secured Party from any such sale shall be applied to the Obligations in the
manner provided in Section 3.4 of the Indenture. As an alternative to exercising
the power of sale herein conferred upon it, the Secured Party may proceed by a
suit or suits at law or in equity to foreclose this Agreement and to sell the
Pledged Collateral, or any portion thereof, pursuant to a judgment or decree of
a court or courts of competent jurisdiction.
(b) In connection with any disposition of the Pledged
Collateral, if the Secured Party elects to obtain the advice of any one of three
independent investment banking firms that are member firms of the New York Stock
Exchange, proposed by the Secured Party to the Pledgor and chosen by the Pledgor
within seven (7) days of receiving notice thereof, or if the Pledgor fails to
make such choice within such seven-day period, any one of such firms chosen by
the Secured Party, with respect to the method or manner of sale or disposition
of any of the Pledged Collateral, the best price reasonably obtainable therefor
and any other details concerning such sale or disposition, then, to the extent
permitted by law, any sale or other disposition of any Pledged Collateral in
reliance on such advice shall be deemed to be commercially reasonable under the
Code and otherwise proper.
(c) The Pledgor understands that compliance with Federal or
state securities laws may limit the course of conduct of the Secured Party if
the Secured Party were to attempt to dispose of all or any part of the Pledged
Collateral and may also limit the extent to which or the manner in which any
subsequent transferee of the Pledged Collateral may dispose of the same. The
Pledgor agrees that in any sale of any of the Pledged Collateral, the Secured
Party is hereby authorized to comply with any such limitation or restriction in
connection with such sale as it may be advised by counsel is necessary in order
to avoid any violation of applicable law (including, without limitation,
compliance with such procedures as may restrict the number of prospective
bidders or purchasers and/or further restrict such prospective bidders or
purchasers to persons who will represent and agree that they are purchasing for
their own account for investment and not with a view to the distribution or
resale of the Pledged Collateral), or in order to obtain any required approval
of the sale or of the purchase by any governmental regulatory authority or
official, and the Pledgor further agrees that such compliance shall not result
in such sale being considered or deemed not to have been made in a commercially
reasonable manner, nor shall the Secured Party be liable or accountable to the
Pledgor for any discount allowed by reason of the fact that the Pledged
Collateral is sold in compliance with any such limitation or restriction.
Section 5.4. SECURED PARTY APPOINTED ATTORNEY-IN-FACT. The
Pledgor and the Stock Trustee each hereby irrevocably constitutes and appoints
Secured Party and any officer, employee or agent thereof, with full power of
substitution, as the Pledgor's and Stock Trustee's true and lawful
attorney-in-fact with full irrevocable power and authority in the name, place
and stead of the Pledgor or the Stock Trustee or in its own name, from time to
time in Secured Party's discretion, for the purpose of carrying out the terms of
this Agreement, to take any and
<PAGE>
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all appropriate action and to execute any and all documents and instruments
which may be reasonably necessary or desirable to accomplish the purposes of
this Agreement. The Pledgor and the Stock Trustee each hereby ratifies all that
said attorneys shall lawfully do or cause to be done by virtue hereof. This
power of attorney is a power coupled with an interest, shall be irrevocable and
shall terminate only upon payment in full of the Obligations. The powers
conferred on Secured Party hereunder are solely to protect Secured Party's
interests in the Pledged Collateral and shall not impose any duty upon it to
exercise such powers. Secured Party shall be accountable only for amounts that
it actually receives as a result of the exercise of such powers, and neither it
nor any of its officers, directors, employees or agents shall be responsible to
Pledgor and the Stock Trustee for any action taken or omitted to be taken in
good faith or in reliance on the advice of counsel except only for its own gross
negligence or willful misconduct, and the foregoing shall not operate to release
the Secured Party from any liability arising out of the gross negligence of any
of its officers, directors, employees or agents in disposing of any of the
Pledged Collateral.
Section 5.5. WAIVERS. (A) The Pledgor waives presentment,
demand, notice, protest, notice of acceptance of this Agreement, notice of loans
made, credit extended, collateral received or delivered or other action taken in
reliance hereon and, except as otherwise expressly provided herein or in the
other Security Documents, all other demands and notices of any description. The
Secured Party shall have no duty as to the collection or protection of Pledged
Collateral or any income thereon, nor as to the preservation of rights against
prior parties, nor as to the preservation of any rights pertaining thereto
beyond the safe custody thereof.
(B) The Secured Party shall not, under any circumstances or in
any event whatsoever, have any liability for any error or omission or delay of
any kind occurring in the liquidation of or realization upon any of the Pledged
Collateral, including any instrument received in payment thereof, or any damage
resulting therefrom, except for its own gross negligence or willful misconduct.
The Pledgor shall indemnify and hold harmless the Secured Party against any
claim, loss or damage arising out of the liquidation of or realization upon any
of the Pledged Collateral, including any instrument received in payment thereof,
except that the Pledgor shall have no obligation to indemnify and hold harmless
the Secured Party from its own gross negligence or willful misconduct.
Section 5.6. REMEDIES CUMULATIVE. No remedy conferred upon or
reserved to the Secured Party hereunder is or shall be deemed to be exclusive of
any other available remedy or remedies. Each such remedy shall be distinct,
separate and cumulative, shall not be deemed to be inconsistent with or in
exclusion of any other available remedy, may be exercised in the discretion of
the Secured Party at any time, in any manner, and in any order, and shall be in
addition to and separate and distinct from every other remedy given the Secured
Party under the Indenture and the other Security Documents, any other security
interest given to the Secured Party by the Pledgor with respect to the
Collateral or any other mortgage or security agreement securing the Obligations,
or now or hereafter existing in favor of the Secured Party at law or in equity
or by statute, including without limitation, all rights of a secured party under
the Code. Without limiting the generality of the foregoing, the Secured Party
shall have the right to
<PAGE>
-12-
exercise any available remedy to recover any amount due and payable hereunder
without regard to whether any other amount is due and payable, and without
prejudice to the Secured Party to exercise any available remedy, under the
Indenture, the other Security Documents or otherwise, for other events of
default existing at the time the earlier action was commenced.
Section 5.7. DELAY DOES NOT CONSTITUTE WAIVER. Any delay,
omission or failure by the Secured Party to insist upon the strict performance
by the Pledgor or the Stock Trustee of any of the covenants, conditions and
agreements herein set forth or to exercise any right or remedy available to it
upon the occurrence of an Event of Default hereunder, an Event of Default under
the Indenture or otherwise, shall not impair any such right or remedy or be
considered or taken as a waiver or relinquishment for the future right to insist
upon and to enforce, by injunction or other appropriate legal or equitable
remedy, strict compliance by the Pledgor and the Stock Trustee with all of the
covenants, conditions and agreements herein or otherwise, or of the right to
exercise any such rights or remedies if such default by the Pledgor or the Stock
Trustee be continued or repeated.
ARTICLE VI
MISCELLANEOUS
Section 6.1. AMENDMENT. This Agreement may be amended from
time to time by written agreement signed by the parties hereto.
Section 6.2. SEVERABILITY. If any provision of this Agreement
is held to be in conflict with any applicable statute or rule of law or is
otherwise held to be unenforceable for any reason whatsoever, such circumstances
shall not have the effect of rendering the provision in question inoperative or
unenforceable in any other case or circumstance, or of rendering any other
provision or provisions herein contained invalid, inoperative, or unenforceable
to any extent whatsoever. The invalidity of any one or more phrases, sentences,
clauses or Sections of this Agreement contained, shall not affect the remaining
portions of this Agreement, or any part thereof.
Section 6.3. NOTICES. All demands, notices and communications
hereunder shall be in writing, personally delivered or mailed by certified
mail-return receipt requested, and shall be deemed to have been duly given upon
receipt (a) in the case of the Pledgor, at the following address: c/o Cambridge
Fund Management, LLC, Park Avenue Tower, 65 East 55th Street, Suite 3300, New
York, New York 10022, (b) in the case of the Secured Party, at the following
address: 114 West 47th Street, New York, New York 10036, Attention: Corporate
Trust Department and (c) in the case of the Stock Trustee, at the following
address: 15-19 Athol Street, Douglas, Isle of Man, or at other such address as
shall be designated by such party in a written notice to the other parties.
<PAGE>
-13-
Section 6.4. CONSENT TO JURISDICTION. Any legal suit, action
or proceeding against the Pledgor arising out of or relating to this Agreement,
the Indenture or any other Security Document, or any transaction contemplated
hereby or thereby, may be instituted in any federal or state court in The City
of New York, State of New York and the Pledgor hereby waives any objection which
they may now or hereafter have to the laying of venue of any such suit, action
or proceeding, and the Pledgor hereby irrevocably submits to the jurisdiction of
any such court in any such suit, action or proceeding. The Pledgor hereby
irrevocably appoints and designate CT Corporation System, having an address at
1633 Broadway, New York, New York, its true and lawful attorney-in-fact and duly
authorized agent for the limited purpose of accepting service of legal process
and the Pledgor agrees that service of process upon such party shall constitute
personal service of such process on the Pledgor. The Pledgor shall maintain the
designation and appointment of such authorized agent until all amounts payable
under this Agreement, the Indenture and the other Security Documents shall have
been paid in full. If such agent shall cease to so act, the Pledgor shall
immediately designate and appoint another such agent satisfactory to the Secured
Party and shall promptly deliver to the Secured Party evidence in writing of
such other agent's acceptance of such appointment.
Section 6.5. CAPTIONS. The captions or headings in this
Agreement are for convenience only and in no way define, limit or describe the
scope or intent of any provisions or sections of this Agreement.
Section 6.6. GOVERNING LAW. This Agreement shall be governed
by and interpreted in accordance with the laws of the State of New York, without
giving effect to the principles of conflicts of law.
Section 6.7. NO PARTNERSHIP. Nothing herein contained shall be
deemed or construed to create a partnership or joint venture among the parties
hereto and the services of each party shall be rendered as an independent
contractor and not as agent for any other party.
Section 6.8. COUNTERPARTS. This Agreement may be executed in
any number of counterparts and by different parties hereto on separate
counterpart, each of which shall be deemed to be an original. Such counterparts
shall constitute one and the same agreement.
Section 6.9. SURVIVAL. The representations, covenants and
agreements contained in or made pursuant to this Agreement in respect of either
party hereto shall survive the execution and delivery of this Agreement and
shall continue in effect so long as such party's obligations hereunder remain
outstanding.
<PAGE>
-14-
Section 6.10. INTEGRATION. This Agreement and the Exhibits
hereto constitute the entire agreement and understanding between the parties
hereto with respect to the subject matter hereof and supersedes all prior
agreements, understandings or representations pertaining to the subject matter
hereof, whether oral or written. There are no warranties, representations or
other agreements between the parties in connection with the subject matter
hereof except as specifically set forth or incorporated herein.
Section 6.11. REPRODUCTION OF DOCUMENTS. This Agreement and
all documents relating thereto, including, without limitation, (a) consents,
waivers and modifications which may hereafter be executed, (b) documents
received by any party at the closing, and (c) financial statements, certificates
and other information previously or hereafter furnished, may be reproduced by
any photographic, photostatic, microfilm, micro-card, miniature photographic or
other similar process. The parties agree that any such reproduction shall be
admissible in evidence as the original itself in any judicial or administrative
proceeding (whether or not the original is in existence and whether or not such
reproduction was made in the regular course of business) and that any
enlargement, facsimile or further reproduction of such reproduction shall
likewise be admissible in evidence.
Section 6.12. SUCCESSORS AND ASSIGNS; ASSIGNMENT. This
Agreement shall be binding upon and inure to the benefit of the Pledgor and the
Secured Party and their respective successors and assigns. The Pledgor shall not
have the right to assign its rights hereunder or any interest herein without the
prior written consent of the Secured Party. The Secured Party, at its sole
option, shall have the right to assign this Agreement and any of its rights and
interest hereunder.
Section 6.13. EFFECTIVE DATE OF TRANSACTION. Notwithstanding
the fact that this Agreement is dated as of December 1, 1996, the transactions
set forth herein shall not be effective until the Closing Date.
Section 6.14. RETURN OF PLEDGED SHARES. Upon the payment and
performance in full of the Obligations, the Secured Party shall redeliver the
related Pledged Shares to the Pledgor.
<PAGE>
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
GOLDEN STATE HOLDINGS I LTD.
By:/s/ John McFadden
-----------------------------
Name: John McFadden
Its: President
UNITED STATES TRUST COMPANY OF NEW YORK, as
Indenture Trustee
By:/s/ Christine C. Collins
-----------------------------
Name: Christine C. Collins
Its: Assistant Vice President
ANDREW JAMES BAKER, as Stock Trustee
By:/s/ R. V. Vanderplank
-----------------------------
Name: R. V. Vanderplank
Its: Attorney for A. J. Baker
<PAGE>
Exhibit A
Letter of resignation referred to in Clause 2.2(i)
To: [Name of Owner]
(the "Company")
Date:
Dear Sirs:
1. I hereby resign as a director/secretary (or other officer) of
the Company and confirm that I have no claims against the
Company for loss of office, arrears of pay or otherwise
howsoever.
2. This resignation is to be effective as at the date hereof.
Yours faithfully,
<PAGE>
Exhibit B
Irrevocable Proxy
The undersigned, being the registered legal owner (and as assignee
holder respectively) of one hundred per cent of the number of shares
respectively set against its name at the foot of this proxy of [Name of Owners]
(the "Company"), hereby makes, constitutes and appoints United States Trust
Company of New York (the "Secured Party") the true and lawful attorney and proxy
of the undersigned with full power to appoint a nominee or nominees to act
hereunder from time to time to vote the number of shares set against the names
of the undersigned at the foot of this proxy of the issued share capital of the
Company at all annual and special meetings of shareholders for the Company with
the same force and effect as the undersigned might or could do and the
undersigned hereby ratifies and confirms all that the said attorney or its
nominee or nominees shall do or cause to be done by virtue hereof.
The said shares have been pledged to the Secured Party pursuant to an
Agreement dated as of December 1, 1996.
This power and proxy may not be assigned.
Shareholder No. Of Shares
----------- -------------
Golden State Holdings I Ltd. 1
Andrew James Baker 1
IN WITNESS WHEREOF this instrument has been duly executed this ____ day
of December, 1996.
SIGNED, SEALED and DELIVERED
by
the duly authorized Attorney-in-Fact
of Golden State Holdings I Ltd.
in the presence of:
Witness __________________
Witness __________________
<PAGE>
TABLE OF CONTENTS
Page No.
--------
ARTICLE I
DEFINITIONS AND INTERPRETATION............................................... 1
Section 1.1. Definitions........................................... 1
Section 1.2. Interpretation........................................ 2
ARTICLE II
SECURITY INTEREST............................................................ 3
Section 2.1. Security Interest..................................... 3
Section 2.2. Delivery of Pledged Collateral........................ 3
Section 2.3. Voting Rights; Dividends; Etc......................... 4
Section 2.4. Capital Adjustments................................... 5
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE PLEDGOR................................ 5
Section 3.1. Representations and Warranties........................ 5
ARTICLE IV
COVENANTS OF THE PLEDGOR..................................................... 7
Section 4.1. Transfers and Other Liens............................. 7
Section 4.2. Additional Shares..................................... 7
Section 4.3. Further Assurances.................................... 7
Section 4.4 Covenants............................................. 7
Section 4.5. Right of Secured Party to Perform for Pledgor......... 7
Section 4.6. Amendment of Corporate Documents...................... 7
<PAGE>
Page No.
--------
ARTICLE V
DEFAULTS; REMEDIES........................................................... 8
Section 5.1. Defaults.............................................. 8
Section 5.2. Remedies on Default................................... 8
Section 5.3. Sale of Pledged Collateral............................ 9
Section 5.4. Secured Party Appointed Attorney-in-Fact.............. 10
Section 5.5. Waivers............................................... 11
Section 5.6. Remedies Cumulative................................... 11
Section 5.7. Delay Does Not Constitute Waiver...................... 12
ARTICLE VI
MISCELLANEOUS................................................................ 12
Section 6.1. Amendment............................................. 12
Section 6.2. Severability.......................................... 12
Section 6.3. Notices............................................... 12
Section 6.4. Consent to Jurisdiction............................... 12
Section 6.5. Captions.............................................. 13
Section 6.6. Governing Law......................................... 13
Section 6.7. No Partnership........................................ 13
Section 6.8. Counterparts.......................................... 13
Section 6.9. Survival.............................................. 13
Section 6.10. Integration........................................... 14
Section 6.11. Reproduction of Documents............................. 14
<PAGE>
Page No.
--------
Section 6.12. Successors and Assigns; Assignment.................... 14
Section 6.13. Effective Date of Transaction......................... 14
Section 6.14. Return of Pledged Shares.............................. 14
================================================================================
UNITED STATES TRUST COMPANY OF NEW YORK,
as INDENTURE TRUSTEE
and
GOLDEN STATE PETRO (IOM I-A) PLC
-----------------------------------
ISSUE OF ONE DEBENTURE
Dated as of December 1, 1996
-----------------------------------
================================================================================
<PAGE>
This Issue of One Debenture, dated as of December 1, 1996 (the
"Debenture"), from Golden State Petro (IOM I-A) PLC, a company organized under
the laws of the Isle of Man (the "Owner") to United States Trust Company of New
York, as indenture trustee, a bank and trust company organized under the New
York Banking Law (the "Indenture Trustee").
PRELIMINARY STATEMENT
On the Closing Date, Golden State Petroleum, as agent for the
Owner and Golden State Petro (IOM I-B) PLC, will issue Notes in connection with
the financing of the construction of the Vessel. The net proceeds of such
issuance will be deposited into the Pre-Funding Account. Pursuant to the
Indenture, the Allocated Principal Amount of the Mortgage Notes for the Vessel
will be used, INTER ALIA, to make the installments due under the Shipbuilding
Contract for the Vessel. As of the date of this Assignment, the Owner has agreed
to bareboat charter the Vessel to Chevron Transport Corporation (the "Initial
Charterer") pursuant to the Initial Charter. The obligations of the Initial
Charterer under the Initial Charter are guaranteed by Chevron Corporation (the
"Guarantor") pursuant to the Chevron Guarantee. The Vessel will be managed by
Cambridge Fund Management L.L.C. (the "Manager") pursuant to the Management
Agreement, dated as of the date hereof, between the Owner and the Manager. As
collateral security for its obligations under the Indenture, the Owner has and
will assign, pledge, mortgage and grant the Indenture Trustee a security
interest in, INTER ALIA, the Vessel, the Initial Charter, the Chevron Guarantee
and the earnings and insurances of the Vessel and will grant this debenture in
favor of the Indenture Trustee.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained and of other valuable consideration, receipt of
which is hereby acknowledged, the Owner and the Indenture Trustee hereby agree
as follows:
ARTICLE I
DEFINITIONS
Capitalized terms used in this Debenture shall have the
meanings assigned to such terms in Schedule 1 to this Debenture, and the
definitions of such terms shall be equally applicable to both the singular and
plural forms of such terms.
ARTICLE II
COVENANT TO PAY
Section 2.1. COVENANT TO PAY. The Owner hereby covenants and
agrees to pay and discharge each sum owing under the Obligations as and when the
same shall fall due, whether at maturity, by acceleration or otherwise.
<PAGE>
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ARTICLE III
MORTGAGE, CHARGE AND ASSIGNMENT
Section 3.1. CHARGE. As continuing security for the
Obligations, the Owner hereby:
(a) conveys, transfers and assigns absolutely to and unto the
Indenture Trustee all rights of the Owner in and to the
Current Receivables by way of fixed charge;
(b) mortgages, charges and assigns, and agrees to mortgage, charge
and assign to the Indenture Trustee all present and future
rights of the Owner in and to all freehold or leasehold
property of the Owner and all other estates or interests
therein together with all trade fixtures and fixed plant and
machinery now and for the time being thereon, by way of a
fixed charge;
(c) mortgages, charges and assigns, and agrees to mortgage, charge
and assign, to the Indenture Trustee all rights now owned or
hereafter acquired in and to the goodwill, franchises, patent
rights, copyrights, trademarks and other intangible Assets of
the Owner by way of fixed charge;
(d) mortgages, charges and assigns, and agrees to mortgage, charge
and assign, to the Indenture Trustee all rights relating to
the aforesaid property specified in Sections 3.1(a), (b) and
(c) including, INTER ALIA, negotiable instruments, legal and
equitable charges, reservations of property rights, rights of
action, collection, recovery or security, rights of tracing
and unpaid vendor's liens and similar and associated rights,
by way of fixed legal mortgage and charge; and
(e) mortgages and charges in favor of the Indenture Trustee all
rights of the Owner now owned or hereafter acquired in and to
all other Security Assets for the time being of the Owner not
subject to the fixed securities created by Sections 3.1(a),
(b), (c) and (d) wheresoever situate (including, INTER ALIA,
all undertakings and businesses of the Owner) by way of a
floating charge and the Owner shall not be at liberty to
create any mortgage or charge on any of the securities created
by this Section 3.1(e) and no Encumbrance shall in any case or
in any manner arise on or affect any part of the said
securities in priority to or PARI PASSU with all charges
hereby created, it being the intention that the Owner shall
have no power, without the written consent of the Indenture
Trustee, to part with or dispose of any part of the said
securities except by way of sale in the ordinary course of its
business;
<PAGE>
-3-
PROVIDED, HOWEVER, that upon the unconditional payment and satisfaction
of the Obligations the rights of the Indenture Trustee hereunder will
terminate and the Indenture Trustee will at the direction, cost and
expense of the Owner release or reassign to the Owner all remaining
rights of the Indenture Trustee in and to the balance of the Security
Assets.
Section 3.2. LEGAL SECURITIES. The Owner will forthwith at the
request of the Indenture Trustee execute a legal mortgage, charge or assignment
over all or any of the Security Assets subject to or intended to be subject to
any fixed security hereby created in favor of the Indenture Trustee in such form
as the Indenture Trustee may reasonably require.
Section 3.3. CONVERSION OF FLOATING CHARGE. The Indenture
Trustee may at any time by notice to the Owner convert the floating charge
hereby created into a fixed charge as regards any Assets specified in the notice
which the Indenture Trustee shall consider to be in danger of being seized or
sold under any form of distress, attachment, execution or other legal process or
to be otherwise in jeopardy and (whether or not this security has become
enforceable) may at any time appoint a Receiver (as defined in Section 7.1
hereof) thereof.
Section 3.4. NEGATIVE PLEDGE. Except as otherwise provided in
the Mortgage or the Indenture, the Owner shall not, without the prior written
consent of the Indenture Trustee, permit the sale, transfer, assignment lease or
other disposition of any Security Asset, or any Encumbrance or other right in or
over any Security Asset to subsist, arise or be created, other than such
Encumbrance as is created by this Debenture.
Section 3.5. NEW ACCOUNTS. If the Indenture Trustee receives
or is deemed to be affected by notice whether actual or constructive of any
subsequent Encumbrance or other interest affecting any Security Asset or the
proceeds of sale thereof, the Indenture Trustee may open a new account or
accounts for the Owner. If the Indenture Trustee does not open a new account it
shall nevertheless be treated as if it had done so at the time when it received
or was deemed to have received notice and as from that time all payments made to
the Indenture Trustee shall be credited or be treated as having been credited to
the new account and shall not operate to reduce the amount for which this
Debenture is security.
ARTICLE IV
PRESERVATION OF SECURITY
Section 4.1. CONTINUING SECURITY. The security constituted by
this Debenture shall be a continuing security and shall not be satisfied by any
intermediate payment or satisfaction of the Obligations but shall secure the
ultimate balance of the Obligations. The security hereby given shall be in
addition to and shall not be discharged, released, prejudiced or otherwise
affected by any other security or Encumbrance now or hereafter held by the
Indenture Trustee for the Obligations.
<PAGE>
-4-
Section 4.2. WAIVER OF DEFENSES. The obligations of the Owner
under this Debenture and this security shall not be discharged, released,
prejudiced or otherwise affected by any act, omission or circumstance which but
for this provision might so operate or otherwise release or discharge the Owner
from the Obligations, or the security created under this Debenture including
without limitation and whether or not known to or discoverable by the Owner or
the Indenture Trustee:
(a) any time, indulgence, waiver, consent or other relief granted
to or composition with the Owner or any other Person;
(b) the taking, variation, extension, compromise, renewal or
release of, or refusal or neglect to perfect or enforce, any
rights under the Indenture, this Debenture, any Security
Document or any other guarantee, agreement or obligation or
any right against, or any security granted by, the Owner or
any other Person;
(c) any irregularity, invalidity or unenforceability of any
obligation of the Owner under the Indenture, any Security
Document, this Debenture or any other guarantee, of any
government or authority (whether of right or in fact)
purporting to reduce or otherwise affect any such obligation
to the extent that such obligation and this security shall
remain in full force and this Debenture shall be construed
accordingly as if there were no such irregularity,
unenforceability, invalidity, law or order;
(d) any legal limitation, disability, incapacity or other
circumstance relating to the Owner, any guarantor or any other
Person;
(e) any defect in or invalidity or inadequacy of the constitution
or incorporation or borrowing powers of the Owner or of its
board of directors, executive committee or other equivalent or
analogous body or in the authorization, execution or delivery
of the Indenture, any Security Document, this Debenture or any
other guarantee, agreement or obligation; or
(f) any supplement, amendment or modification to the terms of the
Indenture, this Debenture, any other Security Document or any
other guarantee, agreement or obligation.
Section 4.3. IMMEDIATE RECOURSE. The Owner waives any right it
may have of first requiring the Indenture Trustee to proceed against or claim
payment from the Owner or enforce the Indenture, any Security Documents or other
guarantee, agreement or obligation before enforcing this Debenture.
<PAGE>
-5-
Section 4.4. PRESERVATION OF RIGHTS. Until the Obligations
have been irrevocably paid and discharged in full, the Indenture Trustee may:
(a) refrain from applying or enforcing any other security, money
or right held or received by the Indenture Trustee in respect
of the Obligations or apply and enforce the same in such
manner and order as the Indenture Trustee sees fit; and
(b) hold in a suspense account (without liability to pay interest
thereon) any moneys received or on account of this Debenture
by way of a partial payment.
Section 4.5. ADDITIONAL SECURITY. This Debenture shall be in
addition to and shall not in any way be prejudiced by any other security now or
hereafter held by the Indenture Trustee.
Section 4.6. CERTIFICATE. A certificate of the Indenture
Trustee setting forth the amount due from the Owner in respect of the
Obligations shall, in the absence of manifest error, be PRIMA FACIE evidence of
such amount.
Section 4.7. DISCHARGE. Where any discharge (whether in
respect of the Indenture, the Obligations, this Debenture, or any other
guarantee, agreement, obligation or security or otherwise) is made in whole or
in part or any arrangement is made on the faith of any payment, security or
other disposition which is avoided or must be repaid on bankruptcy, liquidation,
winding-up, dissolution or otherwise, this security and the obligations of the
Owner under this Debenture shall continue as if there had been no such discharge
or arrangement.
Section 4.8. REGISTRATION. The Owner hereby agrees to arrange
for this Debenture, any Security Asset or any agreement, document or instrument
relating thereto to be registered with or notified to any Person to preserve or
perfect the Indenture Trustee's security in any Security Asset.
Section 4.9. INDENTURE TRUSTEE'S POWER'S WITH RESPECT TO
SECURITY ASSETS. The Indenture Trustee may without demand or notice to the Owner
being required at any time after this security becomes enforceable exercise at
its discretion (in the name of the Owner or otherwise) and without any further
consent or authority by the Owner, any right which may be exercised by the
Person in whose name any Security Asset is registered or who is the holder
thereof under the terms thereof or otherwise including, but without limitation,
all the powers given to trustees by statute in respect of securities or property
subject to a trust; PROVIDED, HOWEVER, that until the security hereby
constituted becomes enforceable, the Indenture Trustee shall procure that the
rights attached to each such Security Asset are exercised in such manner as the
Owner shall direct so long as the same is not inconsistent with any term of the
Indenture or this Debenture and account to the Owner for any sum or other
distribution paid in respect of such Security Asset.
<PAGE>
-6-
Section 4.10. CALLS. The Owner will for so long as the
Obligations remain outstanding pay all sums which may become due in respect of
the Security Assets and in the event of default the Indenture Trustee may if it
thinks fit make such payments on behalf of the Owner. Any sums so paid by the
Indenture Trustee shall be immediately due and payable by the Owner to the
Indenture Trustee without demand or notice being required.
Section 4.11. DELEGATION BY INDENTURE TRUSTEE. The Indenture
Trustee may at any time and from time to time delegate by power of attorney or
in any other manner to any Person or Persons all or any of the rights and
discretions which are for the time being exercisable by the Indenture Trustee
under this Debenture in relation to any Security Asset. Any such delegation may
be made upon such terms (including power to sub-delegate) and subject to such
regulations as the Indenture Trustee may think fit. The Indenture Trustee shall
not be in any way liable or responsible to the Owner for any loss or damage
arising from any act, default, omission or misconduct on the part of any such
delegate or sub-delegate.
Section 4.12. FURTHER ASSURANCES. The Owner shall at its own
expense execute and deliver all such agreements, documents and instruments and
do all such assurances, acts and things as the Indenture Trustee may require for
perfecting or protecting this security over any Security Asset or for
facilitating the realization of such property and in the exercise of all rights
vested in the Indenture Trustee or in any sub-delegate as aforesaid. The Owner
shall in particular execute all transfers, conveyances, assignments and
assurances of such property whether to the Indenture Trustee or its nominees and
give all notices, orders and directions which the Indenture Trustee may think
expedient and, for the purposes of this Section, a certificate in writing by the
Indenture Trustee to the effect that any particular assurance, act or thing
required by it is reasonably required shall be conclusive evidence of such fact
in favor of all third parties.
Section 4.13. REDEMPTION OF PRIOR MORTGAGES. The Indenture
Trustee may at any time after the security hereby constituted has become
enforceable redeem any prior Encumbrances against any Security Asset or procure
the transfer thereof to itself and may settle and pass the accounts of the prior
Encumbrances. Any accounts so settled and passed shall be conclusive and binding
on the Owner. All principal moneys, interest, costs, charges and expenses of and
incidental to such redemption and transfer shall be immediately due by the Owner
to the Indenture Trustee without notice or demand being required.
Section 4.14. POWER OF ATTORNEY. (a) The Owner hereby by way
of security irrevocably nominates, constitutes and appoints the Indenture
Trustee and every Receiver of any Security Asset appointed hereunder and every
such delegate or sub-delegate as aforesaid, each of them acting alone or jointly
with any other of them, to be its attorney (the "Attorney") and on its behalf
and in its name or otherwise to sign under seal or otherwise and deliver all
such agreements, documents and instruments and do all such assurances, acts and
things which the Owner ought to do but fails to do under the covenants and
provisions contained in the Indenture or this Debenture (including without
prejudice to the generality of the foregoing to make any
<PAGE>
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demand upon or give any notice or receipt to any Person owing moneys to the
Owner and to execute and deliver any charges, legal and equitable generally in
its name and on its behalf to exercise all or any of the rights conferred by or
pursuant to this Debenture or by statute on the Attorney and (without prejudice
to the generality of the foregoing) to sign under seal or otherwise and deliver
and otherwise perfect any assurance, agreement, instrument or act which the
Attorney may deem proper in or for the purpose of exercising any of such rights.
(b) The Owner hereby ratifies and confirms and agrees to
ratify and confirm any such Attorney described in Section 4.14(a).
Section 4.15. AVOIDANCE OF PAYMENTS. No assurance, security or
payment which may be avoided under any enactment relating to bankruptcy, and no
release, settlement or discharge given or made by the Indenture Trustee on the
faith of any such assurance, security or payment, shall prejudice or affect the
right of the Indenture Trustee to enforce the security created by or pursuant to
this Debenture in respect of the full extent of the moneys thereby secured. The
Indenture Trustee shall be at liberty at its absolute discretion to retain the
security so created as security for the Obligations for a period of seven months
in the case of fixed security and thirteen months in the case of floating
security after the Obligations shall have been paid in full, notwithstanding any
release, settlement, discharge or arrangement given or made by the Indenture
Trustee on or as a consequence of, such termination of liability. If at any time
within the period of six months in the case of fixed security and twelve months
in the case of floating security after such termination a petition shall be
presented to a competent court for an order for the winding up of the Owner or
the Owner shall commence to be wound up voluntarily, the Indenture Trustee shall
be at liberty, notwithstanding as aforementioned, to continue to retain such
security or any part thereof for and during such further period as the Indenture
Trustee in its absolute discretion shall determine. The Owner agrees that such
security shall be deemed to have been and to have remained held by the Indenture
Trustee as and by way of security for the payment to the Indenture Trustee of
all or any sums which are now or may become due and owing to the Indenture
Trustee under the Indenture and the rest of the Security Documents.
Section 4.16. POWERS TO LEND. The Indenture Trustee may
advance money on the security of any Security Asset for the purpose of defraying
any costs, charges, losses and expenses which shall be paid or incurred by it in
relation to this Debenture (including the remuneration of any Receiver) or which
the Indenture Trustee anticipates may be paid or incurred in the exercise of the
rights vested in it or for all other purposes of this Debenture or any of them
and the Indenture Trustee may advance such moneys at such rates of interest and
generally on such terms and conditions as it shall think fit.
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ARTICLE V
DEALINGS WITH SECURITY ASSETS
Section 5.1. CHARGED ACCOUNTS. The Owner shall cause all sums
hereafter received or recovered by or for it in respect of any Current
Receivable to be directly credited to a separate and distinct account as the
Indenture Trustee may from time to time designate and, if called upon to do so
by notice in writing from the Indenture Trustee, shall execute an absolute
assignment of any such Current Receivable in favor of the Indenture Trustee, all
at the cost of the Owner. Until the security hereby constituted is fully
discharged in accordance with the terms hereof, the Owner shall not be entitled
to withdraw any sum standing to the credit of any such account established as
aforesaid without the prior written consent of the Indenture Trustee.
Section 5.2. DEPOSIT OF PROPRIETARY RIGHTS. The Owner shall,
if the Indenture Trustee so requires, deposit with the Indenture Trustee all
certificates and other documents of title or evidence of ownership in relation
to the patents and rights referred to in Section 3.1(c).
Section 5.3. LIABILITY TO PERFORM. Notwithstanding any other
provision herein contained to the contrary, the Owner shall remain liable to
observe and perform all of the respective conditions and obligations assumed by
it in respect of each Security Asset and the Indenture Trustee shall be under no
obligation by reason of this Debenture, nor shall the Indenture Trustee be
required in any manner, to perform or fulfil any obligation of the Owner in
respect of any Security Asset or to make any payment or make any enquiry as to
the maturity, amount, nature or sufficiency of any rental, interest, proceeds,
payments or receipts received by it or them or the Owner or to present or file
any claim or take any other action or give any notice to collect, exercise or
enforce the payment of any amount or the taking up of any rights or property to
which the Owner may have been or to which it may be now or hereafter entitled
thereunder at any time.
ARTICLE VI
ENFORCEMENT
Section 6.1. WHEN SECURITY BECOMES ENFORCEABLE. The security
hereby conferred shall become immediately enforceable and the floating charge
created by this Debenture shall be deemed to have crystallized and the power of
sale and other powers conferred by statute as varied or amended or granted by
this Debenture shall be immediately exercisable (i) if the Owner fails to meet
the Obligations in the manner specified in Section 2.1 or (ii) upon and after
the occurrence of any Indenture Event of Default as defined in the Indenture.
After this security has become enforceable, the Indenture Trustee may in its
discretion enforce all or any part of this security, and exercise all or any
rights of enforcement hereby granted, in such manner as the Indenture Trustee
sees fit.
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Section 6.2. ENFORCEMENT OF SECURITY. For the purposes of all
powers implied by statute the Obligations shall be deemed to have become due and
payable on the date hereof and any statutory restrictions on the power of sale
and restrictions on the right of consolidation shall not apply to this security.
Section 6.3. REMEDIES, WAIVERS AND CONSENTS. No delay or
omission of the Indenture Trustee in exercising any right under this Debenture
shall impair or be construed as a waiver of such right nor shall any single or
partial exercise of any such right preclude any further exercise thereof or the
exercise of any other right. The rights provided in this Debenture are
cumulative and not exclusive of any rights provided by law, agreement or
otherwise. Any waiver and any consent by the Indenture Trustee under this
Debenture must be in writing and may be given subject to any conditions thought
fit by the Indenture Trustee. Any waiver or consent shall be effective only in
the instance and for the purpose for which it is given.
ARTICLE VII
RECEIVER
Section 7.1. APPOINTMENT AND POWERS OF RECEIVER. At any time
after this security becomes enforceable the Indenture Trustee may without
further notice appoint in writing under the hand of its duly authorized officer
any one or more Person(s) to be a receiver or receiver and manager (hereinafter
each called "a Receiver") as the Indenture Trustee at its sole discretion may
see fit of any Security Asset in like manner in every respect as if the
Indenture Trustee had become entitled under statute to exercise the power of
sale thereby conferred. Every Receiver so appointed shall, in addition to any
powers conferred by statute or common law, have and be entitled to exercise all
rights to do any or all of the following things:
(a) TAKE POSSESSION. Enter upon and take immediate possession of,
get in and collect any Security Asset and undertake any works
of demolition, building, reconstruction, repair or decoration
thereon;
(b) SELL ASSETS. Subject to any necessary consent or approval of
any judicial, administrative, governmental or other regulatory
body, office or agency, sell, convert into money and realize
any Security Asset by public auction or private contract,
dispose of, grant options and other rights in respect of and
exercise all other rights conferred on an owner under any
statute, at common law or otherwise, in respect of any
Security Asset and generally in such manner and on such terms
(which may consist wholly or partly of shares or securities of
any company or body corporate) as the Receiver shall think fit
and transfer, convey, assign or grant an assurance of the same
in the name and on behalf of the Owner. Without prejudice to
the generality of the foregoing, the Receiver may do any of
these things for a consideration consisting of cash,
debentures or other obligations, shares or other valuable
consideration in cash or in any other form
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whatsoever and any such consideration may be payable in a lump
sum or by installments spread over such period as the Receiver
may think fit;
(c) COMPROMISE. Settle, adjust, refer to arbitration, compromise
and arrange any claims, accounts, disputes, questions and
demands with or by any Person who is or claims to be a
creditor of the Owner or relating in any way to any Security
Asset;
(d) BORROW AND CREATE SECURITY. Borrow or raise money and secure
the repayment thereof and interest thereon by mortgaging,
sub-mortgaging or otherwise charging any Security Asset or
this Debenture (whether or not in priority to the sums and
obligations secured by this Debenture) in such manner and on
such terms as the Receiver shall think fit; PROVIDED, HOWEVER,
that:
(i) no Receiver shall exercise such right without first
obtaining the written consent of the Person
appointing him and the Indenture Trustee shall not
incur any responsibility to the Owner or any other
Person by reason of giving or refusing its consent,
whether directly or subject to any limitation or
condition; and
(ii) no Person lending such money shall be concerned to
enquire as to the existence of such consent or the
terms thereof or as to the propriety or purpose of
the exercise thereof or to see to the application of
any money so borrowed or raised;
(e) EMPLOY AGENTS. Employ solicitors, managers, agents and others
as the Receiver shall deem necessary;
(f) RECEIPTS. Give valid receipts and discharges for all moneys
and claims and execute all assurances and things which may be
proper or desirable for realizing any Security Assets;
(g) CONSIDERATION. Receive or pay any consideration in cash or
other valuable consideration and so that the same may be
receivable or payable either immediately or at a later time
and in a lump sum or by installments spread over such period
as the Receiver shall think fit;
(h) DEALINGS. Generally to deal with and effect any transaction or
arrangement of any kind whatsoever in respect of any Security
Asset;
(i) LEGAL PROCEEDINGS. Settle, arrange, compromise and submit to
arbitration any accounts, claims, questions or disputes
whatsoever which may arise in connection
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with any Security Asset or in any way relating to the security
constituted by this Debenture, to bring, take, defend,
compromise, submit to and discontinue any actions, suits,
arbitration or proceedings whatsoever whether civil or
criminal in relation to the matters aforesaid, to enter into,
complete, disclaim, abandon or disregard, determine or rectify
all or any of the outstanding agreements or arrangements of
the Owner in any way relating to or affecting the Security
Assets or any part thereof and to allow time for payment of
any debts either with or without security as the Receiver
shall think expedient;
(j) IN OWNER'S NAME. Generally at his option to use the name of
the Owner in the exercise of all or any of the rights hereby
conferred;
(k) EXERCISE OF RIGHTS. Exercise, or permit the Owner or any
nominee of the Owner to exercise, any rights incident to the
ownership of any Security Asset in such manner as the Receiver
may think fit and in particular (as regards shares, stock and
securities) any voting rights conferred by the same and (as
regards securities) any rights of enforcing the same by
foreclosure, sale or otherwise;
(l) CORPORATE TRANSFERS. Transfer any Security Asset to any other
company or body corporate, whether or not formed or acquired
for the purpose;
(m) CARRY ON BUSINESS. Generally manage and carry on and conduct
any of the undertakings and businesses of the Owner;
(n) CALLS. Make calls, conditionally or unconditionally, on the
members of the Owner in respect of all or any part of its
uncalled capital with such and the same rights of enforcement
as are conferred by the Memorandum of Association and Articles
of Association of the Owner upon its directors in this
respect;
(o) GENERAL POWERS. Sign under seal or otherwise and deliver all
such agreements, documents and instruments and do all such
other acts and things as the Receiver may consider desirable
or necessary for realizing any Security Asset or incidental or
conducive to any of the matters or rights conferred on a
Receiver under or by virtue of this Debenture and to exercise
in relation to any Security Asset all such rights as the
Receiver should be capable of exercising if the Receiver were
the beneficial owner of the same; and
(p) MONEYS RECEIVED BY RECEIVER. All moneys received by a Receiver
shall after providing for the matters specified by any law be
applied by him in or towards satisfaction of this Debenture
and thereafter of any other Encumbrance of which he shall have
notice and thereafter the Receiver shall pay the residue of
the moneys received by him to the Owner.
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Section 7.2. COMPLY WITH INSTRUCTIONS. Any Receiver shall in
the exercise of the Receiver's rights conform to any regulations and directions
from time to time made and given by the Indenture Trustee as appointer but so
that no Person dealing with the Indenture Trustee or any Receiver shall be
concerned to enquire whether the Receiver has so conformed to any such
regulations or directions.
Section 7.3. REMOVAL AND REMUNERATION. The Indenture Trustee
may from time to time by writing under its hand remove any Receiver appointed by
it and may whenever it may deem it expedient appoint a new Receiver in the place
of any Receiver whose appointment may for any reason have terminated and may
from time to time fix the remuneration of any Receiver appointed by it.
Section 7.4. INDENTURE TRUSTEE MAY EXERCISE RECEIVER'S POWERS.
All or any of the rights which are conferred by this Debenture (either expressly
or impliedly) upon a Receiver of any Security Asset may be exercised after the
security hereby created becomes enforceable by the Indenture Trustee in relation
to any Security Asset without first appointing a Receiver of the same or
notwithstanding the appointment of a Receiver of the same.
Section 7.5. NO LIABILITY AS MORTGAGEE IN POSSESSION. The
Indenture Trustee shall not nor shall any Receiver appointed as aforesaid by
reason of the Indenture Trustee or the Receiver entering into possession of any
Security Asset be liable to account as mortgagee in possession or be liable for
any loss or realization or for any default or omission for which a mortgagee in
possession might be liable. Every Receiver duly appointed by the Indenture
Trustee shall be deemed to be the agent of the Owner for all purposes and shall
as such agent be deemed to be in the same position as a Receiver duly appointed
by a mortgagee under statute. The Owner alone shall be responsible for its
agreements, obligations, acts, omissions, defaults and losses and the Indenture
Trustee shall not incur any responsibility therefor (either to the Owner or to
any other Person whatsoever) by reason of appointing such Receiver or for any
other reason whatsoever. Every such Receiver and the Indenture Trustee shall be
entitled to all the rights, privileges and immunities by statute conferred on
mortgagees and receivers when such receivers have been duly appointed.
Section 7.6. PROTECTION OF THIRD PARTIES. No purchaser,
mortgagee or other Person dealing with the Indenture Trustee or the Receiver or
the agents of the Indenture Trustee or the Receiver shall be concerned to
enquire whether any of the Obligations are due or owing, the right which the
Indenture Trustee or the Receiver is purporting to exercise has become
exercisable or any money remains due under this Debenture, as to the propriety
or regularity of the actions of the Indenture Trustee or such Receiver, or to
see to the application of any money paid to the Indenture Trustee or to such
Receiver.
Section 7.7. EXPENSES. All costs, charges and expenses
incurred and all payments made by the Indenture Trustee or any Receiver
appointed hereunder in the exercise
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in good faith of any right hereby conferred whether or not occasioned by any
act, neglect or default of the Indenture Trustee or such Receiver shall bear
interest from the date of the same being incurred or becoming due at the Default
Rate. The amount of all such costs, charges, expenses and payments and all
interest thereon and all remuneration payable hereunder shall be payable by the
Owner on demand. All such costs, charges, expenses and payments shall be paid
and charged as between the Indenture Trustee and the Owner on the basis of a
full indemnity and not on the basis of party and party or any other kind of
taxation.
Section 7.8. INDEMNITY. Each of the Indenture Trustee and
every Receiver, attorney, manager, agent or other Person appointed by the
Indenture Trustee hereunder shall be entitled to be indemnified out of the
Security Assets in respect of all obligations, costs, charges and expenses
incurred and payments made by such Person in good faith in the execution or
purported execution of any right vested in such Person pursuant hereto and
against all actions, proceedings, obligations, costs, claims and demands in
respect of any matter or thing done or omitted in anyway relating to any
Security Asset and the Indenture Trustee and any such Receiver may retain and
pay all sums in respect of the same out of any moneys received under the rights
hereby conferred.
ARTICLE VIII
APPLICATION OF PROCEEDS
Section 8.1. ORDER OF APPLICATION. Any moneys received by the
Indenture Trustee pursuant to this Debenture or under the powers hereby
conferred shall after the security hereby constituted shall have become
enforceable but subject to the payment of any claims having priority to this
security be applied for the following purposes and in the following order of
priority (but without prejudice to the right of the Indenture Trustee to recover
any shortfall from the Owner):
(a) in satisfaction of or provision for all costs, charges and
expenses incurred and payments made by the Indenture Trustee
or any Receiver appointed hereunder and of all remuneration
due hereunder with interest on such costs, charges, expenses
and payments at the Default Rate;
(b) in or towards payment of interest on the Obligations;
(c) in or towards payment of principal on the Obligations; and
(d) in payment of the surplus (if any) to the Owner or other
Person entitled thereto.
Section 8.2. SUSPENSE ACCOUNTS. Any moneys received under the
rights hereby conferred may, at the discretion of the Indenture Trustee, be
placed in a suspense account and kept there for so long as the Indenture Trustee
thinks fit.
<PAGE>
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ARTICLE IX
MISCELLANEOUS PROVISIONS
Section 9.1. AMENDMENT. This Debenture may be amended from
time to time by written agreement signed by the parties hereto.
Section 9.2. SEVERABILITY. If any provision of this Debenture
is held to be in conflict with any applicable statute or rule of law or is
otherwise held to be unenforceable for any reason whatsoever, such circumstances
shall not have the effect of rendering the provision in question inoperative or
unenforceable in any other case or circumstance, or of rendering any other
provision or provisions herein contained invalid, inoperative, or unenforceable
to any extent whatsoever. The invalidity of any one or more phrases, sentences,
clauses or Sections of this Debenture contained, shall not affect the remaining
portions of this Debenture, or any part thereof.
Section 9.3. NOTICES. All demands, notices and communications
hereunder shall be in writing, personally delivered or mailed by certified
mail-return receipt requested, and shall be deemed to have been duly given upon
receipt (a) in the case of the Indenture Trustee, at the following address: 114
West 47th Street, New York, New York 10036, Attention: Corporate Trust
Department, (b) in the case of the Owner, at the following address: 15-19 Athol
Street, Douglas, Isle of Man, or at other such address as shall be designated by
such party in a written notice to the other parties.
Section 9.4. CONSENT TO JURISDICTION. Any legal suit, action
or proceeding against the Owner arising out of or relating to this Debenture, or
any transaction contemplated hereby, may be instituted in any federal or state
court in The City of New York, State of New York and the Owner hereby waives any
objection which it may now or hereafter have to the laying of venue of any such
suit, action or proceeding, and the Owner hereby irrevocably submits to the
jurisdiction of any such court in any such suit, action or proceeding. The Owner
hereby irrevocably appoints and designates CT Corporation System, having an
address at 1633 Broadway, New York, New York, its true and lawful
attorney-in-fact and duly authorized agent for the limited purpose of accepting
servicing of legal process and the Owner agrees that service of process upon
such party shall constitute personal service of such process on the Owner. The
Owner shall maintain the designation and appointment of such authorized agent
until all amounts payable under this Debenture shall have been paid in full. If
such agent shall cease to so act, the Owner shall immediately designate and
appoint another such agent satisfactory to the Indenture Trustee and shall
promptly deliver to the Indenture Trustee evidence in writing of such other
agent's acceptance of such appointment.
Section 9.5. CAPTIONS. The captions or headings in this
Debenture are for convenience only and in no way define, limit or describe the
scope or intent of any provisions or sections of this Debenture.
<PAGE>
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Section 9.6. GOVERNING LAW. This Debenture shall be governed
by and interpreted in accordance with the laws of the Isle of Man, without
giving effect to the principles of conflicts of law.
Section 9.7. NO PARTNERSHIP. Nothing herein contained shall be
deemed or construed to create a partnership or joint venture among the parties
hereto and the services of each party shall be rendered as an independent
contractor and not as agent for any other party.
Section 9.8. COUNTERPARTS. This Debenture may be executed in
any number of counterparts and by different parties hereto on separate
counterpart, each of which shall be deemed to be an original. Such counterparts
shall constitute one and the same agreement.
Section 9.9. SURVIVAL. The representations, covenants and
agreements contained in or made pursuant to this Debenture in respect of either
party hereto shall survive the execution and delivery of this Debenture and
shall continue in effect so long as such party's obligations hereunder remain
outstanding.
Section 9.10. INTEGRATION. This Debenture and the Schedule and
Exhibits hereto, the Indenture and the Security Documents constitute the entire
agreement and understanding between the parties hereto with respect to the
subject matter hereof and supersedes all prior agreements, understandings or
representations pertaining to the subject matter hereof, whether oral or
written. There are no warranties, representations or other agreements between
the parties in connection with the subject matter hereof except as specifically
set forth or incorporated herein.
Section 9.11. REPRODUCTION OF DOCUMENTS. This Debenture and
all documents relating thereto, including, without limitation, (a) consents,
waivers and modifications which may hereafter be executed, (b) documents
received by any party at the closing, and (c) financial statements, certificates
and other information previously or hereafter furnished, may be reproduced by
any photographic, photostatic, microfilm, micro-card, miniature photographic or
other similar process. The parties agree that any such reproduction shall be
admissible in evidence as the original itself in any judicial or administrative
proceeding (whether or not the original is in existence and whether or not such
reproduction was made in the regular course of business) and that any
enlargement, facsimile or further reproduction of such reproduction shall
likewise be admissible in evidence.
Section 9.12. SUCCESSORS AND ASSIGNS; ASSIGNMENT. This
Debenture shall be binding upon and inure to the benefit of the Owner and the
Indenture Trustee and their respective successors and assigns. The Owner shall
not have the right to assign its rights hereunder or any interest herein without
the prior written consent of the Indenture Trustee. The Indenture Trustee, at
its sole option, shall have the right to assign this Debenture, Indenture, the
Security Documents and any of its rights and interest hereunder and thereunder.
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Section 9.13. GENERAL INTERPRETIVE PRINCIPLES. For purposes of
this Debenture except as otherwise expressly provided or unless the context
otherwise requires:
(a) the defined terms in this Debenture shall include the
plural as well as the singular, and the use of any gender herein shall be deemed
to include any other gender;
(b) accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted accounting
principles as in effect on the date hereof;
(c) references herein to "Articles", "Sections",
"Subsections", "paragraphs", and other subdivisions without reference to a
document are to designated Articles, Sections, Subsections, paragraphs and other
subdivisions of this Debenture;
(d) a reference to a Subsection without further reference to a
Section is a reference to such Subsection as contained in the same Section in
which the reference appears, and this rule shall also apply to paragraphs and
other subdivisions;
(e) the words "herein", "hereof", "hereunder" and other words
of similar import refer to this Debenture as a whole and not to any particular
provision; and
(f) the term "include" or "including" shall mean without
limitation by reason of enumeration.
<PAGE>
IN WITNESS WHEREOF this Debenture has been executed by the
Owner the day and year first above written.
SIGNED, SEALED and DELIVERED )
as a Deed and Debenture ) /s/ Joseph Avantario
by )
for and on behalf of )
Golden State Petro (IOM I-A) PLC ) /s/ John McFadden
in the presence:- )
SIGNED by )
for and on behalf of )
United States Trust Company of New York /s/ Christine C. Collins
as Indenture Trustee )
in the presence of:- ) /s/ Adam Levine
<PAGE>
SCHEDULE 1
DEFINED TERMS USED IN THE DEBENTURE
"ADDITIONAL NOTE" means each first preferred mortgage note issued
pursuant to a Supplemental Indenture to finance the Additional Construction
Costs of a Vessel.
"ADDITIONAL CONSTRUCTION COSTS" means any net increases in construction
costs for the Vessel which (i) result from actions by the Initial Charterer or
the Technical Supervisor; (ii) are approved by the Owner, such approval not to
be unreasonably withheld; and (iii) occur after execution of the Building
Contract but prior to the Delivery Date.
"ALLOCATED PRINCIPAL AMOUNT OF THE ADDITIONAL NOTES" means, when used
with reference to the Additional Notes and the Vessel at any date of
determination, the product of (a) the aggregate outstanding principal amount of
Additional Notes as of such date and (b) a fraction (i) the numerator of which
is the aggregate outstanding principal amount of Additional Notes for the Vessel
as specified with respect to the Vessel in the related Supplemental Indenture
and (ii) the denominator of which is the aggregate initial principal amount of
all Additional Notes.
"ALLOCATED PRINCIPAL AMOUNT OF THE MORTGAGE NOTES" means, when used
with reference to the Mortgage Notes and the Vessel at any date of
determination, the sum of (a) the Allocated Principal Amount of the Notes for
the Vessel and (b) the Allocated Principal Amount of the Additional Notes for
the Vessel.
"ALLOCATED PRINCIPAL AMOUNT OF THE NOTES" means, when used with
reference to the Notes and either Vessel, amounts indicated on Schedule 1
attached to the Indenture.
"AGREEMENT ON CONTRACT FOR TECHNICAL MATTERS" means, the Agreement
Regarding Technical Matters, dated as of the Closing Date, between the Owner,
Samsung Heavy Industries Co., LTD and Chevron Shipping Company, San Francisco,
California (as Agent for the Initial Charterer).
"ASSETS" means, in relation to any person, the whole or any part of its
business, undertaking, property and assets and includes, without limitation, any
right to receive revenues.
"ASSIGNMENT OF BUILDING CONTRACT" means, for each Vessel, the Building
Contract Assignment, dated as of the Closing Date, between the related Owner and
the Indenture Trustee, pursuant to which such Owner collaterally assigns its
rights, title and interests in the related Building Contract and the Agreement
on Contract for Technical Matters to the Indenture Trustee.
"ASSIGNMENT OF BUILDING CONTRACT GUARANTEE" means, for each Building
Contract Guarantee, the Assignment of Building Contract Guarantee, dated as of
the Closing Date, between the related Owner and the Indenture Trustee, as the
same may be amended from time
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to time, pursuant to which such Owner collaterally assigns its rights, title and
interest in the related Building Contract Guarantee therein to the Indenture
Trustee.
"ASSIGNMENT OF CHARTER" means the assignment between the Owner and the
Indenture Trustee, as amended from time to time in accordance with the terms
thereof, pursuant to which the Owner collaterally assigns to the Indenture
Trustee all of the Owner's right, title and interest in, to and under the
Initial Charter to secure its obligations under the Indenture.
"ASSIGNMENT OF CHARTER SUPPLEMENT" means, for each Charter Supplement,
the Assignment of Charter Supplement, dated the date of the Supplemental
Indenture, between the Owner of the Vessel and the Indenture Trustee, as the
same may be amended from time to time pursuant to which the Owner collaterally
assigns all of the Owner's right, title and interest therein to the Indenture
Trustee.
"ASSIGNMENT OF CHEVRON GUARANTEE" means the assignment between the
Owner and the Indenture Trustee, as amended from time to time in accordance with
the terms thereof, pursuant to which the Owner collaterally assigns to the
Indenture Trustee all of the Owner's right, title and interest in, to and under
the Chevron Guarantee to secure its obligations under the Indenture.
"ASSIGNMENT OF EARNINGS AND INSURANCES" means the assignment between
the Owner and the Indenture Trustee, as amended from time to time in accordance
with the terms thereof, pursuant to which the Owner collaterally assigns to the
Indenture Trustee all of the Owner's right, title and interest in, to and under
the freights and hires (as well as any charters entered into after the Delivery
Date) with respect to the Vessel to secure its obligations under the Indenture.
"ASSIGNMENT OF MANAGEMENT AGREEMENT" means the assignment between the
Owner and the Indenture Trustee, as amended from time to time in accordance with
the terms thereof, pursuant to which the Owner collaterally assigns to the
Indenture Trustee all of the Owner's right, title and interest in, to and under
the Management Agreement to secure its obligations under the Indenture.
"BUILDER" means, collectively, Samsung Corporation and Samsung Heavy
Industries, Ltd.
"BUILDING CONTRACT" means the Shipbuilding Contract, dated December 19,
1996, between the Builder and the Owner.
"BUILDING CONTRACT GUARANTEE" means the Irrevocable Installment Payment
Letter of Guarantee, dated December 19, 1996, given by the Building Contract
Guarantor to the Owner in connection with the Vessel.
"BUILDING CONTRACT GUARANTOR" means Korea Development Bank.
<PAGE>
-3-
"CHEVRON" means Chevron Corporation, a Delaware corporation, and its
successors and assigns.
"CHEVRON GUARANTEE" means the Guarantee, dated the Closing Date, given
by Chevron to the Owner in connection with the Initial Charter and the Charter
Supplement.
"CLOSING DATE" means December 24, 1996.
"CURRENT RECEIVABLES" means (a) all obligations of the trade debtors of
the Owner due or owing to the Owner on account of the prevailing debit balances
of the present book debts of the Owner and (b) all rights relating to the
aforesaid property specified in clause (a), including, INTER ALIA, negotiable
instruments, legal and equitable charges, reservations of property rights,
rights of action, collection, recovery or security, rights of tracing an unpaid
vendor's liens and similar and associated rights (and each reference to a
"Current Receivable" shall be construed as a reference to the whole or any part
of any one or more of them).
"DEFAULT RATE" means, with respect to a Mortgage Note, a rate per annum
for each day from the date of a default in any payment hereunder until such
payment shall be paid in full equal to the lesser of (a) 1.0% above the interest
rate indicated in such Mortgage Note and (b) the sum of 1.5% and LIBOR.
"DELIVERY DATE" means the date the Vessel is accepted by the Owner from
the Builder under the Building Contract.
"ENCUMBRANCE" means any encumbrance and includes any mortgage, charge
(whether fixed or floating, pledge, lien, hypothecation, title retention or
other security agreement or security interest of any kind whatsoever and
howsoever arising and any equivalent or analogous interest to any of the
foregoing.
"INDENTURE" means the Indenture, dated as of December 1, 1996 among the
Indenture Trustee, the Owner, Golden State Petro (IOM I-B) and Golden State
Petroleum, pursuant to which the Notes were issued.
"INDENTURE TRUSTEE" means United States Trust Company of New York.
"INITIAL CHARTER" means with respect to each Vessel, the bareboat
charter, dated as of December 1, 1996, between the Initial Charterer and the
Owner.
"INITIAL CHARTERER" means Chevron Transport Corporation, a Liberian
corporation.
"ISSUE OF ONE DEBENTURE" means each Issue of One Debenture between the
Owner and the Indenture Trustee, as amended from time to time in accordance with
the terms thereof,
<PAGE>
-4-
pursuant to which the Owner grants to the Indenture Trustee a security interest
in all of its assets.
"LIBOR" means the rate calculated on the basis of the offered rates for
deposits in dollars for a one-month period which appear on the Reuters Screen
LIBO Page as of 11:00 A.M., London time, on the date that is two London Banking
Days preceding the date of calculation. If at least two such offered rates
appear on the Reuters Screen LIBO Page, LIBOR will be the arithmetic mean of
such offered rates (rounded to the nearest .0001 percentage point). If, at any
time of determination, the Reuters Screen LIBO Page is not available, LIBOR will
be calculated as the average (rounded upward, if necessary, to the next higher
1/16 of 1%) of the respective ratio per annum at which deposits in dollars for a
one month period are offered to each of three reference banks in the London
interbank market at approximately 11:00 A.M., London time, on the date that is
two London Banking Days preceding the date of calculation. Each of the Initial
Charterer and the Owners (or the Owners' assignee) will select a reference bank
and the third reference bank will be selected by the Initial Charterer and the
Owners (or Owners' assignee) together or, failing agreement, by the previously
selected reference banks together.
"LONDON BANKING DAY" means any day on which dealings in deposits in
United States dollars are carried on in the London interbank market and on which
commercial banks are open for domestic and international business (including
dealings in United States dollar deposits) in London and New York.
"MANAGEMENT AGREEMENT" means the agreement, dated the Closing Date,
between the Owner and the Manager pursuant to which the Manager agrees to
provide certain services to the Owner.
"MANAGER" means the Person performing the duties of the Manager under
the Management Agreement, initially Cambridge Fund Management L.L.C.
"MORTGAGE" means, with respect to the Vessel, the first preferred ship
mortgage on the Vessel granted by the Owner to the Indenture Trustee, as amended
from time to time in accordance with the terms of such Mortgage.
"MORTGAGE NOTES" means, collectively, the Serial First Preferred
Mortgage Notes maturing serially from 2000 to 2006 (the "Serial Notes") and the
8.04% First Preferred Mortgage Notes due 2019 (the "Term Notes") issued in the
initial aggregate principal amount of $178,800,000 and any other notes issued
pursuant to a supplement to the Indenture or pursuant to the Registration Rights
Agreement.
"NOTES" means, collectively, the Serial Notes and Term Notes.
<PAGE>
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"OBLIGATIONS" means the payment, performance or obligations of any kind
or nature whatsoever of the Owner under and pursuant to the Indenture, any
Security Document and any instrument, agreement or document referred to therein.
"OWNER" means Golden State Petro (IOM I-A) PLC, a company organized
under the laws of the Isle of Man.
"PERSON" means an individual, a partnership, a corporation, a joint
venture, unincorporated association, a joint stock company, a trust or any other
entity or a Governmental Authority.
"REGISTRATION JURISDICTION" means the jurisdiction in which the Vessel
is or will be registered.
"REGISTRATION RIGHTS AGREEMENT" means the Registration Rights
Agreement, dated the Closing Date, among the Owners and Cambridge Partners,
L.L.C., Salomon Brothers Inc and Donaldson, Lufkin & Jenrette Securities
Corporation, as initial purchaser of the Initial Notes.
"SECURITY ASSETS" means all of the present and future Assets of the
Owner, including, INTER ALIA, the Current Receivables (and each reference to a
"Security Asset" shall be construed as a reference to the whole or any part of
any one or more of them).
"SECURITY DOCUMENTS" means the Indenture, the Mortgage, the Assignment
of Charter, the Assignments of Charter Supplements, the Assignment of Earnings
and Insurances, the Assignment of Chevron Guarantee, the Assignment of
Management Agreement, the Assignment of Building Contract, the Issue of One
Debenture, the Stock Pledge and the Assignment of Building Contract Guarantee,
collectively.
"VESSEL" means Hull No. 1228.
<PAGE>
TABLE OF CONTENTS
Page
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ARTICLE I
DEFINITIONS............................... 1
ARTICLE II
COVENANT TO PAY.............................. 1
Section 2.1. Covenant to Pay............................................... 1
ARTICLE III
MORTGAGE, CHARGE AND ASSIGNMENT..................... 2
Section 3.1. Charge........................................................ 2
Section 3.2. Legal Securities.............................................. 3
Section 3.3. Conversion of Floating Charge................................. 3
Section 3.4. Negative Pledge............................................... 3
Section 3.5. New Accounts.................................................. 3
ARTICLE IV
PRESERVATION OF SECURITY......................... 3
Section 4.1. Continuing Security........................................... 3
Section 4.2. Waiver of Defenses............................................ 4
Section 4.3. Immediate Recourse............................................ 4
Section 4.4. Preservation of Rights........................................ 5
Section 4.5. Additional Security........................................... 5
Section 4.6. Certificate................................................... 5
Section 4.7. Discharge..................................................... 5
Section 4.8. Registration.................................................. 5
<PAGE>
Page
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Section 4.9. Indenture Trustee's Power's With Respect to Security Assets... 5
Section 4.10. Calls......................................................... 6
Section 4.11. Delegation By Indenture Trustee............................... 6
Section 4.12. Further Assurances............................................ 6
Section 4.13. Redemption of Prior Mortgages................................. 6
Section 4.14. Power of Attorney............................................. 6
Section 4.15. Avoidance of Payments......................................... 7
Section 4.16. Powers to Lend................................................ 7
ARTICLE V
DEALINGS WITH SECURITY ASSETS...................... 8
Section 5.1. Charged Accounts.............................................. 8
Section 5.2. Deposit of Proprietary Rights................................. 8
Section 5.3. Liability to Perform.......................................... 8
ARTICLE VI
ENFORCEMENT............................... 8
Section 6.1. When Security Becomes Enforceable............................. 8
Section 6.2. Enforcement of Security....................................... 9
Section 6.3. Remedies, Waivers and Consents................................ 9
ARTICLE VII
RECEIVER................................. 9
Section 7.1. Appointment and Powers of Receiver............................ 9
Section 7.2. Comply with Instructions...................................... 12
<PAGE>
Page
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Section 7.3. Removal and Remuneration...................................... 12
Section 7.4. Indenture Trustee May Exercise Receiver's Powers.............. 12
Section 7.5. No Liability As Mortgagee In Possession....................... 12
Section 7.6. Protection Of Third Parties................................... 12
Section 7.7. Expenses...................................................... 12
Section 7.8. Indemnity..................................................... 13
ARTICLE VIII
APPLICATION OF PROCEEDS.......................... 13
Section 8.1. Order of Application.......................................... 13
Section 8.2. Suspense Accounts............................................. 13
ARTICLE IX
MISCELLANEOUS PROVISIONS......................... 14
Section 9.1. Amendment..................................................... 14
Section 9.2. Severability.................................................. 14
Section 9.3. Notices....................................................... 14
Section 9.4. Consent to Jurisdiction....................................... 14
Section 9.5. Captions...................................................... 14
Section 9.6. Governing Law................................................. 15
Section 9.7. No Partnership................................................ 15
Section 9.8. Counterparts.................................................. 15
Section 9.9. Survival...................................................... 15
Section 9.10. Integration................................................... 15
<PAGE>
Page
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Section 9.11. Reproduction of Documents..................................... 15
Section 9.12. Successors and Assigns; Assignment............................ 15
Section 9.13. General Interpretive Principles............................... 16
================================================================================
UNITED STATES TRUST COMPANY OF NEW YORK,
as INDENTURE TRUSTEE
and
GOLDEN STATE PETRO (IOM I-B) PLC
-----------------------------------
ISSUE OF ONE DEBENTURE
Dated as of December 1, 1996
-----------------------------------
================================================================================
<PAGE>
This Issue of One Debenture, dated as of December 1, 1996 (the
"Debenture"), from Golden State Petro (IOM I-B) PLC, a company organized under
the laws of the Isle of Man (the "Owner") to United States Trust Company of New
York, as indenture trustee, a bank and trust company organized under the New
York Banking Law (the "Indenture Trustee").
PRELIMINARY STATEMENT
On the Closing Date, Golden State Petroleum, as agent for the
Owner and Golden State Petro (IOM I-A) PLC, will issue Notes in connection with
the financing of the construction of the Vessel. The net proceeds of such
issuance will be deposited into the Pre-Funding Account. Pursuant to the
Indenture, the Allocated Principal Amount of the Mortgage Notes for the Vessel
will be used, INTER ALIA, to make the installments due under the Shipbuilding
Contract for the Vessel. As of the date of this Assignment, the Owner has agreed
to bareboat charter the Vessel to Chevron Transport Corporation (the "Initial
Charterer") pursuant to the Initial Charter. The obligations of the Initial
Charterer under the Initial Charter are guaranteed by Chevron Corporation (the
"Guarantor") pursuant to the Chevron Guarantee. The Vessel will be managed by
Cambridge Fund Management L.L.C. (the "Manager") pursuant to the Management
Agreement, dated as of the date hereof, between the Owner and the Manager. As
collateral security for its obligations under the Indenture, the Owner has and
will assign, pledge, mortgage and grant the Indenture Trustee a security
interest in, INTER ALIA, the Vessel, the Initial Charter, the Chevron Guarantee
and the earnings and insurances of the Vessel and will grant this debenture in
favor of the Indenture Trustee.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained and of other valuable consideration, receipt of
which is hereby acknowledged, the Owner and the Indenture Trustee hereby agree
as follows:
ARTICLE I
DEFINITIONS
Capitalized terms used in this Debenture shall have the
meanings assigned to such terms in Schedule 1 to this Debenture, and the
definitions of such terms shall be equally applicable to both the singular and
plural forms of such terms.
ARTICLE II
COVENANT TO PAY
Section 2.1. COVENANT TO PAY. The Owner hereby covenants and
agrees to pay and discharge each sum owing under the Obligations as and when the
same shall fall due, whether at maturity, by acceleration or otherwise.
<PAGE>
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ARTICLE III
MORTGAGE, CHARGE AND ASSIGNMENT
Section 3.1. CHARGE. As continuing security for the
Obligations, the Owner hereby:
(a) conveys, transfers and assigns absolutely to and unto the
Indenture Trustee all rights of the Owner in and to the
Current Receivables by way of fixed charge;
(b) mortgages, charges and assigns, and agrees to mortgage, charge
and assign to the Indenture Trustee all present and future
rights of the Owner in and to all freehold or leasehold
property of the Owner and all other estates or interests
therein together with all trade fixtures and fixed plant and
machinery now and for the time being thereon, by way of a
fixed charge;
(c) mortgages, charges and assigns, and agrees to mortgage, charge
and assign, to the Indenture Trustee all rights now owned or
hereafter acquired in and to the goodwill, franchises, patent
rights, copyrights, trademarks and other intangible Assets of
the Owner by way of fixed charge;
(d) mortgages, charges and assigns, and agrees to mortgage, charge
and assign, to the Indenture Trustee all rights relating to
the aforesaid property specified in Sections 3.1(a), (b) and
(c) including, INTER ALIA, negotiable instruments, legal and
equitable charges, reservations of property rights, rights of
action, collection, recovery or security, rights of tracing
and unpaid vendor's liens and similar and associated rights,
by way of fixed legal mortgage and charge; and
(e) mortgages and charges in favor of the Indenture Trustee all
rights of the Owner now owned or hereafter acquired in and to
all other Security Assets for the time being of the Owner not
subject to the fixed securities created by Sections 3.1(a),
(b), (c) and (d) wheresoever situate (including, INTER ALIA,
all undertakings and businesses of the Owner) by way of a
floating charge and the Owner shall not be at liberty to
create any mortgage or charge on any of the securities created
by this Section 3.1(e) and no Encumbrance shall in any case or
in any manner arise on or affect any part of the said
securities in priority to or PARI PASSU with all charges
hereby created, it being the intention that the Owner shall
have no power, without the written consent of the Indenture
Trustee, to part with or dispose of any part of the said
securities except by way of sale in the ordinary course of its
business;
<PAGE>
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PROVIDED, HOWEVER, that upon the unconditional payment and satisfaction
of the Obligations the rights of the Indenture Trustee hereunder will
terminate and the Indenture Trustee will at the direction, cost and
expense of the Owner release or reassign to the Owner all remaining
rights of the Indenture Trustee in and to the balance of the Security
Assets.
Section 3.2. LEGAL SECURITIES. The Owner will forthwith at the
request of the Indenture Trustee execute a legal mortgage, charge or assignment
over all or any of the Security Assets subject to or intended to be subject to
any fixed security hereby created in favor of the Indenture Trustee in such form
as the Indenture Trustee may reasonably require.
Section 3.3. CONVERSION OF FLOATING CHARGE. The Indenture
Trustee may at any time by notice to the Owner convert the floating charge
hereby created into a fixed charge as regards any Assets specified in the notice
which the Indenture Trustee shall consider to be in danger of being seized or
sold under any form of distress, attachment, execution or other legal process or
to be otherwise in jeopardy and (whether or not this security has become
enforceable) may at any time appoint a Receiver (as defined in Section 7.1
hereof) thereof.
Section 3.4. NEGATIVE PLEDGE. Except as otherwise provided in
the Mortgage or the Indenture, the Owner shall not, without the prior written
consent of the Indenture Trustee, permit the sale, transfer, assignment lease or
other disposition of any Security Asset, or any Encumbrance or other right in or
over any Security Asset to subsist, arise or be created, other than such
Encumbrance as is created by this Debenture.
Section 3.5. NEW ACCOUNTS. If the Indenture Trustee receives
or is deemed to be affected by notice whether actual or constructive of any
subsequent Encumbrance or other interest affecting any Security Asset or the
proceeds of sale thereof, the Indenture Trustee may open a new account or
accounts for the Owner. If the Indenture Trustee does not open a new account it
shall nevertheless be treated as if it had done so at the time when it received
or was deemed to have received notice and as from that time all payments made to
the Indenture Trustee shall be credited or be treated as having been credited to
the new account and shall not operate to reduce the amount for which this
Debenture is security.
ARTICLE IV
PRESERVATION OF SECURITY
Section 4.1. CONTINUING SECURITY. The security constituted by
this Debenture shall be a continuing security and shall not be satisfied by any
intermediate payment or satisfaction of the Obligations but shall secure the
ultimate balance of the Obligations. The security hereby given shall be in
addition to and shall not be discharged, released, prejudiced or otherwise
affected by any other security or Encumbrance now or hereafter held by the
Indenture Trustee for the Obligations.
<PAGE>
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Section 4.2. WAIVER OF DEFENSES. The obligations of the Owner
under this Debenture and this security shall not be discharged, released,
prejudiced or otherwise affected by any act, omission or circumstance which but
for this provision might so operate or otherwise release or discharge the Owner
from the Obligations, or the security created under this Debenture including
without limitation and whether or not known to or discoverable by the Owner or
the Indenture Trustee:
(a) any time, indulgence, waiver, consent or other relief granted
to or composition with the Owner or any other Person;
(b) the taking, variation, extension, compromise, renewal or
release of, or refusal or neglect to perfect or enforce, any
rights under the Indenture, this Debenture, any Security
Document or any other guarantee, agreement or obligation or
any right against, or any security granted by, the Owner or
any other Person;
(c) any irregularity, invalidity or unenforceability of any
obligation of the Owner under the Indenture, any Security
Document, this Debenture or any other guarantee, of any
government or authority (whether of right or in fact)
purporting to reduce or otherwise affect any such obligation
to the extent that such obligation and this security shall
remain in full force and this Debenture shall be construed
accordingly as if there were no such irregularity,
unenforceability, invalidity, law or order;
(d) any legal limitation, disability, incapacity or other
circumstance relating to the Owner, any guarantor or any other
Person;
(e) any defect in or invalidity or inadequacy of the constitution
or incorporation or borrowing powers of the Owner or of its
board of directors, executive committee or other equivalent or
analogous body or in the authorization, execution or delivery
of the Indenture, any Security Document, this Debenture or any
other guarantee, agreement or obligation; or
(f) any supplement, amendment or modification to the terms of the
Indenture, this Debenture, any other Security Document or any
other guarantee, agreement or obligation.
Section 4.3. IMMEDIATE RECOURSE. The Owner waives any right it
may have of first requiring the Indenture Trustee to proceed against or claim
payment from the Owner or enforce the Indenture, any Security Documents or other
guarantee, agreement or obligation before enforcing this Debenture.
<PAGE>
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Section 4.4. PRESERVATION OF RIGHTS. Until the Obligations
have been irrevocably paid and discharged in full, the Indenture Trustee may:
(a) refrain from applying or enforcing any other security, money
or right held or received by the Indenture Trustee in respect
of the Obligations or apply and enforce the same in such
manner and order as the Indenture Trustee sees fit; and
(b) hold in a suspense account (without liability to pay interest
thereon) any moneys received or on account of this Debenture
by way of a partial payment.
Section 4.5. ADDITIONAL SECURITY. This Debenture shall be in
addition to and shall not in any way be prejudiced by any other security now or
hereafter held by the Indenture Trustee.
Section 4.6. CERTIFICATE. A certificate of the Indenture
Trustee setting forth the amount due from the Owner in respect of the
Obligations shall, in the absence of manifest error, be PRIMA FACIE evidence of
such amount.
Section 4.7. DISCHARGE. Where any discharge (whether in
respect of the Indenture, the Obligations, this Debenture, or any other
guarantee, agreement, obligation or security or otherwise) is made in whole or
in part or any arrangement is made on the faith of any payment, security or
other disposition which is avoided or must be repaid on bankruptcy, liquidation,
winding-up, dissolution or otherwise, this security and the obligations of the
Owner under this Debenture shall continue as if there had been no such discharge
or arrangement.
Section 4.8. REGISTRATION. The Owner hereby agrees to arrange
for this Debenture, any Security Asset or any agreement, document or instrument
relating thereto to be registered with or notified to any Person to preserve or
perfect the Indenture Trustee's security in any Security Asset.
Section 4.9. INDENTURE TRUSTEE'S POWER'S WITH RESPECT TO
SECURITY ASSETS. The Indenture Trustee may without demand or notice to the Owner
being required at any time after this security becomes enforceable exercise at
its discretion (in the name of the Owner or otherwise) and without any further
consent or authority by the Owner, any right which may be exercised by the
Person in whose name any Security Asset is registered or who is the holder
thereof under the terms thereof or otherwise including, but without limitation,
all the powers given to trustees by statute in respect of securities or property
subject to a trust; PROVIDED, HOWEVER, that until the security hereby
constituted becomes enforceable, the Indenture Trustee shall procure that the
rights attached to each such Security Asset are exercised in such manner as the
Owner shall direct so long as the same is not inconsistent with any term of the
Indenture or this Debenture and account to the Owner for any sum or other
distribution paid in respect of such Security Asset.
<PAGE>
-6-
Section 4.10. CALLS. The Owner will for so long as the
Obligations remain outstanding pay all sums which may become due in respect of
the Security Assets and in the event of default the Indenture Trustee may if it
thinks fit make such payments on behalf of the Owner. Any sums so paid by the
Indenture Trustee shall be immediately due and payable by the Owner to the
Indenture Trustee without demand or notice being required.
Section 4.11. DELEGATION BY INDENTURE TRUSTEE. The Indenture
Trustee may at any time and from time to time delegate by power of attorney or
in any other manner to any Person or Persons all or any of the rights and
discretions which are for the time being exercisable by the Indenture Trustee
under this Debenture in relation to any Security Asset. Any such delegation may
be made upon such terms (including power to sub-delegate) and subject to such
regulations as the Indenture Trustee may think fit. The Indenture Trustee shall
not be in any way liable or responsible to the Owner for any loss or damage
arising from any act, default, omission or misconduct on the part of any such
delegate or sub-delegate.
Section 4.12. FURTHER ASSURANCES. The Owner shall at its own
expense execute and deliver all such agreements, documents and instruments and
do all such assurances, acts and things as the Indenture Trustee may require for
perfecting or protecting this security over any Security Asset or for
facilitating the realization of such property and in the exercise of all rights
vested in the Indenture Trustee or in any sub-delegate as aforesaid. The Owner
shall in particular execute all transfers, conveyances, assignments and
assurances of such property whether to the Indenture Trustee or its nominees and
give all notices, orders and directions which the Indenture Trustee may think
expedient and, for the purposes of this Section, a certificate in writing by the
Indenture Trustee to the effect that any particular assurance, act or thing
required by it is reasonably required shall be conclusive evidence of such fact
in favor of all third parties.
Section 4.13. REDEMPTION OF PRIOR MORTGAGES. The Indenture
Trustee may at any time after the security hereby constituted has become
enforceable redeem any prior Encumbrances against any Security Asset or procure
the transfer thereof to itself and may settle and pass the accounts of the prior
Encumbrances. Any accounts so settled and passed shall be conclusive and binding
on the Owner. All principal moneys, interest, costs, charges and expenses of and
incidental to such redemption and transfer shall be immediately due by the Owner
to the Indenture Trustee without notice or demand being required.
Section 4.14. POWER OF ATTORNEY. (a) The Owner hereby by way
of security irrevocably nominates, constitutes and appoints the Indenture
Trustee and every Receiver of any Security Asset appointed hereunder and every
such delegate or sub-delegate as aforesaid, each of them acting alone or jointly
with any other of them, to be its attorney (the "Attorney") and on its behalf
and in its name or otherwise to sign under seal or otherwise and deliver all
such agreements, documents and instruments and do all such assurances, acts and
things which the Owner ought to do but fails to do under the covenants and
provisions contained in the Indenture or this Debenture (including without
prejudice to the generality of the foregoing to make any
<PAGE>
-7-
demand upon or give any notice or receipt to any Person owing moneys to the
Owner and to execute and deliver any charges, legal and equitable generally in
its name and on its behalf to exercise all or any of the rights conferred by or
pursuant to this Debenture or by statute on the Attorney and (without prejudice
to the generality of the foregoing) to sign under seal or otherwise and deliver
and otherwise perfect any assurance, agreement, instrument or act which the
Attorney may deem proper in or for the purpose of exercising any of such rights.
(b) The Owner hereby ratifies and confirms and agrees to
ratify and confirm any such Attorney described in Section 4.14(a).
Section 4.15. AVOIDANCE OF PAYMENTS. No assurance, security or
payment which may be avoided under any enactment relating to bankruptcy, and no
release, settlement or discharge given or made by the Indenture Trustee on the
faith of any such assurance, security or payment, shall prejudice or affect the
right of the Indenture Trustee to enforce the security created by or pursuant to
this Debenture in respect of the full extent of the moneys thereby secured. The
Indenture Trustee shall be at liberty at its absolute discretion to retain the
security so created as security for the Obligations for a period of seven months
in the case of fixed security and thirteen months in the case of floating
security after the Obligations shall have been paid in full, notwithstanding any
release, settlement, discharge or arrangement given or made by the Indenture
Trustee on or as a consequence of, such termination of liability. If at any time
within the period of six months in the case of fixed security and twelve months
in the case of floating security after such termination a petition shall be
presented to a competent court for an order for the winding up of the Owner or
the Owner shall commence to be wound up voluntarily, the Indenture Trustee shall
be at liberty, notwithstanding as aforementioned, to continue to retain such
security or any part thereof for and during such further period as the Indenture
Trustee in its absolute discretion shall determine. The Owner agrees that such
security shall be deemed to have been and to have remained held by the Indenture
Trustee as and by way of security for the payment to the Indenture Trustee of
all or any sums which are now or may become due and owing to the Indenture
Trustee under the Indenture and the rest of the Security Documents.
Section 4.16. POWERS TO LEND. The Indenture Trustee may
advance money on the security of any Security Asset for the purpose of defraying
any costs, charges, losses and expenses which shall be paid or incurred by it in
relation to this Debenture (including the remuneration of any Receiver) or which
the Indenture Trustee anticipates may be paid or incurred in the exercise of the
rights vested in it or for all other purposes of this Debenture or any of them
and the Indenture Trustee may advance such moneys at such rates of interest and
generally on such terms and conditions as it shall think fit.
<PAGE>
-8-
ARTICLE V
DEALINGS WITH SECURITY ASSETS
Section 5.1. CHARGED ACCOUNTS. The Owner shall cause all sums
hereafter received or recovered by or for it in respect of any Current
Receivable to be directly credited to a separate and distinct account as the
Indenture Trustee may from time to time designate and, if called upon to do so
by notice in writing from the Indenture Trustee, shall execute an absolute
assignment of any such Current Receivable in favor of the Indenture Trustee, all
at the cost of the Owner. Until the security hereby constituted is fully
discharged in accordance with the terms hereof, the Owner shall not be entitled
to withdraw any sum standing to the credit of any such account established as
aforesaid without the prior written consent of the Indenture Trustee.
Section 5.2. DEPOSIT OF PROPRIETARY RIGHTS. The Owner shall,
if the Indenture Trustee so requires, deposit with the Indenture Trustee all
certificates and other documents of title or evidence of ownership in relation
to the patents and rights referred to in Section 3.1(c).
Section 5.3. LIABILITY TO PERFORM. Notwithstanding any other
provision herein contained to the contrary, the Owner shall remain liable to
observe and perform all of the respective conditions and obligations assumed by
it in respect of each Security Asset and the Indenture Trustee shall be under no
obligation by reason of this Debenture, nor shall the Indenture Trustee be
required in any manner, to perform or fulfil any obligation of the Owner in
respect of any Security Asset or to make any payment or make any enquiry as to
the maturity, amount, nature or sufficiency of any rental, interest, proceeds,
payments or receipts received by it or them or the Owner or to present or file
any claim or take any other action or give any notice to collect, exercise or
enforce the payment of any amount or the taking up of any rights or property to
which the Owner may have been or to which it may be now or hereafter entitled
thereunder at any time.
ARTICLE VI
ENFORCEMENT
Section 6.1. WHEN SECURITY BECOMES ENFORCEABLE. The security
hereby conferred shall become immediately enforceable and the floating charge
created by this Debenture shall be deemed to have crystallized and the power of
sale and other powers conferred by statute as varied or amended or granted by
this Debenture shall be immediately exercisable (i) if the Owner fails to meet
the Obligations in the manner specified in Section 2.1 or (ii) upon and after
the occurrence of any Indenture Event of Default as defined in the Indenture.
After this security has become enforceable, the Indenture Trustee may in its
discretion enforce all or any part of this security, and exercise all or any
rights of enforcement hereby granted, in such manner as the Indenture Trustee
sees fit.
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Section 6.2. ENFORCEMENT OF SECURITY. For the purposes of all
powers implied by statute the Obligations shall be deemed to have become due and
payable on the date hereof and any statutory restrictions on the power of sale
and restrictions on the right of consolidation shall not apply to this security.
Section 6.3. REMEDIES, WAIVERS AND CONSENTS. No delay or
omission of the Indenture Trustee in exercising any right under this Debenture
shall impair or be construed as a waiver of such right nor shall any single or
partial exercise of any such right preclude any further exercise thereof or the
exercise of any other right. The rights provided in this Debenture are
cumulative and not exclusive of any rights provided by law, agreement or
otherwise. Any waiver and any consent by the Indenture Trustee under this
Debenture must be in writing and may be given subject to any conditions thought
fit by the Indenture Trustee. Any waiver or consent shall be effective only in
the instance and for the purpose for which it is given.
ARTICLE VII
RECEIVER
Section 7.1. APPOINTMENT AND POWERS OF RECEIVER. At any time
after this security becomes enforceable the Indenture Trustee may without
further notice appoint in writing under the hand of its duly authorized officer
any one or more Person(s) to be a receiver or receiver and manager (hereinafter
each called "a Receiver") as the Indenture Trustee at its sole discretion may
see fit of any Security Asset in like manner in every respect as if the
Indenture Trustee had become entitled under statute to exercise the power of
sale thereby conferred. Every Receiver so appointed shall, in addition to any
powers conferred by statute or common law, have and be entitled to exercise all
rights to do any or all of the following things:
(a) TAKE POSSESSION. Enter upon and take immediate possession of,
get in and collect any Security Asset and undertake any works
of demolition, building, reconstruction, repair or decoration
thereon;
(b) SELL ASSETS. Subject to any necessary consent or approval of
any judicial, administrative, governmental or other regulatory
body, office or agency, sell, convert into money and realize
any Security Asset by public auction or private contract,
dispose of, grant options and other rights in respect of and
exercise all other rights conferred on an owner under any
statute, at common law or otherwise, in respect of any
Security Asset and generally in such manner and on such terms
(which may consist wholly or partly of shares or securities of
any company or body corporate) as the Receiver shall think fit
and transfer, convey, assign or grant an assurance of the same
in the name and on behalf of the Owner. Without prejudice to
the generality of the foregoing, the Receiver may do any of
these things for a consideration consisting of cash,
debentures or other obligations, shares or other valuable
consideration in cash or in any other form
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whatsoever and any such consideration may be payable in a lump
sum or by installments spread over such period as the Receiver
may think fit;
(c) COMPROMISE. Settle, adjust, refer to arbitration, compromise
and arrange any claims, accounts, disputes, questions and
demands with or by any Person who is or claims to be a
creditor of the Owner or relating in any way to any Security
Asset;
(d) BORROW AND CREATE SECURITY. Borrow or raise money and secure
the repayment thereof and interest thereon by mortgaging,
sub-mortgaging or otherwise charging any Security Asset or
this Debenture (whether or not in priority to the sums and
obligations secured by this Debenture) in such manner and on
such terms as the Receiver shall think fit; PROVIDED, HOWEVER,
that:
(i) no Receiver shall exercise such right without first
obtaining the written consent of the Person
appointing him and the Indenture Trustee shall not
incur any responsibility to the Owner or any other
Person by reason of giving or refusing its consent,
whether directly or subject to any limitation or
condition; and
(ii) no Person lending such money shall be concerned to
enquire as to the existence of such consent or the
terms thereof or as to the propriety or purpose of
the exercise thereof or to see to the application of
any money so borrowed or raised;
(e) EMPLOY AGENTS. Employ solicitors, managers, agents and others
as the Receiver shall deem necessary;
(f) RECEIPTS. Give valid receipts and discharges for all moneys
and claims and execute all assurances and things which may be
proper or desirable for realizing any Security Assets;
(g) CONSIDERATION. Receive or pay any consideration in cash or
other valuable consideration and so that the same may be
receivable or payable either immediately or at a later time
and in a lump sum or by installments spread over such period
as the Receiver shall think fit;
(h) DEALINGS. Generally to deal with and effect any transaction or
arrangement of any kind whatsoever in respect of any Security
Asset;
(i) LEGAL PROCEEDINGS. Settle, arrange, compromise and submit to
arbitration any accounts, claims, questions or disputes
whatsoever which may arise in connection
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with any Security Asset or in any way relating to the security
constituted by this Debenture, to bring, take, defend,
compromise, submit to and discontinue any actions, suits,
arbitration or proceedings whatsoever whether civil or
criminal in relation to the matters aforesaid, to enter into,
complete, disclaim, abandon or disregard, determine or rectify
all or any of the outstanding agreements or arrangements of
the Owner in any way relating to or affecting the Security
Assets or any part thereof and to allow time for payment of
any debts either with or without security as the Receiver
shall think expedient;
(j) IN OWNER'S NAME. Generally at his option to use the name of
the Owner in the exercise of all or any of the rights hereby
conferred;
(k) EXERCISE OF RIGHTS. Exercise, or permit the Owner or any
nominee of the Owner to exercise, any rights incident to the
ownership of any Security Asset in such manner as the Receiver
may think fit and in particular (as regards shares, stock and
securities) any voting rights conferred by the same and (as
regards securities) any rights of enforcing the same by
foreclosure, sale or otherwise;
(l) CORPORATE TRANSFERS. Transfer any Security Asset to any other
company or body corporate, whether or not formed or acquired
for the purpose;
(m) CARRY ON BUSINESS. Generally manage and carry on and conduct
any of the undertakings and businesses of the Owner;
(n) CALLS. Make calls, conditionally or unconditionally, on the
members of the Owner in respect of all or any part of its
uncalled capital with such and the same rights of enforcement
as are conferred by the Memorandum of Association and Articles
of Association of the Owner upon its directors in this
respect;
(o) GENERAL POWERS. Sign under seal or otherwise and deliver all
such agreements, documents and instruments and do all such
other acts and things as the Receiver may consider desirable
or necessary for realizing any Security Asset or incidental or
conducive to any of the matters or rights conferred on a
Receiver under or by virtue of this Debenture and to exercise
in relation to any Security Asset all such rights as the
Receiver should be capable of exercising if the Receiver were
the beneficial owner of the same; and
(p) MONEYS RECEIVED BY RECEIVER. All moneys received by a Receiver
shall after providing for the matters specified by any law be
applied by him in or towards satisfaction of this Debenture
and thereafter of any other Encumbrance of which he shall have
notice and thereafter the Receiver shall pay the residue of
the moneys received by him to the Owner.
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Section 7.2. COMPLY WITH INSTRUCTIONS. Any Receiver shall in
the exercise of the Receiver's rights conform to any regulations and directions
from time to time made and given by the Indenture Trustee as appointer but so
that no Person dealing with the Indenture Trustee or any Receiver shall be
concerned to enquire whether the Receiver has so conformed to any such
regulations or directions.
Section 7.3. REMOVAL AND REMUNERATION. The Indenture Trustee
may from time to time by writing under its hand remove any Receiver appointed by
it and may whenever it may deem it expedient appoint a new Receiver in the place
of any Receiver whose appointment may for any reason have terminated and may
from time to time fix the remuneration of any Receiver appointed by it.
Section 7.4. INDENTURE TRUSTEE MAY EXERCISE RECEIVER'S POWERS.
All or any of the rights which are conferred by this Debenture (either expressly
or impliedly) upon a Receiver of any Security Asset may be exercised after the
security hereby created becomes enforceable by the Indenture Trustee in relation
to any Security Asset without first appointing a Receiver of the same or
notwithstanding the appointment of a Receiver of the same.
Section 7.5. NO LIABILITY AS MORTGAGEE IN POSSESSION. The
Indenture Trustee shall not nor shall any Receiver appointed as aforesaid by
reason of the Indenture Trustee or the Receiver entering into possession of any
Security Asset be liable to account as mortgagee in possession or be liable for
any loss or realization or for any default or omission for which a mortgagee in
possession might be liable. Every Receiver duly appointed by the Indenture
Trustee shall be deemed to be the agent of the Owner for all purposes and shall
as such agent be deemed to be in the same position as a Receiver duly appointed
by a mortgagee under statute. The Owner alone shall be responsible for its
agreements, obligations, acts, omissions, defaults and losses and the Indenture
Trustee shall not incur any responsibility therefor (either to the Owner or to
any other Person whatsoever) by reason of appointing such Receiver or for any
other reason whatsoever. Every such Receiver and the Indenture Trustee shall be
entitled to all the rights, privileges and immunities by statute conferred on
mortgagees and receivers when such receivers have been duly appointed.
Section 7.6. PROTECTION OF THIRD PARTIES. No purchaser,
mortgagee or other Person dealing with the Indenture Trustee or the Receiver or
the agents of the Indenture Trustee or the Receiver shall be concerned to
enquire whether any of the Obligations are due or owing, the right which the
Indenture Trustee or the Receiver is purporting to exercise has become
exercisable or any money remains due under this Debenture, as to the propriety
or regularity of the actions of the Indenture Trustee or such Receiver, or to
see to the application of any money paid to the Indenture Trustee or to such
Receiver.
Section 7.7. EXPENSES. All costs, charges and expenses
incurred and all payments made by the Indenture Trustee or any Receiver
appointed hereunder in the exercise
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in good faith of any right hereby conferred whether or not occasioned by any
act, neglect or default of the Indenture Trustee or such Receiver shall bear
interest from the date of the same being incurred or becoming due at the Default
Rate. The amount of all such costs, charges, expenses and payments and all
interest thereon and all remuneration payable hereunder shall be payable by the
Owner on demand. All such costs, charges, expenses and payments shall be paid
and charged as between the Indenture Trustee and the Owner on the basis of a
full indemnity and not on the basis of party and party or any other kind of
taxation.
Section 7.8. INDEMNITY. Each of the Indenture Trustee and
every Receiver, attorney, manager, agent or other Person appointed by the
Indenture Trustee hereunder shall be entitled to be indemnified out of the
Security Assets in respect of all obligations, costs, charges and expenses
incurred and payments made by such Person in good faith in the execution or
purported execution of any right vested in such Person pursuant hereto and
against all actions, proceedings, obligations, costs, claims and demands in
respect of any matter or thing done or omitted in anyway relating to any
Security Asset and the Indenture Trustee and any such Receiver may retain and
pay all sums in respect of the same out of any moneys received under the rights
hereby conferred.
ARTICLE VIII
APPLICATION OF PROCEEDS
Section 8.1. ORDER OF APPLICATION. Any moneys received by the
Indenture Trustee pursuant to this Debenture or under the powers hereby
conferred shall after the security hereby constituted shall have become
enforceable but subject to the payment of any claims having priority to this
security be applied for the following purposes and in the following order of
priority (but without prejudice to the right of the Indenture Trustee to recover
any shortfall from the Owner):
(a) in satisfaction of or provision for all costs, charges and
expenses incurred and payments made by the Indenture Trustee
or any Receiver appointed hereunder and of all remuneration
due hereunder with interest on such costs, charges, expenses
and payments at the Default Rate;
(b) in or towards payment of interest on the Obligations;
(c) in or towards payment of principal on the Obligations; and
(d) in payment of the surplus (if any) to the Owner or other
Person entitled thereto.
Section 8.2. SUSPENSE ACCOUNTS. Any moneys received under the
rights hereby conferred may, at the discretion of the Indenture Trustee, be
placed in a suspense account and kept there for so long as the Indenture Trustee
thinks fit.
<PAGE>
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ARTICLE IX
MISCELLANEOUS PROVISIONS
Section 9.1. AMENDMENT. This Debenture may be amended from
time to time by written agreement signed by the parties hereto.
Section 9.2. SEVERABILITY. If any provision of this Debenture
is held to be in conflict with any applicable statute or rule of law or is
otherwise held to be unenforceable for any reason whatsoever, such circumstances
shall not have the effect of rendering the provision in question inoperative or
unenforceable in any other case or circumstance, or of rendering any other
provision or provisions herein contained invalid, inoperative, or unenforceable
to any extent whatsoever. The invalidity of any one or more phrases, sentences,
clauses or Sections of this Debenture contained, shall not affect the remaining
portions of this Debenture, or any part thereof.
Section 9.3. NOTICES. All demands, notices and communications
hereunder shall be in writing, personally delivered or mailed by certified
mail-return receipt requested, and shall be deemed to have been duly given upon
receipt (a) in the case of the Indenture Trustee, at the following address: 114
West 47th Street, New York, New York 10036, Attention: Corporate Trust
Department, (b) in the case of the Owner, at the following address: 15-19 Athol
Street, Douglas, Isle of Man, or at other such address as shall be designated by
such party in a written notice to the other parties.
Section 9.4. CONSENT TO JURISDICTION. Any legal suit, action
or proceeding against the Owner arising out of or relating to this Debenture, or
any transaction contemplated hereby, may be instituted in any federal or state
court in The City of New York, State of New York and the Owner hereby waives any
objection which it may now or hereafter have to the laying of venue of any such
suit, action or proceeding, and the Owner hereby irrevocably submits to the
jurisdiction of any such court in any such suit, action or proceeding. The Owner
hereby irrevocably appoints and designates CT Corporation System, having an
address at 1633 Broadway, New York, New York, its true and lawful
attorney-in-fact and duly authorized agent for the limited purpose of accepting
servicing of legal process and the Owner agrees that service of process upon
such party shall constitute personal service of such process on the Owner. The
Owner shall maintain the designation and appointment of such authorized agent
until all amounts payable under this Debenture shall have been paid in full. If
such agent shall cease to so act, the Owner shall immediately designate and
appoint another such agent satisfactory to the Indenture Trustee and shall
promptly deliver to the Indenture Trustee evidence in writing of such other
agent's acceptance of such appointment.
Section 9.5. CAPTIONS. The captions or headings in this
Debenture are for convenience only and in no way define, limit or describe the
scope or intent of any provisions or sections of this Debenture.
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Section 9.6. GOVERNING LAW. This Debenture shall be governed
by and interpreted in accordance with the laws of the Isle of Man, without
giving effect to the principles of conflicts of law.
Section 9.7. NO PARTNERSHIP. Nothing herein contained shall be
deemed or construed to create a partnership or joint venture among the parties
hereto and the services of each party shall be rendered as an independent
contractor and not as agent for any other party.
Section 9.8. COUNTERPARTS. This Debenture may be executed in
any number of counterparts and by different parties hereto on separate
counterpart, each of which shall be deemed to be an original. Such counterparts
shall constitute one and the same agreement.
Section 9.9. SURVIVAL. The representations, covenants and
agreements contained in or made pursuant to this Debenture in respect of either
party hereto shall survive the execution and delivery of this Debenture and
shall continue in effect so long as such party's obligations hereunder remain
outstanding.
Section 9.10. INTEGRATION. This Debenture and the Schedule and
Exhibits hereto, the Indenture and the Security Documents constitute the entire
agreement and understanding between the parties hereto with respect to the
subject matter hereof and supersedes all prior agreements, understandings or
representations pertaining to the subject matter hereof, whether oral or
written. There are no warranties, representations or other agreements between
the parties in connection with the subject matter hereof except as specifically
set forth or incorporated herein.
Section 9.11. REPRODUCTION OF DOCUMENTS. This Debenture and
all documents relating thereto, including, without limitation, (a) consents,
waivers and modifications which may hereafter be executed, (b) documents
received by any party at the closing, and (c) financial statements, certificates
and other information previously or hereafter furnished, may be reproduced by
any photographic, photostatic, microfilm, micro-card, miniature photographic or
other similar process. The parties agree that any such reproduction shall be
admissible in evidence as the original itself in any judicial or administrative
proceeding (whether or not the original is in existence and whether or not such
reproduction was made in the regular course of business) and that any
enlargement, facsimile or further reproduction of such reproduction shall
likewise be admissible in evidence.
Section 9.12. SUCCESSORS AND ASSIGNS; ASSIGNMENT. This
Debenture shall be binding upon and inure to the benefit of the Owner and the
Indenture Trustee and their respective successors and assigns. The Owner shall
not have the right to assign its rights hereunder or any interest herein without
the prior written consent of the Indenture Trustee. The Indenture Trustee, at
its sole option, shall have the right to assign this Debenture, Indenture, the
Security Documents and any of its rights and interest hereunder and thereunder.
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Section 9.13. GENERAL INTERPRETIVE PRINCIPLES. For purposes of
this Debenture except as otherwise expressly provided or unless the context
otherwise requires:
(a) the defined terms in this Debenture shall include the
plural as well as the singular, and the use of any gender herein shall be deemed
to include any other gender;
(b) accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted accounting
principles as in effect on the date hereof;
(c) references herein to "Articles", "Sections",
"Subsections", "paragraphs", and other subdivisions without reference to a
document are to designated Articles, Sections, Subsections, paragraphs and other
subdivisions of this Debenture;
(d) a reference to a Subsection without further reference to a
Section is a reference to such Subsection as contained in the same Section in
which the reference appears, and this rule shall also apply to paragraphs and
other subdivisions;
(e) the words "herein", "hereof", "hereunder" and other words
of similar import refer to this Debenture as a whole and not to any particular
provision; and
(f) the term "include" or "including" shall mean without
limitation by reason of enumeration.
<PAGE>
IN WITNESS WHEREOF this Debenture has been executed by the
Owner the day and year first above written.
SIGNED, SEALED and DELIVERED )
as a Deed and Debenture )
by ) /s/ Nunzio Lipomi
for and on behalf of )
Golden State Petro (IOM I-B) PLC ) /s/ Matt Lefferts
in the presence:- )
SIGNED by )
for and on behalf of )
United States Trust Company of New York /s/ Christine C. Collins
as Indenture Trustee )
in the presence of:- ) /s/ Adam Levine
<PAGE>
SCHEDULE 1
DEFINED TERMS USED IN THE DEBENTURE
"ADDITIONAL NOTE" means each first preferred mortgage note issued
pursuant to a Supplemental Indenture to finance the Additional Construction
Costs of a Vessel.
"ADDITIONAL CONSTRUCTION COSTS" means any net increases in construction
costs for the Vessel which (i) result from actions by the Initial Charterer or
the Technical Supervisor; (ii) are approved by the Owner, such approval not to
be unreasonably withheld; and (iii) occur after execution of the Building
Contract but prior to the Delivery Date.
"ALLOCATED PRINCIPAL AMOUNT OF THE ADDITIONAL NOTES" means, when used
with reference to the Additional Notes and the Vessel at any date of
determination, the product of (a) the aggregate outstanding principal amount of
Additional Notes as of such date and (b) a fraction (i) the numerator of which
is the aggregate outstanding principal amount of Additional Notes for the Vessel
as specified with respect to the Vessel in the related Supplemental Indenture
and (ii) the denominator of which is the aggregate initial principal amount of
all Additional Notes.
"ALLOCATED PRINCIPAL AMOUNT OF THE MORTGAGE NOTES" means, when used
with reference to the Mortgage Notes and the Vessel at any date of
determination, the sum of (a) the Allocated Principal Amount of the Notes for
the Vessel and (b) the Allocated Principal Amount of the Additional Notes for
the Vessel.
"ALLOCATED PRINCIPAL AMOUNT OF THE NOTES" means, when used with
reference to the Notes and either Vessel, amounts indicated on Schedule 1
attached to the Indenture.
"AGREEMENT ON CONTRACT FOR TECHNICAL MATTERS" means, the Agreement
Regarding Technical Matters, dated as of the Closing Date, between the Owner,
Samsung Heavy Industries Co., LTD and Chevron Shipping Company, San Francisco,
California (as Agent for the Initial Charterer).
"ASSETS" means, in relation to any person, the whole or any part of its
business, undertaking, property and assets and includes, without limitation, any
right to receive revenues.
"ASSIGNMENT OF BUILDING CONTRACT" means, for each Vessel, the Building
Contract Assignment, dated as of the Closing Date, between the related Owner and
the Indenture Trustee, pursuant to which such Owner collaterally assigns its
rights, title and interests in the related Building Contract and the Agreement
on Contract for Technical Matters to the Indenture Trustee.
"ASSIGNMENT OF BUILDING CONTRACT GUARANTEE" means, for each Building
Contract Guarantee, the Assignment of Building Contract Guarantee, dated as of
the Closing Date, between the related Owner and the Indenture Trustee, as the
same may be amended from time
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to time, pursuant to which such Owner collaterally assigns its rights, title and
interest in the related Building Contract Guarantee therein to the Indenture
Trustee.
"ASSIGNMENT OF CHARTER" means the assignment between the Owner and the
Indenture Trustee, as amended from time to time in accordance with the terms
thereof, pursuant to which the Owner collaterally assigns to the Indenture
Trustee all of the Owner's right, title and interest in, to and under the
Initial Charter to secure its obligations under the Indenture.
"ASSIGNMENT OF CHARTER SUPPLEMENT" means, for each Charter Supplement,
the Assignment of Charter Supplement, dated the date of the Supplemental
Indenture, between the Owner of the Vessel and the Indenture Trustee, as the
same may be amended from time to time pursuant to which the Owner collaterally
assigns all of the Owner's right, title and interest therein to the Indenture
Trustee.
"ASSIGNMENT OF CHEVRON GUARANTEE" means the assignment between the
Owner and the Indenture Trustee, as amended from time to time in accordance with
the terms thereof, pursuant to which the Owner collaterally assigns to the
Indenture Trustee all of the Owner's right, title and interest in, to and under
the Chevron Guarantee to secure its obligations under the Indenture.
"ASSIGNMENT OF EARNINGS AND INSURANCES" means the assignment between
the Owner and the Indenture Trustee, as amended from time to time in accordance
with the terms thereof, pursuant to which the Owner collaterally assigns to the
Indenture Trustee all of the Owner's right, title and interest in, to and under
the freights and hires (as well as any charters entered into after the Delivery
Date) with respect to the Vessel to secure its obligations under the Indenture.
"ASSIGNMENT OF MANAGEMENT AGREEMENT" means the assignment between the
Owner and the Indenture Trustee, as amended from time to time in accordance with
the terms thereof, pursuant to which the Owner collaterally assigns to the
Indenture Trustee all of the Owner's right, title and interest in, to and under
the Management Agreement to secure its obligations under the Indenture.
"BUILDER" means, collectively, Samsung Corporation and Samsung Heavy
Industries, Ltd.
"BUILDING CONTRACT" means the Shipbuilding Contract, dated December 19,
1996, between the Builder and the Owner.
"BUILDING CONTRACT GUARANTEE" means the Irrevocable Installment Payment
Letter of Guarantee, dated December 19, 1996, given by the Building Contract
Guarantor to the Owner in connection with the Vessel.
"BUILDING CONTRACT GUARANTOR" means Korea Development Bank.
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"CHEVRON" means Chevron Corporation, a Delaware corporation, and its
successors and assigns.
"CHEVRON GUARANTEE" means the Guarantee, dated the Closing Date, given
by Chevron to the Owner in connection with the Initial Charter and the Charter
Supplement.
"CLOSING DATE" means December 24, 1996.
"CURRENT RECEIVABLES" means (a) all obligations of the trade debtors of
the Owner due or owing to the Owner on account of the prevailing debit balances
of the present book debts of the Owner and (b) all rights relating to the
aforesaid property specified in clause (a), including, INTER ALIA, negotiable
instruments, legal and equitable charges, reservations of property rights,
rights of action, collection, recovery or security, rights of tracing an unpaid
vendor's liens and similar and associated rights (and each reference to a
"Current Receivable" shall be construed as a reference to the whole or any part
of any one or more of them).
"DEFAULT RATE" means, with respect to a Mortgage Note, a rate per annum
for each day from the date of a default in any payment hereunder until such
payment shall be paid in full equal to the lesser of (a) 1.0% above the interest
rate indicated in such Mortgage Note and (b) the sum of 1.5% and LIBOR.
"DELIVERY DATE" means the date the Vessel is accepted by the Owner from
the Builder under the Building Contract.
"ENCUMBRANCE" means any encumbrance and includes any mortgage, charge
(whether fixed or floating, pledge, lien, hypothecation, title retention or
other security agreement or security interest of any kind whatsoever and
howsoever arising and any equivalent or analogous interest to any of the
foregoing.
"INDENTURE" means the Indenture, dated as of December 1, 1996 among the
Indenture Trustee, the Owner, Golden State Petro (IOM I-A) and Golden State
Petroleum, pursuant to which the Notes were issued.
"INDENTURE TRUSTEE" means United States Trust Company of New York.
"INITIAL CHARTER" means with respect to each Vessel, the bareboat
charter, dated as of December 1, 1996, between the Initial Charterer and the
Owner.
"INITIAL CHARTERER" means Chevron Transport Corporation, a Liberian
corporation.
"ISSUE OF ONE DEBENTURE" means each Issue of One Debenture between the
Owner and the Indenture Trustee, as amended from time to time in accordance with
the terms thereof,
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pursuant to which the Owner grants to the Indenture Trustee a security interest
in all of its assets.
"LIBOR" means the rate calculated on the basis of the offered rates for
deposits in dollars for a one-month period which appear on the Reuters Screen
LIBO Page as of 11:00 A.M., London time, on the date that is two London Banking
Days preceding the date of calculation. If at least two such offered rates
appear on the Reuters Screen LIBO Page, LIBOR will be the arithmetic mean of
such offered rates (rounded to the nearest .0001 percentage point). If, at any
time of determination, the Reuters Screen LIBO Page is not available, LIBOR will
be calculated as the average (rounded upward, if necessary, to the next higher
1/16 of 1%) of the respective ratio per annum at which deposits in dollars for a
one month period are offered to each of three reference banks in the London
interbank market at approximately 11:00 A.M., London time, on the date that is
two London Banking Days preceding the date of calculation. Each of the Initial
Charterer and the Owners (or the Owners' assignee) will select a reference bank
and the third reference bank will be selected by the Initial Charterer and the
Owners (or Owners' assignee) together or, failing agreement, by the previously
selected reference banks together.
"LONDON BANKING DAY" means any day on which dealings in deposits in
United States dollars are carried on in the London interbank market and on which
commercial banks are open for domestic and international business (including
dealings in United States dollar deposits) in London and New York.
"MANAGEMENT AGREEMENT" means the agreement, dated the Closing Date,
between the Owner and the Manager pursuant to which the Manager agrees to
provide certain services to the Owner.
"MANAGER" means the Person performing the duties of the Manager under
the Management Agreement, initially Cambridge Fund Management L.L.C.
"MORTGAGE" means, with respect to the Vessel, the first preferred ship
mortgage on the Vessel granted by the Owner to the Indenture Trustee, as amended
from time to time in accordance with the terms of such Mortgage.
"MORTGAGE NOTES" means, collectively, the Serial First Preferred
Mortgage Notes maturing serially from 2000 to 2006 (the "Serial Notes") and the
8.04% First Preferred Mortgage Notes due 2019 (the "Term Notes") issued in the
initial aggregate principal amount of $178,800,000 and any other notes issued
pursuant to a supplement to the Indenture or pursuant to the Registration Rights
Agreement.
"NOTES" means, collectively, the Serial Notes and Term Notes.
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"OBLIGATIONS" means the payment, performance or obligations of any kind
or nature whatsoever of the Owner under and pursuant to the Indenture, any
Security Document and any instrument, agreement or document referred to therein.
"OWNER" means Golden State Petro (IOM I-B) PLC, a company organized
under the laws of the Isle of Man.
"PERSON" means an individual, a partnership, a corporation, a joint
venture, unincorporated association, a joint stock company, a trust or any other
entity or a Governmental Authority.
"REGISTRATION JURISDICTION" means the jurisdiction in which the Vessel
is or will be registered.
"REGISTRATION RIGHTS AGREEMENT" means the Registration Rights
Agreement, dated the Closing Date, among the Owners and Cambridge Partners,
L.L.C., Salomon Brothers Inc and Donaldson, Lufkin & Jenrette Securities
Corporation, as initial purchaser of the Initial Notes.
"SECURITY ASSETS" means all of the present and future Assets of the
Owner, including, INTER ALIA, the Current Receivables (and each reference to a
"Security Asset" shall be construed as a reference to the whole or any part of
any one or more of them).
"SECURITY DOCUMENTS" means the Indenture, the Mortgage, the Assignment
of Charter, the Assignments of Charter Supplements, the Assignment of Earnings
and Insurances, the Assignment of Chevron Guarantee, the Assignment of
Management Agreement, the Assignment of Building Contract, the Issue of One
Debenture, the Stock Pledge and the Assignment of Building Contract Guarantee,
collectively.
"VESSEL" means Hull No. 1229.
<PAGE>
TABLE OF CONTENTS
Page
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ARTICLE I
DEFINITIONS............................... 1
ARTICLE II
COVENANT TO PAY............................. 1
Section 2.1. Covenant to Pay............................................... 1
ARTICLE III
MORTGAGE, CHARGE AND ASSIGNMENT..................... 2
Section 3.1. Charge........................................................ 2
Section 3.2. Legal Securities.............................................. 3
Section 3.3. Conversion of Floating Charge................................. 3
Section 3.4. Negative Pledge............................................... 3
Section 3.5. New Accounts.................................................. 3
ARTICLE IV
PRESERVATION OF SECURITY......................... 3
Section 4.1. Continuing Security........................................... 3
Section 4.2. Waiver of Defenses............................................ 4
Section 4.3. Immediate Recourse............................................ 4
Section 4.4. Preservation of Rights........................................ 5
Section 4.5. Additional Security........................................... 5
Section 4.6. Certificate................................................... 5
Section 4.7. Discharge..................................................... 5
Section 4.8. Registration.................................................. 5
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Section 4.9. Indenture Trustee's Power's With Respect to Security Assets... 5
Section 4.10. Calls......................................................... 6
Section 4.11. Delegation By Indenture Trustee............................... 6
Section 4.12. Further Assurances............................................ 6
Section 4.13. Redemption of Prior Mortgages................................. 6
Section 4.14. Power of Attorney............................................. 6
Section 4.15. Avoidance of Payments......................................... 7
Section 4.16. Powers to Lend................................................ 7
ARTICLE V
DEALINGS WITH SECURITY ASSETS...................... 8
Section 5.1. Charged Accounts.............................................. 8
Section 5.2. Deposit of Proprietary Rights................................. 8
Section 5.3. Liability to Perform.......................................... 8
ARTICLE VI
ENFORCEMENT............................... 8
Section 6.1. When Security Becomes Enforceable............................. 8
Section 6.2. Enforcement of Security....................................... 9
Section 6.3. Remedies, Waivers and Consents................................ 9
ARTICLE VII
RECEIVER................................. 9
Section 7.1. Appointment and Powers of Receiver............................ 9
Section 7.2. Comply with Instructions...................................... 12
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Section 7.3. Removal and Remuneration...................................... 12
Section 7.4. Indenture Trustee May Exercise Receiver's Powers.............. 12
Section 7.5. No Liability As Mortgagee In Possession....................... 12
Section 7.6. Protection Of Third Parties................................... 12
Section 7.7. Expenses...................................................... 12
Section 7.8. Indemnity..................................................... 13
ARTICLE VIII
APPLICATION OF PROCEEDS......................... 13
Section 8.1. Order of Application.......................................... 13
Section 8.2. Suspense Accounts............................................. 13
ARTICLE IX
MISCELLANEOUS PROVISIONS......................... 14
Section 9.1. Amendment..................................................... 14
Section 9.2. Severability.................................................. 14
Section 9.3. Notices....................................................... 14
Section 9.4. Consent to Jurisdiction....................................... 14
Section 9.5. Captions...................................................... 14
Section 9.6. Governing Law................................................. 15
Section 9.7. No Partnership................................................ 15
Section 9.8. Counterparts.................................................. 15
Section 9.9. Survival...................................................... 15
Section 9.10. Integration................................................... 15
<PAGE>
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Section 9.11. Reproduction of Documents..................................... 15
Section 9.12. Successors and Assigns; Assignment............................ 15
Section 9.13. General Interpretive Principles............................... 16
===============================================================================
UNITED STATES TRUST COMPANY OF NEW YORK,
AS INDENTURE TRUSTEE
and
GOLDEN STATE PETRO (IOM I-A) PLC
-----------------------------------
ASSIGNMENT OF CHARTER
Dated as of December 1, 1996
-----------------------------------
================================================================================
<PAGE>
Assignment of Charter, dated as of December 1, 1996 (the
"Assignment"), between Golden State Petro (IOM I-A) PLC (the "Owner") and United
States Trust Company of New York (the "Indenture Trustee"), not in its
individual capacity but solely as trustee under the Indenture (the "Indenture"),
dated as of the date hereof, among the Owner, the Indenture Trustee, Golden
State Petro (IOM I-B) PLC ("Golden State Petro B") and Golden State Petroleum
Transport Corporation ("Golden State Petroleum"), as agent for the Owner and
Golden State Petro B.
PRELIMINARY STATEMENT
On the Closing Date, Golden State Petroleum, as agent for the
Owner and Golden State Petro B, will issue Notes in connection with the
financing of the construction of the Vessel. The net proceeds of such issuance
will be deposited into the Pre-Funding Account. Pursuant to the Indenture, the
Allocated Principal Amount of the Mortgage Notes for the Vessel will be used,
INTER ALIA, to make the installments due under the Shipbuilding Contract for the
Vessel. As of the date of this Assignment, the Owner agreed to bareboat charter
the Vessel to Chevron Transport Corporation (the "Initial Charterer") pursuant
to the Initial Charter. The obligations of the Initial Charterer under the
Initial Charter are guaranteed by Chevron Corporation (the "Guarantor") pursuant
to the Chevron Guarantee. The Vessel will be managed by Cambridge Fund
Management L.L.C. (the "Manager") pursuant to the Management Agreement, dated as
of the date hereof, between the Owner and the Manager. As collateral security
for its obligations under the Indenture, the Owner has and will assign, pledge,
mortgage and grant the Indenture Trustee a security interest in, INTER ALIA, the
Vessel, the Initial Charter and the Chevron Guarantee.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained and of other valuable consideration, receipt of
which is hereby acknowledged, the Owner and the Indenture Trustee hereby agree
as follows:
ARTICLE I
DEFINITIONS
Unless otherwise defined in Schedule 1 to this Assignment,
capitalized terms used in this Assignment shall have the meanings assigned to
such terms in the Indenture.
ARTICLE II
ASSIGNMENT
Section 2.01 SECURITY INTEREST. This Assignment is made and
delivered as security for the Obligations.
Section 2.02 ASSIGNMENT. In order to provide for the payment
of and as security for the Obligations, the Owner has granted, bargained,
assigned, transferred, conveyed, mortgaged, pledged and granted a security
interest in and confirmed, and does hereby grant, bargain, assign, transfer,
convey, mortgage, pledge and grant a security interest in and confirm, to the
Indenture Trustee, its successors and assigns, for its and their respective
successors' and assigns' own proper use and benefit, all of the Owner's right,
title and interest in and to the
<PAGE>
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Initial Charter, including without limitation any moneys whatsoever payable to
the Owner under the Initial Charter, together with the income and proceeds
thereof and all other rights and benefits whatsoever accruing to the Owner under
the Initial Charter; PROVIDED, HOWEVER, that the Owner shall keep the Indenture
Trustee fully and effectively indemnified from and against all actions, losses,
claims, proceedings, costs, demands and liabilities which may be suffered by the
Indenture Trustee under or by virtue of the Initial Charter or this Assignment.
Section 2.03 OWNER TO REMAIN LIABLE. Anything in this
Assignment contained to the contrary notwithstanding, the Owner shall remain
liable under the Initial Charter, and shall observe, perform and fulfill all of
the conditions and obligations to be observed, performed and fulfilled by it
thereunder, and the Indenture Trustee shall have no obligation or liability of
any kind whatsoever thereunder or by reason of or arising out of this
Assignment, nor shall the Indenture Trustee be under any liability whatsoever in
the event of any failure by the Owner to perform its obligations thereunder or
be required or obligated in any manner to observe, perform or fulfill any of the
conditions or obligations of the Owner thereunder or pursuant thereto, or to
make any payment or to make any inquiry as to the nature or sufficiency of any
payment received by it or the Owner thereunder, or to present or file any claim,
or to take any other action to collect or enforce the payment of any amounts
which may have been assigned to the Indenture Trustee or to which the Indenture
Trustee may be entitled hereunder at any time or times.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE OWNER
The Owner hereby represents and warrants to the Indenture
Trustee as follows:
Section 3.01 ORGANIZATION, POWER AND STATUS OF THE OWNER. The
Owner (a) is a corporation duly formed, validly existing and in good standing
under the laws of the Isle of Man and (b) is duly authorized, to the extent
necessary, to do business in each jurisdiction where the character of its
properties or the nature of its activities makes such qualification necessary.
The Owner has all requisite corporate power and authority to own and operate the
property it purports to own and to carry on its business as now being conducted
and as proposed to be conducted in respect of the Vessel.
Section 3.02 AUTHORIZATION; ENFORCEABILITY; EXECUTION AND
DELIVERY. (a) The Owner has all necessary corporate power and authority to
execute, deliver and perform under this Assignment.
(b) All action on the part of the Owner that is required for
the authorization, execution, delivery and performance of this Assignment has
been duly and effectively taken; and the execution, delivery and performance of
this Assignment does not require the approval or consent of any Person except
for such consents and approvals as have been obtained on or prior to the Closing
Date.
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(c) This Assignment has been duly executed and delivered by
the Owner. This Assignment constitutes the legal, valid and binding obligation
of the Owner, enforceable against it in accordance with the terms thereof.
Section 3.03 NO CONFLICTS; LAWS AND CONSENTS; NO DEFAULT. (a)
Neither the execution, delivery and performance of this Assignment nor the
consummation of any of the transactions contemplated hereby nor performance of
or compliance with the terms and conditions hereof (i) contravenes any
Requirement of Law applicable to the Owner or (ii) constitutes a default under
the Indenture or any Security Document.
(b) The Owner is in compliance with and not in default under
any and all Requirements of Law applicable to the Owner and all terms and
provisions of this Assignment.
Section 3.04 GOVERNMENTAL APPROVALS. All Governmental
Approvals which are required to be obtained in the name of the Owner in
connection with the execution, delivery and performance by the Owner of this
Assignment have been obtained and are in effect on the Closing Date.
Section 3.05 LITIGATION. There are no actions, suits or
proceedings at law or in equity or by or before any Governmental Authority now
pending against the Owner or, to the best of the Owner's knowledge, threatened
against the Owner or pending or threatened against any property or other assets
or rights of the Owner with respect to this Assignment.
Section 3.06 NO PRIOR ASSIGNMENT. The Owner has not assigned
or pledged, and hereby covenants that it will not assign or pledge, so long as
this Assignment shall remain in effect, the Initial Charter or any part of the
rights, titles and interests hereby assigned, to anyone other than the Indenture
Trustee, or its successors or assigns.
Section 3.07 THE INITIAL CHARTER. The Initial Charter
constitutes the legal, valid and binding obligation of the Owner as "Owner"
thereunder and is in full force and effect in the form of Exhibit "A" attached
hereto; there are no amendments, additions, addenda or modifications thereto and
neither of the parties thereto is in default thereunder.
ARTICLE IV
COVENANTS OF THE OWNER
The Owner hereby covenants and agrees that so long as any of
the Obligations remains outstanding:
Section 4.01 CONSENT OF INITIAL CHARTERER. On the Closing
Date, the Owner shall deliver to the Initial Charterer a copy of this Assignment
and shall procure the execution by the Initial Charterer of the Consent and
Acknowledgment set out in Exhibit A hereto and deliver said Consent and
Acknowledgment to the Indenture Trustee on the Closing Date.
<PAGE>
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Section 4.02 ENFORCEMENT OF INITIAL CHARTER. (a) The Owner
will do or permit to be done each and every act or thing which the Indenture
Trustee may from time to time require to be done for the purpose of enforcing
the Indenture Trustee's rights under the Initial Charter and this Assignment.
(b) The Owner shall cause all moneys hereby assigned or agreed
to be assigned or arising from or in connection with any of the rights, title,
interest and benefits of the Owner under the Initial Charter shall be paid to
the credit of Chase Manhattan Bank NYC, ABA #021000021, A/C #920-1-073195,
credit U.S. Trust Co NY, further credit to A/C #04692300, Golden State Petroleum
Transport Revenue Account, Attention: Chris Collins or to such other account as
the Indenture Trustee may from time to time direct.
(c) The Owner will not exercise any right or powers conferred
on it by the Initial Charter in connection with any default or alleged default
by the Initial Charterer thereunder (including without limitation the right of
termination and substitution) unless and until requested so to do by the
Indenture Trustee whereupon the Owner agrees that it will do so provided always
that the Indenture Trustee shall not be responsible in any way whatsoever in the
event that the exercise of any right or power (including the right of
termination and substitution) be thereafter adjudged improper or to constitute a
repudiation of the Initial Charter by the Owner.
Section 4.03 AMENDMENT OF INITIAL CHARTER; ASSIGNMENT OF
INITIAL CHARTER. (a) The Owner will not, except with the previous written
consent of the Indenture Trustee, agree to any variation of the Initial Charter
or release the Initial Charterer from any of its obligations thereunder or waive
any breach of the Initial Charterer's obligations thereunder or consent to any
such act or omission of the Initial Charterer as would otherwise constitute such
breach.
(b) The Owner will not, except with the previous written
consent of the Indenture Trustee, assign the Initial Charter to any other
Person.
Section 4.04 PERFORMANCE OF OBLIGATIONS. The Owner will
perform its obligations under the Initial Charter and will use its best efforts
to cause the Initial Charterer to perform its obligations under the Initial
Charter.
Section 4.05 NOTICES. The Owner will send a copy of all
notices received or given by it under the Initial Charter forthwith to the
Indenture Trustee.
Section 4.06 FURTHER ASSURANCES. The Owner will at any time
and from time to time, upon the written request of the Indenture Trustee,
promptly and duly execute and deliver any and all such further instruments and
documents and take such action as the Indenture Trustee may deem desirable in
order to obtain the full benefits of this Assignment and of the rights and
powers herein granted.
Section 4.07 INDENTURE TRUSTEE AS ATTORNEY-IN-FACT OF
OWNER. The Owner hereby constitutes the Indenture Trustee, and its successors
and assigns, its true and lawful
<PAGE>
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attorney-in-fact, irrevocably, with full power in its own name, in the name of
its agents or nominees or in the name of the Owner or otherwise, to ask,
require, demand, receive, enforce and give acquittance for, any and all moneys
and claims for moneys due and to become due and payable under or arising out of
the Initial Charter, to endorse any checks or other instruments or orders in
connection therewith and to file any claims or take any action or institute any
proceedings which to the Indenture Trustee may seem to be necessary or advisable
under this Assignment. Any action or proceeding brought by the Indenture Trustee
pursuant to any of the provisions of this Assignment or otherwise and any claim
made by the Indenture Trustee hereunder may be compromised, withdrawn or
otherwise dealt with by the Indenture Trustee without any notice to or approval
of the Owner.
ARTICLE V
MISCELLANEOUS PROVISIONS
Section 5.01 AMENDMENT. This Assignment may be amended from
time to time by written agreement signed by the parties hereto.
Section 5.02 SEVERABILITY. If any provision of this Assignment
is held to be in conflict with any applicable statute or rule of law or is
otherwise held to be unenforceable for any reason whatsoever, such circumstances
shall not have the effect of rendering the provision in question inoperative or
unenforceable in any other case or circumstance, or of rendering any other
provision or provisions herein contained invalid, inoperative, or unenforceable
to any extent whatsoever. The invalidity of any one or more phrases, sentences,
clauses or Sections of this Assignment contained, shall not affect the remaining
portions of this Assignment, or any part thereof.
Section 5.03 NOTICES. All demands, notices and communications
hereunder shall be in writing, personally delivered or mailed by certified
mail-return receipt requested, and shall be deemed to have been duly given upon
receipt (a) in the case of the Indenture Trustee, at the following address: 114
West 47th Street, New York, New York 10036, Attention: Corporate Trust
Department, (b) in the case of the Owner, at the following address: 15-19 Athol
Street, Douglas, Isle of Man, or at other such address as shall be designated by
such party in a written notice to the other parties.
Section 5.04 CONSENT TO JURISDICTION. Any legal suit, action
or proceeding against the Owner arising out of or relating to this Assignment,
or any transaction contemplated hereby, may be instituted in any federal or
state court in The City of New York, State of New York, and the Owner hereby
irrevocably submits to the jurisdiction of any such court in any such suit,
action or proceeding. The Owner hereby waives, to the fullest extent permitted
by applicable law, any defense which it may now or hereafter have based upon
lack of personal jurisdiction or venue or FORUM NON CONVENIENS. The Owner hereby
irrevocably appoints and designates CT Corporation System, having an address at
1633 Broadway, New York, New York, its true and lawful attorney-in-fact and duly
authorized agent for the limited purpose of accepting servicing of legal process
and the Owner agrees that service of process upon such party shall constitute
personal service of such process on such Person. The Owner shall
<PAGE>
-6-
maintain the designation and appointment of such authorized agent until all
amounts payable under this Assignment shall have been paid in full. If such
agent shall cease to so act, the Owner shall immediately designate and appoint
another such agent satisfactory to the Indenture Trustee and shall promptly
deliver to the Indenture Trustee evidence in writing of such other agent's
acceptance of such appointment.
Section 5.05 CAPTIONS. The captions or headings in this
Assignment are for convenience only and in no way define, limit or describe the
scope or intent of any provisions or sections of this Assignment.
Section 5.06 GOVERNING LAW. This Assignment shall be governed
by and interpreted in accordance with the laws of the State of New York, without
giving effect to the principles of conflicts of law.
Section 5.07 NO PARTNERSHIP. Nothing herein contained shall be
deemed or construed to create a partnership or joint venture among the parties
hereto, and the services of each party shall be rendered as an independent
contractor and not as agent for any other party.
Section 5.08 COUNTERPARTS. This Assignment may be executed in
any number of counterparts and by different parties hereto on separate
counterpart, each of which shall be deemed to be an original. Such counterparts
shall constitute one and the same agreement.
Section 5.09 SURVIVAL. The representations, covenants and
agreements contained in or made pursuant to this Assignment in respect of either
party hereto shall survive the execution and delivery of this Assignment and
shall continue in effect so long as such party's obligations hereunder remain
outstanding.
Section 5.10 INTEGRATION. This Assignment and the Schedule and
Exhibits hereto constitute the entire agreement and understanding between the
parties hereto with respect to the subject matter hereof and supersede all prior
agreements, understandings or representations pertaining to the subject matter
hereof, whether oral or written. There are no warranties, representations or
other agreements between the parties in connection with the subject matter
hereof except as specifically set forth or incorporated herein.
Section 5.11 REPRODUCTION OF DOCUMENTS. This Assignment and
all documents relating thereto, including, without limitation, (a) consents,
waivers and modifications which may hereafter be executed, (b) documents
received by any party at the closing, and (c) financial statements, certificates
and other information previously or hereafter furnished, may be reproduced by
any photographic, photostatic, microfilm, micro-card, miniature photographic or
other similar process. The parties agree that any such reproduction shall be
admissible in evidence as the original itself in any judicial or administrative
proceeding (whether or not the original is in existence and whether or not such
reproduction was made in the regular course of business) and that any
enlargement, facsimile or further reproduction of such reproduction shall
likewise be admissible in evidence.
<PAGE>
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Section 5.12 SUCCESSORS AND ASSIGNS; ASSIGNMENT. This
Assignment shall be binding upon and inure to the benefit of the Owner and the
Indenture Trustee and their respective successors and assigns. The Owner shall
not have the right to assign its rights hereunder or any interest herein without
the prior written consent of the Indenture Trustee. The Indenture Trustee, at
its sole option, shall have the right to assign this Assignment, the Indenture,
the Security Documents and any of its rights and interest hereunder in
accordance with the terms and provisions of the Indenture and the Security
Documents.
Section 5.13 GENERAL INTERPRETIVE PRINCIPLES. For
purposes of this Assignment except as otherwise expressly provided or unless the
context otherwise requires:
(a) the defined terms in this Assignment shall include the
plural as well as the singular, and the use of any gender herein shall be deemed
to include any other gender;
(b) accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted accounting
principles as in effect on the date hereof;
(c) references herein to "Articles", "Sections",
"Subsections", "paragraphs", and other subdivisions without reference to a
document are to designated Articles, Sections, Subsections, paragraphs and other
subdivisions of this Assignment;
(d) a reference to a Subsection without further reference to a
Section is a reference to such Subsection as contained in the same Section in
which the reference appears, and this rule shall also apply to paragraphs and
other subdivisions;
(e) the words "herein", "hereof", "hereunder" and other words
of similar import refer to this Assignment as a whole and not to any particular
provision; and
(f) the term "include" or "including" shall mean without
limitation by reason of enumeration.
Section 5.14 EFFECTIVE DATE OF TRANSACTION. Notwithstanding
the fact that this Assignment is dated as of December 24, 1996, the transactions
set forth herein shall not be effective until the Closing Date.
<PAGE>
IN WITNESS WHEREOF, the Owner and the Indenture Trustee have
caused this Assignment to be duly executed and delivered by their respective
officers thereunto duly authorized all as of the day and year first above
written.
United States Trust Company of New York,
as Indenture Trustee
By:/s/ Christine C. Collins
-----------------------------
Name: Christine C. Collins
Title: Assistant Vice President
Golden State Petro (IOM I-A) PLC, as Owner
By:/s/ Joseph Avantario
-----------------------------
Name: Joseph Avantario
Title: Treasurer
<PAGE>
Exhibit A
LETTER OF ACKNOWLEDGMENT
TO ASSIGNMENT OF CHARTER
[Date]
United States Trust Company of New York,
as Indenture Trustee
Dear Sirs:
The undersigned hereby consents to and acknowledges receipt of
a signed copy of the Assignment of Charter (the "Assignment"), dated as of
December 1, 1996, between Golden State Petro (IOM I-A) PLC (the "Owner") and
United States Trust Company of New York, not in its individual capacity but
solely as trustee (the "Indenture Trustee") as adequate notice of such
assignment to the Indenture Trustee of the Initial Charter (as defined in the
Assignment) and of all the right, title and interest of the Owner in, to and
under the Initial Charter.
So long as the Assignment remains effective, we hereby agree
that (a) we shall pay any and all sums which we are legally obligated to pay to
the Owner or otherwise as stated in and according to the Initial Charter
directly to _______________________ Golden State Petroleum Revenue Account,
Attention: ___________________, or otherwise to such other account as you may at
any time or from time to time, designate by notice to us in writing, (b) with
respect to each of the insurances obtained pursuant to Clause 11 of the Initial
Charter, the Indenture Trustee shall be named as an additional assured and the
provisions of Clause 11(b) shall be equally applicable to the Indenture Trustee
as if it were named in addition to the Owner in each case where the Owner is so
named, (c) the Indenture Trustee, as assignee of the Owner, is the loss payee to
the extent that the Owner is the loss payee under such insurances and (d) the
Indenture Trustee and each of the Noteholders shall be entitled to the
indemnifications by the Initial Charterer set forth in the Initial Charter to
the same extent as if they were named indemnified parties therein.
Payments of moneys under the Initial Charter may be adjusted,
reduced or withheld only as expressly provided therein. Payments to the
Indenture Trustee shall not be subject to any right of set-off or defense by way
of counterclaim or otherwise which the undersigned may have against the Owner or
any entity substituted for it other than under the Initial Charter, and all
payments once made to you will be final, and once paid the undersigned will not,
for any reason whatsoever, seek to recover from the Indenture Trustee any such
payment made to the Indenture Trustee by virtue of the Assignment or this Letter
of Consent.
We confirm that the terms of the Initial Charter remain in
full force and effect that the Owner is not presently to our knowledge in breach
of the terms of the Initial Charter. We further confirm that the terms of the
Initial Charter have not been varied or modified and that
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the terms of the Initial Charter will not after the date hereof be varied or
modified without the prior written consent of the Indenture Trustee.
We confirm that we have received no prior notice of any
assignment by the Owner of any interest in the Initial Charter.
The undersigned will not permit any amendment, modification,
cancellation or other alteration in the Initial Charter, nor will it consent to
or accept the substitution thereunder of any party for the Owner without your
prior written consent.
CHEVRON TRANSPORT CORPORATION, as Initial
Charterer
By:________________________________
Name:______________________________
Title:_____________________________
<PAGE>
SCHEDULE 1
ADDITIONAL DEFINED TERMS USED IN THE ASSIGNMENT
"AGREEMENT ON CONTRACT FOR TECHNICAL MATTERS" means, the Agreement
Regarding Technical Matters, dated as of the Closing Date, between the Owner,
Samsung Heavy Industries Co., LTD and Chevron Shipping Company, San Francisco,
U.S.A. (as Agent for the Initial Charterer).
"ASSIGNMENT" or "ASSIGNMENT OF CHARTER" means the assignment between
the Owner and the Indenture Trustee, as amended from time to time in accordance
with the terms thereof, pursuant to which the Owner collaterally assigns to the
Indenture Trustee all of the Owner's right, title and interest in, to and under
the Initial Charter to secure its obligations under the Indenture.
"ASSIGNMENT OF BUILDING CONTRACT" means, for each Vessel, the Building
Contract Assignment, dated as of the Closing Date, between the related Owner and
the Indenture Trustee, pursuant to which such Owner collaterally assigns its
rights, title and interests in the related Building Contract and the Agreement
on Contract for Technical Matters to the Indenture Trustee.
"ASSIGNMENT OF BUILDING CONTRACT GUARANTEE" means, for each Building
Contract Guarantee, the Assignment of Building Contract Guarantee, dated as of
the Closing Date, between the related Owner and the Indenture Trustee, as the
same may be amended from time to time, pursuant to which such Owner collaterally
assigns its rights, title and interest in the related Building Contract
Guarantee therein to the Indenture Trustee.
"ASSIGNMENT OF CHARTER SUPPLEMENT" means, for each Charter Supplement,
the Assignment of Charter Supplement, dated the date of the Supplemental
Indenture, between the Owner of the Vessel and the Indenture Trustee, as the
same may be amended from time to time pursuant to which the Owner collaterally
assigns all of the Owner's right, title and interest therein to the Indenture
Trustee.
"ASSIGNMENT OF CHEVRON GUARANTEE" means the assignment between the
Owner and the Indenture Trustee, as amended from time to time in accordance with
the terms thereof, pursuant to which the Owner collaterally assigns to the
Indenture Trustee all of the Owner's right, title and interest in, to and under
the Chevron Guarantee to secure its obligations under the Indenture.
"ASSIGNMENT OF EARNINGS AND INSURANCES" means the assignment between
the Owner and the Indenture Trustee, as amended from time to time in accordance
with the terms thereof, pursuant to which the Owner collaterally assigns to the
Indenture Trustee all of the Owner's right, title and interest in, to and under
the freights and hires (as well as any charters entered into after the Delivery
Date) with respect to the Vessel to secure its obligations under the Indenture.
<PAGE>
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"ASSIGNMENT OF MANAGEMENT AGREEMENT" means the assignment between the
Owner and the Indenture Trustee, as amended from time to time in accordance with
the terms thereof, pursuant to which the Owner collaterally assigns to the
Indenture Trustee all of the Owner's right, title and interest in, to and under
the Management Agreement to secure its obligations under the Indenture.
"BUILDER" means, collectively, Samsung Corporation and Samsung Heavy
Industries, Ltd.
"BUILDING CONTRACT" means the Shipbuilding Contract, dated December 24,
1996, between the Builder and the Owner.
"BUILDING CONTRACT GUARANTEE" means the Irrevocable Installment Payment
Letter of Guarantee, dated December 24, 1996, given by the Building Contract
Guarantor to the Owner in connection with the Vessel.
"BUILDING CONTRACT GUARANTOR" means Korea Development Bank.
"CHEVRON" means Chevron Corporation, a Delaware corporation, and its
successors and assigns.
"CHEVRON GUARANTEE" means the Guarantee, dated the Closing Date, given
by Chevron to the Owner in connection with the Initial Charter and the Charter
Supplement.
"CLOSING DATE" means December 24, 1996.
"COLLATERAL" means the collateral assigned, pledged or granted to the
Indenture Trustee pursuant to (i) this Assignment of Charter, (ii) the
Assignment of Earnings and Insurances, (iii) the Assignment of Charter
Supplement, (iv) the Mortgage, (v) the Assignment of Chevron Guarantee, (vi) the
Assignment of Management Agreement, (vii) the Assignment of Building Contract,
(viii) the Assignment of Building Contract Guarantee, (ix) the Issue of One
Debenture and (x) the Stock Pledge, together with all income and proceeds
thereof.
"DELIVERY DATE" means the date the Vessel is accepted by the Owner from
the Builder under the Building Contract, which is the date of this Assignment.
"INDENTURE" means the Indenture, dated as of December 1, 1996 among the
Indenture Trustee, the Owner, Golden State Petro B and Golden State Petroleum,
pursuant to which the Notes were issued.
"INDENTURE TRUSTEE" means United States Trust Company of New York.
"INITIAL CHARTER" means with respect to each Vessel, the bareboat
charter, dated as of December 24, 1996, between the Initial Charterer and the
Owner.
"INITIAL CHARTERER" means Chevron Transport Corporation, a Liberian
corporation.
<PAGE>
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"ISSUE OF ONE DEBENTURE" means each Issue of One Debenture between the
Owner and the Indenture Trustee, as amended from time to time in accordance with
the terms thereof, pursuant to which the Owner grants to the Indenture Trustee a
security interest in all of its assets.
"MANAGEMENT AGREEMENT" means the agreement, dated the Closing Date,
between the Owner and the Manager pursuant to which the Manager agrees to
provide certain services to the Owner.
"MANAGER" means the Person performing the duties of the Manager under
the Management Agreement, initially Cambridge Fund Management L.L.C.
"MORTGAGE" means, with respect to the Vessel, the first preferred ship
mortgage on the Vessel granted by the Owner to the Indenture Trustee, as amended
from time to time in accordance with the terms of such Mortgage.
"OBLIGATIONS" means the payment, performance or obligations of any kind
or nature whatsoever of the Owner under and pursuant to the Indenture, any
Security Document and any instrument, agreement or document referred to therein.
"OWNER" means Golden State Petro (IOM I-A) PLC, a company organized
under the laws of the Isle of Man.
"SECURITY DOCUMENTS" means the Indenture, the Mortgage, this Assignment
of Charter, the Assignments of Charter Supplements, the Assignment of Earnings
and Insurances, the Assignment of Chevron Guarantee, the Assignment of
Management Agreement, the Assignment of Building Contract, the Issue of One
Debenture, the Stock Pledge and the Assignment of Building Contract Guarantee,
collectively.
"VESSEL" means Hull No. 1228.
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS
ARTICLE II
ASSIGNMENT
Section 2.01 SECURITY INTEREST.......................................... 1
-----------------
Section 2.02 ASSIGNMENT................................................. 1
----------
Section 2.03 OWNER TO REMAIN LIABLE..................................... 2
----------------------
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE OWNER
Section 3.01 ORGANIZATION, POWER AND STATUS OF THE OWNER................ 2
-------------------------------------------
Section 3.02 AUTHORIZATION; ENFORCEABILITY; EXECUTION AND DELIVERY...... 2
-----------------------------------------------------
Section 3.03 NO CONFLICTS; LAWS AND CONSENTS; NO DEFAULT................ 3
-------------------------------------------
Section 3.04 GOVERNMENTAL APPROVALS..................................... 3
----------------------
Section 3.05 LITIGATION................................................. 3
----------
Section 3.06 NO PRIOR ASSIGNMENT........................................ 3
-------------------
Section 3.07 THE INITIAL CHARTER........................................ 3
-------------------
ARTICLE IV
COVENANTS OF THE OWNER........................ 3
Section 4.01 CONSENT OF INITIAL CHARTERER............................... 3
----------------------------
Section 4.02 ENFORCEMENT OF INITIAL CHARTER............................. 4
------------------------------
Section 4.03 AMENDMENT OF INITIAL CHARTER; ASSIGNMENT OF INITIAL
----------------------------------------------------
CHARTER.................................................... 4
-------
<PAGE>
Section 4.04 PERFORMANCE OF OBLIGATIONS................................. 4
--------------------------
Section 4.05 NOTICES.................................................... 4
-------
Section 4.06 FURTHER ASSURANCES......................................... 4
------------------
Section 4.07 INDENTURE TRUSTEE AS ATTORNEY-IN-FACT OF OWNER............. 4
----------------------------------------------
ARTICLE V
MISCELLANEOUS PROVISIONS................................. 5
Section 5.01 AMENDMENT.................................................. 5
---------
Section 5.02 SEVERABILITY............................................... 5
------------
Section 5.03 NOTICES.................................................... 5
-------
Section 5.04 CONSENT TO JURISDICTION.................................... 5
-----------------------
Section 5.05 CAPTIONS................................................... 6
--------
Section 5.06 GOVERNING LAW.............................................. 6
-------------
Section 5.07 NO PARTNERSHIP............................................. 6
--------------
Section 5.08 COUNTERPARTS............................................... 6
------------
Section 5.09 SURVIVAL................................................... 6
--------
Section 5.10 INTEGRATION................................................ 6
-----------
Section 5.11 REPRODUCTION OF DOCUMENTS.................................. 6
-------------------------
Section 5.12 SUCCESSORS AND ASSIGNS; ASSIGNMENT......................... 6
----------------------------------
Section 5.13 GENERAL INTERPRETIVE PRINCIPLES............................ 7
-------------------------------
Section 5.14 EFFECTIVE DATE OF TRANSACTION.............................. 7
-----------------------------
- - - - - --------------------------------------------------------------------------------
- - - - - --------------------------------------------------------------------------------
UNITED STATES TRUST COMPANY OF NEW YORK,
AS INDENTURE TRUSTEE
and
GOLDEN STATE PETRO (IOM I-B) PLC
-----------------------------------
ASSIGNMENT OF CHARTER
Dated as of December 1, 1996
-----------------------------------
- - - - - --------------------------------------------------------------------------------
- - - - - --------------------------------------------------------------------------------
<PAGE>
Assignment of Charter, dated as of December 1, 1996 (the
"Assignment"), between Golden State Petro (IOM I-B) PLC (the "Owner") and United
States Trust Company of New York (the "Indenture Trustee"), not in its
individual capacity but solely as trustee under the Indenture (the "Indenture"),
dated as of the date hereof, among the Owner, the Indenture Trustee, Golden
State Petro (IOM I-A) PLC ("Golden State Petro A") and Golden State Petroleum
Transport Corporation ("Golden State Petroleum"), as agent for the Owner and
Golden State Petro A.
PRELIMINARY STATEMENT
On the Closing Date, Golden State Petroleum, as agent for the
Owner and Golden State Petro A, will issue Notes in connection with the
financing of the construction of the Vessel. The net proceeds of such issuance
will be deposited into the Pre-Funding Account. Pursuant to the Indenture, the
Allocated Principal Amount of the Mortgage Notes for the Vessel will be used,
INTER ALIA, to make the installments due under the Shipbuilding Contract for the
Vessel. As of the date of this Assignment, the Owner agreed to bareboat charter
the Vessel to Chevron Transport Corporation (the "Initial Charterer") pursuant
to the Initial Charter. The obligations of the Initial Charterer under the
Initial Charter are guaranteed by Chevron Corporation (the "Guarantor") pursuant
to the Chevron Guarantee. The Vessel will be managed by Cambridge Fund
Management L.L.C. (the "Manager") pursuant to the Management Agreement, dated as
of the date hereof, between the Owner and the Manager. As collateral security
for its obligations under the Indenture, the Owner has and will assign, pledge,
mortgage and grant the Indenture Trustee a security interest in, INTER ALIA, the
Vessel, the Initial Charter and the Chevron Guarantee.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained and of other valuable consideration, receipt of
which is hereby acknowledged, the Owner and the Indenture Trustee hereby agree
as follows:
ARTICLE I
DEFINITIONS
Unless otherwise defined in Schedule 1 to this Assignment,
capitalized terms used in this Assignment shall have the meanings assigned to
such terms in the Indenture.
ARTICLE II
ASSIGNMENT
Section 2.01 SECURITY INTEREST. This Assignment is made and
delivered as security for the Obligations.
Section 2.02 ASSIGNMENT. In order to provide for the payment
of and as security for the Obligations, the Owner has granted, bargained,
assigned, transferred, conveyed, mortgaged, pledged and granted a security
interest in and confirmed, and does hereby grant, bargain, assign, transfer,
convey, mortgage, pledge and grant a security interest in and confirm, to the
Indenture Trustee, its successors and assigns, for its and their respective
successors' and assigns' own proper use and benefit, all of the Owner's right,
title and interest in and to the
<PAGE>
-2-
Initial Charter, including without limitation any moneys whatsoever payable to
the Owner under the Initial Charter, together with the income and proceeds
thereof and all other rights and benefits whatsoever accruing to the Owner under
the Initial Charter; PROVIDED, HOWEVER, that the Owner shall keep the Indenture
Trustee fully and effectively indemnified from and against all actions, losses,
claims, proceedings, costs, demands and liabilities which may be suffered by the
Indenture Trustee under or by virtue of the Initial Charter or this Assignment.
Section 2.03 OWNER TO REMAIN LIABLE. Anything in this
Assignment contained to the contrary notwithstanding, the Owner shall remain
liable under the Initial Charter, and shall observe, perform and fulfill all of
the conditions and obligations to be observed, performed and fulfilled by it
thereunder, and the Indenture Trustee shall have no obligation or liability of
any kind whatsoever thereunder or by reason of or arising out of this
Assignment, nor shall the Indenture Trustee be under any liability whatsoever in
the event of any failure by the Owner to perform its obligations thereunder or
be required or obligated in any manner to observe, perform or fulfill any of the
conditions or obligations of the Owner thereunder or pursuant thereto, or to
make any payment or to make any inquiry as to the nature or sufficiency of any
payment received by it or the Owner thereunder, or to present or file any claim,
or to take any other action to collect or enforce the payment of any amounts
which may have been assigned to the Indenture Trustee or to which the Indenture
Trustee may be entitled hereunder at any time or times.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE OWNER
The Owner hereby represents and warrants to the Indenture
Trustee as follows:
Section 3.01 ORGANIZATION, POWER AND STATUS OF THE OWNER. The
Owner (a) is a corporation duly formed, validly existing and in good standing
under the laws of the Isle of Man and (b) is duly authorized, to the extent
necessary, to do business in each jurisdiction where the character of its
properties or the nature of its activities makes such qualification necessary.
The Owner has all requisite corporate power and authority to own and operate the
property it purports to own and to carry on its business as now being conducted
and as proposed to be conducted in respect of the Vessel.
Section 3.02 AUTHORIZATION; ENFORCEABILITY; EXECUTION AND
DELIVERY. (a) The Owner has all necessary corporate power and authority to
execute, deliver and perform under this Assignment.
(b) All action on the part of the Owner that is required for
the authorization, execution, delivery and performance of this Assignment has
been duly and effectively taken; and the execution, delivery and performance of
this Assignment does not require the approval or consent of any Person except
for such consents and approvals as have been obtained on or prior to the Closing
Date.
<PAGE>
-3-
(c) This Assignment has been duly executed and delivered by
the Owner. This Assignment constitutes the legal, valid and binding obligation
of the Owner, enforceable against it in accordance with the terms thereof.
Section 3.03 NO CONFLICTS; LAWS AND CONSENTS; NO DEFAULT. (a)
Neither the execution, delivery and performance of this Assignment nor the
consummation of any of the transactions contemplated hereby nor performance of
or compliance with the terms and conditions hereof (i) contravenes any
Requirement of Law applicable to the Owner or (ii) constitutes a default under
the Indenture or any Security Document.
(b) The Owner is in compliance with and not in default under
any and all Requirements of Law applicable to the Owner and all terms and
provisions of this Assignment.
Section 3.04 GOVERNMENTAL APPROVALS. All Governmental
Approvals which are required to be obtained in the name of the Owner in
connection with the execution, delivery and performance by the Owner of this
Assignment have been obtained and are in effect on the Closing Date.
Section 3.05 LITIGATION. There are no actions, suits or
proceedings at law or in equity or by or before any Governmental Authority now
pending against the Owner or, to the best of the Owner's knowledge, threatened
against the Owner or pending or threatened against any property or other assets
or rights of the Owner with respect to this Assignment.
Section 3.06 NO PRIOR ASSIGNMENT. The Owner has not assigned
or pledged, and hereby covenants that it will not assign or pledge, so long as
this Assignment shall remain in effect, the Initial Charter or any part of the
rights, titles and interests hereby assigned, to anyone other than the Indenture
Trustee, or its successors or assigns.
Section 3.07 THE INITIAL CHARTER. The Initial Charter
constitutes the legal, valid and binding obligation of the Owner as "Owner"
thereunder and is in full force and effect in the form of Exhibit "A" attached
hereto; there are no amendments, additions, addenda or modifications thereto and
neither of the parties thereto is in default thereunder.
ARTICLE IV
COVENANTS OF THE OWNER
The Owner hereby covenants and agrees that so long as any of
the Obligations remains outstanding:
Section 4.01 CONSENT OF INITIAL CHARTERER. On the Closing
Date, the Owner shall deliver to the Initial Charterer a copy of this Assignment
and shall procure the execution by the Initial Charterer of the Consent and
Acknowledgment set out in Exhibit A hereto and deliver said Consent and
Acknowledgment to the Indenture Trustee on the Closing Date.
<PAGE>
-4-
Section 4.02 ENFORCEMENT OF INITIAL CHARTER. (a) The Owner
will do or permit to be done each and every act or thing which the Indenture
Trustee may from time to time require to be done for the purpose of enforcing
the Indenture Trustee's rights under the Initial Charter and this Assignment.
(b) The Owner shall cause all moneys hereby assigned or agreed
to be assigned or arising from or in connection with any of the rights, title,
interest and benefits of the Owner under the Initial Charter shall be paid to
the credit of Chase Manhattan Bank NYC, ABA #021000021, A/C #920-1-073195,
credit U.S. Trust Co NY, further credit to A/C #04692300, Golden State Petroleum
Transport Revenue Account, Attention: Chris Collins or to such other account as
the Indenture Trustee may from time to time direct.
(c) The Owner will not exercise any right or powers conferred
on it by the Initial Charter in connection with any default or alleged default
by the Initial Charterer thereunder (including without limitation the right of
termination and substitution) unless and until requested so to do by the
Indenture Trustee whereupon the Owner agrees that it will do so provided always
that the Indenture Trustee shall not be responsible in any way whatsoever in the
event that the exercise of any right or power (including the right of
termination and substitution) be thereafter adjudged improper or to constitute a
repudiation of the Initial Charter by the Owner.
Section 4.03 AMENDMENT OF INITIAL CHARTER; ASSIGNMENT OF
INITIAL CHARTER. (a) The Owner will not, except with the previous written
consent of the Indenture Trustee, agree to any variation of the Initial Charter
or release the Initial Charterer from any of its obligations thereunder or waive
any breach of the Initial Charterer's obligations thereunder or consent to any
such act or omission of the Initial Charterer as would otherwise constitute such
breach.
(b) The Owner will not, except with the previous written
consent of the Indenture Trustee, assign the Initial Charter to any other
Person.
Section 4.04 PERFORMANCE OF OBLIGATIONS. The Owner will
perform its obligations under the Initial Charter and will use its best efforts
to cause the Initial Charterer to perform its obligations under the Initial
Charter.
Section 4.05 NOTICES. The Owner will send a copy of all
notices received or given by it under the Initial Charter forthwith to the
Indenture Trustee.
Section 4.06 FURTHER ASSURANCES. The Owner will at any time
and from time to time, upon the written request of the Indenture Trustee,
promptly and duly execute and deliver any and all such further instruments and
documents and take such action as the Indenture Trustee may deem desirable in
order to obtain the full benefits of this Assignment and of the rights and
powers herein granted.
Section 4.07 INDENTURE TRUSTEE AS ATTORNEY-IN-FACT OF OWNER.
The Owner hereby constitutes the Indenture Trustee, and its successors and
assigns, its true and lawful
<PAGE>
-5-
attorney-in-fact, irrevocably, with full power in its own name, in the name of
its agents or nominees or in the name of the Owner or otherwise, to ask,
require, demand, receive, enforce and give acquittance for, any and all moneys
and claims for moneys due and to become due and payable under or arising out of
the Initial Charter, to endorse any checks or other instruments or orders in
connection therewith and to file any claims or take any action or institute any
proceedings which to the Indenture Trustee may seem to be necessary or advisable
under this Assignment. Any action or proceeding brought by the Indenture Trustee
pursuant to any of the provisions of this Assignment or otherwise and any claim
made by the Indenture Trustee hereunder may be compromised, withdrawn or
otherwise dealt with by the Indenture Trustee without any notice to or approval
of the Owner.
ARTICLE V
MISCELLANEOUS PROVISIONS
Section 5.01 AMENDMENT. This Assignment may be amended from
time to time by written agreement signed by the parties hereto.
Section 5.02 SEVERABILITY. If any provision of this Assignment
is held to be in conflict with any applicable statute or rule of law or is
otherwise held to be unenforceable for any reason whatsoever, such circumstances
shall not have the effect of rendering the provision in question inoperative or
unenforceable in any other case or circumstance, or of rendering any other
provision or provisions herein contained invalid, inoperative, or unenforceable
to any extent whatsoever. The invalidity of any one or more phrases, sentences,
clauses or Sections of this Assignment contained, shall not affect the remaining
portions of this Assignment, or any part thereof.
Section 5.03 NOTICES. All demands, notices and communications
hereunder shall be in writing, personally delivered or mailed by certified
mail-return receipt requested, and shall be deemed to have been duly given upon
receipt (a) in the case of the Indenture Trustee, at the following address: 114
West 47th Street, New York, New York 10036, Attention: Corporate Trust
Department, (b) in the case of the Owner, at the following address: 15-19 Athol
Street, Douglas, Isle of Man, or at other such address as shall be designated by
such party in a written notice to the other parties.
Section 5.04 CONSENT TO JURISDICTION. Any legal suit, action
or proceeding against the Owner arising out of or relating to this Assignment,
or any transaction contemplated hereby, may be instituted in any federal or
state court in The City of New York, State of New York, and the Owner hereby
irrevocably submits to the jurisdiction of any such court in any such suit,
action or proceeding. The Owner hereby waives, to the fullest extent permitted
by applicable law, any defense which it may now or hereafter have based upon
lack of personal jurisdiction or venue or FORUM NON CONVENIENS. The Owner hereby
irrevocably appoints and designates CT Corporation System, having an address at
1633 Broadway, New York, New York, its true and lawful attorney-in-fact and duly
authorized agent for the limited purpose of accepting servicing of legal process
and the Owner agrees that service of process upon such party shall constitute
personal service of such process on such Person. The Owner shall
<PAGE>
-6-
maintain the designation and appointment of such authorized agent until all
amounts payable under this Assignment shall have been paid in full. If such
agent shall cease to so act, the Owner shall immediately designate and appoint
another such agent satisfactory to the Indenture Trustee and shall promptly
deliver to the Indenture Trustee evidence in writing of such other agent's
acceptance of such appointment.
Section 5.05 CAPTIONS. The captions or headings in this
Assignment are for convenience only and in no way define, limit or describe the
scope or intent of any provisions or sections of this Assignment.
Section 5.06 GOVERNING LAW. This Assignment shall be governed
by and interpreted in accordance with the laws of the State of New York, without
giving effect to the principles of conflicts of law.
Section 5.07 NO PARTNERSHIP. Nothing herein contained shall be
deemed or construed to create a partnership or joint venture among the parties
hereto, and the services of each party shall be rendered as an independent
contractor and not as agent for any other party.
Section 5.08 COUNTERPARTS. This Assignment may be executed in
any number of counterparts and by different parties hereto on separate
counterpart, each of which shall be deemed to be an original. Such counterparts
shall constitute one and the same agreement.
Section 5.09 SURVIVAL. The representations, covenants and
agreements contained in or made pursuant to this Assignment in respect of either
party hereto shall survive the execution and delivery of this Assignment and
shall continue in effect so long as such party's obligations hereunder remain
outstanding.
Section 5.10 INTEGRATION. This Assignment and the Schedule and
Exhibits hereto constitute the entire agreement and understanding between the
parties hereto with respect to the subject matter hereof and supersede all prior
agreements, understandings or representations pertaining to the subject matter
hereof, whether oral or written. There are no warranties, representations or
other agreements between the parties in connection with the subject matter
hereof except as specifically set forth or incorporated herein.
Section 5.11 REPRODUCTION OF DOCUMENTS. This Assignment and
all documents relating thereto, including, without limitation, (a) consents,
waivers and modifications which may hereafter be executed, (b) documents
received by any party at the closing, and (c) financial statements, certificates
and other information previously or hereafter furnished, may be reproduced by
any photographic, photostatic, microfilm, micro-card, miniature photographic or
other similar process. The parties agree that any such reproduction shall be
admissible in evidence as the original itself in any judicial or administrative
proceeding (whether or not the original is in existence and whether or not such
reproduction was made in the regular course of business) and that any
enlargement, facsimile or further reproduction of such reproduction shall
likewise be admissible in evidence.
<PAGE>
-7-
Section 5.12 SUCCESSORS AND ASSIGNS; ASSIGNMENT. This
Assignment shall be binding upon and inure to the benefit of the Owner and the
Indenture Trustee and their respective successors and assigns. The Owner shall
not have the right to assign its rights hereunder or any interest herein without
the prior written consent of the Indenture Trustee. The Indenture Trustee, at
its sole option, shall have the right to assign this Assignment, the Indenture,
the Security Documents and any of its rights and interest hereunder in
accordance with the terms and provisions of the Indenture and the Security
Documents.
Section 5.13 GENERAL INTERPRETIVE PRINCIPLES. For purposes of
this Assignment except as otherwise expressly provided or unless the context
otherwise requires:
(a) the defined terms in this Assignment shall include the
plural as well as the singular, and the use of any gender herein shall be deemed
to include any other gender;
(b) accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted accounting
principles as in effect on the date hereof;
(c) references herein to "Articles", "Sections",
"Subsections", "paragraphs", and other subdivisions without reference to a
document are to designated Articles, Sections, Subsections, paragraphs and other
subdivisions of this Assignment;
(d) a reference to a Subsection without further reference to a
Section is a reference to such Subsection as contained in the same Section in
which the reference appears, and this rule shall also apply to paragraphs and
other subdivisions;
(e) the words "herein", "hereof", "hereunder" and other words
of similar import refer to this Assignment as a whole and not to any particular
provision; and
(f) the term "include" or "including" shall mean without
limitation by reason of enumeration.
Section 5.14 EFFECTIVE DATE OF TRANSACTION. Notwithstanding
the fact that this Assignment is dated as of December 24, 1996, the transactions
set forth herein shall not be effective until the Closing Date.
<PAGE>
-8-
IN WITNESS WHEREOF, the Owner and the Indenture Trustee have
caused this Assignment to be duly executed and delivered by their respective
officers thereunto duly authorized all as of the day and year first above
written.
United States Trust Company of New York,
as Indenture Trustee
By:/s/ Christine C. Collins
-----------------------------
Name: Christine C. Collins
Its: Assistant Vice President
Golden State Petro (IOM I-B) PLC, as Owner
By:/s/ Nunzio Lipomi
-----------------------------
Name: Nunzio Lipomi
Its: Assistant Secretary
<PAGE>
Exhibit A
LETTER OF ACKNOWLEDGMENT
TO ASSIGNMENT OF CHARTER
[Date]
United States Trust Company of New York,
as Indenture Trustee
Dear Sirs:
The undersigned hereby consents to and acknowledges receipt of
a signed copy of the Assignment of Charter (the "Assignment"), dated as of
December 1, 1996, between Golden State Petro (IOM I-B) PLC (the "Owner") and
United States Trust Company of New York, not in its individual capacity but
solely as trustee (the "Indenture Trustee") as adequate notice of such
assignment to the Indenture Trustee of the Initial Charter (as defined in the
Assignment) and of all the right, title and interest of the Owner in, to and
under the Initial Charter.
So long as the Assignment remains effective, we hereby agree
that (a) we shall pay any and all sums which we are legally obligated to pay to
the Owner or otherwise as stated in and according to the Initial Charter
directly to _______________________ Golden State Petroleum Revenue Account,
Attention: ___________________, or otherwise to such other account as you may at
any time or from time to time, designate by notice to us in writing, (b) with
respect to each of the insurances obtained pursuant to Clause 11 of the Initial
Charter, the Indenture Trustee shall be named as an additional assured and the
provisions of Clause 11(b) shall be equally applicable to the Indenture Trustee
as if it were named in addition to the Owner in each case where the Owner is so
named, (c) the Indenture Trustee, as assignee of the Owner, is the loss payee to
the extent that the Owner is the loss payee under such insurances and (d) the
Indenture Trustee and each of the Noteholders shall be entitled to the
indemnifications by the Initial Charterer set forth in the Initial Charter to
the same extent as if they were named indemnified parties therein.
Payments of moneys under the Initial Charter may be adjusted,
reduced or withheld only as expressly provided therein. Payments to the
Indenture Trustee shall not be subject to any right of set-off or defense by way
of counterclaim or otherwise which the undersigned may have against the Owner or
any entity substituted for it other than under the Initial Charter, and all
payments once made to you will be final, and once paid the undersigned will not,
for any reason whatsoever, seek to recover from the Indenture Trustee any such
payment made to the Indenture Trustee by virtue of the Assignment or this Letter
of Consent.
We confirm that the terms of the Initial Charter remain in
full force and effect that the Owner is not presently to our knowledge in breach
of the terms of the Initial Charter. We further confirm that the terms of the
Initial Charter have not been varied or modified and that
<PAGE>
-2-
the terms of the Initial Charter will not after the date hereof be varied or
modified without the prior written consent of the Indenture Trustee.
We confirm that we have received no prior notice of any
assignment by the Owner of any interest in the Initial Charter.
The undersigned will not permit any amendment, modification,
cancellation or other alteration in the Initial Charter, nor will it consent to
or accept the substitution thereunder of any party for the Owner without your
prior written consent.
CHEVRON TRANSPORT CORPORATION, as Initial
Charterer
By:_________________________________
Name:_______________________________
Title:______________________________
<PAGE>
SCHEDULE 1
ADDITIONAL DEFINED TERMS USED IN THE ASSIGNMENT
"AGREEMENT ON CONTRACT FOR TECHNICAL MATTERS" means, the Agreement
Regarding Technical Matters, dated as of the Closing Date, between the Owner,
Samsung Heavy Industries Co., LTD and Chevron Shipping Company, San Francisco,
U.S.A. (as Agent for the Initial Charterer).
"ASSIGNMENT" or "ASSIGNMENT OF CHARTER" means the assignment between
the Owner and the Indenture Trustee, as amended from time to time in accordance
with the terms thereof, pursuant to which the Owner collaterally assigns to the
Indenture Trustee all of the Owner's right, title and interest in, to and under
the Initial Charter to secure its obligations under the Indenture.
"ASSIGNMENT OF BUILDING CONTRACT" means, for each Vessel, the Building
Contract Assignment, dated as of the Closing Date, between the related Owner and
the Indenture Trustee, pursuant to which such Owner collaterally assigns its
rights, title and interests in the related Building Contract and the Agreement
on Contract for Technical Matters to the Indenture Trustee.
"ASSIGNMENT OF BUILDING CONTRACT GUARANTEE" means, for each Building
Contract Guarantee, the Assignment of Building Contract Guarantee, dated as of
the Closing Date, between the related Owner and the Indenture Trustee, as the
same may be amended from time to time, pursuant to which such Owner collaterally
assigns its rights, title and interest in the related Building Contract
Guarantee therein to the Indenture Trustee.
"ASSIGNMENT OF CHARTER SUPPLEMENT" means, for each Charter Supplement,
the Assignment of Charter Supplement, dated the date of the Supplemental
Indenture, between the Owner of the Vessel and the Indenture Trustee, as the
same may be amended from time to time pursuant to which the Owner collaterally
assigns all of the Owner's right, title and interest therein to the Indenture
Trustee.
"ASSIGNMENT OF CHEVRON GUARANTEE" means the assignment between the
Owner and the Indenture Trustee, as amended from time to time in accordance with
the terms thereof, pursuant to which the Owner collaterally assigns to the
Indenture Trustee all of the Owner's right, title and interest in, to and under
the Chevron Guarantee to secure its obligations under the Indenture.
"ASSIGNMENT OF EARNINGS AND INSURANCES" means the assignment between
the Owner and the Indenture Trustee, as amended from time to time in accordance
with the terms thereof, pursuant to which the Owner collaterally assigns to the
Indenture Trustee all of the Owner's right, title and interest in, to and under
the freights and hires (as well as any charters entered into after the Delivery
Date) with respect to the Vessel to secure its obligations under the Indenture.
<PAGE>
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"ASSIGNMENT OF MANAGEMENT AGREEMENT" means the assignment between the
Owner and the Indenture Trustee, as amended from time to time in accordance with
the terms thereof, pursuant to which the Owner collaterally assigns to the
Indenture Trustee all of the Owner's right, title and interest in, to and under
the Management Agreement to secure its obligations under the Indenture.
"BUILDER" means, collectively, Samsung Corporation and Samsung Heavy
Industries, Ltd.
"BUILDING CONTRACT" means the Shipbuilding Contract, dated December 24,
1996, between the Builder and the Owner.
"BUILDING CONTRACT GUARANTEE" means the Irrevocable Installment Payment
Letter of Guarantee, dated December 24, 1996, given by the Building Contract
Guarantor to the Owner in connection with the Vessel.
"BUILDING CONTRACT GUARANTOR" means Korea Development Bank.
"CHEVRON" means Chevron Corporation, a Delaware corporation, and its
successors and assigns.
"CHEVRON GUARANTEE" means the Guarantee, dated the Closing Date, given
by Chevron to the Owner in connection with the Initial Charter and the Charter
Supplement.
"CLOSING DATE" means December 24, 1996.
"COLLATERAL" means the collateral assigned, pledged or granted to the
Indenture Trustee pursuant to (i) this Assignment of Charter, (ii) the
Assignment of Earnings and Insurances, (iii) the Assignment of Charter
Supplement, (iv) the Mortgage, (v) the Assignment of Chevron Guarantee, (vi) the
Assignment of Management Agreement, (vii) the Assignment of Building Contract,
(viii) the Assignment of Building Contract Guarantee, (ix) the Issue of One
Debenture and (x) the Stock Pledge, together with all income and proceeds
thereof.
"DELIVERY DATE" means the date the Vessel is accepted by the Owner from
the Builder under the Building Contract, which is the date of this Assignment.
"INDENTURE" means the Indenture, dated as of December 1, 1996 among the
Indenture Trustee, the Owner, Golden State Petro A and Golden State Petroleum,
pursuant to which the Notes were issued.
"INDENTURE TRUSTEE" means United States Trust Company of New York.
"INITIAL CHARTER" means with respect to each Vessel, the bareboat
charter, dated as of December 24, 1996, between the Initial Charterer and the
Owner.
"INITIAL CHARTERER" means Chevron Transport Corporation, a Liberian
corporation.
<PAGE>
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"ISSUE OF ONE DEBENTURE" means each Issue of One Debenture between the
Owner and the Indenture Trustee, as amended from time to time in accordance with
the terms thereof, pursuant to which the Owner grants to the Indenture Trustee a
security interest in all of its assets.
"MANAGEMENT AGREEMENT" means the agreement, dated the Closing Date,
between the Owner and the Manager pursuant to which the Manager agrees to
provide certain services to the Owner.
"MANAGER" means the Person performing the duties of the Manager under
the Management Agreement, initially Cambridge Fund Management L.L.C.
"MORTGAGE" means, with respect to the Vessel, the first preferred ship
mortgage on the Vessel granted by the Owner to the Indenture Trustee, as amended
from time to time in accordance with the terms of such Mortgage.
"OBLIGATIONS" means the payment, performance or obligations of any kind
or nature whatsoever of the Owner under and pursuant to the Indenture, any
Security Document and any instrument, agreement or document referred to therein.
"OWNER" means Golden State Petro (IOM I-B) PLC, a company organized
under the laws of the Isle of Man.
"SECURITY DOCUMENTS" means the Indenture, the Mortgage, this Assignment
of Charter, the Assignments of Charter Supplements, the Assignment of Earnings
and Insurances, the Assignment of Chevron Guarantee, the Assignment of
Management Agreement, the Assignment of Building Contract, the Issue of One
Debenture, the Stock Pledge and the Assignment of Building Contract Guarantee,
collectively.
"VESSEL" means Hull No. 1229.
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE I
DEFINITIONS
ARTICLE II
ASSIGNMENT
Section 2.01 SECURITY INTEREST........................................... 1
Section 2.02 ASSIGNMENT.................................................. 1
Section 2.03 OWNER TO REMAIN LIABLE...................................... 2
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE OWNER
Section 3.01 ORGANIZATION, POWER AND STATUS OF THE OWNER................. 2
Section 3.02 AUTHORIZATION; ENFORCEABILITY; EXECUTION AND DELIVERY....... 2
Section 3.03 NO CONFLICTS; LAWS AND CONSENTS; NO DEFAULT................. 3
Section 3.04 GOVERNMENTAL APPROVALS...................................... 3
Section 3.05 LITIGATION.................................................. 3
Section 3.06 NO PRIOR ASSIGNMENT......................................... 3
Section 3.07 THE INITIAL CHARTER......................................... 3
ARTICLE IV
COVENANTS OF THE OWNER.......................... 3
Section 4.01 CONSENT OF INITIAL CHARTERER................................ 3
Section 4.02 ENFORCEMENT OF INITIAL CHARTER.............................. 4
Section 4.03 AMENDMENT OF INITIAL CHARTER; ASSIGNMENT OF INITIAL CHARTER. 4
<PAGE>
Section 4.04 PERFORMANCE OF OBLIGATIONS.................................. 4
Section 4.05 NOTICES..................................................... 4
Section 4.06 FURTHER ASSURANCES.......................................... 4
Section 4.07 INDENTURE TRUSTEE AS ATTORNEY-IN-FACT OF OWNER.............. 4
ARTICLE V
MISCELLANEOUS PROVISIONS......................... 5
Section 5.01 AMENDMENT................................................... 5
Section 5.02 SEVERABILITY................................................ 5
Section 5.03 NOTICES..................................................... 5
Section 5.04 CONSENT TO JURISDICTION..................................... 5
Section 5.05 CAPTIONS.................................................... 6
Section 5.06 GOVERNING LAW............................................... 6
Section 5.07 NO PARTNERSHIP.............................................. 6
Section 5.08 COUNTERPARTS................................................ 6
Section 5.09 SURVIVAL.................................................... 6
Section 5.10 INTEGRATION................................................. 6
Section 5.11 REPRODUCTION OF DOCUMENTS................................... 6
Section 5.12 SUCCESSORS AND ASSIGNS; ASSIGNMENT.......................... 6
Section 5.13 GENERAL INTERPRETIVE PRINCIPLES............................. 7
Section 5.14 EFFECTIVE DATE OF TRANSACTION............................... 7
===============================================================================
UNITED STATES TRUST COMPANY OF NEW YORK,
AS INDENTURE TRUSTEE
and
Golden State Petro (IOM I-A) PLC
-----------------------------------
ASSIGNMENT OF BUILDING CONTRACT
Dated as of December 1, 1996
-----------------------------------
===============================================================================
<PAGE>
Assignment of Building Contract, dated as of December 1, 1996
(the "Assignment"), between Golden State Petro (IOM I-A) PLC (the "Owner") and
United States Trust Company of New York (the "Indenture Trustee"), not in its
individual capacity but solely as trustee under the Indenture (the "Indenture"),
dated as of the date hereof, among the Owner, the Indenture Trustee, Golden
State Petro (IOM I-B) PLC ("Golden State Petro B") and Golden State Petroleum
Transport Corporation ("Golden State Petroleum"), as agent for the Owner and
Golden State Petro B.
PRELIMINARY STATEMENT
On the Closing Date, Golden State Petroleum, as agent for the
Owner and Golden State Petro B, will issue Notes in connection with the
financing of the construction of the Vessel. The Vessel will be constructed
pursuant to the terms and conditions of the Building Contract. Pursuant to the
Agreement on Contract for Technical Matters, Chevron Shipping Company (the
"Technical Supervisor") will supervise the construction of the Vessel. Pursuant
to the Building Contract Guarantee, the Building Contract Guarantor is
guaranteeing the obligations of the Builder under the Building Contract. The
Allocated Principal Amount of the Mortgage Notes for the Vessel will be used,
INTER ALIA, to make the installments due under the Building Contract for the
Vessel. As collateral security for its obligations under the Indenture, the
Owner has and will assign, pledge, mortgage and grant the Indenture Trustee a
security interest in, INTER ALIA, the Building Contract, the Agreement on
Contract for Technical Matters and the Building Contract Guarantee.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained and of other valuable consideration, receipt of
which is hereby acknowledged, the Owner and the Indenture Trustee hereby agree
as follows:
ARTICLE I
DEFINITIONS
Unless otherwise defined in Schedule 1 to this Assignment,
capitalized terms used in this Assignment shall have the meanings assigned to
such terms in the Indenture.
ARTICLE II
ASSIGNMENT
Section 2.01 SECURITY INTEREST. This Assignment is made and
delivered as security for the Obligations.
Section 2.02 ASSIGNMENT. In order to provide for the payment
of and as security for the Obligations, the Owner has granted, bargained,
assigned, transferred, conveyed, mortgaged, pledged and granted a security
interest in and confirmed, and does hereby grant, bargain, assign, transfer,
convey, mortgage, pledge and grant a security interest in and confirm, to the
Indenture Trustee, its successors and assigns, for its and their respective
successors' and assigns' own proper use and benefit, all of the Owner's right,
title and interest in and to the Building Contract and the Agreement on Contract
for Technical Matters, including without limitation any moneys whatsoever
payable to the Owner thereunder, together with the income
<PAGE>
-2-
and proceeds thereof and all other rights and benefits whatsoever accruing to
the Owner thereunder; PROVIDED, HOWEVER, that the Owner shall keep the Indenture
Trustee fully and effectively indemnified from and against all actions, losses,
claims, proceedings, costs, demands and liabilities which may be suffered by the
Indenture Trustee under or by virtue of the Building Contract, the Agreement on
Contract for Technical Matters or this Assignment.
Section 2.03 OWNER TO REMAIN LIABLE. Anything in this
Assignment contained to the contrary notwithstanding, the Owner shall remain
liable under the Building Contract and the Agreement on Contract for Technical
Matters, and shall observe, perform and fulfill all of the conditions and
obligations to be observed, performed and fulfilled by it thereunder, and the
Indenture Trustee shall have no obligation or liability of any kind whatsoever
thereunder or by reason of or arising out of this Assignment, nor shall the
Indenture Trustee be under any liability whatsoever in the event of any failure
by the Owner to perform its obligations thereunder or be required or obligated
in any manner to observe, perform or fulfill any of the conditions or
obligations of the Owner thereunder or pursuant thereto, or to make any payment
or to make any inquiry as to the nature or sufficiency of any payment received
by it or the Owner thereunder, or to present or file any claim, or to take any
other action to collect or enforce the payment of any amounts which may have
been assigned to the Indenture Trustee or to which the Indenture Trustee may be
entitled hereunder at any time or times.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE OWNER
The Owner hereby represents and warrants to the Indenture
Trustee as follows:
Section 3.01 ORGANIZATION, POWER AND STATUS OF THE OWNER. The
Owner (a) is a corporation duly formed, validly existing and in good standing
under the laws of the Isle of Man and (b) is duly authorized, to the extent
necessary, to do business in each jurisdiction where the character of its
properties or the nature of its activities makes such qualification necessary.
The Owner has all requisite corporate power and authority to own and operate the
property it purports to own and to carry on its business as now being conducted
and as proposed to be conducted in respect of the Vessel.
Section 3.02 AUTHORIZATION; ENFORCEABILITY; EXECUTION AND
DELIVERY. (a) The Owner has all necessary corporate power and authority to
execute, deliver and perform under this Assignment.
(b) All action on the part of the Owner that is required for
the authorization, execution, delivery and performance of this Assignment has
been duly and effectively taken; and the execution, delivery and performance of
this Assignment does not require the approval or consent of any Person except
for such consents and approvals as have been obtained on or prior to the Closing
Date.
<PAGE>
-3-
(c) This Assignment has been duly executed and delivered by
the Owner. This Assignment constitutes the legal, valid and binding obligation
of the Owner, enforceable against it in accordance with the terms thereof.
Section 3.03 NO CONFLICTS; LAWS AND CONSENTS; NO DEFAULT. (a)
Neither the execution, delivery and performance of this Assignment nor the
consummation of any of the transactions contemplated hereby nor performance of
or compliance with the terms and conditions hereof (i) contravenes any
Requirement of Law applicable to the Owner or (ii) constitutes a default under
the Indenture or any Security Document.
(b) The Owner is in compliance with and not in default under
any and all Requirements of Law applicable to the Owner and all terms and
provisions of this Assignment.
Section 3.04 GOVERNMENTAL APPROVALS. All Governmental
Approvals which are required to be obtained in the name of the Owner in
connection with the execution, delivery and performance by the Owner of this
Assignment have been obtained and are in effect on the Closing Date.
Section 3.05 LITIGATION. There are no actions, suits or
proceedings at law or in equity or by or before any Governmental Authority now
pending against the Owner or, to the best of the Owner's knowledge, threatened
against the Owner or pending or threatened against any property or other assets
or rights of the Owner with respect to this Assignment.
Section 3.06 NO PRIOR ASSIGNMENT. The Owner has not assigned
or pledged, and hereby covenants that it will not assign or pledge, so long as
this Assignment shall remain in effect, the Building Contract or the Agreement
on Contract for Technical Matters or any part of the rights, titles and
interests hereby assigned, to anyone other than the Indenture Trustee, or its
successors or assigns.
Section 3.07 THE AGREEMENTS. Each of the Building Contract and
the Agreement on Contract for Technical Matters constitutes the legal, valid and
binding obligation of the Owner as "Owner" thereunder and is in full force and
effect in the form of Exhibit "A" attached hereto; there are no amendments,
additions, addenda or modifications thereto and neither of the parties thereto
is in default thereunder.
ARTICLE IV
COVENANTS OF THE OWNER
The Owner hereby covenants and agrees that so long as any of
the Obligations remains outstanding:
Section 4.01 CONSENT OF PARTIES TO ASSIGNMENT. On the Closing
Date, the Owner shall deliver to the Builder and the Technical Supervisor a copy
of this Assignment and shall procure the execution by each of the Builder and
the Technical Supervisor of the Consent and
<PAGE>
-4-
Acknowledgment set out in Exhibits A-1 and A-2 hereto and deliver said Consent
and Acknowledgment to the Indenture Trustee on the Closing Date.
Section 4.02 ENFORCEMENT OF AGREEMENT. (a) The Owner will do
or permit to be done each and every act or thing which the Indenture Trustee may
from time to time require to be done for the purpose of enforcing the Indenture
Trustee's rights under the Building Contract, the Agreement on Contract for
Technical Matters and this Assignment.
(b) The Owner shall cause all moneys hereby assigned or agreed
to be assigned or arising from or in connection with any of the rights, title,
interest and benefits of the Owner under the Building Contract and the Agreement
on Contract for Technical Matters shall be paid to the credit of Chase Manhattan
Bank NYC, ABA #021000021, A/C #920-1- 073195, credit U.S. Trust Co NY, further
credit to A/C #04692300, Golden State Petroleum Transport Revenue Account,
Attention: Chris Collins or to such other account as the Indenture Trustee may
from time to time direct.
(c) The Owner will not exercise any right or powers conferred
on it by the Building Contract and the Agreement on Contract for Technical
Matters in connection with any default or alleged default by the Builder or
Technical Supervisor, respectively, thereunder (including without limitation the
right of termination and substitution) unless and until requested so to do by
the Indenture Trustee whereupon the Owner agrees that it will do so provided
always that the Indenture Trustee shall not be responsible in any way whatsoever
in the event that the exercise of any right or power (including the right of
termination and substitution) be thereafter adjudged improper or to constitute a
repudiation of the Building Contract and the Agreement on Contract for Technical
Matters, as the case may be, by the Owner.
Section 4.03 AMENDMENT OF AGREEMENTS; ASSIGNMENT OF
AGREEMENTS. (a) The Owner will not, except with the previous written consent of
the Indenture Trustee, agree to any variation of the Building Contract or the
Agreement on Contract for Technical Matters or release any party thereto from
any of its obligations thereunder or waive any breach of any party thereto's
obligations thereunder or consent to any such act or omission of such party as
would otherwise constitute such breach.
(b) The Owner will not, except with the previous written
consent of the Indenture Trustee, assign the Building Contract or the Agreement
on Contract for Technical Matters to any other Person.
Section 4.04 PERFORMANCE OF OBLIGATIONS. The Owner will
perform its obligations under the Building Contract and the Agreement on
Contract for Technical Matters and will use its best efforts to cause the other
parties thereto to perform their respective obligations thereunder.
Section 4.05 NOTICES. The Owner will send a copy of all
notices received or given by it under the Building Contract or the Agreement on
Contract for Technical Matters forthwith to the Indenture Trustee.
<PAGE>
-5-
Section 4.06 FURTHER ASSURANCES. The Owner will at any time
and from time to time, upon the written request of the Indenture Trustee,
promptly and duly execute and deliver any and all such further instruments and
documents and take such action as the Indenture Trustee may deem desirable in
order to obtain the full benefits of this Assignment and of the rights and
powers herein granted.
Section 4.07 INDENTURE TRUSTEE AS ATTORNEY-IN-FACT OF OWNER.
The Owner hereby constitutes the Indenture Trustee, and its successors and
assigns, its true and lawful attorney-in-fact, irrevocably, with full power in
its own name, in the name of its agents or nominees or in the name of the Owner
or otherwise, to ask, require, demand, receive, enforce and give acquittance
for, any and all moneys and claims for moneys due and to become due and payable
under or arising out of the Building Contract and the Agreement on Contract for
Technical Matters, to endorse any checks or other instruments or orders in
connection therewith and to file any claims or take any action or institute any
proceedings which to the Indenture Trustee may seem to be necessary or advisable
under this Assignment. Any action or proceeding brought by the Indenture Trustee
pursuant to any of the provisions of this Assignment or otherwise and any claim
made by the Indenture Trustee hereunder may be compromised, withdrawn or
otherwise dealt with by the Indenture Trustee without any notice to or approval
of the Owner.
ARTICLE V
MISCELLANEOUS PROVISIONS
Section 5.01 AMENDMENT. This Assignment may be amended from
time to time by written agreement signed by the parties hereto.
Section 5.02 SEVERABILITY. If any provision of this Assignment
is held to be in conflict with any applicable statute or rule of law or is
otherwise held to be unenforceable for any reason whatsoever, such circumstances
shall not have the effect of rendering the provision in question inoperative or
unenforceable in any other case or circumstance, or of rendering any other
provision or provisions herein contained invalid, inoperative, or unenforceable
to any extent whatsoever. The invalidity of any one or more phrases, sentences,
clauses or Sections of this Assignment contained, shall not affect the remaining
portions of this Assignment, or any part thereof.
Section 5.03 NOTICES. All demands, notices and communications
hereunder shall be in writing, personally delivered or mailed by certified
mail-return receipt requested, and shall be deemed to have been duly given upon
receipt (a) in the case of the Indenture Trustee, at the following address: 114
West 47th Street, New York, New York 10036, Attention: Corporate Trust
Department, (b) in the case of the Owner, at the following address: 15-19 Athol
Street, Douglas, Isle of Man, or at other such address as shall be designated by
such party in a written notice to the other parties.
Section 5.04 CONSENT TO JURISDICTION. Any legal suit, action
or proceeding against the Owner arising out of or relating to this Assignment,
or any transaction contemplated
<PAGE>
-6-
hereby, may be instituted in any federal or state court in The City of New York,
State of New York, and the Owner hereby irrevocably submits to the jurisdiction
of any such court in any such suit, action or proceeding. The Owner hereby
waives, to the fullest extent permitted by applicable law, any defense which it
may now or hereafter have based upon lack of personal jurisdiction or venue or
FORUM NON CONVENIENS. The Owner hereby irrevocably appoints and designates CT
Corporation System, having an address at 1633 Broadway, New York, New York, its
true and lawful attorney-in-fact and duly authorized agent for the limited
purpose of accepting servicing of legal process and the Owner agrees that
service of process upon such party shall constitute personal service of such
process on such Person. The Owner shall maintain the designation and appointment
of such authorized agent until all amounts payable under this Assignment shall
have been paid in full. If such agent shall cease to so act, the Owner shall
immediately designate and appoint another such agent satisfactory to the
Indenture Trustee and shall promptly deliver to the Indenture Trustee evidence
in writing of such other agent's acceptance of such appointment.
Section 5.05 CAPTIONS. The captions or headings in this
Assignment are for convenience only and in no way define, limit or describe the
scope or intent of any provisions or sections of this Assignment.
Section 5.06 GOVERNING LAW. This Assignment shall be governed
by and interpreted in accordance with the laws of the State of New York, without
giving effect to the principles of conflicts of law.
Section 5.07 NO PARTNERSHIP. Nothing herein contained shall be
deemed or construed to create a partnership or joint venture among the parties
hereto, and the services of each party shall be rendered as an independent
contractor and not as agent for any other party.
Section 5.08 COUNTERPARTS. This Assignment may be executed in
any number of counterparts and by different parties hereto on separate
counterpart, each of which shall be deemed to be an original. Such counterparts
shall constitute one and the same agreement.
Section 5.09 SURVIVAL. The representations, covenants and
agreements contained in or made pursuant to this Assignment in respect of either
party hereto shall survive the execution and delivery of this Assignment and
shall continue in effect so long as such party's obligations hereunder remain
outstanding.
Section 5.10 INTEGRATION. This Assignment and the Schedule and
Exhibits hereto constitute the entire agreement and understanding between the
parties hereto with respect to the subject matter hereof and supersede all prior
agreements, understandings or representations pertaining to the subject matter
hereof, whether oral or written. There are no warranties, representations or
other agreements between the parties in connection with the subject matter
hereof except as specifically set forth or incorporated herein.
<PAGE>
-7-
Section 5.11 REPRODUCTION OF DOCUMENTS. This Assignment and
all documents relating thereto, including, without limitation, (a) consents,
waivers and modifications which may hereafter be executed, (b) documents
received by any party at the closing, and (c) financial statements, certificates
and other information previously or hereafter furnished, may be reproduced by
any photographic, photostatic, microfilm, micro-card, miniature photographic or
other similar process. The parties agree that any such reproduction shall be
admissible in evidence as the original itself in any judicial or administrative
proceeding (whether or not the original is in existence and whether or not such
reproduction was made in the regular course of business) and that any
enlargement, facsimile or further reproduction of such reproduction shall
likewise be admissible in evidence.
Section 5.12 SUCCESSORS AND ASSIGNS; ASSIGNMENT. This
Assignment shall be binding upon and inure to the benefit of the Owner and the
Indenture Trustee and their respective successors and assigns. The Owner shall
not have the right to assign its rights hereunder or any interest herein without
the prior written consent of the Indenture Trustee. The Indenture Trustee, at
its sole option, shall have the right to assign this Assignment, the Indenture,
the Security Documents and any of its rights and interest hereunder in
accordance with the terms and provisions of the Indenture and the Security
Documents.
Section 5.13 GENERAL INTERPRETIVE PRINCIPLES. For purposes of
this Assignment except as otherwise expressly provided or unless the context
otherwise requires:
(a) the defined terms in this Assignment shall include the
plural as well as the singular, and the use of any gender herein shall be deemed
to include any other gender;
(b) accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted accounting
principles as in effect on the date hereof;
(c) references herein to "Articles", "Sections",
"Subsections", "paragraphs", and other subdivisions without reference to a
document are to designated Articles, Sections, Subsections, paragraphs and other
subdivisions of this Assignment;
(d) a reference to a Subsection without further reference to a
Section is a reference to such Subsection as contained in the same Section in
which the reference appears, and this rule shall also apply to paragraphs and
other subdivisions;
(e) the words "herein", "hereof", "hereunder" and other words
of similar import refer to this Assignment as a whole and not to any particular
provision; and
(f) the term "include" or "including" shall mean without
limitation by reason of enumeration.
<PAGE>
-8-
Section 5.14 EFFECTIVE DATE OF TRANSACTION. Notwithstanding
the fact that this Assignment is dated as of December 24, 1996, the transactions
set forth herein shall not be effective until the Closing Date.
<PAGE>
IN WITNESS WHEREOF, the Owner and the Indenture Trustee have
caused this Assignment to be duly executed and delivered by their respective
officers thereunto duly authorized all as of the day and year first above
written.
United States Trust Company of New York,
as Indenture Trustee
By:/s/ Christine C. Collins
-----------------------------
Name: Christine C. Collins
Title: Assistant Vice President
Golden State Petro (IOM I-A) PLC, as Owner
By:/s/ Joseph Avantario
-----------------------------
Name: Joseph Avantario
Title: Treasurer
<PAGE>
Exhibit A-1
LETTER OF ACKNOWLEDGMENT
TO ASSIGNMENT OF BUILDING CONTRACT
[Date]
United States Trust Company of New York,
as Indenture Trustee
Dear Sirs:
The undersigned hereby consents to and acknowledges receipt of
a signed copy of the Assignment of Building Contract (the "Assignment"), dated
as of _________, between Golden State Petro (IOM I-A) PLC (the "Owner") and
United States Trust Company of New York, not in its individual capacity but
solely as trustee (the "Indenture Trustee") as adequate notice of such
assignment to the Indenture Trustee of the Building Contract (as defined in the
Assignment) and of all the right, title and interest of the Owner in, to and
under the Building Contract.
So long as the Assignment remains effective, we hereby agree
that we shall pay any and all sums which we are legally obligated to pay to the
Owner or otherwise as stated in and according to the Building Contract directly
to _______________________ Golden State Petroleum Revenue Account, Attention:
___________________, or otherwise to such other account as you may at any time
or from time to time, designate by notice to us in writing.
We confirm that the terms of the Building Contract remain in
full force and effect that the Owner is not presently to our knowledge in breach
of the terms of the Building Contract. We further confirm that the terms of the
Building Contract have not been varied or modified and that the terms of the
Building Contract will not after the date hereof be varied or modified without
the prior written consent of the Indenture Trustee.
We confirm that we have received no prior notice of any
assignment by the Owner of any interest in the Building Contract.
The undersigned will not permit any amendment, modification,
cancellation or other alteration in the Building Contract, nor will it consent
to or accept the substitution thereunder of any party for the Owner without your
prior written consent.
SAMSUNG CORPORATION
By: ______________________________________
Name:_____________________________________
Title:____________________________________
SAMSUNG HEAVY INDUSTRIES, LTD.
By: ______________________________________
Name:_____________________________________
Title:____________________________________
<PAGE>
Exhibit A-2
LETTER OF ACKNOWLEDGMENT
TO ASSIGNMENT OF AGREEMENT ON CONTRACT FOR TECHNICAL MATTERS
[Date]
United States Trust Company of New York,
as Indenture Trustee
Dear Sirs:
The undersigned hereby consents to and acknowledges receipt of
a signed copy of the Assignment of Building Contract (the "Assignment"), dated
as of _________, between Golden State Petro (IOM I-A) PLC (the "Owner") and
United States Trust Company of New York, not in its individual capacity but
solely as trustee (the "Indenture Trustee") as adequate notice of such
assignment to the Indenture Trustee of the Agreement on Contract for Technical
Matters (as defined in the Assignment) and of all the right, title and interest
of the Owner in, to and under the Agreement on Contract for Technical Matters.
So long as the Assignment remains effective, we hereby agree
that (a) we shall pay any and all sums which we are legally obligated to pay to
the Owner or otherwise as stated in and according to the Agreement on Contract
for Technical Matters directly to _______________________ Golden State Petroleum
Revenue Account, Attention: ___________________, or otherwise to such other
account as you may at any time or from time to time, designate by notice to us
in writing.
We confirm that the terms of the Agreement on Contract for
Technical Matters remain in full force and effect that the Owner is not
presently to our knowledge in breach of the terms of the Agreement on Contract
for Technical Matters. We further confirm that the terms of the Agreement on
Contract for Technical Matters have not been varied or modified and that the
terms of the Agreement on Contract for Technical Matters will not after the date
hereof be varied or modified without the prior written consent of the Indenture
Trustee.
We confirm that we have received no prior notice of any
assignment by the Owner of any interest in the Agreement on Contract for
Technical Matters.
The undersigned will not permit any amendment, modification,
cancellation or
<PAGE>
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other alteration in the Agreement on Contract for Technical Matters, nor will it
consent to or accept the substitution thereunder of any party for the Owner
without your prior written consent.
SAMSUNG CORPORATION
By: ______________________________________
Name:_____________________________________
Title:____________________________________
SAMSUNG HEAVY INDUSTRIES, LTD.
By: ______________________________________
Name:_____________________________________
Title:____________________________________
CHEVRON SHIPPING COMPANY
By: ______________________________________
Name:_____________________________________
Title:____________________________________
<PAGE>
SCHEDULE 1
ADDITIONAL DEFINED TERMS USED IN THE ASSIGNMENT
"AGREEMENT ON CONTRACT FOR TECHNICAL MATTERS" means, the Agreement
Regarding Technical Matters, dated as of the Closing Date, between the Owner,
Samsung Heavy Industries Co., LTD and the Technical Supervisor.
"ASSIGNMENT" or "ASSIGNMENT OF BUILDING CONTRACT" means, for each
Vessel, the Building Contract Assignment, dated as of the Closing Date, between
the related Owner and the Indenture Trustee, pursuant to which such Owner
collaterally assigns its rights, title and interests in the related Building
Contract and the Agreement on Contract for Technical Matters to the Indenture
Trustee.
"ASSIGNMENT OF BUILDING CONTRACT GUARANTEE" means, for each Building
Contract Guarantee, the Assignment of Building Contract Guarantee, dated as of
the Closing Date, between the related Owner and the Indenture Trustee, as the
same may be amended from time to time, pursuant to which such Owner collaterally
assigns its rights, title and interest in the related Building Contract
Guarantee therein to the Indenture Trustee.
"ASSIGNMENT OF CHARTER" means the assignment between the Owner and the
Indenture Trustee, as amended from time to time in accordance with the terms
thereof, pursuant to which the Owner collaterally assigns to the Indenture
Trustee all of the Owner's right, title and interest in, to and under the
Initial Charter to secure its obligations under the Indenture.
"ASSIGNMENT OF CHARTER SUPPLEMENT" means, for each Charter Supplement,
the Assignment of Charter Supplement, dated the date of the Supplemental
Indenture, between the Owner of the Vessel and the Indenture Trustee, as the
same may be amended from time to time pursuant to which the Owner collaterally
assigns all of the Owner's right, title and interest therein to the Indenture
Trustee.
"ASSIGNMENT OF CHEVRON GUARANTEE" means the assignment between the
Owner and the Indenture Trustee, as amended from time to time in accordance with
the terms thereof, pursuant to which the Owner collaterally assigns to the
Indenture Trustee all of the Owner's right, title and interest in, to and under
the Chevron Guarantee to secure its obligations under the Indenture.
"ASSIGNMENT OF EARNINGS AND INSURANCES" means the assignment between
the Owner and the Indenture Trustee, as amended from time to time in accordance
with the terms thereof, pursuant to which the Owner collaterally assigns to the
Indenture Trustee all of the Owner's right, title and interest in, to and under
the freights and hires (as well as any charters entered into after the Delivery
Date) with respect to the Vessel to secure its obligations under the Indenture.
"ASSIGNMENT OF MANAGEMENT AGREEMENT" means the assignment between the
Owner and the Indenture Trustee, as amended from time to time in accordance with
the terms thereof, pursuant to which the Owner collaterally assigns to the
Indenture Trustee all of the Owner's
<PAGE>
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right, title and interest in, to and under the Management Agreement to secure
its obligations under the Indenture.
"BUILDER" means, collectively, Samsung Corporation and Samsung Heavy
Industries, Ltd.
"BUILDING CONTRACT" means the Shipbuilding Contract, dated December 24,
1996, between the Builder and the Owner.
"BUILDING CONTRACT GUARANTEE" means the Irrevocable Installment Payment
Letter of Guarantee, dated December 24, 1996, given by the Building Contract
Guarantor to the Owner in connection with the Vessel.
"BUILDING CONTRACT GUARANTOR" means Korea Development Bank.
"CHEVRON" means Chevron Corporation, a Delaware corporation, and its
successors and assigns.
"CHEVRON GUARANTEE" means the Guarantee, dated the Closing Date, given
by Chevron to the Owner in connection with the Initial Charter.
"CLOSING DATE" means December 24, 1996.
"COLLATERAL" means the collateral assigned, pledged or granted to the
Indenture Trustee pursuant to (i) the Assignment of Charter, (ii) the Assignment
of Earnings and Insurances, (iii) the Assignment of Charter Supplement, (iv) the
Mortgage, (v) the Assignment of Chevron Guarantee, (vi) the Assignment of
Management Agreement, (vii) this Assignment of Building Contract, (viii) the
Assignment of Building Contract Guarantee, (ix) the Issue of One Debenture and
(x) the Stock Pledge, together with all income and proceeds thereof.
"DELIVERY DATE" means the date the Vessel is accepted by the Owner from
the Builder under the Building Contract.
"INDENTURE" means the Indenture, dated as of December 1, 1996 among the
Indenture Trustee, the Owner, Golden State Petro B and Golden State Petroleum,
pursuant to which the Notes were issued.
"INDENTURE TRUSTEE" means United States Trust Company of New York.
"INITIAL CHARTER" means with respect to each Vessel, the bareboat
charter, dated as of December 24, 1996, between the Initial Charterer and the
Owner.
"INITIAL CHARTERER" means Chevron Transport Corporation, a Liberian
corporation.
"ISSUE OF ONE DEBENTURE" means each Issue of One Debenture between the
Owner and the Indenture Trustee, as amended from time to time in accordance with
the terms thereof,
<PAGE>
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pursuant to which the Owner grants to the Indenture Trustee a security interest
in all of its assets.
"MANAGEMENT AGREEMENT" means the agreement, dated the Closing Date,
between the Owner and the Manager pursuant to which the Manager agrees to
provide certain services to the Owner.
"MANAGER" means the Person performing the duties of the Manager under
the Management Agreement, initially Cambridge Fund Management L.L.C.
"MORTGAGE" means, with respect to the Vessel, the first preferred ship
mortgage on the Vessel granted by the Owner to the Indenture Trustee, as amended
from time to time in accordance with the terms of such Mortgage.
"OBLIGATIONS" means the payment, performance or obligations of any kind
or nature whatsoever of the Owner under and pursuant to the Indenture, any
Security Document and any instrument, agreement or document referred to therein.
"OWNER" means Golden State Petro (IOM I-A) PLC, a company organized
under the laws of the Isle of Man.
"SECURITY DOCUMENTS" means the Indenture, the Mortgage, the Assignment
of Charter, the Assignments of Charter Supplements, the Assignment of Earnings
and Insurances, the Assignment of Chevron Guarantee, the Assignment of
Management Agreement, this Assignment of Building Contract, the Issue of One
Debenture, the Stock Pledge and the Assignment of Building Contract Guarantee,
collectively.
"TECHNICAL SUPERVISOR" means Chevron Shipping Company, San Francisco,
California (as Agent for the Initial Charterer).
"VESSEL" means Hull No. 1228.
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE I
DEFINITIONS............................... 1
ARTICLE II
ASSIGNMENT................................. 1
Section 2.01 Security Interest.......................................... 1
Section 2.02 Assignment................................................. 1
Section 2.03 Owner to Remain Liable..................................... 2
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE OWNER....................... 2
Section 3.01 Organization, Power and Status of the Owner................ 2
Section 3.02 Authorization; Enforceability; Execution and Delivery...... 2
Section 3.03 No Conflicts; Laws and Consents; No Default................ 3
Section 3.04 Governmental Approvals..................................... 3
Section 3.05 Litigation................................................. 3
Section 3.06 No Prior Assignment........................................ 3
Section 3.07 The Agreements............................................. 3
ARTICLE IV
COVENANTS OF THE OWNER........................... 3
Section 4.01 Consent of Parties to Assignment........................... 3
Section 4.02 Enforcement of Agreement................................... 3
Section 4.03 Amendment of Agreements; Assignment of Agreements.......... 4
Section 4.04 Performance of Obligations................................. 4
Section 4.05 Notices.................................................... 4
Section 4.06 Further Assurances......................................... 4
<PAGE>
PAGE
Section 4.07 Indenture Trustee as Attorney-in-Fact of Owner............. 5
ARTICLE V
MISCELLANEOUS PROVISIONS....................... 5
Section 5.01 Amendment.................................................. 5
Section 5.02 Severability............................................... 5
Section 5.03 Notices.................................................... 5
Section 5.04 Consent to Jurisdiction.................................... 5
Section 5.05 Captions................................................... 6
Section 5.06 Governing Law.............................................. 6
Section 5.07 No Partnership............................................. 6
Section 5.08 Counterparts............................................... 6
Section 5.09 Survival................................................... 6
Section 5.10 Integration................................................ 6
Section 5.11 Reproduction of Documents.................................. 6
Section 5.12 Successors and Assigns; Assignment......................... 7
Section 5.13 General Interpretive Principles............................ 7
Section 5.14 Effective Date of Transaction.............................. 7
- - - - - --------------------------------------------------------------------------------
- - - - - --------------------------------------------------------------------------------
UNITED STATES TRUST COMPANY OF NEW YORK,
AS INDENTURE TRUSTEE
and
Golden State Petro (IOM-B) PLC
-----------------------------------
ASSIGNMENT OF BUILDING CONTRACT
Dated as of December 1, 1996
-----------------------------------
- - - - - --------------------------------------------------------------------------------
- - - - - --------------------------------------------------------------------------------
<PAGE>
Assignment of Building Contract, dated as of December 1, 1996
(the "Assignment"), between Golden State Petro (IOM-B) PLC (the "Owner") and
United States Trust Company of New York (the "Indenture Trustee"), not in its
individual capacity but solely as trustee under the Indenture (the "Indenture"),
dated as of the date hereof, among the Owner, the Indenture Trustee, Golden
State Petro (IOM I-A) PLC ("Golden State Petro A") and Golden State Petroleum
Transport Corporation ("Golden State Petroleum"), as agent for the Owner and
Golden State Petro A.
PRELIMINARY STATEMENT
On the Closing Date, Golden State Petroleum, as agent for the
Owner and Golden State Petro A, will issue Notes in connection with the
financing of the construction of the Vessel. The Vessel will be constructed
pursuant to the terms and conditions of the Building Contract. Pursuant to the
Agreement on Contract for Technical Matters, Chevron Shipping Company (the
"Technical Supervisor") will supervise the construction of the Vessel. Pursuant
to the Building Contract Guarantee, the Building Contract Guarantor is
guaranteeing the obligations of the Builder under the Building Contract. The
Allocated Principal Amount of the Mortgage Notes for the Vessel will be used,
INTER ALIA, to make the installments due under the Building Contract for the
Vessel. As collateral security for its obligations under the Indenture, the
Owner has and will assign, pledge, mortgage and grant the Indenture Trustee a
security interest in, INTER ALIA, the Building Contract, the Agreement on
Contract for Technical Matters and the Building Contract Guarantee.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained and of other valuable consideration, receipt of
which is hereby acknowledged, the Owner and the Indenture Trustee hereby agree
as follows:
ARTICLE I
DEFINITIONS
Unless otherwise defined in Schedule 1 to this Assignment,
capitalized terms used in this Assignment shall have the meanings assigned to
such terms in the Indenture.
ARTICLE II
ASSIGNMENT
Section 2.01 SECURITY INTEREST. This Assignment is made and
delivered as security for the Obligations.
Section 2.02 ASSIGNMENT. In order to provide for the payment
of and as security for the Obligations, the Owner has granted, bargained,
assigned, transferred, conveyed, mortgaged, pledged and granted a security
interest in and confirmed, and does hereby grant, bargain, assign, transfer,
convey, mortgage, pledge and grant a security interest in and confirm, to the
Indenture Trustee, its successors and assigns, for its and their respective
successors' and assigns' own proper use and benefit, all of the Owner's right,
title and interest in and to the Building Contract and the Agreement on Contract
for Technical Matters, including without limitation any moneys whatsoever
payable to the Owner thereunder, together with the income
<PAGE>
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and proceeds thereof and all other rights and benefits whatsoever accruing to
the Owner thereunder; PROVIDED, HOWEVER, that the Owner shall keep the Indenture
Trustee fully and effectively indemnified from and against all actions, losses,
claims, proceedings, costs, demands and liabilities which may be suffered by the
Indenture Trustee under or by virtue of the Building Contract, the Agreement on
Contract for Technical Matters or this Assignment.
Section 2.03 OWNER TO REMAIN LIABLE. Anything in this
Assignment contained to the contrary notwithstanding, the Owner shall remain
liable under the Building Contract and the Agreement on Contract for Technical
Matters, and shall observe, perform and fulfill all of the conditions and
obligations to be observed, performed and fulfilled by it thereunder, and the
Indenture Trustee shall have no obligation or liability of any kind whatsoever
thereunder or by reason of or arising out of this Assignment, nor shall the
Indenture Trustee be under any liability whatsoever in the event of any failure
by the Owner to perform its obligations thereunder or be required or obligated
in any manner to observe, perform or fulfill any of the conditions or
obligations of the Owner thereunder or pursuant thereto, or to make any payment
or to make any inquiry as to the nature or sufficiency of any payment received
by it or the Owner thereunder, or to present or file any claim, or to take any
other action to collect or enforce the payment of any amounts which may have
been assigned to the Indenture Trustee or to which the Indenture Trustee may be
entitled hereunder at any time or times.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE OWNER
The Owner hereby represents and warrants to the Indenture
Trustee as follows:
Section 3.01 ORGANIZATION, POWER AND STATUS OF THE OWNER. The
Owner (a) is a corporation duly formed, validly existing and in good standing
under the laws of the Isle of Man and (b) is duly authorized, to the extent
necessary, to do business in each jurisdiction where the character of its
properties or the nature of its activities makes such qualification necessary.
The Owner has all requisite corporate power and authority to own and operate the
property it purports to own and to carry on its business as now being conducted
and as proposed to be conducted in respect of the Vessel.
Section 3.02 AUTHORIZATION; ENFORCEABILITY; EXECUTION AND
DELIVERY. (a) The Owner has all necessary corporate power and authority to
execute, deliver and perform under this Assignment.
(b) All action on the part of the Owner that is required for
the authorization, execution, delivery and performance of this Assignment has
been duly and effectively taken; and the execution, delivery and performance of
this Assignment does not require the approval or consent of any Person except
for such consents and approvals as have been obtained on or prior to the Closing
Date.
<PAGE>
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(c) This Assignment has been duly executed and delivered by
the Owner. This Assignment constitutes the legal, valid and binding obligation
of the Owner, enforceable against it in accordance with the terms thereof.
Section 3.03 NO CONFLICTS; LAWS AND CONSENTS; NO DEFAULT. (a)
Neither the execution, delivery and performance of this Assignment nor the
consummation of any of the transactions contemplated hereby nor performance of
or compliance with the terms and conditions hereof (i) contravenes any
Requirement of Law applicable to the Owner or (ii) constitutes a default under
the Indenture or any Security Document.
(b) The Owner is in compliance with and not in default under
any and all Requirements of Law applicable to the Owner and all terms and
provisions of this Assignment.
Section 3.04 GOVERNMENTAL APPROVALS. All Governmental
Approvals which are required to be obtained in the name of the Owner in
connection with the execution, delivery and performance by the Owner of this
Assignment have been obtained and are in effect on the Closing Date.
Section 3.05 LITIGATION. There are no actions, suits or
proceedings at law or in equity or by or before any Governmental Authority now
pending against the Owner or, to the best of the Owner's knowledge, threatened
against the Owner or pending or threatened against any property or other assets
or rights of the Owner with respect to this Assignment.
Section 3.06 NO PRIOR ASSIGNMENT. The Owner has not assigned
or pledged, and hereby covenants that it will not assign or pledge, so long as
this Assignment shall remain in effect, the Building Contract or the Agreement
on Contract for Technical Matters or any part of the rights, titles and
interests hereby assigned, to anyone other than the Indenture Trustee, or its
successors or assigns.
Section 3.07 THE AGREEMENTS. Each of the Building Contract and
the Agreement on Contract for Technical Matters constitutes the legal, valid and
binding obligation of the Owner as "Owner" thereunder and is in full force and
effect in the form of Exhibit "A" attached hereto; there are no amendments,
additions, addenda or modifications thereto and neither of the parties thereto
is in default thereunder.
ARTICLE IV
COVENANTS OF THE OWNER
The Owner hereby covenants and agrees that so long as any of
the Obligations remains outstanding:
Section 4.01 CONSENT OF PARTIES TO ASSIGNMENT. On the Closing
Date, the Owner shall deliver to the Builder and the Technical Supervisor a copy
of this Assignment and shall procure the execution by each of the Builder and
the Technical Supervisor of the Consent and
<PAGE>
-4-
Acknowledgment set out in Exhibits A-1 and A-2 hereto and deliver said Consent
and Acknowledgment to the Indenture Trustee on the Closing Date.
Section 4.02 ENFORCEMENT OF AGREEMENT. (a) The Owner will do
or permit to be done each and every act or thing which the Indenture Trustee may
from time to time require to be done for the purpose of enforcing the Indenture
Trustee's rights under the Building Contract, the Agreement on Contract for
Technical Matters and this Assignment.
(b) The Owner shall cause all moneys hereby assigned or agreed
to be assigned or arising from or in connection with any of the rights, title,
interest and benefits of the Owner under the Building Contract and the Agreement
on Contract for Technical Matters shall be paid to the credit of Chase Manhattan
Bank NYC, ABA #021000021, A/C #920-1- 073195, credit U.S. Trust Co NY, further
credit to A/C #04692300, Golden State Petroleum Transport Revenue Account,
Attention: Chris Collins or to such other account as the Indenture Trustee may
from time to time direct.
(c) The Owner will not exercise any right or powers conferred
on it by the Building Contract and the Agreement on Contract for Technical
Matters in connection with any default or alleged default by the Builder or
Technical Supervisor, respectively, thereunder (including without limitation the
right of termination and substitution) unless and until requested so to do by
the Indenture Trustee whereupon the Owner agrees that it will do so provided
always that the Indenture Trustee shall not be responsible in any way whatsoever
in the event that the exercise of any right or power (including the right of
termination and substitution) be thereafter adjudged improper or to constitute a
repudiation of the Building Contract and the Agreement on Contract for Technical
Matters, as the case may be, by the Owner.
Section 4.03 AMENDMENT OF AGREEMENTS; ASSIGNMENT OF
AGREEMENTS. (a) The Owner will not, except with the previous written consent of
the Indenture Trustee, agree to any variation of the Building Contract or the
Agreement on Contract for Technical Matters or release any party thereto from
any of its obligations thereunder or waive any breach of any party thereto's
obligations thereunder or consent to any such act or omission of such party as
would otherwise constitute such breach.
(b) The Owner will not, except with the previous written
consent of the Indenture Trustee, assign the Building Contract or the Agreement
on Contract for Technical Matters to any other Person.
Section 4.04 PERFORMANCE OF OBLIGATIONS. The Owner will
perform its obligations under the Building Contract and the Agreement on
Contract for Technical Matters and will use its best efforts to cause the other
parties thereto to perform their respective obligations thereunder.
Section 4.05 NOTICES. The Owner will send a copy of all
notices received or given by it under the Building Contract or the Agreement on
Contract for Technical Matters forthwith to the Indenture Trustee.
<PAGE>
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Section 4.06 FURTHER ASSURANCES. The Owner will at any time
and from time to time, upon the written request of the Indenture Trustee,
promptly and duly execute and deliver any and all such further instruments and
documents and take such action as the Indenture Trustee may deem desirable in
order to obtain the full benefits of this Assignment and of the rights and
powers herein granted.
Section 4.07 INDENTURE TRUSTEE AS ATTORNEY-IN-FACT OF OWNER.
The Owner hereby constitutes the Indenture Trustee, and its successors and
assigns, its true and lawful attorney-in-fact, irrevocably, with full power in
its own name, in the name of its agents or nominees or in the name of the Owner
or otherwise, to ask, require, demand, receive, enforce and give acquittance
for, any and all moneys and claims for moneys due and to become due and payable
under or arising out of the Building Contract and the Agreement on Contract for
Technical Matters, to endorse any checks or other instruments or orders in
connection therewith and to file any claims or take any action or institute any
proceedings which to the Indenture Trustee may seem to be necessary or advisable
under this Assignment. Any action or proceeding brought by the Indenture Trustee
pursuant to any of the provisions of this Assignment or otherwise and any claim
made by the Indenture Trustee hereunder may be compromised, withdrawn or
otherwise dealt with by the Indenture Trustee without any notice to or approval
of the Owner.
ARTICLE V
MISCELLANEOUS PROVISIONS
Section 5.01 AMENDMENT. This Assignment may be amended from
time to time by written agreement signed by the parties hereto.
Section 5.02 SEVERABILITY. If any provision of this Assignment
is held to be in conflict with any applicable statute or rule of law or is
otherwise held to be unenforceable for any reason whatsoever, such circumstances
shall not have the effect of rendering the provision in question inoperative or
unenforceable in any other case or circumstance, or of rendering any other
provision or provisions herein contained invalid, inoperative, or unenforceable
to any extent whatsoever. The invalidity of any one or more phrases, sentences,
clauses or Sections of this Assignment contained, shall not affect the remaining
portions of this Assignment, or any part thereof.
Section 5.03 NOTICES. All demands, notices and communications
hereunder shall be in writing, personally delivered or mailed by certified
mail-return receipt requested, and shall be deemed to have been duly given upon
receipt (a) in the case of the Indenture Trustee, at the following address: 114
West 47th Street, New York, New York 10036, Attention: Corporate Trust
Department, (b) in the case of the Owner, at the following address: 15-19 Athol
Street, Douglas, Isle of Man, or at other such address as shall be designated by
such party in a written notice to the other parties.
Section 5.04 CONSENT TO JURISDICTION. Any legal suit, action
or proceeding against the Owner arising out of or relating to this Assignment,
or any transaction contemplated
<PAGE>
-6-
hereby, may be instituted in any federal or state court in The City of New York,
State of New York, and the Owner hereby irrevocably submits to the jurisdiction
of any such court in any such suit, action or proceeding. The Owner hereby
waives, to the fullest extent permitted by applicable law, any defense which it
may now or hereafter have based upon lack of personal jurisdiction or venue or
FORUM NON CONVENIENS. The Owner hereby irrevocably appoints and designates CT
Corporation System, having an address at 1633 Broadway, New York, New York, its
true and lawful attorney-in-fact and duly authorized agent for the limited
purpose of accepting servicing of legal process and the Owner agrees that
service of process upon such party shall constitute personal service of such
process on such Person. The Owner shall maintain the designation and appointment
of such authorized agent until all amounts payable under this Assignment shall
have been paid in full. If such agent shall cease to so act, the Owner shall
immediately designate and appoint another such agent satisfactory to the
Indenture Trustee and shall promptly deliver to the Indenture Trustee evidence
in writing of such other agent's acceptance of such appointment.
Section 5.05 CAPTIONS. The captions or headings in this
Assignment are for convenience only and in no way define, limit or describe the
scope or intent of any provisions or sections of this Assignment.
Section 5.06 GOVERNING LAW. This Assignment shall be governed
by and interpreted in accordance with the laws of the State of New York, without
giving effect to the principles of conflicts of law.
Section 5.07 NO PARTNERSHIP. Nothing herein contained shall be
deemed or construed to create a partnership or joint venture among the parties
hereto, and the services of each party shall be rendered as an independent
contractor and not as agent for any other party.
Section 5.08 COUNTERPARTS. This Assignment may be executed in
any number of counterparts and by different parties hereto on separate
counterpart, each of which shall be deemed to be an original. Such counterparts
shall constitute one and the same agreement.
Section 5.09 SURVIVAL. The representations, covenants and
agreements contained in or made pursuant to this Assignment in respect of either
party hereto shall survive the execution and delivery of this Assignment and
shall continue in effect so long as such party's obligations hereunder remain
outstanding.
Section 5.10 INTEGRATION. This Assignment and the Schedule and
Exhibits hereto constitute the entire agreement and understanding between the
parties hereto with respect to the subject matter hereof and supersede all prior
agreements, understandings or representations pertaining to the subject matter
hereof, whether oral or written. There are no warranties, representations or
other agreements between the parties in connection with the subject matter
hereof except as specifically set forth or incorporated herein.
<PAGE>
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Section 5.11 REPRODUCTION OF DOCUMENTS. This Assignment and
all documents relating thereto, including, without limitation, (a) consents,
waivers and modifications which may hereafter be executed, (b) documents
received by any party at the closing, and (c) financial statements, certificates
and other information previously or hereafter furnished, may be reproduced by
any photographic, photostatic, microfilm, micro-card, miniature photographic or
other similar process. The parties agree that any such reproduction shall be
admissible in evidence as the original itself in any judicial or administrative
proceeding (whether or not the original is in existence and whether or not such
reproduction was made in the regular course of business) and that any
enlargement, facsimile or further reproduction of such reproduction shall
likewise be admissible in evidence.
Section 5.12 SUCCESSORS AND ASSIGNS; ASSIGNMENT. This
Assignment shall be binding upon and inure to the benefit of the Owner and the
Indenture Trustee and their respective successors and assigns. The Owner shall
not have the right to assign its rights hereunder or any interest herein without
the prior written consent of the Indenture Trustee. The Indenture Trustee, at
its sole option, shall have the right to assign this Assignment, the Indenture,
the Security Documents and any of its rights and interest hereunder in
accordance with the terms and provisions of the Indenture and the Security
Documents.
Section 5.13 GENERAL INTERPRETIVE PRINCIPLES. For purposes of
this Assignment except as otherwise expressly provided or unless the context
otherwise requires:
(a) the defined terms in this Assignment shall include the
plural as well as the singular, and the use of any gender herein shall be deemed
to include any other gender;
(b) accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted accounting
principles as in effect on the date hereof;
(c) references herein to "Articles", "Sections",
"Subsections", "paragraphs", and other subdivisions without reference to a
document are to designated Articles, Sections, Subsections, paragraphs and other
subdivisions of this Assignment;
(d) a reference to a Subsection without further reference to a
Section is a reference to such Subsection as contained in the same Section in
which the reference appears, and this rule shall also apply to paragraphs and
other subdivisions;
(e) the words "herein", "hereof", "hereunder" and other words
of similar import refer to this Assignment as a whole and not to any particular
provision; and
(f) the term "include" or "including" shall mean without
limitation by reason of enumeration.
<PAGE>
-8-
Section 5.14 EFFECTIVE DATE OF TRANSACTION. Notwithstanding
the fact that this Assignment is dated as of December 24, 1996, the transactions
set forth herein shall not be effective until the Closing Date.
<PAGE>
-9-
IN WITNESS WHEREOF, the Owner and the Indenture Trustee have
caused this Assignment to be duly executed and delivered by their respective
officers thereunto duly authorized all as of the day and year first above
written.
United States Trust Company of New York,
as Indenture Trustee
By:/s/ Christine C. Collins
-----------------------------
Name: Christine C. Collins
Its: Assistant Vice President
Golden State Petro (IOM I-B) PLC, as Owner
By:/s/ John McFadden
-----------------------------
Name: John McFadden
Its: President
<PAGE>
Exhibit A-1
LETTER OF ACKNOWLEDGMENT
TO ASSIGNMENT OF BUILDING CONTRACT
[Date]
United States Trust Company of New York,
as Indenture Trustee
Dear Sirs:
The undersigned hereby consents to and acknowledges receipt of
a signed copy of the Assignment of Building Contract (the "Assignment"), dated
as of _________, between Golden State Petro (IOM-B) PLC (the "Owner") and United
States Trust Company of New York, not in its individual capacity but solely as
trustee (the "Indenture Trustee") as adequate notice of such assignment to the
Indenture Trustee of the Building Contract (as defined in the Assignment) and of
all the right, title and interest of the Owner in, to and under the Building
Contract.
So long as the Assignment remains effective, we hereby agree
that we shall pay any and all sums which we are legally obligated to pay to the
Owner or otherwise as stated in and according to the Building Contract directly
to _______________________ Golden State Petroleum Revenue Account, Attention:
___________________, or otherwise to such other account as you may at any time
or from time to time, designate by notice to us in writing.
We confirm that the terms of the Building Contract remain in
full force and effect that the Owner is not presently to our knowledge in breach
of the terms of the Building Contract. We further confirm that the terms of the
Building Contract have not been varied or modified and that the terms of the
Building Contract will not after the date hereof be varied or modified without
the prior written consent of the Indenture Trustee.
We confirm that we have received no prior notice of any
assignment by the Owner of any interest in the Building Contract.
The undersigned will not permit any amendment, modification,
cancellation or other alteration in the Building Contract, nor will it consent
to or accept the substitution thereunder of any party for the Owner without your
prior written consent.
SAMSUNG CORPORATION
By:__________________________________
Name:________________________________
Title:_______________________________
SAMSUNG HEAVY INDUSTRIES, LTD.
By:__________________________________
Name:________________________________
Title:_______________________________
<PAGE>
Exhibit A-2
LETTER OF ACKNOWLEDGMENT
TO ASSIGNMENT OF AGREEMENT ON CONTRACT FOR TECHNICAL MATTERS
[Date]
United States Trust Company of New York,
as Indenture Trustee
Dear Sirs:
The undersigned hereby consents to and acknowledges receipt of
a signed copy of the Assignment of Building Contract (the "Assignment"), dated
as of _________, between Golden State Petro (IOM-B) PLC (the "Owner") and United
States Trust Company of New York, not in its individual capacity but solely as
trustee (the "Indenture Trustee") as adequate notice of such assignment to the
Indenture Trustee of the Agreement on Contract for Technical Matters (as defined
in the Assignment) and of all the right, title and interest of the Owner in, to
and under the Agreement on Contract for Technical Matters.
So long as the Assignment remains effective, we hereby agree
that (a) we shall pay any and all sums which we are legally obligated to pay to
the Owner or otherwise as stated in and according to the Agreement on Contract
for Technical Matters directly to _______________________ Golden State Petroleum
Revenue Account, Attention: ___________________, or otherwise to such other
account as you may at any time or from time to time, designate by notice to us
in writing.
We confirm that the terms of the Agreement on Contract for
Technical Matters remain in full force and effect that the Owner is not
presently to our knowledge in breach of the terms of the Agreement on Contract
for Technical Matters. We further confirm that the terms of the Agreement on
Contract for Technical Matters have not been varied or modified and that the
terms of the Agreement on Contract for Technical Matters will not after the date
hereof be varied or modified without the prior written consent of the Indenture
Trustee.
We confirm that we have received no prior notice of any
assignment by the Owner of any interest in the Agreement on Contract for
Technical Matters.
The undersigned will not permit any amendment, modification,
cancellation or
<PAGE>
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other alteration in the Agreement on Contract for Technical Matters, nor will it
consent to or accept the substitution thereunder of any party for the Owner
without your prior written consent.
SAMSUNG CORPORATION
By:__________________________________
Name:________________________________
Title:_______________________________
SAMSUNG HEAVY INDUSTRIES, LTD.
By:__________________________________
Name:________________________________
Title:_______________________________
CHEVRON SHIPPING COMPANY
By:__________________________________
Name:________________________________
Title:_______________________________
<PAGE>
SCHEDULE 1
ADDITIONAL DEFINED TERMS USED IN THE ASSIGNMENT
"AGREEMENT ON CONTRACT FOR TECHNICAL MATTERS" means, the Agreement
Regarding Technical Matters, dated as of the Closing Date, between the Owner,
Samsung Heavy Industries Co., LTD and the Technical Supervisor.
"ASSIGNMENT" or "ASSIGNMENT OF BUILDING CONTRACT" means, for each
Vessel, the Building Contract Assignment, dated as of the Closing Date, between
the related Owner and the Indenture Trustee, pursuant to which such Owner
collaterally assigns its rights, title and interests in the related Building
Contract and the Agreement on Contract for Technical Matters to the Indenture
Trustee.
"ASSIGNMENT OF BUILDING CONTRACT GUARANTEE" means, for each Building
Contract Guarantee, the Assignment of Building Contract Guarantee, dated as of
the Closing Date, between the related Owner and the Indenture Trustee, as the
same may be amended from time to time, pursuant to which such Owner collaterally
assigns its rights, title and interest in the related Building Contract
Guarantee therein to the Indenture Trustee.
"ASSIGNMENT OF CHARTER" means the assignment between the Owner and the
Indenture Trustee, as amended from time to time in accordance with the terms
thereof, pursuant to which the Owner collaterally assigns to the Indenture
Trustee all of the Owner's right, title and interest in, to and under the
Initial Charter to secure its obligations under the Indenture.
"ASSIGNMENT OF CHARTER SUPPLEMENT" means, for each Charter Supplement,
the Assignment of Charter Supplement, dated the date of the Supplemental
Indenture, between the Owner of the Vessel and the Indenture Trustee, as the
same may be amended from time to time pursuant to which the Owner collaterally
assigns all of the Owner's right, title and interest therein to the Indenture
Trustee.
"ASSIGNMENT OF CHEVRON GUARANTEE" means the assignment between the
Owner and the Indenture Trustee, as amended from time to time in accordance with
the terms thereof, pursuant to which the Owner collaterally assigns to the
Indenture Trustee all of the Owner's right, title and interest in, to and under
the Chevron Guarantee to secure its obligations under the Indenture.
"ASSIGNMENT OF EARNINGS AND INSURANCES" means the assignment between
the Owner and the Indenture Trustee, as amended from time to time in accordance
with the terms thereof, pursuant to which the Owner collaterally assigns to the
Indenture Trustee all of the Owner's right, title and interest in, to and under
the freights and hires (as well as any charters entered into after the Delivery
Date) with respect to the Vessel to secure its obligations under the Indenture.
"ASSIGNMENT OF MANAGEMENT AGREEMENT" means the assignment between the
Owner and the Indenture Trustee, as amended from time to time in accordance with
the terms thereof, pursuant to which the Owner collaterally assigns to the
Indenture Trustee all of the Owner's
<PAGE>
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right, title and interest in, to and under the Management Agreement to secure
its obligations under the Indenture.
"BUILDER" means, collectively, Samsung Corporation and Samsung Heavy
Industries, Ltd.
"BUILDING CONTRACT" means the Shipbuilding Contract, dated December 24,
1996, between the Builder and the Owner.
"BUILDING CONTRACT GUARANTEE" means the Irrevocable Installment Payment
Letter of Guarantee, dated December 24, 1996, given by the Building Contract
Guarantor to the Owner in connection with the Vessel.
"BUILDING CONTRACT GUARANTOR" means Korea Development Bank.
"CHEVRON" means Chevron Corporation, a Delaware corporation, and its
successors and assigns.
"CHEVRON GUARANTEE" means the Guarantee, dated the Closing Date, given
by Chevron to the Owner in connection with the Initial Charter.
"CLOSING DATE" means December 24, 1996.
"COLLATERAL" means the collateral assigned, pledged or granted to the
Indenture Trustee pursuant to (i) the Assignment of Charter, (ii) the Assignment
of Earnings and Insurances, (iii) the Assignment of Charter Supplement, (iv) the
Mortgage, (v) the Assignment of Chevron Guarantee, (vi) the Assignment of
Management Agreement, (vii) this Assignment of Building Contract, (viii) the
Assignment of Building Contract Guarantee, (ix) the Issue of One Debenture and
(x) the Stock Pledge, together with all income and proceeds thereof.
"DELIVERY DATE" means the date the Vessel is accepted by the Owner from
the Builder under the Building Contract.
"INDENTURE" means the Indenture, dated as of December 1, 1996 among the
Indenture Trustee, the Owner, Golden State Petro A and Golden State Petroleum,
pursuant to which the Notes were issued.
"INDENTURE TRUSTEE" means United States Trust Company of New York.
"INITIAL CHARTER" means with respect to each Vessel, the bareboat
charter, dated as of December 24, 1996, between the Initial Charterer and the
Owner.
"INITIAL CHARTERER" means Chevron Transport Corporation, a Liberian
corporation.
"ISSUE OF ONE DEBENTURE" means each Issue of One Debenture between the
Owner and the Indenture Trustee, as amended from time to time in accordance with
the terms thereof,
<PAGE>
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pursuant to which the Owner grants to the Indenture Trustee a security interest
in all of its assets.
"MANAGEMENT AGREEMENT" means the agreement, dated the Closing Date,
between the Owner and the Manager pursuant to which the Manager agrees to
provide certain services to the Owner.
"MANAGER" means the Person performing the duties of the Manager under
the Management Agreement, initially Cambridge Fund Management L.L.C.
"MORTGAGE" means, with respect to the Vessel, the first preferred ship
mortgage on the Vessel granted by the Owner to the Indenture Trustee, as amended
from time to time in accordance with the terms of such Mortgage.
"OBLIGATIONS" means the payment, performance or obligations of any kind
or nature whatsoever of the Owner under and pursuant to the Indenture, any
Security Document and any instrument, agreement or document referred to therein.
"OWNER" means Golden State Petro (IOM-B) PLC, a company organized under
the laws of the Isle of Man.
"SECURITY DOCUMENTS" means the Indenture, the Mortgage, the Assignment
of Charter, the Assignments of Charter Supplements, the Assignment of Earnings
and Insurances, the Assignment of Chevron Guarantee, the Assignment of
Management Agreement, this Assignment of Building Contract, the Issue of One
Debenture, the Stock Pledge and the Assignment of Building Contract Guarantee,
collectively.
"TECHNICAL SUPERVISOR" means Chevron Shipping Company, San Francisco,
California (as Agent for the Initial Charterer).
"VESSEL" means Hull No. 1228.
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE I
DEFINITIONS............................. 1
ARTICLE II
ASSIGNMENT.............................. 1
Section 2.01 Security Interest....................................... 1
Section 2.02 Assignment.............................................. 1
Section 2.03 Owner to Remain Liable.................................. 2
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE OWNER............. 2
Section 3.01 Organization, Power and Status of the Owner............. 2
Section 3.02 Authorization; Enforceability; Execution and Delivery... 2
Section 3.03 No Conflicts; Laws and Consents; No Default............. 3
Section 3.04 Governmental Approvals.................................. 3
Section 3.05 Litigation.............................................. 3
Section 3.06 No Prior Assignment..................................... 3
Section 3.07 The Agreements.......................................... 3
ARTICLE IV
COVENANTS OF THE OWNER........................ 3
Section 4.01 Consent of Parties to Assignment........................ 3
Section 4.02 Enforcement of Agreement................................ 3
Section 4.03 Amendment of Agreements; Assignment of Agreements....... 4
Section 4.04 Performance of Obligations.............................. 4
Section 4.05 Notices................................................. 4
Section 4.06 Further Assurances...................................... 4
<PAGE>
PAGE
Section 4.07 Indenture Trustee as Attorney-in-Fact of Owner.......... 5
ARTICLE V
MISCELLANEOUS PROVISIONS....................... 5
Section 5.01 Amendment............................................... 5
Section 5.02 Severability............................................ 5
Section 5.03 Notices................................................. 5
Section 5.04 Consent to Jurisdiction................................. 5
Section 5.05 Captions................................................ 6
Section 5.06 Governing Law........................................... 6
Section 5.07 No Partnership.......................................... 6
Section 5.08 Counterparts............................................ 6
Section 5.09 Survival................................................ 6
Section 5.10 Integration............................................. 6
Section 5.11 Reproduction of Documents............................... 6
Section 5.12 Successors and Assigns; Assignment...................... 7
Section 5.13 General Interpretive Principles......................... 7
Section 5.14 Effective Date of Transaction........................... 7
================================================================================
UNITED STATES TRUST COMPANY OF NEW YORK,
AS INDENTURE TRUSTEE
and
GOLDEN STATE PETRO (IOM I-A) PLC
-----------------------------------
ASSIGNMENT OF BUILDING CONTRACT GUARANTEE
Dated as of December 1, 1996
-----------------------------------
================================================================================
<PAGE>
Assignment of Building Contract Guarantee, dated as of
December 1, 1996 (the "Assignment"), between Golden State Petro (IOM I-A) PLC
(the "Owner") and United States Trust Company of New York (the "Indenture
Trustee"), not in its individual capacity but solely as trustee under the
Indenture (the "Indenture"), dated as of the date hereof, among the Owner, the
Indenture Trustee, Golden State Petro (IOM I-B) PLC ("Golden State Petro B") and
Golden State Petroleum Transport Corporation ("Golden State Petroleum"), as
agent for the Owner and Golden State Petro B.
PRELIMINARY STATEMENT
On the Closing Date, Golden State Petroleum, as agent for the
Owner and Golden State Petro B, will issue Notes in connection with the
financing of the construction of the Vessel. The Vessel will be constructed
pursuant to the terms and conditions of the Building Contract. Pursuant to the
Agreement on Contract for Technical Matters, the Technical Supervisor will
supervise the construction of the Vessel. Pursuant to the Building Contract
Guarantee, Korea Development Bank (the "Building Contract Guarantor") will
guarantee the obligations of the Builder under the Building Contract. The
Allocated Principal Amount of the Mortgage Notes for the Vessel will be used,
INTER ALIA, to make the installments due under the Building Contract for the
Vessel. As collateral security for its obligations under the Indenture, the
Owner has and will assign, pledge, mortgage and grant the Indenture Trustee a
security interest in, INTER ALIA, the Building Contract, the Agreement on
Contract for Technical Matters and the Building Contract Guarantee.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained and of other valuable consideration, receipt of
which is hereby acknowledged, the Owner and the Indenture Trustee hereby agree
as follows:
ARTICLE I
DEFINITIONS
Unless otherwise defined in Schedule 1 to this Assignment,
capitalized terms used in this Assignment shall have the meanings assigned to
such terms in the Indenture.
ARTICLE II
ASSIGNMENT
Section 2.01 SECURITY INTEREST. This Assignment is made and
delivered as security for the Obligations.
Section 2.02 ASSIGNMENT. In order to provide for the payment
of and as security for the Obligations, the Owner has granted, bargained,
assigned, transferred, conveyed, mortgaged, pledged and granted a security
interest in and confirmed, and does hereby grant, bargain, assign, transfer,
convey, mortgage, pledge and grant a security interest in and confirm, to the
Indenture Trustee, its successors and assigns, for its and their respective
successors' and assigns' own proper use and benefit, all of the Owner's right,
title and interest in and to the Building Contract Guarantee, including without
limitation any moneys whatsoever payable to the Owner thereunder, together with
the income and proceeds thereof and all other rights and
<PAGE>
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benefits whatsoever accruing to the Owner thereunder; PROVIDED, HOWEVER, that
the Owner shall keep the Indenture Trustee fully and effectively indemnified
from and against all actions, losses, claims, proceedings, costs, demands and
liabilities which may be suffered by the Indenture Trustee under or by virtue of
the Building Contract Guarantee or this Assignment.
Section 2.03 OWNER TO REMAIN LIABLE. Anything in this
Assignment contained to the contrary notwithstanding, the Owner shall remain
liable under the Building Contract Guarantee, and shall observe, perform and
fulfill all of the conditions and obligations to be observed, performed and
fulfilled by it thereunder, and the Indenture Trustee shall have no obligation
or liability of any kind whatsoever thereunder or by reason of or arising out of
this Assignment, nor shall the Indenture Trustee be under any liability
whatsoever in the event of any failure by the Owner to perform its obligations
thereunder or be required or obligated in any manner to observe, perform or
fulfill any of the conditions or obligations of the Owner thereunder or pursuant
thereto, or to make any payment or to make any inquiry as to the nature or
sufficiency of any payment received by it or the Owner thereunder, or to present
or file any claim, or to take any other action to collect or enforce the payment
of any amounts which may have been assigned to the Indenture Trustee or to which
the Indenture Trustee may be entitled hereunder at any time or times.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE OWNER
The Owner hereby represents and warrants to the Indenture
Trustee as follows:
Section 3.01 ORGANIZATION, POWER AND STATUS OF THE OWNER. The
Owner (a) is a corporation duly formed, validly existing and in good standing
under the laws of the Isle of Man and (b) is duly authorized, to the extent
necessary, to do business in each jurisdiction where the character of its
properties or the nature of its activities makes such qualification necessary.
The Owner has all requisite corporate power and authority to own and operate the
property it purports to own and to carry on its business as now being conducted
and as proposed to be conducted in respect of the Vessel.
Section 3.02 AUTHORIZATION; ENFORCEABILITY; EXECUTION AND
DELIVERY. (a) The Owner has all necessary corporate power and authority to
execute, deliver and perform under this Assignment.
(b) All action on the part of the Owner that is required for
the authorization, execution, delivery and performance of this Assignment has
been duly and effectively taken; and the execution, delivery and performance of
this Assignment does not require the approval or consent of any Person except
for such consents and approvals as have been obtained on or prior to the Closing
Date.
(c) This Assignment has been duly executed and delivered by
the Owner. This Assignment constitutes the legal, valid and binding obligation
of the Owner, enforceable against it in accordance with the terms thereof.
<PAGE>
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Section 3.03 NO CONFLICTS; LAWS AND CONSENTS; NO DEFAULT. (a)
Neither the execution, delivery and performance of this Assignment nor the
consummation of any of the transactions contemplated hereby nor performance of
or compliance with the terms and conditions hereof (i) contravenes any
Requirement of Law applicable to the Owner or (ii) constitutes a default under
the Indenture or any Security Document.
(b) The Owner is in compliance with and not in default under
any and all Requirements of Law applicable to the Owner and all terms and
provisions of this Assignment.
Section 3.04 GOVERNMENTAL APPROVALS. All Governmental
Approvals which are required to be obtained in the name of the Owner in
connection with the execution, delivery and performance by the Owner of this
Assignment have been obtained and are in effect on the Closing Date.
Section 3.05 LITIGATION. There are no actions, suits or
proceedings at law or in equity or by or before any Governmental Authority now
pending against the Owner or, to the best of the Owner's knowledge, threatened
against the Owner or pending or threatened against any property or other assets
or rights of the Owner with respect to this Assignment.
Section 3.06 NO PRIOR ASSIGNMENT. The Owner has not assigned
or pledged, and hereby covenants that it will not assign or pledge, so long as
this Assignment shall remain in effect, the Building Contract Guarantee or any
part of the rights, titles and interests hereby assigned, to anyone other than
the Indenture Trustee, or its successors or assigns.
Section 3.07 THE BUILDING CONTRACT GUARANTEE. The Building
Contract Guarantee constitutes the legal, valid and binding obligation of the
Owner as "Owner" thereunder and is in full force and effect in the form of
Exhibit "A" attached hereto; there are no amendments, additions, addenda or
modifications thereto and neither of the parties thereto is in default
thereunder.
ARTICLE IV
COVENANTS OF THE OWNER
The Owner hereby covenants and agrees that so long as any of
the Obligations remains outstanding:
Section 4.01 CONSENT OF PARTIES TO ASSIGNMENT. On the Closing
Date, the Owner shall deliver to the Building Contract Guarantor a copy of this
Assignment and shall procure the execution by the Building Contract Guarantor of
the Consent and Acknowledgment set out in Exhibit A hereto and deliver said
Consent and Acknowledgment to the Indenture Trustee on the Closing Date.
Section 4.02 ENFORCEMENT OF BUILDING CONTRACT GUARANTEE. (a)
The Owner will do or permit to be done each and every act or thing which the
Indenture Trustee may from time
<PAGE>
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to time require to be done for the purpose of enforcing the Indenture Trustee's
rights under the Building Contract Guarantee and this Assignment.
(b) The Owner shall cause all moneys hereby assigned or agreed
to be assigned or arising from or in connection with any of the rights, title,
interest and benefits of the Owner under the Building Contract Guarantee shall
be paid to the credit of Chase Manhattan Bank NYC, ABA #021000021, A/C
#920-1-073195, credit U.S. Trust Co NY, further credit to A/C #04692300, Golden
State Petroleum Transport Revenue Account, Attention: Chris Collins or to such
other account as the Indenture Trustee may from time to time direct.
(c) The Owner will not exercise any right or powers conferred
on it by the Building Contract Guarantee in connection with any default or
alleged default by the Building Contract Guarantor thereunder (including without
limitation the right of termination and substitution) unless and until requested
so to do by the Indenture Trustee whereupon the Owner agrees that it will do so
provided always that the Indenture Trustee shall not be responsible in any way
whatsoever in the event that the exercise of any right or power (including the
right of termination and substitution) be thereafter adjudged improper or to
constitute a repudiation of the Building Contract Guarantee by the Owner.
Section 4.03 AMENDMENT OF BUILDING CONTRACT GUARANTEE;
ASSIGNMENT OF BUILDING CONTRACT GUARANTEE. (a) The Owner will not, except with
the previous written consent of the Indenture Trustee, agree to any variation of
the Building Contract Guarantee or release the Building Contract Guarantor
thereto from any of its obligations thereunder or waive any breach of the
Building Contract Guarantor's obligations thereunder or consent to any such act
or omission of such party as would otherwise constitute such breach.
(b) The Owner will not, except with the previous written
consent of the Indenture Trustee, assign the Building Contract Guarantee to any
other Person.
Section 4.04 PERFORMANCE OF OBLIGATIONS. The Owner will
perform its obligations under the Building Contract Guarantee and will use its
best efforts to cause the Building Contract Guarantor to perform its obligations
thereunder.
Section 4.05 NOTICES. The Owner will send a copy of all
notices received or given by it under the Building Contract Guarantee forthwith
to the Indenture Trustee.
Section 4.06 FURTHER ASSURANCES. The Owner will at any time
and from time to time, upon the written request of the Indenture Trustee,
promptly and duly execute and deliver any and all such further instruments and
documents and take such action as the Indenture Trustee may deem desirable in
order to obtain the full benefits of this Assignment and of the rights and
powers herein granted.
Section 4.07 INDENTURE TRUSTEE AS ATTORNEY-IN-FACT OF OWNER.
The Owner hereby constitutes the Indenture Trustee, and its successors and
assigns, its true and lawful attorney-in-fact, irrevocably, with full power in
its own name, in the name of its agents or
<PAGE>
-5-
nominees or in the name of the Owner or otherwise, to ask, require, demand,
receive, enforce and give acquittance for, any and all moneys and claims for
moneys due and to become due and payable under or arising out of the Building
Contract Guarantee, to endorse any checks or other instruments or orders in
connection therewith and to file any claims or take any action or institute any
proceedings which to the Indenture Trustee may seem to be necessary or advisable
under this Assignment. Any action or proceeding brought by the Indenture Trustee
pursuant to any of the provisions of this Assignment or otherwise and any claim
made by the Indenture Trustee hereunder may be compromised, withdrawn or
otherwise dealt with by the Indenture Trustee without any notice to or approval
of the Owner.
ARTICLE V
MISCELLANEOUS PROVISIONS
Section 5.01 AMENDMENT. This Assignment may be amended from
time to time by written agreement signed by the parties hereto.
Section 5.02 SEVERABILITY. If any provision of this Assignment
is held to be in conflict with any applicable statute or rule of law or is
otherwise held to be unenforceable for any reason whatsoever, such circumstances
shall not have the effect of rendering the provision in question inoperative or
unenforceable in any other case or circumstance, or of rendering any other
provision or provisions herein contained invalid, inoperative, or unenforceable
to any extent whatsoever. The invalidity of any one or more phrases, sentences,
clauses or Sections of this Assignment contained, shall not affect the remaining
portions of this Assignment, or any part thereof.
Section 5.03 NOTICES. All demands, notices and communications
hereunder shall be in writing, personally delivered or mailed by certified
mail-return receipt requested, and shall be deemed to have been duly given upon
receipt (a) in the case of the Indenture Trustee, at the following address: 114
West 47th Street, New York, New York 10036, Attention: Corporate Trust
Department, (b) in the case of the Owner, at the following address: 15-19 Athol
Street, Douglas, Isle of Man, or at other such address as shall be designated by
such party in a written notice to the other parties.
Section 5.04 CONSENT TO JURISDICTION. Any legal suit, action
or proceeding against the Owner arising out of or relating to this Assignment,
or any transaction contemplated hereby, may be instituted in any federal or
state court in The City of New York, State of New York, and the Owner hereby
irrevocably submits to the jurisdiction of any such court in any such suit,
action or proceeding. The Owner hereby waives, to the fullest extent permitted
by applicable law, any defense which it may now or hereafter have based upon
lack of personal jurisdiction or venue or FORUM NON CONVENIENS. The Owner hereby
irrevocably appoints and designates CT Corporation System, having an address at
1633 Broadway, New York, New York, its true and lawful attorney-in-fact and duly
authorized agent for the limited purpose of accepting servicing of legal process
and the Owner agrees that service of process upon such party shall constitute
personal service of such process on such Person. The Owner shall maintain the
designation and appointment of such authorized agent until all amounts payable
<PAGE>
-6-
under this Assignment shall have been paid in full. If such agent shall cease to
so act, the Owner shall immediately designate and appoint another such agent
satisfactory to the Indenture Trustee and shall promptly deliver to the
Indenture Trustee evidence in writing of such other agent's acceptance of such
appointment.
Section 5.05 CAPTIONS. The captions or headings in this
Assignment are for convenience only and in no way define, limit or describe the
scope or intent of any provisions or sections of this Assignment.
Section 5.06 GOVERNING LAW. This Assignment shall be governed
by and interpreted in accordance with the laws of the State of New York, without
giving effect to the principles of conflicts of law.
Section 5.07 NO PARTNERSHIP. Nothing herein contained shall be
deemed or construed to create a partnership or joint venture among the parties
hereto, and the services of each party shall be rendered as an independent
contractor and not as agent for any other party.
Section 5.08 COUNTERPARTS. This Assignment may be executed in
any number of counterparts and by different parties hereto on separate
counterpart, each of which shall be deemed to be an original. Such counterparts
shall constitute one and the same agreement.
Section 5.09 SURVIVAL. The representations, covenants and
agreements contained in or made pursuant to this Assignment in respect of either
party hereto shall survive the execution and delivery of this Assignment and
shall continue in effect so long as such party's obligations hereunder remain
outstanding.
Section 5.10 INTEGRATION. This Assignment and the Schedule and
Exhibits hereto constitute the entire agreement and understanding between the
parties hereto with respect to the subject matter hereof and supersede all prior
agreements, understandings or representations pertaining to the subject matter
hereof, whether oral or written. There are no warranties, representations or
other agreements between the parties in connection with the subject matter
hereof except as specifically set forth or incorporated herein.
Section 5.11 REPRODUCTION OF DOCUMENTS. This Assignment and
all documents relating thereto, including, without limitation, (a) consents,
waivers and modifications which may hereafter be executed, (b) documents
received by any party at the closing, and (c) financial statements, certificates
and other information previously or hereafter furnished, may be reproduced by
any photographic, photostatic, microfilm, micro-card, miniature photographic or
other similar process. The parties agree that any such reproduction shall be
admissible in evidence as the original itself in any judicial or administrative
proceeding (whether or not the original is in existence and whether or not such
reproduction was made in the regular course of business) and that any
enlargement, facsimile or further reproduction of such reproduction shall
likewise be admissible in evidence.
<PAGE>
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Section 5.12 SUCCESSORS AND ASSIGNS; ASSIGNMENT. This
Assignment shall be binding upon and inure to the benefit of the Owner and the
Indenture Trustee and their respective successors and assigns. The Owner shall
not have the right to assign its rights hereunder or any interest herein without
the prior written consent of the Indenture Trustee. The Indenture Trustee, at
its sole option, shall have the right to assign this Assignment, the Indenture,
the Security Documents and any of its rights and interest hereunder in
accordance with the terms and provisions of the Indenture and the Security
Documents.
Section 5.13 GENERAL INTERPRETIVE PRINCIPLES. For purposes of
this Assignment except as otherwise expressly provided or unless the context
otherwise requires:
(a) the defined terms in this Assignment shall include the
plural as well as the singular, and the use of any gender herein shall be deemed
to include any other gender;
(b) accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted accounting
principles as in effect on the date hereof;
(c) references herein to "Articles", "Sections",
"Subsections", "paragraphs", and other subdivisions without reference to a
document are to designated Articles, Sections, Subsections, paragraphs and other
subdivisions of this Assignment;
(d) a reference to a Subsection without further reference to a
Section is a reference to such Subsection as contained in the same Section in
which the reference appears, and this rule shall also apply to paragraphs and
other subdivisions;
(e) the words "herein", "hereof", "hereunder" and other words
of similar import refer to this Assignment as a whole and not to any particular
provision; and
(f) the term "include" or "including" shall mean without
limitation by reason of enumeration.
Section 5.14 EFFECTIVE DATE OF TRANSACTION. Notwithstanding
the fact that this Assignment is dated as of December 24, 1996, the transactions
set forth herein shall not be effective until the Closing Date.
<PAGE>
IN WITNESS WHEREOF, the Owner and the Indenture Trustee have
caused this Assignment to be duly executed and delivered by their respective
officers thereunto duly authorized all as of the day and year first above
written.
United States Trust Company of New York, as
Indenture Trustee
By:/s/ Christine C. Collins
-----------------------------
Name: Christine C. Collins
Title: Assistant Vice President
Golden State Petro (IOM I-A) PLC, as Owner
By:/s/ Joseph Avantario
-----------------------------
Name: Joseph Avantario
Title: Treasurer
<PAGE>
Exhibit A
LETTER OF ACKNOWLEDGMENT
TO ASSIGNMENT OF BUILDING CONTRACT GUARANTEE
[Date]
United States Trust Company of New York,
as Indenture Trustee
Dear Sirs:
The undersigned hereby consents to and acknowledges receipt of
a signed copy of the Assignment of Building Contract Guarantee (the
"Assignment"), dated as of December 1, 1996, between Golden State Petro (IOM
I-A) PLC (the "Owner") and United States Trust Company of New York, not in its
individual capacity but solely as trustee (the "Indenture Trustee") as adequate
notice of such assignment to the Indenture Trustee of the Building Contract
Guarantee (as defined in the Assignment) and of all the right, title and
interest of the Owner in, to and under the Building Contract Guarantee.
So long as the Assignment remains effective, we hereby agree
that we shall pay any and all sums which we are legally obligated to pay to the
Owner or otherwise as stated in and according to the Building Contract Guarantee
directly to _______________________ Golden State Petroleum Revenue Account,
Attention: ___________________, or otherwise to such other account as you may at
any time or from time to time, designate by notice to us in writing.
We confirm that the terms of the Building Contract Guarantee
remain in full force and effect that the Owner is not presently to our knowledge
in breach of the terms of the Building Contract Guarantee. We further confirm
that the terms of the Building Contract Guarantee have not been varied or
modified and that the terms of the Building Contract Guarantee will not after
the date hereof be varied or modified without the prior written consent of the
Indenture Trustee.
We confirm that we have received no prior notice of any
assignment by the Owner of any interest in the Building Contract Guarantee.
The undersigned will not permit any amendment, modification,
cancellation or other alteration in the Building Contract Guarantee, nor will it
consent to or accept the substitution thereunder of any party for the Owner
without your prior written consent.
Korea Development Bank
By:_______________________________
Name:_____________________________
Title:____________________________
<PAGE>
SCHEDULE 1
ADDITIONAL DEFINED TERMS USED IN THE ASSIGNMENT
"AGREEMENT ON CONTRACT FOR TECHNICAL MATTERS" means, the Agreement
Regarding Technical Matters, dated as of the Closing Date, between the Owner,
Samsung Heavy Industries Co., LTD and the Technical Supervisor.
"ASSIGNMENT" or "ASSIGNMENT OF BUILDING CONTRACT GUARANTEE" means, for
each Building Contract Guarantee, the Assignment of Building Contract Guarantee,
dated as of the Closing Date, between the related Owner and the Indenture
Trustee, as the same may be amended from time to time, pursuant to which such
Owner collaterally assigns its rights, title and interest in the related
Building Contract Guarantee therein to the Indenture Trustee.
"ASSIGNMENT OF BUILDING CONTRACT" means, for each Vessel, the Building
Contract Assignment, dated as of the Closing Date, between the related Owner and
the Indenture Trustee, pursuant to which such Owner collaterally assigns its
rights, title and interests in the related Building Contract and the Agreement
on Contract for Technical Matters to the Indenture Trustee.
"ASSIGNMENT OF CHARTER" means the assignment between the Owner and the
Indenture Trustee, as amended from time to time in accordance with the terms
thereof, pursuant to which the Owner collaterally assigns to the Indenture
Trustee all of the Owner's right, title and interest in, to and under the
Initial Charter to secure its obligations under the Indenture.
"ASSIGNMENT OF CHARTER SUPPLEMENT" means, for each Charter Supplement,
the Assignment of Charter Supplement, dated the date of the Supplemental
Indenture, between the Owner of the Vessel and the Indenture Trustee, as the
same may be amended from time to time pursuant to which the Owner collaterally
assigns all of the Owner's right, title and interest therein to the Indenture
Trustee.
"ASSIGNMENT OF CHEVRON GUARANTEE" means the assignment between the
Owner and the Indenture Trustee, as amended from time to time in accordance with
the terms thereof, pursuant to which the Owner collaterally assigns to the
Indenture Trustee all of the Owner's right, title and interest in, to and under
the Chevron Guarantee to secure its obligations under the Indenture.
"ASSIGNMENT OF EARNINGS AND INSURANCES" means the assignment between
the Owner and the Indenture Trustee, as amended from time to time in accordance
with the terms thereof, pursuant to which the Owner collaterally assigns to the
Indenture Trustee all of the Owner's right, title and interest in, to and under
the freights and hires (as well as any charters entered into after the Delivery
Date) with respect to the Vessel to secure its obligations under the Indenture.
"ASSIGNMENT OF MANAGEMENT AGREEMENT" means the assignment between the
Owner and the Indenture Trustee, as amended from time to time in accordance with
the terms thereof, pursuant to which the Owner collaterally assigns to the
Indenture Trustee all of the Owner's
<PAGE>
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right, title and interest in, to and under the Management Agreement to secure
its obligations under the Indenture.
"BUILDER" means, collectively, Samsung Corporation and Samsung Heavy
Industries, Ltd.
"BUILDING CONTRACT" means the Shipbuilding Contract, dated December 24,
1996, between the Builder and the Owner.
"BUILDING CONTRACT GUARANTEE" means the Irrevocable Installment Payment
Letter of Guarantee, dated December 24, 1996, given by the Building Contract
Guarantor to the Owner in connection with the Vessel.
"BUILDING CONTRACT GUARANTOR" means Korea Development Bank.
"CHEVRON" means Chevron Corporation, a Delaware corporation, and its
successors and assigns.
"CHEVRON GUARANTEE" means the Guarantee, dated the Closing Date, given
by Chevron to the Owner in connection with the Initial Charter.
"CLOSING DATE" means December 24, 1996.
"COLLATERAL" means the collateral assigned, pledged or granted to the
Indenture Trustee pursuant to (i) the Assignment of Charter, (ii) the Assignment
of Earnings and Insurances, (iii) the Assignment of Charter Supplement, (iv) the
Mortgage, (v) the Assignment of Chevron Guarantee, (vi) the Assignment of
Management Agreement, (vii) the Assignment of Building Contract, (viii) this
Assignment of Building Contract Guarantee, (ix) the Issue of One Debenture and
(x) the Stock Pledge, together with all income and proceeds thereof.
"DELIVERY DATE" means the date the Vessel is accepted by the Owner from
the Builder under the Building Contract.
"INDENTURE" means the Indenture, dated as of December 1, 1996, among
the Indenture Trustee, the Owner, Golden State Petro B and Golden State
Petroleum, pursuant to which the Notes were issued.
"INDENTURE TRUSTEE" means United States Trust Company of New York.
"INITIAL CHARTER" means with respect to each Vessel, the bareboat
charter, dated as of December 24, 1996, between the Initial Charterer and the
Owner.
"INITIAL CHARTERER" means Chevron Transport Corporation, a Liberian
corporation.
"ISSUE OF ONE DEBENTURE" means each Issue of One Debenture between the
Owner and the Indenture Trustee, as amended from time to time in accordance with
the terms thereof,
<PAGE>
-3-
pursuant to which the Owner grants to the Indenture Trustee a security interest
in all of its assets.
"MANAGEMENT AGREEMENT" means the agreement, dated the Closing Date,
between the Owner and the Manager pursuant to which the Manager agrees to
provide certain services to the Owner.
"MANAGER" means the Person performing the duties of the Manager under
the Management Agreement, initially Cambridge Fund Management L.L.C.
"MORTGAGE" means, with respect to the Vessel, the first preferred ship
mortgage on the Vessel granted by the Owner to the Indenture Trustee, as amended
from time to time in accordance with the terms of such Mortgage.
"OBLIGATIONS" means the payment, performance or obligations of any kind
or nature whatsoever of the Owner under and pursuant to the Indenture, any
Security Document and any instrument, agreement or document referred to therein.
"OWNER" means Golden State Petro (IOM I-A) PLC, a company organized
under the laws of the Isle of Man.
"SECURITY DOCUMENTS" means the Indenture, the Mortgage, the Assignment
of Charter, the Assignments of Charter Supplements, the Assignment of Earnings
and Insurances, the Assignment of Chevron Guarantee, the Assignment of
Management Agreement, the Assignment of Building Contract, the Issue of One
Debenture, the Stock Pledge and this Assignment of Building Contract Guarantee,
collectively.
"TECHNICAL SUPERVISOR" means Chevron Shipping Company, San Francisco,
California (as Agent for the Initial Charterer).
"VESSEL" means Hull No. 1228.
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS............................... 1
ARTICLE II
ASSIGNMENT................................ 1
Section 2.01 Security Interest............................................. 1
Section 2.02 Assignment.................................................... 1
Section 2.03 Owner to Remain Liable........................................ 2
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE OWNER................ 2
Section 3.01 Organization, Power and Status of the Owner................... 2
Section 3.02 Authorization; Enforceability; Execution and Delivery......... 2
Section 3.03 No Conflicts; Laws and Consents; No Default................... 3
Section 3.04 Governmental Approvals........................................ 3
Section 3.05 Litigation.................................................... 3
Section 3.06 No Prior Assignment........................................... 3
Section 3.07 The Building Contract Guarantee............................... 3
ARTICLE IV
COVENANTS OF THE OWNER.......................... 3
Section 4.01 Consent of Parties to Assignment.............................. 3
Section 4.02 Enforcement of Building Contract Guarantee.................... 3
Section 4.03 Amendment of Building Contract Guarantee; Assignment of
Building Contract Guarantee................................... 4
Section 4.04 Performance of Obligations.................................... 4
Section 4.05 Notices....................................................... 4
<PAGE>
Page
----
Section 4.06 Further Assurances............................................ 4
Section 4.07 Indenture Trustee as Attorney-in-Fact of Owner................ 4
ARTICLE V
MISCELLANEOUS PROVISIONS........................ 5
Section 5.01 Amendment..................................................... 5
Section 5.02 Severability.................................................. 5
Section 5.03 Notices....................................................... 5
Section 5.04 Consent to Jurisdiction....................................... 5
Section 5.05 Captions...................................................... 6
Section 5.06 Governing Law................................................. 6
Section 5.07 No Partnership................................................ 6
Section 5.08 Counterparts.................................................. 6
Section 5.09 Survival...................................................... 6
Section 5.10 Integration................................................... 6
Section 5.11 Reproduction of Documents..................................... 6
Section 5.12 Successors and Assigns; Assignment............................ 6
Section 5.13 General Interpretive Principles............................... 7
Section 5.14 Effective Date of Transaction................................. 7
================================================================================
UNITED STATES TRUST COMPANY OF NEW YORK,
AS INDENTURE TRUSTEE
and
GOLDEN STATE PETRO (IOM I-B) PLC
-----------------------------------
ASSIGNMENT OF BUILDING CONTRACT GUARANTEE
Dated as of December 1, 1996
-----------------------------------
================================================================================
<PAGE>
Assignment of Building Contract Guarantee, dated as of
December 1, 1996 (the "Assignment"), between Golden State Petro (IOM I-B) PLC
(the "Owner") and United States Trust Company of New York (the "Indenture
Trustee"), not in its individual capacity but solely as trustee under the
Indenture (the "Indenture"), dated as of the date hereof, among the Owner, the
Indenture Trustee, Golden State Petro (IOM I-A) PLC ("Golden State Petro A") and
Golden State Petroleum Transport Corporation ("Golden State Petroleum"), as
agent for the Owner and Golden State Petro A.
PRELIMINARY STATEMENT
On the Closing Date, Golden State Petroleum, as agent for the
Owner and Golden State Petro A, will issue Notes in connection with the
financing of the construction of the Vessel. The Vessel will be constructed
pursuant to the terms and conditions of the Building Contract. Pursuant to the
Agreement on Contract for Technical Matters, the Technical Supervisor will
supervise the construction of the Vessel. Pursuant to the Building Contract
Guarantee, Korea Development Bank (the "Building Contract Guarantor") will
guarantee the obligations of the Builder under the Building Contract. The
Allocated Principal Amount of the Mortgage Notes for the Vessel will be used,
INTER ALIA, to make the installments due under the Building Contract for the
Vessel. As collateral security for its obligations under the Indenture, the
Owner has and will assign, pledge, mortgage and grant the Indenture Trustee a
security interest in, INTER ALIA, the Building Contract, the Agreement on
Contract for Technical Matters and the Building Contract Guarantee.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained and of other valuable consideration, receipt of
which is hereby acknowledged, the Owner and the Indenture Trustee hereby agree
as follows:
ARTICLE I
DEFINITIONS
Unless otherwise defined in Schedule 1 to this Assignment,
capitalized terms used in this Assignment shall have the meanings assigned to
such terms in the Indenture.
ARTICLE II
ASSIGNMENT
Section 2.01 SECURITY INTEREST. This Assignment is made and
delivered as security for the Obligations.
Section 2.02 ASSIGNMENT. In order to provide for the payment
of and as security for the Obligations, the Owner has granted, bargained,
assigned, transferred, conveyed, mortgaged, pledged and granted a security
interest in and confirmed, and does hereby grant, bargain, assign, transfer,
convey, mortgage, pledge and grant a security interest in and confirm, to the
Indenture Trustee, its successors and assigns, for its and their respective
successors' and assigns' own proper use and benefit, all of the Owner's right,
title and interest in and to the Building Contract Guarantee, including without
limitation any moneys whatsoever payable to the Owner thereunder, together with
the income and proceeds thereof and all other rights and
<PAGE>
-2-
benefits whatsoever accruing to the Owner thereunder; PROVIDED, HOWEVER, that
the Owner shall keep the Indenture Trustee fully and effectively indemnified
from and against all actions, losses, claims, proceedings, costs, demands and
liabilities which may be suffered by the Indenture Trustee under or by virtue of
the Building Contract Guarantee or this Assignment.
Section 2.03 OWNER TO REMAIN LIABLE. Anything in this
Assignment contained to the contrary notwithstanding, the Owner shall remain
liable under the Building Contract Guarantee, and shall observe, perform and
fulfill all of the conditions and obligations to be observed, performed and
fulfilled by it thereunder, and the Indenture Trustee shall have no obligation
or liability of any kind whatsoever thereunder or by reason of or arising out of
this Assignment, nor shall the Indenture Trustee be under any liability
whatsoever in the event of any failure by the Owner to perform its obligations
thereunder or be required or obligated in any manner to observe, perform or
fulfill any of the conditions or obligations of the Owner thereunder or pursuant
thereto, or to make any payment or to make any inquiry as to the nature or
sufficiency of any payment received by it or the Owner thereunder, or to present
or file any claim, or to take any other action to collect or enforce the payment
of any amounts which may have been assigned to the Indenture Trustee or to which
the Indenture Trustee may be entitled hereunder at any time or times.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE OWNER
The Owner hereby represents and warrants to the Indenture
Trustee as follows:
Section 3.01 ORGANIZATION, POWER AND STATUS OF THE OWNER. The
Owner (a) is a corporation duly formed, validly existing and in good standing
under the laws of the Isle of Man and (b) is duly authorized, to the extent
necessary, to do business in each jurisdiction where the character of its
properties or the nature of its activities makes such qualification necessary.
The Owner has all requisite corporate power and authority to own and operate the
property it purports to own and to carry on its business as now being conducted
and as proposed to be conducted in respect of the Vessel.
Section 3.02 AUTHORIZATION; ENFORCEABILITY; EXECUTION AND
DELIVERY. (a) The Owner has all necessary corporate power and authority to
execute, deliver and perform under this Assignment.
(b) All action on the part of the Owner that is required for
the authorization, execution, delivery and performance of this Assignment has
been duly and effectively taken; and the execution, delivery and performance of
this Assignment does not require the approval or consent of any Person except
for such consents and approvals as have been obtained on or prior to the Closing
Date.
(c) This Assignment has been duly executed and delivered by
the Owner. This Assignment constitutes the legal, valid and binding obligation
of the Owner, enforceable against it in accordance with the terms thereof.
<PAGE>
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Section 3.03 NO CONFLICTS; LAWS AND CONSENTS; NO DEFAULT. (a)
Neither the execution, delivery and performance of this Assignment nor the
consummation of any of the transactions contemplated hereby nor performance of
or compliance with the terms and conditions hereof (i) contravenes any
Requirement of Law applicable to the Owner or (ii) constitutes a default under
the Indenture or any Security Document.
(b) The Owner is in compliance with and not in default under
any and all Requirements of Law applicable to the Owner and all terms and
provisions of this Assignment.
Section 3.04 GOVERNMENTAL APPROVALS. All Governmental
Approvals which are required to be obtained in the name of the Owner in
connection with the execution, delivery and performance by the Owner of this
Assignment have been obtained and are in effect on the Closing Date.
Section 3.05 LITIGATION. There are no actions, suits or
proceedings at law or in equity or by or before any Governmental Authority now
pending against the Owner or, to the best of the Owner's knowledge, threatened
against the Owner or pending or threatened against any property or other assets
or rights of the Owner with respect to this Assignment.
Section 3.06 NO PRIOR ASSIGNMENT. The Owner has not assigned
or pledged, and hereby covenants that it will not assign or pledge, so long as
this Assignment shall remain in effect, the Building Contract Guarantee or any
part of the rights, titles and interests hereby assigned, to anyone other than
the Indenture Trustee, or its successors or assigns.
Section 3.07 THE BUILDING CONTRACT GUARANTEE. The Building
Contract Guarantee constitutes the legal, valid and binding obligation of the
Owner as "Owner" thereunder and is in full force and effect in the form of
Exhibit "A" attached hereto; there are no amendments, additions, addenda or
modifications thereto and neither of the parties thereto is in default
thereunder.
ARTICLE IV
COVENANTS OF THE OWNER
The Owner hereby covenants and agrees that so long as any of
the Obligations remains outstanding:
Section 4.01 CONSENT OF PARTIES TO ASSIGNMENT. On the Closing
Date, the Owner shall deliver to the Building Contract Guarantor a copy of this
Assignment and shall procure the execution by the Building Contract Guarantor of
the Consent and Acknowledgment set out in Exhibit A hereto and deliver said
Consent and Acknowledgment to the Indenture Trustee on the Closing Date.
Section 4.02 ENFORCEMENT OF BUILDING CONTRACT GUARANTEE. (a)
The Owner will do or permit to be done each and every act or thing which the
Indenture Trustee may from time
<PAGE>
-4-
to time require to be done for the purpose of enforcing the Indenture Trustee's
rights under the Building Contract Guarantee and this Assignment.
(b) The Owner shall cause all moneys hereby assigned or agreed
to be assigned or arising from or in connection with any of the rights, title,
interest and benefits of the Owner under the Building Contract Guarantee shall
be paid to the credit of Chase Manhattan Bank NYC, ABA #021000021, A/C
#920-1-073195, credit U.S. Trust Co NY, further credit to A/C #04692300, Golden
State Petroleum Transport Revenue Account, Attention: Chris Collins or to such
other account as the Indenture Trustee may from time to time direct.
(c) The Owner will not exercise any right or powers conferred
on it by the Building Contract Guarantee in connection with any default or
alleged default by the Building Contract Guarantor thereunder (including without
limitation the right of termination and substitution) unless and until requested
so to do by the Indenture Trustee whereupon the Owner agrees that it will do so
provided always that the Indenture Trustee shall not be responsible in any way
whatsoever in the event that the exercise of any right or power (including the
right of termination and substitution) be thereafter adjudged improper or to
constitute a repudiation of the Building Contract Guarantee by the Owner.
Section 4.03 AMENDMENT OF BUILDING CONTRACT GUARANTEE;
ASSIGNMENT OF BUILDING CONTRACT GUARANTEE. (a) The Owner will not, except with
the previous written consent of the Indenture Trustee, agree to any variation of
the Building Contract Guarantee or release the Building Contract Guarantor
thereto from any of its obligations thereunder or waive any breach of the
Building Contract Guarantor's obligations thereunder or consent to any such act
or omission of such party as would otherwise constitute such breach.
(b) The Owner will not, except with the previous written
consent of the Indenture Trustee, assign the Building Contract Guarantee to any
other Person.
Section 4.04 PERFORMANCE OF OBLIGATIONS. The Owner will
perform its obligations under the Building Contract Guarantee and will use its
best efforts to cause the Building Contract Guarantor to perform its obligations
thereunder.
Section 4.05 NOTICES. The Owner will send a copy of all
notices received or given by it under the Building Contract Guarantee forthwith
to the Indenture Trustee.
Section 4.06 FURTHER ASSURANCES. The Owner will at any time
and from time to time, upon the written request of the Indenture Trustee,
promptly and duly execute and deliver any and all such further instruments and
documents and take such action as the Indenture Trustee may deem desirable in
order to obtain the full benefits of this Assignment and of the rights and
powers herein granted.
Section 4.07 INDENTURE TRUSTEE AS ATTORNEY-IN-FACT OF OWNER.
The Owner hereby constitutes the Indenture Trustee, and its successors and
assigns, its true and lawful attorney-in-fact, irrevocably, with full power in
its own name, in the name of its agents or
<PAGE>
-5-
nominees or in the name of the Owner or otherwise, to ask, require, demand,
receive, enforce and give acquittance for, any and all moneys and claims for
moneys due and to become due and payable under or arising out of the Building
Contract Guarantee, to endorse any checks or other instruments or orders in
connection therewith and to file any claims or take any action or institute any
proceedings which to the Indenture Trustee may seem to be necessary or advisable
under this Assignment. Any action or proceeding brought by the Indenture Trustee
pursuant to any of the provisions of this Assignment or otherwise and any claim
made by the Indenture Trustee hereunder may be compromised, withdrawn or
otherwise dealt with by the Indenture Trustee without any notice to or approval
of the Owner.
ARTICLE V
MISCELLANEOUS PROVISIONS
Section 5.01 AMENDMENT. This Assignment may be amended from
time to time by written agreement signed by the parties hereto.
Section 5.02 SEVERABILITY. If any provision of this Assignment
is held to be in conflict with any applicable statute or rule of law or is
otherwise held to be unenforceable for any reason whatsoever, such circumstances
shall not have the effect of rendering the provision in question inoperative or
unenforceable in any other case or circumstance, or of rendering any other
provision or provisions herein contained invalid, inoperative, or unenforceable
to any extent whatsoever. The invalidity of any one or more phrases, sentences,
clauses or Sections of this Assignment contained, shall not affect the remaining
portions of this Assignment, or any part thereof.
Section 5.03 NOTICES. All demands, notices and communications
hereunder shall be in writing, personally delivered or mailed by certified
mail-return receipt requested, and shall be deemed to have been duly given upon
receipt (a) in the case of the Indenture Trustee, at the following address: 114
West 47th Street, New York, New York 10036, Attention: Corporate Trust
Department, (b) in the case of the Owner, at the following address: 15-19 Athol
Street, Douglas, Isle of Man, or at other such address as shall be designated by
such party in a written notice to the other parties.
Section 5.04 CONSENT TO JURISDICTION. Any legal suit, action
or proceeding against the Owner arising out of or relating to this Assignment,
or any transaction contemplated hereby, may be instituted in any federal or
state court in The City of New York, State of New York, and the Owner hereby
irrevocably submits to the jurisdiction of any such court in any such suit,
action or proceeding. The Owner hereby waives, to the fullest extent permitted
by applicable law, any defense which it may now or hereafter have based upon
lack of personal jurisdiction or venue or FORUM NON CONVENIENS. The Owner hereby
irrevocably appoints and designates CT Corporation System, having an address at
1633 Broadway, New York, New York, its true and lawful attorney-in-fact and duly
authorized agent for the limited purpose of accepting servicing of legal process
and the Owner agrees that service of process upon such party shall constitute
personal service of such process on such Person. The Owner shall maintain the
designation and appointment of such authorized agent until all amounts payable
<PAGE>
-6-
under this Assignment shall have been paid in full. If such agent shall cease to
so act, the Owner shall immediately designate and appoint another such agent
satisfactory to the Indenture Trustee and shall promptly deliver to the
Indenture Trustee evidence in writing of such other agent's acceptance of such
appointment.
Section 5.05 CAPTIONS. The captions or headings in this
Assignment are for convenience only and in no way define, limit or describe the
scope or intent of any provisions or sections of this Assignment.
Section 5.06 GOVERNING LAW. This Assignment shall be governed
by and interpreted in accordance with the laws of the State of New York, without
giving effect to the principles of conflicts of law.
Section 5.07 NO PARTNERSHIP. Nothing herein contained shall be
deemed or construed to create a partnership or joint venture among the parties
hereto, and the services of each party shall be rendered as an independent
contractor and not as agent for any other party.
Section 5.08 COUNTERPARTS. This Assignment may be executed in
any number of counterparts and by different parties hereto on separate
counterpart, each of which shall be deemed to be an original. Such counterparts
shall constitute one and the same agreement.
Section 5.09 SURVIVAL. The representations, covenants and
agreements contained in or made pursuant to this Assignment in respect of either
party hereto shall survive the execution and delivery of this Assignment and
shall continue in effect so long as such party's obligations hereunder remain
outstanding.
Section 5.10 INTEGRATION. This Assignment and the Schedule and
Exhibits hereto constitute the entire agreement and understanding between the
parties hereto with respect to the subject matter hereof and supersede all prior
agreements, understandings or representations pertaining to the subject matter
hereof, whether oral or written. There are no warranties, representations or
other agreements between the parties in connection with the subject matter
hereof except as specifically set forth or incorporated herein.
Section 5.11 REPRODUCTION OF DOCUMENTS. This Assignment and
all documents relating thereto, including, without limitation, (a) consents,
waivers and modifications which may hereafter be executed, (b) documents
received by any party at the closing, and (c) financial statements, certificates
and other information previously or hereafter furnished, may be reproduced by
any photographic, photostatic, microfilm, micro-card, miniature photographic or
other similar process. The parties agree that any such reproduction shall be
admissible in evidence as the original itself in any judicial or administrative
proceeding (whether or not the original is in existence and whether or not such
reproduction was made in the regular course of business) and that any
enlargement, facsimile or further reproduction of such reproduction shall
likewise be admissible in evidence.
<PAGE>
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Section 5.12 SUCCESSORS AND ASSIGNS; ASSIGNMENT. This
Assignment shall be binding upon and inure to the benefit of the Owner and the
Indenture Trustee and their respective successors and assigns. The Owner shall
not have the right to assign its rights hereunder or any interest herein without
the prior written consent of the Indenture Trustee. The Indenture Trustee, at
its sole option, shall have the right to assign this Assignment, the Indenture,
the Security Documents and any of its rights and interest hereunder in
accordance with the terms and provisions of the Indenture and the Security
Documents.
Section 5.13 GENERAL INTERPRETIVE PRINCIPLES. For purposes of
this Assignment except as otherwise expressly provided or unless the context
otherwise requires:
(a) the defined terms in this Assignment shall include the
plural as well as the singular, and the use of any gender herein shall be deemed
to include any other gender;
(b) accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted accounting
principles as in effect on the date hereof;
(c) references herein to "Articles", "Sections",
"Subsections", "paragraphs", and other subdivisions without reference to a
document are to designated Articles, Sections, Subsections, paragraphs and other
subdivisions of this Assignment;
(d) a reference to a Subsection without further reference to a
Section is a reference to such Subsection as contained in the same Section in
which the reference appears, and this rule shall also apply to paragraphs and
other subdivisions;
(e) the words "herein", "hereof", "hereunder" and other words
of similar import refer to this Assignment as a whole and not to any particular
provision; and
(f) the term "include" or "including" shall mean without
limitation by reason of enumeration.
Section 5.14 EFFECTIVE DATE OF TRANSACTION. Notwithstanding
the fact that this Assignment is dated as of December 24, 1996, the transactions
set forth herein shall not be effective until the Closing Date.
<PAGE>
-8-
IN WITNESS WHEREOF, the Owner and the Indenture Trustee have
caused this Assignment to be duly executed and delivered by their respective
officers thereunto duly authorized all as of the day and year first above
written.
United States Trust Company of New York, as
Indenture Trustee
By:/s/ Christine C. Collins
-----------------------------
Name: Christine C. Collins
Its: Assistant Vice President
Golden State Petro (IOM I-B) PLC, as Owner
By:/s/ Nunzio Lipomi
-----------------------------
Name: Nunzio Lipomi
Its: Assistant Secretary
<PAGE>
Exhibit A
LETTER OF ACKNOWLEDGMENT
TO ASSIGNMENT OF BUILDING CONTRACT GUARANTEE
[Date]
United States Trust Company of New York,
as Indenture Trustee
Dear Sirs:
The undersigned hereby consents to and acknowledges receipt of
a signed copy of the Assignment of Building Contract Guarantee (the
"Assignment"), dated as of December 1, 1996, between Golden State Petro (IOM
I-B) PLC (the "Owner") and United States Trust Company of New York, not in its
individual capacity but solely as trustee (the "Indenture Trustee") as adequate
notice of such assignment to the Indenture Trustee of the Building Contract
Guarantee (as defined in the Assignment) and of all the right, title and
interest of the Owner in, to and under the Building Contract Guarantee.
So long as the Assignment remains effective, we hereby agree
that we shall pay any and all sums which we are legally obligated to pay to the
Owner or otherwise as stated in and according to the Building Contract Guarantee
directly to _______________________ Golden State Petroleum Revenue Account,
Attention: ___________________, or otherwise to such other account as you may at
any time or from time to time, designate by notice to us in writing.
We confirm that the terms of the Building Contract Guarantee
remain in full force and effect that the Owner is not presently to our knowledge
in breach of the terms of the Building Contract Guarantee. We further confirm
that the terms of the Building Contract Guarantee have not been varied or
modified and that the terms of the Building Contract Guarantee will not after
the date hereof be varied or modified without the prior written consent of the
Indenture Trustee.
We confirm that we have received no prior notice of any
assignment by the Owner of any interest in the Building Contract Guarantee.
The undersigned will not permit any amendment, modification,
cancellation or other alteration in the Building Contract Guarantee, nor will it
consent to or accept the substitution thereunder of any party for the Owner
without your prior written consent.
Korea Development Bank
By:________________________________
Name:______________________________
Title:_____________________________
<PAGE>
SCHEDULE 1
ADDITIONAL DEFINED TERMS USED IN THE ASSIGNMENT
"AGREEMENT ON CONTRACT FOR TECHNICAL MATTERS" means, the Agreement
Regarding Technical Matters, dated as of the Closing Date, between the Owner,
Samsung Heavy Industries Co., LTD and the Technical Supervisor.
"ASSIGNMENT" or "ASSIGNMENT OF BUILDING CONTRACT GUARANTEE" means, for
each Building Contract Guarantee, the Assignment of Building Contract Guarantee,
dated as of the Closing Date, between the related Owner and the Indenture
Trustee, as the same may be amended from time to time, pursuant to which such
Owner collaterally assigns its rights, title and interest in the related
Building Contract Guarantee therein to the Indenture Trustee.
"ASSIGNMENT OF BUILDING CONTRACT" means, for each Vessel, the Building
Contract Assignment, dated as of the Closing Date, between the related Owner and
the Indenture Trustee, pursuant to which such Owner collaterally assigns its
rights, title and interests in the related Building Contract and the Agreement
on Contract for Technical Matters to the Indenture Trustee.
"ASSIGNMENT OF CHARTER" means the assignment between the Owner and the
Indenture Trustee, as amended from time to time in accordance with the terms
thereof, pursuant to which the Owner collaterally assigns to the Indenture
Trustee all of the Owner's right, title and interest in, to and under the
Initial Charter to secure its obligations under the Indenture.
"ASSIGNMENT OF CHARTER SUPPLEMENT" means, for each Charter Supplement,
the Assignment of Charter Supplement, dated the date of the Supplemental
Indenture, between the Owner of the Vessel and the Indenture Trustee, as the
same may be amended from time to time pursuant to which the Owner collaterally
assigns all of the Owner's right, title and interest therein to the Indenture
Trustee.
"ASSIGNMENT OF CHEVRON GUARANTEE" means the assignment between the
Owner and the Indenture Trustee, as amended from time to time in accordance with
the terms thereof, pursuant to which the Owner collaterally assigns to the
Indenture Trustee all of the Owner's right, title and interest in, to and under
the Chevron Guarantee to secure its obligations under the Indenture.
"ASSIGNMENT OF EARNINGS AND INSURANCES" means the assignment between
the Owner and the Indenture Trustee, as amended from time to time in accordance
with the terms thereof, pursuant to which the Owner collaterally assigns to the
Indenture Trustee all of the Owner's right, title and interest in, to and under
the freights and hires (as well as any charters entered into after the Delivery
Date) with respect to the Vessel to secure its obligations under the Indenture.
"ASSIGNMENT OF MANAGEMENT AGREEMENT" means the assignment between the
Owner and the Indenture Trustee, as amended from time to time in accordance with
the terms thereof, pursuant to which the Owner collaterally assigns to the
Indenture Trustee all of the Owner's
<PAGE>
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right, title and interest in, to and under the Management Agreement to secure
its obligations under the Indenture.
"BUILDER" means, collectively, Samsung Corporation and Samsung Heavy
Industries, Ltd.
"BUILDING CONTRACT" means the Shipbuilding Contract, dated December 24,
1996, between the Builder and the Owner.
"BUILDING CONTRACT GUARANTEE" means the Irrevocable Installment Payment
Letter of Guarantee, dated December 24, 1996, given by the Building Contract
Guarantor to the Owner in connection with the Vessel.
"BUILDING CONTRACT GUARANTOR" means Korea Development Bank.
"CHEVRON" means Chevron Corporation, a Delaware corporation, and its
successors and assigns.
"CHEVRON GUARANTEE" means the Guarantee, dated the Closing Date, given
by Chevron to the Owner in connection with the Initial Charter.
"CLOSING DATE" means December 24, 1996.
"COLLATERAL" means the collateral assigned, pledged or granted to the
Indenture Trustee pursuant to (i) the Assignment of Charter, (ii) the Assignment
of Earnings and Insurances, (iii) the Assignment of Charter Supplement, (iv) the
Mortgage, (v) the Assignment of Chevron Guarantee, (vi) the Assignment of
Management Agreement, (vii) the Assignment of Building Contract, (viii) this
Assignment of Building Contract Guarantee, (ix) the Issue of One Debenture and
(x) the Stock Pledge, together with all income and proceeds thereof.
"DELIVERY DATE" means the date the Vessel is accepted by the Owner from
the Builder under the Building Contract.
"INDENTURE" means the Indenture, dated as of December 1, 1996, among
the Indenture Trustee, the Owner, Golden State Petro A and Golden State
Petroleum, pursuant to which the Notes were issued.
"INDENTURE TRUSTEE" means United States Trust Company of New York.
"INITIAL CHARTER" means with respect to each Vessel, the bareboat
charter, dated as of December 24, 1996, between the Initial Charterer and the
Owner.
"INITIAL CHARTERER" means Chevron Transport Corporation, a Liberian
corporation.
"ISSUE OF ONE DEBENTURE" means each Issue of One Debenture between the
Owner and the Indenture Trustee, as amended from time to time in accordance with
the terms thereof,
<PAGE>
-3-
pursuant to which the Owner grants to the Indenture Trustee a security interest
in all of its assets.
"MANAGEMENT AGREEMENT" means the agreement, dated the Closing Date,
between the Owner and the Manager pursuant to which the Manager agrees to
provide certain services to the Owner.
"MANAGER" means the Person performing the duties of the Manager under
the Management Agreement, initially Cambridge Fund Management L.L.C.
"MORTGAGE" means, with respect to the Vessel, the first preferred ship
mortgage on the Vessel granted by the Owner to the Indenture Trustee, as amended
from time to time in accordance with the terms of such Mortgage.
"OBLIGATIONS" means the payment, performance or obligations of any kind
or nature whatsoever of the Owner under and pursuant to the Indenture, any
Security Document and any instrument, agreement or document referred to therein.
"OWNER" means Golden State Petro (IOM I-B) PLC, a company organized
under the laws of the Isle of Man.
"SECURITY DOCUMENTS" means the Indenture, the Mortgage, the Assignment
of Charter, the Assignments of Charter Supplements, the Assignment of Earnings
and Insurances, the Assignment of Chevron Guarantee, the Assignment of
Management Agreement, the Assignment of Building Contract, the Issue of One
Debenture, the Stock Pledge and this Assignment of Building Contract Guarantee,
collectively.
"TECHNICAL SUPERVISOR" means Chevron Shipping Company, San Francisco,
California (as Agent for the Initial Charterer).
"VESSEL" means Hull No. 1229.
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS............................... 1
ARTICLE II
ASSIGNMENT................................ 1
Section 2.01 Security Interest............................................. 1
Section 2.02 Assignment.................................................... 1
Section 2.03 Owner to Remain Liable........................................ 2
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE OWNER............... 2
Section 3.01 Organization, Power and Status of the Owner................... 2
Section 3.02 Authorization; Enforceability; Execution and Delivery......... 2
Section 3.03 No Conflicts; Laws and Consents; No Default................... 3
Section 3.04 Governmental Approvals........................................ 3
Section 3.05 Litigation.................................................... 3
Section 3.06 No Prior Assignment........................................... 3
Section 3.07 The Building Contract Guarantee............................... 3
ARTICLE IV
COVENANTS OF THE OWNER.......................... 3
Section 4.01 Consent of Parties to Assignment.............................. 3
Section 4.02 Enforcement of Building Contract Guarantee.................... 3
Section 4.03 Amendment of Building Contract Guarantee; Assignment of
Building Contract Guarantee................................... 4
Section 4.04 Performance of Obligations.................................... 4
Section 4.05 Notices....................................................... 4
<PAGE>
Page
----
Section 4.06 Further Assurances............................................ 4
Section 4.07 Indenture Trustee as Attorney-in-Fact of Owner................ 4
ARTICLE V
MISCELLANEOUS PROVISIONS......................... 5
Section 5.01 Amendment..................................................... 5
Section 5.02 Severability.................................................. 5
Section 5.03 Notices....................................................... 5
Section 5.04 Consent to Jurisdiction....................................... 5
Section 5.05 Captions...................................................... 6
Section 5.06 Governing Law................................................. 6
Section 5.07 No Partnership................................................ 6
Section 5.08 Counterparts.................................................. 6
Section 5.09 Survival...................................................... 6
Section 5.10 Integration................................................... 6
Section 5.11 Reproduction of Documents..................................... 6
Section 5.12 Successors and Assigns; Assignment............................ 6
Section 5.13 General Interpretive Principles............................... 7
Section 5.14 Effective Date of Transaction................................. 7
Golden State Petro (IOM I-A) PLC
15-19 Athol Street
Douglas, Isle of Man
GUARANTEE
In consideration of your company (herein after called "Owners") executing a
certain bareboat charter party (herein called the "Charter") with Chevron
Transport Corporation, a corporation duly organized and existing under the laws
of Liberia (herein called the "Charterer"), for the bareboat charter of one (1)
very large crude carrier of approximately 308,500 DWT Hull No. 1128 (herein
called the "Vessel"), the undersigned, jointly and severally with Charterer,
does hereby irrevocably and unconditionally guarantee to you, due and faithful
performance by Charterer of all Charterer's liabilities and responsibilities
under the Charter and any supplement, amendment, change or modification thereto
as aforesaid (hereby expressly waiving notice of any such supplement, amendment,
change or modification as may be agreed to by the Charterer and confirming that
this Guarantee shall be fully applicable to the Charter as so supplemented,
amended, changed or modified).
This Guarantee shall become null and void (and this letter shall be forthwith
returned to us) upon the occurrence of any of the following events: (1)
termination of the Charter in accordance with its terms and conditions, (2)
Owners' assignment of the Charter, (3) sale of the Vessel (excepting such a sale
in connection with the initial financing of the Vessel).
The validity, construction and enforceability of this Guarantee shall be
governed, in all respects, by the laws New York.
GUARANTOR:
CHEVRON CORPORATION
By: /s/ G. K. Carter
--------------------
Date:December 24, 1996
--------------------
Golden State Petro (IOM I-B) PLC
15-19 Athol Street
Douglas, Isle of Man
GUARANTEE
In consideration of your company (herein after called "Owners") executing a
certain bareboat charter party (herein called the "Charter") with Chevron
Transport Corporation, a corporation duly organized and existing under the laws
of Liberia (herein called the "Charterer"), for the bareboat charter of one (1)
very large crude carrier of approximately 308,500 DWT Hull No. 1129 (herein
called the "Vessel"), the undersigned, jointly and severally with Charterer,
does hereby irrevocably and unconditionally guarantee to you, due and faithful
performance by Charterer of all Charterer's liabilities and responsibilities
under the Charter and any supplement, amendment, change or modification thereto
as aforesaid (hereby expressly waiving notice of any such supplement, amendment,
change or modification as may be agreed to by the Charterer and confirming that
this Guarantee shall be fully applicable to the Charter as so supplemented,
amended, changed or modified).
This Guarantee shall become null and void (and this letter shall be forthwith
returned to us) upon the occurrence of any of the following events: (1)
termination of the Charter in accordance with its terms and conditions, (2)
Owners' assignment of the Charter, (3) sale of the Vessel (excepting such a sale
in connection with the initial financing of the Vessel).
The validity, construction and enforceability of this Guarantee shall be
governed, in all respects, by the laws New York.
GUARANTOR:
CHEVRON CORPORATION
By: /s/ G. K. Carter
--------------------
Date:December 24, 1996
--------------------
================================================================================
UNITED STATES TRUST COMPANY OF NEW YORK,
as INDENTURE TRUSTEE
and
GOLDEN STATE PETRO (IOM I-A) PLC
-----------------------------------
ASSIGNMENT OF MANAGEMENT AGREEMENT
Dated as of December 1, 1996
-----------------------------------
================================================================================
<PAGE>
Assignment of Management Agreement, dated as of December 1,
1996 (the "Assignment"), between Golden State Petro (IOM I-A) PLC (the "Owner")
and United States Trust Company of New York (the "Indenture Trustee"), not in
its individual capacity but solely as trustee under the Indenture (the
"Indenture"), dated as of the date hereof, among the Owner, the Indenture
Trustee, Golden State Petro (IOM I-B) PLC ("Golden State Petro (IOM I-B) PLC")
and Golden State Petroleum Transport Corporation ("Golden State Petroleum"), as
agent for the Owner and Golden State Petro (IOM I-B) PLC.
PRELIMINARY STATEMENT
On the Closing Date, Golden State Petroleum, as agent for the
Owner and Golden State Petro (IOM I-B) PLC, will issue Notes in connection with
the financing of the construction of the Vessel. The net proceeds of such
issuance will be deposited into the Pre-Funding Account. Pursuant to the
Indenture, the Allocated Principal Amount of the Mortgage Notes for the Vessel
will be used, INTER ALIA, to make the installments due under the Shipbuilding
Contract for the Vessel. As of the date of this Assignment, the Owner has agreed
to bareboat charter the Vessel to Chevron Transport Corporation (the "Initial
Charterer") pursuant to the Initial Charter. The obligations of the Initial
Charterer under the Initial Charter will be guaranteed by Chevron Corporation
(the "Guarantor") pursuant to the Chevron Guarantee. The Vessel will be managed
by Cambridge Fund Management L.L.C. (the "Manager") pursuant to the Management
Agreement, dated as of the date hereof, between the Owner and the Manager. As
collateral security for its obligations under the Indenture, the Owner has and
will assign, pledge, mortgage and grant the Indenture Trustee a security
interest in, INTER ALIA, the Vessel, the Initial Charter, the Chevron Guarantee
and the Management Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained and of other valuable consideration, receipt of
which is hereby acknowledged, the Owner and the Indenture Trustee hereby agree
as follows:
ARTICLE I
DEFINITIONS
Unless otherwise defined in Schedule 1 to this Assignment,
capitalized terms used in this Assignment shall have the meanings assigned to
such terms in the Indenture.
ARTICLE II
ASSIGNMENT
Section 2.01 SECURITY INTEREST. This Assignment is made and
delivered as security for the Obligations.
Section 2.02 ASSIGNMENT. In order to provide for the payment
of and as security for the Obligations, the Owner has granted, bargained,
assigned, transferred, conveyed, mortgaged, pledged and granted a security
interest in and confirmed, and does hereby grant, bargain, assign, transfer,
convey, mortgage, pledge and grant a security interest in and confirm, to the
Indenture Trustee, its successors and assigns, for its and their respective
successors' and assigns' own proper use and benefit, all of the Owner's right,
title and interest in and to the
<PAGE>
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Management Agreement, including without limitation any moneys whatsoever payable
to the Owner under the Management Agreement, together with the income and
proceeds thereof and all other rights and benefits whatsoever accruing to the
Owner under the Management Agreement; PROVIDED, HOWEVER, that the Owner shall
keep the Indenture Trustee fully and effectively indemnified from and against
all actions, losses, claims, proceedings, costs, demands and liabilities which
may be suffered by the Indenture Trustee under or by virtue of the Management
Agreement or this Assignment.
Section 2.03 OWNER TO REMAIN LIABLE. Anything in this
Assignment contained to the contrary notwithstanding, the Owner shall remain
liable under the Management Agreement, and shall observe, perform and fulfill
all of the conditions and obligations to be observed, performed and fulfilled by
it thereunder, and the Indenture Trustee shall have no obligation or liability
of any kind whatsoever thereunder or by reason of or arising out of this
Assignment, nor shall the Indenture Trustee be under any liability whatsoever in
the event of any failure by the Owner to perform its obligations thereunder or
be required or obligated in any manner to observe, perform or fulfill any of the
conditions or obligations of the Owner thereunder or pursuant thereto, or to
make any payment or to make any inquiry as to the nature or sufficiency of any
payment received by it or the Owner thereunder, or to present or file any claim,
or to take any other action to collect or enforce the payment of any amounts
which may have been assigned to the Indenture Trustee or to which the Indenture
Trustee may be entitled hereunder at any time or times.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE OWNER
The Owner hereby represents and warrants to the Indenture
Trustee as follows:
Section 3.01 ORGANIZATION, POWER AND STATUS OF THE OWNER. The
Owner (a) is a corporation duly formed, validly existing and in good standing
under the laws of the Isle of Man and (b) is duly authorized, to the extent
necessary, to do business in each jurisdiction where the character of its
properties or the nature of its activities makes such qualification necessary.
The Owner has all requisite corporate power and authority to own and operate the
property it purports to own and to carry on its business as now being conducted
and as proposed to be conducted in respect of the Vessel.
Section 3.02 AUTHORIZATION; ENFORCEABILITY; EXECUTION AND
DELIVERY. (a) The Owner has all necessary corporate power and authority to
execute, deliver and perform under this Assignment.
(b) All action on the part of the Owner that is required for
the authorization, execution, delivery and performance of this Assignment has
been duly and effectively taken; and the execution, delivery and performance of
this Assignment does not require the approval or consent of any Person except
for such consents and approvals as have been obtained on or prior to the Closing
Date.
<PAGE>
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(c) This Assignment has been duly executed and delivered by
the Owner. This Assignment constitutes the legal, valid and binding obligation
of the Owner, enforceable against it in accordance with the terms thereof.
Section 3.03 NO CONFLICTS; LAWS AND CONSENTS; NO DEFAULT. (a)
Neither the execution, delivery and performance of this Assignment nor the
consummation of any of the transactions contemplated hereby nor performance of
or compliance with the terms and conditions hereof (i) contravenes any
Requirement of Law applicable to the Owner or (ii) constitutes a default under
the Indenture or any Security Document.
(b) The Owner is in compliance with and not in default under
any and all Requirements of Law applicable to the Owner and all terms and
provisions of this Assignment.
Section 3.04 GOVERNMENTAL APPROVALS. All Governmental
Approvals which are required to be obtained in the name of the Owner in
connection with the execution, delivery and performance by the Owner of this
Assignment have been obtained and are in effect on the Closing Date.
Section 3.05 LITIGATION. There are no actions, suits or
proceedings at law or in equity or by or before any Governmental Authority now
pending against the Owner or, to the best of the Owner's knowledge, threatened
against the Owner or pending or threatened against any property or other assets
or rights of the Owner with respect to this Assignment.
Section 3.06 NO PRIOR ASSIGNMENT. The Owner has not assigned
or pledged, and hereby covenants that it will not assign or pledge, so long as
this Assignment shall remain in effect, the Management Agreement or any part of
the rights, titles and interests hereby assigned, to anyone other than the
Indenture Trustee, or its successors or assigns.
Section 3.07 THE MANAGEMENT AGREEMENT. The Management
Agreement constitutes the legal, valid and binding obligation of the Owner as
"Owner" thereunder and is in full force and effect in the form of Exhibit "A"
attached hereto; there are no amendments, additions, addenda or modifications
thereto; said Exhibit "A" represents the entirety of the management arrangements
referred to therein; and neither of the parties thereto is in default
thereunder.
ARTICLE IV
COVENANTS OF THE OWNER
The Owner hereby covenants and agrees that so long as any of
the Obligations remains outstanding:
Section 4.01 CONSENT OF MANAGER. On the Closing Date, the
Owner shall deliver to the Manager a copy of this Assignment and shall procure
the execution by the Manager of the Letter of Consent and Acknowledgment set out
in Exhibit A hereto and deliver said Letter of Consent and Acknowledgment to the
Indenture Trustee on the [Closing/Delivery] Date.
<PAGE>
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Section 4.02 ENFORCEMENT OF MANAGEMENT AGREEMENT. (a) The
Owner will do or permit to be done each and every act or thing which the
Indenture Trustee may from time to time require to be done for the purpose of
enforcing the Indenture Trustee's rights under the Management Agreement and this
Assignment.
(b) The Owner shall cause all moneys hereby assigned or agreed
to be assigned or arising from or in connection with any of the rights, title,
interest and benefits of the Owner under the Management Agreement shall be paid
to the credit of Chase Manhattan Bank NYC, ABA # 02100021, A/C # 920-1-073195,
credit U.S. Trust Co. NY, further credit to A/C # 04692300, Golden State
Petroleum Transp. Corp. Rev., Attention: Chris Collins or to such other account
as the Indenture Trustee may from time to time direct.
(c) The Owner will not exercise any right or powers conferred
on it by the Management Agreement in connection with any default or alleged
default by the Manager thereunder (including without limitation the right of
termination and substitution) unless and until requested so to do by the
Indenture Trustee whereupon the Owner agrees that it will do so provided always
that the Indenture Trustee shall not be responsible in any way whatsoever in the
event that the exercise of any right or power (including the right of
termination and substitution) be thereafter adjudged improper or to constitute a
repudiation of the Management Agreement by the Owner.
Section 4.03 AMENDMENT OF MANAGEMENT AGREEMENT; ASSIGNMENT OF
MANAGEMENT AGREEMENT. (a) The Owner will not, except with the previous written
consent of the Indenture Trustee, agree to any variation of the Management
Agreement or release the Manager from any of its obligations thereunder or waive
any breach of the Manager's obligations thereunder or consent to any such act or
omission of the Manager as would otherwise constitute such breach.
(b) The Owner will not, except with the previous written
consent of the Indenture Trustee, assign the Management Agreement to any other
Person.
Section 4.04 PERFORMANCE OF OBLIGATIONS. The Owner will
perform its obligations under the Management Agreement and will use its best
efforts to cause the Manager to perform its obligations under the Management
Agreement.
Section 4.05 NOTICES. The Owner will send a copy of all
notices received or given by it under the Management Agreement forthwith to the
Indenture Trustee.
Section 4.06 FURTHER ASSURANCES. The Owner will at any time
and from time to time, upon the written request of the Indenture Trustee,
promptly and duly execute and deliver any and all such further instruments and
documents and take such action as the Indenture Trustee may deem desirable in
order to obtain the full benefits of this Assignment and of the rights and
powers herein granted.
<PAGE>
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Section 4.07 INDENTURE TRUSTEE AS ATTORNEY-IN-FACT OF OWNER.
The Owner hereby constitutes the Indenture Trustee, and its successors and
assigns, its true and lawful attorney-in-fact, irrevocably, with full power in
its own name, in the name of its agents or nominees or in the name of the Owner
or otherwise, to ask, require, demand, receive, enforce and give acquittance
for, any and all moneys and claims for moneys due and to become due and payable
under or arising out of the Management Agreement, to endorse any checks or other
instruments or orders in connection therewith and to file any claims or take any
action or institute any proceedings which to the Indenture Trustee may seem to
be necessary or advisable under this Assignment. Any action or proceeding
brought by the Indenture Trustee pursuant to any of the provisions of this
Assignment or otherwise and any claim made by the Indenture Trustee hereunder
may be compromised, withdrawn or otherwise dealt with by the Indenture Trustee
without any notice to or approval of the Owner.
ARTICLE V
MISCELLANEOUS PROVISIONS
Section 5.01 AMENDMENT. This Assignment may be amended from
time to time by written agreement signed by the parties hereto.
Section 5.02 SEVERABILITY. If any provision of this Assignment
is held to be in conflict with any applicable statute or rule of law or is
otherwise held to be unenforceable for any reason whatsoever, such circumstances
shall not have the effect of rendering the provision in question inoperative or
unenforceable in any other case or circumstance, or of rendering any other
provision or provisions herein contained invalid, inoperative, or unenforceable
to any extent whatsoever. The invalidity of any one or more phrases, sentences,
clauses or Sections of this Assignment contained, shall not affect the remaining
portions of this Assignment, or any part thereof.
Section 5.03 NOTICES. All demands, notices and communications
hereunder shall be in writing, personally delivered or mailed by certified
mail-return receipt requested, and shall be deemed to have been duly given upon
receipt (a) in the case of the Indenture Trustee, at the following address: 114
West 47th Street, New York, New York 10036, Attention: Corporate Trust
Department, (b) in the case of the Owner, at the following address: 15-19 Athol
Street, Douglas, Isle of Man, or at other such address as shall be designated by
such party in a written notice to the other parties.
Section 5.04 CONSENT TO JURISDICTION. Any legal suit, action
or proceeding against the Owner arising out of or relating to this Assignment,
or any transaction contemplated hereby, may be instituted in any federal or
state court in The City of New York, State of New York, and the Owner hereby
irrevocably submits to the jurisdiction of any such court in any such suit,
action or proceeding. The Owner hereby waives, to the fullest extent permitted
by applicable law, any defense which it may now or hereafter have based upon
lack of personal jurisdiction or venue or FORUM NON CONVENIENS. The Owner hereby
irrevocably appoints and designates CT Corporation System, having an address at
1633 Broadway, New York, New York, its true and lawful attorney-in-fact and duly
authorized agent for the limited purpose of
<PAGE>
-6-
accepting servicing of legal process and the Owner agrees that service of
process upon such party shall constitute personal service of such process on
such Person. The Owner shall maintain the designation and appointment of such
authorized agent until all amounts payable under this Assignment shall have been
paid in full. If such agent shall cease to so act, the Owner shall immediately
designate and appoint another such agent satisfactory to the Indenture Trustee
and shall promptly deliver to the Indenture Trustee evidence in writing of such
other agent's acceptance of such appointment.
Section 5.05 CAPTIONS. The captions or headings in this
Assignment are for convenience only and in no way define, limit or describe the
scope or intent of any provisions or sections of this Assignment.
Section 5.06 GOVERNING LAW. This Assignment shall be governed
by and interpreted in accordance with the laws of the State of New York, without
giving effect to the principles of conflicts of law.
Section 5.07 NO PARTNERSHIP. Nothing herein contained shall be
deemed or construed to create a partnership or joint venture among the parties
hereto, and the services of each party shall be rendered as an independent
contractor and not as agent for any other party.
Section 5.08 COUNTERPARTS. This Assignment may be executed in
any number of counterparts and by different parties hereto on separate
counterpart, each of which shall be deemed to be an original. Such counterparts
shall constitute one and the same agreement.
Section 5.09 SURVIVAL. The representations, covenants and
agreements contained in or made pursuant to this Assignment in respect of either
party hereto shall survive the execution and delivery of this Assignment and
shall continue in effect so long as such party's obligations hereunder remain
outstanding.
Section 5.10 INTEGRATION. This Assignment and the Schedule and
Exhibits hereto constitute the entire agreement and understanding between the
parties hereto with respect to the subject matter hereof and supersede all prior
agreements, understandings or representations pertaining to the subject matter
hereof, whether oral or written. There are no warranties, representations or
other agreements between the parties in connection with the subject matter
hereof except as specifically set forth or incorporated herein.
Section 5.11 REPRODUCTION OF DOCUMENTS. This Assignment and
all documents relating thereto, including, without limitation, (a) consents,
waivers and modifications which may hereafter be executed, (b) documents
received by any party at the closing, and (c) financial statements, certificates
and other information previously or hereafter furnished, may be reproduced by
any photographic, photostatic, microfilm, micro-card, miniature photographic or
other similar process. The parties agree that any such reproduction shall be
admissible in evidence as the original itself in any judicial or administrative
proceeding (whether or not the original is in existence and whether or not such
reproduction was made in the regular course of
<PAGE>
-7-
business) and that any enlargement, facsimile or further reproduction of such
reproduction shall likewise be admissible in evidence.
Section 5.12 SUCCESSORS AND ASSIGNS; ASSIGNMENT. This
Assignment shall be binding upon and inure to the benefit of the Owner and the
Indenture Trustee and their respective successors and assigns. The Owner shall
not have the right to assign its rights hereunder or any interest herein without
the prior written consent of the Indenture Trustee. The Indenture Trustee, at
its sole option, shall have the right to assign this Assignment, the Indenture,
the Security Documents and any of its rights and interest hereunder in
accordance with the terms and provisions of the Indenture and the Security
Documents.
Section 5.13 GENERAL INTERPRETIVE PRINCIPLES. For purposes of
this Assignment except as otherwise expressly provided or unless the context
otherwise requires:
(a) the defined terms in this Assignment shall include the
plural as well as the singular, and the use of any gender herein shall be deemed
to include any other gender;
(b) accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted accounting
principles as in effect on the date hereof;
(c) references herein to "Articles", "Sections",
"Subsections", "paragraphs", and other subdivisions without reference to a
document are to designated Articles, Sections, Subsections, paragraphs and other
subdivisions of this Assignment;
(d) a reference to a Subsection without further reference to a
Section is a reference to such Subsection as contained in the same Section in
which the reference appears, and this rule shall also apply to paragraphs and
other subdivisions;
(e) the words "herein", "hereof", "hereunder" and other words
of similar import refer to this Assignment as a whole and not to any particular
provision; and
(f) the term "include" or "including" shall mean without
limitation by reason of enumeration.
Section 5.14 EFFECTIVE DATE OF TRANSACTION. Notwithstanding
the fact that this Assignment is dated as of December 1, 1996, the transactions
set forth herein shall not be effective until the Closing Date.
<PAGE>
IN WITNESS WHEREOF, the Owner and the Indenture Trustee have
caused this Assignment to be duly executed and delivered by their respective
officers thereunto duly authorized all as of the day and year first above
written.
United States Trust Company of New York, as
Indenture Trustee
By:/s/ Christine C. Collins
-----------------------------
Name: Christine C. Collins
Title: Assistant Vice President
Golden State Petro (IOM I-A) PLC, as Owner
By:/s/ Joseph Avantario
-----------------------------
Name: Joseph Avantario
Title: Treasurer
<PAGE>
Exhibit A
LETTER OF ACKNOWLEDGMENT
TO ASSIGNMENT OF MANAGEMENT AGREEMENT
__________ __, 1996
United States Trust Company of New York, as Indenture Trustee
Dear Sirs:
The undersigned hereby consents to and acknowledges receipt of a signed
copy of the Assignment of Management Agreement (the "Assignment"), dated as of
December 1, 1996, between Golden State Petro (IOM I-A) PLC (the "Owner") and
United States Trust Company of New York, not in its individual capacity but
solely as trustee (the "Indenture Trustee") as adequate notice of such
assignment to the Indenture Trustee of the Management Agreement (as defined in
the Assignment) and of all the right, title and interest of the Owner in, to and
under the Management Agreement.
We confirm that the terms of the Management Agreement remain in full
force and effect and that the Owner is not presently to our knowledge in breach
of the terms of the Management Agreement. We further confirm that the terms of
the Management Agreement have not been varied or modified and that the terms of
the Management Agreement will not after the date hereof be varied or modified
without the prior written consent of the Indenture Trustee.
We confirm that we have received no prior notice of any assignment by
the Owner of any interest in the Management Agreement.
The undersigned will not permit any amendment, modification,
cancellation or other alteration in the Management Agreement, nor will it
consent to or accept the substitution thereunder of any party for the Owner
without your prior written consent.
Cambridge Fund Management L.L.C., as Manager
By:____________________________________
Name:__________________________________
Title:_________________________________
<PAGE>
SCHEDULE 1
ADDITIONAL DEFINED TERMS USED IN THE ASSIGNMENT
"AGREEMENT ON CONTRACT FOR TECHNICAL MATTERS" means, the Agreement
Regarding Technical Matters, dated as of December 24, 1996, between the Owner,
Samsung Heavy Industries Co., LTD and Chevron Shipping Company, San Francisco,
U.S.A. (as Agent for the Initial Charterer).
"ASSIGNMENT" or "ASSIGNMENT OF MANAGEMENT AGREEMENT" means the
assignment between the Owner and the Indenture Trustee, as amended from time to
time in accordance with the terms thereof, pursuant to which the Owner
collaterally assigns to the Indenture Trustee all of the Owner's right, title
and interest in, to and under the Management Agreement to secure its obligations
under the Indenture.
"ASSIGNMENT OF BUILDING CONTRACT" means, for each Vessel, the Building
Contract Assignment, dated as of December 1, 1996, between the related Owner and
the Indenture Trustee, pursuant to which such Owner collaterally assigns its
rights, title and interests in the related Building Contract and the Agreement
on Contract for Technical Matters to the Indenture Trustee.
"ASSIGNMENT OF BUILDING CONTRACT GUARANTEE" means, for each Building
Contract Guarantee, the Assignment of Building Contract Guarantee, dated as of
December 1, 1996, between the related Owner and the Indenture Trustee, as the
same may be amended from time to time, pursuant to which such Owner collaterally
assigns its rights, title and interest in the related Building Contract
Guarantee therein to the Indenture Trustee.
"ASSIGNMENT OF CHARTER" means the assignment between the Owner and the
Indenture Trustee, as amended from time to time in accordance with the terms
thereof, pursuant to which the Owner collaterally assigns to the Indenture
Trustee all of the Owner's right, title and interest in, to and under the
Initial Charter to secure its obligations under the Indenture.
"ASSIGNMENT OF CHARTER SUPPLEMENT" means, for each Charter Supplement,
the Assignment of Charter Supplement, dated the date of the Supplemental
Indenture, between the Owner of the Vessel and the Indenture Trustee, as the
same may be amended from time to time pursuant to which the Owner collaterally
assigns all of the Owner's right, title and interest therein to the Indenture
Trustee.
"ASSIGNMENT OF CHEVRON GUARANTEE" means the assignment between the
Owner and the Indenture Trustee, as amended from time to time in accordance with
the terms thereof, pursuant to which the Owner collaterally assigns to the
Indenture Trustee all of the Owner's right, title and interest in, to and under
the Chevron Guarantee to secure its obligations under the Indenture.
"ASSIGNMENT OF EARNINGS AND INSURANCES" means the assignment between
the Owner and the Indenture Trustee, as amended from time to time in accordance
with the terms thereof, pursuant to which the Owner collaterally assigns to the
Indenture Trustee all of the Owner's right, title and interest in, to and under
the freights and hires (as well as any charters entered
<PAGE>
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into after the Delivery Date) with respect to the Vessel to secure its
obligations under the Indenture.
"BUILDER" means, collectively, Samsung Corporation and Samsung Heavy
Industries, Ltd.
"BUILDING CONTRACT" means the Shipbuilding Contract, dated December 24,
1996, between the Builder and the Owner.
"BUILDING CONTRACT GUARANTEE" means the Irrevocable Installment Payment
Letter of Guarantee, dated December 24, 1996, given by the Building Contract
Guarantor to the Owner in connection with the Vessel.
"BUILDING CONTRACT GUARANTOR" means Korea Development Bank.
"CHEVRON" means Chevron Corporation, a Delaware corporation, and its
successors and assigns.
"CHEVRON GUARANTEE" means the Guarantee, dated the Closing Date, given
by Chevron to the Owner in connection with the Initial Charter and the Charter
Supplement.
"CLOSING DATE" means December 24, 1996.
"COLLATERAL" means the collateral assigned, pledged or granted to the
Indenture Trustee pursuant to (i) this Assignment of Management Agreement, (ii)
the Assignment of Charter, (iii) the Assignment of Charter Supplement, (iv) the
Mortgage, (v) the Assignment of Chevron Guarantee, (vi) the Assignment of
Earnings and Insurances, (vii) the Assignment of Building Contract, (viii) the
Assignment of Building Contract Guarantee, (ix) the Issue of One Debenture and
(x) the Stock Pledge, together with all income and proceeds thereof.
"DELIVERY DATE" means the date the Vessel is accepted by the Owner from
the Builder under the Building Contract, which is the date of this Assignment.
"INDENTURE" means the Indenture, dated as of December 1, 1996 among the
Indenture Trustee, the Owner, Golden State Petro (IOM I-B) PLC and Golden State
Petroleum, pursuant to which the Notes were issued.
"INDENTURE TRUSTEE" means United States Trust Company of New York.
"INITIAL CHARTER" means with respect to each Vessel, the bareboat
charter, dated as of December 24, 1996, between the Initial Charterer and the
Owner.
"INITIAL CHARTERER" means Chevron Transport Corporation, a Liberian
corporation.
"ISSUE OF ONE DEBENTURE" means each Issue of One Debenture between the
Owner and the Indenture Trustee, as amended from time to time in accordance with
the terms thereof,
<PAGE>
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pursuant to which the Owner grants to the Indenture Trustee a security interest
in all of its assets.
"MANAGEMENT AGREEMENT" means the agreement, dated the Closing Date,
between the Owner and the Manager pursuant to which the Manager agrees to
provide certain services to the Owner.
"MANAGER" means the Person performing the duties of the Manager under
the Management Agreement, initially Cambridge Fund Management L.L.C.
"MORTGAGE" means, with respect to the Vessel, the first preferred ship
mortgage on the Vessel granted by the Owner to the Indenture Trustee, as amended
from time to time in accordance with the terms of such Mortgage.
"OBLIGATIONS" means the payment, performance or obligations of any kind
or nature whatsoever of the Owner under and pursuant to the Indenture, any
Security Document and any instrument, agreement or document referred to therein.
"OBLIGATIONS" means the payment, performance or obligations of any kind
or nature whatsoever of the Owner under and pursuant to the Indenture, any
Security Document and any instrument, agreement or document referred to therein.
"OWNER" means Golden State Petro (IOM I-A) PLC, a company organized
under the laws of the Isle of Man.
"SECURITY DOCUMENTS" means the Indenture, the Mortgage, the Assignment
of Charter, the Assignments of Charter Supplements, the Assignment of Earnings
and Insurances, the Assignment of Chevron Guarantee, this Assignment of
Management Agreement, the Assignment of Building Contract, the Issue of One
Debenture, the Stock Pledge and the Assignment of Building Contract Guarantee,
collectively.
"VESSEL" means Hull No. 1228.
<PAGE>
TABLE OF CONTENTS
Page No.
ARTICLE I
DEFINITIONS............................... 1
ARTICLE II
ASSIGNMENT................................ 1
Section 2.01 Security Interest............................................. 1
Section 2.02 Assignment.................................................... 1
Section 2.03 Owner to Remain Liable........................................ 2
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE OWNER................ 2
Section 3.01 Organization, Power and Status of the Owner................... 2
Section 3.02 Authorization; Enforceability; Execution and Delivery......... 2
Section 3.03 No Conflicts; Laws and Consents; No Default................... 3
Section 3.04 Governmental Approvals........................................ 3
Section 3.05 Litigation.................................................... 3
Section 3.06 No Prior Assignment........................................... 3
Section 3.07 The Management Agreement...................................... 3
ARTICLE IV
COVENANTS OF THE OWNER.......................... 3
Section 4.01 Consent of Manager............................................ 3
Section 4.02 Enforcement of Management Agreement........................... 4
Section 4.03 Amendment of Management Agreement; Assignment of
Management Agreement.......................................... 4
Section 4.04 Performance of Obligations.................................... 4
Section 4.05 Notices....................................................... 4
i
<PAGE>
Page No.
Section 4.06 Further Assurances............................................ 4
Section 4.07 Indenture Trustee as Attorney-in-Fact of Owner................ 5
ARTICLE V
MISCELLANEOUS PROVISIONS......................... 5
Section 5.01 Amendment..................................................... 5
Section 5.02 Severability.................................................. 5
Section 5.03 Notices....................................................... 5
Section 5.04 Consent to Jurisdiction....................................... 5
Section 5.05 Captions...................................................... 6
Section 5.06 Governing Law................................................. 6
Section 5.07 No Partnership................................................ 6
Section 5.08 Counterparts.................................................. 6
Section 5.09 Survival...................................................... 6
Section 5.10 Integration................................................... 6
Section 5.11 Reproduction of Documents..................................... 6
Section 5.12 Successors and Assigns; Assignment............................ 7
Section 5.13 General Interpretive Principles............................... 7
Section 5.14 Effective Date of Transaction................................. 7
ii
================================================================================
UNITED STATES TRUST COMPANY OF NEW YORK,
as INDENTURE TRUSTEE
and
GOLDEN STATE PETRO (IOM I-B) PLC
-----------------------------------
ASSIGNMENT OF MANAGEMENT AGREEMENT
Dated as of December 1, 1996
-----------------------------------
================================================================================
<PAGE>
Assignment of Management Agreement, dated as of December 1,
1996 (the "Assignment"), between Golden State Petro (IOM I-B) PLC (the "Owner")
and United States Trust Company of New York (the "Indenture Trustee"), not in
its individual capacity but solely as trustee under the Indenture (the
"Indenture"), dated as of the date hereof, among the Owner, the Indenture
Trustee, Golden State Petro (IOM I-A) PLC ("Golden State Petro (IOM I-A) PLC")
and Golden State Petroleum Transport Corporation ("Golden State Petroleum"), as
agent for the Owner and Golden State Petro (IOM I-A) PLC.
PRELIMINARY STATEMENT
On the Closing Date, Golden State Petroleum, as agent for the
Owner and Golden State Petro (IOM I-A) PLC, will issue Notes in connection with
the financing of the construction of the Vessel. The net proceeds of such
issuance will be deposited into the Pre-Funding Account. Pursuant to the
Indenture, the Allocated Principal Amount of the Mortgage Notes for the Vessel
will be used, INTER ALIA, to make the installments due under the Shipbuilding
Contract for the Vessel. As of the date of this Assignment, the Owner has agreed
to bareboat charter the Vessel to Chevron Transport Corporation (the "Initial
Charterer") pursuant to the Initial Charter. The obligations of the Initial
Charterer under the Initial Charter will be guaranteed by Chevron Corporation
(the "Guarantor") pursuant to the Chevron Guarantee. The Vessel will be managed
by Cambridge Fund Management L.L.C. (the "Manager") pursuant to the Management
Agreement, dated as of the date hereof, between the Owner and the Manager. As
collateral security for its obligations under the Indenture, the Owner has and
will assign, pledge, mortgage and grant the Indenture Trustee a security
interest in, INTER ALIA, the Vessel, the Initial Charter, the Chevron Guarantee
and the Management Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained and of other valuable consideration, receipt of
which is hereby acknowledged, the Owner and the Indenture Trustee hereby agree
as follows:
ARTICLE I
DEFINITIONS
Unless otherwise defined in Schedule 1 to this Assignment,
capitalized terms used in this Assignment shall have the meanings assigned to
such terms in the Indenture.
ARTICLE II
ASSIGNMENT
Section 2.01 SECURITY INTEREST. This Assignment is made and
delivered as security for the Obligations.
Section 2.02 ASSIGNMENT. In order to provide for the payment
of and as security for the Obligations, the Owner has granted, bargained,
assigned, transferred, conveyed, mortgaged, pledged and granted a security
interest in and confirmed, and does hereby grant, bargain, assign, transfer,
convey, mortgage, pledge and grant a security interest in and confirm, to the
Indenture Trustee, its successors and assigns, for its and their respective
successors' and assigns' own proper use and benefit, all of the Owner's right,
title and interest in and to the
<PAGE>
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Management Agreement, including without limitation any moneys whatsoever payable
to the Owner under the Management Agreement, together with the income and
proceeds thereof and all other rights and benefits whatsoever accruing to the
Owner under the Management Agreement; PROVIDED, HOWEVER, that the Owner shall
keep the Indenture Trustee fully and effectively indemnified from and against
all actions, losses, claims, proceedings, costs, demands and liabilities which
may be suffered by the Indenture Trustee under or by virtue of the Management
Agreement or this Assignment.
Section 2.03 OWNER TO REMAIN LIABLE. Anything in this
Assignment contained to the contrary notwithstanding, the Owner shall remain
liable under the Management Agreement, and shall observe, perform and fulfill
all of the conditions and obligations to be observed, performed and fulfilled by
it thereunder, and the Indenture Trustee shall have no obligation or liability
of any kind whatsoever thereunder or by reason of or arising out of this
Assignment, nor shall the Indenture Trustee be under any liability whatsoever in
the event of any failure by the Owner to perform its obligations thereunder or
be required or obligated in any manner to observe, perform or fulfill any of the
conditions or obligations of the Owner thereunder or pursuant thereto, or to
make any payment or to make any inquiry as to the nature or sufficiency of any
payment received by it or the Owner thereunder, or to present or file any claim,
or to take any other action to collect or enforce the payment of any amounts
which may have been assigned to the Indenture Trustee or to which the Indenture
Trustee may be entitled hereunder at any time or times.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE OWNER
The Owner hereby represents and warrants to the Indenture
Trustee as follows:
Section 3.01 ORGANIZATION, POWER AND STATUS OF THE OWNER. The
Owner (a) is a corporation duly formed, validly existing and in good standing
under the laws of the Isle of Man and (b) is duly authorized, to the extent
necessary, to do business in each jurisdiction where the character of its
properties or the nature of its activities makes such qualification necessary.
The Owner has all requisite corporate power and authority to own and operate the
property it purports to own and to carry on its business as now being conducted
and as proposed to be conducted in respect of the Vessel.
Section 3.02 AUTHORIZATION; ENFORCEABILITY; EXECUTION AND
DELIVERY. (a) The Owner has all necessary corporate power and authority to
execute, deliver and perform under this Assignment.
(b) All action on the part of the Owner that is required for
the authorization, execution, delivery and performance of this Assignment has
been duly and effectively taken; and the execution, delivery and performance of
this Assignment does not require the approval or consent of any Person except
for such consents and approvals as have been obtained on or prior to the Closing
Date.
<PAGE>
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(c) This Assignment has been duly executed and delivered by
the Owner. This Assignment constitutes the legal, valid and binding obligation
of the Owner, enforceable against it in accordance with the terms thereof.
Section 3.03 NO CONFLICTS; LAWS AND CONSENTS; NO DEFAULT. (a)
Neither the execution, delivery and performance of this Assignment nor the
consummation of any of the transactions contemplated hereby nor performance of
or compliance with the terms and conditions hereof (i) contravenes any
Requirement of Law applicable to the Owner or (ii) constitutes a default under
the Indenture or any Security Document.
(b) The Owner is in compliance with and not in default under
any and all Requirements of Law applicable to the Owner and all terms and
provisions of this Assignment.
Section 3.04 GOVERNMENTAL APPROVALS. All Governmental
Approvals which are required to be obtained in the name of the Owner in
connection with the execution, delivery and performance by the Owner of this
Assignment have been obtained and are in effect on the Closing Date.
Section 3.05 LITIGATION. There are no actions, suits or
proceedings at law or in equity or by or before any Governmental Authority now
pending against the Owner or, to the best of the Owner's knowledge, threatened
against the Owner or pending or threatened against any property or other assets
or rights of the Owner with respect to this Assignment.
Section 3.06 NO PRIOR ASSIGNMENT. The Owner has not assigned
or pledged, and hereby covenants that it will not assign or pledge, so long as
this Assignment shall remain in effect, the Management Agreement or any part of
the rights, titles and interests hereby assigned, to anyone other than the
Indenture Trustee, or its successors or assigns.
Section 3.07 THE MANAGEMENT AGREEMENT. The Management
Agreement constitutes the legal, valid and binding obligation of the Owner as
"Owner" thereunder and is in full force and effect in the form of Exhibit "A"
attached hereto; there are no amendments, additions, addenda or modifications
thereto; said Exhibit "A" represents the entirety of the management arrangements
referred to therein; and neither of the parties thereto is in default
thereunder.
ARTICLE IV
COVENANTS OF THE OWNER
The Owner hereby covenants and agrees that so long as any of
the Obligations remains outstanding:
Section 4.01 CONSENT OF MANAGER. On the Closing Date, the
Owner shall deliver to the Manager a copy of this Assignment and shall procure
the execution by the Manager of the Letter of Consent and Acknowledgment set out
in Exhibit A hereto and deliver said Letter of Consent and Acknowledgment to the
Indenture Trustee on the [Closing/Delivery] Date.
<PAGE>
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Section 4.02 ENFORCEMENT OF MANAGEMENT AGREEMENT. (a) The
Owner will do or permit to be done each and every act or thing which the
Indenture Trustee may from time to time require to be done for the purpose of
enforcing the Indenture Trustee's rights under the Management Agreement and this
Assignment.
(b) The Owner shall cause all moneys hereby assigned or agreed
to be assigned or arising from or in connection with any of the rights, title,
interest and benefits of the Owner under the Management Agreement shall be paid
to the credit of Chase Manhattan Bank NYC, ABA # 02100021, A/C # 920-1-073195,
credit U.S. Trust Co. NY, further credit to A/C # 04692300, Golden State
Petroleum Transp. Corp. Rev., Attention: Chris Collins or to such other account
as the Indenture Trustee may from time to time direct.
(c) The Owner will not exercise any right or powers conferred
on it by the Management Agreement in connection with any default or alleged
default by the Manager thereunder (including without limitation the right of
termination and substitution) unless and until requested so to do by the
Indenture Trustee whereupon the Owner agrees that it will do so provided always
that the Indenture Trustee shall not be responsible in any way whatsoever in the
event that the exercise of any right or power (including the right of
termination and substitution) be thereafter adjudged improper or to constitute a
repudiation of the Management Agreement by the Owner.
Section 4.03 AMENDMENT OF MANAGEMENT AGREEMENT; ASSIGNMENT OF
MANAGEMENT AGREEMENT. (a) The Owner will not, except with the previous written
consent of the Indenture Trustee, agree to any variation of the Management
Agreement or release the Manager from any of its obligations thereunder or waive
any breach of the Manager's obligations thereunder or consent to any such act or
omission of the Manager as would otherwise constitute such breach.
(b) The Owner will not, except with the previous written
consent of the Indenture Trustee, assign the Management Agreement to any other
Person.
Section 4.04 PERFORMANCE OF OBLIGATIONS. The Owner will
perform its obligations under the Management Agreement and will use its best
efforts to cause the Manager to perform its obligations under the Management
Agreement.
Section 4.05 NOTICES. The Owner will send a copy of all
notices received or given by it under the Management Agreement forthwith to the
Indenture Trustee.
Section 4.06 FURTHER ASSURANCES. The Owner will at any time
and from time to time, upon the written request of the Indenture Trustee,
promptly and duly execute and deliver any and all such further instruments and
documents and take such action as the Indenture Trustee may deem desirable in
order to obtain the full benefits of this Assignment and of the rights and
powers herein granted.
<PAGE>
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Section 4.07 INDENTURE TRUSTEE AS ATTORNEY-IN-FACT OF OWNER.
The Owner hereby constitutes the Indenture Trustee, and its successors and
assigns, its true and lawful attorney-in-fact, irrevocably, with full power in
its own name, in the name of its agents or nominees or in the name of the Owner
or otherwise, to ask, require, demand, receive, enforce and give acquittance
for, any and all moneys and claims for moneys due and to become due and payable
under or arising out of the Management Agreement, to endorse any checks or other
instruments or orders in connection therewith and to file any claims or take any
action or institute any proceedings which to the Indenture Trustee may seem to
be necessary or advisable under this Assignment. Any action or proceeding
brought by the Indenture Trustee pursuant to any of the provisions of this
Assignment or otherwise and any claim made by the Indenture Trustee hereunder
may be compromised, withdrawn or otherwise dealt with by the Indenture Trustee
without any notice to or approval of the Owner.
ARTICLE V
MISCELLANEOUS PROVISIONS
Section 5.01 AMENDMENT. This Assignment may be amended from
time to time by written agreement signed by the parties hereto.
Section 5.02 SEVERABILITY. If any provision of this Assignment
is held to be in conflict with any applicable statute or rule of law or is
otherwise held to be unenforceable for any reason whatsoever, such circumstances
shall not have the effect of rendering the provision in question inoperative or
unenforceable in any other case or circumstance, or of rendering any other
provision or provisions herein contained invalid, inoperative, or unenforceable
to any extent whatsoever. The invalidity of any one or more phrases, sentences,
clauses or Sections of this Assignment contained, shall not affect the remaining
portions of this Assignment, or any part thereof.
Section 5.03 NOTICES. All demands, notices and communications
hereunder shall be in writing, personally delivered or mailed by certified
mail-return receipt requested, and shall be deemed to have been duly given upon
receipt (a) in the case of the Indenture Trustee, at the following address: 114
West 47th Street, New York, New York 10036, Attention: Corporate Trust
Department, (b) in the case of the Owner, at the following address: 15-19 Athol
Street, Douglas, Isle of Man, or at other such address as shall be designated by
such party in a written notice to the other parties.
Section 5.04 CONSENT TO JURISDICTION. Any legal suit, action
or proceeding against the Owner arising out of or relating to this Assignment,
or any transaction contemplated hereby, may be instituted in any federal or
state court in The City of New York, State of New York, and the Owner hereby
irrevocably submits to the jurisdiction of any such court in any such suit,
action or proceeding. The Owner hereby waives, to the fullest extent permitted
by applicable law, any defense which it may now or hereafter have based upon
lack of personal jurisdiction or venue or FORUM NON CONVENIENS. The Owner hereby
irrevocably appoints and designates CT Corporation System, having an address at
1633 Broadway, New York, New York, its true and lawful attorney-in-fact and duly
authorized agent for the limited purpose of
<PAGE>
-6-
accepting servicing of legal process and the Owner agrees that service of
process upon such party shall constitute personal service of such process on
such Person. The Owner shall maintain the designation and appointment of such
authorized agent until all amounts payable under this Assignment shall have been
paid in full. If such agent shall cease to so act, the Owner shall immediately
designate and appoint another such agent satisfactory to the Indenture Trustee
and shall promptly deliver to the Indenture Trustee evidence in writing of such
other agent's acceptance of such appointment.
Section 5.05 CAPTIONS. The captions or headings in this
Assignment are for convenience only and in no way define, limit or describe the
scope or intent of any provisions or sections of this Assignment.
Section 5.06 GOVERNING LAW. This Assignment shall be governed
by and interpreted in accordance with the laws of the State of New York, without
giving effect to the principles of conflicts of law.
Section 5.07 NO PARTNERSHIP. Nothing herein contained shall be
deemed or construed to create a partnership or joint venture among the parties
hereto, and the services of each party shall be rendered as an independent
contractor and not as agent for any other party.
Section 5.08 COUNTERPARTS. This Assignment may be executed in
any number of counterparts and by different parties hereto on separate
counterpart, each of which shall be deemed to be an original. Such counterparts
shall constitute one and the same agreement.
Section 5.09 SURVIVAL. The representations, covenants and
agreements contained in or made pursuant to this Assignment in respect of either
party hereto shall survive the execution and delivery of this Assignment and
shall continue in effect so long as such party's obligations hereunder remain
outstanding.
Section 5.10 INTEGRATION. This Assignment and the Schedule and
Exhibits hereto constitute the entire agreement and understanding between the
parties hereto with respect to the subject matter hereof and supersede all prior
agreements, understandings or representations pertaining to the subject matter
hereof, whether oral or written. There are no warranties, representations or
other agreements between the parties in connection with the subject matter
hereof except as specifically set forth or incorporated herein.
Section 5.11 REPRODUCTION OF DOCUMENTS. This Assignment and
all documents relating thereto, including, without limitation, (a) consents,
waivers and modifications which may hereafter be executed, (b) documents
received by any party at the closing, and (c) financial statements, certificates
and other information previously or hereafter furnished, may be reproduced by
any photographic, photostatic, microfilm, micro-card, miniature photographic or
other similar process. The parties agree that any such reproduction shall be
admissible in evidence as the original itself in any judicial or administrative
proceeding (whether or not the original is in existence and whether or not such
reproduction was made in the regular course of
<PAGE>
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business) and that any enlargement, facsimile or further reproduction of such
reproduction shall likewise be admissible in evidence.
Section 5.12 SUCCESSORS AND ASSIGNS; ASSIGNMENT. This
Assignment shall be binding upon and inure to the benefit of the Owner and the
Indenture Trustee and their respective successors and assigns. The Owner shall
not have the right to assign its rights hereunder or any interest herein without
the prior written consent of the Indenture Trustee. The Indenture Trustee, at
its sole option, shall have the right to assign this Assignment, the Indenture,
the Security Documents and any of its rights and interest hereunder in
accordance with the terms and provisions of the Indenture and the Security
Documents.
Section 5.13 GENERAL INTERPRETIVE PRINCIPLES. For purposes of
this Assignment except as otherwise expressly provided or unless the context
otherwise requires:
(a) the defined terms in this Assignment shall include the
plural as well as the singular, and the use of any gender herein shall be deemed
to include any other gender;
(b) accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted accounting
principles as in effect on the date hereof;
(c) references herein to "Articles", "Sections",
"Subsections", "paragraphs", and other subdivisions without reference to a
document are to designated Articles, Sections, Subsections, paragraphs and other
subdivisions of this Assignment;
(d) a reference to a Subsection without further reference to a
Section is a reference to such Subsection as contained in the same Section in
which the reference appears, and this rule shall also apply to paragraphs and
other subdivisions;
(e) the words "herein", "hereof", "hereunder" and other words
of similar import refer to this Assignment as a whole and not to any particular
provision; and
(f) the term "include" or "including" shall mean without
limitation by reason of enumeration.
Section 5.14 EFFECTIVE DATE OF TRANSACTION. Notwithstanding
the fact that this Assignment is dated as of December 1, 1996, the transactions
set forth herein shall not be effective until the Closing Date.
<PAGE>
IN WITNESS WHEREOF, the Owner and the Indenture Trustee have
caused this Assignment to be duly executed and delivered by their respective
officers thereunto duly authorized all as of the day and year first above
written.
United States Trust Company of New York, as
Indenture Trustee
By:/s/ Christine C. Collins
-----------------------------
Name: Christine C. Collins
Its: Assistant Vice President
Golden State Petro (IOM I-B) PLC, as Owner
By:/s/ Nunzio Lipomi
-----------------------------
Name: Nunzio Lipomi
Its: Assistant Secretary
<PAGE>
Exhibit A
LETTER OF ACKNOWLEDGMENT
TO ASSIGNMENT OF MANAGEMENT AGREEMENT
__________ __, 1996
United States Trust Company of New York, as Indenture Trustee
Dear Sirs:
The undersigned hereby consents to and acknowledges receipt of a signed
copy of the Assignment of Management Agreement (the "Assignment"), dated as of
December 1, 1996, between Golden State Petro (IOM I-B) PLC (the "Owner") and
United States Trust Company of New York, not in its individual capacity but
solely as trustee (the "Indenture Trustee") as adequate notice of such
assignment to the Indenture Trustee of the Management Agreement (as defined in
the Assignment) and of all the right, title and interest of the Owner in, to and
under the Management Agreement.
We confirm that the terms of the Management Agreement remain in full
force and effect and that the Owner is not presently to our knowledge in breach
of the terms of the Management Agreement. We further confirm that the terms of
the Management Agreement have not been varied or modified and that the terms of
the Management Agreement will not after the date hereof be varied or modified
without the prior written consent of the Indenture Trustee.
We confirm that we have received no prior notice of any assignment by
the Owner of any interest in the Management Agreement.
The undersigned will not permit any amendment, modification,
cancellation or other alteration in the Management Agreement, nor will it
consent to or accept the substitution thereunder of any party for the Owner
without your prior written consent.
Cambridge Fund Management L.L.C., as Manager
By:______________________________
Name:____________________________
Title:___________________________
<PAGE>
SCHEDULE 1
ADDITIONAL DEFINED TERMS USED IN THE ASSIGNMENT
"AGREEMENT ON CONTRACT FOR TECHNICAL MATTERS" means, the Agreement
Regarding Technical Matters, dated as of December 24, 1996, between the Owner,
Samsung Heavy Industries Co., LTD and Chevron Shipping Company, San Francisco,
U.S.A. (as Agent for the Initial Charterer).
"ASSIGNMENT" or "ASSIGNMENT OF MANAGEMENT AGREEMENT" means the
assignment between the Owner and the Indenture Trustee, as amended from time to
time in accordance with the terms thereof, pursuant to which the Owner
collaterally assigns to the Indenture Trustee all of the Owner's right, title
and interest in, to and under the Management Agreement to secure its obligations
under the Indenture.
"ASSIGNMENT OF BUILDING CONTRACT" means, for each Vessel, the Building
Contract Assignment, dated as of December 1, 1996, between the related Owner and
the Indenture Trustee, pursuant to which such Owner collaterally assigns its
rights, title and interests in the related Building Contract and the Agreement
on Contract for Technical Matters to the Indenture Trustee.
"ASSIGNMENT OF BUILDING CONTRACT GUARANTEE" means, for each Building
Contract Guarantee, the Assignment of Building Contract Guarantee, dated as of
December 1, 1996, between the related Owner and the Indenture Trustee, as the
same may be amended from time to time, pursuant to which such Owner collaterally
assigns its rights, title and interest in the related Building Contract
Guarantee therein to the Indenture Trustee.
"ASSIGNMENT OF CHARTER" means the assignment between the Owner and the
Indenture Trustee, as amended from time to time in accordance with the terms
thereof, pursuant to which the Owner collaterally assigns to the Indenture
Trustee all of the Owner's right, title and interest in, to and under the
Initial Charter to secure its obligations under the Indenture.
"ASSIGNMENT OF CHARTER SUPPLEMENT" means, for each Charter Supplement,
the Assignment of Charter Supplement, dated the date of the Supplemental
Indenture, between the Owner of the Vessel and the Indenture Trustee, as the
same may be amended from time to time pursuant to which the Owner collaterally
assigns all of the Owner's right, title and interest therein to the Indenture
Trustee.
"ASSIGNMENT OF CHEVRON GUARANTEE" means the assignment between the
Owner and the Indenture Trustee, as amended from time to time in accordance with
the terms thereof, pursuant to which the Owner collaterally assigns to the
Indenture Trustee all of the Owner's right, title and interest in, to and under
the Chevron Guarantee to secure its obligations under the Indenture.
"ASSIGNMENT OF EARNINGS AND INSURANCES" means the assignment between
the Owner and the Indenture Trustee, as amended from time to time in accordance
with the terms thereof, pursuant to which the Owner collaterally assigns to the
Indenture Trustee all of the Owner's right, title and interest in, to and under
the freights and hires (as well as any charters entered
<PAGE>
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into after the Delivery Date) with respect to the Vessel to secure its
obligations under the Indenture.
"BUILDER" means, collectively, Samsung Corporation and Samsung Heavy
Industries, Ltd.
"BUILDING CONTRACT" means the Shipbuilding Contract, dated December 24,
1996, between the Builder and the Owner.
"BUILDING CONTRACT GUARANTEE" means the Irrevocable Installment Payment
Letter of Guarantee, dated December 24, 1996, given by the Building Contract
Guarantor to the Owner in connection with the Vessel.
"BUILDING CONTRACT GUARANTOR" means Korea Development Bank.
"CHEVRON" means Chevron Corporation, a Delaware corporation, and its
successors and assigns.
"CHEVRON GUARANTEE" means the Guarantee, dated the Closing Date, given
by Chevron to the Owner in connection with the Initial Charter and the Charter
Supplement.
"CLOSING DATE" means December 24, 1996.
"COLLATERAL" means the collateral assigned, pledged or granted to the
Indenture Trustee pursuant to (i) this Assignment of Management Agreement, (ii)
the Assignment of Charter, (iii) the Assignment of Charter Supplement, (iv) the
Mortgage, (v) the Assignment of Chevron Guarantee, (vi) the Assignment of
Earnings and Insurances, (vii) the Assignment of Building Contract, (viii) the
Assignment of Building Contract Guarantee, (ix) the Issue of One Debenture and
(x) the Stock Pledge, together with all income and proceeds thereof.
"DELIVERY DATE" means the date the Vessel is accepted by the Owner from
the Builder under the Building Contract, which is the date of this Assignment.
"INDENTURE" means the Indenture, dated as of December 1, 1996 among the
Indenture Trustee, the Owner, Golden State Petro (IOM I-A) PLC and Golden State
Petroleum, pursuant to which the Notes were issued.
"INDENTURE TRUSTEE" means United States Trust Company of New York.
"INITIAL CHARTER" means with respect to each Vessel, the bareboat
charter, dated as of December 24, 1996, between the Initial Charterer and the
Owner.
"INITIAL CHARTERER" means Chevron Transport Corporation, a Liberian
corporation.
"ISSUE OF ONE DEBENTURE" means each Issue of One Debenture between the
Owner and the Indenture Trustee, as amended from time to time in accordance with
the terms thereof,
<PAGE>
-3-
pursuant to which the Owner grants to the Indenture Trustee a security interest
in all of its assets.
"MANAGEMENT AGREEMENT" means the agreement, dated the Closing Date,
between the Owner and the Manager pursuant to which the Manager agrees to
provide certain services to the Owner.
"MANAGER" means the Person performing the duties of the Manager under
the Management Agreement, initially Cambridge Fund Management L.L.C.
"MORTGAGE" means, with respect to the Vessel, the first preferred ship
mortgage on the Vessel granted by the Owner to the Indenture Trustee, as amended
from time to time in accordance with the terms of such Mortgage.
"OBLIGATIONS" means the payment, performance or obligations of any kind
or nature whatsoever of the Owner under and pursuant to the Indenture, any
Security Document and any instrument, agreement or document referred to therein.
"OBLIGATIONS" means the payment, performance or obligations of any kind
or nature whatsoever of the Owner under and pursuant to the Indenture, any
Security Document and any instrument, agreement or document referred to therein.
"OWNER" means Golden State Petro (IOM I-B) PLC, a company organized
under the laws of the Isle of Man.
"SECURITY DOCUMENTS" means the Indenture, the Mortgage, the Assignment
of Charter, the Assignments of Charter Supplements, the Assignment of Earnings
and Insurances, the Assignment of Chevron Guarantee, this Assignment of
Management Agreement, the Assignment of Building Contract, the Issue of One
Debenture, the Stock Pledge and the Assignment of Building Contract Guarantee,
collectively.
"VESSEL" means Hull No. 1229.
<PAGE>
TABLE OF CONTENTS
Page No.
ARTICLE I
DEFINITIONS............................... 1
ARTICLE II
ASSIGNMENT................................ 1
Section 2.01 Security Interest............................................. 1
Section 2.02 Assignment.................................................... 1
Section 2.03 Owner to Remain Liable........................................ 2
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE OWNER............... 2
Section 3.01 Organization, Power and Status of the Owner................... 2
Section 3.02 Authorization; Enforceability; Execution and Delivery......... 2
Section 3.03 No Conflicts; Laws and Consents; No Default................... 3
Section 3.04 Governmental Approvals........................................ 3
Section 3.05 Litigation.................................................... 3
Section 3.06 No Prior Assignment........................................... 3
Section 3.07 The Management Agreement...................................... 3
ARTICLE IV
COVENANTS OF THE OWNER.......................... 3
Section 4.01 Consent of Manager............................................ 3
Section 4.02 Enforcement of Management Agreement........................... 4
Section 4.03 Amendment of Management Agreement; Assignment of
Management Agreement.......................................... 4
Section 4.04 Performance of Obligations.................................... 4
Section 4.05 Notices....................................................... 4
i
<PAGE>
Page No.
Section 4.06 Further Assurances............................................ 4
Section 4.07 Indenture Trustee as Attorney-in-Fact of Owner................ 5
ARTICLE V
MISCELLANEOUS PROVISIONS......................... 5
Section 5.01 Amendment..................................................... 5
Section 5.02 Severability.................................................. 5
Section 5.03 Notices....................................................... 5
Section 5.04 Consent to Jurisdiction....................................... 5
Section 5.05 Captions...................................................... 6
Section 5.06 Governing Law................................................. 6
Section 5.07 No Partnership................................................ 6
Section 5.08 Counterparts.................................................. 6
Section 5.09 Survival...................................................... 6
Section 5.10 Integration................................................... 6
Section 5.11 Reproduction of Documents..................................... 6
Section 5.12 Successors and Assigns; Assignment............................ 7
Section 5.13 General Interpretive Principles............................... 7
Section 5.14 Effective Date of Transaction................................. 7
ii
FACE OF MORTGAGE NOTE
(Term Note)
THIS MORTGAGE NOTE IS A GLOBAL NOTE WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITORY OR A
NOMINEE THEREOF. THIS MORTGAGE NOTE MAY NOT BE EXCHANGED IN WHOLE OR IN PART FOR
A MORTGAGE NOTE REGISTERED, AND NO TRANSFER OF THIS MORTGAGE NOTE IN WHOLE OR IN
PART MAY BE REGISTERED, IN THE NAME OF ANY PERSON OTHER THAN SUCH DEPOSITORY OR
A NOMINEE THEREOF, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE
INDENTURE.
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR MORTGAGE NOTES IN
DEFINITIVE FORM, THIS MORTGAGE NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY
THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY OR BY A NOMINEE OF THE DEPOSITORY
TO THE DEPOSITORY OR ANOTHER NOMINEE OF THE DEPOSITORY OR BY THE DEPOSITORY OR
ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITORY OR A NOMINEE OF SUCH SUCCESSOR
DEPOSITORY. UNLESS AND UNTIL THIS MORTGAGE NOTE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY ("DTC"), TO GOLDEN STATE
PETROLEUM TRANSPORT CORPORATION, AS AGENT FOR GOLDEN STATE PETRO (IOM I-A) PLC
AND GOLDEN STATE PETRO (IOM I-B) PLC, OR ITS AGENTS FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND ANY MORTGAGE NOTE ISSUED IS REGISTERED IN THE
NAME OF CEDE & CO. OR SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO.), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
No. 2 $54,000,000
CUSIP 38121E AE 3
Golden State Petroleum Transport Corporation, as agent for
Golden State Petro (IOM I-A) PLC and Golden State Petro (IOM I-B) PLC
8.04% First Preferred Mortgage Notes Due 2019
THE MORTGAGE NOTE (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY
ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE UNITED
STATES SECURITIES ACT OF 1933 (THE "SECURITIES ACT"), AND THE MORTGAGE NOTE
EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH
PURCHASER OF THE MORTGAGE NOTE EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE
SELLER MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF
<PAGE>
THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER. THE HOLDER OF THE MORTGAGE
NOTE EVIDENCED HEREBY AGREES FOR THE BENEFIT OF GOLDEN STATE PETROLEUM AND THE
OWNERS THAT, UNTIL THE LATER OF JANUARY 6, 2000 OR THREE YEARS SINCE THE DATE
THIS MORTGAGE NOTE WAS LAST HELD BY AN AFFILIATE OF GOLDEN STATE PETROLEUM (OR,
IN EACH CASE, SUCH EARLIER DATE AS RESALES HEREOF ARE PERMITTED PURSUANT TO RULE
144(K) OR THE SUCCESSOR RULE THERETO) (A) SUCH MORTGAGE NOTE MAY BE RESOLD,
PLEDGED OR OTHERWISE TRANSFERRED, ONLY (1) (a) TO A PERSON WHO THE SELLER
REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A
UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE
144A, (b) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE
SECURITIES ACT, (c) OUTSIDE THE UNITED STATE STATES TO A FOREIGN PERSON IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 UNDER THE SECURITIES ACT OR (d)
IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT (AND (a) IN THE CASE OF CLAUSE (b), (c) OR (d), BASED ON AN
OPINION OF COUNSEL AND/OR CERTIFICATES TO THE EXTENT PROVIDED IN THE INDENTURE),
(2) TO THE OWNERS, (3) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN
EACH CASE, IN ACCORDANCE WITH THE APPLICABLE SECURITIES LAWS OF ANY STATE OF THE
UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND (B) THE HOLDER WILL, AND
EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THE
MORTGAGE NOTE EVIDENCED HEREBY OR ANY MORTGAGE NOTE ISSUED IN EXCHANGE FOR OR IN
SUBSTITUTION HEREOF OF THE RESALE RESTRICTIONS SET FORTH IN (A) ABOVE.
Golden State Petroleum Transport Corporation, a Delaware
corporation ("Golden State Petroleum"), solely as agent for Golden State Petro
(IOM I-A) PLC (an "Owner") and Golden State Petro (IOM I-B) PLC (an "Owner" and,
together with Golden State Petro (IOM I-A) PLC, the "Owners"), for value
received hereby promises to pay to CEDE & CO. or registered assigns the
principal sum of Fifty-Four Million Dollars in sinking fund payments as provided
in the Indenture, together with a final payment of principal on February 1, 2019
at the office or agency of United States Trust Company of New York (the
"Indenture Trustee") or its paying agent under the Indenture dated as of
December 1, 1996 by and among Golden State Petroleum, the Owners and the
Indenture Trustee (the "Indenture"; terms defined in the Indenture are used
herein as so defined) maintained for such purpose in New York, in such coin or
currency of the United States of America as at the time of payment shall be
legal tender for the payment of public and private debts, and to pay interest
(computed on the basis of a 360-day year of twelve 30-day months), semi-annually
on February 1 and August 1 of each year commencing August 1, 1997 on said
principal sum in like coin or currency at the rate per annum set forth above at
said office or agency from the February 1 or the August 1, as the case may be,
next preceding the date of this Mortgage Note to which interest on the Mortgage
Notes has been paid or duly provided for, unless the date hereof is a date to
which interest on the Mortgage Notes has been paid or duly provided for, in
which case from the date of this Mortgage Note, or unless no interest has been
paid or duly provided for on the Mortgage Notes, in which case from December 24,
1996 until payment of said principal sum has been made or duly provided for.
Notwithstanding the foregoing, if the date hereof is after any February 1 or
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<PAGE>
August 1 and before the following February 1 or August 1, as the case may be,
this Mortgage Note shall bear interest from such February 1 or August 1. The
interest so payable on any February 1 or August 1 will, except as otherwise
provided in the Indenture, be paid to the person in whose name this Mortgage
Note is registered at the close of business on the January 15 or July 15
preceding such February 1 or August 1, whether or not such day is a Business
Day.
If (i) the Exchange Offer is not consummated within 180 days
of the Closing Date, (ii) a Shelf Registration Statement required under the
Registration Rights Agreement is not declared effective within the time period
specified therein, (iii) the Shelf Registration Statement or the Exchange Offer
Registration Statement is declared effective but thereafter ceases to be
effective during the periods specified in the Registration Rights Agreement, or
(iv) the Commission determines that neither the consummation of the Exchange
Offer nor continued effectiveness of the Shelf Registration Statement will
permit the free resale of the Exchange Term Notes or the Term Notes, as the case
may be, without additional registration under the Securities Act then a
"Registration Event" event will be deemed to have occurred. During any time that
a Registration Event has occurred and is continuing, until the Exchange Term
Notes or the Term Notes may be freely resold pursuant to Rule 144(k) by a person
who is not an affiliate of the issuer (within the meaning of Rule 144(k)),
special interest ("Special Interest") will accrue on such Term Notes which
constitute Restricted Securities at at rate of 0.25% of the principal amount
thereof per annum payable semiannually in arrears on each Payment Date.
Interest is payable on demand at the Default Rate on any
overdue payment of principal of, interest or any other amount payable on this
Mortgage Note from the due date for such payment to the date such amount is paid
in full.
If any amount payable under this Mortgage Note or under the
Indenture falls due on a day that is not a Business Day, then such amount shall
be payable on the next succeeding Business Day without additional interest
thereon for the period of such extension (provided that payment is made on such
next succeeding Business Day).
Reference is made to the further provisions of this Mortgage
Note set forth on the reverse hereof. Such further provisions shall for all
purposes have the same effect as though fully set forth at this place.
This Mortgage Note shall not be valid or obligatory until the
certificate of authentication hereon shall have been duly signed by the
Indenture Trustee acting under the Indenture.
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<PAGE>
IN WITNESS WHEREOF, Golden State Petroleum, as agent on behalf
of the Owners, has caused this instrument to be duly executed under its
corporate seal.
Dated:
Golden State Petroleum Transport Corporation,
as agent on behalf of the Owners
/s/ John McFadden
-----------------------------
Name: John McFadden
Its: President
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Mortgage Notes described in the
within-mentioned Indenture.
UNITED STATES TRUST COMPANY OF NEW YORK,
as Indenture Trustee
/s/ Christine C. Collins
-----------------------------
Authorized Officer
<PAGE>
REVERSE OF MORTGAGE NOTE
Golden State Petroleum Transport Corporation, as agent for
Golden State Petro (IOM I-A) PLC and Golden State Petro (IOM I-B) PLC
8.04% First Preferred Mortgage Notes Due 2019
This Mortgage Note is one of a duly authorized issue of debt
securities of Golden State Petroleum, as agent for the Owners, limited to the
aggregate principal amount of $54,000,000 (except as otherwise provided in the
Indenture), issued or to be issued pursuant to the Indenture. Reference is
hereby made to the Indenture and all indentures supplemental thereto for a
description of the rights, limitations of rights, obligations, duties and
immunities thereunder of the Indenture Trustee, Golden State Petroleum, the
Owners and the Holders of the Mortgage Notes.
This Mortgage Note is secured by the Collateral pursuant to
the Indenture and the other Security Documents. Each Holder of this Mortgage
Note, by its acceptance thereof, consents and agrees to the terms of the
Security Documents (including without limitation the provisions providing for
the release of the Collateral provided for herein and therein) as the same may
be in effect or may be amended from time to time in accordance with their terms
and authorizes and directs the Indenture Trustee to perform its obligations and
exercise its rights under the Indenture and the other Security Documents in
accordance therewith; PROVIDED that in the event the terms thereof limit,
qualify or conflict with the duties imposed by the incorporated provisions of
the Trust Indenture Act, the incorporated provisions of the Trust Indenture Act
shall control.
In case an Indenture Event of Default shall have occurred and
be continuing, the principal of all the Mortgage Notes may be declared due and
payable, in the manner and with the effect, and subject to the conditions,
provided in the Indenture. The Indenture provides that in certain events such
declaration and its consequences may be waived by the Majority Noteholders and
that, prior to any such declaration, such Holders may waive any past default
under the Indenture and its consequences except a default in the payment of
principal of or interest on any of the Mortgage Notes. Any such consent or
waiver by the Holder of this Mortgage Note (unless revoked as provided in the
Indenture) shall be conclusive and binding upon such Holder and upon all future
holders and owners of this Mortgage Note and any Mortgage Note which may be
issued in exchange or substitution herefor, whether or not any notation thereof
is made upon this Mortgage Note or such other Mortgage Notes.
The Indenture permits Golden State Petroleum, the Owners and
the Indenture Trustee, with the consent of the Majority Noteholders, evidenced
as provided in the Indenture, to execute supplemental indentures adding any
provisions to or changing in any manner or eliminating any of the provisions of
the Indenture or of any supplemental indenture or modifying in any manner the
rights of the holders of the Mortgage Notes; PROVIDED that no such supplemental
indenture shall extend the final maturity or redemption dates of any Mortgage
Note, or reduce the principal amount thereof, or reduce the rate of interest
thereon or extend the time of payment of interest thereon, or reduce any amount
payable upon the redemption hereof, change the sinking fund redemption amount
hereof, or impair or affect the right to
-5-
<PAGE>
institute suit for the enforcement of any such payment, or reduce the percentage
of the Holders whose consent is required for any such modification or amendment
or modify any provision of the Indenture relating to the amendment thereof or
the creation of a supplemental indenture (unless the change increases the rights
of the Holders).
No reference herein to the Indenture and no provision of this
Mortgage Note or of the Indenture shall alter or impair the obligation of Golden
State Petroleum, as agent for the Owners, which is absolute and unconditional,
to pay the principal of and interest on this Mortgage Note at the place, times,
and rate, and in the currency, herein prescribed.
The Mortgage Notes are issuable only as registered Mortgage
Notes without coupons in denominations of $100,000 and any multiple of $1,000 in
excess thereof.
Mortgage Notes may be exchanged for a like aggregate principal
amount of Mortgage Notes of other authorized denominations at the office or
agency of the Indenture Trustee maintained for such purpose and in the manner
and subject to the limitations provided in the Indenture.
Upon due presentment for registration of transfer of this
Mortgage Note as provided in the Indenture, a new Mortgage Note or Mortgage
Notes of authorized denominations, for a like aggregate principal amount, will
be issued to the transferee as provided in the Indenture. No service charge
shall be made for any such transfer, but the Indenture Trustee may require
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in relation thereto.
The Mortgage Notes may be redeemed at the option of the
Owners, in whole and in part, on any Payment Date on or after the later to occur
of (a) August 1, 1999 and (b) the Delivery Date of the last Vessel to be
delivered upon mailing a notice of such redemption not less than 30 nor more
than 60 days prior to the date fixed for redemption to the holders of Mortgage
Notes to be redeemed, all as provided in the Indenture, at a redemption price
equal to (a) 100% of the principal amount thereof plus accrued and unpaid
interest to the date fixed for redemption, plus in the event that (i) such
redemption occurs prior to February 1, 2018 and (ii) a Vessel is then subject to
the related Charter or to an Acceptable Replacement Charter pursuant to which
the charterer thereunder is required to pay charter hire equal to or greater
than the Charter Hire payable by the Charterer during the Fixed Period, then the
Make-Whole Premium shall be payable with respect to Mortgage Notes in an amount
equal to Allocated Principal Amount of the Mortgage Notes for such Vessel.
In connection with the optional termination of a Charter by
the Charterer, under certain circumstances more fully set forth in the
Indenture, the Mortgage Notes are also subject to mandatory redemption, in part
on a pro rata basis, in an amount equal to 100% of the Allocated Principal
Amount of the Mortgage Notes for the related Vessel, together with accrued and
unpaid interest to the date fixed for redemption.
The Mortgage Notes are also subject to redemption in part on a
pro rata basis, in an amount equal to the Allocated Principal Amount of the
Mortgage Notes for the related Vessel, on notice as all as provided in the
Indenture if a Total Loss occurs or is declared with
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<PAGE>
respect to such Vessel. The aggregate principal amount of Mortgage Notes to be
redeemed pursuant to this paragraph shall equal the Allocated Principal Amount
of Mortgage Notes for the related Vessel. The redemption date for any redemption
pursuant to this paragraph shall be the date which is on or prior to 90 days
after the occurrence of the Total Loss. The Mortgage Notes are also subject to
redemption in part if a Vessel is not part of the Collateral in accordance with
the Indenture on or before the date which is 180 days after the date such Vessel
was scheduled to be delivered under the related Building Contract.
The Mortgage Notes are also subject to redemption in part on a
pro rata basis, in an amount equal to the Net Reduction in Construction Costs,
under certain circumstances more fully set forth in the Indenture, at a
redemption price equal to 100% of the Net Reduction in Construction Costs,
together with accrued and unpaid interest to the date fixed for redemption.
The Mortgage Notes are also subject to redemption through the
operation of the sinking fund provided for in the Indenture, on August 1, 2007,
and on each August 1 and February 1 thereafter to and including August 1, 2018,
on notice as set forth above and at 100% of the principal amount thereof, the
sinking fund redemption price, together with accrued interest to the date fixed
for redemption. The aggregate principal amount of Mortgage Notes to be redeemed
on any such sinking fund redemption date shall be as set forth in the Indenture
and is subject to change if one or more of the Charters is terminated.
On August 1, 2014, (the "Optional Purchase Date") if neither
Charter has been terminated by the Charterer, each Holder of the Term Notes will
have a one-time option to cause the Owners to purchase all or a part of such
Holder's Term Notes at a purchase price equal to 100% of the principal amount
thereof plus accrued and unpaid interest through the date of purchase. The Term
Notes will be purchased in multiples of $1,000 principal amount, provided that
the principal amount of Term Notes not so purchased must be of an authorized
denomination.
Subject to payment by Golden State Petroleum, as agent for the
Owners, of a sum sufficient to pay the amount due on redemption, interest on
this Mortgage Note (or portion hereof if this Mortgage Note is redeemed in part)
shall cease to accrue upon the date duly fixed for redemption of this Mortgage
Note (or portion hereof if this Mortgage Note is redeemed in part).
Golden State Petroleum, the Indenture Trustee, the Owners, and
any authorized agent of Golden State Petroleum or the Indenture Trustee, may
deem and treat the registered holder hereof as the absolute owner of this
Mortgage Note (whether or not this Mortgage Note shall be overdue and
notwithstanding any notation of ownership or other writing hereon made by anyone
other than Golden State Petroleum, as agent for the Owners, or the Indenture
Trustee or any authorized agent of Golden State Petroleum or the Indenture
Trustee), for the purpose of receiving payment of, or on account of, the
principal hereof and, subject to the provisions on the face hereof, interest
hereon and for all other purposes, and none of Golden State Petroleum, the
Owners or the Indenture Trustee nor any authorized agent of Golden State
Petroleum, the Owners or the Indenture Trustee shall be affected by any notice
to the contrary.
-7-
<PAGE>
No recourse under or upon any obligation, covenant or
agreement contained in the Indenture or this Mortgage Note, or because of any
indebtedness evidenced thereby, shall be had against any incorporator, as such
or against any past, present or future stockholder, officer or director, as
such, of Golden State Petroleum, the Owners or of any successor, either directly
or through Golden State Petroleum, the Owners, or any successor, under any rule
of law, statute or constitutional provision or by the enforcement of any
assessment or by any legal or equitable proceeding or otherwise, all such
liability being expressly waived and released by the Indenture Trustee and by
the acceptance of this Mortgage Note by the Holder hereof and as part of the
consideration for the issue of the Mortgage Notes.
-8-
<PAGE>
SCHEDULE OF EXCHANGES FOR DEFINITIVE NOTES
The following exchanges of a part of this Global Note for Definitive Notes have
been made:
<TABLE>
<CAPTION>
Principal Amount of this Signature of
Amount of decrease in Amount of increase in Global Note following authorized officer of
Principal Amount of this Principal Amount of this such decrease (or Indenture Trustee or
Date of Exchange Global Note Global Note increase) Note Custodian
- - - - - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
</TABLE>
-9-
<PAGE>
ASSIGNMENT FORM
To assign this Mortgage Note, fill in the form below:
(I) or (we) assign and transfer this Mortgage Note to
- - - - - --------------------------------------------------------------------------------
(Insert assignee's social security or tax I.D. no.)
- - - - - --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint _________________ agent to transfer this Mortgage Note
on the books of Golden State Petroleum, as agent for the Owners. The agent may
substitute another to act for him.
Your Signature:_________________________________________________________________
(Sign exactly as your name appears on the other side of this Mortgage Note.)
Date:________________________________
Signature Guarantee:___________
[OPINION OF THACHER PROFFITT & WOOD]
April 30, 1997
Golden State Petroleum Transport Corporation
c/o Cambridge Fund Management L.L.C.
65 East 55th Street
New York, New York 10022
Golden State Petro (IOM I-A) PLC
Golden State Petro (IOM I-B) PLC
15-19 Athol Street
Douglas, Isle of Man 1M1 1LB
Golden State Petroleum Transport Corporation
8.04% First Preferred Exchange Mortgage Notes Due 2019
Registration Statement on Forms S-4 and F-4
------------------------------------------------------
Ladies and Gentlemen:
We are counsel to Golden State Petroleum Transport Corporation
("Golden State Petroleum"), Golden State Petro (IOM I-A) PLC and Golden State
Petro (IOM I-B) PLC (the "Owners", and together with Golden State Petroleum, the
"Registrants") in connection with the registration under the Securities Act of
1933, as amended (the "Act"), of Golden State Petroleum Transport Corporation
First Preferred Exchange Mortgage Notes Due 2019 (the "Notes"), and the related
preparation and filing of a Registration Statement on Forms S-4 and F-4 (the
"Registration Statement"). The Notes are issuable under the Indenture, dated as
of December 1, 1996 (the "Indenture"), between the Registrants and United States
Trust Company of New York as indenture trustee (the "Indenture Trustee"). The
Indenture and the Supplements are substantially in the form filed as an Exhibit
to the Registration Statement. This opinion is rendered pursuant to Items 601(5)
and (8) of Regulation S-K promulgated by the Securities and Exchange Commission.
In connection with rendering this opinion letter, we have
examined the Indenture contained as an Exhibit to the Registration Statement,
the Registration Statement and such other
<PAGE>
Golden State Petroleum Transport Corporation
Golden State Petro (IOM I-A) PLC
Golden State Petro (IOM I-B) PLC Page 2.
documents as we have deemed necessary. As to matters of fact, we have examined
and relied upon representations or certifications of officers of the Registrant
or public officials. We have assumed the authenticity of all documents submitted
to us as originals, the genuineness of all signatures, the legal capacity of
natural persons and the conformity to the originals of all documents submitted
to us as copies. We have assumed that all parties, other than the Registrants,
had the corporate power and authority to enter into and perform all obligations
thereunder. As to such parties, we have also assumed the due authorization by
all requisite corporate action, the due execution and delivery and the validity,
binding effect and enforceability of such documents.
In rendering this opinion letter, we express no opinion as to
the laws of any jurisdiction other than the federal laws of the United States
and the laws of the State of New York, nor do we express any opinion on any
issue not expressly addressed below. In rendering this opinion letter, we have
not passed upon and do not pass upon the application of "doing business" or the
securities laws of any jurisdiction.
Based on the foregoing, we are of the opinion that:
1. The Indenture has been duly authorized by the Registrants
and is a legal and valid obligation of the Registrants, enforceable in
accordance with its terms, except as enforceability may be limited by (a)
bankruptcy, insolvency, liquidation, receivership, moratorium, reorganization or
other similar laws affecting the enforcement of the rights of creditors and (b)
general principles of equity, whether enforcement is sought in a proceeding in
equity or at law.
2. When the Notes have been duly executed and authenticated in
accordance with the provisions of the Indenture, and issued as contemplated in
the Registration Statement and the prospectus delivered in connection therewith,
such Notes will be legally and validly issued and outstanding and the holders of
such Notes will be entitled to the benefits of the Indenture.
3. The description of federal income tax consequences
appearing under the heading "Material United States Federal Income Tax
Consequences" in the prospectus contained in the Registration Statement, while
not purporting to discuss all possible federal income tax consequences of an
investment in the Notes, summarizes the material federal income tax consequences
under the Internal Revenue Code of 1986 of the acquisition, ownership and
disposition of the Exchange Notes and the Existing Notes.
<PAGE>
Golden State Petroleum Transport Corporation
Golden State Petro (IOM I-A) PLC
Golden State Petro (IOM I-B) PLC Page 3.
We hereby consent to the filing of this opinion letter as an
Exhibit to the Registration Statement, and to the use of our name in the
prospectus included in the Registration Statement under the heading "Legal
Matters" and "Material United States Federal Income Tax Consequences", without
admitting that we are "experts" within the meaning of the Act and the rules and
regulations thereunder with respect to any part of the Registration Statement
including this Exhibit.
Very truly yours,
THACHER PROFFITT & WOOD
By: /s/ Thacher Proffitt & Wood
----------------------------------
Thacher Proffitt & Wood
$51,700,000
GOLDEN STATE PETROLEUM TRANSPORT CORPORATION
GOLDEN STATE PETRO (IOM I-A) PLC
GOLDEN STATE PETRO (IOM I-B) PLC
PAYABLE FROM CHARTER HIRE PAYMENTS BY
CHEVRON TRANSPORT CORPORATION
WHOSE OBLIGATIONS ARE GUARANTEED BY
CHEVRON CORPORATION
$5,200,000 6.360% Serial First Preferred Mortgage Notes Due 2000
$6,800,000 6.465% Serial First Preferred Mortgage Notes Due 2001
$7,300,000 6.550% Serial First Preferred Mortgage Notes Due 2002
$7,800,000 6.610% Serial First Preferred Mortgage Notes Due 2003
$8,300,000 6.700% Serial First Preferred Mortgage Notes Due 2004
$8,800,000 6.800% Serial First Preferred Mortgage Notes Due 2005
$7,500,000 6.855% Serial First Preferred Mortgage Notes Due 2006
PURCHASE AGREEMENT
December 19, 1996
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
277 Park Avenue
New York, New York 10172
Dear Sirs and Mesdames:
Golden State Petroleum Transport Corporation, a Delaware corporation
("GOLDEN STATE PETROLEUM"), proposes to issue and sell to you (the "INITIAL
PURCHASER") $51,700,000 aggregate principal amount of its Serial First Preferred
Mortgage Notes Maturing Serially from 2000 to 2006 (the "SERIAL NOTES"). The
Serial Notes are to be issued pursuant to the provisions of an Indenture dated
as of December 1, 1996 (the "INDENTURE") among Golden State Petroleum, as Agent
for the Owners (as defined below), the Owners and United States Trust Company of
New York, as Trustee (the "INDENTURE TRUSTEE"). Concurrently with this offering,
Golden State Petroleum proposes to issue and sell $127,100,000 aggregate
principal amount of its 8.04% First Preferred Mortgage Notes Due 2019
<PAGE>
(the "TERM NOTES") to the Initial Purchaser pursuant to a Purchase Agreement
dated the date hereof relating to the Term Notes (the "TERM NOTES PURCHASE
AGREEMENT").
The Serial Notes will be offered and sold to the Initial Purchaser
without being registered under the United States Securities Act of 1933, as
amended (the "SECURITIES ACT"), in reliance on an exemption therefrom. The
Initial Purchaser has advised Golden State Petroleum that it will make an
offering of the Serial Notes purchased by it hereunder in accordance with
Section 4 hereof on the terms set forth in the Preliminary Offering Memorandum
and the Final Offering Memorandum (each as defined below) as soon as practicable
after the date hereof as in its judgment is advisable.
The proceeds from the sale of the Serial Notes, together with the
proceeds from the sale of the Term Notes, will be used by Golden State Petro
(IOM I-A) PLC and Golden State Petro (IOM I-B) PLC (each, an "OWNER" and
together with Golden State Petroleum, the "COMPANIES") to fund, after paying
certain fees and expenses, the construction for each Owner of a very large crude
carrier (each, a "VESSEL") as well as capitalized interest through the date of
delivery for each Vessel. Each Vessel will be constructed by Samsung Corporation
and Samsung Heavy Industries Co., Ltd. pursuant to a building contract (each, a
"BUILDING CONTRACT") under the supervision and pursuant to the specifications of
Chevron Shipping Company, as agent of Chevron Transport Corporation ("CHEVRON
TRANSPORT"). Initially, each Owner will enter into a bareboat charter (each, an
"INITIAL CHARTER") with Chevron Transport with a term commencing upon the
delivery of the related Vessel and expiring on the eighteenth anniversary
thereof, subject to Chevron's right to terminate each Initial Charter on the
eighth anniversary of its commencement and on each of the four succeeding
two-year anniversaries thereof. The obligations of Chevron Transport under each
Initial Charter will be guaranteed by Chevron Corporation ("CHEVRON").
In connection with the sale of the Serial Notes, Golden State Petroleum
has prepared a preliminary Offering Memorandum dated December 9, 1996 (the
"PRELIMINARY OFFERING MEMORANDUM") and will prepare a final Offering Memorandum
(the "FINAL OFFERING MEMORANDUM" and, with the Preliminary Offering Memorandum,
each an "OFFERING MEMORANDUM") setting forth or including a description of the
terms of the Serial Notes, the construction, acquisition and chartering of the
Vessels, the terms of the offering, a description of the Companies and any
material developments relating to the Companies.
Unless otherwise defined in this Agreement, capitalized terms have the
meanings specified or referred to in the Indenture. The term "OPERATIVE
2
<PAGE>
DOCUMENTS" means, collectively, this Agreement, the Term Notes Purchase
Agreement, the Registration Rights Agreement, the Indenture, the Building
Contracts and any other agreements contemplated by such agreements or the Final
Offering Memorandum to be signed by any of the Companies. To the extent provided
herein, this Agreement is made expressly for the benefit of Chevron and Chevron
Transport as third party beneficiaries.
1 AGREEMENTS TO SELL AND PURCHASE. On the basis of the
representations and warranties contained in this Agreement, and subject to its
terms and conditions, Golden State Petroleum agrees to issue and sell, and the
Initial Purchaser agrees to purchase from Golden State Petroleum, the entire
principal amount of Serial Notes, at percentages of the principal amount thereof
set forth below (the "PURCHASE PRICE") plus accrued interest thereon, if any,
from December 24, 1996 to the date of payment and delivery.
PURCHASE PRICE AS
PERCENTAGE OF
PRINCIPAL AMOUNT
Serial Notes Due 2000 99.625%
Serial Notes Due 2001 99.550%
Serial Notes Due 2002 99.450%
Serial Notes Due 2003 99.425%
Serial Notes Due 2004 99.375%
Serial Notes Due 2005 99.350%
Serial Notes Due 2006 99.350%
2 DELIVERY AND PAYMENT. Delivery of and payment for the aggregate
principal amounts of the Serial Notes set forth below (the "FIRST SERIAL NOTES")
shall be made at the same time as the delivery of and payment for the First Term
Notes (as defined in the Term Notes Purchase Agreement) (the "FIRST CLOSING
DATE"), at such place as is specified in the Term Notes Purchase Agreement for
delivery of the First Term Notes:
PRINCIPAL AMOUNT
Serial Notes Due 2000 $5,200,000
Serial Notes Due 2001 $6,800,000
Serial Notes Due 2002 $7,300,000
Serial Notes Due 2003 $7,800,000
Serial Notes Due 2004 $8,300,000
Serial Notes Due 2005 $8,800,000
3
<PAGE>
Serial Notes Due 2006 $7,500,000
Delivery of and payment for the remaining aggregate principal amounts
of the Serial Notes (the "DELAYED SERIAL NOTES") shall be made at the same time
as the delivery of and payment for the Delayed Term Notes (as defined in the
Term Notes Purchase Agreement) (the "DELAYED CLOSING DATE," and collectively
with the First Closing Date, the "CLOSING DATES"), at such place as is specified
in the Term Notes Purchase Agreement for delivery of the Delayed Term Notes.
Either Closing Date or the location of delivery of and the form of
payment for the Serial Notes may be varied by agreement among the Initial
Purchaser and the Companies.
Certificates for the Serial Notes shall be registered in the name of
Cede & Co., as nominee of The Depository Trust Company, or in such names and
issued in such denominations as the Initial Purchaser shall request in writing
not later than two full business days prior to the related Closing Date. Such
certificates shall be made available to the Initial Purchaser for inspection not
later than 9:30 A.M., New York City time, on the business day next preceding the
related Closing Date. Certificates in definitive form evidencing the Serial
Notes shall be delivered to the Initial Purchaser on the related Closing Date
with any transfer taxes thereon duly paid by Golden State Petroleum, for the
account of the Initial Purchaser, against payment of the Purchase Price therefor
by wire transfer of immediately available funds to an account designated by
Golden State Petroleum.
3 AGREEMENTS OF GOLDEN STATE PETROLEUM AND EACH OWNER. Golden
State Petroleum and each Owner agree with the Initial Purchaser:
(a) To advise the Initial Purchaser and, if requested by the Initial
Purchaser, to confirm such advice in writing, of the happening of any
event during the period referred to in paragraph 3.(d) below which
makes any statement of a material fact made in the Final Offering
Memorandum untrue or which requires the making of any additions to or
changes in such Offering Memorandum in order to make the statements
therein not misleading.
(b) To furnish to the Initial Purchaser, without charge, during the
period referred to in paragraph 3.(d) below as many copies of the
Preliminary Offering Memorandum, the Final Offering Memorandum and any
supplements or amendments thereto, including documents incorporated by
reference, as the Initial Purchaser may reasonably request.
4
<PAGE>
(c) Not to make any amendment or supplement to either Offering
Memorandum of which the Initial Purchaser shall not previously have
been advised or to which it shall reasonably object and to prepare,
promptly upon its reasonable request, any amendment or supplement to
either Offering Memorandum which may be necessary or advisable in
connection with the offering of the Serial Notes by the Initial
Purchaser.
(d) If, during the period after the first date of the offering of the
Serial Notes and prior to the completion of the sale thereof (the
"OFFERING PERIOD"), any event shall occur as a result of which, in the
opinion of counsel for the Initial Purchaser, it becomes necessary to
amend or supplement the Final Offering Memorandum in order to make the
statements therein, in the light of the circumstances when such
Offering Memorandum is delivered to a purchaser, not misleading, or if
it is necessary to amend or supplement such Offering Memorandum to
comply with any law, forthwith to prepare an appropriate amendment or
supplement to such Offering Memorandum so that the statements in such
Offering Memorandum, as so amended or supplemented, will not, in the
light of the circumstances when it is so delivered, be misleading, or
so that such Offering Memorandum will comply with law, and to furnish
to the Initial Purchaser and to such dealers as the Initial Purchaser
shall specify such number of copies thereof as the Initial Purchaser or
such dealers may reasonably request.
(e) Prior to any offering of the Serial Notes, to cooperate with the
Initial Purchaser and counsel for the Initial Purchaser in connection
with the registration or qualification of the Serial Notes for offer
and sale by the Initial Purchaser and by dealers under the state
securities or Blue Sky laws of such jurisdictions as the Initial
Purchaser may request, to continue such qualification in effect so long
as required for distribution of the Serial Notes; provided, however,
that Golden State Petroleum and each Owner shall not be required to
qualify to do business in any jurisdiction where they are not now
qualified or to take any action which would subject them to general or
unlimited service of process in any jurisdiction where they are not now
so subject.
(f) During the period of five years after the date of this Agreement,
(i) to mail as soon as reasonably practicable after the end of each
fiscal year to the record holders of its Serial Notes a separate
financial report of Golden State Petroleum and each Owner and their
respective subsidiaries on a consolidated basis (and a similar
financial report of all unconsolidated subsidiaries, if any), all such
financial reports
5
<PAGE>
to include a consolidated balance sheet, a consolidated statement of
operations, a consolidated statement of cash flows and a consolidated
statement of shareholders' equity as of the end of and for such fiscal
year, together with comparable information as of the end of and for the
preceding year, certified by independent certified public accountants,
and (ii) to mail and make generally available as soon as practicable
after the end of each quarterly period (except for the last quarterly
period of each fiscal year) to such holders, a consolidated balance
sheet, a consolidated statement of operations and a consolidated
statement of cash flows (and similar financial reports of all
unconsolidated subsidiaries, if any) as of the end of and for such
period, and for the period from the beginning of such year to the close
of such quarterly period, together with comparable information for the
corresponding periods of the preceding year.
(g) During the period referred to in paragraph 3.(f) above, to furnish
to the Initial Purchaser as soon as available a copy of each report or
other publicly available information of Golden State Petroleum and each
Owner mailed to the security holders of Golden State Petroleum or filed
with the Commission and such other publicly available information
concerning Golden State Petroleum and each Owner and their respective
subsidiaries as the Initial Purchaser may reasonably request.
(h) To use the proceeds from the sale of the Serial Notes in the
manner described in the Final Offering Memorandum under the caption
"Offering Memorandum Summary--Sources and Uses of Funds Through the
Delivery Dates."
(i) Golden State Petroleum and the Owners will pay all costs,
expenses, disbursements, fees and taxes incident to (i) the
preparation, printing, filing and distribution of each Offering
Memorandum (including financial statements and all amendments and
supplements prior to or during the period specified in paragraph 3.(d),
but not including fees and disbursements of counsel to the Initial
Purchaser, (ii) the registration or qualification of the Serial Notes
for offer and sale under the securities or Blue Sky laws of the several
states (including in each case the fees and disbursements of counsel
for the Initial Purchaser relating to such registration or
qualification and memoranda relating thereto), (iii) furnishing such
copies of each Offering Memorandum and all amendments and supplements
thereto as may be requested for use in connection with the offering or
sale of the Serial Notes by the Initial Purchaser or by dealers to whom
Serial Notes may be sold, (iv) any fees charged by rating agencies for
the rating of the Serial Notes, (v) the fees and expenses, if
6
<PAGE>
any, incurred in connection with the designation of the Serial Notes
for trading in the PORTAL market and the deposit of the global Serial
Notes with The Depository Trust Company, (vi) any stamp or transfer
taxes payable in connection with the sale of the Serial Notes to the
Initial Purchaser, (vii) the issuance, transfer and delivery by the
Companies of the Serial Notes (including, without limitation, the fees
of the Companies' transfer agent and registrar, the cost of their
personnel and other internal costs, the costs of printing and engraving
the certificates representing the Serial Notes and any stock and
securities transfer taxes payable thereon), (viii) the reasonable fees
and expenses of the Indenture Trustee and the fees and disbursements of
counsel for the Indenture Trustee and (ix) the costs and expenses of
the Companies relating to investor presentations on any "road show"
undertaken in connection with the marketing of the offering of the
Serial Notes, including without limitation, expenses associated with
the production of road show slides and graphics, travel and lodging
expenses of officers of the Companies (provided that the costs of car
services and charter aircraft during the "road show" will be paid
equally by the Companies on the one hand and the Initial Purchaser on
the other and the cost of conference rooms and other meeting places
used on the "road show" to make investor presentations will be paid by
the Initial Purchaser).
(j) To use its reasonable best efforts to do and perform all things
required or necessary to be done and performed under this Agreement by
Golden State Petroleum and each Owner prior to the Delayed Closing Date
and to satisfy all conditions precedent to the delivery of the Serial
Notes.
(k) Not to sell, offer for sale or solicit offers to buy or otherwise
negotiate, and not to permit its affiliates (as defined in Regulation
501(b) of Regulation D under the Securities Act, "AFFILIATES") to sell,
offer for sale or solicit offers to buy or otherwise negotiate,
directly or through any agent, in respect of any security (as defined
in the Securities Act) the offering of which security will be
integrated with the sale of the Serial Notes in a manner which would
require the registration of the Serial Notes under the Securities Act
and to take all action that is appropriate to assure that its offerings
of other securities will not be integrated for purposes of the
Securities Act with the offerings contemplated hereby.
(l) Not to solicit any offer to buy or sell the Serial Notes by means
of any form of general solicitation or general advertising (as those
terms are used in Regulation D under the Securities Act ("REGULATION
7
<PAGE>
D")) in any manner involving a public offering within the meaning of
Section 4(2) of the Securities Act, including: (i) any advertisement,
article, notice or other communication published in any newspaper,
magazine or similar medium or broadcast over television or radio and
(ii) any seminar or meeting whose attendees have been invited by any
general solicitation or general advertising.
(m) Not to engage, or permit any person acting on behalf of any of the
Companies to engage, in any directed selling efforts within the meaning
of Regulation S under the Securities Act ("REGULATION S") with respect
to the Serial Notes, and to comply, and cause each such person so
acting to comply, with the offering restrictions requirement of
Regulation S.
(n) So long as any of the Serial Notes remain outstanding and are
"RESTRICTED SECURITIES" within the meaning of Rule 144(a)(3) under the
Securities Act, during any period in which it is not subject to Section
13 or 15(d) of the Exchange Act, to make available to any holder of
Serial Notes in connection with any sale thereof and any prospective
purchaser of Serial Notes from such holder, in each case upon request,
the information specified in, and meeting the requirements of, Rule
144A(d)(4) under the Securities Act.
(o) Not to, and not to permit any of its affiliates (as defined in
Rule 144(a)(1)) to, (i) purchase any of the Serial Notes unless such
Serial Notes are held in the form of a certificated Serial Note (as
such term is used in the Final Offering Memorandum under the caption
"Description of the Serial Notes--Book-Entry Registration") and (ii)
resell any of the Serial Notes, except as permitted by the Indenture.
4 OFFERING OF NOTES; RESTRICTIONS ON TRANSFER.
The Initial Purchaser represents and warrants that:
(a) it is a qualified institutional buyer as defined in Rule 144A
under the Securities Act (a "QIB");
(b) it will not solicit offers for, or offer to sell, Serial Notes by
any form of general solicitation or general advertising (as those terms
are used in Regulation D under the Securities Act) or in any manner
involving a public offering within the meaning of Section 4(2) of the
Securities Act;
8
<PAGE>
(c) it will solicit offers for Serial Notes only from, and will offer
such Serial Notes only to, persons that it reasonably believes to be
(i) in the case of offers inside the United States, QIBs and (ii) in
the case of offers outside the United States, to persons other than
U.S. persons ("FOREIGN PURCHASERS," which term shall include dealers or
other professional fiduciaries in the United States acting on a
discretionary basis for foreign beneficial owners (other than an estate
or trust)) in reliance upon Regulation S under the Securities Act who,
in each case, in purchasing such Serial Notes are deemed to have
represented and agreed as provided in the Final Offering Memorandum
under the caption "Notice to Investors";
(d) it understands that no action has been or will be taken in any
jurisdiction by the Companies that would permit a public offering of
the Serial Notes, or possession or distribution of either Offering
Memorandum or any other offering or publicity material relating to the
Serial Notes, in any country or jurisdiction where action for that
purpose is required;
(e) it will comply with all applicable laws and regulations in each
jurisdiction in which it acquires, offers, sells or delivers Serial
Notes or has in its possession or distributes either Offering
Memorandum or any such other material, in all cases at its own expense;
(f) it understands that the Serial Notes have not been registered
under the Securities Act and may not be offered or sold within the
United States or to, or for the account or benefit of, U.S. persons
except in accordance with Rule 144A or Regulation S under the
Securities Act or pursuant to another exemption from the registration
requirements of the Securities Act;
(g) it has not offered the Serial Notes and will not offer and sell
the Serial Notes (i) as part of the distribution at any time and (ii)
otherwise until 40 days after the later of the date hereof and the
related Closing Date, except in accordance with Rule 903 of Regulation
S or as otherwise permitted in paragraph (a) above; and neither it, nor
its Affiliates nor any person acting on its behalf has engaged or will
engage in any directed selling efforts (within the meaning of
Regulation S) with respect to the Serial Notes; and it, its Affiliates
and any such other persons have complied and will comply with the
offering restrictions requirement of Regulation S;
9
<PAGE>
(h) it has (i) not offered or sold and will not offer or sell any
Serial Notes to persons in the United Kingdom except to persons whose
ordinary activities involve them in acquiring, holding, managing or
disposing of investments (as principal or agent) for the purposes of
their businesses or otherwise in circumstances which have not resulted
and will not result in an offer to the public in the United Kingdom
within the meaning of the Public Offers of Securities Regulations 1995
("Regulations"); (ii) complied with and will comply with all applicable
provisions of the Financial Services Act 1986 and the Regulations with
respect to anything done by it in relation to the Serial Notes in, from
or otherwise involving the United Kingdom; and (iii) only issued or
passed on and will only issue or pass on to any person in the United
Kingdom any document received by it in connection with the issue of the
Serial Notes if that person is of a kind described in Article 11(3) of
the Financial Services Act 1986 (Investment Advertisements)
(Exemptions) Order 1996 or is a person to whom such document may
otherwise lawfully be issued or passed on;
(i) it understands that the Serial Notes have not been and will not be
registered under the Securities and Exchange Law of Japan, and
represents that it has not offered or sold, and agrees that it will not
offer or sell, any Serial Notes, directly or indirectly in Japan or to
or from any resident of Japan except (i) pursuant to an exemption from
the registration requirements of the Securities and Exchange Law of
Japan and (ii) in compliance with any other applicable requirements of
Japanese law; and
(j) it agrees that, at or prior to confirmation of sales of the Serial
Notes, it will have sent to each distributor, dealer or person
receiving a selling concession, fee or other remuneration that
purchases Serial Notes from it during the restricted period a
confirmation or notice to substantially the following effect:
The Securities covered hereby have not been registered under
the U.S. Securities Act of 1933 (the "SECURITIES ACT") and may
not be offered and sold within the United States or to, or for
the account or benefit of, U.S. persons (i) as part of their
distribution at any time or (ii) otherwise until 40 days after
the later of the commencement of the offering and the closing
date, except in either case in accordance with Regulation S
(or Rule 144A if available) under the Securities Act. Terms
used above have the meanings given to them by Regulation S.
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Terms used in this Section 4 have the meanings given to them
by Regulation S.
5 REPRESENTATIONS AND WARRANTIES. Golden State Petroleum and each
Owner, jointly and severally, represent and warrant to the Initial Purchaser
that:
(a) The Final Offering Memorandum (as amended or supplemented if the
Companies shall have furnished any amendments or supplements thereto)
was, on the date of its issuance, and is, at the date hereof, accurate
in all material respects and did not and does not contain any untrue
statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; and the Final
Offering Memorandum (as amended or supplemented as necessary) will be,
as of each Closing Date, accurate in all material respects and will not
contain any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein, in the
light of the circumstances, existing at each Closing Date, not
misleading; PROVIDED that this representation and warranty shall not
apply to any statements or omissions made in reliance upon and in
conformity with information relating to the Initial Purchaser furnished
to the Company in writing by the Initial Purchaser expressly for use
therein.
(b) The Preliminary Offering Memorandum was, on the date of its
issuance, accurate in all material respects and did not contain any
untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; PROVIDED that
this representation and warranty shall not apply to any statements or
omissions made in reliance upon and in conformity with the information
relating to the Initial Purchaser furnished to the Companies in writing
by the Initial Purchaser expressly for use therein.
(c) Golden State Petroleum and each Owner has been duly incorporated,
is validly existing as a corporation in good standing under the laws of
its jurisdiction of incorporation and has the corporate power and
authority to carry on its business as it is currently being conducted
and to own, lease and operate its properties, and each is duly
qualified and is in good standing as a foreign corporation authorized
to do business in each jurisdiction in which the nature of its business
or its ownership or leasing of property requires such qualification,
except where the failure to be so qualified would not have a material
adverse effect on such Company.
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(d) Any taxes, fees and other governmental charges which are due and
payable on either Closing Date in connection with the execution,
delivery and performance of this Agreement, the Indenture and the other
Operative Documents being executed on or before the Delayed Closing
Date and the execution, delivery and sale of the Serial Notes shall
have been paid by Golden State Petroleum or the Owners, at or prior to
the related Closing Date.
(e) The Serial Notes have been duly authorized and, when executed and
authenticated in accordance with the provisions of the Indenture and
delivered to the Initial Purchaser against payment therefor as provided
by this Agreement, will be entitled to the benefits of the Indenture,
and will be valid and binding obligations of the Owners, enforceable in
accordance with their terms except as (i) the enforceability thereof
may be limited by bankruptcy, insolvency or similar laws affecting
creditors' rights generally and (ii) rights of acceleration and the
availability of equitable remedies may be limited by equitable
principles of general applicability.
(f) This Agreement has been duly authorized, executed and delivered by
Golden State Petroleum and each Owner and is a valid and binding
agreement of Golden State Petroleum and each Owner enforceable in
accordance with its terms (except as rights to indemnity and
contribution hereunder may be limited by applicable law).
(g) The Indenture has been duly authorized, executed and delivered by
each of the Companies, and is a valid and binding agreement of each
Company, enforceable in accordance with its terms except as (i) the
enforceability thereof may be limited by bankruptcy, insolvency or
similar laws affecting creditors' rights generally and (ii) rights of
acceleration and the availability of equitable remedies may be limited
by equitable principles of general applicability.
(h) The Serial Notes conform in all material respects to the
description thereof contained in the Offering Memorandum.
(i) Neither Golden State Petroleum nor any Owner is in violation of
its respective organizational documents or by-laws or in default in the
performance of any obligation, agreement or condition contained in any
bond, debenture, note or any other evidence of indebtedness or in any
other agreement, indenture or instrument material
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to the conduct of the business of such Company, to which such Company
is a party or by which such Company or its property is bound.
(j) The execution, delivery and performance of this Agreement, the
Indenture, the Serial Notes and all other Operative Documents being
executed by Golden State Petroleum on or before the Delayed Closing
Date, and compliance by Golden State Petroleum with all the provisions
hereof and thereof and the consummation of the transactions
contemplated hereby and thereby will not require any consent, approval,
authorization or other order of any court, regulatory body,
administrative agency or other governmental body (except as such may be
required under the securities or Blue Sky laws of the various states)
and will not conflict with or constitute a breach of any of the terms
or provisions of, or a default under, the organizational documents or
by-laws of Golden State Petroleum or any agreement, indenture or other
instrument to which it is a party or by which it or its property is
bound, or violate or conflict with any laws, administrative regulations
or rulings or court decrees applicable to Golden State Petroleum or its
property.
(k) The execution, delivery and performance of this Agreement and all
other Operative Documents being executed by either Owner on or before
the Delayed Closing Date, and compliance by the Owners with all the
provisions hereof and thereof and the consummation of the transactions
contemplated hereby and thereby will not require any consent, approval,
authorization or other order of any court, regulatory body,
administrative agency or other governmental body (except as such may be
required under the securities or Blue Sky laws of the various states)
and will not conflict with or constitute a breach of any of the terms
or provisions of, or a default under, the charter or by-laws of either
of the Owners or any agreement, indenture or other instrument to which
such Owner is a party or by which such Owner or its property is bound,
or violate or conflict with any laws, administrative regulations or
rulings or court decrees applicable to such Owner or its property.
(l) There are no material legal or governmental proceedings pending to
which Golden State Petroleum or either Owner is a party or of which any
of their respective property is the subject, and, to the best of such
Company's knowledge, no such proceedings are threatened or
contemplated. No contract or document of a character required to be
described in the Final Offering Memorandum is not so described as
required.
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(m) To such Company's knowledge, neither Golden State Petroleum nor
either Owner has violated any foreign, federal, state or local law or
regulation relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants ("ENVIRONMENTAL LAWS"), which in each case might result in
any material adverse change in the business, prospects, financial
condition or results of operation of such Company.
(n) Except as otherwise set forth in the Final Offering Memorandum or
such as are not material to the business, prospects, financial
condition or results of operation of such Company, Golden State
Petroleum and each Owner has good and marketable title, free and clear
of all liens, claims, encumbrances and restrictions except liens for
taxes not yet due and payable, to all property and assets described in
the Final Offering Memorandum as being owned by such Company.
(o) Golden State Petroleum and each of the Owners maintains the
various insurance required of it under the financing documents to which
it is a party.
(p) Neither Golden State Petroleum nor either Owner is an "investment
company" or a company "controlled" by an "investment company" within
the meaning of the Investment Company Act of 1940, as amended.
(q) All tax returns required to be filed by Golden State Petroleum or
either of the Owners, in all jurisdictions, have been so filed, except
insofar as the failure to file such returns would not have a material
adverse effect on such Company. All taxes, including withholding taxes,
penalties and interest, assessments, fees and other charges due or
claimed to be due from such entities or that are due and payable have
been paid, other than those being contested in good faith and for which
adequate reserves have been provided or those currently payable without
penalty or interest, except insofar as the failure to pay such taxes
would not have a material adverse effect on such Company.
(r) The laws, governmental rules, regulations and decrees of the Isle
of Man and any political subdivision thereof permit the transfer of
United States Dollars as required by this Agreement.
(s) Except for the fees payable as provided in the Final Offering
Memorandum, neither Golden State Petroleum nor either Owner has
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become obligated to pay any fee or commission to or any expenses of any
broker, finder or investment banker or anyone else acting in the
capacity of a broker, finder or investment banker in connection with
the transactions contemplated hereby.
(t) Golden State Petroleum and the Owners shall pay amounts payable
hereunder in United States Dollars in New York City as may be necessary
in order that every net payment by such Company of any fees or expenses
payable or reimbursable hereunder, after deduction or withholding for
or on account of any present or future tax, assessment or other
governmental charge (including, without limitation, value added tax)
imposed upon or as a result of such payment by any political
subdivision or taxing authority thereof or any non-U.S. jurisdiction
from which such payment or reimbursement may be made, will not be less
than the amount provided for herein to be paid or reimbursed by such
Company.
(u) Golden State Petroleum and each Owner have complied with all
provisions of Section 517.075, Florida Statutes (Chapter 92-198, Laws
of Florida).
(v) All of the representations and warranties by (i) Golden State
Petroleum contained in each Operative Document to which it is a party
and (ii) the Owners contained in the Building Contract to which such
Owner is a party and each Operative Document to which such Owner is a
party are incorporated by reference in this Agreement as if set forth
herein, and Golden State Petroleum and the Owners represent and warrant
that such representations and warranties are true and correct as of the
date of this Agreement, except to the extent that such representations
and warranties relate solely to an earlier date or later date (in which
case such representations and warranties are correct on and as of such
earlier date or will be correct on and as of such later date, as the
case may be).
(w) Coopers & Lybrand, L.L.P. is an "independent public accountant,"
as defined in the Securities Act, with respect to each of the Owners.
(x) None of the Companies nor any Affiliate of the Companies has
directly, or through any agent, (i) sold, offered for sale, solicited
offers to buy or otherwise negotiated in respect of, any security (as
defined in the Securities Act) the offering of which security is or
will be integrated with the sale of the Serial Notes in a manner that
would require the registration of the Serial Notes under the Securities
Act or (ii) solicited any offer to
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buy or sell the Serial Notes by any form of general solicitation or
general advertising (as those terms are used in Regulation D) in any
manner involving a public offering within the meaning of Section 4(2)
of the Securities Act.
(y) None of the Companies nor any Affiliate of the Companies nor any
person acting on any of their behalf has engaged in any directed
selling efforts (as that term is defined in Regulation S) with respect
to the Serial Notes.
(z) It is not necessary in connection with the offer, sale and
delivery of the Serial Notes in the manner contemplated by this
Agreement to register the Serial Notes under the Securities Act or to
qualify the Indenture under the Trust Indenture Act of 1939. The Serial
Notes satisfy the requirements set forth in Rule 144A(d)(3) under the
Securities Act.
6 INDEMNIFICATION. (a) Golden State Petroleum and each Owner agree,
jointly and severally, to indemnify and hold harmless the Initial Purchaser,
Chevron and Chevron Transport, and each person, if any, who controls the Initial
Purchaser, Chevron or Chevron Transport within the meaning of Section 15 of the
Securities Act or Section 20 of the Securities Exchange Act of 1934, as amended
(the "EXCHANGE ACT"), and the officers, directors, employees, representatives
and agents of the Initial Purchaser, from and against any and all losses,
claims, damages, liabilities and judgments caused by any untrue statement or
alleged untrue statement of a material fact contained in either Offering
Memorandum (as amended or supplemented if the Companies shall have furnished any
amendments or supplements thereto), or caused by any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, except insofar as such
losses, claims, damages, liabilities or judgments are caused by any such untrue
statement or omission or alleged untrue statement or omission based upon
information relating to the Initial Purchaser furnished in writing to Golden
State Petroleum by the Initial Purchaser expressly for use therein. This
indemnity agreement will be in addition to any liability which Golden State
Petroleum or any Owner may otherwise have.
(b) In case any action shall be brought against any person in respect
of which indemnity may be sought pursuant to the preceding paragraph
(the "INDEMNIFIED PARTY"), based upon either Offering Memorandum or any
amendment or supplement thereto and with respect to which indemnity may
be sought against any of the Companies, the indemnified party shall
promptly notify the indemnifying party in writing and the indemnifying
party shall assume the defense thereof, including the
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employment of counsel reasonably satisfactory to such indemnified party
and payment of all fees and expenses. The indemnified party shall have
the right to employ separate counsel in any such action and participate
in the defense thereof, but the fees and expenses of such counsel shall
be at the expense of the indemnified party unless (i) the employment of
such counsel shall have been specifically authorized in writing by the
indemnifying party, (ii) the indemnifying party shall have failed to
assume the defense and employ counsel within 30 days after notice of
commencement of such action or (iii) the named parties to any such
action (including any impleaded parties) include both the indemnified
party and the indemnifying party and the indemnified party shall have
been advised by such counsel that there may be one or more legal
defenses available to it which are different from or additional to
those available to the other party or parties named in such action (in
which case the indemnifying party shall not have the right to assume
the defense of such action on behalf of the indemnified party, it being
understood, however, that the indemnifying party shall not, in
connection with any one such action or separate but substantially
similar or related actions in the same jurisdiction arising out of the
same general allegations or circumstances, be liable for the fees and
expenses of more than one separate firm of attorneys (in addition to
any local counsel) for the indemnified parties, which firm shall be
designated in writing by the Initial Purchaser and that all such fees
and expenses shall be reimbursed as they are incurred). The
indemnifying party shall not be liable for any settlement of any such
action effected without its written consent but if settled with the
written consent of the indemnifying party, the indemnifying party
agrees to indemnify and hold harmless the indemnified parties from and
against any loss or liability by reason of such settlement.
Notwithstanding the foregoing sentence, if at any time an indemnified
party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel as contemplated by
the second sentence of this paragraph, the indemnifying party agrees
that it shall be liable for any settlement of any proceeding effected
without its written consent if (i) such settlement is entered into more
than 10 business days after receipt by such indemnifying party of the
aforesaid request and (ii) such indemnifying party shall not have
reimbursed the indemnified party in accordance with such request prior
to the date of such settlement. No indemnifying party shall, without
the prior written consent of the indemnified party, effect any
settlement of any pending or threatened proceeding in respect of which
any indemnified party is or could have been a party and indemnity could
have been sought hereunder by such indemnified party, unless such
settlement includes an
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unconditional release of such indemnified party from all liability on
claims that are the subject matter of such proceeding.
(c) The Initial Purchaser agrees to indemnify and hold harmless Golden
State Petroleum and each Owner, their directors, their officers who
sign the Registration Statement, Chevron, Chevron Transport and any
person controlling any Company, Chevron or Chevron Transport within the
meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act, to the same extent as the foregoing indemnity from the
Companies to the Initial Purchaser, Chevron and Chevron Transport, but
only with reference to information relating to the Initial Purchaser
furnished in writing by the Initial Purchaser expressly for use in
either Offering Memorandum. In case any action shall be brought against
any Company, any of its directors, any such officer, Chevron or Chevron
Transport or any person controlling any Company, Chevron or Chevron
Transport based on either Offering Memorandum and in respect of which
indemnity may be sought against the Initial Purchaser, the Initial
Purchaser shall have the rights and duties given to the Companies
(except that if the Companies shall have assumed the defense thereof,
the Initial Purchaser shall not be required to do so, but may employ
separate counsel therein and participate in the defense thereof but the
fees and expenses of such counsel shall be at the expense of the
Initial Purchaser), and the Companies, their directors, any such
officers and any person controlling the Companies shall have the rights
and duties given to the Initial Purchaser, by Section 6.(b) hereof.
This indemnity agreement will be in addition to any liability which the
Initial Purchaser may otherwise have.
(d) If the indemnification provided for in this Section 6 is
unavailable to an indemnified party in respect of any losses, claims,
damages, liabilities or judgments referred to therein, then each
indemnifying party, in lieu of indemnifying such indemnified party,
shall contribute to the amount paid or payable by such indemnified
party as a result of such losses, claims, damages, liabilities and
judgments (i) in such proportion as is appropriate to reflect the
relative benefits received by the indemnifying party on the one hand
and the indemnified party on the other hand from the offering of the
Serial Notes or (ii) if the allocation provided by clause (i) above is
not permitted by applicable law, in such proportion as is appropriate
to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Companies and the Initial
Purchaser in connection with the statements or omissions which resulted
in such losses, claims, damages, liabilities or judgments, as well as
any other relevant equitable considerations. As between the Companies
and
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the Initial Purchaser, the relative benefits received by the Companies
on the one hand and the Initial Purchaser on the other hand shall be
deemed to be in the same proportion as the total net proceeds from the
offering (before deducting expenses) received by Golden State
Petroleum, and the total discounts to Initial Purchaser received by the
Initial Purchaser, bear to the total price to investors of the Serial
Notes, in each case as set forth in the table on the cover page of the
Final Offering Memorandum. For purposes of this Section 6, each person
who controls the Initial Purchaser within the meaning of either the
Securities Act or the Exchange Act shall have the same rights to
contribution as the Initial Purchaser and each person who controls any
Company within the meaning of either the Securities Act or the Exchange
Act, shall have the same rights to contribution as each Owner. The
relative fault of the Companies on the one hand and the Initial
Purchaser on the other hand shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a
material fact or the omission to state a material fact relates to
information supplied by the Companies or the Initial Purchaser and the
parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
The Companies and the Initial Purchaser agree that it would not be just
and equitable if contribution pursuant to this Section 6.(d) were determined by
pro rata allocation or by any other method of allocation which does not take
account of the equitable considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an indemnified party as a result of the
losses, claims, damages, liabilities or judgments referred to in the immediately
preceding paragraph shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 6, the Initial Purchaser shall
not be required to contribute any amount in excess of the amount of discount of
the Serial Notes purchased by it and distributed to the public. No person guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.
Any party entitled to contribution will, promptly after receipt of
notice of commencement of any action, suit or proceeding against such party in
respect of which a claim for contribution may be made against another party or
parties under this paragraph 6.(d), notify such party from whom contribution may
be sought, but the omission to so notify in writing such party or parties shall
not relieve the
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party or parties from whom contribution may be sought from any other obligation
it or they may have hereunder or otherwise than under this paragraph 6.(d).
7 CONDITIONS OF INITIAL PURCHASER'S OBLIGATION TO PURCHASE FIRST
SERIAL NOTES. The obligation of the Initial Purchaser to purchase the First
Serial Notes under this Agreement is subject to the satisfaction of each of the
following conditions:
(a) All the representations and warranties of the Companies contained
in this Agreement and the Term Notes Purchase Agreement shall be true
and correct on the First Closing Date with the same force and effect as
if made on and as of the First Closing Date.
(b) Subsequent to the execution and delivery of this Agreement and
prior to the First Closing Date, there shall not have been any
downgrading, nor shall any notice have been given of any intended or
potential downgrading or of any review for a possible change that does
not indicate the direction of the possible change, in the rating
accorded any securities of Golden State Petroleum or either Owner by
any "nationally recognized statistical rating organization", as such
term is defined for purposes of Rule 436(g)(2) under the Securities
Act, and each of Standard & Poor's Rating Group, Moody's Investors
Service, Inc. and Duff & Phelps Credit Rating Co. shall have affirmed
their Serial Notes ratings of "AA," "Aa2" and "AA," respectively.
(c)(i) Since the date of the latest balance sheet included in the
Preliminary Offering Memorandum, there shall not have been any material
adverse change, or any development involving a prospective material
adverse change, in the condition, financial or otherwise, or in the
earnings, affairs or business prospects, whether or not arising in the
ordinary course of business, of any of the Companies, (ii) since the
date of the latest balance sheet included in the Preliminary Offering
Memorandum there shall not have been any change, or any development
involving a prospective material adverse change, in the capital stock
or in the long-term debt of any of the Companies from that set forth in
the Preliminary Offering Memorandum, (iii) the Companies and any of
their respective subsidiaries shall have no liability or obligation,
direct or contingent, which is material to such Company and its
respective subsidiaries, taken as a whole, other than those reflected
in the Preliminary Offering Memorandum and (iv) on the First Closing
Date the Initial Purchaser shall have received certificates dated the
First Closing Date,
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signed by an authorized representative of each of the Companies,
confirming the matters set forth in paragraphs 7.(a), 7.(b) and 7.(c).
(d) The Initial Purchaser shall have received on the First Closing
Date an opinion (satisfactory to the Initial Purchaser and its
counsel), dated the First Closing Date, of Thacher Proffitt & Wood,
special counsel for Golden State Petroleum and the Owners, to the
effect set forth in Exhibit A.
(e) The Initial Purchaser shall have received on the First Closing
Date an opinion (satisfactory to the Initial Purchaser and its
counsel), dated the First Closing Date, of Cains, special Isle of Man
counsel for the Owners, to the effect set forth in Exhibit B.
(f) The Initial Purchaser shall have received on the First Closing
Date an opinion, dated the First Closing Date, of Davis Polk &
Wardwell, special counsel for the Initial Purchaser, to the effect set
forth in Exhibit C.
(g) The Initial Purchaser shall have received on and as of the First
Closing Date, in form and substance satisfactory to you, a letter from
Coopers & Lybrand, L.L.P., independent public accountants, with respect
to certain financial information of Golden State Petroleum and the
Owners contained in each Offering Memorandum and substantially in the
form and substance of the letter delivered to you by Coopers & Lybrand,
L.L.P. on the date of this Agreement.
(h) The Companies shall not have failed at or prior to the First
Closing Date to perform or comply with any of the agreements herein
contained and required to be performed or complied with by such Company
at or prior to the First Closing Date.
(i) All of the conditions required in the Term Notes Purchase
Agreement to be complied with on or prior to the First Closing Date
shall have been satisfied or waived in writing on the First Closing
Date.
(j) Each of Chevron and Chevron Transport shall have executed and
delivered, and to the extent performance is required on or prior to the
First Closing Date, shall have performed all of their obligations
pursuant to the Chevron Agreement (the "CHEVRON AGREEMENT") dated
December 19, 1996 by and among Chevron, Chevron Transport and the
Initial Purchaser; and all the representations and warranties of
Chevron and Chevron Transport contained in the Chevron Agreement shall
be true and
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correct on the First Closing Date with the same force and effect as if
made on and as of the First Closing Date.
(k) Each of R.S. Platou Economic Research a.s. and McQuilling
Brokerage Partners, Inc. shall have consented in writing to being named
in each Offering Memorandum.
(l) Each of Cambridge Petroleum Transport Corporation and the
Indenture Trustee shall have executed and delivered an agreement
pursuant to which Cambridge Petroleum Transport Corporation agrees to
contribute its brokerage commission to the Trustee for deposit in the
PreFunding Account (as defined in the Indenture).
8 CONDITIONS OF INITIAL PURCHASER'S OBLIGATION TO PURCHASE DELAYED
SERIAL NOTES. The obligation of the Initial Purchaser to purchase the Delayed
Serial Notes under this Agreement is subject to the satisfaction of each of the
following conditions:
(a) The Term Notes and Serial Notes to be issued and purchased on the
First Closing Date shall have been so issued and purchased and the Term
Notes to be issued and purchased on the Delayed Closing Date shall,
contemporaneously with the issuance and purchase of the Delayed Serial
Notes, be so issued and purchased.
(b) The issuance and purchase of the Delayed Serial Notes shall not be
prohibited by applicable law.
9 TERMINATION. This Agreement may be terminated at any time prior to
delivery of and payment for the First Serial Notes by you by written notice to
the Companies if any of the following has occurred: (i) since the respective
dates as of which information is given in either Offering Memorandum, any
adverse change or development involving a prospective adverse change in the
condition, financial or otherwise, of any of the Companies or the earnings,
affairs, or business prospects of any of the Companies, whether or not arising
in the ordinary course of business, which would, in your judgment, make it
impracticable to market the First Serial Notes on the terms and in the manner
contemplated in the Final Offering Memorandum, (ii) any outbreak or escalation
of hostilities or other national or international calamity or crisis or change
in economic conditions or in the financial markets of the United States or
elsewhere that, in your reasonable judgment, is material and adverse and would,
in your reasonable judgment, make it impracticable to market the First Serial
Notes on the terms and in the manner contemplated in the Final Offering
Memorandum, (iii) the suspension or material
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limitation of trading in securities on the New York Stock Exchange or limitation
on prices for securities on such exchange, (iv) the enactment, publication,
decree or other promulgation of any federal or state statute, regulation, rule
or order of any court or other governmental authority which in your opinion
materially and adversely affects, or will materially and adversely affect, the
business or operations of any of the Companies or (v) the declaration of a
general moratorium on commercial banking activities by either federal or New
York State authorities.
10 CONSENT TO JURISDICTION. Any legal suit, action or proceeding
against any of the Companies arising out of or relating to this Agreement, the
Indenture or any Operative Document, or any transaction contemplated hereby or
thereby, may be instituted in any federal or state court in The City of New
York, State of New York and each of the Companies hereby waives any objection
which it may now or hereafter have to the laying of venue of any such suit,
action or proceeding, and each of the Companies hereby irrevocably submits to
the jurisdiction of any such court in any such suit, action or proceeding. Each
of the Companies hereby irrevocably appoints and designates CT Corporation
System, having an address at 1633 Broadway, New York, New York, its true and
lawful attorney-in-fact and duly authorized agent for the limited purpose of
accepting service of legal process in connection with any such suit, action or
proceeding and each of the Companies agrees that service of process upon such
party shall constitute personal service of such process on it. Each of the
Companies shall maintain the designation and appointment of such authorized
agent until all amounts payable under this Agreement, the Indenture and the
Operative Documents shall have been paid in full. If such agent shall cease to
so act, each of the Companies shall immediately designate and appoint another
such agent satisfactory to you in the City of New York, State of New York, and
shall promptly deliver to you evidence in writing of such other agent's
acceptance of such appointment.
11 MISCELLANEOUS. Notices given pursuant to any provision of this
Agreement shall be addressed as follows: (a) if to Golden State Petroleum, to
Golden State Petroleum Transport Corporation, 65 East 55th Street, Suite 3300,
New York, New York 10022, (b) if to Chevron Transport, to Chevron Transport
Corporation, c/o Chevron House, 11 Church Street, Hamilton, Bermuda HM11,
Attention: Secretary, (c) if to Chevron, to Chevron Corporation, 225 Bush
Street, San Francisco, California 94104, Attention: Secretary, (d) if to either
of the Owners, 15-19 Athol Street, Douglas, Isle of Man, British Isles and (e)
if to the Initial Purchaser to Donaldson, Lufkin & Jenrette Securities
Corporation, 277 Park Avenue, New York, New York 10172, Attention: Syndicate
Department, or in any case to such other address as the person to be notified
may have requested in writing.
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No recourse under or upon any obligation, covenant or agreement
contained in this Purchase Agreement, shall be had against any past, present or
future stockholder, director, officer or agent of Golden State Petroleum or of
any successor, either directly or through Golden State Petroleum or any
successor.
The respective indemnities, contribution agreements, representations,
warranties and other statements of the Companies, their officers and directors
and of the Initial Purchaser set forth in or made pursuant to this Agreement
shall remain operative and in full force and effect, and will survive delivery
of and payment for the Serial Notes, regardless of (i) any investigation, or
statement as to the results thereof, made by or on behalf of the Initial
Purchaser or by or on behalf of such company, the officers or directors of such
company or any controlling person of such company, (ii) acceptance of the Serial
Notes and payment for them hereunder and (iii) termination of this Agreement.
If this Agreement shall be terminated by the Initial Purchaser because
of any failure or refusal on the part of any Company to comply with the terms or
to fulfill any of the conditions of this Agreement, (except for any failure so
to perform on the part of any Company engendered by a failure, refusal or
inability on the part of the Initial Purchaser to perform any agreement on the
Initial Purchaser's part to be performed) each Company agrees to reimburse the
Initial Purchaser for all out-of-pocket expenses (including the reasonable fees
and disbursements of counsel) reasonably incurred by it.
Except as otherwise provided, this Agreement has been and is made
solely for the benefit of and shall be binding upon the Companies, the Initial
Purchaser, any controlling persons referred to herein and their respective
successors and assigns, all as and to the extent provided in this Agreement, and
no other person shall acquire or have any right under or by virtue of this
Agreement. The term "SUCCESSORS AND ASSIGNS" shall not include a purchaser of
any of the Serial Notes from the Initial Purchaser merely because of such
purchase.
This Agreement shall be governed and construed in accordance with the
laws of the State of New York.
This Agreement may be signed in various counterparts which together
shall constitute one and the same instrument.
<PAGE>
Please confirm that the foregoing correctly sets forth the agreement
between Golden State Petroleum, each of the Owners and the Initial Purchaser.
Very truly yours,
GOLDEN STATE PETROLEUM
TRANSPORT CORPORATION
By: /s/ John McFadden
-----------------------------
Name: John McFadden
Title: President
GOLDEN STATE PETRO (IOM
I-A) PLC
By: /s/ John McFadden
-----------------------------
Name: John McFadden
Title: President
GOLDEN STATE PETRO (IOM
I-B) PLC
By: /s/ John McFadden
-----------------------------
Name: John McFadden
Title: President
Accepted and agreed to as of
the date first above written.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By /s/ Hoyt Davidson
----------------------------
Name: Hoyt Davidson
Title:Senior Vice President
25
<PAGE>
EXHIBIT A
Opinion of Thacher Proffitt & Wood,
Special Counsel for
Golden State Petroleum and the Owners
December __, 1996
Donaldson, Lufkin & Jenrette
Securities Corporation
277 Park Avenue
New York, New York 10172
Re: GOLDEN STATE PETROLEUM TRANSPORT CORPORATION
SERIAL FIRST PREFERRED NOTES
Dear Sirs:
We have acted as counsel to Golden State Petroleum Transport
Corporation ("GOLDEN STATE PETROLEUM"), Golden State Petro (IOM I-A) PLC
("GOLDEN STATE PETRO I-A") and Golden State Petro (IOM I-B) PLC ("GOLDEN STATE
PETRO I-B," and together with Golden State Petro I-A, the "OWNERS"), in
connection with the issuance of Golden State Petroleum Transport Corporation
Serial First Preferred Mortgage Notes Maturing Serially from 2000 to 2006 (the
"SERIAL NOTES"). The Serial Notes were issued pursuant to an Indenture, dated as
of December 1, 1996 (the "INDENTURE"), among Golden State Petroleum, as Agent
for the Owners, the Owners and United States Trust Company of New York as the
indenture trustee (the "INDENTURE TRUSTEE"). The Serial Notes were offered
pursuant to an offering memorandum (the "FINAL OFFERING MEMORANDUM"). Golden
State Petroleum will sell the Serial Notes to Donaldson, Lufkin & Jenrette
Securities Corporation (the "INITIAL PURCHASER") pursuant to a Purchase
Agreement, dated December __, 1996 (the "PURCHASE AGREEMENT" and together with
the Indenture, the "AGREEMENTS"), among Golden State Petroleum, the Owners and
the Initial Purchaser. Contemporaneously with the issuance of the Serial Notes,
Golden State Petroleum proposes to issue Golden State Petroleum Transport
Corporation ___% First Preferred Mortgage Notes Due 2019 (the "TERM NOTES")
pursuant to the Indenture.
1
<PAGE>
The proceeds from the sale of the Serial Notes, together with the
proceeds from the sale of the Term Notes, will be used by the Owners to fund,
after paying certain fees and expenses, the construction for each Owner of a
very large crude carrier (each, a "VESSEL") as well as capitalized interest
through the date of delivery for each Vessel. Each Vessel will be constructed by
Samsung Corporation and Samsung Heavy Industries Co., Ltd. pursuant to a
building contract (each, a "BUILDING CONTRACT") under the supervision and
pursuant to the specifications of Chevron Shipping Company, as Agent for Chevron
Transport Corporation ("CHEVRON TRANSPORT"). Initially, each Owner will enter
into a bareboat charter (each, an "INITIAL CHARTER") with Chevron Transport with
a term expiring on the eighteenth anniversary thereof, subject to Chevron's
right to terminate each Initial Charter on the eighth anniversary of its
commencement and on each of the four succeeding two-year anniversaries thereof.
The obligations of Chevron Transport under each Initial Charter will be
guaranteed by Chevron. Capitalized terms not defined herein have the meanings
set forth in the Agreements. This opinion is rendered pursuant to Section 7.(d)
of the Purchase Agreement at the request of Golden State Petroleum and the
Owners. Unless otherwise defined herein, capitalized terms have the meanings
specified or referred to in the Purchase Agreement.
In connection with rendering this opinion letter, we have examined the
Agreements, the Operative Documents, the Initial Charters, each Offering
Memorandum, the Serial Notes, the Term Notes and such other documents as we have
deemed necessary. As to matters of fact, we have examined and relied upon
representations of parties to the Agreements, the Initial Charters, and the
Operative Documents contained in such documents and, where we have deemed
appropriate, representations or certifications of officers or public officials.
We have assumed the authenticity of all documents submitted to us as originals,
the genuineness of all signatures, the legal capacity of natural persons and the
conformity to the originals of all documents submitted to us as copies. We have
assumed that all parties had the corporate power and authority to enter into and
perform all obligations thereunder. As to such parties, we also have assumed the
due authorization by all requisite corporate action, and, as to all parties
other than Golden State Petroleum and the Owners, the due execution and delivery
of such documents. We have further assumed that there is not and will not be any
other agreement that modifies or supplements the agreements expressed in the
Agreements, the Initial Charters and the Operative Documents.
In rendering this opinion letter, we do not express any opinion
concerning any law other than the law of the State of New York, the law of the
Republic of Liberia and the federal laws of the United States. We do not express
any opinion concerning the "doing business" laws or the securities laws of any
jurisdiction
2
<PAGE>
other than the federal securities laws of the United States. We do not express
any opinion on any subject not expressly addressed herein. With respect to the
law of the Republic of Liberia, we are not admitted to practice in the courts of
the Republic of Liberia. However, we have dealt regularly with matters relating
to the maritime laws of the Republic of Liberia. We are also familiar with the
current compilations of the Liberian Maritime Law as furnished to us by Liberian
Services, Inc. in New York City.
Based upon and subject to the foregoing, it is our opinion that:
1 The Serial Notes, when executed and authenticated in accordance
with the provisions of the Indenture and delivered to and paid for by the
Initial Purchaser in accordance with the terms of the Purchase Agreement, will
be entitled to the benefits of the Indenture and will be valid and binding
obligations of the Owners, enforceable against the Owners in accordance with
their terms except as enforceability may be limited by (i) bankruptcy,
insolvency, liquidation, receivership, moratorium, reorganization or other
similar laws affecting the rights of creditors and (ii) general principles of
equity, whether enforcement is sought in a proceeding in equity or at law.
2 The Purchase Agreement is a valid and binding agreement of each of
Golden State Petroleum and the Owners, enforceable against each of Golden State
Petroleum and the Owners in accordance with its terms except as rights to
indemnification and contribution may be limited by applicable law.
3 The Indenture has been duly authorized, executed and delivered by
each of the Owners and is a valid and binding agreement of each of Golden State
Petroleum and the Owners, enforceable against it in accordance with its terms,
except as enforceability may be limited by (i) bankruptcy, insolvency,
liquidation, receivership, moratorium, reorganization or other similar laws
affecting the rights of creditors and (ii) general principles of equity, whether
enforcement is sought in a proceeding in equity or at law.
4 Each of the Operative Documents to which Golden State Petroleum is
a party is a valid and binding agreement of Golden State Petroleum, enforceable
against it in accordance with its terms, except as enforceability may be limited
by (i) bankruptcy, insolvency, liquidation, receivership, moratorium,
reorganization or other similar laws affecting the rights of creditors and (ii)
general principles of equity, whether enforcement is sought in a proceeding in
equity or at law.
5 Each of the Initial Charters and the Operative Documents governed
by New York law, to which Golden State Petro I-A or Golden State Petro I-B is a
3
<PAGE>
party, is a valid and binding agreement of such Owner, enforceable against it in
accordance with its terms, except as enforceability may be limited by (i)
bankruptcy, insolvency, liquidation, receivership, moratorium, reorganization or
other similar laws affecting the rights of creditors and (ii) general principles
of equity, whether enforcement is sought in a proceeding in equity or at law.
6 The Chevron Guarantee is a valid and binding agreement of Chevron,
enforceable against it in accordance with its terms, except as enforceability
may be limited by (i) bankruptcy, insolvency, liquidation, receivership,
moratorium, reorganization or other similar laws affecting the rights of
creditors and (ii) general principles of equity, whether enforcement is sought
in a proceeding in equity or at law.
7 The statements under the captions "Description of the Serial
Notes," "Additional Notes" and "Notice to Investors" in the Final Offering
Memorandum, as amended or supplemented, insofar as such statements constitute a
summary of legal matters, documents or proceedings referred to therein, fairly
present the information called for with respect to such legal matters, documents
and proceedings.
8 No consent, approval, authorization or order of any federal or
State of New York court or governmental agency or body is required for the
consummation by each Owner of the transactions contemplated by the terms of the
Agreements, the Building Contracts, the Initial Charters and the Operative
Documents, except (a) such as have been obtained under the Securities Act and
(b) such as may be required under the blue sky laws of any jurisdiction in
connection with the purchase and the offer and sale of the Serial Notes by the
Initial Purchaser, as to which we express no opinion.
9 Neither the sale of the Serial Notes to the Initial Purchaser
pursuant to, nor the consummation of any other of the transactions contemplated
by or the fulfillment by each Owner of the terms of, the Operative Documents
will result in a breach of any federal or State of New York statute or
regulation or, to the best of our knowledge, conflict with, result in a breach,
violation or acceleration of or constitute a default under any contract or other
agreement to which Golden State Petroleum or any of the Owners is a party or in
a breach or violation of any order of any federal or State of New York court,
regulatory body, administrative agency or other governmental body having
jurisdiction over Golden State Petroleum or any Owner.
4
<PAGE>
10 Neither Golden State Petroleum nor any Owner is an "investment
company" or a company "controlled" by an "investment company" within the meaning
of the Investment Company Act of 1940, as amended.
[11 Each of the Owners is duly registered as a Foreign Maritime Entity
in the Republic of Liberia and each has obtained a waiver, pursuant to Section
51(6) of the Liberian Maritime Law, of the Liberian ownership requirements set
forth in Section 51(2) of the Liberian Maritime Law.]
12 Based upon the representations, warranties and agreements of the
Companies in Sections 3.(k), 3.(l), 3.(m), 3.(n) and 3.(o) and 5.(x), 5.(y) and
5.(z) of the Purchase Agreement and of the Initial Purchasers in Section 4 of
the Purchase Agreement and on the representations and agreements contained in
the Final Offering Memorandum under the caption "Notice to Investors," it is not
necessary in connection with the offer, sale and delivery of the Serial Notes to
the Initial Purchasers in the manner contemplated by the Purchase Agreement or
in connection with the initial resale of such Serial Notes by the Initial
Purchasers in accordance with Section 4 of the Purchase Agreement to register
the Serial Notes under the Securities Act or to qualify an indenture under the
Trust Indenture Act of 1939, as amended, provided that we express no opinion as
to when and under what circumstances the Serial Notes may be otherwise resold;
This opinion letter is rendered for the sole benefit of the addressee
hereof, and no other person or entity is entitled to rely hereon. Copies of this
opinion letter may not be furnished to any other party or entity, nor may any
portion of this letter be quoted, circulated or referred to in any other
document.
Very truly yours,
THACHER PROFFITT & WOOD
By:----------------------------------
<PAGE>
Opinion of Thacher Proffitt & Wood,
Special Counsel for
Golden State Petroleum and the Owners
December __, 1996
Donaldson, Lufkin & Jenrette
Securities Corporation
277 Park Avenue
New York, New York 10172
Re: GOLDEN STATE PETROLEUM TRANSPORT CORPORATION SERIAL
FIRST PREFERRED NOTES
Dear Sirs:
We have acted as counsel to Golden State Petroleum Transport
Corporation ("GOLDEN STATE PETROLEUM"), Golden State Petro (IOM I-A) PLC
("GOLDEN STATE PETRO I-A") and Golden State Petro (IOM I-B) PLC ("GOLDEN STATE
PETRO I-B," and together with Golden State Petro I-A, the "OWNERS"), in
connection with the issuance of Golden State Petroleum Transport Corporation
Serial First Preferred Mortgage Notes Maturing Serially from 2000 to 2006 (the
"SERIAL NOTES"). The Serial Notes were issued pursuant to an Indenture, dated as
of December 1, 1996 (the "INDENTURE"), among Golden State Petroleum, as Agent
for the Owners, the Owners and United States Trust Company of New York as the
indenture trustee (the "INDENTURE TRUSTEE"). The Serial Notes were offered
pursuant to an offering memorandum (the "FINAL OFFERING MEMORANDUM"). Golden
State Petroleum will sell the Serial Notes to Donaldson, Lufkin & Jenrette
Securities Corporation (the "INITIAL PURCHASER") pursuant to a Purchase
Agreement, dated December __, 1996 (the "PURCHASE AGREEMENT" and together with
the Indenture, the "AGREEMENTS"), among Golden State Petroleum, the Owners and
the Initial Purchaser. Contemporaneously with the issuance of the Serial Notes,
Golden State Petroleum proposes to issue Golden State Petroleum Transport
Corporation ___% First Preferred Mortgage Notes Due 2019 (the "TERM NOTES")
pursuant to the Indenture.
The proceeds from the sale of the Serial Notes, together with the
proceeds from the sale of the Term Notes, will be used by the Owners to fund,
after paying certain fees and expenses, the construction for each Owner of a
very large crude carrier (each, a "VESSEL") as well as capitalized interest
through the date of delivery for each Vessel. Each Vessel will be constructed by
Samsung
<PAGE>
Corporation and Samsung Heavy Industries Co., Ltd. pursuant to a building
contract (each, a "BUILDING CONTRACT") under the supervision and pursuant to the
specifications of Chevron Shipping Company, as Agent for Chevron Transport
Corporation ("CHEVRON TRANSPORT"). Initially, each Owner will enter into a
bareboat charter (each, an "INITIAL CHARTER") with Chevron Transport with a term
expiring on the eighteenth anniversary thereof, subject to Chevron's right to
terminate each Initial Charter on the eighth anniversary of its commencement and
on each of the four succeeding two-year anniversaries thereof. The obligations
of Chevron Transport under each Initial Charter will be guaranteed by Chevron.
Capitalized terms not defined herein have the meanings set forth in the
Agreements. This opinion is rendered pursuant to Section 7.(d) of the Purchase
Agreement at the request of Golden State Petroleum and the Owners. Unless
otherwise defined herein, capitalized terms have the meanings specified or
referred to in the Purchase Agreement.
The primary purpose of our professional engagement was not to establish
factual matters. Many wholly or partially non-legal determinations were involved
in the preparation of the Offering Memoranda. Accordingly, we are not advising
in this letter with respect to and do not assume any responsibility for the
accuracy, completeness or fairness of the statements contained in the Offering
Memoranda and make no representation that we have otherwise independently
verified the accuracy, completeness or fairness of such statements. In
particular and without limiting the foregoing, we have not examined any
accounting, financial or statistical records not included in the Offering
Memorandum from which the information and statements included therein are
derived. We express no advice as to any such accounting, financial or
statistical information contained in the Offering Memoranda. We also note that
we are not experts with respect to any portion of the Offering Memoranda,
including without limitation such financial and statistical information, except
to the extent we may be deemed to be "experts" within the meaning of the
Securities Act of 1933 or the rules and regulations of the Securities and
Exchange Commission issued thereunder, with respect to the matters specifically
mentioned in our separate opinion letter dated the date hereof and rendered
pursuant to Section 7.(d) of the Purchase Agreement.
We do not act as general counsel to the Owners or Golden State
Petroleum. However, in the course of our acting as counsel to Golden State
Petroleum and the Owners in connection with their preparation of the Offering
Memoranda, we met in conferences and participated in telephone conversations
with representatives of Golden State Petroleum, the Owners, Cains in their
capacity as special Isle of Man counsel to the Owners, the Initial Purchaser,
Davis Polk & Wardwell in their capacity as counsel to the Initial Purchaser,
Chevron, Chevron Transport, Pillsbury Madison & Sutro LLP in their capacity as
counsel
2
<PAGE>
to Chevron and Chevron Transport, the Indenture Trustee and Olshan Grundman
Frome & Rosenzweig LLP in their capacity as counsel to the Indenture Trustee.
During those conferences and telephone conversations the contents of the
Offering Memoranda and related matters were discussed. In addition, we reviewed
certain corporate documents furnished to us by Golden State Petroleum and the
Owners or otherwise in our possession. We have not otherwise undertaken any
procedures, other than the review of documents delivered to the Initial
Purchaser on the date hereof pursuant to the Purchase Agreement, which were
intended or likely to elicit information concerning the accuracy, completeness
or fairness of the statements made in the Offering Memoranda.
Based upon and subject to the foregoing, our understanding of
applicable law and the experience we have gained in our practice thereunder, we
hereby advise you that no information has come to our attention that causes us
to believe that the Final Offering Memorandum contained as of its date or
contains as of the date hereof any untrue statement of a material fact or
omitted or omits to state a material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
This letter is provided for the sole benefit of the addressee hereof,
and no other person or entity is entitled to rely hereon. Copies of this letter
may not be furnished to any other party or entity, nor may any portion of this
letter be quoted, circulated or referred to in any other document.
Very truly yours,
THACHER PROFFITT & WOOD
By:----------------------------------
3
<PAGE>
EXHIBIT B
See Exhibit B to Term Notes Purchase Agreement
<PAGE>
EXHIBIT C
Opinion of Davis Polk & Wardwell,
Special Counsel for the Initial Purchaser
The Opinion of Davis Polk & Wardwell, Special Counsel for the Initial
Purchaser, to be delivered pursuant to Section 7.(f) of the Purchase Agreement
shall be to the effect that:
(a) the Serial Notes have been duly authorized by Golden State
Petroleum and, when executed and authenticated in accordance with the
provisions of the Indenture and delivered to and paid for by the
Initial Purchaser in accordance with the terms of the Purchase
Agreement, will be entitled to the benefits of the Indenture and,
assuming that the execution, delivery and performance by each Owner of
the Indenture are within such Owner's corporate powers and have been
duly authorized by all necessary corporate action, will be valid and
binding joint and several obligations of the Owners, enforceable in
accordance with their terms except as (i) the enforceability thereof
may be limited by bankruptcy, insolvency or similar laws affecting
creditors' rights generally and (ii) rights of acceleration and the
availability of equitable remedies may be limited by equitable
principles of general applicability;
(b) the Purchase Agreement has been duly authorized, executed and
delivered by Golden State Petroleum and is a valid and binding
agreement of Golden State Petroleum, enforceable in accordance with its
terms (except as rights to indemnity and contribution thereunder may be
limited by applicable law);
(c) assuming that the execution, delivery and performance by each
Owner of the Purchase Agreement are within such Owner's corporate
powers and have been duly authorized by all necessary corporate action,
then the Purchase Agreement is a valid and binding agreement of each
Owner, enforceable in accordance with its terms (except as rights to
indemnity and contribution thereunder may be limited by applicable
law);
(d) the Indenture has been duly authorized, executed and delivered by
Golden State Petroleum and is a valid and binding agreement of Golden
State Petroleum, enforceable in accordance with its terms except as (i)
the enforceability thereof may be limited by bankruptcy, insolvency or
similar laws affecting creditors' rights generally and (ii)
<PAGE>
rights of acceleration and the availability of equitable remedies may
be limited by equitable principles of general applicability;
(e) assuming that the execution, delivery and performance by each
Owner of the Indenture are within such Owner's corporate powers and
have been duly authorized by all necessary corporate action, then the
Indenture is a valid and binding agreement of each Owner, enforceable
in accordance with its terms except as (i) the enforceability thereof
may be limited by bankruptcy, insolvency or similar laws affecting
creditors' rights generally and (ii) rights of acceleration and the
availability of equitable remedies may be limited by equitable
principles of general applicability;
(f) the Chevron Agreement has been duly authorized, executed and
delivered by Chevron and is a valid and binding agreement of Chevron,
enforceable in accordance with its terms (except as rights to indemnity
and contribution thereunder may be limited by applicable law);
(g) assuming that the execution, delivery and performance by Chevron
Transport of the Chevron Agreement are within the corporate powers of
Chevron Transport and have been duly authorized by all necessary
corporate action, then the Chevron Agreement is a valid and binding
agreement of Chevron Transport, enforceable in accordance with its
terms (except as rights to indemnity and contribution thereunder may be
limited by applicable law);
(h) the statements under the captions "Description of the Serial
Notes," "Additional Notes," "Notice to Investors" and "Plan of
Distribution" in the Offering Memorandum, as amended or supplemented,
insofar as such statements constitute a summary of legal matters,
documents or proceedings referred to therein, fairly present the
information called for with respect to such legal matters, documents
and proceedings;
(i) such counsel believes that (except for financial statements and as
aforesaid) the Final Offering Memorandum did not contain as of its date
and does not contain as of the date hereof any untrue statement of a
material fact or omitted or omits to state a material fact necessary in
order to make the statements therein, in the light of the circumstances
under which they were made, not misleading; and
2
<PAGE>
(j) based upon the representations, warranties and agreements of the
Companies in Sections 3.(k), 3.(l), 3.(m), 3.(n) and 3.(o) and 5.(x),
5.(y) and 5.(z) of the Purchase Agreement and of the Initial Purchaser
in Section 4 of the Purchase Agreement and on the representations and
agreements contained in the Final Offering Memorandum under the caption
"Notice to Investors," it is not necessary in connection with the
offer, sale and delivery of the Serial Notes to the Initial Purchaser
in the manner contemplated by the Purchase Agreement or in connection
with the initial resale of such Serial Notes by the Initial Purchaser
in accordance with Section 4 of the Purchase Agreement to register the
Serial Notes under the Securities Act or to qualify an indenture under
the Trust Indenture Act of 1939, as amended, provided that we express
no opinion as to when and under what circumstances the Serial Notes may
be otherwise resold;
In giving such opinion with respect to the matters covered by clause
(i) such counsel may state that their opinion and belief are based upon their
participation in the preparation of the Final Offering Memorandum and any
amendments or supplements thereto (but not including documents incorporated
therein by reference) and review and discussion of the contents thereof
(including documents incorporated therein by reference), but are without
independent check or verification except as specified.
Insofar as the foregoing opinion involves matters governed by the laws
of the Isle of Man or Liberia such counsel may rely, without independent
investigation, upon the opinions of Cains and The Henries Law Firm,
respectively.
3
$127,100,000
GOLDEN STATE PETROLEUM TRANSPORT CORPORATION
GOLDEN STATE PETRO (IOM I-A) PLC
GOLDEN STATE PETRO (IOM I-B) PLC
8.04% First Preferred Mortgage Notes Due 2019
PURCHASE AGREEMENT
December 19, 1996
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
277 Park Avenue
New York, New York 10172
Dear Sirs and Mesdames:
Golden State Petroleum Transport Corporation, a Delaware corporation
("GOLDEN STATE PETROLEUM"), proposes to issue and sell to you (the "INITIAL
PURCHASER") $127,100,000 aggregate principal amount of its 8.04% First Preferred
Mortgage Notes Due 2019 (the "TERM NOTES"). The Term Notes are to be issued
pursuant to the provisions of an Indenture dated as of December 1, 1996 (the
"INDENTURE") among Golden State Petroleum, as Agent for the Owners (as defined
below), the Owners and United States Trust Company of New York, as Trustee (the
"INDENTURE TRUSTEE"). Concurrently with this offering, Golden State Petroleum
proposes to issue and sell $51,700,000 aggregate principal amount of its Serial
First Preferred Mortgage Notes Maturing Serially from 2000 to 2006 (the "SERIAL
NOTES") to the Initial Purchaser pursuant to a Purchase Agreement dated the date
hereof relating to the Serial Notes (the "SERIAL NOTES PURCHASE AGREEMENT").
The Term Notes will be offered and sold to the Initial Purchaser
without being registered under the United States Securities Act of 1933, as
amended (the "SECURITIES ACT"), in reliance on an exemption therefrom. The
Initial Purchaser has advised Golden State Petroleum that it will make an
offering of the Term Notes purchased by it hereunder in accordance with Section
4 hereof on the terms set forth in the Preliminary Offering Memorandum and the
Final Offering
<PAGE>
Memorandum (each as defined below) as soon as practicable after the date hereof
as in its judgment is advisable.
The proceeds from the sale of the Term Notes, together with the
proceeds from the sale of the Serial Notes, will be used by Golden State Petro
(IOM I-A) PLC and Golden State Petro (IOM I-B) PLC (each, an "OWNER" and
together with Golden State Petroleum, the "COMPANIES") to fund, after paying
certain fees and expenses, the construction for each Owner of a very large crude
carrier (each, a "VESSEL") as well as capitalized interest through the date of
delivery for each Vessel. Each Vessel will be constructed by Samsung Corporation
and Samsung Heavy Industries Co., Ltd. pursuant to a building contract (each, a
"BUILDING CONTRACT") under the supervision and pursuant to the specifications of
Chevron Shipping Company, as agent of Chevron Transport Corporation ("CHEVRON
TRANSPORT"). Initially, each Owner will enter into a bareboat charter (each, an
"INITIAL CHARTER") with Chevron Transport with a term commencing upon the
delivery of the related Vessel and expiring on the eighteenth anniversary
thereof, subject to Chevron's right to terminate each Initial Charter on the
eighth anniversary of its commencement and on each of the four succeeding
two-year anniversaries thereof. The obligations of Chevron Transport under each
Initial Charter will be guaranteed by Chevron Corporation ("CHEVRON").
In connection with the sale of the Term Notes, Golden State Petroleum
has prepared a preliminary Offering Memorandum dated December 9, 1996 (the
"PRELIMINARY OFFERING MEMORANDUM") and will prepare a final Offering Memorandum
(the "FINAL OFFERING MEMORANDUM" and, with the Preliminary Offering Memorandum,
each an "OFFERING MEMORANDUM") setting forth or including a description of the
terms of the Term Notes, the construction, acquisition and chartering of the
Vessels, the terms of the offering, a description of the Companies and any
material developments relating to the Companies.
The Companies and the Initial Purchaser will enter into a Registration
Rights Agreement (the "REGISTRATION RIGHTS AGREEMENT") concurrently with the
issuance of the Term Notes. Pursuant to the Registration Rights Agreement, under
the circumstances and the terms set forth therein, the Companies will agree to
file with the Securities and Exchange Commission (the "COMMISSION"): (i) a
registration statement on form S-1 or S-4 (the "EXCHANGE OFFER REGISTRATION
STATEMENT") relating to an offer (the "EXCHANGE OFFER") to the holders of Term
Notes to exchange their Term Notes for an issue of notes (the "NEW TERM NOTES")
registered under the Securities Act and otherwise identical in all material
respects to the Term Notes (other than with respect to certain restrictions on
transfer contained in the Term Notes and the right to receive penalty interest
under certain circumstances) or, alternatively, (ii) in the event that
applicable
2
<PAGE>
interpretations of the Commission do not permit the Company to effect the
Exchange Offer or do not permit any holder of the Term Notes to participate in
the Exchange Offer, a shelf registration statement (the "SHELF REGISTRATION
STATEMENT") to cover resales of Term Notes by holders who satisfy certain
conditions relating to the provision of information in connection with the Shelf
Registration Statement.
Unless otherwise defined in this Agreement, capitalized terms have the
meanings specified or referred to in the Indenture. The term "OPERATIVE
DOCUMENTS" means, collectively, this Agreement, the Serial Notes Purchase
Agreement, the Registration Rights Agreement, the Indenture, the Building
Contracts and any other agreements contemplated by such agreements or the Final
Offering Memorandum to be signed by any of the Companies. To the extent provided
herein, this Agreement is made expressly for the benefit of Chevron and Chevron
Transport as third party beneficiaries.
1 AGREEMENTS TO SELL AND PURCHASE. On the basis of the
representations and warranties contained in this Agreement, and subject to its
terms and conditions, Golden State Petroleum agrees to issue and sell, and the
Initial Purchaser agrees to purchase from Golden State Petroleum, the entire
principal amount of Term Notes, at 99.0% of the principal amount thereof (the
"PURCHASE PRICE") plus accrued interest thereon, if any, from December 24, 1996
to the date of payment and delivery.
2 DELIVERY AND PAYMENT. Delivery of and payment for $73,100,000
aggregate principal amount of the Term Notes (the "FIRST TERM NOTES") shall be
made at 9:30 A.M., New York City time, on December 24, 1996 (the "FIRST CLOSING
DATE"), at such place as the Initial Purchaser shall designate.
Delivery of and payment for the remaining aggregate principal amount of
the Term Notes (the "DELAYED TERM NOTES") shall be made at 9:30 A.M., New York
City time, on January 6, 1997 (the "DELAYED CLOSING DATE," and collectively with
the First Closing Date, the "CLOSING DATES"), at such place as the Initial
Purchaser shall designate.
Certificates for the Term Notes shall be registered in the name of Cede
& Co., as nominee of The Depository Trust Company, or in such names and issued
in such denominations as the Initial Purchaser shall request in writing not
later than two full business days prior to the related Closing Date. Such
certificates shall be made available to the Initial Purchaser for inspection not
later than 9:30 A.M., New York City time, on the business day next preceding the
related Closing Date. Certificates in definitive form evidencing the Term Notes
shall be
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delivered to the Initial Purchaser on the related Closing Date with any transfer
taxes thereon duly paid by Golden State Petroleum, for the account of the
Initial Purchaser, against payment of the Purchase Price therefor by wire
transfer of immediately available funds to an account designated by Golden State
Petroleum.
3 AGREEMENTS OF GOLDEN STATE PETROLEUM AND EACH OWNER. Golden
State Petroleum and each Owner agree with the Initial Purchaser:
(a) To advise the Initial Purchaser and, if requested by the Initial
Purchaser, to confirm such advice in writing, of the happening of any
event during the period referred to in paragraph 3.(d) below which
makes any statement of a material fact made in the Final Offering
Memorandum untrue or which requires the making of any additions to or
changes in such Offering Memorandum in order to make the statements
therein not misleading.
(b) To furnish to the Initial Purchaser, without charge, during the
period referred to in paragraph 3.(d) below as many copies of the
Preliminary Offering Memorandum, the Final Offering Memorandum and any
supplements or amendments thereto, including documents incorporated by
reference, as the Initial Purchaser may reasonably request.
(c) Not to make any amendment or supplement to either Offering
Memorandum of which the Initial Purchaser shall not previously have
been advised or to which it shall reasonably object and to prepare,
promptly upon its reasonable request, any amendment or supplement to
either Offering Memorandum which may be necessary or advisable in
connection with the offering of the Term Notes by the Initial
Purchaser.
(d) If, during the period after the first date of the offering of the
Term Notes and prior to the completion of the sale thereof (the
"OFFERING PERIOD"), any event shall occur as a result of which, in the
opinion of counsel for the Initial Purchaser, it becomes necessary to
amend or supplement the Final Offering Memorandum in order to make the
statements therein, in the light of the circumstances when such
Offering Memorandum is delivered to a purchaser, not misleading, or if
it is necessary to amend or supplement such Offering Memorandum to
comply with any law, forthwith to prepare an appropriate amendment or
supplement to such Offering Memorandum so that the statements in such
Offering Memorandum, as so amended or supplemented, will not, in the
light of the circumstances when it is so delivered, be misleading, or
so that such Offering Memorandum will comply with law, and to furnish
to the
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Initial Purchaser and to such dealers as the Initial Purchaser shall
specify such number of copies thereof as the Initial Purchaser or such
dealers may reasonably request.
(e) Prior to any offering of the Term Notes, to cooperate with the
Initial Purchaser and counsel for the Initial Purchaser in connection
with the registration or qualification of the Term Notes for offer and
sale by the Initial Purchaser and by dealers under the state securities
or Blue Sky laws of such jurisdictions as the Initial Purchaser may
request, to continue such qualification in effect so long as required
for distribution of the Term Notes; provided, however, that Golden
State Petroleum and each Owner shall not be required to qualify to do
business in any jurisdiction where they are not now qualified or to
take any action which would subject them to general or unlimited
service of process in any jurisdiction where they are not now so
subject.
(f) During the period of five years after the date of this Agreement,
(i) to mail as soon as reasonably practicable after the end of each
fiscal year to the record holders of its Term Notes a separate
financial report of Golden State Petroleum and each Owner and their
respective subsidiaries on a consolidated basis (and a similar
financial report of all unconsolidated subsidiaries, if any), all such
financial reports to include a consolidated balance sheet, a
consolidated statement of operations, a consolidated statement of cash
flows and a consolidated statement of shareholders' equity as of the
end of and for such fiscal year, together with comparable information
as of the end of and for the preceding year, certified by independent
certified public accountants, and (ii) to mail and make generally
available as soon as practicable after the end of each quarterly period
(except for the last quarterly period of each fiscal year) to such
holders, a consolidated balance sheet, a consolidated statement of
operations and a consolidated statement of cash flows (and similar
financial reports of all unconsolidated subsidiaries, if any) as of the
end of and for such period, and for the period from the beginning of
such year to the close of such quarterly period, together with
comparable information for the corresponding periods of the preceding
year.
(g) During the period referred to in paragraph 3.(f) above, to furnish
to the Initial Purchaser as soon as available a copy of each report or
other publicly available information of Golden State Petroleum and each
Owner mailed to the security holders of Golden State Petroleum or filed
with the Commission and such other publicly available information
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concerning Golden State Petroleum and each Owner and their respective
subsidiaries as the Initial Purchaser may reasonably request.
(h) To use the proceeds from the sale of the Term Notes in the manner
described in the Final Offering Memorandum under the caption "Offering
Memorandum Summary--Sources and Uses of Funds Through the Delivery
Dates."
(i) Golden State Petroleum and the Owners will pay all costs,
expenses, disbursements, fees and taxes incident to (i) the
preparation, printing, filing and distribution of each Offering
Memorandum, the Exchange Offer Registration Statement and any Shelf
Registration Statement (including financial statements and all
amendments and supplements prior to or during the period specified in
paragraph 3.(d), but not including fees and disbursements of counsel to
the Initial Purchaser except to the extent such counsel acts as Special
Counsel to the holders pursuant to the Registration Rights Agreement),
(ii) the registration or qualification of the Term Notes and the New
Term Notes for offer and sale under the securities or Blue Sky laws of
the several states (including in each case the fees and disbursements
of counsel for the Initial Purchaser relating to such registration or
qualification and memoranda relating thereto), (iii) furnishing such
copies of each Offering Memorandum and all amendments and supplements
thereto as may be requested for use in connection with the offering or
sale of the Term Notes by the Initial Purchaser or by dealers to whom
Term Notes may be sold, (iv) any fees charged by rating agencies for
the rating of the Term Notes and the New Term Notes, (v) the fees and
expenses, if any, incurred in connection with the designation of the
Term Notes for trading in the PORTAL market and the deposit of the
global Term Notes with The Depository Trust Company, (vi) any stamp or
transfer taxes payable in connection with the sale of the Term Notes to
the Initial Purchaser, (vii) the issuance, transfer and delivery by the
Companies of the Term Notes and the New Term Notes (including, without
limitation, the fees of the Companies' transfer agent and registrar,
the cost of their personnel and other internal costs, the costs of
printing and engraving the certificates representing the Term Notes and
any stock and securities transfer taxes payable thereon), (viii) the
reasonable fees and expenses of the Indenture Trustee and the fees and
disbursements of counsel for the Indenture Trustee and (ix) the costs
and expenses of the Companies relating to investor presentations on any
"road show" undertaken in connection with the marketing of the offering
of the Term Notes, including without limitation, expenses associated
with the production of road show slides and graphics, travel and
lodging expenses
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of officers of the Companies (provided that the costs of car services
and charter aircraft during the "road show" will be paid equally by the
Companies on the one hand and the Initial Purchaser on the other and
the cost of conference rooms and other meeting places used on the "road
show" to make investor presentations will be paid by the Initial
Purchaser).
(j) To use its reasonable best efforts to do and perform all things
required or necessary to be done and performed under this Agreement by
Golden State Petroleum and each Owner prior to the Delayed Closing Date
and to satisfy all conditions precedent to the delivery of the Term
Notes.
(k) Not to sell, offer for sale or solicit offers to buy or otherwise
negotiate, and not to permit its affiliates (as defined in Regulation
501(b) of Regulation D under the Securities Act, "AFFILIATES") to sell,
offer for sale or solicit offers to buy or otherwise negotiate,
directly or through any agent, in respect of any security (as defined
in the Securities Act) the offering of which security will be
integrated with the sale of the Term Notes in a manner which would
require the registration of the Term Notes under the Securities Act and
to take all action that is appropriate to assure that its offerings of
other securities will not be integrated for purposes of the Securities
Act with the offerings contemplated hereby.
(l) Except pursuant to the Exchange Offer or a Shelf Registration
Statement, not to solicit any offer to buy or sell the Term Notes by
means of any form of general solicitation or general advertising (as
those terms are used in Regulation D under the Securities Act
("REGULATION D")) in any manner involving a public offering within the
meaning of Section 4(2) of the Securities Act, including: (i) any
advertisement, article, notice or other communication published in any
newspaper, magazine or similar medium or broadcast over television or
radio and (ii) any seminar or meeting whose attendees have been invited
by any general solicitation or general advertising.
(m) Not to engage, or permit any person acting on behalf of any of the
Companies to engage, in any directed selling efforts within the meaning
of Regulation S under the Securities Act ("REGULATION S") with respect
to the Term Notes, and to comply, and cause each such person so acting
to comply, with the offering restrictions requirement of Regulation S.
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(n) So long as any of the Term Notes remain outstanding and are
"RESTRICTED SECURITIES" within the meaning of Rule 144(a)(3) under the
Securities Act, during any period in which it is not subject to Section
13 or 15(d) of the Exchange Act, to make available to any holder of
Term Notes in connection with any sale thereof and any prospective
purchaser of Term Notes from such holder, in each case upon request,
the information specified in, and meeting the requirements of, Rule
144A(d)(4) under the Securities Act.
(o) Not to, and not to permit any of its affiliates (as defined in
Rule 144(a)(1)) to, (i) purchase any of the Term Notes unless such Term
Notes are held in the form of a certificated Term Note (as such term is
used in the Final Offering Memorandum under the caption "Description of
the Term Notes--Book-Entry Registration") and (ii) resell any of the
Term Notes, except as permitted by the Indenture.
4 OFFERING OF NOTES; RESTRICTIONS ON TRANSFER.
The Initial Purchaser represents and warrants that:
(a) it is a qualified institutional buyer as defined in Rule 144A
under the Securities Act (a "QIB");
(b) it will not solicit offers for, or offer to sell, Term Notes by
any form of general solicitation or general advertising (as those terms
are used in Regulation D under the Securities Act) or in any manner
involving a public offering within the meaning of Section 4(2) of the
Securities Act;
(c) it will solicit offers for Term Notes only from, and will offer
such Term Notes only to, persons that it reasonably believes to be (i)
in the case of offers inside the United States, QIBs and (ii) in the
case of offers outside the United States, to persons other than U.S.
persons ("FOREIGN PURCHASERS," which term shall include dealers or
other professional fiduciaries in the United States acting on a
discretionary basis for foreign beneficial owners (other than an estate
or trust)) in reliance upon Regulation S under the Securities Act who,
in each case, in purchasing such Term Notes are deemed to have
represented and agreed as provided in the Final Offering Memorandum
under the caption "Notice to Investors; Registration Rights";
(d) it understands that no action has been or will be taken in any
jurisdiction by the Companies that would permit a public offering of
the
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Term Notes, or possession or distribution of either Offering Memorandum
or any other offering or publicity material relating to the Term Notes,
in any country or jurisdiction where action for that purpose is
required;
(e) it will comply with all applicable laws and regulations in each
jurisdiction in which it acquires, offers, sells or delivers Term Notes
or has in its possession or distributes either Offering Memorandum or
any such other material, in all cases at its own expense;
(f) it understands that the Term Notes have not been registered under
the Securities Act and may not be offered or sold within the United
States or to, or for the account or benefit of, U.S. persons except in
accordance with Rule 144A or Regulation S under the Securities Act or
pursuant to another exemption from the registration requirements of the
Securities Act;
(g) it has not offered the Term Notes and will not offer and sell the
Term Notes (i) as part of the distribution at any time and (ii)
otherwise until 40 days after the later of the date hereof and the
related Closing Date, except in accordance with Rule 903 of Regulation
S or as otherwise permitted in paragraph (a) above; and neither it, nor
its Affiliates nor any person acting on its behalf has engaged or will
engage in any directed selling efforts (within the meaning of
Regulation S) with respect to the Term Notes; and it, its Affiliates
and any such other persons have complied and will comply with the
offering restrictions requirement of Regulation S;
(h) it has (i) not offered or sold and will not offer or sell any Term
Notes to persons in the United Kingdom except to persons whose ordinary
activities involve them in acquiring, holding, managing or disposing of
investments (as principal or agent) for the purposes of their
businesses or otherwise in circumstances which have not resulted and
will not result in an offer to the public in the United Kingdom within
the meaning of the Public Offers of Securities Regulations 1995
("Regulations"); (ii) complied with and will comply with all applicable
provisions of the Financial Services Act 1986 and the Regulations with
respect to anything done by it in relation to the Term Notes in, from
or otherwise involving the United Kingdom; and (iii) only issued or
passed on and will only issue or pass on to any person in the United
Kingdom any document received by it in connection with the issue of the
Term Notes if that person is of a kind described in Article 11(3) of
the Financial Services Act 1986 (Investment Advertisements)
(Exemptions) Order 1996 or is a
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person to whom such document may otherwise lawfully be issued or
passed on;
(i) it understands that the Term Notes have not been and will not be
registered under the Securities and Exchange Law of Japan, and
represents that it has not offered or sold, and agrees that it will not
offer or sell, any Term Notes, directly or indirectly in Japan or to or
from any resident of Japan except (i) pursuant to an exemption from the
registration requirements of the Securities and Exchange Law of Japan
and (ii) in compliance with any other applicable requirements of
Japanese law; and
(j) it agrees that, at or prior to confirmation of sales of the Term
Notes, it will have sent to each distributor, dealer or person
receiving a selling concession, fee or other remuneration that
purchases Term Notes from it during the restricted period a
confirmation or notice to substantially the following effect:
The Securities covered hereby have not been registered under
the U.S. Securities Act of 1933 (the "SECURITIES ACT") and may
not be offered and sold within the United States or to, or for
the account or benefit of, U.S. persons (i) as part of their
distribution at any time or (ii) otherwise until 40 days after
the later of the commencement of the offering and the closing
date, except in either case in accordance with Regulation S
(or Rule 144A if available) under the Securities Act. Terms
used above have the meanings given to them by Regulation S.
Terms used in this Section 4 have the meanings given to them
by Regulation S.
5 REPRESENTATIONS AND WARRANTIES. Golden State Petroleum and each
Owner, jointly and severally, represent and warrant to the Initial Purchaser
that:
(a) The Final Offering Memorandum (as amended or supplemented if the
Companies shall have furnished any amendments or supplements thereto)
was, on the date of its issuance, and is, at the date hereof, accurate
in all material respects and did not and does not contain any untrue
statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; and the Final
Offering Memorandum (as amended or supplemented as necessary) will be,
as of each Closing Date, accurate in all material respects and will not
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contain any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein, in the
light of the circumstances, existing at each Closing Date, not
misleading; PROVIDED that this representation and warranty shall not
apply to any statements or omissions made in reliance upon and in
conformity with information relating to the Initial Purchaser furnished
to the Company in writing by the Initial Purchaser expressly for use
therein.
(b) The Preliminary Offering Memorandum was, on the date of its
issuance, accurate in all material respects and did not contain any
untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; PROVIDED that
this representation and warranty shall not apply to any statements or
omissions made in reliance upon and in conformity with the information
relating to the Initial Purchaser furnished to the Companies in writing
by the Initial Purchaser expressly for use therein.
(c) Golden State Petroleum and each Owner has been duly incorporated,
is validly existing as a corporation in good standing under the laws of
its jurisdiction of incorporation and has the corporate power and
authority to carry on its business as it is currently being conducted
and to own, lease and operate its properties, and each is duly
qualified and is in good standing as a foreign corporation authorized
to do business in each jurisdiction in which the nature of its business
or its ownership or leasing of property requires such qualification,
except where the failure to be so qualified would not have a material
adverse effect on such Company.
(d) Any taxes, fees and other governmental charges which are due and
payable on either Closing Date in connection with the execution,
delivery and performance of this Agreement, the Registration Rights
Agreement, the Indenture and the other Operative Documents being
executed on or before the Delayed Closing Date and the execution,
delivery and sale of the Term Notes shall have been paid by Golden
State Petroleum or the Owners, at or prior to the related Closing Date.
(e) The Term Notes have been duly authorized and, when executed and
authenticated in accordance with the provisions of the Indenture and
delivered to the Initial Purchaser against payment therefor as provided
by this Agreement, will be entitled to the benefits of the Indenture,
and will be valid and binding obligations of the Owners, enforceable in
accordance with their terms except as (i) the enforceability
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thereof may be limited by bankruptcy, insolvency or similar laws
affecting creditors' rights generally and (ii) rights of acceleration
and the availability of equitable remedies may be limited by equitable
principles of general applicability.
(f) This Agreement has been duly authorized, executed and delivered by
Golden State Petroleum and each Owner and is a valid and binding
agreement of Golden State Petroleum and each Owner enforceable in
accordance with its terms (except as rights to indemnity and
contribution hereunder may be limited by applicable law).
(g) The Indenture has been duly authorized, executed and delivered by
each of the Companies, and is a valid and binding agreement of each
Company, enforceable in accordance with its terms except as (i) the
enforceability thereof may be limited by bankruptcy, insolvency or
similar laws affecting creditors' rights generally and (ii) rights of
acceleration and the availability of equitable remedies may be limited
by equitable principles of general applicability.
(h) The Term Notes conform in all material respects to the description
thereof contained in the Offering Memorandum.
(i) Neither Golden State Petroleum nor any Owner is in violation of
its respective organizational documents or by-laws or in default in the
performance of any obligation, agreement or condition contained in any
bond, debenture, note or any other evidence of indebtedness or in any
other agreement, indenture or instrument material to the conduct of the
business of such Company, to which such Company is a party or by which
such Company or its property is bound.
(j) The execution, delivery and performance of this Agreement, the
Registration Rights Agreement, the Indenture, the Term Notes and all
other Operative Documents being executed by Golden State Petroleum on
or before the Delayed Closing Date, and compliance by Golden State
Petroleum with all the provisions hereof and thereof and the
consummation of the transactions contemplated hereby and thereby will
not require any consent, approval, authorization or other order of any
court, regulatory body, administrative agency or other governmental
body (except as such may be required under the securities or Blue Sky
laws of the various states) and will not conflict with or constitute a
breach of any of the terms or provisions of, or a default under, the
organizational documents or by-laws of Golden State Petroleum or any
agreement,
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indenture or other instrument to which it is a party or by which it or
its property is bound, or violate or conflict with any laws,
administrative regulations or rulings or court decrees applicable to
Golden State Petroleum or its property.
(k) The execution, delivery and performance of this Agreement, the
Registration Rights Agreement and all other Operative Documents being
executed by either Owner on or before the Delayed Closing Date, and
compliance by the Owners with all the provisions hereof and thereof and
the consummation of the transactions contemplated hereby and thereby
will not require any consent, approval, authorization or other order of
any court, regulatory body, administrative agency or other governmental
body (except as such may be required under the securities or Blue Sky
laws of the various states) and will not conflict with or constitute a
breach of any of the terms or provisions of, or a default under, the
charter or by-laws of either of the Owners or any agreement, indenture
or other instrument to which such Owner is a party or by which such
Owner or its property is bound, or violate or conflict with any laws,
administrative regulations or rulings or court decrees applicable to
such Owner or its property.
(l) There are no material legal or governmental proceedings pending to
which Golden State Petroleum or either Owner is a party or of which any
of their respective property is the subject, and, to the best of such
Company's knowledge, no such proceedings are threatened or
contemplated. No contract or document of a character required to be
described in the Final Offering Memorandum is not so described as
required.
(m) To such Company's knowledge, neither Golden State Petroleum nor
either Owner has violated any foreign, federal, state or local law or
regulation relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants ("ENVIRONMENTAL LAWS"), which in each case might result in
any material adverse change in the business, prospects, financial
condition or results of operation of such Company.
(n) Except as otherwise set forth in the Final Offering Memorandum or
such as are not material to the business, prospects, financial
condition or results of operation of such Company, Golden State
Petroleum and each Owner has good and marketable title, free and clear
of all liens, claims, encumbrances and restrictions except liens for
taxes not
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yet due and payable, to all property and assets described in the Final
Offering Memorandum as being owned by such Company.
(o) Golden State Petroleum and each of the Owners maintains the
various insurance required of it under the financing documents to which
it is a party.
(p) Neither Golden State Petroleum nor either Owner is an "investment
company" or a company "controlled" by an "investment company" within
the meaning of the Investment Company Act of 1940, as amended.
(q) All tax returns required to be filed by Golden State Petroleum or
either of the Owners, in all jurisdictions, have been so filed, except
insofar as the failure to file such returns would not have a material
adverse effect on such Company. All taxes, including withholding taxes,
penalties and interest, assessments, fees and other charges due or
claimed to be due from such entities or that are due and payable have
been paid, other than those being contested in good faith and for which
adequate reserves have been provided or those currently payable without
penalty or interest, except insofar as the failure to pay such taxes
would not have a material adverse effect on such Company.
(r) The laws, governmental rules, regulations and decrees of the Isle
of Man and any political subdivision thereof permit the transfer of
United States Dollars as required by this Agreement.
(s) Except for the fees payable as provided in the Final Offering
Memorandum, neither Golden State Petroleum nor either Owner has become
obligated to pay any fee or commission to or any expenses of any
broker, finder or investment banker or anyone else acting in the
capacity of a broker, finder or investment banker in connection with
the transactions contemplated hereby.
(t) Golden State Petroleum and the Owners shall pay amounts payable
hereunder in United States Dollars in New York City as may be necessary
in order that every net payment by such Company of any fees or expenses
payable or reimbursable hereunder, after deduction or withholding for
or on account of any present or future tax, assessment or other
governmental charge (including, without limitation, value added tax)
imposed upon or as a result of such payment by any political
subdivision or taxing authority thereof or any non-U.S. jurisdiction
from which such
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payment or reimbursement may be made, will not be less than the amount
provided for herein to be paid or reimbursed by such Company.
(u) Golden State Petroleum and each Owner have complied with all
provisions of Section 517.075, Florida Statutes (Chapter 92-198, Laws
of Florida).
(v) All of the representations and warranties by (i) Golden State
Petroleum contained in each Operative Document to which it is a party
and (ii) the Owners contained in the Building Contract to which such
Owner is a party and each Operative Document to which such Owner is a
party are incorporated by reference in this Agreement as if set forth
herein, and Golden State Petroleum and the Owners represent and warrant
that such representations and warranties are true and correct as of the
date of this Agreement, except to the extent that such representations
and warranties relate solely to an earlier date or later date (in which
case such representations and warranties are correct on and as of such
earlier date or will be correct on and as of such later date, as the
case may be).
(w) The Registration Rights Agreement has been duly and validly
authorized by each Company and, when duly executed and delivered by
each Company, will be the legally valid and binding agreement of such
Company, enforceable against each Company in accordance with its terms,
except as (i) the enforceability thereof may be limited by bankruptcy,
insolvency or similar laws affecting creditors' rights generally and
(ii) rights of acceleration and the availability of equitable remedies
may be limited by equitable principles of general applicability. When
executed and delivered, the Registration Rights Agreement will conform
in all material respects to the description thereof in each Offering
Memorandum.
(x) Coopers & Lybrand, L.L.P. is an "independent public accountant,"
as defined in the Securities Act, with respect to each of the Owners.
(y) None of the Companies nor any Affiliate of the Companies has
directly, or through any agent, (i) sold, offered for sale, solicited
offers to buy or otherwise negotiated in respect of, any security (as
defined in the Securities Act) the offering of which security is or
will be integrated with the sale of the Term Notes in a manner that
would require the registration of the Term Notes under the Securities
Act or (ii) solicited any offer to buy or sell the Term Notes by any
form of general solicitation or general
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advertising (as those terms are used in Regulation D) in any manner
involving a public offering within the meaning of Section 4(2) of the
Securities Act.
(z) None of the Companies nor any Affiliate of the Companies nor any
person acting on any of their behalf has engaged in any directed
selling efforts (as that term is defined in Regulation S) with respect
to the Term Notes.
(aa) It is not necessary in connection with the offer, sale and
delivery of the Term Notes in the manner contemplated by this Agreement
to register the Term Notes under the Securities Act or to qualify the
Indenture under the Trust Indenture Act of 1939. The Term Notes satisfy
the requirements set forth in Rule 144A(d)(3) under the Securities Act.
6 INDEMNIFICATION. (a) Golden State Petroleum and each Owner agree,
jointly and severally, to indemnify and hold harmless the Initial Purchaser,
Chevron and Chevron Transport, and each person, if any, who controls the Initial
Purchaser, Chevron or Chevron Transport within the meaning of Section 15 of the
Securities Act or Section 20 of the Securities Exchange Act of 1934, as amended
(the "EXCHANGE ACT"), and the officers, directors, employees, representatives
and agents of the Initial Purchaser, from and against any and all losses,
claims, damages, liabilities and judgments caused by any untrue statement or
alleged untrue statement of a material fact contained in either Offering
Memorandum (as amended or supplemented if the Companies shall have furnished any
amendments or supplements thereto), or caused by any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, except insofar as such
losses, claims, damages, liabilities or judgments are caused by any such untrue
statement or omission or alleged untrue statement or omission based upon
information relating to the Initial Purchaser furnished in writing to Golden
State Petroleum by the Initial Purchaser expressly for use therein. This
indemnity agreement will be in addition to any liability which Golden State
Petroleum or any Owner may otherwise have.
(b) In case any action shall be brought against any person in respect
of which indemnity may be sought pursuant to the preceding paragraph (the
"INDEMNIFIED PARTY"), based upon either Offering Memorandum or any amendment or
supplement thereto and with respect to which indemnity may be sought against any
of the Companies, the indemnified party shall promptly notify the indemnifying
party in writing and the indemnifying party shall assume the defense thereof,
including the employment of counsel reasonably satisfactory to such indemnified
party and payment of all fees and expenses. The indemnified
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party shall have the right to employ separate counsel in any such action and
participate in the defense thereof, but the fees and expenses of such counsel
shall be at the expense of the indemnified party unless (i) the employment of
such counsel shall have been specifically authorized in writing by the
indemnifying party, (ii) the indemnifying party shall have failed to assume the
defense and employ counsel within 30 days after notice of commencement of such
action or (iii) the named parties to any such action (including any impleaded
parties) include both the indemnified party and the indemnifying party and the
indemnified party shall have been advised by such counsel that there may be one
or more legal defenses available to it which are different from or additional to
those available to the other party or parties named in such action (in which
case the indemnifying party shall not have the right to assume the defense of
such action on behalf of the indemnified party, it being understood, however,
that the indemnifying party shall not, in connection with any one such action or
separate but substantially similar or related actions in the same jurisdiction
arising out of the same general allegations or circumstances, be liable for the
fees and expenses of more than one separate firm of attorneys (in addition to
any local counsel) for the indemnified parties, which firm shall be designated
in writing by the Initial Purchaser and that all such fees and expenses shall be
reimbursed as they are incurred). The indemnifying party shall not be liable for
any settlement of any such action effected without its written consent but if
settled with the written consent of the indemnifying party, the indemnifying
party agrees to indemnify and hold harmless the indemnified parties from and
against any loss or liability by reason of such settlement. Notwithstanding the
foregoing sentence, if at any time an indemnified party shall have requested an
indemnifying party to reimburse the indemnified party for fees and expenses of
counsel as contemplated by the second sentence of this paragraph, the
indemnifying party agrees that it shall be liable for any settlement of any
proceeding effected without its written consent if (i) such settlement is
entered into more than 10 business days after receipt by such indemnifying party
of the aforesaid request and (ii) such indemnifying party shall not have
reimbursed the indemnified party in accordance with such request prior to the
date of such settlement. No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement of any pending or
threatened proceeding in respect of which any indemnified party is or could have
been a party and indemnity could have been sought hereunder by such indemnified
party, unless such settlement includes an unconditional release of such
indemnified party from all liability on claims that are the subject matter of
such proceeding.
(c) The Initial Purchaser agrees to indemnify and hold harmless Golden
State Petroleum and each Owner, their directors, their officers who sign the
Registration Statement, Chevron, Chevron Transport and any person controlling
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any Company, Chevron or Chevron Transport within the meaning of Section 15 of
the Securities Act or Section 20 of the Exchange Act, to the same extent as the
foregoing indemnity from the Companies to the Initial Purchaser, Chevron and
Chevron Transport, but only with reference to information relating to the
Initial Purchaser furnished in writing by the Initial Purchaser expressly for
use in either Offering Memorandum. In case any action shall be brought against
any Company, any of its directors, any such officer, Chevron or Chevron
Transport or any person controlling any Company, Chevron or Chevron Transport
based on either Offering Memorandum and in respect of which indemnity may be
sought against the Initial Purchaser, the Initial Purchaser shall have the
rights and duties given to the Companies (except that if the Companies shall
have assumed the defense thereof, the Initial Purchaser shall not be required to
do so, but may employ separate counsel therein and participate in the defense
thereof but the fees and expenses of such counsel shall be at the expense of the
Initial Purchaser), and the Companies, their directors, any such officers and
any person controlling the Companies shall have the rights and duties given to
the Initial Purchaser, by Section 6.(b) hereof. This indemnity agreement will be
in addition to any liability which the Initial Purchaser may otherwise have.
(d) If the indemnification provided for in this Section 6 is
unavailable to an indemnified party in respect of any losses, claims, damages,
liabilities or judgments referred to therein, then each indemnifying party, in
lieu of indemnifying such indemnified party, shall contribute to the amount paid
or payable by such indemnified party as a result of such losses, claims,
damages, liabilities and judgments (i) in such proportion as is appropriate to
reflect the relative benefits received by the indemnifying party on the one hand
and the indemnified party on the other hand from the offering of the Term Notes
or (ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
the Companies and the Initial Purchaser in connection with the statements or
omissions which resulted in such losses, claims, damages, liabilities or
judgments, as well as any other relevant equitable considerations. As between
the Companies and the Initial Purchaser, the relative benefits received by the
Companies on the one hand and the Initial Purchaser on the other hand shall be
deemed to be in the same proportion as the total net proceeds from the offering
(before deducting expenses) received by Golden State Petroleum, and the total
discounts to Initial Purchaser received by the Initial Purchaser, bear to the
total price to investors of the Term Notes, in each case as set forth in the
table on the cover page of the Final Offering Memorandum. For purposes of this
Section 6, each person who controls the Initial Purchaser within the meaning of
either the Securities Act or the Exchange Act shall have the same rights to
contribution as the Initial Purchaser and each
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person who controls any Company within the meaning of either the Securities Act
or the Exchange Act, shall have the same rights to contribution as each Owner.
The relative fault of the Companies on the one hand and the Initial Purchaser on
the other hand shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission to
state a material fact relates to information supplied by the Companies or the
Initial Purchaser and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Companies and the Initial Purchaser agree that it would not be just
and equitable if contribution pursuant to this Section 6.(d) were determined by
pro rata allocation or by any other method of allocation which does not take
account of the equitable considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an indemnified party as a result of the
losses, claims, damages, liabilities or judgments referred to in the immediately
preceding paragraph shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 6, the Initial Purchaser shall
not be required to contribute any amount in excess of the amount of discount of
the Term Notes purchased by it and distributed to the public. No person guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.
Any party entitled to contribution will, promptly after receipt of
notice of commencement of any action, suit or proceeding against such party in
respect of which a claim for contribution may be made against another party or
parties under this paragraph 6.(d), notify such party from whom contribution may
be sought, but the omission to so notify in writing such party or parties shall
not relieve the party or parties from whom contribution may be sought from any
other obligation it or they may have hereunder or otherwise than under this
paragraph 6.(d).
7 CONDITIONS OF INITIAL PURCHASER'S OBLIGATION TO PURCHASE FIRST
TERM NOTES. The obligation of the Initial Purchaser to purchase the First Term
Notes under this Agreement is subject to the satisfaction of each of the
following conditions:
(a) All the representations and warranties of the Companies contained
in this Agreement and the Serial Notes Purchase Agreement shall be true
and correct on the First Closing Date with the same force and effect as
if made on and as of the First Closing Date.
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(b) Subsequent to the execution and delivery of this Agreement and
prior to the First Closing Date, there shall not have been any
downgrading, nor shall any notice have been given of any intended or
potential downgrading or of any review for a possible change that does
not indicate the direction of the possible change, in the rating
accorded any securities of Golden State Petroleum or either Owner by
any "nationally recognized statistical rating organization", as such
term is defined for purposes of Rule 436(g)(2) under the Securities
Act, and each of Standard & Poor's Rating Group, Moody's Investors
Service, Inc. and Duff & Phelps Credit Rating Co. shall have affirmed
their Term Notes ratings of "BBB," "Baa2" and "BBB," respectively.
(c)(i) Since the date of the latest balance sheet included in the
Preliminary Offering Memorandum, there shall not have been any material
adverse change, or any development involving a prospective material
adverse change, in the condition, financial or otherwise, or in the
earnings, affairs or business prospects, whether or not arising in the
ordinary course of business, of any of the Companies, (ii) since the
date of the latest balance sheet included in the Preliminary Offering
Memorandum there shall not have been any change, or any development
involving a prospective material adverse change, in the capital stock
or in the long-term debt of any of the Companies from that set forth in
the Preliminary Offering Memorandum, (iii) the Companies and any of
their respective subsidiaries shall have no liability or obligation,
direct or contingent, which is material to such Company and its
respective subsidiaries, taken as a whole, other than those reflected
in the Preliminary Offering Memorandum and (iv) on the First Closing
Date the Initial Purchaser shall have received certificates dated the
First Closing Date, signed by an authorized representative of each of
the Companies, confirming the matters set forth in paragraphs 7.(a),
7.(b) and 7.(c).
(d) The Initial Purchaser shall have received on the First Closing
Date an opinion (satisfactory to the Initial Purchaser and its
counsel), dated the First Closing Date, of Thacher Proffitt & Wood,
special counsel for Golden State Petroleum and the Owners, to the
effect set forth in Exhibit A.
(e) The Initial Purchaser shall have received on the First Closing
Date an opinion (satisfactory to the Initial Purchaser and its
counsel), dated the First Closing Date, of Cains, special Isle of Man
counsel for the Owners, to the effect set forth in Exhibit B.
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(f) The Initial Purchaser shall have received on the First Closing
Date an opinion, dated the First Closing Date, of Davis Polk &
Wardwell, special counsel for the Initial Purchaser, to the effect set
forth in Exhibit C.
(g) The Initial Purchaser shall have received on and as of the First
Closing Date, in form and substance satisfactory to you, a letter from
Coopers & Lybrand, L.L.P., independent public accountants, with respect
to certain financial information of Golden State Petroleum and the
Owners contained in each Offering Memorandum and substantially in the
form and substance of the letter delivered to you by Coopers & Lybrand,
L.L.P. on the date of this Agreement.
(h) The Companies shall not have failed at or prior to the First
Closing Date to perform or comply with any of the agreements herein
contained and required to be performed or complied with by such Company
at or prior to the First Closing Date.
(i) All of the conditions required in the Serial Notes Purchase
Agreement to be complied with on or prior to the First Closing Date
shall have been satisfied or waived in writing on the First Closing
Date.
(j) Each of Chevron and Chevron Transport shall have executed and
delivered, and to the extent performance is required on or prior to the
First Closing Date, shall have performed all of their obligations
pursuant to (i) the Chevron Registration Rights Agreement (the "CHEVRON
REGISTRATION RIGHTS AGREEMENT" dated as of December 24, 1996 by and
among Chevron, Chevron Transport and the Initial Purchaser and (ii) the
Chevron Agreement (the "CHEVRON AGREEMENT") dated December 19, 1996 by
and among Chevron, Chevron Transport and the Initial Purchaser; and all
the representations and warranties of Chevron and Chevron Transport
contained in the Chevron Agreement shall be true and correct on the
First Closing Date with the same force and effect as if made on and as
of the First Closing Date.
(k) Each of R.S. Platou Economic Research a.s. and McQuilling
Brokerage Partners, Inc. shall have consented in writing to being named
in each Offering Memorandum and in any Registration Statement to be
filed pursuant to the Registration Rights Agreement, and each such
party shall have agreed to cooperate in the filing of any such
Registration Statement.
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(l) Each of Cambridge Petroleum Transport Corporation and the
Indenture Trustee shall have executed and delivered an agreement
pursuant to which Cambridge Petroleum Transport Corporation agrees to
contribute its brokerage commission to the Trustee for deposit in the
PreFunding Account (as defined in the Indenture).
8 CONDITIONS OF INITIAL PURCHASER'S OBLIGATION TO PURCHASE DELAYED
TERM NOTES. The obligation of the Initial Purchaser to purchase the Delayed Term
Notes under this Agreement is subject to the satisfaction of each of the
following conditions:
(a) The Term Notes and Serial Notes to be issued and purchased on the
First Closing Date shall have been so issued and purchased and the
Serial Notes to be issued and purchased on the Delayed Closing Date
shall, contemporaneously with the issuance and purchase of the Delayed
Term Notes, be so issued and purchased.
(b) The issuance and purchase of the Delayed Term Notes shall not be
prohibited by applicable law.
9. TERMINATION. This Agreement may be terminated at any time prior to
delivery of and payment for the First Term Notes by you by written notice to the
Companies if any of the following has occurred: (i) since the respective dates
as of which information is given in either Offering Memorandum, any adverse
change or development involving a prospective adverse change in the condition,
financial or otherwise, of any of the Companies or the earnings, affairs, or
business prospects of any of the Companies, whether or not arising in the
ordinary course of business, which would, in your judgment, make it
impracticable to market the Term Notes on the terms and in the manner
contemplated in the Final Offering Memorandum, (ii) any outbreak or escalation
of hostilities or other national or international calamity or crisis or change
in economic conditions or in the financial markets of the United States or
elsewhere that, in your reasonable judgment, is material and adverse and would,
in your reasonable judgment, make it impracticable to market the Term Notes on
the terms and in the manner contemplated in the Final Offering Memorandum, (iii)
the suspension or material limitation of trading in securities on the New York
Stock Exchange or limitation on prices for securities on such exchange, (iv) the
enactment, publication, decree or other promulgation of any federal or state
statute, regulation, rule or order of any court or other governmental authority
which in your opinion materially and adversely affects, or will materially and
adversely affect, the business or operations of any of the Companies or (v) the
declaration of a general moratorium on commercial banking activities by either
federal or New York State authorities.
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10 CONSENT TO JURISDICTION. Any legal suit, action or proceeding
against any of the Companies arising out of or relating to this Agreement, the
Indenture or any Operative Document, or any transaction contemplated hereby or
thereby, may be instituted in any federal or state court in The City of New
York, State of New York and each of the Companies hereby waives any objection
which it may now or hereafter have to the laying of venue of any such suit,
action or proceeding, and each of the Companies hereby irrevocably submits to
the jurisdiction of any such court in any such suit, action or proceeding. Each
of the Companies hereby irrevocably appoints and designates CT Corporation
System, having an address at 1633 Broadway, New York, New York, its true and
lawful attorney-in-fact and duly authorized agent for the limited purpose of
accepting service of legal process in connection with any such suit, action or
proceeding and each of the Companies agrees that service of process upon such
party shall constitute personal service of such process on it. Each of the
Companies shall maintain the designation and appointment of such authorized
agent until all amounts payable under this Agreement, the Indenture and the
Operative Documents shall have been paid in full. If such agent shall cease to
so act, each of the Companies shall immediately designate and appoint another
such agent satisfactory to you in the City of New York, State of New York, and
shall promptly deliver to you evidence in writing of such other agent's
acceptance of such appointment.
11 MISCELLANEOUS. Notices given pursuant to any provision of this
Agreement shall be addressed as follows: (a) if to Golden State Petroleum, to
Golden State Petroleum Transport Corporation, 65 East 55th Street, Suite 3300,
New York, New York 10022, (b) if to Chevron Transport, to Chevron Transport
Corporation, c/o Chevron House, 11 Church Street, Hamilton, Bermuda HM11,
Attention: Secretary, (c) if to Chevron, to Chevron Corporation, 225 Bush
Street, San Francisco, California 94104, Attention: Secretary, (d) if to either
of the Owners, 15-19 Athol Street, Douglas, Isle of Man, British Isles and (e)
if to the Initial Purchaser to Donaldson, Lufkin & Jenrette Securities
Corporation, 277 Park Avenue, New York, New York 10172, Attention: Syndicate
Department, or in any case to such other address as the person to be notified
may have requested in writing.
No recourse under or upon any obligation, covenant or agreement
contained in this Purchase Agreement, shall be had against any past, present or
future stockholder, director, officer or agent of Golden State Petroleum or of
any successor, either directly or through Golden State Petroleum or any
successor.
The respective indemnities, contribution agreements, representations,
warranties and other statements of the Companies, their officers and directors
and
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of the Initial Purchaser set forth in or made pursuant to this Agreement shall
remain operative and in full force and effect, and will survive delivery of and
payment for the Term Notes, regardless of (i) any investigation, or statement as
to the results thereof, made by or on behalf of the Initial Purchaser or by or
on behalf of such company, the officers or directors of such company or any
controlling person of such company, (ii) acceptance of the Term Notes and
payment for them hereunder and (iii) termination of this Agreement.
If this Agreement shall be terminated by the Initial Purchaser because
of any failure or refusal on the part of any Company to comply with the terms or
to fulfill any of the conditions of this Agreement, (except for any failure so
to perform on the part of any Company engendered by a failure, refusal or
inability on the part of the Initial Purchaser to perform any agreement on the
Initial Purchaser's part to be performed) each Company agrees to reimburse the
Initial Purchaser for all out-of-pocket expenses (including the reasonable fees
and disbursements of counsel) reasonably incurred by it.
Except as otherwise provided, this Agreement has been and is made
solely for the benefit of and shall be binding upon the Companies, the Initial
Purchaser, any controlling persons referred to herein and their respective
successors and assigns, all as and to the extent provided in this Agreement, and
no other person shall acquire or have any right under or by virtue of this
Agreement. The term "SUCCESSORS AND ASSIGNS" shall not include a purchaser of
any of the Term Notes from the Initial Purchaser merely because of such
purchase.
This Agreement shall be governed and construed in accordance with the
laws of the State of New York.
This Agreement may be signed in various counterparts which together
shall constitute one and the same instrument.
<PAGE>
Please confirm that the foregoing correctly sets forth the agreement
between Golden State Petroleum, each of the Owners and the Initial Purchaser.
Very truly yours,
GOLDEN STATE PETROLEUM
TRANSPORT CORPORATION
By: /s/ John McFadden
-----------------------------
Name: John McFadden
Title: President
GOLDEN STATE PETRO (IOM
I-A) PLC
By: /s/ John McFadden
-----------------------------
Name: John McFadden
Title: President
GOLDEN STATE PETRO (IOM
I-B) PLC
By: /s/ John McFadden
-----------------------------
Name: John McFadden
Title: President
Accepted and agreed to as of
the date first above written.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By /s/ Hoyt Davidson
----------------------------
Name: Hoyt Davidson
Title:Senior Vice President
<PAGE>
EXHIBIT A
Opinion of Thacher Proffitt & Wood,
Special Counsel for
Golden State Petroleum and the Owners
December __, 1996
Donaldson, Lufkin & Jenrette
Securities Corporation
277 Park Avenue
New York, New York 10172
Re: GOLDEN STATE PETROLEUM TRANSPORT CORPORATION
TERM FIRST PREFERRED NOTES
Dear Sirs:
We have acted as counsel to Golden State Petroleum Transport
Corporation ("GOLDEN STATE PETROLEUM"), Golden State Petro (IOM I-A) PLC
("GOLDEN STATE PETRO I-A") and Golden State Petro (IOM I-B) PLC ("GOLDEN STATE
PETRO I-B," and together with Golden State Petro I-A, the "OWNERS"), in
connection with the issuance of Golden State Petroleum Transport Corporation
___% First Preferred Notes Due 2019 (the "TERM NOTES"). The Term Notes were
issued pursuant to an Indenture, dated as of December 1, 1996 (the "INDENTURE"),
among Golden State Petroleum, as Agent for the Owners, the Owners and United
States Trust Company of New York as the indenture trustee (the "INDENTURE
TRUSTEE"). The Term Notes were offered pursuant to an offering memorandum (the
"FINAL OFFERING MEMORANDUM"). Golden State Petroleum will sell the Term Notes to
Donaldson, Lufkin & Jenrette Securities Corporation (the "INITIAL PURCHASER")
pursuant to a Purchase Agreement, dated December __, 1996 (the "PURCHASE
AGREEMENT" and together with the Indenture, the "AGREEMENTS"), among Golden
State Petroleum, the Owners and the Initial Purchaser. Contemporaneously with
the issuance of the Term Notes, Golden State Petroleum proposes to issue Golden
State Petroleum Transport Corporation Serial First Preferred Mortgage Notes
Maturing Serially from 2000 to 2006 (the "SERIAL NOTES") pursuant to the
Indenture.
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The proceeds from the sale of the Term Notes, together with the
proceeds from the sale of the Serial Notes, will be used by the Owners to fund,
after paying certain fees and expenses, the construction for each Owner of a
very large crude carrier (each, a "VESSEL") as well as capitalized interest
through the date of delivery for each Vessel. Each Vessel will be constructed by
Samsung Corporation and Samsung Heavy Industries Co., Ltd. pursuant to a
building contract (each, a "BUILDING CONTRACT") under the supervision and
pursuant to the specifications of Chevron Shipping Company, as Agent for Chevron
Transport Corporation ("CHEVRON TRANSPORT"). Initially, each Owner will enter
into a bareboat charter (each, an "INITIAL CHARTER") with Chevron Transport with
a term expiring on the eighteenth anniversary thereof, subject to Chevron's
right to terminate each Initial Charter on the eighth anniversary of its
commencement and on each of the four succeeding two-year anniversaries thereof.
The obligations of Chevron Transport under each Initial Charter will be
guaranteed by Chevron. Capitalized terms not defined herein have the meanings
set forth in the Agreements. This opinion is rendered pursuant to Section 7.(d)
of the Purchase Agreement at the request of Golden State Petroleum and the
Owners. Unless otherwise defined herein, capitalized terms have the meanings
specified or referred to in the Purchase Agreement.
In connection with rendering this opinion letter, we have examined the
Agreements, the Operative Documents, the Initial Charters, each Offering
Memorandum, the Term Notes, the Serial Notes and such other documents as we have
deemed necessary. As to matters of fact, we have examined and relied upon
representations of parties to the Agreements, the Initial Charters, and the
Operative Documents contained in such documents and, where we have deemed
appropriate, representations or certifications of officers or public officials.
We have assumed the authenticity of all documents submitted to us as originals,
the genuineness of all signatures, the legal capacity of natural persons and the
conformity to the originals of all documents submitted to us as copies. We have
assumed that all parties had the corporate power and authority to enter into and
perform all obligations thereunder. As to such parties, we also have assumed the
due authorization by all requisite corporate action, and, as to all parties
other than Golden State Petroleum and the Owners, the due execution and delivery
of such documents. We have further assumed that there is not and will not be any
other agreement that modifies or supplements the agreements expressed in the
Agreements, the Initial Charters and the Operative Documents.
In rendering this opinion letter, we do not express any opinion
concerning any law other than the law of the State of New York, the law of the
Republic of Liberia and the federal laws of the United States. We do not express
any opinion concerning the "doing business" laws or the securities laws of any
jurisdiction
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other than the federal securities laws of the United States. We do not express
any opinion on any subject not expressly addressed herein. With respect to the
law of the Republic of Liberia, we are not admitted to practice in the courts of
the Republic of Liberia. However, we have dealt regularly with matters relating
to the maritime laws of the Republic of Liberia. We are also familiar with the
current compilations of the Liberian Maritime Law as furnished to us by Liberian
Services, Inc. in New York City.
Based upon and subject to the foregoing, it is our opinion that:
1. The Term Notes, when executed and authenticated in accordance with
the provisions of the Indenture and delivered to and paid for by the Initial
Purchaser in accordance with the terms of the Purchase Agreement, will be
entitled to the benefits of the Indenture and will be valid and binding
obligations of the Owners, enforceable against the Owners in accordance with
their terms except as enforceability may be limited by (i) bankruptcy,
insolvency, liquidation, receivership, moratorium, reorganization or other
similar laws affecting the rights of creditors and (ii) general principles of
equity, whether enforcement is sought in a proceeding in equity or at law.
2. Each of the Purchase Agreement and the Registration Rights
Agreement dated as of December __, 1996 among Golden State Petroleum, the Owners
and the Initial Purchaser is a valid and binding agreement of each of Golden
State Petroleum and the Owners, enforceable against each of Golden State
Petroleum and the Owners in accordance with its terms except as rights to
indemnification and contribution may be limited by applicable law.
3. The Indenture has been duly authorized, executed and delivered by
each of the Owners and is a valid and binding agreement of each of Golden State
Petroleum and the Owners, enforceable against it in accordance with its terms,
except as enforceability may be limited by (i) bankruptcy, insolvency,
liquidation, receivership, moratorium, reorganization or other similar laws
affecting the rights of creditors and (ii) general principles of equity, whether
enforcement is sought in a proceeding in equity or at law.
4. Each of the Operative Documents to which Golden State Petroleum is
a party is a valid and binding agreement of Golden State Petroleum, enforceable
against it in accordance with its terms, except as enforceability may be limited
by (i) bankruptcy, insolvency, liquidation, receivership, moratorium,
reorganization or other similar laws affecting the rights of creditors and (ii)
general principles of equity, whether enforcement is sought in a proceeding in
equity or at law.
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5. Each of the Initial Charters and the Operative Documents governed
by New York law, to which Golden State Petro I-A or Golden State Petro I-B is a
party, is a valid and binding agreement of such Owner, enforceable against it in
accordance with its terms, except as enforceability may be limited by (i)
bankruptcy, insolvency, liquidation, receivership, moratorium, reorganization or
other similar laws affecting the rights of creditors and (ii) general principles
of equity, whether enforcement is sought in a proceeding in equity or at law.
6. The Chevron Guarantee is a valid and binding agreement of Chevron,
enforceable against it in accordance with its terms, except as enforceability
may be limited by (i) bankruptcy, insolvency, liquidation, receivership,
moratorium, reorganization or other similar laws affecting the rights of
creditors and (ii) general principles of equity, whether enforcement is sought
in a proceeding in equity or at law.
7. The statements under the captions "Description of the Term Notes,"
"Additional Notes" and "Notice to Investors; Registration Rights" in the Final
Offering Memorandum, as amended or supplemented, insofar as such statements
constitute a summary of legal matters, documents or proceedings referred to
therein, fairly present the information called for with respect to such legal
matters, documents and proceedings.
8. No consent, approval, authorization or order of any federal or
State of New York court or governmental agency or body is required for the
consummation by each Owner of the transactions contemplated by the terms of the
Agreements, the Building Contracts, the Initial Charters and the Operative
Documents, except (a) such as have been obtained under the Securities Act and
(b) such as may be required under the blue sky laws of any jurisdiction in
connection with the purchase and the offer and sale of the Term Notes by the
Initial Purchaser, as to which we express no opinion.
9. Neither the sale of the Term Notes to the Initial Purchaser
pursuant to, nor the consummation of any other of the transactions contemplated
by or the fulfillment by each Owner of the terms of, the Operative Documents
will result in a breach of any federal or State of New York statute or
regulation or, to the best of our knowledge, conflict with, result in a breach,
violation or acceleration of or constitute a default under any contract or other
agreement to which Golden State Petroleum or any of the Owners is a party or in
a breach or violation of any order of any federal or State of New York court,
regulatory body, administrative agency or other governmental body having
jurisdiction over Golden State Petroleum or any Owner.
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10. Neither Golden State Petroleum nor any Owner is an "investment
company" or a company "controlled" by an "investment company" within the meaning
of the Investment Company Act of 1940, as amended.
[11. Each of the Owners is duly registered as a Foreign Maritime Entity
in the Republic of Liberia and each has obtained a waiver, pursuant to Section
51(6) of the Liberian Maritime Law, of the Liberian ownership requirements set
forth in Section 51(2) of the Liberian Maritime Law.]
12. Based upon the representations, warranties and agreements of the
Companies in Sections 3.(k), 3.(l), 3.(m), 3.(n) and 3.(o) and 5.(y), 5.(z) and
5.(aa) of the Purchase Agreement and of the Initial Purchasers in Section 4 of
the Purchase Agreement and on the representations and agreements contained in
the Final Offering Memorandum under the caption "Notice to Investors;
Registration Rights," it is not necessary in connection with the offer, sale and
delivery of the Term Notes to the Initial Purchasers in the manner contemplated
by the Purchase Agreement or in connection with the initial resale of such Term
Notes by the Initial Purchasers in accordance with Section 4 of the Purchase
Agreement to register the Term Notes under the Securities Act or to qualify an
indenture under the Trust Indenture Act of 1939, as amended, provided that we
express no opinion as to when and under what circumstances the Term Notes may be
otherwise resold;
This opinion letter is rendered for the sole benefit of the addressee
hereof, and no other person or entity is entitled to rely hereon. Copies of this
opinion letter may not be furnished to any other party or entity, nor may any
portion of this letter be quoted, circulated or referred to in any other
document.
Very truly yours,
THACHER PROFFITT & WOOD
By:----------------------------------
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<PAGE>
Opinion of Thacher Proffitt & Wood,
Special Counsel for
Golden State Petroleum and the Owners
December __, 1996
Donaldson, Lufkin & Jenrette
Securities Corporation
277 Park Avenue
New York, New York 10172
Re: GOLDEN STATE PETROLEUM TRANSPORT CORPORATION TERM
FIRST PREFERRED NOTES
Dear Sirs:
We have acted as counsel to Golden State Petroleum Transport
Corporation ("GOLDEN STATE PETROLEUM"), Golden State Petro (IOM I-A) PLC
("GOLDEN STATE PETRO I-A") and Golden State Petro (IOM I-B) PLC ("GOLDEN STATE
PETRO I-B," and together with Golden State Petro I-A, the "OWNERS"), in
connection with the issuance of Golden State Petroleum Transport Corporation
___% First Preferred Mortgage Notes Due 2019 (the "TERM NOTES"). The Term Notes
were issued pursuant to an Indenture, dated as of December 1, 1996 (the
"INDENTURE"), among Golden State Petroleum, as Agent for the Owners, the Owners
and United States Trust Company of New York as the indenture trustee (the "AN
TRUSTEE"). The Term Notes were offered pursuant to an offering memorandum (the
"FINAL OFFERING MEMORANDUM"). Golden State Petroleum will sell the Term Notes to
Donaldson, Lufkin & Jenrette Securities Corporation (the "INITIAL PURCHASER")
pursuant to a Purchase Agreement, dated December __, 1996 (the "PURCHASE
AGREEMENT" and together with the Indenture, the "AGREEMENTS"), among Golden
State Petroleum, the Owners and the Initial Purchaser. Contemporaneously with
the issuance of the Term Notes, Golden State Petroleum proposes to issue Golden
State Petroleum Transport Corporation Serial First Preferred Mortgage Notes
Maturing Serially from 2000 to 2006 (the "SERIAL NOTES") pursuant to the
Indenture.
The proceeds from the sale of the Term Notes, together with the
proceeds from the sale of the Serial Notes, will be used by the Owners to fund,
after paying certain fees and expenses, the construction for each Owner of a
very large crude carrier (each, a "VESSEL") as well as capitalized interest
through the date of delivery for each Vessel. Each Vessel will be constructed by
Samsung
<PAGE>
Corporation and Samsung Heavy Industries Co., Ltd. pursuant to a building
contract (each, a "BUILDING CONTRACT") under the supervision and pursuant to the
specifications of Chevron Shipping Company, as Agent for Chevron Transport
Corporation ("CHEVRON TRANSPORT"). Initially, each Owner will enter into a
bareboat charter (each, an "INITIAL CHARTER") with Chevron Transport with a term
expiring on the eighteenth anniversary thereof, subject to Chevron's right to
terminate each Initial Charter on the eighth anniversary of its commencement and
on each of the four succeeding two-year anniversaries thereof. The obligations
of Chevron Transport under each Initial Charter will be guaranteed by Chevron.
Capitalized terms not defined herein have the meanings set forth in the
Agreements. This opinion is rendered pursuant to Section 7.(d) of the Purchase
Agreement at the request of Golden State Petroleum and the Owners. Unless
otherwise defined herein, capitalized terms have the meanings specified or
referred to in the Purchase Agreement.
The primary purpose of our professional engagement was not to establish
factual matters. Many wholly or partially non-legal determinations were involved
in the preparation of the Offering Memoranda. Accordingly, we are not advising
in this letter with respect to and do not assume any responsibility for the
accuracy, completeness or fairness of the statements contained in the Offering
Memoranda and make no representation that we have otherwise independently
verified the accuracy, completeness or fairness of such statements. In
particular and without limiting the foregoing, we have not examined any
accounting, financial or statistical records not included in the Offering
Memorandum from which the information and statements included therein are
derived. We express no advice as to any such accounting, financial or
statistical information contained in the Offering Memoranda. We also note that
we are not experts with respect to any portion of the Offering Memoranda,
including without limitation such financial and statistical information, except
to the extent we may be deemed to be "experts" within the meaning of the
Securities Act of 1933 or the rules and regulations of the Securities and
Exchange Commission issued thereunder, with respect to the matters specifically
mentioned in our separate opinion letter dated the date hereof and rendered
pursuant to Section 7.(d) of the Purchase Agreement.
We do not act as general counsel to the Owners or Golden State
Petroleum. However, in the course of our acting as counsel to Golden State
Petroleum and the Owners in connection with their preparation of the Offering
Memoranda, we met in conferences and participated in telephone conversations
with representatives of Golden State Petroleum, the Owners, Cains in their
capacity as special Isle of Man counsel to the Owners, the Initial Purchaser,
Davis Polk & Wardwell in their capacity as counsel to the Initial Purchaser,
Chevron, Chevron Transport, Pillsbury Madison & Sutro LLP in their capacity as
counsel
2
<PAGE>
to Chevron and Chevron Transport, the Indenture Trustee and Olshan Grundman
Frome & Rosenzweig LLP in their capacity as counsel to the Indenture Trustee.
During those conferences and telephone conversations the contents of the
Offering Memoranda and related matters were discussed. In addition, we reviewed
certain corporate documents furnished to us by Golden State Petroleum and the
Owners or otherwise in our possession. We have not otherwise un dertaken any
procedures, other than the review of documents delivered to the Initial
Purchaser on the date hereof pursuant to the Purchase Agreement, which were
intended or likely to elicit information concerning the accuracy, complete ness
or fairness of the statements made in the Offering Memoranda.
Based upon and subject to the foregoing, our understanding of
applicable law and the experience we have gained in our practice thereunder, we
hereby advise you that no information has come to our attention that causes us
to believe that the Final Offering Memorandum contained as of its date or
contains as of the date hereof any untrue statement of a material fact or
omitted or omits to state a material fact necessary to make the statements
therein, in the light of the circum stances under which they were made, not
misleading.
This letter is provided for the sole benefit of the addressee hereof,
and no other person or entity is entitled to rely hereon. Copies of this letter
may not be furnished to any other party or entity, nor may any portion of this
letter be quoted, circulated or referred to in any other document.
Very truly yours,
THACHER PROFFITT & WOOD
By:----------------------------------
3
<PAGE>
EXHIBIT B
Opinion of Cains,
Special Isle of Man Counsel for
Golden State Petro (IOM I-A) PLC, Golden State
Petro (IOM I-B) PLC
and
Golden State Holdings I, Ltd.
24 December, 1996
Donaldson, Lufkin & Jenrette
Securities Corporation
277 Park Avenue
New York, New York 10172
Dear Sirs:
Re: CHEVRON TANKER FINANCING
We have acted as legal advisors in the Isle of Man to Golden State Petro (IOM
I-A) PLC ("OWNER A"), Golden State Petro (IOM I-B) PLC ("OWNER B" and, together
with Owner A, the "OWNERS") and Golden State Holdings I, Ltd. in connection with
the above.
We have examined the following documents:
1. Indenture dated as of December 1, 1996 among Golden State Petroleum
Transport Corporation ("GOLDEN STATE PETROLEUM"), the Owners and
United States Trust Company of New York, as Indenture Trustee;
2. Issue of One Debenture dated _____, 1996 between United States Trust
Company of New York, as Indenture Trustee and Owner A;
3. Issue of One Debenture dated _____, 1996 between United States Trust
Company of New York, as Indenture Trustee and Owner B;
<PAGE>
4. Shipbuilding Contract dated _____, 1996 for the Construction of a
308,500 DWT Crude Oil Double Hull Tank Vessel (Hull No. ____)
between Samsung Corporation ("SAMSUNG") and Samsung Heavy
Industries Co., Ltd. ("SHI" and together with Samsung, the "BUILDER")
and Owner A;
5. Shipbuilding Contract dated _____, 1996 for the Construction of a
308,500 DWT Crude Oil Double Hull Tank Vessel (Hull No. ____)
between the Builder and Owner B;
6. Assignment of Shipbuilding Contract dated _____, 1996 between Owner
A and United States Trust Company of New York, as Trustee;
7. Assignment of Shipbuilding Contract dated _____, 1996 between Owner
B and United States Trust Company of New York, as Trustee;
8. Irrevocable Instalment Payment Letter of Guarantee, dated _____, 1996,
given by The Korea Development Bank to Owner A in connection with
the related Vessel;
9. Irrevocable Instalment Payment Letter of Guarantee, dated _____, 1996,
given by The Korea Development Bank to Owner B in connection with
the related Vessel;
10. Assignment of Building Contract Guarantee dated 1 December, 1996,
between Owner A and United States Trust Company of New York, as
Trustee;
11. Assignment of Building Contract Guarantee dated 1 December, 1996,
between Owner B and United States Trust Company of New York, as
Trustee;
12. Agreement on Contract for Technical Matters (Hull No. _____) dated
_______, 1996, by and among Chevron Shipping Company, as agent for
Chevron Transport Corporation ("CHEVRON TRANSPORT"), Owner A and
SHI;
13. Agreement on Contract for Technical Matters made (Hull No. _____) dated
_______, 1996, by and among Chevron Shipping Company, as agent for
Chevron Transport, Owner B and SHI;
2
<PAGE>
14. Assignment of Agreement on Contract for Technical Matters dated
December __, 1996, between Owner A and United States Trust Company
of New York, as Trustee;
15. Assignment of Agreement on Contract for Technical Matters dated
December __, 1996, between Owner B and United States Trust Company
of New York, as Trustee;
16. Management Agreement dated December __, 1996 between Cambridge
Fund Management, L.L.C. and Owner A;
17. Management Agreement dated December __, 1996 between Cambridge
Fund Management, L.L.C. and Owner B;
18. Assignment of Management Agreement dated December __, 1996
between Owner A and United States Trust Company of New York, as
Trustee;
19. Assignment of Management Agreement dated December __, 1996
between Owner B and United States Trust Company of New York, as
Trustee;
20. Agency Agreement dated December __, 1996 among Owner A, Owner B
and Golden State Petroleum;
21. Stock Pledge Agreement dated December __, 1996 between Golden State
Holdings I, Ltd. and United States Trust Company of New York, as
Trustee;
22. Bareboat Charter ("CHARTER A") dated December __, 1996 between
Chevron Transport and Owner A;
23. Bareboat Charter ("CHARTER B") dated December __, 1996 between
Chevron Transport and Owner B;
24. Guarantee ("GUARANTEE A") by Chevron Corporation ("CHEVRON") of
Charter A, dated December __, 1996, of Charter A;
25. Guarantee ("GUARANTEE B") by Chevron Corporation ("CHEVRON") of
Charter B, dated December __, 1996, of Charter B;
3
<PAGE>
26. Assignment of Charter A dated December __, 1996 between Owner A and
United States Trust Company of New York, as Trustee;
27. Assignment of Charter B dated December __, 1996 between Owner B and
United States Trust Company of New York, as Trustee;
28. Assignment of Guarantee A dated December __, 1996 between Owner A
and United States Trust Company of New York, as Trustee;
29. Assignment of Guarantee B dated December __, 1996 between Owner B
and United States Trust Company of New York, as Trustee;
30. Purchase Agreement dated December 19, 1996 among Golden State
Petroleum, Owner A, Owner B and Donaldson, Lufkin & Jenrette Securities
Corporation relating to the purchase and sale of $127,100,000 aggregate
principal amount of 8.04% First Preferred Mortgage Notes Due 2019;
31. Purchase Agreement dated December 19, 1996 among Golden State
Petroleum, Owner A, Owner B and Donaldson, Lufkin & Jenrette Securities
Corporation relating to the purchase and sale of $51,700,000 aggregate
principal amount of Serial First Preferred Mortgage Notes Maturing
Serially from 2000 to 2006;
32. Registration Rights Agreement dated December 24, 1996 by and among
Golden State Petroleum, the Owners and Donaldson, Lufkin & Jenrette
Securities Corporation;
33. Chevron Registration Rights Agreement dated _________, 1996 by and
among Chevron, Chevron Transport and Donaldson, Lufkin & Jenrette
Securities Corporation;
34. Minutes of a meeting ("MEETING A") of the board of directors of Owner A
dated [ ] December, 1996; and
35. Minutes of a meeting ("MEETING B") of the board of directors of Owner B
dated [ ] December, 1996.
In this opinion, the "DOCUMENTS" means the documents referred to at paragraphs 1
to 35 inclusive and the "SECURITY DOCUMENTS" means the documents referred to at
paragraphs 2, 3, 6, 7, 10, 11, 14, 15, 18, 19, 26, 27, 28 and 29.
4
<PAGE>
In arriving at the opinion expressed below, in addition to examining the
Documents, we have examined such other documents as have been revealed by
searches of the Isle of Man Companies Registry and Rolls Office undertaken on 6
December, 1996 in respect of each Owner.
In arriving at our opinion, we have assumed:
(a) the genuineness of all signatures on original documents; the
correctness of all facts stated in and representations made in the
documents which we have examined (except as otherwise opined upon
herein) and the conformity to original documents of all copy documents;
(b) that each of the parties to the Documents (other than each of the
Owners) is duly incorporated, validly existing and fully authorised,
qualified and empowered under their respective constitutions and any
applicable laws to carry on business and to enter into and perform
their respective obligations and exercise their respective rights under
each of the Documents;
(c) that each of the parties to the Documents (other than each of the
Owners) has taken all corporate and other action required to authorise
the execution of the Documents and the performance of their respective
obligations thereunder;
(d) that there are no provisions of the laws of any jurisdiction outside
the Isle of Man or any agreement to which any of the parties (other
than each of the Owners) to the Documents are a party which would be
contravened by such execution or delivery and that, insofar as any
obligation under the Documents fails to be performed in any
jurisdiction outside the Isle of Man, its performance will not be
unlawful by virtue of the laws of that jurisdiction;
(e) that the Documents are valid and legally binding in accordance with
their terms under the laws by which they are expressed to be governed;
(f) the accuracy and currency of the records and filing systems maintained
at the public offices where we have searched or inquired or have caused
searches or inquiries to be conducted;
(g) that all necessary consents or approvals of, and all necessary
registrations or other action by or with, any regulatory authority or
any other person or entity outside the Isle of Man have been or will be
obtained, performed or
5
<PAGE>
taken in relation to the execution, delivery and performance of each of
the Documents by each of the parties thereto;
(h) that Meeting A and Meeting B were duly convened and held with proper
notice being given to each of the directors of each of the Owners, that
a duly qualified quorum of directors voted in favour of the approving
resolutions and that such resolutions are a true record of the
proceedings at each such meeting and have not been amended or
rescinded;
(i) that all appropriate notices of and consents to assignment required to
be given or which it is desirable are given in connection with any of
the Documents are, in fact, given in timely fashion; and
(j) that entering into the Documents and performing the obligations which
each of the Owners undertakes is to its commercial benefit.
Based on and subject to the foregoing and subject to the further qualifications
set out below, we are of the opinion that:
(a) each Owner is incorporated in the Isle of Man, is validly existing as a
public limited company in good standing (so far as is ascertainable
from public documents) under the laws of the Isle of Man and has the
corporate power and authority required to carry on its business and to
own, lease and operate its properties;
(b) pursuant to each of Meeting A and Meeting B, entry into each of the
Shipbuilding Contracts, the Charters, the Agreements on Contract for
Technical Matters, the Management Agreements, the Agency Agreement, the
Purchase Agreements, the Registration Rights Agreements and the
Security Documents have been duly authorised and executed by each Owner
party thereto respectively;
(c) to the best of our knowledge and belief (having made enquiry only of
the Company Secretary of each Owner upon whom we have relied), neither
of the Owners is in violation of its memorandum and articles of
association or is in default in the performance of any obligation,
agreement or condition contained in any bond, debenture, note, or any
other evidence of indebtedness or in any other agreement, indenture or
instrument material to the conduct of the business of such Owner, to
which it is a party or by which it or its property is bound, or is in
violation of any Isle of Man law, statute, rule, registration, judgment
or court decree applicable to it;
6
<PAGE>
(d) the execution, delivery and performance of each of the Purchase
Agreements, the Registration Rights Agreement, the Shipbuilding
Contracts, the Charters, the Agreements on Contract for Technical
Matters, the Management Agreements, the Agency Agreement and the
Security Documents by each Owner party thereto and compliance by such
Owner or Owners with all the provisions thereof and the consummation of
the transactions contemplated thereby will not require any consent,
approval, authorisation or other order of any court, regulatory body,
administrative agency or other governmental body of the Isle of Man and
will not conflict with or constitute a breach of any of the terms or
provisions of, or a default under, the memorandum and articles of
association of such Owner or Owners or, we are informed by the Company
Secretary of each Owner: (i) any agreement, indenture or other
instrument to which either Owner is a party or to which any of its
properties is bound; or (ii) violate or conflict with any laws,
administrative regulations or rulings or court decrees applicable to
either Owner or any of its property;
(e) after enquiry of the Company Secretary of each Owner upon whom we have
relied, there are no legal or governmental proceedings pending or
threatened to which either Owner is a party or to which any of its
property is subject which is material for inclusion in the Final
Offering Memoranda (as the same is defined in the Purchase Agreements)
and is not so described, or of any contract or other document which is
material for inclusion in the Final Offering Memoranda which is not
described as required;
(f) the choice of the law of the State of New York to govern the Purchase
Agreements and the Documents governed by New York law to which either
Owner is a party is valid under the laws of the Isle of Man and a court
in the Isle of Man would uphold such choice of law in a suit, action or
other proceeding on such agreement or document in a court of the Isle
of Man; and
(g) on the principle laid down in Saloman v. A Saloman and Co. Limited
[1897] AC22, it is our opinion that, if an Owner was wound up, in the
absence of fraud, the courts of the Isle of Man would be unlikely to
order substantive consolidation of the assets and liabilities of the
Owner with those of third parties or with those of its shareholders.
7
<PAGE>
The opinions expressed above are given subject to the following reservations:
(a) enforcement of any of the Documents may be limited by bankruptcy,
insolvency, liquidation, reorganisation, court schemes, moratoriums,
the doctrine of frustration and laws relating to or affecting the
rights of creditors generally;
(b) enforcement of any of the Documents may be limited by general
principles of equity, and, in particular, equitable remedies are
available only at the discretion of the Court and are not available
where damages are considered to be an adequate remedy;
(c) claims may be or become barred in the Isle of Man under the Limitation
Acts 1984 and 1988 (Acts of Tynwald) or become subject to a defence of
set-off or counterclaim;
(d) under Isle of Man law the terms of an agreement under hand may be
varied by oral or written agreement of the parties;
(e) a foreign judgment would not be enforced by an Isle of Man Court
without a re-trial or re-examination of the matters thereby adjudicated
upon if a judgment were obtained by fraud or in a manner contrary to
natural justice or if the enforcement thereof were contrary to Isle of
Man public policy and such enforcement of the foreign judgment may also
be withheld if the relevant judgment were not a final and conclusive
money judgment being both unrelated to taxation and free of conflict
with any other judgment in the same cause of action;
(f) provisions relating to set-off contained in any of the Documents will
only be enforceable in a liquidation of either Owner insofar as they do
not purport to contract out of the mandatory set-off rules imposed by
the Bankruptcy Code 1892;
(g) if proceedings are commenced in the Isle of Man courts any provision in
any of the Documents to the effect that calculations and/or
certifications will be conclusive and binding will not be effective in
Manx law if such calculations and/or certifications are fraudulent or
erroneous on their face and will not necessarily prevent judicial
enquiry into the merits of any claim respecting any such calculation or
certification;
(h) if proceedings are commenced in the Isle of Man Courts, where in any of
the Documents a party is vested with a discretion or may determine a
8
<PAGE>
matter in its opinion, the law of the Isle of Man may require that such
discretion is exercised reasonably or that such opinion is based on
reasonable grounds;
(i) the Security Documents should be lodged for filing at the Companies
Registry in the Isle of Man pursuant to Section 79 of the Companies Act
1931 (an Act of Tynwald) within one month from their respective dates
of creation. Failure to do so will, in the event that any of the
Security Documents are of a type referred to in Section 79 of that Act,
render them void against a liquidator or creditor of either Owner and
priority over the other creditors will not be lost;
(j) provisions as to severability in any of the Documents may not be
binding and the question of whether or not provisions relating to
invalidity may be severed from other provisions in order to save such
other provisions would be determined by the Manx Courts at their
discretion;
(k) no opinion is expressed as to whether the Manx Courts would construe
any of the Documents without giving effect to principles of conflict of
laws; and
(l) this opinion addresses matters of law not fact and is confined entirely
to Isle of Man law.
This opinion may only be relied upon by you and may not be disclosed to or
relied upon by any other person without our prior written consent.
Notwithstanding the foregoing, this opinion may be relied upon by your counsel,
and Davis Polk & Wardwell, in connection with their delivery of opinions to you
pursuant to the Purchase Agreements.
Yours faithfully,
CAINS
9
<PAGE>
EXHIBIT C
Opinion of Davis Polk & Wardwell,
Special Counsel for the Initial Purchaser
The Opinion of Davis Polk & Wardwell, Special Counsel for the Initial
Purchaser, to be delivered pursuant to Section 7.(f) of the Purchase Agreement
shall be to the effect that:
(a) the Term Notes have been duly authorized by Golden State Petroleum
and, when executed and authenticated in accordance with the provisions
of the Indenture and delivered to and paid for by the Initial Purchaser
in accordance with the terms of the Purchase Agreement, will be
entitled to the benefits of the Indenture and, assuming that the
execution, delivery and performance by each Owner of the Indenture are
within such Owner's corporate powers and have been duly authorized by
all necessary corporate action, will be valid and binding joint and
several obligations of the Owners, enforceable in accordance with their
terms except as (i) the enforceability thereof may be limited by
bankruptcy, insolvency or similar laws affecting creditors' rights
generally and (ii) rights of acceleration and the availability of
equitable remedies may be limited by equitable principles of general
applicability;
(b) each of the Purchase Agreement and the Registration Rights
Agreement has been duly authorized, executed and delivered by Golden
State Petroleum and is a valid and binding agreement of Golden State
Petroleum, enforceable in accordance with its terms (except as rights
to indemnity ad contribution thereunder may be limited by applicable
law);
(c) assuming that the execution, delivery and performance by each
Owner of the Purchase Agreement and the Registration Rights Agreement
are within such Owner's corporate powers and have been duly authorized
by all necessary corporate action, then each of the Purchase Agreement
and the Registration Rights Agreement is a valid and binding agreement
of each Owner, enforceable in accordance with its terms (except as
rights to indemnity and contribution thereunder may be limited by
applicable law);
(d) the Indenture has been duly authorized, executed and delivered by
Golden State Petroleum and is a valid and binding agreement of Golden
State Petroleum, enforceable in accordance with its terms
<PAGE>
except as (i) the enforceability thereof may be limited by bankruptcy,
insolvency or similar laws affecting creditors' rights generally and
(ii) rights of acceleration and the availability of equitable remedies
may be limited by equitable principles of general applicability;
(e) Assuming that the execution, delivery and performance by each
Owner of the Indenture are within such Owner's corporate powers and
have been duly authorized by all necessary corporate action, then the
Indenture is a valid and binding agreement of each Owner, enforceable
in accordance with its terms except as (i) the enforceability thereof
may be limited by bankruptcy, insolvency or similar laws affecting
creditors' rights generally and (ii) rights of acceleration and the
availability of equitable remedies may be limited by equitable
principles of general applicability;
(f) Each of the Chevron Registration Rights Agreement and the Chevron
Agreement have been duly authorized, executed and delivered by Chevron
and is a valid and binding agreement of Chevron, enforceable in
accordance with its terms (except as rights to indemnity and
contribution thereunder may be limited by applicable law);
(g) Assuming that the execution, delivery and performance by Chevron
Transport of each of the Chevron Registration Rights Agreement and the
Chevron Agreement are within the corporate powers of Chevron Transport
and have been duly authorized by all necessary corporate action, then
each of the Chevron Registration Rights Agreement and the Chevron
Agreement is a valid and binding agreement of Chevron Transport,
enforceable in accordance with its terms (except as rights to indemnity
and contribution thereunder may be limited by applicable law);
(h) the statements under the captions "Description of the Term Notes,"
"Additional Notes," "Notice to Investors; Registration Rights" and
"Plan of Distribution" in the Offering Memorandum, as amended or
supplemented, insofar as such statements constitute a summary of legal
matters, documents or proceedings referred to therein, fairly present
the information called for with respect to such legal matters,
documents and proceedings;
(i) such counsel believes that (except for financial statements and as
aforesaid) the Final Offering Memorandum did not contain as of its date
and does not contain as of the date hereof any untrue statement of a
material fact or omitted or omits to state a material fact necessary in
order
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<PAGE>
to make the statements therein, in the light of the circumstances under
which they were made, not misleading; and
(j) based upon the representations, warranties and agreements of the
Companies in Sections 3.(k), 3.(l), 3.(m), 3.(n) and 3.(o) and 5.(y),
5.(z) and 5.(aa) of the Purchase Agreement and of the Initial Purchaser
in Section 4 of the Purchase Agreement and on the representations and
agreements contained in the Final Offering Memorandum under the caption
"Notice to Investors; Registration Rights," it is not necessary in
connection with the offer, sale and delivery of the Term Notes to the
Initial Purchaser in the manner contemplated by the Purchase Agreement
or in connection with the initial resale of such Term Notes by the
Initial Purchaser in accordance with Section 4 of the Purchase
Agreement to register the Term Notes under the Securities Act or to
qualify an indenture under the Trust Indenture Act of 1939, as amended,
provided that we express no opinion as to when and under what
circumstances the Term Notes may be otherwise resold;
In giving such opinion with respect to the matters covered by clause
(i) such counsel may state that their opinion and belief are based upon their
participation in the preparation of the Final Offering Memorandum and any
amendments or supplements thereto (but not including documents incorporated
therein by reference) and review and discussion of the contents thereof
(including documents incorporated therein by reference), but are without
independent check or verification except as specified.
Insofar as the foregoing opinion involves matters governed by the laws
of the Isle of Man or Liberia such counsel may rely, without independent
investigation, upon the opinions of Cains and The Henries Law Firm,
respectively.
3
SHIPBUILDING CONTRACT
FOR THE CONSTRUCTION OF A
308,500 DWT
CRUDE OIL DOUBLE HULL TANK VESSEL
(Hull No. 1228)
between
SAMSUNG CORPORATION
and
SAMSUNG HEAVY INDUSTRIES CO., LTD.
COLLECTIVELY AS "BUILDER"
and
GOLDEN STATE PETRO (IOM I-A) PLC
AS "BUYER"
<PAGE>
CONTRACT
PREAMBLE
CONTRACT, made this 24th day of December 1996, by and between
SAMSUNG CORPORATION, a corporation incorporated and existing under the laws of
the Republic of Korea, having its registered office at 250, 2-ka, Taepyong-ro,
Chung-ku, Seoul, Republic of Korea, and SAMSUNG HEAVY INDUSTRIES CO., LTD., a
corporation incorporated and existing under the laws of the Republic of Korea,
having its registered office at 890-25, Daechi-Dong, Kangnam-Ku, Seoul, Korea,
(hereinafter collectively called the "Builder"), on one part, and GOLDEN STATE
PETRO (IOM I-A) PLC, having an office and its principal place of business at
15-19 Athol Street, Douglas, Isle of Man, (hereinafter collectively called the
"Buyer"), on the other part.
WITNESSETH
The Buyer and the Builder, each in consideration of the mutual
undertakings, promises, and commitments set forth herein, agree, subject to the
stated terms and conditions, as follows:
ARTICLE I
VESSEL'S DESIGN AND DELIVERY
1. THE VESSEL
(a) The Builder shall, at its Koje Shipyard, located at Koje,
Korea (hereinafter called the "Shipyard"), construct, launch,
equip, supply, and in all respects complete so as to be ready
for immediate operation, and deliver to the Buyer a single
screw, double hull, oil tank vessel (hereinafter called the
"Vessel"), to be designated as Hull No. 1228, together with
all machinery, materials, parts, supplies, equipment,
appurtenances, and all other items necessary to and for the
said construction, completion, delivery, and operation of the
Vessel.
(b) The Vessel shall be built and completed in accordance with:
(i) GENERAL ARRANGEMENT PLAN DWG. No: TK9616.GA04 dated
October 17, 1996 as may be updated by subsequent
changes to documents (ii) through (v) below;
(ii) MIDSHIP SECTION PLAN DWG No: TK9616.MS03 dated
October 1, 1996 (hereinafter called the "Plan");
<PAGE>
(iii) FULL SPECIFICATIONS REF No.: TK9616.FS05 dated
November 5, 1996 (herein called the
"Specifications"), which Plan and Specifications have
been executed, and shall be deemed to be incorporated
herein and shall constitute an integral part of this
Contract; and
(iv) MEMORANDUM OF DISCUSSION: REF No. TK9616MOMVI dated
November 6, 1996 ("MOD I") and MEMORANDUM OF
DISCUSSION REF No.: TK9616.MOMVII when delivered
("MOD II"), to the extent there are discrepancies
between MOD I, MOD II and documents listed in (i),
(ii) or (iii) above, MOD I and MOD II shall prevail.
(c) Should there be any discrepancy between this Contract and the
Plan or the Specifications, the provisions in this Contract
shall prevail. Should there be any discrepancy between the
Specifications and Plan, the Specifications shall prevail.
When there is no specific description in the Specifications
(including Samsung Shipbuilding Quality Standards - "SSQS")
and Plan, a standard of workmanship and practices equivalent
to the Builder's shipbuilding standards as practicable,
generally applicable to the construction of similar size and
types of vessels, shall be applicable to the construction of
the Vessel, which standard shall include the incorporation of
any modification in design or construction which was
implemented to address a defect in any other Builder's VLCC
vessels.
(d) The Builder, at its expense, shall, unless otherwise
specifically provided herein, procure and furnish all items
and permissions necessary to perform its obligations hereunder
including, but not limited to, (i) plans and specifications
(in addition to the Plan and Specifications), labor,
machinery, materials, parts, supplies, equipment,
appurtenances, and (ii) licenses, permits, inspections,
surveys and approvals.
(e) The Builder retains all rights with respect to the
Specifications, plans and working drawings, technical
descriptions, calculations, test results, and other data,
information, and documents concerning the design and
construction of the Vessel and the Buyer undertakes therefore
not to disclose the same or divulge any information contained
therein to any third parties, without prior written consent of
the Builder, which shall not be unreasonably withheld, except
where it is necessary for usual operation, repair, and
maintenance of the Vessel or to any charterer of the Vessel
from the Buyer. In addition, the Buyer shall cause any
charterer of the Vessel to deliver to the Builder a
confidentiality agreement with respect to the Specifications.
(f) Any modifications to drawings set forth above which may be
required by the Classification Society shall be accomplished
by the Builder without any cost to the Buyer; provided, this
provision shall only apply to modifications which are based
upon the standards of the American Bureau of Shipping (the
"Classification
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Society") in effect on the date of this Contract; PROVIDED
FURTHER, any other modifications required by the
Classification Society shall be handled in accordance with
Article III(c).
ARTICLE II
DIMENSIONS, DEADWEIGHT, SPEED, FUEL CONSUMPTION
(a)The basic dimensions of the Vessel shall be:
Length overall about 333.00 meters
Length between
perpendiculars about 318.00 meters
Breadth, molded about 58.00 meters
Depth, molded to upper deck at
side about 31.25 meters
Designed loaded draft, molded about 21.40 meters
Scantling draft, molded about 22.50 meters
Cargo tank capacity including
the slop tanks (100% full) about 350,000 cubic meters
(b) The deadweight capacity (hereinafter called "DWT") of the
Vessel, including cargo, bunkers, stores, provisions, fresh
drinking, and distilled water, crew with their effects and
minimum spare parts required by the Classification Society and
based upon the Plan and Specifications, shall be three hundred
eight thousand five hundred (308,500) metric tons in salt
water (of 1.025 specific gravity) on the scantling draft,
molded, of about 22.50 meters.
The deadweight of the Vessel of 308,500 metric tons, plus or
minus any deadweight change due to Alterations, shall
constitute, and hereinafter shall be referred to as, the
"Contract DWT". Should the final deadweight on delivery, be
less than the Contract DWT, a payment for such deficiency
shall be allowed, as specified in Article VII (b).
(c) The main propulsion unit for the Vessel will consist of one
Samsung-B&W 7S80MC engine, to be manufactured by a Korean
licensee identified in the Maker's List, and as stipulated in
the Specifications, having a maximum continuous power rating
of 34,650 BHPm at about 79.0 r.p.m.
(d) The Vessel is guaranteed to obtain an average speed of 16.0
knots, measured during sea trials and as defined in the
Specifications.
(e) The fuel consumption of the main propulsion unit, as
determined by the shop trials, shall be 122.3 grams per BHPm
per hour for fuel having a lower calorific
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<PAGE>
value of 10,200 Kcal/kg for main propulsion at 31,190 BHPm and
based on Specifications.
ARTICLE III
CLASS AND REGULATIONS
(a) The Vessel, including its machinery, equipment, and
outfittings, shall be classed with the Classification Society
and shall be built to Class +A1, (E), Oil Carrier, +AMS,
+ACCU, and SH. The Vessel shall also comply with the laws,
rules, regulations, recommendations, and requirements as
stated in the Specifications. The Builder shall, at its
expense, request the Classification Society to assign an
on-site surveyor (hereinafter referred to as the "Surveyor")
to oversee complete construction of the Vessel at the Shipyard
and other locations as required.
(b) The Builder, at its expense, shall obtain certificates as
provided in the Specifications and deliver such to the Buyer
in triplicate (one (1) original and two (2) copies). If formal
certificate(s) cannot be obtained upon the Vessel's delivery,
the Builder may furnish provisional one(s) in substitution for
the formal certificate(s). The Buyer shall pay the charges for
official inspection and certifications required by any
Government of Registry specified in Specifications, and the
registration of the Vessel shall be the responsibility of the
Buyer.
(c) In the event that there should be any amendments or additions,
following the date of this Contract, to the laws, rules, or
regulations of any Government or regulatory body, or the
Classification Society, which require any revision(s) of or to
the Plan and Specifications or to this Contract, the Buyer
shall authorize any such revision(s) to the Vessel that are
necessary to comply with such amendments or additions unless
the Buyer shall obtain from such Government or regulatory body
a written waiver of compliance therewith. In the event that
Alterations (as defined in Article XIV (a)) are required, they
shall be handled in accordance with the provisions of Article
XIV.
ARTICLE IV
DELIVERY
(a) The Vessel shall be delivered to the Buyer (hereinafter called
the "Delivery") fully complete, supplied (including
lubricating oil and fresh water in the system but excluding
ship's stores such as food, utensils, miscellaneous
consumable, etc.) and ready for immediate operation, after
having passed the tests and met the standards set forth in the
Specifications and Articles II, III, and XVI hereof on or
before February 1, 1999 (hereinafter called the "Delivery
Date"). Notwithstanding the foregoing, in the event defects of
a nature which would affect
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Vessel's seaworthiness or seriously impair the operation of
Vessel are discovered after Vessel has passed the tests and
met standards set forth in the Specifications and prior to
delivery of Vessel, except defects of Buyer Supplies (as
defined in Article XI), Buyer shall have the right to require
Builder to make the necessary correction(s) at Builder's
expense prior to delivery.
(b) The Builder shall use its best efforts and all due diligence
and dispatch, including, but not limited to, the ordering,
expediting and inspection of all machinery, parts and
materials, to complete and deliver the Vessel on or prior to
the Delivery Date. The Builder shall assist the Buyer to
bunker and store the Vessel (beyond the conditions set forth
in Article IV (a) above) at the Buyer's expense to be ready
for departure. Delivery shall be made at the Shipyard at a
wharfside where there shall be sufficient water for the Vessel
always to be afloat and from which it can safely depart, or at
such other safe place as may be mutually agreed. Upon
Delivery, the Vessel shall be free and clear of all liens,
encumbrances, taxes and claims of any nature.
(c) The Builder shall notify the Buyer in writing, providing
documentation for any delay relating to the construction or
delivery of the Vessel or any performance required hereunder
within ten (10) days after the beginning of any period of
delay.
(d) If Delivery of the Vessel is or will be delayed for any reason
whatsoever, other than due to delays caused by the Buyer, or
by Alterations (as defined in Article XIV), for a period of
more than one hundred eighty (180) days beyond the Delivery
Date, the Buyer shall have the following options, exercisable
not later than either (i) ten (10) days after the expiration
of such one hundred eighty (180) day period or (ii) twenty
(20) days after the Buyer has been notified by the Builder and
the parties have mutually agreed that one hundred eighty (180)
days delay is likely to take place, whichever first occurs:
(i) to extend the Delivery Date with the Buyer's right to
liquidated damages, as provided in Article VII (a),
or
(ii) to cancel this Contract in which event the Buyer
shall be entitled to a refund in accordance with
Article VI (h).
(e) In case the Vessel, during the period of building, sustains
any damage which is repaired in accordance with the Plan and
Specifications and to the satisfaction of the Representative
(as hereinafter defined in Article XV), the Classification
Society, and the concerned authorities, if any, the Buyer
shall have no right, except as specifically granted under the
terms of this Contract, to refuse to take Delivery.
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(f) Should the Vessel be completed for Delivery before the
Delivery Date and the Builder has so informed the Buyer at
least 10 weeks in advance, the Buyer shall take Delivery but
not earlier than 8 weeks prior to the Delivery Date provided
that all the terms and conditions of this Contract have been
fulfilled.
(g) Upon Delivery, the Builder shall furnish the Buyer with a
Commercial Invoice, Builder's Certificate, Protocol of Sea
Trials of Vessel, Protocols of Inventory, Protocols of
Consumable Nature and Declaration of Warranty of Freedom from
Liens and Claims, including any claim by the Guarantor by
reason of its Letter of Guarantee under Article X (as such
terms are defined in such Article), and such other
certificates and documents as the Buyer may request evidencing
transfer to the Buyer of a free and clear title in and to the
Vessel.
(h) The Buyer shall remove the Vessel from the Builder's premises
within five (5) business days after Delivery of the Vessel.
(i) Upon satisfactory completion of the trials as specified in
Article XVI, and fulfillment of the terms and conditions of
this Contract, Buyer and Builder shall execute a Protocol of
Delivery and Acceptance (hereinafter referred to as
"Acceptance"). Upon execution of said Protocol of Delivery and
Acceptance, title and risk of the Vessel shall pass to the
Buyer, as stated above, it being expressly understood that
until such Delivery is effected, title to the Vessel and its
equipment (except for the Buyer's Supplies subject to the
provisions of Article XI), are in the Builder and at its risk.
ARTICLE V
DISCHARGE OF LIENS
The Builder shall, before Delivery, discharge all claims,
liens, or right in rem of any kind against the Vessel, including any claims for
taxes or by the Guarantor made by reason of its Letter of Guaranty under Article
X hereof, and shall indemnify and save the Buyer harmless with respect thereto.
Upon Delivery, the Builder shall furnish the Buyer with a warranty (as defined
in Article IV (g)), that the Vessel is free and clear of all liens,
encumbrances, taxes, and claims of any nature.
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<PAGE>
ARTICLE VI
PRICE, PAYMENT, TERMS, REFUND, BANK GUARANTEE
PRICE, CURRENCY AND PAYMENTS
(a) Contract Price:
The net purchase price of the Vessel is US$80,881,200
(hereinafter called the "Contract Price") to be paid by the
Buyer to the Builder for the construction and completion of
the Vessel and Delivery (exclusive of Buyer's Supplies as
provided in Article XI). The Contract Price shall be fixed,
with no escalation and subject to change only as expressly
provided elsewhere in this Contract, and to the extent that
the Builder might, under any applicable law, regulation, or
decree (including those of Korea), have any such right(s) to
escalate or change the Contract Price, such right(s) are
hereby waived. The Contract Price includes all costs and
expenses incurred by the Builder performing engineering
calculations for designing and supplying all necessary
drawings for the Vessel, in accordance with the
Specifications.
(b) Currency:
All payments by the Buyer to the Builder under this Contract
shall be made in United States Dollars ("US$").
(c) Progress Payment:
The Contract Price shall be due and payable by the Buyer to
the Builder in installments as indicated on Schedule 1
attached hereto.
(d) Method of Payment:
(i) First Installment
Within one (1) banking day after receipt of a facsimile copy
of the export license for the Vessel issued by the Builder's
Bank (as hereinafter defined) on behalf of the Government of
Korea as required under Article XIX(a) hereof, the Buyer shall
remit by telegraphic transfer the first installment in the
amount set forth in Schedule 1 to the account of BANKERS TRUST
COMPANY, New York for account of Hanil Bank, Account No.
04-023-584 for credit of Samsung Heavy Industries Co., Ltd. or
to such other Bank which the Builder may designate in favor of
Samsung Heavy Industries Co., Ltd. (hereinafter called the
"Builder's Bank") under advise by authenticated cable or telex
to the Builder's Bank.
(ii) Each Subsequent Installment
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<PAGE>
The Buyer shall remit by telegraphic transfer each installment
to the Builder's Bank or to such other Bank which the Builder
may designate in favor of Samsung Heavy Industries Co., Ltd.
payable pursuant to Schedule 1 attached to this Contract.
Upon receipt of a facsimile or telex notice from the Builder
not less than six (6) banking days in New York prior to the
scheduled Delivery Date, notifying the Buyer of such date, the
Buyer shall deposit the amount payable upon Delivery of the
Vessel by telegraphic transfer to account of the Builder's
Bank at least one (1) banking day in Korea prior to the
scheduled Delivery of the Vessel, with irrevocable
instructions to be confirmed by the Builder's Bank that the
said deposit shall be payable to the Builder against
presentation by the Builder of a duplicate original copy of
the Protocol of Delivery and Acceptance of the Vessel signed
by the Builder and the Buyer and that, in the event that the
actual delivery and acceptance of the Vessel shall not take
place within seven (7) days following such scheduled Delivery,
the said deposit shall be returned to the Buyer's bank.
To the extent a note (in the form of Appendix C hereto) (the
"Note") is delivered with respect to any installment payment
as provided in Schedule 1 hereto, the Builder shall indemnify
the Buyer against any loss, damage, claim, liability and any
payment obligations incurred by the Buyer solely as a result
of Builder's failure to return the Note when required by this
Contract or the Note. Buyer shall only be required to make a
payment on the Note, upon presentation of the original of such
Note to the Buyer and Acceptance of the Vessel. If the Vessel
is rejected for any reason and this Contract is terminated the
Note shall be marked "cancelled" and returned to the Buyer.
The final installment shall be adjusted as set forth below:
- any adjustments or payments due from the Buyer to the
Builder at the time of Delivery in accordance with
the terms of this Contract, including payment for any
additional work, for which extra payments have been
agreed under Article XIV(b).
- any adjustments, saving, credits, or payments due
from the Builder to the Buyer at the time of the
Vessel's Delivery pursuant to the provisions of this
Contract,
- any adjustment resulting from settlement of the costs
of any fuel oil, lubricating oils and greases (except
in the Vessel's systems) or unbroached consumable
stores (furnished by Builder for trials), and
remaining on board the Vessel after acceptance of the
Vessel by Buyer, at the cost thereof to either the
Builder or Buyer as may be applicable.
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Not later than ten (10) business days prior to the scheduled
date for Delivery, the parties hereto shall execute and
deliver an agreement setting forth the ascertained adjustments
of the Contract Price, if any, and not later than three (3)
banking days prior to the scheduled date for acceptance of
delivery of the Vessel a supplemental agreement setting forth
any further adjustment of the Contract Price. It is the
intention of the parties to settle all amounts prior to
Delivery and Acceptance.
It is understood, however, that any outstanding adjustments
and settlements by either party to the other, not determined
prior to Delivery, shall be payable when determined as soon as
possible after Delivery; in no event shall Delivery of the
Vessel be delayed pending final determination of any such
adjustments and settlements. Any disputes as to adjustments
shall be settled in accordance with Article XXIV.
(iii) Default Interest and Others
In the event of default in the payment of any installments in
the above Paragraphs (i) and (ii) above, the Buyer shall pay
default interest, charges and expenses in accordance with
Paragraph (b) of Article VIII hereof.
Simultaneously with such payments, the Buyer shall cause the
Buyer's Bank to advise the Builder's Bank of the details of
such payments by authenticated bank cable or telex.
No payment under this Contract shall be delayed, suspended or
withheld by the Buyer on account of any dispute or
disagreement between the parties hereto. Any claim which the
Buyer may have against the Builder hereunder shall be settled
and liquidated separately from any payment by the Buyer to the
Builder hereunder.
Except as otherwise specifically provided for in this Article
VI, all payments to the Builder due under this Contract shall
be paid in United States Dollars by telegraphic transfer to
the bank identified in Article VI (d)(i) above.
(e) Notice of Payment on or before Delivery:
With the exception of the first installment, the Builder shall
give the Buyer seven (7) business days prior notice by telex
of the anticipated due date and amount of each installment
payable on or before delivery of the Vessel.
(f) Expenses:
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Expenses and bank charges for remitting payments and any
expenses and fees connected with such payment shall be for
account of the Buyer.
(g) Prepayment
Prepayment of any installment due on or before Delivery shall
be subject to mutual agreement between the parties hereto.
(h) Refund:
All payments made by the Buyer hereunder in United States
Dollars and prior to Delivery and Buyer's acceptance of the
Vessel shall be in the nature of installments to the Builder.
In the event that the Vessel is rejected by the Buyer, or this
Contract is canceled by the Buyer, all in accordance with the
terms of this Contract, or if the Builder should default in
Delivery of the Vessel or is guilty of breach of this Contract
justifying a recision thereof by the Buyer then, and in any
such event, the Builder shall refund to the Buyer an amount
equal to the sum of (i) the amount set forth on Schedule 2
hereto calculated as of the first day of the calendar month in
which the date of rejection occurs and (ii) an amount equal to
the product of (x) the difference between (1) the amount set
forth on Schedule 2 hereto calculated as of the first day of
the calendar month immediately succeeding the month in which
the date of rejection occurs and (2) the amount set forth on
Schedule 1 hereto as of the first day of the month in which
the date of rejection occurs and (y) a fraction the numerator
of which is the numeric day of the month of the date of
rejection and the denominator of which is 30. If the amount as
calculated above is not paid on the date of rejection there
shall be added to such amount interest at the rate of nine
percent (9.0%) per annum from and including the date of
rejection to but not including the date such amount is paid.
Such refunds by the Builder to the Buyer shall forthwith
discharge all obligations, duties, and liabilities of each of
the parties hereto to the other under this Contract. Any and
all refunds made to the Buyer under this Article VI (h) shall
be made in United States Dollars. Throughout this Contract,
whenever interest is due on any amounts to be paid or refunded
by either party, said interest shall be calculated as simple
interest, based on the actual number of days divided by 360.
All refunds made by the Builder to the Buyer under this
contract shall be paid in United States Dollars by telegraphic
transfer to the Buyer's account or its assignee's account as
set forth in a written notice to the Builder from such party.
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ARTICLE VII
ADJUSTMENTS TO CONTRACT PRICE
(a) Delayed Delivery Price Adjustment:
(i) If the Delivery is not made on the Delivery Date, the
Builder shall pay the Buyer, as liquidated damages
(not as penalty), the amount of $24,200 for each
calendar day of delay and the Contract Price shall be
reduced by the amount of such liquidated damages.
If delivery of the Vessel is delayed for a period of
more than one hundred eighty (180) days beyond the
Delivery Date, the Buyer may reject the Vessel or,
alternatively, the Buyer may accept the Vessel with a
longer delay in Delivery at an agreed upon reduction
in the Contract Price. Such reduction in the Contract
Price shall be agreed within thirty (30) days
following the Builder's receipt of the Buyer's notice
that it elects to accept the Vessel (with longer
delay in Delivery), but in no event shall the
Contract Price reduction be less than the maximum
price adjustment set forth above and calculated in
accordance with Schedule 2. If agreement is not
reached in such thirty (30) day period, the Buyer
shall be deemed to have rejected the Vessel.
(ii) If the Vessel is delivered earlier than the Delivery
Date, the Buyer shall pay to the Builder, a premium,
which shall be US$24,200 for each calendar day prior
to the Delivery Date; provided however no delivery
shall be made earlier than 8 weeks prior to the
Delivery Date as provided in Article IV (f).
(iii) In the event that the Buyer elects to reject the
Vessel as allowed under this Article VII (a), the
Builder shall immediately repay to the Buyer the
amounts set forth in Article VI (h), whereupon this
Contract shall terminate and such payment shall
forthwith discharge all obligations, duties and
liabilities of each party hereto to the other under
this Contract.
(b) Deadweight Deficiency Price Adjustment:
(i) No payment shall be made by the Builder to the Buyer
for a deficiency in deadweight (measured to the
nearest metric ton) of up to and including two
thousand five hundred (2,500) metric tons less than
the Contract DWT as specified in Article II (b), and
as may be adjusted under the provisions of Article
XIV (b). If the final deadweight is deficient by more
than the aforesaid two thousand five hundred (2,500)
metric tons, the Builder shall pay the Buyer, as
liquidated damages (not as a penalty), seven hundred
($700) per metric ton of deadweight deficiency,
exceeding
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the aforesaid two thousand five hundred (2,500)
metric tons up to and including the deadweight
deficiency. If such deadweight deficiency should
amount to more than six thousand (6,000) metric tons
and the Builder is unable to rectify such deficiency
to below the aforesaid six thousand (6,000) metric
tons, the Buyer may reject the Vessel or,
alternatively, the Buyer may accept the Vessel with
the excessive deadweight deficiency with an agreed
upon reduction of the Contract Price. The Buyer shall
make such elections within seven (7) days following
receipt of a notice from the Builder stating that the
Builder is unable to rectify the deficiency. The
Buyer and Builder shall agree upon the reduction of
the Contract Price within thirty (30) days following
the Buyer's election, which reduction shall be in an
amount not less than the maximum price adjustment set
forth above. If agreement is not reached in such
thirty (30) day period, the Buyer shall be deemed to
have rejected the Vessel.
(ii) No payment shall be made for any increases in the
Contract DWT.
(iii) In the event that the Buyer elects to reject the
Vessel as allowed under this Article VII (b), the
Builder shall immediately repay to the Buyer the
amounts set forth in Article VI (h), all sums
theretofore paid by the Buyer on account of the
Contract Price, whereupon this Contract shall
terminate and such payment shall forthwith discharge
all obligations, duties and liabilities of each party
hereto to the other under this Contract.
(c) Speed Deficiency Price Adjustment:
(i) No payment shall be made by the Builder to the Buyer
for a deficiency in speed (measured to the nearest
one-tenth (0.10) of one knot) of up to and including
three tenths (0.30) of one knot less than the speed
of sixteen (16.0) knots guaranteed in Article II (d).
If the speed deficiency is more than three tenths
(0.30) of one knot, the Builder shall pay the Buyer,
as liquidated damages (not as penalty) in accordance
with the following schedule for speed deficiencies up
to and including one (1.00) knot less than the
guaranteed speed.
Speed Deficiency
below 16.00 knots Liquidated Damage
----------------- -----------------
0.01 to 0.30 knots $0
0.31 to 0.40 knots $400,000
0.41 to 0.50 knots $600,000
0.51 to 1.00 knots $900,000/each 0.10 knot
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If the speed deficiency is greater than one (1.0)
knot, and the Builder is unable to rectify such
deficiency up to at least the aforesaid one (1.0)
knot, the Buyer may reject the Vessel or,
alternatively, the Buyer may accept the Vessel with
its insufficient speed with an agreed upon reduction
of the Contract Price. The Buyer shall make such
elections within seven (7) days following receipt of
a notice from the Builder stating that the Builder is
unable to rectify the deficiency. The Buyer and
Builder shall agree upon the reduction of the
Contract Price within thirty (30) days following the
Buyer's election, which reduction shall be in an
amount not less than the maximum price adjustment set
forth above. If agreement is not reached in such
thirty (30) day period, the Buyer shall be deemed to
have rejected the Vessel.
(ii) No payment shall be made for any increase in the
speed of the Vessel.
(iii) In the event that the Buyer elects to reject the
Vessel as allowed under this Article VII (c), the
Builder shall immediately repay to the Buyer, the
amounts set forth in Article VI (h), whereupon this
Contract shall terminate and such payment shall
forthwith discharge all obligations, duties and
liabilities of each party hereto to the other under
this Contract.
(d) Excessive Fuel Consumption Price Adjustment:
(i) No payment shall be made by the Builder to the Buyer
if the fuel consumption (measured to the nearest
tenth of one percent) of the main propulsion unit
exceeds that provided for in Article II (e) by Three
percent (3.0%) or less. If the fuel consumption of
the main propulsion unit exceeds that provided for in
Article II (e) by more than Three percent (3.0%) the
Builder shall pay the Buyer, as liquidated damages
(not as penalty), one hundred fifty thousand
($150,000) for every one percent (1.0%) and pro rata
for less than a full one percent (1.0%) by which the
fuel consumption exceeds the aforesaid three percent
(3.0%). If the fuel consumption exceeds that provided
in Article II (e) by more than Ten percent (10.0%)
and the Builder is unable to rectify such deficiency
to at least said Ten percent (10.0%), the Buyer may
reject the Vessel or, alternatively, the Buyer may
accept the Vessel with the aforesaid deficiencies
with an agreed upon reduction of the Contract Price.
The Buyer shall make such elections within seven (7)
days following receipt of a notice from the Builder
stating that the Builder is unable to rectify the
deficiency. The Buyer and Builder shall agree upon
the reduction of the Contract Price within thirty
(30) days following the Buyer's election, which
reduction shall be in an amount not less than the
maximum price adjustment set forth above. If
agreement is not reached in such thirty (30)
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day period, the Buyer shall be deemed to have
rejected the main propulsion unit.
(ii) No payment shall be made for any improvements in fuel
consumption less than that defined in Article II (e)
herein.
(iii) In the event that the Buyer elects to reject the
Vessel as allowed under this Article VII (d), the
Builder shall immediately repay to the Buyer, the
amounts set forth in Article VI (h), whereupon this
Contract shall terminate and such payment shall
forthwith discharge all obligations, duties and
liabilities of each party hereto to the other under
this Contract.
(e) Schedule of Payments due to Price Adjustments:
All payments due to price adjustments, if any, pursuant to
this Article VII shall be made on the Delivery Date.
(f) Effect of Rescission:
It is expressly understood and agreed by the parties that, in
any case, if the Buyer rejects the Vessel under the provisions
of this Article VII, the Buyer shall not be entitled to any
liquidated damages set forth in this Article VII.
ARTICLE VIII
DEFAULT IN PAYMENT
(a) The Buyer shall be deemed to be in default in the event that
it should fail to make any payment with respect to the
Contract Price, when due and payable as provided in Article
VI.
(b) If the Buyer is in default as provided herein, then, and in
such event, the Buyer shall, commencing with and including the
day next following the payment date, pay interest on the
payment which has not been paid to the Builder from the date
when it should have been paid at the rate of nine percent
(9.0%) per annum from and including such day until paid. In
addition, the Delivery Date shall be extended by one day for
each day the Buyer remains in default hereunder.
(c) Subject to the provisions of Article VIII (b), if any such
default shall prevail for more than fifteen (15) business
days, the Builder shall have the option of canceling this
Contract, by giving fifteen (15) business days written notice
of said cancellation to the Buyer and retaining, as security
for the payment of its legal damages, any and all funds then
paid to it by the Buyer and the Builder shall have a right to
sell the Vessel at the best price available at a public or
private auction,
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advertised internationally, including an invitation to the
Buyer to participate, but otherwise on such terms and
conditions as the Builder may determine, and any resulting
losses to the Builder shall be an element of legal damages. If
the proceeds of the sale are insufficient to compensate losses
to the Builder due to the Buyer's default, the Buyer shall
promptly pay the deficiency to the Builder on demand. If the
Vessel is sold for more than the Contract Price, the Buyer
shall receive any such excess the Builder receives, after
reasonable and customary service fees have been deducted.
ARTICLE IX
BUILDER'S PAYMENT AND REPAYMENT AND INTEREST THEREON
(a) Any payments or repayments required to be made by the Builder
to the Buyer under this Contract shall be made as provided for
in Article VI (h). The Buyer shall receive the gross amount of
the principal and interest due. Any applicable withholding tax
payments shall be paid by the Builder.
(b) If the Builder is required to make payment to the Buyer of any
moneys as liquidated damages, under this Contract the Builder
shall pay such amounts to the Buyer at Delivery of the Vessel.
However, should this payment be delayed, there shall be added
to each such payment interest at the rate of nine percent
(9.0%) per annum from the date the said payment becomes due
until paid.
ARTICLE X
BANK GUARANTEE
The Builder shall, at its cost, furnish the Buyer with a Letter of
Guarantee given by a first class Korean bank acceptable to the Buyer
(hereinafter referred to as "Guarantor"), substantially in the form of
Appendix A attached hereto. The Letter of Guarantee shall guarantee
payment to the Buyer in United States Dollars, at such place as the
Buyer or its assignee may designate, of all sums payable or repayable
by the Builder to the Buyer under this Contract with interest thereon
as provided in Article VI (h), upon receipt by said Guarantor from the
Buyer of a written claim that it is entitled to such payment or
repayment and that the Builder has failed to make same.
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ARTICLE XI
TERMS DURING DESIGN, CONSTRUCTION, AND GUARANTEE PERIODS
BUYER'S SUPPLIES
The Contract Price for the Vessel is exclusive of the costs of
equipment specified in the Specifications as the "Buyer's Supplies"
(and hereinafter so referred to), which shall be supplied and delivered
by the Buyer to the Builder, at the Shipyard and at the Buyer's cost
and expense. The Builder shall undertake to install the agreed Buyer's
Supplies without extra cost to the Buyer, provided that they are
delivered by the Buyer to the Builder in sufficient time to permit
installation without delaying construction of the Vessel. Delivery of
the Buyer's Supplies shall be in accordance with a reasonable time
schedule, designated by the Builder and made available to the Buyer
prior to the start of any construction activity for the Vessel. Should
any or all of the Buyer's Supplies arrive late and should the Builder
agree to install those Buyer's Supplies so delayed, any change in
construction time directly resulting from such late arrival shall
accordingly extend the Delivery Date. Furthermore, if the delay in
delivery of the Buyer's Supplies should exceed thirty (30) days, the
Builder shall be entitled to proceed with the construction of the
Vessel, either without installation of such Buyer's Supplies in or onto
the Vessel, or using equipment supplied by the Builder, without
prejudice to the Builder's right to extend the Delivery Date and to
compensation for losses and damages as hereinabove provided and the
Buyer shall accept the Vessel so completed. All the Buyer's Supplies
shall be subject to the Builder's reasonable right of rejection in the
event the same are found to be unsuitable or not in proper condition
for installation. The Builder shall not be responsible for the quality
or capacity of the Buyer's Supplies and shall not be liable for any
defect in the Buyer's Supplies; however, the Builder shall receive and
upon receipt safely store and insure, against loss or damage, all the
said Buyer's Supplies. Any technical assistance, information and/or
royalties required for the installation of the Buyer's Supplies shall
be the responsibility of the Buyer. Both parties clearly understand
that the provisions of this Article XI shall not apply to machinery or
equipment other than those specified in the Specifications as the
Buyer's Supplies.
ARTICLE XII
INSURANCE
(a) From the time of launching until delivery of the Vessel, the Builder
shall, at its own cost and expense, insure the Vessel and all machinery
and equipment, appurtenances and outfits, including the Buyer's
Supplies after arrival at the shipyard whether or not built into or
installed in or upon the Vessel, against all risks under the "Institute
Clauses for Builder's Risk", with a first class Korean insurance
company or underwriters acceptable to the Buyer. The amount of such
insurance coverage shall, up to the date of Delivery of the Vessel, not
be less than the aggregate amount of all payments paid by the Buyer
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to the Builder, plus the value of agreed Alterations at the time of
launching and of the Buyer's Supplies in the custody of the Shipyard.
(b) In the event that the Vessel shall be damaged from any insured cause at
any time before Delivery of the Vessel, and in the further event that
such damage shall not constitute an actual or constructive total loss
of the Vessel, the amount received in respect of the insurance shall be
applied by the Builder in repair of such damage, satisfactory to the
Classification Society, and the Buyer shall accept the Vessel under
this Contract if completed in accordance with this Contract, the
Specifications, and Plan, subject, however, to any applicable extension
of delivery time under Article IV (c) hereof.
Should the Vessel from any cause become an actual or constructive total
loss, the Builder shall either:
(i) proceed in accordance with the terms of this Contract, in
which case the amount received in respect of the insurance
shall be applied to the construction and repair of damage to
the Vessel, provided the parties hereto shall have first
agreed thereto in writing and to such reasonable extension of
delivery time as may be necessary for the completion of such
reconstruction and repair; or
(ii) refund promptly to the Buyer, in accordance with Article VI
(h), the full amount of all sums paid by the Buyer to the
Builder in advance of delivery of the Vessel, and deliver to
the Buyer all Buyer's Supplies (or the insurance proceeds paid
with respect thereto), in which case this Contract shall be
deemed to be automatically terminated and all right, duties,
liabilities and obligations of each of the parties to the
other shall forthwith cease and terminate.
(c) The Builder shall be under no obligation to insure the Vessel hereunder
after Delivery of the Vessel.
ARTICLE XIII
BUILDER'S GUARANTEE
(a) If, within twelve (12) months, or such longer period as might
be specified with respect to certain equipment or machinery in
the Specifications, and eighteen (18) months for main engine
(hereinafter called the "Guarantee Period") after the Delivery
and Acceptance of the Vessel, any defect in the Vessel (except
the Buyer's Supplies), its design, machinery, equipment, or
other appurtenances, due to defective materials or
workmanship, or failure to construct in conformity with the
Plan and Specifications (all hereinafter referred to as
"Guarantee Defects"), shall be discovered (other than defects
solely due to normal wear and tear, negligence or improper
acts of the operator or crew of said Vessel or overloading,
improper loading, stowage, and accident), the Builder shall,
as quickly as possible after receipt of the Buyer's written
notice thereof, correct,
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replace, or repair such defect at its own expense at its
Shipyard; provided that if, in the Buyer's opinion, the Vessel
cannot conveniently be brought to the Shipyard, and if no
other agreement can be reached between the parties, the
Builder shall pay to the Buyer the lesser of
(i) the cost to the Buyer of such repairs, or
(ii) such sum as the Builder would have charged a repair
customer for like repairs and/or replacements had
such work been done at the Shipyard.
Replacement parts or materials to be furnished to Buyer by
Builder for making of repairs under the Guarantee which are
performed other than at Shipyard or in such other facility of
Builder shall be transported to the place of repair at
Builder's expense.
In principle, such transportation shall be by the most
expeditious public surface transportation. If required to keep
Vessel in operation, Builder shall arrange for and bear the
cost of transporting necessary parts or materials by air
transportation.
Builder shall in every case use its best efforts to expedite
the furnishing to Buyer of replacement parts or materials
required under the Guarantee.
Repairs under this Article are guaranteed for the balance of
the period set out in paragraph (a) of this Article however
major repairs shall be guaranteed for the longer of (x) the
balance of the period set out in paragraph (a) of this Article
or (y) two (2) months from the date of completion of such
major repairs, but in no event longer than fourteen months
(14) after the Delivery Date. For purposes of this paragraph,
"major repairs" shall be any repair costing more than ten
thousand United States Dollars (US$10,000).
If such defect can be repaired or replaced by the Vessel's
crew, the Buyer will give prior notice to the Builder of such
defect, and upon the Builder's written acceptance that the
Buyer may remedy such defect, and the Builder will reimburse
the Buyer for the incremental costs of the crew's labor so
incurred or the costs of such labor at the Builder's Shipyard,
whichever is the lesser, excluding normal maintenance.
Guarantee Defects that affect the safety of the Vessel or crew
and/or constitute an emergency, shall be repaired either by
the crew or Buyer selected contractor in a reasonable manner
under the circumstances without Builder's prior approval and
the Builder shall be notified as soon as possible after the
repairs are undertaken and such repair work will be subject to
mutual agreement between the parties; provided any such repair
work shall not adversely affect any provisions of this Article
XIII as to any other Guarantee Defect. In any case, the
Builder shall also reimburse the Buyer for the actual
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cost, in the currency incurred, of any temporary repairs
necessary to enable the Vessel to present itself for the
aforesaid permanent repairs. As to such defects as are
repaired or replaced by the Builder, the guarantee hereunder
shall be subject to an agreement between the Builder and Buyer
which addresses defects so repaired or replaced. The Builder's
only liability for defects in the Vessel, its machinery,
equipment or other appurtenances, as aforesaid, shall be as
hereinabove provided and the Builder shall be under no
obligation for defects in workmanship or contractor supplied
materials in any part of the Vessel which have been replaced
or in any way repaired by any contractors, unless such
contractors have been appointed or approved by the Builder. In
no event shall the Builder be liable for any consequential
damages or for any loss of hire or time in operation or repair
of the Vessel. The parties hereto agree that there are no
warranties intended or given, which extend beyond those
specified in this Contract, and that the provisions of this
Article XIII exclude and negate any warranty, express or
implied (including any implied warranty of merchantability or
fitness for particular purpose), or other or further
responsibility or liability imposed by law, statute, or
otherwise with respect to the Vessel.
(b) For the detection of any underwater Guarantee Defects, which
cannot be detected while the Vessel is afloat, Buyer at its
expense, may drydock the Vessel within the Guarantee Period.
Buyer shall pay, as its expense, the haul day and lay days
required to accomplish the Vessel's normal drydocking
maintenance. However, if any underwater Guarantee Defects are
discovered, and the correction of which requires additional
drydocking time, the Builder, in addition to the cost of
correcting Guarantee Defects shall also pay the drydocking
charge for the additional days spent in the drydock, if any.
Alternatively, the Buyer may choose to conduct an underwater
survey in lieu of drydocking within the Guarantee Period to
determine if any defects exist as to any area of the Vessel
which is below the waterline for such Vessel. If any
underwater Guarantee Defects are found, the Builder shall pay
to correct the defects at Vessel's first drydocking. In
addition to remedying the Guarantee Defects, the Builder shall
pay the drydocking charge for each additional day beyond those
needed for routine maintenance.
The Buyer shall notify the Builder of the time and place of
any drydocking or underwater survey for the purpose of
discovery of underwater Guarantee Defects so that the Builder
may attend at its own expense, if it so desires.
Notwithstanding the foregoing, if at any time during Guarantee
Period it becomes necessary to drydock the Vessel for
correction of any Guarantee Defects, the cost of the entire
drydocking as well as the cost of remedying Guarantee Defects
shall be at the expense of the Builder; provided that if any
work is carried out for the
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Buyer during such drydocking, the Buyer shall pay the
drydocking charge for the additional days spent in the
drydock, if any.
(c) The Buyer shall notify the Builder in writing, or by telex or
facsimile, of any defects for which claim is made under this
guarantee as promptly as possible after the discovery thereof.
The Buyer's written notice shall describe in detail the nature
and ascertainable cause and extent of the defects. The Builder
shall in any event have no obligation in respect of any
defects, unless notice of such defects is received by the
Builder not later than ten (10) days after the expiry of the
Guarantee Period.
(d) Upon Buyer's request the Builder shall assign a "Guarantee
Engineer" to the Vessel, who shall be fully conversant with
the construction and maintenance of the machinery, for a
period of three (3) months following Delivery. At the option
of the Buyer, the Buyer may request the services of the
Guarantee Engineer for an additional period of up to six (6)
months beyond the initial three (3) months. While said
Guarantee Engineer shall remain the employee of the Builder,
he shall sign the Vessel's Articles, be accorded the status of
Chief Engineer and shall receive from the Buyer free lodging,
board, medical care, and communication services equal to one
of the Vessel's officers, and if required, free passage to
Korea. The Buyer shall pay to the Builder for the services of
the Guarantee Engineer the sum of Five Thousand United States
Dollars ($5,000) per month as compensation for the services of
the Guarantee Engineer. The detailed terms and conditions on
assignment of the Guarantee Engineer shall be the subject of a
separate agreement to be executed on or before the date of
Delivery.
ARTICLE XIV
ALTERATIONS and APPROVALS
(a) The Builder shall not depart from the requirements of the Plan
and Specifications unless such departure is approved in
writing by the Buyer but, the Buyer may, subject to the
remaining terms and conditions of this Article, correct any
errors or omissions in and/or make deletions from, or
additions to, the Plan and Specifications (such corrections,
deletions, modifications, changes, and additions hereinafter
also called the "Alterations").
(b) The Alterations requested in writing by the Buyer, or required
under the provisions of Articles III (c), shall be carried out
by the Builder, provided, however, that any Alterations are
reasonable in regard to the design of the Vessel and the Buyer
shall have first agreed in writing to an adjustment of the
Contract Price, the date of Delivery, alteration in the
Contract DWT, if any, and other terms of this Contract or the
Specifications as may then be necessary. If any such
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agreement by the Buyer results in an inconsistency or
contradiction between this Contract and the Specifications,
such agreement shall then prevail over the terms of this
Contract and the Specifications to the extent of any such
inconsistency or contradiction. All payments or credits, if
any, resulting from Alterations as may be agreed to as set
forth herein, shall be included in the invoice for the payment
due the Builder at Delivery, as set forth in Article VI (d).
(c) All of the Builder's drawings and equipment specifications as
specified in the Specifications shall be submitted to the
Buyer or its designated agent, at the address set forth in
Article XXVI, or as may be designated by the Buyer as the
address of its agent, for approval before work associated with
these drawings and equipment specifications is commenced.
Unless notification, in accordance with Article XXVI, is given
to the Builder by the Buyer or its agent of approval or
disapproval of such drawings and equipment specifications
within twenty (20) calendar days of receipt thereof by the
Buyer, said drawings and equipment specifications shall be
deemed to have been approved. It is understood that the Buyer
may reserve comments upon or remarks with respect to the
drawings and specifications at the time of their approval, and
details concerning construction and/or outfittings may be
discussed and agreed upon between the Builder and the
Representative, as defined herein, since such prompt approval
is essential to timely Delivery.
(d) In the event that any of the materials required by the
Specifications and Plan, or otherwise under this Contract, for
the construction of the Vessel cannot be procured in time to
effect Delivery, or are in short supply, the Builder may,
provided the Buyer so agrees in writing, supply other
materials capable of meeting the requirements of the
Classification Society and the Rules, Regulations,
Requirements and Recommendations with which the construction
of the Vessel must comply at no additional cost to Buyer.
ARTICLE XV
INSPECTION
(a) The Buyer may assign, at its own cost and expense, one or more
representatives (herein called individually or collectively
the "Representative") to be stationed at the Shipyard, one of
whom will be designated as the Buyer's Construction
Supervisor. The Buyer will prepare a job description for the
Construction Supervisor which, among other things, will
clearly describe his responsibilities and levels of authority
while he is stationed at the Shipyard. A copy of this job
description, together with the scheduled arrival date of the
Construction Supervisor at the Shipyard, will be provided to
the Builder within six (6) months of Contract signing. In
order to permit inspection of the work, the Buyer, or its
Representative, shall have free access, during working hours
or outside working
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hours with twenty-four (24) hours advance notice, to the
Shipyard and to all of the Builder's drawing offices and
workshops where the Vessel or its parts are being designed or
manufactured. The Builder shall take immediate remedial action
as to any valid and reasonable criticism of or exception made
as to the material or workmanship by the Buyer or its
Representative. Valid and reasonable criticism or exceptions
shall refer to non-conformity with this Contract, Plans,
Specifications, good shipbuilding practice, or unsafe working
Conditions for the Buyer or its Representative. If the Builder
so requests or the Buyer so desires, the Buyer or its
Representative shall specify such criticism or exception in
writing. The Representative shall make every effort to carry
out inspections as scheduled by the Builder, providing the
procedures specified in the Builder's "Quality System Guide"
("QSG"), included in the Specifications, are followed. The
Representative and Builder shall utilize the previously
mentioned "QSG" to record inspection results and resolve the
Buyer's comments, if any.
(b) Facilities, including but not limited to office space, two (2)
telephone lines, one (1) facsimile telephone line, file
cabinets, desks, chairs, additional office space for Vessel's
crew during latter part of Vessel's construction with local
area network (LAN) line to the main office, office cleaning
services, clean boiler suit service and other normal services,
sanitation facilities, labor and material necessary for the
safe and convenient conduct, in the Shipyard, of such
inspection(s) shall be furnished by the Builder to the
Representative at no expense to the Buyer. The Builder shall
also provide apartments furnished to Western standards in
Builder's practice for the Buyer's construction manager and
five (5) inspectors. If Buyer requests Builder to provide the
Buyer with special furniture and facilities beyond Builder's
practice, any additional costs therefrom, if any, shall be
borne by Buyer. The Builder shall also arrange for the Buyer,
or its Representative, to have free access to the drawing
offices and workshops of subcontractors and suppliers engaged
by the Builder. The Builder shall not be liable for personal
injuries to or death of said Representative (or other agents
or employees of the Buyer) or for damage to, or loss or
destruction of their property, unless such injury, death,
damage, loss, or destruction is the result of the negligence
of the Builder, its subcontractors or its (their) employees or
agents. All salaries and personal expenses of said
Representative, or others employed by the Buyer, shall be for
the Buyer's account. International and long distance
telephone/facsimile charges, postage, cable/telex charges and
other miscellaneous expenses incurred by the Representative
shall be for the Buyer's account.
(c) Prior to scheduled arrival date of the Representative at the
Shipyard, the Builder shall give the Buyer seven (7) day's
notice of any scheduled inspections. If the Buyer elects not
to personally attend any such inspections, approval by the
Surveyor of inspections and tests of materials, machinery and
equipment shall be deemed to be approval by the Buyer, but
only to the extent that said Surveyor normally performs such
inspections and tests; otherwise, the Builder's approval,
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taking into account all Specification requirements, shall be
deemed to be approval by the Buyer.
ARTICLE XVI
TRIALS
(a) When construction, fitting out and testing of Vessel have been
substantially completed, Builder shall carry out in strict
compliance with the Specifications all sea trials, tests and
commissioning of the various machinery and equipment which are
detailed in the Specifications so as to demonstrate that such
machinery and equipment are in accordance with the
requirements of the Specifications, and shall further
demonstrate that Vessel and all systems function properly.
The Builder shall notify the Buyer at least fifteen (15) days
prior to the date that the Vessel shall be ready for its
trials and the Buyer shall promptly acknowledge receipt of
such notice, and said trials shall be carried out (on the date
set forth in said notice, in the open sea and at the Builder's
sole risk and expense, but in the presence of the Surveyor and
the Representative), in order to ascertain whether said Vessel
complies with this Contract. The Builder shall provide five
(5) berths on board the Vessel for the Buyer's representatives
during sea trials. The said trials shall be carried out
regardless of whether the Representative should attend or not
on the date set forth in said notice. The Builder shall be
responsible for all acts or omissions (whether negligent or
not) of its employees or representatives, including its
officers, crew and pilots, or any compulsory pilots or
inspectors required for the trials. The said trials shall be
conducted in accordance with the Specifications. Unless the
said trials reveal deficiency(ies) and/or failures and
therefore valid complaints as to the fulfillment of this
Contract, the Vessel shall be delivered as provided for in
Article IV. Failure of the Buyer and/or its Representative to
attend the said trials of the Vessel, after due notice to the
Buyer as provided herein, shall be deemed to be a waiver by
the Buyer of its right to have the Buyer and/or its
Representative on board the Vessel at the trials. In such
case, the Buyer shall accept the Vessel on the basis of the
Builder's statement that the Vessel, upon completion of the
trials is found to conform to this Contract and the
Specifications.
(b) The Buyer or its Representative shall have access to all data
being taken and all calculations during the said trials and if
the Buyer or its Representatives should detect any
deficiencies and/or failures during the said trials, the Buyer
or its Representative shall give to the Builder (as soon as
possible but in any event prior to completion of the trials
and subsequently confirmed in writing within seventy-two (72)
hours after completion of the trials) notice that such
deficiencies and/or failures exists with a short description
of said deficiencies and/or failures.
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Rectification of any such deficiencies and/or failures shall
be made in accordance with the terms of this Article XVI.
(c) If any said deficiencies and/or failures are detected during
the said trials, the Builder shall rectify same and then by a
fresh trials of like duration, or necessary trials/tests of
the specific parts rectified, establish, that said
deficiencies and/or failures have been rectified in accordance
with the Plans, Specifications and this Contract.
(d) For the said trials, the Builder, at its expense, shall load
the Vessel by ballasting to the loaded and ballast drafts as
defined in the Specifications. Any delay in a Vessel's
Delivery arising as a result of said trials shall be the sole
responsibility of the Builder.
(e) In the event of unfavorable weather as agreed between the
Builder and Buyer, on the date specified for the said trials,
they shall take place on the first available day thereafter
that the weather conditions permit. It is agreed that if
during the trials of the Vessel the weather should suddenly
become unfavorable, as would have precluded the commencement
of the trials had the change in weather occurred before the
trials had started, then, and in such event, the trials of the
Vessel shall be discontinued and postponed until the first
favorable day next following, unless the Buyer shall assent in
writing to Acceptance of the Vessel on the basis of the trials
made prior to such sudden change in weather conditions.
(f) Fuel oil, lubricating oils, and greases required for the
trials or any other trials shall be purchased and supplied by
the Buyer, unless the parties shall otherwise agree. The
Builder shall pay the Buyer the cost of the fuel oil,
lubricating oils and greases consumed by the Builder up to the
date of Delivery at the Buyer's original purchase prices.
ARTICLE XVII
RESPONSIBILITIES OF THE BUILDER
BUILDER'S STATUS
In the performance of the work covered by this Contract, the Builder
shall act as an independent contractor, maintaining complete control
over the Builder's employees. The Builder may, at its sole
responsibility, subcontract any portion of the construction work of the
Vessel, but the Builder shall, in any event, be responsible for all
subcontractors, agents and representatives, and their collective
employees. Any work to be done outside the Builder's shipyard shall be
disclosed to the Buyer in advance. It is agreed that all major
structural building components of the Vessel shall be done in the
Builder's
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shipyard or by subcontractors located in Korea within the vicinity of
Koje Island and the City of Pusan who are under direct supervision by
Builder.
ARTICLE XVIII
TAXES AND DUTIES
The Builder shall be responsible for and pay, without recourse to the
Buyer, any and all taxes, assessments, duties or other similar levies
or charges, imposed by the Korean authorities, whether national,
municipal or local, with respect to the period up to and including
Delivery (even though assessed, determined or imposed thereafter), on
or in respect of (i) this Contract or any act or transaction hereunder,
(ii) the Vessel or any part thereof, or (iii) any imports of material
or equipment, and including without limitation, any tax imposed with
respect to the sale or Delivery to the Buyer or the Vessel's export
from Korea. Should the Buyer, at any time before or after Delivery, be
assessed or required to pay any such taxes, assessments, duties or
other similar levies or charges imposed by the Korean authorities, the
Builder shall reimburse the Buyer therefore. The Builder's liabilities
with regard to taxes shall be limited to the foregoing.
Taxes, assessments, duties or other charges imposed by any Governmental
authority on the Buyer's Supplies, supplied or exported to Korea by the
Buyer or its Representative shall be the responsibility of the Buyer.
The Buyer shall bear and pay all taxes, duties, stamps, and fees
incurred outside of Korea in connection with the Buyer's execution
and/or performance of this Contract, except for taxes, duties and other
fees imposed upon those items to be procured by the Builder for
construction of the Vessel.
ARTICLE XIX
GOVERNMENTAL PERMITS, LICENSES, LAWS, AND PATENTS
GOVERNMENTAL APPROVALS AND LICENSES
(a) The Builder shall obtain necessary Korean Government approvals
and licenses, if any, required for the Builder's performance
under this Contract, including, without limitation, the Korean
Government Export License authorizing the transfer and
Delivery to the Buyer for export or removal from the
jurisdiction of Korea and for registration by the Buyer under
the flag of Liberia. The Builder shall assist the Buyer in
obtaining any licenses, permits, or other authorizations, or
waivers, necessary for the Representative to enter and/or
reside in Korea to perform his functions as set forth herein
or attend the Trials.
(b) The Builder shall proceed as soon as possible to obtain from
the Korean Government the aforementioned licenses and permits
for the Vessel to be
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constructed, delivered and be exported from Korea, as provided
herein and shall notify the Buyer as to the issuance thereof
by facsimile or cable, subsequently confirmed in writing
accompanied by copies of the said licenses and permits. In the
event that the said licenses and permits for the Vessel shall
not have been granted by the Korean authorities within thirty
(30) days following the date of this Contract, unless
otherwise mutually agreed to by the Builder and the Buyer, the
Builder shall be required to refund within twenty (20) days
thereafter, to the Buyer the amounts set forth in Article VI
(h) and this Contract shall thereupon automatically become
null and void and each of the parties hereto shall be
forthwith and completely discharged from all of its
obligations to the other.
(c) Notwithstanding the foregoing provisions of this Article XIX,
in case the Vessel, during construction or prior to Delivery,
should be requisitioned or seized by the Korean Government,
the Builder shall forthwith pay to the Buyer the amounts set
forth in Article VI (h) hereof, and such refund shall
forthwith release both parties from all obligations under this
Contract.
ARTICLE XX
LAWS AND PERMITS
The Builder shall exercise due diligence to ensure that the Builder,
its employees and representatives, shall at all times comply with all
applicable Korean laws, ordinances, statutes, rules, and regulations,
including those relating to wages, hours and working conditions and
insurance. The Builder, at its expense, shall procure all priorities,
permits, licenses, inspections, approvals and certificates required in
connection with the construction and completion of the Vessel and
Delivery in its Koje Shipyard. If required to permit performance of the
work, the Builder shall furnish any bond, security or deposits so
required. If violations are identified, the Buyer shall have no remedy,
unless such violation materially affects the Builder's performance of
this Contract or seriously threatens the health or safety of Buyer's
representative.
ARTICLE XXI
PATENTS, TRADEMARKS, AND TRADE NAMES
Except for the aforesaid Buyer's Supplies, all royalties and licensing
and engineering fees required for incorporating patented features or
proprietary articles into the Vessel shall be paid by the Builder. The
Builder shall indemnify and save the Buyer harmless from all claims,
damages and costs, including costs of defense, in Korea or elsewhere,
resulting from any alleged patent, trademark or trade name infringement
based upon the design, construction or use of the Vessel or any part
thereof furnished by the Builder, its suppliers or subcontractors. The
Buyer shall notify the Builder of any such claim of
- 26 -
<PAGE>
which the Buyer has notice and the Builder shall assume the
responsibility and defense thereof at the Builder's expense.
ARTICLE XXII
CONTRACTUAL RESPONSIBILITIES AND PROCEDURES
ASSIGNMENT OR SUBSTITUTION
(a) The Builder shall not assign this Contract without the consent
of the Buyer.
(b) The Buyer intends to register the Vessel under Liberian flag
but may elect an alternate registry within a reasonable time
prior to Delivery (subject to mutual agreement on necessary
Alterations as provided for in Article XIV (b).
(c) It is understood that the Buyer may designate any other
company as the person to receive Delivery of the Vessel by
assigning its rights and obligations under this Contract with
a resulting change of the Vessel's intended registry, if any,
provided that any said assignee shall demonstrate to the
satisfaction of the Builder that it is financially able to
meet the Buyer's obligations hereunder and is otherwise
acceptable to the Builder, which acceptance shall not be
unreasonably withheld.
(d) In the event of an assignment of the Buyer's rights and
obligations hereunder with respect to the Vessel said assignee
or the substitute party shall have all the rights and assume
all the obligations of the Buyer hereunder with respect to
said Vessel and the responsibility of the Buyer hereunder,
with respect to such Vessel, shall terminate.
(e) Any and all costs incurred for the registration of the Vessel
shall be for the account of the Buyer or its assignee
regardless of whether such expenses should be incurred and
payable in Korea or not. Application and certificates for
statutory inspections for the registration of the Vessel shall
be arranged by the Buyer at Buyer's expense.
ARTICLE XXIII
CONTRACT AND AMENDMENTS
(a) This Contract and the Plan and Specifications have been
prepared in the English language, which shall control. The
Contract has been signed in duplicate, one counterpart being
retained by the Builder and one by the Buyer. The Plan and
Specifications have been signed in duplicate, one counterpart
being retained by the Builder and one counterpart by the
Buyer.
- 27 -
<PAGE>
(b) No representative of either party shall have authority to
make, and neither party shall be bound by, nor liable for, any
statement, representation, promise or agreement not set forth
herein. No changes, amendments or modifications shall be valid
unless reduced to writing and signed by the parties.
(c) The validity, enforcement and interpretation of this Contract
shall be governed by the Laws of the State of New York, one of
the United States of America.
ARTICLE XXIV
ARBITRATION
(a) If any dispute arises between the parties hereto with regard
to the application or interpretation of rules for construction
and classification of vessels promulgated by the
Classification Society (or other matters deemed appropriate by
the parties), the parties may by mutual agreement refer the
dispute to the Classification Society, or to such other expert
as may be mutually agreed between two parties hereto, and
whose decision shall be final, conclusive and binding upon the
parties hereto.
(b) Should any dispute of any nature arise in respect of this
Contract, its performance or interpretation which is not
decided in accordance with Article XXIV (a) above, such
dispute shall be settled by arbitration in New York City in
accordance with the rules of the Society of Maritime
Arbitrations, Inc. and otherwise in accordance with the
provisions of the Laws of the State of New York. The party who
desires arbitration of any such dispute shall give written
notice to the other party. The notice shall state the name and
address of the arbitrator whom it appoints and describe the
specific nature of the particular dispute. Such notice shall
be sent by registered air mail and shall be addressed in the
manner set forth in Article XXVI, and the other party shall,
within thirty (30) days following the receipt of said notice,
give written notice to the party requesting the arbitration as
to the name and address of the arbitrator whom it appoints,
which notice shall be sent by registered air mail and shall be
addressed in the manner set forth in Article XXVI, provided
that if the other party should fail to so appoint its
arbitrator, the arbitrator appointed by the party desiring the
arbitration may proceed with the arbitration hearing and issue
an award. Otherwise the two arbitrators so chosen shall select
a third arbitrator. The applicable law of the State of New
York on all matters at issue shall apply. A judgement based
upon the decision of the majority of the arbitrators or the
sole arbitrator, as the case may be, may be entered in the
appropriate court of any country having jurisdiction of either
party. The arbitrators shall also decide which party, or the
extent to which each party, shall pay costs of arbitration.
Unless and to the extent otherwise determined by the
arbitrator(s), reference to arbitration shall not relieve the
Builder of its obligation diligently to proceed with the
construction,
- 28 -
<PAGE>
completion and delivery of the Vessel, but the majority of the
arbitrators or the sole arbitrator, as the case may be, shall
decide the extent to which the Delivery Date shall be extended
by virtue of the dispute having been referred to arbitration.
No director, employee or agent of either party shall give or
receive any commission, fee, rebate, gift or entertainment of
significant cost or value in connection with this Contract. An
independent public accounting firm mutually acceptable to
Builder and Buyer may, at either party's request and expense,
audit any and all records of both parties for the sole purpose
of determining whether there has been compliance with this
Article. Any such audit shall be conducted at any reasonable
time or times during the term of this Contract and during a
period of two years after its termination. No information
obtained during such audit shall be disclosed unless it
relates to such conflict of interest.
ARTICLE XXV
INDEMNITY
Each of Builder and Buyer shall indemnify and save Indemnitees harmless
from and against any and all loss, damage, injury, liability, and
claims thereof for injury to, or death of any person, including an
employee of Builder or Buyer, one of the Indemnitees or a third party
or for loss of or damage to property belonging to Builder or Buyer, an
Indemnitee or a third party arising out of or in connection with the
Indemnitee's performance or non-performance of its duties under this
Shipbuilding Contract until Delivery except to the extent such loss,
damage, injury, liability or claim is attributable to the negligence or
willful misconduct of any of the Indemnitees.
Indemnitees means Chevron Corporation which has been nominated by Buyer
for supervision of the Vessel on behalf of Buyer, any company under
Chevron Corporation's control and the directors, officers, employees
and agents of any of the foregoing companies.
ARTICLE XXVI
NOTICES
All notices hereunder shall be made in writing and delivered personally
or by registered mail, postage prepaid, or by cable, telex, or
facsimile to the Builder and to the Buyer at the following respective
addresses, unless changed by notice duly given in accordance with this
Article XXVI:
- 29 -
<PAGE>
To the Builder, at:
Samsung Heavy Industries Co., Ltd.
Dongnam Tower, 890-25, Daechi-Dong,
Kangnam-ku, Seoul, Korea 135-280
Telefax: 82-2-3458-6503
Telephone: 82-2-3458-6570 6530
Or preferably to its Koje Shipyard -
Samsung Heavy Industries Co., Ltd.
Koje Shipyard
530, Jangpyung-ri, Sinhyun-up,
Koje City, Kyungnam, Korea, 656-800
Telex: SSCYARD K52213
Telefax: 82-558-32-2160 (Design Department)
82-558-636-2560 (Customer Coordination Department)
To the Buyer, at:
Golden State Petroleum Transport Corporation
15-19 Athol Street
Douglas, Isle of Man
Telefax: 011-441-624-672-510
Telephone: 011-441-624-628-575
Attention: Edward Cain
copy to:
Golden State Petroleum Transportation Corporation
c/o Cambridge Petroleum Transport Corporation
65 East 55th Street
Suite 3300
New York, New York 10022
Telefax: 212-508-6501
Telephone: 212-508-6500
Attention: John McFadden
- 30 -
<PAGE>
ARTICLE XXVII
EFFECTIVE DATE
This Contract shall, following execution by all parties, become
effective upon the Builder furnishing to the Buyer, per Article XIX
(b), a notice of issuance of the Export License required under Article
XIX (a) (herein called the "Effective Date").
- 31 -
<PAGE>
IN WITNESS WHEREOF, the parties hereto executed this Contract as of the
date first set forth above.
For the Builder: SAMSUNG CORPORATION
- - - - - ---------------
Witness:
/s/ David S. Lee By: /s/ C. G. Cho
- - - - - -------------------- ---------------------
SAMSUNG HEAVY INDUSTRIES CO., LTD.
Witness:
/s/ David S. Lee By: /s/ C. G. Cho
- - - - - -------------------- ---------------------
For the Buyer: GOLDEN STATE PETRO (IOM-I-A) PLC
Witness:
/s/ Joseph Avantario By: /s/ John McFadden
- - - - - -------------------- ---------------------
- 32 -
<PAGE>
Schedule 1
<TABLE>
<CAPTION>
NET
INSTALLMENT PAYMENT TO
INSTALLMENT PAYMENT DATE AMOUNT BUILDER(D)
<S> <C> <C> <C>
1 December 26, 1996 $ 36,396,540 $35,304,644
2 June 1, 1998 8,088,120 7,845,477
3 Sept 1, 1998 8,088,120 7,845,477
4 Dec 1, 1998 1,786,420 1,732,826
5 (FINAL) Feb 1, 1999(A) 26,522,000(B)(C) 25,726,340
</TABLE>
(A) The final installment is to be paid on the Delivery Date for the Vessel
which is currently anticipated to be February 1, 1999. Notwithstanding
the date set forth above the final installment shall be payable on the
date of Acceptance of the Vessel as provided in the Contract.
(B) The final installment shall be payable as provided below.
1. On December 24, 1996 the Buyer shall execute and deliver one
(1) promissory note in the amount of US$4,044,060 and bearing
a maturity date of February 1, 1999, which Note shall be in
the form as attached as Appendix C hereto. Any transferee of
such Note shall deliver a Letter of Undertaking in the form of
Appendix D hereto.
2. Cash payment of US$22,477,940 shall be made by the Buyer
simultaneously with the Acceptance of the Vessel by
telegraphic transfer to the account set forth in Article
VI(d)(i) of the Contract.
(C) In the event Acceptance of the Vessel shall occur on any date other
than the maturity date of the Note for whatever reason and this
Contract shall not have been rescinded, terminated or cancelled prior
to such date, the Buyer shall execute and deliver to the Builder, upon
request of the Builder in exchange for the Note, a replacement note
(the "Replacement Note") identical to the Note except that such
Replacement Note shall bear a new maturity date designated by the
Builder. The Builder shall return the Note when it receives the
Replacement Note. Any payment made by the Buyer to the holder of the
Note shall be deemed payment to the Builder under this Contract with
respect to the installment amount to which such Note relates and the
Buyer shall be discharged from any and all obligations with respect to
such installment amount.
<PAGE>
N.B. Simultaneously with each of such payments, the Buyer shall cause
the Buyer's Bank of advise the Builder's Bank of the details of such
payments by authenticated bank cable or telex.
(D) Net payment reflects the obligation of the Builder to pay 3.0% of the
Contract Price to Cambridge Petroleum Transport Corporation pursuant to
a Letter Agreement dated as of December 24, 1996.
For the Builder: SAMSUNG CORPORATION
- - - - - ---------------
Witness:
____________________________ By:______________
SAMSUNG HEAVY INDUSTRIES CO., LTD.
Witness:
____________________________ By:______________
For the Buyer: GOLDEN STATE PETRO (IOM I-A) PLC
Witness:
____________________________ By:______________
<PAGE>
SCHEDULE 2
REFUND AMOUNT
Net
Date Amount
---- ------
1-1-97 38,532,319
2-1-97 38,675,864
3-1-97 38,939,083
4-1-97 39,200,551
5-1-97 39,460,258
6-1-97 39,718,192
7-1-97 39,974,345
8-1-97 40,253,705
9-1-97 40,530,182
10-1-97 40,804,985
11-1-97 41,078,104
12-1-97 41,349,530
1-1-98 41,619,252
2-1-98 41,912,261
3-1-98 42,198,413
4-1-98 42,482,948
5-1-98 42,765,855
6-1-98 50,892,603
7-1-98 51,217,993
8-1-98 51,566,994
9-1-98 59,754,942
10-1-98 60,141,890
11-1-98 60,527,808
12-1-98 62,645,518
1-1-99 63,039,467
2-1-99 63,457,427
3-1-99 63,912,580
4-1-99 64,367,282
5-1-99 64,821,531
6-1-99 65,275,324
7-1-99 65,728,661
8-1-99 66,181,539
<PAGE>
APPENDIX A
IRREVOCABLE INSTALLMENT PAYMENT
LETTER OF GUARANTEE
[STATIONERY OF GUARANTOR BANK]
December 24, 1996
Golden State Petro (IOM I-A) PLC
c/o Cambridge Petroleum Transport Corporation
65 East 55th Street
Suite 3300
New York, New York 10022
Dear Sirs:
On behalf of The Korea Development Bank ("We" or the "Bank"), Seoul, Republic of
Korea, we hereby open our Irrevocable Installment Payment Letter of Guarantee
No. __________________________ (hereinafter called the "Guarantee") in favor of
Golden State Petro (IOM I-A) PLC and its assignee (hereinafter called the
"Buyer") for account of Samsung Heavy Industries Co., Ltd. and Samsung
Corporation (hereinafter collectively called the "Builder") in connection with
payments to be made by the Buyer to the Builder pursuant to the Shipbuilding
Contract dated the 24th day of December, 1996, as amended, supplemented or
otherwise modified from time to time (hereinafter called the "Contract") made by
and between the Buyer and the Builder for the construction of one (1) single
screw diesel drive Crude Oil Double Hull Tank Vessel having Builder's Hull No.
1228 (hereinafter called the "Vessel") which is available as follows:
We hereby irrevocably guarantee the payment (and not merely the collectability
of the same) to the Buyer immediately upon demand in an amount not to exceed the
principal amount of sixty six million, one hundred eighty one thousand, five
hundred thirty nine United States Dollars (US $66,181,539) together with simple
interest thereon calculated at the rate of nine percent (9.0%) per annum on the
basis of a 360 day year from and including the date of receipt of demand to but
not including the date of remittance by telegraphic transfer of such refund.
Subject to Buyer making installment payments in accordance with paragraph (d) of
Article VI of the Contract, the amount of this Guarantee will be automatically
increased during the term of this Guarantee and shall be equal to the sum of:
(i) the amount set forth on Schedule 1 hereto calculated as of the first day of
the calendar month in which the date of rejection occurs; and (ii) an amount
equal to the product of (X) the difference between (1) the amount set forth of
<PAGE>
Schedule 1 hereto calculated as of the first day of the calendar month
immediately succeeding the month in which the date of rejection occurs and (2)
the amount set forth on Schedule 1 hereto as of the first day of the month in
which the date of rejection of the vessel under the Contract occurs and (y) a
fraction the numerator of which is numeric day of the month of the date of such
rejection and the denominator of which is 30 (collectively, the "Refund
Amount").
Payment under this Guarantee is available at the counters of ______________ Bank
against presentation of the Buyer's signed statement issued in the form attached
hereto as Exhibit A ("Notice of Demand"). If the Notice of Demand is received by
the Bank by 12:00 noon local time on a business day, the Bank shall pay the
Refund Amount in immediately available funds on the same business day. If the
Notice of Demand is received by the Bank after 12:00 noon local time on a
business day, the Bank shall pay the Refund Amount in immediately available
funds on the next succeeding business day.
This Guarantee is available for one payment only, whether for the full amount
hereof or any part thereof, as may be demanded by the Buyer. In the event that
the Buyer's demand is for a lesser amount than the amount of this Guarantee, the
interest payable will be calculated on the amount of the Buyer's demand and not
on the amount of this Guarantee.
Payment shall be made to the Buyer in United States Dollars in accordance with
the payment instruction given to us by the Buyer at the time of a claim under
this Guarantee. Payment effected as directed by the Buyer shall discharge our
obligation to the extent of such payment.
We agree that this Guarantee shall be a continuing guarantee and (i) shall not
be impaired or discharged by the granting of time or any other indulgence to the
Builder, or any other forbearance (whether as to payment, time, performance, or
otherwise) which might, but for this provision, have any such effect; (ii) shall
not be conditioned or contingent upon the Buyer's pursuit of any remedy that it
has against the Builder; and (iii) shall be unconditional irrespective of any
other circumstance that might otherwise constitute a legal or equitable
discharge of a surety or guarantor under applicable law, and we hereby waive any
and all rights (whether by counterclaim, set off or otherwise) and defenses at
law or in equity that may be available to us by reason of such circumstance.
This Guarantee shall expire and become null and void on the earlier of (i) the
receipt by the Buyer of the sum guaranteed hereby; (ii) the receipt by The Korea
Development Bank of a copy of the Protocol of Acceptance and Delivery of the
Vessel, purportedly signed by the Buyer and the Builder and issued in the form
attached hereto as Appendix B; and (iii) 5:00 p.m. New York time on the 1st day
of October, 1999, in any such case this Guarantee shall be returned to us;
provided, the Bank further agrees that its obligations hereunder shall continue
to be effective or reinstated, as the case may be, if at any time any payment,
or any part thereof, made by the Builder is rescinded or must otherwise be
restored by the Buyer upon the bankruptcy or reorganization of the Buyer.
-2-
<PAGE>
Notwithstanding the provisions hereinabove, in case we receive notification from
the Buyer or the Builder confirmed by an arbitrator stating that the Buyer's
claim to cancel the Contract or the Buyer's claim for refundment thereunder has
been disputed and referred to arbitration in accordance with the provisions of
the Contract, the period of validity of this Guarantee shall be extended until
thirty (30) days after the final award shall be rendered in the arbitration and
a copy thereof acknowledged by the arbitrators. In such case, this Guarantee
shall not be available unless and until such acknowledged copy of the final
award in the Arbitration justifying the Buyer's claim is presented to us.
This Guarantee and the rights and interests hereunder may be assigned by the
Buyer in whole without charge with written notice to the Bank but only if this
Guarantee and the Contract are simultaneously assigned to the same assignee. The
Bank may not assign this Guarantee and the Bank's rights or interests hereunder
without the prior written consent of the Buyer and its assignee.
This Guarantee is governed by and enforced and construed in accordance with the
laws of the State of New York, United States of America, applicable to contracts
entered into and to be performed entirely within such state.
For: The Korea Development Bank
By: _____________________________ By: ______________________________
Name: Name:
Title: Title:
-3-
<PAGE>
SCHEDULE 1
REFUND AMOUNT
Net
Date Amount
---- ------
1-1-97 38,532,319
2-1-97 38,675,864
3-1-97 38,939,083
4-1-97 39,200,551
5-1-97 39,460,258
6-1-97 39,718,192
7-1-97 39,974,345
8-1-97 40,253,705
9-1-97 40,530,182
10-1-97 40,804,985
11-1-97 41,078,104
12-1-97 41,349,530
1-1-98 41,619,252
2-1-98 41,912,261
3-1-98 42,198,413
4-1-98 42,482,948
5-1-98 42,765,855
6-1-98 50,892,603
7-1-98 51,217,993
8-1-98 51,566,994
9-1-98 59,754,942
10-1-98 60,141,890
11-1-98 60,527,808
12-1-98 62,645,518
1-1-99 63,039,467
2-1-99 63,457,427
3-1-99 63,912,580
4-1-99 64,367,282
5-1-99 64,821,531
6-1-99 65,275,324
7-1-99 65,728,661
8-1-99 66,181,539
<PAGE>
Exhibit A
___________________Bank
___________________
___________________
Re: Irrevocable Installment Payment Guarantee No. __ (the "Guarantee")
The undersigned, acting as Administrator _____________________, the
"Buyer" hereby certifies to The Korea Development Bank with reference to
Guarantee No. ______ that:
1.The undersigned is duly authorized to execute and deliver this
certificate on behalf of the Buyer.
2. The Buyer hereby makes a claim against the Guarantee for
payment of US$ _________, plus simple interest thereon
calculated at the rate of _______ percent per annum on the
basis of a 360 day year from __________ to the date payment
is effected by The Korea Development Bank to the Buyer in
accordance with the payment instructions provided below.
3. The amount claimed represents a demand for refund of amounts
refundable to the Buyer and such demand for refund has been
made in conformity with the Shipbuilding Contract dated the
_____________ day of __________________, made by and among
the Buyer and Samsung Heavy Industries Co., Ltd., the
"Builder", for the construction of one (1) single screw
diesel driven Crude Oil Double Hull Tank Vessel having
Builder's Hull No. ___, as amended, supplemented or otherwise
modified from time to time (hereinafter called the
"Contract") and that the Builder has failed to make the
refund within fifteen (15) business days of our demand to the
Builder.
4. You are hereby directed to make payment of the stated amount
to ________________________ [INSERT PAYMENT INSTRUCTIONS]
_______________
By:____________
Attorney-in-Fact
Date:__________
<PAGE>
APPENDIX B
PROTOCOL OF DELIVERY AND ACCEPTANCE
KNOW ALL MEN BY THESE PRESENTS:
That the undersigned, Samsung Heavy Industries Co., Ltd., Seoul, Korea
(the "Builder") does hereby deliver at ________ hours (local time) on
__________________, to ____________ (the "Buyer"), the vessel described
hereunder in accordance with the provisions of the Shipbuilding Contract dated
______________, as amended, made by and between Samsung Heavy Industries Co.,
Ltd., Samsung Corporation and the Buyer.
Name of Vessel: ____________________
Builder's Hull No. ___
Type of Vessel: Double Hull Oil Tank Vessel
That the undersigned,______________________ [the Buyer] does hereby
accept delivery of the aforesaid vessel and certify that the same is delivered
in accordance with the provisions of the said Shipbuilding Contract, and that
this PROTOCOL OF DELIVERY AND ACCEPTANCE does not release Samsung Heavy
Industries Co., Ltd. from its responsibilities under the Builder's Guarantee
Clause of the said Shipbuilding Contract.
SAMSUNG HEAVY INDUSTRIES
CO., LTD. [Name of Buyer]
-------------------
By:__________________ By:__________________
Attorney-in-Fact Attorney-in-Fact
Date:________________ Date:________________
As Agent for Buyer:
CHEVRON SHIPPING COMPANY
By:_______________________________
Attorney-in-Fact
Date:_____________________________
<PAGE>
APPENDIX C
PROMISSORY NOTE
---------------
No. 1 Issued at: New York, New York
US$4,044,060 Date: December 27, 1996
FOR VALUE RECEIVED, Golden State Petro (IOM I-A) PLC, a corporation
duly organized and existing under the laws of the Isle of Man having its
principal place of business at 15-19 Athol Street, Douglas, Isle of Man (the
"Buyer"), hereby unconditionally and irrevocably promises to pay, on the 1st day
of February, 1999, to Samsung Heavy Industries Co., Ltd., a corporation duly
organized and existing under the laws of the Republic of Korea, having its
principal office at 890-25, Daechi-Dong, Kangnam-Ku, Seoul, Republic of Korea
(the "Contractor"), or order, the principal sum of United States Dollars
(US$4,044,060) and, if not paid on the above due date, to pay interest on said
principal sum from and including the due date at the default rate of Ten percent
(10.0%) per annum, until the principal sum and interest thereon are fully paid,
plus all expenses, including reasonable legal fees incurred by the holder in
enforcing its rights hereunder. Interest shall be calculated on the basis of the
actual days elapsed and a year of 360 days.
Both principal and interest, if any, shall be payable in United States
Dollars in immediately available funds to the account of Banker's Trust Company,
for account of The Korea Commercial Bank, head office, Seoul, Korea, New York,
N.Y., United States of America (Account No.: 04-022-936) in favor of Samsung
Heavy Industries Co., Ltd. or to such other account with such other bank as may
be designated by the holder of this Note by a 5 days' prior written notice
without set-off or counterclaim, free and clear of and without deduction for any
present or future taxes, charges, restrictions or conditions of any kind.
This note is made pursuant to a Shipbuilding Contract dated December
24, 1996 by and between the Contractor, Samsung Corporation and the Buyer (the
"Contract"). Pursuant to the Contract, Contractor is required to construct and
deliver a single-screw diesel-driven Crude Oil Double Hull Tank Vessel bearing
Contractor's Hull No. 1228 (the "Vessel").
Notwithstanding any provision contained in this Note, the Buyer shall
not be obligated to make any payment of principal or interest on this Note if
the Vessel subject to the Contract is not delivered to and accepted by the Buyer
under the Contract.
The Contractor shall not assign or transfer this Note without prior
written consent from the Buyer except that this Note may be sold to banks and
other financial institutions from Korea,
<PAGE>
Hong Kong, Singapore and OECD countries, in which case only prior notice to the
Buyer shall be required.
In the event default shall be made in the payment of principal or
interest on this note, as and when the same shall become due and payable, the
holder hereof shall have the remedies as set forth herein and such other
remedies as may be provided by law.
The maker and endorsers of this note hereby waive the right to
interpose any defense, set-off or counterclaim of any nature or description in
any action or proceeding arising out of or in connection with this note.
Amounts payable on this Note shall be paid to the holder upon
presentment of the Note to the Buyer or its Assignee of the Contract. Upon
payment, the note shall be marked "Paid."
This Note shall be governed by and construed and interpreted in
accordance with the laws of England (without giving effect to the conflict of
law principles thereof). The maker and the endorser hereby consent to any legal
action or proceeding in relation to this note being brought in the State of New
York, U.S.A. or in London, England and hereby irrevocably waive any immunity
from suit, attachment (before or after judgement) or execution on a judgement to
which they or their property may be entitled.
The maker and the endorsers hereby irrevocably submit to the
nonexclusive jurisdiction of the courts of the State of New York and the Federal
court of the United States of America located in the City and State of New York,
United States of America, or the courts of England, as any holder of this note
may elect, and irrevocably consent to the service of process out of said courts
by registered airmail, postage prepaid to the maker or endorsers as the case may
be or in any other manner provided by law.
The maker hereby certifies and declares that all acts, conditions and
things required to be done and performed and to have happened precedent to the
creation and issuance of this note, and to constitute this note the legal, valid
and binding obligation of the maker, in accordance with its terms, have been
done and performed and have happened in due and strict compliance with all
applicable laws and regulations.
-2-
<PAGE>
IN WITNESS WHEREOF, the undersigned has caused this note to be signed
in its corporate name by its duly authorized representative this 27th day of
December, 1996.
GOLDEN STATE PETRO (IOM I-A) PLC
By:__________________________________________
Name:
Title:
STATE OF NEW YORK )
COUNTY OF NEW YORK )ss.:
UNITED STATES OF AMERICA )
I, _________________, Notary Public, duly authorized, admitted and
sworn, practicing at New York State, do hereby certify that:
1. GOLDEN STATE PETRO (IOM I-A), who has executed this power of
attorney on behalf of Golden State Petro (IOM I-A), (hereinafter the "Buyer") is
personally known to me and I acknowledge that his signature is authentic;
2. Sufficient evidence has been presented to me to the effect that
__________________, was duly authorized by the Buyer to execute this Promissory
Note on behalf of the Buyer.
IN WITNESS WHEREOF, I have hereunto subscribed my name and affixed my
seal of office this ____, day of December, 1996.
---------------------------------------------
Notary Public
-3-
<PAGE>
APPENDIX D
LETTER OF UNDERTAKING
Samsung Heavy Industries Co., Ltd. 24th December, 1996
890-25, Daechi-dong, Kangman-ku,
Seoul, Republic of Korea
Gentlemen:
Samsung Heavy Industries Co., Ltd. Hull Number 1228 - Letter of Undertaking
---------------------------------------------------------------------------
We refer to one (1) promissory note dated December 24, 1996 (hereinafter called
the "Note") made by GOLDEN STATE PETRO (IOM-IA) PLC (the "Maker") in connection
with its obligation to pay the price for the Builder's Hull No. 1228.
We hereby undertake and agree with you that:
We will keep the Note in our custody and return to the Maker
immediately upon our receipt of the payment of the amounts of the Note.
This Letter of Undertaking is also given to the benefit of the Maker.
This Letter of Undertaking shall be governed by, and construed in accordance
with the laws of England.
Yours very truly,
For and on behalf of
_______________________________Bank
Name:
Title:
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I
VESSEL'S DESIGN AND DELIVERY....................... 1
1. THE VESSEL............................................................. 1
ARTICLE II
DIMENSIONS, DEADWEIGHT, SPEED, FUEL CONSUMPTION
............................................................................. 3
ARTICLE III
CLASS AND REGULATIONS
............................................................................. 4
ARTICLE IV
DELIVERY
............................................................................. 4
ARTICLE V
DISCHARGE OF LIENS
............................................................................. 6
ARTICLE VI
PRICE, PAYMENT, TERMS, REFUND, BANK GUARANTEE
............................................................................. 7
ARTICLE VII
ADJUSTMENTS TO CONTRACT PRICE
............................................................................. 11
ARTICLE VIII
DEFAULT IN PAYMENT
............................................................................. 14
ARTICLE IX
BUILDER'S PAYMENT AND REPAYMENT AND INTEREST THEREON
............................................................................. 15
ARTICLE X
BANK GUARANTEE
<PAGE>
............................................................................. 15
ARTICLE XI
TERMS DURING DESIGN, CONSTRUCTION, AND GUARANTEE PERIODS
............................................................................. 16
ARTICLE XII
INSURANCE
............................................................................. 16
ARTICLE XIII
BUILDER'S GUARANTEE........................... 17
ARTICLE XIV
ALTERATIONS and APPROVALS
............................................................................. 20
ARTICLE XV
INSPECTION
............................................................................. 21
ARTICLE XVI
TRIALS
............................................................................. 23
ARTICLE XVII
RESPONSIBILITIES OF THE BUILDER
............................................................................. 24
ARTICLE XVIII
TAXES AND DUTIES
............................................................................. 25
ARTICLE XIX
GOVERNMENTAL PERMITS, LICENSES, LAWS, AND PATENTS
............................................................................. 25
ARTICLE XX
LAWS AND PERMITS
............................................................................. 26
ARTICLE XXI
PATENTS, TRADEMARKS, AND TRADE NAMES
............................................................................. 26
-2-
<PAGE>
ARTICLE XXII
CONTRACTUAL RESPONSIBILITIES AND PROCEDURES
............................................................................. 27
ARTICLE XXIII
CONTRACT AND AMENDMENTS......................... 27
ARTICLE XXIV
ARBITRATION
............................................................................. 28
ARTICLE XXV
INDEMNITY................................ 29
ARTICLE XXVI
NOTICES
............................................................................. 29
ARTICLE XXVII
EFFECTIVE DATE
............................................................................. 31
Schedule 1
Schedule 2
APPENDIX A IRREVOCABLE INSTALLMENT PAYMENT LETTER OF
GUARANTEE
APPENDIX B PROTOCOL OF DELIVERY AND ACCEPTANCE
APPENDIX C PROMISSORY NOTE
APPENDIX D LETTER OF UNDERTAKING
-3-
SHIPBUILDING CONTRACT
FOR THE CONSTRUCTION OF A
308,500 DWT
CRUDE OIL DOUBLE HULL TANK VESSEL
(Hull No. 1229)
between
SAMSUNG CORPORATION
and
SAMSUNG HEAVY INDUSTRIES CO., LTD.
COLLECTIVELY AS "BUILDER"
and
GOLDEN STATE PETRO (IOM I-B) PLC
AS "BUYER"
<PAGE>
CONTRACT
PREAMBLE
CONTRACT, made this 24th day of December 1996, by and between
SAMSUNG CORPORATION, a corporation incorporated and existing under the laws of
the Republic of Korea, having its registered office at 250, 2-ka, Taepyong-ro,
Chung-ku, Seoul, Republic of Korea, and SAMSUNG HEAVY INDUSTRIES CO., LTD., a
corporation incorporated and existing under the laws of the Republic of Korea,
having its registered office at 890-25, Daechi-Dong, Kangnam-Ku, Seoul, Korea,
(hereinafter collectively called the "Builder"), on one part, and GOLDEN STATE
PETRO (IOM I-B) PLC, having an office and its principal place of business at
15-19 Athol Street, Douglas, Isle of Man, (hereinafter collectively called the
"Buyer"), on the other part.
WITNESSETH
The Buyer and the Builder, each in consideration of the mutual
undertakings, promises, and commitments set forth herein, agree, subject to the
stated terms and conditions, as follows:
ARTICLE I
VESSEL'S DESIGN AND DELIVERY
1. THE VESSEL
(a) The Builder shall, at its Koje Shipyard, located at Koje,
Korea (hereinafter called the "Shipyard"), construct, launch,
equip, supply, and in all respects complete so as to be ready
for immediate operation, and deliver to the Buyer a single
screw, double hull, oil tank vessel (hereinafter called the
"Vessel"), to be designated as Hull No. 1229, together with
all machinery, materials, parts, supplies, equipment,
appurtenances, and all other items necessary to and for the
said construction, completion, delivery, and operation of the
Vessel.
(b) The Vessel shall be built and completed in accordance with:
(i) GENERAL ARRANGEMENT PLAN DWG. No: TK9616.GA04 dated
October 17, 1996 as may be updated by subsequent
changes to documents (ii) through (v) below;
(ii) MIDSHIP SECTION PLAN DWG No: TK9616.MS03 dated
October 1, 1996 (hereinafter called the "Plan");
<PAGE>
(iii) FULL SPECIFICATIONS REF No.: TK9616.FS05 dated
November 5, 1996 (herein called the
"Specifications"), which Plan and Specifications have
been executed, and shall be deemed to be incorporated
herein and shall constitute an integral part of this
Contract; and
(iv) MEMORANDUM OF DISCUSSION: REF No. TK9616MOMVI dated
November 6, 1996 ("MOD I") and MEMORANDUM OF
DISCUSSION REF No.: TK9616.MOMVII when delivered
("MOD II"), to the extent there are discrepancies
between MOD I, MOD II and documents listed in (i),
(ii) or (iii) above, MOD I and MOD II shall prevail.
(c) Should there be any discrepancy between this Contract and the
Plan or the Specifications, the provisions in this Contract
shall prevail. Should there be any discrepancy between the
Specifications and Plan, the Specifications shall prevail.
When there is no specific description in the Specifications
(including Samsung Shipbuilding Quality Standards - "SSQS")
and Plan, a standard of workmanship and practices equivalent
to the Builder's shipbuilding standards as practicable,
generally applicable to the construction of similar size and
types of vessels, shall be applicable to the construction of
the Vessel, which standard shall include the incorporation of
any modification in design or construction which was
implemented to address a defect in any other Builder's VLCC
vessels.
(d) The Builder, at its expense, shall, unless otherwise
specifically provided herein, procure and furnish all items
and permissions necessary to perform its obligations hereunder
including, but not limited to, (i) plans and specifications
(in addition to the Plan and Specifications), labor,
machinery, materials, parts, supplies, equipment,
appurtenances, and (ii) licenses, permits, inspections,
surveys and approvals.
(e) The Builder retains all rights with respect to the
Specifications, plans and working drawings, technical
descriptions, calculations, test results, and other data,
information, and documents concerning the design and
construction of the Vessel and the Buyer undertakes therefore
not to disclose the same or divulge any information contained
therein to any third parties, without prior written consent of
the Builder, which shall not be unreasonably withheld, except
where it is necessary for usual operation, repair, and
maintenance of the Vessel or to any charterer of the Vessel
from the Buyer. In addition, the Buyer shall cause any
charterer of the Vessel to deliver to the Builder a
confidentiality agreement with respect to the Specifications.
(f) Any modifications to drawings set forth above which may be
required by the Classification Society shall be accomplished
by the Builder without any cost to the Buyer; provided, this
provision shall only apply to modifications which are based
upon the standards of the American Bureau of Shipping (the
"Classification
- 2 -
<PAGE>
Society") in effect on the date of this Contract; PROVIDED
FURTHER, any other modifications required by the
Classification Society shall be handled in accordance with
Article III(c).
ARTICLE II
DIMENSIONS, DEADWEIGHT, SPEED, FUEL CONSUMPTION
(a)The basic dimensions of the Vessel shall be:
Length overall about 333.00 meters
Length between
perpendiculars about 318.00 meters
Breadth, molded about 58.00 meters
Depth, molded to upper deck at
side about 31.25 meters
Designed loaded draft, molded about 21.40 meters
Scantling draft, molded about 22.50 meters
Cargo tank capacity including
the slop tanks (100% full) about 350,000 cubic meters
(b) The deadweight capacity (hereinafter called "DWT") of the
Vessel, including cargo, bunkers, stores, provisions, fresh
drinking, and distilled water, crew with their effects and
minimum spare parts required by the Classification Society and
based upon the Plan and Specifications, shall be three hundred
eight thousand five hundred (308,500) metric tons in salt
water (of 1.025 specific gravity) on the scantling draft,
molded, of about 22.50 meters.
The deadweight of the Vessel of 308,500 metric tons, plus or
minus any deadweight change due to Alterations, shall
constitute, and hereinafter shall be referred to as, the
"Contract DWT". Should the final deadweight on delivery, be
less than the Contract DWT, a payment for such deficiency
shall be allowed, as specified in Article VII (b).
(c) The main propulsion unit for the Vessel will consist of one
Samsung-B&W 7S80MC engine, to be manufactured by a Korean
licensee identified in the Maker's List, and as stipulated in
the Specifications, having a maximum continuous power rating
of 34,650 BHPm at about 79.0 r.p.m.
(d) The Vessel is guaranteed to obtain an average speed of 16.0
knots, measured during sea trials and as defined in the
Specifications.
(e) The fuel consumption of the main propulsion unit, as
determined by the shop trials, shall be 122.3 grams per BHPm
per hour for fuel having a lower calorific value of 10,200
Kcal/kg for main propulsion at 31,190 BHPm and based on
Specifications.
- 3 -
<PAGE>
ARTICLE III
CLASS AND REGULATIONS
(a) The Vessel, including its machinery, equipment, and
outfittings, shall be classed with the Classification Society
and shall be built to Class +A1, (E), Oil Carrier, +AMS,
+ACCU, and SH. The Vessel shall also comply with the laws,
rules, regulations, recommendations, and requirements as
stated in the Specifications. The Builder shall, at its
expense, request the Classification Society to assign an
on-site surveyor (hereinafter referred to as the "Surveyor")
to oversee complete construction of the Vessel at the Shipyard
and other locations as required.
(b) The Builder, at its expense, shall obtain certificates as
provided in the Specifications and deliver such to the Buyer
in triplicate (one (1) original and two (2) copies). If formal
certificate(s) cannot be obtained upon the Vessel's delivery,
the Builder may furnish provisional one(s) in substitution for
the formal certificate(s). The Buyer shall pay the charges for
official inspection and certifications required by any
Government of Registry specified in Specifications, and the
registration of the Vessel shall be the responsibility of the
Buyer.
(c) In the event that there should be any amendments or additions,
following the date of this Contract, to the laws, rules, or
regulations of any Government or regulatory body, or the
Classification Society, which require any revision(s) of or to
the Plan and Specifications or to this Contract, the Buyer
shall authorize any such revision(s) to the Vessel that are
necessary to comply with such amendments or additions unless
the Buyer shall obtain from such Government or regulatory body
a written waiver of compliance therewith. In the event that
Alterations (as defined in Article XIV (a)) are required, they
shall be handled in accordance with the provisions of Article
XIV.
ARTICLE IV
DELIVERY
(a) The Vessel shall be delivered to the Buyer (hereinafter called
the "Delivery") fully complete, supplied (including
lubricating oil and fresh water in the system but excluding
ship's stores such as food, utensils, miscellaneous
consumables, etc.) and ready for immediate operation, after
having passed the tests and met the standards set forth in the
Specifications and Articles II, III, and XVI hereof on or
before July 1, 1999 (hereinafter called the "Delivery Date").
Notwithstanding the foregoing, in the event defects of a
nature which would affect Vessel's seaworthiness or seriously
impair the operation of Vessel are discovered after Vessel has
passed the tests and met standards set forth in the
Specifications and
- 4 -
<PAGE>
prior to delivery of Vessel, except defects of Buyer Supplies
(as defined in Article XI), Buyer shall have the right to
require Builder to make the necessary correction(s) at
Builder's expense prior to delivery.
(b) The Builder shall use its best efforts and all due diligence
and dispatch, including, but not limited to, the ordering,
expediting and inspection of all machinery, parts and
materials, to complete and deliver the Vessel on or prior to
the Delivery Date. The Builder shall assist the Buyer to
bunker and store the Vessel (beyond the conditions set forth
in Article IV (a) above) at the Buyer's expense to be ready
for departure. Delivery shall be made at the Shipyard at a
wharfside where there shall be sufficient water for the Vessel
always to be afloat and from which it can safely depart, or at
such other safe place as may be mutually agreed. Upon
Delivery, the Vessel shall be free and clear of all liens,
encumbrances, taxes and claims of any nature.
(c) The Builder shall notify the Buyer in writing, providing
documentation for any delay relating to the construction or
delivery of the Vessel or any performance required hereunder
within ten (10) days after the beginning of any period of
delay.
(d) If Delivery of the Vessel is or will be delayed for any reason
whatsoever, other than due to delays caused by the Buyer, or
by Alterations (as defined in Article XIV), for a period of
more than one hundred eighty (180) days beyond the Delivery
Date, the Buyer shall have the following options, exercisable
not later than either (i) ten (10) days after the expiration
of such one hundred eighty (180) day period or (ii) twenty
(20) days after the Buyer has been notified by the Builder and
the parties have mutually agreed that one hundred eighty (180)
days delay is likely to take place, whichever first occurs:
(i) to extend the Delivery Date with the Buyer's right to
liquidated damages, as provided in Article VII (a),
or
(ii) to cancel this Contract in which event the Buyer
shall be entitled to a refund in accordance with
Article VI (h).
(e) In case the Vessel, during the period of building, sustains
any damage which is repaired in accordance with the Plan and
Specifications and to the satisfaction of the Representative
(as hereinafter defined in Article XV), the Classification
Society, and the concerned authorities, if any, the Buyer
shall have no right, except as specifically granted under the
terms of this Contract, to refuse to take Delivery.
(f) Should the Vessel be completed for Delivery before the
Delivery Date and the Builder has so informed the Buyer at
least 10 weeks in advance, the Buyer shall
- 5 -
<PAGE>
take Delivery but not earlier than 8 weeks prior to the
Delivery Date provided that all the terms and conditions of
this Contract have been fulfilled.
(g) Upon Delivery, the Builder shall furnish the Buyer with a
Commercial Invoice, Builder's Certificate, Protocol of Sea
Trials of Vessel, Protocols of Inventory, Protocols of
Consumable Nature and Declaration of Warranty of Freedom from
Liens and Claims, including any claim by the Guarantor by
reason of its Letter of Guarantee under Article X (as such
terms are defined in such Article), and such other
certificates and documents as the Buyer may request evidencing
transfer to the Buyer of a free and clear title in and to the
Vessel.
(h) The Buyer shall remove the Vessel from the Builder's premises
within five (5) business days after Delivery of the Vessel.
(i) Upon satisfactory completion of the trials as specified in
Article XVI, and fulfillment of the terms and conditions of
this Contract, Buyer and Builder shall execute a Protocol of
Delivery and Acceptance (hereinafter referred to as
"Acceptance"). Upon execution of said Protocol of Delivery and
Acceptance, title and risk of the Vessel shall pass to the
Buyer, as stated above, it being expressly understood that
until such Delivery is effected, title to the Vessel and its
equipment (except for the Buyer's Supplies subject to the
provisions of Article XI), are in the Builder and at its risk.
ARTICLE V
DISCHARGE OF LIENS
The Builder shall, before Delivery, discharge all claims,
liens, or right in rem of any kind against the Vessel, including any claims for
taxes or by the Guarantor made by reason of its Letter of Guaranty under Article
X hereof, and shall indemnify and save the Buyer harmless with respect thereto.
Upon Delivery, the Builder shall furnish the Buyer with a warranty (as defined
in Article IV (g)), that the Vessel is free and clear of all liens,
encumbrances, taxes, and claims of any nature.
ARTICLE VI
PRICE, PAYMENT, TERMS, REFUND, BANK GUARANTEE
PRICE, CURRENCY AND PAYMENTS
(a) Contract Price:
The net purchase price of the Vessel is US$80,292,400
(hereinafter called the "Contract Price") to be paid by the
Buyer to the Builder for the construction and completion of
the Vessel and Delivery (exclusive of Buyer's Supplies as
provided
- 6 -
<PAGE>
in Article XI). The Contract Price shall be fixed, with no
escalation and subject to change only as expressly provided
elsewhere in this Contract, and to the extent that the Builder
might, under any applicable law, regulation, or decree
(including those of Korea), have any such right(s) to escalate
or change the Contract Price, such right(s) are hereby waived.
The Contract Price includes all costs and expenses incurred by
the Builder performing engineering calculations for designing
and supplying all necessary drawings for the Vessel, in
accordance with the Specifications.
(b) Currency:
All payments by the Buyer to the Builder under this Contract
shall be made in United States Dollars ("US$").
(c) Progress Payment:
The Contract Price shall be due and payable by the Buyer to
the Builder in installments as indicated on Schedule 1
attached hereto.
(d) Method of Payment:
(i) First Installment
Within one (1) banking day after receipt of a facsimile copy
of the export license for the Vessel issued by the Builder's
Bank (as hereinafter defined) on behalf of the Government of
Korea as required under Article XIX(a) hereof, the Buyer shall
remit by telegraphic transfer the first installment in the
amount set forth in Schedule 1 to the account of BANKERS TRUST
COMPANY, New York for account of the Bank of Seoul, head
office Seoul Korea, Account No. 04-028-991 for credit of
Samsung Heavy Industries Co., Ltd. or to such other Bank which
the Builder may designate in favor of Samsung Heavy Industries
Co., Ltd. (hereinafter called the "Builder's Bank") under
advise by authenticated cable or telex to the Builder's Bank.
(ii) Each Subsequent Installment
The Buyer shall remit by telegraphic transfer each installment
to the Builder's Bank or to such other Bank which the Builder
may designate in favor of Samsung Heavy Industries Co., Ltd.
payable pursuant to Schedule 1 attached to this Contract.
Upon receipt of a facsimile or telex notice from the Builder
not less than six (6) banking days in New York prior to the
scheduled Delivery Date, notifying the Buyer of such date, the
Buyer shall deposit the amount payable upon Delivery of
- 7 -
<PAGE>
the Vessel by telegraphic transfer to account of the Builder's
Bank at least one (1) banking day in Korea prior to the
scheduled Delivery of the Vessel, with irrevocable
instructions to be confirmed by the Builder's Bank that the
said deposit shall be payable to the Builder against
presentation by the Builder of a duplicate original copy of
the Protocol of Delivery and Acceptance of the Vessel signed
by the Builder and the Buyer and that, in the event that the
actual delivery and acceptance of the Vessel shall not take
place within seven (7) days following such scheduled Delivery,
the said deposit shall be returned to the Buyer's bank.
The final installment shall be adjusted as set forth below:
- any adjustments or payments due from the Buyer to the
Builder at the time of Delivery in accordance with
the terms of this Contract, including payment for any
additional work, for which extra payments have been
agreed under Article XIV(b).
- any adjustments, saving, credits, or payments due
from the Builder to the Buyer at the time of the
Vessel's Delivery pursuant to the provisions of this
Contract,
- any adjustment resulting from settlement of the costs
of any fuel oil, lubricating oils and greases (except
in the Vessel's systems) or unbroached consumable
stores (furnished by Builder for trials), and
remaining on board the Vessel after acceptance of the
Vessel by Buyer, at the cost thereof to either the
Builder or Buyer as may be applicable.
Not later than ten (10) business days prior to the scheduled
date for Delivery, the parties hereto shall execute and
deliver an agreement setting forth the ascertained adjustments
of the Contract Price, if any, and not later than three (3)
banking days prior to the scheduled date for acceptance of
delivery of the Vessel a supplemental agreement setting forth
any further adjustment of the Contract Price. It is the
intention of the parties to settle all amounts prior to
Delivery and Acceptance.
It is understood, however, that any outstanding adjustments
and settlements by either party to the other, not determined
prior to Delivery, shall be payable when determined as soon as
possible after Delivery; in no event shall Delivery of the
Vessel be delayed pending final determination of any such
adjustments and settlements. Any disputes as to adjustments
shall be settled in accordance with Article XXIV.
(iii) Default Interest and Others
- 8 -
<PAGE>
In the event of default in the payment of any installments in
the above Paragraphs (i) and (ii) above, the Buyer shall pay
default interest, charges and expenses in accordance with
Paragraph (b) of Article VIII hereof.
Simultaneously with such payments, the Buyer shall cause the
Buyer's Bank to advise the Builder's Bank of the details of
such payments by authenticated bank cable or telex.
No payment under this Contract shall be delayed, suspended or
withheld by the Buyer on account of any dispute or
disagreement between the parties hereto. Any claim which the
Buyer may have against the Builder hereunder shall be settled
and liquidated separately from any payment by the Buyer to the
Builder hereunder.
Except as otherwise specifically provided for in this Article
VI, all payments to the Builder due under this Contract shall
be paid in United States Dollars by telegraphic transfer to
the bank identified in Article VI (d)(i) above.
(e) Notice of Payment on or before Delivery:
With the exception of the first installment, the Builder shall
give the Buyer seven (7) business days prior notice by telex
of the anticipated due date and amount of each installment
payable on or before delivery of the Vessel.
(f) Expenses:
Expenses and bank charges for remitting payments and any
expenses and fees connected with such payment shall be for
account of the Buyer.
(g) Prepayment
Prepayment of any installment due on or before Delivery shall
be subject to mutual agreement between the parties hereto.
(h) Refund:
All payments made by the Buyer hereunder in United States
Dollars and prior to Delivery and Buyer's acceptance of the
Vessel shall be in the nature of installments to the Builder.
In the event that the Vessel is rejected by the Buyer, or this
Contract is canceled by the Buyer, all in accordance with the
terms of this Contract, or if the Builder should default in
Delivery of the Vessel or is guilty of breach of this Contract
justifying a recision thereof by the Buyer then, and in any
such event, the Builder shall refund to the Buyer an amount
equal to the sum of (i) the amount set forth on Schedule 2
hereto calculated as of the first day of the
- 9 -
<PAGE>
calendar month in which the date of rejection occurs and (ii)
an amount equal to the product of (x) the difference between
(1) the amount set forth on Schedule 2 hereto calculated as of
the first day of the calendar month immediately succeeding the
month in which the date of rejection occurs and (2) the amount
set forth on Schedule 1 hereto as of the first day of the
month in which the date of rejection occurs and (y) a fraction
the numerator of which is the numeric day of the month of the
date of rejection and the denominator of which is 30. If the
amount as calculated above is not paid on the date of
rejection there shall be added to such amount interest at the
rate of nine percent (9.0%) per annum from and including the
date of rejection to but not including the date such amount is
paid. Such refunds by the Builder to the Buyer shall forthwith
discharge all obligations, duties, and liabilities of each of
the parties hereto to the other under this Contract. Any and
all refunds made to the Buyer under this Article VI (h) shall
be made in United States Dollars. Throughout this Contract,
whenever interest is due on any amounts to be paid or refunded
by either party, said interest shall be calculated as simple
interest, based on the actual number of days divided by 360.
All refunds made by the Builder to the Buyer under this
contract shall be paid in United States Dollars by telegraphic
transfer to the Buyer's account or its assignee's account as
set forth in a written notice to the Builder from such party.
ARTICLE VII
ADJUSTMENTS TO CONTRACT PRICE
(a) Delayed Delivery Price Adjustment:
(i) If the Delivery is not made on the Delivery Date, the
Builder shall pay the Buyer, as liquidated damages
(not as penalty), the amount of $24,200 for each
calendar day of delay and the Contract Price shall be
reduced by the amount of such liquidated damages;
provided, if the Delivery Date is delayed by more
than 30 days, the Builder shall be required to pay
the Buyer a portion of the liquidated damages in an
amount equal to $400,000 on July 30, 1999. The
balance of any liquidation damages which are incurred
by the Builder less the amount paid on July 30, 1999
shall reduce the Contract Price payable for such
Vessel.
If delivery of the Vessel is delayed for a period of
more than one hundred eighty (180) days beyond the
Delivery Date, the Buyer may reject the Vessel or,
alternatively, the Buyer may accept the Vessel with a
longer delay in Delivery at an agreed upon reduction
in the Contract Price. Such reduction in the Contract
Price shall be agreed within thirty (30) days
following the Builder's receipt of the Buyer's notice
that it elects to accept
- 10 -
<PAGE>
the Vessel (with longer delay in Delivery), but in no
event shall the Contract Price reduction be less than
the maximum price adjustment set forth above and
calculated in accordance with Schedule 2. If
agreement is not reached in such thirty (30) day
period, the Buyer shall be deemed to have rejected
the Vessel.
(ii) If the Vessel is delivered earlier than the Delivery
Date, the Buyer shall pay to the Builder, a premium,
which shall be US$24,200 for each calendar day prior
to the Delivery Date; provided however no delivery
shall be made earlier than 8 weeks prior to the
Delivery Date as provided in Article IV (f).
(iii) In the event that the Buyer elects to reject the
Vessel as allowed under this Article VII (a), the
Builder shall immediately repay to the Buyer the
amounts set forth in Article VI (h), whereupon this
Contract shall terminate and such payment shall
forthwith discharge all obligations, duties and
liabilities of each party hereto to the other under
this Contract.
(b) Deadweight Deficiency Price Adjustment:
(i) No payment shall be made by the Builder to the Buyer
for a deficiency in deadweight (measured to the
nearest metric ton) of up to and including two
thousand five hundred (2,500) metric tons less than
the Contract DWT as specified in Article II (b), and
as may be adjusted under the provisions of Article
XIV (b). If the final deadweight is deficient by more
than the aforesaid two thousand five hundred (2,500)
metric tons, the Builder shall pay the Buyer, as
liquidated damages (not as a penalty), seven hundred
($700) per metric ton of deadweight deficiency,
exceeding the aforesaid two thousand five hundred
(2,500) metric tons up to and including the
deadweight deficiency. If such deadweight deficiency
should amount to more than six thousand (6,000)
metric tons and the Builder is unable to rectify such
deficiency to below the aforesaid six thousand
(6,000) metric tons, the Buyer may reject the Vessel
or, alternatively, the Buyer may accept the Vessel
with the excessive deadweight deficiency with an
agreed upon reduction of the Contract Price. The
Buyer shall make such elections within seven (7) days
following receipt of a notice from the Builder
stating that the Builder is unable to rectify the
deficiency. The Buyer and Builder shall agree upon
the reduction of the Contract Price within thirty
(30) days following the Buyer's election, which
reduction shall be in an amount not less than the
maximum price adjustment set forth above. If
agreement is not reached in such thirty (30) day
period, the Buyer shall be deemed to have rejected
the Vessel.
(ii) No payment shall be made for any increases in the
Contract DWT.
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(iii) In the event that the Buyer elects to reject the
Vessel as allowed under this Article VII (b), the
Builder shall immediately repay to the Buyer the
amounts set forth in Article VI (h), all sums
theretofore paid by the Buyer on account of the
Contract Price, whereupon this Contract shall
terminate and such payment shall forthwith discharge
all obligations, duties and liabilities of each party
hereto to the other under this Contract.
(c) Speed Deficiency Price Adjustment:
(i) No payment shall be made by the Builder to the Buyer
for a deficiency in speed (measured to the nearest
one-tenth (0.10) of one knot) of up to and including
three tenths (0.30) of one knot less than the speed
of sixteen (16.0) knots guaranteed in Article II (d).
If the speed deficiency is more than three tenths
(0.30) of one knot, the Builder shall pay the Buyer,
as liquidated damages (not as penalty) in accordance
with the following schedule for speed deficiencies up
to and including one (1.00) knot less than the
guaranteed speed.
Speed Deficiency
below 16.00 knots Liquidated Damage
----------------- -----------------
0.01 to 0.30 knots $0
0.31 to 0.40 knots $400,000
0.41 to 0.50 knots $600,000
0.51 to 1.00 knots $900,000/each 0.10 knot
If the speed deficiency is greater than one (1.0)
knot, and the Builder is unable to rectify such
deficiency up to at least the aforesaid one (1.0)
knot, the Buyer may reject the Vessel or,
alternatively, the Buyer may accept the Vessel with
its insufficient speed with an agreed upon reduction
of the Contract Price. The Buyer shall make such
elections within seven (7) days following receipt of
a notice from the Builder stating that the Builder is
unable to rectify the deficiency. The Buyer and
Builder shall agree upon the reduction of the
Contract Price within thirty (30) days following the
Buyer's election, which reduction shall be in an
amount not less than the maximum price adjustment set
forth above. If agreement is not reached in such
thirty (30) day period, the Buyer shall be deemed to
have rejected the Vessel.
(ii) No payment shall be made for any increase in the
speed of the Vessel.
(iii) In the event that the Buyer elects to reject the
Vessel as allowed under this Article VII (c), the
Builder shall immediately repay to the Buyer, the
amounts set forth in Article VI (h), whereupon this
Contract shall
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terminate and such payment shall forthwith discharge
all obligations, duties and liabilities of each party
hereto to the other under this Contract.
(d) Excessive Fuel Consumption Price Adjustment:
(i) No payment shall be made by the Builder to the Buyer
if the fuel consumption (measured to the nearest
tenth of one percent) of the main propulsion unit
exceeds that provided for in Article II (e) by Three
percent (3.0%) or less. If the fuel consumption of
the main propulsion unit exceeds that provided for in
Article II (e) by more than Three percent (3.0%) the
Builder shall pay the Buyer, as liquidated damages
(not as penalty), one hundred fifty thousand
($150,000) for every one percent (1.0%) and pro rata
for less than a full one percent (1.0%) by which the
fuel consumption exceeds the aforesaid three percent
(3.0%). If the fuel consumption exceeds that provided
in Article II (e) by more than Ten percent (10.0%)
and the Builder is unable to rectify such deficiency
to at least said Ten percent (10.0%), the Buyer may
reject the Vessel or, alternatively, the Buyer may
accept the Vessel with the aforesaid deficiencies
with an agreed upon reduction of the Contract Price.
The Buyer shall make such elections within seven (7)
days following receipt of a notice from the Builder
stating that the Builder is unable to rectify the
deficiency. The Buyer and Builder shall agree upon
the reduction of the Contract Price within thirty
(30) days following the Buyer's election, which
reduction shall be in an amount not less than the
maximum price adjustment set forth above. If
agreement is not reached in such thirty (30) day
period, the Buyer shall be deemed to have rejected
the main propulsion unit.
(ii) No payment shall be made for any improvements in fuel
consumption less than that defined in Article II (e)
herein.
(iii) In the event that the Buyer elects to reject the
Vessel as allowed under this Article VII (d), the
Builder shall immediately repay to the Buyer, the
amounts set forth in Article VI (h), whereupon this
Contract shall terminate and such payment shall
forthwith discharge all obligations, duties and
liabilities of each party hereto to the other under
this Contract.
(e) Schedule of Payments due to Price Adjustments:
All payments due to price adjustments, if any, pursuant to
this Article VII shall be made on the Delivery Date.
(f) Effect of Rescission:
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It is expressly understood and agreed by the parties that, in
any case, if the Buyer rejects the Vessel under the provisions
of this Article VII, the Buyer shall not be entitled to any
liquidated damages set forth in this Article VII.
ARTICLE VIII
DEFAULT IN PAYMENT
(a) The Buyer shall be deemed to be in default in the event that
it should fail to make any payment with respect to the
Contract Price, when due and payable as provided in Article
VI.
(b) If the Buyer is in default as provided herein, then, and in
such event, the Buyer shall, commencing with and including the
day next following the payment date, pay interest on the
payment which has not been paid to the Builder from the date
when it should have been paid at the rate of nine percent
(9.0%) per annum from and including such day until paid. In
addition, the Delivery Date shall be extended by one day for
each day the Buyer remains in default hereunder.
(c) Subject to the provisions of Article VIII (b), if any such
default shall prevail for more than fifteen (15) business
days, the Builder shall have the option of canceling this
Contract, by giving fifteen (15) business days written notice
of said cancellation to the Buyer and retaining, as security
for the payment of its legal damages, any and all funds then
paid to it by the Buyer and the Builder shall have a right to
sell the Vessel at the best price available at a public or
private auction, advertised internationally, including an
invitation to the Buyer to participate, but otherwise on such
terms and conditions as the Builder may determine, and any
resulting losses to the Builder shall be an element of legal
damages. If the proceeds of the sale are insufficient to
compensate losses to the Builder due to the Buyer's default,
the Buyer shall promptly pay the deficiency to the Builder on
demand. If the Vessel is sold for more than the Contract
Price, the Buyer shall receive any such excess the Builder
receives, after reasonable and customary service fees have
been deducted.
ARTICLE IX
BUILDER'S PAYMENT AND REPAYMENT AND INTEREST THEREON
(a) Any payments or repayments required to be made by the Builder
to the Buyer under this Contract shall be made as provided for
in Article VI (h). The Buyer shall receive the gross amount of
the principal and interest due. Any applicable withholding tax
payments shall be paid by the Builder.
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<PAGE>
(b) If the Builder is required to make payment to the Buyer of any
moneys as liquidated damages, under this Contract the Builder
shall pay such amounts to the Buyer at Delivery of the Vessel.
However, should this payment be delayed, there shall be added
to each such payment interest at the rate of nine percent
(9.0%) per annum from the date the said payment becomes due
until paid.
ARTICLE X
BANK GUARANTEE
The Builder shall, at its cost, furnish the Buyer with a Letter of
Guarantee given by a first class Korean bank acceptable to the Buyer
(hereinafter referred to as "Guarantor"), substantially in the form of
Appendix A attached hereto. The Letter of Guarantee shall guarantee
payment to the Buyer in United States Dollars, at such place as the
Buyer or its assignee may designate, of all sums payable or repayable
by the Builder to the Buyer under this Contract with interest thereon
as provided in Article VI (h), upon receipt by said Guarantor from the
Buyer of a written claim that it is entitled to such payment or
repayment and that the Builder has failed to make same.
ARTICLE XI
TERMS DURING DESIGN, CONSTRUCTION, AND GUARANTEE PERIODS
BUYER'S SUPPLIES
The Contract Price for the Vessel is exclusive of the costs of
equipment specified in the Specifications as the "Buyer's Supplies"
(and hereinafter so referred to), which shall be supplied and delivered
by the Buyer to the Builder, at the Shipyard and at the Buyer's cost
and expense. The Builder shall undertake to install the agreed Buyer's
Supplies without extra cost to the Buyer, provided that they are
delivered by the Buyer to the Builder in sufficient time to permit
installation without delaying construction of the Vessel. Delivery of
the Buyer's Supplies shall be in accordance with a reasonable time
schedule, designated by the Builder and made available to the Buyer
prior to the start of any construction activity for the Vessel. Should
any or all of the Buyer's Supplies arrive late and should the Builder
agree to install those Buyer's Supplies so delayed, any change in
construction time directly resulting from such late arrival shall
accordingly extend the Delivery Date. Furthermore, if the delay in
delivery of the Buyer's Supplies should exceed thirty (30) days, the
Builder shall be entitled to proceed with the construction of the
Vessel, either without installation of such Buyer's Supplies in or onto
the Vessel, or using equipment supplied by the Builder, without
prejudice to the Builder's right to extend the Delivery Date and to
compensation for losses and damages as hereinabove provided and the
Buyer shall accept the Vessel so completed. All the Buyer's Supplies
shall be subject to the Builder's reasonable right of rejection in the
event the same are found to be unsuitable or not in proper condition
for installation. The Builder shall not
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<PAGE>
be responsible for the quality or capacity of the Buyer's Supplies and
shall not be liable for any defect in the Buyer's Supplies; however,
the Builder shall receive and upon receipt safely store and insure,
against loss or damage, all the said Buyer's Supplies. Any technical
assistance, information and/or royalties required for the installation
of the Buyer's Supplies shall be the responsibility of the Buyer. Both
parties clearly understand that the provisions of this Article XI shall
not apply to machinery or equipment other than those specified in the
Specifications as the Buyer's Supplies.
ARTICLE XII
INSURANCE
(a) From the time of launching until delivery of the Vessel, the Builder
shall, at its own cost and expense, insure the Vessel and all machinery
and equipment, appurtenances and outfits, including the Buyer's
Supplies after arrival at the shipyard whether or not built into or
installed in or upon the Vessel, against all risks under the "Institute
Clauses for Builder's Risk", with a first class Korean insurance
company or underwriters acceptable to the Buyer. The amount of such
insurance coverage shall, up to the date of Delivery of the Vessel, not
be less than the aggregate amount of all payments paid by the Buyer to
the Builder, plus the value of agreed Alterations at the time of
launching and of the Buyer's Supplies in the custody of the Shipyard.
(b) In the event that the Vessel shall be damaged from any insured cause at
any time before Delivery of the Vessel, and in the further event that
such damage shall not constitute an actual or constructive total loss
of the Vessel, the amount received in respect of the insurance shall be
applied by the Builder in repair of such damage, satisfactory to the
Classification Society, and the Buyer shall accept the Vessel under
this Contract if completed in accordance with this Contract, the
Specifications, and Plan, subject, however, to any applicable extension
of delivery time under Article IV (c) hereof.
Should the Vessel from any cause become an actual or constructive total
loss, the Builder shall either:
(i) proceed in accordance with the terms of this Contract, in
which case the amount received in respect of the insurance
shall be applied to the construction and repair of damage to
the Vessel, provided the parties hereto shall have first
agreed thereto in writing and to such reasonable extension of
delivery time as may be necessary for the completion of such
reconstruction and repair; or
(ii) refund promptly to the Buyer, in accordance with Article VI
(h), the full amount of all sums paid by the Buyer to the
Builder in advance of delivery of the Vessel, and deliver to
the Buyer all Buyer's Supplies (or the insurance proceeds paid
with respect thereto), in which case this Contract shall be
deemed to be automatically terminated and all right, duties,
liabilities and obligations of each of the parties to the
other shall forthwith cease and terminate.
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<PAGE>
(c) The Builder shall be under no obligation to insure the Vessel hereunder
after Delivery of the Vessel.
ARTICLE XIII
BUILDER'S GUARANTEE
(a) If, within twelve (12) months, or such longer period as might
be specified with respect to certain equipment or machinery in
the Specifications, and eighteen (18) months for main engine
(hereinafter called the "Guarantee Period") after the Delivery
and Acceptance of the Vessel, any defect in the Vessel (except
the Buyer's Supplies), its design, machinery, equipment, or
other appurtenances, due to defective materials or
workmanship, or failure to construct in conformity with the
Plan and Specifications (all hereinafter referred to as
"Guarantee Defects"), shall be discovered (other than defects
solely due to normal wear and tear, negligence or improper
acts of the operator or crew of said Vessel or overloading,
improper loading, stowage, and accident), the Builder shall,
as quickly as possible after receipt of the Buyer's written
notice thereof, correct, replace, or repair such defect at its
own expense at its Shipyard; provided that if, in the Buyer's
opinion, the Vessel cannot conveniently be brought to the
Shipyard, and if no other agreement can be reached between the
parties, the Builder shall pay to the Buyer the lesser of
(i) the cost to the Buyer of such repairs, or
(ii) such sum as the Builder would have charged a repair
customer for like repairs and/or replacements had
such work been done at the Shipyard.
Replacement parts or materials to be furnished to Buyer by
Builder for making of repairs under the Guarantee which are
performed other than at Shipyard or in such other facility of
Builder shall be transported to the place of repair at
Builder's expense.
In principle, such transportation shall be by the most
expeditious public surface transportation. If required to keep
Vessel in operation, Builder shall arrange for and bear the
cost of transporting necessary parts or materials by air
transportation.
Builder shall in every case use its best efforts to expedite
the furnishing to Buyer of replacement parts or materials
required under the Guarantee.
Repairs under this Article are guaranteed for the balance of
the period set out in paragraph (a) of this Article however
major repairs shall be guaranteed for the longer of (x) the
balance of the period set out in paragraph (a) of this Article
or (y) two (2) months from the date of completion of such
major repairs, but in no
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event longer than fourteen months (14) after the Delivery
Date. For purposes of this paragraph, "major repairs" shall be
any repair costing more than ten thousand United States
Dollars (US$10,000).
If such defect can be repaired or replaced by the Vessel's
crew, the Buyer will give prior notice to the Builder of such
defect, and upon the Builder's written acceptance that the
Buyer may remedy such defect, and the Builder will reimburse
the Buyer for the incremental costs of the crew's labor so
incurred or the costs of such labor at the Builder's Shipyard,
whichever is the lesser, excluding normal maintenance.
Guarantee Defects that affect the safety of the Vessel or crew
and/or constitute an emergency, shall be repaired either by
the crew or Buyer selected contractor in a reasonable manner
under the circumstances without Builder's prior approval and
the Builder shall be notified as soon as possible after the
repairs are undertaken and such repair work will be subject to
mutual agreement between the parties; provided any such repair
work shall not adversely affect any provisions of this Article
XIII as to any other Guarantee Defect. In any case, the
Builder shall also reimburse the Buyer for the actual cost, in
the currency incurred, of any temporary repairs necessary to
enable the Vessel to present itself for the aforesaid
permanent repairs. As to such defects as are repaired or
replaced by the Builder, the guarantee hereunder shall be
subject to an agreement between the Builder and Buyer which
addresses defects so repaired or replaced. The Builder's only
liability for defects in the Vessel, its machinery, equipment
or other appurtenances, as aforesaid, shall be as hereinabove
provided and the Builder shall be under no obligation for
defects in workmanship or contractor supplied materials in any
part of the Vessel which have been replaced or in any way
repaired by any contractors, unless such contractors have been
appointed or approved by the Builder. In no event shall the
Builder be liable for any consequential damages or for any
loss of hire or time in operation or repair of the Vessel. The
parties hereto agree that there are no warranties intended or
given, which extend beyond those specified in this Contract,
and that the provisions of this Article XIII exclude and
negate any warranty, express or implied (including any implied
warranty of merchantability or fitness for particular
purpose), or other or further responsibility or liability
imposed by law, statute, or otherwise with respect to the
Vessel.
(b) For the detection of any underwater Guarantee Defects, which
cannot be detected while the Vessel is afloat, Buyer at its
expense, may drydock the Vessel within the Guarantee Period.
Buyer shall pay, as its expense, the haul day and lay days
required to accomplish the Vessel's normal drydocking
maintenance. However, if any underwater Guarantee Defects are
discovered, and the correction of which requires additional
drydocking time, the Builder, in addition to the cost of
correcting Guarantee Defects shall also pay the drydocking
charge for the additional days spent in the drydock, if any.
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Alternatively, the Buyer may choose to conduct an underwater
survey in lieu of drydocking within the Guarantee Period to
determine if any defects exist as to any area of the Vessel
which is below the waterline for such Vessel. If any
underwater Guarantee Defects are found, the Builder shall pay
to correct the defects at Vessel's first drydocking. In
addition to remedying the Guarantee Defects, the Builder shall
pay the drydocking charge for each additional day beyond those
needed for routine maintenance.
The Buyer shall notify the Builder of the time and place of
any drydocking or underwater survey for the purpose of
discovery of underwater Guarantee Defects so that the Builder
may attend at its own expense, if it so desires.
Notwithstanding the foregoing, if at any time during Guarantee
Period it becomes necessary to drydock the Vessel for
correction of any Guarantee Defects, the cost of the entire
drydocking as well as the cost of remedying Guarantee Defects
shall be at the expense of the Builder; provided that if any
work is carried out for the Buyer during such drydocking, the
Buyer shall pay the drydocking charge for the additional days
spent in the drydock, if any.
(c) The Buyer shall notify the Builder in writing, or by telex or
facsimile, of any defects for which claim is made under this
guarantee as promptly as possible after the discovery thereof.
The Buyer's written notice shall describe in detail the nature
and ascertainable cause and extent of the defects. The Builder
shall in any event have no obligation in respect of any
defects, unless notice of such defects is received by the
Builder not later than ten (10) days after the expiry of the
Guarantee Period.
(d) Upon Buyer's request the Builder shall assign a "Guarantee
Engineer" to the Vessel, who shall be fully conversant with
the construction and maintenance of the machinery, for a
period of three (3) months following Delivery. At the option
of the Buyer, the Buyer may request the services of the
Guarantee Engineer for an additional period of up to six (6)
months beyond the initial three (3) months. While said
Guarantee Engineer shall remain the employee of the Builder,
he shall sign the Vessel's Articles, be accorded the status of
Chief Engineer and shall receive from the Buyer free lodging,
board, medical care, and communication services equal to one
of the Vessel's officers, and if required, free passage to
Korea. The Buyer shall pay to the Builder for the services of
the Guarantee Engineer the sum of Five Thousand United States
Dollars ($5,000) per month as compensation for the services of
the Guarantee Engineer. The detailed terms and conditions on
assignment of the Guarantee Engineer shall be the subject of a
separate agreement to be executed on or before the date of
Delivery.
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<PAGE>
ARTICLE XIV
ALTERATIONS and APPROVALS
(a) The Builder shall not depart from the requirements of the Plan
and Specifications unless such departure is approved in
writing by the Buyer but, the Buyer may, subject to the
remaining terms and conditions of this Article, correct any
errors or omissions in and/or make deletions from, or
additions to, the Plan and Specifications (such corrections,
deletions, modifications, changes, and additions hereinafter
also called the "Alterations").
(b) The Alterations requested in writing by the Buyer, or required
under the provisions of Articles III (c), shall be carried out
by the Builder, provided, however, that any Alterations are
reasonable in regard to the design of the Vessel and the Buyer
shall have first agreed in writing to an adjustment of the
Contract Price, the date of Delivery, alteration in the
Contract DWT, if any, and other terms of this Contract or the
Specifications as may then be necessary. If any such agreement
by the Buyer results in an inconsistency or contradiction
between this Contract and the Specifications, such agreement
shall then prevail over the terms of this Contract and the
Specifications to the extent of any such inconsistency or
contradiction. All payments or credits, if any, resulting from
Alterations as may be agreed to as set forth herein, shall be
included in the invoice for the payment due the Builder at
Delivery, as set forth in Article VI (d).
(c) All of the Builder's drawings and equipment specifications as
specified in the Specifications shall be submitted to the
Buyer or its designated agent, at the address set forth in
Article XXVI, or as may be designated by the Buyer as the
address of its agent, for approval before work associated with
these drawings and equipment specifications is commenced.
Unless notification, in accordance with Article XXVI, is given
to the Builder by the Buyer or its agent of approval or
disapproval of such drawings and equipment specifications
within twenty (20) calendar days of receipt thereof by the
Buyer, said drawings and equipment specifications shall be
deemed to have been approved. It is understood that the Buyer
may reserve comments upon or remarks with respect to the
drawings and specifications at the time of their approval, and
details concerning construction and/or outfittings may be
discussed and agreed upon between the Builder and the
Representative, as defined herein, since such prompt approval
is essential to timely Delivery.
(d) In the event that any of the materials required by the
Specifications and Plan, or otherwise under this Contract, for
the construction of the Vessel cannot be procured in time to
effect Delivery, or are in short supply, the Builder may,
provided the Buyer so agrees in writing, supply other
materials capable of meeting the requirements of the
Classification Society and the Rules, Regulations,
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Requirements and Recommendations with which the construction
of the Vessel must comply at no additional cost to Buyer.
ARTICLE XV
INSPECTION
(a) The Buyer may assign, at its own cost and expense, one or more
representatives (herein called individually or collectively
the "Representative") to be stationed at the Shipyard, one of
whom will be designated as the Buyer's Construction
Supervisor. The Buyer will prepare a job description for the
Construction Supervisor which, among other things, will
clearly describe his responsibilities and levels of authority
while he is stationed at the Shipyard. A copy of this job
description, together with the scheduled arrival date of the
Construction Supervisor at the Shipyard, will be provided to
the Builder within six (6) months of Contract signing. In
order to permit inspection of the work, the Buyer, or its
Representative, shall have free access, during working hours
or outside working hours with twenty-four (24) hours advance
notice, to the Shipyard and to all of the Builder's drawing
offices and workshops where the Vessel or its parts are being
designed or manufactured. The Builder shall take immediate
remedial action as to any valid and reasonable criticism of or
exception made as to the material or workmanship by the Buyer
or its Representative. Valid and reasonable criticism or
exceptions shall refer to non-conformity with this Contract,
Plans, Specifications, good shipbuilding practice, or unsafe
working Conditions for the Buyer or its Representative. If the
Builder so requests or the Buyer so desires, the Buyer or its
Representative shall specify such criticism or exception in
writing. The Representative shall make every effort to carry
out inspections as scheduled by the Builder, providing the
procedures specified in the Builder's "Quality System Guide"
("QSG"), included in the Specifications, are followed. The
Representative and Builder shall utilize the previously
mentioned "QSG" to record inspection results and resolve the
Buyer's comments, if any.
(b) Facilities, including but not limited to office space, two (2)
telephone lines, one (1) facsimile telephone line, file
cabinets, desks, chairs, additional office space for Vessel's
crew during latter part of Vessel's construction with local
area network (LAN) line to the main office, office cleaning
services, clean boiler suit service and other normal services,
sanitation facilities, labor and material necessary for the
safe and convenient conduct, in the Shipyard, of such
inspection(s) shall be furnished by the Builder to the
Representative at no expense to the Buyer. The Builder shall
also provide apartments furnished to Western standards in
Builder's practice for the Buyer's construction manager and
five (5) inspectors. If Buyer requests Builder to provide the
Buyer with special furniture and facilities beyond Builder's
practice, any additional costs therefrom, if any, shall be
borne by Buyer. The Builder shall also arrange for the Buyer,
or its
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Representative, to have free access to the drawing offices and
workshops of subcontractors and suppliers engaged by the
Builder. The Builder shall not be liable for personal injuries
to or death of said Representative (or other agents or
employees of the Buyer) or for damage to, or loss or
destruction of their property, unless such injury, death,
damage, loss, or destruction is the result of the negligence
of the Builder, its subcontractors or its (their) employees or
agents. All salaries and personal expenses of said
Representative, or others employed by the Buyer, shall be for
the Buyer's account. International and long distance
telephone/facsimile charges, postage, cable/telex charges and
other miscellaneous expenses incurred by the Representative
shall be for the Buyer's account.
(c) Prior to scheduled arrival date of the Representative at the
Shipyard, the Builder shall give the Buyer seven (7) day's
notice of any scheduled inspections. If the Buyer elects not
to personally attend any such inspections, approval by the
Surveyor of inspections and tests of materials, machinery and
equipment shall be deemed to be approval by the Buyer, but
only to the extent that said Surveyor normally performs such
inspections and tests; otherwise, the Builder's approval,
taking into account all Specification requirements, shall be
deemed to be approval by the Buyer.
ARTICLE XVI
TRIALS
(a) When construction, fitting out and testing of Vessel have been
substantially completed, Builder shall carry out in strict
compliance with the Specifications all sea trials, tests and
commissioning of the various machinery and equipment which are
detailed in the Specifications so as to demonstrate that such
machinery and equipment are in accordance with the
requirements of the Specifications, and shall further
demonstrate that Vessel and all systems function properly.
The Builder shall notify the Buyer at least fifteen (15) days
prior to the date that the Vessel shall be ready for its
trials and the Buyer shall promptly acknowledge receipt of
such notice, and said trials shall be carried out (on the date
set forth in said notice, in the open sea and at the Builder's
sole risk and expense, but in the presence of the Surveyor and
the Representative), in order to ascertain whether said Vessel
complies with this Contract. The Builder shall provide five
(5) berths on board the Vessel for the Buyer's representatives
during sea trials. The said trials shall be carried out
regardless of whether the Representative should attend or not
on the date set forth in said notice. The Builder shall be
responsible for all acts or omissions (whether negligent or
not) of its employees or representatives, including its
officers, crew and pilots, or any compulsory pilots or
inspectors required for the trials. The said trials shall be
conducted in accordance with the Specifications. Unless the
said trials reveal deficiency(ies)
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and/or failures and therefore valid complaints as to the
fulfillment of this Contract, the Vessel shall be delivered as
provided for in Article IV. Failure of the Buyer and/or its
Representative to attend the said trials of the Vessel, after
due notice to the Buyer as provided herein, shall be deemed to
be a waiver by the Buyer of its right to have the Buyer and/or
its Representative on board the Vessel at the trials. In such
case, the Buyer shall accept the Vessel on the basis of the
Builder's statement that the Vessel, upon completion of the
trials is found to conform to this Contract and the
Specifications.
(b) The Buyer or its Representative shall have access to all data
being taken and all calculations during the said trials and if
the Buyer or its Representatives should detect any
deficiencies and/or failures during the said trials, the Buyer
or its Representative shall give to the Builder (as soon as
possible but in any event prior to completion of the trials
and subsequently confirmed in writing within seventy-two (72)
hours after completion of the trials) notice that such
deficiencies and/or failures exists with a short description
of said deficiencies and/or failures. Rectification of any
such deficiencies and/or failures shall be made in accordance
with the terms of this Article XVI.
(c) If any said deficiencies and/or failures are detected during
the said trials, the Builder shall rectify same and then by a
fresh trials of like duration, or necessary trials/tests of
the specific parts rectified, establish, that said
deficiencies and/or failures have been rectified in accordance
with the Plans, Specifications and this Contract.
(d) For the said trials, the Builder, at its expense, shall load
the Vessel by ballasting to the loaded and ballast drafts as
defined in the Specifications. Any delay in a Vessel's
Delivery arising as a result of said trials shall be the sole
responsibility of the Builder.
(e) In the event of unfavorable weather as agreed between the
Builder and Buyer, on the date specified for the said trials,
they shall take place on the first available day thereafter
that the weather conditions permit. It is agreed that if
during the trials of the Vessel the weather should suddenly
become unfavorable, as would have precluded the commencement
of the trials had the change in weather occurred before the
trials had started, then, and in such event, the trials of the
Vessel shall be discontinued and postponed until the first
favorable day next following, unless the Buyer shall assent in
writing to Acceptance of the Vessel on the basis of the trials
made prior to such sudden change in weather conditions.
(f) Fuel oil, lubricating oils, and greases required for the
trials or any other trials shall be purchased and supplied by
the Buyer, unless the parties shall otherwise agree. The
Builder shall pay the Buyer the cost of the fuel oil,
lubricating oils
- 23 -
<PAGE>
and greases consumed by the Builder up to the date of Delivery
at the Buyer's original purchase prices.
ARTICLE XVII
RESPONSIBILITIES OF THE BUILDER
BUILDER'S STATUS
In the performance of the work covered by this Contract, the Builder
shall act as an independent contractor, maintaining complete control
over the Builder's employees. The Builder may, at its sole
responsibility, subcontract any portion of the construction work of the
Vessel, but the Builder shall, in any event, be responsible for all
subcontractors, agents and representatives, and their collective
employees. Any work to be done outside the Builder's shipyard shall be
disclosed to the Buyer in advance. It is agreed that all major
structural building components of the Vessel shall be done in the
Builder's shipyard or by subcontractors located in Korea within the
vicinity of Koje Island and the City of Pusan who are under direct
supervision by Builder.
ARTICLE XVIII
TAXES AND DUTIES
The Builder shall be responsible for and pay, without recourse to the
Buyer, any and all taxes, assessments, duties or other similar levies
or charges, imposed by the Korean authorities, whether national,
municipal or local, with respect to the period up to and including
Delivery (even though assessed, determined or imposed thereafter), on
or in respect of (i) this Contract or any act or transaction hereunder,
(ii) the Vessel or any part thereof, or (iii) any imports of material
or equipment, and including without limitation, any tax imposed with
respect to the sale or Delivery to the Buyer or the Vessel's export
from Korea. Should the Buyer, at any time before or after Delivery, be
assessed or required to pay any such taxes, assessments, duties or
other similar levies or charges imposed by the Korean authorities, the
Builder shall reimburse the Buyer therefore. The Builder's liabilities
with regard to taxes shall be limited to the foregoing.
Taxes, assessments, duties or other charges imposed by any Governmental
authority on the Buyer's Supplies, supplied or exported to Korea by the
Buyer or its Representative shall be the responsibility of the Buyer.
The Buyer shall bear and pay all taxes, duties, stamps, and fees
incurred outside of Korea in connection with the Buyer's execution
and/or performance of this Contract, except for taxes, duties and other
fees imposed upon those items to be procured by the Builder for
construction of the Vessel.
- 24 -
<PAGE>
ARTICLE XIX
GOVERNMENTAL PERMITS, LICENSES, LAWS, AND PATENTS
GOVERNMENTAL APPROVALS AND LICENSES
(a) The Builder shall obtain necessary Korean Government approvals
and licenses, if any, required for the Builder's performance
under this Contract, including, without limitation, the Korean
Government Export License authorizing the transfer and
Delivery to the Buyer for export or removal from the
jurisdiction of Korea and for registration by the Buyer under
the flag of Liberia. The Builder shall assist the Buyer in
obtaining any licenses, permits, or other authorizations, or
waivers, necessary for the Representative to enter and/or
reside in Korea to perform his functions as set forth herein
or attend the Trials.
(b) The Builder shall proceed as soon as possible to obtain from
the Korean Government the aforementioned licenses and permits
for the Vessel to be constructed, delivered and be exported
from Korea, as provided herein and shall notify the Buyer as
to the issuance thereof by facsimile or cable, subsequently
confirmed in writing accompanied by copies of the said
licenses and permits. In the event that the said licenses and
permits for the Vessel shall not have been granted by the
Korean authorities within thirty (30) days following the date
of this Contract, unless otherwise mutually agreed to by the
Builder and the Buyer, the Builder shall be required to refund
within twenty (20) days thereafter, to the Buyer the amounts
set forth in Article VI (h) and this Contract shall thereupon
automatically become null and void and each of the parties
hereto shall be forthwith and completely discharged from all
of its obligations to the other.
(c) Notwithstanding the foregoing provisions of this Article XIX,
in case the Vessel, during construction or prior to Delivery,
should be requisitioned or seized by the Korean Government,
the Builder shall forthwith pay to the Buyer the amounts set
forth in Article VI (h) hereof, and such refund shall
forthwith release both parties from all obligations under this
Contract.
ARTICLE XX
LAWS AND PERMITS
The Builder shall exercise due diligence to ensure that the Builder,
its employees and representatives, shall at all times comply with all
applicable Korean laws, ordinances, statutes, rules, and regulations,
including those relating to wages, hours and working conditions and
insurance. The Builder, at its expense, shall procure all priorities,
permits, licenses, inspections, approvals and certificates required in
connection with the construction and completion of the Vessel and
Delivery in its Koje Shipyard. If required to permit performance of the
work, the Builder shall furnish any bond, security or
- 25 -
<PAGE>
deposits so required. If violations are identified, the Buyer shall
have no remedy, unless such violation materially affects the Builder's
performance of this Contract or seriously threatens the health or
safety of Buyer's representative.
ARTICLE XXI
PATENTS, TRADEMARKS, AND TRADE NAMES
Except for the aforesaid Buyer's Supplies, all royalties and licensing
and engineering fees required for incorporating patented features or
proprietary articles into the Vessel shall be paid by the Builder. The
Builder shall indemnify and save the Buyer harmless from all claims,
damages and costs, including costs of defense, in Korea or elsewhere,
resulting from any alleged patent, trademark or trade name infringement
based upon the design, construction or use of the Vessel or any part
thereof furnished by the Builder, its suppliers or subcontractors. The
Buyer shall notify the Builder of any such claim of which the Buyer has
notice and the Builder shall assume the responsibility and defense
thereof at the Builder's expense.
ARTICLE XXII
CONTRACTUAL RESPONSIBILITIES AND PROCEDURES
ASSIGNMENT OR SUBSTITUTION
(a) The Builder shall not assign this Contract without the consent
of the Buyer.
(b) The Buyer intends to register the Vessel under Liberian flag
but may elect an alternate registry within a reasonable time
prior to Delivery (subject to mutual agreement on necessary
Alterations as provided for in Article XIV (b).
(c) It is understood that the Buyer may designate any other
company as the person to receive Delivery of the Vessel by
assigning its rights and obligations under this Contract with
a resulting change of the Vessel's intended registry, if any,
provided that any said assignee shall demonstrate to the
satisfaction of the Builder that it is financially able to
meet the Buyer's obligations hereunder and is otherwise
acceptable to the Builder, which acceptance shall not be
unreasonably withheld.
(d) In the event of an assignment of the Buyer's rights and
obligations hereunder with respect to the Vessel said assignee
or the substitute party shall have all the rights and assume
all the obligations of the Buyer hereunder with respect to
said Vessel and the responsibility of the Buyer hereunder,
with respect to such Vessel, shall terminate.
- 26 -
<PAGE>
(e) Any and all costs incurred for the registration of the Vessel
shall be for the account of the Buyer or its assignee
regardless of whether such expenses should be incurred and
payable in Korea or not. Application and certificates for
statutory inspections for the registration of the Vessel shall
be arranged by the Buyer at Buyer's expense.
ARTICLE XXIII
CONTRACT AND AMENDMENTS
(a) This Contract and the Plan and Specifications have been
prepared in the English language, which shall control. The
Contract has been signed in duplicate, one counterpart being
retained by the Builder and one by the Buyer. The Plan and
Specifications have been signed in duplicate, one counterpart
being retained by the Builder and one counterpart by the
Buyer.
(b) No representative of either party shall have authority to
make, and neither party shall be bound by, nor liable for, any
statement, representation, promise or agreement not set forth
herein. No changes, amendments or modifications shall be valid
unless reduced to writing and signed by the parties.
(c) The validity, enforcement and interpretation of this Contract
shall be governed by the Laws of the State of New York, one of
the United States of America.
ARTICLE XXIV
ARBITRATION
(a) If any dispute arises between the parties hereto with regard
to the application or interpretation of rules for construction
and classification of vessels promulgated by the
Classification Society (or other matters deemed appropriate by
the parties), the parties may by mutual agreement refer the
dispute to the Classification Society, or to such other expert
as may be mutually agreed between two parties hereto, and
whose decision shall be final, conclusive and binding upon the
parties hereto.
(b) Should any dispute of any nature arise in respect of this
Contract, its performance or interpretation which is not
decided in accordance with Article XXIV (a) above, such
dispute shall be settled by arbitration in New York City in
accordance with the rules of the Society of Maritime
Arbitrations, Inc. and otherwise in accordance with the
provisions of the Laws of the State of New York. The party who
desires arbitration of any such dispute shall give written
notice to the other party. The notice shall state the name and
address of the arbitrator whom it appoints and describe the
specific nature of the particular dispute. Such notice
- 27 -
<PAGE>
shall be sent by registered air mail and shall be addressed in
the manner set forth in Article XXVI, and the other party
shall, within thirty (30) days following the receipt of said
notice, give written notice to the party requesting the
arbitration as to the name and address of the arbitrator whom
it appoints, which notice shall be sent by registered air mail
and shall be addressed in the manner set forth in Article
XXVI, provided that if the other party should fail to so
appoint its arbitrator, the arbitrator appointed by the party
desiring the arbitration may proceed with the arbitration
hearing and issue an award. Otherwise the two arbitrators so
chosen shall select a third arbitrator. The applicable law of
the State of New York on all matters at issue shall apply. A
judgement based upon the decision of the majority of the
arbitrators or the sole arbitrator, as the case may be, may be
entered in the appropriate court of any country having
jurisdiction of either party. The arbitrators shall also
decide which party, or the extent to which each party, shall
pay costs of arbitration. Unless and to the extent otherwise
determined by the arbitrator(s), reference to arbitration
shall not relieve the Builder of its obligation diligently to
proceed with the construction, completion and delivery of the
Vessel, but the majority of the arbitrators or the sole
arbitrator, as the case may be, shall decide the extent to
which the Delivery Date shall be extended by virtue of the
dispute having been referred to arbitration.
No director, employee or agent of either party shall give or
receive any commission, fee, rebate, gift or entertainment of
significant cost or value in connection with this Contract. An
independent public accounting firm mutually acceptable to
Builder and Buyer may, at either party's request and expense,
audit any and all records of both parties for the sole purpose
of determining whether there has been compliance with this
Article. Any such audit shall be conducted at any reasonable
time or times during the term of this Contract and during a
period of two years after its termination. No information
obtained during such audit shall be disclosed unless it
relates to such conflict of interest.
ARTICLE XXV
INDEMNITY
Each of Builder and Buyer shall indemnify and save Indemnitees harmless
from and against any and all loss, damage, injury, liability, and
claims thereof for injury to, or death of any person, including an
employee of Builder or Buyer, one of the Indemnitees or a third party
or for loss of or damage to property belonging to Builder or Buyer, an
Indemnitee or a third party arising out of or in connection with the
Indemnitee's performance or non-performance of its duties under this
Shipbuilding Contract until Delivery except to the extent such loss,
damage, injury, liability or claim is attributable to the negligence or
willful misconduct of any of the Indemnitees.
- 28 -
<PAGE>
Indemnitees means Chevron Corporation which has been nominated by Buyer
for supervision of the Vessel on behalf of Buyer, any company under
Chevron Corporation's control and the directors, officers, employees
and agents of any of the foregoing companies.
ARTICLE XXVI
NOTICES
All notices hereunder shall be made in writing and delivered personally
or by registered mail, postage prepaid, or by cable, telex, or
facsimile to the Builder and to the Buyer at the following respective
addresses, unless changed by notice duly given in accordance with this
Article XXVI:
To the Builder, at:
Samsung Heavy Industries Co., Ltd.
Dongnam Tower, 890-25, Daechi-Dong,
Kangnam-ku, Seoul, Korea 135-280
Telefax: 82-2-3458-6503
Telephone: 82-2-3458-6570 6530
Or preferably to its Koje Shipyard -
Samsung Heavy Industries Co., Ltd.
Koje Shipyard
530, Jangpyung-ri, Sinhyun-up,
Koje City, Kyungnam, Korea, 656-800
Telex: SSCYARD K52213
Telefax: 82-558-32-2160 (Design Department)
82-558-636-2560 (Customer Coordination Department)
To the Buyer, at:
15-19 Athol Street
Douglas, Isle of Man
Telefax: 011-441-624-672-510
Telephone: 011-441-624-628-575
Attention: Edward Cain
copy to:
Golden State Petroleum Transport Corporation
- 29 -
<PAGE>
c/o Cambridge Petroleum Transport Corporation
65 East 55th Street
Suite 3300
New York, New York 10022
Telefax: 212-508-6501
Telephone: 212-508-6500
Attention: John McFadden
ARTICLE XXVII
EFFECTIVE DATE
This Contract shall, following execution by all parties, become
effective upon the Builder furnishing to the Buyer, per Article XIX
(b), a notice of issuance of the Export License required under Article
XIX (a) (herein called the "Effective Date").
- 30 -
<PAGE>
IN WITNESS WHEREOF, the parties hereto executed this Contract as of the
date first set forth above.
For the Builder: SAMSUNG CORPORATION
- - - - - ---------------
Witness:
/s/ David S. Lee By:/s/ C. G. Cho
- - - - - ---------------- ----------------
SAMSUNG HEAVY INDUSTRIES CO., LTD.
Witness:
/s/ David S. Lee By:/s/ C. G. Cho
- - - - - ---------------- ----------------
For the Buyer: GOLDEN STATE PETRO (IOM-I-B) PLC
Witness:
/s/ Nunzio Lipomi By:/s/ John McFadden
- - - - - ----------------- -----------------
- 31 -
<PAGE>
Schedule 1
INSTALLMENT PAYMENT DATE AMOUNT NET PAYMENT TO
BUILDER(B)
1 December 26, 1996 $ 40,146,200 $38,941,814
2 April 1, 1998 353,711 343,100
3 May 1, 1998 2,652,833 2,573,248
4 June 1, 1998 2,652,833 2,573,248
5 July 1, 1998 2,652,833 2,573,248
6 Aug 1, 1998 2,652,833 2,573,248
7 Sept 1, 1998 634,157 615,132
8 (FINAL) July 1, 1999(A) 28,547,000 27,690,590
(A) The final installment is to be paid on the Delivery Date for the Vessel
which is currently anticipated to be July 1, 1999. Notwithstanding the
date set forth above the final installment shall be payable on the date
of Acceptance of the Vessel as provided in the Contract.
(B) Net payment reflects the obligation of the Builder to pay 3.0% of the
Contract Price to Cambridge Petroleum Transport Corporation pursuant to
a Letter Agreement dated as of December 24, 1996.
For the Builder: SAMSUNG CORPORATION
- - - - - ---------------
Witness:
____________________________ By:_______________________
SAMSUNG HEAVY INDUSTRIES CO., LTD.
Witness:
____________________________ By:_______________________
For the Buyer: GOLDEN STATE PETRO (IOM I-B) PLC
Witness:
____________________________ By:_______________________
<PAGE>
SCHEDULE 2
REFUND AMOUNT
Date Amount
---- ------
1-1-97 42,190,395
2-1-97 42,353,366
3-1-97 42,637,594
4-1-97 42,920,130
5-1-97 43,200,965
6-1-97 43,480,090
7-1-97 43,757,493
8-1-97 44,058,164
9-1-97 44,356,468
10-1-97 44,653,162
11-1-97 44,948,237
12-1-97 45,241,684
1-1-98 45,533,494
2-1-98 45,848,657
3-1-98 46,157,404
4-1-98 46,765,147
5-1-98 49,648,627
6-1-98 52,545,578
7-1-98 55,456,079
8-1-98 58,405,203
9-1-98 59,433,544
10-1-98 59,818,188
11-1-98 60,201,726
12-1-98 60,584,152
1-1-99 60,965,459
2-1-99 61,370,642
3-1-99 61,769,934
4-1-99 62,168,207
5-1-99 62,565,453
6-1-99 62,961,668
7-1-99 66,227,706
8-1-99 66,685,240
9-1-99 67,156,642
10-1-99 67,627,617
11-1-99 68,098,161
12-1-99 68,568,273
1-1-00 69,037,952
<PAGE>
APPENDIX A
IRREVOCABLE INSTALLMENT PAYMENT
LETTER OF GUARANTEE
[STATIONERY OF GUARANTOR BANK]
December 24, 1996
Golden State Petro (IOM I-B) PLC
c/o Cambridge Petroleum Transport Corporation
65 East 55th Street
Suite 3300
New York, New York 10022
Dear Sirs:
On behalf of The Korea Development Bank ("We" or the "Bank"), Seoul, Republic of
Korea, we hereby open our Irrevocable Installment Payment Letter of Guarantee
No. __________________________ (hereinafter called the "Guarantee") in favor of
Golden State Petro (IOM I-B) PLC and its assignee (hereinafter called the
"Buyer") for account of Samsung Heavy Industries Co., Ltd. and Samsung
Corporation (hereinafter collectively called the "Builder") in connection with
payments to be made by the Buyer to the Builder pursuant to the Shipbuilding
Contract dated the 24th day of December, 1996, as amended, supplemented or
otherwise modified from time to time (hereinafter called the "Contract") made by
and between the Buyer and the Builder for the construction of one (1) single
screw diesel drive Crude Oil Double Hull Tank Vessel having Builder's Hull No.
1229 (hereinafter called the "Vessel") which is available as follows:
We hereby irrevocably guarantee the payment (and not merely the collectability
of the same) to the Buyer immediately upon demand in an amount not to exceed the
principal amount of sixty six million, one hundred eighty one thousand, five
hundred thirty nine United States Dollars (US $69,037,952) together with simple
interest thereon calculated at the rate of nine percent (9.0%) per annum on the
basis of a 360 day year from and including the date of receipt of demand to but
not including the date of remittance by telegraphic transfer of such refund.
Subject to Buyer making installment payments in accordance with paragraph (d) of
Article VI of the Contract, the amount of this Guarantee will be automatically
increased during the term of this Guarantee and shall be equal to the sum of:
(i) the amount set forth on Schedule 1 hereto calculated as of the first day of
the calendar month in which the date of rejection occurs; and (ii) an amount
equal to the product of (X) the difference between (1) the amount set forth of
<PAGE>
Schedule 1 hereto calculated as of the first day of the calendar month
immediately succeeding the month in which the date of rejection occurs and (2)
the amount set forth on Schedule 1 hereto as of the first day of the month in
which the date of rejection of the vessel under the Contract occurs and (y) a
fraction the numerator of which is numeric day of the month of the date of such
rejection and the denominator of which is 30 (collectively, the "Refund
Amount").
Payment under this Guarantee is available at the counters of ______________ Bank
against presentation of the Buyer's signed statement issued in the form attached
hereto as Exhibit A ("Notice of Demand"). If the Notice of Demand is received by
the Bank by 12:00 noon local time on a business day, the Bank shall pay the
Refund Amount in immediately available funds on the same business day. If the
Notice of Demand is received by the Bank after 12:00 noon local time on a
business day, the Bank shall pay the Refund Amount in immediately available
funds on the next succeeding business day.
This Guarantee is available for one payment only, whether for the full amount
hereof or any part thereof, as may be demanded by the Buyer. In the event that
the Buyer's demand is for a lesser amount than the amount of this Guarantee, the
interest payable will be calculated on the amount of the Buyer's demand and not
on the amount of this Guarantee.
Payment shall be made to the Buyer in United States Dollars in accordance with
the payment instruction given to us by the Buyer at the time of a claim under
this Guarantee. Payment effected as directed by the Buyer shall discharge our
obligation to the extent of such payment.
We agree that this Guarantee shall be a continuing guarantee and (i) shall not
be impaired or discharged by the granting of time or any other indulgence to the
Builder, or any other forbearance (whether as to payment, time, performance, or
otherwise) which might, but for this provision, have any such effect; (ii) shall
not be conditioned or contingent upon the Buyer's pursuit of any remedy that it
has against the Builder; and (iii) shall be unconditional irrespective of any
other circumstance that might otherwise constitute a legal or equitable
discharge of a surety or guarantor under applicable law, and we hereby waive any
and all rights (whether by counterclaim, set off or otherwise) and defenses at
law or in equity that may be available to us by reason of such circumstance.
This Guarantee shall expire and become null and void on the earlier of (i) the
receipt by the Buyer of the sum guaranteed hereby; (ii) the receipt by The Korea
Development Bank of a copy of the Protocol of Acceptance and Delivery of the
Vessel, purportedly signed by the Buyer and the Builder and issued in the form
attached hereto as Appendix B; and (iii) 5:00 p.m. New York time on the 1st day
of March, 2000, in any such case this Guarantee shall be returned to us;
provided, the Bank further agrees that its obligations hereunder shall continue
to be effective or reinstated, as the case may be, if at any time any payment,
or any part thereof, made by the Builder is rescinded or must otherwise be
restored by the Buyer upon the bankruptcy or reorganization of the Buyer.
-2-
<PAGE>
Notwithstanding the provisions hereinabove, in case we receive notification from
the Buyer or the Builder confirmed by an arbitrator stating that the Buyer's
claim to cancel the Contract or the Buyer's claim for refundment thereunder has
been disputed and referred to arbitration in accordance with the provisions of
the Contract, the period of validity of this Guarantee shall be extended until
thirty (30) days after the final award shall be rendered in the arbitration and
a copy thereof acknowledged by the arbitrators. In such case, this Guarantee
shall not be available unless and until such acknowledged copy of the final
award in the Arbitration justifying the Buyer's claim is presented to us.
This Guarantee and the rights and interests hereunder may be assigned by the
Buyer in whole without charge with written notice to the Bank but only if this
Guarantee and the Contract are simultaneously assigned to the same assignee. The
Bank may not assign this Guarantee and the Bank's rights or interests hereunder
without the prior written consent of the Buyer and its assignee.
This Guarantee is governed by and enforced and construed in accordance with the
laws of the State of New York, United States of America, applicable to contracts
entered into and to be performed entirely within such state.
For: The Korea Development Bank
By: _____________________________ By: _____________________________
Name: Name:
Title: Title:
-3-
<PAGE>
SCHEDULE 1
REFUND AMOUNT
Date Amount
---- ------
1-1-97 42,190,395
2-1-97 42,353,366
3-1-97 42,637,594
4-1-97 42,920,130
5-1-97 43,200,965
6-1-97 43,480,090
7-1-97 43,757,493
8-1-97 44,058,164
9-1-97 44,356,468
10-1-97 44,653,162
11-1-97 44,948,237
12-1-97 45,241,684
1-1-98 45,533,494
2-1-98 45,848,657
3-1-98 46,157,404
4-1-98 46,765,147
5-1-98 49,648,627
6-1-98 52,545,578
7-1-98 55,456,079
8-1-98 58,405,203
9-1-98 59,433,544
10-1-98 59,818,188
11-1-98 60,201,726
12-1-98 60,584,152
1-1-99 60,965,459
2-1-99 61,370,642
3-1-99 61,769,934
4-1-99 62,168,207
5-1-99 62,565,453
6-1-99 62,961,668
7-1-99 66,227,706
8-1-99 66,685,240
9-1-99 67,156,642
10-1-99 67,627,617
11-1-99 68,098,161
12-1-99 68,568,273
1-1-00 69,037,952
<PAGE>
Exhibit A
___________________ Bank
___________________
___________________
Re: Irrevocable Installment Payment Guarantee No. __ (the "Guarantee")
The undersigned, acting as Administrator _____________________, the
"Buyer" hereby certifies to The Korea Development Bank with reference to
Guarantee No. ______ that:
1.The undersigned is duly authorized to execute and deliver this
certificate on behalf of the Buyer.
2. The Buyer hereby makes a claim against the Guarantee for
payment of US$ _________, plus simple interest thereon
calculated at the rate of ______ percent per annum on the
basis of a 360 day year from __________ to the date payment is
effected by The Korea Development Bank to the Buyer in
accordance with the payment instructions provided below.
3. The amount claimed represents a demand for refund of amounts
refundable to the Buyer and such demand for refund has been
made in conformity with the Shipbuilding Contract dated the
_____________ day of __________________, made by and among the
Buyer and Samsung Heavy Industries Co., Ltd., the "Builder",
for the construction of one (1) single screw diesel driven
Crude Oil Double Hull Tank Vessel having Builder's Hull No.
___, as amended, supplemented or otherwise modified from time
to time (hereinafter called the "Contract") and that the
Builder has failed to make the refund within fifteen (15)
business days of our demand to the Builder.
4. You are hereby directed to make payment of the stated amount
to ________________________ [INSERT PAYMENT INSTRUCTIONS]
_____________
By:__________
Attorney-in-Fact
Date:________
<PAGE>
APPENDIX B
PROTOCOL OF DELIVERY AND ACCEPTANCE
KNOW ALL MEN BY THESE PRESENTS:
That the undersigned, Samsung Heavy Industries Co., Ltd., Seoul, Korea
(the "Builder") does hereby deliver at ________ hours (local time) on
__________________, to ____________ (the "Buyer"), the vessel described
hereunder in accordance with the provisions of the Shipbuilding Contract dated
______________, as amended, made by and between Samsung Heavy Industries Co.,
Ltd., Samsung Corporation and the Buyer.
Name of Vessel: ___________________
Builder's Hull No. ___
Type of Vessel: Double Hull Oil Tank Vessel
That the undersigned,______________________ [the Buyer] does hereby
accept delivery of the aforesaid vessel and certify that the same is delivered
in accordance with the provisions of the said Shipbuilding Contract, and that
this PROTOCOL OF DELIVERY AND ACCEPTANCE does not release Samsung Heavy
Industries Co., Ltd. from its responsibilities under the Builder's Guarantee
Clause of the said Shipbuilding Contract.
SAMSUNG HEAVY INDUSTRIES
CO., LTD. [Name of Buyer]
-------------------
By:________________ By:________________
Attorney-in-Fact Attorney-in-Fact
Date:______________ Date:______________
As Agent for Buyer:
CHEVRON SHIPPING COMPANY
By:_______________________________
Attorney-in-Fact
Date:_____________________________
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I
VESSEL'S DESIGN AND DELIVERY....................... 1
1. THE VESSEL.............................................................. 1
ARTICLE II
DIMENSIONS, DEADWEIGHT, SPEED, FUEL CONSUMPTION
............................................................................. 3
ARTICLE III
CLASS AND REGULATIONS
............................................................................. 4
ARTICLE IV
DELIVERY
............................................................................. 4
ARTICLE V
DISCHARGE OF LIENS
............................................................................. 6
ARTICLE VI
PRICE, PAYMENT, TERMS, REFUND, BANK GUARANTEE
............................................................................. 6
ARTICLE VII
ADJUSTMENTS TO CONTRACT PRICE
............................................................................. 10
ARTICLE VIII
DEFAULT IN PAYMENT
............................................................................. 14
ARTICLE IX
BUILDER'S PAYMENT AND REPAYMENT AND INTEREST THEREON
............................................................................. 14
<PAGE>
ARTICLE X
BANK GUARANTEE
............................................................................. 15
ARTICLE XI
TERMS DURING DESIGN, CONSTRUCTION, AND GUARANTEE PERIODS
............................................................................. 15
ARTICLE XII
INSURANCE
............................................................................. 16
ARTICLE XIII
BUILDER'S GUARANTEE
............................................................................. 17
ARTICLE XIV
ALTERATIONS and APPROVALS
............................................................................. 20
ARTICLE XV
INSPECTION
............................................................................. 21
ARTICLE XVI
TRIALS
............................................................................. 22
ARTICLE XVII
RESPONSIBILITIES OF THE BUILDER
............................................................................. 24
ARTICLE XVIII
TAXES AND DUTIES
............................................................................. 24
ARTICLE XIX
GOVERNMENTAL PERMITS, LICENSES, LAWS, AND PATENTS
............................................................................. 25
ARTICLE XX
LAWS AND PERMITS
............................................................................. 25
-2-
<PAGE>
ARTICLE XXI
PATENTS, TRADEMARKS, AND TRADE NAMES
............................................................................. 26
ARTICLE XXII
CONTRACTUAL RESPONSIBILITIES AND PROCEDURES
............................................................................. 26
ARTICLE XXIII
CONTRACT AND AMENDMENTS......................... 27
ARTICLE XXIV
ARBITRATION
............................................................................. 27
ARTICLE XXV
INDEMNITY
............................................................................. 28
ARTICLE XXVI
NOTICES
............................................................................. 29
ARTICLE XXVII
EFFECTIVE DATE
............................................................................. 30
Schedule 1
Schedule 2
APPENDIX A IRREVOCABLE INSTALLMENT PAYMENT LETTER OF
GUARANTEE
APPENDIX B PROTOCOL OF DELIVERY AND ACCEPTANCE
-3-
PROMISSORY NOTE
No. 1 Issued at: New York, New York
US$4,044,060 Date: December 27, 1996
FOR VALUE RECEIVED, Golden State Petro (IOM I-A) PLC, a corporation
duly organized and existing under the laws of the Isle of Man having its
principal place of business at 15-19 Athol Street, Douglas, Isle of Man (the
"Buyer"), hereby unconditionally and irrevocably promises to pay, on the 1st day
of February, 1999, to Samsung Heavy Industries Co., Ltd., a corporation duly
organized and existing under the laws of the Republic of Korea, having its
principal office at 890-25, Daechi-Dong, Kangnam-Ku, Seoul, Republic of Korea
(the "Contractor"), or order, the principal sum of United States Dollars
(US$4,044,060) and, if not paid on the above due date, to pay interest on said
principal sum from and including the due date at the default rate of Ten percent
(10.0%) per annum, until the principal sum and interest thereon are fully paid,
plus all expenses, including reasonable legal fees incurred by the holder in
enforcing its rights hereunder. Interest shall be calculated on the basis of the
actual days elapsed and a year of 360 days.
Both principal and interest, if any, shall be payable in United States
Dollars in immediately available funds to the account of Banker's Trust Company,
for account of The Korea Commercial Bank, head office, Seoul, Korea, New York,
N.Y., United States of America (Account No.: 04-022-936) in favor of Samsung
Heavy Industries Co., Ltd. or to such other account with such other bank as may
be designated by the holder of this Note by a 5 days' prior written notice
without set-off or counterclaim, free and clear of and without deduction for any
present or future taxes, charges, restrictions or conditions of any kind.
This note is made pursuant to a Shipbuilding Contract dated December
24, 1996 by and between the Contractor, Samsung Corporation and the Buyer (the
"Contract"). Pursuant to the Contract, Contractor is required to construct and
deliver a single-screw diesel-driven Crude Oil Double Hull Tank Vessel bearing
Contractor's Hull No. 1228 (the "Vessel").
Notwithstanding any provision contained in this Note, the Buyer shall
not be obligated to make any payment of principal or interest on this Note if
the Vessel subject to the Contract is not delivered to and accepted by the Buyer
under the Contract.
<PAGE>
The Contractor shall not assign or transfer this Note without prior
written consent from the Buyer except that this Note may be sold to banks and
other financial institutions from Korea, Hong Kong, Singapore and OECD
countries, in which case only prior notice to the Buyer shall be required.
In the event default shall be made in the payment of principal or
interest on this note, as and when the same shall become due and payable, the
holder hereof shall have the remedies as set forth herein and such other
remedies as may be provided by law.
The maker and endorsers of this note hereby waive the right to
interpose any defense, set-off or counterclaim of any nature or description in
any action or proceeding arising out of or in connection with this note.
Amounts payable on this Note shall be paid to the holder upon
presentment of the Note to the Buyer or its Assignee of the Contract. Upon
payment, the note shall be marked "Paid."
This Note shall be governed by and construed and interpreted in
accordance with the laws of England (without giving effect to the conflict of
law principles thereof). The maker and the endorser hereby consent to any legal
action or proceeding in relation to this note being brought in the State of New
York, U.S.A. or in London, England and hereby irrevocably waive any immunity
from suit, attachment (before or after judgement) or execution on a judgement to
which they or their property may be entitled.
The maker and the endorsers hereby irrevocably submit to the
nonexclusive jurisdiction of the courts of the State of New York and the Federal
court of the United States of America located in the City and State of New York,
United States of America, or the courts of England, as any holder of this note
may elect, and irrevocably consent to the service of process out of said courts
by registered airmail, postage prepaid to the maker or endorsers as the case may
be or in any other manner provided by law.
The maker hereby certifies and declares that all acts, conditions and
things required to be done and performed and to have happened precedent to the
creation and issuance of this note, and to constitute this note the legal, valid
and binding obligation of the maker, in accordance with its terms, have been
done and performed and have happened in due and strict compliance with all
applicable laws and regulations.
- 2 -
<PAGE>
IN WITNESS WHEREOF, the undersigned has caused this note to be signed
in its corporate name by its duly authorized representative this 27th day of
December, 1996.
GOLDEN STATE PETRO (IOM I-A) PLC
By:/s/ Joseph Avantario
-----------------------------
Name: Joseph Avantario
Title: Director/Treasurer
STATE OF NEW YORK )
COUNTY OF NEW YORK )ss.:
UNITED STATES OF AMERICA )
I, _________________, Notary Public, duly authorized, admitted and
sworn, practicing at New York State, do hereby certify that:
1. GOLDEN STATE PETRO (IOM I-A), who has executed this power of
attorney on behalf of Golden State Petro (IOM I-A), (hereinafter the "Buyer") is
personally known to me and I acknowledge that his signature is authentic;
2. Sufficient evidence has been presented to me to the effect that
__________________, was duly authorized by the Buyer to execute this Promissory
Note on behalf of the Buyer.
IN WITNESS WHEREOF, I have hereunto subscribed my name and affixed my
seal of office this ____, day of December, 1996.
/s/ Gina D'Alessandro
---------------------------------------------
Notary Public
- 3 -
HULL NO. 1228
AGREEMENT ON CONTRACT
FOR
TECHNICAL MATTERS
THIS AGREEMENT, made and entered into as of December 24, 1996,
by and among Chevron Shipping Company, San Francisco, U.S.A. (as Agent for
Chevron Transport Corporation) (hereinafter called "Chevron"), Golden State
Petro (IOM I-A) PLC (hereinafter called "Buyer"), and Samsung Corporation and
Samsung Heavy Industries Co., LTD., each of Seoul, Republic of Korea
(hereinafter collectively called "Samsung"):
WITNESSETH:
-----------
WHEREAS, Buyer and Samsung entered into a Ship Building
Contract (hereinafter called the "Building Contract") as of the 24th day of
December, 1996, covering the construction of one (1) 308,500 deadweight ton
double hulled VLCC tanker identified as Hull No. 1228 (hereinafter called the
"Vessel").
WHEREAS, all defined terms contained herein shall have the
meaning set forth in the Building Contract.
WHEREAS, Buyer entered into a Bareboat Charter Contract with
Chevron Transport Corporation (hereinafter called "CTC") as of the 24th day of
December, 1996.
WHEREAS, pursuant to the Bareboat Charter Contract, Buyer
desires Chevron, as agent for Buyer, to act as Buyer's technical representative
with respect to technical matters related to the construction of the Vessel,
including the guarantee after delivery of the Vessel under the Building
Contract.
WHEREAS, Buyer agrees to employ Chevron with respect to the
technical matters above mentioned under the Building Contract.
NOW, THEREFORE, in consideration of the mutual covenants
herein contained, it is mutually understood and agreed upon by and among the
parties hereto as follows:
1. Buyer hereby appoints Chevron as authorized technical
representative to perform any and all of Buyer's rights, duties, obligations and
responsibilities under the provisions of Article XI, XIII, XIV, XV and XVI, of
the Building Contract (hereinafter called "Articles") except those rights,
duties, obligations and responsibilities which are specifically otherwise agreed
upon in this Agreement.
<PAGE>
Chevron hereby accepts such appointment by Buyer, and
undertakes to perform in good faith for and on behalf of Buyer any and all of
Buyer's rights, duties, obligations and responsibilities under Articles, for
Chevron's own account, including the payment of any amounts or the delivery of
any Buyer's Supplies which may be incurred under such Articles. Chevron shall
not look to Buyer for reimbursement of such amounts, except as provided in the
Charter.
Chevron further undertakes to perform such appointment with
due care so as to protect the rights and interests of Buyer under the Building
Contract. Buyer hereby acknowledges that Chevron's performance of this
appointment and any liabilities associated with it or arising out of such
appointment shall terminate upon delivery of the Vessel to the Buyer; provided,
however, to the extent any loss, claim or damage is not discovered by Buyer at
the time of the delivery of the Vessel, Chevron's liability therefor shall
continue for a term not to exceed 2 years.
Samsung hereby acknowledges Buyer's appointment of Chevron and
agrees to direct all correspondence and communications under Articles directly
to Chevron. The same shall be informed in advance to Buyer by Samsung if such
amendments and/or changes on the Specifications shall cause an increase in price
in excess of $100,000 or $250,000 in the aggregate to the date of the most
recent request.
2. Notwithstanding anything contained in the Building Contract
the following is agreed by the parties hereto:
(a) Samsung shall also notify Buyer of any and all delays
specified in Clause (c) of Article IV of the Building Contract.
(b) Buyer shall have the right, at its request, to be informed
of anything under this Agreement, to observe the Vessel during the
construction and attend the trial runs of the Vessel as observer(s)
whose comment, if any, shall always be made through Chevron to Samsung.
The approval and/or decisions given to Samsung by Chevron shall be
deemed to be those of Buyer and shall bind Buyer.
Notwithstanding the above, acceptance or rejection of the Vessel under
Article IV, VII, XII or XIX of the Building Contract shall always be
notified by Buyer to Samsung and Chevron shall, prior to delivery of
the Vessel, give Buyer their advice on whether the Vessel conforms to
the requirements of the Building Contract and the Specifications.
(c) Chevron shall check contents of the documents specified in
Clause (g) of Article IV of the Building Contract and confirm to Buyer
whether the contents are acceptable or not.
(d) Samsung shall also furnish Buyer and Chevron with the
design and construction schedules with respect to any Alterations (as
defined in the Building
- 2 -
<PAGE>
Contract) permitted by Article XIV of the Building Contract. In
addition Samsung shall supply to Chevron the Change Report mentioned in
of Article XIV of the Building Contract a copy of which will be
supplied to Buyer by Chevron.
(e) Notwithstanding Item 1 above, for practical reasons
Chevron and Samsung may agree on the Alterations pursuant to Article
XIV without obtaining Buyer's prior consent but only if (i) the
aggregate amount of all agreed Alterations shall not exceed US$250,000
and (ii) such Alteration shall not result in a delay of the Delivery
Date.
In any event, however, Chevron shall promptly inform Buyer after
Changes have been agreed with Samsung and Buyer shall confirm such
agreement.
(f) Buyer shall not be responsible whatsoever for personal
injuries, including death, of the Representative and any inspectors
appointed by the Representative, or other employees or agents of
Chevron during the time they or any of them are on the Vessel, or
within the premises of Samsung or its subcontractors, or, are otherwise
engaged in and about the construction of the Vessel unless such
personal injuries, including death, were caused by the negligence of
Buyer.
(g) Any adjustment of Contract Price, except for delayed
delivery, in accordance with the provisions of the Building Contract
shall be settled between Chevron and Samsung through Buyer at the
delivery of the Vessel. If the settlement of the costs of any fuel oil,
lubricating oils and greases (except in the Vessel's systems) or
unbroached consumable stores (furnished by Builder for trials), and
remaining on board the Vessel after acceptance of the Vessel by the
Buyer, are for the account of the Buyer, Chevron shall pay such costs
on behalf of the Buyer.
(h) In the event that the Building Contract is terminated in
accordance with Articles IV, VII, XII or XIX of the Building Contract,
Buyer shall refund to Chevron the costs of all Buyer's Supplies (as
defined in the Building Contract) previously received by Samsung
together with interest thereon as provided for in the Building Contract
from the dates of each delivery of Buyer's Supplies to Samsung to the
date of the remittance of such refundment, such refundment to Chevron
to be made upon Buyer receipt of such refundment from Samsung under the
Building Contract.
(i) "Indemnitee" stipulated in Article XXI and XXV of the
Building Contract shall include Chevron, any company under Chevron's
control (as measured by direct or indirect ownership of at least 50% of
the shares entitled to vote at general election of directors) and the
directors, officers, employees and agents of any of the foregoing
companies.
(j) In case of an "actual total loss" or a "constructive total
loss" Buyer shall refund to Chevron the cost of all Buyer's Supplies
previously received by Samsung, such
- 3 -
<PAGE>
refund to be made upon Buyer's receipt of the proceeds of the institute
clauses for Builder's Risk Policy.
(k) Chevron is responsible for the payment of taxes and duties
specified in the 2nd paragraph of Article XVIII of the Building
Contract.
(l) Chevron shall assist Buyer in case of Arbitration under
Article XXIV of the Building Contract.
(m) Chevron shall (i) appoint inspectors in accordance with
the Building Contracts who shall be in attendance at the Ship Yard and
(to the extent to which Buyer would be entitled under the Building
Contracts) shall have free access to the Vessel and to the Builder's
shipyard and workshops and the Builder's sub-contractors' premises as
may be necessary for the proper performance of the inspector's duties
hereunder until the Vessel has been delivered to Buyer in accordance
with the provisions of the Shipbuilding Contracts and (ii) attend to
any claim by Buyer that may constitute a breach by the Builder of the
warranty of quality incorporated in the Building Contract and supervise
the remedy of any defects in the Vessels which constitute such breach
and the recovery from the Builder of any loss, damages or expenses
occasioned by or connected with any such breach;
(n) Chevron shall use reasonable efforts to ensure that, prior
to a Vessel's Delivery under the Building Contract, such Vessel is
classed with the American Bureau of Shipping as +A1, (E), Oil Carrier,
+AMS, +ACCU, and SH clean and free of any and all recommendations,
reservations and qualifications and otherwise as stated in the relevant
Building Contract and is otherwise fully documented and classified in
accordance with the provisions of that Building Contract and its
Specifications;
(o) Chevron shall, along with Buyer, sign each Protocol of
Delivery and Acceptance referred to in each Shipbuilding Contract and
neither the Buyer nor Chevron shall have the right to reject the Vessel
or delay its Delivery if such rejection or delay is based solely on the
absence of Builder's Supplies which were not previously delivered to
the Builder by Chevron.
(p) Chevron shall on the Delivery Date of the Vessel, use
reasonable efforts to produce to or ensure the production to Buyer of a
Builder's certification or equivalent executed in favor of Buyer by the
Builder in respect of the Vessel.
(q) Each finished plan including the instruction books of the
Vessel shall be distributed as set forth in the Specifications.
3. Chevron shall perform its obligations under this Agreement in all
respects in accordance with the highest standards of practice and degree of care
regularly observed in the shipping industry. If any work or services under this
Agreement are negligently performed or
- 4 -
<PAGE>
omitted, then so far as may be reasonably practicable, Chevron, at its own
expense, will cause such work and services to be correctly performed.
If Chevron does incur third party liability of any nature whatsoever
arising out of or connected with performance of this Agreement, then
Chevron shall indemnify Buyer against such third party liability and
costs and expenses relating thereto; PROVIDED, HOWEVER, that Chevron
shall not be required to indemnify Buyer for loss or liability (A)
resulting from the negligence of Buyer; or (B) directly and proximately
caused by breach of a material representation or warranty made by
Buyer, in any agreement relating to such Vessel to which it is a party.
Notwithstanding the foregoing, Chevron shall not be responsible
whatsoever for personal injuries, including death, of Buyer or Samsung
employees or other Buyer or Samsung authorized personnel during the
time they or any of them are on the Vessel, or within the premises of
Samsung or its subcontractors, or, are otherwise engaged in and about
the construction of the Vessel unless such personal injuries, including
death, were caused by the negligence of Chevron.
4. All of the correspondences between Chevron, Buyer and
Samsung as above shall be addressed as follows:
To Chevron:
Chevron Shipping Company (as agent for Chevron Transportation
Company)
Attn: Vice President & General Manager Engineering
Address: 555 Market Street
San Francisco, CA 94105-2870, U.S.A.
Tele-facsimile No.
Telex No.
To the Buyer, at:
Golden State Petro (IOM I-A) PLC
15-19 Athol Street
Douglas, Isle of Man
Telefax: 011-441-624-672-510
Telephone: 011-441-628-575
Attention: Edward Cain
- 5 -
<PAGE>
copy to:
Golden State Petroleum Transport Corporation
c/o Cambridge Petroleum Transport Corporation
65 East 55th Street
Suite 3300
New York, New York 10022
Telefax: 212-508-6501
Telephone: 212-508-6500
To Samsung:
Samsung Heavy Industries Co., Ltd.
Dongnam Tower, 890-25, Daechi-Dong,
Kangnam-ku, Seoul, Republic of Korea 135-280
Telefax: 82-2-3458-6503
Telephone: 82-2-3458-6570 6530
Or preferably to its Koje Shipyard -
Samsung Heavy Industries Co., Ltd.
Koje Shipyard
530, Jangpyung-ri, Sinhyun-up,
Koje City, Kyungnam, Republic of Korea, 656-800
Telex: SSCYARD K52213
Telefax: 82-558-32-2160 (Design Department)
82-558-636-2560 (Customer Coordination Department)
5. Buyer shall have the right to assign its rights and
obligations hereunder to its wholly owned subsidiary company permitted in
accordance with the Building Contract and the said Bareboat Charter Contract.
6. No representative of either party shall have authority to
make, and neither party shall be bound by, nor liable for, any statement,
representation, promise or agreement not set forth herein. No changes,
amendments or modifications shall be valid unless reduced to writing and signed
by the parties.
7. The validity, enforcement and interpretation of this
Contract shall be governed by the Laws of the State of New York, one of the
United States of America.
8. Any other terms and conditions under the Building Contract
shall remain unchanged and unaltered.
- 6 -
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed on the day and year as first above written.
CHEVRON SHIPPING COMPANY (as Agent for
Chevron Transportation Company)
/s/ Thomas R. Moore
__________________________
T. R. Moore
President
GOLDEN STATE PETRO (IOM I-A) PLC
/s/ Joseph Avantario
__________________________
SAMSUNG HEAVY INDUSTRIES CO. LTD.
/s/ C. G. Cho
__________________________
SAMSUNG CORPORATION
/s/ C. G. Cho
__________________________
HULL NO. 1229
AGREEMENT ON CONTRACT
FOR
TECHNICAL MATTERS
THIS AGREEMENT, made and entered into as of December 24, 1996,
by and among Chevron Shipping Company, San Francisco, U.S.A. (as Agent for
Chevron Transport Corporation) (hereinafter called "Chevron"), Golden State
Petro (IOM I-B) PLC (hereinafter called "Buyer"), and Samsung Corporation and
Samsung Heavy Industries Co., LTD., each of Seoul, Republic of Korea
(hereinafter collectively called "Samsung"):
WITNESSETH:
WHEREAS, Buyer and Samsung entered into a Ship Building
Contract (hereinafter called the "Building Contract") as of the 24th day of
December, 1996, covering the construction of one (1) 308,500 deadweight ton
double hulled VLCC tanker identified as Hull No. 1229 (hereinafter called the
"Vessel").
WHEREAS, all defined terms contained herein shall have the
meaning set forth in the Building Contract.
WHEREAS, Buyer entered into a Bareboat Charter Contract with
Chevron Transport Corporation (hereinafter called "CTC") as of the 24th day of
December, 1996.
WHEREAS, pursuant to the Bareboat Charter Contract, Buyer
desires Chevron, as agent for Buyer, to act as Buyer's technical representative
with respect to technical matters related to the construction of the Vessel,
including the guarantee after delivery of the Vessel under the Building
Contract.
WHEREAS, Buyer agrees to employ Chevron with respect to the
technical matters above mentioned under the Building Contract.
NOW, THEREFORE, in consideration of the mutual covenants
herein contained, it is mutually understood and agreed upon by and among the
parties hereto as follows:
1. Buyer hereby appoints Chevron as authorized technical
representative to perform any and all of Buyer's rights, duties, obligations and
responsibilities under the provisions of Article XI, XIII, XIV, XV and XVI, of
the Building Contract (hereinafter called "Articles") except those rights,
duties, obligations and responsibilities which are specifically otherwise agreed
upon in this Agreement.
<PAGE>
Chevron hereby accepts such appointment by Buyer, and
undertakes to perform in good faith for and on behalf of Buyer any and all of
Buyer's rights, duties, obligations and responsibilities under Articles, for
Chevron's own account, including the payment of any amounts or the delivery of
any Buyer's Supplies which may be incurred under such Articles. Chevron shall
not look to Buyer for reimbursement of such amounts, except as provided in the
Charter.
Chevron further undertakes to perform such appointment with
due care so as to protect the rights and interests of Buyer under the Building
Contract. Buyer hereby acknowledges that Chevron's performance of this
appointment and any liabilities associated with it or arising out of such
appointment shall terminate upon delivery of the Vessel to the Buyer; provided,
however, to the extent any loss, claim or damage is not discovered by Buyer at
the time of the delivery of the Vessel, Chevron's liability therefor shall
continue for a term not to exceed 2 years.
Samsung hereby acknowledges Buyer's appointment of Chevron and
agrees to direct all correspondence and communications under Articles directly
to Chevron. The same shall be informed in advance to Buyer by Samsung if such
amendments and/or changes on the Specifications shall cause an increase in price
in excess of $100,000 or $250,000 in the aggregate to the date of the most
recent request.
2. Notwithstanding anything contained in the Building Contract
the following is agreed by the parties hereto:
(a) Samsung shall also notify Buyer of any and all delays
specified in Clause (c) of Article IV of the Building Contract.
(b) Buyer shall have the right, at its request, to be informed
of anything under this Agreement, to observe the Vessel during the
construction and attend the trial runs of the Vessel as observer(s)
whose comment, if any, shall always be made through Chevron to Samsung.
The approval and/or decisions given to Samsung by Chevron shall be
deemed to be those of Buyer and shall bind Buyer.
Notwithstanding the above, acceptance or rejection of the Vessel under
Article IV, VII, XII or XIX of the Building Contract shall always be
notified by Buyer to Samsung and Chevron shall, prior to delivery of
the Vessel, give Buyer their advice on whether the Vessel conforms to
the requirements of the Building Contract and the Specifications.
(c) Chevron shall check contents of the documents specified in
Clause (g) of Article IV of the Building Contract and confirm to Buyer
whether the contents are acceptable or not.
(d) Samsung shall also furnish Buyer and Chevron with the
design and construction schedules with respect to any alterations (as
defined in the Building
- 2 -
<PAGE>
Contract) permitted by Article XIV of the Building Contract. In
addition Samsung shall supply to Chevron the Change Report mentioned in
of Article XIV of the Building Contract a copy of which will be
supplied to Buyer by Chevron.
(e) Notwithstanding Item 1 above, for practical reasons
Chevron and Samsung may agree on the alterations pursuant to Article
XIV without obtaining Buyer's prior consent and to the extent that the
aggregate amount of all agreed alterations shall not exceed US$250,000.
In any event, however, Chevron shall promptly inform Buyer after
Changes have been agreed with Samsung and Buyer shall confirm such
agreement.
(f) Buyer shall not be responsible whatsoever for personal
injuries, including death, of the Representative and any inspectors
appointed by the Representative, or other employees or agents of
Chevron during the time they or any of them are on the Vessel, or
within the premises of Samsung or its subcontractors, or, are otherwise
engaged in and about the construction of the Vessel unless such
personal injuries, including death, were caused by the negligence of
Buyer.
(g) Any adjustment of Contract Price, except for delayed
delivery, in accordance with the provisions of the Building Contract
shall be settled between Chevron and Samsung through Buyer at the
delivery of the Vessel. If the settlement of the costs of any fuel oil,
lubricating oils and greases (except in the Vessel's systems) or
unbroached consumable stores (furnished by Builder for trials), and
remaining on board the Vessel after acceptance of the Vessel by the
Buyer, are for the account of the Buyer, Chevron shall pay such costs
on behalf of the Buyer.
(h) In the event that the Building Contract is terminated in
accordance with Articles IV, VII, XII or XIX of the Building Contract,
Buyer shall refund to Chevron the costs of all Buyer's Supplies (as
defined in the Building Contract) previously received by Samsung
together with interest thereon as provided for in the Building Contract
from the dates of each delivery of Buyer Supplied Property to Samsung
to the date of the remittance of such refundment, such refundment to
Chevron to be made upon Buyer receipt of such refundment from Samsung
under the Building Contract.
(i) "Indemnitee" stipulated in Article XXI and XXV of the
Building Contract shall include Chevron, any company under Chevron's
control (as measured by direct or indirect ownership of at least 50% of
the shares entitled to vote at general election of directors) and the
directors, officers, employees and agents of any of the foregoing
companies.
(j) In case of an "actual total loss" or a "constructive total
loss" Buyer shall refund to Chevron the cost of all Buyer's Supplies
previously received by Samsung, such refund to be made upon Buyer's
receipt of the proceeds of the institute clauses for
- 3 -
<PAGE>
Builder's Risk Policy.
(k) Chevron is responsible for the payment of taxes and duties
specified in the 2nd paragraph of Article XVIII of the Building
Contract.
(l) Chevron shall assist Buyer in case of Arbitration under
Article XXIV of the Building Contract.
(m) Chevron shall (i) appoint inspectors in accordance with
the Building Contracts who shall be in attendance at the Ship Yard and
(to the extent to which Buyer would be entitled under the Building
Contracts) shall have free access to the Vessel and to the Builder's
shipyard and workshops and the Builder's sub-contractors' premises as
may be necessary for the proper performance of the inspector's duties
hereunder until the Vessel has been delivered to Buyer in accordance
with the provisions of the Shipbuilding Contracts and (ii) attend to
any claim by Buyer that may constitute a breach by the Builder of the
warranty of quality incorporated in the Building Contract and supervise
the remedy of any defects in the Vessels which constitute such breach
and the recovery from the Builder of any loss, damages or expenses
occasioned by or connected with any such breach;
(n) Chevron shall use reasonable efforts to ensure that, prior
to a Vessel's Delivery under the Building Contract, such Vessel is
classed with the American Bureau of Shipping as +A1, (E), Oil Carrier,
+AMS, +ACCU, and SH clean and free of any and all recommendations,
reservations and qualifications and otherwise as stated in the relevant
Building Contract and is otherwise fully documented and classified in
accordance with the provisions of that Building Contract and its
Specifications;
(o) Chevron shall, along with Buyer, sign each Protocol of
Delivery and Acceptance referred to in each Shipbuilding Contract; and
(p) Chevron shall on the Delivery Date of the Vessel, use
reasonable efforts to produce to or ensure the production to Buyer of a
Builder's certification or equivalent executed in favor of Buyer by the
Builder in respect of the Vessel.
(q) Each finished plan including the instruction books of the
Vessel shall be distributed as set forth in the Specifications.
3. Chevron shall perform its obligations under this Agreement in all
respects in accordance with the highest standards of practice and degree of care
regularly observed in the shipping industry. If any work or services under this
Agreement are negligently performed or omitted, then so far as may be reasonably
practicable, Chevron, at its own expense, will cause such work and services to
be correctly performed.
If Chevron does incur third party liability of any nature whatsoever
arising out of or
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<PAGE>
connected with performance of this Agreement, then Chevron shall
indemnify Buyer against such third party liability and costs and
expenses relating thereto; PROVIDED, HOWEVER, that Chevron shall not be
required to indemnify Buyer for loss or liability (A) resulting from
the negligence of Buyer; or (B) directly and proximately caused by
breach of a material representation or warranty made by Buyer, in any
agreement relating to such Vessel to which it is a party.
Notwithstanding the foregoing, Chevron shall not be responsible
whatsoever for personal injuries, including death, of Buyer or Samsung
employees or other Buyer or Samsung authorized personnel during the
time they or any of them are on the Vessel, or within the premises of
Samsung or its subcontractors, or, are otherwise engaged in and about
the construction of the Vessel unless such personal injuries, including
death, were caused by the negligence of Chevron.
4. All of the correspondences between Chevron, Buyer and
Samsung as above shall be addressed as follows:
To Chevron:
Chevron Shipping Company (as agent for Chevron Transportation
Company)
Attn: Vice President & General Manager Engineering
Address: 555 Market Street
San Francisco, CA 94105-2870, U.S.A.
Tele-facsimile No.
Telex No.
To the Buyer, at:
15-19 Athol Street
Douglas, Isle of Man
Telefax:
Telephone:
Attention:
To Samsung:
Samsung Heavy Industries Co., Ltd.
Dongnam Tower, 890-25, Daechi-Dong,
Kangnam-ku, Seoul, Republic of Korea 135-280
Telefax: 82-2-3458-6503
Telephone: 82-2-3458-6570 6530
Or preferably to its Koje Shipyard -
- 5 -
<PAGE>
Samsung Heavy Industries Co., Ltd.
Koje Shipyard
530, Jangpyung-ri, Sinhyun-up,
Koje City, Kyungnam, Republic of Korea, 656-800
Telex: SSCYARD K52213
Telefax: 82-558-32-2160 (Design Department)
82-558-636-2560 (Customer Coordination Department)
5. Buyer shall have the right to assign its rights and
obligations hereunder to its wholly owned subsidiary company permitted in
accordance with the Building Contract and the said Bareboat Charter Contract.
6. No representative of either party shall have authority to
make, and neither party shall be bound by, nor liable for, any statement,
representation, promise or agreement not set forth herein. No changes,
amendments or modifications shall be valid unless reduced to writing and signed
by the parties.
7. The validity, enforcement and interpretation of this
Contract shall be governed by the Laws of the State of New York, one of the
United States of America.
8. Any other terms and conditions under the Building Contract
shall remain unchanged and unaltered.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed on the day and year as first above written.
CHEVRON SHIPPING COMPANY
(as Agent for Chevron Transportation Company)
/s/ T. R. Moore
-----------------------------------
T. R. Moore
President
GOLDEN STATE PETRO (IOM I-B) PLC
/s/ Nunzio Lipomi
-----------------------------------
SAMSUNG HEAVY INDUSTRIES CO. LTD.
/s/ C. G. Cho
-----------------------------------
SAMSUNG CORPORATION
/s/ C. G. Cho
-----------------------------------
================================================================================
GOLDEN STATE PETRO (IOM I-A) PLC
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CHEVRON TRANSPORT CORPORATION
BAREBOAT CHARTER
================================================================================
<PAGE>
BAREBOAT CHARTER
THIS BAREBOAT CHARTER (hereinafter called the "Charter") made as of the
24th day of December, 1996 BY and BETWEEN Golden State Petro (IOM I-A) PLC
(hereinafter called "Owner") organized under the laws of the Isle of Man and
Chevron Transport Corporation (hereinafter called "Charterer"), organized under
the laws of the Republic of Liberia.
WITNESSETH AND IT IS HEREBY AGREED as follows:
1. VESSEL TO BE CHARTERED.
(a) The Owner hereby lets and demises and the Charterer hereby hires
the very large crude carrier having hull number 1128 (hereinafter called the
"Vessel") to be built at the yard of Samsung Corporation and Samsung Heavy
Industries Co., Ltd. (collectively, "Builder") together with all her engines,
boilers, machinery, masts, anchors, cables, rigging, tackle, apparel, furniture,
electronics, small boats, and all her other appurtenances, whether aboard or
removed from the Vessel, together with any and all additions, improvements
and/or replacements which may hereafter be made to, on or in the Vessel.
(b) The Vessel shall be constructed in accordance with the Building
Contract (hereafter called "the Building Contract") as annexed to this Charter,
made between the Builder and the Owner and in accordance with the specifications
and plans annexed thereto.
(c) No change shall be made in the Building Contract or in the
specifications or plans of the Vessel without the Charterer's consent.
2. PERIOD OF CHARTER
(a) This Charter shall be for a period of eighteen (18) years from the
Delivery Date (the "Charter Period") and shall comprise an initial fixed period
(the "Fixed Period") of eight (8) years and five subsequent optional periods
(each, an "Optional Period") of two (2) years each. The Charterer shall have the
option of terminating this Charter on an Optional Termination Date upon the
expiration of the Fixed Period or any of the Optional Periods (I) if the
Optional Termination Date is the first Optional Termination Date, at the end of
the Fixed Period upon provision to the Owner of (i) non-binding notice of its
intent to exercise such option, determined on a good faith basis, at least 12
months prior to such Optional Termination Date and (ii) irrevocable notice of
such exercise nine (9) months prior to such Optional Termination Date or (II) if
the Optional Termination Date is any subsequent Optional Termination Date, at
the end of the related Optional Period, such notification shall be made by the
Charterer to the Owner at (i) nine (9) months and (ii) six (6) months,
respectively.
(b) Should the Vessel be upon a voyage otherwise than under requisition
for hire at the time when the charter of the Vessel would (but for the
provisions of this clause) have terminated, the Charter Period shall be extended
for such additional time as may be necessary for the completion of such voyage.
The Charter Period shall also be extended for such additional
<PAGE>
time as may be necessary to bring the Vessel to a port of redelivery as
hereinafter provided in Clause 8 hereof. During any such extension, hire shall
be paid pro rata on a daily basis (assuming a 365-day year) at the rate in force
before the commencement of such extension.
3. TIME AND PLACE OF DELIVERY
(a) The Owner shall give and the Charterer shall take delivery of the
Vessel concurrently with delivery of the Vessel by the Builder to the Owner when
the Vessel is ready for delivery by Builder after trials and the Owner, Builder
and Chevron Shipping Company, as agent for the Charterer (the "Agent") have
executed the Protocol of Delivery and Acceptance in substantially the form of
Exhibit B to the Shipbuilding Contract.
(b) The Charterer warrants that upon delivery of the Vessel to the
Charterer the Vessel shall be in the Charterer's custody and under its control.
(c) If for any reason other than a default by the Owner under the
Building Contract, the Builder becomes entitled under the Building Contract not
to deliver the Vessel to the Owner, the Owner shall upon giving to the Charterer
written notice of Builder becoming so entitled, be excused from giving delivery
of the Vessel to the Charterer and upon receipt of such notice by the Charterer
this Charter shall cease to have effect.
(d) If for any reason the Owner becomes entitled under the Building
Contract to reject the Vessel, the Owner shall, before exercising such right of
rejection, give written notice thereof to the Charterer and consult the
Charterer and thereupon:
(i) If the Charterer does not wish to take delivery of the
Vessel, it shall inform the Owner within seven (7) days of notice from
the Owner by notice in writing and upon receipt by the Owner of such
notice this Charter shall cease to have effect; or
(ii) If the Charterer wishes to take delivery of the Vessel,
it may by notice in writing within seven (7) days of notice from the
Owner require the Owner to negotiate with the Builder as to the terms
on which delivery should be taken and during such period refrain from
exercising the Owner's right of rejection and upon receipt of such
notice the Owner shall commence such negotiations; provided however,
the Owner shall not be required to accept delivery of the Vessel from
the Builder unless the terms of such delivery are acceptable to it in
its sole discretion.
(e) In no circumstances shall the Charterer be entitled to reject the
Vessel unless the Owner is able to reject the Vessel from the Builder. If this
Charter terminates under sub-clause (c) or (d) of this Clause, the Owner shall
thereafter not be liable to the Charterer for any claim under or arising out of
this Charter or its termination.
(f) THE OWNER MAKES NO REPRESENTATION, WARRANTY OR GUARANTEE OF ANY
KIND, EXPRESS OR IMPLIED, STATUTORY OR OTHERWISE,
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<PAGE>
AS TO THE TITLE, SEAWORTHINESS, CONDITION, VALUE, EQUIPMENT DESIGN, OPERATION,
MERCHANTABILITY OR FITNESS FOR USE OF THE VESSEL FOR ANY PARTICULAR PURPOSE OR
AS TO THE ELIGIBILITY OF THE VESSEL FOR ANY PARTICULAR TRADE OR ANY OTHER
REPRESENTATION, WARRANTY OR GUARANTEE WITH RESPECT TO THE VESSEL AND NONE SHALL
BE IMPLIED FROM THIS CHARTER; PROVIDED, HOWEVER, THAT THE OWNER WARRANTS THAT
THE OWNER HAS AND SHALL RETAIN WHATEVER TITLE TO THE VESSEL SUBJECT ONLY TO THE
MORTGAGE, THIS CHARTER AND LIENS AND ENCUMBRANCES WHICH THE OWNER IS OBLIGATED
TO DISCHARGE OR SATISFY. THE CHARTERER HEREBY WAIVES AS AGAINST THE OWNER AND
THE VESSEL, ALL REMEDIES, WARRANTIES NOT EXPRESSED IN THIS SUBCLAUSE (F) OF
CLAUSE 3 OR LIABILITIES, EXPRESS OR IMPLIED, ARISING BY LAW OR OTHERWISE WITH
RESPECT TO THE OWNER'S TITLE THERETO OR THE PHYSICAL CONDITION OF THE VESSEL AT
THE TIME OF DELIVERY TO THE CHARTERER INCLUDING, BUT NOT LIMITED TO (I) ANY
IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, (II)
ANY IMPLIED WARRANTY ARISING FROM COURSE OF PERFORMANCE, COURSE OF DEALING OR
USAGE OF TRADE, (II) ANY OBLIGATION, LIABILITY, RIGHT, CLAIM OR REMEDY FOUNDED
IN STRICT LIABILITY IN TORT AND (IV) ANY OBLIGATION, LIABILITY, RIGHT, CLAIM OR
REMEDY FOR LOSS OR DAMAGE TO THE VESSEL. THE ACCEPTANCE BY THE CHARTERER OF THE
VESSEL UNDER THIS CHARTER SHALL CONSTITUTE CONCLUSIVE PROOF, AS BETWEEN THE
OWNER AND THE CHARTERER, THAT THE VESSEL IS SEAWORTHY, AND OTHERWISE IN THE
CONDITION REQUIRED BY THIS CHARTER, IN GOOD WORKING ORDER AND REPAIR AND WITHOUT
DEFECT OR INHERENT DEFECT IN TITLE, SEAWORTHINESS, CONDITION, DESIGN, OPERATION
OR FITNESS FOR USE, WHETHER OR NOT DISCOVERABLE BY THE CHARTERER AS OF THE DATE
OF SUCH TENDER, AND GENERALLY IN ALL RESPECTS SATISFACTORY TO THE CHARTERER.
4. CHARTERER'S RIGHT IN RESPECT OF THE VESSEL
(a) The Owner hereby assigns to the Charterer, for the duration of the
Charter Period, except during periods when an Event of Default shall have
occurred and be continuing and except in respect of a Total Loss (unless the
Charterer shall have made all payments required by Clause 12 hereof in respect
of a Total Loss) without representation, warranty or covenant of any kind,
effective upon delivery of the Vessel to the Charterer, the right to enforce and
exercise all rights of warranty, guaranty and indemnity which the Owner may have
in respect of the Vessel or otherwise directly against the Builder or any
manufacturer of any part of the Vessel. The Charterer shall be entitled to take
such action in the name of the Owner against the Builder or any manufacturer of
any part of the Vessel in relation to the terms of purchase of, the condition of
or any patent infringement or alleged patent infringement in relation to the
Vessel or any part thereof as the Charterer sees fit but subject to the Owner
being indemnified and secured to its satisfaction by the Charterer against all
losses, costs, damages and expenses thereby incurred or to be incurred. If as a
result of any such action any moneys are
- 4 -
<PAGE>
received from the Builder or any such other manufacturer of the Vessel as
aforesaid the same shall be received by the Charterer. The Charterer shall use
diligence to assert and enforce all such rights which have a material effect
upon the value of the Vessel.
(b) Specifically with respect to the warranties set forth in the
Building Contract (the "Builder Guarantees"), the Owner hereby assigns to the
Charterer for the Fixed Period and each exercised Optional Period the benefit of
and rights to administer the Builder Guarantees with respect to materials and
workmanship set forth in the Building Contract together with all other
manufacturer, supplier and subcontractor guarantees furnished with respect to
the Vessel. The Owner shall be entitled to receive from Builder the Liquidated
Damages Rebate related to the Vessel's failure to satisfy the Building Contract
deadweight, speed and/or fuel consumption specifications. Notwithstanding the
foregoing, the Charterer shall be entitled to receive from the Owner an amount
(the "Charterer Rebate Amount") equal to the Liquidated Damages Rebate times a
fraction equal to 8/18 on the date such Liquidated Damages Rebate is received
from Builder. The remainder of the Charterer Rebate Amount (the "Initial
Deposit") shall be deposited by the Owner into a separate escrow account (the
"Escrow Account") and invested until the last day of the Fixed Period and shall
be disbursed as follows: on the first day of any Optional Period, the Charterer
shall be entitled to receive an amount equal to the Escrow Account Balance times
a fraction the numerator of which is the number of years of the related Optional
Period and the denominator of which is the number of years remaining on the
Charter if no termination options were exercised. (I.E., 2/10th, 2/8ths, 2/6ths,
2/4ths, 1). Any balance shall remain in the Escrow Account and shall be invested
to the end of the related Optional Period.
The Escrow Account shall be established with a financial institution
and subject to an escrow agreement acceptable to both the Charterer and the
Owner.
5. USE AND TRADE OF VESSEL
(a) The Charterer shall have full use of the Vessel and may employ the
Vessel worldwide (within British Institute Warranty Limits) in the carriage of
suitable lawful merchandise. In no event shall the Charterer carry on board the
Vessel nuclear fuels or radioactive products; provided, however, with the prior
written consent of the Owner, the Charterer may carry on board the Vessel
radioisotopes used or intended to be used for any industrial, agricultural,
medical or scientific purposes.
(b) The Charterer undertakes not to employ the Vessel or suffer the
Vessel to be employed otherwise than in conformity with the terms of the
instruments of insurance (including any warranties expressed or implied therein)
without first obtaining the consent to such employment from its insurers,
protection and indemnity clubs and underwriters and complying with such
requirements as to extra premium or otherwise as the insurers may prescribe.
- 5 -
<PAGE>
(c) The Charterer also undertakes not to employ the Vessel or suffer
her employment in any trade or business which is forbidden by the law of any
country to which the Vessel may sail or is otherwise illicit or in carrying
illicit or prohibited goods.
(d) As to those trades in which the Vessel is employed, the Charterer
shall comply with any and all requirements regarding financial responsibility or
security in respect of oil or other pollution damage as required by any
government, any state or other political subdivision thereof, or any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government and any other governmental entity with
authority over the Owner or the Charterer, as the case may be, or ownership, use
and operation of the Vessel (whether or not such requirement has been lawfully
imposed or not) to enable the Vessel, without penalty or charges, lawfully to
enter, remain at, or leave any port, place, territorial or contiguous waters of
any country, state or municipality in performance of this Charter without delay.
The Charterer shall make and maintain all arrangements for security bond or
otherwise as may be necessary to satisfy such requirements at the Charterer's
sole liability and expense and the Charterer shall indemnify the Owner against
any and all losses, damages, claims, expenses or liabilities incurred by reason
of the Charterer's failure to comply with this Clause 5(d).
(e) The Charterer shall enter and maintain the Vessel under the TOVALOP
Scheme or under any similar scheme during the Charter Period.
6. DOCUMENTATION AND HOUSE FLAG
(a) The Charterer agrees that it shall, throughout the Charter Period,
maintain the documentation of the Vessel under the laws of the Registration
Jurisdiction at the Charterer's cost and expense. The Owner agrees to do such
things whatsoever and execute and deliver all such documents whatsoever to
enable the Charterer to maintain such documentation. The Charterer will not
change the registry or port of documentation of the Vessel without the prior
written consent of the Owner which consent shall not be unreasonably withheld,
or do or suffer or permit to be done anything which will injuriously affect the
documentation of the Vessel as a vessel documented under the laws and
regulations of the Registration Jurisdiction. If the Charterer changes the
registry or port of documentation of the Vessel, the Charterer shall, at time of
redelivery, if the Owner so requests and at the Charterer's expense, change the
registry and port of documentation back to that of the Registration
Jurisdiction.
(b) The Charterer shall have the right to name the Vessel, to paint the
Vessel in the Charterer's own colors, install and display its funnel insignia
and fly its own house flag.
7. MAINTENANCE AND OPERATION
(a) Except as provided in Clause 20, the Vessel shall during the
Charter Period be in the full possession and at the absolute disposal for all
purposes of the Charterer and under its complete control in every respect. The
Charterer hereby covenants and agrees with the Owner that during the Charter
Period (and subject to the provisions of Clause 13):
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<PAGE>
(i) The Charterer will at its expense maintain the
Vessel, her machinery, cargo handling equipment,
boilers, appurtenances and spare parts in a good
state of repair and in efficient operating condition
in accordance with good commercial maintenance
practice commensurate with other vessels in
Charterer's fleet of similar size and trade, ordinary
wear and tear excepted; and
(ii) The Charterer will at its expense keep the Vessel
with unexpired classification in accordance with the
highest classification of the American Bureau of
Shipping (or such other classification society as
shall previously have been approved in writing by the
Owner) and other required certificates in force and
shall make any improvement or structural changes or
acquire any new equipment necessary to comply with
the requirements of such classification; and
(iii) The Charterer shall be at liberty to fit any
additional equipment required for the services of the
Charterer, beyond that on board at the commencement
of this Charter, such work to be done at the
Charterer's expense and on its time, and such
equipment may be removed by the Charterer at its cost
and on its time at any time (provided, however, that
such removal does not adversely affect the class or
seaworthiness of the Vessel) prior to the expiration
or any other termination of the Charter. The Vessel
is to be redelivered to the Owner in the same
condition and class as that in which she is delivered
by the Owner, ordinary wear and tear excepted and any
additional equipment that cannot be or is not so
removed shall become the property of the Owner; and
(iv) The Charterer shall not permit the Vessel to proceed
to any port which is then subject to a prohibition by
the government of the Registration Jurisdiction or
the national government of the port in question; and
(v) In the event of any hostilities in any part of the
world (whether war be declared or not) the Charterer
will not employ the Vessel nor suggest her employment
in carrying any goods which are declared contraband
nor suffer her to enter or trade to any zone which is
declared a War Zone by the War Risks Insurers unless
the Charterer has made arrangement with the said
insurers for the payment of such additional premiums
as said insurers may require to maintain the relevant
insurances in force or in any zone in respect of
which the War Risks Insurers have withdrawn cover for
the Vessel; and
(vi) The Charterer will not use the Vessel in any manner
or for any purpose excepted from any insurance policy
or policies taken out in compliance with Clause 11
hereof or for the purpose of carriage of goods of any
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<PAGE>
description excepted from the said insurance policy
or policies and shall not do or permit to be done
anything which could reasonably be expected to
invalidate any of the said insurance policy or
policies; and
(vii) The Charterer will not use the Vessel in any manner
or for any purpose or trade or permit or suffer to be
done any act which will prejudice the Owner's
ownership of the Vessel or any part thereof.
(b) During the Charter Period (subject to the provisions of Clause 13),
the Charterer shall at its own expense or by its own procurement man, victual,
navigate, operate, supply, fuel and repair the Vessel whenever required and
shall, as between itself and the Owner, be responsible for all charges and
expenses of every kind and nature whatsoever incidental to the Charterer's use
and operation of the Vessel under this Charter, including any foreign, general,
municipal, value added or other taxes except that the Charterer shall not be
responsible for Owner Taxes. During the Charter Period, the master, officers and
crew of the Vessel shall be engaged and employed by the Charterer and shall
remain the Charterer's servants, navigating, managing and working the Vessel on
behalf of and at the risk of the Charterer.
(c) As between the Charterer and the Owner, the Charterer shall also be
responsible for any charges and expenses incidental to the use and operation of
the Vessel while under requisition for hire, during the Charter Period. The
foregoing provision of this sub-clause shall be without prejudice to the rights
of the Owner and the Charterer against other parties in respect of any such
charges or expenses. The Charterer shall, subject to the prior written approval
of the Owner (such approval not to be unreasonably withheld), be entitled to
take action in the name of the Owner against other parties in respect of such
charges or expenses. If as a result of any such action any moneys are received
the same shall be recovered by the Charterer.
(d) The Charterer shall make no changes in the structure of the Vessel
nor major changes in her machinery, appurtenances, spare parts or boilers
without in each instance first securing the written approval of the Owner, which
approval shall not be unreasonably withheld; provided that if any such changes
are required to meet classification society requirements, applicable regulations
and/or any relevant laws the Owner shall not withhold such approval and the
Charterer shall not be obliged to reinstate the Vessel to its condition prior to
the making of such changes.
(e) The Charterer shall drydock the Vessel and clean and paint her
underwater parts in accordance with good commercial practice, but not less than
as may be required by the American Bureau of Shipping or such other
classification society as provided in Clause 7(a)(ii) to maintain the Vessel's
highest classification. The Charterer shall give the Owner not less than seven
(7) days prior notice of the Charterer's intention to drydock the Vessel, such
notice to specify the intended time and place of drydocking.
(f) The Owner (or such persons as it shall appoint or authorize) shall
have the right at any time on reasonable notice, and in a manner which shall not
interfere with the Vessel's
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<PAGE>
trading requirements to inspect or survey the Vessel in order to ascertain the
condition of the Vessel and to satisfy itself that the Vessel is being properly
repaired and maintained in accordance with the provisions of this Charter.
Inspection or survey in drydock shall be made only when the Vessel is in drydock
under the provisions of sub-clause (e) of this Clause. However, the Owner shall
have the right to require the Vessel to be drydocked for inspection, if the
Charterer is not docking her at the required classification intervals. The costs
incurred in respect of such drydocking and any inspection or survey made under
this sub-clause shall be paid by the Charterer to the Owner only if repairs are
found to be required. Otherwise, the costs of drydocking and any inspection or
survey shall be paid by the Owner. All repairs as shall be shown to be required
by any inspection or survey shall be made at the Charterer's expense and shall
be completed within a reasonable period of time or such other period as is
specified by the relevant classification society referred to in Clause 7(a)(ii).
Time taken in respect of inspection, survey or repairs shall form part of the
Charter Period. The Charterer shall whenever requested, on reasonable notice,
permit the Owner to inspect the Vessel's log books and furnish the Owner
promptly with full information regarding any casualties or other damage to the
Vessel.
(g) The Owner shall not be liable for any expense in repairing or
maintaining the Vessel or be liable to supply a vessel or any part in lieu
thereof if the Vessel or any part thereof is lost, damaged, rendered unfit for
use, confiscated, seized, requisitioned, restrained or appropriated and the
Charter Hire and any Additional Charter Hire payable in respect of the Vessel
shall continue to be payable notwithstanding loss or damage (not amounting to a
Total Loss) to the Vessel or any part thereof (and notwithstanding that the
Vessel or any part thereof is rendered unfit for use or is requisitioned for
hire). In the event of a Total Loss the provisions of Clause 12 shall apply.
(h) The Charterer shall not have or be deemed to have any authority to
pledge the Owner's credit for any purpose, including any maintenance overhauls,
replacements, repairs and modification of the Vessel.
8. REDELIVERY AND STATUS
(a) Unless the Vessel suffers a Total Loss, the Charterer shall at the
end of the Charter Period redeliver the Vessel to the Owner at a safe and
ice-free port or a place selected by the Charterer within the Vessel's trading
limits (within 10 steaming days from a recognized loading area) or at such other
safe port as shall be agreed between the parties but the Charterer shall not be
deemed to warrant the safety of such port once redelivery has occurred. The
Vessel shall be redelivered to the Owner free and clear of all mortgages, liens,
claims, charges and encumbrances which the Charterer is obligated to discharge
or satisfy and in the same or as good structure, state and condition as those in
which she was delivered, ordinary wear and tear not affecting class excepted.
The time of redelivery shall be the time when the Vessel is tendered for
redelivery in class without outstanding requirements or recommendations to
enable the Vessel to proceed without delay and free of cargo (other than slops).
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<PAGE>
(b) At or about the same time of redelivery a survey shall, if the
Owner so requires, be made to determine the condition and fitness of the Vessel,
her machinery and equipment. In that event, the Charterer and the Owner shall
each appoint surveyors to be present at such survey and the surveyors present
shall determine and state the repairs or work necessary to place the Vessel at
the date of redelivery in the structure, state and condition required by
sub-clause (a) of this Clause. In the event that the Vessel has been dry-docked
within 30 days prior to redelivery and the Charterer certifies in writing to the
Owner that, to the best of the Charterer's knowledge, the Vessel has had no
bottom touching since such dry-docking, such survey may be conducted while the
Vessel is afloat. The Owner may require a diver's survey of the Vessel. The
Charterer shall bear all expense of any such survey only if repairs are found to
be required. Otherwise, the cost of a diver's survey shall be paid by the Owner.
The Charterer shall at its expense make all such repairs and do all such work so
found to be necessary before redelivery or at the Owner's option shall discharge
the Charterer's obligations hereunder by payment to the Owner of a sum
sufficient to provide, at the prices current at the time of redelivery, for the
work and repairs necessary to place the Vessel in such structure, state and
condition. The Charter Period shall be extended until the completion of any such
repairs and work found to be necessary or the payment of the amounts described
in this Clause 8(b).
(c) The provisions of this Clause shall be subject to the provisions of
sub-clause (b) of Clause 13 hereof where the Vessel is under requisition for
hire at or until the end of the Charter Period.
(d) An inventory of consumable stores on board the Vessel shall be made
by the Charterer in conjunction with the Owner on redelivery of the Vessel. The
Owner shall take over and pay for all bunkers, lubricating oil, water and
unbroached provisions, paints, oils, ropes and other consumable stores remaining
in the Vessel on redelivery at the market prices current at the port of
redelivery.
(e) The Vessel upon redelivery shall have her survey cycles up to date
and class certificates valid for at least six (6) calendar months.
Notwithstanding the provisions of this Clause 8, the Charterer shall ensure that
the Vessel shall have been dry-docked within 30 months prior to redelivery.
9. USE OF VESSEL AND PAYMENT OF HIRE
(a) The Charterer shall have the use of all equipment (which expression
includes cabin, crew and galley equipment, navigational aids and technical
equipment, furnishings, furniture and fittings and spare and replacement parts)
that is the property of the Owner on board at the time of Delivery of the
Vessel; and the same, or their substantial equivalent, shall be returned to the
Owner on redelivery in good order and condition, ordinary wear and tear alone
excepted. The Charterer shall from time to time during the Charter Period
replace at its expense such items of equipment as shall be so damaged or worn as
to be unfit for use. Such replacement equipment shall become part of the Vessel
and title to such replaced equipment shall vest in and the same shall belong to
the Owner.
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<PAGE>
(b) Any hired equipment placed on the Vessel by the Charterer may be
removed by the Charterer prior to the expiration of the Charter Period. If so
requested by the Owner, the Charterer shall assist in transfer of equipment hire
agreements to the Owner or its nominee, but the Charterer shall not be required
to guarantee or assume any other liability with respect to a transferee's
performance under said hire agreements.
(c) During the Charter Period, the Charterer shall pay, without offset
or deduction, whether or not Vessel is under arrest, the sum of Charter Hire for
the use and hire of the Vessel at the times and in the amounts indicated on
Schedule 1 attached hereto and made a part hereof and any Additional Charter
Hire payable pursuant to subclause 9(g). Charter Hire shall be offset and
reduced by the amount of the Charter Hire Reduction, if any. The obligation to
pay Additional Charter Hire shall become effective on the next succeeding
Payment Date. Unless otherwise notified by the Owner, all payments of Charter
Hire and Additional Charter Hire and other amounts payable by the Charterer to
the Owner hereunder shall be made to an account nominated by the Owner at Chase
Manhattan Bank NYC, ABA #021000021, A/C #920-1-073195, credit U.S. Trust Co NY,
further credit to A/C #04692300, Golden State Petroleum Transp. Corp. Rev.,
Attention: Chris Collins (or to such other account as the Owner may from time to
time nominate) and shall be made by wire transfer of immediately available
funds.
(d) If, on or before a date on which the Charterer is obligated under
subclause 2(a) above to give the Owner irrevocable notice of its intent to
exercise an option to terminate the Charter (a "Termination Notice Date"), and
if (i) the Charter Hire during the next succeeding Optional Period is above the
then current bareboat market level and (ii) the Charterer desires to have a
vessel on bareboat charter for a term equal to the applicable Optional Period
and of a size, age, condition, and performance characteristics similar or
equivalent to those of the Vessel, then the Charterer shall so notify the Owner
in writing no later than the Termination Notice Date. Then, from the Termination
Notice Date until the commencement of the next succeeding Optional Period (a
"Start Date"), the Charterer and Owner shall work together in good faith to
agree on a mutually acceptable charterhire rate for the applicable Optional
Period as follows:
Within 30 days after such Termination Notice Date, the Charterer shall
request the London Tanker Broker's Panel (the "Panel") in writing to determine
the then current bareboat market charterhire rate for the Vessel. The Charterer
shall provide the Owner with a copy of such request to the Panel. The Panel
shall provide such determination to the Charterer and the Owner in writing
within 30 days of such request by the Charterer, including the Panel's method
and rationale for arriving at the then current market charterhire rate.
Notwithstanding such determination by the Panel, the Charterer and the
Owner may attempt to negotiate in good faith a mutually agreeable charterhire
rate during the time remaining up to the applicable Start Date.
If, pursuant to this subclause 9(d), the Charterer and Owner are unable
to mutually agree to the Panel's charterhire rate determination or to negotiate
in good faith any other mutually
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<PAGE>
agreeable charterhire rate prior to the applicable Start Date, and the Charterer
and the Owner do not agree to continue these efforts beyond the applicable Start
Date, then both parties shall be relieved of all further obligations to continue
the Charter.
With respect to the first period after the Start Date for the Vessel,
the Owner and the Charterer agree that the minimum charter hire for the Vessel
shall be $19,950 per day.
(e) Time of payment shall be of the essence. If a date of payment is a
date upon which the Owner's nominated bank is not open for business, payment
shall be made on the first preceding Business Day. Payment of sums due under the
provisions of this Charter shall be made (by close of business New York Federal
Reserve Bank) by wire transfer to the Owner's nominated bank and receipt of such
wire transfer by such bank by 10:00 a.m. New York time on the due date for
payment (in accordance with all the provisions of this Charter) shall constitute
timely payment by the payor of the amount authorized by such cable or telex to
be paid even though the payee's account be not credited until after such due
date and the payor shall not be liable for any delays or errors committed by
such bank in processing payment instructions transmitted properly on behalf of
the Charterer.
(f) If any payment of Charter Hire or Additional Charter Hire hereunder
shall not be paid when due the Owner shall be entitled in addition to call for
interest thereon at the rate of interest per annum equal to the Default Rate
from and including the due date to the date of actual payment (after as well as
before judgment) parts of a day being treated as complete days and the Charterer
shall thereupon forthwith pay the same to the Owner.
(g) The parties hereto agree that the Additional Charter Hire payable
with respect to the Net Extras (as defined in Schedule 1 hereto) shall commence
on the next succeeding Payment Date. On or prior to the next succeeding Payment
Date, the Charterer shall execute and deliver a Charter Supplement substantially
in the form of Exhibit B hereto as to the Additional Charter Hire. The Charterer
understands and agrees that the Additional Charter Hire pursuant to a Charter
Supplement shall be in an amount sufficient to pay sinking fund redemption
payments, principal and interest payments payable by the Owner as to any
Additional Notes issued pursuant to the related Supplemental Indenture. The
amount of Additional Notes issued pursuant to the related Supplemental Indenture
shall be in an amount equal to the sum of (i) the costs and expenses incurred by
the Owner with respect to the issuance of the related series of Additional Notes
and (ii) the amount necessary to fund the Extras.
10. MORTGAGE
(a) The Charterer agrees that the financing of the Vessel will be
secured by the Charter on the Vessel and assignments of the Owner's right, title
and interest under, in and to this Charter. The Charterer shall execute and
deliver all such documents, opinions, reports, and agreements listed on Exhibit
A attached hereto.
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<PAGE>
(b) The Charterer agrees that this Charter and any other charters
permitted under Clause 20(a) hereof shall always be subordinated in all respects
to the Mortgage.
(c) The Owner agrees that the Mortgage and any other mortgage
hereinafter placed on the Vessel by the Owner will contain a provision to the
effect that throughout the Charter Period, so long as no Event of Default shall
have occurred and be continuing and so long as the Charterer shall have
performed its obligations hereunder, the Charterer shall be entitled to quiet
enjoyment of the Vessel.
11. INSURANCE
(a) INSURANCE OBLIGATIONS The Charterer shall, at its own expense,
provide and maintain the following insurance and shall ensure that the value of
the Vessel as stated in any valued policy is equal to the amount insured
thereunder:
(i) hull and machinery insurance for an amount not less than the
Stipulated Loss Value of the Vessel as per American Institute
Hull Clauses (June 2, 1977) and the American Hull Insurance
Syndicate's Liner Negligence clause (June 2, 1977). Such
insurance shall include navigation limits adequate for the
vessel's trade and exclude collision liability.
(ii) protection & indemnity insurance on a full entry basis with an
International Group P&I Club. Such insurance shall include,
but not be limited to, coverage for injuries to or death of
masters, mates and crew; full (4/4ths) collision liabilities
and pollution liabilities imposed by federal and state laws as
well as TOVALOP liabilities (if applicable). Such insurance
shall be unlimited as per International Group P&I Club rules
and pollution liabilities shall be limited to $700 million or
the maximum pollution limit offered by and through the P&I
Clubs of the International Group.
(iii) Hull War Risk Insurance for an amount not less than the
Stipulated Loss Value of the Vessel as per American Institute
Hull War Risks and Strikes Clauses December 1, 1977 and the
American Hull Insurance Syndicate's Addendum April 1, 1984
(War Risks). Such insurance shall apply to all areas where the
Vessel trades.
(b) LOSS PAYABLE AND NOTICE OF CANCELLATION
(i) Unless the Owner shall have given its prior written consent,
all insurances effected pursuant to Clause 11(a)(i) and (iii)
shall contain a loss payable and notice of cancellation clause
in the following form:
"LOSS PAYABLE AND NOTICE OF CANCELLATION CLAUSE"
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<PAGE>
(A) Until Golden State Petro (IOM I-A) PLC ("Owner") shall have
notified underwriters to the contrary:
(1) all recoveries up to the Stipulated Loss Value
hereunder in respect of a total loss or constructive
or compromised or agreed or arranged total loss shall
be paid in full to the Owner without any deduction or
deductions whatsoever; and
(2) all other recoveries shall be paid in full to Chevron
Transport Corporation ("Charterer") or to its order
without any deduction or deductions whatsoever; and
(B) The Owner shall be advised:
(1) if any Hull and Machinery insurer cancels or give
notice of cancellation of any insurance or entry at
least ten ( 10) days before such cancellation is to
take effect; and
(2) if any hull War Risks insurer cancels or gives notice
of cancellation of any insurance or entry at least
seven (7) days before such cancellation is to take
effect; and
(3) of any default in the payment of any Hull and
Machinery premium or call or failure to renew any
such insurance or entry ten (10) days prior to the
date of renewal thereof; and
(4) of any default in the payment of any War Risks
premium or call or failure to renew any such entry
seven (7) days prior to the date of renewal thereof.
(ii) Unless the Owner shall have given its prior written consent,
all insurance and entries effected pursuant to Clause
11(a)(ii) shall contain a loss payable and notice of
cancellation clause in the following form:
"LOSS PAYABLE AND NOTICE OF CANCELLATION CLAUSE"
At the request of the Owner and with the consent of the
Charterer, the protection and indemnity club managers may in
its discretion, agree:
(a) to pay the Owner, or to its order, any recovery the
Charterer is entitled to receive from the funds of
the P&I Club in respect of any liability, costs or
expenses incurred by the Charterer on receipt of
notice from the Owner that the Charterer is in
default under the Charter; and
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<PAGE>
(b) to give the Owner ten (10) days' notice that
insurance in the P&I Club in respect of the Vessel is
to cease; and
(c) to give the Owner ten (10) days' notice of the P&I
Club's intention to cancel the insurance of the
Charterer by reason of its failure to pay when due
and demanded any sum due from them to the P&I Club.
(c) INFORMATION AS TO INSURANCES
The Charterer shall give the Owner and its insurance advisers such
information as to the insurances taken out or being or to be taken out in
compliance with the Charterer's obligations under the foregoing provisions of
this Clause or as to any other matter which may be relevant to such insurances
as the Owner or its advisers may reasonably request.
(d) CHARTERER OPTION TO SELF-INSURE
Notwithstanding anything to the contrary herein contained in Clause 11,
the Charterer shall have the right to self-insure against the risks described in
Clause 11(a).
12. TOTAL LOSS, REQUISITION FOR TITLE, CAPTURE, SEIZURE
(a) If a Total Loss shall occur, this Charter and the obligation of the
Charterer to pay Charter Hire and Additional Charter Hire hereunder shall
continue and be payable as set forth herein until the Charterer has complied
with this Clause 12. The Charterer shall forthwith notify the Owner of the facts
and circumstances of such Total Loss and the Charterer shall, on the date which
is 90 days after the Total Loss (the "Loss Date"), pay to the Owner the amount
determined pursuant to paragraph (b) below. The Charterer shall give the Owner
at least 15 days prior notice in writing of the Loss Date. On the Loss Date, the
Charterer shall pay such amount to the Owner, and thereupon this Charter shall
terminate and Charter Hire and Additional Charter Hire payable hereunder shall
cease.
(b) The amount payable on any such Loss Date shall be the sum of (i)
any deficiency between (A) the Stipulated Loss Value in relation to the period
in question calculated by the application of Schedule 2 and (B) all insurance
proceeds for damage to or loss of the Vessel and amounts paid by any
governmental authority in connection with any requisition, seizure or forfeiture
actually received in hand by the Owner or the Mortgagee prior to or on such Loss
Date; and (ii) all Charter Hire and Additional Charter Hire accrued (on a daily
basis) but unpaid hereunder to such Loss Date and any other sums due under any
provisions of this Charter, together with interest thereon at the Default Rate
from the date upon which any such Charter Hire and Additional Charter Hire or
other sums was due until the date upon which the calculations are made for the
purposes of this Clause which date shall be the Loss Date. The foregoing
obligations of the Charterer under this Clause 12 shall apply regardless of
whether or not any moneys are payable under the insurances effected in
compliance with Clause 11 hereof in respect of the Vessel, regardless also of
the amount payable thereunder, regardless also of the
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<PAGE>
cause of the Total Loss and, regardless of whether or not any of the said
compensation shall be payable. This Charter shall terminate upon the fulfillment
by the Charterer of its obligations under this subclause.
(c) If the Charterer shall have made a payment to the Owner pursuant to
the foregoing provisions of sub-clause (b) of this Clause and the Owner shall
subsequently receive any insurance monies or other compensation contemplated
under such Clause (b) the same shall be immediately applied first towards
repayment to the Charterer of the amount of any such payment and second (to the
extent that the further insurance monies or compensation shall exceed the
amounts paid by the Charterer and so repaid by the Owner) to the Charterer.
(d) The Charterer shall be liable for any loss of any part of or damage
to the Vessel (other than a Total Loss in which event the foregoing provisions
of this clause shall apply) during the Charter Period from whatsoever cause such
loss or damage may arise, unless the same shall have been caused by the
negligence or willful act of the Owner, its servants or agents (except where the
Charterer or its servants and agents are acting as agents of the Owner). In the
event of repairable damage to the Vessel or any part thereof or loss of part of
the Vessel, the Owner shall, subject to its prior right to retain any sums which
may be due from the Charterer to the Owner under the terms of this Charter, make
payment to the Charterer of moneys received under the insurances effected in
compliance with Clause 11 upon the Charterer furnishing evidence satisfactory to
the Owner that all such damage has been made good or repaired or repairs have
been put in hand.
(e) For the purpose of this Clause 12, insurers shall be deemed to have
admitted a claim either on the date that they inform the Owner that the claim is
admitted or upon the date that they make payment to the Owner even though no
claim has ever been admitted.
(f) The Owner shall, upon the request of the Charterer, promptly
execute such documents as may be required to enable the Charterer to abandon the
Vessel to insurers and claim a constructive total loss provided that the Owner
shall be entitled by notice in writing to the Charterer to require that the
Vessel shall not be abandoned and that a partial loss only shall be claimed, in
which case this Charter shall terminate as from the date of the event giving
rise to such loss and any insurance payments in respect of the partial loss
shall be paid to the Owner. Save as aforesaid, any moneys payable by insurers
for a partial loss shall be paid to the Charterer and the Owner shall, at the
request and expense of the Charterer, take or procure to be taken all such
reasonable steps as the Charterer may require for the recovery of such moneys.
13. REQUISITION FOR HIRE.
(a) If the Vessel is requisitioned for hire by any governmental or
other competent authority during the Charter Period, then unless and until
following such requisition the Vessel becomes a Total Loss, this Charter shall
continue in full force and effect for the remainder of the Charter Period (and
the Charterer shall be fully responsible for due compliance with all its
obligations under (i) Clause 11 and (ii) the other provisions of this Charter,
other than those
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<PAGE>
which the Charterer is unable to comply with solely by virtue of the aforesaid
requisition for hire); provided, however, that if the Charterer shall duly
comply with all of its obligations under this Charter save as aforesaid, the
Charterer shall be entitled to all requisition hire paid to the Owner or to the
Charterer by such governmental or other competent authority or by any person
acting by the authority of the same on account of such requisition during the
Charter Period.
(b) Should the Vessel be under requisition for hire at or until the end
of the Charter Period:
(i) The Charterer shall, if it is prevented by reason of the
requisition from redelivering the Vessel under sub-clause (a)
of Clause 8 hereof, be relieved from its obligation so to do,
provided that if the party requisitioning the Vessel does not
at the end of the period of requisition redeliver the Vessel
to the Owner at such place as the Owner shall request, the
Charterer shall upon the written request of the Owner use the
Charterer's best endeavors to redeliver the Vessel in
accordance with sub-clause (a) of Clause 8;
(ii) after such release the Charterer shall be given a reasonable
opportunity of removing any such additional or hired equipment
as is referred to in sub-clause (b) of Clause 9 hereof on the
terms referred to in that sub-clause;
(iii) notwithstanding any other provision of this Charter, the
Charterer shall be under no liability to the Owner in respect
of the structure, state or condition of the Vessel insofar as
such structure, state or condition is due to the manner in
which she has been used or treated or to any events which have
occurred during the period of such requisition.
14. LIENS; NOTICE ON VESSEL
(a) The Charterer will not suffer, nor permit to be continued, any lien
or encumbrance incurred by it or its agents, which might have priority over the
title and interest of the Owner in the Vessel. The Charterer shall indemnify and
hold the Owner harmless against any lien of whatsoever nature arising upon the
Vessel during the Charter Period while she is under the control of the
Charterer, and against any claims against the Owner arising out of or in
relation to the operation of the Vessel by the Charterer. Should the Vessel be
arrested by reason of claims or liens arising out of her operation hereunder by
the Charterer, the Charterer shall at its own expense take all reasonable steps
to secure that within a reasonable time the Vessel is released and at its own
expense put up bail to secure release of the Vessel.
(b) The Charterer will fasten to the Vessel in a conspicuous place and
will keep so fastened during the Charter Period a notice reading as follows:
This Vessel is the property of and is registered in the name
of Golden State Petro (IOM I-A) PLC (the "Owner"); she is
under
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<PAGE>
charter by demise to and operated by Chevron Transport
Corporation ("Charterer") and neither the Charterer nor the
Master nor any servant or agent thereof has any authority
whatsoever to contract on behalf of the Owner or to pledge the
Owner's credit or to involve the Owner in any liability
whatsoever"
or in such other form as the Owner may reasonably require from time to time.
15. SALVAGE All salvage and all proceeds from derelicts shall be for
the Charterer's benefit and the cost of repairing damage occasioned thereby
shall be borne by the Charterer.
16. GENERAL AVERAGE General Average, including the Owner's portion, if
any, shall be payable by the Charterer. General Average, if any, shall be
adjusted according to the York-Antwerp Rules 1974, as amended 1990, or any
subsequent modification thereof current at the time of the casualty.
17. DEFAULT; REMEDIES
(a) If during the term of this Charter:
(i) The Charterer shall make default for two Business Days in any
payment in respect of Charter Hire, Additional Charter Hire or
other amounts due under the terms of this Charter.
(ii) The Charterer shall fail for a period of thirty (30) Business
Days after written notice thereof has been given to the
Charterer by the Owner to perform and observe any of the
covenants, conditions, agreements or stipulations on the part
of the Charterer to be performed or observed contained herein
(other than sub-clause (a)(i) and (v) of this Clause).
(iii) The Charterer ceases doing business as a going concern or
generally ceases to pay its debts as they become due or any
proceedings under any bankruptcy or insolvency laws are
instituted against the Charterer or if a receiver or trustee
is appointed for the Charterer or for any of its assets or
properties, and such proceeding is not dismissed, vacated or
fully stayed within sixty (60) days.
(iv) The Charterer shall create or suffer to exist any mortgage,
charge, pledge or other like encumbrance over the Vessel or
any part thereof not created or caused by the Owner or by
persons claiming by, through or under the Owner or shall have
abandoned the Vessel. The foregoing provisions shall not apply
to any notice of abandonment which the Charterer may give to
insurers under the provisions of Clause 12.
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<PAGE>
(v) The Charterer fails to comply with any of its obligations as
to insurance contained in Clause 11.
(vi) The Charterer shall within thirty (30) days of any scheduled
date of redelivery hereunder fail to provide adequate bail or
security when required so to do in respect of any maritime
lien, possessory lien or statutory right in rem which may be
acquired over the Vessel not created or caused by the Owner or
by persons claiming by, through or under the Owner in order to
prevent the Vessel being arrested, impounded or seized or if
any such lien, right or claim over the Vessel is exercised by
the arrest, attachment, detention, impounding or seizure of
the Vessel under any distress execution or other process, or
any distress or execution is levied thereon, and the Charterer
fails to use its best endeavors to procure the release of the
Vessel therefrom within thirty (30) days of any scheduled date
of redelivery hereunder.
THEN AND IN ANY SUCH EVENT the Owner may, by written notice to the
Charterer, declare this Charter to be in default and the Owner may:
(a) (i) Upon written demand, cause the Charterer at the
Charterer's expense to, and the Charterer shall promptly, redeliver the
Vessel or cause the Vessel to be redelivered, with all reasonable
dispatch to the Owner and in the condition required by the terms of
Clause 8 as if the Vessel were being redelivered at the expiration of
the Charter Period, and all obligations of the Charterer under said
Clause 8 shall apply to such redelivery, or (ii) the Owner or its
agent, at the Owner's option, without further notice, may, but shall be
under no obligation to, retake the Vessel wherever found, whether upon
the high seas or in any port, harbor, or other place and irrespective
of whether the Charterer, any subcharterer or any other Person may be
in possession of the Vessel, all without prior demand and without legal
process, and for that purpose the Owner or its agent may enter upon any
dock, pier or other premises where the Vessel may be and may take
possession thereof, without the Owner or its agent incurring any
liability by reason of such retaking, whether for the restoration of
damage to property caused by such retaking or otherwise. The exercise
by the Owner of its remedies under this subclause (a) shall be without
prejudice, and in addition, to any of the Owner's other remedies
referred to below.
(b) The Owner or its agent may sell the Vessel at public or
private sale, with or without notice to the Charterer, advertisement or
publication, as the Owner may determine, or otherwise may dispose of,
hold, use, operate, charter (whether for a period greater or less than
the balance of what would have been the Charter Period in the absence
of the termination of the Charterer's rights to the Vessel) to others
or keep the Vessel idle, all on such terms and conditions and at such
place or places as the Owner may determine and all free and clear of
any rights of the Charterer and of any claim of the Charterer in
admiralty, in equity, at law or by statute, whether for loss or damage
or otherwise, and without any duty to account to the Charterer.
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<PAGE>
(c) The Charterer shall be liable for any and all Charter Hire
and Additional Charter Hire payable under this Charter before, during
or after the exercise of any of the foregoing remedies and for all
reasonable costs including all legal fees and any other costs and
expenses whatsoever incurred by the Owner by reason of the occurrence
of any default or by reason of the exercise by the Owner of any remedy
hereunder, including, without limitation, all costs and expenses
incurred by the Owner in connection with any retaking of the Vessel
and, upon the redelivery or retaking of the Vessel in accordance with
this Clause 17, the placing of the Vessel in the condition and
seaworthiness required by the terms of Clause 8 hereof and including
interest on overdue Charter Hire and Additional Charter Hire.
(d) Each and every right, power and remedy herein given to the
Owner shall be cumulative and shall be in addition to every other
right, power and remedy herein given or now or hereafter existing at
law, in equity, admiralty or by statute and each and every power and
remedy whether herein given or otherwise existing may be exercised from
time to time and as often and in such order as may be deemed expedient
by the Owner, and the exercise or the beginning of the exercise of any
right, power or remedy shall not be construed to be a waiver of the
right to exercise at the same time or thereafter any other power or
remedy. No delay or omission of the Owner to exercise any right or
power vested in it hereunder shall impair such right or power or be
construed as a waiver of or as acquiescence in any default by the Owner
or be deemed a waiver of any right arising out of any future default or
of any past default. In the event the Owner at any time agrees to waive
any such right or power, such waiver shall be revocable by the Owner at
any time and the right or power shall henceforth be again exercisable
as though there had been no such waiver unless the Event of Default has
been cured. In the event the Owner shall have proceeded to enforce any
right or pursue any power under this Charter and such proceedings shall
have been discontinued or abandoned for any reason, or shall have been
determined adversely to the Owner, then and in every such case the
Charterer and the Owner shall be restored to their former positions and
rights hereunder with respect to the property subject or intended to be
subject to this Charter and all rights, remedies and powers of the
Owner shall continue as if no such proceedings had been taken.
(e) The rights and powers of the Owner and the obligations of
the Charterer under this Clause 17 shall be effective and enforceable
regardless of the pendency of any proceeding which has or might have
the effect of preventing the Owner or the Charterer from complying with
the terms of this Charter. No express or implied waiver by the Owner of
any default shall in any way be, or be construed to be a waiver of any
further or subsequent default.
18. TERMINATION
In the event (a) the Charterer shall exercise the termination option
granted to it pursuant to Clause 2(a), (b) a Total Loss shall have occurred and
the Charterer shall have remitted to the
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Owner the amounts described in Clause 12(b) or (c) the Charterer shall have
remitted to the Owner the amounts described in Clause 19, then, notwithstanding
anything to the contrary contained herein, the Charter shall continue with
respect to the Charterer's obligation to pay such amount to the Owner and shall
terminate on (x) the date which is 367 days after the date on which such amounts
have been remitted to the Owner or the Owner's assignee or (y) if (i) the
Charterer commences a voluntary case under any applicable bankruptcy,
insolvency, or other similar law now or hereafter in effect, (ii) a receiver,
liquidator, assignee, custodian, trustee or sequestrator (or other similar
official) is appointed for the Charterer or for any substantial part of its
property, (iii) the Charterer generally fails to pay its debts as they become
due or (iv) the Charterer makes a general assignment for the benefit of
creditors, the expiration of the period during which any payment made by or on
behalf of the Charterer may be avoided under any applicable bankruptcy,
insolvency, creditors' rights or similar laws.
19. PAYMENTS ON TERMINATION
Whether or not the Owner shall have exercised, or shall thereafter at
any time exercise, any options, rights or remedies under Clause 17, upon or as a
consequence of a breach of contract by the Charterer amounting to repudiation by
the Charterer of this Charter, the Owner may immediately require the Charterer
to pay to the Owner, and the Charterer shall pay to the Owner as liquidated
damages for loss of a bargain and not as a penalty, an amount equal to (i) the
sum of (A) the Stipulated Loss Value in relation to the period in question
calculated by the application of Schedule 2, (B) all outstanding accrued and
unpaid Charter Hire and Additional Charter Hire and (C) any other amounts due to
the Owner under this Charter on or prior to the date of payment and (ii)
interest thereon (after as well as before judgment) at the Default Rate from the
date such amounts were payable to the actual date of payment.
The Charterer shall not be entitled to any part of the net proceeds of
the Vessel (if any) whether by way of rebate of Charter Hire or Additional
Charter Hire or otherwise.
20. ASSIGNMENT AND SUB CHARTER
(a) The Charterer may not assign all or part of its rights and
obligations under this Charter nor may it charter the Vessel by demise to any
other entity without the prior written consent of the Owner, such consent,
subject always to the Vessel being maintained and insured to the same standards
as are adopted by the Charterer in respect of the vessels owned by them, not to
be unreasonably withheld; provided, however, that the Charterer may assign its
rights and obligations hereunder to a corporation more than 50% of which is
owned, directly or indirectly, by Chevron Corporation and Chevron Corporation
shall continue to guarantee the payment and performance of this Charter pursuant
to the Charter Guarantee.
(b) The Charterer may otherwise charter the Vessel without the prior
consent of the Owner provided that the Charterer remains responsible as
principal (or appoints another person to be responsible in its stead) for
navigating and managing the Vessel throughout the period of such charter and for
defraying all expenses in connection with the Vessel throughout such period
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<PAGE>
or substantially all such expenses other than those directly incidental to a
particular voyage or to the employment of the Vessel during that period.
21. INDEMNITY
(a) The Charterer hereby indemnifies the Owner and shall keep the Owner
fully indemnified at all times whether during the currency of this Charter or at
any time in respect of events arising during the currency of this Charter
against:
(i) All costs and expenses of operating and maintaining
the Vessel and of operating, maintaining and
replacing all parts including (but without prejudice
to the generality of the foregoing) all fuel, oil,
port charges, fees, taxes, levies, fines, penalties,
charges, insurance premiums, victualing, crew,
navigation, manning, operating and freight expenses
and all other outgoings whatsoever payable by the
Owner or the Charterer in respect of the possession
or operation of the Vessel or any part thereof, or
the purchase, ownership, delivery, chartering,
possession and operation, import to or export from
any country, return, sale or disposition of the
Vessel or any part thereof or upon the hire, receipts
or earnings arising therefrom (other than Owner
Taxes) which shall be promptly paid by the Charterer;
(ii) All liabilities, claims, proceedings (whether civil
or criminal), penalties, fines or other sanctions,
judgments, charges, taxes, impositions, liens,
salvage, general average, costs and expenses
whatsoever which may at any time be made or claimed
by the Charterer or any employee, servant, agent or
sub-contractor, passenger, owner, shipper, consignee
and receiver of goods or any third party (including
governments or other authorities) or by their
respective dependents arising directly or indirectly
in any manner out of the design, construction,
possession, management, repair, certification,
manning, provisioning, supply or servicing of the
Vessel (whether at sea or not) or the chartering
thereof hereunder whether such liability, claims,
proceedings, penalties, fines, sanctions, judgments,
charges, taxes, impositions, liens, salvage, general
average, cost or expenses may be attributable to any
defect in the Vessel or the design, construction,
testing or use thereof or from any maintenance,
service, repair, overhaul or otherwise and regardless
of when or where the same shall arise and whether or
not the Vessel or the relevant part thereof is in the
possession or control of the Charterer (other than
Owner Taxes); and
(iii) The Charterer accepts all liability for oil or other
pollution damage resulting from the Charterer's
operation of the Vessel under this Charter and agrees
to promptly indemnify and hold the Owner harmless
from and against any and all losses, damages and
expenses which the Owner may
- 22 -
<PAGE>
incur as a result of any oil or other pollution
damage resulting from the Charterer's operation of
the Vessel under this Charter, including, but not
limited to, the Owner's liability under the Oil
Pollution Act of 1990, as amended, and/or the laws of
any other jurisdiction relating to oil spills.
(iv) The Owner shall use good faith efforts to notify the
Charterer promptly of any tax for which it may seek
indemnity. The Charterer shall, subject to the prior
written approval of the Owner (such approval not to
be unreasonably withheld), be entitled to take action
in the name of the Owner at the Charterer's expense
against any taxing authority in respect of any taxes
for which the Charterer has indemnified the Owner,
and the Owner agrees to reasonably cooperate with the
Charterer in taking such action. If as a result of
any such action any moneys are received that are
attributable to such indemnified taxes (including any
interest thereon paid by such taxing authority) the
same shall be recovered by the Charterer.
(b) Without prejudice to its generality, the provisions of this
sub-clause shall extend to claims of persons (including governments or other
bodies whether corporate or otherwise) who have suffered or allege that they
have suffered loss, damage or injury in connection with any thing done or not
done by the Vessel, including in connection with any oil or other substance
emanating or threatening to emanate from the Vessel and shall extend to levies,
impositions, calls, or contributions on or required to be made by the Owner
during or in respect of the Charter Period.
(c) If any obligation of the Charterer under the foregoing sub-clause
or under subclause (d) below shall not be discharged when due, the Charterer
shall on demand forthwith pay to the Owner not only the amount of such
obligation but also interest thereon at the Default Rate from the date the Owner
paid the same to the date of reimbursement by the Charterer (after as well as
before judgment)
(d) In the event of the Vessel becoming a wreck or obstruction to
navigation, the Charterer shall indemnify the Owner against all losses, costs,
damages and expenses which the Owner may in consequence thereof incur including
those incurred in respect of the removal or destruction of the wreck or
obstruction under statutory or other powers.
22. GENERAL
(a) The Charterer shall give to the Owner all such information as the
Owner may reasonably request with regard to the performance by the Charterer of
its obligations hereunder.
(b) The Charterer shall pay all expenses (including legal and other
costs) incurred by the Owner in connection with the enforcement of any rights
conferred upon the Owner by this Charter or in or incidental to any action
brought by the Owner to recover any hire or other payments due hereunder or for
breach of any covenant, agreement, condition or stipulation
- 23 -
<PAGE>
herein contained or to recover possession of the Vessel or any part thereof
whether any such action proceeds to judgment or not. The Owner shall pay all
expenses (including legal and other costs) incurred by the Charterer in
connection with the enforcement of any rights conferred upon the Charterer
against the Owner by this Charter.
(c) No failure or delay on the part of the Owner in exercising any
power or right hereunder shall operate as a waiver thereof nor shall any single
or partial exercise of any such right or power preclude any other or further
exercise of any such right or power.
(d) This Charter shall not be varied in its terms by an oral agreement
or representation or otherwise than by an instrument in writing of even date
herewith or subsequent hereto executed by all the parties hereto or by their
duly authorized representatives.
(e) If any term or provision of this Charter or the application thereof
to any person or circumstance shall to any extent be invalid or unenforceable,
the remainder of this Charter or application of such term or provision to
persons or circumstances other than those as to which it is already invalid or
unenforceable shall not be affected thereby and each term and provision of this
Charter shall be valid and be enforceable to the fullest extent permitted by
law.
(f) The title to the Clauses and sub-clauses of this Charter shall not
in any way affect the interpretation thereof; the terms defined in this Charter
have the meanings assigned to them in this Charter and include the plural as
well as the singular, and the use of any gender herein shall be deemed to
include the other gender.
(g) Any demand, consent, record, election or notice required or
permitted to be given under this Charter shall be in writing and sent by
recorded or registered letter or telefax (and in the case of telefax confirmed
by recorded or registered letter) addressed as follows:
(i) If to the Owner to:
15-19 Athol Street
Douglas, Isle of Man
(ii) If to the Charterer to:
c/o Chevron Shipping Company
555 Market Street
San Francisco, CA 94120-7000
or in case to such other person or address or addresses or telefax number as any
party may notify in writing to the other parties hereto. Any such notice shall
be deemed to have reached the party to whom it is addressed (in the case of
notice given by letter) five (5) days after dispatch by first class pre-paid
post (airmail if from abroad) or (in the case of notice given by telefax) when
confirmed by a correct transmission report when dispatched and for this purpose
confirmation by letter of notice given by telefax, shall be disregarded.
- 24 -
<PAGE>
(h) This Charter shall be governed by and construed and performance
thereof shall be determined in accordance with the federal laws of the United
States of America and the laws of New York. The obligations, rights and remedies
of the parties hereunder shall be determined in accordance with such laws,
without giving effect to principles of conflicts of law.
(i) All matters of difference between the parties hereto (other than as
herein expressly provided to the contrary and other than in respect of any
action by the Owner for possession of the Vessel) shall be referred to
arbitration in New York by an arbitrator to be agreed between the Owner and the
Charterer or in default of such agreement within 30 days to be nominated by the
President for the time being of the Society of Maritime Arbitrators.
(j) Where it is provided in this Charter that in default of agreement a
matter is to be determined by an expert under this sub-clause, the same shall be
determined by such person, firm, corporation or body as may be agreed between
the Owner and the Charterer (or in default of agreement as may be nominated by
the Chairman for the time being of the Baltic and Mercantile Shipping Exchange)
who shall be deemed to act as expert and not as arbitrator and whose
determination shall be final and binding on the parties.
(k) All payments (other than payments pursuant to Clauses 21(a)(i) and
21(a)(ii)) made to the Owner shall be made without deduction for or on account
of any present or future taxes (including value added, turnover, sales and use
taxes), levies, imposts, duties, deduction, withholdings and other charges of
whatsoever nature (collectively, "Charges") unless such deduction is required by
law. If such deduction is required by law (i) the sum payable by the Charterer
shall be increased as may be necessary so that, after making all required
withholdings and deductions (including those applicable to additional sums
payable under this Clause 22(k)), the Owner shall receive an amount equal to the
sum that the Owner would have received had no such withholdings and deductions
been made and (ii) as required by applicable law the Charterer shall withhold or
deduct the amount required and pay such amount to the relevant taxing or other
governmental authority. If any Charges paid by the Charterer are recoverable by
the Owner from such taxing or other governmental authority, the Charterer shall
be entitled to the same rights provided in Clause 21(a)(iv). The Owner shall
consult with the Charterer and use reasonable efforts to agree to a method of
avoiding or minimizing any such deduction that is not in breach of applicable
law or governmental regulation or of any of the financing documents entered into
with the Mortgagee and which will leave the parties in substantially the same
contractual relation as is herein contained. Without limiting the generality of
the foregoing, the Owner shall take any lawful action to the extent necessary to
prevent or avoid the imposition of any taxes, including any withholding taxes
with respect to Charter Hire or Additional Charter Hire, by any taxing
jurisdiction (including the Registration Jurisdiction) including changing its
jurisdiction of incorporation or residence; PROVIDED HOWEVER, that it shall not
be required to take, or fail to take, any action (x) if in the opinion of
counsel such act or failure to act would violate applicable law or (y) if in the
reasonable opinion of the Owner the actions necessary to avoid or prevent
imposition of such taxes would be unduly burdensome. For purposes of clause (y)
- 25 -
<PAGE>
of the immediately preceding sentence a requirement to change the jurisdiction
of the Owner's incorporation or residence shall not be treated as unduly
burdensome.
(l) If any provision of this Charter shall be, or shall be rendered,
unenforceable in whole or in part (which for the purposes of this Clause shall
include being contrary to an official code or order for the time being in force
to which either of the parties hereto is required by law to have regard and the
contravention or the continued contravention of which could be considered or be
made unlawful) the Owner and the Charterer shall use their best endeavors to
agree to an amendment or amendments to the terms of this Charter which would
result in this Charter as so amended being fully enforceable and achieving
substantially the same result (both financially and otherwise) so far as
concerns the Owner and the Charterer as this Charter in its executed form would
have achieved if the same had been fully enforceable. If the Owner and the
Charterer are unable to agree to such an amendment or amendments then either
party may by notice request that an arbitrator be appointed pursuant to the
provisions to Clause 22(i) to determine whether an amendment or amendments which
would achieve the result set out above are possible, and he shall be asked to
specify them and the terms of this Charter shall be amended accordingly.
(m) The indemnities of the Owner by the Charterer contained in this
Charter shall continue in full force and effect (in respect of events occurring
during the currency of this Charter) notwithstanding the termination of the
charter of the Vessel, the repudiation by the Charterer of this Charter or the
expiration of the charter period by affluxion of time or otherwise.
23. DEFINITIONS
"ADDITIONAL CHARTER HIRE" means any Additional Charter Hire payable
pursuant to subclause 9(g).
"ADDITIONAL NOTES" means each first preferred mortgage note issued
pursuant to a Supplemental Indenture to finance the Extras.
"BUILDER" means Samsung Corporation and Samsung Heavy Industries, Ltd.
"BUSINESS DAY" means any day other than a Saturday, a Sunday or a day
on which banking institutions in New York, New York, San Francisco, California
or in the city and state where the Mortgagee's principal offices are located,
are authorized or are obligated by law, executive order or governmental decree
to be closed.
"CERTIFICATE OF ACCEPTANCE" means the certificate executed by the
Charterer on the Commencement Date indicating the Charterer's acceptance of the
Vessel under this Charter.
"CHARTER GUARANTEE" means the Guarantee dated the date hereof from
Chevron Corporation to the Owner.
- 26 -
<PAGE>
"CHARTER HIRE" means the charter hire payable by the Charterer for the
use and possession of the Vessel payable at the times and in the amounts set
forth on Schedule 1 attached hereto and made a part hereof.
"CHARTER HIRE REDUCTION" has the meaning described in Schedule 1
attached hereto.
"CHARTER PERIOD" means the period of time from the Delivery Date to the
expiration or earlier termination of this Charter, pursuant to the provisions
hereof.
"CHARTER SUPPLEMENT" means each Charter Supplement delivered pursuant
to Clause 9(g) hereof.
"COMPULSORY ACQUISITION" means requisition for title or other
compulsory acquisition of the Vessel (otherwise than by requisition for hire),
capture, seizure, condemnation, destruction, detention or confiscation of the
Vessel by any government or by persons acting or purporting to act on behalf of
any government or governmental authority.
"CONTRACT DATE" shall be the date on which the Owner enters into the
Building Contracts with the Builder and which shall be no later than December
24, 1996.
"CREDITS" means reductions in construction costs which (i) result from
actions by the Charterer or by the Technical Supervisor; (ii) are approved by
the Owner, such approval not to be unreasonably withheld; and (iii) occur after
execution of the Building Contract but prior to the Delivery Date.
"DEFAULT RATE" means a rate per annum equal to the sum of 1.50% and
LIBOR as of the commencement of such period; plus any and all penalties, if any,
payable under the Section 2 of the Funding Agreement dated as of December 24,
1996 with Pacific Mutual Life Insurance Company (G-26321.02) occurring as a
result of the Charterer's failure to pay Charter Hire and Additional Charter
Hire when due.
"DELIVERY DATE" means the date on which the Vessel is accepted for
delivery by the Owner from the Builder by execution and delivery of a Protocol
of Acceptance and Delivery as provided in clause (i) of Article IV of the
Building Contract.
"ESCROW ACCOUNT BALANCE" (i) the Initial Deposit plus accrued interest
thereon to the end of the Fixed Period and (ii) after the payment of an amount
payable pursuant to Section 4(b), the amount of funds remaining in the Escrow
Account together with any interest earned thereon less any amount previously
paid to the Charterer pursuant to Section 4(b)(ii).
"EVENT OF DEFAULT" means an event described in sub-clauses (a)(i)
through (a)(vi) of Clause 17.
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<PAGE>
"EXTRAS" means increases in construction costs which (i) result from
actions by the Charterer or the Technical Supervisor; (ii) are approved by the
Owner, such approval not to be unreasonably withheld; and (iii) occur after
execution of the Building Contract but prior to the Delivery Date; provided,
however, the cost of Extras shall not exceed $250,000 without the consent of the
Owner.
"INDENTURE" means the Indenture, dated as of December 1, 1996, among
the Owner, Golden State Petro (IOM I-B) PLC, United States Trust Company of New
York, as indenture trustee (the "Indenture Trustee") and Golden State Petroleum
Transport Corporation, together with any amendments, modifications or
supplements thereto.
"INSTITUTE WARRANTY LIMITS" means the Institute Warranties as defined
by the Institute of London Underwriters.
"LIBOR" means the rate calculated on the basis of the offered rates for
deposits in dollars for a one-month period which appear on the Reuters Screen
LIBO Page as of 11:00 A.M., London time, on the date that is two London Banking
Days preceding the date of calculation. If at least two such offered rates
appear on the Reuters Screen LIBO Page, LIBOR will be the arithmetic mean of
such offered rates (rounded to the nearest .0001 percentage point). If, at any
time of determination, the Reuters Screen LIBO Page is not available, the rate
will be the arithmetic mean (rounded to the nearest .0001 percentage point) of
the rates quoted by the three reference banks (selected in accordance herewith)
at approximately 11:00 a.m., New York time, on the date of calculation for loans
in dollars to leading European banks for a one-month period. For the purposes of
this definition, the term "London Banking Day" shall mean any day on which
dealings in deposits in United States Dollars are transacted in the London
interbank market. Each of the Charterer and the Owner (or the Owner's assignee)
will select a reference bank and the third reference bank will be selected by
the Charterer and the Owner (or the Owner's assignee) together or, failing
agreement, by the previously selected reference banks together.
"LIQUIDATED DAMAGES REBATE" means the amount the Owner received from
Builder pursuant to the Building Contract representing all liquidated damages
related to the Vessel's failure to satisfy Builder's contract deadweight, speed
and/or fuel consumption guarantees.
"LONDON BANKING DAY" means any day on which dealings in deposits in
United States dollars are carried on in the London interbank market and on which
commercial banks are open for domestic and international business (including
dealings in United States dollar deposits) in London and New York.
"MORTGAGE" means the Mortgage, dated the date hereof, between the Owner
and the Mortgagee or any other mortgage relating to the financing of the Vessel
by the Owner.
"MORTGAGEE" means the Indenture Trustee and any successor thereto or
any other mortgagee of the Vessel.
- 28 -
<PAGE>
"OPTIONAL TERMINATION DATE" means the expiration date of the Fixed
Period and any Optional Period.
"OWNER TAXES" means any income, franchise or equivalent tax, imposed
upon or measured by the net income, stated capital or earned surplus of the
Owner by any federal, state, local or other taxing authority of any jurisdiction
worldwide, or any taxes that result from the willful misconduct or gross
negligence of the Owner or from the inaccuracy or breach of any representation,
warranty or covenant of the Owner contained in any of Clauses 6, 20, 21(a)(iv),
or 22(k) of this Charter or in any document furnished in connection with such
Clauses by the Owner, or any taxes that would not have been imposed but for the
failure of the Owner (a) to provide to the Charterer (for filing by the
Charterer with the taxing jurisdiction imposing such taxes or retention in the
Charterer's records) upon the Charterer's timely request such certifications,
information, documentation or reports concerning the Owner's identity,
jurisdiction of incorporation or residency, or connection with such taxing
jurisdiction or (b) to promptly file upon the Charterer's timely request such
reports or returns (which shall be prepared with reasonable care in accordance
with the Charterer's written instructions) claiming (or availing itself of) any
applicable extensions or exemptions (to the extent that timely notice thereof is
provided by the Charterer); PROVIDED that Owner Taxes shall not include any such
tax imposed on any amount that is (i) an indemnity or reimbursement of the
Owner, (ii) an operating or maintenance expense, (iii) any tax imposed pursuant
to Section 887 of the United States Internal Revenue Code of 1986, as amended,
or (iv) a tax for which the Charterer is otherwise liable under this Charter;
and PROVIDED FURTHER that Owner Taxes shall not include any such tax imposed by
any government, jurisdiction or taxing authority other than the United States
Federal government solely as a result of the location of the Vessel or the
Vessel's use by the Charterer.
"PAYMENT DATE" means the 1st day of each month, commencing the 1st day
of the month immediately succeeding the Delivery Date.
"PERSON" means an individual, a partnership, a corporation, a joint
venture, an unincorporated association, a joint-stock company, a trust, or other
entity or a government or any agency or political subdivision thereof.
"P&I CLUB" means a protection and indemnity association.
"REGISTRATION JURISDICTION" means the Republic of Liberia.
"SECURITY DOCUMENTS" means all of the agreements executed and delivered
by the Owner to the Indenture Trustee as collateral security for the Owner's
obligations under the Indenture.
"STIPULATED LOSS VALUE" means, as of any date, the amount corresponding
to such date as indicated on Schedule 2 hereto and made a part hereof.
- 29 -
<PAGE>
"SUPPLEMENTAL INDENTURE" means a Supplemental Indenture entered into by
the Indenture Trustee and the Issuer pursuant to the terms and subject to the
conditions set forth in the Indenture.
"TOTAL LOSS" means either (a) actual or constructive or compromised or
arranged total loss of the Vessel, (b) Compulsory Acquisition of the Vessel or
(c) if so declared by the Charterer at any time and in its sole discretion a
requisition for hire of the Vessel for a period in excess of 180 days. Any
actual loss of the Vessel shall be deemed to have occurred at 1200 hours
Greenwich Mean Time (GMT) on the actual date on which the Vessel was lost or in
the event of the date of the loss being unknown then the actual total loss shall
be deemed to have occurred at 1200 hours GMT on the day next following the day
on which the Vessel was last heard of. A constructive total loss shall be deemed
to have occurred at 1200 hours GMT on the earliest of: 1) the date that notice
of abandonment of the Vessel is given to the insurers provided a claim for total
loss is admitted by the insurers, or 2) if the insurers do not admit such a
claim, at the date and time GMT at which a total loss is subsequently adjudged
by a competent court of law or arbitration tribunal to have occurred, or 3) the
date that a report is rendered by one or more experts in marine surveying and
vessel valuation (said experts to be appointed by the Charterer at its expense
and approved by the Owner, such approval not to be unreasonably withheld)
concluding that salvage, repair and associated costs in restoring the Vessel to
the condition specified in Clause 7 exceed the Vessel's fair market value in
sound condition.
"TOVALOP SCHEME" means the Tankers Owner Voluntary Agreement concerning
Liability for Oil Pollution dated January 7, 1969, as amended or any similar
scheme.
- 30 -
<PAGE>
IN WITNESS WHEREOF the parties have caused this Charter to be signed
the date and year first above written.
GOLDEN STATE PETRO (IOM I-A) PLC
By:/s/ Joseph Avantario
-----------------------------
Name: Joseph Avantario
Its: Treasurer
CHEVRON TRANSPORT CORPORATION
By:/s/ T. R. Moore
-----------------------------
Name: T. R. Moore
Its: Attorney-in-Fact
- 31 -
<PAGE>
EXHIBIT A
The documents, reports and opinions required to be delivered by Chevron
Corporation, Chevron Transport Corporation and its attorneys and agents pursuant
to the Closing Memorandum, dated
- 32 -
<PAGE>
EXHIBIT B
CHARTER SUPPLEMENT NUMBER __
THIS CHARTER SUPPLEMENT NUMBER __, dated as of _________ __,
____, is executed and delivered by GOLDEN STATE PETRO (IOM I-A) PLC, an Isle of
Man company (the "Owner"), and CHEVRON TRANSPORT CORPORATION, a Liberian company
(the "Charterer"), in accordance with the terms and as a part of that certain
BAREBOAT CHARTER dated as of December 1, 1996 (the "Charter"), between the Owner
and the Charterer. The defined terms set forth in the Charter shall have the
same meanings herein. In addition, the following terms shall be assigned the
following meanings solely with respect to this Charter Supplement Number __:
A. EXTRA AMOUNT: $________
B. ADDITIONAL CHARTER HIRE SHALL BE $_______ PER DAY PAYABLE
MONTHLY IN ADVANCE
C. ALLOCATED PRINCIPAL AMOUNT OF ADDITIONAL NOTES:________
D. NEXT SUCCEEDING PAYMENT DATE: _________
E. APPLICABLE PAYMENT DATE: _____________
F. SUPPLEMENTAL INDENTURE DATED: ________
1. DESCRIPTION OF EXTRAS AND COST OF EXTRAS COVERED BY THIS
SCHEDULE (See Schedule 1).
2. RENT: The Charterer agrees to pay the Additional Charter Hire
in the amounts set forth above on the dates set forth in the Charter.
3. INCORPORATION OF CHARTER: All of the terms and provisions of
the Charter are hereby incorporated by reference in this Charter Supplement to
the same extent as if fully set forth herein. In the event of any conflict
between the terms of this Charter Supplement and the Charter, the terms of this
Charter Supplement shall control.
4. COUNTERPARTS: This Charter may be executed by the parties
hereto in separate counterparts, each of which when so executed and delivered
shall be an original, but all such counterparts shall together constitute but
one and the same instrument.
<PAGE>
APPROVED AND AGREED TO by and between the parties hereto on the ___st day of
- - - - - ---------------.
CHEVRON TRANSPORT CORPORATION
By: ______________________________
(Title)
GOLDEN STATE PETRO (IOM I-A) PLC
By: ______________________________
(Title)
- 2 -
<PAGE>
Schedule 1 to Bareboat Charter
1. CHARTER HIRE
(a) Charter Hire during the Fixed Period shall be United States Dollars
(USD) 27,199 per day payable by the Charterer to the Owner monthly in advance on
the Delivery Date and each Payment Date on the basis of 365/12 days per month.
Payments shall be made by wire transfer of immediately available funds and shall
be made prior to 12:00 noon New York time.
(b) Charter Hire during each Optional Period shall be United States
Dollars (USD) 28,500 per day payable by the Charterer to the Owner monthly in
advance on each Payment Date on the basis of 365/12 days per month.
(c) Charter Hire during the Charter Period may be adjusted for any
Additional Charter Hire or Charter Hire Reduction as set forth in Sections 2 and
3 of this Schedule 1. Charter Hire shall be in United States Dollars payable by
the Charterer to the Owner monthly in advance.
2. ADDITIONAL CHARTER HIRE
To the extent that the Extras exceed the Credits ("Net Extras"), the
Charter Hire listed in Section 1 of this Schedule 1 shall be adjusted to the
extent necessary such that the Additional Charter Hire will allow the Owner to
service the aggregate debt incurred on any Additional Notes issued in connection
herewith and as referenced in subclause 9(g).
3. CHARTER HIRE REDUCTION
To the extent that the Credits exceed the Extras ("Net Credits"), the
Charter Hire listed in Section 1 of this Schedule 1 shall be adjusted to the
extent necessary such that the Charter Hire adjusted for the Charter Hire
Reduction shall bear the same ratio to the Charter Hire prior to such adjustment
as the amount of Notes outstanding after application by the Owners of the
difference between Credits and Extras to repurchase outstanding Notes bears to
the amount of Notes outstanding prior to such repurchase.
<PAGE>
SCHEDULE 2
TO BAREBOAT CHARTER
STIPULATED LOSS VALUE
DATE AMOUNT
---- ------
8-1-99 96,983,866
2-1-00 94,599,220
8-1-00 94,875,189
2-1-01 91,712,197
8-1-01 92,010,684
2-1-02 88,621,112
8-1-02 88,943,956
2-1-03 85,329,715
8-1-03 85,678,903
2-1-04 81,842,059
8-1-04 82,219,742
2-1-05 78,162,531
8-1-05 78,571,033
2-1-06 74,595,874
8-1-06 75,037,709
2-1-07 75,497,217
8-1-07 75,975,106
2-1-08 75,042,110
8-1-08 74,068,994
2-1-09 73,056,554
8-1-09 72,005,616
2-1-10 70,912,041
8-1-10 69,771,723
2-1-11 68,585,592
8-1-11 67,354,615
2-1-12 66,074,800
8-1-12 64,742,192
2-1-13 63,352,880
8-1-13 61,907,995
2-1-14 60,408,715
8-1-14 58,846,263
2-1-15 57,221,914
8-1-15 55,531,990
2-1-16 53,772,870
8-1-16 51,940,985
2-1-17 50,037,824
8-1-17 48,059,937
2-1-18 45,998,934
8-1-18 43,856,492
2-1-19 41,619,352
- 2 -
<PAGE>
- 3 -
<PAGE>
TABLE OF CONTENTS
Page No.
1. VESSEL TO BE CHARTERED.................................................... 2
2. PERIOD OF CHARTER......................................................... 2
3. TIME AND PLACE OF DELIVERY................................................ 3
4. CHARTERER'S RIGHT IN RESPECT OF THE VESSEL................................ 4
5. USE AND TRADE OF VESSEL................................................... 5
6. DOCUMENTATION AND HOUSE FLAG.............................................. 6
7. MAINTENANCE AND OPERATION................................................. 6
8. REDELIVERY AND STATUS..................................................... 9
9. USE OF VESSEL AND PAYMENT OF HIRE......................................... 10
10. MORTGAGE................................................................. 12
11. INSURANCE................................................................ 13
12. TOTAL LOSS, REQUISITION FOR TITLE, CAPTURE, SEIZURE...................... 15
13. REQUISITION FOR HIRE..................................................... 16
14. LIENS; NOTICE ON VESSEL.................................................. 17
15. SALVAGE.................................................................. 18
16. GENERAL AVERAGE.......................................................... 18
17. DEFAULT; REMEDIES........................................................ 18
18. TERMINATION.............................................................. 20
19. PAYMENTS ON TERMINATION.................................................. 21
20. ASSIGNMENT AND SUB CHARTER............................................... 21
21. INDEMNITY................................................................ 22
22. GENERAL.................................................................. 23
23. DEFINITIONS.............................................................. 26
GOLDEN STATE PETRO (IOM I-B) PLC
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CHEVRON TRANSPORT CORPORATION
BAREBOAT CHARTER
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BAREBOAT CHARTER
THIS BAREBOAT CHARTER (hereinafter called the "Charter") made as of the
24th day of December, 1996 BY and BETWEEN Golden State Petro (IOM I-B) PLC
(hereinafter called "Owner") organized under the laws of the Isle of Man and
Chevron Transport Corporation (hereinafter called "Charterer"), organized under
the laws of the Republic of Liberia.
WITNESSETH AND IT IS HEREBY AGREED as follows:
1. VESSEL TO BE CHARTERED.
(a) The Owner hereby lets and demises and the Charterer hereby hires
the very large crude carrier having hull number 1129 (hereinafter called the
"Vessel") to be built at the yard of Samsung Corporation and Samsung Heavy
Industries Co., Ltd. (collectively, "Builder") together with all her engines,
boilers, machinery, masts, anchors, cables, rigging, tackle, apparel, furniture,
electronics, small boats, and all her other appurtenances, whether aboard or
removed from the Vessel, together with any and all additions, improvements
and/or replacements which may hereafter be made to, on or in the Vessel.
(b) The Vessel shall be constructed in accordance with the Building
Contract (hereafter called "the Building Contract") as annexed to this Charter,
made between the Builder and the Owner and in accordance with the specifications
and plans annexed thereto.
(c) No change shall be made in the Building Contract or in the
specifications or plans of the Vessel without the Charterer's consent.
2. PERIOD OF CHARTER
(a) This Charter shall be for a period of eighteen (18) years from the
Delivery Date (the "Charter Period") and shall comprise an initial fixed period
(the "Fixed Period") of eight (8) years and five subsequent optional periods
(each, an "Optional Period") of two (2) years each. The Charterer shall have the
option of terminating this Charter on an Optional Termination Date upon the
expiration of the Fixed Period or any of the Optional Periods (I) if the
Optional Termination Date is the first Optional Termination Date, at the end of
the Fixed Period upon provision to the Owner of (i) non-binding notice of its
intent to exercise such option, determined on a good faith basis, at least 12
months prior to such Optional Termination Date and (ii) irrevocable notice of
such exercise nine (9) months prior to such Optional Termination Date or (II) if
the Optional Termination Date is any subsequent Optional Termination Date, at
the end of the related Optional Period, such notification shall be made by the
Charterer to the Owner at (i) nine (9) months and (ii) six (6) months,
respectively.
(b) Should the Vessel be upon a voyage otherwise than under requisition
for hire at the time when the charter of the Vessel would (but for the
provisions of this clause) have
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terminated, the Charter Period shall be extended for such additional time as may
be necessary for the completion of such voyage. The Charter Period shall also be
extended for such additional time as may be necessary to bring the Vessel to a
port of redelivery as hereinafter provided in Clause 8 hereof. During any such
extension, hire shall be paid pro rata on a daily basis (assuming a 365-day
year) at the rate in force before the commencement of such extension.
3. TIME AND PLACE OF DELIVERY
(a) The Owner shall give and the Charterer shall take delivery of the
Vessel concurrently with delivery of the Vessel by the Builder to the Owner when
the Vessel is ready for delivery by Builder after trials and the Owner, Builder
and Chevron Shipping Company, as agent for the Charterer (the "Agent") have
executed the Protocol of Delivery and Acceptance in substantially the form of
Exhibit B to the Shipbuilding Contract.
(b) The Charterer warrants that upon delivery of the Vessel to the
Charterer the Vessel shall be in the Charterer's custody and under its control.
(c) If for any reason other than a default by the Owner under the
Building Contract, the Builder becomes entitled under the Building Contract not
to deliver the Vessel to the Owner, the Owner shall upon giving to the Charterer
written notice of Builder becoming so entitled, be excused from giving delivery
of the Vessel to the Charterer and upon receipt of such notice by the Charterer
this Charter shall cease to have effect.
(d) If for any reason the Owner becomes entitled under the Building
Contract to reject the Vessel, the Owner shall, before exercising such right of
rejection, give written notice thereof to the Charterer and consult the
Charterer and thereupon:
(i) If the Charterer does not wish to take delivery of the
Vessel, it shall inform the Owner within seven (7) days of notice from
the Owner by notice in writing and upon receipt by the Owner of such
notice this Charter shall cease to have effect; or
(ii) If the Charterer wishes to take delivery of the Vessel,
it may by notice in writing within seven (7) days of notice from the
Owner require the Owner to negotiate with the Builder as to the terms
on which delivery should be taken and during such period refrain from
exercising the Owner's right of rejection and upon receipt of such
notice the Owner shall commence such negotiations; provided however,
the Owner shall not be required to accept delivery of the Vessel from
the Builder unless the terms of such delivery are acceptable to it in
its sole discretion.
(e) In no circumstances shall the Charterer be entitled to reject the
Vessel unless the Owner is able to reject the Vessel from the Builder. If this
Charter terminates under sub-clause (c) or (d) of this Clause, the Owner shall
thereafter not be liable to the Charterer for any claim under or arising out of
this Charter or its termination.
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(f) THE OWNER MAKES NO REPRESENTATION, WARRANTY OR GUARANTEE OF ANY
KIND, EXPRESS OR IMPLIED, STATUTORY OR OTHERWISE, AS TO THE TITLE,
SEAWORTHINESS, CONDITION, VALUE, EQUIPMENT DESIGN, OPERATION, MERCHANTABILITY OR
FITNESS FOR USE OF THE VESSEL FOR ANY PARTICULAR PURPOSE OR AS TO THE
ELIGIBILITY OF THE VESSEL FOR ANY PARTICULAR TRADE OR ANY OTHER REPRESENTATION,
WARRANTY OR GUARANTEE WITH RESPECT TO THE VESSEL AND NONE SHALL BE IMPLIED FROM
THIS CHARTER; PROVIDED, HOWEVER, THAT THE OWNER WARRANTS THAT THE OWNER HAS AND
SHALL RETAIN WHATEVER TITLE TO THE VESSEL SUBJECT ONLY TO THE MORTGAGE, THIS
CHARTER AND LIENS AND ENCUMBRANCES WHICH THE OWNER IS OBLIGATED TO DISCHARGE OR
SATISFY. THE CHARTERER HEREBY WAIVES AS AGAINST THE OWNER AND THE VESSEL, ALL
REMEDIES, WARRANTIES NOT EXPRESSED IN THIS SUBCLAUSE (F) OF CLAUSE 3 OR
LIABILITIES, EXPRESS OR IMPLIED, ARISING BY LAW OR OTHERWISE WITH RESPECT TO THE
OWNER'S TITLE THERETO OR THE PHYSICAL CONDITION OF THE VESSEL AT THE TIME OF
DELIVERY TO THE CHARTERER INCLUDING, BUT NOT LIMITED TO (I) ANY IMPLIED WARRANTY
OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, (II) ANY IMPLIED
WARRANTY ARISING FROM COURSE OF PERFORMANCE, COURSE OF DEALING OR USAGE OF
TRADE, (II) ANY OBLIGATION, LIABILITY, RIGHT, CLAIM OR REMEDY FOUNDED IN STRICT
LIABILITY IN TORT AND (IV) ANY OBLIGATION, LIABILITY, RIGHT, CLAIM OR REMEDY FOR
LOSS OR DAMAGE TO THE VESSEL. THE ACCEPTANCE BY THE CHARTERER OF THE VESSEL
UNDER THIS CHARTER SHALL CONSTITUTE CONCLUSIVE PROOF, AS BETWEEN THE OWNER AND
THE CHARTERER, THAT THE VESSEL IS SEAWORTHY, AND OTHERWISE IN THE CONDITION
REQUIRED BY THIS CHARTER, IN GOOD WORKING ORDER AND REPAIR AND WITHOUT DEFECT OR
INHERENT DEFECT IN TITLE, SEAWORTHINESS, CONDITION, DESIGN, OPERATION OR FITNESS
FOR USE, WHETHER OR NOT DISCOVERABLE BY THE CHARTERER AS OF THE DATE OF SUCH
TENDER, AND GENERALLY IN ALL RESPECTS SATISFACTORY TO THE CHARTERER.
4. CHARTERER'S RIGHT IN RESPECT OF THE VESSEL
(a) The Owner hereby assigns to the Charterer, for the duration of the
Charter Period, except during periods when an Event of Default shall have
occurred and be continuing and except in respect of a Total Loss (unless the
Charterer shall have made all payments required by Clause 12 hereof in respect
of a Total Loss) without representation, warranty or covenant of any kind,
effective upon delivery of the Vessel to the Charterer, the right to enforce and
exercise all rights of warranty, guaranty and indemnity which the Owner may have
in respect of the Vessel or otherwise directly against the Builder or any
manufacturer of any part of the Vessel. The Charterer shall be entitled to take
such action in the name of the Owner against the Builder or any manufacturer of
any part of the Vessel in relation to the terms of purchase of, the condition of
or any patent infringement or alleged patent infringement in relation to the
Vessel or any part thereof as the Charterer sees fit but subject to the Owner
being
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indemnified and secured to its satisfaction by the Charterer against all losses,
costs, damages and expenses thereby incurred or to be incurred. If as a result
of any such action any moneys are received from the Builder or any such other
manufacturer of the Vessel as aforesaid the same shall be received by the
Charterer. The Charterer shall use diligence to assert and enforce all such
rights which have a material effect upon the value of the Vessel.
(b) Specifically with respect to the warranties set forth in the
Building Contract (the "Builder Guarantees"), the Owner hereby assigns to the
Charterer for the Fixed Period and each exercised Optional Period the benefit of
and rights to administer the Builder Guarantees with respect to materials and
workmanship set forth in the Building Contract together with all other
manufacturer, supplier and subcontractor guarantees furnished with respect to
the Vessel. The Owner shall be entitled to receive from Builder the Liquidated
Damages Rebate related to the Vessel's failure to satisfy the Building Contract
deadweight, speed and/or fuel consumption specifications. Notwithstanding the
foregoing, the Charterer shall be entitled to receive from the Owner an amount
(the "Charterer Rebate Amount") equal to the Liquidated Damages Rebate times a
fraction equal to 8/18 on the date such Liquidated Damages Rebate is received
from Builder. The remainder of the Charterer Rebate Amount (the "Initial
Deposit") shall be deposited by the Owner into a separate escrow account (the
"Escrow Account") and invested until the last day of the Fixed Period and shall
be disbursed as follows: on the first day of any Optional Period, the Charterer
shall be entitled to receive an amount equal to the Escrow Account Balance times
a fraction the numerator of which is the number of years of the related Optional
Period and the denominator of which is the number of years remaining on the
Charter if no termination options were exercised. (I.E., 2/10th, 2/8ths, 2/6ths,
2/4ths, 1). Any balance shall remain in the Escrow Account and shall be invested
to the end of the related Optional Period.
The Escrow Account shall be established with a financial institution
and subject to an escrow agreement acceptable to both the Charterer and the
Owner.
5. USE AND TRADE OF VESSEL
(a) The Charterer shall have full use of the Vessel and may employ the
Vessel worldwide (within British Institute Warranty Limits) in the carriage of
suitable lawful merchandise. In no event shall the Charterer carry on board the
Vessel nuclear fuels or radioactive products; provided, however, with the prior
written consent of the Owner, the Charterer may carry on board the Vessel
radioisotopes used or intended to be used for any industrial, agricultural,
medical or scientific purposes.
(b) The Charterer undertakes not to employ the Vessel or suffer the
Vessel to be employed otherwise than in conformity with the terms of the
instruments of insurance (including any warranties expressed or implied therein)
without first obtaining the consent to such employment from its insurers,
protection and indemnity clubs and underwriters and complying with such
requirements as to extra premium or otherwise as the insurers may prescribe.
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<PAGE>
(c) The Charterer also undertakes not to employ the Vessel or suffer
her employment in any trade or business which is forbidden by the law of any
country to which the Vessel may sail or is otherwise illicit or in carrying
illicit or prohibited goods.
(d) As to those trades in which the Vessel is employed, the Charterer
shall comply with any and all requirements regarding financial responsibility or
security in respect of oil or other pollution damage as required by any
government, any state or other political subdivision thereof, or any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government and any other governmental entity with
authority over the Owner or the Charterer, as the case may be, or ownership, use
and operation of the Vessel (whether or not such requirement has been lawfully
imposed or not) to enable the Vessel, without penalty or charges, lawfully to
enter, remain at, or leave any port, place, territorial or contiguous waters of
any country, state or municipality in performance of this Charter without delay.
The Charterer shall make and maintain all arrangements for security bond or
otherwise as may be necessary to satisfy such requirements at the Charterer's
sole liability and expense and the Charterer shall indemnify the Owner against
any and all losses, damages, claims, expenses or liabilities incurred by reason
of the Charterer's failure to comply with this Clause 5(d).
(e) The Charterer shall enter and maintain the Vessel under the TOVALOP
Scheme or under any similar scheme during the Charter Period.
6. DOCUMENTATION AND HOUSE FLAG
(a) The Charterer agrees that it shall, throughout the Charter Period,
maintain the documentation of the Vessel under the laws of the Registration
Jurisdiction at the Charterer's cost and expense. The Owner agrees to do such
things whatsoever and execute and deliver all such documents whatsoever to
enable the Charterer to maintain such documentation. The Charterer will not
change the registry or port of documentation of the Vessel without the prior
written consent of the Owner which consent shall not be unreasonably withheld,
or do or suffer or permit to be done anything which will injuriously affect the
documentation of the Vessel as a vessel documented under the laws and
regulations of the Registration Jurisdiction. If the Charterer changes the
registry or port of documentation of the Vessel, the Charterer shall, at time of
redelivery, if the Owner so requests and at the Charterer's expense, change the
registry and port of documentation back to that of the Registration
Jurisdiction.
(b) The Charterer shall have the right to name the Vessel, to paint the
Vessel in the Charterer's own colors, install and display its funnel insignia
and fly its own house flag.
7. MAINTENANCE AND OPERATION
(a) Except as provided in Clause 20, the Vessel shall during the
Charter Period be in the full possession and at the absolute disposal for all
purposes of the Charterer and under its complete control in every respect. The
Charterer hereby covenants and agrees with the Owner that during the Charter
Period (and subject to the provisions of Clause 13):
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<PAGE>
(i) The Charterer will at its expense maintain the
Vessel, her machinery, cargo handling equipment,
boilers, appurtenances and spare parts in a good
state of repair and in efficient operating condition
in accordance with good commercial maintenance
practice commensurate with other vessels in
Charterer's fleet of similar size and trade, ordinary
wear and tear excepted; and
(ii) The Charterer will at its expense keep the Vessel
with unexpired classification in accordance with the
highest classification of the American Bureau of
Shipping (or such other classification society as
shall previously have been approved in writing by the
Owner) and other required certificates in force and
shall make any improvement or structural changes or
acquire any new equipment necessary to comply with
the requirements of such classification; and
(iii) The Charterer shall be at liberty to fit any
additional equipment required for the services of the
Charterer, beyond that on board at the commencement
of this Charter, such work to be done at the
Charterer's expense and on its time, and such
equipment may be removed by the Charterer at its cost
and on its time at any time (provided, however, that
such removal does not adversely affect the class or
seaworthiness of the Vessel) prior to the expiration
or any other termination of the Charter. The Vessel
is to be redelivered to the Owner in the same
condition and class as that in which she is delivered
by the Owner, ordinary wear and tear excepted and any
additional equipment that cannot be or is not so
removed shall become the property of the Owner; and
(iv) The Charterer shall not permit the Vessel to proceed
to any port which is then subject to a prohibition by
the government of the Registration Jurisdiction or
the national government of the port in question; and
(v) In the event of any hostilities in any part of the
world (whether war be declared or not) the Charterer
will not employ the Vessel nor suggest her employment
in carrying any goods which are declared contraband
nor suffer her to enter or trade to any zone which is
declared a War Zone by the War Risks Insurers unless
the Charterer has made arrangement with the said
insurers for the payment of such additional premiums
as said insurers may require to maintain the relevant
insurances in force or in any zone in respect of
which the War Risks Insurers have withdrawn cover for
the Vessel; and
(vi) The Charterer will not use the Vessel in any manner
or for any purpose excepted from any insurance policy
or policies taken out in compliance with Clause 11
hereof or for the purpose of carriage of goods of any
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description excepted from the said insurance policy
or policies and shall not do or permit to be done
anything which could reasonably be expected to
invalidate any of the said insurance policy or
policies; and
(vii) The Charterer will not use the Vessel in any manner
or for any purpose or trade or permit or suffer to be
done any act which will prejudice the Owner's
ownership of the Vessel or any part thereof.
(b) During the Charter Period (subject to the provisions of Clause 13),
the Charterer shall at its own expense or by its own procurement man, victual,
navigate, operate, supply, fuel and repair the Vessel whenever required and
shall, as between itself and the Owner, be responsible for all charges and
expenses of every kind and nature whatsoever incidental to the Charterer's use
and operation of the Vessel under this Charter, including any foreign, general,
municipal, value added or other taxes except that the Charterer shall not be
responsible for Owner Taxes. During the Charter Period, the master, officers and
crew of the Vessel shall be engaged and employed by the Charterer and shall
remain the Charterer's servants, navigating, managing and working the Vessel on
behalf of and at the risk of the Charterer.
(c) As between the Charterer and the Owner, the Charterer shall also be
responsible for any charges and expenses incidental to the use and operation of
the Vessel while under requisition for hire, during the Charter Period. The
foregoing provision of this sub-clause shall be without prejudice to the rights
of the Owner and the Charterer against other parties in respect of any such
charges or expenses. The Charterer shall, subject to the prior written approval
of the Owner (such approval not to be unreasonably withheld), be entitled to
take action in the name of the Owner against other parties in respect of such
charges or expenses. If as a result of any such action any moneys are received
the same shall be recovered by the Charterer.
(d) The Charterer shall make no changes in the structure of the Vessel
nor major changes in her machinery, appurtenances, spare parts or boilers
without in each instance first securing the written approval of the Owner, which
approval shall not be unreasonably withheld; provided that if any such changes
are required to meet classification society requirements, applicable regulations
and/or any relevant laws the Owner shall not withhold such approval and the
Charterer shall not be obliged to reinstate the Vessel to its condition prior to
the making of such changes.
(e) The Charterer shall drydock the Vessel and clean and paint her
underwater parts in accordance with good commercial practice, but not less than
as may be required by the American Bureau of Shipping or such other
classification society as provided in Clause 7(a)(ii) to maintain the Vessel's
highest classification. The Charterer shall give the Owner not less than seven
(7) days prior notice of the Charterer's intention to drydock the Vessel, such
notice to specify the intended time and place of drydocking.
(f) The Owner (or such persons as it shall appoint or authorize) shall
have the right at any time on reasonable notice, and in a manner which shall not
interfere with the Vessel's
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trading requirements to inspect or survey the Vessel in order to ascertain the
condition of the Vessel and to satisfy itself that the Vessel is being properly
repaired and maintained in accordance with the provisions of this Charter.
Inspection or survey in drydock shall be made only when the Vessel is in drydock
under the provisions of sub-clause (e) of this Clause. However, the Owner shall
have the right to require the Vessel to be drydocked for inspection, if the
Charterer is not docking her at the required classification intervals. The costs
incurred in respect of such drydocking and any inspection or survey made under
this sub-clause shall be paid by the Charterer to the Owner only if repairs are
found to be required. Otherwise, the costs of drydocking and any inspection or
survey shall be paid by the Owner. All repairs as shall be shown to be required
by any inspection or survey shall be made at the Charterer's expense and shall
be completed within a reasonable period of time or such other period as is
specified by the relevant classification society referred to in Clause 7(a)(ii).
Time taken in respect of inspection, survey or repairs shall form part of the
Charter Period. The Charterer shall whenever requested, on reasonable notice,
permit the Owner to inspect the Vessel's log books and furnish the Owner
promptly with full information regarding any casualties or other damage to the
Vessel.
(g) The Owner shall not be liable for any expense in repairing or
maintaining the Vessel or be liable to supply a vessel or any part in lieu
thereof if the Vessel or any part thereof is lost, damaged, rendered unfit for
use, confiscated, seized, requisitioned, restrained or appropriated and the
Charter Hire and any Additional Charter Hire payable in respect of the Vessel
shall continue to be payable notwithstanding loss or damage (not amounting to a
Total Loss) to the Vessel or any part thereof (and notwithstanding that the
Vessel or any part thereof is rendered unfit for use or is requisitioned for
hire). In the event of a Total Loss the provisions of Clause 12 shall apply.
(h) The Charterer shall not have or be deemed to have any authority to
pledge the Owner's credit for any purpose, including any maintenance overhauls,
replacements, repairs and modification of the Vessel.
8. REDELIVERY AND STATUS
(a) Unless the Vessel suffers a Total Loss, the Charterer shall at the
end of the Charter Period redeliver the Vessel to the Owner at a safe and
ice-free port or a place selected by the Charterer within the Vessel's trading
limits (within 10 steaming days from a recognized loading area) or at such other
safe port as shall be agreed between the parties but the Charterer shall not be
deemed to warrant the safety of such port once redelivery has occurred. The
Vessel shall be redelivered to the Owner free and clear of all mortgages, liens,
claims, charges and encumbrances which the Charterer is obligated to discharge
or satisfy and in the same or as good structure, state and condition as those in
which she was delivered, ordinary wear and tear not affecting class excepted.
The time of redelivery shall be the time when the Vessel is tendered for
redelivery in class without outstanding requirements or recommendations to
enable the Vessel to proceed without delay and free of cargo (other than slops).
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(b) At or about the same time of redelivery a survey shall, if the
Owner so requires, be made to determine the condition and fitness of the Vessel,
her machinery and equipment. In that event, the Charterer and the Owner shall
each appoint surveyors to be present at such survey and the surveyors present
shall determine and state the repairs or work necessary to place the Vessel at
the date of redelivery in the structure, state and condition required by
sub-clause (a) of this Clause. In the event that the Vessel has been dry-docked
within 30 days prior to redelivery and the Charterer certifies in writing to the
Owner that, to the best of the Charterer's knowledge, the Vessel has had no
bottom touching since such dry-docking, such survey may be conducted while the
Vessel is afloat. The Owner may require a diver's survey of the Vessel. The
Charterer shall bear all expense of any such survey only if repairs are found to
be required. Otherwise, the cost of a diver's survey shall be paid by the Owner.
The Charterer shall at its expense make all such repairs and do all such work so
found to be necessary before redelivery or at the Owner's option shall discharge
the Charterer's obligations hereunder by payment to the Owner of a sum
sufficient to provide, at the prices current at the time of redelivery, for the
work and repairs necessary to place the Vessel in such structure, state and
condition. The Charter Period shall be extended until the completion of any such
repairs and work found to be necessary or the payment of the amounts described
in this Clause 8(b).
(c) The provisions of this Clause shall be subject to the provisions of
sub-clause (b) of Clause 13 hereof where the Vessel is under requisition for
hire at or until the end of the Charter Period.
(d) An inventory of consumable stores on board the Vessel shall be made
by the Charterer in conjunction with the Owner on redelivery of the Vessel. The
Owner shall take over and pay for all bunkers, lubricating oil, water and
unbroached provisions, paints, oils, ropes and other consumable stores remaining
in the Vessel on redelivery at the market prices current at the port of
redelivery.
(e) The Vessel upon redelivery shall have her survey cycles up to date
and class certificates valid for at least six (6) calendar months.
Notwithstanding the provisions of this Clause 8, the Charterer shall ensure that
the Vessel shall have been dry-docked within 30 months prior to redelivery.
9. USE OF VESSEL AND PAYMENT OF HIRE
(a) The Charterer shall have the use of all equipment (which expression
includes cabin, crew and galley equipment, navigational aids and technical
equipment, furnishings, furniture and fittings and spare and replacement parts)
that is the property of the Owner on board at the time of Delivery of the
Vessel; and the same, or their substantial equivalent, shall be returned to the
Owner on redelivery in good order and condition, ordinary wear and tear alone
excepted. The Charterer shall from time to time during the Charter Period
replace at its expense such items of equipment as shall be so damaged or worn as
to be unfit for use. Such replacement equipment shall become part of the Vessel
and title to such replaced equipment shall vest in and the same shall belong to
the Owner.
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(b) Any hired equipment placed on the Vessel by the Charterer may be
removed by the Charterer prior to the expiration of the Charter Period. If so
requested by the Owner, the Charterer shall assist in transfer of equipment hire
agreements to the Owner or its nominee, but the Charterer shall not be required
to guarantee or assume any other liability with respect to a transferee's
performance under said hire agreements.
(c) During the Charter Period, the Charterer shall pay, without offset
or deduction, whether or not Vessel is under arrest, the sum of Charter Hire for
the use and hire of the Vessel at the times and in the amounts indicated on
Schedule 1 attached hereto and made a part hereof and any Additional Charter
Hire payable pursuant to subclause 9(g). Charter Hire shall be offset and
reduced by the amount of the Charter Hire Reduction, if any. The obligation to
pay Additional Charter Hire shall become effective on the next succeeding
Payment Date. Unless otherwise notified by the Owner, all payments of Charter
Hire and Additional Charter Hire and other amounts payable by the Charterer to
the Owner hereunder shall be made to an account nominated by the Owner at Chase
Manhattan Bank NYC, ABA #021000021, A/C #920-1- 073195, credit U.S. Trust Co NY,
further credit to A/C #04692300, Golden State Petroleum Transp. Corp. Rev.,
Attention: Chris Collins (or to such other account as the Owner may from time to
time nominate) and shall be made by wire transfer of immediately available
funds.
(d) If, on or before a date on which the Charterer is obligated under
subclause 2(a) above to give the Owner irrevocable notice of its intent to
exercise an option to terminate the Charter (a "Termination Notice Date"), and
if (i) the Charter Hire during the next succeeding Optional Period is above the
then current bareboat market level and (ii) the Charterer desires to have a
vessel on bareboat charter for a term equal to the applicable Optional Period
and of a size, age, condition, and performance characteristics similar or
equivalent to those of the Vessel, then the Charterer shall so notify the Owner
in writing no later than the Termination Notice Date. Then, from the Termination
Notice Date until the commencement of the next succeeding Optional Period (a
"Start Date"), the Charterer and Owner shall work together in good faith to
agree on a mutually acceptable charterhire rate for the applicable Optional
Period as follows:
Within 30 days after such Termination Notice Date, the Charterer shall
request the London Tanker Broker's Panel (the "Panel") in writing to determine
the then current bareboat market charterhire rate for the Vessel. The Charterer
shall provide the Owner with a copy of such request to the Panel. The Panel
shall provide such determination to the Charterer and the Owner in writing
within 30 days of such request by the Charterer, including the Panel's method
and rationale for arriving at the then current market charterhire rate.
Notwithstanding such determination by the Panel, the Charterer and the
Owner may attempt to negotiate in good faith a mutually agreeable charterhire
rate during the time remaining up to the applicable Start Date.
If, pursuant to this subclause 9(d), the Charterer and Owner are unable
to mutually agree to the Panel's charterhire rate determination or to negotiate
in good faith any other mutually
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agreeable charterhire rate prior to the applicable Start Date, and the Charterer
and the Owner do not agree to continue these efforts beyond the applicable Start
Date, then both parties shall be relieved of all further obligations to continue
the Charter.
With respect to the first period after the Start Date for the Vessel,
the Owner and the Charterer agree that the minimum charter hire for the Vessel
shall be $19,950 per day.
(e) Time of payment shall be of the essence. If a date of payment is a
date upon which the Owner's nominated bank is not open for business, payment
shall be made on the first preceding Business Day. Payment of sums due under the
provisions of this Charter shall be made (by close of business New York Federal
Reserve Bank) by wire transfer to the Owner's nominated bank and receipt of such
wire transfer by such bank by 10:00 a.m. New York time on the due date for
payment (in accordance with all the provisions of this Charter) shall constitute
timely payment by the payor of the amount authorized by such cable or telex to
be paid even though the payee's account be not credited until after such due
date and the payor shall not be liable for any delays or errors committed by
such bank in processing payment instructions transmitted properly on behalf of
the Charterer.
(f) If any payment of Charter Hire or Additional Charter Hire hereunder
shall not be paid when due the Owner shall be entitled in addition to call for
interest thereon at the rate of interest per annum equal to the Default Rate
from and including the due date to the date of actual payment (after as well as
before judgment) parts of a day being treated as complete days and the Charterer
shall thereupon forthwith pay the same to the Owner.
(g) The parties hereto agree that the Additional Charter Hire payable
with respect to the Net Extras (as defined in Schedule 1 hereto) shall commence
on the next succeeding Payment Date. On or prior to the next succeeding Payment
Date, the Charterer shall execute and deliver a Charter Supplement substantially
in the form of Exhibit B hereto as to the Additional Charter Hire. The Charterer
understands and agrees that the Additional Charter Hire pursuant to a Charter
Supplement shall be in an amount sufficient to pay sinking fund redemption
payments, principal and interest payments payable by the Owner as to any
Additional Notes issued pursuant to the related Supplemental Indenture. The
amount of Additional Notes issued pursuant to the related Supplemental Indenture
shall be in an amount equal to the sum of (i) the costs and expenses incurred by
the Owner with respect to the issuance of the related series of Additional Notes
and (ii) the amount necessary to fund the Extras.
10. MORTGAGE
(a) The Charterer agrees that the financing of the Vessel will be
secured by the Charter on the Vessel and assignments of the Owner's right, title
and interest under, in and to this Charter. The Charterer shall execute and
deliver all such documents, opinions, reports, and agreements listed on Exhibit
A attached hereto.
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<PAGE>
(b) The Charterer agrees that this Charter and any other charters
permitted under Clause 20(a) hereof shall always be subordinated in all respects
to the Mortgage.
(c) The Owner agrees that the Mortgage and any other mortgage
hereinafter placed on the Vessel by the Owner will contain a provision to the
effect that throughout the Charter Period, so long as no Event of Default shall
have occurred and be continuing and so long as the Charterer shall have
performed its obligations hereunder, the Charterer shall be entitled to quiet
enjoyment of the Vessel.
11. INSURANCE
(a) INSURANCE OBLIGATIONS The Charterer shall, at its own expense,
provide and maintain the following insurance and shall ensure that the value of
the Vessel as stated in any valued policy is equal to the amount insured
thereunder:
(i) hull and machinery insurance for an amount not less than the
Stipulated Loss Value of the Vessel as per American Institute
Hull Clauses (June 2, 1977) and the American Hull Insurance
Syndicate's Liner Negligence clause (June 2, 1977). Such
insurance shall include navigation limits adequate for the
vessel's trade and exclude collision liability.
(ii) protection & indemnity insurance on a full entry basis with an
International Group P&I Club. Such insurance shall include,
but not be limited to, coverage for injuries to or death of
masters, mates and crew; full (4/4ths) collision liabilities
and pollution liabilities imposed by federal and state laws as
well as TOVALOP liabilities (if applicable). Such insurance
shall be unlimited as per International Group P&I Club rules
and pollution liabilities shall be limited to $700 million or
the maximum pollution limit offered by and through the P&I
Clubs of the International Group.
(iii) Hull War Risk Insurance for an amount not less than the
Stipulated Loss Value of the Vessel as per American Institute
Hull War Risks and Strikes Clauses December 1, 1977 and the
American Hull Insurance Syndicate's Addendum April 1, 1984
(War Risks). Such insurance shall apply to all areas where the
Vessel trades.
(b) LOSS PAYABLE AND NOTICE OF CANCELLATION
(i) Unless the Owner shall have given its prior written consent,
all insurances effected pursuant to Clause 11(a)(i) and (iii)
shall contain a loss payable and notice of cancellation clause
in the following form:
"LOSS PAYABLE AND NOTICE OF CANCELLATION CLAUSE"
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<PAGE>
(A) Until Golden State Petro (IOM I-B) PLC ("Owner") shall have
notified underwriters to the contrary:
(1) all recoveries up to the Stipulated Loss Value
hereunder in respect of a total loss or constructive
or compromised or agreed or arranged total loss shall
be paid in full to the Owner without any deduction or
deductions whatsoever; and
(2) all other recoveries shall be paid in full to Chevron
Transport Corporation ("Charterer") or to its order
without any deduction or deductions whatsoever; and
(B) The Owner shall be advised:
(1) if any Hull and Machinery insurer cancels or give
notice of cancellation of any insurance or entry at
least ten ( 10) days before such cancellation is to
take effect; and
(2) if any hull War Risks insurer cancels or gives notice
of cancellation of any insurance or entry at least
seven (7) days before such cancellation is to take
effect; and
(3) of any default in the payment of any Hull and
Machinery premium or call or failure to renew any
such insurance or entry ten (10) days prior to the
date of renewal thereof; and
(4) of any default in the payment of any War Risks
premium or call or failure to renew any such entry
seven (7) days prior to the date of renewal thereof.
(ii) Unless the Owner shall have given its prior written consent,
all insurance and entries effected pursuant to Clause
11(a)(ii) shall contain a loss payable and notice of
cancellation clause in the following form:
"LOSS PAYABLE AND NOTICE OF CANCELLATION CLAUSE"
At the request of the Owner and with the consent of the
Charterer, the protection and indemnity club managers may in
its discretion, agree:
(a) to pay the Owner, or to its order, any recovery the
Charterer is entitled to receive from the funds of
the P&I Club in respect of any liability, costs or
expenses incurred by the Charterer on receipt of
notice from the Owner that the Charterer is in
default under the Charter; and
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<PAGE>
(b) to give the Owner ten (10) days' notice that
insurance in the P&I Club in respect of the Vessel is
to cease; and
(c) to give the Owner ten (10) days' notice of the P&I
Club's intention to cancel the insurance of the
Charterer by reason of its failure to pay when due
and demanded any sum due from them to the P&I Club.
(c) INFORMATION AS TO INSURANCES
The Charterer shall give the Owner and its insurance advisers such
information as to the insurances taken out or being or to be taken out in
compliance with the Charterer's obligations under the foregoing provisions of
this Clause or as to any other matter which may be relevant to such insurances
as the Owner or its advisers may reasonably request.
(d) CHARTERER OPTION TO SELF-INSURE
Notwithstanding anything to the contrary herein contained in Clause 11,
the Charterer shall have the right to self-insure against the risks described in
Clause 11(a).
12. TOTAL LOSS, REQUISITION FOR TITLE, CAPTURE, SEIZURE
(a) If a Total Loss shall occur, this Charter and the obligation of the
Charterer to pay Charter Hire and Additional Charter Hire hereunder shall
continue and be payable as set forth herein until the Charterer has complied
with this Clause 12. The Charterer shall forthwith notify the Owner of the facts
and circumstances of such Total Loss and the Charterer shall, on the date which
is 90 days after the Total Loss (the "Loss Date"), pay to the Owner the amount
determined pursuant to paragraph (b) below. The Charterer shall give the Owner
at least 15 days prior notice in writing of the Loss Date. On the Loss Date, the
Charterer shall pay such amount to the Owner, and thereupon this Charter shall
terminate and Charter Hire and Additional Charter Hire payable hereunder shall
cease.
(b) The amount payable on any such Loss Date shall be the sum of (i)
any deficiency between (A) the Stipulated Loss Value in relation to the period
in question calculated by the application of Schedule 2 and (B) all insurance
proceeds for damage to or loss of the Vessel and amounts paid by any
governmental authority in connection with any requisition, seizure or forfeiture
actually received in hand by the Owner or the Mortgagee prior to or on such Loss
Date; and (ii) all Charter Hire and Additional Charter Hire accrued (on a daily
basis) but unpaid hereunder to such Loss Date and any other sums due under any
provisions of this Charter, together with interest thereon at the Default Rate
from the date upon which any such Charter Hire and Additional Charter Hire or
other sums was due until the date upon which the calculations are made for the
purposes of this Clause which date shall be the Loss Date. The foregoing
obligations of the Charterer under this Clause 12 shall apply regardless of
whether or not any moneys are payable under the insurances effected in
compliance with Clause 11 hereof in respect of the Vessel, regardless also of
the amount payable thereunder, regardless also of the
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<PAGE>
cause of the Total Loss and, regardless of whether or not any of the said
compensation shall be payable. This Charter shall terminate upon the fulfillment
by the Charterer of its obligations under this subclause.
(c) If the Charterer shall have made a payment to the Owner pursuant to
the foregoing provisions of sub-clause (b) of this Clause and the Owner shall
subsequently receive any insurance monies or other compensation contemplated
under such Clause (b) the same shall be immediately applied first towards
repayment to the Charterer of the amount of any such payment and second (to the
extent that the further insurance monies or compensation shall exceed the
amounts paid by the Charterer and so repaid by the Owner) to the Charterer.
(d) The Charterer shall be liable for any loss of any part of or damage
to the Vessel (other than a Total Loss in which event the foregoing provisions
of this clause shall apply) during the Charter Period from whatsoever cause such
loss or damage may arise, unless the same shall have been caused by the
negligence or willful act of the Owner, its servants or agents (except where the
Charterer or its servants and agents are acting as agents of the Owner). In the
event of repairable damage to the Vessel or any part thereof or loss of part of
the Vessel, the Owner shall, subject to its prior right to retain any sums which
may be due from the Charterer to the Owner under the terms of this Charter, make
payment to the Charterer of moneys received under the insurances effected in
compliance with Clause 11 upon the Charterer furnishing evidence satisfactory to
the Owner that all such damage has been made good or repaired or repairs have
been put in hand.
(e) For the purpose of this Clause 12, insurers shall be deemed to have
admitted a claim either on the date that they inform the Owner that the claim is
admitted or upon the date that they make payment to the Owner even though no
claim has ever been admitted.
(f) The Owner shall, upon the request of the Charterer, promptly
execute such documents as may be required to enable the Charterer to abandon the
Vessel to insurers and claim a constructive total loss provided that the Owner
shall be entitled by notice in writing to the Charterer to require that the
Vessel shall not be abandoned and that a partial loss only shall be claimed, in
which case this Charter shall terminate as from the date of the event giving
rise to such loss and any insurance payments in respect of the partial loss
shall be paid to the Owner. Save as aforesaid, any moneys payable by insurers
for a partial loss shall be paid to the Charterer and the Owner shall, at the
request and expense of the Charterer, take or procure to be taken all such
reasonable steps as the Charterer may require for the recovery of such moneys.
13. REQUISITION FOR HIRE.
(a) If the Vessel is requisitioned for hire by any governmental or
other competent authority during the Charter Period, then unless and until
following such requisition the Vessel becomes a Total Loss, this Charter shall
continue in full force and effect for the remainder of the Charter Period (and
the Charterer shall be fully responsible for due compliance with all its
obligations under (i) Clause 11 and (ii) the other provisions of this Charter,
other than those
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<PAGE>
which the Charterer is unable to comply with solely by virtue of the aforesaid
requisition for hire); provided, however, that if the Charterer shall duly
comply with all of its obligations under this Charter save as aforesaid, the
Charterer shall be entitled to all requisition hire paid to the Owner or to the
Charterer by such governmental or other competent authority or by any person
acting by the authority of the same on account of such requisition during the
Charter Period.
(b) Should the Vessel be under requisition for hire at or until the end
of the Charter Period:
(i) The Charterer shall, if it is prevented by reason of the
requisition from redelivering the Vessel under sub-clause (a)
of Clause 8 hereof, be relieved from its obligation so to do,
provided that if the party requisitioning the Vessel does not
at the end of the period of requisition redeliver the Vessel
to the Owner at such place as the Owner shall request, the
Charterer shall upon the written request of the Owner use the
Charterer's best endeavors to redeliver the Vessel in
accordance with sub-clause (a) of Clause 8;
(ii) after such release the Charterer shall be given a reasonable
opportunity of removing any such additional or hired equipment
as is referred to in sub-clause (b) of Clause 9 hereof on the
terms referred to in that sub-clause;
(iii) notwithstanding any other provision of this Charter, the
Charterer shall be under no liability to the Owner in respect
of the structure, state or condition of the Vessel insofar as
such structure, state or condition is due to the manner in
which she has been used or treated or to any events which have
occurred during the period of such requisition.
14. LIENS; NOTICE ON VESSEL
(a) The Charterer will not suffer, nor permit to be continued, any lien
or encumbrance incurred by it or its agents, which might have priority over the
title and interest of the Owner in the Vessel. The Charterer shall indemnify and
hold the Owner harmless against any lien of whatsoever nature arising upon the
Vessel during the Charter Period while she is under the control of the
Charterer, and against any claims against the Owner arising out of or in
relation to the operation of the Vessel by the Charterer. Should the Vessel be
arrested by reason of claims or liens arising out of her operation hereunder by
the Charterer, the Charterer shall at its own expense take all reasonable steps
to secure that within a reasonable time the Vessel is released and at its own
expense put up bail to secure release of the Vessel.
(b) The Charterer will fasten to the Vessel in a conspicuous place and
will keep so fastened during the Charter Period a notice reading as follows:
This Vessel is the property of and is registered in the name
of Golden State Petro (IOM I-B) PLC (the "Owner"); she is
under
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<PAGE>
charter by demise to and operated by Chevron Transport
Corporation ("Charterer") and neither the Charterer nor the
Master nor any servant or agent thereof has any authority
whatsoever to contract on behalf of the Owner or to pledge the
Owner's credit or to involve the Owner in any liability
whatsoever"
or in such other form as the Owner may reasonably require from time to time.
15. SALVAGE All salvage and all proceeds from derelicts shall be for
the Charterer's benefit and the cost of repairing damage occasioned thereby
shall be borne by the Charterer.
16. GENERAL AVERAGE General Average, including the Owner's portion, if
any, shall be payable by the Charterer. General Average, if any, shall be
adjusted according to the York-Antwerp Rules 1974, as amended 1990, or any
subsequent modification thereof current at the time of the casualty.
17. DEFAULT; REMEDIES
(a) If during the term of this Charter:
(i) The Charterer shall make default for two Business Days in any
payment in respect of Charter Hire, Additional Charter Hire or
other amounts due under the terms of this Charter.
(ii) The Charterer shall fail for a period of thirty (30) Business
Days after written notice thereof has been given to the
Charterer by the Owner to perform and observe any of the
covenants, conditions, agreements or stipulations on the part
of the Charterer to be performed or observed contained herein
(other than sub-clause (a)(i) and (v) of this Clause).
(iii) The Charterer ceases doing business as a going concern or
generally ceases to pay its debts as they become due or any
proceedings under any bankruptcy or insolvency laws are
instituted against the Charterer or if a receiver or trustee
is appointed for the Charterer or for any of its assets or
properties, and such proceeding is not dismissed, vacated or
fully stayed within sixty (60) days.
(iv) The Charterer shall create or suffer to exist any mortgage,
charge, pledge or other like encumbrance over the Vessel or
any part thereof not created or caused by the Owner or by
persons claiming by, through or under the Owner or shall have
abandoned the Vessel. The foregoing provisions shall not apply
to any notice of abandonment which the Charterer may give to
insurers under the provisions of Clause 12.
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<PAGE>
(v) The Charterer fails to comply with any of its obligations as
to insurance contained in Clause 11.
(vi) The Charterer shall within thirty (30) days of any scheduled
date of redelivery hereunder fail to provide adequate bail or
security when required so to do in respect of any maritime
lien, possessory lien or statutory right in rem which may be
acquired over the Vessel not created or caused by the Owner or
by persons claiming by, through or under the Owner in order to
prevent the Vessel being arrested, impounded or seized or if
any such lien, right or claim over the Vessel is exercised by
the arrest, attachment, detention, impounding or seizure of
the Vessel under any distress execution or other process, or
any distress or execution is levied thereon, and the Charterer
fails to use its best endeavors to procure the release of the
Vessel therefrom within thirty (30) days of any scheduled date
of redelivery hereunder.
THEN AND IN ANY SUCH EVENT the Owner may, by written notice to the
Charterer, declare this Charter to be in default and the Owner may:
(a) (i) Upon written demand, cause the Charterer at the
Charterer's expense to, and the Charterer shall promptly, redeliver the
Vessel or cause the Vessel to be redelivered, with all reasonable
dispatch to the Owner and in the condition required by the terms of
Clause 8 as if the Vessel were being redelivered at the expiration of
the Charter Period, and all obligations of the Charterer under said
Clause 8 shall apply to such redelivery, or (ii) the Owner or its
agent, at the Owner's option, without further notice, may, but shall be
under no obligation to, retake the Vessel wherever found, whether upon
the high seas or in any port, harbor, or other place and irrespective
of whether the Charterer, any subcharterer or any other Person may be
in possession of the Vessel, all without prior demand and without legal
process, and for that purpose the Owner or its agent may enter upon any
dock, pier or other premises where the Vessel may be and may take
possession thereof, without the Owner or its agent incurring any
liability by reason of such retaking, whether for the restoration of
damage to property caused by such retaking or otherwise. The exercise
by the Owner of its remedies under this subclause (a) shall be without
prejudice, and in addition, to any of the Owner's other remedies
referred to below.
(b) The Owner or its agent may sell the Vessel at public or
private sale, with or without notice to the Charterer, advertisement or
publication, as the Owner may determine, or otherwise may dispose of,
hold, use, operate, charter (whether for a period greater or less than
the balance of what would have been the Charter Period in the absence
of the termination of the Charterer's rights to the Vessel) to others
or keep the Vessel idle, all on such terms and conditions and at such
place or places as the Owner may determine and all free and clear of
any rights of the Charterer and of any claim of the Charterer in
admiralty, in equity, at law or by statute, whether for loss or damage
or otherwise, and without any duty to account to the Charterer.
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<PAGE>
(c) The Charterer shall be liable for any and all Charter Hire
and Additional Charter Hire payable under this Charter before, during
or after the exercise of any of the foregoing remedies and for all
reasonable costs including all legal fees and any other costs and
expenses whatsoever incurred by the Owner by reason of the occurrence
of any default or by reason of the exercise by the Owner of any remedy
hereunder, including, without limitation, all costs and expenses
incurred by the Owner in connection with any retaking of the Vessel
and, upon the redelivery or retaking of the Vessel in accordance with
this Clause 17, the placing of the Vessel in the condition and
seaworthiness required by the terms of Clause 8 hereof and including
interest on overdue Charter Hire and Additional Charter Hire.
(d) Each and every right, power and remedy herein given to the
Owner shall be cumulative and shall be in addition to every other
right, power and remedy herein given or now or hereafter existing at
law, in equity, admiralty or by statute and each and every power and
remedy whether herein given or otherwise existing may be exercised from
time to time and as often and in such order as may be deemed expedient
by the Owner, and the exercise or the beginning of the exercise of any
right, power or remedy shall not be construed to be a waiver of the
right to exercise at the same time or thereafter any other power or
remedy. No delay or omission of the Owner to exercise any right or
power vested in it hereunder shall impair such right or power or be
construed as a waiver of or as acquiescence in any default by the Owner
or be deemed a waiver of any right arising out of any future default or
of any past default. In the event the Owner at any time agrees to waive
any such right or power, such waiver shall be revocable by the Owner at
any time and the right or power shall henceforth be again exercisable
as though there had been no such waiver unless the Event of Default has
been cured. In the event the Owner shall have proceeded to enforce any
right or pursue any power under this Charter and such proceedings shall
have been discontinued or abandoned for any reason, or shall have been
determined adversely to the Owner, then and in every such case the
Charterer and the Owner shall be restored to their former positions and
rights hereunder with respect to the property subject or intended to be
subject to this Charter and all rights, remedies and powers of the
Owner shall continue as if no such proceedings had been taken.
(e) The rights and powers of the Owner and the obligations of
the Charterer under this Clause 17 shall be effective and enforceable
regardless of the pendency of any proceeding which has or might have
the effect of preventing the Owner or the Charterer from complying with
the terms of this Charter. No express or implied waiver by the Owner of
any default shall in any way be, or be construed to be a waiver of any
further or subsequent default.
18. TERMINATION
In the event (a) the Charterer shall exercise the termination option
granted to it pursuant to Clause 2(a), (b) a Total Loss shall have occurred and
the Charterer shall have remitted to the
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Owner the amounts described in Clause 12(b) or (c) the Charterer shall have
remitted to the Owner the amounts described in Clause 19, then, notwithstanding
anything to the contrary contained herein, the Charter shall continue with
respect to the Charterer's obligation to pay such amount to the Owner and shall
terminate on (x) the date which is 367 days after the date on which such amounts
have been remitted to the Owner or the Owner's assignee or (y) if (i) the
Charterer commences a voluntary case under any applicable bankruptcy,
insolvency, or other similar law now or hereafter in effect, (ii) a receiver,
liquidator, assignee, custodian, trustee or sequestrator (or other similar
official) is appointed for the Charterer or for any substantial part of its
property, (iii) the Charterer generally fails to pay its debts as they become
due or (iv) the Charterer makes a general assignment for the benefit of
creditors, the expiration of the period during which any payment made by or on
behalf of the Charterer may be avoided under any applicable bankruptcy,
insolvency, creditors' rights or similar laws.
19. PAYMENTS ON TERMINATION
Whether or not the Owner shall have exercised, or shall thereafter at
any time exercise, any options, rights or remedies under Clause 17, upon or as a
consequence of a breach of contract by the Charterer amounting to repudiation by
the Charterer of this Charter, the Owner may immediately require the Charterer
to pay to the Owner, and the Charterer shall pay to the Owner as liquidated
damages for loss of a bargain and not as a penalty, an amount equal to (i) the
sum of (A) the Stipulated Loss Value in relation to the period in question
calculated by the application of Schedule 2, (B) all outstanding accrued and
unpaid Charter Hire and Additional Charter Hire and (C) any other amounts due to
the Owner under this Charter on or prior to the date of payment and (ii)
interest thereon (after as well as before judgment) at the Default Rate from the
date such amounts were payable to the actual date of payment.
The Charterer shall not be entitled to any part of the net proceeds of
the Vessel (if any) whether by way of rebate of Charter Hire or Additional
Charter Hire or otherwise.
20. ASSIGNMENT AND SUB CHARTER
(a) The Charterer may not assign all or part of its rights and
obligations under this Charter nor may it charter the Vessel by demise to any
other entity without the prior written consent of the Owner, such consent,
subject always to the Vessel being maintained and insured to the same standards
as are adopted by the Charterer in respect of the vessels owned by them, not to
be unreasonably withheld; provided, however, that the Charterer may assign its
rights and obligations hereunder to a corporation more than 50% of which is
owned, directly or indirectly, by Chevron Corporation and Chevron Corporation
shall continue to guarantee the payment and performance of this Charter pursuant
to the Chevron Guarantee.
(b) The Charterer may otherwise charter the Vessel without the prior
consent of the Owner provided that the Charterer remains responsible as
principal (or appoints another person to be responsible in its stead) for
navigating and managing the Vessel throughout the period of such charter and for
defraying all expenses in connection with the Vessel throughout such period
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<PAGE>
or substantially all such expenses other than those directly incidental to a
particular voyage or to the employment of the Vessel during that period.
21. INDEMNITY
(a) The Charterer hereby indemnifies the Owner and shall keep the Owner
fully indemnified at all times whether during the currency of this Charter or at
any time in respect of events arising during the currency of this Charter
against:
(i) All costs and expenses of operating and maintaining
the Vessel and of operating, maintaining and
replacing all parts including (but without prejudice
to the generality of the foregoing) all fuel, oil,
port charges, fees, taxes, levies, fines, penalties,
charges, insurance premiums, victualing, crew,
navigation, manning, operating and freight expenses
and all other outgoings whatsoever payable by the
Owner or the Charterer in respect of the possession
or operation of the Vessel or any part thereof, or
the purchase, ownership, delivery, chartering,
possession and operation, import to or export from
any country, return, sale or disposition of the
Vessel or any part thereof or upon the hire, receipts
or earnings arising therefrom (other than Owner
Taxes) which shall be promptly paid by the Charterer;
(ii) All liabilities, claims, proceedings (whether civil
or criminal), penalties, fines or other sanctions,
judgments, charges, taxes, impositions, liens,
salvage, general average, costs and expenses
whatsoever which may at any time be made or claimed
by the Charterer or any employee, servant, agent or
sub-contractor, passenger, owner, shipper, consignee
and receiver of goods or any third party (including
governments or other authorities) or by their
respective dependents arising directly or indirectly
in any manner out of the design, construction,
possession, management, repair, certification,
manning, provisioning, supply or servicing of the
Vessel (whether at sea or not) or the chartering
thereof hereunder whether such liability, claims,
proceedings, penalties, fines, sanctions, judgments,
charges, taxes, impositions, liens, salvage, general
average, cost or expenses may be attributable to any
defect in the Vessel or the design, construction,
testing or use thereof or from any maintenance,
service, repair, overhaul or otherwise and regardless
of when or where the same shall arise and whether or
not the Vessel or the relevant part thereof is in the
possession or control of the Charterer (other than
Owner Taxes); and
(iii) The Charterer accepts all liability for oil or other
pollution damage resulting from the Charterer's
operation of the Vessel under this Charter and agrees
to promptly indemnify and hold the Owner harmless
from and against any and all losses, damages and
expenses which the Owner may
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<PAGE>
incur as a result of any oil or other pollution
damage resulting from the Charterer's operation of
the Vessel under this Charter, including, but not
limited to, the Owner's liability under the Oil
Pollution Act of 1990, as amended, and/or the laws of
any other jurisdiction relating to oil spills.
(iv) The Owner shall use good faith efforts to notify the
Charterer promptly of any tax for which it may seek
indemnity. The Charterer shall, subject to the prior
written approval of the Owner (such approval not to
be unreasonably withheld), be entitled to take action
in the name of the Owner at the Charterer's expense
against any taxing authority in respect of any taxes
for which the Charterer has indemnified the Owner,
and the Owner agrees to reasonably cooperate with the
Charterer in taking such action. If as a result of
any such action any moneys are received that are
attributable to such indemnified taxes (including any
interest thereon paid by such taxing authority) the
same shall be recovered by the Charterer.
(b) Without prejudice to its generality, the provisions of this
sub-clause shall extend to claims of persons (including governments or other
bodies whether corporate or otherwise) who have suffered or allege that they
have suffered loss, damage or injury in connection with any thing done or not
done by the Vessel, including in connection with any oil or other substance
emanating or threatening to emanate from the Vessel and shall extend to levies,
impositions, calls, or contributions on or required to be made by the Owner
during or in respect of the Charter Period.
(c) If any obligation of the Charterer under the foregoing sub-clause
or under subclause (d) below shall not be discharged when due, the Charterer
shall on demand forthwith pay to the Owner not only the amount of such
obligation but also interest thereon at the Default Rate from the date the Owner
paid the same to the date of reimbursement by the Charterer (after as well as
before judgment)
(d) In the event of the Vessel becoming a wreck or obstruction to
navigation, the Charterer shall indemnify the Owner against all losses, costs,
damages and expenses which the Owner may in consequence thereof incur including
those incurred in respect of the removal or destruction of the wreck or
obstruction under statutory or other powers.
22. GENERAL
(a) The Charterer shall give to the Owner all such information as the
Owner may reasonably request with regard to the performance by the Charterer of
its obligations hereunder.
(b) The Charterer shall pay all expenses (including legal and other
costs) incurred by the Owner in connection with the enforcement of any rights
conferred upon the Owner by this Charter or in or incidental to any action
brought by the Owner to recover any hire or other payments due hereunder or for
breach of any covenant, agreement, condition or stipulation
- 23 -
<PAGE>
herein contained or to recover possession of the Vessel or any part thereof
whether any such action proceeds to judgment or not. The Owner shall pay all
expenses (including legal and other costs) incurred by the Charterer in
connection with the enforcement of any rights conferred upon the Charterer
against the Owner by this Charter.
(c) No failure or delay on the part of the Owner in exercising any
power or right hereunder shall operate as a waiver thereof nor shall any single
or partial exercise of any such right or power preclude any other or further
exercise of any such right or power.
(d) This Charter shall not be varied in its terms by an oral agreement
or representation or otherwise than by an instrument in writing of even date
herewith or subsequent hereto executed by all the parties hereto or by their
duly authorized representatives.
(e) If any term or provision of this Charter or the application thereof
to any person or circumstance shall to any extent be invalid or unenforceable,
the remainder of this Charter or application of such term or provision to
persons or circumstances other than those as to which it is already invalid or
unenforceable shall not be affected thereby and each term and provision of this
Charter shall be valid and be enforceable to the fullest extent permitted by
law.
(f) The title to the Clauses and sub-clauses of this Charter shall not
in any way affect the interpretation thereof; the terms defined in this Charter
have the meanings assigned to them in this Charter and include the plural as
well as the singular, and the use of any gender herein shall be deemed to
include the other gender.
(g) Any demand, consent, record, election or notice required or
permitted to be given under this Charter shall be in writing and sent by
recorded or registered letter or telefax (and in the case of telefax confirmed
by recorded or registered letter) addressed as follows:
(i) If to the Owner to:
15-19 Athol Street
Douglas, Isle of Man
(ii) If to the Charterer to:
c/o Chevron Shipping Company
555 Market Street
San Francisco, CA 94120-7000
or in case to such other person or address or addresses or telefax number as any
party may notify in writing to the other parties hereto. Any such notice shall
be deemed to have reached the party to whom it is addressed (in the case of
notice given by letter) five (5) days after dispatch by first class pre-paid
post (airmail if from abroad) or (in the case of notice given by telefax) when
confirmed by a correct transmission report when dispatched and for this purpose
confirmation by letter of notice given by telefax, shall be disregarded.
- 24 -
<PAGE>
(h) This Charter shall be governed by and construed and performance
thereof shall be determined in accordance with the federal laws of the United
States of America and the laws of New York. The obligations, rights and remedies
of the parties hereunder shall be determined in accordance with such laws,
without giving effect to principles of conflicts of law.
(i) All matters of difference between the parties hereto (other than as
herein expressly provided to the contrary and other than in respect of any
action by the Owner for possession of the Vessel) shall be referred to
arbitration in New York by an arbitrator to be agreed between the Owner and the
Charterer or in default of such agreement within 30 days to be nominated by the
President for the time being of the Society of Maritime Arbitrators.
(j) Where it is provided in this Charter that in default of agreement a
matter is to be determined by an expert under this sub-clause, the same shall be
determined by such person, firm, corporation or body as may be agreed between
the Owner and the Charterer (or in default of agreement as may be nominated by
the Chairman for the time being of the Baltic and Mercantile Shipping Exchange)
who shall be deemed to act as expert and not as arbitrator and whose
determination shall be final and binding on the parties.
(k) All payments (other than payments pursuant to Clauses 21(a)(i) and
21(a)(ii)) made to the Owner shall be made without deduction for or on account
of any present or future taxes (including value added, turnover, sales and use
taxes), levies, imposts, duties, deduction, withholdings and other charges of
whatsoever nature (collectively, "Charges") unless such deduction is required by
law. If such deduction is required by law (i) the sum payable by the Charterer
shall be increased as may be necessary so that, after making all required
withholdings and deductions (including those applicable to additional sums
payable under this Clause 22(k)), the Owner shall receive an amount equal to the
sum that the Owner would have received had no such withholdings and deductions
been made and (ii) as required by applicable law the Charterer shall withhold or
deduct the amount required and pay such amount to the relevant taxing or other
governmental authority. If any Charges paid by the Charterer are recoverable by
the Owner from such taxing or other governmental authority, the Charterer shall
be entitled to the same rights provided in Clause 21(a)(iv). The Owner shall
consult with the Charterer and use reasonable efforts to agree to a method of
avoiding or minimizing any such deduction that is not in breach of applicable
law or governmental regulation or of any of the financing documents entered into
with the Mortgagee and which will leave the parties in substantially the same
contractual relation as is herein contained. Without limiting the generality of
the foregoing, the Owner shall take any lawful action to the extent necessary to
prevent or avoid the imposition of any taxes, including any withholding taxes
with respect to Charter Hire or Additional Charter Hire, by any taxing
jurisdiction (including the Registration Jurisdiction) including changing its
jurisdiction of incorporation or residence; PROVIDED HOWEVER, that it shall not
be required to take, or fail to take, any action (x) if in the opinion of
counsel such act or failure to act would violate applicable law or (y) if in the
reasonable opinion of the Owner the actions necessary to avoid or prevent
imposition of such taxes would be unduly burdensome. For purposes of clause (y)
- 25 -
<PAGE>
of the immediately preceding sentence a requirement to change the jurisdiction
of the Owner's incorporation or residence shall not be treated as unduly
burdensome.
(l) If any provision of this Charter shall be, or shall be rendered,
unenforceable in whole or in part (which for the purposes of this Clause shall
include being contrary to an official code or order for the time being in force
to which either of the parties hereto is required by law to have regard and the
contravention or the continued contravention of which could be considered or be
made unlawful) the Owner and the Charterer shall use their best endeavors to
agree to an amendment or amendments to the terms of this Charter which would
result in this Charter as so amended being fully enforceable and achieving
substantially the same result (both financially and otherwise) so far as
concerns the Owner and the Charterer as this Charter in its executed form would
have achieved if the same had been fully enforceable. If the Owner and the
Charterer are unable to agree to such an amendment or amendments then either
party may by notice request that an arbitrator be appointed pursuant to the
provisions to Clause 22(i) to determine whether an amendment or amendments which
would achieve the result set out above are possible, and he shall be asked to
specify them and the terms of this Charter shall be amended accordingly.
(m) The indemnities of the Owner by the Charterer contained in this
Charter shall continue in full force and effect (in respect of events occurring
during the currency of this Charter) notwithstanding the termination of the
charter of the Vessel, the repudiation by the Charterer of this Charter or the
expiration of the charter period by affluxion of time or otherwise.
23. DEFINITIONS
"ADDITIONAL CHARTER HIRE" means any Additional Charter Hire payable
pursuant to subclause 9(g).
"ADDITIONAL NOTES" means each first preferred mortgage note issued
pursuant to a Supplemental Indenture to finance the Extras.
"BUILDER" means Samsung Corporation and Samsung Heavy Industries, Ltd.
"BUSINESS DAY" means any day other than a Saturday, a Sunday or a day
on which banking institutions in New York, New York, San Francisco, California
or in the city and state where the Mortgagee's principal offices are located,
are authorized or are obligated by law, executive order or governmental decree
to be closed.
"CERTIFICATE OF ACCEPTANCE" means the certificate executed by the
Charterer on the Commencement Date indicating the Charterer's acceptance of the
Vessel under this Charter.
"CHARTER GUARANTEE" means the Guarantee dated the date hereof from
Chevron Corporation to the Owner.
- 26 -
<PAGE>
"CHARTER HIRE" means the charter hire payable by the Charterer for the
use and possession of the Vessel payable at the times and in the amounts set
forth on Schedule 1 attached hereto and made a part hereof.
"CHARTER HIRE REDUCTION" has the meaning described in Schedule 1
attached hereto.
"CHARTER PERIOD" means the period of time from the Delivery Date to the
expiration or earlier termination of this Charter, pursuant to the provisions
hereof.
"CHARTER SUPPLEMENT" means each Charter Supplement delivered pursuant
to Clause 9(g) hereof.
"COMPULSORY ACQUISITION" means requisition for title or other
compulsory acquisition of the Vessel (otherwise than by requisition for hire),
capture, seizure, condemnation, destruction, detention or confiscation of the
Vessel by any government or by persons acting or purporting to act on behalf of
any government or governmental authority.
"CONTRACT DATE" shall be the date on which the Owner enters into the
Building Contracts with the Builder and which shall be no later than December
24, 1996.
"CREDITS" means reductions in construction costs which (i) result from
actions by the Charterer or by the Technical Supervisor; (ii) are approved by
the Owner, such approval not to be unreasonably withheld; and (iii) occur after
execution of the Building Contract but prior to the Delivery Date.
"DEFAULT RATE" means a rate per annum equal to the sum of 1.50% and
LIBOR as of the commencement of such period; plus any and all penalties, if any,
payable under the Section 2 of the Funding Agreement dated as of December 24,
1996 with Pacific Mutual Life Insurance Company (G-26321.02) occurring as a
result of the Charterer's failure to pay Charter Hire and Additional Charter
Hire when due.
"DELIVERY DATE" means the date on which the Vessel is accepted for
delivery by the Owner from the Builder by execution and delivery of a Protocol
of Acceptance and Delivery as provided in clause (i) of Article IV of the
Building Contract.
"ESCROW ACCOUNT BALANCE" (i) the Initial Deposit plus accrued interest
thereon to the end of the Fixed Period and (ii) after the payment of an amount
payable pursuant to Section 4(b), the amount of funds remaining in the Escrow
Account together with any interest earned thereon less any amount previously
paid to the Charterer pursuant to Section 4(b)(ii).
"EVENT OF DEFAULT" means an event described in sub-clauses (a)(i)
through (a)(vi) of Clause 17.
- 27 -
<PAGE>
"EXTRAS" means increases in construction costs which (i) result from
actions by the Charterer or the Technical Supervisor; (ii) are approved by the
Owner, such approval not to be unreasonably withheld; and (iii) occur after
execution of the Building Contract but prior to the Delivery Date; provided,
however, the cost of Extras shall not exceed $250,000 without the consent of the
Owner.
"INDENTURE" means the Indenture, dated as of December 1, 1996, among
the Owner, Golden State Petro (IOM I-A) PLC, United States Trust Company of New
York, as indenture trustee (the "Indenture Trustee") and Golden State Petroleum
Transport Corporation, together with any amendments, modifications or
supplements thereto.
"INSTITUTE WARRANTY LIMITS" means the Institute Warranties as defined
by the Institute of London Underwriters.
"LIBOR" means the rate calculated on the basis of the offered rates for
deposits in dollars for a one-month period which appear on the Reuters Screen
LIBO Page as of 11:00 A.M., London time, on the date that is two London Banking
Days preceding the date of calculation. If at least two such offered rates
appear on the Reuters Screen LIBO Page, LIBOR will be the arithmetic mean of
such offered rates (rounded to the nearest .0001 percentage point). If, at any
time of determination, the Reuters Screen LIBO Page is not available, the rate
will be the arithmetic mean (rounded to the nearest .0001 percentage point) of
the rates quoted by the three reference banks (selected in accordance herewith)
at approximately 11:00 a.m., New York time, on the date of calculation for loans
in dollars to leading European banks for a one-month period. For the purposes of
this definition, the term "London Banking Day" shall mean any day on which
dealings in deposits in United States Dollars are transacted in the London
interbank market. Each of the Charterer and the Owner (or the Owner's assignee)
will select a reference bank and the third reference bank will be selected by
the Charterer and the Owner (or the Owner's assignee) together or, failing
agreement, by the previously selected reference banks together.
"LIQUIDATED DAMAGES REBATE" means the amount the Owner received from
Builder pursuant to the Building Contract representing all liquidated damages
related to the Vessel's failure to satisfy Builder's contract deadweight, speed
and/or fuel consumption guarantees.
"LONDON BANKING DAY" means any day on which dealings in deposits in
United States dollars are carried on in the London interbank market and on which
commercial banks are open for domestic and international business (including
dealings in United States dollar deposits) in London and New York.
"MORTGAGE" means the Mortgage, dated the date hereof, between the Owner
and the Mortgagee or any other mortgage relating to the financing of the Vessel
by the Owner.
"MORTGAGEE" means the Indenture Trustee and any successor thereto or
any other mortgagee of the Vessel.
- 28 -
<PAGE>
"OPTIONAL TERMINATION DATE" means the expiration date of the Fixed
Period and any Optional Period.
"OWNER TAXES" means any income, franchise or equivalent tax, imposed
upon or measured by the net income, stated capital or earned surplus of the
Owner by any federal, state, local or other taxing authority of any jurisdiction
worldwide, or any taxes that result from the willful misconduct or gross
negligence of the Owner or from the inaccuracy or breach of any representation,
warranty or covenant of the Owner contained in any of Clauses 6, 20, 21(a)(iv),
or 22(k) of this Charter or in any document furnished in connection with such
Clauses by the Owner, or any taxes that would not have been imposed but for the
failure of the Owner (a) to provide to the Charterer (for filing by the
Charterer with the taxing jurisdiction imposing such taxes or retention in the
Charterer's records) upon the Charterer's timely request such certifications,
information, documentation or reports concerning the Owner's identity,
jurisdiction of incorporation or residency, or connection with such taxing
jurisdiction or (b) to promptly file upon the Charterer's timely request such
reports or returns (which shall be prepared with reasonable care in accordance
with the Charterer's written instructions) claiming (or availing itself of) any
applicable extensions or exemptions (to the extent that timely notice thereof is
provided by the Charterer); PROVIDED that Owner Taxes shall not include any such
tax imposed on any amount that is (i) an indemnity or reimbursement of the
Owner, (ii) an operating or maintenance expense, (iii) any tax imposed pursuant
to Section 887 of the United States Internal Revenue Code of 1986, as amended,
or (iv) a tax for which the Charterer is otherwise liable under this Charter;
and PROVIDED FURTHER that Owner Taxes shall not include any such tax imposed by
any government, jurisdiction or taxing authority other than the United States
Federal government solely as a result of the location of the Vessel or the
Vessel's use by the Charterer.
"PAYMENT DATE" means the 1st day of each month, commencing the 1st day
of the month immediately succeeding the Delivery Date.
"PERSON" means an individual, a partnership, a corporation, a joint
venture, an unincorporated association, a joint-stock company, a trust, or other
entity or a government or any agency or political subdivision thereof.
"P&I CLUB" means a protection and indemnity association.
"REGISTRATION JURISDICTION" means the Republic of Liberia.
"SECURITY DOCUMENTS" means all of the agreements executed and delivered
by the Owner to the Indenture Trustee as collateral security for the Owner's
obligations under the Indenture.
"STIPULATED LOSS VALUE" means, as of any date, the amount corresponding
to such date as indicated on Schedule 2 hereto and made a part hereof.
- 29 -
<PAGE>
"SUPPLEMENTAL INDENTURE" means a Supplemental Indenture entered into by
the Indenture Trustee and the Issuer pursuant to the terms and subject to the
conditions set forth in the Indenture.
"TOTAL LOSS" means either (a) actual or constructive or compromised or
arranged total loss of the Vessel, (b) Compulsory Acquisition of the Vessel or
(c) if so declared by the Charterer at any time and in its sole discretion a
requisition for hire of the Vessel for a period in excess of 180 days. Any
actual loss of the Vessel shall be deemed to have occurred at 1200 hours
Greenwich Mean Time (GMT) on the actual date on which the Vessel was lost or in
the event of the date of the loss being unknown then the actual total loss shall
be deemed to have occurred at 1200 hours GMT on the day next following the day
on which the Vessel was last heard of. A constructive total loss shall be deemed
to have occurred at 1200 hours GMT on the earliest of: 1) the date that notice
of abandonment of the Vessel is given to the insurers provided a claim for total
loss is admitted by the insurers, or 2) if the insurers do not admit such a
claim, at the date and time GMT at which a total loss is subsequently adjudged
by a competent court of law or arbitration tribunal to have occurred, or 3) the
date that a report is rendered by one or more experts in marine surveying and
vessel valuation (said experts to be appointed by the Charterer at its expense
and approved by the Owner, such approval not to be unreasonably withheld)
concluding that salvage, repair and associated costs in restoring the Vessel to
the condition specified in Clause 7 exceed the Vessel's fair market value in
sound condition.
"TOVALOP SCHEME" means the Tankers Owner Voluntary Agreement concerning
Liability for Oil Pollution dated January 7, 1969, as amended or any similar
scheme.
- 30 -
<PAGE>
IN WITNESS WHEREOF the parties have caused this Charter to be signed
the date and year first above written.
GOLDEN STATE PETRO (IOM I-B) PLC
By:/s/ Nunzio Lipomi
-----------------------------
Name: Nunzio Lipomi
Its: Assistant Secretary
CHEVRON TRANSPORT CORPORATION
By:/s/ T. R. Moore
-----------------------------
Name: T. R. Moore
Its: Attorney-in-Fact
- 31 -
<PAGE>
EXHIBIT A
The documents, reports and opinions required to be delivered by Chevron
Corporation, Chevron Transport Corporation and its attorneys and agents pursuant
to the Closing Memorandum, dated
- 32 -
<PAGE>
EXHIBIT B
CHARTER SUPPLEMENT NUMBER __
THIS CHARTER SUPPLEMENT NUMBER __, dated as of _________ __,
____, is executed and delivered by GOLDEN STATE PETRO (IOM I-B) PLC, an Isle of
Man company (the "Owner"), and CHEVRON TRANSPORT CORPORATION, a Liberian company
(the "Charterer"), in accordance with the terms and as a part of that certain
BAREBOAT CHARTER dated as of December 1, 1996 (the "Charter"), between the Owner
and the Charterer. The defined terms set forth in the Charter shall have the
same meanings herein. In addition, the following terms shall be assigned the
following meanings solely with respect to this Charter Supplement Number __:
A. EXTRA AMOUNT: $________
B. ADDITIONAL CHARTER HIRE SHALL BE $_______ PER DAY PAYABLE
MONTHLY IN ADVANCE
C. ALLOCATED PRINCIPAL AMOUNT OF ADDITIONAL NOTES:________
D. NEXT SUCCEEDING PAYMENT DATE: _________
E. APPLICABLE PAYMENT DATE: _____________
F. SUPPLEMENTAL INDENTURE DATED: ________
1. DESCRIPTION OF EXTRAS AND COST OF EXTRAS COVERED BY THIS
SCHEDULE (See Schedule 1).
2. RENT: The Charterer agrees to pay the Additional Charter Hire
in the amounts set forth above on the dates set forth in the Charter.
3. INCORPORATION OF CHARTER: All of the terms and provisions of
the Charter are hereby incorporated by reference in this Charter Supplement to
the same extent as if fully set forth herein. In the event of any conflict
between the terms of this Charter Supplement and the Charter, the terms of this
Charter Supplement shall control.
4. COUNTERPARTS: This Charter may be executed by the parties
hereto in separate counterparts, each of which when so executed and delivered
shall be an original, but all such counterparts shall together constitute but
one and the same instrument.
<PAGE>
APPROVED AND AGREED TO by and between the parties hereto on the ___st day of
_______________.
CHEVRON TRANSPORT CORPORATION
By: ______________________________
(Title)
GOLDEN STATE PETRO (IOM I-B) PLC
By: ______________________________
(Title)
- 2 -
<PAGE>
Schedule 1 to Bareboat Charter
1. CHARTER HIRE
(a) Charter Hire during the Fixed Period shall be United States Dollars
(USD) 27,199 per day payable by the Charterer to the Owner monthly in advance on
the Delivery Date and each Payment Date on the basis of 365/12 days per month.
Payments shall be made by wire transfer of immediately available funds and shall
be made prior to 12:00 noon New York time.
(b) Charter Hire during each Optional Period shall be United States
Dollars (USD) 28,500 per day payable by the Charterer to the Owner monthly in
advance on each Payment Date on the basis of 365/12 days per month.
(c) Charter Hire during the Charter Period may be adjusted for any
Additional Charter Hire or Charter Hire Reduction as set forth in Sections 2 and
3 of this Schedule 1. Charter Hire shall be in United States Dollars payable by
the Charterer to the Owner monthly in advance.
2. ADDITIONAL CHARTER HIRE
To the extent that the Extras exceed the Credits ("Net Extras"), the
Charter Hire listed in Section 1 of this Schedule 1 shall be adjusted to the
extent necessary such that the Additional Charter Hire will allow the Owner to
service the aggregate debt incurred on any Additional Notes issued in connection
herewith and as referenced in subclause 9(g).
3. CHARTER HIRE REDUCTION
To the extent that the Credits exceed the Extras ("Net Credits"), the
Charter Hire listed in Section 1 of this Schedule 1 shall be adjusted to the
extent necessary such that the Charter Hire adjusted for the Charter Hire
Reduction shall bear the same ratio to the Charter Hire prior to such adjustment
as the amount of Notes outstanding after application by the Owners of the
difference between Credits and Extras to repurchase outstanding Notes bears to
the amount of Notes outstanding prior to such repurchase.
<PAGE>
SCHEDULE 2
TO BAREBOAT CHARTER
STIPULATED LOSS VALUE
DATE AMOUNT
---- ------
2-1-99 94,849,549
8-1-99 95,105,531
2-1-00 92,821,752
8-1-00 93,098,622
2-1-01 90,036,567
8-1-01 90,336,029
2-1-02 87,047,471
8-1-02 87,371,369
2-1-03 83,858,224
8-1-03 84,208,553
2-1-04 80,472,895
8-1-04 80,851,811
2-1-05 76,895,883
8-1-05 77,305,719
2-1-06 74,631,948
8-1-06 75,075,225
2-1-07 75,536,234
8-1-07 74,675,684
2-1-08 73,779,311
8-1-08 72,847,884
2-1-09 71,877,199
8-1-09 70,868,087
2-1-10 69,816,410
8-1-10 68,723,067
2-1-11 67,588,990
8-1-11 66,405,149
2-1-12 65,177,555
8-1-12 63,897,257
2-1-13 62,565,348
8-1-13 61,182,961
2-1-14 59,741,280
8-1-14 58,241,531
2-1-15 56,684,992
8-1-15 55,062,992
2-1-16 53,376,912
8-1-16 51,623,188
2-1-17 49,798,316
8-1-17 47,898,848
2-1-18 45,921,402
8-1-18 43,867,658
2-1-19 41,719,365
- 2 -
<PAGE>
TABLE OF CONTENTS
Page No.
1. VESSEL TO BE CHARTERED................................................. 2
2. PERIOD OF CHARTER...................................................... 2
3. TIME AND PLACE OF DELIVERY............................................. 3
4. CHARTERER'S RIGHT IN RESPECT OF THE VESSEL............................. 4
5. USE AND TRADE OF VESSEL................................................ 5
6. DOCUMENTATION AND HOUSE FLAG........................................... 6
7. MAINTENANCE AND OPERATION.............................................. 6
8. REDELIVERY AND STATUS.................................................. 9
9. USE OF VESSEL AND PAYMENT OF HIRE...................................... 10
10. MORTGAGE.............................................................. 12
11. INSURANCE............................................................. 13
12. TOTAL LOSS, REQUISITION FOR TITLE, CAPTURE, SEIZURE................... 15
13. REQUISITION FOR HIRE.................................................. 16
14. LIENS; NOTICE ON VESSEL.......................................... 17
15. SALVAGE............................................................... 18
16. GENERAL AVERAGE....................................................... 18
17. DEFAULT; REMEDIES..................................................... 18
18. TERMINATION........................................................... 20
19. PAYMENTS ON TERMINATION............................................... 21
20. ASSIGNMENT AND SUB CHARTER............................................ 21
21. INDEMNITY............................................................. 22
22. GENERAL............................................................... 23
23. DEFINITIONS........................................................... 26
================================================================================
CAMBRIDGE FUND MANAGEMENT L.L.C., MANAGER
GOLDEN STATE PETRO (IOM I-A) PLC
-------------------------------------------
MANAGEMENT AGREEMENT
-------------------------------------------
================================================================================
<PAGE>
This Management Agreement, dated as of December 1, 1996 (the
"Agreement"), between Golden State Petro (IOM I-A) PLC, a company organized
under the laws of the Isle of Man (the "Owner") and Cambridge Fund Management
L.L.C., a Delaware limited liability company organized under the laws of the
State of Delaware (the "Manager").
PRELIMINARY STATEMENT
The Owner is issuing first preferred mortgage notes (the
"Notes") to finance the construction of a very large crude carrier (the Vessel")
pursuant to a trust indenture (the "Indenture"), dated as of December 1, 1996,
by and among Golden State Petroleum Transport Corporation, as agent, the Owner,
Golden State Petro (IOM I-B) PLC and United State Trust Company of New York (the
"Indenture Trustee"), as indenture trustee. Concurrently herewith, the Owner is
entering into a bareboat charter (the "Initial Charter") with Chevron Transport
Corporation (the "Initial Charterer"). The Owner desires to engage the Manager
to provide management services for the Vessel and the Owner.
The Manager is willing to provide such services as to the
Owner pursuant to this Agreement upon the terms and subject to the conditions
set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained and of other good and valuable consideration, the
receipt of which is hereby acknowledged, the Owner and the Manager hereby agree
as follows:
ARTICLE I
DEFINITIONS
Unless otherwise defined in Schedule 1 to this Agreement,
capitalized terms shall have the meanings assigned to such terms in the
Indenture.
ARTICLE II
ADMINISTRATIVE MANAGEMENT OF THE OWNER
Section 2.01 APPOINTMENT OF MANAGER AS MANAGER OF
ADMINISTRATIVE OBLIGATIONS OF OWNER. The Owner hereby appoints the Manager and
the Manager hereby accepts its appointment as manager of the administrative and
corporate obligations of the Owner.
Section 2.02 ADMINISTRATIVE RESPONSIBILITIES OF MANAGER. The
Manager hereby covenants and agrees with the Owner that the Manager shall or
shall cause its designee to do the following:
(i) maintain the books and records of the Owner;
(ii) prepare and file the annual financial statements and
annual tax returns of the Owner, if required;
<PAGE>
(iii) provide all office staff and accommodation of the Owner;
(iv) prepare and submit invoices to the Owner or to the
Owner's assignee for the cost and expense of (A) recording the Mortgage under
the laws of the Registration Jurisdiction, (B) the annual corporate fees of the
Owner, (C) the annual fees of the officers and directors of the Owner, (D) the
annual premiums for directors and officers liability insurance for the directors
and officers of the Owner, if any, and (E) any other expenses properly incurred
on behalf of the Owner;
(v) on or prior to one (1) Business Day prior to a Payment
Date, determine and certify to the Indenture Trustee (A) the estimated Recurring
Fees for the Vessel which are then due and payable and (B) the estimated
Recurring Fees for the Vessel which will become due and payable on the next
succeeding Payment Date as contemplated by Section 3.3 of the Indenture;
(vi) pay any and all of the Recurring Fees pursuant to Section
3.3 of the Indenture; and
(vii) provide notice to the Indenture Trustee on or prior to
three (3) Business Days prior to each Installment Date.
ARTICLE III
ADMINISTRATIVE MANAGEMENT OF THE VESSEL
Section 3.01 APPOINTMENT OF MANAGER AS MANAGER OF THE VESSEL.
The Owner hereby appoints the Manager and the Manager hereby accepts its
appointment to act as administrative manager of the Vessel from and after the
date hereof to the date the Vessel is disposed of by the Owner or the Manager is
removed pursuant to Section 4.02.
Section 3.02 RESPONSIBILITIES OF THE MANAGER. From and after
the Closing Date, the Manager hereby covenants and agrees with the Owner that:
(a) From and after the Closing Date to the date of termination
of the Initial Charter pursuant to the provisions thereof, the Manager shall
monitor and enforce the performance by the Initial Charterer of its obligations
under and pursuant to the Initial Charter. Thereafter, if the Owner enters into
an Acceptable Replacement Charter or substitute charter, the Manager shall
monitor and enforce the performance by any subsequent charterer (a "Subsequent
Charterer") of its obligations under and pursuant to an Acceptable Replacement
Charter or substitute charter. In no event shall the Manager be responsible for
the costs and expenses incurred in connection with the enforcement of the
Initial Charter, any Acceptable Replacement Charter or substitute charter.
(b) The Manager shall review the insurance certificates
provided by the Initial Charterer (or Subsequent Charterer) pursuant to the
terms of the Initial Charter (or Acceptable Replacement Charter or substitute
charter) to determine whether such certificates comply with the terms of the
Initial Charter (or Acceptable Replacement Charter or substitute charter);
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<PAGE>
PROVIDED, HOWEVER, that in no event shall the Manager be liable for the
placement of additional insurance on the Vessel or the payment or advancement of
any premiums or calls.
(c) The Manager shall handle and process any claims arising in
connection with the insurances of the Vessel in accordance with Clause 11 of the
Initial Charter (or the pertinent provisions of the Acceptable Replacement
Charter or substitute charter).
(d) The Manager shall review any and all assignments and
subcharters of the Vessel to determine if they meet the requirements of the
Initial Charter (or Acceptable Replacement Charter or substitute charter).
(e) The Manager shall review any and all approvals or consents
requested by the Initial Charterer (or Subsequent Charterer) pursuant to the
terms of the Initial Charter (or Acceptable Replacement Charter or substitute
charter) and advise the Owner or the Owner's assignee with respect to same.
(f) The Manager shall provide the services of such officers
and other staff of suitable skills and experience from among the members of the
staff of the Manager as may be necessary in order properly to perform the
services referred to herein.
(g) The Manager shall provide office equipment and the use of
accounting or computing equipment when and to the extent required and the
necessary executive, clerical and secretarial personnel for the performance of
the services herein set out.
(h) The Manager shall keep all books and records of things
done and transactions performed on behalf of the Owner.
Section 3.03 MANAGER TO ACT AS ATTORNEY-IN-FACT OF OWNER. The
Owner hereby constitutes the Manager, and its successors and assigns, its true
and lawful attorney, irrevocably, with full power in its own name, in the name
of its agents or nominees or in the name of the Owner or otherwise, to execute
any and all documents, instruments, agreements and applications for and on
behalf of the Owner relating to or in connection with (i) the registration of
the Vessel under the laws of the Registration Jurisdiction, (ii) the monitoring
and enforcement of the terms and conditions of the Initial Charter (or
Acceptable Replacement Charter or substitute charter) and (iii) the performance
by the Owner of its obligations under the Initial Charter (or Acceptable
Replacement Charter or substitute charter) as the Manager may deem to be
necessary or advisable.
Section 3.04 MANAGER TO ACT AS OWNER'S REMARKETING AGENT. The
Owner hereby appoints and the Manager accepts appointment as the Owner's
exclusive marketing agent with respect to the sale and/or charter of the Vessel
on the terms and conditions set forth in this Agreement.
Section 3.05 MANAGER'S REMARKETING OBLIGATIONS. (a) The
Manager shall commence marketing of the Vessel upon receipt of written notice
(the "Commencement Notice") from the Owner stating that the Initial Charterer
has given the Owner notice of the Initial Charter's election not to renew the
Initial Charter. The Manager will obtain the services of
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<PAGE>
brokers to assist it in its remarketing efforts. Among the brokers the Manager
may use (on a non-exclusive basis) are McQuilling Brokerage Partners, Inc. and
ACM Shipping Limited.
(b) The Manager shall promptly solicit bids for and advise the
Owner and the Indenture Trustee, as assignee of the Owner, as to the
availability of an Acceptable Replacement Charter.
(c) In the event that the Manager notifies the Indenture
Trustee, as assignee of the Owner, and the Owner that an Acceptable Replacement
Charter is commercially unavailable, then the Manager shall be directed by
notice in writing from the Owner or the Indenture Trustee, as assignee of the
Owner, to solicit bids for the sale of the Vessel.
(d) The Manager shall forward to the Indenture Trustee the
highest cash bid for the sale of such Vessel received after the receipt of the
Commencement Notice to the date which is one week prior to the next succeeding
principal payment date (the "Remarketing Period") that will, when added to the
Allocable Portion of the Debt Service Reserve Fund, at least equal the Allocated
Principal Amount of the Notes for such Vessel, plus interest accrued but unpaid
thereon; PROVIDED, HOWEVER, if there are no such bids, the Manager shall forward
to the Indenture Trustee all other cash bids received during the Remarketing
Period by the Manager for the sale of the Vessel. The Indenture Trustee shall
instruct the Manager whether or not to accept any such bid.
(e) In the event that there are no bids for the sale of the
Vessel or the Indenture Trustee instructs the Manager not to accept any bid for
the sale of the Vessel, then the Manager shall consult with the Owner and the
Indenture Trustee and shall attempt to recharter the Vessel upon such terms as
it shall, in its sole discretion, deem appropriate so long as (i) such charter
is an arms' length agreement, (ii) the charterhire payable thereunder during the
term thereof is an amount sufficient to (A) make the mandatory sinking fund
payments, together with all interest payments on the Allocated Principal Amount
of the Notes for the Vessel, (B) pay Recurring Fees for the Vessel and the cost
of insurance not maintained by the Substitute Charterer under such substitute
charter, (C) pay the Management Fees for the Vessel and (D) pay the amount of
fees and expenses of the Indenture Trustee allocable to the Vessel.
(f) If the Manager is unable to obtain any bids for the
recharter of the Vessel, it shall promptly advise the Owner and the Indenture
Trustee and recommend what alternatives are available for the employment or
disposition of the Vessel.
Section 3.06 MANAGER'S ACTIVITIES ON BEHALF OF OWNER. In
connection with the performance of its services hereunder on behalf of the
Owner, the Manager shall not perform such services from an office or fixed place
of business in the United States within the meaning of sections 864 or 887(b)(4)
of the Code and shall use its best efforts to avoid treatment of the Owner as
being engaged in a trade or business in the United States or having any such
office or fixed place of business in the United States.
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<PAGE>
ARTICLE IV
GENERAL PROVISIONS REGARDING
THE MANAGER
Section 4.01 NO DUTIES EXCEPT AS SPECIFIED IN AGREEMENT OR
INSTRUCTIONS. (a) The Manager shall not have any duty or obligation to manage,
make any payment in respect of, register, record, sell, repair, advance any
amounts in connection with the repair of, dispose of or otherwise deal with the
Vessel or any part thereof, or otherwise take or refrain from taking any action
under, or in connection with, any document contemplated hereby to which the
Manager is a party, except as expressly provided by the terms of this Agreement.
No implied duties or obligations shall be read into this Agreement against the
Manager.
(b) Under no circumstances shall the Manager be liable for (i)
the Owner's obligations under the Indenture, the Security Documents, the Initial
Charter or the indebtedness evidenced by the Notes or (ii) the validity or
sufficiency of the Indenture or any of the Security Documents. The Manager shall
not assume any liability, duty or obligation to any Person, other than as
expressly provided for herein.
(c) The Manager shall not have any duty to conduct any
affirmative investigation, other than as specifically set forth in this
Agreement, as to the Initial Charterer's (or Acceptable Replacement Charterer's
or Subsequent Charterer's) performance of its obligations under the Initial
Charter (or Acceptable Replacement Charter or substitute charter) or the
condition of the Vessel.
(d) No provision of this Agreement shall be construed to
relieve the Manager from liability for its own grossly negligent action, its own
grossly negligent failure to act or its own willful misconduct. The duties and
obligations of the Manager shall be determined solely by the express provisions
of this Agreement and the Manager shall not be liable except for the performance
of its duties and obligations as specifically set forth in this Agreement. No
implied covenants or obligations shall be read into this Agreement against the
Manager and, in the absence of bad faith on the part of the Manager, the Manager
may conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon any certificates or opinions furnished to
the Manager and conforming to the requirements of this Agreement.
(e) The Manager may consult with counsel and any advice or
opinion of counsel shall be full and complete authorization and protection in
respect of any action taken or suffered or omitted by it hereunder in good faith
and in accordance with such advice or opinion of counsel.
(f) The right of the Manager to perform any discretionary act
enumerated in this Agreement shall not be construed as a duty, and the Manager
shall not be answerable for other than its gross negligence or willful
misconduct in the performance of such act, and the delivery hereunder to the
Manager of any notice, document or report shall not give rise to an affirmative
obligation on the part of the Manager to take any action with respect thereto,
except as otherwise expressly provided herein.
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<PAGE>
Section 4.02 RESIGNATION OF MANAGER. The Manager may resign
its duties at any time upon 30 days prior written notice to the Owner and the
Indenture Trustee. The Manager may be removed by the Owner with or without cause
upon 30 days prior written notice to the Manager and the Indenture Trustee;
PROVIDED, HOWEVER, if the Owner removes the Manager without cause, the Manager
shall be entitled to receive the compensation described in Section 4.04(a)
hereof through the date which is 90 days after the receipt of such notice. In
the event of the resignation or removal of the Manager, a successor manager
shall be appointed by the Owner. The Owner shall give the Indenture Trustee
notice of the successor manager's acceptance of such appointment and shall cause
such successor to execute any and all documents requested by the Indenture
Trustee to evidence such successor's acceptance of all of the obligations of the
Manager pursuant to this Agreement. For the purposes of this Agreement, any
material breach of any material obligation of the Manager hereunder shall give
the Owner the right to remove the Manager with cause.
Section 4.03 INDEMNIFICATION. The Owner shall indemnify the
Manager and its successors and assigns, and hold them harmless against and from,
any and all liabilities, obligations, losses, damages, taxes, penalties, claims,
actions, suits, costs, expenses (including legal fees and expenses) of any kind
and nature whatsoever (collectively, "Expenses") which may be imposed on,
incurred by or asserted at any time against the Manager (whether or not
indemnified against by other parties) in any way relating to or arising out of
this Agreement, the Indentures or any Security Document; PROVIDED, HOWEVER, that
the Owner shall not be required to indemnify the Manager for Expenses arising or
resulting from its own willful misconduct or gross negligence.
Section 4.04 COMPENSATION. (a) For the first year of the term
of this Agreement, the Manager shall receive as compensation for its services
hereunder an amount equal to $50,000 per annum, payable semi-annually in arrears
on each Payment Date as provided in Section 3.3 of the Indenture.
(b) Whenever any payment to the Manager under this Agreement
shall be due on a day other than a Business Day, the date of payment thereof
shall be extended to the next succeeding Business Day, unless such extension
would cause payment to be made in the next succeeding calendar month, in which
case such date shall be advanced to the next preceding Business Day.
ARTICLE V
MISCELLANEOUS PROVISIONS
Section 5.01 AMENDMENT. This Agreement may be amended from
time to time by written agreement signed by the parties hereto upon the written
consent of the Indenture Trustee.
Section 5.02 SEVERABILITY. If any provision of this Agreement
is held to be in conflict with any applicable statute or rule of law or is
otherwise held to be unenforceable for any reason whatsoever, such circumstances
shall not have the effect of rendering the provision in question inoperative or
unenforceable in any other case or circumstance, or of rendering any
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<PAGE>
other provision or provisions herein contained invalid, inoperative, or
unenforceable to any extent whatsoever. The invalidity of any one or more
phrases, sentences, clauses or Sections contained in this Agreement shall not
affect the remaining portions of this Agreement, or any part thereof.
Section 5.03 NOTICES. All demands, notices and communications
hereunder shall be in writing, personally delivered or mailed by certified
mail-return receipt requested, and shall be deemed to have been duly given upon
receipt (a) in the case of the Manager, at the following address: Park Avenue
Tower, 65 East 55th Street, Suite 3300, New York, New York 10022, (b) in the
case of the Owner, at the following address: 15-19 Athol Street, Douglas, Isle
of Man and (c) in the case of the Indenture Trustee, at the following address:
114 West 47th Street, New York, New York 10036-1532 Attention: Corporate Trust
Department, or at other such address as shall be designated by such party in a
written notice to the other parties.
Section 5.04 CAPTIONS. The captions or headings in this
Agreement are for convenience only and in no way define, limit or describe the
scope or intent of any provisions or sections of this Agreement.
Section 5.05 GOVERNING LAW. This Agreement shall be governed
by and interpreted in accordance with the laws of the State of New York, without
giving effect to the principles of conflicts of law.
Section 5.06 NO DEMISE. Nothing herein contained shall be
construed as creating a demise of the Vessel to the Manager.
Section 5.07 NO PARTNERSHIP. Nothing herein contained shall be
deemed or construed to create a partnership or joint venture among the parties
hereto, and the services of each party shall be rendered as an independent
contractor and not as agent for any other party.
Section 5.08 COUNTERPARTS. This Agreement may be executed in
any number of counterparts and by different parties hereto on separate
counterpart, each of which shall be deemed to be an original. Such counterparts
shall constitute one and the same agreement.
Section 5.09 SURVIVAL. The representations, covenants and
agreements contained in or made pursuant to this Agreement in respect of either
party hereto shall survive the execution and delivery of this Agreement and
shall continue in effect so long as such party's obligations hereunder remain
outstanding.
Section 5.10 INTEGRATION. This Agreement and the Schedule and
Exhibits hereto constitute the entire agreement and understanding between the
parties hereto with respect to the subject matter hereof and supersedes all
prior agreements, understandings or representations pertaining to the subject
matter hereof, whether oral or written. There are no warranties, representations
or other agreements between the parties in connection with the subject matter
hereof except as specifically set forth or incorporated herein.
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<PAGE>
Section 5.11 REPRODUCTION OF DOCUMENTS. This Agreement and all
documents relating thereto, including, without limitation, (a) consents, waivers
and modifications which may hereafter be executed, (b) documents received by any
party at the closing, and (c) financial statements, certificates and other
information previously or hereafter furnished, may be reproduced by any
photographic, photostatic, microfilm, micro-card, miniature photographic or
other similar process. The parties agree that any such reproduction shall be
admissible in evidence as the original itself in any judicial or administrative
proceeding (whether or not the original is in existence and whether or not such
reproduction was made in the regular course of business) and that any
enlargement, facsimile or further reproduction of such reproduction shall
likewise be admissible in evidence.
Section 5.12 GENERAL INTERPRETIVE PRINCIPLES. For purposes of
this Agreement except as otherwise expressly provided or unless the context
otherwise requires:
(a) the defined terms in this Agreement shall include the
plural as well as the singular, and the use of any gender herein shall be deemed
to include any other gender;
(b) accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted accounting
principles as in effect on the date hereof;
(c) references herein to "Articles", "Sections",
"Subsections", "paragraphs", and other subdivisions without reference to a
document are to designated Articles, Sections, Subsections, paragraphs and other
subdivisions of this Indenture;
(d) a reference to a Subsection without further reference to a
Section is a reference to such Subsection as contained in the same Section in
which the reference appears, and this rule shall also apply to paragraphs and
other subdivisions;
(e) the words "herein", "hereof", "hereunder" and other words
of similar import refer to this Indenture as a whole and not to any particular
provision; and
(f) the term "include" or "including" shall mean without
limitation by reason of enumeration.
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<PAGE>
IN WITNESS WHEREOF, the Manager and the Owner have caused this
Indenture to be duly executed and delivered by their respective officers
thereunto duly authorized and their respective seals, duly attested, to be
hereunto affixed, all as of the day and year first above written.
CAMBRIDGE FUND MANAGEMENT L.L.C., as Manager
By:/s/ David Moore
-----------------------------
Name: David Moore
Title: Chief Financial Officer
GOLDEN STATE PETRO (IOM I-A) PLC, as Owner
By:/s/ Joseph Avantario
-----------------------------
Name: Joseph Avantario
Title: Treasurer
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<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS............................... 1
ARTICLE II
ADMINISTRATIVE MANAGEMENT OF THE OWNER.................. 1
Section 2.01 Appointment of Manager as Manager of Administrative
Obligations of Owner.......................................... 1
Section 2.02 Administrative Responsibilities of Manager.................... 1
ARTICLE III
ADMINISTRATIVE MANAGEMENT OF THE VESSEL................. 2
Section 3.01 Appointment of Manager as Manager of the Vessel............... 2
Section 3.02 Responsibilities of the Manager............................... 2
Section 3.03 Manager to Act as Attorney-in-Fact of Owner................... 3
Section 3.04 Manager to Act as Owner's Remarketing Agent................... 3
Section 3.05 Manager's Remarketing Obligations............................. 3
Section 3.06 Manager's Activities on Behalf of Owner....................... 4
ARTICLE IV
GENERAL PROVISIONS REGARDING
THE MANAGER............................... 5
Section 4.01 No Duties Except As Specified in Agreement or Instructions.... 5
Section 4.02 Resignation of Manager........................................ 6
Section 4.03 Indemnification............................................... 6
Section 4.04 Compensation.................................................. 6
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Page
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ARTICLE V
MISCELLANEOUS PROVISIONS......................... 6
Section 5.01 Amendment..................................................... 6
Section 5.02 Severability.................................................. 6
Section 5.03 Notices....................................................... 7
Section 5.04 Captions...................................................... 7
Section 5.05 Governing Law................................................. 7
Section 5.06 No Demise..................................................... 7
Section 5.07 No Partnership................................................ 7
Section 5.08 Counterparts.................................................. 7
Section 5.09 Survival...................................................... 7
Section 5.10 Integration................................................... 7
Section 5.11 Reproduction of Documents..................................... 8
Section 5.12 General Interpretive Principles............................... 8
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CAMBRIDGE FUND MANAGEMENT L.L.C., MANAGER
GOLDEN STATE PETRO (IOM I-B) PLC
-------------------------------------------
MANAGEMENT AGREEMENT
-------------------------------------------
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<PAGE>
This Management Agreement, dated as of December 1, 1996 (the
"Agreement"), between Golden State Petro (IOM I-B) PLC, a company organized
under the laws of the Isle of Man (the "Owner") and Cambridge Fund Management
L.L.C., a Delaware limited liability company organized under the laws of the
State of Delaware (the "Manager").
PRELIMINARY STATEMENT
The Owner is issuing first preferred mortgage notes (the
"Notes") to finance the construction of a very large crude carrier (the Vessel")
pursuant to a trust indenture (the "Indenture"), dated as of December 1, 1996,
by and among Golden State Petroleum Transport Corporation, as agent, the Owner,
Golden State Petro (IOM I-A) PLC and United State Trust Company of New York (the
"Indenture Trustee"), as indenture trustee. Concurrently herewith, the Owner is
entering into a bareboat charter (the "Initial Charter") with Chevron Transport
Corporation (the "Initial Charterer"). The Owner desires to engage the Manager
to provide management services for the Vessel and the Owner.
The Manager is willing to provide such services as to the
Owner pursuant to this Agreement upon the terms and subject to the conditions
set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained and of other good and valuable consideration, the
receipt of which is hereby acknowledged, the Owner and the Manager hereby agree
as follows:
ARTICLE I
DEFINITIONS
Unless otherwise defined in Schedule 1 to this Agreement,
capitalized terms shall have the meanings assigned to such terms in the
Indenture.
ARTICLE II
ADMINISTRATIVE MANAGEMENT OF THE OWNER
Section 2.01 APPOINTMENT OF MANAGER AS MANAGER OF
ADMINISTRATIVE OBLIGATIONS OF OWNER. The Owner hereby appoints the Manager and
the Manager hereby accepts its appointment as manager of the administrative and
corporate obligations of the Owner.
Section 2.02 ADMINISTRATIVE RESPONSIBILITIES OF MANAGER. The
Manager hereby covenants and agrees with the Owner that the Manager shall or
shall cause its designee to do the following:
(i) maintain the books and records of the Owner;
(ii) prepare and file the annual financial statements and
annual tax returns of the Owner, if required;
<PAGE>
(iii) provide all office staff and accommodation of the Owner;
(iv) prepare and submit invoices to the Owner or to the
Owner's assignee for the cost and expense of (A) recording the Mortgage under
the laws of the Registration Jurisdiction, (B) the annual corporate fees of the
Owner, (C) the annual fees of the officers and directors of the Owner, (D) the
annual premiums for directors and officers liability insurance for the directors
and officers of the Owner, if any, and (E) any other expenses properly incurred
on behalf of the Owner;
(v) on or prior to one (1) Business Day prior to a Payment
Date, determine and certify to the Indenture Trustee (A) the estimated Recurring
Fees for the Vessel which are then due and payable and (B) the estimated
Recurring Fees for the Vessel which will become due and payable on the next
succeeding Payment Date as contemplated by Section 3.3 of the Indenture;
(vi) pay any and all of the Recurring Fees pursuant to Section
3.3 of the Indenture; and
(vii) provide notice to the Indenture Trustee on or prior to
three (3) Business Days prior to each Installment Date.
ARTICLE III
ADMINISTRATIVE MANAGEMENT OF THE VESSEL
Section 3.01 APPOINTMENT OF MANAGER AS MANAGER OF THE VESSEL.
The Owner hereby appoints the Manager and the Manager hereby accepts its
appointment to act as administrative manager of the Vessel from and after the
date hereof to the date the Vessel is disposed of by the Owner or the Manager is
removed pursuant to Section 4.02.
Section 3.02 RESPONSIBILITIES OF THE MANAGER. From and after
the Closing Date, the Manager hereby covenants and agrees with the Owner that:
(a) From and after the Closing Date to the date of termination
of the Initial Charter pursuant to the provisions thereof, the Manager shall
monitor and enforce the performance by the Initial Charterer of its obligations
under and pursuant to the Initial Charter. Thereafter, if the Owner enters into
an Acceptable Replacement Charter or substitute charter, the Manager shall
monitor and enforce the performance by any subsequent charterer (a "Subsequent
Charterer") of its obligations under and pursuant to an Acceptable Replacement
Charter or substitute charter. In no event shall the Manager be responsible for
the costs and expenses incurred in connection with the enforcement of the
Initial Charter, any Acceptable Replacement Charter or substitute charter.
(b) The Manager shall review the insurance certificates
provided by the Initial Charterer (or Subsequent Charterer) pursuant to the
terms of the Initial Charter (or Acceptable Replacement Charter or substitute
charter) to determine whether such certificates comply with the terms of the
Initial Charter (or Acceptable Replacement Charter or substitute charter);
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<PAGE>
PROVIDED, HOWEVER, that in no event shall the Manager be liable for the
placement of additional insurance on the Vessel or the payment or advancement of
any premiums or calls.
(c) The Manager shall handle and process any claims arising in
connection with the insurances of the Vessel in accordance with Clause 11 of the
Initial Charter (or the pertinent provisions of the Acceptable Replacement
Charter or substitute charter).
(d) The Manager shall review any and all assignments and
subcharters of the Vessel to determine if they meet the requirements of the
Initial Charter (or Acceptable Replacement Charter or substitute charter).
(e) The Manager shall review any and all approvals or consents
requested by the Initial Charterer (or Subsequent Charterer) pursuant to the
terms of the Initial Charter (or Acceptable Replacement Charter or substitute
charter) and advise the Owner or the Owner's assignee with respect to same.
(f) The Manager shall provide the services of such officers
and other staff of suitable skills and experience from among the members of the
staff of the Manager as may be necessary in order properly to perform the
services referred to herein.
(g) The Manager shall provide office equipment and the use of
accounting or computing equipment when and to the extent required and the
necessary executive, clerical and secretarial personnel for the performance of
the services herein set out.
(h) The Manager shall keep all books and records of things
done and transactions performed on behalf of the Owner.
Section 3.03 MANAGER TO ACT AS ATTORNEY-IN-FACT OF OWNER. The
Owner hereby constitutes the Manager, and its successors and assigns, its true
and lawful attorney, irrevocably, with full power in its own name, in the name
of its agents or nominees or in the name of the Owner or otherwise, to execute
any and all documents, instruments, agreements and applications for and on
behalf of the Owner relating to or in connection with (i) the registration of
the Vessel under the laws of the Registration Jurisdiction, (ii) the monitoring
and enforcement of the terms and conditions of the Initial Charter (or
Acceptable Replacement Charter or substitute charter) and (iii) the performance
by the Owner of its obligations under the Initial Charter (or Acceptable
Replacement Charter or substitute charter) as the Manager may deem to be
necessary or advisable.
Section 3.04 MANAGER TO ACT AS OWNER'S REMARKETING AGENT. The
Owner hereby appoints and the Manager accepts appointment as the Owner's
exclusive marketing agent with respect to the sale and/or charter of the Vessel
on the terms and conditions set forth in this Agreement.
Section 3.05 MANAGER'S REMARKETING OBLIGATIONS. (a) The
Manager shall commence marketing of the Vessel upon receipt of written notice
(the "Commencement Notice") from the Owner stating that the Initial Charterer
has given the Owner notice of the Initial Charter's election not to renew the
Initial Charter. The Manager will obtain the services of
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<PAGE>
brokers to assist it in its remarketing efforts. Among the brokers the Manager
may use (on a non-exclusive basis) are McQuilling Brokerage Partners, Inc. and
ACM Shipping Limited.
(b) The Manager shall promptly solicit bids for and advise the
Owner and the Indenture Trustee, as assignee of the Owner, as to the
availability of an Acceptable Replacement Charter.
(c) In the event that the Manager notifies the Indenture
Trustee, as assignee of the Owner, and the Owner that an Acceptable Replacement
Charter is commercially unavailable, then the Manager shall be directed by
notice in writing from the Owner or the Indenture Trustee, as assignee of the
Owner, to solicit bids for the sale of the Vessel.
(d) The Manager shall forward to the Indenture Trustee the
highest cash bid for the sale of such Vessel received after the receipt of the
Commencement Notice to the date which is one week prior to the next succeeding
principal payment date (the "Remarketing Period") that will, when added to the
Allocable Portion of the Debt Service Reserve Fund, at least equal the Allocated
Principal Amount of the Notes for such Vessel, plus interest accrued but unpaid
thereon; PROVIDED, HOWEVER, if there are no such bids, the Manager shall forward
to the Indenture Trustee all other cash bids received during the Remarketing
Period by the Manager for the sale of the Vessel. The Indenture Trustee shall
instruct the Manager whether or not to accept any such bid.
(e) In the event that there are no bids for the sale of the
Vessel or the Indenture Trustee instructs the Manager not to accept any bid for
the sale of the Vessel, then the Manager shall consult with the Owner and the
Indenture Trustee and shall attempt to recharter the Vessel upon such terms as
it shall, in its sole discretion, deem appropriate so long as (i) such charter
is an arms' length agreement, (ii) the charterhire payable thereunder during the
term thereof is an amount sufficient to (A) make the mandatory sinking fund
payments, together with all interest payments on the Allocated Principal Amount
of the Notes for the Vessel, (B) pay Recurring Fees for the Vessel and the cost
of insurance not maintained by the Substitute Charterer under such substitute
charter, (C) pay the Management Fees for the Vessel and (D) pay the amount of
fees and expenses of the Indenture Trustee allocable to the Vessel.
(f) If the Manager is unable to obtain any bids for the
recharter of the Vessel, it shall promptly advise the Owner and the Indenture
Trustee and recommend what alternatives are available for the employment or
disposition of the Vessel.
Section 3.06 MANAGER'S ACTIVITIES ON BEHALF OF OWNER. In
connection with the performance of its services hereunder on behalf of the
Owner, the Manager shall not perform such services from an office or fixed place
of business in the United States within the meaning of sections 864 or 887(b)(4)
of the Code and shall use its best efforts to avoid treatment of the Owner as
being engaged in a trade or business in the United States or having any such
office or fixed place of business in the United States.
- 4 -
<PAGE>
ARTICLE IV
GENERAL PROVISIONS REGARDING
THE MANAGER
Section 4.01 NO DUTIES EXCEPT AS SPECIFIED IN AGREEMENT OR
INSTRUCTIONS. (a) The Manager shall not have any duty or obligation to manage,
make any payment in respect of, register, record, sell, repair, advance any
amounts in connection with the repair of, dispose of or otherwise deal with the
Vessel or any part thereof, or otherwise take or refrain from taking any action
under, or in connection with, any document contemplated hereby to which the
Manager is a party, except as expressly provided by the terms of this Agreement.
No implied duties or obligations shall be read into this Agreement against the
Manager.
(b) Under no circumstances shall the Manager be liable for (i)
the Owner's obligations under the Indenture, the Security Documents, the Initial
Charter or the indebtedness evidenced by the Notes or (ii) the validity or
sufficiency of the Indenture or any of the Security Documents. The Manager shall
not assume any liability, duty or obligation to any Person, other than as
expressly provided for herein.
(c) The Manager shall not have any duty to conduct any
affirmative investigation, other than as specifically set forth in this
Agreement, as to the Initial Charterer's (or Acceptable Replacement Charterer's
or Subsequent Charterer's) performance of its obligations under the Initial
Charter (or Acceptable Replacement Charter or substitute charter) or the
condition of the Vessel.
(d) No provision of this Agreement shall be construed to
relieve the Manager from liability for its own grossly negligent action, its own
grossly negligent failure to act or its own willful misconduct. The duties and
obligations of the Manager shall be determined solely by the express provisions
of this Agreement and the Manager shall not be liable except for the performance
of its duties and obligations as specifically set forth in this Agreement. No
implied covenants or obligations shall be read into this Agreement against the
Manager and, in the absence of bad faith on the part of the Manager, the Manager
may conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon any certificates or opinions furnished to
the Manager and conforming to the requirements of this Agreement.
(e) The Manager may consult with counsel and any advice or
opinion of counsel shall be full and complete authorization and protection in
respect of any action taken or suffered or omitted by it hereunder in good faith
and in accordance with such advice or opinion of counsel.
(f) The right of the Manager to perform any discretionary act
enumerated in this Agreement shall not be construed as a duty, and the Manager
shall not be answerable for other than its gross negligence or willful
misconduct in the performance of such act, and the delivery hereunder to the
Manager of any notice, document or report shall not give rise to an affirmative
obligation on the part of the Manager to take any action with respect thereto,
except as otherwise expressly provided herein.
- 5 -
<PAGE>
Section 4.02 RESIGNATION OF MANAGER. The Manager may resign
its duties at any time upon 30 days prior written notice to the Owner and the
Indenture Trustee. The Manager may be removed by the Owner with or without cause
upon 30 days prior written notice to the Manager and the Indenture Trustee;
PROVIDED, HOWEVER, if the Owner removes the Manager without cause, the Manager
shall be entitled to receive the compensation described in Section 4.04(a)
hereof through the date which is 90 days after the receipt of such notice. In
the event of the resignation or removal of the Manager, a successor manager
shall be appointed by the Owner. The Owner shall give the Indenture Trustee
notice of the successor manager's acceptance of such appointment and shall cause
such successor to execute any and all documents requested by the Indenture
Trustee to evidence such successor's acceptance of all of the obligations of the
Manager pursuant to this Agreement. For the purposes of this Agreement, any
material breach of any material obligation of the Manager hereunder shall give
the Owner the right to remove the Manager with cause.
Section 4.03 INDEMNIFICATION. The Owner shall indemnify the
Manager and its successors and assigns, and hold them harmless against and from,
any and all liabilities, obligations, losses, damages, taxes, penalties, claims,
actions, suits, costs, expenses (including legal fees and expenses) of any kind
and nature whatsoever (collectively, "Expenses") which may be imposed on,
incurred by or asserted at any time against the Manager (whether or not
indemnified against by other parties) in any way relating to or arising out of
this Agreement, the Indentures or any Security Document; PROVIDED, HOWEVER, that
the Owner shall not be required to indemnify the Manager for Expenses arising or
resulting from its own willful misconduct or gross negligence.
Section 4.04 COMPENSATION. (a) For the first year of the term
of this Agreement, the Manager shall receive as compensation for its services
hereunder an amount equal to $50,000 per annum, payable semi-annually in arrears
on each Payment Date as provided in Section 3.3 of the Indenture.
(b) Whenever any payment to the Manager under this Agreement
shall be due on a day other than a Business Day, the date of payment thereof
shall be extended to the next succeeding Business Day, unless such extension
would cause payment to be made in the next succeeding calendar month, in which
case such date shall be advanced to the next preceding Business Day.
ARTICLE V
MISCELLANEOUS PROVISIONS
Section 5.01 AMENDMENT. This Agreement may be amended from
time to time by written agreement signed by the parties hereto upon the written
consent of the Indenture Trustee.
Section 5.02 SEVERABILITY. If any provision of this Agreement
is held to be in conflict with any applicable statute or rule of law or is
otherwise held to be unenforceable for any reason whatsoever, such circumstances
shall not have the effect of rendering the provision in question inoperative or
unenforceable in any other case or circumstance, or of rendering any
- 6 -
<PAGE>
other provision or provisions herein contained invalid, inoperative, or
unenforceable to any extent whatsoever. The invalidity of any one or more
phrases, sentences, clauses or Sections contained in this Agreement shall not
affect the remaining portions of this Agreement, or any part thereof.
Section 5.03 NOTICES. All demands, notices and communications
hereunder shall be in writing, personally delivered or mailed by certified
mail-return receipt requested, and shall be deemed to have been duly given upon
receipt (a) in the case of the Manager, at the following address: Park Avenue
Tower, 65 East 55th Street, Suite 3300, New York, New York 10022, (b) in the
case of the Owner, at the following address: 15-19 Athol Street, Douglas, Isle
of Man and (c) in the case of the Indenture Trustee, at the following address:
114 West 47th Street, New York, New York 10036-1532 Attention: Corporate Trust
Department, or at other such address as shall be designated by such party in a
written notice to the other parties.
Section 5.04 CAPTIONS. The captions or headings in this
Agreement are for convenience only and in no way define, limit or describe the
scope or intent of any provisions or sections of this Agreement.
Section 5.05 GOVERNING LAW. This Agreement shall be governed
by and interpreted in accordance with the laws of the State of New York, without
giving effect to the principles of conflicts of law.
Section 5.06 NO DEMISE. Nothing herein contained shall be
construed as creating a demise of the Vessel to the Manager.
Section 5.07 NO PARTNERSHIP. Nothing herein contained shall be
deemed or construed to create a partnership or joint venture among the parties
hereto, and the services of each party shall be rendered as an independent
contractor and not as agent for any other party.
Section 5.08 COUNTERPARTS. This Agreement may be executed in
any number of counterparts and by different parties hereto on separate
counterpart, each of which shall be deemed to be an original. Such counterparts
shall constitute one and the same agreement.
Section 5.09 SURVIVAL. The representations, covenants and
agreements contained in or made pursuant to this Agreement in respect of either
party hereto shall survive the execution and delivery of this Agreement and
shall continue in effect so long as such party's obligations hereunder remain
outstanding.
Section 5.10 INTEGRATION. This Agreement and the Schedule and
Exhibits hereto constitute the entire agreement and understanding between the
parties hereto with respect to the subject matter hereof and supersedes all
prior agreements, understandings or representations pertaining to the subject
matter hereof, whether oral or written. There are no warranties, representations
or other agreements between the parties in connection with the subject matter
hereof except as specifically set forth or incorporated herein.
- 7 -
<PAGE>
Section 5.11 REPRODUCTION OF DOCUMENTS. This Agreement and all
documents relating thereto, including, without limitation, (a) consents, waivers
and modifications which may hereafter be executed, (b) documents received by any
party at the closing, and (c) financial statements, certificates and other
information previously or hereafter furnished, may be reproduced by any
photographic, photostatic, microfilm, micro-card, miniature photographic or
other similar process. The parties agree that any such reproduction shall be
admissible in evidence as the original itself in any judicial or administrative
proceeding (whether or not the original is in existence and whether or not such
reproduction was made in the regular course of business) and that any
enlargement, facsimile or further reproduction of such reproduction shall
likewise be admissible in evidence.
Section 5.12 GENERAL INTERPRETIVE PRINCIPLES. For purposes of
this Agreement except as otherwise expressly provided or unless the context
otherwise requires:
(a) the defined terms in this Agreement shall include the
plural as well as the singular, and the use of any gender herein shall be deemed
to include any other gender;
(b) accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted accounting
principles as in effect on the date hereof;
(c) references herein to "Articles", "Sections",
"Subsections", "paragraphs", and other subdivisions without reference to a
document are to designated Articles, Sections, Subsections, paragraphs and other
subdivisions of this Indenture;
(d) a reference to a Subsection without further reference to a
Section is a reference to such Subsection as contained in the same Section in
which the reference appears, and this rule shall also apply to paragraphs and
other subdivisions;
(e) the words "herein", "hereof", "hereunder" and other words
of similar import refer to this Indenture as a whole and not to any particular
provision; and
(f) the term "include" or "including" shall mean without
limitation by reason of enumeration.
- 8 -
<PAGE>
IN WITNESS WHEREOF, the Manager and the Owner have caused this
to be duly executed and delivered by their respective officers thereunto duly
authorized and their respective seals, duly attested, to be hereunto affixed,
all as of the day and year first above written.
CAMBRIDGE FUND MANAGEMENT L.L.C., as
Manager
By:/s/ David Moore
-----------------------------
Name: David Moore
Title: Chief Financial Officer
GOLDEN STATE PETRO (IOM I-B) PLC, as Owner
By:/s/ Nunzio Lipomi
-----------------------------
Name: Nunzio Lipomi
Title: Assistant Secretary
- 9 -
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE I
DEFINITIONS............................... 1
ARTICLE II
ADMINISTRATIVE MANAGEMENT OF THE OWNER.................. 1
Section 2.01 Appointment of Manager as Manager of Administrative
Obligations of Owner........................................ 1
Section 2.02 Administrative Responsibilities of Manager.................. 1
ARTICLE III
ADMINISTRATIVE MANAGEMENT OF THE VESSEL................. 2
Section 3.01 Appointment of Manager as Manager of the Vessel............. 2
Section 3.02 Responsibilities of the Manager............................. 2
Section 3.03 Manager to Act as Attorney-in-Fact of Owner................. 3
Section 3.04 Manager to Act as Owner's Remarketing Agent................. 3
Section 3.05 Manager's Remarketing Obligations........................... 3
Section 3.06 Manager's Activities on Behalf of Owner..................... 4
ARTICLE IV
GENERAL PROVISIONS REGARDING
THE MANAGER............................... 5
Section 4.01 No Duties Except As Specified in Agreement or Instructions.. 5
Section 4.02 Resignation of Manager...................................... 6
Section 4.03 Indemnification............................................. 6
Section 4.04 Compensation................................................ 6
- 10 -
<PAGE>
PAGE
ARTICLE V
MISCELLANEOUS PROVISIONS......................... 6
Section 5.01 Amendment................................................... 6
Section 5.02 Severability................................................ 6
Section 5.03 Notices..................................................... 7
Section 5.04 Captions.................................................... 7
Section 5.05 Governing Law............................................... 7
Section 5.06 No Demise................................................... 7
Section 5.07 No Partnership.............................................. 7
Section 5.08 Counterparts................................................ 7
Section 5.09 Survival.................................................... 7
Section 5.10 Integration................................................. 7
Section 5.11 Reproduction of Documents................................... 8
Section 5.12 General Interpretive Principles............................. 8
- 11 -
================================================================================
GOLDEN STATE PETRO (IOM I-A) PLC,
GOLDEN STATE PETRO (IOM-B) PLC
and
GOLDEN STATE PETROLEUM TRANSPORT CORPORATION
-----------------------------------
AGENCY AGREEMENT
Dated as of December __, 1996
-----------------------------------
================================================================================
<PAGE>
Agency Agreement, dated as of December __, 1996 (as amended or
supplemented from time to time, the "Agreement"), between Golden State Petro
(IOM-A) PLC and Golden State Petro (IOM I-B) PLC (each, an "Owner" and,
collectively, the "Owners"), each a company whose office is at 15-19 Athol
Street, Douglas, Isle of Man, and Golden State Petroleum Transport Corporation
(the "Agent"), a Delaware corporation, whose office is at 65 East 55th Street,
Suite 3300, New York, New York 10022.
WHEREAS, the Owners desire to engage the Agent to act as the
Owners' agent;
WHEREAS, the Agent is willing to act as agent for and on
behalf of Owners on the terms and subject to the conditions hereinafter set
forth.
NOW, THEREFORE, in consideration of the premises and of the
covenants herein contained, the parties hereto covenant and agree as follows:
1. DEFINITIONS. Any capitalized term not otherwise defined
herein shall have the meaning set forth in the Indenture (the "Indenture"),
dated as of the date hereof, among the Owners, the Agent and [Name of Trustee],
as indenture trustee (the "Indenture Trustee").
2. APPOINTMENT. The Owners hereby appoint the Agent and the
Agent hereby accepts its appointment to act for and on behalf of the Owners
pursuant to the terms of this Agreement.
3. DUTIES OF THE AGENT.
(a) In performing any of its duties hereunder, the Agent
shall act in accordance with any written instruction signed on behalf of both of
the Owners.
(b) The Agent is hereby directed by the Owners to do the
following for and on behalf of the Owners:
(i) to execute and deliver the Mortgage Notes as agent for
and on behalf of the Owners;
(ii) to issue, transfer and exchange the Mortgage Notes as
agent for and on behalf of the Owners;
(iii) to take whatever action shall be required to be
taken by the Agent by the terms of, and subject to the terms of, this
Agreement and the Indenture; and
(iv) to take such other lawful action in connection with
the foregoing as the Owners may from time to time direct.
4. ACTION UPON INSTRUCTIONS. In the event the Agent is
required to take any action pursuant to the Indenture not expressly discussed
herein, the Agent shall act on the written direction of the Owners; PROVIDED,
HOWEVER, the Agent shall not be required to take any action
<PAGE>
-2-
that is likely to result in the personal liability of the Agent or is contrary
to the terms hereof or of any document contemplated hereby or otherwise contrary
to law.
5. FURTHER ASSURANCES.
(a) The Agent shall execute and deliver all such other
documents, instruments or certificates and take all such other actions in
accordance with the direction of the Owners as the Owners may deem necessary or
advisable to give effect to the transactions contemplated hereby.
(b) Each of the Owners agrees that it shall execute and
deliver all such other documents, instruments or certificates and take all such
other actions in accordance with the direction of the Agent as the Agent may
deem necessary or advisable to give effect to the transactions contemplated
hereby.
6. RESTRICTIONS. The Agent shall take no action (a)
inconsistent with the terms of the Indenture or (b) if the Agent has been
notified by the Indenture Trustee that such action would cause or threaten to
cause any nationally recognized statistical ratings agency to downgrade the
ratings of the Mortgage Notes. The Owners shall not direct the Agent to take any
action that would violate the provisions of this Section 6.
7. FURNISHING OF DOCUMENTS. The Agent shall furnish to the
Owners, promptly upon receipt thereof, duplicate copies of all reports, notices,
requests, demands, certificates, financial statements or other instruments
furnished to the Agent under the Indenture or the Security Documents.
8. RESIGNATION OF AGENT. The Agent may resign its duties
hereunder at any time upon 30 days prior written notice to the Owners, the
Indenture Trustee and the Rating Agency. The Agent may be removed by the Owners
upon 30 days prior written notice to the Agent, the Indenture Trustee and the
Rating Agency. In the event of the resignation or removal of the Agent, a
successor agent shall be appointed by the Owners. No resignation or removal
shall become effective unless a successor has assumed the Agent's
responsibilities and obligations hereunder. The Owners shall give the Indenture
Trustee and the Rating Agency notice of the such successor Agent's acceptance of
such appointment and shall cause such successor to execute any and all documents
requested by the Indenture Trustee to evidence such successor's acceptance of
all of the obligations of the Agent pursuant to the Indenture and any of the
other Security Documents.
9. TRUST EXPENSES. The Owners shall be jointly and severally
liable, subject to a right of contribution INTER SE in proportion to the
Allocated Principal Amount of the Mortgage Notes for such Owner's Vessel, to pay
any and all out-of-pocket costs or expenses of the Agent hereunder, including,
without limitation, the reasonable compensation, expenses and disbursements of
such agents, representatives, experts and counsel as the Agent may employ in
connection with the exercise and performance of its rights and duties hereunder
and under the Indenture and the Security Documents.
<PAGE>
-3-
10. INDEMNIFICATION. The Owners shall be jointly and severally
liable, subject to a right of contribution INTER SE in proportion to the
Allocated Principal Amount of the Mortgage Notes for such Owner's Vessel, for,
and shall indemnify the Agent and its successors and assigns, and hold them
harmless against and from, any and all liabilities, obligations, losses,
damages, taxes, penalties, claims, actions, suits, costs, expenses (including
legal fees and expenses) of any kind and nature whatsoever (collectively,
"Expenses") which may be imposed on, incurred by or asserted at any time against
the Agent (whether or not indemnified against by other parties) in any way
relating to or arising out of this Agreement, the Indenture or any other
Security Document; PROVIDED, HOWEVER, that the Owners shall not be required to
indemnify the Agent for Expenses arising or resulting from its own willful
misconduct or gross negligence.
11. COMPENSATION. The Agent shall receive as compensation for
its services hereunder an amount equal to $5,000 payable on the date hereof.
12. SEVERABILITY. If any word, phrase, sentence, paragraph,
provision or section of this Agreement shall be held, declared, pronounced or
rendered invalid, void, unenforceable or inoperative for any reason by any court
of competent jurisdiction, governmental authority, statute or otherwise, such
holding, declaration, pronouncement or rendering shall not adversely affect any
other word, phrase, sentence, paragraph, provision or section of this Agreement
which shall otherwise remain in full force and effect and be enforced in
accordance with its terms.
13. COUNTERPARTS. This Agreement may be executed in any number
of counterparts, each of which for all purposes shall be deemed to be an
original but all of which together shall constitute but one instrument.
14. HEADINGS. The captions or headings in this Agreement are
for convenience only and in no way define, limit or describe the scope or intent
of any provisions or sections of this Agreement.
15. RELATIONSHIP OF PARTIES. The relationship of the Agent to
the Owners is intended by the parties hereto to be that of an independent
contractor and not of a joint venturer or partner of the Owners. The Agent is
not a registered agent of the Owners.
16. TERMINATION. The agency created hereby shall terminate
upon the payment in full of the Mortgage Notes and the performance by the Agent
and the Owners of all of the obligations of the Agent and the Owners,
respectively, under the Indenture and the other Security Documents. Upon
termination of this Agreement, the Agent shall (a) deliver to the Owners any and
all documents and instruments held by it hereunder or under the Indenture or any
other Security Document and (b) execute and deliver such instruments and perform
all acts reasonably requested in order to effect the orderly and efficient
termination of the agency created hereby.
17. MISCELLANEOUS. This Agreement shall bind the respective
successors and assigns of the parties hereto. This Agreement and the rights of
the parties hereto and of any
<PAGE>
-4-
subsequent holder of this Agreement shall be construed in accordance with and
governed by the laws of the State of New York, and may not be changed orally but
only by an instrument in writing signed by the person against whom enforcement
of any waiver, change, modification or discharge is sought.
No failure to exercise and no delay in exercising, on the part
of any party hereto, of any right, power or privilege hereunder shall operate as
a waiver thereof, nor shall any single or partial exercise of any right, power
or privilege preclude any other or further exercise thereof or the exercise of
any right, power or privilege. The rights and remedies herein provided are
cumulative and are not exclusive of any rights or remedies provided by law.
18. NOTICES. All demands, notices and communications hereunder
shall be in writing, personally delivered or mailed by certified mail-return
receipt requested, and shall be deemed to have been duly given upon receipt (a)
in the case of the Agent, at the following address: c/o Cambridge Fund
Management, LLC, Park Avenue Tower, 65 East 55th Street, Suite 3300, New York,
New York 10022, (b) in the case of the Owners, at the following address: 15-19
Athol Street, Douglas, Isle of Man, or at other such address as shall be
designated by such party in a written notice to the other parties.
19. GENERAL INTERPRETIVE PRINCIPLES. For purposes of this
Agreement except as otherwise expressly provided or unless the context otherwise
requires:
(a) the terms defined in this Agreement have the meanings
assigned to them in this Agreement and include the plural as well as the
singular, and the use of any gender herein shall be deemed to include the other
gender;
(b) accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted accounting
principles in the United States of America as in effect on the date hereof;
(c) references herein to "Sections", "paragraphs", and other
subdivisions without reference to a document are to designated Sections,
paragraphs and other subdivisions of this Agreement;
(d) a reference to a paragraph of a Section without further
reference to a Section is a reference to such paragraph as contained in the same
Section in which the reference appears, and this rule shall also apply to other
subdivisions;
(e) the words "herein", "hereof", "hereunder" and other words
of similar import refer to this Agreement as a whole and not to any particular
provision; and
(f) the term "include" or "including" shall mean without
limitation by reason of enumeration.
<PAGE>
-5-
IN WITNESS WHEREOF, parties hereto have caused this Agreement
to be executed the day and year first above written.
GOLDEN STATE PETRO (IOM I-A) PLC
By:/s/ Joseph Avantario
-----------------------------
Name: Joseph Avantario
Its: Treasurer
GOLDEN STATE PETRO (IOM-B) PLC
By:/s/ Nunzio Lipomi
-----------------------------
Name: Nunzio Lipomi
Its: Assistant Secretary
GOLDEN STATE PETROLEUM
TRANSPORT CORPORATION
By:/s/ John McFadden
-----------------------------
Name: John McFadden
Its: President
<PAGE>
TABLE OF CONTENTS
Page
----
1. Definitions............................................................ 1
2. Appointment............................................................ 1
3. Duties of the Agent.................................................... 1
4. Action Upon Instructions............................................... 1
5. Further Assurances..................................................... 2
6. Restrictions........................................................... 2
7. Furnishing of Documents................................................ 2
8. Resignation of Agent................................................... 2
9. Trust Expenses......................................................... 2
10. Indemnification........................................................ 3
11. Compensation........................................................... 3
12. Severability........................................................... 3
13. Counterparts........................................................... 3
14. Headings............................................................... 3
15. Relationship of Parties................................................ 3
16. Termination............................................................ 3
17. Miscellaneous.......................................................... 3
18. Notices................................................................ 4
19. General Interpretive Principles........................................ 4
8.04% FIRST PREFERRED MORTGAGE NOTES DUE 2019
REGISTRATION RIGHTS AGREEMENT
Dated as of December 24, 1996
by and among
GOLDEN STATE PETROLEUM CORPORATION, as Agent
GOLDEN STATE PETRO (IOM I-A) PLC
GOLDEN STATE PETRO (IOM I-B) PLC
and
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
<PAGE>
8.04% FIRST PREFERRED MORTGAGE NOTES DUE 2019
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement is made and entered into as of
December 24, 1996, by and among Golden State Petroleum Transport Corporation, a
Delaware corporation ("GOLDEN STATE PETROLEUM"), as agent on behalf of the
Owners (as defined herein), Golden State Petro (IOM I-A) PLC and Golden State
Petro (IOM I-B) PLC (each, an "OWNER," and together with Golden State Petroleum,
the "COMPANIES") and Donaldson, Lufkin & Jenrette Securities Corporation, as
initial purchaser (the "INITIAL PURCHASER") of the $127,100,000 aggregate
principal amount of original 8.04% First Preferred Mortgage Notes Due 2019 (the
"Notes") issued by Golden State Petroleum.
Concurrently herewith, the Initial Purchaser has entered into a
separate registration rights agreement (the "CHEVRON REGISTRATION RIGHTS
AGREEMENT") with Chevron Corporation, a Delaware corporation ("CHEVRON"), and
Chevron Transport Corporation, a Liberian corporation ("CHEVRON TRANSPORT").
Pursuant to the Chevron Registration Rights Agreement, Chevron and Chevron
Transport have agreed, inter alia, to use their reasonable best efforts to
assist in the consummation of the transactions contemplated by this Agreement
and, to the extent required by the Securities and Exchange Commission (the
"SEC"), file and have declared effective a registration statement (the "CHEVRON
REGISTRATION STATEMENT"), which shall contain a prospectus (the "CHEVRON
PROSPECTUS").
This Agreement is made pursuant to the Purchase Agreement, dated
December 19, 1996, among the Companies and the Initial Purchaser (the "PURCHASE
AGREEMENT") relating to the purchase and sale of the Notes. In order to induce
the Initial Purchaser to purchase the Notes, the Companies have agreed to
provide the registration rights set forth in this Agreement. The execution and
delivery of this Agreement is a condition to the Initial Purchaser's purchase of
the Notes as contemplated by the Purchase Agreement and this Agreement is made
expressly for the benefit of Chevron, Chevron Transport and the holders of the
Notes as third party beneficiaries. The provisions of Section 5 hereof are made
expressly for the benefit of the Trustee (as defined herein) on behalf of the
holders of the Registrable Notes (as defined herein).
The parties hereby agree as follows:
<PAGE>
1 DEFINITIONS
As used in this Agreement, the following terms shall have the following
meanings:
ACCEPTANCE DATE: As defined in Section 2.(d)(ii) hereof.
AFFILIATE: Of any specified person shall mean any other person directly
or indirectly controlling or controlled by or under direct or indirect common
control with such specified person. For the purposes of this definition,
"CONTROL," when used with respect to any person, means the power to direct the
management and policies of such person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise. The terms
"AFFILIATED," "CONTROLLING" and "CONTROLLED" have meanings correlative to the
foregoing.
AGREEMENT: This Registration Rights Agreement, as the same may be
amended, supplemented or modified from time to time in accordance with the terms
hereof.
BUSINESS DAY: Any day except Saturday, Sunday and any day which shall
be a legal holiday or a day on which banking institutions in the states of New
York or California generally are authorized or required by law or other
government actions to close.
CHEVRON: Chevron Corporation, a Delaware corporation.
CHEVRON OBLIGATIONS: Collectively, (i) Chevron Transport's obligations
under the Bareboat Charter dated December 24, 1996 between Chevron Transport and
Golden State Petro (IOM I-A) PLC, (ii) Chevron Transport's obligations under the
Bareboat Charter dated December 24, 1996 between Chevron Transport and Golden
State Petro (IOM I-B) PLC and (iii) Chevron's obligations under its guarantees
of each such Bareboat Charter.
CHEVRON PROSPECTUS: The prospectus included in the Chevron Registration
Statement (including, without limitation, a prospectus that discloses
information previously omitted from a prospectus filed as part of an effective
registration statement in reliance upon Rule 430A promulgated pursuant to the
Securities Act), as amended or supplemented by any prospectus supplement, with
respect to the terms of the offering of any portion of the Chevron Obligations
covered by the Chevron Registration Statement, and all other amendments and
supplements to the Chevron Prospectus, including post-effective amendments, and
all material incorporated by reference or deemed to be incorporated by reference
in the Chevron Prospectus.
2
<PAGE>
CHEVRON REGISTRATION STATEMENT: A co-registration statement of Chevron
and Chevron Transport relating to the Chevron Obligations, pursuant to the
provisions of the Chevron Registration Rights Agreement, including the Chevron
Prospectus, amendments and supplements to such registration statement or Chevron
Prospectus, including pre- and post-effective amendments, all exhibits thereto,
and all material incorporated by reference or deemed to be incorporated by
reference in such registration statement.
CHEVRON TRANSPORT: Chevron Transport Corporation, a Liberian
corporation.
COMPANIES: Golden State Petroleum and the Owners.
CONSUMMATE OR CONSUMMATE: When used to qualify the term "Exchange
Offer" shall mean to validly and lawfully issue and deliver the New Notes
pursuant to the Exchange Offer in exchange for all Registrable Notes tendered
pursuant thereto.
EFFECTIVE DATE: The date on which the SEC declares the Registration
Statement to be effective.
EFFECTIVE PERIOD: As defined in Section 3 hereof.
EXCHANGE ACT: The Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated by the SEC thereunder.
EXCHANGE DATE: The date on which the Exchange Offer is consummated
which shall in any event be on or before the 30th Business Day after the
Effective Date of the Exchange Offer Registration Statement.
EXCHANGE OFFER: An offer to issue, in exchange for any and all of the
Registrable Notes, a like aggregate principal amount of New Notes, which offer
shall be made by the Companies pursuant to Section 2 hereof.
EXCHANGE OFFER REGISTRATION STATEMENT: Any registration statement of
the Companies that covers the New Notes pursuant to the provisions of this
Agreement, including the Prospectus, amendments and supplements to such
registration statement or Prospectus, including pre- and post-effective
amendments, all exhibits thereto, and all material incorporated by reference or
deemed to be incorporated by reference in such registration statement.
FILING DATE: The date the Registration Statement is filed with the SEC.
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GOLDEN STATE PETROLEUM: Golden State Petroleum Transport Corporation, a
Delaware corporation, as agent on behalf of the Owners.
INDEMNIFIED PARTY: As defined in Section 7.(d) hereof.
INDEMNIFYING PARTY: As defined in Section 7.(d) hereof.
INDENTURE: The Indenture, dated December 1, 1996, among the Companies
and the Trustee thereunder pursuant to which the Notes are being issued, as
amended or supplemented from time to time in accordance with the terms thereof.
INITIAL PURCHASER: As defined in the preamble hereof.
NEW NOTES: The 8.04% First Preferred Mortgage Notes Due 2019 issued by
Golden State Petroleum that are identical to the Notes in all material respects,
except that the offer and exchange thereof pursuant to the Exchange Offer shall
have been registered pursuant to an effective Exchange Offer Registration
Statement under the Securities Act and shall not bear any restrictions on
transfer.
NOTES: The $127,100,000 aggregate principal amount of original 8.04%
First Preferred Mortgage Notes Due 2019 issued by Golden State Petroleum
pursuant to the Indenture.
OWNERS: Golden State Petro (IOM I-A) PLC and Golden State Petro (IOM
I-B) PLC, each of which is an Isle of Man public limited company.
PARTICIPATING BROKER-DEALER: As defined in Section 2.(e) hereof.
PAYING AGENT: As defined in the Indenture.
PROCEEDING: An action, claim, suit or proceeding (including, without
limitation, an investigation or partial proceeding, such as a deposition),
whether commenced or threatened.
PROSPECTUS: The prospectus included in any Registration Statement
(including, without limitation, a prospectus that discloses information
previously omitted from a prospectus filed as part of an effective registration
statement in reliance upon Rule 430A promulgated pursuant to the Securities
Act), as amended or supplemented by any prospectus supplement, with respect to
the terms of the offering of any portion of the Registrable Notes or the New
Notes covered by such Registration Statement, and all other amendments and
supplements to the Prospectus, including post-effective amendments, and all
material incorporated by
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reference or deemed to be incorporated by reference in such Prospectus. If
required by the SEC in order to permit the consummation of the Exchange Offer,
the Prospectus included in the Exchange Offer Registration Statement shall
include, as an appendix, the Chevron Prospectus.
REGISTRABLE NOTE: Each Note, upon original issuance thereof and at all
times subsequent thereto, until, in the case of any such Note, (i) the date on
which it has been exchanged by a person other than a broker-dealer for a New
Note in the Exchange Offer, (ii) the date on which it has been effectively
registered pursuant to the Securities Act and disposed of in accordance with the
Shelf Registration Statement, (iii) it has been distributed to the public
pursuant to Rule 144 under the Securities Act or (iv) after the expiration date
of the holding period applicable to sale of such Note pursuant to Rule 144(k)
(or any similar provisions then in effect).
REGISTRATION EVENT: As defined in Section 5 hereof.
REGISTRATION STATEMENT: Any Exchange Offer Registration Statement and
any Shelf Registration Statement.
RULE 144: Rule 144 promulgated by the SEC pursuant to the Securities
Act, as such Rule may be amended from time to time, or any similar rule or
regulation hereafter adopted by the SEC having substantially the same effect as
such Rule.
RULE 144A: Rule 144A promulgated by the SEC pursuant to the Securities
Act, as such Rule may be amended from time to time, or any similar rule or
regulation hereafter adopted by the SEC having substantially the same effect as
such Rule.
RULE 158: Rule 158 promulgated by the SEC pursuant to the Securities
Act, as such Rule may be amended from time to time, or any similar rule or
regulation hereafter adopted by the SEC having substantially the same effect as
such Rule.
RULE 174: Rule 174 promulgated by the SEC pursuant to the Securities
Act, as such Rule may be amended from time to time, or any similar rule or
regulation hereafter adopted by the SEC having substantially the same effect as
such Rule.
RULE 415: Rule 415 promulgated by the SEC pursuant to the Securities
Act, as such Rule may be amended from time to time, or any similar rule or
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regulation hereafter adopted by the SEC having substantially the same effect as
such Rule.
RULE 424: Rule 424 promulgated by the SEC pursuant to the Securities
Act, as such Rule may be amended from time to time, or any similar rule or
regulation hereafter adopted by the SEC having substantially the same effect as
such Rule.
SEC: The Securities and Exchange Commission.
SECURITIES ACT: The Securities Act of 1933, as amended, and the rules
and regulations promulgated by the SEC thereunder.
SHELF NOTICE: As defined in Section 2.(c) hereof.
SHELF REGISTRATION: As defined in Section 3 hereof.
SHELF REGISTRATION STATEMENT: Any registration statement of the
Companies that covers the Registrable Notes pursuant to the provisions of this
Agreement, including the Prospectus, amendments and supplements to such
registration statement or Prospectus, including pre- and post-effective
amendments, all exhibits thereto, and all material incorporated by reference or
deemed to be incorporated by reference in such registration statement, and is
filed pursuant to Rule 415.
SPECIAL COUNSEL: Any special counsel as may be designated by the
holders of a majority in aggregate principal amount of Registrable Notes
outstanding.
SPECIAL INTEREST: As defined in Section 5 hereof.
TIA: The Trust Indenture Act of 1939, as amended.
TRUSTEE: United States Trust Company of New York, as trustee under the
Indenture.
UNDERWRITTEN REGISTRATION OR UNDERWRITTEN OFFERING: A registration in
connection with which securities of any of the Companies are sold to an
underwriter for reoffering to the public pursuant to an effective Registration
Statement.
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2 REGISTERED EXCHANGE OFFER
(a) Subject to Section 2.(c) below, the Companies shall file with the
SEC on or prior to the 30th day after the date hereof an Exchange Offer
Registration Statement. The Companies will use their reasonable best efforts to
have the Exchange Offer Registration Statement declared effective by the SEC on
or prior to the 105th day (or if the Companies are unable to do so, as soon as
possible thereafter) after the date hereof. Unless the Exchange Offer would not
be permitted by applicable law or SEC policy, the Companies will commence the
Exchange Offer and use their reasonable best efforts to issue New Notes on or
prior to the 30th Business Day (or if the Companies are unable to do so, as soon
as possible thereafter) after the date on which the Exchange Offer Registration
Statement was declared effective by the SEC. The offer and exchange of the New
Notes pursuant to the Exchange Offer shall be registered pursuant to the
Securities Act on the appropriate form and duly registered or qualified under
applicable state securities or Blue Sky laws and will comply with all applicable
tender offer rules and regulations of and pursuant to the Exchange Act and state
securities or Blue Sky laws. The Exchange Offer shall not be subject to any
condition, other than that the Exchange Offer does not violate any applicable
law. No securities shall be included in the Exchange Offer Registration
Statement other than the New Notes.
(b) The Companies may require each holder of Registrable Notes
participating in the Exchange Offer to represent to the Companies that at the
time of the consummation of the Exchange Offer (i) any New Notes received by
such holder will be acquired in the ordinary course of its business and (ii)
such holder will have no arrangement or understanding with any person to
participate in the distribution of the New Notes within the meaning of the
Securities Act.
(c) If (i) the Companies are not required to file the Exchange Offer
Registration Statement or are not permitted to consummate the Exchange Offer
because the Exchange Offer is not permitted by applicable law or SEC policy or
(ii) prior to the consummation of the Exchange Offer, any holder of Registrable
Notes notifies the Companies that (A) it is prohibited by law or SEC policy from
participating in the Exchange Offer or (B) it may not resell the New Notes
acquired by it in the Exchange Offer to the public without delivering a
prospectus and the prospectus contained in the Exchange Offer Registration
Statement is not appropriate or available for such resales or (C) it is a
broker-dealer and owns Notes acquired directly from the Companies or an
Affiliate of the Companies, the Companies shall cease to be obligated under
Section 2.(a) above with respect to the Exchange Offer and shall promptly
deliver to the holders of the Registrable Notes and the Trustee notice thereof
(the "SHELF NOTICE") and shall thereafter file a Shelf Registration Statement
pursuant to Section 3. Following the delivery of a
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valid Shelf Notice in accordance with the provisions hereof, the Companies shall
not have any further obligation under this Section 2.
(d) The Companies shall commence the Exchange Offer (within the time
periods set forth herein) by mailing the related Prospectus and appropriate
accompanying documents to each holder of Registrable Notes providing, in
addition to such other disclosures as are required by applicable law, that:
(i) the Exchange Offer is being made pursuant to this Agreement
and that all Registrable Notes validly tendered will be accepted for
exchange;
(ii) the date of acceptance of Registrable Notes tendered for
exchange (the "ACCEPTANCE DATE"); and
(iii) holders of Registrable Notes electing to have any such Note
exchanged pursuant to the Exchange Offer will be required to surrender
such Note in denominations of $1,000 or an integral multiple thereof,
together with the letters of transmittal enclosed therewith, to the
institution and at the address (located in the Borough of Manhattan,
The City of New York) specified in the notice prior to the close of
business on the Exchange Date, PROVIDED that reasonable best efforts
shall be used by the Companies to ensure that customary guaranteed
delivery procedures are available for the holders to elect to use.
On the Exchange Date, the Companies or their agent shall accept for
exchange all Registrable Notes or portions thereof tendered and not validly
withdrawn pursuant to the Exchange Offer. As soon as practicable after the
Acceptance Date (but in no event later than the Exchange Date), the Companies or
their agent shall deliver, or cause to be delivered, to the Trustee for
cancellation all Registrable Notes or portions thereof so accepted for exchange
by the Companies and issue, and cause the Trustee to promptly authenticate under
the Indenture and mail to each holder, a New Note equal in principal amount to
the aggregate principal amount of the Registrable Notes surrendered by such
holder.
(e) The Companies have been informed that the Staff of the SEC has
taken the position that any broker-dealer that owns New Notes that were received
by such broker-dealer for its own account in the Exchange Offer (a
"PARTICIPATING BROKER-DEALER") may be deemed to be an "underwriter" within the
meaning of the Securities Act and must deliver a prospectus meeting the
requirements of the Securities Act in connection with any resale of such New
Notes (other than a resale of an unsold allotment resulting from the original
placement of the Registrable Notes).
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The Companies have also been informed that the Staff of the SEC has
taken the position that if the Prospectus contained in the Registration
Statement includes a plan of distribution containing a statement to the above
effect and the means by which Participating Broker-Dealers may resell the New
Notes, without naming the Participating Broker-Dealers or specifying the amount
of New Notes owned by them, such Prospectus may be delivered by Participating
Broker-Dealers to satisfy their prospectus delivery obligations under the
Securities Act in connection with the resales of New Notes for their own
accounts, so long as the Prospectus otherwise meets the requirements of the
Securities Act.
In light of the above, notwithstanding the other provisions of this
Agreement, the Companies agree that the provisions of this Agreement as they
relate to a Shelf Registration shall also apply to an Exchange Offer to the
extent, and with such reasonable modifications thereto as may be, reasonably
requested by any Participating Broker-Dealer or the Companies, in each case as
provided in clause 2.(e)(ii), in order to expedite or facilitate the disposition
of any New Notes by Participating Broker-Dealers consistent with the positions
of the Staff of the SEC recited in this Section 2.(e); PROVIDED that:
(i) the Companies shall not be required to amend or supplement
the Prospectus contained in the Registration Statement, as would
otherwise be contemplated by this Agreement, for a period exceeding 180
days after the Exchange Date (as such period may be extended pursuant
to the terms of this Agreement relating to a Shelf Registration) and
Participating Broker-Dealers shall not be authorized by the Companies
to deliver and shall not deliver such Prospectus after such period in
connection with the resales contemplated by this Section 2.(e); and
(ii) the application of the Shelf Registration procedures set
forth in this Section 2.(e) of this Agreement to an Exchange Offer, to
the extent not otherwise required by the positions of the Staff of the
SEC or the Securities Act, will be in conformity with the reasonable
request to the Companies by anyone who certified to the Companies in
writing a reasonable period prior to the Filing Date that they
anticipate that they may be a Participating Broker-Dealer.
3 SHELF REGISTRATION
If a Shelf Notice is delivered (or should have been delivered) as
contemplated by Section 2.(c), then the Companies shall use their reasonable
best efforts to prepare and file, as promptly as reasonably practicable
thereafter, with the SEC a Shelf Registration Statement for an offering to be
made on a continuous
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basis pursuant to Rule 415 covering all of the Registrable Notes (the "SHELF
REGISTRATION"). The Companies shall use their reasonable best efforts to (i)
file a Shelf Registration Statement with the SEC on or prior to the 30th day (or
if the Companies are unable to do so, as soon as possible thereafter) after such
filing obligation arises, (ii) cause the Shelf Registration Statement to become
effective under the Securities Act on or prior to the 105th day (or if the
Companies are unable to do so, as soon as possible thereafter) after such
obligation arises and (iii) keep the Shelf Registration Statement continuously
effective under the Securities Act for the period (the "EFFECTIVE PERIOD") from
the date of its effectiveness to the earlier of: (A) such time as the Notes
issued on the Delayed Closing Date (as defined in the Purchase Agreement) may be
freely resold pursuant to Rule 144(k) by a person who is not an Affiliate of the
Companies and (B) the next day following the date that all Registrable Notes
covered by the Shelf Registration Statement have been sold pursuant thereto;
PROVIDED that the Effective Period shall be extended to the extent required to
permit dealers to comply with the applicable prospectus delivery requirements
under Rule 174.
4 REGISTRATION PROCEDURES
In connection with the Companies' registration obligations hereunder,
the Companies shall effect such registrations on the appropriate form for the
offer and sale of the Registrable Notes or offer and exchange of the New Notes,
as applicable, to (i) permit the offer and sale of New Notes or (ii) permit the
offer and exchange of the Registrable Notes in accordance with the method or
methods of disposition thereof specified by the holders of a majority in
aggregate principal amount of Registrable Notes, and in furtherance thereof the
Companies shall:
(a) No fewer than five Business Days prior to the initial filing of
any Shelf Registration Statement or Prospectus with respect thereto and no fewer
than two Business Days prior to the filing of any amendment or supplement
thereto (including any document that would be incorporated or deemed to be
incorporated therein by reference), furnish to the Initial Purchaser, Chevron,
Chevron Transport, the holders of the Registrable Notes, their Special Counsel
and the managing underwriters, if any, copies of all such documents proposed to
be filed, which documents (other than those incorporated or deemed to be
incorporated by reference) will be subject to the review of such holders, their
Special Counsel and such managing underwriters, if any, and cause the officers
and directors of the Companies, counsel to the Companies and independent
certified public accountants to the Companies to respond to such inquiries as
shall be necessary, in the opinion of respective counsel to such holders and
such managing underwriters, to conduct a reasonable investigation within the
meaning of the Securities Act; PROVIDED that the Companies shall not be deemed
to have kept a Shelf Registration Statement effective during the period required
hereunder if they voluntarily take
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any action that results in holders of the Registrable Notes covered thereby not
being able to sell such Registrable Notes pursuant to Federal securities laws
during that period. The Companies shall not file any such Shelf Registration
Statement or Prospectus relating thereto or any amendments or supplements
thereto to which the holders of a majority of the Registrable Notes, their
Special Counsel or the managing underwriters, if any, shall reasonably object on
a timely basis (within three and one Business Days of receipt thereof, in the
case of the initial filing and the filing of any amendment or supplement,
respectively);
(b) Prepare and file with the SEC such amendments, including
post-effective amendments, to each Registration Statement as may be necessary to
keep such Registration Statement continuously effective for the applicable time
period; cause the related Prospectus to be supplemented by any required
Prospectus supplement and as so supplemented to be filed pursuant to Rule 424
(or any similar provisions then in force) under the Securities Act; and comply
with the provisions of the Securities Act and the Exchange Act with respect to
the disposition of all securities covered by such Registration Statement during
such period in accordance with the intended methods of disposition by the
sellers thereof set forth in such Registration Statement as so amended or in
such Prospectus as so supplemented;
(c) Notify the Initial Purchaser, Chevron, Chevron Transport, the
holders of Registrable Notes to be sold or, in the case of an Exchange Offer,
tendered for, their Special Counsel and the managing underwriters, if any,
promptly (and, in the case of clause 4.(c)(i)(A), in no event less than two
Business Days prior to such filing) (i)(A) when a Prospectus or any Prospectus
supplement or post-effective amendment is being filed, and (B) with respect to a
Registration Statement or any post-effective amendment, when the same has become
effective, (ii) in the case of a Shelf Registration Statement, of any request by
the SEC or any other Federal or state governmental authority for amendments or
supplements to such Shelf Registration Statement or related Prospectus or for
additional information, (iii) of the issuance by the SEC, any state securities
commission, any other governmental agency or any court of any stop order, order
or injunction suspending or enjoining the use or the effectiveness of a
Registration Statement or the initiation of any proceedings for that purpose,
(iv) if at any time any of the representations and warranties of the Companies
contained in any agreement (including any underwriting agreement) contemplated
hereby cease to be true and correct in all material respects, (v) of the receipt
by the Companies of any notification with respect to the suspension of the
qualification or exemption from qualification of any of the Registrable Notes or
New Notes for sale in any jurisdiction, or the initiation or threatening of any
proceeding for such purpose, and (vi) in the case of a Shelf Registration
Statement, of the happening of any event that makes any statement made in such
Shelf Registration Statement or related Prospectus or any
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document incorporated or deemed to be incorporated therein by reference untrue
in any material respect or that requires the making of any changes in such Shelf
Registration Statement, Prospectus or documents so that, in the case of the
Shelf Registration Statement, it will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, not misleading, and so that, in the
case of the related Prospectus, it will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading;
(d) Use their reasonable best efforts (i) to avoid the issuance of,
or, if issued, obtain the withdrawal of, any order enjoining or suspending the
use or effectiveness of a Registration Statement and (ii) to obtain the lifting
of any suspension of the qualification (or exemption from qualification) of any
of the Registrable Notes or New Notes for sale in any United States
jurisdiction, in each case at the earliest practicable time;
(e) If a Shelf Registration Statement is filed pursuant to Section 3
and if requested by the managing underwriters, if any, or the holders of a
majority in aggregate principal amount of the Registrable Notes being registered
thereunder, (i) promptly incorporate in a Prospectus supplement or
post-effective amendment such information as the managing underwriters, if any,
and the holders agree and reasonably propose should be included therein and (ii)
make all required filings of such Prospectus supplement or such post-effective
amendment as soon as practicable after the Companies have received notification
of the matters reasonably proposed to be incorporated in such Prospectus
supplement or post-effective amendment; PROVIDED that the Companies shall not be
required to take any action pursuant to this Section 4.(e) that would, in the
opinion of outside counsel for the Companies, violate applicable law;
(f) Furnish to the Initial Purchaser, Chevron, Chevron Transport, each
holder of Registrable Notes and New Notes, their Special Counsel and each
managing underwriter, if any, without charge, at least one conformed copy of
each Registration Statement and each amendment thereto, including financial
statements and schedules, all documents incorporated or deemed to be
incorporated therein by reference, and all exhibits to the extent requested by
each holder (including those previously furnished or incorporated by reference)
as soon as practicable after the filing of such documents with the SEC;
(g) Deliver to the Initial Purchaser, Chevron, Chevron Transport, each
holder of Registrable Notes and New Notes, their Special Counsel and the
underwriters, if any, without charge as many copies of the Prospectus or
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Prospectuses (including each form of prospectus) and each amendment or
supplement thereto as such persons reasonably request; and the Companies hereby
consent to the use of such Prospectus and each amendment or supplement thereto
by each of the selling holders of Registrable Notes and the underwriters, if
any, in connection with the offering and sale of the Registrable Notes covered
by such Prospectus and any amendment or supplement thereto as contemplated
thereby;
(h) Prior to any public offering of Registrable Notes and prior to the
consummation of the Exchange Offer, use their reasonable best efforts: (i) to
register or qualify or cooperate with the holders of Registrable Notes to be
sold or tendered for, the underwriters, if any, and their respective counsel in
connection with the registration or qualification (or exemption from such
registration or qualification) of such Registrable Notes or New Notes for offer
and sale under the securities or Blue Sky laws of such jurisdictions within the
United States as any holder or underwriter reasonably requests in writing and
(ii) to keep each such registration or qualification (or exemption therefrom)
effective during the period such Registration Statement is required to be kept
effective and do any and all other acts or things necessary or advisable to
enable the disposition in such jurisdictions of the Registrable Notes or New
Notes covered by the applicable Registration Statement; PROVIDED that the
Companies shall not be required to qualify generally to do business in any
jurisdiction where they are not then so qualified or to take any action that
would subject them to general service of process in any such jurisdiction where
they are not then so subject or subject the Companies to any tax in any such
jurisdiction where they are not then so subject;
(i) Cooperate with the holders and the managing underwriters, if any,
to facilitate the timely preparation and delivery of certificates representing
Registrable Notes or New Notes to be sold, which certificates shall not bear any
restrictive legends and shall be in a form eligible for deposit with The
Depository Trust Company and to enable such Registrable Notes or New Notes to be
in such denominations and registered in such names as the managing underwriters,
if any, or holders may request at least two Business Days prior to any sale of
Registrable Notes or New Notes;
(j) Use their reasonable best efforts to cause the Registrable Notes
and New Notes covered by the Registration Statement, and the offering thereof,
to be registered with or approved by such other governmental agencies or
authorities within the United States, except as may be required solely as a
consequence of the nature of such selling holder's business, in which case the
Companies will cooperate in all reasonable respects with the filing of such
Registration Statement and the granting of such approvals as may be necessary to
enable the seller or sellers thereof or the underwriters, if any, to consummate
the disposition of such Registrable Notes and New Notes; PROVIDED that the
Companies shall not be
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required to register the Registrable Notes and New Notes in any jurisdiction
that would subject them to general service of process in any such jurisdiction
where they are not then so subject or subject the Companies to any tax in any
such jurisdiction where they are not then so subject or to require the Companies
to qualify to do business in any jurisdiction where they are not then so
qualified;
(k) Upon the occurrence of any event contemplated by Section
4.(c)(vi), as promptly as practicable, prepare a supplement or amendment,
including a post-effective amendment, to each Registration Statement or a
supplement to the related Prospectus or any document incorporated or deemed to
be incorporated therein by reference, and file any other required document so
that, as thereafter delivered, such Prospectus will not contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading;
(l) Use their reasonable best efforts to cause the Registrable Notes
or the New Notes, as applicable, covered by a Registration Statement to be rated
with the appropriate rating agencies;
(m) Prior to the Effective Date of the first Registration Statement
relating to the Registrable Notes or New Notes, as applicable, to provide a
CUSIP number for the Registrable Notes and New Notes, as applicable;
(n) If a Shelf Registration Statement is filed pursuant to Section 3,
enter into such agreements (including an underwriting agreement in form, scope
and substance as is customary in underwritten offerings of securities such as
the Registrable Notes) and take all such other reasonable actions in connection
therewith (including those reasonably requested by the managing underwriters, if
any, or the holders of a majority in aggregate principal amount of the
Registrable Notes being sold) in order to expedite or facilitate the disposition
of such Registrable Notes, and in such connection, whether or not an
underwriting agreement is entered into and whether or not any offering
thereunder is an underwritten offering, (i) make such representations and
warranties to the holders of such Registrable Notes and the underwriters, if
any, with respect to the business of the Companies and their subsidiaries, and
the Registration Statement, Prospectus and documents, if any, incorporated or
deemed to be incorporated by reference therein, in each case, in form, substance
and scope as are customarily made by issuers to underwriters in underwritten
offerings of securities such as the Registrable Notes, and confirm the same if
and when requested; (ii) obtain opinions of counsel to the Companies and updates
thereof (which counsel and opinions (in form, scope and substance) shall be
reasonably satisfactory to the managing underwriters, if any, and Special
Counsel to the holders of the
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Registrable Notes being sold), addressed to each selling holder of Registrable
Notes and each of the underwriters, if any, covering the matters customarily
covered in opinions requested in underwritten offerings of securities such as
the Registrable Notes and such other matters as may be reasonably requested by
such Special Counsel and underwriters; (iii) unless not permitted to be issued
under an applicable Statement of Accounting Standards, obtain "cold comfort"
letters and updates thereof from the independent certified public accountants of
the Companies (and, if necessary, any other independent certified public
accountants of any subsidiary of the Companies or of any business acquired by
the Companies for which financial statements and financial data is, or is
required to be, included in the Registration Statement), addressed to each
selling holder of Registrable Notes and each of the underwriters, if any, such
letters to be in customary form and covering matters of the type customarily
covered in "cold comfort" letters in connection with underwritten offerings of
securities such as the Registrable Notes; (iv) if an underwriting agreement is
entered into, the same shall contain indemnification provisions and procedures
no less favorable to the selling holders and the underwriters, if any, than
those set forth in Section 7 hereof (or such other provisions and procedures
acceptable to holders of a majority in aggregate principal amount of the holders
of Registrable Notes covered by such Shelf Registration Statement and the
managing underwriters); and (v) deliver such documents and certificates as may
be reasonably requested by the holders of a majority in aggregate principal
amount of the Registrable Notes being sold, their Special Counsel and the
managing underwriters, if any, to evidence the continued validity of the
representations and warranties made pursuant to clause 4.(n)(i) and to evidence
compliance with any customary conditions contained in the underwriting agreement
or other agreement entered into by the Companies;
(o) In the case of a Shelf Registration Statement, make available for
inspection by a representative of the holders of a majority in aggregate
principal amount of Registrable Notes being sold, any underwriter participating
in any such disposition of Registrable Notes and any attorney, consultant or
accountant retained by such selling holders or underwriter, at the offices where
normally kept, during reasonable business hours, all financial and other
records, pertinent corporate documents and properties of the Companies and their
subsidiaries, and cause the officers, directors, agents and employees of the
Companies and their subsidiaries to supply all information in each case
reasonably requested by any such representative, underwriter, attorney,
consultant or accountant in connection with such Shelf Registration Statement;
PROVIDED that any confidential records, documents and other information
designated by the Companies as confidential shall be kept confidential by such
persons unless disclosure of any such record, document or other information is
required by law or by a court or administrative order, in which case such
record, document or information shall be disclosed only to the extent required
to comply with such law or order;
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(p) Provide an indenture trustee for the Registrable Notes and the New
Notes, as the case may be, and cause the Indenture to be qualified under the TIA
not later than the Effective Date of the first Registration Statement relating
to the Registrable Notes or the New Notes, as applicable; and in connection
therewith, cooperate with the trustee under the Indenture and the holders of the
Registrable Notes or the New Notes, as the case may be, to effect such changes
to the Indenture as may be required for such Indenture to be so qualified in
accordance with the terms of the TIA; and execute, and use their reasonable best
efforts to cause such trustee to execute, all customary documents as may be
required to effect such changes, and all other forms and documents required to
be filed with the SEC to enable the Indenture to be so qualified in a timely
manner;
(q) Use their reasonable best efforts to comply with all applicable
rules and regulations of the SEC; and make generally available to their security
holders earning statements satisfying the provisions of Section 11(a) of the
Securities Act and Rule 158 thereunder (or any similar rule promulgated under
the Securities Act), no later than 45 days after the end of any 12-month period
(or 90 days after the end of any 12-month period if such period is a fiscal
year) (i) commencing at the end of any fiscal quarter in which Registrable Notes
are sold to underwriters in a firm commitment or reasonable efforts underwritten
offering and (ii) if not sold to underwriters in such an offering, commencing on
the first day of the first fiscal quarter of each of the Companies after the
effective date of a Registration Statement, which statement shall cover said
period, consistent with the requirements of Rule 158; and
(r) If an Exchange Offer is to be consummated, upon delivery of the
Registrable Notes by such holders to the Companies in exchange for the New
Notes, the Companies shall mark, or caused to be marked, on such Registrable
Notes that such Registrable Notes are being cancelled in exchange for the New
Notes; in no event shall such Registrable Notes be marked as paid or otherwise
satisfied.
The Companies may require each seller of Registrable Notes as to which
any registration is being effected to furnish to the Companies such information
regarding the distribution of such Registrable Notes as is required by law to be
disclosed in the applicable Shelf Registration Statement and the Companies may
exclude from such registration the Registrable Notes of any seller who
unreasonably fails to furnish such information within a reasonable time after
receiving such request.
If any such Shelf Registration Statement refers to any holder of
Registrable Notes by name or otherwise as the holder of any securities of the
Companies, then
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such holder shall have the right to require (i) the insertion therein of
language, in form and substance reasonably satisfactory to such holder, to the
effect that the holding by such holder of such securities is not to be construed
as a recommendation by such holder of the investment quality of the New Notes
and that such holding does not imply that such holder will assist in meeting any
future financial requirements of the Companies or (ii) in the event that such
reference to such holder by name or otherwise is not required by the Securities
Act or any similar Federal statute then in force, the deletion of the reference
to such holder in any amendment or supplement to the Registration Statement
filed or prepared subsequent to the time that such reference ceases to be
required.
In the case of a Shelf Registration Statement, each holder of
Registrable Notes agrees by acquisition of such Registrable Notes that, upon
receipt of any notice from the Companies of the happening of any event of the
kind described in Section 4.(c)(ii), 4.(c)(iii), 4.(c)(v) or 4.(c)(vi) hereof,
such holder will forthwith discontinue disposition of such Registrable Notes
covered by such Shelf Registration Statement or related Prospectus until such
holder's receipt of the copies of the supplemented or amended Prospectus
contemplated by Section 4.(k) hereof or until it is advised in writing by the
Companies that the use of the applicable Prospectus may be resumed and, in
either case, has received copies of any additional or supplemental filings that
are incorporated or deemed to be incorporated by reference in such Prospectus.
5 SPECIAL INTEREST
If (i) the Exchange Offer is not consummated within 180 days of the
date hereof, (ii) a Shelf Registration Statement is not declared effective
within the time period specified therein, (iii) the Shelf Registration Statement
or the Exchange Offer Registration Statement is declared effective but
thereafter ceases to be effective during the periods specified herein, or (iv)
the SEC determines that neither the consummation of the Exchange Offer nor
continued effectiveness of the Shelf Registration Statement will permit the free
resale of the Notes or the New Notes, as the case may be, without additional
registration under the Securities Act, then a "REGISTRATION EVENT" will be
deemed to have occurred. During any time that a Registration Event has occurred
and is continuing, until the Notes or the New Notes may be freely resold
pursuant to Rule 144(k) or pursuant to an effective Shelf Registration
Statement, by a person who is not an Affiliate of the Companies, special
interest ("SPECIAL INTEREST") will accrue on all outstanding Registrable Notes
at a rate of 0.25% of the principal amount thereof per annum payable
semiannually in arrears on each Payment Date (as defined in the Indenture). Two
Business Days prior to each Payment Date, the Owners shall pay to the Trustee,
for the benefit of the holders of the Registrable Notes, all Special
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Interest that shall have accrued since the previous Payment Date (together with
any other accrued but unpaid Special Interest (including any interest thereon)).
6 REGISTRATION EXPENSES
(a) All fees and expenses incident to the performance of or compliance
with this Agreement or the Chevron Registration Rights Agreement by the
Companies, Chevron and Chevron Transport shall be borne jointly and severally by
the Companies whether or not any Registration Statement or Chevron Registration
Statement is filed or becomes effective and whether or not any securities are
offered and exchanged or sold pursuant to any Registration Statement. The fees
and expenses referred to in the foregoing sentence shall include, without
limitation, (i) all registration and filing fees (including, without limitation,
fees and expenses (A) with respect to filings required to be made with the
National Association of Securities Dealers, Inc. and (B) in compliance with
state securities or Blue Sky laws (including, without limitation and in addition
to that provided for in (b) below, fees and disbursements of counsel for the
underwriters or holders in connection with Blue Sky qualifications of the
Registrable Notes or New Notes and determination of the eligibility of the
Registrable Notes or New Notes for investment under the laws of such
jurisdictions as the managing underwriters, if any, or holders of a majority in
aggregate principal amount of Registrable Notes may designate)), (ii) printing
expenses (including, without limitation, expenses of printing certificates for
Registrable Notes or New Notes in a form eligible for deposit with The
Depository Trust Company and of printing Prospectuses if the printing of
Prospectuses is requested by the managing underwriters, if any, or by the
holders of a majority in aggregate principal amount of the Registrable Notes or
New Notes covered by the Registration Statement), (iii) messenger, telephone and
delivery expenses, (iv) fees and disbursements of counsel for the Companies and
Special Counsel for the holders (in accordance with the provisions of Section
6.(b) hereof), (v) fees and disbursements of all independent certified public
accountants referred to in Section 4.(n)(iii) hereof (including, without
limitation, the expenses of any special audit and "cold comfort" letters
required by or incident to such performance), (vi) all fees and disbursements
relating to the qualification of the Indenture under applicable securities laws,
(vii) the reasonable fees and disbursements of the Trustee (including the
reasonable fees and disbursements of its counsel), (viii) rating agency fees,
(ix) Securities Act liability insurance, if the Companies so desire such
insurance, and (x) fees and expenses of all other persons retained by the
Companies. In addition, the Companies shall pay their internal expenses
(including, without limitation, all salaries and expenses of their officers and
employees performing legal or accounting duties) and the expense of any annual
audit.
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(b) In connection with any Registration Statement hereunder, the
Companies shall reimburse the holders of the Registrable Notes being registered
or tendered for in such registration for the reasonable fees and disbursements
of not more than one firm of attorneys (in addition to any local counsel) chosen
by the holders of a majority in aggregate principal amount of the Registrable
Notes.
(c) Notwithstanding Section 7.(a) above, the Companies shall have no
obligation to pay any of the costs, expenses, disbursements and fees of
Pillsbury Madison & Sutro LLP or Price Waterhouse LLP (San Francisco),
accountants for Chevron and Chevron Transport, which Chevron and Chevron
Transport have agreed to pay pursuant to the Chevron Registration Rights
Agreement.
7 INDEMNIFICATION
(a) Each of the Companies jointly and severally agrees to indemnify
and hold harmless the Initial Purchaser, Chevron, Chevron Transport and each
holder of Registrable Notes and each person, if any, who controls the Initial
Purchaser or any holder of Registrable Notes within the meaning of either
Section 15 of the Securities Act or Section 20 of the Exchange Act, from and
against any and all losses, claims, damages, liabilities and judgments
(including, without limitation, any legal or other expenses reasonably incurred
in connection with defending or investigating any such action or claim) caused
by any untrue statement or alleged untrue statement of a material fact contained
in any Registration Statement or any amendment thereof, any preliminary
prospectus or the Prospectus (as amended and supplemented if the Companies shall
have furnished any amendments or supplements thereto), or caused by any omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, except
insofar as such losses, claims, damage, liabilities or judgments are caused by
any such untrue statement or omission or alleged untrue statement or omission
based upon (i) information furnished in writing expressly for use in any
Registration Statement (x) by the Initial Purchaser relating to the Initial
Purchaser or (y) by any holder of Registrable Notes relating to such holder of
Registrable Notes or (ii) information furnished in writing to the Companies by
Chevron or Chevron Transport expressly for use in the Chevron Registration
Statement and the Chevron Prospectus. The Companies also agree to indemnify any
underwriters of the Registrable Notes, their officers and directors and each
person who controls such underwriters on substantially the same basis as that of
the indemnification of the Initial Purchaser and the holders of Registrable
Notes provided in this Section 7. This indemnity agreement will be in addition
to any liability which the Companies may otherwise have.
(b) In connection with any Shelf Registration in which a holder of
Registrable Notes is participating, such holder of Registrable Notes shall
furnish to
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the Companies in writing such information as the Companies reasonably request
for use in such Registration Statement, any preliminary prospectus, the
Prospectus or any amendments or supplements thereto, and each such holder of
Registrable Notes agrees, severally and not jointly, to indemnify and hold
harmless the Initial Purchaser, Chevron, Chevron Transport, the Companies, the
directors and the officers of the Companies who sign a Registration Statement
and each person, if any, who controls the Initial Purchaser, Chevron, Chevron
Transport or any of the Companies within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act, from and against any and all
losses, claims, damage, liabilities and judgments (including, without
limitation, any legal or other expenses reasonably incurred in connection with
defending or investigating any such action or claim) caused by any untrue
statement or alleged untrue statement of a material fact contained in any
Registration Statement or any amendment thereof, any preliminary prospectus or
the Prospectus (as amended or supplemented if the Companies shall have furnished
any amendments or supplements thereto), or caused by any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, but only with reference
to such information relating to such holder of Registrable Notes, furnished in
writing by or on behalf of such holder of Registrable Notes, expressly for use
in such Registration Statement, any preliminary prospectus, the Prospectus or
any amendments or supplements thereto.
(c) The Initial Purchaser agrees to indemnify and hold harmless the
Companies, the holders of Registrable Notes, the directors and the officers of
the Companies who sign a Registration Statement and each person, if any, who
controls any of the Companies, or any holder of Registrable Notes within the
meaning of either Section 15 of the Securities Act or Section 20 of the Exchange
Act from and against any and all losses, claims, damages, liabilities and
judgments (including, without limitation, any legal or other expenses reasonably
incurred in connection with defending or investigating any such action or claim)
caused by any untrue statement or alleged untrue statement of a material fact
contained in any Registration Statement or any amendment thereof, any
preliminary prospectus or the Prospectus (as amended or supplemented if the
Companies shall have furnished any amendments or supplements thereto), or
arising out of or based upon any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, but only with reference to information relating to the
Initial Purchaser, furnished in writing by the Initial Purchaser to the
Companies expressly for use in such Registration Statement, any preliminary
prospectus, the Prospectus or any amendments or supplements thereto. This
indemnity agreement will be in addition to any liability which the Initial
Purchaser may otherwise have.
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(d) In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity may be
sought pursuant to any of the three preceding paragraphs, such person (the
"INDEMNIFIED PARTY") shall promptly notify the person against whom such
indemnity may be sought (the "INDEMNIFYING PARTY") in writing and the
indemnifying party shall assume the defense thereof, including employment of
counsel reasonably satisfactory to the indemnified party to represent the
indemnified party and payment of all fees and disbursements of such counsel
related to such proceeding. In any such proceeding, any indemnified party shall
have the right to retain its own counsel, and participate in the defense
thereof, but the fees and expenses of such counsel shall be at the expense of
such indemnified party unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel (ii) the
indemnifying party shall have failed to assume the defense and employ counsel or
(iii) the named parties to any such proceeding (including any impleaded parties)
include both the indemnifying party and the indemnified party and representation
of both parties by the same counsel would be inappropriate due to the actual or
potential differing interest between them. It is understood that the
indemnifying party shall not, in connection with any proceeding or related
proceedings in the same jurisdiction, be liable for (i) the fees and expenses of
more than one separate firm (in addition to any local counsel) for the Initial
Purchaser and all persons, if any, who control the Initial Purchaser within the
meaning of either Section 15 of the Securities Act or Section 20 of the Exchange
Act, (ii) the fees and expenses of more than one separate firm (in addition to
any local counsel) for the Companies, their directors, their officers who sign
the Registration Statement and each person, if any, who controls any of the
Companies within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act, (iii) the fees and expenses of more than one
separate firm (in addition to any local counsel) for Chevron and Chevron
Transport, and all persons, if any, who control Chevron or Chevron Transport
within the meaning of either Section 15 of the Securities Act or Section 20 of
the Exchange Act and (iv) the fees and expenses of more than one separate firm
(in addition to any local counsel) for all holders of Registrable Notes and all
persons, if any, who control any holders of Registrable Notes within the meaning
of either Section 15 of the Securities Act or Section 20 of the Exchange Act,
and that all such fees and expenses shall be reimbursed as they are incurred. In
such case involving the Initial Purchaser and such control persons of the
Initial Purchaser, such firm shall be designated in writing by the Initial
Purchaser. In such case involving Chevron and Chevron Transport and such
controlling persons of Chevron or Chevron Transport, such firm shall be
designated in writing by Chevron. In such case involving the holders of
Registrable Notes and such controlling persons of holders of Registrable Notes,
such firm shall be designated in writing by holders of a majority in aggregate
principal amount of Registrable Notes. In all other cases, such firm shall be
designated by the Companies. The
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indemnifying party shall not be liable for any settlement of any proceeding
effected without its written consent, but if settled with such consent or if
there be a final judgment for the plaintiff, the indemnifying party agrees to
indemnify the indemnified party from and against any loss or liability by reason
of such settlement or judgment. Notwithstanding the immediately preceding
sentence, if in any case where the fees and expenses of counsel are at the
expense of the indemnifying party and an indemnified party shall have requested
the indemnifying party to reimburse the indemnified party for such fees and
expenses of counsel as incurred, such indemnifying party agrees that it shall be
liable for any settlement of any action effected without its written consent if
(i) such settlement is entered into more than ten Business Days after the
receipt by such indemnifying party of the aforesaid request and (ii) such
indemnifying party shall have failed to reimburse the indemnified party in
accordance with such request for reimbursement prior to the date of such
settlement. No indemnifying party shall, without the prior written consent of
the indemnified party, effect any settlement of any pending or threatened
proceeding in respect of which any indemnified party is or could have been a
party and indemnity could have been sought hereunder by such indemnified party,
unless such settlement includes an unconditional release of such indemnified
party from all liability on claims that are the subject matter of such
proceeding.
(e) If the indemnification provided for in Section 7.(a), 7.(b) or
7.(c) is unavailable to an indemnified party or insufficient in respect of any
losses, claims, damages or liabilities referred to therein, then each
indemnifying party under such paragraph, in lieu of indemnifying such
indemnified party thereunder, shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities in such proportion as is appropriate to reflect the relative fault
of the indemnifying party or parties on the one hand and the indemnified party
or parties on the other hand in connection with the statements or omissions that
resulted in such losses, claims, damages or liabilities, as well as any other
relevant equitable considerations. The relative fault of such indemnifying party
and indemnified party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by such indemnifying party or indemnified party and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The respective obligations of the holders of
Registrable Notes to contribute pursuant to this Section 7.(e) are several in
proportion to the respective number of Registrable Notes of such holder of
Registrable Notes that were registered pursuant to a Registration Statement.
(f) The parties hereto agree that it would not be just or equitable if
contribution pursuant to this Section 7 were determined by PRO RATA allocation
or by any other method of allocation that does not take account of the equitable
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considerations referred to in the immediately preceding paragraph. The amount
paid or payable by an indemnified party as a result of the losses, claims,
damages and liabilities referred to in the immediately preceding paragraph shall
be deemed to include, subject to the limitations set forth above, any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 7, an indemnifying party that is a holder of
Registrable Notes shall not be required to indemnify or contribute any amount in
excess of the amount by which the total price at which the Registrable Notes
sold by such indemnifying party and distributed to the public were offered to
the public exceeds the amount of any damages that such indemnifying party has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The remedies provided for in this Section 7 are
not exclusive and shall not limit any rights or remedies which may otherwise be
available to any indemnified party at law or in equity. The provisions of this
Section 7 shall survive so long as Registrable Notes remain outstanding,
notwithstanding any transfer of the Registrable Notes by any holder of
Registrable Notes or any termination of this Agreement.
(g) The indemnity and contribution provisions contained in this
Section 7 shall remain operative and in full force and effect regardless of (i)
any termination of this Agreement, (ii) any investigation made by or on behalf
of (A) the Initial Purchaser or any person controlling the Initial Purchaser (B)
any holder of Registrable Notes or any person controlling the holder of
Registrable Notes, or (C) the Companies, their officers or directors or any
person controlling any of the Companies and (iii) the sale of any Registrable
Notes by any holder of Registrable Notes.
8 RULES 144 AND 144A
The Companies shall use their best efforts to file the reports required
to be filed by them under the Securities Act and the Exchange Act in a timely
manner and, if at any time the Companies are not required to file such reports,
they will, upon the request of any holder of Registrable Notes, make publicly
available other information so long as necessary to permit sales of the
Registrable Notes pursuant to Rules 144 and 144A. The Companies further covenant
that they will take such further action as any holder of Registrable Notes may
reasonably request, all to the extent required from time to time to enable such
holder to sell Registrable Notes without registration under the Securities Act
within the limitation of the exemptions provided by Rules 144 and 144A
(including, without limitation, the requirements of Rule 144A(d)(4)). Upon the
request of any holder of Registrable
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Notes, the Companies shall deliver to such holder a written statement as to
whether they have complied with such requirements. Notwithstanding the
foregoing, nothing in this Section 8 shall be deemed to require the Companies to
register any of their securities pursuant to the Exchange Act.
9 UNDERWRITTEN OFFERINGS
If any of the Registrable Notes covered by any Shelf Registration
Statement are to be sold in an underwritten offering, the investment banker or
investment bankers and manager or managers that will administer the offering
will be selected by the holders of a majority in aggregate principal amount of
such Registrable Notes included in such offering, subject to the consent of the
Companies (which shall not be unreasonably withheld or delayed).
No holder of Registrable Notes may participate in any underwritten
offering unless such holder (i) agrees to sell such holder's Registrable Notes
on the basis reasonably provided in any underwriting arrangements approved by
the holders entitled hereunder to approve such arrangements and (ii) completes
and executes all questionnaires, powers of attorney, indemnities, underwriting
agreements and other documents reasonably required under the terms of such
underwriting arrangements.
10 MISCELLANEOUS
(a) REMEDIES. In the event of a breach by the Companies, or by a
holder of Registrable Notes, of any of their obligations under this Agreement,
each holder of Registrable Notes or the Companies, as the case may be, in
addition to being entitled to exercise all rights granted by law, including
recovery of damages, will be entitled to specific performance of its rights
under this Agreement. The Companies, and each holder of Registrable Notes, agree
that monetary damages would not be adequate compensation for any loss incurred
by reason of a breach by it of any of the provisions of this Agreement and
hereby further agree that, in the event of any action for specific performance
in respect of such breach, it shall waive the defense that a remedy at law would
be adequate.
(b) NO INCONSISTENT AGREEMENTS. None of the Companies have entered
into, nor shall any of the Companies, on or after the date of this Agreement
enter into, any agreement that is inconsistent with the rights granted to the
holders of Registrable Notes in this Agreement or otherwise conflicts with the
provisions hereof. None of the Companies have previously entered into any
agreement granting any registration rights with respect to any of their debt
securities to any person. Without limiting the generality of the foregoing,
without the written consent of the holders of a majority in aggregate principal
amount of the then
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outstanding Registrable Notes, the Companies shall not grant to any person the
right to request the Companies to register any debt securities of the Companies
under the Securities Act unless the rights so granted are subject in all
respects to the prior rights of the holders of Registrable Notes set forth
herein, and are not otherwise in conflict or inconsistent with the provisions of
this Agreement.
(c) NO PIGGYBACK ON REGISTRATIONS. None of the Companies nor any of
their respective securityholders (other than the holders of Registrable Notes in
such capacity) shall have the right to include any securities of the Companies
in any Shelf Registration Statement or Exchange Offer Registration Statement
other than Registrable Notes.
(d) ADJUSTMENTS AFFECTING THE REGISTRABLE NOTES. None of the Companies
will take any action, or permit any change to occur, with respect to the
Registrable Notes which would (i) adversely affect the ability of any of the
holders of Registrable Notes to include such Registrable Notes in a registration
undertaken pursuant to this Agreement or (ii) adversely affect the marketability
of the Registrable Notes in any such registration.
(e) AMENDMENTS AND WAIVERS. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given, unless the Companies have obtained the written consent of the
holders of a majority of the then outstanding aggregate principal amount of
Registrable Notes; PROVIDED that, for the purposes of this Agreement,
Registrable Notes that are owned, directly or indirectly, by any of the
Companies or an Affiliate of any of them are not deemed outstanding.
Notwithstanding the foregoing, a waiver or consent to depart from the provisions
hereof with respect to a matter that relates exclusively to the rights of
holders of Registrable Notes whose securities are being sold pursuant to a
Registration Statement and that does not directly or indirectly affect the
rights of other holders of Registrable Notes may be given by holders of a
majority in aggregate principal amount of the Registrable Notes being sold by
such holders pursuant to such Registration Statement; PROVIDED that the
provisions of this sentence may not be amended, modified, or supplemented except
in accordance with the provisions of the immediately preceding sentence.
(f) NOTICES. All notices and other communications provided for herein
shall be made in writing by hand-delivery, next-day air courier, certified
first-class mail, return receipt requested, telex or facsimile:
(i) if to the Initial Purchaser or the Companies, as provided in
the Purchase Agreement, or
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(ii) if to Chevron to: Chevron Corporation, 225 Bush Street, San
Francisco, California 94104, Attention: Secretary, or
(iii) if to Chevron Transport to: Chevron Transport Corporation,
c/o Chevron House, 11 Church Street, Hamilton, Bermuda HM11, Attention:
Secretary, or
(iv) if to any other person who is then the registered holder of
any Registrable Notes, to the address of such holder as it appears in
the note register of the Companies.
Except as otherwise provided in this Agreement, all such communications
shall be deemed to have been duly given: when delivered by hand, if personally
delivered; one Business Day after being timely delivered to a next-day air
courier; five Business Days after being deposited in the mail, postage prepaid,
if mailed; when answered back, if telexed; and when complete transmission is
confirmed by the sender's telecopier machine, if telecopied.
(g) SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit
of and be binding upon the successors and permitted assigns of each of the
parties and shall inure to the benefit of each holder of Registrable Notes. The
Companies may not assign their rights or obligations hereunder without the prior
written consent of each holder of any Registrable Notes. Notwithstanding the
foregoing, no transferee shall have any of the rights granted under this
Agreement until such transferee shall acknowledge its rights and obligations
hereunder by a signed written statement of such transferee's acceptance of such
rights and obligations.
(h) COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and, all of which taken
together shall constitute one and the same Agreement.
(i) GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS MADE AND PERFORMED
WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.
THE COMPANIES HEREBY IRREVOCABLY SUBMIT TO THE JURISDICTION OF ANY NEW YORK
STATE COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK OR ANY
FEDERAL COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK IN
RESPECT OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT, AND IRREVOCABLY ACCEPT FOR THEMSELVES AND IN
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RESPECT OF THEIR PROPERTY, GENERALLY AND UNCONDITIONALLY, JURISDICTION OF THE
AFORESAID COURTS. EACH OF THE COMPANIES IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT IT MAY EFFECTIVELY DO SO UNDER APPLICABLE LAW, TRIAL BY JURY AND ANY
OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY
SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT AND ANY CLAIM THAT ANY
SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM. NOTHING HEREIN SHALL AFFECT THE RIGHT OF ANY HOLDER OF A
REGISTRABLE NOTE TO SERVE PROCESS IN ANY MANNER PERMITTED BY LAW OR TO COMMENCE
LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST THE COMPANIES IN ANY OTHER
JURISDICTION.
(j) SEVERABILITY. The remedies provided herein are cumulative and not
exclusive of any remedies provided by law. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to be
invalid, illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their reasonable efforts to find and employ an alternative
means to achieve the same or substantially the same result as that contemplated
by such term, provision, covenant or restriction. It is hereby stipulated and
declared to be the intention of the parties that they would have executed the
remaining terms, provisions, covenants and restrictions without including any of
such that may be hereafter declared invalid, illegal, void or unenforceable.
(k) HEADINGS. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof. All
references made in this Agreement to "Section" and "paragraph" refer to such
Section or paragraph of this Agreement unless expressly stated otherwise.
(l) ATTORNEYS' FEES. In any action or proceeding brought to enforce
any provision of this Agreement, or where any provision hereof is validly
asserted as a defense, the prevailing party, as determined by the court, shall
be entitled to recover reasonable attorneys' fees in addition to any other
available remedy.
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IN WITNESS WHEREOF, the parties have caused this Registration Rights
Agreement to be duly executed as of the date first written above.
GOLDEN STATE PETROLEUM TRANSPORT
CORPORATION,
as Agent for the Owners
By:/s/ John McFadden
-----------------------------
Name: John McFadden
Its: President
GOLDEN STATE PETRO (IOM I-A) PLC
By:/s/ Joseph Avantario
-----------------------------
Name: Joseph Avantario
Its: Treasurer
GOLDEN STATE PETRO (IOM I-B) PLC
By:/s/ Nunzio Lipomi
-----------------------------
Name: Nunzio Lipomi
Its: Assistant Secretary
DONALDSON, LUFKIN & JENRETTE SECURITIES
CORPORATION
By:/s/ Hoyt Davidson
-----------------------------
Name: Hoyt Davidson
Its: Senior Vice President
[LETTERHEAD OF CAINS]
CONSENT OF ISLE OF MAN ATTORNEYS
Securities & Exchange Commission
Washington DC 20549
U.S.A.
Gentlemen,
We hereby consent to the use in the Prospectus constituting part of
this Registration Statement on Form S-4 and Form F-4, of this firm's name in the
form and context in which the same appears.
Yours faithfully
/s/ Cains
FORM T-1
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF
A CORPORATION DESIGNATED TO ACT AS TRUSTEE
------------------
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(B)(2)____
-------------------------
UNITED STATES TRUST COMPANY OF NEW YORK
(Exact name of trustee as specified in its
charter)
New York 13-3818954
(Jurisdiction of incorporation (I.R.S. employer
if not a U.S. national bank) identification No.)
114 West 47th Street 10036-1532
New York, NY (Zip Code)
(Address of principal
executive offices)
------------------
Golden State Petroleum Transport Corporation
(Exact name of obligor as specified in its charter)
Delaware 13-3927016
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
c/o Cambridge Fund Management LLC
65 East 55th Street
Suite 3300
New York, NY 10022
(Address of principal executive offices) (Zip Code)
------------------
<PAGE>
-2-
Golden State Petro (IOM-A) PLC
(Exact name of obligor as specified in its charter)
Isle of Man N/A
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
c/o 15-19 Athol Street 1M1 1LB
Douglas, Isle of Man (Zip Code)
(Address of principal executive offices)
------------------
Golden State Petro (IOM-B) PLC
(Exact name of obligor as specified in its charter)
Isle of Man N/A
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
c/o 15-19 Athol Street 1M1 1LB
Douglas, Isle of Man (Zip Code)
(Address of principal executive offices)
------------------
8.04% First Preferred Mortgage Notes due 2019
(Title of the indenture securities)
================================================================================
<PAGE>
-3-
GENERAL
1. GENERAL INFORMATION
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to
which it is subject.
Federal Reserve Bank of New York (2nd District), New York, New York
(Board of Governors of the Federal Reserve System)
Federal Deposit Insurance Corporation, Washington, D.C.
New York State Banking Department, Albany, New York
(b) Whether it is authorized to exercise corporate trust powers.
The trustee is authorized to exercise corporate trust powers.
2. AFFILIATIONS WITH THE OBLIGOR
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None
3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14 and 15:
None of Golden State Petroleum Transport Corporation, Golden State
Petro (IOM-A) PLC, or Golden State Petro (IOM-B) PLC currently is in
default under any of its outstanding securities for which United States
Trust Company of New York is Trustee. Accordingly, responses to Items
3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14 and 15 of Form T-1 are not
required under General Instruction B.
16. LIST OF EXHIBITS
T-1.1 -- Organization Certificate, as amended, issued by
the State of New York Banking Department to transact
business as a Trust Company, is incorporated by
reference to Exhibit T-1.1 to Form T-1 filed on
September 15, 1995 with the Commission pursuant to
the Trust Indenture Act of 1939, as amended by the
Trust Indenture Reform Act of 1990 (Registration No.
33-97056).
T-1.2--Included in Exhibit T-1.1.
T-1.3--Included in Exhibit T-1.1.
<PAGE>
-4-
16. LIST OF EXHIBITS
(CONT'D)
T-1.4 -- The By-Laws of United States Trust Company of New
York, as amended, is incorporated by reference to
Exhibit T-1.4 to Form T-1 filed on September 15, 1995
with the Commission pursuant to the Trust Indenture
Act of 1939, as amended by the Trust Indenture Reform
Act of 1990 (Registration No. 33-97056).
T-1.6 -- The consent of the trustee required by Section
321(b) of the Trust Indenture Act of 1939, as amended
by the Trust Indenture Reform Act of 1990.
T-1.7 -- A copy of the latest report of condition of the
trustee pursuant to law or the requirements of its
supervising or examining authority.
NOTE
As of April 22, 1997, the trustee had 2,999,020 shares of Common Stock
outstanding, all of which are owned by its parent company, U.S. Trust
Corporation. The term "trustee" in Item 2, refers to each of United States Trust
Company of New York and its parent company, U. S. Trust Corporation.
In answering Item 2 in this statement of eligibility as to matters peculiarly
within the knowledge of the obligor or its directors, the trustee has relied
upon information furnished to it by the obligor and will rely on information to
be furnished by the obligor and the trustee disclaims responsibility for the
accuracy or completeness of such information.
------------------
Pursuant to the requirements of the Trust Indenture Act of 1939, the trustee,
United States Trust Company of New York, a corporation organized and existing
under the laws of the State of New York, has duly caused this statement of
eligibility to be signed on its behalf by the undersigned, thereunto duly
authorized, all in the City of New York, and State of New York, on the 22nd day
of April, 1997.
UNITED STATES TRUST COMPANY
OF NEW YORK, Trustee
By: _______________________________
Christine C. Collins
Assistant Vice President
CCC/pg
<PAGE>
EXHIBIT T-1.6
-------------
The consent of the trustee required by Section 321(b) of the Act.
United States Trust Company of New York
114 West 47th Street
New York, NY 10036
September 1, 1995
Securities and Exchange Commission 450 5th Street, N.W.
Washington, DC 20549
Gentlemen:
Pursuant to the provisions of Section 321(b) of the Trust Indenture Act of 1939,
as amended by the Trust Indenture Reform Act of 1990, and subject to the
limitations set forth therein, United States Trust Company of New York ("U.S.
Trust") hereby consents that reports of examinations of U.S. Trust by Federal,
State, Territorial or District authorities may be furnished by such authorities
to the Securities and Exchange Commission upon request therefor.
Very truly yours,
UNITED STATES TRUST COMPANY
OF NEW YORK
____________________________
By: /s/Gerard F. Ganey
Senior Vice President
<PAGE>
EXHIBIT T-1.7
UNITED STATES TRUST COMPANY OF NEW YORK
CONSOLIDATED STATEMENT OF CONDITION
DECEMBER 31, 1996
-----------------
(IN THOUSANDS)
ASSETS
- - - - - ------
Cash and Due from Banks $ 75,754
Short-Term Investments 276,399
Securities, Available for Sale 925,886
Loans 1,638,516
Less: Allowance for Credit Losses 13,168
------------
Net Loans 1,625,348
Premises and Equipment 61,278
Other Assets 120,903
------------
TOTAL ASSETS $3,085,568
============
LIABILITIES
Deposits:
Non-Interest Bearing $ 645,424
Interest Bearing 1,694,581
------------
Total Deposits 2,340,005
Short-Term Credit Facilities 449,183
Accounts Payable and Accrued Liabilities 139,261
------------
TOTAL LIABILITIES $2,928,449
============
STOCKHOLDER'S EQUITY
Common Stock 14,995
Capital Surplus 42,394
Retained Earnings 98,926
Unrealized Gains (Losses) on Securities
Available for Sale, Net of Taxes 804
------------
TOTAL STOCKHOLDER'S EQUITY 157,119
------------
TOTAL LIABILITIES AND
STOCKHOLDER'S EQUITY $3,085,568
============
I, Richard E. Brinkmann, Senior Vice President & Comptroller of the named bank
do hereby declare that this Statement of Condition has been prepared in
conformance with the instructions issued by the appropriate regulatory authority
and is true to the best of my knowledge and belief.
/s/Richard E. Brinkmann, SVP & Controller
- - - - - -----------------------------------------
Signature of Officer
April 9, 1997
- - - - - -----------------------------------------
Date
FORM OF
LETTER OF TRANSMITTAL
OFFER TO EXCHANGE THE 8.04% FIRST PREFERRED EXCHANGE MORTGAGE
NOTES DUE 2019 THAT HAVE BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED
FOR ANY AND ALL OF THE OUTSTANDING
8.04% FIRST PREFERRED MORTGAGE NOTES DUE 2019
OF
GOLDEN STATE PETROLEUM TRANSPORT CORPORATION,
AS AGENT ON BEHALF OF
GOLDEN STATE PETROL (IOM I-A) PLC
AND
GOLDEN STATE PETROL (IOM I-B) PLC
PURSUANT TO THE PROSPECTUS DATED ___________, 1997
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT
5:00 P.M., NEW YORK CITY TIME, ON MAY __, 1997,
UNLESS THE OFFER IS EXTENDED
To United States Trust Company of New York
(the "Exchange Agent")
BY REGISTERED OR CERTIFIED MAIL: BY HAND (UNTIL 4:30 PM., NEW YORK TIME)
P.O. Box 843 111 Broadway
Cooper Station New York, New York 10006
New York, New York 10276 Attention: Lower Level Corporate Trust Window
Attention: Corporate Trust Services
BY OVERNIGHT MAIL OR COURIER, OR BY HAND BY FACSIMILE
(AFTER 4:30 P.M., NEW YORK TIME) (FOR ELIGIBLE INSTITUTIONS ONLY):
770 Broadway (212) 420-6152
13th Floor confirm by telephone (800) 548-6565
New York, New York 10003
Attention: Corporate Trust Services
Delivery of this Letter of Transmittal to an address other than
as set forth above or transmission of instructions via facsimile to a number
other than the one listed above will not constitute valid delivery. The
instructions accompanying this Letter of Transmittal should be read carefully
before completing this Letter of Transmittal
<PAGE>
The undersigned hereby acknowledges receipt of the Prospectus dated
______________ ____, 1997 (the "Prospectus") of Golden State Petroleum Transport
Corporation ("Golden State Petroleum"), as agent for Golden State Petro (IOM
I-A) PLC and Golden State Petro (IOM I-B) PLC (each an "Owner"; and together
with Golden State Petroleum, the "Companies") and this Letter of Transmittal,
which together constitute the offer of the Companies (the "Exchange Offer") to
exchange up to $127,100,000 in aggregate principal amount of their registered
8.09% First Preferred Exchange Mortgage Notes due 2019 (the "Exchange Notes")
for a like principal amount of their outstanding unregistered 8.09% First
Preferred Mortgage Notes due 2019 (the "Existing Notes"). Existing Notes may be
tendered only in minimum denominations of $100,000 and integral multiples of
$1,000 in excess thereof. The term "Expiration Date" shall mean 5:00 p.m., New
York City time, on __________ ___, 1997, unless the Companies, in their sole
discretion, extend the Exchange Offer, in which case the term shall mean the
latest date and time to which the Exchange Offer is extended. Capitalized terms
used but not defined herein have the meaning given to them in the Prospectus.
YOUR BANK OR BROKER CAN ASSIST YOU IN COMPLETING THIS FORM. THE
INSTRUCTIONS INCLUDED WITH THIS LETTER OF TRANSMITTAL MUST BE FOLLOWED.
QUESTIONS AND REQUESTS FOR ASSISTANCE OR FOR ADDITIONAL COPIES OF THE PROSPECTUS
AND THIS LETTER OF TRANSMITTAL MAY BE DIRECTED TO THE EXCHANGE AGENT.
List below the Existing Notes to which this Letter of Transmittal
relates. If the space indicated below is inadequate, the Certificate or
Registration Numbers and Principal Amounts should be listed on a separately
signed schedule affixed hereto.
<TABLE>
<CAPTION>
=============================================================================================================================
DESCRIPTION OF EXISTING NOTES TENDERED HEREBY
- - - - - -----------------------------------------------------------------------------------------------------------------------------
Certificate Aggregate
or Principal Amount Principal
Name(s) and Address(es) of Registered Holder(s) Registration Represented by Amount
(Please fill in) Numbers* Existing Notes Tendered**
- - - - - -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
--------------------------------------------------------------------
--------------------------------------------------------------------
--------------------------------------------------------------------
--------------------------------------------------------------------
--------------------------------------------------------------------
Total
=============================================================================================================================
</TABLE>
* Need not be completed by book-entry Holders.
** Unless otherwise indicated, the Holder will be deemed to have tendered
the full aggregate principal amount represented by such Existing Notes.
All tenders must be in minimum denominations of $100,000 and integral
multiples of $1,000 thereafter.
<PAGE>
This Letter of Transmittal is to be used (i) if certificates of Existing
Notes are to be forwarded herewith, (ii) if delivery of Existing Notes is to be
made by book-entry transfer to an account maintained by the Exchange Agent at
The Depository Trust Company, pursuant to the procedures set forth in "The
Exchange Offer-Procedures for Training" in the Prospectus or (iii) tender of the
Existing Notes is to be made according to the guaranteed delivery procedures
described in the Prospectus under the caption "The Exchange Offer-Guaranteed
Delivery Procedures." See Instruction 2. Delivery of documents to a book-entry
transfer facility does not constitute delivery to the Exchange Agent.
The term "Holder" with respect to the Exchange Offer means any person in
whose name the Existing Notes are registered on the books of Golden State
Petroleum or any other person who has obtained a properly completed bond power
from such registered holder. The undersigned must complete, execute and deliver
this Letter of Transmittal to indicate the action the undersigned desires to
take with respect to the Exchange Offer.
/ / CHECK HERE IF TENDERED EXISTING NOTES ARE BEING DELIVERED BY BOOK-ENTRY
TRANSFER MADE TO AN ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH A
BOOK-ENTRY TRANSFER FACILITY AND COMPLETE THE FOLLOWING:
Name of Tendering Institution
/ / The Depository Trust Company
Account Number
Transaction Code Number
Holders whose Existing Notes are not immediately available or who cannot
deliver their Existing Notes and all other documents required hereby to the
Exchange Agent on or prior to the Expiration Date must tender their Existing
Notes according to the guaranteed delivery procedure set forth in the Prospectus
under the caption "The Exchange Offer-Guaranteed Delivery Procedures." See
Instruction 2.
/ / CHECK HERE IF TENDERED EXISTING NOTES ARE BEING DELIVERED PURSUANT TO
A NOTICE OF GUARANTEED DELIVERY AND COMPLETE THE FOLLOWING:
Name of Registered Holder(s)
Name of Eligible Institution that Guaranteed Delivery
If delivered by book-entry transfer:
Account Number
Transaction Code Number
<PAGE>
/ / CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE ADDITIONAL COPIES
OF THE PROSPECTUS AND COPIES OF ANY AMENDMENTS OR SUPPLEMENTS THERETO THAT
ARE DISTRIBUTED DURING THE ONE-YEAR PERIOD FOLLOWING THE EXPIRATION DATE.
Name
Address
<PAGE>
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
Upon the terms and subject to the conditions of the Exchange Offer, the
undersigned hereby tenders to the Companies the principal amount of the Existing
Notes indicated above. Subject to, and effective upon, the acceptance for
exchange of such Existing Notes tendered hereby, the undersigned hereby
exchanges, assigns and transfers to, or upon the order of, the Companies all
right, title and interest in and to such Existing Notes as are being tendered
hereby, including all rights to accrued and unpaid interest thereon as of the
Expiration Date. The undersigned hereby irrevocably constitutes and appoints the
Exchange Agent the true and lawful agent and attorney-in-fact of the undersigned
(with full knowledge that said Exchange Agent acts as the agent of the Companies
in connection with the Exchange Offer) to cause the Existing Notes to be
assigned, transferred and exchanged. The undersigned represents and warrants
that it has full power and authority to tender, exchange, assign and transfer
the Existing Notes and to acquire Exchange Notes issuable upon the exchange of
such tendered Existing Notes, and that when the same are accepted for exchange,
the Companies will acquire good and unencumbered title to the tendered Existing
Notes, free and clear of all liens, restrictions, charges and encumbrances and
not subject to any adverse claim.
The undersigned acknowledges that this Exchange Offer is being made in
reliance on interpretations by the staff of the Securities and Exchange
Commission set forth in no-action letters issued to third parties. Based on such
interpretations, the Companies believe that the Exchange Notes issued in
exchange for the Existing Notes pursuant to the Exchange Offer may be offered
for resale, resold and otherwise transferred by holders thereof (other than any
such holder that is an "affiliate" of the Companies within the meaning of Rule
405 under the Securities Act of 1933, as amended (the "Securities Act"), or a
broker-dealer tendering Existing Notes acquired directly from the Companies or
an affiliate thereof for its own account) without compliance with the
registration and prospectus delivery provisions of the Securities Act, provided
that such Exchange Notes are acquired in the ordinary course of such holders'
business and such holders are not engaged in and do not intend to engage in a
distribution of Exchange Notes and have no arrangement or understanding with any
person to participate in a distribution of Exchange Notes.
By signing or electronically confirming this Letter of Transmittal, the
undersigned represents to the Companies that (i) the exchange Notes acquired
pursuant to the Exchange Offer are being obtained in the ordinary course of such
holder's business, (ii) the undersigned is not engaged in, and does not intend
to engage in, a distribution of the Exchange Notes and has no arrangement or
understanding with any person to participate in a distribution of the Exchange
Notes, and (iii) the undersigned is neither an "affiliate" of the Companies
within the meaning of Rule 405 under the Securities Act nor a broker-dealer
tendering Existing Notes acquired directly from the Companies or an affiliate
thereof for its own account. If the undersigned is an affiliate within the
meaning of Rule 405 under the Securities Act, it represents that it will comply
with the registration and prospectus delivery requirements of the Securities Act
to the extent applicable.
<PAGE>
If the undersigned is a broker-dealer that will receive Exchange Notes
for its own account in exchange for Existing Notes, it represents that the
Existing Notes to be exchanged for the Exchange Notes were acquired by it as a
result of market-making activities or other trading activities and acknowledges
that it will deliver a prospectus in connection with any resale of such Exchange
Notes; however, by so acknowledging and by delivering a prospectus, the
undersigned will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act.
The undersigned also warrants that it will, upon request, execute and
deliver any additional documents deemed by the Exchange Agent or the Companies
to be necessary or desirable to complete the exchange, assignment and transfer
of tendered Existing Notes or transfer ownership of such Existing Notes on the
account books maintained by a book-entry transfer facility.
The Exchange Offer is subject to certain conditions set forth in the
Prospectus under the caption "The Exchange Offer--Conditions." The undersigned
recognizes that as a result of these conditions (which may be waived, in whole
or in part, by the Companies), as more particularly set forth in the Prospectus,
the Companies may not be required to exchange any of the Existing Notes tendered
hereby and, in such event, the Existing Notes not exchanged will be returned to
the undersigned at the address shown below the signature of the undersigned.
All authority herein conferred or agreed to be conferred shall survive
the death or incapacity of the undersigned and every obligation of the
undersigned hereunder shall be binding upon the heirs, personal representatives,
successors and assigns of the undersigned. Tendered Existing Notes may be
withdrawn at any time prior to the Expiration Date.
Unless otherwise indicated in the box entitled "Special Registration
Instructions" or the box entitled "Special Delivery Instructions" in this Letter
of Transmittal, certificates for all Exchange Notes delivered in exchange for
tendered Existing Notes, and any Existing Notes delivered herewith but not
exchanged, will be registered in the name of the undersigned and shall be
delivered to the undersigned at the address shown below the signature of the
undersigned. If an Exchange Note is to be issued to a person other than the
person(s) signing this Letter of Transmittal, or if the Exchange Note is to be
mailed to someone other than the person(s) signing this Letter of Transmittal or
to the person(s) signing this Letter of Transmittal at an address different than
the address shown on this Letter of Transmittal, the appropriate boxes of this
Letter of Transmittal should be completed. IF EXISTING NOTES ARE SURRENDERED BY
HOLDER(S) THAT HAVE COMPLETED EITHER THE BOX ENTITLED "SPECIAL REGISTRATION
INSTRUCTIONS" ORTHE BOX ENTITLED "SPECIAL DELIVERY INSTRUCTIONS" IN THIS LETTER
OF TRANSMITTAL, SIGNATURE(S) ON THIS LETTER OF TRANSMITTAL MUST BE GUARANTEED BY
AN ELIGIBLE INSTITUTION (AS DEFINED IN INSTRUCTION 4).
THE UNDERSIGNED, BY COMPLETING THE BOX ENTITLED "DESCRIPTION OF EXISTING
NOTES TENDERED HEREBY" ABOVE AND SIGNING THIS LETTER OF TRANSMITTAL, WILL BE
DEEMED TO HAVE TENDERED THE EXISTING NOTES AS SET FORTH IN SUCH BOX.
<PAGE>
<TABLE>
<CAPTION>
===================================================================================================================================
<S> <C>
SPECIAL REGISTRATION INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
To be completed ONLY if the Exchange Notes To be completed ONLY if the Exchange Notes are to be sent to
are to be issued in the name of someone other than someone other than the undersigned, or to the undersigned at an
the undersigned. address other than that shown under "Description of Existing Notes
Tendered Hereby."
Issue Exchange Note to:
Mail Exchange Note to:
Name:
Name:
Address:
Address:
Book-Entry Transfer Facility Account:
Employer Identification or Social Security No.:
<CAPTION>
(PLEASE PRINT OR TYPE) (PLEASE PRINT OR TYPE)
- - - - - -----------------------------------------------------------------------------------------------------------------------------------
REGISTERED HOLDER(S) OF EXISTING NOTES SIGN HERE
(IN ADDITION, COMPLETE SUBSTITUTE FORM W-9 BELOW)
X
X
(SIGNATURE(S) OF REGISTERED HOLDER(S))
Must be signed by registered holder(s) exactly as name(s) appear(s) on
the Existing Notes or on a security position listing as the owner of the
Existing Notes or by person(s) authorized to become registered holder(s) by
properly completed bond powers transmitted herewith. If signature is by
attorney-in-fact, trustee, executor, administrator, guardian, officer of a
corporation or other person acting in a fiduciary capacity, please provide the
following information. (PLEASE PRINT OR TYPE):
<S> <C>
Name and Capacity (full title):
Address (Including zip code):
Area Code and Telephone Number:
Taxpayer Identification or Social Security No.:
Dated:
SIGNATURE GUARANTEE (IF REQUIRED - SEE INSTRUCTION 4)
Authorized Signature:
(SIGNATURE OF REPRESENTATIVE OF SIGNATURE GUARANTOR)
Name and Title:
Name of Firm:
Area Code and Telephone Number:
(PLEASE PRINT OR TYPE)
Dated:
===================================================================================================================================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PAYORS: GOLDEN STATE PETROLEUM TRANSPORT CORPORATION
GOLDEN STATE PETRO (IOM I-A) PLC
GOLDEN STATE PETRO (IOM I-A) PLC
THIS SUBSTITUTE FORM W-9 MUST BE COMPLETED AND SIGNED
Please provide your social security
number or other taxpayer
identification number on the
following Substitute Form W-9
and certify therein that you
are subject to backup
withholding.
===================================================================================================================================
<S> <C> <C>
SUBSTITUTE FORM W-9 PART I - PLEASE PROVIDE YOUR TIN IN THE BOX AT RIGHT AND CERTIFY BY
DEPARTMENT OF THE TREASURY SIGNING AND DATING BELOW.
INTERNAL REVENUE SERVICE
-------
PART I - CHECK THE BOX IF YOU ARE NOT SOCIAL SECURITY
SUBJECT TO BACKUP WITHHOLDING NUMBER OR
UNDER THE PROVISIONS OF SECTION EMPLOYER
3406(A)(I)(C) OF THE INTERNAL REVENUE IDENTIFICATION
CODE BECAUSE (1) YOU ARE EXEMPT FROM NUMBER
BACKUP WITHHOLDING, (2) YOU HAVE
NOT BEEN NOTIFIED THAT YOU ARE SUBJECT TO
BACKUP WITHHOLDING AS A RESULT OF
FAILURE TO REPORT ALL INTEREST OR
DIVIDENDS OR (3) THE INTERNAL REVENUE
SERVICE HAS NOTIFIED YOU THAT YOU ARE NO
LONGER SUBJECT TO BACKUP WITHHOLDING. / /
-------------------------------------------------------------------------------------------------
CERTIFICATION: UNDER THE PENALTIES OF PERJURY, I CERTIFY
THAT THE INFORMATION PROVIDED ON THIS FORM IS TRUE,
CORRECT AND COMPLETE. PART 3 -
SIGNATURE: AWAITING TIN / /
PAYORS' REQUEST FOR TAXPAYER
IDENTIFICATION NUMBER ("TIN") DATED:
- - - - - -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP
WITHHOLDING OF 31% OF ANY CASH PAYMENTS IN EXCESS OF $10.00 MADE TO
YOU.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN
PART 3 OF SUBSTITUTE FORM W-9.
- - - - - --------------------------------------------------------------------------------
CERTIFICATE OF AWAITING TAX IDENTIFICATION NUMBER
I CERTIFY UNDER PENALTIES OF PERJURY THAT A TAXPAYER IDENTIFICATION
NUMBER HAS NOT BEEN ISSUED TO ME, AND EITHER (A) I HAVE MAILED OR DELIVERED AN
APPLICATION TO RECEIVE A TAXPAYER IDENTIFICATION NUMBER TO THE APPROPRIATE
INTERNAL REVENUE SERVICE CENTER OR SOCIAL SECURITY ADMINISTRATION OFFICE, OR (B)
I INTEND TO MAIL OR DELIVER AN APPLICATION IN THE NEAR FUTURE. I UNDERSTAND THAT
IF I DO NOT PROVIDE A TAXPAYER IDENTIFICATION NUMBER WITHIN 60 DAYS, 31% OF ALL
REPORTABLE PAYMENTS MADE TO ME THEREAFTER WILL BE WITHHELD UNTIL I PROVIDE A
NUMBER.
Signature Date
===============================================================================
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND
CONDITIONS OF THE EXCHANGE OFFER
1. DELIVERY OF THIS LETTER OF TRANSMITTAL AND CERTIFICATES.
All physically delivered Existing Notes or confirmation of any
book-entry transfer to the Exchange Agent's account at a book-entry transfer
facility of Existing Notes tendered by book-entry transfer, as well as a
properly completed and duly executed copy of this Letter of Transmittal or
facsimile thereof (or electronic confirmation thereof), and any other documents
required by this Letter of Transmittal, must be received by the Exchange Agent
at any of its addresses set forth herein on or prior to the Expiration Date. THE
METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL, THE EXISTING NOTES AND ANY
OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH BOOK-ENTRY TRANSFER, IS AT
THE ELECTION AND RISK OF THE HOLDER AND, EXCEPT AS OTHERWISE PROVIDED BELOW,
DELIVERY WILL BE VALID ONLY WHEN ACTUALLY RECEIVED BY THE EXCHANGE AGENT.
INSTEAD OF DELIVERY BY MAIL, IT IS RECOMMENDED THAT HOLDERS USE AN OVERNIGHT OR
HAND DELIVERY SERVICE. IF DELIVERY IS BY MAIL, IT IS SUGGESTED THAT REGISTERED
MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, BE USED. IN ALL CASES,
SUFFICIENT TIME SHOULD BE ALLOWED TO PERMIT TIMELY DELIVERY.
No alternative, conditional, irregular or contingent tenders
will be accepted. All tendering Holders, by execution of this Letter of
Transmittal (or facsimile thereof), shall waive any right to receive notice of
the acceptance of the Existing Notes for exchange.
DELIVERY TO AN ADDRESS OTHER THAN AS SET FORTH HEREIN, OR INSTRUCTIONS VIA
FACSIMILE TO A NUMBER OTHER THAN THE ONE SET FORTH HEREIN, WILL NOT CONSTITUTE
VALID DELIVERY.
2. GUARANTEED DELIVERY PROCEDURES.
Holders who wish to tender their Existing Notes and who do not
hold their Existing Notes through a book-entry transfer facility, but whose
Existing Notes are not immediately available or who cannot deliver their
Existing Notes, the Letter of Transmittal or any other required documents to the
Exchange Agent (or complete the procedures for book-entry transfer) prior to the
Expiration Date, may effect a tender if:
(a) the tender is made through a member firm of a registered
national securities exchange or of the National Association of
Securities Dealers, Inc., a commercial bank or trust company
having an office or correspondent in the United States or an
"eligible guarantor institution" within the meaning of Rule
17Ad-15 under the Exchange Act (an "Eligible Institution");
(b) prior to the Expiration Date, the Exchange Agent receives from
such Eligible Institution a properly completed and duly
executed Notice of Guaranteed Delivery (by facsimile
transmission, mail or hand delivery) setting forth the name
and address of the Holder, the certificate number(s) of such
Existing Notes and the principal amount of Existing Notes
tendered, stating that the tender is being made thereby and
guaranteeing what, within five New York Stock Exchange trading
days after the Expiration Date or the execution of the Notice
of Guaranteed
<PAGE>
Delivery, the Letter of Transmittal (or facsimile thereof),
together with the certificate(s) representing the Existing
Notes (or a confirmation of book-entry transfer of such
Existing Notes into the Exchange Agent's account at the
BookEntry Transfer Facility) and any other documents required
by the Letter of Transmittal, will be deposited by the
Eligible Institution with the Exchange Agent; and
(c) such properly completed and executed Letter of Transmittal (or
facsimile thereof), as well as the certificate(s) representing
all tendered Existing Notes in proper form for transfer (or a
confirmation of book-entry transfer of such Existing Notes
into the Exchange Agent's account at the Book-Entry Transfer
Facility) and all other documents required by the Letter of
Transmittal, are received by the Exchange Agent within five
New York Stock Exchange trading days after the Expiration
Date.
Upon request to the Exchange Agent, a Notice of Guaranteed
Delivery will be sent to Holders who wish to tender their Existing Notes
according to the guaranteed delivery procedures set forth above. Any Holder who
wishes to tender Existing Notes pursuant to the guaranteed delivery procedures
described above must ensure that the Exchange Agent receives the Notice of
Guaranteed Delivery relating to such Existing Notes prior to the Expiration
Date. Failure to complete the guaranteed delivery procedures outlined above will
not, of itself, affect the validity or effect a revocation of any Letter of
Transmittal form properly completed and executed by a Holder who attempted to
use the guaranteed delivery procedures.
3. PARTIAL TENDERS; WITHDRAWALS.
If less than the entire principal amount of Existing Notes
evidenced by a submitted certificate is tendered, the tendering Holder should
fill in the principal amount tendered in the column entitled "Principal Amount
Tendered" of the box entitled "Description of Existing Notes Tendered Hereby." A
newly issued Existing Note for the principal amount of Existing Notes submitted
but not tendered will be sent to such Holder as soon as practicable after the
Expiration Date. All Existing Notes delivered to the Exchange Agent will be
deemed to have been tendered in full unless otherwise indicated.
Existing Notes tendered pursuant to the Exchange Offer may be
withdrawn at any time prior to 5:00 p.m., New York City time, on the Expiration
Date, after which time tenders of Existing Notes are irrevocable. To be
effective, a written or facsimile transmission notice of withdrawal (or a
written or electronic transmission notice of withdrawal through DTC's Automated
Tender Offer Program ("ATOP") for DTC participants) must be timely received by
the Exchange Agent. Any such notice of withdrawal must (i) specify the name of
the person having deposited the Existing Notes to be withdrawn (the
"Depositor"), (ii) identify the Existing Notes to be withdrawn (including the
registration number(s) and principal amount of such Existing Notes or, in the
case of Existing Notes transferred by book-entry transfer, the name and number
of the account at the Book-Entry Transfer Facility to be credited), (iii) be
signed or confirmed by the Holder in the same manner as the original signature
on or confirmation of this Letter of Transmittal (including any required
signature guarantees) or be accompanied by documents of transfer sufficient to
have the Trustee with respect to the Existing Notes register the transfer of
such Existing Notes into the name of the person withdrawing the tender and (iv)
specify the name in which any such Existing Notes are to be registered, if
different from
<PAGE>
that of the Depositor. If Existing Notes have been delivered pursuant to
procedures for book-entry transfer, any notice of withdrawal must otherwise
comply with DTC's procedures. All questions as to the validity, form and
eligibility (including time of receipt) of such notices will be determined by
the Companies, whose determination shall be final and binding on all parties.
Any Existing Notes so withdrawn will be deemed not to have been validly tendered
for purposes of the Exchange Offer and no Exchange Notes will be issued with
respect thereto unless the Existing Notes so withdrawn are validly retendered.
Any Existing Notes which have been tendered but which are not accepted for
exchange will be returned to the Holder thereof without cost to such Holder as
soon as practicable after withdrawal, rejection of tender or termination of the
Exchange Offer. Properly withdrawn Existing Notes may be retendered by following
the procedures for tender described above.
4. SIGNATURE ON THIS LETTER OF TRANSMITTAL; WRITTEN INSTRUMENTS AND
ENDORSEMENTS; GUARANTEE OF SIGNATURES.
If this Letter of Transmittal is signed by the registered
Holder(s) of the Existing Notes tendered hereby, the signature must correspond
with the name(s) as written on the face of the certificates without alteration
or enlargement or any change whatsoever. If this Letter of Transmittal is signed
by a participant in the Book-Entry Transfer Facility, the signature must
correspond with the name as it appears on the security position listing as the
owner of the Existing Notes.
If any of the Existing Notes tendered hereby are owned of
record by two or more joint owners, all such owners must sign this Letter of
Transmittal.
If a number of Existing Notes registered in different names
are tendered, it will be necessary to complete, sign and submit as many separate
copies of this Letter of Transmittal as there are different registrations of
Existing Notes.
Signatures of this Letter of Transmittal or a notice of
withdrawal, as the case may be, must be guaranteed by an Eligible Institution
unless the Existing Notes tendered hereby are tendered (i) by a registered
Holder who has not completed the box entitled "Special Registration
Instructions" or "Special Delivery Instructions" on the Letter of Transmittal or
(ii) for the account of an Eligible Institution.
If this Letter of Transmittal is signed by the registered
Holder or Holders of Existing Notes (which term, for the purposes described
herein, shall include a participant in the Book-Entry Transfer Facility whose
name appears on a security listing as the owner of the Existing Notes) listed
and tendered hereby, no endorsements of the tendered Existing Notes or separate
written instruments of transfer or exchange are required. In any other case, the
registered Holder (or acting Holder) must either properly endorse the Existing
Notes or transmit properly completed bond powers with this Letter of Transmittal
(in either case, executed exactly as the name(s) of the registered Holder(s)
appear(s) on the Existing Notes, and, with respect to a participant in the
Book-Entry Transfer Facility whose name appears on a security position listing
as the owner of Existing Notes, exactly as the name of the participant appears
on such security position listing), with the signature on the Existing Notes or
bond power guaranteed by an Eligible Institution (except where the Existing
Notes are tendered for the account of an Eligible Institution).
<PAGE>
If this Letter of Transmittal, any certificates or separate
written instruments of transfer or exchange are signed by trustees, executors,
administrators, guardians, attorneys-in-fact, officers of corporations or others
acting in a fiduciary or representative capacity, such persons should so
indicate when signing, and, unless waived by the Companies, proper evidence
satisfactory to the Companies of their authority so to act must be submitted.
5. SPECIAL REGISTRATION AND DELIVERY INSTRUCTIONS.
Tendering Holders should indicate, in the applicable box, the
name and address (or account at the Book-Entry Transfer Facility) in which the
Exchange Notes or substitute Existing Notes for principal amounts not tendered
or not accepted for exchange are to be issued (or deposited), if different from
the names and addresses or accounts of the person signing this Letter of
Transmittal. In the case of issuance in a different name, the employer
identification number or social security number of the person named must also be
indicated and the tendering Holder should complete the applicable box.
If no instructions are given, the Exchange Existing Notes (and
any Existing Notes not tendered or not accepted) will be issued in the name of
and sent to the acting Holder of the Existing Notes or deposited at such
Holder's account at the Book-Entry Transfer Facility.
6. TRANSFER TAXES.
PGS shall pay all transfer taxes, if any, applicable to the
transfer and exchange of Existing Notes pursuant to the Exchange Offer. If,
however, certificates representing the Exchange Notes or the Existing Notes for
principal amounts not tendered or accepted for exchange are to be delivered to,
or are to be issued in the name of, any person other than the registered Holder
of the Existing Notes tendered, or if tendered Existing Notes are registered in
the name of any person other than the person signing the Letter of Transmittal,
or if a transfer tax is imposed for any reason other than the exchange of the
Existing Notes pursuant to the Exchange Offer, then the amount of any such
transfer taxes (whether imposed on the registered Holder or any other person)
will be payable by the tendering Holder. If satisfactory evidence of payment of
such taxes or exception therefrom is not submitted herewith, the amount of such
transfer taxes will be collected from the tendering Holder by the Exchange
Agent.
Except as provided in this Instruction 6, it will not be
necessary for transfer stamps to be affixed to the Existing Notes listed in this
Letter of Transmittal.
7. WAIVER OF CONDITIONS.
The Companies reserve the right, in their reasonable judgment,
to waive, in whole or in part, any of the conditions to the Exchange Offer set
forth in the Prospectus.
8. MUTILATED, LOST, STOLEN OR DESTROYED NOTES.
Any Holder whose Existing Notes have been mutilated, lost,
stolen or destroyed should contact the Exchange Agent at the address indicated
above for further instructions.
<PAGE>
9. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES.
Questions relating to the procedure for tendering as well as
requests for additional copies of the Prospectus and this Letter of Transmittal,
may be directed to the Exchange Agent at the address and telephone number(s) set
forth above. In addition, all questions relating to the Exchange Offer, as well
as requests for assistance or additional copies of the Prospectus and this
Letter of Transmittal, may be directed to Golden State Petroleum, c/o Cambridge
Fund Management, LLC, Park Avenue Tower, 65 East 55th Street, Suite 3000, New
York, New York, 10022, telephone number: (212) 661-9541.
10. VALIDITY AND FORM.
All questions as to the validity, form, eligibility (including
time of receipt), acceptance of tendered Existing Notes and withdrawal of
tendered Existing Notes will be determined by the Companies in their sole
discretion, which determination will be final and binding. The Companies reserve
the absolute right to reject any and all Existing Notes not properly tendered or
any Existing Notes the acceptance of which would, in the opinion of counsel for
the Companies, be unlawful. The Companies also reserve the right to waive any
defects, irregularities or conditions of tender as to particular Existing Notes.
The Companies' interpretation of the terms and conditions of the Exchange Offer
(including the instructions in this Letter of Transmittal) will be final and
binding on all parties. Unless waived, any defects or irregularities in
connection with tenders of Existing Notes must be cured within such time as the
Companies shall determine. Although the Companies intend to notify Holders of
defects or irregularities with respect to tenders of Existing Notes, none of the
Companies, the Exchange Agent or any other person shall incur any liability for
failure to give such notification. Tenders of Existing Notes will not be deemed
to have been made until such defects or irregularities have been cured or
waived. Any Existing Notes received by the Exchange Agent that are not properly
tendered and as to which the defects or irregularities have not been cured or
waived will be returned by the Exchange Agent to the tendering Holders as soon
as practicable following the Expiration Date.
IMPORTANT TAX INFORMATION
Under federal income tax law, a Holder tendering Existing
Notes is required to provide the Exchange Agent with such Holder's correct TIN
on Substitute Form W-9 below. If such Holder is an individual, the TIN is the
Holder's social security number. The Certificate of Awaiting Taxpayer
Identification Number should be completed if the tendering Holder has not been
issued a TIN and has applied for a number or intends to apply for a number in
the near future. If the Exchange Agent is not provided with the correct TIN, the
Holder may be subject to a $50 penalty imposed by the Internal Revenue Service.
In addition, payments that are made to such Holder with respect to tendered
Existing Notes may be subject to backup withholding.
Certain Holders (including, among others, all domestic
corporations and certain foreign individuals and foreign entities) are not
subject to these backup withholding and reporting requirements. Such a Holder
who satisfies one or more of the conditions set forth in Part 2 of the
Substitute Form W-9 should execute the certification following such Part 2. In
order for a foreign Holder to qualify as an exempt recipient, that Holder must
submit to the Exchange Agent a properly completed Internal Revenue Service Form
W-8, signed under penalties of perjury, attesting to that Holder's exempt
status. Such forms can be obtained from the Exchange Agent.
<PAGE>
If backup withholding applies, the Exchange Agent is required
to withhold 31% of any amounts otherwise payable to the Holder. Backup
withholding is not an additional tax. Rather, the tax liability of persons
subject to backup withholding will be reduced by the amount of tax withheld. If
withholding results in an overpayment of taxes, a refund may be obtained from
the Internal Revenue Service.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding on payments that are made to a
Holder with respect to Existing Notes tendered for exchange, the Holder is
required to notify the Exchange Agent of his or her correct TIN by completing
the form herein certifying that the TIN provided on Substitute Form W-9 is
correct (or that such Holder is awaiting a TIN) and that (i) each Holder is
exempt, (ii) such Holder has not been notified by the Internal Revenue Service
that he or she is subject to backup withholding as a result of failure to report
all interest or dividends or (iii) the Internal Revenue Service has notified
such Holder that he or she is no longer subject to backup withholding.
WHAT NUMBER TO GIVE THE EXCHANGE AGENT
Each Holder is required to give the Exchange Agent the social
security number or employer identification number of the record Holder(s) of the
Existing Notes. If Existing Notes are in more than one name or are not in the
name of the actual Holder, consult the instructions on Internal Revenue Service
Form W-9, which may be obtained from the Exchange Agent, for additional guidance
on which number to report.
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
If the tendering Holder has not been issued a TIN and has
applied for a number or intends to apply for a number in the near future, write
"Applied For" in the space for the TIN on Substitute Form W-9, sign and date the
form and the Certificate of Awaiting Taxpayer Identification Number and return
them to the Exchange Agent. If such certificate is completed and the Exchange
Agent is not provided with the TIN within 60 days, the Exchange Agent will
withhold 31% of all payments made thereafter until a TIN is provided to the
Exchange Agent.
IMPORTANT: THIS LETTER OF TRANSMITTAL OR A FACSIMILE THEREOF
(TOGETHER WITH THE EXISTING NOTES OR CONFIRMATION OF BOOK-ENTRY TRANSFER AND ALL
OTHER REQUIRED DOCUMENTS) OR A NOTICE OF GUARANTEED DELIVERY MUST BE RECEIVED BY
THE EXCHANGE AGENT ON OR PRIOR TO THE EXPIRATION DATE.
NOTICE OF GUARANTEED DELIVERY
GOLDEN STATE PETROLEUM TRANSPORT CORPORATION
GOLDEN STATE PETRO (IOM I-A) PLC
GOLDEN STATE PETRO (IOM I-B) PLC
for Tender of
8.04% First Preferred Mortgage Notes due 2019
(including those in book-entry form)
This form or a facsimile hereof must be used by a holder of the 8.04%
First Preferred Mortgage Notes due 2019 of Golden State Petroleum Transport
Corporation, as agent for Golden State Petro (IOM I-A) PLC and Golden State
Petro (IOM I-B) PLC (the "Existing Notes"), who wishes to tender Existing Notes
to United States Trust Company of New York, as Exchange Agent (the "Exchange
Agent"), pursuant to the guaranteed delivery procedures described in "The
Exchange Offer-Guaranteed Delivery Procedures" of the Prospectus, dated
______________ ___, 1997 (the "Prospectus"), relating to the offer by Golden
State Petroleum Corporation, Golden State Petro (IOM I-A) PLC and Golden State
Petro (IOM I-B) PLC (collectively, the "Companies") to exchange the 8.04% First
Preferred Exchange Mortgage Notes due 2019 that have been registered under the
Securities Act of 1933, as amended, for Existing Notes, and in Instruction 2 to
the related Letter of Transmittal. Any holder who wishes to tender Existing
Notes pursuant to such guaranteed delivery procedures must ensure that the
Exchange Agent receives this Notice of Guaranteed Delivery prior to 5:00 p.m.,
New York City time, on _____, 1997, or such later date and time to which the
Exchange Offer may be extended (the "Expiration Date"). This form, properly
completed and executed, may be delivered by hand, mail or facsimile transmission
to the Exchange Agent. In addition, in order to utilize the guaranteed delivery
procedures to tender Existing Notes pursuant to the Exchange Offer, tender must
be made through an Eligible Institution and a properly completed and duly
executed Notice of Guaranteed Delivery must be received prior to the Expiration
Date. Thereafter, a properly completed and executed Letter of Transmittal (or
facsimile thereof) and certificate(s) representing all tendered Existing Notes
(or a confirmation of book-entry transfer of such Existing Notes into the
Exchange Agent's account at the Book-Entry Transfer Facility) and all other
documents required by the Letter of Transmittal must be received by the Exchange
Agent within five New York Stock Exchange trading days after the Expiration
Date. Capitalized terms used and not defined herein shall have the meanings
ascribed to such terms in the Prospectus or the Letter of Transmittal.
To United States Trust Company of New York
BY REGISTERED OR CERTIFIED MAIL: BY HAND (UNTIL 4:30 PM., NEW YORK TIME)
P.O. Box 843 111 Broadway
Cooper Station New York, New York 10006
New York, New York 10276 Attention: Lower Level Corporate Trust Window
Attention: Corporate Trust Services
BY OVERNIGHT MAIL OR COURIER, OR BY HAND BY FACSIMILE
(AFTER 4:30 P.M., NEW YORK TIME) (FOR ELIGIBLE INSTITUTIONS ONLY):
770 Broadway (212) 420-6152
13th Floor confirm by telephone (800) 548-6565
New York, New York 10003
Attention: Corporate Trust Services
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE
OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TO A NUMBER OTHER THAN THE ONE
LISTED ABOVE WILL NOT CONSTITUTE VALID DELIVERY.
This form is not to be used to guarantee signatures. If a signature on
a Letter of Transmittal is required to be guaranteed by an "Eligible
Institution" under the instructions thereto, such signature guarantee must
appear in the applicable space provided in the signature box on the Letter of
Transmittal.
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to the Companies, in accordance with the
Companies' offer, upon the terms and subject to the conditions set forth in the
Prospectus and the related Letter of Transmittal, receipt of which is hereby
acknowledged, the principal amount of Existing Notes set forth below pursuant to
the guaranteed delivery procedures described in the Prospectus and in
Instruction 2 of the Letter of Transmittal.
Name(s) of registered holder(s):
(Please Type or Print)
Address:
Area Code and Telephone No.:
Principal Amount of Existing Notes Tendered:
Certificate Number(s) or Account
Number(s) at Book-Entry Facility
for Existing Notes (if available):
Aggregate Principal Amount
Represented by Existing Note(s):
All authority herein conferred or agreed to be conferred shall survive
the death or incapacity of the undersigned and every obligation of the
undersigned hereunder shall be binding upon the heirs, personal representatives,
successors and assigns of the undersigned.
Signature of Holder(s):
Date:
MUST BE SIGNED BY THE HOLDER(S) OF THE EXISTING NOTES AS THEIR NAME(S)
APPEAR(S) ON CERTIFICATES OR BOOK-ENTRY ACCOUNTS FOR EXISTING NOTES OR ON A
SECURITY POSITION LISTING, OR BY PERSON(S) AUTHORIZED TO BECOME REGISTERED
HOLDER(S) BY ENDORSEMENT AND DOCUMENTS TRANSMITTED WITH THIS NOTICE OF
GUARANTEED DELIVERY. IF SIGNATURE IS BY A TRUSTEE, EXECUTOR, ADMINISTRATOR,
GUARDIAN, ATTORNEY-IN-FACT, OFFICER OR OTHER PERSON ACTING IN A FIDUCIARY OR
REPRESENTATIVE CAPACITY, SUCH PERSON MUST SET HIS OR HER FULL TITLE BELOW.
<PAGE>
PLEASE PRINT NAME(S) AND ADDRESS(ES)
Name(s):
Capacity:
Address(es):
/ / The Depository Trust Company
(Check if Existing Notes will be tendered
by book-entry transfer)
Account Number: _______________________________________________
THE GUARANTEE ON THE FOLLOWING PAGE MUST BE COMPLETED
<PAGE>
GUARANTEE
(Not to be used for signature guarantee)
The undersigned, being a member of a registered national securities
exchange or of the National Association of Securities Dealers, Inc., a
commercial bank or trust company having an office or correspondent in the United
States or an Eligible Guarantor Institution within the meaning of Rule 17 Ad-15
under the Securities Exchange Act of 1934, as amended, hereby guarantees that
the undersigned will deliver to the Exchange Agent the certificates representing
the Existing Notes being tendered hereby or confirmation of book-entry transfer
of such Existing Notes into the Exchange Agent's account at The Depository Trust
Company, in proper form for transfer, together with the Letter of Transmittal
(or facsimile thereof) properly completed and duly executed, with any required
signature guarantees and any other required documents, all within five New York
Stock Exchange trading days after the Expiration Date.
(Name of Firm)
(Authorized Signature)
(Name)
(Title)
(Address)
(Zip Code)
(Area Code and Telephone No.)
Dated: _________________________
DO NOT SEND CERTIFICATES REPRESENTING EXISTING NOTES WITH THIS FORM. ACTUAL
SURRENDER OF EXISTING NOTES MUST BE MADE PURSUANT TO, AND BE ACCOMPANIED BY, A
COMPLETED AND EXECUTED LETTER OF TRANSMITTAL.
