AS FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION ON
____________, 1998 REGISTRATION NO. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------
Form F-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------
MILLENIUM SEACARRIERS, INC.
OAKMONT SHIPPING & TRADING LIMITED MILLENIUM II, INC.
RAPID OCEAN CARRIERS INC. MILLENIUM III, INC.
IVY NAVIGATION LTD. MILLENIUM IV, INC.
TOPSCALE SHIPPING COMPANY LIMITED MILLENIUM V, INC.
CONIFER SHIPPING COMPANY LIMITED MILLENIUM VI, INC.
MILLENIUM ALEKSANDER, INC. MILLENIUM VII, INC.
MILLENIUM ELMAR, INC. MILLENIUM YAMA, INC
MILLENIUM AMETHYST, INC. MILLENIUM MAJESTIC, INC.
(Exact Name of Registrant as Specified in its Charter)
Cayman Islands 8611 N/A
Republic of Liberia 8611 N/A
Republic of Liberia 8611 N/A
Republic of Liberia 8611 N/A
Republic of Cyprus 8611 N/A
Republic of Cyprus 8611 N/A
Cayman Islands 8611 N/A
Cayman Islands 8611 N/A
Cayman Islands 8611 N/A
Cayman Islands 8611 N/A
Cayman Islands 8611 N/A
Cayman Islands 8611 N/A
Cayman Islands 8611 N/A
Cayman Islands 8611 N/A
Cayman Islands 8611 N/A
Cayman Islands 8611 N/A
Cayman Islands 8611 N/A
(State or Other (Primary Standard
Jurisdiction of Industrial (I.R.S. Employer
Incorporation Classification Identification Nos.)
or Organization) Code Number)
c/o Ugland House
South Church Street
Grand Cayman, Cayman Islands
345-949-8066
(Address, including zip code, and
telephone number, including area code,
of principal executive offices of
Millenium Seacarriers, Inc.
Kylco Maritime, Inc.
645 Fifth Avenue, Suite 907
New York, New York 10022
212-759-8382
(Name, address, including zip code, and
telephone number, including
area code, of agent for service of
Millenium Seacarriers, Inc.)
------------------
Copies to:
Lauris G. L. Rall Vassilios M. Livanos
Charles A. Dietzgen Millenium Seacarriers, Inc.
Thacher Proffitt & Wood c/o P.O. Box 309, Ugland House
Two World Trade Center South Church Street
New York, New York 10048 Grand Cayman, Cayman Islands
212-912-7400 345-949-8066
Approximate date of commencement of proposed sale to the public: As soon
as practicable after this Registration Statement becomes effective
------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
====================================================================================================================================
| | Proposed maximum | Proposed maximum |
Title of each class of | Amount to | offering price | aggregate offering | Amount of
securities to be registered | be registered | per Note | price | Registration Fee
- - - - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
12% First Priority Ship Mortgage Exchange Notes | $100,000,000 | 100% | 100,000,000 | $29,500
====================================================================================================================================
</TABLE>
The Registrant hereby amends 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.
<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.
PROSPECTUS
Subject to Completion , 1998
----------
Offer for all outstanding
12% First Priority Ship Mortgage Notes Due 2005
($100,000,000 principal amount at maturity outstanding)
in Exchange for
12% First Priority Ship Mortgage Exchange Notes Due 2005 of
MILLENIUM SEACARRIERS, INC.
The Exchange Offer will expire at 5:00 p.m., New York City time, on
,199 unless extended.
- - - - --------- --
Interest payable January 15 and July 15 Due July 15, 2005
Millenium Seacarriers, Inc., a Cayman Islands company ("Millenium"), and
each of the subsidiaries of Millenium (the "Subsidiary Guarantors" and, together
with Millenium, the "Company") 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 $100,000,000 in aggregate
principal amount at maturity of its registered 12% First Priority Ship Mortgage
Exchange Notes (the "Exchange Notes"), for a like principal amount of its
unregistered 12% First Priority Ship Mortgage Notes (the "Existing Notes";
together with the Existing Notes, the "Notes"), of which an aggregate principal
amount at maturity of $100,000,000 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 Millenium and the Subsidiary Guarantors. See "The Exchange
Offer" and "Description of the Exchange Notes."
The Exchange Notes will be fully and unconditionally guaranteed (the
"Subsidiary Guarantees") on a senior secured basis by each of the Subsidiary
Guarantors. The Exchange Notes will initially be secured by a pledge of all the
capital stock of the Subsidiary Guarantors and are expected to be secured
ultimately by first priority ship mortgages on approximately 22 vessels. On the
Original Issue Date (as defined herein) the Company owned five vessels (the
"Existing Vessels") and had executed vessel purchase agreements to acquire
eleven vessels (collectively, the "Committed Vessels"). The Exchange Notes will
also initially be secured by a portion of the proceeds of the offering of the
Existing Notes that have been deposited in an escrow account (the "Escrow
Account") until such amounts are used to acquire the Committed Vessels and up to
approximately six additional vessels that the Company intends to purchase (the
"Additional Vessels" and, together with the Existing Vessels and the Committed
Vessels, the "Mortgaged Vessels"). Amounts remaining on deposit in the Escrow
Account will be released in connection with the acquisition by the Company of
the Committed Vessels and the Additional Vessels upon the satisfaction of
certain conditions. To the extent that, after July 31, 1999, amounts remaining
on deposit in the Escrow Account exceed $5,000,000, Millenium will be required
to redeem as much principal amount of Exchange Notes and untendered Existing
Notes, if any, as can be redeemed with such amounts on deposit at a redemption
price equal to 101% of the Accreted Value (as defined) of such Notes together
with accrued and unpaid interest thereon to the date of such redemption.
The Exchange Notes mature on July 15, 2005 (the "Maturity Date"). Interest
on the Exchange Notes will be deemed to accrue from July 24, 1998 (the "Original
Issue Date") or from the date of the last periodic payment of interest on the
Existing Notes, whichever is later, at a rate of 12% per annum, except that from
January 20, 1999 until consummation of the Exchange Offer interest will be
deemed to accrue at a rate of 12 1/2 %per annum to reflect Additional Interest
(as hereinafter defined). Interest on the Exchange Notes is payable on January
15 and July 15 of each year, commencing January 15, 1999 (each, a "Payment
Date").
The Exchange Notes will be redeemable at the option of the Company in whole
or in part at the prices set forth herein, plus any accrued and unpaid interest
to the date of redemption, at any time on or after July 15, 2003, or earlier if
the Company becomes subject to withholding taxes on any amounts payable under
the Exchange Notes as a result of changes in the laws of the Cayman Islands,
Liberia or Cyprus. Upon an Event of Loss (as defined) with respect to a
Mortgaged Vessel and upon the sale of a Mortgaged Vessel, the Exchange Notes are
subject to redemption, subject to certain conditions, at the redemption prices
set forth herein. In addition, prior to July 15, 2001, the Company may, at its
option, redeem up to 35% of the principal amount at maturity of the Exchange
Notes at the redemption price set forth herein with the proceeds of and within
60 days following one or more Public Equity Offerings (as defined) if at least
$65,000,000 of the principal amount at maturity of the Exchange Notes and
untendered Existing Notes, if any, remains outstanding and is held, directly or
indirectly, by persons other than the Company and its Affiliates (as defined)
after each such redemption. In addition, upon the occurrence of a Change of
Control (as defined), the Company will be required to make an offer to
repurchase the Exchange Notes at a price equal to 101% of the Accreted Value
thereof, together with accrued and unpaid interest thereon to the date of
repurchase. On the Original Issue Date, the Collateral (as defined) consisted of
five Mortgaged Vessels and the initial deposit in the Escrow Account. See
"Description of the Exchange Notes."
<PAGE>
The Exchange Notes, the untendered Existing Notes, if any, and the
Subsidiary Guarantees will rank senior in right of payment to all existing and
future subordinated indebtedness of, and pari passu with all senior indebtedness
of, Millenium and the Subsidiary Guarantors, respectively.
The Company 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
, 199 , 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 Company believes 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 Company (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 Company, 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 Company,
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 Company
has agreed that, starting on the Expiration Date and ending on the close of
business on the first anniversary of the Expiration Date, it will make this
Prospectus, as supplemented or amended, available to any broker-dealer for use
in connection with any resale. See "Plan of Distribution."
----------------
For a discussion of certain factors that should be considered in connection with
an investment in the Exchange Notes, see "Risk Factors" beginning on page 14.
----------------
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 , 1998
---------
No public market has existed for the Exchange Notes before the Exchange
Offer. The Company currently does 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 Company from this
Exchange Offer. The Company 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 Millenium, on July 24, 1998, 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 and in offshore transactions in compliance
with Rule 903 or Rule 904 of Regulation S of the Securities Act. Accordingly,
the Existing Notes may not be reoffered, resold or otherwise transferred in the
United States unless registered under the Securities Act 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
-ii-
<PAGE>
thereof and the Company 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 "Book Entry-Delivery and
Form."
THE EXCHANGE OFFER DESCRIBED IN THIS PROSPECTUS (THE "PROSPECTUS") IS NOT
DIRECTED TO, NOR WILL THE COMPANY 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 COMPANY OR THAT THE INFORMATION SET FORTH HEREIN IS
CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE HEREOF.
----------------
Millenium's registered offices are located at the offices of
Maples and Calder, P.O. Box 309, George Town, Grand Cayman, Cayman Islands.
Each of Millenium II, Inc., Millenium III, Inc., Millenium IV, Inc.
Millenium V, Inc., Millenium VI, Inc., Millenium VII, Inc.,
Millenium Aleksander, Inc., Millenium Elmar, Inc.,
Millenium Yama, Inc, Millenium Amethyst, Inc. and
Millenium Majestic, Inc. has its registered
office at the offices of Maples and Calder,
P.O. Box 309, George Town, Grand Cayman,
Cayman Islands.
Each of Oakmont Shipping & Trading Limited, Rapid Ocean Carriers
Inc., and Ivy Navigation Ltd. has its registered
office at c/o 80 Broad Street, Monovia, Liberia.
Each of Topscale Shipping Company Limited and Conifer Shipping Company
Limited has its registered offices at c/o Andreas P.
Demetriades & Associates, P.O. Box 4533, Nicosia, Cyprus
----------------
ENFORCEABILITY OF CIVIL LIABILITIES
Millenium is incorporated in the Cayman Islands, and the Subsidiary
Guarantors are incorporated in Liberia, Cyprus or the Cayman Islands. Certain of
the officers and directors of Millenium and the Subsidiary Guarantors reside
outside the United States and all the assets of Millenium and the Subsidiary
Guarantors are located outside the United States. As a result, it may be
difficult for investors to effect service of process upon such persons in the
United States or to enforce against Millenium, any Subsidiary Guarantor or such
persons in United States courts, judgments obtained in United States courts,
including judgments predicated upon the civil liability provisions of the
federal securities laws of the United States. Millenium and each of the
Subsidiary Guarantors has designated Kylco Maritime (USA), Inc., 645 Fifth
Avenue, New York, New York 10022, as its agent for service of process in any
action brought against any of them under the securities laws of the United
States with respect to the offering of the Notes, the Subsidiary Guarantees, and
the indenture relating to the Notes (the "Indenture").
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
This Prospectus includes "forward looking statements" within the meaning of
Section 27A of the Securities Act and Section 21E of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"). All statements other than statements
of historical facts included in this Prospectus, including, without limitation,
such statements under "Prospectus Summary," "Management's Discussion and
Analysis of Financial Condition and Results of Operations," "Business" and
located elsewhere herein, regarding the financial position and capital
expenditures of the Company are forward-looking statements. Although the Company
believes that the expectations reflected in such forward-looking statements are
reasonable, it can give no assurance that such expectations will prove to have
been correct. Important factors that could cause actual results to differ
materially from such expectations ("Cautionary Statements") are disclosed in
this Prospectus, including, without limitation, in conjunction with the
forward-looking statements included in this Prospectus and/or under "Risk
Factors." All subsequent written or oral forward-looking statements attributable
to the Company or persons acting on behalf of the Company are expressly
qualified in their entirety by the Cautionary Statements.
-iii-
<PAGE>
AVAILABLE INFORMATION
Notwithstanding that Millenium may not be required to remain subject to the
reporting requirements of Section 13 or 15(d) of the Securities and Exchange Act
of 1934, as amended (the "Exchange Act") applicable to a "foreign private
issuer" (as such term is defined in Rule 3b-4 under the Exchange Act), Millenium
shall file with the Commission and furnish to the Trustee, Holders and
prospective Holders, upon request, (i) commencing with respect to the fiscal
year ended December 31, 1998, within 120 days after the end of each fiscal year,
an annual report on Form 20-F (or any successor form) containing the information
required to be contained therein for such fiscal year, and (ii) commencing with
respect to the fiscal quarter ended September 30, 1998, within 45 days after the
end of each of the first three quarters in each fiscal year, quarterly reports
on Form 6-K consisting of unaudited financial statements (including a balance
sheet and statement of income, changes in stockholders' equity and cash flows)
and Management's Discussion and Analysis of Financial Condition and Results of
Operations for and as of the end of each of such quarters (with comparable
financial statements for such quarter of the immediately preceding fiscal year).
Copies of the Indenture, the Registration Rights Agreement, the Security
Agreements (as defined) and any other document referred to herein can be
obtained without charge by any recipient of this Prospectus by contacting
Millenium Seacarriers, Inc. c/o P.O. Box 309, George Town, Grand Cayman, Cayman
Islands. Additionally, such documents may be accessed via the Commission's
Internet Web site at http://www.sec.gov.
SHIPPING INDUSTRY INFORMATION
Certain market data and industry information and data used throughout this
Prospectus were obtained from SSY Consultancy and Research Limited of London
("SSY"), Drewry Shipping Consultants Ltd. ("Drewry"), Shipping Intelligence Inc.
("Shipping Intelligence") and Maritime Research Inc. ("Maritime Research Inc."
and, collectively with SSY, Drewry and Shipping Intelligence, the "Industry
Sources"). SSY maintains a database of the world's drybulk carrier fleets
(vessels of 10,000 deadweight tons ("dwt") and over) that includes data on fleet
sizes, orderbooks, scrapping rates, laid-up tonnage and freight rates. The data
has been collected from sources including shipowners and shipbuilders. The
database excludes vessels that do not carry cargoes in bulk and vessels engaged
exclusively in carriage on the Great Lakes of the United States. Drewry
maintains a database covering many aspects of the shipping industry that is
utilized by Drewry's research team of market analysts, economists and strategic
planners. Shipping Intelligence maintains a database on vessel sales history and
period time charter history. Maritime Research Inc. utilizes its own database of
reported worldwide fixture reports collected from its extensive global shipping
sources developed over the past 45 years. The Industry Sources have advised the
Company that (i) certain industry information set forth herein is based on
estimates or subjective judgments in circumstances where data for actual freight
market transactions either does not exist or is not publicly available and,
consequently, there can be no assurance that such data reflects actual industry
and market experience, (ii) the published information of other maritime data
collection experts may differ from the information contained herein, (iii) while
each of the Industry Sources have taken reasonable care in the compilation of
such industry, market, statistical and graphical information and believe it to
be correct, data compilation is inherently subject to limited audit and
validation procedures and (iv) the provision of such information does not
obviate the need to make further appropriate inquiries.
Whenever in this Prospectus the Company or its management expresses its
expectation about future events, such expectations are based upon the experience
of the Company's management team in combination with the data and information
provided by SSY, Drewry, Shipping Intelligence and/or Maritime Research Inc.
-iv-
<PAGE>
PROSPECTUS SUMMARY
The following summary should be read in conjunction with, and is qualified
in its entirety by, the more detailed information (including the financial
statements and the notes thereto) included elsewhere herein. Unless the context
requires otherwise, references in this Prospectus to the "Company" are
references to Millenium Seacarriers, Inc., and its predecessor businesses and
affiliates, including the Subsidiary Guarantors.
The Company
The Company is an international shipping company that currently owns and
operates a fleet of drybulk carriers, primarily in the 20,000 to 49,999
deadweight ton ("dwt") range ("Handysize drybulk carriers"). The Company has
attracted strong industry partners and equity investors in order to implement an
expansion of its fleet through the acquisition of approximately 17 second hand
Handysize drybulk carriers. On the Original Issue Date, the Company owned five
vessels (the "Existing Vessels") and had executed vessel purchase agreements to
acquire eleven vessels (the "Committed Vessels"). As of the date of this
Prospectus, the Company has acquired eight of the Committed Vessels. The Company
has obtained period time charters for each of the Existing Vessels and Committed
Vessels. Approximately six additional vessels (the "Additional Vessels") are
expected to be acquired and placed on period time charters within six months of
the Original Issue Date.
The Company's senior management has a proven track record of effectively
managing shipping businesses, identifying shipping industry trends and building
fleets through vessel acquisitions. Vassilios Livanos, Chief Executive Officer
and a co-founder of the Company and its predecessor, has spent his 25-year
career in the drybulk sector of the shipping industry. Prior to founding the
Company, Mr. Livanos was president of Kedma Ltd. ("Kedma") in New York where he
expanded Kedma's fleet of four vessels through the acquisition of 20 vessels,
primarily Handysize drybulk carriers. Prior to Kedma, during his 13 years at
Seres Shipping, Inc., Mr. Livanos oversaw the acquisition and construction of
over 150 vessels as technical director. Theotokis Milas, Chief Operating Officer
and a co-founder of the Company and its predecessor, has spent 30 years in the
shipping industry. Prior to founding the Company, while Mr. Milas was at
International Maritime Investors ("IMI"), a vehicle he co-founded to acquire
vessels, IMI acquired a fleet of 16 vessels having an aggregate capacity of 1.35
million dwt and generated substantial returns for its investors. Nicholas
Cotzias, Jr., Chief Financial Officer and a co-founder of the Company and its
predecessor, has over 15 years experience in the shipping industry and also has
significant experience in the expansion of fleets. Prior to founding the
Company, Mr. Cotzias was general manager and director of Trade and Transport
(UK) Ltd., part of a shipping venture which controlled a fleet that expanded to
over 35 vessels through the acquisition of 19 vessels. The Company's senior
management believes the current downturn in the drybulk carrier shipping cycle
presents an excellent opportunity for the Company to grow and enhance cash flow
by purchasing vessels at attractive prices. The acquisition costs of Handysize
drybulk carriers are at their lowest levels in ten years, in significant part
due to the recent economic crisis in Asia.
The Company's strategy has been and will continue to be to generate
revenues under long-term contracts using period time charters for all of its
vessels in order to maximize vessel utilization and enhance stability of cash
flow and earnings. For example, over the last five years, all revenues relating
to the Existing Vessels were derived from a series of one-year time charter
contracts with either Cementos Mexicanos ("Cemex") or Clipper Group ("Clipper"),
yielding an average utilization rate for its vessels of over 98%. The current
charters with these customers continue through at least February 1999, at which
time the Company will seek a further renewal of the charters. The Company is
chartering three of the Committed Vessels to Clipper for a period of at least 12
months, four to FedNav International Limited ("FedNav"), a major international
shipping company, for a period of at least two and one half years and one to Hai
Sun Hup Shipping ("HSH"), a Singapore-based conglomerate, for a period of at
least 12 months. In addition, two of the Committed Vessels are being acquired by
the Company subject to their existing charters with Tschudi & Eitzen Group
("T&E"), an integrated shipping company, and the Company has obtained a
commitment from FedNav to charter the remaining Committed Vessel. The Company
will acquire the Additional Vessels subject to either existing time charters or
newly negotiated time charters. In addition, major companies such as Cargill,
Continental Grain, Garnac Grain, Pillsbury, Kerr McGee, Marcona, Van Ommeren,
Armada and Ispat have current or previous charter relationships with the Company
or its management.
The Company has a proven ability to serve its charter customers in niche
trades which require specialized vessels or expertise and tend to generate
premium revenue rates as well as stable, long-term relationships. For example,
two of the Existing Vessels have traded forest products from the Amazon which
requires specially configured and geared vessels and navigational expertise. The
five Committed Vessels chartered to FedNav for initial terms of up to three and
one half years are ocean-going vessels that are capable of trading in the St.
Lawrence Seaway and Great Lakes region, as well as other technically demanding
regions. There are currently only 143 Handysize drybulk carriers that are at
least 25,000 dwt and under 18 years of age in the world capable of this trade.
As a result of its demonstrated expertise in specialized trades, the Company
typically is able to obtain long-term or recurring charters for its vessels and
believes it has generally achieved premium time charter rates.
The Company has engaged Millenium Management, Inc. ("MMI"), a Cayman
Islands company and the sole shareholder of Millenium, to provide certain
commercial and technical management services to the Company at current market
rates. MMI has subcontracted with Kylco
<PAGE>
Maritime Limited ("Kylco Greece") and Kylco Maritime (USA), Inc. ("Kylco USA"
and, together with Kylco Greece, "KYLCO") to provide management services.
Messrs. Livanos, Milas and Cotzias are officers of KYLCO. Kylco Greece and Kylco
USA collectively employ approximately 30 individuals. KYLCO currently manages or
sub-manages 18 vessels, five of which comprise the Existing Vessels, eight of
which comprise Committed Vessels and five of which are owned by third parties
and are not expected to be acquired by the Company. Recently, KYLCO and, through
KYLCO, the Existing Vessels received certification under the International
Maritime Organization's ("IMO") International Management Code for the Safe
Operation of Ships and Pollution Prevention (the "ISM Code") by successfully
completing audits conducted by Det Norske Veritas, a leading classification
society.
The Handysize Drybulk Carrier Industry
The Company believes the Handysize drybulk carrier sector is one of the
most attractive sectors in the shipping industry due to the diverse demand for
these vessels as compared to the larger, gearless drybulk carrier sector.
Handysize drybulk carriers are versatile, single deck ships that transport
unpacked cargo, which is poured, tipped or placed through hatchways into the
hold of the vessel. Their size, dimension and self-sustaining cargo gear enable
Handysize drybulk carriers to access geographic markets which larger and
gearless vessels cannot service and respond to the widest range of trade
movements. Handysize drybulk carriers carry a wide variety of cargoes, including
agricultural products, sugar, salt, minerals, phosphates, bauxite and alumina,
forest products, petcoke, cement, steel products, scrap metal and pig iron, as
well as cargoes generally carried by larger, gearless drybulk carriers, such as
coal, iron ore and grain. According to SSY, as of December 31, 1997, the world
fleet of Handysize drybulk carriers was comprised of 3,172 vessels with an
aggregate capacity of approximately 105.5 million dwt.
Partly due to the recent economic situation in Asia, freight rates and
vessel values for all drybulk carriers (including the Handysize drybulk carrier
segment) are currently at their ten-year lows. According to Shipping
Intelligence, the average purchase price of a 15-year old 25,000 dwt Handysize
drybulk carrier over the past ten years is approximately 31% higher than the
current purchase price for such a vessel. Historically, cyclical downturns in
this sector have resulted in the rationalization of supply through increased
scrapping of older, less efficient vessels and limited fleet replacement by
newbuildings. According to SSY, as of March 1998, the time charter rate for a
20,000-29,999 dwt Handysize drybulk carrier was $5,500 per day compared to the
last peak of $9,250 per day in 1995, and the ten-year average of $7,461 per day.
The current cyclical downturn in this sector has led to accelerated scrappings
as of June 1998, which the Company believes will continue through the remainder
of 1998 and will limit the growth of the Handysize drybulk carrier fleet through
1998. Despite the currently depressed freight rates and vessel values for all
drybulk carriers, the Handysize drybulk carrier sector currently commands
significantly higher 12-month period time charter rates than those for the
larger, gearless drybulk carrier sector due to the versatility of Handysize
drybulk carriers and the wide range of cargoes they transport.
Business Strategy
The Company's strategy is to expand its operations through the purchase of
high quality second hand drybulk carriers at attractive vessel prices and to
provide superior transportation services to its charterers. Key elements of this
strategy include:
Generating Stable Cash Flows Using Period Time Charters. Period time
charters provide for an agreed daily charter hire rate during the contract
period, which is generally 12 months. The Company believes that period time
charters provide more stable revenues and cash flows as well as better vessel
utilization than spot charters, which are generally contracts for single voyages
(typically of 15 to 30 days duration). In addition, the Company believes that
focusing on period time charters with a targeted group of charterers allows it
to provide superior customer-oriented service, thereby distinguishing itself
from other drybulk carrier operators, which in turn may allow the Company to
grow more steadily than other operators in this sector. The Company has period
time charters for all Existing Vessels and Committed Vessels and intends to
obtain time charters for the Additional Vessels. The Company has obtained
attractive period time charters for the Committed Vessels (of up to three and
one half years for certain of the Committed Vessels) despite current market
conditions.
Building the Company's Fleet by Taking Advantage of Attractive Prices. The
Company believes it now has the opportunity to purchase additional vessels at
virtually the lowest prices in the past decade and thereby generate superior
returns on its investments. The Company has inspected over 30 other vessels
during the past six months and continues to review additional opportunities. As
part of its long-term strategy to continue to grow through vessel acquisitions,
the Company plans to acquire vessels periodically at attractive prices. The
Company plans to actively manage its fleet by reinvesting earnings and proceeds
of periodic sales of the Mortgaged Vessels in order to grow and renew its fleet.
In addition, the Company will consider raising additional private and public
equity capital to support further fleet expansion.
Focusing on Handysize Drybulk Sector. The Company believes that focusing on
the Handysize drybulk sector of the shipping industry will generate the
following competitive advantages:
Marketing Advantages to Enhance Revenues. Focusing on the Handysize drybulk
sector of the shipping industry will enable the Company to identify and respond
to its market and customer needs. As a customer-oriented service provider, the
Company can use
-2-
<PAGE>
this market and customer information to develop creative solutions for its
clients, including acquiring additional vessels or reconfiguring existing
vessels within its fleet and developing customized trade routes. For
example, in response to the needs and concerns of Cemex, the Company
developed a combined, vessel-specific trade for the carriage of cement and
petcoke, leading to recurring service contracts with this charterer.
Operating Efficiencies to Reduce Costs. The Company is generally able
to achieve significant cost efficiencies as a result of operating a fleet
focused in one sector. These include more efficient drydock service, better
rates for insurance and spares and purchasing efficiencies from suppliers.
In addition, the Existing Vessels and Committed Vessels include sister
vessels that have similar design characteristics, allowing the Company to
benefit from operating, maintenance and crew efficiencies.
Obtaining Better Returns with a Second Hand Fleet. The Company intends to
acquire and operate second hand vessels between 10 and 18 years of age,
consistent with management's operating experience. The Company believes the
values and charter rates for vessels in this age group enable it to obtain
superior returns on invested capital when compared to potential returns on
capital invested in newbuildings. According to SSY, as of June 1998, the
purchase price for a 15-year old 28,000 dwt Handysize drybulk carrier was
approximately 33% that of a newbuilding and the revenue obtained by a one-year
time charter for such vessel was approximately 75% that for a newbuilding.
-3-
<PAGE>
Transactions
In connection with the issuance of the Existing Notes, the Company has
effected a series of transactions (the "Transactions") consisting of (i) the
issuance of the Existing Notes, (ii) the acquisition by the Company of the
Existing Vessels and of certain of the Committed Vessels (with the remaining
Committed Vessels expected to be acquired by the end of September 1998), (iii)
the Equity Contribution (as defined) and (iv) the establishment of the Working
Capital Facility (as defined).
The following sets forth the sources and uses of the proceeds of the
Transactions (amounts in millions):
Sources of Proceeds of Transactions:
Proceeds from the issuance of the Existing Notes $ 96.6
Total Equity Contribution 24.0
------
Total $120.6
======
Uses of Proceeds of Transactions:
Existing Vessels:
Repayment of indebtedness $ 12.9
Equity issued for the Existing Vessels 4.0
Acquisition of Committed Vessels(a) 66.7(b)
Escrow Account(c) 31.4
Fees and expenses 5.6
-----
Total $120.6
======
(a) As of the date of this Prospectus, eight of the Committed Vessels have been
acquired. Pending actual acquisition of the remaining Committed Vessels,
the funds to effect the purchase of these vessels will be held in the
Escrow Account.
(b) Includes $5.9 million of contributed vessel equity (based on Appraised
Values) from Clipper and ESCO (as defined) and $7.0 million of vessel
equity (based on Appraised Values) with respect to the Millenium Leader,
the Millenium Hawk, the Millenium Eagle, the Millenium Osprey, the
Millenium Falcon and the Millenium Condor. See "Certain Transactions--New
Equity Contribution."
(c) Amounts held in the Escrow Account are available for the purchase of
Additional Vessels and to make deposits and pay transaction fees and
expenses in connection with the Committed Vessels and the Additional
Vessels and, if necessary, to make vessel upgrades on the Committed Vessels
and the Additional Vessels.
-4-
<PAGE>
The Vessels
The following table indicates the age, capacity, charter status and
appraised value of the Existing Vessels and the Committed Vessels.
<TABLE>
<CAPTION>
Appraised
Year Capacity Chartered Daily Charter Value
Name of Vessel Built (dwt) Charterer Until Hire Rate (thousands)
- - - - -------------- ------- ------- --------- -------------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Existing Vessels
Monica Marissa ........ 1973 55,057(a) Cemex February 1999(b) $ 7,250 $ 3,625(d)
Clipper Harmony ....... 1978 16,711 Clipper February 2000 7,500 5,175(d)
Clipper Golden Hind ... 1978 16,560 Clipper February 1999 7,500 4,375(d)
Clipper Pacific ....... 1976 7,923 Clipper March 1999 4,300 1,675(d)
Clipper Atlantic ...... 1975 7,923 Clipper February 1999 4,300 1,625(d)
-------
Total Existing Vessels................................................................................. 16,475
-------
Committed Vessels
Millenium Aleksander* ... 1988 52,650(a) T&E June 1999(c) 7,000 8,688(e)
Millenium Elmar* ........ 1987 52,650(a) T&E June 1999(c) 7,000 8,125(e)
Millenium Leader ........ 1984 37,489 HSH September 1999 6,800 8,100(f)
Millenium Hawk* ......... 1984 28,791 FedNav March 2002 7,000 7,113(f)
Millenium Eagle ......... 1983 28,788 FedNav March 2002 7,000 6,813(f)
Millenium Osprey ........ 1984 28,786 FedNav March 2002 7,000 7,113(f)
Millenium Falcon ........ 1981 27,048 FedNav March 2001 7,000 5,613(f)
Millenium Condor ........ 1981 27,036 FedNav March 2001 7,000 5,613(f)
Millenium Amethyst ...... 1978 23,563 Clipper July 1999 5,275 3,000(e)
Millenium Yama .......... 1979 23,538 Clipper July 1999 5,275 3,500(e)
Millenium Majestic ...... 1979 17,152 Clipper August 1999 5,200 3,050(g)
Total Committed Vessels.................................................................................. 66,728
--------
Total Existing and Committed Vessels................................................................. $ 83,203
========
</TABLE>
* Not acquired as of the date of this Prospectus.
- - - - --------------------------
(a) Although the vessel capacity is greater than 49,999 dwt, it is considered a
Handysize drybulk carrier.
(b) The time charter for the Monica Marissa provides that the charterer
thereunder has the right to renew such charter at the specified rates set
forth therein.
(c) The Company may, at its option, cancel these charters at any time after
December 1998.
(d) Appraised value is based on the average of two appraisals, each performed
by a Designated Appraiser (as defined in "Description of the Exchange
Notes") in February 1998 and in June 1998. Appraised value gives effect to
the value of the time charter for the relevant vessel.
(e) Appraised value is based on the average of two appraisals completed in
February 1998, each performed by a Designated Appraiser. Appraised values
were determined on a charter-free basis.
(f) Appraised value is based on the average of two appraisals, each completed
by a Designated Appraiser in June 1998. Appraised value gives effect to the
value of the time charter for the relevant vessel.
(g) Appraised value is based on the average of two appraisals completed in June
1998, each performed by a Designated Appraiser.
As of June 1998, the Existing Vessels and Committed Vessels had an
aggregate appraised value, giving effect to the values of their time charters,
of $82.9 million, based on the appraisal performed by a Designated Appraiser.
-5-
<PAGE>
Ownership
The three senior members of management have a significant equity ownership
in the Company, through their beneficial equity interest in MMI. Other
stockholders and sponsors of MMI include Millenium Investment, Inc. ("Millenium
Investment"), Millenium Advisors, L.L.C. ("Millenium Advisors"), Estonian
Shipping Company Limited ("ESCO") and Clipper.
Stanton Capital Corporation ("Stanton Capital"), a New York-based
investment firm, has acted as equity sponsor on behalf of Millenium Investment
in connection with the formation and structuring of MMI and Millenium
Investment's equity investment in MMI and is affiliated with Millenium Advisors.
Since its formation in 1995 until the Original Issue Date, Stanton Capital has
completed investments with an aggregate transaction value exceeding $400
million. In July 1997, Stanton Capital arranged the consortium of investors that
acquired 70% of the equity of ESCO from the Republic of Estonia.
ESCO is the successor to one of the largest merchant marine fleets in the
Former Soviet Union, currently owning over 40 cargo vessels (including over 25
bulker and general cargo vessels), most of which operate in the Baltic Sea,
between Northern Europe, Scandinavia and the Baltic countries. An affiliate of
Stanton Capital serves as financial advisor to ESCO, and an affiliate of Stanton
Capital will be actively involved as financial advisor to Millenium.
Clipper is a 25-year old international shipping consortium that operates
over 100 vessels. It is comprised of shipowning, commercial management, trading,
agency, stevedoring and investment companies. Clipper currently includes over 30
companies with offices throughout the world. Clipper has built its reputation by
establishing and maintaining charter relationships with major industry
participants. Many of Clipper's clients rely on its services rather than
creating and supporting "in house" transportation services. The Company has
enjoyed a long and mutually beneficial relationship with Clipper.
Millenium's registered offices are located at the offices of Maples and
Calder, P.O. Box 309, George Town, Grand Cayman, Cayman Islands.
Kylco USA's offices are located at 645 Fifth Avenue, New York, New York
(telephone: 212-759-8382), and Kylco Greece's offices are located at 26 Skouze
Street, Piraeus, Greece.
-6-
<PAGE>
The Exchange Offer
Summary of Terms of the Exchange Offer
The Exchange Offer......... Up to $100,000,000 aggregate principal amount at
maturity of 12% First Priority Ship Mortgage
Exchange Notes Due 2005 (the "Exchange Notes")
will be issued in minimum denominations of $1,000
and integral multiples of $1,000 in excess
thereof. Subject to such minimum denominations,
$1,000 principal amount at maturity of Exchange
Notes is offered in exchange for each $1,000
principal amount at maturity of First Priority
Ship Mortgage Notes Due 2005 (the "Existing
Notes"). As of the date of this Prospectus,
Existing Notes representing 100,000,000 aggregate
principal amount at maturity 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 Company, the Company
believes 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 Company 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 Company (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 Millenium on July
24, 1998 in a private placement. In connection
with the sale of the Existing Notes, Millenium and
the Subsidiary Guarantors entered into a
Registration Rights Agreement for the benefit of
the purchasers thereof (the "Registration Rights
Agreement"), under which the Company agreed to use
its 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 Company is
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 Company) without
restriction under the Securities Act. This
Prospectus is prepared in connection with the
Company's compliance with such registration
requirement. See "The Exchange Offer--Purpose and
Effect of the Exchange Offer" and "Description of
the Exchange Notes--Registration Rights."
-7-
<PAGE>
Expiration Date............ The Exchange Offer will expire at 5:00 p.m., New
York City time, on , 199 (or longer
if required by applicable law) unless extended by
the Company in its sole discretion. 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 July 24, 1998 (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.
Additional Interest........ If the Exchange Offer is not consummated by
January 20, 1999 (a "Registration Default"),
Additional Interest will accrue on the Existing
Notes from such date to the date the Exchange
Offer is consummated, at a rate of 0.50% of the
principal amount thereof per annum, which
Additional Interest is payable semiannually in
arrears on each Payment Date. Interest on the
Exchange Notes will accrue at a rate of 121/2% per
annum to reflect the 0.50% of Additional Interest
until such Registration Default has been cured.
Conditions to the
Exchange Offer........... The Exchange Offer is subject to certain customary
conditions, certain of which may be waived by the
Company. 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 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 Company 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 the Company 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 Company 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."
-8-
<PAGE>
Exchange Agent............. The First National Bank of Maryland of Baltimore,
Maryland 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 "Certain 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 Company generally will have no further
obligation to provide for the registration under
the Securities Act of such Existing Notes. See
"Risk Factors--Exchange Offer Procedure."
Summary of Terms of the Exchange Notes
Exchange Notes Offered..... $100,000,000 aggregate principal amount at
maturity of 12% First Priority Ship Mortgage
Exchange Notes Due 2005 ($96.6 million aggregate
initial Accreted Value).
Issuer..................... Millenium Seacarriers, Inc.
Trustee.................... The First National Bank of Maryland.
Maturity Date.............. July 15, 2005.
Interest Payment Dates January 15 and July 15 of each year, commencing
January 15, 1999.
Special Mandatory Redemption
for Escrowed Funds....... As of the Original Issue Date, Millenium deposited
in the Escrow Account approximately $78.1 million
of the proceeds of the offering of the Existing
Notes (plus $7.1 million representing the cash
portion of the Equity Contribution), of which no
more than $53.8 million is permitted to be
released in connection with paying the purchase
price for the Committed Vessels. As of the date of
this Prospectus, approximately $40.6 million has
been released from the Escrow Account in
connection with the acquisition of eight Committed
Vessels and to make deposits and pay related fees
and expenses. The balance of funds on deposit in
the Escrow Account will be released in connection
with the acquisition by the Company of the
remaining Committed Vessels, the Additional
Vessels and to make related vessel upgrades and
deposits. To the extent that, after July 31, 1999,
amounts on deposit in the Escrow Account exceed $5
million, Millenium will be required to redeem as
much principal amount of Notes as can be redeemed
with such amounts on deposit at a redemption price
equal to 101% of the Accreted Value of such Notes
together with accrued and unpaid interest thereon
to the date of such redemption.
Optional Redemption........ The Exchange Notes and the untendered Existing
Notes, if any, will be redeemable at the option of
Millenium in whole or in part, at the redemption
prices set forth herein plus accrued interest to
the date of redemption, at any time following July
15, 2003, or earlier if Millenium becomes liable
to pay certain amounts as a result of the
imposition of withholding taxes by the Cayman
Islands, Liberia or Cyprus. In addition, prior to
July 15, 2001, Millenium may, at its option,
redeem up to 35% of the principal amount at
maturity of the Exchange Notes and the untendered
Existing Notes, if any, at the redemption price
set forth herein from the net proceeds of one or
more Public Equity Offerings; provided, however,
that at least $65 million aggregate principal
amount at maturity of the Exchange Notes and the
untendered Existing Notes, if any, remains
outstanding and is held, directly or indirectly,
by persons other than Millenium and its
Affiliates, after each such redemption and that
each such redemption is made no more than 60 days
following the related Public Equity Offering.
-9-
<PAGE>
Redemption upon the Loss
of a Mortgaged Vessel.... Upon an Event of Loss (as defined) with respect to
a Mortgaged Vessel, Millenium must either, at the
option of Millenium, (a) redeem the Exchange Notes
and the untendered Existing Notes, if any, in
whole or in part, in an aggregate Accreted Value
equal to the lesser of (i) the Vessel Percentage
(as defined) applicable to such Mortgaged Vessel
multiplied by the Accreted Value of the Notes then
outstanding, at a redemption price equal to 100%
of the Accreted Value of such redeemed Exchange
Notes and the untendered Existing Notes, if any,
plus accrued and unpaid interest to such
redemption date and (ii) if no Event of Default
(as defined) shall have occurred and if the Loan
To Value Ratio (as defined) (calculated to include
in the numerator thereof the then outstanding
amount of Indebtedness (as defined) under any
working capital facility to the extent such
Indebtedness is secured by a prior Lien on the
Mortgaged Vessels) is less than 0.8 to 1.0, an
amount equal the net proceeds of such Event of
Loss or (b) if no Event of Default (as defined)
shall have occurred and be continuing, substitute
a Qualified Substitute Vessel (as defined) within
12 months after the receipt of the proceeds from
such Event of Loss of such Mortgaged Vessel.
Redemption upon the Sale
of a Mortgaged Vessel.... Upon the permitted sale of a Mortgaged Vessel (or
the capital stock of a Subsidiary Guarantor that
owns a Mortgaged Vessel), Millenium must either,
at the option of Millenium, (a) redeem the
Exchange Notes and the untendered Existing Notes,
if any, in whole or in part, in an aggregate
Accreted Value equal to (subject to certain
exceptions) the Vessel Percentage applicable to
such Mortgaged Vessel being sold multiplied by the
Accreted Value of the Exchange Notes and the
untendered Existing Notes, if any, then
outstanding, at a redemption price equal to the
sum of (i) the lesser of (x) if no Event of
Default shall have occurred and the Loan To Value
Ratio (calculated to include in the numerator
thereof the then outstanding amount of
Indebtedness under any working capital facility to
the extent such Indebtedness is secured by a prior
lien on the Mortgaged Vessels) is less than 0.8 to
1.0, an amount equal to the net proceeds of such
sale and (y) the greater of (A) 100% of the
Accreted Value of such redeemed Exchange Notes and
the untendered Existing Notes, if any, and (B) (1)
if such redemption date is on or after July 15,
2003, the redemption price then applicable as set
forth herein or (2) if such redemption date is
prior to July 15, 2003, the sum of the then
remaining payments of principal and interest on
such Exchange Notes and the untendered Existing
Notes, if any, through July 15, 2003 and the
redemption price of such Notes on such date and
accrued and unpaid interest thereon, in each case
discounted to their present values to the
redemption date using the Treasury Rate (as
defined) plus 50 basis points and (ii) accrued and
unpaid interest to such redemption date or (b) if
no Event of Default shall have occurred and be
continuing substitute a Qualified Substitute
Vessel within 12 months after the sale of such
Mortgaged Vessel (or capital stock).
Change of Control.......... Upon a Change of Control and subject to certain
conditions, each holder of the Exchange Notes and
the untendered Existing Notes, if any, may require
Millenium to repurchase the Exchange Notes and the
untendered Existing Notes, if any, held by such
holder at 101% of the Accreted Value thereof plus
accrued and unpaid interest to the date of
repurchase.
Subsidiary Guarantees...... The payment by Millenium of the principal of, and
premium and interest on, the Exchange Notes and
the untendered Existing Notes, if any, is fully,
irrevocably and unconditionally guaranteed on a
joint and several senior secured basis by each of
the Subsidiary Guarantors.
Mortgages and Other Security Millenium's obligations in respect of the Exchange
Notes and the untendered Existing Notes, if any,
will be secured by a pledge of all the capital
stock of the Subsidiary Guarantors and by amount
on deposit in the Escrow Account from time to
time. The obligations of each of the Subsidiary
Guarantors pursuant to its respective Subsidiary
Guarantee will be secured by the Mortgage over the
Mortgaged Vessel owned by such Subsidiary
Guarantor.
-10-
<PAGE>
Ranking.................... The Exchange Notes and the untendered Existing
Notes, if any, and the Subsidiary Guarantees will
be senior secured obligations of Millenium and the
Subsidiary Guarantors, respectively, will rank
pari passu in right of payment with all such
future senior indebtedness of Millenium and of the
Subsidiary Guarantors, respectively, and will be
senior in right of payment to all subordinated
indebtedness existing on the Original Issue Date
of the Existing Notes and future subordinated
indebtedness of Millenium and of the Subsidiary
Guarantors, respectively; provided, however, that
pursuant to the Indenture, Millenium may incur up
to $7.0 million of working capital indebtedness
that will be secured by a lien on the Mortgaged
Vessels that will have priority over the lien in
favor of the holders of the Exchange Notes and the
untendered Existing Notes, if any. The Working
Capital Facility Provider (as defined) has made
such a facility available to Millenium. As of the
date of this Prospectus, there are no amounts
outstanding under such working capital facility.
As of the date of this Prospectus, after giving
effect to the issuance of the Exchange Notes and
the Existing Notes and the application of the
proceeds therefrom, Millenium and the Subsidiary
Guarantors have had no senior indebtedness
outstanding other than the Exchange Notes and the
untendered Existing Notes, if any.
Certain Covenants.......... The Indenture contains covenants with respect to
(i) limitations on the incurrence of additional
indebtedness, (ii) limitations on certain
payments, (iii) limitations on restrictions on
distributions from subsidiaries (including the
Subsidiary Guarantors), (iv) limitations on sales
of assets and subsidiary stock, (v) limitations on
liens, (vi) limitations on investments, (vii)
limitations on business activities, (viii)
limitations on sale and leaseback transactions,
(ix) limitations on transactions with affiliates,
(x) requirements for the provision of financial
information, (xi) limitations on mergers,
consolidations and certain purchases of assets,
(xii) impairment of security interests and (xiii)
amendments to security agreements. All these
limitations and prohibitions, however, are subject
to a number of important qualifications.
Additional Amounts......... All payments by Millenium or the Subsidiary
Guarantors in respect of the Exchange Notes and
the untendered Existing Notes, if any, whether of
principal or interest, will be made without
withholding or deduction of any taxes imposed by
or within the Cayman Islands, Cyprus, Liberia or
any jurisdiction in which Millenium or any of the
Subsidiary Guarantors is incorporated or resident
for tax purposes or, in each case, any political
subdivision or taxing authority thereof or
therein, unless such withholding or deduction is
required by law or the interpretation and
administration thereof, in which case, subject to
specified exceptions and limitations, Millenium or
the Subsidiary Guarantors, as the case may be,
will either (i) pay such additional amounts as may
be necessary so that the net amount received by
the holders of the Notes after such withholding or
deduction will not be less than the amount that
would have been received in the absence of such
withholding or deduction or (ii) if payments in
respect of the Exchange Notes and the untendered
Existing Notes, if any, become subject to taxes
imposed by the Cayman Islands, Cyprus or Liberia,
redeem the Notes at 100% of the Accreted Value
thereof, plus accrued and unpaid interest to the
date of such redemption.
Risk Factors
Prospective Investors should carefully consider the information set
forth in this Prospectus and, in particular, the information
set forth under "Risk Factors" in connection with any
investment in the Exchange Notes.
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Summary Combined Financial Information
(in thousands, except ratios and operating data)
The Summary Combined Financial Information set forth below for the Company for
the three years ended December 31, 1995, 1996 and 1997 and as of December 31,
1996 and 1997 has been derived from the Company's audited combined financial
statements and related notes thereto which were prepared in accordance with
United States generally accepted accounting principles. Such combined financial
statements have been audited by Coopers & Lybrand, independent accountants, as
stated in their report included elsewhere in this Prospectus and should be read
in conjunction therewith. The summary combined statement of income data of the
Company set forth below for the two years ended December 31, 1993 and 1994 and
combined balance sheet data as of December 31, 1993, 1994, and 1995 have been
derived from the Company's audited combined financial statements not included in
this Prospectus. The summary combined financial information for the three months
ended March 31, 1997 and 1998 has been derived from the Company's unaudited
combined financial statements. In the opinion of management the unaudited
combined financial statements of the Company have been prepared on the same
basis as the audited combined financial statements included herein and include
all adjustments necessary for the fair presentation of the financial position
and results of operations for the Company for these periods, which adjustments
are only of a normal recurring nature. The results of operations for the three
months ended March 31, 1998 are not necessarily indicative of results that may
be expected for a full year.
<TABLE>
<CAPTION>
Three Months Ended
Year Ended December 31, March-31
------------------------------------------------------------------ ----------------------
1993 1994 1995 1996 1997 1997 1998
------------------------------------------------------------------ ----------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Income Statement Data:
Net revenue(a) .................. $ 2,585 $ 3,110 $ 4,633 $ 10,367 $ 2,714 $ 10,518 $ 2,596
Operating expenses(b) ........... 1,405 1,794 2,843 6,267 7,339 1,714 1,721
-------- -------- -------- -------- -------- -------- --------
Vessel operating income ...... 1,180 1,316 1,790 4,100 3,179 1,000 875
Interest expense, net ........... 384 392 690 1,159 1,215 301 274
Other (income)/expense, net ..... (1) (9) 31 234 116 10 13
Depreciation .................... 620 782 1,099 2,034 2,367 592 592
-------- -------- -------- -------- -------- -------- --------
Net income/(loss) ............ $ 177 $ 151 $ (30) $ 673 $ (519) $ 97 $ (4)
======== ======== ======== ======== ======== ======== ========
Other Financial Data:
Capital expenditures(c) ......... 6,140 -- 5,800 10,402 -- -- --
Ratio of earnings to
fixed charges(d) .............. 1.5x 1.4x 1.0x 1.6x -- 1.3x 1.0x
Balance Sheet Data (at period end):
Net book value of vessels ....... $ 5,520 $ 4,746 $ 9,446 $ 17,814 $ 15,447 $ 17,222 $ 14,855
Total assets
5,776 5,089 10,257 18,994 17,241 18,496 17,219
Total debt
5,343 4,403 8,471 15,583 12,956 14,691 12,828
Shareholders' equity ............ 179 202 634 1,514 995 1,612 991
Operating Data:
Number of drybulk carriers
(at period end) ............. 2 2 3 5 5 5 5
Average TCE per vessel per
day (e) ..................... $ 4,381 $ 4,443 $ 5,030 $ 6,582 $ 6,010 $ 6,203 $ 5,934
Average vessel running cost per
vessel per day (f) .......... 2,246 2,237 2,746 3,368(g) 3,400(g) 3,505(g) 3,098
Utilization(h) ................ 99.0% 99.0% 100.0% 100.0% 96.0%(i) NA NA
Revenues from time charter .... 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Average dwt per vessel
(at period end) ............. 7,923 7,923 10,802 20,835 20,835 20,835 20,835
Average age of fleet
(in years, at period end) ... 17.5 18.5 18.7 20.0 21.0 20.3 21.3
</TABLE>
(a) Net revenue is gross revenues from time charters net of charter commissions
and voyage related expenses.
(b) Operating expenses include, among other things, the amortization of
drydocking expenses, the amortization of special survey costs and
management fees.
(c) In 1993, the Company purchased the Clipper Atlantic and the Clipper
Pacific. In 1995, the Company purchased the Clipper Golden Hind. In 1996,
the Company purchased the Monica Marissa and the Clipper Harmony.
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<PAGE>
(d) Ratio of earnings to fixed charges is calculated as pre-tax net income from
continuing operations plus fixed charges (i.e., interest expense, net)
divided by fixed charges. Earnings in December 1997 and the three months
ended March 1997 were insufficient to pay fixed charges by $0.5 million and
$0.1 million, respectively.
(e) The Company uses the time charter equivalent ("TCE") as a method of
identifying net revenues earned on a daily basis by its vessels assuming
350 days per calendar year.
(f) Vessel running cost is operating expenses less drydocking expenses and
management fees.
(g) In 1996 and in 1997, the Company made significant upgrades to the Monica
Marissa and the Clipper Harmony, respectively. The costs of these upgrades
resulted in an increase in the vessel running costs for these years.
(h) Utilization is calculated on the basis that vessel employment for 350 days
per calendar year equals 100% utilization.
(i) In 1997, utilization was negatively impacted by upgrades made to the
Clipper Harmony.
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<PAGE>
RISK FACTORS
Prospective Investors should carefully consider the information set forth
in this Prospectus and, in particular, the information set forth under "Risk
Factors" in connection with any investment in the Exchange Notes.
Substantial Leverage and Ability to Service Indebtedness
As of the date of this Prospectus, Millenium is highly leveraged. Millenium
currently has $95.4 million of total consolidated indebtedness outstanding and
stockholders' equity of $24.1 million. In addition, subject to the restrictions
in the Indenture, Millenium is permitted to incur additional indebtedness from
time to time, including indebtedness pursuant to a working line of credit that
will be secured by a lien on the Mortgaged Vessels. Such lien would have
priority over the lien in favor of the holders of the Notes. The level of such
indebtedness will have several important effects on Millenium's future
operations, including the following: (i) Millenium's highly leveraged position
may impede its ability to obtain financing in the future for working capital,
capital expenditures and general corporate purposes, including acquisitions of
Additional Vessels; (ii) a substantial portion of Millenium's cash flow from
operations will be required to be dedicated to the payment of interest on its
indebtedness, and will not be available for other purposes; (iii) Millenium may
be hindered in its ability to withstand competitive pressures and respond to
changing business conditions; (iv) Millenium may be more vulnerable to any
downturn in its business, which historically has been cyclical and subject to
general and industry-specific economic conditions; and (v) Millenium may be more
highly leveraged than others with which it competes which may put it at a
competitive disadvantage. Any inability of Millenium to service its indebtedness
or obtain additional financing, as needed, would have a material adverse effect
on Millenium.
Millenium's ability to meet its debt obligations and to reduce its total
indebtedness will depend upon Millenium's future operating performance, which
will be affected by prevailing economic conditions and by financial, business
and other factors affecting the operations of Millenium, many of which are
beyond its control. There can be no assurance that Millenium's business will
continue to generate cash flow at levels sufficient to satisfy its debt service
requirements. If in the future Millenium is unable to generate sufficient cash
from operations to make scheduled interest payments on the Notes at maturity, or
to meet other obligations and commitments, Millenium will be required to adopt
one or more alternatives, such as refinancing or restructuring its indebtedness,
selling vessels or seeking to raise additional debt or equity capital. There can
be no assurance that any of these alternatives could be effected on a timely
basis or on satisfactory terms or at all. In addition, the terms of existing or
future debt agreements, including the Indenture, may prohibit Millenium from
adopting some of these alternatives. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations--Liquidity and Capital
Resources."
Potential Insufficiency of Collateral; Market Value of Mortgaged Vessels
The Notes, Subsidiary Guarantees and the Working Capital Facility (as
defined) and the Working Capital Guarantees (as defined) will be secured by
mortgages on the Existing Vessels and the Committed Vessels and, following the
acquisition of one or more Additional Vessels, by mortgages on such Additional
Vessels. In the event that Millenium and the Subsidiary Guarantors default on
their obligations to make payments in respect of the Notes or the Working
Capital Facility, holders of the Notes or the Working Capital Facility Provider,
as the case may be, would be entitled to payment out of the proceeds from the
sale of the Mortgaged Vessels. The Company has obtained appraisals by
independent shipbrokers of the Existing Vessels from one Designated Appraiser in
June 1998 and from another in February 1998; of the Millenium Yama, the
Millenium Amethyst, Millenium Elmar and the Millenium Aleksander, from two
Designated Appraisers, each in February 1998; and of the Millenium Majestic,
Millenium Condor, Millenium Falcon, Millenium Osprey, Millenium Eagle, Millenium
Hawk and Millenium Leader from two Designated Appraisers, each in June 1998. In
addition, the Company has obtained an appraisal of the Existing Vessels and
Committed Vessels in June 1998 from a Designated Appraiser, giving effect to
charters relating to such vessels, indicating that the Existing Vessels and the
Committed Vessels have an aggregate appraised value of $82.9 million. See
"Business--The Company's Fleet." The market value of drybulk carriers can be
expected to fluctuate, depending on prevailing general economic and market
conditions and competition from other shipping companies. See "--Cyclical Nature
of Industry, Freight Rates and Vessel Values." Although the Company believes
that the appraisals are a reasonable approximation of the current value of the
Existing Vessels and the Committed Vessels, the Company is not required under
the Indenture to maintain such appraised values (or any future appraised values
in connection with the proposed purchase of Additional Vessels) and there can be
no assurance that the future values of the Existing Vessels and the Committed
Vessels will not differ considerably from their current appraised values. See
"Business--The Company's Fleet."
Notwithstanding the current or future appraised value of the Mortgaged
Vessels, if an Event of Default were to occur under the Indenture or the Working
Capital Facility (and, in accordance with the terms of the Indenture and the
Notes, the maturity of the Notes were accelerated and the Trustee or the Holders
elected to foreclose on the Mortgaged Vessels and the other Collateral), the
ability of the Company to realize such value upon the foreclosure sale of the
Mortgaged Vessels and such other Collateral and to satisfy in full its
obligations with
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<PAGE>
respect to the Notes and the Working Capital Facility would depend upon
prevailing market and economic conditions, the physical condition of the
Mortgaged Vessels, the availability of buyers and other similar factors at the
time of sale. Accordingly, there can be no assurance that the proceeds of any
foreclosure sale of the Mortgaged Vessels and such other Collateral pursuant to
the Indenture and the Security Agreements (as defined) following an Event of
Default would be sufficient to satisfy payments due on the Notes and, if
applicable, on the amounts due under the Working Capital Facility. In addition,
there is no assurance that a foreclosure sale would give value to the charters
then in effect for such Mortgaged Vessel. Furthermore, in certain circumstances,
the extent to which the Mortgages may be enforced and the extent to which the
Mortgages will have priority over the claims of other creditors is limited. See
"--Enforcement of Mortgages." If the proceeds from any such foreclosure sale of
the Mortgaged Vessels and the other Collateral are not sufficient to satisfy
payments due on the Notes and, if applicable, on the amounts due under the
Working Capital Facility, the Holders (to the extent not repaid from such
proceeds) will have only unsecured claims against the remaining assets, if any,
of Millenium and the Subsidiary Guarantors.
Cyclical Nature of Industry, Freight Rates and Vessel Values
The Company is an independent shipping company which operates in the
drybulk market. This market has been cyclical in varying degrees, experiencing
fluctuations in freight rates, profitability and, consequently, vessel values.
These fluctuations have been primarily due to changes in the level and pattern
of global economic growth, the highly competitive nature of the world shipping
industry and changes in the supply of and demand for seaborne shipping capacity.
Freight rates are strongly influenced by the supply of and demand for
shipping capacity. The demand for shipping capacity is primarily determined by
demand for the commodities carried and by the distance that those commodities
are to be moved by sea. Demand for commodities is affected by, among other
things, world and regional economic and political conditions (including
developments in international trade, fluctuations in industrial and agricultural
production, armed conflicts, embargoes and strikes), environmental concerns,
weather patterns, canal closures and changes in seaborne and other
transportation patterns and crop yields. The supply of shipping capacity,
measured by the amount of suitable tonnage available to carry cargo, is
determined by the size of the existing fleet in a particular market, the number
of newbuilding deliveries, the scrapping of older vessels and the number of
vessels out of active service (i.e., laid-up, drydocked, awaiting repairs or
otherwise not available for hire). In addition to prevailing and anticipated
freight rates, factors that affect the rate of newbuilding, scrapping and
laying-up include newbuilding prices, second hand vessel values in relation to
scrap prices, costs of bunkers and other operating costs, costs associated with
classification society surveys, normal maintenance and insurance coverage, the
efficiency and age profile of the existing fleet in the market and government
and industry regulation of maritime transportation practices, particularly
environmental protection laws and regulations. The factors that influence the
supply of and demand for shipping capacity are outside the control of the
Company, and the nature, timing and degree of changes in industry conditions are
unpredictable. See "Business" and "The International Bulk Carrier Market."
The market value of the Company's vessels can be expected to fluctuate
largely in relation to existing and anticipated freight rates as well as with
changes in general economic and market conditions. In particular, the economic
crisis in southeast Asia that developed in the second half of 1997 has had an
adverse effect on vessel values and freight rates. The Company cannot predict
when vessel values and freight rates will begin to recover and there can be no
assurance that values and rates will not decline even further as a result of the
southeast Asian crisis or other economic conditions. Furthermore, as vessels
grow older they can generally be expected to decline significantly in value. As
the values of the Company's vessels decline, it may be more costly for the
Company to refinance debt relating to such vessels, which could have a material
adverse effect on the Company's liquidity.
Forward-Looking Information
This Prospectus includes certain statements, provided by the Company and
other sources believed by the Company to be reliable. All statements included in
this Prospectus regarding adjusted, estimated, pro forma, projected or intended
or anticipated future operations or financial performance, and all other
statements that neither expressly nor according to their context are historical
facts, are forward-looking statements. Moreover, words and expressions such as:
"believes," "is likely to," "should result in," "may," "intends," "foresees,"
"desires," "expects," "anticipates," "projects," "enables," "estimates,"
"predicts," "prospects" and analogous or correlative statements, and all
statements preceded or otherwise qualified by "there can be no assurance" or "no
assurance can be given," are also intended to identify forward-looking
statements. Such statements are subject to significant business, economic and
competitive uncertainties and contingencies, many of which are beyond the
control of the Company and, therefore, are impossible to predict. Accordingly,
there can be no assurance that the matters covered by such statements will be
realized. These forward-looking statements and actual developments, events,
achievements and results will likely vary and those variations may be material.
The Company can offer no promises, guarantees, representations or warranties as
to the accuracy or completeness of such forward-looking statements contained in
this Prospectus, and prospective investors in the Exchange Notes are cautioned
not to place undue reliance on such statements.
-15-
<PAGE>
Moreover, such forward-looking statements are based upon the Company's
beliefs by which the Company attempts to measure activity in, and to analyze the
factors affecting, the markets for its services. There can be no assurance that
(i) the Company has correctly measured or identified all the factors affecting
these markets or the extent of their likely impact, (ii) the publicly available
information with respect to these factors on which the Company's analysis is
based is complete or accurate, (iii) the Company's analysis is correct or (iv)
the Company's strategy, which is based in part on this analysis, will be
successful. Factors that could cause actual results to differ from those
reflected in the Company's forward-looking statements include fluctuations in
time and spot charter rates resulting from various supply and demand
considerations, such as an adverse change in the prices of the various
commodities carried, economic and political regional instability, adverse
currency fluctuations and other factors not within the Company's ability to
predict or control.
Risks Associated with the Purchase and Operation of Second Hand Vessels
The Existing Vessels and the Committed Vessels consist of 16 Handysize
drybulk carriers, all of which are between 10 and 25 years of age. All of these
vessels were or, in the case of the Committed Vessels not acquired as of the
date of this Prospectus, will be acquired second hand, and their useful lives
are estimated by the Company to be 30 years, depending on various market factors
and management's ability to comply with government and industry regulatory
requirements. The Company's current business strategy includes the acquisition
of up to six Additional Vessels, and a portion of the net proceeds of the
offering of the Existing Notes will be used to purchase such Additional Vessels,
none of which has yet been identified. There can be no assurance, however, that
such Additional Vessels will be available for purchase on terms favorable to the
Company or that, if acquired, such Additional Vessels will have significant
useful lives. In addition, the Company's inspections of second hand vessels
prior to purchase would not normally provide the Company with the same knowledge
about the condition of such vessels that the Company would have obtained if such
vessels had been built for and operated exclusively by the Company. See "Use of
Proceeds" and "Business--The Company's Fleet."
In general, expenditures necessary for maintaining a vessel in good
operating condition increase as the age of the vessel increases, and older
vessels may develop unexpected mechanical and operational problems despite
adherence to regular survey schedules and proper maintenance. Moreover, second
hand vessels typically carry very limited warranties with respect to their
condition as compared to warranties available for newer vessels. Cargo insurance
rates also tend to increase with the age of a vessel, and second hand vessels
tend to be less fuel efficient than newer vessels. While the difference in fuel
consumption is factored into the freight rates earned by older vessels, if the
cost of bunker fuels were to increase significantly, as happened immediately
prior to the Gulf War in 1991, the Company's vessels could be disproportionately
affected or earn significantly lower freight rates. In addition, changes in
governmental regulations, safety or other equipment standards may require
expenditures for alterations to existing equipment, the addition of new
equipment to the fleet or restrictions on the cargoes that the fleet may
transport. There can be no assurance that market conditions will justify such
expenditures or enable the Company to operate its vessels profitably during the
remainder of the economic lives of such vessels.
Potential Unavailability of Time Charters at Attractive Rates;
Possible Dependence on Spot Charter Market; Potential Decrease in Utilization
Rates
The Company currently charters the Existing Vessels and eight of the
Committed Vessels on a period time charter basis. All of the Company's revenue
in 1997 was derived from time charters. Such charters will expire in February or
March 1999 or February 2000 unless extended by the present charterers. There can
be no assurance that if these charters are renewed or extended, the charter hire
rates will be at or greater than the current charter hire rates for the Existing
Vessels or the eight Committed Vessels or that such extension or renewals will
be profitable or that if such charters are not renewed or extended, profitable
replacement period time charters will be available at that time. One or more of
the Mortgaged Vessels, therefore, may have to enter the spot market upon the
expiration of a time charter until the Company can identify a replacement time
charter. The spot charter market is highly competitive and spot charter rates
are subject to greater fluctuations than time charter rates. If profitable time
charters are not available, there can be no assurance that spot charters will be
available at rates that will be sufficient to enable the Mortgaged Vessels to be
operated profitably or at all.
In addition, dependence on the spot market may result in lower vessel
utilization and consequently decreased profitability. There can be no assurance
that rates in the time or spot charter market will not decline, that charters in
the time or spot markets will continue to be available or that dependence on the
spot market will not result in generally lower overall utilization, decreased
profitability or an inability to service the Notes.
Competition
The Company obtains charters for vessels in highly competitive markets in
which its market share is insufficient to enforce any degree of pricing
discipline. Although the Company believes that no single competitor has a
dominant position in the markets in which the Company
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<PAGE>
competes, the Company is aware that certain competitors may be able to devote
greater financial and other resources to their activities which may result in a
greater competitive threat to the Company. There can be no assurance that the
Company will continue to compete successfully with its competitors or that the
Company's competitive position will not be eroded in the future.
Transactions with Affiliates; Potential Conflicts of Interest
Each of the Mortgaged Vessels owned by the Company currently receives, and
each of the Mortgaged Vessels to be acquired by the Company will receive,
technical and management services from MMI pursuant to a new ship management
agreement (the "New Management Agreement") between each of the Subsidiary
Guarantors and MMI. MMI is the sole shareholder and, therefore, an affiliate of
Millenium. Under the New Management Agreement, MMI acts as the fleet's technical
manager and performs all commercial management functions. MMI subcontracts the
technical management and certain commercial management of the Mortgaged Vessels
to KYLCO. MMI owns all of the capital stock of Kylco Greece and 35% of the
capital stock Kylco USA and the balance of the capital stock of Kylco Greece and
Kylco USA is owned by members of the Company's senior management. MMI retains
the overall responsibility to the Company for both technical and commercial
management of the vessels. As remuneration for its services, MMI receives a
fixed daily management fee (payable monthly in advance) and receives a
commission on all gross revenue in respect of time charters and spot charters
earned by each vessel managed, a commission on the gross sale or purchase price
of vessels which the Company purchases or sells and a commission on all
insurance placed. The Company believes that the terms of the New Management
Agreement are at least as favorable to the Company as can be obtained from
independent third party managers. MMI and KYLCO may perform similar services for
similar compensation arrangements for vessels that are unaffiliated with the
Company. See "Business--Operations," and "Certain Transactions--New Management
Agreement."
The relationships between the Company and each of MMI and KYLCO may give
rise to conflicts of interest between Millenium on the one hand and MMI and
KYLCO on the other. Although the Indenture limits certain transactions with
affiliates and, among other things, requires that any arrangement with an
affiliate be on terms materially no less favorable to the Company than those
that could be obtained in a comparable transaction on an arms' length basis with
an independent third party, the Indenture does not otherwise prohibit the
payment of amounts to any such parties, nor does it require the approval of the
Holders or the Trustee for such arrangements or payments, regardless of amount.
See "Description of the Exchange Notes--Certain Covenants" and "Certain
Transactions--New Management Agreement." In addition, most of the senior
management of the Company also hold senior management positions with MMI, KYLCO
or any combination thereof. In light of their positions, these individuals may
experience conflicts of interest in selecting between the Company's interests
and those of MMI or KYLCO. Finally, MMI and KYLCO also manage vessels for third
party ship owners. In light of these management obligations, MMI and KYLCO may
experience conflicts of interest in selecting between the Company's interests
and those of such third parties.
Possible Catastrophic Loss and Liability; Insurance
The ownership and operation of any ocean-going vessel in international
trade is affected by a number of risks, including mechanical failure, personal
injury, vessel and cargo loss or damage, business interruption due to political
conditions in foreign countries, hostilities, labor strikes, adverse weather
conditions and catastrophic marine disaster, including environmental accidents
and collisions. All these risks could result in liability to the Company and
could cause loss of revenue, increased costs or loss of reputation.
The Company maintains, and is required by the Security Agreements to
continue to maintain, insurance consistent with industry standards against these
risks (except that the Company, like many of its competitors, does not maintain
business interruption or "off-hire" insurance. See "--Risk of Arrest; Loss of
Hire"). There can be no assurance, however, that the Company will adequately
insure against all risks, that any particular claim will be paid out of such
insurance, or that the Company will be able to procure adequate insurance
coverage at commercially reasonable rates in the future. More stringent
environmental and other regulations may result in increased costs for, or the
lack of availability of, insurance against the risks of environmental damage,
pollution and other claims for damages that may be asserted against the Company.
Moreover, even if insurance proceeds are paid to the Company to cover the
financial losses incurred following the occurrence of one of these events, there
can be no assurance that the Company's business reputation, and therefore its
ability to obtain future charters, will not be materially adversely affected by
such an event. Such an impact on the Company's business reputation could have a
material adverse effect on the Company's business and results of operations. See
"Business--Insurance."
Operations Outside the United States
The operations of the Company are conducted worldwide, primarily outside of
the United States, and therefore may be affected by currency fluctuations and by
changing economic, political and social conditions in the countries where its
business is conducted or where its vessels are registered or flagged. In
particular, the operations may be affected by war, expropriation of vessels, the
imposition of taxes,
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<PAGE>
increased regulation or other circumstances, and as a consequence, the Company
may incur higher costs, its assets may be impaired or its operations may be
curtailed.
Millenium is incorporated in the Cayman Islands and the Subsidiary
Guarantors are incorporated in either the Cayman Islands, Cyprus or Liberia. All
of the assets of the Company are located outside the United States.
Consequently, it may not be possible to enforce judgments against the Company or
any Subsidiary Guarantor, including judgments predicated upon the civil
liability provisions of the federal securities laws of the United States. See
"Enforceability of Civil Liabilities."
Environmental and Other Regulations
The Company's operations are materially affected by extensive and changing
environmental protection and other laws, rules, regulations and conventions,
compliance with which may entail significant expense, including expenses for
ship modifications and changes in operating procedures. Although the Company
believes it is in substantial compliance with such laws, rules, regulations and
conventions, there can be no assurance that the costs of compliance, or the
failure to comply, would not have a material adverse effect on the Company's
business, results of operations, financial condition and liquidity.
The United States Oil Pollution Act of 1990, as amended ("OPA 90"), imposes
strict, joint and several liability on owners, operators and charterers by
demise (i.e., bareboat charterers) of vessels (the "Responsible Parties") for
actual or threatened discharges of oil into the navigable waters of the United
States or adjoining shorelines, including the 200-nautical mile exclusive
economic zone of the United States ("U.S. Waters"), with certain limited
exceptions. OPA 90 limits the strict liability of Responsible Parties to the
greater of $1,200 per gross ton or $10 million per tanker and the greater of
$600 per gross ton or $500,000 for all other vessels (subject to possible
adjustment for inflation) for removal costs and damages that result from an
actual or threatened discharge of oil. These limits do not apply, however, if
the incident is caused by gross negligence, willful misconduct, or the violation
by a Responsible Party or its agent of any applicable United States federal
safety, construction or operating regulation, or if the Responsible Party fails
to report the incident or cooperate in connection with related removal
activities. In addition, OPA 90 specifically permits individual states to impose
their own liability regimes with regard to hazardous materials and oil pollution
incidents occurring within their boundaries, and most states bordering on a
navigable waterway have enacted legislation providing for strict unlimited
liability for discharges of pollutants within state waters. In some cases,
states which have enacted such legislation have not yet issued implementing
regulations defining owners' or operators' responsibilities under these laws.
See "Business--Regulation."
Pursuant to regulations promulgated by the United States Coast Guard
("USCG") under OPA 90, Responsible Parties must meet financial responsibility
requirements under OPA 90 and the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended ("CERCLA"). The protection
and indemnity clubs ("P&I Clubs"), which have historically provided shipowners
and operators with financial assurance, have refused to furnish evidence of
insurance to Responsible Parties and, therefore, Responsible Parties have
obtained financial assurance from other sources at additional cost. Although the
Company currently satisfies such financial responsibility requirements for each
of its vessels that call in U.S. Waters, failure to maintain compliance with
these USCG regulations could have a material adverse effect on the Company's
business, results of operations, financial condition and liquidity. See
"Business--Regulation."
According to the IMO, an agency of the United Nations, 99 bulk carriers
sank between 1990 and 1997. In response to this increase in bulk carrier
accidents, the IMO has adopted regulations to reduce the risk of drybulk
carriers sinking. These regulations generally require new and existing drybulk
carriers to be capable of withstanding the flooding of any one cargo hold at a
particular time. Failure to comply with these IMO regulations could have a
material adverse effect on the Company's business, results of operations,
financial condition and liquidity. See "Business--Regulation."
The Company's operations also are affected by the newly-adopted
requirements set forth in the ISM Code. The ISM Code and implementing
regulations require shipowners and bareboat charterers who have assumed
responsibility for the operation of cargo vessels, including bulk carriers, to
have developed, no later than July 1, 1998, an extensive "Safety Management
System" that includes, among other things, the adoption of a safety and
environmental protection policy setting forth instructions and procedures for
operating their vessels safely and describing procedures for dealing with
emergencies. Noncompliance with the ISM Code may lead to decreases in available
insurance coverage for affected vessels and may result in the denial of access
to, or detention in, certain ports. Although the Company, through KYLCO, has
obtained ISM certification for the Existing Vessels by successfully completing
audits conducted by Det Norske Veritas, a leading classification society,
failure to maintain such certification would have a material adverse effect on
the Company's business, results of operations, financial condition and
liquidity. The Company will be required to obtain ISM Certification for the
Committed Vessels and Additional Vessels within six months of acquiring them. As
of the date of this Prospectus, the Company has obtained ISM Certification for
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seven of the Committed Vessels. Failure to obtain and maintain such
certifications would have a material adverse effect on the Company's business,
results of operations, financial condition and liquidity.
In complying with OPA 90, the IMO regulations, the ISM Code and with other
laws and regulations that may be adopted, shipowners and operators may incur
significant additional costs in meeting new maintenance and inspection
requirements, in developing contingency arrangements for potential spills and in
obtaining insurance coverage. These laws and regulations also may restrict the
economic life of vessels, require a reduction in cargo carrying capacity and
make such vessels less desirable to potential charterers. Additional laws and
regulations may be adopted which could limit the ability of the Company to do
business and which could have a material adverse effect on the Company's
business, results of operations, financial condition and liquidity. See
"Business--Regulation."
Risk of Arrest; Loss of Hire
All the Existing Vessels and Committed Vessels are on time charter to third
parties. Under the terms of the Company's charters, the vessels are placed
off-hire (i.e., the charterer ceases to pay charter hire) for any period during
which such vessel is "arrested" for a reason not arising from the fault of the
charterer. Under the general maritime law in many jurisdictions, crew members,
tort claimants, claimants for breach of certain maritime contracts, vessel
mortgagees, suppliers of goods and services to a vessel and shippers and
consignees of cargo may be entitled to a maritime lien against that vessel for
unsatisfied debts, claims or damages, and in many circumstances a maritime
lienholder may enforce its lien by "arresting" a vessel through court processes.
In addition, in certain jurisdictions, such as South Africa, under the
"sister ship" theory of liability, a claimant may arrest not only the vessel
with respect to which the claimant's maritime lien has arisen, but also any
"associated" vessel owned or controlled by the legal or beneficial owner of that
vessel. While in some of the jurisdictions which have adopted this doctrine,
liability for damages is limited in scope and would only extend to a company and
its shipowning subsidiaries, there can be no assurance that liability for
damages caused by a vessel managed by MMI or KYLCO would not be asserted against
Millenium, any of its shipowning subsidiaries or their respective vessels. The
arrest of one or more vessels could result in a material loss of cash flow for
the Company or require the Company to pay substantial sums to have the arrest
lifted. Although the Company currently maintains insurance coverage for
liability for each of its vessels, there can be no assurance that such insurance
will continue to be available on terms favorable to the Company, or at all. See
"--Possible Catastrophic Loss and Liability; Insurance" and
"Business--Insurance."
Special Mandatory Redemption Upon Failure to Acquire Additional Vessels
Although the Company intends to use substantially all the net proceeds of
the Existing Notes to purchase additional vessels and to make related vessel
upgrades and make deposits and pay related transaction fees and expenses, there
can be no assurance that it will be able to secure agreements to purchase such
vessels or to take delivery of such vessels in the time period set forth in the
Indenture, if at all. In such event, the Company would be required to redeem a
portion of the Exchange Notes and the untendered Existing Notes, if any. See
"Use of Proceeds" and "Description of the Exchange Notes--Escrow of Proceeds;
Special Mandatory Redemption."
Change of Control
In the event of a Change of Control, the Company will be required, subject
to certain conditions, to offer to purchase all outstanding Notes at a price
equal to 101% of the Accreted Value thereof, plus accrued but unpaid interest to
the date of purchase. There can be no assurance that the Company would have the
financial resources to purchase the Notes. See "Description of the Exchange
Notes--Change of Control."
Enforcement of Mortgages
Each of the Mortgaged Vessels is, and during the term of the Notes is
expected to be, registered under either the Liberian, Cypriot, Panamanian,
Cayman Islands or Bahamian flag (or other jurisdictions of similar authority).
Currently, one of the Existing Vessels is registered under the Liberian flag,
two of the Existing Vessels are registered under the Cypriot flag and two of the
Existing Vessels are registered under the Panamanian flag. Three of the
Committed Vessels are registered under the Bahamian flag with the remaining
Committed Vessels registered, or to be registered upon their acquisition by the
Company, under the Cayman Islands flag. Liberian, Cypriot, Panamanian, Bahamian
and Cayman Islands law provide that such mortgages may be enforced by the
mortgagee by a suit in admiralty in a proceeding against the mortgaged vessel.
Historically, Liberian, Cypriot, Panamanian, Bahamian and Cayman Island ship
mortgages have been enforced in major commercial ports throughout the world,
including United States ports. However, Millenium has been advised that the
priority that any of the mortgages would have against the claims of other lien
creditors in an enforcement proceeding is generally determined by, and will
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vary in accordance with, the laws of the country where the proceeding is
brought. Liberian, Cypriot, Panamanian, Bahamian and Cayman Islands ship
mortgages may be enforced against a vessel physically present in the United
States, but the claim under any such mortgage would rank junior to preferred
maritime liens, which include those for supplies, wages and other necessities
provided in the United States. Since the Mortgaged Vessels will also operate
throughout the world, there can be no assurance that if enforcement proceedings
are commenced against a Mortgaged Vessel, the Mortgaged Vessel will be located
in a jurisdiction having the same mortgage enforcement procedures and lien
priorities as Liberia, Cyprus, Panama, The Bahamas or the Cayman Islands,
although, upon the occurrence of an event of Default, the Collateral Agent (as
defined) may be able to effect control over the Mortgaged Vessels to direct them
to a desirable jurisdiction to arrest such vessels pursuant to judicial
foreclosure proceedings. See "The Mortgages."
Although each of the Mortgaged Vessels is or will be separately owned by a
subsidiary of Millenium, under certain circumstances, a parent company and all
the shipowning affiliates in a group under common control or engaged in a joint
venture could be held liable for damages or debts owed by one of the other
affiliates. Therefore, it is possible that all of the assets of Millenium and
its subsidiaries could be subject to execution upon a judgment against Millenium
or any of its subsidiaries. Although the Company currently maintains insurance
coverage for liability for each of its vessels, there can be no assurance that
such insurance will continue to be available on terms favorable to the Company,
or at all. See "--Possible Catastrophic Loss and Liability; Insurance" and
"Business--Regulation."
Certain Creditors' Rights; Fraudulent Conveyance Statutes
The Notes are secured by mortgages granted by, and Guarantees made by, the
Subsidiary Guarantors. Accordingly, the granting of the mortgages, the making of
the Guarantees and any payments made under the Guarantees by the Subsidiary
Guarantors may be subject to review under relevant fraudulent conveyance laws if
a bankruptcy, reorganization or rehabilitation case or a lawsuit (including
circumstances in which bankruptcy is not involved) were commenced by, or on
behalf of, unpaid creditors of the Subsidiary Guarantors at some future date.
These laws differ among various jurisdictions. In general, under these laws, if
a court were to find that, among other things, at the time an obligation such as
the Guarantees were incurred, either (a) such obligation was incurred with the
intent of hindering, delaying or defrauding creditors or (b) the entity
incurring the obligation received less than reasonably equivalent or fair value
consideration in exchange for the incurrence of such obligation and the entity
incurring such obligation (i) was insolvent or was rendered insolvent by reason
thereof, (ii) was engaged in a business or transaction for which its remaining
assets constituted unreasonably small capital, (iii) intended to incur, or
believed, or reasonably should have believed, that it would incur, debts beyond
its ability to pay such debts as they matured (as all of the foregoing terms are
defined in, or interpreted under, the fraudulent conveyance statutes) or (iv)
such entity was a defendant in an action for money damages, or had a judgment
for money damages docketed against it (if, in either case, after final judgment,
the judgment is unsatisfied) (each of clauses (i)-(iv) above, a "Fraudulent
Conveyance"), such court could impose legal and equitable remedies, including
(x) subordination of the obligation and the liens, and direction of the
repayment of any amounts paid from the proceeds thereof to a fund for the
benefit of the entity's creditors or (y) taking of other action detrimental to
the holders of the Notes.
The measure of insolvency for purposes of determining whether a Fraudulent
Conveyance has occurred will vary depending upon the laws of the relevant
jurisdiction and upon the valuation assumptions and methodology applied by the
court.
The Company believes that at the time of, or as a result of, granting of
the mortgages, the issuance of the Guarantees and the application of the net
proceeds of the Existing Notes and the Equity Contribution, each of the
Subsidiary Guarantors (a) will not be insolvent or rendered insolvent under the
foregoing standards, (b) will not be engaged in a business or transaction for
which its remaining assets would constitute unreasonably small capital, (c) does
not intend to incur, and does not believe that it will or would incur, debts
beyond its ability to pay such debts as they mature and (d) will have sufficient
assets to satisfy any probable money judgment against it in any pending actions.
Such beliefs are based in part on the Company's operating history and
management's analysis of internal cash flow projections and estimated values of
assets and liabilities of the Company at the Original Issue Date. There can be
no assurance, however, that a court passing on these issues would adopt or
utilize the same methodology or assumptions, or arrive at the same conclusions
as the Company.
Expansion of Business
Between the Original Issue Date and July 31, 1999, the Company's fleet is
expected to expand beyond the Existing Vessels by approximately 17 Handysize
drybulk carriers. This rapid expansion will significantly increase the
responsibilities associated with owning, operating and managing the Company's
fleet. The Company expects to hire additional employees and upgrade bookkeeping,
tracking and computer systems in order to meet such operational and
administrative requirements. There can be no assurance, however, that these
plans will be implemented successfully, or that if implemented, they will
sufficiently compensate for the increased responsibilities.
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Concentration of Voting Power
MMI is the sole shareholder of Millenium. As of the Original Issue Date,
Millenium Investment, a Cayman Islands company, and Millenium Advisors, L.L.C.,
a New York limited liability company, beneficially owned in the aggregate
approximately 44% of the outstanding common stock of MMI. The sole director of
Millenium Investment also serves as the managing member of Millenium Advisors.
See "Principal Stockholders."
Dependence on Key Personnel
The Company is dependent upon a limited number of senior executives for the
principal decisions with respect to the Company's activities. The loss or
unavailability of the services of any such person for any significant period of
time could have a materially adverse effect on the Company's business and
results of operations. See "Officers and Directors."
Withholding Tax
All payments by the Company or any Subsidiary Guarantor with respect to the
Notes or the related Guarantees will be made without withholding or deduction
for taxes imposed by any jurisdiction in which the Company or any of the
Subsidiary Guarantors is then incorporated or resident for tax purposes unless
required by law or the interpretation or administration thereof, in which case,
the Company will, except in certain circumstances, (i) pay such additional
amounts as may be necessary so that the net amount received by the Holders after
such withholding or deduction will not be less than the amount that would have
been received in the absence of such withholding or deduction or (ii) if the
payments in respect of the Notes become subject to taxes imposed by the Cayman
Islands, Cyprus or Liberia, redeem the Notes at 100% of the Accreted Value
thereof, plus accrued and unpaid interest to the date of such redemption. See
"Description of the Exchange Notes- -Additional Amounts" and "Description of the
Exchange Notes--Redemption for Changes in Withholding Taxes." The Company has
been advised by legal counsel, Maples and Calder, with regard to the laws of the
Cayman Islands, Andreas Demetriades Law Office, with regard to the laws of
Cyprus and the Law Offices of Basil T. Patkos with regard to the laws of
Liberia, that the Cayman Islands, Cyprus and Liberia will not impose, under
present laws, any withholding taxes on payments by the Company or any Subsidiary
Guarantor. Prospective Holders should consult their tax advisors respecting the
implications of taxation before investing in the Notes. See "Certain United
States Federal Income Tax Consequences" and "Certain Foreign Tax
Considerations."
Currency Risks
All the Company's revenue and most of its expenses are denominated in
United States dollars. However, the Company has incurred and will continue to
incur expenses in other currencies, particularly Greek drachmae. For the year
ended December 31, 1997, total expenses incurred in Greek drachmae accounted for
approximately 10% of the total expenses incurred in such period. While the
Unites States dollar has generally appreciated against the Greek drachma in
recent years, it has also depreciated from time to time. Depreciation in the
value of the United States dollar relative to the Greek drachma would increase
the United States dollar cost to the Company of paying such expenses and thus
could have a material adverse effect on the Company's results of operations.
There can be no assurance that the portion of the Company's business conducted
in other currencies will not increase in the future, which could expand the
Company's exposure to losses arising from currency fluctuations. The Company has
not historically hedged its exposure to foreign currency fluctuations.
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, Millenium does not intend to list the Exchange Notes on any
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."
Historically, the market for securities such as the Exchange Notes has been
subject to disruptions that have caused substantial volatility in the prices of
such securities. There can be no assurance that, if a market for the Exchange
Notes were to develop, such a market would not be subject to similar
disruptions. Such disruptions may materially and adversely affect holders of the
Exchange Notes.
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Exchange Offer Procedure
The issuance of the Exchange Notes pursuant to the Exchange Offer will be
made only after a timely receipt by the Company or its 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 Company is under no duty to
give notification of defects or irregularities with respect to tenders of
Existing Notes for Exchange Notes. 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 Millenium in July 1998, to Credit Suisse
First Boston Corporation and Donaldson, Lufkin & Jenrette Securities Corporation
(the "Initial Purchasers"). The Initial Purchasers subsequently placed the
Existing Notes with (i) persons whom they reasonably believe to be QIBs (as
defined in Rule 144A) in reliance on Rule 144A under the Securities Act and (ii)
directly, or through their international affiliates, in offshore transactions
complying with the requirements of Rule 903 or Rule 904 of Regulation S under
the Securities Act. As a condition to the purchase of the Existing Notes by the
Initial Purchasers, Millenium and the Subsidiary Guarantors entered into the
Registration Rights Agreement with the Initial Purchasers, which requires, among
other things, that promptly following the sale of the Existing Notes to the
Initial Purchasers, the Company 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 Millenium
identical in all material respects to the Existing Notes, (ii) use its best
efforts to cause such registration statement to become effective under the
Securities Act within 150 days after the Original Issue Date and (iii) use its
best efforts to cause the Exchange Offer to be consummated. The Company has
agreed to keep the Exchange Offer open for 30 days with the right to extend the
Exchange Offer up to a maximum of 60 days.
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 Company 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. The Company will issue up to
$100,000,000 principal amount at maturity of Exchange Notes in exchange for a
like principal amount at maturity 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 $1,000 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, $100,000,000 aggregate principal amount
at maturity of the Existing Notes was outstanding and registered in the name of
Cede & Co., as nominee for DTC. The Company has fixed the close of business on
, 1998 as the record date for the Exchange Offer for purposes of
determining the persons to whom this Prospectus, the Letter of Transmittal and
the Notice of Guaranteed Delivery will be mailed initially.
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.
The Company shall be deemed to have accepted validly tendered Existing
Notes when, as and if the Company has 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 Company.
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
Existing Notes pursuant to the Exchange Offer. The Company has agreed to pay all
charges and expenses in connection with the Exchange Offer.
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Expiration Date; Extensions; Amendments
The term "Expiration Date" shall mean 5:00 p.m., New York City time, on
, 1998, unless the Company, in its sole discretion, extends the
Exchange Offer, in which case the term "Expiration Date" shall mean the latest
date and time to which the Exchange Offer is extended.
Interest on the Exchange Notes
The Exchange Notes will be deemed to accrue interest from July 24, 1998
(the date of original issuance of the Existing Notes) or from the date of the
last periodic payment of interest on such Existing Notes, whichever is later.
Interest on the Exchange Notes will be payable semi-annually on each January 15
and July 15, commencing on January 15, 1999.
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 at maturity 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 Company understands 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 ("ATOP") 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 Company 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 Company will
constitute agreement between such Holder and the Company 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 THE COMPANY. HOLDERS MAY REQUEST THEIR RESPECTIVE BROKERS,
DEALERS, COMMERCIAL BANKS, TRUST REGISTRATION COMPANIES OR NOMINEES TO EFFECT
THE ABOVE TRANSACTIONS FOR SUCH HOLDERS.
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.
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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
Company, evidence satisfactory to the Company 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 Company, in its reasonable discretion,
which determination will be final and binding. The Company reserves 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 Company,
be unlawful. The Company also reserves the right to waive any defects,
irregularities or conditions of tender as to particular Existing Notes. The
Company's 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
Company shall determine. Although the Company intends to notify Holders of
defects or irregularities with respect to tenders of Existing Notes, none of the
Company, 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 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.
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<PAGE>
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 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 Company, 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 untendered. 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
untendered 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 Company shall not
be required to accept for exchange, or to exchange any 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 reasonable judgment of the Company, might materially impair
the ability of the Company to proceed with the Exchange Offer or any
material adverse development has occurred in any existing action or
proceeding with respect to the Company; or
(b) any change, or any development involving a prospective change, in
the business or financial affairs of the Company has occurred which, in the
sole judgment of the Company might materially impair the ability of the
Company 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 Company, might materially impair the ability of the Company
to proceed with the Exchange Offer or materially impair the contemplated
benefits of the Exchange Offer to the Company; or
(d) any governmental approval has not been obtained, which approval
the Company shall, in their reasonable discretion, deem necessary for the
consummation of the Exchange Offer as contemplated hereby; or
(e) the Company believes 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 Company, 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 Company determines in its reasonable discretion that any of the
conditions are not satisfied, the Company 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 Company 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 Company
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. All
conditions,
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<PAGE>
other than governmental approval, must be satisfied on or prior to the
expiration of the Exchange Offer in order to consummate the Exchange Offer.
Exchange Agent
The First National Bank of Maryland 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: 25 South Charles Street
Mail Code 101-591
Baltimore, MD 21201
By Hand: 25 South Charles Street
Mail Code 101-591
Baltimore, MD 21201
By Overnight Mail or Courier: 25 South Charles Street
Mail Code 101-591
Baltimore, MD 21201
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 Company and their affiliates. No additional
compensation will be paid to any such officers and employees who engage in
soliciting tenders. The Company has 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 Company, 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 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 or reimbursed by the Company and are estimated in the
aggregate to be in excess of $120,000.
Transfer Taxes
The Company 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 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.
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 Company 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 Company believes 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
Company within the meaning
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<PAGE>
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 Company, 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 holder's 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
Company 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 Company. Further, by tendering in the
Exchange Offer, each Holder represents to the Company either that it is not an
"affiliate" (as defined under Rule 405 of the Securities Act) of the Company or,
if it may be deemed an "affiliate" of the Company 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 Company that it
acquired the Existing Notes as a result of market-making activities or other
trading activities.
Consequences of Failure to Exchange
As a result of the making of this Exchange Offer, the Company generally
will have fulfilled its 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 Millenium (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. Thacher Proffitt & Wood, New York, New
York, as counsel for the Company, has passed upon the legality of the Exchange
Notes. None of the Company 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 (which regulate the nature and extent of
permitted
-28-
<PAGE>
investments in certain securities for certain institutional investors).
Each Holder of the Existing Notes should consult with its own advisors as to
legal, tax, business, financial and related aspects of participation in the
Exchange Offer.
The Company may in the future seek to acquire untendered Existing Notes in
open market or privately negotiated transactions, through subsequent exchange
offers or otherwise. The Company 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 Company's obligations
under the Registration Rights Agreement. The Company 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 Company will receive in exchange Existing Notes in like principal amount at
maturity, 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 Company.
-29-
<PAGE>
CAPITALIZATION
The following table sets forth the actual combined capitalization of the
Company at March 31, 1998 and as adjusted to give effect to the issuance of the
Existing Notes, the Equity Contribution, the acquisition of the Committed
Vessels and the repayment of the indebtedness on the Existing Vessels. This
table should be read in conjunction with "Management's Discussion and Analysis
of Financial Condition and Results of Operations" and the Combined Financial
Statements, included elsewhere in this Prospectus.
As of March 31, 1998
------------------------------
Actual As Adjusted
------------- ---------------
(dollars in millions)
Cash and cash equivalents ....... $ 0.3 $ 31.5(a)
======= ========
Short-term debt(b):
Current portion of long-term debt $ 3.8 $ --
Long-term debt:
Bank indebtedness ............... 9.0 --
Existing Notes, net of discount . -- 95.4(c)
------- --------
Total debt ................ 12.8 95.4
Stockholders' equity ............ 1.0 24.1(c)
------- --------
Total capitalization ............ $ 13.8 $ 119.5
======= ========
Millenium was incorporated on March 10, 1998. As of the Original Issue
Date, Millenium had 10,000,000 shares of Common Stock, par value $.01 per
share authorized, of which 9,500,000 shares were issued and outstanding.
(a) This amount was placed into the Escrow Account for the purchase of
Additional Vessels and pay deposits, transaction fees and expenses and, if
necessary, to make vessel upgrades. In addition, pending actual delivery of
any Committed Vessels that have not been purchased as of the date of this
Prospectus, funds for the purchase of such Committed Vessels will be
temporarily held in the Escrow Account.
(b) The Company has obtained a working capital facility from The Bank of New
York (the "Working Capital Facility") which includes a $7.0 million
committed revolving line of credit, in order to provide further liquidity
to the Company. No amounts are currently outstanding under such Working
Capital Facility.
(c) Of the $96.6 million gross proceeds from the issuance of the Existing
Notes, $95.4 million was allocated to the Notes and $1.2 million was
allocated to additional paid-in capital to reflect the issuance of warrants
to purchase in the aggregate 500,000 shares of Millenium common stock at an
exercise price of $.01 per share (the "Warrants"). Stockholders' equity has
been reduced by $1.1 million to reflect the estimated issuance costs
allocated to the Equity Contribution. No assurance can be given that the
value allocated to the Warrants was or will be indicative of the price at
which the Warrants may actually trade.
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<PAGE>
SELECTED COMBINED FINANCIAL INFORMATION OF THE COMPANY
(in thousands, except ratios and operating data)
The Selected Combined Financial Information set forth below for the Company
for the three years ended December 31, 1995, 1996 and 1997 and as of December
31, 1996 and 1997 has been derived from the Company's audited combined financial
statements and related notes thereto which were prepared in accordance with
United States generally accepted accounting principles. Such combined financial
statements have been audited by Coopers & Lybrand, independent accountants, as
stated in their report included elsewhere in this Prospectus and should be read
in conjunction therewith. The selected combined statement of income data of the
Company set forth below for the two years ended December 31, 1993 and 1994 and
combined balance sheet data as of December 31, 1993, 1994 and 1995 have been
derived from the Company's audited combined financial statements not included in
this Prospectus. The selected combined financial information for the three
months ended March 31, 1997 and 1998 has been derived from the Company's
unaudited combined financial statements. In the opinion of management the
unaudited combined financial statements of the Company have been prepared on the
same basis as the audited combined financial statements included herein and
include all adjustments necessary for the fair presentation of the financial
position and results of operations for the Company for these periods, which
adjustments are only of a normal recurring nature. The results of operations for
the three months ended March 31, 1998 are not necessarily indicative of results
that may be expected for a full year.
<TABLE>
<CAPTION>
Year Ended December 31, Three Months Ended
March 31,
---------------------------------------------------------------------------------------
1993 1994 1995 1996 1997 1997 1998
---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Income Statement Data:
Net revenue(a) ......................... $ 2,585 $ 3,110 $ 4,633 $ 10,367 $ 10,518 $ 2,714 $ 2,596
Operating expenses(b) .................. 1,405 1,794 2,843 6,267 7,339 1,714 1,721
-------- -------- -------- -------- -------- -------- --------
Vessel operating income ............ 1,180 1,316 1,790 4,100 3,179 1,000 875
Interest expense, net .................. 384 392 690 1,159 1,215 301 274
Other (income)/expense, net ............ (1) (9) 31 234 116 10 13
Depreciation ........................... 620 782 1,099 2,034 2,367 592 592
-------- -------- -------- -------- -------- -------- --------
Net income/(loss) .................. $ 177 $ 151 $ (30) $ 673 $ (519) $ 97 $ (4)
======== ======== ======== ======== ======== ======== ========
Other Financial Data:
Capital expenditures(c) ............... 6,140 -- 5,800 10,402 -- -- --
Ratio of earnings to fixed charges(d) 1.5x 1.4x 1.0x 1.6x -- 1.3x 1.0x
Balance Sheet Data (at period end):
Net book value of vessels ............. $ 5,520 $ 4,746 $ 9,446 $ 17,814 $ 15,447 $ 17,222 $ 14,855
Total assets .......................... 5,776 5,089 10,257 18,994 17,241 18,496 17,219
Total debt ............................ 5,343 4,403 8,471 15,583 12,956 14,691 12,828
Shareholders' equity .................. 179 202 634 1,514 995 1,612 991
Operating Data:
Number of drybulk carriers (at period 2 2 3 5 5 5 5
end).................................
Average TCE per vessel per day(e) ..... $ 4,381 $ 4,443 $ 5,030 $ 6,582 $ 6,010 $ 6,203 $ 5,934
Average vessel running cost per vessel 2,246 2,237 2,746 3,368(g) 3,400(g) 3,505(g) 3,098
per day(f)...........................
Utilization(h) ........................ 99.0% 99.0% 100.0% 100.0% 96.0%(i) NA NA
Revenues from time charter ............ 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Average dwt per vessel (at period end) 7,923 7,923 10,802 20,835 20,835 20,835 20,835
Average age of fleet (in years, at 17.5 18.5 18.7 20.0 21.0 20.3 21.3
period end)..........................
</TABLE>
(a) Net revenue is gross revenues from time charters net of charter commissions
and voyage related expenses.
(b) Operating expenses include, among other things, the amortization of
drydocking expenses, the amortization of special survey costs and
management fees.
(c) In 1993, the Company purchased the Clipper Atlantic and the Clipper
Pacific. In 1995, the Company purchased the Clipper Golden Hind. In 1996,
the Company purchased the Monica Marissa and the Clipper Harmony.
-31-
<PAGE>
Concentration of Voting Power
MMI is the sole shareholder of Millenium. As of the Original Issue Date,
Millenium Investment, a Cayman Islands company, and Millenium Advisors, L.L.C.,
a New York limited liability company, beneficially owned in the aggregate
approximately 44% of the outstanding common stock of MMI. The sole director of
Millenium Investment also serves as the managing member of Millenium Advisors.
See "Principal Stockholders."
Dependence on Key Personnel
The Company is dependent upon a limited number of senior executives for the
principal decisions with respect to the Company's activities. The loss or
unavailability of the services of any such person for any significant period of
time could have a materially adverse effect on the Company's business and
results of operations. See "Officers and Directors."
Withholding Tax
All payments by the Company or any Subsidiary Guarantor with respect to the
Notes or the related Guarantees will be made without withholding or deduction
for taxes imposed by any jurisdiction in which the Company or any of the
Subsidiary Guarantors is then incorporated or resident for tax purposes unless
required by law or the interpretation or administration thereof, in which case,
the Company will, except in certain circumstances, (i) pay such additional
amounts as may be necessary so that the net amount received by the Holders after
such withholding or deduction will not be less than the amount that would have
been received in the absence of such withholding or deduction or (ii) if the
payments in respect of the Notes become subject to taxes imposed by the Cayman
Islands, Cyprus or Liberia, redeem the Notes at 100% of the Accreted Value
thereof, plus accrued and unpaid interest to the date of such redemption. See
"Description of the Exchange Notes- -Additional Amounts" and "Description of the
Exchange Notes--Redemption for Changes in Withholding Taxes." The Company has
been advised by legal counsel, Maples and Calder, with regard to the laws of the
Cayman Islands, Andreas Demetriades Law Office, with regard to the laws of
Cyprus and the Law Offices of Basil T. Patkos with regard to the laws of
Liberia, that the Cayman Islands, Cyprus and Liberia will not impose, under
present laws, any withholding taxes on payments by the Company or any Subsidiary
Guarantor. Prospective Holders should consult their tax advisors respecting the
implications of taxation before investing in the Notes. See "Certain United
States Federal Income Tax Consequences" and "Certain Foreign Tax
Considerations."
Currency Risks
All the Company's revenue and most of its expenses are denominated in
United States dollars. However, the Company has incurred and will continue to
incur expenses in other currencies, particularly Greek drachmae. For the year
ended December 31, 1997, total expenses incurred in Greek drachmae accounted for
approximately 10% of the total expenses incurred in such period. While the
Unites States dollar has generally appreciated against the Greek drachma in
recent years, it has also depreciated from time to time. Depreciation in the
value of the United States dollar relative to the Greek drachma would increase
the United States dollar cost to the Company of paying such expenses and thus
could have a material adverse effect on the Company's results of operations.
There can be no assurance that the portion of the Company's business conducted
in other currencies will not increase in the future, which could expand the
Company's exposure to losses arising from currency fluctuations. The Company has
not historically hedged its exposure to foreign currency fluctuations.
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, Millenium does not intend to list the Exchange Notes on any
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."
Historically, the market for securities such as the Exchange Notes has been
subject to disruptions that have caused substantial volatility in the prices of
such securities. There can be no assurance that, if a market for the Exchange
Notes were to develop, such a market would not be subject to similar
disruptions. Such disruptions may materially and adversely affect holders of the
Exchange Notes.
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<PAGE>
Exchange Offer Procedure
The issuance of the Exchange Notes pursuant to the Exchange Offer will be
made only after a timely receipt by the Company or its 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 Company is under no duty to
give notification of defects or irregularities with respect to tenders of
Existing Notes for Exchange Notes. 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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<PAGE>
THE EXCHANGE OFFER
Purpose and Effect of the Exchange Offer
The Existing Notes were issued by Millenium in July 1998, to Credit Suisse
First Boston Corporation and Donaldson, Lufkin & Jenrette Securities Corporation
(the "Initial Purchasers"). The Initial Purchasers subsequently placed the
Existing Notes with (i) persons whom they reasonably believe to be QIBs (as
defined in Rule 144A) in reliance on Rule 144A under the Securities Act and (ii)
directly, or through their international affiliates, in offshore transactions
complying with the requirements of Rule 903 or Rule 904 of Regulation S under
the Securities Act. As a condition to the purchase of the Existing Notes by the
Initial Purchasers, Millenium and the Subsidiary Guarantors entered into the
Registration Rights Agreement with the Initial Purchasers, which requires, among
other things, that promptly following the sale of the Existing Notes to the
Initial Purchasers, the Company 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 Millenium
identical in all material respects to the Existing Notes, (ii) use its best
efforts to cause such registration statement to become effective under the
Securities Act within 150 days after the Original Issue Date and (iii) use its
best efforts to cause the Exchange Offer to be consummated. The Company has
agreed to keep the Exchange Offer open for 30 days with the right to extend the
Exchange Offer up to a maximum of 60 days.
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 Company 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. The Company will issue up to
$100,000,000 principal amount at maturity of Exchange Notes in exchange for a
like principal amount at maturity 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 $1,000 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, $100,000,000 aggregate principal amount
at maturity of the Existing Notes was outstanding and registered in the name of
Cede & Co., as nominee for DTC. The Company has fixed the close of business on
, 1998 as the record date for the Exchange Offer for purposes of
determining the persons to whom this Prospectus, the Letter of Transmittal and
the Notice of Guaranteed Delivery will be mailed initially.
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.
The Company shall be deemed to have accepted validly tendered Existing
Notes when, as and if the Company has 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 Company.
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
Existing Notes pursuant to the Exchange Offer. The Company has agreed to pay all
charges and expenses in connection with the Exchange Offer.
-23-
<PAGE>
Expiration Date; Extensions; Amendments
The term "Expiration Date" shall mean 5:00 p.m., New York City time, on
, 1998, unless the Company, in its sole discretion, extends the
Exchange Offer, in which case the term "Expiration Date" shall mean the latest
date and time to which the Exchange Offer is extended.
Interest on the Exchange Notes
The Exchange Notes will be deemed to accrue interest from July 24, 1998
(the date of original issuance of the Existing Notes) or from the date of the
last periodic payment of interest on such Existing Notes, whichever is later.
Interest on the Exchange Notes will be payable semi-annually on each January 15
and July 15, commencing on January 15, 1999.
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 at maturity 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 Company understands 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 ("ATOP") 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 Company 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 Company will
constitute agreement between such Holder and the Company 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 THE COMPANY. HOLDERS MAY REQUEST THEIR RESPECTIVE BROKERS,
DEALERS, COMMERCIAL BANKS, TRUST REGISTRATION COMPANIES OR NOMINEES TO EFFECT
THE ABOVE TRANSACTIONS FOR SUCH HOLDERS.
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.
-24-
<PAGE>
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
Company, evidence satisfactory to the Company 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 Company, in its reasonable discretion,
which determination will be final and binding. The Company reserves 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 Company,
be unlawful. The Company also reserves the right to waive any defects,
irregularities or conditions of tender as to particular Existing Notes. The
Company's 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
Company shall determine. Although the Company intends to notify Holders of
defects or irregularities with respect to tenders of Existing Notes, none of the
Company, 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 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.
-25-
<PAGE>
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 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 Company, 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 untendered. 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
untendered 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 Company shall not
be required to accept for exchange, or to exchange any 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 reasonable judgment of the Company, might materially impair
the ability of the Company to proceed with the Exchange Offer or any
material adverse development has occurred in any existing action or
proceeding with respect to the Company; or
(b) any change, or any development involving a prospective change, in
the business or financial affairs of the Company has occurred which, in the
sole judgment of the Company might materially impair the ability of the
Company 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 Company, might materially impair the ability of the Company
to proceed with the Exchange Offer or materially impair the contemplated
benefits of the Exchange Offer to the Company; or
(d) any governmental approval has not been obtained, which approval
the Company shall, in their reasonable discretion, deem necessary for the
consummation of the Exchange Offer as contemplated hereby; or
(e) the Company believes 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 Company, 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 Company determines in its reasonable discretion that any of the
conditions are not satisfied, the Company 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 Company 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 Company
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. All
conditions,
-26-
<PAGE>
other than governmental approval, must be satisfied on or prior to the
expiration of the Exchange Offer in order to consummate the Exchange Offer.
Exchange Agent
The First National Bank of Maryland 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: 25 South Charles Street
Mail Code 101-591
Baltimore, MD 21201
By Hand: 25 South Charles Street
Mail Code 101-591
Baltimore, MD 21201
By Overnight Mail or Courier: 25 South Charles Street
Mail Code 101-591
Baltimore, MD 21201
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 Company and their affiliates. No additional
compensation will be paid to any such officers and employees who engage in
soliciting tenders. The Company has 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 Company, 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 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 or reimbursed by the Company and are estimated in the
aggregate to be in excess of $120,000.
Transfer Taxes
The Company 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 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.
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 Company 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 Company believes 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
Company within the meaning
-27-
<PAGE>
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 Company, 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 holder's 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
Company 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 Company. Further, by tendering in the
Exchange Offer, each Holder represents to the Company either that it is not an
"affiliate" (as defined under Rule 405 of the Securities Act) of the Company or,
if it may be deemed an "affiliate" of the Company 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 Company that it
acquired the Existing Notes as a result of market-making activities or other
trading activities.
Consequences of Failure to Exchange
As a result of the making of this Exchange Offer, the Company generally
will have fulfilled its 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 Millenium (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. Thacher Proffitt & Wood, New York, New
York, as counsel for the Company, has passed upon the legality of the Exchange
Notes. None of the Company 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 (which regulate the nature and extent of
permitted
-28-
<PAGE>
investments in certain securities for certain institutional investors).
Each Holder of the Existing Notes should consult with its own advisors as to
legal, tax, business, financial and related aspects of participation in the
Exchange Offer.
The Company may in the future seek to acquire untendered Existing Notes in
open market or privately negotiated transactions, through subsequent exchange
offers or otherwise. The Company 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 Company's obligations
under the Registration Rights Agreement. The Company 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 Company will receive in exchange Existing Notes in like principal amount at
maturity, 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 Company.
-29-
<PAGE>
CAPITALIZATION
The following table sets forth the actual combined capitalization of the
Company at March 31, 1998 and as adjusted to give effect to the issuance of the
Existing Notes, the Equity Contribution, the acquisition of the Committed
Vessels and the repayment of the indebtedness on the Existing Vessels. This
table should be read in conjunction with "Management's Discussion and Analysis
of Financial Condition and Results of Operations" and the Combined Financial
Statements, included elsewhere in this Prospectus.
As of March 31, 1998
------------------------------
Actual As Adjusted
------------- ---------------
(dollars in millions)
Cash and cash equivalents ....... $ 0.3 $ 31.5(a)
======= ========
Short-term debt(b):
Current portion of long-term debt $ 3.8 $ --
Long-term debt:
Bank indebtedness ............... 9.0 --
Existing Notes, net of discount . -- 95.4(c)
------- --------
Total debt ................ 12.8 95.4
Stockholders' equity ............ 1.0 24.1(c)
------- --------
Total capitalization ............ $ 13.8 $ 119.5
======= ========
Millenium was incorporated on March 10, 1998. As of the Original Issue
Date, Millenium had 10,000,000 shares of Common Stock, par value $.01 per
share authorized, of which 9,500,000 shares were issued and outstanding.
(a) This amount was placed into the Escrow Account for the purchase of
Additional Vessels and pay deposits, transaction fees and expenses and, if
necessary, to make vessel upgrades. In addition, pending actual delivery of
any Committed Vessels that have not been purchased as of the date of this
Prospectus, funds for the purchase of such Committed Vessels will be
temporarily held in the Escrow Account.
(b) The Company has obtained a working capital facility from The Bank of New
York (the "Working Capital Facility") which includes a $7.0 million
committed revolving line of credit, in order to provide further liquidity
to the Company. No amounts are currently outstanding under such Working
Capital Facility.
(c) Of the $96.6 million gross proceeds from the issuance of the Existing
Notes, $95.4 million was allocated to the Notes and $1.2 million was
allocated to additional paid-in capital to reflect the issuance of warrants
to purchase in the aggregate 500,000 shares of Millenium common stock at an
exercise price of $.01 per share (the "Warrants"). Stockholders' equity has
been reduced by $1.1 million to reflect the estimated issuance costs
allocated to the Equity Contribution. No assurance can be given that the
value allocated to the Warrants was or will be indicative of the price at
which the Warrants may actually trade.
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<PAGE>
SELECTED COMBINED FINANCIAL INFORMATION OF THE COMPANY
(in thousands, except ratios and operating data)
The Selected Combined Financial Information set forth below for the Company
for the three years ended December 31, 1995, 1996 and 1997 and as of December
31, 1996 and 1997 has been derived from the Company's audited combined financial
statements and related notes thereto which were prepared in accordance with
United States generally accepted accounting principles. Such combined financial
statements have been audited by Coopers & Lybrand, independent accountants, as
stated in their report included elsewhere in this Prospectus and should be read
in conjunction therewith. The selected combined statement of income data of the
Company set forth below for the two years ended December 31, 1993 and 1994 and
combined balance sheet data as of December 31, 1993, 1994 and 1995 have been
derived from the Company's audited combined financial statements not included in
this Prospectus. The selected combined financial information for the three
months ended March 31, 1997 and 1998 has been derived from the Company's
unaudited combined financial statements. In the opinion of management the
unaudited combined financial statements of the Company have been prepared on the
same basis as the audited combined financial statements included herein and
include all adjustments necessary for the fair presentation of the financial
position and results of operations for the Company for these periods, which
adjustments are only of a normal recurring nature. The results of operations for
the three months ended March 31, 1998 are not necessarily indicative of results
that may be expected for a full year.
<TABLE>
<CAPTION>
Year Ended December 31, Three Months Ended
March 31,
---------------------------------------------------------------------------------------
1993 1994 1995 1996 1997 1997 1998
---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Income Statement Data:
Net revenue(a) ......................... $ 2,585 $ 3,110 $ 4,633 $ 10,367 $ 10,518 $ 2,714 $ 2,596
Operating expenses(b) .................. 1,405 1,794 2,843 6,267 7,339 1,714 1,721
-------- -------- -------- -------- -------- -------- --------
Vessel operating income ............ 1,180 1,316 1,790 4,100 3,179 1,000 875
Interest expense, net .................. 384 392 690 1,159 1,215 301 274
Other (income)/expense, net ............ (1) (9) 31 234 116 10 13
Depreciation ........................... 620 782 1,099 2,034 2,367 592 592
-------- -------- -------- -------- -------- -------- --------
Net income/(loss) .................. $ 177 $ 151 $ (30) $ 673 $ (519) $ 97 $ (4)
======== ======== ======== ======== ======== ======== ========
Other Financial Data:
Capital expenditures(c) ............... 6,140 -- 5,800 10,402 -- -- --
Ratio of earnings to fixed charges(d) 1.5x 1.4x 1.0x 1.6x -- 1.3x 1.0x
Balance Sheet Data (at period end):
Net book value of vessels ............. $ 5,520 $ 4,746 $ 9,446 $ 17,814 $ 15,447 $ 17,222 $ 14,855
Total assets .......................... 5,776 5,089 10,257 18,994 17,241 18,496 17,219
Total debt ............................ 5,343 4,403 8,471 15,583 12,956 14,691 12,828
Shareholders' equity .................. 179 202 634 1,514 995 1,612 991
Operating Data:
Number of drybulk carriers (at period 2 2 3 5 5 5 5
end).................................
Average TCE per vessel per day(e) ..... $ 4,381 $ 4,443 $ 5,030 $ 6,582 $ 6,010 $ 6,203 $ 5,934
Average vessel running cost per vessel 2,246 2,237 2,746 3,368(g) 3,400(g) 3,505(g) 3,098
per day(f)...........................
Utilization(h) ........................ 99.0% 99.0% 100.0% 100.0% 96.0%(i) NA NA
Revenues from time charter ............ 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Average dwt per vessel (at period end) 7,923 7,923 10,802 20,835 20,835 20,835 20,835
Average age of fleet (in years, at 17.5 18.5 18.7 20.0 21.0 20.3 21.3
period end)..........................
</TABLE>
(a) Net revenue is gross revenues from time charters net of charter commissions
and voyage related expenses.
(b) Operating expenses include, among other things, the amortization of
drydocking expenses, the amortization of special survey costs and
management fees.
(c) In 1993, the Company purchased the Clipper Atlantic and the Clipper
Pacific. In 1995, the Company purchased the Clipper Golden Hind. In 1996,
the Company purchased the Monica Marissa and the Clipper Harmony.
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<PAGE>
(d) Ratio of earnings to fixed charges is calculated as pre-tax net income from
continuing operations plus fixed charges (i.e., interest expense, net)
divided by fixed charges. Earnings in December 1997 and the three months
ended March 1997 were insufficient to pay fixed charges by $0.5 million and
$0.1 million, respectively.
(e) The Company uses the TCE as a method of identifying net revenues earned on
a daily basis by its vessels assuming 350 days per calendar year.
(f) Vessel running cost is operating expenses less drydocking expenses and
management fees.
(g) In 1996 and in 1997, the Company made significant upgrades to the Monica
Marissa and the Clipper Harmony, respectively, the costs of these upgrades
resulted in an increase in the vessel running costs for these years.
(h) Utilization is calculated on the basis that vessel employment for 350 days
per calendar year equaling 100% utilization.
(i) In 1997, utilization was negatively impacted by upgrades made to the
Clipper Harmony.
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<PAGE>
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
(in thousands, except per share data)
The unaudited pro forma condensed consolidated balance sheet data set forth
below for the Company as of December 31, 1997, is based on the audited
historical combined balance sheet of the Group of Shipping Companies acquired by
Millenium (the Subsidiary Guarantors that own the Existing Vessels) as of
December 31, 1997, after giving effect to: (i) the acquisition of the Subsidiary
Guarantors that own the Existing Vessels as if it had occurred at December 31,
1997, (ii) the consummation of the offering of the Existing Notes and Warrants
as if it had occurred at December 31, 1997, (iii) the contribution of equity to
the Company by the sole stockholder of Millenium as if it had occurred at
December 31, 1997, (iv) the acquisition of Committed Vessels as if it had
occurred at December 31, 1997 and (v) the resultant pro forma adjustments
described in the notes below. The unaudited pro forma condensed consolidated
income statement data set forth below for the Company for the year ended
December 31, 1997, is based on the audited historical combined income statement
data of the Company for the year ended December 31, 1997, after giving effect to
(i) the issuance of the Existing Notes and Warrants as if it had occurred on
January 1, 1997 and (ii) the resultant pro forma adjustments described in the
notes below.
The unaudited pro forma condensed consolidated financial data are based
upon and should be read in conjunction with the assumptions set forth in the
accompanying notes. The unaudited pro forma condensed consolidated financial
data are intended for information purposes only and are not necessarily
indicative of the results that would have actually occurred had the transactions
described above occurred on the dates indicated, or of any future results. The
unaudited pro forma condensed consolidated financial data are based upon
assumptions that the Company believes are reasonable and should be read in
conjunction with the Combined Financial Statements and the notes thereto of the
Group of Shipping Companies acquired by Millenium included elsewhere in
this Prospectus.
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<PAGE>
Pro Forma Balance Sheet Data
<TABLE>
<CAPTION>
Group of Shipping Companies
Acquired by Millenium (Subsidiary
Guarantors that own Existing Vessels)
-------------------------------------------
Pro Forma as of
December 31, As December 31,
1997 Adjustments Adjusted Adjustments 1997
-------------- -------------- ------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Current Assets:
Cash and cash equivalents.......... $135 $135 $96,593 (b) $31,591
7,100 (c)
(12,956)(d)
(53,681)(e)
(5,600)(f)
Cash and retention accounts........ 193 193 193
------- ------- --------
328 328 31,784
Receivable: claims and other............ 27 27 27
Inventories and prepaid expenses... 68 68 18 (e) 86
Due from related party.................. 722 722 722
------- ------ ------- -------- --------
Total current assets............... 1,145 1,145 32,619
Deferred charges, net of accumulated
amortization....................... 649 649 4,500 (f) 5,399
250 (e)
Vessels at cost, net of accumulated
depreciation....................... 15,447 1,028 (a) 16,475 66,313 (e) 82,788
Intangible assets....................... 1,977 (a) 1,977 1,977
------- ------ ------- -------- --------
Total assets....................... $17,241 $3,005 $20,246 $102,537 $122,783
======= ====== ======= ======== ========
Current liabilities:
Trade accounts payable.................. 2,315 2,315 2,315
Other liabilities....................... 785 785 785
Charter revenues received in advance.... 190 190 190
------- ------- --------
3,290 3,290 3,290
Long term debt, current portion......... 3,441 3,441 (3,441)(d) --
------- ------- -------- --------
Total current liabilities.......... 6,731 6,731 3,290
Long term debt, net of current portion,
less unamortized discount.......... 9,515 9,515 100,000 (b) 95,393
(4,607)(b)
98,683
(9,515)(d)
Total liabilities.................. 16,246 16,246 82,437
------- ------- -------- --------
Shareholder's equity:
Common stock and paid-in capital........ 880 3,120 (a) 4,000 1,200 (b)
7,100 (c)
12,900 (e)
(1,100)(f) 24,100
Retained earnings....................... 115 (115)(a) -- --
------- ------ ------- -------- --------
Total shareholders' equity......... 995 3,005 4,000 20,100 24,100
------- ------ ------- -------- --------
Total liabilities and shareholders'
equity............................. $17,241 $3,005 $20,246 $102,537 $122,783
======= ====== ======= ======== ========
</TABLE>
Pro Forma Balance Sheet Adjustments
(a) Adjustment to fair value upon acquisition by Millenium including an
intangible comprising of excess cost over book value.
(b) Issuance of Existing Notes of $100,000 (less unamortized discount of
$4,607) and Warrants of $1,200.
(c) Issuance of cash equity to MMI: $6,100 from Millenium Investment, Inc. and
$1,000 from Management and affiliates.
(d) Repayment of debt on Existing Vessels.
(e) Acquisition of Committed Vessels and issuance of $12,900 of equity.
ESCO Clipper Other Total
-------------------------------------------
Cash (12,813) (7,868) (33,000) (53,681)
Vessels 16,813 9,500 40,000 66,313
Deferred charges, etc -- 268 -- 268
------- ------- ------- -------
Equity 4,000 1,900 7,000 12,900
------- ------- ------- -------
(f) Transaction costs of $5,600 allocated between issuance of Existing Notes
and equity (common stock and Warrants)
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<PAGE>
Pro Forma Income Statement Data
<TABLE>
<CAPTION>
Group of Shipping Companies Acquired by Millenium
(Subsidiary Guarantors that own Existing Vessels)
----------------------------------------------------------
Pro forma as of
December 31, 1997 Adjustments December 31, 1997
----------------------------------------------------------
<S> <C> <C> <C>
Revenues:
Freight and hire from voyages 11,285 11,285
Voyage expenses (172) (172)
Commission (595) (595)
--------- --------
Net revenue 10,518 10,518
Expenses:
Vessel operating expenses 6,204 6,204
Management fees 896 896
Depreciation and amortization 2,606 643 (b)(i) 3,531
282 (c)
Total 9,706 925 10,631
--------- -------- --------
Operating Income $ 812 $ (925) $ (113)
========= ======== ========
Other Income (Expense)
Interest expense (1,215) 1,215 (a) (12,437)
(12,000)(d)
(437)(b)(ii)
Other (116) (116)
--------- -------- --------
Total (1,331) (11,222) (12,553)
--------- -------- --------
Net (Loss) $ (519) $(12,147) $(12,666)
========= ======== ========
Per share data
(Basic and fully diluted)
Net (Loss) Per Share (e) (0.05) (1.33)
</TABLE>
Pro Forma Income Statement Adjustments
(a) Elimination of interest expense associated with previous debt.
(b) (i) Amortization of transaction costs associated with Existing Notes
($4,500 over the life of the Notes).
(ii) Amortization of discount on Existing Notes (using effective interest
rate method).
(c) Amortization of intangible assets (comprising excess of cost over net
assets acquired) of $1,977.
(d) Interest expense on Existing Notes at 12%. (e) Net loss per share has been
computed using 9,500 shares, the total outstanding common shares of
Millenium at July 24, 1998.
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<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
General
The Company is an international shipping company that currently owns and
operates a fleet of drybulk carriers that transport bulk cargo worldwide. The
Company has built a reputation as an efficient operator with experienced
commercial and technical management. The aggregate appraised value of the
Company's Existing Vessels is $16.5 million based on the average of two
appraisals, one performed by a Designated Appraiser in February 1998 and the
other performed by a Designated Appraiser in June 1998.
The Company operates in and derives its revenue from the drybulk market,
which has been cyclical in varying degrees, experiencing fluctuations in freight
rates, profitability and, consequently, vessel values. The Handysize drybulk
carrier market, however, is less volatile than certain other shipping markets,
due to the versatility of such vessels. The fluctuations in the drybulk market
have been primarily due to changes in the level and pattern of global economic
growth, the highly competitive nature of the world shipping industry and changes
in the supply of and demand for seaborne shipping capacity. The aggregate
appraised value of the Existing Vessels has been affected by the significant
drop in the drybulk vessel values towards the end of 1997 and during the early
part of 1998.
As a result of the Company's strategy of emphasizing dedicated service and
customer service and, by maintaining all of its vessels on period time charter,
the Company has been successful in maintaining a steady stream of revenues
despite the decline in the shipping market. In May 1995, the Company purchased
the Clipper Golden Hind and immediately placed it on a period time charter. As a
result of the satisfactory service provided to the charterer of the Clipper
Golden Hind, one year later the Company acquired a sister vessel, the Clipper
Harmony, and placed her on a period time charter with the same charterer. In
February 1996, the Company purchased the Monica Marissa, and promptly entered
into a period time charter pursuant to which she has been employed since her
acquisition. During 1995 and continuing through 1997, the Clipper Atlantic and
Clipper Pacific continued on their period time charters, which had been extended
since their acquisition by the Company in 1993. As part of the Company's policy
of hedging against further declines in the drybulk market, the Company
successfully negotiated extensions through at least February 1999 on the
charters for each of the Existing Vessels that would otherwise have expired in
1998. The Existing Vessels are now contractually able to continue on their
employment through at least February 1999.
The Company uses (i) Average Daily Time Charter Rate ("ADTR") to analyze
the average contracted daily charter rate that a vessel earns in a fiscal year,
(ii) utilization as an index that indicates vessel earning days on the basis
that 350 days per calendar year equals 100% utilization and (iii) the average
daily TCE rate to analyze net revenues after commissions on the basis of 350
days per year utilization. To the extent utilization is 100% the TCE equals the
ADTR. When utilization drops below 100%, TCE is lower than ADTR. From 1993
through 1997, all of the Company's earning were based on period time charters,
and the Company's ADTR for the 5 years were $4,525, $4,610, $5,377, $6,823 and
$6,672 per day, respectively.
Vessel operating expenses primarily consist of crew wages, victualing,
components and spares, repairs and maintenance, insurance costs (including hull
and machinery and liability), lubricants, crew travel and repatriation,
telephone and radio maintenance, amortization of scheduled drydocking and
special surveys and management fees. Crewing costs, management fees and
insurance expenses are generally fixed for each financial period and typically
have little effect on fluctuations in operating expenses between periods. The
expenses of components and spares, repairs and maintenance, however, can vary
from period to period.
The estimated costs of drydocking are amortized over a period of two and
one half years. Vessel capital expenditures are amortized over a period
commencing on the date the expenditure was made until the date of the related
vessel's next drydocking.
In the periods discussed herein, each of the Existing Vessels received
management services from Kylco Greece, one of the Company's affiliates, pursuant
to a Management Agreement (each, a "Kylco Management Agreement") between each
Subsidiary Guarantor owning such Existing Vessel and Kylco Greece. Under each
Kylco Management Agreement, Kylco Greece acted as the fleet's technical manager
(i) providing qualified officers and crews, (ii) managing day-to-day vessel
operations and relationships with charterers, (iii) purchasing stores, supplies
and new equipment for the vessels, (iv) performing general vessel maintenance,
reconditioning and repair, including commissioning and supervision of shipyards,
subcontractors or drydock facilities required for such work, (v) ensuring
regulatory and classification society compliance, (vi) performing vessel
operational budgeting and evaluation, (vii) arranging financing for vessels and
(viii) providing accounting, treasury and finance functions (including cash
collections and disbursements). As remuneration for its services, Kylco Greece
received a fixed management fee (payable monthly in advance). Pursuant to the
New
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<PAGE>
Management Agreement these services are now performed by MMI, which subcontracts
these services to KYLCO. See "Certain Transactions--New Management Agreement."
In addition, under each Kylco Management Agreement, Kylco Greece performed
commercial management functions, primarily charter negotiating and vessel sale
and purchase brokerage. Kylco Greece received a commission of 1% on the gross
sale or purchase price of a vessel for brokerage services. The Company has
deducted commissions paid to Kylco Greece in its calculation of net revenue.
Pursuant to the New Management Agreement these services are now performed by
MMI, which subcontracts these services to KYLCO. See "Certain Transactions--New
Management Agreement."
Results of Operations
Quarter Ended March 31, 1998 Compared to Quarter Ended March 31, 1997
Net Revenue. Net revenue in the quarter ended March 31, 1998 was $2.6
million, a decrease of $118,000 as compared to the quarter ended March 31, 1997.
The ADTR for the Existing Vessels was $6,413 per day for the quarter ending
March 31, 1998 and $6,769 per day for the quarter ending March 31, 1997. The
ADTR was lower in the quarter ended March 31, 1998 due to the following:
(i) A reduction in the period charter rate for the Monica Marissa from
$10,000 per day to $9,500 per day in February 1997. In addition, an
agreement was reached with Sunbulk (a wholly owned shipping subsidiary of
Cemex) to further reduce the charter rate to $8,750 per day in April 1997
and to extend the charter for a period commencing February 24, 1998 for a
further 12-month period at $7,250 per day.
(ii) A reduction in the actual charter rates for the Clipper Atlantic
and the Clipper Pacific to $4,300 per day from $4,520 per day effective
February 1998 and March 1998, respectively, in return for a further
12-month extension of both vessels' period time charters until February
1999 and March 1999, respectively.
Operating Expenses. Total vessel operating expenses in the quarter ended
March 31, 1998 were $1.7 million, which remained the same as compared to the
quarter ended March 31, 1997.
Depreciation. Total depreciation for the quarter ended March 31, 1998 was
$0.6 million which remained the same as compared to the quarter ended March 31,
1997.
Year Ended December 31, 1997 Compared to Year Ended December 31, 1996.
Unless otherwise indicated, the change in 1997 results as compared to 1996
is attributable to the acquisition in 1996 of the Monica Marissa and the Clipper
Harmony which contributed to revenues for 311 and 228 days, respectively, for
1996. The remaining three Existing Vessels contributed to revenues for 365 days
for 1996. In 1997, all five Existing Vessels were in service for a full year.
However, in connection with the extension of the charters for the Monica
Marissa, the Clipper Atlantic and the Clipper Pacific through at least February
1999, the Company agreed to a reduction in their charter rates. In addition,
expenses incurred in connection with the improvements made to the Monica Marissa
and the Clipper Harmony further negatively impacted 1997 results.
Net Revenue. Net revenue in 1997 was $10.5 million, an increase of $151,000
as compared to 1996. The ADTR for the Existing Vessels was $6,672 for 1997 and
$6,823 for 1996. While the Company had its vessels on period time charter for
all of 1997; the ADTR was lower in 1997 due to the following:
(i) A reduction in the period charter rate for the Monica Marissa from
$10,000 per day to $9,500 per day in February 1997. In addition, an
agreement was reached with Sunbulk (a wholly owned shipping subsidiary of
Cemex) to further reduce the charter rate to $8,750 per day in April 1997
until February 1998.
(ii) A reduction in the actual charter rates for the Clipper Atlantic
and the Clipper Pacific to $4,520 per day from $4,725 per day effective
February 1997 and March 1997, respectively.
In addition, in 1997 the Company made upgrades to the Clipper Harmony relating
to her external appearance and improvements in her cargo handling system in
response to her charterers' request resulting in the Clipper Harmony being
off-hire for a two-week period.
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<PAGE>
Operating Expenses. Total operating expenses for 1997 were $7.3 million, an
increase of $1.1 million as compared with 1996. A portion of the increase in
operating expenses was attributable to upgrades for the Clipper Harmony. As a
result, the Clipper Harmony was taken out of service in New Orleans, Louisiana
and in Dalien, China for a total period of 15 days, during which time she was
sand blasted and painted and her cargo handling systems were overhauled. In
addition, a portion of the increase in operating costs during 1997 was
attributable to an increase in management fees for 1997 which were $0.9 million,
an increase of $168,000 as compared with 1996. These additional expenses
increased the ratio of operating expenses as a percentage of net revenue in 1997
to 69.8% from 60.5% when compared to 1996.
Interest Expense, Net. Interest expense, net for 1997 was $1.2 million
which remained the same as compared to 1996.
Depreciation. Total depreciation for 1997 was $2.4 million, an increase of
$332,000 as compared to 1996 due the fact that all five vessels were owned for a
full year in 1997.
Year Ended December 31, 1996 Compared to Year Ended December 31, 1995
Unless otherwise indicated, the change in the figures below comparing year
end 1996 with year end 1995, is attributable to the acquisition of the Monica
Marissa and the Clipper Harmony in February and May 1996, respectively, and the
Clipper Golden Hind in May 1995.
Net Revenue. Net revenue in 1996 increased by $5.7 million, or 124%, from
$4.6 million to $10.4 million, primarily attributable to the fleet expansion
during 1995 and 1996. The ADTR for the vessels was $6,823 for 1996 and $5,377
for 1995.
Operating Expenses. Total operating expense for 1996 was $6.3 million, an
increase of $3.4 million or 120%, as compared with 1995. The increase in
operating expense was primarily attributable to the addition of vessels in the
fleet. A portion of the increase in operating expenses was attributable to an
increase in management fees for 1996 which were $0.7 million, an increase of
$0.5 million, as compared with 1995. However, operating expenses as a percentage
of net revenue remained steady at approximately 60% for both 1995 and 1996.
Interest Expense, Net. Interest expense, net for 1996 was $1.2 million, an
increase of $469,000 as compared with 1995. This was due to the refinancing of a
portion of the Company's indebtedness, a portion of the proceeds of which were
used for working capital purposes.
Depreciation. Total depreciation for 1996 was $2.0 million, an increase of
$0.9 million, or 85% as compared with 1995, primarily attributable to the fleet
expansion during 1995 and 1996.
Liquidity and Capital Resources
The Company has historically funded its vessel acquisitions through a
combination of long-term bank financing, cash flow from operations and equity
contributions. As of December 31, 1997, the Company had total indebtedness of
$13.0 million ($12.8 million as of March 31, 1998), all of which was secured by
first (and in some cases second) priority ship mortgages on various Existing
Vessels.
On or shortly after the Original Issue Date the Company (i) used
approximately $12.9 million to repay all outstanding bank indebtedness relating
to the Existing Vessels, (ii) committed to use approximately $66.7 million to
purchase the Committed Vessels (includes $5.9 million of contributed vessel
equity based on Appraised Values) from Clipper and ESCO and $7.0 million of
vessel equity with respect to the Millenium Leader, the Millenium Hawk, the
Millenium Eagle, the Millenium Osprey, the Millenium Falcon and the Millenium
Condor), (iii) used approximately $5.6 million to pay certain fees and expenses
incurred in connection with the offering of the Existing Notes and the formation
of MMI and Millenium (including the Equity Contribution) and (iv) placed the
remainder in the Escrow Account to be used to purchase Additional Vessels, pay
deposits and transaction fees and expenses in connection with the Committed
Vessels and the Additional Vessels and, if necessary, to make vessel upgrades on
the Additional Vessels and the Committed Vessels. As of the Original Issue Date,
the Company had no indebtedness outstanding other than the Existing Notes. The
Company believes that based upon current levels of operation and cash flow from
operations, together with other sources of funds (principally in the form of
either debt or equity financing), the Company will have adequate liquidity to
make required payments of principal and interest on the Exchange Notes and the
untendered Existing Notes, if any, complete anticipated capital expenditures and
fund working capital requirements. The Company obtained a working capital
facility in the third quarter of 1998 in order to provide further liquidity to
the Company. To the extent funds are advanced to the Company under such working
capital facility, the Indenture permits amounts to be
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<PAGE>
secured by a lien on the Mortgaged Vessels which will have priority over the
lien in favor of the holders of the Exchange Notes and the untendered Existing
Notes, if any.
Operating Activities. Net cash flows generated by continuing operations
have historically been the main source of liquidity for the Company. Additional
sources of liquidity have included refinancings. Net cash provided by operating
activities for each of 1997 and 1996 was $3.5 million as compared with net cash
provided by operating activities for the year ended December 31, 1995 of $1.4
million. As is common in the shipping industry, the Company collects its hire
for all time charters and period time charters 15 days in advance which has
historically resulted in the Company having low average receivables outstanding.
In addition, the Company has established long-term relationships with many of
its principal suppliers which has resulted in the Company receiving favorable
credit terms.
Investing Activities. The Company has historically acquired its vessels
from the international shipping market, concluding the transactions in two main
stages: (i) a deposit of approximately 10% of the purchase price is paid upon
the execution of the related purchase agreement and (ii) the balance of the
purchase price is paid upon the vessel's physical delivery, usually 30 to 90
days from the date of the execution of the agreement.
Financing Activities. In 1997 the Clipper Pacific and the Clipper Harmony
were refinanced and the proceeds were utilized partly for working capital
purposes of the Company.
Management believes that cash flow operations of the Company, together with
its cash balances and available borrowings, including the proceeds of the
offering of the Existing Notes will be sufficient to service its liquidity
requirements.
Foreign Exchange Rate Fluctuations
All of the Company's revenue, and most of its expenses, are denominated in
United States dollars. For the year ended December 31, 1997, approximately 10%
of the Company's expenses were denominated in foreign currencies, primarily,
Greek drachmae. The Company does not hedge its exposure to foreign currency
fluctuations. Historically, foreign exchange rate fluctuations have had minimal
effect on the Company's financial performance.
Inflation
The Company does not believe that inflation has had a material impact on
its operations, although certain of the Company's operating expenses (such as
crewing, insurance and drydocking costs) are subject to fluctuations as a result
of market forces.
Year 2000 Consequences
As is the case with most companies using computers in their operations, the
Company is faced with the task of addressing the year 2000 issue during the next
year and a half. The year 2000 issue is the result of prior computer programs
being written using two digits, rather than four digits, to define the
applicable year. Any of the Company's programs that have time-sensitive software
may recognize a date using "00" as the year 1900 rather than the year 2000. This
could result in major system failure or miscalculations. The Company is
presently in the process of evaluating the consequences and the cost of
upgrading its computer software to programs which will be year 2000 compliant.
At this time, the Company expects that the programs affected can and will be
properly modified or replaced by the end of 1999 and while the Company currently
is unable to quantify the overall cost of this work, it does not foresee any
materially adverse effects on the Company's results of operations or financial
conditions as a result of such changes. However, in the event that any of the
Company's suppliers, customers, brokers or agents do not successfully and timely
achieve year 2000 compliance, the Company's business or operations could be
materially adversely affected.
-39-
<PAGE>
THE INTERNATIONAL BULK CARRIER MARKET
Overview
The maritime industry provides one of the most practical and cost effective
means of transporting large volumes of many essential cargoes. It consists of a
number of markets, including the drybulk carrier market in which non-liquid
cargoes are transported in vessels specifically designed and built to carry such
cargoes in bulk. The drybulk carrier market has been cyclical in varying
degrees, experiencing fluctuations in freight rates, profitability and,
consequently, vessel values. These fluctuations have been due primarily to
changes in the level and pattern of global economic growth, the highly
competitive nature of the world shipping industry and changes in the supply of
and demand for seaborne shipping capacity. While each major shipping market in
the world is affected by the same general supply and demand dynamics, each is
ultimately driven by a distinct set of such characteristics.
Vessel Types
Vessels utilized in the transport of drybulk cargoes are generally
classified into three categories based on carrying capacity:
Handysize drybulk carriers (20,000 to 49,999 dwt). Handysize drybulk
carriers are well suited for transporting both major and minor bulk
commodities to ports around the world that may have draft restrictions or
are not equipped with gear for loading or discharging of cargo. Unlike most
larger drybulk carriers, a significant portion of the world fleet of
Handysize drybulk carriers is typically equipped with cargo handling gear
such as cranes.
Panamax bulk carriers (50,000 to 79,999 dwt). Panamax carriers are
designed with the maximum width, length and draft that will allow them to
transit fully laden through the Panama Canal. Panamax carriers are
primarily used in the transport of iron ore, coal and grain. These vessels
are not equipped with cargo handling gear and can only service large ports.
Capesize bulk carriers (80,000 dwt or above). Capesize carriers
transport commodities worldwide but cannot transit the Panama Canal because
of their size. Capesize carriers are primarily used in the transport of
iron ore, coal and, to a lesser extent, grain trades. These vessels are
also not equipped with cargo handling gear and are restricted to even fewer
ports than Panamax bulk carriers.
The supply of drybulk carrier vessels is also supplemented by a small
number of combination carriers, which are typically larger vessels equipped to
carry either crude oil or drybulk cargoes. These vessels are excluded from the
following discussion as their impact on the Handysize drybulk carrier market is
not significant. The Company operates in and derives its revenue exclusively
from the Handysize sector of the drybulk carrier market.
Handysize Drybulk Market
The Handysize drybulk carrier market is highly fragmented and cyclical.
Handysize drybulk carriers carry a wide variety of cargoes, including
agricultural products, sugar, salt, minerals, phosphates, bauxite and alumina,
forest products, petcoke, cement, steel products, scrap metal and pig iron, as
well as cargoes generally carried by larger gearless drybulk carriers, such as
coal, iron ore and grain. Demand for Handysize drybulk carriers is
geographically diverse and is affected by a number of factors including world
and regional economic and political conditions, developments in international
trade, changes in seaborne and other transportation patterns, weather patterns,
crop yields, armed conflicts, port congestion, canal closures and other
diversions in trade. These factors cause the demand for drybulk cargoes, and
consequently the demand for Handysize drybulk carriers, to fluctuate. In
addition, demand for Handysize drybulk carriers is affected by geo-political
trends. As political and economic barriers to international trade are removed,
international trade increases, thereby increasing demand for the seaborne
transportation of cargoes, such as the cargoes Handysize drybulk carriers
transport.
Handysize drybulk carriers service markets that are restricted by vessel
dimension and cannot be served by other types of drybulk carriers. For example,
the trade to and from the Great Lakes region of the United States and Canada is
restricted to vessels that have specified drafts and lengths and a maximum beam
of 23.2 meters. According to SSY, only 143 vessels built between 1980 and 1998
have a capacity of at least 25,000 dwt and meet these size parameters. As a
result, the Company believes these vessels are likely to earn premium charter
rates. Five of the Committed Vessels meet these parameters and, therefore, the
Company intends to be active in this sector of the Handysize drybulk carrier
market.
-40-
<PAGE>
Handysize Drybulk Cargoes and Trade Patterns
Handysize drybulk carriers transport the greatest range of cargoes within
the drybulk sector and are not dependent on the supply and demand for any single
commodity. In addition, since Handysize drybulk carriers service the widest
geographic range of all bulk carriers, their utilization has been more stable
than larger drybulk carriers.
According to Drewry, a vast majority of minor bulk cargoes (other than
grain, coal and iron ore) carried in 1996 was transported by Handysize drybulk
carriers. Set forth below is a brief overview of the primary cargoes carried by
Handysize drybulk carriers and their trading routes.
Forest Products. Forest products include logs, timber, plywoods, newsprint,
sawnwoods, boards and panel products, paper, wood chips and wood pulp. According
to Drewry, forest product shipments totaled approximately 170 million tons in
1996, the majority of which were shipped in Handysize drybulk carriers.
Iron and Steel Products. Iron and steel products are cargoes derived from
the processing of iron ore, and include pipes, steel coils, plates and beams,
pig iron, steel slabs and wire rods. According to Drewry, approximately 110
million tons of iron and steel products were shipped in 1996, the majority of
which were transported by Handysize drybulk carriers.
Grain. Grain products include wheat, wheat flour, corn, barley and
soybeans. Although annual grain shipments are subject to political factors and
weather conditions, they have remained at approximately 185 million tons per
year over the past five years. Grain is primarily transported from the United
States, Canada, Europe, Australia and Argentina to the Far East, Latin America
and Africa. According to Drewry, Handysize drybulk carriers carried perhaps as
much as 40% of grain shipments, or about 85 million tons, in 1996.
Coal. The two categories comprising this segment are steam (or thermal)
coal, which is used by power utilities, and coking (or metallurgical) coal,
which is used by steelmakers. Coal shipments were estimated at approximately 430
million tons in 1996. Capesize and Panamax bulk carriers account for the
majority of these shipments. According to Drewry, Handysize drybulk carriers
transported perhaps as much as 20% of all coal shipments, or approximately 85
million tons, in 1996.
Historically, demand for Handysize drybulk carriers is geographically
diverse with no single region accounting for more than 25% of all trade.
According to Drewry, in 1995, the last year for which such data was available,
the principal geographic areas in which Handysize drybulk carriers trade
included North America, Europe and Asia.
Handysize Drybulk Carrier Freight Rates
Freight rates are strongly influenced by the supply of and demand for
shipping capacity. The demand for shipping capacity is primarily determined by
demand for the commodities carried and by the distance that those commodities
are to be moved by sea. Demand for commodities is affected by, among other
things, world and regional economic and political conditions (including
developments in international trade, fluctuations in industrial and agricultural
production and armed conflicts), environmental concerns, weather patterns, and
changes in seaborne and other transportation costs.
The Handysize drybulk carrier is the most versatile ship type within the
bulk carrier fleet. It is capable of carrying a wide range of cargoes and is
able to access most ports in the world. Handysize drybulk carriers are usually
fully employed in normal market conditions and rarely have downtime due to lack
of cargo, unlike the large Capesize carriers which may not be fully utilized.
This opportunity for continuous employment adds a degree of stability to
Handysize freight rates that is unavailable elsewhere in the drybulk carrier
market.
Freight rates for Handysize drybulk carriers have been relatively stable
over time when compared to freight rates for larger, gearless drybulk carriers.
Due in significant part to the recent economic crisis affecting certain Asian
economies, however, the freight rates for all drybulk carriers, including the
Handysize, have reached their lowest point in over a decade. Freight rates for
Handysize drybulk carriers on one-year time charters are generally determined by
supply and demand factors and vessel specifications, which include cargo gear,
vessel dimensions, cargo cubic capacity, and fuel consumption, among other
factors. According to SSY, over the past ten-year period, the average one-year
time charter rate for Handysize drybulk carriers in the 20,000 dwt to 30,000 dwt
range was $7,461 per day, with a high of $9,250 per day and a low of $5,550 per
day. Freight rates for middle aged Handysize drybulk carriers are
-41-
<PAGE>
not significantly affected by age. According to SSY, as of June 1998 the average
one-year charter rate for a 15 year old 28,000 dwt Handysize drybulk carrier was
approximately 75% of that for a new Handysize drybulk carrier.
<TABLE>
<CAPTION>
20,000-30,000 dwt
Atlantic 12 Months Annual Average Time Charter Rates
- - - - ------------------------------------------------------------------------------------------------------------------------
1st
Quarter
1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
------- ----- ----- ----- ----- ----- ----- ------ ----- ----- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Maximum $8000 $8250 $8250 $8000 $6750 $8250 $8750 $10250 $8000 $7250 $5500
Average 7375 8042 6563 7271 6417 7771 8000 9292 6938 6958 5500
Minimum 6750 7500 5750 6000 6000 7000 7500 8250 5750 6250 5500
</TABLE>
Five-Year Average $7791.8
Ten-Year Average $7462.7
Source: SSY
Supply of Handysize Drybulk carriers
The supply of Handysize drybulk carriers, measured by the amount of
suitable tonnage available to carry cargo, is determined by the size of the
existing fleet in a particular market, the number of newbuildings on order, the
scrapping of older vessels and the number of vessels out of active service
(i.e., laid up, drydocked, awaiting repairs or otherwise not available for
hire). Supply primarily fluctuates in correlation with freight rates and, to a
lesser extent, by factors such as second hand values and operating expenses. As
freight rates decrease, the number of newbuildings tends to decrease and the
number of scrappings tends to increase.
-42-
<PAGE>
<TABLE>
<CAPTION>
Handy Bulk Carrier Demolition
Activity vs. Deliveries
20,000-49,999 dwt ('000 dwt) Newbuildings Delivery Schedules
- - - - -------------------------------------------------------------------------------------------------------------------
Newbuilding Fleet --- Year Number of Newbuildings
Year Scrapping Deliveries Developments* Vesselsn Schedule-(in-dwt)
- - - - ------------------------------------------------------------ ----------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1988 (586) 670 90,280 *1998 149 5,502,205
1989 (274) 1,771 90,364
1990 (326) 1,768 91,861
1991 (421) 1,713 93,303
1992 (915) 1,259 94,595 Scrapping Projection Assumption **
-------------------------------------------------------
1993 (843) 892 94,939 YEAR SCRAPPING
-------------------------------------------------------
1994 (1,308) 3,274 94,988
1995 (511) 5,180 96,954 1.01.98 - 6.02.98 (2,853)
1996 (1,978) 5,890 101,623 6.02.98 - 12.31.98 (3,709)
1997 (2,361) 5,412 105,535 Pro Rated 1998 (6,562)
1998 (6,562) 5,502 104,475
</TABLE>
* Fleet Development based on reported 20,000-49,999 dwt vessel total fleet
dwt as of December 31, 1997--SSY.
** Scrapping projection based on annualizing confirmed Scrapping and Sold for
Scrap figures obtained for partial year (6.02.98).
Sources: 1988-1997 Newbuilding and Scrapped and Sold for Scrapping figures
from Drewry Shipping Consultants; 1998 Scrapped
and Sold for Scrapping figures provided by SSY; 1998 Newbuilding
Deliveries and 1999-2001 Scheduled Newbuildings provided by SSY.
According to SSY, as of December 31, 1997, there were 3,172 Handysize
drybulk carriers, with an aggregate capacity of 105.5 million dwt and an average
age of 14.9 years. Approximately 31% of these Handysize drybulk carriers were
over 20 years old and approximately 26% were 10 years old and under. As of March
1, 1998, 234 newbuildings were on order, with 149 scheduled to be delivered in
1998, 63 scheduled to be delivered in 1999 and 20 scheduled to be delivered in
2000. The newbuildings scheduled for delivery during 1998 comprise approximately
5% of the existing Handysize drybulk carrier fleet. During 1997, 74 Handysize
drybulk carriers were scrapped or otherwise removed, while the number of
scrappings and removals through June 1998 has already exceeded 95 vessels.
During the next decade, the number of vessels in this sector reaching their 30th
year of age will be a significant factor influencing the supply side dynamics of
the sector.
Acquisition Prices for Second Hand Handysize Drybulk Carriers
Acquisition prices for second hand Handysize drybulk carriers vary due to a
number of factors, including the cost of newbuildings, market supply and demand,
market perception, as well as the specification, size and age of the vessels.
The cost of newbuildings has remained relatively stable over the past decade,
while current second hand Handysize drybulk carrier costs are significantly
lower than the average costs for such vessels for the past decade. As a result,
the Company has an opportunity to acquire vessels at attractive prices. For
example, according to Shipping Intelligence and as of June 1998, the purchase
price of a 15-year old 25,000 dwt Handysize drybulk carrier was more than 31%
below that of the average price for the past ten years.
The following chart indicates the deviations from the ten-year average
acquisition price for second hand Handysize drybulk carriers over the past
decade.
-43-
<PAGE>
Handysize Bulk Carrier Values
25,000 dwt. Acquisition Price Deviation
from 10 year Average 1998-1999
- - - - --------------------------------------------------------------------------------
(in $US mil)
Date 25,000 dwt % from avg. Average
---- ---------- ----------- -------
June 1988 -36.00% 5.9 3.8
September 1988 -41.06% 5.9 3.5
December 1988 -15.79% 5.9 5.0
March 1989 -12.43% 5.9 5.2
June 1989 -0.64% 5.9 5.9
September 1989 4.42% 5.9 6.2
December 1989 -4.01% 5.9 5.7
March 1990 1.05% 5.9 6.0
June 1990 -9.06% 5.9 5.4
September 1990 -15.79% 5.9 5.0
December 1990 -24.21% 5.9 4.5
March 1991 -27.58% 5.9 4.3
June 1991 -7.37% 5.9 5.5
September 1991 -17.48% 5.9 4.9
December 1991 -2.32% 5.9 5.8
March 1992 -14.11% 5.9 5.1
June 1992 -15.79% 5.9 5.0
September 1992 -12.43% 5.9 5.2
December 1992 -27.58% 5.9 4.3
March 1993 -9.06% 5.9 5.4
June 1993 1.05% 5.9 6.0
September 1993 2.73% 5.9 6.1
December 1993 -7.37% 5.9 5.5
March 1994 9.47% 5.9 6.5
June 1994 -4.01% 5.9 5.7
September 1994 14.52% 5.9 6.8
December 1994 2.73% 5.9 6.1
March 1995 16.20% 5.9 6.9
June 1995 29.68% 5.9 7.7
September 1995 27.99% 5.9 7.6
December 1995 31.36% 5.9 7.8
March 1996 27.99% 5.9 7.6
June 1996 36.41% 5.9 8.1
September 1996 17.89% 5.9 7.0
December 1996 -4.01% 5.9 5.7
March 1997 -10.74% 5.9 5.3
June 1997 7.78% 5.9 6.4
September 1997 7.78% 5.9 6.4
December 1997 2.73% 5.9 6.1
March 1998 -22.53% 5.9 4.6
April 1998 -15.79% 5.9 5.0
May 1998 -20.85% 5.9 4.7
June 1998 -30.95% 5.9 4.1
1988-1997 Ten Year Average..........................................5.9
Source: Shipping Intelligence
The current acquisition costs of second hand Handysize drybulk carriers
as compared with the cost of replacement tonnage makes the acquisition of second
hand Handysize drybulk carriers an attractive opportunity for the Company.
-44-
<PAGE>
BUSINESS
The Company is an international shipping company that currently owns
and operates a fleet of drybulk carriers, primarily Handysize drybulk carriers.
The Company has attracted strong industry partners and equity investors in order
to implement an expansion of its fleet through the acquisition of approximately
17 second hand Handysize drybulk carriers. On the Original Issue Date, the
Company owned five Existing Vessels and had executed vessel purchase agreements
to acquire the eleven Committed Vessels. As of the date of this Prospectus, the
Company has acquired eight of the Committed Vessels. The Company has obtained
period time charters for each of the Existing Vessels and Committed Vessels.
Approximately six Additional Vessels are expected to be acquired and placed on
period time charters within six months of the Original Issue Date.
The Company's senior management has a proven track record of
effectively managing shipping businesses, identifying shipping industry trends
and building fleets through vessel acquisitions. Vassilios Livanos, Chief
Executive Officer and a co-founder of the Company and its predecessor, has spent
his 25-year career in the drybulk sector of the shipping industry. Prior to
founding the Company, Mr. Livanos was president of Kedma in New York where he
expanded Kedma's fleet of four vessels through the acquisition of 20 vessels,
primarily Handysize drybulk carriers. Prior to Kedma, during his 13 years at
Seres Shipping, Inc., Mr. Livanos oversaw the acquisition and construction of
over 150 vessels as technical director. Theotokis Milas, Chief Operating Officer
and a co-founder of the Company and its predecessor, has spent 30 years in the
shipping industry. Prior to founding the Company, while Mr. Milas was at IMI, a
vehicle he co-founded to acquire vessels, IMI acquired a fleet of 16 vessels
having an aggregate capacity of 1.35 million dwt and generated substantial
returns for its investors. Nicholas Cotzias, Jr., Chief Financial Officer and a
co-founder of the Company and its predecessor, has over 15 years experience in
the shipping industry and also has significant experience in the expansion of
fleets. Prior to founding the Company, Mr. Cotzias was general manager and
director of Trade and Transport (UK) Ltd., part of a shipping venture which
controlled a fleet that expanded to over 35 vessels through the acquisition of
19 vessels. The Company's senior management believes the current downturn in the
drybulk carrier shipping cycle presents an excellent opportunity for the Company
to grow and enhance cash flow by purchasing vessels at attractive prices. The
acquisition costs of Handysize drybulk carriers are at their lowest levels in
ten years, in significant part due to the recent economic crisis in Asia.
The Company's strategy has been and will continue to be to generate
revenues under long-term contracts using period time charters for all of its
vessels in order to maximize vessel utilization and enhance stability of cash
flow and earnings. For example, over the last five years, all revenues relating
to the Existing Vessels were derived from a series of one-year time charter
contracts with either Cemex or Clipper, yielding an average utilization rate for
its vessels of over 98%. The current charters with these customers continue
through at least February 1999, at which time the Company will seek a further
renewal of the charters. The Company is chartering three of the Committed
Vessels to Clipper for a period of at least 12 months, four to FedNav for a
period of at least two and one half years and one to HSH for a period of at
least 12 months. In addition, two of the Committed Vessels are being acquired by
the Company subject to their existing charters with T&E and the Company has
obtained a commitment from FedNav to charter the remaining Committed Vessel. The
Company will acquire the Additional Vessels subject to either existing time
charters or newly negotiated time charters. In addition, major companies such as
Cargill, Continental Grain, Garnac Grain, Pillsbury, Kerr McGee, Marcona, Van
Ommeren, Armada and Ispat have current or previous charter relationships with
the Company or its management.
The Company has a proven ability to serve its charter customers in
niche trades which require specialized vessels or expertise and tend to generate
premium revenue rates as well as stable, long-term relationships. For example,
two of the Existing Vessels have traded forest products from the Amazon which
requires specially configured and geared vessels and navigational expertise. The
five Committed Vessels chartered to FedNav for initial terms of up to three and
one half years are ocean-going vessels that are capable of trading in the St.
Lawrence Seaway and Great Lakes region, as well as other technically demanding
regions. There are currently only 143 Handysize drybulk carriers that are at
least 25,000 dwt and under 18 years of age in the world capable of this trade.
As a result of its demonstrated expertise in specialized trades, the Company
typically is able to obtain long-term or recurring charters for its vessels and
believes it has generally achieved premium time charter rates.
The Company has engaged MMI, the sole shareholder of Millenium, to
provide certain commercial and technical management services to the Company at
current market rates. MMI has subcontracted with KYLCO to provide management
services. Messrs. Livanos, Milas and Cotzias are officers of KYLCO. Kylco Greece
and Kylco USA collectively employ 30 individuals. KYLCO currently manages or
sub-manages 18 vessels, five of which comprise the Existing Vessels, eight of
which comprise Committed Vessels and five of which are owned by third parties
and are not expected to be acquired by the Company. Recently, KYLCO and, through
KYLCO, the Existing Vessels received certification under IMO's ISM Code by
successfully completing audits conducted by Det Norske Veritas, a leading
classification society.
-45-
<PAGE>
Business Strategy
The Company's strategy is to expand its operations through the purchase
of high quality second hand drybulk carriers at attractive vessel prices and to
provide superior transportation services to its charterers. Key elements of this
strategy include:
Generating Stable Cash Flows Using Period Time Charters. Period time
charters provide for an agreed daily charter hire rate during the contract
period, which is generally 12 months. The Company believes that period time
charters provide more stable revenues and cash flows as well as better vessel
utilization than spot charters, which are generally contracts for single voyages
(typically of 15 to 30 days duration). In addition, the Company believes that
focusing on period time charters with a targeted group of charterers allows it
to provide superior customer-oriented service, thereby distinguishing itself
from other drybulk carrier operators, which in turn may allow the Company to
grow more steadily than other operators in this sector. The Company has period
time charters for all Existing Vessels and Committed Vessels and intends to
obtain time charters for the Additional Vessels. The Company has obtained
attractive period time charters for the Committed Vessels (of up to three and
one half years for certain of the Committed Vessels) despite current market
conditions.
Building the Company's Fleet by Taking Advantage of Attractive Prices.
The Company believes it now has the opportunity to purchase additional vessels
at virtually the lowest prices in the past decade and thereby generate superior
returns on its investments. The Company has inspected over 30 other vessels
during the past six months and continues to review additional opportunities. As
part of its long-term strategy to continue to grow through vessel acquisitions,
the Company plans to acquire vessels periodically at attractive prices. The
Company plans to actively manage its fleet by reinvesting earnings and proceeds
of periodic sales of the Mortgaged Vessels in order to grow and renew its fleet.
In addition, the Company will consider raising additional private and public
equity capital to support further fleet expansion.
Focusing on Handysize Drybulk Sector. The Company believes that
focusing on the Handysize drybulk sector of the shipping industry will generate
the following competitive advantages:
Marketing Advantages to Enhance Revenues. Focusing on the
Handysize drybulk sector of the shipping industry will enable the
Company to identify and respond to its market and customer needs. As a
customer-oriented service provider, the Company can use this market and
customer information to develop creative solutions for its clients,
including acquiring additional vessels or reconfiguring existing
vessels within its fleet and developing customized trade routes. For
example, in response to the needs and concerns of Cemex, the Company
developed a combined, vessel-specific trade for the carriage of cement
and petcoke, leading to recurring service contracts with this
charterer.
Operating Efficiencies to Reduce Costs. The Company is
generally able to achieve significant cost efficiencies as a result of
operating a fleet focused in one sector. These include more efficient
drydock service, better rates for insurance and spares and purchasing
efficiencies from suppliers. In addition, the Existing Vessels and
Committed Vessels include sister vessels that have similar design
characteristics, allowing the Company to benefit from operating,
maintenance and crew efficiencies.
Obtaining Better Returns with a Second Hand Fleet. The Company intends
to acquire and operate second hand vessels between 10 and 18 years of age,
consistent with management's operating experience. The Company believes the
values and charter rates for vessels in this age group enable it to obtain
superior returns on invested capital when compared to potential returns on
capital invested in newbuildings. According to SSY, as of June 1998, the
purchase price for a 15-year old 28,000 dwt Handysize drybulk carrier was
approximately 33% that of a newbuilding and the revenue obtained by a one-year
timecharter for such vessel was approximately 75% that for a newbuilding.
The Company's Fleet
Upon the acquisition of the Committed Vessels and the Additional
Vessels with the proceeds of the offering of the Existing Notes, the Company
will own and operate a fleet consisting of approximately 22 Handysize drybulk
carriers which operate worldwide. The following table indicates the age,
capacity, charter status and appraised value of the Existing Vessels and the
Committed Vessels.
-46-
<PAGE>
<TABLE>
<CAPTION>
Appraised
Year Capacity Chartered Daily Charter Value
Name of Vessel Built (dwt) Charterer Until Hire Rate (thousands)
- - - - -------------- ------- ------- --------- -------------------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Existing Vessels
Monica Marissa................ 1973 55,057(a) Cemex February 1996(b) $ 7,250 $ 3,625(d)
Clipper Harmony............... 1978 16,711 Clipper February 2000 7,500 5,175(d)
Clipper Golden Hind........... 1978 16,560 Clipper February 1999 7,500 4,375(d)
Clipper Pacific............... 1976 7,923 Clipper March 1999 4,300 1,675(d)
Clipper Atlantic.............. 1975 7,923 Clipper February 1999 4,300 1,625(d)
------------
Total Existing Vessels............................................................................................. 16,475
------------
Committed Vessels
Millenium Aleksander*......... 1988 52,650(a) T&E June 1999(c) 7,000 8,688(e)
Millenium Elmar*.............. 1987 52,650(a) T&E June 1999(c) 7,000 8,125(e)
Millenium Leader.............. 1984 37,489 HSH September 1999 6,800 8,100(f)
Millenium Hawk*............... 1984 28,791 FedNav March 2002 7,000 7,113(f)
Millenium Eagle............... 1983 28,788 FedNav March 2002 7,000 6,813(f)
Millenium Osprey.............. 1984 28,786 FedNav March 2002 7,000 7,113(f)
Millenium Falcon.............. 1981 27,048 FedNav March 2001 7,000 5,613(f)
Millenium Condor.............. 1981 27,036 FedNav March 2001 7,000 5,613(f)
Millenium Amethyst............ 1978 23,563 Clipper July 1999 5,275 3,000(e)
Millenium Yama................ 1979 23,538 Clipper July 1999 5,275 3,500(e)
Millenium Majestic............ 1979 17,152 Clipper August 1999 5,200 3,050(g)
Total Committed Vessels............................................................................................ $ 66,728
----------
Total Existing and Committed Vessels........................................................................... $ 83,203
==========
</TABLE>
* Not acquired as of the date of this Prospectus.
- - - - --------------------------
(a) Although the vessel capacity is greater than 49,999 dwt, it is considered
a Handy size drybulk carrier.
(b) The time charter for the Monica Marissa provides that the charterer
thereunder has the right to renew such charter at the specified rates set
forth therein.
(c) The Company may, at its option, cancel these charters at any time after
December 1998.
(d) Appraised value is based on the average of two appraisals, one performed
by a Designated Appraiser in February 1998 and the other performed by a
Designated Appraiser in June 1998. Appraised value gives effect to the
value of the time charter for the relevant vessel.
(e) Appraised value is based on the average of two appraisals completed in
February 1998, each performed by a Designated Appraiser. Appraised values
were determined on a charter-free basis.
(f) Appraised value is based on the average of two appraisals completed in
June 1998, one performed by SSY Shipbrokers and the other by Associated
Shipbrokers. Appraised value gives effect to the value of the time charter
for the relevant vessel.
(g) Appraised value is based on the average of two appraisals completed in
June 1998, each performed by a Designated Appraiser.
As of June 1998, the Existing Vessels and Committed Vessels had an
aggregate appraised value, giving effect to the values of their time charters,
of $82.9 million, based on the appraisal performed by a Designated Appraiser.
-47-
<PAGE>
Trade Routes and Representative Voyages
The Company's operations are worldwide. The following table indicates
representative trade routes and voyages of a portion of its fleet.
<TABLE>
<CAPTION>
Representative Voyages and Cargoes 1997
Vessels Load Port Discharge Ports Duration Cargo
- - - - ------- --------- --------------- -------- -----
<S> <C> <C> <C> <C>
Monica Marissa...............Spain U.S. Gulf Coast 30 days Bulk Cement
U.S. Gulf Coast Spain 28 days Petcoke
Clipper Harmony..............Canada Brazil 40 days Forest Products
Brazil U.S. Gulf Coast 22 days Steel Products
Clipper Golden Hind........ U.S. Gulf Coast Italy 31 days Craft Paper
Germany U.S. Gulf Coast 28 days Steel Products
Clipper Pacific..............U.S. East Coast Caribbean 20 days Forest Products
Brazil U.S. East Coast 38 days Forest Products
Clipper Atlantic.............U.S. East Coast Caribbean 20 days Forest Products
Brazil U.S. East Coast 38 days Forest Products
Millenium Aleksander...... U.S. Gulf Coast Japan 36 days Grain
Millenium Elmar..............Estonia Saudi Arabia 32 days Grain
Millenium Amethyst......... Caribbean Japan 53 days Bulk Bauxite
Millenium Yama...............Philippines Japan 20 days Bulk Dolomite
</TABLE>
Operations
Chartering Strategy
The chartering process begins when a need is identified to transport a
cargo or cargoes from one port to another. The charterer typically contacts a
broker or group of brokers to determine the availability of suitable vessels to
transport the specified cargo. The charterer then chooses from an array of
available companies with vessels able to satisfy its needs and seeks to
negotiate the most favorable economic terms for its transportation requirements.
Typically, the agreed terms are based on standard industry charterparties
prepared to streamline the negotiation and documentation processes. In certain
cases, it is necessary to work closely with charterers to devise tailored
solutions to their transportation needs.
Charters may be arranged on a spot basis for the immediate hiring of a
vessel, usually for a single voyage, or through longer term arrangements, such
as contracts of affreightment and time or bareboat charters. Contracts of
affreightment are agreements to transport a specified type of cargo on a
specified route on a regular basis. Contracts of affreightment function as a
long-term series of spot charters, except that the vessel owner is not required
to use a specific vessel to transport the cargo, but instead may use any vessel
that can satisfy the requirement. Companies holding contracts of affreightment
may take other owners' vessels on charter to fulfill their commitments.
A period time charter is a contract for the hire of a specific vessel
for a certain period of time, with the vessel owner being responsible for
providing the crew and paying operating costs, while the charterer is
responsible for fuel and other voyage costs. This form of charter
eliminates variable costs and the risks for the owner of the vessel.
The Company has a global chartering strategy, concentrating on period
time charters of at least 12 months duration and targeting both its existing
customer base and new charterers. The Company believes that time charters
provide stable revenues and cash flows and better vessel utilization than spot
charters. The depth of experience of the Company's commercial staff enables it
to access a worldwide network of shipping brokers for the utilization of the
Mortgaged Vessels. All the Existing Vessels are currently under time charters
through at least February 1999.
Millenium Elmar and the Millenium Aleksander will be acquired subject
to a period time charter at a rate of $7,000 per day until June 1999 with T&E.
The Millenium Yama and the Millenium Amethyst are currently chartered to Clipper
at a rate of $5,275 per day until July 1999 and under an optional renewal period
of six months at $6,000 per day. The Millenium Majestic is currently chartered
to Clipper at a rate of $5,200 per day until August 1999.
-48-
<PAGE>
FedNav, a major international shipping company that provides
transportation services worldwide, is chartering four of the Committed Vessels
and is committed to charter another Committed Vessel at a rate of $7,000 per
day, three for a period of three and one half years and two for a period of two
and one half years. Due to the size and dimensions of these vessels, they are
capable for trade in the Great Lakes region of the United States and Canada. The
Company understands that FedNav is using these Committed Vessels for trade in
the Great Lakes region. Pursuant to the terms of each of the FedNav charters,
during the winter season while the Great Lakes are frozen, FedNav has the option
to redeliver these Committed Vessels to the Company, but is obligated to
reaccept them during the spring opening of the Great Lakes shipping season.
HSH, a diversified hotel and shipping conglomerate with approximately
3,000 employees and over $730.0 million in assets and shareholder funds as of
March 31, 1997, is chartering one Committed Vessel at a rate of $6,800 per day
for a period of 12 months commencing August 29, 1998, with a renewal option at a
rate of $6,800 per day for an additional 12-month period. HSH is headquartered
in Singapore and has offices in Hong Kong, throughout Australia and South East
Asia.
Vessel Management
Each of the Mortgaged Vessels owned by the Company currently receives,
and each of the Mortgaged Vessels to be acquired by the Company will receive,
management services from MMI. Under the New Management Agreement, MMI acts as
the fleet's technical manager and also performs all commercial management
functions, including arranging chartering, advising the Company on the purchase
and sale of vessels and advising on obtaining insurance. As remuneration for its
services, MMI receives a fixed daily management fee (payable monthly in advance)
of $350 to $600 per day ($350 per day during fiscal 1998), depending on the type
and size of vessel managed and receives a commission of 1.25% on all time
charter revenue, 1.75% of spot charter revenue, 2.0% of insurances placed by
each vessel managed and 1.0% on the gross sale or purchase price of vessels
which the Company purchases or sells. The Company believes that the terms of the
New Management Agreement are at least as favorable as can be obtained from
independent third party managers. See "Certain Transactions--New Management
Agreement."
MMI subcontracts certain technical and commercial management services
to KYLCO. Kylco Greece and Kylco USA collectively employ approximately 30
individuals. Kylco Greece has offices in Piraeus and Kylco USA has offices in
New York, providing full service and support to the Mortgaged Vessels from two
locations, each located in strategic shipping epicenters. The Company believes
that these locations allow KYLCO to maximize the efficient technical and
commercial aspects of ship management. Kylco Greece and Kylco USA coordinate
their activities to eliminate duplicative effort and conflicting priorities so
as to provide the most complete, efficient, cost effective management services
to their respective clients. The Company believes that KYLCO's multi-disciplined
and coordinated structure allows it to provide the most effective management
services for the differing sizes and types of vessels operated by the Company
and KYLCO's other clients.
MMI and KYLCO provide commercial management services by coordinating
with various third party brokers. MMI solicits, researches, evaluates and
proposes charters for the Mortgaged Vessels and, pursuant to the Company's
direction, also negotiates the terms and conditions for the sale and purchase of
the Mortgaged Vessels, through recognized shipbrokers worldwide. Finally, at the
Company's instruction, MMI obtains insurance for the Mortgaged Vessels, working
through recognized third party brokers worldwide.
MMI and KYLCO also provide comprehensive technical management services
to each of the Mortgaged Vessels. MMI's services include: obtaining qualified
officers and crews; managing day-to-day vessel operations and relationships with
charterers; purchasing stores, supplies and new equipment; performing general
vessel maintenance, reconditioning and repair, including commissioning and
supervising shipyards, subcontractors, or drydock facilities required for such
work; ensuring regulatory and classification society compliance; performing
operational budgeting, evaluating and arranging financing for the vessels and
performing accounting, treasury and finance functions (including cash
disbursements and collections). MMI provides these services on a collective
basis to the Company's fleet as well as certain vessels that are unaffiliated
with the Company, thereby allowing the Company to benefit from certain economies
of scale.
Each member of KYLCO's staff that interacts with vessels is provided
with home and portable linkages to the vessels' communication and data system,
so that ship management services can be provided around the clock, seven days a
week. All the Mortgaged Vessels will also be linked by electronic communication
to KYLCO to allow immediate response to vessel management operations.
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<PAGE>
Crewing
The Company employs mainly Russian officers and crews on its vessels,
all of whom must be fully licensed and certified in accordance with
international regulatory requirements and shipping conventions. The Company
believes that all officers are fully qualified
for their respective disciplines.
As part of its ongoing commitment to maintain a high quality fleet and
efficient operations, the Company places great emphasis on attracting qualified
crew members and on regular training. Prior to and during employment, the
Company requires all shipboard personnel to undergo training courses both
in-house and at recognized national training centers. All these courses are
selected with a view toward enabling shipboard personnel to maintain a high
level of skill within their respective areas, with an emphasis on safety and
keeping up to date with the latest technical and professional developments.
The Company's seaboard personnel are responsible for carrying out
routine maintenance aboard the vessels while at sea. In addition to the regular
crew, the Company's vessels routinely have extra repair teams aboard to conduct
repairs at sea. These repair teams are comprised of workers formerly employed by
shipyards in Rumania and Russia. The Company believes that repairs conducted at
sea cost the Company less than that would otherwise be incurred if such repairs
were conducted by a shipyard and that they reduce the number of repairs required
during the regular maintenance cycle conducted by KYLCO's technical department.
Competition
Seaborne transportation services are provided by independently owned
fleets, proprietary fleets and state-owned fleets. Competition for charters can
be intense and depends on freight rates offered, location, size, age, condition
and acceptability of a vessel and its operator to the charterer. Although the
Company believes that the markets in which the Company competes are highly
fragmented and that no single competitor has a dominant position, the Company is
aware that certain competitors may be able to devote greater financial and other
resources to their activities, which may result in a competitive threat to the
Company.
Classification Society and ISM Certification and Other Safety Requirements
Every commercial vessel's hull and machinery must be "classed" by a
classification society authorized by its country of registry. The classification
society verifies that a vessel is constructed, maintained and equipped in
accordance with the rules of such classification society and that the vessel
complies with flag state regulations and with international conventions,
including the Safety of Life at Sea Convention ("SOLAS") and the regulations
promulgated by the IMO. Insurance underwriters make it a condition of insurance
coverage for the vessel to be "classed" and the failure of a vessel to be
"classed" may render such a vessel uninsurable. Insurance underwriters may also
require that vessels comply with standards more restrictive than those of the
classification society. All the Existing Vessels and Committed Vessels are
currently "in class," with the Lloyds Register, the American Bureau of Shipping,
Germanischer Lloyd or Russian Society or Det Norske Veritas, each of which is a
member of the International Association of Classification Societies.
A vessel must be inspected by a surveyor of the classification society
at least every year, every two and one-half years ("Intermediate Survey") and
every four or five years ("Special Survey"). If any defects are found, the
classification society will issue a "recommendation" which requires the ship
owner to remedy the defect within a prescribed time limit. The Intermediate
Survey includes an underwater examination of the vessel's submerged hull and
machinery. The Special Survey includes a mandatory drydocking. In connection
with a Special Survey, the vessel is examined extensively, including an
inspection to determine the thickness of the steel plates in various parts of
the vessel. If the vessel experiences excessive wear and tear, substantial
expenditures may become necessary for steel renewals and other repairs to pass a
Special Survey. Although the useful life of a vessel may be extended by capital
improvements and upgradings, the costs necessary to meet classification society
and other safety and regulatory requirements generally increase significantly as
a vessel becomes older. All the Existing Vessels and Committed Vessels are on a
five-year Special Survey cycle. In addition to the drydocking conducted as part
of the Special Survey, each vessel must be drydocked at some time between
special surveys.
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<PAGE>
The following table sets forth upcoming periodic survey and drydocking
dates for the Existing Vessels and the Committed Vessels:
<TABLE>
<CAPTION>
Intermediate Special
Vessel Drydocking Survey Survey Classification Society
- - - - ------ ---------- ------ ------ ----------------------
<S> <C> <C> <C> <C>
Monica Marissa August 2000 March 2003 March 2000 Lloyds Register
Clipper Harmony September 1998 June 2000 September 1998 Lloyds Register
Clipper Golden Hind February 2000 March 2000 March 2002 Germanischer Lloyd
Clipper Pacific February 2000 April 1999 April 2001 Lloyds Register
Clipper Atlantic May 1999 June 2002 June 1999 Germanischer Lloyd
Millenium Aleksander March 2001 September 2000 September 2003 Det Norske Veritas
Millenium Elmar August 1999 October 1999 July 2001 Russian Society
Millenium Leader October 1999 December 2002 December 1999 Lloyds Register
Millenium Hawk December 1998 December 2001 December 1998 Det Norske Veritas
Millenium Eagle January 2001 January 2001 May 2003 Det Norske Veritas
Millenium Osprey December 2000 December 2001 December 1998 Det Norske Veritas
Millenium Falcon November 2000 September 2000 June 2003 Lloyds Register
Millenium Condor November 1998 May 1998 May 2001 Lloyds Register
Millenium Amethyst February 2001 July 2001 July 2003 American Bureau of Shipping
Millenium Yama December 2000 December 2001 June 2003 American Bureau of Shipping
Millenium Majestic March 1999 March 2001 March 1999 American Bureau of Shipping
</TABLE>
The Company's policy is to include the costs of intermediate and
special surveys and drydocking in operating expenses. The purpose of the ISM
certification is to provide an international standard for the safe management
and operation of ships and for pollution
prevention.
The ISM Code required that shipowners and vessel managers developed, no later
than July 1, 1998, an extensive Safety Management System ("SMS") that includes,
among other things, the adoption of a safety and environmental protection policy
setting forth instructions and procedures for operating vessels safely and
discussing procedures for dealing with emergencies. Specifically, a SMS requires
that conditions, activities and tasks, both ashore and on board, affecting
safety and environmental protection be planned, organized, executed and checked
in accordance with legislative and Company requirements. Noncompliance with the
ISM Code may subject a shipowner or bareboat charterer to increased liability
and may lead to decreases in available insurance coverage for affected vessels.
KYLCO has secured ISM certification and, through KYLCO, the Company has obtained
ISM certification for all of the Existing Vessels, having successfully completed
audits conducted by Det Norske Veritas, a leading classification society. The
Company has six months from the date of the acquisition of a vessel within which
it must obtain ISM Certification for such vessel. As of the date of this
Prospectus, the Company has obtained ISM Certification for seven of the
Committed Vessels.
Insurance
The business of the Company is affected by a number of risks, including
mechanical failure, personal injury, vessel and cargo loss or damage, business
interruption due to political conditions in foreign countries, hostilities,
labor strikes, adverse weather conditions and catastrophic marine disaster,
including environmental accidents and collisions. The Mortgaged Vessels are
insured against these risks with the following forms of insurance for such
vessel.
Hull and Machinery Insurance. The Company maintains marine hull and
machinery insurance, which insures against the risk of damage and the total or
constructive total loss of an insured vessel and against damage to third parties
directly caused by an insured vessel. Constructive total loss occurs when the
vessel is damaged to the extent that the repair costs exceed the insured value
of the vessel. The Company also maintains war risk insurance, which insures
against the risk of damage and the total or constructive total loss of an
insured vessel directly caused by certain warlike situations such as military
use of weapons or terrorist activities. Coverage for areas designated from time
to time as war zones may be excluded or additional premiums may be required in
respect of vessels operating in such zones. The Company maintains coverage for
at least the full value of each insured vessel and updates this insurance at
least annually. The Company maintains civil and war risk hull and machinery
insurance on all of its vessels. This insurance has been placed in the French,
Italian and Norwegian markets, and is subject to deductibles consistent with
industry practice.
P&I Insurance. The Company maintains P&I insurance coverage for its
shipping activities, which includes the legal liability and other related
expenses of injury to or death of crew members and third parties, loss or damage
to cargo, claims arising from collisions with other vessels, damage to other
third party property, pollution liability and salvage, towing and other related
costs. The Company's P&I
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<PAGE>
insurance coverage is arranged through P&I mutual insurance clubs. As a member
of a club, the Company may be required to pay additional premiums at the end of
a year in which claims made on the club were particularly large. The Company's
total premium is based on the Company's own claims record, the total claims
record of the members of the club and the aggregate claims record of all clubs
which are members of the international association of P&I clubs.
In line with industry practice, coverage for damages arising out of
hazardous materials discharges is limited to $500 million per vessel per
incident. For trading in United States Waters, the Company arranges additional
insurance coverage, satisfactory to USCG regulatory approval, for liability
arising from oil pollution.
Adequacy of Insurance. The Company believes that its current insurance
coverage provides adequate protection against the accident-related risks
involved in the conduct of its business and that the Company maintains
appropriate levels of environmental damage and pollution insurance coverage
consistent with industry practice. The Company's insurance policies are subject
to commercially reasonable deductibles.
Regulation
The Company's operations are materially affected by regulation in the
form of international conventions and national, state and local laws and
regulations in force in the jurisdictions in which the Mortgaged Vessels
operate, as well as in the country or countries of their registration. Because
such conventions, laws and regulations are subject to revision, the Company
cannot predict the ultimate cost of compliance or the impact thereof on the
resale price or useful life of its vessels. The Company is required to carry
certain permits, licenses and certificates with respect to its operations.
Subject to the discussion below and to the fact that the kinds of permits,
licenses and certificates required for the operation of the Mortgaged Vessels
will depend upon a number of factors, the Company believes that the Company has
been and will be able to obtain all permits, licenses and certificates material
to the conduct of its operations. The Company believes that the heightened
environmental and quality concerns of insurance underwriters, regulators and
charterers will impose greater inspection and safety requirements on all
vessels. The Mortgaged Vessels are subject to both scheduled and unscheduled
inspections by a variety of governmental and private interests, each of which
may have a different perspective or impose different standards. These interests
include the local port state authority (USCG or equivalent), classification
society, flag state administration (country of registry) and charterers.
Environmental Regulation--International
The IMO is an agency of the United Nations whose purpose is to develop
international regulations and practices affecting shipping and international
trade, and to encourage the adoption of standards of safety and navigation. All
IMO agreements must be ratified by the IMO's individual government constituents.
The International Convention on Civil Liability for Oil Pollution Damage, 1969,
as amended (the "CCL"), and the Convention for the Establishment of an
International Fund for Oil Pollution of 1979, as amended, are the principal
international laws adopted by most jurisdictions for imposing strict liability
on a vessel's registered owner for pollution damage caused on the territorial
waters of a contracting state by the discharge of persistent oil. The liability
of the vessel owner is subject to certain complete defenses. The United States
is not a party to the CCL. Approximately one-quarter of the countries that have
ratified the CCL have increased the liability limits through a 1992 Protocol to
the CCL that has recently entered into force. As of September 1, 1998, for
vessels of between 5,000 and 140,000 gross tons, the liability limits in the
countries that have ratified this Protocol to the CCL are approximately $3.9
million plus approximately $546 per gross ton above 5,000 gross tons, with an
approximate maximum of $78.0 million. The exact amount of liability is tied to a
unit of account which varies according to a basket of currencies. The exchange
rate in effect on September 1, 1998 for the dollar equivalent of this unit of
account was approximately 1.3. The right to limit liability is forfeited under
the CCL where the spill is caused by the owner's intentional or reckless
conduct. Vessels carrying cargo in bulk trading to contracting states must
establish evidence of insurance covering the limited liability of the owner. In
jurisdictions where the CCL 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 CCL.
The ISM Code and implementing regulations require shipowners and
bareboat charterers to have developed, no later than July 1, 1998, an extensive
"Safety Management System" that includes policy statements and instruction
manuals that set forth standard operating, maintenance and communication
protocol. Noncompliance with the ISM Code may subject shipowners and bareboat
charterers to increased liability, may lead to decreases in available insurance
coverage for affected vessels, and may result in the denial of access to, or
detention in, certain ports. The Company, through KYLCO, has obtained ISM
certification for the Existing Vessels and seven of the Committed Vessels and
will be required to obtain ISM certification for the remaining Committed Vessels
and the Additional Vessels within six months of the date of their respective
acquisitions.
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<PAGE>
The IMO recently adopted new survivability and structural requirements
for drybulk carriers aimed at preventing the sinking of any such vessel if one
cargo hold floods. The new requirements will apply to existing ships carrying
heavy cargoes, including iron ore, steel, bauxite and cement and future vessels
carrying lighter cargo. On the Existing Vessels and certain of the Committed
Vessels, the transverse watertight bulkhead below the foremost cargo hold, and
the bottom of that hold, would have to withstand flooding of the fore hold. All
drybulk vessels of 150 meters or more built after July 1, 1999 would have to
withstand flooding of any one hold, even if they only haul lighter cargo, such
as grain. The IMO has called on member states to enact these new requirements
and begin enforcing them on July 1, 1999. The Company believes that it will be
able to comply with these requirements without incurring material costs.
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 Company's operations.
Environmental Regulation--OPA 90
OPA 90 applies to all owners, operators and bareboat charterers of
vessels ("Responsible Parties") that trade within the United States or its
territories or possessions or that operate in U.S. Waters, which include the
United States territorial seas and the 200-nautical mile
exclusive economic zone of the United States.
Under OPA 90, Responsible Parties are strictly liable, on a joint and
several basis, for all oil spill containment, removal costs and damages arising
from actual or threatened discharges of oil from their vessels (unless the
discharge results solely from the act or omission of a third party, an act of
God or an act of war). 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
resources 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 strict liability of
Responsible Parties to the greater of $1,200 per gross ton or $10 million per
tanker, but such limitation may not be available to the Responsible Parties in
certain circumstances. CERCLA contains a similar strict liability regime for the
release of hazardous substances, which the Company's vessels may carry.
Liability under CERCLA is limited to the greater of $300 per gross ton or $5
million. These limits of liability under CERCLA and OPA 90 do not apply if the
incident is 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 failed or
refused to report the incident or to cooperate and assist in connection with oil
removal activities. OPA 90 specifically permits individual states to impose
their own liability regimes with regard to oil pollution incidents occurring
within their waters, and most states that border on a navigable waterway have
enacted legislation providing for unlimited liability for the discharge of
pollutants. Moreover, OPA 90 and CERCLA preserve the right to recover damages
under existing law, including maritime tort law.
OPA 90 increased the financial requirements of the Federal Water
Pollution Control Act for vessels operating in United States waters and requires
owners and operators of vessels to establish and maintain with the USCG evidence
of financial responsibility sufficient to meet the limit of their potential
strict liability under OPA 90 and CERCLA. Bulk carriers must demonstrate
financial responsibility in the amount of the greater of $500,000 or $600 per
gross ton. Such financial responsibility, evidenced by the USCG's issuance of a
Certificate of Financial Responsibility ("COFR"), may be demonstrated by a
guarantee in the form of acceptable insurance, surety bond, self-insurance or
other means approved by the USCG. Claimants may bring suit directly against an
insurer, surety or other party that furnishes that guarantee. An insurer, surety
or other party that is sued directly is limited to asserting the following
defenses: (i) the defense that the incident was caused by the willful misconduct
of the Responsible Party; (ii) the defenses available to the Responsible Party
under OPA 90 or CERCLA; (iii) the defense that the claim exceeds the amount of
the guarantee; (iv) the defense that the claim exceeds the property amount of
the guarantee based on the gross tonnage of the vessel; and (v) the defense that
the claim has not been made under either OPA 90 or CERCLA. The Company has
demonstrated its financial responsibility by purchasing insurance from special
purpose insurers approved by the USCG. The Company believes that its vessels
that call within U.S. Waters comply with these USCG requirements.
OPA 90 requires owners or operators of vessels operating in U.S. Waters
to file vessel response plans with the USCG and with certain states detailing
the steps to be taken to address an oil spill and to operate their vessels in
compliance with their USCG-approved plans. Such response plans must, among other
things, (i) address a "worst case" scenario and 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 and (iii) identify a qualified individual with full authority to
implement removal actions. The Company has vessel response plans approved by the
USCG for vessels in its fleet operating in United States Waters and the
Company's vessels are operated in substantial compliance with such plans.
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<PAGE>
Legal Proceedings
The Company is involved in certain routine litigation incidental to its
business. The Company is not a party to, nor are any of its properties the
subject of any legal proceedings which, individually or in the aggregate, will
have a material adverse effect on its business or financial condition.
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<PAGE>
OFFICERS AND DIRECTORS
The following individuals are the senior officers and directors of
Millenium (ages as of September 1, 1998):
Vassilios M. Livanos 51 Chairman, Chief Executive Officer and Director
Theotokis S. Milas 55 Chief Operating Officer
Nicholas A. Cotzias, Jr. 38 Chief Financial Officer and Director
Emanuel Kyprios 55 Vice President, Projects
Michael A. Dritz 60 Director
Harald H. Ludwig 43 Director
Robert W. Nilsen 48 Director
Connor O'Brien 37 Director
Tom Stage Petersen 40 Director
Vassilios M. Livanos has been involved in the shipping industry for
over 25 years. In 1993 he was one of the founding partners of Kylco Greece. From
1985 to 1993, Mr. Livanos was president of Kedma Ltd., a New York-based
shipowning company which was founded in 1985. As President of Kedma, Mr. Livanos
directed the growth of Kedma's fleet from four vessels to over 20 vessels. From
1972 to 1985, Mr. Livanos worked for Seres Shipping Inc., in New York and Tokyo,
as Director of Engineering responsible for the technical management of a fleet
of over 100 vessels. Mr. Livanos spent four years in Japan, where he supervised
the construction of over 20 vessels of various types. During his tenure at Seres
Shipping Inc., Mr. Livanos was a principal shipowner of two vessels from 1981
and a principal in a drybulk chartering operation from 1983. Mr. Livanos
graduated from the Massachusetts Institute of Technology in 1971, with a B.A.
and M.S. in Naval Architecture and Marine Engineering, and an M.S. in Shipping
and Shipbuilding Management.
Theotokis S. Milas has been involved in the shipping industry for over
30 years. In 1993 Mr. Milas was one of the founding members of Kylco Greece. In
1984 he was a founding partner of IMI, a New York based shipowning company with
15 vessels having an aggregate tonnage of 1.25 million dwt. Prior to 1984, Mr.
Milas held various management positions with other shipping companies based in
the United States. Also during that time, Mr. Milas was appointed and acted as a
qualified surveyor for the American Bureau of Shipping and the NKK, the Japanese
Classification society. He graduated from City University of New York with a
B.S. degree in Mechanical Engineering in 1966, and from Massachusetts Institute
of Technology in 1971 with M.S. degrees in Naval Architecture and Marine
Engineering, as well as in Shipping and Shipbuilding Management. Mr. Milas was
elected a member of the Society of Maritime Arbitrators in 1981.
Nicholas A. Cotzias, Jr. has been involved in the shipping industry for
over 15 years. In 1993, he was one of the founding partners of Kylco Greece.
From 1988 to 1993, Mr. Cotzias served as the General Manager and Director of
Trade and Transport (UK) Ltd. in London, part of Brokerage & Management Group, a
United States connected shipping venture which controlled, at the time, in
excess of 40 vessels including drybulk carriers, tankers and offshore supply and
support vessels, trading primarily in the North Seas. Mr. Cotzias handled a
number of transactions in the sale and purchase sector, and period charter
employments, for and on behalf of the owners of vessels, and was responsible for
successfully preparing, analyzing and negotiating investment proposals in
assisting the group implement various programs and maximizing returns by meeting
targets. From 1984 to 1988, Mr. Cotzias worked at Cotzias Shipping of Greece, an
international family owned concern established in 1892, as sale and purchase
manager. Mr. Cotzias graduated from Boston University in 1982 with a B.A. and an
M.A. degree in International Economics.
Emanuel Kyprios has been involved in the shipping industry for over 25
years. In 1993 Mr. Kyprios was one of the founding members of Kylco Greece. In
1985, Mr. Kyprios founded the OSI Group which specializes in merchant banking
for the shipping industry, and has provided financial services to some of the
leading shipping groups and financial shipping institutions in the world. From
1970 to 1984, Mr. Kyprios was an executive at Bankers Trust Company and
Manufacturers Hanover Trust Company and Vice President and Group Head of
Shipping and Transportation at Marine Midland Bank. Mr. Kyprios graduated from
The Wharton School of Finance and Commerce in 1968 with an MBA degree.
Michael Dritz is the Chairman of Dritz Enterprises LLC, a New York
based investment firm which also provides consulting services for the financial
industry since 1996. Mr. Dritz also serves on the board of directors of Compass
Aerospace Corporation, a supplier of aerospace parts. Mr. Dritz was previously a
Managing Director for Merrill Lynch & Co. and Chairman of its Smith Brothers
International Advisory Division. Until 1996, following the acquisition by
Merrill Lynch & Co. of Smith New Court PLC, Mr. Dritz was the President and
Chief Executive Officer of Smith New Court, Inc. and an Executive Director of
Smith New Court PLC from 1985 to 1995. Mr. Dritz is a graduate of Syracuse
University.
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<PAGE>
Harald H. Ludwig is a co-founder and President of Macluan Capital
Corporation, a private investment company based in Vancouver, British Columbia.
Under Mr. Ludwig's leadership, Macluan Capital Corporation has invested in over
20 companies since 1986. Mr. Ludwig serves on the board of directors of Compass
Aerospace Corporation, a supplier of aerospace parts. Mr. Ludwig graduated from
Simon Fraser University and received a law degree from Osgoode Hall Law School.
Robert W. Nilsen has been involved in shipping over 20 years. Since
1990, he has been a Director and Vice President at Clipper Americas, Inc. Prior
to that he worked at various other shipping and chartering companies in the
United States. Mr. Nilsen graduated from the United States Merchant Marine
Academy in 1972 with a B.S. degree and a third mate's license. He also did
post-graduate studies at the
Stevens Institute.
Connor O'Brien is a co-founder and Managing Director of Stanton Capital
Corporation, a private equity investment firm based in New York. Prior to
forming Stanton Capital in 1995, he worked in the Investment Banking Group at
Merrill Lynch & Co., following four years in the Mergers & Acquisitions and
Natural Resources Groups at Lehman Brothers Inc. and two years at a major New
York bank. Mr. O'Brien sits on the board of directors of several privately-held
companies, including ESCO and Siderperu, the former government-owned national
steel company in Peru. Mr. O'Brien received an M.B.A. from the Tuck School at
Dartmouth College.
Tom Stage Petersen is the Managing Director of ESCO and has 23 years
experience in the shipping industry. Prior to joining ESCO in the beginning of
1998, Mr. Petersen worked for Norasia Lines Ltd. for ten years, where he held
various management positions in Asia, the Middle East and Europe. Prior to that
Mr. Petersen worked at Maersk Line/A.P. Moller for thirteen years.
Compensation of Officers and Directors
The directors of the Company are each entitled to receive approximately
$10,000 plus expenses from the Company annually. Neither the Company nor any of
its subsidiaries have set aside or reserved funds for pension, retirement or
similar benefits for directors and officers. Certain officers and directors of
the Company will also be officers and directors of and compensated by MMI, Kylco
Greece and/or Kylco USA.
Employee Incentive Plan
The Company anticipates that MMI will establish a restricted stock or
similar employee benefit plan for MMI employees who are not officers. In
addition, Millenium expects to adopt a cash incentive plan to reward non-officer
employees only in the event that Millenium's annual EBITDA exceeds $20.0
million.
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PRINCIPAL STOCKHOLDERS
As of July 24, 1998, MMI was the sole shareholder of Millenium. The
following table sets forth certain information regarding the approximate
beneficial ownership as of the date of this Prospectus of MMI's voting common
stock with respect to (i) each person or entity who is expected to be the
beneficial owner of more than 10% of the outstanding shares of Class A Common
Stock ("Class A Shares") and the outstanding shares of Class B Common Stock
("Class B Shares") and (ii) certain officers and directors of MMI.
<TABLE>
<CAPTION>
Number Percentage of Number of Percentage of
of Class A Total Class A Class B(a) Total Class B
Name Shares Shares % Shares Shares %
- - - - ---- ------ -------- ------ --------
<S> <C> <C> <C> <C>
Vassilios M. Livanos 73 4.3 130 16.3
Theotokis S. Milas 123 7.2 130 16.3
Nicholas A. Cotzias, Jr. 73 4.3 130(b) 16.3
Emanuel Kyprios 57 3.4 43 5.4
Millenium Advisors 133 7.8 367(b) 45.9
Millenium Investment 610 35.9 -- --
ESCO(c) 400 23.5 -- --
Clipper(c) 219 12.9 -- --
Connor O'Brien(d) 743 43.7 367(b) 45.9
Tom Stage Petersen(e) 400 23.5 -- --
</TABLE>
(a) Holders of Class B Shares do not vote for directors of MMI but
otherwise vote together with the holders of Class A Shares on all other
matters. Upon a dividend or a liquidation of MMI the holder of each
Class B Share would receive a portion of the proceeds to be received by
the holder of each Class A Share. The Class B Shares will be identical
to the Class A Shares when certain credit obligations of MMI have been
satisfied.
(b) Assumes exercise of warrants to purchase 50 shares of Class B Shares
for $.01.
(c) Shares are expected to be held by subsidiaries of such entities.
(d) Mr. O'Brien is the managing member of Millenium Advisors and the sole
director of Millenium Investment and as such may be deemed to be a
beneficial owner of the shares owned by such entities. Mr. O'Brien
disclaims beneficial ownership of such shares in excess of his
proportionate share of MMI.
(e) Mr. Petersen is the Managing Director of ESCO and as such may be
deemed to be a beneficial owner of the shares owned by ESCO. Mr.
Petersen disclaims such beneficial ownership.
CERTAIN TRANSACTIONS
New Management Agreement
Each of the Mortgaged Vessels owned by the Company currently receives,
and each of the Mortgaged Vessels to be acquired by the Company will receive,
technical and commercial management services from MMI pursuant to the New
Management Agreement. The New Management Agreement is substantially similar to
the Kylco Management Agreements, which agreements expired on the Original Issue
Date.
Under the New Management Agreement, MMI acts as the fleet's technical manager
and performs all commercial management functions, including arranging
chartering, advising the Company on the purchase and sale of vessels and
advising on obtaining insurance. As remuneration for its services, MMI receives
a fixed daily management fee (payable monthly in advance) ranging from $350 to
$600 per day depending on the type and size of vessel managed. In addition, any
visit to a vessel by a superintendent of MMI to evaluate or supervise any
repairs, drydocking or other activities entitles MMI to expenses incurred and,
from visits in excess of five days per annum per vessel, its expenses incurred
and an amount equal to $550 for each additional day. As additional remuneration
for its services, MMI receives commissions of (i) 1.25% on all gross revenue
earned by each vessel managed in respect of time charters, (ii) 1.75% on all
gross revenue earned by each vessel managed in respect of charters arranged on
the spot market, (iii) 1.0% on the gross sale or purchase price of a vessel and
(iv) 2.0% of insurance premiums for insurance placed, in each case as adjusted
to reflect fluctuations in market rates and practices. The Company believes that
the terms of the New Management Agreement with MMI are at least as favorable as
can be obtained from independent third party managers. MMI subcontracts certain
technical and commercial management services to Kylco Greece and Kylco USA. MMI
performs similar services under similar compensation arrangements for vessels
that are unaffiliated with the Company, including the five vessels currently
managed by Kylco Greece that are not being contributed to the Company. See
"Business--Operations."
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Advisory Agreement
Millenium has entered into an Advisory Agreement with Millenium
Advisors, L.L.C. ("Advisors"), an affiliate of Stanton Capital, as exclusive
financial and strategic advisor, pursuant to which Advisors provides financial
and investment management services, merchant and investment banking services and
corporate finance services to Millenium upon the terms and conditions set forth
therein. As compensation for such ongoing services, Millenium will pay Advisors,
on a quarterly basis in advance, payable on the first business day of each
calendar quarter, (i) through the later to occur between (x) the first full
eight quarters following consummation of the offering of the Existing Notes and
(y) an initial public offering of MMI, $300,000 per year (or $75,000 per
quarter), appropriately pro rated for partial periods, and (ii) thereafter,
$150,000 per year (or $37,500 per quarter), appropriately pro rated for partial
periods. The Advisory Agreement will terminate at such time as Millenium
Investment (together with its designees and affiliates) ceases to own at least
8% of the outstanding common stock of MMI. Millenium agreed to indemnify
Advisors against liabilities, costs, charges and expenses relating to Advisors's
performance of its duties, other than such of the foregoing resulting from
Advisors's gross negligence or willful misconduct. On the Original Issue Date,
Stanton Capital, an affiliate of Advisors was paid success-based compensation
equal to 0.5% of the value of the Transactions plus $150,000 for its pre-Issue
Date expenses incurred in connection with the Transactions.
New Equity Contribution
On or shortly following the Original Issue Date, MMI received: (i) the
contribution of 100% of the issued and outstanding shares of the Subsidiary
Guarantors that own the Existing Vessels, for a value of $4.0 million, (ii) a
portion of the contribution relating to the Committed Vessels equal to $4.0
million with respect to vessels from Aleksander Aberg Maritime Company Ltd. and
Elmar Kivistik Maritime Company Ltd., subsidiaries of ESCO, $1.9 million with
respect to Committed Vessels from Yama Shipping Company Ltd., Majestic Shipping
Co. Ltd. and Amethyst Shipping Co. S.A. Ltd. and $7.0 million with respect to
the Millenium Leader, the Millenium Hawk, the Millenium Eagle, the Millenium
Osprey, the Millenium Falcon and the Millenium Condor, (iii) cash from Millenium
Investment, Inc. equal to $6.1 million and (iv) cash from Management and its
affiliates equal to $1.0 million. MMI has contributed the foregoing vessel and
cash equity to Millenium. MMI is the sole shareholder of Millenium (the "Equity
Contribution").
Accounting for the Transactions
Under United States generally accepted accounting principles, the
assets and liabilities contributed by the principal stockholder will be recorded
at historical cost and the assets and liabilities contributed by the other
stockholders will be recorded at fair value. It is expected that Millenium
Investment, which contributed cash, will be the principal stockholder insofar as
it owns the largest number of shares of MMI.
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DESCRIPTION OF THE EXCHANGE NOTES
General
The Exchange Notes will be issued, and the Existing Notes were issued,
under an Indenture, dated as of July 15, 1998 (the "Indenture"), among
Millenium, the Subsidiary Guarantors and The First National Bank of Maryland, as
trustee (the "Trustee").
The following is a summary of certain provisions of the Indenture, the
Security Agreements, the Existing Notes and the Exchange Notes, a copy of which
Indenture, Security Agreements and the form of Exchange Note is available upon
request to Millenium at the address set forth under "Available Information." The
statements under this section relating to the Existing Notes, the Exchange
Notes, the Indenture and Security Agreements are summaries of the material
terms, but do not purport to be a complete description, of the Indenture, the
Existing Notes, the Exchange Notes or Security Agreements and is qualified in
its entirety by reference to, all the provisions of the Indenture, including the
definitions of certain terms therein and those terms made a part thereof by the
Trust Indenture Act of 1939, as amended, as well as the Security Agreements.
Capitalized terms used herein and not otherwise defined have the meanings set
forth in the section "--Certain Definitions."
The Exchange Notes will be issued only in fully registered form,
without coupons, in denominations of $1,000 and any integral multiple of $1,000.
No service charge shall be made for any registration of transfer or exchange of
Notes, but Millenium may require payment of a sum sufficient to cover any
transfer tax or other similar governmental charge payable in connection
therewith.
Exchange
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 Exchange
Notes applies equally to the Existing Notes and the Exchange Notes, and
following the exchanges, the Exchange Notes and the untendered Existing Notes,
if any, will be treated as one series for purposes of the Indenture.
Terms of the Exchange Notes
The Exchange Notes are senior secured obligations of Millenium, limited
to $100.0 million aggregate principal amount at maturity, and will mature on
July 15, 2005. Payment of the principal of, premium, if any, and interest on the
Exchange Notes will be irrevocably and unconditionally guaranteed by each of the
Subsidiary Guarantors. Cash interest will accrue and be paid at 12% per annum
from July 24,
1998
or from the most recent date to which interest has been paid or provided for,
payable semiannually to Holders of record at the close of business on the
January 1 or July 1 immediately preceding the interest payment date on January
15 and July 15 of each year, commencing
January 15,
1999. Millenium will pay interest on overdue principal at 1.0% per annum in
excess of such rate, and it will pay interest on overdue installments of
interest at such higher rate to the extent lawful.
Escrow of Proceeds; Special Mandatory Redemption
Millenium has entered into an escrow agreement (the "Escrow Agreement")
with The First National Bank of Maryland as Escrow Agent (the "Escrow Agent")
pursuant to which Millenium deposited on the Original Issue Date with the Escrow
Agent an amount, in cash or Treasury Securities (as defined in the Escrow
Agreement) equal to approximately $85.2 million, which represented amounts to be
used to purchase the Committed Vessels and the Additional Vessels and pay
related deposits, fees and expenses and make related upgrades and repairs (such
cash and Treasury Securities, together with the interest, dividends and
distributions thereof, "Escrowed Proceeds"). As of the date of this Prospectus,
approximately $45.1 million remains on deposit in the Escrow Account.
Escrowed Proceeds have been and will continue to be released to
Millenium from time to time by the Escrow Agent upon the satisfaction of the
conditions set forth in the Indenture and the Escrow Agreement, including the
receipt of a Release Certificate (as defined below), the recording of Mortgages
and other collateral documents (if applicable), the delivery of appropriate
legal opinions and the absence of any Default or Event of Default under the
Indenture at the time of such release.
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A "Release Certificate" shall be a written certificate of Millenium,
signed by two of its Officers, which:
(1) shall state that it is a Release Certificate;
(2) shall state that to the knowledge of the signers thereof,
no Default or Event of Default under the Indenture shall have occurred
and be continuing as of the date of such Release Certificate;
(3) shall specify the dollar amount which Millenium is thereby
seeking to have released from the Escrow Account (the "Requested
Amount"); and
(4) shall set forth the circumstances that justify the
release of the Requested Amount as described in one or more of the
following:
(a)(i) Millenium or a Restricted Subsidiary has
executed a sale and purchase contract (an "Acquisition
Contract") to acquire an Additional Vessel or Additional
Vessels, (ii) such Acquisition Contract has been signed by the
applicable seller, is in full force and effect as of the date
of the Release Certificate and the signers of the Release
Certificate are not aware of any default that could reasonably
lead to the termination of such Acquisition Contract
thereunder by Millenium, such Restricted Subsidiary or the
applicable seller, (iii) the vessel(s) to be acquired pursuant
to such Acquisition Contract conform(s) in all material
respects with the description in the Prospectus of the types
of Vessels which are to be acquired with Escrowed Proceeds,
(iv) the Requested Amount does not exceed the amount required
to pay a deposit to the applicable seller, or to pay other
pre-delivery expenses, or the cost of appraisals for such
Additional Vessel or Additional Vessels, in each case called
for by the Acquisition Contract, and (v) after giving effect
to the release of the Requested Amount and the application
thereof in accordance with such Release Certificate, the Loan
to Value Ratio would not exceed 0.85 to 1.00 as of the date of
the execution of the Acquisition Contract;
(b)(i) Millenium or a Restricted Subsidiary proposes
to consummate simultaneously with the release of the Requested
Amount, the acquisition of one or more Committed Vessels or
Additional Vessels, pursuant to an Acquisition Contract, (ii)
the vessel(s) to be acquired pursuant to such Acquisition
Contract is either a Committed Vessel or conform(s) in all
material respects with the description in the Prospectus of
the types of Vessels which are to be acquired with Escrowed
Proceeds and in the case of a Committed Vessel, the conditions
in the related Acquisition Contract have been satisfied; (iii)
the Requested Amount does not exceed the sum of the balance of
the consideration payable to the applicable seller pursuant to
the Acquisition Contract plus the related transaction costs
(including the cost of appraisals for such Committed Vessel(s)
or Additional Vessel(s)) incurred by Millenium or the
Restricted Subsidiary, including the reasonable fees and
expenses of counsel and the costs of the registration of title
and the recording of the mortgage with respect thereto, and
(iv) after giving effect to the release of the Requested
Amount and the application thereof in accordance with such
Release Certificate, the Loan to Value Ratio would not exceed
0.85 to 1.00 as of the date of the execution of the
Acquisition Contract; provided, however, that no more than
$53.8 million may be released to effect the purchase of the
Committed Vessels.
(c)(i) in connection with, or within six months
after, the acquisition of a Committed Vessel or an Additional
Vessel by Millenium or a Restricted Subsidiary with proceeds
of the sale of the Existing Notes, including Escrowed
Proceeds, Millenium or the Restricted Subsidiary has
undertaken or is undertaking necessary maintenance, repair
(including structural modifications) or drydocking expenses,
including survey expenses, relating to such Committed Vessel
or such Additional Vessel, and (ii) the Requested Amount does
not exceed the amount of such expenses;
Except for the purposes described in paragraphs (a)-(c) of the
definition of "Release Certificate" above, and except to pay the Special
Mandatory Redemption Price (as defined below) in connection with a Special
Mandatory Redemption (as defined below and except as otherwise provided in the
next paragraph), Millenium will not be entitled to withdraw Escrowed Proceeds
for any purpose.
To the extent that, after the close of business on July 31, 1999, the
amount of cash and the fair market value (as determined by the Board of
Directors in good faith) of securities on deposit in escrow with the Escrow
Agent exceeds $5.0 million, Millenium will be obligated to use all such
remaining Escrowed Proceeds to redeem (the "Special Mandatory Redemption") as
much principal amount of Exchange Notes, or untendered Existing Notes, if any,
as can be redeemed with such Escrowed Proceeds at a redemption price equal to
the sum of 101% of the Accreted Value of such Exchange Notes, or untendered
Existing Notes, if any, and the accrued and unpaid interest thereon to the
Special Mandatory Redemption Date (as defined below) (subject to the right of
Holders of record on the relevant record date to receive interest due
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on the relevant interest payment date) (such redemption price, the "Special
Mandatory Redemption Price"). For purposes hereof, "Special Mandatory Redemption
Date" means August 31, 1999. To the extent that, after the close of business on
July 31, 1999, the amount of cash and the fair market value (as determined by
the Board of Directors in good faith) of securities on deposit in escrow with
the Escrow Agent is equal to or less than $5.0 million, such cash and securities
will be promptly released to Millenium, free of any lien of the Indenture, the
Escrow Agreement or the Security Agreements, and the Escrow Agreement will be
terminated.
If the Escrow Agent receives a notice of Special Mandatory Redemption
pursuant to the terms of the Indenture and the Exchange Notes, the Escrow Agent
will liquidate all Escrowed Proceeds then held by it not later than the third
Business Day prior to the Special Mandatory Redemption Date and release all the
Escrowed Proceeds to the Paying Agent for the Exchange Notes for payment to
Holders on the Special Mandatory Redemption Date and, to the extent of any
excess, thereafter for payment to Millenium free of any lien of the Indenture or
the Escrow Agreement, whereupon the Escrow Agreement or the Security Agreements
will terminate.
Certain provisions relating to Millenium's obligations to redeem
Exchange Notes and the untendered Existing Notes, if any, in a Special Mandatory
Redemption may not be waived or modified without the written consent of the
Holders of all the Notes.
Additional Amounts
All payments made on behalf of Millenium or the Subsidiary Guarantors
under or with respect to the Exchange Notes or the Subsidiary Guarantees, as
applicable, must be made free and clear of and without withholding or deduction
for, or on account of, any present or future tax, duty, levy, impost, assessment
or other governmental charge (including penalties, interest and other
liabilities related thereto) imposed or levied by or on behalf of the Cayman
Islands, Liberia, Cyprus or any jurisdiction in which Millenium or any of the
Subsidiary Guarantors is incorporated or resident for tax purposes or by any
authority or agency therein or thereof having power to tax (or the jurisdiction
of incorporation of any successor of Millenium or the Subsidiary Guarantors)
(hereinafter "Taxes"), unless Millenium or the Subsidiary Guarantors, as
applicable, are required to withhold or deduct Taxes by law or by the
interpretation or administration thereof by the relevant government authority or
agency. If Millenium or the Subsidiary Guarantors (or any successor of either),
as applicable, are so required to withhold or deduct any amount for or on
account of Taxes from any payment made under or with respect to the Exchange
Notes or the Subsidiary Guarantees, as applicable, Millenium or the Subsidiary
Guarantors (or any successor of either), as applicable, will be required to pay
such additional amounts ("Additional Amounts") as may be necessary so that the
net amount received by each Holder (including Additional Amounts) after such
withholding or deduction will not be less than the amount the Holder would have
received if such Taxes had not been withheld or deducted; provided, however,
that no Additional Amounts will be payable with respect to payments made to a
Holder (an "Excluded Holder") in respect of a beneficial owner
(i) which is subject to such Taxes by reason of its being
connected with the Cayman Islands, Liberia, Cyprus or any jurisdiction
in which Millenium or any of the Subsidiary Guarantors is incorporated
or resident for tax purposes other than by a connection relating to or
otherwise arising from the mere holding of Exchange Notes or the
receipt of payments thereunder (or under the related Subsidiary
Guarantee),
(ii) which presents any Exchange Note for payment of principal
more than 60 days after the later of (x) the date on which payment
first became due and (y) if the full amount payable has not been
received by the Trustee on or prior to such due date, the date on
which, the full amount payable having been so received, notice to that
effect shall have been given to the Holders by the Trustee, except to
the extent that the Holder would have been entitled to such Additional
Amounts on presenting such Exchange Note for payment on any day within
such 60-day period, including the last day of the applicable 60-day
period,
(iii) which failed duly and timely to comply with a
reasonable, timely request of Millenium to provide information,
documents or other evidence concerning the Holder's nationality,
residence, entitlement to treaty benefits, identity or connection with
the Cayman Islands, Liberia, Cyprus or any jurisdiction in which
Millenium or any of the Subsidiary Guarantors is incorporated or
resident for tax purposes or any political subdivision or authority
thereof, if and to the extent that due and timely compliance with such
request would have reduced or eliminated any Taxes as to which
Additional Amounts would have otherwise been payable to such Holder but
for this clause (iii),
(iv) on account of any estate, inheritance, gift, sale,
transfer, personal property or other similar Tax,
(v) which is a fiduciary, a partnership or not the beneficial
owner of any payment on an Exchange Note or the Subsidiary Guarantees,
if and to the extent that any beneficiary or settlor of such fiduciary,
any partner in such partnership or the beneficial
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<PAGE>
owner of such payment (as the case may be) would not have been entitled
to receive Additional Amounts with respect to such payment if such
beneficiary, settlor, partner or beneficial owner had been the Holder
of such Exchange Note or
(vi) any combination of the foregoing numbered clauses of this
proviso.
Millenium or the Subsidiary Guarantors (or any successor of either), as
applicable, will also make such withholding or deduction and remit the full
amount deducted or withheld to the relevant authority as and when required in
accordance with applicable law. Millenium or the Subsidiary Guarantors (or any
successor of either), as applicable, will furnish to the Trustee, within 30 days
after the date the payment of any Taxes is due pursuant to applicable law,
certified copies of tax receipts evidencing such payment by Millenium or the
Subsidiary Guarantors (or any successor of either), as applicable, in such form
as provided in the normal course by the taxing authority imposing such Taxes and
in such form as is legally sufficient to obtain foreign tax credits for United
States Federal income tax purposes. The Trustee shall make such evidence
available to the Holders upon request. Millenium or the Subsidiary Guarantors
(or any successor of either), as applicable, will upon written request of each
Holder (other than an Excluded Holder), reimburse each such Holder for the
amount of (i) any Taxes so levied or imposed and paid by such Holder as a result
of payments made under or with respect to the Exchange Notes or the Subsidiary
Guarantees, as applicable, and (ii) any Taxes imposed with respect to any such
reimbursement under the immediately preceding clause (i), but excluding any such
Taxes on such Holder's net income, so that the net amount received by such
Holder after such reimbursement will not be less than the net amount the Holder
would have received if Taxes (other than such Taxes on such Holder's net income)
on such reimbursement had not been imposed.
Whenever in the Indenture there is mentioned, in any context, (a) the
payment of principal, (b) purchase prices in connection with a purchase of
Exchange Notes, (c) interest or (d) any other amount payable on or with respect
to any of the Exchange Notes, or any payment pursuant to the Subsidiary
Guarantees, such mention shall be deemed to include mention of the payment of
Additional Amounts provided for in this section to the extent that, in such
context, Additional Amounts are, were or would be payable in respect thereof.
The foregoing obligations shall survive any termination, defeasance or
discharge of the Indenture.
Millenium or the Subsidiary Guarantors (or any successor of either)
will pay any present or future stamp, court or documentary taxes or any other
excise or property taxes, charges or similar levies that arise in any
jurisdiction from the execution, delivery, enforcement or registration of the
Exchange Notes or the Subsidiary Guarantees or any other document or instrument
in relation thereto, or the receipt of any payments with respect to the Exchange
Notes or the Subsidiary Guarantees, excluding such taxes, charges or similar
levies imposed by any jurisdiction outside of the Cayman Islands, Liberia,
Cyprus or any jurisdiction in which Millenium or any of the Subsidiary
Guarantors is incorporated or resident for tax purposes, the jurisdiction of
incorporation of any successor of Millenium or any jurisdiction in which a
paying agent is located, and has agreed to indemnify the Holders for any such
taxes paid by such Holders.
For a discussion of the exemption from withholding taxes of the Cayman
Islands, Liberia, Cyprus or any jurisdiction in which Millenium or any of the
Subsidiary Guarantors is incorporated or resident for tax purposes applicable to
payments under or with respect to the Exchange Notes, see "Certain Foreign Tax
Considerations."
Redemptions
Redemption upon Sale or Loss of a Mortgaged Vessel. If either
(1) a Mortgaged Vessel or the Capital Stock of a Subsidiary
Guarantor is sold in compliance with the terms of the Indenture (the
Mortgaged Vessel so sold or owned by the Subsidiary Guarantor whose
Capital Stock is so sold being the "Sold Mortgaged Vessel"), or
(2) an Event of Loss occurs at any time with respect to a
Mortgaged Vessel (the Mortgaged Vessel suffering such Event of Loss
being the "Lost Mortgaged Vessel"),
then within 60 days after the date title of the Mortgaged Vessel passes to the
buyer (such date being the "Sale Date"), in the case of a sale, or within 60
days after the date such Event of Loss was deemed to have occurred (the "Loss
Date"), Millenium shall give written notice (such date of notice or such 60th
day, whichever is earlier, being the "Notification Date") to the Trustee whether
it elects to redeem Exchange Notes in connection with such sale or Event of
Loss; provided, however, that if a Default shall have occurred and be continuing
on the Notification Date, Millenium will be required to redeem Exchange Notes in
accordance with the provisions of the Indenture described in the following
paragraphs.
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Upon the receipt by Millenium of the Net Available Cash attributable to
a Sold Mortgaged Vessel or of the Net Event of Loss Proceeds attributable to a
Lost Mortgaged Vessel, such amounts shall be deposited with the Trustee in
accordance with the Indenture and shall constitute Collateral pending
application as hereinafter described, but shall not constitute Escrowed
Proceeds.
If Millenium elects to (or is required to) redeem Exchange Notes, the
redemption date will occur not later than 60 days after the date (the "Proceeds
Receipt Date") of the receipt of such Net Available Cash or Net Event of Loss
Proceeds, as the case may be.
In such event, Millenium shall apply Net Available Cash or Net Event of
Loss Proceeds, as the case may be, in an amount (the "Redemption Amount") at
least equal to the Vessel Percentage applicable to the Sold Mortgaged Vessel as
of the Sale Date or the Lost Mortgaged Vessel as of the Loss Date, as the case
may be, multiplied by the Accreted Value of the Exchange Notes and untendered
Existing Notes, if any, outstanding on the Sale Date or the Loss Date, as the
case may be (provided, however, that if a Default shall have occurred and be
continuing on the Notification Date, the amount required to be applied by
Millenium to redeem Exchange Notes and untendered Existing Notes, if any, shall
equal the greater of such Redemption Amount and such Net Available Cash or Net
Event of Loss Proceeds, as the case may be; provided further, however, that if
the Loan To Value Ratio (calculated to include in the numerator thereof the then
outstanding amount of Indebtedness under any working capital facility to the
extent such Indebtedness is secured by a prior Lien on the Mortgaged Vessels)
would be less than 0.8 to 1.0 after giving effect to the disposition of such
Sold Mortgaged Vessel and the redemption of Exchange Notes and untendered
Existing Notes, if any, using the lesser of the Redemption Amount and the Net
Available Cash, then the amount required to be applied by Millenium to redeem
Exchange Notes and untendered Existing Notes, if any, shall equal the lesser of
the Redemption Amount and such Net Available Cash), to redeem as much principal
amount of Exchange Notes and untendered Existing Notes, if any, as can be
redeemed at the Sale Redemption Price (as defined below) or the Loss Redemption
Price (as defined below), as the case may be.
The "Sale Redemption Price" means, per $1,000 principal amount at
maturity of Exchange Note, the sum of (a) the greater of (i) 100% of the
Accreted Value and (ii)(x) if such redemption date is on or after July 15, 2003,
the redemption price then applicable as described under "--Other Redemption," or
(y) if such redemption date is prior to July 15, 2003, the sum of (1) the
remaining scheduled payments of interest on such Exchange Note through July 15,
2003 and (2) the redemption price of such Exchange Note on July 15, 2003 as
described under "--Other Redemption," in each case as discounted to their
present values to the redemption date on a semiannual basis (assuming a 360-day
year consisting of 12 30-day months) at a rate equal to the Treasury Rate plus
50 basis points, and (b) accrued and unpaid interest on such Exchange Note to
the redemption date.
The "Loss Redemption Price" means, per $1,000 principal amount at
maturity of Exchange Note, the sum of (a) 100% of the Accreted Value and (b)
accrued and unpaid interest on such Exchange Note to the redemption date.
On the redemption date attributable to a Sold Mortgaged Vessel or a
Lost Mortgaged Vessel, the Trustee will apply the applicable Net Available Cash
or the applicable Net Event of Loss Proceeds (together with any funds Millenium
delivers to the Trustee to the extent necessary to pay the Sale Redemption Price
or the Loss Redemption Price for the Exchange Notes to be redeemed) to pay the
Sale Redemption Price or the Loss Redemption Price to the Holders of Exchange
Notes and untendered Existing Notes, if any, being redeemed. To the extent that
after the Sale Redemption Price or the Loss Redemption Price has been paid with
respect to all Exchange Notes and untendered Existing Notes, if any, to be
redeemed in respect of such Sold Mortgaged Vessel or Lost Mortgaged Vessel, as
the case may be, any related Net Available Cash or Net Event of Loss Proceeds
remains on deposit with the Trustee, such Net Available Cash or Net Event of
Loss Proceeds will be released to Millenium, free of the Lien of the Indenture
and the Mortgages, and such funds may be used by Millenium for any purpose not
otherwise prohibited by the Indenture, including the making of Restricted
Payments.
Redemption Upon Public Equity Offering. At any time and from time to
time prior to July 15, 2001, Millenium may redeem in the aggregate up to 35% of
the principal amount at maturity of the Exchange Notes and untendered Existing
Notes, if any, with the proceeds of one or more Public Equity Offerings
following which there exists a Public Market, at a redemption price (expressed
as a percentage of Accreted Value) of 112% plus accrued and unpaid interest to
the redemption date (subject to the right of Holders on the relevant record date
to receive interest due on the relevant interest payment date); provided,
however, that at least $65.0 million aggregate principal amount at maturity of
the Exchange Notes and untendered Existing Notes, if any, must remain
outstanding and be held, directly or indirectly, by Persons other than Millenium
and its Affiliates, after each such redemption and that any such redemption
occurs within 60 days following the closing of any such Public Equity Offering.
Other Redemption. On or after July 15, 2003, the Exchange Notes will be
redeemable, at Millenium's option, in whole or in part, at any time or from time
to time, upon not less than 30 nor more than 60 days' prior notice mailed by
first-class mail to each Holder's registered address, at the following
redemption prices (expressed in percentages of Accreted Value), plus accrued and
unpaid interest to the
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redemption date (subject to the right of Holders on the relevant record date to
receive interest due on the relevant interest payment date), if redeemed during
the 12-month period commencing on July 15 of the years set forth below:
Period Redemption Price
------ ----------------
2003 106%
2004 100
Selection of Exchange Notes for Redemption. In the case of any partial
redemption, selection of the Exchange Notes for redemption will be made by the
Trustee on a pro rata basis, by lot or by such other method as the Trustee in
its sole discretion shall deem to be fair and appropriate, although no Note of
$1,000 in principal amount at maturity or less shall be redeemed in part. If any
Exchange Note is to be redeemed in part only, the notice of redemption relating
to such Note shall state the portion of the principal amount at maturity thereof
to be redeemed. A new Exchange Note in principal amount at maturity equal to the
unredeemed portion thereof will be issued in the name of the Holder thereof upon
cancellation of the original Exchange Note.
Redemption for Changes in Withholding Taxes. The Exchange Notes may be
redeemed, at the option of Millenium, at any time as a whole but not in part, on
not less than 30 nor more than 60 days' written notice to each Holder, at 100%
of the Accreted Value thereof, plus accrued and unpaid interest to the date of
redemption (subject to the right of Holders of record on the relevant record
date to receive interest due on the relevant interest payment date), in the
event Millenium or the Subsidiary Guarantors, as the case may be, has become or
would become obligated for reasons outside of its control, and after taking
reasonable measures to avoid such obligation, to pay, on the next date on which
any amount would be payable with respect to the Exchange Notes, any Additional
Amounts on the Exchange Notes or Subsidiary Guarantees pursuant to the terms and
conditions thereof as a result of a change in or an amendment to the laws
(including any regulations or rulings promulgated thereunder) of the Cayman
Islands, Liberia or Cyprus (or any relevant jurisdiction, political subdivision
or taxing authority thereof or therein), or any change in or amendment to any
official position regarding the application or interpretation of such laws,
regulations or rulings (including a holding by a court of competent
jurisdiction), which change or amendment is announced or becomes effective on or
after the date of the Original Closing Date; provided, however, that (a) no such
notice of redemption shall be given earlier than 60 days prior to the earliest
date on which Millenium or the Subsidiary Guarantors, as the case may be, would
be obligated to pay such Additional Amounts if a payment in respect of the
Exchange Notes or the Subsidiary Guaranty were then due, and (b) at the time any
such redemption notice is given, such obligation to pay Additional Amounts must
remain in effect. Prior to any redemption of the Exchange Notes, Millenium shall
deliver to the Trustee or any paying agent an Officer's Certificate stating that
Millenium is entitled to effect such redemption and setting forth a statement of
facts showing that the conditions precedent to the right to effect such
redemption have occurred.
Tender of Qualified Substitute Vessel
In the event that Millenium elects, with respect to a Sold Mortgaged
Vessel or a Lost Mortgaged Vessel, not to redeem Exchange Notes as described
under "--Redemptions--Redemption Upon Sale or Loss of Mortgaged Vessel," then
within seven months after the Proceeds Receipt Date, Millenium or a Restricted
Subsidiary will be required to tender to the Trustee (or to the Collateral
Agent) as part of the Collateral a Qualified Substitute Vessel; provided,
however, that if Net Available Cash attributable to a Sold Mortgaged Vessel or
Net Event of Loss Proceeds attributable to a Lost Mortgaged Vessel is less than
$5 million, Millenium or such Restricted Subsidiary may defer the tender of a
Qualified Substitute Vessel until the date (the "Extended Tender Date") that is
three months after the aggregate of all such amounts not applied to tender
Qualified Substitute Vessels equals or exceeds $5 million, at which time
Millenium or such Restricted Subsidiary shall use the unused Net Available Cash
or Net Event of Loss Proceeds to tender a Qualified Substitute Vessel on or
before the Extended Tender Date; and provided, further, that if, at any time
prior to the date on which Millenium or a Restricted Subsidiary enters into a
binding agreement with respect to the purchase of a Qualified Substitute Vessel,
a Default shall occur, Millenium shall thereupon instead become obligated to
redeem Exchange Notes in accordance with the provisions described under
"--Redemptions--Redemption Upon Sale or Loss of Mortgaged Vessel." Net Available
Cash or Net Event of Loss Proceeds, as the case may be, attributable to such
Sold Mortgaged Vessel or such Lost Mortgaged Vessel, as the case may be, will be
made available to Millenium or any Restricted Subsidiary pursuant to the terms,
and subject to the conditions, of the Indenture and the Security Agreements to
make any deposits in respect of, or to consummate the purchase of, the Qualified
Substitute Vessel, and to pay related fees and expenses and make upgrades and
repairs thereon. To the extent that any such Net Available Cash or Net Event of
Loss Proceeds remain on deposit with the Trustee after the tender of the
Qualified Substitute Vessel, such funds will be released to Millenium, free of
the Lien of the Indenture and the Security Agreements, and such funds may be
used by Millenium for any purpose not otherwise prohibited by the Indenture,
including the making of Restricted Payments.
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On the date on which a Qualified Substitute Vessel is tendered to the
Trustee (or to the Collateral Agent) as part of the Collateral (a "Vessel Tender
Date") following a sale of or an Event of Loss with respect to, a Mortgaged
Vessel, Millenium shall deliver to the Trustee (or to the Collateral Agent) , or
shall cause the owner of such Qualified Substitute Vessel, which shall be a
Wholly Owned Subsidiary of Millenium (the "Tendered Vessel Owner"), to deliver
to the Trustee (or to the Collateral Agent) , as the case may be, the documents
and certificates required by the Indenture, including, among other things:
(i) a Guarantee Agreement substantially in the form required
by the Indenture;
(ii) a Mortgage (or a preliminary registration thereof,
pending delivery of a copy of the Mortgage) with respect to such
Qualified Substitute Vessel dated the Vessel Tender Date in favor of
the Trustee (or the Collateral Agent) and substantially in the form
required by the Indenture (or the Collateral Agency Agreement) (such
Mortgage having been duly received for recording in the appropriate
registry office), together with appropriate legal opinions with respect
to such Mortgage; and
(iii) written appraisals by two independent Appraisers of the
value of such Qualified Substitute Vessel as of a date within
60 days prior to the Vessel Tender Date.
Excess Proceeds Offers
If, as of the first day of any calendar month, the aggregate amount of
Excess Proceeds not theretofore subject to an Excess Proceeds Offer (as defined
below), totals at least $10.0 million, Millenium must, not later than the
fifteenth Business Day of such month, make an offer (an "Excess Proceeds Offer")
to purchase from the Holders pursuant to and subject to the conditions contained
in the Indenture on a pro rata basis an aggregate Accreted Value of Exchange
Notes and untendered Existing Notes, if any, equal to the Excess Proceeds
available on such first day of the month, at a purchase price equal to 100% of
their Accreted Value, plus, in each case, accrued and unpaid interest (if any)
to the date of purchase (an "Excess Proceeds Payment").
Millenium shall comply, to the extent applicable, with the requirements
of Section 14(e) of the Exchange Act and any other securities laws or
regulations in connection with the repurchase of Exchange Notes pursuant to an
Excess Proceeds Offer. To the extent that the provisions of any securities laws
or regulations conflict with provisions in the Indenture governing Excess
Proceeds Offers, Millenium shall comply with the applicable securities laws and
regulations and shall not be deemed to have breached its obligations described
hereunder by virtue thereof.
Guarantees
Millenium's obligations for payment of the principal of, and premium,
if any, and interest on the Exchange Notes, the Subsidiary Guarantors'
obligations for payment of all sums of money payable under the Security
Agreements and performance of all other provisions contained in the Indenture
and the Security Agreements (collectively, the "Obligations") will be
irrevocably and unconditionally guaranteed on a senior secured basis by each of
the Subsidiary Guarantors. Each Subsidiary Guarantee will be limited in amount
to an amount not to exceed the maximum amount that can be guaranteed by the
applicable Subsidiary Guarantor without rendering the applicable Subsidiary
Guarantee voidable under applicable law relating to fraudulent conveyance or
fraudulent transfer or similar laws affecting the rights of creditors generally.
If a Subsidiary Guarantee were to be rendered voidable, it could be subordinated
by a court to all other indebtedness (including guarantees and other contingent
liabilities) of the applicable Subsidiary Guarantor, and, depending on the
amount of such indebtedness, a Subsidiary Guarantor's liability on its
Subsidiary Guarantee could be reduced to zero. See "Risk Factors--Certain
Creditors' Rights; Fraudulent Conveyance Statutes."
Upon the sale or other disposition of all the Capital Stock of a
Subsidiary Guarantor or the sale or disposition of all or substantially all the
assets of a Subsidiary Guarantor (in each case other than to Millenium or an
Affiliate of Millenium) in compliance with the terms of the Indenture and the
Security Agreements, such Subsidiary Guarantor will be released and relieved
from all its obligations under its
Subsidiary Guarantee.
Collateral
In order to secure the Obligations, Millenium will pledge in favor of
the Trustee all the issued and outstanding Capital Stock of each Subsidiary
Guarantor owned, directly or indirectly by Millenium, as well as its interest in
the Escrowed Proceeds and any other cash of Millenium that is required by the
terms of the Indenture to be deposited with the Trustee.
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Each Subsidiary Guarantor will pledge and assign substantially all its
assets to the Collateral Agent or the Trustee to secure, among other things, the
Exchange Notes, its Subsidiary Guarantee of the Exchange Notes and the other
Obligations. The assets to be so pledged and assigned by each Subsidiary
Guarantor shall include, subject to Permitted Liens, all its right, title and
interest in and to (i) its Mortgaged Vessel (or any Qualified Substitute
Vessel), pursuant to a Mortgage issued by such Subsidiary Guarantor in favor of
the Collateral Agent; (ii) the Charters, if any, relating to its Mortgaged
Vessel, including the collateral right to receive all moneys due and to become
due under such Charters or in respect of such Mortgaged Vessel and all claims
for damages arising under such Charters or relating to such Mortgaged Vessel;
(iii) the freights and hires relating to its Mortgaged Vessel; (iv) all its
policies and contracts of insurance taken out from time to time in respect of
its Mortgaged Vessel pursuant to the Insurance Assignment between such
Subsidiary Guarantor and the Collateral Agent; and (v) all proceeds of the
foregoing (the foregoing (i) through (iv) collectively, the "Mortgaged
Collateral"). Obligations on the Exchange Notes will be satisfied from the
Mortgaged Collateral, if and to the extent that there are amounts remaining
after the satisfaction of Indebtedness Incurred pursuant to paragraph (b)(1) of
the covenant described under "--Limitation on Indebtedness" and paragraph (6) of
the covenant described under "--Limitation on Indebtedness and Preferred Stock
of Restricted Subsidiaries." See "The Mortgaged Vessels."
In addition, the Collateral will consist of (i) Escrowed Proceeds, (ii)
Net Event of Loss Proceeds, (iii) Net Available Cash from the sale of a
Mortgaged Vessel and (iv) any cash deposited from time to time by Millenium with
the Trustee. Any cash on deposit from time to time with the Trustee that
constitutes Net Event of Loss Proceeds and Net Available Cash from the sale of a
Mortgaged Vessel will be released, subject to the terms and conditions of the
Indenture, as described under "--Redemptions--Redemption Upon Sale or Loss of a
Mortgaged Vessel" and "--Tender of Qualified Substitute Vessel."
Upon performance and payment in full of all the Obligations, all such
pledges and assignments in favor of the Trustee shall terminate.
At the closing of the offering of the Existing Notes, Millenium
delivered appraisals conducted in February 1998, March 1998 and June 1998 by
independent Appraisers of the values of the Existing Vessels and the Committed
Vessels, which appraisals showed that the average of such Appraisers' aggregate
appraised values of such Vessels, as of their respective dates was $83.2
million, resulting in ratios of the initial aggregate Accreted Value of Exchange
Notes outstanding (less the amount of Escrowed Proceeds consisting of cash or
Temporary Cash Investments) to the aggregate appraised value of the Mortgaged
Vessels of approximately .78 to 1.
Notwithstanding the foregoing, so long as no Event of Default shall
have occurred and be continuing, Millenium or any Subsidiary Guarantor may,
without any release or consent by the Collateral Agent or the Trustee, conduct
ordinary course activities in respect of the Collateral, in limited dollar
amounts, upon satisfaction of certain conditions. For example, among other
things, subject to such dollar limitations and conditions, Millenium or any
Subsidiary Guarantor would be permitted to sell or otherwise dispose of any
machinery, equipment, furniture, tools, materials or supplies or other similar
property subject to the Lien of the Security Agreements, which may have become
worn out or obsolete; grant rights-of-way and easements over or in respect of
property; abandon, terminate, cancel, release or make alterations in or
substitutions of any leases, contracts or rights-of-way subject to the Lien of
any of the Security Agreements; surrender or modify any franchise, permit or
license subject to the Lien of any of the Security Agreements which it may own
or under which it may be operating; alter, repair, replace, change the location
or position of and add to its offices, machinery, systems, equipment, fixtures
and appurtenances; demolish, dismantle, tear down or scrap any Collateral or
abandon any thereof other than land or interests in land (other than leases) and
other than the Mortgaged Vessels; and grant leases in respect of real property
under certain circumstances.
Ranking
The Exchange Notes will be senior secured obligations of Millenium,
will rank pari passu in right of payment with all existing and future senior
indebtedness of Millenium and will be senior in right of payments to all future
subordinated indebtedness of Millenium; provided, however, Indebtedness Incurred
under the provision described in paragraph (b)(1) of the covenant described
under "--Limitation on Indebtedness" and in paragraph (6) of the covenant
described under "--Limitation on Indebtedness and Preferred Stock of Restricted
Subsidiaries" will be secured by a Lien on the Mortgaged Vessels that will have
priority over the Lien in favor of the holders of the Exchange Notes. Millenium
has obtained a working capital facility in the maximum committed amount of up to
$7.0 million. Millenium's obligations thereunder are guaranteed by the
Subsidiary Guarantors and are secured by a lien on the Mortgaged Vessels that is
prior to the lien in favor of the Holders of the Exchange Notes. Certain
additional Indebtedness, including Indebtedness Incurred upon the satisfaction
of a financial test, may be Incurred by Millenium. As of the date of this
Prospectus, Millenium has no senior indebtedness outstanding other than the
Existing Notes.
With respect to each Subsidiary Guarantor and subject to admiralty law
in each relevant jurisdiction, claims of Holders will rank pari passu with
claims of the creditors of such Subsidiary Guarantor, but will rank ahead of
such claims (other than claims represented by Permitted Liens) to the extent of
the value, priority and validity of such Subsidiary Guarantor's Mortgage of its
respective Mortgaged Vessel. Although
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the Holders of the Exchange Notes should be entitled to payment of their
indebtedness out of the proceeds of their Collateral prior to the holders of any
general unsecured obligations of the Subsidiary Guarantors or Millenium, in the
event that the value of any Subsidiary Guarantor's Collateral is insufficient to
discharge each Subsidiary Guarantor's obligations under its Subsidiary
Guarantee, claims of the Holders against such Subsidiary Guarantor will rank
pari passu with the claims of creditors (including trade creditors) of such
Subsidiary Guarantor and claims of the Holders against Millenium will be
effectively subordinated to the claims of creditors (including trade creditors)
and holders of Preferred Stock of subsidiaries other than the Subsidiary
Guarantors. Although the Indenture limits the incurrence of Indebtedness and
Preferred Stock of Millenium's Subsidiaries, such limitation is subject to a
number of significant qualifications. Moreover, the Indenture does not impose
any limitation on the incurrence by such Subsidiaries of liabilities that are
not considered Indebtedness or Preferred Stock under the Indenture.
Registration Rights
In connection with the issuance of the Existing Notes, the Company
entered into a Registration Rights Agreement with the Initial Purchasers
pursuant to which the Company agreed, for the benefit of the Holders of the
Existing Notes, at the Company's expense, to use its 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 Company has agreed to commence the
Exchange Offer and to keep the Exchange Offer open for 30 days with the right to
extend the Exchange Offer up to a maximum
of 60 days.
If, (i) because of any change in law or applicable interpretations
thereof by the Commission's staff, the Company is not permitted to effect the
Exchange Offer as contemplated by the Registration Rights Agreement, or (ii) the
Exchange Offer is not consummated within 180 days of the date of the
Registration Rights Agreement, or (iii) any Initial Purchaser so requests with
respect to Existing Notes held by it following consummation of the Exchange
Offer or (iv) any Holder of Exchange Notes (other than an Exchanging Dealer) is
not eligible to participate in the Exchange Offer, or any Holder (other than an
Exchanging Dealer) participates in the Exchange Offer does not receive freely
tradable Exchange Notes on the date of such exchange, the Company will, at its
cost, (a) as promptly as practicable (but in no event more than 30 days after
such filing obligation arises or a request is made by the Initial Purchasers),
file a shelf registration statement (a "Shelf Registration Statement") with the
Commission relating to the offer and sale of the Exchange Notes or the Existing
Notes, (b) cause such Shelf Registration Statement to be declared continuously
effective under the Securities Act and (c) use its respective best efforts to
keep such Shelf Registration Statement continuously effective under the
Securities Act for a period of two years or such shorter period that will
terminate when all the Exchange Notes or Existing Notes, as applicable, covered
by such Shelf Registration Statement have been sold or are no longer restricted
securities as defined in Rule 144 of the Securities Act. The Company will, in
the event of filing such a Shelf Registration Statement, provide to each holder
of the Exchange Notes one copy of such Shelf Registration Statement and any
post-effective amendment thereto In addition, the Company shall notify each
Holder when such Shelf Registration Statement for the Exchange Notes has been
filed with the Commission and when such Shelf Registration Statement or any
post-effective amendment thereto has become effective and take certain other
actions as are required to permit unrestricted resales of the Exchange Notes. A
holder of Exchange Notes that sells such Exchange Notes pursuant to a Shelf
Registration Statement generally will be required to be named as a selling
security holder in the related prospectus and to deliver a prospectus to
purchasers, 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 Statement which are applicable to such a holder
(including certain indemnification and contribution rights and obligations). In
addition, such holder of Exchange Notes will be required to deliver certain
information to be used in connection with the Shelf Registration Statement in
order to have its Exchange Notes included thereunder.
If the Exchange Offer is not consummated by January 20, 1999, a
Registration Default will be deemed to have occurred and Additional Interest
will accrue on the Existing Notes from such date to the date the Exchange Offer
is consummated, at a rate of 0.50% of the principal amount thereof per annum,
which Additional Interest is payable semiannually in arrears on each Payment
Date. Interest on the Exchange Notes will accrue at a rate of 12 1/2 % per annum
to reflect the 0.50% of Additional Interest until such Registration Default has
been cured.
Upon consummation of the Exchange Offer, the Company generally will
have satisfied its 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.
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Change of Control
Upon the occurrence of any of the following events (each a "Change of
Control"), each Holder shall have the right to require Millenium to repurchase
such Holder's Exchange Notes at a purchase price in cash equal to 101% of the
Accreted Value thereof plus accrued and unpaid interest, if any, to the date of
purchase (subject to the right of holders of record on the relevant record date
to receive interest due on the relevant interest payment date):
(i) Prior to the earlier to occur of (A) the first public
offering of common stock of Parent or (B) the first public offering of
common stock of Millenium, the Permitted Holders cease to be the
"beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the
Exchange Act), directly or indirectly, of a majority in the aggregate
of the total voting power of the Voting Stock of Millenium, whether as
a result of issuance of securities of Parent or Millenium, any merger,
consolidation, liquidation or dissolution of Parent or Millenium, any
direct or indirect transfer of securities by Parent or otherwise (for
purposes of this clause (i) and clause (ii) below, the Permitted
Holders shall be deemed to beneficially own any Voting Stock of a
corporation (the "specified corporation") held by any other corporation
(the "parent corporation") so long as the Permitted Holders
beneficially own (as so defined), directly or indirectly, in the
aggregate a majority of the voting power of the Voting Stock of the
parent corporation);
(ii) any "person" (as such term is used in Sections 13(d) and
14(d) of the Exchange Act), other than a Permitted Holder, is or
becomes the beneficial owner (as defined in clause (i) above, except
that for purposes of this clause (ii) such person shall be deemed to
have "beneficial ownership" of all shares that any such person has the
right to acquire, whether such right is exercisable immediately or only
after the passage of time), directly or indirectly, of more than 35% of
the total voting power of the Voting Stock of Millenium; provided,
however, that the Permitted Holders beneficially own (as defined in
clause (i) above), directly or indirectly, in the aggregate a lesser
percentage of the total voting power of the Voting Stock of Millenium
than such other person and do not have the right or ability by voting
power, contract or otherwise to elect or designate for election a
majority of the Board of Directors (for the purposes of this clause
(ii), such other person shall be deemed to beneficially own any Voting
Stock of a specified corporation held by a parent corporation, if such
other person is the beneficial owner (as defined in this clause (ii)),
directly or indirectly, of more than 35% of the voting power of the
Voting Stock of such parent corporation and the Permitted Holders
beneficially own (as defined in clause (i) above), directly or
indirectly, in the aggregate a lesser percentage of the voting power of
the Voting Stock of such parent corporation and do not have the right
or ability by voting power, contract or otherwise to elect or designate
for election a majority of the board of directors of such parent
corporation);
(iii) during any period of two consecutive years, individuals
who at the beginning of such period constituted the Board of Directors
(together with any new directors whose election by such Board of
Directors or whose nomination for election by the shareholders of
Millenium was approved by a vote of 66 2/3% of the directors of
Millenium then still in office who were either directors at the
beginning of such period or whose election or nomination for election
was previously so approved) cease for any reason to constitute a
majority of the Board of Directors then in office; and
(iv) the merger or consolidation of Millenium with or into
another Person or the merger of another Person with or into Millenium,
or the sale of all or substantially all the assets of Millenium to
another Person (other than a Person that is controlled by the Permitted
Holders), and, in the case of any such merger or consolidation, the
securities of Millenium that are outstanding immediately prior to such
transaction and which represent 100% of the aggregate voting power of
the Voting Stock of Millenium are changed into or exchanged for cash,
securities or property, unless pursuant to such transaction such
securities are changed into or exchanged for, in addition to any other
consideration, securities of the surviving corporation that represent
immediately after such transaction, at least a majority of the
aggregate voting power of the Voting Stock of the surviving
corporation.
Within 30 days following any Change of Control, Millenium shall mail a
notice to each Holder with a copy to the Trustee stating: (1) that a Change of
Control has occurred and that such Holder has the right to require Millenium to
purchase such Holder's Exchange Notes at a purchase price in cash equal to 101%
of the Accreted Value thereof plus accrued and unpaid interest, if any, to the
date of purchase (subject to the right of holders of record on the relevant
record date to receive interest on the relevant interest payment date); (2) the
circumstances and relevant facts regarding such Change of Control (including
information with respect to pro forma historical income, cash flow and
capitalization after giving effect to such Change of Control); (3) the
repurchase date (which shall be no earlier than 30 days nor later than 60 days
from the date such notice is mailed); and (4) the instructions determined by
Millenium, consistent with the covenant described hereunder, that a Holder must
follow in order to have its Exchange Notes purchased.
Millenium shall comply, to the extent applicable, with the requirements
of Section 14(e) of the Exchange Act and any other securities laws or
regulations in connection with the repurchase of Exchange Notes pursuant to the
covenant described hereunder. To the extent that
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the provisions of any securities laws or regulations conflict with the
provisions of the covenant described hereunder, Millenium shall comply with the
applicable securities laws and regulations and shall not be deemed to have
breached its obligations under the covenant described
hereunder by virtue thereof.
The Change of Control purchase feature is solely a result of
negotiations between Millenium and the Initial Purchasers. Millenium has no
present intention to engage in a transaction involving a Change of Control,
although it is possible that Millenium could decide to do so in the future.
Subject to the limitations discussed below, Millenium could, in the future,
enter into certain transactions, including acquisitions, refinancings or other
recapitalizations, that would not constitute a Change of Control under the
Indenture, but that could increase the amount of indebtedness outstanding at
such time or otherwise affect Millenium's capital structure or credit ratings.
Restrictions on the ability of Millenium to incur additional Indebtedness are
contained in the covenants described under "--Certain Covenants" under
"--Limitation on Indebtedness," "--Limitation on Liens" and "--Limitation on
Sale/Leaseback Transactions." Such restrictions can only be waived with the
consent of the Holders of a majority in principal amount at maturity of the
Exchange Notes then outstanding. Except for the limitations contained in such
covenants, however, the Indenture will not contain any covenants or provisions
that may afford Holders of the Exchange Notes protection in the event of a
highly leveraged transaction.
Future indebtedness of Millenium may contain prohibitions on the
occurrence of certain events that would constitute a change of control
thereunder or require such indebtedness to be repurchased upon a change of
control thereunder. Moreover, the exercise by the Holders of their right to
require Millenium to repurchase the Exchange Notes upon a Change of Control
could cause a default under such indebtedness, even if the Change of Control
itself does not, due to a cross-default provision or the financial effect of
such repurchase on Millenium. Finally, Millenium's ability to pay cash to the
Holders of Exchange Notes following the occurrence of a Change of Control may
also be limited by Millenium's then existing financial resources. There can be
no assurance that sufficient funds will be available when necessary to make any
required repurchases. The provisions under the Indenture relative to Millenium's
obligation to make an offer to repurchase the Exchange Notes as a result of a
Change of Control may be waived or modified with the written consent of the
holders of a majority in principal amount of the Exchange Notes.
Certain Covenants
The Indenture will provide that the following covenants, among others,
will be applicable to Millenium and its Restricted Subsidiaries:
Limitation on Indebtedness. (a) Millenium shall not Incur, directly or
indirectly, any Indebtedness unless, on the date of such Incurrence and after
giving effect thereto, (i) the Consolidated Coverage Ratio exceeds 2.0 to 1.0
and (ii) the Loan to Value Ratio (as of the most recent Appraisal Date occurring
not more than 30 days prior to the date of such Incurrence) does not exceed 0.85
to 1.00.
(b) In addition, without regard to compliance with the foregoing
paragraph (a), Millenium may Incur any or all of the following
Indebtedness:
(1) Indebtedness Incurred pursuant to a working capital line
of credit in an amount which, when added together with the amount of
all other Indebtedness Incurred pursuant to this clause (1) and then
outstanding, does not exceed $7.0 million; provided, however, that the
proceeds of such working capital line of credit will be used solely for
working capital requirements, the payment of operating expenses and
interest on the Exchange Notes and untendered Existing Notes, if any;
(2) Indebtedness owed to and held by a Wholly Owned
Subsidiary; provided, however, that any subsequent issuance or transfer
of any Capital Stock which results in any such Wholly Owned Subsidiary
ceasing to be a Wholly Owned Subsidiary or any subsequent transfer of
such Indebtedness (other than to another Wholly Owned Subsidiary) shall
be deemed, in each case, to constitute the Incurrence of such
Indebtedness by Millenium;
(3) the Existing Notes and the Exchange Notes;
(4) Indebtedness outstanding on the Original Issue Date (other
than Indebtedness described in clause (1), (2) or (3) of this
covenant);
(5) Refinancing Indebtedness in respect of Indebtedness
Incurred pursuant to paragraph (a) or pursuant to clause (3), (4) or
this clause (5);
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(6) Hedging Obligations consisting of Interest Rate Agreements
or Currency Agreements directly related to Indebtedness permitted to be
Incurred by Millenium pursuant to the Indenture;
(7) Indebtedness Incurred pursuant to Section 5.04(b) or
5.04(c) of the Warrant Agreement;
(8) Guarantees of any Indebtedness of a Restricted Subsidiary
permitted by the covenant described under "--Limitation on Indebtedness
and Preferred Stock of Restricted Subsidiaries"; and
(9) Indebtedness in an aggregate amount which, together with
all other Indebtedness of Millenium outstanding on the date of such
Incurrence (other than Indebtedness permitted by clauses (1) through
(8) above or paragraph (a)) does not exceed $2.0 million.
(c) Notwithstanding the foregoing, Millenium shall not Incur any
Indebtedness pursuant to the foregoing paragraph (b) if the proceeds thereof are
used, directly or indirectly, to Refinance any Subordinated Obligations unless
such Indebtedness shall be subordinated to the Exchange Notes to at least the
same extent as such Subordinated Obligations.
(d) For purposes of determining compliance with the foregoing covenant,
(i) in the event that an item of Indebtedness meets the criteria of more than
one of the types of Indebtedness described above, Millenium, in its sole
discretion, will classify such item of Indebtedness and only be required to
include the amount and type of such Indebtedness in one of the above clauses and
(ii) an item of Indebtedness may be divided and classified in more than one of
the types of Indebtedness described above.
Limitation on Indebtedness and Preferred Stock of Restricted
Subsidiaries. Millenium shall not permit any Restricted Subsidiary to Incur,
directly or indirectly, any Indebtedness or Preferred Stock except that a
Restricted Subsidiary may Incur the following Indebtedness
or Preferred Stock:
(1) Indebtedness or Preferred Stock issued to and held by a
Wholly Owned Subsidiary or Millenium; provided, however, that any
subsequent issuance or transfer of any Capital Stock which results in
any such Wholly Owned Subsidiary ceasing to be a Wholly Owned
Subsidiary or any subsequent transfer of such Indebtedness or Preferred
Stock (other than to Millenium or another Wholly Owned Subsidiary)
shall be deemed, in each case, to constitute the Incurrence of such
Indebtedness or Preferred Stock by the Restricted Subsidiary;
(2) Guarantees of the Existing Notes and the Exchange Notes;
(3) Indebtedness or Preferred Stock outstanding on the
Original Issue Date (other than Indebtedness or Preferred Stock
described in clauses (1) or (2) of this covenant);
(4) Refinancing Indebtedness in respect of Indebtedness or
Preferred Stock Incurred pursuant to clause (2), (3) or this clause
(4);
(5) Indebtedness or Preferred Stock for the purpose of
acquiring additional Vessels; provided, however, that, at the date of
such Incurrence and after giving effect thereto, (i) no Default or
Event of Default shall have occurred and be continuing, (ii) the
Consolidated Coverage Ratio shall be at least 2.0 to 1.0 and (iii) the
Loan to Value Ratio (as of the most recent Appraisal Date occurring not
more than 30 days prior to the date of such Incurrence) does not exceed
0.85 to 1.00; and
(6) Guarantees in respect of Indebtedness Incurred pursuant to
clause (b)(1) of the covenant described under "--Limitation on
Indebtedness."
Limitation on Restricted Payments. (a) Millenium shall not, and shall
not permit any Restricted Subsidiary, directly or indirectly, to make a
Restricted Payment if at the time Millenium or such Restricted Subsidiary makes
such Restricted Payment: (1) a Default shall have occurred and be continuing (or
would result therefrom); (2) Millenium is not able to Incur an additional $1.00
of Indebtedness pursuant to paragraph (a) of the covenant described under
"--Limitation on Indebtedness"; or (3) the aggregate amount of such Restricted
Payment and all other Restricted Payments since the Original Issue Date would
exceed the sum of (without duplication):
(A) 50% of the Consolidated Net Income accrued during the
period (treated as one accounting period) from the beginning of the
fiscal quarter immediately following the fiscal quarter during which
the Existing Notes were originally issued to the end of
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the most recent fiscal quarter for which internal financial statements
are available prior to the date of such Restricted Payment (or, in case
such Consolidated Net Income shall be a deficit, minus 100% of such
deficit);
(B) the aggregate Net Cash Proceeds received by Millenium from
contributions to Millenium's capital and the issuance or sale of its
Capital Stock (other than Disqualified Stock) subsequent to the
Original Issue Date (other than (i) in respect of the Committed
Vessels, (ii) an issuance or sale to a Subsidiary of Millenium and
(iii) an issuance or sale to an employee stock ownership plan or to a
trust established by Millenium or any of its Subsidiaries for the
benefit of their employees to the extent such issuance or sale is
financed with proceeds of debt provided by Millenium or any Subsidiary
of Millenium);
(C) the amount by which Indebtedness of Millenium is reduced
on Millenium's balance sheet upon the conversion or exchange (other
than by a Subsidiary of Millenium) subsequent to the Original Issue
Date of any Indebtedness of Millenium convertible or exchangeable for
Capital Stock (other than Disqualified Stock) of Millenium (less the
amount of any cash, or the fair value of any other property,
distributed by Millenium upon such conversion or exchange); and
(D) an amount equal to the net reduction in Investments in
Persons after the Original Issue Date who are not Restricted
Subsidiaries (other than Permitted Investments) resulting from (x)
Qualified Proceeds received as a dividend, repayment of a loan
(including interest) or advance or other transfer of assets (valued at
the fair market value thereof) to Millenium or any Restricted
Subsidiary from such Persons, (y) Qualified Proceeds received upon the
sale or liquidation of such Investment and (z) the redesignation of
Unrestricted Subsidiaries whose assets are used or useful in, or which
are engaged in, a Shipping Business as Restricted Subsidiaries (valued
(proportionate to Millenium's direct or indirect equity interest in
such Subsidiary) at the fair market value of the net assets of such
Subsidiary at the time of such redesignation) not to exceed, in the
case of clauses (x), (y) and (z), the amount of Investments previously
made by Millenium or any Restricted Subsidiary in such Person, which
amount was a Restricted Payment.
(b) The provisions of the foregoing paragraph (a) shall not prohibit:
(i) any acquisition of Capital Stock (including the
acquisition of Capital Stock deemed to occur upon exercise of stock
options if such Capital Stock represents a portion of the exercise
price of such options) or any purchase, repurchase, redemption,
defeasance or other acquisition or retirement for value of Subordinated
Obligations made by exchange for, or out of the proceeds of the
substantially concurrent sale of, Capital Stock of Millenium (other
than Disqualified Stock and other than Capital Stock issued or sold to
a Subsidiary of Millenium or an employee stock ownership plan or to a
trust established by Millenium or any of its Subsidiaries for the
benefit of their employees to the extent such sale to such plan or
trust is financed with proceeds of debt provided by Millenium or any
Subsidiary of Millenium); provided, however, that (A) such purchase,
repurchase, redemption, defeasance or other acquisition or retirement
for value shall be excluded in the calculation of the amount of
Restricted Payments and (B) the Net Cash Proceeds from such sale shall
be excluded from the calculation of amounts under clause (3)(B) of
paragraph (a) above;
(ii) any purchase, repurchase, redemption, defeasance or other
acquisition or retirement for value of Subordinated Obligations made by
exchange for, or out of the proceeds of the substantially concurrent
sale of, Indebtedness of Millenium which is permitted to be Incurred
pursuant to the covenant described under "--Limitation on
Indebtedness;" provided, however, that such purchase, repurchase,
redemption, defeasance or other acquisition or retirement for value
shall be excluded in the calculation of the amount of Restricted
Payments;
(iii) any acquisition of the Warrants or Warrant Shares (as
such terms are defined in the Warrant Agreement) made in exchange for
Subordinated Obligations of Millenium issued pursuant to the indenture
attached as an exhibit to the Warrant Agreement as described in Section
5.04 of the Warrant Agreement; provided, however, that no Default or
Event of Default shall have occurred and be continuing; provided
further, however, that such acquisition shall be excluded in the
calculation of the amount of Restricted Payments;
(iv) dividends paid within 60 days after the date of
declaration thereof if at such date of declaration such dividend would
have complied with this covenant; provided, however, that at the time
of payment of such dividend, no other Default shall have occurred and
be continuing (or result therefrom); provided further, however, that
the declaration of such dividend shall be included
in the calculation of the amount of Restricted Payments;
(v) the repurchase, redemption or other acquisition of shares
of, or options to purchase shares of, Capital Stock of Millenium or any
of its Subsidiaries from employees, former employees, directors or
former directors of Millenium or any of its
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Subsidiaries (or permitted transferees of such employees, former
employees, directors or former directors), or amounts paid to Parent on
account of any such repurchase, redemption or other acquisition or
retirement for value of any Capital Stock of Parent held by any present
or former employees or directors of Parent or Millenium pursuant to the
terms of agreements (including employment agreements) or plans (or
amendments thereto) approved by the Board of Directors under which such
individuals purchase or sell or are granted the option to purchase or
sell, shares of such Capital Stock; provided, however, that the
aggregate amount of such repurchases and other acquisitions shall not
exceed $500,000 in any calendar year (provided that to the extent that
less than $500,000 of such Capital Stock is so repurchased, redeemed or
acquired in a given year, the difference between $500,000 and such
amount shall be added to the amount available to Parent, Millenium and
its Subsidiaries for repurchases, redemptions and acquisitions in
future years (subject to a maximum in any calendar year of $1.0
million)); provided further, however, that such repurchases,
redemptions and other acquisitions shall be excluded in the calculation
of the amount of Restricted Payments;
(vi) payments by Millenium's Subsidiaries (whether in
existence on the Original Issue Date or subsequently acquired or
formed) to the Parent pursuant to the terms of the New Management
Agreement; provided, however, that such payments shall be excluded in
the calculation of the amount of Restricted Payments; provided further,
however, that no Default or Event of Default
shall have occurred and be continuing;
(vii) payments to the Parent pursuant to the Advisory
Agreement; provided, however, that such payments shall be excluded in
the calculation of the amount of Restricted Payments; provided further,
however, that no Default or Event of Default shall have occurred and be
continuing;
(viii) payments to Parent to enable Parent to pay foreign,
Federal, state or local tax liabilities to the appropriate taxing
authorities, not to exceed the amount of any tax liabilities that would
otherwise be payable by Millenium and its Subsidiaries on a
consolidated basis if they filed separate tax returns, to the extent
that Parent has an obligation to pay such tax liabilities relating to
the operations, assets or capital of Millenium or its Subsidiaries;
provided, however, that such payments shall be included in the
calculation of the amount of Restricted Payments; or
(ix) the payment of dividends on Millenium's common stock,
following the first Public Equity Offering, (A) of up to 6% per annum
of the Net Cash Proceeds received by Millenium from such public
offering of its common stock or (B) in an amount to enable Parent to
pay dividends on its capital stock of up to 6% per annum of the Net
Cash Proceeds actually received by Millenium from such public offering
of Parent's common stock as common equity or preferred equity (other
than Disqualified Stock), provided, however, that no Default or Event
of Default shall have occurred and be continuing immediately after any
such payment of dividends; and provided, further, however, that such
Restricted Payment shall be included in the calculation of the amount
of Restricted Payments.
Limitation on Restrictions on Distributions from Restricted
Subsidiaries. Millenium shall not, and shall not permit any Restricted
Subsidiary to, create or otherwise cause or permit to exist or become effective
any consensual encumbrance or restriction on the ability of any Restricted
Subsidiary to (a) pay dividends or make any other distributions on its Capital
Stock to Millenium or a Restricted Subsidiary or pay any Indebtedness owed to
Millenium, (b) make any loans or advances to Millenium or (c) transfer any of
its property or assets to Millenium, except:
(i) any encumbrance or restriction pursuant to an agreement in
effect at or entered into on the Original Issue Date;
(ii) any encumbrance or restriction with respect to a
Restricted Subsidiary pursuant to an agreement relating to any
Indebtedness or Preferred Stock Incurred by such Restricted Subsidiary
on or prior to the date on which such Restricted Subsidiary became a
Restricted Subsidiary or was acquired by Millenium (other than
Indebtedness or Preferred Stock Incurred as consideration in, or to
provide all or any portion of the funds or credit support utilized to
consummate, the transaction or series of related transactions pursuant
to which such Restricted Subsidiary became a Restricted Subsidiary or
was acquired by Millenium) and outstanding on such date;
(iii) any encumbrance or restriction pursuant to an agreement
effecting a Refinancing of Indebtedness or Preferred Stock Incurred
pursuant to an agreement referred to in clause (i) or (ii) of this
covenant or this clause (iii) or contained in any amendment to an
agreement referred to in clause (i) or (ii) of this covenant or this
clause (iii); provided, however, that the encumbrances and restrictions
with respect to such Restricted Subsidiary contained in any such
refinancing agreement or amendment are no less favorable to the Holders
than encumbrances and restrictions with respect to such Restricted
Subsidiary contained in such predecessor agreements;
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(iv) any such encumbrance or restriction consisting of
customary nonassignment provisions in leases governing leasehold
interests to the extent such provisions restrict the transfer of the
lease or the property leased thereunder;
(v) in the case of clause (c) above, restrictions contained in
(A) security agreements or mortgages securing Indebtedness of a
Restricted Subsidiary or (B) joint venture or similar agreements to the
extent such restrictions restrict the transfer of the property subject
to such security agreements, mortgages or joint venture agreements or
require the assignment of earnings attributable to such property; and
(vi) any restriction with respect to a Restricted Subsidiary
imposed pursuant to an agreement entered into for the sale or
disposition of all or substantially all the Capital Stock or assets of
such Restricted Subsidiary pending the closing of such sale or
disposition.
Limitation on Asset Sales. (a) Millenium shall not, and shall not
permit any Subsidiary Guarantor to, sell, assign, convey, transfer or otherwise
dispose of a Mortgaged Vessel or any other portion of the Collateral (other than
an Incidental Asset); provided, however, that a Subsidiary Guarantor may sell a
Mortgaged Vessel (at the option of such Subsidiary Guarantor, together with the
applicable Charters, freights and hires and other related agreements) or
Millenium may sell all the Capital Stock of a Subsidiary Guarantor (any such
asset proposed to be sold is referred to herein as a "Mortgaged Vessel Asset")
if such sale of a Mortgaged Vessel Asset shall be made in compliance with each
of the following conditions:
(i) no Default shall have occurred and be continuing;
(ii) the sale or transfer shall be effected in a commercially
reasonable manner as determined by the Board of Directors and evidenced
by a board resolution;
(iii) 80% of such consideration for such sale shall be cash or
Temporary Cash Investments or the assumption of Senior Indebtedness of
Millenium or a Restricted Subsidiary (provided that Millenium or such
Restricted Subsidiary is released from all liabilities thereunder),
which aggregate consideration shall be not less than the Appraised
Value of such Mortgaged Vessel Asset; provided, however, that 100% of
such consideration shall be used to calculate "Net Available Cash" for
purposes of clause (iv) below; provided further, however, that any
securities, notes or other obligations received by Millenium or any
Subsidiary Guarantor from the transferee of the Mortgaged Vessel Asset
that are promptly converted by Millenium or such Subsidiary Guarantor
into cash (to the extent of the cash received), shall be deemed to be
cash for purposes of this clause (iii);
(iv) funds in an amount equal to the Net Available Cash shall
be paid in full directly to the Trustee as Collateral and shall be
received by the Trustee free of any Lien (other than the Lien of the
Indenture and the Security Agreements) but shall not constitute
Escrowed Proceeds; and
(v) Millenium shall have complied with the other provisions of
the Indenture and the Security Agreements applicable to such sale.
Millenium shall apply the proceeds from such sale as described above
under "--Redemptions--Redemption Upon Sale or Loss of a Mortgaged Vessel" or
"--Tender of Qualified Substitute Vessel."
(b) Millenium shall not, and shall not permit any of its Restricted
Subsidiaries to, engage in any Asset Sales (other than Asset Sales permitted by
paragraph (a) above) unless (x) (A) such Asset Sale is by Millenium (other than
the Capital Stock of a Subsidiary Guarantor) or by a Restricted Subsidiary that
is not a Subsidiary Guarantor or (B) such Asset Sale is the sale of an
Incidental Asset and (y) in the event and to the extent that the Net Available
Cash received by Millenium or any of its Restricted Subsidiaries from one or
more of such Asset Sales occurring on or after the Closing Date in any period of
12 consecutive months exceeds $10 million, then Millenium shall or shall cause a
Restricted Subsidiary to, within 30 days after the date Net Available Cash so
received exceeds $10 million in any period of 12 consecutive months, apply an
amount equal to such Net Available Cash either (i) toward a Permitted Excess
Cash Use or (ii) treat (no later than the end of such 30-day period) such excess
Net Available Cash (to the extent not applied pursuant to clause (i) above) as
Excess Proceeds.
Limitation on Lines of Business. Millenium shall not, and shall not
permit any of its Restricted Subsidiaries to, engage in any business other than
the Shipping Business.
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Limitation on Affiliate Transactions. (a) Millenium shall not, and
shall not permit any Restricted Subsidiary to, enter into or permit to exist any
transaction (including the purchase, sale, lease or exchange of any property,
employee compensation arrangements or the rendering of any service) with any
Affiliate of Millenium (an "Affiliate Transaction") unless the terms thereof (1)
are no less favorable to Millenium or such Restricted Subsidiary than those that
could be obtained at the time of such transaction in arm's-length dealings with
a Person who is not such an Affiliate, (2) if such Affiliate Transaction
involves an amount in excess of $1.0 million, (i) are set forth in writing and
(ii) have been approved by a majority of the members of the Board of Directors
having no personal stake in such Affiliate Transaction and (3) if such Affiliate
Transaction involves an amount in excess of $5.0 million, have been determined
by a reasonably appropriate independent qualified Appraiser, given the size and
nature of the transaction, to be fair, from a financial standpoint, to Millenium
and its Restricted Subsidiaries (which, in the case of an Affiliate Transaction
or series of Affiliate Transactions involving the purchase or sale of a
Mortgaged Vessel by Millenium or a Restricted Subsidiary in exchange for
consideration in which $2.0 million or less consists of non-cash consideration,
may be satisfied by delivery of a certificate of an Appraiser stating that (x)
in the case of the purchase of a Mortgaged Vessel, the consideration paid does
not exceed the Appraised Value of such Mortgaged Vessel or (y) in the case of
the sale of a Mortgaged Vessel, the consideration received is at least equal to
the Appraised Value of such Mortgaged Vessel; provided, however, that any
securities, notes or other obligations received by Millenium or any Subsidiary
Guarantor from the transferee of the Mortgaged Vessel Asset that are promptly
converted by Millenium or such Subsidiary Guarantor into cash (to the extent of
the cash received), shall be deemed to constitute cash consideration for
purposes of this provision).
(b) The provisions of the foregoing paragraph (a) shall not prohibit
(i) any Permitted Investment or Restricted Payment permitted to be paid pursuant
to the covenant described under "--Limitation on Restricted Payments", (ii) any
issuance of securities or other customary employee benefits pursuant to
employment arrangements approved by the Board of Directors, (iii) the grant of
stock options or similar rights to employees and directors of Millenium pursuant
to plans approved by the Board of Directors, (iv) loans or advances to employees
in the ordinary course of business in accordance with the past practices of
Millenium or its Restricted Subsidiaries, but in any event not to exceed
$100,000 in the aggregate outstanding at any one time, (v) the payment of
reasonable fees and other benefits to directors of Millenium and its Restricted
Subsidiaries, (vi) any Affiliate Transaction between Millenium and a Qualified
Restricted Subsidiary or between Qualified Restricted Subsidiaries, (vii)
entering into and the performance of the New Management Agreement and (viii)
entering into and the performance of the Advisory Agreement.
Limitation on the Sale or Issuance of Capital Stock of Restricted
Subsidiaries. Millenium shall not sell or otherwise dispose of any Capital Stock
(other than Qualified Preferred Stock) of a Restricted Subsidiary, and shall not
permit any Restricted Subsidiary, directly or indirectly, to issue or sell or
otherwise dispose of any of its Capital Stock (other than Qualified Preferred
Stock), except (i) to Millenium or a Wholly Owned Subsidiary, (ii) if,
immediately after giving effect to such issuance, sale or other disposition,
neither Millenium nor any of its Subsidiaries own any Capital Stock of such
Restricted Subsidiary, (iii) if, immediately after giving effect to such
issuance, sale or other disposition, such Restricted Subsidiary would no longer
constitute a Restricted Subsidiary and any Investment in such Person remaining
after giving effect thereto would have been permitted to be made under the
covenant described under "--Limitation on Restricted Payments" if made on the
date of such issuance, sale or other disposition, (iv) to directors or other
Persons of qualifying shares of common stock of any Restricted Subsidiary, to
the extent mandated by applicable law, (v) the issuance or sale of Capital Stock
of a Subsidiary Guarantor that has a class of equity security registered under
Section 12 of the Exchange Act pursuant to an employee stock option plan
approved by the Board of Directors, (vi) other than with respect to shares of
Capital Stock of a Subsidiary Guarantor, to management employees of Millenium or
a Restricted Subsidiary pursuant to the exercise of stock options or stock
appreciation rights; and (vii) other than with respect to shares of Capital
Stock of a Subsidiary Guarantor, to Persons who are entering into joint ventures
or other similar business relationships with Millenium or any Subsidiary other
than a Subsidiary Guarantor.
Limitation on Liens. Millenium shall not, and shall not permit any
Restricted Subsidiary to, directly or indirectly, incur or permit to exist any
Lien of any nature whatsoever on any of its properties (including Capital Stock
of a Restricted Subsidiary), whether owned at the Original Issue Date or
thereafter acquired, other than Permitted Liens, without effectively providing
that the Exchange Notes shall be secured equally and ratably with (or prior to)
the obligations so secured for so long as such obligations are so secured;
provided, however, that no Lien that secures Indebtedness (other than the
Existing Notes and the Exchange Notes and Indebtedness Incurred pursuant to
paragraph (b)(1) of the covenant described under "--Limitation on Indebtedness"
and paragraph (6) of the covenant described under "-- Limitation on Indebtedness
and Preferred Stock of Restricted Subsidiaries") may be incurred or permitted to
exist on any of the Collateral.
Limitation on Sale/Leaseback Transactions. Millenium shall not, and
shall not permit any Restricted Subsidiary to, enter into any Sale/Leaseback
Transaction with respect to any property unless (i) Millenium or such Restricted
Subsidiary would be entitled to (A) incur Indebtedness in an amount equal to the
Attributable Debt with respect to such Sale/Leaseback Transaction pursuant to
the covenant described under "--Limitation on Indebtedness" or "--Limitation on
Indebtedness and Preferred Stock of Restricted Subsidiaries" and (B) create a
Lien on such property securing such Attributable Debt without equally and
ratably securing the Exchange Notes pursuant to the covenant described
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under "--Limitation on Liens", (ii) the net proceeds received by Millenium or
any Restricted Subsidiary in connection with such Sale/Leaseback Transaction are
at least equal to the fair value (as determined by the Board of Directors) of
such property and (iii) Millenium applies the proceeds of such transaction in
compliance with the covenant described under "--Limitation on Asset Sales."
Merger and Consolidation. Millenium shall not consolidate with or merge
with or into, or convey, transfer or lease, in one transaction or a series of
transactions, all or substantially all its assets to, any Person, unless:
(i) the resulting, surviving or transferee Person (the
"Successor Company") shall be a Person organized and existing under (a)
the laws of the United States of America, any State thereof or the
District of Columbia, (b) the laws of Cyprus, Liberia or the Cayman
Islands or (c) the laws of any other jurisdiction which at the time is
generally deemed acceptable by institutional lenders to the shipping
industry, as determined in good faith by the Board of Directors, and
the Successor Company (if not Millenium) shall expressly assume, by an
indenture supplemental thereto, executed and delivered to the Trustee,
in form reasonably satisfactory to the Trustee, all the obligations of
Millenium under the Exchange Notes, the Indenture and the Security
Agreements;
(ii) immediately after giving effect to such transaction (and
treating any Indebtedness which becomes an obligation of the Successor
Company or any Subsidiary thereof as a result of such transaction as
having been Incurred by such Successor Company or such Subsidiary at
the time of such transaction), no Default shall have occurred and be
continuing;
(iii) immediately after giving effect to such transaction,
either (A) the Successor Company would be able to Incur an additional
$1.00 of Indebtedness pursuant to paragraph (a) of the covenant
described under "--Limitation on Indebtedness" or (B) the Consolidated
Coverage Ratio of the Successor Company is equal to or greater than
that of Millenium immediately prior to such transaction;
(iv) immediately after giving effect to such transaction, the
Successor Company shall have Consolidated Net Worth in an amount that
is not less than the Consolidated Net Worth of Millenium immediately
prior to such transaction;
(v) Millenium shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that such
consolidation, merger or transfer and such supplemental indenture (if
any) comply with the Indenture; and
(vi) Millenium shall have delivered to the Trustee an Opinion
of Counsel to the effect that the Holders will not recognize income,
gain or loss for Federal income tax purposes as a result of such
transaction and will be subject to Federal income tax on the same
amounts, in the same manner and at the same times as would have been
the case if such transaction had not occurred.
Notwithstanding the foregoing clauses (ii) through (iv), (a) any Wholly
Owned Subsidiary may consolidate with, merge into or transfer all or part of its
properties and assets to Millenium and (b) Millenium may merge with an Affiliate
incorporated solely for the purpose of reincorporating Millenium in another
jurisdiction.
The Successor Company shall be the successor to Millenium and shall
succeed to, and be substituted for, and may exercise every right and power of,
Millenium under the Indenture, but the predecessor Company in the case of a
conveyance, transfer or lease shall not be released from the obligation to pay
the principal of and interest on the Exchange Notes and untendered Existing
Notes, if any.
Millenium shall not permit any Subsidiary Guarantor to consolidate with
or merge with or into, or convey, transfer or lease, in one transaction or a
series of transactions, all or substantially all its assets to any Person (other
than Millenium or another Subsidiary Guarantor) unless:
(i) except in the case of a Subsidiary Guarantor that has been
disposed of in its entirety to another Person, whether through a
merger, consolidation or sale of Capital Stock or assets, if in
connection therewith Millenium provides an Officer's Certificate to the
Trustee to the effect that Millenium will comply with its obligations
under "--Limitation on Asset Sales" in respect of such disposition, the
resulting, surviving or transferee Person (if not such Subsidiary
Guarantor) shall be a Person organized and existing under the laws of
the jurisdiction under which such Subsidiary was organized or under the
laws of (a) the United States of America, or any State thereof or the
District of Columbia, (b) the Republic of Liberia, (c) the Commonwealth
of the Bahamas, (d) Cyprus, (e) the Republic of Panama or (f) the laws
of any other jurisdiction which at the time is generally deemed
acceptable by institutional lenders to the shipping industry, as
determined in good faith by the Board of Directors, and such Person
shall expressly assume, by
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a Guarantee Agreement, in a form satisfactory to the Trustee, all the
obligations of such Subsidiary, if any, under its Subsidiary
Guarantee and under the Security Agreements;
(ii) immediately after giving effect to such transaction or
transactions on a pro forma basis (and treating any Indebtedness which
becomes an obligation of the resulting, surviving or transferee Person
as a result of such transaction as having been issued by such Person at
the time of such transaction), no Default shall have occurred and be
continuing; and
(iii) Millenium delivers to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that such
consolidation, merger or transfer and such Guarantee Agreement, if any,
complies with the Indenture.
Future Subsidiary Guarantors. To the extent that, after the Original
Issue Date, Millenium acquires the Additional Vessels with the Escrowed
Proceeds, each such Additional Vessel shall be acquired by a newly formed Wholly
Owned Subsidiary and Millenium shall cause such Wholly Owned Subsidiary to
execute and deliver to the Trustee a Guarantee Agreement pursuant to which such
Wholly Owned Subsidiary will Guarantee payment of the Exchange Notes on the same
terms and conditions as those set forth in the Indenture, to execute a Mortgage
in favor of the Collateral Agent pursuant to which such acquired Additional
Vessel shall thereafter be a Mortgaged Vessel for all purposes under the
Indenture and to satisfy such other conditions set forth in the Escrow
Agreement.
Impairment of Security Interest. Millenium shall not, and shall not
permit any Subsidiary Guarantor to, take or knowingly or negligently omit to
take, any action which action or omission might or would have the result of
materially impairing the security interest with respect to the Collateral for
the benefit of the Trustee and the Holders of the Exchange Notes, and, subject
to the final paragraph of "-- Collateral" above, Millenium shall not, and shall
not permit any Restricted Subsidiary to, grant to any Person other than the
Trustee, for the benefit of the Trustee and the Holders of the Exchange Notes,
and other than the holder of Indebtedness Incurred and outstanding pursuant to
paragraph (b)(i) of the covenant described under "--Limitation on Indebtedness"
and paragraph (6) of the covenant described under "-- Limitation on Indebtedness
and Preferred Stock of Restricted Subsidiaries," any interest whatsoever in any
of the Collateral.
Amendments to Security Agreements. Millenium shall not, and shall not
permit any Subsidiary Guarantor to, amend, modify or supplement, or permit or
consent to any amendment, modification or supplement of, the Security Agreements
in any way that would be adverse to the Holders of the Exchange Notes.
SEC Reports. Notwithstanding that Millenium may not be required to
remain subject to the reporting requirements of Section 13 or 15(d) of the
Exchange Act applicable to a "foreign private issuer" (as such term is defined
in Rule 3b-4 under the Exchange Act), Millenium shall file with the SEC and
furnish to the Trustee, Holders and prospective Holders, upon request, (i)
commencing with respect to the fiscal year ended December 31, 1998, within 120
days after the end of each fiscal year, an annual report on Form 20-F (or any
successor form) containing the information required to be contained therein for
such fiscal year, and (ii) commencing with respect to the fiscal quarter ended
September 30, 1998, within 45 days after the end of each of the first three
quarters in each fiscal year, quarterly reports on Form 6-K consisting of
unaudited financial statements (including a balance sheet and statement of
income, changes in stockholders' equity and cash flows) and Management's
Discussion and Analysis of Financial Condition and Results of Operations for and
as of the end of each of such quarters (with comparable financial statements for
such quarter of the immediately preceding fiscal year).
Defaults
An Event of Default is defined in the Indenture as (i) a default in the
payment of interest on the Exchange Notes when due, continued for 30 days, (ii)
a default in the payment of principal of any Exchange Note when due at its
Stated Maturity, upon optional redemption, required repurchase, declaration or
otherwise, (iii) the failure by Millenium to comply with its obligations under
"--Certain Covenants--Merger and Consolidation" above, (iv) the failure by
Millenium to comply for 30 days after notice with any of its obligations in the
covenants described above under "--Change of Control" (other than a failure to
purchase Exchange Notes) or under "--Certain Covenants" under "-- Limitation on
Indebtedness", "--Limitation on Indebtedness and Preferred Stock of Restricted
Subsidiaries", "--Limitation on Restricted Payments", "--Limitation on
Restrictions on Distributions from Restricted Subsidiaries", "--Limitation on
Asset Sales" (other than a failure to purchase Exchange Notes in an Excess
Proceeds Offer), "Limitation on Lines of Business", "--Limitation on Affiliate
Transactions", "-- Limitation on Sale of Capital Stock of Restricted
Subsidiaries", "--Limitation on Liens", "--Limitation on Sale/Leaseback
Transactions", "-- Future Subsidiary Guarantors", "--Impairment of Security
Interest", "--Amendment to Security Agreements" or "--SEC Reports", (v) the
failure by Millenium to comply with its other agreements contained in the
Indenture or in the Security Agreements, or the occurrence of an event of
default under a Mortgage after the lapse of any applicable grace period and such
failure or event of default continues for 60 days after notice, (vi)
Indebtedness of Millenium or any Significant Subsidiary is not paid within any
applicable grace period after final maturity or is accelerated by the holders
thereof because of a default and the total amount of such Indebtedness unpaid or
accelerated exceeds $5 million
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(the "cross acceleration provision"), (vii) certain events of bankruptcy,
insolvency or reorganization of Millenium or a Significant Subsidiary (the
"bankruptcy provisions"), (viii) any final judgment or decree for the payment of
money in excess of $5 million is entered against Millenium or a Significant
Subsidiary, remains outstanding for a period of 60 days following such judgment
and is not discharged, waived or stayed within 10 days after notice (the
"judgment default provision"), (ix) a Subsidiary Guarantee ceases to be in full
force and effect (other than in accordance with the terms of such Subsidiary
Guarantee) or a Subsidiary Guarantor denies or disaffirms its obligations under
its Subsidiary Guarantee (the "guarantee default provision"), or (x) the
security interest under the Security Agreements shall, at any time, cease to be
in full force and effect for any reason (other than by operation of the
provisions of the Indenture and the Security Agreements) other than the
satisfaction in full of all obligations under the Indenture and discharge of the
Indenture, or any security interest created thereunder shall be declared invalid
or unenforceable or Millenium or any Subsidiary Guarantor shall assert, in any
pleading in any court of competent jurisdiction, that any such security interest
is invalid or unenforceable (the "security default provision"). However, a
default under clauses (iv), (v) and (viii) will not constitute an Event of
Default until the Trustee or the holders of 25% in principal amount at maturity
of the outstanding Exchange Notes and untendered Existing Notes, if any, notify
Millenium of the default and Millenium does not cure such default within the
time specified after receipt of such notice.
If an Event of Default occurs and is continuing, the Trustee or the
holders of at least 25% in principal amount at maturity of the outstanding
Exchange Notes and untendered Existing Notes, if any, may declare the principal
of and accrued but unpaid interest on all the Exchange Notes to be due and
payable. Upon such a declaration, such principal and interest shall be due and
payable immediately. If an Event of Default relating to certain events of
bankruptcy, insolvency or reorganization of Millenium occurs and is continuing,
the principal of and interest on all the Exchange Notes will ipso facto become
and be immediately due and payable without any declaration or other act on the
part of the Trustee or any Holders of the Exchange Notes. Under certain
circumstances, the holders of a majority in principal amount at maturity of the
outstanding Exchange Notes and untendered Existing Notes, if any, may rescind
any such acceleration with respect to the Exchange Notes and untendered Existing
Notes, if any, and its consequences. Subject to the provisions of the Indenture
relating to the duties of the Trustee, in case an Event of Default occurs and is
continuing, the Trustee will be under no obligation to exercise any of the
rights or powers under the Indenture at the request or direction of any of the
Holders of the Exchange Notes unless such Holders have offered to the Trustee
indemnity or security satisfactory to the Trustee against any loss, liability or
expense. Except to enforce the right to receive payment of principal, premium
(if any) or interest when due, no Holder of a Note may pursue any remedy with
respect to the Indenture or the Exchange Notes unless (i) such Holder has
previously given the Trustee notice that an Event of Default is continuing, (ii)
holders of at least 25% in principal amount at maturity of the outstanding
Exchange Notes and untendered Existing Notes, if any, have requested the Trustee
to pursue the remedy, (iii) such Holders have offered the Trustee security or
indemnity satisfactory to the Trustee against any loss, liability or expense,
(iv) the Trustee has not complied with such request within 60 days after the
receipt thereof and the offer of security or indemnity and (v) the holders of a
majority in principal amount at maturity of the outstanding Exchange Notes and
untendered Existing Notes, if any, have not given the Trustee a direction
inconsistent with such request within such 60-day period. Subject to certain
restrictions, the holders of a majority in principal amount at maturity of the
outstanding Exchange Notes and undtendered Existing Notes, if any, are given the
right to direct the time, method and place of conducting any proceeding for any
remedy available to the Trustee or of exercising any trust or power conferred on
the Trustee. The Trustee, however, may refuse to follow any direction that
conflicts with law or the Indenture or that the Trustee determines is unduly
prejudicial to the rights of any other Holder or that would involve the Trustee
in personal liability.
The Indenture provides that if a Default occurs and is continuing and
is known to a corporate trust officer of the Trustee, the Trustee must mail to
each Holder of the Exchange Notes notice of the Default within 90 days after it
occurs. Except in the case of a Default in the payment of principal of or
interest on any Note, the Trustee may withhold notice if and so long as a
committee of its trust officers determines that withholding notice is not
opposed to the interest of the Holders of the Exchange Notes. In addition,
Millenium is required to deliver to the Trustee, within 120 days after the end
of each fiscal year, a certificate indicating whether the signers thereof know
of any Default that occurred during the previous year. Millenium also is
required to deliver to the Trustee, within 30 days after the occurrence thereof,
written notice of any event which would constitute certain Defaults, their
status and what action Millenium is taking or proposes to take in respect
thereof.
Amendments and Waivers
Subject to certain exceptions, the Indenture may be amended with the
consent of the holders of a majority in principal amount at maturity of the
Exchange Notes and untendered Existing Notes, if any, then outstanding
(including consents obtained in connection with a tender offer or exchange for
the Exchange Notes) and any past Default or Event of Default or compliance with
any provisions may also be waived with the consent of the holders of a majority
in principal amount at maturity of the Exchange Notes and untendered Existing
Notes, if any, then outstanding. However, without the consent of each Holder of
an outstanding Note affected thereby, no amendment may, among other things, (i)
reduce the amount of Exchange Notes and untendered Existing Notes, if any, whose
Holders must consent to an amendment, (ii) reduce the rate of or extend the time
for payment of interest on any Note, (iii) reduce the principal of or extend the
Stated Maturity of any
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Note, (iv) reduce the premium payable upon the redemption of any Note or change
the time at which any Note may be redeemed as described under "--Escrow of
Proceeds; Special Mandatory Redemption" and "--Redemptions" above, (v) make any
Note payable in money other than that stated in the Note, (vi) impair the right
of any Holder of the Exchange Notes to receive payment of principal of and
interest on such Holder's Exchange Notes on or after the due dates therefor or
to institute suit for the enforcement of any payment on or with respect to such
Holder's Exchange Notes, (vii) make any change in the amendment provisions which
require each Holder's consent or in the waiver provisions or (viii) make any
change in any Guarantee or Security Agreement that would adversely affect the
Holders or terminate the Lien of the Indenture or any Security Agreement on any
property at any time subject hereto or thereto or deprive the Holders of the
security afforded by the Lien of the Indenture or the Security Agreements.
Without the consent of any Holder of the Exchange Notes, Millenium, the
Subsidiary Guarantors, Trustee and the Collateral Agent may amend the Indenture
and the Security Agreements to cure any ambiguity, omission, defect or
inconsistency, to provide for the assumption by a successor corporation of the
obligations of Millenium or a Subsidiary Guarantor under the Indenture and the
Security Agreements, to provide for uncertificated Exchange Notes in addition to
or in place of certificated Exchange Notes (provided that the uncertificated
Exchange Notes are issued in registered form for purposes of Section 163(f) of
the Code, or in a manner such that the uncertificated Exchange Notes are
described in Section 163(f)(2)(B) of the Code), to add guarantees with respect
to the Exchange Notes, to secure the Exchange Notes, to add to the covenants of
Millenium or a Subsidiary Guarantor for the benefit of the Holders of the
Exchange Notes or to surrender any right or power conferred upon Millenium or a
Subsidiary Guarantor, to make any change that does not adversely affect the
rights of any Holder of the Exchange Notes or to comply with any requirement of
the SEC in connection with the qualification of the Indenture under the Trust
Indenture Act.
The consent of the Holders of the Exchange Notes is not necessary under
the Indenture or the Security Agreements to approve the particular form of any
proposed amendment. It is sufficient if such consent approves the substance of
the proposed amendment.
After an amendment under the Indenture or the Security Agreements
becomes effective, Millenium is required to mail to Holders of the Exchange
Notes a notice briefly describing such amendment. However, the failure to give
such notice to all Holders of the Exchange Notes or any defect therein, will not
impair or affect the validity of the amendment.
Transfer
The Notes will be issued in registered form and will be transferable
(subject to applicable federal and state securities laws) only upon the
surrender of the Notes being transferred for registration of transfer. Millenium
may require payment of a sum sufficient to cover any tax, assessment or other
governmental charge payable in connection with certain transfers and exchanges.
Defeasance
Millenium at any time may terminate all its obligations under the
Exchange Notes and the Indenture ("legal defeasance"), except for certain
obligations, including those respecting the defeasance trust and obligations to
register the transfer or exchange of the Exchange Notes, to replace mutilated,
destroyed, lost or stolen Exchange Notes and to maintain a registrar and paying
agent in respect of the Exchange Notes. Millenium at any time may terminate its
obligations under "--Change of Control" and under the covenants described under
"--Certain Covenants" (other than the covenant described under "--Merger and
Consolidation"), the operation of the cross acceleration provision, the
bankruptcy provisions with respect to Significant Subsidiaries, the judgment
default provision, the guarantee default provision and the security default
provision described under "--Defaults" above and the limitations contained in
clauses (iii) and (iv) of the first paragraph under, and in the third paragraph
under, "--Certain Covenants--Merger and Consolidation" above ("covenant
defeasance").
Millenium may exercise its legal defeasance option notwithstanding its
prior exercise of its covenant defeasance option. If Millenium exercises its
legal defeasance option, payment of the Exchange Notes may not be accelerated
because of an Event of Default with respect thereto. If Millenium exercises its
covenant defeasance option, payment of the Exchange Notes may not be accelerated
because of an Event of Default specified in clause (iv), (vi), (vii) (with
respect only to Significant Subsidiaries), (viii), (ix) or (x) under
"--Defaults" above or because of the failure of Millenium to comply with clause
(iii) or (iv) of the first paragraph under, and with the third paragraph under,
"-- Certain Covenants--Merger and Consolidation" above. If Millenium exercises
its legal defeasance option or its covenant defeasance option, each Subsidiary
Guarantor will be released from all its obligations with respect to its
Subsidiary Guarantee and the Security Agreements, as applicable.
In order to exercise either defeasance option, Millenium must
irrevocably deposit in trust (the "defeasance trust") with the Trustee money or
U.S. Government Obligations for the payment of principal and interest on the
Exchange Notes to redemption or maturity, as the
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case may be, and must comply with certain other conditions, including delivery
to the Trustee of an Opinion of Counsel to the effect that Holders of the
Exchange Notes will not recognize income, gain or loss for federal income tax
purposes as a result of such deposit and defeasance and will be subject to
federal income tax on the same amounts and in the same manner and at the same
times as would have been the case if such deposit and defeasance had not
occurred (and, in the case of legal defeasance only, such Opinion of Counsel
must be based on a ruling of the Internal Revenue Service or other change in
applicable federal income tax law).
Concerning the Trustee and the Collateral Agent
The First National Bank of Maryland will be the Trustee under the
Indenture and has been appointed by Millenium as Registrar and Paying Agent with
regard to the Exchange Notes. The Trustee has appointed the Collateral Agent as
its agent under the Collateral Agency Agreement, and the Collateral Agent is
thereby authorized to act on behalf of the Trustee, with full authority and
powers of the Trustee
thereunder.
The Holders of a majority in principal amount at maturity of the
outstanding Exchange Notes and untendered Existing Notes, if any, will have the
right to direct the time, method and place of conducting any proceeding for
exercising any remedy available to the Trustee, subject to certain exceptions.
The Indenture provides that if an Event of Default occurs (and is not cured),
the Trustee will be required, in the exercise of its power, to use the degree of
care of a prudent person in the conduct of its own affairs. Subject to such
provisions, the Trustee will be under no obligation to exercise any of its
rights or powers under the Indenture at the request of any Holder of Exchange
Notes, unless such Holder shall have offered to the Trustee security and
indemnity satisfactory to it against any loss, liability or expense and then
only to the extent required by the terms of the Indenture.
Governing Law
The Indenture provides that it, the Exchange Notes, the Existing Notes
and each of the Security Agreements, other than the Mortgages, will be governed
by, and construed in accordance with, the laws of the State of New York without
giving effect to applicable principles of conflicts of law to the extent that
the application of the law of another jurisdiction would be required thereby.
Enforceability of Judgments
Since most of the operating assets of Millenium and the Subsidiary
Guarantors are located outside the United States, any judgment obtained in the
United States against Millenium or a Subsidiary Guarantor, including judgments
with respect to the payment of principal of and interest on the Exchange Notes,
may not be collectible within the United States. See "Enforceability of Civil
Liabilities."
Consent to Jurisdiction and Service
The Indenture and the Security Agreements provide that Millenium and
each Subsidiary Guarantor appoint Kylco Maritime (USA), Inc., 645 Fifth Avenue,
New York, New York 10022 as its agent for actions brought under Federal or state
laws brought in any Federal or state court located in the Borough of Manhattan
in The City of New York and will submit to such jurisdiction. See "Enforcement
of Civil
Liabilities."
Certain Definitions
"Accreted Value" means, as of any date (the "Specified Date"), the
amount provided below for each $1,000 principal amount at maturity of the Notes:
(i) if the Specified Date occurs on one of the following dates
(each, a "Semi-Annual Accrual Date"), the Accreted Value
will equal the amount set forth below for such Semi-Annual Accrual
Date:
Semi-Annual Accrual Date Accreted Value
------------------------ --------------
July 24, 1998 $ 965.93
January 15, 1999 967.51
July 15, 1999 969.20
January 15, 2000 970.98
July 15, 2000 972.88
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January 15, 2001 974.90
July 15, 2001 977.06
January 15, 2002 979.34
July 15, 2002 981.78
January 15, 2003 984.36
July 15, 2003 987.12
January 15, 2004 990.05
July 15, 2004 993.16
January 15, 2005 996.47
July 15, 2005 $1,000.00
(ii) if the Specified Date occurs between two Semi-Annual
Accrual Dates, the Accreted Value will equal the sum of (a) the
Accreted Value for the Semi-Annual Accrual Date immediately preceding
such Specified Date and (b) an amount equal to the product of (1) the
Accreted Value for the immediately following Semi-Annual Accrual Date
less the Accreted Value for the immediately preceding Semi-Annual
Accrual Date multiplied by (2) a fraction, the numerator of which is
the number of the days elapsed from the immediately preceding
Semi-Annual Accrual Date to the Specified Date, using a 360 day year of
twelve 30 day months, and the denominator of which is 180 (or, if the
Semi-Annual Accrual Date immediately preceding the Specified Date is
the Original Issue Date, the number of days from the Original Issue
Date to the next Semi-Annual Accrual Date).
"Additional Assets" means (i) any property or assets (other than
Indebtedness and Capital Stock) in a Shipping Business; (ii) the Capital Stock
of a Person that becomes a Restricted Subsidiary as a result of the acquisition
of such Capital Stock by Millenium or another Restricted Subsidiary; or (iii)
Capital Stock constituting a minority interest in any Person that at such time
is a Restricted Subsidiary; provided, however, that any such Restricted
Subsidiary described in clause (ii) or (iii) above is primarily engaged in a
Shipping Business.
"Advisory Agreement" means the Advisory Agreement between Millenium and
Millenium Advisors, dated July 24, 1998.
"Affiliate" of any specified Person means 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; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing. For
purposes of the provisions described under "--Certain Covenants" under
"--Limitation on Restricted Payments", "--Limitation on Affiliate Transactions"
and "--Limitation on Asset Sales" only, "Affiliate" shall also mean any
beneficial owner of Capital Stock representing 5% or more of the total voting
power of the Voting Stock (on a fully diluted basis) of Millenium or of rights
or warrants to purchase such Capital Stock (whether or not currently
exercisable) and any Person who would be an Affiliate of any such beneficial
owner pursuant to the first sentence hereof.
"Appraisal Date" means each date as of which the Appraised Value of the
Mortgaged Vessels has been determined.
"Appraised Value" means the average of the fair market sale values as
of a specified date of a specified asset that would be obtained in an
arm's-length transaction between an informed and willing seller under no
compulsion to sell and an informed and willing buyer under no compulsion to buy,
as determined by two Appraisers selected by Millenium and, in the event either
of such Appraisers is not a Designated Appraiser, reasonably acceptable to the
Trustee. If the Trustee does not accept an Appraiser (other than a Designated
Appraiser) selected by Millenium within 10 days of the first giving of notice by
Millenium to the Trustee requesting a determination of an Appraised Value (the
"Appraisal Request Date"), such Appraised Value shall be determined by a panel
of three Appraisers, one of whom shall be selected by Millenium, another of whom
shall be selected by the Trustee and the third of whom shall be selected by such
other two Appraisers or, if such Appraisers shall be unable to agree upon a
third Appraiser within 5 days of the selection date of the second of such two
Appraisers, by an arbitrator mutually acceptable to Millenium and the Trustee;
provided, however, that, if either party shall not select its Appraiser within
20 days after the Appraisal Request Date, such Appraised Value shall be
determined solely by the Appraiser selected by the other party. The Appraiser or
Appraisers appointed pursuant to the foregoing procedure shall be instructed to
determine such Appraised Value within 25 days after the final appointment of any
Appraiser pursuant hereto, and such determination shall be final and binding
upon the parties. If three Appraisers shall be appointed, (a) if the median of
the determinations of the Appraisers shall equal the average of such
determinations, such average shall constitute the determination of the
Appraisers; otherwise (b) the determination of the Appraiser that shall differ
most from the other two Appraisers shall be excluded, the remaining two
determinations shall be averaged and such average shall constitute the
determination of the Appraisers. For this purpose, the purchase price
(including, if applicable, the value of any upgrades thereto made by Millenium
in connection with or within six months after the acquisition of a Mortgaged
Vessel) of any Mortgaged Vessel acquired after the most recent Appraisal Date
shall constitute that Vessel's Appraised Value.
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"Appraiser" means each of Fearnleys A.S., Oslo Shipbrokers A.S., R.S.
Platou Shipbrokers A.S., Bassoe A.S., Associated Shipbrokers S.A., H. Clarkson
Ltd., Simpson Spence & Young Shipbrokers Ltd., Axis Shipbrokers Ltd., Mallory
Jones Lynch & Flynn, Inc., A.L. Burbank, Inc., Nestun A.S., Lorentzen Stemoco
Shipbrokers A.S., Braemar Shipbrokers Ltd., Seabrokers, Inc., Seascope Shipping
Ltd., Barry Rogliano Salles, Poten & Partners, Inc., Wigham Richardson
Shipbrokers Limited and Equator Shipbroking Ltd. (each a "Designated Appraiser")
(and each successor thereto), together with any other Person not affiliated with
Millenium engaged in the business of appraising ocean-going vessels, including
bulk carriers.
"Asset Sale" means any sale, lease, transfer or other disposition (or
series of related sales, leases, transfers or dispositions) (excluding the
granting of Liens) by Millenium or any Restricted Subsidiary, including any
disposition by means of a merger, consolidation or similar transaction (each
referred to for the purposes of this definition as a "disposition") in one
transaction or a series of related transactions, of (i) any shares of Capital
Stock of a Restricted Subsidiary (other than directors' qualifying shares or
shares required by applicable law to be held by a Person other than Millenium or
a Restricted Subsidiary), (ii) any Vessel, (iii) all or substantially all the
assets of any division or line of business of Millenium or any Restricted
Subsidiary or (iv) any other assets of Millenium or any Restricted Subsidiary
outside of the ordinary course of business of Millenium or such Restricted
Subsidiary (other than, in the case of (i), (ii), (iii) and (iv) above, (I) the
exchange of assets for other non-cash assets that (a) are useful in the Shipping
Business and (b) have a fair market value at least equal to the fair market
value of the assets being exchanged (as determined by the Board of Directors or
the board of directors of the Restricted Subsidiary which owns such assets in
good faith), (II) the sale, lease, transfer or other disposition of all or
substantially all of the assets of Millenium or its Restricted Subsidiaries
(which will be governed by the provisions described under "--Certain
Covenants--Merger and Consolidation" and not by the provisions of the covenant
described under "--Certain Covenants--Limitation on Asset Sales"), (III) a
disposition by a Restricted Subsidiary to Millenium or by Millenium or a
Restricted Subsidiary to a Restricted Subsidiary, (IV) for purposes of the
covenant described under "-- Certain Covenants--Limitation on Asset Sales" only,
a disposition that constitutes a Permitted Investment or a Restricted Payment
permitted by the covenant described under "--Certain Covenants--Limitation on
Restricted Payments" and (V) a disposition of assets with a fair market value of
less than $500,000).
"Attributable Debt" in respect of a Sale/Leaseback Transaction means,
as at the time of determination, the present value (discounted at the interest
rate borne by the Notes, compounded annually) of the total obligations of the
lessee for rental payments during the remaining term of the lease included in
such Sale/Leaseback Transaction (including any period for which such lease has
been extended).
"Average Life" means, as of the date of determination, with respect to
any Indebtedness or Preferred Stock, the quotient obtained by dividing (i) the
sum of the products of numbers of years from the date of determination to the
dates of each successive scheduled principal payment of such Indebtedness or
redemption or similar payment with respect to such Preferred Stock multiplied by
the amount of such
payment by (ii) the sum of all such payments.
"Board of Directors" means the Board of Directors of Millenium or any
committee thereof duly authorized to act on behalf of such Board.
"Business Day" means each day which is not a Saturday, Sunday or a day
on which banking institutions are authorized or permitted to close in the States
of New York and Maryland.
"Capital Lease Obligation" means an obligation that is required to be
classified and accounted for as a capital lease for financial reporting purposes
in accordance with GAAP, and the amount of Indebtedness represented by such
obligation shall be the capitalized amount of such obligation determined in
accordance with GAAP; and the Stated Maturity thereof shall be the date of the
last payment of rent or any other amount due under such lease prior to the first
date upon which such lease may be terminated by the lessee without payment of a
penalty.
"Capital Stock" of any Person means any and all shares, interests,
rights to purchase, warrants, options, participations or other equivalents of or
interests in (however designated) equity of such Person, including any Preferred
Stock, but excluding any debt securities
convertible into such equity.
"Charter" means each charterparty between a Subsidiary Guarantor and
any third party with respect to such Subsidiary Guarantor's
Mortgaged Vessel, and as the same may be amended from time to time.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collateral" means, in each case as pledged and assigned to the Trustee
or the Collateral Agent pursuant to the Security Agreements: (1) all the issued
and outstanding capital stock of each Subsidiary Guarantor owned, directly or
indirectly, by Millenium, pledged in favor
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of the Trustee pursuant to the Indenture; (2) all cash held by the Trustee or
the Escrow Agent pursuant to the Indenture or the Security Agreements; and (3)
each Subsidiary Guarantor's right, title and interest in and to (i) its
respective Mortgaged Vessel, pursuant to a Mortgage issued by such Subsidiary
Guarantor in favor of the Collateral Agent; (ii) the Charters, if any, relating
to its Mortgaged Vessel, including the right to receive all monies due and to
become due under such Charters or in respect of such Mortgaged Vessel and all
claims for damages arising under such Charters or relating to such Mortgaged
Vessel; (iii) the freights and hires relating to its Mortgaged Vessel; (iv) all
its policies and contracts of insurance taken out from time to time in respect
of its Mortgaged Vessel; and (v) all proceeds of any of the foregoing.
"Collateral Agency Agreement" means the Collateral Agency and
Intercreditor Agreement dated as of July 1, 1998, among the Trustee, the
Collateral Agent, the Working Capital Facility Provider, Millenium and the
Subsidiary Guarantors.
"Collateral Agent" means The First National Bank of Maryland, its
successors and assigns.
"Comparable Treasury Issue" means the United States Treasury security
selected by an Independent Investment Banker (as defined below) as having a
maturity comparable to the weighted average maturity of the remaining term of
the Notes outstanding that would be utilized, at the time of selection and in
accordance with customary financial practice, in pricing new issues of corporate
debt securities of comparable maturity to such weighted average maturity of the
Notes.
"Comparable Treasury Price" means, with respect to any redemption date,
(i) the average of the Reference Treasury Dealer Quotations (as defined below)
for such redemption date, after excluding the highest and lowest such Reference
Treasury Dealer Quotations, or (ii) if the Trustee obtains fewer than four such
Reference Treasury Dealer Quotations, the average of all such Reference Treasury
Dealer Quotations.
"Consolidated Coverage Ratio" as of any date of determination means the
ratio of (i) the aggregate amount of EBITDA for the period of the most recent
four consecutive fiscal quarters ending prior to the date of such determination
for which internal financial statements are available to (ii) Consolidated
Interest Expense for such four fiscal quarters; provided, however, that
(1) if Millenium or any Restricted Subsidiary has Incurred any
Indebtedness since the beginning of such period that remains
outstanding on the date of determination or if the transaction giving
rise to the need to calculate the Consolidated Coverage Ratio is an
Incurrence of Indebtedness, or both, EBITDA and Consolidated Interest
Expense for such period shall be calculated after giving effect on a
pro forma basis to such Indebtedness as if such Indebtedness had been
Incurred on the first day of such period and the discharge of any other
Indebtedness repaid, repurchased, defeased or otherwise discharged with
the proceeds of such new Indebtedness as if such discharge had occurred
on the first day of such period,
(2) if Millenium or any Restricted Subsidiary has repaid,
repurchased, defeased or otherwise discharged any Indebtedness since
the beginning of such period or if any Indebtedness is to be repaid,
repurchased, defeased or otherwise discharged (in each case other than
Indebtedness Incurred under any revolving credit facility unless such
Indebtedness has been permanently repaid and has not been replaced) on
the date of the transaction giving rise to the need to calculate the
Consolidated Coverage Ratio, EBITDA and Consolidated Interest Expense
for such period shall be calculated on a pro forma basis as if such
discharge had occurred on the first day of such period and as if
Millenium or such Restricted Subsidiary had not earned the interest
income actually earned during such period in respect of cash or
Temporary Cash Investments used to repay, repurchase, defease or
otherwise discharge such Indebtedness,
(3) if since the beginning of such period Millenium or any
Restricted Subsidiary shall have made any Asset Sale, the EBITDA for
such period shall be reduced by an amount equal to the EBITDA (if
positive) directly attributable to the assets which are the subject of
such Asset Sale for such period, or increased by an amount equal to the
EBITDA (if negative) directly attributable thereto for such period and
Consolidated Interest Expense for such period shall be reduced by an
amount equal to the Consolidated Interest Expense directly attributable
to any Indebtedness of Millenium or any Restricted Subsidiary repaid,
repurchased, defeased or otherwise discharged with respect to Millenium
and its continuing Restricted Subsidiaries in connection with such
Asset Sale for such period (or, if the Capital Stock of any Restricted
Subsidiary is sold, the Consolidated Interest Expense for such period
directly attributable to the Indebtedness of such Restricted Subsidiary
to the extent Millenium and its continuing Restricted Subsidiaries are
no longer liable for such Indebtedness after such sale),
(4) if since the beginning of such period Millenium or any
Restricted Subsidiary (by merger or otherwise) shall have made an
Investment in any Restricted Subsidiary (or any Person which becomes a
Restricted Subsidiary) or an acquisition of assets,
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including any acquisition of assets occurring in connection with a
transaction requiring a calculation to be made hereunder, which
constitutes all or substantially all of an operating unit of a
business, EBITDA and Consolidated Interest Expense for such period
shall be calculated after giving pro forma effect thereto (including
the Incurrence of any Indebtedness) as if such Investment or
acquisition occurred on the first day of such period and
(5) if since the beginning of such period any Person (that
subsequently became a Restricted Subsidiary or was merged with or into
Millenium or any Restricted Subsidiary since the beginning of such
period) shall have made any Asset Sale, any Investment or acquisition
of assets that would have required an adjustment pursuant to clause (3)
or (4) above if made by Millenium or a Restricted Subsidiary during
such period, EBITDA and Consolidated Interest Expense for such period
shall be calculated after giving pro forma effect thereto as if such
Asset Sale, Investment or acquisition occurred on the first day of such
period.
For purposes of this definition, whenever pro forma effect is to be given to an
Asset Sale, to an Investment, to the amount of Consolidated Interest Expense
associated with any Indebtedness Incurred or to an acquisition of assets and the
amount of income or earnings relating thereto, the pro forma calculations shall
be determined in good faith by a responsible financial or accounting Officer of
Millenium. If any Indebtedness bears a floating rate of interest and is being
given pro forma effect, the interest of such Indebtedness shall be calculated as
if the rate in effect on the date of determination had been the applicable rate
for the entire period (taking into account any Interest Rate Agreement
applicable to such Indebtedness if such Interest Rate Agreement has a remaining
term in excess of 12 months). For purposes of this definition, whenever pro
forma effect is to be given to an acquisition of a Vessel or the financing
thereof, Millenium may (i) if the Vessel is to be subject to a time charter of
at least one year's duration by Millenium, apply pro forma EBITDA for such
Vessel based on such new time charter or (ii) if the Vessel is to be subject to
hire on a voyage charter basis by Millenium, apply EBITDA for such Vessel based
upon historical earnings of the most comparable Vessel of Millenium or any of
its Subsidiaries (as determined in good faith by the Board of Directors) during
such period, or if there is no such comparable vessel, based upon industry
average earnings for comparable Vessels (as determined in good faith by the
Board of Directors).
"Consolidated Interest Expense" means, for any period, the total
interest expense of Millenium and its Restricted Subsidiaries on a consolidated
basis, plus, to the extent not included in such total interest expense, and to
the extent incurred by Millenium or its Restricted Subsidiaries, without
duplication, (i) interest expense attributable to capital leases and the
interest expense attributable to leases constituting part of a Sale/Leaseback
Transaction, (ii) amortization of debt discount and debt issuance cost, (iii)
capitalized interest, (iv) noncash interest expense, (v) commissions, discounts
and other fees and charges owed with respect to letters of credit and bankers'
acceptance financing, (vi) net costs associated with Hedging Obligations
(including amortization of fees), (vii) Preferred Stock dividends in respect of
all Preferred Stock held by Persons other than Millenium or a Wholly Owned
Subsidiary to the extent paid in cash in such period, (viii) interest incurred
in connection with Investments in discontinued operations, (ix) interest
accruing on any Indebtedness of any other Person to the extent such Indebtedness
is Guaranteed by (or secured by the assets of) Millenium or any Restricted
Subsidiary and (x) the cash contributions to any employee stock ownership plan
or similar trust to the extent such contributions are used by such plan or trust
to pay interest or fees to any Person (other than Millenium) in connection with
Indebtedness Incurred by such plan or trust.
"Consolidated Net Income" means, for any period, the net income of
Millenium and its Subsidiaries on a consolidated basis; provided, however, that
there shall not be included in such Consolidated Net Income:
(i) any net income (or loss) of any Person (other than
Millenium) if such Person is not a Restricted Subsidiary, except that
subject to the exclusion contained in clause (iv) below, Millenium's
equity in the net income of any such Person for such period shall be
included in such Consolidated Net Income up to the aggregate amount of
cash actually distributed by such Person during such period to
Millenium or a Restricted Subsidiary as a dividend or other
distribution (subject, in the case of a dividend or other distribution
paid to a Restricted Subsidiary, to the limitations contained in clause
(iii) below);
(ii) any net income (or loss) of any Person acquired by
Millenium or a Subsidiary in a pooling of interests transaction for any
period prior to the date of such acquisition;
(iii) any net income of any Restricted Subsidiary if at the
date of determination such Restricted Subsidiary is subject to
restrictions, directly or indirectly, on the payment of dividends or
the making of distributions by such Restricted Subsidiary, directly or
indirectly, to Millenium, except that (A) subject to the exclusion
contained in clause (iv) below, Millenium's equity in the net income of
any such Restricted Subsidiary for such period shall be included in
such Consolidated Net Income up to the aggregate amount of cash that
could have been distributed by such Restricted Subsidiary during such
period to Millenium or another Restricted Subsidiary as a dividend or
other distribution (subject, in the case of a dividend or other
distribution paid to another Restricted
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Subsidiary, to the limitation contained in this clause) and (B)
Millenium's equity in a net loss of any such Restricted Subsidiary for
such period shall be included in determining such Consolidated Net
Income;
(iv) any gain (but not loss) realized upon the sale or other
disposition of any assets of Millenium or its Subsidiaries on a
consolidated basis (including pursuant to any sale-and-leaseback
arrangement) which are not sold or otherwise disposed of in the
ordinary course of business and any gain (but not loss) realized upon
the sale or other disposition of any Capital Stock of any Person;
(v) subject to clause (iv), extraordinary gains or losses; and
(vi) the cumulative effect of a change in accounting
principles.
Notwithstanding the foregoing, for the purposes of the covenant described under
"--Certain Covenants--Limitation on Restricted Payments" only, there shall be
excluded from Consolidated Net Income any dividends, repayments of loans or
advances or other transfers of assets from Unrestricted Subsidiaries to
Millenium or a Restricted Subsidiary to the extent such dividends, repayments or
transfers increase the amount of Restricted Payments permitted under such
covenant pursuant to clause (a)(3)(D) thereof.
"Consolidated Net Worth" means the total of the amounts shown on the
balance sheet of Millenium and its Subsidiaries, determined on a consolidated
basis in accordance with GAAP, as of the end of the most recent fiscal quarter
of Millenium for which internal financial statements are available prior to the
taking of any action for the purpose of which the determination is being made,
as (i) the par or stated value of all outstanding Capital Stock of Millenium
plus (ii) paid-in capital or capital surplus relating to such Capital Stock plus
(iii) any retained earnings or earned surplus less (A) any accumulated deficit
and (B) any amounts attributable to Disqualified Stock.
"Currency Agreement" means in respect of a Person any foreign exchange
contract, currency swap agreement or other similar agreement designed to protect
such Person against fluctuations in currency values.
"Default" means any event which is, or after notice or passage of time
or both would be, an Event of Default.
"Designated Appraiser" has the meaning assigned to it under the
definition of "Appraiser."
"Disqualified Stock" means, with respect to any Person, any Capital
Stock which by its terms (or by the terms of any security into which it is
convertible or for which it is exchangeable) or upon the happening of any event
(i) matures or is mandatorily redeemable pursuant to a sinking fund obligation
or otherwise, (ii) is convertible or exchangeable for Indebtedness or
Disqualified Stock or (iii) is redeemable at the option of the holder thereof,
in whole or in part, in each case on or prior to the 91st day after the Stated
Maturity of the Notes; provided, however, that any Capital Stock that would not
constitute Disqualified Stock but for provisions thereof giving holders thereof
the right to require such Person to repurchase or redeem such Capital Stock upon
the occurrence of an "asset sale" or "change of control" occurring on or prior
to the 91st day after the Stated Maturity of the Notes shall not constitute
Disqualified Stock if the "asset sale" or "change of control" provisions
applicable to such Capital Stock are not more favorable to the holders of such
Capital Stock than the provisions described under "--Certain
Covenants--Limitation on Asset Sales" and "--Change of Control."
"EBITDA" for any period means the sum of Consolidated Net Income plus
the sum of the following expenses of Millenium and its Restricted Subsidiaries
on a consolidated basis, to the extent deducted in calculating such Consolidated
Net Income: (a) all United States Federal, state and local, and all foreign
income tax expense, (b) Consolidated Interest Expense, (c) depreciation expense,
(d) amortization expense (including in respect of intangibles) (excluding
amortization expense attributable to a prepaid cash item that was paid in a
prior period) and (e) all other noncash charges (excluding any such noncash
charge to the extent that it represents an accrual of or reserve for cash
expenditures in any future period), in each case for such period.
Notwithstanding the foregoing, the provision for taxes based on the income or
profits of, and the depreciation and amortization and noncash charges of, a
Restricted Subsidiary shall be added to Consolidated Net Income to compute
EBITDA only to the extent (and in the same proportion) that the net income of
such Restricted Subsidiary was included in calculating Consolidated Net Income
and only if a corresponding amount would be permitted at the date of
determination to be dividended to Millenium by such Restricted Subsidiary
without prior approval (that has not been obtained), pursuant to the terms of
its charter and all agreements, instruments, judgments, decrees, orders,
statutes, rules and governmental regulations applicable to such Restricted
Subsidiary or its stockholders.
"Event of Loss" means any of the following events: (a) the actual or
constructive total loss of a Vessel or the agreed or compromised total loss of a
Vessel, (b) the destruction of a Vessel, (c) damage to a Vessel to an extent,
determined in good faith by the Board of Directors within 90 days after the
occurrence of such damage (and evidenced by an Officers' Certificate to such
effect delivered to the Trustee, within
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such 90-day period), as shall make repair thereof uneconomical or shall render
such Vessel permanently unfit for normal use (other than obsolescence) or (d)
the condemnation, confiscation, requisition, seizure, forfeiture or other taking
of title to or use of a Vessel that shall not be revoked within six months. An
Event of Loss shall be deemed to have occurred: (i) in the event of the
destruction or other actual total loss of a Vessel, on the date of such loss;
(ii) in the event of a constructive, agreed or compromised total loss of a
Vessel, on the date of the determination of such total loss pursuant to the
relevant insurance policy; (iii) in the case of any event referred to in clause
(c) above, upon the delivery of Millenium's Officers' Certificate to the
Trustee; or (iv) in the case of any event referred to in clause (d) above, on
the date six months after the occurrence of such event.
"Event of Loss Proceeds" means all compensation, damages and other
payments (including insurance proceeds other than certain liability insurance
proceeds) received by Millenium, any Subsidiary Guarantor, the Trustee or the
Collateral Agent, jointly or severally, from any Person, including any
governmental authority, with respect to or in connection with an Event of Loss.
"Excess Proceeds" means the amount of excess Net Available Cash from
Asset Sales not applied (or committed to be applied) pursuant to subclause (i)
of paragraph (b) of the covenant described under "--Certain
Covenants--Limitation on Asset Sales."
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Existing Notes" means Notes which are not Exchange Notes.
"Exchange Notes" means the notes of the Company exchanged hereunder for
Existing Notes pursuant to the Registered Exchange Offer in connection with
which this Prospectus is prepared, or in a private exchange.
"GAAP" means generally accepted accounting principles in the United
States of America as in effect as of the Original Issue Date, including those
set forth in (i) the opinions and pronouncements of the Accounting Principles
Board of the American Institute of Certified Public Accountants, (ii) statements
and pronouncements of the Financial Accounting Standards Board, (iii) such other
statements by such other entity as approved by a significant segment of the
accounting profession and (iv) the rules and regulations of the SEC governing
the inclusion of financial statements (including pro forma financial statements)
in periodic reports required to be filed pursuant to Sections 13 or 15(d) of the
Exchange Act, including opinions and pronouncements in staff accounting
bulletins and similar written statements from the accounting staff of the SEC.
"Guarantee" means any obligation, contingent or otherwise, of any
Person directly or indirectly guaranteeing any Indebtedness of any Person and
any obligation, direct or indirect, contingent or otherwise, of such Person (i)
to purchase or pay (or advance or supply funds for the purchase or payment of)
such Indebtedness of such Person (whether arising by virtue of partnership
arrangements, or by agreements to keep-well, to purchase assets, goods,
securities or services, to take-or-pay or to maintain financial statement
conditions or otherwise) or (ii) entered into for the purpose of assuring in any
other manner the obligee of such Indebtedness of the payment thereof or to
protect such obligee against loss in respect thereof (in whole or in part);
provided, however, that the term "Guarantee" shall not include endorsements for
collection or deposit in the ordinary course of business. The term "Guarantee"
used as a verb has a corresponding meaning. The term "Guarantor" shall mean any
Person Guaranteeing any obligation.
"Guarantee Agreement" means a supplemental indenture, in a form
satisfactory to the Trustee, pursuant to which a Subsidiary Guarantor becomes
subject to the applicable terms and conditions of the Indenture.
"Hedging Obligations" of any Person means the obligations of such
Person pursuant to any Interest Rate Agreement or Currency Agreement.
"Holder" means the Person in whose name a Note is registered on the
Registrar's books.
"Incidental Asset" is defined to mean any equipment, outfit, furniture,
furnishings, appliances, spare or replacement parts or stores owned by Millenium
or a Subsidiary Guarantor that have become obsolete or unfit for use or no
longer useful, necessary or profitable in the conduct of the business of
Millenium or such Subsidiary Guarantor, as the case may be. In no event shall
the term "Incidental Asset" include a Vessel or a Mortgaged Vessel.
"Incur" means issue, assume, Guarantee, incur or otherwise become
liable for; provided, however, that any Indebtedness or Capital Stock of a
Person existing at the time such Person becomes a Subsidiary (whether by merger,
consolidation, acquisition or otherwise) shall be deemed to be Incurred by such
Subsidiary at the time it becomes a Subsidiary. The term "Incurrence" when used
as a noun shall have a
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correlative meaning. The accretion of principal of a non-interest bearing or
other discount security shall be deemed the Incurrence of Indebtedness.
"Indebtedness" means, with respect to any Person on any date of
determination (without duplication):
(i) the principal in respect of (A) indebtedness of such
Person for money borrowed and (B) indebtedness evidenced by notes,
debentures, bonds or other similar instruments for the payment of which
such Person is responsible or liable, including, in each case, any
premium on such indebtedness to the extent such premium has become due
and payable;
(ii) all Capital Lease Obligations of such Person and all
Attributable Debt in respect of Sale/Leaseback Transactions entered
into by such Person;
(iii) all obligations of such Person issued or assumed as the
deferred purchase price of property, all conditional sale obligations
of such Person and all obligations of such Person under any title
retention agreement (but excluding accounts payable
arising in the ordinary course of business);
(iv) all obligations of such Person for the reimbursement of
any obligor on any letter of credit, banker's acceptance or similar
credit transaction (other than obligations with respect to letters of
credit securing obligations (other than obligations described in
clauses (i) through (iii) above) entered into in the ordinary course of
business of such Person to the extent such letters of credit are not
drawn upon or, if and to the extent drawn upon, such drawing is
reimbursed no later than the tenth Business Day following payment on
the letter of credit);
(v) the amount of all obligations of such Person with respect
to the redemption, repayment or other repurchase of any Disqualified
Stock or, with respect to any Subsidiary of such Person, the
liquidation preference with respect to, any Preferred Stock
(but excluding, in each case, any accrued dividends);
(vi) all obligations of the type referred to in clauses (i)
through (v) of other Persons and all dividends of other Persons for the
payment of which, in either case, such Person is responsible or liable,
directly or indirectly, as obligor, Guarantor or otherwise, including
by means of any Guarantee;
(vii) all obligations of the type referred to in clauses (i)
through (vi) of other Persons secured by any Lien on any property or
asset of such Person (whether or not such obligation is assumed by such
Person), the amount of such obligation being deemed to be the lesser of
the value of such property or assets or the amount of the obligation so
secured; and
(viii) to the extent not otherwise included in this
definition, Hedging Obligations of such Person.
The amount of Indebtedness of any Person at any date shall be the outstanding
balance at such date of all unconditional obligations as described above and the
maximum liability, upon the occurrence of the contingency giving rise to the
obligation, of any contingent obligations at such date.
"Independent Investment Banker" means a Reference Treasury Dealer
appointed by the Trustee after consultation with Millenium.
"Insurance Assignment" means the Insurance Assignment between a
Subsidiary Guarantor and the Collateral Agent.
"Interest Rate Agreement" means, in respect of a Person, any interest
rate swap agreement, interest rate cap agreement or other financial agreement or
arrangement designed to protect such Person against fluctuations in interest
rates.
"Investment" in any Person means any direct or indirect advance, loan
(other than advances to customers in the ordinary course of business that are
recorded as accounts receivable on the balance sheet of the lender) or other
extensions of credit (including by way of Guarantee or similar arrangement) or
capital contribution to (by means of any transfer of cash or other property to
others or any payment for property or services for the account or use of
others), or any purchase or acquisition of Capital Stock, Indebtedness or other
similar instruments issued by such Person. For purposes of the definition of
"Unrestricted Subsidiary", the definition of "Restricted Payment" and the
covenant described under "--Certain Covenants--Limitation on Restricted
Payments", (i) "Investment" shall include the portion (proportionate to
Millenium's equity interest in such Subsidiary) of the fair market value of the
net assets of any Subsidiary of Millenium at the time that such Subsidiary is
designated an Unrestricted Subsidiary; provided, however, that upon a
redesignation of such Subsidiary as a Restricted
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Subsidiary, Millenium shall be deemed to continue to have a permanent
"Investment" in an Unrestricted Subsidiary equal to an amount (if positive)
equal to (x) Millenium's "Investment" in such Subsidiary at the time of such
redesignation less (y) the portion (proportionate to Millenium's equity interest
in such Subsidiary) of the fair market value of the net assets of such
Subsidiary at the time of such redesignation; and (ii) any property transferred
to or from an Unrestricted Subsidiary shall be valued at its fair market value
at the time of such transfer, in each case as determined in good faith by the
Board of Directors.
"Original Issue Date" means the date on which the Notes are originally
issued.
"Lien" means any mortgage, pledge, security interest, encumbrance, lien
or charge of any kind (including any conditional sale or other title retention
agreement or lease in the nature thereof).
"Loan To Value Ratio" means, at any time, the ratio of
(x) the aggregate Accreted Value of the then outstanding Notes
(less the amount of any Collateral, including Escrowed Proceeds,
consisting of cash or Temporary Cash Investments at such time) to
(y) the aggregate Appraised Value of all Mortgaged Vessels at
such time.
If the Loan To Value Ratio is required to be calculated or adjusted at a time
prior to a Proceeds Receipt Date or when cash is on deposit with the Trustee as
part of the Collateral in connection with the sale of a Mortgaged Vessel or the
occurrence of an Event of Loss with respect to a Mortgaged Vessel, the then most
recent Appraised Value of such Lost Mortgaged Vessel (in the event such
determination is to be made prior to the Proceeds Receipt Date) or the amount of
such cash on deposit, as the case may be, shall be deemed to be the Appraised
Value of the Vessel giving rise to such cash on deposit and such Vessel shall be
deemed to be a Mortgaged Vessel for purposes of such computation or adjustment
of the Loan To Value Ratio.
"Mortgage" means a mortgage and the related deed of covenant, if any,
on a Vessel substantially in the form of and to the effect set forth as Exhibit
D to the Escrow Agreement.
"Mortgaged Vessels" means the Vessels owned by the Subsidiary
Guarantors from time to time, including the following Vessels (which are the
Existing Vessels and the Committed Vessels),
<TABLE>
<CAPTION>
Official
Vessel Flag Number Year Built
- - - - ------ ---- ------ ----------
<S> <C> <C> <C>
Monica Marissa Panama 24935 1973
Clipper Harmony Panama 7703546 1978
Clipper Golden Hind Liberia 10245 1978
Clipper Pacific Cyprus 708918 1976
Clipper Atlantic Cyprus 708620 1975
Millenium Aleksander Cayman Islands * 1988
Millenium Elmar Cayman Islands 731940 1987
Millenium Leader Cayman Islands 731943 1984
Millenium Hawk Cayman Islands * 1984
Millenium Eagle Cayman Islands 731944 1983
Millenium Osprey Cayman Islands 731945 1984
Millenium Falcon Cayman Islands 731942 1981
Millenium Condor Cayman Islands 731946 1981
Millenium Amethyst Bahamas 720427 1978
Millenium Yama Bahamas 720493 1979
Millenium Majestic Bahamas 708268 1979
</TABLE>
* Not yet available.
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If one of such Vessels shall be sold pursuant to the terms of the Indenture,
such Vessel shall cease to be a Mortgaged Vessel from and after the Sale Date. A
Qualified Substitute Vessel may be substituted for a Mortgaged Vessel in certain
circumstances and such substituted vessel shall become a Mortgaged Vessel upon
substitution in accordance with the terms of the Indenture.
"Net Available Cash" from an Asset Sale means cash payments received
therefrom (including any cash payments received by way of deferred payment of
principal pursuant to a note or installment receivable or otherwise and proceeds
from the sale or other disposition of any securities received as consideration,
but only as and when received, but excluding any other consideration received in
the form of assumption by the acquiring Person of Indebtedness or other
obligations relating to such properties or assets or received in any other
noncash form), in each case net of (i) all legal, title and recording tax
expenses, brokerage and other commissions and other fees and expenses incurred
(including commissions under the Management Agreements), and all Federal, state,
provincial, foreign and local taxes required to be accrued as a liability under
GAAP, as a consequence of such Asset Sale, (ii) all payments made on any
Indebtedness which is secured by any assets subject to such Asset Sale, in
accordance with the terms of any Lien upon or other security agreement of any
kind with respect to such assets, or which must by its terms, or in order to
obtain a necessary consent to such Asset Sale, or by applicable law, be repaid
out of the proceeds from such Asset Sale, (iii) all distributions and other
payments required to be made to minority interest holders in Subsidiaries or
joint ventures as a result of such Asset Sale and (iv) the deduction of
appropriate amounts provided by the seller as a reserve, in accordance with
GAAP, against any liabilities (including indemnification liabilities) associated
with the property or other assets disposed in such Asset Sale and retained by
Millenium or any Restricted Subsidiary after such Asset Sale.
"Net Cash Proceeds" means, with respect to any issuance or sale of
Capital Stock or capital contribution, the cash proceeds and Temporary Cash
Investments proceeds of such issuance or sale (or, in the event the
consideration of such issuance or sale or contribution is other than cash, the
cash proceeds and Temporary Cash Investments proceeds actually received upon the
disposition of such other consideration) net of attorneys' fees, accountants'
fees, underwriters' or placement agents' fees, discounts or commissions and
brokerage, consultant and other fees actually incurred in connection with such
issuance or sale and net of taxes paid or payable as a result thereof.
"Net Event of Loss Proceeds" means, with respect to any Event of Loss,
the Event of Loss Proceeds from such Event of Loss net of related fees and
expenses and payments made to repay related Indebtedness or any other related
obligation outstanding at the time of such Event of Loss; provided, however,
that such Indebtedness or other obligation is either (A) secured by a Lien on
the property or assets that suffered the Event of Loss or (B) required to be
paid as a result of such Event of Loss.
"New Management Agreement" means (i) the agreement entered into on the
Original Issue Date among the Subsidiary Guarantors and MMI with respect to the
Mortgaged Vessels on the Original Issue Date, (ii) any agreements replacing or
amending such agreements and (iii) agreements entered into subsequent to the
Original Issue Date with respect to Mortgaged Vessels or any Qualified
Substitute Vessels; provided, however, that with respect to clauses (ii) and
(iii), such agreements shall be on substantially the same terms as the terms in
effect on the Original Issue Date contained in the agreements described in
clause (i).
"Notes" means the Existing Notes and the Exchange Notes.
"Parent" means any Person that owns directly or indirectly all the
Voting Stock of Millenium.
"Permitted Excess Cash Use" means (i) the repayment of unsubordinated
Indebtedness of Millenium or of a Subsidiary Guarantor (in each case other than
Indebtedness owed to an Affiliate of Millenium) or (ii) the investment in
Additional Assets.
"Permitted Holders" means (i) the members of MMI's management and their
respective affiliates as of the Original Issue Date and (ii) Millenium
Investment and Millenium Advisors, together with any Affiliates of either of
such Persons or of Stanton Capital.
"Permitted Investment" means an Investment by Millenium or any
Restricted Subsidiary in
(i) Millenium, a Restricted Subsidiary or a Person that will,
upon the making of such Investment, become a Restricted Subsidiary;
provided, however, that the primary business of such Restricted
Subsidiary is a Shipping Business;
(ii) another Person if as a result of such Investment such
other Person is merged or consolidated with or into, or transfers or
conveys all or substantially all its assets to, Millenium or a
Restricted Subsidiary; provided, however, that such Person's primary
business is a Shipping Business;
(iii) Temporary Cash Investments;
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(iv) receivables owing to Millenium or any Restricted
Subsidiary if created or acquired in the ordinary course of business
and payable or dischargeable in accordance with customary trade terms;
provided, however, that such trade terms may include such concessionary
trade terms as Millenium or any such Restricted Subsidiary deems
reasonable under the circumstances;
(v) payroll, travel and similar advances to cover matters that
are expected at the time of such advances ultimately to be treated as
expenses for accounting purposes and that are made in the ordinary
course of business;
(vi) loans or advances to employees made in the ordinary
course of business consistent with past practices of Millenium or such
Restricted Subsidiary in an aggregate amount not to exceed $100,000
outstanding at any one time;
(vii) stock, obligations or securities received in settlement
of debts created in the ordinary course of business and owing to
Millenium or any Restricted Subsidiary or in satisfaction of judgments
or received in connection with condemnation proceedings;
(viii) any Investment made as a result of the receipt of
non-cash consideration from an Asset Sale made in compliance with the
Indenture;
(ix) Investments made pursuant to Hedging Obligations to the
extent permitted by the covenants described under "-- Limitation on
Indebtedness"; and
(x) Investments in Persons primarily engaged in a Shipping
Business; provided, however, that any such Investment, when added
together with all other Investments made pursuant to this clause (x)
and then outstanding, does not exceed the sum of (A) $5.0 million plus
(B) 75% of the cumulative amount of Net Available Cash attributable to
Sold Mortgaged Vessels to the extent such Net Available Cash remains
after Millenium and its Restricted Subsidiaries have complied with the
provisions described under "-- Redemptions--Redemption Upon Sale or
Loss of a Mortgaged Vessel" or under "--Tender of Qualified Substitute
Vessel" to redeem Notes or to tender a Qualified Substitute Vessel with
respect to such Sold Mortgaged Vessels.
"Permitted Liens" means, with respect to any Person,
(a) Liens securing obligations under the Indenture, the Notes
and the Security Agreements;
(b) Liens existing on the Original Issue Date;
(c) Liens granted after the Original Issue Date in favor of
the Trustee, the Collateral Agent or the Holders;
(d) Liens with respect to the assets of a Restricted
Subsidiary (other than a Subsidiary Guarantor) granted by such
Restricted Subsidiary to Millenium to secure Indebtedness owing to
Millenium by such Restricted Subsidiary;
(e) Liens for crews' wages (including the wages of a master
and the wages of stevedores employed directly by a Vessel) and pledges
or deposits by such Person under worker's compensation laws,
unemployment insurance laws or similar legislation, or good faith
deposits in connection with bids, tenders, contracts (other than for
the payment of Indebtedness) or leases to which such Person is a party,
or deposits to secure public or statutory obligations of such Person or
deposits of cash or United States government bonds to secure surety or
appeal bonds to which such Person is a party, or deposits as security
for contested taxes or import duties or for the payment of rent, in
each case Incurred in the ordinary course of business;
(f) Liens imposed by law, such as carriers', warehousemen's
and mechanics' Liens, in each case for sums not yet due or being
contested in good faith by appropriate proceedings or other Liens
arising out of judgments or awards against such Person with respect to
which such Person shall then be proceeding with an appeal or other
proceedings for review;
(g) Liens for property taxes not yet subject to penalties for
non-payment or which are being contested in good faith and by
appropriate proceedings;
(h) Liens in favor of issuers of surety bonds or letters of
credit issued pursuant to the request of and for the account of such
Person in the ordinary course of its business; provided, however, that
such letters of credit do not constitute Indebtedness;
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(i) minor survey exceptions, minor encumbrances, easements or
reservations of, or rights of others for, licenses, rights-of-way,
sewers, electric lines, telegraph and telephone lines and other similar
purposes, or zoning or other restrictions as to the use of real
property or Liens incidental to the conduct of the business of such
Person or to the ownership of its properties which were not Incurred in
connection with Indebtedness and which do not in the aggregate
materially adversely affect the value of said properties or materially
impair their use in the operation of the business of such Person;
(j) Liens securing Indebtedness Incurred to finance the
construction, purchase or lease of, or repairs, improvements or
additions to, property of such Person; provided, however, that the Lien
may not extend to any other property owned by such Person or any of its
Subsidiaries at the time the Lien is Incurred, and the Indebtedness
(other than any interest thereon) secured by the Lien may not be
Incurred more than 180 days after the later of the acquisition,
completion of construction, repair, improvement, addition or
commencement of full operation of the property subject to the Lien;
(k) Liens on receivables of Millenium and its Restricted
Subsidiaries or on the Mortgaged Collateral to secure Indebtedness
permitted under the provisions described in paragraph (b)(1) of the
covenant described under "--Limitation on Indebtedness" and in
paragraph (6) of the covenant described under "Limitation on
Indebtedness and Preferred Stock of Restricted Subsidiaries";
(l) Liens on property or shares of Capital Stock of another
Person (other than a Subsidiary Guarantor) at the time such other
Person becomes a Subsidiary of such Person; provided, however, that
such Liens are not created, incurred or assumed in connection with, or
in contemplation of, such other Person becoming such a Subsidiary;
provided further, however, that such Lien may not extend to any other
property owned by such Person or any of its Subsidiaries;
(m) Liens on property at the time such Person or any of its
Subsidiaries acquires the property, including any acquisition by means
of a merger or consolidation with or into such Person or a Subsidiary
of such Person; provided, however, that such Liens are not created,
incurred or assumed in connection with, or in contemplation of, such
acquisition; provided further, however, that the Liens may not extend
to any other property owned by such Person or any of its Subsidiaries;
(n) Liens securing Hedging Obligations so long as such Hedging
Obligations relate to Indebtedness that is, and is permitted to be
under the Indenture, secured by a Lien on the same property securing
such Hedging Obligations;
(o) any Lien which arises in favor of an unpaid seller in
respect of goods, plant or equipment sold and delivered to Millenium in
the ordinary course of business until payment of the purchase price for
such goods or plant or equipment or any other goods, plant or equipment
previously sold and delivered by that seller (except to the extent that
such Lien secures Indebtedness or arises otherwise than due to
deferment of payment of purchase price);
(p) any Lien or pledge created or subsisting in the ordinary
course of business over documents of title, insurance policies or sale
contracts in relation to commercial goods to secure the purchase price
thereof;
(q) Liens to secure any Refinancing (or successive
Refinancings) as a whole, or in part, of any Indebtedness secured by
any Lien referred to in the foregoing clauses (b), (j), (l) and (m);
provided, however, that (x) such new Lien shall be limited to all or
part of the same property that secured the original Lien (plus
improvements to or on such property) and (y) the Indebtedness secured
by such Lien at such time is not increased to any amount greater than
the sum of (A) the outstanding principal amount or, if greater,
committed amount of the Indebtedness described under clause (b), (j),
(l) or (m) at the time the original Lien became a Permitted Lien and
(B) an amount necessary to pay any fees and expenses, including
premiums, related to such Refinancing;
(r) Charters, leases or subleases granted to others in the
ordinary course of business that are subject to the relevant Mortgage
and that do not materially interfere with the ordinary course of
business of Millenium and its Restricted Subsidiaries, taken as a
whole;
(s) (A) Liens in favor of Millenium or any Restricted
Subsidiary, (B) Liens arising from the rendering of a final judgment or
order against such Person that does not give rise to an Event of
Default and (C) Liens securing reimbursement obligations with respect
to letters of credit that encumber documents and other property
relating to such letters of credit and products and proceeds thereof;
(t) Liens in favor of customers and revenue authorities
arising as a matter of law to secure payment of custom duties in
connection with the importation of goods;
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(u) Liens for salvage;
(v) any Lien or pledge which arises in favor of Parent in the
ordinary course of business in connection with the performance of its
duties and obligations under the Management Agreements as in effect on
the Original Issue Date;
(w) Liens on the Capital Stock of an Unrestricted Subsidiary
to the extent such Liens secure obligations of such Unrestricted
Subsidiary or the Guarantee of Millenium of the obligations of such
Unrestricted Subsidiary; and
(x) Liens securing Indebtedness if the Indebtedness secured by
such Lien, plus all other Indebtedness secured by Liens described in
this clause (x) at the time of determination, does not exceed $1
million; and
Notwithstanding the foregoing, "Permitted Liens" will not include any Lien
described in clause (j), (l) or (m) above to the extent such Lien applies to any
Additional Assets acquired directly or indirectly from Net Available Cash
pursuant to the covenant described under "--Certain Covenants--Limitation on
Asset Sales." For purposes of this definition, the term "Indebtedness" shall be
deemed to include interest on such Indebtedness.
"Person" means any individual, corporation, partnership, limited
liability issuer, joint venture, association, joint-stock issuer, trust,
unincorporated organization, government or any agency or political subdivision
thereof or any other entity.
"Preferred Stock", as applied to the Capital Stock of any Person, means
Capital Stock of any class or classes (however designated) which is preferred as
to the payment of dividends or distributions, or as to the distribution of
assets upon any voluntary or involuntary liquidation or dissolution of such
Person, over shares of Capital Stock of any other class of such Person.
"Primary Treasury Dealer" means a primary U.S. Government securities
dealer in New York City.
"principal" of a Note means the Accreted Value of the Note plus the
premium, if any, payable on the Note which is due or overdue or is to become due
at the relevant time.
"Public Equity Offering" means an underwritten primary public offering
of common stock of Millenium or Parent pursuant to an effective registration
statement under the Securities Act.
"Public Market" means any time after (x) a Public Equity Offering has
been consummated and (y) at least 15% of the total issued and outstanding common
stock of Millenium or Parent has been distributed by means of an effective
registration statement under the Securities Act or is eligible for distribution
pursuant to Rule 144(k) under the Securities Act.
"Qualified Preferred Stock" of a Restricted Subsidiary means a series
of Preferred Stock of such Restricted Subsidiary which (i) has a fixed
liquidation preference that is no greater in the aggregate than the sum of (x)
the fair market value (as determined in good faith by the Board of Directors at
the time of the issuance of such series of Preferred Stock) of the consideration
received by such Restricted Subsidiary for the issuance of such series of
Preferred Stock and (y) accrued and unpaid dividends to the date of liquidation,
(ii) has a fixed annual dividend and has no right to share in any dividend or
other distributions based on the financial or other similar performance of such
Restricted Subsidiary and (iii) does not entitle the holders thereof to vote in
the election of directors, managers or trustees of such Restricted Subsidiary
unless such Restricted Subsidiary has failed to pay dividends on such series of
Preferred Stock for a period of at least 12 consecutive calendar months.
"Qualified Proceeds" means any of the following or any combination of
the following: (i) cash, (ii) Temporary Cash Investments, (iii) assets that are
used or useful in a Shipping Business and (iv) the Capital Stock of any Person
primarily engaged in a Shipping Business if, in connection with the receipt by
Millenium or any Restricted Subsidiary of Millenium of such Capital Stock, (a)
such Person becomes a Restricted Subsidiary of Millenium or of any Restricted
Subsidiary of Millenium or (b) such Person is merged, consolidated or
amalgamated with or into, or transfers or conveys substantially all of its
assets to, or is liquidated into, Millenium or any Restricted Subsidiary of
Millenium.
"Qualified Restricted Subsidiary" means a Restricted Subsidiary in
which no Affiliate of Millenium (other than another Qualified Restricted
Subsidiary) holds any Investment except through its beneficial ownership of
Capital Stock of Millenium.
"Qualified Substitute Vessel" means in respect of any Mortgaged Vessel
which has been sold or was the subject of an Event of Loss, as of any date, one
or more Vessels, (i) none of which is a Mortgaged Vessel as of such date, (ii)
which will be, upon acquisition thereof,
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wholly owned by a Wholly Owned Subsidiary of Millenium, (iii) each of which is
registered under the laws of the Republic of Liberia, the Commonwealth of the
Bahamas, Panama, Cyprus, the Cayman Islands or such other jurisdiction which at
the time is generally deemed acceptable by institutional lenders to the shipping
industry, as determined in good faith by the Board of Directors and (iv) each of
which has or which together have an Appraised Value at the Vessel Tender Date at
least equal to (x) the product of (A) the Vessel Percentage of the Vessel(s) for
which it is or they are being substituted, multiplied by (B) the Accreted Value
of the Notes outstanding on such date, assuming compliance by the applicable
Subsidiary Guarantor with all the terms of the Indenture and the applicable
Mortgage or (y) with respect to a Sold Mortgaged Vessel, if the Loan To Value
Ratio (calculated to include in the numerator thereof the then outstanding
amount of Indebtedness under any working capital facility to the extent such
Indebtedness is secured by a prior Lien on the Mortgaged Vessels) would be less
than 0.8 to 1.0 after giving effect to the disposition of such Sold Mortgaged
Vessel and the tender of one or more Vessels having an Appraised Value at the
Vessel Tender Date at least equal to the lesser of (I) the product calculated
under the foregoing clause (x) and (II) the Appraised Value of such Sold
Mortgaged Vessel, then such lesser amount.
"Reference Treasury Dealers" means each of Credit Suisse First Boston
Corporation, Donaldson Lufkin Jenrette Securities Corporation and their
respective successors; provided, however, that if either of the foregoing shall
cease to be a Primary Treasury Dealer, Millenium shall substitute therefor
another Primary Treasury Dealer.
"Reference Treasury Dealer Quotations" means, with respect to any
Reference Treasury Dealer and any redemption date, the average, as determined by
the Trustee, of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) quoted in
writing to the Trustee by such Reference Treasury Dealer at 5:00 p.m. (New York
City time) on the third business day preceding such redemption date.
"Refinance" means, in respect of any Indebtedness, to refinance,
extend, renew, refund, repay, prepay, redeem, defease or retire, or to issue
other Indebtedness in exchange or replacement for, such indebtedness.
"Refinanced" and "Refinancing" shall have correlative meanings.
"Refinancing Indebtedness" means Indebtedness that Refinances any
Indebtedness of Millenium or any Restricted Subsidiary existing on the Original
Issue Date or Incurred in compliance with the Indenture, including Indebtedness
that Refinances Refinancing
Indebtedness;
provided, however, that (i) such Refinancing Indebtedness has a Stated Maturity
either (A) no earlier than the Stated Maturity of the Indebtedness being
Refinanced or (B) after the Stated Maturity of the Notes, (ii) such Refinancing
Indebtedness has an Average Life at the time such Refinancing Indebtedness is
Incurred that is equal to or greater than the Average Life of the Indebtedness
being Refinanced and (iii) such Refinancing Indebtedness has an aggregate
principal amount (or if Incurred with original issue discount, an aggregate
issue price) that is equal to or less than the aggregate principal amount (or if
Incurred with original issue discount, the aggregate accreted value) then
outstanding or committed (plus the amount of up to six months of accrued and
unpaid interest on such Indebtedness and fees and expenses, including any
premium and defeasance costs) under the Indebtedness being Refinanced; provided
further, however, that Refinancing Indebtedness shall not include (x)
Indebtedness of a Subsidiary that Refinances Indebtedness of Millenium or of
another Restricted Subsidiary or (y) Indebtedness of Millenium or a Restricted
Subsidiary that Refinances Indebtedness of an Unrestricted Subsidiary.
"Restricted Payment" with respect to any Person means
(i) the declaration or payment of any dividends or any other
distributions of any sort in respect of its Capital Stock (including
any payment in connection with any merger or consolidation involving
such Person) or similar payment to the direct or indirect holders in
their capacity as such of its Capital Stock (other than dividends or
distributions payable solely in its Capital Stock (other than
Disqualified Stock) and dividends or distributions payable solely to
Millenium or a Restricted Subsidiary, and other than pro rata dividends
or other distributions made by a Subsidiary that is not a Wholly Owned
Subsidiary to minority stockholders (or owners of an equivalent
interest in the case of a Subsidiary that is an entity other than a
corporation)),
(ii) the purchase, redemption or other acquisition or
retirement for value of any Capital Stock of Millenium held by any
Person or of any Capital Stock of a Restricted Subsidiary held by any
Affiliate of Millenium (other than a Restricted Subsidiary), including
the exercise of any option to exchange any Capital Stock (other than
into Capital Stock of Millenium that is not Disqualified Stock),
(iii) the purchase, repurchase, redemption, defeasance or
other acquisition or retirement for value, prior to scheduled maturity,
scheduled repayment or scheduled sinking fund payment of any
Subordinated Obligations (other than the purchase, repurchase or other
acquisition of Subordinated Obligations purchased in anticipation of
satisfying a sinking fund obligation, principal installment or final
maturity, in each case due within one year of the date of acquisition)
or
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(iv) the making of any Investment (other than a Permitted
Investment) in any Person.
"Restricted Subsidiary" means the Subsidiary Guarantors and any other
Subsidiary of Millenium that is not an Unrestricted Subsidiary.
"Sale/Leaseback Transaction" means an arrangement relating to property
now owned or hereafter acquired whereby Millenium or a Restricted Subsidiary
transfers such property to a Person and Millenium or a Restricted Subsidiary
leases it from such Person.
"SEC" means the Securities and Exchange Commission.
"Secured Indebtedness" means any Indebtedness of Millenium secured by a
Lien.
"Security Agreements" has the meaning specified in the Indenture and
includes the Collateral Agency Agreement, the Mortgages, the Escrow Agreement,
the Insurance Assignments and the security arrangements specified in the
Indenture and in the Collateral Agency Agreement.
"Senior Indebtedness" of any Person means (i) Indebtedness of such
Person, whether outstanding on the Original Issue Date or thereafter Incurred,
and (ii) accrued and unpaid interest (including interest accruing on or after
the filing of any petition in bankruptcy or for reorganization relating to
Person to the extent post-filing interest is allowed in such proceeding) in
respect of (A) indebtedness for money borrowed and (B) indebtedness evidenced by
notes, debentures, bonds or other similar instruments for the payment of which
such Person is responsible or liable unless, in the case of (i) and (ii), in the
instrument creating or evidencing the same or pursuant to which the same is
outstanding, it is provided that such obligations are subordinate in right of
payment to the Notes; provided, however, that Senior Indebtedness shall not
include (1) any obligation of such Person to any subsidiary of such Person, (2)
any liability for Federal, state, local or other taxes owed or owing by such
Person, (3) any accounts payable or other liability to trade creditors arising
in the ordinary course of business (including guarantees thereof or instruments
evidencing such liabilities), (4) any Indebtedness of such Person (and any
accrued and unpaid interest in respect thereof) which is subordinate or junior
in any respect to any other Indebtedness or other obligation of such Person or
(5) that portion of any Indebtedness which at the time of Incurrence is Incurred
in violation of the Indenture.
"Shipping Business" means the ownership or operation of vessels and any
activities within the ship owning and shipping industries and all businesses
which are complementary, incidental, related or ancillary to any such
activities.
"Significant Subsidiary" means any Restricted Subsidiary that would be
a "Significant Subsidiary" of Millenium within the meaning of Rule 1-02 under
Regulation S-X promulgated by the SEC.
"Stated Maturity" means, with respect to any security, the date
specified in such security as the fixed date on which the final payment of
principal of such security is due and payable, including pursuant to any
mandatory redemption provision (but excluding any provision providing for the
repurchase of such security at the option of the holder thereof upon the
happening of any contingency unless such contingency has occurred).
"Subordinated Obligation" means any Indebtedness of Millenium (whether
outstanding on the Original Issue Date or thereafter Incurred) which is
subordinate or junior in right of payment to the Notes by its terms or pursuant
to a written agreement to that effect.
"Subsidiary" means, in respect of any Person, any corporation,
association, partnership or other business entity of which more than 50% of the
total voting power of shares of Capital Stock or other interests (including
partnership interests) entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees thereof
is at the time owned or controlled, directly or indirectly, by (i) such Person,
(ii) such Person and one or more Subsidiaries of such Person or (iii) one or
more Subsidiaries of such Person.
"Subsidiary Guarantor" means each Subsidiary of Millenium, whether now
owned or hereafter formed, which (i) owns a Mortgaged Vessel on the Original
Issue Date, (ii) acquires a Vessel with Escrowed Proceeds, (iii) acquires a
Qualified Substitute Vessel, or (iv) shall
execute and deliver a Subsidiary Guarantee.
"Subsidiary Guarantee" means a Guarantee of Millenium's obligations
with respect to the Notes issued by a Subsidiary of Millenium.
"Temporary Cash Investments" means any of the following: (i) any
investment in direct obligations of the United States of America or any agency
thereof or obligations guaranteed by the United States of America or any agency
thereof; (ii) investments in time deposit
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accounts, certificates of deposit and money market deposits maturing within 360
days of the date of acquisition thereof issued by a bank or trust company which
is organized under the laws of the United States of America, any state thereof
or any foreign country recognized by the United States, and which bank or trust
company has capital, surplus and undivided profits aggregating in excess of
$50,000,000 (or the foreign currency equivalent thereof) and has outstanding
debt which is rated "A" (or such similar equivalent rating) or higher by at
least one nationally recognized statistical rating organization (as defined in
Rule 436 under the Securities Act) or any money-market fund sponsored by a
registered broker dealer or mutual fund distributor; (iii) repurchase
obligations with a term of not more than 30 days for underlying securities of
the types described in clause (i) above entered into with a bank meeting the
qualifications described in clause (ii) above; (iv) investments in commercial
paper, maturing not more than six months after the date of acquisition, issued
by a corporation (other than an Affiliate of Millenium) organized and in
existence under the laws of the United States of America or any foreign country
recognized by the United States of America with a rating at the time as of which
any investment therein is made of "P-2" (or higher) according to Moody's
Investors Service, Inc. or "A-2" (or higher) according to Standard & Poor's
Ratings Group; (v) investments in securities with maturities of six months or
less from the date of acquisition issued or fully guaranteed by any state,
commonwealth or territory of the United States of America, or by any political
subdivision or taxing authority thereof, and rated at least "A" by Standard &
Poor's Ratings Group or "A" by Moody's Investors Service, Inc. and (vi) any
mutual fund the portfolio of which is limited to investments of types specified
in the preceding clauses (i) through (v), including any proprietary mutual fund
of the Trustee for which such bank or an affiliate thereof is investment advisor
or to which such bank provides other services and receives reasonable
compensation therefor.
"Treasury Rate" means, with respect to any redemption date, the rate
per annum equal to the semiannual equivalent yield to maturity of the Comparable
Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as
a percentage of its principal amount) equal to the Comparable Treasury Price for
such redemption date.
"Unrestricted Subsidiary" means (i) any Subsidiary of Millenium (other
than a Subsidiary Guarantor) that at the time of determination shall be
designated an Unrestricted Subsidiary by the Board of Directors in the manner
provided below and (ii) any Subsidiary of an Unrestricted Subsidiary. The Board
of Directors may designate any Subsidiary of Millenium (including any newly
acquired or newly formed Subsidiary (other than a Subsidiary Guarantor)) to be
an Unrestricted Subsidiary unless such Subsidiary or any of its Subsidiaries
owns any Capital Stock or Indebtedness of, or holds any Lien on any property of,
Millenium or any other Restricted Subsidiary; provided, however, that either (A)
the Subsidiary to be so designated has total assets of $1,000 or less or (B) if
such Subsidiary has assets greater than $1,000, such designation would be
permitted under the covenant described under "--Certain Covenants--Limitation on
Restricted Payments." The Board of Directors may designate any Unrestricted
Subsidiary to be a Restricted Subsidiary; provided, however, that immediately
after giving effect to such designation (x) Millenium could incur $1.00 of
additional Indebtedness under paragraph (a) of the covenant described under
"--Certain Covenants--Limitation on Indebtedness" and (y) no Default shall have
occurred and be continuing. Any such designation by the Board of Directors shall
be evidenced to the Trustee by promptly filing with the Trustee a copy of the
resolution of the Board of Directors giving effect to such designation and an
Officers' Certificate certifying that such designation complied with the
foregoing provisions.
"U.S. Government Obligations" means direct obligations (or certificates
representing an ownership interest in such obligations) of the United States of
America (including any agency or instrumentality thereof) for the payment of
which the full faith and credit of the United
States of America is pledged and which are not callable at the issuer's option.
"Vessel" means a bulk carrier owned or leased by Millenium or any
Subsidiary of Millenium.
"Vessel Percentage" means, as of and after the Original Issue Date and
prior to any subsequent adjustment as provided below, for each of the initial
Mortgaged Vessels (including the Committed Vessels) and the Escrowed Proceeds,
the percentage set forth below opposite such Mortgaged Vessel:
Vessel Percentage
------ ----------
(1) Monica Marissa 3.2%
(2) Clipper Harmony 4.5%
(3) Clipper Golden Hind 3.8%
(4) Clipper Pacific 1.5%
(5) Clipper Atlantic 1.4%
(6) Millenium Aleksander 7.6%
(7) Millenium Elmar 7.0%
(8) Millenium Leader 7.0%
(9) Millenium Hawk 6.2%
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(10) Millenium Eagle 5.9%
(11) Millenium Osprey 6.2%
(12) Millenium Falcon 4.9%
(13) Millenium Condor 4.9%
(14) Millenium Amethyst 2.6%
(15) Millenium Yama 3.1%
(16) Millenium Majestic 2.7%
Escrowed Proceeds 27.5%
-----
Total 100.0%
provided, however, that each Vessel Percentage shall be adjusted in each case
upon the occurrence of, and after giving effect to, (i) the acquisition of a
vessel with Escrowed Proceeds (other than a Committed Vessel) and the delivery
of a Mortgage with respect to such Vessel, (ii) the delivery of any Qualified
Substitute Vessel as part of the Collateral pursuant to the terms of the
Indenture, (iii) the delivery of any other Vessel as part of the Collateral,
(iv) an Event of Loss with respect to any Mortgaged Vessel, or (v) the sale of
any Mortgaged Vessel (or the termination of any Acquisition Contract in respect
of a Committed Vessel prior to the acquisition thereof by the Company), in each
case effected in accordance with the terms of the Indenture, to be, for each
Vessel that constitutes a Mortgaged Vessel after such an occurrence, the
percentage that the most recently calculated Appraised Value of such Mortgaged
Vessel bears to the sum of such aggregate Appraised Value of the remaining
Mortgaged Vessels and after giving effect to such occurrence plus the amount of
Escrowed Proceeds then remaining as part of the Collateral. Notwithstanding the
foregoing, if any Vessel Percentage is required to be calculated or adjusted at
a time when cash is on deposit with the Trustee as part of the Collateral as a
result of the sale of a Mortgaged Vessel or the occurrence of an Event of Loss
with respect to a Mortgaged Vessel, the amount of such cash on deposit shall be
deemed to be the Appraised Value of such Vessel giving rise to such cash on
deposit and such Vessel shall be deemed to remain a Mortgaged Vessel for
purposes of such computation or adjustment of Vessel Percentage.
"Voting Stock" of a Person means all classes of Capital Stock or other
interests (including partnership interests) of such Person then outstanding and
normally entitled (without regard to the occurrence of any contingency) to vote
in the election of directors, managers or
trustees thereof.
"Warrant Agreement" means the Warrant Agreement, dated as of July 15,
1998, between Millenium and ChaseMellon Shareholder Services, L.L.C., as the
warrant agent.
"Wholly Owned Subsidiary" means a Restricted Subsidiary all the Capital
Stock of which (other than directors' qualifying shares) is owned by Millenium
or one or more Wholly Owned Subsidiaries.
"Working Capital Obligations" means all of Millenium's obligations
under the Working Capital Facility Agreement.
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DESCRIPTION OF THE WARRANTS
On the Original Issue Date, Millenium offered 100,000 Units (the
"Units"), each Unit consisting of $1,000 principal amount at maturity of its
Existing Notes and one Warrant to purchase five shares of common stock of
Millenium at an exercise price of $.01 per share. The Warrants were issued
pursuant to a warrant agreement (the "Warrant Agreement"), dated as of July 15,
1998, between Millenium and ChaseMellon Shareholder Services, L.L.C., as warrant
agent (the "Warrant Agent"). A copy of the Warrant Agreement has been filed as
an exhibit to the Registration Statement of which this Prospectus forms a part.
DESCRIPTION OF COMMON STOCK
Millenium Common Stock
As of the date of this Prospectus, 9,500,000 shares of Millenium Common
Stock are outstanding and registered in the name of MMI. The following summary
does not purport to be complete and is subject to, and is qualified in its
entirety by, the Certificate of Incorporation and the Memorandum and Articles of
Association of Millenium, copies of which have been filed as exhibits to the
Registration Statement of which this Prospectus forms a part.
In relation to all matters submitted to a vote of stockholders, every
holder of Millenium Common Stock who (being an individual) is present in person
or by proxy or (being a corporation) is present by a duly authorized
representative, not being himself a stockholder, shall, on a show of hands, have
one vote and, on a poll, every holder of Millenium Common Stock entitled to vote
shall have one vote for each share registered in his name in the register of
members. Accordingly, the holders of Millenium Common Stock may from time to
time in general meeting increase or reduce the number of directors and may, by
ordinary resolution, remove any director or by ordinary resolution appoint any
person to be a director. On a winding-up of Millenium, a liquidator may with the
sanction of a special resolution of the holders of Millenium Common Stock,
divide among the holders of Millenium Common Stock in specie or kind the whole
or any part of the assets of Millenium and may for such purposes set such value
as he deems fair upon any property to be divided as aforesaid and may determine
how such division shall be carried out as between the holders of Millenium
Common Stock.
There is included in the Articles of Association of Millenium a
provision indemnifying every director or other officer of Millenium out of the
assets of Millenium against losses or liabilities which such director or officer
may sustain or incur in or about the execution of the duties of his office or
otherwise in relation thereto and confirming that no such director or other
officer shall be liable for any loss, damage or misfortune which may happen to
or be incurred by Millenium in the execution of the duties of his office or in
relation thereto.
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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 the Company that DTC is a limited-purpose trust
company organized under the laws of the State of New York, a member of the
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").
The Company 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 Existing Notes or
Exchange 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 the Company 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, the Company, and the 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,
neither the Company or the Trustee has or will have any responsibility or
liability for the payment of such amounts to beneficial owners of Exchange
Notes. The Company 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 the
Company is unable to locate a qualified successor or if the Company 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 exchangeable at the office
of the Indenture Trustee upon compliance with the requirements set forth in the
Indenture.
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THE MORTGAGES
General
Each Subsidiary Guarantor has granted to the Collateral Agent, for the
benefit of the Holders of the Exchange Notes and the Working Capital Facility
Provider, a Mortgage on its Mortgaged Vessel to secure the payment of all sums
of money (whether for principal, premium, if any, interest, fees, expenses or
otherwise) from time to time payable by such Subsidiary under (a) its Subsidiary
Guarantee, the payment of the principal of (and premium, if any) and interest on
the Exchange Notes, the payment of all other sums payable by Millenium under the
Indenture and the payment of all other sums payable under the Security
Agreements (as guaranteed by its Subsidiary Guarantee) and (b) its Working
Capital Guarantee, the payment of all amounts payable by Millenium under the
Working Capital Facility Agreement. The Holders of the Notes and the Working
Capital Facility Provider will have an equal and ratable interest in the
Mortgaged Vessel, subject to the priority of payment described below under
"--Application of Proceeds Following an Event of Default." The Mortgages have
been recorded in accordance with the provisions of Liberian law, Cypriot law,
Bahamian law, Cayman Islands law or Panamanian law as applicable. Each
Subsidiary Guarantee and Working Capital Facility Guarantee is limited in amount
to an amount not to exceed the maximum amount that can be guaranteed by the
applicable Subsidiary Guarantor without rendering the applicable Subsidiary
Guarantee or Working Capital Facility Guarantee voidable under applicable law
relating to fraudulent conveyance or fraudulent transfer or similar laws
affecting the rights of creditors generally.
Certain Covenants
Each Mortgage contains, among other things, the following covenants:
Registration and Documentation of the Mortgaged Vessel. The
Subsidiary Guarantor will not permit the Mortgaged Vessel to be
operated in any manner contrary to law, will not engage in unlawful
trade or carry any cargo that would expose the Mortgaged Vessel to
penalty, forfeiture or capture, and will not permit to be done anything
which can or may injuriously affect the registration or enrollment of
its Mortgaged Vessel under the laws and regulations of the jurisdiction
in which such Mortgaged Vessel is registered, and will at all times
keep its Mortgaged Vessel duly documented thereunder, except in the
case of any change of registry permitted by the Indenture or the
Mortgage, in which case a Vessel Mortgage will be recorded against such
Vessel under the laws of any such new registry state.
Restriction on Liens. Except for its time charter and the lien
of the Mortgage and certain other permitted liens (including liens
relating to a covered insured incident), the Subsidiary Guarantor will
not suffer to be continued any lien, encumbrance or charge on its
Mortgaged Vessel for longer than 90 days after the same becomes due and
payable and will pay or cause to be discharged or make adequate
provision for the satisfaction or discharge of all claims or demands,
or will cause its Mortgaged Vessel to be released or discharged from
any lien, encumbrance or charge therefor. Notwithstanding the
foregoing, no Subsidiary Guarantor will be permitted to suffer any
lien, encumbrance or charge on its Mortgaged Vessel to secure any
Indebtedness (other than the Existing Notes and the Subsidiary
Guarantees and Indebtedness Incurred under the provision described in
paragraph (b)(1) of the covenant described under "Limitation on
Indebtedness" and in paragraph (6) of the covenant described under
"--Limitation on Indebtedness and Preferred Stock of Restricted
Subsidiaries").
Maintenance of the Mortgaged Vessel. The Subsidiary Guarantor
will at all times and without cost or expense to the Collateral Agent
maintain and preserve, or cause to be maintained and preserved, its
Mortgaged Vessel in good running order and repair, so that the
Mortgaged Vessel shall be in every respect seaworthy; and will keep the
Mortgaged Vessel, or cause her to be kept, in such condition as will
entitle her to maintain her current classification rating and annually
will furnish the Collateral Agent a certificate by such classification
society confirming that such classification is maintained.
Transfer of Flag or Sale of the Mortgaged Vessel. The
Subsidiary Guarantor will not transfer or change the flag or port of
documentation of its Mortgaged Vessel, except to Cyprus, the Bahamas,
Liberia, Panama, the Cayman Islands, Isle of Man, the Hellenic Republic
or any jurisdiction which at the time is generally deemed acceptable by
institutional lenders to the shipping industry, as determined in good
faith by the Board of Directors, as permitted by the terms of the
Indenture; provided, however, that there shall at all times exist an
effective Mortgage on the applicable Mortgaged Vessel, notwithstanding
such transfer or change of flag or port. Except as permitted by the
terms of the Indenture, no Subsidiary Guarantor will sell, mortgage or
transfer its Mortgaged Vessel.
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Insurance. The Subsidiary Guarantor will at all times and at
its own cost and expense cause to be carried and maintained in respect
of its Mortgaged Vessel insurance payable in United States dollars in
amounts, against risks (including marine hull and machinery insurance,
marine protection and indemnity insurance, war risks insurance and
liability arising out of pollution and the spillage or leakage of cargo
and cargo liability insurance) and in a form that is substantially
equivalent to the coverage carried by other responsible and experienced
companies engaged in the operation of vessels similar to its Mortgaged
Vessel and with insurance companies, underwriters, funds, mutual
insurance associations or clubs of recognized standing. No insurance
will provide for a deductible amount in excess of $1,000,000 per
occurrence.
In the case of all marine and war risk hull and machinery policies, the
Subsidiary Guarantor will cause the Collateral Agent to be named an additional
insured and will use all reasonable efforts (and cause its insurance broker to
use all reasonable efforts) to cause the insurers under such policies to waive
any liability of the Collateral Agent for premiums or calls payable under such
policies. The Subsidiary Guarantor will use all reasonable efforts with its
insurance brokers and underwriters to include a clause to the effect that no
policy is to be cancelable or subject to lapse without at least seven business
days' prior notice to the Collateral Agent.
For purposes of insurance against total loss, each Mortgaged Vessel is
to be insured for an amount not less than its fair value and not less, when
aggregated with the insurance on the other Mortgaged Vessels, than an amount
equal to the aggregate outstanding principal amount of the Exchange Notes,
premium, if any, and accrued and unpaid interest thereon. Unless the Collateral
Agent shall have otherwise directed, any loss involving damage to a Mortgaged
Vessel which is not in excess of $1,000,000 may be paid directly for repair or
salvage or to reimburse the Subsidiary Guarantor for the same.
In the event of an actual, constructive or compromised total loss of
its Mortgaged Vessel, any adjustment or compromise of such loss by the
Subsidiary Guarantor will be at the highest amount reasonably obtainable, and
all insurance or other payments for such loss will be applied as set forth above
under "Description of the Exchange Notes--Redemption."
Events of Default and Remedies
An Event of Default under the Indenture and the Working Capital
Facility Agreement will constitute an event of default under the Mortgages and,
in case any one or more events of default under the Mortgages shall have
occurred and be continuing, then, in each and every such case the Collateral
Agent will have the right to:
(1) declare immediately due and payable all the Obligations
and Working Capital 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 Working
Capital Obligations and collect the same out of any and all property of
the Subsidiary Guarantor whether
covered by the Mortgage or otherwise;
(2) exercise all the rights and remedies in foreclosure and
otherwise given to mortgagees by the provisions of applicable law;
(3) take and enter into possession of the Mortgaged Vessel, at
any time, wherever the same may be, without legal process and without
being responsible for loss or damage, and the Subsidiary Guarantors or
other person in possession forthwith upon demand of the Collateral
Agent will surrender to the Collateral Agent possession of the
Mortgaged Vessel and the Collateral Agent may, without being
responsible for loss or damage, hold, lay-up, lease, charter, operate
or otherwise use such Mortgaged 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 in general
average, and all other sums due or to become due in respect of such
Mortgaged Vessel or in respect of any insurance thereon from any person
whomsoever, in accordance with the terms of the Mortgage; and
(4) take and enter into possession of the Mortgaged Vessel, at
any time, wherever the same may be, without legal process, and if it
seems desirable to the Collateral Agent and without being responsible
for loss or damage, sell such Mortgaged Vessel, at any place and at
such time as the Collateral Agent may specify and in any such manner
and such place (whether by public or private sale) as the Collateral
Agent may deem advisable, in accordance with the terms of the Mortgage.
Any sale of a Mortgaged Vessel made in pursuance of the Collateral
Agent's right under the Mortgage will operate to divest all right, title and
interest of any nature whatsoever of the Subsidiary Guarantor therein and
thereto and shall bar any claim from the Subsidiary Guarantor, its successors
and assigns, and all persons claiming by, through or under them.
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All the Mortgaged Vessels owned by Millenium and its Restricted
Subsidiaries on or shortly after the Original Issue Date are registered under
the Liberian, Cypriot, Panamanian, Cayman Islands or Bahamian flag. The Mortgage
on each of the Panamanian flag Mortgaged Vessels will be a preferred mortgage
lien under Panamanian maritime law. The Mortgage on each of the other Mortgaged
Vessels will have similar status under applicable law. The laws of all of such
jurisdictions provide that such Mortgages may be enforced by the mortgagee by
suit in admiralty in a proceeding against the vessel covered by the mortgage.
The priority that such a mortgage would have against the claims of
other lien creditors in an enforcement proceeding is generally determined by,
and will vary in accordance with, the law of the country where the proceeding is
brought.
Panamanian maritime law provides that a "preferred mortgage" is prior
to all claims except (i) costs imposed by the enforcing court, (ii) liens for
damages arising out of tort, (iii) wages of a stevedore earned during the most
recent voyage when employed directly by the owner, operator or master of the
vessel, (iv) wages of the crew of the vessel earned during the most recent
voyage and (v) general average and salvage, including contract salvage.
Panamanian law also provides that unpaid vessel tonnage taxes, annual fees and
penalties imposed by the Panamanian government are liens prior to the liens of
the mortgage.
Bahamian law provides that a first priority ship mortgage has priority
over all other claims except (i) costs allowed by the court arising out of the
arrest and sale proceedings, (ii) wages and other sums due to the master,
officers and other members of the ship's complement in respect of their
employment on the ship, (iii) port, canal and other waterway dues and pilotage
dues and any other outstanding fees payable under the Merchant Shipping Act of
The Bahamas in respect of the ship, (iv) claims against the owner in respect of
loss of life or personal injury occurring, whether on land or on water, in
direct connection with the operation of the ship, (v) claims against the owner,
based on tort and not capable of being based on contract, in respect of loss of
or damage to property occurring, whether on land or on water, in direct
connection with the operation, of the ship, and (vi) claims for salvage, wreck
removal and contribution in general average.
Cayman Islands maritime law provides that the priority of mortgages
between themselves shall be determined by the order in which the mortgages were
registered. Upon entry of a first priority ship mortgage in the Ship Registry,
it will have priority over any other subsequently registered mortgage of or
charge on the relevant vessel. However, a ship mortgage, even if registered,
will rank behind any possessory liens in respect of work done on the vessel and
maritime liens (whether existing before or after the creation of the
mortgage).
Liberian maritime law provides that a "preferred mortgage lien" is
prior to all claims other than the following: (i) liens arising prior in time to
the recording of the preferred mortgage; (ii) liens arising out of tort; (iii)
liens for tonnage taxes and annual fees payable under the Liberian Maritime
Regulations; (iv) liens for crew's wages; (v) liens for general average; (vi)
liens for salvage; and (vii) liens for expenses and fees allowed and costs
imposed by courts of competent jurisdiction.
Cypriot maritime law provides that a "preferred mortgage lien" is prior
to all claims other than the following: (i) maritime liens for damage done by
the vessel; (ii) liens for salvage; (iii) liens or crew's wages; (iv) liens for
master's disbursements; (v) liens for bottomry; and (vii) liens for costs of
arresting parties imposed by courts of competent jurisdiction.
All of such ship mortgages may be enforced against a vessel physically
present in the United States, but the claim under the mortgage would rank behind
preferred maritime liens, including those for supplies and other necessaries
provided in the United States. There is no assurance, however, that if
enforcement proceedings must be commenced against a Mortgaged Vessel, the
Mortgaged Vessel will be located in a jurisdiction having the same procedures
and lien priorities as the United States. Other jurisdictions may provide no
legal remedy at all for the enforcement of the Mortgages, or a remedy dependent
on court proceedings so expensive and time consuming as to be impractical.
Furthermore, certain jurisdictions, unlike the United States, may not permit the
Mortgaged Vessel to be sold prior to entry of a judgment, entailing a long
waiting time that could result in increased custodial costs, deterioration in
the condition of the Mortgaged Vessel and substantial reduction in her value.
As additional security for the Obligations, each Subsidiary Guarantor
will assign to the Trustee, among other things, all its rights under the
Charter, the earnings of its Mortgaged Vessel and the insurance carried thereon.
The assignment of earnings on the vessels will not be notified to charterers
unless an event of default has occurred and is continuing under a mortgage which
is not capable of cure. See "Description of the Exchange Notes--Subsidiary
Guarantees."
Application of Proceeds Following an Event of Default
The Trustee will be the "Senior Representative" under the Collateral
Agency Agreement and will be entitled to direct the Collateral Agent in the
exercise of remedies following an Event of Default; provided, however, that upon
the occurrence of an event of default under
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the Working Capital Facility Agreement and the acceleration of the amounts due
thereunder, the Working Capital Facility Provider shall have the right to notify
the Trustee. If the Trustee fails to instruct the Collateral Agent with respect
to the Vessel Collateral within 90 days, the Working Capital Facility Provider
shall have the right to so instruct the Collateral Agent; provided, however,
that the Trustee may at any time thereafter resume the direction of the
Collateral Agent, so long as the Trustee does not terminate the actions
commenced by the Collateral Agent without the prior written consent of the
Working Capital Facility Provider. Pursuant to the terms of the Collateral
Agency Agreement, the Collateral Agent will distribute all proceeds received by
it following an Event of Default in the following order of priority:
FIRST: to the Working Capital Facility Provider, the Trustee and the
Collateral Agent, pro rata to each of them accordance with the amounts owed, an
amount equal to any accrued and unpaid fees owing under the Working Capital
Facility Agreement, any Trustee and Collateral Agent fees and all reasonable
expenses and charges incurred by or on behalf of the Working Capital Facility
Provider, the Trustee and the Collateral Agent in connection with the
ascertainment or protection of their respective rights and the pursuance of
their respective remedies under the Indenture or the Working Capital Facility
Agreement (including the reasonable fees and expenses of counsel) in each case
as certified in writing to the Collateral Agent by the Lender, the Trustee or
the Collateral Agent, as the case may be;
SECOND: to the Working Capital Facility Provider, an amount, as
certified in writing to the Collateral Agent by the Working Capital Facility
Provider, equal to any amounts owing pursuant to the Working Capital Facility
Agreement with respect to borrowings made thereunder (not to exceed an aggregate
principal amount of $7.0 million), including all accrued and unpaid interest
thereon;
THIRD: to the Trustee for the benefit of the Holders of the Exchange
Notes, an amount, as certified in writing to the Collateral Agent by the
Trustee, equal to any accrued and unpaid interest in respect of the Exchange
Notes then outstanding;
FOURTH: to the Trustee for the benefit of the holders of the Exchange
Notes, an amount, as certified in writing to the Collateral Agent by the
Trustee, equal to the outstanding principal of the Exchange Notes; and
FIFTH: to the related Subsidiary Guarantor, its successors or assigns,
or to whomsoever may be lawfully entitled to receive the same, the excess, if
any.
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DESCRIPTION OF WORKING CAPITAL FACILITY AGREEMENT
Pursuant to a Credit Agreement (the "Working Capital Facility
Agreement"), dated July 20, 1998, among Millenium and The Bank of New York (the
"Working Capital Facility Provider"), the Working Capital Facility Provider has
made available to Millenium a line of credit ("Working Capital Facility") in a
principal amount up to $7,000,000, although no amounts are currently outstanding
under such Working Capital Facility. The Working Capital Facility Agreement
provides that working capital draws (each, a "Working Capital Draw") shall be in
minimum amounts of $250,000 and shall accrue interest at a rate equal to the sum
of (a) LIBOR and (b) 1.5% per annum. The Working Capital Facility matures on the
one-year anniversary of the Original Issue Date. During the second half of the
term of the Working Capital Facility Agreement, for any period of 30 consecutive
days chosen by Millenium, all Working Capital Draws then outstanding must be
repaid by Millenium. Millenium will be required to pay to the Working Capital
Facility Provider (a) an up front fee equal to $35,000 and (b) a commitment fee
equal to 0.375% per annum on the unused portion of the Working Capital Facility,
payable quarterly in arrears commencing on October 20, 1998. The obligations of
Millenium under the Working Capital Facility Agreement are guaranteed by each of
the Subsidiary Guarantors pursuant to a guarantee (each, a "Working Capital
Guarantee") and are secured by the Mortgaged Vessels, together with the
insurances thereon (the "Vessel Collateral").
The Working Capital Facility Agreement contains representations and
warranties similar to those contained in the Purchase Agreement (as defined),
and will incorporate by reference, for the benefit of the Working Capital
Facility Provider, each of the covenants contained in the Indenture. The
following events, among others, will constitute events of default under the
Working Capital Facility Agreement unless waived by the Working Capital Facility
Provider: (i) Millenium fails to pay the Working Capital Facility Provider when
due any amounts drawn under the Working Capital Facility Agreement, any interest
thereon or any fees due under the Working Capital Facility Agreement, (ii)
Millenium or any of the Subsidiary Guarantors fails to observe or perform any
other covenant, agreement or restriction contained or incorporated by reference
in the Working Capital Facility Agreement, and, in certain cases, applicable
grace periods expire, (iii) any representation, warranty, certification or
statement made by Millenium or any of the Subsidiary Guarantors in the Working
Capital Facility Agreement or in any certificate, financial statement or other
document delivered pursuant thereto proves to have been incorrect in any
material respect when made and (iv) certain events of bankruptcy or insolvency
of Millenium or any of the Subsidiary Guarantors. Upon the occurrence of an
event of default under the Working Capital Facility Agreement and the
acceleration of the amounts due thereunder, the Working Capital Facility
Provider shall have the right to notify the Trustee. If the Trustee fails to
instruct the Collateral Agent with respect to the Vessel Collateral within 90
days, the Working Capital Facility Provider shall have the right to so instruct
the Collateral Agent; provided, however, that the Trustee may at any time
thereafter resume the direction of the Collateral Agent, so long as the Trustee
does not terminate the actions commenced by the Collateral Agent without the
prior written consent of the Working Capital Facility Provider. Proceeds from
the Vessel Collateral will be applied pursuant to the priority of payment
indicated under "The Mortgages--Application of Proceeds following an Event of
Default."
The Working Capital Facility Agreement provides that to the extent a
Mortgaged Vessel is a Sold Vessel or a Lost Vessel and the Net Available Cash
relating to the Sold Vessel or the Event of Loss Proceeds relating to a Lost
Vessel are required to be used to redeem Exchange Notes pursuant to the terms of
the Indenture (see "Description of the Exchange Notes--Redemptions--Redemption
upon Sale or Loss of a Mortgaged Vessel"), then Millenium shall be required to
repay the Working Capital Facility in an amount equal to the sum of (i) the
product of (a) the Vessel Percentage applicable to the Sold Mortgage Vessel as
of the Sale Date of the Lost Mortgaged Vessel as of the Loss Date, as the case
may be, and (b) the aggregate principal amount of all Working Capital Draws then
outstanding and (ii) all accrued and unpaid interest thereon.
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MATERIAL UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
The Exchange Offer
In the opinion of Thacher Proffitt & Wood, counsel to the Company, the
following disclosure summarizes the material federal income tax consequences
under the Internal Revenue Code of 1986 (the "Code") expected to result to
Holders whose Existing Notes are exchanged for Exchange Notes in the Exchange
Offer. This discussion has been prepared with the advice of Thacher Proffitt &
Wood, counsel to the Company, and 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 United States federal income tax laws
that may be relevant to a holder in light of its 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, a holder
who owns or will own directly, indirectly or by attribution (including stock
attribution resulting from ownership of the Warrants) 10.0% or more (by voting
power) of Millenium Common Stock or holders that have a functional currency
other than the United States 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. All investors also 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 determination of an entry on a tax return. Accordingly,
a holder should consult its own tax advisors and tax return preparers regarding
the preparation of any item on a tax return.
The exchange of Existing Notes for Exchange Notes will be treated as a
"non-event" for federal income tax purposes because the Exchange Notes will not
be considered to differ materially in kind or extent from the Existing Notes. As
a result, no material federal income tax consequences will result to a Holder
exchanging Existing Notes for Exchange Notes.
-103-
<PAGE>
CERTAIN FOREIGN TAX CONSIDERATIONS
Cayman Islands Tax Considerations
Millenium and Cayman Islands Subsidiary Guarantors. Millenium and each
Subsidiary Guarantor incorporated in the Cayman Islands (such Subsidiary
Guarantors, collectively, the "Cayman Islands Guarantors") has been incorporated
as an exempted company under the laws of the Cayman Islands and has received an
undertaking from the Governor in Council of the Cayman Islands under Section 6
of The Tax Concessions Law (1995 Revision) that for a period of twenty years
from the date of the undertaking (a) no Law which is hereafter enacted in the
Cayman Islands imposing any tax to be levied on profits, income, gains or
appreciation shall apply to Millenium or the relevant Cayman Island Guarantor or
their respective operations; and (b) that no tax to be levied on profits,
income, gains, or appreciations or which is the nature of estate duty or
inheritance tax shall be payable by Millenium or the relevant Cayman Islands
Guarantor (i) on or in respect of its respective shares, debentures or other
obligations; or (ii) by way of the withholding in whole or in part of any
relevant payment as defined in Section 6(3) of the Tax Concessions Law (1995
Revision).
The Cayman Islands does not have an income tax treaty arrangement with
the United States or any other country.
Investors. There is no income tax, corporation tax, capital gains tax,
withholding tax or any other kind of tax on profits or gains or tax in the
nature of estate duty or inheritance tax currently in effect in the Cayman
Islands. Holders who bring individual Exchange Notes in original form to the
Cayman Islands may be liable to pay stamp duty in an amount of up to C.I.$250 on
each Exchange Notes.
Liberian Tax Considerations
Based on the advice of the Law Offices of Basil T. Patkos, special
Liberian counsel to each Subsidiary Guarantor that is incorporated in Liberia
(collectively, the "Liberian Guarantors"), no taxes or withholding will be
imposed by the Republic of Liberia on or with respect to any payments to be made
in respect of the Exchange Notes or the Subsidiary Guarantees made by each of
the Liberian Guarantors, provided that (i) each of the Liberian Guarantors is
and maintains its status as a "nonresident Liberian entity" under the Liberian
Internal Revenue Code, (ii) each of the Liberian Guarantors is not now carrying
on, and in the future does not expect to carry on, any operations within the
Republic of Liberia, (iii) the Exchange Notes and all related documentation will
be executed outside of the Republic of Liberia and (iv) the holders of the
Exchange Notes will neither reside in, maintain offices in, nor engage in
business in, the Republic of Liberia.
Cypriot Tax Considerations
Based on the advice of Andreas Demetriades Law Office, special Cypriot
counsel to each Subsidiary Guarantor that is incorporated in the Republic of
Cyprus (collectively, the "Cypriot Guarantors"), no taxes or withholding will be
imposed by the Republic of Cyprus on or with respect to any payments to be made
in respect of the Exchange Notes or the Subsidiary Guarantees made by each of
the Cypriot Guarantors, provided that (i) each of the Subsidiary Guarantors is
and maintains its status as a shipping company of limited liability under the
Cyprus Merchant Shipping (Fees and Taxing Provisions) Law No. 38(1)(92), (ii)
the Company and each of the Subsidiary Guarantors is not now carrying on, and in
the future is not expected to carry on, any operations exclusively within the
Republic of Cyprus, (iii) the Exchange Notes and all related documentation will
be executed outside the Republic of Cyprus and (iv) the Holders of the Exchange
Notes will neither reside in, maintain offices in, nor engage in business in,
the Republic of Cyprus.
-104-
<PAGE>
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 Existing Notes where such Existing Notes were acquired as a result
of market-making activities or other trading activities. The Company has agreed
that, for a period of 180 days after the Expiration Date, it will make this
Prospectus, as amended or supplemented, available to any broker-dealer for use
in connection with any such resale. In addition, until , 199 , all dealers
effecting transactions in the Exchange Notes may be required to deliver a
prospectus.
The Company 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 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 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 commission 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 180 days after the Expiration Date the Company 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 Company 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 will indemnify the Holders of the Exchange Notes
(including any broker-dealers) against certain liabilities, including
liabilities under the Securities Act.
RATING
Moody's has rated the Existing Notes B3 and Standard & Poor's has rated
the Existing Notes B. The Company does not intend to request a rating for the
Exchange Notes. 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 Existing Notes address the likelihood of
the receipt by Holders of the Existing Notes of all distributions to which such
Holders are entitled. The ratings assigned to the Existing 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 Existing 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 Existing Notes may suffer a lower than
anticipated yield.
The Company has not requested a rating on the Existing 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 Existing Notes,
or, if it does, what rating would be assigned by any such other rating agency. A
rating on the Existing 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 with respect to the Exchange Notes offered hereby
will be passed upon for the Company by Thacher Proffitt & Wood, New York, New
York, with respect to matters of United States law and Liberian maritime law, by
Maples and Calder, Grand Cayman, Cayman Islands, with respect to matters of
Cayman Islands law, by the Law Offices of Basil T. Patkos with respect to
matters of Liberian tax law and Andreas P. Demetriades & Associates with respect
to matters of Cypriot law.
-105-
<PAGE>
INDEPENDENT PUBLIC ACCOUNTANTS
The combined balance sheets as of December 31, 1996 and 1997, and the
combined statements of income, shareholders' equity and cash flows for each of
the three years in the period ended December 31, 1997 included in this
Prospectus, have been included herein in reliance upon the report of Coopers &
Lybrand, independent accountants, given on the authority of that firm as experts
in accounting and
auditing.
-106-
<PAGE>
Appendix A: Glossary of Certain Shipping Terms
Ballast A vessel is said to be in "ballast" when it is
steaming without cargo and carrying water as
ballast which is discharged before loading at the
next loading port.
Bareboat Charter Also known as a "demise charter." Contract or hire
of a ship which the shipowner is usually paid a
fixed amount of charter hire for a certain period
of time during which the charterer is responsible
for the operating costs and voyage costs of the
ship as well as arranging for crewing.
Bunkers Heavy fuel oil used to power a vessel's engines.
Charter 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 charterparty.
Charterer The individual or company which charters a ship.
Charter hire A sum of money paid to the shipowner by a
charterer under a time charterparty for the use of
a vessel.
Classification Society A private organization which has as its purpose
the supervision of vessels during their
construction and afterward, in respect of their
seaworthiness and upkeep, and the placing of
vessels in "classes" according to the society's
rules for each particular type of vessel.
Draft Vertical distance between the waterline and the
vessel's keel.
Drydocking The removal of a vessel from the water for
inspection and/or repair of submerged parts.
Dwt Deadweight ton: the maximum weight of cargo and
supplies that can be carried by a ship, expressed
in metric tons.
Gross Ton Unit of 100 cubic feet or 2.831 cubic meters used
in arriving at the calculation of gross tonnage.
Lay-up 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.
Lightweight The weight of steel contained in a vessel,
expressed in metric tonnes.
Metric Ton A metric ton of 1,000 kilograms.
Newbuilding A newly constructed vessel.
Orderbook A reference to currently placed orders for the
construction of vessels.
Period Charter A reference to currently placed orders for the
construction of vessels. A time or bareboat
charter for a specified period of time in excess
of six months.
Protection and
Indemnity Insurance Insurance obtained through a mutual association
formed by shipowners to provide liability
insurance protection from large financial loss to
one member through contributions towards that loss
by all members.
Spot Market The market for immediate chartering of a vessel
usually for single voyages.
Time Charter Contract for hire of a ship. A charter under which
the shipowner is paid charter hire on a per day
basis for a certain period of time, the shipowner
being responsible for providing the crew and
-107-
<PAGE>
paying operating costs while the charterer is
responsible for paying the voyage costs. Any
delays at port or during the voyages are the
responsibility of the charterer, save for certain
specific exceptions such as loss of time arising
from vessel breakdown and routine maintenance.
Voyage Charter Contract for hire of a ship under which the
shipowner is paid freight at a price per metric
ton on the basis of moving cargo from a loading
port to a discharge port. The shipowner is
responsible for paying both operating costs and
voyage costs. The charterer is typically
responsible for any delay at the loading or
discharging ports.
-108-
<PAGE>
<TABLE>
<CAPTION>
GROUP OF SHIPPING COMPANIES
ACQUIRED BY MILLENIUM SEACARRIERS, INC
Index to Combined Financial Statements
<S> <C>
Audit Report of Independent Accountants...............................................................................F-2
Review Report of Independent Accountants..............................................................................F-3
Combined Balance Sheets as of December 31, 1996 and 1997 and as of
March 31, 1998 (unaudited)..........................................................................................F-4
Combined Statements of Income for the years ended December 31, 1995,
1996 and 1997 and for the three month period ended March 31, 1997 and 1998
(unaudited).........................................................................................................F-5
Combined Statements of Cash Flows for the years ended December 31, 1995,
1996 and 1997 and for the three month period ended March 31, 1997 and 1998
(unaudited).........................................................................................................F-6
Combined Statements of Shareholders' Equity for the years ended
December 31, 1995, 1996 and 1997 and for the three month period
ended March 31, 1998 (unaudited)....................................................................................F-7
Notes to the Combined Financial Statements............................................................................F-8
</TABLE>
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders
of Group of Shipping Companies
acquired by Millenium Seacarriers, Inc.
We have audited the accompanying combined balance sheets of Group of
Shipping Companies acquired by Millenium Seacarriers, Inc. as of December 31,
1996 and 1997 and the related combined statements of income, cash flows and
shareholders' equity for each of the three years in the period ended December
31, 1997. These financial statements are the responsibility of the group's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the combined financial statements referred to above
present fairly, in all material respects, the combined financial position of
Group of Shipping Companies acquired by Millenium Seacarriers, Inc. as of
December 31, 1996 and 1997 and the combined results of their operations and
their cash flows for each of the three years in the period ended December 31,
1997 in conformity with United States generally accepted accounting principles.
COOPERS & LYBRAND
Piraeus, Greece
April 13, 1998
except as to Note 11
for which the date is
July 24, 1998
F-2
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders
of Group of Shipping Companiesacquired by
Millenium Seacarriers, Inc.
We have reviewed the accompanying interim combined balance sheet of
Group of Shipping Companies acquired by Millenium Seacarriers, Inc. as of March
31, 1998 and the related combined statements of income, cash flows and
shareholders' equity for the three-month period then ended. These financial
statements are the responsibility of the Company's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted in
accordance with generally accepted auditing standards, the objective of which is
the expression of an opinion regarding the financial statements taken as a
whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications
that should be made to the accompanying financial statements referred to above
for them to be in conformity with United States generally accepted accounting
principles.
COOPERS & LYBRAND
Piraeus, Greece
July 15, 1998
except as to Note 11
for which the date
is July 24, 1998
F-3
<PAGE>
<TABLE>
<CAPTION>
GROUP OF SHIPPING COMPANIES
ACQUIRED BY MILLENIUM SEACARRIERS, INC.
Combined Balance Sheets
(Expressed in US Dollars in Thousands)
December 31, March 31,
----------------------------------------- ------------------
ASSETS 1996 1997 1998
-------------------- ------------------- ------------------
(unaudited)
-----------
<S> <C> <C> <C>
Current assets
Cash and cash equivalents.............................................. $ 15 $ 135 $ 23
Cash retention accounts................................................ 222 193 232
------- ------- -------
237 328 255
Receivables: Claims & other (Note 3) 107 27 137
Inventories and prepaid expenses (Note 4) 110 68 201
Due from related party (Note 8) 573 722 1,008
------- ------- -------
Total current assets........................................ 1,027 1,145 1,601
Deferred charges, net of accumulated amortization (Note 2) 153 649 763
Vessels at cost, net of accumulated depreciation (Note 5) 17,814 15,447 14,855
------ ------ ------
Total assets................................................ $18,994 17,241 17,219
====== ====== ======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Trade accounts payable................................................. $ 972 $ 2,315 $ 2,359
Other Liabilities (Note 6)............................................. 736 785 959
Charter revenue received in advance.................................... 189 190 82
------- ------- ------
1,897 3,290 3,400
Long-term debt current portion (Note 7) 3,664 3,441 3,775
------- ------- ------
Total current liabilities................................... 5,561 6,731 7,175
Long-term debt, net of current portion (Note 7) 11,919 9,515 9,053
------- ------- ------
Total liabilities........................................... 17,480 16,246 16,228
------- ------- ------
Commitments and contingencies (Note 7 and 10)
Shareholders' equity
Common stock and paid-in capital....................................... 880 880 880
Retained earnings...................................................... 634 115 111
------- ------- -------
Total shareholders' equity.................................. 1,514 995 991
------- ------- -------
Total liabilities and shareholders' equity.................. 18,994 17,241 17,219
======= ======= =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE>
<TABLE>
<CAPTION>
GROUP OF SHIPPING COMPANIES
ACQUIRED BY MILLENIUM SEACARRIERS, INC.
Combined Statements of Income
(Expressed in US Dollars in Thousands, except per share amounts)
Three Month
Period Ended
Year Ended December 31, March 31, (unaudited)
----------------------- ---------------------
1995 1996 1997 1997 1998
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
REVENUES
Freight and hire from voyages........................ $ 4,904 $10,879 %11,285 $ 2,893 $ 2,743
Voyage expenses...................................... (8) (4) (172) (17) (2)
Commissions.......................................... (263) (508) (595) (162) (145)
------- ------- ------- ------- -------
Net revenue..................................... 4,633 10,367 10,518 2,714 2,596
------- ------- ------- ------- -------
EXPENSES
Vessel operating expenses............................ 2,548 5,439 6,204 1,491 1,407
Management fees (Note 8)............................. 221 728 896 223 223
Depreciation and amortization (Note 2)............... 1,173 2,134 2,606 592 683
------- ------- ------- ------- -------
3,942 8,301 9,706 2,306 2,313
------- ------- ------- ------- -------
Operating income................................ 691 2,066 812 408 283
------- ------- ------- ------- -------
OTHER INCOME/(EXPENSES)
Interest expense, net (Note 7)....................... (690) (1,159) (1,215) (301) (274)
Other................................................ (31) (234) (116) (10) (13)
------- ------- ------- ------- -------
(721) (1,393) (1,331) (311) (287)
------- ------- ------- ------- -------
Net income/(loss)............................... (30) 673 (519) 97 (4)
======= ======= ======= ======= =======
PROFORMA EARNINGS (LOSS) PER
SHARE
Basic................................................ $ -- $ 0.07 $ (0.05) $ 0.01 $ --
======= ======= ======= ======= =======
Fully diluted........................................ $ -- $ 0.07 $ (0.05) $ 0.01 $ --
======= ======= ======= ======= =======
PROFORMA NUMBER OF ORDINARY
SHARES (thousands)
Basic................................................ 9,500 9,500 9,500 9,500 9,500
======= ======= ======= ======= =======
Fully diluted........................................ 9,500 9,998 9,500 9,998 9,500
======= ======= ======= ======= =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE>
<TABLE>
<CAPTION>
GROUP OF SHIPPING COMPANIES
ACQUIRED BY MILLENIUM SEACARRIERS, INC.
Combined Statements of Cash Flows
(Expressed in US Dollars in Thousands)
Three Month
Period Ended
Year Ended December 31, March 31, (unaudited)
----------------------- ---------------------
1995 1996 1997 1997 1998
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Net income (loss).................................................... $ (30) $ 673 $ (519) $ 97 $ (4)
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation......................................................... 1,099 2,034 $2,367 592 592
Amortization of deferred charges..................................... 74 100 239 47 91
Changes in operating assets and liabilities:
Receivables: Claims & other.......................................... (30) (64) 80 87 (110)
Inventories and prepaid expenses..................................... (40) (12) 42 91 (133)
Current account with managing agent.................................. (344) 44 (149) 12 (286)
Trade accounts payable............................................... 229 579 1,343 426 44
Other liabilities.................................................... 350 87 49 (73) 174
Charter revenue received in advance.................................. 90 78 1 (57) (108)
----- ------ ------ ------ ------
Net cash provided by operating activities............................ 1,398 3,519 3,453 1,222 260
----- ------ ------ ------ ------
Cash flows from investing activities:
Purchase of vessels.................................................. (5,800) (10,402) - - -
Deferred charges..................................................... - (200) (735) (325) (205)
----- ------ ------ ------ ------
Net cash used in investing activities................................ (5,800) (10,602) (735) (325) (205)
----- ------ ------ ------ ------
Cash flows from financing activities:
Proceeds from long term debt......................................... 5,333 12,800 5,400 - 400
Dividends Paid....................................................... - (335) - - -
Shareholders' contribution, net...................................... 334 542 - - -
Principal repayments of long- term debt.............................. (1,265) (5,687) (8,027) (892) (528)
------ ------ ------ ------ ------
Net cash provided by (used in) financing activities.................. 4,402 7,320 (2,627) (892) (128)
Increase in cash and cash equivalents and retention
accounts........................................................... - 237 91 5 (73)
------ ------ ------ ------ ------
Cash and cash equivalents and retention account at beginning
of year........................................................... - - 237 237 328
------ ------ ------ ------ ------
Cash and cash equivalents and retention account at
end of year........................................................ $ - $ 237 $ 328 $ 243 $ 255
====== ====== ====== ====== ======
Supplemental cash flow information:
Interest paid $ 552 $1,184 $1,236 $ 305 $ 154
====== ====== ====== ====== ======
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-6
<PAGE>
<TABLE>
<CAPTION>
GROUP OF SHIPPING COMPANIES
ACQUIRED BY MILLENIUM SEACARRIERS, INC.
Combined Statements of Shareholders' Equity
(Expressed in US Dollars In Thousands)
Common Stock
and Retained
Paid-in Earnings
Capital /(Deficit) Total
------- ---------- -----
<S> <C> <C> <C>
Balance, December 31, 1994......................................... $ 4 $ 326 $ 330
Net loss........................................................... -- (30) (30)
Contributions...................................................... 334 -- 334
------ ------ ------
Balance, December 31, 1995......................................... 338 296 634
Net income......................................................... -- 673 673
Contributions and (distributions).................................. 542 (335) 207
------ ------ ------
Balance, December 31, 1996......................................... 880 634 1,514
Net loss........................................................... -- (519) (519)
Balance, December 31, 1997......................................... 880 115 995
Net loss........................................................... -- (4) (4)
------ ------ ------
Balance, March 31, 1998 (unaudited)................................ $ 880 $ 111 $ 991
====== ====== ======
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-7
<PAGE>
GROUP OF SHIPPING COMPANIES
ACQUIRED BY MILLENIUM SEACARRIERS, INC.
Notes to the Combined Financial Statements
(Expressed in US Dollars In Thousands)
1. Business Information
Group of Shipping Companies consists of five shipowning companies
listed in note 5, collectively referred to as the "Group." All these companies
have common shareholders and are under the exclusive management of Kylco
Maritime Ltda related company. The Group's drybulk vessels operate worldwide
carrying cargoes for many of the world's leading charters.
On March 10, 1998, Millenium Seacarriers, Inc. ("Millenium") was formed
to hold all the capital stock of the Group (collectively, the "Company"). Upon
consummation of the Units Placement and the new equity contribution (the
"Reorganization") (see note 11), the existing vessels of the Group were acquired
by Millenium at fair market value which is approximately $16.5 million. The fair
market value was determined by the average of two appraisals in February 1998,
each performed by an independent shipbroker.
Millenium is registered and incorporated in the Cayman Islands. Its
principal business is the acquiring, upgrading and operating of vessels.
Millenium will conduct its operations through its subsidiaries whose principal
activity is the operation and ownership of drybulk vessels that will be under
the exclusive management of Millenium Management, Inc. ("MMI") and
sub-management of Kylco Maritime Ltd. and Kylco Maritime (USA), Inc. (see Note
8).
2. Summary of Significant Accounting Policies
Basis of Preparation of the Combined Financial Statements
The accompanying combined financial statements are prepared in
accordance with accounting principles generally accepted in the United States.
The companies comprising the Group have common shareholders. All intercompany
balances and transactions have been eliminated upon combination.
Use of Estimates
The preparation of the combined financial statements are in conformity
with accounting principles generally accepted in the United States and requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities, the disclosures of contingent assets and liabilities at
the date of the combined financial statements, and the stated amounts of
revenues and expenses during the reporting period. Actual results could differ
from those estimates.
Acquisitions and Disposals
The operating results of vessels acquired or disposed of during the
period or year are included in the accompanying combined financial statements
from the date of their acquisition until the date of their disposal, as
applicable.
Vessels
Vessels owned by the Group are stated at cost which comprises the
vessels' contract price, major repairs and improvements, direct delivery and
acquisition expenses, and finance charges relating to the acquisition of the
vessel.
Depreciation
Depreciation is calculated on a straight line basis by reference to the
vessels' cost, age and scrap value as estimated at the date of acquisition.
Depreciation is calculated over the remaining useful life of the vessel, which
is assumed to be 23 to 28 years from the vessel's original construction.
F-8
<PAGE>
GROUP OF SHIPPING COMPANIES
ACQUIRED BY MILLENIUM SEACARRIERS, INC.
Notes to the Combined Financial Statements (Continued)
(Expressed in US Dollars In Thousands)
Revenue and Expense Recognition
Revenue and expenses resulting from each voyage or time charter are
accounted for on the accrual basis and are recognized in the income statement on
the percentage of completed voyage basis. Chartered revenues received in advance
are recorded as a liability until charter services are rendered.
Vessels' operating expenses comprise all expenses relating to the
operation of the vessels, including crewing, repairs and maintenance,
insurances, stores and lubricants, and miscellaneous expenses, including
communications. Voyage expenses comprise all expenses relating to particular
voyages, including bunkers, port charges, canal tolls and agency fees.
Concentration of Credit Risk
The Group derived $4,904, $7,759, $8,124 and $2,023 of freight and hire
revenues from one customer related to the charter of M/V Clipper Atlantic, M/V
Clipper Pacific, M/V Clipper Golden Hind and M/V Clipper Harmony for the years
ended December 31, 1995, 1996 and 1997, and the three-month period ended March
31, 1998 (unaudited), respectively.
Foreign Currencies
The Group's functional currency is U.S. dollar. Assets and liabilities
denominated in foreign currencies are translated into U.S. dollars at exchange
rates prevailing at the balance sheet date. Income and expenses denominated in
foreign currencies are translated into U.S. dollars at exchange rates prevailing
at the date of the transaction. Resulting exchange gains and/or losses on
settlement or translation are included in operating expenses in the accompanying
combined statement of income.
Repairs, Maintenance and Deferred Charges
Expenditures for vessel repair and maintenance are charged against
income in the period incurred. Drydocking and special survey costs are deferred
and amortized over the estimated period to the next scheduled drydocking or
survey, which are generally, two and a half years and five years, respectively.
The amortization of drydocking and special survey costs are included in
operating expenses and totaled $75, $100, $239 in 1995, 1996 and 1997,
respectively.
For the three-month periods ended March 31, 1997 and 1998, the
amortization of drydocking and special survey cost amounted to $47 and $91,
respectively (unaudited).
P&I Back Calls
The Group participates in a Protection and Indemnity (P&I) insurance
coverage plan provided by mutual insurance societies known as P&I clubs. Under
the terms of the plan, participants may be required to pay additional premiums
to fund operating deficits incurred by the clubs ("back calls"). Obligations for
back calls are accrued annually.
Cash and Equivalents
The Group considers time deposits or other certificates purchased with
an original maturity of three months or less to be cash equivalents. Cash
retention accounts are restricted for use as general working capital unless such
balances exceed instalment payments due to the vessels lenders.
F-9
<PAGE>
GROUP OF SHIPPING COMPANIES
ACQUIRED BY MILLENIUM SEACARRIERS, INC.
Notes to the Combined Financial Statements (Continued)
(Expressed in US Dollars In Thousands)
Inventories
Inventories consist of lubricants on board the Group's vessels at the
balance sheet date. Inventories are stated at lower of cost or market value.
Cost is determined on a first-in, first-out method.
Long-lived Assets
The Group has adopted the provision of Statement of Financial
Accounting Standards ("SFAS") No. 121, Accounting for Impairment of Long-lived
Assets to Be Disposed Of. The statement requires that long-lived assets used or
disposed of by an entity be reviewed for impairment whenever events or changes
in circumstances indicate that the carrying amount of an asset may not be
recovered. An impairment loss for an asset held for use should be recognized
when the estimate of non-discounted future net cash flows, excluding interest
charges, expected to be generated by the use of the asset is less than its
carrying amount. Measurement of impairment loss is based on the fair market
value of the asset (Note 5).
Pro forma basic and diluted earnings (loss) per ordinary share
Pro forma basic and diluted earnings per ordinary share have been
computed by dividing net income (loss) by the applicable number of pro forma
ordinary shares expected to be outstanding following the finalization of the
Units Placements of the Company (See Note
11).
Newly issued pronouncements
SFAS No. 130, Reporting Comprehensive Income, has been issued and is
effective for fiscal years beginning after December 15, 1997. The new standard
requires that comprehensive income and its components, as defined, be reported
in the financial statements. This standard does not require that comprehensive
income and its components be reported in an income statement. Early adoption is
encouraged. Management is currently assessing the impact of this standard.
SFAS No. 131, Disclosures about Segments of Enterprise and Related
Information, has been issued and is effective for fiscal periods beginning after
December 15, 1997. This standard specifies revised guidelines for determining an
entity's operating segments and the type and level of information to be
disclosed. Early adoption of this standard is encouraged. Management is
currently assessing the impact of this standard.
SFAS No. 132, Employer's Disclosures about Pensions and Other
Post-retirement Benefits, has been issued and is effective for fiscal periods
beginning after December 15, 1997. This standard revised employers' disclosure
about pension and other post-retirement benefit plans by (1) standardising
disclosure requirements, (2) requiring additional information on changes in the
benefit obligations and fair values of plan assets and (3) eliminating certain
disclosures that are no longer useful as stated in previously issued Standards.
Early adoption of this standard is encouraged. Management does not believe that
this standard is expected to have a material impact on the financial statements
of the Company.
SFAS No. 133, Accounting for Derivative Instruments and Hedging
Activities, has been issued and is effective for all fiscal quarters of fiscal
years beginning after June 15, 1999. SFAS No. 133 requires that all derivatives
be recognized in the statement of financial position as either assets or
liabilities and be measured at fair value. The impact of adopting this statement
is not expected to be material to the Company's financial position as the
Company does not have any derivative instruments or hedging activities.
3. Receivables Claims and Other
These represent claims arising from hull and machinery damages or other
insured risks which have been submitted to insurance adjusters or are currently
being compiled. All amounts are shown net of applicable deductibles.
F-10
<PAGE>
<TABLE>
<CAPTION>
GROUP OF SHIPPING COMPANIES
ACQUIRED BY MILLENIUM SEACARRIERS, INC.
Notes to the Combined Financial Statements (Continued)
(Expressed in US Dollars In Thousands)
4. Inventories and Prepaid Expenses
December 31, March 31,
1996 1997 1998
---- ---- -----------
(unaudited)
<S> <C> <C> <C>
Lubricants $ 92 $62 $ --
Prepaid Expenses 18 6 201
--- --- ----
$110 $68 $201
==== === ====
</TABLE>
<TABLE>
<CAPTION>
5. Vessels and Vessel Owning Subsidiaries
Accumulated Net Book
Cost Depreciation Value
---- ------------ -----
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1994 $ 6,148 $(1,402) $ 4,746
Additions/provision for depreciation 5,799 (1,099) 4,700
------- ------- -------
Balance, December 31, 1995 11,947 (2,501) 9,446
Additions/provision for depreciation 10,402 (2,034) 8,368
------- ------- -------
Balance, December 31, 1996 22,349 (4,535) 17,814
Additions/provision for depreciation (2,367) (2,367)
------- ------- -------
Balance, December 31, 1997 22,349 (6,902) 15,477
Additions/provision for depreciation -- (592) (592)
------- ------- -------
Balance, March 31, 1998 (unaudited) $22,349 $(7,494) $14,855
======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
Acquisitions
- - - - ------------
Period Ending Vessel Type Built DWT Cost
- - - - ------------- ------ ---- ----- --- ----
<S> <C> <C> <C> <C> <C>
December 31, 1995 M/V Clipper Golden Hind Dry Bulk Carrier 1978 16,560 $ 5,799
=======
December 31, 1996 M/V Monica Marissa Dry Bulk Carrier 1973 55,060 $ 4,588
M/V Clipper Harmony Dry Bulk Carrier 1978 16,711 5,814
-------
$10,402
=======
</TABLE>
F-11
<PAGE>
At December 31, 1997 and March 31, 1998, the Group's fleet consisted of
Bulk Carriers which are wholly owned by Vessel Owning Subsidiaries.
<TABLE>
<CAPTION>
Vessel Owning Subsidiaries Name Vessels Type Year Built
- - - - -------------------------- ---- ------------ ----------
<S> <C> <C> <C>
Conifer Shipping Co. Ltd M/V Clipper Atlantic Dry Bulk Carrier 1975
Topscale Shipping Co. Ltd M/V Clipper Pacific Dry Bulk Carrier 1976
Ivy Navigation Ltd M/V Clipper Golden Hind Dry Bulk Carrier 1978
</TABLE>
<TABLE>
<CAPTION>
GROUP OF SHIPPING COMPANIES
ACQUIRED BY MILLENIUM SEACARRIERS, INC.
Notes to the Combined Financial Statements (Continued)
(Expressed in US Dollars In Thousands)
<S> <C> <C> <C>
Oakmont Shipping & Trading Ltd M/V Monica Marissa Dry Bulk Carrier 1973
Rapid Ocean Carriers Inc M/V Clipper Harmony Dry Bulk Carrier 1978
</TABLE>
<TABLE>
<CAPTION>
6. Other Liabilities
December 31, March 31,
1996 1997 1998
---- ---- -----------
(unaudited)
<S> <C> <C> <C>
Payroll....................................................... $328 $391 $469
Accrued interest.............................................. 236 215 335
Accrued expenses.............................................. 172 179 155
--- --- ---
736 785 959
=== === ===
</TABLE>
7. Long-term Debt
(a) Long-term debt as of December 31, 1997 comprises of bank loans
granted to the Vessel Owning Subsidiaries. Such loans are detailed as follows:
<TABLE>
<CAPTION>
December 31 March 31,
----------- ---------
Lender 1996 1997 1998
------ ---- ---- ----
(unaudited)
<S> <C> <C> <C>
1 Bank of Scotland................................ $ 1,483 $ 1,050 $ 942
2 Bank of Scotland................................ 3,400 2,600 2,400
3 Bank of Scotland................................ 1,431 1,363
4 Bank of Scotland................................ -- -- 400
5 First National Bank of Maryland................. 883 250 250
6 First National Bank of Maryland................. 4,857 3,450 3,450
7 Nations Credit Commercial Corporation........... 4,221 3,709 3,624
8 Bank of Butterfield............................. 250 250 250
9 Clipper Shipping Ltd............................ 406 133 66
10 Drake Associates LP............................. 83 83 83
------- ------- -------
Total........................................... 15,583 12,956 12,828
Current Portion................................. (3,664) (3,441) (3,775)
------- ------- -------
Long-term Portion............................... $11,919 $ 9,515 $ 9,053
======= ======= =======
</TABLE>
(b) The payments required to be made on the long-term debts outstanding
as of December 31, 1997 are as follows:
1. Bank of Scotland: Term loan bearing interest at 1.5% per annum
over LIBOR payable in six quarterly instalments of $108 each plus a
balloon payment of $400 due in July, 1999. The loan is collateralized
by a first preferred mortgage on the vessel M/V Clipper Atlantic
F-12
<PAGE>
GROUP OF SHIPPING COMPANIES
ACQUIRED BY MILLENIUM SEACARRIERS, INC.
Notes to the Combined Financial Statements (Continued)
(Expressed in US Dollars In Thousands)
2. Bank of Scotland: Term loan bearing interest at 1.5% per annum over
LIBOR payable in nine quarterly instalments of $200 for the first five payments
and $150 for the remaining four payments and a balloon payment of $1,000 due
with the last instalment in February 2000. The loan is collateralized by a first
preferred mortgage on the vessel M/V Monica Marissa.
3. Bank of Scotland: Term loan bearing interest of 1.5% per annum over
LIBOR payable in fifteen quarterly instalments of $68.75 each plus a balloon
payment of $400 due with the last instalment in July 2001. The loan is
collateralized by a first preferred mortgage on the vessel M/V Clipper Pacific.
4. Bank of Scotland: In February 1998, the Group entered into a term
loan agreement bearing interest at 2.5% over LIBOR per annum payable at the
earliest of the following dates a.) May 31, 1998, which was subsequently
extended to August 12, 1998, b.) successful closing of the bond issue or c.)
sale and delivery of a new vessel to Millenium or its subsidiaries. The loan is
secured by second preferred mortgages on Vessels M/V Clipper Pacific, M/V
Clipper Atlantic and M/V Monica Marissa.
5. First National Bank of Maryland: Credit Facility bearing interest of
0.5% per annum over the US Prime Rate, payable within one year. The credit
facility is collateralized by a second preferred mortgage on the vessel M/V
Clipper Harmony.
6. First National Bank of Maryland: Term loan bearing interest of 1.5%
per annum over LIBOR payable in ten quarterly instalments of $225 plus a balloon
payment of $1,200 due with the last instalment in June, 2000. The loan is
collateralized by a first preferred mortgage on the vessel M/V Clipper Harmony.
7. Nations Credit Commercial Corporation: Term loan bearing interest at
11.39% per annum payable in ten varying quarterly instalments plus a balloon
payment of $1,800 due in May, 2000. The loan is collateralized by a first
preferred mortgage on the vessel M/V Clipper Golden Hind.
8. Bank of Butterfield: Term loan bearing interest at 11.39% per annum
payable in five annual varying instalments due in January of each calendar year.
Instalments are payable only on the condition that the vessel, M/V Clipper
Golden Hind is operating profitably. The loan is unsecured.
9. Clipper Shipping: Term loan bearing interest at 8.25% per annum
payable in one instalment of $66 and one instalment of $67 through 1998. The
loan is collateralized by a second preferred mortgage on the vessel M/V Clipper
Pacific.
10. Drake Associates LP: Term loan bearing interest at 11.39% per annum
payable in five annual varying instalments due in January of each calendar year.
Instalments are payable only on the condition that the vessel, M/V Clipper
Golden Hind is operating profitably. The loan is unsecured.
(c) The future annual loan repayments are as follows:
For the December 31, March 31,
period ended 1997 1998
------------ ---- ----
(unaudited)
1998.................. $ 3,441 $ 3,313
1999.................. 3,677 3,677
2000.................. 5,232 5,232
2001.................. 606 606
------- -------
$12,956 $12,828
======= =======
F-13
<PAGE>
GROUP OF SHIPPING COMPANIES
ACQUIRED BY MILLENIUM SEACARRIERS, INC.
Notes to the Combined Financial Statements (Continued)
(Expressed in US Dollars In Thousands)
The reference to LIBOR indicates interest rates applicable to either
3-month, 6-month or 9-month LIBOR. These loans are also collateralized by
general assignment of the mortgaged vessels' hires and freights, as well as,
assignment of any proceeds from insurance settlements or from the sale of the
mortgaged vessels. The carrying amount of the debt approximates its fair value
as of December 31, 1996 and 1997. The debt agreements also include positive and
negative covenants for the respective Vessel owning subsidiaries the most
significant of which are the maintenance of operating accounts, minimum working
capital, minimum cash deposits and minimum market values. The borrowers are
further restricted from incurring additional indebtedness, changing any vessel's
flag, making loans or investments and distributing earnings without the prior
written consent of the lender. Certain of the above loans are personally
guaranteed by the Company's shareholders.
8. Related Party Transactions
Each of the Group's vessels receives management services from the
Group's affiliate, Kylco Maritime Ltd., a Liberian corporation ("Kylco"),
pursuant to a ship management agreement between each Vessel Owning Subsidiaries
and Kylco ("Management Agreement"). Under each Management Agreement, Kylco acts
as the fleet's technical manager (i) providing qualified officers and crews,
(ii) managing day-to-day vessel operation and relationships with charterers,
(iii) purchasing of stores, suppliers and new equipment for the vessels, (iv)
performing general vessel maintenance, reconditioning and repair, including
commissioning and supervision of shipyards, subcontractors or dry dock
facilities required for such work, (v) ensuring regulatory and classification
society compliance, (vi) performing operational budgeting and evaluating, (vii)
arranging financing for vessels and (viii) providing accounting, treasury and
finance functions (including cash disbursements and collections). Kylco also
performs commercial management functions, primarily brokering and negotiating of
vessel charters.
Kylco receives management fees which are calculated at fixed daily
rates. The rates range from $0.233 to $0.493 per day depending on the vessel
type. The management fees amounted to $221, $728 and $896 in 1995, 1996 and
1997, respectively. Kylco, for chartering services also receives 1.25%
commission calculated on the gross charter hire and freight revenues on some of
the vessels. The commission amounted to approximately $42, $54 and $41 in 1995,
1996 and 1997, respectively.
Management fees and commissions charged by Kylco in the three month
periods ended March 31, amounted in 1997 to $223 (unaudited) and $11
(unaudited), respectively, and in 1998 to $223 (unaudited) and $9 (unaudited),
respectively.
Amounts due from related parties reflects the net disbursements and
collections made on behalf of the Vessel Owning Subsidiaries by Kylco during the
normal course of operations. As of December 31, 1997 the account receivable
balance of $722 includes $500 of revenue collected by Kylco from time charter
customers that are owed the Group.
Following the consummation of this Units Placement (Note 11) management
expects that MMI, Kylco and Kylco Maritime (USA) will contract to render
management services to the Group's vessels (existing and committed Note 11)
under terms similar to those described
above.
9. Taxes
The Group is not liable for income taxes since all of its Vessel Owning
Subsidiaries are incorporated in either Cyprus, Panama or Liberia and all of the
Millenium Subsidiaries are incorporated in either Liberia or Cyprus and these
jurisdictions do not impose taxes on international shipping income. While
certain revenue earned by the Group is considered attributable to US sources,
management of the Group has obtained a legal opinion that such revenue is exempt
from US taxation under applicable provisions of the Internal Revenue Code (the
"Code"). Under the laws of Cyprus, Panama and Liberia, the Vessel Owning
Subsidiaries are subject to registration and tonnage taxes which have been
included in "operating expenses" in the accompanying combined statements of
income.
F-14
<PAGE>
GROUP OF SHIPPING COMPANIES
ACQUIRED BY MILLENIUM SEACARRIERS, INC.
Notes to the Combined Financial Statements (Continued)
(Expressed in US Dollars In Thousands)
10. Contingencies
There are no material legal proceedings to which the Group is a party
or to which any of its properties are the subject, other than routine litigation
incidental to the Group's business. In the opinion of management, the
disposition of these lawsuits should not have a material impact on the Group's
results of operations, financial position and cash flows.
11. Reorganization
The Units Placement
On July 24, 1998, Millenium successfully completed an offering of
100,000 Units (the "Units Placement"), each Unit representing one thousand
dollars principal amount at maturity of its 12% First Priority Ship Mortgage
Notes Due 2005 (the "Existing Notes") and warrants (the "Warrants") to purchase
five shares of common stock, par value $.01 per share, on the earlier of July
24, 1999 or the date of other certain events specified, of Millenium, at an
exercise price of $.01 per share. The Units, Existing Notes and Warrants are
collectively referred to as the "Securities." The Existing Notes are fully and
unconditionally guaranteed (the "Subsidiary Guarantees") on a senior
collateralized basis by each of the subsidiaries of Millenium (the "Subsidiary
Guarantors," together with Millenium, the "Company"). The Existing Notes will be
collateralized by First Priority Ship Mortgages on 16 vessels, five of which are
existing vessels (the "Existing Vessels") currently owned by certain of the
Subsidiary Guarantors which were acquired on July 24, 1998 and eleven of which
are the Committed Vessels (the "Committed Vessels") which will be acquired
subsequently by certain of the Subsidiary Guarantors. The Company intends to
purchase with the portion of the net proceeds of the offering of the Existing
Notes approximately six additional vessels (the "Additional Vessels," together
with Existing Vessels and the Committed Vessels, the "Mortgaged Vessels").
The Company and Guarantors have agreed for the benefit of the holders
of the Existing Notes that they will file a registration statement under the
Securities Act of 1933 (the "Securities Act"), relating to an exchange offer for
the Existing Notes. If such registration statement is not filed, has not become
effective or is not consummated within the time periods set forth the interest
rate on the Existing Notes will be temporarily increased.
Certain covenants are set forth in relation to the Units Placement,
including limitations on additional indebtedness, investment loans and advances,
restricted payments, liens, sale-leaseback transactions, dividends and other
payment restrictions affecting subsidiaries, disposition of proceeds of asset
sales or event of loss involving vessels, transactions with affiliates, and
mergers.
F-15
<PAGE>
Committed Vessels
The Company has committed to purchase the Committed Vessels for $66.7
million using a portion of net proceeds of the Units Placement. The following
table provides certain information with respect to the Committed Vessels:
<TABLE>
<CAPTION>
Appraisal
Vessel Year Built D.W.T Value
- - - - ------ ---------- ----- -----
<S> <C> <C> <C>
Clipper Majestic (T.B.R.Millenium Majestic) 1979 17,152 $ 3,050
Clipper Amethyst (T.B.R.Millenium Amethyst) 1978 23,563 3,000
Clipper Yama (T.B.R.Millenium Yama) 1979 23,538 3,500
Elmar Kivistik (T.B.R.Millenium Elmar) 1987 52,650 8,125
Aleksander Aberg (T.B.R.Millenium Aleksander) 1988 52,650 8,688
Holck Larsen (T.B.R.Millenium Condor) 1981 27,036 5,613
Soren Toubro (T.B.R.Millenium Falcon) 1981 27,048 5,613
</TABLE>
<TABLE>
<CAPTION>
GROUP OF SHIPPING COMPANIES
ACQUIRED BY MILLENIUM SEACARRIERS, INC.
Notes to the Combined Financial Statements (Continued)
(Expressed in US Dollars In Thousands)
<S> <C> <C> <C>
LT Odyssey (T.B.R.Millenium Osprey) 1984 28,786 7,113
Mangal Desai (T.B.R.Millenium Eagle) 1983 28,788 6,813
LT Argossy (T.B.R.Millenium Hawk) 1984 28,791 7,113
LT Pragati (T.B.R. Millenium Leader) 1984 37,489 8,100
-------
$66,728
</TABLE>
Each of the Committed Vessels are directly owned by third parties that
were unaffiliated with Millenium at the time of the execution of the related
Memorandum of Agreement and will be acquired in separately negotiated
transactions consummated during 1998 for a total of $66.7 million. The Company
has signed a memorandum of agreement with the respective sellers for the
purchase of each Committed Vessel at a price that is at each vessel's appraised
value, as determined by the average of two appraisals performed by independent
shipbrokers.
New Equity Contributions
On July 24, 1998 MMI received: (a) contribution of 100% of the issued
and outstanding shares of the Subsidiary Guarantors that own the Existing
Vessels, for a value of $4.0 million, (b) commitments relating to the
contribution of the Committed Vessels equal to $4.0 million with respect to
vessels from Aleksander Aberg Maritime Company Ltd. and Elmar Kivistik Maritime
Company Ltd., subsidiaries of ESCO, $1.9 million with respect to vessels from
Yama Shipping Company Ltd., Majestic Shipping Co. Ltd. and Amethyst Shipping Co.
S.A. Ltd. and $7.0 million with respect to the Millenium Leader, the Millenium
Hawk, the Millenium Eagle, the Millenium Osprey, the Millenium Falcon and the
Millenium Condor, (c) cash from Millenium Investment, Inc. equal to $6.1 million
and (d) cash from Management and its affiliates equal to $1.0 million. MMI
contributed the foregoing vessels and cash equity to Millenium.
As of July 24, 1998, MMI was the sole shareholder and registered owner
of Millenium's 9,500,000 issued and outstanding $.01 par value common stock
(10,000,000 shares authorized).
Use of Proceeds of Reorganization
The sources and uses of proceeds of the Reorganization Transactions
comprising the reorganization are as follows (expressed in millions):
Sources of Proceeds
Proceeds from the issuance of the Existing Notes and Warrants....... $ 96.6
Equity Contribution --Issuance of Common Stock....................... 24.0
Total......................................................... $ 120.6
=======
Uses of Proceeds
Existing Vessel Owning Companies:
Repayment of indebtedness........................................... $ 12.9
Purchase of Stock of the Existing Vessel Owning Companies........... 4.0
Acquisition of Committed Vessels........................................ 66.7
Escrow Account.......................................................... 31.4
Fees and expenses....................................................... 5.6
Total......................................................... $ 120.6
=======
F-16
<PAGE>
GROUP OF SHIPPING COMPANIES
ACQUIRED BY MILLENIUM SEACARRIERS, INC.
Notes to the Combined Financial Statements (Continued)
(Expressed in US Dollars In Thousands)
Working Capital Facility
On July 20, 1998, the Company entered into a $7.0 million one
year working capital revolving line of credit with The Bank of New York,
effective upon the consummation of the Units Placement. Borrowings under the
facility bear interest at LIBOR+1.5%, are collateralized by the Company's
vessels and subject to various covenants. The Facility is subject to a 0.375%
commitment fee on the unused
portion.
F-17
<PAGE>
- - - - --------------------------------------------------------------------------------
No dealer, salesperson or other person has been authorized to give any
information or to make any representation not contained in this Prospectus, and,
if given or made, such information or representation must not be relied upon as
having been authorized by the Company. This Prospectus does not constitute an
offer to sell or a solicitation of an offer to buy any of the securities offered
hereby in any jurisdiction to any person to whom it is unlawful to make such an
offer in such jurisdiction. Neither the delivery of this Prospectus nor any sale
made hereunder shall, under any circumstances, create any implication that the
information contained herein is correct as of any time subsequent to the date
hereof or that there has been no change in the affairs of the Company since such
date.
Until ______ all dealers effecting transactions in the registered securities,
whether or not participating in this distributions, may be required to deliver a
prospectus. This is in addition to the obligation of dealers to deliver a
prospectus when acting as underwriters and with respect to their unsold
allotments or subscriptions.
TABLE OF CONTENTS
Page
----
Prospectus Summary....................................................1
Risk Factors.........................................................14
The Exchange Offer...................................................23
Use of Proceeds......................................................29
Capitalization.......................................................30
Selected Combined Financial Information of the Company...............31
Unaudited Pro Forma Condensed Consolidated Financial
Information.......................................................33
Management's Discussion and Analysis
of Financial Condition and Results of Operations..................36
The International Bulk Carrier Market................................40
Business.............................................................45
Officers and Directors...............................................55
Principal Stockholders...............................................57
Certain Transactions.................................................57
Description of the Exchange Notes....................................59
Description of the Warrants..........................................96
Book-entry Registration..............................................98
The Mortgages........................................................99
Description of Working Capital Facility Agreement...................103
Material United States Federal Income Tax Consequences..............104
Certain Foreign Tax Considerations..................................105
Plan of Distribution................................................106
Rating..............................................................106
Legal Matters.......................................................106
Independent Public Accountants......................................107
Glossary of Certain Shipping Terms..................................108
Index to Combined Financial Statements..............................F-1
- - - - --------------------------------------------------------------------------------
MILLENIUM SEACARRIERS, INC.
$100,000,000
12% First Priority Ship Mortgage
Exchange Notes
Due 2005
PROSPECTUS
- - - - --------------------------------------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
CROSS REFERENCE SHEET FURNISHED PURSUANT TO RULE 404(a)
ITEMS AND CAPTIONS IN FORM S-4 AND F-4 LOCATION IN PROSPECTUS
<S> <C> <C>
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; Selected
Combined Financial Information of the Company
4. Terms of the Transaction ........................................ Prospectus Summary; Description of the Exchange
Notes
5. Pro Forma Financial Information ................................. Capitalization of the Company, Management's
Discussion and Analysis of Financial Condition and
Results of Operations; Unaudited Pro Forma
Condensed Consolidated Financial Information
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 Part II
10. Information with Respect to S-3 Registrants...................... *
11. Incorporation of Certain Information by
Reference........................................................ *
<PAGE>
12. Information With Respect to S-2 or S-3
Registrants...................................................... *
13. Incorporation of Certain Information by
Reference........................................................ *
14. Information With Respect to Registrants Other
than S-3 or S-2 Registrants
(a) Description of Business................................. Prospectus Summary, Management's Discussion and
Analysis of Financial Condition, Business
(b) Description of Property................................. Prospectus Summary, Management's Discussion and
Analysis of Financial Condition, Business
(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................................. Financial Statements
(g) Supplementary Financial Information..................... Financial Statements
(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
</TABLE>
- - - - -------------------
* Answer negative or item inapplicable.
<PAGE>
PART II
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
MILLENIUM SEACARRIERS, INC. ("MILLENIUM").
Millenium is a company organized under the laws of the Cayman Islands. The
Companies Law (1998 Revision) includes no provision in relation to the
indemnification officers and directors of companies organized under the laws of
the Cayman Islands.
Article 123 of the Articles of Association provides for indemnification of
its directors and officers as follows:
The Directors and officers for the time being of the Company and any
trustee for the time being acting in relation to any of the affairs of the
Company and their heirs, executors, administrators and personal
representatives respectively shall be indemnified out of the assets of the
Company from and against all actions, proceedings, costs, charges, losses,
damages and expenses which they or any of them shall or may incur or
sustain by reason of any act done or omitted in or about the execution of
their duty in their respective offices or trusts, except such (if any) as
they shall incur or sustain by or through their own willful neglect or
default respectively and no such Director, officer or trustee shall be
answerable for the acts, receipts, neglects or defaults of any other
Director, officer or trustee or for joining in any receipt for the sake of
conformity or for the solvency or honesty of any banker or other persons
with whom any monies or effects belonging to the Company may be lodged or
deposited for safe custody or for any insufficiency of any security upon
which any monies of the Company may be invested or for any other loss or
damage due to any such cause as aforesaid or which may happen in or about
the execution of his office or trust unless the same shall happen through
the wilful neglect or default of such Director, Officer or trustee.
MILLENIUM II, INC., MILLENIUM III, INC., MILLENIUM IV, INC., MILLENIUM V, INC.,
MILLENIUM VI, INC., MILLENIUM VII, INC., MILLENIUM YAMA, INC., MILLENIUM
MAJESTIC, INC., MILLENIUM AMETHYST, INC., MILLENIUM ELMAR, INC. AND MILLENIUM
ALEKSANDER, INC. (EACH, A "SUBSIDIARY GUARANTOR"; AND, COLLECTIVELY THE "CAYMAN
SUBSIDIARY GUARANTORS").
Each of the Cayman Subsidiary Guarantors is a company organized under the
laws of the Cayman Islands. The Companies Law (1998 Revision) includes no
provision in relation to the indemnification officers and directors of companies
organized under the laws of the Cayman Islands.
Article 123 of the Articles of Association of each of the Cayman Subsidiary
Guarantors provides for indemnification of their respective directors and
officers as follows:
The Directors and officers for the time being of the Company and any
trustee for the time being acting in relation to any of the affairs of the
Company and their heirs, executors, administrators and personal
representatives respectively shall be indemnified out of the assets of the
Company from and against all actions, proceedings, costs, charges, losses,
damages and expenses which they or any of them shall or may incur or
sustain by reason of any act done or omitted in or about the execution of
their duty in their respective offices or trusts, except such (if any) as
they shall incur or sustain by or through their own wilful
<PAGE>
neglect or default respectively and no such Director, officer or trustee
shall be answerable for the acts, receipts, neglects or defaults of any
other Director, officer or trustee or for joining in any receipt for the
sake of conformity or for the solvency or honesty of any banker or other
persons with whom any monies or effects belonging to the Company may be
lodged or deposited for safe custody or for any insufficiency of any
security upon which any monies of the Company may be invested or for any
other loss or damage due to any such cause as aforesaid or which may happen
in or about the execution of his office or trust unless the same shall
happen through the wilful neglect or default of such Director, Officer or
trustee.
OAKMONT SHIPPING AND TRADING LIMITED, RAPID OCEAN CARRIERS INC. AND IVY
NAVIGATION LTD. (EACH, A "SUBSIDIARY GUARANTOR"; AND, COLLECTIVELY THE "LIBERIAN
SUBSIDIARY GUARANTORS").
Each of the Liberian Subsidiary Guarantors is a corporation organized under
the Business Corporation Act of the Republic of Liberia.
Subsection 1 of Section 6.13 empowers a corporation to 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 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 in connection with such
action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
cause to believe his conduct was unlawful.
Subsection 2 of Section 6.13 empowers a corporation to 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
such person acted in any of the capacities set forth above, against
expenses (including attorneys' fees) actually and reasonably incurred by
him in connection with the defense or settlement of such action or suit if
he acted in good faith and in a manner he reasonably believed to be in or
not opposed to the best interests of the corporation and except that no
indemnification may be made in respect to any claim, issue or matter as to
which such person shall have been adjudged to be liable for negligence or
misconduct in the performance of his duty to the corporation unless and
only to the extent that the court in which such action or suit was brought
shall determine upon application that, despite the adjudication of
liability but in view of all circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses which the
court shall deem proper.
Section 6.13 further provides that to the extent a director, officer,
employee or agent of a corporation has been successful in the defense of
any action, suit or proceeding referred to in subsections 1 and 2 above or
in the defense of any claim, issue or matter therein, he shall be
indemnified against expenses (including attorneys' fees) actually and
reasonably
<PAGE>
incurred by him in connection therewith; empowers the corporation to
advance expenses incurred in defending a civil or criminal action, suit or
proceeding unless it shall be determined that such officer or director is
entitled to indemnification by the corporation; and empowers the
corporation to purchase and maintain insurance on behalf of a director or
officer of the corporation against any liability asserted against him or
incurred by him in any such capacity or arising out of his status as such
whether or not the corporation would have the power to indemnify him
against such liabilities under Section 6.13.
The by-laws of the Liberian Subsidiary Guarantors do not contain any
provisions relating to the indemnification of officers or directors.
TOPSCALE SHIPPING COMPANY LIMITED AND CONIFER SHIPPING COMPANY LIMITED (EACH, A
"SUBSIDIARY GUARANTOR"; AND COLLECTIVELY, THE "CYPRIOT SUBSIDIARY GUARANTORS";
AND, TOGETHER WITH MILLENIUM, THE CAYMAN SUBSIDIARY GUARANTORS AND THE LIBERIAN
GUARANTORS, THE "REGISTRANTS").
Each of the Cypriot Subsidiary Guarantors is a corporation organized and
incorporated under the Laws of the Republic of Cyprus. The Cypriot Corporate Law
on Indemnity is governed by CAP. 113 Companies - of the Statue Laws of Cyprus -
First Schedule - Table A - Section 136 which provides that:
Every Director, Managing Director, Auditor, Secretary and other Officer for
the time being of the Company shall be indemnified out of the assets of the
Company against any liability incurred by him in defending any Proceedings,
whether Civil or Criminal in which Judgement is given in his favor or in
which he is acquitted or in connecting with any application under section
383 of the Law, in which relief is granted to him by the Court.
Section 383 of the Law (CAP. 113 - Companies) provides:
383 (1). If in any Proceeding for Negligence, default, breach of duty or
breach of trust against an Officer of a Company or Person employed by a
Company as Auditor ( whether he is or is not an Officer of the Company ) it
appears to the Court hearing the case that Officer or Person is or may be
liable in respect of the negligence, default, breach of duty or breach of
trust, but that he has acted honestly and reasonably, and that, having
regard to all the circumstances of the case, including those connected with
his appointment, he ought fairly to be excused for the Negligence, default,
breach of duty or breach of trust, that Court may relieve him, either
wholly or partly, from his liability on such terms as the Court may think
fit.
383 (2). Where any such Officer or Person aforesaid has reason to apprehend
that any claim will or might be made against him in respect of any
negligence, default, breach of duty or breach of trust, he may apply to the
Court for relief, and the Court on any such Application shall have the same
power to relief him as under this section it would have had if it had been
a Court before which Proceedings against that person for negligence,
default, breach of duty or breach of trust has been brought.
Article 1 of the Articles of Association of the Cypriot Subsidiary
Guarantors provides for indemnification of officers and directors that is
applicable to Cap. 113-Companies Statute of Laws of Cyprus
<PAGE>
- - - - - First Schedule - Table A - Section 136. Article 1 of the Articles of
Association of the Cypriot Subsidiary Guarantors provides for indemnification of
directors and officers as follows:
The regulations contained in Part I of Table "A" in the First Schedule of
the Companies Law, Cap. 113 (which Table is hereinafter called "Table A")
shall apply to this Company, save those which by these presents are
excepted or amended or which are inconsistent with the other provisions of
these Articles. The regulations of Part 1 of "Table A" No. 11, 24, 53, 58,
60, 77, 79, 88 (a), 89, 90, 91, 92, 98 and 113 shall not apply, but save as
above provided and in addition to the other provisions of Part I of "Table
A", the following shall constitute the Articles of Association of this
Company.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(A) EXHIBITS
3.1 -- Memorandum and Articles of Association of
Millenium Seacarriers, Inc. ("Millenium").
3.2 -- Articles of Incorporation of Oakmont Shipping
and Trading Limited ("Oakmont Shipping").
3.3 -- By-laws of Oakmont Shipping.
3.4 -- Articles of Incorporation of Rapid Ocean
Carriers Inc. ("Rapid Ocean").
3.5 -- By-laws of Rapid Ocean.
3.6 -- Articles of Incorporation of Ivy
Navigation Ltd. ("Ivy Navigation").
3.7 -- By-laws of Ivy Navigation.
3.8 -- Memorandum and Articles of Association of
Topscale Shipping Company Limited
("Topscale Shipping").
3.9 -- Memorandum and Articles of Association of
Conifer Shipping Company Limited
("Conifer Shipping").
3.10 -- Memorandum and Articles of Association of
Millenium II, Inc. ("Millenium II").
3.11 -- Memorandum and Articles of Association of
Millenium III, Inc. ("Millenium III").
3.12 -- Memorandum and Articles of Association of
Millenium IV, Inc. ("Millenium IV").
3.13 -- Memorandum and Articles of Association of
Millenium V, Inc. ("Millenium V").
3.14 -- Memorandum and Articles of Association of
Millenium VI, Inc.
<PAGE>
("Millenium VI").
3.15 -- Memorandum and Articles of Association of
Millenium VII, Inc. ("Millenium VII").
3.16 -- Memorandum and Articles of Association of
Millenium Yama, Inc. ("Millenium Yama").
3.17 -- Memorandum and Articles of Association of
Millenium Elmar, Inc. ("Millenium Elmar").
3.18 -- Memorandum and Articles of Association of
Millenium Majestic, Inc. ("Millenium Majestic").
3.19 -- Memorandum and Articles of Association of Millenium
Amethyst, Inc. ("Millenium Amethyst").
3.20 -- Memorandum and Articles of Association of
Millenium Aleksander, Inc. ("Millenium Aleksander").
4.1 -- Indenture, dated as of July 15, 1998 (the
"Indenture"), by and among Millenium Seacarriers,
each subsidiary of Millenium Seacarriers named
therein (the "Subsidiary Guarantors") and The First
National Bank of Maryland as Trustee (the
"Trustee").
4.2 -- Escrow and Pledge Agreement, dated as of July 15,
1998 (the "Escrow Agreement"), by and between
Millenium Seacarriers and The First National Bank of
Maryland, as Escrow Agent (the "Escrow Agent").
4.3 -- Collateral Agency and Intercreditor Agreement, dated
as of July 15, 1998 (the "Collateral Agency
Agreement"), by and among Millenium Seacarriers, the
Subsidiary Guarantors named therein, the Trustee,
the Collateral Agent and The Bank of New York.
4.4 -- Form of Exchange Note.
4.5 -- Form of First Preferred Liberian Ship Mortgage.
4.6 -- Form of First Preferred Panamanian Naval Mortgage.
4.7 -- Form of Cayman Islands Statutory Ship Mortgage.
4.8 -- Form of Cayman Islands Deed of Covenants to Cayman
Islands Statutory Ship Mortgage.
4.9 -- Form of Cypriot Statutory Ship Mortgage.
4.10 -- Form of Cypriot Deed of Covenants to the Cypriot
Statutory Ship
<PAGE>
Mortgage.
4.11 -- Form of Bahamian Statutory Ship Mortgage.
4.12 -- Form of Bahamian Deed of Covenants to the Bahamian
Statutory Ship Mortgage.
4.13 -- Form of Insurance Assignment (the "Insurance
Assignment"), by and between each of the Subsidiary
Guarantors, as applicable and the Collateral Agent
5.1 -- Opinion of Thacher Proffitt & Wood, counsel to
Millenium and the Subsidiary Guarantors, as to the
validity of the Exchange Notes.
8.1 -- Opinion of Thacher Proffitt & Wood, counsel to
Millenium and the Subsidiary Guarantors, as to
Certain United States Income Tax Considerations
(contained in Exhibit 5.1)
8.2 -- Opinion of Maples and Calder, special counsel to
Millenium and each Subsidiary Guarantor organized in
the Cayman Islands (the "Cayman Subsidiary
Guarantors"), as to certain Cayman Island Tax
Considerations.
8.3 -- Opinion of the Law Offices of Basil T. Patkos,
special counsel to each Subsidiary Guarantor,
organized in the Republic of Liberia (the "Liberian
Subsidiary Guarantors"), as to certain Liberian Tax
Considerations.
8.4 -- Opinion of Andreas P. Demetriades & Associates,
special counsel to each Subsidiary Guarantor
organized in the Republic of Cyprus (the "Cypriot
Subsidiary Guarantors"), as to certain Cypriot Tax
Considerations.
10.1 -- Purchase Agreement, dated as of July 20, 1998 (the
"Purchase Agreement") by and among Millenium
Seacarriers, the Subsidiary Guarantors named therein
and Credit Suisse First Boston Corporation and
Donaldson, Lufkin & Jenrette Securities Corporation
(the "Initial Purchasers").
10.2 -- The Management Agreement, dated as of July 1, 1998
(the "Management Agreement"), by and among Millenium
Seacarriers, Millenium Management, Inc. (the
"Manager"), and the Subsidiary Guarantors named
therein.
10.3 -- The Registration Rights Agreement, dated as of July
20, 1998 (the "Registration Rights Agreement"), by
and among Millenium Seacarriers, the Subsidiary
Guarantors named therein and the Initial Purchasers.
10.4 -- Credit Agreement, dated as of July 20, 1998 (the
"Credit Agreement"), by and between Millenium
Seacarriers and The Bank of New York.
10.5 -- Warrant Agreement, dated as of July 15, 1998
(the "Warrant Agreement"),
<PAGE>
by and among Millenium, the Subsidiary Guarantors
named therein and ChaseMellon Shareholder Services,
L.L.C. (the "Warrant Agent").
10.6 -- Advisory Agreement, dated as of July 24, 1998 (the
"Advisory Agreement"), by and between Millenium
Seacarriers and Millenium Advisors, Inc. ("Millenium
Advisors").
10.7 -- Guarantee Agreement, dated as of July 20, 1998 (the
"Guarantee Agreement"), by and between the
Subsidiary Guarantors named therein and The Bank of
New York.
+ 10.8 -- Charterparty relating to m.v. Millenium Hawk, dated
July 27, 1998 (the "Millenium Hawk Charterparty"),
by and between Millenium II and FedNav International
Limited ("FedNav").
+ 10.9 -- Charterparty relating to m.v. Millenium Eagle, dated
July 27, 1998 (the "Millenium Eagle Charterparty"),
by and between Millenium VII and FedNav.
+ 10.10 -- Charterparty relating to m.v. Millenium Osprey,
dated July 27, 1998 (the "Millenium Osprey
Charterparty"), by and between Millenium VI and
FedNav.
+ 10.11 -- Charterparty relating to m.v. Millenium Falcon,
dated July 27, 1998 (the "Millenium Falcon
Charterparty"), by and between Millenium V and
FedNav.
+ 10.12 -- Charterparty relating to m.v. Millenium Condor,
dated July 27, 1998 (the "Millenium Condor
Charterparty"), by and between Millenium IV and
FedNav.
+ 10.13 -- Charterparty relating to m.v. Monica Marissa, dated
October 27, 1995, as amended by Addendum No. 1 dated
April 30, 1997 (the "Monica Marissa Charterparty"),
by and between Oakmont Shipping and Cementos
Mexicanos ("Cemex").
+ 10.14 -- Charterparty relating to m.v. Clipper Harmony, dated
February 21, 1996, as amended by Addendum No. 1
dated May 2, 1997 and Addendum No. 2 dated January
23, 1998 (the "Clipper Harmony Charterparty"), by
and between Ivy Navigation and Clipper Group
("Clipper").
+ 10.15 -- Charterparty relating to m.v. Clipper Golden Hind,
dated March 14, 1995, as amended by Addendum No. 1
dated April 25, 1995, Addendum No. 2 dated February
21, 1996 and Addendum No. 3 dated August 14, 1996
(the "Clipper Golden Hind Charterparty"), by and
between Rapid Ocean and Clipper.
+ 10.16 -- Charterparty relating to m.v. Clipper Pacific, dated
January 8, 1993 as amended by Addendum No. 1,
Addendum No. 2, Addendum No. 3 dated Feruary 21,
1996, Addendum No. 4 dated February 21, 1996,
Addendum
<PAGE>
No. 5 dated August 14, 1996 and Addendum No. 6 dated
August 14, 1996 (the "Clipper Pacific
Charterparty"), by and between Topscale Shipping and
Clipper.
+ 10.17 -- Charterparty relating to m.v. Clipper Atlantic,
dated January 8, 1993 and as amended by Addendum No.
1, Addendum No. 2, Addendum No. 3 dated Feruary 21,
1996, Addendum No. 4 dated February 21, 1996,
Addendum No. 5 dated August 14, 1996 and Addendum
No. 6 dated August 14, 1996 (the "Clipper Atlantic
Charterparty"), by and between Conifer Shipping and
Clipper.
+ 10.18 -- Charterparty relating to m.v. Millenium Amethyst,
dated June 1, 1998 (the "Millenium Amethyst
Charterparty"), by and between Millenium Amethyst
and Clipper.
+ 10.19 -- Charterparty relating to m.v. Millenium Yama, dated
July 31, 1998 (the "Millenium Yama Charterparty"),
by and between Millenium Yama and Clipper.
+ 10.20 -- Charterparty relating to m.v. Millenium Majestic,
dated June 24, 1998 (the "Millenium Majestic
Charterparty"), by and between Millenium Majestic
and Clipper.
+ 10.21 -- Charterparty relating to m.v. Millenium Aleksander,
dated October 20, 1997, as amended by Addendum No. 1
dated October 20, 1997 and Addendum No. 2 dated July
24, 1998 (the "Millenium Aleksander Charterparty"),
by and between Millenium Aleksander and Tschudi &
Eitzen Group ("T&E").
+ 10.22 -- Charterparty relating to m.v. Millenium Elmar, dated
October 20, 1997, as amended by Addendum No. 1 dated
October 20, 1997 and Addendum No. 2 dated July 24,
1998 (the "Millenium Elmar Charterparty"), by and
between Millenium Elmar and T&E.
+ 10.23 -- Charterparty relating to m.v. Millenium Leader,
dated May 20, 1998 (the "Millenium Leader
Charterparty"), by and between Millenium III and Hai
Sun Hup Shipping ("HSH").
23.1 -- Consent of Coopers & Lybrand.
23.2 -- Consent of Thacher Proffitt & Wood (contained in
Exhibit 5.1).
23.3 -- Consent of Maples and Calder.
23.4 -- Consent of Andreas P. Demetriades & Associates.
23.5 -- Consent of The Law Offices of Basil T. Patkos.
<PAGE>
23.6 -- Consent of SSY Consultancy and Research Limited of
London.
23.7 -- Consent of Drewry Shipping Consultants Ltd.
23.8 -- Consent of Shipping Intelligence, Inc.
23.9 -- Consent of Maritime Research, Inc.
25.1 -- Statement of Eligibility of Trustee on Form T-1.
99.1 -- Letter of Transmittal.
99.2 -- Notice of Guaranteed Delivery.
- - - - --------------------
+ To be filed by amendment.
ITEM 22. UNDERTAKINGS
Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended (the "Securities Act") may be permitted to directors,
officers and controlling persons of the Registrants pursuant to the foregoing
provisions, or otherwise, the Registrants have been advised that in the opinion
of the Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities (other than
the payment by the Registrants of expenses incurred or paid by a director,
officer or controlling person of the Registrants 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, each of
the Registrants 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 Securities Act and will be governed by the final adjudication
of such issue.
Each of Millenium and the Subsidiary Guarantors, each an undersigned
Registrant, hereby undertakes: to file, during any period in which offers or
sales are being made, a post-effective amendment to this Registration Statement
(i) to include any prospectus required by Section 10(a)(3) of the Securities
Act; (ii) to reflect in the prospectus any facts or events arising after the
effective date of the Registration Statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in the Registration Statement;
and (iii) to include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the Registration Statement.
Each of Millenium and the Subsidiary Guarantors, each an undersigned
Registrant, hereby undertakes: that, for the purpose of determining any
liability under the Securities Act, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial BONA FIDE offering thereof.
Each of Millenium and the Subsidiary Guarantors, each an undersigned
Registrant, hereby
<PAGE>
undertakes: to remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
Each of Millenium and the Subsidiary Guarantors, each an undersigned
Registrant, hereby undertakes: if the registrant is a foreign private issuer, to
file a post-effective amendment to the Registration Statement to include any
financial statements required by Rule 3-19 of this chapter at the start of any
delayed offering or throughout a continuous offering. Financial statements and
information otherwise required by Section 10(a)(3) of the Securities Act need
not be furnished, PROVIDED, that the Registrants include in the prospectus, by
means of a post-effective amendment, financial statements required pursuant to
this paragraph (a)(4) and other information necessary to ensure that all other
information in the prospectus is at least as current as the date of those
financial statements.
Each of Millenium and the Subsidiary Guarantors, each an undersigned
Registrant, hereby undertakes: that prior to any public reoffering of the
securities registered hereunder through use of a prospectus which is a part of
this Registration Statement, by any person or party who is deemed to be an
underwriter within the meaning of Rule 145 (c), the issuer undertakes that such
reoffering prospectus will contain the information called for by the applicable
registration form with respect to reofferings by persons who may be deemed
underwriters, in addition to the information called for by the other items of
the applicable form.
Each of Millenium and the Subsidiary Guarantors, each an undersigned
Registrant, hereby undertakes that every prospectus: (i) that is filed pursuant
to the paragraph immediately preceding, or (ii) that purports to meet the
requirements of Section 10(a)(3) of the Act and is used in connection with an
offering of securities subject to Rule 415, will be filed as a part of an
amendment to the Registration Statement and will not be used until such
amendment is effective, and that, for purposes of determining any liability
under the Securities Act, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the initial
BONA FIDE offering thereof.
Each of Millenium and the Subsidiary Guarantors, each an undersigned
Registrant, hereby undertakes: to file an application for the purpose of
determining the eligibility of the trustee to act under subsection (a) of
Section 310 of the Trust Indenture Act in accordance with the rules and
regulations prescribed by the Commission under Section 305(b)(2) of the Act.
<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, in the City of New York, State of New
York, on September 4, 1998.
MILLENIUM SEACARRIERS, INC.
By: /s/ Vassilios M. Livanos
-----------------------------
Name: Vassilios M. Livanos
Title: Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons, in the
capacities and on the dates indicated.
By: /s/ Vassilios M. Livanos
-------------------------
Name: Vassilios M. Livanos
Title: Chairman and Director
Date: September 4, 1998
By: /s/ Theotokis S. Milas
-----------------------------
Name: Theotokis S. Milas
Title: Chief Operating Officer
Date: September 4, 1998
By: /s/ Nico A. Cotzias
-----------------------------
Name: Nico A. Cotzias, Jr.
Title: Chief Financial Officer, Chief
Accounting Officer and Director
Date: September 4, 1998
<PAGE>
By: /s/ Michael A, Dritz
-----------------------------
Name: Michael A. Dritz
Title: Director
Date: September 4, 1998
By: /s/ Harald H. Ludwig
-----------------------------
Name: Harald H. Ludwig
Title: Director
Date: September 2, 1998
By: /s/ Robert W. Nilsen
-----------------------------
Name: Robert W. Nilsen
Title: Director
Date: September 4, 1998
By: /s/ Connor O'brien
-----------------------------
Name: Connor O'Brien
Title: Director
Date: September 4, 1998
By: /s/ Tom Stage Petersen
-----------------------------
Name: Tom Stage Petersen
Title: Director
Date September 2, 1998
<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, in the City of New York, State of New
York, on September 4, 1998. MILLENIUM II, INC.
By: /s/ Vassilios Livanos
-----------------------------
Name: Vassilios M. Livanos
Title: President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons, in the
capacities and on the dates indicated.
By: /s/ Vassilios Livanos
-----------------------------
Name: Vassilios M. Livanos
Title: Secretary and Director
Date: September 4, 1998
By: /s/ Nico A. Cotzias
-----------------------------
Name: Nico A. Cotzias, Jr.
Title: Vice President, Treasurer
and Director
Date: September 4, 1998
<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, in the City of New York, State of New
York, on September 4, 1998.
MILLENIUM III, INC.
By: /s/ Vassilios Livanos
-----------------------------
Name: Vassilios M. Livanos
Title: President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons, in the
capacities and on the dates indicated.
By: /s/ Vassilios Livanos
-----------------------------
Name: Vassilios M. Livanos
Title: Secretary and Director
Date: September 4, 1998
By: /s/ Nico A. Cotzias
-----------------------------
Name: Nico A. Cotzias, Jr.
Title: Vice President, Treasurer
and Director
Date: September 4, 1998
<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, in the City of New York, State of New
York, on September 4, 1998.
MILLENIUM IV, INC.
By: /s/ Vassilios Livanos
-----------------------------
Name: Vassilios M. Livanos
Title: President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons, in the
capacities and on the dates indicated.
By: /s/ Vassilios Livanos
-----------------------------
Name: Vassilios M. Livanos
Title: Secretary and Director
Date: September 4, 1998
By: /s/ Nico A. Cotzias
-----------------------------
Name: Nico A. Cotzias, Jr.
Title: Vice President, Treasurer
and Director
Date: September 4, 1998
<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, in the City of New York, State of New
York, on September 4, 1998.
MILLENIUM V, INC.
By: /s/ Vassilios Livanos
-----------------------------
Name: Vassilios M. Livanos
Title: President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons, in the
capacities and on the dates indicated.
By: /s/ Vassilios Livanos
-----------------------------
Name: Vassilios M. Livanos
Title: Secretary and Director
Date: September 4, 1998
By: /s/ Nico A. Cotzias
-----------------------------
Name: Nico A. Cotzias, Jr.
Title: Vice President, Treasurer
and Director
Date: September 4, 1998
<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, in the City of New York, State of New
York, on September 4, 1998.
MILLENIUM VI, INC.
By: /s/ Vassilios Livanos
-----------------------------
Name: Vassilios M. Livanos
Title: President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons, in the
capacities and on the dates indicated.
By: /s/ Vassilios Livanos
-----------------------------
Name: Vassilios M. Livanos
Title: Secretary and Director
Date: September 4, 1998
By: /s/ Nico A. Cotzias
-----------------------------
Name: Nico A. Cotzias, Jr.
Title: Vice President, Treasurer
and Director
Date: September 4, 1998
<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, in the City of New York, State of New
York, on September 4, 1998.
MILLENIUM VII, INC.
By: /s/ Vassilios Livanos
-----------------------------
Name: Vassilios M. Livanos
Title: President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons, in the
capacities and on the dates indicated.
By: /s/ Vassilios Livanos
-----------------------------
Name: Vassilios M. Livanos
Title: Secretary and Director
Date: September 4, 1998
By: /s/ Nico A. Cotzias
-----------------------------
Name: Nico A. Cotzias, Jr.
Title: Vice President, Treasurer
and Director
Date: September 4, 1998
<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, in the City of New York, State of New
York, on September 4, 1998.
MILLENIUM YAMA, INC.
By: /s/ Vassilios Livanos
Name: Vassilios M. Livanos
Title: President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons, in the
capacities and on the dates indicated.
By: /s/ Vassilios Livanos
-----------------------------
Name: Vassilios M. Livanos
Title: Secretary and Director
Date: September 4, 1998
By: /s/ Nico A. Cotzias
-----------------------------
Name: Nico A. Cotzias, Jr.
Title: Vice President, Treasurer
and Director
Date: September 4, 1998
<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, in the City of New York, State of New
York, on September 4, 1998.
MILLENIUM ELMAR, INC.
By: /s/ VASSILIOS LIVANOS
-----------------------------
Name: Vassilios M. Livanos
Title: President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons, in the
capacities and on the dates indicated.
By: /s/ VASSILIOS LIVANOS
-----------------------------
Name: Vassilios M. Livanos
Title: Secretary and Director
Date: September 4, 1998
By: /s/ NICO A. COTZIAS
-----------------------------
Name: Nico A. Cotzias, Jr.
Title: Vice President, Treasurer
and Director
Date: September 4, 1998
<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, in the City of New York, State of New
York, on September 4, 1998.
MILLENIUM AMETHYST, INC.
By: /s/ Vassilios Livanos
-----------------------------
Name: Vassilios M. Livanos
Title: President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons, in the
capacities and on the dates indicated.
By: /s/ Vassilios Livanos
-----------------------------
Name: Vassilios M. Livanos
Title: Secretary and Director
Date: September 4, 1998
By: /s/ Nico A. Cotzias
-----------------------------
Name: Nico A. Cotzias, Jr.
Title: Vice President, Treasurer
and Director
Date: September 4, 1998
<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, in the City of New York, State of New
York, on September 4, 1998.
MILLENIUM MAJESTIC, INC.
By: /s/ Vassilios Livanos
-----------------------------
Name: Vassilios M. Livanos
Title: President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons, in the
capacities and on the dates indicated.
By: /s/ Vassilios Livanos
-----------------------------
Name: Vassilios M. Livanos
Title: Secretary and Director
Date: September 4, 1998
By: /s/ Nico A. Cotzias
-----------------------------
Name: Nico A. Cotzias, Jr.
Title: Vice President, Treasurer
and Director
Date: September 4, 1998
<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, in the City of New York, State of New
York, on September 4, 1998.
MILLENIUM ALEKSANDER, INC.
By: /s/ Vassilios Livanos
-----------------------------
Name: Vassilios M. Livanos
Title: President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons, in the
capacities and on the dates indicated.
By: /s/ Vassilios Livanos
-----------------------------
Name: Vassilios M. Livanos
Title: Secretary and Director
Date: September 4, 1998
By: /s/ Nico A. Cotzias
-----------------------------
Name: Nico A. Cotzias, Jr.
Title: Vice President, Treasurer
and Director
Date: September 4, 1998
<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, in the City of New York, New York, on
September 4, 1998.
OAKMONT SHIPPING AND TRADING LIMITED
By: /s/ Vassilios Livanos
-----------------------------
Name: Vassilios M. Livanos
Title: President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons, in the
capacities and on the dates indicated.
By: /s/ Vassilios Livanos
-----------------------------
Name: Vassilios M. Livanos
Title: Director
Date: September 4, 1998
By: /s/ Theotokis S. Milas
-----------------------------
Name: Theotokis S. Milas
Title: Vice-President, Treasurer
and Director
Date: September 4, 1998
By: /s/ Nico A. Cotzias
-----------------------------
Name: Nico A. Cotzias, Jr.
Title: Secretary and Director
Date: September 4, 1998
<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, in the City of New York, New York, on
September 4, 1998.
RAPID OCEAN CARRIERS INC.
By: /s/ Vassilios Livanos
-----------------------------
Name: Vassilios M. Livanos
Title: President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons, in the
capacities and on the dates indicated.
By: /s/ Vassilios Livanos
-----------------------------
Name: Vassilios M. Livanos
Title: Director
Date: September 4, 1998
By: /s/ Theotokis A. Milas
-----------------------------
Name: Theotokis S. Milas
Title: Vice-President, Treasurer
and Director
Date: September 4, 1998
By: /s/ Nico A. Cotzias
-----------------------------
Name: Nico A. Cotzias, Jr.
Title: Secretary and Director
Date: September 4, 1998
<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, in the City of Pireaus, Greece, on
September 4, 1998.
IVY NAVIGATION LTD.
By: /s/ Theotokis S. Milas
-----------------------------
Name: Theotokis S. Milas
Title: President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons, in the
capacities and on the dates indicated.
By: /s/ Vassilios Livanos
-----------------------------
Name: Vassilios M. Livanos
Title: Director
Date: September 4, 1998
By: /s/ Vassilios Livanos
-----------------------------
Name: Vassilios M. Livanos
Title: Vice-President, Treasurer
and Director
Date: September 4, 1998
By: /s/ Leda Partazoglou
-----------------------------
Name: Leda Partazoglou
Title: Director and Secretary
Date: September 4, 1998
<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, in the City of New York, New York, on
September 4, 1998.
TOPSCALE SHIPPING COMPANY LIMITED
By: /s/ Vassilios Livanos
-----------------------------
Name: Vassilios M. Livanos
Title: Director
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons, in the
capacities and on the dates indicated.
By: /s/ Theotokis S. Milas
-----------------------------
Name: Theotokis S. Milas
Title: Director
Date: September 4, 1998
By: /s/ Nico A. Cotzias
-----------------------------
Name: Nico A. Cotzias, Jr.
Title: Director
Date: September 4, 1998
By: /s/ Emanuel Kyprios
-----------------------------
Name: Emanuel Kyprios
Title: Director
Date: September 4, 1998
<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, in the City of New York, New York, on
September 4, 1998.
CONIFER SHIPPING COMPANY LIMITED
By: /s/ Vassilios Livanos
-----------------------------
Name: Vassilios M. Livanos
Title: Director
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons, in the
capacities and on the dates indicated.
By: /s/ Theotokis S. Milas
-----------------------------
Name: Theotokis S. Milas
Title: Director
Date: September 4, 1998
By: /s/ Nico A. Cotzias
-----------------------------
Name: Nico A. Cotzias, Jr.
Title: Director
Date: September 4, 1998
By: /s/ Emanuel Kyprios
-----------------------------
Name: Emanuel Kyprios
Title: Director
Date: September 4, 1998
<PAGE>
INDEX TO EXHIBITS
3.1 -- Memorandum and Articles of Association of Millenium.
3.2 -- Articles of Incorporation of Oakmont Shipping.
3.3 -- By-laws of Oakmont Shipping.
3.4 -- Articles of Incorporation of Rapid Ocean.
3.5 -- By-laws of Rapid Ocean.
3.6 -- Articles of Incorporation of Ivy Navigation.
3.7 -- By-laws of Ivy Navigation.
3.8 -- Memorandum and Articles of Association of Topscale Shipping.
3.9 -- Memorandum and Articles of Association of Conifer Shipping.
3.10 -- Memorandum and Articles of Association of Millenium II.
3.11 -- Memorandum and Articles of Association of Millenium III.
3.12 -- Memorandum and Articles of Association of Millenium IV.
3.13 -- Memorandum and Articles of Association of Millenium V.
3.14 -- Memorandum and Articles of Association of Millenium VI.
3.15 -- Memorandum and Articles of Association of Millenium VII.
3.16 -- Memorandum and Articles of Association of Millenium Yama.
3.17 -- Memorandum and Articles of Association of Millenium Elmar.
3.18 -- Memorandum and Articles of Association of Millenium Majestic.
3.19 -- Memorandum and Articles of Association of Millenium Amethyst.
3.20 -- Memorandum and Articles of Association of Millenium Aleksander.
4.1 -- Indenture, dated as of July 15, 1998, by and among Millenium
Seacarriers, the Subsidiary Guarantors and the Trustee.
4.2 -- Escrow Agreement, dated as of July 15, 1998, by and between
Millenium Seacarriers and the Escrow Agent.
4.3 -- Collateral Agency Agreement, dated as of July 15, 1998, by and
among Millenium Seacarriers, the Subsidiary Guarantors named
therein the Trustee, the Collateral Agent and The Bank of
New York.
4.4 -- Form of Exchange Note.
4.5 -- Form of First Preferred Liberian Ship Mortgage.
4.6 -- Form of First Preferred Panamanian Naval Mortgage.
4.7 -- Form of Cayman Islands Statutory Ship Mortgage.
4.8 -- Form of Cayman Islands Deed of Covenants to Cayman Islands
Statutory Ship Mortgage.
4.9 -- Form of Cypriot Statutory Ship Mortgage.
4.10 -- Form of Cypriot Deed of Covenants to the Cypriot Statutory Ship
Mortgage.
4.11 -- Form of Bahamian Statutory Ship Mortgage.
4.12 -- Form of Bahamian Deed of Covenants to the Bahamian Statutory
Ship Mortgage.
4.13 -- Form of Insurance Assignment, by and between each of the
Subsidiary Guarantors, as applicable and the Collateral Agent
<PAGE>
5.1 -- Opinion of Thacher Proffitt & Wood, counsel to Millenium and the
Subsidiary Guarantors, as to the validity of the Exchange Notes.
8.1 -- Opinion of Thacher Proffitt & Wood, counsel to Millenium and the
Subsidiary Guarantors, as to Certain United States Income Tax
Considerations. (contained in Exhibit 5.1)
8.2 -- Opinion of Maples and Calder, special counsel to Millenium and
each of the Cayman Subsidiary Guarantors, as to certain Cayman
Island Tax Considerations.
8.3 -- Opinion of the Law Offices of Basil T. Patkos, special counsel
to each of the Liberian Subsidiary Guarantors, as to certain
Liberian Tax Considerations.
8.4 -- Opinion of Andreas P. Demetriades & Associates, special counsel
to each of the Cypriot Subsidiary Guarantors, as to certain
Cypriot Tax Considerations.
10.1 -- Purchase Agreement, dated as of July 20, 1998, by and among
Millenium Seacarriers, the Subsidiary Guarantors named therein
and the Initial Purchasers.
10.2 -- Management Agreement, dated as of July 1, 1998, by and among
Millenium Seacarriers, the Manager, and the Subsidiary
Guarantors named therein.
10.3 -- Registration Rights Agreement, dated as of July 20, 1998, by
and among Millenium Seacarriers, the Subsidiary Guarantors named
therein and the Initial Purchasers.
10.4 -- Credit Agreement, dated as of July 20, 1998, by and between
Millenium Seacarriers and The Bank of New York.
10.5 -- Warrant Agreement, dated as of July 15, 1998, by and among
Millenium, the Subsidiary Guarantors named therein and the
Warrant Agent.
10.6 -- Advisory Agreement, dated as of July 24, 1998, by and between
Millenium Seacarriers and Millenium Advisors.
10.7 -- Guarantee Agreement, dated as of July 20, 1998, by and between
the Subsidiary Guarantors named therein and The Bank of
New York.
10.8 -- Millenium Hawk Charterparty.
10.9 -- Millenium Eagle Charterparty.
10.10 -- Millenium Osprey Charterparty.
10.11 -- Millenium Falcon Charterparty.
10.12 -- Millenium Condor Charterparty.
10.13 -- Monica Marissa Charterparty.
10.14 -- Clipper Harmony Charterparty.
10.15 -- Clipper Golden Hind Charterparty.
10.16 -- Clipper Pacific Charterparty.
10.17 -- Clipper Atlantic Charterparty.
10.18 -- Millenium Amethyst Charterparty.
10.19 -- Millenium Yama Charterparty.
10.20 -- Millenium Majestic Charterparty.
<PAGE>
10.21 -- Millenium Aleksander Charterparty.
10.22 -- Millenium Elmar Charterparty.
10.23 -- Millenium Leader Charterparty.
23.1 -- Consent of Coopers & Lybrand.
23.2 -- Consent of Thacher Proffitt & Wood (contained in Exhibit 5.1).
23.3 -- Consent of Maples and Calder.
23.4 -- Consent of Andreas P. Demetriades & Associates.
23.5 -- Consent of The Law Offices of Basil T. Patkos.
23.6 -- Consent of SSY Consultancy and Research Limited of London.
23.7 -- Consent of Drewry Shipping Consultants Ltd.
23.8 -- Consent of Shipping Intelligence, Inc.
23.9 -- Consent of Maritime Research, Inc.
25.1 -- Statement of Eligibility of Trustee on Form T-1.
99.1 -- Letter of Transmittal.
99.2 -- Notice of Guaranteed Delivery.
THE COMPANIES LAW (1995 REVISION)
COMPANY LIMITED BY SHARES
MEMORANDUM OF ASSOCIATION
OF
MILLENIUM SEACARRIERS, INC.
1. The name of the Company is MILLENIUM SEACARRIERS, INC.. 2. The Registered
Office of the Company shall be at the offices of Maples and Calder,
Attorneys-at-Law, Ugland House, P.O. Box 309, George Town, Grand Cayman, Cayman
Islands, British West Indies or at such other place as the Directors may from
time to time decide. 3. The objects for which the Company is established are
unrestricted and shall include, but without limitation, the following: (i) (a)
To carry on the business of an investment company and to act as promoters and
entrepreneurs and to carry on business as financiers, capitalists,
concessionaires, merchants, brokers, traders, dealers, agents, importers and
exporters and to undertake and carry on and execute all kinds of investment,
financial, commercial, mercantile, trading and other operations.
(b) To carry on whether as principals, agents or otherwise howsoever
the business of realtors, developers, consultants, estate agents or managers,
builders, contractors, engineers, manufacturers, dealers in or vendors of all
types of property including services. (ii) To exercise and enforce all rights
and powers conferred by or incidental to the ownership of any shares, stock,
obligations or other securities including without prejudice to the generality of
the foregoing all such powers of veto or control as may be conferred by virtue
of the
<PAGE>
2
holding by the Company of some special proportion of the issued or nominal
amount thereof, to provide managerial and other executive, supervisory and
consultant services for or in relation to any company in which the Company is
interested upon such terms as may be thought fit. (iii) To purchase or otherwise
acquire, to sell, exchange, surrender, lease, mortgage, charge, convert, turn to
account, dispose of and deal with real and personal property and rights of all
kinds and, in particular, mortgages, debentures, produce, concessions, options,
contracts, patents, annuities, licences, stocks, shares, bonds, policies, book
debts, business concerns, undertakings, claims, privileges and choses in action
of all kinds. (iv) To subscribe for, conditionally or unconditionally, to
underwrite, issue on commission or otherwise, take, hold, deal in and convert
stocks, shares and securities of all kinds and to enter into partnership or into
any arrangement for sharing profits, reciprocal concessions or cooperation with
any person or company and to promote and aid in promoting, to constitute, form
or organise any company, syndicate or partnership of any kind, for the purpose
of acquiring and undertaking any property and liabilities of the Company or of
advancing, directly or indirectly, the objects of the Company or for any other
purpose which the Company may think expedient. (v) To stand surety for or to
guarantee, support or secure the performance of all or any of the obligations of
any person, firm or company whether or not related or affiliated to the Company
in any manner and whether by personal covenant or by mortgage, charge or lien
upon the whole or any part of the undertaking, property and assets of the
Company, both present and
<PAGE>
3
future, including its uncalled capital or by any such method and whether or not
the Company shall receive valuable consideration therefor. (vi) To engage in or
carry on any other lawful trade, business or enterprise which may at any time
appear to the Directors of the Company capable of being conveniently carried on
in conjunction with any of the aforementioned businesses or activities or which
may appear to the Directors or the Company likely to be profitable to the
Company.
In the interpretation of this Memorandum of Association in general and of this
Clause 3 in particular no object, business or power specified or mentioned shall
be limited or restricted by reference to or inference from any other object,
business or power, or the name of the Company, or by the juxtaposition of two or
more objects, businesses or powers and that, in the event of any ambiguity in
this clause or elsewhere in this Memorandum of Association, the same shall be
resolved by such interpretation and construction as will widen and enlarge and
not restrict the objects, businesses and powers of and exercisable by the
Company. 4. Except as prohibited or limited by the Companies Law (1995
Revision), the Company shall have full power and authority to carry out any
object and shall have and be capable of from time to time and at all times
exercising any and all of the powers at any time or from time to time
exercisable by a natural person or body corporate in doing in any part of the
world whether as principal, agent, contractor or otherwise whatever may be
considered by it necessary for the attainment of its objects and whatever else
may be considered by it as incidental or conducive thereto or consequential
thereon, including, but without in any way restricting the generality of
<PAGE>
4
the foregoing, the power to make any alterations or amendments to this
Memorandum of Association and the Articles of Association of the Company
considered necessary or convenient in the manner set out in the Articles of
Association of the Company, and the power to do any of the following acts or
things, viz: to pay all expenses of and incidental to the promotion, formation
and incorporation of the Company; to register the Company to do business in any
other jurisdiction; to sell, lease or dispose of any property of the Company; to
draw, make, accept, endorse, discount, execute and issue promissory notes,
debentures, bills of exchange, bills of lading, warrants and other negotiable or
transferable instruments; to lend money or other assets and to act as
guarantors; to borrow or raise money on the security of the undertaking or on
all or any of the assets of the Company including uncalled capital or without
security; to invest monies of the Company in such manner as the Directors
determine; to promote other companies; to sell the undertaking of the Company
for cash or any other consideration; to distribute assets in specie to Members
of the Company; to make charitable or benevolent donations; to pay pensions or
gratuities or provide other benefits in cash or kind to Directors, officers,
employees, past or present and their families; to purchase Directors and
officers liability insurance and to carry on any trade or business and generally
to do all acts and things which, in the opinion of the Company or the Directors,
may be conveniently or profitably or usefully acquired and dealt with, carried
on, executed or done by the Company in connection with the business aforesaid
PROVIDED THAT the Company shall only carry on the businesses for which a licence
is required under the laws of the Cayman Islands when so licensed under the
terms of such laws.
<PAGE>
5
5. The liability of each Member is limited to the amount from time to time
unpaid on such Member's shares. 6. The share capital of the Company is US$50,000
divided into 50,000 shares of a nominal or par value of US$1.00 each with power
for the Company insofar as is permitted by law, to redeem or purchase any of its
shares and to increase or reduce the said capital subject to the provisions of
the Companies Law (1995 Revision) and the Articles of Association and to issue
any part of its capital, whether original, redeemed or increased with or without
any preference, priority or special privilege or subject to any postponement of
rights or to any conditions or restrictions and so that unless the conditions of
issue shall otherwise expressly declare every issue of shares whether declared
to be preference or otherwise shall be subject to the powers hereinbefore
contained. 7. If the Company is registered as exempted, its operations will be
carried on subject to the provisions of Section 192 of the Companies Law
(Revision 1995) and, subject to the provisions of the Companies Law (Revision
1995) and the Articles of Association, it shall have the power to register by
way of continuation as a body corporate limited by shares under the laws of any
jurisdiction outside the Cayman Islands and to be deregistered in the Cayman
Islands.
<PAGE>
6
WE the several persons whose names and addresses are subscribed are desirous of
being formed into a company in pursuance of this Memorandum of Association and
we respectively agree to take the number of shares in the capital of the Company
set opposite our respective names.
DATED this 10th day of March, 1998.
SIGNATURE and ADDRESS NUMBER OF SHARES
OF EACH SUBSCRIBER TAKEN BY EACH
Henry Smith, Attorney at Law One
PO Box 309, Grand Cayman
Paul Lumsden, Attorney at Law One
PO Box 309, Grand Cayman
Witness to the above signatures
I, Registrar of Companies in and for the Cayman Islands HEREBY CERTIFY that this
is a true and correct copy of the Memorandum of Association of this Company
duly incorporated on the 10th day of March, 1998.
-----------------------------------
REGISTRAR OF COMPANIES
<PAGE>
7
THE COMPANIES LAW (1995 REVISION)
COMPANY LIMITED BY SHARES
ARTICLES OF ASSOCIATION
OF
MILLENIUM SEACARRIERS, INC.
1. In these Articles Table A in the Schedule to the Statute does not apply and,
unless there be something in the subject or context inconsistent therewith,
"Articles" means these Articles as originally framed or
as from time to time altered by Special
Resolution.
"Auditors" means the persons for the time being
performing the duties of auditors of the
Company.
"Company" means the above-named Company.
"debenture" means debenture stock, mortgages, bonds and
any other such securities of the Company
whether constituting a charge on the assets
of the Company or not.
"Directors" means the directors for the time being of
the Company.
"dividend" includes bonus.
"Member" shall bear the meaning as ascribed to it in
the Statute.
"month" means calendar month.
"paid-up" means paid-up and/or credited as paid-up.
"registered office" means the registered office for the time
being of the Company.
"Seal" means the common seal of the Company and
includes every duplicate seal.
<PAGE>
2
"Secretary" includes an Assistant Secretary and any
person appointed to perform the duties of
Secretary of the Company.
"share " includes a fraction of a share.
"Special Resolution" has the same meaning as in the Statute and
includes a resolution approved in writing as
described therein.
"Statute" means the Companies Law of the Cayman
Islands as amended and every statutory
modification or re-enactment thereof for the
time being in force.
"written" and
"in writing" include all modes of representing or
reproducing words in visible form.
Words importing the singular number only include the plural number and
vice-versa.
Words importing the masculine gender only include the feminine gender.
Words importing persons only include corporations.
PRELIMINARY
2. The business of the Company may be commenced as soon after incorporation as
the Directors shall see fit, notwithstanding that part only of the shares may
have been allotted.
3. The Directors may pay, out of the capital or any other monies of the Company,
all expenses incurred in or about the formation and establishment of the Company
including the expenses of registration.
CERTIFICATES FOR SHARES
4. Certificates representing shares of the Company shall be in such form as
shall be determined by the Directors. Such certificates may be under Seal. All
certificates for shares shall be consecutively numbered or otherwise identified
and shall specify the shares to which they relate. The name and address of the
person to whom the shares represented thereby are issued, with the number of
shares and date of issue, shall be entered in the register of Members of the
Company. All certificates surrendered to the Company for transfer shall be
cancelled and no new certificate shall be issued until the former certificate
for a like number of shares shall have been
<PAGE>
3
surrendered and cancelled. The Directors may authorise certificates to be issued
with the seal and authorised signature(s) affixed by some method or system of
mechanical process.
5. Notwithstanding Article 4 of these Articles, if a share certificate be
defaced, lost or destroyed, it may be renewed on payment of a fee of one dollar
(US$l.00) or such less sum and on such terms (if any) as to evidence and
indemnity and the payment of the expenses incurred by the Company in
investigating evidence, as the Directors may prescribe.
ISSUE OF SHARES
6. Subject to the provisions, if any, in that behalf in the Memorandum of
Association and to any direction that may be given by the Company in general
meeting and without prejudice to any special rights previously conferred on the
holders of existing shares, the Directors may allot, issue, grant options over
or otherwise dispose of shares of the Company (including fractions of a share)
with or without preferred, deferred or other special rights or restrictions,
whether in regard to dividend, voting, return of capital or otherwise and to
such persons, at such times and on such other terms as they think proper.
7. The Company shall maintain a register of its Members and every person whose
name is entered as a Member in the register of Members shall be entitled without
payment to receive within two months after allotment or lodgement of transfer
(or within such other period as the conditions of issue shall provide) one
certificate for all his shares or several certificates each for one or more of
his shares upon payment of fifty cents (US$0.50) for every certificate after the
first or such less sum as the Directors shall from time to time determine
provided that in respect of a share or shares held jointly by several persons
the Company shall not be bound to issue more than one certificate and delivery
of a certificate for a share to one of the several joint holders shall be
sufficient delivery to all such holders.
TRANSFER OF SHARES
8. The instrument of transfer of any share shall be in writing and shall be
executed by or on behalf of the transferor and the transferor shall be deemed to
remain the holder of a share until the name of the transferee is entered in the
register in respect thereof.
9. The Directors may in their absolute discretion decline to register any
transfer of shares without assigning any reason therefor. If the Directors
refuse to register a transfer they shall notify the transferee within two months
of such refusal.
10. The registration of transfers may be suspended at such time and for such
periods as the Directors may from time to time determine, provided always that
such registration shall not be suspended for more than forty-five days in any
year.
<PAGE>
4
REDEEMABLE SHARES
11. (a) Subject to the provisions of the Statute and the Memorandum of
Association, shares may be issued on the terms that they are, or at the option
of the Company or the holder are, to be redeemed on such terms and in such
manner as the Company, before the issue of the shares, may by Special Resolution
determine.
(b) Subject to the provisions of the Statute and the Memorandum of
Association, the Company may purchase its own shares (including fractions of a
share), including any redeemable shares, provided that the manner of purchase
has first been authorised by the Company in general meeting and may make payment
therefor in any manner authorised by the Statute, including out of capital.
VARIATION OF RIGHTS OF SHARES
12. If at any time the share capital of the Company 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, whether or not the
Company is being wound-up, be varied with the consent in writing of the holders
of three-fourths of the issued shares of that class, or with the sanction of a
Special Resolution passed at a general meeting of the holders of the shares of
that class.
The provisions of these Articles relating to general meetings
shall apply to every such general meeting of the holders of one class of shares
except that the necessary quorum shall be one person holding or representing by
proxy at least 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.
13. The rights conferred upon the holders of the shares of any class issued with
preferred or other rights shall not, unless otherwise expressly provided by the
terms of issue of the shares of that class, be deemed to be varied by the
creation or issue of further shares ranking
pari passu therewith.
COMMISSION ON SALE OF SHARES
14. The Company may in so far as the Statute from time to time permits pay a
commission to any person in consideration of his subscribing or agreeing to
subscribe whether absolutely or conditionally for any shares of the Company.
Such commissions may be satisfied by the payment of cash or the lodgement of
fully or partly paid-up shares or partly in one way and partly in the other. The
Company may also on any issue of shares pay such brokerage as may be lawful.
<PAGE>
5
NON-RECOGNITION OF TRUSTS
15. No person shall be recognised by the Company as holding any share upon any
trust and the Company shall not be bound by or be compelled in any way to
recognise (even when having notice thereof) any equitable, contingent, future,
or partial interest in any share, or any interest in any fractional part of a
share, or (except only as is otherwise provided by these Articles or the
Statute) any other rights in respect of any share except an absolute right to
the entirety thereof in the registered holder.
LIEN ON SHARES
16. The Company shall have a first and paramount lien and charge on all shares
(whether fully paid-up or not) registered in the name of a Member (whether
solely or jointly with others) for all debts, liabilities or engagements to or
with the Company (whether presently payable or not) by such Member or his
estate, either alone or jointly with any other person, whether a Member or not,
but the Directors may at any time declare any share to be wholly or in part
exempt from the provisions of this Article. The registration of a transfer of
any such share shall operate as a waiver of the Company's lien (if any) thereon.
The Company's lien (if any) on a share shall extend to all dividends or other
monies payable in respect thereof.
17. The Company may sell, in such manner as the Directors think fit, any shares
on which the Company has a lien, but no sale shall be made unless a sum in
respect of which the lien exists is presently payable, nor until the expiration
of fourteen days after a notice in writing stating and demanding payment of such
part of the amount in respect of which the lien exists as is presently payable,
has been given to the registered holder or holders for the time being of the
share, or the person, of which the Company has notice, entitled thereto by
reason of his death or bankruptcy.
18. To give effect to any such sale the Directors may authorise some person to
transfer the shares sold to the purchaser thereof. The purchaser shall be
registered as the holder of the shares comprised in any such transfer, and he
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 or invalidity in the
proceedings in reference to the sale.
19. The proceeds of such sale shall be received by the Company and applied in
payment of such part of the amount in respect of which the lien exists as is
presently payable and the residue, if any, shall (subject to a like lien for
sums 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.
<PAGE>
6
CALL ON SHARES
20. (a) The Directors may from time to time make calls upon the Members in
respect of any monies unpaid on their shares (whether on account of the nominal
value of the shares or by way of premium or otherwise) and not by the conditions
of allotment thereof made payable at fixed terms, provided that no call shall be
payable at less than one month from the date fixed for the payment of the last
preceding call, and each Member shall (subject to receiving at least fourteen
days notice specifying the time or times of payment) pay to the Company at the
time or times so specified the amount called on the shares. A call may be
revoked or postponed as the Directors may determine. A call may be made payable
by instalments.
(b) A call shall be deemed to have been made at the time when the
resolution of the Directors authorising such call was passed.
(c) The joint holders of a share shall be jointly and severally liable
to pay all calls in respect thereof.
21. If a sum called in respect of a share is not paid before or on a day
appointed for payment thereof, the persons from whom the sum is due shall pay
interest on the sum from the day appointed for payment thereof to the time of
actual payment at such rate not exceeding ten per cent per annum as the
Directors may determine, but the Directors shall be at liberty to waive payment
of such interest either wholly or in part.
22. Any sum which by the terms of issue of a share becomes payable on allotment
or at any fixed date, whether on account of the nominal value of the share or by
way of premium or otherwise, shall for the purposes of these Articles be deemed
to be a call duly made, notified and payable on the date on which by the terms
of issue the same becomes payable, and in the case of non-payment all the
relevant provisions of these Articles as to payment of interest forfeiture or
otherwise shall apply as if such sum had become payable by virtue of a call duly
made and notified.
23. The Directors may, on the issue of shares, differentiate between the holders
as to the amount of calls or interest to be paid and the times of payment.
24. (a) The Directors may, if they think fit, receive from any Member willing to
advance the same, all or any part of the monies uncalled and unpaid upon any
shares held by him, and upon all or any of the monies so advanced may (until the
same would but for such advances, become payable) pay interest at such rate not
exceeding (unless the Company in general meeting shall otherwise direct) seven
per cent per annum, as may be agreed upon between the Directors and the Member
paying such sum in advance.
<PAGE>
7
(b) No such sum paid in advance of calls shall entitle the Member
paying such sum to any portion of a dividend declared in respect of any period
prior to the date upon which such sum would, but for such payment, become
presently payable.
FORFEITURE OF SHARES
25. (a) If a Member fails to pay any call or instalment of a call or to make any
payment required by the terms of issue on the day appointed for payment thereof,
the Directors may, at any time thereafter during such time as any part of the
call, instalment or payment remains unpaid, give notice requiring payment of so
much of the call, instalment or payment as is unpaid, together with any interest
which may have accrued and all expenses that have been incurred by the Company
by reason of such non-payment. Such notice shall name a day (not earlier than
the expiration of fourteen days from the date of giving of the notice) on or
before which the payment required by the notice is to be made, and shall state
that, in the event of non-payment at or before the time appointed the shares in
respect of which such notice was given will be liable to be forfeited.
(b) If the requirements of any such notice as aforesaid are not
complied with, any share in respect of which the notice has been given may at
any time thereafter, before the payment required by the notice has been made, be
forfeited by a resolution of the Directors to that effect. Such forfeiture shall
include all dividends declared in respect of the forfeited share and not
actually paid before the forfeiture.
(c) A forfeited share may be sold or otherwise disposed of on such
terms and in such manner as the Directors think fit and at any time before a
sale or disposition the forfeiture may be cancelled on such terms as the
Directors think fit.
26. A person whose shares have been forfeited shall cease to be a Member in
respect of the forfeited shares, but shall, notwithstanding, remain liable to
pay to the Company all monies which, at the date of forfeiture were payable by
him to the Company in respect of the shares together with interest thereon, but
his liability shall cease if and when the Company shall have received payment in
full of all monies whenever payable in respect of the shares.
27. A certificate in writing under the hand of one Director or the Secretary of
the Company that a share in the Company has been duly forfeited on a date stated
in the declaration shall be conclusive evidence of the fact therein stated as
against all persons claiming to be entitled to the share. The Company may
receive the consideration given for the share on any sale or disposition thereof
and may execute a transfer of the share in favour of the person to whom the
share is sold or disposed of and he shall thereupon be registered as the holder
of the share and shall not be bound to see to the application of the purchase
money, if any, nor shall his title to the
<PAGE>
8
share be affected by any irregularity or invalidity in the proceedings in
reference to the forfeiture, sale or disposal of the share.
28. The provisions of these Articles as to forfeiture shall apply in the case of
non-payment of any sum which, by the terms of issue of a share, becomes payable
at a fixed time, whether on account of the nominal value of the share or by way
of premium as if the same had been payable by virtue of a call duly made and
notified.
REGISTRATION OF EMPOWERING INSTRUMENTS
29. The Company shall be entitled to charge a fee not exceeding one dollar
(US$l.00) on the registration of every probate, letters of administration,
certificate of death or marriage, power of attorney, notice in lieu of
distringas, or other instrument.
TRANSMISSION OF SHARES
30. In case of the death of a Member, the survivor or survivors where the
deceased was a joint holder, and the legal personal representatives of the
deceased where he was a sole holder, shall be the only persons recognised by the
Company as having any title to his interest in the shares, but nothing herein
contained shall release the estate of any such deceased holder from any
liability in respect of any shares which had been held by him solely or jointly
with other persons.
31. (a) Any person becoming entitled to a share in consequence of the death or
bankruptcy or liquidation or dissolution of a Member (or in any other way than
by transfer) may, upon such evidence being produced as may from time to time be
required by the Directors and subject as hereinafter provided, elect either to
be registered himself as holder of the share or to make such transfer of the
share to such other person nominated by him as the deceased or bankrupt person
could have made and to have such person registered as the transferee thereof,
but the Directors shall, in either case, have the same right to decline or
suspend registration as they would have had in the case of a transfer of the
share by that Member before his death or bankruptcy as the case may be.
(b) If the person so becoming entitled shall elect to be registered
himself as holder he shall deliver or send to the Company a notice in writing
signed by him stating that he so elects.
32. A person becoming entitled to a share by reason of the death or bankruptcy
or liquidation or dissolution of the holder (or in any other case than by
transfer) shall be entitled to the same dividends and other advantages to which
he would be entitled if he were the registered holder of the share, except that
he shall not, before being registered as a Member in respect of the share, be
entitled in respect of it to exercise any right conferred by membership in
relation to meetings of the Company PROVIDED HOWEVER that the Directors may at
any time give notice
<PAGE>
9
requiring any such person to elect either to be registered himself or to
transfer the share and if the notice is not complied with within ninety days the
Directors may thereafter withhold payment of all dividends, bonuses or other
monies payable in respect of the share until the requirements of
the notice have been complied with.
AMENDMENT OF MEMORANDUM OF ASSOCIATION, CHANGE OF
LOCATION OF REGISTERED OFFICE & ALTERATION OF CAPITAL
33. (a) Subject to and in so far as permitted by the provisions of the Statute,
the Company may from time to time by ordinary resolution alter or amend its
Memorandum of Association otherwise than with respect to its name and objects
and may, without restricting the generality of
the foregoing:
i. increase the share capital by such sum to be divided
into shares of such amount or without nominal or par
value as the resolution shall prescribe and with such
rights, priorities and privileges annexed thereto, as
the Company in general meeting may determine.
ii. consolidate and divide all or any of its share
capital into shares of larger amount than its
existing shares;
iii. by subdivision of its existing shares or any of them
divide the whole or any part of its share capital
into shares of smaller amount than is fixed by the
Memorandum of Association or into shares without
nominal or par value;
iv. cancel any shares which at the date of the passing of
the resolution have not been taken or agreed to be
taken by any person.
(b) All new shares created hereunder shall be subject to the same
provisions with reference to the payment of calls, liens, transfer,
transmission, forfeiture and otherwise as the shares in the original share
capital.
(c) Subject to the provisions of the Statute, the Company may by
Special Resolution change its name or alter its objects.
(d) Without prejudice to Article 11 hereof and subject to the
provisions of the Statute, the Company may by Special Resolution reduce its
share capital and any capital redemption reserve fund.
(e) Subject to the provisions of the Statute, the Company may by
resolution of the Directors change the location of its registered office.
<PAGE>
10
CLOSING REGISTER OF MEMBERS OR FIXING RECORD DATE
34. For the purpose of determining Members entitled to notice of or to vote at
any meeting of Members or any adjournment thereof, or Members entitled to
receive payment of any dividend, or in order to make a determination of Members
for any other proper purpose, the Directors of the Company may provide that the
register of Members shall be closed for transfers for a stated period but not to
exceed in any case forty days. If the register of Members shall be so closed for
the purpose of determining Members entitled to notice of or to vote at a meeting
of Members such register shall be so closed for at least ten days immediately
preceding such meeting and the record date for such determination shall be the
date of the closure of the register of Members.
35. In lieu of or apart from closing the register of Members, the Directors may
fix in advance a date as the record date for any such determination of Members
entitled to notice of or to vote at a meeting of the Members and for the purpose
of determining the Members entitled to receive payment of any dividend the
Directors may, at or within 90 days prior to the date of declaration of such
dividend fix a subsequent date as the record date for such determination.
36. If the register of Members is not so closed and no record date is fixed for
the determination of Members entitled to notice of or to vote at a meeting of
Members or Members entitled to receive payment of a dividend, the date on which
notice of the meeting is mailed or the date on which the resolution of the
Directors declaring such dividend is adopted, as the case may be, shall be the
record date for such determination of Members. When a determination of Members
entitled to vote at any meeting of Members has been made as provided in this
section, such determination shall apply to any adjournment thereof.
GENERAL MEETING
37. (a) Subject to paragraph (c) hereof, the Company shall within one year of
its incorporation and in each year of its existence thereafter hold a general
meeting as its annual general meeting and shall specify the meeting as such in
the notices calling it. The annual general meeting shall be held at such time
and place as the Directors shall appoint and if no other time and place is
prescribed by them, it shall be held at the registered office on the second
Wednesday in December of each year at ten o'clock in the morning.
(b) At these meetings the report of the Directors (if
any) shall be presented.
(c) If the Company is exempted as defined in the Statute it may
but shall not be obliged to hold an annual general meeting.
<PAGE>
11
38. (a) The Directors may whenever they think fit, and they shall on the
requisition of Members of the Company holding at the date of the deposit of the
requisition not less than one-tenth of such of the paid-up capital of the
Company as at the date of the deposit carries the right of voting at general
meetings of the Company, proceed to convene a general meeting of the
Company.
(b) The requisition must state the objects of the meeting and must be
signed by the requisitionists and deposited at the registered office of the
Company and may consist of several documents in like form each signed by one or
more requisitionists.
(c) If the Directors do not within twenty-one days from the date of the
deposit of the requisition duly proceed to convene a general meeting, the
requisitionists, or any of them representing more than one-half of the total
voting rights of all of them, may themselves convene a general meeting, but any
meeting so convened shall not be held after the expiration of three months after
the expiration of the said twenty-one days.
(d) A general meeting convened as aforesaid by requisitionists shall be
convened in the same manner as nearly as possible as that in which general
meetings are to be convened by
Directors.
NOTICE OF GENERAL MEETINGS
39. At least five days' notice shall be given of an annual general meeting or
any other general meeting. Every notice shall be exclusive of the day on which
it is given or deemed to begiven and of the day for which it is given and shall
specify the place, the day and the hour of the meeting and the general nature of
the business and shall be given in manner hereinafter mentioned or in such other
manner if any as may be prescribed by the Company PROVIDED that a general
meeting of the Company shall, whether or not the notice specified in this
regulation has been given and whether or not the provisions of Article 38 have
been complied with, be deemed to have been duly convened if it is so agreed:
(a) in the case of a general meeting called as an annual general
meeting by all the Members entitled to attend and vote thereat or their proxies;
and
(b) in the case of any other general meeting by a majority in number of
the Members having a right to attend and vote at the meeting, being a majority
together holding not less than seventy-five per cent in nominal value or in the
case of shares without nominal or par value seventy-five per cent of the shares
in issue, or their proxies.
<PAGE>
12
40. The accidental omission to give notice of a general meeting to, or the
non-receipt of notice of a meeting by any person entitled to receive notice
shall not invalidate the proceedings of that meeting.
PROCEEDINGS AT GENERAL MEETINGS
41. No business shall be transacted at any general meeting unless a quorum of
Members is present at the time when the meeting proceeds to business; two
Members present in person or by proxy shall be a quorum provided always that if
the Company has one Member of record the quorum shall be that one Member present
in person or by proxy.
42. A resolution (including a Special Resolution) in writing (in one or more
counterparts) signed by all Members for the time being entitled to receive
notice of and to attend and vote at general meetings (or being corporations by
their duly authorised representatives) shall be as valid and effective as if the
same had been passed at a general meeting of the Company duly convened and held.
43. If within half an hour from the time appointed for the meeting a quorum is
not present, the meeting, if convened upon the requisition of Members, shall be
dissolved and in any other case it shall stand adjourned to the same day in the
next week at the same time and place or to such other time or such other place
as the Directors may determine and if at the adjourned meeting a quorum is not
present within half an hour from the time appointed for the meeting the Members
present shall be a quorum.
44. The Chairman, if any, of the Board of Directors shall preside as Chairman at
every general meeting of the Company, or if there is no such Chairman, or if he
shall not be present within fifteen minutes after the time appointed for the
holding of the meeting, or is unwilling to act, the Directors present shall
elect one of their number to be Chairman of the meeting.
45. If at any general meeting 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 shall choose one of their number to be Chairman
of the meeting.
46. The Chairman may, with the consent of any general meeting duly constituted
hereunder, 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 any
adjourned meeting other than the business left unfinished at the meeting from
which the adjournment took place. When a general meeting is adjourned for thirty
days or more, notice of the adjourned meeting shall be given as in the case of
an original meeting; save as aforesaid it shall not be necessary to give any
notice of an adjournment or of the business to be transacted at an adjourned
general meeting.
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13
47. At any general meeting a resolution put to the vote of the meeting shall be
decided on a show of hands unless a poll is, before or on the declaration of the
result of the show of hands, demanded by the Chairman or any other Member
present in person or by proxy.
48. Unless a poll be so demanded a declaration by the Chairman that a resolution
has on a show of hands been carried, or carried unanimously, or by a particular
majority, or lost, and an entry to that effect in the Company's Minute Book
containing the Minutes of the proceedings of the meeting shall be conclusive
evidence of that fact without proof of the number or proportion of the votes
recorded in favour of or against such resolution.
49. The demand for a poll may be withdrawn.
50. Except as provided in Article 52, if a poll is duly demanded it shall be
taken in such manner as the Chairman directs and the result of the poll shall be
deemed to be the resolution of the general meeting at which the poll was
demanded.
51. In the case of an equality of votes, whether on a show of hands or on a
poll, the Chairman of the general meeting at which the show of hands takes place
or at which the poll is demanded, shall be entitled to a second or casting vote.
52. 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 at such time as the Chairman of the general meeting directs and
any business other than that upon which a poll has been demanded or is
contingent thereon may be proceeded with pending the taking of the poll.
VOTES OF MEMBERS
53. Subject to any rights or restrictions for the time being attached to any
class or classes of shares, on a show of hands every Member of record present in
person or by proxy at a general meeting shall have one vote and on a poll every
Member of record present in person or by proxy shall have one vote for each
share registered in his name in the register of Members.
54. In the case of joint holders of record 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 for this purpose seniority shall be
determined by the order in which the names stand in the register of Members.
55. A Member of unsound mind, or in respect of whom an order has been made by
any court, having jurisdiction in lunacy, may vote, whether on a show of hands
or on a poll, by his committee, receiver, curator bonis, or other person in the
nature of a committee, receiver or
<PAGE>
14
curator bonis appointed by that court, and any such committee, receiver, curator
bonis or other persons may vote by proxy.
56. No Member shall be entitled to vote at any general meeting unless he is
registered as a shareholder of the Company on the record date for such meeting
nor unless all calls or other sums presently payable by him in respect of shares
in the Company have been paid.
57. No objection shall be raised to the qualification of any voter except at the
general meeting or adjourned general meeting at which the vote objected to is
given or tendered and every vote not disallowed at such general meeting shall be
valid for all purposes. Any such objection made in due time shall be referred to
the Chairman of the general meeting whose decision shall be final and
conclusive.
58. On a poll or on a show of hands votes may be given either personally or by
proxy.
PROXIES
59. The instrument appointing a proxy shall be in writing and shall be executed
under the hand of the appointor or of his attorney duly authorised in writing,
or, if the appointor is a corporation under the hand of an officer or attorney
duly authorised in that behalf. A proxy need not be a Member of the Company.
60. The instrument appointing a proxy shall be deposited at the registered
office of the Company or at such other place as is specified for that purpose in
the notice convening the meeting no later than the time for holding the meeting,
or adjourned meeting provided that the Chairman of the Meeting may at his
discretion direct that an instrument of proxy shall be deemed to have been duly
deposited upon receipt of telex, cable or telecopy confirmation from the
appointor that the instrument of proxy duly signed is in the course of
transmission to the Company.
61. The instrument appointing a proxy may be in any usual or common form and may
be expressed to be for a particular meeting or any adjournment thereof or
generally until revoked. An instrument appointing a proxy shall be deemed to
include the power to demand or join or concur in demanding a poll.
62. A vote given in accordance with the terms of an instrument of proxy shall be
valid notwithstanding the previous death or insanity of the principal or
revocation of the proxy or of the authority under which the proxy was executed,
or the transfer of the share in respect of which the proxy is given provided
that no intimation in writing of such death, insanity, revocation or transfer as
aforesaid shall have been received by the Company at the registered office
before the commencement of the general meeting, or adjourned meeting at which it
is sought to use the proxy.
<PAGE>
15
63. Any corporation which is a Member of record of the Company may in accordance
with its Articles or in the absence of such provision by resolution of its
Directors or other governing body authorise such person as it thinks fit to act
as its representative at any meeting of the Company or of any class of Members
of the Company, and the person so authorised shall be entitled to exercise the
same powers on behalf of the corporation which he represents as the corporation
could exercise if it were an individual Member of record of the Company.
64. Shares of its own capital belonging to the Company or held by it in a
fiduciary capacity shall not be voted, directly or indirectly, at any meeting
and shall not be counted in determining the total number of outstanding shares
at any given time.
DIRECTORS
65. There shall be a Board of Directors consisting of not less than one or more
than ten persons (exclusive of alternate Directors) PROVIDED HOWEVER that the
Company may from time to time by ordinary resolution increase or reduce the
limits in the number of Directors. The first Directors of the Company shall be
determined in writing by, or appointed by a resolution of, the subscribers of
the Memorandum of Association or a majority of them.
66. The remuneration to be paid to the Directors shall be such remuneration as
the Directors shall determine. Such remuneration shall be deemed to accrue from
day to day. The Directors shall also be entitled to be paid their travelling,
hotel and other expenses properly incurred by them in going to, attending and
returning from meetings of the Directors, or any committee of the Directors, or
general meetings of the Company, or otherwise in connection with the business of
the Company, or to receive a fixed allowance in respect thereof as may be
determined by the Directors from time to time, or a combination partly of one
such method and partly the other.
67. The Directors may by resolution award special remuneration to any Director
of the Company undertaking any special work or services for, or undertaking any
special mission on behalf of, the Company other than his ordinary routine work
as a Director. Any fees paid to a Director who is also counsel or solicitor to
the Company, or otherwise serves it in a professional capacity shall be in
addition to his remuneration as a Director.
68. A Director or alternate Director may hold any other office or place of
profit under the Company (other than the office of Auditor) in conjunction with
his office of Director for such period and on such terms as to remuneration and
otherwise as the Directors may determine.
69. A Director or alternate Director may act by himself or his firm in a
professional capacity for the Company and he or his firm shall be entitled to
remuneration for professional services as if he were not a Director or alternate
Director.
<PAGE>
16
70. A shareholding qualification for Directors may be fixed by the Company in
general meeting, but unless and until so fixed no qualification shall be
required.
71. A Director or alternate Director of the Company may be or become a director
or other officer of or otherwise interested in any company promoted by the
Company or in which the Company may be interested as shareholder or otherwise
and no such Director or alternate Director shall be accountable to the Company
for any remuneration or other benefits received by him as a director or officer
of, or from his interest in, such other company.
72. No person shall be disqualified from the office of Director or alternate
Director or prevented by such office from contracting with the Company, either
as vendor, purchaser or otherwise, nor shall any such contract or any contract
or transaction entered into by or on behalf of the Company in which any Director
or alternate Director shall be in any way interested be or be liable to be
avoided, nor shall any Director or alternate Director so contracting or being so
interested be liable to account to the Company for any profit realised by any
such contract or transaction by reason of such Director holding office or of the
fiduciary relation thereby established. A Director (or his alternate Director in
his absence) shall be at liberty to vote in respect of any contract or
transaction in which he is so interested as aforesaid PROVIDED HOWEVER that the
nature of the interest of any Director or alternate Director in any such
contract or transaction shall be disclosed by him or the alternate Director
appointed by him at or prior to its consideration and any vote thereon.
73. A general notice that a Director or alternate Director is a shareholder of
any specified firm or company and is to be regarded as interested in any
transaction with such firm or company shall be sufficient disclosure under
Article 72 and after such general notice it shall not be necessary to give
special notice relating to any particular transaction.
ALTERNATE DIRECTORS
74. Subject to the exception contained in Article 82, a Director who expects to
be unable to attend Directors' Meetings because of absence, illness or otherwise
may appoint any person to be an alternate Director to act in his stead and such
appointee whilst he holds office as an alternate Director shall, in the event of
absence therefrom of his appointor, be entitled to attend meetings of the
Directors and to vote thereat and to do, in the place and stead of his
appointor, any other act or thing which his appointor is permitted or required
to do by virtue of his being a Director as if the alternate Director were the
appointor, other than appointment of an alternate to himself, and he shall ipso
facto vacate office if and when his appointor ceases to be a Director or removes
the appointee from office. Any appointment or removal under this Article shall
be effected by notice in writing under the hand of the Director making the same.
<PAGE>
17
POWERS AND DUTIES OF DIRECTORS
75. The business of the Company shall be managed by the Directors (or a sole
Director if only one is appointed) who may pay all expenses incurred in
promoting, registering and setting up the Company, and may exercise all such
powers of the Company as are not, from time to time by the Statute, or by these
Articles, required to be exercised by the Company in general meeting subject
nevertheless to any of these regulations, to the provisions of the Statute and
to such regulations being not inconsistent with the aforesaid regulations or
provisions, as may be prescribed by the Company in general meeting PROVIDED
HOWEVER that no regulations made by the Company in general meeting shall
invalidate any prior act of the Directors which would have been valid if that
regulation had not been made.
76. The Directors may from time to time and at any time by powers of attorney
appoint any company, firm, person or body of persons, whether nominated directly
or indirectly by the Directors, to be the attorney or attorneys of the Company
for such purpose and with such powers, authorities and discretions (not
exceeding those vested in or exercisable by the Directors under these Articles)
and for such period and subject to such conditions as they may think fit, and
any such powers of attorney may contain such provisions for the protection and
convenience of persons dealing with any such attorneys as the Directors may
think fit and may also authorise any such attorney to delegate all or any of the
powers, authorities and discretions vested in him.
77. All cheques, promissory notes, drafts, bills of exchange and other
negotiable instruments and all receipts for monies paid to the Company shall be
signed, drawn, accepted, endorsed or otherwise executed as the case may be in
such manner as the Directors shall from time to time by resolution determine.
78. The Directors shall cause minutes to be made in books provided
for the purpose:
(a) of all appointments of officers made by the Directors;
(b) of the names of the Directors (including those represented
thereat by an alternate or by proxy) present at each meeting
of the Directors and of any committee of the
Directors;
(c) of all resolutions and proceedings at all meetings of the
Company and of the Directors and of committees of Directors.
79. The Directors on behalf of the Company may pay a gratuity or pension or
allowance on retirement to any Director who has held any other salaried office
or place of profit with the Company or to his widow or dependants and may make
contributions to any fund and pay premiums for the purchase or provision of any
such gratuity, pension or allowance.
<PAGE>
18
80. The Directors may exercise all the powers of the Company to borrow money and
to mortgage or charge its undertaking, property and uncalled capital or any part
thereof and to issue debentures, debenture stock and other securities whether
outright or as security for any debt, liability or obligation of the Company or
of any third party.
MANAGEMENT
81. (a) The Directors may from time to time provide for the management of the
affairs of the Company in such manner as they shall think fit and the provisions
contained in the three next following paragraphs shall be without prejudice to
the general powers conferred by this paragraph.
(b) The Directors from time to time and at any time may establish any
committees, local boards or agencies for managing any of the affairs of the
Company and may appoint any persons to be members of such committees or local
boards or any managers or agents and may fix their remuneration.
(c) The Directors from time to time and at any time may delegate to any
such committee, local board, manager or agent any of the powers, authorities and
discretions for the time being vested in the Directors and may authorise the
members for the time being of any such local board, or any of them to fill up
any vacancies therein and to act notwithstanding vacancies and any such
appointment or delegation may be made on such terms and subject to such
conditions as the Directors may think fit and the Directors may at any time
remove any person so appointed and may annul or vary any such delegation, but no
person dealing in good faith and without notice of any such annulment or
variation shall be affected thereby.
(d) Any such delegates as aforesaid may be authorised by the Directors
to subdelegate all or any of the powers, authorities, and discretions for the
time being vested in them.
MANAGING DIRECTORS
82. The Directors may, from time to time, appoint one or more of their body (but
not an alternate Director) to the office of Managing Director for such term and
at such remuneration (whether by way of salary, or commission, or participation
in profits, or partly in one way and partly in another) as they may think fit
but his appointment shall be subject to determination ipso facto if he ceases
from any cause to be a Director and no alternate Director appointed by him can
act in his stead as a Director or Managing Director.
83. The Directors may entrust to and confer upon a Managing Director any of the
powers exercisable by them upon such terms and conditions and with such
restrictions as they may think fit and either collaterally with or to the
exclusion of their own powers and may from time to time revoke, withdraw, alter
or vary all or any of such powers.
<PAGE>
19
PROCEEDINGS OF DIRECTORS
84. Except as otherwise provided by these Articles, the Directors shall meet
together for the despatch of business, convening, adjourning and otherwise
regulating their meetings as they think fit. Questions arising at any meeting
shall be decided by a majority of votes of the Directors and alternate Directors
present at a meeting at which there is a quorum, the vote of an alternate
Director not being counted if his appointor be present at such meeting. In case
of an equality of votes, the Chairman shall have a second or casting vote.
85. A Director or alternate Director may, and the Secretary on the requisition
of a Director or alternate Director shall, at any time summon a meeting of the
Directors by at least two days' notice in writing to every Director and
alternate Director which notice shall set forth the general nature of the
business to be considered unless notice is waived by all the Directors (or their
alternates) either at, before or after the meeting is held and PROVIDED FURTHER
if notice is given in person, by cable, telex or telecopy the same shall be
deemed to have been given on the day it is delivered to the Directors or
transmitting organisation as the case may be. The provisions of Article 40 shall
apply mutatis mutandis with respect to notices of meetings of Directors.
86. The quorum necessary for the transaction of the business of the Directors
may be fixed by the Directors and unless so fixed shall be two, a Director and
his appointed alternate Director being considered only one person for this
purpose, PROVIDED ALWAYS that if there shall at any time be only a sole Director
the quorum shall be one. For the purposes of this Article an alternate Director
or proxy appointed by a Director shall be counted in a quorum at a meeting at
which the Director appointing him is not present.
87. The continuing Directors may act notwithstanding any vacancy in their body,
but if and so long as their number is reduced below the number fixed by or
pursuant to these Articles as the necessary quorum of Directors the continuing
Directors or Director may act for the purpose of increasing the number of
Directors to that number, or of summoning a general meeting of the Company, but
for no other purpose.
88. The Directors may elect a Chairman of their Board and determine the period
for which he is to hold office; but if no such Chairman is elected, or if at any
meeting the Chairman is not present within five minutes after the time appointed
for holding the same, the Directors present may choose one of their number to be
Chairman of the meeting.
89. The Directors may delegate any of their powers to committees consisting of
such member or members of the Board of Directors (including Alternate Directors
in the absence of their appointors) as they think fit; any committee so formed
shall in the exercise of the powers so delegated conform to any regulations that
may be imposed on it by the Directors.
<PAGE>
20
90. A committee may meet and adjourn as it thinks proper. Questions arising at
any meeting shall be determined by a majority of votes of the members present,
and in the case of an equality of votes the Chairman shall have a second or
casting vote.
91. All acts done by any meeting of the Directors or of a committee of Directors
(including any person acting as an alternate Director) shall, notwithstanding
that it be afterwards discovered that there was some defect in the appointment
of any Director or alternate Director, or that they or any of them were
disqualified, be as valid as if every such person had been duly appointed and
qualified to be a Director or alternate Director as the case may be.
92. Members of the Board of Directors or of any committee thereof may
participate in a meeting of the Board or of such 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 participation in a
meeting pursuant to this provision shall constitute presence in person at such
meeting. A resolution in writing (in one or more counterparts), signed by all
the Directors for the time being or all the members of a committee of Directors
(an alternate Director being entitled to sign such resolution on behalf of his
appointor) shall be as valid and effectual as if it had been passed at a meeting
of the Directors or committee as the case may be duly convened and held.
93. (a) A Director may be represented at any meetings of the Board of Directors
by a proxy appointed by him in which event the presence or vote of the proxy
shall for all purposes be deemed to be that of the Director.
(b) The provisions of Articles 59-62 shall mutatis mutandis apply to the
appointment of proxies by Directors.
VACATION OF OFFICE OF DIRECTOR
94. The office of a Director shall be vacated:
(a) if he gives notice in writing to the Company that he resigns the
office of Director;
(b) if he absents himself (without being represented by proxy or an
alternate Director appointed by him) from three consecutive meetings of the
Board of Directors without special leave of absence from the Directors, and they
pass a resolution that he has by reason of such absence vacated office;
(c) if he dies, becomes bankrupt or makes any arrangement or
composition with his creditors generally;
<PAGE>
21
(d) if he is found a lunatic or becomes of unsound mind.
APPOINTMENT AND REMOVAL OF DIRECTORS
95. The Company may by ordinary resolution appoint any person to be a Director
and may in like manner remove any Director and may in like manner appoint
another person in his stead.
96. The Directors shall have power at any time and from time to time to appoint
any person to be a Director, either to fill a casual vacancy or as an addition
to the existing Directors but so that the total amount of Directors (exclusive
of alternate Directors) shall not at any time exceed the number fixed in
accordance with these Articles.
PRESUMPTION OF ASSENT
97. A Director of the Company who is present at a meeting of the Board of
Directors at which action on any Company matter is taken shall be presumed to
have assented to the action taken unless his dissent shall be entered in the
Minutes of the meeting or unless he shall file his written dissent from such
action with the person acting as the Secretary of the meeting before the
adjournment thereof or shall forward such dissent by registered mail to such
person immediately after the adjournment of the meeting. Such right to dissent
shall not apply to a Director who voted in favour of such action.
SEAL
98. (a) The Company may, if the Directors so determine, have a Seal which shall,
subject to paragraph (c) hereof, only be used by the authority of the Directors
or of a committee of the Directors authorised by the Directors in that behalf
and every instrument to which the Seal has been affixed shall be signed by one
person who shall be either a Director or the Secretary or Secretary-Treasurer or
some person appointed by the Directors for the purpose.
(b) The Company may have a duplicate Seal or Seals each of which shall
be a facsimile of the Common Seal of the Company and, if the Directors so
determine, with the addition on its face of the name of every place where it is
to be used.
(c) A Director, Secretary or other officer or representative or
attorney may without further authority of the Directors affix the Seal of the
Company over his signature alone to any document of the Company required to be
authenticated by him under Seal or to be filed with the Registrar of Companies
in the Cayman Islands or elsewhere wheresoever.
<PAGE>
22
OFFICERS
99. The Company may have a President, a Secretary or Secretary-Treasurer
appointed by the Directors who may also from time to time appoint such other
officers as they consider necessary, all for such terms, at such remuneration
and to perform such duties, and subject to such provisions as to
disqualification and removal as the Directors from time to time prescribe.
DIVIDENDS, DISTRIBUTIONS AND RESERVE
100. Subject to the Statute, the Directors may from time to time declare
dividends (including interim dividends) and distributions on shares of the
Company outstanding and authorise payment of the same out of the funds of the
Company lawfully available therefor.
101. The Directors may, before declaring any dividends or distributions, set
aside such sums as they think proper as a reserve or reserves which shall at the
discretion of the Directors, be applicable for any purpose of the Company and
pending such application may, at the like discretion, be employed in the
business of the Company.
102. No dividend or distribution shall be payable except out of the profits of
the Company, realised or unrealised, or out of the share premium account or as
otherwise permitted by the Statute.
103. Subject to the rights of persons, if any, entitled to shares with special
rights as to dividends or distributions, if dividends or distributions are to be
declared on a class of shares they shall be declared and paid according to the
amounts paid or credited as paid on the shares of such class outstanding on the
record date for such dividend or distribution as determined in accordance with
these Articles but no amount paid or credited as paid on a share in advance of
calls shall be treated for the purpose of this Article as paid on the share.
104. The Directors may deduct from any dividend or distribution payable to any
Member all sums of money (if any) presently payable by him to the Company on
account of calls or otherwise.
105. The Directors may declare that any dividend or distribution be paid wholly
or partly by the distribution of specific assets and in particular of paid up
shares, debentures, or debenture stock of any other company or in any one or
more of such ways and where any difficulty arises in regard to such
distribution, the Directors may settle the same as they think expedient and in
particular may issue fractional certificates and fix the value for distribution
of such specific assets or any part thereof and may determine that cash payments
shall be made to any Members upon the footing of the value so fixed in order to
adjust the rights of all Members and may vest any such specific assets in
trustees as may seem expedient to the Directors.
<PAGE>
23
106. Any dividend, distribution, interest or other monies payable in cash in
respect of shares may be paid by cheque or warrant sent through the post
directed to the registered address of the holder or, in the case of joint
holders, to the holder who is first named on the register of Members or to such
person and to such address as such holder or joint holders may in writing
direct. Every such cheque or warrant shall be made payable to the order of the
person to whom it is sent. Any one of two or more joint holders may give
effectual receipts for any dividends, bonuses, or other monies payable in
respect of the share held by them as joint holders.
107. No dividend or distribution shall bear interest against the Company.
CAPITALISATION
108. The Company may upon the recommendation of the Directors by ordinary
resolution authorise the Directors to capitalise any sum standing to the credit
of any of the Company's reserve accounts (including share premium account and
capital redemption reserve fund) or any sum standing to the credit of profit and
loss account or otherwise available for distribution and to appropriate such sum
to Members in the proportions in which such sum would have been divisible
amongst them had the same been a distribution of profits by way of dividend and
to apply such sum on their behalf in paying up in full unissued shares for
allotment and distribution credited as fully paid up to and amongst them in the
proportion aforesaid. In such event the Directors shall do all acts and things
required to give effect to such capitalisation, with full power to the Directors
to make such provisions as they think fit for the case of shares becoming
distributable in fractions (including provisions whereby the benefit of
fractional entitlements accrue to the Company rather than to the Members
concerned). The Directors may authorise any person to enter on behalf of all of
the Members interested into an agreement with the Company providing for such
capitalisation and matters incidental thereto and any agreement made under such
authority shall be effective and binding on all concerned.
BOOKS OF ACCOUNT
109. The Directors shall cause proper books of account to be kept
with respect to:
(a) all sums of money received and expended by the Company and
the matters in respect of which the receipt or expenditure
takes place;
(b) all sales and purchases of goods by the Company;
(c) the assets and liabilities of the Company.
<PAGE>
24
Proper books shall not be deemed to be kept if there are not kept such books of
account as are necessary to give a true and fair view of the state of the
Company's affairs and to explain its transactions.
110. The Directors shall from time to time determine whether and to what extent
and at what times and places and under what conditions or regulations the
accounts and books of the Company or any of them shall be open to the inspection
of Members not being Directors and no Member (not being a Director) shall have
any right of inspecting any account or book or document of the Company except as
conferred by Statute or authorised by the Directors or by the Company in general
meeting.
111. The Directors may from time to time cause to be prepared and to be laid
before the Company in general meeting profit and loss accounts, balance sheets,
group accounts (if any) and such other reports and accounts as may be required
by law.
AUDIT
112. The Company may at any annual general meeting appoint an Auditor or
Auditors of the Company who shall hold office until the next annual general
meeting and may fix his or their remuneration.
113. The Directors may before the first annual general meeting appoint an
Auditor or Auditors of the Company who shall hold office until the first annual
general meeting unless previously removed by an ordinary resolution of the
Members in general meeting in which case the Members at that meeting may appoint
Auditors. The Directors may fill any casual vacancy in the office of Auditor but
while any such vacancy continues the surviving or continuing Auditor or
Auditors, if any, may act. The remuneration of any Auditor appointed by the
Directors under this Article may be fixed by the Directors.
114. Every Auditor of the Company shall have a right of access at all times to
the books and accounts and vouchers of the Company and shall be entitled to
require from the Directors and Officers of the Company such information and
explanation as may be necessary for the performance of the duties of the
auditors.
115. Auditors shall at the next annual general meeting following their
appointment and at any other time during their term of office, upon request of
the Directors or any general meeting of the Members, make a report on the
accounts of the Company in general meeting during their tenure of office.
<PAGE>
25
NOTICES
116. Notices shall be in writing and may be given by the Company to any Member
either personally or by sending it by post, cable, telex or telecopy to him or
to his address as shown in the register of Members, such notice, if mailed, to
be forwarded airmail if the address be outside the Cayman Islands.
117. (a) Where a notice is sent by post, service of the notice shall be deemed
to be effected by properly addressing, pre-paying and posting a letter
containing the notice, and to have been effected at the expiration of sixty
hours after the letter containing the same is posted as
aforesaid.
(b) Where a notice is sent by cable, telex, or telecopy, service of the
notice shall be deemed to be effected by properly addressing, and sending such
notice through a transmitting organisation and to have been effected on the day
the same is sent as aforesaid.
118. A notice may be given by the Company to the joint holders of record of a
share by giving the notice to the joint holder first named on the register of
Members in respect of the share.
119. A notice may be given by the Company to the person or persons which the
Company has been advised are entitled to a share or shares in consequence of the
death or bankruptcy of a Member by sending it through the post as aforesaid in a
pre-paid letter 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 supplied for that purpose by the persons claiming to be so entitled, or
at the option of the Company by giving the notice in any manner in which the
same might have been given if the death or bankruptcy had not occurred.
120. Notice of every general meeting shall be given in any manner hereinbefore
authorised to:
(a) every person shown as a Member in the register of Members as of the
record date for such meeting except that in the case of joint holders the notice
shall be sufficient if given to the joint holder first named in the register of
Members.
(b) every person upon whom the ownership of a share devolves by reason
of his being a legal personal representative or a trustee in bankruptcy of a
Member of record where the Member of record but for his death or bankruptcy
would be entitled to receive notice of the meeting; and
No other person shall be entitled to receive notices of general meetings.
<PAGE>
26
WINDING UP
121. If the Company shall be wound up the liquidator may, with the sanction of a
Special Resolution of the Company and any other sanction required by the
Statute, divide amongst the Members in specie or kind the whole or any part of
the assets of the Company (whether they shall consist of property of the same
kind or not) and may for such purpose set such value as he deems fair upon any
property to be divided as aforesaid and may determine how such 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 such assets
in trustees upon such trusts for the benefit of the contributories as the
liquidator, with the like sanction, shall think fit, but so that no Member shall
be compelled to accept any shares or other securities whereon there is any
liability.
122. If the Company shall be wound up, and the assets available for distribution
amongst the Members as such shall be insufficient to repay the whole of the
paid-up capital, such assets shall be distributed so that, as nearly as may be,
the losses shall be borne by the Members in proportion to the capital paid up,
or which ought to have been paid up, at the commencement of the winding up on
the shares held by them respectively. And if in a winding up the assets
available for distribution amongst the Members shall be more than sufficient to
repay the whole of the capital paid up at the commencement of the winding up,
the excess shall be distributed amongst the Members in proportion to the capital
paid up at the commencement of the winding up on the shares held by them
respectively. This Article is to be without prejudice to the rights of the
holders of shares issued upon special terms and conditions.
INDEMNITY
123. The Directors and officers for the time being of the Company and any
trustee for the time being acting in relation to any of the affairs of the
Company and their heirs, executors, administrators and personal representatives
respectively shall be indemnified out of the assets of the Company from and
against all actions, proceedings, costs, charges, losses, damages and expenses
which they or any of them shall or may incur or sustain by reason of any act
done or omitted in or about the execution of their duty in their respective
offices or trusts, except such (if any) as they shall incur or sustain by or
through their own wilful neglect or default respectively and no such Director,
officer or trustee shall be answerable for the acts, receipts, neglects or
defaults of any other Director, officer or trustee or for joining in any receipt
for the sake of conformity or for the solvency or honesty of any banker or other
persons with whom any monies or effects belonging to the Company may be lodged
or deposited for safe custody or for any insufficiency of any security upon
which any monies of the Company may be invested or for any other loss or damage
due to any such cause as aforesaid or which may happen in or about the execution
of his office or trust unless the same shall happen through the wilful neglect
or default of such Director, Officer or trustee.
<PAGE>
27
FINANCIAL YEAR
124. Unless the Directors otherwise prescribe, the financial year of the Company
shall end on 31st December in each year and, following the year of
incorporation, shall begin on 1st January in each year.
AMENDMENTS OF ARTICLES
125. Subject to the Statute, the Company may at any time and from time to time
by Special Resolution alter or amend these Articles in whole or in part.
TRANSFER BY WAY OF CONTINUATION
126. If the Company is exempted as defined in the Statute, it shall, subject to
the provisions of the Statute and with the approval of a Special Resolution,
have the power to register by way of continuation as a body corporate under the
laws of any jurisdiction outside the Cayman Islands and to be deregistered in
the Cayman Islands.
================================================================================
ARTICLES OF INCORPORATION
OF
OAKMONT SHIPPING AND TRADING LIMITED
PURSUANT TO THE LIBERIAN BUSINESS CORPORATION ACT
================================================================================
<PAGE>
ARTICLES OF INCORPORATION
PURSUANT TO THE LIBERIAN BUSINESS CORPORATION ACT
The undersigned, for the purpose of forming a corporation
pursuant to the provisions of the Liberian Business Corporation Act, does hereby
make, subscribe, acknowledge and file in the Office of the Minister of Foreign
Affairs this instrument for that purpose, as follows:
A. The name of the Corporation shall be:
OAKMONT SHIPPING AND TRADING LIMITED
B. The purpose of the Corporation is to engage in any lawful act or activity for
which corporations may now or hereafter be organized under the Liberian Business
Corporation Act and without in any way limiting the generality of the foregoing,
the corporation shall have the power:
1) To purchase or otherwise acquire, own, use, operate, pledge,
hypothecate, mortgage, lease, charter, sub-charter, sell, build, and repair
steamships, motorships, tankers, whaling vessels, sailing vessels, tugs,
lighters, barges, and all other vessels and craft of any and all motive power
whatsoever, including aircraft, landcraft, and any and all means of conveyance
and transportation by land, water or air, together with engines, boilers,
machinery equipment and appurtenances of all kinds, including masts, sails,
boats, anchors, cables, tackle, furniture and all other necessities thereunto
appertaining and belonging, together with all materials, articles, tools,
equipment and appliances necessary, suitable or convenient for the construction,
equipment, use and operation thereof; and to equip, furnish, outfit such vessels
and ships.
2) To engage in ocean, coastwise and inland commerce, and generally in
the carriage of freight, goods, cargo in bulk, passengers, mail and personal
effects by water between the various ports of the world and to engage generally
in waterborne commerce throughout the world.
3) To purchase or otherwise acquire, own, use, operate, lease, build,
repair, sell or in any manner dispose of docks, piers, quays, wharves, dry
docks, warehouses and storage facilities of all kinds, and any property, real,
personal and mixed, in connection therewith.
4) To act as ship's husband, ship brokers, custom house brokers, ship's
agents, manager of shipping property, freight contractors, forwarding agents,
warehousemen, wharfingers, ship chandlers, and general traders.
C. The registered address of the Corporation in Liberia shall be 80 Broad
Street, Monrovia, Liberia. The name of the Corporation's registered agent at
such address shall be The International Trust Company of Liberia.
D. The aggregate number of shares of stock that the Corporation is authorized to
issue is Five Hundred (500) registered and/or bearer shares without par value.
The Corporation shall mail notices and information to holders of bearer
shares to the address provided to the Corporation by the shareholder for that
purpose.
-1-
<PAGE>
The holder of a stock certificate issued to bearer may cause such
certificate to be exchanged for another certificate in his name for a like
number of shares, and the holder of shares issued in the name of the owner may
cause his certificate to be exchanged for another certificate to bearer for a
like number of shares.
E. The Corporation shall have every power which a corporation now or hereafter
organized under the Liberian Business Corporation Act may have.
F. The name and mailing address of each incorporator and subscriber of these
Articles of Incorporation and the number of shares of stock subscribed by each
incorporator is:
No. Of Shares of
Name Post Office Address Common Stock Subscribed
---- ------------------- -----------------------
K. Elliot 80 Broad Street One
Monrovia, Liberia
G. The number of directors constituting the initial board of directors is three
(3).
H. The Board of Directors as well as the Shareholders of the Corporation shall
have the authority to adopt, amend or repeal the by-laws of the Corporation.
I. Corporate existence shall begin upon filing these Articles of Incorporation
with the Minister of Foreign Affairs as of the filing date stated on these
Articles.
IN WITNESS WHEREOF, I have executed this instrument on OCTOBER
4, 1995.
/s/ K. Elliott
------------------------------
K. Elliott
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BY LAWS
OF
OAKMONT SHIPPING AND TRADING LIMITED
A LIBERIAN CORPORATION
----------------------
ARTICLE I
SECTION 1. Registered Office. -- The registered office of the
corporation shall be in Monrovia, Liberia.
SECTION 2. Other Offices. -- The corporation may also have
offices at such other places as the board of directors may from time to time
appoint or the business may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
SECTION 1. Place of Meeting. -- All meetings of the
stockholders of the corporation shall be held at the office of the corporation
in Monrovia, Liberia unless otherwise specified in the notice thereof or waiver
of notice; provided, however, that this is subject to Section 4 of this Article;
and provided further that the directors , by the affirmative vote of a majority
of their number , may change the place for the holding of the stockholders'
meeting to any place without Monrovia, Liberia.
SECTION 2. Annual Meeting. -- Subject to the provisions of
Sections 1 and 4 of this Article, the Annual Meeting of the stockholders of the
corporation is hereby designated to be held at its office in Monrovia, Liberia
unless otherwise specified in the notice thereof or waiver of notice thereof, at
the hour of two o' clock in the afternoon, on the 25th day of October 1996, and
in each year thereafter if not a legal holiday, and if a legal holiday, then on
the next succeeding day, not a legal holiday, for the purpose of electing
directors and for the transaction of such other business as may be brought
before the meeting. If for any reason said meeting shall not to be held at the
time herein provided, the same may be held at any time thereafter, upon notice
or waiver of notice as herein after provided, or the business thereof may be
transacted at any special meeting called for that purpose.
SECTION 3. Special Meetings. -- Special meetings of the
stockholders may be called by the president, or by the order of the Board of
Directors, whenever they deem it necessary, and it shall be their duty to order
and call such meeting whenever persons holding not less than one-fifth of the
outstanding capital stock of the corporation entitled to be voted at such
meeting shall in writing request the same. The business of such special meeting
shall be confined to the objects stated in the notice thereof
SECTION 4. Notice of Meetings.-- Notice of the time and place
of the annual and of any special meeting of the stockholders shall be given by
the secretary to each stockholder entitled
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<PAGE>
to vote at such meeting by posting the time in a postage prepaid letter
addressed to each such stockholder at the address left with the secretary of the
corporation, or at his last known address, or by delivering the same personally,
at least thirty days prior to such meeting. The notice of a special meeting
shall also set forth the objects of the meeting. All or any of the stockholders
may waive notice of any meeting, before or after the holding of such meeting,
and the presence of a stockholder at any meeting, in person or by proxy, shall
be deemed a waiver of notice thereof by him. Meetings of the stockholders may
be, held. at any time and place for any purpose, without notice, when all of the
stockholders entitled to vote at such meetings are present in person or by proxy
or when all of such stockholders waive notice and consent to the holding of such
meeting.
SECTION 5. Voting at Stockholders' Meetings. -- At all
meetings of the Stockholders, each holder of stock of the corporation having the
right to vote at such meeting shall be entitled to one vote for each share
standing registered in his name at the time of the closing of the transfer books
for said meeting, or if such transfer books shall not have been closed then for
each such share of stock standing registered in his name at the time fixed by
the board of directors as prescribed in Section 6 of Article VI of these
by-laws.
In the case of shares issued to bearer, the bearer of a
certificate or certificates representing such shares entitled to vote, shall be
entitled to one vote at any meeting of the stockholders for each share of stock
entitled to vote at such meeting, represented by such certificate, upon
presentation of such meeting of such certificate or certificates, or upon other
evidence of ownership as may be prescribed by the board of directors.
SECTION 6. Proxies. -- Each holder of stock shall be entitled
to one vote in person or by proxy appointed by an instrument in writing,
subscribed by such stockholder, or by duly authorized attorney.
SECTION 7. Manner of voting. -- All elections shall be by
ballot, and all questions shall be decided by a majority vote.
SECTION 8. Stock Register. -- The officer of agent having
charge of the stock register shall keep a complete alphabetical list of the
stockholders entitled to vote, together with the residence of each and the
number of shares held by each, which list and stock register shall be kept on
file at any office of the corporation. The stock register shall be the only
evidence as to who are the stockholders entitled to vote at any meeting of the
stockholders thereof . In the case of shares issued to bearer such stock
register shall state the number of shares so issued, the date of issue, and that
such shares are fully paid and non-assessable.
SECTION 9. Quorum. -- The holders for the time being of a
majority of the total number of shares of stock issued and out-standing and
entitled to be voted at any meeting, represented in person or by proxy, shall
constitute a quorum for the transaction of business, unless the representation
of a large number shall be required by law. In the absence of a quorum, the
stockholders attending or represented at the time and place at which a meeting
shall have been called, may adjourn the meeting from time to time until a quorum
shall be present. At any such adjourned meeting at which a quorum shall be
present, any business may be transacted which might have been transacted by a
quorum of stockholders at the meeting as originally convened.
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<PAGE>
SECTION 10. Presiding officer and secretary . -- The
President, and in his absence, any vice-president, shall call meetings of the
stockholders to order and shall act as a chairman of such meetings ; but, in the
absence of the President and the vice-president, the board of directors may
appoint any stockholder to act as chairman of the meeting, and, in default of an
appointment by the board of directors of a chairman, the stockholders may elect
a chairman to preside at the meeting. The secretary of the corporation shall act
as secretary of all meetings of the stockholders, but in his absence the
presiding officer of the stockholders may appoint any person to act as secretary
of the meeting.
ARTICLE III
BOARD OF DIRECTORS
SECTION 1. Election, Qualification and Vacancies. -- The
property and business of the corporation shall be managed and controlled by the
board of directors, which shall consist of three (3) members as may from time to
time be determined by the stockholders. They shall be elected by the
stockholders, and shall serve for one year or until the election and
qualification of their successor. In the event of a vacancy in the board of
directors through death, resignation, disqualification or other cause, the
remaining directors, by the affirmative vote of a majority thereof, shall have
the power to fill such vacancy for any unexpired term. Directors may act and
vote either in person or by proxy. In case though that all shares are owned by
one person, then, there may be elected a Sole Director, having the same
authority as of that of the Board of Directors.
SECTION 2. Place of meeting. -- Any meeting of the board of
directors may be held at such places as may be from time to time established by
resolution of the board or which may be agreed to in writing by all the
directors of the corporation.
SECTION 3. Regular Meetings. -- Regular meetings of the board
shall be held upon such notice, or without notice, as the board of directors may
by resolution from time to time determine.
SECTION 4. Special Meetings. -- Special Meetings of the board
shall be held whenever called by the President on two days notice to each
director, either in person or by mail or by telegraph. Special meetings of the
board may be held for any purpose, without notice, whenever all the directors
are present, or shall waive notice of and consent to the holding of such
meeting.
SECTION 5. Quorum. -- A majority of the directors elected
shall constitute a quorum for the transaction of business. In the absence of a
quorum, the directors present in person, or by proxy, at the time and place at
which the meeting shall have been called may adjourn the meeting from time to
time, and from place to place until a quorum shall be present. The act of a
majority of the directors present in person or by proxy at a meeting at which a
quorum is present shall be the act of the board of directors.
SECTION 6. Compensation. -- The directors, as such, shall not
receive any stated salary for their services, but by resolution of the board, a
fixed sum and expenses of attendance, if
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<PAGE>
any. may be allowed for attendance at each regular or special meeting of the
board; provided, that nothing herein contained shall be construed to preclude
any director from serving the corporation in any other capacity and receiving
compensation thereof. Members of special or standing committees may be allowed
like compensation for attending committee meetings.
SECTION 7. Voting Other Shares. -- The directors shall have
power to determine who shall be entitled to vote in the name and behalf of the
corporation upon, or to assign, and transfer, ant shares of stock, bonds, or
other securities of other companies held by the corporation.
ARTICLE IV
EXECUTIVE COMMITTEE.
SECTION 1. Appointment and Vacancies.-- There may be an
executive committee of two or more directors of whom the e president shall be
one designated by resolution passed by a majority of the whole board . Vacancies
in the membership of said committee shall be filled by the board and directors
at a regular meeting, or at a special meeting called for that purpose.
SECTION 2. Meetings and Powers. -- The executive committee may
meet at stated times or on notice to all by any of their own number. During the
intervals between meetings of the board such committee shall advice with and aid
the officers of the corporation in all matters concerning its interests and the
management of its business, and generally perform such duties and exercise such
powers as may be directed or delegated by the board of directors from time to
time. The board may delegate to such committee authority to exercise all the
powers of the board while the board is not in session.
SECTION 3. Minutes. -- The executive committee shall keep
regular minutes of its proceedings and report the same to the board when
required.
ARTICLE V
OFFICERS.
SECTION 1. Election, Term, and Vacancies -- The board of
directors shall appoint a president, a secretary and a treasurer for the
corporation. The board of directors may also appoint, from time to time, a
vice-president and/or 2nd vice-president and such Assistant secretaries,
Assistant Treasurer and other officers, agents, factors and employees as may be
deemed necessary. Officers elected by the board of shall hold office for one
year, or until their successors are elected and qualify, provided, that any
officer may be removed at any time by the affirmative vote of a majority of the
whole board. Vacancies occurring among the officers of the corporation shall be
filled, and their salaries fixed, by the board of directors. No officer need be
a director, and any person may hold two or more offices, except those of the
President and Vi se-President.
SECTION 2. President.-- The President shall be the chief
executive officer of the corporation, and shall preside at all meetings of the
stockholders and directors. He shall have general and active management of the
business of the corporation, subject to the board of directors, and shall
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<PAGE>
see that all orders and resolutions of the board are carried into effect. He
shall execute contracts and other obligations authorized by the board, and may,
without previous authority of the board, make such contracts as the ordinary
business of the corporation shall require. He shall have the usual powers and
duties vested in the office of President of a corporation, but may delegate any
of his powers to the vice-president. He shall have the power to select and
appoint all necessary officers and servants of the corporation, except those
selected by the boars of directors, and to remove all such officers and
servants, except those selected by the boards of directors, and make new
appointments to fill the vacancies.
SECTION 3. vice-president -- The vice-president, if any, shall
be vested with all the powers and require to perform all the duties of the
President, in the event of the latter absence or disability, and also such of
said powers and duties as the president from time to time delegate to him. He
shall have such other powers and perform such other duties as may be assigned to
him by the board of directors. The 2nd vice president, if any, shall be vested
with all powers and required to perform all the duties of the president in the
event of the absence or disability of both the president and the vice president,
and also of such powers and duties as the president may from time to time
delegate to him or which he may have assigned to him by the board of directors.
SECTION 4. Secretary. -- The secretary shall attend all
meetings of the stockholders, of the board of directors and of the executive
committee, and record the votes and proceedings of such meetings, in a book to
be kept for that purpose. He shall keep the corporate seal in safe custody and
affix it to any instrument requiring the same. He shall attend to the giving and
serving of notices of meetings, and shall have charge of such books and papers
as properly belong to his office, or as may be committed to his care by the
board of directors or executive committee. He shall also perform such other
duties as appertain to his office or as may be required by the board of
directors. The assistant secretary, if any, shall be vested with all of the
powers and required to perform all of the duties of the secretary in the event
of the latter absence or disability and also such of said powers or duties as
the president or board of directors may from time to time delegate to him.
SECTION 5. Treasurer -- The treasurer shall have the custody
of the corporate funds and securities 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 designed by the board of directors. He shall disburse the
facts of the corporation as may be ordered by the board, taking proper vouchers
for such disbursements, and shall render to the president or board of directors,
whenever they may require it, an account of all his transactions as treasurer
and of the financial condition of the company. The assistant treasurer, if any,
shall be vested with all of the powers and required to perform all of the duties
of the treasurer in the event of the latter's absence or disability and also
such of said power or duties as the president may from time to time delegate to
him.
SECTION 6. Oaths and Bonds.-- The board of directors may by
resolution require any officers, agents or employees of the corporation to give
oaths or to furnish bonds for the faithful performance of their respective
duties.
SECTION 7. Signatures. -- All checks, drafts, or orders for
payment of money, and all acceptances, bills of exchange and promissory notes
shall be signed by any officer or officers of the company designated by
resolution of the board of directors.
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<PAGE>
SECTION 8. Vacancies. -- Vacancies occurring in any of the
offices of the company may be filled for the unexpired term by the original
appointive power.
SECTION 9. Delegation of Duties. -- In the event of death,
resignation, retirement, disqualification, diability, sickness, absence, removal
from office or refusal to act of any officer or agent of the corporation, or for
any reason that the board of directors or executive committee may delegate the
powers and duties of such officer or agent to any other officer or agent, or to
any director, for the time being.
ARTICLE VI
SHARES OF STOCK
SECTION 1. Certificates of stock. -- All certificates for
shares of the capital stock of the company shall be in such form, not
inconsistent with the law and the articles of incorporation of the company, as
may be approved by the board of directors, and be signed by the president or
vice-president and by the secretary or treasurer of the company. All
certificates of stock shall be consecutively numbered, and the name of the
persons owning the shares represented thereby, to together with the number of
such shares and the date of issue, shall be entered on the books of the company.
SECTION 2. Bearer shares -- Shares may be issued to bearer
only if they are fully paid and not-assessable.
SECTION 3. Registered Stockholders. -- The corporation shall
be entitled to treat the holder of record of any share or shares of stocking
this company as the holder in fact thereof, and shall not be bound to recognize
any equitable or other reclaim to or interest in such shares on the part of any
other person, whether or not it shall have express or other notice thereof, save
as expressly provided by the laws of the Republic of Liberia.
SECTION 4. Bearer Register -- In the case of shares issued to
bearer, the stock register shall state the number of shares issued, the date of
issue, and that such shares are fully paid and non-assessable.
SECTION 5. Canceled and Lost Certificate. -- All surrendered
certificates of stock shall be canceled, and no new certificate shall be issued
until a like certificate for the same number of shares shall have been
surrendered and canceled. Any person claiming a certificate of stock to be lost
or destroyed shall make an affidavit or affirmation of that fact, and shall
advertise the same in such matter as the board of directors may require, give
the corporation a bond of indemnity in such sum as they may direct, whereupon a
new certificate may be issued of the same tenor and for the same number of
shares as the one alleged to have been lost or destroyed.
SECTION 6. Transfers of Shares. -- Transfers of stock shall be
made on the books of the corporation by the holder in person or by attorney,
upon the surrender and cancellation of the
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<PAGE>
certificate or certificates for such shares ; but the board of directors may
appoint a bank or trust company to act as the transfer agent or registrar of
transfers of such certificates. The transfer books of the company may be closed
for such period as the board of directors shall direct but not exceeding forty
days prior to the day of the annual or any special meeting of the stockholders,
and may also be closed by the board for such time as may be deemed advisable for
dividend purposes, during which time no stock shall be transferable. The
directors may also fix a day no more than forty days prior to the holding of any
meeting as the day of which stockholders, other than the holders of shares
issued to bearer, entitled to notice of and to vote at such meeting shall be
determined, in which event, only stockholders of record on such day shall be
entitled to notice of vote at such meeting. Shares issued to bearer shall be
transferable by delivery of the certificate or certificates representing such
shares.
SECTION 7. Addresses of Stockholders.--- Every stockholder
shall furnish the secretary with an address to which notices of meetings and all
other notices may be addressed, but in default thereof, such notices may be sent
to stockholders at their last known address or at the principal office of the
company, except as provided in the second paragraph of Section 4 of Article 11
of these by-laws.
SECTION 8. Regulations. -- The Board of Directors shall have
the power and authority to make such rules and regulations as they may deem
expedient governing the issue, transfer and registration of the certificates for
shares of the capital stock of the company.
ARTICLE VII
DIVIDENDS
SECTION 1. Dividends and Reserves. -- Before payment of any
dividend or making any distribution of profits, the board of directors may set
aside out of the surplus or net profits of the corporation, such sum or sums in
their absolute discretion they may deem proper as a reserve fund for
depreciation, renewal, repair, and maintenance or for such other purpose as the
directors shall think conducive to the interests of the corporation. Dividends
upon the issued and outstanding stock of the company may be declared at any
regular or special meeting of the board of directors.
SECTION 2. Stock Dividends- When the directors shall so
determine, dividends may be paid in stock of the corporation; provided the stock
requisite for such purpose shall be authorizes and provided, if such stock has
not therefore been issued, there shall be transferred from surplus to the
capital of the corporation an amount at least equal to that for which such stock
could be lawfully issued.
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ARTICLE VIII
PRE-EMPTIVE RIGHTS
After the original issue of stock, every stockholder of the corporation
shall upon the issuance of any stock of the corporation of the same class as
that which has already holds, have the right to purchase his pro-rata share of
such stock at the price at which it is offered to others.
ARTICLE IX
FISCAL YEAR
The fiscal year of the company shall commence on the first day
of January in each year.
ARTICLE X
SEAL
The corporate seal is, and until otherwise ordered and
directed by the board of directors shall be an impression upon paper or wax, in
the following form:
ARTICLE XI
AMENDMENTS
These by-laws may be altered, amended or repealed by the vote
of either a majority or the stockholders entitled to vote at any regular or
special meeting of the stockholders, or a two-thirds majority of all of the
directors at any meeting of the board, provided notice of such proposed
alteration, amendment or repeal shall have been included in the notice of such
meeting or shall have been waived by all of the stockholders or directors, or at
any regular or special meeting of the stockholders or directors at which all of
the stockholders or directors are present, without such notice or waiver of
notice.
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ARTICLES OF INCORPORATION
OF
RAPID OCEAN CARRIERS INC.
PURSUANT TO THE LIBERIAN BUSINESS CORPORATION ACT
- - - - --------------------------------------------------------------------------------
<PAGE>
ARTICLES OF INCORPORATION
PURSUANT TO THE LIBERIAN BUSINESS CORPORATION ACT
The undersigned, for the purpose of forming a corporation pursuant to
the provisions of the Liberian Business Corporation Act, does hereby make,
subscribe, acknowledge and file in the Office of the Minister of Foreign Affairs
this instrument for that purpose, as follows:
A. The name of the Corporation shall be:
RAPID OCEAN CARRIERS INC.
B. The purpose of the Corporation is to engage in any lawful act or activity for
which corporations may now or hereafter be organized under the Liberian Business
Corporation Act and without in any way limiting the generality of the foregoing,
the corporation shall have the power:
1) To purchase or otherwise acquire, own, use, operate, pledge,
hypothecate, mortgage, lease, charter, sub-charter, sell, build, and repair
steamships, motorships, tankers, whaling vessels, sailing vessels, tugs,
lighters, barges, and all other vessels and craft of any and all motive power
whatsoever, including aircraft, landcraft, and any and all means of conveyance
and transportation by land, water or air, together with engines, boilers,
machinery equipment and appurtenances of all kinds, including masts, sails,
boats, anchors, cables, tackle, furniture and all other necessities thereunto
appertaining and belonging, together with all materials, articles, tools,
equipment and appliances necessary, suitable or convenient for the construction,
equipment, use and operation thereof; and to equip, furnish, outfit such vessels
and ships.
2) To engage in ocean, coastwise and inland commerce, and generally in
the carriage of freight, goods, cargo in bulk, passengers, mail and personal
effects by water between the various ports of the world and to engage generally
in waterborne commerce throughout the world.
3) To purchase or otherwise acquire, own, use, operate, lease, build,
repair, sell or in any manner dispose of docks, piers, quays, wharves, dry
docks, warehouses and storage facilities of all kinds, and any property, real,
personal and mixed, in connection therewith.
4) To act as ship's husband, ship brokers, custom house brokers, ship's
agents, manager of shipping property, freight contractors, forwarding agents,
warehousemen, wharfingers, ship chandlers, and general traders.
C. The registered address of the Corporation in Liberia shall be 80 Broad
Street, Monrovia, Liberia. The name of the Corporation's registered agent at
such address shall be The International Trust Company of Liberia.
D. The aggregate number of shares of stock that the Corporation is authorized to
issue is Five Hundred (500) registered and/or bearer shares without par value.
The Corporation shall mail notices and information to holders of bearer
shares to the address provided to the Corporation by the shareholder for that
purpose.
<PAGE>
The holder of a stock certificate issued to bearer may cause such
certificate to be exchanged for another certificate in his name for a like
number of shares, and the holder of shares issued in the name of the owner may
cause his certificate to be exchanged for another certificate to bearer for a
like number of shares.
E. The Corporation shall have every power which a corporation now or hereafter
organized under the Liberian Business Corporation Act may have.
F. The name and mailing address of each incorporator and subscriber of these
Articles of Incorporation and the number of shares of stock subscribed by each
incorporator is:
No. Of Shares of
Name Post Office Address Common Stock Subscribed
---- ------------------- -----------------------
K. Elliot 80 Broad Street One
Monrovia, Liberia
G. The number of directors constituting the initial board of directors is three
(3).
H. The Board of Directors as well as the Shareholders of the Corporation shall
have the authority to adopt, amend or repeal the by-laws of the Corporation.
I. Corporate existence shall begin upon filing these Articles of Incorporation
with the Minister of Foreign Affairs as of the filing date stated on these
Articles.
IN WITNESS WHEREOF, I have executed this instrument on March 14, 1996.
/s/ K. Elliott
---------------------------
K. Elliott
BY LAWS
Of
RAPID OCEAN CARRIERS INC
A LIBERIAN CORPORATION
ARTICLE I
SECTION 1. Registered Office. -- The registered office of the
corporation shall be in Monrovia, Liberia.
SECTION 2. Other Offices. -- The corporation may also have
offices at such other places as the board of directors may from time to time
appoint or the business may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
SECTION 1. Place of Meeting. -- All meetings of the
stockholders of the corporation shall be held at the office of the corporation
in Monrovia, Liberia unless otherwise specified in the notice thereof or waiver
of notice; provided, however, that this is subject to Section 4 of this Article;
and provided further that the directors, by the affirmative vote of a majority
of their number, may change the place for the holding of the stockholders'
meeting to any place without Monrovia, Liberia.
SECTION 2. Annual Meeting. -- Subject to the provisions of
Sections 1 and 4 of this Article, the Annual Meeting of the stockholders of the
corporation is hereby designated to be held at its office in Monrovia, Liberia
unless otherwise specified in the notice thereof or waiver of notice thereof, at
the hour of two o' clock in the afternoon, on the 14th day of March 1997, and in
each year thereafter if not a legal holiday, and if a legal holiday, then on the
next succeeding day, not a legal holiday, for the purpose of electing directors
and for the transaction of such other business as may be brought before the
meeting. If for any reason said meeting shall not to be held at the time herein
provided, the same may be held at any time thereafter, upon notice or waiver of
notice as herein after provided, or the business thereof may be transacted at
any special meeting called for that purpose.
SECTION 3. Special Meetings. -- Special meetings of the
stockholders may be called by the president, or by the order of the Board of
Directors, whenever they deem it necessary, and it shall be their duty to order
and call such meeting whenever persons holding not less than one-fifth of the
outstanding capital stock of the corporation entitled to be voted at such
meeting shall in writing request the same. The business of such special meeting
shall be confined to the objects stated in the notice thereof.
SECTION 4. Notice of Meetings.-- Notice of the time and place
of the annual and of any special meeting of the stockholders shall be given by
the secretary to each stockholder entitled to vote at such meeting by posting
the time in a postage prepaid letter addressed to each such stockholder at the
address left with the secretary of the corporation, or at his last known
address, or
<PAGE>
by delivering the same personally, at least thirty days prior to such meeting.
The notice of a special meeting shall also set forth the objects of the meeting.
All or any of the stockholders may waive notice of any meeting, before or after
the holding of such meeting, and the presence of a stockholder at any meeting,
in person or by proxy, shall be deemed a waiver of notice thereof by him.
Meetings of the stockholders may be held at any time and place for any purpose,
without notice, when all of the stockholders entitled to vote at such meetings
are present in person or by proxy or by telephone conference or when all of such
stockholders waive notice and consent to the holding of such meeting.
SECTION 5. Voting at Stockholders' Meetings. -- At all
meetings of the Stockholders, each holder of stock of the corporation having the
right to vote at such meeting shall be entitled to one vote for each share
standing registered in his name at the time of the closing of the transfer books
for said meeting, or if such transfer books shall not have been closed then for
each such share of stock standing registered in his name at the time fixed by
the board of directors as prescribed in Section 6 of Article VI of these
by-laws.
In the case of shares issued to bearer, the bearer of a certificate or
certificates representing such shares entitled to vote, shall be entitled to one
vote at any meeting of the stockholders for each share of stock entitled to vote
at such meeting, represented by such certificate, upon presentation of such
meeting of such certificate or certificates, or upon other evidence of ownership
as may be prescribed by the board of directors.
SECTION 6. Proxies. -- Each holder of stock shall be entitled
to one vote in person or by proxy appointed by an instrument in writing,
subscribed by such stockholder, or by duly authorized attorney.
SECTION 7. Manner of voting. -- All elections shall be by
ballot, and all questions shall be decided by a majority vote.
SECTION 8. Stock Register. -- The officer of agent having
charge of the stock register shall keep a complete alphabetical list of the
stockholders entitled to vote, together with the residence of each and the
number of shares held by each, which list and stock register shall be kept on
file at any office of the corporation. The stock register shall be the only
evidence as to who are the stockholders entitled to vote at any meeting of the
stockholders thereof. In the case of shares issued to bearer such stock register
shall state the number of shares so issued, the date of issue, and that such
shares are fully paid and non-assessable.
SECTION 9. Quorum. -- The holders for the time being of a
majority of the total number of shares of stock issued and out-standing and
entitled to be voted at any meeting, represented in person or by proxy, shall
constitute a quorum for the transaction of business, unless the representation
of a large number shall be required by law. In the absence of a quorum, the
stockholders attending or represented at the time and place at which a meeting
shall have been called, may adjourn the meeting from time to time until a quorum
shall be present. At any such adjourned meeting at which a quorum shall be
present, any business may be transacted which might have been transacted by a
quorum of stockholders at the meeting as originally convened.
<PAGE>
SECTION 10. Presiding officer and secretary. -- The President,
and in his absence, any vice-president, shall call meetings of the stockholders
to order and shall act as a chairman of such meetings; but, in the absence of
the President and the vice-president, the board of directors may appoint any
stockholder to act as chairman of the meeting, and, in default of an appointment
by the board of directors of a chairman, the stockholders may elect a chairman
to preside at the meeting. The secretary of the corporation shall act as
secretary of all meetings of the stockholders, but in his absence the presiding
officer of the stockholders may appoint any person to act as secretary of the
meeting.
ARTICLE III
BOARD OF DIRECTORS
SECTION 1. Election, Qualification and Vacancies. -- The
property and business of the corporation shall be managed and controlled by the
board of directors , which shall consist of three (3) members as may from time
to time be determined by the stockholders. They shall be elected by the
stockholders, and shall serve for one year or until the election and
qualification of their successor. In the event of a vacancy in the board of
directors through death, resignation, disqualification or other cause , the
remaining directors, by the affirmative vote of a majority thereof, shall have
the power to fill such vacancy for any unexpired term. Directors may act and
vote either in person or by proxy. In case though that all shares are owned by
one person , then, there may be elected a Sole Director, having the same
authority as of that of the Board of Directors.
SECTION 2. Place of meeting. -- Any meeting of the board of
directors may be held at such places as may be from time to time established by
resolution of the board or which may be agreed to in writing by all the
directors of the corporation.
SECTION 3. Regular Meetings. -- Regular meetings of the board
shall be held upon such notice, or without notice, as the board of directors may
by resolution from time to time determine.
SECTION 4. Special Meetings. -- Special Meetings of the board
shall be held whenever called by the President on two days notice to each
director, either in person or by mail or by telegraph or by telephone
conference. Special meetings of the board may be held for any purpose, without
notice, whenever all the directors are present, or shall waive notice of and
consent to the holding of such meeting.
SECTION 5. Quorum. -- A majority of the directors elected
shall constitute a quorum for the transaction of business. In the absence of a
quorum , the directors present in person, or by proxy, at the time and place at
which the meeting shall have been called may adjourn the meeting from time to
time, and from place to place until a quorum shall be present. The act of a
majority of the directors present in person or by proxy at a meeting at which a
quorum is present shall be the act of the board of directors.
<PAGE>
SECTION 6. Compensation. -- The directors, as such, shall not
receive any stated salary for their services, but by resolution of the board, a
fixed sum and expenses of attendance, if any, may be allowed for attendance at
each regular or special meeting of the board; provided , that nothing herein
contained shall be construed to preclude any director from serving the
corporation in any other capacity and receiving compensation thereof. Members of
special or standing committees may be allowed like compensation for attending
committee meetings.
SECTION 7. Voting Other Shares. -- The directors shall have
power to determine who shall be entitled to vote in the name and behalf of the
corporation upon, or to assign, and transfer, ant shares of stock, bonds, or
other securities of other companies held by the corporation.
ARTICLE IV
EXECUTIVE COMMITTEE.
SECTION 1. Appointment and Vacancies.-- There may be an
executive committee of two or more directors of whom the president shall be one
designated by resolution passed by a majority of the whole board. Vacancies in
the membership of said committee shall be filled by the board and directors at a
regular meeting, or at a special meeting called for that purpose.
SECTION 2. Meetings and Powers. -- The executive committee may
meet at stated times or on notice to all by any of their own number. During the
intervals between meetings of the board such committee shall advice with and aid
the officers of the corporation in all matters concerning its interests and the
management of its business, and generally perform such duties and exercise such
powers as may be directed or delegated by the board of directors from time to
time. The board may delegate to such committee authority to exercise all the
powers of the board while the board is not in session.
SECTION 3. Minutes. -- The executive committee shall keep
regular minutes of its proceedings and report the same to the board when
required.
ARTICLE V
OFFICERS
SECTION 1. Election, Term, and Vacancies -- The board of
directors shall appoint a president, a secretary and a treasurer for the
corporation. The board of directors may also appoint, from time to time, a
vice-president and/or 2nd vice-president and such Assistant secretaries,
Assistant Treasurer and other officers, agents, factors and employees as may be
deemed necessary. Officers elected by the board of shall hold office for one
year, or until their successors are elected and qualify, provided, that any
officer may be removed at any time by the affirmative vote of a majority of the
whole board. Vacancies occurring among the officers of the corporation shall be
filled, and their salaries fixed, by the board of directors. No officer need be
a director, and any person may hold two or more offices, except those of the
President and Vi se-President.
<PAGE>
SECTION 2. President.--- The President shall be the chief
executive officer of the corporation, and shall preside at all meetings of the
stockholders and directors. He shall have general and active management of the
business of the corporation, subject to the board of directors, and shall see
that all orders and resolutions of the board are carried into effect. He shall
execute contracts and other obligations authorized by the board, and may,
without previous authority of the board, make such contracts as the ordinary
business of the corporation shall require. He shall have the usual powers and
duties vested in the office of President of a corporation, but may delegate any
of his powers to the vice-president. He shall have the power to select and
appoint all necessary officers and servants of the corporation, except those
selected by the board of directors, and to remove all such officers and
servants, except those selected by the boars of directors, and make new
appointments to fill the vacancies.
SECTION 3. Vice-president -- The vice-president , if any,
shall be vested with all the powers and require to perform all the duties of the
President, in the event of the latter absence or disability, and also such of
said powers and duties as the president from time tot time delegate to him. He
shall have such other powers and perform such other duties as may be assigned to
him by the board of directors. The 2nd vice-president, if any, shall be vested
with all powers and required to perform all the duties of the president in the
event of the absence or disability of both the president and the vice-president,
and also of such powers and duties as the president may from time to time
delegate to him or which he may have assigned to him by the board of directors.
SECTION 4. Secretary. -- The secretary shall attend all
meetings of the stockholders, of the board of directors and of the executive
committee, and record the votes and proceedings of such meetings, in a book to
be kept for that purpose. He shall keep the corporate seal in safe custody and
affix it to any instrument requiring the same. He shall attend to the giving and
serving of notices of meetings, and shall have charge of such books and papers
as properly belong to his office, or as may be committed to his care by the
board of directors or executive committee. He shall also perform such other
duties as appertain to his office or as may be required by the board of
directors. The assistant secretary, if any, shall be vested with all of the
powers and required to perform all of the duties of the secretary in the event
of the latter absence or disability and also such of said powers or duties as
the president or board of directors may from time to time delegate to him.
SECTION 5. Treasurer -- The treasurer shall have the custody
of the corporate funds and securities 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 designed by the board of directors. He shall disburse the
facts of the corporation as may be ordered by the board, taking proper vouchers
for such disbursements, and shall render to the president or board of directors,
whenever they may require it, an account of all his transactions as treasurer
and of the financial condition of the company. The assistant treasurer, if any,
shall be vested with all of the powers and required to perform all of the duties
of the treasurer in the event of the latter's absence or disability and also
such of said power or duties as the president may from time to time delegate to
him.
SECTION 6. Oaths and Bonds.-- The board of directors may by
resolution require any officers, agents or employees of the corporation to give
oaths or to furnish bonds for the faithful performance of their respective
duties.
<PAGE>
SECTION 7. Signatures. -- All checks, drafts, or orders for
payment of money, and all acceptances, bills of exchange and promissory notes
shall be signed by any officer or officers of the company designated by
resolution of the board of directors.
SECTION 8. Vacancies. -- Vacancies occurring in any of the
offices of the company may be filled for the unexpired term by the original
appointive power.
SECTION 9. Delegation of Duties. -- In the event of death,
resignation, retirement, disqualification, disability, sickness, absence,
removal from office or refusal to act of any officer or agent of the
corporation, or for any reason that the board of directors or executive
committee may delegate the powers and duties of such officer or agent to any
other officer or agent, or to any director, for the time being.
ARTICLE VI
SHARES OF STOCK
SECTION 1. Certificates of stock. -- All certificates for
shares of the capital stock of the company shall be in such form, not
inconsistent with the law and the articles of incorporation of the company, as
may be approved by the board of directors, and be signed by the president or
vice-president and by the secretary or treasurer of the company. All
certificates of stock shall be consecutively numbered, and the name of the
persons owning the shares represented thereby, to together with the number of
such shares and the date of issue, shall be entered on the books of the company.
SECTION 2. Bearer shares -- Shares may be issued to bearer
only if they are fully paid and not-assessable.
SECTION 3. Registered Stockholders. -- The corporation shall
be entitled to treat the holder of record of any share or shares of stocking
this company as the holder in fact thereof, and shall not be bound to recognize
any equitable or other reclaim to or interest in such shares on the part of any
other person, whether or not it shall have express or other notice thereof, save
as expressly provided by the laws of the Republic of Liberia.
SECTION 4. Bearer Register -- In the case of shares issued to
bearer, the stock register shall state the number of shares issued, the date of
issue, and that such shares are fully paid and non-assessable.
SECTION 5. Cancelled and Lost Certificate . -- All surrendered
certificates of stock shall be cancelled, and no new certificate shall be issued
until a like certificate for the same number of shares shall have been
surrendered and cancelled. Any person claiming a certificate of stock to be lost
or destroyed shall make an affidavit or affirmation of that fact, and shall
advertise the same in such matter as the board of directors may require, give
the corporation a bond of indemnity in such sum as they may direct, whereupon a
new certificate may be issued of the same tenor and for the same number of
shares as the one alleged to have been lost or destroyed.
<PAGE>
SECTION 6. Transfers of Shares. -- Transfers of stock shall be
made on the books of the corporation by the holder in person or by attorney,
upon the surrender and cancellation of the certificate or certificates for such
shares; but the board of directors may appoint a bank or trust company to act as
the transfer agent or registrar of transfers of such certificates. The transfer
books of the company may be closed for such period as the board of directors
shall direct but not exceeding forty days prior to the day of the annual or any
special meeting of the stockholders, and may also be closed by the board for
such time as may be deemed advisable for dividend purposes, during which time no
stock shall be transferable. The directors may also fix a day no more than forty
days prior to the holding of any meeting as the day of which stockholders, other
than the holders of shares issued to bearer , entitled to notice of and to vote
at such meeting shall be determined, in which event, only stockholders of record
on such day shall be entitled to notice of vote at such meeting. Shares issued
to bearer shall be transferable by delivery of the certificate or certificates
representing such shares.
SECTION 7. Addresses of Stockholders.-- Every stockholder
shall furnish the secretary with an address to which notices of meetings and all
other notices may be addressed, but in default thereof, such notices may be sent
to stockholders at their last known address or at the principal office of the
company, except as provided in the second paragraph of Section 4 of Article 11
of these by-laws.
SECTION 8. Regulations. --. The Board of Directors shall have
the power and authority to make such rules and regulations as they may deem
expedient governing the issue, transfer and registration of the certificates for
shares of the capital stock of the company.
ARTICLE VIII
DIVIDENDS
SECTION 1. Dividends and Reserves. -- Before payment of any
dividend or making any distribution of profits, the board of directors may set
aside out of the surplus or net profits of the corporation, such sum or sums in
their absolute discretion they may deem proper as a reserve fund for
depreciation, renewal, repair, and maintenance or for such other purpose as the
directors shall think conducive to the interests of the corporation. Dividends
upon the issued and outstanding stock of the company may be declared at any
regular or special meeting of the board of directors.
SECTION 2. Stock Dividends- When the directors shall so
determine, dividends may be paid in stock of the corporation; provided the stock
requisite for such purpose shall be authorizes and provided, if such stock has
not therefore been issued, there shall be transferred from surplus to the
capital of the corporation an amount at least equal to that for which such stock
could be lawfully issued.
<PAGE>
ARTICLE VIII
PRE-EMPTIVE RIGHTS
After the original issue of stock, every stockholder of the
corporation shall upon the issuance of any stock of the corporation of the same
class as that which has already holds, have the right to purchase his pro-rata
share of such stock at the price at which it is offered to others.
ARTICLE IX
FISCAL YEAR
The fiscal year of the company shall commence on the first day
of January in each year.
ARTICLE X
SEAL
The corporate seal is, and until otherwise ordered and
directed by the board of directors shall be an impression upon paper or wax, in
the following form:
ARTICLE XI
AMENDMENTS
These by-laws may be altered, amended or repealed by the vote
of either a majority or the stockholders entitled to vote at any regular or
special meeting of the stockholders, or a two-thirds majority of all of the
directors at any meeting of the board, provided notice of such proposed
alteration, amendment or repeal shall have been included in the notice of such
meeting or shall have been waived by all of the stockholders or directors, or at
any regular or special meeting of the stockholders or directors at which all of
the stockholders or directors are present, without such notice or waiver of
notice.
================================================================================
ARTICLES OF INCORPORATION
OF
IVY NAVIGATION LTD.
PURSUANT TO THE LIBERIAN BUSINESS CORPORATION ACT
================================================================================
<PAGE>
ARTICLES OF INCORPORATION
PURSUANT TO THE LIBERIAN BUSINESS CORPORATION ACT.
The undersigned, for the purpose of forming a corporation pursuant to
the provisions of the Liberian Business Corporation Act, does hereby make,
subscribe, acknowledge and file in the Office of the Minister of Foreign Affairs
this instrument for that purpose, as follows:
A. The name of the Corporation shall be:
IVY NAVIGATION LTD.
B. The purpose of the Corporation is to engage in any lawful act or activity for
which corporations may now or hereafter be organized under the Liberian Business
Corporation Act and without in any way limiting the generality of the foregoing,
the corporation shall have the power:
To purchase or otherwise acquire, own, use, operate, pledge,
hypothecate, mortgage, lease, charter, subcharter, sell, build, and repair
steamships, motorships, tankers, whaling vessels, sailing vessels, tugs,
lighters, barges, and all other vessels and craft of any and all motive power
whatsoever, including aircraft, landcraft, and any and all means of conveyance
and transportation by land, water or air, together with engines, boilers,
machinery equipment and appurtenances of all kinds, including masts, sails,
boats, anchors, cables, tackle, furniture and all other necessities thereunto
appertaining and belonging, together with all materials, articles, tools,
equipments and appliances necessary, suitable or convenient for the
construction, equipment, use and operation thereof; and to equip, furnish,
outfit such vessels and ships.
To engage in ocean, coastwise and inland commerce, and generally in the
carriage of freight, goods, cargo in bulk, passengers mail and personal effects
by water between the various ports of the world and to engage generally in
waterborne commerce throughout the world.
To purchase or otherwise acquire, own, use, operate, lease, build,
repair, sell or in any way manner dispose of docks, piers, quays, wharves, dry
docks, warehouses and storage facilities of all kinds, and any property, real,
personal and mixed, in connection therewith.
To act as ship's husband, ship brokers, custom house brokers, ship's
agents, manager of shipping property, freight contractors, forwarding agents,
warehousemen, wharfingers, ship chandlers, and general traders.
C. The registered address of the Corporation in Liberia shall be 80 Broad
Street, Monrovia, Liberia. The name of the Corporation's registered agent at
such address shall be The International Trust Company of Liberia.
D. The aggregate number of shares of stock that the Corporation is authorized to
issue is Five Hundred (500) registered and/or bearer shares without par value.
The Corporation shall mail notices and information to holders of bearer
shares to the address provided to the Corporation by the shareholder for that
purpose.
<PAGE>
The holder of a stock certificate issued to bearer may cause such
certificate to be exchanged for another certificate in his name for a like
number of shares, and the holder of shares issued in the name of the owner may
cause his certificate to be exchanged for another certificate to bearer for a
like number of shares.
E. The Corporation shall have every power which a corporation now or hereafter
organized under the Liberian Business Corporation Act may have.
F. The name and mailing address of each incorporator and subscriber of these
Articles of Incorporation and the number of shares of stock subscribed by each
incorporator is:
No. Of Shares of
Name Post Office Address Common Stock Subscribed
---- ------------------- -----------------------
K. Elliot 80 Broad Street One
Monrovia, Liberia
G. The number of directors constituting the initial board of directors is three
(3).
H. The Board of Directors as well as the Shareholders of the Corporation shall
have the authority to adopt, amend or repeal the by-laws of the Corporation.
I. Corporate existence shall begin upon filing these Articles of Incorporation
with the Minister of Foreign Affairs as of the filing date stated on these
Articles.
IN WITNESS WHEROF, I have executed this instrument on February 21,
1995.
/s/ K. Elliott
------------------------------
K. Elliott
BY LAWS
OF
IVY NAVIGATION LTD
ARTICLE I
SECTION 1. Registered Office. -- The registered office of the
corporation shall be in Monrovia, Republic of Liberia.
SECTION 2. Other Offices. -- The corporation may also have
offices at such other places as the board of directors may from time to time
appoint or the business may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
SECTION 1. Place of Meeting. -- All meetings of the
stockholders of the corporation shall be held at the office of the corporation
in the Republic of Liberia unless otherwise specified in the notice thereof or
waiver of notice; provided , however, that this is subject to Section 4 of this
Article; and provided further that the directors, by the affirmative vote of a
majority of their number, may change the place for the holding of the
stockholders' meeting to any place without the Republic of Liberia.
SECTION 2. Annual Meeting. -- Subject to the provisions of
Sections 1 and 4 of this Article, the Annual Meeting of the stockholders of the
corporation is hereby designated to be held at its office in the Republic of
Liberia, unless otherwise specified in the notice thereof or waiver of notice
thereof, at the hour of two o' clock in the afternoon, on the 21st day of
February in the year 1996, and in each year thereafter if not a legal holiday,
and if a legal holiday, then on the next succeeding day, not a legal holiday,
for the purpose of electing directors and for the transaction of such other
business as may be brought before the meeting. If for any reason said meeting
shall not to be held at the time herein provided, the same may be held at any
time thereafter, upon notice or waiver of notice as herein after provided , or
the business thereof may be transacted at any special meeting called for that
purpose.
SECTION 3. Special Meetings. -- Special meetings of the
stockholders may be called by the president, or by the order of the Board of
Directors, whenever they deem it necessary, and it shall be their duty to order
and call such meeting whenever persons holding not less than one-fifth of the
outstanding capital stock of the corporation entitled to be voted at such
meeting shall in writing request the same. The business of such special meeting
shall be confined to the objects stated in the notice thereof.
<PAGE>
SECTION 4. Notice of Meetings.-- Notice of the time and place
of the annual and of any special meeting of the stockholders shall be given by
the secretary to each stockholder entitled to vote at such meeting by posting
the time in a postage prepaid letter addressed to each such stockholder at the
address left with the secretary of the corporation, or at his last known
address, or by delivering the same personally, at least thirty days prior to
such meeting. The notice of a special meeting shall also set forth the objects
of the meeting. All or any of the stockholders may waive notice of any meeting,
before or after the holding of such meeting, and the presence of a stockholder
at any meeting, in person or by proxy, shall be deemed a waiver of notice
thereof by him. Meetings of the stockholders may be held at any time and place
for any purpose, without notice, when all of the stockholders entitled to vote
at such meetings are present in person or by proxy or when all of such
stockholders waive notice and consent to the holding of such meeting.
SECTION 5. Voting at Stockholders' Meetings. -- At all
meetings of the Stockholders, each holder of stock of the corporation having the
right to vote at such meeting shall be entitled to one vote for each share
standing registered in his name at the time of the closing of the transfer books
for said meeting, or if such transfer books shall not have been closed then for
each such share of stock standing registered in his name at the time fixed by
the board of directors as prescribed in Section 6 of Article VI of these
by-laws.
In the case of shares issued to bearer, the bearer of a
certificate or certificates representing such shares entitled to vote, shall be
entitled to one vote at any meeting of the stockholders for each share of stock
entitled to vote at such meeting, represented by such certificate, upon
presentation of such meeting of such certificate or certificates , or upon other
evidence of ownership as may be prescribed by the board of directors.
SECTION 6. Proxies. -- Each holder of stock shall be entitled
to one vote in person or by proxy appointed by an instrument in writing,
subscribed by such stockholder, or by duly authorized attorney.
SECTION 7. Manner of voting. -- All elections shall be by
ballot, and all questions shall be decided by a majority vote.
SECTION 8. Stock Register. -- The officer of agent having
charge of the stock register shall keep a complete alphabetical list of the
stockholders entitled to vote, together with the residence of each and the
number of shares held by each , which list and stock register shall be kept on
file at any office of the corporation. The stock register shall be the only
evidence as to who are the stockholders entitled to vote at any meeting of the
stockholders thereof. In the case of shares issued to bearer such stock register
shall state the number of shares so issued, the date of issue, and that such
shares are fully paid and non-assessable.
SECTION 9. Quorum. -- The holders for the time being of a
majority of the total number of shares of stock issued and out-standing and
entitled to be voted at any meeting, represented in person or by proxy, shall
constitute a quorum for the transaction of business, unless the representation
of a large number shall be required by law. In the absence of a quorum, the
stockholders attending or represented at the time and place at which a meeting
shall have been called, may adjourn the meeting from time to time until a quorum
shall be present. At any such
<PAGE>
adjourned meeting at which a quorum shall be present, any business may be
transacted which might have been transacted by a quorum of stockholders at the
meeting as originally convened.
SECTION 10. Presiding officer and secretary -- The President,
and in his absence, any vice-president, shall call meetings of the stockholders
to order and shall act as a chairman of such meetings ; but, in the absence of
the President and the vice-president , the board of directors may appoint any
stockholder to act as chairman of the meeting, and , in default of an
appointment by the board of directors of a chairman, the stockholders may elect
a chairman to preside at the meeting. The secretary of the corporation shall act
as secretary of all meetings of the stockholders, but in his absence the
presiding officer of the stockholders may appoint any person to act as secretary
of the meeting.
ARTICLE III
BOARD OF DIRECTORS
SECTION 1. Election, Qualification and Vacancies. -- The
property and business of the corporation shall be managed and controlled by the
board of directors ,which shall consist of three (3) members as may from time to
time be determined by the stockholders. They shall be elected by the
stockholders, and shall serve for one year or until the election and
qualification of their successor. In the event of a vacancy in the board of
directors through death, resignation, disqualification or other cause, the
remaining directors, by the affirmative vote of a majority thereof, shall have
the power to fill such vacancy for any unexpired term. Directors may act and
vote either in person or by proxy. In case though that all shares are owned by
one person, then, there may be elected a Sole Director, having the same
authority as of that of the Board of Directors.
SECTION 2. Place of meeting. -- Any meeting of the board of
directors may be held at such places as may be from time to time established by
resolution of the board or which may be agreed to in writing by all the
directors of the corporation.
SECTION 3. Regular Meetings. -- Regular meetings of the board
shall be held upon such notice , or without notice , as the board of directors
may by resolution from time to time determine.
SECTION 4. Special Meetings. -- Special Meetings of the board
shall be held whenever called by the President on two days notice to each
director, either in person or by mail or by telegraph or by fax or by telephone.
Special meetings of the board may be held for any purpose, without notice,
whenever all the directors are present by telephone inclusive , or shall waive
notice of and consent to the holding of such meeting.
SECTION 5. Quorum. -- A majority of the directors elected
shall constitute a quorum for the transaction of business. In the absence of a
quorum , the directors present in person, or by proxy, at the time and place at
which the meeting shall have been called may adjourn the meeting from time to
time, and from place to place until a quorum shall be present. The act of a
majority of the directors present in person or by proxy at a meeting at which a
quorum is present shall be the act of the board of directors.
<PAGE>
SECTION 6. Compensation. -- The directors, as such, shall not
receive any stated salary for their services, but by resolution of the board, a
fixed sum and expenses of attendance, if any, may be allowed for attendance at
each regular or special meeting of the board; provided, that nothing herein
contained shall be construed to preclude any director from serving the
corporation in any other capacity and receiving compensation thereof. Members of
special or standing committees may be allowed like compensation for attending
committee meetings.
SECTION 7. Voting Other Shares. -- The directors shall have
power to determine who shall be entitled to vote in the name and behalf of the
corporation upon, or to assign, and transfer, ant shares of stock, bonds, or
other securities of other companies held by the corporation.
ARTICLE IV
EXECUTIVE COMMITTEE.
SECTION 1. Appointment and Vacancies.-- There may be an
executive committee of two or more directors of whom the president shall be one
designated by resolution passed by a majority of the whole board. Vacancies in
the membership of said committee shall be filled by the board and directors at a
regular meeting, or at a special meeting called for that purpose.
SECTION 2. Meetings and Powers. -- The executive committee may
meet at stated times or on notice to all by any of their own number. During the
intervals between meetings of the board such committee shall advice with and aid
the officers of the corporation in all matters concerning Its interests and the
management of its business, and generally perform such duties and exercise such
powers as may be directed or delegated by the board of directors from time to
time. The board may delegate to such committee authority to exercise all the
powers of the board while the board is not in session.
SECTION 3. Minutes. -- The executive committee shall keep
regular minutes of its proceedings and report the same to the board when
required.
ARTICLE V
OFFICERS.
SECTION 1. Election, Term, and Vacancies -- The board of
directors shall appoint a president, a secretary and a treasurer for the
corporation. The board of directors may also appoint, from time to time, a
vice-president and/or 2nd vice-president and such Assistant secretaries,
Assistant Treasurer and other officers, agents, factors and employees as may be
deemed necessary. Officers elected by the board of shall hold office for one
year, or until their successors are elected and qualify, provided, that any
officer may be removed at any time by the affirmative vote of a majority of the
whole board. Vacancies occurring among the officers of the corporation shall be
filled, and their salaries fixed, by the board of directors. No officer need be
a director, and any person may hold two or more offices, except those of the
President and Vise-President.
<PAGE>
SECTION 2. President.-- The President shall be the chief
executive officer of the corporation, and shall preside at all meetings of the
stockholders and directors. He shall have general and active management of the
business of the corporation, subject to the board of directors, and shall see
that all orders and resolutions of the board are carried into effect. He shall
execute contracts and other obligations authorized by the board, and may,
without previous authority of the board, make such contracts as the ordinary
business of the corporation shall require. He shall have the usual powers and
duties vested in the office of President of a corporation, but may delegate any
of his powers to the vice-president. He shall have the power to select and
appoint all necessary officers and servants of the corporation, except those
selected by the board of directors, and to remove all such officers and
servants, except those selected by the boars of directors, and make new
appointments to fill the vacancies.
SECTION 3. Vice-President -- The vice-president , if any,
shall be vested with all the powers and require to perform all the duties of the
President, in the event of the latter absence or disability, and also such of
said powers and duties as the president from time to time delegate to him. He
shall have such other powers and perform such other duties as may be assigned to
him by the board of directors. The 2nd vice-president, if any, shall be vested
with all powers and required to perform all the duties of the president in the
event of the absence or disability of both the president and the vice-president,
and also of such powers and duties as the president may from time to time
delegate to him or which he may have assigned to him by the board of directors.
SECTION 4. Secretary. -- The secretary shall attend all
meetings of the stockholders, of the board of directors and of the executive
committee, and record the votes and proceedings of such meetings, in a book to
be kept for that purpose. He shall keep the corporate seal in safe custody and
affix it to any instrument requiring the same. He shall attend to the giving and
serving of notices of meetings, and shall have charge of such books and papers
as properly belong to his office, or as may be committed to his care by the
board of directors or executive committee. He shall also perform such other
duties as appertain to his office or as may be required by the board of
directors. The assistant secretary , if any, shall be vested with all of the
powers and required to perform all of the duties of the secretary in the event
of the latter absence or disability and also such of said powers or duties as
the president or board of directors may from time to time delegate to him.
SECTION 5. Treasurer -- The treasurer shall have the custody
of the corporate funds and securities 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 designed by the board of directors. He shall disburse the
facts of the corporation as may be ordered by the board, taking proper vouchers
for such disbursements , and shall render to the president or board of
directors, whenever they may require it, an account of all his transactions as
treasurer and of the financial condition of the company. The assistant
treasurer, if any, shall be vested with all of the powers and required to
perform all of the duties of the treasurer in the event of the latter's absence
or disability and also such of said power or duties as the president may from
time to time delegate to him.
SECTION 6. Oaths and Bonds.- The board of directors may by
resolution require any officers , agents or employees of the corporation to give
oaths or to furnish bonds for the faithful performance of their respective
duties.
<PAGE>
SECTION 7. Signatures. -- All checks, drafts, or orders for
payment of money, and all acceptances, bills of exchange and promissory notes
shall be signed by any officer or officers of the company designated by
resolution of the board of directors.
SECTION 8. Vacancies. -- Vacancies occurring in any of the
offices of the company may be filled for the unexpired term by the original
appointive power.
SECTION 9. Delegation of Duties. -- In the event of death,
resignation, retirement, disqualification, disability, sickness, absence,
removal from office or refusal to act of any officer or agent of the
corporation, or for any reason that the board of directors or executive
committee may delegate the powers and duties of such officer or agent to any
other officer or agent, or to any director, for the time being.
ARTICLE VI
SHARES OF STOCK
SECTION 1. Certificates of stock. -- All certificates for
shares of the capital stock of the company shall be in such form, not
inconsistent with the law and the articles of incorporation of the company, as
may be approved by the board of directors, and be signed by the president or
vice-president and by the secretary or treasurer of the company. All
certificates of stock shall be consecutively numbered, and the name of the
persons owning the shares represented thereby, to together with the number of
such shares and the date of issue, shall be entered on the books of the company.
SECTION 2. Bearer shares -- Shares may be issued to bearer
only if they are fully paid and not-assessable.
SECTION 3. Registered Stockholders. -- The corporation shall
be entitled to treat the holder of record of any share or shares of stocking
this company as the holder in fact thereof, and shall not be bound to recognize
any equitable or other reclaim to or interest in such shares on the part of any
other person, whether or not it shall have express or other notice thereof, save
as expressly provided by the laws of the Republic of Liberia.
SECTION 4. Bearer Register -- In the case of shares issued to
bearer , the stock register shall state the number of shares issued, the date of
issue, and that such shares are fully paid and non-assessable.
SECTION 5. Canceled and Lost Certificate . -- All surrendered
certificates of stock shall be canceled, and no new certificate shall be issued
until a like certificate for the same number of shares shall have been
surrendered and canceled. Any person claiming a certificate of stock to be lost
or destroyed shall make an affidavit or affirmation of that fact, and shall
advertise the same in such matter as the board of directors may require, give
the corporation a bond of indemnity in such sum as they may direct, whereupon a
new certificate may be issued of the same tenor and for the same number of
shares as the one alleged to have been lost or destroyed.
<PAGE>
SECTION 6. Transfers of Shares. -- Transfers of stock shall be
made on the books of the corporation by the holder in person or by attorney,
upon the surrender and cancellation of the certificate or certificates for such
shares; but the board of directors may appoint a bank or trust company to act as
the transfer agent or registrar of transfers of such certificates. The transfer
books of the company may be closed for such period as the board of directors
shall direct but not exceeding forty days prior to the day of the annual or any
special meeting of the stockholders, and may also be closed by the board for
such time as may be deemed advisable for dividend purposes, during which time no
stock shall be transferable. The directors may also fix a day no more than forty
days prior to the holding of any meeting as the day of which stockholders, other
than the holders of shares issued to bearer, entitled to notice of and to vote
at such meeting shall be determined, in which event, only stockholders of record
on such day shall be entitled to notice of vote at such meeting. Shares issued
to bearer shall be transferable by delivery of the certificate or certificates
representing such shares.
SECTION 7. Addresses of Stockholders. -- Every stockholder
shall furnish the secretary with an address to which notices of meetings and all
other notices may be addressed, but in default thereof, such notices may be sent
to stockholders at their last known address or at the principal office of the
company, except as provided in the second paragraph of Section 4 of Article 11
of these by-laws.
SECTION 8. Regulations. -- The Board of Directors shall have
the power and authority to make such rules and regulations as they may deem
expedient governing the issue, transfer and registration of the certificates for
shares of the capital stock of the company.
ARTICLE VIII
DIVIDENDS
SECTION 1. Dividends and Reserves. -- Before payment of any
dividend or making any distribution of profits, the board of directors may set
aside out of the surplus or net profits of the corporation, such sum or sums in
their absolute discretion they may deem proper as a reserve fund for
depreciation, renewal, repair, and maintenance or for such other purpose as the
directors shall think conducive to the interests of the corporation. Dividends
upon the issued and outstanding stock of the company may be declared at any
regular or special meeting of the board of directors.
SECTION 2. Stock Dividends- When the directors shall so
determine, dividends may be paid in stock of the corporation; provided the stock
requisite for such purpose shall be authorizes and provided, if such stock has
not therefore been issued there shall be transferred from surplus to the capital
of the corporation an amount at least equal to that for which such stock could
be lawfully issued.
<PAGE>
ARTICLE VIII
PRE-EMPTIVE RIGHTS
After the original issue of stock, every stockholder of the corporation
shall upon the issuance of any stock of the corporation of the same class as
that which has already holds, have the right to purchase his pro-rata share of
such stock at the price at which it is offered to others.
ARTICLE IX
FISCAL YEAR
The fiscal year of the company shall commence on the first day of
January in each year.
SEAL
ARTICLE X
The corporate seal is, and until otherwise ordered and directed by the
board of directors shall be an impression upon paper or wax, in the following
form:
ARTICLE XI
AMENDMENTS
These by-laws may be altered, amended or repealed by the vote
of either a majority or the stockholders entitled to vote at any regular or
special meeting of the stockholders, or a two-thirds majority of all of the
directors at any meeting of the board, provided notice of such proposed
alteration, amendment or repeal shall have been included in the notice of such
meeting or shall have been waived by all of the stockholders or directors, or at
any regular or special meeting of the stockholders or directors at which all of
the stockholders or directors are present, without such notice or waiver of
notice.
Exhibit 3.8
-----------
COMPANIES LAW, CAP. 113
----------------
COMPANY LIMITED BY SHARES
----------------
ARTICLES OF ASSOCIATION
OF
TOPSCALE SHIPPING COMPANY LIMITED
1. The regulations contained in Part 1 of Table "A" in the First
Schedule of the Companies Law, Cap. 113 (which Table is
hereinafter called "Table A") shall apply to this Company,
save those which by these presents are excepted or amended or
which are inconsistent with the other provisions of these
Articles. The regulations of Part 1 of "Table A" Nos. 11, 24,
53, 58, 60, 77, 79, 88 (a), 89, 90, 91, 92, 98 and 113 shall
not apply, but save as above provided and in addition to the
other provisions of Part 1 of "Table A", the following shall
constitute the Articles of Association of this Company.
2. The Company is a private company and consequently:
(a) The right to transfer shares is restricted in manner
hereinafter prescribed,
(b) The number of members of the Company (exclusive of
persons who are in the employment of the Company and
of persons who having been formerly in the employment
of the Company were while in such employment and have
continued after the determination of such employment
to be members of the Company) is limited to fifty.
Provided that where two or more persons hold one or
more shares in the Company jointly they shall for the
purpose of this Article be treated as a single
member,
(c) Any invitation to the public to subscribe for any
shares or debentures of the Company is prohibited.
(d) The Company shall not have power to issue share
warrants to bearer.
3. Any branch or nature of business for which there is either an
express or an implied by the Memorandum of Association of the
Company or by these Articles authorization to be undertaken by
the Company may be undertaken by the Directors
<PAGE>
at such time or times as they would deem fit and, furthermore,
may remain by the Directors in abeyance, irrespective of
whether such branch or nature of business has actually started
or not if the Directors would deem fit not to start or not to
continue with such branch or nature of business.
4. The Company shall have a first and paramount lien on every
share for all moneys (whether presently payable or not) called
or payable at a fixed time in respect of that share, and the
Company shall also have a first and paramount lien on all
shares standing registered in the name of a single person for
all moneys presently payable by him or his estate to the
Company; but the Directors may at any time declare any share
to be wholly or in part exempt from the provisions of this
Article. The Company's lien, if any, on a share shall extend
to all dividends payable thereon.
5. All additional shares approved to be issued shall be offered
to the members in proportion to the number of shares already
held by them and such offer shall be made by notice fixing the
number of shares which each member is entitled to be allotted
and restricting the time in which the offer if not accepted,
shall be deemed as having been declined and after which time
or on receipt of a declaration by the member to whom such a
notice is given that he declines to accept the shares offered,
the Directors may allot or otherwise dispose same to such
persons and under such conditions as they would deem fit.
6. The Directors may, independently of any other provision of the
Articles, but subject to Art. 7 hereinbelow in their absolute
discretion and without assigning any reason therefor, decline
to register the transfer of any share to any person of whom
they do not approve, whether or not it is a fully paid share,
and may also decline to register the transfer of any share on
which the Company has a legal lien.
7. Notwithstanding any other provision in these Articles, the
following transfers of shares to members of the Company or not
and either by sale, exchange, gift, transmission by law or
otherwise are freely permitted and the Directors shall
forthwith approve any such transfer and shall proceed to the
registration of same in the Register of Members of the
Company:
(a) Transfer to father, mother, spouse, child, grandson
or granddaughter of the transferor (in these Articles
called " members of the family ").
- 2 -
<PAGE>
10. If the Company shall, within the space of twenty-eight days
after being served with such notice of sale, find a member
willing to purchase any share included in the notice of sale
hereinafter called "the purchasing member" - and shall give
notice thereof to the retiring member, the retiring member
shall be bound, upon payment of the fair value, to transfer
the share to the purchasing member, who is bound to complete
the purchase within seven days from the service of the last
mentioned notice. The Directors, in order to find a purchasing
member shall offer any shares included in a notice of sale to
the persons who are the holders of the remaining shares in the
Company in as near a proportion to the shares in the Company
held by them and shall limit the time within which such offer
if not accepted will be deemed as declined, and the Directors
shall then make such arrangements as regards finding a
purchasing member for any shares declined by the member to
whom the shares were offered, within the so fixed time limit,
as the Directors would deem just and reasonable.
11. The fair value of a share is fixed by agreement between the
purchasing and the retiring member and any difference in
regard thereto shall be referred to arbitration of one
arbitrator, whose decision shall be final and, subject to
above, the Arbitration Law for the time being in force shall
apply and the auditors of the Company shall appear before such
arbitrator as expert witnesses. If for any reason the award of
the arbitrator is not made within fourteen days from the date
of the appointment of the arbitrator, the arbitration is
cancelled and the auditors of the Company shall fix finally
the fair value as experts and not as arbitrators.
12. If, in case the retiring member makes default in transferring
any share which he was bound to transfer as above, the
Directors may authorize another person to proceed with the
transfer of the shares to the purchasing member and may give
valid receipt for the purchase-money of such shares, register
the purchasing member as holder thereof and issue a
certificate in respect of same in his name and by virtue of
which the purchasing member shall become absolutely entitled
to same. The retiring member in such a case shall be bound to
return the certificate of the said shares and upon that shall
be entitled to collect the purchase-money, without interest,
and if such certificate contains any shares which he was not
bound to transfer as above, the Company shall issue to him a
certificate for the remaining shares.
Provided that, till the return of the above
certificate, same shall in any case, be deemed to be cancelled
with regard to any share already transferred to a purchasing
member, as above.
13. If the Directors shall not, within the space of twenty-eight
days after being served with a notice of sale, find a
participating member for all or any of the shares which are
included in such notice and shall not give notice in manner
aforesaid, or if through no fault of the retiring member the
purchase of any shares in respect of which such last mentioned
notice was given is not concluded within the space of
twenty-eight days from the service of such notice, the
retiring member at any time
- 3 -
<PAGE>
within the next six months shall be free, subject to Art. 6,
to sell and transfer the shares contained in the notice of
sale or such of them which were not sold to a pur chasing
member at any price and to any person.
14. Notwithstanding any other provisions of the Articles, no share
shall be given by a member as a pledge or as security for a
loan, debt or obligation without the sanction of the
Directors, and the Directors shall decline to register or
recognize any such pledge or security given in contravention
of this Article, which pledge or security shall not be valid
towards the Company, save as otherwise provided by law.
15. Each member shall not be entitled to appoint more than one
proxy to attend on the same occasion.
16. All notices and other communications relating to a General
Meeting and which each member is entitled to receive, shall
also be given to the auditors of the Company.
17. No business shall be transacted at any General Meeting unless
a quorum of members is present at the time when the Meeting
proceeds to business. Save as herein otherwise provided, two
members present in person or by proxy shall be a quorum.
18. At any General Meeting a resolution put to the vote of the
Meeting shall be decided on a show of hands unless a poll is
(before or on the declaration of the result of the show of
hands) demanded:
(a) by the chairman, or
(b) by at least one member, present in person or by
proxy.
Unless a poll be so demanded, a declaration by the
chairman that a resolution has on a show of hands been carried
or carried unanimously, or by a particular majority, or lost,
and an entry to that effect in the book containing the minutes
of the proceedings of the Company shall be conclusive evidence
of the fact without proof of the number or proportion of the
votes recorded in favour of or against such resolution. The
demand for a poll may be withdrawn.
19. The Chairman of a general meeting has no second or casting
vote.
20. (a) The number of the Directors shall be from one to
seven and may be increased or reduced by an ordinary
resolution of the Company.
(b) The number of the first Directors within the
aforesaid limits and their names shall be determined
by the subscribers to the Memorandum of Association
of the Company.
- 4 -
<PAGE>
(c) The aforesaid first Directors shall hold their post
until the first Annual General Meeting.
(d) At each Annual General Meeting all Directors shall
resign but shall be eligible for re-election.
21. It shall not be necessary for a Director to be registered
holder of shares in the Company in order to be a Director, and
in such case he shall be entitled to receive notice and attend
all the General Meetings of the Company.
22. The Directors may exercise all the powers of the Company, to
borrow or raise money, to mortgage or charge the undertaking
of the Company, its property and uncalled capital, as well as
to issue debentures, debenture stock and other securities as
security for any debt, loss or obligation of the Company or of
any other third party.
23. The Directors may meet together for the despatch of their
business, adjourn and otherwise regulate their meetings as
they deem fit. Questions arising at any meeting shall be
decided by a majority of votes. In case of an equality of
votes, the Chairman shall not have a second or casting vote. A
Director may and the Secretary, on the requisition of a
Director, shall, at any time, summon a meeting of the
Directors.
24. Each Director may vote as Director in respect of any contract
or arrangement in which he is personally interested or in
respect of any other matter referred to in section 191 of the
Companies Law and if he does so vote his vote shall be counted
and shall, also, be counted in the quorum present at the
meeting when considering such contract or arrangement.
25. Each Director may at any time and from time to time by a Power
of Attorney duly made and attested appoint any person,
Director or not to be an Alternate Director in his place and
for any period of time he may fix, and such Alternate Director
shall during such period be entitled to attend and vote in any
Meeting of the Director and he shall generally have and
exercise all rights, powers and duties of the Director
appointing him, provided always that the appointor Director
may at any time revoke such appointment and in case of death
or disability of the appointor Director or in case in which
the latter ceases for any reason to be a Director the
appointment shall be terminated ipso facto and shall be of no
effect.
If an Alternate Director is already a Director of the
Company, he shall have a separate vote as Alternate Director
and shall be counted separately for the purposes of
constituting a quorum.
26. Any person acting as Alternate Director shall be deemed to be
an officer of the Company and he shall be personally liable to
it for his acts and omissions and his remuneration shall be
paid out of the remuneration of the Director appointing him
- 5 -
<PAGE>
and shall consist of such part of such remuneration as it may
be agreed between the appointor Director and his Alternate.
27. (a) The Seal of the Company shall only be used by the
authority of the Directors and every instrument to
which the Seal shall be affixed shall be signed by
one Director or Alternate Director, or by the
Secretary.
(b) The Company may have an official seal, in addition to
the aforesaid common seal, which shall be as provided
by s.36 (1) of the Law and for use as therein
provided.
28. Subject to the provisions of the Law, a resolution in writing
signed by all the members for the time being entitled to
receive notice of and to attend and vote at General Meetings
-or being corporations by their duly authorized
representatives -shall be as valid and effective as if the
same had been passed at a General Meeting of the Company duly
convened and held.
29. A resolution in writing, signed, or approved by letter, cable,
radiogram or telex by all the Directors, or the Alternate
Directors, shall be as valid and effective for all purposes as
if the same hid been passed at a meeting of the Directors duly
convened and held and whenever the same is signed may consist
of several papers each of which shall be signed by one or more
of the aforesaid persons.
30. The Directors may at any time require from any person, whose
name is registered in the register of members of the Company,
to furnish them with any information supported - if the
Directors so require - by a statutory Declaration, which they
may consider necessary for the purpose of enabling them to
determine whether or not the Company is an exempt private
Company within the meaning of para. 4 of section 123 of the
Law.
31. Notwithstanding any provision contained in the Articles
applicable to the Company, the meetings of the Directors, as
well as the General Meetings of the Company (ordinary or
extraordinary) may be convened and held either in Cyprus or
abroad, in any city or at any place as the majority of the
Directors or the members, as the case may be, may require in
writing.
32. Except as required by law, no person shall be recognized by
the Company as holding any share upon any trust and the
Company shall not be bound by, or be compelled in any way to
recognize (even when having notice thereof) any equitable,
contingent, future or partial interest in any share or any
interest in any fractional part of a share or (except as
otherwise provided by these Articles or by law or by an order
of a Court of competent jurisdiction) any other rights in
respect of any share except an absolute right to the entirety
thereof in the registered holder.
- 6 -
<PAGE>
33. Notwithstanding any provision of Art. 32 above, but always
subject to the provisions of section 112 of the Law, the
Company may if it so desires and if it has been notified in
writing thereof, recognize the existence of a trust on any
share although it may not register the same in the Register of
Members of the Company. Such recognition by the Company is
made known to the trustees by letter and is irrevocable as
long as such trust remains in existence, even though trustees
or any of them may be replaced.
34. The Directors may grant retirement pensions or annuities or
other gratuities or allowances, including allowances on death,
to any person or to the widow of or dependants of any person
in respect of services rendered by him to the Company whether
as Director or Director in any executive office or in any
other officer or employment under the Company or indirectly as
an officer or employee of any subsidiary company of the
Company notwithstanding that he may be or may have been a
Director of the Company and the Company may make payments
towards insurances or trusts for such purpose in respect of
such persons and may include rights in respect of such
pensions, annuities and allowances in the terms of engagement
of any such person, without being precluded from granting such
retirement pensions or annuities or other gratuities or
allowances including allowances of death not as a part and
independently of the terms of any engagement but upon the
retirement, resignation or death of any such person as the
Board of Directors may decide.
35. A notice may be given by the Company to any member either
personally or by sending it by post to him or to his
registered address or (if he has no registered address within
Cyprus) to the address, if any, within or out of Cyprus,
supplied by him to the Company, for the giving of notice to
him. Where a notice is sent by post, service of the notice
shall be deemed to be effected if contained in an envelope,
duly addressed and duly stamped and posted by double
registered letter and shall be deemed to have been received in
the case of a notice of a meeting at the expiration of 72
hours after posting and in any other case at the time at which
the letter would be delivered in the ordinary course of post.
- 7 -
<PAGE>
COMPANIES LAW, CAP. 113
------------------------------------
COMPANY LIMITED BY SHARES
------------------------------------
MEMORANDUM OF ASSOCIATION
OF
TOPSCALE SHIPPING COMPANY LIMITED
1. The name of the Company is:
TOPSCALE SHIPPING COMPANY LIMITED
2. The registered office of the Company will be situated in Cyprus.
3. The objects for which tile Company is established are:
(1) To bareboat charter vessels of any kind and to register the
same at any ship registry in accordance with any relevant law
and to purchase, take in exchange, hire, manage, charter,
build, or otherwise acquire, hold or equip ships or vessels of
any kind with or without their equipment, machinery, furniture
and receptacles, or shares or interests in such ships or
vessels, as well as shares or other documents of companies
possessed of such ships or vessels, and to employ the same in
the conveyance of passengers, troops, goods and produce of all
kinds, including live stock, oil or other liquids, weapons and
munitions of war and generally any kind of articles, between
any ports or places, in Cyprus or elsewhere and to acquire any
postal subsidies, and to maintain, repair, improve, alter, let
out on hire, mortgage or otherwise deal with, sell or dispose
of any such ships or vessels, shares or documents.
(2) To carry on the business of shipowners, carriers by land and
sea, managers, dealers and agents of ships and shipping
companies, shipchandlers, warehousemen, contractors, owners of
barges, lighters, motor boats or other small vessels,
forwarding agents, agents of all kinds, stevedores,
shipbrokers, freight contractors, shipowners, wharfingers,
manufacturers and merchants of ice, owners and keepers of
refrigerating stores and spaces and to insure with any company
or person against any loss, damage, risk or liability of any
kind which may affect the Company, its property, its products
or the persons or articles transported by it and its transport
means as well as to carry on the business of insurance agents
for any type of insurance business, including maritime
insurance.
<PAGE>
-2-
(3) To borrow money for any purpose jointly and/or severally with
others, to give guarantees and securities of the liabilities
and obligations of others and generally, without limitation,
in any possible way and by any method or means, to grant
financial, commercial or other assistance, aid or support, of
any nature, to others; provided that for the purposes of this
paragraph the word "others" shall mean and include only any
one or more shipowning or shipmanagement or other companies,
which belong to the same group of companies as the Company, or
are controlled by the same shareholders as those of the
Company or own a vessel managed or operated by the same
managers or operators as a vessel of the Company.
(4) To participate in the management, supervision and control of
any business or work of any company or enterprise and for this
purpose to appoint and remunerate any Directors, Managers,
accountants, experts, agents or other representatives and to
amalgamate with any other company or enterprise which either
in part or as a whole has objects similar to those of the
Company.
(5) To acquire either in part or as a whole the property or the
obligations of any person or persons, legal or physical, and
of any description, so long as the Company deems them capable
of promoting its business and contribute to its success.
(6) To enter into contracts, agreements and arrangements with
other companies, person or persons, legal or physical and of
whatever description, on lawful consideration and to carry on
on their behalf any kind of business connected with the
objects of the Company.
(7) To enter into partnerships or any other arrangements for
participation in profits or interests, and into co-operation,
joint ventures, mutual concessions or otherwise with other
persons or person, legal or physical, or with other
enterprises carrying on or engaged in business or commercial
transactions capable of being directly or indirectly
beneficial to the Company.
(8) To invest and manage the capital and monies of the Company in
such shares or other investments, mortgages or pledges as it
would be deemed fit or in such a way as the Directors may from
time to time decide, as well as to subscribe for, take, buy or
otherwise acquire and possess shares or other interests in
other companies or debentures or other securities in same.
(9) To enter into any arrangements with any Government or
Authority, Municipal, local or otherwise, which might be
considered as conducive to the attainment of the objects of
the Company or of any of them, to obtain by such arrangement
concessions, rights or privileges, which, as a whole or each
one separately the Company would wish to obtain and use and to
comply with such arrangements, rights, privileges and
concessions.
<PAGE>
-3-
(10) To secure the registration or recognition of the Company in
any country or place and to comply with any necessary or
advantageous conditions for the purpose of ensuring the
functioning of the Company in such country or place and to
establish local representatives or offices therein for the
carrying on of its business.
(11) To appoint and engage employees, servants, workers, personnel,
agents or other persons in connection with the business of the
Company.
(12) To remunerate any person or firm rendering services to the
Company or working in the Company either by payment of money
or by the issue of shares as fully or partly paid up or by
granting a dividend or interest in the profits of the Company.
(13) To lend or advance money to such persons and under such
conditions as it would be deemed advisable and, especially, to
its members, to customers and persons dealing with the
Company.
(14) To provide indemnities or guarantees to third parties
including mortgaging and charging of the property of the
Company by way of security of a loan and/or guarantee to third
parties. The provision of such indemnity or guarantee
constitutes a self-evident and conclusive fact that the same
was made in the interests and/or for the promotion of the
objects of the Company.
(15) To borrow, seek and secure the payment of money in respect of
the business of the Company and for this purpose to mortgage
and burden the business and the whole or any part of its
immovable and movable property, present or future, in any way
the Company would deem fit, including the issue, at nominal
value or increased value or value below the nominal one, of
debentures or stock, perpetual or otherwise. charged upon all
or any of the property of the Company (both present or
future), including its uncalled capital and, further or
additionally, to secure any securities of the Company by trust
or other security and to purchase, redeem or otherwise pay off
any such securities.
(16) To draw, accept, indorse, discount and execute promissory
notes, bills of exchange and other instruments payable to
order or to the bearer.
(17) To purchase, take under lease or exchange, let or otherwise
acquire, use and possess or mortgage, sell, gift or otherwise
alienate any property or any interests, lands, buildings,
easements, rights privileges, concessions, machineries,
patents, installations, goods or any other movable or
immovable property of any kind.
(18) To erect, construct, commence construction, extend, convert
and maintain any buildings works and machinery necessary or
suitable for the objects of the Company.
<PAGE>
-4-
(19) To register, acquire, possess, use, sell or otherwise dispose
business names, trade and industrial marks, patents, invention
rights, copyrights and other similar rights and privileges.
(20) To advertise either by itself or through special, governmental
or private bodies, the businesses of the Company or any of
them, in any way the Company would deem fit, including the
advertisement through the press or radio, through placards,
films, circu lars, exhibitions, publication of books or
magazines, competitions, prize awards or rewards and through
any other lawful means.
(21) To sell or otherwise dispose of part or the whole of the
business or the property of the Company for such consideration
as the Company would deem fit.
(22) To distribute in specie amongst the members of the Company
part or the whole of the property or the business of the
Company and at any time, as well as in case of its
dissolution.
(23) To establish and maintain or procure the establishment and
maintenance of any contributory or non contributory pension
provident or superannuation funds for the benefit of, and give
or procure the giving of donations, gratuities, pensions,
allowances or emoluments to any persons who are or were at any
time in the employment or service of the Company, or of any
company which is a subsidiary of the Company or is allied to
or associated with the Company or any subsidiary company, or
who are or were at any time Directors or officers of the
Company or of any such other company as aforesaid, and the
wives, widows, husbands, widowers, families and dependants of
any such persons, and also to establish and subsidize and
subscribe to any institutions, associations, clubs or funds
which to the Company may seem to be for the benefit of or to
advance the interest and well-being of the Company or of any
such other company as aforesaid or of any such persons as
aforesaid and make payments to or towards the insurance of any
such person as aforesaid, and do any of the matters aforesaid
either alone or in conjunction with any such other company as
aforesaid.
(24) To participate in or otherwise aid any charitable or
philanthropic body or purpose or other purpose of public
benefit.
(25) To pay all expenses related to the formation and registration
of the Company.
(26) To do all or any of the above acts either alone or in
conjunction with others and in various legal capacities, such
as principal, mandatory, agent contractor, trustee or in any
other capacity envisaged by the Law, as well as generally and
for every purpose or object to act in any capacity as above.
<PAGE>
-5-
(27) To do any act which is conducive to or necessary for the
achievement of the above or of any of the above objects
severally.
It is hereby expressly declared that each sub-clause of clause
3 above shall be construed independently of any other
sub-clause thereof and that none of the objects mentioned in
any of the above sub-clauses shall be deemed to be merely
subsidiary to the objects mentioned in any of the other above
sub-clauses.
4. The liability of the members is limited.
5. The share capital of the Company is (pound)1000 - - divided into 1000
shares of (pound)1000 each. The shares in the original or any increased
capital may be divided into several classes, and there may be attached
thereto respectively any preferential rights, privileges, conditions or
restrictions or especially as regards dividends, capital, voting rights
or otherwise.
Exhibit 3.9
-----------
COMPANIES LAW, CAP. 113
------------------
COMPANY LIMITED BY SHARES
------------------
MEMORANDUM OF ASSOCIATION
OF
CONIFER SHIPPING COMPANY LIMITED
1. The name of the Company is:
CONIFER SHIPPING COMPANY LIMITED
2. The registered office of the Company will be situated in Cyprus.
3. The objects for which the Company is established are :
(1) To bareboat charter vessels of any kind and to register the same at any
ship registry in accordance with any relevant law and to purchase, take
in exchange, hire, manage, charter, build, or otherwise acquire, hold
or equip ships or vessels of any kind with or without their equipment
machinery, furniture and receptacles, or shares or interests in such
ships or vessels, as well as shares or other documents of companies
possessed of such ships or vessels, and to employ the same in the
conveyance of passengers, troops, goods and produce of all kinds,
including live stock, oil or other liquids, weapons and munitions of
war and generally any kind of articles, between any ports or places, in
Cyprus or elsewhere, and to acquire any postal subsidies, and to
maintain, repair, improve, alter, let out on hire, mortgage or
otherwise deal with, sell or dispose of any such ships or vessels,
shares or documents.
(2) To carry on the business of shipowners, carriers by land and sea,
managers, dealers and agents of ships and shipping companies,
shipchandlers, warehousemen, contractors, owners of barges, lighters,
motor boats or other small vessels, forwarding agents, agents of all
kinds, stevedores, shipbrokers, freight contractors, shipowners,
wharfingers, manufacturers and merchants of ice, owners and keepers of
refrigerating stores and spaces and to insure with any company or
person against any loss, damage, risk or liability of any kind which
may affect the Company, its property, its products or the persons or
articles transported by it and its transport means as well as to carry
on the business of insurance agents for any type of insurance business,
including marine insurance.
<PAGE>
(3) To borrow money for any purpose jointly and/or severally with others,
to give guarantees and securities of the liabilities and obligations of
others and generally, without limitation, in any possible way and by
any method or means, to grant financial, commercial or other
assistance, aid or support, of any nature, to others; provided that for
the purposes of this paragraph the word " others " shall mean and
include only any one or more shipowning or shipmanagement or other
companies, which belong to the same group of companies as the Company,
or are controlled by the same shareholders as those of the Company or
own a vessel managed or operated by the same managers or operators as a
vessel of the Company.
(4) To participate in the management, supervision and control of any
business or work of any company or enterprise and for this purpose to
appoint and remunerate any Directors, Managers, accountants, experts,
agents or other representatives and to amalgamate with any other
company or enterprise which either in part or as a whole has objects
similar to those of the Company.
(5) To acquire either in part or as a whole the property or the obligations
of any person or persons, legal or physical, and of any description, so
long as the Company deems them capable of promoting its business and
contribute to its success.
(6) To enter into contracts, agreements and arrangements with other
companies, person or persons, legal or physical and of whatever
description, on lawful consideration and to carry on on their behalf
any kind of business connected with the objects of the Company.
(7) To enter into partnerships or any other arrangements for participation
in profits or interests, and into co-operation, joint ventures, mutual
concessions or otherwise with other persons or person, legal or
physical, or with other enterprises carrying on or engaged in business
or commercial transactions capable of being directly or indirectly
beneficial to the Company.
(8) To invest and manage the capital and monies of the Company in such
shares or other investments, mortgages or pledges as it would be deemed
fit or in such a way as the Directors may from time to time decide, as
well as to subscribe for, take, buy or otherwise acquire and possess
shares or other interests in other companies or debentures or other
securities in same.
(9) To enter into any arrangements with any Government or Authority,
Municipal, local or otherwise, which might be considered as conducive
to the attainment of the objects of the Company or of any of them, to
obtain by such arrangement concessions, rights or privileges, which, as
a whole or each one separately the Company would wish to obtain and use
and to comply with such arrangements, rights, privileges and
concessions.
(10) To secure the registration or recognition of the Company in any country
or place and to comply with any necessary or advantageous conditions
for the purpose of ensuring the functioning of the Company in such
country or place and to establish local representatives or offices
therein for the carrying on of its business.
(11) To appoint and engage employees, servants, workers, personnel, agents
or other persons in connection with the business of the Company.
- 2 -
<PAGE>
(12) To remunerate any person or firm rendering services to the Company or
working in the Company either by payment of money or by the issue of
shares as fully or partly paid up or by granting a dividend or interest
in the profits of the Company.
(13) To lend or advance money to such persons and under such conditions as
it would be deemed advisable and, especially, to its members, to
customers and persons dealing with the Company.
(14) To provide indemnities or guarantees to third parties including
mortgaging and charging of the property of the Company by way of
security of a loan and/or guarantee to third parties. The provision of
such indemnity or guarantee constitutes a self-evident and conclusive
fact that the same was made in the interests and/or for the promotion
of the objects of the Company.
(15) To borrow, seek and secure the payment of money in respect of the
business of the Company and for this purpose to mortgage and burden the
business and the whole or any part of its immovable and movable
property, present or future, in any way the Company would deem fit,
including the issue, at nominal value or increased value or value below
the nominal one, of debentures or stock, perpetual or otherwise,
charged upon all or any of the property of the Company (both present or
future), including its uncalled capital and, further or additionally,
to secure any securities of the Company by trust or other security and
to purchase, redeem or otherwise pay off any such securities.
(16) To draw, accept, indorse, discount and execute promissory notes, bills
of exchange and other instruments payable to order or to the bearer.
(17) To purchase, take under lease or exchange, let or otherwise acquire,
use and possess or mortgage, sell, gift or otherwise alienate any
property or any interests, lands, buildings, easements, rights,
privileges, concessions, machineries, patents, installations, goods or
any other movable or immovable property of any kind.
(18) To erect, construct, commence construction, extend, convert and
maintain any buildings works and machinery necessary or suitable for
the objects of the Company.
(19) To register, acquire, possess, use, sell or otherwise dispose business
names, trade and industrial marks, patents, invention rights,
copyrights and other similar rights and privileges.
(20) To advertise either by itself or through special, governmental or
private bodies, the businesses of the Company or any of them, in any
way the Company would deem fit, including the advertisement through the
press or radio, through placards, films, circulars, exhibitions,
publication of books or magazines, competitions, prize awards or
rewards and through any other lawful means.
(21) To sell or otherwise dispose of part or the whole of the business or
the property of the Company for such consideration as the Company would
deem fit.
- 3 -
<PAGE>
(22) To distribute in specie amongst the members of the Company part or the
whole of the property or the business of the Company and at any time,
as well as in case of its dissolution.
(23) To establish and maintain or procure the establishment and maintenance
of any contributory or non contributory pension provident or
superannuation funds for the benefit of, and give or procure the giving
of donations, gratuities, pensions, allowances or emoluments to any
persons who are or were at any time in the employment or service of the
Company, or of any company which is a subsidiary of the Company or is
allied to or associated with the Company or any subsidiary company, or
who are or were at any time Directors or officers of the Company or of
any such other company as aforesaid, and the Wives, widows, husbands,
widowers, families and dependents of any such persons, and also to
establish and subsidise and subscribe to any institutions,
associations, clubs or funds which to the Company may seem to be for
the benefit of or to advance the interest and well-being of the Company
or of any such other company as aforesaid or of any such persons as
aforesaid and make payments to or towards the insurance of any such
person as aforesaid, and do any of the matters aforesaid either alone
or in conjunction with any such other company as aforesaid.
(24) To participate in or otherwise aid any charitable or philanthropic body
or purpose or other purpose of public benefit.
(25) To pay all expenses related to the formation and registration of the
Company.
(26) To do all or any of the above acts either alone or in conjunction with
others and in various legal capacities, such as principal, mandatory,
agent contractor, trustee or in any other capacity envisaged by the
Law, as well as generally and for every purpose or object to act in any
capacity as above.
(27) To do any act which is conducive to or necessary for the achievement of
the above or of any of the above objects severally.
It is herepy expressly declared that each sub-clause of clause 3 above
shall be construed independently of any other sub-clause thereof and
that none of the objects mentioned in any of the above sub-clauses
shall be deemed to be merely subsidiary to the objects mentioned in any
of the other above sub-clauses.
4. The liability of the members is limited.
5. The share capital of the Company is (pound)1000.- divided into 1000
shares of (pound) 1.- each. The shares in the original or any increased
capital may be divided into several classes, and there may be attached
thereto respectively any preferential rights, privileges, conditions or
restrictions or especially as regards dividends, capital, voting rights
or otherwise.
- 4 -
<PAGE>
COMPANIES LAW, CAP. 113
------------------
COMPANY LIMITED BY SHARES
------------------
ARTICLES OF ASSOCIATION
OF
CONIFER SHIPPING COMPANY LIMITED
1. The regulations contained in Part I of Table "A" in the First Schedule
of the Companies Law, Cap. 113 (which Table is hereinafter called
"Table A") shall apply to this Company, save those which by these
presents are excepted or amended or which are inconsistent with the
other provisions of these Articles. The regulations of Part 1 of "Table
A" No. 11, 24, 53, 58, 60, 77, 79, 88 (a), 89, 90, 91, 92, 98 and 113
shall not apply, but save as above provided and in addition to the
other provisions of Part I of "Table A", the following shall constitute
the Articles of Association of this Company.
2. The Company is a private company and consequently: -
(a) The right to transfer shares is restricted in manner
hereinafter prescribed,
(b) The number of members of the Company (exclusive of persons who
are in the employment of the Company and of persons who having
been formerly in the employment of the Company were while in
such employment and have continued after the determination of
such employment to be members of the Company) is limited to
fifty. Provided that where two or more persons hold one or
more shares in the Company jointly they shall for the purpose
of this Article be treated as a single member,
(c) Any invitation to the public to subscribe for any shares or
debentures of the Company is prohibited.
(d) The Company shall not have power to issue share warrants to
bearer.
3. Any branch or nature of business for which there is either an express
or an implied by the Memorandum of Association of the Company or by
these Articles authorization to be undertaken by the Company may be
undertaken by the Directors at such time or times as they would deem
fit and, furthermore, may remain by the Directors in abeyance,
irrespective of whether such branch or nature of business has actually
started or not if the Directors would deem fit not to start or not to
continue with such branch or nature of business.
- 5 -
<PAGE>
4. The Company shall have a first and paramount lien on every share for
all moneys (whether presently payable or not) called or payable at a
fixed time in respect of that share, and the Company shall also have a
first and paramount lien on all shares standing registered in the name
of a single person for all moneys presently payable by him or his
estate to the Company; but the Directors may at any time declare any
share to be wholly or in part exempt from the provisions of this
Article. The Company's lien, if any, on a share shall extend to all
dividends payable thereon.
5. All additional shares approved to be issued shall be offered to the
members in proportion to the number of shares already held by them and
such offer shall be made by notice fixing the number of shares which
each member is entitled to be allotted and restricting the time in
which the offer if not accepted, shall be deemed as having been
declined and after which time or on receipt of a declaration by the
member to whom such a notice is given that he declines to accept the
shares offered, the Directors may allot or otherwise dispose same to
such persons and under such conditions as they would deem fit.
6. The Directors may, independently of any other provision of the
Articles, but subject to Art. 7 hereinbelow, in their absolute
discretion and without assigning any reason therefor, decline to
register the transfer of any share to any person of whom they do not
approve, whether or not it is a fully paid share, and may also decline
to register the transfer of any share on which the Company has a legal
lien.
7. Notwithstanding any other provision in these Articles, the following
transfers of shares to members of the Company or not and either by
sale, exchange, gift, transmission by law or otherwise are freely
permitted and the Directors shall forthwith approve any such transfer
and shall proceed to the registration of same in the Register of
Members of the Company:-
(a) Transfer to father, mother, spouse, child, grandson or
granddaughter of the transferor (in these Articles called "
members of the family ").
(b) if the member is one or more trustees, transfer to another
trustee or trustees if any previous one or ones were replaced.
(c) Transfer by an individual member to a company controlled
either together or separately by such member and/or by any
members of his family and/or by a company controlled by them
or any of them. For the purposes of this paragraph a company
is deemed to be controlled if the controlling person, physical
or legal, holds therein more than 50% of the votes.
(d) Transfer by a company member to an individual or to another
company holding in the transferor company more then 25% of the
votes.
(e) Transfer by a company member to another company which is a
subsidiary or holding of the transferor company or to another
company controlled by such subsidiary or holding company. For
the purposes of this paragraph the words subsidiary and
- 6 -
<PAGE>
holding company have the usual meaning and the word
"controlled company" means holding in such company more than
50% of the votes.
Provided that the as above provided free transfer of
shares would not be allowed if by such transfer there would
result, directly or indirectly, the transformation of this
Company to a non-exempt one, if it is already an exempt
company or to a public company, except if the Directors would
otherwise resolve unanimously, in which case such transfer
would be freely allowed and without the exercise of the rights
of option hereinbelow provided.
8. No transfer of shares to any member of the Company or not, which is not
provided by these Articles to be freely allowed, may be effected so
long as any member wishes to buy such share at its fair value which
shall be fixed as hereinbelow provided.
9. In order to find out whether any member is willing to purchase a share
at the fair value, the person, whether a member of the Company or not,
proposing to transfer same - hereinafter called "the retiring member" -
shall give notice in writing - hereinafter called "notice of sale" - to
the Company that he desires to transfer the same. Every notice of sale
shall specify the serial number - if any - of the shares, which the
retiring member desires to transfer and shall constitute the Company
the agent of the retiring member for the sale of such shares to any
member of the Company at the fair value. No notice shall be revocable
except with the sanction of the Directors.
10. If the Company shall, within the space of twenty-eight days after being
served with such notice of sale, find a member willing to purchase any
share included in the notice of sale - hereinafter called "the
purchasing member" - and shall give notice thereof to the retiring
member, the retiring member shall be bound, upon payment of the fair
value, to transfer the share to the purchasing member, who is bound to
complete the purchase within seven days from the service of the last
mentioned notice. The Directors, in order to find a purchasing member
shall offer any shares included in a notice of sale to the persons who
are the holders of the remaining shares in the Company in as near a
proportion to the shares in the Company held by them and shall limit
the time within which such offer if not accepted will be deemed as
declined, and the Directors shall then make such arrangements as
regards finding a purchasing member for any shares declined by the
member to whom the shares were offered, within the so fixed time limit,
as the Directors would deem just and reasonable.
11. The fair value of a share is fixed by agreement between the purchasing
and the retiring member and any difference in regard thereto shall be
referred to arbitration of one arbitrator, whose decision shall be
final and, subject to above, the Arbitration Law for the time being in
force shall apply and the auditors of the Company shall appear before
such arbitrator as expert witnesses. If for any reason the award of the
arbitrator is not made within fourteen days from the date of the
appointment of the arbitrator, the arbitration is cancelled and the
auditors of the Company shall fix finally the fair value, as experts
and not as arbitrators.
12. If, in case the retiring member makes default in transferring any
shares which he was bound to transfer as above, the Directors may
authorise another person to proceed with the transfer
- 7 -
<PAGE>
of the shares to the purchasing member and may give valid receipt for
the purchase-money of such shares, register the purchasing member as
holder thereof and issue a certificate in respect of same in his name
and by virtue of which the purchasing member shall become absolutely
entitled to same. The retiring member in such a case shall be bound to
return the certificate of the said shares and upon that shall be
entitled to collect the purchase-money, without interest, and if such
certificate contains any shares which he was not bound to transfer as
above, the Company shall issue to him a certificate for the remaining
shares.
Provided that, till the return of the above certificate, some
shall in any case, be deemed to be cancelled with regard to any share
already transferred to a purchasing member, as above.
13. If the Directors shall not, within the space of twenty-eight days after
being served with a notice of sale, find a purchasing member for all or
any of the shares which are included in such notice and shall not give
notice in manner aforesaid, or if through no fault of the retiring
member the purchase of any shares in respect of which such last
mentioned notice was given is not concluded within the space of
twenty-eight days from the service of such notice, the retiring member
at any time within the next six months shall be free, subject to Art.
6, to sell and transfer the shares contained in the notice of sale or
such of them which were not sold to a purchasing member at any price
and to any person.
14. Notwithstanding any other provisions of the Articles, no share shall be
given by a member as a pledge or as security for a loan, debt or
obligation without the sanction of the Directors, and the Directors
shall decline to register or recognize any such pledge or security
given in contravention of this Article, which pledge or security shall
not be valid towards the Company, save as otherwise provided by law.
15. Each member shall not be entitled to appoint more than one proxy to
attend on the same occasion.
16. All notices and other communications relating to a General Meeting and
which each member is entitled to receive, shall also be given to the
auditors of the Company.
17. No business shall be transacted at any General Meeting unless a quorum
of members is present at the time when the Meeting proceeds to
business. Save as herein otherwise provided, two members present in
person or by proxy shall be a quorum.
18. At any General Meeting a resolution put to the vote of the Meeting
shall be decided on a show of hands unless a poll is (before or on the
declaration of the result of the show of hands) demanded: -
(a) by the chairman, or
(b) by at least one member, present in person or by proxy.
- 8 -
<PAGE>
Unless a poll be so demanded, a declaration by the chairman
that a resolution has on a show of hands been carried or carried
unanimously, or by a particular majority, or lost, and an entry to that
effect in the book containing the minutes of the proceedings of the
Company shall be conclusive evidence of the fact without proof of the
number or proportion of the votes recorded in favour of or against such
resolution. The demand for a poll may be withdrawn.
- 9 -
<PAGE>
he may fix, and such Alternate Director shall during such period be
entitled to attend and vote in any Meeting of the Director and he shall
generally have and exercise all rights, powers and duties of the
Director appointing him, provided always that the appointor Director
may at any time revoke such appointment and in case of death or
disability of the appointor Director or in case in which the latter
ceases for any reason to be a Director the appointment shall be
terminated ipso facto and shall be of no effect.
If an Alternate Director is already a Director of the Company,
he shall have a separate vote, as Alternate Director and shall be
counted separately for the purposes of constituting a quorum.
26. Any person acting as Alternate Director shall be deemed to be an
officer of the Company and he shall be personally liable to it for his
acts and omissions and his remuneration shall be paid out of the
remuneration of the Director appointing him and shall consist of such
part of such remuneration as it may be agreed between the appointor
Director and his Alternate.
27. (a) The Seal of the Company shall only be used by the
authority of the Directors and every instrument to which the
Seal shall be affixed shall be signed by one Director or
Alternate Director, or by the Secretary.
(b) The Company may have an official seal, in addition to the
aforesaid common seal, which shall be as provided by s. 36 (1)
of the Law and for use as therein provided.
28. Subject to the provisions of the Law, a resolution in writing signed by
all the members for the time being entitled to receive notice of and to
attend and vote at General Meetings - or being corporations by their
duly authorized representatives - shall be as valid and effective as if
the same had been passed at a General Meeting of the Company duly
convened and held.
29. A resolution in writing, signed, or approved by letter, cable,
radiogram or telex by all the Directors, or the Alternate Directors,
shall be as valid and effective for all purposes as if the same had
been passed at a meeting of the Directors duly convened and held and
whenever the same is signed may consist of several papers each of which
shall be signed by one or more of the aforesaid persons.
30. The Directors may at any time require from any person, whose name is
registered in the register of members of the Company, to furnish them
with any information supported - if the Directors so require - by a
statutory Declaration, which they may consider necessary for the
purpose of enabling them to determine whether or not the Company is an
exempt private Company within the meaning of pars. 4 of section 123 of
the Law.
31. Notwithstanding any provision contained in the Articles applicable to
the Company, the meetings of the Directors, as well as the General
Meetings of the Company (ordinary or extraordinary) may be convened and
held either in Cyprus or abroad, in any city or at any place as the
majority of the Directors or the members, as the case may be, may
require in writing.
- 10 -
<PAGE>
32. Except as required by law, no person shall be recognised by the Company
as holding any share upon any trust and the Company shall not be bound
by, or be compelled in any way to recognise (even when having notice
thereof) any equitable, contingent, future or partial interest in any
share or any interest in any fractional part of a share or (except as
otherwise provided by these Articles or by law or by an order of a
Court of competent jurisdiction) any other rights in respect of any
share except an absolute right to the entirety thereof in the
registered holder.
33. Notwithstanding any provision of Art. 32 above, but always subject to
the provisions of section 112 of the Law, the Company may if it so
desires and if it has been notified in writing thereof, recognise the
existence of a trust on any share although it may not register the same
in the Register of Members of the Company. Such recognition by the
Company is made known to the trustees by letter and is irrevocable as
long as such trust remains in existence, even though trustees or any of
them may be replaced.
34. The Directors may grant retirement pensions or annuities or other
gratuities or allowances, including allowances on death, to any person
or to the widow of or dependants of any person in respect of services
rendered by him to the Company whether as Director or Director in any
executive office or in any other office or employment under the Company
or indirectly as an officer or employee of any subsidiary company of
the Company notwithstanding that he may be or may have been a Director
of the Company and the Company may make payments towards insurances or
trusts for such purposes in respect of such persons and may include
rights in respect of such pensions, annuities and allowances in the
terms of engagement of any such person, without being precluded from
granting such retirement pensions or annuities or other gratuities or
allowances including allowances of death not as a part and
independently of the terms of any engagement but upon the retirement,
resignation or death of any such person as the Board of Directors may
decide.
35. A notice may be given by the Company to any member either personally or
by sending it by post to him or to his registered address or (if he has
no registered address within Cyprus) to the address, if any, within or
out of Cyprus, supplied by him to the Company, for the giving of notice
to him. Where a notice is sent by post, service of the notice shall be
deemed to be effected if contained in an envelope, duly addressed and
duly stamped and posted by double registered letter and shall be deemed
to have been received in the case of a notice of a meeting at the
expiration of 72 hours after posting and in any other case at the time
at which the letter would be delivered in the ordinary course of post.
- 11 -
THE COMPANIES LAW (1995 REVISION)
---------------------------------
COMPANY LIMITED BY SHARES
-------------------------
MEMORANDUM OF ASSOCIATION
OF
MILLENIUM II, INC.
1. The name of the Company is MILLENIUM II, INC..
2. The Registered Office of the Company shall be at the offices of Maples and
Calder, Attorneys-at-Law, Ugland House, P.O. Box 309, George Town, Grand Cayman,
Cayman Islands, British West Indies or at such other place as the Directors may
from time to time decide.
3. The objects for which the Company is established are unrestricted and shall
include, but without limitation, the following:-
(i) (a) To undertake and carry on all or any of the trades and businesses of
international freight forwarders and agents, shippers, ship owners, ship
brokers, shipping agents and insurance brokers, underwriters, ship managers, tug
owners, shipping agents, loading brokers, freight contractors, carriers by land,
air and water, transport, haulage and general contractors, barge owners,
lightermen, railway and forwarding agents, dock owners, ships' husbands,
warehousemen, salvors, manufacturers of and dealers in tarpaulins, waterproofs,
machinery, engines, nautical instruments, and ships' rigging, gear, fittings and
equipment of every description, importers and exporters of and dealers in goods,
provisions, live and dead stock, commodities, articles, chattels, merchandise
and property of every kind,
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2
general traders and merchants, and generally to carry on the said businesses in
all their branches, and to carry on the said businesses either as principals or
agents or on commission or otherwise.
(b) To purchase or otherwise acquire, and to carry on the business or
businesses of fishing boat owners, smack owners, trawlers, deep-sea fishers,
shrimp fishers, fish curers, fish or shrimp salesmen, wholesale and retail fish
or shrimp merchants, wholesale and retail game and poultry merchants, ice
manufacturers, oil merchants and refiners, utilisers of fish refuse, manure
manufacturers, anchor and chain makers, wire rope makers, rope makers, mast and
block makers, ship chandlers, marine storekeepers, compass and nautical
instrument makers, marine engineers, engineers, boiler makers, ship builders,
dry-dock keepers, slip keepers, boat builders, ship and boat repairers, ship and
boat outfitters, salvors, wreck removers, wreck raisers, divers, auctioneers,
valuers, assessors, stevedores, wharfingers, carriers, forwarding agents, and
all other branches of business usually or conveniently connected with any such
business as aforesaid.
(c) To enter into, take over, negotiate or otherwise acquire, any
contract or contracts for the construction, building, equipping, fitting out,
storing, gearing or otherwise relating to any steamship, ship, trawler, catcher,
carrier, drifter, fishing boat, boat, or other vessel whatsoever, and to enter
into, take over, negotiate or otherwise acquire any other contract or contracts
whatever which the Company may think necessary, desirable or convenient for the
purposes of the Company or any of them, and to enter into, take over, negotiate,
or otherwise acquire any such contract or contracts at such prices and for such
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3
considerations, and upon such terms and conditions, and subject to such
stipulations and agreements as the Company may determine, and at any time and
from time to time vary, modify, alter or cancel any such contract.
(d) To acquire concessions or licences for the establishment and
working of lines of ships or other vessels between any ports of the world, or
for the formation or working of any railway or tramway, wharf, pier, dock, or
other works, or for the working of any coaches or other public conveyances, with
the benefit of any subsidy attached to any such concession or licence or
otherwise.
(e) To insure the vessels and other property of the Company in any
manner.
(f) To grant loans on ships and vessels or on goods and merchandise
carried or to be carried in any vessels and to buy and sell merchandise for
freighting on the ships and vessels of the Company.
(g) To engage in any and all kinds of business and other activities
with respect to oil, gas and other materials, and the products and by-products
thereof, including but not by way of limitation, exploration, developing,
drilling, producing, refining, processing, mining, confining, manufacturing,
storing, transporting, distributing, trading, buying, selling and all other
activities pertinent thereto.
(h) To resell or sublet any concession or licence obtained, or contract
entered into.
(i) To carry on the business of an investment company and to act as
promoters and entrepreneurs and to carry on business as financiers, capitalists,
concessionaires, merchants, brokers, traders, dealers, agents, importers and
exporters and to undertake and
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4
carry on and execute all kinds of investment, financial, commercial, mercantile,
trading and other operations.
(j) To carry on whether as principals, agents or otherwise howsoever
the business of realtors, developers, consultants, estate agents or managers,
builders, contractors, engineers, manufacturers, dealers in or vendors of all
types of property including services.
(ii) To exercise and enforce all rights and powers conferred by or incidental to
the ownership of any shares, stock, obligations or other securities including
without prejudice to the generality of the foregoing all such powers of veto or
control as may be conferred by virtue of the holding by the Company of some
special proportion of the issued or nominal amount thereof, to provide
managerial and other executive, supervisory and consultant services for or in
relation to any company in which the Company is interested upon such terms as
may be thought fit.
(iii) To purchase or otherwise acquire, to sell, exchange, surrender, lease,
mortgage, charge, convert, turn to account, dispose of and deal with real and
personal property and rights of all kinds and, in particular, mortgages,
debentures, produce, concessions, options, contracts, patents, annuities,
licences, stocks, shares, bonds, policies, book debts, business concerns,
undertakings, claims, privileges and choses in action of all kinds.
(iv) To subscribe for, conditionally or unconditionally, to underwrite, issue on
commission or otherwise, take, hold, deal in and convert stocks, shares and
securities of all kinds and to enter into partnership or into any arrangement
for sharing profits, reciprocal
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5
concessions or cooperation with any person or company and to promote and aid in
promoting, to constitute, form or organise any company, syndicate or partnership
of any kind, for the purpose of acquiring and undertaking any property and
liabilities of the Company or of advancing, directly or indirectly, the objects
of the Company or for any other purpose which the Company may think expedient.
(v) To stand surety for or to guarantee, support or secure the performance of
all or any of the obligations of any person, firm or company whether or not
related or affiliated to the Company in any manner and whether by personal
covenant or by mortgage, charge or lien upon the whole or any part of the
undertaking, property and assets of the Company, both present and future,
including its uncalled capital or by any such method and whether or not the
Company shall receive valuable consideration therefor.
(vi) To engage in or carry on any other lawful trade, business or enterprise
which may at any time appear to the Directors of the Company capable of being
conveniently carried on in conjunction with any of the aforementioned businesses
or activities or which may appear to the Directors or the Company likely to be
profitable to the Company. In the interpretation of this Memorandum of
Association in general and of this Clause 3 in particular no object, business or
power specified or mentioned shall be limited or restricted by reference to or
inference from any other object, business or power, or the name of the Company,
or by the juxtaposition of two or more objects, businesses or powers and that,
in the event of any ambiguity in this clause or elsewhere in this Memorandum of
Association,
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6
the same shall be resolved by such interpretation and construction as will widen
and enlarge and not restrict the objects, businesses and powers of and
exercisable by the Company.
4. Except as prohibited or limited by the Companies Law (1995 Revision), the
Company shall have full power and authority to carry out any object and shall
have and be capable of from time to time and at all times exercising any and all
of the powers at any time or from time to time exercisable by a natural person
or body corporate in doing in any part of the world whether as principal, agent,
contractor or otherwise whatever may be considered by it necessary for the
attainment of its objects and whatever else may be considered by it as
incidental or conducive thereto or consequential thereon, including, but without
in any way restricting the generality of the foregoing, the power to make any
alterations or amendments to this Memorandum of Association and the Articles of
Association of the Company considered necessary or convenient in the manner set
out in the Articles of Association of the Company, and the power to do any of
the following acts or things, viz:
to pay all expenses of and incidental to the promotion, formation and
incorporation of the Company; to register the Company to do business in any
other jurisdiction; to sell, lease or dispose of any property of the Company; to
draw, make, accept, endorse, discount, execute and issue promissory notes,
debentures, bills of exchange, bills of lading, warrants and other negotiable or
transferable instruments; to lend money or other assets and to act as
guarantors; to borrow or raise money on the security of the undertaking or on
all or any of the assets of the Company including uncalled capital or without
security; to invest monies of the Company in such manner as the Directors
determine; to promote other companies; to sell the
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7
undertaking of the Company for cash or any other consideration; to distribute
assets in specie to members of the Company; to make charitable or benevolent
donations; to pay pensions or gratuities or provide other benefits in cash or
kind to Directors, officers, employees, past or present and their families; to
carry on any trade or business and generally to do all acts and things which, in
the opinion of the Company or the Directors, may be conveniently or profitably
or usefully acquired and dealt with, carried on, executed or done by the Company
in connection with the business aforesaid PROVIDED THAT the Company shall only
carry on the businesses for which a licence is required under the laws of the
Cayman Islands when so licensed under the terms of such laws.
5. The liability of each member is limited to the amount from time to time
unpaid on such member's shares.
6. The share capital of the Company is US$50,000 divided into 50,000 shares of a
nominal or par value of US$1.00 each with power for the Company insofar as is
permitted by law, to redeem or purchase any of its shares and to increase or
reduce the said capital subject to the provisions of the Companies Law (1995
Revision) and the Articles of Association and to issue any part of its capital,
whether original, redeemed or increased with or without any preference, priority
or special privilege or subject to any postponement of rights or to any
conditions or restrictions and so that unless the conditions of issue shall
otherwise expressly declare every issue of shares whether declared to be
preference or otherwise shall be subject to the powers hereinbefore contained.
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7. If the Company is registered as exempted, its operations will be carried on
subject to the provisions of Section l92 of the Companies Law (1995 Revision)
and subject to the provisions of the Companies Law (1995 Revision) and the
Articles of Association it shall have the power to register by way of
continuation as a body corporate limited by shares under the laws of any
jurisdiction outside the Cayman Islands and to be deregistered in the Cayman
Islands.
WE the several persons whose names and addresses are subscribed are desirous of
being formed into a company in pursuance of this Memorandum of Association and
we respectively agree to take the number of shares in the capital of the Company
set opposite our respective names.
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THE COMPANIES LAW (1995 REVISION)
---------------------------------
COMPANY LIMITED BY SHARES
-------------------------
ARTICLES OF ASSOCIATION
OF
MILLENIUM II, INC.
1. In these Articles Table A in the Schedule to the Statute does not apply and,
unless there be something in the subject or context inconsistent therewith,
"Articles" means these Articles as originally framed
or as from time to time altered by Special
Resolution.
"Auditors" means the persons for the time being
performing the duties of auditors of the
Company.
"Company" means the above-named Company.
"debenture" means debenture stock, mortgages, bonds
and any other such securities of the
Company whether constituting a charge on
the assets of the Company or not.
"Directors" means the directors for the time being of
the Company.
"dividend" includes bonus.
"Member" shall bear the meaning as ascribed to it
in the Statute.
"month" means calendar month.
"paid-up" means paid-up and/or credited as paid-up.
"registered office" means the registered office for the time
being of the Company.
"Seal" means the common seal of the Company and
includes every duplicate seal.
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"Secretary" includes an Assistant Secretary and any
person appointed to perform the duties of
Secretary of the Company.
"share" includes a fraction of a share.
"Special Resolution" has the same meaning as in the Statute and
includes a resolution approved in writing
as described therein.
"Statute" means the Companies Law of the Cayman
Islands as amended and every statutory
modification or re-enactment thereof for
the time being in force.
"written" and "in writing" include all modes of representing or
reproducing words in visible form.
Words importing the singular number only include the plural number and
vice-versa.
Words importing the masculine gender only include the feminine gender.
Words importing persons only include corporations.
2. The business of the Company may be commenced as soon after incorporation as
the Directors shall see fit, notwithstanding that part only of the shares may
have been allotted.
3. The Directors may pay, out of the capital or any other monies of the Company,
all expenses incurred in or about the formation and establishment of the Company
including the expenses of registration.
CERTIFICATES FOR SHARES
-----------------------
4. Certificates representing shares of the Company shall be in such form as
shall be determined by the Directors. Such certificates may be under Seal. All
certificates for shares shall be consecutively numbered or otherwise identified
and shall specify the shares to which they relate. The name and address of the
person to whom the shares represented thereby are issued, with the number of
shares and date of issue, shall be entered in the register of Members of the
Company. All certificates surrendered to the Company for transfer shall be
cancelled and no new certificate shall be issued until the former certificate
for a like number of shares shall have been surrendered and cancelled. The
Directors may authorise certificates to be issued with the seal and authorised
signature(s) affixed by some method or system of mechanical process.
<PAGE>
5. Notwithstanding Article 4 of these Articles, if a share certificate be
defaced, lost or destroyed, it may be renewed on payment of a fee of one dollar
(US$l.00) or such less sum and on such terms (if any) as to evidence and
indemnity and the payment of the expenses incurred by the Company in
investigating evidence, as the Directors may prescribe.
ISSUE OF SHARES
---------------
6. Subject to the provisions, if any, in that behalf in the Memorandum of
Association and to any direction that may be given by the Company in general
meeting and without prejudice to any special rights previously conferred on the
holders of existing shares, the Directors may allot, issue, grant options over
or otherwise dispose of shares of the Company (including fractions of a share)
with or without preferred, deferred or other special rights or restrictions,
whether in regard to dividend, voting, return of capital or otherwise and to
such persons, at such times and on such other terms as they think proper.
7. The Company shall maintain a register of its Members and every person whose
name is entered as a Member in the register of Members shall be entitled without
payment to receive within two months after allotment or lodgement of transfer
(or within such other period as the conditions of issue shall provide) one
certificate for all his shares or several certificates each for one or more of
his shares upon payment of fifty cents (US$0.50) for every certificate after the
first or such less sum as the Directors shall from time to time determine
provided that in respect of a share or shares held jointly by several persons
the Company shall not be bound to issue more than one certificate and delivery
of a certificate for a share to one of the several joint holders shall be
sufficient delivery to all such holders.
TRANSFER OF SHARES
------------------
8. The instrument of transfer of any share shall be in writing and shall be
executed by or on behalf of the transferor and the transferor shall be deemed to
remain the holder of a share until the name of the transferee is entered in the
register in respect thereof.
9. The Directors may in their absolute discretion decline to register any
transfer of shares without assigning any reason therefor. If the Directors
refuse to register a transfer they shall notify the transferee within two months
of such refusal.
10. The registration of transfers may be suspended at such time and for such
periods as the Directors may from time to time determine, provided always that
such registration shall not be suspended for more than forty-five days in any
year.
<PAGE>
REDEEMABLE SHARES
-----------------
11. (a) Subject to the provisions of the Statute and the Memorandum of
Association, shares may be issued on the terms that they are, or at the option
of the Company or the holder are, to be redeemed on such terms and in such
manner as the Company, before the issue of the shares, may by Special Resolution
determine.
(b) Subject to the provisions of the Statute and the Memorandum of
Association, the Company may purchase its own shares (including fractions of a
share), including any redeemable shares, provided that the manner of purchase
has first been authorised by the Company in general meeting and may make payment
therefor in any manner authorised by the Statute, including out of capital.
VARIATION OF RIGHTS OF SHARES
-----------------------------
12. If at any time the share capital of the Company 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, whether or not the
Company is being wound-up, be varied with the consent in writing of the holders
of three-fourths of the issued shares of that class, or with the sanction of a
Special Resolution passed at a general meeting of the holders of the shares of
that class.
The provisions of these Articles relating to general meetings
shall apply to every such general meeting of the holders of one class of shares
except that the necessary quorum shall be one person holding or representing by
proxy at least 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.
13. The rights conferred upon the holders of the shares of any class issued with
preferred or other rights shall not, unless otherwise expressly provided by the
terms of issue of the shares of that class, be deemed to be varied by the
creation or issue of further shares ranking pari passu therewith.
COMMISSION ON SALE OF SHARES
----------------------------
14. The Company may in so far as the Statute from time to time permits pay a
commission to any person in consideration of his subscribing or agreeing to
subscribe whether absolutely or conditionally for any shares of the Company.
Such commissions may be satisfied by the payment of cash or the lodgement of
fully or partly paid-up shares or
<PAGE>
partly in one way and partly in the other. The Company may also on any issue of
shares pay such brokerage as may be lawful.
NON-RECOGNITION OF TRUSTS
-------------------------
15. No person shall be recognised by the Company as holding any share upon any
trust and the Company shall not be bound by or be compelled in any way to
recognise (even when having notice thereof) any equitable, contingent, future,
or partial interest in any share, or any interest in any fractional part of a
share, or (except only as is otherwise provided by these Articles or the
Statute) any other rights in respect of any share except an absolute right to
the entirety thereof in the registered holder.
LIEN ON SHARES
--------------
16. The Company shall have a first and paramount lien and charge on all shares
(whether fully paid-up or not) registered in the name of a Member (whether
solely or jointly with others) for all debts, liabilities or engagements to or
with the Company (whether presently payable or not) by such Member or his
estate, either alone or jointly with any other person, whether a Member or not,
but the Directors may at any time declare any share to be wholly or in part
exempt from the provisions of this Article. The registration of a transfer of
any such share shall operate as a waiver of the Company's lien (if any) thereon.
The Company's lien (if any) on a share shall extend to all dividends or other
monies payable in respect thereof.
17. The Company may sell, in such manner as the Directors think fit, any shares
on which the Company has a lien, but no sale shall be made unless a sum in
respect of which the lien exists is presently payable, nor until the expiration
of fourteen days after a notice in writing stating and demanding payment of such
part of the amount in respect of which the lien exists as is presently payable,
has been given to the registered holder or holders for the time being of the
share, or the person, of which the Company has notice, entitled thereto by
reason of his death or bankruptcy.
18. To give effect to any such sale the Directors may authorise some person to
transfer the shares sold to the purchaser thereof. The purchaser shall be
registered as the holder of the shares comprised in any such transfer, and he
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 or invalidity in the
proceedings in reference to the sale.
19. The proceeds of such sale shall be received by the Company and applied in
payment of such part of the amount in respect of which the lien exists as is
presently payable and the residue, if any, shall (subject to a like lien for
sums not presently payable as existed
<PAGE>
upon the shares before the sale) be paid to the person entitled to the shares at
the date of the sale.
CALL ON SHARES
--------------
20. (a) The Directors may from time to time make calls upon the Members in
respect of any monies unpaid on their shares (whether on account of the nominal
value of the shares or by way of premium or otherwise) and not by the conditions
of allotment thereof made payable at fixed terms, provided that no call shall be
payable at less than one month from the date fixed for the payment of the last
preceding call, and each Member shall (subject to receiving at least fourteen
days notice specifying the time or times of payment) pay to the Company at the
time or times so specified the amount called on the shares. A call may be
revoked or postponed as the Directors may determine. A call may be made payable
by instalments.
(b) A call shall be deemed to have been made at the time when the
resolution of the Directors authorising such call was passed.
(c) The joint holders of a share shall be jointly and severally liable
to pay all calls in respect thereof.
21. If a sum called in respect of a share is not paid before or on a day
appointed for payment thereof, the persons from whom the sum is due shall pay
interest on the sum from the day appointed for payment thereof to the time of
actual payment at such rate not exceeding ten per cent per annum as the
Directors may determine, but the Directors shall be at liberty to waive payment
of such interest either wholly or in part.
22. Any sum which by the terms of issue of a share becomes payable on allotment
or at any fixed date, whether on account of the nominal value of the share or by
way of premium or otherwise, shall for the purposes of these Articles be deemed
to be a call duly made, notified and payable on the date on which by the terms
of issue the same becomes payable, and in the case of non-payment all the
relevant provisions of these Articles as to payment of interest forfeiture or
otherwise shall apply as if such sum had become payable by virtue of a call duly
made and notified.
23. The Directors may, on the issue of shares, differentiate between the holders
as to the amount of calls or interest to be paid and the times of payment.
24. (a) The Directors may, if they think fit, receive from any Member willing to
advance the same, all or any part of the monies uncalled and unpaid upon any
shares held by him, and upon all or any of the monies so advanced may (until the
same would but for such
<PAGE>
advances, become payable) pay interest at such rate not exceeding (unless the
Company in general meeting shall otherwise direct) seven per cent per annum, as
may be agreed upon between the Directors and the Member paying such sum in
advance.
(b) No such sum paid in advance of calls shall entitle the Member
paying such sum to any portion of a dividend declared in respect of any period
prior to the date upon which such sum would, but for such payment, become
presently payable.
FORFEITURE OF SHARES
--------------------
25. (a) If a Member fails to pay any call or instalment of a call or to make any
payment required by the terms of issue on the day appointed for payment thereof,
the Directors may, at any time thereafter during such time as any part of the
call, instalment or payment remains unpaid, give notice requiring payment of so
much of the call, instalment or payment as is unpaid, together with any interest
which may have accrued and all expenses that have been incurred by the Company
by reason of such non-payment. Such notice shall name a day (not earlier than
the expiration of fourteen days from the date of giving of the notice) on or
before which the payment required by the notice is to be made, and shall state
that, in the event of non-payment at or before the time appointed the shares in
respect of which such notice was given will be liable to be forfeited.
(b) If the requirements of any such notice as aforesaid are not
complied with, any share in respect of which the notice has been given may at
any time thereafter, before the payment required by the notice has been made, be
forfeited by a resolution of the Directors to that effect. Such forfeiture shall
include all dividends declared in respect of the forfeited
share and not actually paid before the forfeiture.
(c) A forfeited share may be sold or otherwise disposed of on such
terms and in such manner as the Directors think fit and at any time before a
sale or disposition the forfeiture may be cancelled on such terms as the
Directors think fit.
26. A person whose shares have been forfeited shall cease to be a Member in
respect of the forfeited shares, but shall, notwithstanding, remain liable to
pay to the Company all monies which, at the date of forfeiture were payable by
him to the Company in respect of the shares together with interest thereon, but
his liability shall cease if and when the Company shall have received payment in
full of all monies whenever payable in respect of the shares.
27. A certificate in writing under the hand of one Director or the Secretary of
the Company that a share in the Company has been duly forfeited on a date stated
in the declaration shall be conclusive evidence of the fact therein stated as
against all persons
<PAGE>
claiming to be entitled to the share. The Company may receive the consideration
given for the share on any sale or disposition thereof and may execute a
transfer of the share in favour of the person to whom the share is sold or
disposed of and he shall thereupon be registered as the holder of the share and
shall not be bound to see to the application of the purchase money, if any, nor
shall his title to the share be affected by any irregularity or invalidity in
the proceedings in reference to the forfeiture, sale or disposal of the share.
28. The provisions of these Articles as to forfeiture shall apply in the case of
non-payment of any sum which, by the terms of issue of a share, becomes payable
at a fixed time, whether on account of the nominal value of the share or by way
of premium as if the same had been payable by virtue of a call duly made and
notified.
REGISTRATION OF EMPOWERING INSTRUMENTS
--------------------------------------
29. The Company shall be entitled to charge a fee not exceeding one dollar
(US$l.00) on the registration of every probate, letters of administration,
certificate of death or marriage, power of attorney, notice in lieu of
distringas, or other instrument.
TRANSMISSION OF SHARES
----------------------
30. In case of the death of a Member, the survivor or survivors where the
deceased was a joint holder, and the legal personal representatives of the
deceased where he was a sole holder, shall be the only persons recognised by the
Company as having any title to his interest in the shares, but nothing herein
contained shall release the estate of any such deceased holder from any
liability in respect of any shares which had been held by him solely or jointly
with other persons.
31. (a) Any person becoming entitled to a share in consequence of the death or
bankruptcy or liquidation or dissolution of a Member (or in any other way than
by transfer) may, upon such evidence being produced as may from time to time be
required by the Directors and subject as hereinafter provided, elect either to
be registered himself as holder of the share or to make such transfer of the
share to such other person nominated by him as the deceased or bankrupt person
could have made and to have such person registered as the transferee thereof,
but the Directors shall, in either case, have the same right to decline or
suspend registration as they would have had in the case of a transfer of the
share by that Member before his death or bankruptcy as the case may be.
(b) If the person so becoming entitled shall elect to be registered
himself as holder he shall deliver or send to the Company a notice in writing
signed by him stating that he so elects.
<PAGE>
32. A person becoming entitled to a share by reason of the death or bankruptcy
or liquidation or dissolution of the holder (or in any other case than by
transfer) shall be entitled to the same dividends and other advantages to which
he would be entitled if he were the registered holder of the share, except that
he shall not, before being registered as a Member in respect of the share, be
entitled in respect of it to exercise any right conferred by membership in
relation to meetings of the Company PROVIDED HOWEVER that the Directors may at
any time give notice requiring any such person to elect either to be registered
himself or to transfer the share and if the notice is not complied with within
ninety days the Directors may thereafter withhold payment of all dividends,
bonuses or other monies payable in respect of the share until the requirements
of the notice have been complied with.
AMENDMENT OF MEMORANDUM OF ASSOCIATION, CHANGE OF
LOCATION OF REGISTERED OFFICE & ALTERATION OF CAPITAL
-----------------------------------------------------
33. (a) Subject to and in so far as permitted by the provisions of the Statute,
the Company may from time to time by ordinary resolution alter or amend its
Memorandum of Association otherwise than with respect to its name and objects
and may, without restricting the generality of the foregoing:
(i) increase the share capital by such sum to be divided into
shares of such amount or without nominal or par value as the resolution shall
prescribe and with such rights, priorities and privileges annexed thereto, as
the Company in general meeting may determine.
(ii) consolidate and divide all or any of its share capital
into shares of larger amount than its existing shares;
(iii) by subdivision of its existing shares or any of them
divide the whole or any part of its share capital into shares of smaller amount
than is fixed by the Memorandum of Association or into shares without nominal or
par value;
(iv) cancel any shares which at the date of the passing of the
resolution have not been taken or agreed to be taken by any person.
(b) All new shares created hereunder shall be subject to the same
provisions with reference to the payment of calls, liens, transfer,
transmission, forfeiture and otherwise as the shares in the original share
capital.
(c) Subject to the provisions of the Statute, the Company may by
Special Resolution change its name or alter its objects.
<PAGE>
(d) Without prejudice to Article 11 hereof and subject to the
provisions of the Statute, the Company may by Special Resolution reduce its
share capital and any capital redemption reserve fund.
(e) Subject to the provisions of the Statute, the Company may by
resolution of the Directors change the location of its registered office.
CLOSING REGISTER OF MEMBERS OR FIXING RECORD DATE
-------------------------------------------------
34. For the purpose of determining Members entitled to notice of or to vote at
any meeting of Members or any adjournment thereof, or Members entitled to
receive payment of any dividend, or in order to make a determination of Members
for any other proper purpose, the Directors of the Company may provide that the
register of Members shall be closed for transfers for a stated period but not to
exceed in any case forty days. If the register of Members shall be so closed for
the purpose of determining Members entitled to notice of or to vote at a meeting
of Members such register shall be so closed for at least ten days immediately
preceding such meeting and the record date for such determination shall be the
date of the closure of the register of Members.
35. In lieu of or apart from closing the register of Members, the Directors may
fix in advance a date as the record date for any such determination of Members
entitled to notice of or to vote at a meeting of the Members and for the purpose
of determining the Members entitled to receive payment of any dividend the
Directors may, at or within 90 days prior to the date of declaration of such
dividend fix a subsequent date as the record date for such determination.
36. If the register of Members is not so closed and no record date is fixed for
the determination of Members entitled to notice of or to vote at a meeting of
Members or Members entitled to receive payment of a dividend, the date on which
notice of the meeting is mailed or the date on which the resolution of the
Directors declaring such dividend is adopted, as the case may be, shall be the
record date for such determination of Members. When a determination of Members
entitled to vote at any meeting of Members has been made as provided in this
section, such determination shall apply to any adjournment thereof.
GENERAL MEETING
---------------
37. (a) Subject to paragraph (c) hereof, the Company shall within one year of
its incorporation and in each year of its existence thereafter hold a general
meeting as its annual general meeting and shall specify the meeting as such in
the notices calling it. The annual general meeting shall be held at such time
and place as the Directors shall appoint and if no
<PAGE>
other time and place is prescribed by them, it shall be held at the registered
office on the second Wednesday in December of each year at ten o'clock in the
morning.
(b) At these meetings the report of the Directors (if any) shall be
presented.
(c) If the Company is exempted as defined in the Statute it may but
shall not be obliged to hold an annual general meeting.
38. (a) The Directors may whenever they think fit, and they shall on the
requisition of Members of the Company holding at the date of the deposit of the
requisition not less than one-tenth of such of the paid-up capital of the
Company as at the date of the deposit carries the right of voting at general
meetings of the Company, proceed to convene a general meeting
of the Company.
(b) The requisition must state the objects of the meeting and must be
signed by the requisitionists and deposited at the registered office of the
Company and may consist of several documents in like form each signed by one or
more requisitionists.
(c) If the Directors do not within twenty-one days from the date of the
deposit of the requisition duly proceed to convene a general meeting, the
requisitionists, or any of them representing more than one-half of the total
voting rights of all of them, may themselves convene a general meeting, but any
meeting so convened shall not be held after the expiration of three months after
the expiration of the said twenty-one days.
(d) A general meeting convened as aforesaid by requisitionists shall be
convened in the same manner as nearly as possible as that in which general
meetings are to be convened
by Directors.
NOTICE OF GENERAL MEETINGS
--------------------------
39. At least five days' notice shall be given of an annual general meeting or
any other general meeting. Every notice shall be exclusive of the day on which
it is given or deemed to be given and of the day for which it is given and shall
specify the place, the day and the hour of the meeting and the general nature of
the business and shall be given in manner hereinafter mentioned or in such other
manner if any as may be prescribed by the Company PROVIDED that a general
meeting of the Company shall, whether or not the notice specified in this
regulation has been given and whether or not the provisions of Article 38 have
been complied with, be deemed to have been duly convened if it is so agreed:
(a) in the case of a general meeting called as an annual general
meeting by all the Members entitled to attend and vote thereat or their proxies;
and
<PAGE>
(b) in the case of any other general meeting by a majority in number of
the Members having a right to attend and vote at the meeting, being a majority
together holding not less than seventy-five per cent in nominal value or in the
case of shares without nominal or par value seventy-five per cent of the shares
in issue, or their proxies.
40. The accidental omission to give notice of a general meeting to, or the
non-receipt of notice of a meeting by any person entitled to receive notice
shall not invalidate the proceedings of that meeting.
PROCEEDINGS AT GENERAL MEETINGS
-------------------------------
41. No business shall be transacted at any general meeting unless a quorum of
Members is present at the time when the meeting proceeds to business; two
Members present in person or by proxy shall be a quorum provided always that if
the Company has one Member of record the quorum shall be that one Member present
in person or by proxy.
42. A resolution (including a Special Resolution) in writing (in one or more
counterparts) signed by all Members for the time being entitled to receive
notice of and to attend and vote at general meetings (or being corporations by
their duly authorised representatives) shall be as valid and effective as if the
same had been passed at a general meeting of the Company duly convened and held.
43. If within half an hour from the time appointed for the meeting a quorum is
not present, the meeting, if convened upon the requisition of Members, shall be
dissolved and in any other case it shall stand adjourned to the same day in the
next week at the same time and place or to such other time or such other place
as the Directors may determine and if at the adjourned meeting a quorum is not
present within half an hour from the time appointed for the meeting the Members
present shall be a quorum.
44. The Chairman, if any, of the Board of Directors shall preside as Chairman at
every general meeting of the Company, or if there is no such Chairman, or if he
shall not be present within fifteen minutes after the time appointed for the
holding of the meeting, or is unwilling to act, the Directors present shall
elect one of their number to be Chairman of the meeting.
45. If at any general meeting 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 shall choose one of their number to be Chairman
of the meeting.
46. The Chairman may, with the consent of any general meeting duly constituted
hereunder, and shall if so directed by the meeting, adjourn the meeting from
time to time and
<PAGE>
from place to place, but no business shall be transacted at any adjourned
meeting other than the business left unfinished at the meeting from which the
adjournment took place. When a general meeting is adjourned for thirty days or
more, notice of the adjourned meeting shall be given as in the case of an
original meeting; save as aforesaid it shall not be necessary to give any notice
of an adjournment or of the business to be transacted at an adjourned general
meeting.
47. At any general meeting a resolution put to the vote of the meeting shall be
decided on a show of hands unless a poll is, before or on the declaration of the
result of the show of hands, demanded by the Chairman or any other Member
present in person or by proxy.
48. Unless a poll be so demanded a declaration by the Chairman that a resolution
has on a show of hands been carried, or carried unanimously, or by a particular
majority, or lost, and an entry to that effect in the Company's Minute Book
containing the Minutes of the proceedings of the meeting shall be conclusive
evidence of that fact without proof of the number or proportion of the votes
recorded in favour of or against such resolution.
49. The demand for a poll may be withdrawn.
50. Except as provided in Article 52, if a poll is duly demanded it shall be
taken in such manner as the Chairman directs and the result of the poll shall be
deemed to be the resolution of the general meeting at which the poll was
demanded.
51. In the case of an equality of votes, whether on a show of hands or on a
poll, the Chairman of the general meeting at which the show of hands takes place
or at which the poll is demanded, shall be entitled to a second or casting vote.
52. 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 at such time as the Chairman of the general meeting directs and
any business other than that upon which a poll has been demanded or is
contingent thereon may be proceeded with pending the taking of the poll.
VOTES OF MEMBERS
----------------
53. Subject to any rights or restrictions for the time being attached to any
class or classes of shares, on a show of hands every Member of record present in
person or by proxy at a general meeting shall have one vote and on a poll every
Member of record present in person or by proxy shall have one vote for each
share registered in his name in the register of Members.
<PAGE>
54. In the case of joint holders of record 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 for this purpose seniority shall be
determined by the order in which the names stand in the register of Members.
55. A Member of unsound mind, or in respect of whom an order has been made by
any court, having jurisdiction in lunacy, may vote, whether on a show of hands
or on a poll, by his committee, receiver, curator bonis, or other person in the
nature of a committee, receiver or curator bonis appointed by that court, and
any such committee, receiver, curator
bonis or other persons may vote by proxy.
56. No Member shall be entitled to vote at any general meeting unless he is
registered as a shareholder of the Company on the record date for such meeting
nor unless all calls or other sums presently payable by him in respect of shares
in the Company have been paid.
57. No objection shall be raised to the qualification of any voter except at the
general meeting or adjourned general meeting at which the vote objected to is
given or tendered and every vote not disallowed at such general meeting shall be
valid for all purposes. Any such objection made in due time shall be referred to
the Chairman of the general meeting whose decision shall be final and
conclusive.
58. On a poll or on a show of hands votes may be given either personally or by
proxy.
PROXIES
-------
59. The instrument appointing a proxy shall be in writing and shall be executed
under the hand of the appointor or of his attorney duly authorised in writing,
or, if the appointor is a corporation under the hand of an officer or attorney
duly authorised in that behalf. A proxy need not be a Member of the Company.
60. The instrument appointing a proxy shall be deposited at the registered
office of the Company or at such other place as is specified for that purpose in
the notice convening the meeting no later than the time for holding the meeting,
or adjourned meeting provided that the Chairman of the Meeting may at his
discretion direct that an instrument of proxy shall be deemed to have been duly
deposited upon receipt of telex, cable or telecopy confirmation from the
appointor that the instrument of proxy duly signed is in the course of
transmission to the Company.
<PAGE>
61. The instrument appointing a proxy may be in any usual or common form and may
be expressed to be for a particular meeting or any adjournment thereof or
generally until revoked. An instrument appointing a proxy shall be deemed to
include the power to demand or join or concur in demanding a poll.
62. A vote given in accordance with the terms of an instrument of proxy shall be
valid notwithstanding the previous death or insanity of the principal or
revocation of the proxy or of the authority under which the proxy was executed,
or the transfer of the share in respect of which the proxy is given provided
that no intimation in writing of such death, insanity, revocation or transfer as
aforesaid shall have been received by the Company at the registered office
before the commencement of the general meeting, or adjourned meeting at which it
is sought to use the proxy.
63. Any corporation which is a Member of record of the Company may in accordance
with its Articles or in the absence of such provision by resolution of its
Directors or other governing body authorise such person as it thinks fit to act
as its representative at any meeting of the Company or of any class of Members
of the Company, and the person so authorised shall be entitled to exercise the
same powers on behalf of the corporation which he represents as the corporation
could exercise if it were an individual Member of record of the Company.
64. Shares of its own capital belonging to the Company or held by it in a
fiduciary capacity shall not be voted, directly or indirectly, at any meeting
and shall not be counted in determining the total number of outstanding shares
at any given time.
DIRECTORS
---------
65. There shall be a Board of Directors consisting of not less than one or more
than ten persons (exclusive of alternate Directors) PROVIDED HOWEVER that the
Company may from time to time by ordinary resolution increase or reduce the
limits in the number of Directors. The first Directors of the Company shall be
determined in writing by, or appointed by a resolution of, the subscribers of
the Memorandum of Association or a majority of them.
66. The remuneration to be paid to the Directors shall be such remuneration as
the Directors shall determine. Such remuneration shall be deemed to accrue from
day to day. The Directors shall also be entitled to be paid their travelling,
hotel and other expenses properly incurred by them in going to, attending and
returning from meetings of the Directors, or any committee of the Directors, or
general meetings of the Company, or otherwise in connection with the business of
the Company, or to receive a fixed allowance in
<PAGE>
respect thereof as may be determined by the Directors from time to time, or a
combination partly of one such method and partly the other.
67. The Directors may by resolution award special remuneration to any Director
of the Company undertaking any special work or services for, or undertaking any
special mission on behalf of, the Company other than his ordinary routine work
as a Director. Any fees paid to a Director who is also counsel or solicitor to
the Company, or otherwise serves it in a professional capacity shall be in
addition to his remuneration as a Director.
68. A Director or alternate Director may hold any other office or place of
profit under the Company (other than the office of Auditor) in conjunction with
his office of Director for such period and on such terms as to remuneration and
otherwise as the Directors may determine.
69. A Director or alternate Director may act by himself or his firm in a
professional capacity for the Company and he or his firm shall be entitled to
remuneration for professional services as if he were not a Director or alternate
Director.
70. A shareholding qualification for Directors may be fixed by the Company in
general meeting, but unless and until so fixed no qualification shall be
required.
71. A Director or alternate Director of the Company may be or become a director
or other officer of or otherwise interested in any company promoted by the
Company or in which the Company may be interested as shareholder or otherwise
and no such Director or alternate Director shall be accountable to the Company
for any remuneration or other benefits received by him as a director or officer
of, or from his interest in, such other company.
72. No person shall be disqualified from the office of Director or alternate
Director or prevented by such office from contracting with the Company, either
as vendor, purchaser or otherwise, nor shall any such contract or any contract
or transaction entered into by or on behalf of the Company in which any Director
or alternate Director shall be in any way interested be or be liable to be
avoided, nor shall any Director or alternate Director so contracting or being so
interested be liable to account to the Company for any profit realised by any
such contract or transaction by reason of such Director holding office or of the
fiduciary relation thereby established. A Director (or his alternate Director in
his absence) shall be at liberty to vote in respect of any contract or
transaction in which he is so interested as aforesaid PROVIDED HOWEVER that the
nature of the interest of any Director or alternate Director in any such
contract or transaction shall be disclosed by him or the alternate Director
appointed by him at or prior to its consideration and any vote thereon.
<PAGE>
73. A general notice that a Director or alternate Director is a shareholder of
any specified firm or company and is to be regarded as interested in any
transaction with such firm or company shall be sufficient disclosure under
Article 72 and after such general notice it shall not be necessary to give
special notice relating to any particular transaction.
ALTERNATE DIRECTORS
-------------------
74. Subject to the exception contained in Article 82, a Director who expects to
be unable to attend Directors' Meetings because of absence, illness or otherwise
may appoint any person to be an alternate Director to act in his stead and such
appointee whilst he holds office as an alternate Director shall, in the event of
absence therefrom of his appointor, be entitled to attend meetings of the
Directors and to vote thereat and to do, in the place and stead of his
appointor, any other act or thing which his appointor is permitted or required
to do by virtue of his being a Director as if the alternate Director were the
appointor, other than appointment of an alternate to himself, and he shall ipso
facto vacate office if and when his appointor ceases to be a Director or removes
the appointee from office. Any appointment or removal under this Article shall
be effected by notice in writing under the hand of the Director making the same.
POWERS AND DUTIES OF DIRECTORS
------------------------------
75. The business of the Company shall be managed by the Directors (or a sole
Director if only one is appointed) who may pay all expenses incurred in
promoting, registering and setting up the Company, and may exercise all such
powers of the Company as are not, from time to time by the Statute, or by these
Articles, or such regulations, being not inconsistent with the aforesaid, as may
be prescribed by the Company in general meeting required to be exercised by the
Company in general meeting PROVIDED HOWEVER that no regulations made by the
Company in general meeting shall invalidate any prior act of the Directors which
would have been valid if that regulation had not been made.
76. The Directors may from time to time and at any time by powers of attorney
appoint any company, firm, person or body of persons, whether nominated directly
or indirectly by the Directors, to be the attorney or attorneys of the Company
for such purpose and with such powers, authorities and discretions (not
exceeding those vested in or exercisable by the Directors under these Articles)
and for such period and subject to such conditions as they may think fit, and
any such powers of attorney may contain such provisions for the protection and
convenience of persons dealing with any such attorneys as the Directors may
think fit and may also authorise any such attorney to delegate all or any of the
powers, authorities and discretions vested in him.
<PAGE>
77. All cheques, promissory notes, drafts, bills of exchange and other
negotiable instruments and all receipts for monies paid to the Company shall be
signed, drawn, accepted, endorsed or otherwise executed as the case may be in
such manner as the Directors shall from time to time by resolution determine.
78. The Directors shall cause minutes to be made in books provided for the
purpose:
(a) of all appointments of officers made by the Directors;
(b) of the names of the Directors (including those represented thereat
by an alternate or by proxy) present at each meeting of the Directors and of any
committee of the Directors;
(c) of all resolutions and proceedings at all meetings of the Company
and of the Directors and of committees of Directors.
79. The Directors on behalf of the Company may pay a gratuity or pension or
allowance on retirement to any Director who has held any other salaried office
or place of profit with the Company or to his widow or dependants and may make
contributions to any fund and pay premiums for the purchase or provision of any
such gratuity, pension or allowance.
80. The Directors may exercise all the powers of the Company to borrow money and
to mortgage or charge its undertaking, property and uncalled capital or any part
thereof and to issue debentures, debenture stock and other securities whether
outright or as security for any debt, liability or obligation of the Company or
of any third party.
MANAGEMENT
----------
81. (a) The Directors may from time to time provide for the management of the
affairs of the Company in such manner as they shall think fit and the provisions
contained in the three next following paragraphs shall be without prejudice to
the general powers conferred by
this paragraph.
(b) The Directors from time to time and at any time may establish any
committees, local boards or agencies for managing any of the affairs of the
Company and may appoint any persons to be members of such committees or local
boards or any managers or agents and
may fix their remuneration.
<PAGE>
(c) The Directors from time to time and at any time may delegate to any
such committee, local board, manager or agent any of the powers, authorities and
discretions for the time being vested in the Directors and may authorise the
members for the time being of any such local board, or any of them to fill up
any vacancies therein and to act notwithstanding vacancies and any such
appointment or delegation may be made on such terms and subject to such
conditions as the Directors may think fit and the Directors may at any time
remove any person so appointed and may annul or vary any such delegation, but no
person dealing in good faith and without notice of any such annulment or
variation shall be affected thereby.
(d) Any such delegates as aforesaid may be authorised by the Directors
to subdelegate all or any of the powers, authorities, and discretions for the
time being vested in them.
MANAGING DIRECTORS
------------------
82. The Directors may, from time to time, appoint one or more of their body (but
not an alternate Director) to the office of Managing Director for such term and
at such remuneration (whether by way of salary, or commission, or participation
in profits, or partly in one way and partly in another) as they may think fit
but his appointment shall be subject to determination ipso facto if he ceases
from any cause to be a Director and no alternate Director appointed by him can
act in his stead as a Director or Managing Director.
83. The Directors may entrust to and confer upon a Managing Director any of the
powers exercisable by them upon such terms and conditions and with such
restrictions as they may think fit and either collaterally with or to the
exclusion of their own powers and may from time to time revoke, withdraw, alter
or vary all or any of such powers.
PROCEEDINGS OF DIRECTORS
------------------------
84. Except as otherwise provided by these Articles, the Directors shall meet
together for the despatch of business, convening, adjourning and otherwise
regulating their meetings as they think fit. Questions arising at any meeting
shall be decided by a majority of votes of the Directors and alternate Directors
present at a meeting at which there is a quorum, the vote of an alternate
Director not being counted if his appointor be present at such meeting. In case
of an equality of votes, the Chairman shall have a second or casting vote.
85. A Director or alternate Director may, and the Secretary on the requisition
of a Director or alternate Director shall, at any time summon a meeting of the
Directors by at least two days' notice in writing to every Director and
alternate Director which notice shall set forth the general nature of the
business to be considered unless notice is waived by all the
<PAGE>
Directors (or their alternates) either at, before or after the meeting is held
and PROVIDED FURTHER if notice is given in person, by cable, telex or telecopy
the same shall be deemed to have been given on the day it is delivered to the
Directors or transmitting organisation as the case may be. The provisions of
Article 40 shall apply mutatis mutandis with respect to notices of meetings of
Directors.
86. The quorum necessary for the transaction of the business of the Directors
may be fixed by the Directors and unless so fixed shall be two, a Director and
his appointed alternate Director being considered only one person for this
purpose, PROVIDED ALWAYS that if there shall at any time be only a sole Director
the quorum shall be one. For the purposes of this Article an alternate Director
or proxy appointed by a Director shall be counted in a quorum at a meeting at
which the Director appointing him is not present.
87. The continuing Directors may act notwithstanding any vacancy in their body,
but if and so long as their number is reduced below the number fixed by or
pursuant to these Articles as the necessary quorum of Directors the continuing
Directors or Director may act for the purpose of increasing the number of
Directors to that number, or of summoning a general meeting of the Company, but
for no other purpose.
88. The Directors may elect a Chairman of their Board and determine the period
for which he is to hold office; but if no such Chairman is elected, or if at any
meeting the Chairman is not present within five minutes after the time appointed
for holding the same, the Directors present may choose one of their number to be
Chairman of the meeting.
89. The Directors may delegate any of their powers to committees consisting of
such member or members of the Board of Directors (including Alternate Directors
in the absence of their appointors) as they think fit; any committee so formed
shall in the exercise of the powers so delegated conform to any regulations that
may be imposed on it by the
Directors.
90. A committee may meet and adjourn as it thinks proper. Questions arising at
any meeting shall be determined by a majority of votes of the members present,
and in the case of an equality of votes the Chairman shall have a second or
casting vote.
91. All acts done by any meeting of the Directors or of a committee of Directors
(including any person acting as an alternate Director) shall, notwithstanding
that it be afterwards discovered that there was some defect in the appointment
of any Director or alternate Director, or that they or any of them were
disqualified, be as valid as if every such person had been duly appointed and
qualified to be a Director or alternate Director as the case may be.
<PAGE>
92. Members of the Board of Directors or of any committee thereof may
participate in a meeting of the Board or of such 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 participation in a
meeting pursuant to this provision shall constitute presence in person at such
meeting. A resolution in writing (in one or more counterparts), signed by all
the Directors for the time being or all the members of a committee of Directors
(an alternate Director being entitled to sign such resolution on behalf of his
appointor) shall be as valid and effectual as if it had been passed at a meeting
of the Directors or committee as the case may be duly convened and held.
93. (a) A Director may be represented at any meetings of the Board of Directors
by a proxy appointed by him in which event the presence or vote of the proxy
shall for all purposes be deemed to be that of the Director.
(b) The provisions of Articles 59-62 shall mutatis mutandis apply to
the appointment of proxies by Directors.
VACATION OF OFFICE OF DIRECTOR
------------------------------
94. The office of a Director shall be vacated:
(a) if he gives notice in writing to the Company that he resigns the
office of Director;
(b) if he absents himself (without being represented by proxy or an
alternate Director appointed by him) from three consecutive meetings of the
Board of Directors without special leave of absence from the Directors, and they
pass a resolution that he has by reason of such absence vacated office;
(c) if he dies, becomes bankrupt or makes any arrangement or
composition with his creditors generally;
(d) if he is found a lunatic or becomes of unsound mind.
APPOINTMENT AND REMOVAL OF DIRECTORS
------------------------------------
95. The Company may by ordinary resolution appoint any person to be a Director
and may in like manner remove any Director and may in like manner appoint
another person in his stead.
<PAGE>
96. The Directors shall have power at any time and from time to time to appoint
any person to be a Director, either to fill a casual vacancy or as an addition
to the existing Directors but so that the total amount of Directors (exclusive
of alternate Directors) shall not at any time exceed the number fixed in
accordance with these Articles.
PRESUMPTION OF ASSENT
---------------------
97. A Director of the Company who is present at a meeting of the Board of
Directors at which action on any Company matter is taken shall be presumed to
have assented to the action taken unless his dissent shall be entered in the
Minutes of the meeting or unless he shall file his written dissent from such
action with the person acting as the Secretary of the meeting before the
adjournment thereof or shall forward such dissent by registered mail to such
person immediately after the adjournment of the meeting. Such right to dissent
shall not apply to a Director who voted in favour of such action.
SEAL
----
98. (a) The Company may, if the Directors so determine, have a Seal which shall,
subject to paragraph (c) hereof, only be used by the authority of the Directors
or of a committee of the Directors authorised by the Directors in that behalf
and every instrument to which the Seal has been affixed shall be signed by one
person who shall be either a Director or the Secretary or Secretary-Treasurer or
some person appointed by the Directors for the purpose.
(b) The Company may have for use in any place or places outside the
Cayman Islands a duplicate Seal or Seals each of which shall be a facsimile of
the Common Seal of the Company and, if the Directors so determine, with the
addition on its face of the name of
every place where it is to be used.
(c) A Director, Secretary or other officer or representative or
attorney may without further authority of the Directors affix the Seal of the
Company over his signature alone to any document of the Company required to be
authenticated by him under Seal or to be filed with the Registrar of Companies
in the Cayman Islands or elsewhere wheresoever.
OFFICERS
--------
99. The Company may have a President, a Secretary or Secretary-Treasurer
appointed by the Directors who may also from time to time appoint such other
officers as they consider
<PAGE>
necessary, all for such terms, at such remuneration and to perform such duties,
and subject to such provisions as to disqualification and removal as the
Directors from time to time prescribe.
DIVIDENDS, DISTRIBUTIONS AND RESERVE
------------------------------------
100. Subject to the Statute, the Directors may from time to time declare
dividends (including interim dividends) and distributions on shares of the
Company outstanding and authorise payment of the same out of the funds of the
Company lawfully available therefor.
101. The Directors may, before declaring any dividends or distributions, set
aside such sums as they think proper as a reserve or reserves which shall at the
discretion of the Directors, be applicable for any purpose of the Company and
pending such application may, at the like discretion, be employed in the
business of the Company.
102. No dividend or distribution shall be payable except out of the profits of
the Company, realised or unrealised, or out of the share premium account or as
otherwise permitted by the Statute.
103. Subject to the rights of persons, if any, entitled to shares with special
rights as to dividends or distributions, if dividends or distributions are to be
declared on a class of shares they shall be declared and paid according to the
amounts paid or credited as paid on the shares of such class outstanding on the
record date for such dividend or distribution as determined in accordance with
these Articles but no amount paid or credited as paid on a share in advance of
calls shall be treated for the purpose of this Article as paid on the share.
104. The Directors may deduct from any dividend or distribution payable to any
Member all sums of money (if any) presently payable by him to the Company on
account of calls or otherwise.
105. The Directors may declare that any dividend or distribution be paid wholly
or partly by the distribution of specific assets and in particular of paid up
shares, debentures, or debenture stock of any other company or in any one or
more of such ways and where any difficulty arises in regard to such
distribution, the Directors may settle the same as they think expedient and in
particular may issue fractional certificates and fix the value for distribution
of such specific assets or any part thereof and may determine that cash payments
shall be made to any Members upon the footing of the value so fixed in order to
adjust the rights of all Members and may vest any such specific assets in
trustees as may seem expedient to the Directors.
<PAGE>
106. Any dividend, distribution, interest or other monies payable in cash in
respect of shares may be paid by cheque or warrant sent through the post
directed to the registered address of the holder or, in the case of joint
holders, to the holder who is first named on the register of Members or to such
person and to such address as such holder or joint holders may in writing
direct. Every such cheque or warrant shall be made payable to the order of the
person to whom it is sent. Any one of two or more joint holders may give
effectual receipts for any dividends, bonuses, or other monies payable in
respect of the share held by them as joint holders.
107. No dividend or distribution shall bear interest against the Company.
CAPITALISATION
--------------
108. The Company may upon the recommendation of the Directors by ordinary
resolution authorise the Directors to capitalise any sum standing to the credit
of any of the Company's reserve accounts (including share premium account and
capital redemption reserve fund) or any sum standing to the credit of profit and
loss account or otherwise available for distribution and to appropriate such sum
to Members in the proportions in which such sum would have been divisible
amongst them had the same been a distribution of profits by way of dividend and
to apply such sum on their behalf in paying up in full unissued shares for
allotment and distribution credited as fully paid up to and amongst them in the
proportion aforesaid. In such event the Directors shall do all acts and things
required to give effect to such capitalisation, with full power to the Directors
to make such provisions as they think fit for the case of shares becoming
distributable in fractions (including provisions whereby the benefit of
fractional entitlements accrue to the Company rather than to the Members
concerned). The Directors may authorise any person to enter on behalf of all of
the Members interested into an agreement with the Company providing for such
capitalisation and matters incidental thereto and any agreement made under such
authority shall be effective and binding on all concerned.
BOOKS OF ACCOUNT
----------------
109. The Directors shall cause proper books of account to be kept with respect
to:
(a) all sums of money received and expended by the Company and the
matters in respect of which the receipt or expenditure takes place;
(b) all sales and purchases of goods by the Company;
(c) the assets and liabilities of the Company.
<PAGE>
Proper books shall not be deemed to be kept if there are not kept such books of
account as are necessary to give a true and fair view of the state of the
Company's affairs and to explain its transactions.
110. The Directors shall from time to time determine whether and to what extent
and at what times and places and under what conditions or regulations the
accounts and books of the Company or any of them shall be open to the inspection
of Members not being Directors and no Member (not being a Director) shall have
any right of inspecting any account or book or document of the Company except as
conferred by Statute or authorised by the Directors or by the Company in general
meeting.
111. The Directors may from time to time cause to be prepared and to be laid
before the Company in general meeting profit and loss accounts, balance sheets,
group accounts (if any) and such other reports and accounts as may be required
by law.
AUDIT
-----
112. The Company may at any annual general meeting appoint an Auditor or
Auditors of the Company who shall hold office until the next annual general
meeting and may fix his or their remuneration.
113. The Directors may before the first annual general meeting appoint an
Auditor or Auditors of the Company who shall hold office until the first annual
general meeting unless previously removed by an ordinary resolution of the
Members in general meeting in which case the Members at that meeting may appoint
Auditors. The Directors may fill any casual vacancy in the office of Auditor but
while any such vacancy continues the surviving or continuing Auditor or
Auditors, if any, may act. The remuneration of any Auditor appointed by the
Directors under this Article may be fixed by the Directors.
114. Every Auditor of the Company shall have a right of access at all times to
the books and accounts and vouchers of the Company and shall be entitled to
require from the Directors and Officers of the Company such information and
explanation as may be necessary for the performance of the duties of the
auditors.
115. Auditors shall at the next annual general meeting following their
appointment and at any other time during their term of office, upon request of
the Directors or any general meeting of the Members, make a report on the
accounts of the Company in general meeting during their tenure of office.
<PAGE>
NOTICES
-------
116. Notices shall be in writing and may be given by the Company to any Member
either personally or by sending it by post, cable, telex or telecopy to him or
to his address as shown in the register of Members, such notice, if mailed, to
be forwarded airmail if the address be outside the Cayman Islands.
117. (a) Where a notice is sent by post, service of the notice shall be deemed
to be effected by properly addressing, pre-paying and posting a letter
containing the notice, and to have been effected at the expiration of sixty
hours after the letter containing the same is posted as aforesaid.
(b) Where a notice is sent by cable, telex, or telecopy, service of the
notice shall be deemed to be effected by properly addressing, and sending such
notice through a transmitting organisation and to have been effected on the day
the same is sent as aforesaid.
118. A notice may be given by the Company to the joint holders of record of a
share by giving the notice to the joint holder first named on the register of
Members in respect of the share.
119. A notice may be given by the Company to the person or persons which the
Company has been advised are entitled to a share or shares in consequence of the
death or bankruptcy of a Member by sending it through the post as aforesaid in a
pre-paid letter 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 supplied for that purpose by the persons claiming to be so entitled, or
at the option of the Company by giving the notice in any manner in which the
same might have been given if the death or bankruptcy had not occurred.
120. Notice of every general meeting shall be given in any manner hereinbefore
authorised to:
(a) every person shown as a Member in the register of Members as of the
record date for such meeting except that in the case of joint holders the notice
shall be sufficient if given to the joint holder first named in the register of
Members.
(b) every person upon whom the ownership of a share devolves by reason
of his being a legal personal representative or a trustee in bankruptcy of a
Member of record where the Member of record but for his death or bankruptcy
would be entitled to receive notice of the meeting; and
<PAGE>
No other person shall be entitled to receive notices of general meetings.
WINDING UP
----------
121. If the Company shall be wound up the liquidator may, with the sanction of a
Special Resolution of the Company and any other sanction required by the
Statute, divide amongst the Members in specie or kind the whole or any part of
the assets of the Company (whether they shall consist of property of the same
kind or not) and may for such purpose set such value as he deems fair upon any
property to be divided as aforesaid and may determine how such 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 such assets
in trustees upon such trusts for the benefit of the contributories as the
liquidator, with the like sanction, shall think fit, but so that no Member shall
be compelled to accept any shares or other securities whereon there is any
liability.
122. If the Company shall be wound up, and the assets available for distribution
amongst the Members as such shall be insufficient to repay the whole of the
paid-up capital, such assets shall be distributed so that, as nearly as may be,
the losses shall be borne by the Members in proportion to the capital paid up,
or which ought to have been paid up, at the commencement of the winding up on
the shares held by them respectively. And if in a winding up the assets
available for distribution amongst the Members shall be more than sufficient to
repay the whole of the capital paid up at the commencement of the winding up,
the excess shall be distributed amongst the Members in proportion to the capital
paid up at the commencement of the winding up on the shares held by them
respectively. This Article is to be without prejudice to the rights of the
holders of shares issued upon special terms and conditions.
INDEMNITY
---------
123. The Directors and officers for the time being of the Company and any
trustee for the time being acting in relation to any of the affairs of the
Company and their heirs, executors, administrators and personal representatives
respectively shall be indemnified out of the assets of the Company from and
against all actions, proceedings, costs, charges, losses, damages and expenses
which they or any of them shall or may incur or sustain by reason of any act
done or omitted in or about the execution of their duty in their respective
offices or trusts, except such (if any) as they shall incur or sustain by or
through their own wilful neglect or default respectively and no such Director,
officer or trustee shall be answerable for the acts, receipts, neglects or
defaults of any other Director, officer or trustee or for joining in any receipt
for the sake of conformity or for the solvency or honesty of any banker or other
persons with whom any monies or effects belonging to the Company may be lodged
or deposited for safe custody or for any insufficiency of any security upon
which any
<PAGE>
monies of the Company may be invested or for any other loss or damage due to any
such cause as aforesaid or which may happen in or about the execution of his
office or trust unless the same shall happen through the wilful neglect or
default of such Director, Officer or trustee.
FINANCIAL YEAR
--------------
124. Unless the Directors otherwise prescribe, the financial year of the Company
shall end on 31st December in each year and, following the year of
incorporation, shall begin on 1st January in each year.
AMENDMENTS OF ARTICLES
----------------------
125. Subject to the Statute, the Company may at any time and from time to time
by Special Resolution alter or amend these Articles in whole or in part.
TRANSFER BY WAY OF CONTINUATION
-------------------------------
126. If the Company is exempted as defined in the Statute, it shall, subject to
the provisions of the Statute and with the approval of a Special Resolution,
have the power to register by way of continuation as a body corporate under the
laws of any jurisdiction outside the Cayman Islands and to be deregistered in
the Cayman Islands.
THE COMPANIES LAW (1995 REVISION)
---------------------------------
COMPANY LIMITED BY SHARES
-------------------------
MEMORANDUM OF ASSOCIATION
OF
MILLENIUM III, INC.
1. The name of the Company is MILLENIUM III, INC..
2. The Registered Office of the Company shall be at the offices of Maples and
Calder, Attorneys-at-Law, Ugland House, P.O. Box 309, George Town, Grand Cayman,
Cayman Islands, British West Indies or at such other place as the Directors may
from time to time decide.
3. The objects for which the Company is established are unrestricted and shall
include, but without limitation, the following:-
(i) (a) To undertake and carry on all or any of the trades and businesses of
international freight forwarders and agents, shippers, ship owners, ship
brokers, shipping agents and insurance brokers, underwriters, ship managers, tug
owners, shipping agents, loading brokers, freight contractors, carriers by land,
air and water, transport, haulage and general contractors, barge owners,
lightermen, railway and forwarding agents, dock owners, ships' husbands,
warehousemen, salvors, manufacturers of and dealers in tarpaulins, waterproofs,
machinery, engines, nautical instruments, and ships'rigging, gear, fittings and
equipment of every description, importers and exporters of and dealers in goods,
provisions, live and dead stock, commodities, articles, chattels, merchandise
and property of every kind,
<PAGE>
2
general traders and merchants, and generally to carry on the said businesses in
all their branches, and to carry on the said businesses either as principals or
agents or on commission or otherwise.
(b) To purchase or otherwise acquire, and to carry on the business or
businesses of fishing boat owners, smack owners, trawlers, deep-sea fishers,
shrimp fishers, fish curers, fish or shrimp salesmen, wholesale and retail fish
or shrimp merchants, wholesale and retail game and poultry merchants, ice
manufacturers, oil merchants and refiners, utilisers of fish refuse, manure
manufacturers, anchor and chain makers, wire rope makers, rope makers, mast and
block makers, ship chandlers, marine storekeepers, compass and nautical
instrument makers, marine engineers, engineers, boiler makers, ship builders,
dry-dock keepers, slip keepers, boat builders, ship and boat repairers, ship and
boat outfitters, salvors, wreck removers, wreck raisers, divers, auctioneers,
valuers, assessors, stevedores, wharfingers, carriers, forwarding agents, and
all other branches of business usually or conveniently connected with any such
business as aforesaid.
(c) To enter into, take over, negotiate or otherwise acquire, any
contract or contracts for the construction, building, equipping, fitting out,
storing, gearing or otherwise relating to any steamship, ship, trawler, catcher,
carrier, drifter, fishing boat, boat, or other vessel whatsoever, and to enter
into, take over, negotiate or otherwise acquire any other contract or contracts
whatever which the Company may think necessary, desirable or convenient for the
purposes of the Company or any of them, and to enter into, take over, negotiate,
or otherwise acquire any such contract or contracts at such prices and for such
<PAGE>
3
considerations, and upon such terms and conditions, and subject to such
stipulations and agreements as the Company may determine, and at any time and
from time to time vary, modify, alter or cancel any such contract.
(d) To acquire concessions or licences for the establishment and
working of lines of ships or other vessels between any ports of the world, or
for the formation or working of any railway or tramway, wharf, pier, dock, or
other works, or for the working of any coaches or other public conveyances, with
the benefit of any subsidy attached to any such concession or licence or
otherwise.
(e) To insure the vessels and other property of the Company in any
manner.
(f) To grant loans on ships and vessels or on goods and merchandise
carried or to be carried in any vessels and to buy and sell merchandise for
freighting on the ships and vessels of the Company.
(g) To engage in any and all kinds of business and other activities
with respect to oil, gas and other materials, and the products and by-products
thereof, including but not by way of limitation, exploration, developing,
drilling, producing, refining, processing, mining, confining, manufacturing,
storing, transporting, distributing, trading, buying, selling and all other
activities pertinent thereto.
(h) To resell or sublet any concession or licence obtained, or contract
entered into.
(i) To carry on the business of an investment company and to act as
promoters and entrepreneurs and to carry on business as financiers, capitalists,
concessionaires, merchants, brokers, traders, dealers, agents, importers and
exporters and to undertake and
<PAGE>
4
carry on and execute all kinds of investment, financial, commercial, mercantile,
trading and other operations.
(j) To carry on whether as principals, agents or otherwise howsoever
the business of realtors, developers, consultants, estate agents or managers,
builders, contractors, engineers, manufacturers, dealers in or vendors of all
types of property including services.
(ii) To exercise and enforce all rights and powers conferred by or incidental to
the ownership of any shares, stock, obligations or other securities including
without prejudice to the generality of the foregoing all such powers of veto or
control as may be conferred by virtue of the holding by the Company of some
special proportion of the issued or nominal amount thereof, to provide
managerial and other executive, supervisory and consultant services for or in
relation to any company in which the Company is interested upon such terms as
may be thought fit.
(iii) To purchase or otherwise acquire, to sell, exchange, surrender, lease,
mortgage, charge, convert, turn to account, dispose of and deal with real and
personal property and rights of all kinds and, in particular, mortgages,
debentures, produce, concessions, options, contracts, patents, annuities,
licences, stocks, shares, bonds, policies, book debts, business concerns,
undertakings, claims, privileges and choses in action of all kinds.
(iv) To subscribe for, conditionally or unconditionally, to underwrite, issue on
commission or otherwise, take, hold, deal in and convert stocks, shares and
securities of all kinds and to enter into partnership or into any arrangement
for sharing profits, reciprocal
<PAGE>
5
concessions or cooperation with any person or company and to promote and aid in
promoting, to constitute, form or organise any company, syndicate or partnership
of any kind, for the purpose of acquiring and undertaking any property and
liabilities of the Company or of advancing, directly or indirectly, the objects
of the Company or for any other purpose which the Company may think expedient.
(v) To stand surety for or to guarantee, support or secure the performance of
all or any of the obligations of any person, firm or company whether or not
related or affiliated to the Company in any manner and whether by personal
covenant or by mortgage, charge or lien upon the whole or any part of the
undertaking, property and assets of the Company, both present and future,
including its uncalled capital or by any such method and whether or not the
Company shall receive valuable consideration therefor.
(vi) To engage in or carry on any other lawful trade, business or enterprise
which may at any time appear to the Directors of the Company capable of being
conveniently carried on in conjunction with any of the aforementioned businesses
or activities or which may appear to the Directors or the Company likely to be
profitable to the Company. In the interpretation of this Memorandum of
Association in general and of this Clause 3 in particular no object, business or
power specified or mentioned shall be limited or restricted by reference to or
inference from any other object, business or power, or the name of the Company,
or by the juxtaposition of two or more objects, businesses or powers and that,
in the event of any ambiguity in this clause or elsewhere in this Memorandum of
Association,
<PAGE>
6
the same shall be resolved by such interpretation and construction as will widen
and enlarge and not restrict the objects, businesses and powers of and
exercisable by the Company.
4. Except as prohibited or limited by the Companies Law (1995 Revision), the
Company shall have full power and authority to carry out any object and shall
have and be capable of from time to time and at all times exercising any and all
of the powers at any time or from time to time exercisable by a natural person
or body corporate in doing in any part of the world whether as principal, agent,
contractor or otherwise whatever may be considered by it necessary for the
attainment of its objects and whatever else may be considered by it as
incidental or conducive thereto or consequential thereon, including, but without
in any way restricting the generality of the foregoing, the power to make any
alterations or amendments to this Memorandum of Association and the Articles of
Association of the Company considered necessary or convenient in the manner set
out in the Articles of Association of the Company, and the power to do any of
the following acts or things, viz:
to pay all expenses of and incidental to the promotion, formation and
incorporation of the Company; to register the Company to do business in any
other jurisdiction; to sell, lease or dispose of any property of the Company; to
draw, make, accept, endorse, discount, execute and issue promissory notes,
debentures, bills of exchange, bills of lading, warrants and other negotiable or
transferable instruments; to lend money or other assets and to act as
guarantors; to borrow or raise money on the security of the undertaking or on
all or any of the assets of the Company including uncalled capital or without
security; to invest monies of the Company in such manner as the Directors
determine; to promote other companies; to sell the
<PAGE>
7
undertaking of the Company for cash or any other consideration; to distribute
assets in specie to members of the Company; to make charitable or benevolent
donations; to pay pensions or gratuities or provide other benefits in cash or
kind to Directors, officers, employees, past or present and their families; to
carry on any trade or business and generally to do all acts and things which, in
the opinion of the Company or the Directors, may be conveniently or profitably
or usefully acquired and dealt with, carried on, executed or done by the Company
in connection with the business aforesaid PROVIDED THAT the Company shall only
carry on the businesses for which a licence is required under the laws of the
Cayman Islands when so licensed under the terms of such laws.
5. The liability of each member is limited to the amount from time to time
unpaid on such member's shares.
6. The share capital of the Company is US$50,000 divided into 50,000 shares of a
nominal or par value of US$1.00 each with power for the Company insofar as is
permitted by law, to redeem or purchase any of its shares and to increase or
reduce the said capital subject to the provisions of the Companies Law (1995
Revision) and the Articles of Association and to issue any part of its capital,
whether original, redeemed or increased with or without any preference, priority
or special privilege or subject to any postponement of rights or to any
conditions or restrictions and so that unless the conditions of issue shall
otherwise expressly declare every issue of shares whether declared to be
preference or otherwise shall be subject to the powers hereinbefore contained.
<PAGE>
8
7. If the Company is registered as exempted, its operations will be carried on
subject to the provisions of Section l92 of the Companies Law (1995 Revision)
and subject to the provisions of the Companies Law (1995 Revision) and the
Articles of Association it shall have the power to register by way of
continuation as a body corporate limited by shares under the laws of any
jurisdiction outside the Cayman Islands and to be deregistered in the Cayman
Islands.
WE the several persons whose names and addresses are subscribed are desirous of
being formed into a company in pursuance of this Memorandum of Association and
we respectively agree to take the number of shares in the capital of the Company
set opposite our respective names.
<PAGE>
THE COMPANIES LAW (1995 REVISION)
---------------------------------
COMPANY LIMITED BY SHARES
-------------------------
ARTICLES OF ASSOCIATION
OF
MILLENIUM III, INC.
1. In these Articles Table A in the Schedule to the Statute does not apply and,
unless there be something in the subject or context inconsistent therewith,
"Articles" means these Articles as originally framed
or as from time to time altered by Special
Resolution.
"Auditors" means the persons for the time being
performing the duties of auditors of the
Company.
"Company" means the above-named Company.
"debenture" means debenture stock, mortgages, bonds
and any other such securities of the
Company whether constituting a charge on
the assets of the Company or not.
"Directors" means the directors for the time being of
the Company.
"dividend" includes bonus.
"Member" shall bear the meaning as ascribed to it
in the Statute.
"month" means calendar month.
"paid-up" means paid-up and/or credited as paid-up.
"registered office" means the registered office for the time
being of the Company.
<PAGE>
2
"Seal" means the common seal of the Company and
includes every duplicate seal.
"Secretary" includes an Assistant Secretary and any
person appointed to perform the duties of
Secretary of the Company.
"share" includes a fraction of a share.
"Special Resolution" has the same meaning as in the Statute and
includes a resolution approved in writing
as described therein.
"Statute" means the Companies Law of the Cayman
Islands as amended and every statutory
modification or re-enactment thereof for
the time being in force.
"written" and "in writing" include all modes of representing or
reproducing words in visible form.
Words importing the singular number only include the plural number and
vice-versa.
Words importing the masculine gender only include the feminine gender.
Words importing persons only include corporations.
2. The business of the Company may be commenced as soon after incorporation as
the Directors shall see fit, notwithstanding that part only of the shares may
have been allotted.
3. The Directors may pay, out of the capital or any other monies of the Company,
all expenses incurred in or about the formation and establishment of the Company
including the expenses of registration.
CERTIFICATES FOR SHARES
-----------------------
4. Certificates representing shares of the Company shall be in such form as
shall be determined by the Directors. Such certificates may be under Seal. All
certificates for shares shall be consecutively numbered or otherwise identified
and shall specify the shares to which they relate. The name and address of the
person to whom the shares represented thereby are issued, with the number of
shares and date of issue, shall be entered in the
<PAGE>
3
register of Members of the Company. All certificates surrendered to the Company
for transfer shall be cancelled and no new certificate shall be issued until the
former certificate for a like number of shares shall have been surrendered and
cancelled. The Directors may authorise certificates to be issued with the seal
and authorised signature(s) affixed by some method or system of mechanical
process.
5. Notwithstanding Article 4 of these Articles, if a share certificate be
defaced, lost or destroyed, it may be renewed on payment of a fee of one dollar
(US$l.00) or such less sum and on such terms (if any) as to evidence and
indemnity and the payment of the expenses incurred by the Company in
investigating evidence, as the Directors may prescribe.
ISSUE OF SHARES
---------------
6. Subject to the provisions, if any, in that behalf in the Memorandum of
Association and to any direction that may be given by the Company in general
meeting and without prejudice to any special rights previously conferred on the
holders of existing shares, the Directors may allot, issue, grant options over
or otherwise dispose of shares of the Company (including fractions of a share)
with or without preferred, deferred or other special rights or restrictions,
whether in regard to dividend, voting, return of capital or otherwise and to
such persons, at such times and on such other terms as they think proper.
7. The Company shall maintain a register of its Members and every person whose
name is entered as a Member in the register of Members shall be entitled without
payment to receive within two months after allotment or lodgement of transfer
(or within such other period as the conditions of issue shall provide) one
certificate for all his shares or several certificates each for one or more of
his shares upon payment of fifty cents (US$0.50) for every certificate after the
first or such less sum as the Directors shall from time to time determine
provided that in respect of a share or shares held jointly by several persons
the Company shall not be bound to issue more than one certificate and delivery
of a certificate for a share to one of the several joint holders shall be
sufficient delivery to all such holders.
TRANSFER OF SHARES
------------------
8. The instrument of transfer of any share shall be in writing and shall be
executed by or on behalf of the transferor and the transferor shall be deemed to
remain the holder of a share until the name of the transferee is entered in the
register in respect thereof.
9. The Directors may in their absolute discretion decline to register any
transfer of shares without assigning any reason therefor. If the Directors
refuse to register a transfer they shall notify the transferee within two months
of such refusal.
<PAGE>
4
10. The registration of transfers may be suspended at such time and for such
periods as the Directors may from time to time determine, provided always that
such registration shall not be suspended for more than forty-five days in any
year.
REDEEMABLE SHARES
-----------------
11. (a) Subject to the provisions of the Statute and the Memorandum of
Association, shares may be issued on the terms that they are, or at the option
of the Company or the holder are, to be redeemed on such terms and in such
manner as the Company, before the issue of the shares, may by Special Resolution
determine.
(b) Subject to the provisions of the Statute and the Memorandum of
Association, the Company may purchase its own shares (including fractions of a
share), including any redeemable shares, provided that the manner of purchase
has first been authorised by the Company in general meeting and may make payment
therefor in any manner authorised by the Statute, including out of capital.
VARIATION OF RIGHTS OF SHARES
-----------------------------
12. If at any time the share capital of the Company 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, whether or not the
Company is being wound-up, be varied with the consent in writing of the holders
of three-fourths of the issued shares of that class, or with the sanction of a
Special Resolution passed at a general meeting of the holders of the shares of
that class.
The provisions of these Articles relating to general meetings
shall apply to every such general meeting of the holders of one class of shares
except that the necessary quorum shall be one person holding or representing by
proxy at least 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.
13. The rights conferred upon the holders of the shares of any class issued with
preferred or other rights shall not, unless otherwise expressly provided by the
terms of issue of the shares of that class, be deemed to be varied by the
creation or issue of further shares ranking pari passu therewith.
COMMISSION ON SALE OF SHARES
----------------------------
14. The Company may in so far as the Statute from time to time permits pay a
commission to any person in consideration of his subscribing or agreeing to
subscribe
<PAGE>
5
whether absolutely or conditionally for any shares of the Company. Such
commissions may be satisfied by the payment of cash or the lodgement of fully or
partly paid-up shares or partly in one way and partly in the other. The Company
may also on any issue of shares pay such brokerage as may be lawful.
NON-RECOGNITION OF TRUSTS
-------------------------
15. No person shall be recognised by the Company as holding any share upon any
trust and the Company shall not be bound by or be compelled in any way to
recognise (even when having notice thereof) any equitable, contingent, future,
or partial interest in any share, or any interest in any fractional part of a
share, or (except only as is otherwise provided by these Articles or the
Statute) any other rights in respect of any share except an absolute right to
the entirety thereof in the registered holder.
LIEN ON SHARES
--------------
16. The Company shall have a first and paramount lien and charge on all shares
(whether fully paid-up or not) registered in the name of a Member (whether
solely or jointly with others) for all debts, liabilities or engagements to or
with the Company (whether presently payable or not) by such Member or his
estate, either alone or jointly with any other person, whether a Member or not,
but the Directors may at any time declare any share to be wholly or in part
exempt from the provisions of this Article. The registration of a transfer of
any such share shall operate as a waiver of the Company's lien (if any) thereon.
The Company's lien (if any) on a share shall extend to all dividends or other
monies payable in respect thereof.
17. The Company may sell, in such manner as the Directors think fit, any shares
on which the Company has a lien, but no sale shall be made unless a sum in
respect of which the lien exists is presently payable, nor until the expiration
of fourteen days after a notice in writing stating and demanding payment of such
part of the amount in respect of which the lien exists as is presently payable,
has been given to the registered holder or holders for the time being of the
share, or the person, of which the Company has notice, entitled thereto by
reason of his death or bankruptcy.
18. To give effect to any such sale the Directors may authorise some person to
transfer the shares sold to the purchaser thereof. The purchaser shall be
registered as the holder of the shares comprised in any such transfer, and he
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 or invalidity in the
proceedings in reference to the sale.
<PAGE>
6
19. The proceeds of such sale shall be received by the Company and applied in
payment of such part of the amount in respect of which the lien exists as is
presently payable and the residue, if any, shall (subject to a like lien for
sums 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.
CALL ON SHARES
--------------
20. (a) The Directors may from time to time make calls upon the Members in
respect of any monies unpaid on their shares (whether on account of the nominal
value of the shares or by way of premium or otherwise) and not by the conditions
of allotment thereof made payable at fixed terms, provided that no call shall be
payable at less than one month from the date fixed for the payment of the last
preceding call, and each Member shall (subject to receiving at least fourteen
days notice specifying the time or times of payment) pay to the Company at the
time or times so specified the amount called on the shares. A call may be
revoked or postponed as the Directors may determine. A call may be made payable
by instalments.
(b) A call shall be deemed to have been made at the time when the
resolution of the Directors authorising such call was passed.
(c) The joint holders of a share shall be jointly and severally liable
to pay all calls in respect thereof.
21. If a sum called in respect of a share is not paid before or on a day
appointed for payment thereof, the persons from whom the sum is due shall pay
interest on the sum from the day appointed for payment thereof to the time of
actual payment at such rate not exceeding ten per cent per annum as the
Directors may determine, but the Directors shall be at liberty to waive payment
of such interest either wholly or in part.
22. Any sum which by the terms of issue of a share becomes payable on allotment
or at any fixed date, whether on account of the nominal value of the share or by
way of premium or otherwise, shall for the purposes of these Articles be deemed
to be a call duly made, notified and payable on the date on which by the terms
of issue the same becomes payable, and in the case of non-payment all the
relevant provisions of these Articles as to payment of interest forfeiture or
otherwise shall apply as if such sum had become payable by virtue of a call duly
made and notified.
23. The Directors may, on the issue of shares, differentiate between the holders
as to the amount of calls or interest to be paid and the times of payment.
<PAGE>
7
24. (a) The Directors may, if they think fit, receive from any Member willing to
advance the same, all or any part of the monies uncalled and unpaid upon any
shares held by him, and upon all or any of the monies so advanced may (until the
same would but for such advances, become payable) pay interest at such rate not
exceeding (unless the Company in general meeting shall otherwise direct) seven
per cent per annum, as may be agreed upon between the Directors and the Member
paying such sum in advance.
(b) No such sum paid in advance of calls shall entitle the Member
paying such sum to any portion of a dividend declared in respect of any period
prior to the date upon which such sum would, but for such payment, become
presently payable.
FORFEITURE OF SHARES
--------------------
25. (a) If a Member fails to pay any call or instalment of a call or to make any
payment required by the terms of issue on the day appointed for payment thereof,
the Directors may, at any time thereafter during such time as any part of the
call, instalment or payment remains unpaid, give notice requiring payment of so
much of the call, instalment or payment as is unpaid, together with any interest
which may have accrued and all expenses that have been incurred by the Company
by reason of such non-payment. Such notice shall name a day (not earlier than
the expiration of fourteen days from the date of giving of the notice) on or
before which the payment required by the notice is to be made, and shall state
that, in the event of non-payment at or before the time appointed the shares in
respect of which such notice was given will be liable to be forfeited.
(b) If the requirements of any such notice as aforesaid are not
complied with, any share in respect of which the notice has been given may at
any time thereafter, before the payment required by the notice has been made, be
forfeited by a resolution of the Directors to that effect. Such forfeiture shall
include all dividends declared in respect of the forfeited
share and not actually paid before the forfeiture.
(c) A forfeited share may be sold or otherwise disposed of on such
terms and in such manner as the Directors think fit and at any time before a
sale or disposition the forfeiture may be cancelled on such terms as the
Directors think fit.
26. A person whose shares have been forfeited shall cease to be a Member in
respect of the forfeited shares, but shall, notwithstanding, remain liable to
pay to the Company all monies which, at the date of forfeiture were payable by
him to the Company in respect of the shares together with interest thereon, but
his liability shall cease if and when the Company shall have received payment in
full of all monies whenever payable in respect of the shares.
<PAGE>
8
27. A certificate in writing under the hand of one Director or the Secretary of
the Company that a share in the Company has been duly forfeited on a date stated
in the declaration shall be conclusive evidence of the fact therein stated as
against all persons claiming to be entitled to the share. The Company may
receive the consideration given for the share on any sale or disposition thereof
and may execute a transfer of the share in favour of the person to whom the
share is sold or disposed of and he shall thereupon be registered as the holder
of the share and shall not be bound to see to the application of the purchase
money, if any, nor shall his title to the share be affected by any irregularity
or invalidity in the proceedings in reference to the forfeiture, sale or
disposal of the share.
28. The provisions of these Articles as to forfeiture shall apply in the case of
non-payment of any sum which, by the terms of issue of a share, becomes payable
at a fixed time, whether on account of the nominal value of the share or by way
of premium as if the same had been payable by virtue of a call duly made and
notified.
REGISTRATION OF EMPOWERING INSTRUMENTS
--------------------------------------
29. The Company shall be entitled to charge a fee not exceeding one dollar
(US$l.00) on the registration of every probate, letters of administration,
certificate of death or marriage, power of attorney, notice in lieu of
distringas, or other instrument.
TRANSMISSION OF SHARES
----------------------
30. In case of the death of a Member, the survivor or survivors where the
deceased was a joint holder, and the legal personal representatives of the
deceased where he was a sole holder, shall be the only persons recognised by the
Company as having any title to his interest in the shares, but nothing herein
contained shall release the estate of any such deceased holder from any
liability in respect of any shares which had been held by him solely or jointly
with other persons.
31. (a) Any person becoming entitled to a share in consequence of the death or
bankruptcy or liquidation or dissolution of a Member (or in any other way than
by transfer) may, upon such evidence being produced as may from time to time be
required by the Directors and subject as hereinafter provided, elect either to
be registered himself as holder of the share or to make such transfer of the
share to such other person nominated by him as the deceased or bankrupt person
could have made and to have such person registered as the transferee thereof,
but the Directors shall, in either case, have the same right to decline or
suspend registration as they would have had in the case of a transfer of the
share by that Member before his death or bankruptcy as the case may be.
<PAGE>
9
(b) If the person so becoming entitled shall elect to be registered
himself as holder he shall deliver or send to the Company a notice in writing
signed by him stating that he so elects.
32. A person becoming entitled to a share by reason of the death or bankruptcy
or liquidation or dissolution of the holder (or in any other case than by
transfer) shall be entitled to the same dividends and other advantages to which
he would be entitled if he were the registered holder of the share, except that
he shall not, before being registered as a Member in respect of the share, be
entitled in respect of it to exercise any right conferred by membership in
relation to meetings of the Company PROVIDED HOWEVER that the Directors may at
any time give notice requiring any such person to elect either to be registered
himself or to transfer the share and if the notice is not complied with within
ninety days the Directors may thereafter withhold payment of all dividends,
bonuses or other monies payable in respect of the share until the requirements
of the notice have been complied with.
AMENDMENT OF MEMORANDUM OF ASSOCIATION, CHANGE OF
LOCATION OF REGISTERED OFFICE & ALTERATION OF CAPITAL
-----------------------------------------------------
33. (a) Subject to and in so far as permitted by the provisions of the Statute,
the Company may from time to time by ordinary resolution alter or amend its
Memorandum of Association otherwise than with respect to its name and objects
and may, without restricting the generality of the foregoing:
(i) increase the share capital by such sum to be divided
into shares of such amount or without nominal or par
value as the resolution shall prescribe and with such
rights, priorities and privileges annexed thereto, as
the Company in general meeting may determine.
(ii) consolidate and divide all or any of its share
capital into shares of larger amount than its
existing shares;
(iii) by subdivision of its existing shares or any of them
divide the whole or any part of its share capital
into shares of smaller amount than is fixed by the
Memorandum of Association or into shares without
nominal or par value;
(iv) cancel any shares which at the date of the passing of
the resolution have not been taken or agreed to be
taken by any person.
<PAGE>
10
(b) All new shares created hereunder shall be subject to the same
provisions with reference to the payment of calls, liens, transfer,
transmission, forfeiture and otherwise as the shares in the original share
capital.
(c) Subject to the provisions of the Statute, the Company may by
Special Resolution change its name or alter its objects.
(d) Without prejudice to Article 11 hereof and subject to the
provisions of the Statute, the Company may by Special Resolution reduce its
share capital and any capital redemption reserve fund.
(e) Subject to the provisions of the Statute, the Company may by
resolution of the Directors change the location of its registered office.
CLOSING REGISTER OF MEMBERS OR FIXING RECORD DATE
-------------------------------------------------
34. For the purpose of determining Members entitled to notice of or to vote at
any meeting of Members or any adjournment thereof, or Members entitled to
receive payment of any dividend, or in order to make a determination of Members
for any other proper purpose, the Directors of the Company may provide that the
register of Members shall be closed for transfers for a stated period but not to
exceed in any case forty days. If the register of Members shall be so closed for
the purpose of determining Members entitled to notice of or to vote at a meeting
of Members such register shall be so closed for at least ten days immediately
preceding such meeting and the record date for such determination shall be the
date of the closure of the register of Members.
35. In lieu of or apart from closing the register of Members, the Directors may
fix in advance a date as the record date for any such determination of Members
entitled to notice of or to vote at a meeting of the Members and for the purpose
of determining the Members entitled to receive payment of any dividend the
Directors may, at or within 90 days prior to the date of declaration of such
dividend fix a subsequent date as the record date for such determination.
36. If the register of Members is not so closed and no record date is fixed for
the determination of Members entitled to notice of or to vote at a meeting of
Members or Members entitled to receive payment of a dividend, the date on which
notice of the meeting is mailed or the date on which the resolution of the
Directors declaring such dividend is adopted, as the case may be, shall be the
record date for such determination of Members. When a determination of Members
entitled to vote at any meeting of Members has been made as provided in this
section, such determination shall apply to any adjournment thereof.
<PAGE>
11
GENERAL MEETING
37. (a) Subject to paragraph (c) hereof, the Company shall within one year of
its incorporation and in each year of its existence thereafter hold a general
meeting as its annual general meeting and shall specify the meeting as such in
the notices calling it. The annual general meeting shall be held at such time
and place as the Directors shall appoint and if no other time and place is
prescribed by them, it shall be held at the registered office on the second
Wednesday in December of each year at ten o'clock in the morning.
(b) At these meetings the report of the Directors (if any) shall be
presented.
(c) If the Company is exempted as defined in the Statute it may but
shall not be obliged to hold an annual general meeting.
38. (a) The Directors may whenever they think fit, and they shall on the
requisition of Members of the Company holding at the date of the deposit of the
requisition not less than one-tenth of such of the paid-up capital of the
Company as at the date of the deposit carries the right of voting at general
meetings of the Company, proceed to convene a general meeting
of the Company.
(b) The requisition must state the objects of the meeting and must be
signed by the requisitionists and deposited at the registered office of the
Company and may consist of several documents in like form each signed by one or
more requisitionists.
(c) If the Directors do not within twenty-one days from the date of the
deposit of the requisition duly proceed to convene a general meeting, the
requisitionists, or any of them representing more than one-half of the total
voting rights of all of them, may themselves convene a general meeting, but any
meeting so convened shall not be held after the expiration of three months after
the expiration of the said twenty-one days.
(d) A general meeting convened as aforesaid by requisitionists shall be
convened in the same manner as nearly as possible as that in which general
meetings are to be convened
by Directors.
NOTICE OF GENERAL MEETINGS
--------------------------
39. At least five days' notice shall be given of an annual general meeting or
any other general meeting. Every notice shall be exclusive of the day on which
it is given or deemed to be given and of the day for which it is given and shall
specify the place, the day and the hour of the meeting and the general nature of
the business and shall be given in manner hereinafter mentioned or in such other
manner if any as may be prescribed by the
<PAGE>
12
Company PROVIDED that a general meeting of the Company shall, whether or not the
notice specified in this regulation has been given and whether or not the
provisions of Article 38 have been complied with, be deemed to have been duly
convened if it is so agreed:
(a) in the case of a general meeting called as an annual general
meeting by all the Members entitled to attend and vote thereat
or their proxies; and
(b) in the case of any other general meeting by a majority in
number of the Members having a right to attend and vote at the
meeting, being a majority together holding not less than
seventy-five per cent in nominal value or in the case of
shares without nominal or par value seventy-five per cent of
the shares in issue, or their proxies.
40. The accidental omission to give notice of a general meeting to, or the
non-receipt of notice of a meeting by any person entitled to receive notice
shall not invalidate the proceedings of that meeting.
PROCEEDINGS AT GENERAL MEETINGS
-------------------------------
41. No business shall be transacted at any general meeting unless a quorum of
Members is present at the time when the meeting proceeds to business; two
Members present in person or by proxy shall be a quorum provided always that if
the Company has one Member of record the quorum shall be that one Member present
in person or by proxy.
42. A resolution (including a Special Resolution) in writing (in one or more
counterparts) signed by all Members for the time being entitled to receive
notice of and to attend and vote at general meetings (or being corporations by
their duly authorised representatives) shall be as valid and effective as if the
same had been passed at a general meeting of the Company duly convened and held.
43. If within half an hour from the time appointed for the meeting a quorum is
not present, the meeting, if convened upon the requisition of Members, shall be
dissolved and in any other case it shall stand adjourned to the same day in the
next week at the same time and place or to such other time or such other place
as the Directors may determine and if at the adjourned meeting a quorum is not
present within half an hour from the time appointed for the meeting the Members
present shall be a quorum.
44. The Chairman, if any, of the Board of Directors shall preside as Chairman at
every general meeting of the Company, or if there is no such Chairman, or if he
shall not be present within fifteen minutes after the time appointed for the
holding of the meeting, or is
<PAGE>
13
unwilling to act, the Directors present shall elect one of their number to be
Chairman of the meeting.
45. If at any general meeting 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 shall choose one of their number to be Chairman
of the meeting.
46. The Chairman may, with the consent of any general meeting duly constituted
hereunder, 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 any
adjourned meeting other than the business left unfinished at the meeting from
which the adjournment took place. When a general meeting is adjourned for thirty
days or more, notice of the adjourned meeting shall be given as in the case of
an original meeting; save as aforesaid it shall not be necessary to give any
notice of an adjournment or of the business to be transacted at an adjourned
general meeting.
47. At any general meeting a resolution put to the vote of the meeting shall be
decided on a show of hands unless a poll is, before or on the declaration of the
result of the show of hands, demanded by the Chairman or any other Member
present in person or by proxy.
48. Unless a poll be so demanded a declaration by the Chairman that a resolution
has on a show of hands been carried, or carried unanimously, or by a particular
majority, or lost, and an entry to that effect in the Company's Minute Book
containing the Minutes of the proceedings of the meeting shall be conclusive
evidence of that fact without proof of the number or proportion of the votes
recorded in favour of or against such resolution.
49. The demand for a poll may be withdrawn.
50. Except as provided in Article 52, if a poll is duly demanded it shall be
taken in such manner as the Chairman directs and the result of the poll shall be
deemed to be the resolution of the general meeting at which the poll was
demanded.
51. In the case of an equality of votes, whether on a show of hands or on a
poll, the Chairman of the general meeting at which the show of hands takes place
or at which the poll is demanded, shall be entitled to a second or casting vote.
52. 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 at such time as the Chairman of the general meeting directs and
any business other than that
<PAGE>
14
upon which a poll has been demanded or is contingent thereon may be proceeded
with pending the taking of the poll.
VOTES OF MEMBERS
----------------
53. Subject to any rights or restrictions for the time being attached to any
class or classes of shares, on a show of hands every Member of record present in
person or by proxy at a general meeting shall have one vote and on a poll every
Member of record present in person or by proxy shall have one vote for each
share registered in his name in the register of Members.
54. In the case of joint holders of record 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 for this purpose seniority shall be
determined by the order in which the names stand in the register of Members.
55. A Member of unsound mind, or in respect of whom an order has been made by
any court, having jurisdiction in lunacy, may vote, whether on a show of hands
or on a poll, by his committee, receiver, curator bonis, or other person in the
nature of a committee, receiver or curator bonis appointed by that court, and
any such committee, receiver, curator
bonis or other persons may vote by proxy.
56. No Member shall be entitled to vote at any general meeting unless he is
registered as a shareholder of the Company on the record date for such meeting
nor unless all calls or other sums presently payable by him in respect of shares
in the Company have been paid.
57. No objection shall be raised to the qualification of any voter except at the
general meeting or adjourned general meeting at which the vote objected to is
given or tendered and every vote not disallowed at such general meeting shall be
valid for all purposes. Any such objection made in due time shall be referred to
the Chairman of the general meeting whose decision shall be final and
conclusive.
58. On a poll or on a show of hands votes may be given either personally or by
proxy.
PROXIES
-------
59. The instrument appointing a proxy shall be in writing and shall be executed
under the hand of the appointor or of his attorney duly authorised in writing,
or, if the
<PAGE>
15
appointor is a corporation under the hand of an officer or attorney duly
authorised in that behalf. A proxy need not be a Member of the Company.
60. The instrument appointing a proxy shall be deposited at the registered
office of the Company or at such other place as is specified for that purpose in
the notice convening the meeting no later than the time for holding the meeting,
or adjourned meeting provided that the Chairman of the Meeting may at his
discretion direct that an instrument of proxy shall be deemed to have been duly
deposited upon receipt of telex, cable or telecopy confirmation from the
appointor that the instrument of proxy duly signed is in the course of
transmission to the Company.
61. The instrument appointing a proxy may be in any usual or common form and may
be expressed to be for a particular meeting or any adjournment thereof or
generally until revoked. An instrument appointing a proxy shall be deemed to
include the power to demand or join or concur in demanding a poll.
62. A vote given in accordance with the terms of an instrument of proxy shall be
valid notwithstanding the previous death or insanity of the principal or
revocation of the proxy or of the authority under which the proxy was executed,
or the transfer of the share in respect of which the proxy is given provided
that no intimation in writing of such death, insanity, revocation or transfer as
aforesaid shall have been received by the Company at the registered office
before the commencement of the general meeting, or adjourned meeting at which it
is sought to use the proxy.
63. Any corporation which is a Member of record of the Company may in accordance
with its Articles or in the absence of such provision by resolution of its
Directors or other governing body authorise such person as it thinks fit to act
as its representative at any meeting of the Company or of any class of Members
of the Company, and the person so authorised shall be entitled to exercise the
same powers on behalf of the corporation which he represents as the corporation
could exercise if it were an individual Member of record of the Company.
64. Shares of its own capital belonging to the Company or held by it in a
fiduciary capacity shall not be voted, directly or indirectly, at any meeting
and shall not be counted in determining the total number of outstanding shares
at any given time.
DIRECTORS
---------
65. There shall be a Board of Directors consisting of not less than one or more
than ten persons (exclusive of alternate Directors) PROVIDED HOWEVER that the
Company may from time to time by ordinary resolution increase or reduce the
limits in the
<PAGE>
16
number of Directors. The first Directors of the Company shall be determined in
writing by, or appointed by a resolution of, the subscribers of the Memorandum
of Association or a majority of them.
66. The remuneration to be paid to the Directors shall be such remuneration as
the Directors shall determine. Such remuneration shall be deemed to accrue from
day to day. The Directors shall also be entitled to be paid their travelling,
hotel and other expenses properly incurred by them in going to, attending and
returning from meetings of the Directors, or any committee of the Directors, or
general meetings of the Company, or otherwise in connection with the business of
the Company, or to receive a fixed allowance in respect thereof as may be
determined by the Directors from time to time, or a combination partly of one
such method and partly the other.
67. The Directors may by resolution award special remuneration to any Director
of the Company undertaking any special work or services for, or undertaking any
special mission on behalf of, the Company other than his ordinary routine work
as a Director. Any fees paid to a Director who is also counsel or solicitor to
the Company, or otherwise serves it in a professional capacity shall be in
addition to his remuneration as a Director.
68. A Director or alternate Director may hold any other office or place of
profit under the Company (other than the office of Auditor) in conjunction with
his office of Director for such period and on such terms as to remuneration and
otherwise as the Directors may determine.
69. A Director or alternate Director may act by himself or his firm in a
professional capacity for the Company and he or his firm shall be entitled to
remuneration for professional services as if he were not a Director or alternate
Director.
70. A shareholding qualification for Directors may be fixed by the Company in
general meeting, but unless and until so fixed no qualification shall be
required.
71. A Director or alternate Director of the Company may be or become a director
or other officer of or otherwise interested in any company promoted by the
Company or in which the Company may be interested as shareholder or otherwise
and no such Director or alternate Director shall be accountable to the Company
for any remuneration or other benefits received by him as a director or officer
of, or from his interest in, such other company.
72. No person shall be disqualified from the office of Director or alternate
Director or prevented by such office from contracting with the Company, either
as vendor, purchaser or otherwise, nor shall any such contract or any contract
or transaction entered into by or on behalf of the Company in which any Director
or alternate Director shall be in any
<PAGE>
17
way interested be or be liable to be avoided, nor shall any Director or
alternate Director so contracting or being so interested be liable to account to
the Company for any profit realised by any such contract or transaction by
reason of such Director holding office or of the fiduciary relation thereby
established. A Director (or his alternate Director in his absence) shall be at
liberty to vote in respect of any contract or transaction in which he is so
interested as aforesaid PROVIDED HOWEVER that the nature of the interest of any
Director or alternate Director in any such contract or transaction shall be
disclosed by him or the alternate Director appointed by him at or prior to its
consideration and any vote thereon.
73. A general notice that a Director or alternate Director is a shareholder of
any specified firm or company and is to be regarded as interested in any
transaction with such firm or company shall be sufficient disclosure under
Article 72 and after such general notice it shall not be necessary to give
special notice relating to any particular transaction.
ALTERNATE DIRECTORS
-------------------
74. Subject to the exception contained in Article 82, a Director who expects to
be unable to attend Directors' Meetings because of absence, illness or otherwise
may appoint any person to be an alternate Director to act in his stead and such
appointee whilst he holds office as an alternate Director shall, in the event of
absence therefrom of his appointor, be entitled to attend meetings of the
Directors and to vote thereat and to do, in the place and stead of his
appointor, any other act or thing which his appointor is permitted or required
to do by virtue of his being a Director as if the alternate Director were the
appointor, other than appointment of an alternate to himself, and he shall ipso
facto vacate office if and when his appointor ceases to be a Director or removes
the appointee from office. Any appointment or removal under this Article shall
be effected by notice in writing under the hand of the Director making the same.
POWERS AND DUTIES OF DIRECTORS
------------------------------
75. The business of the Company shall be managed by the Directors (or a sole
Director if only one is appointed) who may pay all expenses incurred in
promoting, registering and setting up the Company, and may exercise all such
powers of the Company as are not, from time to time by the Statute, or by these
Articles, or such regulations, being not inconsistent with the aforesaid, as may
be prescribed by the Company in general meeting required to be exercised by the
Company in general meeting PROVIDED HOWEVER that no regulations made by the
Company in general meeting shall invalidate any prior act of the Directors which
would have been valid if that regulation had not been made.
76. The Directors may from time to time and at any time by powers of attorney
appoint any company, firm, person or body of persons, whether nominated directly
or
<PAGE>
18
indirectly by the Directors, to be the attorney or attorneys of the Company for
such purpose and with such powers, authorities and discretions (not exceeding
those vested in or exercisable by the Directors under these Articles) and for
such period and subject to such conditions as they may think fit, and any such
powers of attorney may contain such provisions for the protection and
convenience of persons dealing with any such attorneys as the Directors may
think fit and may also authorise any such attorney to delegate all or any of the
powers, authorities and discretions vested in him.
77. All cheques, promissory notes, drafts, bills of exchange and other
negotiable instruments and all receipts for monies paid to the Company shall be
signed, drawn, accepted, endorsed or otherwise executed as the case may be in
such manner as the Directors shall from time to time by resolution determine.
78. The Directors shall cause minutes to be made in books provided for the
purpose:
(a) of all appointments of officers made by the Directors;
(b) of the names of the Directors (including those represented thereat
by an alternate or by proxy) present at each meeting of the Directors and of any
committee of the Directors;
(c) of all resolutions and proceedings at all meetings of the Company
and of the Directors and of committees of Directors.
79. The Directors on behalf of the Company may pay a gratuity or pension or
allowance on retirement to any Director who has held any other salaried office
or place of profit with the Company or to his widow or dependants and may make
contributions to any fund and pay premiums for the purchase or provision of any
such gratuity, pension or allowance.
80. The Directors may exercise all the powers of the Company to borrow money and
to mortgage or charge its undertaking, property and uncalled capital or any part
thereof and to issue debentures, debenture stock and other securities whether
outright or as security for any debt, liability or obligation of the Company or
of any third party.
MANAGEMENT
----------
81. (a) The Directors may from time to time provide for the management of the
affairs of the Company in such manner as they shall think fit and the provisions
contained in the
<PAGE>
19
three next following paragraphs shall be without prejudice to the general powers
conferred by this paragraph.
(b) The Directors from time to time and at any time may establish any
committees, local boards or agencies for managing any of the affairs of the
Company and may appoint any persons to be members of such committees or local
boards or any managers or agents and
may fix their remuneration.
(c) The Directors from time to time and at any time may delegate to any
such committee, local board, manager or agent any of the powers, authorities and
discretions for the time being vested in the Directors and may authorise the
members for the time being of any such local board, or any of them to fill up
any vacancies therein and to act notwithstanding vacancies and any such
appointment or delegation may be made on such terms and subject to such
conditions as the Directors may think fit and the Directors may at any time
remove any person so appointed and may annul or vary any such delegation, but no
person dealing in good faith and without notice of any such annulment or
variation shall be affected thereby.
(d) Any such delegates as aforesaid may be authorised by the Directors
to subdelegate all or any of the powers, authorities, and discretions for the
time being vested in them.
MANAGING DIRECTORS
------------------
82. The Directors may, from time to time, appoint one or more of their body (but
not an alternate Director) to the office of Managing Director for such term and
at such remuneration (whether by way of salary, or commission, or participation
in profits, or partly in one way and partly in another) as they may think fit
but his appointment shall be subject to determination ipso facto if he ceases
from any cause to be a Director and no alternate Director appointed by him can
act in his stead as a Director or Managing Director.
83. The Directors may entrust to and confer upon a Managing Director any of the
powers exercisable by them upon such terms and conditions and with such
restrictions as they may think fit and either collaterally with or to the
exclusion of their own powers and may from time to time revoke, withdraw, alter
or vary all or any of such powers.
PROCEEDINGS OF DIRECTORS
------------------------
84. Except as otherwise provided by these Articles, the Directors shall meet
together for the despatch of business, convening, adjourning and otherwise
regulating their meetings as they think fit. Questions arising at any meeting
shall be decided by a majority of
<PAGE>
20
votes of the Directors and alternate Directors present at a meeting at which
there is a quorum, the vote of an alternate Director not being counted if his
appointor be present at such meeting. In case of an equality of votes, the
Chairman shall have a second or casting vote.
85. A Director or alternate Director may, and the Secretary on the requisition
of a Director or alternate Director shall, at any time summon a meeting of the
Directors by at least two days' notice in writing to every Director and
alternate Director which notice shall set forth the general nature of the
business to be considered unless notice is waived by all the Directors (or their
alternates) either at, before or after the meeting is held and PROVIDED FURTHER
if notice is given in person, by cable, telex or telecopy the same shall be
deemed to have been given on the day it is delivered to the Directors or
transmitting organisation as the case may be. The provisions of Article 40 shall
apply mutatis mutandis with respect to notices of meetings of Directors.
86. The quorum necessary for the transaction of the business of the Directors
may be fixed by the Directors and unless so fixed shall be two, a Director and
his appointed alternate Director being considered only one person for this
purpose, PROVIDED ALWAYS that if there shall at any time be only a sole Director
the quorum shall be one. For the purposes of this Article an alternate Director
or proxy appointed by a Director shall be counted in a quorum at a meeting at
which the Director appointing him is not present.
87. The continuing Directors may act notwithstanding any vacancy in their body,
but if and so long as their number is reduced below the number fixed by or
pursuant to these Articles as the necessary quorum of Directors the continuing
Directors or Director may act for the purpose of increasing the number of
Directors to that number, or of summoning a general meeting of the Company, but
for no other purpose.
88. The Directors may elect a Chairman of their Board and determine the period
for which he is to hold office; but if no such Chairman is elected, or if at any
meeting the Chairman is not present within five minutes after the time appointed
for holding the same, the Directors present may choose one of their number to be
Chairman of the meeting.
89. The Directors may delegate any of their powers to committees consisting of
such member or members of the Board of Directors (including Alternate Directors
in the absence of their appointors) as they think fit; any committee so formed
shall in the exercise of the powers so delegated conform to any regulations that
may be imposed on it by the
Directors.
90. A committee may meet and adjourn as it thinks proper. Questions arising at
any meeting shall be determined by a majority of votes of the members present,
and in the case of an equality of votes the Chairman shall have a second or
casting vote.
<PAGE>
21
91. All acts done by any meeting of the Directors or of a committee of Directors
(including any person acting as an alternate Director) shall, notwithstanding
that it be afterwards discovered that there was some defect in the appointment
of any Director or alternate Director, or that they or any of them were
disqualified, be as valid as if every such person had been duly appointed and
qualified to be a Director or alternate Director as the case may be.
92. Members of the Board of Directors or of any committee thereof may
participate in a meeting of the Board or of such 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 participation in a
meeting pursuant to this provision shall constitute presence in person at such
meeting. A resolution in writing (in one or more counterparts), signed by all
the Directors for the time being or all the members of a committee of Directors
(an alternate Director being entitled to sign such resolution on behalf of his
appointor) shall be as valid and effectual as if it had been passed at a meeting
of the Directors or committee as the case may be duly convened and held.
93. (a) A Director may be represented at any meetings of the Board of Directors
by a proxy appointed by him in which event the presence or vote of the proxy
shall for all purposes be deemed to be that of the Director.
(b) The provisions of Articles 59-62 shall mutatis mutandis apply to
the appointment of proxies by Directors.
VACATION OF OFFICE OF DIRECTOR
------------------------------
94. The office of a Director shall be vacated:
(a) if he gives notice in writing to the Company that he resigns
the office of Director;
(b) if he absents himself (without being represented by proxy or
an alternate Director appointed by him) from three consecutive
meetings of the Board of Directors without special leave of
absence from the Directors, and they pass a resolution that he
has by reason of such absence vacated office;
(c) if he dies, becomes bankrupt or makes any arrangement or
composition with his creditors generally;
(d) if he is found a lunatic or becomes of unsound mind.
<PAGE>
22
APPOINTMENT AND REMOVAL OF DIRECTORS
------------------------------------
95. The Company may by ordinary resolution appoint any person to be a Director
and may in like manner remove any Director and may in like manner appoint
another person in his stead.
96. The Directors shall have power at any time and from time to time to appoint
any person to be a Director, either to fill a casual vacancy or as an addition
to the existing Directors but so that the total amount of Directors (exclusive
of alternate Directors) shall not at any time exceed the number fixed in
accordance with these Articles.
PRESUMPTION OF ASSENT
---------------------
97. A Director of the Company who is present at a meeting of the Board of
Directors at which action on any Company matter is taken shall be presumed to
have assented to the action taken unless his dissent shall be entered in the
Minutes of the meeting or unless he shall file his written dissent from such
action with the person acting as the Secretary of the meeting before the
adjournment thereof or shall forward such dissent by registered mail to such
person immediately after the adjournment of the meeting. Such right to dissent
shall not apply to a Director who voted in favour of such action.
SEAL
----
98. (a) The Company may, if the Directors so determine, have a Seal which shall,
subject to paragraph (c) hereof, only be used by the authority of the Directors
or of a committee of the Directors authorised by the Directors in that behalf
and every instrument to which the Seal has been affixed shall be signed by one
person who shall be either a Director or the Secretary or Secretary-Treasurer or
some person appointed by the Directors for the purpose.
(b) The Company may have for use in any place or places outside the
Cayman Islands a duplicate Seal or Seals each of which shall be a facsimile of
the Common Seal of the Company and, if the Directors so determine, with the
addition on its face of the name of
every place where it is to be used.
(c) A Director, Secretary or other officer or representative or
attorney may without further authority of the Directors affix the Seal of the
Company over his signature alone to any document of the Company required to be
authenticated by him under Seal or to be filed with the Registrar of Companies
in the Cayman Islands or elsewhere wheresoever.
<PAGE>
23
OFFICERS
--------
99. The Company may have a President, a Secretary or Secretary-Treasurer
appointed by the Directors who may also from time to time appoint such other
officers as they consider necessary, all for such terms, at such remuneration
and to perform such duties, and subject to such provisions as to
disqualification and removal as the Directors from time to
time prescribe.
DIVIDENDS, DISTRIBUTIONS AND RESERVE
------------------------------------
100. Subject to the Statute, the Directors may from time to time declare
dividends (including interim dividends) and distributions on shares of the
Company outstanding and authorise payment of the same out of the funds of the
Company lawfully available therefor.
101. The Directors may, before declaring any dividends or distributions, set
aside such sums as they think proper as a reserve or reserves which shall at the
discretion of the Directors, be applicable for any purpose of the Company and
pending such application may, at the like discretion, be employed in the
business of the Company.
102. No dividend or distribution shall be payable except out of the profits of
the Company, realised or unrealised, or out of the share premium account or as
otherwise permitted by the Statute.
103. Subject to the rights of persons, if any, entitled to shares with special
rights as to dividends or distributions, if dividends or distributions are to be
declared on a class of shares they shall be declared and paid according to the
amounts paid or credited as paid on the shares of such class outstanding on the
record date for such dividend or distribution as determined in accordance with
these Articles but no amount paid or credited as paid on a share in advance of
calls shall be treated for the purpose of this Article as paid on the share.
104. The Directors may deduct from any dividend or distribution payable to any
Member all sums of money (if any) presently payable by him to the Company on
account of calls or otherwise.
105. The Directors may declare that any dividend or distribution be paid wholly
or partly by the distribution of specific assets and in particular of paid up
shares, debentures, or debenture stock of any other company or in any one or
more of such ways and where any difficulty arises in regard to such
distribution, the Directors may settle the same as they think expedient and in
particular may issue fractional certificates and fix the value for distribution
of such specific assets or any part thereof and may determine that cash payments
shall be made to any Members upon the footing of the value so fixed in order to
adjust the rights of
<PAGE>
24
all Members and may vest any such specific assets in trustees as may seem
expedient to the Directors.
106. Any dividend, distribution, interest or other monies payable in cash in
respect of shares may be paid by cheque or warrant sent through the post
directed to the registered address of the holder or, in the case of joint
holders, to the holder who is first named on the register of Members or to such
person and to such address as such holder or joint holders may in writing
direct. Every such cheque or warrant shall be made payable to the order of the
person to whom it is sent. Any one of two or more joint holders may give
effectual receipts for any dividends, bonuses, or other monies payable in
respect of the share held by them as joint holders.
107. No dividend or distribution shall bear interest against the Company.
CAPITALISATION
--------------
108. The Company may upon the recommendation of the Directors by ordinary
resolution authorise the Directors to capitalise any sum standing to the credit
of any of the Company's reserve accounts (including share premium account and
capital redemption reserve fund) or any sum standing to the credit of profit and
loss account or otherwise available for distribution and to appropriate such sum
to Members in the proportions in which such sum would have been divisible
amongst them had the same been a distribution of profits by way of dividend and
to apply such sum on their behalf in paying up in full unissued shares for
allotment and distribution credited as fully paid up to and amongst them in the
proportion aforesaid. In such event the Directors shall do all acts and things
required to give effect to such capitalisation, with full power to the Directors
to make such provisions as they think fit for the case of shares becoming
distributable in fractions (including provisions whereby the benefit of
fractional entitlements accrue to the Company rather than to the Members
concerned). The Directors may authorise any person to enter on behalf of all of
the Members interested into an agreement with the Company providing for such
capitalisation and matters incidental thereto and any agreement made under such
authority shall be effective and binding on all concerned.
BOOKS OF ACCOUNT
----------------
109. The Directors shall cause proper books of account to be kept with respect
to:
(a) all sums of money received and expended by the Company and the
matters in respect of which the receipt or expenditure takes
place;
(b) all sales and purchases of goods by the Company;
<PAGE>
25
(c) the assets and liabilities of the Company.
Proper books shall not be deemed to be kept if there are not kept such books of
account as are necessary to give a true and fair view of the state of the
Company's affairs and to explain its transactions.
110. The Directors shall from time to time determine whether and to what extent
and at what times and places and under what conditions or regulations the
accounts and books of the Company or any of them shall be open to the inspection
of Members not being Directors and no Member (not being a Director) shall have
any right of inspecting any account or book or document of the Company except as
conferred by Statute or authorised by the Directors or by the Company in general
meeting.
111. The Directors may from time to time cause to be prepared and to be laid
before the Company in general meeting profit and loss accounts, balance sheets,
group accounts (if any) and such other reports and accounts as may be required
by law.
AUDIT
-----
112. The Company may at any annual general meeting appoint an Auditor or
Auditors of the Company who shall hold office until the next annual general
meeting and may fix his or their remuneration.
113. The Directors may before the first annual general meeting appoint an
Auditor or Auditors of the Company who shall hold office until the first annual
general meeting unless previously removed by an ordinary resolution of the
Members in general meeting in which case the Members at that meeting may appoint
Auditors. The Directors may fill any casual vacancy in the office of Auditor but
while any such vacancy continues the surviving or continuing Auditor or
Auditors, if any, may act. The remuneration of any Auditor appointed by the
Directors under this Article may be fixed by the Directors.
114. Every Auditor of the Company shall have a right of access at all times to
the books and accounts and vouchers of the Company and shall be entitled to
require from the Directors and Officers of the Company such information and
explanation as may be necessary
for the performance of the duties of the auditors.
115. Auditors shall at the next annual general meeting following their
appointment and at any other time during their term of office, upon request of
the Directors or any general meeting of the Members, make a report on the
accounts of the Company in general meeting
during their tenure of office.
<PAGE>
26
NOTICES
-------
116. Notices shall be in writing and may be given by the Company to any Member
either personally or by sending it by post, cable, telex or telecopy to him or
to his address as shown in the register of Members, such notice, if mailed, to
be forwarded airmail if the address be outside the Cayman Islands.
117. (a) Where a notice is sent by post, service of the notice shall be deemed
to be effected by properly addressing, pre-paying and posting a letter
containing the notice, and to have been effected at the expiration of sixty
hours after the letter containing the same is posted as aforesaid.
(b) Where a notice is sent by cable, telex, or telecopy, service of the
notice shall be deemed to be effected by properly addressing, and sending such
notice through a transmitting organisation and to have been effected on the day
the same is sent as aforesaid.
118. A notice may be given by the Company to the joint holders of record of a
share by giving the notice to the joint holder first named on the register of
Members in respect of the share.
119. A notice may be given by the Company to the person or persons which the
Company has been advised are entitled to a share or shares in consequence of the
death or bankruptcy of a Member by sending it through the post as aforesaid in a
pre-paid letter 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 supplied for that purpose by the persons claiming to be so entitled, or
at the option of the Company by giving the notice in any manner in which the
same might have been given if the death or bankruptcy had not occurred.
120. Notice of every general meeting shall be given in any manner hereinbefore
authorised to:
(a) every person shown as a Member in the register of Members as
of the record date for such meeting except that in the case of
joint holders the notice shall be sufficient if given to the
joint holder first named in the register of Members.
(b) every person upon whom the ownership of a share devolves by
reason of his being a legal personal representative or a
trustee in bankruptcy of a Member of record where the Member
of record but for his death or bankruptcy would be entitled to
receive notice of the meeting; and
<PAGE>
27
No other person shall be entitled to receive notices of general meetings.
WINDING UP
----------
121. If the Company shall be wound up the liquidator may, with the sanction of a
Special Resolution of the Company and any other sanction required by the
Statute, divide amongst the Members in specie or kind the whole or any part of
the assets of the Company (whether they shall consist of property of the same
kind or not) and may for such purpose set such value as he deems fair upon any
property to be divided as aforesaid and may determine how such 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 such assets
in trustees upon such trusts for the benefit of the contributories as the
liquidator, with the like sanction, shall think fit, but so that no Member shall
be compelled to accept any shares or other securities whereon there is any
liability.
122. If the Company shall be wound up, and the assets available for distribution
amongst the Members as such shall be insufficient to repay the whole of the
paid-up capital, such assets shall be distributed so that, as nearly as may be,
the losses shall be borne by the Members in proportion to the capital paid up,
or which ought to have been paid up, at the commencement of the winding up on
the shares held by them respectively. And if in a winding up the assets
available for distribution amongst the Members shall be more than sufficient to
repay the whole of the capital paid up at the commencement of the winding up,
the excess shall be distributed amongst the Members in proportion to the capital
paid up at the commencement of the winding up on the shares held by them
respectively. This Article is to be without prejudice to the rights of the
holders of shares issued upon special terms and conditions.
INDEMNITY
---------
123. The Directors and officers for the time being of the Company and any
trustee for the time being acting in relation to any of the affairs of the
Company and their heirs, executors, administrators and personal representatives
respectively shall be indemnified out of the assets of the Company from and
against all actions, proceedings, costs, charges, losses, damages and expenses
which they or any of them shall or may incur or sustain by reason of any act
done or omitted in or about the execution of their duty in their respective
offices or trusts, except such (if any) as they shall incur or sustain by or
through their own wilful neglect or default respectively and no such Director,
officer or trustee shall be answerable for the acts, receipts, neglects or
defaults of any other Director, officer or trustee or for joining in any receipt
for the sake of conformity or for the solvency or honesty of any banker or other
persons with whom any monies or effects belonging to the Company may be lodged
or deposited for safe custody or for any insufficiency of any security upon
which any
<PAGE>
28
monies of the Company may be invested or for any other loss or damage due to any
such cause as aforesaid or which may happen in or about the execution of his
office or trust unless the same shall happen through the wilful neglect or
default of such Director, Officer or trustee.
FINANCIAL YEAR
--------------
124. Unless the Directors otherwise prescribe, the financial year of the Company
shall end on 31st December in each year and, following the year of
incorporation, shall begin on 1st January in each year.
AMENDMENTS OF ARTICLES
----------------------
125. Subject to the Statute, the Company may at any time and from time to time
by Special Resolution alter or amend these Articles in whole or in part.
TRANSFER BY WAY OF CONTINUATION
-------------------------------
126. If the Company is exempted as defined in the Statute, it shall, subject to
the provisions of the Statute and with the approval of a Special Resolution,
have the power to register by way of continuation as a body corporate under the
laws of any jurisdiction outside the Cayman Islands and to be deregistered in
the Cayman Islands.
THE COMPANIES LAW (1995 REVISION)
COMPANY LIMITED BY SHARES
MEMORANDUM OF ASSOCIATION
OF
MILLENIUM IV, INC.
1. The name of the Company is MILLENIUM IV, INC..
2. The Registered Office of the Company shall be at the offices of Maples and
Calder, Attorneys-at-Law, Ugland House, P.O. Box 309, George Town, Grand Cayman,
Cayman Islands, British West Indies or at such other place as the Directors may
from time to time decide.
3. The objects for which the Company is established are unrestricted and shall
include, but without limitation, the following:-
(i) (a) To undertake and carry on all or any of the trades and businesses of
international freight forwarders and agents, shippers, ship owners, ship
brokers, shipping agents and insurance brokers, underwriters, ship managers, tug
owners, shipping agents, loading brokers, freight contractors, carriers by land,
air and water, transport, haulage and general contractors, barge owners,
lightermen, railway and forwarding agents, dock owners, ships' husbands,
warehousemen, salvors, manufacturers of and dealers in tarpaulins, waterproofs,
machinery, engines, nautical instruments, and ships'rigging, gear, fittings and
equipment of every description, importers and exporters of and dealers in goods,
provisions, live and dead stock, commodities, articles, chattels, merchandise
and property of every kind,
<PAGE>
2
general traders and merchants, and generally to carry on the said businesses in
all their branches, and to carry on the said businesses either as principals or
agents or on commission or otherwise.
(b) To purchase or otherwise acquire, and to carry on the business or
businesses of fishing boat owners, smack owners, trawlers, deep-sea fishers,
shrimp fishers, fish curers, fish or shrimp salesmen, wholesale and retail fish
or shrimp merchants, wholesale and retail game and poultry merchants, ice
manufacturers, oil merchants and refiners, utilisers of fish refuse, manure
manufacturers, anchor and chain makers, wire rope makers, rope makers, mast and
block makers, ship chandlers, marine storekeepers, compass and nautical
instrument makers, marine engineers, engineers, boiler makers, ship builders,
dry-dock keepers, slip keepers, boat builders, ship and boat repairers, ship and
boat outfitters, salvors, wreck removers, wreck raisers, divers, auctioneers,
valuers, assessors, stevedores, wharfingers, carriers, forwarding agents, and
all other branches of business usually or conveniently connected with any such
business as aforesaid.
(c) To enter into, take over, negotiate or otherwise acquire, any
contract or contracts for the construction, building, equipping, fitting out,
storing, gearing or otherwise relating to any steamship, ship, trawler, catcher,
carrier, drifter, fishing boat, boat, or other vessel whatsoever, and to enter
into, take over, negotiate or otherwise acquire any other contract or contracts
whatever which the Company may think necessary, desirable or convenient for the
purposes of the Company or any of them, and to enter into, take over, negotiate,
or otherwise acquire any such contract or contracts at such prices and for such
<PAGE>
3
considerations, and upon such terms and conditions, and subject to such
stipulations and agreements as the Company may determine, and at any time and
from time to time vary, modify, alter or cancel any such contract.
(d) To acquire concessions or licences for the establishment and
working of lines of ships or other vessels between any ports of the world, or
for the formation or working of any railway or tramway, wharf, pier, dock, or
other works, or for the working of any coaches or other public conveyances, with
the benefit of any subsidy attached to any such concession or licence or
otherwise.
(e) To insure the vessels and other property of the Company in any
manner.
(f) To grant loans on ships and vessels or on goods and merchandise
carried or to be carried in any vessels and to buy and sell merchandise for
freighting on the ships and vessels of the Company.
(g) To engage in any and all kinds of business and other activities
with respect to oil, gas and other materials, and the products and by-products
thereof, including but not by way of limitation, exploration, developing,
drilling, producing, refining, processing, mining, confining, manufacturing,
storing, transporting, distributing, trading, buying, selling and all other
activities pertinent thereto.
(h) To resell or sublet any concession or licence obtained, or contract
entered into.
(i) To carry on the business of an investment company and to act as
promoters and entrepreneurs and to carry on business as financiers, capitalists,
concessionaires, merchants, brokers, traders, dealers, agents, importers and
exporters and to undertake and
<PAGE>
4
carry on and execute all kinds of investment, financial, commercial, mercantile,
trading and other operations.
(j) To carry on whether as principals, agents or otherwise howsoever
the business of realtors, developers, consultants, estate agents or managers,
builders, contractors, engineers, manufacturers, dealers in or vendors of all
types of property including services.
(ii) To exercise and enforce all rights and powers conferred by or incidental to
the ownership of any shares, stock, obligations or other securities including
without prejudice to the generality of the foregoing all such powers of veto or
control as may be conferred by virtue of the holding by the Company of some
special proportion of the issued or nominal amount thereof, to provide
managerial and other executive, supervisory and consultant services for or in
relation to any company in which the Company is interested upon such terms as
may be thought fit.
(iii) To purchase or otherwise acquire, to sell, exchange, surrender, lease,
mortgage, charge, convert, turn to account, dispose of and deal with real and
personal property and rights of all kinds and, in particular, mortgages,
debentures, produce, concessions, options, contracts, patents, annuities,
licences, stocks, shares, bonds, policies, book debts, business concerns,
undertakings, claims, privileges and choses in action of all kinds.
(iv) To subscribe for, conditionally or unconditionally, to underwrite, issue on
commission or otherwise, take, hold, deal in and convert stocks, shares and
securities of all kinds and to enter into partnership or into any arrangement
for sharing profits, reciprocal
<PAGE>
5
concessions or cooperation with any person or company and to promote and aid in
promoting, to constitute, form or organise any company, syndicate or partnership
of any kind, for the purpose of acquiring and undertaking any property and
liabilities of the Company or of advancing, directly or indirectly, the objects
of the Company or for any other purpose which the Company may think expedient.
(v) To stand surety for or to guarantee, support or secure the performance of
all or any of the obligations of any person, firm or company whether or not
related or affiliated to the Company in any manner and whether by personal
covenant or by mortgage, charge or lien upon the whole or any part of the
undertaking, property and assets of the Company, both present and future,
including its uncalled capital or by any such method and whether or not the
Company shall receive valuable consideration therefor.
(vi) To engage in or carry on any other lawful trade, business or enterprise
which may at any time appear to the Directors of the Company capable of being
conveniently carried on in conjunction with any of the aforementioned businesses
or activities or which may appear to the Directors or the Company likely to be
profitable to the Company. In the interpretation of this Memorandum of
Association in general and of this Clause 3 in particular no object, business or
power specified or mentioned shall be limited or restricted by reference to or
inference from any other object, business or power, or the name of the Company,
or by the juxtaposition of two or more objects, businesses or powers and that,
in the event of any ambiguity in this clause or elsewhere in this Memorandum of
Association,
<PAGE>
6
the same shall be resolved by such interpretation and construction as will widen
and enlarge and not restrict the objects, businesses and powers of and
exercisable by the Company.
4. Except as prohibited or limited by the Companies Law (1995 Revision), the
Company shall have full power and authority to carry out any object and shall
have and be capable of from time to time and at all times exercising any and all
of the powers at any time or from time to time exercisable by a natural person
or body corporate in doing in any part of the world whether as principal, agent,
contractor or otherwise whatever may be considered by it necessary for the
attainment of its objects and whatever else may be considered by it as
incidental or conducive thereto or consequential thereon, including, but without
in any way restricting the generality of the foregoing, the power to make any
alterations or amendments to this Memorandum of Association and the Articles of
Association of the Company considered necessary or convenient in the manner set
out in the Articles of Association of the Company, and the power to do any of
the following acts or things, viz:
to pay all expenses of and incidental to the promotion, formation and
incorporation of the Company; to register the Company to do business in any
other jurisdiction; to sell, lease or dispose of any property of the Company; to
draw, make, accept, endorse, discount, execute and issue promissory notes,
debentures, bills of exchange, bills of lading, warrants and other negotiable or
transferable instruments; to lend money or other assets and to act as
guarantors; to borrow or raise money on the security of the undertaking or on
all or any of the assets of the Company including uncalled capital or without
security; to invest monies of the Company in such manner as the Directors
determine; to promote other companies; to sell the
<PAGE>
7
undertaking of the Company for cash or any other consideration; to distribute
assets in specie to members of the Company; to make charitable or benevolent
donations; to pay pensions or gratuities or provide other benefits in cash or
kind to Directors, officers, employees, past or present and their families; to
carry on any trade or business and generally to do all acts and things which, in
the opinion of the Company or the Directors, may be conveniently or profitably
or usefully acquired and dealt with, carried on, executed or done by the Company
in connection with the business aforesaid PROVIDED THAT the Company shall only
carry on the businesses for which a licence is required under the laws of the
Cayman Islands when so licensed under the terms of such laws.
5. The liability of each member is limited to the amount from time to time
unpaid on such member's shares.
6. The share capital of the Company is US$50,000 divided into 50,000 shares of a
nominal or par value of US$1.00 each with power for the Company insofar as is
permitted by law, to redeem or purchase any of its shares and to increase or
reduce the said capital subject to the provisions of the Companies Law (1995
Revision) and the Articles of Association and to issue any part of its capital,
whether original, redeemed or increased with or without any preference, priority
or special privilege or subject to any postponement of rights or to any
conditions or restrictions and so that unless the conditions of issue shall
otherwise expressly declare every issue of shares whether declared to be
preference or otherwise shall be subject to the powers hereinbefore contained.
<PAGE>
8
7. If the Company is registered as exempted, its operations will be carried on
subject to the provisions of Section l92 of the Companies Law (1995 Revision)
and subject to the provisions of the Companies Law (1995 Revision) and the
Articles of Association it shall have the power to register by way of
continuation as a body corporate limited by shares under the laws of any
jurisdiction outside the Cayman Islands and to be deregistered in the Cayman
Islands.
WE the several persons whose names and addresses are subscribed are
desirous of being formed into a company in pursuance of this Memorandum of
Association and we respectively agree to take the number of shares in the
capital of the Company set opposite our respective names.
<PAGE>
THE COMPANIES LAW (1995 REVISION)
---------------------------------
COMPANY LIMITED BY SHARES
-------------------------
ARTICLES OF ASSOCIATION
OF
MILLENIUM IV, INC.
1. In these Articles Table A in the Schedule to the Statute does not apply and,
unless there be something in the subject or context inconsistent therewith,
"Articles" means these Articles as originally framed
or as from time to time altered by Special
Resolution.
"Auditors" means the persons for the time being
performing the duties of auditors of the
Company.
"Company" means the above-named Company.
"debenture" means debenture stock, mortgages, bonds
and any other such securities of the
Company whether constituting a charge on
the assets of the Company or not.
"Directors" means the directors for the time being of
the Company.
"dividend" includes bonus.
"Member" shall bear the meaning as ascribed to it
in the Statute.
"month" means calendar month.
"paid-up" means paid-up and/or credited as paid-up.
"registered office" means the registered office for the time
being of the Company.
<PAGE>
2
"Seal" means the common seal of the Company and
includes every duplicate seal.
"Secretary" includes an Assistant Secretary and any
person appointed to perform the duties of
Secretary of the Company.
"share" includes a fraction of a share.
"Special Resolution" has the same meaning as in the Statute and
includes a resolution approved in writing
as described therein.
"Statute" means the Companies Law of the Cayman
Islands as amended and every statutory
modification or re-enactment thereof for
the time being in force.
"written" and "in writing" include all modes of representing or
reproducing words in visible form.
Words importing the singular number only include the plural number and
vice-versa.
Words importing the masculine gender only include the feminine gender.
Words importing persons only include corporations.
2. The business of the Company may be commenced as soon after incorporation as
the Directors shall see fit, notwithstanding that part only of the shares may
have been allotted.
3. The Directors may pay, out of the capital or any other monies of the Company,
all expenses incurred in or about the formation and establishment of the Company
including the expenses of registration.
CERTIFICATES FOR SHARES
-----------------------
4. Certificates representing shares of the Company shall be in such form as
shall be determined by the Directors. Such certificates may be under Seal. All
certificates for shares shall be consecutively numbered or otherwise identified
and shall specify the shares to which they relate. The name and address of the
person to whom the shares represented thereby are issued, with the number of
shares and date of issue, shall be entered in the
<PAGE>
3
register of Members of the Company. All certificates surrendered to the Company
for transfer shall be cancelled and no new certificate shall be issued until the
former certificate for a like number of shares shall have been surrendered and
cancelled. The Directors may authorise certificates to be issued with the seal
and authorised signature(s) affixed by some method or system of mechanical
process.
5. Notwithstanding Article 4 of these Articles, if a share certificate be
defaced, lost or destroyed, it may be renewed on payment of a fee of one dollar
(US$l.00) or such less sum and on such terms (if any) as to evidence and
indemnity and the payment of the expenses incurred by the Company in
investigating evidence, as the Directors may prescribe.
ISSUE OF SHARES
---------------
6. Subject to the provisions, if any, in that behalf in the Memorandum of
Association and to any direction that may be given by the Company in general
meeting and without prejudice to any special rights previously conferred on the
holders of existing shares, the Directors may allot, issue, grant options over
or otherwise dispose of shares of the Company (including fractions of a share)
with or without preferred, deferred or other special rights or restrictions,
whether in regard to dividend, voting, return of capital or otherwise and to
such persons, at such times and on such other terms as they think proper.
7. The Company shall maintain a register of its Members and every person whose
name is entered as a Member in the register of Members shall be entitled without
payment to receive within two months after allotment or lodgement of transfer
(or within such other period as the conditions of issue shall provide) one
certificate for all his shares or several certificates each for one or more of
his shares upon payment of fifty cents (US$0.50) for every certificate after the
first or such less sum as the Directors shall from time to time determine
provided that in respect of a share or shares held jointly by several persons
the Company shall not be bound to issue more than one certificate and delivery
of a certificate for a share to one of the several joint holders shall be
sufficient delivery to all such holders.
TRANSFER OF SHARES
------------------
8. The instrument of transfer of any share shall be in writing and shall be
executed by or on behalf of the transferor and the transferor shall be deemed to
remain the holder of a share until the name of the transferee is entered in the
register in respect thereof.
9. The Directors may in their absolute discretion decline to register any
transfer of shares without assigning any reason therefor. If the Directors
refuse to register a transfer they shall notify the transferee within two months
of such refusal.
<PAGE>
4
10. The registration of transfers may be suspended at such time and for such
periods as the Directors may from time to time determine, provided always that
such registration shall not be suspended for more than forty-five days in any
year.
REDEEMABLE SHARES
-----------------
11. (a) Subject to the provisions of the Statute and the Memorandum of
Association, shares may be issued on the terms that they are, or at the option
of the Company or the holder are, to be redeemed on such terms and in such
manner as the Company, before the issue of the shares, may by Special Resolution
determine.
(b) Subject to the provisions of the Statute and the Memorandum of
Association, the Company may purchase its own shares (including fractions of a
share), including any redeemable shares, provided that the manner of purchase
has first been authorised by the Company in general meeting and may make payment
therefor in any manner authorised by the Statute, including out of capital.
VARIATION OF RIGHTS OF SHARES
-----------------------------
12. If at any time the share capital of the Company 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, whether or not the
Company is being wound-up, be varied with the consent in writing of the holders
of three-fourths of the issued shares of that class, or with the sanction of a
Special Resolution passed at a general meeting of the holders of the shares of
that class.
The provisions of these Articles relating to general meetings
shall apply to every such general meeting of the holders of one class of shares
except that the necessary quorum shall be one person holding or representing by
proxy at least 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.
13. The rights conferred upon the holders of the shares of any class issued with
preferred or other rights shall not, unless otherwise expressly provided by the
terms of issue of the shares of that class, be deemed to be varied by the
creation or issue of further shares ranking pari passu therewith.
COMMISSION ON SALE OF SHARES
----------------------------
14. The Company may in so far as the Statute from time to time permits pay a
commission to any person in consideration of his subscribing or agreeing to
subscribe
<PAGE>
5
whether absolutely or conditionally for any shares of the Company. Such
commissions may be satisfied by the payment of cash or the lodgement of fully or
partly paid-up shares or partly in one way and partly in the other. The Company
may also on any issue of shares pay such brokerage as may be lawful.
NON-RECOGNITION OF TRUSTS
-------------------------
15. No person shall be recognised by the Company as holding any share upon any
trust and the Company shall not be bound by or be compelled in any way to
recognise (even when having notice thereof) any equitable, contingent, future,
or partial interest in any share, or any interest in any fractional part of a
share, or (except only as is otherwise provided by these Articles or the
Statute) any other rights in respect of any share except an absolute right to
the entirety thereof in the registered holder.
LIEN ON SHARES
--------------
16. The Company shall have a first and paramount lien and charge on all shares
(whether fully paid-up or not) registered in the name of a Member (whether
solely or jointly with others) for all debts, liabilities or engagements to or
with the Company (whether presently payable or not) by such Member or his
estate, either alone or jointly with any other person, whether a Member or not,
but the Directors may at any time declare any share to be wholly or in part
exempt from the provisions of this Article. The registration of a transfer of
any such share shall operate as a waiver of the Company's lien (if any) thereon.
The Company's lien (if any) on a share shall extend to all dividends or other
monies payable in respect thereof.
17. The Company may sell, in such manner as the Directors think fit, any shares
on which the Company has a lien, but no sale shall be made unless a sum in
respect of which the lien exists is presently payable, nor until the expiration
of fourteen days after a notice in writing stating and demanding payment of such
part of the amount in respect of which the lien exists as is presently payable,
has been given to the registered holder or holders for the time being of the
share, or the person, of which the Company has notice, entitled thereto by
reason of his death or bankruptcy.
18. To give effect to any such sale the Directors may authorise some person to
transfer the shares sold to the purchaser thereof. The purchaser shall be
registered as the holder of the shares comprised in any such transfer, and he
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 or invalidity in the
proceedings in reference to the sale.
<PAGE>
6
19. The proceeds of such sale shall be received by the Company and applied in
payment of such part of the amount in respect of which the lien exists as is
presently payable and the residue, if any, shall (subject to a like lien for
sums 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.
CALL ON SHARES
--------------
20. (a) The Directors may from time to time make calls upon the Members in
respect of any monies unpaid on their shares (whether on account of the nominal
value of the shares or by way of premium or otherwise) and not by the conditions
of allotment thereof made payable at fixed terms, provided that no call shall be
payable at less than one month from the date fixed for the payment of the last
preceding call, and each Member shall (subject to receiving at least fourteen
days notice specifying the time or times of payment) pay to the Company at the
time or times so specified the amount called on the shares. A call may be
revoked or postponed as the Directors may determine. A call may be made payable
by instalments.
(b) A call shall be deemed to have been made at the time when the
resolution of the Directors authorising such call was passed.
(c) The joint holders of a share shall be jointly and severally liable
to pay all calls in respect thereof.
21. If a sum called in respect of a share is not paid before or on a day
appointed for payment thereof, the persons from whom the sum is due shall pay
interest on the sum from the day appointed for payment thereof to the time of
actual payment at such rate not exceeding ten per cent per annum as the
Directors may determine, but the Directors shall be at liberty to waive payment
of such interest either wholly or in part.
22. Any sum which by the terms of issue of a share becomes payable on allotment
or at any fixed date, whether on account of the nominal value of the share or by
way of premium or otherwise, shall for the purposes of these Articles be deemed
to be a call duly made, notified and payable on the date on which by the terms
of issue the same becomes payable, and in the case of non-payment all the
relevant provisions of these Articles as to payment of interest forfeiture or
otherwise shall apply as if such sum had become payable by virtue of a call duly
made and notified.
23. The Directors may, on the issue of shares, differentiate between the holders
as to the amount of calls or interest to be paid and the times of payment.
<PAGE>
7
24. (a) The Directors may, if they think fit, receive from any Member willing to
advance the same, all or any part of the monies uncalled and unpaid upon any
shares held by him, and upon all or any of the monies so advanced may (until the
same would but for such advances, become payable) pay interest at such rate not
exceeding (unless the Company in general meeting shall otherwise direct) seven
per cent per annum, as may be agreed upon between the Directors and the Member
paying such sum in advance.
(b) No such sum paid in advance of calls shall entitle the Member
paying such sum to any portion of a dividend declared in respect of any period
prior to the date upon which such sum would, but for such payment, become
presently payable.
FORFEITURE OF SHARES
--------------------
25. (a) If a Member fails to pay any call or instalment of a call or to make any
payment required by the terms of issue on the day appointed for payment thereof,
the Directors may, at any time thereafter during such time as any part of the
call, instalment or payment remains unpaid, give notice requiring payment of so
much of the call, instalment or payment as is unpaid, together with any interest
which may have accrued and all expenses that have been incurred by the Company
by reason of such non-payment. Such notice shall name a day (not earlier than
the expiration of fourteen days from the date of giving of the notice) on or
before which the payment required by the notice is to be made, and shall state
that, in the event of non-payment at or before the time appointed the shares in
respect of which such notice was given will be liable to be forfeited.
(b) If the requirements of any such notice as aforesaid are not
complied with, any share in respect of which the notice has been given may at
any time thereafter, before the payment required by the notice has been made, be
forfeited by a resolution of the Directors to that effect. Such forfeiture shall
include all dividends declared in respect of the forfeited
share and not actually paid before the forfeiture.
(c) A forfeited share may be sold or otherwise disposed of on such
terms and in such manner as the Directors think fit and at any time before a
sale or disposition the forfeiture may be cancelled on such terms as the
Directors think fit.
26. A person whose shares have been forfeited shall cease to be a Member in
respect of the forfeited shares, but shall, notwithstanding, remain liable to
pay to the Company all monies which, at the date of forfeiture were payable by
him to the Company in respect of the shares together with interest thereon, but
his liability shall cease if and when the Company shall have received payment in
full of all monies whenever payable in respect of the shares.
<PAGE>
8
27. A certificate in writing under the hand of one Director or the Secretary of
the Company that a share in the Company has been duly forfeited on a date stated
in the declaration shall be conclusive evidence of the fact therein stated as
against all persons claiming to be entitled to the share. The Company may
receive the consideration given for the share on any sale or disposition thereof
and may execute a transfer of the share in favour of the person to whom the
share is sold or disposed of and he shall thereupon be registered as the holder
of the share and shall not be bound to see to the application of the purchase
money, if any, nor shall his title to the share be affected by any irregularity
or invalidity in the proceedings in reference to the forfeiture, sale or
disposal of the share.
28. The provisions of these Articles as to forfeiture shall apply in the case of
non-payment of any sum which, by the terms of issue of a share, becomes payable
at a fixed time, whether on account of the nominal value of the share or by way
of premium as if the same had been payable by virtue of a call duly made and
notified.
REGISTRATION OF EMPOWERING INSTRUMENTS
--------------------------------------
29. The Company shall be entitled to charge a fee not exceeding one dollar
(US$l.00) on the registration of every probate, letters of administration,
certificate of death or marriage, power of attorney, notice in lieu of
distringas, or other instrument.
TRANSMISSION OF SHARES
----------------------
30. In case of the death of a Member, the survivor or survivors where the
deceased was a joint holder, and the legal personal representatives of the
deceased where he was a sole holder, shall be the only persons recognised by the
Company as having any title to his interest in the shares, but nothing herein
contained shall release the estate of any such deceased holder from any
liability in respect of any shares which had been held by him solely or jointly
with other persons.
31. (a) Any person becoming entitled to a share in consequence of the death or
bankruptcy or liquidation or dissolution of a Member (or in any other way than
by transfer) may, upon such evidence being produced as may from time to time be
required by the Directors and subject as hereinafter provided, elect either to
be registered himself as holder of the share or to make such transfer of the
share to such other person nominated by him as the deceased or bankrupt person
could have made and to have such person registered as the transferee thereof,
but the Directors shall, in either case, have the same right to decline or
suspend registration as they would have had in the case of a transfer of the
share by that Member before his death or bankruptcy as the case may be.
<PAGE>
9
(b) If the person so becoming entitled shall elect to be registered
himself as holder he shall deliver or send to the Company a notice in writing
signed by him stating that he so elects.
32. A person becoming entitled to a share by reason of the death or bankruptcy
or liquidation or dissolution of the holder (or in any other case than by
transfer) shall be entitled to the same dividends and other advantages to which
he would be entitled if he were the registered holder of the share, except that
he shall not, before being registered as a Member in respect of the share, be
entitled in respect of it to exercise any right conferred by membership in
relation to meetings of the Company PROVIDED HOWEVER that the Directors may at
any time give notice requiring any such person to elect either to be registered
himself or to transfer the share and if the notice is not complied with within
ninety days the Directors may thereafter withhold payment of all dividends,
bonuses or other monies payable in respect of the share until the requirements
of the notice have been complied with.
AMENDMENT OF MEMORANDUM OF ASSOCIATION, CHANGE OF
LOCATION OF REGISTERED OFFICE & ALTERATION OF CAPITAL
-----------------------------------------------------
33. (a) Subject to and in so far as permitted by the provisions of the Statute,
the Company may from time to time by ordinary resolution alter or amend its
Memorandum of Association otherwise than with respect to its name and objects
and may, without restricting the generality of the foregoing:
(i) increase the share capital by such sum to be
divided into shares of such amount or without nominal
or par value as the resolution shall prescribe and
with such rights, priorities and privileges annexed
thereto, as the Company in general meeting may
determine.
(ii) consolidate and divide all or any of its share
capital into shares of larger amount than its
existing shares;
(iii) by subdivision of its existing shares or any of them
divide the whole or any part of its share capital
into shares of smaller amount than is fixed by the
Memorandum of Association or into shares without
nominal or par value;
(iv) cancel any shares which at the date of the
passing of the resolution have not been taken or
agreed to be taken by any person.
<PAGE>
10
(b) All new shares created hereunder shall be subject to the same
provisions with reference to the payment of calls, liens, transfer,
transmission, forfeiture and otherwise as the
shares in the original share capital.
(c) Subject to the provisions of the Statute, the Company may by
Special Resolution change its name or alter its objects.
(d) Without prejudice to Article 11 hereof and subject to the
provisions of the Statute, the Company may by Special Resolution reduce its
share capital and any capital redemption reserve fund.
(e) Subject to the provisions of the Statute, the Company may by
resolution of the Directors change the location of its registered office.
CLOSING REGISTER OF MEMBERS OR FIXING RECORD DATE
-------------------------------------------------
34. For the purpose of determining Members entitled to notice of or to vote at
any meeting of Members or any adjournment thereof, or Members entitled to
receive payment of any dividend, or in order to make a determination of Members
for any other proper purpose, the Directors of the Company may provide that the
register of Members shall be closed for transfers for a stated period but not to
exceed in any case forty days. If the register of Members shall be so closed for
the purpose of determining Members entitled to notice of or to vote at a meeting
of Members such register shall be so closed for at least ten days immediately
preceding such meeting and the record date for such determination shall be the
date of the closure of the register of Members.
35. In lieu of or apart from closing the register of Members, the Directors may
fix in advance a date as the record date for any such determination of Members
entitled to notice of or to vote at a meeting of the Members and for the purpose
of determining the Members entitled to receive payment of any dividend the
Directors may, at or within 90 days prior to the date of declaration of such
dividend fix a subsequent date as the record date for such determination.
36. If the register of Members is not so closed and no record date is fixed for
the determination of Members entitled to notice of or to vote at a meeting of
Members or Members entitled to receive payment of a dividend, the date on which
notice of the meeting is mailed or the date on which the resolution of the
Directors declaring such dividend is adopted, as the case may be, shall be the
record date for such determination of Members. When a determination of Members
entitled to vote at any meeting of Members has been made as provided in this
section, such determination shall apply to any adjournment thereof.
<PAGE>
11
GENERAL MEETING
---------------
37. (a) Subject to paragraph (c) hereof, the Company shall within one year of
its incorporation and in each year of its existence thereafter hold a general
meeting as its annual general meeting and shall specify the meeting as such in
the notices calling it. The annual general meeting shall be held at such time
and place as the Directors shall appoint and if no other time and place is
prescribed by them, it shall be held at the registered office on the second
Wednesday in December of each year at ten o'clock in the morning.
(b) At these meetings the report of the Directors (if any) shall be
presented.
(c) If the Company is exempted as defined in the Statute it may but
shall not be obliged to hold an annual general meeting.
38. (a) The Directors may whenever they think fit, and they shall on the
requisition of Members of the Company holding at the date of the deposit of the
requisition not less than one-tenth of such of the paid-up capital of the
Company as at the date of the deposit carries the right of voting at general
meetings of the Company, proceed to convene a general meeting
of the Company.
(b) The requisition must state the objects of the meeting and must be
signed by the requisitionists and deposited at the registered office of the
Company and may consist of several documents in like form each signed by one or
more requisitionists.
(c) If the Directors do not within twenty-one days from the date of the
deposit of the requisition duly proceed to convene a general meeting, the
requisitionists, or any of them representing more than one-half of the total
voting rights of all of them, may themselves convene a general meeting, but any
meeting so convened shall not be held after the expiration of three months after
the expiration of the said twenty-one days.
(d) A general meeting convened as aforesaid by requisitionists shall be
convened in the same manner as nearly as possible as that in which general
meetings are to be convened
by Directors.
NOTICE OF GENERAL MEETINGS
--------------------------
39. At least five days' notice shall be given of an annual general meeting or
any other general meeting. Every notice shall be exclusive of the day on which
it is given or deemed to be given and of the day for which it is given and shall
specify the place, the day and the hour of the meeting and the general nature of
the business and shall be given in manner hereinafter mentioned or in such other
manner if any as may be prescribed by the
<PAGE>
12
Company PROVIDED that a general meeting of the Company shall, whether or not the
notice specified in this regulation has been given and whether or not the
provisions of Article 38 have been complied with, be deemed to have been duly
convened if it is so agreed:
(a) in the case of a general meeting called as an annual general
meeting by all the Members entitled to attend and vote thereat
or their proxies; and
(b) in the case of any other general meeting by a majority in
number of the Members having a right to attend and vote at the
meeting, being a majority together holding not less than
seventy-five per cent in nominal value or in the case of
shares without nominal or par value seventy-five per cent of
the shares in issue, or their proxies.
40. The accidental omission to give notice of a general meeting to, or the
non-receipt of notice of a meeting by any person entitled to receive notice
shall not invalidate the proceedings of that meeting.
PROCEEDINGS AT GENERAL MEETINGS
-------------------------------
41. No business shall be transacted at any general meeting unless a quorum of
Members is present at the time when the meeting proceeds to business; two
Members present in person or by proxy shall be a quorum provided always that if
the Company has one Member of record the quorum shall be that one Member present
in person or by proxy.
42. A resolution (including a Special Resolution) in writing (in one or more
counterparts) signed by all Members for the time being entitled to receive
notice of and to attend and vote at general meetings (or being corporations by
their duly authorised representatives) shall be as valid and effective as if the
same had been passed at a general meeting of the Company duly convened and held.
43. If within half an hour from the time appointed for the meeting a quorum is
not present, the meeting, if convened upon the requisition of Members, shall be
dissolved and in any other case it shall stand adjourned to the same day in the
next week at the same time and place or to such other time or such other place
as the Directors may determine and if at the adjourned meeting a quorum is not
present within half an hour from the time appointed for the meeting the Members
present shall be a quorum.
44. The Chairman, if any, of the Board of Directors shall preside as Chairman at
every general meeting of the Company, or if there is no such Chairman, or if he
shall not be present within fifteen minutes after the time appointed for the
holding of the meeting, or is
<PAGE>
13
unwilling to act, the Directors present shall elect one of their number to be
Chairman of the meeting.
45. If at any general meeting 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 shall choose one of their number to be Chairman
of the meeting.
46. The Chairman may, with the consent of any general meeting duly constituted
hereunder, 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 any
adjourned meeting other than the business left unfinished at the meeting from
which the adjournment took place. When a general meeting is adjourned for thirty
days or more, notice of the adjourned meeting shall be given as in the case of
an original meeting; save as aforesaid it shall not be necessary to give any
notice of an adjournment or of the business to be transacted at an adjourned
general meeting.
47. At any general meeting a resolution put to the vote of the meeting shall be
decided on a show of hands unless a poll is, before or on the declaration of the
result of the show of hands, demanded by the Chairman or any other Member
present in person or by proxy.
48. Unless a poll be so demanded a declaration by the Chairman that a resolution
has on a show of hands been carried, or carried unanimously, or by a particular
majority, or lost, and an entry to that effect in the Company's Minute Book
containing the Minutes of the proceedings of the meeting shall be conclusive
evidence of that fact without proof of the number or proportion of the votes
recorded in favour of or against such resolution.
49. The demand for a poll may be withdrawn.
50. Except as provided in Article 52, if a poll is duly demanded it shall be
taken in such manner as the Chairman directs and the result of the poll shall be
deemed to be the resolution of the general meeting at which the poll was
demanded.
51. In the case of an equality of votes, whether on a show of hands or on a
poll, the Chairman of the general meeting at which the show of hands takes place
or at which the poll is demanded, shall be entitled to a second or casting vote.
52. 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 at such time as the Chairman of the general meeting directs and
any business other than that
<PAGE>
14
upon which a poll has been demanded or is contingent thereon may be proceeded
with pending the taking of the poll.
VOTES OF MEMBERS
----------------
53. Subject to any rights or restrictions for the time being attached to any
class or classes of shares, on a show of hands every Member of record present in
person or by proxy at a general meeting shall have one vote and on a poll every
Member of record present in person or by proxy shall have one vote for each
share registered in his name in the register of Members.
54. In the case of joint holders of record 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 for this purpose seniority shall be
determined by the order in which the names stand in the register of Members.
55. A Member of unsound mind, or in respect of whom an order has been made by
any court, having jurisdiction in lunacy, may vote, whether on a show of hands
or on a poll, by his committee, receiver, curator bonis, or other person in the
nature of a committee, receiver or curator bonis appointed by that court, and
any such committee, receiver, curator bonis or other persons may vote by proxy.
56. No Member shall be entitled to vote at any general meeting unless he is
registered as a shareholder of the Company on the record date for such meeting
nor unless all calls or other sums presently payable by him in respect of shares
in the Company have been paid.
57. No objection shall be raised to the qualification of any voter except at the
general meeting or adjourned general meeting at which the vote objected to is
given or tendered and every vote not disallowed at such general meeting shall be
valid for all purposes. Any such objection made in due time shall be referred to
the Chairman of the general meeting whose decision shall be final and
conclusive.
58. On a poll or on a show of hands votes may be given either personally or by
proxy.
PROXIES
-------
59. The instrument appointing a proxy shall be in writing and shall be executed
under the hand of the appointor or of his attorney duly authorised in writing,
or, if the
<PAGE>
15
appointor is a corporation under the hand of an officer or attorney duly
authorised in that behalf. A proxy need not be a Member of the Company.
60. The instrument appointing a proxy shall be deposited at the registered
office of the Company or at such other place as is specified for that purpose in
the notice convening the meeting no later than the time for holding the meeting,
or adjourned meeting provided that the Chairman of the Meeting may at his
discretion direct that an instrument of proxy shall be deemed to have been duly
deposited upon receipt of telex, cable or telecopy confirmation from the
appointor that the instrument of proxy duly signed is in the course of
transmission to the Company.
61. The instrument appointing a proxy may be in any usual or common form and may
be expressed to be for a particular meeting or any adjournment thereof or
generally until revoked. An instrument appointing a proxy shall be deemed to
include the power to demand or join or concur in demanding a poll.
62. A vote given in accordance with the terms of an instrument of proxy shall be
valid notwithstanding the previous death or insanity of the principal or
revocation of the proxy or of the authority under which the proxy was executed,
or the transfer of the share in respect of which the proxy is given provided
that no intimation in writing of such death, insanity, revocation or transfer as
aforesaid shall have been received by the Company at the registered office
before the commencement of the general meeting, or adjourned meeting at which it
is sought to use the proxy.
63. Any corporation which is a Member of record of the Company may in accordance
with its Articles or in the absence of such provision by resolution of its
Directors or other governing body authorise such person as it thinks fit to act
as its representative at any meeting of the Company or of any class of Members
of the Company, and the person so authorised shall be entitled to exercise the
same powers on behalf of the corporation which he represents as the corporation
could exercise if it were an individual Member of record of the Company.
64. Shares of its own capital belonging to the Company or held by it in a
fiduciary capacity shall not be voted, directly or indirectly, at any meeting
and shall not be counted in determining the total number of outstanding shares
at any given time.
DIRECTORS
---------
65. There shall be a Board of Directors consisting of not less than one or more
than ten persons (exclusive of alternate Directors) PROVIDED HOWEVER that the
Company may from time to time by ordinary resolution increase or reduce the
limits in the
<PAGE>
16
number of Directors. The first Directors of the Company shall be determined in
writing by, or appointed by a resolution of, the subscribers of the Memorandum
of Association or a majority of them.
66. The remuneration to be paid to the Directors shall be such remuneration as
the Directors shall determine. Such remuneration shall be deemed to accrue from
day to day. The Directors shall also be entitled to be paid their travelling,
hotel and other expenses properly incurred by them in going to, attending and
returning from meetings of the Directors, or any committee of the Directors, or
general meetings of the Company, or otherwise in connection with the business of
the Company, or to receive a fixed allowance in respect thereof as may be
determined by the Directors from time to time, or a combination partly of one
such method and partly the other.
67. The Directors may by resolution award special remuneration to any Director
of the Company undertaking any special work or services for, or undertaking any
special mission on behalf of, the Company other than his ordinary routine work
as a Director. Any fees paid to a Director who is also counsel or solicitor to
the Company, or otherwise serves it in a professional capacity shall be in
addition to his remuneration as a Director.
68. A Director or alternate Director may hold any other office or place of
profit under the Company (other than the office of Auditor) in conjunction with
his office of Director for such period and on such terms as to remuneration and
otherwise as the Directors may determine.
69. A Director or alternate Director may act by himself or his firm in a
professional capacity for the Company and he or his firm shall be entitled to
remuneration for professional services as if he were not a Director or alternate
Director.
70. A shareholding qualification for Directors may be fixed by the Company in
general meeting, but unless and until so fixed no qualification shall be
required.
71. A Director or alternate Director of the Company may be or become a director
or other officer of or otherwise interested in any company promoted by the
Company or in which the Company may be interested as shareholder or otherwise
and no such Director or alternate Director shall be accountable to the Company
for any remuneration or other benefits received by him as a director or officer
of, or from his interest in, such other company.
72. No person shall be disqualified from the office of Director or alternate
Director or prevented by such office from contracting with the Company, either
as vendor, purchaser or otherwise, nor shall any such contract or any contract
or transaction entered into by or on behalf of the Company in which any Director
or alternate Director shall be in any
<PAGE>
17
way interested be or be liable to be avoided, nor shall any Director or
alternate Director so contracting or being so interested be liable to account to
the Company for any profit realised by any such contract or transaction by
reason of such Director holding office or of the fiduciary relation thereby
established. A Director (or his alternate Director in his absence) shall be at
liberty to vote in respect of any contract or transaction in which he is so
interested as aforesaid PROVIDED HOWEVER that the nature of the interest of any
Director or alternate Director in any such contract or transaction shall be
disclosed by him or the alternate Director appointed by him at or prior to its
consideration and any vote thereon.
73. A general notice that a Director or alternate Director is a shareholder of
any specified firm or company and is to be regarded as interested in any
transaction with such firm or company shall be sufficient disclosure under
Article 72 and after such general notice it shall not be necessary to give
special notice relating to any particular transaction.
ALTERNATE DIRECTORS
-------------------
74. Subject to the exception contained in Article 82, a Director who expects to
be unable to attend Directors' Meetings because of absence, illness or otherwise
may appoint any person to be an alternate Director to act in his stead and such
appointee whilst he holds office as an alternate Director shall, in the event of
absence therefrom of his appointor, be entitled to attend meetings of the
Directors and to vote thereat and to do, in the place and stead of his
appointor, any other act or thing which his appointor is permitted or required
to do by virtue of his being a Director as if the alternate Director were the
appointor, other than appointment of an alternate to himself, and he shall ipso
facto vacate office if and when his appointor ceases to be a Director or removes
the appointee from office. Any appointment or removal under this Article shall
be effected by notice in writing under the hand of the Director making the same.
POWERS AND DUTIES OF DIRECTORS
------------------------------
75. The business of the Company shall be managed by the Directors (or a sole
Director if only one is appointed) who may pay all expenses incurred in
promoting, registering and setting up the Company, and may exercise all such
powers of the Company as are not, from time to time by the Statute, or by these
Articles, or such regulations, being not inconsistent with the aforesaid, as may
be prescribed by the Company in general meeting required to be exercised by the
Company in general meeting PROVIDED HOWEVER that no regulations made by the
Company in general meeting shall invalidate any prior act of the Directors which
would have been valid if that regulation had not been made.
76. The Directors may from time to time and at any time by powers of attorney
appoint any company, firm, person or body of persons, whether nominated directly
or
<PAGE>
18
indirectly by the Directors, to be the attorney or attorneys of the Company for
such purpose and with such powers, authorities and discretions (not exceeding
those vested in or exercisable by the Directors under these Articles) and for
such period and subject to such conditions as they may think fit, and any such
powers of attorney may contain such provisions for the protection and
convenience of persons dealing with any such attorneys as the Directors may
think fit and may also authorise any such attorney to delegate all or any of the
powers, authorities and discretions vested in him.
77. All cheques, promissory notes, drafts, bills of exchange and other
negotiable instruments and all receipts for monies paid to the Company shall be
signed, drawn, accepted, endorsed or otherwise executed as the case may be in
such manner as the Directors shall from time to time by resolution determine.
78. The Directors shall cause minutes to be made in books provided for the
purpose:
(a) of all appointments of officers made by the Directors;
(b) of the names of the Directors (including those represented
thereat by an alternate or by proxy) present at each meeting
of the Directors and of any committee of the Directors;
(c) of all resolutions and proceedings at all meetings of the
Company and of the Directors and of committees of Directors.
79. The Directors on behalf of the Company may pay a gratuity or pension or
allowance on retirement to any Director who has held any other salaried office
or place of profit with the Company or to his widow or dependants and may make
contributions to any fund and pay premiums for the purchase or provision of any
such gratuity, pension or allowance.
80. The Directors may exercise all the powers of the Company to borrow money and
to mortgage or charge its undertaking, property and uncalled capital or any part
thereof and to issue debentures, debenture stock and other securities whether
outright or as security for any debt, liability or obligation of the Company or
of any third party.
MANAGEMENT
----------
81. (a) The Directors may from time to time provide for the management of the
affairs of the Company in such manner as they shall think fit and the provisions
contained in the
<PAGE>
19
three next following paragraphs shall be without prejudice to the general powers
conferred by this paragraph.
(b) The Directors from time to time and at any time may establish any
committees, local boards or agencies for managing any of the affairs of the
Company and may appoint any persons to be members of such committees or local
boards or any managers or agents and
may fix their remuneration.
(c) The Directors from time to time and at any time may delegate to any
such committee, local board, manager or agent any of the powers, authorities and
discretions for the time being vested in the Directors and may authorise the
members for the time being of any such local board, or any of them to fill up
any vacancies therein and to act notwithstanding vacancies and any such
appointment or delegation may be made on such terms and subject to such
conditions as the Directors may think fit and the Directors may at any time
remove any person so appointed and may annul or vary any such delegation, but no
person dealing in good faith and without notice of any such annulment or
variation shall be affected thereby.
(d) Any such delegates as aforesaid may be authorised by the Directors
to subdelegate all or any of the powers, authorities, and discretions for the
time being vested in them.
MANAGING DIRECTORS
------------------
82. The Directors may, from time to time, appoint one or more of their body (but
not an alternate Director) to the office of Managing Director for such term and
at such remuneration (whether by way of salary, or commission, or participation
in profits, or partly in one way and partly in another) as they may think fit
but his appointment shall be subject to determination ipso facto if he ceases
from any cause to be a Director and no alternate Director appointed by him can
act in his stead as a Director or Managing Director.
83. The Directors may entrust to and confer upon a Managing Director any of the
powers exercisable by them upon such terms and conditions and with such
restrictions as they may think fit and either collaterally with or to the
exclusion of their own powers and may from time to time revoke, withdraw, alter
or vary all or any of such powers.
PROCEEDINGS OF DIRECTORS
------------------------
84. Except as otherwise provided by these Articles, the Directors shall meet
together for the despatch of business, convening, adjourning and otherwise
regulating their meetings as they think fit. Questions arising at any meeting
shall be decided by a majority of
<PAGE>
20
votes of the Directors and alternate Directors present at a meeting at which
there is a quorum, the vote of an alternate Director not being counted if his
appointor be present at such meeting. In case of an equality of votes, the
Chairman shall have a second or casting vote.
85. A Director or alternate Director may, and the Secretary on the requisition
of a Director or alternate Director shall, at any time summon a meeting of the
Directors by at least two days' notice in writing to every Director and
alternate Director which notice shall set forth the general nature of the
business to be considered unless notice is waived by all the Directors (or their
alternates) either at, before or after the meeting is held and PROVIDED FURTHER
if notice is given in person, by cable, telex or telecopy the same shall be
deemed to have been given on the day it is delivered to the Directors or
transmitting organisation as the case may be. The provisions of Article 40 shall
apply mutatis mutandis with respect to notices of meetings of Directors.
86. The quorum necessary for the transaction of the business of the Directors
may be fixed by the Directors and unless so fixed shall be two, a Director and
his appointed alternate Director being considered only one person for this
purpose, PROVIDED ALWAYS that if there shall at any time be only a sole Director
the quorum shall be one. For the purposes of this Article an alternate Director
or proxy appointed by a Director shall be counted in a quorum at a meeting at
which the Director appointing him is not present.
87. The continuing Directors may act notwithstanding any vacancy in their body,
but if and so long as their number is reduced below the number fixed by or
pursuant to these Articles as the necessary quorum of Directors the continuing
Directors or Director may act for the purpose of increasing the number of
Directors to that number, or of summoning a general meeting of the Company, but
for no other purpose.
88. The Directors may elect a Chairman of their Board and determine the period
for which he is to hold office; but if no such Chairman is elected, or if at any
meeting the Chairman is not present within five minutes after the time appointed
for holding the same, the Directors present may choose one of their number to be
Chairman of the meeting.
89. The Directors may delegate any of their powers to committees consisting of
such member or members of the Board of Directors (including Alternate Directors
in the absence of their appointors) as they think fit; any committee so formed
shall in the exercise of the powers so delegated conform to any regulations that
may be imposed on it by the
Directors.
90. A committee may meet and adjourn as it thinks proper. Questions arising at
any meeting shall be determined by a majority of votes of the members present,
and in the case of an equality of votes the Chairman shall have a second or
casting vote.
<PAGE>
21
91. All acts done by any meeting of the Directors or of a committee of Directors
(including any person acting as an alternate Director) shall, notwithstanding
that it be afterwards discovered that there was some defect in the appointment
of any Director or alternate Director, or that they or any of them were
disqualified, be as valid as if every such person had been duly appointed and
qualified to be a Director or alternate Director as the case may be.
92. Members of the Board of Directors or of any committee thereof may
participate in a meeting of the Board or of such 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 participation in a
meeting pursuant to this provision shall constitute presence in person at such
meeting. A resolution in writing (in one or more counterparts), signed by all
the Directors for the time being or all the members of a committee of Directors
(an alternate Director being entitled to sign such resolution on behalf of his
appointor) shall be as valid and effectual as if it had been passed at a meeting
of the Directors or committee as the case may be duly convened and held.
93. (a) A Director may be represented at any meetings of the Board of Directors
by a proxy appointed by him in which event the presence or vote of the proxy
shall for all purposes be deemed to be that of the Director.
(b) The provisions of Articles 59-62 shall mutatis mutandis apply to
the appointment of proxies by Directors.
VACATION OF OFFICE OF DIRECTOR
------------------------------
94. The office of a Director shall be vacated:
(a) if he gives notice in writing to the Company that he resigns
the office of Director;
(b) if he absents himself (without being represented by proxy or
an alternate Director appointed by him) from three consecutive
meetings of the Board of Directors without special leave of
absence from the Directors, and they pass a resolution that he
has by reason of such absence vacated office;
(c) if he dies, becomes bankrupt or makes any arrangement or
composition with his creditors generally;
(d) if he is found a lunatic or becomes of unsound mind.
<PAGE>
22
APPOINTMENT AND REMOVAL OF DIRECTORS
------------------------------------
95. The Company may by ordinary resolution appoint any person to be a Director
and may in like manner remove any Director and may in like manner appoint
another person in his stead.
96. The Directors shall have power at any time and from time to time to appoint
any person to be a Director, either to fill a casual vacancy or as an addition
to the existing Directors but so that the total amount of Directors (exclusive
of alternate Directors) shall not at any time exceed the number fixed in
accordance with these Articles.
PRESUMPTION OF ASSENT
---------------------
97. A Director of the Company who is present at a meeting of the Board of
Directors at which action on any Company matter is taken shall be presumed to
have assented to the action taken unless his dissent shall be entered in the
Minutes of the meeting or unless he shall file his written dissent from such
action with the person acting as the Secretary of the meeting before the
adjournment thereof or shall forward such dissent by registered mail to such
person immediately after the adjournment of the meeting. Such right to dissent
shall not apply to a Director who voted in favour of such action.
SEAL
----
98. (a) The Company may, if the Directors so determine, have a Seal which shall,
subject to paragraph (c) hereof, only be used by the authority of the Directors
or of a committee of the Directors authorised by the Directors in that behalf
and every instrument to which the Seal has been affixed shall be signed by one
person who shall be either a Director or the Secretary or Secretary-Treasurer or
some person appointed by the Directors for the purpose.
(b) The Company may have for use in any place or places outside the
Cayman Islands a duplicate Seal or Seals each of which shall be a facsimile of
the Common Seal of the Company and, if the Directors so determine, with the
addition on its face of the name of
every place where it is to be used.
(c) A Director, Secretary or other officer or representative or
attorney may without further authority of the Directors affix the Seal of the
Company over his signature alone to any document of the Company required to be
authenticated by him under Seal or to be filed with the Registrar of Companies
in the Cayman Islands or elsewhere wheresoever.
<PAGE>
23
OFFICERS
--------
99. The Company may have a President, a Secretary or Secretary-Treasurer
appointed by the Directors who may also from time to time appoint such other
officers as they consider necessary, all for such terms, at such remuneration
and to perform such duties, and subject to such provisions as to
disqualification and removal as the Directors from time to
time prescribe.
DIVIDENDS, DISTRIBUTIONS AND RESERVE
------------------------------------
100. Subject to the Statute, the Directors may from time to time declare
dividends (including interim dividends) and distributions on shares of the
Company outstanding and authorise payment of the same out of the funds of the
Company lawfully available therefor.
101. The Directors may, before declaring any dividends or distributions, set
aside such sums as they think proper as a reserve or reserves which shall at the
discretion of the Directors, be applicable for any purpose of the Company and
pending such application may, at the like discretion, be employed in the
business of the Company.
102. No dividend or distribution shall be payable except out of the profits of
the Company, realised or unrealised, or out of the share premium account or as
otherwise permitted by the Statute.
103. Subject to the rights of persons, if any, entitled to shares with special
rights as to dividends or distributions, if dividends or distributions are to be
declared on a class of shares they shall be declared and paid according to the
amounts paid or credited as paid on the shares of such class outstanding on the
record date for such dividend or distribution as determined in accordance with
these Articles but no amount paid or credited as paid on a share in advance of
calls shall be treated for the purpose of this Article as paid on the share.
104. The Directors may deduct from any dividend or distribution payable to any
Member all sums of money (if any) presently payable by him to the Company on
account of calls or otherwise.
105. The Directors may declare that any dividend or distribution be paid wholly
or partly by the distribution of specific assets and in particular of paid up
shares, debentures, or debenture stock of any other company or in any one or
more of such ways and where any difficulty arises in regard to such
distribution, the Directors may settle the same as they think expedient and in
particular may issue fractional certificates and fix the value for distribution
of such specific assets or any part thereof and may determine that cash payments
shall be made to any Members upon the footing of the value so fixed in order to
adjust the rights of
<PAGE>
24
all Members and may vest any such specific assets in trustees as may seem
expedient to the Directors.
106. Any dividend, distribution, interest or other monies payable in cash in
respect of shares may be paid by cheque or warrant sent through the post
directed to the registered address of the holder or, in the case of joint
holders, to the holder who is first named on the register of Members or to such
person and to such address as such holder or joint holders may in writing
direct. Every such cheque or warrant shall be made payable to the order of the
person to whom it is sent. Any one of two or more joint holders may give
effectual receipts for any dividends, bonuses, or other monies payable in
respect of the share held by them as joint holders.
107. No dividend or distribution shall bear interest against the Company.
CAPITALISATION
--------------
108. The Company may upon the recommendation of the Directors by ordinary
resolution authorise the Directors to capitalise any sum standing to the credit
of any of the Company's reserve accounts (including share premium account and
capital redemption reserve fund) or any sum standing to the credit of profit and
loss account or otherwise available for distribution and to appropriate such sum
to Members in the proportions in which such sum would have been divisible
amongst them had the same been a distribution of profits by way of dividend and
to apply such sum on their behalf in paying up in full unissued shares for
allotment and distribution credited as fully paid up to and amongst them in the
proportion aforesaid. In such event the Directors shall do all acts and things
required to give effect to such capitalisation, with full power to the Directors
to make such provisions as they think fit for the case of shares becoming
distributable in fractions (including provisions whereby the benefit of
fractional entitlements accrue to the Company rather than to the Members
concerned). The Directors may authorise any person to enter on behalf of all of
the Members interested into an agreement with the Company providing for such
capitalisation and matters incidental thereto and any agreement made under such
authority shall be effective and binding on all concerned.
BOOKS OF ACCOUNT
----------------
109. The Directors shall cause proper books of account to be kept with respect
to:
(a) all sums of money received and expended by the Company and the
matters in respect of which the receipt or expenditure takes
place;
(b) all sales and purchases of goods by the Company;
<PAGE>
25
(c) the assets and liabilities of the Company.
Proper books shall not be deemed to be kept if there are not kept such books of
account as are necessary to give a true and fair view of the state of the
Company's affairs and to explain its transactions.
110. The Directors shall from time to time determine whether and to what extent
and at what times and places and under what conditions or regulations the
accounts and books of the Company or any of them shall be open to the inspection
of Members not being Directors and no Member (not being a Director) shall have
any right of inspecting any account or book or document of the Company except as
conferred by Statute or authorised by the Directors or by the Company in general
meeting.
111. The Directors may from time to time cause to be prepared and to be laid
before the Company in general meeting profit and loss accounts, balance sheets,
group accounts (if any) and such other reports and accounts as may be required
by law.
AUDIT
-----
112. The Company may at any annual general meeting appoint an Auditor or
Auditors of the Company who shall hold office until the next annual general
meeting and may fix his or their remuneration.
113. The Directors may before the first annual general meeting appoint an
Auditor or Auditors of the Company who shall hold office until the first annual
general meeting unless previously removed by an ordinary resolution of the
Members in general meeting in which case the Members at that meeting may appoint
Auditors. The Directors may fill any casual vacancy in the office of Auditor but
while any such vacancy continues the surviving or continuing Auditor or
Auditors, if any, may act. The remuneration of any Auditor appointed by the
Directors under this Article may be fixed by the Directors.
114. Every Auditor of the Company shall have a right of access at all times to
the books and accounts and vouchers of the Company and shall be entitled to
require from the Directors and Officers of the Company such information and
explanation as may be necessary for the performance of the duties of the
auditors.
115. Auditors shall at the next annual general meeting following their
appointment and at any other time during their term of office, upon request of
the Directors or any general meeting of the Members, make a report on the
accounts of the Company in general meeting during their tenure of office.
<PAGE>
26
NOTICES
-------
116. Notices shall be in writing and may be given by the Company to any Member
either personally or by sending it by post, cable, telex or telecopy to him or
to his address as shown in the register of Members, such notice, if mailed, to
be forwarded airmail if the address be outside the Cayman Islands.
117. (a) Where a notice is sent by post, service of the notice shall be deemed
to be effected by properly addressing, pre-paying and posting a letter
containing the notice, and to have been effected at the expiration of sixty
hours after the letter containing the same is posted as aforesaid.
(b) Where a notice is sent by cable, telex, or telecopy, service of the
notice shall be deemed to be effected by properly addressing, and sending such
notice through a transmitting organisation and to have been effected on the day
the same is sent as aforesaid.
118. A notice may be given by the Company to the joint holders of record of a
share by giving the notice to the joint holder first named on the register of
Members in respect of the share.
119. A notice may be given by the Company to the person or persons which the
Company has been advised are entitled to a share or shares in consequence of the
death or bankruptcy of a Member by sending it through the post as aforesaid in a
pre-paid letter 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 supplied for that purpose by the persons claiming to be so entitled, or
at the option of the Company by giving the notice in any manner in which the
same might have been given if the death or bankruptcy had not occurred.
120. Notice of every general meeting shall be given in any manner hereinbefore
authorised to:
(a) every person shown as a Member in the register of Members as
of the record date for such meeting except that in the case of
joint holders the notice shall be sufficient if given to the
joint holder first named in the register of Members.
(b) every person upon whom the ownership of a share devolves by
reason of his being a legal personal representative or a
trustee in bankruptcy of a Member of record where the Member
of record but for his death or bankruptcy would be entitled to
receive notice of the meeting; and
<PAGE>
27
No other person shall be entitled to receive notices of general meetings.
WINDING UP
----------
121. If the Company shall be wound up the liquidator may, with the sanction of a
Special Resolution of the Company and any other sanction required by the
Statute, divide amongst the Members in specie or kind the whole or any part of
the assets of the Company (whether they shall consist of property of the same
kind or not) and may for such purpose set such value as he deems fair upon any
property to be divided as aforesaid and may determine how such 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 such assets
in trustees upon such trusts for the benefit of the contributories as the
liquidator, with the like sanction, shall think fit, but so that no Member shall
be compelled to accept any shares or other securities whereon there is any
liability.
122. If the Company shall be wound up, and the assets available for distribution
amongst the Members as such shall be insufficient to repay the whole of the
paid-up capital, such assets shall be distributed so that, as nearly as may be,
the losses shall be borne by the Members in proportion to the capital paid up,
or which ought to have been paid up, at the commencement of the winding up on
the shares held by them respectively. And if in a winding up the assets
available for distribution amongst the Members shall be more than sufficient to
repay the whole of the capital paid up at the commencement of the winding up,
the excess shall be distributed amongst the Members in proportion to the capital
paid up at the commencement of the winding up on the shares held by them
respectively. This Article is to be without prejudice to the rights of the
holders of shares issued upon special terms and conditions.
INDEMNITY
---------
123. The Directors and officers for the time being of the Company and any
trustee for the time being acting in relation to any of the affairs of the
Company and their heirs, executors, administrators and personal representatives
respectively shall be indemnified out of the assets of the Company from and
against all actions, proceedings, costs, charges, losses, damages and expenses
which they or any of them shall or may incur or sustain by reason of any act
done or omitted in or about the execution of their duty in their respective
offices or trusts, except such (if any) as they shall incur or sustain by or
through their own wilful neglect or default respectively and no such Director,
officer or trustee shall be answerable for the acts, receipts, neglects or
defaults of any other Director, officer or trustee or for joining in any receipt
for the sake of conformity or for the solvency or honesty of any banker or other
persons with whom any monies or effects belonging to the Company may be lodged
or deposited for safe custody or for any insufficiency of any security upon
which any
<PAGE>
28
monies of the Company may be invested or for any other loss or damage due to any
such cause as aforesaid or which may happen in or about the execution of his
office or trust unless the same shall happen through the wilful neglect or
default of such Director, Officer or trustee.
FINANCIAL YEAR
--------------
124. Unless the Directors otherwise prescribe, the financial year of the Company
shall end on 31st December in each year and, following the year of
incorporation, shall begin on 1st January in each year.
AMENDMENTS OF ARTICLES
----------------------
125. Subject to the Statute, the Company may at any time and from time to time
by Special Resolution alter or amend these Articles in whole or in part.
TRANSFER BY WAY OF CONTINUATION
-------------------------------
126. If the Company is exempted as defined in the Statute, it shall, subject to
the provisions of the Statute and with the approval of a Special Resolution,
have the power to register by way of continuation as a body corporate under the
laws of any jurisdiction outside the Cayman Islands and to be deregistered in
the Cayman Islands.
THE COMPANIES LAW (1995 REVISION)
COMPANY LIMITED BY SHARES
MEMORANDUM OF ASSOCIATION
OF
MILLENIUM V, INC.
1. The name of the Company is MILLENIUM V, INC.
2. The Registered Office of the Company shall be at the offices of Maples
and Calder, Attorneys-at-Law, Ugland House, P.O. Box 309, George Town, Grand
Cayman, Cayman Islands, British West Indies or at such other place as the
Directors may from time to time decide.
3. The objects for which the Company is established are unrestricted and
shall include, but without limitation, the following:-
(i)(a) To undertake and carry on all or any of the trades and businesses of
international freight forwarders and agents, shippers, ship owners, ship
brokers, shipping agents and insurance brokers, underwriters, ship managers, tug
owners, shipping agents, loading brokers, freight contractors, carriers by land,
air and water, transport, haulage and general contractors, barge owners,
lightermen, railway and forwarding agents, dock owners, ships' husbands,
warehousemen, salvors, manufacturers of and dealers in tarpaulins, waterproofs,
machinery, engines, nautical instruments, and ships'rigging, gear, fittings and
equipment of every description, importers and exporters of and dealers in goods,
provisions, live and dead stock, commodities, articles, chattels, merchandise
and property of every kind, general traders and merchants, and generally to
carry on
<PAGE>
2
the said businesses in all their branches, and to carry on the said businesses
either as principals or agents or on commission or otherwise.
(b) To purchase or otherwise acquire, and to carry on the business or
businesses of fishing boat owners, smack owners, trawlers, deep-sea fishers,
shrimp fishers, fish curers, fish or shrimp salesmen, wholesale and retail fish
or shrimp merchants, wholesale and retail game and poultry merchants, ice
manufacturers, oil merchants and refiners, utilisers of fish refuse, manure
manufacturers, anchor and chain makers, wire rope makers, rope makers, mast and
block makers, ship chandlers, marine storekeepers, compass and nautical
instrument makers, marine engineers, engineers, boiler makers, ship builders,
dry-dock keepers, slip keepers, boat builders, ship and boat repairers, ship and
boat outfitters, salvors, wreck removers, wreck raisers, divers, auctioneers,
valuers, assessors, stevedores, wharfingers, carriers, forwarding agents, and
all other branches of business usually or conveniently connected with any such
business as aforesaid.
(c) To enter into, take over, negotiate or otherwise acquire, any
contract or contracts for the construction, building, equipping, fitting out,
storing, gearing or otherwise relating to any steamship, ship, trawler, catcher,
carrier, drifter, fishing boat, boat, or other vessel whatsoever, and to enter
into, take over, negotiate or otherwise acquire any other contract or contracts
whatever which the Company may think necessary, desirable or convenient for the
purposes of the Company or any of them, and to enter into, take over, negotiate,
or otherwise acquire any such contract or contracts at such prices and for such
considerations, and upon such terms and conditions, and subject to such
stipulations and agreements as the Company may determine, and at any time and
from time to time vary, modify, alter or cancel any such contract.
<PAGE>
3
(d) To acquire concessions or licences for the establishment and
working of lines of ships or other vessels between any ports of the world, or
for the formation or working of any railway or tramway, wharf, pier, dock, or
other works, or for the working of any coaches or other public conveyances, with
the benefit of any subsidy attached to any such concession or licence or
otherwise.
(e) To insure the vessels and other property of the Company in any
manner.
(f) To grant loans on ships and vessels or on goods and merchandise
carried or to be carried in any vessels and to buy and sell merchandise for
freighting on the ships and vessels of the Company.
(g) To engage in any and all kinds of business and other activities
with respect to oil, gas and other materials, and the products and by-products
thereof, including but not by way of limitation, exploration, developing,
drilling, producing, refining, processing, mining, confining, manufacturing,
storing, transporting, distributing, trading, buying, selling and all other
activities pertinent thereto.
(h) To resell or sublet any concession or licence obtained, or contract
entered into.
(i) To carry on the business of an investment company and to act as
promoters and entrepreneurs and to carry on business as financiers, capitalists,
concessionaires, merchants, brokers, traders, dealers, agents, importers and
exporters and to undertake and carry on and execute all kinds of investment,
financial, commercial, mercantile, trading and other operations.
<PAGE>
4
(j) To carry on whether as principals, agents or otherwise howsoever
the business of realtors, developers, consultants, estate agents or managers,
builders, contractors, engineers, manufacturers, dealers in or vendors of all
types of property including services. (ii) To exercise and enforce all rights
and powers conferred by or incidental to the ownership of any shares, stock,
obligations or other securities including without prejudice to the generality of
the foregoing all such powers of veto or control as may be conferred by virtue
of the holding by the Company of some special proportion of the issued or
nominal amount thereof, to provide managerial and other executive, supervisory
and consultant services for or in relation to any company in which the Company
is interested upon such terms as may be thought fit. (iii) To purchase or
otherwise acquire, to sell, exchange, surrender, lease, mortgage, charge,
convert, turn to account, dispose of and deal with real and personal property
and rights of all kinds and, in particular, mortgages, debentures, produce,
concessions, options, contracts, patents, annuities, licences, stocks, shares,
bonds, policies, book debts, business concerns, undertakings, claims, privileges
and choses in action of all kinds. (iv) To subscribe for, conditionally or
unconditionally, to underwrite, issue on commission or otherwise, take, hold,
deal in and convert stocks, shares and securities of all kinds and to enter into
partnership or into any arrangement for sharing profits, reciprocal concessions
or cooperation with any person or company and to promote and aid in promoting,
to constitute, form or organise any company, syndicate or partnership of any
kind, for the purpose of acquiring and undertaking any property and liabilities
of the Company or of advancing, directly or indirectly, the objects of the
Company or for any other purpose which the Company may think expedient.
<PAGE>
5
(v) To stand surety for or to guarantee, support or secure the performance
of all or any of the obligations of any person, firm or company whether or not
related or affiliated to the Company in any manner and whether by personal
covenant or by mortgage, charge or lien upon the whole or any part of the
undertaking, property and assets of the Company, both present and future,
including its uncalled capital or by any such method and whether or not the
Company shall receive valuable consideration therefor. (vi) To engage in or
carry on any other lawful trade, business or enterprise which may at any time
appear to the Directors of the Company capable of being conveniently carried on
in conjunction with any of the aforementioned businesses or activities or which
may appear to the Directors or the Company likely to be profitable to the
Company. In the interpretation of this Memorandum of Association in general and
of this Clause 3 in particular no object, business or power specified or
mentioned shall be limited or restricted by reference to or inference from any
other object, business or power, or the name of the Company, or by the
juxtaposition of two or more objects, businesses or powers and that, in the
event of any ambiguity in this clause or elsewhere in this Memorandum of
Association, the same shall be resolved by such interpretation and construction
as will widen and enlarge and not restrict the objects, businesses and powers of
and exercisable by the Company.
4. Except as prohibited or limited by the Companies Law (1995 Revision),
the Company shall have full power and authority to carry out any object and
shall have and be capable of from time to time and at all times exercising any
and all of the powers at any time or from time to time exercisable by a natural
person or body corporate in doing in any part of the world whether as
<PAGE>
6
principal, agent, contractor or otherwise whatever may be considered by it
necessary for the attainment of its objects and whatever else may be considered
by it as incidental or conducive thereto or consequential thereon, including,
but without in any way restricting the generality of the foregoing, the power to
make any alterations or amendments to this Memorandum of Association and the
Articles of Association of the Company considered necessary or convenient in the
manner set out in the Articles of Association of the Company, and the power to
do any of the following acts or things, viz: to pay all expenses of and
incidental to the promotion, formation and incorporation of the Company; to
register the Company to do business in any other jurisdiction; to sell, lease or
dispose of any property of the Company; to draw, make, accept, endorse,
discount, execute and issue promissory notes, debentures, bills of exchange,
bills of lading, warrants and other negotiable or transferable instruments; to
lend money or other assets and to act as guarantors; to borrow or raise money on
the security of the undertaking or on all or any of the assets of the Company
including uncalled capital or without security; to invest monies of the Company
in such manner as the Directors determine; to promote other companies; to sell
the undertaking of the Company for cash or any other consideration; to
distribute assets in specie to members of the Company; to make charitable or
benevolent donations; to pay pensions or gratuities or provide other benefits in
cash or kind to Directors, officers, employees, past or present and their
families; to carry on any trade or business and generally to do all acts and
things which, in the opinion of the Company or the Directors, may be
conveniently or profitably or usefully acquired and dealt with, carried on,
executed or done by the Company in connection with the business aforesaid
PROVIDED THAT
<PAGE>
7
the Company shall only carry on the businesses for which a licence is required
under the laws of the Cayman Islands when so licensed under the terms of such
laws.
5. The liability of each member is limited to the amount from time to time
unpaid on such member's shares.
6. The share capital of the Company is US$50,000 divided into 50,000
shares of a nominal or par value of US$1.00 each with power for the Company
insofar as is permitted by law, to redeem or purchase any of its shares and to
increase or reduce the said capital subject to the provisions of the Companies
Law (1995 Revision) and the Articles of Association and to issue any part of its
capital, whether original, redeemed or increased with or without any preference,
priority or special privilege or subject to any postponement of rights or to any
conditions or restrictions and so that unless the conditions of issue shall
otherwise expressly declare every issue of shares whether declared to be
preference or otherwise shall be subject to the powers hereinbefore contained.
7. If the Company is registered as exempted, its operations will be
carried on subject to the provisions of Section l92 of the Companies Law (1995
Revision) and subject to the provisions of the Companies Law (1995 Revision) and
the Articles of Association it shall have the power to register by way of
continuation as a body corporate limited by shares under the laws of any
jurisdiction outside the Cayman Islands and to be deregistered in the Cayman
Islands. WE the several persons whose names and addresses are subscribed are
desirous of being formed into a company in pursuance of this Memorandum of
Association and we respectively agree to take the number of shares in the
capital of the Company set opposite our respective names.
<PAGE>
THE COMPANIES LAW (1995 REVISION)
COMPANY LIMITED BY SHARES
ARTICLES OF ASSOCIATION
OF
MILLENIUM V, INC.
1. In these Articles Table A in the Schedule to the Statute does not apply
and, unless there be something in the subject or context inconsistent therewith,
<TABLE>
<CAPTION>
<S> <C> <C>
"Articles" means these Articles as originally framed or as from time to
time altered by Special Resolution.
"Auditors" means the persons for the time being performing the duties
of auditors of the Company.
"Company" means the above-named Company.
"debenture" means debenture stock, mortgages,
bonds and any other such securities
of the Company whether constituting a
charge on the assets of the Company
or not.
"Directors" means the directors for the time being of the Company.
"dividend" includes bonus.
"Member" shall bear the meaning as ascribed to it in the Statute.
"month" means calendar month.
"paid-up" means paid-up and/or credited as paid-up.
"registered office" means the registered office for the time being of the
Company.
"Seal" means the common seal of the Company and includes every
duplicate seal.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
2
<S> <C> <C>
"Secretary" includes an Assistant Secretary and any person appointed to
perform the duties of Secretary of the Company.
"share" includes a fraction of a share.
"Special Resolution" has the same meaning as in the Statute and includes a
resolution approved in writing as described therein.
"Statute" means the Companies Law of the Cayman
Islands as amended and every
statutory modification or
re-enactment thereof for the time
being in force.
"written" and "in writing" include all modes of representing or reproducing words in
visible form.
</TABLE>
Words importing the singular number only include the plural number
and vice-versa.
Words importing the masculine gender only include the feminine
gender.
Words importing persons only include corporations.
2. The business of the Company may be commenced as soon after
incorporation as the Directors shall see fit, notwithstanding that part only of
the shares may have been allotted.
3. The Directors may pay, out of the capital or any other monies of the
Company, all expenses incurred in or about the formation and establishment of
the Company including the expenses of registration.
CERTIFICATES FOR SHARES
4. Certificates representing shares of the Company shall be in such form as
shall be determined by the Directors. Such certificates may be under Seal. All
certificates for shares shall be consecutively numbered or otherwise identified
and shall specify the shares to which they relate. The name and address of the
person to whom the shares represented thereby are issued, with the number of
shares and date of issue, shall be entered in the register of Members of the
Company. All certificates surrendered to the Company for transfer shall be
cancelled and no new certificate shall be issued until the former certificate
for a like number of shares shall have been surrendered and cancelled. The
Directors may authorise certificates to be issued with the seal and authorised
signature(s) affixed by some method or system of mechanical process.
<PAGE>
3
5. Notwithstanding Article 4 of these Articles, if a share certificate be
defaced, lost or destroyed, it may be renewed on payment of a fee of one dollar
(US$l.00) or such less sum and on such terms (if any) as to evidence and
indemnity and the payment of the expenses incurred by the Company in
investigating evidence, as the Directors may prescribe.
ISSUE OF SHARES
6. Subject to the provisions, if any, in that behalf in the Memorandum of
Association and to any direction that may be given by the Company in general
meeting and without prejudice to any special rights previously conferred on the
holders of existing shares, the Directors may allot, issue, grant options over
or otherwise dispose of shares of the Company (including fractions of a share)
with or without preferred, deferred or other special rights or restrictions,
whether in regard to dividend, voting, return of capital or otherwise and to
such persons, at such times and on such other terms as they think proper.
7. The Company shall maintain a register of its Members and every person
whose name is entered as a Member in the register of Members shall be entitled
without payment to receive within two months after allotment or lodgement of
transfer (or within such other period as the conditions of issue shall provide)
one certificate for all his shares or several certificates each for one or more
of his shares upon payment of fifty cents (US$0.50) for every certificate after
the first or such less sum as the Directors shall from time to time determine
provided that in respect of a share or shares held jointly by several persons
the Company shall not be bound to issue more than one certificate and delivery
of a certificate for a share to one of the several joint holders shall be
sufficient delivery to all such holders.
TRANSFER OF SHARES
8. The instrument of transfer of any share shall be in writing and shall
be executed by or on behalf of the transferor and the transferor shall be deemed
to remain the holder of a share until the name of the transferee is entered in
the register in respect thereof.
9. The Directors may in their absolute discretion decline to register any
transfer of shares without assigning any reason therefor. If the Directors
refuse to register a transfer they shall notify the transferee within two months
of such refusal.
10. The registration of transfers may be suspended at such time and for
such periods as the Directors may from time to time determine, provided always
that such registration shall not be suspended for more than forty-five days in
any year.
<PAGE>
4
REDEEMABLE SHARES
11. (a) Subject to the provisions of the Statute and the Memorandum of
Association, shares may be issued on the terms that they are, or at the option
of the Company or the holder are, to be redeemed on such terms and in such
manner as the Company, before the issue of the shares, may by Special Resolution
determine.
(b) Subject to the provisions of the Statute and the Memorandum of
Association, the Company may purchase its own shares (including fractions of a
share), including any redeemable shares, provided that the manner of purchase
has first been authorised by the Company in general meeting and may make payment
therefor in any manner authorised by the Statute, including out of capital.
VARIATION OF RIGHTS OF SHARES
12. If at any time the share capital of the Company 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, whether or not
the Company is being wound-up, be varied with the consent in writing of the
holders of three-fourths of the issued shares of that class, or with the
sanction of a Special Resolution passed at a general meeting of the holders of
the shares of that class.
The provisions of these Articles relating to general meetings shall
apply to every such general meeting of the holders of one class of shares except
that the necessary quorum shall be one person holding or representing by proxy
at least 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.
13. The rights conferred upon the holders of the shares of any class issued
with preferred or other rights shall not, unless otherwise expressly provided by
the terms of issue of the shares of that class, be deemed to be varied by the
creation or issue of further shares ranking pari passu therewith.
COMMISSION ON SALE OF SHARES
14. The Company may in so far as the Statute from time to time permits pay
a commission to any person in consideration of his subscribing or agreeing to
subscribe whether absolutely or conditionally for any shares of the Company.
Such commissions may be satisfied by the payment of cash or the lodgement of
fully or partly paid-up shares or partly in one way and partly in the other. The
Company may also on any issue of shares pay such brokerage as may be lawful.
<PAGE>
5
NON-RECOGNITION OF TRUSTS
15. No person shall be recognised by the Company as holding any share upon
any trust and the Company shall not be bound by or be compelled in any way to
recognise (even when having notice thereof) any equitable, contingent, future,
or partial interest in any share, or any interest in any fractional part of a
share, or (except only as is otherwise provided by these Articles or the
Statute) any other rights in respect of any share except an absolute right to
the entirety thereof in the registered holder.
LIEN ON SHARES
16. The Company shall have a first and paramount lien and charge on all
shares (whether fully paid-up or not) registered in the name of a Member
(whether solely or jointly with others) for all debts, liabilities or
engagements to or with the Company (whether presently payable or not) by such
Member or his estate, either alone or jointly with any other person, whether a
Member or not, but the Directors may at any time declare any share to be wholly
or in part exempt from the provisions of this Article. The registration of a
transfer of any such share shall operate as a waiver of the Company's lien (if
any) thereon. The Company's lien (if any) on a share shall extend to all
dividends or other monies payable in respect thereof.
17. The Company may sell, in such manner as the Directors think fit, any
shares on which the Company has a lien, but no sale shall be made unless a sum
in respect of which the lien exists is presently payable, nor until the
expiration of fourteen days after a notice in writing stating and demanding
payment of such part of the amount in respect of which the lien exists as is
presently payable, has been given to the registered holder or holders for the
time being of the share, or the person, of which the Company has notice,
entitled thereto by reason of his death or bankruptcy.
18. To give effect to any such sale the Directors may authorise some
person to transfer the shares sold to the purchaser thereof. The purchaser shall
be registered as the holder of the shares comprised in any such transfer, and he
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 or invalidity in the
proceedings in reference to the sale.
19. The proceeds of such sale shall be received by the Company and applied
in payment of such part of the amount in respect of which the lien exists as is
presently payable and the residue, if any, shall (subject to a like lien for
sums 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.
<PAGE>
6
CALL ON SHARES
20. (a) The Directors may from time to time make calls upon the Members in
respect of any monies unpaid on their shares (whether on account of the nominal
value of the shares or by way of premium or otherwise) and not by the conditions
of allotment thereof made payable at fixed terms, provided that no call shall be
payable at less than one month from the date fixed for the payment of the last
preceding call, and each Member shall (subject to receiving at least fourteen
days notice specifying the time or times of payment) pay to the Company at the
time or times so specified the amount called on the shares. A call may be
revoked or postponed as the Directors may determine. A call may be made payable
by instalments.
(b) A call shall be deemed to have been made at the time when the
resolution of the Directors authorising such call was passed.
(c) The joint holders of a share shall be jointly and severally liable
to pay all calls in respect thereof.
21. If a sum called in respect of a share is not paid before or on a day
appointed for payment thereof, the persons from whom the sum is due shall pay
interest on the sum from the day appointed for payment thereof to the time of
actual payment at such rate not exceeding ten per cent per annum as the
Directors may determine, but the Directors shall be at liberty to waive payment
of such interest either wholly or in part.
22. Any sum which by the terms of issue of a share becomes payable on
allotment or at any fixed date, whether on account of the nominal value of the
share or by way of premium or otherwise, shall for the purposes of these
Articles be deemed to be a call duly made, notified and payable on the date on
which by the terms of issue the same becomes payable, and in the case of
non-payment all the relevant provisions of these Articles as to payment of
interest forfeiture or otherwise shall apply as if such sum had become payable
by virtue of a call duly made and notified.
23. The Directors may, on the issue of shares, differentiate between the
holders as to the amount of calls or interest to be paid and the times of
payment.
24. (a) The Directors may, if they think fit, receive from any Member
willing to advance the same, all or any part of the monies uncalled and unpaid
upon any shares held by him, and upon all or any of the monies so advanced may
(until the same would but for such advances, become payable) pay interest at
such rate not exceeding (unless the Company in general meeting shall otherwise
direct) seven per cent per annum, as may be agreed upon between the Directors
and the Member paying such sum in advance.
<PAGE>
7
(b) No such sum paid in advance of calls shall entitle the Member
paying such sum to any portion of a dividend declared in respect of any period
prior to the date upon which such sum would, but for such payment, become
presently payable.
FORFEITURE OF SHARES
25. (a) If a Member fails to pay any call or instalment of a call or to
make any payment required by the terms of issue on the day appointed for payment
thereof, the Directors may, at any time thereafter during such time as any part
of the call, instalment or payment remains unpaid, give notice requiring payment
of so much of the call, instalment or payment as is unpaid, together with any
interest which may have accrued and all expenses that have been incurred by the
Company by reason of such non-payment. Such notice shall name a day (not earlier
than the expiration of fourteen days from the date of giving of the notice) on
or before which the payment required by the notice is to be made, and shall
state that, in the event of non-payment at or before the time appointed the
shares in respect of which such notice was given will be liable to be forfeited.
(b) If the requirements of any such notice as aforesaid are not
complied with, any share in respect of which the notice has been given may at
any time thereafter, before the payment required by the notice has been made, be
forfeited by a resolution of the Directors to that effect. Such forfeiture shall
include all dividends declared in respect of the forfeited share and not
actually paid before the forfeiture.
(c) A forfeited share may be sold or otherwise disposed of on such
terms and in such manner as the Directors think fit and at any time before a
sale or disposition the forfeiture may be cancelled on such terms as the
Directors think fit.
26. A person whose shares have been forfeited shall cease to be a Member in
respect of the forfeited shares, but shall, notwithstanding, remain liable to
pay to the Company all monies which, at the date of forfeiture were payable by
him to the Company in respect of the shares together with interest thereon, but
his liability shall cease if and when the Company shall have received payment in
full of all monies whenever payable in respect of the shares.
27. A certificate in writing under the hand of one Director or the
Secretary of the Company that a share in the Company has been duly forfeited on
a date stated in the declaration shall be conclusive evidence of the fact
therein stated as against all persons claiming to be entitled to the share. The
Company may receive the consideration given for the share on any sale or
disposition thereof and may execute a transfer of the share in favour of the
person to whom the share is sold or disposed of and he shall thereupon be
registered as the holder of the share and shall not be bound to see to the
application of the purchase money, if any, nor shall his title to the share be
affected by any irregularity or invalidity in the proceedings in reference to
the forfeiture, sale or disposal of the share.
<PAGE>
8
28. The provisions of these Articles as to forfeiture shall apply in the
case of non-payment of any sum which, by the terms of issue of a share, becomes
payable at a fixed time, whether on account of the nominal value of the share or
by way of premium as if the same had been payable by virtue of a call duly made
and notified.
REGISTRATION OF EMPOWERING INSTRUMENTS
29. The Company shall be entitled to charge a fee not exceeding one dollar
(US$l.00) on the registration of every probate, letters of administration,
certificate of death or marriage, power of attorney, notice in lieu of
distringas, or other instrument.
TRANSMISSION OF SHARES
30. In case of the death of a Member, the survivor or survivors where the
deceased was a joint holder, and the legal personal representatives of the
deceased where he was a sole holder, shall be the only persons recognised by the
Company as having any title to his interest in the shares, but nothing herein
contained shall release the estate of any such deceased holder from any
liability in respect of any shares which had been held by him solely or jointly
with other persons.
31. (a) Any person becoming entitled to a share in consequence of the death
or bankruptcy or liquidation or dissolution of a Member (or in any other way
than by transfer) may, upon such evidence being produced as may from time to
time be required by the Directors and subject as hereinafter provided, elect
either to be registered himself as holder of the share or to make such transfer
of the share to such other person nominated by him as the deceased or bankrupt
person could have made and to have such person registered as the transferee
thereof, but the Directors shall, in either case, have the same right to decline
or suspend registration as they would have had in the case of a transfer of the
share by that Member before his death or bankruptcy as the case may be.
(b) If the person so becoming entitled shall elect to be registered
himself as holder he shall deliver or send to the Company a notice in writing
signed by him stating that he so elects.
32. A person becoming entitled to a share by reason of the death or
bankruptcy or liquidation or dissolution of the holder (or in any other case
than by transfer) shall be entitled to the same dividends and other advantages
to which he would be entitled if he were the registered holder of the share,
except that he shall not, before being registered as a Member in respect of the
share, be entitled in respect of it to exercise any right conferred by
membership in relation to meetings of the Company PROVIDED HOWEVER that the
Directors may at any time give notice requiring any such person to elect either
to be registered himself or to transfer the share and if the notice is not
complied with within ninety days the Directors may thereafter withhold payment
of all
<PAGE>
9
dividends, bonuses or other monies payable in respect of the share until the
requirements of the notice have been complied with.
AMENDMENT OF MEMORANDUM OF ASSOCIATION, CHANGE OF
LOCATION OF REGISTERED OFFICE & ALTERATION OF CAPITAL
33. (a) Subject to and in so far as permitted by the provisions of the
Statute, the Company may from time to time by ordinary resolution alter or amend
its Memorandum of Association otherwise than with respect to its name and
objects and may, without restricting the generality of the foregoing:
(i) increase the share capital by such sum to be divided
into shares of such amount or without nominal or par
value as the resolution shall prescribe and with such
rights, priorities and privileges annexed thereto, as
the Company in general meeting may determine.
(ii) consolidate and divide all or any of its share
capital into shares of larger amount than its
existing shares;
(iii) by subdivision of its existing shares or any of them
divide the whole or any part of its share capital
into shares of smaller amount than is fixed by the
Memorandum of Association or into shares without
nominal or par value;
(iv) cancel any shares which at the date of the passing of
the resolution have not been taken or agreed to be
taken by any person.
(b) All new shares created hereunder shall be subject to the same
provisions with reference to the payment of calls, liens, transfer,
transmission, forfeiture and otherwise as the shares in the original share
capital.
(c) Subject to the provisions of the Statute, the Company may by
Special Resolution change its name or alter its objects.
(d) Without prejudice to Article 11 hereof and subject to the
provisions of the Statute, the Company may by Special Resolution reduce its
share capital and any capital redemption reserve fund.
(e) Subject to the provisions of the Statute, the Company may by
resolution of the Directors change the location of its registered office.
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10
CLOSING REGISTER OF MEMBERS OR FIXING RECORD DATE
34. For the purpose of determining Members entitled to notice of or to vote
at any meeting of Members or any adjournment thereof, or Members entitled to
receive payment of any dividend, or in order to make a determination of Members
for any other proper purpose, the Directors of the Company may provide that the
register of Members shall be closed for transfers for a stated period but not to
exceed in any case forty days. If the register of Members shall be so closed for
the purpose of determining Members entitled to notice of or to vote at a meeting
of Members such register shall be so closed for at least ten days immediately
preceding such meeting and the record date for such determination shall be the
date of the closure of the register of Members.
35. In lieu of or apart from closing the register of Members, the Directors
may fix in advance a date as the record date for any such determination of
Members entitled to notice of or to vote at a meeting of the Members and for the
purpose of determining the Members entitled to receive payment of any dividend
the Directors may, at or within 90 days prior to the date of declaration of such
dividend fix a subsequent date as the record date for such determination.
36. If the register of Members is not so closed and no record date is fixed
for the determination of Members entitled to notice of or to vote at a meeting
of Members or Members entitled to receive payment of a dividend, the date on
which notice of the meeting is mailed or the date on which the resolution of the
Directors declaring such dividend is adopted, as the case may be, shall be the
record date for such determination of Members. When a determination of Members
entitled to vote at any meeting of Members has been made as provided in this
section, such determination shall apply to any adjournment thereof.
GENERAL MEETING
37. (a) Subject to paragraph (c) hereof, the Company shall within one year
of its incorporation and in each year of its existence thereafter hold a general
meeting as its annual general meeting and shall specify the meeting as such in
the notices calling it. The annual general meeting shall be held at such time
and place as the Directors shall appoint and if no other time and place is
prescribed by them, it shall be held at the registered office on the second
Wednesday in December of each year at ten o'clock in the morning.
(b) At these meetings the report of the Directors (if any) shall be
presented.
(c) If the Company is exempted as defined in the Statute it may but
shall not be obliged to hold an annual general meeting.
38. (a) The Directors may whenever they think fit, and they shall on the
requisition of Members of the Company holding at the date of the deposit of the
requisition not less than
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11
one-tenth of such of the paid-up capital of the Company as at the date of the
deposit carries the right of voting at general meetings of the Company, proceed
to convene a general meeting of the Company.
(b) The requisition must state the objects of the meeting and must be
signed by the requisitionists and deposited at the registered office of the
Company and may consist of several documents in like form each signed by one or
more requisitionists.
(c) If the Directors do not within twenty-one days from the date of the
deposit of the requisition duly proceed to convene a general meeting, the
requisitionists, or any of them representing more than one-half of the total
voting rights of all of them, may themselves convene a general meeting, but any
meeting so convened shall not be held after the expiration of three months after
the expiration of the said twenty-one days.
(d) A general meeting convened as aforesaid by requisitionists shall be
convened in the same manner as nearly as possible as that in which general
meetings are to be convened by Directors.
NOTICE OF GENERAL MEETINGS
39. At least five days' notice shall be given of an annual general meeting
or any other general meeting. Every notice shall be exclusive of the day on
which it is given or deemed to be given and of the day for which it is given and
shall specify the place, the day and the hour of the meeting and the general
nature of the business and shall be given in manner hereinafter mentioned or in
such other manner if any as may be prescribed by the Company PROVIDED that a
general meeting of the Company shall, whether or not the notice specified in
this regulation has been given and whether or not the provisions of Article 38
have been complied with, be deemed to have been duly convened if it is so
agreed:
(a) in the case of a general meeting called as an annual general
meeting by all the Members entitled to attend and vote thereat or their proxies;
and
(b) in the case of any other general meeting by a majority in number of
the Members having a right to attend and vote at the meeting, being a majority
together holding not less than seventy-five per cent in nominal value or in the
case of shares without nominal or par value seventy-five per cent of the shares
in issue, or their proxies.
40. The accidental omission to give notice of a general meeting to, or the
non-receipt of notice of a meeting by any person entitled to receive notice
shall not invalidate the proceedings of that meeting.
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12
PROCEEDINGS AT GENERAL MEETINGS
41. No business shall be transacted at any general meeting unless a quorum
of Members is present at the time when the meeting proceeds to business; two
Members present in person or by proxy shall be a quorum provided always that if
the Company has one Member of record the quorum shall be that one Member present
in person or by proxy.
42. A resolution (including a Special Resolution) in writing (in one or
more counterparts) signed by all Members for the time being entitled to receive
notice of and to attend and vote at general meetings (or being corporations by
their duly authorised representatives) shall be as valid and effective as if the
same had been passed at a general meeting of the Company duly convened and held.
43. If within half an hour from the time appointed for the meeting a quorum
is not present, the meeting, if convened upon the requisition of Members, shall
be dissolved and in any other case it shall stand adjourned to the same day in
the next week at the same time and place or to such other time or such other
place as the Directors may determine and if at the adjourned meeting a quorum is
not present within half an hour from the time appointed for the meeting the
Members present shall be a quorum.
44. The Chairman, if any, of the Board of Directors shall preside as
Chairman at every general meeting of the Company, or if there is no such
Chairman, or if he shall not be present within fifteen minutes after the time
appointed for the holding of the meeting, or is unwilling to act, the Directors
present shall elect one of their number to be Chairman of the meeting.
45. If at any general meeting 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 shall choose one of their number to be
Chairman of the meeting.
46. The Chairman may, with the consent of any general meeting duly
constituted hereunder, 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 any adjourned meeting other than the business left unfinished at
the meeting from which the adjournment took place. When a general meeting is
adjourned for thirty days or more, notice of the adjourned meeting shall be
given as in the case of an original meeting; save as aforesaid it shall not be
necessary to give any notice of an adjournment or of the business to be
transacted at an adjourned general meeting.
47. At any general meeting a resolution put to the vote of the meeting
shall be decided on a show of hands unless a poll is, before or on the
declaration of the result of the show of hands, demanded by the Chairman or any
other Member present in person or by proxy.
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13
48. Unless a poll be so demanded a declaration by the Chairman that a
resolution has on a show of hands been carried, or carried unanimously, or by a
particular majority, or lost, and an entry to that effect in the Company's
Minute Book containing the Minutes of the proceedings of the meeting shall be
conclusive evidence of that fact without proof of the number or proportion of
the votes recorded in favour of or against such resolution.
49. The demand for a poll may be withdrawn.
50. Except as provided in Article 52, if a poll is duly demanded it shall
be taken in such manner as the Chairman directs and the result of the poll shall
be deemed to be the resolution of the general meeting at which the poll was
demanded.
51. In the case of an equality of votes, whether on a show of hands or on a
poll, the Chairman of the general meeting at which the show of hands takes place
or at which the poll is demanded, shall be entitled to a second or casting vote.
52. 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 at such time as the Chairman of the general meeting directs and
any business other than that upon which a poll has been demanded or is
contingent thereon may be proceeded with pending the taking of the poll.
VOTES OF MEMBERS
53. Subject to any rights or restrictions for the time being attached to
any class or classes of shares, on a show of hands every Member of record
present in person or by proxy at a general meeting shall have one vote and on a
poll every Member of record present in person or by proxy shall have one vote
for each share registered in his name in the register of Members.
54. In the case of joint holders of record 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 for this purpose
seniority shall be determined by the order in which the names stand in the
register of Members.
55. A Member of unsound mind, or in respect of whom an order has been made
by any court, having jurisdiction in lunacy, may vote, whether on a show of
hands or on a poll, by his committee, receiver, curator bonis, or other person
in the nature of a committee, receiver or curator bonis appointed by that court,
and any such committee, receiver, curator bonis or other persons may vote by
proxy.
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14
56. No Member shall be entitled to vote at any general meeting unless he is
registered as a shareholder of the Company on the record date for such meeting
nor unless all calls or other sums presently payable by him in respect of shares
in the Company have been paid.
57. No objection shall be raised to the qualification of any voter except
at the general meeting or adjourned general meeting at which the vote objected
to is given or tendered and every vote not disallowed at such general meeting
shall be valid for all purposes. Any such objection made in due time shall be
referred to the Chairman of the general meeting whose decision shall be final
and conclusive.
58. On a poll or on a show of hands votes may be given either personally or
by proxy.
PROXIES
59. The instrument appointing a proxy shall be in writing and shall be
executed under the hand of the appointor or of his attorney duly authorised in
writing, or, if the appointor is a corporation under the hand of an officer or
attorney duly authorised in that behalf. A proxy need not be a Member of the
Company.
60. The instrument appointing a proxy shall be deposited at the registered
office of the Company or at such other place as is specified for that purpose in
the notice convening the meeting no later than the time for holding the meeting,
or adjourned meeting provided that the Chairman of the Meeting may at his
discretion direct that an instrument of proxy shall be deemed to have been duly
deposited upon receipt of telex, cable or telecopy confirmation from the
appointor that the instrument of proxy duly signed is in the course of
transmission to the Company.
61. The instrument appointing a proxy may be in any usual or common form
and may be expressed to be for a particular meeting or any adjournment thereof
or generally until revoked. An instrument appointing a proxy shall be deemed to
include the power to demand or join or concur in demanding a poll.
62. A vote given in accordance with the terms of an instrument of proxy
shall be valid notwithstanding the previous death or insanity of the principal
or revocation of the proxy or of the authority under which the proxy was
executed, or the transfer of the share in respect of which the proxy is given
provided that no intimation in writing of such death, insanity, revocation or
transfer as aforesaid shall have been received by the Company at the registered
office before the commencement of the general meeting, or adjourned meeting at
which it is sought to use the proxy.
63. Any corporation which is a Member of record of the Company may in
accordance with its Articles or in the absence of such provision by resolution
of its Directors or other governing body authorise such person as it thinks fit
to act as its representative at any meeting of the Company or
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15
of any class of Members of the Company, and the person so authorised shall be
entitled to exercise the same powers on behalf of the corporation which he
represents as the corporation could exercise if it were an individual Member of
record of the Company.
64. Shares of its own capital belonging to the Company or held by it in a
fiduciary capacity shall not be voted, directly or indirectly, at any meeting
and shall not be counted in determining the total number of outstanding shares
at any given time.
DIRECTORS
65. There shall be a Board of Directors consisting of not less than one or
more than ten persons (exclusive of alternate Directors) PROVIDED HOWEVER that
the Company may from time to time by ordinary resolution increase or reduce the
limits in the number of Directors. The first Directors of the Company shall be
determined in writing by, or appointed by a resolution of, the subscribers of
the Memorandum of Association or a majority of them.
66. The remuneration to be paid to the Directors shall be such remuneration
as the Directors shall determine. Such remuneration shall be deemed to accrue
from day to day. The Directors shall also be entitled to be paid their
travelling, hotel and other expenses properly incurred by them in going to,
attending and returning from meetings of the Directors, or any committee of the
Directors, or general meetings of the Company, or otherwise in connection with
the business of the Company, or to receive a fixed allowance in respect thereof
as may be determined by the Directors from time to time, or a combination partly
of one such method and partly the other.
67. The Directors may by resolution award special remuneration to any
Director of the Company undertaking any special work or services for, or
undertaking any special mission on behalf of, the Company other than his
ordinary routine work as a Director. Any fees paid to a Director who is also
counsel or solicitor to the Company, or otherwise serves it in a professional
capacity shall be in addition to his remuneration as a Director.
68. A Director or alternate Director may hold any other office or place of
profit under the Company (other than the office of Auditor) in conjunction with
his office of Director for such period and on such terms as to remuneration and
otherwise as the Directors may determine.
69. A Director or alternate Director may act by himself or his firm in a
professional capacity for the Company and he or his firm shall be entitled to
remuneration for professional services as if he were not a Director or alternate
Director.
70. A shareholding qualification for Directors may be fixed by the Company
in general meeting, but unless and until so fixed no qualification shall be
required.
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16
71. A Director or alternate Director of the Company may be or become a
director or other officer of or otherwise interested in any company promoted by
the Company or in which the Company may be interested as shareholder or
otherwise and no such Director or alternate Director shall be accountable to the
Company for any remuneration or other benefits received by him as a director or
officer of, or from his interest in, such other company.
72. No person shall be disqualified from the office of Director or
alternate Director or prevented by such office from contracting with the
Company, either as vendor, purchaser or otherwise, nor shall any such contract
or any contract or transaction entered into by or on behalf of the Company in
which any Director or alternate Director shall be in any way interested be or be
liable to be avoided, nor shall any Director or alternate Director so
contracting or being so interested be liable to account to the Company for any
profit realised by any such contract or transaction by reason of such Director
holding office or of the fiduciary relation thereby established. A Director (or
his alternate Director in his absence) shall be at liberty to vote in respect of
any contract or transaction in which he is so interested as aforesaid PROVIDED
HOWEVER that the nature of the interest of any Director or alternate Director in
any such contract or transaction shall be disclosed by him or the alternate
Director appointed by him at or prior to its consideration and any vote thereon.
73. A general notice that a Director or alternate Director is a shareholder
of any specified firm or company and is to be regarded as interested in any
transaction with such firm or company shall be sufficient disclosure under
Article 72 and after such general notice it shall not be necessary to give
special notice relating to any particular transaction.
ALTERNATE DIRECTORS
74. Subject to the exception contained in Article 82, a Director who
expects to be unable to attend Directors' Meetings because of absence, illness
or otherwise may appoint any person to be an alternate Director to act in his
stead and such appointee whilst he holds office as an alternate Director shall,
in the event of absence therefrom of his appointor, be entitled to attend
meetings of the Directors and to vote thereat and to do, in the place and stead
of his appointor, any other act or thing which his appointor is permitted or
required to do by virtue of his being a Director as if the alternate Director
were the appointor, other than appointment of an alternate to himself, and he
shall ipso facto vacate office if and when his appointor ceases to be a Director
or removes the appointee from office. Any appointment or removal under this
Article shall be effected by notice in writing under the hand of the Director
making the same.
POWERS AND DUTIES OF DIRECTORS
75. The business of the Company shall be managed by the Directors (or a
sole Director if only one is appointed) who may pay all expenses incurred in
promoting, registering and setting up the Company, and may exercise all such
powers of the Company as are not, from time to time by the
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17
Statute, or by these Articles, or such regulations, being not inconsistent with
the aforesaid, as may be prescribed by the Company in general meeting required
to be exercised by the Company in general meeting PROVIDED HOWEVER that no
regulations made by the Company in general meeting shall invalidate any prior
act of the Directors which would have been valid if that regulation had not been
made.
76. The Directors may from time to time and at any time by powers of
attorney appoint any company, firm, person or body of persons, whether nominated
directly or indirectly by the Directors, to be the attorney or attorneys of the
Company for such purpose and with such powers, authorities and discretions (not
exceeding those vested in or exercisable by the Directors under these Articles)
and for such period and subject to such conditions as they may think fit, and
any such powers of attorney may contain such provisions for the protection and
convenience of persons dealing with any such attorneys as the Directors may
think fit and may also authorise any such attorney to delegate all or any of the
powers, authorities and discretions vested in him.
77. All cheques, promissory notes, drafts, bills of exchange and other
negotiable instruments and all receipts for monies paid to the Company shall be
signed, drawn, accepted, endorsed or otherwise executed as the case may be in
such manner as the Directors shall from time to time by resolution determine.
78. The Directors shall cause minutes to be made in books provided for the
purpose:
(a) of all appointments of officers made by the Directors;
(b) of the names of the Directors (including those represented thereat
by an alternate or by proxy) present at each meeting of the Directors and of any
committee of the Directors;
(c) of all resolutions and proceedings at all meetings of the Company
and of the Directors and of committees of Directors.
79. The Directors on behalf of the Company may pay a gratuity or pension or
allowance on retirement to any Director who has held any other salaried office
or place of profit with the Company or to his widow or dependants and may make
contributions to any fund and pay premiums for the purchase or provision of any
such gratuity, pension or allowance.
80. The Directors may exercise all the powers of the Company to borrow
money and to mortgage or charge its undertaking, property and uncalled capital
or any part thereof and to issue debentures, debenture stock and other
securities whether outright or as security for any debt, liability or obligation
of the Company or of any third party.
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18
MANAGEMENT
81. (a) The Directors may from time to time provide for the management of
the affairs of the Company in such manner as they shall think fit and the
provisions contained in the three next following paragraphs shall be without
prejudice to the general powers conferred by this paragraph.
(b) The Directors from time to time and at any time may establish any
committees, local boards or agencies for managing any of the affairs of the
Company and may appoint any persons to be members of such committees or local
boards or any managers or agents and may fix their remuneration.
(c) The Directors from time to time and at any time may delegate to any
such committee, local board, manager or agent any of the powers, authorities and
discretions for the time being vested in the Directors and may authorise the
members for the time being of any such local board, or any of them to fill up
any vacancies therein and to act notwithstanding vacancies and any such
appointment or delegation may be made on such terms and subject to such
conditions as the Directors may think fit and the Directors may at any time
remove any person so appointed and may annul or vary any such delegation, but no
person dealing in good faith and without notice of any such annulment or
variation shall be affected thereby.
(d) Any such delegates as aforesaid may be authorised by the Directors
to subdelegate all or any of the powers, authorities, and discretions for the
time being vested in them.
MANAGING DIRECTORS
82. The Directors may, from time to time, appoint one or more of their body
(but not an alternate Director) to the office of Managing Director for such term
and at such remuneration (whether by way of salary, or commission, or
participation in profits, or partly in one way and partly in another) as they
may think fit but his appointment shall be subject to determination ipso facto
if he ceases from any cause to be a Director and no alternate Director appointed
by him can act in his stead as a Director or Managing Director.
83. The Directors may entrust to and confer upon a Managing Director any of
the powers exercisable by them upon such terms and conditions and with such
restrictions as they may think fit and either collaterally with or to the
exclusion of their own powers and may from time to time revoke, withdraw, alter
or vary all or any of such powers.
PROCEEDINGS OF DIRECTORS
84. Except as otherwise provided by these Articles, the Directors shall
meet together for the despatch of business, convening, adjourning and otherwise
regulating their meetings as they think
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19
fit. Questions arising at any meeting shall be decided by a majority of votes of
the Directors and alternate Directors present at a meeting at which there is a
quorum, the vote of an alternate Director not being counted if his appointor be
present at such meeting. In case of an equality of votes, the Chairman shall
have a second or casting vote.
85. A Director or alternate Director may, and the Secretary on the
requisition of a Director or alternate Director shall, at any time summon a
meeting of the Directors by at least two days' notice in writing to every
Director and alternate Director which notice shall set forth the general nature
of the business to be considered unless notice is waived by all the Directors
(or their alternates) either at, before or after the meeting is held and
PROVIDED FURTHER if notice is given in person, by cable, telex or telecopy the
same shall be deemed to have been given on the day it is delivered to the
Directors or transmitting organisation as the case may be. The provisions of
Article 40 shall apply mutatis mutandis with respect to notices of meetings of
Directors.
86. The quorum necessary for the transaction of the business of the
Directors may be fixed by the Directors and unless so fixed shall be two, a
Director and his appointed alternate Director being considered only one person
for this purpose, PROVIDED ALWAYS that if there shall at any time be only a sole
Director the quorum shall be one. For the purposes of this Article an alternate
Director or proxy appointed by a Director shall be counted in a quorum at a
meeting at which the Director appointing him is not present.
87. The continuing Directors may act notwithstanding any vacancy in their
body, but if and so long as their number is reduced below the number fixed by or
pursuant to these Articles as the necessary quorum of Directors the continuing
Directors or Director may act for the purpose of increasing the number of
Directors to that number, or of summoning a general meeting of the Company, but
for no other purpose.
88. The Directors may elect a Chairman of their Board and determine the
period for which he is to hold office; but if no such Chairman is elected, or if
at any meeting the Chairman is not present within five minutes after the time
appointed for holding the same, the Directors present may choose one of their
number to be Chairman of the meeting.
89. The Directors may delegate any of their powers to committees consisting
of such member or members of the Board of Directors (including Alternate
Directors in the absence of their appointors) as they think fit; any committee
so formed shall in the exercise of the powers so delegated conform to any
regulations that may be imposed on it by the Directors.
90. A committee may meet and adjourn as it thinks proper. Questions arising
at any meeting shall be determined by a majority of votes of the members
present, and in the case of an equality of votes the Chairman shall have a
second or casting vote.
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20
91. All acts done by any meeting of the Directors or of a committee of
Directors (including any person acting as an alternate Director) shall,
notwithstanding that it be afterwards discovered that there was some defect in
the appointment of any Director or alternate Director, or that they or any of
them were disqualified, be as valid as if every such person had been duly
appointed and qualified to be a Director or alternate Director as the case may
be.
92. Members of the Board of Directors or of any committee thereof may
participate in a meeting of the Board or of such 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 participation in a
meeting pursuant to this provision shall constitute presence in person at such
meeting. A resolution in writing (in one or more counterparts), signed by all
the Directors for the time being or all the members of a committee of Directors
(an alternate Director being entitled to sign such resolution on behalf of his
appointor) shall be as valid and effectual as if it had been passed at a meeting
of the Directors or committee as the case may be duly convened and held.
93. (a) A Director may be represented at any meetings of the Board of
Directors by a proxy appointed by him in which event the presence or vote of the
proxy shall for all purposes be deemed to be that of the Director.
(b) The provisions of Articles 59-62 shall mutatis mutandis apply to
the appointment of proxies by Directors.
VACATION OF OFFICE OF DIRECTOR
94. The office of a Director shall be vacated:
(a) if he gives notice in writing to the Company that he resigns the
office of Director;
(b) if he absents himself (without being represented by proxy or an
alternate Director appointed by him) from three consecutive meetings of the
Board of Directors without special leave of absence from the Directors, and they
pass a resolution that he has by reason of such absence vacated office;
(c) if he dies, becomes bankrupt or makes any arrangement or
composition with his creditors generally;
(d) if he is found a lunatic or becomes of unsound mind.
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21
APPOINTMENT AND REMOVAL OF DIRECTORS
95. The Company may by ordinary resolution appoint any person to be a
Director and may in like manner remove any Director and may in like manner
appoint another person in his stead.
96. The Directors shall have power at any time and from time to time to
appoint any person to be a Director, either to fill a casual vacancy or as an
addition to the existing Directors but so that the total amount of Directors
(exclusive of alternate Directors) shall not at any time exceed the number fixed
in accordance with these Articles.
PRESUMPTION OF ASSENT
97. A Director of the Company who is present at a meeting of the Board of
Directors at which action on any Company matter is taken shall be presumed to
have assented to the action taken unless his dissent shall be entered in the
Minutes of the meeting or unless he shall file his written dissent from such
action with the person acting as the Secretary of the meeting before the
adjournment thereof or shall forward such dissent by registered mail to such
person immediately after the adjournment of the meeting. Such right to dissent
shall not apply to a Director who voted in favour of such action.
SEAL
98. (a) The Company may, if the Directors so determine, have a Seal which
shall, subject to paragraph (c) hereof, only be used by the authority of the
Directors or of a committee of the Directors authorised by the Directors in that
behalf and every instrument to which the Seal has been affixed shall be signed
by one person who shall be either a Director or the Secretary or
Secretary-Treasurer or some person appointed by the Directors for the purpose.
(b) The Company may have for use in any place or places outside the
Cayman Islands a duplicate Seal or Seals each of which shall be a facsimile of
the Common Seal of the Company and, if the Directors so determine, with the
addition on its face of the name of every place where it is to be used.
(c) A Director, Secretary or other officer or representative or
attorney may without further authority of the Directors affix the Seal of the
Company over his signature alone to any document of the Company required to be
authenticated by him under Seal or to be filed with the Registrar of Companies
in the Cayman Islands or elsewhere wheresoever.
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OFFICERS
99. The Company may have a President, a Secretary or Secretary-Treasurer
appointed by the Directors who may also from time to time appoint such other
officers as they consider necessary, all for such terms, at such remuneration
and to perform such duties, and subject to such provisions as to
disqualification and removal as the Directors from time to time prescribe.
DIVIDENDS, DISTRIBUTIONS AND RESERVE
100. Subject to the Statute, the Directors may from time to time declare
dividends (including interim dividends) and distributions on shares of the
Company outstanding and authorise payment of the same out of the funds of the
Company lawfully available therefor.
101. The Directors may, before declaring any dividends or distributions,
set aside such sums as they think proper as a reserve or reserves which shall at
the discretion of the Directors, be applicable for any purpose of the Company
and pending such application may, at the like discretion, be employed in the
business of the Company.
102. No dividend or distribution shall be payable except out of the profits
of the Company, realised or unrealised, or out of the share premium account or
as otherwise permitted by the Statute.
103. Subject to the rights of persons, if any, entitled to shares with
special rights as to dividends or distributions, if dividends or distributions
are to be declared on a class of shares they shall be declared and paid
according to the amounts paid or credited as paid on the shares of such class
outstanding on the record date for such dividend or distribution as determined
in accordance with these Articles but no amount paid or credited as paid on a
share in advance of calls shall be treated for the purpose of this Article as
paid on the share.
104. The Directors may deduct from any dividend or distribution payable to
any Member all sums of money (if any) presently payable by him to the Company on
account of calls or otherwise.
105. The Directors may declare that any dividend or distribution be paid
wholly or partly by the distribution of specific assets and in particular of
paid up shares, debentures, or debenture stock of any other company or in any
one or more of such ways and where any difficulty arises in regard to such
distribution, the Directors may settle the same as they think expedient and in
particular may issue fractional certificates and fix the value for distribution
of such specific assets or any part thereof and may determine that cash payments
shall be made to any Members upon the footing of the value so fixed in order to
adjust the rights of all Members and may vest any such specific assets in
trustees as may seem expedient to the Directors.
<PAGE>
23
106. Any dividend, distribution, interest or other monies payable in cash in
respect of shares may be paid by cheque or warrant sent through the post
directed to the registered address of the holder or, in the case of joint
holders, to the holder who is first named on the register of Members or to such
person and to such address as such holder or joint holders may in writing
direct. Every such cheque or warrant shall be made payable to the order of the
person to whom it is sent. Any one of two or more joint holders may give
effectual receipts for any dividends, bonuses, or other monies payable in
respect of the share held by them as joint holders.
107. No dividend or distribution shall bear interest against the Company.
CAPITALISATION
108. The Company may upon the recommendation of the Directors by ordinary
resolution authorise the Directors to capitalise any sum standing to the credit
of any of the Company's reserve accounts (including share premium account and
capital redemption reserve fund) or any sum standing to the credit of profit and
loss account or otherwise available for distribution and to appropriate such sum
to Members in the proportions in which such sum would have been divisible
amongst them had the same been a distribution of profits by way of dividend and
to apply such sum on their behalf in paying up in full unissued shares for
allotment and distribution credited as fully paid up to and amongst them in the
proportion aforesaid. In such event the Directors shall do all acts and things
required to give effect to such capitalisation, with full power to the Directors
to make such provisions as they think fit for the case of shares becoming
distributable in fractions (including provisions whereby the benefit of
fractional entitlements accrue to the Company rather than to the Members
concerned). The Directors may authorise any person to enter on behalf of all of
the Members interested into an agreement with the Company providing for such
capitalisation and matters incidental thereto and any agreement made under such
authority shall be effective and binding on all concerned.
BOOKS OF ACCOUNT
109. The Directors shall cause proper books of account to be kept with
respect to:
(a) all sums of money received and expended by the Company and the
matters in respect of which the receipt or expenditure takes place;
(b) all sales and purchases of goods by the Company;
(c) the assets and liabilities of the Company.
<PAGE>
24
Proper books shall not be deemed to be kept if there are not kept such books of
account as are necessary to give a true and fair view of the state of the
Company's affairs and to explain its transactions.
110. The Directors shall from time to time determine whether and to what
extent and at what times and places and under what conditions or regulations the
accounts and books of the Company or any of them shall be open to the inspection
of Members not being Directors and no Member (not being a Director) shall have
any right of inspecting any account or book or document of the Company except as
conferred by Statute or authorised by the Directors or by the Company in general
meeting.
111. The Directors may from time to time cause to be prepared and to be laid
before the Company in general meeting profit and loss accounts, balance sheets,
group accounts (if any) and such other reports and accounts as may be required
by law.
AUDIT
112. The Company may at any annual general meeting appoint an Auditor or
Auditors of the Company who shall hold office until the next annual general
meeting and may fix his or their remuneration.
113. The Directors may before the first annual general meeting appoint an
Auditor or Auditors of the Company who shall hold office until the first annual
general meeting unless previously removed by an ordinary resolution of the
Members in general meeting in which case the Members at that meeting may appoint
Auditors. The Directors may fill any casual vacancy in the office of Auditor but
while any such vacancy continues the surviving or continuing Auditor or
Auditors, if any, may act. The remuneration of any Auditor appointed by the
Directors under this Article may be fixed by the Directors.
114. Every Auditor of the Company shall have a right of access at all times
to the books and accounts and vouchers of the Company and shall be entitled to
require from the Directors and Officers of the Company such information and
explanation as may be necessary for the performance of the duties of the
auditors.
115. Auditors shall at the next annual general meeting following their
appointment and at any other time during their term of office, upon request of
the Directors or any general meeting of the Members, make a report on the
accounts of the Company in general meeting during their tenure of office.
<PAGE>
25
NOTICES
116. Notices shall be in writing and may be given by the Company to any
Member either personally or by sending it by post, cable, telex or telecopy to
him or to his address as shown in the register of Members, such notice, if
mailed, to be forwarded airmail if the address be outside the Cayman Islands.
117. (a) Where a notice is sent by post, service of the notice shall be
deemed to be effected by properly addressing, pre-paying and posting a letter
containing the notice, and to have been effected at the expiration of sixty
hours after the letter containing the same is posted as aforesaid.
(b) Where a notice is sent by cable, telex, or telecopy, service of the
notice shall be deemed to be effected by properly addressing, and sending such
notice through a transmitting organisation and to have been effected on the day
the same is sent as aforesaid.
118. A notice may be given by the Company to the joint holders of record of
a share by giving the notice to the joint holder first named on the register of
Members in respect of the share.
119. A notice may be given by the Company to the person or persons which the
Company has been advised are entitled to a share or shares in consequence of the
death or bankruptcy of a Member by sending it through the post as aforesaid in a
pre-paid letter 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 supplied for that purpose by the persons claiming to be so entitled, or
at the option of the Company by giving the notice in any manner in which the
same might have been given if the death or bankruptcy had not occurred.
120. Notice of every general meeting shall be given in any manner
hereinbefore authorised to:
(a) every person shown as a Member in the register of Members as of the
record date for such meeting except that in the case of joint holders the notice
shall be sufficient if given to the joint holder first named in the register of
Members.
(b) every person upon whom the ownership of a share devolves by reason
of his being a legal personal representative or a trustee in bankruptcy of a
Member of record where the Member of record but for his death or bankruptcy
would be entitled to receive notice of the meeting; and
No other person shall be entitled to receive notices of general meetings.
<PAGE>
26
WINDING UP
121. If the Company shall be wound up the liquidator may, with the sanction of a
Special Resolution of the Company and any other sanction required by the
Statute, divide amongst the Members in specie or kind the whole or any part of
the assets of the Company (whether they shall consist of property of the same
kind or not) and may for such purpose set such value as he deems fair upon any
property to be divided as aforesaid and may determine how such 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 such assets
in trustees upon such trusts for the benefit of the contributories as the
liquidator, with the like sanction, shall think fit, but so that no Member shall
be compelled to accept any shares or other securities whereon there is any
liability.
122. If the Company shall be wound up, and the assets available for
distribution amongst the Members as such shall be insufficient to repay the
whole of the paid-up capital, such assets shall be distributed so that, as
nearly as may be, the losses shall be borne by the Members in proportion to the
capital paid up, or which ought to have been paid up, at the commencement of the
winding up on the shares held by them respectively. And if in a winding up the
assets available for distribution amongst the Members shall be more than
sufficient to repay the whole of the capital paid up at the commencement of the
winding up, the excess shall be distributed amongst the Members in proportion to
the capital paid up at the commencement of the winding up on the shares held by
them respectively. This Article is to be without prejudice to the rights of the
holders of shares issued upon special terms and conditions.
INDEMNITY
123. The Directors and officers for the time being of the Company and any
trustee for the time being acting in relation to any of the affairs of the
Company and their heirs, executors, administrators and personal representatives
respectively shall be indemnified out of the assets of the Company from and
against all actions, proceedings, costs, charges, losses, damages and expenses
which they or any of them shall or may incur or sustain by reason of any act
done or omitted in or about the execution of their duty in their respective
offices or trusts, except such (if any) as they shall incur or sustain by or
through their own wilful neglect or default respectively and no such Director,
officer or trustee shall be answerable for the acts, receipts, neglects or
defaults of any other Director, officer or trustee or for joining in any receipt
for the sake of conformity or for the solvency or honesty of any banker or other
persons with whom any monies or effects belonging to the Company may be lodged
or deposited for safe custody or for any insufficiency of any security upon
which any monies of the Company may be invested or for any other loss or damage
due to any such cause as aforesaid or which may happen in or about the execution
of his office or trust unless the same shall happen through the wilful neglect
or default of such Director, Officer or trustee.
<PAGE>
27
FINANCIAL YEAR
124. Unless the Directors otherwise prescribe, the financial year of the
Company shall end on 31st December in each year and, following the year of
incorporation, shall begin on 1st January in each year.
AMENDMENTS OF ARTICLES
125. Subject to the Statute, the Company may at any time and from time to
time by Special Resolution alter or amend these Articles in whole or in part.
TRANSFER BY WAY OF CONTINUATION
126. If the Company is exempted as defined in the Statute, it shall,
subject to the provisions of the Statute and with the approval of a Special
Resolution, have the power to register by way of continuation as a body
corporate under the laws of any jurisdiction outside the Cayman Islands and to
be deregistered in the Cayman Islands.
THE COMPANIES LAW (1995 REVISION)
---------------------------------
COMPANY LIMITED BY SHARES
-------------------------
MEMORANDUM OF ASSOCIATION
OF
MILLENIUM VI, INC.
1. The name of the Company is MILLENIUM VI, INC.
2. The Registered Office of the Company shall be at the offices of Maples and
Calder, Attorneys-at-Law, Ugland House, P.O. Box 309, George Town, Grand Cayman,
Cayman Islands, British West Indies or at such other place as the Directors may
from time to time decide.
3. The objects for which the Company is established are unrestricted and shall
include, but without limitation, the following:-
(i) (a) To undertake and carry on all or any of the trades and businesses of
international freight forwarders and agents, shippers, ship owners, ship
brokers, shipping agents and insurance brokers, underwriters, ship managers, tug
owners, shipping agents, loading brokers, freight contractors, carriers by land,
air and water, transport, haulage and general contractors, barge owners,
lightermen, railway and forwarding agents, dock owners, ships' husbands,
warehousemen, salvors, manufacturers of and dealers in tarpaulins, waterproofs,
machinery, engines, nautical instruments, and ships'rigging, gear, fittings and
equipment of every description, importers and exporters of and dealers in goods,
provisions, live and dead stock, commodities, articles, chattels, merchandise
and property of every kind,
<PAGE>
2
general traders and merchants, and generally to carry on the said businesses in
all their branches, and to carry on the said businesses either as principals or
agents or on commission or otherwise.
(b) To purchase or otherwise acquire, and to carry on the business or
businesses of fishing boat owners, smack owners, trawlers, deep-sea fishers,
shrimp fishers, fish curers, fish or shrimp salesmen, wholesale and retail fish
or shrimp merchants, wholesale and retail game and poultry merchants, ice
manufacturers, oil merchants and refiners, utilisers of fish refuse, manure
manufacturers, anchor and chain makers, wire rope makers, rope makers, mast and
block makers, ship chandlers, marine storekeepers, compass and nautical
instrument makers, marine engineers, engineers, boiler makers, ship builders,
dry-dock keepers, slip keepers, boat builders, ship and boat repairers, ship and
boat outfitters, salvors, wreck removers, wreck raisers, divers, auctioneers,
valuers, assessors, stevedores, wharfingers, carriers, forwarding agents, and
all other branches of business usually or conveniently connected with any such
business as aforesaid.
(c) To enter into, take over, negotiate or otherwise acquire, any
contract or contracts for the construction, building, equipping, fitting out,
storing, gearing or otherwise relating to any steamship, ship, trawler, catcher,
carrier, drifter, fishing boat, boat, or other vessel whatsoever, and to enter
into, take over, negotiate or otherwise acquire any other contract or contracts
whatever which the Company may think necessary, desirable or convenient for the
purposes of the Company or any of them, and to enter into, take over, negotiate,
or otherwise acquire any such contract or contracts at such prices and for such
<PAGE>
3
considerations, and upon such terms and conditions, and subject to such
stipulations and agreements as the Company may determine, and at any time and
from time to time vary, modify, alter or cancel any such contract.
(d) To acquire concessions or licences for the establishment and
working of lines of ships or other vessels between any ports of the world, or
for the formation or working of any railway or tramway, wharf, pier, dock, or
other works, or for the working of any coaches or other public conveyances, with
the benefit of any subsidy attached to any such concession or licence or
otherwise.
(e) To insure the vessels and other property of the Company in any
manner.
(f) To grant loans on ships and vessels or on goods and merchandise
carried or to be carried in any vessels and to buy and sell merchandise for
freighting on the ships and vessels of the Company.
(g) To engage in any and all kinds of business and other activities
with respect to oil, gas and other materials, and the products and by-products
thereof, including but not by way of limitation, exploration, developing,
drilling, producing, refining, processing, mining, confining, manufacturing,
storing, transporting, distributing, trading, buying, selling and all other
activities pertinent thereto.
(h) To resell or sublet any concession or licence obtained, or contract
entered into.
(i) To carry on the business of an investment company and to act as
promoters and entrepreneurs and to carry on business as financiers, capitalists,
concessionaires, merchants, brokers, traders, dealers, agents, importers and
exporters and to undertake and
<PAGE>
4
carry on and execute all kinds of investment, financial, commercial, mercantile,
trading and other operations.
(j) To carry on whether as principals, agents or otherwise howsoever
the business of realtors, developers, consultants, estate agents or managers,
builders, contractors, engineers, manufacturers, dealers in or vendors of all
types of property including services.
(ii) To exercise and enforce all rights and powers conferred by or incidental to
the ownership of any shares, stock, obligations or other securities including
without prejudice to the generality of the foregoing all such powers of veto or
control as may be conferred by virtue of the holding by the Company of some
special proportion of the issued or nominal amount thereof, to provide
managerial and other executive, supervisory and consultant services for or in
relation to any company in which the Company is interested upon such terms as
may be thought fit.
(iii) To purchase or otherwise acquire, to sell, exchange, surrender, lease,
mortgage, charge, convert, turn to account, dispose of and deal with real and
personal property and rights of all kinds and, in particular, mortgages,
debentures, produce, concessions, options, contracts, patents, annuities,
licences, stocks, shares, bonds, policies, book debts, business concerns,
undertakings, claims, privileges and choses in action of all kinds.
(iv) To subscribe for, conditionally or unconditionally, to underwrite, issue on
commission or otherwise, take, hold, deal in and convert stocks, shares and
securities of all kinds and to enter into partnership or into any arrangement
for sharing profits, reciprocal
<PAGE>
5
concessions or cooperation with any person or company and to promote and aid in
promoting, to constitute, form or organise any company, syndicate or partnership
of any kind, for the purpose of acquiring and undertaking any property and
liabilities of the Company or of advancing, directly or indirectly, the objects
of the Company or for any other purpose which the Company may think expedient.
(v) To stand surety for or to guarantee, support or secure the performance of
all or any of the obligations of any person, firm or company whether or not
related or affiliated to the Company in any manner and whether by personal
covenant or by mortgage, charge or lien upon the whole or any part of the
undertaking, property and assets of the Company, both present and future,
including its uncalled capital or by any such method and whether or not the
Company shall receive valuable consideration therefor.
(vi) To engage in or carry on any other lawful trade, business or enterprise
which may at any time appear to the Directors of the Company capable of being
conveniently carried on in conjunction with any of the aforementioned businesses
or activities or which may appear to the Directors or the Company likely to be
profitable to the Company. In the interpretation of this Memorandum of
Association in general and of this Clause 3 in particular no object, business or
power specified or mentioned shall be limited or restricted by reference to or
inference from any other object, business or power, or the name of the Company,
or by the juxtaposition of two or more objects, businesses or powers and that,
in the event of any ambiguity in this clause or elsewhere in this Memorandum of
Association,
<PAGE>
6
the same shall be resolved by such interpretation and construction as will widen
and enlarge and not restrict the objects, businesses and powers of and
exercisable by the Company.
4. Except as prohibited or limited by the Companies Law (1995 Revision), the
Company shall have full power and authority to carry out any object and shall
have and be capable of from time to time and at all times exercising any and all
of the powers at any time or from time to time exercisable by a natural person
or body corporate in doing in any part of the world whether as principal, agent,
contractor or otherwise whatever may be considered by it necessary for the
attainment of its objects and whatever else may be considered by it as
incidental or conducive thereto or consequential thereon, including, but without
in any way restricting the generality of the foregoing, the power to make any
alterations or amendments to this Memorandum of Association and the Articles of
Association of the Company considered necessary or convenient in the manner set
out in the Articles of Association of the Company, and the power to do any of
the following acts or things, viz:
to pay all expenses of and incidental to the promotion, formation and
incorporation of the Company; to register the Company to do business in any
other jurisdiction; to sell, lease or dispose of any property of the Company; to
draw, make, accept, endorse, discount, execute and issue promissory notes,
debentures, bills of exchange, bills of lading, warrants and other negotiable or
transferable instruments; to lend money or other assets and to act as
guarantors; to borrow or raise money on the security of the undertaking or on
all or any of the assets of the Company including uncalled capital or without
security; to invest monies of the Company in such manner as the Directors
determine; to promote other companies; to sell the
<PAGE>
7
undertaking of the Company for cash or any other consideration; to distribute
assets in specie to members of the Company; to make charitable or benevolent
donations; to pay pensions or gratuities or provide other benefits in cash or
kind to Directors, officers, employees, past or present and their families; to
carry on any trade or business and generally to do all acts and things which, in
the opinion of the Company or the Directors, may be conveniently or profitably
or usefully acquired and dealt with, carried on, executed or done by the Company
in connection with the business aforesaid PROVIDED THAT the Company shall only
carry on the businesses for which a licence is required under the laws of the
Cayman Islands when so licensed under the terms of such laws.
5. The liability of each member is limited to the amount from time to time
unpaid on such member's shares.
6. The share capital of the Company is US$50,000 divided into 50,000 shares of a
nominal or par value of US$1.00 each with power for the Company insofar as is
permitted by law, to redeem or purchase any of its shares and to increase or
reduce the said capital subject to the provisions of the Companies Law (1995
Revision) and the Articles of Association and to issue any part of its capital,
whether original, redeemed or increased with or without any preference, priority
or special privilege or subject to any postponement of rights or to any
conditions or restrictions and so that unless the conditions of issue shall
otherwise expressly declare every issue of shares whether declared to be
preference or otherwise shall be subject to the powers hereinbefore contained.
<PAGE>
8
7. If the Company is registered as exempted, its operations will be carried on
subject to the provisions of Section l92 of the Companies Law (1995 Revision)
and subject to the provisions of the Companies Law (1995 Revision) and the
Articles of Association it shall have the power to register by way of
continuation as a body corporate limited by shares under the laws of any
jurisdiction outside the Cayman Islands and to be deregistered in the Cayman
Islands.
WE the several persons whose names and addresses are subscribed are desirous of
being formed into a company in pursuance of this Memorandum of Association and
we respectively agree to take the number of shares in the capital of the Company
set opposite our respective names.
<PAGE>
THE COMPANIES LAW (1995 REVISION)
---------------------------------
COMPANY LIMITED BY SHARES
-------------------------
ARTICLES OF ASSOCIATION
OF
MILLENIUM VI, INC.
1. In these Articles Table A in the Schedule to the Statute does not apply and,
unless there be something in the subject or context inconsistent therewith,
"Articles" means these Articles as originally framed
or as from time to time altered by Special
Resolution.
"Auditors" means the persons for the time being
performing the duties of auditors of the
Company.
"Company" means the above-named Company.
"debenture" means debenture stock, mortgages, bonds
and any other such securities of the
Company whether constituting a charge on
the assets of the Company or not.
"Directors" means the directors for the time being of
the Company.
"dividend" includes bonus.
"Member" shall bear the meaning as ascribed to it
in the Statute.
"month" means calendar month.
"paid-up" means paid-up and/or credited as paid-up.
"registered office" means the registered office for the time
being of the Company.
<PAGE>
2
"Seal" means the common seal of the Company and
includes every duplicate seal.
"Secretary" includes an Assistant Secretary and any
person appointed to perform the duties of
Secretary of the Company.
"share" includes a fraction of a share.
"Special Resolution" has the same meaning as in the Statute and
includes a resolution approved in writing
as described therein.
"Statute" means the Companies Law of the Cayman
Islands as amended and every statutory
modification or re-enactment thereof for
the time being in force.
"written" and "in writing" include all modes of representing or
reproducing words in visible form.
Words importing the singular number only include the plural number and
vice-versa.
Words importing the masculine gender only include the feminine gender.
Words importing persons only include corporations.
2. The business of the Company may be commenced as soon after incorporation as
the Directors shall see fit, notwithstanding that part only of the shares may
have been allotted.
3. The Directors may pay, out of the capital or any other monies of the Company,
all expenses incurred in or about the formation and establishment of the Company
including the expenses of registration.
CERTIFICATES FOR SHARES
-----------------------
4. Certificates representing shares of the Company shall be in such form as
shall be determined by the Directors. Such certificates may be under Seal. All
certificates for shares shall be consecutively numbered or otherwise identified
and shall specify the shares to which they relate. The name and address of the
person to whom the shares represented thereby are issued, with the number of
shares and date of issue, shall be entered in the
<PAGE>
3
register of Members of the Company. All certificates surrendered to the Company
for transfer shall be cancelled and no new certificate shall be issued until the
former certificate for a like number of shares shall have been surrendered and
cancelled. The Directors may authorise certificates to be issued with the seal
and authorised signature(s) affixed by some method or system of mechanical
process.
5. Notwithstanding Article 4 of these Articles, if a share certificate be
defaced, lost or destroyed, it may be renewed on payment of a fee of one dollar
(US$l.00) or such less sum and on such terms (if any) as to evidence and
indemnity and the payment of the expenses incurred by the Company in
investigating evidence, as the Directors may prescribe.
ISSUE OF SHARES
---------------
6. Subject to the provisions, if any, in that behalf in the Memorandum of
Association and to any direction that may be given by the Company in general
meeting and without prejudice to any special rights previously conferred on the
holders of existing shares, the Directors may allot, issue, grant options over
or otherwise dispose of shares of the Company (including fractions of a share)
with or without preferred, deferred or other special rights or restrictions,
whether in regard to dividend, voting, return of capital or otherwise and to
such persons, at such times and on such other terms as they think proper.
7. The Company shall maintain a register of its Members and every person whose
name is entered as a Member in the register of Members shall be entitled without
payment to receive within two months after allotment or lodgement of transfer
(or within such other period as the conditions of issue shall provide) one
certificate for all his shares or several certificates each for one or more of
his shares upon payment of fifty cents (US$0.50) for every certificate after the
first or such less sum as the Directors shall from time to time determine
provided that in respect of a share or shares held jointly by several persons
the Company shall not be bound to issue more than one certificate and delivery
of a certificate for a share to one of the several joint holders shall be
sufficient delivery to all such holders.
TRANSFER OF SHARES
------------------
8. The instrument of transfer of any share shall be in writing and shall be
executed by or on behalf of the transferor and the transferor shall be deemed to
remain the holder of a share until the name of the transferee is entered in the
register in respect thereof.
9. The Directors may in their absolute discretion decline to register any
transfer of shares without assigning any reason therefor. If the Directors
refuse to register a transfer they shall notify the transferee within two months
of such refusal.
<PAGE>
4
10. The registration of transfers may be suspended at such time and for such
periods as the Directors may from time to time determine, provided always that
such registration shall not be suspended for more than forty-five days in any
year.
REDEEMABLE SHARES
-----------------
11. (a) Subject to the provisions of the Statute and the Memorandum of
Association, shares may be issued on the terms that they are, or at the option
of the Company or the holder are, to be redeemed on such terms and in such
manner as the Company, before the issue of the shares, may by Special Resolution
determine.
(b) Subject to the provisions of the Statute and the Memorandum of
Association, the Company may purchase its own shares (including fractions of a
share), including any redeemable shares, provided that the manner of purchase
has first been authorised by the Company in general meeting and may make payment
therefor in any manner authorised by the Statute, including out of capital.
VARIATION OF RIGHTS OF SHARES
-----------------------------
12. If at any time the share capital of the Company 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, whether or not the
Company is being wound-up, be varied with the consent in writing of the holders
of three-fourths of the issued shares of that class, or with the sanction of a
Special Resolution passed at a general meeting of the holders of the shares of
that class.
The provisions of these Articles relating to general meetings
shall apply to every such general meeting of the holders of one class of shares
except that the necessary quorum shall be one person holding or representing by
proxy at least 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.
13. The rights conferred upon the holders of the shares of any class issued with
preferred or other rights shall not, unless otherwise expressly provided by the
terms of issue of the shares of that class, be deemed to be varied by the
creation or issue of further shares ranking pari passu therewith.
COMMISSION ON SALE OF SHARES
----------------------------
14. The Company may in so far as the Statute from time to time permits pay a
commission to any person in consideration of his subscribing or agreeing to
subscribe
<PAGE>
5
whether absolutely or conditionally for any shares of the Company. Such
commissions may be satisfied by the payment of cash or the lodgement of fully or
partly paid-up shares or partly in one way and partly in the other. The Company
may also on any issue of shares pay such brokerage as may be lawful.
NON-RECOGNITION OF TRUSTS
-------------------------
15. No person shall be recognised by the Company as holding any share upon any
trust and the Company shall not be bound by or be compelled in any way to
recognise (even when having notice thereof) any equitable, contingent, future,
or partial interest in any share, or any interest in any fractional part of a
share, or (except only as is otherwise provided by these Articles or the
Statute) any other rights in respect of any share except an absolute right to
the entirety thereof in the registered holder.
LIEN ON SHARES
--------------
16. The Company shall have a first and paramount lien and charge on all shares
(whether fully paid-up or not) registered in the name of a Member (whether
solely or jointly with others) for all debts, liabilities or engagements to or
with the Company (whether presently payable or not) by such Member or his
estate, either alone or jointly with any other person, whether a Member or not,
but the Directors may at any time declare any share to be wholly or in part
exempt from the provisions of this Article. The registration of a transfer of
any such share shall operate as a waiver of the Company's lien (if any) thereon.
The Company's lien (if any) on a share shall extend to all dividends or other
monies payable in respect thereof.
17. The Company may sell, in such manner as the Directors think fit, any shares
on which the Company has a lien, but no sale shall be made unless a sum in
respect of which the lien exists is presently payable, nor until the expiration
of fourteen days after a notice in writing stating and demanding payment of such
part of the amount in respect of which the lien exists as is presently payable,
has been given to the registered holder or holders for the time being of the
share, or the person, of which the Company has notice, entitled thereto by
reason of his death or bankruptcy.
18. To give effect to any such sale the Directors may authorise some person to
transfer the shares sold to the purchaser thereof. The purchaser shall be
registered as the holder of the shares comprised in any such transfer, and he
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 or invalidity in the
proceedings in reference to the sale.
<PAGE>
6
19. The proceeds of such sale shall be received by the Company and applied in
payment of such part of the amount in respect of which the lien exists as is
presently payable and the residue, if any, shall (subject to a like lien for
sums 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.
CALL ON SHARES
--------------
20. (a) The Directors may from time to time make calls upon the Members in
respect of any monies unpaid on their shares (whether on account of the nominal
value of the shares or by way of premium or otherwise) and not by the conditions
of allotment thereof made payable at fixed terms, provided that no call shall be
payable at less than one month from the date fixed for the payment of the last
preceding call, and each Member shall (subject to receiving at least fourteen
days notice specifying the time or times of payment) pay to the Company at the
time or times so specified the amount called on the shares. A call may be
revoked or postponed as the Directors may determine. A call may be made payable
by instalments.
(b) A call shall be deemed to have been made at the time when the
resolution of the Directors authorising such call was passed.
(c) The joint holders of a share shall be jointly and severally liable
to pay all calls in respect thereof.
21. If a sum called in respect of a share is not paid before or on a day
appointed for payment thereof, the persons from whom the sum is due shall pay
interest on the sum from the day appointed for payment thereof to the time of
actual payment at such rate not exceeding ten per cent per annum as the
Directors may determine, but the Directors shall be at liberty to waive payment
of such interest either wholly or in part.
22. Any sum which by the terms of issue of a share becomes payable on allotment
or at any fixed date, whether on account of the nominal value of the share or by
way of premium or otherwise, shall for the purposes of these Articles be deemed
to be a call duly made, notified and payable on the date on which by the terms
of issue the same becomes payable, and in the case of non-payment all the
relevant provisions of these Articles as to payment of interest forfeiture or
otherwise shall apply as if such sum had become payable by virtue of a call duly
made and notified.
23. The Directors may, on the issue of shares, differentiate between the holders
as to the amount of calls or interest to be paid and the times of payment.
<PAGE>
7
24. (a) The Directors may, if they think fit, receive from any Member willing to
advance the same, all or any part of the monies uncalled and unpaid upon any
shares held by him, and upon all or any of the monies so advanced may (until the
same would but for such advances, become payable) pay interest at such rate not
exceeding (unless the Company in general meeting shall otherwise direct) seven
per cent per annum, as may be agreed upon between the Directors and the Member
paying such sum in advance.
(b) No such sum paid in advance of calls shall entitle the Member
paying such sum to any portion of a dividend declared in respect of any period
prior to the date upon which such sum would, but for such payment, become
presently payable.
FORFEITURE OF SHARES
--------------------
25. (a) If a Member fails to pay any call or instalment of a call or to make any
payment required by the terms of issue on the day appointed for payment thereof,
the Directors may, at any time thereafter during such time as any part of the
call, instalment or payment remains unpaid, give notice requiring payment of so
much of the call, instalment or payment as is unpaid, together with any interest
which may have accrued and all expenses that have been incurred by the Company
by reason of such non-payment. Such notice shall name a day (not earlier than
the expiration of fourteen days from the date of giving of the notice) on or
before which the payment required by the notice is to be made, and shall state
that, in the event of non-payment at or before the time appointed the shares in
respect of which such notice was given will be liable to be forfeited.
(b) If the requirements of any such notice as aforesaid are not
complied with, any share in respect of which the notice has been given may at
any time thereafter, before the payment required by the notice has been made, be
forfeited by a resolution of the Directors to that effect. Such forfeiture shall
include all dividends declared in respect of the forfeited
share and not actually paid before the forfeiture.
(c) A forfeited share may be sold or otherwise disposed of on such
terms and in such manner as the Directors think fit and at any time before a
sale or disposition the forfeiture may be cancelled on such terms as the
Directors think fit.
26. A person whose shares have been forfeited shall cease to be a Member in
respect of the forfeited shares, but shall, notwithstanding, remain liable to
pay to the Company all monies which, at the date of forfeiture were payable by
him to the Company in respect of the shares together with interest thereon, but
his liability shall cease if and when the Company shall have received payment in
full of all monies whenever payable in respect of the shares.
<PAGE>
8
27. A certificate in writing under the hand of one Director or the Secretary of
the Company that a share in the Company has been duly forfeited on a date stated
in the declaration shall be conclusive evidence of the fact therein stated as
against all persons claiming to be entitled to the share. The Company may
receive the consideration given for the share on any sale or disposition thereof
and may execute a transfer of the share in favour of the person to whom the
share is sold or disposed of and he shall thereupon be registered as the holder
of the share and shall not be bound to see to the application of the purchase
money, if any, nor shall his title to the share be affected by any irregularity
or invalidity in the proceedings in reference to the forfeiture, sale or
disposal of the share.
28. The provisions of these Articles as to forfeiture shall apply in the case of
non-payment of any sum which, by the terms of issue of a share, becomes payable
at a fixed time, whether on account of the nominal value of the share or by way
of premium as if the same had been payable by virtue of a call duly made and
notified.
REGISTRATION OF EMPOWERING INSTRUMENTS
--------------------------------------
29. The Company shall be entitled to charge a fee not exceeding one dollar
(US$l.00) on the registration of every probate, letters of administration,
certificate of death or marriage, power of attorney, notice in lieu of
distringas, or other instrument.
TRANSMISSION OF SHARES
----------------------
30. In case of the death of a Member, the survivor or survivors where the
deceased was a joint holder, and the legal personal representatives of the
deceased where he was a sole holder, shall be the only persons recognised by the
Company as having any title to his interest in the shares, but nothing herein
contained shall release the estate of any such deceased holder from any
liability in respect of any shares which had been held by him solely or jointly
with other persons.
31. (a) Any person becoming entitled to a share in consequence of the death or
bankruptcy or liquidation or dissolution of a Member (or in any other way than
by transfer) may, upon such evidence being produced as may from time to time be
required by the Directors and subject as hereinafter provided, elect either to
be registered himself as holder of the share or to make such transfer of the
share to such other person nominated by him as the deceased or bankrupt person
could have made and to have such person registered as the transferee thereof,
but the Directors shall, in either case, have the same right to decline or
suspend registration as they would have had in the case of a transfer of the
share by that Member before his death or bankruptcy as the case may be.
<PAGE>
9
(b) If the person so becoming entitled shall elect to be registered
himself as holder he shall deliver or send to the Company a notice in writing
signed by him stating that he so elects.
32. A person becoming entitled to a share by reason of the death or bankruptcy
or liquidation or dissolution of the holder (or in any other case than by
transfer) shall be entitled to the same dividends and other advantages to which
he would be entitled if he were the registered holder of the share, except that
he shall not, before being registered as a Member in respect of the share, be
entitled in respect of it to exercise any right conferred by membership in
relation to meetings of the Company PROVIDED HOWEVER that the Directors may at
any time give notice requiring any such person to elect either to be registered
himself or to transfer the share and if the notice is not complied with within
ninety days the Directors may thereafter withhold payment of all dividends,
bonuses or other monies payable in respect of the share until the requirements
of the notice have been complied with.
AMENDMENT OF MEMORANDUM OF ASSOCIATION, CHANGE OF
LOCATION OF REGISTERED OFFICE & ALTERATION OF CAPITAL
-----------------------------------------------------
33. (a) Subject to and in so far as permitted by the provisions of the Statute,
the Company may from time to time by ordinary resolution alter or amend its
Memorandum of Association otherwise than with respect to its name and objects
and may, without restricting the generality of the foregoing:
(i) increase the share capital by such sum to be divided into
shares of such amount or without nominal or par value as the resolution shall
prescribe and with such rights, priorities and privileges annexed thereto, as
the Company in general meeting may determine.
(ii) consolidate and divide all or any of its share capital
into shares of larger amount than its existing shares;
(iii) by subdivision of its existing shares or any of them
divide the whole or any part of its share capital into shares of smaller amount
than is fixed by the Memorandum of Association or into shares without nominal or
par value;
(iv) cancel any shares which at the date of the passing of the
resolution have not been taken or agreed to be taken by any person.
(b) All new shares created hereunder shall be subject to the same
provisions with reference to the payment of calls, liens, transfer,
transmission, forfeiture and otherwise as the shares in the original share
capital.
<PAGE>
10
(c) Subject to the provisions of the Statute, the Company may by
Special Resolution change its name or alter its objects.
(d) Without prejudice to Article 11 hereof and subject to the
provisions of the Statute, the Company may by Special Resolution reduce its
share capital and any capital redemption reserve fund.
(e) Subject to the provisions of the Statute, the Company may by
resolution of the Directors change the location of its registered office.
CLOSING REGISTER OF MEMBERS OR FIXING RECORD DATE
-------------------------------------------------
34. For the purpose of determining Members entitled to notice of or to vote at
any meeting of Members or any adjournment thereof, or Members entitled to
receive payment of any dividend, or in order to make a determination of Members
for any other proper purpose, the Directors of the Company may provide that the
register of Members shall be closed for transfers for a stated period but not to
exceed in any case forty days. If the register of Members shall be so closed for
the purpose of determining Members entitled to notice of or to vote at a meeting
of Members such register shall be so closed for at least ten days immediately
preceding such meeting and the record date for such determination shall be the
date of the closure of the register of Members.
35. In lieu of or apart from closing the register of Members, the Directors may
fix in advance a date as the record date for any such determination of Members
entitled to notice of or to vote at a meeting of the Members and for the purpose
of determining the Members entitled to receive payment of any dividend the
Directors may, at or within 90 days prior to the date of declaration of such
dividend fix a subsequent date as the record date for such determination.
36. If the register of Members is not so closed and no record date is fixed for
the determination of Members entitled to notice of or to vote at a meeting of
Members or Members entitled to receive payment of a dividend, the date on which
notice of the meeting is mailed or the date on which the resolution of the
Directors declaring such dividend is adopted, as the case may be, shall be the
record date for such determination of Members. When a determination of Members
entitled to vote at any meeting of Members has been made as provided in this
section, such determination shall apply to any adjournment thereof.
GENERAL MEETING
---------------
37. (a) Subject to paragraph (c) hereof, the Company shall within one year of
its incorporation and in each year of its existence thereafter hold a general
meeting as its annual
<PAGE>
11
general meeting and shall specify the meeting as such in the notices calling it.
The annual general meeting shall be held at such time and place as the Directors
shall appoint and if no other time and place is prescribed by them, it shall be
held at the registered office on the second Wednesday in December of each year
at ten o'clock in the morning.
(b) At these meetings the report of the Directors (if any) shall be
presented.
(c) If the Company is exempted as defined in the Statute it may but
shall not be obliged to hold an annual general meeting.
38. (a) The Directors may whenever they think fit, and they shall on the
requisition of Members of the Company holding at the date of the deposit of the
requisition not less than one-tenth of such of the paid-up capital of the
Company as at the date of the deposit carries the right of voting at general
meetings of the Company, proceed to convene a general meeting
of the Company.
(b) The requisition must state the objects of the meeting and must be
signed by the requisitionists and deposited at the registered office of the
Company and may consist of several documents in like form each signed by one or
more requisitionists.
(c) If the Directors do not within twenty-one days from the date of the
deposit of the requisition duly proceed to convene a general meeting, the
requisitionists, or any of them representing more than one-half of the total
voting rights of all of them, may themselves convene a general meeting, but any
meeting so convened shall not be held after the expiration of three months after
the expiration of the said twenty-one days.
(d) A general meeting convened as aforesaid by requisitionists shall be
convened in the same manner as nearly as possible as that in which general
meetings are to be convened by Directors.
NOTICE OF GENERAL MEETINGS
--------------------------
39. At least five days' notice shall be given of an annual general meeting or
any other general meeting. Every notice shall be exclusive of the day on which
it is given or deemed to be given and of the day for which it is given and shall
specify the place, the day and the hour of the meeting and the general nature of
the business and shall be given in manner hereinafter mentioned or in such other
manner if any as may be prescribed by the Company PROVIDED that a general
meeting of the Company shall, whether or not the notice specified in this
regulation has been given and whether or not the provisions of Article 38 have
been complied with, be deemed to have been duly convened if it is so agreed:
<PAGE>
12
(a) in the case of a general meeting called as an annual general
meeting by all the Members entitled to attend and vote thereat or their proxies;
and
(b) in the case of any other general meeting by a majority in number of
the Members having a right to attend and vote at the meeting, being a majority
together holding not less than seventy-five per cent in nominal value or in the
case of shares without nominal or par value seventy-five per cent of the shares
in issue, or their proxies.
40. The accidental omission to give notice of a general meeting to, or the
non-receipt of notice of a meeting by any person entitled to receive notice
shall not invalidate the proceedings of that meeting.
PROCEEDINGS AT GENERAL MEETINGS
-------------------------------
41. No business shall be transacted at any general meeting unless a quorum of
Members is present at the time when the meeting proceeds to business; two
Members present in person or by proxy shall be a quorum provided always that if
the Company has one Member of record the quorum shall be that one Member present
in person or by proxy.
42. A resolution (including a Special Resolution) in writing (in one or more
counterparts) signed by all Members for the time being entitled to receive
notice of and to attend and vote at general meetings (or being corporations by
their duly authorised representatives) shall be as valid and effective as if the
same had been passed at a general meeting of the Company duly convened and held.
43. If within half an hour from the time appointed for the meeting a quorum is
not present, the meeting, if convened upon the requisition of Members, shall be
dissolved and in any other case it shall stand adjourned to the same day in the
next week at the same time and place or to such other time or such other place
as the Directors may determine and if at the adjourned meeting a quorum is not
present within half an hour from the time appointed for the meeting the Members
present shall be a quorum.
44. The Chairman, if any, of the Board of Directors shall preside as Chairman at
every general meeting of the Company, or if there is no such Chairman, or if he
shall not be present within fifteen minutes after the time appointed for the
holding of the meeting, or is unwilling to act, the Directors present shall
elect one of their number to be Chairman of the meeting.
45. If at any general meeting 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 shall choose one of their number to be Chairman
of the meeting.
<PAGE>
13
46. The Chairman may, with the consent of any general meeting duly constituted
hereunder, 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 any
adjourned meeting other than the business left unfinished at the meeting from
which the adjournment took place. When a general meeting is adjourned for thirty
days or more, notice of the adjourned meeting shall be given as in the case of
an original meeting; save as aforesaid it shall not be necessary to give any
notice of an adjournment or of the business to be transacted at an adjourned
general meeting.
47. At any general meeting a resolution put to the vote of the meeting shall be
decided on a show of hands unless a poll is, before or on the declaration of the
result of the show of hands, demanded by the Chairman or any other Member
present in person or by proxy.
48. Unless a poll be so demanded a declaration by the Chairman that a resolution
has on a show of hands been carried, or carried unanimously, or by a particular
majority, or lost, and an entry to that effect in the Company's Minute Book
containing the Minutes of the proceedings of the meeting shall be conclusive
evidence of that fact without proof of the number or proportion of the votes
recorded in favour of or against such resolution.
49. The demand for a poll may be withdrawn.
50. Except as provided in Article 52, if a poll is duly demanded it shall be
taken in such manner as the Chairman directs and the result of the poll shall be
deemed to be the resolution of the general meeting at which the poll was
demanded.
51. In the case of an equality of votes, whether on a show of hands or on a
poll, the Chairman of the general meeting at which the show of hands takes place
or at which the poll is demanded, shall be entitled to a second or casting vote.
52. 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 at such time as the Chairman of the general meeting directs and
any business other than that upon which a poll has been demanded or is
contingent thereon may be proceeded with pending the taking of the poll.
VOTES OF MEMBERS
----------------
53. Subject to any rights or restrictions for the time being attached to any
class or classes of shares, on a show of hands every Member of record present in
person or by proxy at a general meeting shall have one vote and on a poll every
Member of record present in
<PAGE>
14
person or by proxy shall have one vote for each share registered in his name in
the register of Members.
54. In the case of joint holders of record 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 for this purpose seniority shall be
determined by the order in which the names stand in the register of Members.
55. A Member of unsound mind, or in respect of whom an order has been made by
any court, having jurisdiction in lunacy, may vote, whether on a show of hands
or on a poll, by his committee, receiver, curator bonis, or other person in the
nature of a committee, receiver or curator bonis appointed by that court, and
any such committee, receiver, curator
bonis or other persons may vote by proxy.
56. No Member shall be entitled to vote at any general meeting unless he is
registered as a shareholder of the Company on the record date for such meeting
nor unless all calls or other sums presently payable by him in respect of shares
in the Company have been paid.
57. No objection shall be raised to the qualification of any voter except at the
general meeting or adjourned general meeting at which the vote objected to is
given or tendered and every vote not disallowed at such general meeting shall be
valid for all purposes. Any such objection made in due time shall be referred to
the Chairman of the general meeting whose decision shall be final and
conclusive.
58. On a poll or on a show of hands votes may be given either personally or by
proxy.
PROXIES
-------
59. The instrument appointing a proxy shall be in writing and shall be executed
under the hand of the appointor or of his attorney duly authorised in writing,
or, if the appointor is a corporation under the hand of an officer or attorney
duly authorised in that behalf. A proxy need not be a Member of the Company.
60. The instrument appointing a proxy shall be deposited at the registered
office of the Company or at such other place as is specified for that purpose in
the notice convening the meeting no later than the time for holding the meeting,
or adjourned meeting provided that the Chairman of the Meeting may at his
discretion direct that an instrument of proxy shall be deemed to have been duly
deposited upon receipt of telex, cable or telecopy
<PAGE>
15
confirmation from the appointor that the instrument of proxy duly signed is in
the course of transmission to the Company.
61. The instrument appointing a proxy may be in any usual or common form and may
be expressed to be for a particular meeting or any adjournment thereof or
generally until revoked. An instrument appointing a proxy shall be deemed to
include the power to demand or join or concur in demanding a poll.
62. A vote given in accordance with the terms of an instrument of proxy shall be
valid notwithstanding the previous death or insanity of the principal or
revocation of the proxy or of the authority under which the proxy was executed,
or the transfer of the share in respect of which the proxy is given provided
that no intimation in writing of such death, insanity, revocation or transfer as
aforesaid shall have been received by the Company at the registered office
before the commencement of the general meeting, or adjourned meeting at which it
is sought to use the proxy.
63. Any corporation which is a Member of record of the Company may in accordance
with its Articles or in the absence of such provision by resolution of its
Directors or other governing body authorise such person as it thinks fit to act
as its representative at any meeting of the Company or of any class of Members
of the Company, and the person so authorised shall be entitled to exercise the
same powers on behalf of the corporation which he represents as the corporation
could exercise if it were an individual Member of record of the Company.
64. Shares of its own capital belonging to the Company or held by it in a
fiduciary capacity shall not be voted, directly or indirectly, at any meeting
and shall not be counted in determining the total number of outstanding shares
at any given time.
DIRECTORS
---------
65. There shall be a Board of Directors consisting of not less than one or more
than ten persons (exclusive of alternate Directors) PROVIDED HOWEVER that the
Company may from time to time by ordinary resolution increase or reduce the
limits in the number of Directors. The first Directors of the Company shall be
determined in writing by, or appointed by a resolution of, the subscribers of
the Memorandum of Association or a majority of them.
66. The remuneration to be paid to the Directors shall be such remuneration as
the Directors shall determine. Such remuneration shall be deemed to accrue from
day to day. The Directors shall also be entitled to be paid their travelling,
hotel and other expenses properly incurred by them in going to, attending and
returning from meetings of the
<PAGE>
16
Directors, or any committee of the Directors, or general meetings of the
Company, or otherwise in connection with the business of the Company, or to
receive a fixed allowance in respect thereof as may be determined by the
Directors from time to time, or a combination partly of one such method and
partly the other.
67. The Directors may by resolution award special remuneration to any Director
of the Company undertaking any special work or services for, or undertaking any
special mission on behalf of, the Company other than his ordinary routine work
as a Director. Any fees paid to a Director who is also counsel or solicitor to
the Company, or otherwise serves it in a professional capacity shall be in
addition to his remuneration as a Director.
68. A Director or alternate Director may hold any other office or place of
profit under the Company (other than the office of Auditor) in conjunction with
his office of Director for such period and on such terms as to remuneration and
otherwise as the Directors may determine.
69. A Director or alternate Director may act by himself or his firm in a
professional capacity for the Company and he or his firm shall be entitled to
remuneration for professional services as if he were not a Director or alternate
Director.
70. A shareholding qualification for Directors may be fixed by the Company in
general meeting, but unless and until so fixed no qualification shall be
required.
71. A Director or alternate Director of the Company may be or become a director
or other officer of or otherwise interested in any company promoted by the
Company or in which the Company may be interested as shareholder or otherwise
and no such Director or alternate Director shall be accountable to the Company
for any remuneration or other benefits received by him as a director or officer
of, or from his interest in, such other company.
72. No person shall be disqualified from the office of Director or alternate
Director or prevented by such office from contracting with the Company, either
as vendor, purchaser or otherwise, nor shall any such contract or any contract
or transaction entered into by or on behalf of the Company in which any Director
or alternate Director shall be in any way interested be or be liable to be
avoided, nor shall any Director or alternate Director so contracting or being so
interested be liable to account to the Company for any profit realised by any
such contract or transaction by reason of such Director holding office or of the
fiduciary relation thereby established. A Director (or his alternate Director in
his absence) shall be at liberty to vote in respect of any contract or
transaction in which he is so interested as aforesaid PROVIDED HOWEVER that the
nature of the interest of any Director or alternate Director in any such
contract or transaction shall be disclosed by him or the alternate Director
appointed by him at or prior to its consideration and any vote thereon.
<PAGE>
17
73. A general notice that a Director or alternate Director is a shareholder of
any specified firm or company and is to be regarded as interested in any
transaction with such firm or company shall be sufficient disclosure under
Article 72 and after such general notice it shall not be necessary to give
special notice relating to any particular transaction.
ALTERNATE DIRECTORS
-------------------
74. Subject to the exception contained in Article 82, a Director who expects to
be unable to attend Directors' Meetings because of absence, illness or otherwise
may appoint any person to be an alternate Director to act in his stead and such
appointee whilst he holds office as an alternate Director shall, in the event of
absence therefrom of his appointor, be entitled to attend meetings of the
Directors and to vote thereat and to do, in the place and stead of his
appointor, any other act or thing which his appointor is permitted or required
to do by virtue of his being a Director as if the alternate Director were the
appointor, other than appointment of an alternate to himself, and he shall ipso
facto vacate office if and when his appointor ceases to be a Director or removes
the appointee from office. Any appointment or removal under this Article shall
be effected by notice in writing under the hand of the Director making the same.
POWERS AND DUTIES OF DIRECTORS
------------------------------
75. The business of the Company shall be managed by the Directors (or a sole
Director if only one is appointed) who may pay all expenses incurred in
promoting, registering and setting up the Company, and may exercise all such
powers of the Company as are not, from time to time by the Statute, or by these
Articles, or such regulations, being not inconsistent with the aforesaid, as may
be prescribed by the Company in general meeting required to be exercised by the
Company in general meeting PROVIDED HOWEVER that no regulations made by the
Company in general meeting shall invalidate any prior act of the Directors which
would have been valid if that regulation had not been made.
76. The Directors may from time to time and at any time by powers of attorney
appoint any company, firm, person or body of persons, whether nominated directly
or indirectly by the Directors, to be the attorney or attorneys of the Company
for such purpose and with such powers, authorities and discretions (not
exceeding those vested in or exercisable by the Directors under these Articles)
and for such period and subject to such conditions as they may think fit, and
any such powers of attorney may contain such provisions for the protection and
convenience of persons dealing with any such attorneys as the Directors may
think fit and may also authorise any such attorney to delegate all or any of the
powers, authorities and discretions vested in him.
<PAGE>
18
77. All cheques, promissory notes, drafts, bills of exchange and other
negotiable instruments and all receipts for monies paid to the Company shall be
signed, drawn, accepted, endorsed or otherwise executed as the case may be in
such manner as the Directors shall from time to time by resolution determine.
78. The Directors shall cause minutes to be made in books provided for the
purpose:
(a) of all appointments of officers made by the Directors;
(b) of the names of the Directors (including those represented thereat
by an alternate or by proxy) present at each meeting of the Directors and of any
committee of the Directors;
(c) of all resolutions and proceedings at all meetings of the Company
and of the Directors and of committees of Directors.
79. The Directors on behalf of the Company may pay a gratuity or pension or
allowance on retirement to any Director who has held any other salaried office
or place of profit with the Company or to his widow or dependants and may make
contributions to any fund and pay premiums for the purchase or provision of any
such gratuity, pension or allowance.
80. The Directors may exercise all the powers of the Company to borrow money and
to mortgage or charge its undertaking, property and uncalled capital or any part
thereof and to issue debentures, debenture stock and other securities whether
outright or as security for any debt, liability or obligation of the Company or
of any third party.
MANAGEMENT
----------
81. (a) The Directors may from time to time provide for the management of the
affairs of the Company in such manner as they shall think fit and the provisions
contained in the three next following paragraphs shall be without prejudice to
the general powers conferred by
this paragraph.
(b) The Directors from time to time and at any time may establish any
committees, local boards or agencies for managing any of the affairs of the
Company and may appoint any persons to be members of such committees or local
boards or any managers or agents and
may fix their remuneration.
<PAGE>
19
(c) The Directors from time to time and at any time may delegate to any
such committee, local board, manager or agent any of the powers, authorities and
discretions for the time being vested in the Directors and may authorise the
members for the time being of any such local board, or any of them to fill up
any vacancies therein and to act notwithstanding vacancies and any such
appointment or delegation may be made on such terms and subject to such
conditions as the Directors may think fit and the Directors may at any time
remove any person so appointed and may annul or vary any such delegation, but no
person dealing in good faith and without notice of any such annulment or
variation shall be affected thereby.
(d) Any such delegates as aforesaid may be authorised by the Directors
to subdelegate all or any of the powers, authorities, and discretions for the
time being vested in them.
MANAGING DIRECTORS
------------------
82. The Directors may, from time to time, appoint one or more of their body (but
not an alternate Director) to the office of Managing Director for such term and
at such remuneration (whether by way of salary, or commission, or participation
in profits, or partly in one way and partly in another) as they may think fit
but his appointment shall be subject to determination ipso facto if he ceases
from any cause to be a Director and no alternate Director appointed by him can
act in his stead as a Director or Managing Director.
83. The Directors may entrust to and confer upon a Managing Director any of the
powers exercisable by them upon such terms and conditions and with such
restrictions as they may think fit and either collaterally with or to the
exclusion of their own powers and may from time to time revoke, withdraw, alter
or vary all or any of such powers.
PROCEEDINGS OF DIRECTORS
------------------------
84. Except as otherwise provided by these Articles, the Directors shall meet
together for the despatch of business, convening, adjourning and otherwise
regulating their meetings as they think fit. Questions arising at any meeting
shall be decided by a majority of votes of the Directors and alternate Directors
present at a meeting at which there is a quorum, the vote of an alternate
Director not being counted if his appointor be present at such meeting. In case
of an equality of votes, the Chairman shall have a second or casting vote.
85. A Director or alternate Director may, and the Secretary on the requisition
of a Director or alternate Director shall, at any time summon a meeting of the
Directors by at least two days' notice in writing to every Director and
alternate Director which notice shall set forth the general nature of the
business to be considered unless notice is waived by all the
<PAGE>
20
Directors (or their alternates) either at, before or after the meeting is held
and PROVIDED FURTHER if notice is given in person, by cable, telex or telecopy
the same shall be deemed to have been given on the day it is delivered to the
Directors or transmitting organisation as the case may be. The provisions of
Article 40 shall apply mutatis mutandis with respect to notices of meetings of
Directors.
86. The quorum necessary for the transaction of the business of the Directors
may be fixed by the Directors and unless so fixed shall be two, a Director and
his appointed alternate Director being considered only one person for this
purpose, PROVIDED ALWAYS that if there shall at any time be only a sole Director
the quorum shall be one. For the purposes of this Article an alternate Director
or proxy appointed by a Director shall be counted in a quorum at a meeting at
which the Director appointing him is not present.
87. The continuing Directors may act notwithstanding any vacancy in their body,
but if and so long as their number is reduced below the number fixed by or
pursuant to these Articles as the necessary quorum of Directors the continuing
Directors or Director may act for the purpose of increasing the number of
Directors to that number, or of summoning a general meeting of the Company, but
for no other purpose.
88. The Directors may elect a Chairman of their Board and determine the period
for which he is to hold office; but if no such Chairman is elected, or if at any
meeting the Chairman is not present within five minutes after the time appointed
for holding the same, the Directors present may choose one of their number to be
Chairman of the meeting.
89. The Directors may delegate any of their powers to committees consisting of
such member or members of the Board of Directors (including Alternate Directors
in the absence of their appointors) as they think fit; any committee so formed
shall in the exercise of the powers so delegated conform to any regulations that
may be imposed on it by the
Directors.
90. A committee may meet and adjourn as it thinks proper. Questions arising at
any meeting shall be determined by a majority of votes of the members present,
and in the case of an equality of votes the Chairman shall have a second or
casting vote.
91. All acts done by any meeting of the Directors or of a committee of Directors
(including any person acting as an alternate Director) shall, notwithstanding
that it be afterwards discovered that there was some defect in the appointment
of any Director or alternate Director, or that they or any of them were
disqualified, be as valid as if every such person had been duly appointed and
qualified to be a Director or alternate Director as the case may be.
<PAGE>
21
92. Members of the Board of Directors or of any committee thereof may
participate in a meeting of the Board or of such 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 participation in a
meeting pursuant to this provision shall constitute presence in person at such
meeting. A resolution in writing (in one or more counterparts), signed by all
the Directors for the time being or all the members of a committee of Directors
(an alternate Director being entitled to sign such resolution on behalf of his
appointor) shall be as valid and effectual as if it had been passed at a meeting
of the Directors or committee as the case may be duly convened and held.
93. (a) A Director may be represented at any meetings of the Board of Directors
by a proxy appointed by him in which event the presence or vote of the proxy
shall for all purposes be deemed to be that of the Director.
(b) The provisions of Articles 59-62 shall mutatis mutandis apply to
the appointment of proxies by Directors.
VACATION OF OFFICE OF DIRECTOR
------------------------------
94. The office of a Director shall be vacated:
(a) if he gives notice in writing to the Company that he resigns the
office of Director;
(b) if he absents himself (without being represented by proxy or an
alternate Director appointed by him) from three consecutive meetings of the
Board of Directors without special leave of absence from the Directors, and they
pass a resolution that he has by reason of such absence vacated office;
(c) if he dies, becomes bankrupt or makes any arrangement or
composition with his creditors generally;
(d) if he is found a lunatic or becomes of unsound mind.
APPOINTMENT AND REMOVAL OF DIRECTORS
------------------------------------
95. The Company may by ordinary resolution appoint any person to be a Director
and may in like manner remove any Director and may in like manner appoint
another person in his stead.
<PAGE>
22
96. The Directors shall have power at any time and from time to time to appoint
any person to be a Director, either to fill a casual vacancy or as an addition
to the existing Directors but so that the total amount of Directors (exclusive
of alternate Directors) shall not at any time exceed the number fixed in
accordance with these Articles.
PRESUMPTION OF ASSENT
---------------------
97. A Director of the Company who is present at a meeting of the Board of
Directors at which action on any Company matter is taken shall be presumed to
have assented to the action taken unless his dissent shall be entered in the
Minutes of the meeting or unless he shall file his written dissent from such
action with the person acting as the Secretary of the meeting before the
adjournment thereof or shall forward such dissent by registered mail to such
person immediately after the adjournment of the meeting. Such right to dissent
shall not apply to a Director who voted in favour of such action.
SEAL
----
98. (a) The Company may, if the Directors so determine, have a Seal which shall,
subject to paragraph (c) hereof, only be used by the authority of the Directors
or of a committee of the Directors authorised by the Directors in that behalf
and every instrument to which the Seal has been affixed shall be signed by one
person who shall be either a Director or the Secretary or Secretary-Treasurer or
some person appointed by the Directors for the purpose.
(b) The Company may have for use in any place or places outside the
Cayman Islands a duplicate Seal or Seals each of which shall be a facsimile of
the Common Seal of the Company and, if the Directors so determine, with the
addition on its face of the name of
every place where it is to be used.
(c) A Director, Secretary or other officer or representative or
attorney may without further authority of the Directors affix the Seal of the
Company over his signature alone to any document of the Company required to be
authenticated by him under Seal or to be filed with the Registrar of Companies
in the Cayman Islands or elsewhere wheresoever.
OFFICERS
--------
99. The Company may have a President, a Secretary or Secretary-Treasurer
appointed by the Directors who may also from time to time appoint such other
officers as they consider necessary, all for such terms, at such remuneration
and to perform such duties, and subject to such provisions as to
disqualification and removal as the Directors from time to
time prescribe.
<PAGE>
23
DIVIDENDS, DISTRIBUTIONS AND RESERVE
------------------------------------
100. Subject to the Statute, the Directors may from time to time declare
dividends (including interim dividends) and distributions on shares of the
Company outstanding and authorise payment of the same out of the funds of the
Company lawfully available therefor.
101. The Directors may, before declaring any dividends or distributions, set
aside such sums as they think proper as a reserve or reserves which shall at the
discretion of the Directors, be applicable for any purpose of the Company and
pending such application may, at the like discretion, be employed in the
business of the Company.
102. No dividend or distribution shall be payable except out of the profits of
the Company, realised or unrealised, or out of the share premium account or as
otherwise permitted by the Statute.
103. Subject to the rights of persons, if any, entitled to shares with special
rights as to dividends or distributions, if dividends or distributions are to be
declared on a class of shares they shall be declared and paid according to the
amounts paid or credited as paid on the shares of such class outstanding on the
record date for such dividend or distribution as determined in accordance with
these Articles but no amount paid or credited as paid on a share in advance of
calls shall be treated for the purpose of this Article as paid on the share.
104. The Directors may deduct from any dividend or distribution payable to any
Member all sums of money (if any) presently payable by him to the Company on
account of calls or otherwise.
105. The Directors may declare that any dividend or distribution be paid wholly
or partly by the distribution of specific assets and in particular of paid up
shares, debentures, or debenture stock of any other company or in any one or
more of such ways and where any difficulty arises in regard to such
distribution, the Directors may settle the same as they think expedient and in
particular may issue fractional certificates and fix the value for distribution
of such specific assets or any part thereof and may determine that cash payments
shall be made to any Members upon the footing of the value so fixed in order to
adjust the rights of all Members and may vest any such specific assets in
trustees as may seem expedient to the Directors.
106. Any dividend, distribution, interest or other monies payable in cash in
respect of shares may be paid by cheque or warrant sent through the post
directed to the registered address of the holder or, in the case of joint
holders, to the holder who is first named on the register of Members or to such
person and to such address as such holder or joint holders may in writing
direct. Every such cheque or warrant shall be made payable to the order of
<PAGE>
24
the person to whom it is sent. Any one of two or more joint holders may give
effectual receipts for any dividends, bonuses, or other monies payable in
respect of the share held by them as joint holders.
107. No dividend or distribution shall bear interest against the Company.
CAPITALISATION
--------------
108. The Company may upon the recommendation of the Directors by ordinary
resolution authorise the Directors to capitalise any sum standing to the credit
of any of the Company's reserve accounts (including share premium account and
capital redemption reserve fund) or any sum standing to the credit of profit and
loss account or otherwise available for distribution and to appropriate such sum
to Members in the proportions in which such sum would have been divisible
amongst them had the same been a distribution of profits by way of dividend and
to apply such sum on their behalf in paying up in full unissued shares for
allotment and distribution credited as fully paid up to and amongst them in the
proportion aforesaid. In such event the Directors shall do all acts and things
required to give effect to such capitalisation, with full power to the Directors
to make such provisions as they think fit for the case of shares becoming
distributable in fractions (including provisions whereby the benefit of
fractional entitlements accrue to the Company rather than to the Members
concerned). The Directors may authorise any person to enter on behalf of all of
the Members interested into an agreement with the Company providing for such
capitalisation and matters incidental thereto and any agreement made under such
authority shall be effective and binding on all concerned.
BOOKS OF ACCOUNT
----------------
109. The Directors shall cause proper books of account to be kept with respect
to:
(a) all sums of money received and expended by the Company and the
matters in respect of which the receipt or expenditure takes place;
(b) all sales and purchases of goods by the Company;
(c) the assets and liabilities of the Company.
Proper books shall not be deemed to be kept if there are not kept such books of
account as are necessary to give a true and fair view of the state of the
Company's affairs and to explain its transactions.
<PAGE>
25
110. The Directors shall from time to time determine whether and to what extent
and at what times and places and under what conditions or regulations the
accounts and books of the Company or any of them shall be open to the inspection
of Members not being Directors and no Member (not being a Director) shall have
any right of inspecting any account or book or document of the Company except as
conferred by Statute or authorised by the Directors or by the Company in general
meeting.
111. The Directors may from time to time cause to be prepared and to be laid
before the Company in general meeting profit and loss accounts, balance sheets,
group accounts (if any) and such other reports and accounts as may be required
by law.
AUDIT
-----
112. The Company may at any annual general meeting appoint an Auditor or
Auditors of the Company who shall hold office until the next annual general
meeting and may fix his or their remuneration.
113. The Directors may before the first annual general meeting appoint an
Auditor or Auditors of the Company who shall hold office until the first annual
general meeting unless previously removed by an ordinary resolution of the
Members in general meeting in which case the Members at that meeting may appoint
Auditors. The Directors may fill any casual vacancy in the office of Auditor but
while any such vacancy continues the surviving or continuing Auditor or
Auditors, if any, may act. The remuneration of any Auditor appointed by the
Directors under this Article may be fixed by the Directors.
114. Every Auditor of the Company shall have a right of access at all times to
the books and accounts and vouchers of the Company and shall be entitled to
require from the Directors and Officers of the Company such information and
explanation as may be necessary for the performance of the duties of the
auditors.
115. Auditors shall at the next annual general meeting following their
appointment and at any other time during their term of office, upon request of
the Directors or any general meeting of the Members, make a report on the
accounts of the Company in general meeting during their tenure of office.
NOTICES
-------
116. Notices shall be in writing and may be given by the Company to any Member
either personally or by sending it by post, cable, telex or telecopy to him or
to his address as shown in the register of Members, such notice, if mailed, to
be forwarded airmail if the address be outside the Cayman Islands.
<PAGE>
26
117. (a) Where a notice is sent by post, service of the notice shall be deemed
to be effected by properly addressing, pre-paying and posting a letter
containing the notice, and to have been effected at the expiration of sixty
hours after the letter containing the same is posted as aforesaid.
(b) Where a notice is sent by cable, telex, or telecopy, service of the
notice shall be deemed to be effected by properly addressing, and sending such
notice through a transmitting organisation and to have been effected on the day
the same is sent as aforesaid.
118. A notice may be given by the Company to the joint holders of record of a
share by giving the notice to the joint holder first named on the register of
Members in respect of the share.
119. A notice may be given by the Company to the person or persons which the
Company has been advised are entitled to a share or shares in consequence of the
death or bankruptcy of a Member by sending it through the post as aforesaid in a
pre-paid letter 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 supplied for that purpose by the persons claiming to be so entitled, or
at the option of the Company by giving the notice in any manner in which the
same might have been given if the death or bankruptcy had not occurred.
120. Notice of every general meeting shall be given in any manner hereinbefore
authorised to:
(a) every person shown as a Member in the register of Members as of the
record date for such meeting except that in the case of joint holders the notice
shall be sufficient if given to the joint holder first named in the register of
Members.
(b) every person upon whom the ownership of a share devolves by reason
of his being a legal personal representative or a trustee in bankruptcy of a
Member of record where the Member of record but for his death or bankruptcy
would be entitled to receive notice of the meeting; and
No other person shall be entitled to receive notices of general meetings.
WINDING UP
----------
121. If the Company shall be wound up the liquidator may, with the sanction of a
Special Resolution of the Company and any other sanction required by the
Statute, divide amongst the Members in specie or kind the whole or any part of
the assets of the Company
<PAGE>
27
(whether they shall consist of property of the same kind or not) and may for
such purpose set such value as he deems fair upon any property to be divided as
aforesaid and may determine how such 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 such assets in trustees upon such trusts
for the benefit of the contributories as the liquidator, with the like sanction,
shall think fit, but so that no Member shall be compelled to accept any shares
or other securities whereon there is any liability.
122. If the Company shall be wound up, and the assets available for distribution
amongst the Members as such shall be insufficient to repay the whole of the
paid-up capital, such assets shall be distributed so that, as nearly as may be,
the losses shall be borne by the Members in proportion to the capital paid up,
or which ought to have been paid up, at the commencement of the winding up on
the shares held by them respectively. And if in a winding up the assets
available for distribution amongst the Members shall be more than sufficient to
repay the whole of the capital paid up at the commencement of the winding up,
the excess shall be distributed amongst the Members in proportion to the capital
paid up at the commencement of the winding up on the shares held by them
respectively. This Article is to be without prejudice to the rights of the
holders of shares issued upon special terms and conditions.
INDEMNITY
---------
123. The Directors and officers for the time being of the Company and any
trustee for the time being acting in relation to any of the affairs of the
Company and their heirs, executors, administrators and personal representatives
respectively shall be indemnified out of the assets of the Company from and
against all actions, proceedings, costs, charges, losses, damages and expenses
which they or any of them shall or may incur or sustain by reason of any act
done or omitted in or about the execution of their duty in their respective
offices or trusts, except such (if any) as they shall incur or sustain by or
through their own wilful neglect or default respectively and no such Director,
officer or trustee shall be answerable for the acts, receipts, neglects or
defaults of any other Director, officer or trustee or for joining in any receipt
for the sake of conformity or for the solvency or honesty of any banker or other
persons with whom any monies or effects belonging to the Company may be lodged
or deposited for safe custody or for any insufficiency of any security upon
which any monies of the Company may be invested or for any other loss or damage
due to any such cause as aforesaid or which may happen in or about the execution
of his office or trust unless the same shall happen through the wilful neglect
or default of such Director, Officer or trustee.
<PAGE>
28
FINANCIAL YEAR
--------------
124. Unless the Directors otherwise prescribe, the financial year of the Company
shall end on 31st December in each year and, following the year of
incorporation, shall begin on 1st January in each year.
AMENDMENTS OF ARTICLES
----------------------
125. Subject to the Statute, the Company may at any time and from time to time
by Special Resolution alter or amend these Articles in whole or in part.
TRANSFER BY WAY OF CONTINUATION
-------------------------------
126. If the Company is exempted as defined in the Statute, it shall, subject to
the provisions of the Statute and with the approval of a Special Resolution,
have the power to register by way of continuation as a body corporate under the
laws of any jurisdiction outside the Cayman Islands and to be deregistered in
the Cayman Islands.
THE COMPANIES LAW (1995 REVISION)
---------------------------------
COMPANY LIMITED BY SHARES
-------------------------
MEMORANDUM OF ASSOCIATION
OF
MILLENIUM VII, INC.
1. The name of the Company is MILLENIUM VII, INC..
2. The Registered Office of the Company shall be at the offices of Maples and
Calder, Attorneys-at-Law, Ugland House, P.O. Box 309, George Town, Grand Cayman,
Cayman Islands, British West Indies or at such other place as the Directors may
from time to time decide.
3. The objects for which the Company is established are unrestricted and shall
include, but without limitation, the following:-
(i) (a) To undertake and carry on all or any of the trades and businesses of
international freight forwarders and agents, shippers, ship owners, ship
brokers, shipping agents and insurance brokers, underwriters, ship managers, tug
owners, shipping agents, loading brokers, freight contractors, carriers by land,
air and water, transport, haulage and general contractors, barge owners,
lightermen, railway and forwarding agents, dock owners, ships' husbands,
warehousemen, salvors, manufacturers of and dealers in tarpaulins, waterproofs,
machinery, engines, nautical instruments, and ships'rigging, gear, fittings and
equipment of every description, importers and exporters of and dealers in goods,
provisions, live and dead stock, commodities, articles, chattels, merchandise
and property of every kind, general traders and
<PAGE>
2
merchants, and generally to carry on the said businesses in all their branches,
and to carry on the said businesses either as principals or agents or on
commission or otherwise.
(b) To purchase or otherwise acquire, and to carry on the business or
businesses of fishing boat owners, smack owners, trawlers, deep-sea fishers,
shrimp fishers, fish curers, fish or shrimp salesmen, wholesale and retail fish
or shrimp merchants, wholesale and retail game and poultry merchants, ice
manufacturers, oil merchants and refiners, utilisers of fish refuse, manure
manufacturers, anchor and chain makers, wire rope makers, rope makers, mast and
block makers, ship chandlers, marine storekeepers, compass and nautical
instrument makers, marine engineers, engineers, boiler makers, ship builders,
dry-dock keepers, slip keepers, boat builders, ship and boat repairers, ship and
boat outfitters, salvors, wreck removers, wreck raisers, divers, auctioneers,
valuers, assessors, stevedores, wharfingers, carriers, forwarding agents, and
all other branches of business usually or conveniently connected with any such
business as aforesaid.
(c) To enter into, take over, negotiate or otherwise acquire, any
contract or contracts for the construction, building, equipping, fitting out,
storing, gearing or otherwise relating to any steamship, ship, trawler, catcher,
carrier, drifter, fishing boat, boat, or other vessel whatsoever, and to enter
into, take over, negotiate or otherwise acquire any other contract or contracts
whatever which the Company may think necessary, desirable or convenient for the
purposes of the Company or any of them, and to enter into, take over, negotiate,
or otherwise acquire any such contract or contracts at such prices and for such
considerations, and upon such terms and
<PAGE>
3
conditions, and subject to such stipulations and agreements as the Company may
determine, and at any time and from time to time vary, modify, alter or cancel
any such contract.
(d) To acquire concessions or licences for the establishment and
working of lines of ships or other vessels between any ports of the world, or
for the formation or working of any railway or tramway, wharf, pier, dock, or
other works, or for the working of any coaches or other public conveyances, with
the benefit of any subsidy attached to any such concession or
licence or otherwise.
(e) To insure the vessels and other property of the Company in any
manner.
(f) To grant loans on ships and vessels or on goods and merchandise
carried or to be carried in any vessels and to buy and sell merchandise for
freighting on the ships and vessels of the Company.
(g) To engage in any and all kinds of business and other activities
with respect to oil, gas and other materials, and the products and by-products
thereof, including but not by way of limitation, exploration, developing,
drilling, producing, refining, processing, mining, confining, manufacturing,
storing, transporting, distributing, trading, buying, selling and all other
activities pertinent thereto.
(h) To resell or sublet any concession or licence obtained, or contract
entered into.
(i) To carry on the business of an investment company and to act as
promoters and entrepreneurs and to carry on business as financiers, capitalists,
concessionaires, merchants, brokers, traders, dealers, agents, importers and
exporters and to undertake and carry on and execute all kinds of investment,
financial, commercial, mercantile, trading and other operations.
<PAGE>
4
(j) To carry on whether as principals, agents or otherwise howsoever
the business of realtors, developers, consultants, estate agents or managers,
builders, contractors, engineers, manufacturers, dealers in or vendors of all
types of property including services.
(ii) To exercise and enforce all rights and powers conferred by or incidental to
the ownership of any shares, stock, obligations or other securities including
without prejudice to the generality of the foregoing all such powers of veto or
control as may be conferred by virtue of the holding by the Company of some
special proportion of the issued or nominal amount thereof, to provide
managerial and other executive, supervisory and consultant services for or in
relation to any company in which the Company is interested upon such terms as
may be thought fit.
(iii) To purchase or otherwise acquire, to sell, exchange, surrender, lease,
mortgage, charge, convert, turn to account, dispose of and deal with real and
personal property and rights of all kinds and, in particular, mortgages,
debentures, produce, concessions, options, contracts, patents, annuities,
licences, stocks, shares, bonds, policies, book debts, business concerns,
undertakings, claims, privileges and choses in action of all kinds.
(iv) To subscribe for, conditionally or unconditionally, to underwrite, issue on
commission or otherwise, take, hold, deal in and convert stocks, shares and
securities of all kinds and to enter into partnership or into any arrangement
for sharing profits, reciprocal concessions or cooperation with any person or
company and to promote and aid in promoting, to constitute, form or organise any
company, syndicate or partnership of any kind, for the purpose of acquiring and
undertaking any property and liabilities of the Company or of
<PAGE>
5
advancing, directly or indirectly, the objects of the Company or for any other
purpose which the Company may think expedient.
(v) To stand surety for or to guarantee, support or secure the performance of
all or any of the obligations of any person, firm or company whether or not
related or affiliated to the Company in any manner and whether by personal
covenant or by mortgage, charge or lien upon the whole or any part of the
undertaking, property and assets of the Company, both present and future,
including its uncalled capital or by any such method and whether or not the
Company shall receive valuable consideration therefor.
(vi) To engage in or carry on any other lawful trade, business or enterprise
which may at any time appear to the Directors of the Company capable of being
conveniently carried on in conjunction with any of the aforementioned businesses
or activities or which may appear to the Directors or the Company likely to be
profitable to the Company. In the interpretation of this Memorandum of
Association in general and of this Clause 3 in particular no object, business or
power specified or mentioned shall be limited or restricted by reference to or
inference from any other object, business or power, or the name of the Company,
or by the juxtaposition of two or more objects, businesses or powers and that,
in the event of any ambiguity in this clause or elsewhere in this Memorandum of
Association, the same shall be resolved by such interpretation and construction
as will widen and enlarge and not restrict the objects, businesses and powers of
and exercisable by the Company.
4. Except as prohibited or limited by the Companies Law (1995 Revision), the
Company shall have full power and authority to carry out any object and shall
have and be
<PAGE>
6
capable of from time to time and at all times exercising any and all of the
powers at any time or from time to time exercisable by a natural person or body
corporate in doing in any part of the world whether as principal, agent,
contractor or otherwise whatever may be considered by it necessary for the
attainment of its objects and whatever else may be considered by it as
incidental or conducive thereto or consequential thereon, including, but without
in any way restricting the generality of the foregoing, the power to make any
alterations or amendments to this Memorandum of Association and the Articles of
Association of the Company considered necessary or convenient in the manner set
out in the Articles of Association of the Company, and the power to do any of
the following acts or things, viz:
to pay all expenses of and incidental to the promotion, formation and
incorporation of the Company; to register the Company to do business in any
other jurisdiction; to sell, lease or dispose of any property of the Company; to
draw, make, accept, endorse, discount, execute and issue promissory notes,
debentures, bills of exchange, bills of lading, warrants and other negotiable or
transferable instruments; to lend money or other assets and to act as
guarantors; to borrow or raise money on the security of the undertaking or on
all or any of the assets of the Company including uncalled capital or without
security; to invest monies of the Company in such manner as the Directors
determine; to promote other companies; to sell the undertaking of the Company
for cash or any other consideration; to distribute assets in specie to members
of the Company; to make charitable or benevolent donations; to pay pensions or
gratuities or provide other benefits in cash or kind to Directors, officers,
employees, past or present and their families; to carry on any trade or business
and generally to do all acts and things which, in the
<PAGE>
7
opinion of the Company or the Directors, may be conveniently or profitably or
usefully acquired and dealt with, carried on, executed or done by the Company in
connection with the business aforesaid PROVIDED THAT the Company shall only
carry on the businesses for which a licence is required under the laws of the
Cayman Islands when so licensed under the terms of such laws.
5. The liability of each member is limited to the amount from time to time
unpaid on such member's shares.
6. The share capital of the Company is US$50,000 divided into 50,000 shares of a
nominal or par value of US$1.00 each with power for the Company insofar as is
permitted by law, to redeem or purchase any of its shares and to increase or
reduce the said capital subject to the provisions of the Companies Law (1995
Revision) and the Articles of Association and to issue any part of its capital,
whether original, redeemed or increased with or without any preference, priority
or special privilege or subject to any postponement of rights or to any
conditions or restrictions and so that unless the conditions of issue shall
otherwise expressly declare every issue of shares whether declared to be
preference or otherwise shall be subject to the powers hereinbefore contained.
7. If the Company is registered as exempted, its operations will be carried on
subject to the provisions of Section l92 of the Companies Law (1995 Revision)
and subject to the provisions of the Companies Law (1995 Revision) and the
Articles of Association it shall have the power to register by way of
continuation as a body corporate limited by shares under the laws of any
jurisdiction outside the Cayman Islands and to be deregistered in the Cayman
Islands.
<PAGE>
8
WE the several persons whose names and addresses are subscribed are desirous of
being formed into a company in pursuance of this Memorandum of Association and
we respectively agree to take the number of shares in the capital of the Company
set opposite our respective names.
<PAGE>
THE COMPANIES LAW (1995 REVISION)
---------------------------------
COMPANY LIMITED BY SHARES
-------------------------
ARTICLES OF ASSOCIATION
OF
MILLENIUM VII, INC.
1. In these Articles Table A in the Schedule to the Statute does not apply and,
unless there be something in the subject or context inconsistent therewith,
"Articles" means these Articles as originally framed or
as from time to time altered by Special
Resolution.
"Auditors" means the persons for the time being
performing the duties of auditors of the
Company.
"Company" means the above-named Company.
"debenture" means debenture stock, mortgages, bonds and
any other such securities of the Company
whether constituting a charge on the assets
of the Company or not.
"Directors" means the directors for the time being of
the Company.
"dividend" includes bonus.
"Member" shall bear the meaning as ascribed to it in
the Statute.
"month" means calendar month.
"paid-up" means paid-up and/or credited as paid-up.
"registered office" means the registered office for the time
being of the Company.
<PAGE>
2
"Seal" means the common seal of the Company and
includes every duplicate seal.
"Secretary" includes an Assistant Secretary and any
person appointed to perform the duties of
Secretary of the Company.
"share" includes a fraction of a share.
"Special Resolution" has the same meaning as in the Statute and
includes a resolution approved in writing as
described therein.
"Statute" means the Companies Law of the Cayman
Islands as amended and every statutory
modification or re-enactment thereof for the
time being in force.
"written" and "in writing" include all modes of representing or
reproducing words in visible form.
Words importing the singular number only include the plural number and
vice-versa.
Words importing the masculine gender only include the feminine gender.
Words importing persons only include corporations.
2. The business of the Company may be commenced as soon after incorporation as
the Directors shall see fit, notwithstanding that part only of the shares may
have been
allotted.
3. The Directors may pay, out of the capital or any other monies of the Company,
all expenses incurred in or about the formation and establishment of the Company
including the expenses of registration.
CERTIFICATES FOR SHARES
-----------------------
4. Certificates representing shares of the Company shall be in such form as
shall be determined by the Directors. Such certificates may be under Seal. All
certificates for shares shall be consecutively numbered or otherwise identified
and shall specify the shares to which they relate. The name and address of the
person to whom the shares represented thereby are issued, with the number of
shares and date of issue, shall be entered in the register of Members of the
Company. All certificates surrendered to the Company for transfer shall be
cancelled and no new
<PAGE>
3
certificate shall be issued until the former certificate for a like number of
shares shall have been surrendered and cancelled. The Directors may authorise
certificates to be issued with the seal and authorised signature(s) affixed by
some method or system of mechanical process.
5. Notwithstanding Article 4 of these Articles, if a share certificate be
defaced, lost or destroyed, it may be renewed on payment of a fee of one dollar
(US$l.00) or such less sum and on such terms (if any) as to evidence and
indemnity and the payment of the expenses incurred by the Company in
investigating evidence, as the Directors may prescribe.
ISSUE OF SHARES
---------------
6. Subject to the provisions, if any, in that behalf in the Memorandum of
Association and to any direction that may be given by the Company in general
meeting and without prejudice to any special rights previously conferred on the
holders of existing shares, the Directors may allot, issue, grant options over
or otherwise dispose of shares of the Company (including fractions of a share)
with or without preferred, deferred or other special rights or restrictions,
whether in regard to dividend, voting, return of capital or otherwise and to
such persons, at such times and on such other terms as they think proper.
7. The Company shall maintain a register of its Members and every person whose
name is entered as a Member in the register of Members shall be entitled without
payment to receive within two months after allotment or lodgement of transfer
(or within such other period as the conditions of issue shall provide) one
certificate for all his shares or several certificates each for one or more of
his shares upon payment of fifty cents (US$0.50) for every certificate after the
first or such less sum as the Directors shall from time to time determine
provided that in respect of a share or shares held jointly by several persons
the Company shall not be bound to issue more than one certificate and delivery
of a certificate for a share to one of the several joint holders shall be
sufficient delivery to all such holders.
TRANSFER OF SHARES
------------------
8. The instrument of transfer of any share shall be in writing and shall be
executed by or on behalf of the transferor and the transferor shall be deemed to
remain the holder of a share until the name of the transferee is entered in the
register in respect thereof.
9. The Directors may in their absolute discretion decline to register any
transfer of shares without assigning any reason therefor. If the Directors
refuse to register a transfer they
shall notify the transferee within two months of such refusal.
<PAGE>
4
10. The registration of transfers may be suspended at such time and for such
periods as the Directors may from time to time determine, provided always that
such registration shall
not be suspended for more than forty-five days in any year.
REDEEMABLE SHARES
-----------------
11. (a) Subject to the provisions of the Statute and the Memorandum of
Association, shares may be issued on the terms that they are, or at the option
of the Company or the holder are, to be redeemed on such terms and in such
manner as the Company, before the issue of the
shares, may by Special Resolution determine.
(b) Subject to the provisions of the Statute and the Memorandum of
Association, the Company may purchase its own shares (including fractions of a
share), including any redeemable shares, provided that the manner of purchase
has first been authorised by the Company in general meeting and may make payment
therefor in any manner authorised by the Statute, including out of capital.
VARIATION OF RIGHTS OF SHARES
-----------------------------
12. If at any time the share capital of the Company 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, whether or not the
Company is being wound-up, be varied with the consent in writing of the holders
of three-fourths of the issued shares of that class, or with the sanction of a
Special Resolution passed at a general meeting of the holders of the shares of
that class.
The provisions of these Articles relating to general meetings
shall apply to every such general meeting of the holders of one class of shares
except that the necessary quorum shall be one person holding or representing by
proxy at least 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.
13. The rights conferred upon the holders of the shares of any class issued with
preferred or other rights shall not, unless otherwise expressly provided by the
terms of issue of the shares of that class, be deemed to be varied by the
creation or issue of further shares ranking
pari passu therewith.
COMMISSION ON SALE OF SHARES
----------------------------
14. The Company may in so far as the Statute from time to time permits pay a
commission to any person in consideration of his subscribing or agreeing to
subscribe whether absolutely or conditionally for any shares of the Company.
Such commissions may be satisfied
<PAGE>
5
by the payment of cash or the lodgement of fully or partly paid-up shares or
partly in one way and partly in the other. The Company may also on any issue of
shares pay such brokerage as may be lawful.
NON-RECOGNITION OF TRUSTS
-------------------------
15. No person shall be recognised by the Company as holding any share upon any
trust and the Company shall not be bound by or be compelled in any way to
recognise (even when having notice thereof) any equitable, contingent, future,
or partial interest in any share, or any interest in any fractional part of a
share, or (except only as is otherwise provided by these Articles or the
Statute) any other rights in respect of any share except an absolute right to
the entirety thereof in the registered holder.
LIEN ON SHARES
--------------
16. The Company shall have a first and paramount lien and charge on all shares
(whether fully paid-up or not) registered in the name of a Member (whether
solely or jointly with others) for all debts, liabilities or engagements to or
with the Company (whether presently payable or not) by such Member or his
estate, either alone or jointly with any other person, whether a Member or not,
but the Directors may at any time declare any share to be wholly or in part
exempt from the provisions of this Article. The registration of a transfer of
any such share shall operate as a waiver of the Company's lien (if any) thereon.
The Company's lien (if any) on a share shall extend to all dividends or other
monies payable in respect thereof.
17. The Company may sell, in such manner as the Directors think fit, any shares
on which the Company has a lien, but no sale shall be made unless a sum in
respect of which the lien exists is presently payable, nor until the expiration
of fourteen days after a notice in writing stating and demanding payment of such
part of the amount in respect of which the lien exists as is presently payable,
has been given to the registered holder or holders for the time being of the
share, or the person, of which the Company has notice, entitled thereto by
reason of his death or bankruptcy.
18. To give effect to any such sale the Directors may authorise some person to
transfer the shares sold to the purchaser thereof. The purchaser shall be
registered as the holder of the shares comprised in any such transfer, and he
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 or invalidity in the
proceedings in reference to the sale.
19. The proceeds of such sale shall be received by the Company and applied in
payment of such part of the amount in respect of which the lien exists as is
presently payable and
<PAGE>
6
the residue, if any, shall (subject to a like lien for sums 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.
CALL ON SHARES
--------------
20. (a) The Directors may from time to time make calls upon the Members in
respect of any monies unpaid on their shares (whether on account of the nominal
value of the shares or by way of premium or otherwise) and not by the conditions
of allotment thereof made payable at fixed terms, provided that no call shall be
payable at less than one month from the date fixed for the payment of the last
preceding call, and each Member shall (subject to receiving at least fourteen
days notice specifying the time or times of payment) pay to the Company at the
time or times so specified the amount called on the shares. A call may be
revoked or postponed as the Directors may determine. A call may be made payable
by instalments.
(b) A call shall be deemed to have been made at the time when the
resolution of the Directors authorising such call was passed.
(c) The joint holders of a share shall be jointly and severally liable
to pay all calls in respect thereof.
21. If a sum called in respect of a share is not paid before or on a day
appointed for payment thereof, the persons from whom the sum is due shall pay
interest on the sum from the day appointed for payment thereof to the time of
actual payment at such rate not exceeding ten per cent per annum as the
Directors may determine, but the Directors shall be at liberty to waive payment
of such interest either wholly or in part.
22. Any sum which by the terms of issue of a share becomes payable on allotment
or at any fixed date, whether on account of the nominal value of the share or by
way of premium or otherwise, shall for the purposes of these Articles be deemed
to be a call duly made, notified and payable on the date on which by the terms
of issue the same becomes payable, and in the case of non-payment all the
relevant provisions of these Articles as to payment of interest forfeiture or
otherwise shall apply as if such sum had become payable by virtue of a call duly
made and notified.
23. The Directors may, on the issue of shares, differentiate between the holders
as to the amount of calls or interest to be paid and the times of payment.
24. (a) The Directors may, if they think fit, receive from any Member willing to
advance the same, all or any part of the monies uncalled and unpaid upon any
shares held by him, and upon all or any of the monies so advanced may (until the
same would but for such advances, become payable) pay interest at such rate not
exceeding (unless the Company in general meeting
<PAGE>
7
shall otherwise direct) seven per cent per annum, as may be agreed upon between
the Directors and the Member paying such sum in advance.
(b) No such sum paid in advance of calls shall entitle the Member
paying such sum to any portion of a dividend declared in respect of any period
prior to the date upon which such sum would, but for such payment, become
presently payable.
FORFEITURE OF SHARES
--------------------
25. (a) If a Member fails to pay any call or instalment of a call or to make any
payment required by the terms of issue on the day appointed for payment thereof,
the Directors may, at any time thereafter during such time as any part of the
call, instalment or payment remains unpaid, give notice requiring payment of so
much of the call, instalment or payment as is unpaid, together with any interest
which may have accrued and all expenses that have been incurred by the Company
by reason of such non-payment. Such notice shall name a day (not earlier than
the expiration of fourteen days from the date of giving of the notice) on or
before which the payment required by the notice is to be made, and shall state
that, in the event of non-payment at or before the time appointed the shares in
respect of which such notice was given will be liable to be forfeited.
(b) If the requirements of any such notice as aforesaid are not
complied with, any share in respect of which the notice has been given may at
any time thereafter, before the payment required by the notice has been made, be
forfeited by a resolution of the Directors to that effect. Such forfeiture shall
include all dividends declared in respect of the forfeited share and not
actually paid before the forfeiture.
(c) A forfeited share may be sold or otherwise disposed of on such
terms and in such manner as the Directors think fit and at any time before a
sale or disposition the forfeiture may be cancelled on such terms as the
Directors think fit.
26. A person whose shares have been forfeited shall cease to be a Member in
respect of the forfeited shares, but shall, notwithstanding, remain liable to
pay to the Company all monies which, at the date of forfeiture were payable by
him to the Company in respect of the shares together with interest thereon, but
his liability shall cease if and when the Company shall have received payment in
full of all monies whenever payable in respect of the shares.
27. A certificate in writing under the hand of one Director or the Secretary of
the Company that a share in the Company has been duly forfeited on a date stated
in the declaration shall be conclusive evidence of the fact therein stated as
against all persons claiming to be entitled to the share. The Company may
receive the consideration given for the share on any sale or disposition thereof
and may execute a transfer of the share in favour of the person to whom
<PAGE>
8
the share is sold or disposed of and he shall thereupon be registered as the
holder of the share and shall not be bound to see to the application of the
purchase money, if any, nor shall his title to the share be affected by any
irregularity or invalidity in the proceedings in reference to the
forfeiture, sale or disposal of the share.
28. The provisions of these Articles as to forfeiture shall apply in the case of
non-payment of any sum which, by the terms of issue of a share, becomes payable
at a fixed time, whether on account of the nominal value of the share or by way
of premium as if the same had been payable by virtue of a call duly made and
notified.
REGISTRATION OF EMPOWERING INSTRUMENTS
--------------------------------------
29. The Company shall be entitled to charge a fee not exceeding one dollar
(US$l.00) on the registration of every probate, letters of administration,
certificate of death or marriage, power of attorney, notice in lieu of
distringas, or other instrument.
TRANSMISSION OF SHARES
----------------------
30. In case of the death of a Member, the survivor or survivors where the
deceased was a joint holder, and the legal personal representatives of the
deceased where he was a sole holder, shall be the only persons recognised by the
Company as having any title to his interest in the shares, but nothing herein
contained shall release the estate of any such deceased holder from any
liability in respect of any shares which had been held by him solely or jointly
with other persons.
31. (a) Any person becoming entitled to a share in consequence of the death or
bankruptcy or liquidation or dissolution of a Member (or in any other way than
by transfer) may, upon such evidence being produced as may from time to time be
required by the Directors and subject as hereinafter provided, elect either to
be registered himself as holder of the share or to make such transfer of the
share to such other person nominated by him as the deceased or bankrupt person
could have made and to have such person registered as the transferee thereof,
but the Directors shall, in either case, have the same right to decline or
suspend registration as they would have had in the case of a transfer of the
share by that Member before his death or bankruptcy as the case may be.
(b) If the person so becoming entitled shall elect to be registered
himself as holder he shall deliver or send to the Company a notice in writing
signed by him stating that he so elects.
32. A person becoming entitled to a share by reason of the death or bankruptcy
or liquidation or dissolution of the holder (or in any other case than by
transfer) shall be entitled to the same dividends and other advantages to which
he would be entitled if he were the registered
<PAGE>
9
holder of the share, except that he shall not, before being registered as a
Member in respect of the share, be entitled in respect of it to exercise any
right conferred by membership in relation to meetings of the Company PROVIDED
HOWEVER that the Directors may at any time give notice requiring any such person
to elect either to be registered himself or to transfer the share and if the
notice is not complied with within ninety days the Directors may thereafter
withhold payment of all dividends, bonuses or other monies payable in respect of
the share until the requirements of the notice have been complied with.
AMENDMENT OF MEMORANDUM OF ASSOCIATION, CHANGE OF
LOCATION OF REGISTERED OFFICE & ALTERATION OF CAPITAL
-----------------------------------------------------
33. (a) Subject to and in so far as permitted by the provisions of the Statute,
the Company may from time to time by ordinary resolution alter or amend its
Memorandum of Association otherwise than with respect to its name and objects
and may, without restricting the generality
of the foregoing:
(i) increase the share capital by such sum to be divided
into shares of such amount or without nominal or par
value as the resolution shall prescribe and with such
rights, priorities and privileges annexed thereto, as
the Company in general meeting may determine.
(ii) consolidate and divide all or any of its share
capital into shares of larger amount than its
existing shares;
(iii) by subdivision of its existing shares or any of them
divide the whole or any part of its share capital
into shares of smaller amount than is fixed by the
Memorandum of Association or into shares without
nominal or par value;
(iv) cancel any shares which at the date of the passing of
the resolution have not been taken or agreed to be
taken by any person.
(b) All new shares created hereunder shall be subject to the same
provisions with reference to the payment of calls, liens, transfer,
transmission, forfeiture and otherwise as the
shares in the original share capital.
(c) Subject to the provisions of the Statute, the Company may by
Special Resolution change its name or alter its objects.
<PAGE>
10
(d) Without prejudice to Article 11 hereof and subject to the
provisions of the Statute, the Company may by Special Resolution reduce its
share capital and any capital redemption reserve fund.
(e) Subject to the provisions of the Statute, the Company may by
resolution of the Directors change the location of its registered office.
CLOSING REGISTER OF MEMBERS OR FIXING RECORD DATE
-------------------------------------------------
34. For the purpose of determining Members entitled to notice of or to vote at
any meeting of Members or any adjournment thereof, or Members entitled to
receive payment of any dividend, or in order to make a determination of Members
for any other proper purpose, the Directors of the Company may provide that the
register of Members shall be closed for transfers for a stated period but not to
exceed in any case forty days. If the register of Members shall be so closed for
the purpose of determining Members entitled to notice of or to vote at a meeting
of Members such register shall be so closed for at least ten days immediately
preceding such meeting and the record date for such determination shall be the
date of the closure of the register of Members.
35. In lieu of or apart from closing the register of Members, the Directors may
fix in advance a date as the record date for any such determination of Members
entitled to notice of or to vote at a meeting of the Members and for the purpose
of determining the Members entitled to receive payment of any dividend the
Directors may, at or within 90 days prior to the date of declaration of such
dividend fix a subsequent date as the record date for such determination.
36. If the register of Members is not so closed and no record date is fixed for
the determination of Members entitled to notice of or to vote at a meeting of
Members or Members entitled to receive payment of a dividend, the date on which
notice of the meeting is mailed or the date on which the resolution of the
Directors declaring such dividend is adopted, as the case may be, shall be the
record date for such determination of Members. When a determination of Members
entitled to vote at any meeting of Members has been made as provided in this
section, such determination shall apply to any adjournment thereof.
GENERAL MEETING
---------------
37. (a) Subject to paragraph (c) hereof, the Company shall within one year of
its incorporation and in each year of its existence thereafter hold a general
meeting as its annual general meeting and shall specify the meeting as such in
the notices calling it. The annual general meeting shall be held at such time
and place as the Directors shall appoint and if no other time and place is
prescribed by them, it shall be held at the registered office on the second
Wednesday in December of each year at ten o'clock in the morning.
<PAGE>
11
(b) At these meetings the report of the Directors (if any) shall be
presented.
(c) If the Company is exempted as defined in the Statute it may but
shall not be obliged to hold an annual general meeting.
38. (a) The Directors may whenever they think fit, and they shall on the
requisition of Members of the Company holding at the date of the deposit of the
requisition not less than one-tenth of such of the paid-up capital of the
Company as at the date of the deposit carries the right of voting at general
meetings of the Company, proceed to convene a general meeting of the Company.
(b) The requisition must state the objects of the meeting and must be
signed by the requisitionists and deposited at the registered office of the
Company and may consist of several documents in like form each signed by one or
more requisitionists.
(c) If the Directors do not within twenty-one days from the date of the
deposit of the requisition duly proceed to convene a general meeting, the
requisitionists, or any of them representing more than one-half of the total
voting rights of all of them, may themselves convene a general meeting, but any
meeting so convened shall not be held after the expiration of three months after
the expiration of the said twenty-one days.
(d) A general meeting convened as aforesaid by requisitionists shall be
convened in the same manner as nearly as possible as that in which general
meetings are to be convened by Directors.
NOTICE OF GENERAL MEETINGS
--------------------------
39. At least five days' notice shall be given of an annual general meeting or
any other general meeting. Every notice shall be exclusive of the day on which
it is given or deemed to be given and of the day for which it is given and shall
specify the place, the day and the hour of the meeting and the general nature of
the business and shall be given in manner hereinafter mentioned or in such other
manner if any as may be prescribed by the Company PROVIDED that a general
meeting of the Company shall, whether or not the notice specified in this
regulation has been given and whether or not the provisions of Article 38 have
been complied with, be deemed to have been duly convened if it is so agreed:
(a) in the case of a general meeting called as an annual general
meeting by all the Members entitled to attend and vote thereat
or their proxies; and
(b) in the case of any other general meeting by a majority in
number of the Members having a right to attend and vote at the
meeting, being a majority together holding
<PAGE>
12
not less than seventy-five per cent in nominal value or in the
case of shares without nominal or par value seventy-five per
cent of the shares in issue, or their
proxies.
40. The accidental omission to give notice of a general meeting to, or the
non-receipt of notice of a meeting by any person entitled to receive notice
shall not invalidate the proceedings
of that meeting.
PROCEEDINGS AT GENERAL MEETINGS
-------------------------------
41. No business shall be transacted at any general meeting unless a quorum of
Members is present at the time when the meeting proceeds to business; two
Members present in person or by proxy shall be a quorum provided always that if
the Company has one Member of record the quorum shall be that one Member present
in person or by proxy.
42. A resolution (including a Special Resolution) in writing (in one or more
counterparts) signed by all Members for the time being entitled to receive
notice of and to attend and vote at general meetings (or being corporations by
their duly authorised representatives) shall be as valid and effective as if the
same had been passed at a general meeting of the Company duly convened and held.
43. If within half an hour from the time appointed for the meeting a quorum is
not present, the meeting, if convened upon the requisition of Members, shall be
dissolved and in any other case it shall stand adjourned to the same day in the
next week at the same time and place or to such other time or such other place
as the Directors may determine and if at the adjourned meeting a quorum is not
present within half an hour from the time appointed for the meeting the Members
present shall be a quorum.
44. The Chairman, if any, of the Board of Directors shall preside as Chairman at
every general meeting of the Company, or if there is no such Chairman, or if he
shall not be present within fifteen minutes after the time appointed for the
holding of the meeting, or is unwilling to act, the Directors present shall
elect one of their number to be Chairman of the meeting.
45. If at any general meeting 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 shall choose one of their number to be Chairman
of the meeting.
46. The Chairman may, with the consent of any general meeting duly constituted
hereunder, 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 any
adjourned meeting other than the
<PAGE>
13
business left unfinished at the meeting from which the adjournment took place.
When a general meeting is adjourned for thirty days or more, notice of the
adjourned meeting shall be given as in the case of an original meeting; save as
aforesaid it shall not be necessary to give any notice of an adjournment or of
the business to be transacted at an adjourned general meeting.
47. At any general meeting a resolution put to the vote of the meeting shall be
decided on a show of hands unless a poll is, before or on the declaration of the
result of the show of hands, demanded by the Chairman or any other Member
present in person or by proxy.
48. Unless a poll be so demanded a declaration by the Chairman that a resolution
has on a show of hands been carried, or carried unanimously, or by a particular
majority, or lost, and an entry to that effect in the Company's Minute Book
containing the Minutes of the proceedings of the meeting shall be conclusive
evidence of that fact without proof of the number or proportion of the votes
recorded in favour of or against such resolution.
49. The demand for a poll may be withdrawn.
50. Except as provided in Article 52, if a poll is duly demanded it shall be
taken in such manner as the Chairman directs and the result of the poll shall be
deemed to be the resolution of the general meeting at which the poll was
demanded.
51. In the case of an equality of votes, whether on a show of hands or on a
poll, the Chairman of the general meeting at which the show of hands takes place
or at which the poll is
demanded, shall be entitled to a second or casting vote.
52. 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 at such time as the Chairman of the general meeting directs and
any business other than that upon which a poll has been demanded or is
contingent thereon may be proceeded with pending the taking of the poll.
VOTES OF MEMBERS
----------------
53. Subject to any rights or restrictions for the time being attached to any
class or classes of shares, on a show of hands every Member of record present in
person or by proxy at a general meeting shall have one vote and on a poll every
Member of record present in person or by proxy shall have one vote for each
share registered in his name in the register of Members.
54. In the case of joint holders of record 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
<PAGE>
14
holders, and for this purpose seniority shall be determined by the order in
which the names stand in the register of Members.
55. A Member of unsound mind, or in respect of whom an order has been made by
any court, having jurisdiction in lunacy, may vote, whether on a show of hands
or on a poll, by his committee, receiver, curator bonis, or other person in the
nature of a committee, receiver or curator bonis appointed by that court, and
any such committee, receiver, curator bonis or other persons may vote by proxy.
56. No Member shall be entitled to vote at any general meeting unless he is
registered as a shareholder of the Company on the record date for such meeting
nor unless all calls or other sums presently payable by him in respect of shares
in the Company have been paid.
57. No objection shall be raised to the qualification of any voter except at the
general meeting or adjourned general meeting at which the vote objected to is
given or tendered and every vote not disallowed at such general meeting shall be
valid for all purposes. Any such objection made in due time shall be referred to
the Chairman of the general meeting whose
decision shall be final and conclusive.
58. On a poll or on a show of hands votes may be given either personally or by
proxy.
PROXIES
-------
59. The instrument appointing a proxy shall be in writing and shall be executed
under the hand of the appointor or of his attorney duly authorised in writing,
or, if the appointor is a corporation under the hand of an officer or attorney
duly authorised in that behalf. A proxy need not be a Member of the Company.
60. The instrument appointing a proxy shall be deposited at the registered
office of the Company or at such other place as is specified for that purpose in
the notice convening the meeting no later than the time for holding the meeting,
or adjourned meeting provided that the Chairman of the Meeting may at his
discretion direct that an instrument of proxy shall be deemed to have been duly
deposited upon receipt of telex, cable or telecopy confirmation from the
appointor that the instrument of proxy duly signed is in the course of
transmission to the Company.
61. The instrument appointing a proxy may be in any usual or common form and may
be expressed to be for a particular meeting or any adjournment thereof or
generally until revoked. An instrument appointing a proxy shall be deemed to
include the power to demand or
join or concur in demanding a poll.
<PAGE>
15
62. A vote given in accordance with the terms of an instrument of proxy shall be
valid notwithstanding the previous death or insanity of the principal or
revocation of the proxy or of the authority under which the proxy was executed,
or the transfer of the share in respect of which the proxy is given provided
that no intimation in writing of such death, insanity, revocation or transfer as
aforesaid shall have been received by the Company at the registered office
before the commencement of the general meeting, or adjourned meeting at which it
is sought to use the proxy.
63. Any corporation which is a Member of record of the Company may in accordance
with its Articles or in the absence of such provision by resolution of its
Directors or other governing body authorise such person as it thinks fit to act
as its representative at any meeting of the Company or of any class of Members
of the Company, and the person so authorised shall be entitled to exercise the
same powers on behalf of the corporation which he represents as the corporation
could exercise if it were an individual Member of record of the Company.
64. Shares of its own capital belonging to the Company or held by it in a
fiduciary capacity shall not be voted, directly or indirectly, at any meeting
and shall not be counted in determining the total number of outstanding shares
at any given time.
DIRECTORS
---------
65. There shall be a Board of Directors consisting of not less than one or more
than ten persons (exclusive of alternate Directors) PROVIDED HOWEVER that the
Company may from time to time by ordinary resolution increase or reduce the
limits in the number of
Directors.
The first Directors of the Company shall be determined in writing by, or
appointed by a resolution of, the subscribers of the Memorandum of Association
or a majority of them.
66. The remuneration to be paid to the Directors shall be such remuneration as
the Directors shall determine. Such remuneration shall be deemed to accrue from
day to day. The Directors shall also be entitled to be paid their travelling,
hotel and other expenses properly incurred by them in going to, attending and
returning from meetings of the Directors, or any committee of the Directors, or
general meetings of the Company, or otherwise in connection with the business of
the Company, or to receive a fixed allowance in respect thereof as may be
determined by the Directors from time to time, or a combination partly of one
such method and partly the other.
67. The Directors may by resolution award special remuneration to any Director
of the Company undertaking any special work or services for, or undertaking any
special mission on behalf of, the Company other than his ordinary routine work
as a Director. Any fees paid to a Director who is also counsel or solicitor to
the Company, or otherwise serves it in a professional capacity shall be in
addition to his remuneration as a Director.
<PAGE>
16
68. A Director or alternate Director may hold any other office or place of
profit under the Company (other than the office of Auditor) in conjunction with
his office of Director for such period and on such terms as to remuneration and
otherwise as the Directors may determine.
69. A Director or alternate Director may act by himself or his firm in a
professional capacity for the Company and he or his firm shall be entitled to
remuneration for professional
services as if he were not a Director or alternate Director.
70. A shareholding qualification for Directors may be fixed by the Company in
general meeting, but unless and until so fixed no qualification shall be
required.
71. A Director or alternate Director of the Company may be or become a director
or other officer of or otherwise interested in any company promoted by the
Company or in which the Company may be interested as shareholder or otherwise
and no such Director or alternate Director shall be accountable to the Company
for any remuneration or other benefits received by him as a director or officer
of, or from his interest in, such other company.
72. No person shall be disqualified from the office of Director or alternate
Director or prevented by such office from contracting with the Company, either
as vendor, purchaser or otherwise, nor shall any such contract or any contract
or transaction entered into by or on behalf of the Company in which any Director
or alternate Director shall be in any way interested be or be liable to be
avoided, nor shall any Director or alternate Director so contracting or being so
interested be liable to account to the Company for any profit realised by any
such contract or transaction by reason of such Director holding office or of the
fiduciary relation thereby established. A Director (or his alternate Director in
his absence) shall be at liberty to vote in respect of any contract or
transaction in which he is so interested as aforesaid PROVIDED HOWEVER that the
nature of the interest of any Director or alternate Director in any such
contract or transaction shall be disclosed by him or the alternate Director
appointed by him at or prior to its consideration and any vote thereon.
73. A general notice that a Director or alternate Director is a shareholder of
any specified firm or company and is to be regarded as interested in any
transaction with such firm or company shall be sufficient disclosure under
Article 72 and after such general notice it shall not be necessary to give
special notice relating to any particular transaction.
ALTERNATE DIRECTORS
-------------------
74. Subject to the exception contained in Article 82, a Director who expects to
be unable to attend Directors' Meetings because of absence, illness or otherwise
may appoint any person to be an alternate Director to act in his stead and such
appointee whilst he holds office as an alternate Director shall, in the event of
absence therefrom of his appointor, be entitled to
<PAGE>
17
attend meetings of the Directors and to vote thereat and to do, in the place and
stead of his appointor, any other act or thing which his appointor is permitted
or required to do by virtue of his being a Director as if the alternate Director
were the appointor, other than appointment of an alternate to himself, and he
shall ipso facto vacate office if and when his appointor ceases to be a Director
or removes the appointee from office. Any appointment or removal under this
Article shall be effected by notice in writing under the hand of the Director
making the same.
POWERS AND DUTIES OF DIRECTORS
------------------------------
75. The business of the Company shall be managed by the Directors (or a sole
Director if only one is appointed) who may pay all expenses incurred in
promoting, registering and setting up the Company, and may exercise all such
powers of the Company as are not, from time to time by the Statute, or by these
Articles, or such regulations, being not inconsistent with the aforesaid, as may
be prescribed by the Company in general meeting required to be exercised by the
Company in general meeting PROVIDED HOWEVER that no regulations made by the
Company in general meeting shall invalidate any prior act of the Directors which
would have been valid if that regulation had not been made.
76. The Directors may from time to time and at any time by powers of attorney
appoint any company, firm, person or body of persons, whether nominated directly
or indirectly by the Directors, to be the attorney or attorneys of the Company
for such purpose and with such powers, authorities and discretions (not
exceeding those vested in or exercisable by the Directors under these Articles)
and for such period and subject to such conditions as they may think fit, and
any such powers of attorney may contain such provisions for the protection and
convenience of persons dealing with any such attorneys as the Directors may
think fit and may also authorise any such attorney to delegate all or any of the
powers, authorities and discretions vested in him.
77. All cheques, promissory notes, drafts, bills of exchange and other
negotiable instruments and all receipts for monies paid to the Company shall be
signed, drawn, accepted, endorsed or otherwise executed as the case may be in
such manner as the Directors shall from
time to time by resolution determine.
78. The Directors shall cause minutes to be made in books provided for the
purpose:
(a) of all appointments of officers made by the Directors;
(b) of the names of the Directors (including those represented
thereat by an alternate or by proxy) present at each meeting
of the Directors and of any committee of the
Directors;
<PAGE>
18
(c) of all resolutions and proceedings at all meetings of the
Company and of the Directors and of committees of Directors.
79. The Directors on behalf of the Company may pay a gratuity or pension or
allowance on retirement to any Director who has held any other salaried office
or place of profit with the Company or to his widow or dependants and may make
contributions to any fund and pay premiums for the purchase or provision of any
such gratuity, pension or allowance.
80. The Directors may exercise all the powers of the Company to borrow money and
to mortgage or charge its undertaking, property and uncalled capital or any part
thereof and to issue debentures, debenture stock and other securities whether
outright or as security for any debt, liability or obligation of the Company or
of any third party.
MANAGEMENT
----------
81. (a) The Directors may from time to time provide for the management of the
affairs of the Company in such manner as they shall think fit and the provisions
contained in the three next following paragraphs shall be without prejudice to
the general powers conferred by this
paragraph.
(b) The Directors from time to time and at any time may establish any
committees, local boards or agencies for managing any of the affairs of the
Company and may appoint any persons to be members of such committees or local
boards or any managers or agents and may fix their remuneration.
(c) The Directors from time to time and at any time may delegate to any
such committee, local board, manager or agent any of the powers, authorities and
discretions for the time being vested in the Directors and may authorise the
members for the time being of any such local board, or any of them to fill up
any vacancies therein and to act notwithstanding vacancies and any such
appointment or delegation may be made on such terms and subject to such
conditions as the Directors may think fit and the Directors may at any time
remove any person so appointed and may annul or vary any such delegation, but no
person dealing in good faith and without notice of any such annulment or
variation shall be affected thereby.
(d) Any such delegates as aforesaid may be authorised by the Directors
to subdelegate all or any of the powers, authorities, and discretions for the
time being vested in them.
MANAGING DIRECTORS
------------------
82. The Directors may, from time to time, appoint one or more of their body (but
not an alternate Director) to the office of Managing Director for such term and
at such remuneration
<PAGE>
19
(whether by way of salary, or commission, or participation in profits, or partly
in one way and partly in another) as they may think fit but his appointment
shall be subject to determination ipso facto if he ceases from any cause to be a
Director and no alternate Director appointed by him can act in his stead as a
Director or Managing Director.
83. The Directors may entrust to and confer upon a Managing Director any of the
powers exercisable by them upon such terms and conditions and with such
restrictions as they may think fit and either collaterally with or to the
exclusion of their own powers and may from time to time revoke, withdraw, alter
or vary all or any of such powers.
PROCEEDINGS OF DIRECTORS
------------------------
84. Except as otherwise provided by these Articles, the Directors shall meet
together for the despatch of business, convening, adjourning and otherwise
regulating their meetings as they think fit. Questions arising at any meeting
shall be decided by a majority of votes of the Directors and alternate Directors
present at a meeting at which there is a quorum, the vote of an alternate
Director not being counted if his appointor be present at such meeting. In case
of an equality of votes, the Chairman shall have a second or casting vote.
85. A Director or alternate Director may, and the Secretary on the requisition
of a Director or alternate Director shall, at any time summon a meeting of the
Directors by at least two days' notice in writing to every Director and
alternate Director which notice shall set forth the general nature of the
business to be considered unless notice is waived by all the Directors (or their
alternates) either at, before or after the meeting is held and PROVIDED FURTHER
if notice is given in person, by cable, telex or telecopy the same shall be
deemed to have been given on the day it is delivered to the Directors or
transmitting organisation as the case may be. The provisions of Article 40 shall
apply mutatis mutandis with respect to notices of meetings of Directors.
86. The quorum necessary for the transaction of the business of the Directors
may be fixed by the Directors and unless so fixed shall be two, a Director and
his appointed alternate Director being considered only one person for this
purpose, PROVIDED ALWAYS that if there shall at any time be only a sole Director
the quorum shall be one. For the purposes of this Article an alternate Director
or proxy appointed by a Director shall be counted in a quorum at a meeting at
which the Director appointing him is not present.
87. The continuing Directors may act notwithstanding any vacancy in their body,
but if and so long as their number is reduced below the number fixed by or
pursuant to these Articles as the necessary quorum of Directors the continuing
Directors or Director may act for the purpose of increasing the number of
Directors to that number, or of summoning a general meeting of the Company, but
for no other purpose.
<PAGE>
20
88. The Directors may elect a Chairman of their Board and determine the period
for which he is to hold office; but if no such Chairman is elected, or if at any
meeting the Chairman is not present within five minutes after the time appointed
for holding the same, the Directors present may choose one of their number to be
Chairman of the meeting.
89. The Directors may delegate any of their powers to committees consisting of
such member or members of the Board of Directors (including Alternate Directors
in the absence of their appointors) as they think fit; any committee so formed
shall in the exercise of the powers so delegated conform to any regulations that
may be imposed on it by the Directors.
90. A committee may meet and adjourn as it thinks proper. Questions arising at
any meeting shall be determined by a majority of votes of the members present,
and in the case of an equality of votes the Chairman shall have a second or
casting vote.
91. All acts done by any meeting of the Directors or of a committee of Directors
(including any person acting as an alternate Director) shall, notwithstanding
that it be afterwards discovered that there was some defect in the appointment
of any Director or alternate Director, or that they or any of them were
disqualified, be as valid as if every such person had been duly appointed and
qualified to be a Director or alternate Director as the case may be.
92. Members of the Board of Directors or of any committee thereof may
participate in a meeting of the Board or of such 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 participation in a
meeting pursuant to this provision shall constitute presence in person at such
meeting. A resolution in writing (in one or more counterparts), signed by all
the Directors for the time being or all the members of a committee of Directors
(an alternate Director being entitled to sign such resolution on behalf of his
appointor) shall be as valid and effectual as if it had been passed at a meeting
of the Directors or committee as the case may be duly convened and held.
93. (a) A Director may be represented at any meetings of the Board of Directors
by a proxy appointed by him in which event the presence or vote of the proxy
shall for all purposes be deemed to be that of the Director.
(b) The provisions of Articles 59-62 shall mutatis mutandis apply to
the appointment of proxies by Directors.
VACATION OF OFFICE OF DIRECTOR
------------------------------
94. The office of a Director shall be vacated:
<PAGE>
21
(a) if he gives notice in writing to the Company that he resigns
the office of Director;
(b) if he absents himself (without being represented by proxy or
an alternate Director appointed by him) from three consecutive
meetings of the Board of Directors without special leave of
absence from the Directors, and they pass a resolution that he
has by reason of such absence vacated office;
(c) if he dies, becomes bankrupt or makes any arrangement or
composition with his creditors generally;
(d) if he is found a lunatic or becomes of unsound mind.
APPOINTMENT AND REMOVAL OF DIRECTORS
------------------------------------
95. The Company may by ordinary resolution appoint any person to be a Director
and may in like manner remove any Director and may in like manner appoint
another person in his
stead.
96. The Directors shall have power at any time and from time to time to appoint
any person to be a Director, either to fill a casual vacancy or as an addition
to the existing Directors but so that the total amount of Directors (exclusive
of alternate Directors) shall not at any time exceed the number fixed in
accordance with these Articles.
PRESUMPTION OF ASSENT
---------------------
97. A Director of the Company who is present at a meeting of the Board of
Directors at which action on any Company matter is taken shall be presumed to
have assented to the action taken unless his dissent shall be entered in the
Minutes of the meeting or unless he shall file his written dissent from such
action with the person acting as the Secretary of the meeting before the
adjournment thereof or shall forward such dissent by registered mail to such
person immediately after the adjournment of the meeting. Such right to dissent
shall not apply to a Director who voted in favour of such action.
SEAL
----
98. (a) The Company may, if the Directors so determine, have a Seal which shall,
subject to paragraph (c) hereof, only be used by the authority of the Directors
or of a committee of the Directors authorised by the Directors in that behalf
and every instrument to which the Seal has been affixed shall be signed by one
person who shall be either a Director or the Secretary or Secretary-Treasurer or
some person appointed by the Directors for the purpose.
<PAGE>
22
(b) The Company may have for use in any place or places outside the
Cayman Islands a duplicate Seal or Seals each of which shall be a facsimile of
the Common Seal of the Company and, if the Directors so determine, with the
addition on its face of the name of every place where it is to be used.
(c) A Director, Secretary or other officer or representative or
attorney may without further authority of the Directors affix the Seal of the
Company over his signature alone to any document of the Company required to be
authenticated by him under Seal or to be filed with the Registrar of Companies
in the Cayman Islands or elsewhere wheresoever.
OFFICERS
--------
99. The Company may have a President, a Secretary or Secretary-Treasurer
appointed by the Directors who may also from time to time appoint such other
officers as they consider necessary, all for such terms, at such remuneration
and to perform such duties, and subject to such provisions as to
disqualification and removal as the Directors from time to time prescribe.
DIVIDENDS, DISTRIBUTIONS AND RESERVE
------------------------------------
100. Subject to the Statute, the Directors may from time to time declare
dividends (including interim dividends) and distributions on shares of the
Company outstanding and authorise payment of the same out of the funds of the
Company lawfully available therefor.
101. The Directors may, before declaring any dividends or distributions, set
aside such sums as they think proper as a reserve or reserves which shall at the
discretion of the Directors, be applicable for any purpose of the Company and
pending such application may, at the like discretion, be employed in the
business of the Company.
102. No dividend or distribution shall be payable except out of the profits of
the Company, realised or unrealised, or out of the share premium account or as
otherwise permitted
by the Statute.
103. Subject to the rights of persons, if any, entitled to shares with special
rights as to dividends or distributions, if dividends or distributions are to be
declared on a class of shares they shall be declared and paid according to the
amounts paid or credited as paid on the shares of such class outstanding on the
record date for such dividend or distribution as determined in accordance with
these Articles but no amount paid or credited as paid on a share in advance of
calls shall be treated for the purpose of this Article as paid on the share.
<PAGE>
23
104. The Directors may deduct from any dividend or distribution payable to any
Member all sums of money (if any) presently payable by him to the Company on
account of calls or otherwise.
105. The Directors may declare that any dividend or distribution be paid wholly
or partly by the distribution of specific assets and in particular of paid up
shares, debentures, or debenture stock of any other company or in any one or
more of such ways and where any difficulty arises in regard to such
distribution, the Directors may settle the same as they think expedient and in
particular may issue fractional certificates and fix the value for distribution
of such specific assets or any part thereof and may determine that cash payments
shall be made to any Members upon the footing of the value so fixed in order to
adjust the rights of all Members and may vest any such specific assets in
trustees as may seem expedient to the Directors.
106. Any dividend, distribution, interest or other monies payable in cash in
respect of shares may be paid by cheque or warrant sent through the post
directed to the registered address of the holder or, in the case of joint
holders, to the holder who is first named on the register of Members or to such
person and to such address as such holder or joint holders may in writing
direct. Every such cheque or warrant shall be made payable to the order of the
person to whom it is sent. Any one of two or more joint holders may give
effectual receipts for any dividends, bonuses, or other monies payable in
respect of the share held by them as joint holders.
107. No dividend or distribution shall bear interest against the Company.
CAPITALISATION
--------------
108. The Company may upon the recommendation of the Directors by ordinary
resolution authorise the Directors to capitalise any sum standing to the credit
of any of the Company's reserve accounts (including share premium account and
capital redemption reserve fund) or any sum standing to the credit of profit and
loss account or otherwise available for distribution and to appropriate such sum
to Members in the proportions in which such sum would have been divisible
amongst them had the same been a distribution of profits by way of dividend and
to apply such sum on their behalf in paying up in full unissued shares for
allotment and distribution credited as fully paid up to and amongst them in the
proportion aforesaid. In such event the Directors shall do all acts and things
required to give effect to such capitalisation, with full power to the Directors
to make such provisions as they think fit for the case of shares becoming
distributable in fractions (including provisions whereby the benefit of
fractional entitlements accrue to the Company rather than to the Members
concerned). The Directors may authorise any person to enter on behalf of all of
the Members interested into an agreement with the Company providing for such
capitalisation and matters incidental thereto and any agreement made under such
authority shall be effective and binding on all concerned.
<PAGE>
24
BOOKS OF ACCOUNT
----------------
109. The Directors shall cause proper books of account to be kept with respect
to:
(a) all sums of money received and expended by the Company and the
matters in respect of which the receipt or expenditure takes place;
(b) all sales and purchases of goods by the Company;
(c) the assets and liabilities of the Company.
Proper books shall not be deemed to be kept if there are not kept such books of
account as are necessary to give a true and fair view of the state of the
Company's affairs and to explain its
transactions.
110. The Directors shall from time to time determine whether and to what extent
and at what times and places and under what conditions or regulations the
accounts and books of the Company or any of them shall be open to the inspection
of Members not being Directors and no Member (not being a Director) shall have
any right of inspecting any account or book or document of the Company except as
conferred by Statute or authorised by the Directors or by the Company in general
meeting.
111. The Directors may from time to time cause to be prepared and to be laid
before the Company in general meeting profit and loss accounts, balance sheets,
group accounts (if any) and such other reports and accounts as may be required
by law.
AUDIT
-----
112. The Company may at any annual general meeting appoint an Auditor or
Auditors of the Company who shall hold office until the next annual general
meeting and may fix his or
their remuneration.
113. The Directors may before the first annual general meeting appoint an
Auditor or Auditors of the Company who shall hold office until the first annual
general meeting unless previously removed by an ordinary resolution of the
Members in general meeting in which case the Members at that meeting may appoint
Auditors. The Directors may fill any casual vacancy in the office of Auditor but
while any such vacancy continues the surviving or continuing Auditor or
Auditors, if any, may act. The remuneration of any Auditor appointed by the
Directors under this Article may be fixed by the Directors.
<PAGE>
25
114. Every Auditor of the Company shall have a right of access at all times to
the books and accounts and vouchers of the Company and shall be entitled to
require from the Directors and Officers of the Company such information and
explanation as may be necessary for the performance of the duties of the
auditors.
115. Auditors shall at the next annual general meeting following their
appointment and at any other time during their term of office, upon request of
the Directors or any general meeting of the Members, make a report on the
accounts of the Company in general meeting during their tenure of office.
NOTICES
-------
116. Notices shall be in writing and may be given by the Company to any Member
either personally or by sending it by post, cable, telex or telecopy to him or
to his address as shown in the register of Members, such notice, if mailed, to
be forwarded airmail if the address
be outside the Cayman Islands.
117. (a) Where a notice is sent by post, service of the notice shall be deemed
to be effected by properly addressing, pre-paying and posting a letter
containing the notice, and to have been effected at the expiration of sixty
hours after the letter containing the same is posted as aforesaid.
(b) Where a notice is sent by cable, telex, or telecopy, service of the
notice shall be deemed to be effected by properly addressing, and sending such
notice through a transmitting organisation and to have been effected on the day
the same is sent as aforesaid.
118. A notice may be given by the Company to the joint holders of record of a
share by giving the notice to the joint holder first named on the register of
Members in respect of the share.
119. A notice may be given by the Company to the person or persons which the
Company has been advised are entitled to a share or shares in consequence of the
death or bankruptcy of a Member by sending it through the post as aforesaid in a
pre-paid letter 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 supplied for that purpose by the persons claiming to be so entitled, or
at the option of the Company by giving the notice in any manner in which the
same might have been given if the death or bankruptcy had not occurred.
120. Notice of every general meeting shall be given in any manner hereinbefore
authorised to:
<PAGE>
26
(a) every person shown as a Member in the register of Members as
of the record date for such meeting except that in the case of
joint holders the notice shall be sufficient if given to the
joint holder first named in the register of Members.
(b) every person upon whom the ownership of a share devolves by
reason of his being a legal personal representative or a
trustee in bankruptcy of a Member of record where the Member
of record but for his death or bankruptcy would be entitled to
receive notice of the meeting; and
No other person shall be entitled to receive notices of general meetings.
WINDING UP
----------
121. If the Company shall be wound up the liquidator may, with the sanction of a
Special Resolution of the Company and any other sanction required by the
Statute, divide amongst the Members in specie or kind the whole or any part of
the assets of the Company (whether they shall consist of property of the same
kind or not) and may for such purpose set such value as he deems fair upon any
property to be divided as aforesaid and may determine how such 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 such assets
in trustees upon such trusts for the benefit of the contributories as the
liquidator, with the like sanction, shall think fit, but so that no Member shall
be compelled to accept any shares or other securities whereon there is any
liability.
122. If the Company shall be wound up, and the assets available for distribution
amongst the Members as such shall be insufficient to repay the whole of the
paid-up capital, such assets shall be distributed so that, as nearly as may be,
the losses shall be borne by the Members in proportion to the capital paid up,
or which ought to have been paid up, at the commencement of the winding up on
the shares held by them respectively. And if in a winding up the assets
available for distribution amongst the Members shall be more than sufficient to
repay the whole of the capital paid up at the commencement of the winding up,
the excess shall be distributed amongst the Members in proportion to the capital
paid up at the commencement of the winding up on the shares held by them
respectively. This Article is to be without prejudice to the rights of the
holders of shares issued upon special terms and conditions.
INDEMNITY
---------
123. The Directors and officers for the time being of the Company and any
trustee for the time being acting in relation to any of the affairs of the
Company and their heirs, executors, administrators and personal representatives
respectively shall be indemnified out of the assets of the Company from and
against all actions, proceedings, costs, charges, losses, damages and
<PAGE>
27
expenses which they or any of them shall or may incur or sustain by reason of
any act done or omitted in or about the execution of their duty in their
respective offices or trusts, except such (if any) as they shall incur or
sustain by or through their own wilful neglect or default respectively and no
such Director, officer or trustee shall be answerable for the acts, receipts,
neglects or defaults of any other Director, officer or trustee or for joining in
any receipt for the sake of conformity or for the solvency or honesty of any
banker or other persons with whom any monies or effects belonging to the Company
may be lodged or deposited for safe custody or for any insufficiency of any
security upon which any monies of the Company may be invested or for any other
loss or damage due to any such cause as aforesaid or which may happen in or
about the execution of his office or trust unless the same shall happen through
the wilful neglect or default of such Director, Officer or trustee.
FINANCIAL YEAR
--------------
124. Unless the Directors otherwise prescribe, the financial year of the Company
shall end on 31st December in each year and, following the year of
incorporation, shall begin on 1st
January in each year.
AMENDMENTS OF ARTICLES
----------------------
125. Subject to the Statute, the Company may at any time and from time to time
by Special Resolution alter or amend these Articles in whole or in part.
TRANSFER BY WAY OF CONTINUATION
-------------------------------
126. If the Company is exempted as defined in the Statute, it shall, subject to
the provisions of the Statute and with the approval of a Special Resolution,
have the power to register by way of continuation as a body corporate under the
laws of any jurisdiction outside the Cayman Islands and to be deregistered in
the Cayman Islands.
THE COMPANIES LAW (1995 REVISION)
---------------------------------
COMPANY LIMITED BY SHARES
-------------------------
MEMORANDUM OF ASSOCIATION
OF
MILLENIUM YAMA, INC.
1. The name of the Company is MILLENIUM YAMA, INC..
2. The Registered Office of the Company shall be at the offices of Maples and
Calder, Attorneys-at-Law, Ugland House, P.O. Box 309, George Town, Grand Cayman,
Cayman Islands, British West Indies or at such other place as the Directors may
from time to time decide.
3. The objects for which the Company is established are unrestricted and shall
include, but without limitation, the following:-
(i) (a) To undertake and carry on all or any of the trades and businesses of
international freight forwarders and agents, shippers, ship owners, ship
brokers, shipping agents and insurance brokers, underwriters, ship managers, tug
owners, shipping agents, loading brokers, freight contractors, carriers by land,
air and water, transport, haulage and general contractors, barge owners,
lightermen, railway and forwarding agents, dock owners, ships' husbands,
warehousemen, salvors, manufacturers of and dealers in tarpaulins, waterproofs,
machinery, engines, nautical instruments, and ships' rigging, gear, fittings and
equipment of every description, importers and exporters of and dealers in goods,
provisions, live and dead stock, commodities, articles, chattels, merchandise
and property of every kind,
<PAGE>
2
general traders and merchants, and generally to carry on the said businesses in
all their branches, and to carry on the said businesses either as principals or
agents or on commission or otherwise.
(b) To purchase or otherwise acquire, and to carry on the business or
businesses of fishing boat owners, smack owners, trawlers, deep-sea fishers,
shrimp fishers, fish curers, fish or shrimp salesmen, wholesale and retail fish
or shrimp merchants, wholesale and retail game and poultry merchants, ice
manufacturers, oil merchants and refiners, utilisers of fish refuse, manure
manufacturers, anchor and chain makers, wire rope makers, rope makers, mast and
block makers, ship chandlers, marine storekeepers, compass and nautical
instrument makers, marine engineers, engineers, boiler makers, ship builders,
dry-dock keepers, slip keepers, boat builders, ship and boat repairers, ship and
boat outfitters, salvors, wreck removers, wreck raisers, divers, auctioneers,
valuers, assessors, stevedores, wharfingers, carriers, forwarding agents, and
all other branches of business usually or conveniently connected with any such
business as aforesaid.
(c) To enter into, take over, negotiate or otherwise acquire, any
contract or contracts for the construction, building, equipping, fitting out,
storing, gearing or otherwise relating to any steamship, ship, trawler, catcher,
carrier, drifter, fishing boat, boat, or other vessel whatsoever, and to enter
into, take over, negotiate or otherwise acquire any other contract or contracts
whatever which the Company may think necessary, desirable or convenient for the
purposes of the Company or any of them, and to enter into, take over, negotiate,
or otherwise acquire any such contract or contracts at such prices and for such
<PAGE>
3
considerations, and upon such terms and conditions, and subject to such
stipulations and agreements as the Company may determine, and at any time and
from time to time vary, modify, alter or cancel any such contract.
(d) To acquire concessions or licences for the establishment and
working of lines of ships or other vessels between any ports of the world, or
for the formation or working of any railway or tramway, wharf, pier, dock, or
other works, or for the working of any coaches or other public conveyances, with
the benefit of any subsidy attached to any such concession or licence or
otherwise.
(e) To insure the vessels and other property of the Company in any
manner.
(f) To grant loans on ships and vessels or on goods and merchandise
carried or to be carried in any vessels and to buy and sell merchandise for
freighting on the ships and vessels of the Company.
(g) To engage in any and all kinds of business and other activities
with respect to oil, gas and other materials, and the products and by-products
thereof, including but not by way of limitation, exploration, developing,
drilling, producing, refining, processing, mining, confining, manufacturing,
storing, transporting, distributing, trading, buying, selling and all other
activities pertinent thereto.
(h) To resell or sublet any concession or licence obtained, or contract
entered into.
(i) To carry on the business of an investment company and to act as
promoters and entrepreneurs and to carry on business as financiers, capitalists,
concessionaires, merchants, brokers, traders, dealers, agents, importers and
exporters and to undertake and carry on and
<PAGE>
4
execute all kinds of investment, financial, commercial, mercantile, trading and
other operations.
(j) To carry on whether as principals, agents or otherwise howsoever
the business of realtors, developers, consultants, estate agents or managers,
builders, contractors, engineers, manufacturers, dealers in or vendors of all
types of property including services.
(ii) To exercise and enforce all rights and powers conferred by or incidental to
the ownership of any shares, stock, obligations or other securities including
without prejudice to the generality of the foregoing all such powers of veto or
control as may be conferred by virtue of the holding by the Company of some
special proportion of the issued or nominal amount thereof, to provide
managerial and other executive, supervisory and consultant services for or in
relation to any company in which the Company is interested upon such terms as
may be thought fit.
(iii) To purchase or otherwise acquire, to sell, exchange, surrender, lease,
mortgage, charge, convert, turn to account, dispose of and deal with real and
personal property and rights of all kinds and, in particular, mortgages,
debentures, produce, concessions, options, contracts, patents, annuities,
licences, stocks, shares, bonds, policies, book debts, business concerns,
undertakings, claims, privileges and choses in action of all kinds.
(iv) To subscribe for, conditionally or unconditionally, to underwrite, issue on
commission or otherwise, take, hold, deal in and convert stocks, shares and
securities of all kinds and to enter into partnership or into any arrangement
for sharing profits, reciprocal concessions or cooperation with any person or
company and to promote and aid in promoting,
<PAGE>
5
to constitute, form or organise any company, syndicate or partnership of any
kind, for the purpose of acquiring and undertaking any property and liabilities
of the Company or of advancing, directly or indirectly, the objects of the
Company or for any other purpose which the Company may think expedient.
(v) To stand surety for or to guarantee, support or secure the performance of
all or any of the obligations of any person, firm or company whether or not
related or affiliated to the Company in any manner and whether by personal
covenant or by mortgage, charge or lien upon the whole or any part of the
undertaking, property and assets of the Company, both present and future,
including its uncalled capital or by any such method and whether or not the
Company shall receive valuable consideration therefor.
(vi) To engage in or carry on any other lawful trade, business or enterprise
which may at any time appear to the Directors of the Company capable of being
conveniently carried on in conjunction with any of the aforementioned businesses
or activities or which may appear to the Directors or the Company likely to be
profitable to the Company.
In the interpretation of this Memorandum of Association in general and of this
Clause 3 in particular no object, business or power specified or mentioned shall
be limited or restricted by reference to or inference from any other object,
business or power, or the name of the Company, or by the juxtaposition of two or
more objects, businesses or powers and that, in the event of any ambiguity in
this clause or elsewhere in this Memorandum of Association, the same shall be
resolved by such interpretation and construction as will widen and enlarge and
not restrict the objects, businesses and powers of and exercisable by the
Company.
<PAGE>
6
4. Except as prohibited or limited by the Companies Law (1995 Revision), the
Company shall have full power and authority to carry out any object and shall
have and be capable of from time to time and at all times exercising any and all
of the powers at any time or from time to time exercisable by a natural person
or body corporate in doing in any part of the world whether as principal, agent,
contractor or otherwise whatever may be considered by it necessary for the
attainment of its objects and whatever else may be considered by it as
incidental or conducive thereto or consequential thereon, including, but without
in any way restricting the generality of the foregoing, the power to make any
alterations or amendments to this Memorandum of Association and the Articles of
Association of the Company considered necessary or convenient in the manner set
out in the Articles of Association of the Company, and the power to do any of
the following acts or things, viz:
to pay all expenses of and incidental to the promotion, formation and
incorporation of the Company; to register the Company to do business in any
other jurisdiction; to sell, lease or dispose of any property of the Company; to
draw, make, accept, endorse, discount, execute and issue promissory notes,
debentures, bills of exchange, bills of lading, warrants and other negotiable or
transferable instruments; to lend money or other assets and to act as
guarantors; to borrow or raise money on the security of the undertaking or on
all or any of the assets of the Company including uncalled capital or without
security; to invest monies of the Company in such manner as the Directors
determine; to promote other companies; to sell the undertaking of the Company
for cash or any other consideration; to distribute assets in specie to members
of the Company; to make charitable or benevolent donations; to pay pensions or
gratuities or
<PAGE>
7
provide other benefits in cash or kind to Directors, officers, employees, past
or present and their families; to carry on any trade or business and generally
to do all acts and things which, in the opinion of the Company or the Directors,
may be conveniently or profitably or usefully acquired and dealt with, carried
on, executed or done by the Company in connection with the business aforesaid
PROVIDED THAT the Company shall only carry on the businesses for which a licence
is required under the laws of the Cayman Islands when so licensed under the
terms of such laws.
5. The liability of each member is limited to the amount from time to time
unpaid on such member's shares.
6. The share capital of the Company is US$50,000 divided into 50,000 shares of a
nominal or par value of US$1.00 each with power for the Company insofar as is
permitted by law, to redeem or purchase any of its shares and to increase or
reduce the said capital subject to the provisions of the Companies Law (1995
Revision) and the Articles of Association and to issue any part of its capital,
whether original, redeemed or increased with or without any preference, priority
or special privilege or subject to any postponement of rights or to any
conditions or restrictions and so that unless the conditions of issue shall
otherwise expressly declare every issue of shares whether declared to be
preference or otherwise shall be subject to the powers hereinbefore contained.
7. If the Company is registered as exempted, its operations will be carried on
subject to the provisions of Section l92 of the Companies Law (1995 Revision)
and subject to the provisions of the Companies Law (1995 Revision) and the
Articles of Association it shall
<PAGE>
8
have the power to register by way of continuation as a body corporate limited by
shares under the laws of any jurisdiction outside the Cayman Islands and to be
deregistered in the Cayman Islands.
WE the several persons whose names and addresses are subscribed are desirous of
being formed into a company in pursuance of this Memorandum of Association and
we respectively agree to take the number of shares in the capital of the Company
set opposite our respective names.
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
PAGE
----
<S> <C>
INTERPRETATION.........................................................................1
CERTIFICATES FOR SHARES................................................................2
ISSUE OF SHARES........................................................................3
TRANSFER OF SHARES.....................................................................3
REDEEMABLE SHARES......................................................................4
VARIATION OF RIGHTS OF SHARES..........................................................4
COMMISSION ON SALE OF SHARES...........................................................5
NON-RECOGNITION OF TRUSTS..............................................................5
LIEN ON SHARES.........................................................................5
CALL ON SHARES.........................................................................6
FORFEITURE OF SHARES...................................................................7
REGISTRATION OF EMPOWERING INSTRUMENTS.................................................8
TRANSMISSION OF SHARES.................................................................8
AMENDMENT OF MEMORANDUM OF ASSOCIATION, CHANGE OF......................................9
CLOSING REGISTER OF MEMBERS OR FIXING RECORD DATE.....................................10
GENERAL MEETING.......................................................................11
NOTICE OF GENERAL MEETINGS............................................................12
PROCEEDINGS AT GENERAL MEETINGS.......................................................12
VOTES OF MEMBERS......................................................................14
PROXIES...............................................................................15
DIRECTORS.............................................................................16
ALTERNATE DIRECTORS...................................................................17
POWERS AND DUTIES OF DIRECTORS........................................................17
MANAGEMENT............................................................................19
MANAGING DIRECTORS....................................................................19
PROCEEDINGS OF DIRECTORS..............................................................20
VACATION OF OFFICE OF DIRECTOR........................................................21
APPOINTMENT AND REMOVAL OF DIRECTORS..................................................22
PRESUMPTION OF ASSENT.................................................................22
SEAL..................................................................................22
OFFICERS..............................................................................23
DIVIDENDS, DISTRIBUTIONS AND RESERVE..................................................23
CAPITALISATION........................................................................24
BOOKS OF ACCOUNT......................................................................25
AUDIT.................................................................................25
NOTICES...............................................................................26
WINDING UP............................................................................27
<PAGE>
2
INDEMNITY.............................................................................28
FINANCIAL YEAR........................................................................28
AMENDMENTS OF ARTICLES................................................................28
TRANSFER BY WAY OF CONTINUATION.......................................................28
</TABLE>
<PAGE>
THE COMPANIES LAW (1995 REVISION)
---------------------------------
COMPANY LIMITED BY SHARES
-------------------------
ARTICLES OF ASSOCIATION
OF
MILLENIUM YAMA, INC.
INTERPRETATION
--------------
1. In these Articles Table A in the Schedule to the Statute does not apply and,
unless there be something in the subject or context inconsistent therewith,
"Articles" means these Articles as originally framed
or as from time to time altered by Special
Resolution.
"Auditors" means the persons for the time being
performing the duties of auditors of the
Company.
"Company" means the above-named Company.
"debenture" means debenture stock, mortgages, bonds
and any other such securities of the
Company whether constituting a charge on
the assets of the Company or not.
"Directors" means the directors for the time being of
the Company.
"dividend" includes bonus.
"Member" shall bear the meaning as ascribed to it
in the Statute.
"month" means calendar month.
"paid-up" means paid-up and/or credited as paid-up.
<PAGE>
2
"registered office" means the registered office for the time
being of the Company.
"Seal" means the common seal of the Company and
includes every duplicate seal.
"Secretary" includes an Assistant Secretary and any
person appointed to perform the duties of
Secretary of the Company.
"share" includes a fraction of a share.
"Special Resolution" has the same meaning as in the Statute and
includes a resolution approved in writing
as described therein.
"Statute" means the Companies Law of the Cayman
Islands as amended and every statutory
modification or re-enactment thereof for
the time being in force.
"written" and "in writing" include all modes of representing or
reproducing words in visible form.
Words importing the singular number only include the plural number and
vice-versa.
Words importing the masculine gender only include the feminine gender.
Words importing persons only include corporations.
2. The business of the Company may be commenced as soon after incorporation as
the Directors shall see fit, notwithstanding that part only of the shares may
have been allotted.
3. The Directors may pay, out of the capital or any other monies of the Company,
all expenses incurred in or about the formation and establishment of the Company
including the
expenses of registration.
CERTIFICATES FOR SHARES
-----------------------
4. Certificates representing shares of the Company shall be in such form as
shall be determined by the Directors. Such certificates may be under Seal. All
certificates for shares shall be consecutively numbered or otherwise identified
and shall specify the shares to which
<PAGE>
3
they relate. The name and address of the person to whom the shares represented
thereby are issued, with the number of shares and date of issue, shall be
entered in the register of Members of the Company. All certificates surrendered
to the Company for transfer shall be cancelled and no new certificate shall be
issued until the former certificate for a like number of shares shall have been
surrendered and cancelled. The Directors may authorise certificates to be issued
with the seal and authorised signature(s) affixed by some method or system of
mechanical process.
5. Notwithstanding Article 4 of these Articles, if a share certificate be
defaced, lost or destroyed, it may be renewed on payment of a fee of one dollar
(US$l.00) or such less sum and on such terms (if any) as to evidence and
indemnity and the payment of the expenses incurred by the Company in
investigating evidence, as the Directors may prescribe.
ISSUE OF SHARES
---------------
6. Subject to the provisions, if any, in that behalf in the Memorandum of
Association and to any direction that may be given by the Company in general
meeting and without prejudice to any special rights previously conferred on the
holders of existing shares, the Directors may allot, issue, grant options over
or otherwise dispose of shares of the Company (including fractions of a share)
with or without preferred, deferred or other special rights or restrictions,
whether in regard to dividend, voting, return of capital or otherwise and to
such persons, at such times and on such other terms as they think proper.
7. The Company shall maintain a register of its Members and every person whose
name is entered as a Member in the register of Members shall be entitled without
payment to receive within two months after allotment or lodgement of transfer
(or within such other period as the conditions of issue shall provide) one
certificate for all his shares or several certificates each for one or more of
his shares upon payment of fifty cents (US$0.50) for every certificate after the
first or such less sum as the Directors shall from time to time determine
provided that in respect of a share or shares held jointly by several persons
the Company shall not be bound to issue more than one certificate and delivery
of a certificate for a share to one of the several joint holders shall be
sufficient delivery to all such holders.
TRANSFER OF SHARES
------------------
8. The instrument of transfer of any share shall be in writing and shall be
executed by or on behalf of the transferor and the transferor shall be deemed to
remain the holder of a share until the name of the transferee is entered in the
register in respect thereof.
<PAGE>
4
9. The Directors may in their absolute discretion decline to register any
transfer of shares without assigning any reason therefor. If the Directors
refuse to register a transfer they shall notify the transferee within two months
of such refusal.
10. The registration of transfers may be suspended at such time and for such
periods as the Directors may from time to time determine, provided always that
such registration shall not be suspended for more than forty-five days in any
year.
REDEEMABLE SHARES
-----------------
11. (a) Subject to the provisions of the Statute and the Memorandum of
Association, shares may be issued on the terms that they are, or at the option
of the Company or the holder are, to be redeemed on such terms and in such
manner as the Company, before the issue of the shares, may by Special Resolution
determine.
(b) Subject to the provisions of the Statute and the Memorandum of
Association, the Company may purchase its own shares (including fractions of a
share), including any redeemable shares, provided that the manner of purchase
has first been authorised by the Company in general meeting and may make payment
therefor in any manner authorised by the Statute, including out of capital.
VARIATION OF RIGHTS OF SHARES
-----------------------------
12. If at any time the share capital of the Company 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, whether or not the
Company is being wound-up, be varied with the consent in writing of the holders
of three-fourths of the issued shares of that class, or with the sanction of a
Special Resolution passed at a general meeting of the holders of the shares of
that class.
The provisions of these Articles relating to general meetings
shall apply to every such general meeting of the holders of one class of shares
except that the necessary quorum shall be one person holding or representing by
proxy at least 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.
13. The rights conferred upon the holders of the shares of any class issued with
preferred or other rights shall not, unless otherwise expressly provided by the
terms of issue of the shares of that class, be deemed to be varied by the
creation or issue of further shares ranking pari passu therewith.
<PAGE>
5
COMMISSION ON SALE OF SHARES
----------------------------
14. The Company may in so far as the Statute from time to time permits pay a
commission to any person in consideration of his subscribing or agreeing to
subscribe whether absolutely or conditionally for any shares of the Company.
Such commissions may be satisfied by the payment of cash or the lodgement of
fully or partly paid-up shares or partly in one way and partly in the other. The
Company may also on any issue of shares pay such brokerage as may be lawful.
NON-RECOGNITION OF TRUSTS
-------------------------
15. No person shall be recognised by the Company as holding any share upon any
trust and the Company shall not be bound by or be compelled in any way to
recognise (even when having notice thereof) any equitable, contingent, future,
or partial interest in any share, or any interest in any fractional part of a
share, or (except only as is otherwise provided by these Articles or the
Statute) any other rights in respect of any share except an absolute right to
the entirety thereof in the registered holder.
LIEN ON SHARES
--------------
16. The Company shall have a first and paramount lien and charge on all shares
(whether fully paid-up or not) registered in the name of a Member (whether
solely or jointly with others) for all debts, liabilities or engagements to or
with the Company (whether presently payable or not) by such Member or his
estate, either alone or jointly with any other person, whether a Member or not,
but the Directors may at any time declare any share to be wholly or in part
exempt from the provisions of this Article. The registration of a transfer of
any such share shall operate as a waiver of the Company's lien (if any) thereon.
The Company's lien (if any) on a share shall extend to all dividends or other
monies payable in respect thereof.
17. The Company may sell, in such manner as the Directors think fit, any shares
on which the Company has a lien, but no sale shall be made unless a sum in
respect of which the lien exists is presently payable, nor until the expiration
of fourteen days after a notice in writing stating and demanding payment of such
part of the amount in respect of which the lien exists as is presently payable,
has been given to the registered holder or holders for the time being of the
share, or the person, of which the Company has notice, entitled thereto by
reason of his death or bankruptcy.
18. To give effect to any such sale the Directors may authorise some person to
transfer the shares sold to the purchaser thereof. The purchaser shall be
registered as the holder of the shares comprised in any such transfer, and he
shall not be bound to see to the
<PAGE>
6
application of the purchase money, nor shall his title to the shares be affected
by any irregularity or invalidity in the proceedings in reference to the sale.
19. The proceeds of such sale shall be received by the Company and applied in
payment of such part of the amount in respect of which the lien exists as is
presently payable and the residue, if any, shall (subject to a like lien for
sums 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.
CALL ON SHARES
--------------
20. (a) The Directors may from time to time make calls upon the Members in
respect of any monies unpaid on their shares (whether on account of the nominal
value of the shares or by way of premium or otherwise) and not by the conditions
of allotment thereof made payable at fixed terms, provided that no call shall be
payable at less than one month from the date fixed for the payment of the last
preceding call, and each Member shall (subject to receiving at least fourteen
days notice specifying the time or times of payment) pay to the Company at the
time or times so specified the amount called on the shares. A call may be
revoked or postponed as the Directors may determine. A call may be made payable
by instalments.
(b) A call shall be deemed to have been made at the time when the
resolution of the Directors authorising such call was passed.
(c) The joint holders of a share shall be jointly and severally liable
to pay all calls in respect thereof.
21. If a sum called in respect of a share is not paid before or on a day
appointed for payment thereof, the persons from whom the sum is due shall pay
interest on the sum from the day appointed for payment thereof to the time of
actual payment at such rate not exceeding ten per cent per annum as the
Directors may determine, but the Directors shall be at liberty to waive payment
of such interest either wholly or in part.
22. Any sum which by the terms of issue of a share becomes payable on allotment
or at any fixed date, whether on account of the nominal value of the share or by
way of premium or otherwise, shall for the purposes of these Articles be deemed
to be a call duly made, notified and payable on the date on which by the terms
of issue the same becomes payable, and in the case of non-payment all the
relevant provisions of these Articles as to payment of interest forfeiture or
otherwise shall apply as if such sum had become payable by virtue of a call duly
made and notified.
<PAGE>
7
23. The Directors may, on the issue of shares, differentiate between the holders
as to the amount of calls or interest to be paid and the times of payment.
24. (a) The Directors may, if they think fit, receive from any Member willing to
advance the same, all or any part of the monies uncalled and unpaid upon any
shares held by him, and upon all or any of the monies so advanced may (until the
same would but for such advances, become payable) pay interest at such rate not
exceeding (unless the Company in general meeting shall otherwise direct) seven
per cent per annum, as may be agreed upon between the Directors and the Member
paying such sum in advance.
(b) No such sum paid in advance of calls shall entitle the Member
paying such sum to any portion of a dividend declared in respect of any period
prior to the date upon which such
sum would, but for such payment, become presently payable.
FORFEITURE OF SHARES
--------------------
25. (a) If a Member fails to pay any call or instalment of a call or to make any
payment required by the terms of issue on the day appointed for payment thereof,
the Directors may, at any time thereafter during such time as any part of the
call, instalment or payment remains unpaid, give notice requiring payment of so
much of the call, instalment or payment as is unpaid, together with any interest
which may have accrued and all expenses that have been incurred by the Company
by reason of such non-payment. Such notice shall name a day (not earlier than
the expiration of fourteen days from the date of giving of the notice) on or
before which the payment required by the notice is to be made, and shall state
that, in the event of non-payment at or before the time appointed the shares in
respect of which such notice was given will be liable to be forfeited.
(b) If the requirements of any such notice as aforesaid are not
complied with, any share in respect of which the notice has been given may at
any time thereafter, before the payment required by the notice has been made, be
forfeited by a resolution of the Directors to that effect. Such forfeiture shall
include all dividends declared in respect of the forfeited share and not
actually paid before the forfeiture.
(c) A forfeited share may be sold or otherwise disposed of on such
terms and in such manner as the Directors think fit and at any time before a
sale or disposition the forfeiture may be cancelled on such terms as the
Directors think fit.
26. A person whose shares have been forfeited shall cease to be a Member in
respect of the forfeited shares, but shall, notwithstanding, remain liable to
pay to the Company all monies which, at the date of forfeiture were payable by
him to the Company in respect of
<PAGE>
8
the shares together with interest thereon, but his liability shall cease if and
when the Company shall have received payment in full of all monies whenever
payable in respect of the shares.
27. A certificate in writing under the hand of one Director or the Secretary of
the Company that a share in the Company has been duly forfeited on a date stated
in the declaration shall be conclusive evidence of the fact therein stated as
against all persons claiming to be entitled to the share. The Company may
receive the consideration given for the share on any sale or disposition thereof
and may execute a transfer of the share in favour of the person to whom the
share is sold or disposed of and he shall thereupon be registered as the holder
of the share and shall not be bound to see to the application of the purchase
money, if any, nor shall his title to the share be affected by any irregularity
or invalidity in the proceedings in reference to the forfeiture, sale or
disposal of the share.
28. The provisions of these Articles as to forfeiture shall apply in the case of
non-payment of any sum which, by the terms of issue of a share, becomes payable
at a fixed time, whether on account of the nominal value of the share or by way
of premium as if the same had been payable by virtue of a call duly made and
notified.
REGISTRATION OF EMPOWERING INSTRUMENTS
--------------------------------------
29. The Company shall be entitled to charge a fee not exceeding one dollar
(US$l.00) on the registration of every probate, letters of administration,
certificate of death or marriage, power of attorney, notice in lieu of
distringas, or other instrument.
TRANSMISSION OF SHARES
----------------------
30. In case of the death of a Member, the survivor or survivors where the
deceased was a joint holder, and the legal personal representatives of the
deceased where he was a sole holder, shall be the only persons recognised by the
Company as having any title to his interest in the shares, but nothing herein
contained shall release the estate of any such deceased holder from any
liability in respect of any shares which had been held by him solely or jointly
with other persons.
31. (a) Any person becoming entitled to a share in consequence of the death or
bankruptcy or liquidation or dissolution of a Member (or in any other way than
by transfer) may, upon such evidence being produced as may from time to time be
required by the Directors and subject as hereinafter provided, elect either to
be registered himself as holder of the share or to make such transfer of the
share to such other person nominated by him as the deceased or bankrupt person
could have made and to have such person registered as the transferee thereof,
but the Directors shall, in either case, have the same right to decline or
<PAGE>
9
suspend registration as they would have had in the case of a transfer of the
share by that Member before his death or bankruptcy as the case may be.
(b) If the person so becoming entitled shall elect to be registered
himself as holder he shall deliver or send to the Company a notice in writing
signed by him stating that he so elects.
32. A person becoming entitled to a share by reason of the death or bankruptcy
or liquidation or dissolution of the holder (or in any other case than by
transfer) shall be entitled to the same dividends and other advantages to which
he would be entitled if he were the registered holder of the share, except that
he shall not, before being registered as a Member in respect of the share, be
entitled in respect of it to exercise any right conferred by membership in
relation to meetings of the Company PROVIDED HOWEVER that the Directors may at
any time give notice requiring any such person to elect either to be registered
himself or to transfer the share and if the notice is not complied with within
ninety days the Directors may thereafter withhold payment of all dividends,
bonuses or other monies payable in respect of the share until the requirements
of the notice have been complied with.
AMENDMENT OF MEMORANDUM OF ASSOCIATION, CHANGE OF
LOCATION OF REGISTERED OFFICE & ALTERATION OF CAPITAL
-----------------------------------------------------
33. (a) Subject to and in so far as permitted by the provisions of the Statute,
the Company may from time to time by ordinary resolution alter or amend its
Memorandum of Association otherwise than with respect to its name and objects
and may, without restricting the generality of the foregoing:
(i) increase the share capital by such sum to be
divided into shares of such amount or without nominal
or par value as the resolution shall prescribe and
with such rights, priorities and privileges annexed
thereto, as the Company in general meeting may
determine.
(ii) consolidate and divide all or any of its share
capital into shares of larger amount than its
existing shares;
(iii) by subdivision of its existing shares or any of them
divide the whole or any part of its share capital
into shares of smaller amount than is fixed by the
Memorandum of Association or into shares without
nominal or par value;
<PAGE>
10
(iv) cancel any shares which at the date of the
passing of the resolution have not been taken or
agreed to be taken by any person.
(b) All new shares created hereunder shall be subject to the same
provisions with reference to the payment of calls, liens, transfer,
transmission, forfeiture and otherwise as the shares in the original share
capital.
(c) Subject to the provisions of the Statute, the Company may by
Special Resolution change its name or alter its objects.
(d) Without prejudice to Article 11 hereof and subject to the
provisions of the Statute, the Company may by Special Resolution reduce its
share capital and any capital redemption reserve fund.
(e) Subject to the provisions of the Statute, the Company may by
resolution of the Directors change the location of its registered office.
CLOSING REGISTER OF MEMBERS OR FIXING RECORD DATE
-------------------------------------------------
34. For the purpose of determining Members entitled to notice of or to vote at
any meeting of Members or any adjournment thereof, or Members entitled to
receive payment of any dividend, or in order to make a determination of Members
for any other proper purpose, the Directors of the Company may provide that the
register of Members shall be closed for transfers for a stated period but not to
exceed in any case forty days. If the register of Members shall be so closed for
the purpose of determining Members entitled to notice of or to vote at a meeting
of Members such register shall be so closed for at least ten days immediately
preceding such meeting and the record date for such determination shall be the
date of the closure of the register of Members.
35. In lieu of or apart from closing the register of Members, the Directors may
fix in advance a date as the record date for any such determination of Members
entitled to notice of or to vote at a meeting of the Members and for the purpose
of determining the Members entitled to receive payment of any dividend the
Directors may, at or within 90 days prior to the date of declaration of such
dividend fix a subsequent date as the record date for such determination.
36. If the register of Members is not so closed and no record date is fixed for
the determination of Members entitled to notice of or to vote at a meeting of
Members or Members entitled to receive payment of a dividend, the date on which
notice of the meeting is mailed or the date on which the resolution of the
Directors declaring such dividend is adopted, as the case may be, shall be the
record date for such determination of Members. When a
<PAGE>
11
determination of Members entitled to vote at any meeting of Members has been
made as provided in this section, such determination shall apply to any
adjournment thereof.
GENERAL MEETING
---------------
37. (a) Subject to paragraph (c) hereof, the Company shall within one year of
its incorporation and in each year of its existence thereafter hold a general
meeting as its annual general meeting and shall specify the meeting as such in
the notices calling it. The annual general meeting shall be held at such time
and place as the Directors shall appoint and if no other time and place is
prescribed by them, it shall be held at the registered office on the second
Wednesday in December of each year at ten o'clock in the morning.
(b) At these meetings the report of the Directors (if any) shall be
presented.
(c) If the Company is exempted as defined in the Statute it may but
shall not be obliged to hold an annual general meeting.
38. (a) The Directors may whenever they think fit, and they shall on the
requisition of Members of the Company holding at the date of the deposit of the
requisition not less than one-tenth of such of the paid-up capital of the
Company as at the date of the deposit carries the right of voting at general
meetings of the Company, proceed to convene a general meeting of the Company.
(b) The requisition must state the objects of the meeting and must be
signed by the requisitionists and deposited at the registered office of the
Company and may consist of several documents in like form each signed by one or
more requisitionists.
(c) If the Directors do not within twenty-one days from the date of the
deposit of the requisition duly proceed to convene a general meeting, the
requisitionists, or any of them representing more than one-half of the total
voting rights of all of them, may themselves convene a general meeting, but any
meeting so convened shall not be held after the expiration of three months after
the expiration of the said twenty-one days.
(d) A general meeting convened as aforesaid by requisitionists shall be
convened in the same manner as nearly as possible as that in which general
meetings are to be convened by Directors.
<PAGE>
12
NOTICE OF GENERAL MEETINGS
--------------------------
39. At least five days' notice shall be given of an annual general meeting or
any other general meeting. Every notice shall be exclusive of the day on which
it is given or deemed to be given and of the day for which it is given and shall
specify the place, the day and the hour of the meeting and the general nature of
the business and shall be given in manner hereinafter mentioned or in such other
manner if any as may be prescribed by the Company PROVIDED that a general
meeting of the Company shall, whether or not the notice specified in this
regulation has been given and whether or not the provisions of Article 38 have
been complied with, be deemed to have been duly convened if it is so agreed:
(a) in the case of a general meeting called as an annual general
meeting by all the Members entitled to attend and vote thereat
or their proxies; and
(b) in the case of any other general meeting by a majority in
number of the Members having a right to attend and vote at the
meeting, being a majority together holding not less than
seventy-five per cent in nominal value or in the case of
shares without nominal or par value seventy-five per cent of
the shares in issue, or their proxies.
40. The accidental omission to give notice of a general meeting to, or the
non-receipt of notice of a meeting by any person entitled to receive notice
shall not invalidate the proceedings of that meeting.
PROCEEDINGS AT GENERAL MEETINGS
-------------------------------
41. No business shall be transacted at any general meeting unless a quorum of
Members is present at the time when the meeting proceeds to business; two
Members present in person or by proxy shall be a quorum provided always that if
the Company has one Member of record the quorum shall be that one Member present
in person or by proxy.
42. A resolution (including a Special Resolution) in writing (in one or more
counterparts) signed by all Members for the time being entitled to receive
notice of and to attend and vote at general meetings (or being corporations by
their duly authorised representatives) shall be as valid and effective as if the
same had been passed at a general meeting of the Company duly convened and held.
43. If within half an hour from the time appointed for the meeting a quorum is
not present, the meeting, if convened upon the requisition of Members, shall be
dissolved and in any other case it shall stand adjourned to the same day in the
next week at the same time and place or to such other time or such other place
as the Directors may determine and if at the
<PAGE>
13
adjourned meeting a quorum is not present within half an hour from the time
appointed for the meeting the Members present shall be a quorum.
44. The Chairman, if any, of the Board of Directors shall preside as Chairman at
every general meeting of the Company, or if there is no such Chairman, or if he
shall not be present within fifteen minutes after the time appointed for the
holding of the meeting, or is unwilling to act, the Directors present shall
elect one of their number to be Chairman of the meeting.
45. If at any general meeting 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 shall choose one of their number to be Chairman
of the meeting.
46. The Chairman may, with the consent of any general meeting duly constituted
hereunder, 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 any
adjourned meeting other than the business left unfinished at the meeting from
which the adjournment took place. When a general meeting is adjourned for thirty
days or more, notice of the adjourned meeting shall be given as in the case of
an original meeting; save as aforesaid it shall not be necessary to give any
notice of an adjournment or of the business to be transacted at an adjourned
general meeting.
47. At any general meeting a resolution put to the vote of the meeting shall be
decided on a show of hands unless a poll is, before or on the declaration of the
result of the show of hands, demanded by the Chairman or any other Member
present in person or by proxy.
48. Unless a poll be so demanded a declaration by the Chairman that a resolution
has on a show of hands been carried, or carried unanimously, or by a particular
majority, or lost, and an entry to that effect in the Company's Minute Book
containing the Minutes of the proceedings of the meeting shall be conclusive
evidence of that fact without proof of the number or proportion of the votes
recorded in favour of or against such resolution.
49. The demand for a poll may be withdrawn.
50. Except as provided in Article 52, if a poll is duly demanded it shall be
taken in such manner as the Chairman directs and the result of the poll shall be
deemed to be the resolution of the general meeting at which the poll was
demanded.
<PAGE>
14
51. In the case of an equality of votes, whether on a show of hands or on a
poll, the Chairman of the general meeting at which the show of hands takes place
or at which the poll is demanded, shall be entitled to a second or casting vote.
52. 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 at such time as the Chairman of the general meeting directs and
any business other than that upon which a poll has been demanded or is
contingent thereon may be proceeded with pending the taking of the poll.
VOTES OF MEMBERS
----------------
53. Subject to any rights or restrictions for the time being attached to any
class or classes of shares, on a show of hands every Member of record present in
person or by proxy at a general meeting shall have one vote and on a poll every
Member of record present in person or by proxy shall have one vote for each
share registered in his name in the register of
Members.
54. In the case of joint holders of record 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 for this purpose seniority shall be
determined by the order in which the names stand in the register of Members.
55. A Member of unsound mind, or in respect of whom an order has been made by
any court, having jurisdiction in lunacy, may vote, whether on a show of hands
or on a poll, by his committee, receiver, curator bonis, or other person in the
nature of a committee, receiver or curator bonis appointed by that court, and
any such committee, receiver, curator bonis or other persons may vote by proxy.
56. No Member shall be entitled to vote at any general meeting unless he is
registered as a shareholder of the Company on the record date for such meeting
nor unless all calls or other sums presently payable by him in respect of shares
in the Company have been paid.
57. No objection shall be raised to the qualification of any voter except at the
general meeting or adjourned general meeting at which the vote objected to is
given or tendered and every vote not disallowed at such general meeting shall be
valid for all purposes. Any such objection made in due time shall be referred to
the Chairman of the general meeting whose decision shall be final and
conclusive.
<PAGE>
15
58. On a poll or on a show of hands votes may be given either personally or by
proxy.
PROXIES
-------
59. The instrument appointing a proxy shall be in writing and shall be executed
under the hand of the appointor or of his attorney duly authorised in writing,
or, if the appointor is a corporation under the hand of an officer or attorney
duly authorised in that behalf. A proxy need not be a Member of the Company.
60. The instrument appointing a proxy shall be deposited at the registered
office of the Company or at such other place as is specified for that purpose in
the notice convening the meeting no later than the time for holding the meeting,
or adjourned meeting provided that the Chairman of the Meeting may at his
discretion direct that an instrument of proxy shall be deemed to have been duly
deposited upon receipt of telex, cable or telecopy confirmation from the
appointor that the instrument of proxy duly signed is in the course of
transmission to the Company.
61. The instrument appointing a proxy may be in any usual or common form and may
be expressed to be for a particular meeting or any adjournment thereof or
generally until revoked. An instrument appointing a proxy shall be deemed to
include the power to demand or join or concur in demanding a poll.
62. A vote given in accordance with the terms of an instrument of proxy shall be
valid notwithstanding the previous death or insanity of the principal or
revocation of the proxy or of the authority under which the proxy was executed,
or the transfer of the share in respect of which the proxy is given provided
that no intimation in writing of such death, insanity, revocation or transfer as
aforesaid shall have been received by the Company at the registered office
before the commencement of the general meeting, or adjourned meeting at which it
is sought to use the proxy.
63. Any corporation which is a Member of record of the Company may in accordance
with its Articles or in the absence of such provision by resolution of its
Directors or other governing body authorise such person as it thinks fit to act
as its representative at any meeting of the Company or of any class of Members
of the Company, and the person so authorised shall be entitled to exercise the
same powers on behalf of the corporation which he represents as the corporation
could exercise if it were an individual Member of record of the Company.
<PAGE>
16
64. Shares of its own capital belonging to the Company or held by it in a
fiduciary capacity shall not be voted, directly or indirectly, at any meeting
and shall not be counted in determining the total number of outstanding shares
at any given time.
DIRECTORS
---------
65. There shall be a Board of Directors consisting of not less than one or more
than ten persons (exclusive of alternate Directors) PROVIDED HOWEVER that the
Company may from time to time by ordinary resolution increase or reduce the
limits in the number of Directors. The first Directors of the Company shall be
determined in writing by, or appointed by a resolution of, the subscribers of
the Memorandum of Association or a majority of them.
66. The remuneration to be paid to the Directors shall be such remuneration as
the Directors shall determine. Such remuneration shall be deemed to accrue from
day to day. The Directors shall also be entitled to be paid their travelling,
hotel and other expenses properly incurred by them in going to, attending and
returning from meetings of the Directors, or any committee of the Directors, or
general meetings of the Company, or otherwise in connection with the business of
the Company, or to receive a fixed allowance in respect thereof as may be
determined by the Directors from time to time, or a combination partly of one
such method and partly the other.
67. The Directors may by resolution award special remuneration to any Director
of the Company undertaking any special work or services for, or undertaking any
special mission on behalf of, the Company other than his ordinary routine work
as a Director. Any fees paid to a Director who is also counsel or solicitor to
the Company, or otherwise serves it in a professional capacity shall be in
addition to his remuneration as a Director.
68. A Director or alternate Director may hold any other office or place of
profit under the Company (other than the office of Auditor) in conjunction with
his office of Director for such period and on such terms as to remuneration and
otherwise as the Directors may determine.
69. A Director or alternate Director may act by himself or his firm in a
professional capacity for the Company and he or his firm shall be entitled to
remuneration for professional services as if he were not a Director or alternate
Director.
70. A shareholding qualification for Directors may be fixed by the Company in
general meeting, but unless and until so fixed no qualification shall be
required.
71. A Director or alternate Director of the Company may be or become a director
or other officer of or otherwise interested in any company promoted by the
Company or in which
<PAGE>
17
the Company may be interested as shareholder or otherwise and no such Director
or alternate Director shall be accountable to the Company for any remuneration
or other benefits received by him as a director or officer of, or from his
interest in, such other company.
72. No person shall be disqualified from the office of Director or alternate
Director or prevented by such office from contracting with the Company, either
as vendor, purchaser or otherwise, nor shall any such contract or any contract
or transaction entered into by or on behalf of the Company in which any Director
or alternate Director shall be in any way interested be or be liable to be
avoided, nor shall any Director or alternate Director so contracting or being so
interested be liable to account to the Company for any profit realised by any
such contract or transaction by reason of such Director holding office or of the
fiduciary relation thereby established. A Director (or his alternate Director in
his absence) shall be at liberty to vote in respect of any contract or
transaction in which he is so interested as aforesaid PROVIDED HOWEVER that the
nature of the interest of any Director or alternate Director in any such
contract or transaction shall be disclosed by him or the alternate Director
appointed by him at or prior to its consideration and any vote thereon.
73. A general notice that a Director or alternate Director is a shareholder of
any specified firm or company and is to be regarded as interested in any
transaction with such firm or company shall be sufficient disclosure under
Article 72 and after such general notice it shall not be necessary to give
special notice relating to any particular transaction.
ALTERNATE DIRECTORS
-------------------
74. Subject to the exception contained in Article 82, a Director who expects to
be unable to attend Directors' Meetings because of absence, illness or otherwise
may appoint any person to be an alternate Director to act in his stead and such
appointee whilst he holds office as an alternate Director shall, in the event of
absence therefrom of his appointor, be entitled to attend meetings of the
Directors and to vote thereat and to do, in the place and stead of his
appointor, any other act or thing which his appointor is permitted or required
to do by virtue of his being a Director as if the alternate Director were the
appointor, other than appointment of an alternate to himself, and he shall ipso
facto vacate office if and when his appointor ceases to be a Director or removes
the appointee from office. Any appointment or removal under this Article shall
be effected by notice in writing under the hand of the Director making the same.
POWERS AND DUTIES OF DIRECTORS
------------------------------
75. The business of the Company shall be managed by the Directors (or a sole
Director if only one is appointed) who may pay all expenses incurred in
promoting, registering and setting up the Company, and may exercise all such
powers of the Company as are not,
<PAGE>
18
from time to time by the Statute, or by these Articles, or such regulations,
being not inconsistent with the aforesaid, as may be prescribed by the Company
in general meeting required to be exercised by the Company in general meeting
PROVIDED HOWEVER that no regulations made by the Company in general meeting
shall invalidate any prior act of the Directors which would have been valid if
that regulation had not been made.
76. The Directors may from time to time and at any time by powers of attorney
appoint any company, firm, person or body of persons, whether nominated directly
or indirectly by the Directors, to be the attorney or attorneys of the Company
for such purpose and with such powers, authorities and discretions (not
exceeding those vested in or exercisable by the Directors under these Articles)
and for such period and subject to such conditions as they may think fit, and
any such powers of attorney may contain such provisions for the protection and
convenience of persons dealing with any such attorneys as the Directors may
think fit and may also authorise any such attorney to delegate all or any of the
powers, authorities and discretions vested in him.
77. All cheques, promissory notes, drafts, bills of exchange and other
negotiable instruments and all receipts for monies paid to the Company shall be
signed, drawn, accepted, endorsed or otherwise executed as the case may be in
such manner as the Directors shall from time to time by resolution determine.
78. The Directors shall cause minutes to be made in books provided for the
purpose:
(a) of all appointments of officers made by the Directors;
(b) of the names of the Directors (including those represented thereat
by an alternate or by proxy) present at each meeting of the Directors and of any
committee of the Directors;
(c) of all resolutions and proceedings at all meetings of the Company
and of the Directors and of committees of Directors.
79. The Directors on behalf of the Company may pay a gratuity or pension or
allowance on retirement to any Director who has held any other salaried office
or place of profit with the Company or to his widow or dependants and may make
contributions to any fund and pay premiums for the purchase or provision of any
such gratuity, pension or allowance.
80. The Directors may exercise all the powers of the Company to borrow money and
to mortgage or charge its undertaking, property and uncalled capital or any part
thereof and to issue debentures, debenture stock and other securities whether
outright or as security for any debt, liability or obligation of the Company or
of any third party.
<PAGE>
19
MANAGEMENT
----------
81. (a) The Directors may from time to time provide for the management of the
affairs of the Company in such manner as they shall think fit and the provisions
contained in the three next following paragraphs shall be without prejudice to
the general powers conferred by this paragraph.
(b) The Directors from time to time and at any time may establish any
committees, local boards or agencies for managing any of the affairs of the
Company and may appoint any persons to be members of such committees or local
boards or any managers or agents and may fix their remuneration.
(c) The Directors from time to time and at any time may delegate to any
such committee, local board, manager or agent any of the powers, authorities and
discretions for the time being vested in the Directors and may authorise the
members for the time being of any such local board, or any of them to fill up
any vacancies therein and to act notwithstanding vacancies and any such
appointment or delegation may be made on such terms and subject to such
conditions as the Directors may think fit and the Directors may at any time
remove any person so appointed and may annul or vary any such delegation, but no
person dealing in good faith and without notice of any such annulment or
variation shall be affected thereby.
(d) Any such delegates as aforesaid may be authorised by the Directors
to subdelegate all or any of the powers, authorities, and discretions for the
time being vested in them.
MANAGING DIRECTORS
------------------
82. The Directors may, from time to time, appoint one or more of their body (but
not an alternate Director) to the office of Managing Director for such term and
at such remuneration (whether by way of salary, or commission, or participation
in profits, or partly in one way and partly in another) as they may think fit
but his appointment shall be subject to determination ipso facto if he ceases
from any cause to be a Director and no alternate Director appointed by him can
act in his stead as a Director or Managing Director.
83. The Directors may entrust to and confer upon a Managing Director any of the
powers exercisable by them upon such terms and conditions and with such
restrictions as they may think fit and either collaterally with or to the
exclusion of their own powers and may from time to time revoke, withdraw, alter
or vary all or any of such powers.
<PAGE>
20
PROCEEDINGS OF DIRECTORS
------------------------
84. Except as otherwise provided by these Articles, the Directors shall meet
together for the despatch of business, convening, adjourning and otherwise
regulating their meetings as they think fit. Questions arising at any meeting
shall be decided by a majority of votes of the Directors and alternate Directors
present at a meeting at which there is a quorum, the vote of an alternate
Director not being counted if his appointor be present at such meeting. In case
of an equality of votes, the Chairman shall have a second or casting vote.
85. A Director or alternate Director may, and the Secretary on the requisition
of a Director or alternate Director shall, at any time summon a meeting of the
Directors by at least two days' notice in writing to every Director and
alternate Director which notice shall set forth the general nature of the
business to be considered unless notice is waived by all the Directors (or their
alternates) either at, before or after the meeting is held and PROVIDED FURTHER
if notice is given in person, by cable, telex or telecopy the same shall be
deemed to have been given on the day it is delivered to the Directors or
transmitting organisation as the case may be. The provisions of Article 40 shall
apply mutatis mutandis with respect to notices of meetings of Directors.
86. The quorum necessary for the transaction of the business of the Directors
may be fixed by the Directors and unless so fixed shall be two, a Director and
his appointed alternate Director being considered only one person for this
purpose, PROVIDED ALWAYS that if there shall at any time be only a sole Director
the quorum shall be one. For the purposes of this Article an alternate Director
or proxy appointed by a Director shall be counted in a quorum at a meeting at
which the Director appointing him is not present.
87. The continuing Directors may act notwithstanding any vacancy in their body,
but if and so long as their number is reduced below the number fixed by or
pursuant to these Articles as the necessary quorum of Directors the continuing
Directors or Director may act for the purpose of increasing the number of
Directors to that number, or of summoning a general meeting of the Company, but
for no other purpose.
88. The Directors may elect a Chairman of their Board and determine the period
for which he is to hold office; but if no such Chairman is elected, or if at any
meeting the Chairman is not present within five minutes after the time appointed
for holding the same, the Directors present may choose one of their number to be
Chairman of the meeting.
89. The Directors may delegate any of their powers to committees consisting of
such member or members of the Board of Directors (including Alternate Directors
in the absence of their appointors) as they think fit; any committee so formed
shall in the exercise of
<PAGE>
21
the powers so delegated conform to any regulations that may be imposed on it by
the Directors.
90. A committee may meet and adjourn as it thinks proper. Questions arising at
any meeting shall be determined by a majority of votes of the members present,
and in the case of an equality of votes the Chairman shall have a second or
casting vote.
91. All acts done by any meeting of the Directors or of a committee of Directors
(including any person acting as an alternate Director) shall, notwithstanding
that it be afterwards discovered that there was some defect in the appointment
of any Director or alternate Director, or that they or any of them were
disqualified, be as valid as if every such person had been duly appointed and
qualified to be a Director or alternate Director as the case may be.
92. Members of the Board of Directors or of any committee thereof may
participate in a meeting of the Board or of such 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 participation in a
meeting pursuant to this provision shall constitute presence in person at such
meeting. A resolution in writing (in one or more counterparts), signed by all
the Directors for the time being or all the members of a committee of Directors
(an alternate Director being entitled to sign such resolution on behalf of his
appointor) shall be as valid and effectual as if it had been passed at a meeting
of the Directors or committee as the case may be duly convened and held.
93. (a) A Director may be represented at any meetings of the Board of Directors
by a proxy appointed by him in which event the presence or vote of the proxy
shall for all purposes be deemed to be that of the Director.
(b) The provisions of Articles 59-62 shall mutatis mutandis apply to
the appointment of proxies by Directors.
VACATION OF OFFICE OF DIRECTOR
------------------------------
94. The office of a Director shall be vacated:
(a) if he gives notice in writing to the Company that he resigns
the office of Director;
<PAGE>
22
(b) if he absents himself (without being represented by proxy or
an alternate Director appointed by him) from three consecutive
meetings of the Board of Directors without special leave of
absence from the Directors, and they pass a resolution that he
has by reason of such absence vacated office;
(c) if he dies, becomes bankrupt or makes any arrangement or
composition with his creditors generally;
(d) if he is found a lunatic or becomes of unsound mind.
APPOINTMENT AND REMOVAL OF DIRECTORS
------------------------------------
95. The Company may by ordinary resolution appoint any person to be a Director
and may in like manner remove any Director and may in like manner appoint
another person in
his stead.
96. The Directors shall have power at any time and from time to time to appoint
any person to be a Director, either to fill a casual vacancy or as an addition
to the existing Directors but so that the total amount of Directors (exclusive
of alternate Directors) shall not at any time exceed the number fixed in
accordance with these Articles.
PRESUMPTION OF ASSENT
---------------------
97. A Director of the Company who is present at a meeting of the Board of
Directors at which action on any Company matter is taken shall be presumed to
have assented to the action taken unless his dissent shall be entered in the
Minutes of the meeting or unless he shall file his written dissent from such
action with the person acting as the Secretary of the meeting before the
adjournment thereof or shall forward such dissent by registered mail to such
person immediately after the adjournment of the meeting. Such right to dissent
shall not apply to a Director who voted in favour of such action.
SEAL
----
98. (a) The Company may, if the Directors so determine, have a Seal which shall,
subject to paragraph (c) hereof, only be used by the authority of the Directors
or of a committee of the Directors authorised by the Directors in that behalf
and every instrument to which the Seal has been affixed shall be signed by one
person who shall be either a Director or the Secretary or Secretary-Treasurer or
some person appointed by the Directors for the purpose.
<PAGE>
23
(b) The Company may have for use in any place or places outside the
Cayman Islands a duplicate Seal or Seals each of which shall be a facsimile of
the Common Seal of the Company and, if the Directors so determine, with the
addition on its face of the name of every place where it is to be used.
(c) A Director, Secretary or other officer or representative or
attorney may without further authority of the Directors affix the Seal of the
Company over his signature alone to any document of the Company required to be
authenticated by him under Seal or to be filed with the Registrar of Companies
in the Cayman Islands or elsewhere wheresoever.
OFFICERS
--------
99. The Company may have a President, a Secretary or Secretary-Treasurer
appointed by the Directors who may also from time to time appoint such other
officers as they consider necessary, all for such terms, at such remuneration
and to perform such duties, and subject to such provisions as to
disqualification and removal as the Directors from time to time prescribe.
DIVIDENDS, DISTRIBUTIONS AND RESERVE
------------------------------------
100. Subject to the Statute, the Directors may from time to time declare
dividends (including interim dividends) and distributions on shares of the
Company outstanding and authorise payment of the same out of the funds of the
Company lawfully available therefor.
101. The Directors may, before declaring any dividends or distributions, set
aside such sums as they think proper as a reserve or reserves which shall at the
discretion of the Directors, be applicable for any purpose of the Company and
pending such application may, at the like discretion, be employed in the
business of the Company.
102. No dividend or distribution shall be payable except out of the profits of
the Company, realised or unrealised, or out of the share premium account or as
otherwise permitted by the Statute.
103. Subject to the rights of persons, if any, entitled to shares with special
rights as to dividends or distributions, if dividends or distributions are to be
declared on a class of shares they shall be declared and paid according to the
amounts paid or credited as paid on the shares of such class outstanding on the
record date for such dividend or distribution as determined in accordance with
these Articles but no amount paid or credited as paid on a share in advance of
calls shall be treated for the purpose of this Article as paid on the share.
<PAGE>
24
104. The Directors may deduct from any dividend or distribution payable to any
Member all sums of money (if any) presently payable by him to the Company on
account of calls or otherwise.
105. The Directors may declare that any dividend or distribution be paid wholly
or partly by the distribution of specific assets and in particular of paid up
shares, debentures, or debenture stock of any other company or in any one or
more of such ways and where any difficulty arises in regard to such
distribution, the Directors may settle the same as they think expedient and in
particular may issue fractional certificates and fix the value for distribution
of such specific assets or any part thereof and may determine that cash payments
shall be made to any Members upon the footing of the value so fixed in order to
adjust the rights of all Members and may vest any such specific assets in
trustees as may seem expedient to the Directors.
106. Any dividend, distribution, interest or other monies payable in cash in
respect of shares may be paid by cheque or warrant sent through the post
directed to the registered address of the holder or, in the case of joint
holders, to the holder who is first named on the register of Members or to such
person and to such address as such holder or joint holders may in writing
direct. Every such cheque or warrant shall be made payable to the order of the
person to whom it is sent. Any one of two or more joint holders may give
effectual receipts for any dividends, bonuses, or other monies payable in
respect of the share held by them as joint holders.
107. No dividend or distribution shall bear interest against the Company.
CAPITALISATION
--------------
108. The Company may upon the recommendation of the Directors by ordinary
resolution authorise the Directors to capitalise any sum standing to the credit
of any of the Company's reserve accounts (including share premium account and
capital redemption reserve fund) or any sum standing to the credit of profit and
loss account or otherwise available for distribution and to appropriate such sum
to Members in the proportions in which such sum would have been divisible
amongst them had the same been a distribution of profits by way of dividend and
to apply such sum on their behalf in paying up in full unissued shares for
allotment and distribution credited as fully paid up to and amongst them in the
proportion aforesaid. In such event the Directors shall do all acts and things
required to give effect to such capitalisation, with full power to the Directors
to make such provisions as they think fit for the case of shares becoming
distributable in fractions (including provisions whereby the benefit of
fractional entitlements accrue to the Company rather than to the Members
concerned). The Directors may authorise any person to enter on behalf of all of
the Members interested into an agreement with the Company providing for such
capitalisation and matters
<PAGE>
25
incidental thereto and any agreement made under such authority shall be
effective and binding on all concerned.
BOOKS OF ACCOUNT
----------------
109. The Directors shall cause proper books of account to be kept with respect
to:
(a) all sums of money received and expended by the Company and the
matters in respect of which the receipt or expenditure takes
place;
(b) all sales and purchases of goods by the Company;
(c) the assets and liabilities of the Company.
Proper books shall not be deemed to be kept if there are not kept such books of
account as are necessary to give a true and fair view of the state of the
Company's affairs and to explain its transactions.
110. The Directors shall from time to time determine whether and to what extent
and at what times and places and under what conditions or regulations the
accounts and books of the Company or any of them shall be open to the inspection
of Members not being Directors and no Member (not being a Director) shall have
any right of inspecting any account or book or document of the Company except as
conferred by Statute or authorised by the Directors or by the Company in general
meeting.
111. The Directors may from time to time cause to be prepared and to be laid
before the Company in general meeting profit and loss accounts, balance sheets,
group accounts (if any) and such other reports and accounts as may be required
by law.
AUDIT
-----
112. The Company may at any annual general meeting appoint an Auditor or
Auditors of the Company who shall hold office until the next annual general
meeting and may fix his or their remuneration.
113. The Directors may before the first annual general meeting appoint an
Auditor or Auditors of the Company who shall hold office until the first annual
general meeting unless previously removed by an ordinary resolution of the
Members in general meeting in which case the Members at that meeting may appoint
Auditors. The Directors may fill any casual vacancy in the office of Auditor but
while any such vacancy continues the surviving or
<PAGE>
26
continuing Auditor or Auditors, if any, may act. The remuneration of any Auditor
appointed by the Directors under this Article may be fixed by the Directors.
114. Every Auditor of the Company shall have a right of access at all times to
the books and accounts and vouchers of the Company and shall be entitled to
require from the Directors and Officers of the Company such information and
explanation as may be necessary for the performance of the duties of the
auditors.
115. Auditors shall at the next annual general meeting following their
appointment and at any other time during their term of office, upon request of
the Directors or any general meeting of the Members, make a report on the
accounts of the Company in general meeting during their tenure of office.
NOTICES
-------
116. Notices shall be in writing and may be given by the Company to any Member
either personally or by sending it by post, cable, telex or telecopy to him or
to his address as shown in the register of Members, such notice, if mailed, to
be forwarded airmail if the address be outside the Cayman Islands.
117. (a) Where a notice is sent by post, service of the notice shall be deemed
to be effected by properly addressing, pre-paying and posting a letter
containing the notice, and to have been effected at the expiration of sixty
hours after the letter containing the same is posted as aforesaid.
(b) Where a notice is sent by cable, telex, or telecopy, service of the
notice shall be deemed to be effected by properly addressing, and sending such
notice through a transmitting organisation and to have been effected on the day
the same is sent as aforesaid.
118. A notice may be given by the Company to the joint holders of record of a
share by giving the notice to the joint holder first named on the register of
Members in respect of the share.
119. A notice may be given by the Company to the person or persons which the
Company has been advised are entitled to a share or shares in consequence of the
death or bankruptcy of a Member by sending it through the post as aforesaid in a
pre-paid letter 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 supplied for that purpose by the persons claiming to be so entitled, or
at the option of the Company by giving the notice in any manner in which the
same might have been given if the death or bankruptcy had not occurred.
<PAGE>
27
120. Notice of every general meeting shall be given in any manner hereinbefore
authorised to:
(a) every person shown as a Member in the register of Members as
of the record date for such meeting except that in the case of
joint holders the notice shall be sufficient if given to the
joint holder first named in the register of Members.
(b) every person upon whom the ownership of a share devolves by
reason of his being a legal personal representative or a
trustee in bankruptcy of a Member of record where the Member
of record but for his death or bankruptcy would be entitled to
receive notice of the meeting; and
No other person shall be entitled to receive notices of general meetings.
WINDING UP
----------
121. If the Company shall be wound up the liquidator may, with the sanction of a
Special Resolution of the Company and any other sanction required by the
Statute, divide amongst the Members in specie or kind the whole or any part of
the assets of the Company (whether they shall consist of property of the same
kind or not) and may for such purpose set such value as he deems fair upon any
property to be divided as aforesaid and may determine how such 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 such assets
in trustees upon such trusts for the benefit of the contributories as the
liquidator, with the like sanction, shall think fit, but so that no Member shall
be compelled to accept any shares or other securities whereon there is any
liability.
122. If the Company shall be wound up, and the assets available for distribution
amongst the Members as such shall be insufficient to repay the whole of the
paid-up capital, such assets shall be distributed so that, as nearly as may be,
the losses shall be borne by the Members in proportion to the capital paid up,
or which ought to have been paid up, at the commencement of the winding up on
the shares held by them respectively. And if in a winding up the assets
available for distribution amongst the Members shall be more than sufficient to
repay the whole of the capital paid up at the commencement of the winding up,
the excess shall be distributed amongst the Members in proportion to the capital
paid up at the commencement of the winding up on the shares held by them
respectively. This Article is to be without prejudice to the rights of the
holders of shares issued upon special terms and conditions.
<PAGE>
28
INDEMNITY
---------
123. The Directors and officers for the time being of the Company and any
trustee for the time being acting in relation to any of the affairs of the
Company and their heirs, executors, administrators and personal representatives
respectively shall be indemnified out of the assets of the Company from and
against all actions, proceedings, costs, charges, losses, damages and expenses
which they or any of them shall or may incur or sustain by reason of any act
done or omitted in or about the execution of their duty in their respective
offices or trusts, except such (if any) as they shall incur or sustain by or
through their own wilful neglect or default respectively and no such Director,
officer or trustee shall be answerable for the acts, receipts, neglects or
defaults of any other Director, officer or trustee or for joining in any receipt
for the sake of conformity or for the solvency or honesty of any banker or other
persons with whom any monies or effects belonging to the Company may be lodged
or deposited for safe custody or for any insufficiency of any security upon
which any monies of the Company may be invested or for any other loss or damage
due to any such cause as aforesaid or which may happen in or about the execution
of his office or trust unless the same shall happen through the wilful neglect
or default of such Director, Officer or trustee.
FINANCIAL YEAR
--------------
124. Unless the Directors otherwise prescribe, the financial year of the Company
shall end on 31st December in each year and, following the year of
incorporation, shall begin on 1st January in each year.
AMENDMENTS OF ARTICLES
----------------------
125. Subject to the Statute, the Company may at any time and from time to time
by Special Resolution alter or amend these Articles in whole or in part.
TRANSFER BY WAY OF CONTINUATION
-------------------------------
126. If the Company is exempted as defined in the Statute, it shall, subject to
the provisions of the Statute and with the approval of a Special Resolution,
have the power to register by way of continuation as a body corporate under the
laws of any jurisdiction outside the Cayman Islands and to be deregistered in
the Cayman Islands.
THE COMPANIES LAW (1995 REVISION)
---------------------------------
COMPANY LIMITED BY SHARES
-------------------------
MEMORANDUM OF ASSOCIATION
OF
MILLENIUM ELMAR, INC.
1. The name of the Company is MILLENIUM ELMAR, INC.
2. The Registered Office of the Company shall be at the offices of Maples and
Calder, Attorneys-at-Law, Ugland House, P.O. Box 309, George Town, Grand Cayman,
Cayman Islands, British West Indies or at such other place as the Directors may
from time to time decide.
3. The objects for which the Company is established are unrestricted and shall
include, but without limitation, the following:-
(i) (a) To undertake and carry on all or any of the trades and businesses of
international freight forwarders and agents, shippers, ship owners, ship
brokers, shipping agents and insurance brokers, underwriters, ship managers, tug
owners, shipping agents, loading brokers, freight contractors, carriers by land,
air and water, transport, haulage and general contractors, barge owners,
lightermen, railway and forwarding agents, dock owners, ships' husbands,
warehousemen, salvors, manufacturers of and dealers in tarpaulins, waterproofs,
machinery, engines, nautical instruments, and ships' rigging, gear, fittings and
equipment of every description, importers and exporters of and dealers in goods,
provisions, live and dead stock, commodities, articles, chattels, merchandise
and property of every kind,
<PAGE>
2
general traders and merchants, and generally to carry on the said businesses in
all their branches, and to carry on the said businesses either as principals or
agents or on commission or otherwise.
(b) To purchase or otherwise acquire, and to carry on the business or
businesses of fishing boat owners, smack owners, trawlers, deep-sea fishers,
shrimp fishers, fish curers, fish or shrimp salesmen, wholesale and retail fish
or shrimp merchants, wholesale and retail game and poultry merchants, ice
manufacturers, oil merchants and refiners, utilisers of fish refuse, manure
manufacturers, anchor and chain makers, wire rope makers, rope makers, mast and
block makers, ship chandlers, marine storekeepers, compass and nautical
instrument makers, marine engineers, engineers, boiler makers, ship builders,
dry-dock keepers, slip keepers, boat builders, ship and boat repairers, ship and
boat outfitters, salvors, wreck removers, wreck raisers, divers, auctioneers,
valuers, assessors, stevedores, wharfingers, carriers, forwarding agents, and
all other branches of business usually or conveniently connected with any such
business as aforesaid.
(c) To enter into, take over, negotiate or otherwise acquire, any
contract or contracts for the construction, building, equipping, fitting out,
storing, gearing or otherwise relating to any steamship, ship, trawler, catcher,
carrier, drifter, fishing boat, boat, or other vessel whatsoever, and to enter
into, take over, negotiate or otherwise acquire any other contract or contracts
whatever which the Company may think necessary, desirable or convenient for the
purposes of the Company or any of them, and to enter into, take over, negotiate,
or otherwise acquire any such contract or contracts at such prices and for such
<PAGE>
3
considerations, and upon such terms and conditions, and subject to such
stipulations and agreements as the Company may determine, and at any time and
from time to time vary, modify, alter or cancel any such contract.
(d) To acquire concessions or licences for the establishment and
working of lines of ships or other vessels between any ports of the world, or
for the formation or working of any railway or tramway, wharf, pier, dock, or
other works, or for the working of any coaches or other public conveyances, with
the benefit of any subsidy attached to any such concession or licence or
otherwise.
(e) To insure the vessels and other property of the Company in any
manner.
(f) To grant loans on ships and vessels or on goods and merchandise
carried or to be carried in any vessels and to buy and sell merchandise for
freighting on the ships and vessels of the Company.
(g) To engage in any and all kinds of business and other activities
with respect to oil, gas and other materials, and the products and by-products
thereof, including but not by way of limitation, exploration, developing,
drilling, producing, refining, processing, mining, confining, manufacturing,
storing, transporting, distributing, trading, buying, selling and all other
activities pertinent thereto.
(h) To resell or sublet any concession or licence obtained, or contract
entered into.
(i)To carry on the business of an investment company and to act as
promoters and entrepreneurs and to carry on business as financiers, capitalists,
concessionaires, merchants, brokers, traders, dealers, agents, importers and
exporters and to undertake and carry on and
<PAGE>
4
execute all kinds of investment, financial, commercial, mercantile, trading and
other operations.
(j) To carry on whether as principals, agents or otherwise howsoever
the business of realtors, developers, consultants, estate agents or managers,
builders, contractors, engineers, manufacturers, dealers in or vendors of all
types of property including services.
(ii) To exercise and enforce all rights and powers conferred by or incidental to
the ownership of any shares, stock, obligations or other securities including
without prejudice to the generality of the foregoing all such powers of veto or
control as may be conferred by virtue of the holding by the Company of some
special proportion of the issued or nominal amount thereof, to provide
managerial and other executive, supervisory and consultant services for or in
relation to any company in which the Company is interested upon such terms as
may be thought fit.
(iii) To purchase or otherwise acquire, to sell, exchange, surrender, lease,
mortgage, charge, convert, turn to account, dispose of and deal with real and
personal property and rights of all kinds and, in particular, mortgages,
debentures, produce, concessions, options, contracts, patents, annuities,
licences, stocks, shares, bonds, policies, book debts, business concerns,
undertakings, claims, privileges and choses in action of all kinds.
(iv) To subscribe for, conditionally or unconditionally, to underwrite, issue on
commission or otherwise, take, hold, deal in and convert stocks, shares and
securities of all kinds and to enter into partnership or into any arrangement
for sharing profits, reciprocal concessions or cooperation with any person or
company and to promote and aid in promoting,
<PAGE>
5
to constitute, form or organise any company, syndicate or partnership of any
kind, for the purpose of acquiring and undertaking any property and liabilities
of the Company or of advancing, directly or indirectly, the objects of the
Company or for any other purpose which the Company may think expedient.
(v) To stand surety for or to guarantee, support or secure the performance of
all or any of the obligations of any person, firm or company whether or not
related or affiliated to the Company in any manner and whether by personal
covenant or by mortgage, charge or lien upon the whole or any part of the
undertaking, property and assets of the Company, both present and future,
including its uncalled capital or by any such method and whether or not the
Company shall receive valuable consideration therefor.
(vi) To engage in or carry on any other lawful trade, business or enterprise
which may at any time appear to the Directors of the Company capable of being
conveniently carried on in conjunction with any of the aforementioned businesses
or activities or which may appear to the Directors or the Company likely to be
profitable to the Company.
In the interpretation of this Memorandum of Association in general and of this
Clause 3 in particular no object, business or power specified or mentioned shall
be limited or restricted by reference to or inference from any other object,
business or power, or the name of the Company, or by the juxtaposition of two or
more objects, businesses or powers and that, in the event of any ambiguity in
this clause or elsewhere in this Memorandum of Association, the same shall be
resolved by such interpretation and construction as will widen and enlarge and
not restrict the objects, businesses and powers of and exercisable by the
Company.
<PAGE>
6
4. Except as prohibited or limited by the Companies Law (1995 Revision), the
Company shall have full power and authority to carry out any object and shall
have and be capable of from time to time and at all times exercising any and all
of the powers at any time or from time to time exercisable by a natural person
or body corporate in doing in any part of the world whether as principal, agent,
contractor or otherwise whatever may be considered by it necessary for the
attainment of its objects and whatever else may be considered by it as
incidental or conducive thereto or consequential thereon, including, but without
in any way restricting the generality of the foregoing, the power to make any
alterations or amendments to this Memorandum of Association and the Articles of
Association of the Company considered necessary or convenient in the manner set
out in the Articles of Association of the Company, and the power to do any of
the following acts or things, viz:
to pay all expenses of and incidental to the promotion, formation and
incorporation of the Company; to register the Company to do business in any
other jurisdiction; to sell, lease or dispose of any property of the Company; to
draw, make, accept, endorse, discount, execute and issue promissory notes,
debentures, bills of exchange, bills of lading, warrants and other negotiable or
transferable instruments; to lend money or other assets and to act as
guarantors; to borrow or raise money on the security of the undertaking or on
all or any of the assets of the Company including uncalled capital or without
security; to invest monies of the Company in such manner as the Directors
determine; to promote other companies; to sell the undertaking of the Company
for cash or any other consideration; to distribute assets in specie to members
of the Company; to make charitable or benevolent donations; to pay pensions or
gratuities or
<PAGE>
7
provide other benefits in cash or kind to Directors, officers, employees, past
or present and their families; to carry on any trade or business and generally
to do all acts and things which, in the opinion of the Company or the Directors,
may be conveniently or profitably or usefully acquired and dealt with, carried
on, executed or done by the Company in connection with the business aforesaid
PROVIDED THAT the Company shall only carry on the businesses for which a licence
is required under the laws of the Cayman Islands when so licensed under the
terms of such laws.
5. The liability of each member is limited to the amount from time to time
unpaid on such member's shares.
6. The share capital of the Company is US$50,000 divided into 50,000 shares of a
nominal or par value of US$1.00 each with power for the Company insofar as is
permitted by law, to redeem or purchase any of its shares and to increase or
reduce the said capital subject to the provisions of the Companies Law (1995
Revision) and the Articles of Association and to issue any part of its capital,
whether original, redeemed or increased with or without any preference, priority
or special privilege or subject to any postponement of rights or to any
conditions or restrictions and so that unless the conditions of issue shall
otherwise expressly declare every issue of shares whether declared to be
preference or otherwise shall be subject to the powers hereinbefore contained.
7. If the Company is registered as exempted, its operations will be carried on
subject to the provisions of Section l92 of the Companies Law (1995 Revision)
and subject to the provisions of the Companies Law (1995 Revision) and the
Articles of Association it shall
<PAGE>
8
have the power to register by way of continuation as a body corporate limited by
shares under the laws of any jurisdiction outside the Cayman Islands and to be
deregistered in the Cayman Islands.
WE the several persons whose names and addresses are subscribed are desirous of
being formed into a company in pursuance of this Memorandum of Association and
we respectively agree to take the number of shares in the capital of the Company
set opposite our respective names.
<PAGE>
THE COMPANIES LAW (1995 REVISION)
---------------------------------
COMPANY LIMITED BY SHARES
-------------------------
ARTICLES OF ASSOCIATION
OF
MILLENIUM ELMAR, INC.
INTERPRETATION
--------------
1. In these Articles Table A in the Schedule to the Statute does not apply and,
unless there be something in the subject or context inconsistent therewith,
"Articles" means these Articles as originally framed
or as from time to time altered by Special
Resolution.
"Auditors" means the persons for the time being
performing the duties of auditors of the
Company.
"Company" means the above-named Company.
"debenture" means debenture stock, mortgages, bonds and
any other such securities of the Company
whether constituting a charge on the assets
of the Company or not.
"Directors" means the directors for the time being of
the Company.
"dividend" includes bonus.
"Member" shall bear the meaning as ascribed to it in
the Statute.
"month" means calendar month.
"paid-up" means paid-up and/or credited as paid-up.
<PAGE>
2
"registered office" means the registered office for the time
being of the Company.
"Seal" means the common seal of the Company and
includes every duplicate seal.
"Secretary" includes an Assistant Secretary and any
person appointed to perform the duties of
Secretary of the Company.
"share" includes a fraction of a share.
"Special Resolution" has the same meaning as in the Statute and
includes a resolution approved in writing
as described therein.
"Statute" means the Companies Law of the Cayman
Islands as amended and every statutory
modification or re-enactment thereof for
the time being in force.
"written" and "in writing" include all modes of representing or
reproducing words in visible form.
Words importing the singular number only include the plural number and
vice-versa.
Words importing the masculine gender only include the feminine gender.
Words importing persons only include corporations.
2. The business of the Company may be commenced as soon after incorporation as
the Directors shall see fit, notwithstanding that part only of the shares may
have been allotted.
3. The Directors may pay, out of the capital or any other monies of the Company,
all expenses incurred in or about the formation and establishment of the Company
including the expenses of registration.
CERTIFICATES FOR SHARES
-----------------------
4. Certificates representing shares of the Company shall be in such form as
shall be determined by the Directors. Such certificates may be under Seal. All
certificates for shares shall be consecutively numbered or otherwise identified
and shall specify the shares to which they
<PAGE>
3
relate. The name and address of the person to whom the shares represented
thereby are issued, with the number of shares and date of issue, shall be
entered in the register of Members of the Company. All certificates surrendered
to the Company for transfer shall be cancelled and no new certificate shall be
issued until the former certificate for a like number of shares shall have been
surrendered and cancelled. The Directors may authorise certificates to be issued
with the seal and authorised signature(s) affixed by some method or system of
mechanical process.
5. Notwithstanding Article 4 of these Articles, if a share certificate be
defaced, lost or destroyed, it may be renewed on payment of a fee of one dollar
(US$l.00) or such less sum and on such terms (if any) as to evidence and
indemnity and the payment of the expenses incurred by
the Company in investigating evidence, as the Directors may prescribe.
ISSUE OF SHARES
---------------
6. Subject to the provisions, if any, in that behalf in the Memorandum of
Association and to any direction that may be given by the Company in general
meeting and without prejudice to any special rights previously conferred on the
holders of existing shares, the Directors may allot, issue, grant options over
or otherwise dispose of shares of the Company (including fractions of a share)
with or without preferred, deferred or other special rights or restrictions,
whether in regard to dividend, voting, return of capital or otherwise and to
such persons, at such times and on such other terms as they think proper.
7. The Company shall maintain a register of its Members and every person whose
name is entered as a Member in the register of Members shall be entitled without
payment to receive within two months after allotment or lodgement of transfer
(or within such other period as the conditions of issue shall provide) one
certificate for all his shares or several certificates each for one or more of
his shares upon payment of fifty cents (US$0.50) for every certificate after the
first or such less sum as the Directors shall from time to time determine
provided that in respect of a share or shares held jointly by several persons
the Company shall not be bound to issue more than one certificate and delivery
of a certificate for a share to one of the several joint holders shall be
sufficient delivery to all such holders.
TRANSFER OF SHARES
------------------
8. The instrument of transfer of any share shall be in writing and shall be
executed by or on behalf of the transferor and the transferor shall be deemed to
remain the holder of a share until the name of the transferee is entered in the
register in respect thereof.
9. The Directors may in their absolute discretion decline to register any
transfer of shares without assigning any reason therefor. If the Directors
refuse to register a transfer they shall notify the transferee within two months
of such refusal.
<PAGE>
4
10. The registration of transfers may be suspended at such time and for such
periods as the Directors may from time to time determine, provided always that
such registration shall not be suspended for more than forty-five days in any
year.
REDEEMABLE SHARES
-----------------
11. (a) Subject to the provisions of the Statute and the Memorandum of
Association, shares may be issued on the terms that they are, or at the option
of the Company or the holder are, to be redeemed on such terms and in such
manner as the Company, before the issue of the shares, may by Special Resolution
determine.
(b) Subject to the provisions of the Statute and the Memorandum of
Association, the Company may purchase its own shares (including fractions of a
share), including any redeemable shares, provided that the manner of purchase
has first been authorised by the Company in general meeting and may make payment
therefor in any manner authorised by the Statute, including out of capital.
VARIATION OF RIGHTS OF SHARES
-----------------------------
12. If at any time the share capital of the Company 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, whether or not the
Company is being wound-up, be varied with the consent in writing of the holders
of three-fourths of the issued shares of that class, or with the sanction of a
Special Resolution passed at a general meeting of the holders of the shares of
that class.
The provisions of these Articles relating to general meetings
shall apply to every such general meeting of the holders of one class of shares
except that the necessary quorum shall be one person holding or representing by
proxy at least 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.
13. The rights conferred upon the holders of the shares of any class issued with
preferred or other rights shall not, unless otherwise expressly provided by the
terms of issue of the shares of that class, be deemed to be varied by the
creation or issue of further shares ranking
pari passu therewith.
COMMISSION ON SALE OF SHARES
----------------------------
14. The Company may in so far as the Statute from time to time permits pay a
commission to any person in consideration of his subscribing or agreeing to
subscribe whether absolutely or conditionally for any shares of the Company.
Such commissions may be satisfied by
<PAGE>
5
the payment of cash or the lodgement of fully or partly paid-up shares or partly
in one way and partly in the other. The Company may also on any issue of shares
pay such brokerage as may be lawful.
NON-RECOGNITION OF TRUSTS
-------------------------
15. No person shall be recognised by the Company as holding any share upon any
trust and the Company shall not be bound by or be compelled in any way to
recognise (even when having notice thereof) any equitable, contingent, future,
or partial interest in any share, or any interest in any fractional part of a
share, or (except only as is otherwise provided by these Articles or the
Statute) any other rights in respect of any share except an absolute right to
the entirety thereof in the registered holder.
LIEN ON SHARES
--------------
16. The Company shall have a first and paramount lien and charge on all shares
(whether fully paid-up or not) registered in the name of a Member (whether
solely or jointly with others) for all debts, liabilities or engagements to or
with the Company (whether presently payable or not) by such Member or his
estate, either alone or jointly with any other person, whether a Member or not,
but the Directors may at any time declare any share to be wholly or in part
exempt from the provisions of this Article. The registration of a transfer of
any such share shall operate as a waiver of the Company's lien (if any) thereon.
The Company's lien (if any) on a share shall extend to all dividends or other
monies payable in respect thereof.
17. The Company may sell, in such manner as the Directors think fit, any shares
on which the Company has a lien, but no sale shall be made unless a sum in
respect of which the lien exists is presently payable, nor until the expiration
of fourteen days after a notice in writing stating and demanding payment of such
part of the amount in respect of which the lien exists as is presently payable,
has been given to the registered holder or holders for the time being of the
share, or the person, of which the Company has notice, entitled thereto by
reason of his death or bankruptcy.
18. To give effect to any such sale the Directors may authorise some person to
transfer the shares sold to the purchaser thereof. The purchaser shall be
registered as the holder of the shares comprised in any such transfer, and he
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 or invalidity in the
proceedings in reference to the sale.
19. The proceeds of such sale shall be received by the Company and applied in
payment of such part of the amount in respect of which the lien exists as is
presently payable and the
<PAGE>
6
residue, if any, shall (subject to a like lien for sums 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.
CALL ON SHARES
--------------
20. (a) The Directors may from time to time make calls upon the Members in
respect of any monies unpaid on their shares (whether on account of the nominal
value of the shares or by way of premium or otherwise) and not by the conditions
of allotment thereof made payable at fixed terms, provided that no call shall be
payable at less than one month from the date fixed for the payment of the last
preceding call, and each Member shall (subject to receiving at least fourteen
days notice specifying the time or times of payment) pay to the Company at the
time or times so specified the amount called on the shares. A call may be
revoked or postponed as the Directors may determine. A call may be made payable
by instalments.
(b) A call shall be deemed to have been made at the time when the
resolution of the Directors authorising such call was passed.
(c) The joint holders of a share shall be jointly and severally liable
to pay all calls in respect thereof.
21. If a sum called in respect of a share is not paid before or on a day
appointed for payment thereof, the persons from whom the sum is due shall pay
interest on the sum from the day appointed for payment thereof to the time of
actual payment at such rate not exceeding ten per cent per annum as the
Directors may determine, but the Directors shall be at liberty to waive payment
of such interest either wholly or in part.
22. Any sum which by the terms of issue of a share becomes payable on allotment
or at any fixed date, whether on account of the nominal value of the share or by
way of premium or otherwise, shall for the purposes of these Articles be deemed
to be a call duly made, notified and payable on the date on which by the terms
of issue the same becomes payable, and in the case of non-payment all the
relevant provisions of these Articles as to payment of interest forfeiture or
otherwise shall apply as if such sum had become payable by virtue of a call duly
made and notified.
23. The Directors may, on the issue of shares, differentiate between the holders
as to the amount of calls or interest to be paid and the times of payment.
24. (a) The Directors may, if they think fit, receive from any Member willing to
advance the same, all or any part of the monies uncalled and unpaid upon any
shares held by him, and upon all or any of the monies so advanced may (until the
same would but for such advances, become payable) pay interest at such rate not
exceeding (unless the Company in general meeting shall
<PAGE>
7
otherwise direct) seven per cent per annum, as may be agreed upon between the
Directors and the Member paying such sum in advance.
(b) No such sum paid in advance of calls shall entitle the Member
paying such sum to any portion of a dividend declared in respect of any period
prior to the date upon which such sum would, but for such payment, become
presently payable.
FORFEITURE OF SHARES
--------------------
25. (a) If a Member fails to pay any call or instalment of a call or to make any
payment required by the terms of issue on the day appointed for payment thereof,
the Directors may, at any time thereafter during such time as any part of the
call, instalment or payment remains unpaid, give notice requiring payment of so
much of the call, instalment or payment as is unpaid, together with any interest
which may have accrued and all expenses that have been incurred by the Company
by reason of such non-payment. Such notice shall name a day (not earlier than
the expiration of fourteen days from the date of giving of the notice) on or
before which the payment required by the notice is to be made, and shall state
that, in the event of non-payment at or before the time appointed the shares in
respect of which such notice was given will be liable to be forfeited.
(b) If the requirements of any such notice as aforesaid are not
complied with, any share in respect of which the notice has been given may at
any time thereafter, before the payment required by the notice has been made, be
forfeited by a resolution of the Directors to that effect. Such forfeiture shall
include all dividends declared in respect of the forfeited share and not
actually paid before the forfeiture.
(c) A forfeited share may be sold or otherwise disposed of on such
terms and in such manner as the Directors think fit and at any time before a
sale or disposition the forfeiture may be cancelled on such terms as the
Directors think fit.
26. A person whose shares have been forfeited shall cease to be a Member in
respect of the forfeited shares, but shall, notwithstanding, remain liable to
pay to the Company all monies which, at the date of forfeiture were payable by
him to the Company in respect of the shares together with interest thereon, but
his liability shall cease if and when the Company shall have received payment in
full of all monies whenever payable in respect of the shares.
27. A certificate in writing under the hand of one Director or the Secretary of
the Company that a share in the Company has been duly forfeited on a date stated
in the declaration shall be conclusive evidence of the fact therein stated as
against all persons claiming to be entitled to the share. The Company may
receive the consideration given for the share on any sale or disposition thereof
and may execute a transfer of the share in favour of the person to whom the
<PAGE>
8
share is sold or disposed of and he shall thereupon be registered as the holder
of the share and shall not be bound to see to the application of the purchase
money, if any, nor shall his title to the share be affected by any irregularity
or invalidity in the proceedings in reference to the forfeiture,
sale or disposal of the share.
28. The provisions of these Articles as to forfeiture shall apply in the case of
non-payment of any sum which, by the terms of issue of a share, becomes payable
at a fixed time, whether on account of the nominal value of the share or by way
of premium as if the same had been payable by virtue of a call duly made and
notified.
REGISTRATION OF EMPOWERING INSTRUMENTS
--------------------------------------
29. The Company shall be entitled to charge a fee not exceeding one dollar
(US$l.00) on the registration of every probate, letters of administration,
certificate of death or marriage, power of attorney, notice in lieu of
distringas, or other instrument.
TRANSMISSION OF SHARES
----------------------
30. In case of the death of a Member, the survivor or survivors where the
deceased was a joint holder, and the legal personal representatives of the
deceased where he was a sole holder, shall be the only persons recognised by the
Company as having any title to his interest in the shares, but nothing herein
contained shall release the estate of any such deceased holder from any
liability in respect of any shares which had been held by him solely or jointly
with other persons.
31. (a) Any person becoming entitled to a share in consequence of the death or
bankruptcy or liquidation or dissolution of a Member (or in any other way than
by transfer) may, upon such evidence being produced as may from time to time be
required by the Directors and subject as hereinafter provided, elect either to
be registered himself as holder of the share or to make such transfer of the
share to such other person nominated by him as the deceased or bankrupt person
could have made and to have such person registered as the transferee thereof,
but the Directors shall, in either case, have the same right to decline or
suspend registration as they would have had in the case of a transfer of the
share by that Member before his death or bankruptcy as the case may be.
(b) If the person so becoming entitled shall elect to be registered
himself as holder he shall deliver or send to the Company a notice in writing
signed by him stating that he so elects.
32. A person becoming entitled to a share by reason of the death or bankruptcy
or liquidation or dissolution of the holder (or in any other case than by
transfer) shall be entitled to the same dividends and other advantages to which
he would be entitled if he were the registered holder of the share, except that
he shall not, before being registered as a Member in respect of the
<PAGE>
9
share, be entitled in respect of it to exercise any right conferred by
membership in relation to meetings of the Company PROVIDED HOWEVER that the
Directors may at any time give notice requiring any such person to elect either
to be registered himself or to transfer the share and if the notice is not
complied with within ninety days the Directors may thereafter withhold payment
of all dividends, bonuses or other monies payable in respect of the share until
the requirements of the notice have been complied with.
AMENDMENT OF MEMORANDUM OF ASSOCIATION, CHANGE OF
LOCATION OF REGISTERED OFFICE & ALTERATION OF CAPITAL
-----------------------------------------------------
33. (a) Subject to and in so far as permitted by the provisions of the Statute,
the Company may from time to time by ordinary resolution alter or amend its
Memorandum of Association otherwise than with respect to its name and objects
and may, without restricting the generality of
the foregoing:
(i) increase the share capital by such sum to be divided
into shares of such amount or without nominal or par
value as the resolution shall prescribe and with such
rights, priorities and privileges annexed thereto, as
the Company
in general meeting may determine.
(ii) consolidate and divide all or any of its share
capital into shares of larger amount than its
existing shares;
(iii) by subdivision of its existing shares or any of them
divide the whole or any part of its share capital
into shares of smaller amount than is fixed by the
Memorandum of Association or into shares without
nominal or par value;
(iv) cancel any shares which at the date of the passing of
the resolution have not been taken or agreed to be
taken by any person.
(b) All new shares created hereunder shall be subject to the same
provisions with reference to the payment of calls, liens, transfer,
transmission, forfeiture and otherwise as the shares in the original share
capital.
(c) Subject to the provisions of the Statute, the Company may by
Special Resolution change its name or alter its objects.
(d) Without prejudice to Article 11 hereof and subject to the
provisions of the Statute, the Company may by Special Resolution reduce its
share capital and any capital redemption reserve fund.
<PAGE>
10
(e) Subject to the provisions of the Statute, the Company may by
resolution of the Directors change the location of its registered office.
CLOSING REGISTER OF MEMBERS OR FIXING RECORD DATE
-------------------------------------------------
34. For the purpose of determining Members entitled to notice of or to vote at
any meeting of Members or any adjournment thereof, or Members entitled to
receive payment of any dividend, or in order to make a determination of Members
for any other proper purpose, the Directors of the Company may provide that the
register of Members shall be closed for transfers for a stated period but not to
exceed in any case forty days. If the register of Members shall be so closed for
the purpose of determining Members entitled to notice of or to vote at a meeting
of Members such register shall be so closed for at least ten days immediately
preceding such meeting and the record date for such determination shall be the
date of the closure of the register of Members.
35. In lieu of or apart from closing the register of Members, the Directors may
fix in advance a date as the record date for any such determination of Members
entitled to notice of or to vote at a meeting of the Members and for the purpose
of determining the Members entitled to receive payment of any dividend the
Directors may, at or within 90 days prior to the date of declaration of such
dividend fix a subsequent date as the record date for such determination.
36. If the register of Members is not so closed and no record date is fixed for
the determination of Members entitled to notice of or to vote at a meeting of
Members or Members entitled to receive payment of a dividend, the date on which
notice of the meeting is mailed or the date on which the resolution of the
Directors declaring such dividend is adopted, as the case may be, shall be the
record date for such determination of Members. When a determination of Members
entitled to vote at any meeting of Members has been made as provided in this
section, such determination shall apply to any adjournment thereof.
GENERAL MEETING
---------------
37. (a) Subject to paragraph (c) hereof, the Company shall within one year of
its incorporation and in each year of its existence thereafter hold a general
meeting as its annual general meeting and shall specify the meeting as such in
the notices calling it. The annual general meeting shall be held at such time
and place as the Directors shall appoint and if no other time and place is
prescribed by them, it shall be held at the registered office on the second
Wednesday in December of each year at ten o'clock in the morning.
(b) At these meetings the report of the Directors (if any) shall be
presented.
<PAGE>
11
(c) If the Company is exempted as defined in the Statute it may but
shall not be obliged to hold an annual general meeting.
38. (a) The Directors may whenever they think fit, and they shall on the
requisition of Members of the Company holding at the date of the deposit of the
requisition not less than one-tenth of such of the paid-up capital of the
Company as at the date of the deposit carries the right of voting at general
meetings of the Company, proceed to convene a general meeting of the
Company.
(b) The requisition must state the objects of the meeting and must be
signed by the requisitionists and deposited at the registered office of the
Company and may consist of several documents in like form each signed by one or
more requisitionists.
(c) If the Directors do not within twenty-one days from the date of the
deposit of the requisition duly proceed to convene a general meeting, the
requisitionists, or any of them representing more than one-half of the total
voting rights of all of them, may themselves convene a general meeting, but any
meeting so convened shall not be held after the expiration of three months after
the expiration of the said twenty-one days.
(d) A general meeting convened as aforesaid by requisitionists shall be
convened in the same manner as nearly as possible as that in which general
meetings are to be convened by
Directors.
NOTICE OF GENERAL MEETINGS
--------------------------
39. At least five days' notice shall be given of an annual general meeting or
any other general meeting. Every notice shall be exclusive of the day on which
it is given or deemed to be given and of the day for which it is given and shall
specify the place, the day and the hour of the meeting and the general nature of
the business and shall be given in manner hereinafter mentioned or in such other
manner if any as may be prescribed by the Company PROVIDED that a general
meeting of the Company shall, whether or not the notice specified in this
regulation has been given and whether or not the provisions of Article 38 have
been complied with, be deemed to have been duly convened if it is so agreed:
(a) in the case of a general meeting called as an annual general
meeting by all the Members entitled to attend and vote thereat
or their proxies; and
(b) in the case of any other general meeting by a majority in
number of the Members having a right to attend and vote at the
meeting, being a majority together holding not less than
seventy-five per cent in nominal value or in the case of
shares without nominal or par value seventy-five per cent of
the shares in issue, or their proxies.
<PAGE>
12
40. The accidental omission to give notice of a general meeting to, or the
non-receipt of notice of a meeting by any person entitled to receive notice
shall not invalidate the proceedings
of that meeting.
PROCEEDINGS AT GENERAL MEETINGS
-------------------------------
41. No business shall be transacted at any general meeting unless a quorum of
Members is present at the time when the meeting proceeds to business; two
Members present in person or by proxy shall be a quorum provided always that if
the Company has one Member of record the quorum shall be that one Member present
in person or by proxy.
42. A resolution (including a Special Resolution) in writing (in one or more
counterparts) signed by all Members for the time being entitled to receive
notice of and to attend and vote at general meetings (or being corporations by
their duly authorised representatives) shall be as valid and effective as if the
same had been passed at a general meeting of the Company duly convened and held.
43. If within half an hour from the time appointed for the meeting a quorum is
not present, the meeting, if convened upon the requisition of Members, shall be
dissolved and in any other case it shall stand adjourned to the same day in the
next week at the same time and place or to such other time or such other place
as the Directors may determine and if at the adjourned meeting a quorum is not
present within half an hour from the time appointed for the meeting the Members
present shall be a quorum.
44. The Chairman, if any, of the Board of Directors shall preside as Chairman at
every general meeting of the Company, or if there is no such Chairman, or if he
shall not be present within fifteen minutes after the time appointed for the
holding of the meeting, or is unwilling to act, the Directors present shall
elect one of their number to be Chairman of the meeting.
45. If at any general meeting 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 shall choose one of their number to be Chairman
of the meeting.
46. The Chairman may, with the consent of any general meeting duly constituted
hereunder, 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 any
adjourned meeting other than the business left unfinished at the meeting from
which the adjournment took place. When a general meeting is adjourned for thirty
days or more, notice of the adjourned meeting shall be given as in the case of
an original meeting; save as aforesaid it shall not be necessary to give any
notice of an adjournment or of the business to be transacted at an adjourned
general meeting.
<PAGE>
13
47. At any general meeting a resolution put to the vote of the meeting shall be
decided on a show of hands unless a poll is, before or on the declaration of the
result of the show of hands, demanded by the Chairman or any other Member
present in person or by proxy.
48. Unless a poll be so demanded a declaration by the Chairman that a resolution
has on a show of hands been carried, or carried unanimously, or by a particular
majority, or lost, and an entry to that effect in the Company's Minute Book
containing the Minutes of the proceedings of the meeting shall be conclusive
evidence of that fact without proof of the number or proportion of the votes
recorded in favour of or against such resolution.
49. The demand for a poll may be withdrawn.
50. Except as provided in Article 52, if a poll is duly demanded it shall be
taken in such manner as the Chairman directs and the result of the poll shall be
deemed to be the resolution of the general meeting at which the poll was
demanded.
51. In the case of an equality of votes, whether on a show of hands or on a
poll, the Chairman of the general meeting at which the show of hands takes place
or at which the poll is demanded, shall be entitled to a second or casting vote.
52. 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 at such time as the Chairman of the general meeting directs and
any business other than that upon which a poll has been demanded or is
contingent thereon may be proceeded with pending the taking of the poll.
VOTES OF MEMBERS
----------------
53. Subject to any rights or restrictions for the time being attached to any
class or classes of shares, on a show of hands every Member of record present in
person or by proxy at a general meeting shall have one vote and on a poll every
Member of record present in person or by proxy shall have one vote for each
share registered in his name in the register of Members.
54. In the case of joint holders of record 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 for this purpose seniority shall be
determined by the order in which the names stand
in the register of Members.
55. A Member of unsound mind, or in respect of whom an order has been made by
any court, having jurisdiction in lunacy, may vote, whether on a show of hands
or on a poll, by his committee, receiver, curator bonis, or other person in the
nature of a committee, receiver or
<PAGE>
14
curator bonis appointed by that court, and any such committee, receiver, curator
bonis or other persons may vote by proxy.
56. No Member shall be entitled to vote at any general meeting unless he is
registered as a shareholder of the Company on the record date for such meeting
nor unless all calls or other sums presently payable by him in respect of shares
in the Company have been paid.
57. No objection shall be raised to the qualification of any voter except at the
general meeting or adjourned general meeting at which the vote objected to is
given or tendered and every vote not disallowed at such general meeting shall be
valid for all purposes. Any such objection made in due time shall be referred to
the Chairman of the general meeting whose decision shall be final and
conclusive.
58. On a poll or on a show of hands votes may be given either personally or by
proxy.
PROXIES
-------
59. The instrument appointing a proxy shall be in writing and shall be executed
under the hand of the appointor or of his attorney duly authorised in writing,
or, if the appointor is a corporation under the hand of an officer or attorney
duly authorised in that behalf. A proxy need
not be a Member of the Company.
60. The instrument appointing a proxy shall be deposited at the registered
office of the Company or at such other place as is specified for that purpose in
the notice convening the meeting no later than the time for holding the meeting,
or adjourned meeting provided that the Chairman of the Meeting may at his
discretion direct that an instrument of proxy shall be deemed to have been duly
deposited upon receipt of telex, cable or telecopy confirmation from the
appointor that the instrument of proxy duly signed is in the course of
transmission to the Company.
61. The instrument appointing a proxy may be in any usual or common form and may
be expressed to be for a particular meeting or any adjournment thereof or
generally until revoked. An instrument appointing a proxy shall be deemed to
include the power to demand or join or concur in demanding a poll.
62. A vote given in accordance with the terms of an instrument of proxy shall be
valid notwithstanding the previous death or insanity of the principal or
revocation of the proxy or of the authority under which the proxy was executed,
or the transfer of the share in respect of which the proxy is given provided
that no intimation in writing of such death, insanity, revocation or transfer as
aforesaid shall have been received by the Company at the registered office
before the commencement of the general meeting, or adjourned meeting at which it
is sought to use the proxy.
<PAGE>
15
63. Any corporation which is a Member of record of the Company may in accordance
with its Articles or in the absence of such provision by resolution of its
Directors or other governing body authorise such person as it thinks fit to act
as its representative at any meeting of the Company or of any class of Members
of the Company, and the person so authorised shall be entitled to exercise the
same powers on behalf of the corporation which he represents as the corporation
could exercise if it were an individual Member of record of the Company.
64. Shares of its own capital belonging to the Company or held by it in a
fiduciary capacity shall not be voted, directly or indirectly, at any meeting
and shall not be counted in determining the total number of outstanding shares
at any given time.
DIRECTORS
65. There shall be a Board of Directors consisting of not less than one or more
than ten persons (exclusive of alternate Directors) PROVIDED HOWEVER that the
Company may from time to time by ordinary resolution increase or reduce the
limits in the number of Directors. The first Directors of the Company shall be
determined in writing by, or appointed by a resolution of, the subscribers of
the Memorandum of Association or a majority of them.
66. The remuneration to be paid to the Directors shall be such remuneration as
the Directors shall determine. Such remuneration shall be deemed to accrue from
day to day. The Directors shall also be entitled to be paid their travelling,
hotel and other expenses properly incurred by them in going to, attending and
returning from meetings of the Directors, or any committee of the Directors, or
general meetings of the Company, or otherwise in connection with the business of
the Company, or to receive a fixed allowance in respect thereof as may be
determined by the Directors from time to time, or a combination partly of one
such method and partly the other.
67. The Directors may by resolution award special remuneration to any Director
of the Company undertaking any special work or services for, or undertaking any
special mission on behalf of, the Company other than his ordinary routine work
as a Director. Any fees paid to a Director who is also counsel or solicitor to
the Company, or otherwise serves it in a professional capacity shall be in
addition to his remuneration as a Director.
68. A Director or alternate Director may hold any other office or place of
profit under the Company (other than the office of Auditor) in conjunction with
his office of Director for such period and on such terms as to remuneration and
otherwise as the Directors may determine.
<PAGE>
16
69. A Director or alternate Director may act by himself or his firm in a
professional capacity for the Company and he or his firm shall be entitled to
remuneration for professional services as if he were not a Director or alternate
Director.
70. A shareholding qualification for Directors may be fixed by the Company in
general meeting, but unless and until so fixed no qualification shall be
required.
71. A Director or alternate Director of the Company may be or become a director
or other officer of or otherwise interested in any company promoted by the
Company or in which the Company may be interested as shareholder or otherwise
and no such Director or alternate Director shall be accountable to the Company
for any remuneration or other benefits received by him as a director or officer
of, or from his interest in, such other company.
72. No person shall be disqualified from the office of Director or alternate
Director or prevented by such office from contracting with the Company, either
as vendor, purchaser or otherwise, nor shall any such contract or any contract
or transaction entered into by or on behalf of the Company in which any Director
or alternate Director shall be in any way interested be or be liable to be
avoided, nor shall any Director or alternate Director so contracting or being so
interested be liable to account to the Company for any profit realised by any
such contract or transaction by reason of such Director holding office or of the
fiduciary relation thereby established. A Director (or his alternate Director in
his absence) shall be at liberty to vote in respect of any contract or
transaction in which he is so interested as aforesaid PROVIDED HOWEVER that the
nature of the interest of any Director or alternate Director in any such
contract or transaction shall be disclosed by him or the alternate Director
appointed by him at or prior to its consideration and any vote thereon.
73. A general notice that a Director or alternate Director is a shareholder of
any specified firm or company and is to be regarded as interested in any
transaction with such firm or company shall be sufficient disclosure under
Article 72 and after such general notice it shall not be necessary to give
special notice relating to any particular transaction.
ALTERNATE DIRECTORS
74. Subject to the exception contained in Article 82, a Director who expects to
be unable to attend Directors' Meetings because of absence, illness or otherwise
may appoint any person to be an alternate Director to act in his stead and such
appointee whilst he holds office as an alternate Director shall, in the event of
absence therefrom of his appointor, be entitled to attend meetings of the
Directors and to vote thereat and to do, in the place and stead of his
appointor, any other act or thing which his appointor is permitted or required
to do by virtue of his being a Director as if the alternate Director were the
appointor, other than appointment of an alternate to
<PAGE>
17
himself, and he shall ipso facto vacate office if and when his appointor ceases
to be a Director or removes the appointee from office. Any appointment or
removal under this Article shall be effected by notice in writing under the hand
of the Director making the same.
POWERS AND DUTIES OF DIRECTORS
75. The business of the Company shall be managed by the Directors (or a sole
Director if only one is appointed) who may pay all expenses incurred in
promoting, registering and setting up the Company, and may exercise all such
powers of the Company as are not, from time to time by the Statute, or by these
Articles, or such regulations, being not inconsistent with the aforesaid, as may
be prescribed by the Company in general meeting required to be exercised by the
Company in general meeting PROVIDED HOWEVER that no regulations made by the
Company in general meeting shall invalidate any prior act of the Directors which
would have been valid if that regulation had not been made.
76. The Directors may from time to time and at any time by powers of attorney
appoint any company, firm, person or body of persons, whether nominated directly
or indirectly by the Directors, to be the attorney or attorneys of the Company
for such purpose and with such powers, authorities and discretions (not
exceeding those vested in or exercisable by the Directors under these Articles)
and for such period and subject to such conditions as they may think fit, and
any such powers of attorney may contain such provisions for the protection and
convenience of persons dealing with any such attorneys as the Directors may
think fit and may also authorise any such attorney to delegate all or any of the
powers, authorities and discretions vested in him.
77. All cheques, promissory notes, drafts, bills of exchange and other
negotiable instruments and all receipts for monies paid to the Company shall be
signed, drawn, accepted, endorsed or otherwise executed as the case may be in
such manner as the Directors shall from time
to time by resolution determine.
78. The Directors shall cause minutes to be made in books provided for the
purpose:
(a) of all appointments of officers made by the Directors;
(b) of the names of the Directors (including those represented
thereat by an alternate or by proxy) present at each meeting
of the Directors and of any committee of the
Directors;
(c) of all resolutions and proceedings at all meetings of the
Company and of the Directors and of committees of Directors.
<PAGE>
18
79. The Directors on behalf of the Company may pay a gratuity or pension or
allowance on retirement to any Director who has held any other salaried office
or place of profit with the Company or to his widow or dependants and may make
contributions to any fund and pay premiums for the purchase or provision of any
such gratuity, pension or allowance.
80. The Directors may exercise all the powers of the Company to borrow money and
to mortgage or charge its undertaking, property and uncalled capital or any part
thereof and to issue debentures, debenture stock and other securities whether
outright or as security for any debt, liability or obligation of the Company or
of any third party.
MANAGEMENT
----------
81. (a) The Directors may from time to time provide for the management of the
affairs of the Company in such manner as they shall think fit and the provisions
contained in the three next following paragraphs shall be without prejudice to
the general powers conferred by this paragraph.
(b) The Directors from time to time and at any time may establish any
committees, local boards or agencies for managing any of the affairs of the
Company and may appoint any persons to be members of such committees or local
boards or any managers or agents and may fix their remuneration.
(c) The Directors from time to time and at any time may delegate to any
such committee, local board, manager or agent any of the powers, authorities and
discretions for the time being vested in the Directors and may authorise the
members for the time being of any such local board, or any of them to fill up
any vacancies therein and to act notwithstanding vacancies and any such
appointment or delegation may be made on such terms and subject to such
conditions as the Directors may think fit and the Directors may at any time
remove any person so appointed and may annul or vary any such delegation, but no
person dealing in good faith and without notice of any such annulment or
variation shall be affected thereby.
(d) Any such delegates as aforesaid may be authorised by the Directors
to subdelegate all or any of the powers, authorities, and discretions for the
time being vested in them.
MANAGING DIRECTORS
------------------
82. The Directors may, from time to time, appoint one or more of their body (but
not an alternate Director) to the office of Managing Director for such term and
at such remuneration (whether by way of salary, or commission, or participation
in profits, or partly in one way and partly in another) as they may think fit
but his appointment shall be subject to determination ipso facto if he ceases
from any cause to be a Director and no alternate Director appointed by him can
act in his stead as a Director or Managing Director.
<PAGE>
19
83. The Directors may entrust to and confer upon a Managing Director any of the
powers exercisable by them upon such terms and conditions and with such
restrictions as they may think fit and either collaterally with or to the
exclusion of their own powers and may from time to time revoke, withdraw, alter
or vary all or any of such powers.
PROCEEDINGS OF DIRECTORS
------------------------
84. Except as otherwise provided by these Articles, the Directors shall meet
together for the despatch of business, convening, adjourning and otherwise
regulating their meetings as they think fit. Questions arising at any meeting
shall be decided by a majority of votes of the Directors and alternate Directors
present at a meeting at which there is a quorum, the vote of an alternate
Director not being counted if his appointor be present at such meeting. In case
of an equality of votes, the Chairman shall have a second or casting vote.
85. A Director or alternate Director may, and the Secretary on the requisition
of a Director or alternate Director shall, at any time summon a meeting of the
Directors by at least two days' notice in writing to every Director and
alternate Director which notice shall set forth the general nature of the
business to be considered unless notice is waived by all the Directors (or their
alternates) either at, before or after the meeting is held and PROVIDED FURTHER
if notice is given in person, by cable, telex or telecopy the same shall be
deemed to have been given on the day it is delivered to the Directors or
transmitting organisation as the case may be. The provisions of Article 40 shall
apply mutatis mutandis with respect to notices of meetings of Directors.
86. The quorum necessary for the transaction of the business of the Directors
may be fixed by the Directors and unless so fixed shall be two, a Director and
his appointed alternate Director being considered only one person for this
purpose, PROVIDED ALWAYS that if there shall at any time be only a sole Director
the quorum shall be one. For the purposes of this Article an alternate Director
or proxy appointed by a Director shall be counted in a quorum at a meeting at
which the Director appointing him is not present.
87. The continuing Directors may act notwithstanding any vacancy in their body,
but if and so long as their number is reduced below the number fixed by or
pursuant to these Articles as the necessary quorum of Directors the continuing
Directors or Director may act for the purpose of increasing the number of
Directors to that number, or of summoning a general meeting of the Company, but
for no other purpose.
88. The Directors may elect a Chairman of their Board and determine the period
for which he is to hold office; but if no such Chairman is elected, or if at any
meeting the Chairman is not present within five minutes after the time appointed
for holding the same, the Directors present may choose one of their number to be
Chairman of the meeting.
<PAGE>
20
89. The Directors may delegate any of their powers to committees consisting of
such member or members of the Board of Directors (including Alternate Directors
in the absence of their appointors) as they think fit; any committee so formed
shall in the exercise of the powers so delegated conform to any regulations that
may be imposed on it by the Directors.
90. A committee may meet and adjourn as it thinks proper. Questions arising at
any meeting shall be determined by a majority of votes of the members present,
and in the case of an equality of votes the Chairman shall have a second or
casting vote.
91. All acts done by any meeting of the Directors or of a committee of Directors
(including any person acting as an alternate Director) shall, notwithstanding
that it be afterwards discovered that there was some defect in the appointment
of any Director or alternate Director, or that they or any of them were
disqualified, be as valid as if every such person had been duly appointed and
qualified to be a Director or alternate Director as the case may be.
92. Members of the Board of Directors or of any committee thereof may
participate in a meeting of the Board or of such 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 participation in a
meeting pursuant to this provision shall constitute presence in person at such
meeting. A resolution in writing (in one or more counterparts), signed by all
the Directors for the time being or all the members of a committee of Directors
(an alternate Director being entitled to sign such resolution on behalf of his
appointor) shall be as valid and effectual as if it had been passed at a meeting
of the Directors or committee as the case may be duly convened and held.
93. (a) A Director may be represented at any meetings of the Board of Directors
by a proxy appointed by him in which event the presence or vote of the proxy
shall for all purposes be deemed to be that of the Director.
(b) The provisions of Articles 59-62 shall mutatis mutandis apply to
the appointment of proxies by Directors.
VACATION OF OFFICE OF DIRECTOR
------------------------------
94. The office of a Director shall be vacated:
(a) if he gives notice in writing to the Company that he resigns
the office of Director;
(b) if he absents himself (without being represented by proxy or
an alternate Director appointed by him) from three consecutive
meetings of the Board of Directors
<PAGE>
21
without special leave of absence from the Directors, and they
pass a resolution that he has by reason of such absence
vacated office;
(c) if he dies, becomes bankrupt or makes any arrangement or
composition with his creditors generally;
(d) if he is found a lunatic or becomes of unsound mind.
APPOINTMENT AND REMOVAL OF DIRECTORS
------------------------------------
95. The Company may by ordinary resolution appoint any person to be a Director
and may in like manner remove any Director and may in like manner appoint
another person in his stead.
96. The Directors shall have power at any time and from time to time to appoint
any person to be a Director, either to fill a casual vacancy or as an addition
to the existing Directors but so that the total amount of Directors (exclusive
of alternate Directors) shall not at any time exceed the number fixed in
accordance with these Articles.
PRESUMPTION OF ASSENT
---------------------
97. A Director of the Company who is present at a meeting of the Board of
Directors at which action on any Company matter is taken shall be presumed to
have assented to the action taken unless his dissent shall be entered in the
Minutes of the meeting or unless he shall file his written dissent from such
action with the person acting as the Secretary of the meeting before the
adjournment thereof or shall forward such dissent by registered mail to such
person immediately after the adjournment of the meeting. Such right to dissent
shall not apply to a Director who voted in favour of such action.
SEAL
----
98. (a) The Company may, if the Directors so determine, have a Seal which shall,
subject to paragraph (c) hereof, only be used by the authority of the Directors
or of a committee of the Directors authorised by the Directors in that behalf
and every instrument to which the Seal has been affixed shall be signed by one
person who shall be either a Director or the Secretary or Secretary-Treasurer or
some person appointed by the Directors for the purpose.
(b) The Company may have for use in any place or places outside the
Cayman Islands a duplicate Seal or Seals each of which shall be a facsimile of
the Common Seal of the Company and, if the Directors so determine, with the
addition on its face of the name of every place where it is to be used.
<PAGE>
22
(c) A Director, Secretary or other officer or representative or
attorney may without further authority of the Directors affix the Seal of the
Company over his signature alone to any document of the Company required to be
authenticated by him under Seal or to be filed with the Registrar of Companies
in the Cayman Islands or elsewhere wheresoever.
OFFICERS
--------
99. The Company may have a President, a Secretary or Secretary-Treasurer
appointed by the Directors who may also from time to time appoint such other
officers as they consider necessary, all for such terms, at such remuneration
and to perform such duties, and subject to such provisions as to
disqualification and removal as the Directors from time to time prescribe.
DIVIDENDS, DISTRIBUTIONS AND RESERVE
------------------------------------
100. Subject to the Statute, the Directors may from time to time declare
dividends (including interim dividends) and distributions on shares of the
Company outstanding and authorise payment of the same out of the funds of the
Company lawfully available therefor.
101. The Directors may, before declaring any dividends or distributions, set
aside such sums as they think proper as a reserve or reserves which shall at the
discretion of the Directors, be applicable for any purpose of the Company and
pending such application may, at the like discretion, be employed in the
business of the Company.
102. No dividend or distribution shall be payable except out of the profits of
the Company, realised or unrealised, or out of the share premium account or as
otherwise permitted by the Statute.
103. Subject to the rights of persons, if any, entitled to shares with special
rights as to dividends or distributions, if dividends or distributions are to be
declared on a class of shares they shall be declared and paid according to the
amounts paid or credited as paid on the shares of such class outstanding on the
record date for such dividend or distribution as determined in accordance with
these Articles but no amount paid or credited as paid on a share in advance of
calls shall be treated for the purpose of this Article as paid on the share.
104. The Directors may deduct from any dividend or distribution payable to any
Member all sums of money (if any) presently payable by him to the Company on
account of calls or otherwise.
105. The Directors may declare that any dividend or distribution be paid wholly
or partly by the distribution of specific assets and in particular of paid up
shares, debentures, or debenture stock of any other company or in any one or
more of such ways and where any difficulty arises
<PAGE>
23
in regard to such distribution, the Directors may settle the same as they think
expedient and in particular may issue fractional certificates and fix the value
for distribution of such specific assets or any part thereof and may determine
that cash payments shall be made to any Members upon the footing of the value so
fixed in order to adjust the rights of all Members and may vest any such
specific assets in trustees as may seem expedient to the Directors.
106. Any dividend, distribution, interest or other monies payable in cash in
respect of shares may be paid by cheque or warrant sent through the post
directed to the registered address of the holder or, in the case of joint
holders, to the holder who is first named on the register of Members or to such
person and to such address as such holder or joint holders may in writing
direct. Every such cheque or warrant shall be made payable to the order of the
person to whom it is sent. Any one of two or more joint holders may give
effectual receipts for any dividends, bonuses, or other monies payable in
respect of the share held by them as joint holders.
107. No dividend or distribution shall bear interest against the Company.
CAPITALISATION
--------------
108. The Company may upon the recommendation of the Directors by ordinary
resolution authorise the Directors to capitalise any sum standing to the credit
of any of the Company's reserve accounts (including share premium account and
capital redemption reserve fund) or any sum standing to the credit of profit and
loss account or otherwise available for distribution and to appropriate such sum
to Members in the proportions in which such sum would have been divisible
amongst them had the same been a distribution of profits by way of dividend and
to apply such sum on their behalf in paying up in full unissued shares for
allotment and distribution credited as fully paid up to and amongst them in the
proportion aforesaid. In such event the Directors shall do all acts and things
required to give effect to such capitalisation, with full power to the Directors
to make such provisions as they think fit for the case of shares becoming
distributable in fractions (including provisions whereby the benefit of
fractional entitlements accrue to the Company rather than to the Members
concerned). The Directors may authorise any person to enter on behalf of all of
the Members interested into an agreement with the Company providing for such
capitalisation and matters incidental thereto and any agreement made under such
authority shall be effective and binding on all concerned.
BOOKS OF ACCOUNT
----------------
109. The Directors shall cause proper books of account to be kept with respect
to:
(a) all sums of money received and expended by the Company and the
matters in respect of which the receipt or expenditure takes
place;
<PAGE>
24
(b) all sales and purchases of goods by the Company;
(c) the assets and liabilities of the Company.
Proper books shall not be deemed to be kept if there are not kept such books of
account as are necessary to give a true and fair view of the state of the
Company's affairs and to explain its transactions.
110. The Directors shall from time to time determine whether and to what extent
and at what times and places and under what conditions or regulations the
accounts and books of the Company or any of them shall be open to the inspection
of Members not being Directors and no Member (not being a Director) shall have
any right of inspecting any account or book or document of the Company except as
conferred by Statute or authorised by the Directors or by the Company in general
meeting.
111. The Directors may from time to time cause to be prepared and to be laid
before the Company in general meeting profit and loss accounts, balance sheets,
group accounts (if any) and such other reports and accounts as may be required
by law.
AUDIT
-----
112. The Company may at any annual general meeting appoint an Auditor or
Auditors of the Company who shall hold office until the next annual general
meeting and may fix his or their remuneration.
113. The Directors may before the first annual general meeting appoint an
Auditor or Auditors of the Company who shall hold office until the first annual
general meeting unless previously removed by an ordinary resolution of the
Members in general meeting in which case the Members at that meeting may appoint
Auditors. The Directors may fill any casual vacancy in the office of Auditor but
while any such vacancy continues the surviving or continuing Auditor or
Auditors, if any, may act. The remuneration of any Auditor appointed by the
Directors under this Article may be fixed by the Directors.
114. Every Auditor of the Company shall have a right of access at all times to
the books and accounts and vouchers of the Company and shall be entitled to
require from the Directors and Officers of the Company such information and
explanation as may be necessary for the performance of the duties of the
auditors.
115. Auditors shall at the next annual general meeting following their
appointment and at any other time during their term of office, upon request of
the Directors or any general meeting
<PAGE>
25
of the Members, make a report on the accounts of the Company in general meeting
during their tenure of office.
NOTICES
-------
116. Notices shall be in writing and may be given by the Company to any Member
either personally or by sending it by post, cable, telex or telecopy to him or
to his address as shown in the register of Members, such notice, if mailed, to
be forwarded airmail if the address be outside the Cayman Islands.
117. (a) Where a notice is sent by post, service of the notice shall be deemed
to be effected by properly addressing, pre-paying and posting a letter
containing the notice, and to have been effected at the expiration of sixty
hours after the letter containing the same is posted as aforesaid.
(b) Where a notice is sent by cable, telex, or telecopy, service of the
notice shall be deemed to be effected by properly addressing, and sending such
notice through a transmitting organisation and to have been effected on the day
the same is sent as aforesaid.
118. A notice may be given by the Company to the joint holders of record of a
share by giving the notice to the joint holder first named on the register of
Members in respect of the share.
119. A notice may be given by the Company to the person or persons which the
Company has been advised are entitled to a share or shares in consequence of the
death or bankruptcy of a Member by sending it through the post as aforesaid in a
pre-paid letter 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 supplied for that purpose by the persons claiming to be so entitled, or
at the option of the Company by giving the notice in any manner in which the
same might have been given if the death or bankruptcy had not occurred.
120. Notice of every general meeting shall be given in any manner hereinbefore
authorised to:
(a) every person shown as a Member in the register of Members as
of the record date for such meeting except that in the case of
joint holders the notice shall be sufficient if given to the
joint holder first named in the register of Members.
(b) every person upon whom the ownership of a share devolves by
reason of his being a legal personal representative or a
trustee in bankruptcy of a Member of record where the Member
of record but for his death or bankruptcy would be entitled to
receive notice of the meeting; and
<PAGE>
26
No other person shall be entitled to receive notices of general meetings.
WINDING UP
----------
121. If the Company shall be wound up the liquidator may, with the sanction of a
Special Resolution of the Company and any other sanction required by the
Statute, divide amongst the Members in specie or kind the whole or any part of
the assets of the Company (whether they shall consist of property of the same
kind or not) and may for such purpose set such value as he deems fair upon any
property to be divided as aforesaid and may determine how such 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 such assets
in trustees upon such trusts for the benefit of the contributories as the
liquidator, with the like sanction, shall think fit, but so that no Member shall
be compelled to accept any shares or other securities whereon there is any
liability.
122. If the Company shall be wound up, and the assets available for distribution
amongst the Members as such shall be insufficient to repay the whole of the
paid-up capital, such assets shall be distributed so that, as nearly as may be,
the losses shall be borne by the Members in proportion to the capital paid up,
or which ought to have been paid up, at the commencement of the winding up on
the shares held by them respectively. And if in a winding up the assets
available for distribution amongst the Members shall be more than sufficient to
repay the whole of the capital paid up at the commencement of the winding up,
the excess shall be distributed amongst the Members in proportion to the capital
paid up at the commencement of the winding up on the shares held by them
respectively. This Article is to be without prejudice to the rights of the
holders of shares issued upon special terms and conditions.
INDEMNITY
---------
123. The Directors and officers for the time being of the Company and any
trustee for the time being acting in relation to any of the affairs of the
Company and their heirs, executors, administrators and personal representatives
respectively shall be indemnified out of the assets of the Company from and
against all actions, proceedings, costs, charges, losses, damages and expenses
which they or any of them shall or may incur or sustain by reason of any act
done or omitted in or about the execution of their duty in their respective
offices or trusts, except such (if any) as they shall incur or sustain by or
through their own wilful neglect or default respectively and no such Director,
officer or trustee shall be answerable for the acts, receipts, neglects or
defaults of any other Director, officer or trustee or for joining in any receipt
for the sake of conformity or for the solvency or honesty of any banker or other
persons with whom any monies or effects belonging to the Company may be lodged
or deposited for safe custody or for any insufficiency of any security upon
which any monies of the Company may be invested or for any other loss or damage
due to any such cause as aforesaid or which may happen in or about the
<PAGE>
27
execution of his office or trust unless the same shall happen through the wilful
neglect or default of such Director, Officer or trustee.
FINANCIAL YEAR
--------------
124. Unless the Directors otherwise prescribe, the financial year of the Company
shall end on 31st December in each year and, following the year of
incorporation, shall begin on 1st January in each year.
AMENDMENTS OF ARTICLES
----------------------
125. Subject to the Statute, the Company may at any time and from time to time
by Special Resolution alter or amend these Articles in whole or in part.
TRANSFER BY WAY OF CONTINUATION
-------------------------------
126. If the Company is exempted as defined in the Statute, it shall, subject to
the provisions of the Statute and with the approval of a Special Resolution,
have the power to register by way of continuation as a body corporate under the
laws of any jurisdiction outside the Cayman
Islands and to be deregistered in the Cayman Islands.
THE COMPANIES LAW (1995 REVISION)
---------------------------------
COMPANY LIMITED BY SHARES
-------------------------
MEMORANDUM OF ASSOCIATION
OF
MILLENIUM MAJESTIC, INC.
1. The name of the Company is MILLENIUM MAJESTIC, INC..
2. The Registered Office of the Company shall be at the offices of Maples and
Calder, Attorneys-at-Law, Ugland House, P.O. Box 309, George Town, Grand Cayman,
Cayman Islands, British West Indies or at such other place as the Directors may
from time to time decide.
3. The objects for which the Company is established are unrestricted and shall
include, but without limitation, the following:-
(i) (a) To undertake and carry on all or any of the trades and businesses of
international freight forwarders and agents, shippers, ship owners, ship
brokers, shipping agents and insurance brokers, underwriters, ship managers, tug
owners, shipping agents, loading brokers, freight contractors, carriers by land,
air and water, transport, haulage and general contractors, barge owners,
lightermen, railway and forwarding agents, dock owners, ships' husbands,
warehousemen, salvors, manufacturers of and dealers in tarpaulins, waterproofs,
machinery, engines, nautical instruments, and ships' rigging, gear, fittings and
equipment of every description, importers and exporters of and dealers in goods,
provisions, live and dead stock, commodities, articles, chattels, merchandise
and property of every kind, general traders and
<PAGE>
2
merchants, and generally to carry on the said businesses in all their branches,
and to carry on the said businesses either as principals or agents or on
commission or otherwise.
(b) To purchase or otherwise acquire, and to carry on the business or
businesses of fishing boat owners, smack owners, trawlers, deep-sea fishers,
shrimp fishers, fish curers, fish or shrimp salesmen, wholesale and retail fish
or shrimp merchants, wholesale and retail game and poultry merchants, ice
manufacturers, oil merchants and refiners, utilisers of fish refuse, manure
manufacturers, anchor and chain makers, wire rope makers, rope makers, mast and
block makers, ship chandlers, marine storekeepers, compass and nautical
instrument makers, marine engineers, engineers, boiler makers, ship builders,
dry-dock keepers, slip keepers, boat builders, ship and boat repairers, ship and
boat outfitters, salvors, wreck removers, wreck raisers, divers, auctioneers,
valuers, assessors, stevedores, wharfingers, carriers, forwarding agents, and
all other branches of business usually or conveniently connected with any such
business as aforesaid.
(c) To enter into, take over, negotiate or otherwise acquire, any
contract or contracts for the construction, building, equipping, fitting out,
storing, gearing or otherwise relating to any steamship, ship, trawler, catcher,
carrier, drifter, fishing boat, boat, or other vessel whatsoever, and to enter
into, take over, negotiate or otherwise acquire any other contract or contracts
whatever which the Company may think necessary, desirable or convenient for the
purposes of the Company or any of them, and to enter into, take over, negotiate,
or otherwise acquire any such contract or contracts at such prices and for such
considerations, and upon such terms and conditions, and subject to such
stipulations and agreements as the Company may determine, and at any time and
from time to time vary, modify, alter or cancel any such contract.
<PAGE>
3
(d) To acquire concessions or licences for the establishment and
working of lines of ships or other vessels between any ports of the world, or
for the formation or working of any railway or tramway, wharf, pier, dock, or
other works, or for the working of any coaches or other public conveyances, with
the benefit of any subsidy attached to any such concession or licence or
otherwise.
(e) To insure the vessels and other property of the Company in any
manner.
(f) To grant loans on ships and vessels or on goods and merchandise
carried or to be carried in any vessels and to buy and sell merchandise for
freighting on the ships and vessels of the Company.
(g) To engage in any and all kinds of business and other activities
with respect to oil, gas and other materials, and the products and by-products
thereof, including but not by way of limitation, exploration, developing,
drilling, producing, refining, processing, mining, confining, manufacturing,
storing, transporting, distributing, trading, buying, selling and all other
activities pertinent thereto.
(h) To resell or sublet any concession or licence obtained, or contract
entered into.
(i) To carry on the business of an investment company and to act as
promoters and entrepreneurs and to carry on business as financiers, capitalists,
concessionaires, merchants, brokers, traders, dealers, agents, importers and
exporters and to undertake and carry on and execute all kinds of investment,
financial, commercial, mercantile, trading and other operations.
<PAGE>
4
(j) To carry on whether as principals, agents or otherwise howsoever
the business of realtors, developers, consultants, estate agents or managers,
builders, contractors, engineers, manufacturers, dealers in or vendors of all
types of property including services.
(ii) To exercise and enforce all rights and powers conferred by or incidental to
the ownership of any shares, stock, obligations or other securities including
without prejudice to the generality of the foregoing all such powers of veto or
control as may be conferred by virtue of the holding by the Company of some
special proportion of the issued or nominal amount thereof, to provide
managerial and other executive, supervisory and consultant services for or in
relation to any company in which the Company is interested upon such terms as
may be thought fit.
(iii) To purchase or otherwise acquire, to sell, exchange, surrender, lease,
mortgage, charge, convert, turn to account, dispose of and deal with real and
personal property and rights of all kinds and, in particular, mortgages,
debentures, produce, concessions, options, contracts, patents, annuities,
licences, stocks, shares, bonds, policies, book debts, business concerns,
undertakings, claims, privileges and choses in action of all kinds.
(iv) To subscribe for, conditionally or unconditionally, to underwrite, issue on
commission or otherwise, take, hold, deal in and convert stocks, shares and
securities of all kinds and to enter into partnership or into any arrangement
for sharing profits, reciprocal concessions or cooperation with any person or
company and to promote and aid in promoting, to constitute, form or organise any
company, syndicate or partnership of any kind, for the purpose of acquiring and
undertaking any property and liabilities of the Company or of advancing,
directly or
<PAGE>
5
indirectly, the objects of the Company or for any other purpose which the
Company may think expedient.
(v) To stand surety for or to guarantee, support or secure the performance of
all or any of the obligations of any person, firm or company whether or not
related or affiliated to the Company in any manner and whether by personal
covenant or by mortgage, charge or lien upon the whole or any part of the
undertaking, property and assets of the Company, both present and future,
including its uncalled capital or by any such method and whether or not the
Company shall receive valuable consideration therefor.
(vi) To engage in or carry on any other lawful trade, business or enterprise
which may at any time appear to the Directors of the Company capable of being
conveniently carried on in conjunction with any of the aforementioned businesses
or activities or which may appear to the Directors or the Company likely to be
profitable to the Company. In the interpretation of this Memorandum of
Association in general and of this Clause 3 in particular no object, business or
power specified or mentioned shall be limited or restricted by reference to or
inference from any other object, business or power, or the name of the Company,
or by the juxtaposition of two or more objects, businesses or powers and that,
in the event of any ambiguity in this clause or elsewhere in this Memorandum of
Association, the same shall be resolved by such interpretation and construction
as will widen and enlarge and not restrict the objects, businesses and powers of
and exercisable by the Company.
4. Except as prohibited or limited by the Companies Law (1995 Revision), the
Company shall have full power and authority to carry out any object and shall
have and be capable
<PAGE>
6
of from time to time and at all times exercising any and all of the powers at
any time or from time to time exercisable by a natural person or body corporate
in doing in any part of the world whether as principal, agent, contractor or
otherwise whatever may be considered by it necessary for the attainment of its
objects and whatever else may be considered by it as incidental or conducive
thereto or consequential thereon, including, but without in any way restricting
the generality of the foregoing, the power to make any alterations or amendments
to this Memorandum of Association and the Articles of Association of the Company
considered necessary or convenient in the manner set out in the Articles of
Association of the Company, and the power to do any of the following acts or
things, viz:
to pay all expenses of and incidental to the promotion, formation and
incorporation of the Company; to register the Company to do business in any
other jurisdiction; to sell, lease or dispose of any property of the Company; to
draw, make, accept, endorse, discount, execute and issue promissory notes,
debentures, bills of exchange, bills of lading, warrants and other negotiable or
transferable instruments; to lend money or other assets and to act as
guarantors; to borrow or raise money on the security of the undertaking or on
all or any of the assets of the Company including uncalled capital or without
security; to invest monies of the Company in such manner as the Directors
determine; to promote other companies; to sell the undertaking of the Company
for cash or any other consideration; to distribute assets in specie to members
of the Company; to make charitable or benevolent donations; to pay pensions or
gratuities or provide other benefits in cash or kind to Directors, officers,
employees, past or present and their families; to carry on any trade or business
and generally to do all acts and things which, in the opinion of
<PAGE>
7
the Company or the Directors, may be conveniently or profitably or usefully
acquired and dealt with, carried on, executed or done by the Company in
connection with the business aforesaid PROVIDED THAT the Company shall only
carry on the businesses for which a licence is required under the laws of the
Cayman Islands when so licensed under the terms of such laws.
5. The liability of each member is limited to the amount from time to time
unpaid on such member's shares.
6. The share capital of the Company is US$50,000 divided into 50,000 shares of a
nominal or par value of US$1.00 each with power for the Company insofar as is
permitted by law, to redeem or purchase any of its shares and to increase or
reduce the said capital subject to the provisions of the Companies Law (1995
Revision) and the Articles of Association and to issue any part of its capital,
whether original, redeemed or increased with or without any preference, priority
or special privilege or subject to any postponement of rights or to any
conditions or restrictions and so that unless the conditions of issue shall
otherwise expressly declare every issue of shares whether declared to be
preference or otherwise shall be subject to the powers hereinbefore contained.
7. If the Company is registered as exempted, its operations will be carried on
subject to the provisions of Section l92 of the Companies Law (1995 Revision)
and subject to the provisions of the Companies Law (1995 Revision) and the
Articles of Association it shall have the power to register by way of
continuation as a body corporate limited by shares under the laws of any
jurisdiction outside the Cayman Islands and to be deregistered in the Cayman
Islands.
<PAGE>
8
WE the several persons whose names and addresses are subscribed are desirous of
being formed into a company in pursuance of this Memorandum of Association and
we respectively agree to take the number of shares in the capital of the Company
set opposite our respective names.
<PAGE>
THE COMPANIES LAW (1995 REVISION)
---------------------------------
COMPANY LIMITED BY SHARES
-------------------------
ARTICLES OF ASSOCIATION
OF
MILLENIUM MAJESTIC, INC.
INTERPRETATION
--------------
1. In these Articles Table A in the Schedule to the Statute does not apply and,
unless there be something in the subject or context inconsistent therewith,
"Articles" means these Articles as originally framed
or as from time to time altered by Special
Resolution.
"Auditors" means the persons for the time being
performing the duties of auditors of the
Company.
"Company" means the above-named Company.
"debenture" means debenture stock, mortgages, bonds
and any other such securities of the
Company whether constituting a charge on
the assets of the Company or not.
"Directors" means the directors for the time being of
the Company.
"dividend" includes bonus.
"Member" shall bear the meaning as ascribed to it
in the Statute.
"month" means calendar month.
"paid-up" means paid-up and/or credited as paid-up.
"registered office" means the registered office for the time
being of the Company.
"Seal" means the common seal of the Company and
includes every duplicate seal.
<PAGE>
2
"Secretary" includes an Assistant Secretary and any
person appointed to perform the duties of
Secretary of the Company.
"share" includes a fraction of a share.
"Special Resolution" has the same meaning as in the Statute and
includes a resolution approved in writing
as described therein.
"Statute" means the Companies Law of the Cayman
Islands as amended and every statutory
modification or re-enactment thereof for
the time being in force.
"written" and "in writing" include all modes of representing or
reproducing words in visible form.
Words importing the singular number only include the plural number and
vice-versa.
Words importing the masculine gender only include the feminine gender.
Words importing persons only include corporations.
2. The business of the Company may be commenced as soon after incorporation as
the Directors shall see fit, notwithstanding that part only of the shares may
have been allotted.
3. The Directors may pay, out of the capital or any other monies of the Company,
all expenses incurred in or about the formation and establishment of the Company
including the expenses of registration.
CERTIFICATES FOR SHARES
-----------------------
4. Certificates representing shares of the Company shall be in such form as
shall be determined by the Directors. Such certificates may be under Seal. All
certificates for shares shall be consecutively numbered or otherwise identified
and shall specify the shares to which they relate. The name and address of the
person to whom the shares represented thereby are issued, with the number of
shares and date of issue, shall be entered in the register of Members of the
Company. All certificates surrendered to the Company for transfer shall be
cancelled and no new certificate shall be issued until the former certificate
for a like number of shares shall have been surrendered and cancelled. The
Directors may authorise certificates to be issued with the seal and authorised
signature(s) affixed by some method or system of mechanical process.
<PAGE>
3
5. Notwithstanding Article 4 of these Articles, if a share certificate be
defaced, lost or destroyed, it may be renewed on payment of a fee of one dollar
(US$l.00) or such less sum and on such terms (if any) as to evidence and
indemnity and the payment of the expenses incurred by
the Company in investigating evidence, as the Directors may prescribe.
ISSUE OF SHARES
---------------
6. Subject to the provisions, if any, in that behalf in the Memorandum of
Association and to any direction that may be given by the Company in general
meeting and without prejudice to any special rights previously conferred on the
holders of existing shares, the Directors may allot, issue, grant options over
or otherwise dispose of shares of the Company (including fractions of a share)
with or without preferred, deferred or other special rights or restrictions,
whether in regard to dividend, voting, return of capital or otherwise and to
such persons, at such times and on such other terms as they think proper.
7. The Company shall maintain a register of its Members and every person whose
name is entered as a Member in the register of Members shall be entitled without
payment to receive within two months after allotment or lodgement of transfer
(or within such other period as the conditions of issue shall provide) one
certificate for all his shares or several certificates each for one or more of
his shares upon payment of fifty cents (US$0.50) for every certificate after the
first or such less sum as the Directors shall from time to time determine
provided that in respect of a share or shares held jointly by several persons
the Company shall not be bound to issue more than one certificate and delivery
of a certificate for a share to one of the several joint holders shall be
sufficient delivery to all such holders.
TRANSFER OF SHARES
------------------
8. The instrument of transfer of any share shall be in writing and shall be
executed by or on behalf of the transferor and the transferor shall be deemed to
remain the holder of a share until the name of the transferee is entered in the
register in respect thereof.
9. The Directors may in their absolute discretion decline to register any
transfer of shares without assigning any reason therefor. If the Directors
refuse to register a transfer they shall notify the transferee within two months
of such refusal.
10. The registration of transfers may be suspended at such time and for such
periods as the Directors may from time to time determine, provided always that
such registration shall not be suspended for more than forty-five days in any
year.
<PAGE>
4
REDEEMABLE SHARES
-----------------
11. (a) Subject to the provisions of the Statute and the Memorandum of
Association, shares may be issued on the terms that they are, or at the option
of the Company or the holder are, to be redeemed on such terms and in such
manner as the Company, before the issue of the shares, may by Special Resolution
determine.
(b) Subject to the provisions of the Statute and the Memorandum of
Association, the Company may purchase its own shares (including fractions of a
share), including any redeemable shares, provided that the manner of purchase
has first been authorised by the Company in general meeting and may make payment
therefor in any manner authorised by the Statute, including out of capital.
VARIATION OF RIGHTS OF SHARES
-----------------------------
12. If at any time the share capital of the Company 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, whether or not the
Company is being wound-up, be varied with the consent in writing of the holders
of three-fourths of the issued shares of that class, or with the sanction of a
Special Resolution passed at a general meeting of the holders of the shares of
that class.
The provisions of these Articles relating to general meetings
shall apply to every such general meeting of the holders of one class of shares
except that the necessary quorum shall be one person holding or representing by
proxy at least 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.
13. The rights conferred upon the holders of the shares of any class issued with
preferred or other rights shall not, unless otherwise expressly provided by the
terms of issue of the shares of that class, be deemed to be varied by the
creation or issue of further shares ranking
pari passu therewith.
COMMISSION ON SALE OF SHARES
----------------------------
14. The Company may in so far as the Statute from time to time permits pay a
commission to any person in consideration of his subscribing or agreeing to
subscribe whether absolutely or conditionally for any shares of the Company.
Such commissions may be satisfied by the payment of cash or the lodgement of
fully or partly paid-up shares or partly in one way and partly in the other. The
Company may also on any issue of shares pay such brokerage as may be lawful.
<PAGE>
5
NON-RECOGNITION OF TRUSTS
-------------------------
15. No person shall be recognised by the Company as holding any share upon any
trust and the Company shall not be bound by or be compelled in any way to
recognise (even when having notice thereof) any equitable, contingent, future,
or partial interest in any share, or any interest in any fractional part of a
share, or (except only as is otherwise provided by these Articles or the
Statute) any other rights in respect of any share except an absolute right to
the entirety thereof in the registered holder.
LIEN ON SHARES
--------------
16. The Company shall have a first and paramount lien and charge on all shares
(whether fully paid-up or not) registered in the name of a Member (whether
solely or jointly with others) for all debts, liabilities or engagements to or
with the Company (whether presently payable or not) by such Member or his
estate, either alone or jointly with any other person, whether a Member or not,
but the Directors may at any time declare any share to be wholly or in part
exempt from the provisions of this Article. The registration of a transfer of
any such share shall operate as a waiver of the Company's lien (if any) thereon.
The Company's lien (if any) on a share shall extend to all dividends or other
monies payable in respect thereof.
17. The Company may sell, in such manner as the Directors think fit, any shares
on which the Company has a lien, but no sale shall be made unless a sum in
respect of which the lien exists is presently payable, nor until the expiration
of fourteen days after a notice in writing stating and demanding payment of such
part of the amount in respect of which the lien exists as is presently payable,
has been given to the registered holder or holders for the time being of the
share, or the person, of which the Company has notice, entitled thereto by
reason of his death or bankruptcy.
18. To give effect to any such sale the Directors may authorise some person to
transfer the shares sold to the purchaser thereof. The purchaser shall be
registered as the holder of the shares comprised in any such transfer, and he
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 or invalidity in the
proceedings in reference to the sale.
19. The proceeds of such sale shall be received by the Company and applied in
payment of such part of the amount in respect of which the lien exists as is
presently payable and the residue, if any, shall (subject to a like lien for
sums 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.
<PAGE>
6
CALL ON SHARES
--------------
20. (a) The Directors may from time to time make calls upon the Members in
respect of any monies unpaid on their shares (whether on account of the nominal
value of the shares or by way of premium or otherwise) and not by the conditions
of allotment thereof made payable at fixed terms, provided that no call shall be
payable at less than one month from the date fixed for the payment of the last
preceding call, and each Member shall (subject to receiving at least fourteen
days notice specifying the time or times of payment) pay to the Company at the
time or times so specified the amount called on the shares. A call may be
revoked or postponed as the Directors may determine. A call may be made payable
by instalments.
(b) A call shall be deemed to have been made at the time when the
resolution of the Directors authorising such call was passed.
(c) The joint holders of a share shall be jointly and severally liable
to pay all calls in respect thereof.
21. If a sum called in respect of a share is not paid before or on a day
appointed for payment thereof, the persons from whom the sum is due shall pay
interest on the sum from the day appointed for payment thereof to the time of
actual payment at such rate not exceeding ten per cent per annum as the
Directors may determine, but the Directors shall be at liberty to waive payment
of such interest either wholly or in part.
22. Any sum which by the terms of issue of a share becomes payable on allotment
or at any fixed date, whether on account of the nominal value of the share or by
way of premium or otherwise, shall for the purposes of these Articles be deemed
to be a call duly made, notified and payable on the date on which by the terms
of issue the same becomes payable, and in the case of non-payment all the
relevant provisions of these Articles as to payment of interest forfeiture or
otherwise shall apply as if such sum had become payable by virtue of a call duly
made and notified.
23. The Directors may, on the issue of shares, differentiate between the holders
as to the amount of calls or interest to be paid and the times of payment.
24. (a) The Directors may, if they think fit, receive from any Member willing to
advance the same, all or any part of the monies uncalled and unpaid upon any
shares held by him, and upon all or any of the monies so advanced may (until the
same would but for such advances, become payable) pay interest at such rate not
exceeding (unless the Company in general meeting shall otherwise direct) seven
per cent per annum, as may be agreed upon between the Directors and the Member
paying such sum in advance.
<PAGE>
7
(b) No such sum paid in advance of calls shall entitle the Member
paying such sum to any portion of a dividend declared in respect of any period
prior to the date upon which such sum would, but for such payment, become
presently payable.
FORFEITURE OF SHARES
--------------------
25. (a) If a Member fails to pay any call or instalment of a call or to make any
payment required by the terms of issue on the day appointed for payment thereof,
the Directors may, at any time thereafter during such time as any part of the
call, instalment or payment remains unpaid, give notice requiring payment of so
much of the call, instalment or payment as is unpaid, together with any interest
which may have accrued and all expenses that have been incurred by the Company
by reason of such non-payment. Such notice shall name a day (not earlier than
the expiration of fourteen days from the date of giving of the notice) on or
before which the payment required by the notice is to be made, and shall state
that, in the event of non-payment at or before the time appointed the shares in
respect of which such notice was given will be liable to be forfeited.
(b) If the requirements of any such notice as aforesaid are not
complied with, any share in respect of which the notice has been given may at
any time thereafter, before the payment required by the notice has been made, be
forfeited by a resolution of the Directors to that effect. Such forfeiture shall
include all dividends declared in respect of the forfeited share and not
actually paid before the forfeiture.
(c) A forfeited share may be sold or otherwise disposed of on such
terms and in such manner as the Directors think fit and at any time before a
sale or disposition the forfeiture may be cancelled on such terms as the
Directors think fit.
26. A person whose shares have been forfeited shall cease to be a Member in
respect of the forfeited shares, but shall, notwithstanding, remain liable to
pay to the Company all monies which, at the date of forfeiture were payable by
him to the Company in respect of the shares together with interest thereon, but
his liability shall cease if and when the Company shall have received payment in
full of all monies whenever payable in respect of the shares.
27. A certificate in writing under the hand of one Director or the Secretary of
the Company that a share in the Company has been duly forfeited on a date stated
in the declaration shall be conclusive evidence of the fact therein stated as
against all persons claiming to be entitled to the share. The Company may
receive the consideration given for the share on any sale or disposition thereof
and may execute a transfer of the share in favour of the person to whom the
share is sold or disposed of and he shall thereupon be registered as the holder
of the share and shall not be bound to see to the application of the purchase
money, if any, nor shall his title to the
<PAGE>
8
share be affected by any irregularity or invalidity in the proceedings in
reference to the forfeiture, sale or disposal of the share.
28. The provisions of these Articles as to forfeiture shall apply in the case of
non-payment of any sum which, by the terms of issue of a share, becomes payable
at a fixed time, whether on account of the nominal value of the share or by way
of premium as if the same had been payable by virtue of a call duly made and
notified.
REGISTRATION OF EMPOWERING INSTRUMENTS
--------------------------------------
29. The Company shall be entitled to charge a fee not exceeding one dollar
(US$l.00) on the registration of every probate, letters of administration,
certificate of death or marriage, power of attorney, notice in lieu of
distringas, or other instrument.
TRANSMISSION OF SHARES
----------------------
30. In case of the death of a Member, the survivor or survivors where the
deceased was a joint holder, and the legal personal representatives of the
deceased where he was a sole holder, shall be the only persons recognised by the
Company as having any title to his interest in the shares, but nothing herein
contained shall release the estate of any such deceased holder from any
liability in respect of any shares which had been held by him solely or jointly
with other persons.
31. (a) Any person becoming entitled to a share in consequence of the death or
bankruptcy or liquidation or dissolution of a Member (or in any other way than
by transfer) may, upon such evidence being produced as may from time to time be
required by the Directors and subject as hereinafter provided, elect either to
be registered himself as holder of the share or to make such transfer of the
share to such other person nominated by him as the deceased or bankrupt person
could have made and to have such person registered as the transferee thereof,
but the Directors shall, in either case, have the same right to decline or
suspend registration as they would have had in the case of a transfer of the
share by that Member before his death or bankruptcy as the case may be.
(b) If the person so becoming entitled shall elect to be registered
himself as holder he shall deliver or send to the Company a notice in writing
signed by him stating that he so elects.
32. A person becoming entitled to a share by reason of the death or bankruptcy
or liquidation or dissolution of the holder (or in any other case than by
transfer) shall be entitled to the same dividends and other advantages to which
he would be entitled if he were the registered holder of the share, except that
he shall not, before being registered as a Member in respect of the share, be
entitled in respect of it to exercise any right conferred by membership in
relation to meetings of the Company PROVIDED HOWEVER that the Directors may at
any time give notice
<PAGE>
9
requiring any such person to elect either to be registered himself or to
transfer the share and if the notice is not complied with within ninety days the
Directors may thereafter withhold payment of all dividends, bonuses or other
monies payable in respect of the share until the requirements of
the notice have been complied with.
AMENDMENT OF MEMORANDUM OF ASSOCIATION, CHANGE OF
LOCATION OF REGISTERED OFFICE & ALTERATION OF CAPITAL
-----------------------------------------------------
33. (a) Subject to and in so far as permitted by the provisions of the Statute,
the Company may from time to time by ordinary resolution alter or amend its
Memorandum of Association otherwise than with respect to its name and objects
and may, without restricting the generality of
the foregoing:
(i) increase the share capital by such sum to be divided
into shares of such amount or without nominal or par
value as the resolution shall prescribe and with such
rights, priorities and privileges annexed thereto, as
the Company in general meeting may determine.
(ii) consolidate and divide all or any of its share
capital into shares of larger amount than its
existing shares;
(iii) by subdivision of its existing shares or any of them
divide the whole or any part of its share capital
into shares of smaller amount than is fixed by the
Memorandum of Association or into shares without
nominal or par value;
(iv) cancel any shares which at the date of the passing of
the resolution have not been taken or agreed to be
taken by any person.
(b) All new shares created hereunder shall be subject to the same
provisions with reference to the payment of calls, liens, transfer,
transmission, forfeiture and otherwise as the shares in the original share
capital.
(c) Subject to the provisions of the Statute, the Company may by
Special Resolution change its name or alter its objects.
(d) Without prejudice to Article 11 hereof and subject to the
provisions of the Statute, the Company may by Special Resolution reduce its
share capital and any capital redemption reserve fund.
(e) Subject to the provisions of the Statute, the Company may by
resolution of the Directors change the location of its registered office.
<PAGE>
10
CLOSING REGISTER OF MEMBERS OR FIXING RECORD DATE
-------------------------------------------------
34. For the purpose of determining Members entitled to notice of or to vote at
any meeting of Members or any adjournment thereof, or Members entitled to
receive payment of any dividend, or in order to make a determination of Members
for any other proper purpose, the Directors of the Company may provide that the
register of Members shall be closed for transfers for a stated period but not to
exceed in any case forty days. If the register of Members shall be so closed for
the purpose of determining Members entitled to notice of or to vote at a meeting
of Members such register shall be so closed for at least ten days immediately
preceding such meeting and the record date for such determination shall be the
date of the closure of the register of Members.
35. In lieu of or apart from closing the register of Members, the Directors may
fix in advance a date as the record date for any such determination of Members
entitled to notice of or to vote at a meeting of the Members and for the purpose
of determining the Members entitled to receive payment of any dividend the
Directors may, at or within 90 days prior to the date of declaration of such
dividend fix a subsequent date as the record date for such determination.
36. If the register of Members is not so closed and no record date is fixed for
the determination of Members entitled to notice of or to vote at a meeting of
Members or Members entitled to receive payment of a dividend, the date on which
notice of the meeting is mailed or the date on which the resolution of the
Directors declaring such dividend is adopted, as the case may be, shall be the
record date for such determination of Members. When a determination of Members
entitled to vote at any meeting of Members has been made as provided in this
section, such determination shall apply to any adjournment thereof.
GENERAL MEETING
---------------
37. (a) Subject to paragraph (c) hereof, the Company shall within one year of
its incorporation and in each year of its existence thereafter hold a general
meeting as its annual general meeting and shall specify the meeting as such in
the notices calling it. The annual general meeting shall be held at such time
and place as the Directors shall appoint and if no other time and place is
prescribed by them, it shall be held at the registered office on the second
Wednesday in December of each year at ten o'clock in the morning.
(b) At these meetings the report of the Directors (if any) shall be
presented.
(c) If the Company is exempted as defined in the Statute it may but
shall not be obliged to hold an annual general meeting.
<PAGE>
11
38. (a) The Directors may whenever they think fit, and they shall on the
requisition of Members of the Company holding at the date of the deposit of the
requisition not less than one-tenth of such of the paid-up capital of the
Company as at the date of the deposit carries the right of voting at general
meetings of the Company, proceed to convene a general meeting of the
Company.
(b) The requisition must state the objects of the meeting and must be
signed by the requisitionists and deposited at the registered office of the
Company and may consist of several documents in like form each signed by one or
more requisitionists.
(c) If the Directors do not within twenty-one days from the date of the
deposit of the requisition duly proceed to convene a general meeting, the
requisitionists, or any of them representing more than one-half of the total
voting rights of all of them, may themselves convene a general meeting, but any
meeting so convened shall not be held after the expiration of three months after
the expiration of the said twenty-one days.
(d) A general meeting convened as aforesaid by requisitionists shall be
convened in the same manner as nearly as possible as that in which general
meetings are to be convened by
Directors.
NOTICE OF GENERAL MEETINGS
--------------------------
39. At least five days' notice shall be given of an annual general meeting or
any other general meeting. Every notice shall be exclusive of the day on which
it is given or deemed to be given and of the day for which it is given and shall
specify the place, the day and the hour of the meeting and the general nature of
the business and shall be given in manner hereinafter mentioned or in such other
manner if any as may be prescribed by the Company PROVIDED that a general
meeting of the Company shall, whether or not the notice specified in this
regulation has been given and whether or not the provisions of Article 38 have
been complied with, be deemed to have been duly convened if it is so agreed:
(a) in the case of a general meeting called as an annual general
meeting by all the Members entitled to attend and vote thereat
or their proxies; and
(b) in the case of any other general meeting by a majority in
number of the Members having a right to attend and vote at the
meeting, being a majority together holding not less than
seventy-five per cent in nominal value or in the case of
shares without nominal or par value seventy-five per cent of
the shares in issue, or their proxies.
<PAGE>
12
40. The accidental omission to give notice of a general meeting to, or the
non-receipt of notice of a meeting by any person entitled to receive notice
shall not invalidate the proceedings of that meeting.
PROCEEDINGS AT GENERAL MEETINGS
-------------------------------
41. No business shall be transacted at any general meeting unless a quorum of
Members is present at the time when the meeting proceeds to business; two
Members present in person or by proxy shall be a quorum provided always that if
the Company has one Member of record the quorum shall be that one Member present
in person or by proxy.
42. A resolution (including a Special Resolution) in writing (in one or more
counterparts) signed by all Members for the time being entitled to receive
notice of and to attend and vote at general meetings (or being corporations by
their duly authorised representatives) shall be as valid and effective as if the
same had been passed at a general meeting of the Company duly convened and held.
43. If within half an hour from the time appointed for the meeting a quorum is
not present, the meeting, if convened upon the requisition of Members, shall be
dissolved and in any other case it shall stand adjourned to the same day in the
next week at the same time and place or to such other time or such other place
as the Directors may determine and if at the adjourned meeting a quorum is not
present within half an hour from the time appointed for the meeting the Members
present shall be a quorum.
44. The Chairman, if any, of the Board of Directors shall preside as Chairman at
every general meeting of the Company, or if there is no such Chairman, or if he
shall not be present within fifteen minutes after the time appointed for the
holding of the meeting, or is unwilling to act, the Directors present shall
elect one of their number to be Chairman of the meeting.
45. If at any general meeting 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 shall choose one of their number to be Chairman
of the meeting.
46. The Chairman may, with the consent of any general meeting duly constituted
hereunder, 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 any
adjourned meeting other than the business left unfinished at the meeting from
which the adjournment took place. When a general meeting is adjourned for thirty
days or more, notice of the adjourned meeting shall be given as in the case of
an original meeting; save as aforesaid it shall not be necessary to give any
notice of an adjournment or of the business to be transacted at an adjourned
general meeting.
<PAGE>
13
47. At any general meeting a resolution put to the vote of the meeting shall be
decided on a show of hands unless a poll is, before or on the declaration of the
result of the show of hands, demanded by the Chairman or any other Member
present in person or by proxy.
48. Unless a poll be so demanded a declaration by the Chairman that a resolution
has on a show of hands been carried, or carried unanimously, or by a particular
majority, or lost, and an entry to that effect in the Company's Minute Book
containing the Minutes of the proceedings of the meeting shall be conclusive
evidence of that fact without proof of the number or proportion of the votes
recorded in favour of or against such resolution.
49. The demand for a poll may be withdrawn.
50. Except as provided in Article 52, if a poll is duly demanded it shall be
taken in such manner as the Chairman directs and the result of the poll shall be
deemed to be the resolution of the general meeting at which the poll was
demanded.
51. In the case of an equality of votes, whether on a show of hands or on a
poll, the Chairman of the general meeting at which the show of hands takes place
or at which the poll is demanded, shall be entitled to a second or casting vote.
52. 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 at such time as the Chairman of the general meeting directs and
any business other than that upon which a poll has been demanded or is
contingent thereon may be proceeded with pending the taking of the poll.
VOTES OF MEMBERS
----------------
53. Subject to any rights or restrictions for the time being attached to any
class or classes of shares, on a show of hands every Member of record present in
person or by proxy at a general meeting shall have one vote and on a poll every
Member of record present in person or by proxy shall have one vote for each
share registered in his name in the register of Members.
54. In the case of joint holders of record 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 for this purpose seniority shall be
determined by the order in which the names stand
in the register of Members.
55. A Member of unsound mind, or in respect of whom an order has been made by
any court, having jurisdiction in lunacy, may vote, whether on a show of hands
or on a poll, by his committee, receiver, curator bonis, or other person in the
nature of a committee, receiver or
<PAGE>
14
curator bonis appointed by that court, and any such committee, receiver, curator
bonis or other persons may vote by proxy.
56. No Member shall be entitled to vote at any general meeting unless he is
registered as a shareholder of the Company on the record date for such meeting
nor unless all calls or other sums presently payable by him in respect of shares
in the Company have been paid.
57. No objection shall be raised to the qualification of any voter except at the
general meeting or adjourned general meeting at which the vote objected to is
given or tendered and every vote not disallowed at such general meeting shall be
valid for all purposes. Any such objection made in due time shall be referred to
the Chairman of the general meeting whose decision shall be final and
conclusive.
58. On a poll or on a show of hands votes may be given either personally or by
proxy.
PROXIES
-------
59. The instrument appointing a proxy shall be in writing and shall be executed
under the hand of the appointor or of his attorney duly authorised in writing,
or, if the appointor is a corporation under the hand of an officer or attorney
duly authorised in that behalf. A proxy need not be a Member of the Company.
60. The instrument appointing a proxy shall be deposited at the registered
office of the Company or at such other place as is specified for that purpose in
the notice convening the meeting no later than the time for holding the meeting,
or adjourned meeting provided that the Chairman of the Meeting may at his
discretion direct that an instrument of proxy shall be deemed to have been duly
deposited upon receipt of telex, cable or telecopy confirmation from the
appointor that the instrument of proxy duly signed is in the course of
transmission to the Company.
61. The instrument appointing a proxy may be in any usual or common form and may
be expressed to be for a particular meeting or any adjournment thereof or
generally until revoked. An instrument appointing a proxy shall be deemed to
include the power to demand or join or concur in demanding a poll.
62. A vote given in accordance with the terms of an instrument of proxy shall be
valid notwithstanding the previous death or insanity of the principal or
revocation of the proxy or of the authority under which the proxy was executed,
or the transfer of the share in respect of which the proxy is given provided
that no intimation in writing of such death, insanity, revocation or transfer as
aforesaid shall have been received by the Company at the registered office
before the commencement of the general meeting, or adjourned meeting at which it
is sought to use the proxy.
<PAGE>
15
63. Any corporation which is a Member of record of the Company may in accordance
with its Articles or in the absence of such provision by resolution of its
Directors or other governing body authorise such person as it thinks fit to act
as its representative at any meeting of the Company or of any class of Members
of the Company, and the person so authorised shall be entitled to exercise the
same powers on behalf of the corporation which he represents as the corporation
could exercise if it were an individual Member of record of the Company.
64. Shares of its own capital belonging to the Company or held by it in a
fiduciary capacity shall not be voted, directly or indirectly, at any meeting
and shall not be counted in determining the total number of outstanding shares
at any given time.
DIRECTORS
---------
65. There shall be a Board of Directors consisting of not less than one or more
than ten persons (exclusive of alternate Directors) PROVIDED HOWEVER that the
Company may from time to time by ordinary resolution increase or reduce the
limits in the number of Directors. The first Directors of the Company shall be
determined in writing by, or appointed by a resolution of, the subscribers of
the Memorandum of Association or a majority of them.
66. The remuneration to be paid to the Directors shall be such remuneration as
the Directors shall determine. Such remuneration shall be deemed to accrue from
day to day. The Directors shall also be entitled to be paid their travelling,
hotel and other expenses properly incurred by them in going to, attending and
returning from meetings of the Directors, or any committee of the Directors, or
general meetings of the Company, or otherwise in connection with the business of
the Company, or to receive a fixed allowance in respect thereof as may be
determined by the Directors from time to time, or a combination partly of one
such method and partly the other.
67. The Directors may by resolution award special remuneration to any Director
of the Company undertaking any special work or services for, or undertaking any
special mission on behalf of, the Company other than his ordinary routine work
as a Director. Any fees paid to a Director who is also counsel or solicitor to
the Company, or otherwise serves it in a professional capacity shall be in
addition to his remuneration as a Director.
68. A Director or alternate Director may hold any other office or place of
profit under the Company (other than the office of Auditor) in conjunction with
his office of Director for such period and on such terms as to remuneration and
otherwise as the Directors may determine.
69. A Director or alternate Director may act by himself or his firm in a
professional capacity for the Company and he or his firm shall be entitled to
remuneration for professional services as if he were not a Director or alternate
Director.
<PAGE>
16
70. A shareholding qualification for Directors may be fixed by the Company in
general meeting, but unless and until so fixed no qualification shall be
required.
71. A Director or alternate Director of the Company may be or become a director
or other officer of or otherwise interested in any company promoted by the
Company or in which the Company may be interested as shareholder or otherwise
and no such Director or alternate Director shall be accountable to the Company
for any remuneration or other benefits received by him as a director or officer
of, or from his interest in, such other company.
72. No person shall be disqualified from the office of Director or alternate
Director or prevented by such office from contracting with the Company, either
as vendor, purchaser or otherwise, nor shall any such contract or any contract
or transaction entered into by or on behalf of the Company in which any Director
or alternate Director shall be in any way interested be or be liable to be
avoided, nor shall any Director or alternate Director so contracting or being so
interested be liable to account to the Company for any profit realised by any
such contract or transaction by reason of such Director holding office or of the
fiduciary relation thereby established. A Director (or his alternate Director in
his absence) shall be at liberty to vote in respect of any contract or
transaction in which he is so interested as aforesaid PROVIDED HOWEVER that the
nature of the interest of any Director or alternate Director in any such
contract or transaction shall be disclosed by him or the alternate Director
appointed by him at or prior to its consideration and any vote thereon.
73. A general notice that a Director or alternate Director is a shareholder of
any specified firm or company and is to be regarded as interested in any
transaction with such firm or company shall be sufficient disclosure under
Article 72 and after such general notice it shall not be necessary to give
special notice relating to any particular transaction.
ALTERNATE DIRECTORS
-------------------
74. Subject to the exception contained in Article 82, a Director who expects to
be unable to attend Directors' Meetings because of absence, illness or otherwise
may appoint any person to be an alternate Director to act in his stead and such
appointee whilst he holds office as an alternate Director shall, in the event of
absence therefrom of his appointor, be entitled to attend meetings of the
Directors and to vote thereat and to do, in the place and stead of his
appointor, any other act or thing which his appointor is permitted or required
to do by virtue of his being a Director as if the alternate Director were the
appointor, other than appointment of an alternate to himself, and he shall ipso
facto vacate office if and when his appointor ceases to be a Director or removes
the appointee from office. Any appointment or removal under this Article shall
be effected by notice in writing under the hand of the Director making the same.
<PAGE>
17
POWERS AND DUTIES OF DIRECTORS
------------------------------
75. The business of the Company shall be managed by the Directors (or a sole
Director if only one is appointed) who may pay all expenses incurred in
promoting, registering and setting up the Company, and may exercise all such
powers of the Company as are not, from time to time by the Statute, or by these
Articles, or such regulations, being not inconsistent with the aforesaid, as may
be prescribed by the Company in general meeting required to be exercised by the
Company in general meeting PROVIDED HOWEVER that no regulations made by the
Company in general meeting shall invalidate any prior act of the Directors which
would have been valid if that regulation had not been made.
76. The Directors may from time to time and at any time by powers of attorney
appoint any company, firm, person or body of persons, whether nominated directly
or indirectly by the Directors, to be the attorney or attorneys of the Company
for such purpose and with such powers, authorities and discretions (not
exceeding those vested in or exercisable by the Directors under these Articles)
and for such period and subject to such conditions as they may think fit, and
any such powers of attorney may contain such provisions for the protection and
convenience of persons dealing with any such attorneys as the Directors may
think fit and may also authorise any such attorney to delegate all or any of the
powers, authorities and discretions vested in him.
77. All cheques, promissory notes, drafts, bills of exchange and other
negotiable instruments and all receipts for monies paid to the Company shall be
signed, drawn, accepted, endorsed or otherwise executed as the case may be in
such manner as the Directors shall from time
to time by resolution determine.
78. The Directors shall cause minutes to be made in books provided for the
purpose:
(a) of all appointments of officers made by the Directors;
(b) of the names of the Directors (including those represented
thereat by an alternate or by proxy) present at each meeting
of the Directors and of any committee of the
Directors;
(c) of all resolutions and proceedings at all meetings of the
Company and of the Directors and of committees of Directors.
79. The Directors on behalf of the Company may pay a gratuity or pension or
allowance on retirement to any Director who has held any other salaried office
or place of profit with the Company or to his widow or dependants and may make
contributions to any fund and pay premiums for the purchase or provision of any
such gratuity, pension or allowance.
<PAGE>
18
80. The Directors may exercise all the powers of the Company to borrow money and
to mortgage or charge its undertaking, property and uncalled capital or any part
thereof and to issue debentures, debenture stock and other securities whether
outright or as security for any debt, liability or obligation of the Company or
of any third party.
MANAGEMENT
----------
81. (a) The Directors may from time to time provide for the management of the
affairs of the Company in such manner as they shall think fit and the provisions
contained in the three next following paragraphs shall be without prejudice to
the general powers conferred by this paragraph.
(b) The Directors from time to time and at any time may establish any
committees, local boards or agencies for managing any of the affairs of the
Company and may appoint any persons to be members of such committees or local
boards or any managers or agents and may fix their remuneration.
(c) The Directors from time to time and at any time may delegate to any
such committee, local board, manager or agent any of the powers, authorities and
discretions for the time being vested in the Directors and may authorise the
members for the time being of any such local board, or any of them to fill up
any vacancies therein and to act notwithstanding vacancies and any such
appointment or delegation may be made on such terms and subject to such
conditions as the Directors may think fit and the Directors may at any time
remove any person so appointed and may annul or vary any such delegation, but no
person dealing in good faith and without notice of any such annulment or
variation shall be affected thereby.
(d) Any such delegates as aforesaid may be authorised by the Directors
to subdelegate all or any of the powers, authorities, and discretions for the
time being vested in them.
MANAGING DIRECTORS
------------------
82. The Directors may, from time to time, appoint one or more of their body (but
not an alternate Director) to the office of Managing Director for such term and
at such remuneration (whether by way of salary, or commission, or participation
in profits, or partly in one way and partly in another) as they may think fit
but his appointment shall be subject to determination ipso facto if he ceases
from any cause to be a Director and no alternate Director appointed by him can
act in his stead as a Director or Managing Director.
83. The Directors may entrust to and confer upon a Managing Director any of the
powers exercisable by them upon such terms and conditions and with such
restrictions as they may think fit and either collaterally with or to the
exclusion of their own powers and may from time to time revoke, withdraw, alter
or vary all or any of such powers.
<PAGE>
19
PROCEEDINGS OF DIRECTORS
------------------------
84. Except as otherwise provided by these Articles, the Directors shall meet
together for the despatch of business, convening, adjourning and otherwise
regulating their meetings as they think fit. Questions arising at any meeting
shall be decided by a majority of votes of the Directors and alternate Directors
present at a meeting at which there is a quorum, the vote of an alternate
Director not being counted if his appointor be present at such meeting. In case
of an equality of votes, the Chairman shall have a second or casting vote.
85. A Director or alternate Director may, and the Secretary on the requisition
of a Director or alternate Director shall, at any time summon a meeting of the
Directors by at least two days' notice in writing to every Director and
alternate Director which notice shall set forth the general nature of the
business to be considered unless notice is waived by all the Directors (or their
alternates) either at, before or after the meeting is held and PROVIDED FURTHER
if notice is given in person, by cable, telex or telecopy the same shall be
deemed to have been given on the day it is delivered to the Directors or
transmitting organisation as the case may be. The provisions of Article 40 shall
apply mutatis mutandis with respect to notices of meetings of Directors.
86. The quorum necessary for the transaction of the business of the Directors
may be fixed by the Directors and unless so fixed shall be two, a Director and
his appointed alternate Director being considered only one person for this
purpose, PROVIDED ALWAYS that if there shall at any time be only a sole Director
the quorum shall be one. For the purposes of this Article an alternate Director
or proxy appointed by a Director shall be counted in a quorum at a meeting at
which the Director appointing him is not present.
87. The continuing Directors may act notwithstanding any vacancy in their body,
but if and so long as their number is reduced below the number fixed by or
pursuant to these Articles as the necessary quorum of Directors the continuing
Directors or Director may act for the purpose of increasing the number of
Directors to that number, or of summoning a general meeting of the Company, but
for no other purpose.
88. The Directors may elect a Chairman of their Board and determine the period
for which he is to hold office; but if no such Chairman is elected, or if at any
meeting the Chairman is not present within five minutes after the time appointed
for holding the same, the Directors present may choose one of their number to be
Chairman of the meeting.
89. The Directors may delegate any of their powers to committees consisting of
such member or members of the Board of Directors (including Alternate Directors
in the absence of their appointors) as they think fit; any committee so formed
shall in the exercise of the powers so delegated conform to any regulations that
may be imposed on it by the Directors.
<PAGE>
20
90. A committee may meet and adjourn as it thinks proper. Questions arising at
any meeting shall be determined by a majority of votes of the members present,
and in the case of an equality of votes the Chairman shall have a second or
casting vote.
91. All acts done by any meeting of the Directors or of a committee of Directors
(including any person acting as an alternate Director) shall, notwithstanding
that it be afterwards discovered that there was some defect in the appointment
of any Director or alternate Director, or that they or any of them were
disqualified, be as valid as if every such person had been duly appointed and
qualified to be a Director or alternate Director as the case may be.
92. Members of the Board of Directors or of any committee thereof may
participate in a meeting of the Board or of such 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 participation in a
meeting pursuant to this provision shall constitute presence in person at such
meeting. A resolution in writing (in one or more counterparts), signed by all
the Directors for the time being or all the members of a committee of Directors
(an alternate Director being entitled to sign such resolution on behalf of his
appointor) shall be as valid and effectual as if it had been passed at a meeting
of the Directors or committee as the case may be duly convened and held.
93. (a) A Director may be represented at any meetings of the Board of Directors
by a proxy appointed by him in which event the presence or vote of the proxy
shall for all purposes be deemed to be that of the Director.
(b) The provisions of Articles 59-62 shall mutatis mutandis apply to
the appointment of proxies by Directors.
VACATION OF OFFICE OF DIRECTOR
------------------------------
94. The office of a Director shall be vacated:
(a) if he gives notice in writing to the Company that he resigns
the office of Director;
(b) if he absents himself (without being represented by proxy or
an alternate Director appointed by him) from three consecutive
meetings of the Board of Directors without special leave of
absence from the Directors, and they pass a resolution that he
has by reason of such absence vacated office;
(c) if he dies, becomes bankrupt or makes any arrangement or
composition with his creditors generally;
<PAGE>
21
(d) if he is found a lunatic or becomes of unsound mind.
APPOINTMENT AND REMOVAL OF DIRECTORS
------------------------------------
95. The Company may by ordinary resolution appoint any person to be a Director
and may in like manner remove any Director and may in like manner appoint
another person in his stead.
96. The Directors shall have power at any time and from time to time to appoint
any person to be a Director, either to fill a casual vacancy or as an addition
to the existing Directors but so that the total amount of Directors (exclusive
of alternate Directors) shall not at any time exceed the number fixed in
accordance with these Articles.
PRESUMPTION OF ASSENT
---------------------
97. A Director of the Company who is present at a meeting of the Board of
Directors at which action on any Company matter is taken shall be presumed to
have assented to the action taken unless his dissent shall be entered in the
Minutes of the meeting or unless he shall file his written dissent from such
action with the person acting as the Secretary of the meeting before the
adjournment thereof or shall forward such dissent by registered mail to such
person immediately after the adjournment of the meeting. Such right to dissent
shall not apply to a Director who voted in favour of such action.
SEAL
----
98. (a) The Company may, if the Directors so determine, have a Seal which shall,
subject to paragraph (c) hereof, only be used by the authority of the Directors
or of a committee of the Directors authorised by the Directors in that behalf
and every instrument to which the Seal has been affixed shall be signed by one
person who shall be either a Director or the Secretary or Secretary-Treasurer or
some person appointed by the Directors for the purpose.
(b) The Company may have for use in any place or places outside the
Cayman Islands a duplicate Seal or Seals each of which shall be a facsimile of
the Common Seal of the Company and, if the Directors so determine, with the
addition on its face of the name of every place where it is to be used.
(c) A Director, Secretary or other officer or representative or
attorney may without further authority of the Directors affix the Seal of the
Company over his signature alone to any document of the Company required to be
authenticated by him under Seal or to be filed with the Registrar of Companies
in the Cayman Islands or elsewhere wheresoever.
<PAGE>
22
OFFICERS
--------
99. The Company may have a President, a Secretary or Secretary-Treasurer
appointed by the Directors who may also from time to time appoint such other
officers as they consider necessary, all for such terms, at such remuneration
and to perform such duties, and subject to such provisions as to
disqualification and removal as the Directors from time to time prescribe.
DIVIDENDS, DISTRIBUTIONS AND RESERVE
------------------------------------
100. Subject to the Statute, the Directors may from time to time declare
dividends (including interim dividends) and distributions on shares of the
Company outstanding and authorise payment of the same out of the funds of the
Company lawfully available therefor.
101. The Directors may, before declaring any dividends or distributions, set
aside such sums as they think proper as a reserve or reserves which shall at the
discretion of the Directors, be applicable for any purpose of the Company and
pending such application may, at the like discretion, be employed in the
business of the Company.
102. No dividend or distribution shall be payable except out of the profits of
the Company, realised or unrealised, or out of the share premium account or as
otherwise permitted by the Statute.
103. Subject to the rights of persons, if any, entitled to shares with special
rights as to dividends or distributions, if dividends or distributions are to be
declared on a class of shares they shall be declared and paid according to the
amounts paid or credited as paid on the shares of such class outstanding on the
record date for such dividend or distribution as determined in accordance with
these Articles but no amount paid or credited as paid on a share in advance of
calls shall be treated for the purpose of this Article as paid on the share.
104. The Directors may deduct from any dividend or distribution payable to any
Member all sums of money (if any) presently payable by him to the Company on
account of calls or otherwise.
105. The Directors may declare that any dividend or distribution be paid wholly
or partly by the distribution of specific assets and in particular of paid up
shares, debentures, or debenture stock of any other company or in any one or
more of such ways and where any difficulty arises in regard to such
distribution, the Directors may settle the same as they think expedient and in
particular may issue fractional certificates and fix the value for distribution
of such specific assets or any part thereof and may determine that cash payments
shall be made to any Members upon the footing of the value so fixed in order to
adjust the rights of all Members and may vest any such specific assets in
trustees as may seem expedient to the Directors.
<PAGE>
23
106. Any dividend, distribution, interest or other monies payable in cash in
respect of shares may be paid by cheque or warrant sent through the post
directed to the registered address of the holder or, in the case of joint
holders, to the holder who is first named on the register of Members or to such
person and to such address as such holder or joint holders may in writing
direct. Every such cheque or warrant shall be made payable to the order of the
person to whom it is sent. Any one of two or more joint holders may give
effectual receipts for any dividends, bonuses, or other monies payable in
respect of the share held by them as joint holders.
107. No dividend or distribution shall bear interest against the Company.
CAPITALISATION
--------------
108. The Company may upon the recommendation of the Directors by ordinary
resolution authorise the Directors to capitalise any sum standing to the credit
of any of the Company's reserve accounts (including share premium account and
capital redemption reserve fund) or any sum standing to the credit of profit and
loss account or otherwise available for distribution and to appropriate such sum
to Members in the proportions in which such sum would have been divisible
amongst them had the same been a distribution of profits by way of dividend and
to apply such sum on their behalf in paying up in full unissued shares for
allotment and distribution credited as fully paid up to and amongst them in the
proportion aforesaid. In such event the Directors shall do all acts and things
required to give effect to such capitalisation, with full power to the Directors
to make such provisions as they think fit for the case of shares becoming
distributable in fractions (including provisions whereby the benefit of
fractional entitlements accrue to the Company rather than to the Members
concerned). The Directors may authorise any person to enter on behalf of all of
the Members interested into an agreement with the Company providing for such
capitalisation and matters incidental thereto and any agreement made under such
authority shall be effective and binding on all concerned.
BOOKS OF ACCOUNT
----------------
109. The Directors shall cause proper books of account to be kept with respect
to:
(a) all sums of money received and expended by the Company and the
matters in respect of which the receipt or expenditure takes
place;
(b) all sales and purchases of goods by the Company;
(c) the assets and liabilities of the Company.
<PAGE>
24
Proper books shall not be deemed to be kept if there are not kept such books of
account as are necessary to give a true and fair view of the state of the
Company's affairs and to explain its transactions.
110. The Directors shall from time to time determine whether and to what extent
and at what times and places and under what conditions or regulations the
accounts and books of the Company or any of them shall be open to the inspection
of Members not being Directors and no Member (not being a Director) shall have
any right of inspecting any account or book or document of the Company except as
conferred by Statute or authorised by the Directors or by the Company in general
meeting.
111. The Directors may from time to time cause to be prepared and to be laid
before the Company in general meeting profit and loss accounts, balance sheets,
group accounts (if any) and such other reports and accounts as may be required
by law.
AUDIT
-----
112. The Company may at any annual general meeting appoint an Auditor or
Auditors of the Company who shall hold office until the next annual general
meeting and may fix his or
their remuneration.
113. The Directors may before the first annual general meeting appoint an
Auditor or Auditors of the Company who shall hold office until the first annual
general meeting unless previously removed by an ordinary resolution of the
Members in general meeting in which case the Members at that meeting may appoint
Auditors. The Directors may fill any casual vacancy in the office of Auditor but
while any such vacancy continues the surviving or continuing Auditor or
Auditors, if any, may act. The remuneration of any Auditor appointed by the
Directors under this Article may be fixed by the Directors.
114. Every Auditor of the Company shall have a right of access at all times to
the books and accounts and vouchers of the Company and shall be entitled to
require from the Directors and Officers of the Company such information and
explanation as may be necessary for the performance of the duties of the
auditors.
115. Auditors shall at the next annual general meeting following their
appointment and at any other time during their term of office, upon request of
the Directors or any general meeting of the Members, make a report on the
accounts of the Company in general meeting during their tenure of office.
<PAGE>
25
NOTICES
-------
116. Notices shall be in writing and may be given by the Company to any Member
either personally or by sending it by post, cable, telex or telecopy to him or
to his address as shown in the register of Members, such notice, if mailed, to
be forwarded airmail if the address be outside the Cayman Islands.
117. (a) Where a notice is sent by post, service of the notice shall be deemed
to be effected by properly addressing, pre-paying and posting a letter
containing the notice, and to have been effected at the expiration of sixty
hours after the letter containing the same is posted as aforesaid.
(b) Where a notice is sent by cable, telex, or telecopy, service of the
notice shall be deemed to be effected by properly addressing, and sending such
notice through a transmitting organisation and to have been effected on the day
the same is sent as aforesaid.
118. A notice may be given by the Company to the joint holders of record of a
share by giving the notice to the joint holder first named on the register of
Members in respect of the share.
119. A notice may be given by the Company to the person or persons which the
Company has been advised are entitled to a share or shares in consequence of the
death or bankruptcy of a Member by sending it through the post as aforesaid in a
pre-paid letter 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 supplied for that purpose by the persons claiming to be so entitled, or
at the option of the Company by giving the notice in any manner in which the
same might have been given if the death or bankruptcy had not occurred.
120. Notice of every general meeting shall be given in any manner hereinbefore
authorised to:
(a) every person shown as a Member in the register of Members as
of the record date for such meeting except that in the case of
joint holders the notice shall be sufficient if given to the
joint holder first named in the register of Members.
(b) every person upon whom the ownership of a share devolves by
reason of his being a legal personal representative or a
trustee in bankruptcy of a Member of record where the Member
of record but for his death or bankruptcy would be entitled to
receive notice of the meeting; and
No other person shall be entitled to receive notices of general meetings.
<PAGE>
26
WINDING UP
121. If the Company shall be wound up the liquidator may, with the sanction of a
Special Resolution of the Company and any other sanction required by the
Statute, divide amongst the Members in specie or kind the whole or any part of
the assets of the Company (whether they shall consist of property of the same
kind or not) and may for such purpose set such value as he deems fair upon any
property to be divided as aforesaid and may determine how such 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 such assets
in trustees upon such trusts for the benefit of the contributories as the
liquidator, with the like sanction, shall think fit, but so that no Member shall
be compelled to accept any shares or other securities whereon there is any
liability.
122. If the Company shall be wound up, and the assets available for distribution
amongst the Members as such shall be insufficient to repay the whole of the
paid-up capital, such assets shall be distributed so that, as nearly as may be,
the losses shall be borne by the Members in proportion to the capital paid up,
or which ought to have been paid up, at the commencement of the winding up on
the shares held by them respectively. And if in a winding up the assets
available for distribution amongst the Members shall be more than sufficient to
repay the whole of the capital paid up at the commencement of the winding up,
the excess shall be distributed amongst the Members in proportion to the capital
paid up at the commencement of the winding up on the shares held by them
respectively. This Article is to be without prejudice to the rights of the
holders of shares issued upon special terms and conditions.
INDEMNITY
---------
123. The Directors and officers for the time being of the Company and any
trustee for the time being acting in relation to any of the affairs of the
Company and their heirs, executors, administrators and personal representatives
respectively shall be indemnified out of the assets of the Company from and
against all actions, proceedings, costs, charges, losses, damages and expenses
which they or any of them shall or may incur or sustain by reason of any act
done or omitted in or about the execution of their duty in their respective
offices or trusts, except such (if any) as they shall incur or sustain by or
through their own wilful neglect or default respectively and no such Director,
officer or trustee shall be answerable for the acts, receipts, neglects or
defaults of any other Director, officer or trustee or for joining in any receipt
for the sake of conformity or for the solvency or honesty of any banker or other
persons with whom any monies or effects belonging to the Company may be lodged
or deposited for safe custody or for any insufficiency of any security upon
which any monies of the Company may be invested or for any other loss or damage
due to any such cause as aforesaid or which may happen in or about the execution
of his office or trust unless the same shall happen through the wilful neglect
or default of such Director, Officer or trustee.
<PAGE>
27
FINANCIAL YEAR
--------------
124. Unless the Directors otherwise prescribe, the financial year of the Company
shall end on 31st December in each year and, following the year of
incorporation, shall begin on 1st
January in each year.
AMENDMENTS OF ARTICLES
----------------------
125. Subject to the Statute, the Company may at any time and from time to time
by Special Resolution alter or amend these Articles in whole or in part.
TRANSFER BY WAY OF CONTINUATION
-------------------------------
126. If the Company is exempted as defined in the Statute, it shall, subject to
the provisions of the Statute and with the approval of a Special Resolution,
have the power to register by way of continuation as a body corporate under the
laws of any jurisdiction outside the Cayman
Islands and to be deregistered in the Cayman Islands.
THE COMPANIES LAW (1995 REVISION)
---------------------------------
COMPANY LIMITED BY SHARES
-------------------------
MEMORANDUM OF ASSOCIATION
OF
MILLENIUM AMETHYST, INC.
1. The name of the Company is MILLENIUM AMETHYST, INC..
2. The Registered Office of the Company shall be at the offices of Maples and
Calder, Attorneys-at-Law, Ugland House, P.O. Box 309, George Town, Grand Cayman,
Cayman Islands, British West Indies or at such other place as the Directors may
from time to time decide.
3. The objects for which the Company is established are unrestricted and shall
include, but without limitation, the following:-
(i) (a) To undertake and carry on all or any of the trades and businesses of
international freight forwarders and agents, shippers, ship owners, ship
brokers, shipping agents and insurance brokers, underwriters, ship managers, tug
owners, shipping agents, loading brokers, freight contractors, carriers by land,
air and water, transport, haulage and general contractors, barge owners,
lightermen, railway and forwarding agents, dock owners, ships' husbands,
warehousemen, salvors, manufacturers of and dealers in tarpaulins, waterproofs,
machinery, engines, nautical instruments, and ships' rigging, gear, fittings and
equipment of every description, importers and exporters of and dealers in goods,
provisions, live and dead stock, commodities, articles, chattels, merchandise
and property of every kind, general traders and merchants, and generally to
carry on the said businesses in all their branches, and to carry on the said
businesses either as principals or agents or on commission or otherwise.
<PAGE>
- 2 -
(b) To purchase or otherwise acquire, and to carry on the business or
businesses of fishing boat owners, smack owners, trawlers, deep-sea fishers,
shrimp fishers, fish curers, fish or shrimp salesmen, wholesale and retail fish
or shrimp merchants, wholesale and retail game and poultry merchants, ice
manufacturers, oil merchants and refiners, utilizers of fish refuse, manure
manufacturers, anchor and chain makers, wire rope makers, rope makers, mast and
block makers, ship chandlers, marine storekeepers, compass and nautical
instrument makers, marine engineers, engineers, boiler makers, ship builders,
dry-dock keepers, slip keepers, boat builders, ship and boat repairers, ship and
boat outfitters, salvors, wreck removers, wreck raisers, divers, auctioneers,
valuers, assessors, stevedores, wharfingers, carriers, forwarding agents, and
all other branches of business usually or conveniently connected with any such
business as aforesaid.
(c) To enter into, take over, negotiate or otherwise acquire, any
contract or contracts for the construction, building, equipping, fitting out,
storing, gearing or otherwise relating to any steamship, ship, trawler, catcher,
carrier, drifter, fishing boat, boat, or other vessel whatsoever, and to enter
into, take over, negotiate or otherwise acquire any other contract or contracts
whatever which the Company may think necessary, desirable or convenient for the
purposes of the Company or any of them, and to enter into, take over, negotiate,
or otherwise acquire any such contract or contracts at such prices and for such
considerations, and upon such terms and conditions, and subject to such
stipulations and agreements as the Company may determine, and at any time and
from time to time vary, modify, alter or cancel any such contract.
(d) To acquire concessions or licences for the establishment and
working of lines of ships or other vessels between any ports of the world, or
for the formation or working of any railway or
<PAGE>
- 3 -
tramway, wharf, pier, dock, or other works, or for the working of any coaches or
other public conveyances, with the benefit of any subsidy attached to any such
concession or licence or otherwise.
(e) To insure the vessels and other property of the Company in any
manner.
(f) To grant loans on ships and vessels or on goods and merchandise
carried or to be carried in any vessels and to buy and sell merchandise for
freighting on the ships and vessels of the Company.
(g) To engage in any and all kinds of business and other activities
with respect to oil, gas and other materials, and the products and by-products
thereof, including but not by way of limitation, exploration, developing,
drilling, producing, refining, processing, mining, confining, manufacturing,
storing, transporting, distributing, trading, buying, selling and all other
activities pertinent thereto.
(h) To resell or sublet any concession or licence obtained, or contract
entered into.
(i) To carry on the business of an investment company and to act as
promoters and entrepreneurs and to carry on business as financiers, capitalists,
concessionaires, merchants, brokers, traders, dealers, agents, importers and
exporters and to undertake and carry on and execute all kinds of investment,
financial, commercial, mercantile, trading and other operations.
(j) To carry on whether as principals, agents or otherwise howsoever
the business of realtors, developers, consultants, estate agents or managers,
builders, contractors, engineers, manufacturers, dealers in or vendors of all
types of property including services.
(ii) To exercise and enforce all rights and powers conferred by or incidental to
the ownership of any shares, stock, obligations or other securities including
without prejudice to the generality of the
<PAGE>
- 4 -
foregoing all such powers of veto or control as may be conferred by virtue of
the holding by the Company of some special proportion of the issued or nominal
amount thereof, to provide managerial and other executive, supervisory and
consultant services for or in relation to any company in which
the Company is interested upon such terms as may be thought fit.
(iii) To purchase or otherwise acquire, to sell, exchange, surrender, lease,
mortgage, charge, convert, turn to account, dispose of and deal with real and
personal property and rights of all kinds and, in particular, mortgages,
debentures, produce, concessions, options, contracts, patents, annuities,
licences, stocks, shares, bonds, policies, book debts, business concerns,
undertakings, claims, privileges and chooses in action of all kinds.
(iv) To subscribe for, conditionally or unconditionally, to underwrite, issue on
commission or otherwise, take, hold, deal in and convert stocks, shares and
securities of all kinds and to enter into partnership or into any arrangement
for sharing profits, reciprocal concessions or cooperation with any person or
company and to promote and aid in promoting, to constitute, form or organize any
company, syndicate or partnership of any kind, for the purpose of acquiring and
undertaking any property and liabilities of the Company or of advancing,
directly or indirectly, the objects of the Company or for any other purpose
which the Company may think expedient.
(v) To stand surety for or to guarantee, support or secure the performance of
all or any of the obligations of any person, firm or company whether or not
related or affiliated to the Company in any manner and whether by personal
covenant or by mortgage, charge or lien upon the whole or any part of the
undertaking, property and assets of the Company, both present and future,
including its
<PAGE>
- 5 -
uncalled capital or by any such method and whether or not the Company shall
receive valuable consideration therefor.
(vi) To engage in or carry on any other lawful trade, business or enterprise
which may at any time appear to the Directors of the Company capable of being
conveniently carried on in conjunction with any of the aforementioned businesses
or activities or which may appear to the Directors or the Company likely to be
profitable to the Company.
In the interpretation of this Memorandum of Association in general and of this
Clause 3 in particular no object, business or power specified or mentioned shall
be limited or restricted by reference to or inference from any other object,
business or power, or the name of the Company, or by the juxtaposition of two or
more objects, businesses or powers and that, in the event of any ambiguity in
this clause or elsewhere in this Memorandum of Association, the same shall be
resolved by such interpretation and construction as will widen and enlarge and
not restrict the objects, businesses and powers of and exercisable by the
Company.
4. Except as prohibited or limited by the Companies Law (1995 Revision), the
Company shall have full power and authority to carry out any object and shall
have and be capable of from time to time and at all times exercising any and all
of the powers at any time or from time to time exercisable by a natural person
or body corporate in doing in any part of the world whether as principal, agent,
contractor or otherwise whatever may be considered by it necessary for the
attainment of its objects and whatever else may be considered by it as
incidental or conducive thereto or consequential thereon, including, but without
in any way restricting the generality of the foregoing, the power to make any
alterations or amendments to this Memorandum of Association
<PAGE>
- 6 -
and the Articles of Association of the Company considered necessary or
convenient in the manner set out in the Articles of Association of the Company,
and the power to do any of the following acts or things, viz:
to pay all expenses of and incidental to the promotion, formation and
incorporation of the Company; to register the Company to do business in any
other jurisdiction; to sell, lease or dispose of any property of the Company; to
draw, make, accept, endorse, discount, execute and issue promissory notes,
debentures, bills of exchange, bills of lading, warrants and other negotiable or
transferable instruments; to lend money or other assets and to act as
guarantors; to borrow or raise money on the security of the undertaking or on
all or any of the assets of the Company including uncalled capital or without
security; to invest monies of the Company in such manner as the Directors
determine; to promote other companies; to sell the undertaking of the Company
for cash or any other consideration; to distribute assets in specie to members
of the Company; to make charitable or benevolent donations; to pay pensions or
gratuities or provide other benefits in cash or kind to Directors, officers,
employees, past or present and their families; to carry on any trade or business
and generally to do all acts and things which, in the opinion of the Company or
the Directors, may be conveniently or profitably or usefully acquired and dealt
with, carried on, executed or done by the Company in connection with the
business aforesaid PROVIDED THAT the Company shall only carry on the businesses
for which a licence is required under the laws of the Cayman Islands when so
licensed under the terms of such laws.
5. The liability of each member is limited to the amount from time to time
unpaid on such member's shares.
<PAGE>
- 7 -
6. The share capital of the Company is US$50,000 divided into 50,000 shares of a
nominal or par value of US$1.00 each with power for the Company insofar as is
permitted by law, to redeem or purchase any of its shares and to increase or
reduce the said capital subject to the provisions of the Companies Law (1995
Revision) and the Articles of Association and to issue any part of its capital,
whether original, redeemed or increased with or without any preference, priority
or special privilege or subject to any postponement of rights or to any
conditions or restrictions and so that unless the conditions of issue shall
otherwise expressly declare every issue of shares whether declared to be
preference or otherwise shall be subject to the powers hereinbefore contained.
7. If the Company is registered as exempted, its operations will be carried on
subject to the provisions of Section l92 of the Companies Law (1995 Revision)
and subject to the provisions of the Companies Law (1995 Revision) and the
Articles of Association it shall have the power to register by way of
continuation as a body corporate limited by shares under the laws of any
jurisdiction outside the Cayman Islands and to be deregistered in the Cayman
Islands.
WE the several persons whose names and addresses are subscribed are desirous of
being formed into a company in pursuance of this Memorandum of Association and
we respectively agree to take the number of shares in the capital of the Company
set opposite our respective names.
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
PAGE
----
<S> <C>
INTERPRETATION................................................................................................- 1 -
CERTIFICATES FOR SHARES.......................................................................................- 2 -
ISSUE OF SHARES...............................................................................................- 3 -
TRANSFER OF SHARES............................................................................................- 3 -
REDEEMABLE SHARES.............................................................................................- 4 -
VARIATION OF RIGHTS OF SHARES.................................................................................- 4 -
COMMISSION ON SALE OF SHARES..................................................................................- 4 -
NON-RECOGNITION OF TRUSTS.....................................................................................- 5 -
LIEN ON SHARES................................................................................................- 5 -
CALL ON SHARES................................................................................................- 6 -
FORFEITURE OF SHARES..........................................................................................- 7 -
REGISTRATION OF EMPOWERING INSTRUMENTS........................................................................- 8 -
TRANSMISSION OF SHARES........................................................................................- 8 -
AMENDMENT OF MEMORANDUM OF ASSOCIATION, CHANGE OF
LOCATION OF REGISTERED OFFICE & ALTERATION OF CAPITAL.........................................................- 9 -
CLOSING REGISTER OF MEMBERS OR FIXING RECORD DATE............................................................- 10 -
GENERAL MEETING..............................................................................................- 10 -
NOTICE OF GENERAL MEETINGS...................................................................................- 11 -
PROCEEDINGS AT GENERAL MEETINGS..............................................................................- 12 -
VOTES OF MEMBERS.............................................................................................- 13 -
PROXIES......................................................................................................- 14 -
DIRECTORS....................................................................................................- 15 -
ALTERNATE DIRECTORS..........................................................................................- 16 -
POWERS AND DUTIES OF DIRECTORS...............................................................................- 16 -
MANAGEMENT...................................................................................................- 18 -
MANAGING DIRECTORS...........................................................................................- 18 -
PROCEEDINGS OF DIRECTORS.....................................................................................- 19 -
VACATION OF OFFICE OF DIRECTOR...............................................................................- 20 -
APPOINTMENT AND REMOVAL OF DIRECTORS.........................................................................- 21 -
PRESUMPTION OF ASSENT........................................................................................- 21 -
SEAL.........................................................................................................- 21 -
OFFICERS.....................................................................................................- 22 -
DIVIDENDS, DISTRIBUTIONS AND RESERVE.........................................................................- 22 -
CAPITALIZATION...............................................................................................- 23 -
BOOKS OF ACCOUNT.............................................................................................- 23 -
AUDIT........................................................................................................- 24 -
NOTICES......................................................................................................- 25 -
WINDING UP...................................................................................................- 26 -
INDEMNITY....................................................................................................- 26 -
FINANCIAL YEAR...............................................................................................- 27 -
<PAGE>
AMENDMENTS OF ARTICLES.......................................................................................- 27 -
TRANSFER BY WAY OF CONTINUATION..............................................................................- 27 -
</TABLE>
<PAGE>
THE COMPANIES LAW (1995 REVISION)
---------------------------------
COMPANY LIMITED BY SHARES
-------------------------
ARTICLES OF ASSOCIATION
OF
MILLENIUM AMETHYST, INC.
INTERPRETATION
--------------
1. In these Articles Table A in the Schedule to the Statute does not apply and,
unless there be something in the subject or context inconsistent therewith,
"Articles" means these Articles as originally framed or
as from time to time altered by Special
Resolution.
"Auditors" means the persons for the time being
performing the duties of auditors of the
Company.
"Company" means the above-named Company.
"debenture" means debenture stock, mortgages, bonds and
any other such securities of the Company
whether constituting a charge on the assets
of the Company or not.
"Directors" means the directors for the time being of
the Company.
"dividend" includes bonus.
"Member" shall bear the meaning as ascribed to it in
the Statute.
"month" means calendar month.
"paid-up" means paid-up and/or credited as paid-up.
<PAGE>
- 2 -
"registered office" means the registered office for the time
being of the Company.
"Seal" means the common seal of the Company and
includes every duplicate seal.
"Secretary" includes an Assistant Secretary and any
person appointed to perform the duties of
Secretary of the Company.
"share" includes a fraction of a share.
"Special Resolution" has the same meaning as in the Statute and
includes a resolution approved in writing as
described therein.
"Statute" means the Companies Law of the Cayman
Islands as amended and every statutory
modification or re-enactment thereof for the
time being in force.
"written" and "in writing" include all modes of representing or
reproducing words in visible form.
Words importing the singular number only include the plural number and
vice-versa.
Words importing the masculine gender only include the feminine gender.
Words importing persons only include corporations.
2. The business of the Company may be commenced as soon after incorporation as
the Directors shall see fit, notwithstanding that part only of the shares may
have been allotted.
3. The Directors may pay, out of the capital or any other monies of the Company,
all expenses incurred in or about the formation and establishment of the Company
including the expenses of registration.
CERTIFICATES FOR SHARES
-----------------------
4. Certificates representing shares of the Company shall be in such form as
shall be determined by the Directors. Such certificates may be under Seal. All
certificates for shares shall be consecutively numbered or otherwise identified
and shall specify the shares to which they relate. The name and address of the
person to whom the shares represented thereby are issued, with the
<PAGE>
- 3 -
number of shares and date of issue, shall be entered in the register of Members
of the Company. All certificates surrendered to the Company for transfer shall
be cancelled and no new certificate shall be issued until the former certificate
for a like number of shares shall have been surrendered and cancelled. The
Directors may authorize certificates to be issued with the seal and authorized
signature(s) affixed by some method or system of mechanical process.
5. Notwithstanding Article 4 of these Articles, if a share certificate be
defaced, lost or destroyed, it may be renewed on payment of a fee of one dollar
(US$l.00) or such less sum and on such terms (if any) as to evidence and
indemnity and the payment of the expenses incurred by the
Company in investigating evidence, as the Directors may prescribe.
ISSUE OF SHARES
---------------
6. Subject to the provisions, if any, in that behalf in the Memorandum of
Association and to any direction that may be given by the Company in general
meeting and without prejudice to any special rights previously conferred on the
holders of existing shares, the Directors may allot, issue, grant options over
or otherwise dispose of shares of the Company (including fractions of a share)
with or without preferred, deferred or other special rights or restrictions,
whether in regard to dividend, voting, return of capital or otherwise and to
such persons, at such times and on such other terms as they think proper.
7. The Company shall maintain a register of its Members and every person whose
name is entered as a Member in the register of Members shall be entitled without
payment to receive within two months after allotment or lodgement of transfer
(or within such other period as the conditions of issue shall provide) one
certificate for all his shares or several certificates each for one or more of
his shares upon payment of fifty cents (US$0.50) for every certificate after the
first or such less sum as the Directors shall from time to time determine
provided that in respect of a share or shares held jointly by several persons
the Company shall not be bound to issue more than one certificate and delivery
of a certificate for a share to one of the several joint holders shall be
sufficient delivery to all such holders.
TRANSFER OF SHARES
------------------
8. The instrument of transfer of any share shall be in writing and shall be
executed by or on behalf of the transferor and the transferor shall be deemed to
remain the holder of a share until the
name of the transferee is entered in the register in respect thereof.
9. The Directors may in their absolute discretion decline to register any
transfer of shares without assigning any reason therefor. If the Directors
refuse to register a transfer they shall notify
the transferee within two months of such refusal.
<PAGE>
- 4 -
10. The registration of transfers may be suspended at such time and for such
periods as the Directors may from time to time determine, provided always that
such registration shall not be suspended for more than forty-five days in any
year.
REDEEMABLE SHARES
-----------------
11. (a) Subject to the provisions of the Statute and the Memorandum of
Association, shares may be issued on the terms that they are, or at the option
of the Company or the holder are, to be redeemed on such terms and in such
manner as the Company, before the issue of the shares, may by
Special Resolution determine.
(b) Subject to the provisions of the Statute and the Memorandum of
Association, the Company may purchase its own shares (including fractions of a
share), including any redeemable shares, provided that the manner of purchase
has first been authorized by the Company in general meeting and may make payment
therefor in any manner authorized by the Statute, including out of capital.
VARIATION OF RIGHTS OF SHARES
-----------------------------
12. If at any time the share capital of the Company 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, whether or not the
Company is being wound-up, be varied with the consent in writing of the holders
of three-fourths of the issued shares of that class, or with the sanction of a
Special Resolution passed at a general meeting of the holders of the shares of
that class.
The provisions of these Articles relating to general meetings
shall apply to every such general meeting of the holders of one class of shares
except that the necessary quorum shall be one person holding or representing by
proxy at least 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.
13. The rights conferred upon the holders of the shares of any class issued with
preferred or other rights shall not, unless otherwise expressly provided by the
terms of issue of the shares of that class, be deemed to be varied by the
creation or issue of further shares ranking pari passu therewith.
COMMISSION ON SALE OF SHARES
----------------------------
14. The Company may in so far as the Statute from time to time permits pay a
commission to any person in consideration of his subscribing or agreeing to
subscribe whether absolutely or conditionally for any shares of the Company.
Such commissions may be satisfied by the payment
<PAGE>
- 5 -
of cash or the lodgement of fully or partly paid-up shares or partly in one way
and partly in the other. The Company may also on any issue of shares pay such
brokerage as may be lawful.
NON-RECOGNITION OF TRUSTS
-------------------------
15. No person shall be recognized by the Company as holding any share upon any
trust and the Company shall not be bound by or be compelled in any way to
recognize (even when having notice thereof) any equitable, contingent, future,
or partial interest in any share, or any interest in any fractional part of a
share, or (except only as is otherwise provided by these Articles or the
Statute) any other rights in respect of any share except an absolute right to
the entirety thereof in the registered holder.
LIEN ON SHARES
--------------
16. The Company shall have a first and paramount lien and charge on all shares
(whether fully paid-up or not) registered in the name of a Member (whether
solely or jointly with others) for all debts, liabilities or engagements to or
with the Company (whether presently payable or not) by such Member or his
estate, either alone or jointly with any other person, whether a Member or not,
but the Directors may at any time declare any share to be wholly or in part
exempt from the provisions of this Article. The registration of a transfer of
any such share shall operate as a waiver of the Company's lien (if any) thereon.
The Company's lien (if any) on a share shall extend to all dividends or other
monies payable in respect thereof.
17. The Company may sell, in such manner as the Directors think fit, any shares
on which the Company has a lien, but no sale shall be made unless a sum in
respect of which the lien exists is presently payable, nor until the expiration
of fourteen days after a notice in writing stating and demanding payment of such
part of the amount in respect of which the lien exists as is presently payable,
has been given to the registered holder or holders for the time being of the
share, or the person, of which the Company has notice, entitled thereto by
reason of his death or bankruptcy.
18. To give effect to any such sale the Directors may authorize some person to
transfer the shares sold to the purchaser thereof. The purchaser shall be
registered as the holder of the shares comprised in any such transfer, and he
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 or invalidity in the
proceedings in reference to the sale.
19. The proceeds of such sale shall be received by the Company and applied in
payment of such part of the amount in respect of which the lien exists as is
presently payable and the residue, if any, shall (subject to a like lien for
sums 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.
<PAGE>
- 6 -
CALL ON SHARES
--------------
20. (a) The Directors may from time to time make calls upon the Members in
respect of any monies unpaid on their shares (whether on account of the nominal
value of the shares or by way of premium or otherwise) and not by the conditions
of allotment thereof made payable at fixed terms, provided that no call shall be
payable at less than one month from the date fixed for the payment of the last
preceding call, and each Member shall (subject to receiving at least fourteen
days notice specifying the time or times of payment) pay to the Company at the
time or times so specified the amount called on the shares. A call may be
revoked or postponed as the Directors may determine. A call may be made payable
by instalments.
(b) A call shall be deemed to have been made at the time when the
resolution of the Directors authorizing such call was passed.
(c) The joint holders of a share shall be jointly and severally liable
to pay all calls in respect thereof.
21. If a sum called in respect of a share is not paid before or on a day
appointed for payment thereof, the persons from whom the sum is due shall pay
interest on the sum from the day appointed for payment thereof to the time of
actual payment at such rate not exceeding ten per cent per annum as the
Directors may determine, but the Directors shall be at liberty to waive payment
of such interest either wholly or in part.
22. Any sum which by the terms of issue of a share becomes payable on allotment
or at any fixed date, whether on account of the nominal value of the share or by
way of premium or otherwise, shall for the purposes of these Articles be deemed
to be a call duly made, notified and payable on the date on which by the terms
of issue the same becomes payable, and in the case of non-payment all the
relevant provisions of these Articles as to payment of interest forfeiture or
otherwise shall apply as if such sum had become payable by virtue of a call duly
made and notified.
23. The Directors may, on the issue of shares, differentiate between the holders
as to the amount of calls or interest to be paid and the times of payment.
24. (a) The Directors may, if they think fit, receive from any Member willing to
advance the same, all or any part of the monies uncalled and unpaid upon any
shares held by him, and upon all or any of the monies so advanced may (until the
same would but for such advances, become payable) pay interest at such rate not
exceeding (unless the Company in general meeting shall otherwise direct) seven
per cent per annum, as may be agreed upon between the Directors and the Member
paying such sum in advance.
<PAGE>
- 7 -
(b) No such sum paid in advance of calls shall entitle the Member
paying such sum to any portion of a dividend declared in respect of any period
prior to the date upon which such sum would, but for such payment, become
presently payable.
FORFEITURE OF SHARES
--------------------
25. (a) If a Member fails to pay any call or instalment of a call or to make any
payment required by the terms of issue on the day appointed for payment thereof,
the Directors may, at any time thereafter during such time as any part of the
call, instalment or payment remains unpaid, give notice requiring payment of so
much of the call, instalment or payment as is unpaid, together with any interest
which may have accrued and all expenses that have been incurred by the Company
by reason of such non-payment. Such notice shall name a day (not earlier than
the expiration of fourteen days from the date of giving of the notice) on or
before which the payment required by the notice is to be made, and shall state
that, in the event of non-payment at or before the time appointed the shares in
respect of which such notice was given will be liable to be forfeited.
(b) If the requirements of any such notice as aforesaid are not
complied with, any share in respect of which the notice has been given may at
any time thereafter, before the payment required by the notice has been made, be
forfeited by a resolution of the Directors to that effect. Such forfeiture shall
include all dividends declared in respect of the forfeited share and not
actually paid before the forfeiture.
(c) A forfeited share may be sold or otherwise disposed of on such
terms and in such manner as the Directors think fit and at any time before a
sale or disposition the forfeiture may be cancelled on such terms as the
Directors think fit.
26. A person whose shares have been forfeited shall cease to be a Member in
respect of the forfeited shares, but shall, notwithstanding, remain liable to
pay to the Company all monies which, at the date of forfeiture were payable by
him to the Company in respect of the shares together with interest thereon, but
his liability shall cease if and when the Company shall have received payment in
full of all monies whenever payable in respect of the shares.
27. A certificate in writing under the hand of one Director or the Secretary of
the Company that a share in the Company has been duly forfeited on a date stated
in the declaration shall be conclusive evidence of the fact therein stated as
against all persons claiming to be entitled to the share. The Company may
receive the consideration given for the share on any sale or disposition thereof
and may execute a transfer of the share in favour of the person to whom the
share is sold or disposed of and he shall thereupon be registered as the holder
of the share and shall not be bound to see to the application of the purchase
money, if any, nor shall his title to the share be affected by any irregularity
or invalidity in the proceedings in reference to the forfeiture, sale or
disposal of the share.
<PAGE>
- 8 -
28. The provisions of these Articles as to forfeiture shall apply in the case of
non-payment of any sum which, by the terms of issue of a share, becomes payable
at a fixed time, whether on account of the nominal value of the share or by way
of premium as if the same had been payable by virtue
of a call duly made and notified.
REGISTRATION OF EMPOWERING INSTRUMENTS
--------------------------------------
29. The Company shall be entitled to charge a fee not exceeding one dollar
(US$l.00) on the registration of every probate, letters of administration,
certificate of death or marriage, power of attorney, notice in lieu of
distringas, or other instrument.
TRANSMISSION OF SHARES
----------------------
30. In case of the death of a Member, the survivor or survivors where the
deceased was a joint holder, and the legal personal representatives of the
deceased where he was a sole holder, shall be the only persons recognized by the
Company as having any title to his interest in the shares, but nothing herein
contained shall release the estate of any such deceased holder from any
liability in respect of any shares which had been held by him solely or jointly
with other persons.
31. (a) Any person becoming entitled to a share in consequence of the death or
bankruptcy or liquidation or dissolution of a Member (or in any other way than
by transfer) may, upon such evidence being produced as may from time to time be
required by the Directors and subject as hereinafter provided, elect either to
be registered himself as holder of the share or to make such transfer of the
share to such other person nominated by him as the deceased or bankrupt person
could have made and to have such person registered as the transferee thereof,
but the Directors shall, in either case, have the same right to decline or
suspend registration as they would have had in the case of a transfer of the
share by that Member before his death or bankruptcy as the case may be.
(b) If the person so becoming entitled shall elect to be registered
himself as holder he shall deliver or send to the Company a notice in writing
signed by him stating that he so elects.
32. A person becoming entitled to a share by reason of the death or bankruptcy
or liquidation or dissolution of the holder (or in any other case than by
transfer) shall be entitled to the same dividends and other advantages to which
he would be entitled if he were the registered holder of the share, except that
he shall not, before being registered as a Member in respect of the share, be
entitled in respect of it to exercise any right conferred by membership in
relation to meetings of the Company PROVIDED HOWEVER that the Directors may at
any time give notice requiring any such person to elect either to be registered
himself or to transfer the share and if the notice is not complied with within
ninety days the Directors may thereafter withhold payment of all dividends,
bonuses or other monies payable in respect of the share until the requirements
of the notice have been complied with.
<PAGE>
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AMENDMENT OF MEMORANDUM OF ASSOCIATION, CHANGE OF
LOCATION OF REGISTERED OFFICE & ALTERATION OF CAPITAL
-----------------------------------------------------
33. (a) Subject to and in so far as permitted by the provisions of the Statute,
the Company may from time to time by ordinary resolution alter or amend its
Memorandum of Association otherwise than with respect to its name and objects
and may, without restricting the generality of the
foregoing:
(i) increase the share capital by such sum to be divided
into shares of such amount or without nominal or par
value as the resolution shall prescribe and with such
rights, priorities and privileges annexed thereto, as
the Company in general meeting may determine.
(ii) consolidate and divide all or any of its share
capital into shares of larger amount than its
existing shares;
(iii) by subdivision of its existing shares or any of them
divide the whole or any part of its share capital
into shares of smaller amount than is fixed by the
Memorandum of Association or into shares without
nominal or par value;
(iv) cancel any shares which at the date of the passing of
the resolution have not been taken or agreed to be
taken by any person.
(b) All new shares created hereunder shall be subject to the same
provisions with reference to the payment of calls, liens, transfer,
transmission, forfeiture and otherwise as the shares
in the original share capital.
(c) Subject to the provisions of the Statute, the Company may by
Special Resolution change its name or alter its objects.
(d) Without prejudice to Article 11 hereof and subject to the
provisions of the Statute, the Company may by Special Resolution reduce its
share capital and any capital redemption reserve
fund.
(e) Subject to the provisions of the Statute, the Company may by
resolution of the Directors change the location of its registered office.
<PAGE>
- 10 -
CLOSING REGISTER OF MEMBERS OR FIXING RECORD DATE
-------------------------------------------------
34. For the purpose of determining Members entitled to notice of or to vote at
any meeting of Members or any adjournment thereof, or Members entitled to
receive payment of any dividend, or in order to make a determination of Members
for any other proper purpose, the Directors of the Company may provide that the
register of Members shall be closed for transfers for a stated period but not to
exceed in any case forty days. If the register of Members shall be so closed for
the purpose of determining Members entitled to notice of or to vote at a meeting
of Members such register shall be so closed for at least ten days immediately
preceding such meeting and the record date for such determination shall be the
date of the closure of the register of Members.
35. In lieu of or apart from closing the register of Members, the Directors may
fix in advance a date as the record date for any such determination of Members
entitled to notice of or to vote at a meeting of the Members and for the purpose
of determining the Members entitled to receive payment of any dividend the
Directors may, at or within 90 days prior to the date of declaration of such
dividend fix a subsequent date as the record date for such determination.
36. If the register of Members is not so closed and no record date is fixed for
the determination of Members entitled to notice of or to vote at a meeting of
Members or Members entitled to receive payment of a dividend, the date on which
notice of the meeting is mailed or the date on which the resolution of the
Directors declaring such dividend is adopted, as the case may be, shall be the
record date for such determination of Members. When a determination of Members
entitled to vote at any meeting of Members has been made as provided in this
section, such determination shall apply to any adjournment thereof.
GENERAL MEETING
---------------
37. (a) Subject to paragraph (c) hereof, the Company shall within one year of
its incorporation and in each year of its existence thereafter hold a general
meeting as its annual general meeting and shall specify the meeting as such in
the notices calling it. The annual general meeting shall be held at such time
and place as the Directors shall appoint and if no other time and place is
prescribed by them, it shall be held at the registered office on the second
Wednesday in December of each year at ten o'clock in the morning.
(b) At these meetings the report of the Directors (if any) shall be
presented.
(c) If the Company is exempted as defined in the Statute it may but
shall not be obliged to hold an annual general meeting.
38. (a) The Directors may whenever they think fit, and they shall on the
requisition of Members of the Company holding at the date of the deposit of the
requisition not less than one-tenth
<PAGE>
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of such of the paid-up capital of the Company as at the date of the deposit
carries the right of voting at general meetings of the Company, proceed to
convene a general meeting of the Company.
(b) The requisition must state the objects of the meeting and must be
signed by the requisitionists and deposited at the registered office of the
Company and may consist of several documents in like form each signed by one or
more requisitionists.
(c) If the Directors do not within twenty-one days from the date of the
deposit of the requisition duly proceed to convene a general meeting, the
requisitionists, or any of them representing more than one-half of the total
voting rights of all of them, may themselves convene a general meeting, but any
meeting so convened shall not be held after the expiration of three months
after the expiration of the said twenty-one days.
(d) A general meeting convened as aforesaid by requisitionists shall be
convened in the same manner as nearly as possible as that in which general
meetings are to be convened by
Directors.
NOTICE OF GENERAL MEETINGS
--------------------------
39. At least five days' notice shall be given of an annual general meeting or
any other general meeting. Every notice shall be exclusive of the day on which
it is given or deemed to be given and of the day for which it is given and shall
specify the place, the day and the hour of the meeting and the general nature of
the business and shall be given in manner hereinafter mentioned or in such other
manner if any as may be prescribed by the Company PROVIDED that a general
meeting of the Company shall, whether or not the notice specified in this
regulation has been given and whether or not the provisions of Article 38 have
been complied with, be deemed to have been duly convened if it is so agreed:
(a) in the case of a general meeting called as an annual general
meeting by all the Members entitled to attend and vote thereat
or their proxies; and
(b) in the case of any other general meeting by a majority in
number of the Members having a right to attend and vote at the
meeting, being a majority together holding not less than
seventy-five per cent in nominal value or in the case of
shares without nominal or par value seventy-five per cent of
the shares in issue, or their proxies.
40. The accidental omission to give notice of a general meeting to, or the
non-receipt of notice of a meeting by any person entitled to receive notice
shall not invalidate the proceedings of that meeting.
<PAGE>
- 12 -
PROCEEDINGS AT GENERAL MEETINGS
-------------------------------
41. No business shall be transacted at any general meeting unless a quorum of
Members is present at the time when the meeting proceeds to business; two
Members present in person or by proxy shall be a quorum provided always that if
the Company has one Member of record the quorum shall be that one Member present
in person or by proxy.
42. A resolution (including a Special Resolution) in writing (in one or more
counterparts) signed by all Members for the time being entitled to receive
notice of and to attend and vote at general meetings (or being corporations by
their duly authorized representatives) shall be as valid and effective as if the
same had been passed at a general meeting of the Company duly convened and
held.
43. If within half an hour from the time appointed for the meeting a quorum is
not present, the meeting, if convened upon the requisition of Members, shall be
dissolved and in any other case it shall stand adjourned to the same day in the
next week at the same time and place or to such other time or such other place
as the Directors may determine and if at the adjourned meeting a quorum is not
present within half an hour from the time appointed for the meeting the Members
present shall be a quorum.
44. The Chairman, if any, of the Board of Directors shall preside as Chairman at
every general meeting of the Company, or if there is no such Chairman, or if he
shall not be present within fifteen minutes after the time appointed for the
holding of the meeting, or is unwilling to act, the Directors present shall
elect one of their number to be Chairman of the meeting.
45. If at any general meeting 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 shall choose one of their number to be Chairman
of the meeting.
46. The Chairman may, with the consent of any general meeting duly constituted
hereunder, 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 any
adjourned meeting other than the business left unfinished at the meeting from
which the adjournment took place. When a general meeting is adjourned for thirty
days or more, notice of the adjourned meeting shall be given as in the case of
an original meeting; save as aforesaid it shall not be necessary to give any
notice of an adjournment or of the business to be transacted at an adjourned
general meeting.
47. At any general meeting a resolution put to the vote of the meeting shall be
decided on a show of hands unless a poll is, before or on the declaration of the
result of the show of hands, demanded by the Chairman or any other Member
present in person or by proxy.
<PAGE>
- 13 -
48. Unless a poll be so demanded a declaration by the Chairman that a resolution
has on a show of hands been carried, or carried unanimously, or by a particular
majority, or lost, and an entry to that effect in the Company's Minute Book
containing the Minutes of the proceedings of the meeting shall be conclusive
evidence of that fact without proof of the number or proportion of the votes
recorded in favour of or against such resolution.
49. The demand for a poll may be withdrawn.
50. Except as provided in Article 52, if a poll is duly demanded it shall be
taken in such manner as the Chairman directs and the result of the poll shall be
deemed to be the resolution of the general meeting at which the poll was
demanded.
51. In the case of an equality of votes, whether on a show of hands or on a
poll, the Chairman of the general meeting at which the show of hands takes place
or at which the poll is demanded, shall be entitled to a second or casting vote.
52. 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 at such time as the Chairman of the general meeting directs and
any business other than that upon which a poll has been demanded or is
contingent thereon may be proceeded with pending the taking of the poll.
VOTES OF MEMBERS
----------------
53. Subject to any rights or restrictions for the time being attached to any
class or classes of shares, on a show of hands every Member of record present in
person or by proxy at a general meeting shall have one vote and on a poll every
Member of record present in person or by proxy shall have one vote for each
share registered in his name in the register of Members.
54. In the case of joint holders of record 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 for this purpose seniority shall be
determined by the order in which the names stand in the register of Members.
55. A Member of unsound mind, or in respect of whom an order has been made by
any court, having jurisdiction in lunacy, may vote, whether on a show of hands
or on a poll, by his committee, receiver, curator bonis, or other person in the
nature of a committee, receiver or curator bonis appointed by that court, and
any such committee, receiver, curator bonis or other persons may vote by proxy.
<PAGE>
- 14 -
56. No Member shall be entitled to vote at any general meeting unless he is
registered as a shareholder of the Company on the record date for such meeting
nor unless all calls or other sums presently payable by him in respect of shares
in the Company have been paid.
57. No objection shall be raised to the qualification of any voter except at the
general meeting or adjourned general meeting at which the vote objected to is
given or tendered and every vote not disallowed at such general meeting shall be
valid for all purposes. Any such objection made in due time shall be referred to
the Chairman of the general meeting whose decision shall be final and
conclusive.
58. On a poll or on a show of hands votes may be given either personally or by
proxy.
PROXIES
-------
59. The instrument appointing a proxy shall be in writing and shall be executed
under the hand of the appointor or of his attorney duly authorized in writing,
or, if the appointor is a corporation under the hand of an officer or attorney
duly authorized in that behalf. A proxy need not be a Member of the Company.
60. The instrument appointing a proxy shall be deposited at the registered
office of the Company or at such other place as is specified for that purpose in
the notice convening the meeting no later than the time for holding the meeting,
or adjourned meeting provided that the Chairman of the Meeting may at his
discretion direct that an instrument of proxy shall be deemed to have been duly
deposited upon receipt of telex, cable or telecopy confirmation from the
appointor that the instrument of proxy duly signed is in the course of
transmission to the Company.
61. The instrument appointing a proxy may be in any usual or common form and may
be expressed to be for a particular meeting or any adjournment thereof or
generally until revoked. An instrument appointing a proxy shall be deemed to
include the power to demand or join or concur in demanding a poll.
62. A vote given in accordance with the terms of an instrument of proxy shall be
valid notwithstanding the previous death or insanity of the principal or
revocation of the proxy or of the authority under which the proxy was executed,
or the transfer of the share in respect of which the proxy is given provided
that no intimation in writing of such death, insanity, revocation or transfer as
aforesaid shall have been received by the Company at the registered office
before the commencement of the general meeting, or adjourned meeting at which it
is sought to use the proxy.
63. Any corporation which is a Member of record of the Company may in accordance
with its Articles or in the absence of such provision by resolution of its
Directors or other governing body authorize such person as it thinks fit to act
as its representative at any meeting of the Company or
<PAGE>
- 15 -
of any class of Members of the Company, and the person so authorized shall be
entitled to exercise the same powers on behalf of the corporation which he
represents as the corporation could exercise if it were an individual Member of
record of the Company.
64. Shares of its own capital belonging to the Company or held by it in a
fiduciary capacity shall not be voted, directly or indirectly, at any meeting
and shall not be counted in determining the total number of outstanding shares
at any given time.
DIRECTORS
---------
65. There shall be a Board of Directors consisting of not less than one or more
than ten persons (exclusive of alternate Directors) PROVIDED HOWEVER that the
Company may from time to time by ordinary resolution increase or reduce the
limits in the number of Directors. The first Directors of the Company shall be
determined in writing by, or appointed by a resolution of, the subscribers of
the Memorandum of Association or a majority of them.
66. The remuneration to be paid to the Directors shall be such remuneration as
the Directors shall determine. Such remuneration shall be deemed to accrue from
day to day. The Directors shall also be entitled to be paid their travelling,
hotel and other expenses properly incurred by them in going to, attending and
returning from meetings of the Directors, or any committee of the Directors, or
general meetings of the Company, or otherwise in connection with the business of
the Company, or to receive a fixed allowance in respect thereof as may be
determined by the Directors from time to time, or a combination partly of one
such method and partly the other.
67. The Directors may by resolution award special remuneration to any Director
of the Company undertaking any special work or services for, or undertaking any
special mission on behalf of, the Company other than his ordinary routine work
as a Director. Any fees paid to a Director who is also counsel or solicitor to
the Company, or otherwise serves it in a professional capacity shall be in
addition to his remuneration as a Director.
68. A Director or alternate Director may hold any other office or place of
profit under the Company (other than the office of Auditor) in conjunction with
his office of Director for such period and on such terms as to remuneration and
otherwise as the Directors may determine.
69. A Director or alternate Director may act by himself or his firm in a
professional capacity for the Company and he or his firm shall be entitled to
remuneration for professional services as if he were not a Director or alternate
Director.
70. A shareholding qualification for Directors may be fixed by the Company in
general meeting, but unless and until so fixed no qualification shall be
required.
<PAGE>
- 16 -
71. A Director or alternate Director of the Company may be or become a director
or other officer of or otherwise interested in any company promoted by the
Company or in which the Company may be interested as shareholder or otherwise
and no such Director or alternate Director shall be accountable to the Company
for any remuneration or other benefits received by him as a director or officer
of, or from his interest in, such other company.
72. No person shall be disqualified from the office of Director or alternate
Director or prevented by such office from contracting with the Company, either
as vendor, purchaser or otherwise, nor shall any such contract or any contract
or transaction entered into by or on behalf of the Company in which any Director
or alternate Director shall be in any way interested be or be liable to be
avoided, nor shall any Director or alternate Director so contracting or being so
interested be liable to account to the Company for any profit realized by any
such contract or transaction by reason of such Director holding office or of the
fiduciary relation thereby established. A Director (or his alternate Director in
his absence) shall be at liberty to vote in respect of any contract or
transaction in which he is so interested as aforesaid PROVIDED HOWEVER that the
nature of the interest of any Director or alternate Director in any such
contract or transaction shall be disclosed by him or the alternate Director
appointed by him at or prior to its consideration and any vote thereon.
73. A general notice that a Director or alternate Director is a shareholder of
any specified firm or company and is to be regarded as interested in any
transaction with such firm or company shall be sufficient disclosure under
Article 72 and after such general notice it shall not be necessary to
give special notice relating to any particular transaction.
ALTERNATE DIRECTORS
-------------------
74. Subject to the exception contained in Article 82, a Director who expects to
be unable to attend Directors' Meetings because of absence, illness or otherwise
may appoint any person to be an alternate Director to act in his stead and such
appointee whilst he holds office as an alternate Director shall, in the event of
absence therefrom of his appointor, be entitled to attend meetings of the
Directors and to vote thereat and to do, in the place and stead of his
appointor, any other act or thing which his appointor is permitted or required
to do by virtue of his being a Director as if the alternate Director were the
appointor, other than appointment of an alternate to himself, and he shall ipso
facto vacate office if and when his appointor ceases to be a Director or removes
the appointee from office. Any appointment or removal under this Article shall
be effected by notice in writing under the hand of the Director making the same.
POWERS AND DUTIES OF DIRECTORS
------------------------------
75. The business of the Company shall be managed by the Directors (or a sole
Director if only one is appointed) who may pay all expenses incurred in
promoting, registering and setting up the
<PAGE>
- 17 -
Company, and may exercise all such powers of the Company as are not, from time
to time by the Statute, or by these Articles, or such regulations, being not
inconsistent with the aforesaid, as may be prescribed by the Company in general
meeting required to be exercised by the Company in general meeting PROVIDED
HOWEVER that no regulations made by the Company in general meeting shall
invalidate any prior act of the Directors which would have been valid if that
regulation had not been made.
76. The Directors may from time to time and at any time by powers of attorney
appoint any company, firm, person or body of persons, whether nominated directly
or indirectly by the Directors, to be the attorney or attorneys of the Company
for such purpose and with such powers, authorities and discretions (not
exceeding those vested in or exercisable by the Directors under these Articles)
and for such period and subject to such conditions as they may think fit, and
any such powers of attorney may contain such provisions for the protection and
convenience of persons dealing with any such attorneys as the Directors may
think fit and may also authorize any such attorney to delegate all or any of the
powers, authorities and discretions vested in him.
77. All cheques, promissory notes, drafts, bills of exchange and other
negotiable instruments and all receipts for monies paid to the Company shall be
signed, drawn, accepted, endorsed or otherwise executed as the case may be in
such manner as the Directors shall from time to time by resolution determine.
78. The Directors shall cause minutes to be made in books provided for the
purpose:
(a) of all appointments of officers made by the Directors;
(b) of the names of the Directors (including those represented
thereat by an alternate or by proxy) present at each meeting
of the Directors and of any committee of the
Directors;
(c) of all resolutions and proceedings at all meetings of the
Company and of the Directors and of committees of Directors.
79. The Directors on behalf of the Company may pay a gratuity or pension or
allowance on retirement to any Director who has held any other salaried office
or place of profit with the Company or to his widow or dependants and may make
contributions to any fund and pay premiums for the purchase or provision of any
such gratuity, pension or allowance.
80. The Directors may exercise all the powers of the Company to borrow money and
to mortgage or charge its undertaking, property and uncalled capital or any part
thereof and to issue debentures,
<PAGE>
- 18 -
debenture stock and other securities whether outright or as security for any
debt, liability or obligation of the Company or of any third party.
MANAGEMENT
----------
81. (a) The Directors may from time to time provide for the management of the
affairs of the Company in such manner as they shall think fit and the provisions
contained in the three next following paragraphs shall be without prejudice to
the general powers conferred by this paragraph.
(b) The Directors from time to time and at any time may establish any
committees, local boards or agencies for managing any of the affairs of the
Company and may appoint any persons to be members of such committees or local
boards or any managers or agents and may fix their remuneration.
(c) The Directors from time to time and at any time may delegate to any
such committee, local board, manager or agent any of the powers, authorities and
discretions for the time being vested in the Directors and may authorize the
members for the time being of any such local board, or any of them to fill up
any vacancies therein and to act notwithstanding vacancies and any such
appointment or delegation may be made on such terms and subject to such
conditions as the Directors may think fit and the Directors may at any time
remove any person so appointed and may annul or vary any such delegation, but no
person dealing in good faith and without notice of any such annulment or
variation shall be affected thereby.
(d) Any such delegates as aforesaid may be authorized by the Directors
to subdelegate all or any of the powers, authorities, and discretions for the
time being vested in them.
MANAGING DIRECTORS
------------------
82. The Directors may, from time to time, appoint one or more of their body (but
not an alternate Director) to the office of Managing Director for such term and
at such remuneration (whether by way of salary, or commission, or participation
in profits, or partly in one way and partly in another) as they may think fit
but his appointment shall be subject to determination ipso facto if he ceases
from any cause to be a Director and no alternate Director appointed by him can
act in his stead as a Director or Managing Director.
83. The Directors may entrust to and confer upon a Managing Director any of the
powers exercisable by them upon such terms and conditions and with such
restrictions as they may think fit and either collaterally with or to the
exclusion of their own powers and may from time to time revoke, withdraw, alter
or vary all or any of such powers.
<PAGE>
- 19 -
PROCEEDINGS OF DIRECTORS
------------------------
84. Except as otherwise provided by these Articles, the Directors shall meet
together for the despatch of business, convening, adjourning and otherwise
regulating their meetings as they think fit. Questions arising at any meeting
shall be decided by a majority of votes of the Directors and alternate Directors
present at a meeting at which there is a quorum, the vote of an alternate
Director not being counted if his appointor be present at such meeting. In case
of an equality of votes, the Chairman shall have a second or casting vote.
85. A Director or alternate Director may, and the Secretary on the requisition
of a Director or alternate Director shall, at any time summon a meeting of the
Directors by at least two days' notice in writing to every Director and
alternate Director which notice shall set forth the general nature of the
business to be considered unless notice is waived by all the Directors (or their
alternates) either at, before or after the meeting is held and PROVIDED FURTHER
if notice is given in person, by cable, telex or telecopy the same shall be
deemed to have been given on the day it is delivered to the Directors or
transmitting organization as the case may be. The provisions of Article 40 shall
apply mutatis mutandis with respect to notices of meetings of Directors.
86. The quorum necessary for the transaction of the business of the Directors
may be fixed by the Directors and unless so fixed shall be two, a Director and
his appointed alternate Director being considered only one person for this
purpose, PROVIDED ALWAYS that if there shall at any time be only a sole Director
the quorum shall be one. For the purposes of this Article an alternate Director
or proxy appointed by a Director shall be counted in a quorum at a meeting at
which the Director appointing him is not present.
87. The continuing Directors may act notwithstanding any vacancy in their body,
but if and so long as their number is reduced below the number fixed by or
pursuant to these Articles as the necessary quorum of Directors the continuing
Directors or Director may act for the purpose of increasing the number of
Directors to that number, or of summoning a general meeting of the
Company, but for no other purpose.
88. The Directors may elect a Chairman of their Board and determine the period
for which he is to hold office; but if no such Chairman is elected, or if at any
meeting the Chairman is not present within five minutes after the time appointed
for holding the same, the Directors present may choose one of their number to be
Chairman of the meeting.
89. The Directors may delegate any of their powers to committees consisting of
such member or members of the Board of Directors (including Alternate Directors
in the absence of their appointors) as they think fit; any committee so formed
shall in the exercise of the powers so delegated conform to any regulations that
may be imposed on it by the Directors.
<PAGE>
- 20 -
90. A committee may meet and adjourn as it thinks proper. Questions arising at
any meeting shall be determined by a majority of votes of the members present,
and in the case of an equality of votes the Chairman shall have a second or
casting vote.
91. All acts done by any meeting of the Directors or of a committee of Directors
(including any person acting as an alternate Director) shall, notwithstanding
that it be afterwards discovered that there was some defect in the appointment
of any Director or alternate Director, or that they or any of them were
disqualified, be as valid as if every such person had been duly appointed and
qualified to be a Director or alternate Director as the case may be.
92. Members of the Board of Directors or of any committee thereof may
participate in a meeting of the Board or of such 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 participation in a
meeting pursuant to this provision shall constitute presence in person at such
meeting. A resolution in writing (in one or more counterparts), signed by all
the Directors for the time being or all the members of a committee of Directors
(an alternate Director being entitled to sign such resolution on behalf of his
appointor) shall be as valid and effectual as if it had been passed at a meeting
of the Directors or committee as the case may be duly convened and held.
93. (a) A Director may be represented at any meetings of the Board of Directors
by a proxy appointed by him in which event the presence or vote of the proxy
shall for all purposes be deemed to be that of the Director.
(b) The provisions of Articles 59-62 shall mutatis mutandis apply to
the appointment of proxies by Directors.
VACATION OF OFFICE OF DIRECTOR
------------------------------
94. The office of a Director shall be vacated:
(a) if he gives notice in writing to the Company that he resigns
the office of Director;
(b) if he absents himself (without being represented by proxy or
an alternate Director appointed by him) from three consecutive
meetings of the Board of Directors without special leave of
absence from the Directors, and they pass a resolution that he
has by reason of such absence vacated office;
(c) if he dies, becomes bankrupt or makes any arrangement or
composition with his creditors generally;
<PAGE>
- 21 -
(d) if he is found a lunatic or becomes of unsound mind.
APPOINTMENT AND REMOVAL OF DIRECTORS
------------------------------------
95. The Company may by ordinary resolution appoint any person to be a Director
and may in like manner remove any Director and may in like manner appoint
another person in his stead.
96. The Directors shall have power at any time and from time to time to appoint
any person to be a Director, either to fill a casual vacancy or as an addition
to the existing Directors but so that the total amount of Directors (exclusive
of alternate Directors) shall not at any time exceed the number fixed in
accordance with these Articles.
PRESUMPTION OF ASSENT
---------------------
97. A Director of the Company who is present at a meeting of the Board of
Directors at which action on any Company matter is taken shall be presumed to
have assented to the action taken unless his dissent shall be entered in the
Minutes of the meeting or unless he shall file his written dissent from such
action with the person acting as the Secretary of the meeting before the
adjournment thereof or shall forward such dissent by registered mail to such
person immediately after the adjournment of the meeting. Such right to dissent
shall not apply to a Director who voted in favour of such action.
SEAL
----
98. (a) The Company may, if the Directors so determine, have a Seal which shall,
subject to paragraph (c) hereof, only be used by the authority of the Directors
or of a committee of the Directors authorized by the Directors in that behalf
and every instrument to which the Seal has been affixed shall be signed by one
person who shall be either a Director or the Secretary or Secretary-Treasurer or
some person appointed by the Directors for the purpose.
(b) The Company may have for use in any place or places outside the
Cayman Islands a duplicate Seal or Seals each of which shall be a facsimile of
the Common Seal of the Company and, if the Directors so determine, with the
addition on its face of the name of every place where it is to be used.
(c) A Director, Secretary or other officer or representative or
attorney may without further authority of the Directors affix the Seal of the
Company over his signature alone to any document of the Company required to be
authenticated by him under Seal or to be filed with the Registrar of Companies
in the Cayman Islands or elsewhere wheresoever.
<PAGE>
- 22 -
OFFICERS
--------
99. The Company may have a President, a Secretary or Secretary-Treasurer
appointed by the Directors who may also from time to time appoint such other
officers as they consider necessary, all for such terms, at such remuneration
and to perform such duties, and subject to such provisions as to
disqualification and removal as the Directors from time to time prescribe.
DIVIDENDS, DISTRIBUTIONS AND RESERVE
------------------------------------
100. Subject to the Statute, the Directors may from time to time declare
dividends (including interim dividends) and distributions on shares of the
Company outstanding and authorize payment of the same out of the funds of the
Company lawfully available therefor.
101. The Directors may, before declaring any dividends or distributions, set
aside such sums as they think proper as a reserve or reserves which shall at the
discretion of the Directors, be applicable for any purpose of the Company and
pending such application may, at the like discretion, be employed in the
business of the Company.
102. No dividend or distribution shall be payable except out of the profits of
the Company, realized or unrealized, or out of the share premium account or as
otherwise permitted by the Statute.
103. Subject to the rights of persons, if any, entitled to shares with special
rights as to dividends or distributions, if dividends or distributions are to be
declared on a class of shares they shall be declared and paid according to the
amounts paid or credited as paid on the shares of such class outstanding on the
record date for such dividend or distribution as determined in accordance with
these Articles but no amount paid or credited as paid on a share in advance of
calls shall be treated for the purpose of this Article as paid on the share.
104. The Directors may deduct from any dividend or distribution payable to any
Member all sums of money (if any) presently payable by him to the Company on
account of calls or otherwise.
105. The Directors may declare that any dividend or distribution be paid wholly
or partly by the distribution of specific assets and in particular of paid up
shares, debentures, or debenture stock of any other company or in any one or
more of such ways and where any difficulty arises in regard to such
distribution, the Directors may settle the same as they think expedient and in
particular may issue fractional certificates and fix the value for distribution
of such specific assets or any part thereof and may determine that cash payments
shall be made to any Members upon the footing of the value so fixed in order to
adjust the rights of all Members and may vest any such specific assets in
trustees as may seem expedient to the Directors.
<PAGE>
- 23 -
106. Any dividend, distribution, interest or other monies payable in cash in
respect of shares may be paid by cheque or warrant sent through the post
directed to the registered address of the holder or, in the case of joint
holders, to the holder who is first named on the register of Members or to such
person and to such address as such holder or joint holders may in writing
direct. Every such cheque or warrant shall be made payable to the order of the
person to whom it is sent. Any one of two or more joint holders may give
effectual receipts for any dividends, bonuses, or other monies payable in
respect of the share held by them as joint holders.
107. No dividend or distribution shall bear interest against the Company.
CAPITALIZATION
--------------
108. The Company may upon the recommendation of the Directors by ordinary
resolution authorize the Directors to capitalize any sum standing to the credit
of any of the Company's reserve accounts (including share premium account and
capital redemption reserve fund) or any sum standing to the credit of profit and
loss account or otherwise available for distribution and to appropriate such sum
to Members in the proportions in which such sum would have been divisible
amongst them had the same been a distribution of profits by way of dividend and
to apply such sum on their behalf in paying up in full unissued shares for
allotment and distribution credited as fully paid up to and amongst them in the
proportion aforesaid. In such event the Directors shall do all acts and things
required to give effect to such capitalization, with full power to the Directors
to make such provisions as they think fit for the case of shares becoming
distributable in fractions (including provisions whereby the benefit of
fractional entitlements accrue to the Company rather than to the Members
concerned). The Directors may authorize any person to enter on behalf of all of
the Members interested into an agreement with the Company providing for such
capitalization and matters incidental thereto and any agreement made under such
authority shall be effective and binding on all concerned.
BOOKS OF ACCOUNT
----------------
109. The Directors shall cause proper books of account to be kept with respect
to:
(a) all sums of money received and expended by the Company and the
matters in respect of which the receipt or expenditure takes
place;
(b) all sales and purchases of goods by the Company;
(c) the assets and liabilities of the Company.
<PAGE>
- 24 -
Proper books shall not be deemed to be kept if there are not kept such books of
account as are necessary to give a true and fair view of the state of the
Company's affairs and to explain its transactions.
110. The Directors shall from time to time determine whether and to what extent
and at what times and places and under what conditions or regulations the
accounts and books of the Company or any of them shall be open to the inspection
of Members not being Directors and no Member (not being a Director) shall have
any right of inspecting any account or book or document of the Company except as
conferred by Statute or authorized by the Directors or by the Company in general
meeting.
111. The Directors may from time to time cause to be prepared and to be laid
before the Company in general meeting profit and loss accounts, balance sheets,
group accounts (if any) and such other reports and accounts as may be required
by law.
AUDIT
-----
112. The Company may at any annual general meeting appoint an Auditor or
Auditors of the Company who shall hold office until the next annual general
meeting and may fix his or their remuneration.
113. The Directors may before the first annual general meeting appoint an
Auditor or Auditors of the Company who shall hold office until the first annual
general meeting unless previously removed by an ordinary resolution of the
Members in general meeting in which case the Members at that meeting may appoint
Auditors. The Directors may fill any casual vacancy in the office of Auditor but
while any such vacancy continues the surviving or continuing Auditor or
Auditors, if any, may act. The remuneration of any Auditor appointed by the
Directors under this Article may be fixed by the Directors.
114. Every Auditor of the Company shall have a right of access at all times to
the books and accounts and vouchers of the Company and shall be entitled to
require from the Directors and Officers of the Company such information and
explanation as may be necessary for the performance of the duties of the
auditors.
115. Auditors shall at the next annual general meeting following their
appointment and at any other time during their term of office, upon request of
the Directors or any general meeting of the Members, make a report on the
accounts of the Company in general meeting during their tenure of
office.
<PAGE>
- 25 -
NOTICES
-------
116. Notices shall be in writing and may be given by the Company to any Member
either personally or by sending it by post, cable, telex or telecopy to him or
to his address as shown in the register of Members, such notice, if mailed, to
be forwarded airmail if the address be outside the
Cayman Islands.
117. (a) Where a notice is sent by post, service of the notice shall be deemed
to be effected by properly addressing, pre-paying and posting a letter
containing the notice, and to have been effected at the expiration of sixty
hours after the letter containing the same is posted as aforesaid.
(b) Where a notice is sent by cable, telex, or telecopy, service of the
notice shall be deemed to be effected by properly addressing, and sending such
notice through a transmitting organization and to have been effected on the day
the same is sent as aforesaid.
118. A notice may be given by the Company to the joint holders of record of a
share by giving the notice to the joint holder first named on the register of
Members in respect of the share.
119. A notice may be given by the Company to the person or persons which the
Company has been advised are entitled to a share or shares in consequence of the
death or bankruptcy of a Member by sending it through the post as aforesaid in a
pre-paid letter 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 supplied for that purpose by the persons claiming to be so entitled, or
at the option of the Company by giving the notice in any manner in which the
same might have been given if the death or bankruptcy had not occurred.
120. Notice of every general meeting shall be given in any manner hereinbefore
authorized to:
(a) every person shown as a Member in the register of Members as
of the record date for such meeting except that in the case of
joint holders the notice shall be sufficient if given to the
joint holder first named in the register of Members.
(b) every person upon whom the ownership of a share devolves by
reason of his being a legal personal representative or a
trustee in bankruptcy of a Member of record where the Member
of record but for his death or bankruptcy would be entitled to
receive notice of the meeting; and
No other person shall be entitled to receive notices of general meetings.
<PAGE>
- 26 -
WINDING UP
----------
121. If the Company shall be wound up the liquidator may, with the sanction of a
Special Resolution of the Company and any other sanction required by the
Statute, divide amongst the Members in specie or kind the whole or any part of
the assets of the Company (whether they shall consist of property of the same
kind or not) and may for such purpose set such value as he deems fair upon any
property to be divided as aforesaid and may determine how such 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 such assets
in trustees upon such trusts for the benefit of the contributories as the
liquidator, with the like sanction, shall think fit, but so that no Member shall
be compelled to accept any shares or other securities whereon there is any
liability.
122. If the Company shall be wound up, and the assets available for distribution
amongst the Members as such shall be insufficient to repay the whole of the
paid-up capital, such assets shall be distributed so that, as nearly as may be,
the losses shall be borne by the Members in proportion to the capital paid up,
or which ought to have been paid up, at the commencement of the winding up on
the shares held by them respectively. And if in a winding up the assets
available for distribution amongst the Members shall be more than sufficient to
repay the whole of the capital paid up at the commencement of the winding up,
the excess shall be distributed amongst the Members in proportion to the capital
paid up at the commencement of the winding up on the shares held by them
respectively. This Article is to be without prejudice to the rights of the
holders of shares issued upon special terms and conditions.
INDEMNITY
---------
123. The Directors and officers for the time being of the Company and any
trustee for the time being acting in relation to any of the affairs of the
Company and their heirs, executors, administrators and personal representatives
respectively shall be indemnified out of the assets of the Company from and
against all actions, proceedings, costs, charges, losses, damages and expenses
which they or any of them shall or may incur or sustain by reason of any act
done or omitted in or about the execution of their duty in their respective
offices or trusts, except such (if any) as they shall incur or sustain by or
through their own wilful neglect or default respectively and no such Director,
officer or trustee shall be answerable for the acts, receipts, neglects or
defaults of any other Director, officer or trustee or for joining in any receipt
for the sake of conformity or for the solvency or honesty of any banker or other
persons with whom any monies or effects belonging to the Company may be lodged
or deposited for safe custody or for any insufficiency of any security upon
which any monies of the Company may be invested or for any other loss or damage
due to any such cause as aforesaid or which may happen in or about the execution
of his office or trust unless the same shall happen through the wilful neglect
or default of such Director, Officer or trustee.
<PAGE>
- 27 -
FINANCIAL YEAR
--------------
124. Unless the Directors otherwise prescribe, the financial year of the Company
shall end on 31st December in each year and, following the year of
incorporation, shall begin on 1st January in each
year.
AMENDMENTS OF ARTICLES
----------------------
125. Subject to the Statute, the Company may at any time and from time to time
by Special Resolution alter or amend these Articles in whole or in part.
TRANSFER BY WAY OF CONTINUATION
-------------------------------
126. If the Company is exempted as defined in the Statute, it shall, subject to
the provisions of the Statute and with the approval of a Special Resolution,
have the power to register by way of continuation as a body corporate under the
laws of any jurisdiction outside the Cayman Islands and
to be deregistered in the Cayman Islands.
THE COMPANIES LAW (1995 REVISION)
---------------------------------
COMPANY LIMITED BY SHARES
-------------------------
MEMORANDUM OF ASSOCIATION
OF
MILLENIUM ALEKSANDER, INC.
1. The name of the Company is MILLENIUM ALEKSANDER, INC.
2. The Registered Office of the Company shall be at the offices of Maples and
Calder, Attorneys-at-Law, Ugland House, P.O. Box 309, George Town, Grand Cayman,
Cayman Islands, British West Indies or at such other place as the Directors may
from time to time decide.
3. The objects for which the Company is established are unrestricted and shall
include, but without limitation, the following:-
(i) (a) To undertake and carry on all or any of the trades and businesses of
international freight forwarders and agents, shippers, ship owners, ship
brokers, shipping agents and insurance brokers, underwriters, ship managers, tug
owners, shipping agents, loading brokers, freight contractors, carriers by land,
air and water, transport, haulage and general contractors, barge owners,
lightermen, railway and forwarding agents, dock owners, ships' husbands,
warehousemen, salvors, manufacturers of and dealers in tarpaulins, waterproofs,
machinery, engines, nautical instruments, and ships' rigging, gear, fittings and
equipment of every description, importers and exporters of and dealers in goods,
provisions, live and dead stock, commodities, articles, chattels, merchandise
and property of every kind,
<PAGE>
2
general traders and merchants, and generally to carry on the said businesses in
all their branches, and to carry on the said businesses either as principals or
agents or on commission or otherwise.
(b) To purchase or otherwise acquire, and to carry on the business or
businesses of fishing boat owners, smack owners, trawlers, deep-sea fishers,
shrimp fishers, fish curers, fish or shrimp salesmen, wholesale and retail fish
or shrimp merchants, wholesale and retail game and poultry merchants, ice
manufacturers, oil merchants and refiners, utilisers of fish refuse, manure
manufacturers, anchor and chain makers, wire rope makers, rope makers, mast and
block makers, ship chandlers, marine storekeepers, compass and nautical
instrument makers, marine engineers, engineers, boiler makers, ship builders,
dry-dock keepers, slip keepers, boat builders, ship and boat repairers, ship and
boat outfitters, salvors, wreck removers, wreck raisers, divers, auctioneers,
valuers, assessors, stevedores, wharfingers, carriers, forwarding agents, and
all other branches of business usually or conveniently connected with any such
business as aforesaid.
(c) To enter into, take over, negotiate or otherwise acquire, any
contract or contracts for the construction, building, equipping, fitting out,
storing, gearing or otherwise relating to any steamship, ship, trawler, catcher,
carrier, drifter, fishing boat, boat, or other vessel whatsoever, and to enter
into, take over, negotiate or otherwise acquire any other contract or contracts
whatever which the Company may think necessary, desirable or convenient for the
purposes of the Company or any of them, and to enter into, take over, negotiate,
or otherwise acquire any such contract or contracts at such prices and for such
<PAGE>
3
considerations, and upon such terms and conditions, and subject to such
stipulations and agreements as the Company may determine, and at any time and
from time to time vary, modify, alter or cancel any such contract.
(d) To acquire concessions or licences for the establishment and
working of lines of ships or other vessels between any ports of the world, or
for the formation or working of any railway or tramway, wharf, pier, dock, or
other works, or for the working of any coaches or other public conveyances, with
the benefit of any subsidy attached to any such concession or licence or
otherwise.
(e) To insure the vessels and other property of the Company in any
manner.
(f) To grant loans on ships and vessels or on goods and merchandise
carried or to be carried in any vessels and to buy and sell merchandise for
freighting on the ships and vessels of the Company.
(g) To engage in any and all kinds of business and other activities
with respect to oil, gas and other materials, and the products and by-products
thereof, including but not by way of limitation, exploration, developing,
drilling, producing, refining, processing, mining, confining, manufacturing,
storing, transporting, distributing, trading, buying, selling and all other
activities pertinent thereto.
(h) To resell or sublet any concession or licence obtained, or contract
entered into.
(i) To carry on the business of an investment company and to act as
promoters and entrepreneurs and to carry on business as financiers, capitalists,
concessionaires, merchants, brokers, traders, dealers, agents, importers and
exporters and to undertake and carry on and
<PAGE>
4
execute all kinds of investment, financial, commercial, mercantile, trading and
other operations.
(j) To carry on whether as principals, agents or otherwise howsoever
the business of realtors, developers, consultants, estate agents or managers,
builders, contractors, engineers, manufacturers, dealers in or vendors of all
types of property including services.
(ii) To exercise and enforce all rights and powers conferred by or incidental to
the ownership of any shares, stock, obligations or other securities including
without prejudice to the generality of the foregoing all such powers of veto or
control as may be conferred by virtue of the holding by the Company of some
special proportion of the issued or nominal amount thereof, to provide
managerial and other executive, supervisory and consultant services for or in
relation to any company in which the Company is interested upon such terms as
may be thought fit.
(iii) To purchase or otherwise acquire, to sell, exchange, surrender, lease,
mortgage, charge, convert, turn to account, dispose of and deal with real and
personal property and rights of all kinds and, in particular, mortgages,
debentures, produce, concessions, options, contracts, patents, annuities,
licences, stocks, shares, bonds, policies, book debts, business concerns,
undertakings, claims, privileges and choses in action of all kinds.
(iv) To subscribe for, conditionally or unconditionally, to underwrite, issue on
commission or otherwise, take, hold, deal in and convert stocks, shares and
securities of all kinds and to enter into partnership or into any arrangement
for sharing profits, reciprocal concessions or cooperation with any person or
company and to promote and aid in promoting,
<PAGE>
5
to constitute, form or organise any company, syndicate or partnership of any
kind, for the purpose of acquiring and undertaking any property and liabilities
of the Company or of advancing, directly or indirectly, the objects of the
Company or for any other purpose which the Company may think expedient.
(v) To stand surety for or to guarantee, support or secure the performance of
all or any of the obligations of any person, firm or company whether or not
related or affiliated to the Company in any manner and whether by personal
covenant or by mortgage, charge or lien upon the whole or any part of the
undertaking, property and assets of the Company, both present and future,
including its uncalled capital or by any such method and whether or not the
Company shall receive valuable consideration therefor.
(vi) To engage in or carry on any other lawful trade, business or enterprise
which may at any time appear to the Directors of the Company capable of being
conveniently carried on in conjunction with any of the aforementioned businesses
or activities or which may appear to the Directors or the Company likely to be
profitable to the Company.
In the interpretation of this Memorandum of Association in general and of this
Clause 3 in particular no object, business or power specified or mentioned shall
be limited or restricted by reference to or inference from any other object,
business or power, or the name of the Company, or by the juxtaposition of two or
more objects, businesses or powers and that, in the event of any ambiguity in
this clause or elsewhere in this Memorandum of Association, the same shall be
resolved by such interpretation and construction as will widen and enlarge and
not restrict the objects, businesses and powers of and exercisable by the
Company.
<PAGE>
6
4. Except as prohibited or limited by the Companies Law (1995 Revision), the
Company shall have full power and authority to carry out any object and shall
have and be capable of from time to time and at all times exercising any and all
of the powers at any time or from time to time exercisable by a natural person
or body corporate in doing in any part of the world whether as principal, agent,
contractor or otherwise whatever may be considered by it necessary for the
attainment of its objects and whatever else may be considered by it as
incidental or conducive thereto or consequential thereon, including, but without
in any way restricting the generality of the foregoing, the power to make any
alterations or amendments to this Memorandum of Association and the Articles of
Association of the Company considered necessary or convenient in the manner set
out in the Articles of Association of the Company, and the power to do any of
the following acts or things, viz:
to pay all expenses of and incidental to the promotion, formation and
incorporation of the Company; to register the Company to do business in any
other jurisdiction; to sell, lease or dispose of any property of the Company; to
draw, make, accept, endorse, discount, execute and issue promissory notes,
debentures, bills of exchange, bills of lading, warrants and other negotiable or
transferable instruments; to lend money or other assets and to act as
guarantors; to borrow or raise money on the security of the undertaking or on
all or any of the assets of the Company including uncalled capital or without
security; to invest monies of the Company in such manner as the Directors
determine; to promote other companies; to sell the undertaking of the Company
for cash or any other consideration; to distribute assets in specie to members
of the Company; to make charitable or benevolent donations; to pay pensions or
gratuities or
<PAGE>
7
provide other benefits in cash or kind to Directors, officers, employees, past
or present and their families; to carry on any trade or business and generally
to do all acts and things which, in the opinion of the Company or the Directors,
may be conveniently or profitably or usefully acquired and dealt with, carried
on, executed or done by the Company in connection with the business aforesaid
PROVIDED THAT the Company shall only carry on the businesses for which a licence
is required under the laws of the Cayman Islands when so licensed under the
terms of such laws.
5. The liability of each member is limited to the amount from time to time
unpaid on such member's shares.
6. The share capital of the Company is US$50,000 divided into 50,000 shares of a
nominal or par value of US$1.00 each with power for the Company insofar as is
permitted by law, to redeem or purchase any of its shares and to increase or
reduce the said capital subject to the provisions of the Companies Law (1995
Revision) and the Articles of Association and to issue any part of its capital,
whether original, redeemed or increased with or without any preference, priority
or special privilege or subject to any postponement of rights or to any
conditions or restrictions and so that unless the conditions of issue shall
otherwise expressly declare every issue of shares whether declared to be
preference or otherwise shall be subject to the powers hereinbefore contained.
7. If the Company is registered as exempted, its operations will be carried on
subject to the provisions of Section l92 of the Companies Law (1995 Revision)
and subject to the provisions of the Companies Law (1995 Revision) and the
Articles of Association it shall
<PAGE>
8
have the power to register by way of continuation as a body corporate limited by
shares under the laws of any jurisdiction outside the Cayman Islands and to be
deregistered in the Cayman Islands. WE the several persons whose names and
addresses are subscribed are desirous of being formed into a company in
pursuance of this Memorandum of Association and we respectively agree to take
the number of shares in the capital of the Company set opposite our respective
names.
<PAGE>
THE COMPANIES LAW (1995 REVISION)
---------------------------------
COMPANY LIMITED BY SHARES
-------------------------
ARTICLES OF ASSOCIATION
OF
MILLENIUM ALEKSANDER, INC.
INTERPRETATION
--------------
1. In these Articles Table A in the Schedule to the Statute does not apply and,
unless there be something in the subject or context inconsistent therewith,
"Articles" means these Articles as originally framed or
as from time to time altered by Special
Resolution.
"Auditors" means the persons for the time being
performing the duties of auditors of the
Company.
"Company" means the above-named Company.
"debenture" means debenture stock, mortgages, bonds and
any other such securities of the Company
whether constituting a charge on the assets
of the Company or not.
"Directors" means the directors for the time being of
the Company.
"dividend" includes bonus.
"Member" shall bear the meaning as ascribed to it in
the Statute.
"month" means calendar month.
"paid-up" means paid-up and/or credited as paid-up.
<PAGE>
2
"registered office" means the registered office for the time
being of the Company.
"Seal" means the common seal of the Company and
includes every duplicate seal.
"Secretary" includes an Assistant Secretary and any
person appointed to perform the duties of
Secretary of the Company.
"share" includes a fraction of a share.
"Special Resolution" has the same meaning as in the Statute and
includes a resolution approved in writing as
described therein.
"Statute" means the Companies Law of the Cayman
Islands as amended and every statutory
modification or re-enactment thereof for the
time being in force.
"written" and "in writing" include all modes of representing or
reproducing words in visible form.
Words importing the singular number only include the plural number and
vice-versa.
Words importing the masculine gender only include the feminine gender.
Words importing persons only include corporations.
2. The business of the Company may be commenced as soon after incorporation as
the Directors shall see fit, notwithstanding that part only of the shares may
have been allotted.
3. The Directors may pay, out of the capital or any other monies of the Company,
all expenses incurred in or about the formation and establishment of the Company
including the expenses of registration.
CERTIFICATES FOR SHARES
-----------------------
4. Certificates representing shares of the Company shall be in such form as
shall be determined by the Directors. Such certificates may be under Seal. All
certificates for shares shall be consecutively numbered or otherwise identified
and shall specify the shares to which they relate. The name and address of the
person to whom the shares represented thereby are
<PAGE>
3
issued, with the number of shares and date of issue, shall be entered in the
register of Members of the Company. All certificates surrendered to the Company
for transfer shall be cancelled and no new certificate shall be issued until the
former certificate for a like number of shares shall have been surrendered and
cancelled. The Directors may authorise certificates to be issued with the seal
and authorised signature(s) affixed by some method or system of mechanical
process.
5. Notwithstanding Article 4 of these Articles, if a share certificate be
defaced, lost or destroyed, it may be renewed on payment of a fee of one dollar
(US$l.00) or such less sum and on such terms (if any) as to evidence and
indemnity and the payment of the expenses incurred by the Company in
investigating evidence, as the Directors may prescribe.
ISSUE OF SHARES
---------------
6. Subject to the provisions, if any, in that behalf in the Memorandum of
Association and to any direction that may be given by the Company in general
meeting and without prejudice to any special rights previously conferred on the
holders of existing shares, the Directors may allot, issue, grant options over
or otherwise dispose of shares of the Company (including fractions of a share)
with or without preferred, deferred or other special rights or restrictions,
whether in regard to dividend, voting, return of capital or otherwise and to
such persons, at such times and on such other terms as they think proper.
7. The Company shall maintain a register of its Members and every person whose
name is entered as a Member in the register of Members shall be entitled without
payment to receive within two months after allotment or lodgement of transfer
(or within such other period as the conditions of issue shall provide) one
certificate for all his shares or several certificates each for one or more of
his shares upon payment of fifty cents (US$0.50) for every certificate after the
first or such less sum as the Directors shall from time to time determine
provided that in respect of a share or shares held jointly by several persons
the Company shall not be bound to issue more than one certificate and delivery
of a certificate for a share to one of the several joint holders shall be
sufficient delivery to all such holders.
TRANSFER OF SHARES
------------------
8. The instrument of transfer of any share shall be in writing and shall be
executed by or on behalf of the transferor and the transferor shall be deemed to
remain the holder of a share until the name of the transferee is entered in the
register in respect thereof.
<PAGE>
4
9. The Directors may in their absolute discretion decline to register any
transfer of shares without assigning any reason therefor. If the Directors
refuse to register a transfer they shall notify the transferee within two months
of such refusal.
10. The registration of transfers may be suspended at such time and for such
periods as the Directors may from time to time determine, provided always that
such registration shall not be suspended for more than forty-five days in any
year.
REDEEMABLE SHARES
-----------------
11. (a) Subject to the provisions of the Statute and the Memorandum of
Association, shares may be issued on the terms that they are, or at the option
of the Company or the holder are, to be redeemed on such terms and in such
manner as the Company, before the issue of the shares, may by Special Resolution
determine.
(b) Subject to the provisions of the Statute and the Memorandum of
Association, the Company may purchase its own shares (including fractions of a
share), including any redeemable shares, provided that the manner of purchase
has first been authorised by the Company in general meeting and may make payment
therefor in any manner authorised by the Statute, including out of capital.
VARIATION OF RIGHTS OF SHARES
-----------------------------
12. If at any time the share capital of the Company 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, whether or not the
Company is being wound-up, be varied with the consent in writing of the holders
of three-fourths of the issued shares of that class, or with the sanction of a
Special Resolution passed at a general meeting of the holders of the shares of
that class.
The provisions of these Articles relating to general meetings
shall apply to every such general meeting of the holders of one class of shares
except that the necessary quorum shall be one person holding or representing by
proxy at least 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.
13. The rights conferred upon the holders of the shares of any class issued with
preferred or other rights shall not, unless otherwise expressly provided by the
terms of issue of the shares of that class, be deemed to be varied by the
creation or issue of further shares ranking pari passu therewith.
<PAGE>
5
COMMISSION ON SALE OF SHARES
----------------------------
14. The Company may in so far as the Statute from time to time permits pay a
commission to any person in consideration of his subscribing or agreeing to
subscribe whether absolutely or conditionally for any shares of the Company.
Such commissions may be satisfied by the payment of cash or the lodgement of
fully or partly paid-up shares or partly in one way and partly in the other. The
Company may also on any issue of shares pay such brokerage as may be lawful.
NON-RECOGNITION OF TRUSTS
-------------------------
15. No person shall be recognised by the Company as holding any share upon any
trust and the Company shall not be bound by or be compelled in any way to
recognise (even when having notice thereof) any equitable, contingent, future,
or partial interest in any share, or any interest in any fractional part of a
share, or (except only as is otherwise provided by these Articles or the
Statute) any other rights in respect of any share except an absolute right to
the entirety thereof in the registered holder.
LIEN ON SHARES
--------------
16. The Company shall have a first and paramount lien and charge on all shares
(whether fully paid-up or not) registered in the name of a Member (whether
solely or jointly with others) for all debts, liabilities or engagements to or
with the Company (whether presently payable or not) by such Member or his
estate, either alone or jointly with any other person, whether a Member or not,
but the Directors may at any time declare any share to be wholly or in part
exempt from the provisions of this Article. The registration of a transfer of
any such share shall operate as a waiver of the Company's lien (if any) thereon.
The Company's lien (if any) on a share shall extend to all dividends or other
monies payable in respect thereof.
17. The Company may sell, in such manner as the Directors think fit, any shares
on which the Company has a lien, but no sale shall be made unless a sum in
respect of which the lien exists is presently payable, nor until the expiration
of fourteen days after a notice in writing stating and demanding payment of such
part of the amount in respect of which the lien exists as is presently payable,
has been given to the registered holder or holders for the time being of the
share, or the person, of which the Company has notice, entitled thereto by
reason of his death or bankruptcy.
18. To give effect to any such sale the Directors may authorise some person to
transfer the shares sold to the purchaser thereof. The purchaser shall be
registered as the holder of the shares comprised in any such transfer, and he
shall not be bound to see to the
<PAGE>
6
application of the purchase money, nor shall his title to the shares be affected
by any irregularity or invalidity in the proceedings in reference to the sale.
19. The proceeds of such sale shall be received by the Company and applied in
payment of such part of the amount in respect of which the lien exists as is
presently payable and the residue, if any, shall (subject to a like lien for
sums 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.
CALL ON SHARES
--------------
20. (a) The Directors may from time to time make calls upon the Members in
respect of any monies unpaid on their shares (whether on account of the nominal
value of the shares or by way of premium or otherwise) and not by the conditions
of allotment thereof made payable at fixed terms, provided that no call shall be
payable at less than one month from the date fixed for the payment of the last
preceding call, and each Member shall (subject to receiving at least fourteen
days notice specifying the time or times of payment) pay to the Company at the
time or times so specified the amount called on the shares. A call may be
revoked or postponed as the Directors may determine. A call may be made payable
by instalments.
(b) A call shall be deemed to have been made at the time when the
resolution of the Directors authorising such call was passed.
(c) The joint holders of a share shall be jointly and severally liable
to pay all calls in respect thereof.
21. If a sum called in respect of a share is not paid before or on a day
appointed for payment thereof, the persons from whom the sum is due shall pay
interest on the sum from the day appointed for payment thereof to the time of
actual payment at such rate not exceeding ten per cent per annum as the
Directors may determine, but the Directors shall be at liberty to waive payment
of such interest either wholly or in part.
22. Any sum which by the terms of issue of a share becomes payable on allotment
or at any fixed date, whether on account of the nominal value of the share or by
way of premium or otherwise, shall for the purposes of these Articles be deemed
to be a call duly made, notified and payable on the date on which by the terms
of issue the same becomes payable, and in the case of non-payment all the
relevant provisions of these Articles as to payment of interest forfeiture or
otherwise shall apply as if such sum had become payable by virtue of a call duly
made and notified.
<PAGE>
7
23. The Directors may, on the issue of shares, differentiate between the holders
as to the amount of calls or interest to be paid and the times of payment.
24. (a) The Directors may, if they think fit, receive from any Member willing to
advance the same, all or any part of the monies uncalled and unpaid upon any
shares held by him, and upon all or any of the monies so advanced may (until the
same would but for such advances, become payable) pay interest at such rate not
exceeding (unless the Company in general meeting shall otherwise direct) seven
per cent per annum, as may be agreed upon between the Directors and the Member
paying such sum in advance.
(b) No such sum paid in advance of calls shall entitle the Member
paying such sum to any portion of a dividend declared in respect of any period
prior to the date upon which such sum would, but for such payment, become
presently payable.
FORFEITURE OF SHARES
--------------------
25. (a) If a Member fails to pay any call or instalment of a call or to make any
payment required by the terms of issue on the day appointed for payment thereof,
the Directors may, at any time thereafter during such time as any part of the
call, instalment or payment remains unpaid, give notice requiring payment of so
much of the call, instalment or payment as is unpaid, together with any interest
which may have accrued and all expenses that have been incurred by the Company
by reason of such non-payment. Such notice shall name a day (not earlier than
the expiration of fourteen days from the date of giving of the notice) on or
before which the payment required by the notice is to be made, and shall state
that, in the event of non-payment at or before the time appointed the shares in
respect of which such notice was given will be liable to be forfeited.
(b) If the requirements of any such notice as aforesaid are not
complied with, any share in respect of which the notice has been given may at
any time thereafter, before the payment required by the notice has been made, be
forfeited by a resolution of the Directors to that effect. Such forfeiture shall
include all dividends declared in respect of the forfeited share and not
actually paid before the forfeiture.
(c) A forfeited share may be sold or otherwise disposed of on such
terms and in such manner as the Directors think fit and at any time before a
sale or disposition the forfeiture may be cancelled on such terms as the
Directors think fit.
26. A person whose shares have been forfeited shall cease to be a Member in
respect of the forfeited shares, but shall, notwithstanding, remain liable to
pay to the Company all monies which, at the date of forfeiture were payable by
him to the Company in respect of
<PAGE>
8
the shares together with interest thereon, but his liability shall cease if and
when the Company shall have received payment in full of all monies whenever
payable in respect of the shares.
27. A certificate in writing under the hand of one Director or the Secretary of
the Company that a share in the Company has been duly forfeited on a date stated
in the declaration shall be conclusive evidence of the fact therein stated as
against all persons claiming to be entitled to the share. The Company may
receive the consideration given for the share on any sale or disposition thereof
and may execute a transfer of the share in favour of the person to whom the
share is sold or disposed of and he shall thereupon be registered as the holder
of the share and shall not be bound to see to the application of the purchase
money, if any, nor shall his title to the share be affected by any irregularity
or invalidity in the proceedings in reference to the forfeiture, sale or
disposal of the share.
28. The provisions of these Articles as to forfeiture shall apply in the case of
non-payment of any sum which, by the terms of issue of a share, becomes payable
at a fixed time, whether on account of the nominal value of the share or by way
of premium as if the same had been payable by virtue of a call duly made and
notified.
REGISTRATION OF EMPOWERING INSTRUMENTS
--------------------------------------
29. The Company shall be entitled to charge a fee not exceeding one dollar
(US$l.00) on the registration of every probate, letters of administration,
certificate of death or marriage, power of attorney, notice in lieu of
distringas, or other instrument.
TRANSMISSION OF SHARES
----------------------
30. In case of the death of a Member, the survivor or survivors where the
deceased was a joint holder, and the legal personal representatives of the
deceased where he was a sole holder, shall be the only persons recognised by the
Company as having any title to his interest in the shares, but nothing herein
contained shall release the estate of any such deceased holder from any
liability in respect of any shares which had been held by him solely or jointly
with other persons.
31. (a) Any person becoming entitled to a share in consequence of the death or
bankruptcy or liquidation or dissolution of a Member (or in any other way than
by transfer) may, upon such evidence being produced as may from time to time be
required by the Directors and subject as hereinafter provided, elect either to
be registered himself as holder of the share or to make such transfer of the
share to such other person nominated by him as the deceased or bankrupt person
could have made and to have such person registered as the transferee thereof,
but the Directors shall, in either case, have the same right to decline or
<PAGE>
9
suspend registration as they would have had in the case of a transfer of the
share by that Member before his death or bankruptcy as the case may be.
(b) If the person so becoming entitled shall elect to be registered
himself as holder he shall deliver or send to the Company a notice in writing
signed by him stating that he so elects.
32. A person becoming entitled to a share by reason of the death or bankruptcy
or liquidation or dissolution of the holder (or in any other case than by
transfer) shall be entitled to the same dividends and other advantages to which
he would be entitled if he were the registered holder of the share, except that
he shall not, before being registered as a Member in respect of the share, be
entitled in respect of it to exercise any right conferred by membership in
relation to meetings of the Company PROVIDED HOWEVER that the Directors may at
any time give notice requiring any such person to elect either to be registered
himself or to transfer the share and if the notice is not complied with within
ninety days the Directors may thereafter withhold payment of all dividends,
bonuses or other monies payable in respect of the share until the requirements
of the notice have been complied with.
AMENDMENT OF MEMORANDUM OF ASSOCIATION, CHANGE OF
LOCATION OF REGISTERED OFFICE & ALTERATION OF CAPITAL
33. (a) Subject to and in so far as permitted by the provisions of the Statute,
the Company may from time to time by ordinary resolution alter or amend its
Memorandum of Association otherwise than with respect to its name and objects
and may, without restricting the generality of the foregoing:
(i) increase the share capital by such sum to be divided into
shares of such amount or without nominal or par value as the resolution shall
prescribe and with such rights, priorities and privileges annexed thereto, as
the Company in general meeting may determine.
(ii) consolidate and divide all or any of its share capital
into shares of larger amount than its existing shares;
(iii) by subdivision of its existing shares or any of them
divide the whole or any part of its share capital into shares of smaller amount
than is fixed by the Memorandum of Association or into shares without nominal or
par value;
(iv) cancel any shares which at the date of the passing of the
resolution have not been taken or agreed to be taken by any person.
<PAGE>
10
(b) All new shares created hereunder shall be subject to the same
provisions with reference to the payment of calls, liens, transfer,
transmission, forfeiture and otherwise as the shares in the original share
capital.
(c) Subject to the provisions of the Statute, the Company may by
Special Resolution change its name or alter its objects.
(d) Without prejudice to Article 11 hereof and subject to the
provisions of the Statute, the Company may by Special Resolution reduce its
share capital and any capital redemption reserve fund.
(e) Subject to the provisions of the Statute, the Company may by
resolution of the Directors change the location of its registered office.
CLOSING REGISTER OF MEMBERS OR FIXING RECORD DATE
-------------------------------------------------
34. For the purpose of determining Members entitled to notice of or to vote at
any meeting of Members or any adjournment thereof, or Members entitled to
receive payment of any dividend, or in order to make a determination of Members
for any other proper purpose, the Directors of the Company may provide that the
register of Members shall be closed for transfers for a stated period but not to
exceed in any case forty days. If the register of Members shall be so closed for
the purpose of determining Members entitled to notice of or to vote at a meeting
of Members such register shall be so closed for at least ten days immediately
preceding such meeting and the record date for such determination shall be the
date of the closure of the register of Members.
35. In lieu of or apart from closing the register of Members, the Directors may
fix in advance a date as the record date for any such determination of Members
entitled to notice of or to vote at a meeting of the Members and for the purpose
of determining the Members entitled to receive payment of any dividend the
Directors may, at or within 90 days prior to the date of declaration of such
dividend fix a subsequent date as the record date for such determination.
36. If the register of Members is not so closed and no record date is fixed for
the determination of Members entitled to notice of or to vote at a meeting of
Members or Members entitled to receive payment of a dividend, the date on which
notice of the meeting is mailed or the date on which the resolution of the
Directors declaring such dividend is adopted, as the case may be, shall be the
record date for such determination of Members. When a determination of Members
entitled to vote at any meeting of Members has been made as provided in this
section, such determination shall apply to any adjournment thereof.
<PAGE>
11
GENERAL MEETING
---------------
37. (a) Subject to paragraph (c) hereof, the Company shall within one year of
its incorporation and in each year of its existence thereafter hold a general
meeting as its annual general meeting and shall specify the meeting as such in
the notices calling it. The annual general meeting shall be held at such time
and place as the Directors shall appoint and if no other time and place is
prescribed by them, it shall be held at the registered office on the second
Wednesday in December of each year at ten o'clock in the morning.
(b) At these meetings the report of the Directors (if any) shall be
presented.
(c) If the Company is exempted as defined in the Statute it may but
shall not be obliged to hold an annual general meeting.
38. (a) The Directors may whenever they think fit, and they shall on the
requisition of Members of the Company holding at the date of the deposit of the
requisition not less than one-tenth of such of the paid-up capital of the
Company as at the date of the deposit carries the right of voting at general
meetings of the Company, proceed to convene a general meeting of the Company.
(b) The requisition must state the objects of the meeting and must be
signed by the requisitionists and deposited at the registered office of the
Company and may consist of several documents in like form each signed by one or
more requisitionists.
(c) If the Directors do not within twenty-one days from the date of the
deposit of the requisition duly proceed to convene a general meeting, the
requisitionists, or any of them representing more than one-half of the total
voting rights of all of them, may themselves convene a general meeting, but any
meeting so convened shall not be held after the expiration of three months after
the expiration of the said twenty-one days.
(d) A general meeting convened as aforesaid by requisitionists shall be
convened in the same manner as nearly as possible as that in which general
meetings are to be convened by Directors.
NOTICE OF GENERAL MEETINGS
--------------------------
39. At least five days' notice shall be given of an annual general meeting or
any other general meeting. Every notice shall be exclusive of the day on which
it is given or deemed to be given and of the day for which it is given and shall
specify the place, the day and the hour of the meeting and the general nature of
the business and shall be given in manner
<PAGE>
12
hereinafter mentioned or in such other manner if any as may be prescribed by the
Company PROVIDED that a general meeting of the Company shall, whether or not the
notice specified in this regulation has been given and whether or not the
provisions of Article 38 have been complied with, be deemed to have been duly
convened if it is so agreed:
(a) in the case of a general meeting called as an annual general
meeting by all the Members entitled to attend and vote thereat or their proxies;
and
(b) in the case of any other general meeting by a majority in number of
the Members having a right to attend and vote at the meeting, being a majority
together holding not less than seventy-five per cent in nominal value or in the
case of shares without nominal or par value seventy-five per cent of the shares
in issue, or their proxies.
40. The accidental omission to give notice of a general meeting to, or the
non-receipt of notice of a meeting by any person entitled to receive notice
shall not invalidate the proceedings of that meeting.
PROCEEDINGS AT GENERAL MEETINGS
-------------------------------
41. No business shall be transacted at any general meeting unless a quorum of
Members is present at the time when the meeting proceeds to business; two
Members present in person or by proxy shall be a quorum provided always that if
the Company has one Member of record the quorum shall be that one Member present
in person or by proxy.
42. A resolution (including a Special Resolution) in writing (in one or more
counterparts) signed by all Members for the time being entitled to receive
notice of and to attend and vote at general meetings (or being corporations by
their duly authorised representatives) shall be as valid and effective as if the
same had been passed at a general meeting of the Company duly convened and held.
43. If within half an hour from the time appointed for the meeting a quorum is
not present, the meeting, if convened upon the requisition of Members, shall be
dissolved and in any other case it shall stand adjourned to the same day in the
next week at the same time and place or to such other time or such other place
as the Directors may determine and if at the adjourned meeting a quorum is not
present within half an hour from the time appointed for the meeting the Members
present shall be a quorum.
44. The Chairman, if any, of the Board of Directors shall preside as Chairman at
every general meeting of the Company, or if there is no such Chairman, or if he
shall not be present within fifteen minutes after the time appointed for the
holding of the meeting, or is
<PAGE>
13
unwilling to act, the Directors present shall elect one of their number to be
Chairman of the meeting.
45. If at any general meeting 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 shall choose one of their number to be Chairman
of the meeting.
46. The Chairman may, with the consent of any general meeting duly constituted
hereunder, 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 any
adjourned meeting other than the business left unfinished at the meeting from
which the adjournment took place. When a general meeting is adjourned for thirty
days or more, notice of the adjourned meeting shall be given as in the case of
an original meeting; save as aforesaid it shall not be necessary to give any
notice of an adjournment or of the business to be transacted at an adjourned
general meeting.
47. At any general meeting a resolution put to the vote of the meeting shall be
decided on a show of hands unless a poll is, before or on the declaration of the
result of the show of hands, demanded by the Chairman or any other Member
present in person or by proxy.
48. Unless a poll be so demanded a declaration by the Chairman that a resolution
has on a show of hands been carried, or carried unanimously, or by a particular
majority, or lost, and an entry to that effect in the Company's Minute Book
containing the Minutes of the proceedings of the meeting shall be conclusive
evidence of that fact without proof of the number or proportion of the votes
recorded in favour of or against such resolution.
49. The demand for a poll may be withdrawn.
50. Except as provided in Article 52, if a poll is duly demanded it shall be
taken in such manner as the Chairman directs and the result of the poll shall be
deemed to be the resolution of the general meeting at which the poll was
demanded.
51. In the case of an equality of votes, whether on a show of hands or on a
poll, the Chairman of the general meeting at which the show of hands takes place
or at which the poll is demanded, shall be entitled to a second or casting vote.
52. 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 at such time as the Chairman of the general meeting directs and
any business other than that upon which a poll
<PAGE>
14
has been demanded or is contingent thereon may be proceeded with pending the
taking of the poll.
VOTES OF MEMBERS
----------------
53. Subject to any rights or restrictions for the time being attached to any
class or classes of shares, on a show of hands every Member of record present in
person or by proxy at a general meeting shall have one vote and on a poll every
Member of record present in person or by proxy shall have one vote for each
share registered in his name in the register of
Members.
54. In the case of joint holders of record 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 for this purpose seniority shall be
determined by the order in which the names stand in the register of Members.
55. A Member of unsound mind, or in respect of whom an order has been made by
any court, having jurisdiction in lunacy, may vote, whether on a show of hands
or on a poll, by his committee, receiver, curator bonis, or other person in the
nature of a committee, receiver or curator bonis appointed by that court, and
any such committee, receiver, curator bonis or other persons may vote by proxy.
56. No Member shall be entitled to vote at any general meeting unless he is
registered as a shareholder of the Company on the record date for such meeting
nor unless all calls or other sums presently payable by him in respect of shares
in the Company have been paid.
57. No objection shall be raised to the qualification of any voter except at the
general meeting or adjourned general meeting at which the vote objected to is
given or tendered and every vote not disallowed at such general meeting shall be
valid for all purposes. Any such objection made in due time shall be referred to
the Chairman of the general meeting whose decision shall be final and
conclusive.
58. On a poll or on a show of hands votes may be given either personally or by
proxy.
PROXIES
-------
59. The instrument appointing a proxy shall be in writing and shall be executed
under the hand of the appointor or of his attorney duly authorised in writing,
or, if the
<PAGE>
15
appointor is a corporation under the hand of an officer or attorney duly
authorised in that behalf. A proxy need not be a Member of the Company.
60. The instrument appointing a proxy shall be deposited at the registered
office of the Company or at such other place as is specified for that purpose in
the notice convening the meeting no later than the time for holding the meeting,
or adjourned meeting provided that the Chairman of the Meeting may at his
discretion direct that an instrument of proxy shall be deemed to have been duly
deposited upon receipt of telex, cable or telecopy confirmation from the
appointor that the instrument of proxy duly signed is in the course of
transmission to the Company.
61. The instrument appointing a proxy may be in any usual or common form and may
be expressed to be for a particular meeting or any adjournment thereof or
generally until revoked. An instrument appointing a proxy shall be deemed to
include the power to demand or join or concur in demanding a poll.
62. A vote given in accordance with the terms of an instrument of proxy shall be
valid notwithstanding the previous death or insanity of the principal or
revocation of the proxy or of the authority under which the proxy was executed,
or the transfer of the share in respect of which the proxy is given provided
that no intimation in writing of such death, insanity, revocation or transfer as
aforesaid shall have been received by the Company at the registered office
before the commencement of the general meeting, or adjourned meeting at which it
is sought to use the proxy.
63. Any corporation which is a Member of record of the Company may in accordance
with its Articles or in the absence of such provision by resolution of its
Directors or other governing body authorise such person as it thinks fit to act
as its representative at any meeting of the Company or of any class of Members
of the Company, and the person so authorised shall be entitled to exercise the
same powers on behalf of the corporation which he represents as the corporation
could exercise if it were an individual Member of record of the Company.
64. Shares of its own capital belonging to the Company or held by it in a
fiduciary capacity shall not be voted, directly or indirectly, at any meeting
and shall not be counted in determining the total number of outstanding shares
at any given time.
DIRECTORS
---------
65. There shall be a Board of Directors consisting of not less than one or more
than ten persons (exclusive of alternate Directors) PROVIDED HOWEVER that the
Company may
<PAGE>
16
from time to time by ordinary resolution increase or reduce the limits in the
number of Directors. The first Directors of the Company shall be determined in
writing by, or appointed by a resolution of, the subscribers of the Memorandum
of Association or a majority of them.
66. The remuneration to be paid to the Directors shall be such remuneration as
the Directors shall determine. Such remuneration shall be deemed to accrue from
day to day. The Directors shall also be entitled to be paid their travelling,
hotel and other expenses properly incurred by them in going to, attending and
returning from meetings of the Directors, or any committee of the Directors, or
general meetings of the Company, or otherwise in connection with the business of
the Company, or to receive a fixed allowance in respect thereof as may be
determined by the Directors from time to time, or a combination partly of one
such method and partly the other.
67. The Directors may by resolution award special remuneration to any Director
of the Company undertaking any special work or services for, or undertaking any
special mission on behalf of, the Company other than his ordinary routine work
as a Director. Any fees paid to a Director who is also counsel or solicitor to
the Company, or otherwise serves it in a professional capacity shall be in
addition to his remuneration as a Director.
68. A Director or alternate Director may hold any other office or place of
profit under the Company (other than the office of Auditor) in conjunction with
his office of Director for such period and on such terms as to remuneration and
otherwise as the Directors may determine.
69. A Director or alternate Director may act by himself or his firm in a
professional capacity for the Company and he or his firm shall be entitled to
remuneration for professional services as if he were not a Director or alternate
Director.
70. A shareholding qualification for Directors may be fixed by the Company in
general meeting, but unless and until so fixed no qualification shall be
required.
71. A Director or alternate Director of the Company may be or become a director
or other officer of or otherwise interested in any company promoted by the
Company or in which the Company may be interested as shareholder or otherwise
and no such Director or alternate Director shall be accountable to the Company
for any remuneration or other benefits received by him as a director or officer
of, or from his interest in, such other company.
72. No person shall be disqualified from the office of Director or alternate
Director or prevented by such office from contracting with the Company, either
as vendor, purchaser or otherwise, nor shall any such contract or any contract
or transaction entered into by or on behalf of the Company in which any Director
or alternate Director shall be in any way
<PAGE>
17
interested be or be liable to be avoided, nor shall any Director or alternate
Director so contracting or being so interested be liable to account to the
Company for any profit realised by any such contract or transaction by reason of
such Director holding office or of the fiduciary relation thereby established. A
Director (or his alternate Director in his absence) shall be at liberty to vote
in respect of any contract or transaction in which he is so interested as
aforesaid PROVIDED HOWEVER that the nature of the interest of any Director or
alternate Director in any such contract or transaction shall be disclosed by him
or the alternate Director appointed by him at or prior to its consideration and
any vote thereon.
73. A general notice that a Director or alternate Director is a shareholder of
any specified firm or company and is to be regarded as interested in any
transaction with such firm or company shall be sufficient disclosure under
Article 72 and after such general notice it shall not be necessary to give
special notice relating to any particular transaction.
ALTERNATE DIRECTORS
-------------------
74. Subject to the exception contained in Article 82, a Director who expects to
be unable to attend Directors' Meetings because of absence, illness or otherwise
may appoint any person to be an alternate Director to act in his stead and such
appointee whilst he holds office as an alternate Director shall, in the event of
absence therefrom of his appointor, be entitled to attend meetings of the
Directors and to vote thereat and to do, in the place and stead of his
appointor, any other act or thing which his appointor is permitted or required
to do by virtue of his being a Director as if the alternate Director were the
appointor, other than appointment of an alternate to himself, and he shall ipso
facto vacate office if and when his appointor ceases to be a Director or removes
the appointee from office. Any appointment or removal under this Article shall
be effected by notice in writing under the hand of the Director making the same.
POWERS AND DUTIES OF DIRECTORS
------------------------------
75. The business of the Company shall be managed by the Directors (or a sole
Director if only one is appointed) who may pay all expenses incurred in
promoting, registering and setting up the Company, and may exercise all such
powers of the Company as are not, from time to time by the Statute, or by these
Articles, or such regulations, being not inconsistent with the aforesaid, as may
be prescribed by the Company in general meeting required to be exercised by the
Company in general meeting PROVIDED HOWEVER that no regulations made by the
Company in general meeting shall invalidate any prior act of the Directors which
would have been valid if that regulation had not been made.
76. The Directors may from time to time and at any time by powers of attorney
appoint any company, firm, person or body of persons, whether nominated directly
or
<PAGE>
18
indirectly by the Directors, to be the attorney or attorneys of the Company for
such purpose and with such powers, authorities and discretions (not exceeding
those vested in or exercisable by the Directors under these Articles) and for
such period and subject to such conditions as they may think fit, and any such
powers of attorney may contain such provisions for the protection and
convenience of persons dealing with any such attorneys as the Directors may
think fit and may also authorise any such attorney to delegate all or any of the
powers, authorities and discretions vested in him.
77. All cheques, promissory notes, drafts, bills of exchange and other
negotiable instruments and all receipts for monies paid to the Company shall be
signed, drawn, accepted, endorsed or otherwise executed as the case may be in
such manner as the Directors shall from time to time by resolution determine.
78. The Directors shall cause minutes to be made in books provided for the
purpose:
(a) of all appointments of officers made by the Directors;
(b) of the names of the Directors (including those represented
thereat by an alternate or by proxy) present at each meeting
of the Directors and of any committee of the Directors;
(c) of all resolutions and proceedings at all meetings of the
Company and of the Directors and of committees of Directors.
79. The Directors on behalf of the Company may pay a gratuity or pension or
allowance on retirement to any Director who has held any other salaried office
or place of profit with the Company or to his widow or dependants and may make
contributions to any fund and pay premiums for the purchase or provision of any
such gratuity, pension or allowance.
80. The Directors may exercise all the powers of the Company to borrow money and
to mortgage or charge its undertaking, property and uncalled capital or any part
thereof and to issue debentures, debenture stock and other securities whether
outright or as security for any debt, liability or obligation of the Company or
of any third party.
MANAGEMENT
----------
81. (a) The Directors may from time to time provide for the management of the
affairs of the Company in such manner as they shall think fit and the provisions
contained in the three next following paragraphs shall be without prejudice to
the general powers conferred by this paragraph.
<PAGE>
19
(b) The Directors from time to time and at any time may establish any
committees, local boards or agencies for managing any of the affairs of the
Company and may appoint any persons to be members of such committees or local
boards or any managers or agents and may fix their remuneration.
(c) The Directors from time to time and at any time may delegate to any
such committee, local board, manager or agent any of the powers, authorities and
discretions for the time being vested in the Directors and may authorise the
members for the time being of any such local board, or any of them to fill up
any vacancies therein and to act notwithstanding vacancies and any such
appointment or delegation may be made on such terms and subject to such
conditions as the Directors may think fit and the Directors may at any time
remove any person so appointed and may annul or vary any such delegation, but no
person dealing in good faith and without notice of any such annulment or
variation shall be affected thereby.
(d) Any such delegates as aforesaid may be authorised by the Directors
to subdelegate all or any of the powers, authorities, and discretions for the
time being vested in them.
MANAGING DIRECTORS
------------------
82. The Directors may, from time to time, appoint one or more of their body (but
not an alternate Director) to the office of Managing Director for such term and
at such remuneration (whether by way of salary, or commission, or participation
in profits, or partly in one way and partly in another) as they may think fit
but his appointment shall be subject to determination ipso facto if he ceases
from any cause to be a Director and no alternate Director appointed by him can
act in his stead as a Director or Managing Director.
83. The Directors may entrust to and confer upon a Managing Director any of the
powers exercisable by them upon such terms and conditions and with such
restrictions as they may think fit and either collaterally with or to the
exclusion of their own powers and may from time to time revoke, withdraw, alter
or vary all or any of such powers.
PROCEEDINGS OF DIRECTORS
------------------------
84. Except as otherwise provided by these Articles, the Directors shall meet
together for the despatch of business, convening, adjourning and otherwise
regulating their meetings as they think fit. Questions arising at any meeting
shall be decided by a majority of votes of the Directors and alternate Directors
present at a meeting at which there is a quorum, the vote of an alternate
Director not being counted if his appointor be present at such meeting. In case
of an equality of votes, the Chairman shall have a second or casting vote.
<PAGE>
20
85. A Director or alternate Director may, and the Secretary on the requisition
of a Director or alternate Director shall, at any time summon a meeting of the
Directors by at least two days' notice in writing to every Director and
alternate Director which notice shall set forth the general nature of the
business to be considered unless notice is waived by all the Directors (or their
alternates) either at, before or after the meeting is held and PROVIDED FURTHER
if notice is given in person, by cable, telex or telecopy the same shall be
deemed to have been given on the day it is delivered to the Directors or
transmitting organisation as the case may be. The provisions of Article 40 shall
apply mutatis mutandis with respect to notices of meetings of Directors.
86. The quorum necessary for the transaction of the business of the Directors
may be fixed by the Directors and unless so fixed shall be two, a Director and
his appointed alternate Director being considered only one person for this
purpose, PROVIDED ALWAYS that if there shall at any time be only a sole Director
the quorum shall be one. For the purposes of this Article an alternate Director
or proxy appointed by a Director shall be counted in a quorum at a meeting at
which the Director appointing him is not present.
87. The continuing Directors may act notwithstanding any vacancy in their body,
but if and so long as their number is reduced below the number fixed by or
pursuant to these Articles as the necessary quorum of Directors the continuing
Directors or Director may act for the purpose of increasing the number of
Directors to that number, or of summoning a general meeting of the Company, but
for no other purpose.
88. The Directors may elect a Chairman of their Board and determine the period
for which he is to hold office; but if no such Chairman is elected, or if at any
meeting the Chairman is not present within five minutes after the time appointed
for holding the same, the Directors present may choose one of their number to be
Chairman of the meeting.
89. The Directors may delegate any of their powers to committees consisting of
such member or members of the Board of Directors (including Alternate Directors
in the absence of their appointors) as they think fit; any committee so formed
shall in the exercise of the powers so delegated conform to any regulations that
may be imposed on it by the Directors.
90. A committee may meet and adjourn as it thinks proper. Questions arising at
any meeting shall be determined by a majority of votes of the members present,
and in the case of an equality of votes the Chairman shall have a second or
casting vote.
91. All acts done by any meeting of the Directors or of a committee of Directors
(including any person acting as an alternate Director) shall, notwithstanding
that it be afterwards discovered that there was some defect in the appointment
of any Director or
<PAGE>
21
alternate Director, or that they or any of them were disqualified, be as valid
as if every such person had been duly appointed and qualified to be a Director
or alternate Director as the case may be.
92. Members of the Board of Directors or of any committee thereof may
participate in a meeting of the Board or of such 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 participation in a
meeting pursuant to this provision shall constitute presence in person at such
meeting. A resolution in writing (in one or more counterparts), signed by all
the Directors for the time being or all the members of a committee of Directors
(an alternate Director being entitled to sign such resolution on behalf of his
appointor) shall be as valid and effectual as if it had been passed at a meeting
of the Directors or committee as the case may be duly convened and held.
93. (a) A Director may be represented at any meetings of the Board of Directors
by a proxy appointed by him in which event the presence or vote of the proxy
shall for all purposes be deemed to be that of the Director.
(b) The provisions of Articles 59-62 shall mutatis mutandis apply to
the appointment of proxies by Directors.
VACATION OF OFFICE OF DIRECTOR
------------------------------
94. The office of a Director shall be vacated:
(a) if he gives notice in writing to the Company that he resigns
the office of Director;
(b) if he absents himself (without being represented by proxy or
an alternate Director appointed by him) from three consecutive
meetings of the Board of Directors without special leave of
absence from the Directors, and they pass a resolution that he
has by reason of such absence vacated office;
(c) if he dies, becomes bankrupt or makes any arrangement or
composition with his creditors generally;
(d) if he is found a lunatic or becomes of unsound mind.
<PAGE>
22
APPOINTMENT AND REMOVAL OF DIRECTORS
------------------------------------
95. The Company may by ordinary resolution appoint any person to be a Director
and may in like manner remove any Director and may in like manner appoint
another person in
his stead.
96. The Directors shall have power at any time and from time to time to appoint
any person to be a Director, either to fill a casual vacancy or as an addition
to the existing Directors but so that the total amount of Directors (exclusive
of alternate Directors) shall not at any time exceed the number fixed in
accordance with these Articles.
PRESUMPTION OF ASSENT
---------------------
97. A Director of the Company who is present at a meeting of the Board of
Directors at which action on any Company matter is taken shall be presumed to
have assented to the action taken unless his dissent shall be entered in the
Minutes of the meeting or unless he shall file his written dissent from such
action with the person acting as the Secretary of the meeting before the
adjournment thereof or shall forward such dissent by registered mail to such
person immediately after the adjournment of the meeting. Such right to dissent
shall not apply to a Director who voted in favour of such action.
SEAL
----
98. (a) The Company may, if the Directors so determine, have a Seal which shall,
subject to paragraph (c) hereof, only be used by the authority of the Directors
or of a committee of the Directors authorised by the Directors in that behalf
and every instrument to which the Seal has been affixed shall be signed by one
person who shall be either a Director or the Secretary or Secretary-Treasurer or
some person appointed by the Directors for the purpose.
(b) The Company may have for use in any place or places outside the
Cayman Islands a duplicate Seal or Seals each of which shall be a facsimile of
the Common Seal of the Company and, if the Directors so determine, with the
addition on its face of the name of every place where it is to be used.
(c) A Director, Secretary or other officer or representative or
attorney may without further authority of the Directors affix the Seal of the
Company over his signature alone to any document of the Company required to be
authenticated by him under Seal or to be filed with the Registrar of Companies
in the Cayman Islands or elsewhere wheresoever.
<PAGE>
23
OFFICERS
--------
99. The Company may have a President, a Secretary or Secretary-Treasurer
appointed by the Directors who may also from time to time appoint such other
officers as they consider necessary, all for such terms, at such remuneration
and to perform such duties, and subject to such provisions as to
disqualification and removal as the Directors from time to time prescribe.
DIVIDENDS, DISTRIBUTIONS AND RESERVE
------------------------------------
100. Subject to the Statute, the Directors may from time to time declare
dividends (including interim dividends) and distributions on shares of the
Company outstanding and authorise payment of the same out of the funds of the
Company lawfully available therefor.
101. The Directors may, before declaring any dividends or distributions, set
aside such sums as they think proper as a reserve or reserves which shall at the
discretion of the Directors, be applicable for any purpose of the Company and
pending such application may, at the like discretion, be employed in the
business of the Company.
102. No dividend or distribution shall be payable except out of the profits of
the Company, realised or unrealised, or out of the share premium account or as
otherwise permitted by the Statute.
103. Subject to the rights of persons, if any, entitled to shares with special
rights as to dividends or distributions, if dividends or distributions are to be
declared on a class of shares they shall be declared and paid according to the
amounts paid or credited as paid on the shares of such class outstanding on the
record date for such dividend or distribution as determined in accordance with
these Articles but no amount paid or credited as paid on a share in advance of
calls shall be treated for the purpose of this Article as paid on the share.
104. The Directors may deduct from any dividend or distribution payable to any
Member all sums of money (if any) presently payable by him to the Company on
account of calls or otherwise.
105. The Directors may declare that any dividend or distribution be paid wholly
or partly by the distribution of specific assets and in particular of paid up
shares, debentures, or debenture stock of any other company or in any one or
more of such ways and where any difficulty arises in regard to such
distribution, the Directors may settle the same as they think expedient and in
particular may issue fractional certificates and fix the value for distribution
of such specific assets or any part thereof and may determine that cash payments
shall be made to
<PAGE>
24
any Members upon the footing of the value so fixed in order to adjust the rights
of all Members and may vest any such specific assets in trustees as may seem
expedient to the Directors.
106. Any dividend, distribution, interest or other monies payable in cash in
respect of shares may be paid by cheque or warrant sent through the post
directed to the registered address of the holder or, in the case of joint
holders, to the holder who is first named on the register of Members or to such
person and to such address as such holder or joint holders may in writing
direct. Every such cheque or warrant shall be made payable to the order of the
person to whom it is sent. Any one of two or more joint holders may give
effectual receipts for any dividends, bonuses, or other monies payable in
respect of the share held by them as joint holders.
107. No dividend or distribution shall bear interest against the Company.
CAPITALISATION
--------------
108. The Company may upon the recommendation of the Directors by ordinary
resolution authorise the Directors to capitalise any sum standing to the credit
of any of the Company's reserve accounts (including share premium account and
capital redemption reserve fund) or any sum standing to the credit of profit and
loss account or otherwise available for distribution and to appropriate such sum
to Members in the proportions in which such sum would have been divisible
amongst them had the same been a distribution of profits by way of dividend and
to apply such sum on their behalf in paying up in full unissued shares for
allotment and distribution credited as fully paid up to and amongst them in the
proportion aforesaid. In such event the Directors shall do all acts and things
required to give effect to such capitalisation, with full power to the Directors
to make such provisions as they think fit for the case of shares becoming
distributable in fractions (including provisions whereby the benefit of
fractional entitlements accrue to the Company rather than to the Members
concerned). The Directors may authorise any person to enter on behalf of all of
the Members interested into an agreement with the Company providing for such
capitalisation and matters incidental thereto and any agreement made under such
authority shall be effective and binding on all concerned.
BOOKS OF ACCOUNT
----------------
109. The Directors shall cause proper books of account to be kept with respect
to:
(a) all sums of money received and expended by the Company and the
matters in respect of which the receipt or expenditure takes
place;
<PAGE>
25
(b) all sales and purchases of goods by the Company;
(c) the assets and liabilities of the Company.
Proper books shall not be deemed to be kept if there are not kept such books of
account as are necessary to give a true and fair view of the state of the
Company's affairs and to explain its transactions.
110. The Directors shall from time to time determine whether and to what extent
and at what times and places and under what conditions or regulations the
accounts and books of the Company or any of them shall be open to the inspection
of Members not being Directors and no Member (not being a Director) shall have
any right of inspecting any account or book or document of the Company except as
conferred by Statute or authorised by the Directors or by the Company in general
meeting.
111. The Directors may from time to time cause to be prepared and to be laid
before the Company in general meeting profit and loss accounts, balance sheets,
group accounts (if any) and such other reports and accounts as may be required
by law.
AUDIT
-----
112. The Company may at any annual general meeting appoint an Auditor or
Auditors of the Company who shall hold office until the next annual general
meeting and may fix his or their remuneration.
113. The Directors may before the first annual general meeting appoint an
Auditor or Auditors of the Company who shall hold office until the first annual
general meeting unless previously removed by an ordinary resolution of the
Members in general meeting in which case the Members at that meeting may appoint
Auditors. The Directors may fill any casual vacancy in the office of Auditor but
while any such vacancy continues the surviving or continuing Auditor or
Auditors, if any, may act. The remuneration of any Auditor appointed by the
Directors under this Article may be fixed by the Directors.
114. Every Auditor of the Company shall have a right of access at all times to
the books and accounts and vouchers of the Company and shall be entitled to
require from the Directors and Officers of the Company such information and
explanation as may be necessary for the performance of the duties of the
auditors.
115. Auditors shall at the next annual general meeting following their
appointment and at any other time during their term of office, upon request of
the Directors or any general
<PAGE>
26
meeting of the Members, make a report on the accounts of the Company in general
meeting during their tenure of office.
NOTICES
-------
116. Notices shall be in writing and may be given by the Company to any Member
either personally or by sending it by post, cable, telex or telecopy to him or
to his address as shown in the register of Members, such notice, if mailed, to
be forwarded airmail if the address be outside the Cayman Islands.
117. (a) Where a notice is sent by post, service of the notice shall be deemed
to be effected by properly addressing, pre-paying and posting a letter
containing the notice, and to have been effected at the expiration of sixty
hours after the letter containing the same is posted as aforesaid.
(b) Where a notice is sent by cable, telex, or telecopy, service of the
notice shall be deemed to be effected by properly addressing, and sending such
notice through a transmitting organisation and to have been effected on the day
the same is sent as aforesaid.
118. A notice may be given by the Company to the joint holders of record of a
share by giving the notice to the joint holder first named on the register of
Members in respect of the share.
119. A notice may be given by the Company to the person or persons which the
Company has been advised are entitled to a share or shares in consequence of the
death or bankruptcy of a Member by sending it through the post as aforesaid in a
pre-paid letter 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 supplied for that purpose by the persons claiming to be so entitled, or
at the option of the Company by giving the notice in any manner in which the
same might have been given if the death or bankruptcy had not occurred.
120. Notice of every general meeting shall be given in any manner hereinbefore
authorised to:
(a) every person shown as a Member in the register of Members as
of the record date for such meeting except that in the case of
joint holders the notice shall be sufficient if given to the
joint holder first named in the register of Members.
(b) every person upon whom the ownership of a share devolves by
reason of his being a legal personal representative or a
trustee in bankruptcy of a Member of
<PAGE>
27
record where the Member of record but for his death or
bankruptcy would be entitled to receive notice of the meeting;
and
No other person shall be entitled to receive notices of general meetings.
WINDING UP
----------
121. If the Company shall be wound up the liquidator may, with the sanction of a
Special Resolution of the Company and any other sanction required by the
Statute, divide amongst the Members in specie or kind the whole or any part of
the assets of the Company (whether they shall consist of property of the same
kind or not) and may for such purpose set such value as he deems fair upon any
property to be divided as aforesaid and may determine how such 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 such assets
in trustees upon such trusts for the benefit of the contributories as the
liquidator, with the like sanction, shall think fit, but so that no Member shall
be compelled to accept any shares or other securities whereon there is any
liability.
122. If the Company shall be wound up, and the assets available for distribution
amongst the Members as such shall be insufficient to repay the whole of the
paid-up capital, such assets shall be distributed so that, as nearly as may be,
the losses shall be borne by the Members in proportion to the capital paid up,
or which ought to have been paid up, at the commencement of the winding up on
the shares held by them respectively. And if in a winding up the assets
available for distribution amongst the Members shall be more than sufficient to
repay the whole of the capital paid up at the commencement of the winding up,
the excess shall be distributed amongst the Members in proportion to the capital
paid up at the commencement of the winding up on the shares held by them
respectively. This Article is to be without prejudice to the rights of the
holders of shares issued upon special terms and conditions.
INDEMNITY
---------
123. The Directors and officers for the time being of the Company and any
trustee for the time being acting in relation to any of the affairs of the
Company and their heirs, executors, administrators and personal representatives
respectively shall be indemnified out of the assets of the Company from and
against all actions, proceedings, costs, charges, losses, damages and expenses
which they or any of them shall or may incur or sustain by reason of any act
done or omitted in or about the execution of their duty in their respective
offices or trusts, except such (if any) as they shall incur or sustain by or
through their own wilful neglect or default respectively and no such Director,
officer or trustee shall be answerable for the acts,
<PAGE>
28
receipts, neglects or defaults of any other Director, officer or trustee or for
joining in any receipt for the sake of conformity or for the solvency or honesty
of any banker or other persons with whom any monies or effects belonging to the
Company may be lodged or deposited for safe custody or for any insufficiency of
any security upon which any monies of the Company may be invested or for any
other loss or damage due to any such cause as aforesaid or which may happen in
or about the execution of his office or trust unless the same shall happen
through the wilful neglect or default of such Director, Officer or trustee.
FINANCIAL YEAR
--------------
124. Unless the Directors otherwise prescribe, the financial year of the Company
shall end on 31st December in each year and, following the year of
incorporation, shall begin on 1st January in each year.
AMENDMENTS OF ARTICLES
----------------------
125. Subject to the Statute, the Company may at any time and from time to time
by Special Resolution alter or amend these Articles in whole or in part.
TRANSFER BY WAY OF CONTINUATION
-------------------------------
126. If the Company is exempted as defined in the Statute, it shall, subject to
the provisions of the Statute and with the approval of a Special Resolution,
have the power to register by way of continuation as a body corporate under the
laws of any jurisdiction outside the Cayman Islands and to be deregistered in
the Cayman Islands.
EXECUTION COPY
================================================================================
MILLENIUM SEACARRIERS, INC.
12% First Priority Ship Mortgage Notes Due 2005
the
SUBSIDIARY
GUARANTORS
named herein
--------------------
INDENTURE
Dated as of July 15, 1998
---------------------
THE FIRST NATIONAL BANK OF MARYLAND
Trustee
================================================================================
<PAGE>
CROSS-REFERENCE TABLE
TIA Indenture
Section Section
- - - - ------- -------
310(a) ..............................7.10
310(b) ..............................7.10
310(b)(1) ..............................7.10
311(a) ..............................7.06
(b) ..............................7.06
312(b) ..............................14.03
(c) ..............................14.03
313(a) ..............................7.06
(b) ..............................7.06
314(a) ..............................N.A.
(b) ..............................11.12
(c) ..............................N.A.
(d) ..............................11.12, 12.06
315(a) ..............................N.A.
(b) ..............................N.A.
316(a) ..............................N.A.
(b) ..............................N.A.
317(a) ..............................N.A.
(b) ..............................N.A.
318(a) ..............................N.A.
318(b) ..............................N.A
N.A. means Not Applicable.
- - - - --------------------
Note: This Cross-Reference Table shall not, for any purpose, be deemed to be
part of the Indenture.
<PAGE>
INDENTURE dated as of July 24, 1998, among
Millenium Seacarriers, Inc., a Cayman Islands
corporation (the "Company" or "Millenium"), each of
the Company's subsi diaries that owns a Mortgaged
Vessel (as defined) on the Closing Date (as defined)
or thereafter, as identified on the signature page to
this Indenture or to a Guarantee Agreement(the
"Subsidiary Guarantors"), and The First National Bank
of Maryland, a national banking association (the
"Trustee").
Each party agrees as follows for the benefit of the other
party and for the equal and ratable benefit of the Holders of the Company's 12%
First Priority Ship Mortgage Notes Due 2005 (the "Initial Securities") and, if
and when issued pursuant to a registered exchange for Initial Securities, the
Company's 12% First Priority Ship Mortgage Notes Due 2005 (the "Exchange
Securities") and if and when issued pursuant to a private exchange for Initial
Securities, the Company's 12% First Priority Ship Mortgage Notes Due 2005 (the
"Private Exchange Securities", together with the Exchange Securities and the
Initial Securities, the "Securities").
The Securities will be fully and unconditionally guaranteed on
a senior secured basis by the Subsidiary Guarantors. The Securities will
initially be secured by a pledge of all capital stock of the Subsidiary
Guarantors and by first priority ship mortgages on 16 vessels, five of which are
currently owned by certain of the Subsidiary Guarantors (the "Existing Vessels")
and 11 of which are committed to be acquired by certain of the Subsidiary
Guarantors on or shortly after the date the Notes are issued (the "Committed
Vessels"). The Company will enter into an escrow agreement (the "Escrow
Agreement") with the First National Bank of Maryland, as escrow agent, and will
deposit with such agent amounts, as determined in and pursuant to the provisions
of the Escrow Agreement, in cash or Treasury Securities (as defined in the
Escrow Agreement), until such amounts are used to acquire additional vessels
(the "Additional Vessels") (such cash and Treasury Securities, together with the
interest, dividends and distribution thereof, "Escrowed Proceeds"):
<PAGE>
2
ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. DEFINITIONS.
"Accreted Value" means, as of any date (the "Specified Date"),
the amount provided below for each $1,000 principal amount at maturity of the
Securities:
(i) if the Specified Date occurs on one of the following dates
(each, a "Semi-Annual Accrual Date"), the Accreted Value will equal the
amount set forth below for such Semi-Annual Accrual Date:
SEMI-ANNUAL ACCRUAL DATE ACCRETED
VALUE
Issue Date..................................................... $965.93
January 15, 1999............................................... 967.51
July 15, 1999.................................................. 969.20
January 15, 2000............................................... 970.98
July 15, 2000.................................................. 972.88
January 15, 2001............................................... 974.90
July 15, 2001.................................................. 977.06
January 15, 2002............................................... 979.34
July 15, 2002.................................................. 981.78
January 15, 2003............................................... 984.36
July 15, 2003.................................................. 987.12
January 15, 2004............................................... 990.05
July 15, 2004.................................................. 993.16
January 15, 2005............................................... 996.47
July 15, 2005.................................................. $1,000.00
(ii) if the Specified Date occurs between two Semi-Annual
Accrual Dates, the Accreted Value will equal the sum of (a) the
Accreted Value for the SemiAnnual Accrual Date immediately preceding
such Specified Date and (b) an amount equal to the product of (1) the
Accreted Value for the immediately following Semi-Annual Accrual Date
less the Accreted Value for the immediately preceding Semi-Annual Date
multiplied
<PAGE>
3
by (2) a fraction, the numerator of which is the number of the days
elapsed from the immediately preceding Semi-Annual Accrual Date to the
Specified Date, using a 360 day year of twelve 30 day months, and the
denominator of which is 180 (or, if the Semi-Annual Accrual Date
immediately preceding the Specified Date is the Issue Date, the number
of days from the Issue Date to the next Semi-Annual Accrual Date).
"Additional Assets" means (i) any property or assets (other
than Indebtedness and Capital Stock) in a Shipping Business; (ii) the Capital
Stock of a Person that becomes a Restricted Subsidiary as a result of the
acquisi tion of such Capital Stock by the Company or another Restricted
Subsidiary; or (iii) Capital Stock constituting a minority interest in any
Person that at such time is a Restricted Subsidiary; PROVIDED, HOWEVER, that any
such Restricted Subsidiary described in clauses (ii) or (iii) above is primarily
engaged in a Shipping Business.
"Advisory Agreement" means the Advisory Agreement between the
Company and Millenium Advisors, dated July 24, 1998.
"Affiliate" of any specified Person means 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; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing. For
purposes of Sections 4.05, 4.07 and 4.09 only, "Affiliate" shall also mean any
beneficial owner of Capital Stock representing 5% or more of the total voting
power of the Voting Stock (on a fully diluted basis) of the Company or of rights
or warrants to purchase such Capital Stock (whether or not currently
exercisable) and any Person who would be an Affiliate of any such beneficial
owner pursuant to the first sentence hereof.
"Appraisal Date" means each date as of which the Appraised
Value of the Mortgaged Vessels has been determined.
"Appraised Value" means the average of the fair market sale
values as of a specified date of a specified asset that would be obtained in an
arm's-length transaction between an informed and willing seller under no
compulsion to sell and an informed and willing buyer under no compulsion to buy,
as determined by two Appraisers selected by Millenium and, in the event either
of such Appraisers is
<PAGE>
4
not a Designated Appraiser, reasonably acceptable to the Trustee. If the Trustee
does not accept an Appraiser (other than a Designated Appraiser) selected by
Millenium within 10 days of the first giving of notice by Millenium to the
Trustee requesting a determination of an Appraised Value (the "Appraisal Request
Date"), such Appraised Value shall be determined by a panel of three Appraisers,
one of whom shall be selected by Millenium, another of whom shall be selected by
the Trustee and the third of whom shall be selected by such other two Appraisers
or, if such Appraisers shall be unable to agree upon a third Appraiser within
five days of the selection date of the second of such two Appraisers, by an
arbitrator mutually acceptable to Millenium and the Trustee; PROVIDED, HOWEVER,
that, if either party shall not select its Appraiser within 20 days after the
Appraisal Request Date, such Appraised Value shall be determined solely by the
Appraiser selected by the other party. The Appraiser or Appraisers appointed
pursuant to the foregoing procedure shall be instructed to determine such
Appraised Value within 25 days after the final appointment of any Appraiser
pursuant hereto, and such determination shall be final and binding upon the
parties. If three Appraisers shall be appointed, (a) if the median of the
determinations of the Appraisers shall equal the average of such determinations,
such average shall constitute the determination of the Appraisers; otherwise (b)
the determination of the Appraiser that shall differ most from the other two
Appraisers shall be excluded, the remaining two determinations shall be averaged
and such average shall constitute the determination of the Appraisers. For this
purpose, the purchase price (including, if applicable, the value of any upgrades
thereto made by Millenium in connection with or within six (6) months after the
acquisition of a Mortgaged Vessel) of any Mortgaged Vessel acquired after the
most recent Appraisal Date shall constitute that Vessel's Appraised Value.
"Appraiser" means each of Fearnleys A.S., Oslo Shipbrokers
A.S., R.S. Platou Shipbrokers A.S., Bassoe A.S., Associated Shipbrokers S.A., H.
Clarkson Ltd., Simpson Spence Young Ltd., Axis Shipbrokers Ltd., Mallory Jones
Lynch & Flynn, Inc., A.L. Burbank, Inc., Nestun A.S., Lorentzen Stemoco
Shipbrokers A.S., Braemar Shipbrokers Ltd., Seabrokers, Inc., Seascope Shipping
Ltd., Barry Rogliano Salles, Poten & Partners, Inc., Wigham Richardson
Shipbrokers Limited and Equator Shipbroking Ltd. (each a "Designated Appraiser")
(and each successor thereto), together with any other Person not affiliated with
Millenium engaged in the business of appraising ocean-going vessels, including
bulk carriers.
"Asset Sale" means any sale, lease, transfer or other
disposition (or series of related sales, leases, transfers
<PAGE>
5
or dispositions) (excluding the granting of Liens) by Millenium or any
Restricted Subsidiary, including any disposition by means of a merger,
consolidation or similar transaction (each referred to for the purposes of this
definition as a "disposition") in one transaction or a series of related
transactions, of (i) any shares of Capital Stock of a Restricted Subsidiary
(other than directors' qualifying shares or shares required by applicable law to
be held by a Person other than Millenium or a Restricted Subsidiary), (ii) any
Vessel, (iii) all or substantially all the assets of any division or line of
business of Millenium or any Restricted Subsidiary or (iv) any other assets of
Millenium or any Restricted Subsidiary outside of the ordinary course of
business of Millenium or such Restricted Subsidiary (other than, in the case of
(i), (ii), (iii) and (iv) above, (I) the exchange of assets for other non-cash
assets that (a) are useful in the Shipping Business and (b) have a fair market
value at least equal to the fair market value of the assets being exchanged (as
determined by the Board of Directors or the board of directors of the Restricted
Subsidiary which owns such assets in good faith), (II) the sale, lease, transfer
or other disposition of all or substantially all the assets of Millenium or its
Restricted Subsidiaries (which will be governed by the provisions of Section
5.01 and not by the provisions of Section 4.07), (III) a disposition by a
Restricted Subsidiary to Millenium or by Millenium or a Restricted Subsidiary to
a Restricted Subsidiary, (IV) for purposes of Section 4.07 only, a disposition
that constitutes a Permitted Investment or a Restricted Payment permitted by
Section 4.05 and (V) a disposition of assets with a fair market value of less
than $500,000).
"Attributable Debt" in respect of a Sale/Leaseback Transaction
means, as at the time of determination, the present value (discounted at the
interest rate borne by the Securities, compounded annually) of the total
obligations of the lessee for rental payments during the remaining term of the
lease included in such Sale/Leaseback Transaction (including any period for
which such lease has been extended).
"Average Life" means, as of the date of determina tion, with
respect to any Indebtedness or Preferred Stock, the quotient obtained by
dividing (i) the sum of the products of the numbers of years from the date of
determination to the dates of each successive scheduled principal payment of
such Indebtedness or redemption or similar payment with respect to such
Preferred Stock multi plied by the amount of such payment by (ii) the sum of all
such payments.
<PAGE>
6
"Board of Directors" means the Board of Directors of Millenium
or any committee thereof duly authorized to act on behalf of such Board of
Directors.
"Business Day" means each day which is not a Saturday, Sunday
or a day on which banking institutions are authorized or permitted to close in
the States of New York and Maryland.
"Capital Lease Obligation" means an obligation that is
required to be classified and accounted for as a capital lease for financial
reporting purposes in accordance with GAAP, and the amount of Indebtedness
represented by such obligation shall be the capitalized amount of such
obligation determined in accordance with GAAP; and the Stated Maturity thereof
shall be the date of the last payment of rent or any other amount due under such
lease prior to the first date upon which such lease may be terminated by the
lessee without payment of a penalty.
"Capital Stock" of any Person means any and all shares,
interests, rights to purchase, warrants, options, participations or other
equivalents of or interests in (however designated) equity of such Person,
including any Preferred Stock, but excluding any debt securities convertible
into such equity.
"Change of Control" means the occurrence of any of
the following events:
(i) prior to the earlier to occur of (A) the first public
offering of common stock of Parent or (B) the first public offering of
common stock of the Company, the Permitted Holders cease to be the
"beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the
Exchange Act), directly or indirectly, of a majority in the aggregate
of the total voting power of the Voting Stock of the Company, whether
as a result of issuance of securities of the Parent or the Company, any
merger, consolidation, liquidation or dissolution of the Parent or the
Company, any direct or indirect transfer of securities by Parent or
otherwise (for purposes of this clause (i) and clause (ii) below, the
Permitted Holders shall be deemed to beneficially own any Voting Stock
of a corporation (the "specified corporation") held by any other
corporation (the "parent corporation") so long as the Permitted Holders
beneficially own (as so defined), directly or indirectly, in the
aggregate a majority of the voting power of the Voting Stock of the
parent corporation);
(ii) any "person" (as such term is used in Sections 13(d) and
14(d) of the Exchange Act), other
<PAGE>
7
than one or more Permitted Holders, is or becomes the beneficial owner
(as defined in clause (i) above, except that for purposes of this
clause (ii) such person shall be deemed to have "beneficial ownership"
of all shares that any such person has the right to acquire, whether
such right is exercisable immediately or only after the passage of
time), directly or indirectly, of more than 35% of the total voting
power of the Voting Stock of the Company; PROVIDED, HOWEVER, that the
Permitted Holders beneficially own (as defined in clause (i) above),
directly or indirectly, in the aggregate a lesser percentage of the
total voting power of the Voting Stock of the Company than such other
person and do not have the right or ability by voting power, contract
or otherwise to elect or designate for election a majority of the Board
of Directors (for the purposes of this clause (ii), such other person
shall be deemed to beneficially own any Voting Stock of a specified
corporation held by a parent corporation, if such other person is the
beneficial owner (as defined in this clause (ii)), directly or
indirectly, of more than 35% of the voting power of the Voting Stock of
such parent corporation and the Permitted Holders beneficially own (as
defined in clause (i) above), directly or indirectly, in the aggregate
a lesser percentage of the voting power of the Voting Stock of such
parent corporation and do not have the right or ability by voting
power, contract or otherwise to elect or designate for election a
majority of the board of directors of such parent corporation);
(iii) during any period of two consecutive years, individuals
who at the beginning of such period constituted the Board of Directors
(together with any new directors whose election by such Board of
Directors or whose nomination for election by the shareholders of the
Company was approved by a vote of 66-2/3% of the directors of the
Company then still in office who were either directors at the beginning
of such period or whose election or nomination for election was
previously so approved) cease for any reason to constitute a majority
of the Board of Directors then in office; or
(iv) the merger or consolidation of the Company with or into
another Person or the merger of another Person with or into the
Company, or the sale of all or substantially all the assets of the
Company to another Person (other than a Person that is controlled by
the Permitted Holders), and, in the case of any such merger or
consolidation, the securities of the Company that are outstanding
immediately prior to such transaction and which represent 100% of the
aggregate voting power
<PAGE>
8
of the Voting Stock of the Company are changed into or exchanged for
cash, securities or property, unless pursuant to such transaction such
securities are changed into or exchanged for, in addition to any other
consideration, securities of the surviving corporation that represent
immediately after such transaction, at least a majority of the
aggregate voting power of the Voting Stock of the surviving
corporation.
"Charter" means each charterparty between a Subsidiary
Guarantor and any third party with respect to such Subsidiary Guarantor's
Mortgaged Vessel, and as the same may be amended from time to time.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collateral" means, in each case as pledged and assigned to
the Trustee or the Collateral Agent pursuant to the Security Agreements: (1) all
the issued and outstanding capital stock of each Subsidiary Guarantor owned,
directly or indirectly, by Millenium, pledged in favor of the Trustee pursuant
to this Indenture; (2) all cash held by the Trustee or the Escrow Agent pursuant
to this Indenture or the Security Agreements (including all Escrowed Property
(as described in the Escrow Agreement) held pursuant to the Escrow Agreement);
(3) each Subsidiary Guarantor's right, title and interest in and to (i) its
respective Mortgaged Vessel, pursuant to a Mortgage issued by such Subsidiary
Guarantor in favor of the Collateral Agent; (ii) the Charters, if any, relating
to its Mortgaged Vessel, including the right to receive all monies due and to
become due under such Charters or in respect of such Mortgaged Vessel and all
claims for damages arising under such Charters or relating to such Mortgaged
Vessel; (iii) the freights and hires relating to its Mortgaged Vessel; (iv) all
its policies and contracts of insurance taken out from time to time in respect
of its Mortgaged Vessel; and (v) all proceeds of any of the foregoing.
"Collateral Agency Agreement" means the Collateral Agency and
Intercreditor Agreement dated as of July 1, 1998, among the Trustee, the
Collateral Agent, The Bank of New York, Millenium and the Subsidiary Guarantors.
"Collateral Agent" means The First National Bank of Maryland,
as collateral agent, under the Collateral Agency Agreement.
"Comparable Treasury Issue" means the United States Treasury
security selected by an Independent Investment Banker (as defined below) as
having a maturity comparable to the weighted average maturity of the remaining
<PAGE>
9
term of the Securities outstanding that would be utilized, at the time of
selection and in accordance with customary financial practice, in pricing new
issues of corporate debt securities of comparable maturity to such weighted
average maturity of the Securities.
"Comparable Treasury Price" means, with respect to any
redemption date, (i) the average of the Reference Treasury Dealer Quotations (as
defined below) for such redemption date, after excluding the highest and lowest
such Reference Treasury Dealer Quotations, or (ii) if the Trustee obtains fewer
than four such Reference Treasury Dealer Quotations, the average of all such
Reference Treasury Dealer Quotations.
"Consolidated Coverage Ratio" as of any date of determination
means the ratio of (i) the aggregate amount of EBITDA for the period of the most
recent four consecutive fiscal quarters ending prior to the date of such
determina tion for which internal financial statements are available to (ii)
Consolidated Interest Expense for such four fiscal quarters; PROVIDED, HOWEVER,
that
(1) if Millenium or any Restricted Subsidiary has Incurred any
Indebtedness since the beginning of such period that remains
outstanding on the date of determi nation or if the transaction giving
rise to the need to calculate the Consolidated Coverage Ratio is an
Incurrence of Indebtedness, or both, EBITDA and Consolidated Interest
Expense for such period shall be calculated after giving effect on a
pro forma basis to such Indebtedness as if such Indebtedness had been
Incurred on the first day of such period and the discharge of any other
Indebtedness repaid, repur chased, defeased or otherwise discharged
with the proceeds of such new Indebtedness as if such discharge had
occurred on the first day of such period,
(2) if Millenium or any Restricted Subsidiary has repaid,
repurchased, defeased or otherwise discharged any Indebtedness since
the beginning of such period or if any Indebtedness is to be repaid,
repurchased, defeased or otherwise discharged (in each case other than
Indebtedness Incurred under any revolving credit facility unless such
Indebtedness has been permanently repaid and has not been replaced) on
the date of the transaction giving rise to the need to calculate the
Consolidated Coverage Ratio, EBITDA and Consolidated Interest Expense
for such period shall be calculated on a pro forma basis as if such
discharge had occurred on the first day of such period and as if
Millenium or such Restricted Subsidiary had not earned the interest
income actually earned during such period in respect of
<PAGE>
10
cash or Temporary Cash Investments used to repay, repurchase, defease
or otherwise discharge such Indebtedness,
(3) if since the beginning of such period Millenium or any
Restricted Subsidiary shall have made any Asset Sale, the EBITDA for
such period shall be reduced by an amount equal to the EBITDA (if
positive) directly attributable to the assets which are the subject of
such Asset Sale for such period, or increased by an amount equal to the
EBITDA (if negative) directly attributable thereto for such period and
Consolidated Interest Expense for such period shall be reduced by an
amount equal to the Consolidated Interest Expense directly attributable
to any Indebtedness of Millenium or any Restricted Subsidiary repaid,
repurchased, defeased or otherwise discharged with respect to Millenium
and its continuing Restricted Subsidiaries in connection with such
Asset Sale for such period (or, if the Capital Stock of any Restricted
Subsidiary is sold, the Consolidated Interest Expense for such period
directly attributable to the Indebtedness of such Restricted Subsidiary
to the extent Millenium and its continuing Restricted Subsidiaries are
no longer liable for such Indebtedness after such sale),
(4) if since the beginning of such period Millenium or any
Restricted Subsidiary (by merger or otherwise) shall have made an
Investment in any Restricted Subsidiary (or any Person which becomes a
Restricted Subsidiary) or an acquisition of assets, including any
acquisition of assets occurring in connection with a transaction
requiring a calculation to be made hereunder, which constitutes all or
substan tially all of an operating unit of a business, EBITDA and
Consolidated Interest Expense for such period shall be calculated after
giving pro forma effect thereto (including the Incurrence of any
Indebtedness) as if such Investment or acquisition occurred on the
first day of such period and
(5) if since the beginning of such period any Person (that
subsequently became a Restricted Subsi diary or was merged with or into
Millenium or any Restricted Subsidiary since the beginning of such
period) shall have made any Asset Sale, any Investment or acquisition
of assets that would have required an adjustment pursuant to clause (3)
or (4) above if made by Millenium or a Restricted Subsidiary during
such period, EBITDA and Consolidated Interest Expense for such period
shall be calculated after giving pro forma
<PAGE>
11
effect thereto as if such Asset Sale, Investment or acquisition
occurred on the first day of such period.
For purposes of this definition, whenever pro forma effect is to be given to an
Asset Sale, to an Investment, to the amount of Consolidated Interest Expense
associated with any Indebtedness Incurred or to an acquisition of assets and the
amount of income or earnings relating thereto, the pro forma calculations shall
be determined in good faith by a responsible financial or accounting Officer of
Millenium. If any Indebtedness bears a floating rate of interest and is being
given pro forma effect, the interest of such Indebted ness shall be calculated
as if the rate in effect on the date of determination had been the applicable
rate for the entire period (taking into account any Interest Rate Agree ment
applicable to such Indebtedness if such Interest Rate Agreement has a remaining
term in excess of 12 months). For purposes of this definition, whenever pro
forma effect is to be given to an acquisition of a Vessel or the financing
thereof, Millenium may (i) if the Vessel is to be subject to a time charter of
at least one year's duration by Millenium, apply pro forma EBITDA for such
Vessel based on such new time charter or (ii) if the Vessel is to be subject to
hire on a voyage charter basis by Millenium, apply EBITDA for such Vessel based
upon historical earnings of the most comparable Vessel of Millenium or any of
its Subsidiaries (as determined in good faith by the Board of Directors) during
such period, or if there is no such comparable Vessel, based upon industry
average earnings for comparable vessels (as determined in good faith by the
Board of Directors).
"Consolidated Interest Expense" means, for any period, the
total interest expense of Millenium and its Restricted Subsidiaries on a
consolidated basis, plus, to the extent not included in such total interest
expense, and to the extent incurred by Millenium or its Restricted Subsidiaries,
without duplication, (i) interest expense attributable to capital leases and the
interest expense attributable to leases constituting part of a Sale/Leaseback
Transaction, (ii) amortization of debt discount and debt issuance cost, (iii)
capitalized interest, (iv) noncash interest expense, (v) commissions, discounts
and other fees and charges owed with respect to letters of credit and bankers'
acceptance financing, (vi) net costs associated with Hedging Obligations
(including amortization of fees), (vii) Preferred Stock dividends in respect of
all Preferred Stock held by Persons other than Millenium or a Wholly Owned
Subsidiary to the extent paid in cash in such period, (viii) interest incurred
in connection with Investments in discontinued operations, (ix) interest
accruing on any Indebtedness of any other Person to the extent such Indebtedness
is Guaranteed by (or secured by the assets of)
<PAGE>
12
Millenium or any Restricted Subsidiary and (x) the cash contributions to any
employee stock ownership plan or similar trust to the extent such contributions
are used by such plan or trust to pay interest or fees to any Person (other than
Millenium) in connection with Indebtedness Incurred by such plan or trust.
"Consolidated Net Income" means, for any period, the net
income of Millenium and its Subsidiaries on a consolidated basis; PROVIDED,
HOWEVER, that there shall not be included in such Consolidated Net Income:
(i) any net income (or loss) of any Person (other than
Millenium) if such Person is not a Restricted Subsidiary, except that
subject to the exclusion contained in clause (iv) below, Millenium's
equity in the net income of any such Person for such period shall be
included in such Consolidated Net Income up to the aggregate amount of
cash actually distributed by such Person during such period to
Millenium or a Restricted Subsidiary as a dividend or other
distribution (subject, in the case of a dividend or other distribution
paid to a Restricted Subsidiary, to the limitations contained in clause
(iii) below);
(ii) any net income (or loss) of any Person acquired by
Millenium or a Subsidiary in a pooling of interests transaction for any
period prior to the date of such acquisition;
(iii) any net income of any Restricted Subsidiary if at the
date of determination such Restricted Subsidiary is subject to
restrictions, directly or indirectly, on the payment of dividends or
the making of distributions by such Restricted Subsidiary, directly or
indirectly, to Millenium, except that (A) subject to the exclusion
contained in clause (iv) below, Millenium's equity in the net income of
any such Restricted Subsidiary for such period shall be included in
such Consolidated Net Income up to the aggregate amount of cash that
could have been distributed by such Restricted Subsidiary during such
period to Millenium or another Restricted Subsidiary as a dividend or
other distribution (sub ject, in the case of a dividend or other
distribution paid to another Restricted Subsidiary, to the limita tion
contained in this clause) and (B) Millenium's equity in a net loss of
any such Restricted Subsidiary for such period shall be included in
determining such Consolidated Net Income;
(iv) any gain (but not loss) realized upon the sale or other
disposition of any assets of Millenium or its Subsidiaries on a
consolidated basis (including
<PAGE>
13
pursuant to any sale-and-leaseback arrangement) which are not sold or
otherwise disposed of in the ordinary course of business and any gain
(but not loss) realized upon the sale or other disposition of any
Capital Stock of any Person;
(v) subject to clause (iv), extraordinary gains or losses; and
(vi) the cumulative effect of a change in accounting
principles.
Notwithstanding the foregoing, for the purposes of Section 4.05 only, there
shall be excluded from Consolidated Net Income any dividends, repayments of
loans or advances or other transfers of assets from Unrestricted Subsidiaries to
Millenium or a Restricted Subsidiary to the extent such dividends, repayments or
transfers increase the amount of Restricted Payments permitted under Section
4.05(a)(3)(D).
"Consolidated Net Worth" means the total of the amounts shown
on the balance sheet of Millenium and its Subsidiaries, determined on a
consolidated basis in accor dance with GAAP, as of the end of the most recent
fiscal quarter of Millenium for which internal financial statements are
available prior to the taking of any action for the purpose of which the
determination is being made, as (i) the par or stated value of all outstanding
Capital Stock of Millenium plus (ii) paid-in capital or capital surplus relating
to such Capital Stock plus (iii) any retained earnings or earned surplus less
(A) any accumulated deficit and (B) any amounts attributable to Disqualified
Stock.
"Currency Agreement" means in respect of a Person any foreign
exchange contract, currency swap agreement or other similar agreement designed
to protect such Person against fluctuations in currency values.
"Default" means any event which is, or after notice or passage
of time or both would be, an Event of Default.
"Designated Appraiser" has the meaning assigned to it under
the definition of "Appraiser".
"Disqualified Stock" means, with respect to any Person, any
Capital Stock which by its terms (or by the terms of any security into which it
is convertible or for which it is exchangeable) or upon the happening of any
event (i) matures or is mandatorily redeemable pursuant to a sinking fund
obligation or otherwise, (ii) is convertible or exchangeable for Indebtedness or
Disqualified Stock or (iii) is redeemable at the option of the holder thereof,
in
<PAGE>
14
whole or in part, in each case on or prior to the 91st day of the Stated
Maturity of the Securities; PROVIDED, HOWEVER, that any Capital Stock that would
not constitute Disquali fied Stock but for provisions thereof giving holders
thereof the right to require such Person to repurchase or redeem such Capital
Stock upon the occurrence of an "asset sale" or "change of control" occurring
prior to the 91st day of the Stated Maturity of the Securities shall not
constitute Disqualified Stock if the "asset sale" or "change of control"
provisions applicable to such Capital Stock are not more favorable to the
holders of such Capital Stock than the provisions of Sections 4.07 and 4.13.
"EBITDA" for any period means the sum of Consolidated Net
Income plus the sum of the following expenses of Millenium and its Restricted
Subsidiaries on a consolidated basis, to the extent deducted in calculating such
Consolidated Net Income: (a) all United States Federal, state and local, and all
foreign income tax expense, (b) Consolidated Interest Expense, (c) depreciation
expense, (d) amortization expense (including in respect of intangibles)
(excluding amortization expense attributable to a prepaid cash item that was
paid in a prior period) and (e) all other noncash charges (excluding any such
noncash charge to the extent that it represents an accrual of or reserve for
cash expenditures in any future period), in each case for such period.
Notwithstanding the foregoing, the provision for taxes based on the income or
profits of, and the depreciation and amortization and noncash charges of, a
Restricted Subsidiary shall be added to Consolidated Net Income to compute
EBITDA only to the extent (and in the same proportion) that the net income of
such Restricted Subsidiary was included in calculating Consolidated Net Income
and only if a corresponding amount would be permitted at the date of
determination to be dividended to Millenium by such Restricted Subsidiary
without prior approval (that has not been obtained), pursuant to the terms of
its charter and all agreements, instruments, judgments, decrees, orders,
statutes, rules and governmental regulations applicable to such Restricted
Subsidiary or its stockholders.
"Event of Loss" means any of the following events: (a) the
actual or constructive total loss of a Vessel or the agreed or compromised total
loss of a Vessel, (b) the destruction of a Vessel, (c) damage to a Vessel to an
extent, determined in good faith by the Board of Directors within 90 days after
the occurrence of such damage (and evidenced by an Officers' Certificate to such
effect delivered to the Trustee, within such 90-day period), as shall make
repair thereof uneconomical or shall render such Vessel permanently unfit for
normal use (other than obsol escence) or (d) the condemnation, confiscation,
requisition, seizure, forfeiture or other taking of title to or use of a
<PAGE>
15
Vessel that shall not be revoked within six months. An Event of Loss shall be
deemed to have occurred: (i) in the event of the destruction or other actual
total loss of a Vessel, on the date of such loss; (ii) in the event of a
constructive, agreed or compromised total loss of a Vessel, on the date of the
determination of such total loss pursuant to the relevant insurance policy;
(iii) in the case of any event referred to in clause (c) above, upon the
delivery of Millenium's Officers' Certificate to the Trustee; or (iv) in the
case of any event referred to in clause (d) above, on the date six months after
the occurrence of such event.
"Event of Loss Proceeds" means all compensation, damages and
other payments (including insurance proceeds other than certain liability
insurance proceeds) received by Millenium, any Subsidiary Guarantor, the Trustee
or the Collateral Agent, jointly or severally, from any Person, including any
governmental authority, with respect to or in connection with an Event of Loss.
"Excess Proceeds" means the amount of excess Net Available
Cash from Asset Sales not applied (or committed to be applied) pursuant to
Section 4.07(b)(i).
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"GAAP" means generally accepted accounting principles in the
United States of America as in effect as of the Issue Date, including those set
forth in (i) the opinions and pronouncements of the Accounting Principles Board
of the American Institute of Certified Public Accountants, (ii) statements and
pronouncements of the Financial Accounting Standards Board, (iii) such other
statements by such other entity as approved by a significant segment of the
accounting profession and (iv) the rules and regulations of the SEC governing
the inclusion of financial statements (including pro forma financial statements)
in periodic reports required to be filed pursuant to Sections 13 or 15(d) of the
Exchange Act, including opinions and pronouncements in staff accounting
bulletins and similar written statements from the accounting staff of the SEC.
"Guarantee" means any obligation, contingent or otherwise, of
any Person directly or indirectly guaranteeing any Indebtedness of any other
Person and any obligation, direct or indirect, contingent or otherwise, of such
Person (i) to purchase or pay (or advance or supply funds for the purchase or
payment of) such Indebtedness or other obliga tion of such Person (whether
arising by virtue of partner ship arrangements, or by agreements to keep-well,
to purchase assets, goods, securities or services, to take-or-pay or to maintain
financial statement conditions or
<PAGE>
16
otherwise) or (ii) entered into for the purpose of assuring in any other manner
the obligee of such Indebtedness of the payment thereof or to protect such
obligee against loss in respect thereof (in whole or in part); PROVIDED,
HOWEVER, that the term "Guarantee" shall not include endorsements for collection
or deposit in the ordinary course of business. The term "Guarantee" used as a
verb has a corresponding meaning. The term "Guarantor" shall mean any Person
Guaranteeing any obligation.
"Guarantee Agreement" means a supplemental indenture, in a
form satisfactory to a Trustee, pursuant to which a Subsidiary Guarantor becomes
subject to the applicable terms and conditions of this Indenture.
"Hedging Obligations" of any Person means the obligations of
such Person pursuant to any Interest Rate Agreement or Currency Agreement.
"Holder" or "Securityholder" means the Person in whose name a
Security is registered on the Registrar's books.
"Incidental Asset" means any equipment, outfit, furniture,
furnishings, appliances, spare or replacement parts or stores owned by Millenium
or a Subsidiary Guarantor that have become obsolete or unfit for use or no
longer useful, necessary or profitable in the conduct of the business of
Millenium or such Subsidiary Guarantor, as the case may be. In no event shall
the term "Incidental Asset" include a Vessel or a Mortgaged Vessel.
"Incur" means issue, assume, Guarantee, incur or otherwise
become liable for; PROVIDED, HOWEVER, that any Indebtedness or Capital Stock of
a Person existing at the time such Person becomes a Subsidiary (whether by
merger, consolidation, acquisition or otherwise) shall be deemed to be Incurred
by such Subsidiary at the time it becomes a Subsidiary. The term "Incurrence"
when used as a noun shall have a correlative meaning. The accretion of principal
of a non-interest bearing or other discount security shall be deemed the
Incurrence of Indebtedness.
"Indebtedness" means, with respect to any Person on any date
of determination (without duplication):
(i) the principal in respect of (A) indebtedness of such
Person for money borrowed and (B) indebtedness evidenced by notes,
debentures, bonds or other similar instruments for the payment of which
such Person is responsible or liable, including, in each case, any
premium on such indebtedness to the extent such premium has become due
and payable;
<PAGE>
17
(ii) all Capital Lease Obligations of such Person and all
Attributable Debt in respect of Sale/Leaseback Transactions entered
into by such Person;
(iii) all obligations of such Person issued or assumed as the
deferred purchase price of property, all conditional sale obligations
of such Person and all obligations of such Person under any title
retention agreement (but excluding accounts payable arising in the
ordinary course of business);
(iv) all obligations of such Person for the reimbursement of
any obligor on any letter of credit, banker's acceptance or similar
credit transaction (other than obligations with respect to letters of
credit securing obligations (other than obligations described in
clauses (i) through (iii) above) entered into in the ordinary course of
business of such Person to the extent such letters of credit are not
drawn upon or, if and to the extent drawn upon, such drawing is
reimbursed no later than the tenth Business Day following payment on
the letter of credit);
(v) the amount of all obligations of such Person with respect
to the redemption, repayment or other repurchase of any Disqualified
Stock or, with respect to any Subsidiary of such Person, the
liquidation preference with respect to, any Preferred Stock (but
excluding, in each case, any accrued dividends);
(vi) all obligations of the type referred to in clauses (i)
through (v) of other Persons and all dividends of other Persons for the
payment of which, in either case, such Person is responsible or liable,
directly or indirectly, as obligor, guarantor or otherwise, including
by means of any Guarantee;
(vii) all obligations of the type referred to in clauses (i)
through (vi) of other Persons secured by any Lien on any property or
asset of such Person (whether or not such obligation is assumed by such
Person), the amount of such obligation being deemed to be the lesser of
the value of such property or assets or the amount of the obligation so
secured; and
(viii) to the extent not otherwise included in this
definition, Hedging Obligations of such Person.
The amount of Indebtedness of any Person at any date shall be the outstanding
balance at such date of all unconditional obligations as described above and the
maximum liability, upon the occurrence of the contingency giving rise to the
obligation, of any contingent obligations at such date.
<PAGE>
18
"Indenture" means this Indenture as amended or supplemented
from time to time.
"Independent Investment Banker" means a Reference Treasury
Dealer appointed by the Trustee after consultation with Millenium.
"Insurance Assignment" means the Insurance Assignment between
a Subsidiary Guarantor and the Collateral Agent.
"Interest Rate Agreement" means in respect of a Person any
interest rate swap agreement, interest rate cap agreement or other financial
agreement or arrangement designed to protect such Person against fluctuations in
interest rates.
"Investment" in any Person means any direct or indirect
advance, loan (other than advances to customers in the ordinary course of
business that are recorded as accounts receivable on the balance sheet of the
lender) or other extensions of credit (including by way of Guarantee or similar
arrangement) or capital contribution to (by means of any transfer of cash or
other property to others or any payment for property or services for the account
or use of others), or any purchase or acquisition of Capital Stock, Indebtedness
or other similar instruments issued by such Person. For purposes of the
definition of "Unrestricted Subsidiary", the definition of "Restricted Payment"
and Section 4.05, (i) "Investment" shall include the portion (proportionate to
Millenium's equity interest in such Subsidiary) of the fair market value of the
net assets of any Subsidiary of Millenium at the time that such Subsidiary is
designated an Unrestricted Subsidiary; PROVIDED, HOWEVER, that upon a
redesignation of such Subsidiary as a Restricted Subsidiary, Millenium shall be
deemed to continue to have a permanent "Investment" in an Unrestricted
Subsidiary equal to an amount (if positive) equal to (x) Millenium's
"Investment" in such Subsidiary at the time of such redesignation less (y) the
portion (proportionate to Millenium's equity interest in such Subsidiary) of the
fair market value of the net assets of such Subsidiary at the time of such
redesignation; and (ii) any property transferred to or from an Unrestricted
Subsidiary shall be valued at its fair market value at the time of such
transfer, in each case as determined in good faith by the Board of Directors.
"Issue Date" means the date on which the Securities are
originally issued.
"Lien" means any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind (including
<PAGE>
19
any conditional sale or other title retention agreement or lease in the nature
thereof).
"Loan To Value Ratio" means, at any time, the ratio of
(x) the aggregate Accreted Value of the then outstanding
Securities (less the amount of any Collateral, including Escrowed
Proceeds, consisting of cash or Temporary Cash Investments at such
time) to
(y) the aggregate Appraised Value of all Mortgaged Vessels at
such time.
If the Loan To Value Ratio is required to be calculated or adjusted at a time
prior to a Proceeds Receipt Date (as defined in Section 4.17(a) or when cash is
on deposit with the Trustee as part of the Collateral in connection with the
sale of a Mortgaged Vessel or the occurrence of an Event of Loss with respect to
a Mortgaged Vessel, the then most recent Appraised Value of such Lost Mortgaged
Vessel (in the event such determination is to be made prior to the Proceeds
Receipt Date (as defined in Section 4.17(a)) or the amount of such cash on
deposit, as the case may be, shall be deemed to be the Appraised Value of the
Vessel giving rise to such cash on deposit and such Vessel shall be deemed to be
a Mortgaged Vessel for purposes of such computation or adjustment of the Loan To
Value Ratio.
"Mortgage" means a mortgage and the related deed of covenant,
if any, on a Vessel substantially in the form of and to the effect set forth as
Exhibit D in the Escrow Agreement.
"Mortgaged Collateral" means (i) the Mortgaged Vessels (or any
Qualified Substitute Vessels), pursuant to a Mortgage issued by the Subsidiary
Guarantor which owns such Vessel in favor of the Collateral Agent, (ii) the
Charters, if any, relating to the Mortgaged Vessels, including the collateral
right to receive all moneys due and to become due under the Charters or in
respect of the Mortgaged Vessels and all claims for damages arising under the
Charters or relating to the Mortgaged Vessels, (iii) the freights and hires
relating to the Mortgaged Vessels and (v) all policies and contracts of
insurance taken out from time to time in respect of the Mortgaged Vessels
pursuant to the Insurance Assignment.
"Mortgaged Vessels" means the Vessels owned by the Subsidiary
Guarantors from time to time, including the following Vessels (which are the
Existing Vessels and the Committed Vessels), as follows:
<PAGE>
20
<TABLE>
<CAPTION>
SUBSIDIARY OFFICIAL YEAR
VESSEL GUARANTOR FLAG NUMBER BUILT
- - - - ------ --------- ---- ------ -----
<S> <C> <C> <C> <C>
Monica Marissa Oakmont Panama 24935 1973
Shipping &
Trading
Limited
Clipper Harmony Rapid Panama 7703546 1978
Ocean
Carriers
Inc.
Clipper Golden Ivy Liberia 10245 1978
Hind Navigation
Ltd.
Clipper Pacific Topscale Cyprus 708918 1976
Shipping
Company
Limited
Clipper Atlantic Conifer Cyprus 708620 1975
Shipping
Company
Limited
Millenium Millenium Cayman * 1988
Aleksander Aleksander Islands
, Inc.
Millenium Elmar Millenium Cayman * 1987
Elmar, Islands
Inc.
Millenium Leader Millenium Cayman * 1984
III, Inc. Islands
Millenium Hawk Millenium Cayman * 1984
II, Inc. Islands
Millenium Eagle Millenium Cayman * 1983
VII, Inc. Islands
Millenium Osprey Millenium Cayman * 1984
VI, Inc. Islands
Millenium Falcon Millenium Cayman * 1981
V, Inc. Islands
Millenium Condor Millenium Cayman * 1981
IV, Inc. Islands
Millenium Millenium Bahamas * 1978
Amethyst Amethyst,
Inc.
Millenium Yama Millenium Bahamas * 1979
Yama, Inc.
Millenium
Millenium Majestic,
Majestic Inc. Bahamas * 1979
</TABLE>
- - - - ----------------------
* Not yet available
If one of such Vessels shall be sold pursuant to the terms of this Indenture,
such Vessel shall cease to be a Mortgaged Vessel from and after such sale date.
A Qualified Substitute Vessel may be substituted for a Mortgaged Vessel in
certain circumstances and such substituted Vessel shall
<PAGE>
21
become a Mortgaged Vessel upon substitution in accordance with the terms of this
Indenture.
"Net Available Cash" from an Asset Sale means cash payments
received therefrom (including any cash payments received by way of deferred
payment of principal pursuant to a note or installment receivable or otherwise
and proceeds from the sale or other disposition of any securities received as
consideration, but only as and when received, but excluding any other
consideration received in the form of assumption by the acquiring Person of
Indebtedness or other obligations relating to such properties or assets or
received in any other noncash form), in each case net of (i) all legal, title
and recording tax expenses, commissions and other fees and expenses (including
commissions under the New Management Agreement), and all Federal, state,
provincial, foreign and local taxes required to be accrued as a liability under
GAAP, as a consequence of such Asset Sale, (ii) all payments made on any
Indebtedness which is secured by any assets subject to such Asset Sale, in
accordance with the terms of any Lien upon or other security agreement of any
kind with respect to such assets, or which must by its terms, or in order to
obtain a necessary consent to such Asset Sale, or by applicable law, be repaid
out of the proceeds from such Asset Sale, (iii) all distributions and other
payments required to be made to minority interest holders in Subsidiaries or
joint ventures as a result of such Asset Sale and (iv) the deduction of
appropriate amounts provided by the seller as a reserve, in accordance with
GAAP, against any liabilities (including indemnification liabilities) associated
with the property or other assets disposed in such Asset Sale and retained by
Millenium or any Restricted Subsidiary after such Asset Sale.
"Net Cash Proceeds" means, with respect to any issuance or
sale of Capital Stock or capital contribution, the cash proceeds and Temporary
Cash Investments proceeds of such issuance or sale (or, in the event the
consideration of such issuance or sale or contribution is other than cash, the
cash proceeds and Temporary Cash Investments proceeds actually received upon the
disposition of such other consideration) net of attorneys' fees, accountants'
fees, underwriters' or placement agents' fees, discounts or commissions and
brokerage, consultant and other fees actually incurred in connection with such
issuance or sale and net of taxes paid or payable as a result thereof.
"Net Event of Loss Proceeds" means, with respect to any Event
of Loss, the Event of Loss Proceeds from such Event of Loss net of related fees
and expenses and payments made to repay related Indebtedness or any other
related obligation outstanding at the time of such Event of Loss;
<PAGE>
22
PROVIDED, HOWEVER, that such Indebtedness or other obliga tion is either (A)
secured by a Lien on the property or assets that suffered the Event of Loss or
(B) required to be paid as a result of such Event of Loss.
"New Management Agreement" means (i) the agreement entered
into on the Issue Date among the Subsidiary Guaran tors and MMI with respect to
the Existing Vessels and the Committed Vessels on the Issue Date, (ii) any
agreements replacing or amending such agreements and (iii) agreements entered
into subsequent to the Issue Date with respect to Committed Vessels, Additional
Vessels or any Qualified Substitute Vessels; PROVIDED, HOWEVER, that with
respect to clauses (ii) and (iii), such agreements shall be on substantially the
same terms as the terms in effect on the Issue Date contained in the agreement
described in clause (i).
"Officer" means the Chairman of the Board, the President, any
Vice President, the Treasurer or the Secre tary of Millenium.
"Officers' Certificate" means a certificate signed by two
Officers.
"OID" means original issue discount.
"Opinion of Counsel" means a written opinion from legal
counsel who is acceptable to the Trustee. The counsel may be an employee of or
counsel to Millenium or the Trustee.
"Parent" means any Person that, directly or indirectly, owns
all the Voting Stock of Millenium.
"Permitted Excess Cash Use" means (i) the repayment of
unsubordinated Indebtedness of Millenium or of a Subsidiary Guarantor (in each
case other than Indebtedness owed to an Affiliate of Millenium) or (ii) the
investment in Additional Assets.
"Permitted Holders" means (i) the members of MMI's management
and their respective affiliates as of the Issue Date and (ii) Millenium
Investment and Millenium Advisors, together with any Affiliates of either of
such Persons as of the Issue Date or of Stanton Capital Corporation.
"Permitted Investment" means an Investment by Millenium or any
Restricted Subsidiary in (i) Millenium, a Restricted Subsidiary or a Person that
will, upon the making of such Investment, become a Restricted Subsidiary;
PROVIDED, HOWEVER, that the primary business of such Restricted Subsidiary is a
Shipping Business; (ii) another
<PAGE>
23
Person if as a result of such Investment such other Person is merged or
consolidated with or into, or transfers or conveys all or substantially all its
assets to, Millenium or a Restricted Subsidiary; PROVIDED, HOWEVER, that such
Person's primary business is a Shipping Business; (iii) Temporary Cash
Investments; (iv) receivables owing to Millenium or any Restricted Subsidiary if
created or acquired in the ordinary course of business and payable or
dischargeable in accordance with customary trade terms; PROVIDED, HOWEVER, that
such trade terms may include such concessionary trade terms as Millenium or any
such Restricted Subsidiary deems reasonable under the circum stances; (v)
payroll, travel and similar advances to cover matters that are expected at the
time of such advances ultimately to be treated as expenses for accounting
purposes and that are made in the ordinary course of business; (vi) loans or
advances to employees made in the ordinary course of business consistent with
past practices of Millenium or such Restricted in an aggregate amount not to
exceed $100,000 outstanding at any time; (vii) stock, obligations or securities
received in settlement of debts created in the ordinary course of business and
owing to Millenium or any Restricted Subsidiary or in satisfaction of judgments
or received in connection with condemnation proceedings; (viii) any Investment
made as a result of the receipt of non-cash consideration from an Asset Sale
made in compliance with this Indenture; (ix) Investments made pursuant to
Hedging Obligations to the extent permitted by Section 4.03; and (x) Investments
in Persons primarily engaged in a Shipping Business; PROVIDED, HOWEVER, that any
such Investment, when added together with all other Investments made pursuant to
this clause (x) and then outstanding, does not exceed the sum of (A) $5.0
million plus (B) 75% of the cumulative amount of Net Available Cash attributable
to Sold Mortgaged Vessels to the extent such Net Available Cash remains after
Millenium and its Restricted Subsidiaries have complied with Section 4.17 or
Section 4.18 to redeem Securities or to tender a Qualified Substitute Vessel
with respect to such Sold Mortgaged Vessels.
"Permitted Liens" means, with respect to any
Person,
(a) Liens securing obligations under this Indenture, the
Securities and the Mortgages;
(b) Liens existing on the Issue Date;
(c) Liens granted after the Issue Date in favor of the
Trustee, the Collateral Agent or the Holders;
(d) Liens with respect to the assets of a Restricted
Subsidiary (other than a Subsidiary
<PAGE>
24
Guarantor) granted by such Restricted Subsidiary to Millenium to secure
Indebtedness owing to Millenium by such Restricted Subsidiary;
(e) Liens for crews' wages (including the wages of a master
and the wages of stevedores employed directly by a Vessel) and pledges
or deposits by such Person under worker's compensation laws,
unemployment insurance laws or similar legislation, or good faith
deposits in connection with bids, tenders, contracts (other than for
the payment of Indebtedness) or leases to which such Person is a party,
or deposits to secure public or statutory obligations of such Person or
deposits of cash or United States government bonds to secure surety or
appeal bonds to which such Person is a party, or deposits as security
for contested taxes or import duties or for the payment of rent, in
each case Incurred in the ordinary course of business;
(f) Liens imposed by law, such as carriers', warehousemen's
and mechanics' Liens, in each case for sums not yet due or being
contested in good faith by appropriate proceedings or other Liens
arising out of judgments or awards against such Person with respect to
which such Person shall then be proceeding with an appeal or other
proceedings for review;
(g) Liens for property taxes not yet subject to penalties for
non-payment or which are being contested in good faith and by
appropriate proceedings;
(h) Liens in favor of issuers of surety bonds or letters of
credit issued pursuant to the request of and for the account of such
Person in the ordinary course of its business; PROVIDED, HOWEVER, that
such letters of credit do not constitute Indebtedness;
(i) minor survey exceptions, minor encumbrances, easements or
reservations of, or rights of others for, licenses, rights-of-way,
sewers, electric lines, telegraph and telephone lines and other similar
purposes, or zoning or other restrictions as to the use of real
property or Liens incidental to the conduct of the business of such
Person or to the ownership of its properties which were not Incurred in
connection with Indebtedness and which do not in the aggregate
materially adversely affect the value of said properties or materially
impair their use in the operation of the business of such Person;
(j) Liens securing Indebtedness Incurred to finance the
construction, purchase or lease of, or repairs, improvements or
additions to, property of such
<PAGE>
25
Person; PROVIDED, HOWEVER, that the Lien may not extend to any other
property owned by such Person or any of its Subsidiaries at the time
the Lien is Incurred, and the Indebtedness (other than any interest
thereon) secured by the Lien may not be Incurred more than 180 days
after the later of the acquisition, completion of construction, repair,
improvement, addition or commencement of full operation of the property
subject to the Lien;
(k) Liens on receivables of Millenium and its Restricted
Subsidiaries or on the Mortgaged Collateral to secure Indebtedness
permitted under Section 4.03 (b)(1) and Section 4.04(6);
(l) Liens on property or shares of Capital Stock of another
Person (other than a Subsidiary Guarantor) at the time such other
Person becomes a Subsidiary of such Person; PROVIDED, HOWEVER, that
such Liens are not created, incurred or assumed in connection with, or
in contemplation of, such other Person becoming such a Subsidiary;
PROVIDED FURTHER, HOWEVER, that such Lien may not extend to any other
property owned by such Person or any of its Subsidiaries;
(m) Liens on property at the time such Person or any of its
Subsidiaries acquires the property, including any acquisition by means
of a merger or consolidation with or into such Person or a Subsidiary
of such Person; PROVIDED, HOWEVER, that such Liens are not created,
incurred or assumed in connection with, or in contemplation of, such
acquisition; PROVIDED FURTHER, HOWEVER, that the Liens may not extend
to any other property owned by such Person or any of its Subsidiaries;
(n) Liens securing Hedging Obligations so long as such Hedging
Obligations relate to Indebtedness that is, and is permitted to be
under this Indenture, secured by a Lien on the same property securing
such Hedging Obligations;
(o) any Lien which arises in favor of an unpaid seller in
respect of goods, plant or equipment sold and delivered to Millenium in
the ordinary course of business until payment of the purchase price for
such goods or plant or equipment or any other goods, plant or equipment
previously sold and delivered by that seller (except to the extent that
such Lien secures Indebtedness or arises otherwise than due to
deferment of payment of purchase price);
<PAGE>
26
(p) any Lien or pledge created or subsisting in the ordinary
course of business over documents of title, insurance policies or sale
contracts in relation to commercial goods to secure the purchase price
thereof;
(q) Liens to secure any Refinancing (or successive
Refinancings) as a whole, or in part, of any Indebted ness secured by
any Lien referred to in the foregoing clauses (b), (j), (l) and (m);
PROVIDED, HOWEVER, that (x) such new Lien shall be limited to all or
part of the same property that secured the original Lien (plus
improvements to or on such property) and (y) the Indebtedness secured
by such Lien at such time is not increased to any amount greater than
the sum of (A) the outstanding principal amount or, if greater,
committed amount of the Indebtedness described under clause (b), (j),
(l) or (m) at the time the original Lien became a Permitted Lien and
(B) an amount necessary to pay any fees and expenses, including
premiums, related to such Refinancing;
(r) Charters, leases or subleases granted to others in the
ordinary course of business that are subject to the relevant Mortgage
and that do not materially interfere with the ordinary course of
business of Millenium and its Restricted Subsidiaries, taken as a
whole;
(s) (A) Liens in favor of Millenium or any Restricted
Subsidiary, (B) Liens arising from the rendering of a final judgment or
order against such Person that does not give rise to an Event of
Default and (C) Liens securing reimbursement obligations with respect
to letters of credit that encumber documents and other property
relating to such letters of credit and products and proceeds thereof;
(t) Liens in favor of customers and revenue authorities
arising as a matter of law to secure payment of custom duties in
connection with the importation of goods;
(u) Liens for salvage;
(v) any Lien or pledge which arises in favor of Parent in the
ordinary course of business in connection with the performance of its
duties and obligations under the New Management Agreement as in effect
on the Issue Date;
(w) Liens on the Capital Stock of an Unrestricted Subsidiary
to the extent such Liens secure obligations
<PAGE>
27
of such Unrestricted Subsidiary or the Guarantee of Millenium of the
obligations of such Unrestricted Subsidiary; and
(x) Liens securing Indebtedness if the Indebted ness secured
by such Lien, plus all other Indebtedness secured by Liens described in
this clause (x) at the time of determination, does not exceed $1
million.
Notwithstanding the foregoing, "Permitted Liens" will not include any Lien
described in clause (j), (l) or (m) above to the extent such Lien applies to any
Additional Assets acquired directly or indirectly from Net Available Cash
pursuant to Section 4.07. For purposes of this definition, the term
"Indebtedness" shall be deemed to include accrued and unpaid interest on such
Indebtedness.
"Person" means any individual, corporation, partnership,
limited liability company, joint venture, association, joint-stock company,
trust, unincorporated organization, government or any agency or political
subdivision thereof or any other entity.
"Preferred Stock", as applied to the Capital Stock of any
Person, means Capital Stock of any class or classes (however designated) which
is preferred as to the payment of dividends or distributions, or as to the
distribution of assets upon any voluntary or involuntary liquidation or
dissolution of such Person, over shares of Capital Stock of any other class of
such Person.
"Primary Treasury Dealer" means a primary U.S. Government
securities dealer in New York City.
"principal" of a Security means the Accreted Value of the
Security plus the premium, if any, payable on the Security which is due or
overdue or is to become due at the
relevant time.
"Public Equity Offering" means an underwritten primary public
offering of common stock of Millenium pursuant to an effective registration
statement under the Securities Act.
"Public Market" means any time after (x) a Public Equity
Offering has been consummated and (y) at least 15% of the total issued and
outstanding common stock of Millenium has been distributed by means of an
effective registration statement under the Securities Act or sales pursuant to
Rule 144 under the Securities Act.
"Qualified Preferred Stock" of a Restricted Subsidiary means a
series of Preferred Stock of such
<PAGE>
28
Restricted Subsidiary which (i) has a fixed liquidation preference that is no
greater in the aggregate than the sum of (x) the fair market value (as
determined in good faith by the Board of Directors at the time of the issuance
of such series of Preferred Stock) of the consideration received by such
Restricted Subsidiary for the issuance of such series of Preferred Stock and (y)
accrued and unpaid dividends to the date of liquidation, (ii) has a fixed annual
dividend and has no right to share in any dividend or other distribu tions based
on the financial or other similar performance of such Restricted Subsidiary and
(iii) does not entitle the holders thereof to vote in the election of directors,
managers or trustees of such Restricted Subsidiary unless such Restricted
Subsidiary has failed to pay dividends on such series of Preferred Stock for a
period of at least 12 consecutive calendar months.
"Qualified Proceeds" means any of the following or any
combination of the following: (i) cash, (ii) Temporary Cash Investments, (iii)
assets that are used or useful in a Shipping Business and (iv) the Capital Stock
of any Person primarily engaged in a Shipping Business if, in connection with
the receipt by Millenium or any Restricted Subsidiary of Millenium of such
Capital Stock, (a) such Person becomes a Restricted Subsidiary of Millenium or
of any Restricted Subsidiary of Millenium or (b) such Person is merged,
consolidated or amalgamated with or into, or transfers or conveys substantially
all of its assets to, or is liquidated into, Millenium or any Restricted
Subsidiary of Millenium.
"Qualified Restricted Subsidiary" means a Restricted
Subsidiary in which no Affiliate of Millenium (other than another Qualified
Restricted Subsidiary) holds any Investment except through its beneficial
ownership of Capital Stock of Millenium.
"Qualified Substitute Vessel" means in respect of any
Mortgaged Vessel which has been sold or was the subject of an Event of Loss, as
of any date, one or more Vessels, (i) none of which is a Mortgaged Vessel as of
such date, (ii) which will be, upon acquisition thereof, wholly owned by a
Wholly Owned Subsidiary of Millenium, (iii) each of which is registered under
the laws of the Republic of Liberia, the Commonwealth of the Bahamas, Panama,
Cyprus, the Cayman Islands or such other jurisdiction which at the time is
generally deemed acceptable by institutional lenders to the shipping industry,
as determined in good faith by the Board of Directors and (iv) each of which has
or which together have an Appraised Value at the Vessel Tender Date at least
equal to (x) the product of (A) the Vessel Percen tage of the Vessel(s) for
which it is or they are being substituted, multiplied by (B) the Accreted Value
of the Securities outstanding on such date, assuming compliance by
<PAGE>
29
the applicable Subsidiary Guarantor with all the terms of this Indenture and the
applicable Mortgage or (y) with respect to a Sold Mortgaged Vessel, if the Loan
To Value Ratio (calculated to include in the numerator thereof the then
outstanding amount of Indebtedness under any working capital facility to the
extent such Indebtedness is secured by a prior Lien on the Mortgaged Vessels)
would be less than 0.8 to 1.0 after giving effect to the disposition of such
Sold Mortgaged Vessel and the tender of one or more Vessels having an Appraised
Value at the Vessel Tender Date at least equal to the lesser of (I) the product
calculated under the foregoing clause (x) and (II) the Appraised Value of such
Sold Mortgaged Vessel, then such lesser amount.
"Reference Treasury Dealers" means each of Credit Suisse First
Boston Corporation, Donaldson Lufkin Jenrette Securities Corporation and their
respective successors; PROVIDED, HOWEVER, that if either of the foregoing shall
cease to be a Primary Treasury Dealer, Millenium shall substitute therefor
another Primary Treasury Dealer.
"Reference Treasury Dealer Quotations" means, with respect to
any Reference Treasury Dealer and any redemption date, the average, as
determined by the Trustee, of the bid and asked prices for the Comparable
Treasury Issue (expressed in each case as a percentage of its principal amount)
quoted in writing to the Trustee by such Reference Treasury Dealer at 5:00 p.m.
(New York City time) on the third business day preceding such redemption date.
"Refinance" means, in respect of any Indebtedness, to
refinance, extend, renew, refund, repay, prepay, redeem, defease or retire, or
to issue other Indebtedness in exchange or replacement for, such indebtedness.
"Refinanced" and "Refinancing" shall have correlative meanings.
"Refinancing Indebtedness" means Indebtedness that Refinances
any Indebtedness of Millenium or any Restricted Subsidiary existing on the Issue
Date or Incurred in compliance with this Indenture, including Indebtedness that
Refinances Refinancing Indebtedness; PROVIDED, HOWEVER, that (i) such
Refinancing Indebtedness has a Stated Maturity no earlier than the Stated
Maturity of the Indebtedness being Refinanced, (ii) such Refinancing
Indebtedness has an Average Life at the time such Refinancing Indebtedness is
Incurred that is equal to or greater than the Average Life of the Indebtedness
being Refinanced and (iii) such Refinancing Indebtedness has an aggregate
principal amount (or if Incurred with original issue discount, an aggregate
issue price) that is equal to or less than the aggregate principal amount (or if
Incurred with original issue discount, the aggregate accreted value) then
outstanding or
<PAGE>
30
committed (plus fees and expenses, including any premium and defeasance costs)
under the Indebtedness being Refinanced; PROVIDED FURTHER, HOWEVER, that
Refinancing Indebtedness shall not include (x) Indebtedness of a Subsidiary that
Refinances Indebtedness of the Company or (y) Indebtedness of Millenium or a
Restricted Subsidiary that Refinances Indebtedness of an Unrestricted
Subsidiary.
"Registration Rights Agreement" means the Registration Rights
Agreement among the Company, the Subsidiary Guarantors and the Initial
Purchasers dated July 20, 1998.
"Restricted Payment" with respect to any Person means (i) the
declaration or payment of any dividends or any other distributions of any sort
in respect of its Capital Stock (including any payment in connection with any
merger or consolidation involving such Person) or similar payment to the direct
or indirect holders of its Capital Stock (other than dividends or distributions
payable solely in its Capital Stock (other than Disqualified Stock) and
dividends or distributions payable solely to Millenium or a Restricted
Subsidiary, and other than pro rata dividends or other distributions made by a
Subsidiary that is not a Wholly Owned Subsidiary to minority stockholders (or
owners of an equivalent interest in the case of a Subsidiary that is an entity
other than a corporation)), (ii) the purchase, redemption or other acquisition
or retirement for value of any Capital Stock of Millenium held by any Person or
of any Capital Stock of a Restricted Subsidiary held by any Affiliate of
Millenium (other than a Restricted Subsidiary), including the exercise of any
option to exchange any Capital Stock (other than into Capital Stock of the
Company that is not Disqualified Stock), (iii) the purchase, repurchase,
redemption, defeasance or other acquisition or retirement for value, prior to
scheduled maturity, scheduled repayment or scheduled sinking fund payment of any
Subordinated Obligations (other than the purchase, repurchase, or other
acquisition of Subordinated Obligations purchased in anticipation of satisfying
a sinking fund obligation, principal installment or final maturity, in each case
due within one year of the date of acquisition) or (iv) the making of any
Investment (other than a Permitted Investment) in any Person.
"Restricted Subsidiary" means any Subsidiary of Millenium that
is not an Unrestricted Subsidiary.
"Sale/Leaseback Transaction" means an arrangement relating to
property now owned or hereafter acquired whereby Millenium or a Restricted
Subsidiary transfers such property to a Person and Millenium or a Restricted
Subsidiary leases it from such Person.
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31
"SEC" means the Securities and Exchange Commis sion.
"Secured Indebtedness" means any Indebtedness of Millenium
secured by a Lien.
"Security Agreements" means the Collateral Agency Agreement,
the Escrow Agreement, Mortgages, Insurance Assignments, and any other
instruments or documents entered into or delivered in connection with any of the
foregoing, as such agreements, instruments or documents may from time to time be
amended in accordance with the terms hereof and thereof.
"Securities" means the Securities issued under this Indenture.
"Senior Indebtedness" of any Person means (i) Indebtedness of
such Person, whether outstanding on the Issue Date or thereafter Incurred, and
(ii) accrued and unpaid interest (including interest accruing on or after the
filing of any petition in bankruptcy or for reorganization relating to such
Person to the extent post-filing interest is allowed in such proceeding) in
respect of (A) indebtedness of such Person for money borrowed and (B)
indebtedness evidenced by notes, debentures, bonds or other similar instruments
for the payment of which such Person is responsible or liable unless, in the
case of (i) and (ii), in the instrument creating or evidencing the same or
pursuant to which the same is outstanding it is provided that such obligations
are subordinate in right of payment to the Securities; PROVIDED, HOWEVER, that
Senior Indebtedness shall not include (1) any obligation of such Person to any
Subsidiary, (2) any liability for Federal, state, local or other taxes owed or
owing by such Person, (3) any accounts payable or other liability to trade
creditors arising in the ordinary course of business (including guarantees
thereof or instruments evidencing such liabilities), (4) any Indebtedness of
such Person (and any accrued and unpaid interest in respect thereof) which is
subordinate or junior in any respect to any other Indebtedness or other
obligation of such Person or (5) that portion of any Indebtedness which at the
time of Incurrence is Incurred in violation of this Indenture.
"Shipping Business" means the ownership or operation of
vessels and any activities within the ship owning and shipping industries and
all businesses which are complementary, incidental, related or ancillary to any
such activities.
"Significant Subsidiary" means any Restricted Subsidiary that
would be a "Significant Subsidiary" of
<PAGE>
32
Millenium within the meaning of Rule 1-02 under Regulation S-X promulgated by
the SEC.
"Stated Maturity" means, with respect to any security, the
date specified in such security as the fixed date on which the final payment of
principal of such security is due and payable, including pursuant to any
mandatory redemption provision (but excluding any provision providing for the
repurchase of such security at the option of the holder thereof upon the
happening of any contingency unless such contingency has occurred).
"Subordinated Obligation" means any Indebtedness of Millenium
(whether outstanding on the Issue Date or thereafter Incurred) which is
subordinate or junior in right of payment to the Securities pursuant to a
written agreement to that effect.
"Subsidiary" means, in respect of any Person, any corporation,
association, partnership or other business entity of which more than 50% of the
total voting power of shares of Capital Stock or other interests (including
partnership interests) entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees thereof
is at the time owned or controlled, directly or indirectly, by (i) such Person,
(ii) such Person and one or more Subsidiaries of such Person or (iii) one or
more Subsidiaries of such Person.
"Subsidiary Guarantor" means each Subsidiary of Millenium,
whether now owned or hereafter formed, which (i) owns a Mortgaged Vessel on the
Issue Date, (ii) acquires a Vessel with Escrowed Proceeds, (iii) acquires a
Qualified Substitute Vessel, or (iv) shall execute and deliver a Subsidiary
Guarantee.
"Subsidiary Guarantee" means a Guarantee of Millenium's
obligations with respect to the Securities issued by a Subsidiary of Millenium.
"Temporary Cash Investments" means any of the following: (i)
any investment in direct obligations of the United States of America or any
agency thereof or obligations guaranteed by the United States of America or any
agency thereof; (ii) investments in time deposit accounts, certificates of
deposit and money market deposits maturing within 360 days of the date of
acquisition thereof issued by a bank or trust company which is organized under
the laws of the United States of America, any state thereof or any foreign
country recognized by the United States, and which bank or trust company has
capital, surplus and undivided profits aggregating in excess of $50,000,000 (or
the foreign currency equivalent thereof) and has outstanding
<PAGE>
33
debt which is rated "A" (or such similar equivalent rating) or higher by at
least one nationally recognized statistical rating organization (as defined in
Rule 436 under the Securities Act) or any money-market fund sponsored by a
registered broker dealer or mutual fund distributor; (iii) repurchase
obligations with a term of not more than thirty (30) days for underlying
securities of the types described in clause (i) above entered into with a bank
meeting the qualifications described in clause (ii) above; (iv) investments in
commercial paper, maturing not more than six (6) months after the date of
acquisition, issued by a corporation (other than an Affiliate of Millenium)
organized and in existence under the laws of the United States of America or any
foreign country recognized by the United States of America with a rating at the
time as of which any investment therein is made of "P-2" (or higher) according
to Moody's Investors Service, Inc. or "A-2" (or higher) according to Standard &
Poor's Ratings Group; (v) investments in securities with maturities of six (6)
months or less from the date of acquisition issued or fully guaranteed by any
state, commonwealth or territory of the United States of America, or by any
political subdivision or taxing authority thereof, and rated at least "A" by
Standard & Poor's Ratings Group or "A" by Moody's Investors Service, Inc. and
(vi) any mutual fund the portfolio of which is limited to investments of types
specified in the preceding clauses (i) through (v), including any proprietary
mutual fund of the Trustee for which such bank or an affiliate thereof is
investment advisor or to which such bank provides other services and receives
reasonable compensation therefor.
"Treasury Rate" means, with respect to any redemp tion date,
the rate per annum equal to the semiannual equivalent yield to maturity of the
Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue
(expressed as a percentage of its principal amount) equal to the Comparable
Treasury Price for such redemption date.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. ss.ss.
77aaa-77bbbb) as in effect on the date of this Indenture.
"Trustee" means the party named as such in this Indenture
until a successor replaces it and, thereafter, means the successor.
"Trust Officer" means the Chairman of the Board, the President
or any other officer or assistant officer of the Trustee assigned by the Trustee
to administer its corporate trust matters.
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34
"Uniform Commercial Code" means the New York Uniform
Commercial Code as in effect from time to time.
"Unrestricted Subsidiary" means (i) any Subsidiary of
Millenium that at the time of determination shall be designated an Unrestricted
Subsidiary by the Board of Directors in the manner provided below and (ii) any
Subsi diary of an Unrestricted Subsidiary. The Board of Directors may designate
any Subsidiary of Millenium (including any newly acquired or newly formed
Subsidiary of Millenium) to be an Unrestricted Subsidiary unless such Subsidiary
or any of its Subsidiaries owns any Capital Stock or Indebtedness of, or owns or
holds any Lien on any property of, Millenium or any other Subsidiary of
Millenium that is not a Subsi diary of the Subsidiary to be so designated;
PROVIDED, HOWEVER, that either (A) the Subsidiary to be so designated has total
assets of $1,000 or less or (B) if such Subsidiary has assets greater than
$1,000, such designation would be permitted under Section 4.05(b). The Board of
Directors may designate any Unrestricted Subsidiary to be a Restricted
Subsidiary; PROVIDED, HOWEVER, that immediately after giving effect to such
designation (x) Millenium could Incur $1.00 of additional Indebtedness under
Section 4.03(a) and (y) no Default shall have occurred and be continuing. Any
such designation by the Board of Directors shall be evidenced to the Trustee by
promptly filing with the Trustee a copy of the resolution of the Board of
Directors giving effect to such designation and an Officers' Certificate
certifying that such designation complied with the foregoing provisions.
"U.S. Government Obligations" means direct obliga tions (or
certificates representing an ownership interest in such obligations) of the
United States of America (including any agency or instrumentality thereof) for
the payment of which the full faith and credit of the United States of America
is pledged and which are not callable or redeemable at the issuer's option.
"Vessel" means a bulk carrier owned or leased by Millenium or
any Subsidiary of Millenium.
"Vessel Percentage" means, as of and after the Issue Date and
prior to any subsequent adjustment as provided below, for each of the initial
Mortgaged Vessels (including the Committed Vessels) and the Escrowed Proceeds,
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35
the percentage set forth below opposite such Mortgaged Vessel:
VESSEL PERCENTAGE
------ ----------
(1) Monica Marissa 3.2%
(2) Clipper Harmony 4.5%
(3) Clipper Golden Hind 3.8%
(4) Clipper Pacific 1.5%
(5) Clipper Atlantic 1.4%
(6) Millenium Aleksander 7.6%
(7) Millenium Elmar 7.0%
(8) Millenium Leader 7.0%
(9) Millenium Hawk 6.2%
(10) Millenium Eagle 5.9%
(11) Millenium Osprey 6.2%
(12) Millenium Falcon 4.9%
(13) Millenium Condor 4.9%
(14) Millenium Amethyst 2.6%
(15) Millenium Yama 3.1%
(16) Millenium Majestic 2.7%
Escrowed Proceeds 27.5%
-----
Total 100.0%
=====
PROVIDED, HOWEVER, that each Vessel Percentage shall be adjusted in each case
upon the occurrence of, and after giving effect to, (i) the acquisition of a
Vessel with Escrowed Proceeds (other than a Committed Vessel) and the delivery
of a Mortgage with respect to such Vessel, (ii) the delivery of any Qualified
Substitute Vessel as part of the Collateral pursuant to the terms of this
Indenture, (iii) the delivery of any other Vessel as part of the Collateral,
(iv) an Event of Loss with respect to any Mortgaged Vessel, or (v) the sale of
any Mortgaged Vessel (or the termination of any Acquisition Contract in respect
of a Committed Vessel prior to the acquisition thereof by the Company), in each
case effected in accordance with the terms of this Indenture, to be, for each
Vessel that constitutes a Mortgaged Vessel after such an occurrence, the
percentage that the most recently calculated Appraised Value of such Mortgaged
Vessel bears to the sum of such aggregate Appraised Value of the remaining
Mortgaged Vessels and after giving effect to such occurrence plus the amount of
Escrowed Proceeds then remaining as part of the Collateral. Notwithstanding the
foregoing, if any Vessel Percentage is required to be calculated or adjusted at
a time when cash is on deposit with the Trustee as part of the Collateral as a
result of the sale of a Mortgaged Vessel or the occurrence of an Event of Loss
with respect to a Mortgaged Vessel, the amount of such cash on deposit shall be
deemed to be the Appraised Value of such Vessel giving rise to such cash on
deposit and such Vessel shall be deemed to remain a
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36
Mortgaged Vessel for purposes of such computation or adjustment of Vessel
Percentage.
"Voting Stock" of a Person means all classes of Capital Stock
or other interests (including partnership interests) of such Person then
outstanding and normally entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees thereof.
"Warrant Agreement" means the Warrant Agreement between
Millenium and ChaseMellon Shareholder Services, L.L.C., as warrant agent, dated
as of July 15, 1998, as in effect on the Issue Date.
"Wholly Owned Subsidiary" means a Restricted Subsidiary all
the Capital Stock of which (other than directors' qualifying shares) is owned by
Millenium or one or more Wholly Owned Subsidiaries.
SECTION 1.02. OTHER DEFINITIONS.
Defined in
Term Section
---- -------
"Additional Amounts".................... 4.19
"Additional Vessel" .................... Preamble
"Affiliate Transaction" ................ 4.08
"Appendix".............................. 2.01
"Bankruptcy Law" ....................... 6.01
"Committed Vessel" ..................... Preamble
"Custodian" ............................ 6.01
"Escrowed Proceeds"..................... Preamble
"Event of Default" ..................... 6.01
"Excess Proceeds Offer"................. 4.07(c)
"Excess Proceeds Payment"............... 4.07
"Excluded Holder"....................... 2.01
"Existing Vessel" ...................... Preamble
"Extended Tender Date".................. 4.18
"legal defeasance option" .............. 8.01(b)
"Legal Holiday" ........................ 14.08
"Loss Date"............................. 4.17(b)
"Loss Redemption Price"................. 4.17(b)
"Lost Mortgaged Vessel"................. 4.17(a)
"Mortgaged Vessel Asset"................ 4.07
"New Subsidiary Guarantor".............. 4.14
"Notification Date"..................... 4.17(a)
"Obligation"............................ 10.01
"Offer Amount".......................... 4.07
"Offer Period".......................... 4.07
"Paying Agent" ......................... 2.03
"Pledged Collateral".................... 11.01(a)
"Pledged Securities".................... 11.13
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37
"Pledged Shares"........................ 11.01(a)
"Proceeds Receipt Date"................. 4.17(a)
"Purchase Date" ........................ 4.07(d)(1)
"Redemption Amount"..................... 4.17(b)
"Registrar"............................. 2.03
"Release Notice"........................ 12.04
"Sale Date"............................. 4.17(a)
"Sale Redemption Price"................. 4.17(b)
"Sold Mortgaged Vessel"................. 4.17(a)
"Successor Company" .................... 5.01
"Taxes"................................. 4.19
"Tendered Vessel Owner"................. 4.18
"Trust Moneys".......................... 13.01
"Vessel Tender Date".................... 4.18
SECTION 1.03. INCORPORATION BY REFERENCE OF TRUST INDENTURE
ACT. This Indenture is subject to the mandatory provisions of the TIA which are
incorporated by reference in and made a part of this Indenture. The following
TIA terms have the following meanings:
"Commission" means the SEC;
"indenture securities" means the Securities;
"indenture security holder" means a Securityholder;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the
Trustee; and
"obligor" on the indenture securities means the Company and
any other obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined by
the TIA, defined by TIA reference to another statute or defined by SEC rule have
the meanings assigned to them by such definitions.
SECTION 1.04. RULES OF CONSTRUCTION. Unless the context
otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) "including" means including without limitation;
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38
(5) words in the singular include the plural and words in the
plural include the singular;
(6) unsecured Indebtedness shall not be deemed to be
subordinate or junior to Secured Indebtedness merely by virtue of its
nature as unsecured Indebtedness;
(7) the principal amount of any noninterest bearing or other
discount security at any date shall be the principal amount thereof
that would be shown on a balance sheet of the issuer dated such date
prepared in accordance with GAAP;
(8) the principal amount of any Preferred Stock shall be (i)
the maximum liquidation value of such Preferred Stock or (ii) the
maximum mandatory redemption or mandatory repurchase price with respect
to such Preferred Stock, whichever is greater;
(9) all references to the date the Securities were originally
issued shall refer to the date the Initial Securities were originally
issued; and
(10) whenever in this Indenture or in the Securities there is
mentioned, in any context, (i) the payment of principal, (ii) purchase
prices in connection with the purchase of the Securities, (iii)
interest, (iv) Accreted Value or (v) any other amount payable on or
with respect to any of the Securities, or any payment pursuant to the
Subsidiary Guarantees, such mention shall be deemed to include mention
of the payment of Additional Amounts (as defined) to the extent that,
in such context, Additional Amounts are, were or would be payable in
respect thereof.
ARTICLE 2
THE SECURITIES
SECTION 2.01. FORM AND DATING. Provisions relating to the
Initial Securities, the Private Exchange Securities and the Exchange Securities
are set forth in the Rule 144A/Regulation S Appendix attached hereto (the
"Appendix") which is hereby incorporated in and expressly made part of this
Indenture. The initial Securities and the Trustee's certificate of
authentication shall be substan tially in the form of Exhibit 1 to the Appendix
which is hereby incorporated in and expressly made a part of this Indenture. The
Exchange Securities, the Private Exchange Securities and the Trustee's
certificate of authentication shall be substantially in the form of Exhibit A,
which is hereby incorporated in and expressly made a part of this
<PAGE>
39
Indenture. The Securities may have notations, legends or endorsements required
by law, stock exchange rule, agreements to which the Company is subject, if any,
or usage (provided that any such notation, legend or endorsement is in a form
acceptable to the Company). Each Security shall be dated the date of its
authentication. The terms of the Securities set forth in the Appendix and
Exhibit A are part of the terms of this Indenture.
SECTION 2.02. EXECUTION AND AUTHENTICATION. Two Officers shall
sign the Securities for the Company by manual or facsimile signature. The
Company's seal shall be impressed, affixed, imprinted or reproduced on the
Securities and may be in facsimile form.
If an Officer whose signature is on a Security no longer holds
that office at the time the Trustee authenti cates the Security, the Security
shall be valid nevertheless.
A Security shall not be valid until an authorized signatory of
the Trustee manually signs the certificate of authentication on the Security.
The signature shall be con clusive evidence that the Security has been
authenticated under this Indenture.
The Trustee shall authenticate and deliver Securities for
original issue in an aggregate principal amount at maturity of $100,000,000,
upon a written order of the Company signed by two Officers or by an Officer and
either an Assistant Treasurer or an Assistant Secretary of the Company. Such
order shall specify the amount at maturity of the Securities to be authenticated
and the date on which the original issue of Securities is to be authenticated.
The aggregate principal amount at maturity of Securities outstanding at any time
may not exceed that amount except as provided in Section 2.06.
The Trustee may appoint an authenticating agent reasonably
acceptable to the Company to authenticate the Securities. Unless limited by the
terms of such appointment, an authenticating agent may authenticate Securities
whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as any Registrar, Paying Agent or agent
for service of notices and demands.
SECTION 2.03. REGISTRAR AND PAYING AGENT. The Company shall
maintain an office or agency where Securities may be presented for registration
of transfer or for exchange (the "Registrar") and an office or agency where
Securities may be presented for payment (the "Paying Agent"). The Registrar
shall keep a register of the Securities and of
<PAGE>
40
their transfer and exchange. The Company may have one or more co-registrars and
one or more additional paying agents. The term "Paying Agent" includes any
additional paying agent.
The Company shall enter into an appropriate agency agreement
with any Registrar, Paying Agent or co-registrar not a party to this Indenture,
which shall incorporate the terms of the TIA. The agreement shall implement the
provi sions of this Indenture that relate to such agent. The Company shall
notify the Trustee of the name and address of any such agent. If the Company
fails to maintain a Registrar or Paying Agent, the Trustee shall act as such and
shall be entitled to appropriate compensation therefor pursuant to Section 7.07.
The Company or any of its domestically incorporated Wholly Owned Subsidiaries
may act as Paying Agent, Registrar, co-registrar or transfer agent.
The Company initially appoints the Trustee as Registrar and
Paying Agent in connection with the Securities and Banque Generale Du Luxembourg
S.A. as the Paying Agent and Transfer Agent in Luxembourg.
SECTION 2.04. PAYING AGENT TO HOLD MONEY IN Trust. Prior to
each due date of the principal and interest on any Security, the Company shall
deposit with the Paying Agent a sum sufficient to pay such principal and
interest when so becoming due. The Company shall require each Paying Agent
(other than the Trustee) to agree in writing that the Paying Agent shall hold in
trust for the benefit of Securityholders or the Trustee all money held by the
Paying Agent for the payment of principal of or interest on the Securities and
shall notify the Trustee of any default by the Company in making any such
payment. If the Company or a Subsidiary acts as Paying Agent, it shall segregate
the money held by it as Paying Agent and hold it as a separate trust fund. The
Company at any time may require a Paying Agent to pay all money held by it to
the Trustee and to account for any funds disbursed by the Paying Agent. Upon
complying with this Section, the Paying Agent shall have no further liability
for the money delivered to the Trustee.
SECTION 2.05. SECURITYHOLDER LISTS. The Trustee shall preserve
in as current a form as is reasonably prac ticable the most recent list
available to it of the names and addresses of Securityholders. If the Trustee is
not the Registrar, the Company shall furnish to the Trustee, in writing at least
five Business Days before each interest payment date and at such other times as
the Trustee may request in writing, a list in such form and as of such date as
the Trustee may reasonably require of the names and addresses of
Securityholders.
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SECTION 2.06. REPLACEMENT SECURITIES. If a mutilated Security
is surrendered to the Registrar or if the Holder of a Security claims that the
Security has been lost, destroyed or wrongfully taken, the Company shall issue
and the Trustee shall authenticate a replacement Security if the requirements of
Section 8-405 of the Uniform Commercial Code are met and the Holder satisfies
any other reasonable requirements of the Trustee. If required by the Trustee or
the Company, such Holder shall furnish an indemnity bond sufficient in the
judgment of the Company and the Trustee to protect the Company, the Trustee, the
Paying Agent, the Registrar and any co-registrar or co-paying agent from any
loss which any of them may suffer if a Security is replaced. The Company and the
Trustee may charge the Holder for their expenses in replacing a Security.
Every replacement Security is an additional obligation of the
Company.
SECTION 2.07. OUTSTANDING SECURITIES. Securities outstanding
at any time are all Securities authenticated by the Trustee except for those
canceled by it, those delivered to it for cancelation and those described in
this Section as not outstanding. A Security does not cease to be outstanding
because the Company or an Affiliate of the Company holds the Security.
If a Security is replaced pursuant to Section 2.06, it ceases
to be outstanding unless the Trustee and the Company receive proof satisfactory
to them that the replaced Security is held by a bona fide purchaser.
If the Paying Agent segregates and holds in trust, in
accordance with this Indenture, on a redemption date or maturity date money
sufficient to pay all principal and interest payable on that date with respect
to the Securities (or portions thereof) to be redeemed or maturing, as the case
may be, then on and after that date such Securities (or portions thereof) cease
to be outstanding and interest on them ceases to accrue.
SECTION 2.08. TEMPORARY SECURITIES. Until definitive
Securities are ready for delivery, the Company may prepare and the Trustee shall
authenticate temporary Securities. Temporary Securities shall be substantially
in the form of definitive Securities but may have variations that the Company
considers appropriate for temporary Secur ities. Without unreasonable delay, the
Company shall prepare and the Trustee shall authenticate definitive Securities
and deliver them in exchange for temporary Securities.
SECTION 2.09. CANCELATION. The Company at any time may deliver
Securities to the Trustee for cancelation.
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The Registrar and the Paying Agent shall forward to the Trustee any Securities
surrendered to them for registration of transfer, exchange or payment. The
Trustee and no one else shall cancel and destroy (subject to the record reten
tion requirements of the Exchange Act) all Securities surrendered for
registration of transfer, exchange, payment or cancelation and deliver a
certificate of such destruction to the Company unless the Company directs the
Trustee to deliver canceled Securities to the Company. The Company may not issue
new Securities to replace Securities it has redeemed, paid or delivered to the
Trustee for cancelation.
SECTION 2.10. DEFAULTED INTEREST. If the Company defaults in a
payment of interest on the Securities, the Company shall pay defaulted interest
(plus interest on such defaulted interest to the extent lawful) in any lawful
manner. The Company may pay the defaulted interest to the persons who are
Securityholders on a subsequent special record date. The Company shall fix or
cause to be fixed any such special record date and payment date to the
reasonable satisfaction of the Trustee and shall promptly mail to each
Securityholder a notice that states the special record date, the payment date
and the amount of defaulted interest to be paid.
SECTION 2.11. CUSIP NUMBERS. The Company in issuing the
Securities may use "CUSIP" numbers (if then generally in use) and, if so, the
Trustee shall use "CUSIP" numbers in notices of redemption as a convenience to
Holders; PROVIDED, HOWEVER, that any such notice may state that no
representation is made as to the correctness of such numbers either as printed
on the Securities or as contained in any notice of a redemption and that
reliance may be placed only on the other identification numbers printed on the
Securities, and any such redemption shall not be affected by any defect in or
omission of such numbers.
ARTICLE 3
REDEMPTION
SECTION 3.01. NOTICES TO TRUSTEE. If the Company elects to
redeem Securities pursuant to paragraph 5 of the Securities or is required to
redeem Securities pursuant to paragraph 6 of the Securities, it shall notify the
Trustee in writing of the redemption date, the aggregate principal amount at
maturity of Securities to be redeemed and the paragraph of the Securities
pursuant to which the redemption will occur.
If the Company is required to redeem Securities pursuant to
paragraph 6 of the Securities, it may reduce the
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43
principal amount at maturity of Securities required to be redeemed to the extent
it is permitted a credit by the terms of the Securities and it notifies the
Trustee of the amount of the credit and the basis for it. If the reduction is
based on a credit for redeemed or canceled Securities that the Company has not
previously delivered to the Trustee for cancelation, it shall deliver such
Securities with the notice.
The Company shall give each notice to the Trustee provided for
in this Section at least sixty (60) days before the redemption date unless the
Trustee consents in writing to a shorter period. Such notice shall be
accompanied by an Officers' Certificate and an Opinion of Counsel from the
Company to the effect that such redemption will comply with the conditions
herein.
SECTION 3.02. SELECTION OF SECURITIES TO BE REDEEMED. If fewer
than all the Securities are to be redeemed, the Trustee shall select the
Securities to be redeemed pro rata or by lot or by a method that complies with
applicable legal and securities exchange requirements, if any, and that the
Trustee in its sole discretion shall deem to be fair and appropriate and in
accordance with methods generally used at the time of selection by fiduciaries
in similar circumstances. The Trustee shall make the selection from outstanding
Securities not previously called for redemption. The Trustee may select for
redemption portions of the principal of Securities that have denominations
larger than $1,000. Securities and portions of Securities the Trustee selects
shall be in amounts of $1,000 or a whole multiple of $1,000. Provisions of this
Indenture that apply to Securities called for redemption also apply to portions
of Securities called for redemption. The Trustee shall notify the Company
promptly of the Securities or portions of Securities to be redeemed.
SECTION 3.03. NOTICE OF REDEMPTION. At least thirty (30) days
but not more than sixty (60) days before a date for redemption of Securities,
the Company shall mail a notice of redemption by first-class mail to each Holder
of Securities to be redeemed at such Holder's registered address.
The notice shall identify the Securities to be redeemed and
shall state:
(1) the redemption date;
(2) the redemption price;
(3) the name and address of the Paying Agent;
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44
(4) that Securities called for redemption must be surrendered
to the Paying Agent to collect the redemp tion price;
(5) if fewer than all the outstanding Securities are to be
redeemed, the identification and Accreted Value of the particular
Securities to be redeemed and if any Security is being redeemed in
part, the portion of the principal amount at maturity of such Security
to be redeemed and that after the redemption date and upon surrender of
such Security a new Security or Securities will be issued having a
principal amount at maturity equal to the principal amount at maturity
of the Security surrendered less the principal amount at maturity of
the portion of the Security redeemed;
(6) that, unless the Company defaults in making such
redemption payment, interest on Securities (or portion thereof) called
for redemption ceases to accrue on and after the redemption date;
(7) the paragraph of the Securities pursuant to which the
Securities called for redemption are being redeemed; and
(8) that no representation is made as to the correctness or
accuracy of the CUSIP number, if any, listed in such notice or printed
on the Securities.
At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at the Company's sole cost and expense. In
such event, the Company shall provide the Trustee with the information required
by this Section and advance to it all costs to be Incurred in connection
therewith.
SECTION 3.04. EFFECT OF NOTICE OF REDEMPTION. Once notice of
redemption is mailed, Securities called for redemption become due and payable on
the redemption date and at the redemption price stated in the notice. Upon
surrender to the Paying Agent, such Securities shall be paid at the redemption
price stated in the notice, plus accrued interest to the redemption date
(subject to the right of Holders of record on the relevant record date to
receive interest due on the related interest payment date). Failure to give
notice or any defect in the notice to any Holder shall not affect the validity
of the notice to any other Holder.
SECTION 3.05. DEPOSIT OF REDEMPTION PRICE. Prior to the
redemption date, the Company shall deposit with the Paying Agent (or, if the
Company or a Subsidiary is the Paying Agent, shall segregate and hold in trust)
money sufficient to pay the redemption price of and accrued inter-
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45
est on all Securities to be redeemed on that date other than Securities or
portions of Securities called for redemption which have been delivered by the
Company to the Trustee for cancelation.
SECTION 3.06. SECURITIES REDEEMED IN PART. Upon surrender of a
Security that is redeemed in part, the Company shall execute and the Trustee
shall authenticate for the Holder (at the Company's expense) a new Security
equal in principal amount at maturity to the unredeemed portion of the Security
surrendered.
ARTICLE 4
COVENANTS
SECTION 4.01. PAYMENT OF SECURITIES. The Company shall
promptly pay the principal of and interest on the Securities on the dates and in
the manner provided in the Securities and in this Indenture. Principal and
interest shall be considered paid on the date due if on such date the Trustee or
the Paying Agent holds in accordance with this Indenture money sufficient to pay
all principal and interest then due.
The Company shall pay interest on overdue principal at the
rate specified therefor in the Securities, and it shall pay interest on overdue
installments of interest at the same rate to the extent lawful.
SECTION 4.02. SEC REPORTS. Notwithstanding that the Company
may not be required to remain subject to the reporting requirements of Section
13 or 15(d) of the Exchange Act applicable to a "foreign private issuer" (as
such term is defined in Rule 3b-4 under the Exchange Act), the Company shall
file with the SEC and furnish to the Trustee, Holders or prospective Holders,
upon request, (i) commencing with respect to the fiscal year ended December 31,
1998, within 120 days after the end of each fiscal year, an annual report on
Form 20-F (or any successor form) containing the information required to be
contained therein for such fiscal year, and (ii) commencing with respect to the
fiscal quarter ended September 30, 1998, within 45 days after the end of each of
the first three quarters in each fiscal year, quarterly reports on Form 6-K
consisting of unaudited financial statements (including a balance sheet and
statement of income, changes in stockholders' equity and cash flows) and
Management's Discussion and Analysis of Financial Condition and Results of
Operations for and as of the end of each of such quarters (with comparable
financial statements for such quarter of the immediately preceding fiscal year).
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46
SECTION 4.03. LIMITATION ON INDEBTEDNESS. (a) The Company
shall not, and shall not permit any Restricted Subsidiary to, Incur, directly or
indirectly, any Indebtedness; PROVIDED, HOWEVER, that the Company may Incur
Indebtedness if, on the date of such Incurrence and after giving effect thereto,
(i) the Consolidated Coverage Ratio exceeds 2 to 1 and (ii) the Loan to Value
Ratio (as of the most recent Appraisal Date occurring not more than 30 days
prior to the date of such Incurrence) does not exceed .85 to 1.
(b) In addition, without regard to compliance with the
foregoing paragraph (a), the Company and the Restricted Subsidiaries may Incur
any or all of the following Indebtedness:
(1) Indebtedness Incurred pursuant to a working capital line
of credit in an amount which, when added together with the amount of
all other Indebtedness Incurred pursuant to this clause (1) and then
out standing, does not exceed $7 million; PROVIDED, HOWEVER, that the
proceeds of such working capital line of credit will be used solely for
working capital requirements, the payment of operating expenses and
interest on the Securities;
(2) Indebtedness owed to and held by a Wholly Owned
Subsidiary; PROVIDED, HOWEVER, that any subsequent issuance or transfer
of any Capital Stock which results in any such Wholly Owned Subsidiary
ceasing to be a Wholly Owned Subsidiary or any subsequent transfer of
such Indebtedness (other than to another Wholly Owned Subsidiary) shall
be deemed, in each case, to constitute the Incurrence of such
Indebtedness by the Company;
(3) the Securities;
(4) Indebtedness outstanding on the Issue Date (other than
Indebtedness described in clause (1), (2) or (3) of this Section
4.03(b));
(5) Refinancing Indebtedness in respect of Indebtedness
Incurred pursuant to Section 4.03(a) or pursuant to clause (3), (4) or
this clause (5) of this paragraph (b);
(6) Hedging Obligations consisting of Interest Rate Agreements
or Currency Agreements directly related to Indebtedness permitted to be
Incurred by the Company pursuant to this Indenture;
(7) Indebtedness Incurred pursuant to Section 5.04(b) or
5.04(c) of the Warrant Agreement;
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47
(8) Guarantees of any Indebtedness of a Restricted Subsidiary
permitted by Section 4.04; and
(9) Indebtedness in an aggregate amount which, together with
all other Indebtedness of the Company outstanding on the date of such
Incurrence (other than Indebtedness permitted by clauses (1) through
(8) above or Section 4.03(a)) does not exceed $2 million.
(c) Notwithstanding the foregoing, the Company shall not Incur
any Indebtedness pursuant to Section 4.03(b) if the proceeds thereof are used,
directly or indirectly, to Refinance any Subordinated Obligations unless such
Indebtedness shall be subordinated to the Securities to at least the same extent
as such Subordinated Obligations.
(d) For purposes of determining compliance with this Section
4.03, (i) in the event that an item of Indebted ness meets the criteria of more
than one of the types of Indebtedness described herein, the Company, in its sole
discretion, will classify such item of Indebtedness and only be required to
include the amount and type of such Indebtedness in one of the above clauses and
(ii) an item of Indebtedness may be divided and classified in more than one of
the types of Indebtedness described herein.
SECTION 4.04. LIMITATION ON INDEBTEDNESS AND PREFERRED STOCK
OF RESTRICTED SUBSIDIARIES. The Company shall not permit any Restricted
Subsidiary to Incur, directly or indirectly, any Indebtedness or Preferred Stock
except that a Restricted Subsidiary may Incur the following Indebtedness or
Preferred Stock:
(1) Indebtedness or Preferred Stock issued to and held by a
Wholly Owned Subsidiary or the Company; PROVIDED, HOWEVER, that any
subsequent issuance or transfer of any Capital Stock which results in
any such Wholly Owned Subsidiary ceasing to be a Wholly Owned
Subsidiary or any subsequent transfer of such Indebted ness or
Preferred Stock (other than to the Company or another Wholly Owned
Subsidiary) shall be deemed, in each case, to constitute the Incurrence
of such Indebtedness or Preferred Stock by the Restricted Subsidiary;
(2) Guarantees of the Securities;
(3) Indebtedness or Preferred Stock outstanding on the Issue
Date (other than Indebtedness or Preferred Stock described in clauses
(1) or (2) of this Section 4.04);
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(4) Refinancing Indebtedness in respect of Indebtedness or
Preferred Stock Incurred pursuant to clause (2), (3) or this clause (4)
of this Section 4.04;
(5) Indebtedness or Preferred Stock for the purpose of
acquiring additional Vessels; PROVIDED, HOWEVER, that, at the date of
such Incurrence and after giving effect thereto, (i) no Default or
Event of Default shall have occurred and be continuing, (ii) the
Consolidated Coverage Ratio shall be at least 2 to 1 and (iii) the Loan
to Value Ratio (as of the most recent Appraisal Date occurring not more
than 30 days prior to the date of such Incurrence) does not exceed .85
to 1; and
(6) Guarantees in respect of Indebtedness Incurred pursuant to
Section 4.03(b)(1).
SECTION 4.05. LIMITATION ON RESTRICTED PAYMENTS. (a) The
Company shall not, and shall not permit any Restricted Subsidiary, directly or
indirectly, to make a Restricted Payment if at the time the Company or such
Restricted Subsidiary makes such Restricted Payment:
(1) a Default shall have occurred and be continuing (or would
result therefrom);
(2) the Company is not able to Incur an additional $1.00 of
Indebtedness under Section 4.03(a); or
(3) the aggregate amount of such Restricted Payment and all
other Restricted Payments since the Issue Date would exceed the sum of:
(A) 50% of the Consolidated Net Income accrued during
the period (treated as one accounting period) from the
beginning of the fiscal quarter immediately following the
fiscal quarter during which the Securities are originally
issued to the end of the most recent fiscal quarter for which
internal financial statements are available prior to the date
of such Restricted Payment (or, in case such Consolidated Net
Income shall be a deficit, minus 100% of such deficit);
(B) the aggregate Net Cash Proceeds received by the
Company from contributions to the Company's capital and the
issuance or sale of its Capital Stock (other than Disqualified
Stock) subsequent to the Issue Date (other than (i) in respect
of the Committed Vessels, (ii) an issuance or sale to a
Subsidiary of the Company and (iii) an issuance or sale to an
employee stock ownership plan or to a
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49
trust established by the Company or any of its Subsidiaries
for the benefit of their employees to the extent such issuance
or sale is financed with proceeds of debt provided by the
Company or any of its Subsidiaries);
(C) the amount by which Indebtedness of the Company
is reduced on the Company's balance sheet upon the conversion
or exchange (other than by a Subsidiary of the Company)
subsequent to the Issue Date of any Indebtedness of the
Company convertible or exchangeable for Capital Stock (other
than Disqualified Stock) of the Company (less the amount of
any cash, or the fair value of any other property, distributed
by the Company upon such conversion or exchange); and
(D) an amount equal to the net reduction in
Investments in Persons after the Issue Date who are not
Restricted Subsidiaries (other than Permitted Investments)
resulting from (x) Qualified Proceeds received as a dividend,
repayment of a loan (including interest) or advances or other
transfer of assets (valued at the fair market value thereof),
in each case to the Company or any Restricted Subsidiary from
such Persons, (y) Qualified Proceeds received upon the sale or
liquidation of such Investment and (z) the redesignation of
Unrestricted Subsidiaries whose assets are used or useful in,
or which are engaged in, a Shipping Business as Restricted
Subsidiaries (valued (proportionate to the Company's direct or
indirect equity interest in such Subsidiary) at the fair
market value of the net assets of such Subsidiary at the time
of such redesignation) not to exceed, in the case of clauses
(x), (y) and (z), the amount of Investments previously made by
the Company or any Restricted Subsidiary in such Person, which
amount was a Restricted Payment.
(b) The provisions of Section 4.05(a) shall not prohibit:
(i) any acquisition of Capital Stock (including the
acquisition of Capital Stock deemed to occur upon exercise of stock
options if such Capital Stock represents a portion of the exercise
price of such options) or any purchase, repurchase, redemption,
defeasance or other acquisition or retirement for value of Subordinated
Obligations made by exchange for, or out of the proceeds of the
substantially concurrent sale of, Capital Stock of the Company (other
than Disqualified Stock and other than Capital Stock issued or sold to
a
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Subsidiary of the Company or an employee stock ownership plan or to a
trust established by the Company or any of its Subsidiaries for the
benefit of their employees to the extent such sale to such plan or
trust is financed with proceeds of debt provided by the Company or any
Subsidiary of the Company); PROVIDED, HOWEVER, that (A) such purchase,
repurchase, redemption, defeasance or other acquisition or retirement
for value shall be excluded in the calculation of the amount of
Restricted Payments and (B) the Net Cash Proceeds from such sale shall
be excluded from the calculation of amounts under Section
4.05(a)(3)(B);
(ii) any purchase, repurchase, redemption, defeas ance or
other acquisition or retirement for value of Subordinated Obligations
made by exchange for, or out of the proceeds of the substantially
concurrent sale of, Indebtedness of the Company which is permitted to
be Incurred pursuant to Section 4.03; PROVIDED, HOWEVER, that such
purchase, repurchase, redemption, defeasance or other acquisition or
retirement for value shall be excluded in the calculation of the amount
of Restricted Payments;
(iii) any acquisition of the Warrants or Warrant Shares (as
such terms are defined in the Warrant Agreement) made in exchange for
Subordinated Obligations of the Company issued pursuant to the
indenture attached as an exhibit to the Warrant Agreement as described
in Section 5.04 of the Warrant Agreement; PROVIDED, HOWEVER, that no
Default or Event of Default shall have occurred and be continuing;
PROVIDED FURTHER, HOWEVER, that such acquisition shall be excluded from
the calculation of the amount of Restricted Payments;
(iv) dividends paid within sixty (60) days after the date of
declaration thereof if at such date of declaration such dividend would
have complied with this Section 4.05; PROVIDED, HOWEVER, that at the
time of payment of such dividend, no other Default shall have occurred
and be continuing (or result therefrom); PROVIDED FURTHER, HOWEVER,
that the declaration of such dividend shall be included in the
calculation of the amount of Restricted Payments;
(v) the repurchase, redemption or other acquisition of shares
of, or options to purchase shares of, Capital Stock of the Company or
any of its Subsidiaries from employees, former employees, directors or
former directors of the Company or any of its Subsidiaries (or
permitted transferees of such employees, former employees, directors or
former directors), or amounts paid to Parent on account of any such
repurchase,
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51
redemption or other acquisition or retirement for value of any Capital
Stock of Parent held by any present or former employees or directors of
Parent or the Company pursuant to the terms of agreements (including
employ ment agreements) or plans (or amendments thereto) approved by
the Board of Directors under which such individuals purchase or sell or
are granted the option to purchase or sell, shares of such Capital
Stock; PROVIDED, HOWEVER, that the aggregate amount of such repurchases
and other acquisitions shall not exceed $500,000 in any calendar year
(PROVIDED that to the extent that less than $500,000 of such Capital
Stock is so repurchased, redeemed or acquired in a given year, the
difference between $500,000 and such amount shall be added to the
amount available to Parent, the Company and its Subsidiaries for
repurchases, redemptions and acquisitions in future years (subject to a
maximum in any calendar year of $1.0 million)); PROVIDED FURTHER,
HOWEVER, that such repurchases, redemptions and other acquisitions
shall be excluded in the calculation of the amount of Restricted
Payments;
(vi) payments by the Company's Subsidiaries (whether in
existence on the Issue Date or subsequently acquired or formed) to the
Parent pursuant to the terms of the New Management Agreement; PROVIDED,
HOWEVER, that such payments shall be excluded in the calculation of the
amount of Restricted Payments; PROVIDED FURTHER, HOWEVER, that no
Default or Event of Default shall have occurred and be continuing;
(vii) payments to the Parent pursuant to the Advisory
Agreement; PROVIDED, HOWEVER, that such payments shall be excluded in
the calculation of the amount of Restricted Payments; PROVIDED FURTHER,
HOWEVER, that no Default or Event of Default shall have occurred and be
continuing;
(viii) payments to Parent to enable Parent to pay foreign,
federal, state or local tax liabilities to the appropriate taxing
authorities, not to exceed the amount of any tax liabilities that would
otherwise be payable by the Company and its Subsidiaries on a
consolidated basis if they filed separate tax returns, to the extent
that Parent has an obligation to pay such tax liabilities relating to
the operations, assets or capital of the Company or its Subsidiaries;
PROVIDED, HOWEVER, that such payments shall be included in the
calculation of the amount of Restricted Payments; or
(ix) the payment of dividends on the Company's common stock,
following the first Public Equity Offering, (A) of up to 6% per annum
of the Net Cash
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Proceeds received by the Company from such public offering of its
common stock or (B) in an amount to enable Parent to pay dividends on
its capital stock of up to 6% per annum of the Net Cash Proceeds
actually received by the Company from such public offering of Parent's
common stock as common equity or preferred equity (other than
Disqualified Stock), PROVIDED, HOWEVER, that no Default or Event of
Default shall have occurred and be continuing immediately after any
such payment of dividends; and PROVIDED, FURTHER, HOWEVER, that such
Restricted Payment shall be included in the calculation of the amount
of Restricted Payments.
SECTION 4.06. LIMITATION ON RESTRICTIONS ON DISTRIBUTIONS FROM
RESTRICTED SUBSIDIARIES. The Company shall not, and shall not permit any
Restricted Subsidiary to, create or otherwise cause or permit to exist or become
effective any consensual encumbrance or restriction on the ability of any
Restricted Subsidiary to (a) pay dividends or make any other distributions on
its Capital Stock to the Company or a Restricted Subsidiary or pay any
Indebtedness owed to the Company, (b) make any loans or advances to the Company
or (c) transfer any of its property or assets to the Company, except:
(i) any encumbrance or restriction pursuant to an agreement in
effect at or entered into on the Issue Date;
(ii) any encumbrance or restriction with respect to a
Restricted Subsidiary pursuant to an agreement relating to any
Indebtedness or Preferred Stock Incurred by such Restricted Subsidiary
on or prior to the date on which such Restricted Subsidiary became a
Restricted Subsidiary or acquired by the Company (other than
Indebtedness or Preferred Stock Incurred as consideration in, or to
provide all or any portion of the funds or credit support utilized to
consummate, the transaction or series of related transactions pursuant
to which such Restricted Subsidiary became a Restricted Subsidiary or
was acquired by the Company) and out standing on such date;
(iii) any encumbrance or restriction pursuant to an agreement
effecting a Refinancing of Indebtedness or Preferred Stock Incurred
pursuant to an agreement referred to in clause (i) or (ii) of this
Section 4.06 or this clause (iii) or contained in any amendment to an
agreement referred to in clause (i) or (ii) of this Section 4.06 or
this clause (iii); PROVIDED, HOWEVER, that the encumbrances and
restrictions with respect to such Restricted Subsidiary contained in
any such refinancing agreement or amendment are no less favorable
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53
to the Securityholders than encumbrances and restrictions with respect
to such Restricted Subsidiary contained in such predecessor agreements;
(iv) any such encumbrance or restriction consisting of
customary nonassignment provisions in leases governing leasehold
interests to the extent such provisions restrict the transfer of the
lease or the property leased thereunder;
(v) in the case of clause (c) above, restrictions contained in
(A) security agreements or mortgages securing Indebtedness of a
Restricted Subsidiary or (B) joint venture or similar agreements to the
extent such restrictions restrict the transfer of the property subject
to such security agreements or mortgages or joint venture agreements or
require the assignment of earnings attributable to such property; and
(vi) any restriction with respect to a Restricted Subsidiary
imposed pursuant to an agreement entered into for the sale or
disposition of all or substantially all the Capital Stock or assets of
such Restricted Subsidiary pending the closing of such sale or
disposition.
SECTION 4.07. LIMITATION ON SALES OF ASSETS; EXCESS PROCEEDS
OFFERS. (a) The Company shall not, and shall not permit any Subsidiary Guarantor
to, sell, assign, convey, transfer or otherwise dispose of a Mortgaged Vessel or
any other portion of the Collateral (other than an Incidental Asset); PROVIDED,
HOWEVER, that a Subsidiary Guarantor may sell a Mortgaged Vessel (at the option
of such Subsidiary Guarantor, together with the applicable Charters, freights
and hires and other related agreements) or the Company may sell all the Capital
Stock of a Subsidiary Guarantor (any such asset proposed to be sold is referred
to herein as a "Mortgaged Vessel Asset") if such sale of a Mortgaged Vessel
Asset shall be made in compliance with each of the following conditions:
(i) no Default shall have occurred and be continuing;
(ii) the sale or transfer shall be effected in a commercially
reasonable manner as determined by the Board of Directors and evidenced
by a board resolution;
(iii) 80% of such consideration for such sale shall be cash or
Temporary Cash Investments or the assumption of Senior Indebtedness of
the Company or a Restricted Subsidiary (PROVIDED that the Company or
such Restricted Subsidiary is released from all liabilities
thereunder),
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54
which aggregate consideration shall be not less than the Appraised
Value of such Mortgaged Vessel Asset; PROVIDED, HOWEVER, that 100% of
such consideration shall be used to calculate "Net Available Cash" for
purposes of clause (iv) below; PROVIDED FURTHER, HOWEVER, that any
securities, notes or other obligations received by the Company or any
Subsidiary Guarantor from the transferee of the Mortgaged Vessel Asset
that are promptly converted by the Company or such Subsidiary Guarantor
into cash (to the extent of the cash received), shall be deemed to be
cash for purposes of this clause (iii);
(iv) funds in an amount equal to the Net Available Cash shall
be paid in full directly to the Trustee as Collateral and shall be
received by the Trustee free of any Lien (other than the Lien of this
Indenture and the Security Agreements) but shall not constitute
Escrowed Proceeds; and
(v) the Company shall have complied with the other provisions
of this Indenture and the Security Agreements applicable to such sale.
The Company shall apply the proceeds from such sale as
described above under Section 4.17 and Section 4.18.
(b) The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, engage in any Asset Sales (other than Asset Sales
permitted by paragraph (a) above) unless (x) (A) such Asset Sale is by the
Company (other than the Capital Stock of a Subsidiary Guarantor) or by a
Restricted Subsidiary that is not a Subsidiary Guarantor or (B) such Asset Sale
is the sale of an Incidental Asset and (y) in the event and to the extent that
the Net Available Cash received by the Company or any of its Restricted
Subsidiaries from one or more of such Asset Sales occurring on or after the
Closing Date in any period of 12 consecutive months exceeds $10 million, then
the Company shall, or shall cause a Restricted Subsidiary to, within 30 days
after the date Net Available Cash so received exceeds $10 million in any period
of 12 consecutive months, apply an amount equal to such Net Available Cash
either (i) toward a Permitted Excess Cash Use or (ii) treat (no later than the
end of such 30-day period) such excess Net Available Cash (to the extent not
applied pursuant to clause (i) above) as Excess Proceeds.
(c) If, as of the first day of any calendar month, the
aggregate amount of Excess Proceeds not theretofore subject to an Excess
Proceeds Offer (as defined below), totals at least $10 million, the Company
shall, not later than the fifteenth Business Day of such month, make an offer (a
"Excess Proceeds Offer") to purchase from the holders
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55
pursuant to and subject to the conditions contained in Section 4.07(d) on a pro
rata basis an aggregate Accreted Value of Securities equal to the Excess
Proceeds available on such first day of the month, at a purchase price equal to
100% of their Accreted Value, plus, in each case, accrued interest (if any) to
the date of purchase (an "Excess Proceeds Payment").
(d) (1) Promptly, and in any event within 15 calendar days
after the Company becomes obligated to make an Excess Proceeds Offer, the
Company shall be obligated to deliver to the Trustee and send, by first-class
mail to each Holder, a written notice stating that the Holder may elect to have
his Securities purchased by the Company either in whole or in part (subject to
prorating as hereinafter described in the event such Offer is oversubscribed) in
integral multiples of $1,000 of principal amount at maturity, at the Accreted
Value. The notice shall specify a purchase date not less than 30 days nor more
than 60 days after the date of such notice (the "Purchase Date") and shall
contain such information concerning the business of the Company which the
Company in good faith believes will enable such Holders to make an informed
decision (which at a minimum will include (i) the most recently filed Annual
Report on Form 20-F (including audited consolidated financial statements) of the
Company, the most recent subsequently filed Current Report on Form 6-K of the
Company, other than Current Reports describing Asset Sales otherwise described
in the offering materials (or corresponding successor reports), (ii) a
description of material developments in the Company's business subsequent to the
date of the latest of such Reports, and (iii) if material, appropriate pro forma
financial information) and all instructions and materials necessary to tender
Securities pursuant to the Offer, together with the information contained in
clause (3).
(2) Not later than the date upon which written notice of an
Excess Proceeds Offer is delivered to the Trustee as provided above, the Company
shall deliver to the Trustee an Officers' Certificate as to (i) the amount of
the Excess Proceeds Offer (the "Offer Amount"), (ii) the allocation of the Net
Available Cash from the Asset Sales pursuant to which such Offer is being made
and (iii) the compliance of such allocation with the provisions of this
Indenture. By not later than 4:00 p.m. (New York time) on such date, the Company
shall also irrevocably deposit with the Paying Agent (or, if the Company is
acting as its own Paying Agent, segregate and hold in trust) in Temporary Cash
Investments, maturing on the last day prior to the Purchase Date or by 9:00 a.m.
(New York time) on the Purchase Date if funds are immediately available by open
of business, an amount equal to the Offer Amount to be held for payment in
accordance with the provisions of this Section. Upon the
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56
expiration of the period for which the Excess Proceeds Offer remains open (the
"Offer Period"), the Company shall deliver to the Trustee for cancelation, by no
later than 10:00 a.m. (New York time) on the next Business Day, the Securities
or portions thereof which have been properly tendered to and are to be accepted
by the Company. The Paying Agent shall, on the Purchase Date, mail or deliver
payment to each tendering Holder in the amount of the purchase price. In the
event that the aggregate purchase price of the Securities delivered by the
Company to the Paying Agent is less than the Offer Amount, the Paying Agent
shall deliver the excess to the Company immediately after the expiration of the
Offer Period for application in accordance with this Section.
(3) Holders electing to have a Security purchased shall be
required to surrender the Security, with an appro priate form duly completed, to
the Company at the address specified in the notice at least three (3) Business
Days prior to the Purchase Date. Holders shall be entitled to withdraw their
election if the Trustee or the Company receives not later than one Business Day
prior to the Purchase Date, a telex, facsimile transmission or letter setting
forth the name of the Holder, the principal amount at maturity of the Security
which was delivered for purchase by the Holder and a statement that such Holder
is withdrawing his election to have such Security purchased. If at the
expiration of the Offer Period the aggregate Accreted Value of Securities
surrendered by Holders exceeds the Offer Amount, the Company shall select the
Securities to be purchased on a pro rata basis (with such adjustments as may be
deemed appropriate by the Company so that only Securities in denominations of
$1,000, or integral multiples thereof, shall be purchased). Holders whose
Securities are purchased only in part shall be issued new Securities equal in
princi pal amount at maturity to the unpurchased portion of the Securities
surrendered.
(4) At the time the Company notifies the Trustee which
Securities are to be accepted for purchase and delivers the same to the Trustee,
the Company shall also deliver an Officers' Certificate stating that such
Securities (or portions thereof) are to be accepted by the Company pursuant to
and in accordance with the terms of this Section. A Security shall be deemed to
have been accepted for purchase at the time the Paying Agent, mails or delivers
payment therefor to the surrendering Holder.
(e) The Company shall comply, to the extent applicable, with
the requirements of Section 14(e) of the Exchange Act and any other securities
laws or regulations in connection with the purchase of Securities pursuant to an
Excess Proceeds Offer. To the extent that the provisions of any securities laws
or regulations conflict with provisions
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57
of this Section 4.07, the Company shall comply with the applicable securities
laws and regulations and shall not be deemed to have breached its obligations
under this Section 4.07 by virtue thereof.
SECTION 4.08. LIMITATION ON LINES OF BUSINESS. The Company
shall not, and shall not permit any of its Restricted Subsidiaries to, engage in
any business other than the Shipping Business.
SECTION 4.09. LIMITATION ON AFFILIATE TRANS ACTIONS. (a) The
Company shall not, and shall not permit any Restricted Subsidiary to, enter into
or permit to exist any transaction (including the purchase, sale, lease or
exchange of any property, employee compensation arrangements or the rendering of
any service) with any Affiliate of the Company (an "Affiliate Transaction")
unless the terms thereof (i) are no less favorable to the Company or such
Restricted Subsidiary than those that could be obtained at the time of such
transaction in arm's-length dealings with a Person who is not such an Affiliate,
(ii) if such Affiliate Transaction involves an amount in excess of $1 million,
(1) are set forth in writing and (2) have been approved by a majority of the
members of the Board of Directors having no personal stake in such Affiliate
Transaction and (iii) if such Affiliate Transaction involves an amount in excess
of $5 million, have been determined by a reasonably appropriate independent
qualified Appraiser, given the size and nature of the transaction, to be fair,
from a financial standpoint, to Millenium and its Restricted Subsidiaries
(which, in the case of an Affiliate Transaction or series of Affiliate
Transactions involving the purchase or sale of a Mortgaged Vessel by the Company
or a Restricted Subsidiary in exchange for consideration in which $2 million or
less consists of non-cash consideration, may be satisfied by delivery of a
certificate of an Appraiser stating that (x) in the case of the purchase of a
Mortgaged Vessel, the consideration paid does not exceed the Appraised Value of
such Mortgaged Vessel or (y) in the case of the sale of a Mortgaged Vessel, the
consideration received is at least equal to the Appraised Value of such
Mortgaged Vessel; PROVIDED, HOWEVER, that any securities, notes or other
obligations received by Millenium or any Subsidiary Guarantor from the
transferee of the Mortgaged Vessel Asset that are promptly converted by the
Company or such Subsidiary Guarantor into cash (to the extent of the cash
received), shall be deemed to constitute cash consideration for purposes of this
provision).
(b) The provisions of Section 4.09(a) shall not prohibit (i)
any Permitted Investment or Restricted Payment permitted to be paid pursuant to
Section 4.05, (ii) any issuance of securities or other customary employee
benefits pursuant to employment arrangements approved by the Board of
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58
Directors, (iii) the grant of stock options or similar rights to employees and
directors of the Company pursuant to plans approved by the Board of Directors,
(iv) loans or advances to employees in the ordinary course of business in
accordance with the past practices of the Company or its Restricted
Subsidiaries, but in any event not to exceed $100,000 in the aggregate
outstanding at any one time, (v) the payment of reasonable fees and other
benefits to directors of the Company and its Restricted Subsidiaries, (vi) any
Affiliate Transaction between the Company and a Qualified Restricted Subsidiary
or between Qualified Restricted Subsidiaries, (vii) entering into and the
performance of the New Management Agreement and (viii) entering into and the
performance of the Advisory Agreement.
SECTION 4.10. LIMITATION ON THE SALE OR ISSUANCE OF CAPITAL
STOCK OF RESTRICTED SUBSIDIARIES. The Company shall not sell or otherwise
dispose of any Capital Stock (other than Qualified Preferred Stock) of a
Restricted Subsidiary, and shall not permit any Restricted Subsidiary, directly
or indirectly, to issue or sell or otherwise dispose of any of its Capital Stock
except (i) to the Company or a Wholly Owned Subsidiary, (ii) if, immediately
after giving effect to such issuance, sale or other disposition, neither the
Company nor any of its Subsidiaries own any Capital Stock of such Restricted
Subsidiary or (iii) if, immediately after giving effect to such issuance, sale
or other disposition, such Restricted Subsidiary would no longer constitute a
Restricted Subsidiary and any Investment in such Person remaining after giving
effect thereto would have been permitted to be made under Section 4.05 if made
on the date of such issuance, sale or other disposition, (iv) to directors or
other Persons of qualifying shares of common stock of any Restricted Subsidiary,
to the extent mandated by applicable law, (v) the issuance or sale of Capital
Stock of a Subsidiary Guarantor that has a class of equity security registered
under Section 12 of the Exchange Act pursuant to an employee stock option plan
approved by the Board of Directors, (vi) other than with respect to shares of
Capital Stock of a Subsidiary Guarantor, to management employees of Millenium or
a Restricted Subsidiary pursuant to the exercise of stock options or stock
appreciation rights; and (vii) other than with respect to shares of Capital
Stock of a Subsidiary Guarantor, to Persons who are entering into joint ventures
or other similar business relationships with Millenium or any Subsidiary other
than a Subsidiary Guarantor.
SECTION 4.11. LIMITATION ON LIENS. The Company shall not, and
shall not permit any Restricted Subsidiary to, directly or indirectly, Incur or
permit to exist any Lien of any nature whatsoever on any of its properties
(including Capital Stock of a Restricted Subsidiary), whether owned at
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59
the Issue Date or thereafter acquired, other than Permitted Liens, without
effectively providing that the Securities shall be secured equally and ratably
with (or prior to) the obligations so secured for so long as such obligations
are so secured; PROVIDED, HOWEVER, that no Lien that secures Indebtedness (other
than the Securities and Indebtedness Incurred pursuant to Section 4.03(b)(1) and
Section 4.04(6)) may be Incurred or permitted to exist on any of the Collateral.
SECTION 4.12. LIMITATION ON SALE/LEASEBACK TRANSACTIONS. The
Company shall not, and shall not permit any Restricted Subsidiary to, enter into
any Sale/Leaseback Transaction with respect to any property unless (i) the
Company or such Subsidiary would be entitled to (A) Incur Indebtedness in an
amount equal to the Attributable Debt with respect to such Sale/Leaseback
Transaction pursuant to Section 4.03 or Section 4.04 and (B) create a Lien on
such property securing such Attributable Debt without equally and ratably
securing the Securities pursuant to Section 4.11, (ii) the net proceeds received
by the Company or any Restricted Subsidiary in connection with such
Sale/Leaseback Transaction are at least equal to the fair value (as determined
by the Board of Directors) of such property and (iii) the Company applies the
proceeds of such transaction in compliance with Section 4.07.
SECTION 4.13. CHANGE OF CONTROL. (a) Upon the occurrence of a
Change of Control, each Holder shall have the right to require that the Company
repurchase such Holder's Securities at a purchase price in cash equal to 101% of
the Accreted Value thereof plus accrued and unpaid interest, if any, to the date
of purchase (subject to the right of holders of record on the relevant record
date to receive interest on the relevant interest payment date), in accordance
with the terms contemplated in Section 4.13(b).
(b) Within 30 days following any Change of Control, the
Company shall mail a notice to each Holder with a copy to the Trustee (the
"Change of Control Offer") stating:
(1) that a Change of Control has occurred and that such Holder
has the right to require the Company to purchase such Holder's
Securities at a purchase price in cash equal to 101% of the Accreted
Value thereof plus accrued and unpaid interest, if any, to the date of
purchase (subject to the right of Holders of record on the relevant
record date to receive interest on the relevant interest payment date);
(2) the circumstances and relevant facts regarding such Change
of Control (including information with
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60
respect to pro forma historical income, cash flow and capitalization,
each after giving effect to such Change of Control);
(3) the repurchase date (which shall be no earlier than 30
days nor later than sixty (60) days from the date such notice is
mailed); and
(4) the instructions determined by the Company, consistent
with this Section, that a Holder must follow in order to have its
Securities purchased.
(c) Holders electing to have a Security purchased will be
required to surrender the Security, with an appro priate form duly completed, to
the Company at the address specified in the notice at least three Business Days
prior to the purchase date. Holders will be entitled to withdraw their election
if the Trustee or the Company receives not later than one Business Day prior to
the purchase date, a telegram, telex, facsimile transmission or letter setting
forth the name of the Holder, the principal amount at maturity of the Security
which was delivered for purchase by the Holder and a statement that such Holder
is withdrawing his election to have such Security purchased.
(d) On the purchase date, all Securities purchased by the
Company under this Section shall be delivered by the Trustee for cancelation,
and the Company shall pay the purchase price plus accrued and unpaid interest,
if any, to the Holders entitled thereto. Upon surrender of a Security that is
repurchased under this Section in part, the Company shall execute and the
Trustee shall authenticate for the Holder thereof (at the Company's expense) a
new Security having a principal amount at maturity equal to the principal amount
at maturity of the Security surrendered less the portion of the principal amount
at maturity of the Security purchased.
(e) Notwithstanding the foregoing provisions of this Section,
the Company will not be required to make a Change of Control Offer upon a Change
of Control if a third party makes the Change of Control Offer in the manner, at
the times and otherwise in compliance with the requirements set forth in Section
applicable to a Change of Control Offer made by the Company and purchases all
Securities validly tendered and not withdrawn under such Change of Control
Offer.
(f) The Company shall comply, to the extent appli cable, with
the requirements of Section 14(e) of the Exchange Act and any other securities
laws or regulations in connection with the repurchase of Securities pursuant to
this Section. To the extent that the provisions of any securities laws or
regulations conflict with provisions of this Section,
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61
the Company shall comply with the applicable securities laws and regulations and
shall not be deemed to have breached its obligations under this Section by
virtue thereof.
SECTION 4.14. FUTURE SUBSIDIARY GUARANTORS. To the extent
that, after the Issue Date, the Company acquires the Committed Vessels or the
Additional Vessels with the Escrowed Proceeds, each such Committed Vessel or
Additional Vessel shall be acquired by a newly formed Wholly Owned Subsidiary
(the "New Subsidiary Guarantor") and the Company shall cause such New Subsidiary
Guarantor prior to or contemporaneously with the acquisition of such Committed
Vessel or Additional Vessel, as the case may be, to execute and deliver to the
Trustee a Guarantee Agreement pursuant to which such New Subsidiary Guarantor
will Guarantee payment of the Securities on the same terms and conditions as
those set forth in this Indenture, to execute a Mortgage in favor of the
Collateral Agent or the Trustee pursuant to which such acquired Committed Vessel
or Additional Vessel shall thereafter be a Mortgaged Vessel for all purposes
under this Indenture, to execute an Insurance Assignment (each substantially in
the form attached as an Exhibit to the Escrow Agreement) in favor of the Trustee
and to satisfy such other conditions set forth in the Escrow Agreement.
SECTION 4.15. IMPAIRMENT OF SECURITY INTEREST. The Company
shall not, and shall not permit any Subsidiary Guarantor to, take or knowingly
or negligently omit to take, any action which action or omission might or would
have the result of materially impairing the security interest with respect to
the Collateral for the benefit of the Trustee and the Securityholders, and the
Company shall not, and shall not permit any Restricted Subsidiary to, grant to
any Person other than the Trustee, for the benefit of the Trustee and the
Securityholders, and other than the holder of Indebted ness Incurred and
outstanding pursuant to Section 4.03(b)(i) and Section 4.04(6), any interest
whatsoever in any of the Collateral.
SECTION 4.16. AMENDMENTS TO SECURITY AGREEMENTS. The Company
shall not, and shall not permit any Subsidiary Guarantor to, amend, modify or
supplement, or permit or consent to any amendment, modification or supplement
of, the Security Agreements in any way that would be adverse to the
Securityholders.
SECTION 4.17. APPLICATION OF PROCEEDS UPON SALE OR LOSS OF A
MORTGAGED VESSEL. (a) If either:
(1) a Mortgaged Vessel or the Capital Stock of a Subsidiary
Guarantor is sold in compliance with Section 4.07(a) (the Mortgaged
Vessel so sold or owned
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62
by the Subsidiary Guarantor whose Capital Stock is so sold being the
"Sold Mortgaged Vessel"), or
(2) an Event of Loss occurs at any time with respect to a
Mortgaged Vessel (the Mortgaged Vessel suffering such Event of Loss
being the "Lost Mortgaged Vessel"),
then within sixty (60) days after the date title of the Mortgaged Vessel passes
to the buyer (such date being the "Sale Date"), in the case of a sale, or within
60 days after the date such Event of Loss was deemed to have occurred (the "Loss
Date"), the Company shall give written notice (such date of notice being the
"Notification Date") to the Trustee whether it elects to redeem Securities in
connection with such sale or Event of Loss; PROVIDED, HOWEVER, that if a Default
shall have occurred and be continuing on the Notification Date, the Company
shall redeem Securities in accordance with Section 4.17(c).
Upon the receipt by the Company or a Subsidiary Guarantor of
the Net Available Cash attributable to a Sold Mortgaged Vessel or of the Net
Event of Loss Proceeds attributable to a Lost Mortgaged Vessel, such amounts
shall be deposited with the Trustee pursuant to Article 13 and shall constitute
Collateral pending application in accordance with Section 4.17(c).
(b) If the Company elects to (or is required to) redeem
Securities, the Company shall apply Net Available Cash or Net Event of Loss
Proceeds, as the case may be, not later than 60 days after the date (the
"Proceeds Receipt Date") of the receipt of such funds in an amount (the
"Redemption Amount") at least equal to the Vessel Percentage applicable to the
Sold Mortgaged Vessel as of the Sale Date or the Lost Mortgaged Vessel as of the
Loss Date, as the case may be, multiplied by the Accreted Value of the
Securities outstanding on the Sale Date or the Loss Date, as the case may be
(PROVIDED HOWEVER, that if a Default shall have occurred and be continuing on
the Notification Date, the amount required to be applied by the Company to
redeem Securities shall equal the greater of such Redemption Amount and such Net
Available Cash or Net Event of Loss Proceeds, as the case may be; PROVIDED
FURTHER, HOWEVER, that if the Loan to Value Ratio (calculated to include in the
numerator thereof the then outstanding amount of Indebtedness under any working
capital facility to the extent such Indebtedness is secured by a prior Lien on
the Mortgaged Vessels) would be less than 0.8 to 1.0 after giving effect to the
disposition of such Sold Mortgaged Vessel and the redemption of Securities using
the lesser of the Redemption Amount and the Net Available Cash, then the amount
required to be applied by the Company to redeem Securities shall equal the
lesser of
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63
the Redemption Amount and such Net Available Cash), to redeem as much principal
amount of Securities as can be redeemed at the Sale Redemption Price (as defined
below) or the Loss Redemption Price (as defined below), as the case may be.
The "Sale Redemption Price" means, per $1,000 principal amount at
maturity of Security, the sum of (a) the greater of (i) 100% of the Accreted
Value of such Security and (ii)(x) if such redemption date is on or after July
15, 2003, the redemption price then applicable as described in paragraph 5 of
the Securities or (y) if such redemption date is prior to July 15, 2003, the sum
of (1) the remaining scheduled payments of interest on such Security through
July 15, 2003 and (2) the redemption price of such Security on July 15, 2003 as
described in paragraph 5 of the Securities, in each case as discounted to their
present values to the redemption date on a semiannual basis (assuming a 360-day
year consisting of 12 30-day months) at a rate equal to the Treasury Rate plus
50 basis points, and (b) accrued and unpaid interest on such Security to the
redemption date.
The "Loss Redemption Price" means, per $1,000 principal amount at
maturity of Security, the sum of (a) 100% of the Accreted Value of such Security
and (b) accrued and unpaid interest on such Security to the redemption date.
(c) On the redemption date attributable to a Sold Mortgaged
Vessel or a Lost Mortgaged Vessel, the Trustee shall apply the applicable Net
Available Cash or the applicable Net Event of Loss Proceeds then on deposit with
it pursuant to Article 13 (together with any funds the Company delivers to the
Trustee to the extent necessary to pay the Sale Redemption Price or the Loss
Redemption Price for the Securities to be redeemed) to pay the Sale Redemption
Price or the Loss Redemption Price to the holders of Securities being redeemed.
To the extent that after the Sale Redemption Price or the Loss Redemption Price
has been paid with respect to all Securities to be redeemed in respect of such
Sold Mortgaged Vessel or Lost Mortgaged Vessel, as the case may be, any Net
Available Cash or Net Event of Loss Proceeds remains on deposit with the Trustee
and no Default has occurred and is continuing, such Net Available Cash or Net
Event of Loss Proceeds shall be released to the Company upon its written
request, free of the lien of this Indenture and the Mortgages and such funds
may, at the option of the Company, be used by the Company for any purpose not
otherwise prohibited by this Indenture, including the making of Restricted
Payments.
SECTION 4.18. TENDER OF A QUALIFIED SUBSTITUTE VESSEL. In the
event that the Company elects, with respect to a Sold Mortgaged Vessel or a Lost
Mortgaged Vessel, not to redeem Securities as described under Section 4.17, then
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64
within seven months after the Proceeds Receipt Date, the Company shall tender to
the Trustee (or the Collateral Agent) as part of the Collateral a Qualified
Substitute Vessel; PROVIDED, HOWEVER, that if Net Available Cash attributable to
a Sold Mortgaged Vessel or Net Event of Loss Proceeds attributable to a Lost
Mortgaged Vessel is less than $5 million, the Company or such Restricted
Subsidiary, at its option, may defer the tender of a Qualified Substitute Vessel
until the date (the "Extended Tender Date") that is three months after the
aggregate of all such amounts not applied to tender Qualified Substitute Vessels
equals or exceeds $5 million, at which time the Company or such Restricted
Subsidiary shall use the unused Net Available Cash or Net Event of Loss Proceeds
to tender a Qualified Substitute Vessel on or before the Extended Tender Date;
and PROVIDED, FURTHER, that if, at any time prior to the date on which the
Company or a Restricted Subsidiary enters into a binding agreement with respect
to the purchase of a Qualified Substitute Vessel, a Default shall occur, the
Company shall thereupon instead become obligated to redeem Securities in
accordance with the provisions of Section 4.17. Net Available Cash or Net Event
of Loss Proceeds, as the case may be, attributable to such Sold Mortgaged Vessel
or such Lost Mortgaged Vessel, as the case may be, shall be made available to
the Company or any Restricted Subsidiary pursuant to the terms, and subject to
the conditions, of this Indenture and the Security Agreements to make any
deposits in respect of, or to consummate the purchase of, the Qualified
Substitute Vessel, and to pay related fees and expenses and make upgrades and
repairs thereon. To the extent that any such Net Available Cash or Net Event of
Loss Proceeds remain on deposit with the Trustee after the tender of the
Qualified Substitute Vessel and no default shall have occurred and be
continuing, such funds shall be released to the Company upon its written
request, free of the Lien of this Indenture and the Security Agreements, and
such funds, at the option of the Company, may be used by the Company for any
purpose not otherwise prohibited by this Indenture, including the making of
Restricted Payments.
On the date on which a Qualified Substitute Vessel is tendered to the
Trustee or the Collateral Agent, as the case may be as part of the Collateral (a
"Vessel Tender Date") following a sale of or an Event of Loss with respect to, a
Mortgaged Vessel, the Company shall deliver to the Trustee or the Collateral
Agent, as the case may be, or shall cause the owner of such Qualified Substitute
Vessel, which shall be a Wholly Owned Subsidiary of the Company (the "Tendered
Vessel Owner"), to deliver to the Trustee or the Collateral Agent, as the case
may be, the following documents and certificates:
(i) a Guarantee Agreement substantially in the form attached
to the Escrow Agreement;
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(ii) a Mortgage (or a preliminary registration thereof,
pending delivery of a copy of the Mortgage) with respect to such
Qualified Substitute Vessel dated the Vessel Tender Date in favor of
the Trustee (or the Collateral Agent) and an Insurance Assignment, each
substantially in the form attached to the Escrow Agreement (such
Mortgage having been duly received for recording in the appropriate
registry office), together with appropriate legal opinions with respect
to such Mortgage and the Insurance Assignment substantially in the form
attached to the Escrow Agreement; and
(iii) written appraisals by two independent Appraisers of the
value of such Qualified Substitute Vessel as of a date within 60 days
prior to the Vessel Tender Date.
SECTION 4.19. ADDITIONAL AMOUNTS. (a) If the Company or any
Subsidiary Guarantor (or any successor of either), as applicable, is required by
law or by the interpretation or administration thereof by the relevant
government authority or agency to withhold or deduct any amount for or on
account of any present or future tax, duty, levy, impost, assessment or other
governmental charge (including penalties, interest and other liabilities related
thereto) imposed or levied by or on behalf of the Cayman Islands, Liberia,
Cyprus or any other jurisdiction in which the Company or any of its Subsidiary
Guarantors is incorporated or resident for tax purposes or by any authority or
agency therein or thereof having power to tax (or the jurisdiction of
incorporation of any successor of the Company or any Subsidiary Guarantor)
(hereinafter "Taxes") from any payment made under or with respect to the
Securities or any Subsidiary Guarantee, as applicable, unless the Company or the
Subsidiary Guarantors, as applicable, are required to withhold or deduct Taxes
by law or by interpretation or administration thereof by the relevant government
authority or agency, the Company or such Subsidiary Guarantor (or any successor
of either), as applicable shall pay such additional amounts ("Additional
Amounts") as may be necessary so that the net amount received by each Holder
(including Additional Amounts) after such withholding or deduction will not be
less than the amount the Holder would have received if such Taxes had not been
withheld or deducted; PROVIDED, HOWEVER, that no Additional Amounts shall be
payable with respect to payments made to a Holder (an "Excluded Holder") in
respect of a beneficial owner (i) which is subject to such Taxes by reason of
its being connected with the Cayman Islands, Liberia, Cyprus or any jurisdiction
in which the Company or any of its Subsidiary Guarantors is incorporated or
resident for tax purposes otherwise than by the mere holding of Securities or
the receipt of payments thereunder (or under the related Subsidiary Guarantee),
(ii) which presents any Security for
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payment of principal more than 60 days after the later of (x) the date on which
payment first became due and (y) if the full amount payable has not been
received by the Trustee on or prior to such due date, the date on which, the
full amount payable having been so received, notice to that effect shall have
been given to the Holders by the Trustee, except to the extent that the Holder
would have been entitled to such Additional Amounts on presenting such Security
for payment on any day during the applicable 60-day period, including the last
day of the applicable 60-day period, (iii) which failed to duly and timely
comply with a reasonable, timely request of the Company to provide information,
documents or other evidence concerning the Holder's nationality, residence,
entitlement to treaty benefits, identity or connection with Cayman Islands,
Liberia, Cyprus or any jurisdiction in which the Company or any of its
Subsidiary Guarantors is incorporated or resident for tax purposes or any
political subdivision or authority thereof, if and to the extent that due and
timely compliance with such request would have reduced or eliminated any Taxes
as to which Additional Amounts would have otherwise been payable to such Holder
but for this clause (iii), (iv) on account of any estate, inheritance, gift,
sale, transfer, personal property or other similar Tax, (v) which is a
fiduciary, a partnership or not the beneficial owner of any payment on a
Security or the Subsidiary Guarantees, if and to the extent that any beneficiary
or settlor of such fiduciary, any partner in such partnership or the beneficial
owner of such payment (as the case may be) would not have been entitled to
receive Additional Amounts with respect to such payment if such beneficiary,
settlor, partner or beneficial owner had been the Holder of such Security or
(vi) any combination of the foregoing numbered clauses of this proviso. The
Company or the Subsidiary Guarantors (or any successor of either), as
applicable, shall make such withholding or deduction and remit the full amount
deducted or withheld to the relevant authority as and when required in
accordance with applicable law.
(b) The Company or the Subsidiary Guarantors (or any successor
of either), as applicable, shall furnish to the Trustee, within 30 days after
the date the payment of any Taxes is due pursuant to applicable law, certified
copies of tax receipts evidencing such payment by the Company or the Subsidiary
Guarantors (or any successor of either), as applicable, in such form as provided
in the normal course by the taxing authority imposing such Taxes and in such
form as is legally sufficient to obtain foreign tax credits for United States
Federal income tax purposes. The Trustee shall make such evidence available to
the Holders upon request. The Company or the Subsidiary Guarantors (or any
successor of either), as applicable, shall upon written request of each Holder
(other than an Excluded Holder),
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reimburse each such Holder for the amount of (i) any Taxes so levied or imposed
and paid by such Holder as a result of payments made under or with respect to
the Securities or the Subsidiary Guarantees, as applicable, and (ii) any Taxes
imposed with respect to any such reimbursement under the immediately preceding
clause (i), but excluding any such Taxes on such Holder's net income, so that
the net amount received by such Holder after such reimbursement will not be less
than the net amount the Holder would have received if Taxes (other than such
Taxes on such Holder's net income) on such reimbursement had not been imposed.
(c) Whenever in this Indenture there is mentioned, in any
context, (a) the payment of principal, (b) purchase prices in connection with a
purchase of Securities, (c) interest or (d) any other amount payable on or with
respect to any of the Securities, such mention shall be deemed to include
mention of the payment of Additional Amounts provided for in this section to the
extent that, in such context, Additional Amounts are, were or would be pay able
in respect thereof.
(d) The Company or the Subsidiary Guarantors (or any successor
of either) shall pay any present or future stamp, court or documentary taxes or
any other excise or property taxes, charges or similar levies that arise in any
jurisdiction from the execution, delivery, enforcement or registration of the
Securities or any other document or instrument in relation thereto, or the
receipt of any payments with respect to the Securities or the Subsidiary
Guarantees, excluding such taxes, charges or similar levies imposed by any
jurisdiction outside of the Cayman Islands, Liberia, Cyprus or any jurisdiction
in which the Company or any of the Subsidiary Guarantors is incorporated or
resident for tax purposes, the jurisdiction of incorporation of any successor of
the Company or any jurisdiction in which a paying agent is located, and hereby
indemnifies the Holders for any such taxes paid by such Holders. The foregoing
obligations shall survive any termination, defeasance or discharge of this
Indenture.
SECTION 4.20. COMPLIANCE CERTIFICATE. The Company shall
deliver to the Trustee within 120 days after the end of each fiscal year of the
Company an Officers' Certificate stating that in the course of the performance
by the signers of their duties as Officers of the Company they would normally
have knowledge of any Default and whether or not the signers know of any Default
that occurred during such period. If they do, the certificate shall describe the
Default, its status and what action the Company is taking or proposes to take
with respect thereto. The Company also shall comply with TIA ss. 314(a)(4).
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SECTION 4.21. FURTHER INSTRUMENTS AND ACTS. Upon request of
the Trustee, the Company will execute and deliver such further instruments and
do such further acts as may be reasonably necessary or proper to carry out more
effectively the purpose of this Indenture.
ARTICLE 5
SUCCESSOR COMPANY
SECTION 5.01. WHEN COMPANY MAY MERGE OR TRANSFER ASSETS. (a)
The Company shall not consolidate with or merge with or into, or convey,
transfer or lease, in one trans action or a series of transactions, all or
substantially all its assets to, any Person, unless:
(i) the resulting, surviving or transferee Person (the
"Successor Company") shall be a Person organized and existing under (a)
the laws of the United States of America, any State thereof or the
District of Columbia, (b) the laws of Cyprus, Liberia or the Cayman
Islands or (c) the laws of any other jurisdiction which at the time is
generally deemed acceptable by institutional lenders to the shipping
industry, as determined in good faith by the Board of Directors, and
the Successor Company (if not the Company) shall expressly assume, by
an indenture supplemental thereto, executed and delivered to the
Trustee, in form reasonably satisfactory to the Trustee, all the
obligations of the Company under the Securities, this Indenture and the
Security Agreements;
(ii) immediately after giving effect to such transaction (and
treating any Indebtedness which becomes an obligation of the Successor
Company or any Subsidiary thereof as a result of such transaction as
having been Incurred by such Successor Company or such Subsidiary at
the time of such transaction), no Default shall have occurred and be
continuing;
(iii) immediately after giving effect to such transaction,
either (a) the Successor Company would be able to Incur an additional
$1.00 of Indebtedness pursuant to Section 4.03(a) or (B) the
Consolidated Coverage Ratio of the Successor Company is equal to or
greater than that of the Company immediately prior to such transaction;
(iv) immediately after giving effect to such transaction, the
Successor Company shall have Consolidated Net Worth in an amount that
is not less than the Consolidated Net Worth of the Company immediately
prior to such transaction;
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(v) the Company shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that such
consolidation, merger or transfer and such supplemental indenture (if
any) comply with this Indenture; and
(vi) the Company shall have delivered to the Trustee an
Opinion of Counsel to the effect that the Holders will not recognize
income, gain or loss for Federal income tax purposes as a result of
such transaction and will be subject to Federal income tax on the same
amounts, in the same manner and at the same times as would have been
the case if such transaction had not occurred.
Notwithstanding the foregoing clauses (ii) through (iv), (a)
any Wholly Owned Subsidiary may consolidate with, merge into or transfer all or
part of its properties and assets to the Company and (b) the Company may merge
with an Affiliate incorporated solely for the purpose of reincorporating the
Company in another jurisdiction.
The Successor Company shall be the successor to the Company
and shall succeed to, and be substituted for, and may exercise every right and
power of, the Company under this Indenture, but the predecessor Company in the
case of a conveyance, transfer or lease shall not be released from the
obligation to pay the principal of and interest on the Securities.
(b) The Company shall not permit any Subsidiary Guarantor to
consolidate with or merge with or into, or convey, transfer or lease, in one
transaction or a series of transactions, all or substantially all its assets to
any Person (other than the Company or another Subsidiary Guarantor) unless:
(i) except in the case of a Subsidiary Guarantor that has been
disposed of in its entirety to another Person, whether through a
merger, consolidation or sale of Capital Stock or assets, if in
connection therewith the Company provides an Officer's Certificate to
the Trustee to the effect that the Company will comply with its
obligations under Section 4.07 in respect of such disposition and
deliver such documents as are reasonably requested by the Trustee, the
resulting, surviving or transferee Person (if not such Subsidiary
Guarantor) shall be a Person organized and existing under the laws of
the jurisdiction under which such Subsidiary was organized or under the
laws of (a) the United States of America, or any State thereof or the
District of Columbia, (b) the Republic of Liberia, (c) the
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Commonwealth of The Bahamas, (d) Cyprus, (e) the Republic of Panama or
(f) the laws of any other jurisdiction which at the time is generally
deemed acceptable by institutional lenders to the shipping industry, as
determined in good faith by the Board of Directors, and such Person
shall expressly assume, by a Guarantee Agreement, in a form
satisfactory to the Trustee, all the obligations of such Subsidiary, if
any, under its Subsidiary Guarantee and under the Security Agreements;
(ii) immediately after giving effect to such transaction or
transactions on a pro forma basis (and treating any Indebtedness which
becomes an obligation of the resulting, surviving or transferee Person
as a result of such transaction as having been issued by such Person at
the time of such transaction), no Default shall have occurred and be
continuing; and
(iii) the Company delivers to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that such
consolidation, merger or transfer and such Guarantee Agreement, if any,
complies with this Indenture.
ARTICLE 6
DEFAULTS AND REMEDIES
SECTION 6.01. EVENTS OF DEFAULT. An "Event of Default" occurs
if:
(1) the Company defaults in any payment of interest on any
Security when the same becomes due and payable, and such default
continues for a period of 30 days;
(2) the Company (i) defaults in the payment of the principal
of any Security when the same becomes due and payable at its Stated
Maturity, upon optional redemption, required purchase, declaration or
otherwise, or (ii) fails to redeem or purchase Securities when required
pursuant to this Indenture or the Securities.
(3) the Company fails to comply with Section 5.01;
(4) the Company fails to comply with Section 4.02, 4.03, 4.04,
4.05, 4.06, 4.07, 4.08, 4.09, 4.10, 4.11, 4.12, 4.13, 4.14, 4.15, 4.16,
4.17, 4.18 or 4.19 (other than a failure to purchase Securities when
required under Section 4.07 or 4.13) and such failure continues for 30
days after the notice specified below;
(5) the Company fails to comply with any of its agreements in
this Indenture (other than those referred to in clause (1), (2), (3) or
(4) above) or in the
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Security Agreements, or the occurrence of an event of default under a
Mortgage after the lapse of any applicable grace period and such
failure continues for 60 days after the notice specified below;
(6) Indebtedness of the Company or any Significant Subsidiary
is not paid within any applicable grace period after final maturity or
is accelerated by the holders thereof because of a default and the
total amount of such Indebtedness unpaid or accelerated exceeds $5
million, or its foreign currency equivalent at the time;
(7) the Company or any Significant Subsidiary pursuant to or
within the meaning of any applicable Bankruptcy Law or:
(A) commences a voluntary case;
(B) consents to the entry of an order for relief
against it in an involuntary case;
(C) consents to the appointment of a Custodian of it
or for any substantial part of its property; or
(D) makes a general assignment for the benefit of its
creditors;
or takes any comparable action under any foreign laws
relating to insolvency;
(8) a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that:
(A) is for relief against the Company or any
Significant Subsidiary in an involuntary case;
(B) appoints a Custodian of the Company or any
Significant Subsidiary or for any substantial part of its
property; or
(C) orders the winding up or liquidation of the
Company or any Significant Subsidiary;
or any similar relief is granted under any foreign laws and the order
or decree remains unstayed and in effect for 60 days;
(9) any judgment or decree for the payment of money in excess
of $5 million or its foreign currency equivalent at the time is entered
against the Company or any Significant Subsidiary, remains outstanding
for a
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period of 60 days following the entry of such judgment or decree and is
not discharged, waived or the execution thereof stayed within 10 days
after the notice specified below;
(10) a Subsidiary Guarantee ceases to be in full force and
effect (other than in accordance with the terms of such Subsidiary
Guarantee) or a Subsidiary Guarantor denies or disaffirms its
obligations under its Subsidiary Guarantee; or
(11) the security interest under the Security Agreements
shall, at any time, cease to be in full force and effect for any reason
other than the satisfaction in full of all obligations under this
Indenture and discharge of this Indenture or any security interest
created thereunder shall be declared invalid or unenforceable or the
Company or any Subsidiary Guarantor shall assert, in any pleading in
any court of competent jurisdiction, that any such security interest is
invalid or unenforceable.
The foregoing will constitute Events of Default whatever the
reason for any such Event of Default and whether it is voluntary or involuntary
or is 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.
The term "Bankruptcy Law" means Title 11, UNITED STATES CODE,
or any similar law having jurisdiction over the Company, for the relief of
debtors. The term "Custodian" means any receiver, trustee, assignee, liquidator,
custodian or similar official under any Bankruptcy Law.
A Default under clauses (4), (5) or (9) is not an Event of
Default until the Trustee or the holders of at least 25% in principal amount at
maturity of the outstanding Securities notify the Company of the Default and the
Company does not cure such Default within the time specified after receipt of
such notice. Such notice must specify the Default, demand that it be remedied
and state that such notice is a "Notice of Default".
The Company shall deliver to the Trustee, within 30 days after
the occurrence thereof, written notice in the form of an Officers' Certificate
of any Event of Default under clause (6) or (10) or (11) and any event which
with the giving of notice or the lapse of time would become an Event of Default
under clause (4), (5) or (9), its status and what action the Company is taking
or proposes to take with respect thereto.
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SECTION 6.02. ACCELERATION. If an Event of Default (other than
an Event of Default specified in Section 6.01(7) or (8) with respect to the
Company) occurs and is continuing, the Trustee by notice to the Company, or the
Holders of at least 25% in principal amount at maturity of the Securities by
notice to the Company and the Trustee, may declare the principal of and accrued
but unpaid interest on all the Securities to be due and payable. Upon such a
declaration, such principal and interest shall be due and payable immediately.
If an Event of Default specified in Section 6.01(7) or (8) with respect to the
Company occurs, the principal of and interest on all the Securities shall IPSO
FACTO become and be immediately due and payable without any declaration or other
act on the part of the Trustee or any Securityholders. The Holders of a majority
in principal amount at maturity of the Securities by notice to the Trustee may
rescind an acceleration and its consequences if the rescission would not
conflict with any judgment or decree and if all existing Events of Default have
been cured or waived except nonpayment of principal or interest that has become
due solely because of acceleration. No such rescission shall affect any
subsequent Default or impair any right consequent thereto.
SECTION 6.03. OTHER REMEDIES. If an Event of Default occurs
and is continuing, the Trustee may pursue any available remedy to collect the
payment of principal of or interest on the Securities or to enforce the
performance of any provision of the Securities or this Indenture.
The Trustee may maintain a proceeding even if it does not
possess any of the Securities or does not produce any of them in the proceeding.
A delay or omission by the Trustee or any Securityholder in exercising any right
or remedy accruing upon an Event of Default shall not impair the right or remedy
or constitute a waiver of or acquiescence in the Event of Default. No remedy is
exclusive of any other remedy. All available remedies are cumulative.
SECTION 6.04. WAIVER OF PAST DEFAULTS. The Holders of a
majority in principal amount at maturity of the Securities by notice to the
Trustee may waive an existing Default and its consequences except (i) a Default
in the payment of the principal of or interest on a Security (ii) a Default
arising from the failure to redeem or purchase any Security when required
pursuant to this Indenture or (iii) a Default in respect of a provision that
under Section 9.02 cannot be amended without the consent of each Securityholder
affected. When a Default is waived, it is deemed cured, but no such waiver shall
extend to any subsequent or other Default or impair any consequent right.
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SECTION 6.05. CONTROL BY MAJORITY. Holders of a majority in
principal amount at maturity of the Securities may direct the time, method and
place of conducting any proceeding for any remedy available to the Trustee or of
exercising any trust or power conferred on the Trustee. However, the Trustee may
refuse to follow any direction that conflicts with law or this Indenture or,
subject to Section 7.01, that the Trustee determines is unduly prejudicial to
the rights of other Securityholders or would involve the Trustee in personal
liability; PROVIDED, HOWEVER, that the Trustee may take any other action deemed
proper by the Trustee that is not inconsistent with such direction. Prior to
taking any action hereunder, the Trustee shall be entitled to indemnification
satisfactory to it in its sole discretion against all losses and expenses caused
by taking or not taking such action.
SECTION 6.06. LIMITATION ON SUITS. Except to enforce the right
to receive payment of principal, premium (if any) or interest when due, no
Securityholder may pursue any remedy with respect to this Indenture or the
Securities unless:
(1) the Holder gives to the Trustee written notice stating
that an Event of Default is continuing;
(2) the Holders of at least 25% in principal amount at
maturity of the Securities make a written request to the Trustee to
pursue the remedy;
(3) such Holder or Holders offer to the Trustee reasonable
security or indemnity against any loss, liability or expense;
(4) the Trustee does not comply with the request within 60
days after receipt of the request and the offer of security or
indemnity; and
(5) the Holders of a majority in principal amount at maturity
of the Securities do not give the Trustee a direction inconsistent with
the request during such 60- day period.
(6) a Securityholder may not use this Indenture to prejudice
the rights of another Securityholder or to obtain a preference or
priority over another Securityholder.
SECTION 6.07. RIGHTS OF HOLDERS TO RECEIVE PAYMENT.
Notwithstanding any other provision of this Indenture, the right of any Holder
to receive payment of principal of and interest on the Securities held by such
Holder, on or after the respective due dates expressed in the
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Securities, or to bring suit for the enforcement of any such payment on or after
such respective dates, shall not be impaired or affected without the consent of
such Holder.
SECTION 6.08. COLLECTION SUIT BY TRUSTEE. If an Event of
Default specified in Section 6.01(1) or (2) occurs and is continuing, the
Trustee may recover judgment in its own name and as trustee of an express trust
against the Company for the whole amount then due and owing (together with
interest on any unpaid interest to the extent lawful) and the amounts provided
for in Section 7.07.
SECTION 6.09. TRUSTEE MAY FILE PROOFS OF CLAIM. The Trustee
may file such proofs of claim and other papers or documents as may be necessary
or advisable in order to have the claims of the Trustee and the Securityholders
allowed in any judicial proceedings relative to the Company, its creditors or
its property and, unless prohibited by law or applicable regulations, may vote
on behalf of the Holders in any election of a trustee in bankruptcy or other
Person performing similar functions, and any Custodian in any such judicial
proceeding is hereby authorized by each Holder to make payments to the Trustee
and, in the event that the Trustee shall consent to the making of such payments
directly to the Holders, to pay to the Trustee any amount due it for the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and its counsel, and any other amounts due the Trustee under Section
7.07.
SECTION 6.10. PRIORITIES. If the Trustee collects any money or
property pursuant to this Article 6, it shall pay out the money or property in
the following order:
FIRST: to the Trustee for amounts due under Section 7.07;
SECOND: to Securityholders for amounts due and unpaid on the
Securities for principal (equal to Accreted Value) and interest,
ratably, without preference or priority of any kind, according to the
amounts due and payable on the Securities for principal and interest,
respectively; and
THIRD: to the Company or to whomsoever shall be entitled
thereto.
The Trustee may fix a record date and payment date for any
payment to Securityholders pursuant to this Section. At least 15 days before
such record date, the Company shall mail to each Securityholder and the Trustee
a notice that states the record date, the payment date and amount to be paid.
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SECTION 6.11. UNDERTAKING FOR COSTS. In any suit for the
enforcement of any right or remedy under this Inden ture or in any suit against
the Trustee for any action taken or omitted by it as Trustee, a court in its
discretion may require the filing by any party litigant in the suit of an
undertaking to pay the costs of the suit, and the court in its discretion may
assess reasonable costs, including reasonable attorneys' fees, against any party
litigant in the suit, having due regard to the merits and good faith of the
claims or defenses made by the party litigant. This Section does not apply to a
suit by the Trustee, a suit by a Holder pursuant to Section 6.07 or a suit by
Holders of more than 10% in principal amount at maturity of the Securities.
SECTION 6.12. WAIVER OF STAY OR EXTENSION LAWS. The Company
(to the extent it may lawfully do so) shall not at any time insist upon, or
plead, or in any manner whatso ever claim or take the benefit or advantage of,
any stay or extension law wherever enacted, now or at any time hereafter in
force, which may affect the covenants or the performance of this Indenture; and
the Company (to the extent that it may lawfully do so) hereby expressly waives
all benefit or advantage of any such law, and shall not hinder, delay or impede
the execution of any power herein granted to the Trustee, but shall suffer and
permit the execution of every such power as though no such law had been enacted.
ARTICLE 7
TRUSTEE
SECTION 7.01. DUTIES OF TRUSTEE. (a) If an Event of Default
has occurred and is continuing, the Trustee shall exercise 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 such Person's own affairs.
(b) Except during the continuance of an Event of Default:
(1) the Trustee undertakes to perform such duties and only
such duties as are specifically set forth in this Indenture and the
Security Documents and no implied covenants or obligations shall be
read into this Indenture and the Security Documents against the
Trustee; and
(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the
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Trustee and conforming generally to the requirements of this Indenture.
However, the Trustee shall examine the certificates and opinions to
determine whether or not they conform to the requirements of this
Indenture.
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act or its own wilful misconduct,
except that:
(1) this paragraph does not limit the effect of paragraph (b)
of this Section;
(2) the Trustee shall not be liable for any error of judgment
made in good faith by a Trust Officer unless it is proved that the
Trustee was negligent in ascertaining the pertinent facts; and
(3) the Trustee shall not be liable with respect to any action
it takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.05.
(d) Every provision of this Indenture that in any way relates
to the Trustee is subject to paragraphs (a), (b) and (c) of this Section.
(e) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Company.
(f) Money held in trust by the Trustee need not be segregated
from other funds except to the extent required by law.
(g) No provision of this Indenture shall require the Trustee
to expend or risk its own funds or otherwise incur financial liability in the
performance of any of its duties hereunder or in the exercise of any of its
rights or powers, if it shall have reasonable grounds to believe that repayment
of such funds or adequate indemnity against such risk or liability is not
reasonably assured to it.
(h) Every provision of this Indenture relating to the conduct
or affecting the liability of or affording protection to the Trustee shall be
subject to the provisions of this Section and to the provisions of the TIA.
SECTION 7.02. RIGHTS OF TRUSTEE. (a) The Trustee may rely on
any document believed by it to be genuine and to have been signed or presented
by the proper person. The Trustee need not investigate any fact or matter stated
in the document.
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(b) Before the Trustee acts or refrains from acting, it may
require an Officers' Certificate or an Opinion of Counsel. The Trustee shall not
be liable for any action it takes or omits to take in good faith in reliance on
the Officers' Certificate or Opinion of Counsel.
(c) The Trustee may act through agents and shall not be
responsible for the misconduct or negligence of any agent appointed with due
care.
(d) The Trustee shall not be liable for any action it takes or
omits to take in good faith which it believes to be authorized or within its
rights or powers; PROVIDED, HOWEVER, that the Trustee's conduct does not
constitute wilful misconduct or negligence.
(e) The Trustee may consult with counsel, and the advice or
opinion of counsel with respect to legal matters relating to this Indenture and
the Securities shall be full and complete authorization and protection from
liability in respect to any action taken, omitted or suffered by it here under
in good faith and in accordance with the advice or opinion of such counsel.
SECTION 7.03. INDIVIDUAL RIGHTS OF TRUSTEE. The Trustee in its
individual or any other capacity may become the owner or pledgee of Securities
and may otherwise deal with the Company or its Affiliates with the same rights
it would have if it were not Trustee. Any Paying Agent, Registrar, co-registrar
or co-paying agent may do the same with like rights. However, the Trustee must
comply with Sections 7.10 and 7.11.
SECTION 7.04. TRUSTEE'S DISCLAIMER. The Trustee shall not be
responsible for and makes no representation as to the validity or adequacy of
this Indenture or the Secur ities, it shall not be accountable for the Company's
use of the proceeds from the Securities, and it shall not be responsible for any
statement of the Company in this Indenture or in any document issued in
connection with the sale of the Securities or in the Securities other than the
Trustee's certificate of authentication.
SECTION 7.05. NOTICE OF DEFAULTS. If a Default occurs and is
continuing and if it is known to the Trustee, the Trustee shall mail to each
Securityholder notice of the Default within 90 days after it occurs. Except in
the case of a Default in payment of principal of or interest on any Security
(including payments pursuant to the mandatory redemption provisions of such
Security, if any), the Trustee may withhold the notice if and so long as it in
good faith determines that withholding the notice is in the interests of
Securityholders.
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SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS. As promptly as
practicable after each May 15, beginning with the May 15 following the date of
this Indenture, and in any event prior to July 15 in each year, the Trustee
shall mail to each Securityholder a brief report dated as of May 15 that
complies with TIA ss. 313(a). The Trustee also shall comply with TIA ss. 313(b).
A copy of each report at the time of its mailing to
Securityholders shall be filed with the SEC and each stock exchange (if any) on
which the Securities are listed. The Company agrees to notify promptly the
Trustee whenever the Securities become listed on any stock exchange and of any
delisting thereof.
SECTION 7.07. COMPENSATION AND INDEMNITY. The Company shall
pay to the Trustee from time to time upon demand reasonable compensation for its
services. The Trustee's compensation shall not be limited by any law on
compensation of a trustee of an express trust. The Company shall reimburse the
Trustee upon demand for all reasonable out-of-pocket expenses incurred or made
by it, including costs of collection, in addition to the compensation for its
services. Such expenses shall include the reasonable compensation and expenses,
disbursements and advances of the Trustee's agents, counsel, accountants and
experts. The Company shall indemnify and hold harmless the Trustee against any
and all loss, liability or expense (including attorneys' fees) incurred by it in
connection with the administration of this trust and the performance of its
duties hereunder. The Trustee shall notify the Company promptly of any claim for
which it may seek indemnity. Failure by the Trustee to so notify the Company
shall not relieve the Company of its obligations hereunder. The Company shall
defend the claim and the Trustee may have separate counsel and the Company shall
pay the fees and expenses of such counsel. The Company need not reimburse any
expense or indemnify against any loss, liability or expense incurred by the
Trustee through the Trustee's own wilful misconduct, negligence or bad faith.
To secure the Company's payment obligations in this Section,
the Trustee shall have a lien prior to the Securities on all money or property
held or collected by the Trustee other than money or property held in trust to
pay principal of and interest on particular Securities.
The Company's payment obligations pursuant to this Section
shall survive the discharge of this Indenture. When the Trustee incurs expenses
after the occurrence of a Default specified in Section 6.01(7) or (8) with
respect to the Company, the expenses are intended to constitute expenses of
administration under the Bankruptcy Law.
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SECTION 7.08. REPLACEMENT OF TRUSTEE. The Trustee may resign
at any time by so notifying the Company. The Holders of a majority in principal
amount at maturity of the Securities may remove the Trustee by so notifying the
Trustee and may appoint a successor Trustee. The Company shall remove the
Trustee if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged bankrupt or insolvent;
(3) a receiver or other public officer takes charge of the
Trustee or its property; or
(4) the Trustee otherwise becomes incapable of acting.
If the Trustee resigns, is removed by the Company or by the
Holders of a majority in principal amount at maturity of the Securities and such
Holders do not reasonably promptly appoint a successor Trustee, or if a vacancy
exists in the office of Trustee for any reason (the Trustee in such event being
referred to herein as the retiring Trustee), the Company shall promptly appoint
a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Securityholders. The retiring Trustee shall promptly transfer all
property held by it as Trustee to the successor Trustee, subject to the lien
provided for in Section 7.07, and thereupon shall be relieved of all further
obligations and duties hereunder.
If a successor Trustee does not take office within 60 days
after the retiring Trustee resigns or is removed, the retiring Trustee or the
Holders of 10% in principal amount at maturity of the Securities may petition
any court of competent jurisdiction for the appointment of a successor Trustee.
If the Trustee fails to comply with Section 7.10, any
Securityholder may petition any court of competent jurisdiction for the removal
of the Trustee and the appoint ment of a successor Trustee.
Notwithstanding the replacement of the Trustee pursuant to
this Section, the Company's obligations under Section 7.07 shall continue for
the benefit of the retiring Trustee.
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SECTION 7.09. SUCCESSOR TRUSTEE BY MERGER. If the Trustee
consolidates with, merges or converts into, or transfers all or substantially
all its corporate trust business or assets to, another corporation or banking
association, the resulting, surviving or transferee corporation without any
further act shall be the successor Trustee.
In case at the time such successor or successors by merger,
conversion or consolidation to the Trustee shall succeed to the trusts created
by this Indenture any of the Securities shall have been authenticated but not
delivered, any such successor to the Trustee may adopt the certificate of
authentication of any predecessor trustee, and deliver such Securities so
authenticated; and in case at that time any of the Securities shall not have
been authenticated, any successor to the Trustee may authenticate such
Securities either in the name of any predecessor hereunder or in the name of the
successor to the Trustee; and in all such cases such certificates shall have the
full force which it is anywhere in the Securities or in this Indenture provided
that the certificate of the Trustee shall have.
SECTION 7.10. ELIGIBILITY; DISQUALIFICATION. The Trustee shall
at all times satisfy the requirements of TIA ss. 310(a). The Trustee shall have
a combined capital and surplus of at least $50,000,000 as set forth in its most
recent published annual report of condition. The Trustee shall comply with
TIAss. 310(b); PROVIDED, HOWEVER, that there shall be excluded from the
operation of TIAss. 310(b)(1) any indenture or indentures under which other
securities or certificates of interest or participation in other securities of
the Company are outstanding if the requirements for such exclusion set forth in
TIAss. 310(b)(1) are met.
SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST
COMPANY. The Trustee shall comply with TIA ss. 311(a), excluding any creditor
relationship listed in TIA ss. 311(b). A Trustee who has resigned or been
removed shall be subject to TIA ss. 311(a) to the extent indicated.
ARTICLE 8
DISCHARGE OF INDENTURE; DEFEASANCE
SECTION 8.01. DISCHARGE OF LIABILITY ON SECURI TIES;
DEFEASANCE. (a) When (i) the Company delivers to the Trustee all outstanding
Securities (other than Securities replaced pursuant to Section 2.06) for
cancelation or (ii) all outstanding Securities have become due and payable,
whether at maturity or as a result of the mailing of a notice of redemption
pursuant to Article 3 hereof and the Company
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irrevocably deposits with the Trustee funds sufficient to pay at maturity or
upon redemption all outstanding Securities, including interest thereon to
maturity or such redemption date (other than Securities replaced pursuant to
Section 2.06), and if in either case the Company pays all other sums payable
hereunder by the Company, then this Indenture shall, subject to Section 8.01(c),
cease to be of further effect. The Trustee shall acknowledge satisfaction and
discharge of this Indenture on demand of the Company accompanied by an Officers'
Certificate and an Opinion of Counsel and at the cost and expense of the
Company.
(b) Subject to Sections 8.01(c) and 8.02, the Company at any
time may terminate (i) all its obligations under the Securities and this
Indenture ("legal defeasance option") or (ii) its obligations under Sections
4.02, 4.03, 4.04, 4.05, 4.06, 4.07, 4.08, 4.09, 4.10, 4.11, 4.12, 4.13, 4.14,
4.15, 4.16, 4.17, 4.18 and 4.19 and the operation of Sections 6.01(4), 6.01(6),
6.01(7), 6.01(8) and 6.01(9) 6.01(10) and 6.01(11) (but, in the case of Sections
6.01(7) and (8), with respect only to Significant Subsidiaries) and the
limitations contained in Sections 5.01(a)(iii) and (iv) and 5.01(b) ("covenant
defeasance option"). The Company may exercise its legal defeasance option
notwithstanding its prior exercise of its covenant defeasance option.
If the Company exercises its legal defeasance option, payment
of the Securities may not be accelerated because of an Event of Default with
respect thereto. If the Company exercises its covenant defeasance option,
payment of the Securities may not be accelerated because of an Event of Default
specified in Sections 6.01(4), 6.01(6), 6.01(7), 6.01(8), 6.01(9) 6.01(10) and
6.01(11)(but, in the case of Sections 6.01(7) and (8), with respect only to
Significant Subsidiaries) or because of the failure of the Company to comply
with Section 5.01(a)(iii) or (iv) and Section 5.01(b). If the Company exercises
its legal defeasance option or its covenant defeasance option, each Subsidiary
Guarantor, if any, shall be released from all its obligations with respect to
its Subsidiary Guarantee and the Security Agreements.
Upon satisfaction of the conditions set forth herein and upon
request of the Company, the Trustee shall acknowledge in writing the discharge
of those obligations that the Company terminates.
(c) Notwithstanding clauses (a) and (b) above, the Company's
obligations in Sections 2.03, 2.04, 2.05, 2.06, 2.07, 2.08, 7.07 and 7.08 and in
this Article 8 shall survive until the Securities have been paid in full.
Thereafter, the Company's obligations in Sections 7.07, 8.05 and 8.06 shall
survive.
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SECTION 8.02. CONDITIONS TO DEFEASANCE. The Company may
exercise its legal defeasance option or its covenant defeasance option only if:
(1) the Company irrevocably deposits in trust with the Trustee
money or U.S. Government Obligations for the payment of principal of
and interest on the Securities to maturity or redemption, as the case
may be;
(2) the Company delivers to the Trustee a certifi cate from a
nationally recognized firm of independent accountants expressing their
opinion that the payments of principal and interest when due and
without reinvest ment on the deposited U.S. Government Obligations plus
any deposited money without investment will provide cash at such times
and in such amounts as will be sufficient to pay principal and interest
when due on all the Secur ities to maturity or redemption, as the case
may be;
(3) 123 days pass after the deposit is made and during the
123-day period no Default specified in Sections 6.01(7) or (8) with
respect to the Company occurs which is continuing at the end of the
period;
(4) the deposit does not constitute a default under any other
agreement binding on the Company;
(5) the Company delivers to the Trustee an Opinion of Counsel
to the effect that the trust resulting from the deposit does not
constitute, or is qualified as, a regulated investment company under
the Investment Company Act of 1940;
(6) in the case of the legal defeasance option, the Company
shall have delivered to the Trustee an Opinion of Counsel stating that
(i) the Company has received from, or there has been published by, the
Internal Revenue Service a ruling, or (ii) since the date of this
Indenture there has been a change in the applicable Federal income tax
law, in either case to the effect that, and based thereon such Opinion
of Counsel shall confirm that, the Securityholders will not recognize
income, gain or loss for Federal income tax purposes as a result of
such defeasance and will be subject to Federal income tax on the same
amounts, in the same manner and at the same times as would have been
the case if such defeasance had not occurred;
(7) in the case of the covenant defeasance option, the Company
shall have delivered to the Trustee an Opinion of Counsel to the effect
that the Security holders will not recognize income, gain or loss for
Federal income tax purposes as a result of such covenant
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defeasance and will be subject to Federal income tax on the same
amounts, in the same manner and at the same times as would have been
the case if such covenant defeasance had not occurred; and
(8) the Company delivers to the Trustee an Offi cers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent to the defeasance and discharge of the Securities as
contemplated by this Article 8 have been complied with.
Before or after a deposit, the Company may make arrangements
satisfactory to the Trustee for the redemption of Securities at a future date in
accordance with Article 3.
SECTION 8.03. APPLICATION OF TRUST MONEY. The Trustee shall
hold in trust money or U.S. Government Obligations deposited with it pursuant to
this Article 8. It shall apply the deposited money and the money from U.S.
Government Obligations through the Paying Agent and in accordance with this
Indenture to the payment of principal of and interest on the Securities.
SECTION 8.04. REPAYMENT TO COMPANY. The Trustee and the Paying
Agent shall promptly turn over to the Company upon request any excess money or
securities held by them at any time.
Subject to any applicable abandoned property law, the Trustee
and the Paying Agent shall pay to the Company upon request any money held by
them for the payment of principal or interest that remains unclaimed for two
years, and, thereafter, Securityholders entitled to the money must look to the
Company for payment as general creditors.
SECTION 8.05. INDEMNITY FOR GOVERNMENT OBLIGA TIONS. The
Company shall pay and shall indemnify the Trustee against any tax, fee or other
charge imposed on or assessed against deposited U.S. Government Obligations or
the princi pal and interest received on such U.S. Government Obliga tions.
SECTION 8.06. REINSTATEMENT. If the Trustee or Paying Agent is
unable to apply any money or U.S. Government Obligations in accordance with this
Article 8 by reason of any legal proceeding or by reason of any order or
judgment of any court or governmental authority enjoining, restraining or
otherwise prohibiting such application, the Company's obligations under this
Indenture and the Securities shall be revived and reinstated as though no
deposit had occurred pursuant to this Article 8 until such time as the Trustee
or Paying Agent is permitted to apply all such money or U.S. Government
Obligations in accordance with this Article 8;
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PROVIDED, HOWEVER, that, if the Company has made any payment of interest on or
principal of any Securities because of the reinstatement of its obligations, the
Company shall be subrogated to the rights of the Holders of such Securities to
receive such payment from the money or U.S. Government Obligations held by the
Trustee or Paying Agent.
ARTICLE 9
AMENDMENTS
SECTION 9.01. WITHOUT CONSENT OF HOLDERS. The Company, the
Subsidiary Guarantors and the Trustee may amend this Indenture or the Securities
without notice to or consent of any Securityholder:
(1) to cure any ambiguity, omission, defect or inconsistency;
(2) to comply with Article 5;
(3) to provide for uncertificated Securities in addition to or
in place of certificated Securities; PROVIDED, HOWEVER, that the
uncertificated Securities are issued in registered form for purposes of
Sec tion 163(f) of the Code or in a manner such that the uncertificated
Securities are described in Section 163(f)(2)(B) of the Code;
(4) to provide additional security for the Securities.
(5) to add guarantees with respect to the Secur ities,
including any Subsidiary Guarantees, or to secure the Securities;
(6) to add to the covenants of the Company or the Subsidiary
Guarantors for the benefit of the Holders or to surrender any right or
power herein conferred upon the Company;
(7) to comply with any requirements of the SEC in connection
with qualifying, or maintaining the qualification of, this Indenture
under the TIA; or
(8) to make any change that does not adversely affect the
rights of any Securityholder.
After an amendment under this Section becomes effective, the
Company shall mail to Securityholders a notice briefly describing such
amendment. The failure to give such notice to all Securityholders, or any defect
therein, shall
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not impair or affect the validity of an amendment under this Section.
SECTION 9.02. WITH CONSENT OF HOLDERS. The Company, the
Subsidiary Guarantors and the Trustee may amend this Indenture or the Securities
without notice to any Securityholder but with the written consent of the Holders
of at least a majority in principal amount at maturity of the Securities then
outstanding (including consents obtained in connection with a tender offer or
exchange for the Securities). However, without the consent of each
Securityholder affected thereby, an amendment may not:
(1) reduce the amount of Securities whose Holders must consent
to an amendment;
(2) reduce the rate of or extend the time for payment of
interest on any Security;
(3) reduce the principal of or extend the Stated Maturity of
any Security;
(4) reduce the premium payable upon the redemption of any
Security or change the time at which any Security may or shall be
redeemed in accordance with Article 3;
(5) make any Security payable in money other than that stated
in the Security;
(6) make any changes in the Security Agreements or in Articles
10, 11, 12 or 13 that adversely affect the Holders or would terminate
the Lien of this Indenture of any Security Agreement on any property
subject thereto or deprive the Holder of the security afforded by the
Lien of this Indenture or the Security Agreements; or
(7) make any change in Section 6.04 or 6.07 or the second
sentence of this Section.
It shall not be necessary for the consent of the Holders under
this Section to approve the particular form of any proposed amendment, but it
shall be sufficient if such consent approves the substance thereof.
After an amendment under this Section becomes effective, the
Company shall mail to Securityholders a notice briefly describing such
amendment. The failure to give such notice to all Securityholders, or any defect
therein, shall not impair or affect the validity of an amendment under this
Section.
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SECTION 9.03. COMPLIANCE WITH TRUST INDENTURE Act. Every
amendment to this Indenture or the Securities shall comply with the TIA as then
in effect.
SECTION 9.04. REVOCATION AND EFFECT OF CONSENTS AND WAIVERS. A
consent to an amendment or a waiver by a Holder of a Security shall bind the
Holder and every subse quent Holder of that Security or portion of the Security
that evidences the same debt as the consenting Holder's Security, even if
notation of the consent or waiver is not made on the Security. However, any such
Holder or subsequent Holder may revoke the consent or waiver as to such Holder's
Security or portion of the Security if the Trustee receives the notice of
revocation before the date the amendment or waiver becomes effective. After an
amendment or waiver becomes effective, it shall bind every Securityholder. An
amendment or waiver becomes effective upon the execution of such amendment or
waiver by the Trustee.
The Company may, but shall not be obligated to, fix a record
date for the purpose of determining the Securityholders entitled to give their
consent or take any other action described above or required or permitted to be
taken pursuant to this Indenture. If a record date is fixed, then
notwithstanding the immediately preceding paragraph, those Persons who were
Securityholders at such record date (or their duly designated proxies), and only
those Persons, shall be entitled to give such consent or to revoke any consent
previously given or to take any such action, whether or not such Persons
continue to be Holders after such record date. No such consent shall be valid or
effective for more than 120 days after such record date.
SECTION 9.05. NOTATION ON OR EXCHANGE OF SECURI TIES. If an
amendment changes the terms of a Security, the Trustee may require the Holder of
the Security to deliver it to the Trustee. The Trustee may place an appropriate
notation on the Security regarding the changed terms and return it to the
Holder. Alternatively, if the Company or the Trustee so determines, the Company
in exchange for the Security shall issue and the Trustee shall authenticate a
new Security that reflects the changed terms. Failure to make the appropriate
notation or to issue a new Security shall not affect the validity of such
amendment.
SECTION 9.06. TRUSTEE TO SIGN AMENDMENTS. The Trustee shall
sign any amendment authorized pursuant to this Article 9 if the amendment does
not adversely affect the rights, duties, liabilities or immunities of the
Trustee. If it does, the Trustee may but need not sign it. In signing such
amendment the Trustee shall be entitled to receive indemnity reasonably
satisfactory to it and to receive, and (subject to Section 7.01) shall be fully
protected in relying
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upon, an Officers' Certificate and an Opinion of Counsel stating that such
amendment is authorized or permitted by this Indenture.
SECTION 9.07. PAYMENT FOR CONSENT. Neither the Company nor any
Affiliate of the Company shall, directly or indirectly, pay or cause to be paid
any consideration, whether by way of interest, fee or otherwise, to any Holder
for or as an inducement to any consent, waiver or amendment of any of the terms
or provisions of this Indenture or the Securities unless such consideration is
offered to be paid to all Holders that so consent, waive or agree to amend in
the time frame set forth in solicitation documents relating to such consent,
waiver or agreement.
ARTICLE 10
SUBSIDIARY GUARANTEES
SECTION 10.01. GUARANTEES. Each Subsidiary Guarantor hereby
unconditionally and irrevocably guarantees, jointly and severally, to each
Holder and to the Trustee and its successors and assigns (a) the full and
punctual payment of principal of and interest on the Securities when due,
whether at maturity, by acceleration, by redemption or otherwise, and all other
monetary obligations of the Company under this Indenture, the Security
Agreements and the Securities and (b) the full and punctual performance within
applicable grace periods of all other obligations of the Company under this
Indenture, the Security Agreements and the Securities (all the foregoing being
hereinafter collectively called the "Obligations"). Each Subsidiary Guarantor
further agrees that the Obligations may be extended or renewed, in whole or in
part, without notice or further assent from such Subsidiary Guarantor and that
such Subsidiary Guarantor will remain bound under this Article 10
notwithstanding any extension or renewal of any Obligation.
Each Subsidiary Guarantor waives presentation to, demand of,
payment from and protest to the Company of any of the Obligations and also
waives notice of protest for nonpay ment. Each Subsidiary Guarantor waives
notice of any default under the Securities or the Obligations. The obligations
of each Subsidiary Guarantor hereunder shall not be affected by (a) the failure
of any Holder or the Trustee to assert any claim or demand or to enforce any
right or remedy against the Company or any other Person under this Indenture,
the Securities or any other agreement or otherwise; (b) any extension or renewal
of any thereof; (c) any rescission, waiver, amendment or modification of any of
the terms or provisions of this Indenture, the Securities or any other
agreement; (d) the release of any security held by any Holder
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or the Trustee for the Obligations or any of them; (e) the failure of any Holder
or the Trustee to exercise any right or remedy against any other guarantor of
the Obligations; or (f) any change in the ownership of such Subsidiary
Guarantor.
Each Subsidiary Guarantor further agrees that its Subsidiary
Guarantee herein constitutes a guarantee of payment, performance and compliance
when due (and not a guarantee of collection) and waives any right to require
that any resort be had by any Holder or the Trustee to any security held for
payment of the Obligations.
Except as expressly set forth in Sections 8.01(b), 10.02 and
10.06, the obligations of each Subsidiary Guarantor hereunder shall not be
subject to any reduction, limitation, impairment or termination for any reason,
including any claim of waiver, release, surrender, alteration or compromise, and
shall not be subject to any defense of setoff, counterclaim, recoupment or
termination whatsoever or by reason of the invalidity, illegality or
unenforceability of the Obligations or otherwise. Without limiting the
generality of the fore going, the obligations of each Subsidiary Guarantor
herein shall not be discharged or impaired or otherwise affected by the failure
of any Holder or the Trustee to assert any claim or demand or to enforce any
remedy under this Indenture, the Securities or any other agreement, by any
waiver or modification of any thereof, by any default, failure or delay, willful
or otherwise, in the performance of the obligations, or by any other act or
thing or omission or delay to do any other act or thing which may or might in
any manner or to any extent vary the risk of such Subsidiary Guarantor or would
otherwise operate as a discharge of such Subsidiary Guarantor as a matter of law
or equity.
Each Subsidiary Guarantor further agrees that its Guarantee
herein shall continue to be effective or be reinstated, as the case may be, if
at any time payment, or any part thereof, of principal of or interest on any
Obligation is rescinded or must otherwise be restored by any Holder or the
Trustee upon the bankruptcy or reorganization of the Company or otherwise.
In furtherance of the foregoing and not in limitation of any
other right which any Holder or the Trustee has at law or in equity against any
Subsidiary Guarantor by virtue hereof, upon the failure of the Company to pay
the principal of or interest on any Obligation when and as the same shall become
due, whether at maturity, by acceleration, by redemption or otherwise, or to
perform or comply with any other Obligation, each Subsidiary Guarantor hereby
promises to and will, upon receipt of written demand by the Trustee, forthwith
pay, or cause to be paid, in cash, to the Holders or the Trustee an amount equal
to the sum of (i) the unpaid
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amount of such Obligations, (ii) accrued and unpaid interest on such Obligations
(but only to the extent not prohibited by law) and (iii) all other monetary
Obligations of the Company to the Holders and the Trustee.
Each Subsidiary Guarantor agrees that, as between it, on the
one hand, and the Holders and the Trustee, on the other hand, (x) the maturity
of the Obligations Guaranteed hereby may be accelerated as provided in Article 6
for the purposes of such Subsidiary Guarantor's Subsidiary Guarantee herein,
notwithstanding any stay, injunction or other prohibition preventing such
acceleration in respect of the Obligations guaranteed hereby, and (y) in the
event of any declaration of acceleration of such obligations as provided in
Article 6, such Obligations (whether or not due and payable) shall forthwith
become due and payable by such Subsidiary Guarantor for the purposes of this
Section.
Each Subsidiary Guarantor also agrees to pay any and all costs
and expenses (including reasonable attorneys' fees) incurred by the Trustee or
any Holder in enforcing any rights under this Section.
SECTION 10.02. LIMITATION ON LIABILITY. Any term or provision
of this Indenture to the contrary notwith standing, the maximum, aggregate
amount of the Obligations guaranteed hereunder by any Subsidiary Guarantor shall
not exceed the maximum amount that can be hereby guaranteed without rendering
this Indenture, as it relates to such Subsidiary Guarantor, voidable under
applicable law relating to fraudulent conveyance or fraudulent transfer or
similar laws affecting the rights of creditors generally.
SECTION 10.03. SUCCESSORS AND ASSIGNS. This Article 10 shall
be binding upon each Subsidiary Guarantor and its successors and assigns and
shall enure to the benefit of the successors and assigns of the Trustee and the
Holders and, in the event of any transfer or assignment of rights by any Holder
or the Trustee, the rights and privileges conferred upon that party in this
Indenture and in the Securities shall automatically extend to and be vested in
such transferee or assignee, all subject to the terms and conditions of this
Indenture.
SECTION 10.04. NO WAIVER. Neither a failure nor a delay on the
part of either the Trustee or the Holders in exercising any right, power or
privilege under this Article 10 shall operate as a waiver thereof, nor shall a
single or partial exercise thereof preclude any other or further exercise of any
right, power or privilege. The rights, remedies and benefits of the Trustee and
the Holders herein expressly specified are cumulative and not exclusive of any
other rights, remedies or benefits which either may
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have under this Article 10 at law, in equity, by statute or otherwise.
SECTION 10.05. MODIFICATION. No modification, amendment or
waiver of any provision of this Article 10, nor the consent to any departure by
any Subsidiary Guarantor therefrom, shall in any event be effective unless the
same shall be in writing and signed by the Trustee, and then such waiver or
consent shall be effective only in the specific instance and for the purpose for
which given. No notice to or demand on any Subsidiary Guarantor in any case
shall entitle such Subsidiary Guarantor to any other or further notice or demand
in the same, similar or other circumstances.
SECTION 10.06. RELEASE OF SUBSIDIARY GUARANTOR. Upon the sale
or other disposition (including by way of consolidation or merger) of a
Subsidiary Guarantor or the sale or disposition of all or substantially all the
assets of such Subsidiary Guarantor (in each case other than to the Company or
an Affiliate of the Company) in compliance with the terms of this Indenture,
such Subsidiary Guarantor shall be deemed released from all obligations under
this Article 10 without any further action required on the part of the Trustee
or any Holder. At the request and sole cost and expense of the Company, the
Trustee shall execute and deliver an appropriate instrument evidencing such
release.
ARTICLE 11
PLEDGED COLLATERAL
SECTION 11.01. GRANT OF SECURITY INTEREST. (a) To secure the
full and punctual payment when due and the full and punctual performance of the
Obligations, the Company hereby grants to the Trustee, for the benefit of the
Trustee and the Holders, a security interest in all its right, title and
interest in and to the following, other than such of the following which are
released from the Lien of this Indenture pursuant to Section 11.05 (the "Pledged
Collateral"):
(i) all shares of Capital Stock of the Subsidiary Guarantors
now owned or hereafter acquired by the Company, which on the date
hereof are identified on Schedule I hereto (collectively, the "Pledged
Shares");
(ii) all certificates representing any of the Pledged Shares;
and
(iii) all dividends, cash, instruments and other property and
proceeds from time to time received, receivable or otherwise
distributed in respect of or in exchange for any of the foregoing.
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(b) To secure the full and punctual payment when due and the
full and punctual performance of the Obligations, the Subsidiary Guarantors
hereby grant to the Trustee, for the benefit of the Holders, a security interest
in all their rights, titles and interests in and to the Mortgaged Collateral.
SECTION 11.02. DELIVERY OF COLLATERAL. Any and all cash,
certificates or instruments representing or evidencing the Pledged Collateral
shall be delivered to and held by or on behalf of the Trustee and shall be in
suitable form for transfer by delivery, or shall be accompanied by duly executed
instruments of transfer or assignment in blank, all in form and substance
satisfactory to the Trustee. The Trustee shall have the right, at any time after
the occur rence and during the continuance of an Event of Default, in its
discretion and without notice to the Company, to transfer to or to register in
the name of the Trustee or any of its nominees any or all the Pledged
Collateral. In addition, the Trustee shall have the right at any time to
exchange certificates or instruments representing or evidencing Pledged
Collateral for certificates or instruments of different denominations.
The Company shall use its best efforts to ensure that the
certificates representing the Pledged Shares are registered in the name of the
Trustee with the appropriate authorities having jurisdiction over the Company or
any of the Subsidiary Guarantors.
SECTION 11.03. REPRESENTATIONS AND WARRANTIES. The Company
hereby represents and warrants on the Issue Date as follows:
(a) the Company is the record and beneficial owner of the
applicable Pledged Shares described on Schedule I, free and clear of
any Lien, except for the Lien created by this Indenture;
(b) the Company has full corporate power, authority and legal
right to pledge all the Pledged Collateral pledged by it pursuant to
this Indenture;
(c) the Pledged Shares described on Schedule I have been duly
authorized and are validly issued, fully paid and nonassessable;
(d) the pledge in accordance with the terms of this Indenture
creates a valid and perfected first priority Lien on the Pledged
Collateral securing the payment and performance of the Obligations;
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(e) the shares described in Schedule I hereto represent 100.0%
of the shares of Capital Stock of the Subsidiary Guarantors; and
(f) there are no existing options, warrants, calls or
commitments of any character relating to any author ized and unissued
Capital Stock of any Subsidiary Guarantor.
SECTION 11.04. FURTHER ASSURANCES. The Company agrees that at
any time and from time to time, at the expense of the Company, the Company will
promptly execute and deliver all further instruments and documents and take all
further action that may be necessary or that the Trustee may reasonably request
in order to perfect and protect any Lien granted or purported to be granted
hereby or to enable the Trustee to exercise and enforce its rights and remedies
hereunder with respect to any Pledged Collateral. Without limiting the
foregoing, the Company shall, (i) at the time of the issuance by a Subsidiary
Guarantor of any shares of Capital Stock after the Issue Date, deliver 100.0% of
such shares to the Trustee as Pledged Collateral and provide to the Trustee a
revised Schedule I, and (ii) at the time of any release of Pledged Shares
pursuant to Section 11.05, provide to the Trustee a revised Schedule I. Any such
revised Schedule shall reflect any changes made necessary by the applicable
acquisition or release, at which time the Company shall be deemed to make their
representations and warranties set forth in paragraphs (a) through (f) of
Section 11.03 with respect to such Schedule, as so revised.
SECTION 11.05. DIVIDENDS; VOTING RIGHTS; RELEASE OF
COLLATERAL. (a) As long as no Default shall have occurred and be continuing and
until written notice thereof from the Trustee to the Company, the Company shall
be entitled to receive and retain all dividends and other distributions paid in
respect of the Pledged Shares owned by the Company; PROVIDED, HOWEVER, that the
provisions of this Indenture, including Section 4.05, shall in all respects
govern the Company's use or other disposition of such cash or other property.
Any cash dividends or distributions delivered to or otherwise held by the
Trustee pursuant to this Section 11.05, and any other cash constituting
Collateral delivered to the Trustee, shall be invested, at the written direction
of the Company, by the Trustee in Temporary Cash Investments.
(b) Upon the occurrence and during the continuance of a
Default and upon written notice thereof from the Trustee to the Company, the
Trustee shall be entitled to receive and retain as Collateral all dividends paid
and distributions made in respect of the Pledged Shares, whether so paid or made
before or after any Default. Any such dividends shall,
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if received by the Company, be received in trust for the benefit of the Trustee,
be segregated from the other property or funds of the Company, and be forthwith
delivered to the Trustee as Collateral in the same form as so received (with any
necessary endorsement).
(c) As long as no Default shall have occurred and be
continuing and until written notice thereof from the Trustee to the Company, the
Company shall be entitled to exercise any and all voting and other consensual
rights relating to Pledged Shares or any part thereof for any purpose; PROVIDED,
HOWEVER, that no vote shall be cast, and no consent, waiver or ratification
given or action taken, which would be inconsistent with or violate any provision
of this Indenture, the Security Agreements or the Securities.
(d) Upon the occurrence and during the continuance of a
Default, all rights of the Company to exercise the voting and other consensual
rights that it would otherwise be entitled to exercise pursuant to Section
11.05(c) shall cease upon notice from the Trustee to the Company and upon the
giving of such notice all such rights shall thereupon be vested in the Trustee
who shall thereupon have the sole right to exercise such voting and other
consensual rights.
(e) In order to permit the Trustee to exercise the voting and
other consensual rights which it may be entitled to exercise pursuant to Section
11.05(d), and to receive all dividends and distributions which it may be
entitled to receive under Section 11.05(b), the Company shall, if necessary,
upon written notice of the Trustee, from time to time execute and deliver to the
Trustee such instruments as the Trustee may reasonably request.
(f) Notwithstanding anything to the contrary in this Article
11, upon satisfaction by the Company of the conditions set forth in Article 8 to
its legal defeasance option, its covenant defeasance option or to the discharge
of this Indenture, the Lien of this Indenture on all the Collateral shall
terminate and all the Pledged Collateral shall be released without any further
action on the part of the Trustee or any other Person. In addition, in
connection with any release of a Subsidiary Guarantor pursuant to Section 10.06,
the pledge of the Capital Stock of such Subsidiary Guarantor pursuant to this
Article 11 shall be released and the security interest in the Mortgaged
Collateral shall be released without any further action required on the part of
the Trustee or any Holder. At the request of the Company, the Trustee shall
execute and deliver appropriate instruments evidencing any release pursuant to
this Section 11.05(f).
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SECTION 11.06. TRUSTEE APPOINTED Attorney-in-Fact. The Company
hereby appoints the Trustee as its attorney-in-fact, with full authority in the
place and stead of the Company, and in the name of the Company or otherwise,
from time to time in the Trustee's discretion but only after the occurrence and
during the continuance of an Event of Default, to take any action and to execute
any instrument which the Trustee may deem necessary or advisable in order to
accomplish the purposes of this Article 11, including to receive, endorse and
collect all instruments made payable to the Company representing any dividend,
interest payment or other distribution in respect of the Pledged Collateral or
any part thereof and to give full discharge for the same. This power, being
coupled with an interest, is irrevocable.
SECTION 11.07. TRUSTEE MAY PERFORM. If the Company fails to
perform any agreement contained in this Article 11, the Trustee may itself (but
shall not be obligated to) perform, or cause performance of, such agreement, and
the expenses of the Trustee incurred in connection therewith shall be payable by
the Company under Section 7.07.
SECTION 11.08. TRUSTEE'S DUTIES. The powers conferred on the
Trustee under this Article 11 are solely to protect its interest in the Pledged
Collateral and Mortgaged Collateral and shall not impose any duty upon it to
exercise any such powers. Except for the safe custody of any Pledged Collateral
and Mortgaged Collateral in its possession and the accounting for moneys
actually received by it under this Article 11, the Trustee shall have no duty as
to any Pledged Collateral or as to the taking of any necessary steps to preserve
rights against prior parties or any other rights pertaining to any Pledged
Collateral and Mortgaged Collateral.
SECTION 11.09. REMEDIES UPON EVENT OF DEFAULT. If any Event of
Default shall have occurred and be continuing, the Trustee may 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
provided a secured party upon the default of a debtor under the Uniform
Commercial Code at that time, and the Trustee may also, without notice except as
specified below, sell the Pledged Collateral or any part thereof in one or more
parcels at public or private sale, at any exchange, broker's board or at any of
the Trustee's offices or else where, for cash, on credit or for future delivery,
upon such terms as the Trustee may determine to be commercially reasonable, and
the Trustee or any Securityholder may be the purchaser of any or all the Pledged
Collateral so sold and thereafter hold the same, absolutely, free from any right
or claim of whatsoever kind. The Company agrees that, to the
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extent notice of sale shall be required by law, at least 10 days' notice to the
Company of the time and place of any public sale or the time after which any
private sale is to be made shall constitute reasonable notification. The Trustee
shall not be obligated to make any sale of Pledged Collateral regardless of
notice of sale having been given. The Trustee may adjourn any public or private
sale from time to time by announcement at the time and place fixed therefor, and
such sale may, without further notice, be made at the time and place to which it
was so adjourned. The Trustee shall incur no liability as a result of the sale
of the Pledged Collateral, or any part thereof, at any private sale conducted in
a commercially reasonable manner. The Company hereby waives any claims against
the Trustee arising by reason of the fact that the price at which any Pledged
Collateral may have been sold at such a private sale was less than the price
which might have been obtained at a public sale, even if the Trustee accepts the
first offer received and does not offer such Pledged Collateral to more than one
offeree.
The Company recognizes that, by reason of certain prohibitions
contained in the Securities Act and applicable state securities laws, the
Trustee may be compelled, with respect to any sale of all or any part of the
Pledged Collateral, to limit purchasers to those who will agree, among other
things, to acquire such securities for their own account, for investment, and
not with a view to the distribu tion or resale thereof. The Company acknowledges
and agrees that any such sale may result in prices and other terms less
favorable to the seller than if such sale were a public sale without such
restrictions and, notwithstanding such circum stances, agree that any such sale
shall be deemed to have been made in a commercially reasonable manner. The
Trustee shall be under no obligation to delay the sale of any of the Pledged
Collateral for the period of time necessary to permit the Company to register
such securities for public sale under the Securities Act, or under applicable
state securities laws, even if the Company would agree to do so.
SECTION 11.10. APPLICATION OF PROCEEDS. Upon the occurrence
and during the continuance of an Event of Default and after the acceleration of
the Securities pursuant to Section 6.02 (so long as such acceleration has not
been rescinded), any cash held by the Trustee as Pledged Collateral and all cash
proceeds received by the Trustee in respect of any sale of, collection from, or
other realization upon, all or any part of the Pledged Collateral, shall be
applied by the Trustee in the manner specified in Section 6.10.
SECTION 11.11. CONTINUING LIEN. Except as provided in Section
11.05, this Indenture shall create a
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continuing Lien on the Pledged Collateral that shall (i) remain in full force
and effect until payment in full of the Securities, (ii) be binding upon the
Company and its successors and assigns and (iii) enure to the benefit of the
Trustee and its successors, transferees and assigns.
SECTION 11.12. CERTIFICATES AND OPINIONS. The Company shall
comply with (a) TIAss. 314(b), relating to Opinions of Counsel regarding the
Lien of this Indenture and (b) TIAss. 314(d), relating to the release of Pledged
Collateral from the Lien of this Indenture and Officers' Certificates or other
documents regarding fair value of the Pledged Collateral, to the extent such
provisions are applicable. Any certificate or opinion required by TIAss. 314(d)
may be executed and delivered by an Officer of the Company to the extent
permitted by TIAss. 314(d).
SECTION 11.13. ADDITIONAL AGREEMENTS. The Company agrees that,
upon the occurrence and during the continuance of a Default hereunder, it will,
at any time and from time to time, upon the written request of the Trustee, use
its best efforts to take or to cause the issuer of the Pledged Shares and any
other securities distributed in respect of the Pledged Shares (collectively with
the Pledged Shares, the "Pledged Securities") to take such action and prepare,
distribute or file such documents, as are required or advisable in the
reasonable opinion of counsel for the Trustee to permit the public sale of such
Pledged Securities. The Company further agrees to indemnify, defend and hold
harmless the Trustee, each Holder, any underwriter and their respective
officers, directors, affiliates and controlling persons from and against all
loss, liability, expenses, costs of counsel (including reasonable fees and
expenses of legal counsel to the Trustee), and claims (including the costs of
investigation) that they may incur insofar as such loss, liability, expense or
claim arises out of or is based upon any alleged untrue statement of a material
fact contained in any prospectus (or any amendment or supplement thereto) or in
any notification or offering circular, or arises out of or is based upon any
alleged omission to state a material fact required to be stated therein or
necessary to make the statements in any thereof not misleading, except insofar
as the same may have been caused by any untrue statement or omission based upon
information furnished in writing to the Company or the issuer of such Pledged
Securities by the Trustee or any Holder expressly for use therein. The Company
further agrees, upon such written request referred to above, to use its best
efforts to qualify, file or register, or cause the issuer of such Pledged
Securities to qualify, file or register, any of the Pledged Securities under the
Blue Sky or other securities laws of such states as may be requested by the
Trustee and keep effective, or cause to be kept effective, all such
qualifications, filings or registrations.
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The Company will bear all costs and expenses of carrying out its obligations
under this Section 11.13. The Company acknowledges that there is no adequate
remedy at law for failure by it to comply with the provisions of this Section
11.13 and that such failure would not be adequately compensable in damages, and
therefore agree that their agreements contained in this Section 11.13 may be
specially enforced.
ARTICLE 12
SECURITY AGREEMENTS
SECTION 12.01. COLLATERAL AND SECURITY Agreements. (a) To
secure the due and punctual payment of the Obliga tions, the Company, the
Subsidiary Guarantors, the Collateral Agent and the Trustee have entered or will
enter, into the Security Agreements. The Trustee and the Company hereby
acknowledge and agree that the Trustee or the Collateral Agent, as the case may
be, holds the Collateral in trust for the benefit of the Trustee and the
Holders, in each case pursuant to the terms of the Security Agreements. Each
Holder, by accepting a Security, shall be deemed to have agreed to all the terms
and provisions of the Security Agreements.
(b) As set forth in the Security Agreements, the holders of
Secured Debt (as such term is defined in the Collateral Agency Agreement) have
rights in and to the Mortgaged Collateral that are prior to the rights of the
Holders of the Securities. As among the Holders of the Securities, the Mortgaged
Collateral shall be held for the equal and ratable benefit of such holders
without preference, priority or distinction of any thereof over any other.
(c) The Company, the Trustee, The Bank of New York, as lender,
and the Collateral Agent have entered into the Collateral Agency Agreement. By
their acceptance of the Securities, the Holders of the Securities shall be
deemed (i) to have authorized the Trustee to enter into such Collateral Agency
Agreement and (ii) to be bound thereby. The Trustee has appointed the Collateral
Agent as its agent under the Collateral Agreement, and the Collateral Agent is
thereby authorized to act on behalf of the Trustee, with full authority and
powers of the Trustee thereunder.
SECTION 12.02. RECORDING; ANNUAL OPINIONS. (a) The Company and
the Subsidiary Guarantors will take or cause to be taken all action required to
maintain, preserve and protect the Lien on the Mortgaged Collateral granted by
the Security Agreements, including causing the Mortgages and any other Security
Agreement, instruments of further assur-
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ance and all amendments or supplements thereto, to be promptly recorded,
registered and filed and at all times to be kept recorded, registered and filed,
and will execute and file statements and cause to be issued and filed
statements, all in such manner and in such places and at such times as are
prescribed in the Escrow Agreement or in this Indenture as may be required by
law fully to preserve and protect the rights of the Holders and the Trustee
under this Indenture and the Security Agreements to the Collateral.
The Company and the Subsidiary Guarantors will from time to
time promptly pay and discharge all recording or filing fees, charges and taxes
relating to the filing or registration of this Indenture and the Security
Agreements, any amendments thereto and any other instruments of further
assurance.
(b) The Company and the Subsidiary Guarantors shall furnish to
the Collateral Agent or the Trustee:
(i) on the Issue Date or as soon as practicable after the
execution and delivery of this Indenture, an Opinion of Counsel either
(a) to the effect that, in the opinion of such Counsel, this Indenture
and the assignment of the Collateral intended to be made by the
Security Agreements and all other instruments of further assurance or
assignment have been properly recorded, registered and filed (or proper
provision has been made for such recording, registration and filing) to
the extent necessary to make effective the Lien created by such
Security Agreements and reciting the details of such action, and
stating that as to the Lien created pursuant to such Security
Agreements, such recordings, registerings and filings are the only
recordings, registerings and filings necessary to give notice thereof
and that no re-recordings, re-registerings or refilings are necessary
to maintain such notice (other than as stated in such opinion), and
further stating that all statements have been executed and filed (or
proper provision has been made for such filing) that are necessary
fully to preserve and protect the rights of the Holders and the Trustee
with respect to the Lien under this Indenture and such Security
Agreements, or (b) to the effect that, in the opinion of such counsel,
no such action is necessary to perfect such Lien; and
(ii) on or before July 15 in each year beginning with July 15,
1999, an Opinion of Counsel, dated as of such date, either (a) to the
effect that, in the opinion of such counsel, such action has been taken
with respect to the recordings, registerings, filings, re-recordings,
re-registerings and re-filings of this Indenture, the Security
Agreements and all financing statements,
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continuation statements or other instruments of further assurance as is
necessary to maintain the Lien of this Indenture and the Security
Agreements and reciting with respect to such Lien the details of such
action or referencing 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 Holders and the Trustee
hereunder and under the Security Agreements with respect to such Lien,
or (b) to the effect that, in the opinion of such Counsel, no such
action is necessary to maintain such Lien.
SECTION 12.03. DISPOSITION OF COLLATERAL WITHOUT RELEASE. (a)
Notwithstanding the provisions of Section 12.04, so long as no Event of Default
shall have occurred and be continuing, the Company and the Subsidiary
Guarantors, as appropriate, may, without any release or consent by the
Collateral Agent or the Trustee:
(i) sell or otherwise dispose of any machinery, equipment,
furniture, apparatus, tools or implements, materials or supplies or
other similar property subject to the Lien of this Indenture and the
Security Agree ments, which may have become worn out or obsolete, not
exceeding in aggregate value in any one calendar year $500,000, or
which may constitute an Incidental Asset, upon substituting for the
same other machinery, equip ment, furniture, apparatus, tools or
implements, materials or supplies or other similar property not
necessarily of the same character but of at least equal value to the
Company as, and costing not less than the amount realized from, the
Collateral disposed of, which shall forthwith become, without further
action, subject to the Lien of this Indenture and the Security
Agreements;
(ii) grant rights-of-way and easements over or in respect of
the real property; PROVIDED, HOWEVER, that such grant will not, in the
reasonable opinion of the Board of Directors, materially impair the
usefulness of such property in the conduct of the Company's business
and will not be prejudicial to the Holders of the Securities;
(iii) abandon, terminate, cancel, release or make alterations
in or substitutions of any contracts subject to the Lien of this
Indenture and any of the Security Agreements; PROVIDED, HOWEVER, that
any altered or substituted contracts shall forthwith, without further
action, be subject to the Lien of this Indenture and the
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Security Agreements to the same extent as those previously existing;
(iv) surrender or modify any franchise, license or permit
subject to the Lien of this Indenture and any of the Security
Agreements which it may own or under which it may be operating;
PROVIDED, HOWEVER, that, after the surrender or modification of any
such franchise, license or permit, the Company or the applicable
Subsidiary Guarantor shall still, in the reasonable opinion of the
Board of Directors of the Company, be entitled, under some other or
without any franchise, license or permit, to conduct its business as it
was operating immediately prior to such surrender or modification;
(v) alter, repair, replace, change the location or position of
and add to its plants, structures, machinery, systems, equipment,
fixtures and appurtenances; PROVIDED, HOWEVER, that such alteration,
repair or replacement shall comply with the terms of the Security
Agreements and will not, in the reasonable opinion of the Board of
Directors, be prejudicial to the interests of the Holders of the
Securities; or
(vi) demolish, dismantle, tear down, abandon or scrap any
portion of the Collateral (other than land or interests in land (other
than leases) and other than the Mortgaged Vessels), if in the good
faith opinion of the Board of Directors, as evidenced by a Board
Resolution, such demolition, dismantling, tearing down, abandoning or
scrapping is in the best interests of the Company and the fair market
value and utility of the Collateral as an entirety, and the security
for the Securities, will not thereby be impaired;
(b) In the event that the Company or a Subsidiary Guarantor
has sold, exchanged or otherwise disposed of or proposes to sell, exchange or
otherwise dispose of any portion of the Collateral which under the provisions of
this Section 12.03 may be sold, exchanged or otherwise disposed of by the
Company without any release or consent of the Trustee, and the Company requests
the Trustee to furnish a written disclaimer, release or quitclaim of any
interest in such property under this Indenture and the Security Agreements, the
Trustee, at the Company's expense, shall execute such an instrument upon
delivery to the Trustee of (i) an Officers' Certificate by the Company reciting
the sale, exchange or other disposition made or proposed to be made and
describing in reasonable detail the property affected thereby, and stating that
such property is property which by the provisions of this Section 12.03 may be
sold, exchanged or otherwise disposed of or dealt with by the Company without
any release or consent of the Trustee and (ii) an Opinion of
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Counsel stating that the sale, exchange or other disposition made or proposed to
be made was duly taken by the Company or the Subsidiary Guarantor in conformity
with a designated subsection of Section 12.03(a) (specifying which subsection)
and that the execution of such written disclaimer, release or quitclaim is
appropriate to confirm the propriety of such sale, disposition or other
disposition under this Section 12.03.
SECTION 12.04. RELEASE OF COLLATERAL. In addition to its
rights under Section 12.03, the Company shall have the right, at any time and
from time to time, to sell, exchange or otherwise dispose of any of the
Collateral (other than Trust Moneys, which are subject to release from the Lien
of this Indenture and the Security Agreements as provided under Article 13),
upon compliance with the requirements and conditions of this Section 12.04,
Section 4.07 and Section 4.17, and the Trustee, at the Company's sole cost and
expense, shall release the same from the Lien of this Indenture and the Security
Agreements upon receipt by the Trustee of a Release Notice requesting such
release and describing the property to be so released, together with:
(a) If the property to be released has a book value of at
least $2,000,000, a Board Resolution requesting such release and
authorizing an application to the Trustee therefor.
(b) An Officers' Certificate, dated not more than 30 days
prior to the date of the application for such release, and signed also,
in the case of the following clauses (ii), (iv), (v) and (viii), by an
Appraiser, in each case stating in substance as follows:
(i) that, in the opinion of the signers, the security
afforded by this Indenture and the Security Agreements will
not be impaired by such release in contravention of the
provisions of this Indenture, and that if the Mortgaged
Collateral to be released is not being replaced by comparable
property, such Collateral has a book value equal to or less
than $500,000 and is not necessary for the efficient operation
of the Company's remaining property or in the conduct of the
business of the Company;
(ii) that the Company or a Subsidiary Guarantor has
disposed of or will dispose of the Collateral so to be
released for a consideration representing, in the opinion of
the signers, its fair value, which consideration may consist
of any one or more of the following, to the extent otherwise
permitted by this Indenture: (A) cash or cash equivalents,
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(B) obligations secured by a purchase money Lien upon the
property so to be released and (C) any other property or
assets that, except as provided in Section 12.04(d), upon
acquisition thereof by the Company or a Subsidiary Guarantor
would be subject to the Lien of this Indenture and the
Security Agreements, and subject to no Lien other than
Permitted Liens which, under the applicable provisions of the
Security Agreements relating thereto, are permitted to be
superior to the Lien of the Trustee herein and therein, all of
such consideration to be briefly described in the certificate;
(iii) that no Event of Default has occurred and
is continuing;
(iv) the fair value, in the opinion of the signers,
of the property to be released at the date of such application
for release; PROVIDED, HOWEVER, that it shall not be necessary
under this clause (iv) to state the fair value of any property
whose fair value is certified in a certificate of an Appraiser
under Section 12.04(c);
(v) whether the aggregate fair value of all
Collateral to be released and of all other Collateral released
from the Lien of this Indenture and the Security Agreements
pursuant to this Section 12.04 since the commencement of the
then current calendar year is 10% or more of the aggregate
principal amount at maturity of the Securities outstanding on
the date of the application and whether said fair value of the
property to be released is at least $100,000 and at least 1%
of the aggregate principal amount at maturity of the
Securities outstanding on the date of the application, and if
such is the case, that a certificate of an Appraiser as to the
fair value of the property to be released will be furnished
under Section 12.04(c);
(vi) that if the Collateral to be released is only a
portion of a Mortgaged Vessel, following such release, that
the fair value of the Vessel (exclusive of the fair value of
the released Collateral) shall not be less than the fair value
of such Vessel (exclusive of the fair value of the released
Collateral) prior to such release;
(vii) that all conditions precedent herein provided
for relating to the release of the Collateral in question have
been complied with.
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(c) If (i) the fair value of the property to be released and
of all other property released from the Lien of this Indenture and the
Security Agreements pursuant to this Section 12.04 since the
commencement of the then current calendar year, as shown by the
certificate required by Section 12.04(b)(v), is 10% or more of the
aggregate principal amount at maturity of the Securities outstanding on
the date of the application, and (ii) the fair value of the Collateral
to be so released, as shown by the certificate filed pursuant to
Section 12.04(b)(v), is at least $100,000 and at least 1% of the
aggregate principal amount at maturity of the Securities outstanding on
the date of the application, a certificate of an Appraiser stating:
(1) the then fair value, in the opinion of the
signer, of the property to be released; and
(2) that such release, in the opinion of the signer,
will not impair the Lien of this Indenture or the Security
Agreements in contravention of its terms.
(d) The Net Available Cash, which will be paid to the Trustee
(except Net Available Cash from any Asset Sale which is not required,
or cannot be required through the passage of time or otherwise, to be
used to repurchase or redeem or to make an offer to repurchase
Securities hereunder); and, if any property other than cash, cash
equivalents or obligations is included in the consideration received in
connection with such Asset Sale, such instruments of conveyance,
assignment and transfer, if any, as may be necessary, in the Opinion of
Counsel to be given pursuant to Section 12.04(e), to subject to the
Lien of this Indenture and the Security Agreements all the right, title
and interest of the Company or the applicable Subsidiary Guarantor in
and to such property.
(e) An Opinion of Counsel substantially to the effect (i) that
any obligation included in the consider ation for any property so to be
released and to be received by the Trustee pursuant to Section 12.04(d)
is a valid and binding obligation enforceable in accordance with its
terms and is effectively pledged under the Security Agreements, (ii)
that any Lien granted by a purchaser to secure a purchase money
obligation is a fully perfected Lien and such instrument granting such
Lien is enforceable in accordance with its terms, (iii) either (x) that
such instruments of conveyance, assignment and transfer as have been or
are then delivered to the Trustee are sufficient to subject to the Lien
of this Indenture and the applicable Security
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Agreements all the right, title and interest of the Company or the
applicable Subsidiary Guarantor in and to any property, other than
cash, cash equivalents and obligations, that is included in the
consideration for the Collateral so to be released and is to be
received by the Trustee pursuant to Section 12.04(d), subject to no
Lien other than Permitted Liens or (y) that no instruments of
conveyance, assignment or transfer are necessary for such purpose, (iv)
that the Company or the applicable Subsidiary Guarantor has corporate
power to own all property included in the consideration for such
release, and (v) that all conditions precedent herein and under the
Security Agreements relating to the release of such Collateral have
been complied with.
(f) If the Collateral to be released is only a portion of a
Mortgaged Vessel, an Opinion of Counsel relating to the Mortgaged
Vessel confirming that after such release, the Lien of the Mortgage
continues unimpaired as a perfected Lien upon the Mortgaged Vessel
subject only to Permitted Liens.
In connection with any release, the Company shall (i) execute,
deliver and record or file and obtain such instruments as the Trustee may
reasonably require, including amendments to the Security Agreements and this
Indenture, and (ii) deliver to the Trustee such evidence of the satisfaction of
the conditions included in this Indenture and the Security Agreements as the
Trustee may reasonably require.
The Company shall exercise its rights under this Section by
delivery to the Trustee of a notice (each, a "Release Notice"), which shall
refer to this Section, describe with particularity the items of property
proposed to be covered by the release and be accompanied by a counterpart of the
instruments proposed to give effect to the release fully executed and
acknowledged (if applicable) by all parties thereto other than the Trustee and
in form for execution by the Trustee. Upon such compliance, the Company shall
direct the Trustee to execute, acknowledge (if applicable) and deliver to the
Company such counterpart within 10 Business Days after receipt by the Trustee of
a Release Notice and the satisfaction of the requirements of this Section.
In case an Event of Default shall have occurred and be
continuing, the Company or a Subsidiary Guarantor, while in possession of the
Collateral (other than cash, cash equivalents, securities and other personal
property held by, or required to be deposited or pledged with, the Trustee or
the Collateral Agent, as the case may be, hereunder or under any Security
Agreement or with the trustee, mortgagee or other holder of a Permitted Lien),
may do any of the things
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enumerated in this Section 12.04, if the Trustee in its discretion, or the
Holders of a majority in aggregate principal amount at maturity of the
Securities outstanding, by appropriate action of such Holders, shall consent to
such action, in which event any certificate filed under this Section shall omit
the statement to the effect that no Event of Default has occurred and is
continuing. This paragraph shall not apply, however, during the continuance of
an Event of Default of the type specified in Section 6.01(1) or 6.01(2).
All cash or cash equivalents received by the Trustee pursuant
to this Section 12.04 shall be held by the Trustee, for the benefit of the
Holders, as Trust Moneys under Article 13 subject to application as therein
provided. All purchase money and other obligations received by the Trustee
pursuant to this Section 12.04 shall be held by the Trustee for the benefit of
the Holders as Mortgaged Collateral.
SECTION 12.05. EMINENT DOMAIN, EXPROPRIATION AND OTHER
GOVERNMENTAL TAKINGS. If any of the Collateral is taken by eminent domain,
expropriation or other similar governmental taking (including a requisition for
hire which is not revoked within six months (and in all events prior to July 15,
2005) or a requisition for title) or is sold pursuant to the exercise by any
governmental authority of any right which it may then have to purchase, or to
designate a purchaser or to order a sale of, all or any part of the Collateral,
the Trustee shall release the property so taken or purchased, but only upon
receipt by the Trustee, and the Collateral Agent in the case involving Mortgaged
Collateral, of the following:
(a) an Officers' Certificate stating that such property has
been taken by eminent domain, expropriation or other similar
governmental taking and the amount of the award therefor, or that such
property has been sold pursuant to a right vested in a governmental
authority to purchase, or to designate a purchaser, or order a sale of
such property and the amount of the proceeds of such sale, that the
amount of the proceeds of the property so sold is not less than the
amount to which the Company or the applicable Subsidiary Guarantor is
legally entitled under the terms of such right to pur chase or
designate a purchaser, or under the order or orders directing such
sale, as the case may be, and that all conditions precedent herein
provided for relating to such release have been complied with;
(b) to hold as Trust Moneys, subject to the disposition
thereof pursuant to Article 13 hereof, the
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award for such property or the proceeds of such sale to the extent
provided under the Security Agreements; and
(c) an Opinion of Counsel substantially to the effect that:
(1) such property has been taken by eminent domain,
expropriation or other similar governmental taking (including
a requisition for hire which is not revoked within six months
or prior to July 15, 2005 or a requisition for title) or has
been sold pursuant to the exercise of a right vested in a
governmental authority to purchase, or to designate a
purchaser or order a sale of, such property; and
(2) the instruments and the award or proceeds of such
sale which have been or are therewith delivered to and
deposited with the Trustee or the Collateral Agent, as the
case may be, conform to the requirements of this Indenture and
the Security Agreements and that, upon the basis of such
application, the Trustee or the Collateral Agent, as the case
may be, is permitted by the terms hereof and of the Security
Agreements to execute and deliver the release requested, and
that all conditions precedent herein provided for relating to
such release have been complied with.
In any proceedings for the taking or purchase or sale of any
part of the Collateral, by eminent domain, expropriation or other similar
governmental taking or by virtue of any such right to purchase or designate a
purchaser or to order a sale, the Trustee or the Collateral Agent, as the case
may be, may be represented by counsel who may be counsel, at the Company's
expense, for the Company.
All cash received by the Trustee or the Collateral Agent, as
the case may be, pursuant to this Section 12.05 shall be held by the Trustee as
Trust Moneys under Article 13 subject to application as therein provided. All
purchase money and other obligations received by the Trustee pursuant to this
Section 12.05 shall be held by the Trustee or the Collateral Agent, as the case
may be, as Mortgaged Collateral subject to application as provided in Section
12.10.
SECTION 12.06. PERMITTED RELEASES NOT TO IMPAIR LIEN; TRUST
INDENTURE ACT REQUIREMENTS. The release of any Collateral from the terms hereof
and of the Security Agreements or the release of, in whole or in part, the Liens
created by the Security Agreements, will not be deemed to impair the Lien on the
Collateral in contravention of the provisions hereof if and to the extent the
Collateral or Liens are released pursuant to the applicable Security
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Agreements and pursuant to the terms of this Article 12. The Trustee and each of
the Holders acknowledge that a release of Collateral or a Lien strictly in
accordance with the terms of the Security Agreements and of this Article 12 will
not be deemed for any purpose to be an impairment of the Lien on the Mortgaged
Collateral in contravention of the terms of this Indenture. To the extent
applicable, the Company and each obligor on the Securities shall cause ss.
314(d) of the TIA relating to the release of property or securities from the
Lien hereof and of the Security Agreements to be complied with. Any certificate
or opinion required by ss. 314(d) of the TIA may be made by an officer of the
Company, except in cases which ss. 314(d) of the TIA requires that such
certificate or opinion be made by an independent person.
SECTION 12.07. SUITS TO PROTECT THE COLLATERAL. Subject to the
provisions of the Security Agreements, the Trustee shall have power to institute
and to maintain such suits and proceedings as it may deem expedient to prevent
any impairment of the Collateral by any acts which may be unlawful or in
violation of any of the Security Agreements or this Indenture, and such suits
and proceedings as the Trustee, in its sole discretion, may deem expedient to
preserve or protect its interests and the interests of the Holders in the
Collateral (including 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 the Lien on the Collateral or be prejudicial to the interests of
the Holders or the Trustee).
SECTION 12.08. PURCHASER PROTECTED. In no event shall any
purchaser in good faith of any property purported to be released hereunder be
bound to ascertain the authority of the Trustee to execute the release or to
inquire as to the satisfaction of any conditions required by the provisions
hereof for the exercise of such authority or to see to the application of any
consideration given by such purchaser or other transferee; nor shall any
purchaser or other transferee of any property or rights permitted by this
Article 12 to be sold be under obligation to ascertain or inquire into the
authority of the Company or the applicable Subsidiary Guarantor to make any such
sale or other transfer.
SECTION 12.09. POWERS EXERCISABLE BY RECEIVER OR TRUSTEE. In
case the Collateral shall be in the possession of a receiver or trustee,
lawfully appointed, the powers conferred in this Article 12 upon the Company or
a Subsidiary Guarantor with respect to the release, sale or other disposition of
such property may be exercised by such receiver or trustee, and an instrument
signed by such
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receiver or trustee shall be deemed the equivalent of any similar instrument of
the Company or a Subsidiary Guarantor or of any officer or officers thereof
required by the provisions of this Article 12; and if the Trustee shall be in
the possession of the Collateral under any provision of this Indenture, then
such powers may be exercised by the Trustee.
SECTION 12.10. DISPOSITION OF OBLIGATIONS RECEIVED. All
purchase money and other obligations received by the Trustee or the Collateral
Agent under this Article shall be held by the Trustee or the Collateral Agent,
as the case may be, as a part of the Collateral. Upon payment in cash or cash
equivalents by or on behalf of the Company to the Trustee or the Collateral
Agent of the entire unpaid principal amount at maturity of any such obligation,
to the extent not constituting Net Available Cash which may be required, through
the passage of time or otherwise, to be used to redeem or repurchase or to make
an offer to redeem or repurchase Securities, the Trustee or the Collateral
Agent, as appropriate, shall release and transfer such obligation and any
mortgage securing the same upon receipt of any documentation that the Trustee or
the Collateral Agent may reasonably require. Any cash or cash equivalents
received by the Trustee or the Collateral Agent in respect of the principal of
any such obligations shall be held by the Trustee or the Collateral Agent, as
the case may be, as Trust Moneys under Article 13 subject to application as
therein provided and as provided in the Security Agreements. Until the
Securities are accelerated pursuant to Section 6.02, all interest and other
income on any such obligations, when received by the Trustee shall be paid to
the Company from time to time in accordance with Section 13.08. If the
Securities have been accelerated pursuant to Section 6.02, any such interest or
other income not theretofore paid, when collected by the Trustee, shall be
applied by the Trustee in accordance with Section 6.10.
SECTION 12.11. DETERMINATIONS RELATING TO COLLATERAL. In the
event (i) the Trustee shall receive any written request from the Company, a
Subsidiary Guarantor or the Collateral Agent under any Security Agreement for
consent or approval with respect to any matter or thing relating to any
Collateral or the Company's or a Subsidiary Guarantor's obligations with respect
thereto or (ii) there shall be due to or from the Trustee or the Collateral
Agent under the provisions of any Security Agreement any material performance or
the delivery of any material instrument or (iii) the Trustee shall become aware
of any material nonperformance by the Company or a Subsidiary Guarantor of any
covenant or any material breach of any representation or warranty of the Company
or a Subsidiary Guarantor set forth in any Security Agreement, then, in each
such event, the Trustee shall be entitled to hire, at the sole reasonable cost
and expense of
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the Company, experts, consultants, agents and attorneys to advise the Trustee on
the manner in which the Trustee should respond, or direct the Collateral Agent
to respond, to such request or render any requested performance or response to
such nonperformance or breach. The Trustee shall be fully protected in
accordance with Article 7 hereof in the taking of any action recommended or
approved by any such expert, consultant, agent or attorney and by
indemnification provided in accordance with Section 6.05 and other sections of
this Indenture if such action is agreed to by Holders of a majority in principal
amount at maturity of the Securities pursuant to Section 6.05 and, the Trustee
may, in its sole discretion, prior to taking such action if such action could
subject it to environmental liabilities or taxation, require (i) direction from
the Holders of a majority in principal amount at maturity of the Securities in
accordance with Section 6.05 hereof and (ii) indemnification in accordance with
Section 6.05.
SECTION 12.12. RELEASE UPON TERMINATION OF THE COMPANY'S
OBLIGATIONS. In the event that the Company delivers to the Trustee, in form and
substance acceptable to it, an Officers' Certificate certifying that all the
obligations under this Indenture, the Securities and the Security Agreements
have been satisfied and discharged by complying with the provisions of Article 8
and Section 7.07 or by the payment in full of the Company's obligations under
the Securities, this Indenture and the Security Agreements, and all such
obligations have been so satisfied, the Trustee shall deliver to the Company and
the Collateral Agent a notice stating that the Trustee, on behalf of the
Holders, disclaims and gives up any and all rights it has in or to the Mortgaged
Collateral, and any rights it has under the Security Agreements, and upon
receipt by the Collateral of such notice, the Collateral Agent shall not be
deemed to hold a Lien in the Mortgaged Collateral on behalf of the Trustee.
SECTION 12.13. COLLATERAL AGENT'S DUTIES. The Collateral
Agent, acting in its capacity as such, shall have only such duties with respect
to the Collateral as are set forth in the Collateral Agency Agreement.
ARTICLE 13
APPLICATION OF TRUST MONEYS
SECTION 13.01. "TRUST MONEYS" DEFINED. All cash or cash
equivalents received by the Trustee or the Collateral Agent on behalf of the
Trustee:
(a) upon the release of property from the Lien of this
Indenture and the Security Agreements, including
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all moneys received in respect of the principal of all purchase money,
governmental and other obligations; or
(b) as compensation for, or proceeds of sale of, any part of
the Mortgaged Collateral taken by eminent domain or purchased by, or
sold pursuant to an order of, a governmental authority or otherwise
disposed of; or
(c) as proceeds of insurance upon any part of the Mortgaged
Collateral (other than any liability insurance proceeds payable to the
Trustee or the Collateral Agent for any loss, liability or expense
incurred by it); or
(d) for application under this Article as elsewhere provided
in this Indenture or any Security Agreement, or whose disposition is
not elsewhere otherwise specifically provided for herein or in any
Security Agreement;
(all such moneys being herein sometimes called "Trust Moneys"), shall be held by
the Trustee (or the Collateral Agent as the agent of the Trustee) for the
benefit of the Holders of Securities as a part of the Collateral, shall be held
in United States dollars or U.S. dollar denominated obligations, and, upon any
entry upon or sale of the Collateral or any part thereof pursuant to Article 6,
said Trust Moneys shall be applied in accordance with Section 6.10; but, prior
to any such entry or sale, all or any part of the Trust Moneys may be withdrawn,
and shall be released, paid or applied by the Trustee or the Collateral Agent,
as appropriate, from time to time as provided in Sections 13.02 to 13.05,
inclusive, may be applied by the Trustee as provided in Section 13.07(b) and, if
applicable, shall be released pursuant to Section 4.19.
SECTION 13.02. RETIREMENT OF SECURITIES. The Trustee shall, or
shall direct, as appropriate, the Collateral Agent to deliver to the Trustee
Trust Moneys to, apply Trust Moneys from time to time to the payment of the
principal of and interest on any Securities, at final matu rity or to the
redemption thereof or the purchase thereof upon tender or in the open market or
at private sale or upon any exchange or in any one or more of such ways,
including pursuant to a redemption under Article 3 or a required repurchase
pursuant to Section 4.07 or 4.13, as the Company shall request, upon receipt by
the Trustee of the following:
(a) a resolution of the Board of Directors directing the
application pursuant to this Section of a specified amount of Trust
Moneys (denominated in U.S. dollars) and in case any such moneys are to
be applied to payment, designating any Securities, so to be paid and,
in case any such moneys are to be applied to the
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purchase of any Securities, prescribing the method of purchase, the
price or prices to be paid and the maximum principal amount at maturity
of any Securities, to be purchased and any other provisions of this
Indenture governing such purchase;
(b) additional cash (denominated in U.S. dollars) to the
extent necessary to fund the entire payment amount or purchase price
purchase, which cash shall be held by the Trustee in trust for such
purpose;
(c) an Officers' Certificate, dated not more than five days
prior to the date of the relevant application, stating
(i) that no Default exists; and
(ii) that all conditions precedent and covenants
herein provided for relating to such application of Trust
Moneys have been complied with; and
(d) an Opinion of Counsel stating that the docu ments and the
cash or cash equivalents, if any, which have been or are therewith
delivered to and deposited with the Trustee conform to the requirements
of this Indenture and that all conditions precedent herein provided for
relating to such application of Trust Moneys have been complied with.
Upon compliance with the foregoing provisions of this Section,
the Trustee shall apply Trust Moneys available therefor as directed and
specified by such resolution, up to, but not exceeding, the principal amount at
maturity of the Securities to be so paid, redeemed or purchased.
A resolution of the Board of Directors expressed to be
irrevocable directing the application of Trust Moneys under this Section to the
payment of the principal of par ticular Securities shall for all purposes of
this Indenture be deemed the equivalent of the deposit of money with the Trustee
in trust for such purpose. Such Trust Moneys and any cash deposited with the
Trustee pursuant to subsection (b) of this Section shall not, after compliance
with the foregoing provisions of this Section, be deemed to be part of the
Collateral or Trust Moneys.
SECTION 13.03. WITHDRAWALS OF INSURANCE PROCEEDS AND
CONDEMNATION AWARDS. To the extent that any Trust Moneys consist of either (a)
the proceeds of insurance upon any part of the Mortgaged Collateral or (b) any
award for or the proceeds from any of the Collateral being taken by eminent
domain, expropriation or other similar governmental taking
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(including a requisition for hire which is not revoked within six months (and in
all events prior to July 15, 2005) or a requisition for title) or sold pursuant
to the exercise by any governmental authority of any right which it may then
have to purchase, or to designate a purchaser or to order a sale of any part of
the Collateral, such Trust Moneys may be withdrawn by the Company or the
applicable Subsidiary Guarantor and shall be paid by the Trustee upon a request
by the Company to the Trustee by the proper officer or officers of the Company
or the applicable Subsidiary Guarantor to reimburse the Company or the
applicable Subsidiary Guarantor for expenditures made, or to pay costs incurred,
by the Company or the applicable Subsidiary Guarantor to repair, rebuild or
replace the property destroyed, damaged or taken (including the acquisition of a
Qualified Substitute Vessel), upon receipt by the Trustee of the following:
(a) an Officers' Certificate dated not more than 30 days prior
to the date of the application for the withdrawal and payment of such
Trust Moneys and signed also in the case of the following clauses (i),
(iv) and (vi), by an Appraiser, setting forth:
(i) that expenditures have been made, or costs
incurred, or will be incurred simultaneous with such
withdrawal of Trust Moneys, by the Company or the applicable
Subsidiary Guarantor in a specified amount for the purpose of
making certain repairs, rebuildings and replacements of the
Mortgaged Collateral (including the acquisition of a Qualified
Substitute Vessel), which shall be briefly described, and
stating the fair value thereof to the Company at the date of
the acquisi tion thereof by the Company, except that it shall
not be necessary under this paragraph to state the fair value
of any of such repairs, rebuildings or replacements that are
separately described pursuant to paragraph (vi) of this
subsection and whose fair value is stated in the Appraiser's
certificate under the following subsection (b) of this
Section;
(ii) that no part of such expenditures, in any
previous or then pending application, has been or is being
made the basis for the withdrawal of any Trust Moneys pursuant
to this Section 13.03;
(iii) that no part of such expenditures or costs has
been paid out of either the proceeds of insurance upon any
part of the Mortgaged Collateral not required to be paid to
the Trustee or the Collateral Agent, as appropriate, under the
Mortgage or any award for or the proceeds from any of the
Mortgaged Collateral being taken not
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required to be paid to the Trustee or the Collateral Agent
under Section 12.05 hereof, as the case may be;
(iv) that there is no outstanding indebtedness or
other obligation, other than costs for which payment is being
requested, known to the Company, after due inquiry, for the
purchase price or construction of such repairs, rebuildings or
replacements, or for labor, wages, materials or supplies in
connection with the making thereof, which, if unpaid, might
become the basis of a vendor's, mechanics', laborer's,
materialmen's, statutory or other similar Lien upon any of
such repairs, rebuildings or replacement, which Lien might, in
the opinion of the signers of such certificate, materially
impair the security afforded by such repairs, rebuildings or
replacement;
(v) that the property to be repaired, rebuilt or
replaced is necessary or desirable in the conduct of the
Company's or Subsidiary Guarantors' business;
(vi) whether any part of such repairs, rebuild ings
or replacements, within six months before the date of
acquisition thereof by the Company or a Subsidiary Guarantor,
has been used or operated by others other than the Company or
a Subsidiary Guarantor in a business similar to that in which
such property has been or is to be used or operated by the
Company or a Subsidiary Guarantor, and whether the fair value
to the Company or a Subsidiary Guarantor, at the date of such
acquisi tion, of such part of such repairs, rebuildings or
replacement is at least $100,000 and 1% of the aggregate
principal amount at maturity of the out standing Securities;
and, if all such facts are present, such part of said repairs,
rebuildings or replacements shall be separately described, and
it shall be stated that an Appraiser's certificate as to the
fair value to the Company of such separately described
repairs, rebuildings or replacements will be furnished under
the following subsection (b) of this Section 13.03;
(vii) that no Default or Event of Default shall
have occurred and be continuing;
(viii) that the Trust Moneys that will remain
after such withdrawal will be sufficient to
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complete the repair, rebuilding or replacement of the property
destroyed, damaged or taken; and
(ix) that all conditions precedent herein provided
for relating to such withdrawal and payment have been complied
with.
(b) In case any part of such repairs, rebuildings or
replacements is separately described pursuant to the foregoing
paragraph (vi) of subsection (a) of this Section, a certificate of an
Appraiser stating the fair value to the Company or the Subsidiary
Guarantors, in such Appraiser's opinion, of such separately described
repairs, rebuildings or replacements at the date of the acquisition
thereof by the Company or the Subsidiary Guarantors.
(c) An Opinion of Counsel substantially stating:
(i) that the instruments that have been or are
therewith delivered to the Trustee conform to the requirements
of this Indenture or the Security Agreements, and that, upon
the basis of such Company request and the accompanying
documents specified in this Section 13.03, all conditions
precedent herein provided for relating to such withdrawal and
payment have been complied with, and the Trust Moneys whose
withdrawal is then requested may be lawfully paid over under
this Section 13.03;
(ii) that the Company or the applicable Subsidiary
Guarantor has acquired title to said repairs, rebuildings and
replacements at least the equivalent to its title to the
property destroyed, damaged or taken, and that the same and
every part thereof are free and clear of all Liens prior to
the Lien of this Indenture and the Security Agreements, except
Permitted Liens to which the property so destroyed, damaged or
taken shall have been subject at the time of such destruction,
damage or taking; and
(iii) that all the Company's or the applicable
Subsidiary Guarantor's right, title and interest in and to
said repairs, rebuilding or replacements, or combination
thereof, are then subject to the Lien of this Indenture and
the Security Agreements.
Upon compliance with the foregoing provisions of this Section,
the Trustee shall pay on Company request an amount of Trust Moneys of the
character aforesaid equal to the amount of the expenditures or costs stated in
the Officers' Certificate required by paragraph (i) of
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subsection (a) of this Section 13.03, or the fair value to the Company or the
applicable Subsidiary Guarantor of such repairs, rebuildings and replacements
stated in such Officers' Certificate (and in such Appraiser's certificate, if
required by subsection (b) of this Section 13.03), which ever is less. Unless
the Collateral Agent and Trustee shall otherwise agree, all insurance must name
the Collateral Agent and Trustee as an insured, but without liability for
premiums, calls or assessments, and all amounts of whatsoever nature payable
under any insurance must be payable to the Collateral Agent and Trustee for
distribution, first to itself and thereafter to the Relevant Subsidiary
Guarantor, as Owner of such Vessel or others as their interests may appear. All
amounts payable under any insurance with respect to the Vessel involving any
damage to the Vessel not constituting an actual or constructive or an agreed or
compromised total loss, the insurers may pay direct for the repair, salvage or
other charges involved or, if the relevant Subsidiary Guarantor shall have first
fully repaired the damage or paid all of the salvage or other charges, may pay
the relevant Subsidiary Guarantor as reimbursement therefore; PROVIDED, HOWEVER,
that if such amounts (including any franchise or deductible) are in excess of
One Million United States Dollars ($1,000,000), the insurers shall make such
payment to the Collateral Agent and Trustee. All payments of insurance shall be
made to the Collateral Agent and the Trustee if an Event of Default shall have
occurred or any event which with the giving of notice or the lapse of time, or
both, would constitute an Event of Default.
SECTION 13.04. POWERS EXERCISABLE NOTWITHSTANDING EVENT OF
DEFAULT. In case an Event of Default shall have occurred and shall be
continuing, the Company, while in possession of the Mortgaged Collateral (other
than cash, cash equivalents, securities and other personal property held by, or
required to be deposited or pledged with, the Trustee hereunder or under the
Security Agreements), may do any of the things enumerated in Sections 13.02 and
13.03 if the Trustee in its discretion, or the Holders of a majority in
aggregate principal amount at maturity of the outstanding Securities, by
appropriate action of such Holders, shall consent to such action, in which event
any certificate filed under any of such Sections shall omit the statement to the
effect that no Event of Default has occurred and is continuing. This Section
13.04 shall not apply, however, during the continuance of an Event of Default of
the type specified in Section 6.01(1) or 6.01(2).
SECTION 13.05. POWERS EXERCISABLE BY TRUSTEE OR RECEIVER. In
case the Mortgaged Collateral (other than any cash, cash equivalents, securities
and other personal property held by, or required to be deposited or pledged
with, the Trustee hereunder or under the Security Agreements)
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shall be in the possession of a receiver or trustee lawfully appointed, the
powers hereinbefore in this Article 13 conferred upon the Company and the
Subsidiary Guarantors with respect to the withdrawal or application of Trust
Moneys may be exercised by such receiver or trustee, in which case a certificate
signed by such receiver or trustee shall be deemed the equivalent of any
Officers' Certificate required by this Article 13. If the Trustee shall be in
possession of any of the Mortgaged Collateral hereunder or under the Security
Documents, such powers may be exercised by the Trustee in its sole discretion.
SECTION 13.06. DISPOSITION OF SECURITIES RETIRED. All
Securities received by the Trustee and for whose purchase Trust Moneys are
applied under this Article 13, if not other wise canceled, shall be promptly
canceled and destroyed by the Trustee. Upon destruction of any Securities, the
Trustee shall issue a certificate of destruction to the Company.
SECTION 13.07. INVESTMENT AND USE OF TRUST Moneys. (a) All or
any part of any Trust Moneys held by the Trustee hereunder (except such as may
be held for the account of any particular Securities), shall from time to time
at the direction of the Company be invested or reinvested by the Trustee in
Temporary Cash Investments. Unless a Default occurs and is continuing, any
interest on such Temporary Cash Investments (in excess of any accrued interest
paid at the time of purchase) which may be received by the Trustee or the
Collateral Agent, as appropriate, shall be paid periodically to the Company.
Such Temporary Cash Investments shall be held by the Trustee as a part of the
Mortgaged Collateral, subject to the same provisions hereof as the cash used by
it to purchase such cash equivalents. The Trustee shall not be liable or
responsible for any loss resulting from such investments or sales except only
for its own grossly negligent action, its own grossly negligent failure to act
or its own willful misconduct in complying with this Section 13.07.
(b) If the Company or any Subsidiary Guarantor shall fail to
perform any of its covenants in this Indenture or under any Security Agreement,
the Trustee may (but shall not be required to), direct the Collateral Agent to,
at any time and from time to time, use, apply and advance any Trust Moneys held
by it under this Article 13 or make advances to effect performance of any such
covenant on behalf of the Company or such Subsidiary Guarantor as contemplated
by this Indenture or the Security Agreements; PROVIDED, HOWEVER, that the
Trustee or the Collateral Agent, as appropriate, shall not be required to make
any such advances from its own funds; PROVIDED, FURTHER, HOWEVER, that all
moneys so used or advanced by the Trustee, together (in the case of funds
advanced by the Trustee) with interest at the rate borne by
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the Securities shall be repaid by the Company or the applicable Subsidiary
Guarantor upon demand and such advances shall be secured under the Mortgages
prior to the Securities. For repayment of all such advances the Trustee shall
have the right to use and apply any Trust Moneys at any time held by it under
Article 13 but no such use of Trust Moneys or advance shall relieve the Company
or such Subsidiary Guarantor from any Default.
ARTICLE 14
MISCELLANEOUS
SECTION 14.01. TRUST INDENTURE ACT CONTROLS. If any provision
of this Indenture limits, qualifies or conflicts with another provision which is
required to be included in this Indenture by the TIA, the required provision
shall control.
SECTION 14.02. NOTICES. Any notice or communica
tion shall be in writing and delivered in person or mailed by
first-class mail addressed as follows:
if to the Company or any Subsidiary Guarantor:
c/o Maples and Calder
P.O. Box 309
South Church Street
George Town, Grand Cayman
Cayman Islands, British West Indies
Attention of: Gareth Griffiths, Esq.
if to the Trustee:
The First National Bank of Maryland
Corporate Trust Division
16th Floor, Mail Code 101-591
25 South Charles Street
Baltimore, MD 21201
Attention of: Corporate Trust Division
The Company or the Trustee by notice to the other may
designate additional or different addresses for subse quent notices or
communications.
Any notice or communication mailed to a Security holder shall
be mailed to the Securityholder at the Secu rityholder's address as it appears
on the registration books
<PAGE>
119
of the Registrar and shall be sufficiently given if so mailed within the time
prescribed.
Failure to mail a notice or communication to a Securityholder
or any defect in it shall not affect its sufficiency with respect to other
Securityholders. If a notice or communication is mailed in the manner provided
above, it is duly given, whether or not the addressee receives it.
SECTION 14.03. COMMUNICATION BY HOLDERS WITH OTHER HOLDERS.
Securityholders may communicate pursuant to TIA ss. 312(b) with other
Securityholders with respect to their rights under this Indenture or the
Securities. The Company, the Trustee, the Registrar and anyone else shall have
the protection of TIA ss. 312(c).
SECTION 14.04. CERTIFICATE AND OPINION AS TO CONDITIONS
PRECEDENT. Upon any request or application by the Company to the Trustee to take
or refrain from taking any action under this Indenture, the Company shall
furnish to the Trustee:
(1) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee stating that, in the opinion of the
signers, all conditions precedent, if any, provided for in this
Indenture relating to the proposed action have been complied with; and
(2) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee stating that, in the opinion of such
counsel, all such conditions precedent have been complied with.
SECTION 14.05. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION.
Each certificate or opinion with respect to compliance with a covenant or
condition provided for in this Indenture shall include:
(1) a statement that the individual making such certificate or
opinion has read such covenant or condi tion;
(2) 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;
(3) a statement that, in the opinion of such individual, he
has made such examination or investi gation as is necessary to enable
him to express an informed opinion as to whether or not such covenant
or condition has been complied with; and
<PAGE>
120
(4) a statement as to whether or not, in the opinion of such
individual, such covenant or condition has been complied with.
SECTION 14.06. WHEN SECURITIES DISREGARDED. In determining
whether the Holders of the required principal amount at maturity of Securities
have concurred in any direc tion, waiver or consent, Securities owned by the
Company or by any Person directly or indirectly controlling or con trolled by or
under direct or indirect common control with the Company shall be disregarded
and deemed not to be outstanding, except that, for the purpose of determining
whether the Trustee shall be protected in relying on any such direction, waiver
or consent, only Securities which the Trustee knows are so owned shall be so
disregarded. Also, subject to the foregoing, only Securities outstanding at the
time shall be considered in any such determination.
SECTION 14.07. RULES BY TRUSTEE, PAYING AGENT AND REGISTRAR.
The Trustee may make reasonable rules for action by or a meeting of
Securityholders. The Registrar and the Paying Agent may make reasonable rules
for their functions.
SECTION 14.08. LEGAL HOLIDAYS. A "Legal Holiday" is a
Saturday, a Sunday or a day on which banking institu tions are not required to
be open in the State of New York. If a payment date is a Legal Holiday, payment
shall be made on the next succeeding day that is not a Legal Holiday, and no
interest shall accrue for the intervening period. If a regular record date is a
Legal Holiday, the record date shall not be affected.
SECTION 14.09. GOVERNING LAW. This Indenture and the
Securities shall be governed by, and construed in accordance with, the laws of
the State of New York but without giving effect to applicable principles of
conflicts of law to the extent that the application of the laws of another
jurisdiction would be required thereby.
SECTION 14.10. NO RECOURSE AGAINST OTHERS. A director,
officer, employee or stockholder, as such, of the Company shall not have any
liability for any obligations of the Company under the Securities or this
Indenture or for any claim based on, in respect of or by reason of such
obligations or their creation. By accepting a Security, each Securityholder
shall waive and release all such liability. The waiver and release shall be part
of the consideration for the issue of the Securities.
SECTION 14.11. SUCCESSORS. All agreements of the Company in
this Indenture and the Securities shall bind its successors. All agreements of
the Trustee in this Indenture shall bind its successors.
<PAGE>
121
SECTION 14.12. MULTIPLE ORIGINALS. The parties may sign any
number of copies of this Indenture. Each signed copy shall be an original, but
all of them together represent the same agreement. One signed copy is enough to
prove this Indenture.
SECTION 14.13. TABLE OF CONTENTS; HEADINGS. The table of
contents, cross-reference sheet and headings of the Articles and Sections of
this Indenture have been inserted for convenience of reference only, are not
intended to be considered a part hereof and shall not modify or restrict any of
the terms or provisions hereof.
<PAGE>
122
IN WITNESS WHEREOF, the parties have caused this Indenture to
be duly executed as of the date first written above.
MILLENIUM SEACARRIERS, INC.
by /s/ Vassilios M. Livanos
------------------------
Name: Vassilios M. Livanos
Title: Chief Executive Officer
RAPID OCEAN CARRIERS INC.
by /s/ Vassilios M. Livanos
------------------------
Name: Vassilios M. Livanos
Title: Chief Executive Officer
IVY NAVIGATION LIMITED
by /s/ Vassilios M. Livanos
------------------------
Name: Vassilios M. Livanos
Title: Chief Executive Officer
OAKMONT SHIPPING AND TRADING
LIMITED
by /s/ Vassilios M. Livanos
------------------------
Name: Vassilios M. Livanos
Title: Chief Executive Officer
TOPSCALE SHIPPING COMPANY
LIMITED
by /s/ Vassilios M. Livanos
------------------------
Name: Vassilios M. Livanos
Title: Chief Executive Officer
<PAGE>
123
CONIFER SHIPPING COMPANY
LIMITED
by /s/ Vassilios M. Livanos
------------------------
Name: Vassilios M. Livanos
Title: Chief Executive Officer
MILLENIUM MAJESTIC, INC.
by /s/ Vassilios M. Livanos
------------------------
Name: Vassilios M. Livanos
Title: Chief Executive Officer
MILLENIUM YAMA, INC.
by /s/ Vassilios M. Livanos
------------------------
Name: Vassilios M. Livanos
Title: Chief Executive Officer
MILLENIUM AMETHYST, INC.
by /s/ Vassilios M. Livanos
------------------------
Name: Vassilios M. Livanos
Title: Chief Executive Officer
MILLENIUM ELMAR, INC.
by /s/ Vassilios M. Livanos
------------------------
Name: Vassilios M. Livanos
Title: Chief Executive Officer
<PAGE>
124
MILLENIUM ALEKSANDER, INC.
by /s/ Vassilios M. Livanos
------------------------
Name: Vassilios M. Livanos
Title: Chief Executive Officer
MILLENIUM II, INC.
by /s/ Vassilios M. Livanos
------------------------
Name: Vassilios M. Livanos
Title: Chief Executive Officer
MILLENIUM III, INC.
by /s/ Vassilios M. Livanos
------------------------
Name: Vassilios M. Livanos
Title: Chief Executive Officer
MILLENIUM IV, INC.
by /s/ Vassilios M. Livanos
------------------------
Name: Vassilios M. Livanos
Title: Chief Executive Officer
MILLENIUM V, INC.
by /s/ Vassilios M. Livanos
------------------------
Name: Vassilios M. Livanos
Title: Chief Executive Officer
<PAGE>
125
MILLENIUM VI, INC.
by /s/ Vassilios M. Livanos
------------------------
Name: Vassilios M. Livanos
Title: Chief Executive Officer
MILLENIUM VII, INC.
by /s/ Vassilios M. Livanos
------------------------
Name: Vassilios M. Livanos
Title: Chief Executive Officer
THE FIRST NATIONAL BANK OF
MARYLAND
by /s/ Donald Hargadon
------------------------
Name: Donald Hargadon
Title:Assistant Vice President
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
PAGE
ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
<S> <C> <C>
SECTION 1.01. Definitions..................................................................................2
SECTION 1.02. Other Definitions...........................................................................37
SECTION 1.03. Incorporation by Reference of Trust
Indenture Act.............................................................................37
SECTION 1.04. Rules of Construction.......................................................................37
ARTICLE 2
THE SECURITIES
SECTION 2.01. Form and Dating.............................................................................38
SECTION 2.02. Execution and Authentication................................................................39
SECTION 2.03. Registrar and Paying Agent..................................................................39
SECTION 2.04. Paying Agent To Hold Money in Trust.........................................................40
SECTION 2.05. Securityholder Lists........................................................................40
SECTION 2.06. Replacement Securities......................................................................40
SECTION 2.07. Outstanding Securities......................................................................41
SECTION 2.08. Temporary Securities........................................................................41
SECTION 2.09. Cancelation.................................................................................41
SECTION 2.10. Defaulted Interest..........................................................................42
SECTION 2.11. CUSIP Numbers...............................................................................42
ARTICLE 3
REDEMPTION
SECTION 3.01. Notices to Trustee..........................................................................42
SECTION 3.02. Selection of Securities To Be Redeemed......................................................43
SECTION 3.03. Notice of Redemption........................................................................43
SECTION 3.04. Effect of Notice of Redemption..............................................................44
SECTION 3.05. Deposit of Redemption Price.................................................................44
SECTION 3.06. Securities Redeemed in Part.................................................................45
<PAGE>
2
ARTICLE 4
COVENANTS
SECTION 4.01. Payment of Securities.......................................................................45
SECTION 4.02. SEC Reports.................................................................................45
SECTION 4.03. Limitation on Indebtedness..................................................................46
SECTION 4.04. Limitation on Indebtedness and Preferred
Stock of Restricted Subsidiaries..........................................................47
SECTION 4.05. Limitation on Restricted Payments...........................................................48
SECTION 4.06. Limitation on Restrictions on
Distributions from Restricted
Subsidiaries..............................................................................52
SECTION 4.07. Limitation on Sales of Assets...............................................................53
SECTION 4.08. Limitation on Lines of Business.............................................................57
SECTION 4.09. Limitation on Affiliate Transactions........................................................57
SECTION 4.10. Limitation on the Sale or Issuance of
Capital Stock of Restricted
Subsidiaries..............................................................................58
SECTION 4.11. Limitation on Liens.........................................................................58
SECTION 4.12. Limitation on Sale/Leaseback
Transactions..............................................................................59
SECTION 4.13. Change of Control...........................................................................59
SECTION 4.14. Future Subsidiary Guarantors................................................................61
SECTION 4.15. Impairment of Security Interest.............................................................61
SECTION 4.16. Amendments to Security Agreements...........................................................61
SECTION 4.17. Application of Proceeds upon Sale or
Loss of a Mortgaged Vessel................................................................63
SECTION 4.18. Tender of a Qualified Substitute Vessel.....................................................63
SECTION 4.19. Additional Amounts..........................................................................65
SECTION 4.20. Compliance Certificate......................................................................67
SECTION 4.21. Further Instruments and Acts................................................................68
ARTICLE 5
SUCCESSOR COMPANY
SECTION 5.01. When Company May Merge or Transfer
Assets....................................................................................68
ARTICLE 6
DEFAULTS AND REMEDIES
SECTION 6.01. Events of Default...........................................................................70
SECTION 6.02. Acceleration................................................................................73
<PAGE>
3
SECTION 6.03. Other Remedies..............................................................................73
SECTION 6.04. Waiver of Past Defaults.....................................................................73
SECTION 6.05. Control by Majority.........................................................................74
SECTION 6.06. Limitation on Suits.........................................................................74
SECTION 6.07. Rights of Holders To Receive Payment........................................................74
SECTION 6.08. Collection Suit by Trustee..................................................................75
SECTION 6.09. Trustee May File Proofs of Claim............................................................75
SECTION 6.10. Priorities..................................................................................75
SECTION 6.11. Undertaking for Costs.......................................................................76
SECTION 6.12. Waiver of Stay or Extension Laws............................................................76
ARTICLE 7
TRUSTEE
SECTION 7.01. Duties of Trustee...........................................................................76
SECTION 7.02. Rights of Trustee...........................................................................77
SECTION 7.03. Individual Rights of Trustee................................................................78
SECTION 7.04. Trustee's Disclaimer........................................................................78
SECTION 7.05. Notice of Defaults..........................................................................79
SECTION 7.06. Reports by Trustee to Holders...............................................................79
SECTION 7.07. Compensation and Indemnity..................................................................80
SECTION 7.08. Replacement of Trustee......................................................................81
SECTION 7.09. Successor Trustee by Merger.................................................................81
SECTION 7.10. Eligibility; Disqualification...............................................................81
SECTION 7.11. Preferential Collection of Claims
Against Company..........................................................................81
ARTICLE 8
DISCHARGE OF INDENTURE; DEFEASANCE
SECTION 8.01. Discharge of Liability on Securities;
Defeasance................................................................................81
SECTION 8.02. Conditions to Defeasance....................................................................83
SECTION 8.03. Application of Trust Money..................................................................84
SECTION 8.04. Repayment to Company........................................................................84
SECTION 8.05. Indemnity for Government Obligations........................................................84
SECTION 8.06. Reinstatement...............................................................................84
ARTICLE 9
AMENDMENTS
SECTION 9.01. Without Consent of Holders..................................................................85
SECTION 9.02. With Consent of Holders.....................................................................86
SECTION 9.03. Compliance with Trust Indenture Act.........................................................87
<PAGE>
4
SECTION 9.04. Revocation and Effect of Consents
and Waivers...............................................................................87
SECTION 9.05. Notation on or Exchange of Securities.......................................................87
SECTION 9.06. Trustee To Sign Amendments..................................................................88
SECTION 9.07. Payment for Consent.........................................................................88
ARTICLE 10
SUBSIDIARY GUARANTEES
SECTION 10.01. Guarantees.................................................................................88
SECTION 10.02. Limitation on Liability....................................................................90
SECTION 10.03. Successors and Assigns.....................................................................90
SECTION 10.04. No Waiver..................................................................................90
SECTION 10.05. Modification...............................................................................91
SECTION 10.06. Release of Subsidiary Guarantor............................................................91
ARTICLE 11
PLEDGED COLLATERAL
SECTION 11.01. Grant of Security Interest.................................................................91
SECTION 11.02. Delivery of Collateral.....................................................................92
SECTION 11.03. Representations and Warranties.............................................................92
SECTION 11.04. Further Assurances.........................................................................93
SECTION 11.05. Dividends; Voting Rights; Release of
Collateral...............................................................................93
SECTION 11.06. Trustee Appointed Attorney-in-Fact.........................................................95
SECTION 11.07. Trustee May Perform........................................................................95
SECTION 11.08. Trustee's Duties...........................................................................95
SECTION 11.09. Remedies upon Event of Default.............................................................95
SECTION 11.10. Application of Proceeds....................................................................96
SECTION 11.11. Continuing Lien............................................................................96
SECTION 11.12. Certificates and Opinions..................................................................96
SECTION 11.13. Additional Agreements......................................................................97
ARTICLE 12
SECURITY AGREEMENTS
SECTION 12.01. Collateral and Security Agreements.........................................................98
SECTION 12.02. Recording; Annual Opinions.................................................................98
SECTION 12.03. Disposition of Collateral Without
Release.................................................................................100
SECTION 12.04. Release of Collateral.....................................................................102
SECTION 12.05. Eminent Domain, Expropriation and Other
Governmental Takings....................................................................106
<PAGE>
5
SECTION 12.06. Permitted Releases Not To Impair Lien;
Trust Indenture Act Requirements........................................................107
SECTION 12.07. Suits To Protect the Collateral...........................................................108
SECTION 12.08. Purchaser Protected.......................................................................108
SECTION 12.09. Powers Exercisable by Receiver or
Trustee.................................................................................108
SECTION 12.10. Disposition of Obligations Received.......................................................109
SECTION 12.11. Determinations Relating to Collateral.....................................................109
SECTION 12.12. Release upon Termination of the
Company's Obligations...................................................................110
SECTION 12.13. Collateral Agent's Duties.................................................................110
ARTICLE 13
APPLICATION OF TRUST MONEYS
SECTION 13.01. "Trust Moneys" Defined....................................................................110
SECTION 13.02. Retirement of Securities..................................................................111
SECTION 13.03. Withdrawals of Insurance Proceeds and
Condemnation Awards.....................................................................112
SECTION 13.04. Powers Exercisable Notwithstanding
Event of Default........................................................................116
SECTION 13.05. Powers Exercisable by Trustee or
Receiver................................................................................116
SECTION 13.06. Disposition of Securities Retired.........................................................117
SECTION 13.07. Investment and Use of Trust Moneys........................................................117
ARTICLE 14
MISCELLANEOUS
SECTION 14.01. Trust Indenture Act Controls..............................................................118
SECTION 14.02. Notices...................................................................................118
SECTION 14.03. Communication by Holders with Other
Holders.................................................................................119
SECTION 14.04. Certificate and Opinion as to
Conditions Precedent....................................................................119
SECTION 14.05. Statements Required in Certificate
or Opinion..............................................................................119
SECTION 14.06. When Securities Disregarded...............................................................120
SECTION 14.07. Rules by Trustee, Paying Agent and
Registrar...............................................................................120
SECTION 14.08. Legal Holidays............................................................................120
SECTION 14.09. Governing Law.............................................................................120
SECTION 14.10. No Recourse Against Others................................................................120
SECTION 14.11. Successors................................................................................120
SECTION 14.12. Multiple Originals........................................................................121
SECTION 14.13. Table of Contents; Headings...............................................................121
</TABLE>
<PAGE>
6
Rule 144A/Regulation S Appendix
Exhibit A - Form of Security
Schedule I - Description Pledged Shares
<PAGE>
RULE 144A/REGULATION S APPENDIX
[FOR OFFERINGS TO QUALIFIED INSTITUTIONAL BUYERS PURSUANT TO
RULE 144A AND TO CERTAIN PERSONS IN OFFSHORE TRANSACTIONS IN
RELIANCE ON REGULATION S.]
PROVISIONS RELATING TO INITIAL SECURITIES,
PRIVATE EXCHANGE SECURITIES
AND EXCHANGE SECURITIES
1. DEFINITIONS
1.1 DEFINITIONS
For the purposes of this Appendix the following terms shall have the
meanings indicated below:
"Depository" means The Depository Trust Company, its nominees
and their respective successors.
"Exchange Securities" means the 12% First Priority Ship
Mortgage Notes Due 2005 to be issued pursuant to this Indenture in connection
with a Registered Exchange Offer pursuant to the Registration Rights Agreement.
"Initial Purchasers" means Credit Suisse First Boston
Corporation and Donaldson, Lufkin & Jenrette Securities Corporation.
"Initial Securities" means the 12% First Priority Ship
Mortgage Notes Due 2005, issued under this Indenture on or about the date
hereof.
"Private Exchange" means the offer by the Company, pursuant to
the Registration Rights Agreement, to the Initial Purchasers to issue and
deliver to Initial Purchasers, in exchange for the Initial Securities held by
the Initial Purchaser as part of its initial distribution, a like aggregate
principal amount at maturity of Private Exchange Securities.
"Purchase Agreement" means the Purchase Agreement dated July
20, 1998, among the Company, certain Subsidiary Guarantors and the Initial
Purchasers.
"QIB" means a "qualified institutional buyer" as defined in
Rule 144A.
"Registered Exchange Offer" means the offer by the Company,
pursuant to the Registration Rights Agreement, to certain Holders of Initial
Securities, to issue and deliver to such Holders, in exchange for the Initial
Securities, a like aggregate principal amount at maturity of Exchange Securities
registered under the Securities Act.
<PAGE>
2
"Registration Rights Agreement" means the Registration Rights
Agreement dated July 20, 1998, among the Company and the Initial Purchasers.
"Securities" means the Initial Securities, the Exchange
Securities and the Private Exchange Securities, treated as a single class.
"Securities Act" means the Securities Act of 1933.
"Securities Custodian" means the custodian with respect to a
Global Security (as appointed by the Depository), or any successor person
thereto and shall initially be the Trustee.
"Shelf Registration Statement" means the registration
statement issued by the Company, in connection with the offer and sale of
Initial Securities or Private Exchange Securities, pursuant to the Registration
Rights
Agreement.
"Transfer Restricted Securities" means Securities that bear or
are required to bear the legend set forth in Section 2.3(b)hereto.
"Units" means 100,000 Units of the Company, each consisting of
$1,000 principal amount at maturity of its Securities and one Warrant.
"Warrant" means a Warrant issued by the Company pursuant to
the Warrant Agreement to purchase five shares of Common Stock, par value $0.01
per share, of the Company at an exercise price of $0.01 per share.
1.2 OTHER DEFINITIONS
DEFINED IN
TERM SECTION:
---- --------
"Agent Members".........................................................2.1(b)
"Global Security".......................................................2.1(a)
"Regulation S"..........................................................2.1(a)
"Rule 144A".............................................................2.1(a)
2. THE SECURITIES.
2.1 FORM AND DATING.
<PAGE>
3
The Initial Securities are being offered and sold by the
Company pursuant to the Purchase Agreement.
(a) GLOBAL SECURITIES. Initial Securities offered and sold to
a QIB in reliance on Rule 144A under the Securities Act ("Rule 144A") or in
reliance on Regulation S under the Securities Act ("Regulation S"), in each case
as provided in the Purchase Agreement, shall be issued initially in the form of
two permanent global Securities in definitive, fully registered form without
interest coupons with the global securities legend and restricted securities
legend set forth in Exhibit 1 hereto (each, a "Global Security"). Securities
initially offered and sold in the United States to QIBs in reliance on Rule 144A
will be represented by the U.S. Global Security, and Securities initially
offered and sold outside the United States in reliance on Regulation S will be
represented by the Regulation S Global Security, each of which shall be
deposited on behalf of the purchasers of the Initial Securities represented
thereby with the Trustee, at its New York office, as custodian for the
Depository (or with such other custodian as the Depository may direct), and
registered in the name of the Depository or a nominee of the Depository, duly
executed by the Company and authenticated by the Trustee as hereinafter
provided. The aggregate principal amount at maturity of the Global Securities
may from time to time be increased or decreased by adjustments made on the
records of the Trustee and the Depository or its nominee as hereinafter
provided.
(b) BOOK-ENTRY PROVISIONS. This Section 2.1(b) shall apply
only to a Global Security deposited with or on behalf of the Depository.
The Company shall execute and the Trustee shall, in accordance
with this Section 2.1(b), authenticate and deliver initially two Global
Securities that (a) shall be registered in the name of the Depository for such
Global Security or Global Securities or the nominee of such Depository and (b)
shall be delivered by the Trustee to such Depository or pursuant to such
Depository's instructions or held by the Trustee as custodian for the
Depository.
Members of, or participants in, the Depository ("Agent
Members") shall have no rights under this Indenture with respect to any Global
Security held on their behalf by the Depository or by the Trustee as the
custodian of the Depository or under such Global Security, and the Depository
may be treated by the Company, the Trustee and any agent of the Company or the
Trustee as the absolute owner of such Global Security for all purposes
whatsoever. Notwithstanding
<PAGE>
4
the foregoing, nothing herein shall prevent the Company, the Trustee or any
agent of the Company or the Trustee from giving effect to any written
certification, proxy or other authorization furnished by the Depository or
impair, as between the Depository and its Agent Members, the operation of
customary practices of such Depository governing the exercise of the rights of a
holder of a beneficial interest in any Global Security.
(c) CERTIFICATED SECURITIES. Except as provided in this
Section 2.1 or Section 2.3 or 2.4, owners of beneficial interests in Global
Securities will not be entitled to receive physical delivery of certificated
Securities.
2.2 AUTHENTICATION. The Trustee shall authenticate and deliver: (1)
Initial Securities for original issue in an aggregate principal amount at
maturity of $100.0 million and (2) Exchange Securities or Private Exchange
Securities for issue only in a Registered Exchange Offer or a Private Exchange,
respectively, pursuant to the Registration Rights Agreement, for a like
principal amount at maturity of Initial Securities, in each case upon a written
order of the Company signed by two Officers or by an Officer and either an
Assistant Treasurer or an Assistant Secretary of the Company. Such order shall
specify the amount at maturity of the Securities to be authenticated and the
date on which the original issue of Securities is to be authenticated and
whether the Securities are to be Initial Securities, Exchange Securities or
Private Exchange Securities. The aggregate principal amount at maturity of
Securities outstanding at any time may not exceed $100.0 million except as
provided in Section 2.06 of this Indenture.
2.3 TRANSFER AND EXCHANGE.
(a) TRANSFER AND EXCHANGE OF GLOBAL SECURITIES. (i) The
transfer and exchange of Global Securities or beneficial interests therein shall
be effected through the Depository, in accordance with this Indenture (including
applicable restrictions on transfer set forth herein, if any) and the procedures
of the Depository therefor. A transferor of a beneficial interest in a Global
Security shall deliver to the Registrar a written order given in accordance with
the Depositary's procedures containing information regarding the participant
account of the Depositary to credited with a beneficial interest in the Global
Security. The Registrar shall, in accordance with such instructions instruct the
Depositary to credit to the account of the Person specified in such instructions
a beneficial interest in the Global Security
<PAGE>
5
and to debit the account of the Person making the transfer the beneficial
interest in the Global Security being transferred.
(ii) Notwithstanding any other provisions of this Appendix
(other than the provisions set forth in Section 2.4), a Global Security
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.
(iii) In the event that a Global Security is exchanged for
Securities in definitive registered form pursuant to Section 2.4 or
Section 2.09 of the Indenture, prior to the consummation of a
Registered Exchange Offer or the effectiveness of a Shelf Registration
Statement with respect to such Securities, such Securities may be
exchanged only in accordance with such procedures as are substantially
consistent with the provisions of this Section 2.3 (including the
certification requirements set forth on the reverse of the Initial
Securities intended to ensure that such transfers comply with Rule 144A
or Regulation S, as the case may be) and such other procedures as may
from time to time be adopted by the Company.
(b) LEGEND.
(i) Except as permitted by the following para graphs (ii),
(iii) and (iv), each Security certificate evidencing the Global
Securities and the Definitive Securities (and all Securities issued in
exchange there for or in substitution thereof) shall bear a legend in
substantially the following form:
"THIS NOTE (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A
TRANSACTION EXEMPT FROM REGISTRATION UNDER THE UNITED STATES SECURITIES
ACT OF 1933 (THE "SECURITIES ACT"), AND THIS NOTE MAY NOT BE OFFERED,
SOLD, PLEDGED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF
THIS NOTE IS HEREBY NOTIFIED THAT THE SELLER OF THIS NOTE MAY BE
RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE
SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.
THE HOLDER OF THIS NOTE AGREES FOR THE BENEFIT OF MILLENIUM
THAT (A) THIS NOTE MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE
TRANSFERRED, ONLY (i) WITHIN THE
<PAGE>
6
UNITED STATES TO A PERSON WHOM 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,
(ii) OUTSIDE THE UNITED STATES IN A TRANSACTION IN ACCORDANCE WITH RULE
904 UNDER THE SECURITIES ACT, (iii) PURSUANT TO AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER
(IF AVAILABLE), (iv) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT, OR (v) TO MILLENIUM, IN EACH OF CASES (i)
THROUGH (iv) IN ACCORDANCE WITH ANY 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 OF THIS NOTE FROM IT OF THE RESALE RESTRICTIONS REFERRED
TO IN (A) ABOVE."
(ii) Upon any sale or transfer of a Transfer Restricted
Security (including any Transfer Restricted Security represented by a
Global Security) pursuant to Rule 144 under the Securities Act, in the
case of any Transfer Restricted Security that is represented by a
Global Security, the Registrar shall permit the Holder thereof to
exchange such Transfer Restricted Security for a certificated Security
that does not bear the legend set forth above and rescind any
restriction on the transfer of such Transfer Restricted Security, if
the Holder certifies in writing to the Registrar that its request for
such exchange was made in reliance on Rule 144 (such certification to
be in the form set forth on the reverse of the Security).
(iii) After a transfer of any Initial Securities or Private
Exchange Securities during the period of the effectiveness of a Shelf
Registration Statement with respect to such Initial Securities or
Private Exchange Securities, as the case may be, all requirements
pertaining to legends on such Initial Security or such Private Exchange
Security will cease to apply, the requirements requiring any such
Initial Security or such Private Exchange Security issued to certain
Holders be issued in global form will cease to apply, and a
certificated Initial Security or Private Exchange Security without
legends will be available to the transferee of the Holder of such
Initial Securities or Private Exchange Securities upon exchange of such
transferring Holder's certificated Initial Security or Private Exchange
Security or directions to transfer such Holder's interest in the Global
Security, as applicable.
<PAGE>
7
(iv) Upon the consummation of a Registered Exchange Offer with
respect to the Initial Securities pursuant to which Holders of such
Initial Securities are offered Exchange Securities in exchange for
their Initial Securities, all requirements pertaining to such Initial
Securities that Initial Securities issued to certain Holders be issued
in global form will cease to apply and certificated Initial Securities
with the restricted securities legend set forth in Exhibit 1 hereto
will be available to Holders of such Initial Securities that do not
exchange their Initial Securities, and Exchange Securities in
certificated or global form will be available to Holders that exchange
such Initial Securities in such Registered Exchange Offer.
(v) Upon the consummation of a Private Exchange with respect
to the Initial Securities pursuant to which Holders of such Initial
Securities are offered Private Exchange Securities in exchange for
their Initial Securities, all requirements pertaining to such Initial
Securities that Initial Securities issued to certain Holders be issued
in global form will still apply, and Private Exchange Securities in
global form with the Restricted Securities Legend set forth in Exhibit
1 hereto will be available to Holders that exchange such Initial
Securities in such Private Exchange.
(C) CANCELATION OR ADJUSTMENT OF GLOBAL SECURITY. At such time
as all beneficial interests in a Global Security have either been exchanged for
certificated Securities, redeemed, repurchased or canceled, such Global Security
shall be returned to the Depository for cancelation or retained and canceled by
the Trustee. At any time prior to such cancelation, if any beneficial interest
in a Global Security is exchanged for certificated or Definitive Securities,
redeemed, repurchased or canceled, the principal amount at maturity of
Securities represented by such Global Security shall be reduced and an
adjustment shall be made on the books and records of the Trustee (if it is then
the Securities Custodian for such Global Security) with respect to such Global
Security, by the Trustee or the Securities Custodian, to reflect such reduction.
(D) OBLIGATIONS WITH RESPECT TO TRANSFERS AND EXCHANGES OF
SECURITIES.
(i) To permit registrations of transfers and exchanges, the
Company shall execute and the Trustee shall authenticate certificated
Securities and Global Securities at the Registrar's or co-registrar's
request.
<PAGE>
8
(ii)No service charge shall be made for any registration of
transfer or exchange, but the Company may require payment of a sum
sufficient to cover any transfer tax, assessments, or similar
governmental charge payable in connection therewith (other than any
such transfer taxes, assessments or similar governmental charge payable
upon exchange or transfer pursuant to Sections 3.06, 4.13 and 9.05 of
this Indenture).
(iii) The Registrar or co-registrar shall not be required to
register the transfer of or exchange of (a) any certificated Security
selected for redemption in whole or in part pursuant to Article 3 of
this Indenture, except the unredeemed portion of any certificated
Security being redeemed in part, or (b) any Security for a period
beginning 15 Business Days before the mailing of a notice of an offer
to repurchase or redeem Securities or 15 Business Days before an
interest payment date.
(iv) Prior to the due presentation for registration of
transfer of any Security, the Company, the Trustee, the Paying Agent,
the Registrar or any co-registrar may deem and treat the person in
whose name a Security is registered as the absolute owner of such
Security for the purpose of receiving payment of principal of and
interest on such Security and for all other purposes whatsoever,
whether or not such Security is overdue, and none of the Company, the
Trustee, the Paying Agent, the Registrar or any co-registrar shall be
affected by notice to the con trary.
(v) All Securities issued upon any transfer or exchange
pursuant to the terms of this Indenture shall evidence the same debt
and shall be entitled to the same benefits under this Indenture as the
Securities surrendered upon such transfer or exchange.
(e) NO OBLIGATION OF THE TRUSTEE.
(i) The Trustee shall have no responsibility or obligation to
any beneficial owner of a Global Security, a member of, or a
participant in the Depository or other Person with respect to the
accuracy of the records of the Depository or its nominee or of any
participant or member thereof, with respect to any ownership interest
in the Securities or with respect to the delivery to any participant,
member, beneficial owner or other Person (other than the Depository) of
any notice (including any notice of redemption) or the payment of any
amount, under or with respect to such Securities. All notices and
<PAGE>
9
communications to be given to the Holders and all payments to be made
to Holders under the Securities shall be given or made only to or upon
the order of the registered Holders (which shall be the Depository or
its nominee in the case of a Global Security). The rights of beneficial
owners in any Global Security shall be exercised only through the
Depository subject to the applicable rules and procedures of the
Depository. The Trustee may rely and shall be fully protected in
relying upon information furnished by the Depository with respect to
its members, participants and any beneficial owners.
(ii) The Trustee shall have no obligation or duty to monitor,
determine or inquire as to compliance with any restrictions on transfer
imposed under this Indenture or under applicable law with respect to
any transfer of any interest in any Security (including any transfers
between or among Depository participants, members or beneficial owners
in any Global Security) other than to require delivery of such
certificates and other documentation or evidence as are expressly
required by, and to do so if and when expressly required by, the terms
of this Indenture, and to examine the same to determine substantial
compliance as to form with the express requirements hereof.
2.4 CERTIFICATED SECURITIES.
(a) A Global Security deposited with the Depository or with
the Trustee as custodian for the Depository pursuant to Section 2.1 shall be
transferred to the beneficial owners thereof in the form of certificated
Securities in an aggregate principal amount at maturity equal to the principal
amount at maturity of such Global Security, in exchange for such Global
Security, only if such transfer complies with Section 2.3 and (i) the Depository
notifies the Company that it is unwilling or unable to continue as Depository
for such Global Security or if at any time such Depository ceases to be a
"clearing agency" registered under the Exchange Act and a successor depositary
is not appointed by the Company within 90 days of such notice, or (ii) an Event
of Default has occurred and is continuing or (iii) the Company, in its sole
discretion, notifies the Trustee in writing that it elects to cause the issuance
of certificated Securities under this Indenture.
(b) Any Global Security that is transferable to the beneficial
owners thereof pursuant to this Section shall be surrendered by the Depository
to the Trustee located in the Borough of Manhattan, The City of New York, to be
so transferred, in whole or from time to time in part, without
<PAGE>
10
charge, and the Trustee shall authenticate and deliver, upon such transfer of
each portion of such Global Security, an equal aggregate principal amount at
maturity of certificated Initial Securities of authorized denominations. Any
portion of a Global Security transferred pursuant to this Section shall be
executed, authenticated and delivered only in denominations of $1,000 and any
integral multiple thereof and registered in such names as the Depository shall
direct. Any certificated Initial Security delivered in exchange for an interest
in the Global Security shall, except as otherwise provided by Section 2.3(d),
bear the restricted securities legend set forth in Exhibit 1 hereto.
(c) Subject to the provisions of Section 2.4(b), the
registered Holder of a Global Security may grant proxies and otherwise authorize
any Person, including Agent Members and Persons that may hold interests through
Agent Members, to take any action which a Holder is entitled to take under this
Indenture or the Securities.
(d) In the event of the occurrence of either of the events
specified in Section 2.4(a), the Company will promptly make available to the
Trustee a reasonable supply of certificated Securities in definitive, fully
registered form without interest coupons.
<PAGE>
EXHIBIT 1
to
RULE 144A/REGULATION S APPENDIX
[FORM OF FACE OF INITIAL SECURITY]
[Global Securities Legend]
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITARY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"),
NEW YORK, NEW YORK, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF
CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
DTC (AND ANY PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC) ANY TRANSFER, PLEDGE OR OTHER
USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS
THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO
TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR
THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL
SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS
SET FORTH IN THE INDENTURE REFERRED TO ON THE REVERSE HEREOF.
[Restricted Securities Legend]
THIS NOTE (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A
TRANSACTION EXEMPT FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF
1933 (THE "SECURITIES ACT"), AND THIS NOTE MAY NOT BE OFFERED, SOLD, PLEDGED OR
OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE
EXEMPTION THEREFROM. EACH PURCHASER OF THIS NOTE IS HEREBY NOTIFIED THAT THE
SELLER OF THIS NOTE MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF
SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.
THE HOLDER OF THIS NOTE AGREES FOR THE BENEFIT OF MILLENIUM
THAT (A) THIS NOTE MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED,
ONLY (i) WITHIN THE UNITED STATES TO A PERSON WHOM THE SELLER REASONABLY
BELIEVES IS A "QUALIFIED
<PAGE>
2
INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (ii) OUTSIDE THE UNITED
STATES IN A TRANSACTION IN ACCORDANCE WITH RULE 904 UNDER THE SECURITIES ACT,
(iii) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT
PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE), (iv) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT, OR (v) TO MILLENIUM, IN EACH OF
CASES (i) THROUGH (iv) IN ACCORDANCE WITH ANY 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 OF
THIS NOTE FROM IT OF THE RESALE RESTRICTIONS REFERRED TO IN (A) ABOVE.
[Original Issued Discount Legend]
FOR PURPOSES OF SECTION 1273 OF THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), THE ISSUE PRICE IS $965.93 AND
THE AMOUNT OF ORIGINAL ISSUE DISCOUNT IS $34.07, IN EACH CASE PER $1,000
PRINCIPAL AMOUNT AT MATURITY OF THIS SECURITY. FOR PURPOSES OF SECTION 1275 OF
THE CODE, THE ISSUE DATE OF THIS SECURITY IS JULY 24, 1998. FOR PURPOSES OF
SECTION 1272 OF THE CODE, THE YIELD TO MATURITY (COMPOUNDED SEMI-ANNUALLY) IS
12-3/4%.
<PAGE>
3
No. $
12% First Preferred Ship Mortgage Notes Due 2005
MILLENIUM SEACARRIERS, INC., a Cayman Islands corporation,
promises to pay to , or registered assigns, the principal sum of Dollars on July
15, 2005.
Interest Payment Dates: January 15 and July 15.
Record Dates: January 1 and July 1.
Additional provisions of this Security are set forth on the
other side of this Security.
Dated:
MILLENIUM SEACARRIERS, INC.,
by
-----------------------
President
-----------------------
Secretary
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
THE FIRST NATIONAL BANK OF MARYLAND
As Trustee, certifies' his is one of the Securities referred to in the
Indenture.
by
-----------------------------
Authorized Signatory
[SEAL]
<PAGE>
4
[FORM OF REVERSE SIDE OF INITIAL SECURITY]
12% First Priority Ship Mortgage Note Due 2005
1. INTEREST
Millenium Seacarriers, Inc., a Cayman Islands corporation
(such corporation, and its successors and assigns under the Indenture
hereinafter referred to, being herein called the "Company"), promises to pay
cash interest on the Accreted Value of this Security from time to time at the
rate per annum shown above; PROVIDED, HOWEVER, that if a Registration Default
(as defined in the Registration Rights Agreement) occurs, cash interest will
accrue on the Accreted Value of this Security at a rate of 12 1/2% per annum
from and including the date on which any such Registration Default shall occur
to but excluding the date on which all Registration Defaults have been cured.
The Company will pay interest semiannually on January 15 and July 15 of each
year. Interest on the Securities will accrue from the most recent date to which
interest has been paid or, if no interest has been paid, from July 24, 1998.
Cash interest will be computed on the basis of a 360-day year of twelve 30-day
months. The Company shall pay interest on overdue principal at the rate borne by
the Securities plus 1% per annum, and it shall pay interest on overdue
installments of interest at the same rate to the extent lawful.
In addition, in the event that the Securities and the Units
are not listed on the Luxembourg Stock Exchange or on another exchange
substantially equivalent thereto by August 7, 1998, the Company will pay
additional interest on the Accreted Value of this Security at a rate of 0.50%
per annum from and including such date to but not including the date of such
listing.
2. METHOD OF PAYMENT
The Company will pay interest on the Securities (except
defaulted interest) to the Persons who are registered holders of Securities at
the close of business on the January 1 or July 1 next preceding the interest
payment date even if Securities are canceled after the record date and on or
before the interest payment date. Holders must surrender Securities to a Paying
Agent to collect principal payments. The Company will pay principal and interest
in money of the
<PAGE>
5
United States that at the time of payment is legal tender for payment of public
and private debts. Payments in respect of the Securities represented by a Global
Security (including principal, premium and interest) will be made by wire
transfer of immediately available funds to the accounts specified by The
Depository Trust Company. The Company will make all payments in respect of a
certificated Security (including principal, premium and interest) by mailing a
check to the registered address of each Holder thereof; PROVIDED, HOWEVER, that
payments on a certificated Security will be made by wire transfer to a U.S.
dollar account maintained by the payee with a bank in the United States if such
Holder elects payment by wire transfer by giving written notice to the Trustee
or the Paying Agent to such effect designating such account no later than 30
days immediately preceding the relevant due date for payment (or such other date
as the Trustee may accept in its discretion).
3. PAYING AGENT AND REGISTRAR
Initially, The First National Bank of Maryland, a national
banking association ("Trustee"), will act as Paying Agent and Registrar. The
Company may appoint and change any Paying Agent, Registrar or co-registrar
without notice. The Company or any of its domestically incorporated Wholly Owned
Subsidiaries may act as Paying Agent, Registrar or co-registrar.
4. INDENTURE
The Company issued the Securities under an Indenture dated as
of July 24, 1998 ("Indenture"), between the Company and the Trustee. The terms
of the Securities include those stated in the Indenture and those made part of
the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C. ss.ss.
77aaa-77bbbb) as in effect on the date of the Indenture (the "Act"). Terms
defined in the Indenture and not defined herein have the meanings ascribed
thereto in the Indenture. The Securities are subject to all such terms, and
Securityholders are referred to the Indenture and the Act for a statement of
those terms.
The Securities are general secured obligations of the Company
limited to $100.0 million aggregate principal amount at maturity (subject to
Section 2.06 of the Indenture). The Indenture will contain covenants with
respect to (i) limitations on the incurrence of additional indebtedness, (ii)
limitations on certain payments, (iii) limitations on
<PAGE>
6
restrictions on distributions from subsidiaries (including the Subsidiary
Guarantors), (iv) limitations on sales of assets and subsidiary stock, (v)
limitations on liens, (vi) limitations on investments, (vii) limitations on
business activities, (viii) limitations on sale and leaseback transactions, (ix)
limitations on transactions with affiliates, (x) requirements for the provision
of financial information, (xi) limitations on mergers, consolidations and
certain purchases of assets, (xii) impairment of security interests and (xiii)
amendments to security agreements. All these limitations and prohibitions,
however, are subject to a number of important qualifications.
5. OPTIONAL REDEMPTION
Except as set forth in the next two paragraphs below, the
Securities may not be redeemed at the option of the Company prior to July 15,
2003. On and after that date, the Company may redeem the Securities in whole at
any time or in part from time to time at the following redemption prices
(expressed in percentages of Accreted Value), plus accrued interest to the
redemption date (subject to the right of Holders of record on the relevant
record date to receive interest due on the related interest payment date):
if redeemed during the 12-month period commencing on
July 15 of the years set forth below:
PERIOD PERCENTAGE
2003 106%
2004 100
In addition, at any time prior to July 15, 2001, the Company may
redeem up to 35% of the original principal amount at maturity of Securities with
the proceeds of a Public Equity Offering following which there is a Public
Market, at any time or from time to time, at a redemption price (expressed as a
percentage of Accreted Value) of 112% plus accrued interest to redemption date
(subject to the right of Holders of record on the relevant record date to
receive interest due on the related interest payment date); PROVIDED, HOWEVER,
that at least $65.0 million principal amount at maturity of Securities remains
outstanding and is held, directly or indirectly, by Persons other than the
Company and its Affiliates, after each such redemption and that any such
redemption occurs within 60 days following the closing of any such Public Equity
Offering.
<PAGE>
7
The Securities may be redeemed, at the option of Millenium, at
any time as a whole but not in part, on not less than 30 nor more than 60 days'
written notice to each Holder, at 100% of the Accreted Value thereof, plus
accrued and unpaid interest to the date of redemption (subject to the right of
Holders of record on the relevant record date to receive interest due on the
relevant interest payment date), in the event the Company or the Subsidiary
Guarantors, as the case may be, has become or would become obligated for reasons
outside of its control, and after taking reasonable measures to avoid such
obligation, to pay, on the next date on which any amount would be payable with
respect to the Securities, any Additional Amounts on the Securities or
Subsidiary Guarantees pursuant to the terms and conditions thereof as a result
of a change in or an amendment to the laws (including any regulations or rulings
promulgated thereunder) of the Cayman Islands, Liberia or Cyprus (or any
relevant jurisdiction, political subdivision or taxing authority thereof or
therein), or any change in or amendment to any official position regarding the
application or interpretation of such laws, regulations or rulings (including a
holding by a court of competent jurisdiction), which change or amendment is
announced or becomes effective on or after the date of this Offering Circular;
PROVIDED, HOWEVER, that (a) no such notice of redemption shall be given earlier
than 60 days prior to the earliest date on which the Company or the Subsidiary
Guarantors, as the case may be, would be obligated to pay such Additional
Amounts if a payment in respect of the Securities or the Subsidiary Guaranty
were then due, and (b) at the time any such redemption notice is given, such
obligation to pay Additional Amounts must remain in effect. Prior to any
redemption of the Securities, the Company shall deliver to the Trustee or any
paying agent an Officer's Certificate stating that Millenium is entitled to
effect such redemption and setting forth a statement of facts showing that the
conditions precedent to the right to effect such redemption have occurred.
6. MANDATORY REDEMPTION
To the extent that, after the close of business on July 31,
1999, the amount of cash and the fair market value (as determined by the Board
of Directors in good faith) of securities on deposit in escrow with the Escrow
Agent exceeds $5.0 million, Millenium shall use all such remaining Escrowed
Proceeds to redeem as much of Securities as can be redeemed with such Escrowed
Proceeds at a redemption price equal to the sum of 101% of the Accreted Value of
such Securities and the accrued and unpaid interest thereon to the Special
Mandatory Redemption Date (as defined below) (subject to the right of
<PAGE>
8
Holders of record on the relevant record date to receive interest due on the
relevant interest payment date). For purposes hereof, "Special Mandatory
Redemption Date" means August 31, 1999.
7. NOTICE OF REDEMPTION
Notice of redemption will be mailed at least 30 days but not
more than 60 days before the redemption date to each Holder of Securities to be
redeemed at his registered address. Securities in denominations larger than
$1,000 principal amount at maturity may be redeemed in part but only in whole
multiples of $1,000 principal amount at maturity. If money sufficient to pay the
redemption price of and accrued interest on all Securities (or portions thereof)
to be redeemed on the redemption date is deposited with the Paying Agent on or
before the redemption date and certain other conditions are satisfied, on and
after such date interest ceases to accrue on such Securities (or such portions
thereof) called for redemption.
8. PUT PROVISIONS
Upon a Change of Control, any Holder of Securities will have
the right to cause the Company to repurchase all or any part of the Securities
of such Holder at a repurchase price equal to 101% of the Accreted Value of the
Securities to be repurchased plus accrued interest to the date of repurchase
(subject to the right of holders of record on the relevant record date to
receive interest due on the related interest payment date) as provided in, and
subject to the terms of, the Indenture.
9. GUARANTEE
The payment by the Company of the principal of, and premium
and interest on, the Securities is fully and uncon ditionally guaranteed on a
joint and several senior secured basis by Subsidiary Guarantors.
10. SECURITY
Securities will be secured by the Mortgages on the Mortgaged
Vessels, the security interests created pursuant to the Indenture and the
Security Agreements, the Escrowed Property and all the issued and outstanding
capital stock of the Subsidiary Guarantors.
<PAGE>
9
11. DENOMINATIONS; TRANSFER; EXCHANGE
The Securities are in registered form without coupons in
denominations of $1,000 principal amount at maturity and whole multiples of
$1,000 principal amount at maturity. A Holder may transfer or exchange
Securities in accordance with the Indenture. The Registrar may require a Holder,
among other things, to furnish appropriate endorse ments or transfer documents
and to pay any taxes and fees required by law or permitted by the Indenture. The
Registrar need not register the transfer of or exchange any Securities selected
for redemption (except, in the case of a Security to be redeemed in part, the
portion of the Security not to be redeemed) or any Securities for a period of 15
days before a selection of Securities to be redeemed or 15 days before an
interest payment date.
12. PERSONS DEEMED OWNERS
The registered Holder of this Security may be treated as the
owner of it for all purposes.
13. UNCLAIMED MONEY
If money for the payment of principal or interest remains
unclaimed for two years, the Trustee or Paying Agent shall pay the money back to
the Company at its request unless an abandoned property law designates another
Person. After any such payment, Holders entitled to the money must look only to
the Company and not to the Trustee for payment.
14. DISCHARGE AND DEFEASANCE
Subject to certain conditions, the Company at any time may
terminate some or all of its obligations under the Securities and the Indenture
if the Company deposits with the Trustee money or U.S. Government Obligations
for the payment of principal and interest on the Securities to redemption or
maturity, as the case may be.
15. AMENDMENT, WAIVER
Subject to certain exceptions set forth in the Indenture, (i)
the Indenture or the Securities may be amended with the written consent of the
Holders of at least a majority in principal amount at maturity outstanding of
the Securities
<PAGE>
10
and (ii) any default or noncompliance with any provision may be waived with the
written consent of the Holders of a majority in principal amount at maturity
outstanding of the Securities. Subject to certain exceptions set forth in the
Indenture, without the consent of any Securityholder, the Company, the
Subsidiary Guarantors and the Trustee may amend the Indenture or the Securities
to cure any ambiguity, omission, defect or inconsistency, or to comply with
Article 5 of the Indenture, or to provide for uncertificated Securities in
addition to or in place of certificated Securities, or to add guarantees with
respect to the Securities or to secure the Securities, or to add additional
covenants or surrender rights and powers conferred on the Company or the
Subsidiary Guarantors, or to comply with any request of the SEC in connection
with qualifying the Indenture under the Act, or to make any change that does not
adversely affect the rights of any Securityholder.
16. DEFAULTS AND REMEDIES
Under the Indenture, Events of Default include (i) default for
30 days in payment of interest on the Securities; (ii) default in payment of
principal on the Securities at maturity, upon redemption pursuant to para graph
5 or 6 of the Securities, upon acceleration or other wise, or failure by the
Company to redeem or purchase Securities when required; (iii) failure by the
Company to comply with other agreements in the Indenture or the Securities, in
certain cases subject to notice and lapse of time; (iv) certain accelerations
(including failure to pay within any grace period after final maturity) of other
Indebtedness of the Company if the amount accelerated (or so unpaid) exceeds $5
million; (v) certain events of bankruptcy or insolvency with respect to the
Company and the Significant Subsidiaries; (vi) certain judgments or decrees for
the payment of money in excess of $5 million; (vii) a Subsidiary Guarantee
ceases to be in full force and effect (other than in accordance with the terms
of such Subsidiary Guarantee); and (viii) the security interest under the
Security Agreements ceases to be in full force and effect for any reason (other
than by operation of the provisions of the Indenture and the Security Agreements
and certain other reasons specified in this Indenture). If an Event of Default
occurs and is continuing, the Trustee or the Holders of at least 25% in
principal amount at maturity of the Securities may declare all the Securities to
be due and payable immediately. Certain events of bankruptcy or insolvency are
Events of Default which will result in the Securities being due and payable
immediately upon the occurrence of such Events of Default.
<PAGE>
11
Securityholders may not enforce the Indenture or the
Securities except as provided in the Indenture. The Trustee may refuse to
enforce the Indenture or the Securities unless it receives reasonable indemnity
or security. Subject to certain limitations, Holders of a majority in principal
amount at maturity of the Securities may direct the Trustee in its exercise of
any trust or power. The Trustee may withhold from Securityholders notice of any
continuing Default (except a Default in payment of principal or interest) if it
determines that withholding notice is in the interest of the Holders.
17. TRUSTEE DEALINGS WITH THE COMPANY
Subject to certain limitations imposed by the Act, the Trustee
under the Indenture, in its individual or any other capacity, may become the
owner or pledgee of Securities and may otherwise deal with and collect
obligations owed to it by the Company or its Affiliates and may otherwise deal
with the Company or its Affiliates with the same rights it would have if it were
not Trustee.
18. NO RECOURSE AGAINST OTHERS
A director, officer, employee or stockholder, as such, of the
Company or the Trustee shall not have any liability for any obligations of the
Company under the Securities or the Indenture or for any claim based on, in
respect of or by reason of such obligations or their creation. By accepting a
Security, each Securityholder waives and releases all such liability. The waiver
and release are part of the consideration for the issue of the Securities.
19. AUTHENTICATION
This Security shall not be valid until an authorized signatory
of the Trustee (or an authenticating agent) manually signs the certificate of
authentication on the other side of this Security.
20. ABBREVIATIONS
Customary abbreviations may be used in the name of a
Securityholder or an assignee, such as TEN COM (=tenants in common), TEN ENT
(=tenants by the entireties), JT TEN (=joint tenants with rights of survivorship
and not as tenants in
<PAGE>
12
common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors Act).
21. CUSIP NUMBERS
Pursuant to a recommendation promulgated by the Committee on
Uniform Security Identification Procedures the Company has caused CUSIP numbers
to be printed on the Securities and has directed the Trustee to use CUSIP
numbers in notices of redemption as a convenience to Securityholders. No
representation is made as to the accuracy of such numbers either as printed on
the Securities or as contained in any notice of redemption and reliance may be
placed only on the other identification numbers placed thereon.
22. HOLDERS' COMPLIANCE WITH REGISTRATION RIGHTS AGREEMENT.
Each Holder of a Security, by acceptance hereof, acknowledges
and agrees to the provisions of the Registration Rights Agreement, including,
without limitation, the obligations of the Holders with respect to a
registration and the indemnification of the Company to the extent provided
therein.
23. GOVERNING LAW.
THIS SECURITY SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO
APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF
THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
THE COMPANY WILL FURNISH TO ANY SECURITYHOLDER UPON WRITTEN
REQUEST AND WITHOUT CHARGE TO THE SECURITYHOLDER A COPY OF THE INDENTURE WHICH
HAS IN IT THE TEXT OF THIS SECURITY IN LARGER TYPE. REQUESTS MAY BE MADE TO:
C/O MAPLES AND CALDER
P.O. BOX 309
SOUTH CHURCH STREET
GEORGE TOWN, GRAND CAYMAN
CAYMAN ISLANDS, BRITISH WEST INDIES
ATTENTION OF GARETH GRIFFITH, ESQ.
- - - - --------------------------------------------------------------------------------
ASSIGNMENT FORM
<PAGE>
13
To assign this Security, fill in the form below:
I or we assign and transfer this Security to
(Print or type assignee's name, address and zip code)
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint agent to transfer this
Security on the books of the Company. The agent may substitute another to act
for him.
- - - - --------------------------------------------------------------------------------
Date: ________________ Your Signature: _________________________________________
- - - - --------------------------------------------------------------------------------
Sign exactly as your name appears on the other side of this Security.
In connection with any transfer of any of the Securities evidenced by this
certificate occurring prior to the expiration of the period referred to in Rule
144(k) under the Securities Act after the later of the date of original issuance
of such Securities and the last date, if any, on which such Securities were
owned by the Company or any Affiliate of the Company, the undersigned confirms
that such Securities are being transferred in accordance with its terms:
CHECK ONE BOX BELOW
(1) o to the Company; or
(2) o pursuant to an effective registration statement
under the Securities Act of 1933; or
(3) o inside the United States to a "qualified
institutional buyer" (as defined in Rule 144A
under the Securities Act of 1933) that
purchases for its own account or for the
account of a qualified institutional buyer to
whom notice is given that such transfer is
being made in reliance on Rule 144A, in each
case pursuant to and in compliance with
Rule 144A under the Securities Act of 1933; or
<PAGE>
14
(4) o outside the United States in an offshore
transaction within the meaning of Regulation S under
the Securities Act in compliance with Rule 904 under
the Securities Act of 1933; or
(5) o pursuant to another available exemption from
registration provided by Rule 144 under the
Securities Act of 1933.
Unless one of the boxes is checked, the Trustee will refuse to register
any of the Securities evidenced by this certificate in the name of any
person other than the registered holder thereof; PROVIDED, HOWEVER,
that if box (4) or (5) is checked, the Trustee may require, prior to
registering any such transfer of the Securities, such legal opinions,
certifications and other information as the Company has reasonably
requested to confirm that such transfer is being made pursuant to an
exemption from, or in a transaction not subject to, the registration
requirements of the Securities Act of 1933, such as the exemption
provided by Rule 144 under such Act.
------------------------
Signature
Signature Guarantee:
- - - - --------------------- --------------------------
Signature must be guaranteed Signature
- - - - --------------------------------------------------------------------------------
TO BE COMPLETED BY PURCHASER IF (3) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing
this Security for its own account or an account with respect to which it
exercises sole investment discretion and that it and any such account is a
"qualified institutional buyer" within the meaning of Rule 144A under the
Securities Act of 1933, and is aware that the sale to it is being made in
reliance on Rule 144A and acknowledges that it has received such information
regarding the Company as the undersigned has requested pursuant to Rule 144A or
has determined not to
<PAGE>
15
request such information and that it is aware that the transferor is relying
upon the undersigned's foregoing representations in order to claim the exemption
from registration provided by Rule 144A.
Dated: ________________ ______________________________
NOTICE: To be executed by
an executive officer
<PAGE>
16
[TO BE ATTACHED TO GLOBAL SECURITIES]
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY
The following increases or decreases in this Global Security
have been made:
<TABLE>
<CAPTION>
Date of Amount of Amount of Principal Signature of
Exchange decrease increase amount authorized
in Principal in Principal at Maturity officer
Amount at Amount at of of Trustee
Maturity Maturity this Global or
of this of this Security Securities
Global Global following Custodian
Security Security such
decrease or
increase)
<S> <C> <C> <C> <C>
</TABLE>
<PAGE>
17
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by
the Company pursuant to Section 4.07 or 4.13 of the Indenture,
check the box:
/_/
If you want to elect to have only part of this Security
purchased by the Company pursuant to Section 4.07 or 4.13 of the Indenture,
state the amount in principal amount at maturity: $
Date: _______________ Your Signature: ______________________
(Sign exactly as your
name appears on the other
side of this Security.)
Signature Guarantee: _____________________________________________________
(Signature must be guaranteed)
<PAGE>
[FORM OF FACE OF SECURITY OR PRIVATE EXCHANGE]
[*/] EXHIBIT A
[**/]
No.$
12% First Preferred Ship Mortgage Notes Due 2005
Millenium Seacarriers, Inc., a Cayman Islands corporation,
promises to pay to , or registered assigns, the principal sum of Dollars on July
15, 2005.
Interest Payment Dates: January 15 and July 15.
Record Dates: January 1 and July 1.
Additional provisions of this Security are set forth on the other side of this
Security.
Dated:
MILLENIUM SEACARRIERS, INC.,
by
-----------------------
President
-----------------------
Secretary
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
THE FIRST NATIONAL BANK OF MARYLAND,
as Trustee, certifies that
this is one of the Securities
referred to in the Indenture.
by ____________________
Authorized Signatory
_______________
*/ [If the Security is to be issued in global form add the Global Securities
Legend from Exhibit 1 to Appendix A and the attachment from such Exhibit 1
captioned "[TO BE ATTACHED TO GLOBAL SECURITIES] - SCHEDULE OF INCREASES OR
DECREASES IN GLOBAL SECURITY".]
<PAGE>
2
**/ [If the Security is a Private Exchange Security issued in a Private Exchange
to an Initial Purchaser holding an unsold portion of its initial allotment, add
the Restricted Securities Legend from Exhibit 1 to Appendix A and replace the
Assignment Form included in this Exhibit A with the Assignment Form included in
such Exhibit 1.]
<PAGE>
3
[FORM OF REVERSE SIDE OF SECURITY OR PRIVATE EXCHANGE SECURITY]
12% First Preferred Ship Mortgage Note Due 2005
1. INTEREST
Millenium Seacarriers, Inc., a Cayman Islands corporation
(such corporation, and its successors and assigns under the Indenture
hereinafter referred to, being herein called the "Company"), promises to pay
cash interest on the Accreted Value of this Security at the rate per annum shown
above [; PROVIDED, HOWEVER, that if a Registration Default (as defined in the
Registration Rights Agreement) occurs, cash interest will accrue on this
Security from time to time at a rate of 12% per annum from and including the
date on which any such Registration Default shall occur to but excluding the
date on which all Registration Defaults have been cured] ***/. The Company will
pay interest semiannually on January 15 and July 15 of each year. Interest on
the Securities will accrue from the most recent date to which interest has been
paid or, if no interest has been paid, from July 24, 1998. Interest will be
computed on the basis of a 360-day year of twelve 30- day months. The Company
shall pay interest on overdue principal at the rate borne by the Securities plus
1% per annum, and it shall pay interest on overdue installments of interest at
the same rate to the extent lawful.
In addition, in the event that the Securities and the Units
are not listed on the Luxembourg Stock Exchange or on another exchange
substantially equivalent thereto by August 7, 1998, the Company will pay
additional interest on the Accreted Value of this Security at a rate of 0.50%
per annum from and including such date to but not including the date of such
listing.
2. METHOD OF PAYMENT
The Company will pay interest on the Securities (except
defaulted interest) to the Persons who are registered holders of Securities at
the close of business on the
- - - - ---------------
***/ Insert if at the time of issuance of the Exchange Security or Private
Exchange Security (as the case may be) neither the Registered Exchange Offer has
been consummated nor a Shelf Registration Statement has been declared effective
in accordance with the Registration Rights Agreement.
<PAGE>
4
January 1 or July 1 next preceding the interest payment date even if Securities
are canceled after the record date and on or before the interest payment date.
Holders must surrender Securities to a Paying Agent to collect principal
payments. The Company will pay principal and interest in money of the United
States that at the time of payment is legal tender for payment of public and
private debts. Payments in respect of Securities (including principal, premium
and interest) will be made by wire transfer of immediately available funds to
the accounts specified by the holders thereof or, if no U.S. dollar account
maintained by the payee with a bank in the United States is designated by any
holder to the Trustee or the Paying Agent at least 30 days prior to the relevant
due date for payment (or such other date as the Trustee may accept in its
discretion), by mailing a check to the registered address of such holder.
3. PAYING AGENT AND REGISTRAR
Initially, The First National Bank of Maryland, a national
banking association ("Trustee"), will act as Paying Agent and Registrar. The
Company may appoint and change any Paying Agent, Registrar or co-registrar
without notice. The Company or any of its domestically incorporated Wholly Owned
Subsidiaries may act as Paying Agent, Registrar or co-registrar.
4. INDENTURE
The Company issued the Securities under an Indenture dated as
of July 24, 1998 ("Indenture"), between the Company and the Trustee. The terms
of the Securities include those stated in the Indenture and those made part of
the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C. ss.ss.
77aaa-77bbbb) as in effect on the date of the Indenture (the "Act"). Terms
defined in the Indenture and not defined herein have the meanings ascribed
thereto in the Indenture. The Securities are subject to all such terms, and
Securityholders are referred to the Indenture and the Act for a statement of
those terms.
The Securities are general secured obligations of the Company
limited to $100.0 million aggregate principal amount at maturity (subject to
Section 2.06 of the Indenture). The Indenture will contain covenants with
respect to (i) limitations on the incurrence of additional indebtedness, (ii)
limitations on certain payments, (iii) limitations on restrictions on
distributions from subsidiaries (including the
<PAGE>
5
Subsidiary Guarantors), (iv) limitations on sales of assets and subsidiary
stock, (v) limitations on liens, (vi) limitations on investments, (vii)
limitations on business activities, (viii) limitations on sale and leaseback
transactions, (ix) limitations on transactions with affiliates, (x) requirements
for the provision of financial information, (xi) limitations on mergers,
consolidations and certain purchases of assets, (xii) impairment of security
interests and (xiii) amendments to security agreements. All these limitations
and prohibitions, however, are subject to a number of important qualifications.
5. OPTIONAL REDEMPTION
Except as set forth in the next two paragraphs below, the
Securities may not be redeemed at the option of the Company prior to July 15,
2003. On and after that date, the Company may redeem the Securities in whole at
any time or in part from time to time at the following redemption prices
(expressed in percentages of Accreted Value), plus accrued interest to the
redemption date (subject to the right of Holders of record on the relevant
record date to receive interest due on the related interest payment date):
if redeemed during the 12-month period commencing on
July 15 of the years set forth below:
PERIOD PERCENTAGE
2003 106%
2004 100
In addition, at any time prior to July 15, 2001, the Company may
redeem up to 35% of the original principal amount at maturity of Securities with
the proceeds of a Public Equity Offering following which there is a Public
Market, at any time or from time to time, at a redemption price (expressed as a
percentage of Accreted Value) of 112% plus accrued interest to redemption date
(subject to the right of Holders of record on the relevant record date to
receive interest due on the related interest payment date); PROVIDED, HOWEVER,
that at least $65.0 million principal amount at maturity of Securities remains
outstanding and is held, directly or indirectly by Persons other than the
Company and its Affiliates, after each such redemption and that any such
redemption occurs within 60 days following the closing of any such Public Equity
Offering.
<PAGE>
6
The Securities may be redeemed, at the option of the Company,
at any time as a whole but not in part, on not less than 30 nor more than 60
days' written notice to each Holder, at 100% of the Accreted Value thereof, plus
accrued and unpaid interest to the date of redemption (subject to the right of
Holders of record on the relevant record date to receive interest due on the
relevant interest payment date), in the event the Company or the Subsidiary
Guarantors, as the case may be, has become or would become obligated for reasons
outside of its control, and after taking reasonable measures to avoid such
obligation, to pay, on the next date on which any amount would be payable with
respect to the Securities, any Additional Amounts on the Securities or
Subsidiary Guarantees pursuant to the terms and conditions thereof as a result
of a change in or an amendment to the laws (including any regulations or rulings
promulgated thereunder) of the Cayman Islands, Liberia or Cyprus (or any
relevant jurisdiction, political subdivision or taxing authority thereof or
therein), or any change in or amendment to any official position regarding the
application or interpretation of such laws, regulations or rulings (including a
holding by a court of competent jurisdiction), which change or amendment is
announced or becomes effective on or after the date of this Offering Circular;
PROVIDED, HOWEVER, that (a) no such notice of redemption shall be given earlier
than 60 days prior to the earliest date on which the Company or the Subsidiary
Guarantors, as the case may be, would be obligated to pay such Additional
Amounts if a payment in respect of the Securities or the Subsidiary Guaranty
were then due, and (b) at the time any such redemption notice is given, such
obligation to pay Additional Amounts must remain in effect. Prior to any
redemption of the Securities, the Company shall deliver to the Trustee or any
paying agent an Officer's Certificate stating that the Company is entitled to
effect such redemption and setting forth a statement of facts showing that the
conditions precedent to the right to effect such redemption have occurred.
6. MANDATORY REDEMPTION
To the extent that, after the close of business on July 31,
1999, the amount of cash and the fair market value (as determined by the Board
of Directors in good faith) of securities on deposit in escrow with the Escrow
Agent exceeds $5.0 million, Millenium shall use all such remaining Escrowed
Proceeds to redeem as much of Securities as can be redeemed with such Escrowed
Proceeds at a redemption price equal to the sum of 101% of the Accreted Value of
such Securities and the accrued and unpaid interest thereon to the Special
Mandatory
<PAGE>
7
Redemption Date (as defined below) (subject to the right of Holders of record on
the relevant record date to receive interest due on the relevant interest
payment date). For purposes hereof, "Special Mandatory Redemption Date" means
August 31, 1999.
7. NOTICE OF REDEMPTION
Notice of redemption will be mailed at least 30 days but not
more than 60 days before the redemption date to each Holder of Securities to be
redeemed at his registered address. Securities in denominations larger than
$1,000 may be redeemed in part but only in whole multiples of $1,000. If money
sufficient to pay the redemption price of and accrued interest on all Securities
(or portions thereof) to be redeemed on the redemption date is deposited with
the Paying Agent on or before the redemption date and certain other conditions
are satisfied, on and after such date interest ceases to accrue on such
Securities (or such portions thereof) called for redemption.
8. PUT PROVISIONS
Upon a Change of Control, any Holder of Securities will have
the right to cause the Company to repurchase all or any part of the Securities
of such Holder at a repurchase price equal to 101% of the Accreted Value of the
Securities to be repurchased plus accrued interest to the date of repurchase
(subject to the right of holders of record on the relevant record date to
receive interest due on the related interest payment date) as provided in, and
subject to the terms of, the Indenture.
9. GUARANTEE
The payment by the Company of the principal of, and premium
and interest on, the Securities is fully and uncon ditionally guaranteed on a
joint and several senior secured basis by each of the Subsidiary Guarantors.
<PAGE>
8
10. SECURITY
Securities will be secured by the Mortgages on the Mortgaged
Vessels, the security interests created pursuant to the Indenture and the
Security Agreements, the Escrowed
<PAGE>
9
Property and all the issued and outstanding capital stock of the Subsidiary
Guarantors.
11. DENOMINATIONS; TRANSFER; EXCHANGE
The Securities are in registered form without coupons in
denominations of $1,000 principal amount at maturity and whole multiples of
$1,000 principal amount at maturity. A Holder may transfer or exchange
Securities in accordance with the Indenture. The Registrar may require a Holder,
among other things, to furnish appropriate endorse ments or transfer documents
and to pay any taxes and fees required by law or permitted by the Indenture. The
Registrar need not register the transfer of or exchange any Securities selected
for redemption (except, in the case of a Security to be redeemed in part, the
portion of the Security not to be redeemed) or any Securities for a period of 15
days before a selection of Securities to be redeemed or 15 days before an
interest payment date.
12. PERSONS DEEMED OWNERS
The registered Holder of this Security may be treated as the
owner of it for all purposes.
13. UNCLAIMED MONEY
If money for the payment of principal or interest remains
unclaimed for two years, the Trustee or Paying Agent shall pay the money back to
the Company at its request unless an abandoned property law designates another
Person. After any such payment, Holders entitled to the money must look only to
the Company and not to the Trustee for payment.
14. DISCHARGE AND DEFEASANCE
Subject to certain conditions, the Company at any time may
terminate some or all of its obligations under the Securities and the Indenture
if the Company deposits with the Trustee money or U.S. Government Obligations
for the payment of principal and interest on the Securities to redemption or
maturity, as the case may be.
<PAGE>
10
15. AMENDMENT, WAIVER
Subject to certain exceptions set forth in the Indenture, (i)
the Indenture or the Securities may be amended with the written consent of the
Holders of at least a majority in principal amount at maturity outstanding of
the Securities and (ii) any default or noncompliance with any provision may be
waived with the written consent of the Holders of a majority in principal amount
at maturity outstanding of the Securities. Subject to certain exceptions set
forth in the Indenture, without the consent of any Securityholder, the Company,
the Subsidiary Guarantors and the Trustee may amend the Indenture or the
Securities to cure any ambiguity, omission, defect or inconsistency, or to
comply with Article 5 of the Indenture, or to provide for uncertificated
Securities in addition to or in place of certificated Securities, or to add
guarantees with respect to the Securities or to secure the Securities, or to add
additional covenants or surrender rights and powers conferred on the Company or
the Subsidiary Guarantors, or to comply with any request of the SEC in
connection with qualifying the Indenture under the Act, or to make any change
that does not adversely affect the rights of any Securityholder.
16. DEFAULTS AND REMEDIES
Under the Indenture, Events of Default include (i) default for
30 days in payment of interest on the Securities; (ii) default in payment of
principal on the Securities at maturity, upon redemption pursuant to para graph
5 or 6 of the Securities, upon acceleration or other wise, or failure by the
Company to redeem or purchase Securities when required; (iii) failure by the
Company to comply with other agreements in the Indenture or the Securities, in
certain cases subject to notice and lapse of time; (iv) certain accelerations
(including failure to pay within any grace period after final maturity) of other
Indebtedness of the Company if the amount accelerated (or so unpaid) exceeds $5
million; (v) certain events of bankruptcy or insolvency with respect to the
Company and the Significant Subsidiaries; (vi) certain judgments or decrees for
the payment of money in excess of $5 million; (vii) a Subsidiary Guarantee
ceases to be in full force and effect (other than in accordance with the terms
of such Subsidiary Guarantee); and (viii) the security interest under the
Security Agreements ceases to be in full force and effect for any reason (other
than by operation of the provisions of the Indenture and the Security Agreements
and certain other reasons specified in this Indenture). If an Event of Default
occurs and is
<PAGE>
11
continuing, the Trustee or the Holders of at least 25% in principal amount at
maturity of the Securities may declare all the Securities to be due and payable
immediately. Certain events of bankruptcy or insolvency are Events of Default
which will result in the Securities being due and payable immediately upon the
occurrence of such Events of Default.
Securityholders may not enforce the Indenture or the
Securities except as provided in the Indenture. The Trustee may refuse to
enforce the Indenture or the Securities unless it receives reasonable indemnity
or security. Subject to certain limitations, Holders of a majority in principal
amount at maturity of the Securities may direct the Trustee in its exercise of
any trust or power. The Trustee may withhold from Securityholders notice of any
continuing Default (except a Default in payment of principal or interest) if it
determines that withholding notice is in the interest of the Holders.
17. TRUSTEE DEALINGS WITH THE COMPANY
Subject to certain limitations imposed by the Act, the Trustee
under the Indenture, in its individual or any other capacity, may become the
owner or pledgee of Securities and may otherwise deal with and collect
obligations owed to it by the Company or its Affiliates and may otherwise deal
with the Company or its Affiliates with the same rights it would have if it were
not Trustee.
18. NO RECOURSE AGAINST OTHERS
A director, officer, employee or stockholder, as such, of the
Company or the Trustee shall not have any liability for any obligations of the
Company under the Securities or the Indenture or for any claim based on, in
respect of or by reason of such obligations or their creation. By accepting a
Security, each Securityholder waives and releases all such liability. The waiver
and release are part of the consideration for the issue of the Securities.
19. AUTHENTICATION
This Security shall not be valid until an authorized signatory
of the Trustee (or an authenticating agent) manually signs the certificate of
authentication on the other side of this Security.
<PAGE>
12
20. ABBREVIATIONS
Customary abbreviations may be used in the name of a
Securityholder or an assignee, such as TEN COM (=tenants in common), TEN ENT
(=tenants by the entireties), JT TEN (=joint tenants with rights of survivorship
and not as tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to
Minors Act).
21. CUSIP NUMBERS
Pursuant to a recommendation promulgated by the Committee on
Uniform Security Identification Procedures the Company has caused CUSIP numbers
to be printed on the Securities and has directed the Trustee to use CUSIP
numbers in notices of redemption as a convenience to Securityholders. No
representation is made as to the accuracy of such numbers either as printed on
the Securities or as contained in any notice of redemption and reliance may be
placed only on the other identification numbers placed thereon.
22. HOLDERS' COMPLIANCE WITH REGISTRATION RIGHTS AGREEMENT.
Each Holder of a Security, by acceptance hereof, acknowledges
and agrees to the provisions of the Registration Rights Agreement, including,
without limitation, the obligations of the Holders with respect to a
registration and the indemnification of the Company to the extent provided
therein.
23. GOVERNING LAW.
THIS SECURITY SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO
APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF
THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
THE COMPANY WILL FURNISH TO ANY SECURITYHOLDER UPON WRITTEN
REQUEST AND WITHOUT CHARGE TO THE SECURITYHOLDER A COPY OF THE INDENTURE WHICH
HAS IN IT THE TEXT OF THIS SECURITY IN LARGER TYPE. REQUESTS MAY BE MADE TO:
<PAGE>
13
C/O MAPLES AND CALDER
P.O. BOX 309
SOUTH CHURCH STREET
GEORGE TOWN, GRAND CAYMAN
CAYMAN ISLANDS, BRITISH WEST INDIES
ATTENTION OF
GARETH GRIFFITH, ESQ.
- - - - --------------------------------------------------------------------------------
<PAGE>
14
ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to
(Print or type assignee's name, address and zip code)
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint agent to transfer this
Security on the books of the Company. The agent may substitute another to act
for him.
- - - - --------------------------------------------------------------------------------
Date: ________________ Your Signature: _________________________________________
- - - - --------------------------------------------------------------------------------
Sign exactly as your name appears on the other side of this Security.
<PAGE>
15
OPTION OF HOLDER TO ELECT PURCHASE
IF YOU WANT TO ELECT TO HAVE THIS SECURITY PURCHASED
BY THE COMPANY PURSUANT TO SECTION 4.07 OR 4.13 OF THE INDENTURE, CHECK THE BOX:
/_/
IF YOU WANT TO ELECT TO HAVE ONLY PART OF THIS
SECURITY PURCHASED BY THE COMPANY PURSUANT TO SECTION 4.07 OR 4.13 OF THE
INDENTURE, STATE THE AMOUNT OF THE PRINCIPAL AMOUNT AT MATURITY: $
DATE: __________________ YOUR SIGNATURE: _______________________________________
(SIGN EXACTLY AS YOUR NAME APPEARS ON THE OTHER SIDE
OF THE SECURITY)
SIGNATURE GUARANTEE:____________________________________________________________
(SIGNATURE MUST BE GUARANTEED BY A MEMBER FIRM OF THE NEW
YORK STOCK EXCHANGE OR A COMMERCIAL BANK OR TRUST COMPANY)
EXECUTION COPY
================================================================================
ESCROW AND PLEDGE AGREEMENT
between
MILLENIUM SEACARRIERS, INC
and
THE FIRST NATIONAL BANK OF MARYLAND
Dated as of July 15 , 1998
------------------------------
================================================================================
<PAGE>
TABLE OF CONTENTS
PAGE
Section 1: Definitions.......................................................2
Section 2: Delivery and Acceptance of Escrowed
Property.........................................................3
Section 3: Disbursement of Escrowed Property.................................4
Section 4: Disbursement of Escrowed Poperty in Connection
with Special Mandatory Redemption................................8
Section 5: Disbursement of Escrowed Property Upon the
Occurrence of Remedies Trigger Event.............................8
Section 6: Security of Interest in Favor of Escrow
Agent...........................................................10
Section 7: Compensation and Indemnity.......................................13
Section 8: Modifications, Waivers and Amendments............................13
Section 9: Concerning the Escrow Agent......................................13
Section 10: Notices..........................................................15
Section 11: Miscellaneous....................................................15
Exhibit A: Form of Release Certificate
Exhibit B: Form of Officers' Certificate for
Release Date
Exhibit C: Form of Letter of Release of Mortgage
and Reassignment
Exhibit D: Forms of Panamanian, Liberian,
Cypriot, Cayman and Bahamian
Mortgages/Deeds of Covenant
Exhibit E: Form of Opinion of Counsel
Exhibit F: Form of Supplemental Indenture
Exhibit G: Form of Insurance Assignment
-i-
<PAGE>
[Draft--7/23/98]
ESCROW AND PLEDGE AGREEMENT, dated as of
July 15, 1998 (the "Agreement"), between MILLENIUM
SEACARRIERS, INC., a Cayman Islands company (the
"Company"), and THE FIRST NATIONAL BANK OF MARYLAND,
a national banking association, as Escrow Agent (the
"Escrow Agent").
This Agreement is being entered into in connection with (i)
the Purchase Agreement (the "Purchase Agreement"), dated July 20, 1998, among
the Company, the Subsidiary Guarantors (as named therein), Credit Suisse First
Boston Corporation and Donaldson, Lufkin & Jenrette Securities Corporation (the
"Initial Purchasers"), and (ii) the Indenture (the "Indenture"), dated as of
July 15, 1998, among the Company, the Subsidiary Guarantors and The First
National Bank of Maryland ("FNB"), as trustee (FNB or any successor trustee, the
"Trustee").
Pursuant to the Purchase Agreement, the Company is selling
(the "Offering") $100,000,000 representing 100,000 units (the "Units"), each
Unit consisting of $1,000 principal amount at maturity of it 12% First Priority
Ship Mortgage Notes Due 2005 (the "Securities") and one warrant to purchase five
shares of common stock, par value $.01 per share of the Company (the
"Securities"). Concurrently with the closing of such sale, the Company will
deposit with the Escrow Agent as hereinafter provided, approximately $85.2
million of which no more than $53.8 million will be used to purchase the
Committed Vessels (as defined below). The balance of the funds on deposit will
be used (i) to purchase the Additional Vessels (as defined below), (ii) to pay
related fees and expenses, (iii) to make vessel upgrades and repairs to the
Committed and Additional Vessels, (iv) to make deposits upon the request of
Millenium Management, Inc. ("MMI") pursuant to Section 3.07(b) of the Management
Agreement (the "Management Agreement") dated as of July 1, 1998 among MMI, the
Company and the subsidiaries of the Company signatory thereto to fund the
Contingency Fund (as defined therein) (such deposits hereinafter referred to as
the "Contingency Fund Deposits") or (v) to fund the Special Mandatory Redemption
(as defined below) and for no other purposes other than as set forth herein.
Accordingly, the Company and the Escrow Agent agree as
follows:
1. DEFINITIONS. Capitalized terms used but not
defined herein have the respective meanings specified in
the
Indenture. In addition, the following terms shall have the
following meanings when used herein:
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"Additional Vessels" means additional vessels that the Company
in its own name or through one of the Subsidiary Guarantors (or a
subsidiary which will become a Subsidiary Guarantor) may acquire from
time to time with Escrowed Property (as defined in Section 2(b))
pursuant to sale and purchase contracts ("Acquisition Contracts").
"Committed Vessels" means the Alexander Aberg (official number
873704, to be renamed the Millenium Aleksander), the Elmar Kivistik
(official number 864423, to be renamed the Millenium Elmar), the LT
Pragati (call sign VVDX, to be renamed the Millenium Leader), the LT
Argosy (call sign VTKG, to be renamed the Millenium Hawk), the Mangel
Desai (call sign VTJS, to be renamed the Millenium Eagle), the LT
Odyssey (call sign VTKB, to be renamed the Millenium Osprey), the Soren
Toubro (call sign VTFM, to be renamed the Millenium Falcon), the Holk
Larsen (call sign VTFJ, to be renamed the Millenium Condor) (the
preceding eight vessels currently bearing the Flag of India and to be
reflagged to the Cayman Islands), the Clipper Amethyst (official number
720437, to be renamed the Millenium Amethyst), the Clipper Yama
(official number 729494, to be renamed the Millenium Yama) and the
Clipper Majestic (official number 7718175, to be renamed the Millenium
Majestic) (the latter three vessels bearing the Flag of the Bahamas).
"Escrow Account" means an account established by the Escrow
Agent in the name of "The First National Bank of Maryland, as Escrow
Agent for Millenium Seacarriers, Inc."
"Initial Deposit" means an amount of cash or Treasury
Securities having an aggregate value on the date hereof of $85.2
million.
"Treasury Securities" means debt obligations issued or
guaranteed by the government of the United States of America or any
agency thereof for which the full faith and credit of the United States
of America is pledged to secure payment in full at maturity and which
are not redeemable at the option of the issuer prior to maturity.
2. DELIVERY AND ACCEPTANCE OF ESCROWED Property. (a) (i) On
the date hereof, the Escrow Agent shall establish the Escrow Account into which
the Escrow Agent will, concurrently with the execution and delivery hereof,
deposit the Initial Deposit received from the Company.
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(ii) In the event and to the extent the Initial Deposit
consists of cash, the Company may, concurrently or at any time
thereafter and prior to the termination of this Escrow Agreement, with
such cash deposit, deliver to the Escrow Agent (A) a written
confirmation or sales order for delivery to the Escrow Account which
sets forth the cost of Temporary Cash Investments to be acquired by the
Company and their principal amount at maturity, if applicable, and (B)
irrevocable instructions directing the Escrow Agent to release some or
all of the cash constituting the Initial Deposit to the seller of such
Temporary Cash Investments in an amount equal to the purchase price
thereof against delivery of such Treasury Securities.
(b) The Initial Deposit, together with the interest, dividends
and distributions thereon, less any amounts released pursuant to the terms of
this Agreement, shall from time to time constitute the "Escrowed Property". The
Escrow Agent further agrees to invest any portion of the Escrowed Property
represented by cash in Temporary Cash Investments as directed in writing from
time to time by the Company. Any funds received by the Escrow Agent for which
the Company has not given written investment instructions shall be invested in
an interest bearing Temporary Cash Investment at a non-United States (i.e.,
offshore) financial institution selected by the Escrow Agent in its sole
discretion.
(c) The obligation and liability of the Escrow Agent to make
the payments and transfers required by this Agreement shall be limited to the
Escrowed Property and any other moneys on deposit with it pursuant to this
Agreement. The Escrow Agent shall not be liable for any loss resulting from any
investment made pursuant to this Agreement in compliance with the provisions
hereof.
3. DISBURSEMENT OF ESCROWED PROPERTY. (a) On any date (a
"Release Date"), the Escrow Agent will release Escrowed Property to or at the
order of the Company, provided that the Escrow Agent shall have received a
written request in the form of Exhibit A hereto (the "Release Certificate") from
the Company, signed by two Officers of the Company, at least 3 Business Days
prior to such Release Date, and provided that the following conditions have been
satisfied, in the reasonable judgment of the Escrow Agent, prior to or
simultaneous with the release of Escrowed Property:
(i) If the Company proposes to consummate on the date of the
release of the Requested Amount, one or more Acquisition Contracts in
connection with the acquisition of one or more Committed Vessels
(provided,
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HOWEVER, that no more than $53.8 million in the aggregate may be
released in connection with the payment of the purchase price for the
Committed Vessels) or Additional Vessels, the Escrow Agent shall have
received:
(A)(1) fully executed mortgage releases and
satisfaction documents substantially in the form of Exhibit C
hereto (the "Release Documents") from the holders of any
existing indebtedness with respect to such Committed Vessels
or Additional Vessels, which Release Documents shall be in
appropriate form for recording or registration in the
appropriate governmental offices, as to which the Escrow Agent
shall be entitled to rely on the Opinion of Counsel (as
defined below) to the Company described in clause (iv) below;
and
(2) evidence satisfactory to the Escrow Agent to the effect
that any existing indebtedness to which such Committed Vessel
or Additional Vessel is subject has been, or will be, repaid
as of such Release Date, and that immediately prior to or
contemporaneously with the transfer of title to such Committed
Vessel or Additional Vessel by the Seller to the related
Subsidiary Guarantor, such Seller had title to such vessel
free and clear of all mortgages, liens and encumbrances of
record;
(B) fully executed mortgages and related deeds of
covenant, if required (the "Mortgages"), substantially in the
form of Exhibit D hereto and fully executed related
assignments of insurance (the "Insurance Assignments")
substantially in the form of Exhibit G hereto with respect to
each such Committed Vessel or Additional Vessel, which
Mortgages and Insurance Assignments shall be in appropriate
form for recording a registration in the appropriate
governmental offices if required by applicable law in order to
perfect the security interest therein created, as to which the
Escrow Agent shall be entitled to rely on the Opinion of
Counsel to the Company described in clause (iv) below;
(C) originals, certified to be true and complete by
an Officer of the Company, of the certificates representing
all the shares of capital stock (the "Pledged Shares") of the
Subsidiary Guarantor acquiring such Committed Vessel or
Additional Vessel (unless such Subsidiary Guarantor is already
a Subsidiary
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Guarantor), together with an Officers' Certificate in the form
of Exhibit B hereto;
(D) copies, certified to be true and complete by an
Officer of the Company, of the fully executed Acquisition
Contracts covered by such
Release Certificate;
(E) copies, certified to be true and complete by an
Officer of the Company, of any Charters related to such
Committed Vessels or Additional
Vessels;
(F) the report of an insurance broker required by the
form mortgage or deed of covenant attached hereto as part of
Exhibit D, with respect to insurance policies maintained in
respect of each such Committed Vessel or Additional Vessel,
which report shall include loss payable clauses substantially
in the form set forth in Appendix B to the form of Letter of
Undertaking set forth in Annex B to Exhibit G hereto;
(G) a classification certificate, dated as of a date
not more than 30 days prior to the Release Date, from a
classification society with respect to each such Committed
Vessel or Additional Vessel showing such Vessel to be free of
all conditions, recommendations and qualifications affecting
classification;
(H) a Supplemental Indenture executed by the owner of
such Committed Vessel or Additional Vessel as a new Subsidiary
Guarantor (if not already a Subsidiary Guarantor),
substantially in the form of Exhibit F hereto;
(I) copies, certified to be true and complete by an
Officer of the Company, of two appraisals, dated not more than
90 days prior to such Release Date, setting forth the
Appraised Values of each Committed Vessel or Additional
Vessel, except with respect to the Millenium Elmar, the
Millenium Aleksander, the Millenium Amethyst and the Millenium
Yama, with respect to which such appraisals may be dated not
more than 180 days prior to such Release Date; and
(J) copies, certified to be true and complete by an
Officer of the Company of the Document of Compliance and
Safety Management Certificates as required by the
International Safety Management Code, to the extent required.
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(ii) If such Release Request is made in connection with the
execution (but not the consummation) of one or more Acquisition
Contracts in respect of one or more Additional Vessels, the Escrow
Agent shall have received:
(A) copies, certified to be true and complete by an
Officer of the Company, of one or more fully executed
Acquisition Contracts covered by such
Release Requests;
(B) a fully executed Officers' Certificate of the
Company substantially in the form of Exhibit B hereto; and
(C) to the extent available, copies, certified to be
true and complete by an Officer of the Company, of any
Charters related to the Additional Vessels, to the extent such
Charters will continue after consummation of the Acquisition
Contracts.
(iii) If such Release Request is made in connection with, or
within six months after the acquisition of a Committed Vessel or an
Additional Vessel with Escrowed Property, for the purpose of upgrades
or necessary maintenance, repair or drydocking expenses or to make the
Contingency Fund Deposit in relation to such vessel, the Escrow Agent
shall have received
(A) a fully executed Officers' Certificate of the
Company substantially in the form of Exhibit B hereto;
(B) with respect to any upgrades, maintenance, repair
or drydocking expenses, all invoices or written estimates of
the cost of such upgrades, maintenance, repair or drydocking
expenses in relation to the Committed Vessel or the Additional
Vessel; and
(C) with respect to the Contingency Fund Deposit, a
receipt from MMI to the effect that a deposit has been made
pursuant to Section 3.07(b) of the Management Agreement and
specifying the amount of such deposit.
(iv) The Escrow Agent shall have received one or more signed
opinions of counsel substantially in the form of Exhibit E hereto with
such changes as may be necessary, to the reasonable satisfaction of the
Escrow
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Agent, to conform to the legal requirements of the relevant
jurisdiction (the "Opinion of Counsel"); and
(v) The Escrow Agent shall have received any other documents
or certificates reasonably requested by the Escrow Agent to establish
that the conditions described in Section 3(a) have been complied with
in all material respects.
(b) Notwithstanding paragraph 3(a) above, if the Escrow Agent
receives a notice from the Trustee or otherwise becomes aware that a Default or
Event of Default has occurred and is continuing, the Escrow Agent will not
release any Escrowed Property to the Company unless and until the Escrow Agent
receives a notice from the Trustee that such Default or Event of Default, as the
case may be, is not continuing or has been waived in accordance with the terms
of the Indenture.
4. DISBURSEMENT OF ESCROWED PROPERTY IN CONNECTION WITH
SPECIAL MANDATORY REDEMPTION. If the Escrow Agent receives notice or otherwise
becomes aware that the Securities have become subject to the Special Mandatory
Redemption pursuant to paragraph 6 of the Securities and Article 3 of the
Indenture, the Escrow Agent shall (i) liquidate all Escrowed Property then held
by it not later than the third Business Day prior to the Special Mandatory
Redemption Date and (ii) release all the Escrowed Property to the Paying Agent
on the Special Mandatory Redemption Date.
To the extent that, after the close of business on July 31,
1999, the amount of cash and the fair market value (as determined by the Board
of Directors in good faith) of securities (including the Temporary Cash
Investments) on deposit in Escrow with the Escrow Agent is equal to or less than
$5.0 million, such cash and Temporary Cash Investment shall be promptly released
to the Company by the Escrow Agent upon written request of the Company, free of
any lien of the Indenture, the Security Agreements or the Escrow Agreement, and
this Escrow Agreement will be terminated.
5. DISBURSEMENT OF ESCROWED PROPERTY UPON THE OCCURRENCE OF
REMEDIES TRIGGER EVENT. (a) If the Escrow Agent receives a notice from the
Trustee that the principal of and interest on the Securities then outstanding
have become immediately due and payable pursuant to Section 6.02 of the
Indenture (an "Acceleration Event") and such acceleration is not rescinded on or
prior to the earlier of five Business Days after receipt of such notice and the
Special Mandatory Redemption Date (a "Remedies Trigger Event"), the Escrow Agent
will liquidate all Escrowed
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Property then held by it in accordance with paragraph (b) below.
(b) Upon the occurrence and during the continuance of a
Remedies Trigger Event (so long as the acceleration related thereto has not been
rescinded), but not otherwise, the Escrow Agent may without notice except as
specified below, sell the Escrowed Property or any part thereof in one or more
parcels at a public or private sale, at any exchange, broker's board or at any
of the Escrow Agent's offices or elsewhere, for cash, on credit or for future
delivery, upon such terms as the Escrow Agent may determine to be commercially
reasonable, and the Escrow Agent, the Trustee or any holder of the Securities
may be the purchaser of any or all of the Escrowed Property so sold and
thereafter hold the same, absolutely, free from any right or claim of whatsoever
kind. The Company agrees that, to the extent notice of sale shall be required by
law, at least 2 Business Days' notice to the Company of the time and place of
any public sale or the time after which any private sale is to be made shall
constitute reasonable notification. The Escrow Agent shall not be obligated to
make any sale of Escrowed Property regardless of notice of sale having been
given. The Escrow Agent may adjourn any public or private sale from time to time
by announcement at the time and place fixed therefor, and such sale may, without
further notice, be made at the time and place to which it was so adjourned. The
Escrow Agent shall incur no liability as a result of the sale of the Escrowed
Property, or any part thereof, at any private sale conducted in a commercially
reasonable manner. The Company hereby waives any claims against the Escrow Agent
arising by reason of the fact that the price at which any Escrowed Property may
have been sold at such a private sale was less than the price which might have
been obtained at a public sale, even if the Escrow Agent accepts the first offer
received and does not offer such Escrowed Property to more than one offeree.
(c) Upon the occurrence and during the continuance of a
Remedies Trigger Event (so long as the acceleration related thereto has not been
rescinded), any cash held by the Escrow Agent as Escrowed Property and all cash
proceeds received by the Escrow Agent in respect of any sale of, collection
from, or other realization upon, all or any part of the Escrowed Property
pursuant to Section 5(b), shall be released by the Escrow Agent to the Paying
Agent for payment to the holders of the Securities.
(d) This Agreement shall create a continuing Lien on the
Escrowed Property that shall (i) remain in full force and effect until the
earlier of (A) the payment in full of the Securities and (B) the release of all
Escrowed Property in accordance with the provisions of this Agreement, (ii) be
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binding upon the Company and its successors and assigns and (iii) enure to the
benefit of the Escrow Agent, the holders of the Securities and their respective
successors, transferees and assigns.
6. SECURITY INTEREST IN FAVOR OF ESCROW AGENT; ESCROWED
PROPERTY. (a) To secure the full and punctual payment when due and the full and
punctual performance of all amounts that may be payable from time to time under
the Indenture, the Security Agreements and the Securities, the Company hereby
grants to the Escrow Agent, for the benefit of the Escrow Agent, the Trustee and
the holders of the Securities, a security interest in all its right, title and
interest in and to the following, other than such of the following which are
released from the Lien of this Agreement pursuant to Section 3 or Section 4
hereof:
(i) the Initial Deposit of $85.2 million and all certificates
or instruments representing any of the Temporary Cash Investments; and
(ii) all interest, dividends, cash, instruments and other
property and proceeds from time to time received, receivable or
otherwise distributed in respect of or in exchange for any of the
foregoing.
(b) Any and all cash, certificates or instruments representing
or evidencing the Escrowed Property shall be delivered to and held by or on
behalf of the Escrow Agent and shall be in suitable form for transfer by
delivery, or shall be accompanied by duly executed instruments of transfer or
assignment in blank, all in form and substance satisfactory to the Escrow Agent.
The Escrow Agent shall have the right, at any time after the occurrence and
during the continuance of an Event of Default, in its discretion and without
notice to the Company, to transfer to or to register in the name of the Escrow
Agent or any of its nominees any or all the Escrowed Property. In addition, the
Escrow Agent shall have the right at any time to exchange certificates or
instruments representing or evidencing Escrowed Property for certificates or
instruments of different denominations.
(c) The Company hereby represents and warrants with respect to
any Escrowed Property:
(i) It is the legal and beneficial owner of the Escrowed
Property and has full corporate power, authority and legal right to
pledge all the Escrowed Property.
(ii) The pledge pursuant to Section 6(a) creates a valid and
perfected first priority Lien on the Escrowed
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Property securing the payment and performance of all amounts that may
be payable from time to time under the Indenture, the Security
Agreements and the Securities.
(d) The Company agrees that at any time and from time to time,
at the expense of the Company, the Company will promptly execute and deliver all
further instruments and documents and take all further action that may be
necessary or that the Escrow Agent may reasonably request in order to perfect
and protect any Lien granted or purported to be granted hereby or to enable the
Escrow Agent to exercise and enforce its rights and remedies hereunder with
respect to any Escrowed Property.
(e) (i) The Escrow Agent shall be entitled to receive, deposit
into the Escrow Account and hold as collateral in the Escrow Account
all interest and dividends paid and distributions made in respect of
the Temporary Cash Investments. Any such interest or dividends shall,
if received by the Company, be received in trust for the benefit of the
Escrow Agent, be segregated from the other property or funds of the
Company and be forthwith delivered to the Escrow Agent as collateral in
the same form as so received (with any necessary endorsement).
(ii) As long as no Event of Default shall have occurred and be
continuing and until written notice thereof from the Escrow Agent to
the Company, the Company shall be entitled to exercise any and all
voting and other consensual rights relating to Temporary Cash
Investments or any part thereof for any purpose; PROVIDED, HOWEVER,
that no vote shall be cast, and no consent, waiver or ratification
given or action taken, which would be inconsistent with or violate any
provision of this Agreement, the Indenture, the Security Agreements or
the Securities.
(iii) Upon the occurrence and during the continuance of an
Event of Default, all rights of the Company to exercise the voting and
other consensual rights that it would otherwise be entitled to exercise
pursuant to Section 6(e)(ii) shall cease upon notice from the Escrow
Agent to the Company and upon the giving of such notice all such rights
shall thereupon be vested in the Escrow Agent who shall thereupon have
the sole right to exercise such voting and other consensual rights.
(iv) In order to permit the Escrow Agent to exercise the
voting and other consensual rights which it may be entitled to exercise
pursuant to Section 6(e)(iii), and to receive all interest,
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dividends and distributions which it may be entitled to receive under
Section 6(e)(i), the Company shall, if necessary, upon written request
form the Escrow Agent, from time to time execute and deliver to the
Escrow Agent such instruments as the Escrow Agent may reasonably
request.
(f) The Company hereby appoints the Escrow Agent as the
Company's attorney-in-fact, with full authority in the place and stead of the
Company and in the name of the Company or otherwise, from time to time in the
Escrow Agent's discretion but only after the occurrence and during the
continuance of an Event of Default, to take any action and to execute any
instrument which the Escrow Agent may deem necessary or advisable in order to
accomplish the purposes of this Section 6, including to receive, endorse and
collect all instruments made payable to the Company representing any dividend,
interest payment or other distribution in respect of the Escrowed Property or
any part thereof and to give full discharge for the same. This power, being
coupled with an interest, is irrevocable.
(g) If the Company fails to perform any agreement contained in
this Section 6, the Escrow Agent may itself (but shall not be obligated to)
perform, or cause performance of, such agreement, and the expenses of the Escrow
Agent incurred in connection therewith shall be payable by the Company under
Section 7.
(h) Upon the release of any Escrowed Property to or upon the
order of the Company pursuant to Section 3 or Section 4, such Escrowed Property
shall be delivered to or upon the order of the Company, free and clear of any
and all interests of the Escrow Agent, the Trustee and the holders of the
Securities.
(i) The Company shall comply with (i) TIA ss. 314(b), relating
to Opinions of Counsel regarding the Lien of this Agreement and (ii) TIA ss.
314(d), relating to the release of Escrowed Property from the Lien of this
Agreement and Officers' Certificates or other documents regarding fair value of
the Escrowed Property, to the extent such provisions are applicable. Any
certificate or opinion required by TIA ss. 314(d) may be executed and delivered
by an Officer of the Company to the extent permitted by TIA ss. 314(d).
7. COMPENSATION AND INDEMNITY. The Company shall pay to the
Escrow Agent from time to time upon demand reasonable compensation for its
services. The Company shall reimburse the Escrow Agent upon demand for all
reasonable out-of-pocket expenses incurred or made by it, including costs of
collection, in addition to the compensation for its
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services. Such expenses shall include the reasonable compensation and expenses,
disbursements and advances of the Escrow Agent's agents, counsel, accountants
and experts. The Company shall indemnify the Escrow Agent and hold it harmless
from and against any and all damages, suits, actions, loss, liability or expense
(including reasonable attorneys' fees) incurred by it in connection with the
administration of this Agreement and the performance of its duties hereunder.
The Escrow Agent shall notify the Company promptly of any claim for which it may
seek indemnity. Failure by the Escrow Agent to so notify the Company shall not
relieve the Company of its obligations hereunder. The Company shall defend the
claim and the Escrow Agent may have separate counsel and the Company shall pay
the reasonable fees and expenses of such counsel. The Company need not reimburse
any expense or indemnify against any loss, liability or expense incurred by the
Escrow Agent through the Escrow Agent's own wilful misconduct, negligence or bad
faith. The indemnification provisions of this Section 7 shall survive the
termination of this Agreement.
To secure the Company's payment obligations in this Section,
the Escrow Agent shall have a security interest in the Escrowed Property
pursuant to Section 6.
8. MODIFICATIONS, WAIVERS AND AMENDMENTS. The Escrow Agent
shall not be bound by any modification, amendment, termination (except as
provided in Section 11 hereof), cancelation, rescission or supersession of this
Agreement unless the same shall be in writing and signed by the parties hereto,
and, if its rights, duties, immunities or indemnities as Escrow Agent are
affected thereby, unless it shall have given its prior written consent thereto.
This Agreement may not be modified or amended or terminated (except as provided
in Section 11 hereof) without the prior written consent of holders of all the
Securities (except as permitted without such consent pursuant to the Indenture).
9. CONCERNING THE ESCROW AGENT. (a) The Escrow Agent shall
exercise the same degree of care toward the Escrowed Property as it exercises
toward its own similar property and shall not be held to any higher standard of
care under this Agreement, nor be deemed to owe any fiduciary duty to the
Company or anyone else.
(b) The Escrow Agent may act upon any instrument or other
writing believed by it in good faith to be genuine and to have been signed or
presented by the proper person, and shall not be liable to any party hereto in
connection with the performance of its duties hereunder, except for its own
gross negligence, wilful misconduct or bad faith. The duties of the Escrow Agent
shall be determined only with reference to this Agreement and applicable laws,
and the
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Escrow Agent is not charged with any knowledge of or any duties or
responsibilities in connection with any other document or agreement. If in doubt
as to its duties and responsibilities hereunder, the Escrow Agent may consult
with counsel of its choice and shall be protected in any action taken or omitted
in good faith in connection with the advice or opinion of such counsel.
(c) The Escrow Agent may execute any of its powers or
responsibilities hereunder and exercise any rights hereunder either directly or
by or through its agents or attorneys.
(d) Nothing in this Agreement shall be deemed to impose upon
the Escrow Agent any duty to qualify to do business or to act as agent or
otherwise in any jurisdiction other than the State of Maryland.
(e) The Escrow Agent shall not be responsible for and shall
not be under a duty to examine into or pass upon the validity, binding effect,
execution or sufficiency of this Agreement, any agreement amendatory or
supplemental hereto or of any certificates or opinions delivered to it hereunder
or pursuant hereto.
(f) The Escrow Agent makes no representation as to the
validity, value, genuineness or collectability of any security or other document
or instrument held by or delivered to it.
(g) The Escrow Agent shall not be called upon to advise any
party as to selling or retaining, or taking or refraining from taking any action
with respect to, any securities or other property deposited hereunder.
(h) The Escrow Agent shall have the right at any time to
resign hereunder by giving written notice of its resignation to the Company at
the address set forth herein or at such other address as the Company shall
provide, at least 60 days prior to the date specified for such resignation to
take effect. Upon the effective date of such resignation, all cash and other
payments and all other property then held by the Escrow Agent hereunder shall be
delivered by it to a successor escrow agent. If no successor escrow agent is
appointed, the Escrow Agent may apply to a court of competent jurisdiction for
such appointment.
(i) In the event that the Escrow Agent should at any time be
confronted with inconsistent claims or demands to the Escrowed Property the
Escrow Agent shall have the right, but not the duty, to interplead the parties
in any court of competent jurisdiction and request that such court
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determine the respective rights of the parties with respect to the Escrowed
Property. In the event the Escrow Agent no longer holds any Escrowed Property,
it shall be released from any obligation or liability as a consequence of any
such claims or demands.
10. NOTICES. All notices required to be given hereunder shall
be in writing and shall be deemed given when received at the following addresses
until such time as the parties hereto designate a different or additional
address or addresses:
To the Company:
Millenium Seacarriers, Inc.
c/o Maples and Calder
P.O. Box 309
South Church Street
George Town, Grand Cayman
Cayman Islands, British West Indies
To the Escrow Agent:
The First National Bank of Maryland
Corporate Trust Department
Mail Code 101-591
25 South Charles Street
Baltimore, MD 21201
Attention of: Donald Hargadon
11. MISCELLANEOUS. (a) This Agreement sets forth exclusively
the duties of the Escrow Agent with respect to any and all matters pertinent
hereto and no implied duties or obligations shall be read into this Agreement
against the Escrow Agent.
(b) This Agreement may be executed in any number of
counterparts, each of which shall be an original and all of which when taken
together shall constitute one agreement.
(c) This Agreement shall terminate when all Escrowed Property
has been disbursed pursuant to Section 3, 4 or 5, or if the Securities shall be
repaid in full or the Company has exercised either its covenant defeasance or
legal defeasance option in accordance with the terms of the Indenture and
thereafter the Escrow Agent shall have no further obligation or liability
hereunder.
(d) This Agreement shall be governed by the laws of the State
of New York but without giving effect to applicable principles of conflicts of
law to the extent that
<PAGE>
15
the application of the laws of another jurisdiction would be required thereby.
(e) By the execution and delivery of this Agreement, the
Company (i) acknowledges that it has, by separate written instrument,
irrevocably designated and appointed Kylco Maritime (USA), Inc. ("Kylco USA")
(and any successor entity), as its authorized agent upon which process may be
served in any suit or proceeding arising out of or relating to this Agreement
that may be instituted in any federal or state court in the State of New York,
Borough of Manhattan or brought by the Escrow Agent (whether in its individual
capacity or in its capacity as Escrow Agent under this Agreement), and
acknowledges that Kylco USA has accepted such designation, (ii) submits to the
jurisdiction of any such court in any such suit or proceeding, and (iii) agrees
that service of process upon Kylco USA and written notice of said service to the
Company shall be deemed in every respect effective service of process upon the
Company in any such suit or proceeding. The Company further agrees to take any
and all action, including the execution and filing of any and all such documents
and instruments, as may be necessary to continue such designation and
appointment of Kylco USA in full force and effect so long as this Agreement
shall be in full force and effect.
<PAGE>
16
IN WITNESS WHEREOF, the parties have duly executed this
Agreement as of the date first written above.
MILLENIUM SEACARRIERS, INC.
by /s/ Vassilios M. Livanos
------------------------------------
Name: Vassilios M. Livanos
Title: Chief Executive Officer
THE FIRST NATIONAL BANK OF
MARYLAND, as Escrow Agent,
by /s/ Donald Hargadon
------------------------------------
Name: Donald Hargadon
Title: Assistant Vice President
<PAGE>
EXHIBIT A to
Escrow Agreement
[Form of Release Certificate]
The First National Bank of Maryland
Corporate Trust Department
Mail Code 101-991
25 South Charles Street
Baltimore, MD 21201
Attention of Mr. Donald Hargadon
[Date]
MILLENIUM SEACARRIERS, INC.
ESCROW AND PLEDGE AGREEMENT
RELEASE CERTIFICATE
Dear Sirs:
Reference is made to that Escrow and Pledge Agreement, dated
as of July 15, 1998 between you, as Escrow Agent, and the undersigned (the
"Escrow Agreement"). Capitalized terms used but not defined herein shall have
the meanings assigned thereto in the Escrow Agreement.
As of the date hereof, to the knowledge of the undersigned, no
Default or Event of Default under the Indenture dated as of July 15, 1998 has
occurred and is continuing. The undersigned hereby requests that Escrowed
Property in an amount equal to $__________ (the "Requested Amount") be released
to the undersigned (or pursuant to the undersigned's further written
instructions) on , which date is not less than 3 Business Days after the date
hereof.
[This Release Request is being made in connection with the
execution by the Company or a Wholly Owned Subsidiary of a sale and purchase
contract (an "Acquisition Contract") to acquire an Additional Vessel or
Additional Vessels, (i) such Acquisition Contract has been signed by the
applicable seller, is in full force and effect as of the date of the Release
Certificate and the undersigned are not aware of any default that could
reasonably lead to the termination of such Acquisition Contract thereunder by
the Company, such Wholly Owned Subsidiary or the applicable seller, (ii) the
vessel(s) to be acquired pursuant to such Acquisition Contract conform(s) in all
material respects with the description in the Offering Circular of the types of
Vessels which are to be acquired with Escrowed Property, (iii) the Requested
Amount does not exceed the amount required to pay a deposit to the applicable
seller, or to pay other pre-delivery expenses, or the cost of appraisals for
such Additional Vessel or Additional Vessels, in each case called for by the
Acquisition Contract, and (iv) after
<PAGE>
2
giving effect to the release of the Requested Amount and the application thereof
in accordance with such Release Certificate, the Loan to Value Ratio would not
exceed 0.85 to 1.00 as of the date of the execution of the Acquisition
Contract.]
[This release request is being made in connection with the
consummation by the Company or a Wholly Owned Subsidiary, simultaneously with
the release of the Requested Amount, of the acquisition of one or more Committed
Vessels or Additional Vessels, pursuant to an Acquisition Contract, (i) the
vessel(s) to be acquired pursuant to such Acquisition Contract is either a
Committed Vessel or conform(s) in all material respects with the description in
the Offering Circular of the types of Vessels which are to be acquired with
Escrowed Property and in the case of a Committed Vessel, the conditions in the
related Acquisition Contract have been satisfied in all material respects; (ii)
the Requested Amount does not exceed the sum of the balance of the consideration
payable to the applicable seller pursuant to the Acquisition Contract plus the
related transaction costs (including the cost of appraisals for such Committed
Vessel(s) or Additional Vessel(s)) incurred by the Company or the Wholly Owned
Subsidiary, including the reasonable fees and expenses of counsel and the costs
of the registration of title and the recording of the mortgage with respect
thereto, (iii) after giving effect to the release of the Requested Amount and
the application thereof in accordance with such Release Certificate, the Loan to
Value Ratio would not exceed 0.85 to 1.00 as of the date of the execution of the
Acquisition Contract, and (iv) the aggregate amount of funds released to pay the
purchase price of the Committed Vessels, after giving effect to this Release
Certificate, does not exceed $53.8 million.]
[This release request is being made in connection with, or
within six months after, the acquisition of a Committed Vessel or an Additional
Vessel by the Company or a Wholly Owned Subsidiary with proceeds of the sale of
the Securities, including Escrowed Property, the Company or the Wholly Owned
Subsidiary has undertaken or is undertaking upgrades or necessary maintenance,
repair (including structural modifications) or drydocking expenses, including
survey expenses, or is making the Contingency Fund Deposit (as defined in the
Escrow Agreement) relating to such Committed Vessel or such Additional Vessel,
and (ii) the
<PAGE>
3
Requested Amount does not exceed the amount of such expenses.]
Very truly yours,
MILLENIUM SEACARRIERS, INC.
by
-----------------------------------
Name:
Title:
by
-----------------------------------
Name:
Title:
<PAGE>
EXHIBIT B to
Escrow Agreement
FORM OF OFFICERS' CERTIFICATE
FOR RELEASE DATE
This certificate is being delivered pursuant to Section 3(a)
of the Escrow and Pledge Agreement dated as of July 15, 1998 (the "Escrow
Agreement"), between Millenium Seacarriers, Inc. (the "Company") and The First
National Bank of Maryland, as Escrow Agent (the "Escrow Agent"). Capitalized
terms used but not defined herein have the meanings given such terms in the
Escrow Agreement. The Company hereby certifies through the undersigned officers
that:
1. [The Company and the applicable seller have executed the
following Acquisition Contracts or other sale and purchase
contracts to acquire an Additional Vessel(s):
Ship Name:
Seller:
Deposit Amount:
Purchase Price:
Appraised Value:]
[The Company has undertaken or is undertaking necessary
upgrades, maintenance, repair or drydocking expenses relating
to an Additional Vessel:
Ship Name:
Cost of Maintenance:]
2. All conditions precedent in the Escrow Agreement for the
release of Escrowed Property on the Release Date have been
satisfied or will be satisfied concurrently with the release
of the Escrowed Property described below in paragraph 4.
3. The Company or a Wholly Owned Subsidiary thereof is the record
and beneficial owner of the Pledged Shares, free and clear of
any Lien, except for the Lien created by the Indenture.
4. The Company directs that the following amounts be released
from the Escrow Account to the following parties by wire
transfer as provided below or, if no wire transfer
instructions are provided, by check to the parties indicated
(any amounts described below to be paid to the undersigned
represent reimbursements of amounts previously paid by the
undersigned in satisfaction of deposit amounts payable to the
applicable seller(s) in
<PAGE>
2
respect of one or more Acquisition Contracts listed in
paragraph 1 above):
NAME AMOUNT WIRE INSTRUCTIONS
IN WITNESS WHEREOF, Millenium Seacarriers, Inc. through the
undersigned officers, has signed this Certificate this day of , 199 .
MILLENIUM SEACARRIERS, INC.
by
-----------------------------------
Name:
Title:
by
-----------------------------------
Name:
Title:
<PAGE>
EXHIBIT C
to Escrow Agreement
[Form of Letter of Release of Mortgage and Reassignment]
To: [The Company or applicable Subsidiary Guarantor]
From: [Lender name and address]
Dear Sirs
M.V.S [ ]
We refer to an agreement (the "Loan Agreement") dated
_____________ and made between (1) yourselves as Borrowers and (2) ourselves as
Lender pursuant to which we agreed to make available to you a secured loan
facility of up to US$________ (the "Loan").
In consideration of the receipt by us of full repayment of the
Loan and all other amounts outstanding to us under the Loan Agreement, we, as
Lender, hereby irrevocably declare and confirm that the Borrower(s) [and the
Guarantor, [insert name of Guarantor],] are released from all their respective
obligations of whatsoever nature under all of the security documents, including:
[the Mortgage dated ___________ [as amended by Amendment(s) No. __ thereto dated
as of ____________ (collectively,] [(] the "Mortgage"), made and executed by
[Name of Shipowner], a ____________ corporation, on the whole of the vessel
[Name of Vessel], Official No. __ (the "Vessel"), said Mortgage having been
recorded in ____________ at ____________ in Book __ at page __.] [add any other
obligations]
Furthermore, we hereby release and reassign to the Borrowers
all our rights, title and interest in and to all assets, income and property
assigned by the Borrowers to ourselves pursuant to the said security documents
or any other documents executed pursuant to the Loan Agreement and agree to
execute at the expense of the Borrowers, such
<PAGE>
2
further documents as the Borrowers may reasonably require in order to effect
such releases and reassignments.
Dated: ____________
Name of Mortgagee/Lender]
By
-------------------------------------
Name:
Title:
<PAGE>
3
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this _____ day of ____________, ____, before me personally
appeared ________________________, to me known who, being by me duly sworn, did
depose and say that s/he resides at ____________, ____________, ___________,
that s/he is the [office held] of ____________, a ____________, corporation, the
corporation described in and which executed the foregoing instrument; that s/he
signed her/his name thereto pursuant to a power of attorney of said corporation
and that the foregoing instrument is the act and deed of said corporation.
----------------------------
Notary Public
<PAGE>
EXHIBIT D to
Escrow Agreement
[Forms of Panamanian, Liberian, Cypriot, Cayman and Bahamian
Mortgages/Deeds of Covenant]
<PAGE>
EXHIBIT E to
Escrow Agreement
FORM OF OPINION OF COUNSEL
This opinion is being delivered pursuant to Section 3(a) of
the Escrow and Pledge Agreement dated as of July 15, 1998(the "Escrow
Agreement"), between Millenium Seacarriers, Inc. (the "Company") and The First
National Bank of Maryland, as Escrow Agent (the "Escrow Agent"). Capitalized
terms used but not defined herein have the meanings given such terms in the
Escrow Agreement or the Indenture. We are of opinion that:
1. All conditions precedent in the Escrow Agreement to the
release of Escrowed Property on the date hereof have been satisfied in
all material respects or will be satisfied in all material respects
immediately after the release of the Escrowed Property as described in
the Officers' Certificate delivered pursuant to Section 3(a) of the
Escrow Agreement.
2. [If this opinion is being delivered in respect of an
Additional Vessel, add--The acquisition of the Additional Vessel
conforms in all material respects to the description contained in the
Offering Circular dated July 20, 1998.]
3. [If this opinion is being delivered in respect of a new
Subsidiary Guarantor, add--The Supplemental Indenture constitutes a
valid and legally binding obligation of the Guarantor party thereto,
enforceable against such Guarantor in accordance with its terms,
subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or
affecting creditors' rights and to general equity principles.]
4. The applicable Subsidiary Guarantor is a corporation
validly existing and in good standing under the laws of [ ], and has
all requisite corporate and legal right, power and authority to own its
vessel and to transact the business it purports to transact. The
applicable Subsidiary Guarantor has all requisite corporate and legal
right, power and authority to execute and deliver the Security
Agreements, Charters and the Supplemental Indenture, if applicable, to
which it is a party and to consummate the transactions contemplated
thereby and to perform its obligations thereunder.
5. The execution and delivery and performance of the Security
Agreements relating to each [Committed Vessel] [Additional Vessel]
(which Security Agreements, if required by applicable law in order to
perfect the security interests therein created, are in appropriate form
for recording or registration in the appropriate
<PAGE>
2
governmental offices) will not result in a breach or violation of any
of the terms and provisions of, or constitute a default under, any
statute, rule, regulation or order of any New York, Federal or [home
jurisdiction] governmental agency or body or any court having
jurisdiction over the Company or any subsidiary of the Company or any
of their respective properties, or any agreement or instrument to which
the Company or any such subsidiary is a party or by which the Company
or any such subsidiary is bound or to which any of the properties of
the Company or any such subsidiary is subject.
6. Neither the execution and delivery of the Security
Agreements or the Supplemental Indenture nor the performance thereof
nor the consummation of the transactions contemplated thereby will
result in any violation of or be in conflict with or constitute a
default under any term or provision of (i) the Articles of
Incorporation or By-laws of the applicable Subsidiary Guarantor or the
Company or (ii)(a) any term or provision of any agreement, indenture,
mortgage instrument or license that is material to the applicable
Subsidiary Guarantor or (b) any statute, law, governmental rule,
regulation or ordinance or order of any court, arbitrator or
governmental authority and, in the case of each (a) and (b), applicable
to it or its properties or assets, or result in the creation of (or
impose any obligation on the applicable Subsidiary Guarantor to create)
any Lien (other than the Lien of the Indenture and the Lien of the
applicable mortgage upon any of the properties or assets of the
applicable Subsidiary Guarantor pursuant to any such term or provision.
7. The applicable Subsidiary Guarantor has, by all necessary
corporate and shareholder action, duly authorized the execution and
delivery of, and the performance of its obligations under each of the
Security Agreements relating to each [Committed] [Additional] Vessel to
which the Company or a Subsidiary Guarantor is a party, each
Supplemental Indenture, if applicable, and each Charter to which a
Subsidiary Guarantor is a party.
8. Subject to the consummation of the transactions herein
described the applicable Subsidiary Guarantor has title of record to
the [Committed] [Additional] Vessel free and clear of any Liens (as
defined in the Indenture) of record, except for the lien of the related
Mortgage and Permitted Liens.
<PAGE>
3
9. The Supplemental Indenture has been duly authorized,
executed and delivered by the applicable Subsidiary Guarantor.
10. All filing, registration and recording fees required in
connection with any Security Agreement relating to each [Committed]
[Additional] Vessel or other fees necessary to ensure the validity,
effectiveness and priority of any liens, charges and encumbrances
created thereby have been paid.
11. No authorization, consent, license, permission, permit or
approval (including exchange control approval) of or action by, and no
notice to or filing with, any governmental authority or regulatory body
is required for the execution, delivery and performance of any of the
Security Agreements or the Supplemental Indenture by the respective
parties thereto and no such authorization, consent, license,
permission, permit, approval, action, notice or filing is required for
the exercise by the Trustee of the rights and remedies granted to it
under any of the Security Agreements, except for the filing and
registration of the Mortgages in the office of the applicable flag
jurisdiction.
12. Upon the recording of the Mortgages in the office of the
applicable flag jurisdiction, each Mortgage will create of record the
first priority mortgage lien covering the related Mortgaged Vessel
which it purports to create [subject to standard or customary
qualifications].
13. The security interests created by each Security Agreement
(other than the Mortgages) do not require any action to be taken under
or pursuant to the laws of the appropriate flag jurisdiction in order
to create or perfect such security interests or to permit the Trustee
to enforce its rights under the Security Agreements creating the same.
14. The choice of New York law to govern the Security
Agreements (other than the Mortgages) and the Supplemental Indenture
constitutes a valid choice of law. The submission by the applicable
Subsidiary Guarantor to the non-exclusive jurisdiction of any Federal
or state court in the Borough of Manhattan, The City of New York (a
"New York Court") is a valid submission insofar as the appropriate law
is concerned, provided that Kylco USA has accepted its appointment by
the applicable Subsidiary Guarantor as its agent to accept service of
process in the United States of America.
<PAGE>
4
15. Neither the applicable Subsidiary Guarantor nor any of its
property have any immunity from the jurisdiction of any court or from
any legal process (whether through service or notice, attachment prior
to judgment, attachment in aid of execution, execution or otherwise).
16. To the best of our knowledge there are no legal or
governmental actions, suits or proceedings now pending or threatened
against the applicable Subsidiary Guarantor, or to which any of the
properties of the applicable Subsidiary Guarantor all subject, except
actions, suits and proceedings of the character normally incident to
the business conducted by the applicable Subsidiary Guarantor (none of
which calls into question the validity or legality of the Security
Agreements or Guarantee Agreement or any action taken or to be taken
pursuant thereto).
17. In a suit on the events before a court of the jurisdiction
of the applicable subsidiary guarantor, such court will respect and
enforce the agreement of the parties as to judgment currency.
18. No stamp or registration or similar taxes, duties, imposts
or other charge are payable in respect of enforcement of the Security
Agreements or Supplemental Indenture.
<PAGE>
EXHIBIT F to
Escrow Agreement
FORM OF SUPPLEMENTAL INDENTURE
[ ] [ ] SUPPLEMENTAL INDENTURE (this
"Supplemental Indenture") dated as of
, , among MILLENIUM
SEACARRIERS, INC., a Cayman Islands corporation (the
"Company"), the guarantors listed on the signature
pages hereto (the "Guarantors"), and THE FIRST
NATIONAL BANK OF MARYLAND, a national banking
association (the "Trustee"), to the INDENTURE (the
"Indenture") dated as of July 15, 1998 among the
Company, the guarantors named therein (the
"Subsidiary Guarantors"), and the Trustee.
WHEREAS, Sections 9.01(5) and (8) of the Indenture provide
that without the consent of any Securityholder, the Company, the Subsidiary
Guarantors and the Trustee may amend the Indenture to add additional Guarantees
with respect to the Securities, including Subsidiary Guarantees, or to make any
change that does not adversely affect the rights of any Securityholder;
WHEREAS, Section 4.14 of the Indenture requires the Company to
cause [ ] to become a Subsidiary Guarantor, and [ ] is hereby agreeing to become
such, and Section 11.01(b) of the Indenture requires [ ] to make an assignment
to the Trustee of all the freights and hires and Charters in respect of the
Mortgaged Vessel;
WHEREAS, the entry into this Supplemental Indenture by the
parties hereto is in all respects authorized by the provisions of the Indenture;
and
WHEREAS, all things necessary to make this Supplemental
Indenture a valid agreement of the Company and the Subsidiary Guarantors in
accordance with its terms have been done.
NOW, THEREFORE, and in consideration of the premises, it is
mutually covenanted and agreed, for the equal and proportionate benefit of all
Securityholders, as follows:
SECTION 1. [NEW GUARANTOR] hereby agrees to become a
Subsidiary Guarantor under the Indenture and, together with each other
Subsidiary Guarantor, hereby unconditionally and irrevocably guarantees, jointly
and severally, to each Holder and to the Trustee and its successors and assigns
(a) the full and punctual payment of principal of and interest on the Securities
when due, whether at maturity, by acceleration, by redemption, by
<PAGE>
-2-
required repurchase or otherwise, and all other monetary obligations of the
Company and the Subsidiary Guarantors under the Indenture and the Securities and
of the Subsidiary Guarantors under the Security Agreements and (b) the full and
punctual performance within applicable grace periods of all other obligations of
the Company and the Subsidiary Guarantors under the Indenture, the Security
Agreements and the Securities (all the foregoing being hereinafter collectively
called the "Obligations"). Each Guarantor further agrees that the Obligations
may be extended or renewed, in whole or in part, without notice or further
assent from such Guarantor and that such Guarantor will remain bound under the
Indenture notwithstanding any extension or renewal of any Obligation. The
Subsidiary Guarantor is subject to all the provisions of the Indenture
applicable to a Subsidiary Guarantor. Without limiting the effect of the
foregoing, the Subsidiary Guarantor hereby agrees that it is hereby bound by the
provisions of Article 11 of the Indenture relating to the assignment to the
Trustee as security, and hereby grants to the Trustee a security in (subject to
the provisions of the Indenture), all the freights and hires and Charters to
which such Subsidiary Guarantor is entitled in respect of its Mortgaged Vessel.
SECTION 2. The Indenture, as supplemented and amended by this
Supplemental Indenture and all other indentures supplemental thereto, is in all
respects ratified and confirmed, and the Indenture, this Supplemental Indenture
and all indentures supplemental thereto shall be read, taken and construed as
one and the same instrument.
SECTION 3. If any provision hereof limits, qualifies or
conflicts with another provision hereof which is required to be included in this
Supplemental Indenture by any of the provisions of the Trust Indenture Act, such
required provision shall control.
SECTION 4. All covenants and agreements in this Supplemental
Indenture by the Subsidiary Guarantor shall bind its successors and assigns,
whether so expressed or
not.
SECTION 5. In case any provision in this Supplemental
Indenture 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 6. Nothing in this Supplemental Indenture, expressed
or implied, shall give to any Person, other than the parties hereto and their
successors hereunder, and the Securityholders any benefit or any legal
<PAGE>
-3-
or equitable right, remedy or claim under this Supplemental Indenture.
SECTION 7. THIS SUPPLEMENTAL INDENTURE AND THE SECURITIES
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW
TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE
REQUIRED THEREBY.
SECTION 8. All terms used in this Supplemental Indenture not
otherwise defined herein that are defined in the Indenture shall have the
meanings set forth therein.
SECTION 9. This Supplemental 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.
SECTION 10. The recitals contained herein shall be taken as
statements of the Company, and the Trustee assumes no responsibility for their
correctness. The Trustee makes no representations as to the validity or
sufficiency of the Indenture, this Supplemental Indenture or of the Securities
and shall not be accountable for the use or application by the Company of the
Securities or the proceeds thereof.
<PAGE>
-4-
IN WITNESS WHEREOF, the parties have caused this Supplemental Indenture to be
duly executed as of the date first written above.
MILLENIUM SEACARRIERS,
INC., as principal obligor
and Pledgor,
by
------------------------------------
Name:
Title:
SUBSIDIARY GUARANTORS:
RAPID OCEAN CARRIERS
LIMITED,
by
------------------------------------
Name:
Title:
IVY NAVIGATION LIMITED,
by
------------------------------------
Name:
Title:
OAKMONT SHIPPING AND
TRADING LIMITED,
by
------------------------------------
Name:
Title:
TOPSCALE SHIPPING COMPANY
LIMITED,
by
------------------------------------
Name:
Title:
<PAGE>
-5-
CONIFER SHIPPING COMPANY
LIMITED,
by
------------------------------------
Name:
Title:
[NEW SUBSIDIARY GUARANTOR],
by
------------------------------------
Name:
Title:
THE FIRST NATIONAL BANK OF
MARYLAND, as Trustee,
by
------------------------------------
Name:
Title:
<PAGE>
EXHIBIT G to
The Escrow Agreement
INSURANCE ASSIGNMENT
[NAME OF VESSEL]
[NAME OF SHIPOWNER], a corporation organized and existing
under the laws of (the "Shipowner"), in consideration of One Dollar ($1) lawful
money of the United States of America, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, as
sole owner of the [jurisdiction] flag vessel [NAME OF VESSEL], Official
No.______ (the "Vessel"), has sold, assigned, transferred, set over and granted
a security interest and by this instrument does sell, assign, transfer, set over
and grant a security interest, unto The First National Bank of Maryland, a
national banking association organized and existing under the laws of the United
States of America, as Trustee and Collateral Agent (the "Assignee") under that
certain Collateral Agency and Intercreditor Agreement dated as of July 15, 1998
(as the same may be from time to time amended, supplemented or otherwise
modified, the "Collateral Agency Agreement") among (i) the Shipowner, (ii) the
certain other Subsidiary Guarantors named therein, (iii) the Assignee, and (iv)
Millenium Seacarriers, Inc. (the "Issuer") and unto the Assignee's successors
and assigns, and its successors' and assigns' own proper use and benefit, as
collateral security for the Shipowner's Obligations (as defined in the
Collateral Agency Agreement), all right, title and interest of the Shipowner
under, in and to (i) all insurances (including all entries in a protection and
indemnity or war risks association) in respect of the Vessel whether now or
hereafter to be effected, and all renewals of or replacements for the same, (ii)
all claims, returns of premium and other moneys and claims for moneys due and to
become due under said insurance or in respect of said insurance, (iii) all other
rights of the Shipowner under or in respect of said insurance and (iv) any
proceeds of any of the foregoing.
Except where otherwise expressly provided, words and
expressions defined in the Indenture shall bear the same meanings when used in
this Assignment.
It is expressly agreed that anything herein contained to the
contrary notwithstanding, the Shipowner shall remain liable under said
insurances to perform all of the obligations assumed by it thereunder, and the
Assignee shall have no obligation or liability under said insurances by reason
of or arising out of this instrument of assignment nor shall the Assignee be
required or obligated in any manner to perform or fulfill any obligations of the
Shipowner under or pursuant to said insurances or to make any payment or to make
any inquiry as to the nature or sufficiency of any payment received by it or to
present or
<PAGE>
-2-
file any claim, or to take any other action to collect or enforce the payment of
any amounts which may have been assigned to it or to which it may be entitled
hereunder at any time or times.
The Shipowner hereby constitutes the Assignee, its successors
and assigns, the Shipowner's true and lawful attorney-in-fact, irrevocably, with
full power (in the name of the Shipowner or otherwise), to ask, require, demand,
receive, compound and give acquittance for any and all moneys and claims for
moneys due and to become due under or arising out of said insurances, to settle
or comprise any claims, to endorse any checks or other instruments or orders in
connection therewith and to file any claims or to take any action or institute
any proceeding which the Assignee may deem to be necessary or advisable in the
premises. The powers and authorities granted to the Assignee and its successors
or assigns herein have been given for valuable consideration and are hereby
declared to be irrevocable.
The Shipowner covenants and agrees that:
(a) the insurances assigned hereby are now valid and in
full force and effect and that the Shipowner will not
do or omit or knowingly suffer to be done or omitted
anything whereby any of the insurances assigned
hereby may become void or voidable in whole or in
part or the Assignee or any other person claiming
title through it may be prevented from receiving the
proceeds thereof;
(b) if by reason of anything done or omitted or knowingly
suffered to be done or omitted the insurances
assigned hereby shall at any time become voidable in
whole or in part the Shipowner will forthwith at its
own cost take all such insurances in force and in
particular will pay all premiums as they become due;
(c) if by reason of anything done or omitted or knowingly
suffered to be done or omitted the insurances
assigned hereby or any of them shall at any time
become void in whole or in part the Shipowner at its
own cost will forthwith effect new insurances with
insurers approved by the Assignee on terms approved
by the Assignee and will forthwith (if so required by
the Assignee) execute an assignment of such new
insurances to the Assignee and will pay any sums
payable by way of premium under the new insurances.
<PAGE>
-3-
The Shipowner hereby further covenants and agrees to procure
that notice of this Assignment in substantially the form of Annex A shall be
duly given to all underwriters and that where the consent of any underwriter is
required pursuant to any of the insurances assigned hereby that it shall be
obtained and evidence thereof shall be given to the Assignee, or, in the
alternative, that in the case of protection and indemnity coverage the Assignee
shall obtain a letter of undertaking by the underwriters, and that there shall
be duly endorsed upon all slips, cover notes, policies, certificates of entry or
other instruments issued or to be issued in connection with the insurances
assigned hereby such clauses as to loss payees as the Assignee may require or
approve. In all cases, unless otherwise agreed in writing by the Assignee, such
slips, cover notes, notices, certificates of entry or other instruments shall
show the Assignee as named assured and loss payee and shall provide that there
will be no recourse against the Assignee for payment of premiums, calls or
assessments.
The Shipowner agrees that at any time and from time to time,
upon the written request of the Assignee, the Shipowner will promptly and duly
execute and deliver or cause to be executed and delivered any and all such
further instruments and documents as the Assignee may deem desirable in
obtaining the full benefits of this Assignment and of the rights and powers
herein granted.
The Shipowner does hereby warrant and represent that it has
not assigned or pledged, and hereby covenants that, without the prior written
consent thereto of the Assignee, so long as this instrument of assignment shall
remain in effect, it will not assign or pledge the whole or any part of the
right, title and interest hereby assigned to anyone other than the Assignee, its
successors or assigns, and it will not take or omit to take any action, the
taking or omission of which might result in an alteration or impairment of said
insurances, of this Assignment or of any of the rights created by said
insurances or this Assignment.
All notices or other communications which are required to be
made to the Assignee hereunder shall be made pursuant to Section 7.2 of the
Collateral Agency Agreement.
The Shipowner hereby appoints the Assignee its
attorney-in-fact for the sole purpose of executing and filing any financing
statements or papers of similar purpose or effect in connection with any filing
or recording of this Assignment.
THIS ASSIGNMENT SHALL IN ALL RESPECTS BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE
<PAGE>
-4-
OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE.
This Assignment shall not be amended and/or varied except by agreement in
writing signed by the parties hereto.
Section 7.12 of the Collateral Agency Agreement is
incorporated herein in its entirety and made a part hereof as if it were set
forth herein.
[Remainder of page intentionally left blank]
<PAGE>
IN WITNESS WHEREOF, the Shipowner has duly executed this
Insurance Assignment in respect of the [jurisdiction] flag vessel [NAME OF
VESSEL] this ____ day of -----, -----.
[NAME OF SHIPOWNER]
as Shipowner
By______________________________
Name:
Title:
<PAGE>
ANNEX A
to the Insurance Assignment
NOTICE OF ASSIGNMENT
To: [NAME OF BROKER]
PLEASE TAKE NOTICE that, pursuant to the annexed Insurance
Assignment of [NAME OF SHIPOWNER] (the "Shipowner"), the Shipowner has assigned
to The First National Bank of Maryland, as Trustee and Collateral Agent (the
"Assignee"), all of the Shipowner's right, title and interest in, to and under
(i) all insurances in respect of [NAME OF VESSEL] (the "Vessel") whether now or
hereafter to be effected, and all renewals of or replacements for the same, (ii)
all claims, returns of premium and other moneys and claims for moneys due and to
become due under said insurance or in respect of said insurance, (iii) all other
rights of the Shipowner under or in respect of said insurance and (iv) any
proceeds of any of the foregoing as security for the Obligations as defined in
the Collateral Agency Agreement dated July 15, 1998, among (i) the Shipowner,
(ii) certain other Subsidiary Guarantors named therein, (iii) the Assignee and
(iv) Millenium Seacarriers, Inc. (the "Issuer"). The undersigned hereby directs
that, on and after the date on which the Assignee shall have notified you that
an Event of Default (as defined in such Collateral Agency Agreement) has
occurred and is continuing, all moneys otherwise payable to the Shipowner under
the insurances referred to in the above-mentioned Assignment of Insurances shall
be paid to the Assignee at _________, at its office at _____________________;
ABA No. _______; CHIPs ID# _____; Account No. __________; Ref.:
_________________________ Attn: _________________ Re: _________; until further
notice from the Assignee.
Dated: ______ ____, ______.
[NAME OF SHIPOWNER]
By:__________________________
Name:
Title:
Acknowledged and Agreed
on this __ day of ____, ___:
[NAME OF BROKER]
By:_______________________
Name:
Title:
<PAGE>
ANNEX B
to the Insurance Assignment
FORM OF LETTER OF UNDERTAKING
Dear Sirs,
We confirm that we have effected insurances for the account of the above Owners
as set out in Appendix A attached.
Pursuant to instructions received from the above Owners and/or their authorized
Managers or Agents and in consideration of your approving us as the appointed
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 therefor with your consent as may be arranged through
ourselves and the benefit of the insurance hereunder to your order in
accordance with the terms of the Loss Payable Clause(s) set out in
Appendix B attached; and
2. To arrange for the said Loss Payable Clause(s) to be included on the
policies when issued; and
3. To have endorsed on each and every Policy as and when the same is
issued a Notice of Assignment in the form of Annex A to the Insurance
Assignment hereto dated and signed by the Owners and acknowledged by
Underwriters in accordance with Market practice; and
4. To advise you promptly if we cease to be the Broker for the Assured or
in the event of any material changes of which we are aware affecting
the said insurances, and
5. Following a written application received from you not later than one
month before expiry of these insurances to notify you within fourteen
days of the receipt of such application in the event of our not having
received notice of renewal instructions from the Owners and/or their
authorized Managers or Agents, and in the event of our receiving
instructions to renew to advise you promptly of the details thereof.
Our above undertakings are given subject to our lien on the Policies for
premiums and subject to our right of cancellation of default in payment of such
premiums but we undertake not to exercise such rights of cancellation without
giving you ten days notice in writing, either by letter, telex or cable and a
reasonable opportunity for you to pay any premium outstanding. We further
undertake on
<PAGE>
2
application from you to advise you promptly of the premium payment situation.
It is understood and agreed that the operation of any Automatic Termination of
Cover, Cancellation or Amendment Provisions contained in the Policy conditions
shall override any Undertakings given by us as Brokers.
Notwithstanding the terms of the said Loss Payable Clause and the said Notice of
Assignment, unless and until we receive written notice from you to the contrary,
we shall be empowered to arrange for the collision and/or salvage guarantee 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. Where a guarantee has been given as aforesaid and the guarantor has
paid any sum under the guarantee in respect of such claim, there shall be
payable directly to the guarantor out of the proceeds of the said Policies a sum
equal to the sum so paid.
This undertaking is subject to all claims and returns of premiums being
collected through us as Brokers.
Yours faithfully,
Authorized Signatory
<PAGE>
Appendix A
to Letter of Undertaking
DETAILS OF INSURANCES
<PAGE>
Appendix B
to the Letter of Undertaking
Forms of Loss Payable Clauses
(A) HULL AND MACHINERY
By an Insurance Assignment dated _______, 1998 the Owner has assigned
to The First National Bank of Maryland, not in its individual capacity but
solely as Collateral Agent and Trustee (the "Collateral Agent and Trustee"),
under the Collateral Agency and Intercreditor Agreement (the "Agreement"), dated
as of July 15, 1998, among the Collateral Agent and Trustee, The Bank of New
York, a New York trust company (the "Lender") and Millenium Seacarriers, Inc., a
Cayman Islands company (the "Company"), the Owner and each subsidiary of the
Company listed on the signature pages thereto, all the Owner's right, title and
interest in and to all policies and contracts of insurance from time to time
taken out or entered into by or for the benefit of the Owner in respect of the
vessel hereto (the "Vessels") and accordingly:
Unless the Collateral Agent and Trustee shall otherwise agree, all
insurance must name the Collateral Agent and Trustee as an assured, but without
liability for premiums, calls or assessments, and all amounts of whatsoever
nature payable under any insurance must be payable to the Collateral Agent and
Trustee for distribution first to itself and thereafter to the Owner or others
as their interests may appear. All amounts payable under any insurance with
respect to the Vessel involving any damage to the Vessel not constituting an
actual or constructive or an agreed or compromised total loss, the underwriters
may pay direct for the repair, salvage or other charges involved or, if the
Owner shall have first fully repaired the damage or paid all of the salvage or
other charges, may pay the Owner as reimbursement therefor; PROVIDED, HOWEVER,
that if such amounts (including any franchise or deductible) are in excess of
One Million United States Dollars ($1,000,000), the underwriters shall make such
payment to the Collateral Agent and Trustee. All payments of insurance shall be
made to the Collateral Agent and Trustee if an Event of Default (as defined in
the Agreement) shall have occurred or any event which with the giving of notice
or the lapse of time, or both, would constitute an Event of Default.
(B) PROTECTION AND INDEMNITY RISKS
Amounts payable under any insurance on the Vessel with respect to
protection and indemnity risks may be paid directly to the Owner to reimburse it
for any loss, damage or expense incurred by it and covered by such insurance or
to the person to whom any liability covered by such insurance has been incurred;
PROVIDED, HOWEVER, that if the
<PAGE>
2
Collateral Agent and Trustee shall give notice that an Event of Default (as
defined in the Agreement) shall have occurred or any event which with the giving
of notice or the lapse of time, or both, would constitute an Event of Default,
all such payments shall be made to the Collateral Agent and Trustee until the
indebtedness by secured pursuant to the Agreement has been fully discharged.
COLLATERAL AGENCY AND INTERCREDITOR AGREEMENT
COLLATERAL AGENCY AND INTERCREDITOR AGREEMENT dated as of July 15,
1998, by and among The First National Bank of Maryland, a national banking
association organized under the laws of the United States, not in its individual
capacity but solely as trustee (the "Indenture Trustee") with respect to the
First Priority Ship Mortgage Notes Due 2005 (the "Notes") issued under the
Indenture and as the Collateral Agent and trustee hereunder (the "Collateral
Agent and Trustee"), The Bank of New York, a New York trust company (the
"Lender") and Millenium Seacarriers, Inc., a Cayman Islands company (the
"Company") and each subsidiary of the Company listed on the signature pages
hereto (each such subsidiary referred to herein individually as a "Subsidiary
Guarantor" and, collectively, as the "Subsidiary Guarantors", and, together with
the Company, the "Grantors").
The Company has entered into the Credit Agreement and currently
herewith is issuing the Notes. To induce the holders of the Notes to purchase
such securities and to induce the Lender to enter into the Credit Agreement, the
Subsidiary Guarantors have agreed to enter into the Mortgages in order to secure
their obligations in respect of the Notes and the Credit Agreement.
The Company has requested the Collateral Agent and Trustee to act, and
the Collateral Agent and Trustee has agreed to so act, (i) as the agent of the
Indenture Trustee for the benefit of the holders of the Notes and (ii) as the
agent of, and trustee for, the Lender.
The parties hereto desire to set forth their understanding with respect
to the Collateral Agent and Trustee's rights and duties regarding the Collateral
and the respective interests of the parties hereto in and to the Collateral.
In consideration of the premises and other benefits, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. DEFINITIONS. Any capitalized term not otherwise defined
herein shall have the meaning assigned to such term in the Indenture. As used
herein, the following terms shall have the meanings set forth in this Section 1.
"ACCEPTABLE BANK" means a corporation organized and doing business
under the laws of the United States of America or of any state, authorized under
such laws to exercise corporate trust powers, having a combined capital and
surplus of at least $50,000,000, subject to supervision or examination by
Federal or state authority. If such corporation publishes reports of condition
at least annually, pursuant to law or to the requirements of the aforesaid
supervising or examining authority, then for the purposes of this definition,
the combined capital and surplus of such corporation shall be deemed to be its
combined capital and surplus as set forth in its most recent report of condition
so published.
"AGREEMENT" means this Collateral Agency and Intercreditor Agreement,
as the same may from time to time be amended, supplement or otherwise modified
in accordance with its terms and the terms hereof.
"ASSIGNMENTS OF INSURANCE" means each of the Insurance Assignments
granted to the Collateral Agent and Trustee by the Subsidiary Guarantors on the
insurances on the Vessels to secure the obligations under the Indenture, the
Notes and the Credit Agreement.
"COLLATERAL" means the Vessels subject to the Mortgages, together with
all insurances taken out and in effect from time to time with respect to the
Vessels.
1
<PAGE>
"COLLATERAL AGENT AND TRUSTEE" means The First National Bank of
Maryland not in its individual capacity but solely as collateral agent and
trustee under this Agreement until its resignation or removal pursuant to the
provisions of Section 4.5 hereof and, upon such resignation or removal, any
successor Collateral Agent and Trustee appointed pursuant to the provisions of
Section 4.5 hereof until such successor's resignation or removal as Collateral
Agent and Trustee pursuant to the provisions of Section 4.5 hereof.
"COMPANY" means Millenium Seacarriers, Inc., a Cayman Islands company.
"CREDIT AGREEMENT" means the Credit Agreement dated as of July 20, 1998
among the Lender, the Company and the Subsidiary Guarantors.
"DEBT INSTRUMENTS" means, collectively, the Indenture and the Credit
Agreement.
"DEFAULT" means a "DEFAULT" as defined in the Indenture.
"EVENT OF DEFAULT" means an "EVENT OF DEFAULT" as defined in the
Indenture and an "EVENT OF DEFAULT" as defined in the Credit Agreement.
"INDENTURE" means the Indenture dated as of the date hereof among the
Company, the Subsidiary Guarantors and the Indenture Trustee pursuant to which
the Notes were issued, as the same may from time to time be amended,
supplemented or otherwise modified in accordance with its terms.
"INDENTURE TRUSTEE" means The First National Bank of Maryland, not in
its individual capacity but solely as trustee under the Indenture, and any
successor trustee appointed thereunder.
"ISSUE DATE" means July 24, 1998.
"MAJORITY SECURED CREDITORS" means, at any time, holders of a majority
in aggregate principal amount of the outstanding Indebtedness under the Debt
Instruments.
"MORTGAGE" means each of the mortgages granted to the Collateral Agent
and Trustee by the Subsidiary Guarantors on the Vessels to secure the
obligations under the Indenture and the Credit Agreement.
"NOTES" means the 12% First Priority Ship Mortgage Notes Due 2005
issued by the Company in an aggregate principal amount of $100,000,000 under the
Indenture.
"OBLIGATIONS" means, collectively, the Company's obligations under or
in respect of the Notes, the Credit Agreement and the related Security
Agreements and the obligations of the Subsidiary Guarantors under the Indenture,
the Security Agreements and the Credit Agreement.
"POTENTIAL PAYMENT EVENT OF DEFAULT" means a default in the payment of
principal, premium or interest when due and payable under any Obligations
represented by any Debt Instruments that, after notice or lapse of time or both,
would constitute an Event of Default if such payment was not made within the
applicable grace or cure period.
"PROCEEDS" includes (a) all proceeds relating to the conversion,
voluntary or involuntary, and the interest payable thereon of the Collateral, or
any part thereof, into cash or liquidated claims, including proceeds of
insurance and the right to collect and receive the same; (b) all proceeds, both
cash and non-cash, of the Collateral which may be sold or otherwise disposed of;
and (c) all tolls, rents, issues, profits, revenues and other income, and in and
to all proceeds and payments, from or on account of the Collateral.
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<PAGE>
"REGISTRATION JURISDICTION" means the jurisdiction under whose laws a
Vessel is registered.
"REPRESENTATIVES" means, collectively, the Indenture Trustee and the
Lender and each of them individually.
"RESPONSIBLE OFFICER" when used with respect to the Collateral Agent
and Trustee means any officer assigned to the corporate trust office of the
Collateral Agent and Trustee and also means, with respect to any particular
corporate trust matter, any other officer of the Collateral Agent and Trustee to
whom such matter is referred because of his knowledge of and familiarity with
the particular subject.
"SECURED CREDITORS" means any holders from time to time of Secured Debt
then outstanding in accordance with their related Debt Instruments, together
with the Representatives and the Collateral Agent and Trustee.
"SECURED DEBT" means the payment obligations and all other amounts
owing under or in connection with the Notes and the Credit Agreement.
"SECURITY AGREEMENTS" means (i) this Agreement, (ii) the Mortgages and
(iii) the Assignments of Insurances and any other similar instruments or
documents entered into or delivered in connection with any of the foregoing, as
such agreements, instruments or documents may from time to time be amended in
accordance with their respective terms and the Debt Instruments.
"SENIOR REPRESENTATIVE" means the Indenture Trustee.
"SUBSIDIARY GUARANTORS" means each of the subsidiary guarantors a party
hereto.
"TRUST INDENTURE ACT" means the Trust Indenture Act of 1939 as in
effect on the date of this Agreement.
"WORKING CAPITAL LOANS" shall have the meaning assigned to the term
"Loans" in the Credit Agreement.
ARTICLE II
APPOINTMENT OF THE COLLATERAL AGENT AND TRUSTEE
SECTION 2.1. APPOINTMENT. Each Representative, for the benefit
of the Secured Creditors entitled to the benefits of the Debt Instrument
pursuant to which such Representative acts, hereby designates and appoints the
Collateral Agent and Trustee, as agent and, in the case of the Lender, also as
trustee and the Collateral Agent and Trustee hereby accepts such designation and
appointment, to serve as agent and, in the case of the Lender, also as trustee
for such Representatives in the manner and upon the terms and conditions set
forth herein. Each Representative, on behalf of the Secured Creditors entitled
to the benefits of the Debt Instrument pursuant to which such Representative
acts, hereby irrevocably authorizes, and each Secured Creditor, by its
acceptance of the benefit of any Security Agreement or Debt Instrument, shall be
deemed irrevocably to have authorized such Representative to authorize the
Collateral Agent and Trustee upon written instructions from such Representative,
to take such action on behalf of such Representative, for the benefit of the
Secured Creditors entitled to the benefits of the Debt Instrument pursuant to
which such Representative acts, as such Representative may direct and as shall
be permitted to be taken under the provisions hereof and under the Security
Agreements, including to foreclose or otherwise realize upon any Collateral and,
upon the specific direction of such Representative, to initiate, prosecute and
defend any and all legal proceedings against the Company or any other party
(excluding the Representatives) to any Security Agreement.
3
<PAGE>
ARTICLE III
THE SECURITY INTEREST
SECTION 3.1. RECORDING, ETC. The Grantors will cause the applicable
Security Agreements, 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 Collateral Agent
and 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
Collateral Agent and Trustee securing the Obligations (for the ratable benefit
of the Secured Creditors) and to effectuate and preserve the security of the
Secured Creditors and all rights of the Collateral Agent and Trustee. Without
limiting the foregoing, the Collateral Agent and Trustee is hereby authorized
(but shall not be obligated) to file one or more financing statements,
continuation statements or other documents for the purpose of perfecting,
confirming, continuing, enforcing or protecting the Lien created hereunder and
under the other Security Agreements, without the signature of any Grantor, and
naming any Grantor or the Grantors as debtors and the Collateral Agent and
Trustee as secured party.
SECTION 3.2. PROTECTION OF THE COLLATERAL. The Collateral Agent and
Trustee shall have the power to enforce the obligations of the Grantors under
this Agreement and under the other Security Agreements, 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 Agreements 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 Secured Creditors.
SECTION 3.3. RELEASE OF LIEN. (a) So long as no Event of Default has
occurred and is continuing, Collateral may be released from the Lien and
security created by this Agreement and the other Security Agreements, as the
case may be, at any time or from time to time in accordance with the express
provisions of the Debt Instruments, this Agreement and the other Security
Agreements.
(b) Upon the request of the Grantors and pursuant to an Officer's
Certificate certifying that all conditions precedent hereunder have been met (to
be provided at the sole cost and expense of the Grantors) and upon the
satisfaction of such conditions precedent hereunder, the Collateral Agent and
Trustee shall release (i) any portion of the Collateral as to the release of
which the consent of the Representative of each class of Secured Creditors has
been obtained, and (ii) all Collateral upon discharge of all Obligations under
the Debt Instruments and the Security Agreements.
(c) Upon receipt of such Officer's Certificate described in paragraph
(b) above, the Collateral Agent and Trustee shall, at the Company's expense,
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 Agreement or this Agreement and the
other Security Agreements, as the case may be. Whenever Collateral is to be
released pursuant to this Section 3.3, the Collateral Agent and Trustee shall
execute any document or termination statement reasonably necessary to release
the Lien of this Agreement or this Agreement and the other Security Agreements,
as the case may be.
(d) Notwithstanding the other provisions of this Section 3.3, so long
as no Event of Default shall have occurred and be continuing, upon the
Collateral Agent and Trustee's receipt of (i) any amounts payable to the
Collateral Agent and Trustee, as Mortgagee, pursuant to Article I, Section 20 of
the Mortgages, (ii) Event of Loss Proceeds or (iii) Net Available Cash
attributable to a Sold Mortgaged Vessel for a Vessel, such amounts, Event of
Loss Proceeds or Net Available Cash will be delivered to the Indenture Trustee
for application pursuant to the terms of the Indenture;
4
<PAGE>
provided, however, if the Company is required to use such proceeds to redeem
Notes pursuant to the Indenture, then all such amounts, Net Available Loss
Proceeds or Net Available Cash attributable to such Sold Mortgaged Vessel
received by the Collateral Agent and Trustee shall be distributed upon its
receipt thereof by the Collateral Agent and Trustee in the order of priority
specified below:
FIRST: to the Lender, the Indenture Trustee and the Collateral
Agent and Trustee, pro rata to each of them in accordance with the amounts owed,
an amount equal to any accrued and unpaid fees due the Lender under the Credit
Agreement, any Indenture Trustee and Collateral Agent and Trustee fees and all
reasonable expenses and charges incurred by or on behalf of the Lender, the
Indenture Trustee and the Collateral Agent and Trustee in connection with the
ascertainment or protection of their respective rights and the pursuance of
their respective remedies under the Debt Instruments or any of the Security
Agreements (including the reasonable fees and expenses of counsel) in each case
as certified in writing to the Collateral Agent and Trustee by the Lender, the
Indenture Trustee or the Collateral Agent and Trustee, as the case may be;
SECOND: to the Lender, an amount, as certified in writing to
the Collateral Agent and Trustee by the Lender, equal to the sum of (i) product
of (x) the Vessel Percentage for such Vessel as of the applicable Sale Date or
Loss Date, as the case may be, and (y) the any amounts owing pursuant to the
Credit Agreement with respect to Working Capital Loans and (ii) all accrued and
unpaid interest thereon;
THIRD: to the Indenture Trustee for the benefit of the
holders of the Notes, an amount, as certified in writing to the Collateral Agent
and Trustee by the Indenture Trustee, equal to the Redemption Amount required to
be redeemed pursuant to Section 4.17(b) of the Indenture; and
FOURTH: to the Company, its successors or assigns, or to
whomsoever may be lawfully entitled to receive the same, the excess, if any.
SECTION 3.4. LIMITATION ON COLLATERAL AGENT AND TRUSTEE'S DUTY IN
RESPECT OF COLLATERAL. Beyond its duties as to the custody thereof expressly
provided herein or in any other Security Agreement and to account to the Secured
Creditors and the Grantors for moneys and other property received by it under
any Security Agreement, the Collateral Agent and Trustee shall not have any duty
to the Secured Creditors or the Grantors 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 Collateral Agent and 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.
SECTION 3.5. COLLATERAL AGENT AND TRUSTEE APPOINTED ATTORNEY-IN-FACT.
The Grantors hereby appoint the Collateral Agent and Trustee as the Grantors'
attorney-in-fact, with full authority in the place and stead of the Grantors and
in the name of the Grantors or otherwise, from time to time in the Collateral
Agent and Trustee's discretion but only after the occurrence and during the
continuance of an Event of Default, to take any action and to execute any
instrument which the Collateral Agent and Trustee may deem necessary or
advisable in order to accomplish the purposes of this Article III, including to
receive, endorse and collect all instruments made payable to the Grantors
representing any dividend, interest payment or other distribution in respect of
the Collateral or any part thereof and to give full discharge for the same. This
power, being coupled with an interest, is irrevocable.
SECTION 3.6. COLLATERAL AGENT AND TRUSTEE MAY PERFORM. If the Grantors
fail to perform any agreement contained in this Article III, the Collateral
Agent and Trustee may itself (but shall not be obligated to) perform, or cause
performance of, such agreement, and the expenses of the Collateral Agent and
Trustee incurred in connection therewith shall be payable by the Grantors upon
demand as provided in Section 4.3.
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<PAGE>
SECTION 3.7. APPLICATION OF PROCEEDS AFTER EVENT OF DEFAULT. Upon the
occurrence and during the continuance of an Event of Default and after the
acceleration of any Secured Debt pursuant to the Debt Instruments (so long as
such acceleration has not been rescinded), any cash held by the Collateral Agent
and Trustee as Collateral and all cash proceeds received by the Collateral Agent
and Trustee in respect of any sale of, collection from, or other realization
upon, all or any part of the Collateral, shall be distributed by the Collateral
Agent and Trustee in the order of priority specified below:
FIRST: to the Lender, the Indenture Trustee and the Collateral
Agent and Trustee, pro rata to each of them in accordance with the amounts owed,
an amount equal to any accrued and unpaid fees owing to the Lender under the
Credit Agreement, any Indenture Trustee and Collateral Agent and Trustee fees
and all reasonable expenses and charges incurred by or on behalf of the Lender,
the Indenture Trustee and the Collateral Agent and Trustee in connection with
the ascertainment or protection of their respective rights and the pursuance of
their respective remedies under the Debt Instruments or any of the Security
Agreements (including the reasonable fees and expenses of counsel) in each case
as certified in writing to the Collateral Agent and Trustee by the Lender, the
Indenture Trustee or the Collateral Agent and Trustee, as the case may be;
SECOND: to the Lender, an amount, as certified in writing to
the Collateral Agent and Trustee by the Lender, equal to any amounts owing
pursuant to the Credit Agreement with respect to Working Capital Loans,
including all accrued and unpaid interest thereon;
THIRD: to the Indenture Trustee for the benefit of the
holders of the Notes, an amount, as certified in writing to the Collateral Agent
and Trustee by the Indenture Trustee, equal to any accrued and unpaid interest
in respect of the Notes then outstanding;
FOURTH: to the Indenture Trustee for the benefit of the
holders of the Notes, an amount, as certified in writing to the Collateral Agent
and Trustee by the Indenture Trustee, equal to the outstanding principal of the
Notes; and
FIFTH: to the Company, its successors or assigns, or to
whomsoever may be lawfully entitled to receive the same, the excess, if any.
SECTION 3.8. COLLATERAL AGENT AND TRUSTEE'S CALCULATIONS. All
distributions made by the Collateral Agent and Trustee pursuant to this Article
III shall (subject to any decree of any court of competent jurisdiction) be
final, and the Collateral Agent and Trustee shall have no duty to inquire as to
the application of any amounts so distributed. However, if at any time the
Collateral Agent and Trustee determines that an allocation or distribution
previously made pursuant to this Article III was based on a mistake of fact, the
Collateral Agent and Trustee may in its sole discretion, but shall not be
obligated to, adjust subsequent allocations and distributions thereunder upon
written confirmation from the Company of the amount of such allocations and
distributions so that, on a cumulative basis, the Secured Creditors receive the
distributions to which they would have been entitled if such mistake of fact had
not been made.
SECTION 3.9. CONTINUING LIEN. Except as provided in Section 4.5, this
Agreement shall create a continuing Lien on the Collateral that shall (i) remain
in full force and effect until payment in full of the Obligations, (ii) be
binding upon the Grantors and their successors and assigns and (iii) enure to
the benefit of the Collateral Agent and Trustee and its successors, transferees
and assigns.
ARTICLE IV
THE COLLATERAL AGENT AND TRUSTEE
SECTION 4.1. NATURE OF DUTIES. The Collateral Agent and Trustee shall
be responsible for taking only such actions as are expressly set forth herein or
any instructions received from any
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Representative and given in accordance and not in contravention with the
provisions hereof or any other Security Agreement and no implied duties or
obligations shall be read into this Agreement or any such instructions or other
Security Agreement. Notwithstanding any provision in any other Security
Agreement, neither the Collateral Agent and Trustee nor any of its officers,
directors, employees, agents or representatives shall be liable for any claims,
losses, damages, penalties, actions, judgments, suits, liabilities, obligations,
costs or expenses of any kind or nature whatsoever resulting from any action the
Collateral Agent and Trustee takes or omits to take hereunder or under any
Security Agreement or in connection herewith or therewith, unless caused by its
or their gross negligence, bad faith or wilful misconduct. The Collateral Agent
and Trustee may perform any of its duties hereunder by or through its agents or
employees.
Subject to Section 5.1(f) hereof, the Collateral Agent and Trustee
shall at all times be entitled to follow instructions of the Senior
Representative delivered or deemed to be delivered in accordance with this
Agreement, notwithstanding the fact that the same Person may be acting in both
such capacities hereunder, and all Secured Creditors shall be bound by any
action taken by the Collateral Agent and Trustee in accordance therewith.
SECTION 4.2. LACK OF RELIANCE ON THE COLLATERAL AGENT AND TRUSTEE. The
Collateral Agent and Trustee shall have no duty or responsibility, either
initially or on a continuing basis, to provide any Representative or any Secured
Creditor with any credit or other information with respect to the Company or any
of its Affiliates whether coming into its possession before the date hereof or
at any time or times thereafter.
SECTION 4.3. COMPENSATION AND INDEMNIFICATION. (a) Each of the Grantors
agrees, jointly and severally, to pay to the Collateral Agent and Trustee, from
time to time upon demand, reasonable compensation for the services of the
Collateral Agent and Trustee hereunder and under the other Security Agreements
and all reasonable fees, costs and expenses of the Collateral Agent and Trustee
(including the reasonable expenses, fees and disbursements of counsel, agents
and experts of the Collateral Agent and Trustee) incurred by the Collateral
Agent and Trustee in connection with (i) the preparation, execution, delivery,
administration, modification, amendment or termination of this Agreement, each
Security Agreement or the enforcement of any of the provisions hereof or
thereof, (ii) the custody or preservation and protection of, or the sale of,
collection from, or other realization upon, any of the Collateral pursuant to
this Agreement or any other Security Agreement, (iii) the preservation,
protection, defense, exercise or enforcement of any of the rights of the
Collateral Agent and Trustee under this Agreement or the other Security
Agreements and in and to the Collateral arising under applicable law or (iv) the
failure by any of the Grantors to perform or observe any of the provisions of
this Agreement or any other Security Agreement. When the Collateral Agent and
Trustee incurs expenses or renders services after an Event of Default, such
expenses and the compensation for such services are intended to constitute
expenses of administration under any bankruptcy law.
(b) Each of the Grantors hereby agrees, jointly and severally, to
indemnify the Collateral Agent and Trustee, each Representative and each Secured
Creditor for, and hold each of them harmless against, any future claim for
liability for any stamp, transfer or other similar tax and any penalties or
interest with respect thereto, which may be assessed, levied or collected by any
jurisdiction in connection with any Security Agreement or any Collateral;
PROVIDED, HOWEVER, that the Grantors shall not be obligated under this paragraph
(b) in respect of any income tax or any tax imposed in connection with any
transfer of securities.
(c) Each of the Grantors hereby agrees, jointly and severally, to pay
or to reimburse the Collateral Agent and Trustee for any and all amounts in
respect of all search, filing, recording and registration fees, excise taxes and
other similar imposts which may be payable or determined to be payable in
respect of the execution, delivery, performance and enforcement of each Security
Agreement.
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(d) Each of the Grantors hereby agrees, jointly and severally, to
indemnify the Collateral Agent and Trustee (including within such term for
purposes of this Section 4.3, its officers, directors, employees and agents)
for, and hold it and them harmless, in its capacity as Collateral Agent and
Trustee, against, any and all claims, demands, expenses (including reasonable
compensation, disbursements and expenses of the Collateral Agent and Trustee's
agents, experts and counsel), losses, obligations, damages, penalties, actions,
judgments, suits, costs, liabilities or disbursements of any kind and nature
whatsoever (the "Indemnified Obligations") which may be imposed on, incurred by
or asserted against the Collateral Agent and Trustee in its capacity as such (or
such officers, directors, employees or agents) howsoever arising. The Collateral
Agent and Trustee shall notify each of the Grantors promptly of any claim
asserted against the Collateral Agent and Trustee for which it may seek
indemnity; PROVIDED, HOWEVER, that the Collateral Agent and Trustee's failure to
notify any Grantor of any such claim shall not affect the Collateral Agent and
Trustee's right to indemnification except to the extent that such failure to
notify is materially prejudicial to such Grantor's ability to defend such claim.
The Grantors shall defend any such claim and the Collateral Agent and Trustee
shall reasonably cooperate at the Grantor's expense in such defense. The
Collateral Agent and Trustee shall have separate counsel and the Grantors shall
pay the reasonable fees and expenses of such counsel; PROVIDED, HOWEVER, that
the Grantors will not be required to pay such fees and expenses from and after
the date it assumes the Collateral Agent and Trustee's defense so long as there
is no material conflict of interest between the Grantors and the Collateral
Agent and Trustee in connection with such defense. In the event of a material
conflict of interest, the Collateral Agent and Trustee's right to reimbursement
of reasonable fees and expenses of its separate counsel shall be restored. The
Grantors need not pay for any settlement made without their prior written
consent. The Grantors need not reimburse any expense or indemnify against any
Indemnified Obligation to the extent incurred by the Collateral Agent and
Trustee through its gross negligence, bad faith or wilful misconduct. Each of
the Grantors agrees, jointly and severally, to pay, and to save the Collateral
Agent and Trustee and the Representatives harmless from, any and all liabilities
with respect to, or resulting from any delay in paying, any and all excise,
sales or other taxes that may be payable or determined to be payable with
respect to any of the Collateral or in connection with any of the transactions
contemplated by this Agreement or any other Security Agreement. Each of the
Grantors agrees, jointly and severally, to pay, and to save the Secured
Creditors harmless from, any and all liabilities with respect to, or resulting
from any delay in paying, any and all excise, sales or other similar taxes that
may be payable or determined to be payable with respect to any of the Collateral
or in connection with this Agreement or any other Security Agreement; PROVIDED,
HOWEVER, that this sentence shall not obligate the Grantors in respect of any
income tax or any tax imposed in connection with any transfer of Notes.
(e) All obligations set forth in this Section 4.3 shall survive the
execution, delivery and termination of this Agreement and the other Security
Agreements and the payment or other satisfaction of all the obligations.
SECTION 4.4. COLLATERAL AGENT AND TRUSTEE'S DEALINGS WITH THE COMPANY.
The Collateral Agent and Trustee may accept deposits from, lend money to, or
generally engage in any kind of banking, trust or other business with the
Company or any of its Affiliates, in each case as if it were not the Collateral
Agent and Trustee hereunder.
SECTION 4.5. RESIGNATION BY OR REMOVAL OF THE COLLATERAL AGENT AND
TRUSTEE. (a) The Collateral Agent and Trustee may resign from the performance of
all its functions and duties hereunder and under the other Security Agreements
at any time by giving 30 days' prior written notice to the Company and the
Representatives. The Senior Representative may (with the prior written consent
of the Lender which shall not be unreasonably withheld or delayed), at any time,
remove the Collateral Agent and Trustee by giving 30 days' prior written notice
to the Collateral Agent and Trustee, the Company and each other Representative.
The Company shall have the right to remove the Collateral Agent and Trustee by
written notice to the Collateral Agent and Trustee and the Representatives if
(i) the Collateral Agent and Trustee fails to be an Acceptable Bank, (ii) the
Collateral Agent and Trustee is adjudged bankrupt or insolvent; (iii) a receiver
or other public officer
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takes charge of the Collateral Agent and Trustee or its property, or (iv) the
Collateral Agent and Trustee otherwise becomes incapable of acting. Such
resignation or removal shall take effect upon the appointment of a successor
Collateral Agent and Trustee pursuant to paragraph (b) or (c) below or as
otherwise provided below.
(b) Upon any such notice of resignation or removal, the Senior
Representative shall, with prior notice to the Company, appoint a successor
Collateral Agent and Trustee hereunder, which shall be an Acceptable Bank. If a
successor Collateral Agent and Trustee shall not have been so appointed and take
office within 30 days after the retiring Collateral Agent and Trustee resigns or
is removed, the Company shall then appoint a successor Collateral Agent and
Trustee which shall be an Acceptable Bank and which shall serve as Collateral
Agent and Trustee hereunder until such time, if any, as the Senior
Representative appoints a successor Collateral Agent and Trustee as provided
above. If no successor Collateral Agent and Trustee shall have been so appointed
by the Company or the Senior Representative and accepted appointment in the
manner herein provided, the Collateral Agent and Trustee or any Secured Creditor
may petition any court of competent jurisdiction for the appointment of a
successor Collateral Agent and Trustee.
(c) A successor Collateral Agent and Trustee shall deliver a written
acceptance of its appointment to the retiring Collateral Agent and Trustee, to
the Company and each Representative. Immediately thereafter, the retiring
Collateral Agent and Trustee shall transfer all property held by it as
Collateral Agent and Trustee to the successor Collateral Agent and Trustee and,
at the expense of the Company, shall execute and deliver to the successor
Collateral Agent and Trustee such documents as are necessary to perfect or
maintain the Liens created under the Security Agreements, including any
documents necessary to assign or transfer all interests of the retiring
Collateral Agent and Trustee in the Collateral to the successor Collateral Agent
and Trustee, in a form adequate for proper filing or recording in such offices
and such jurisdictions as are necessary to put the successor Collateral Agent
and Trustee in the same position as the retiring Collateral Agent and Trustee
with respect to the Collateral. Thereafter, the resignation or removal of the
retiring Collateral Agent and Trustee shall become effective, the retiring
Collateral Agent and Trustee shall have no further duty or obligation hereunder
and the successor Collateral Agent and Trustee shall have all the rights, powers
and duties of the Collateral Agent and Trustee under this Agreement. Any
successor Collateral Agent and Trustee shall give notice of its succession to
each Secured Creditor as of the date of such succession.
(d) If the Collateral Agent and Trustee consolidates with, merges or
converts into, or transfers all or substantially all its corporate trust
business to, another corporation, the resulting, surviving or transferee
corporation without any further act shall, if such resulting, surviving or
transferee corporation is an Acceptable Bank, be the successor Collateral Agent
and Trustee. The transferring, merging or converting Collateral Agent and
Trustee shall have all documents necessary to perfect or maintain the Liens
created under the Security Agreements, including any documents necessary to
assign or transfer all interests of the transferring, merging or converting
Collateral Agent and Trustee in the Collateral, executed and delivered in a form
adequate for proper filing or recording in such offices and such jurisdictions
as are necessary to put the successor Collateral Agent and Trustee in the same
position as the transferring, merging or converting Collateral Agent and Trustee
with respect to the Collateral.
(e) Any person acting as Collateral Agent and Trustee shall continue to
be entitled to receive compensation and indemnification as provided in Section
4.3 hereof so long as such Person acts as Collateral Agent and Trustee
hereunder; PROVIDED, HOWEVER, a retiring Collateral Agent and Trustee shall be
entitled to the indemnification as provided in Section 4.3.
(f) Nothing herein shall prevent any Representative that is also an
Acceptable Bank from also serving as the Collateral Agent and Trustee.
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SECTION 4.6. ADVICES; ACTIONS REQUESTED OF COLLATERAL AGENT AND
TRUSTEE. (a) The Collateral Agent and Trustee shall forward promptly to each
Representative a copy of each notice, certificate, instruction or other
communication received by the Collateral Agent and Trustee from the Company or
any other Representative under this Agreement, any other Security Agreement or
any of the Debt Instruments (except for any which the Company shall be obligated
to furnish directly to such Representative). The Collateral Agent and Trustee
shall also promptly furnish to each Representative, upon its written request,
such other information and documents concerning the Collateral and the
Collateral Agent and Trustee's actions with respect thereto as such
Representative may reasonably request.
(b) In connection with any request by the Company to the Collateral
Agent and Trustee to give its consent pursuant to a provision in any Security
Agreement (other than a consent to amend any Security Agreement), the Collateral
Agent and Trustee shall be deemed to be authorized by each Representative to
give its consent to the Company on behalf of such Representative at any time
after the Specified Date (as defined below) upon the following conditions:
(i) the Company shall provide an Officers' Certificate to the
Collateral Agent and Trustee stating that (A) written notice was duly
sent, in accordance with the applicable Debt Instrument, to all the
Secured Creditors to the effect that the Company intended to seek the
consent of the Collateral Agent and Trustee, (B) that such notice
explained in reasonable detail the circumstances surrounding the
consent sought, (C) that such notice explained that the Collateral
Agent and Trustee was permitted pursuant to this Agreement to give its
consent as requested unless any such Representative notifies the
Collateral Agent and Trustee on or prior to the date specified (the
"Specified Date") in such notice (which shall not be less than 30 days
after the effectiveness of such notice) that it has received written
objection from Secured Creditors representing, in the aggregate, 25% or
more of the aggregate principal amount of the Secured Debt for which
such Representative is acting (or, with respect to the Credit
Agreement, written objection from the Lender), and (D) that such notice
informed the Secured Creditors that if they had any objection to the
Collateral Agent and Trustee's giving such consent, they should notify
such Representative prior to the Specified Date;
(ii) the Company shall have provided to the Collateral Agent
and Trustee and the Representatives copies of the notice referred to
above; and
(iii) any such Representative shall not have notified the
Collateral Agent and Trustee to withhold its consent as a result of
such Representative's receipt of objection from Secured Creditors
representing, in the aggregate, 25% or more of the aggregate principal
amount of the Secured Debt for which such Representative is acting (or
with respect to the Credit Agreement, written objection from Lender).
SECTION 4.7. CO-COLLATERAL AGENT AND TRUSTEE; SEPARATE COLLATERAL AGENT
AND TRUSTEE. (a) If at any time or times it shall be necessary or prudent in
order to conform to any law of any jurisdiction in which any of the Collateral
shall be located, or to avoid any violation of law or imposition on the
Collateral Agent and Trustee of taxes by such jurisdiction not otherwise imposed
on the Collateral Agent and Trustee, or the Collateral Agent and Trustee shall
be advised by counsel, satisfactory to it, that it is necessary or prudent in
the interest of the Secured Creditors, or the Majority Secured Creditors or the
Indenture Trustee shall in writing so request, or the Collateral Agent and
Trustee shall deem it desirable for its own protection in the performance of its
own duties under any Security Agreement, the Collateral Agent and Trustee, the
Indenture Trustee and the Company as shall be necessary or prudent shall execute
and deliver all instruments and agreements necessary or proper to constitute
another bank or trust company, or one or more persons approved by the Collateral
Agent and Trustee and the Company, either to act as co-agent or co-agents of all
or any of the Collateral under any of the Security Agreements jointly with the
Collateral Agent and Trustee originally named herein or therein or any successor
Collateral Agent and Trustee, or to act as separate agent or agents of any of
the Collateral (any of the foregoing, a "Co-Collateral Agent and
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Trustee"). If the Company shall not have joined in the execution of such
instruments and agreements within 10 days after it receives a written request
from the Collateral Agent and Trustee to do so, the Collateral Agent and Trustee
may act under the foregoing provisions of this Section 4.7(a) without the
concurrence of the Company and execute and deliver such instruments and
agreements on behalf of the Company. The Company hereby appoints the Collateral
Agent and Trustee as its agent and attorney to act for it under the foregoing
provisions of this Section 4.7(a) in either of such contingencies.
(b) Every Co-Collateral Agent and Trustee, other than any successor
Collateral Agent and Trustee appointed pursuant to Section 4.5, shall, to the
extent permitted by law, be appointed and act and be such, subject to the
following provisions and conditions:
(i) all rights, powers, duties and obligations conferred upon
the Collateral Agent and Trustee in respect of the custody, control and
management of moneys, papers or securities shall be exercised solely by
the Collateral Agent and Trustee or any agent appointed by the
Collateral Agent and Trustee;
(ii) all rights, powers, duties and obligations conferred or
imposed upon the Collateral Agent and Trustee under the relevant
Security Agreements shall be conferred or imposed and exercised or
performed by the Collateral Agent and Trustee and such separate agent
or separate agents or co-agent or co-agents, jointly, as shall be
provided in the instrument appointing such separate agent or separate
agents or co-agent or co-agents, except to the extent that under any
law of any jurisdiction in which any particular act or acts are to be
performed the Collateral Agent and Trustee shall be incompetent or
unqualified to perform such act or acts, or unless the performance of
such act or acts would result in the imposition of any tax on the
Collateral Agent and Trustee which would not be imposed absent such
joint act or acts, in which event such rights, powers, duties and
obligations shall be exercised and performed by such separate agent or
separate agents or co-agent or co-agents;
(iii) no power given by any Security Agreement to, or which it
is provided herein or therein may be exercised by, any such co-agent or
co-agents or separate agent or separate agents, shall be exercised
hereunder or thereunder by such co-agent or co-agents or separate agent
or separate agents except jointly with, or with the consent in writing
of, the Collateral Agent and Trustee, anything contained in any
Security Agreement to the contrary notwithstanding;
(iv) no agent hereunder shall be personally liable by reason
of any act or omission of any other agent hereunder; and
(v) the Company and the Collateral Agent and Trustee, at any
time by an instrument in writing executed by them jointly, may accept
the resignation of or remove any such separate agent or co-agent and,
in that case by an instrument in writing executed by them jointly, may
appoint a successor to such separate agent or co-agent, as the case may
be, anything contained herein to the contrary notwithstanding. If the
Company shall not have joined in the execution of any such instrument
within 10 days after it receives a written request from the Collateral
Agent and Trustee to do so, the Collateral Agent and Trustee shall have
the power to accept the resignation of or remove any such separate
agent or co-agent and to appoint a successor without the concurrence of
the Company, the Company hereby appointing the Collateral Agent and
Trustee its agent and attorney to act for it in such connection in such
contingency. If the Collateral Agent and Trustee shall have appointed a
separate agent or separate agents or co-agent or co-agents as above
provided, the Collateral Agent and Trustee may at any time, by an
instrument in writing, accept the resignation of or remove any such
separate agent or co-agent and the successor to any such separate agent
or co-agent shall be appointed by the Company and the Collateral Agent
and Trustee, or by the Collateral Agent and Trustee alone pursuant to
this Section 4.7(b).
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ARTICLE V
EXERCISE OF REMEDIES
SECTION 5.1. EXERCISE OF REMEDIES UNDER SECURITY AGREEMENTS.
(a) If any Representative has notice of a Potential Payment Event of Default or
Event of Default, such Representative shall promptly give written notice to the
other Representatives and to the Collateral Agent and Trustee. As promptly as
practicable, after receipt of such notice of Potential Payment Event of Default
or Event of Default, the Senior Representative shall give written instructions
to the Collateral Agent and Trustee as to the actions, if any, that are
permitted by the Debt Instruments and the Security Agreements to be taken by the
Collateral Agent and Trustee. Upon receipt by the Collateral Agent and Trustee
of notice of a Potential Payment Event of Default or Event of Default and
written instructions from the Senior Representative as to such actions, if any,
to be taken by the Collateral Agent and Trustee, the Collateral Agent and
Trustee shall, within four Business Days after receipt of such instructions and
subject to its receipt of written indemnity as provided in Section 5.1(d)
hereof, commence the taking of such actions, as specifically instructed in
writing by the Senior Representative or, in the event the Senior Representative
fails to deliver such instructions, by the Majority Secured Creditors. If any
Potential Payment Event of Default or Event of Default which was the basis for
the giving of a notice to the Collateral Agent and Trustee shall be cured or
waived in accordance with the terms of the applicable Debt Instrument, any
direction to the Collateral Agent and Trustee to take any action in connection
with such notice shall be deemed rescinded with respect to any action to be
taken by the Collateral Agent and Trustee upon notification by the
Representative to the Collateral Agent and Trustee under the applicable Debt
Instrument of such cure or waiver, as applicable.
In no event may any Representative direct the exercise by the
Collateral Agent and Trustee, nor shall the Collateral Agent and Trustee
exercise, any remedy which would result in the discharge of any of the
Obligations by reason of any antideficiency statute or law relating to sales of
Collateral other than through judicial proceedings.
(b) Prior to the occurrence of a Potential Payment Event of
Default or an Event of Default and receipt of a notice to such effect by the
Collateral Agent and Trustee pursuant to Section 5.1(a) hereof, in the event (i)
the Collateral Agent and Trustee shall receive any written request from the
Company under any Security Agreement for consent or approval with respect to any
matter or thing relating to any Collateral or the Company's obligations with
respect thereto or (ii) there shall be due to the Collateral Agent and Trustee
under the provisions of any Security Agreement any performance or the delivery
of any instrument or (iii) a Responsible Officer of the Collateral Agent and
Trustee shall have actual knowledge of any nonperformance by the Company of any
covenant or any breach of any representation or warranty set forth in any
Security Agreement, then, in each such event, the Collateral Agent and Trustee
shall advise the Representatives in writing of the matter or thing as to which
consent has been requested or the performance or instrument required to be
delivered or the nonperformance or breach of which the Collateral Agent and
Trustee has become aware; PROVIDED, HOWEVER, that, subject to Section 4.6(b),
the Senior Representative shall have the exclusive authority to direct (subject
to the right of the Majority Secured Creditors to otherwise direct in the
absence of such direction) the Collateral Agent and Trustee's response to any of
the circumstances contemplated in clauses (i), (ii) and (iii) above.
(c) All the Secured Creditors shall be bound by any
instruction or direction given by the Senior Representative or, in the absence
of such instructions or direction, by the Majority Secured Creditors pursuant to
this Section 5.1 or deemed given pursuant to Section 4.6(b). The Representatives
shall take such actions as are necessary to enable the Collateral Agent and
Trustee to comply with the provisions of the Security Agreements. Anything in
this Agreement to the contrary notwithstanding, under no circumstances shall the
Senior Representative have, or be deemed to have, any fiduciary or other duty to
any other Representative or any Secured Creditor with respect to actions it is
permitted to take hereunder, and the Senior Representative shall at all times be
entitled
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to take, and fully protected in taking, such actions in accordance with
instructions received under and pursuant to the Credit Agreement or the
Indenture, as the case may be.
(d) The Collateral Agent and Trustee may rely on any document
reasonably believed by it to be genuine and to have been signed or presented by
the proper person. The Collateral Agent and Trustee need not investigate any
fact or matter stated in any such document. Before the Collateral Agent and
Trustee acts or refrains from acting it may consult with counsel and may require
an Officers' Certificate, an Opinion of Counsel (to be delivered at the expense
of the Company or any other source deemed acceptable to the Collateral Agent and
Trustee, at its sole discretion) or both. The Collateral Agent and Trustee shall
not be liable for any action it takes, omits to take or suffers in good faith in
reliance on any such certificate or opinion or in accordance with a direction or
instruction received by it from any Representative hereunder.
The Collateral Agent and Trustee may act through its attorneys
and agents and shall not be responsible for the misconduct of any agent
appointed with due care. The Collateral Agent and Trustee shall not be liable
for any action it takes or omits to take in the good faith belief that such act
or omission was authorized or within its rights or powers conferred upon it
hereunder or under the other Security Agreements. The Collateral Agent and
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, direction, consent, order, bond, debenture, note, other
evidence of indebtedness or other paper or document, but the Collateral Agent
and Trustee, upon specific written instructions from any Representative, may
make such further inquiry or investigation into such facts or matters in
accordance with such instructions.
The Collateral Agent and Trustee shall be under no obligation
to exercise any of the rights or powers vested in it hereunder or by any
Security Agreement at the request, order or direction of any Representative or
pursuant to Section 4.6(b) or Section 5.1 hereof, unless the Collateral Agent
and Trustee shall have been provided by any Representative, by any other Secured
Creditor or by the Company, as may be agreed at the time, security or indemnity
satisfactory to the Collateral Agent and Trustee in its sole discretion and from
any source acceptable to the Collateral Agent and Trustee against the costs,
expenses and liabilities which might be incurred by it in compliance with such
request, order or direction. Upon receipt of such security or indemnity,
however, the Collateral Agent and Trustee shall act upon the specific
instructions of the Senior Representative. Notwithstanding the foregoing, the
Collateral Agent and Trustee shall not take such action if such action would
violate the terms hereof or of any of the Security Agreements.
The Collateral Agent and Trustee is acting hereunder not in
its individual capacity but solely as agent for the Representatives, and the
Collateral Agent and Trustee shall not be responsible for and makes no
representation as to the validity or adequacy of the Debt Instruments, the
Credit Agreement, the Notes, this Agreement or any other Security Agreement,
shall not be responsible for the use by the Grantors of any funds payable to or
retainable by the Grantors hereunder and shall not be responsible for the
accuracy of any statements, certifications or other information provided to it
by the Grantors or any other person pursuant hereto. The Collateral Agent and
Trustee shall not be liable for any error of judgment made in good faith by a
responsible officer of the Collateral Agent and Trustee unless it is proved that
the Collateral Agent and Trustee was negligent in ascertaining the pertinent
facts. Any reference herein to knowledge of the Collateral Agent and Trustee
with respect to any circumstance, fact or event shall mean the actual knowledge
of a responsible officer in the corporate trust department of the Collateral
Agent and Trustee. Except following the occurrence and during the continuance of
an Event of Default, the Collateral Agent and Trustee undertakes to perform such
duties, and only such duties, as are specifically set forth herein, and no
implied covenants or obligations shall be read into this Agreement against the
Collateral Agent and Trustee. If an Event of Default has occurred and is
continuing, the Collateral Agent and Trustee shall exercise the rights and
powers vested in it by this Agreement and use the same degree of care and skill
in its exercise as a prudent person would exercise or use under the
circumstances in the conduct of such Person's own affairs.
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(e) Each of the Grantors hereby irrevocably constitutes and
appoints the Collateral Agent and 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 Grantor or in its own name, as
the case may be, from time to time in the Collateral Agent and Trustee's
discretion, so long as any Event of Default is in effect, to take any and all
appropriate action directed by the Senior Representative, the Majority Secured
Creditors or the Lender pursuant to the terms of this Agreement 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
Collateral Agent and Trustee, whether in its own right or as assignee of the
Grantors; pursuant to the other Security Agreements, each of the Grantors hereby
gives the Collateral Agent and Trustee the power and right on its behalf,
without notice to or further assent by any other Grantor, so long as any Event
of Default is in effect, to do the following (to the extent the Collateral Agent
and Trustee is directed to do so by the Senior Representative, the Majority
Secured Creditors or the Lender pursuant to the terms of this Agreement):
(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
nonnegotiable instruments taken or received by the Collateral Agent and
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) sell, transfer, assign or otherwise deal in or with the
Collateral or any part thereof as fully and effectively as if the
Collateral Agent and Trustee were the absolute owner thereof;
(v) to do, at its option and at the expense and for the account
of the Grantors, at any time or from time to time, all acts and things
which the Collateral Agent and Trustee shall 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
Agreements;
PROVIDED that, except as provided in Section 3.7, the Collateral Agent and
Trustee shall give each of the Grantors not less than 30 days' prior written
notice of the time and place of any sale or other intended disposition of any
Collateral. Each of the Grantors agrees that such notice constitutes "reasonable
notification" within the meaning of Section 9-504(3) of the Uniform Commercial
Code.
(f) Notwithstanding anything to the contrary contained in this
Agreement or any of the Security Agreements, in the event that the Working
Capital Loans have been accelerated pursuant to the terms of the Credit
Agreement after the occurrence of an Event of Default thereunder, the Lender
shall have the right to request the Senior Representative to direct the
Collateral Agent and Trustee to take the actions permitted by the Debt
Instruments and the Security Agreements. If, after being requested to do so, the
Senior Representative fails to give such direction within 90 days after the
receipt of the Lender's request, then the Lender shall have the right to so
direct the Collateral Agent and Trustee; PROVIDED, HOWEVER, that the Senior
Representative may at any time thereafter resume the direction of the Collateral
Agent and Trustee so long as the Senior Representative does not terminate the
actions commenced by the Collateral Agent and Trustee without the prior written
consent of the Lender.
14
<PAGE>
ARTICLE VI
PRIORITY OF RIGHTS
SECTION 6.1. PRIORITY OF RIGHTS. The Indenture Trustee and
each holder of the Notes (a) agree that the lien and security interests of the
Lender in the Collateral, including its interests in any payments to be made
from the proceeds of any sale, loss or other disposition thereof, shall,
irrespective of the time, manner or order of perfection, grant or creation of
any security interests or Liens in the Collateral on behalf of any Secured
Creditor or the incurrence of any such Notes or Indebtedness and notwithstanding
any provision of the Uniform Commercial Code or any applicable law of any
jurisdiction or any other circumstance, be prior to the lien and security
interests of the Indenture Trustee and the holders of the Notes in the
Collateral, including their interests in any such payments, and any Lien of the
Indenture Trustee in the Collateral now or hereafter held and regardless of how
acquired, whether by grant, statute, operation of law, subrogation or otherwise,
shall be junior and subordinate to all Liens in the Collateral held by the
Lender (and from time to time agree to execute and deliver any instruments or
agreements as may be reasonably necessary or desirable to confirm the same) and
(b) agree not to contest or support any other Person in contesting, in any
proceeding (including without limitation any insolvency or liquidation
proceeding), the priority, validity or enforceability of the Lien held by the
Lender in the Collateral.
ARTICLE VII
MISCELLANEOUS PROVISIONS
SECTION 7.1. FURTHER ASSURANCES. Each party hereto covenants to execute
and deliver, in each case at the Company's expense, such further instruments and
to take such further action as the Collateral Agent and Trustee may at any time
or times reasonably request in order to carry out the provisions and intent of
this Agreement.
SECTION 7.2. NOTICES. Any notices or other communications required or
permitted hereunder shall be in writing, and shall be sufficiently given if made
by hand delivery or by registered or certified mail, postage prepaid, return
receipt requested, addressed as follows:
To the Company and the Subsidiary Guarantors:
c/o Maples and Calder
P.O. Box 309
South Church Street
George Town, Grand Cayman
Cayman Islands, British West Indies
To the Collateral Agent and Trustee:
The First National Bank of Maryland
Trust Division
16th Floor
25 South Charles Street
Baltimore, Maryland 21203
15
<PAGE>
To the Indenture Trustee:
The First National Bank of Maryland
Trust Division
16th Floor
25 South Charles Street
Baltimore, Maryland 21203
To the Lender:
The Bank of New York
One Wall Street
New York, New York 10286
Any party hereto may by notice to each other party designate such additional or
different addresses as shall be furnished in writing by such party. Any notice
or communication to any party hereto shall be deemed to have been given or made
as of the date so delivered, if personally delivered; when answered back, if
telexed; when receipt is acknowledged, if telecopied; and five calendar days
after mailing if sent by registered or certified mail (except that a notice of
change of address shall not be deemed to have been given until actually received
by the addressee). A copy of any notice given under this Agreement to any party
shall also be given to each other party hereto.
SECTION 7.3. BINDING AGREEMENT; ASSIGNMENT; OBLIGATIONS SEVERAL. This
Agreement shall be binding upon the Grantors and each of their successors and
assigns, and inure, together with the rights and remedies of the Collateral
Agent and Trustee hereunder, to the benefit of the Collateral Agent and Trustee,
each Representative and each Secured Creditor and each of their respective
successors, transferees and assigns; no other Persons (including any other
creditor of the Company) shall have any interest herein or any right or benefit
with respect hereto. Without limiting the generality of the foregoing clause,
the Collateral Agent and Trustee and any Representative and Secured Creditor may
assign or otherwise transfer any indebtedness held by it secured by this
Agreement to any other person, and such other person shall thereupon become
vested with all the benefits in respect thereof granted to such party herein or
otherwise. Neither this Agreement nor any interest herein or in the Collateral,
or any part thereof, except as otherwise permitted herein or in the Debt
Instruments or the Security Agreements, may be assigned by any Grantor;
PROVIDED, HOWEVER, that this Agreement may be assigned by a Grantor to any
person that shall become a successor obligor of such Grantor under the Debt
Instruments in compliance with the Indenture if such person executes and
delivers an amendment hereto whereby it expressly assumes all obligations of the
Company hereunder as if it were an original party hereto. This Agreement shall
be deemed to be automatically assigned by the Collateral Agent and Trustee to
any person who succeeds to the Collateral Agent and Trustee in accordance with
Section 4.5 hereof, and such assignee shall have all rights and powers of, and
act as, the Collateral Agent and Trustee hereunder, and this Agreement shall be
deemed to be automatically assigned by any of the Representatives to those
persons who succeed to any of them in accordance with the provisions of the
applicable Debt Instrument. Except as otherwise expressly provided herein, the
obligations of each of the parties under this Agreement are several and not
joint, it being expressly agreed that no Representative shall be liable for the
failure of any other Representative to perform its duties or obligations
hereunder.
SECTION 7.4. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, without regard
to conflicts of law principles, except to the extent that the laws of any other
jurisdiction may be mandatorily applicable.
SECTION 7.5. EFFECTIVENESS; TERMINATION. This Agreement shall become
effective on the date on which all of the parties hereto shall have signed a
copy hereof (whether the same or different copies) and shall have delivered the
same to the Collateral Agent and Trustee. This Agreement shall remain effective
until, and terminate when, all Obligations are indefeasibly satisfied and the
Collateral Agent and Trustee receives written notification from each
Representative that the Obligations owed
16
<PAGE>
to such Representative have been so satisfied in full. Upon termination of this
Agreement, the Collateral Agent and Trustee, at the Company's sole cost and
expense, shall reassign and redeliver to the Grantors any Collateral which has
not been sold, disposed of, retained or applied by the Collateral Agent and
Trustee in accordance with the terms hereof or of any other Security Agreement.
Such reassignment and redelivery shall be without warranty by or recourse to the
Collateral Agent and Trustee, and shall be at the expense of the Company.
Thereafter, no Security Agreement shall constitute a Lien upon or grant any
security interest in any of the Collateral and the Collateral Agent and Trustee
shall, at the Company's expense and pursuant to the Company's written
instructions, deliver to the Company written acknowledgment thereof and of
cancelation of this Agreement and all other Security Agreements in a form as
reasonably requested by the Company and adequate for proper filing or recording
in such offices and such jurisdictions as the Company reasonably deems necessary
to release the Liens created under the Security Agreements. This Agreement shall
continue to be effective or be reinstated, as the case may be, if at any time
any payment of any of the Obligations is rescinded or must be otherwise returned
upon the insolvency, bankruptcy or reorganization of the Company or any
Subsidiary Guarantor or otherwise, all as though such payment had not been made
and, if applicable, this Agreement had not been terminated.
SECTION 7.6. AMENDMENT. This Agreement may be amended, changed, waived,
discharged or terminated with the written consent of the Company and the
Representatives (who shall only grant such consent in accordance with the
relevant provisions of the appropriate Debt Instrument). If in the opinion of
the Collateral Agent and Trustee any document required to be executed pursuant
to the terms of this Section 7.6 affects any interest or right or duty or
immunity or indemnity in favor of the Collateral Agent and Trustee under this
Agreement or any other Security Agreement, the Collateral Agent and Trustee may
in its discretion decline to execute such document.
SECTION 7.7. DISCRETION OF THE COLLATERAL AGENT AND TRUSTEE. Any right,
power or authority granted hereunder or under any other Security Agreement to
the Collateral Agent and Trustee to be exercised by the Collateral Agent and
Trustee in its discretion, shall be deemed to be duly exercised in accordance
with this Agreement upon receipt by the Collateral Agent and Trustee of written
instructions signed by the Senior Representative (subject to Section 5.1(f) and
subject to the right of the Majority Secured Creditors to otherwise direct in
the absence of such direction) as to such right, power or authority to be
exercised and the exercise by the Collateral Agent and Trustee in accordance
therewith.
SECTION 7.8. INCONSISTENT PROVISIONS. If any provision of this
Agreement shall be inconsistent with, or contrary to, any provision in any other
Security Agreement, such provision of this Agreement shall be controlling, and
shall supersede such inconsistent provision to the extent necessary to give full
effect to all provisions contained in this Agreement. If any provision of this
Agreement shall be inconsistent with, or contrary to, any provision of any of
the Debt Instruments, upon receipt of written notification from the
Representative, such provision of such Debt Instrument shall be controlling, and
shall supersede such inconsistent provisions hereof to the extent necessary to
give full effect to such provision of such Debt Instrument.
SECTION 7.9. SEVERABILITY. In the event that any provision contained in
this Agreement shall for any reason be held to be illegal or invalid under the
laws of any jurisdiction, such illegality or invalidity shall in no way impair
the effectiveness of any other provision hereof or of such provision under the
laws of any other jurisdiction; PROVIDED, HOWEVER, that in the construction and
enforcement of such provisions under the laws of the jurisdiction in which such
holding of illegality or invalidity exists, and to the extent only of such
illegality or invalidity, this Agreement shall be construed and enforced as
though such illegal or invalid provision had not been contained herein.
SECTION 7.10. HEADINGS. Section headings used herein are inserted for
convenience only and shall not in any way affect the meaning or construction of
any provision of this Agreement.
17
<PAGE>
SECTION 7.11. COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which when so executed and delivered shall be an
original, and all of which shall together constitute one and the same
instrument. A complete set of counterparts shall be lodged with the Collateral
Agent and Trustee and with each Representative.
SECTION 7.12. AGENT FOR SERVICE; SUBMISSION TO JURISDICTION; WAIVER OF
IMMUNITIES. By the execution and delivery of this Agreement, the Company and
each of the Subsidiary Guarantors (i) acknowledges that it has, by separate
written instrument, irrevocably designated and appointed Kylco Maritime (USA),
Inc. ("Kylco USA"), (and any successor entity), as its authorized agent upon
which process may be served in any suit or proceeding arising out of or relating
to this Agreement that may be instituted in any federal or state court in the
State of New York, Borough of Manhattan or brought by the Collateral Agent and
Trustee (whether in its individual capacity or in its capacity as Collateral
Agent and Trustee hereunder), the Indenture Trustee (whether in its individual
capacity or in its capacity as Indenture Trustee under the Indenture) or the
Lender and acknowledges that Kylco USA has accepted such designation, (ii)
submits to the jurisdiction of any such court in any such suit or proceeding,
and (iii) agrees that service of process upon Kylco USA and written notice of
said service to the Company or the applicable Subsidiary Guarantor, shall be
deemed in every respect effective service of process upon the Company or such
Subsidiary Guarantor, as the case may be, in any such suit or proceeding. The
Company and each of the Subsidiary Guarantors further agree to take any and all
action, including the execution and filing of any and all such documents and
instruments, as may be necessary to continue such designation and appointment of
Kylco USA in full force and effect so long as this Agreement shall be in full
force and effect.
The Company and each of the Subsidiary Guarantors hereby irrevocably
and unconditionally waive, to the fullest extent they may legally effectively do
so, any objection which they may now or hereafter have to the laying of venue of
any suit, action or proceeding arising out of or relating to this Agreement or
the other Security Agreements in any federal or state court in the State of New
York, Borough of Manhattan. The Company and each of the Subsidiary Guarantors
hereto hereby irrevocably waives, to the fullest extent permitted by law, the
defense of an inconvenient forum to the maintenance of such action or proceeding
in any such court.
To the extent either the Company or any of the Subsidiary Guarantors
has or hereafter may acquire any immunity from jurisdiction of any court or from
any legal process (whether through service of notice, attachment prior to
judgment, attachment in aid of execution, execution or otherwise) with respect
to itself or its property, it hereby irrevocably waives such immunity in this
Agreement and the other Security Agreements, to the extent permitted by law.
18
<PAGE>
IN WITNESS WHEREOF, the Collateral Agent and Trustee, the Indenture
Trustee, the Lender, the Company and the Subsidiary Guarantors have caused this
Agreement to be executed and delivered by their respective officers thereunto
duly authorized as of the day and year first above written.
The First National Bank of Maryland, as
Collateral Agent and Trustee and Indenture
Trustee
By: /s/ Vassilios M. Livanos
-----------------------------
Name: Vassilios M. Livanos
Title: Chief Executive Officer
The Bank of New York
By: /s/ Vassilios M. Livanos
-----------------------------
Name: Vassilios M. Livanos
Title: Chief Executive Officer
Millenium Seacarriers, Inc.
By: /s/ Vassilios M. Livanos
-----------------------------
Name: Vassilios M. Livanos
Title: Chief Executive Officer
Conifer Shipping Company Limited
By: /s/ Vassilios M. Livanos
-----------------------------
Name: Vassilios M. Livanos
Title: Chief Executive Officer
Topscale Shipping Company, Limited
By: /s/ Vassilios M. Livanos
-----------------------------
Name: Vassilios M. Livanos
Title: Chief Executive Officer
Rapid Ocean Carriers
By: /s/ Vassilios M. Livanos
-----------------------------
Name: Vassilios M. Livanos
Title: Chief Executive Officer
Ivy Navigation, Inc.
By: /s/ Vassilios M. Livanos
-----------------------------
Name: Vassilios M. Livanos
Title: Chief Executive Officer
Oakmont Shipping and Trading, Inc.
By: /s/ Vassilios M. Livanos
-----------------------------
Name: Vassilios M. Livanos
Title: Chief Executive Officer
Millenium Majestic, Inc.
By: /s/ Vassilios M. Livanos
-----------------------------
Name: Vassilios M. Livanos
Title: Chief Executive Officer
Millenium Yama, Inc.
By: /s/ Vassilios M. Livanos
-----------------------------
Name: Vassilios M. Livanos
Title: Chief Executive Officer
19
<PAGE>
Millenium Amethyst, Inc.
By: /s/ Vassilios M. Livanos
-----------------------------
Name: Vassilios M. Livanos
Title: Chief Executive Officer
Millenium Elmar, Inc.
By: /s/ Vassilios M. Livanos
-----------------------------
Name: Vassilios M. Livanos
Title: Chief Executive Officer
Millenium Aleksander, Inc.
By: /s/ Vassilios M. Livanos
-----------------------------
Name: Vassilios M. Livanos
Title: Chief Executive Officer
Millenium II, Inc.
By: /s/ Vassilios M. Livanos
-----------------------------
Name: Vassilios M. Livanos
Title: Chief Executive Officer
Millenium III, Inc.
By: /s/ Vassilios M. Livanos
-----------------------------
Name: Vassilios M. Livanos
Title: Chief Executive Officer
Millenium IV, Inc.
By: /s/ Vassilios M. Livanos
-----------------------------
Name: Vassilios M. Livanos
Title: Chief Executive Officer
Millenium V, Inc.
By: /s/ Vassilios M. Livanos
-----------------------------
Name: Vassilios M. Livanos
Title: Chief Executive Officer
Millenium VI, Inc.
By: /s/ Vassilios M. Livanos
-----------------------------
Name: Vassilios M. Livanos
Title: Chief Executive Officer
Millenium VII, Inc.
By: /s/ Vassilios M. Livanos
-----------------------------
Name: Vassilios M. Livanos
Title: Chief Executive Officer
Millenium VIII, Inc.
By: /s/ Vassilios M. Livanos
-----------------------------
Name: Vassilios M. Livanos
Title: Chief Executive Officer
20
FORM OF FACE OF EXCHANGE NOTE
[*/]
No.$
12% First Priority Ship Mortgage Exchange Notes Due 2005
Millenium Seacarriers, Inc., a Cayman Islands corporation, promises to
pay to _______________, or registered assigns, the principal sum of ____________
Dollars on July 15, 2005.
Interest Payment Dates: January 15 and July 15.
Record Dates: January 1 and July 1.
Additional provisions of this Security are set forth on the other side of this
Security.
Dated:
MILLENIUM SEACARRIERS, INC.,
by
-----------------------
Chief Executive Officer
-----------------------
Secretary
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
THE FIRST NATIONAL BANK OF MARYLAND,
as Trustee, certifies that
this is one of the Securities
referred to in the Indenture.
by
-----------------------------
Authorized Signatory
*/ If the Security is to be issued in global form add the Global Securities
Legend:
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITARY TRUST COMPANY, A NEW
YORK CORPORATION ("DTC"), NEW YORK, NEW YORK, TO THE
COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME
AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC
(AND ANY PAYMENT IS MADE TO CEDE & CO., OR TO SUCH
OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC) ANY TRANSFER, PLEDGE OR OTHER
USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF,
CEDE & CO., HAS AN INTEREST HEREIN.
1
<PAGE>
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO
TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC
OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE
If the Security is to be issued in global form add the following schedule:
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY
The following increases or decreases in this Global Security have been
made:
Date of Amount of decrease in Principal Amount of increase in Principal
Exchange Amount at Maturity of this Amount at Maturity of this
Global Security Global Security
Principal amount at Maturity of Signature of authorized officer of
this Global Security following Trustee or Securities Custodian
such decrease or increase)
2
<PAGE>
FORM OF REVERSE SIDE OF EXCHANGE NOTE
12% First Priority Ship Mortgage Exchange Note Due 2005
1. INTEREST
Millenium Seacarriers, Inc., a Cayman Islands corporation (such
corporation, and its successors and assigns under the Indenture hereinafter
referred to, being herein called the "Company"), promises to pay cash interest
on the Accreted Value of this Security at the rate per annum shown above. The
Company will pay interest semiannually on January 15 and July 15 of each year.
Interest on the Securities will accrue from the most recent date to which
interest has been paid or, if no interest has been paid, from July 24, 1998.
Interest will be computed on the basis of a 360-day year of twelve 30-day
months. The Company shall pay interest on overdue principal at the rate borne by
the Securities plus 1% per annum, and it shall pay interest on overdue
installments of interest at the same rate to the extent lawful.
2. METHOD OF PAYMENT
The Company will pay interest on the Securities (except defaulted
interest) to the Persons who are registered holders of Securities at the close
of business on the January 1 or July 1 next preceding the interest payment date
even if Securities are canceled after the record date and on or before the
interest payment date. Holders must surrender Securities to a Paying Agent to
collect principal payments. The Company will pay principal and interest in money
of the United States that at the time of payment is legal tender for payment of
public and private debts. Payments in respect of Securities (including
principal, premium and interest) will be made by wire transfer of immediately
available funds to the accounts specified by the holders thereof or, if no U.S.
dollar account maintained by the payee with a bank in the United States is
designated by any holder to the Trustee or the Paying Agent at least 30 days
prior to the relevant due date for payment (or such other date as the Trustee
may accept in its discretion), by mailing a check to the registered address of
such holder.
3. PAYING AGENT AND REGISTRAR
Initially, The First National Bank of Maryland, a national banking
association ("Trustee"), will act as Paying Agent and Registrar. The Company may
appoint and change any Paying Agent, Registrar or co-registrar without notice.
The Company or any of its domestically incorporated Wholly Owned Subsidiaries
may act as Paying Agent, Registrar or co-registrar.
4. INDENTURE
The Company issued the Securities under an Indenture dated as of July
24, 1998 ("Indenture"), between the Company and the Trustee. The terms of the
Securities include those stated in the Indenture and those made part of the
Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C. ss.ss.
77aaa-77bbbb) as in effect on the date of the Indenture (the "Act"). Terms
defined in the IndentUre and not defined herein have the meanings ascribed
thereto in the Indenture. The Securities are subject to all such terms, and
Securityholders are referred to the Indenture and the Act for a statement of
those terms.
The Securities are general secured obligations of the Company limited
to $100.0 million aggregate principal amount at maturity (subject to Section
2.06 of the Indenture). The Indenture will contain covenants with respect to (i)
limitations on the incurrence of additional indebtedness, (ii) limitations on
certain payments, (iii) limitations on restrictions on distributions from
subsidiaries (including the Subsidiary Guarantors), (iv) limitations on sales of
assets and subsidiary stock, (v) limitations on liens, (vi) limitations on
investments, (vii) limitations on business activities, (viii) limitations on
sale and leaseback transactions, (ix) limitations on transactions with
affiliates, (x) requirements for the provision of financial information, (xi)
limitations on mergers, consolidations and certain purchases of assets, (xii)
impairment of security interests and (xiii) amendments to security agreements.
All these limitations and prohibitions, however, are subject to a number of
important qualifications.
5. OPTIONAL REDEMPTION
Except as set forth in the next two paragraphs below, the Securities
may not be redeemed at the option of the Company prior to July 15, 2003. On and
after that date, the Company may redeem the Securities in whole at any time or
in part from time to time at the following redemption prices (expressed in
3
<PAGE>
percentages of Accreted Value), plus accrued interest to the redemption date
(subject to the right of Holders of record on the relevant record date to
receive interest due on the related interest payment date):
if redeemed during the 12-month period commencing on July 15 of the
years set forth below:
PERIOD PERCENTAGE
------ ----------
2003 106%
2004 100
In addition, at any time prior to July 15, 2001, the Company may
redeem up to 35% of the original principal amount at maturity of Securities with
the proceeds of a Public Equity Offering following which there is a Public
Market, at any time or from time to time, at a redemption price (expressed as a
percentage of Accreted Value) of 112% plus accrued interest to redemption date
(subject to the right of Holders of record on the relevant record date to
receive interest due on the related interest payment date); PROVIDED, HOWEVER,
that at least $65.0 million principal amount at maturity of Securities remains
outstanding and is held, directly or indirectly by Persons other than the
Company and its Affiliates, after each such redemption and that any such
redemption occurs within 60 days following the closing of any such Public Equity
Offering.
The Securities may be redeemed, at the option of the Company, at any
time as a whole but not in part, on not less than 30 nor more than 60 days'
written notice to each Holder, at 100% of the Accreted Value thereof, plus
accrued and unpaid interest to the date of redemption (subject to the right of
Holders of record on the relevant record date to receive interest due on the
relevant interest payment date), in the event the Company or the Subsidiary
Guarantors, as the case may be, has become or would become obligated for reasons
outside of its control, and after taking reasonable measures to avoid such
obligation, to pay, on the next date on which any amount would be payable with
respect to the Securities, any Additional Amounts on the Securities or
Subsidiary Guarantees pursuant to the terms and conditions thereof as a result
of a change in or an amendment to the laws (including any regulations or rulings
promulgated thereunder) of the Cayman Islands, Liberia or Cyprus (or any
relevant jurisdiction, political subdivision or taxing authority thereof or
therein), or any change in or amendment to any official position regarding the
application or interpretation of such laws, regulations or rulings (including a
holding by a court of competent jurisdiction), which change or amendment is
announced or becomes effective on or after July 20, 1998; PROVIDED, HOWEVER,
that (a) no such notice of redemption shall be given earlier than 60 days prior
to the earliest date on which the Company or the Subsidiary Guarantors, as the
case may be, would be obligated to pay such Additional Amounts if a payment in
respect of the Securities or the Subsidiary Guaranty were then due, and (b) at
the time any such redemption notice is given, such obligation to pay Additional
Amounts must remain in effect. Prior to any redemption of the Securities, the
Company shall deliver to the Trustee or any paying agent an Officer's
Certificate stating that the Company is entitled to effect such redemption and
setting forth a statement of facts showing that the conditions precedent to the
right to effect such redemption have occurred.
6. MANDATORY REDEMPTION
To the extent that, after the close of business on July 31, 1999, the
amount of cash and the fair market value (as determined by the Board of
Directors in good faith) of securities on deposit in escrow with the Escrow
Agent exceeds $5.0 million, Millenium shall use all such remaining Escrowed
Proceeds to redeem as much of Securities as can be redeemed with such Escrowed
Proceeds at a redemption price equal to the sum of 101% of the Accreted Value of
such Securities and the accrued and unpaid interest thereon to the Special
Mandatory Redemption Date (as defined below) (subject to the right of Holders of
record on the relevant record date to receive interest due on the relevant
interest payment date). For purposes hereof, "Special Mandatory Redemption Date"
means August 31, 1999.
7. NOTICE OF REDEMPTION
Notice of redemption will be mailed at least 30 days but not more than
60 days before the redemption date to each Holder of Securities to be redeemed
at his registered address. Securities in denominations larger than $1,000 may be
redeemed in part but only in whole multiples of $1,000. If money sufficient to
pay the redemption price of and accrued interest on all Securities (or portions
thereof) to be redeemed on the redemption date is deposited with the Paying
Agent on or before the redemption date and certain other conditions are
satisfied, on and after such date interest ceases to accrue on such Securities
(or such portions thereof) called for redemption.
4
<PAGE>
8. PUT PROVISIONS
Upon a Change of Control, any Holder of Securities will have the right
to cause the Company to repurchase all or any part of the Securities of such
Holder at a repurchase price equal to 101% of the Accreted Value of the
Securities to be repurchased plus accrued interest to the date of repurchase
(subject to the right of holders of record on the relevant record date to
receive interest due on the related interest payment date) as provided in, and
subject to the terms of, the Indenture.
9. GUARANTEE
The payment by the Company of the principal of, and premium and
interest on, the Securities is fully and unconditionally guaranteed on a joint
and several senior secured basis by each of the Subsidiary Guarantors.
10. SECURITY
Securities will be secured by the Mortgages on the Mortgaged Vessels,
the security interests created pursuant to the Indenture and the Security
Agreements, the Escrowed Property and all the issued and outstanding capital
stock of the Subsidiary Guarantors.
11. DENOMINATIONS; TRANSFER; EXCHANGE
The Securities are in registered form without coupons in denominations
of $1,000 principal amount at maturity and whole multiples of $1,000 principal
amount at maturity. A Holder may transfer or exchange Securities in accordance
with the Indenture. The Registrar may require a Holder, among other things, to
furnish appropriate endorsements or transfer documents and to pay any taxes and
fees required by law or permitted by the Indenture. The Registrar need not
register the transfer of or exchange any Securities selected for redemption
(except, in the case of a Security to be redeemed in part, the portion of the
Security not to be redeemed) or any Securities for a period of 15 days before a
selection of Securities to be redeemed or 15 days before an interest payment
date.
12. PERSONS DEEMED OWNERS
The registered Holder of this Security may be treated as the owner of
it for all purposes.
13. UNCLAIMED MONEY
If money for the payment of principal or interest remains unclaimed
for two years, the Trustee or Paying Agent shall pay the money back to the
Company at its request unless an abandoned property law designates another
Person. After any such payment, Holders entitled to the money must look only to
the Company and not to the Trustee for payment.
14. DISCHARGE AND DEFEASANCE
Subject to certain conditions, the Company at any time may terminate
some or all of its obligations under the Securities and the Indenture if the
Company deposits with the Trustee money or U.S. Government Obligations for the
payment of principal and interest on the Securities to redemption or maturity,
as the case may be.
15. AMENDMENT, WAIVER
Subject to certain exceptions set forth in the Indenture, (i) the
Indenture or the Securities may be amended with the written consent of the
Holders of at least a majority in principal amount at maturity outstanding of
the Securities and (ii) any default or noncompliance with any provision may be
waived with the written consent of the Holders of a majority in principal amount
at maturity outstanding of the Securities. Subject to certain exceptions set
forth in the Indenture, without the consent of any Securityholder, the Company,
the Subsidiary Guarantors and the Trustee may amend the Indenture or the
Securities to cure any ambiguity, omission, defect or inconsistency, or to
comply with Article 5 of the Indenture, or to provide for uncertificated
Securities in addition to or in place of certificated Securities, or to add
guarantees with respect
5
<PAGE>
to the Securities or to secure the Securities, or to add additional covenants or
surrender rights and powers conferred on the Company or the Subsidiary
Guarantors, or to comply with any request of the SEC in connection with
qualifying the Indenture under the Act, or to make any change that does not
adversely affect the rights of any Securityholder.
16. DEFAULTS AND REMEDIES
Under the Indenture, Events of Default include (i) default for 30 days
in payment of interest on the Securities; (ii) default in payment of principal
on the Securities at maturity, upon redemption pursuant to paragraph 5 or 6 of
the Securities, upon acceleration or otherwise, or failure by the Company to
redeem or purchase Securities when required; (iii) failure by the Company to
comply with other agreements in the Indenture or the Securities, in certain
cases subject to notice and lapse of time; (iv) certain accelerations (including
failure to pay within any grace period after final maturity) of other
Indebtedness of the Company if the amount accelerated (or so unpaid) exceeds $5
million; (v) certain events of bankruptcy or insolvency with respect to the
Company and the Significant Subsidiaries; (vi) certain judgments or decrees for
the payment of money in excess of $5 million; (vii) a Subsidiary Guarantee
ceases to be in full force and effect (other than in accordance with the terms
of such Subsidiary Guarantee); and (viii) the security interest under the
Security Agreements ceases to be in full force and effect for any reason (other
than by operation of the provisions of the Indenture and the Security Agreements
and certain other reasons specified in this Indenture). If an Event of Default
occurs and is continuing, the Trustee or the Holders of at least 25% in
principal amount at maturity of the Securities may declare all the Securities to
be due and payable immediately. Certain events of bankruptcy or insolvency are
Events of Default which will result in the Securities being due and payable
immediately upon the occurrence of such Events of Default.
Securityholders may not enforce the Indenture or the Securities except
as provided in the Indenture. The Trustee may refuse to enforce the Indenture or
the Securities unless it receives reasonable indemnity or security. Subject to
certain limitations, Holders of a majority in principal amount at maturity of
the Securities may direct the Trustee in its exercise of any trust or power. The
Trustee may withhold from Securityholders notice of any continuing Default
(except a Default in payment of principal or interest) if it determines that
withholding notice is in the interest of the Holders.
17. TRUSTEE DEALINGS WITH THE COMPANY
Subject to certain limitations imposed by the Act, the Trustee under
the Indenture, in its individual or any other capacity, may become the owner or
pledgee of Securities and may otherwise deal with and collect obligations owed
to it by the Company or its Affiliates and may otherwise deal with the Company
or its Affiliates with the same rights it would have if it were not Trustee.
18. NO RECOURSE AGAINST OTHERS
A director, officer, employee or stockholder, as such, of the Company
or the Trustee shall not have any liability for any obligations of the Company
under the Securities or the Indenture or for any claim based on, in respect of
or by reason of such obligations or their creation. By accepting a Security,
each Securityholder waives and releases all such liability. The waiver and
release are part of the consideration for the issue of the Securities.
19. AUTHENTICATION
This Security shall not be valid until an authorized signatory of the
Trustee (or an authenticating agent) manually signs the certificate of
authentication on the other side of this Security.
20. ABBREVIATIONS
Customary abbreviations may be used in the name of a Securityholder or
an assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the
entireties), JT TEN (=joint tenants with rights of survivorship and not as
tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors
Act).
6
<PAGE>
21. CUSIP NUMBERS
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures the Company has caused CUSIP numbers to be
printed on the Securities and has directed the Trustee to use CUSIP numbers in
notices of redemption as a convenience to Securityholders. No representation is
made as to the accuracy of such numbers either as printed on the Securities or
as contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
22. HOLDERS' COMPLIANCE WITH REGISTRATION RIGHTS AGREEMENT.
Each Holder of a Security, by acceptance hereof, acknowledges and
agrees to the provisions of the Registration Rights Agreement, including,
without limitation, the obligations of the Holders with respect to a
registration and the indemnification of the Company to the extent provided
therein.
23. GOVERNING LAW.
THIS SECURITY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE
PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF
ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
THE COMPANY WILL FURNISH TO ANY SECURITYHOLDER UPON WRITTEN REQUEST
AND WITHOUT CHARGE TO THE SECURITYHOLDER A COPY OF THE INDENTURE WHICH HAS IN IT
THE TEXT OF THIS SECURITY IN LARGER TYPE. REQUESTS MAY BE MADE TO:
C/O MAPLES AND CALDER
P.O. BOX 309
SOUTH CHURCH STREET
GEORGE TOWN, GRAND CAYMAN
CAYMAN ISLANDS, BRITISH WEST INDIES
ATTENTION OF GARETH GRIFFITHS, ESQ.
- - - - ------------------------------------------------------------
7
<PAGE>
ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to
(Print or type assignee's name, address and zip code)
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint ___________________ agent to transfer this Security on
the books of the Company. The agent may substitute another to act for him.
- - - - --------------------------------------------------------------
Date: ________________ Your Signature: _____________________
- - - - --------------------------------------------------------------
Sign exactly as your name appears on the other side of this Security.
8
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
IF YOU WANT TO ELECT TO HAVE THIS SECURITY PURCHASED BY THE COMPANY
PURSUANT TO SECTION 4.07 OR 4.13 OF THE INDENTURE, CHECK THE BOX:
---
/__/
IF YOU WANT TO ELECT TO HAVE ONLY PART OF THIS SECURITY PURCHASED BY
THE COMPANY PURSUANT TO SECTION 4.07 OR 4.13 OF THE INDENTURE, STATE THE AMOUNT
OF THE PRINCIPAL AMOUNT AT MATURITY:
$
DATE: __________________ YOUR SIGNATURE: ____________________________
(SIGN EXACTLY AS YOUR NAME APPEARS
ON THE OTHER SIDE OF THE SECURITY)
SIGNATURE GUARANTEE:_______________________________________
(SIGNATURE MUST BE GUARANTEED BY A
MEMBER FIRM OF THE NEW YORK STOCK EXCHANGE OR A COMMERCIAL
BANK OR TRUST COMPANY)
[Draft--07/22/98]
[FORM OF LIBERIAN MORTGAGE]
FIRST PREFERRED SHIP MORTGAGE
ON THE
LIBERIAN FLAG VESSEL
M/V [NAME OF VESSEL]
GRANTED BY ___________________________, AS SHIPOWNER
IN FAVOR OF
THE FIRST NATIONAL BANK OF MARYLAND, AS
COLLATERAL AGENT, TRUSTEE AND MORTGAGEE
ON
______, 19__
<PAGE>
i
TABLE OF CONTENTS
Page
----
WHEREAS................................................................. 1
ARTICLE I.
Covenants of the Shipowner
Section 1: Acknowledgment of Debt............................... 4
Section 2: Organization of Shipowner............................ 4
Section 3: No Existing Liens.................................... 4
Section 4: Preferred Mortgage under
Liberian Law....................................... 5
Section 5: No Unlawful Operation................................ 5
Section 6: Payment of Taxes, etc................................ 5
Section 7: No Power To Create Liens............................. 6
Section 8: Notice of Mortgage................................... 6
Section 9: Discharge of Liens,
Encumbrances, etc.................................. 6
Section 10: Libel................................................ 7
Section 11: Vessel Condition..................................... 7
Section 12: Provision of Information and
Documents.......................................... 8
Section 13: No Transfer of Flag; Sale;
Charter............................................ 9
Section 14: Insurance............................................ 9
Section 15: Reimbursement for Expenses........................... 14
Section 16: Performance of Charter............................... 14
Section 17: Event of Loss........................................ 14
Section 18: Financing Statements................................. 15
Section 19: Incorporation by Reference........................... 15
Section 20: Requisition of Title................................. 15
ARTICLE II.
Events of Default and Remedies
Section 1: Events of Default.................................... 16
Section 2: Sale Divests Title................................... 18
Section 3: Mortgagee's Power of
Attorney-Sales..................................... 18
Section 4: Mortgagee's Power of
Attorney-Collection................................ 18
Section 5: Mortgagee Power of
Attorney-Discharge of Liens........................ 19
Section 6: Delivery of Vessel................................... 19
Section 7: Indemnification...................................... 19
Section 8: Every Power Cumulative............................... 20
Section 9: Cure of Defaults..................................... 20
ii
Page
----
Section 10: Restoration............................................ 21
Section 11: Distribution of Proceeds................................. 21
Section 12: Quiet Enjoyment.......................................... 21
Section 13: No Waiver of Preferred Status............................ 21
Section 14: Venue.................................................... 22
ARTICLE III.
Sundry Provisions
Section 1: Binding on Successors.................................... 23
Section 2: Exercise by Agents....................................... 23
Section 3: Notices.................................................. 23
Section 4: Titles and Section Headings.............................. 24
Section 5: Recording Clause......................................... 24
Exhibit A: Indenture
Exhibit B: Working Capital Facility Agreement
Exhibit C: Working Capital Guarantee
Exhibit D: Collateral Agency Agreement
<PAGE>
FIRST PREFERRED SHIP MORTGAGE
M/V
FIRST PREFERRED MORTGAGE, made the _____ day of ____, 19___ by
________________, a corporation organized and existing under the laws of
_______________ (herein called the "Shipowner"), having its principal place of
business at ____________________ in favor of The First National Bank of
Maryland, a national banking association organized and existing under the laws
of the United States, as Collateral Agent and Trustee (herein called the
"Mortgagee") under a Collateral Agency and Intercreditor Agreement dated as of
July 15, 1998, (the "Collateral Agency Agreement") by and among the Mortgagee,
The First National Bank of Maryland, not in its individual capacity but as
trustee (the "Trustee") under the Indenture (as defined), The Bank of New York
(the "Working Capital Facility Provider"), the Shipowner, certain other
Subsidiary Guarantors (as defined in the Collateral Agency Agreement) and
Millenium Seacarriers, Inc. (the "Issuer");
WHEREAS:
A. The Shipowner is the sole owner of the whole of the motor
vessel ______________, more fully described in the Granting Clause below.
B. The Issuer has issued One Hundred Million United States
Dollars (U.S. $100,000,000) representing 100,000 units (the "Units"), each Unit
consisting of $1,000 principal amount at maturity of its 12% First Priority Ship
Mortgage Notes Due 2005 (the "Notes") and one warrant to purchase five shares of
common stock, par value $.01 per share of the Issuer, and whereas the Notes will
be issued in accordance with the terms of the Indenture dated as of July 15,
1998 among the Trustee, the Issuer, the Shipowner and certain other Subsidiary
Guarantors, and the Shipowner acknowledges that the Issuer is justly indebted up
to the principal amount of U.S. $100 Million to the Holders of the Notes on the
date hereof;
[C. A portion of the proceeds of the Notes have been lent by
the Issuer to the Shipowner and used to refinance the indebtedness of the
Shipowner respecting the Vessel;][INSERT IF APPLICABLE]
[C. Pursuant to the Escrow and Pledge Agreement dated as of
July 15, 1998 between the Issuer and The First National Bank of Maryland, as
Escrow Agent, the Issuer has deposited with the Escrow Agent a portion of the
net proceeds of the Offering of the Notes, to be used upon the satisfaction of
certain conditions including the delivery of this Mortgage to acquire additional
Mortgaged Vessels;]
D. In accordance with the Indenture, the Shipowner has
[executed and delivered a Supplemental Indenture pursuant to which it has]
guaranteed (the "Guarantee") the payment in full of the principal of, interest
on, and premium, if any, in respect of the Notes, made an assignment to the
Trustee as collateral security of certain of its rights in respect of the
Mortgaged Vessel and has agreed to execute and deliver this Mortgage in favor of
the Mortgagee as security for its obligations under its Guarantee;
E. The Issuer has entered into a Credit Agreement (the
"Working Capital Facility Agreement") dated as of July 20, 1998 among the
Working Capital Facility Provider and the Issuer pursuant to which the Working
Capital Facility Provider has
<PAGE>
2
agreed to make available to the Issuer a revolving line of credit, not to exceed
at any one time outstanding Seven Million United States Dollars (US $7,000,000),
all loans thereunder (the "Working Capital Loans") to bear interest at LIBOR,
plus 1 1/2%, and to be repayable on or before July 24, 1999;
F. The Shipowner [shall, concurrently with any capital draws
under the Working Capital Facility Agreement, execute and deliver] [has executed
and delivered] a Guaranty Agreement (a "Working Capital Guarantee") pursuant to
which it [shall guarantee] [has guaranteed] the payment in full of the principal
of, interest on, and premium, if any, in respect of the line of credit (the
"Working Capital Facility") made available pursuant to the Working Capital
Facility Agreement, [make] [made] an assignment to the Working Capital Facility
Provider as collateral security of certain of its rights with respect to the
Mortgaged Vessel and [shall agree] [has agreed] to execute and deliver the
Mortgage in favor of the Mortgagee as security for its obligations under its
Working Capital Guarantee; and
G. Except as otherwise defined herein, terms defined in the
Indenture are used herein as defined therein and terms not defined in the
Indenture and defined in the Collateral Agency Agreement are used herein as
defined in the Collateral Agency Agreement. A copy of each of: (i) the
Indenture, (ii) the Working Capital Facility Agreement, (iii) the Working
Capital Guarantee and (iv) the Collateral Agency Agreement is attached hereto as
Exhibit A, B, C and D, respectively, and made a part hereof;
NOW, THEREFORE, THIS MORTGAGE WITNESSETH:
That, in consideration of the premises and of the additional
covenants herein contained and for other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, and in order to secure
the payment of the principal of, interest on and premium, if any, respecting the
Notes, the Working Capital Loans, the Obligations, fees, expenses and all other
sums due or otherwise secured under the Indenture, under the Working Capital
Guarantee or hereunder (all such principal, interest, premium and other amounts
hereby collectively called the "Indebtedness hereby secured"), and to secure the
due performance and observance of all the agreements and covenants in the Notes,
the Indenture, the Working Capital Guarantee, the other Security Agreements, and
herein contained, the Shipowner has granted, conveyed, mortgaged, pledged,
confirmed, assigned, transferred and set over, and by these presents does hereby
grant, convey, mortgage, pledge, confirm, assign, transfer and set over, unto
the Mortgagee, the whole of the vessel, described as follows:
The whole of the motor vessel [NAME OF VESSEL], Official No.
_____, of _____ gross and ____ net tons, or thereabouts, duly documented in the
name of the Shipowner under the laws of the Republic of Liberia, with her home
port at Monrovia, Liberia having been built in ________, ______, in 19___; such
vessel including, without being limited to, all of the boilers, engines,
machinery, masts, spars, boats, anchors, cables, chains, rigging, tackle,
capstans, outfit, tools, pumps and pumping equipment, apparel, furniture,
fittings, equipment, spare parts, and all other appurtenances thereunto
appertaining or belonging, whether now owned or hereafter acquired, and also any
and all additions, improvements, renewals and replacements hereafter made in or
to such vessel or any part thereof, including all items and appurtenances
aforesaid (such vessel, together with all of the foregoing, being herein called
the "Vessel").
<PAGE>
3
TO HAVE AND TO HOLD all and singular the above mortgaged and
described property unto the Mortgagee and its successors and assigns, to its and
to its successors' and assigns' own use, benefit and behoof forever upon the
terms set forth to secure the performance and observance of and compliance with
the covenants, terms and conditions of this Mortgage.
PROVIDED, and these presents are upon the condition, that, if
the Shipowner or its successors or assigns shall pay or cause to be paid the
Indebtedness hereby secured as and when the same shall become due and payable in
accordance with the terms of the Indenture, the Working Capital Guarantee and
this Mortgage, and all other such sums as may hereafter become secured by this
Mortgage in accordance with the terms hereof, and the Shipowner shall duly
perform, observe and comply with or cause to be performed, observed, or complied
with all the covenants, terms and conditions of the Indenture, the Working
Capital Guarantee, the other Security Agreements and this Mortgage, expressed or
implied, to be performed, then this Mortgage and the estate and rights hereunder
shall cease, determine and be void, otherwise to remain in full force and
effect.
The Shipowner for itself, its successors and assigns, hereby
covenants, declares and agrees with the Mortgagee and its successors and assigns
that the Vessel is to be held subject to the further covenants, conditions,
terms and uses hereinafter set forth.
ARTICLE I.
COVENANTS OF THE SHIPOWNER.
SECTION 1: ACKNOWLEDGMENT OF DEBT; GOVERNING LAW. (a) The
Shipowner hereby acknowledges that pursuant to its Guarantee, it is justly
indebted (i) pursuant to its Guarantee to the Holders of the Notes in the
principal amount of up to One Hundred Million United States Dollars (U.S.
$100,000,000) and (ii) pursuant to its Working Capital Guarantee to the Working
Capital Facility Provider in the principal amount of up to $7,000,000 and will
pay or cause to be paid the Indebtedness hereby secured. The Shipowner will
observe, perform and comply with the covenants, terms and conditions herein,
express or implied, on its part to be observed, performed or complied with.
(b) This Mortgage is intended to be a first preferred mortgage
under Liberian law and as such shall be governed by Liberian law. However, in
the event of any conflict between the substantive provisions of this Mortgage
and the Indenture, the terms of the Indenture shall prevail, provided they are
consistent with Liberian law.
SECTION 2: ORGANIZATION OF SHIPOWNER. (a) The Shipowner is a
corporation duly organized and existing under the laws of _____________________
and shall so remain during the life of this Mortgage and so long as each of the
Indenture and the Working Capital Guarantee shall remain in effect and any
Obligations or any Working Capital Loans remain outstanding.
(b) The Shipowner has full power and authority to own,
operate, charter and mortgage the Vessel; all action necessary and required by
law for the execution and delivery of this Mortgage has been duly and
effectively taken; and this
<PAGE>
4
Mortgage and the Indebtedness hereby secured is and will be the valid and
enforceable obligation of the Shipowner in accordance with its terms. All
consents or approvals required in respect of this Mortgage have been obtained
and are in full force and effect.
SECTION 3: NO EXISTING LIENS. The Shipowner lawfully owns and
is lawfully possessed of the Vessel free from any lien or encumbrance whatsoever
other than (a) liens for current crew's wages, (b) liens covered by valid
policies of insurance held by the Mortgagee and meeting the requirements of
Section 14 below of this Article I, (c) liens not covered by insurance incurred
in the ordinary course of business and not more than thirty days past due; and
(d) Permitted Liens, and will 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: PREFERRED MORTGAGE UNDER LIBERIAN LAW. The Vessel
is duly documented in the name of the Shipowner under the laws and flag of the
Republic of Liberia. The Shipowner will cause this Mortgage to be duly recorded
in accordance with the provisions of Chapter 3 of Title 22 of the Liberian Code
of Laws of 1956, as at any time amended (the "Liberian Maritime Law"), and will
otherwise comply with and satisfy all of the provisions of the Liberian Maritime
Law in order to establish and maintain this Mortgage, as at any time amended,
supplemented or assigned, as a first preferred mortgage lien thereunder upon the
Vessel and upon all renewals, replacements and improvements made in or to the
same or any part thereof for the amount of the Indebtedness hereby secured.
SECTION 5: NO UNLAWFUL OPERATION. The Shipowner will not cause
or permit the Vessel to be operated in any manner contrary to law, and the
Shipowner will not engage in any unlawful trade or violate any law or carry any
cargo that will expose the Vessel to penalty, forfeiture or capture, and will
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 will at all times at its own expense
keep the Vessel duly documented thereunder, except in the case of any change of
registry permitted by the Indenture or hereby, in which case a mortgage will be
recorded against the Vessel under the laws of any such new registry state.
SECTION 6: PAYMENT OF TAXES, ETC. The Shipowner will pay and
discharge when due and payable, from time to time, all taxes, assessments,
governmental charges, fines and penalties lawfully imposed on the Vessel or any
income therefrom; PROVIDED that the Shipowner shall not be required to pay any
such tax, assessment or charge if the validity or amount thereof is concurrently
contested in good faith by appropriate proceedings, the Shipowner shall have set
aside on its books reserves in accordance with generally accepted accounting
principles in the United States consistently applied deemed by it adequate with
respect to such tax, assessment or charge and during the pendency of such
contest the Vessel will not be subject to sale or forfeiture; and PROVIDED
FURTHER, however, that the Shipowner will pay or cause to be paid all such
taxes, assessments or charges forthwith upon the commencement of proceedings to
foreclose any lien which is attached as security therefor.
SECTION 7: NO POWER TO CREATE LIENS. Neither the Shipowner,
any charterer, the Master of the Vessel nor any other person has or shall have
any right, power or authority to create, incur or permit to be placed or imposed
or continued upon the Vessel any lien or encumbrance whatsoever other than
Permitted Liens, liens for current crew's wages and salvage and the lien of this
Mortgage.
<PAGE>
5
SECTION 8: NOTICE OF MORTGAGE. The Shipowner will place, and
at all times and places will retain, a properly certified copy of this Mortgage
on board the Vessel with her papers and will cause each such certified copy and
the Vessel's marine document to be exhibited to any and all persons having
business therewith which might give rise to any lien thereon other than a
Permitted Lien or liens for current crew's wages or salvage, and to any
representative of the Mortgagee; and will place and keep prominently displayed
in the chart room and in the Master's cabin of the Vessel a framed printed
notice in plain type reading as follows:
"NOTICE OF MORTGAGE
This vessel is covered by a First Preferred Ship
Mortgage in favor of The First National Bank of Maryland, as
Trustee/Mortgagee, under authority of Title 22 of the Liberian
Code of Laws of 1956, as amended. Under the terms of said
First Preferred Mortgage, neither the Owner, any charterer,
the Master of this Vessel nor any other person has any right,
power or authority to create, incur or permit to be imposed
upon this Vessel any other lien whatsoever except liens for
current crew's wages and salvage."
SECTION 9: DISCHARGE OF LIENS, ENCUMBRANCES, ETC. Except for
the lien of this Mortgage, Permitted Liens 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, the Shipowner will not suffer to be continued
any lien, encumbrance or charge on the Vessel, and in due course and in any
event, by the earlier of ninety (90) days after the same becomes due and payable
or twenty-one (21) days after being requested to do so by the Mortgagee, will
pay or cause to be discharged or make adequate provision for the satisfaction or
discharge of all claims or demands, or will cause the Vessel to be released or
discharged from any lien, encumbrance or charge therefor.
SECTION 10: LIBEL. If a libel, complaint or similar process be
filed against the Vessel or the Vessel be otherwise attached, levied upon or
taken into custody by virtue of any legal proceeding in any court, the Shipowner
will promptly notify the Mortgagee thereof by cable, facsimile or telex,
confirmed by letter, at its address, as specified in this Mortgage, and within
fifteen (15) days of such filing, attachment, levy or taking into custody will
cause the Vessel to be released and all liens thereon other than this Mortgage
and the liens securing the obligations under the Security Agreements and the
Working Capital Guarantee to be discharged and will promptly notify the
Mortgagee thereof in the manner aforesaid. In the event the Vessel is levied
upon or taken into custody or detained by any authority whatsoever, the
Shipowner agrees forthwith to notify the Mortgagee thereof by telex, confirmed
by letter. The Shipowner will notify the Mortgagee within forty-eight (48) hours
after it has become known to the Shipowner of any average or salvage incurred by
the Vessel.
SECTION 11: VESSEL CONDITION. (a) The Shipowner at all times
and without cost or expense to the Mortgagee, will maintain and preserve, or
cause to be maintained and preserved, the Vessel and all its equipment, outfit
and appurtenances, tight, staunch, strong, in good condition, working order and
repair and in all respects seaworthy and fit for its intended service, and will
keep the Vessel, or cause her to be kept and maintained, in such condition as
will entitle her to maintain her current
<PAGE>
6
classification and rating for vessels of the same age and type, free of notices,
recommendations or qualifications which negatively affect such classification in
[INSERT CURRENT CLASSIFICATION SOCIETY], or other classification society of like
standing approved by the Mortgagee. The Vessel shall, and the Shipowner
covenants that she will, at all times comply with all applicable laws, treaties
and conventions, and rules and regulations issued thereunder, and shall have on
board as and when required thereby valid certificates showing compliance
therewith, including all Safety Management Certificates required by the
International Safety Management Code (the "ISM Code"). The Shipowner will not
make, or permit to be made, any substantial change in the structure, type or
speed of the Vessel or with respect to any of the terms of the instruments of
insurance or diminish the value of the Vessel without first receiving written
approval thereof from the Mortgagee.
(b) The Shipowner agrees to give the Mortgagee at least ten
(10) days notice of the actual date and place of any survey or drydocking in
order that the Mortgagee may have representatives present if desired. The
Shipowner agrees that at the Mortgagee's request it will satisfy the Mortgagee
that the expense of such survey or drydocking or work to be done thereat is
within Shipowner's financial ability and will not result in a claim or lien
against the Vessel in violation of the provisions of this Mortgage.
(c) The Shipowner agrees to submit the Vessel regularly to
such periodical or other surveys as may be required for classification purposes
and will promptly supply to the Mortgagee copies of all reports issued in
respect thereof.
SECTION 12: PROVISION OF INFORMATION AND DOCUMENTS.
(a) The Shipowner will at all reasonable times afford the
Mortgagee or its authorized representatives full and complete access to the
Vessel for the purpose of inspecting the Vessel and her cargo and papers and, at
the request of the Mortgagee, the Shipowner will deliver for inspection, copies
of any and all contracts and documents relating to the Vessel, whether on board
or not.
(b) The Shipowner hereby agrees to promptly furnish to the
Mortgagee on demand, all charterparties or contracts of affreightment relating
to the Vessel and full details as to the parties, times of delivery and the like
pertaining thereto.
(c) On the date hereof and on an annual basis, the Shipowner
shall obtain and provide the Mortgagee with a Certificate of Confirmation of
Class.
(d) The Shipowner agrees to assign to the Mortgagee
contemporaneously with the execution of this Mortgage any charters or earnings
of the Vessel pursuant to the Indenture or the Supplemental Indenture.
(e) The Shipowner hereby appoints the Mortgagee
attorney-in-fact of the Shipowner, whether or not an event of default shall have
occurred or is continuing, to appear before governmental bodies, classification
societies and insurers and to demand and receive to the same extent that the
Shipowner itself might, all information and certificates respecting (i) the
organizational status of the Shipowner under the laws of its jurisdiction of
organization or any other jurisdiction in which it may have qualified to do
business, (ii) the status of the Vessel under the laws and regulations of its
country of registration, and its compliance with the requirements thereof, and
(iii) the state of the records of the Vessel or of the Shipowner in respect of
the Vessel in any classification society with which the Vessel may be classed or
of any company, association or club by
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7
whom the Vessel or the Shipowner in respect of the Vessel may be insured; and
the Shipowner hereby agrees that the Mortgagee may execute its powers as
attorney-in-fact as aforesaid through its agents, representatives and attorneys.
This power of attorney is coupled with an interest and shall be irrevocable as
long as any Indebtedness hereby secured remains outstanding.
SECTION 13: NO TRANSFER OF FLAG; SALE; CHARTER. (a) The
Shipowner will not transfer or change the flag or port of documentation of the
Vessel (except to Cyprus, the Bahamas, Panama, the Cayman Islands, Isle of Man,
the Hellenic Republic or any other jurisdiction which at the time is generally
deemed acceptable by institutional lenders to the shipping industry, as
determined in good faith by the Board of Directors, as permitted by the terms of
the Indenture, PROVIDED, HOWEVER, that there shall at all times exist an
effective Mortgage on the Vessel, notwithstanding such transfer or change of
flag or port) without the prior written consent of the Mortgagee (which consent
shall contain such terms and conditions as the Mortgagee shall reasonably
conclude are necessary, including Opinions of Counsel, filings and
documentation, to ensure the continuing first priority perfected Lien of the
Mortgagee for the benefit of the Holders and the Working Capital Facility
Provider in respect of the Vessel and the other Collateral). Any such written
consent to any one transfer or change of flag or port of documentation shall not
be construed to be a waiver of this provision with respect to any subsequent
proposed transfer or change of flag or port of documentation.
(b) Without the prior written consent of the Mortgagee, the
Shipowner will not in any manner (i) sell, transfer or mortgage the Vessel other
than in accordance with Section 4.07 of the Indenture or (ii) enter into any
charterparty, contract of affreightment, bill of lading or other engagement of
affreightment or for the carriage or transportation of cargo or other operation
of any kind of the Vessel other than the charterparty existing on the date
hereof.
SECTION 14: INSURANCES. (a) The Shipowner will cause to be
carried and maintained on or in respect of the Vessel without expense to the
Mortgagee insurances, payable in U.S. Dollars, in amounts, against risks
(including marine hull and machinery insurance, marine protection and indemnity
insurance, war risks insurance and liability arising out of pollution and the
spillage or leakage of cargo and cargo liability insurance) and in a form which
is substantially equivalent to the coverage carried by other responsible and
experienced companies engaged in the operation of vessels similar to the Vessel
and for similar purposes and with insurance companies, underwriters, funds,
mutual insurance associations or clubs of recognized standing. Hull and
Machinery and war risk insurance shall be carried in an amount which is not less
than the greater of the full commercial value of the Vessel or 120% of the
Vessel Percentage of the Indebtedness hereby secured outstanding from time to
time. Protection and indemnity insurance (as well as required insurance against
liability for pollution or spillage or leakage of cargo which shall have
limitations of liability of not less than $500 million, shall be in the highest
amount from time to time available for vessels of the same type, size, age and
flag as the Vessel. The Shipowner will reimburse the Mortgagee for all premiums
and other amounts paid by the Mortgagee in connection with mortgagee's interest
insurance and additional peril pollution or equivalent cover in favor of the
Mortgagee which shall insure the interest of the Mortgagee regardless of any
breach or violation by the Shipowner or of any other person of any
representation, warranty, covenant, condition, declaration or promise contained
in any relevant policy and which shall be obtained through an insurance broker
reasonably acceptable to the Mortgagee that is different from the insurance
brokers utilized for all other insurances and reinsurances provided for
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8
hereunder. None of the aforementioned insurance shall provide for a deductible
amount in excess of One Million United States Dollars (U.S. $1,000,000) per
occurrence (or equivalent in any other currency or currency unit).
In the case of all marine, navigating and war risk hull and
machinery policies, the Shipowner will cause the Mortgagee to be named as an
additional insured and will use all reasonable efforts (and cause its insurance
broker to use all reasonable efforts) to cause the insurers under such policies
to waive any liability of the Mortgagee for premiums, calls payable, assessments
or advances under such policies and for the representations and warranties made
therein by the Shipowner or any other person.
The Shipowner will also, without expense to the Mortgagee,
have the Vessel fully entered in a protection and indemnity association or club
in good standing and acceptable to the Mortgagee. The Shipowner will cause such
association or club to issue to the Mortgagee a Letter of Undertaking in a form
satisfactory to the Mortgagee.
In the case of all protection and indemnity insurance
(including insurance against liability arising out of pollution), the Shipowner
will cause the Mortgagee to be named as an additional insured and will take such
actions as shall be necessary so that the Mortgagee shall not be liable under
such policies for payment of any premium, club call, assessment or advance or
for the representations and warranties made therein by the Shipowner or any
other person. Unless the Mortgagee shall have otherwise directed, any loss
involving damage to the Vessel which is not in excess of One Million United
States Dollars (U.S. $1,000,000) may be paid directly for repair or salvage or
to reimburse the Shipowner for the same. The Shipowner will cause its brokers to
agree to advise the Mortgagee promptly of any default in the payment of any
premium and of any other act or omission on the part of the Shipowner of which
they have knowledge and which might invalidate or render unenforceable, in whole
or in part, any insurance on the Vessel.
The Shipowner will also cause such brokers to agree to mark
their records and to advise the Mortgagee by cable, telex or facsimile
transmission, at least seven (7) business days' prior to the expiration date of
any insurance carried pursuant to this Mortgage, whether such insurance has been
renewed or replaced with new insurance which complies with the provisions of
this Section 14 and the other provisions of this Mortgage.
(b) The Shipowner will assign to the Mortgagee
contemporaneously with the execution of the Mortgage any policies of insurance
in respect of the Vessel pursuant to an Insurance Assignment.
(c) Unless the Mortgagee shall otherwise agree, all insurance
must name the Mortgagee as an assured, but without liability for premiums, calls
or assessments, and all amounts of whatsoever nature payable under any insurance
must be payable to the Mortgagee for distribution first to itself and thereafter
to the Shipowner or others as their interests may appear. Nevertheless, until
otherwise required by the Mortgagee by notice to the underwriters, (i) amounts
payable under any insurance on the Vessel with respect to protection and
indemnity risks may be paid directly to the Shipowner to reimburse it for any
loss, damage or expense incurred by it and covered by such insurance or to the
person to whom any liability covered by such insurance has been incurred;
PROVIDED, HOWEVER, that if the Mortgagee shall give notice that the Shipowner is
in default hereunder, all such payments shall be made to the Mortgagee until the
Indebtedness hereby secured has been fully discharged, and (ii) concerning
amounts
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9
payable under any insurance with respect to the Vessel involving any damage to
the Vessel not constituting an actual or constructive or an agreed or
compromised total loss, the underwriters may pay direct for the repair, salvage
or other charges involved or, if the Shipowner shall have first fully repaired
the damage or paid all of the salvage or other charges, may pay the Shipowner as
reimbursement therefor; PROVIDED, HOWEVER, that if such amounts (including any
franchise or deductible) are in excess of One Million United States Dollars
($1,000,000), the underwriters shall make such payment to the Mortgagee. All
payments of insurance shall be made to the Mortgagee if an Event of Default
shall have occurred or any event which with the giving of notice or the lapse of
time, or both, would constitute an Event of Default.
(d) All amounts paid to the Mortgagee in respect of any
insurances on the Vessel shall be disposed of as follows:
(i) any amount which might have been paid at the time, in
accordance with the provisions of paragraph (c) above, directly to the
Shipowner or others as their interest may appear shall be paid by the
Mortgagee to, or as directed by, the Shipowner;
(ii) all amounts paid to the Mortgagee in respect of an Event
of Loss shall be paid in accordance with Section 3.3(d) of the
Collateral Agency Agreement;
(iii) so long as no Event of Default shall have occurred and
be continuing, all other amounts paid to the Mortgagee in respect of
any insurance on the Vessel shall be applied to the making of needed
repairs or other work on the Vessel, or to the payment of other claims
incurred by the Shipowner relating to the Vessel, or may be paid to the
Shipowner or whomsoever may be entitled thereto;
(iv) all remaining amounts paid to the Mortgagee in respect of
any insurance on the Vessel may, in the Mortgagee's sole discretion, be
held and applied to in accordance with the Collateral Agency Agreement;
(v) if an Event of Default shall have occurred and be
continuing, any amounts shall be applied in accordance with Section 3.7
of the Collateral Agency Agreement.
(e) In the event that any claim or lien is asserted against
the Vessel for loss, damage or expense which is covered by insurance required
hereunder and it is necessary for the Shipowner to obtain a bond or supply other
security to prevent arrest of the Vessel or to release the Vessel from arrest on
account of such claim or lien, the Mortgagee, on request of the Shipowner, may,
in the sole discretion of the Mortgagee, assign to any person, firm or
corporation executing a surety or guarantee bond or other Agreement to save or
release the Vessel from such arrest, all right, title and interest of the
Mortgagee in and to said insurance covering said loss, damage or expense, as
collateral security to indemnify against liability under said bond or other
agreement.
(f) The Shipowner shall deliver to the Mortgagee certified
copies or originals on the date hereof and annually at the times the Officers'
Certificates are required to be delivered under the Indenture, of all
certificates of entry, cover notes, binders and evidences of insurance and
policies for the purpose of inspection or safekeeping. In addition, the
Shipowner will furnish the Mortgagee concurrently with the
<PAGE>
10
execution hereof and thereafter at intervals of not more than twelve (12)
calendar months, a detailed report by independent marine insurance brokers,
selected by the Mortgagor and acceptable to the Mortgagee, describing in
reasonable detail the insurance pursuant to this Section 14 and stating that in
the opinion of such brokers such insurance complies in all material respects
with the terms of this Section 14 and is common and customary for types of
insurances and coverage generally required by mortgagees from prudent owners and
operators of vessels similar to the Vessel and engaged in trades similar to the
trades in which the Vessel is engaged.
(g) The Shipowner agrees that it will not execute or permit or
willingly allow to be done any act by which any insurance may be suspended,
impaired or canceled, and that it will not permit or allow the Vessel to
undertake any voyage or run any risk or transport any cargo which may not be
permitted by the policies in force, without having previously insured the Vessel
by additional coverage to extend to such voyages, risks or cargoes with
insurance satisfactory to the Mortgagee and the Shipowner agrees (without
limiting the foregoing) that it will not permit the Vessel to enter or trade to
any zone which is declared a war zone by any government or by the War Risk
Insurers for the Vessel unless the Mortgagee shall have first given its consent
thereto in writing which Mortgagee shall have full power to withhold) and there
shall have been effected by the Shipowner and at its expense such special
insurance as the Mortgagee may require.
(h) In case any underwriter proposes to pay less on any claim
than the amount thereof, the Shipowner shall forthwith inform the Mortgagee and
the Mortgagee shall have the right to negotiate and agree to any compromise.
(i) The Shipowner will comply with and satisfy all of the
provisions of any applicable law, convention, 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 and will maintain all certificates or other evidence of
financial responsibility as may be required by any such law, convention,
regulation, proclamation or order with respect to the trade which the Vessel is
from time to time engaged in and the cargo carried by it.
(j) All insurance required under this Mortgage shall be placed
and kept with such insurance companies or other insurance underwriters as shall
be reasonably acceptable to the Mortgagee.
SECTION 15: REIMBURSEMENT FOR EXPENSES. (a) The Shipowner will
reimburse the Mortgagee promptly, with interest at the interest rate applicable
to the Notes per calendar month set forth in the Indenture for any and all
expenditures which the Mortgagee may from time to time make, lay out or expend
in providing such protection in respect of insurance, discharge or purchase of
liens, taxes, dues, assessments, governmental charges, fines and penalties
lawfully imposed, repairs, attorneys' fees, necessary translation fees for
documents made in a language other than English and other matters as the
Shipowner is obligated herein to provide, but fails to provide. Such obligation
of the Shipowner to reimburse the Mortgagee shall be an additional indebtedness
due from the Shipowner, secured by this Mortgage, and shall be payable by the
Shipowner on demand. The Mortgagee, though privileged to do so, shall be under
no obligation to the Shipowner to make any such expenditures, nor shall the
making thereof relieve the Shipowner of any default in that respect.
<PAGE>
11
SECTION 16: PERFORMANCE OF CHARTER. The Shipowner will fully
perform, or cause to be performed, any and all charterparties and contracts of
affreightment which are, or may be, entered into with respect to the Vessel.
SECTION 17: EVENT OF LOSS. (a) So long as no Event of Default
shall have occurred and be continuing, in the event of an actual, constructive,
agreed or compromised total loss of the Vessel, any adjustment or compromise of
such loss by the Shipowner will be at the highest amount reasonably obtainable,
and insurance or other payments for such loss shall be applied in accordance
with Section 3.3(d) of the Collateral Agency Agreement.
(b) This Mortgage shall extend to and constitute a lien upon,
and the Shipowner hereby grants the Mortgagee a security interest in, all
proceeds resulting from any of the events mentioned in subsection (a) above as
security for the Indebtedness hereby secured.
SECTION 18: FINANCING STATEMENTS. The Shipowner hereby
irrevocably authorizes the Mortgagee to file and record financing statements in
any jurisdiction where the same may be in force and to make any filings or
recordings under any legislation having similar effect for the purpose of
perfecting or continuing the perfection of the security interests granted by the
Shipowner to the Mortgagee herein without obtaining the signature of the
Shipowner thereto. The Shipowner hereby irrevocably authorizes the Mortgagee to
execute any such financing statement or similar document in the name of the
Shipowner.
SECTION 19: INCORPORATION BY REFERENCE. All of the covenants,
representations and agreements on the part of the Issuer as guaranteed by the
Shipowner and of the Shipowner, which are set forth in, and all of the rights,
powers and remedies of the Mortgagee which are provided for in, the Indenture,
the Working Capital Facility Agreement, the Collateral Agency Agreement, the
other Security Agreements and the Notes, together with all other provisions of
the Indenture, the Working Capital Facility Agreement, the Collateral Agency
Agreement and the Notes, are incorporated herein by reference with the same
force and effect as though set forth at length in this Mortgage.
SECTION 20: REQUISITION OF TITLE. In the event that the title
or ownership of the Vessel shall be requisitioned, purchased or taken by any
government of any country or any department, agency or representative thereof,
or any authority acting or purporting to act under color of government, pursuant
to any present or future law, proclamation, decree, order or otherwise, the lien
of this Mortgage shall be deemed to attach to the claim for compensation of the
Shipowner for its interest in the Vessel from such government or department,
agency or representative, or from any other source, and the compensation,
purchase price, reimbursement or award for such requisition, purchase or other
taking of such title or ownership due the shipowner from such government,
department, agency or representative or other source, is hereby declared payable
to the Mortgagee, who shall be entitled to receive the same, and shall apply the
same as provided in Section 3.3(d) of the Collateral Agency Agreement; and in
the event of any such requisition, purchase or taking, the Shipowner shall
promptly execute and deliver to the Mortgagee such documents, if any, and shall
promptly do and perform such acts, if any, as in the opinion of the Mortgagee
may be necessary or useful to facilitate or expedite the collection by the
Mortgagee of such compensation, purchase price, reimbursement or award.
<PAGE>
12
ARTICLE II.
Events of Default and Remedies.
SECTION 1: EVENTS OF DEFAULT. In case any one or more of the
following events, herein termed "Events of Default", shall have occurred and be
continuing:
(a) the statements in Sections 2 and 3 of Article I shall
prove to be untrue;
(b) a default shall have occurred in the due and punctual
observance and performance of any of the provisions of Sections 4, 5,
9, 10, 13, 14(a), 14(b), 14(c), 14(g), 14(i), 16, 17 and 20 of Article
I hereof;
(c) a default by the Shipowner in the observance or
performance of any agreement under this Mortgage shall have occurred
and shall remain unremedied for twenty-one (21) days after written
notice thereof shall have been given to the Shipowner by the Mortgagee;
or
(d) an Event of Default under the Indenture, the Notes or the
Working Capital Facility Agreement; then, and in each and every such
case, the Mortgagee shall have the right to:
(1) Declare all the then unpaid Indebtedness hereby secured to
be due and payable immediately, and upon such declaration the same,
including interest to date of declaration, shall become and be
immediately due and payable;
(2) Exercise all of the rights and remedies in foreclosure and
otherwise given to mortgagees by the provisions of the law of the
Republic of Liberia or of any other jurisdiction where the Vessel may
be found and exercise all of its rights and remedies as
attorney-in-fact or otherwise under this Mortgage;
(3) Bring suit at law, in equity or in admiralty, as it may be
advised, to recover judgment for the Indebtedness hereby secured, and
collect the same out of any and all property of the Shipowner whether
covered by this Mortgage or otherwise;
(4) Take and enter into possession of the Vessel, at any time,
wherever the same may be, without legal process and without being
responsible for loss or damage, and the Shipowner or other person in
possession forthwith upon demand of the Mortgagee shall surrender to
the Mortgagee possession of the Vessel 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 the use of
the Vessel or from the sale thereof by court proceedings or pursuant to
Subsection (5) next following, all costs, expenses, charges, damages or
losses by reason of such use; and if at any time the Mortgagee shall
avail itself of the right
<PAGE>
13
herein given it to take the Vessel, the Mortgagee shall have the right
to dock the Vessel 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;
(5) Take and enter into possession of the Vessel, at any time,
wherever the same may be, without legal process, and if it seems
desirable to the Mortgagee and without being responsible for loss or
damage, sell such Vessel, at any place and at such time as the
Mortgagee may specify and in such manner as the Mortgagee may deem
advisable, free from any claim by the Shipowner in admiralty, in
equity, at law or by statute, at public or private sale, by sealed bids
or otherwise, by mailing, by air or otherwise, notice of such sale,
whether public or private, addressed to the Shipowner at its last known
address, fourteen (14) days prior to the date fixed for entering into
the contract of sale and by first publishing notice of any such public
sale for ten (10) consecutive days, in a newspaper published in the
City of New York, State of New York or if the place of sale should not
be in New York City then by publication of a similar notice at or near
the place of sale; in the event that the Vessel shall be offered for
sale by private sale, no newspaper publication of notice shall be
required, nor notice of adjournment of sale; sale may be held at such
place and at such time as the Mortgagee by notice may have specified,
or may be adjourned by the Mortgagee from time to time by announcement
at the time and place appointed for such sale or for such adjourned
sale, and without further notice or publication the Mortgagee may make
any such sale at the time and place to which the same shall be so
adjourned; and any sale may be conducted without bringing the Vessel to
the place designated for such sale and in such manner as the Mortgagee
may deem to be for its best advantage, and the Mortgagee may become the
purchaser at any judicial sale.
(6) Take and receive all insurance proceeds to which it shall
become entitled by reason of the existence of an Event of Default and
any acceleration of the Notes or of any amounts owed under the Working
Capital Guarantee.
SECTION 2: SALE DIVESTS TITLE. Any 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 therein and thereto, and shall bar the
Shipowner, its successors and assigns, and all persons claiming by, through or
under them. No purchaser shall be bound to inquire whether notice has been
given, or whether any default has occurred, or as to the propriety of the sale,
or as to the application of the proceeds thereof. In case of any such sale, the
Mortgagee, if it is the purchaser, shall be entitled for the purpose of making
settlement or payment for the property purchased to use and apply the
Indebtedness hereby secured in order that there may be credited against the
amount remaining due and unpaid thereon the sums payable out of the net proceeds
of such sale to the Mortgagee after allowing for the costs and expense of sale
and other charges; and thereupon such purchaser shall be credited, on account of
such purchase price, with the net proceeds that shall have been so credited upon
the Indebtedness hereby secured. At any such judicial sale, the Mortgagee may
bid for and purchase such property, may credit against payment of the purchase
price thereof all sums due under the Notes or the Working Capital Guarantee and
upon compliance with the terms of sale may hold, retain and dispose of such
property without further accountability therefor.
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14
SECTION 3: MORTGAGEE'S POWER OF ATTORNEY-SALES. The Mortgagee
is hereby appointed attorney-in-fact of the Shipowner, upon the happening of any
Event of Default, to execute and deliver to any purchaser aforesaid, and is
hereby vested with full power and authority to make, in the name and on behalf
of the Shipowner, a good conveyance of the title to the Vessel so sold. In the
event of any sale of the Vessel, under any power herein contained, the Shipowner
will, if and when required by the Mortgagee, execute such form of conveyance of
the Vessel as the Mortgagee may direct or approve.
SECTION 4: MORTGAGEE'S POWER OF ATTORNEY-COLLECTION. The
Mortgagee is hereby appointed attorney-in-fact of the Shipowner upon the
happening of any Event of Default, in the name and on behalf 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 insurances thereon as
payment of losses or as return premiums or otherwise, salvage awards and
recoveries, recoveries in general average or otherwise, and all other sums due
or to become due at the time of the happening of any Event of Default in respect
of the Vessel, or in respect of any insurances thereon, from any person
whomsoever, and to make, give and execute in the name of the Shipowner
acquittances, 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 other instruments in writing
with respect to the foregoing.
SECTION 5: MORTGAGEE POWER OF ATTORNEY-DISCHARGE OF LIENS. The
Shipowner authorizes and empowers the Mortgagee or its appointees or any of them
to appear in the name of the Shipowner, 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 as to them or any of
them as may seem proper towards the defense of such suit and the purchase or
discharge of such lien, and all expenditures made or incurred by them or any of
them for the purpose of such defense or purchase or discharge shall be a debt
due from the Shipowner, its successors and assigns, to the Mortgagee, shall be
payable on demand and 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 6: DELIVERY OF VESSEL. Whenever any right to enter and
take possession of the Vessel accrues to the Mortgagee, it 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 the Mortgagee shall
be entitled to take any legal proceedings 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 of the freights, hire, earnings,
issues, revenues, income and profits due or to become due and arising from the
operation thereof.
SECTION 7: INDEMNIFICATION. The Shipowner covenants that upon
the happening of any one or more of the Events of Default, then, upon written
demand of the Mortgagee, the Shipowner will pay to the Mortgagee the whole
amount due and payable in respect of the Indebtedness hereby secured; and in
case the Shipowner shall fail to pay the same forthwith upon such demand, the
Mortgagee shall be entitled to recover judgment for the whole amount so due and
unpaid, together with such further amounts as shall be sufficient to cover the
reasonable compensation to the Mortgagee's agents, attorneys and counsel and any
necessary advances, expenses and liabilities made or
<PAGE>
15
incurred by it hereunder. All moneys collected by the Mortgagee under this
Section 7 shall be applied by the Mortgagee in accordance with the provisions of
Section 3.7 of the Collateral Agency Agreement.
SECTION 8: EVERY POWER CUMULATIVE. Each and every power and
remedy herein given to the Mortgagee shall be cumulative and shall be in
addition to every other power and remedy herein given or now or hereafter
existing at law, in equity, in 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
Mortgagee, and the exercise or the beginning of the exercise of any 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 by the
Mortgagee in the exercise of any right or power or in the pursuance of any
remedy accruing upon any default as above defined shall impair any such right,
power or remedy or be construed to be a waiver of any such Event of Default or
to be an acquiescence therein; nor shall the acceptance by the Mortgagee of any
security or of any payment of or on account of the Indebtedness hereby secured
maturing after any Event of Default or of any payment on account of any past
default be construed to be a waiver of any right to take advantage of any future
Event of Default or of any past Event of Default not completely cured thereby.
No consent, waiver or approval of the Mortgagee shall be deemed to be effective
unless in writing and duly signed by authorized signatories of the Mortgagee.
SECTION 9: CURE OF DEFAULTS. Subject to the terms of the
Indenture, if at any time after an Event of Default and prior to the actual sale
of the Vessel by the Mortgagee or prior to any enforcement or foreclosure
proceedings, the Shipowner offers completely to cure all Events of Default and
to pay all expenses, advances and damages to the Mortgagee consequent on such
Events of Default, with interest with respect to the Shipowner's obligations as
provided herein or in the Indenture or the Working Capital Facility Agreement as
set forth therein, then the Mortgagee may, but shall not be required to, accept
such offer and payment and restore the Shipowner to its former position, but
such action, if taken, shall not affect any subsequent Event of Default or
impair any rights consequent thereon.
SECTION 10: RESTORATION. In case the Mortgagee shall have
proceeded to enforce any right, power or remedy 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 11: DISTRIBUTION OF PROCEEDS. The proceeds of any sale
of the Vessel and the net earnings of any charter operation or other use of the
Vessel and any and all other moneys received by the Mortgagee pursuant to or
under the terms of this Mortgage or in any proceedings hereunder, the
application of which has not elsewhere herein been specifically provided for,
shall be applied in accordance with Section 6.10 of the Indenture and Section
3.3(d) of the Collateral Agency Agreement.
SECTION 12: QUIET ENJOYMENT. Until one or more of the Events
of Default hereinabove described shall happen, the Shipowner (a) shall be
suffered and permitted to
<PAGE>
16
retain actual possession and use of the Vessel and (b) shall have the right,
from time to time, in its discretion, and without application to the Mortgagee
subject to the terms of the Indenture, and without obtaining a release thereof
by the Mortgagee, to dispose of, free from the lien hereof, any boilers,
engines, machinery, masts, spars, sails, rigging, boats, anchors, chains,
tackle, apparel, drills, furniture, fittings or equipment or any other
appurtenances of the Vessel that are no longer useful, necessary, profitable or
advantageous in the operation of the Vessel, first or simultaneously replacing
the same by new boilers, engines, machinery, masts, spars, sails, rigging,
boats, anchors, chains, tackle, drills, apparel, furniture, fittings, equipment,
or other appurtenances of substantially equal value to the Shipowner, which
shall forthwith become subject to the lien of this Mortgage as a preferred
mortgage thereon.
SECTION 13: NO WAIVER OF PREFERRED STATUS. (a) If any
provision of this Mortgage should be deemed invalid or shall be deemed to affect
adversely the preferred status of this Mortgage under any applicable law, such
provision shall cease to be a part of this Mortgage without affecting the
remaining provisions, which shall remain in full force and effect.
(b) In the event that the Indenture, the Guarantee, the
Working Capital Facility Agreement, the Working Capital Guarantee, the
Collateral Agency Agreement, or this Mortgage or any of the documents or
instruments which may from time to time be delivered hereunder or thereunder or
any provision hereof or thereof shall be deemed invalidated by present or future
law of any nation or by decision of any court, or if any third party shall fail
or refuse to recognize any of the powers granted to the Mortgagee hereunder when
it is sought to exercise them, this shall not affect the validity and/or
enforceability of all or any other parts of the Indenture, the Guarantee, the
Working Capital Facility Agreement, the Working Capital Guarantee, the
Collateral Agency Agreement or the Mortgage or such documents or instruments
and, in any such case, the Shipowner covenants and agrees that, on demand, it
will execute and deliver such other and further agreements and/or documents
and/or instruments and do such things as the Mortgagee in its sole discretion
may deem to be necessary to carry out the true intent of this Mortgage and of
the obligations secured hereby.
(c) Anything herein to the contrary notwithstanding, it is
intended that nothing herein shall waive the preferred status of this Mortgage
and that, if any provision or portion thereof herein shall be construed to waive
the preferred status of this Mortgage, then such provision to such extent shall
be void and of no effect.
SECTION 14: VENUE. In the event of any legal proceedings,
Section 7.12 of the Collateral Agency Agreement shall apply. Notwithstanding
Section 7.12 of the Collateral Agency Agreement, the Mortgagee is free to
initiate proceedings before any other court worldwide where the Vessel may be
found, and the Shipowner hereby expressly and irrevocably consents to the
jurisdiction of any court in any jurisdiction whatsoever where the Vessel may at
any time be located for the purpose of the foreclosure of this Mortgage, the
sale of the Shipowner's interest in the Vessel or the enforcement of any other
remedy or right hereunder, and hereby expressly and irrevocably submits the
person of the Shipowner and its interests in the Vessel to the jurisdiction of
any such court in any such action or proceeding.
<PAGE>
17
ARTICLE III.
Sundry Provisions.
SECTION 1: BINDING ON SUCCESSORS. All of the covenants,
promises, stipulations and agreements of the Shipowner in this Mortgage
contained shall bind the Shipowner and its successors and assigns and shall
inure to the benefit of the Mortgagee and its respective successors and assigns.
In the event of any assignment or transfer of this Mortgage to the extent
permitted by the Indenture, the term "Mortgagee", as used in this Mortgage,
shall be deemed to mean any such assignee or transferee.
SECTION 2: EXERCISE BY AGENTS. Wherever and whenever herein
any right, power or authority is granted or given to the Mortgagee, such right,
power or authority may be exercised in all cases by the Mortgagee or such agent
or agents as it may appoint, and the act or acts of such agent or agents when
taken shall constitute the act of the Mortgagee hereunder.
SECTION 3: NOTICES. Any notice or other communication to be
given pursuant hereto shall be in the manner provided in the Indenture and
addressed as follows:
If to the Mortgagee, to
The First National Bank of Maryland, as
Collateral Agent, Trustee and Mortgagee
Corporate Trust Department
25 South Charles Street
Baltimore, MD 21201
Telephone: 410-244-4224
Telefax: 410-244-4236
Telex:
If to the Shipowner, to
__________________________
__________________________
__________________________
__________________________
Telephone:
Telefax:
Telex:
or at such other address as either party may notify to the other in writing.
SECTION 4: TITLES AND SECTION HEADINGS. The titles and section
headings in this Mortgage are for convenience only and shall not affect the
construction hereof.
SECTION 5: RECORDING CLAUSE. The maximum principal amount that
may be outstanding under this Mortgage is One Hundred and Seven Million United
States Dollars (U.S. $107,000,000) and for the purpose of recording this
<PAGE>
18
Mortgage, the total amount of this First Preferred Mortgage is One Hundred and
Seven Million United States Dollars (U.S. $107,000,000) and interest, prepayment
fees, and performance of mortgage covenants. The maturity date with respect to
One Hundred Million United States Dollars (U.S. $100,000,000) of the principal
amount secured by this Mortgage is July 15, 2005 and the maturity date with
respect to Seven Million United States Dollars (US $7,000,000) of the principal
amount secured by this Mortgage is July 24, 1999. The discharge amount is the
same as the total amount.
IN WITNESS WHEREOF, the Shipowner has caused this First
Preferred Mortgage on the MV [NAME OF VESSEL] to be duly executed the day and
year first above written.
[NAME OF SHIPOWNER]
By:
----------------------------
Name:
Title:
<PAGE>
19
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this ____ day of ______, _____, before me personally
appeared _______________, to me known, who, being by me duly sworn, did depose
and say that he/she resides at __________________, ______________,
_________________; that he/she is the Attorney-in-Fact of
_______________________ a corporation, the company described in and which
executed the foregoing instrument; that he/she signed his/her name thereto
pursuant to a power of attorney granted by the Board of Directors of said
corporation and that the foregoing instrument is the act and deed of said
corporation.
-------------------------
NOTARY PUBLIC
For use in
the Republic of Liberia
[FORM OF PANAMANIAN MORTGAGE]
FIRST PREFERRED NAVAL MORTGAGE
ON THE
PANAMANIAN FLAG VESSEL
M/V [NAME OF VESSEL]
GRANTED BY ___________________________, AS SHIPOWNER
IN FAVOR OF
THE FIRST NATIONAL BANK OF MARYLAND, AS
COLLATERAL AGENT, TRUSTEE AND MORTGAGEE
ON
______, 19__
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
PAGE
<S> <C>
WHEREAS ................................................................................... 1
ARTICLE I.
Covenants of the Shipowner
Section 1: Acknowledgment of Debt; Governing Law............................... 4
Section 2: Organization of Shipowner............................................. 4
Section 3: No Existing Liens..................................................... 5
Section 4: Preferred Naval Mortgage under
Panamanian Law.................................................. 5
Section 5: No Unlawful Operation................................................. 5
Section 6: Payment of Taxes, etc................................................. 6
Section 7: No Power To Create Liens.............................................. 6
Section 8: Notice of Mortgage.................................................... 6
Section 9: Discharge of Liens,
Encumbrances, etc............................................... 7
Section 10: Libel................................................................. 7
Section 11: Vessel Condition...................................................... 7
Section 12: Provision of Information and
Documents....................................................... 8
Section 13: No Transfer of Flag; Sale; Charter.................................... 9
Section 14: Insurances............................................................ 10
Section 15: Reimbursement for Expenses............................................ 14
Section 16: Performance of Charter................................................ 15
Section 17: Event of Loss......................................................... 15
Section 18: Financing Statements.................................................. 15
Section 19: Incorporation by Reference............................................ 15
Section 20: Requisition of Title.................................................. 16
ARTICLE II.
Events of Default and Remedies
Section 1: Events of Default..................................................... 16
Section 2: Sale Divests Title.................................................... 18
Section 3: Mortgagee's Power of
Attorney-Sales.................................................. 19
Section 4: Mortgagee's Power of
Attorney-Collection............................................. 19
Section 5: Mortgagee Power of
Attorney-Discharge of Liens..................................... 20
Section 6: Delivery of Vessel.................................................... 20
Section 7: Indemnification....................................................... 20
Section 8: Every Power Cumulative................................................ 20
Section 9: Cure of Defaults...................................................... 21
<PAGE>
PAGE
Section 10: Restoration........................................................... 21
Section 11: Distribution of Proceeds.............................................. 21
Section 12: Quiet Enjoyment....................................................... 22
Section 13: No Waiver of Preferred Status......................................... 22
Section 14: Venue................................................................. 23
ARTICLE III.
Sundry Provisions
Section 1: Binding on Successors................................................. 23
Section 2: Exercise by Agents.................................................... 23
Section 3: Notices............................................................... 24
Section 4: Titles and Section Headings........................................... 24
Section 5: Language.............................................................. 24
Exhibit A: Indenture
Exhibit B: Working Capital Facility Agreement
Exhibit C: Working Capital Guarantee
Exhibit D: Collateral Agency Agreement
</TABLE>
<PAGE>
FIRST PREFERRED NAVAL MORTGAGE
M/V
FIRST PREFERRED NAVAL MORTGAGE, made the _____ day of ____,
19___ by ________________, a corporation organized and existing under the laws
of _______________ (herein called the "Shipowner"), having its registered office
at ____________________ in favor of The First National Bank of Maryland, a
national banking association organized and existing under the laws of the United
States, having its office at ___________, as Collateral Agent and Trustee
(herein called the "Mortgagee") under a Collateral Agency and Intercreditor
Agreement dated as of July 15, 1998, (the "Collateral Agency Agreement") by and
among the Mortgagee, The First National Bank of Maryland, not in its individual
capacity but as trustee (the "Trustee") under the Indenture (as defined), The
Bank of New York (the "Working Capital Facility Provider"), the Shipowner,
certain other Subsidiary Guarantors (as defined in the Collateral Agency
Agreement) and Millennium Seacarriers, Inc., (the "Issuer");
WHEREAS:
A. The Shipowner is the sole owner of the whole of the motor
vessel ______________, more fully described in the Granting Clause below.
B. The Issuer has issued One Hundred Million United States
Dollars (U.S. $100,000,000) representing 100,000 units (the "Units"), each Unit
consisting of $1,000 principal amount at maturity of its 12% First Priority Ship
Mortgage Notes Due 2005 (the "Notes") and one warrant to purchase five shares of
common stock, par value $.01 per share of the Issuer, and whereas the Notes will
be issued in accordance with the terms of the Indenture dated as of July 15,
1998 among the Trustee, the Issuer, the Shipowner and certain other Subsidiary
Guarantors, and the Shipowner acknowledges that the Issuer is justly indebted up
to the principal amount of U.S. $100 Million to the Holders of the Notes on the
date hereof;
[C. A portion of the proceeds of the Notes have been lent by
the Issuer to the Shipowner and used to refinance the indebtedness of the
Shipowner respecting the Vessel;] [INSERT IF APPLICABLE]
[C. Pursuant to the Escrow and Pledge Agreement dated as of
July 15, 1998 between the Issuer and The First National Bank of Maryland, as
Escrow Agent, the Issuer has deposited with the Escrow Agent a portion of the
net proceeds of the Offering of the Notes, to be used upon the satisfaction of
certain conditions including the delivery of this Mortgage to acquire additional
Mortgaged Vessels;]
D. In accordance with the Indenture, the Shipowner has
[executed and delivered a Supplemental Indenture pursuant to which it has]
guaranteed (the "Guarantee") the payment in full of the principal of, interest
on, and premium, if any, in respect of the Notes, made an assignment to the
Trustee as collateral security of certain of
<PAGE>
2
its rights in respect of the Vessel and has agreed to execute and deliver this
Mortgage in favor of the Mortgagee as security for its obligations under its
Guarantee;
E. The Issuer has entered into a Credit Agreement (the
"Working Capital Facility Agreement") dated as of July 20, 1998 among the
Working Capital Facility Provider and the Issuer pursuant to which the Working
Capital Facility Provider has agreed to make available to the Issuer a revolving
line of credit, not to exceed at any one time outstanding Seven Million United
States Dollars (US $7,000,000), all loans thereunder (the "Working Capital
Loans") to bear interest at LIBOR, plus 1 1/2%, and to be repayable on or before
July 24, 1999;
F. The Shipowner [shall, concurrently with any capital draws
under the Working Capital Facility Agreement, execute and deliver] [has executed
and delivered] a Guaranty Agreement (a "Working Capital Guarantee") pursuant to
which it [shall guarantee] [has guaranteed] the payment in full of the principal
of, interest on, and premium, if any, in respect of the line of credit (the
"Working Capital Facility") made available pursuant to the Working Capital
Facility Agreement, [make] [made] an assignment to the Working Capital Facility
Provider as collateral security of certain of its rights with respect to the
Mortgaged Vessel and [shall agree] [has agreed] to execute and deliver the
Mortgage in favor of the Mortgagee as security for its obligations under its
Working Capital Guarantee; and
G. Except as otherwise defined herein, terms defined in the
Indenture are used herein as defined therein and terms not defined in the
Indenture and defined in the Collateral Agency Agreement are used herein as
defined in the Collateral Agency Agreement. A copy of each of: (i) the
Indenture, (ii) the Working Capital Facility Agreement, (iii) the Working
Capital Guarantee and (iv) the Collateral Agency Agreement is attached hereto as
Exhibit A, B, C and D, respectively and made a part hereof (information relating
to the payment dates for principal and interest on and the rates of interest to
be borne by the indebtedness are included in the Indenture).
NOW, THEREFORE, THIS MORTGAGE WITNESSETH:
That, in consideration of the premises and of the additional
covenants herein contained and for other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, and in order to secure
the payment of the principal of, interest on and premium, if any, respecting the
Notes, the Working Capital Loans, the Obligations, fees, expenses and all other
sums due or otherwise secured under the Indenture, under the Working Capital
Guarantee or hereunder (all such principal, interest, premium and other amounts
hereby collectively called the "Indebtedness hereby secured"), and to secure the
due performance and observance of all the agreements and covenants in the Notes,
the Indenture, the Working Capital Guarantee, the other Security Agreements, and
herein contained, the Shipowner has granted, conveyed, mortgaged, pledged,
confirmed, assigned, transferred and set over, and by these presents does hereby
grant, convey, mortgage, pledge, confirm, assign, transfer and set over, unto
the Mortgagee, the whole of the Vessel (as defined in the following paragraph),
to the intent that this Mortgage shall constitute in favor of the Mortgagee a
first and absolute Mortgage on the Vessel in accordance with the provisions of
Chapter V, Title IV of Book Second of the Code of Commerce and of the pertinent
provisions of the Civil Code and other laws of the Republic of Panama (the
"Panamanian Maritime Law").
<PAGE>
3
The whole of the motor vessel [NAME OF VESSEL], of _____ gross
and ____ net tons, or thereabouts, built in [name of city and country] at the
[name of shipyard] shipyard in 19__ with radio call letters [ ] and Regulation
Patente of ___________ Navigation number [ ], length approximately [ ], breadth
approximately [ ] _________ ________ __________ and depth approximately [ ],
duly documented in the name of the Shipowner under _________ the laws of the
Republic of Panama, the title of which vessel in the name of the Shipowner has
been registered in the Mercantile (Marine) Section of the Public Registry of
Panama with her home port at the Port of _______, Panama; such vessel including,
without being limited to, all of the boilers, engines, machinery, masts, spars,
boats, anchors, cables, chains, rigging, tackle, capstans, outfit, tools, pumps
and pumping equipment, apparel, furniture, fittings, equipment, spare parts, and
all other appurtenances thereunto appertaining or belonging, whether now owned
or hereafter acquired, and also any and all additions, improvements, renewals
and replacements hereafter made in or to such vessel or any part thereof,
including all items and appurtenances aforesaid (such vessel, together with all
of the foregoing, being herein called the "Vessel").
TO HAVE AND TO HOLD all and singular the above mortgaged and
described property unto the Mortgagee and its successors and assigns, to its and
to its successors' and assigns' own use, benefit and behoof forever, upon the
terms set forth to secure the performance and observance of and compliance with
the covenants, terms and conditions of this Mortgage.
PROVIDED, and these presents are upon the condition, that, if
the Shipowner or its successors or assigns shall pay or cause to be paid the
Indebtedness hereby secured as and when the same shall become due and payable in
accordance with the terms of the Indenture, the Working Capital Guarantee and
this Mortgage, and all other such sums as may hereafter become secured by this
Mortgage in accordance with the terms hereof, and the Shipowner shall duly
perform, observe and comply with or cause to be performed, observed, or complied
with all the covenants, terms and conditions of the Indenture, the Working
Capital Guarantee, the other Security Agreements and this Mortgage, expressed or
implied, to be performed, then this Mortgage and the estate and rights hereunder
shall cease, determine and be void, otherwise to remain in full force and
effect.
The Shipowner for itself, its successors and assigns, hereby
covenants, declares and agrees with the Mortgagee and its successors and assigns
that the Vessel is to be held subject to the further covenants, conditions,
terms and uses hereinafter set forth.
ARTICLE I.
COVENANTS OF THE SHIPOWNER.
SECTION 1: ACKNOWLEDGMENT OF DEBT; GOVERNING LAW. (a) The
Shipowner hereby acknowledges that pursuant to its Guarantee, it is justly
indebted (i) pursuant to its Guarantee to the Holders of the Notes in the
principal amount of up to One Hundred Million United States Dollars (U.S.
$100,000,000) and (ii) pursuant to its Working Capital Guarantee to the Working
Capital Facility Provider in the principal amount of up to $7,000,000, which is
the principal amount secured by this Mortgage, and will pay or cause to be paid
the Indebtedness hereby secured. The Shipowner will
<PAGE>
4
observe, perform and comply with the covenants, terms and conditions herein,
express or implied, on its part to be observed, performed or complied with.
(b) This Mortgage is intended to be a first preferred naval
mortgage under Panamanian law and as such shall be governed by Panamanian law.
However, in the event of any conflict between the substantive provisions of this
Mortgage and the Indenture, the terms of the Indenture shall prevail, provided
they are consistent with Panamanian law.
SECTION 2: ORGANIZATION OF SHIPOWNER. (a) The Shipowner is a
corporation duly organized and existing under the laws of _____________________
and shall so remain during the life of this Mortgage and so long as each of the
Indenture and the Working Capital Guarantee shall remain in effect and any
Obligations or any Working Capital Loans remain outstanding.
(b) The Shipowner has full power and authority to own,
operate, charter and mortgage the Vessel; all action necessary and required by
law for the execution and delivery of this Mortgage has been duly and
effectively taken; and this Mortgage and the Indebtedness hereby secured is and
will be the valid and enforceable obligation of the Shipowner in accordance with
its terms. All consents or approvals required in respect of this Mortgage have
been obtained and are in full force and effect.
SECTION 3: NO EXISTING LIENS. The Shipowner lawfully owns and
is lawfully possessed of the Vessel free from any lien or encumbrance whatsoever
other than (a) liens for current crew's wages, (b) liens covered by valid
policies of insurance held by the Mortgagee and meeting the requirements of
Section 14 below of this Article I, (c) liens not covered by insurance incurred
in the ordinary course of business and not more than thirty days past due; and
(d) Permitted Liens, and will 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: PREFERRED NAVAL MORTGAGE UNDER PANAMANIAN LAW. The
Vessel is duly documented in the name of the Shipowner under the laws and flag
of the Republic of Panama. The Shipowner will cause this Mortgage to be duly
recorded in accordance with the provisions of the Panamanian Maritime Law, and
will otherwise comply with and satisfy all of the provisions of the Panamanian
Maritime Law in order to establish and maintain this Mortgage, as at any time
amended, supplemented or assigned, as a first preferred naval mortgage lien
thereunder upon the Vessel and upon all renewals, replacements and improvements
made in or to the same or any part thereof for the amount of the Indebtedness
hereby secured, and without limiting the generality of the foregoing, will
deliver, execute, file and/or record within three months of the date hereof any
and all such documents or things as may be necessary or desirable to accomplish
the definitive and permanent registration of this Mortgage at the Public
Registry Office in the Republic of Panama and promptly furnish to the Mortgagee
from time to time such proofs as the Mortgagee may request for its satisfaction
with respect to the Shipowner's compliance with the provisions of this Section
4.
SECTION 5: NO UNLAWFUL OPERATION. The Shipowner will not cause
or permit the Vessel to be operated in any manner contrary to law, and the
Shipowner will not engage in any unlawful trade or violate any law or carry any
cargo that will expose the Vessel to penalty, forfeiture or capture, and will
not do, or suffer or permit to be done, anything which can or may injuriously
affect the registration or enrollment of the Vessel
<PAGE>
5
under the laws and regulations of the Republic of Panama and will at all times
at its own expense keep the Vessel duly documented thereunder, except in the
case of any change of registry permitted by the Indenture or hereby, in which
case a mortgage will be recorded against the Vessel under the laws of any such
new registry state.
SECTION 6: PAYMENT OF TAXES, ETC. The Shipowner will pay and
discharge when due and payable, from time to time, all taxes, assessments,
governmental charges, fines and penalties lawfully imposed on the Vessel or any
income therefrom; PROVIDED that the Shipowner shall not be required to pay any
such tax, assessment or charge if the validity or amount thereof is concurrently
contested in good faith by appropriate proceedings, the Shipowner shall have set
aside on its books, reserves in accordance with generally accepted accounting
principles in the United States consistently applied deemed by it adequate with
respect to such tax, assessment or charge and during the pendency of such
contest the Vessel will not be subject to sale or forfeiture; and PROVIDED
FURTHER, however, that the Shipowner will pay or cause to be paid all such
taxes, assessments or charges forthwith upon the commencement of proceedings to
foreclose any lien which is attached as security therefor.
SECTION 7: NO POWER TO CREATE LIENS. Neither the Shipowner,
any charterer, the Master of the Vessel nor any other person has or shall have
any right, power or authority to create, incur or permit to be placed or imposed
or continued upon the Vessel any lien or encumbrance whatsoever other than
Permitted Liens, liens for current crew's wages and salvage and the lien of this
Mortgage.
SECTION 8: NOTICE OF MORTGAGE. The Shipowner will place, and
at all times and places will retain, a properly certified copy of this Mortgage
on board the Vessel with her papers and will cause each such certified copy and
the Vessel's marine document to be exhibited to any and all persons having
business therewith which might give rise to any lien thereon other than a
Permitted Lien or liens for current crew's wages or salvage, and to any
representative of the Mortgagee; and will place and keep prominently displayed
in the chart room and in the Master's cabin of the Vessel a framed printed
notice in plain type reading as follows:
"NOTICE OF MORTGAGE
This vessel is covered by a First Preferred Naval
Mortgage in favor of The First National Bank of Maryland, as
Trustee/Mortgagee, under authority of Chapter V, Title IV of
Book Second of the Code of Commerce and the pertinent
provisions of the Civil Code and other laws of the Republic of
Panama. Under the terms of said First Preferred Naval
Mortgage, neither the Owner, any charterer, the Master of this
Vessel nor any other person has any right, power or authority
to create, incur or permit to be imposed upon this Vessel any
other lien whatsoever except liens for current crew's wages
and salvage."
SECTION 9: DISCHARGE OF LIENS, ENCUMBRANCES, ETC. Except for
the lien of this Mortgage, Permitted Liens 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, the Shipowner will not suffer to be continued
any lien, encumbrance or charge on the Vessel, and in due course and in any
event, by the earlier of ninety (90) days after the same becomes due and
<PAGE>
6
payable or twenty-one (21) days after being requested to do so by the Mortgagee,
will pay or cause to be discharged or make adequate provision for the
satisfaction or discharge of all claims or demands, or will cause the Vessel to
be released or discharged from any lien, encumbrance or charge therefor.
SECTION 10: LIBEL. If a libel, complaint or similar process be
filed against the Vessel or the Vessel be otherwise attached, levied upon or
taken into custody by virtue of any legal proceeding in any court, the Shipowner
will promptly notify the Mortgagee thereof by cable, facsimile or telex,
confirmed by letter, at its address, as specified in this Mortgage, and within
fifteen (15) days of such filing, attachment, levy or taking into custody will
cause the Vessel to be released and all liens thereon other than this Mortgage
and the liens securing the obligations under the Security Agreements and the
Working Capital Guarantee to be discharged and will promptly notify the
Mortgagee thereof in the manner aforesaid. In the event the Vessel is levied
upon or taken into custody or detained by any authority whatsoever, the
Shipowner agrees forthwith to notify the Mortgagee thereof by telex, confirmed
by letter. The Shipowner will notify the Mortgagee within forty-eight (48) hours
after it has become known to the Shipowner of any average or salvage incurred by
the Vessel.
SECTION 11: VESSEL CONDITION. (a) The Shipowner at all times
and without cost or expense to the Mortgagee, will maintain and preserve, or
cause to be maintained and preserved, the Vessel and all its equipment, outfit
and appurtenances, tight, staunch, strong, in good condition, working order and
repair and in all respects seaworthy and fit for its intended service, and will
keep the Vessel, or cause her to be kept and maintained, in such condition as
will entitle her to maintain her current classification and rating for vessels
of the same age and type, free of notices, recommendations or qualifications
which negatively affect such classification in [INSERT CURRENT CLASSIFICATION
SOCIETY], or other classification society of like standing approved by the
Mortgagee. The Vessel shall, and the Shipowner covenants that she will, at all
times comply with all applicable laws, treaties and conventions and rules and
regulations issued thereunder (including all rules and regulations applicable to
vessels registered at a port in the Republic of Panama), and shall have on board
as and when required thereby valid certificates showing compliance therewith,
including all Safety Management Certificates required by the International
Safety Management Code (the "ISM Code"). The Shipowner will not make, or permit
to be made, any substantial change in the structure, type or speed of the Vessel
or with respect to any of the terms of the instruments of insurance or diminish
the value of the Vessel without first receiving written approval thereof from
the Mortgagee.
(b) The Shipowner agrees to give the Mortgagee at least ten
(10) days notice of the actual date and place of any survey or drydocking in
order that the Mortgagee may have representatives present if desired. The
Shipowner agrees that at the Mortgagee's request it will satisfy the Mortgagee
that the expense of such survey or drydocking or work to be done thereat is
within Shipowner's financial ability and will not result in a claim or lien
against the Vessel in violation of the provisions of this Mortgage.
(c) The Shipowner agrees to submit the Vessel regularly to
such periodical or other surveys as may be required for classification purposes
and will promptly supply to the Mortgagee copies of all reports issued in
respect thereof.
SECTION 12: PROVISION OF INFORMATION AND DOCUMENTS.
<PAGE>
7
(a) The Shipowner will at all reasonable times afford the
Mortgagee or its authorized representatives full and complete access to the
Vessel for the purpose of inspecting the Vessel and her cargo and papers and, at
the request of the Mortgagee, the Shipowner will deliver for inspection, copies
of any and all contracts and documents relating to the Vessel, whether on board
or not.
(b) The Shipowner hereby agrees to promptly furnish to the
Mortgagee on demand, all charterparties or contracts of affreightment relating
to the Vessel and full details as to the parties, times of delivery and the like
pertaining thereto.
(c) On the date hereof and on an annual basis, the Shipowner
shall obtain and provide the Mortgagee with a Certificate of Confirmation of
Class.
(d) The Shipowner agrees to assign to the Mortgagee
contemporaneously with the execution of this Mortgage any charters or earnings
of the Vessel pursuant to the Indenture or the Supplemental Indenture.
(e) The Shipowner hereby appoints the Mortgagee
attorney-in-fact of the Shipowner, whether or not an event of default shall have
occurred or is continuing, to appear before governmental bodies, classification
societies and insurers and to demand and receive to the same extent that the
Shipowner itself might, all information and certificates respecting (i) the
organizational status of the Shipowner under the laws of its jurisdiction of
organization or any other jurisdiction in which it may have qualified to do
business, (ii) the status of the Vessel under the laws and regulations of its
country of registration, and its compliance with the requirements thereof, and
(iii) the state of the records of the Vessel or of the Shipowner in respect of
the Vessel in any classification society with which the Vessel may be classed or
of any company, association or club by whom the Vessel or the Shipowner in
respect of the Vessel may be insured; and the Shipowner hereby agrees that the
Mortgagee may execute its powers as attorney-in-fact as aforesaid through its
agents, representatives and attorneys. This power of attorney is coupled with an
interest and shall be irrevocable as long as any Indebtedness hereby secured
remains outstanding.
SECTION 13: NO TRANSFER OF FLAG; SALE; CHARTER. (a) The
Shipowner will not transfer or change the flag or port of documentation of the
Vessel (except to Cyprus, the Bahamas, Liberia, the Cayman Islands, Isle of Man,
the Hellenic Republic or any other jurisdiction which at the time is generally
deemed acceptable by institutional lenders to the shipping industry, as
determined in good faith by the Board of Directors, as permitted by the terms of
the Indenture, PROVIDED, HOWEVER, that there shall at all times exist an
effective Mortgage on the Vessel, notwithstanding such transfer or change of
flag or port) without the prior written consent of the Mortgagee (which consent
shall contain such terms and conditions as the Mortgagee shall reasonably
conclude are necessary, including Opinions of Counsel, filings and
documentation, to ensure the continuing first priority perfected Lien of the
Mortgagee for the benefit of the Holders and the Working Capital Facility
Provider in respect of the Vessel and the other Collateral). Any such written
consent to any one transfer or change of flag or port of documentation shall not
be construed to be a waiver of this provision with respect to any subsequent
proposed transfer or change of flag or port of documentation.
(b) Without the prior written consent of the Mortgagee, the
Shipowner will not in any manner (i) sell, transfer or mortgage the Vessel other
than in accordance with Section 4.07 of the Indenture or (ii) enter into any
charterparty, contract of
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8
affreightment, bill of lading or other engagement of affreightment or for the
carriage or transportation of cargo or other operation of any kind of the
Vessel, other than the charterparty existing on the date hereof.
SECTION 14: INSURANCES. (a) The Shipowner will cause to be
carried and maintained on or in respect of the Vessel without expense to the
Mortgagee insurances, payable in U.S. Dollars, in amounts, against risks
(including marine hull and machinery insurance, marine protection and indemnity
insurance, war risks insurance and liability arising out of pollution and the
spillage or leakage of cargo and cargo liability insurance) and in a form which
is substantially equivalent to the coverage carried by other responsible and
experienced companies engaged in the operation of vessels similar to the Vessel
and for similar purposes and with insurance companies, underwriters, funds,
mutual insurance associations or clubs of recognized standing. Hull and
Machinery and war risk insurance shall be carried in an amount which is not less
than the greater of the full commercial value of the Vessel or 120% of the
Vessel Percentage of the Indebtedness hereby secured outstanding from time to
time. Protection and indemnity insurance as well as required insurance against
liability for pollution or spillage or leakage of cargo which shall have
limitations of liability of not less than $500 million, shall be in the highest
amount from time to time available for vessels of the same type, size, age and
flag as the Vessel. The Shipowner will reimburse the Mortgagee for all premiums
and other amounts paid by the Mortgagee in connection with mortgagee's interest
insurance and additional peril pollution or equivalent cover in favor of the
Mortgagee which shall insure the interest of the Mortgagee regardless of any
breach or violation by the Shipowner or of any other person of any
representation, warranty, covenant, condition, declaration or promise contained
in any relevant policy and which shall be obtained through an insurance broker
reasonably acceptable to the Mortgagee that is different from the insurance
brokers utilized for all other insurances and reinsurances provided for
hereunder. None of the aforementioned insurance shall provide for a deductible
amount in excess of One Million United States Dollars (U.S. $1,000,000) per
occurrence (or equivalent in any other currency or currency unit).
In the case of all marine, navigating and war risk hull and
machinery policies, the Shipowner will cause the Mortgagee to be named as an
additional insured and will use all reasonable efforts (and cause its insurance
broker to use all reasonable efforts) to cause the insurers under such policies
to waive any liability of the Mortgagee for premiums, calls payable, assessments
or advances under such policies and for the representations and warranties made
therein by the Shipowner or any other person.
The Shipowner will also, without expense to the Mortgagee,
have the Vessel fully entered in a protection and indemnity association or club
in good standing and acceptable to the Mortgagee. The Shipowner will cause such
association or club to issue to the Mortgagee a Letter of Undertaking in a form
satisfactory to the Mortgagee.
In the case of all protection and indemnity insurance
(including insurance against liability arising out of pollution), the Shipowner
will cause the Mortgagee to be named as an additional insured and will take such
actions as shall be necessary so that the Mortgagee shall not be liable under
such policies for payment of any premium, club call, assessment or advance or
for the representations and warranties made therein by the Shipowner or any
other person. Unless the Mortgagee shall have otherwise directed, any loss
involving damage to the Vessel which is not in excess of One Million United
States Dollars (U.S. $1,000,000) may be paid directly for repair or salvage or
to reimburse the Shipowner for the same. The Shipowner will cause its brokers to
agree to advise the
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9
Mortgagee promptly of any default in the payment of any premium and of any other
act or omission on the part of the Shipowner of which they have knowledge and
which might invalidate or render unenforceable, in whole or in part, any
insurance on the Vessel.
The Shipowner will also cause such brokers to agree to mark
their records and to advise the Mortgagee by cable, telex or facsimile
transmission, at least seven (7) business days' prior to the expiration date of
any insurance carried pursuant to this Mortgage, whether such insurance has been
renewed or replaced with new insurance which complies with the provisions of
this Section 14 and the other provisions of this Mortgage.
(b) The Shipowner will assign to the Mortgagee
contemporaneously with the execution of the Mortgage any policies of insurance
in respect of the Vessel pursuant to an Insurance Assignment.
(c) Unless the Mortgagee shall otherwise agree, all insurance
must name the Mortgagee as an assured, but without liability for premiums, calls
or assessments, and all amounts of whatsoever nature payable under any insurance
must be payable to the Mortgagee for distribution first to itself and thereafter
to the Shipowner or others as their interests may appear. Nevertheless, until
otherwise required by the Mortgagee by notice to the underwriters, (i) amounts
payable under any insurance on the Vessel with respect to protection and
indemnity risks may be paid directly to the Shipowner to reimburse it for any
loss, damage or expense incurred by it and covered by such insurance or to the
person to whom any liability covered by such insurance has been incurred;
PROVIDED, HOWEVER, that if the Mortgagee shall give notice that the Shipowner is
in default hereunder, all such payments shall be made to the Mortgagee until the
Indebtedness hereby secured has been fully discharged, and (ii) concerning
amounts payable under any insurance with respect to the Vessel involving any
damage to the Vessel not constituting an actual or constructive or an agreed or
compromised total loss, the underwriters may pay direct for the repair, salvage
or other charges involved or, if the Shipowner shall have first fully repaired
the damage or paid all of the salvage or other charges, may pay the Shipowner as
reimbursement therefor; PROVIDED, HOWEVER, that if such amounts (including any
franchise or deductible) are in excess of One Million United States Dollars
($1,000,000), the underwriters shall make such payment to the Mortgagee. All
payments of insurance shall be made to the Mortgagee if an Event of Default
shall have occurred or any event which with the giving of notice or the lapse of
time, or both, would constitute an Event of Default.
(d) All amounts paid to the Mortgagee in respect of any
insurances on the Vessel shall be disposed of as follows:
(i) any amount which might have been paid at the time, in
accordance with the provisions of paragraph (c) above, directly to the
Shipowner or others as their interest may appear shall be paid by the
Mortgagee to, or as directed by, the Shipowner;
(ii) all amounts paid to the Mortgagee in respect of an Event
of Loss shall be paid in accordance with Section 3.3(d) of the
Collateral Agency Agreement;
(iii) so long as no Event of Default shall have occurred and
be continuing, all other amounts paid to the Mortgagee in respect of
any insurance on the Vessel shall be applied to the making of needed
repairs or other work on the Vessel, or to
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10
the payment of other claims incurred by the Shipowner relating to the
Vessel, or may be paid to the Shipowner or whomsoever may be entitled
thereto;
(iv) all remaining amounts paid to the Mortgagee in respect of
any insurance on the Vessel may, in the Mortgagee's sole discretion, be
held and applied in accordance with the Collateral Agency Agreement;
(v) if an Event of Default shall have occurred and be
continuing, any amounts shall be applied in accordance with Section 3.7
of the Collateral Agency Agreement.
(e) In the event that any claim or lien is asserted against
the Vessel for loss, damage or expense which is covered by insurance required
hereunder and it is necessary for the Shipowner to obtain a bond or supply other
security to prevent arrest of the Vessel or to release the Vessel from arrest on
account of such claim or lien, the Mortgagee, on request of the Shipowner, may,
in the sole discretion of the Mortgagee, assign to any person, firm or
corporation executing a surety or guarantee bond or other Agreement to save or
release the Vessel from such arrest, all right, title and interest of the
Mortgagee in and to said insurance covering said loss, damage or expense, as
collateral security to indemnify against liability under said bond or other
Agreement.
(f) The Shipowner shall deliver to the Mortgagee certified
copies or originals on the date hereof and annually at the times the Officers'
Certificates are required to be delivered under the Indenture, of all
certificates of entry, cover notes, binders and evidences of insurance and
policies for the purpose of inspection or safekeeping. In addition, the
Shipowner will furnish the Mortgagee concurrently with the execution hereof and
thereafter at intervals of not more than twelve (12) calendar months, a detailed
report by independent marine insurance brokers, selected by the Mortgagor and
acceptable to the Mortgagee, describing in reasonable detail the insurance
pursuant to this Section 14 and stating that in the opinion of such brokers such
insurance complies in all material respects with the terms of this Section 14
and is common and customary for types of insurances and coverage generally
required by mortgagees from prudent owners and operators of vessels similar to
the Vessel and engaged in trades similar to the trades in which the Vessel is
engaged.
(g) The Shipowner agrees that it will not execute or permit or
willingly allow to be done any act by which any insurance may be suspended,
impaired or canceled, and that it will not permit or allow the Vessel to
undertake any voyage or run any risk or transport any cargo which may not be
permitted by the policies in force, without having previously insured the Vessel
by additional coverage to extend to such voyages, risks or cargoes with
insurance satisfactory to the Mortgagee and the Shipowner agrees (without
limiting the foregoing) that it will not permit the Vessel to enter or trade to
any zone which is declared a war zone by any government or by the War Risk
Insurers for the Vessel unless the Mortgagee shall have first given its consent
thereto in writing which Mortgagee shall have full power to withhold) and there
shall have been effected by the Shipowner and at its expense such special
insurance as the Mortgagee may require.
(h) In case any underwriter proposes to pay less on any claim
than the amount thereof, the Shipowner shall forthwith inform the Mortgagee and
the Mortgagee shall have the right to negotiate and agree to any compromise.
<PAGE>
11
(i) The Shipowner will comply with and satisfy all of the
provisions of any applicable law, convention, 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 and will maintain all certificates or other evidence of
financial responsibility as may be required by any such law, convention,
regulation, proclamation or order with respect to the trade which the Vessel is
from time to time engaged in and the cargo carried by it.
(j) All insurance required under this Mortgage shall be placed
and kept with such insurance companies or other insurance underwriters as shall
be reasonably acceptable to the Mortgagee.
SECTION 15: REIMBURSEMENT FOR EXPENSES. (a) The Shipowner will
reimburse the Mortgagee promptly, with interest at the interest rate applicable
to the Notes per calendar month set forth in the Indenture for any and all
expenditures which the Mortgagee may from time to time make, lay out or expend
in providing such protection in respect of insurance, discharge or purchase of
liens, taxes, dues, assessments, governmental charges, fines and penalties
lawfully imposed, repairs, attorneys' fees, necessary translation fees for
documents made in a language other than English and other matters as the
Shipowner is obligated herein to provide, but fails to provide. Such obligation
of the Shipowner to reimburse the Mortgagee shall be an additional indebtedness
due from the Shipowner, secured by this Mortgage, and shall be payable by the
Shipowner on demand. The Mortgagee, though privileged to do so, shall be under
no obligation to the Shipowner to make any such expenditures, nor shall the
making thereof relieve the Shipowner of any default in that respect.
SECTION 16: PERFORMANCE OF CHARTER. The Shipowner will fully
perform, or cause to be performed, any and all charterparties and contracts of
affreightment which are, or may be, entered into with respect to the Vessel.
SECTION 17: EVENT OF LOSS. (a) So long as no Event of Default
shall have occurred and be continuing, in the event of an actual, constructive,
agreed or compromised total loss of the Vessel, any adjustment or compromise of
such loss by the Shipowner will be at the highest amount reasonably obtainable,
and insurance or other payments for such loss shall be applied in accordance
with Section 3.3(d) of the Collateral Agency Agreement.
(b) This Mortgage shall extend to and constitute a lien upon,
and the Shipowner hereby grants the Mortgagee a security interest in, all
proceeds resulting from any of the events mentioned in subsection (a) above as
security for the Indebtedness hereby secured.
SECTION 18: FINANCING STATEMENTS. The Shipowner hereby
irrevocably authorizes the Mortgagee to file and record financing statements in
any jurisdiction where the same may be in force and to make any filings or
recordings under any legislation having similar effect for the purpose of
perfecting or continuing the perfection of the security interests granted by the
Shipowner to the Mortgagee herein without obtaining the signature of the
Shipowner thereto. The Shipowner hereby irrevocably authorizes the Mortgagee to
execute any such financing statement or similar document in the name of the
Shipowner.
<PAGE>
12
SECTION 19: INCORPORATION BY REFERENCE. All of the covenants,
representations and agreements on the part of the Issuer as guaranteed by the
Shipowner and of the Shipowner, which are set forth in, and all of the rights,
powers and remedies of the Mortgagee which are provided for in, the Indenture,
the Working Capital Facility Agreement, the Collateral Agency Agreement, the
other Security Agreements and the Notes, together with all other provisions of
the Indenture, the Working Capital Agreement, the Collateral Agency Agreement
and the Notes, are incorporated herein by reference with the same force and
effect as though set forth at length in this Mortgage.
SECTION 20: REQUISITION OF TITLE. In the event that the title
or ownership of the Vessel shall be requisitioned, purchased or taken by any
government of any country or any department, agency or representative thereof,
or any authority acting or purporting to act under color of government, pursuant
to any present or future law, proclamation, decree, order or otherwise, the lien
of this Mortgage shall be deemed to attach to the claim for compensation of the
Shipowner for its interest in the Vessel from such government or department,
agency or representative, or from any other source, and the compensation,
purchase price, reimbursement or award for such requisition, purchase or other
taking of such title or ownership due the Shipowner from such government,
department, agency or representative or other source, is hereby declared payable
to the Mortgagee, who shall be entitled to receive the same, and shall apply the
same as provided in Section 3.3(d) of the Collateral Agency Agreement; and in
the event of any such requisition, purchase or taking, the Shipowner shall
promptly execute and deliver to the Mortgagee such documents, if any, and shall
promptly do and perform such acts, if any, as in the opinion of the Mortgagee
may be necessary or useful to facilitate or expedite the collection by the
Mortgagee of such compensation, purchase price, reimbursement or award.
ARTICLE II.
Events of Default and Remedies.
SECTION 1: EVENTS OF DEFAULT. In case any one or more of the
following events, herein termed "Events of Default", shall have occurred and be
continuing:
(a) the statements in Sections 2 and 3 of Article I shall
prove to be untrue;
(b) a default shall have occurred in the due and punctual
observance and performance of any of the provisions of Sections 4, 5,
9, 10, 13, 14(a), 14(b), 14(c), 14(g), 14(i), 16, 17 and 20 of Article
I hereof;
(c) a default by the Shipowner in the observance or
performance of any agreement under this Mortgage shall have occurred
and shall remain unremedied for twenty-one (21) days after written
notice thereof shall have been given to the Shipowner by the Mortgagee;
or
(d) an Event of Default under the Indenture, the Notes or the
Working Capital Facility Agreement;
then, and in each and every such case, the Mortgagee shall have the right to:
<PAGE>
13
(1) Declare all the then unpaid Indebtedness hereby secured to
be due and payable immediately, and upon such declaration the same,
including interest to date of declaration, shall become and be
immediately due and payable;
(2) Exercise all of the rights and remedies in foreclosure and
otherwise given to mortgagees by the provisions of the law of the
Republic of Panama or of any other jurisdiction where the Vessel may be
found and exercise all of its rights and remedies as attorney-in-fact
or otherwise under this Mortgage;
(3) Bring suit at law, in equity or in admiralty, as it may be
advised, to recover judgment for the Indebtedness hereby secured, and
collect the same out of any and all property of the Shipowner whether
covered by this Mortgage or otherwise;
(4) Take and enter into possession of the Vessel, at any time,
wherever the same may be, without legal process and without being
responsible for loss or damage, and the Shipowner or other person in
possession forthwith upon demand of the Mortgagee shall surrender to
the Mortgagee possession of the Vessel 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 the use of
the Vessel or from the sale thereof by court proceedings or pursuant to
Subsection (5) next following, all costs, expenses, charges, damages or
losses by reason of such use; and if at any time the Mortgagee shall
avail itself of the right herein given it to take the Vessel, the
Mortgagee shall have the right to dock the Vessel 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;
(5) Take and enter into possession of the Vessel, at any time,
wherever the same may be, without legal process, and if it seems
desirable to the Mortgagee and without being responsible for loss or
damage, sell such Vessel, at any place and at such time as the
Mortgagee may specify and in such manner as the Mortgagee may deem
advisable, free from any claim by the Shipowner in admiralty, in
equity, at law or by statute, at public or private sale, by sealed bids
or otherwise, by mailing, by air or otherwise, notice of such sale,
whether public or private, addressed to the Shipowner at its last known
address, fourteen (14) days prior to the date fixed for entering into
the contract of sale and by first publishing notice of any such public
sale for ten (10) consecutive days, in a newspaper published in the
City of New York, State of New York or if the place of sale should not
be in New York City then by publication of a similar notice at or near
the place of sale; in the event that the Vessel shall be offered for
sale by private sale, no newspaper publication of notice shall be
required, nor notice of adjournment of sale; sale may be held at such
place and at such time as the Mortgagee by notice may have specified,
or may be adjourned by the Mortgagee from time to time by announcement
at the time and place appointed for such sale or for such adjourned
sale, and without further notice or publication the Mortgagee may make
any such sale at the time and place to which the same shall
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14
be so adjourned; and any sale may be conducted without bringing the
Vessel to the place designated for such sale and in such manner as the
Mortgagee may deem to be for its best advantage, and the Mortgagee may
become the purchaser at any judicial sale.
(6) Take and receive all insurance proceeds to which it shall
become entitled by reason of the existence of an Event of Default and
any acceleration of the Notes or of any amounts owed under the Working
Capital Guarantee.
SECTION 2: SALE DIVESTS TITLE. Any 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 therein and thereto, and shall bar the
Shipowner, its successors and assigns, and all persons claiming by, through or
under them. No purchaser shall be bound to inquire whether notice has been
given, or whether any default has occurred, or as to the propriety of the sale,
or as to the application of the proceeds thereof. In case of any such sale, the
Mortgagee, if it is the purchaser, shall be entitled for the purpose of making
settlement or payment for the property purchased to use and apply the
Indebtedness hereby secured in order that there may be credited against the
amount remaining due and unpaid thereon the sums payable out of the net proceeds
of such sale to the Mortgagee after allowing for the costs and expense of sale
and other charges; and thereupon such purchaser shall be credited, on account of
such purchase price, with the net proceeds that shall have been so credited upon
the Indebtedness hereby secured. At any such judicial sale, the Mortgagee may
bid for and purchase such property, may credit against payment of the purchase
price thereof all sums due under the Notes or the Working Capital Guarantee and
upon compliance with the terms of sale may hold, retain and dispose of such
property without further accountability therefor.
SECTION 3: MORTGAGEE'S POWER OF ATTORNEY-SALES. The Mortgagee
is hereby appointed attorney-in-fact of the Shipowner, upon the happening of any
Event of Default, to execute and deliver to any purchaser aforesaid, and is
hereby vested with full power and authority to make, in the name and on behalf
of the Shipowner, a good conveyance of the title to the Vessel so sold. In the
event of any sale of the Vessel, under any power herein contained, the Shipowner
will, if and when required by the Mortgagee, execute such form of conveyance of
the Vessel as the Mortgagee may direct or approve.
SECTION 4: MORTGAGEE'S POWER OF ATTORNEY-COLLECTION. The
Mortgagee is hereby appointed attorney-in-fact of the Shipowner upon the
happening of any Event of Default, in the name and on behalf 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 insurances thereon as
payment of losses or as return premiums or otherwise, salvage awards and
recoveries, recoveries in general average or otherwise, and all other sums due
or to become due at the time of the happening of any Event of Default in respect
of the Vessel, or in respect of any insurances thereon, from any person
whomsoever, and to make, give and execute in the name of the Shipowner
acquittances, 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 other instruments in writing
with respect to the foregoing.
SECTION 5: MORTGAGEE POWER OF ATTORNEY-DISCHARGE OF LIENS. The
Shipowner authorizes and empowers the Mortgagee or its appointees or any of them
to
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15
appear in the name of the Shipowner, 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 as to them or any of
them as may seem proper towards the defense of such suit and the purchase or
discharge of such lien, and all expenditures made or incurred by them or any of
them for the purpose of such defense or purchase or discharge shall be a debt
due from the Shipowner, its successors and assigns, to the Mortgagee, shall be
payable on demand and 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 6: DELIVERY OF VESSEL. Whenever any right to enter and
take possession of the Vessel accrues to the Mortgagee, it 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 the Mortgagee shall
be entitled to take any legal proceedings 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 of the freights, hire, earnings,
issues, revenues, income and profits due or to become due and arising from the
operation thereof.
SECTION 7: INDEMNIFICATION. The Shipowner covenants that upon
the happening of any one or more of the Events of Default, then, upon written
demand of the Mortgagee, the Shipowner will pay to the Mortgagee the whole
amount due and payable in respect of the Indebtedness hereby secured; and in
case the Shipowner shall fail to pay the same forthwith upon such demand, the
Mortgagee shall be entitled to recover judgment for the whole amount so due and
unpaid, together with such further amounts as shall be sufficient to cover the
reasonable compensation to the Mortgagee's agents, attorneys and counsel and any
necessary advances, expenses and liabilities made or incurred by it hereunder.
All moneys collected by the Mortgagee under this Section 7 shall be applied by
the Mortgagee in accordance with the provisions of Section 3.7 of the Collateral
Agency Agreement.
SECTION 8: EVERY POWER CUMULATIVE. Each and every power and
remedy herein given to the Mortgagee shall be cumulative and shall be in
addition to every other power and remedy herein given or now or hereafter
existing at law, in equity, in 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
Mortgagee, and the exercise or the beginning of the exercise of any 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 by the
Mortgagee in the exercise of any right or power or in the pursuance of any
remedy accruing upon any default as above defined shall impair any such right,
power or remedy or be construed to be a waiver of any such Event of Default or
to be an acquiescence therein; nor shall the acceptance by the Mortgagee of any
security or of any payment of or on account of the Indebtedness hereby secured
maturing after any Event of Default or of any payment on account of any past
default be construed to be a waiver of any right to take advantage of any future
Event of Default or of any past Event of Default not completely cured thereby.
No consent, waiver or approval of the Mortgagee shall be deemed to be effective
unless in writing and duly signed by authorized signatories of the Mortgagee.
<PAGE>
16
SECTION 9: CURE OF DEFAULTS. Subject to the terms of the
Indenture, if at any time after an Event of Default and prior to the actual sale
of the Vessel by the Mortgagee or prior to any enforcement or foreclosure
proceedings, the Shipowner offers completely to cure all Events of Default and
to pay all expenses, advances and damages to the Mortgagee consequent on such
Events of Default, with interest with respect to the Shipowner's obligations as
provided herein or in the Indenture or the Working Capital Facility Agreement as
set forth therein, then the Mortgagee may, but shall not be required to, accept
such offer and payment and restore the Shipowner to its former position, but
such action, if taken, shall not affect any subsequent Event of Default or
impair any rights consequent thereon.
SECTION 10: RESTORATION. In case the Mortgagee shall have
proceeded to enforce any right, power or remedy 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 11: DISTRIBUTION OF PROCEEDS. The proceeds of any sale
of the Vessel and the net earnings of any charter operation or other use of the
Vessel and any and all other moneys received by the Mortgagee pursuant to or
under the terms of this Mortgage or in any proceedings hereunder, the
application of which has not elsewhere herein been specifically provided for,
shall be applied in accordance with Section 6.10 of the Indenture and Section
3.3(d) of the Collateral Agency Agreement.
SECTION 12: QUIET ENJOYMENT. Until one or more of the Events
of Default hereinabove described shall happen, the Shipowner (a) shall be
suffered and permitted to retain actual possession and use of the Vessel and (b)
shall have the right, from time to time, in its discretion, and without
application to the Mortgagee subject to the terms of the Indenture, and without
obtaining a release thereof by the Mortgagee, to dispose of, free from the lien
hereof, any boilers, engines, machinery, masts, spars, sails, rigging, boats,
anchors, chains, tackle, apparel, drills, furniture, fittings or equipment or
any other appurtenances of the Vessel that are no longer useful, necessary,
profitable or advantageous in the operation of the Vessel, first or
simultaneously replacing the same by new boilers, engines, machinery, masts,
spars, sails, rigging, boats, anchors, chains, tackle, drills, apparel,
furniture, fittings, equipment, or other appurtenances of substantially equal
value to the Shipowner, which shall forthwith become subject to the lien of this
Mortgage as a preferred mortgage thereon.
SECTION 13: NO WAIVER OF PREFERRED STATUS. (a) If any
provision of this Mortgage should be deemed invalid or shall be deemed to affect
adversely the preferred status of this Mortgage under any applicable law, such
provision shall cease to be a part of this Mortgage without affecting the
remaining provisions, which shall remain in full force and effect.
(b) In the event that the Indenture, the Guarantee, the
Working Capital Facility Agreement, the Working Capital Guarantee, the
Collateral Agency Agreement, or this Mortgage or any of the documents or
instruments which may from time to time be delivered hereunder or thereunder or
any provision hereof or thereof shall be deemed invalidated by present or future
law of any nation or by decision of any court, or if any
<PAGE>
17
third party shall fail or refuse to recognize any of the powers granted to the
Mortgagee hereunder when it is sought to exercise them, this shall not affect
the validity and/or enforceability of all or any other parts of the Indenture,
the Guarantee, the Working Capital Facility Agreement, the Working Capital
Guarantee, the Collateral Agency Agreement, or the Mortgage or such documents or
instruments and, in any such case, the Shipowner covenants and agrees that, on
demand, it will execute and deliver such other and further agreements and/or
documents and/or instruments and do such things as the Mortgagee in its sole
discretion may deem to be necessary to carry out the true intent of this
Mortgage and of the obligations secured hereby.
(c) Anything herein to the contrary notwithstanding, it is
intended that nothing herein shall waive the preferred status of this Mortgage
and that, if any provision or portion thereof herein shall be construed to waive
the preferred status of this Mortgage, then such provision to such extent shall
be void and of no effect.
SECTION 14: VENUE. In the event of any legal proceedings,
Section 7.12 of the Collateral Agency Agreement shall apply. Notwithstanding
Section 7.12 of the Collateral Agency Agreement, the Mortgagee is free to
initiate proceedings before any other court worldwide where the Vessel may be
found, and the Shipowner hereby expressly and irrevocably consents to the
jurisdiction of any court in any jurisdiction whatsoever where the Vessel may at
any time be located for the purpose of the foreclosure of this Mortgage, the
sale of the Shipowner's interest in the Vessel or the enforcement of any other
remedy or right hereunder, and hereby expressly and irrevocably submits the
person of the Shipowner and its interests in the Vessel to the jurisdiction of
any such court in any such action or proceeding.
ARTICLE III.
Sundry Provisions.
SECTION 1: BINDING ON SUCCESSORS. All of the covenants,
promises, stipulations and agreements of the Shipowner in this Mortgage
contained shall bind the Shipowner and its successors and assigns and shall
inure to the benefit of the Mortgagee and its respective successors and assigns.
In the event of any assignment or transfer of this Mortgage to the extent
permitted by the Indenture, the term "Mortgagee", as used in this Mortgage,
shall be deemed to mean any such assignee or transferee.
SECTION 2: EXERCISE BY AGENTS. Wherever and whenever herein
any right, power or authority is granted or given to the Mortgagee, such right,
power or authority may be exercised in all cases by the Mortgagee or such agent
or agents as it may appoint, and the act or acts of such agent or agents when
taken shall constitute the act of the Mortgagee hereunder.
<PAGE>
18
SECTION 3: NOTICES. Any notice or other communication to be
given pursuant hereto shall be in the manner provided in the Indenture and
addressed as follows:
If to the Mortgagee, to
The First National Bank of Maryland, as
Collateral Agent, Trustee and Mortgagee
Corporate Trust Department
25 South Charles Street
Baltimore, MD 21201
Telephone: 410-244-4224
Telefax: 410-244-4236
Telex:
If to the Shipowner, to
__________________________
__________________________
__________________________
__________________________
Telephone:
Telefax:
Telex:
or at such other address as either party may notify to the other in writing.
SECTION 4: TITLES AND SECTION HEADINGS. The titles and section
headings in this Mortgage are for convenience only and shall not affect the
construction hereof.
SECTION 5: LANGUAGE. If any inconsistency shall arise between
the English and the Spanish text of this Mortgage, the English text shall
prevail.
<PAGE>
19
IN WITNESS WHEREOF, the Shipowner has caused this First
Preferred Naval Mortgage on the MT [NAME OF VESSEL] to be duly executed the day
and year first above written.
[NAME OF SHIPOWNER]
-------------------------------
By:
----------------------------
Name:
Title:
The foregoing is accepted
THE FIRST NATIONAL BANK OF MARYLAND
By:
----------------------------
Name:
Title:
<PAGE>
20
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this ____ day of ______, _____, before me personally
appeared _______________, to me known, who, being by me duly sworn, did depose
and say that he/she resides at __________________, ______________,
_________________; that he/she is the Attorney-in-Fact of
_______________________ a ___________ corporation, the company described in and
which executed the foregoing instrument; that he/she signed his/her name thereto
pursuant to a power of attorney granted by the Board of Directors of said
corporation and that the foregoing instrument is the act and deed of said
corporation.
-------------------------
NOTARY PUBLIC
<PAGE>
21
NOTARIAL CERTIFICATION
----------------------
I, ________________, Notary Public, duly authorized, admitted
and sworn, practicing at _________________, do hereby certify that:
1. and who have executed this Mortgage on behalf of [NAME OF
MORTGAGOR SUBSIDIARY], hereinafter the "Owner", and accepted the same on behalf
of First National Bank of Maryland, hereinafter the "Mortgagee", are personally
known to me and that their respective signatures are authentic.
2. Sufficient evidence has been presented to me to the effect
that ___________ on behalf of the Owner and _____________ on behalf of the
Mortgagee were duly authorized by their respective principals to execute and to
accept the same.
IN WITNESS WHEREOF, I have hereunto subscribed my name and
affixed my seal of office this day of , 1998.
-----------------------------
Notary Public
<PAGE>
22
ACCEPTANCE OF MORTGAGE
----------------------
TO WHOM IT MAY CONCERN:
WE, THE FIRST NATIONAL BANK OF MARYLAND, as Trustee under the Trust Agreement
referred to therein, HEREBY CONFIRM AND ACCEPT for all legal purposes the First
Preferred Naval Mortgage in our favor executed by [INSERT NAME OF MORTGAGOR
SUBSIDIARY] on all its shares and interest in the Panamanian registered Vessel
"[NAME OF VESSEL]" Registration Number [________] as set out further in a First
Preferred Naval Mortgage dated _______________, 1998.
Dated: ________________, 1998
THE FIRST NATIONAL BANK OF
MARYLAND, AS TRUSTEE
By:
------------------------
Name:
Title:
<TABLE>
<CAPTION>
PRESCRIBED BY THE
COMMISSIONERS OF
CUSTOMS AND EXCISE
FORM NO. 12A MORTGAGE (to Secure Account Current, & c.) (Body Corporate) No. 81a (Sale)
WITH THE CONSENT OF
THE BOARD OF TRADE
- - - - ------------------------------------------------------------------------------------------------------------------------------------
Official No. Name of Ship No., Year and Port of Registry
- - - - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
- - - - ------------------------------------------------------------------------------------------------------------------------------------
Metric Units
- - - - ------------------------------------------------------------------------------------------------------------------------------------
Length from forepart of stem to the aft side of the head of the stern post............
Main breadth to outside of plating....................................................
Depth in hold from tonnage deck to ceiling amidships..................................
- - - - -----------------------------------------------------------------------------------------
Whether a Sailing, Steam or Motor Ship Horse Power of Engines, if any
- - - - -----------------------------------------------------------------------------------------
- - - - -----------------------------------------------------------------------------------------
Number of Tons
Gross....................................................................................
Register.................................................................................
- - - - -----------------------------------------------------------------------------------------
and as described in more detail in the Certificate of the Surveyor and the Register Book.
- - - - -----------------------------------------------------------------------------------------
Whereas (a)
Now we the (b) _____________________ in consideration of the premises for ourselves and our successors, covenant with the said (c)
_____________ and (d) _____________________ assigns, to pay to him or them or it the sums for the time being due on this security,
whether by way of principal or interest, at the times and manner aforesaid. And for the purpose of better securing to the said (c)
_______________________ the payment of such sums as aforesaid, we do hereby mortgage to the said (c) _______________________ 64/64
shares, of which we are the Owners in the Ship above particularly described, and in her boats and appurtenances.
Lastly, we for ourselves and our successors, covenant with the said (c) ______________________ and (d) _______________ assigns that
we have power to mortgage in manner aforesaid the above-mentioned shares, and that the same ________________ are free from
incumbrances (e).
In witness whereof we have hereunto caused this mortgage to be executed as a deed on our behalf this __________ day of
____________________ One thousand nine hundred and ninety eight was affixed hereunto in the presence of (b)
____________________________ Per: ____________________________ Witness Director
- - - - ------------------------------------------------------------------------------------------------------------------------------------
(a) Here state by way of recital that there is an account current between the Mortgagor (describing the company and giving its
address), and the Mortgagee (giving address and description--if the Mortgagee is a Body Corporate the full title and address must be
given, and if Joint Mortgagees are concerned they must be so described), and describe the nature of the transaction so as to show
how the amount of principal and interest due at any given time is to be ascertained, and the manner and time of payment. (B) Name of
the Company. (C) Full name of Mortgagee. (D) "his", "theirs" or "its". (e) If any prior incumbrance add, "save as appears by the
Registry of the said Ship". (b) Signatures and description of witnesses, i.e., Directors, Secretary, etc. (as the case may be).
NOTE:--The prompt registration of a Mortgage Deed at the Port of Registry of the Ship is essential to the security of Mortgagee, as
a Mortgage takes its priority form the date of production for registry, NOT FROM THE DATE OF THE INSTRUMENT.
</TABLE>
[FORM OF CAYMAN ISLANDS DEED OF COVENANTS]
DEED OF COVENANTS
COLLATERAL
TO
STATUTORY SHIP MORTGAGE
ON THE
CAYMAN ISLANDS FLAG SHIP
M/V [NAME OF SHIP]
GRANTED BY ___________________________, AS SHIPOWNER
IN FAVOR OF
THE FIRST NATIONAL BANK OF MARYLAND, AS
COLLATERAL AGENT, TRUSTEE AND MORTGAGEE
ON
______, 19__
<PAGE>
DEED OF COVENANTS
M/V ______
THIS DEED OF COVENANTS is made the _____ day of ____, 19___
between ________________, (herein called the "Shipowner", which term shall
include its successors and permitted assigns), having its principal place of
business at ____________________ and The First National Bank of Maryland, having
its principal place of business at __ ___________________________, as Collateral
Agent and Trustee (herein called the "Mortgagee") under a Collateral Agency and
Intercreditor Agreement dated as of July 15, 1998, (the "Collateral Agency
Agreement") among the Mortgagee, The First National Bank of Maryland, not in its
individual capacity but as trustee (the "Trustee") under the Indenture (as
defined), The Bank of New York (the "Working Capital Facility Provider"), the
Shipowner, certain other Subsidiary Guarantors (as defined in the Collateral
Agency Agreement) and Millenium Seacarriers, Inc., (the "Issuer");
WHEREAS:
A. The Shipowner is the absolute and unencumbered owner of the
64/64th shares in the ship ______________, more fully described in the First
Schedule hereto.
B. The Issuer has issued One Hundred Million United States
Dollars (U.S. $100,000,000) representing 100,000 units (the "Units"), each Unit
consisting of $1,000 principal amount at maturity of its 12% First Priority Ship
Mortgage Notes Due 2005 (the "Notes") and one warrant to purchase five shares of
common stock, par value $.01 per share of the Issuer, and whereas the Notes will
be issued in accordance with the terms of the Indenture dated as of July 15,
1998 among the Trustee, the Issuer, the Shipowner and certain other Subsidiary
Guarantors, and the Shipowner acknowledges that the Issuer is justly indebted up
to the principal amount of U.S. $100 Million to the Holders of the Notes on the
date hereof;
[C. A portion of the proceeds of the Notes have been lent by
the Issuer to the Shipowner and used to refinance the indebtedness of the
Shipowner respecting the Ship;] [INSERT IF APPLICABLE]
[C. Pursuant to the Escrow and Pledge Agreement dated as of
July 15, 1998 between the Issuer and The First National Bank of Maryland, as
Escrow Agent, the Issuer has deposited with the Escrow Agent a portion of the
net proceeds of the Offering of the Notes, to be used upon the satisfaction of
certain conditions including the delivery of this Deed to acquire additional
Mortgaged Vessels;]
D. There has, contemporaneously with the execution of this
Deed, been executed by the Shipowner in favor of the Mortgagee a Statutory
Mortgage (the "Mortgage") in account current form constituting a First Preferred
Statutory Mortgage of the Owner's 64/64th shares in the Ship;
E. In accordance with the Indenture, the Shipowner has
[executed and delivered a Supplemental Indenture pursuant to which it has]
guaranteed (the "Guarantee") the payment in full of the principal of, interest
on, and premium, if any, in respect of the Notes, made an assignment to the
Trustee as collateral security of certain of its rights in
<PAGE>
3
respect to the Ship and has agreed to execute and deliver the Mortgage and this
Deed in favor of the Mortgagee as security for its obligations under its
Guarantee;
F. The Issuer has entered into a Credit Agreement (the
"Working Capital Facility Agreement") dated as of July 20, 1998 among the
Working Capital Facility Provider and the Issuer pursuant to which the Working
Capital Facility Provider has agreed to make available to the Issuer a revolving
line of credit, not to exceed at any one time outstanding Seven Million United
States Dollars (US $7,000,000), all loans thereunder (the "Working Capital
Loans") to bear interest at LIBOR, plus 1 1/2%, and to be repayable on or before
July 24, 1999;
G. The Shipowner [shall, concurrently with any capital draws
under the Working Capital Facility Agreement, execute and deliver] [has executed
and delivered] a Guaranty Agreement (a "Working Capital Guarantee") pursuant to
which it [shall guarantee] [has guaranteed] the payment in full of the principal
of, interest on, and premium, if any, in respect of the line of credit (the
"Working Capital Facility") made available pursuant to the Working Capital
Facility Agreement, [make] [made] an assignment to the Working Capital Facility
Provider as collateral security of certain of its rights with respect to the
Mortgaged Vessel and [shall agree] [has agreed] to execute and deliver the
Mortgage in favor of the Mortgagee as security for its obligations under its
Working Capital Guarantee; and
H. This Deed is supplemental to the Indenture and the Mortgage
aforesaid and to the security thereby created and except as otherwise defined
herein, terms defined in the executed Indenture are used herein as defined
therein and terms not defined in the Indenture and defined in the Collateral
Agency Agreement are used herein as defined in the Collateral Agency Agreement.
A copy of each of: (i) the Indenture , (ii) the Working Capital Facility
Agreement, (iii) the Working Capital Guarantee and (iv) the Collateral Agency
Agreement is attached hereto as Exhibit A, B, C and D, respectively, and made a
part hereof.
NOW, THEREFORE, THIS DEED WITNESSETH AND IT IS HEREBY
AGREED AS FOLLOWS:
In this Deed unless the context otherwise requires the "Ship"
means the ship described in the First Schedule hereto and includes any share or
interest therein and its engines, machinery, boats, tackle, outfit, spare gear,
fuel, consumable or other stores, belongings and appurtenances, whether on board
or ashore;
That, in consideration of the premises and of the additional
covenants herein contained and for other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, and in order to secure
the payment of the principal of, interest on and premium, if any, respecting the
Notes, the Working Capital Loans, the Obligations, fees, expenses and all other
sums due or otherwise secured under the Indenture, under the Working Capital
Guarantee or hereunder (all such principal, interest, premium and other amounts
hereby collectively called the "Indebtedness hereby secured"), and to secure the
due performance and observance of all the agreements and covenants in the Notes,
the Indenture, the Working Capital Guarantee, the other Security Agreements, and
herein contained, the SHIPOWNER HEREBY MORTGAGES AND CHARGES to and in favor of
the Mortgagee all its interest, present and future, in the Ship and, without
prejudice to the generality of the foregoing, the SHIPOWNER HEREBY ASSIGNS AND
AGREES TO ASSIGN to the Mortgagee the SHIPOWNER's interest in the earnings of
the Ship, the insurances as hereinbefore defined.
<PAGE>
4
IT IS DECLARED AND AGREED that the security created by this
Deed and the Mortgage shall be held by the Mortgagee as a continuing security
for the payment of the Indebtedness notwithstanding the liquidation, incapacity
or any change in the constitution of the Shipowner, or in the name or style
thereof and that the security so created shall not be affected in any way by any
time or indulgence granted to the Shipowner or by any variation, compromise or
release of any Shipowner's obligations under this Deed and the Mortgage and
shall not be satisfied by any intermediate payment or satisfaction of any part
of the amount hereby and thereby secured and that the security so created shall
be in addition to, and shall not in any way be prejudiced or affected by, any
collateral or other security now or hereafter held by the Mortgagee for all or
any part of the moneys hereby and thereby secured and that every power and
remedy given to the Mortgagee hereunder shall be in addition to and not a
limitation of any and every power or remedy vested in the Mortgagee under this
Deed and the Mortgage and that all powers so vested in the Mortgagee may be
exercised from time to time and as often as the Mortgagee may deem expedient.
ARTICLE I.
COVENANTS OF THE SHIPOWNER TO THE MORTGAGEE
SECTION 1: ACKNOWLEDGMENT OF DEBT; GOVERNING LAW. (a) The
Shipowner hereby acknowledges that pursuant to its Guarantee, it is justly
indebted (i) pursuant to its Guarantee to the Holders of the Notes in the
principal amount of up to One Hundred Million United States Dollars (U.S.
$100,000,000) and (ii) pursuant to its Working Capital Guarantee to the Working
Capital Facility Provider in the principal amount of up to $7,000,000 and will
pay or cause to be paid the Indebtedness hereby secured. The Shipowner will
observe, perform and comply with the covenants, terms and conditions herein,
express or implied, on its part to be observed, performed or complied with.
(b) This Deed and the Mortgage are intended to be a first
preferred mortgage under the laws of the Cayman Islands ("Cayman Islands law")
and as such shall be governed by Cayman Islands law. However, in the event of
any conflict between the substantive provisions of this Deed and the Mortgage on
the one hand and the Indenture on the other, the terms of the Indenture shall
prevail, provided they are consistent with Cayman Islands law.
SECTION 2: ORGANIZATION OF SHIPOWNER. (a) The Shipowner is a
corporation duly organized and existing under the laws of _____________________
and shall so remain during the life of this Deed and the Mortgage and so long as
each of the Indenture and the Working Capital Guarantee shall remain in effect
and any Obligations or any Working Capital Loans remain outstanding.
(b) The Shipowner has full power and authority to own,
operate, charter and mortgage the Ship; all action necessary and required by law
for the execution and delivery of this Deed and the Mortgage has been duly and
effectively taken; and this Deed, the Mortgage and the Indebtedness hereby
secured is and will be the valid and enforceable obligation of the Shipowner in
accordance with its terms. All consents or approvals required in respect of this
Mortgage have been obtained and are in full force and effect.
SECTION 3: NO EXISTING LIENS. The Shipowner lawfully owns
and is lawfully possessed of the Ship free from any lien or encumbrance
whatsoever other than (a) liens for
<PAGE>
5
current crew's wages, (b) liens covered by valid policies of insurance held by
the Mortgagee and meeting the requirements of Section 14 below of this Article
I, (c) liens not covered by insurance incurred in the ordinary course of
business and not more than thirty days past due; and (d) Permitted Liens, and
will 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: PREFERRED MORTGAGE UNDER CYPRIOT LAW. The Ship is
duly documented in the name of the Shipowner under the laws and flag of the
Cayman Islands. The Shipowner will cause this Deed and the Mortgage to be duly
recorded in accordance with the provisions of The Merchant Shipping Acts as
extend to the Cayman Islands and the pertinent provisions of the other laws of
the Cayman Islands (the "Cayman Islands Maritime Law"), and will otherwise
comply with and satisfy all of the provisions of the Cayman Islands Maritime Law
in order to establish and maintain this Deed and the Mortgage, as at any time
amended, supplemented or assigned, as a first preferred mortgage lien thereunder
upon the Ship and upon all renewals, replacements and improvements made in or to
the same or any part thereof for the amount of the Indebtedness hereby secured.
SECTION 5: NO UNLAWFUL OPERATION. The Shipowner will not cause
or permit the Ship to be operated in any manner contrary to law, and the
Shipowner will not engage in any unlawful trade or violate any law or carry any
cargo that will expose the Ship to penalty, forfeiture or capture, and will not
do, or suffer or permit to be done, anything which can or may injuriously affect
the registration or enrollment of the Ship under the laws and regulations of
Cayman Islands and will at all times at its own expense keep the Ship duly
documented thereunder, except in the case of any change of registry permitted by
the Indenture or hereby, in which case a mortgage will be recorded against the
Ship under the laws of any such new registry state.
SECTION 6: PAYMENT OF TAXES, ETC. The Shipowner will pay and
discharge when due and payable, from time to time, all taxes, assessments,
governmental charges, fines and penalties lawfully imposed on the Ship or any
income therefrom; PROVIDED that the Shipowner shall not be required to pay any
such tax, assessment or charge if the validity or amount thereof is concurrently
contested in good faith by appropriate proceedings, the Shipowner shall have set
aside on its books reserves in accordance with generally accepted accounting
principles in the United States consistently applied deemed by it adequate with
respect to such tax, assessment or charge and during the pendency of such
contest the Ship will not be subject to sale or forfeiture; and PROVIDED
FURTHER, however, that the Shipowner will pay or cause to be paid all such
taxes, assessments or charges forthwith upon the commencement of proceedings to
foreclose any lien which is attached as security therefor.
SECTION 7: NO POWER TO CREATE LIENS. Neither the Shipowner,
any charterer, the Master of the Ship nor any other person has or shall have any
right, power or authority to create, incur or permit to be placed or imposed or
continued upon the Ship any lien or encumbrance whatsoever other than Permitted
Liens, liens for current crew's wages and salvage and the lien of this Deed and
the Mortgage.
SECTION 8: NOTICE OF MORTGAGE. The Shipowner will place, and
at all times and places will retain, a properly certified copy of this Mortgage
on board the Ship with her papers and will cause each such certified copy and
the Ship's marine document to be exhibited to any and all person having business
therewith which might give rise to any lien thereon other than liens for crew's
wages or salvage, and to any representative of the
<PAGE>
6
Mortgagee; and will place and keep prominently displayed in the chart room and
in the Master's cabin of the Ship a framed printed notice in plain type reading
as follows:
"NOTICE OF MORTGAGE
This ship is covered by a First Preferred
Mortgage in favor of the First National Bank of
Maryland, as Trustee/Mortgagee, under authority of
the provisions of the Merchant Shipping Acts as
extended to the Cayman Islands and the pertinent
provisions of the other laws of the Cayman Islands.
Under the terms of said First Preferred Mortgage,
neither the Owner, any charterer, the Master of this
Ship nor any other person has any right, power or
authority to create, incur or permit to be imposed
upon this Ship any other lien whatsoever except liens
for crew's wages and salvage."
SECTION 9: DISCHARGE OF LIENS, ENCUMBRANCES, ETC. Except for
the lien of this Deed and the Mortgage, Permitted Liens 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 Ship
from arrest on account of such claim or lien, the Shipowner will not suffer to
be continued any lien, encumbrance or charge on the Ship, and in due course and
in any event, by the earlier of ninety (90) days after the same becomes due and
payable or twenty-one (21) days after being requested to do so by the Mortgagee,
will pay or cause to be discharged or make adequate provision for the
satisfaction or discharge of all claims or demands, or will cause the Ship to be
released or discharged from any lien, encumbrance or charge therefor.
SECTION 10: LIBEL. If a libel, complaint or similar process be
filed against the Ship or the Ship be otherwise attached, levied upon or taken
into custody by virtue of any legal proceeding in any court, the Shipowner will
promptly notify the Mortgagee thereof by cable, facsimile or telex, confirmed by
letter, at its address, as specified in this Deed, and within fifteen (15) days
of such filing, attachment, levy or taking into custody will cause the Ship to
be released and all liens thereon other than this Deed and the Mortgage and the
liens securing the obligations under the Security Agreements and the Working
Capital Guarantee to be discharged and will promptly notify the Mortgagee
thereof in the manner aforesaid. In the event the Ship is levied upon or taken
into custody or detained by any authority whatsoever, the Shipowner agrees
forthwith to notify the Mortgagee thereof by telex, confirmed by letter. The
Shipowner will notify the Mortgagee within forty-eight (48) hours after it has
become known to the Shipowner of any average or salvage incurred by the Ship.
SECTION 11: SHIP CONDITION. (a) The Shipowner at all times and
without cost or expense to the Mortgagee, will maintain and preserve, or cause
to be maintained and preserved, the Ship and all its equipment, outfit and
appurtenances, tight, staunch, strong, in good condition, working order and
repair and in all respects seaworthy and fit for its intended service, and will
keep the Ship, or cause her to be kept and maintained, in such condition as to
make her comply with the provisions of the Merchant Shipping Acts as extended to
the Cayman Islands as will entitle her to maintain her current classification
and rating for ships of the same age and type, free of notices, recommendations
or qualifications which negatively affect such classification in [INSERT CURRENT
CLASSIFICATION SOCIETY] or other classification society of like standing
approved by the Mortgagee. The Ship shall, and the Shipowner covenants that she
will, at all times comply with all applicable laws, treaties and
<PAGE>
7
conventions, and rules and regulations issued thereunder, and shall have on
board as and when required thereby valid certificates showing compliance
therewith, including all Safety Management Certificates required by the
International Safety management Code (the "ISM Code"). The Shipowner will not
make, or permit to be made, any substantial change in the structure, type or
speed of the Ship or with respect to any of the terms of the instruments of
insurance or diminish the value of the Ship without first receiving written
approval thereof from the Mortgagee.
(b) The Shipowner agrees to give the Mortgagee at least ten
(10) days notice of the actual date and place of any survey or drydocking in
order that the Mortgagee may have representatives present if desired. The
Shipowner agrees that at the Mortgagee's request it will satisfy the Mortgagee
that the expense of such survey or drydocking or work to be done thereat is
within Shipowner's financial ability and will not result in a claim or lien
against the Ship in violation of the provisions of this Mortgage.
(c) The Shipowner agrees to submit the Ship regularly to such
periodical or other surveys as may be required for classification purposes and
will promptly supply to the Mortgagee copies of all reports issued in respect
thereof.
SECTION 12: PROVISION OF INFORMATION AND DOCUMENTS.
(a) The Shipowner will at all reasonable times afford the
Mortgagee or its authorized representatives full and complete access to the Ship
for the purpose of inspecting the Ship and her cargo and papers and, at the
request of the Mortgagee, the Shipowner will deliver for inspection, copies of
any and all contracts and documents relating to the Ship, whether on board or
not.
(b) The Shipowner hereby agrees to promptly furnish to the
Mortgagee on demand, all charterparties or contracts of affreightment relating
to the Ship and full details as to the parties, times of delivery and the like
pertaining thereto.
(c) On the date hereof and on an annual basis, the Shipowner
shall obtain and provide the Mortgagee with a Certificate of Confirmation of
Class.
(d) The Shipowner agrees to assign to the Mortgagee
contemporaneously with the execution of this Mortgage any charters or earnings
of the Ship pursuant to the Indenture or the Supplemental Indenture.
(e) The Shipowner hereby appoints the Mortgagee
attorney-in-fact of the Shipowner, whether or not an event of default shall have
occurred or is continuing, to appear before governmental bodies, classification
societies and insurers and to demand and receive to the same extent that the
Shipowner itself might, all information and certificates respecting (i) the
organizational status of the Shipowner under the laws of its jurisdiction of
organization or any other jurisdiction in which it may have qualified to do
business, (ii) the status of the Ship under the laws and regulations of its
country of registration, and its compliance with the requirements thereof, and
(iii) the state of the records of the Ship or of the Shipowner in respect of the
Ship in any classification society with which the Ship may be classed or of any
company, association or club by whom the Ship or the Shipowner in respect of the
Ship may be insured; and the Shipowner hereby agrees that the Mortgagee may
execute its powers as attorney-in-fact as aforesaid through its agents,
representatives and
<PAGE>
8
attorneys. This power of attorney is coupled with an interest and shall be
irrevocable as long as any Indebtedness hereby secured remains outstanding.
SECTION 13: NO TRANSFER OF FLAG; SALE; CHARTER. (a) The
Shipowner will not transfer or change the flag or port of documentation of the
Ship (except to Panama, the Bahamas, Liberia, the Republic of Cyprus, Isle of
Man, the Hellenic Republic or any other jurisdiction which at the time is
generally deemed acceptable by institutional lenders to the shipping industry,
as determined in good faith by the Board of Directors, as permitted by the terms
of the Indenture, PROVIDED, HOWEVER, that there shall at all times exist an
effective Mortgage on the Ship, notwithstanding such transfer or change of flag
or port) without the prior written consent of the Mortgagee (which consent shall
contain such terms and conditions as the Mortgagee shall reasonably conclude are
necessary, including Opinions of Counsel, filings and documentation, to ensure
the continuing first preferred perfected Lien of the Mortgagee for the benefit
of the Holders and the Working Capital Facility Provider in respect of the Ship
and the other Collateral). Any such written consent to any one transfer or
change of flag or port of documentation shall not be construed to be a waiver of
this provision with respect to any subsequent proposed transfer or change of
flag or port of documentation. The Shipowner shall notify the Registrar of
British Ships upon any change of residence of the ship.
(b) Without the prior written consent of the Mortgagee, the
Shipowner will not in any manner (i) sell, transfer or mortgage the Ship other
than in accordance with Section 4.07 of the Indenture or (ii) enter into any
charterparty, contract of affreightment, bill of lading or other engagement of
affreightment or for the carriage or transportation of cargo or other operation
of any kind of the Ship other than the charterparty existing on the date hereof.
SECTION 14: INSURANCES. (a) The Shipowner will cause to be
carried and maintained on or in respect of the Ship without expense to the
Mortgagee insurances, payable in U.S. Dollars, in amounts, against risks
(including marine hull and machinery insurance, marine protection and indemnity
insurance, war risks insurance and liability arising out of pollution and the
spillage or leakage of cargo and cargo liability insurance) and in a form which
is substantially equivalent to the coverage carried by other responsible and
experienced companies engaged in the operation of ships similar to the Ship and
for similar purposes and with insurance companies, underwriters, funds, mutual
insurance associations or clubs of recognized standing. Hull and Machinery and
war risk insurance shall be carried in an amount which is not less than the
greater of the full commercial value of the Ship or 120% of the Ship Percentage
of the Indebtedness hereby secured outstanding from time to time. Protection and
indemnity insurance as well as required insurance against liability for
pollution or spillage or leakage of cargo which shall have limitations of
liability of not less than $500 million, shall be in the highest amount from
time to time available for ships of the same type, size, age and flag as the
Ship. The Shipowner will reimburse the Mortgagee for all premiums and other
amounts paid by the Mortgagee in connection with mortgagee's interest insurance
and additional peril pollution or equivalent cover in favor of the Mortgagee
which shall insure the interest of the Mortgagee regardless of any breach or
violation by the Shipowner or of any other person of any representation,
warranty, covenant, condition, declaration or promise contained in any relevant
policy and which shall be obtained through an insurance broker reasonably
acceptable to the Mortgagee that is different from the insurance brokers
utilized for all other insurances and reinsurances provided for hereunder. None
of the aforementioned insurance shall provide for a deductible amount in excess
of One
<PAGE>
9
Million United States Dollars (U.S. $1,000,000) per occurrence (or equivalent in
any other currency or currency unit).
In the case of all marine, navigating and war risk hull and
machinery policies, the Shipowner will cause the Mortgagee to be named as an
additional insured and will use all reasonable efforts (and cause its insurance
broker to use all reasonable efforts) to cause the insurers under such policies
to waive any liability of the Mortgagee for premiums, calls payable, assessments
or advances under such policies and for the representations and warranties made
therein by the Shipowner or any other person.
The Shipowner will also, without expense to the Mortgagee,
have the Ship fully entered in a protection and indemnity association or club in
good standing and acceptable to the Mortgagee. The Shipowner will cause such
association or club to issue to the Mortgagee a Letter of Undertaking in a form
satisfactory to the Mortgagee.
In the case of all protection and indemnity insurance
(including insurance against liability arising out of pollution), the Shipowner
will cause the Mortgagee to be named as an additional insured and will take such
actions as shall be necessary so that the Mortgagee shall not be liable under
such policies for payment of any premium, club call, assessment or advance or
for the representations and warranties made therein by the Shipowner or any
other person. Unless the Mortgagee shall have otherwise directed, any loss
involving damage to the Ship which is not in excess of One Million United States
Dollars (U.S. $1,000,000) may be paid directly for repair or salvage or to
reimburse the Shipowner for the same. The Shipowner will cause its brokers to
agree to advise the Mortgagee promptly of any default in the payment of any
premium and of any other act or omission on the part of the Shipowner of which
they have knowledge and which might invalidate or render unenforceable, in whole
or in part, any insurance on the Ship.
The Shipowner will also cause such brokers to agree to mark
their records and to advise the Mortgagee by cable, telex or facsimile
transmission, at least seven (7) business days' prior to the expiration date of
any insurance carried pursuant to this Mortgage, whether such insurance has been
renewed or replaced with new insurance which complies with the provisions of
this Section 14 and the other provisions of this Mortgage.
(b) The Shipowner will assign to the Mortgagee
contemporaneously with the execution of the Mortgage any policies of insurance
in respect of the Ship pursuant to an Insurance Assignment.
(c) Unless the Mortgagee shall otherwise agree, all insurance
must name the Mortgagee as an assured, but without liability for premiums, calls
or assessments, and all amounts of whatsoever nature payable under any insurance
must be payable to the Mortgagee for distribution first to itself and thereafter
to the Shipowner or others as their interests may appear. Nevertheless, until
otherwise required by the Mortgagee by notice to the underwriters, (i) amounts
payable under any insurance on the Ship with respect to protection and indemnity
risks may be paid directly to the Shipowner to reimburse it for any loss, damage
or expense incurred by it and covered by such insurance or to the person to whom
any liability covered by such insurance has been incurred; PROVIDED, HOWEVER,
that if the Mortgagee shall give notice that the Shipowner is in default
hereunder, all such payments shall be made to the Mortgagee until the
Indebtedness hereby secured has been fully discharged, and (ii) concerning
amounts payable under any insurance with respect to the Ship involving any
damage to the Ship not constituting an actual or constructive or an agreed or
<PAGE>
10
compromised total loss, the underwriters may pay direct for the repair, salvage
or other charges involved or, if the Shipowner shall have first fully repaired
the damage or paid all of the salvage or other charges, may pay the Shipowner as
reimbursement therefor; PROVIDED, HOWEVER, that if such amounts (including any
franchise or deductible) are in excess of One Million United States Dollars
($1,000,000), the underwriters shall make such payment to the Mortgagee. All
payments of insurance shall be made to the Mortgagee if an Event of Default
shall have occurred or any event which with the giving of notice or the lapse of
time, or both, would constitute an Event of Default.
(d) All amounts paid to the Mortgagee in respect of any
insurances on the Ship shall be disposed of as follows:
(i) any amount which might have been paid at the time, in
accordance with the provisions of paragraph (c) above, directly to the
Shipowner or others as their interest may appear shall be paid by the
Mortgagee to, or as directed by, the Shipowner;
(ii) all amounts paid to the Mortgagee in respect of an Event
of Loss shall be paid in accordance with Section 3.3(d) of the
Collateral Agency Agreement;
(iii) so long as no Event of Default shall have occurred and
be continuing, all other amounts paid to the Mortgagee in respect of
any insurance on the Ship shall be applied to the making of needed
repairs or other work on the Ship, or to the payment of other claims
incurred by the Shipowner relating to the Ship, or may be paid to the
Shipowner or whomsoever may be entitled thereto;
(iv) all remaining amounts paid to the Mortgagee in respect of
any insurance on the Ship may, in the Mortgagee's sole discretion, be
held and applied in accordance with the Collateral Agency Agreement;
(v) if an Event of Default shall have occurred and be
continuing, any amounts shall be applied in accordance with Section 3.7
of the Collateral Agency Agreement.
(e) In the event that any claim or lien is asserted against
the Ship for loss, damage or expense which is covered by insurance required
hereunder and it is necessary for the Shipowner to obtain a bond or supply other
security to prevent arrest of the Ship or to release the Ship from arrest on
account of such claim or lien, the Mortgagee, on request of the Shipowner, may,
in the sole discretion of the Mortgagee, assign to any person, firm or
corporation executing a surety or guarantee bond or other Agreement to save or
release the Ship from such arrest, all right, title and interest of the
Mortgagee in and to said insurance covering said loss, damage or expense, as
collateral security to indemnify against liability under said bond or other
agreement.
(f) The Shipowner shall deliver to the Mortgagee certified
copies or originals on the date hereof and annually at the times the Officers'
Certificates are required to be delivered under the Indenture, of all
certificates of entry, cover notes, binders and evidences of insurance and
policies for the purpose of inspection or safekeeping. In addition, the
Shipowner will furnish the Mortgagee concurrently with the execution hereof and
thereafter at intervals of not more than twelve (12) calendar months, a detailed
report by independent marine insurance brokers, selected by the Mortgagor and
acceptable to the
<PAGE>
11
Mortgagee, describing in reasonable detail the insurance pursuant to this
Section 14 and stating that in the opinion of such brokers such insurance
complies in all material respects with the terms of this Section 14 and is
common and customary for types of insurances and coverage generally required by
mortgagees from prudent owners and operators of ships similar to the Ship and
engaged in trades similar to the trades in which the Ship is engaged.
(g) The Shipowner agrees that it will not execute or permit or
willingly allow to be done any act by which any insurance may be suspended,
impaired or canceled, and that it will not permit or allow the Ship to undertake
any voyage or run any risk or transport any cargo which may not be permitted by
the policies in force, without having previously insured the Ship by additional
coverage to extend to such voyages, risks or cargoes with insurance satisfactory
to the Mortgagee and the Shipowner agrees (without limiting the foregoing) that
it will not permit the Ship to enter or trade to any zone which is declared a
war zone by any government or by the War Risk Insurers for the Ship unless the
Mortgagee shall have first given its consent thereto in writing which Mortgagee
shall have full power to withhold) and there shall have been effected by the
Shipowner and at its expense such special insurance as the Mortgagee may
require.
(h) In case any underwriter proposes to pay less on any claim
than the amount thereof, the Shipowner shall forthwith inform the Mortgagee and
the Mortgagee shall have the right to negotiate and agree to any compromise.
(i) The Shipowner will comply with and satisfy all of the
provisions of any applicable law, convention, regulation, proclamation or order
concerning financial responsibility for liabilities imposed on the Shipowner or
the Ship with respect to pollution by any state or nation or political
subdivision thereof and will maintain all certificates or other evidence of
financial responsibility as may be required by any such law, convention,
regulation, proclamation or order with respect to the trade which the Ship is
from time to time engaged in and the cargo carried by it.
(j) All insurance required under this Deed and the Mortgage
shall be placed and kept with such insurance companies or other insurance
underwriters as shall be reasonably acceptable to the Mortgagee.
SECTION 15: REIMBURSEMENT FOR EXPENSES. (a) The Shipowner will
reimburse the Mortgagee promptly, with interest at the interest rate applicable
to the Notes per calendar month set forth in the Indenture for any and all
expenditures which the Mortgagee may from time to time make, lay out or expend
in providing such protection in respect of insurance, discharge or purchase of
liens, taxes, dues, assessments, governmental charges, fines and penalties
lawfully imposed, repairs, attorneys' fees, necessary translation fees for
documents made in a language other than English and other matters as the
Shipowner is obligated herein to provide, but fails to provide. Such obligation
of the Shipowner to reimburse the Mortgagee shall be an additional indebtedness
due from the Shipowner, secured by this Mortgage, and shall be payable by the
Shipowner on demand. The Mortgagee, though privileged to do so, shall be under
no obligation to the Shipowner to make any such expenditures, nor shall the
making thereof relieve the Shipowner of any default in that respect.
<PAGE>
12
SECTION 16: PERFORMANCE OF CHARTER. The Shipowner will fully
perform, or cause to be performed, any and all charterparties and contracts of
affreightment which are, or may be, entered into with respect to the Ship.
SECTION 17: EVENT OF LOSS. (a) So long as no Event of Default
shall have occurred and be continuing, in the event of an actual, constructive,
agreed or compromised total loss of the Ship, any adjustment or compromise of
such loss by the Shipowner will be at the highest amount reasonably obtainable,
and insurance or other payments for such loss shall be applied in accordance
with Section 3.3(d) of the Collateral Agency Agreement.
(b) This Deed and the Mortgage shall extend to and constitute
a lien upon, and the Shipowner hereby grants the Mortgagee a security interest
in, all proceeds resulting from any of the events mentioned in subsection (a)
above as security for the Indebtedness hereby secured.
SECTION 18: FINANCING STATEMENTS. The Shipowner hereby
irrevocably authorizes the Mortgagee to file and record financing statements in
any jurisdiction where the same may be in force and to make any filings or
recordings under any legislation having similar effect for the purpose of
perfecting or continuing the perfection of the security interests granted by the
Shipowner to the Mortgagee herein and in the Mortgage without obtaining the
signature of the Shipowner thereto. The Shipowner hereby irrevocably authorizes
the Mortgagee to execute any such financing statement or similar document in the
name of the Shipowner.
SECTION 19: INCORPORATION BY REFERENCE. All of the covenants,
representations and agreements on the part of the Issuer as guaranteed by the
Shipowner and of the Shipowner, which are set forth in, and all of the rights,
powers and remedies of the Mortgagee which are provided for in, the Mortgage,
the Indenture, the Working Capital Facility Agreement, the Collateral Agency
Agreement, the other Security Agreements, the Working Capital Facility
Agreement, the Collateral Agency Agreement and the Notes, together with all
other provisions of the Indenture and the Notes, are incorporated herein by
reference with the same force and effect as though set forth at length in this
Deed.
SECTION 20: REQUISITION OF TITLE. In the event that the title
or ownership of the Ship shall be requisitioned, purchased or taken by any
government of any country or any department, agency or representative thereof,
or any authority acting or purporting to act under color of government, pursuant
to any present or future law, proclamation, decree, order or otherwise, the lien
of this Mortgage shall be deemed to attach to the claim for compensation of the
Shipowner for its interest in the Ship from such government or department,
agency or representative, or from any other source, and the compensation,
purchase price, reimbursement or award for such requisition, purchase or other
taking of such title or ownership due the Shipowner from such government,
department, agency or representative or other source, is hereby declared payable
to the Mortgagee, who shall be entitled to receive the same, and shall apply the
same as provided in Section 3.3(d) of the Collateral Agency Agreement; and in
the event of any such requisition, purchase or taking, the Shipowner shall
promptly execute and deliver to the Mortgagee such documents, if any, and shall
promptly do and perform such acts, if any, as in the opinion of the Mortgagee
may be necessary or useful to facilitate or expedite the collection by the
Mortgagee of such compensation, purchase price, reimbursement or award.
<PAGE>
13
ARTICLE II.
Events of Default and Remedies.
SECTION 1: EVENTS OF DEFAULT. In case any one or more of
the following events, herein termed "Events of Default", shall have occurred and
be continuing:
(a) the statements in Sections 2 and 3 of Article I shall
prove to be untrue;
(b) a default shall have occurred in the due and punctual
observance and performance of any of the provisions of Sections 4, 5,
9, 10, 14(a), 14(b), 14(c), 14(g), 14(i), 16, 17 and 20 of Article I
hereof;
(c) a default by the Shipowner in the observance or
performance of any agreement under this Deed or the Mortgage shall have
occurred and shall remain unremedied for twenty-one (21) days after
written notice thereof shall have been given to the Shipowner by the
Mortgagee; or
(d) an Event of Default under the Indenture, the Notes, or the
Working Capital Facility Agreement;
then, and in each and every such case, the Mortgagee shall have the right,
without prejudice to any statutory or common law remedies to:
(1) Declare all the then unpaid Indebtedness hereby secured to
be due and payable immediately, and upon such declaration the same,
including interest to date of declaration, shall become and be
immediately due and payable;
(2) Exercise all of the rights and remedies in foreclosure and
otherwise given to mortgagees by the provisions of the laws of Cyprus
or of any other jurisdiction where the Ship may be found and exercise
all of its rights and remedies as attorney-in-fact or otherwise under
this Deed and the Mortgage;
(3) Bring suit at law, in equity or in admiralty, as it may be
advised, to recover judgment for the Indebtedness hereby secured, and
collect the same out of any and all property of the Shipowner whether
covered by this Deed or the Mortgage or otherwise;
(4) Take and enter into possession of the Ship, at any time,
wherever the same may be, without legal process and without being
responsible for loss or damage, and the Shipowner or other person in
possession forthwith upon demand of the Mortgagee shall surrender to
the Mortgagee possession of the Ship and the Mortgagee may do all acts
necessary, without being responsible for loss or damage, including
hold, lay-up, lease, charter, operate or otherwise use such Ship 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 Ship 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 Ship and charging upon
all receipts from the use of the Ship or from the sale thereof by court
proceedings or pursuant to Subsection (5) next
<PAGE>
14
following, all costs, expenses, charges, damages or losses by reason of
such use; and if at any time the Mortgagee shall avail itself of the
right herein given it to take the Ship, the Mortgagee shall have the
right to dock the Ship 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.
(5) Take and enter into possession of the Ship, at any time,
wherever the same may be, without legal process, and if it seems
desirable to the Mortgagee and without being responsible for loss or
damage, sell such Ship, at any place and at such time as the Mortgagee
may specify and in such manner as the Mortgagee may deem advisable,
free from any claim by the Shipowner in admiralty, in equity, at law or
by statute, at public or private sale, by sealed bids or otherwise, by
mailing, by air or otherwise, notice of such sale, whether public or
private, addressed to the Shipowner at its last known address, fourteen
(14) days prior to the date fixed for entering into the contract of
sale and by first publishing notice of any such public sale for ten
(10) consecutive days, in a newspaper published in the City of New
York, State of New York or if the place of sale should not be in New
York City then by publication of a similar notice at or near the place
of sale; in the event that the Ship shall be offered for sale by
private sale, no newspaper publication of notice shall be required, nor
notice of adjournment of sale; sale may be held at such place and at
such time as the Mortgagee by notice may have specified, or may be
adjourned by the Mortgagee from time to time by announcement at the
time and place appointed for such sale or for such adjourned sale, and
without further notice or publication the Mortgagee may make any such
sale at the time and place to which the same shall be so adjourned; and
any sale may be conducted without bringing the Ship to the place
designated for such sale and in such manner as the Mortgagee may deem
to be for its best advantage, and the Mortgagee may become the
purchaser at any judicial sale.
(6) Take and receive all insurance proceeds to which it shall
become entitled by reason of the existence of an Event of Default and
any acceleration of the Notes or of any amounts owed under the Working
Capital Guarantee.
SECTION 2: SALE DIVESTS TITLE. Any sale of the Ship made in
pursuance of this Deed, 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 therein and thereto, and shall bar the
Shipowner, its successors and assigns, and all persons claiming by, through or
under them. No purchaser shall be bound to inquire whether notice has been
given, or whether any default has occurred, or as to the propriety of the sale,
or as to the application of the proceeds thereof. In case of any such sale, the
Mortgagee, if it is the purchaser, shall be entitled for the purpose of making
settlement or payment for the property purchased to use and apply the
Indebtedness hereby secured in order that there may be credited against the
amount remaining due and unpaid thereon the sums payable out of the net proceeds
of such sale to the Mortgagee after allowing for the costs and expense of sale
and other charges; and thereupon such purchaser shall be credited, on account of
such purchase price, with the net proceeds that shall have been so credited upon
the Indebtedness hereby secured. At any such judicial sale, the Mortgagee may
bid for and purchase such property, may credit against payment of the purchase
price thereof all sums due under the Notes or the Working Capital Guarantee and
upon compliance with the terms of sale may hold, retain and dispose of such
property without further accountability therefor.
<PAGE>
15
SECTION 3: MORTGAGEE'S POWER OF ATTORNEY-SALES. The Mortgagee
is hereby appointed attorney-in-fact of the Shipowner, upon the happening of any
Event of Default, to execute and deliver to any purchaser aforesaid, and is
hereby vested with full power and authority to make, in the name and on behalf
of the Shipowner, a good conveyance of the title to the Ship so sold. In the
event of any sale of the Ship, under any power herein contained, the Shipowner
will, if and when required by the Mortgagee, execute such form of conveyance of
the Ship as the Mortgagee may direct or approve.
SECTION 4: MORTGAGEE'S POWER OF ATTORNEY--COLLECTION. The
Mortgagee is hereby appointed attorney-in-fact of the Shipowner upon the
happening of any Event of Default, in the name and on behalf 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
Ship and all amounts due from underwriters under any insurances thereon as
payment of losses or as return premiums or otherwise, salvage awards and
recoveries, recoveries in general average or otherwise, and all other sums due
or to become due at the time of the happening of any Event of Default in respect
of the Ship, or in respect of any insurances thereon, from any person
whomsoever, and to make, give and execute in the name of the Shipowner
acquittances, 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 other instruments in writing
with respect to the foregoing.
SECTION 5: MORTGAGEE POWER OF ATTORNEY--DISCHARGE OF LIENS.
The Shipowner authorizes and empowers the Mortgagee or its appointees or any of
them to appear in the name of the Shipowner, its successors and assigns, in any
court of any country or nation of the world where a suit is pending against the
Ship because of or on account of any alleged lien against the Ship from which
the Ship has not been released and to take such proceedings as to them or any of
them as may seem proper towards the defense of such suit and the purchase or
discharge of such lien, and all expenditures made or incurred by them or any of
them for the purpose of such defense or purchase or discharge shall be a debt
due from the Shipowner, its successors and assigns, to the Mortgagee, shall be
payable on demand and shall be secured by the lien of this Deed and the Mortgage
in like manner and extent as if the amount and description thereof were written
herein.
SECTION 6: DELIVERY OF SHIP. Whenever any right to enter and
take possession of the Ship accrues to the Mortgagee, it may require the
Shipowner to deliver, and the Shipowner shall on demand, at its own cost and
expense, deliver to the Mortgagee the Ship as demanded. If the Mortgagee shall
be entitled to take any legal proceedings 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 Ship and of the freights, hire, earnings,
issues, revenues, income and profits due or to become due and arising from the
operation thereof.
SECTION 7: INDEMNIFICATION. The Shipowner covenants that upon
the happening of any one or more of the Events of Default, then, upon written
demand of the Mortgagee, the Shipowner will pay to the Mortgagee the whole
amount due and payable in respect of the Indebtedness hereby secured; and in
case the Shipowner shall fail to pay the same forthwith upon such demand, the
Mortgagee shall be entitled to recover judgment for the whole amount so due and
unpaid, together with such further amounts as shall be sufficient to cover the
reasonable compensation to the Mortgagee's agents, attorneys and counsel and any
necessary advances, expenses and liabilities made or incurred by it hereunder.
All moneys collected by the Mortgagee under this Section 7 shall be applied by
<PAGE>
16
the Mortgagee in accordance with the provisions of Section 3.7 of the Collateral
Agency Agreement.
SECTION 8: EVERY POWER CUMULATIVE. Each and every power and
remedy herein given to the Mortgagee shall be cumulative and shall be in
addition to every other power and remedy herein given or now or hereafter
existing at law, in equity, in 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
Mortgagee, and the exercise or the beginning of the exercise of any 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 by the
Mortgagee in the exercise of any right or power or in the pursuance of any
remedy accruing upon any default as above defined shall impair any such right,
power or remedy or be construed to be a waiver of any such Event of Default or
to be an acquiescence therein; nor shall the acceptance by the Mortgagee of any
security or of any payment of or on account of the Indebtedness hereby secured
maturing after any Event of Default or of any payment on account of any past
default be construed to be a waiver of any right to take advantage of any future
Event of Default or of any past Event of Default not completely cured thereby.
No consent, waiver or approval of the Mortgagee shall be deemed to be effective
unless in writing and duly signed by authorized signatories of the Mortgagee.
SECTION 9: CURE OF DEFAULTS. Subject to the terms of the
Indenture, if at any time after an Event of Default and prior to the actual sale
of the Ship by the Mortgagee or prior to any enforcement or foreclosure
proceedings, the Shipowner offers completely to cure all Events of Default and
to pay all expenses, advances and damages to the Mortgagee consequent on such
Events of Default, with interest with respect to the Shipowner's obligations as
provided herein or in the Indenture or the Working Capital Facility Agreement as
set forth therein, then the Mortgagee may, but shall not be required to, accept
such offer and payment and restore the Shipowner to its former position, but
such action, if taken, shall not affect any subsequent Event of Default or
impair any rights consequent thereon.
SECTION 10: RESTORATION. In case the Mortgagee shall have
proceeded to enforce any right, power or remedy 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 Deed, and all rights,
remedies and powers of the Mortgagee shall continue as if no such proceedings
had been taken.
SECTION 11: DISTRIBUTION OF PROCEEDS. The proceeds of any sale
of the Ship and the net earnings of any charter operation or other use of the
Ship and any and all other moneys received by the Mortgagee pursuant to or under
the terms of this Mortgage or in any proceedings hereunder, the application of
which has not elsewhere herein been specifically provided for, shall be applied
in accordance with Section [6.10] of the Indenture and Section 3.3(d) of the
Collateral Agency Agreement.
SECTION 12: QUIET ENJOYMENT. Until one or more of the Events
of Default hereinabove described shall happen, the Shipowner (a) shall be
suffered and permitted to retain actual possession and use of the Ship and (b)
shall have the right, from time to time, in its discretion, and without
application to the Mortgagee subject to the terms of the Indenture, and without
obtaining a release thereof by the Mortgagee, to dispose of, free from
<PAGE>
17
the lien hereof, any boilers, engines, machinery, masts, spars, sails, rigging,
boats, anchors, chains, tackle, apparel, drills, furniture, fittings or
equipment or any other appurtenances of the Ship that are no longer useful,
necessary, profitable or advantageous in the operation of the Ship, first or
simultaneously replacing the same by new boilers, engines, machinery, masts,
spars, sails, rigging, boats, anchors, chains, tackle, drills, apparel,
furniture, fittings, equipment, or other appurtenances of substantially equal
value to the Shipowner, which shall forthwith become subject to the lien of this
Deed and the Mortgage as a preferred mortgage thereon.
SECTION 13: NO WAIVER OF PREFERRED STATUS (a) If any provision
of this Deed or the Mortgage should be deemed invalid or shall be deemed to
affect adversely the preferred status of this Deed or the Mortgage under any
applicable law, such provision shall cease to be a part of this Deed and the
Mortgage without affecting the remaining provisions, which shall remain in full
force and effect.
(b) In the event that the Indenture, the Guarantee, the
Working Capital Facility Agreement, the Working Capital Guarantee, the
Collateral Agency Agreement, this Deed, the Mortgage or any of the documents or
instruments which may from time to time be delivered hereunder or thereunder or
any provision hereof or thereof shall be deemed invalidated by present or future
law of any nation or by decision of any court, or if any third party shall fail
or refuse to recognize any of the powers granted to the Mortgagee hereunder when
it is sought to exercise them, this shall not affect the validity and/or
enforceability of all or any other parts of the Indenture, the Guarantee, the
Working Capital Facility Agreement, the Working Capital Guarantee, the
Collateral Agency Agreement, this Deed, the Mortgage or such documents or
instruments and, in any such case, the Shipowner covenants and agrees that, on
demand, it will execute and deliver such other and further agreements and/or
documents and/or instruments and do such things as the Mortgagee in its sole
discretion may deem to be necessary to carry out the true intent of this Deed
and the Mortgage and of the obligations secured hereby.
(c) Anything herein to the contrary notwithstanding, it is
intended that nothing herein shall waive the preferred status of this Deed or
the Mortgage and that, if any provision or portion thereof herein shall be
construed to waive the preferred status of this Deed or the Mortgage, then such
provision to such extent shall be void and of no effect.
SECTION 14: VENUE. In the event of any legal proceedings,
Section 7.12 of the Collateral Agency Agreement shall apply. Notwithstanding
Section 7.12 of the Collateral Agency Agreement, the Mortgagee is free to
initiate proceedings before any other court worldwide where the Ship may be
found, and the Shipowner hereby expressly and irrevocably consents to the
jurisdiction of any court in any jurisdiction whatsoever where the Ship may at
any time be located for the purpose of the foreclosure of this Mortgage, the
sale of the Shipowner's interest in the Ship or the enforcement of any other
remedy or right hereunder, and hereby expressly and irrevocably submits the
person of the Shipowner and its interests in the Ship to the jurisdiction of any
such court in any such action or proceeding.
<PAGE>
18
ARTICLE III.
Sundry Provisions.
SECTION 1: BINDING ON SUCCESSORS. All of the covenants,
promises, stipulations and agreements of the Shipowner in this Deed and the
Mortgage contained shall bind the Shipowner and its successors and assigns and
shall inure to the benefit of the Mortgagee and its respective successors and
assigns. In the event of any assignment or transfer of this Deed or the Mortgage
to the extent permitted by the Indenture, the term "Mortgagee", as used in this
Deed, shall be deemed to mean any such assignee or transferee.
SECTION 2: EXERCISE BY AGENTS. Wherever and whenever herein
any right, power or authority is granted or given to the Mortgagee, such right,
power or authority may be exercised in all cases by the Mortgagee or such agent
or agents as it may appoint, and the act or acts of such agent or agents when
taken shall constitute the act of the Mortgagee hereunder.
SECTION 3: NOTICES. Any notice or other communication to be
given pursuant hereto shall be in the manner provided in the Indenture and
addressed as follows:
If to the Mortgagee, to
The First National Bank of Maryland, as
Collateral Agent, Trustee and Mortgagee
Corporate Trust Department
25 South Charles Street
Baltimore, MD 21201
Telephone: 410-244-4224
Telefax: 410-244-4236
Telex:
If to the Shipowner, to
--------------------------
--------------------------
--------------------------
--------------------------
Telephone:
Telefax:
Telex:
or at such other address as either party may notify to the other in writing.
SECTION 4: TITLES AND SECTION HEADINGS. The titles and
section headings in this Mortgage are for convenience only and shall not affect
the construction hereof.
SECTION 5: STAMP TAX. The Shipowner shall be responsible for
payment of any and all stamp duties eligible in respect of this deed, the
Indenture or the Working Capital Facility Agreement and shall indemnify the
Mortgagee on demand against any and all
<PAGE>
19
expenditure and liability incurred by the Mortgagee in connection with the
payment of such stamp duty.
<PAGE>
20
IN WITNESS WHEREOF, the Shipowner and the Mortgagee has caused
their respective common seals to be hereunto affixed and this Deed on the MV
[NAME OF SHIP] to be duly executed the day and year first above written.
THE FIRST SCHEDULE HEREINBEFORE REFERRED TO:
[Name of ship]
_________________ whose port of registry is George Town;
Cayman Islands and whose Official Number is ________.
SIGNED, SEALED AND DELIVERED [NAME OF SHIPOWNER]
AS A DEED
by__________________________
the duly authorized ________
____________________________ By:_________________________
for and on behalf of _______ Name:
in the presence of _________ Title:
THE FIRST NATIONAL BANK OF
SIGNED, SEALED AND DELIVERED MARYLAND
AS A DEED
by__________________________
the duly authorized ________
____________________________ By:_________________________
for and on behalf of _______ Name:
in the presence of _________ Title:
<PAGE>
21
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this ____ day of ______, _____, before me personally
appeared _______________, to me known, who, being by me duly sworn, did depose
and say that he/she resides at __________________, ______________,
_________________; that he/she is the Attorney-in-Fact of
_______________________ a ___________ corporation, the company described in and
which executed the foregoing instrument; that he/she signed his/her name thereto
pursuant to a power of attorney granted by the Board of Directors of said
corporation and that the foregoing instrument is the act and deed of said
corporation.
-------------------------
NOTARY PUBLIC
<PAGE>
22
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this ____ day of ______, _____, before me personally
appeared _______________, to me known, who, being by me duly sworn, did depose
and say that he/she resides at __________________, ______________,
_________________; that he/she is the Attorney-in-Fact of
_______________________ a ___________ corporation, the company described in and
which executed the foregoing instrument; that he/she signed his/her name thereto
pursuant to a power of attorney granted by the Board of Directors of said
corporation and that the foregoing instrument is the act and deed of said
corporation.
-------------------------
NOTARY PUBLIC
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this ____ day of ______, _____, before me personally
appeared _______________, to me known, who, being by me duly sworn, did depose
and say that he/she resides at __________________, ______________,
_________________; that he/she is the Attorney-in-Fact of
_______________________ a ___________ corporation, the company described in and
which executed the foregoing instrument; that he/she signed his/her name thereto
pursuant to a power of attorney granted by the Board of Directors of said
corporation and that the foregoing instrument is the act and deed of said
corporation.
-------------------------
NOTARY PUBLIC
<PAGE>
24
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page No.
WHEREAS: ................................................................................................2
ARTICLE I.
COVENANTS OF THE SHIPOWNER TO THE MORTGAGEE
<S> <C>
Section 1: Acknowledgment of Debt; Governing Law...............................................4
Section 2: Organization of Shipowner...........................................................4
Section 3: No Existing Liens...................................................................4
Section 4: Preferred Mortgage under Cypriot Law................................................5
Section 5: No Unlawful Operation...............................................................5
Section 6: Payment of Taxes, etc...............................................................5
Section 7: No Power To Create Liens............................................................5
Section 8: Notice of Mortgage..................................................................5
SECTION 9: DISCHARGE OF LIENS, ENCUMBRANCES, ETC...............................................6
Section 10: Libel..............................................................................6
Section 11: Ship Condition......................................................................6
Section 12: Provision of Information and Documents.............................................7
Section 13: No Transfer of Flag; Sale; Charter.................................................8
Section 14: Insurances.........................................................................8
Section 15: Reimbursement for Expenses........................................................11
Section 16: Performance of Charter............................................................12
Section 17: Event of Loss.....................................................................12
Section 18: Financing Statements..............................................................12
Section 19: Incorporation by Reference........................................................12
Section 20: Requisition of Title...............................................................12
ARTICLE II.
Events of Default and Remedies
Section 1: Events of Default..................................................................13
Section 2: Sale Divests Title.................................................................14
Section 3: Mortgagee's Power of Attorney-Sales................................................15
Section 4: Mortgagee's Power of Attorney--Collection...........................................15
Section 5: Mortgagee Power of Attorney--Discharge of Liens.....................................15
Section 6: Delivery of Ship...................................................................15
Section 7: Indemnification....................................................................15
Section 8: Every Power Cumulative.............................................................16
Section 9: Cure of Defaults...................................................................16
Section 10: Restoration.......................................................................16
Section 11: Distribution of Proceeds..........................................................16
Section 12: Quiet Enjoyment...................................................................16
Section 13: No Waiver of Preferred Status ...................................................17
Section 14: Venue.............................................................................17
</TABLE>
<PAGE>
25
<TABLE>
<CAPTION>
ARTICLE III.
Sundry Provisions
<S> <C>
Section 1: Binding on Successors..............................................................18
Section 2: Exercise by Agents.................................................................18
Section 3: Notices............................................................................18
Section 4: Titles and Section Headings........................................................18
Section 5: Stamp Tax...........................................................................18
</TABLE>
MORTGAGE (to Secure Account Current, & c.) (Body Corporate)
<TABLE>
<CAPTION>
- - - - -------------------------------------------------------------------------------------------------------------------------------
IMO No. Name of Ship No., Year and Port of Registry
- - - - -------------------------------------------------------------------------------------------------------------------------------
- - - - -------------------------------------------------------------------------------------------------------------------------------
Metric Units
- - - - -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Length from forepart of stem to the aft side of the head of the stern post/fore side
of the rudder stock...................................................................
Main breadth to outside of plating....................................................
Depth in hold from tonnage deck to ceiling amidships..................................
Height above Sea Level................................................................
</TABLE>
- - - - -------------------------------------------------------------------------------
Whether a Sailing, Steam or Motor Ship Horse Power
- - - - -------------------------------------------------------------------------------
- - - - -------------------------------------------------------------------------------
- - - - -------------------------------------------------------------------------------
Number of Tons
Gross.........................................................................
Register......................................................................
- - - - -------------------------------------------------------------------------------
Call sign
- - - - -------------------------------------------------------------------------------
And as described in more detail in the Certificate of the Surveyor and the
Register Book.
- - - - -------------------------------------------------------------------------------
<PAGE>
- - - - --------------------------------------------------------------------------------
Whereas there is an Account Current between ________ Shipping Company Limited
(the "Mortgagor") whose said principal place of business is at ___________,
Cyprus and ____________through its branch office at __________ (the "Mortgagee")
regulated by (a) a loan agreement dated _____________, 1998 made between the
Mortgagee and the Mortgagor (hereinafter as the same may from time to time be
amended, varied or supplemented called "the Agreement") and (b) a deed of
covenants of even dated herewith (hereinafter as the same may from time to time
be amended, varied or supplemented called "the Deed of Covenants") made between
the Mortgagor and the Mortgagee and whereas pursuant to the Agreement the
Mortgagor has agreed to execute this Mortgage in favour of the Mortgagee for the
purpose of securing payment to the Mortgagee of all sums for the time being
owing to the Mortgagee in the manner and at the times set forth in the Agreement
and the Deed of Covenants and whereas the amount of principal and interest due
at any given time can be ascertained by reference to the Agreement, the Deed of
Covenants and to the books of account (or other accounting records) of the
Mortgagee.
Now we ________ Shipping Company Limited in consideration of the premises for
ourselves and our successors, covenant with the said Mortgagee and its assigns
to pay to it the sums for the time being due on this security, whether by way of
principal or interest or otherwise at the times and manner aforesaid. And for
the purpose of better securing to the Mortgagee the payment of such sums at last
aforesaid, we do hereby mortgage to the Mortgage one hundred one hundredths
shares (100/100th) of which we are the owner in the ship above particularly
described and in her boats and appurtenances.
Lastly, we for ourselves and our successors, covenant with the Mortgagee and its
assigns that we have power to mortgage in manner aforesaid the above-mentioned
shares and that the same are free from encumbrances.
In witness whereof we have executed this mortgage this ___ day of _______, 1998.
Signed, Sealed and Delivered as a Deed
By
The duly appointed
attorney-in-fact of
___________ Shipping Company
Limited under and pursuant to
a Power of Attorney dated the
__ day of __, 1998 in the
presence of:
- - - - --------------------------------------------------------------------------------
[FORM OF CYPRIOT DEED OF COVENANTS]
DEED OF COVENANTS
COLLATERAL
TO
STATUTORY SHIP MORTGAGE
ON THE
CYPRIOT FLAG SHIP
M/V [NAME OF SHIP]
GRANTED BY ___________________________, AS SHIPOWNER
IN FAVOR OF
THE FIRST NATIONAL BANK OF MARYLAND, AS
COLLATERAL AGENT, TRUSTEE AND MORTGAGEE
ON
______, 19__
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
PAGE
<S> <C>
WHEREAS ................................................................................... 1
ARTICLE I.
Covenants of the Shipowner to the Mortgagee
Section 1: Acknowledgment of Debt; Governing Law............................... 4
Section 2: Organization of Shipowner............................................. 4
Section 3: No Existing Liens..................................................... 4
Section 4: Preferred Mortgage under
Cypriot Law..................................................... 5
Section 5: No Unlawful Operation................................................. 5
Section 6: Payment of Taxes, etc................................................. 5
Section 7: No Power To Create Liens.............................................. 6
Section 8: [RESERVED]............................................................ 6
Section 9: Discharge of Liens,
Encumbrances, etc............................................... 6
Section 10: Libel................................................................. 6
Section 11: Ship Condition........................................................ 7
Section 12: Provision of Information and
Documents....................................................... 7
Section 13: No Transfer of Flag; Sale; Charter.................................... 8
Section 14: Insurances............................................................ 9
Section 15: Reimbursement for Expenses............................................ 14
Section 16: Performance of Charter................................................ 14
Section 17: Event of Loss......................................................... 14
Section 18: Financing Statements.................................................. 14
Section 19: Incorporation by Reference............................................ 15
Section 20: Requisition of Title.................................................. 15
ARTICLE II.
Events of Default and Remedies
Section 1: Events of Default..................................................... 15
Section 2: Sale Divests Title.................................................... 18
Section 3: Mortgagee's Power of
Attorney-Sales.................................................. 18
Section 4: Mortgagee's Power of
Attorney-Collection............................................. 19
Section 5: Mortgagee Power of
Attorney-Discharge of Liens..................................... 19
Section 6: Delivery of Ship...................................................... 19
Section 7: Indemnification....................................................... 20
Section 8: Every Power Cumulative................................................ 20
Section 9: Cure of Defaults...................................................... 20
Section 10: Restoration........................................................... 21
<PAGE>
PAGE
Section 11: Distribution of Proceeds.............................................. 21
Section 12: Quiet Enjoyment....................................................... 21
Section 13: No Waiver of Preferred Status......................................... 22
Section 14: Venue................................................................. 22
ARTICLE III.
Sundry Provisions
Section 1: Binding on Successors................................................. 23
Section 2: Exercise by Agents.................................................... 23
Section 3: Notices............................................................... 23
Section 4: Titles and Section Headings........................................... 24
Section 5: Payment of Interest and the Repayment of Principal.................. 24
Exhibit A: Indenture
Exhibit B: Working Capital Facility Agreement
Exhibit C: Working Capital Guarantee
Exhibit D: Collateral Agency Agreement
</TABLE>
<PAGE>
DEED OF COVENANTS
M/V ______
THIS DEED OF COVENANTS is made the _____ day of ____, 19___
between ________________, (herein called the "Shipowner", which term shall
include its successors and permitted assigns), having its principal place of
business at ____________________ and The First National Bank of Maryland, having
its principal place of business at __ ___________________________, as Collateral
Agent and Trustee (herein called the "Mortgagee") under a Collateral Agency and
Intercreditor Agreement dated as of July 15, 1998, (the "Collateral Agency
Agreement") among the Mortgagee, The First National Bank of Maryland, not in its
individual capacity but as trustee (the "Trustee") under the Indenture (as
defined), The Bank of New York (the "Working Capital Facility Provider"), the
Shipowner, certain other Subsidiary Guarantors (as defined in the Collateral
Agency Agreement) and Millenium Seacarriers, Inc., (the "Issuer");
WHEREAS:
A. The Shipowner is the absolute and unencumbered owner of the
100/100th shares in the ship ______________, more fully described in the First
Schedule hereto.
B. The Issuer has issued One Hundred Million United States
Dollars (U.S. $100,000,000) representing 100,000 units (the "Units"), each Unit
consisting of $1,000 principal amount at maturity of its 12% First Priority Ship
Mortgage Notes Due 2005 (the "Notes") and one warrant to purchase five shares of
common stock, par value $.01 per share of the Issuer, and whereas the Notes will
be issued in accordance with the terms of the Indenture dated as of July 15,
1998 among the Trustee, the Issuer, the Shipowner and certain other Subsidiary
Guarantors, and the Shipowner acknowledges that the Issuer is justly indebted up
to the principal amount of U.S. $100 Million to the Holders of the Notes on the
date hereof;
[C. A portion of the proceeds of the Notes have been lent by
the Issuer to the Shipowner and used to refinance the indebtedness of the
Shipowner respecting the Ship;] [INSERT IF APPLICABLE]
[C. Pursuant to the Escrow and Pledge Agreement dated as of
July 15, 1998 between the Issuer and The First National Bank of Maryland, as
Escrow Agent, the Issuer has deposited with the Escrow Agent a portion of the
net proceeds of the Offering of the Notes, to be used upon the satisfaction of
certain conditions including the delivery of this Deed to acquire additional
Mortgaged Vessels;]
D. There has, contemporaneously with the execution of this
Deed, been executed by the Shipowner in favor of the Mortgagee a Statutory
Mortgage (the "Mortgage") in account current form constituting a First Preferred
Statutory Mortgage of the Owner's 100/100th shares in the Ship;
<PAGE>
2
E. In accordance with the Indenture, the Shipowner has
[executed and delivered a Supplemental Indenture pursuant to which it has]
guaranteed (the "Guarantee") the payment in full of the principal of, interest
on, and premium, if any, in respect of the Notes, made an assignment to the
Trustee as collateral security of certain of its rights in respect to the Ship
and has agreed to execute and deliver the Mortgage and this Deed in favor of the
Mortgagee as security for its obligations under its Guarantee;
F. The Issuer has entered into a Credit Agreement (the
"Working Capital Facility Agreement") dated as of July 20, 1998 among the
Working Capital Facility Provider and the Issuer pursuant to which the Working
Capital Facility Provider has agreed to make available to the Issuer a revolving
line of credit, not to exceed at any one time outstanding Seven Million United
States Dollars (US $7,000,000), all loans thereunder (the "Working Capital
Loans") to bear interest at LIBOR, plus 1 1/2%, and to be repayable on or before
July 24, 1999;
G. The Shipowner [shall, concurrently with any capital draws
under the Working Capital Facility Agreement, execute and deliver] [has executed
and delivered] a Guaranty Agreement (a "Working Capital Guarantee") pursuant to
which it [shall guarantee] [has guaranteed] the payment in full of the principal
of, interest on, and premium, if any, in respect of the line of credit (the
"Working Capital Facility") made available pursuant to the Working Capital
Facility Agreement, [make] [made] an assignment to the Working Capital Facility
Provider as collateral security of certain of its rights with respect to the
Mortgaged Vessel and [shall agree] [has agreed] to execute and deliver the
Mortgage in favor of the Mortgagee as security for its obligations under its
Working Capital Guarantee; and
H. This Deed is supplemental to the Indenture and the Mortgage
aforesaid and to the security thereby created and except as otherwise defined
herein, terms defined in the executed Indenture are used herein as defined
therein and terms not defined in the Indenture and defined in the Collateral
Agency Agreement are used herein as defined in the Collateral Agency Agreement.
A copy of each of: (i) the Indenture , (ii) the Working Capital Facility
Agreement, (iii) the Working Capital Guarantee and (iv) the Collateral Agency
Agreement is attached hereto as Exhibit A, B, C and D, respectively, and made a
part hereof.
NOW, THEREFORE, THIS DEED WITNESSETH AND IT IS HEREBY
AGREED AS FOLLOWS:
In this Deed unless the context otherwise requires the "Ship"
means the ship described in the First Schedule hereto and includes any share or
interest therein and its engines, machinery, boats, tackle, outfit, spare gear,
fuel, consumable or other stores, belongings and appurtenances, whether on board
or ashore;
That, in consideration of the premises and of the additional
covenants herein contained and for other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, and in order to secure
the payment of the principal of, interest on and premium, if any, respecting the
Notes, the Working Capital Loans, the Obligations, fees, expenses and all other
sums due or otherwise secured under the Indenture, under the Working Capital
Guarantee or hereunder (all such principal, interest, premium and other amounts
hereby collectively called the "Indebtedness hereby secured"), and to secure the
due performance and observance of all the agreements and
<PAGE>
3
covenants in the Notes, the Indenture, the Working Capital Guarantee, the other
Security Agreements, and herein contained, the SHIPOWNER HEREBY MORTGAGES AND
CHARGES to and in favor of the Mortgagee all its interest, present and future,
in the Ship and, without prejudice to the generality of the foregoing, the
SHIPOWNER HEREBY ASSIGNS AND AGREES TO ASSIGN to the Mortgagee the SHIPOWNER's
interest in the earnings of the Ship, the insurances as hereinbefore defined.
IT IS DECLARED AND AGREED that the security created by this
Deed and the Mortgage shall be held by the Mortgagee as a continuing security
for the payment of the Indebtedness notwithstanding the liquidation, incapacity
or any change in the constitution of the Shipowner, or in the name or style
thereof and that the security so created shall not be affected in any way by any
time or indulgence granted to the Shipowner or by any variation, compromise or
release of any Shipowner's obligations under this Deed and the Mortgage and
shall not be satisfied by any intermediate payment or satisfaction of any part
of the amount hereby and thereby secured and that the security so created shall
be in addition to, and shall not in any way be prejudiced or affected by, any
collateral or other security now or hereafter held by the Mortgagee for all or
any part of the moneys hereby and thereby secured and that every power and
remedy given to the Mortgagee hereunder shall be in addition to and not a
limitation of any and every power or remedy vested in the Mortgagee under this
Deed and the Mortgage and that all powers so vested in the Mortgagee may be
exercised from time to time and as often as the Mortgagee may deem expedient.
ARTICLE I.
COVENANTS OF THE SHIPOWNER TO THE MORTGAGEE
SECTION 1: ACKNOWLEDGMENT OF DEBT; GOVERNING LAW. (a) The
Shipowner hereby acknowledges that pursuant to its Guarantee, it is justly
indebted (i) pursuant to its Guarantee to the Holders of the Notes in the
principal amount of up to One Hundred Million United States Dollars (U.S.
$100,000,000) and (ii) pursuant to its Working Capital Guarantee to the Working
Capital Facility Provider in the principal amount of up to $7,000,000 and will
pay or cause to be paid the Indebtedness hereby secured. The Shipowner will
observe, perform and comply with the covenants, terms and conditions herein,
express or implied, on its part to be observed, performed or complied with.
(b) This Deed and the Mortgage are intended to be a first
preferred mortgage under the laws of the Republic of Cyprus ("Cypriot law") and
as such shall be governed by Cypriot law. However, in the event of any conflict
between the substantive provisions of this Deed and the Mortgage on the one hand
and the Indenture on the other, the terms of the Indenture shall prevail,
provided they are consistent with Cypriot law.
SECTION 2: ORGANIZATION OF SHIPOWNER. (a) The Shipowner is a
corporation duly organized and existing under the laws of _____________________
and shall so remain during the life of this Deed and the Mortgage and so long as
each of the Indenture and the Working Capital Guarantee shall remain in effect
and any Obligations or any Working Capital Loans remain outstanding.
<PAGE>
4
(b) The Shipowner has full power and authority to own,
operate, charter and mortgage the Ship; all action necessary and required by law
for the execution and delivery of this Deed and the Mortgage has been duly and
effectively taken; and this Deed, the Mortgage and the Indebtedness hereby
secured is and will be the valid and enforceable obligation of the Shipowner in
accordance with its terms. All consents or approvals required in respect of this
Mortgage have been obtained and are in full force and effect.
SECTION 3: NO EXISTING LIENS. The Shipowner lawfully owns and
is lawfully possessed of the Ship free from any lien or encumbrance whatsoever
other than (a) liens for current crew's wages, (b) liens covered by valid
policies of insurance held by the Mortgagee and meeting the requirements of
Section 14 below of this Article I, (c) liens not covered by insurance incurred
in the ordinary course of business and not more than thirty days past due; and
(d) Permitted Liens, and will 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: PREFERRED MORTGAGE UNDER CYPRIOT LAW. The Ship is
duly documented in the name of the Shipowner under the laws and flag of the
Republic of Cyprus. The Shipowner will cause this Deed and the Mortgage to be
duly recorded in accordance with the provisions of The Merchant Shipping
(Registration of Ships, Sales and Mortgages) Law and the pertinent provisions of
the other laws of the Republic of Cyprus (the "Cypriot Maritime Law"), and will
otherwise comply with and satisfy all of the provisions of the Cypriot Maritime
Law in order to establish and maintain this Deed and the Mortgage, as at any
time amended, supplemented or assigned, as a first preferred mortgage lien
thereunder upon the Ship and upon all renewals, replacements and improvements
made in or to the same or any part thereof for the amount of the Indebtedness
hereby secured.
SECTION 5: NO UNLAWFUL OPERATION. The Shipowner will not cause
or permit the Ship to be operated in any manner contrary to law, and the
Shipowner will not engage in any unlawful trade or violate any law or carry any
cargo that will expose the Ship to penalty, forfeiture or capture, and will not
do, or suffer or permit to be done, anything which can or may injuriously affect
the registration or enrollment of the Ship under the laws and regulations of
Cyprus and will at all times at its own expense keep the Ship duly documented
thereunder, except in the case of any change of registry permitted by the
Indenture or hereby, in which case a mortgage will be recorded against the Ship
under the laws of any such new registry state.
SECTION 6: PAYMENT OF TAXES, ETC. The Shipowner will pay and
discharge when due and payable, from time to time, all taxes, assessments,
governmental charges, fines and penalties lawfully imposed on the Ship or any
income therefrom; PROVIDED that the Shipowner shall not be required to pay any
such tax, assessment or charge if the validity or amount thereof is concurrently
contested in good faith by appropriate proceedings, the Shipowner shall have set
aside on its books reserves in accordance with generally accepted accounting
principles in the United States consistently applied deemed by it adequate with
respect to such tax, assessment or charge and during the pendency of such
contest the Ship will not be subject to sale or forfeiture; and PROVIDED
FURTHER, however, that the Shipowner will pay or cause to be paid all such
taxes, assessments or charges forthwith upon the commencement of proceedings to
foreclose any lien which is attached as security therefor.
<PAGE>
5
SECTION 7: NO POWER TO CREATE LIENS. Neither the Shipowner,
any charterer, the Master of the Ship nor any other person has or shall have any
right, power or authority to create, incur or permit to be placed or imposed or
continued upon the Ship any lien or encumbrance whatsoever other than Permitted
Liens, liens for current crew's wages and salvage and the lien of this Deed and
the Mortgage.
SECTION 8: [RESERVED]
SECTION 9: DISCHARGE OF LIENS, ENCUMBRANCES, ETC. Except for
the lien of this Deed and the Mortgage, Permitted Liens 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 Ship
from arrest on account of such claim or lien, the Shipowner will not suffer to
be continued any lien, encumbrance or charge on the Ship, and in due course and
in any event, by the earlier of ninety (90) days after the same becomes due and
payable or twenty-one (21) days after being requested to do so by the Mortgagee,
will pay or cause to be discharged or make adequate provision for the
satisfaction or discharge of all claims or demands, or will cause the Ship to be
released or discharged from any lien, encumbrance or charge therefor.
SECTION 10: LIBEL. If a libel, complaint or similar process be
filed against the Ship or the Ship be otherwise attached, levied upon or taken
into custody by virtue of any legal proceeding in any court, the Shipowner will
promptly notify the Mortgagee thereof by cable, facsimile or telex, confirmed by
letter, at its address, as specified in this Deed, and within fifteen (15) days
of such filing, attachment, levy or taking into custody will cause the Ship to
be released and all liens thereon other than this Deed and the Mortgage and the
liens securing the obligations under the Security Agreements and the Working
Capital Guarantee to be discharged and will promptly notify the Mortgagee
thereof in the manner aforesaid. In the event the Ship is levied upon or taken
into custody or detained by any authority whatsoever, the Shipowner agrees
forthwith to notify the Mortgagee thereof by telex, confirmed by letter. The
Shipowner will notify the Mortgagee within forty-eight (48) hours after it has
become known to the Shipowner of any average or salvage incurred by the Ship.
SECTION 11: SHIP CONDITION. (a) The Shipowner at all times and
without cost or expense to the Mortgagee, will maintain and preserve, or cause
to be maintained and preserved, the Ship and all its equipment, outfit and
appurtenances, tight, staunch, strong, in good condition, working order and
repair and in all respects seaworthy and fit for its intended service, and will
keep the Ship, or cause her to be kept and maintained, in such condition as will
entitle her to maintain her current classification and rating for ships of the
same age and type, free of notices, recommendations or qualifications which
negatively affect such classification in [INSERT CURRENT CLASSIFICATION SOCIETY]
or other classification society of like standing approved by the Mortgagee. The
Ship shall, and the Shipowner covenants that she will, at all times comply with
all applicable laws, treaties and conventions, and rules and regulations issued
thereunder, and shall have on board as and when required thereby valid
certificates showing compliance therewith, including all Safety Management
Certificates required by the International Safety management Code (the "ISM
Code"). The Shipowner will not make, or permit to be made, any substantial
change in the structure, type or speed of the Ship or with respect to any of the
terms of the instruments of insurance or diminish the value of the Ship without
first receiving written approval thereof from the Mortgagee.
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6
(b) The Shipowner agrees to give the Mortgagee at least ten
(10) days notice of the actual date and place of any survey or drydocking in
order that the Mortgagee may have representatives present if desired. The
Shipowner agrees that at the Mortgagee's request it will satisfy the Mortgagee
that the expense of such survey or drydocking or work to be done thereat is
within Shipowner's financial ability and will not result in a claim or lien
against the Ship in violation of the provisions of this Mortgage.
(c) The Shipowner agrees to submit the Ship regularly to such
periodical or other surveys as may be required for classification purposes and
will promptly supply to the Mortgagee copies of all reports issued in respect
thereof.
SECTION 12: PROVISION OF INFORMATION AND DOCUMENTS.
(a) The Shipowner will at all reasonable times afford the
Mortgagee or its authorized representatives full and complete access to the Ship
for the purpose of inspecting the Ship and her cargo and papers and, at the
request of the Mortgagee, the Shipowner will deliver for inspection, copies of
any and all contracts and documents relating to the Ship, whether on board or
not.
(b) The Shipowner hereby agrees to promptly furnish to the
Mortgagee on demand, all charterparties or contracts of affreightment relating
to the Ship and full details as to the parties, times of delivery and the like
pertaining thereto.
(c) On the date hereof and on an annual basis, the Shipowner
shall obtain and provide the Mortgagee with a Certificate of Confirmation of
Class.
(d) The Shipowner agrees to assign to the Mortgagee
contemporaneously with the execution of this Mortgage any charters or earnings
of the Ship pursuant to the Indenture or the Supplemental Indenture.
(e) The Shipowner hereby appoints the Mortgagee
attorney-in-fact of the Shipowner, whether or not an event of default shall have
occurred or is continuing, to appear before governmental bodies, classification
societies and insurers and to demand and receive to the same extent that the
Shipowner itself might, all information and certificates respecting (i) the
organizational status of the Shipowner under the laws of its jurisdiction of
organization or any other jurisdiction in which it may have qualified to do
business, (ii) the status of the Ship under the laws and regulations of its
country of registration, and its compliance with the requirements thereof, and
(iii) the state of the records of the Ship or of the Shipowner in respect of the
Ship in any classification society with which the Ship may be classed or of any
company, association or club by whom the Ship or the Shipowner in respect of the
Ship may be insured; and the Shipowner hereby agrees that the Mortgagee may
execute its powers as attorney-in-fact as aforesaid through its agents,
representatives and attorneys. This power of attorney is coupled with an
interest and shall be irrevocable as long as any Indebtedness hereby secured
remains outstanding.
SECTION 13: NO TRANSFER OF FLAG; SALE; CHARTER. (a) The
Shipowner will not transfer or change the flag or port of documentation of the
Ship (except to Panama, the Bahamas, Liberia, the Cayman Islands, Isle of Man,
the Hellenic Republic or any other jurisdiction which at the time is generally
deemed acceptable by institutional lenders to the shipping industry, as
determined in good faith by the Board of Directors, as
<PAGE>
7
permitted by the terms of the Indenture, PROVIDED, HOWEVER, that there shall at
all times exist an effective Mortgage on the Ship, notwithstanding such transfer
or change of flag or port) without the prior written consent of the Mortgagee
(which consent shall contain such terms and conditions as the Mortgagee shall
reasonably conclude are necessary, including Opinions of Counsel, filings and
documentation, to ensure the continuing first preferred perfected Lien of the
Mortgagee for the benefit of the Holders and the Working Capital Facility
Provider in respect of the Ship and the other Collateral). Any such written
consent to any one transfer or change of flag or port of documentation shall not
be construed to be a waiver of this provision with respect to any subsequent
proposed transfer or change of flag or port of documentation.
(b) Without the prior written consent of the Mortgagee, the
Shipowner will not in any manner (i) sell, transfer or mortgage the Ship other
than in accordance with Section 4.07 of the Indenture or (ii) enter into any
charterparty, contract of affreightment, bill of lading or other engagement of
affreightment or for the carriage or transportation of cargo or other operation
of any kind of the Ship other than the charterparty existing on the date hereof.
SECTION 14: INSURANCES. (a) The Shipowner will cause to be
carried and maintained on or in respect of the Ship without expense to the
Mortgagee insurances, payable in U.S. Dollars, in amounts, against risks
(including marine hull and machinery insurance, marine protection and indemnity
insurance, war risks insurance and liability arising out of pollution and the
spillage or leakage of cargo and cargo liability insurance) and in a form which
is substantially equivalent to the coverage carried by other responsible and
experienced companies engaged in the operation of ships similar to the Ship and
for similar purposes and with insurance companies, underwriters, funds, mutual
insurance associations or clubs of recognized standing. Hull and Machinery and
war risk insurance shall be carried in an amount which is not less than the
greater of the full commercial value of the Ship or 120% of the Ship Percentage
of the Indebtedness hereby secured outstanding from time to time. Protection and
indemnity insurance as well as required insurance against liability for
pollution or spillage or leakage of cargo which shall have limitations of
liability of not less than $500 million, shall be in the highest amount from
time to time available for ships of the same type, size, age and flag as the
Ship. The Shipowner will reimburse the Mortgagee for all premiums and other
amounts paid by the Mortgagee in connection with mortgagee's interest insurance
and additional peril pollution or equivalent cover in favor of the Mortgagee
which shall insure the interest of the Mortgagee regardless of any breach or
violation by the Shipowner or of any other person of any representation,
warranty, covenant, condition, declaration or promise contained in any relevant
policy and which shall be obtained through an insurance broker reasonably
acceptable to the Mortgagee that is different from the insurance brokers
utilized for all other insurances and reinsurances provided for hereunder. None
of the aforementioned insurance shall provide for a deductible amount in excess
of One Million United States Dollars (U.S. $1,000,000) per occurrence (or
equivalent in any other currency or currency unit).
In the case of all marine, navigating and war risk hull and
machinery policies, the Shipowner will cause the Mortgagee to be named as an
additional insured and will use all reasonable efforts (and cause its insurance
broker to use all reasonable efforts) to cause the insurers under such policies
to waive any liability of the Mortgagee for premiums, calls payable, assessments
or advances under such policies and for the representations and warranties made
therein by the Shipowner or any other person.
<PAGE>
8
The Shipowner will also, without expense to the Mortgagee,
have the Ship fully entered in a protection and indemnity association or club in
good standing and acceptable to the Mortgagee. The Shipowner will cause such
association or club to issue to the Mortgagee a Letter of Undertaking in a form
satisfactory to the Mortgagee.
In the case of all protection and indemnity insurance
(including insurance against liability arising out of pollution), the Shipowner
will cause the Mortgagee to be named as an additional insured and will take such
actions as shall be necessary so that the Mortgagee shall not be liable under
such policies for payment of any premium, club call, assessment or advance or
for the representations and warranties made therein by the Shipowner or any
other person. Unless the Mortgagee shall have otherwise directed, any loss
involving damage to the Ship which is not in excess of One Million United States
Dollars (U.S. $1,000,000) may be paid directly for repair or salvage or to
reimburse the Shipowner for the same. The Shipowner will cause its brokers to
agree to advise the Mortgagee promptly of any default in the payment of any
premium and of any other act or omission on the part of the Shipowner of which
they have knowledge and which might invalidate or render unenforceable, in whole
or in part, any insurance on the Ship.
The Shipowner will also cause such brokers to agree to mark
their records and to advise the Mortgagee by cable, telex or facsimile
transmission, at least seven (7) business days' prior to the expiration date of
any insurance carried pursuant to this Mortgage, whether such insurance has been
renewed or replaced with new insurance which complies with the provisions of
this Section 14 and the other provisions of this Mortgage.
(b) The Shipowner will assign to the Mortgagee
contemporaneously with the execution of the Mortgage any policies of insurance
in respect of the Ship pursuant to an Insurance Assignment.
(c) Unless the Mortgagee shall otherwise agree, all insurance
must name the Mortgagee as an assured, but without liability for premiums, calls
or assessments, and all amounts of whatsoever nature payable under any insurance
must be payable to the Mortgagee for distribution first to itself and thereafter
to the Shipowner or others as their interests may appear. Nevertheless, until
otherwise required by the Mortgagee by notice to the underwriters, (i) amounts
payable under any insurance on the Ship with respect to protection and indemnity
risks may be paid directly to the Shipowner to reimburse it for any loss, damage
or expense incurred by it and covered by such insurance or to the person to whom
any liability covered by such insurance has been incurred; PROVIDED, HOWEVER,
that if the Mortgagee shall give notice that the Shipowner is in default
hereunder, all such payments shall be made to the Mortgagee until the
Indebtedness hereby secured has been fully discharged, and (ii) concerning
amounts payable under any insurance with respect to the Ship involving any
damage to the Ship not constituting an actual or constructive or an agreed or
compromised total loss, the underwriters may pay direct for the repair, salvage
or other charges involved or, if the Shipowner shall have first fully repaired
the damage or paid all of the salvage or other charges, may pay the Shipowner as
reimbursement therefor; PROVIDED, HOWEVER, that if such amounts (including any
franchise or deductible) are in excess of One Million United States Dollars
($1,000,000), the underwriters shall make such payment to the Mortgagee. All
payments of insurance shall be made to the Mortgagee if an Event of Default
shall have occurred or any event which with the giving of notice or the lapse of
time, or both, would constitute an Event of Default.
<PAGE>
9
(d) All amounts paid to the Mortgagee in respect of any
insurances on the Ship shall be disposed of as follows:
(i) any amount which might have been paid at the time, in
accordance with the provisions of paragraph (c) above, directly to the
Shipowner or others as their interest may appear shall be paid by the
Mortgagee to, or as directed by, the Shipowner;
(ii) all amounts paid to the Mortgagee in respect of an Event
of Loss shall be paid in accordance with Section 3.3(d) of the
Collateral Agency Agreement;
(iii) so long as no Event of Default shall have occurred and
be continuing, all other amounts paid to the Mortgagee in respect of
any insurance on the Ship shall be applied to the making of needed
repairs or other work on the Ship, or to the payment of other claims
incurred by the Shipowner relating to the Ship, or may be paid to the
Shipowner or whomsoever may be entitled thereto;
(iv) all remaining amounts paid to the Mortgagee in respect of
any insurance on the Ship may, in the Mortgagee's sole discretion, be
held and applied in accordance with the Collateral Agency Agreement;
(v) if an Event of Default shall have occurred and be
continuing, any amounts shall be applied in accordance with Section 3.7
of the Collateral Agency Agreement.
(e) In the event that any claim or lien is asserted against
the Ship for loss, damage or expense which is covered by insurance required
hereunder and it is necessary for the Shipowner to obtain a bond or supply other
security to prevent arrest of the Ship or to release the Ship from arrest on
account of such claim or lien, the Mortgagee, on request of the Shipowner, may,
in the sole discretion of the Mortgagee, assign to any person, firm or
corporation executing a surety or guarantee bond or other Agreement to save or
release the Ship from such arrest, all right, title and interest of the
Mortgagee in and to said insurance covering said loss, damage or expense, as
collateral security to indemnify against liability under said bond or other
agreement.
(f) The Shipowner shall deliver to the Mortgagee certified
copies or originals on the date hereof and annually at the times the Officers'
Certificates are required to be delivered under the Indenture, of all
certificates of entry, cover notes, binders and evidences of insurance and
policies for the purpose of inspection or safekeeping. In addition, the
Shipowner will furnish the Mortgagee concurrently with the execution hereof and
thereafter at intervals of not more than twelve (12) calendar months, a detailed
report by independent marine insurance brokers, selected by the Mortgagor and
acceptable to the Mortgagee, describing in reasonable detail the insurance
pursuant to this Section 14 and stating that in the opinion of such brokers such
insurance complies in all material respects with the terms of this Section 14
and is common and customary for types of insurances and coverage generally
required by mortgagees from prudent owners and operators of ships similar to the
Ship and engaged in trades similar to the trades in which the Ship is engaged.
(g) The Shipowner agrees that it will not execute or permit or
willingly allow to be done any act by which any insurance may be suspended,
impaired or
<PAGE>
10
canceled, and that it will not permit or allow the Ship to undertake any voyage
or run any risk or transport any cargo which may not be permitted by the
policies in force, without having previously insured the Ship by additional
coverage to extend to such voyages, risks or cargoes with insurance satisfactory
to the Mortgagee and the Shipowner agrees (without limiting the foregoing) that
it will not permit the Ship to enter or trade to any zone which is declared a
war zone by any government or by the War Risk Insurers for the Ship unless the
Mortgagee shall have first given its consent thereto in writing which Mortgagee
shall have full power to withhold) and there shall have been effected by the
Shipowner and at its expense such special insurance as the Mortgagee may
require.
(h) In case any underwriter proposes to pay less on any claim
than the amount thereof, the Shipowner shall forthwith inform the Mortgagee and
the Mortgagee shall have the right to negotiate and agree to any compromise.
(i) The Shipowner will comply with and satisfy all of the
provisions of any applicable law, convention, regulation, proclamation or order
concerning financial responsibility for liabilities imposed on the Shipowner or
the Ship with respect to pollution by any state or nation or political
subdivision thereof and will maintain all certificates or other evidence of
financial responsibility as may be required by any such law, convention,
regulation, proclamation or order with respect to the trade which the Ship is
from time to time engaged in and the cargo carried by it.
(j) All insurance required under this Deed and the Mortgage
shall be placed and kept with such insurance companies or other insurance
underwriters as shall be reasonably acceptable to the Mortgagee.
SECTION 15: REIMBURSEMENT FOR EXPENSES. (a) The Shipowner will
reimburse the Mortgagee promptly, with interest at the interest rate applicable
to the Notes per calendar month set forth in the Indenture for any and all
expenditures which the Mortgagee may from time to time make, lay out or expend
in providing such protection in respect of insurance, discharge or purchase of
liens, taxes, dues, assessments, governmental charges, fines and penalties
lawfully imposed, repairs, attorneys' fees, necessary translation fees for
documents made in a language other than English and other matters as the
Shipowner is obligated herein to provide, but fails to provide. Such obligation
of the Shipowner to reimburse the Mortgagee shall be an additional indebtedness
due from the Shipowner, secured by this Mortgage, and shall be payable by the
Shipowner on demand. The Mortgagee, though privileged to do so, shall be under
no obligation to the Shipowner to make any such expenditures, nor shall the
making thereof relieve the Shipowner of any default in that respect.
SECTION 16: PERFORMANCE OF CHARTER. The Shipowner will fully
perform, or cause to be performed, any and all charterparties and contracts of
affreightment which are, or may be, entered into with respect to the Ship.
SECTION 17: EVENT OF LOSS. (a) So long as no Event of Default
shall have occurred and be continuing, in the event of an actual, constructive,
agreed or compromised total loss of the Ship, any adjustment or compromise of
such loss by the Shipowner will be at the highest amount reasonably obtainable,
and insurance or other payments for such loss shall be applied in accordance
with Section 3.3(d) of the Collateral Agency Agreement.
<PAGE>
11
(b) This Deed and the Mortgage shall extend to and constitute
a lien upon, and the Shipowner hereby grants the Mortgagee a security interest
in, all proceeds resulting from any of the events mentioned in subsection (a)
above as security for the Indebtedness hereby secured.
SECTION 18: FINANCING STATEMENTS. The Shipowner hereby
irrevocably authorizes the Mortgagee to file and record financing statements in
any jurisdiction where the same may be in force and to make any filings or
recordings under any legislation having similar effect for the purpose of
perfecting or continuing the perfection of the security interests granted by the
Shipowner to the Mortgagee herein and in the Mortgage without obtaining the
signature of the Shipowner thereto. The Shipowner hereby irrevocably authorizes
the Mortgagee to execute any such financing statement or similar document in the
name of the Shipowner.
SECTION 19: INCORPORATION BY REFERENCE. All of the covenants,
representations and agreements on the part of the Issuer as guaranteed by the
Shipowner and of the Shipowner, which are set forth in, and all of the rights,
powers and remedies of the Mortgagee which are provided for in, the Mortgage,
the Indenture, the Working Capital Facility Agreement, the Collateral Agency
Agreement, the other Security Agreements, the Working Capital Facility
Agreement, the Collateral Agency Agreement and the Notes, together with all
other provisions of the Indenture and the Notes, are incorporated herein by
reference with the same force and effect as though set forth at length in this
Deed.
SECTION 20: REQUISITION OF TITLE. In the event that the title
or ownership of the Ship shall be requisitioned, purchased or taken by any
government of any country or any department, agency or representative thereof,
or any authority acting or purporting to act under color of government, pursuant
to any present or future law, proclamation, decree, order or otherwise, the lien
of this Mortgage shall be deemed to attach to the claim for compensation of the
Shipowner for its interest in the Ship from such government or department,
agency or representative, or from any other source, and the compensation,
purchase price, reimbursement or award for such requisition, purchase or other
taking of such title or ownership due the Shipowner from such government,
department, agency or representative or other source, is hereby declared payable
to the Mortgagee, who shall be entitled to receive the same, and shall apply the
same as provided in Section 3.3(d) of the Collateral Agency Agreement; and in
the event of any such requisition, purchase or taking, the Shipowner shall
promptly execute and deliver to the Mortgagee such documents, if any, and shall
promptly do and perform such acts, if any, as in the opinion of the Mortgagee
may be necessary or useful to facilitate or expedite the collection by the
Mortgagee of such compensation, purchase price, reimbursement or award.
ARTICLE II.
Events of Default and Remedies.
SECTION 1: EVENTS OF DEFAULT. In case any one or more of the
following events, herein termed "Events of Default", shall have occurred and be
continuing:
(a) the statements in Sections 2 and 3 of Article I shall
prove to be untrue;
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12
(b) a default shall have occurred in the due and punctual
observance and performance of any of the provisions of Sections 4, 5,
9, 10, 14(a), 14(b), 14(c), 14(g), 14(i), 16, 17 and 20 of Article I
hereof;
(c) a default by the Shipowner in the observance or
performance of any agreement under this Deed or the Mortgage shall have
occurred and shall remain unremedied for twenty-one (21) days after
written notice thereof shall have been given to the Shipowner by the
Mortgagee; or
(d) an Event of Default under the Indenture, the Notes, or the
Working Capital Facility Agreement;
then, and in each and every such case, the Mortgagee shall have the right to:
(1) Declare all the then unpaid Indebtedness hereby secured to
be due and payable immediately, and upon such declaration the same,
including interest to date of declaration, shall become and be
immediately due and payable;
(2) Exercise all of the rights and remedies in foreclosure and
otherwise given to mortgagees by the provisions of the laws of Cyprus
or of any other jurisdiction where the Ship may be found and exercise
all of its rights and remedies as attorney-in-fact or otherwise under
this Deed and the Mortgage;
(3) Bring suit at law, in equity or in admiralty, as it may be
advised, to recover judgment for the Indebtedness hereby secured, and
collect the same out of any and all property of the Shipowner whether
covered by this Deed or the Mortgage or otherwise;
(4) Take and enter into possession of the Ship, at any time,
wherever the same may be, without legal process and without being
responsible for loss or damage, and the Shipowner or other person in
possession forthwith upon demand of the Mortgagee shall surrender to
the Mortgagee possession of the Ship and the Mortgagee may do all acts
necessary, without being responsible for loss or damage, including
hold, lay-up, lease, charter, operate or otherwise use such Ship 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 Ship 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 Ship and charging upon
all receipts from the use of the Ship or from the sale thereof by court
proceedings or pursuant to Subsection (5) next following, all costs,
expenses, charges, damages or losses by reason of such use; provided,
however, that any amount collected by the Mortgagee during its
management and operation of the Ship after deducting such expenses,
shall be appropriated against the amount of the mortgaged debt secured
by the Mortgage and this Deed and on its final payment, the management
and operation of the Ship by the Mortgagee shall come to an end and if
at any time the Mortgagee shall avail itself of the right herein given
it to take the Ship, the Mortgagee shall have the right to dock the
Ship 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. At any time when the
<PAGE>
13
Mortgagee shall assume the management of the Ship pursuant to this
Subsection (4), the Mortgagee shall provide notice of such assumption
of management to the Registrar of Cyprus Ships;
(5) Take and enter into possession of the Ship, at any time,
wherever the same may be, without legal process, and if it seems
desirable to the Mortgagee and without being responsible for loss or
damage, sell such Ship, at any place and at such time as the Mortgagee
may specify and in such manner as the Mortgagee may deem advisable,
free from any claim by the Shipowner in admiralty, in equity, at law or
by statute, at public or private sale, by sealed bids or otherwise, by
mailing, by air or otherwise, notice of such sale, whether public or
private, addressed to the Shipowner at its last known address, fourteen
(14) days prior to the date fixed for entering into the contract of
sale and by first publishing notice of any such public sale for ten
(10) consecutive days, in a newspaper published in the City of New
York, State of New York or if the place of sale should not be in New
York City then by publication of a similar notice at or near the place
of sale; in the event that the Ship shall be offered for sale by
private sale, no newspaper publication of notice shall be required, nor
notice of adjournment of sale; sale may be held at such place and at
such time as the Mortgagee by notice may have specified, or may be
adjourned by the Mortgagee from time to time by announcement at the
time and place appointed for such sale or for such adjourned sale, and
without further notice or publication the Mortgagee may make any such
sale at the time and place to which the same shall be so adjourned; and
any sale may be conducted without bringing the Ship to the place
designated for such sale and in such manner as the Mortgagee may deem
to be for its best advantage, and the Mortgagee may become the
purchaser at any judicial sale.
(6) Take and receive all insurance proceeds to which it shall
become entitled by reason of the existence of an Event of Default and
any acceleration of the Notes or of any amounts owed under the Working
Capital Guarantee.
SECTION 2: SALE DIVESTS TITLE. Any sale of the Ship made in
pursuance of this Deed, 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 therein and thereto, and shall bar the
Shipowner, its successors and assigns, and all persons claiming by, through or
under them. No purchaser shall be bound to inquire whether notice has been
given, or whether any default has occurred, or as to the propriety of the sale,
or as to the application of the proceeds thereof. In case of any such sale, the
Mortgagee, if it is the purchaser, shall be entitled for the purpose of making
settlement or payment for the property purchased to use and apply the
Indebtedness hereby secured in order that there may be credited against the
amount remaining due and unpaid thereon the sums payable out of the net proceeds
of such sale to the Mortgagee after allowing for the costs and expense of sale
and other charges; and thereupon such purchaser shall be credited, on account of
such purchase price, with the net proceeds that shall have been so credited upon
the Indebtedness hereby secured. At any such judicial sale, the Mortgagee may
bid for and purchase such property, may credit against payment of the purchase
price thereof all sums due under the Notes or the Working Capital Guarantee and
upon compliance with the terms of sale may hold, retain and dispose of such
property without further accountability therefor.
<PAGE>
14
SECTION 3: MORTGAGEE'S POWER OF ATTORNEY-SALES. The Mortgagee
is hereby appointed attorney-in-fact of the Shipowner, upon the happening of any
Event of Default, to execute and deliver to any purchaser aforesaid, and is
hereby vested with full power and authority to make, in the name and on behalf
of the Shipowner, a good conveyance of the title to the Ship so sold. In the
event of any sale of the Ship, under any power herein contained, the Shipowner
will, if and when required by the Mortgagee, execute such form of conveyance of
the Ship as the Mortgagee may direct or approve.
SECTION 4: MORTGAGEE'S POWER OF ATTORNEY--COLLECTION. The
Mortgagee is hereby appointed attorney-in-fact of the Shipowner upon the
happening of any Event of Default, in the name and on behalf 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
Ship and all amounts due from underwriters under any insurances thereon as
payment of losses or as return premiums or otherwise, salvage awards and
recoveries, recoveries in general average or otherwise, and all other sums due
or to become due at the time of the happening of any Event of Default in respect
of the Ship, or in respect of any insurances thereon, from any person
whomsoever, and to make, give and execute in the name of the Shipowner
acquittances, 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 other instruments in writing
with respect to the foregoing.
SECTION 5: MORTGAGEE POWER OF ATTORNEY--DISCHARGE OF LIENS.
The Shipowner authorizes and empowers the Mortgagee or its appointees or any of
them to appear in the name of the Shipowner, its successors and assigns, in any
court of any country or nation of the world where a suit is pending against the
Ship because of or on account of any alleged lien against the Ship from which
the Ship has not been released and to take such proceedings as to them or any of
them as may seem proper towards the defense of such suit and the purchase or
discharge of such lien, and all expenditures made or incurred by them or any of
them for the purpose of such defense or purchase or discharge shall be a debt
due from the Shipowner, its successors and assigns, to the Mortgagee, shall be
payable on demand and shall be secured by the lien of this Deed and the Mortgage
in like manner and extent as if the amount and description thereof were written
herein.
SECTION 6: DELIVERY OF SHIP. Whenever any right to enter and
take possession of the Ship accrues to the Mortgagee, it may require the
Shipowner to deliver, and the Shipowner shall on demand, at its own cost and
expense, deliver to the Mortgagee the Ship as demanded. If the Mortgagee shall
be entitled to take any legal proceedings 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 Ship and of the freights, hire, earnings,
issues, revenues, income and profits due or to become due and arising from the
operation thereof.
SECTION 7: INDEMNIFICATION. The Shipowner covenants that upon
the happening of any one or more of the Events of Default, then, upon written
demand of the Mortgagee, the Shipowner will pay to the Mortgagee the whole
amount due and payable in respect of the Indebtedness hereby secured; and in
case the Shipowner shall fail to pay the same forthwith upon such demand, the
Mortgagee shall be entitled to recover judgment for the whole amount so due and
unpaid, together with such further amounts as shall be sufficient to cover the
reasonable compensation to the Mortgagee's agents,
<PAGE>
15
attorneys and counsel and any necessary advances, expenses and liabilities made
or incurred by it hereunder. All moneys collected by the Mortgagee under this
Section 7 shall be applied by the Mortgagee in accordance with the provisions of
Section 3.7 of the Collateral Agency Agreement.
SECTION 8: EVERY POWER CUMULATIVE. Each and every power and
remedy herein given to the Mortgagee shall be cumulative and shall be in
addition to every other power and remedy herein given or now or hereafter
existing at law, in equity, in 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
Mortgagee, and the exercise or the beginning of the exercise of any 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 by the
Mortgagee in the exercise of any right or power or in the pursuance of any
remedy accruing upon any default as above defined shall impair any such right,
power or remedy or be construed to be a waiver of any such Event of Default or
to be an acquiescence therein; nor shall the acceptance by the Mortgagee of any
security or of any payment of or on account of the Indebtedness hereby secured
maturing after any Event of Default or of any payment on account of any past
default be construed to be a waiver of any right to take advantage of any future
Event of Default or of any past Event of Default not completely cured thereby.
No consent, waiver or approval of the Mortgagee shall be deemed to be effective
unless in writing and duly signed by authorized signatories of the Mortgagee.
SECTION 9: CURE OF DEFAULTS. Subject to the terms of the
Indenture, if at any time after an Event of Default and prior to the actual sale
of the Ship by the Mortgagee or prior to any enforcement or foreclosure
proceedings, the Shipowner offers completely to cure all Events of Default and
to pay all expenses, advances and damages to the Mortgagee consequent on such
Events of Default, with interest with respect to the Shipowner's obligations as
provided herein or in the Indenture or the Working Capital Facility Agreement as
set forth therein, then the Mortgagee may, but shall not be required to, accept
such offer and payment and restore the Shipowner to its former position, but
such action, if taken, shall not affect any subsequent Event of Default or
impair any rights consequent thereon.
SECTION 10: RESTORATION. In case the Mortgagee shall have
proceeded to enforce any right, power or remedy 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 Deed, and all rights,
remedies and powers of the Mortgagee shall continue as if no such proceedings
had been taken.
SECTION 11: DISTRIBUTION OF PROCEEDS. The proceeds of any sale
of the Ship and the net earnings of any charter operation or other use of the
Ship and any and all other moneys received by the Mortgagee pursuant to or under
the terms of this Mortgage or in any proceedings hereunder, the application of
which has not elsewhere herein been specifically provided for, shall be applied
in accordance with Section [6.10] of the Indenture and Section 3.3(d) of the
Collateral Agency Agreement.
<PAGE>
16
SECTION 12: QUIET ENJOYMENT. Until one or more of the Events
of Default hereinabove described shall happen, the Shipowner (a) shall be
suffered and permitted to retain actual possession and use of the Ship and (b)
shall have the right, from time to time, in its discretion, and without
application to the Mortgagee subject to the terms of the Indenture, and without
obtaining a release thereof by the Mortgagee, to dispose of, free from the lien
hereof, any boilers, engines, machinery, masts, spars, sails, rigging, boats,
anchors, chains, tackle, apparel, drills, furniture, fittings or equipment or
any other appurtenances of the Ship that are no longer useful, necessary,
profitable or advantageous in the operation of the Ship, first or simultaneously
replacing the same by new boilers, engines, machinery, masts, spars, sails,
rigging, boats, anchors, chains, tackle, drills, apparel, furniture, fittings,
equipment, or other appurtenances of substantially equal value to the Shipowner,
which shall forthwith become subject to the lien of this Deed and the Mortgage
as a preferred mortgage thereon.
SECTION 13: NO WAIVER OF PREFERRED STATUS (a) If any provision
of this Deed or the Mortgage should be deemed invalid or shall be deemed to
affect adversely the preferred status of this Deed or the Mortgage under any
applicable law, such provision shall cease to be a part of this Deed and the
Mortgage without affecting the remaining provisions, which shall remain in full
force and effect.
(b) In the event that the Indenture, the Guarantee, the
Working Capital Facility Agreement, the Working Capital Guarantee, the
Collateral Agency Agreement, this Deed, the Mortgage or any of the documents or
instruments which may from time to time be delivered hereunder or thereunder or
any provision hereof or thereof shall be deemed invalidated by present or future
law of any nation or by decision of any court, or if any third party shall fail
or refuse to recognize any of the powers granted to the Mortgagee hereunder when
it is sought to exercise them, this shall not affect the validity and/or
enforceability of all or any other parts of the Indenture, the Guarantee, the
Working Capital Facility Agreement, the Working Capital Guarantee, the
Collateral Agency Agreement, this Deed, the Mortgage or such documents or
instruments and, in any such case, the Shipowner covenants and agrees that, on
demand, it will execute and deliver such other and further agreements and/or
documents and/or instruments and do such things as the Mortgagee in its sole
discretion may deem to be necessary to carry out the true intent of this Deed
and the Mortgage and of the obligations secured hereby.
(c) Anything herein to the contrary notwithstanding, it is
intended that nothing herein shall waive the preferred status of this Deed or
the Mortgage and that, if any provision or portion thereof herein shall be
construed to waive the preferred status of this Deed or the Mortgage, then such
provision to such extent shall be void and of no effect.
SECTION 14: VENUE. In the event of any legal proceedings,
Section 7.12 of the Collateral Agency Agreement shall apply. Notwithstanding
Section 7.12 of the Collateral Agency Agreement, the Mortgagee is free to
initiate proceedings before any other court worldwide where the Ship may be
found, and the Shipowner hereby expressly and irrevocably consents to the
jurisdiction of any court in any jurisdiction whatsoever where the Ship may at
any time be located for the purpose of the foreclosure of this Mortgage, the
sale of the Shipowner's interest in the Ship or the enforcement of any other
remedy or right hereunder, and hereby expressly and irrevocably submits the
person of the Shipowner and its interests in the Ship to the jurisdiction of any
such court in any such action or proceeding.
<PAGE>
17
ARTICLE III.
Sundry Provisions.
SECTION 1: BINDING ON SUCCESSORS. All of the covenants,
promises, stipulations and agreements of the Shipowner in this Deed and the
Mortgage contained shall bind the Shipowner and its successors and assigns and
shall inure to the benefit of the Mortgagee and its respective successors and
assigns. In the event of any assignment or transfer of this Deed or the Mortgage
to the extent permitted by the Indenture, the term "Mortgagee", as used in this
Deed, shall be deemed to mean any such assignee or transferee.
SECTION 2: EXERCISE BY AGENTS. Wherever and whenever herein
any right, power or authority is granted or given to the Mortgagee, such right,
power or authority may be exercised in all cases by the Mortgagee or such agent
or agents as it may appoint, and the act or acts of such agent or agents when
taken shall constitute the act of the Mortgagee hereunder.
SECTION 3: NOTICES. Any notice or other communication to be
given pursuant hereto shall be in the manner provided in the Indenture and
addressed as follows:
If to the Mortgagee, to
The First National Bank of Maryland, as
Collateral Agent, Trustee and Mortgagee
Corporate Trust Department
25 South Charles Street
Baltimore, MD 21201
Telephone: 410-244-4224
Telefax: 410-244-4236
Telex:
If to the Shipowner, to
__________________________
__________________________
__________________________
__________________________
Telephone:
Telefax:
Telex:
or at such other address as either party may notify to the other in writing.
SECTION 4: TITLES AND SECTION HEADINGS. The titles and section
headings in this Mortgage are for convenience only and shall not affect the
construction hereof.
<PAGE>
18
SECTION 5: PAYMENT OF INTEREST AND THE REPAYMENT OF PRINCIPAL.
The mode of payment of interest and the repayment of principal that constitute
the Indebtedness hereby secured is set out in Paragraph 2 of the Notes (a form
of which is included in the Rule 144A/Regulation S Appendix to the Indenture)
and in [ADD APPLICABLE SECTION] of the Working Capital Facility Agreement.
<PAGE>
19
IN WITNESS WHEREOF, the Shipowner has caused this Deed on the
MV [NAME OF SHIP] to be duly executed the day and year first above written.
THE FIRST SCHEDULE HEREINBEFORE REFERRED TO:
[Name of ship]
_________________ registered at the Port of ______ under IMO
Number _______.
SIGNED, SEALED AND DELIVERED [NAME OF SHIPOWNER]
AS A DEED
by__________________________
the duly authorized ________
____________________________ By:_________________________
for and on behalf of _______ Name:
in the presence of _________ Title:
THE FIRST NATIONAL BANK OF
SIGNED, SEALED AND DELIVERED MARYLAND
AS A DEED
by__________________________
the duly authorized ________
____________________________ By:_________________________
for and on behalf of _______ Name:
in the presence of _________ Title:
<PAGE>
20
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this ____ day of ______, _____, before me personally
appeared _______________, to me known, who, being by me duly sworn, did depose
and say that he/she resides at __________________, ______________,
_________________; that he/she is the Attorney-in-Fact of
_______________________ a ___________ corporation, the company described in and
which executed the foregoing instrument; that he/she signed his/her name thereto
pursuant to a power of attorney granted by the Board of Directors of said
corporation and that the foregoing instrument is the act and deed of said
corporation.
-------------------------
NOTARY PUBLIC
COMMONWEALTH OF THE BAHAMAS
FORM NO. (j)-1 MORTGAGE (to Secure Account Current, &c.) (Body Corporate)
WITH THE CONSENT OF
THE BOARD OF TRADE
<TABLE>
<CAPTION>
- - - - ----------------------------------------------------------------------------------------------------------------------------
Official No. Name of Ship No., Year and Port of Registry
- - - - ----------------------------------------------------------------------------------------------------------------------------
- - - - ----------------------------------------------------------------------------------------------------------------------------
Metric Units
- - - - ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Length from forepart of stem to the aft side of the head of the stern post............
Main breadth to outside of plating....................................................
Depth in hold from tonnage deck to ceiling amidships..................................
</TABLE>
- - - - -------------------------------------------------------------------------------
Whether a Sailing, Steam or Motor Ship Horse Power of Engines, if any
- - - - -------------------------------------------------------------------------------
- - - - -------------------------------------------------------------------------------
Number of Tons
- - - - -------------------------------------------------------------------------------
Gross.........................................................................
Register......................................................................
- - - - -------------------------------------------------------------------------------
and as described in more detail in the Certificate of the Surveyor and the
Register Book.
- - - - --------------------------------------------------------------------------------
Whereas (a) Now we the (b)___________________ in consideration of the premises
for ourselves and our successors, covenant with the said(c)___________________
and (d)___________________ assigns, to pay to him or them or it the sums for the
time being due on this security, whether by way of principal or interest, at the
times and manner aforesaid. And for the purpose of better securing to the said
(c) ___________________ the payment of such sums as aforesaid, we do hereby
mortgage to the said (c)___________________ 64/64 shares, of which we are the
Owners in the Ship above particularly described, and in her boats and
appurtenances.
Lastly, we for ourselves and our successors, covenant with the said
(c)___________________ and (d)___________________ assigns that we have power to
mortgage in manner aforesaid the above-mentioned shares, and that the same
___________________ are free from incumbrances (e).
In witness whereof we have hereunto caused this mortgage to be executed as a
deed on our behalf this ____ day of _____ One thousand nine hundred and ninety
eight ___________________ was affixed hereunto in the presence of (b)
____________________________ Per: ____________________________
Witness Director
- - - - --------------------------------------------------------------------------------
(a) Here state by way of recital that there is an account current between the
Mortgagor (describing the company and giving its address), and the Mortgagee
(giving address and description--if the Mortgagee is a Body Corporate the full
title and address must be given, and if Joint Mortgagees are concerned they must
be so described), and describe the nature of the transaction so as to show how
the amount of principal and interest due at any given time is to be ascertained,
and the manner and time of payment. (B) Name of the Company. (C) Full name of
Mortgagee. (D) "his", "theirs" or "its". (e) If any prior incumbrance add, "save
as appears by the Registry of the said Ship". (b) Signatures and description of
witnesses, i.e., Directors, Secretary, etc. (as the case may be).
NOTE:--The prompt registration of a Mortgage Deed at the Port of Registry of the
Ship is essential to the security of Mortgagee, as a Mortgage takes its priority
form the date of production for registry, NOT FROM THE DATE OF THE INSTRUMENT.
NOTE:--Registered Owners or Mortgagees are reminded of the importance of keeping
the Registrar of Bahamian Ships informed of any change of residence on their
part.
- - - - --------------------------------------------------------------------------------
[FORM OF BAHAMIAN DEED OF COVENANT]
DEED OF COVENANT
COLLATERAL
TO
STATUTORY SHIP MORTGAGE
ON THE
BAHAMIAN FLAG SHIP
M/V [NAME OF SHIP]
GRANTED BY ___________________________, AS SHIPOWNER
IN FAVOR OF
THE FIRST NATIONAL BANK OF MARYLAND, AS
COLLATERAL AGENT, TRUSTEE AND MORTGAGEE
ON
______, 19__
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
PAGE
<S> <C>
WHEREAS ................................................................................... 1
ARTICLE I.
Covenants of the Shipowner to the Mortgagee
Section 1: Acknowledgment of Debt; Governing Law............................... 4
Section 2: Organization of Shipowner............................................. 4
Section 3: No Existing Liens..................................................... 4
Section 4: Preferred Mortgage under
Bahamian Law.................................................... 5
Section 5: No Unlawful Operation................................................. 5
Section 6: Payment of Taxes, etc................................................. 5
Section 7: No Power To Create Liens.............................................. 6
Section 8: [Reserved]............................................................ 6
Section 9: Discharge of Liens,
Encumbrances, etc............................................... 6
Section 10: Libel................................................................. 6
Section 11: Ship Condition........................................................ 7
Section 12: Provision of Information and
Documents....................................................... 7
Section 13: No Transfer of Flag; Sale; Charter.................................... 8
Section 14: Insurances............................................................ 9
Section 15: Reimbursement for Expenses............................................ 14
Section 16: Performance of Charter................................................ 14
Section 17: Event of Loss......................................................... 14
Section 18: Financing Statements.................................................. 14
Section 19: Incorporation by Reference............................................ 15
Section 20: Requisition of Title.................................................. 15
ARTICLE II.
Events of Default and Remedies
Section 1: Events of Default..................................................... 15
Section 2: Sale Divests Title.................................................... 17
Section 3: Mortgagee's Power of
Attorney-Sales.................................................. 18
Section 4: Mortgagee's Power of
Attorney-Collection............................................. 18
Section 5: Mortgagee Power of
Attorney-Discharge of Liens..................................... 19
Section 6: Delivery of Vessel.................................................... 19
Section 7: Indemnification....................................................... 19
Section 8: Every Power Cumulative................................................ 19
Section 9: Cure of Defaults...................................................... 20
Section 10: Restoration........................................................... 20
<PAGE>
PAGE
Section 11: Distribution of Proceeds.............................................. 20
Section 12: Quiet Enjoyment....................................................... 21
Section 13: No Waiver of Preferred Status......................................... 21
Section 14: Venue................................................................. 22
ARTICLE III.
Sundry Provisions
Section 1: Binding on Successors................................................. 22
Section 2: Exercise by Agents.................................................... 22
Section 3: Notices............................................................... 23
Section 4: Titles and Section Headings........................................... 23
Exhibit A: Indenture
Exhibit B: Working Capital Facility Agreement
Exhibit C: Working Capital Guarantee
Exhibit D: Collateral Agency Agreement
</TABLE>
<PAGE>
DEED OF COVENANT
M/V ______
THIS DEED OF COVENANT is made the _____ day of ____, 19___
between ________________, (herein called the "Shipowner", which term shall
include its successors and permitted assigns), having its principal place of
business at ____________________ and The First National Bank of Maryland, having
its principal place of business at __ ___________________________, as Collateral
Agent and Trustee (herein called the "Mortgagee") under a Collateral Agency and
Intercreditor Agreement dated as of July 15, 1998, (the "Collateral Agency
Agreement") by and among the Mortgagee, The First National Bank of Maryland, not
in its individual capacity but as trustee (the "Trustee") under the Indenture
(as defined), The Bank of New York (the "Working Capital Facility Provider"),
the Shipowner, certain other Subsidiary Guarantors (as defined in the Collateral
Agency Agreement) and Millenium Seacarriers, Inc., (the "Issuer");
WHEREAS:
A. The Shipowner is the absolute and unencumbered owner of the
64/64th shares in the ship ______________, more fully described in the First
Schedule hereto.
B. The Issuer has issued One Hundred Million United States
Dollars (U.S. $100,000,000) representing 100,000 units (the "Units"), each Unit
consisting of $1,000 principal amount at maturity of its 12% First Priority Ship
Mortgage Notes Due 2005 (the "Notes") and one warrant to purchase five shares of
common stock, par value $.01 per share of the Issuer, and whereas the Notes will
be issued in accordance with the terms of the Indenture dated as of July 15,
1998 among the Trustee, the Issuer, the Shipowner and certain other Subsidiary
Guarantors, and the Shipowner acknowledges that the Issuer is justly indebted up
to the principal amount of U.S. $100 Million to the Holders of the Notes on the
date hereof;
[C. A portion of the proceeds of the Notes have been lent by
the Issuer to the Shipowner and used to refinance the indebtedness of the
Shipowner respecting the Ship;] [INSERT IF APPLICABLE]
[C. Pursuant to the Escrow and Pledge Agreement dated as of
July 15, 1998 between the Issuer and The First National Bank of Maryland, as
Escrow Agent, the Issuer has deposited with the Escrow Agent a portion of the
net proceeds of the Offering of the Notes, to be used upon the satisfaction of
certain conditions including the delivery of this Deed to acquire additional
Mortgaged Vessels;]
D. There has, contemporaneously with the execution of this
Deed, been executed by the Shipowner in favor of the Mortgagee a Statutory
Mortgage (the "Mortgage") in account current form constituting a First Preferred
Statutory Mortgage of the Owner's 64/64th shares in the Ship;
<PAGE>
2
E. In accordance with the Indenture, the Shipowner has
[executed and delivered a Supplemental Indenture pursuant to which it has]
guaranteed (the "Guarantee") the payment in full of the principal of, interest
on, and premium, if any, in respect of the Notes, made an assignment to the
Trustee as collateral security of certain of its rights in respect to the Ship
and has agreed to execute and deliver the Mortgage and this Deed in favor of the
Mortgagee as security for its obligations under its Guarantee;
F. The Issuer has entered into a Credit Agreement (the
"Working Capital Facility Agreement") dated as of July 20, 1998 among the
Working Capital Facility Provider and the Issuer pursuant to which the Working
Capital Facility Provider has agreed to make available to the Issuer a revolving
line of credit, not to exceed at any one time outstanding Seven Million United
States Dollars (US $7,000,000), all loans thereunder (the "Working Capital
Loans") to bear interest at LIBOR, plus 1 1/2%, and to be repayable on or before
July 24, 1999;
G. The Shipowner [shall concurrently with any Capital draws
under the Working Capital Facility Agreement, executed and deliver] [has
executed and delivered] a Guaranty Agreement (a "Working Capital Guarantee")
pursuant to which it [shall guarantee] [has guaranteed] the payment in full of
the principal of, interest on, and premium, if any, in respect of the line of
credit (the "Working Capital Facility") made available pursuant to the Working
Capital Facility Agreement, [make] [made] an assignment to the Working Capital
Facility Provider as collateral security of certain of its rights with respect
to the Mortgaged Vessel and [shall agree] [has agreed] to execute and deliver
the Mortgage in favor of the Mortgagee as security for its obligations under its
Working Capital Guarantee; and
H. This Deed is supplemental to the Indenture and the Mortgage
aforesaid and to the security thereby created and except as otherwise defined
herein, terms defined in the Indenture are used herein as defined therein and
terms not defined in the Indenture and defined in the Collateral Agency
Agreement are used herein as defined in the Collateral Agency Agreement. A copy
of each of: (i) the Indenture, (ii) the Working Capital Facility Agreement,
(iii) the Working Capital Guarantee and (iv) the Collateral Agency Agreement is
attached hereto as Exhibit A, B, C and D, respectively and made a part hereof.
NOW, THEREFORE, THIS DEED WITNESSETH AND IT IS HEREBY
AGREED AS FOLLOWS:
In this Deed unless the context otherwise requires the "Ship"
means the vessel described in the First Schedule hereto and includes any share
or interest therein and its engines, machinery, boats, tackle, outfit, spare
gear, fuel, consumable or other stores, belongings and appurtenances, whether on
board or ashore;
That, in consideration of the premises and of the additional
covenants herein contained and for other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, and in order to secure
the payment of the principal of, interest on and premium, if any, respecting the
Notes, the Working Capital Loans, the Obligations, fees, expenses and all other
sums due or otherwise secured under the Indenture, under the Working Capital
Guarantee or hereunder (all such principal, interest, premium and other amounts
hereby collectively called the "Indebtedness hereby secured"), and to secure the
due performance and observance of all the agreements and
<PAGE>
3
covenants in the Notes, the Indenture, the Working Capital Guarantee, the other
Security Agreements, and herein contained, the SHIPOWNER HEREBY MORTGAGES AND
CHARGES to and in favor of the Mortgagee all its interest, present and future,
in the Ship and, without prejudice to the generality of the foregoing, the
SHIPOWNER HEREBY ASSIGNS AND AGREES TO ASSIGN to the Mortgagee the SHIPOWNER's
interest in the earnings of the Ship, the insurances as hereinbefore defined.
IT IS DECLARED AND AGREED that the security created by this
Deed and the Mortgage shall be held by the Mortgagee as a continuing security
for the payment of the Indebtedness notwithstanding the liquidation, incapacity
or any change in the constitution of the Shipowner, or in the name or style
thereof and that the security so created shall not be affected in any way by any
time or indulgence granted to the Shipowner or by any variation, compromise or
release of any Shipowner's obligations under this Deed and the Mortgage and
shall not be satisfied by any intermediate payment or satisfaction of any part
of the amount hereby and thereby secured and that the security so created shall
be in addition to, and shall not in any way be prejudiced or affected by, any
collateral or other security now or hereafter held by the Mortgagee for all or
any part of the moneys hereby and thereby secured and that every power and
remedy given to the Mortgagee hereunder shall be in addition to and not a
limitation of any and every power or remedy vested in the Mortgagee under this
Deed and the Mortgage and that all powers so vested in the Mortgagee may be
exercised from time to time and as often as the Mortgagee may deem expedient.
ARTICLE I.
COVENANTS OF THE SHIPOWNER TO THE MORTGAGEE
SECTION 1: ACKNOWLEDGMENT OF DEBT; GOVERNING LAW. (a) The
Shipowner hereby acknowledges that pursuant to its Guarantee, it is justly
indebted (i) pursuant to its Guarantee to the Holders of the Notes in the
principal amount of up to One Hundred Million United States Dollars (U.S.
$100,000,000) and (ii) pursuant to its Working Capital Guarantee to the Working
Capital Facility Provider in the principal amount of up to $7,000,000 and will
pay or cause to be paid the Indebtedness hereby secured. The Shipowner will
observe, perform and comply with the covenants, terms and conditions herein,
express or implied, on its part to be observed, performed or complied with.
(b) This Deed and the Mortgage are intended to be a first
preferred mortgage under the laws of the Commonwealth of Bahamas ("Bahamian
law") and as such shall be governed by Bahamian law. However, in the event of
any conflict between the substantive provisions of this Deed and the Mortgage on
the one hand and the Indenture on the other, the terms of the Indenture shall
prevail, provided they are consistent with Bahamian law.
SECTION 2: ORGANIZATION OF SHIPOWNER. (a) The Shipowner is a
corporation duly organized and existing under the laws of _____________________
and shall so remain during the life of this Deed and the Mortgage and so long as
each of the Indenture and the Working Capital Guarantee shall remain in effect
and any Obligations or any Working Capital Loans remain outstanding.
<PAGE>
4
(b) The Shipowner has full power and authority to own,
operate, charter and mortgage the Ship; all action necessary and required by law
for the execution and delivery of this Deed and the Mortgage has been duly and
effectively taken; and this Deed, the Mortgage and the Indebtedness hereby
secured is and will be the valid and enforceable obligation of the Shipowner in
accordance with its terms. All consents or approvals required in respect of this
Mortgage have been obtained and are in full force and effect.
SECTION 3: NO EXISTING LIENS. The Shipowner lawfully owns and
is lawfully possessed of the Ship free from any lien or encumbrance whatsoever
other than (a) liens for current crew's wages, (b) liens covered by valid
policies of insurance held by the Mortgagee and meeting the requirements of
Section 14 below of this Article I, (c) liens not covered by insurance incurred
in the ordinary course of business and not more than thirty days past due; and
(d) Permitted Liens, and will 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: PREFERRED MORTGAGE UNDER BAHAMIAN LAW. The Ship is
duly documented in the name of the Shipowner under the laws and flag of the
Commonwealth of the Bahamas. The Shipowner will cause the Mortgage to be duly
recorded in accordance with the provisions of The Merchant Shipping Act and the
pertinent provisions of the other laws of the Commonwealth of the Bahamas (the
"Bahamian Maritime Law"), and will otherwise comply with and satisfy all of the
provisions of the Bahamian Maritime Law in order to establish and maintain the
Mortgage, as at any time amended, supplemented or assigned, as a first preferred
mortgage lien thereunder upon the Ship and upon all renewals, replacements and
improvements made in or to the same or any part thereof for the amount of the
Indebtedness hereby secured.
SECTION 5: NO UNLAWFUL OPERATION. The Shipowner will not cause
or permit the Ship to be operated in any manner contrary to law, and the
Shipowner will not engage in any unlawful trade or violate any law or carry any
cargo that will expose the Ship to penalty, forfeiture or capture, and will not
do, or suffer or permit to be done, anything which can or may injuriously affect
the registration or enrollment of the Ship under the laws and regulations of the
Commonwealth of the Bahamas and will at all times at its own expense keep the
Ship duly documented thereunder, except in the case of any change of registry
permitted by the Indenture or hereby, in which case a mortgage will be recorded
against the Ship under the laws of any such new registry state.
SECTION 6: PAYMENT OF TAXES, ETC. The Shipowner will pay and
discharge when due and payable, from time to time, all taxes, assessments,
governmental charges, fines and penalties lawfully imposed on the Ship or any
income therefrom; PROVIDED that the Shipowner shall not be required to pay any
such tax, assessment or charge if the validity or amount thereof is concurrently
contested in good faith by appropriate proceedings, the Shipowner shall have set
aside on its books reserves in accordance with generally accepted accounting
principles in the United States consistently applied deemed by it adequate with
respect to such tax, assessment or charge and during the pendency of such
contest the Vessel will not be subject to sale or forfeiture; and PROVIDED
FURTHER, however, that the Shipowner will pay or cause to be paid all such
taxes, assessments or charges forthwith upon the commencement of proceedings to
foreclose any lien which is attached as security therefor.
<PAGE>
5
SECTION 7: NO POWER TO CREATE LIENS. Neither the Shipowner,
any charterer, the Master of the Ship nor any other person has or shall have any
right, power or authority to create, incur or permit to be placed or imposed or
continued upon the Ship any lien or encumbrance whatsoever other than Permitted
Liens, liens for current crew's wages and salvage and the lien of this Deed and
the Mortgage.
SECTION 8: [RESERVED]
SECTION 9: DISCHARGE OF LIENS, ENCUMBRANCES, ETC. Except for
the lien of this Deed and the Mortgage, Permitted Liens 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 Ship
from arrest on account of such claim or lien, the Shipowner will not suffer to
be continued any lien, encumbrance or charge on the Ship, and in due course and
in any event, by the earlier of ninety (90) days after the same becomes due and
payable or twenty-one (21) days after being requested to do so by the Mortgagee,
will pay or cause to be discharged or make adequate provision for the
satisfaction or discharge of all claims or demands, or will cause the Ship to be
released or discharged from any lien, encumbrance or charge therefor.
SECTION 10: LIBEL. If a libel, complaint or similar process be
filed against the Ship or the Ship be otherwise attached, levied upon or taken
into custody by virtue of any legal proceeding in any court, the Shipowner will
promptly notify the Mortgagee thereof by cable, facsimile or telex, confirmed by
letter, at its address, as specified in this Deed, and within fifteen (15) days
of such filing, attachment, levy or taking into custody will cause the Ship to
be released and all liens thereon other than this Deed and the Mortgage and the
liens securing the obligations under the Security Agreements and the Working
Capital Guarantee to be discharged and will promptly notify the Mortgagee
thereof in the manner aforesaid. In the event the Ship is levied upon or taken
into custody or detained by any authority whatsoever, the Shipowner agrees
forthwith to notify the Mortgagee thereof by telex, confirmed by letter. The
Shipowner will notify the Mortgagee within forty-eight (48) hours after it has
become known to the Shipowner of any average or salvage incurred by the Ship.
SECTION 11: SHIP CONDITION. (a) The Shipowner at all times and
without cost or expense to the Mortgagee, will maintain and preserve, or cause
to be maintained and preserved, the Ship and all its equipment, outfit and
appurtenances, tight, staunch, strong, in good condition, working order and
repair and in all respects seaworthy and fit for its intended service, and will
keep the Ship, or cause her to be kept and maintained, in such condition as will
entitle her to maintain her current classification and rating for ships of the
same age and type, free of notices, recommendations or qualifications which
negatively affect such classification in [INSERT CURRENT CLASSIFICATION SOCIETY]
or other classification society of like standing approved by the Mortgagee. The
Ship shall, and the Shipowner covenants that she will, at all times comply with
all applicable laws, treaties and conventions, and rules and regulations issued
thereunder, and shall have on board as and when required thereby valid
certificates showing compliance therewith, including all Safety Management
Certificates required by the International Safety Management Code (the "ISM
Code"). The Shipowner will not make, or permit to be made, any substantial
change in the structure, type or speed of the Ship or with respect to any of the
terms of the instruments of insurance or diminish the value of the Ship without
first receiving written approval thereof from the Mortgagee.
<PAGE>
6
(b) The Shipowner agrees to give the Mortgagee at least ten
(10) days notice of the actual date and place of any survey or drydocking in
order that the Mortgagee may have representatives present if desired. The
Shipowner agrees that at the Mortgagee's request it will satisfy the Mortgagee
that the expense of such survey or drydocking or work to be done thereat is
within Shipowner's financial ability and will not result in a claim or lien
against the Ship in violation of the provisions of this Mortgage.
(c) The Shipowner agrees to submit the Vessel regularly to
such periodical or other surveys as may be required for classification purposes
and will promptly supply to the Mortgagee copies of all reports issued in
respect thereof.
SECTION 12: PROVISION OF INFORMATION AND DOCUMENTS.
(a) The Shipowner will at all reasonable times afford the
Mortgagee or its authorized representatives full and complete access to the Ship
for the purpose of inspecting the Ship and her cargo and papers and, at the
request of the Mortgagee, the Shipowner will deliver for inspection, copies of
any and all contracts and documents relating to the Ship, whether on board or
not.
(b) The Shipowner hereby agrees to promptly furnish to the
Mortgagee on demand, all charterparties or contracts of affreightment relating
to the Ship and full details as to the parties, times of delivery and the like
pertaining thereto.
(c) On the date hereof and on an annual basis, the Shipowner
shall obtain and provide the Mortgagee with a Certificate of Confirmation of
Class.
(d) The Shipowner agrees to assign to the Mortgagee
contemporaneously with the execution of this Mortgage any charters or earnings
of the Ship pursuant to the Indenture or the Supplemental Indenture.
(e) The Shipowner hereby appoints the Mortgagee
attorney-in-fact of the Shipowner, whether or not an event of default shall have
occurred or is continuing, to appear before governmental bodies, classification
societies and insurers and to demand and receive to the same extent that the
Shipowner itself might, all information and certificates respecting (i) the
organizational status of the Shipowner under the laws of its jurisdiction of
organization or any other jurisdiction in which it may have qualified to do
business, (ii) the status of the Ship under the laws and regulations of its
country of registration, and its compliance with the requirements thereof, and
(iii) the state of the records of the Ship or of the Shipowner in respect of the
Ship in any classification society with which the Ship may be classed or of any
company, association or club by whom the Ship or the Shipowner in respect of the
Ship may be insured; and the Shipowner hereby agrees that the Mortgagee may
execute its powers as attorney-in-fact as aforesaid through its agents,
representatives and attorneys. This power of attorney is coupled with an
interest and shall be irrevocable as long as any Indebtedness hereby secured
remains outstanding.
SECTION 13: NO TRANSFER OF FLAG; SALE; CHARTER. (a) The
Shipowner will not transfer or change the flag or port of documentation of the
Ship (except to Panama, the Bahamas, Liberia, the Cayman Islands, Isle of Man,
the Hellenic Republic or any other jurisdiction which at the time is generally
deemed acceptable by institutional lenders to the shipping industry, as
determined in good faith by the Board of Directors, as
<PAGE>
7
permitted by the terms of the Indenture, PROVIDED, HOWEVER, that there shall at
all times exist an effective Mortgage on the Ship, notwithstanding such transfer
or change of flag or port) without the prior written consent of the Mortgagee
(which consent shall contain such terms and conditions as the Mortgagee shall
reasonably conclude are necessary, including Opinions of Counsel, filings and
documentation, to ensure the continuing first preferred perfected Lien of the
Mortgagee for the benefit of the Holders and the Working Capital Facility
Provider in respect of the Ship and the other Collateral). Any such written
consent to any one transfer or change of flag or port of documentation shall not
be construed to be a waiver of this provision with respect to any subsequent
proposed transfer or change of flag or port of documentation.
(b) Without the prior written consent of the Mortgagee, the
Shipowner will not in any manner (i) sell, transfer or mortgage the Ship other
than in accordance with Section 4.07 of the Indenture or (ii) enter into any
charterparty, contract of affreightment, bill of lading or other engagement of
affreightment or for the carriage or transportation of cargo or other operation
of any kind of the Ship other than the charterparty existing on the date hereof.
SECTION 14: INSURANCES. (a) The Shipowner will cause to be
carried and maintained on or in respect of the Ship without expense to the
Mortgagee insurances, payable in U.S. Dollars, in amounts, against risks
(including marine hull and machinery (including excess value) insurance, marine
protection and indemnity insurance, war risks insurance and loss of hire
insurance and liability arising out of pollution and the spillage or leakage of
cargo and cargo liability insurance) and in a form which is substantially
equivalent to the coverage carried by other responsible and experienced
companies engaged in the operation of ships similar to the Ship and for similar
purposes and with insurance companies, underwriters, funds, mutual insurance
associations or clubs of recognized standing. Hull and Machinery and war risk
insurance shall be carried in an amount which is not less than the greater of
the full commercial value of the Ship or 120% of the Ship Percentage of the
Indebtedness hereby secured outstanding from time to time. Protection and
indemnity insurance as well as required insurance against liability for
pollution or spillage or leakage of cargo which shall have limitations of
liability of not less than $500 million, shall be in the highest amount from
time to time available for ships of the same type, size, age and flag as the
Ship. The Shipowner will reimburse the Mortgagee for all premiums and other
amounts paid by the Mortgagee in connection with mortgagee's interest insurance
and additional peril pollution or equivalent cover in favor of the Mortgagee
which shall insure the interest of the Mortgagee regardless of any breach or
violation by the Shipowner or of any other person of any representation,
warranty, covenant, condition, declaration or promise contained in any relevant
policy and which shall be obtained through an insurance broker reasonably
acceptable to the Mortgagee that is different from the insurance brokers
utilized for all other insurances and reinsurances provided for hereunder. None
of the aforementioned insurance shall provide for a deductible amount in excess
of One Million United States Dollars (U.S. $1,000,000) per occurrence (or
equivalent in any other currency or currency unit).
In the case of all marine, navigating and war risk hull and
machinery policies, the Shipowner will cause the Mortgagee to be named as an
additional insured and will use all reasonable efforts (and cause its insurance
broker to use all reasonable efforts) to cause the insurers under such policies
to waive any liability of the Mortgagee for premiums, calls payable, assessments
or advances under such policies and for the representations and warranties made
therein by the Shipowner or any other person.
<PAGE>
8
The Shipowner will also, without expense to the Mortgagee,
have the Ship fully entered in a protection and indemnity association or club in
good standing and acceptable to the Mortgagee. The Shipowner will cause such
association or club to issue to the Mortgagee a Letter of Undertaking in a form
satisfactory to the Mortgagee.
In the case of all protection and indemnity insurance
(including insurance against liability arising out of pollution), the Shipowner
will cause the Mortgagee to be named as an additional insured and will take such
actions as shall be necessary so that the Mortgagee shall not be liable under
such policies for payment of any premium, club call, assessment or advance or
for the representations and warranties made therein by the Shipowner or any
other person. Unless the Mortgagee shall have otherwise directed, any loss
involving damage to the Ship which is not in excess of One Million United States
Dollars (U.S. $1,000,000) may be paid directly for repair or salvage or to
reimburse the Shipowner for the same. The Shipowner will cause its brokers to
agree to advise the Mortgagee promptly of any default in the payment of any
premium and of any other act or omission on the part of the Shipowner of which
they have knowledge and which might invalidate or render unenforceable, in whole
or in part, any insurance on the Ship.
The Shipowner will also cause such brokers to agree to mark
their records and to advise the Mortgagee by cable, telex or facsimile
transmission, at least seven (7) business days' prior to the expiration date of
any insurance carried pursuant to this Mortgage, whether such insurance has been
renewed or replaced with new insurance which complies with the provisions of
this Section 14 and the other provisions of this Mortgage.
(b) The Shipowner will assign to the Mortgagee
contemporaneously with the execution of the Mortgage any policies of insurance,
including off-hire insurance, in respect of the Ship pursuant to an Insurance
Assignment.
(c) Unless the Mortgagee shall otherwise agree, all insurance
must name the Mortgagee as an assured, but without liability for premiums, calls
or assessments, and all amounts of whatsoever nature payable under any insurance
must be payable to the Mortgagee for distribution first to itself and thereafter
to the Shipowner or others as their interests may appear. Nevertheless, until
otherwise required by the Mortgagee by notice to the underwriters, (i) amounts
payable under any insurance on the Ship with respect to protection and indemnity
risks may be paid directly to the Shipowner to reimburse it for any loss, damage
or expense incurred by it and covered by such insurance or to the person to whom
any liability covered by such insurance has been incurred; PROVIDED, HOWEVER,
that if the Mortgagee shall give notice that the Shipowner is in default
hereunder, all such payments shall be made to the Mortgagee until the
Indebtedness hereby secured has been fully discharged, and (ii) concerning
amounts payable under any insurance with respect to the Ship involving any
damage to the Ship not constituting an actual or constructive or an agreed or
compromised total loss, the underwriters may pay direct for the repair, salvage
or other charges involved or, if the Shipowner shall have first fully repaired
the damage or paid all of the salvage or other charges, may pay the Shipowner as
reimbursement therefor; PROVIDED, HOWEVER, that if such amounts (including any
franchise or deductible) are in excess of One Million United States Dollars
($1,000,000), the underwriters shall make such payment to the Mortgagee. All
payments of insurance shall be made to the Mortgagee if an Event of Default
shall have occurred or any event which with the giving of notice or the lapse of
time, or both, would constitute an Event of Default.
<PAGE>
9
(d) All amounts paid to the Mortgagee in respect of any
insurances on the Ship shall be disposed of as follows:
(i) any amount which might have been paid at the time, in
accordance with the provisions of paragraph (c) above, directly to the
Shipowner or others as their interest may appear shall be paid by the
Mortgagee to, or as directed by, the Shipowner;
(ii) all amounts paid to the Mortgagee in respect of an Event
of Loss shall be paid in accordance with Section 3.3(d) of the
Collateral Agency Agreement;
(iii) so long as no Event of Default shall have occurred and
be continuing, all other amounts paid to the Mortgagee in respect of
any insurance on the Ship shall be applied to the making of needed
repairs or other work on the Ship, or to the payment of other claims
incurred by the Shipowner relating to the Ship, or may be paid to the
Shipowner or whomsoever may be entitled thereto;
(iv) all remaining amounts paid to the Mortgagee in respect of
any insurance on the Ship may, in the Mortgagee's sole discretion, be
held and applied in accordance with the Collateral Agency Agreement;
(v) if an Event of Default shall have occurred and be
continuing, any amounts shall be applied in accordance with Section 3.7
of the Collateral Agency Agreement.
(e) In the event that any claim or lien is asserted against
the Ship for loss, damage or expense which is covered by insurance required
hereunder and it is necessary for the Shipowner to obtain a bond or supply other
security to prevent arrest of the Ship or to release the Ship from arrest on
account of such claim or lien, the Mortgagee, on request of the Shipowner, may,
in the sole discretion of the Mortgagee, assign to any person, firm or
corporation executing a surety or guarantee bond or other Agreement to save or
release the Ship from such arrest, all right, title and interest of the
Mortgagee in and to said insurance covering said loss, damage or expense, as
collateral security to indemnify against liability under said bond or other
agreement.
(f) The Shipowner shall deliver to the Mortgagee certified
copies or originals on the date hereof and annually at the times the Officers'
Certificates are required to be delivered under the Indenture, of all
certificates of entry, cover notes, binders and evidences of insurance and
policies for the purpose of inspection or safekeeping. In addition, the
Shipowner will furnish the Mortgagee concurrently with the execution hereof and
thereafter at intervals of not more than twelve (12) calendar months, a detailed
report by independent marine insurance brokers, selected by the Mortgagor and
acceptable to the Mortgagee, describing in reasonable detail the insurance
pursuant to this Section 14 and stating that in the opinion of such brokers such
insurance complies in all material respects with the terms of this Section 14
and is common and customary for types of insurances and coverage generally
required by mortgagees from prudent owners and operators of ships similar to the
Ship and engaged in trades similar to the trades in which the Ship is engaged.
(g) The Shipowner agrees that it will not execute or permit or
willingly allow to be done any act by which any insurance may be suspended,
impaired or
<PAGE>
10
cancelled, and that it will not permit or allow the Ship to undertake any voyage
or run any risk or transport any cargo which may not be permitted by the
policies in force, without having previously insured the Ship by additional
coverage to extend to such voyages, risks or cargoes with insurance satisfactory
to the Mortgagee and the Shipowner agrees (without limiting the foregoing) that
it will not permit the Ship to enter or trade to any zone which is declared a
war zone by any government or by the War Risk Insurers for the Ship unless the
Mortgagee shall have first given its consent thereto in writing which Mortgagee
shall have full power to withhold) and there shall have been effected by the
Shipowner and at its expense such special insurance as the Mortgagee may
require.
(h) In case any underwriter proposes to pay less on any claim
than the amount thereof, the Shipowner shall forthwith inform the Mortgagee and
the Mortgagee shall have the right to negotiate and agree to any compromise.
(i) The Shipowner will comply with and satisfy all of the
provisions of any applicable law, convention, regulation, proclamation or order
concerning financial responsibility for liabilities imposed on the Shipowner or
the Ship with respect to pollution by any state or nation or political
subdivision thereof and will maintain all certificates or other evidence of
financial responsibility as may be required by any such law, convention,
regulation, proclamation or order with respect to the trade which the Ship is
from time to time engaged in and the cargo carried by it.
(j) All insurance required under this Deed and the Mortgage
shall be placed and kept with such insurance companies or other insurance
underwriters as shall be reasonably acceptable to the Mortgagee.
SECTION 15: REIMBURSEMENT FOR EXPENSES. (a) The Shipowner will
reimburse the Mortgagee promptly, with interest at the interest rate applicable
to the Notes per calendar month set forth in the Indenture for any and all
expenditures which the Mortgagee may from time to time make, lay out or expend
in providing such protection in respect of insurance, discharge or purchase of
liens, taxes, dues, assessments, governmental charges, fines and penalties
lawfully imposed, repairs, attorneys' fees, necessary translation fees for
documents made in a language other than English and other matters as the
Shipowner is obligated herein to provide, but fails to provide. Such obligation
of the Shipowner to reimburse the Mortgagee shall be an additional indebtedness
due from the Shipowner, secured by this Mortgage, and shall be payable by the
Shipowner on demand. The Mortgagee, though privileged to do so, shall be under
no obligation to the Shipowner to make any such expenditures, nor shall the
making thereof relieve the Shipowner of any default in that respect.
SECTION 16: PERFORMANCE OF CHARTER. The Shipowner will fully
perform, or cause to be performed, any and all charterparties and contracts of
affreightment which are, or may be, entered into with respect to the Ship.
SECTION 17: EVENT OF LOSS. (a) So long as no Event of Default
shall have occurred and be continuing, in the event of an actual, constructive,
agreed or compromised total loss of the Ship, any adjustment or compromise of
such loss by the Shipowner will be at the highest amount reasonably obtainable,
and insurance or other payments for such loss shall be applied in accordance
with Section 3.3(d) of the Collateral Agency Agreement.
<PAGE>
11
(b) This Deed and the Mortgage shall extend to and constitute
a lien upon, and the Shipowner hereby grants the Mortgagee a security interest
in, all proceeds resulting from any of the events mentioned in subsection (a)
above as security for the Indebtedness hereby secured.
SECTION 18: FINANCING STATEMENTS. The Shipowner hereby
irrevocably authorizes the Mortgagee to file and record financing statements in
any jurisdiction where the same may be in force and to make any filings or
recordings under any legislation having similar effect for the purpose of
perfecting or continuing the perfection of the security interests granted by the
Shipowner to the Mortgagee herein and in the Mortgage without obtaining the
signature of the Shipowner thereto. The Shipowner hereby irrevocably authorizes
the Mortgagee to execute any such financing statement or similar document in the
name of the Shipowner.
SECTION 19: INCORPORATION BY REFERENCE. All of the covenants,
representations and agreements on the part of the Issuer as guaranteed by the
Shipowner and of the Shipowner, which are set forth in, and all of the rights,
powers and remedies of the Mortgagee which are provided for in, the Mortgage,
the Indenture, the Working Capital Facility Agreement, the Collateral Agency
Agreement, the other Security Agreements and the Notes, together with all other
provisions of the Indenture, the Working Capital Facility Agreement, the
Collateral Agency Agreement and the Notes, are incorporated herein by reference
with the same force and effect as though set forth at length in this Deed.
SECTION 20: REQUISITION OF TITLE. In the event that the title
or ownership of the Ship shall be requisitioned, purchased or taken by any
government of any country or any department, agency or representative thereof,
or any authority acting or purporting to act under color of government, pursuant
to any present or future law, proclamation, decree, order or otherwise, the lien
of this Mortgage shall be deemed to attach to the claim for compensation of the
Shipowner for its interest in the Ship from such government or department,
agency or representative, or from any other source, and the compensation,
purchase price, reimbursement or award for such requisition, purchase or other
taking of such title or ownership due the Shipowner from such government,
department, agency or representative or other source, is hereby declared payable
to the Mortgagee, who shall be entitled to receive the same, and shall apply the
same as provided in Section 3.3(d) of the Collateral Agency Agreement; and in
the event of any such requisition, purchase or taking, the Shipowner shall
promptly execute and deliver to the Mortgagee such documents, if any, and shall
promptly do and perform such acts, if any, as in the opinion of the Mortgagee
may be necessary or useful to facilitate or expedite the collection by the
Mortgagee of such compensation, purchase price, reimbursement or award.
ARTICLE II.
Events of Default and Remedies.
SECTION 1: EVENTS OF DEFAULT. In case any one or more of the
following events, herein termed "Events of Default", shall have occurred and be
continuing:
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12
(a) the statements in Sections 2 and 3 of Article I shall
prove to be untrue;
(b) a default shall have occurred in the due and punctual
observance and performance of any of the provisions of Sections 4, 5,
9, 10, 13, 14(a), 14(b), 14(c), 14(g), 14(i), 16, 17 and 20 of Article
I hereof;
(c) a default by the Shipowner in the observance or
performance of any agreement under this Deed or the Mortgage shall have
occurred and shall remain unremedied for twenty-one (21) days after
written notice thereof shall have been given to the Shipowner by the
Mortgagee; or
(d) an Event of Default under the Indenture, the Notes or the
Working Capital Facility Agreement;
then, and in each and every such case, the Mortgagee shall have the right to:
(1) Declare all the then unpaid Indebtedness hereby secured to
be due and payable immediately, and upon such declaration the same,
including interest to date of declaration, shall become and be
immediately due and payable;
(2) Exercise all of the rights and remedies in foreclosure and
otherwise given to mortgagees by the provisions of the laws of the
Commonwealth of the Bahamas or of any other jurisdiction where the Ship
may be found and exercise all of its rights and remedies as
attorney-in-fact or otherwise under this Deed and the Mortgage;
(3) Bring suit at law, in equity or in admiralty, as it may be
advised, to recover judgment for the Indebtedness hereby secured, and
collect the same out of any and all property of the Shipowner whether
covered by this Deed or the Mortgage or otherwise;
(4) Take and enter into possession of the Ship, at any time,
wherever the same may be, without legal process and without being
responsible for loss or damage, and the Shipowner or other person in
possession forthwith upon demand of the Mortgagee shall surrender to
the Mortgagee possession of the Ship and the Mortgagee may do all acts
necessary, without being responsible for loss or damage, including
hold, lay-up, lease, charter, operate or otherwise use such Ship 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 Ship 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 Ship and charging upon
all receipts from the use of the Ship or from the sale thereof by court
proceedings or pursuant to Subsection (5) next following, all costs,
expenses, charges, damages or losses by reason of such use; and if at
any time the Mortgagee shall avail itself of the right herein given it
to take the Ship, the Mortgagee shall have the right to dock the Ship
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;
<PAGE>
13
(5) Take and enter into possession of the Ship, at any time,
wherever the same may be, without legal process, and if it seems
desirable to the Mortgagee and without being responsible for loss or
damage, sell such Ship, at any place and at such time as the Mortgagee
may specify and in such manner as the Mortgagee may deem advisable,
free from any claim by the Shipowner in admiralty, in equity, at law or
by statute, at public or private sale, by sealed bids or otherwise, by
mailing, by air or otherwise, notice of such sale, whether public or
private, addressed to the Shipowner at its last known address, fourteen
(14) days prior to the date fixed for entering into the contract of
sale and by first publishing notice of any such public sale for ten
(10) consecutive days, in a newspaper published in the City of New
York, State of New York or if the place of sale should not be in New
York City then by publication of a similar notice at or near the place
of sale; in the event that the Ship shall be offered for sale by
private sale, no newspaper publication of notice shall be required, nor
notice of adjournment of sale; sale may be held at such place and at
such time as the Mortgagee by notice may have specified, or may be
adjourned by the Mortgagee from time to time by announcement at the
time and place appointed for such sale or for such adjourned sale, and
without further notice or publication the Mortgagee may make any such
sale at the time and place to which the same shall be so adjourned; and
any sale may be conducted without bringing the Ship to the place
designated for such sale and in such manner as the Mortgagee may deem
to be for its best advantage, and the Mortgagee may become the
purchaser at any judicial sale.
(6) Take and receive all insurance proceeds to which it shall
become entitled by reason of the existence of an Event of Default and
any acceleration of the Notes or of any amounts owed under the Working
Capital Guarantee.
SECTION 2: SALE DIVESTS TITLE. Any sale of the Ship made in
pursuance of this Deed, 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 therein and thereto, and shall bar the
Shipowner, its successors and assigns, and all persons claiming by, through or
under them. No purchaser shall be bound to inquire whether notice has been
given, or whether any default has occurred, or as to the propriety of the sale,
or as to the application of the proceeds thereof. In case of any such sale, the
Mortgagee, if it is the purchaser, shall be entitled for the purpose of making
settlement or payment for the property purchased to use and apply the
Indebtedness hereby secured in order that there may be credited against the
amount remaining due and unpaid thereon the sums payable out of the net proceeds
of such sale to the Mortgagee after allowing for the costs and expense of sale
and other charges; and thereupon such purchaser shall be credited, on account of
such purchase price, with the net proceeds that shall have been so credited upon
the Indebtedness hereby secured. At any such judicial sale, the Mortgagee may
bid for and purchase such property , may credit against payment of the purchase
price thereof all sums due under the Notes or the Working Capital Guarantee and
upon compliance with the terms of sale may hold, retain and dispose of such
property without further accountability therefor.
SECTION 3: MORTGAGEE'S POWER OF ATTORNEY-SALES. The Mortgagee
is hereby appointed attorney-in-fact of the Shipowner, upon the happening of any
Event of Default, to execute and deliver to any purchaser aforesaid, and is
hereby vested with full power and authority to make, in the name and on behalf
of the Shipowner, a good conveyance of the title to the Ship so sold. In the
event of any sale of the Ship, under any
<PAGE>
14
power herein contained, the Shipowner will, if and when required by the
Mortgagee, execute such form of conveyance of the Ship as the Mortgagee may
direct or approve.
SECTION 4: MORTGAGEE'S POWER OF ATTORNEY--COLLECTION. The
Mortgagee is hereby appointed attorney-in-fact of the Shipowner upon the
happening of any Event of Default, in the name and on behalf 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
Ship and all amounts due from underwriters under any insurances thereon as
payment of losses or as return premiums or otherwise, salvage awards and
recoveries, recoveries in general average or otherwise, and all other sums due
or to become due at the time of the happening of any Event of Default in respect
of the Ship, or in respect of any insurances thereon, from any person
whomsoever, and to make, give and execute in the name of the Shipowner
acquittances, 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 other instruments in writing
with respect to the foregoing.
SECTION 5: MORTGAGEE POWER OF ATTORNEY--DISCHARGE OF LIENS.
The Shipowner authorizes and empowers the Mortgagee or its appointees or any of
them to appear in the name of the Shipowner, its successors and assigns, in any
court of any country or nation of the world where a suit is pending against the
Ship because of or on account of any alleged lien against the Ship from which
the Ship has not been released and to take such proceedings as to them or any of
them as may seem proper towards the defense of such suit and the purchase or
discharge of such lien, and all expenditures made or incurred by them or any of
them for the purpose of such defense or purchase or discharge shall be a debt
due from the Shipowner, its successors and assigns, to the Mortgagee, shall be
payable on demand and shall be secured by the lien of this Deed and the Mortgage
in like manner and extent as if the amount and description thereof were written
herein.
SECTION 6: DELIVERY OF VESSEL. Whenever any right to enter and
take possession of the Ship accrues to the Mortgagee, it may require the
Shipowner to deliver, and the Shipowner shall on demand, at its own cost and
expense, deliver to the Mortgagee the Ship as demanded. If the Mortgagee shall
be entitled to take any legal proceedings 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 Ship and of the freights, hire, earnings,
issues, revenues, income and profits due or to become due and arising from the
operation thereof.
SECTION 7: INDEMNIFICATION. The Shipowner covenants that upon
the happening of any one or more of the Events of Default, then, upon written
demand of the Mortgagee, the Shipowner will pay to the Mortgagee the whole
amount due and payable in respect of the Indebtedness hereby secured; and in
case the Shipowner shall fail to pay the same forthwith upon such demand, the
Mortgagee shall be entitled to recover judgment for the whole amount so due and
unpaid, together with such further amounts as shall be sufficient to cover the
reasonable compensation to the Mortgagee's agents, attorneys and counsel and any
necessary advances, expenses and liabilities made or incurred by it hereunder.
All moneys collected by the Mortgagee under this Section 7 shall be applied by
the Mortgagee in accordance with the provisions of Section 3.7 of the Collateral
Agency Agreement.
<PAGE>
15
SECTION 8: EVERY POWER CUMULATIVE. Each and every power and
remedy herein given to the Mortgagee shall be cumulative and shall be in
addition to every other power and remedy herein given or now or hereafter
existing at law, in equity, in 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
Mortgagee, and the exercise or the beginning of the exercise of any 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 by the
Mortgagee in the exercise of any right or power or in the pursuance of any
remedy accruing upon any default as above defined shall impair any such right,
power or remedy or be construed to be a waiver of any such Event of Default or
to be an acquiescence therein; nor shall the acceptance by the Mortgagee of any
security or of any payment of or on account of the Indebtedness hereby secured
maturing after any Event of Default or of any payment on account of any past
default be construed to be a waiver of any right to take advantage of any future
Event of Default or of any past Event of Default not completely cured thereby.
No consent, waiver or approval of the Mortgagee shall be deemed to be effective
unless in writing and duly signed by authorized signatories of the Mortgagee.
SECTION 9: CURE OF DEFAULTS. Subject to the terms of the
Indenture, if at any time after an Event of Default and prior to the actual sale
of the Ship by the Mortgagee or prior to any enforcement or foreclosure
proceedings, the Shipowner offers completely to cure all Events of Default and
to pay all expenses, advances and damages to the Mortgagee consequent on such
Events of Default, with interest with respect to the Shipowner's obligations as
provided herein or in the Indenture or the Working Capital Facility Agreement as
set forth therein, then the Mortgagee may, but shall not be required to, accept
such offer and payment and restore the Shipowner to its former position, but
such action, if taken, shall not affect any subsequent Event of Default or
impair any rights consequent thereon.
SECTION 10: RESTORATION. In case the Mortgagee shall have
proceeded to enforce any right, power or remedy 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 Deed, and all rights,
remedies and powers of the Mortgagee shall continue as if no such proceedings
had been taken.
SECTION 11: DISTRIBUTION OF PROCEEDS. The proceeds of any sale
of the Ship and the net earnings of any charter operation or other use of the
Ship and any and all other moneys received by the Mortgagee pursuant to or under
the terms of this Mortgage or in any proceedings hereunder, the application of
which has not elsewhere herein been specifically provided for, shall be applied
in accordance with Section 6.10 of the Indenture and Section 3.3(d) of the
Collateral Agency Agreement.
SECTION 12: QUIET ENJOYMENT. Until one or more of the Events
of Default hereinabove described shall happen, the Shipowner (a) shall be
suffered and permitted to retain actual possession and use of the Ship and (b)
shall have the right, from time to time, in its discretion, and without
application to the Mortgagee subject to the terms of the Indenture, and without
obtaining a release thereof by the Mortgagee, to dispose of,
<PAGE>
16
free from the lien hereof, any boilers, engines, machinery, masts, spars, sails,
rigging, boats, anchors, chains, tackle, apparel, drills, furniture, fittings or
equipment or any other appurtenances of the Ship that are no longer useful,
necessary, profitable or advantageous in the operation of the Ship, first or
simultaneously replacing the same by new boilers, engines, machinery, masts,
spars, sails, rigging, boats, anchors, chains, tackle, drills, apparel,
furniture, fittings, equipment, or other appurtenances of substantially equal
value to the Shipowner, which shall forthwith become subject to the lien of this
Deed and the Mortgage as a preferred mortgage thereon.
SECTION 13: NO WAIVER OF PREFERRED STATUS. (a) If any
provision of this Deed or the Mortgage should be deemed invalid or shall be
deemed to affect adversely the preferred status of this Deed or the Mortgage
under any applicable law, such provision shall cease to be a part of this Deed
and the Mortgage without affecting the remaining provisions, which shall remain
in full force and effect.
(b) In the event that the Indenture, the Guarantee, the
Working Capital Facility Agreement, the Working Capital Guarantee, the
Collateral Agency Agreement, this Deed, the Mortgage or any of the documents or
instruments which may from time to time be delivered hereunder or thereunder or
any provision hereof or thereof shall be deemed invalidated by present or future
law of any nation or by decision of any court, or if any third party shall fail
or refuse to recognize any of the powers granted to the Mortgagee hereunder when
it is sought to exercise them, this shall not affect the validity and/or
enforceability of all or any other parts of the Indenture, the Guarantee, the
Working Capital Facility Agreement, the Working Capital Guarantee, the
Collateral Agency Agreement, this Deed, the Mortgage or such documents or
instruments and, in any such case, the Shipowner covenants and agrees that, on
demand, it will execute and deliver such other and further agreements and/or
documents and/or instruments and do such things as the Mortgagee in its sole
discretion may deem to be necessary to carry out the true intent of this Deed
and the Mortgage and of the obligations secured hereby.
(c) Anything herein to the contrary notwithstanding, it is
intended that nothing herein shall waive the preferred status of this Deed or
the Mortgage and that, if any provision or portion thereof herein shall be
construed to waive the preferred status of this Deed or the Mortgage, then such
provision to such extent shall be void and of no effect.
SECTION 14: VENUE. In the event of any legal proceedings,
Section 7.12 of the Collateral Agency Agreement shall apply. Notwithstanding
Section 7.12 of the Collateral Agency Agreement, the Mortgagee is free to
initiate proceedings before any other court worldwide where the Ship may be
found, and the Shipowner hereby expressly and irrevocably consents to the
jurisdiction of any court in any jurisdiction whatsoever where the Ship may at
any time be located for the purpose of the foreclosure of this Mortgage, the
sale of the Shipowner's interest in the Ship or the enforcement of any other
remedy or right hereunder, and hereby expressly and irrevocably submits the
person of the Shipowner and its interests in the Vessel to the jurisdiction of
any such court in any such action or proceeding.
<PAGE>
17
ARTICLE III.
Sundry Provisions.
SECTION 1: BINDING ON SUCCESSORS. All of the covenants,
promises, stipulations and agreements of the Shipowner in this Deed and the
Mortgage contained shall bind the Shipowner and its successors and assigns and
shall inure to the benefit of the Mortgagee and its respective successors and
assigns. In the event of any assignment or transfer of this Deed or the Mortgage
to the extent permitted by the Indenture, the term "Mortgagee", as used in this
Deed, shall be deemed to mean any such assignee or transferee.
SECTION 2: EXERCISE BY AGENTS. Wherever and whenever herein
any right, power or authority is granted or given to the Mortgagee, such right,
power or authority may be exercised in all cases by the Mortgagee or such agent
or agents as it may appoint, and the act or acts of such agent or agents when
taken shall constitute the act of the Mortgagee hereunder.
SECTION 3: NOTICES. Any notice or other communication to be
given pursuant hereto shall be in the manner provided in the Indenture and
addressed as follows:
If to the Mortgagee, to
The First National Bank of Maryland, as
Collateral Agent, Trustee and Mortgagee
Corporate Trust Department
25 South Charles Street
Baltimore, MD 21201
Telephone: 410-244-4224
Telefax: 410-244-4236
Telex:
If to the Shipowner, to
____________________________
____________________________
____________________________
____________________________
Telephone:
Telefax:
Telex:
or at such other address as either party may notify to the other in writing.
SECTION 4: TITLES AND SECTION HEADINGS. The titles and section
headings in this Mortgage are for convenience only and shall not affect the
construction hereof.
<PAGE>
19
IN WITNESS WHEREOF, the Shipowner has caused this Deed on the
MV [NAME OF VESSEL] to be duly executed the day and year first above written.
THE FIRST SCHEDULE HEREINBEFORE REFERRED TO:
[Name of vessel]
_________________ registered at the Port of ______ under IMO
Number __________.
SIGNED, SEALED AND DELIVERED [NAME OF SHIPOWNER]
AS A DEED
by__________________________
the duly authorized ________
____________________________ By:_________________________
for and on behalf of _______ Name:
in the presence of _________ Title:
THE FIRST NATIONAL BANK OF
SIGNED, SEALED AND DELIVERED MARYLAND
AS A DEED
by__________________________
the duly authorized ________
____________________________ By:_________________________
for and on behalf of _______ Name:
in the presence of _________ Title:
FORM OF INSURANCE ASSIGNMENT
M/V __________________
_______________, a corporation organized and existing under
the laws of the ______________ (the "Shipowner"), in consideration of One Dollar
($1) lawful money of the United States of America, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, as
sole owner of the ____________ flag vessel M/V ______________ (the "Vessel"),
has sold, assigned, transferred, set over and granted a security interest and by
this instrument does sell, assign, transfer, set over and grant a security
interest, unto The First National Bank of Maryland, a national banking
association organized and existing under the laws of the United States of
America, as Trustee and Collateral Agent (the "Assignee") under that certain
Collateral Agency and Intercreditor Agreement dated as of July 15, 1998 (as the
same may be from time to time amended, supplemented or otherwise modified, the
"Collateral Agency Agreement") among (i) the Shipowner, (ii) the certain other
Subsidiary Guarantors named therein, (iii) the Assignee, (iv) The Bank of New
York and (v) Millenium Seacarriers, Inc. (the "Issuer") and unto the Assignee's
successors and assigns, and its successors' and assigns' own proper use and
benefit, as collateral security for the Shipowner's Obligations (as defined in
the Collateral Agency Agreement), all right, title and interest of the Shipowner
under, in and to (i) all insurances (including all entries in a protection and
indemnity or war risks association) in respect of the Vessel whether now or
hereafter to be effected, and all renewals of or replacements for the same, (ii)
all claims, returns of premium and other moneys and claims for moneys due and to
become due under said insurance or in respect of said insurance, (iii) all other
rights of the Shipowner under or in respect of said insurance and (iv) any
proceeds of any of the foregoing.
Except where otherwise expressly provided, words and
expressions defined in the Indenture shall bear the same meanings when used in
this Assignment.
It is expressly agreed that anything herein contained to the
contrary notwithstanding, the Shipowner shall remain liable under said
insurances to perform all of the obligations assumed by it thereunder, and the
Assignee shall have no obligation or liability under said insurances by reason
of or arising out of this instrument of assignment nor shall the Assignee be
required or obligated in any manner to perform or fulfill any obligations of the
Shipowner under or pursuant to said insurances or to make any payment or to make
any inquiry as to the nature or sufficiency of any payment received by it 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 it or to which it may be
entitled hereunder at any time or times.
The Shipowner hereby constitutes the Assignee, its successors
and assigns, the Shipowner's true and lawful attorney-in-fact, irrevocably, with
full power (in the name of the Shipowner or otherwise), to ask, require, demand,
receive, compound and give acquittance for any and all moneys and claims for
moneys due and to become due under or arising out of said insurances, to settle
or comprise any claims, to endorse any checks or other instruments or orders in
connection therewith and to file any claims or to take any action or institute
any proceeding
<PAGE>
which the Assignee may deem to be necessary or advisable in the premises. The
powers and authorities granted to the Assignee and its successors or assigns
herein have been given for valuable consideration and are hereby declared to be
irrevocable.
The Shipowner covenants and agrees that:
(a) the insurances assigned hereby are now valid and in
full force and effect and that the Shipowner will not
do or omit or knowingly suffer to be done or omitted
anything whereby any of the insurances assigned
hereby may become void or voidable in whole or in
part or the Assignee or any other person claiming
title through it may be prevented from receiving the
proceeds thereof;
(b) if by reason of anything done or omitted or knowingly
suffered to be done or omitted the insurances
assigned hereby shall at any time become voidable in
whole or in part the Shipowner will forthwith at its
own cost take all such insurances in force and in
particular will pay all premiums as they become due;
(c) if by reason of anything done or omitted or knowingly
suffered to be done or omitted the insurances
assigned hereby or any of them shall at any time
become void in whole or in part the Shipowner at its
own cost will forthwith effect new insurances with
insurers approved by the Assignee on terms approved
by the Assignee and will forthwith (if so required by
the Assignee) execute an assignment of such new
insurances to the Assignee and will pay any sums
payable by way of premium under the new insurances.
The Shipowner hereby further covenants and agrees to procure
that notice of this Assignment in substantially the form of Annex A shall be
duly given to all underwriters and that where the consent of any underwriter is
required pursuant to any of the insurances assigned hereby that it shall be
obtained and evidence thereof shall be given to the Assignee, or, in the
alternative, that in the case of protection and indemnity coverage the Assignee
shall obtain a letter of undertaking by the underwriters, and that there shall
be duly endorsed upon all slips, cover notes, policies, certificates of entry or
other instruments issued or to be issued in connection with the insurances
assigned hereby such clauses as to loss payees as the Assignee may require or
approve. In all cases, unless otherwise agreed in writing by the Assignee, such
slips, cover notes, notices, certificates of entry or other instruments shall
show the Assignee as named assured and loss payee and shall provide that there
will be no recourse against the Assignee for payment of premiums, calls or
assessments.
The Shipowner agrees that at any time and from time to time,
upon the written request of the Assignee, the Shipowner will promptly and duly
execute and deliver or cause to be executed and delivered any and all such
further instruments and documents as the Assignee may deem desirable in
obtaining the full benefits of this Assignment and of the rights and powers
herein granted.
<PAGE>
The Shipowner does hereby warrant and represent that it has
not assigned or pledged, and hereby covenants that, without the prior written
consent thereto of the Assignee, so long as this instrument of assignment shall
remain in effect, it will not assign or pledge the whole or any part of the
right, title and interest hereby assigned to anyone other than the Assignee, its
successors or assigns, and it will not take or omit to take any action, the
taking or omission of which might result in an alteration or impairment of said
insurances, of this Assignment or of any of the rights created by said
insurances or this Assignment.
All notices or other communications which are required to be
made to the Assignee hereunder shall be made pursuant to Section 7.2 of the
Collateral Agency Agreement.
The Shipowner hereby appoints the Assignee its
attorney-in-fact for the sole purpose of executing and filing any financing
statements or papers of similar purpose or effect in connection with any filing
or recording of this Assignment.
THIS ASSIGNMENT SHALL IN ALL RESPECTS BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, INCLUDING ALL
MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. This Assignment shall not be
amended and/or varied except by agreement in writing signed by the parties
hereto.
Section 7.12 of the Collateral Agency Agreement is
incorporated herein in its entirety and made a part hereof as if it were set
forth herein.
[Remainder of page intentionally left blank]
<PAGE>
IN WITNESS WHEREOF, the Shipowner has duly executed this
Insurance Assignment in respect of the ____________ flag vessel M/V
________________ this ____ day of __________, 199__.
--------------------------------
as Shipowner
By
--------------------------------
Name:
Title:
[Thacher Proffitt & Wood Letterhead]
September 4, 1998
To the Addressees listed
in Schedule A hereto
Opinion: Registration Statement
12% First Priority Exchange Ship Mortgage Notes Due 2005
Registration Statement on Form F-4
--------------------------------------------------------
Ladies and Gentlemen:
We are counsel to Millenium Seacarriers, Inc., Oakmont Shipping and Trading
Limited, Millenium II, Inc., Rapid Ocean Carriers Inc., Millenium II, Inc., Ivy
Navigation Ltd., Millenium IV, Inc., Topscale Shipping Company Limited,
Millenium V, Inc., Conifer Shipping Company Limited, Millenium VI, Inc.,
Millenium Aleksander, Inc., Millenium VII, Inc., Millenium Elmar, Inc.,
Millenium Yama, Inc., Millenium Amethyst, Inc., and Millenium Majestic, Inc.
(collectively, the "Registrants"), in connection with the registration under the
Securities Act of 1933, as amended (the "Act"), of the Company's First Priority
Exchange Ship Mortgage Notes Due 2005 (the "Notes"), and the related preparation
and filing of a Registration Statement on Form F-4 (the "Registration
Statement") under the Securities Act of 1933 (the "1933 Act"). The Notes are
issuable under the Indenture, dated as of July 15, 1998 (the "Indenture"),
between the Registrants and The First National Bank of Maryland as trustee (the
"Trustee"). The Indenture is substantially in the form filed as an Exhibit to
the Registration Statement. This opinion is rendered pursuant to Items 601(b)(5)
and 601(b)(8) of Regulation S-K under the 1933 Act.
In rendering this opinion letter, we have examined the documents described
above and such other documents as we have deemed necessary including, where we
have deemed appropriate, representations or certifications of officers of
parties thereto or public officials. In rendering this opinion letter, except
for the matters that are specifically addressed in the opinions expressed below,
we have assumed (i) the authenticity of all documents submitted to us as
originals and the
<PAGE>
September 4, 1998 Page 2
conformity to the originals of all documents submitted to us as copies, (ii) the
necessary entity formation and continuing existence in the jurisdiction of
formation, and the necessary licensing and qualification in all jurisdictions,
of all parties to all documents, (iii) the necessary authorization, execution,
delivery and enforceability of all documents, and the necessary entity power
with respect thereto and (iv) that there is not any other agreement that
modifies or supplements the agreements expressed in the documents to which this
opinion letter relates and that renders any of the opinions expressed below
inconsistent with such documents as so modified or supplemented. In rendering
this opinion letter, we have made no inquiry, have conducted no investigation
and assume no responsibility with respect to (a) the accuracy of and compliance
by the parties thereto with the representations, warranties and covenants
contained in any document or (b) the conformity of the underlying assets and
related documents to the requirements of the agreements to which this opinion
letter relates.
Our opinions set forth below with respect to the enforceability of any
right or obligation under any agreement are subject to (i) general principles of
equity, including concepts of materiality, reasonableness, good faith and fair
dealings and the possible unavailability of specific performance and injunctive
relief, regardless of whether considered in a proceeding in equity or at law,
(ii) the effect of certain laws, regulations and judicial or other decisions
upon the availability and enforceability of certain covenants, remedies and
other provisions, including the remedies of specific performance and self-help
and provisions imposing penalties and forfeitures and waiving objections to
venue and forum, (iii) bankruptcy, insolvency, receivership, reorganization,
liquidation, fraudulent conveyance, moratorium or other similar laws affecting
the rights of creditors or secured parties and (iv) public policy considerations
underlying the securities laws, to the extent that such public policy
considerations limit the enforceability of the provisions of any agreement which
purport or are construed to provide indemnification with respect to securities
law violations. However, the non-enforceability of any such provisions will not,
taken as a whole, materially interfere with the practical realization of the
benefits of the rights and remedies included in any such agreement which is the
subject of any opinion expressed below, except for the considerations referred
to in foregoing clause (iv) and the consequences of any judicial,
administrative, procedural or other delay which may be imposed by, relate to or
arise from applicable laws, equitable principles and interpretations thereof.
In rendering this opinion letter, we do not express any opinion concerning
any law other than the federal law of the United States and the laws of the
State of New York. We do not express any opinion with respect to the securities
laws of any jurisdiction or any other matter not specifically addressed in the
opinions expressed below.
Based upon and subject to the foregoing, it is our opinion that:
1. The Indenture, assuming the authorization, execution and delivery
thereof by the parties thereto, will be a valid and legally binding
agreement under the laws of the
<PAGE>
September 4, 1998 Page 3
State of New York, enforceable thereunder against the Registrants in
accordance with its terms.
2. The Notes, assuming the authorization, execution and authentication
thereof in accordance with the Indenture and the delivery thereof and
payment therefor as contemplated in the Registration Statement and the
prospectus delivered in connection therewith, will be legally and
validly issued and outstanding, fully paid and non-assessable and
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, is accurate with respect to those tax
consequences which are discussed.
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 1933 Act with respect to any part of the
Registration Statement including this Exhibit.
Very truly yours,
Thacher Proffitt & Wood
By /s/ Francis X. Sulger
-----------------------------
<PAGE>
SCHEDULE A
Millenium Seacarriers, Inc.
Oakmont Shipping & Trading Limited
Millenium II, Inc.
Rapid Ocean Carriers Inc.
Millenium III, Inc.
Ivy Navigation Ltd.
Millenium IV, Inc.
Topscale Shipping Company Limited
Millenium V, Inc.
Conifer Shipping Company Limited
Millenium VI, Inc.
Millenium Aleksander, Inc.
Millenium VII, Inc.
Millenium Elmar, Inc.
Millenium Yama, Inc
Millenium Amethyst, Inc.
Millenium Majestic, Inc.
Letterhead
of Maples and Calder
4th September, 1998
Millenium Seacarriers, Inc.
Millenium Management
Millenium II, Inc.
Millenium III, Inc.
Millenium IV, Inc.
Millenium V, Inc.
Millenium VI, Inc.
Millenium VII, Inc.
Millenium Aleksander, Inc.
Millenium Amethyst, Inc.
Millenium Elmar, Inc.
Millenium Majestic, Inc.
Millenium Yama, Inc.
P.O. Box 309
Ugland House
South Church Street
George Town
Grand Cayman
Dear Sirs,
RE: MILLENIUM SEACARRIERS, INC. - REGISTRATION STATEMENT ON FORM F-4
----------------------------------------------------------------
We have acted as Cayman Islands counsel to Millenium Seacarriers, Inc. (the
"Company") in connection with the registration of its 12% First Priority
Exchange Ship Mortgage Notes Due 2005 under the Securities Act of 1933, as
amended, in accordance with the Company's Registration Statement on Form F-4
filed with the Securities and Exchange Commission on 4th September, 1998 (the
"Registration Statement").
In rendering the opinions expressed herein, we have examined the Registration
Statement as an exhibit to which this opinion will be filed. We have also
examined such other documents and instruments and have made such further
investigation as we have deemed necessary or appropriate in connection with this
opinion.
Based upon and subject to the foregoing, and having regard for legal
considerations which we deem relevant, we hereby confirm, and adopt as our
opinion, the statements of legal matters
contained in the Prospectus contained in the above-referenced Registration
Statement under the caption "Certain Foreign Tax Considerations- Cayman Islands
Tax Considerations".
<PAGE>
We consent to the filing of this opinion as an exhibit to the Registration
Statement referred to above.
Yours faithfully,
/s/ Maples and Calder
---------------------------
MAPLES AND CALDER
[Letterhead of BASIL T. PATKOS]
September 2, 1998
To: The Board of Directors of:
Millenium Seacarriers, Inc.
Oakmont Shipping and Trading Limited
Ivy Navigation Ltd.
Rapid Ocean Carriers, Inc.
Ladies and Gentlemen:
We have acted as special Liberian counsel to Millenium Seacarriers,
Inc. ("Millenium Seacarriers") and to each of those subsidiaries of Millenium
Seacarriers that are signatories to the Indenture, dated as of July 15, 1998
(the "Indenture"), among Millenium Seacarriers, the Subsidiary Guarantors listed
therein and The First National Bank of Maryland, as Indenture Trustee (the
"Indenture Trustee") in connection with the issuance of the 12% First Priority
Ship Mortgage Exchange Notes Due 2005 (the "Notes").
We have the opinion that no taxes or withholding will be imposed by the
Republic of Liberia on or with respect to any payments to be made in respect of
the Notes or the Subsidiary Guarantees made by each of the Subsidiary Guarantors
incorporated in the Republic of Liberia (the "Liberian Guarantors"), provided
that (i) each of the Liberian Guarantors is and maintains its status as a
"nonresident Liberian entity" under the Liberian Internal Revenue Code, (ii)
each of the Liberian Guarantors is not now carrying on, and in the future does
not expect to carry on, any operations within the Republic of Liberia, (iii) the
Notes and all related documentations will be executed outside of the Republic of
Liberia and (iv) the holders of the Notes will neither reside in, maintain
offices in, nor engage in business in, the Republic of Liberia.
Furthermore, we are of the opinion that insofar as any matter of
Liberian Law is addressed therein, the statements made in the Prospectus under
"Certain Foreign Tax Considerations - Liberian Tax Considerations," to the
extent that they constitute maters of law or legal conclusions, fairly present
the information disclosed therein all material respects.
We are also of the opinion that there is no tax, levy, impost,
deduction, charge or withholding imposed by Liberia or any political subdivision
or taxing authority thereof or therein either (1) on or by virtue of the
execution, or delivery or performance or continued validity of any Security
Document (as defined in the Indenture) or any other document referred to therein
or to be furnished thereunder (including the Notes) or (2) on any payment to be
made by Millenium or any Subsidiary Guarantor pursuant to the Notes or any
Security Document. All filing, registration and recording
<PAGE>
fees required under the laws of Liberia in connection with any Security Document
or other fees necessary to assure the validity, effectiveness and priority of
any liens, charges and encumbrances created thereby have been paid.
Very truly yours,
/s/ Basil T. Patkos
------------------------------
Basil T. Patkos
[Letterhead of Andreas P. Demetriades & Associates]
September 3, 1998
Millenium Seacarriers Inc.
Ugland House
South Church Street
Cayman Islands
Re: Millenium Seacarriers Inc.-Registration Statement on Form F-4
-------------------------------------------------------------
We have acted as special Cypriot Counsel to the MILLENIUM SEACARRIERS
INC. ("Millenium Seacarriers") and each of those subsidiaries of Millenium
Seacarriers incorporated in the Republic of Cyprus (the "Cypriot Subsidiary
Guarantors") that are signatories to the Indenture, dated July 15, 1998 (the
"Indenture"), among Millenium Seacarriers, the Subsidiary Guarantors listed
therein and The First National Bank of Maryland, as Indenture Trustee (the
"Indenture Trustee") in connection with the issuance of the 12% First Priority
Ship Mortgage Exchange Notes due 2005 (the "Notes").
In rendering the opinions expressed therein, we have examined the
Registration Statement as an exhibit to which this opinion will be filed. We
have also examined such other documents and instruments and have made such
further investigation as we have deemed necessary or appropriate in connection
with this Opinion.
Based upon and subject to the foregoing and having regard for Legal
considerations which we have deemed relevant, we hereby confirm, and adopt as
our Opinion, the Statement of Legal Matters contained in the prospectus
contained in the above-referenced Registration Statement under the caption
"Certain Foreign Tax Considerations-Cypriot Tax Considerations".
We consent to the filing of this opinion as an exhibit to the
Registration Statement referred to the above.
Yours Sincerely,
/s/ Andreas Demetriades
ANDREAS P. DEMETRIADES LLB (HONS)
ADVOCATE
EXECUTION COPY
MILLENIUM SEACARRIERS, INC.
$100,000,000
REPRESENTING 100,000 UNITS CONSISTING OF
12% FIRST PRIORITY SHIP MORTGAGE NOTES DUE 2005
AND WARRANTS TO PURCHASE 500,000 SHARES OF COMMONSTOCK
PURCHASE AGREEMENT
------------------
July 20, 1998
CREDIT SUISSE FIRST BOSTON CORPORATION
DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION
c/o Credit Suisse First Boston Corporation
Eleven Madison Avenue,
New York, N.Y. 10010-3629
Dear Sirs:
1. INTRODUCTORY. Millenium Seacarriers, Inc., a Cayman Islands
corporation (the "Issuer"), proposes, subject to the terms and conditions stated
herein, to issue and sell to the several initial purchasers named in Schedule A
hereto (the "Purchasers") $100,000,000, Representing 100,000 Units (the
"Units"), each Unit consisting of one of its 12% First Priority Ship Mortgage
Notes Due 2005 in a principal amount at maturity of $1,000 and one Warrant (each
a "Warrant") to purchase 5 shares of common stock, par value $1 per share (the
"Common Stock") of the Issuer at the exercise price of $.01 per share. The Notes
and Warrants are collectively referred to herein as the "Offered Securities".
The Notes will be unconditionally guaranteed on a senior basis by each of the
Issuer's subsidiaries that owns a Mortgaged Vessel (as herein defined) on the
Closing Date (as herein defined) or thereafter, identified on the signature
pages to this Agreement or to an amendment thereto (the "Subsidiary
Guarantors"). The Notes will be issued under an indenture dated as of July 15,
1998 (the "Indenture"), among the Issuer, the Subsidiary Guarantors and The
First National Bank of Maryland, a national banking association, as trustee (the
"Trustee"), on a private placement basis pursuant to an exemption under Section
4(2) of the United States Securities Act of 1933 (the "Securities Act"). The
guarantees of the Subsidiary Guarantors are herein referred to as the
"Guarantees". The Warrants will be issued under a warrant agreement dated as of
July 15, 1998 (the "Warrant Agreement") between the Issuer and The First
National Bank of Maryland as warrant agent (the "Warrant Agent").
To secure, among other things, the Notes and its respective Guarantee,
each Subsidiary Guarantor will pledge and assign to the Collateral Agent (as
defined) all its right, title and interest in and to (i) the vessel (the
"Mortgaged Vessel") owned by it, pursuant to a Mortgage (as defined in the
Indenture), substantially in the form heretofore agreed to be
<PAGE>
issued in favor of the Collateral Agent, (ii) all the policies and contracts of
insurance taken out from time to time in respect of its Mortgaged Vessel
pursuant to an Assignment of Insurance (an "Insurance Assignment"), (iii) if
applicable, the time charterparty earnings and hire (the "Charter") and freights
relating to its Mortgaged Vessel pursuant to the Indenture, and (iv) all
accounts maintained in the name of the Collateral Agent pursuant to which any
proceeds of (i) and (ii) will be delivered under the circumstances described in
the Collateral Agency Agreement and all accounts maintained in the name of the
Trustee pursuant to which any proceeds of (iii) will be delivered under the
circumstances described in the Indenture.
The Notes will also be secured by, among other things, a pledge by the
Issuer of all the issued and outstanding capital stock of each Subsidiary
Guarantor (the "Pledged Stock") pursuant to the Indenture and by the escrow
account created pursuant to the terms of the Escrow Agreement, dated as of July
15, 1998 (the "Escrow Agreement"), between the Issuer and The First National
Bank of Maryland, as escrow agent (the "Escrow Agent"), into which the net
proceeds of the Offering will be delivered and held under the circumstances
described in the Escrow Agreement. The Subsidiary Guarantors will obtain certain
commercial and technical management services from the sole shareholder of the
Issuer, Millenium Management Inc., a Cayman Islands corporation ("MMI"), and,
pursuant to certain subcontracts from MMI, from Kylco Maritime Limited ("Kylco
Greece") and Kylco Maritime (USA) Limited ("Kylco USA" and, collectively,
"Kylco").
The rights of the various creditors of the Issuer and the
Subsidiary Guarantors will be governed by a Collateral Agency and Intercreditor
Agreement dated as of July 15, 1998 (the "Collateral Agency Agreement"), among
the Issuer, the Subsidiary Guarantors, The First National Bank of Maryland, as
collateral agent and trustee (the " Collateral Agent") and Bank of New York. The
Indenture, the Mortgages the Collateral Agency Agreement, the Insurance
Assignments and the Escrow Agreement, collectively, will hereinafter be referred
to as the "Security Documents".
The Issuer and the Subsidiary Guarantors hereby agree, jointly and
severally, with the several Purchasers as follows:
2. REPRESENTATIONS AND WARRANTIES OF THE ISSUER AND THE SUBSIDIARY
GUARANTORS. The Issuer and the Subsidiary Guarantors, jointly and severally,
represent and warrant to, and agree with, the Purchasers that:
(a) A preliminary offering circular and an offering circular
relating to the Offered Securities to be offered by the Purchasers have
been prepared by the Issuer and the Subsidiary Guarantors. Such
preliminary offering circular and offering circular, as supplemented as
of the date of this Agreement, together with any other document
approved by the Issuer and the Subsidiary Guarantors for use in
connection with the contemplated resale of the Offered Securities are
hereinafter collectively referred to as the "Offering Document". On the
date of this Agreement, the Offering Document does not include 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. The preceding
sentence does not apply to statements in or omissions from the Offering
Document based upon written information furnished to the Issuer by any
Purchaser through Credit Suisse First Boston Corporation ("CSFBC")
specifically for use therein, it being expressly understood and agreed
that the only such information is that described as such in Section
7(b).
<PAGE>
(b) The Issuer has been duly incorporated and is an existing
corporation in good standing under the laws of the Cayman Islands, with
power and authority (corporate and other) to own its properties and
conduct its business as described in the Offering Document; and the
Issuer is duly qualified to do business as a foreign corporation in
good standing in all other jurisdictions in which its ownership or
lease of property or the conduct of its business requires such
qualification.
(c) Each of the subsidiaries of the Issuer (including the
Subsidiary Guarantors), MMI, Kylco Greece and Kylco USA has been duly
incorporated and is an existing corporation in good standing under the
laws of the jurisdiction of its incorporation, with power and authority
(corporate and other) to own its properties and conduct its business as
described in the Offering Document; and each of the subsidiaries of the
Issuer (including the Subsidiary Guarantors), MMI, Kylco Greece and
Kylco USA is duly qualified to do business as a foreign corporation in
good standing in all other jurisdictions in which its ownership or
lease of property or the conduct of its business requires such
qualification; all the issued and outstanding capital stock of each
subsidiary of the Issuer (including the Subsidiary Guarantors) has been
duly authorized and validly issued and is fully paid and nonassessable;
and the capital stock of each subsidiary of the Issuer (including the
Subsidiary Guarantors) owned by the Issuer, directly or through
subsidiaries, is owned free from liens, encumbrances and defects.
(d) Each of the Indenture (including the Guarantees), the
Warrant Agreement, the Collateral Agency Agreement, the Insurance
Assignments and the Escrow Agreement has been duly authorized; Each
Mortgage (a "Committed Mortgage") to be entered into with respect to
the Existing Vessels and the Committed Vessels (as such terms are
defined in the Offering Document) has been duly authorized; the Offered
Securities have been duly authorized; and when the Offered Securities
are delivered and paid for pursuant to this Agreement on the Closing
Date (as defined below), each of the Indenture (including the
Guarantees), the Warrant Agreement, the Collateral Agency Agreement,
the Insurance Assignments, the Escrow Agreement and the Mortgages on
the Existing Vessels will have been duly executed and delivered and
will conform to the description thereof contained in the Offering
Document, such Offered Securities will have been duly executed,
authenticated, issued and delivered and will conform to the description
thereof contained in the Offering Document, and each of the Indenture
(including the Guarantees), the Warrant Agreement, the Collateral
Agency Agreement, the Insurance Assignments, the Escrow Agreement and
the Mortgages on the Existing Vessels and such Offered Securities will
constitute valid and legally binding obligations of the Issuer and the
Subsidiary Guarantors, as the case may be, enforceable in accordance
with their terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights and to general
equity principles. When the Warrants are delivered and paid for
pursuant to this Agreement on the Closing Date, such Warrants will be
convertible into the shares of Common Stock, ("Underlying Shares") of
the Issuer in accordance with the terms of the Warrant Agreement; the
Underlying Shares initially issuable upon conversion of such Warrants
have been duly authorized and reserved for issuance upon such
conversion and, when issued upon such conversion, will be validly
issued, fully paid and nonassessable and will conform to the
description thereof contained in the Offering Document; and the holders
of capital stock of the Issuer or instruments convertible into or
exercisable for shares of capital stock of the Issuer have no
preemptive rights or rights to have "anti-dilution" or similar
adjustments made in connection with the issuance of the Warrants or the
Underlying Shares. Upon proper filing or recording in the appropriate
registry and filing offices in Liberia, Cyprus, Panama, the Cayman
<PAGE>
Islands or the Bahamas, as the case may be, the Committed Mortgages
will create valid, first perfected mortgages (except as permitted by
the Indenture) on the Mortgaged Vessels in the related jurisdiction
securing the payment of the Notes and the Guarantees in accordance with
the terms thereof, the Indenture and the Collateral Agency Agreement
and, upon such filing, the Mortgaged Vessels will be free and clear of
all Liens other than Permitted Liens (each as defined in the
Indenture), except the Committed Mortgages and the Lien of the
Indenture (and except as permitted by the Indenture). On the Closing
Date and upon delivery to the Trustee of certificates evidencing the
Pledged Stock, the Indenture will create valid, first perfected
security interests on the Pledged Stock securing the Notes in
accordance with the terms thereof and the Pledged Stock will be free
and clear of all Liens (other than the Lien of the Indenture). On the
Closing Date and upon delivery of the Escrowed Proceeds, the Escrow
Agreement will create a valid, perfected security interest in the
Escrowed Proceeds in accordance with the terms of thereof and the
Escrowed Proceeds will be free and clear of all Liens (other than the
Lien of the Escrow Agreement).
(e) No consent, approval, authorization, or order of, or
filing with, any governmental agency or body or any court is required
for the consummation of the transactions contemplated by this Agreement
in connection with the issuance and sale of the Offered Securities by
the Issuer and the Subsidiary Guarantors, except for such filings of
the Mortgages in the appropriate offices of Liberia, Cyprus, Panama,
the Cayman Islands and the Bahamas in order to perfect the security
interests created thereby and except for such filings with the
Securities and Exchange Commission (the "Commission") as are required
in connection with the Registration Rights Agreement (as hereafter
defined).
(f) Except as disclosed in the Offering Document, under
current laws and regulations of the Cayman Islands, Liberia, Cyprus, or
any jurisdiction in which the Issuer or any of the Subsidiary
Guarantors is incorporated or resident for tax purposes and any
political subdivision thereof, all interest, principal, premium, if
any, and other payments due or made on the Offered Securities may be
paid by the Issuer or by the Subsidiary Guarantors to the holder
thereof in United States dollars and all such payments made to holders
thereof who are nonresidents of the Cayman Islands, Liberia, Cyprus, or
any jurisdiction in which the Issuer or any of the Subsidiary
Guarantors is incorporated or resident for tax purposes will not be
subject to income, withholding or other taxes under laws and
regulations of the Cayman Islands, Liberia, Cyprus, or any jurisdiction
in which the Issuer or any of the Subsidiary Guarantors is incorporated
or resident for tax purposes or any political subdivision or taxing
authority thereof or therein and will otherwise be free and clear of
any other tax, duty, withholding or deduction in the Cayman Islands,
Liberia, Cyprus, or any jurisdiction in which the Issuer or any of the
Subsidiary Guarantors is incorporated or resident for tax purposes or
any political subdivision or taxing authority thereof or therein and
without the necessity of obtaining any governmental authorization in
the Cayman Islands, Liberia, Cyprus, or any jurisdiction in which the
Issuer or any of the Subsidiary Guarantors is incorporated or resident
for tax purposes or any political subdivision or taxing authority
thereof or therein.
(g) Each of this Agreement and the Registration Rights
Agreement, dated the date hereof, among the Issuer, the Subsidiary
Guarantors and the Purchasers (the "Registration Rights Agreement"),
has been duly authorized by the Issuer and the Subsidiary Guarantors
and, when executed and delivered thereby, will constitute valid and
legally binding obligations of the Issuer and the Subsidiary Guarantors
signatory hereto, as the case may be, enforceable in accordance with
its terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization,
<PAGE>
moratorium and similar laws of general applicability relating to or
affecting creditors' rights and to general equity principles.
(h) The execution, delivery and performance of the Indenture
(including the Guarantees), the Warrant Agreement, the Collateral
Agency Agreement, the Insurance Assignments, the Escrow Agreement, the
Mortgages, this Agreement and the Registration Rights Agreement, and
the issuance and sale of the Offered Securities and compliance with the
terms and provisions thereof will not result in a breach or violation
of (i) any of the terms and provisions of, or constitute a default
under, any statute, rule, regulation or order of any governmental
agency or body or any court, domestic or foreign, having jurisdiction
over the Issuer or the Subsidiary Guarantors or any subsidiary of the
Issuer or the Subsidiary Guarantors or any of their respective
properties, (ii) any agreement or instrument to which the Issuer or the
Subsidiary Guarantors or any such subsidiary is a party or by which the
Issuer or the Subsidiary Guarantors or any such subsidiary is bound or
to which any of the properties of the Issuer or the Subsidiary
Guarantors or any such subsidiary is subject, or (iii) the charter or
by-laws or other organizational documents of the Issuer or the
Subsidiary Guarantors or any such subsidiary; and the Issuer has full
power and authority to authorize, issue and sell the Offered
Securities, and each of the Subsidiary Guarantors has full power and
authority to authorize and issue the Guarantees, as contemplated by
this Agreement.
(i) Except as disclosed in the Offering Document, each of the
Issuer, the Subsidiary Guarantors, their respective subsidiaries, MMI,
Kylco Greece and Kylco USA has good and marketable title to all real
properties and all other properties and assets owned by them, including
the Mortgaged Vessels owned by the Subsidiary Guarantors on the Closing
Date, in each case free from liens, encumbrances and defects that would
materially affect the value thereof or materially interfere with the
use made or to be made thereof by them; and except as disclosed in the
Offering Document, each of the Issuer, the Subsidiary Guarantors, their
respective subsidiaries, MMI, Kylco Greece and Kylco USA holds any
leased real or personal property under valid and enforceable leases
with no exceptions that would materially interfere with the use made or
to be made thereof by them.
(j) Each of the Issuer, the Subsidiary Guarantors, their
respective subsidiaries, MMI, Kylco Greece and Kylco USA possesses
adequate certificates, authorities or permits issued by appropriate
governmental agencies or bodies necessary to conduct the business now
operated by it and has not received any notice of proceedings relating
to the revocation or modification of any such certificate, authority or
permit that, if determined adversely to the Issuer, the Subsidiary
Guarantors or any of their respective subsidiaries, or to MMI, Kylco
Greece or Kylco USA, as the case may be, would individually or in the
aggregate have a material adverse effect on the Issuer, the Subsidiary
Guarantors and their respective subsidiaries, taken as a whole, or to
MMI, Kylco Greece or Kylco USA, as the case may be.
(k) No labor dispute with the employees of the Issuer or the
Subsidiary Guarantors or any of their respective subsidiaries, or of
MMI, Kylco Greece or Kylco USA, exists or, to the knowledge of the
Issuer or the Subsidiary Guarantors, is imminent that might have a
material adverse effect on the Issuer and the Subsidiary Guarantors and
their respective subsidiaries, taken as a whole, or on MMI, Kylco
Greece and Kylco USA, as the case may be.
<PAGE>
(l) The Issuer, the Subsidiary Guarantors and their respective
subsidiaries, and MMI, Kylco Greece and Kylco USA, own, possess or can
acquire on reasonable terms, adequate trademarks, trade names and other
rights to inventions, know-how, patents, copyrights, confidential
information and other intellectual property (collectively,
"intellectual property rights") necessary to conduct the business now
operated by each of them, or presently utilized by each of them, and
have not received any notice of infringement of or conflict with
asserted rights of others with respect to any intellectual property
rights that, if determined adversely to the Issuer, the Subsidiary
Guarantors or any of their respective subsidiaries, or MMI, Kylco
Greece or Kylco USA, as the case may be, would, individually or in the
aggregate, have a material adverse effect on the Issuer, the Subsidiary
Guarantors and their respective subsidiaries taken as a whole, or on
MMI, Kylco Greece or Kylco USA, as the case may be.
(m) Except as disclosed in the Offering Document, none of the
Issuer, the Subsidiary Guarantors, any of their respective
subsidiaries, MMI, Kylco Greece and Kylco USA is in violation of any
statute, rule, regulation, decision or order of any governmental agency
or body or any court, domestic or foreign, relating to the use,
disposal or release of hazardous or toxic substances or relating to the
protection or restoration of the environment or human exposure to
hazardous or toxic substances (collectively, "environmental laws"),
owns or operates any real property contaminated with any substance that
is subject to any environmental laws, is liable for any off-site
disposal or contamination pursuant to any environmental laws, or is
subject to any claim relating to any environmental laws, which
violation, contamination, liability or claim would individually or in
the aggregate have a material adverse effect on the Issuer, the
Subsidiary Guarantors and their respective subsidiaries taken as a
whole, or on MMI, Kylco Greece or Kylco USA, as the case may be; and
neither the Issuer nor any of the Subsidiary Guarantors is aware of any
pending investigation which might lead to such a claim.
(n) Except as disclosed in the Offering Document, there are no
pending actions, suits or proceedings against or affecting the Issuer,
the Subsidiary Guarantors, any of their respective subsidiaries, MMI,
Kylco Greece, Kylco USA, or any of their respective properties that, if
determined adversely to the Issuer, the Subsidiary Guarantors or any of
their respective subsidiaries, or to MMI, Kylco Greece or Kylco USA,
would individually or in the aggregate have a material adverse effect
on the condition (financial or other), business, properties or results
of operations of the Issuer, the Subsidiary Guarantors and their
respective subsidiaries taken as a whole, or on MMI, Kylco Greece or
Kylco USA, as the case may be, or would materially and adversely affect
the ability of the Issuer or the Subsidiary Guarantors to perform their
respective obligations, if any, under the Indenture, the Warrant
Agreement, the Escrow Agreement, the Collateral Agency Agreement, the
Mortgages, the Insurance Assignments, the Registration Rights Agreement
or this Agreement, or which are otherwise material in the context of
the sale of the Offered Securities; and no such actions, suits or
proceedings are threatened or, to the Issuer's or any of the Subsidiary
Guarantors' knowledge, contemplated.
(o) The historical financial statements included in the
Offering Document comply as to form in all material respects with the
applicable accounting requirements of the Securities Act and the
Securities Exchange Act of 1934 (the "Exchange Act"), and the related
published rules and regulations thereunder; such financial statements
present fairly the financial position of the Issuer and its
consolidated subsidiaries as of the dates shown and their results of
operations and cash flows for the periods shown, and such financial
statements have been
<PAGE>
prepared in conformity with generally accepted accounting principles in
the United States applied on a consistent basis; the assumptions used
in preparing, and the estimates disclosed in, the forecasted financial
information under the caption "Certain Financial Forecast Information"
represent management's current best assumptions and estimates as of
July 20, 1998 of the anticipated results of operations for the Issuer
and its consolidated subsidiaries for the year ended December 31, 1999,
and the assumptions disclosed therein are all those the Issuer and the
Subsidiary Guarantors believe are significant to the forecasted
financial information.
(p) Except as disclosed in the Offering Document, since the
date of the latest audited financial statements included in the
Offering Document, there has been no material adverse change, nor any
development or event involving a prospective material adverse change,
in the condition (financial or other), business, properties or results
of operations of the Issuer, the Subsidiary Guarantors and their
respective subsidiaries, taken as a whole, and, except as disclosed in
or contemplated by the Offering Document, there has been no dividend or
distribution of any kind declared, paid or made by the Issuer or any
Subsidiary Guarantor on any class of its capital stock.
(q) Neither the Issuer nor any of the Subsidiary Guarantors is
an open-end investment company, unit investment trust or face-amount
certificate company that is or is required to be registered under
Section 8 of the United States Investment Company Act of 1940 (the
"Investment Company Act"), nor is either a closed-end investment
company required to be registered, but not registered, thereunder; and
neither the Issuer nor any of the Subsidiary Guarantors is and, after
giving effect to the offering and sale of the Offered Securities and
the application of the proceeds thereof as described in the Offering
Document, will be, an "investment company" as defined in the Investment
Company Act.
(r) No securities of the same class (within the meaning of
Rule 144A(d)(3) under the Securities Act) as the Offered Securities are
listed on any national securities exchange registered under Section 6
of the Exchange Act or quoted in a U.S. automated inter-dealer
quotation system.
(s) The offer and sale of the Offered Securities by the Issuer
to the several Purchasers in the manner contemplated by this Agreement
will be exempt from the registration requirements of the Securities Act
by reason of Section 4(2) thereof and Regulation S under the Securities
Act ("Regulation S"); and prior to the effectiveness of a registration
statement as contemplated in the Registration Rights Agreement, it is
not necessary to qualify an indenture in respect of the Offered
Securities under the United States Trust Indenture Act of 1939, as
amended (the "Trust Indenture Act").
(t) Neither the Issuer, the Subsidiary Guarantors, nor any of
their affiliates, nor any person acting on their behalf (i) has, within
the six-month period prior to the date hereof, offered or sold in the
United States or to any U.S. person (as such terms are defined in
Regulation S under the Securities Act) the Offered Securities or any
security of the same class or series as the Offered Securities or (ii)
has offered or will offer or sell the Offered Securities (A) in the
United States by means of any form of general solicitation or general
advertising within the meaning of Rule 502(c) under the Securities Act
or (B) with respect to any such securities sold in reliance on Rule 903
of Regulation S, by means of any directed selling efforts within the
meaning of Rule 902(c) of Regulation S. The Issuer, the Subsidiary
Guarantors, their affiliates and any person acting on their behalf have
complied and will comply with the offering restrictions requirement
<PAGE>
of Regulation S. The Issuer and the Subsidiary Guarantors have not
entered and will not enter into any contractual arrangement with
respect to the distribution of the Offered Securities except for this
Agreement and the Registration Rights Agreement.
(u) The proceeds to the Issuer from the offering of the
Offered Securities will be used as described in the Offering Document.
(v) The Issuer, the Subsidiary Guarantors and each of their
respective subsidiaries, and each of MMI, Kylco Greece and Kylco USA,
have insurance covering their respective vessels, properties,
operations, personnel and businesses, which insurance is in amounts and
insures against such losses and risks as are adequate to protect the
Issuer, the Subsidiary Guarantors and their respective subsidiaries,
and MMI, Kylco Greece and Kylco USA, as the case may be, and their
respective businesses. None of the Issuer, the Subsidiary Guarantors,
any of their respective subsidiaries, MMI, Kylco Greece and Kylco USA
has received notice from any insurer or agent of such insurer that
capital improvements or other expenditures are required or necessary to
be made in order to continue such insurance.
(w) None of the Issuer, the Subsidiary Guarantors, any of
their respective subsidiaries, any of their respective affiliates, and
any director, officer, agent, employee or other person associated with
or acting on behalf of the Issuer, the Subsidiary Guarantors, any of
their respective subsidiaries and any of their respective affiliates
has (i) used any corporate funds for any unlawful contribution, gift,
entertainment or other unlawful expense relating to political activity;
(ii) made any direct or indirect unlawful payment to any foreign or
domestic government official or employee from corporate funds; (iii)
violated or is in violation of any provision of the Foreign Corrupt
Practices Act of 1977; or (iv) made any bribe, rebate, payoff,
influence payment, kickback or other unlawful payment.
(x) The representations and warranties made by the Issuer and
the Subsidiary Guarantors in the Security Documents to which they are a
party will, when such documents are executed and delivered, be true and
correct in all material respects; PROVIDED, HOWEVER, that those
representations and warranties that are qualified as to their
materiality in the Security Documents will be true and correct in all
respects.
(y) There is no "substantial U.S. market interest" as defined
in Rule 902(n) of Regulation S in the Company's debt securities or in
the Common Stock to be purchased upon exercise of the Warrants.
(z) The Issuer is not, nor does it expect to be in the future,
a "passive foreign investment company" as defined in Section 1297 of
the U.S. Internal Revenue Code, as amended, and the Treasury
Regulations promulgated thereunder.
3. PURCHASE, SALE AND DELIVERY OF OFFERED SECURITIES. On the basis of
the representations, warranties and agreements herein contained, but subject to
the terms and conditions herein set forth, the Issuer agrees to sell to the
Purchasers, and the Purchasers agree to purchase from the Issuer, at a purchase
price of $930.93 per Unit plus accrued interest (if any) on the Notes from July
24, 1998 to the Closing Date (as hereinafter defined), the respective number of
Units set forth opposite the names of the several Purchasers in Schedule A
hereto.
<PAGE>
The Issuer will deliver against payment of the purchase price the
Offered Securities to be offered and sold by the Purchasers in reliance on
Regulation S (the "Regulation S Securities") in the form of one or more
permanent global Units (each of which will consist of the one or more global
Notes and one or more global Warrants) in registered form without interest
coupons (the "Regulation S Global Securities") which will be deposited with the
Trustee, as custodian for The Depository Trust Company ("DTC") for the
respective accounts of the DTC participants for Morgan Guaranty Trust Company of
New York, Brussels office, as operator of the Euroclear System ("Euroclear"),
and Cedel Bank societe anonyme ("Cedel") and registered in the name of Cede &
Co., as nominee for DTC. The Company will deliver against payment of the
purchase price the Offered Securities to be purchased by each Purchaser
hereunder and to be offered and sold by each Purchaser in reliance on Rule 144A
under the Securities Act (the "144A Securities") in the form of one permanent
global Unit (which will consist of one Global Note and one Global Warrant) in
definitive form without interest coupons (the "Restricted Global Securities")
deposited with the Trustee as custodian for DTC and registered in the name of
Cede & Co., as nominee for DTC. The Regulation S Global Securities and the
Restricted Global Securities shall be assigned separate CUSIP numbers. The
Restricted Global Securities shall include the legend regarding restrictions on
transfer set forth under "Transfer Restrictions" in the Offering Document. Until
the termination of the restricted period (as defined in Regulation S) with
respect to the offering of the Offered Securities, interests in the Regulation S
Global Securities may only be held by the DTC participants for Euroclear and
Cedel. Interest in any permanent global Securities will be held only in
book-entry form through Euroclear, Cedel or DTC, as the case may be, except in
the limited circumstances described in the Offering Document.
Payment for the Regulation S Securities and the 144A Securities shall
be made by the Purchasers in Federal (same day) funds by official check or
checks or wire transfer to an account at a bank acceptable to CSFBC drawn to the
order of the Issuer at the office of Cravath, Swaine & Moore, Worldwide Plaza,
825 Eighth Avenue, New York, New York 10019-7475 at 10:00 A.M., (New York time),
on July 24, 1998 or at such other time not later than seven full business days
thereafter as CSFBC and the Issuer determine, such time being herein referred to
as the "Closing Date", against delivery to the Trustee as custodian for DTC of
(i) the Regulation S Global Securities representing all of the Regulation S
Securities for the respective accounts of the DTC participants for Euroclear and
Cedel and (ii) the Restricted Global Securities representing all of the Offered
144A Securities. The Regulation S Global Securities and the Restricted Global
Securities will be made available for checking at the above office of Cravath,
Swaine & Moore at least 24 hours prior to the Closing Date.
4. REPRESENTATIONS BY PURCHASERS; RESALE BY PURCHASERS. (a) Each
Purchaser severally represents and warrants to the Issuer and the Subsidiary
Guarantors that it is an "accredited investor" within the meaning of Regulation
D under the Securities Act.
(b) Each Purchaser severally acknowledges that the Offered Securities
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 Regulation S or pursuant to an exemption from the
registration requirements of the Securities Act. Each Purchaser severally
represents and agrees that it has offered and sold the Offered Securities, and
will offer and sell the Offered Securities (i) as part of its distribution at
any time and (ii) otherwise until 40 days after the later of the commencement of
the offering and the Closing Date, only in accordance with Rule 903 or Rule 144A
under the Securities Act ("Rule 144A"). Accordingly, neither such Purchaser nor
its affiliates, nor any person acting on its or their behalf, have engaged or
will engage in any directed selling efforts with respect to the Offered
Securities, and such Purchaser, its affiliates and all persons acting on its or
their behalf have complied and will comply
<PAGE>
with the offering restrictions requirement of Regulation S. Each Purchaser
severally agrees that, at or prior to confirmation of sale of the Offered
Securities, other than a sale pursuant to Rule 144A, such Purchaser will have
sent to each distributor, dealer or person receiving a selling concession, fee
or other remuneration that purchases the Offered Securities 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 or 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 date 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."
(c) Each Purchaser severally agrees that it and each of its affiliates
have not entered and will not enter into any contractual arrangement with
respect to the distribution of the Offered Securities except with the prior
written consent of the Issuer.
(d) Each Purchaser severally agrees that it and each of its affiliates
will not offer or sell the Offered Securities in the United States by means of
any form of general solicitation or general advertising within the meaning of
Rule 502(c) under the Securities Act, including, but not limited to (i) any
advertisement, article, notice or other communication published in any
newspaper, magazine or similar media or broadcast over television or radio, (ii)
any seminar or meeting whose attendees have been invited by any general
solicitation or general advertising or (iii) any web site maintained by such
Purchaser and its affiliates. Each Purchaser severally agrees, with respect to
resales made by it in reliance on Rule 144A of any of the Offered Securities, to
deliver either with the confirmation of such resale or otherwise prior to
settlement of such resale a notice to the effect that such resale of such
Offered Securities has been made in reliance upon the exemption from the
registration requirements of the Securities Act provided by Rule 144A.
(e) Each Purchaser severally represents and agrees that (i) it has not
offered or sold and prior to the date six months after the date of issue of the
Offered Securities will not offer or sell any Offered Securities 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; (ii) it
has complied and will comply with all applicable provisions of the Financial
Services Act 1986 with respect to anything done by it in relation to the Offered
Securities in, from or otherwise involving the United Kingdom; and (iii) it has
only issued or passed on and will only issue or pass on in the United Kingdom
any document received by it in connection with the issue of the Offered
Securities to a person who 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.
(f) Each Purchaser severally represents and agrees that it has not
offered, sold or distributed the Offered Securities to members of the public in
the Cayman Islands; PROVIDED, HOWEVER, that, notwithstanding the foregoing, the
several Purchasers are not prohibited from offering, selling or distributing
such Offered Securities to exempted or ordinary non-resident companies which are
not carrying on a business in the Cayman Islands.
<PAGE>
5. CERTAIN AGREEMENTS OF THE ISSUER AND THE SUBSIDIARY GUARANTORS. The
Issuer and the Subsidiary Guarantors agree, jointly and severally, with the
several Purchasers that:
(a) The Issuer will advise CSFBC promptly of any proposal to
amend or supplement the Offering Document and will not effect such
amendment or supplementation without CSFBC's consent. If, at any time
prior to the completion of the resale of the Offered Securities by the
Purchasers, any event occurs as a result of which the Offering Document
as then amended or supplemented would include an 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, the Issuer promptly will notify
CSFBC of such event and promptly will prepare, at its own expense, an
amendment or supplement which will correct such statement or omission.
Neither CSFBC's consent to, nor the Purchasers' delivery to offerees or
investors of, any such amendment or supplement shall constitute a
waiver of any of the conditions set forth in Section 6.
(b) The Issuer will furnish to CSFBC copies of any preliminary
offering circular, the Offering Document and all amendments and
supplements to such documents, in each case as soon as available and in
such quantities as CSFBC reasonably requests, and the Issuer will
furnish to CSFBC on the Closing Date four copies of the Offering
Document signed by a duly authorized officer of the Issuer, one of
which will include the independent accountants' reports therein
manually signed by such independent accountants. At any time when the
Issuer is not subject to Section 13 or 15(d) of the Exchange Act and is
not exempt from reporting pursuant to Rule 12g3-2(b) under the Exchange
Act, the Issuer will promptly furnish or cause to be furnished to CSFBC
(and, upon request, to each of the other Purchasers) and, upon request
of holders and prospective purchasers of the Offered Securities, to
such holders and purchasers, copies of the information required to be
delivered to holders and prospective purchasers of the Offered
Securities pursuant to Rule 144A(d)(4) under the Securities Act (or any
successor provision thereto) in order to permit compliance with Rule
144A in connection with resales by such holders of the Offered
Securities. The Issuer will pay the expenses of printing and
distributing to the Purchasers all such documents.
(c) The Issuer will arrange for the qualification of the
Offered Securities for sale and the determination of their eligibility
for investment under the laws of such jurisdictions in the United
States and Canada as CSFBC designates and will continue such
qualifications in effect so long as required for the resale of the
Offered Securities by the Purchasers, provided that neither the Issuer
nor any of the Subsidiary Guarantors will be required to qualify as a
foreign corporation or to file a general consent to service of process
in any such state or province.
(d) So long as any Offered Securities are outstanding, during
the period of seven years after the Closing Date, the Issuer will
furnish to CSFBC and, upon request, to the other Purchaser, as soon as
practicable after the end of each fiscal year, a copy of its annual
report to stockholders for such year; and the Issuer will furnish to
CSFBC and, upon request, to each other Purchaser (i) as soon as
available, a copy of each report or financial statement furnished to or
filed with the Commission or any securities exchange on which any class
of securities of the Issuer is listed, and (ii) from time to time, such
other information concerning the Issuer as CSFBC may reasonably
request.
<PAGE>
(e) During the period of two years after the Closing Date, the
Issuer will, upon request, furnish to CSFBC, the other Purchaser and
any holder of Offered Securities a copy of the restrictions on transfer
applicable to the Offered Securities.
(f) During the period of two years after the Closing Date, the
Issuer will not, and will not permit any of its affiliates (as defined
in Rule 144 under the Securities Act) to, resell any of the Offered
Securities that have been reacquired by any of them.
(g) During the period of two years after the Closing Date,
neither the Issuer nor any of the Subsidiary Guarantors will be or
become, an open-end investment company, unit investment trust or
face-amount certificate company that is or is required to be registered
under Section 8 of the Investment Company Act, or is, or will be or
become, a closed-end investment company required to be registered, but
not registered, under the Investment Company Act.
(h) The Issuer or the Subsidiary Guarantors will pay all
expenses (together with VAT where applicable) incidental to the
performance of their obligations under this Agreement, the Warrant
Agreement and the Security Documents, including (i) the fees and
expenses of the Trustee, the Warrant Agent, the Collateral Agent, the
Escrow Agent and their respective professional advisers; (ii) all
expenses in connection with the execution, issue, authentication,
packaging and initial delivery of the Offered Securities, the
preparation and printing of this Agreement, the Offered Securities, the
Indenture, the Offering Document and amendments and supplements
thereto, and any other document relating to the issuance, offer, sale
and delivery of the Offered Securities; (iii) the cost of listing the
Offered Securities on the Luxembourg Stock Exchange and qualifying the
Offered Securities for trading in The Portalsm Market ("PORTAL") and
any expenses incidental thereto; and (iv) the cost of any advertising
approved by the Issuer in connection with the issue of the Offered
Securities. The Issuer or the Subsidiary Guarantors will also pay or
reimburse the Purchasers (to the extent incurred by them) for any
expenses (including reasonable fees and disbursements of counsel)
incurred in connection with qualification of the Offered Securities for
sale under the laws of such jurisdictions in the United States and
Canada as CSFBC designates and the printing of memoranda relating
thereto, for any fees charged by investment rating agencies for the
rating of the Offered Securities, for all travel expenses of the
Purchasers', the Issuer's and the Subsidiary Guarantors' officers and
employees and any other expenses of the Purchasers, the Issuer and the
Subsidiary Guarantors in connection with attending or hosting meetings
with prospective purchasers of the Offered Securities and for expenses
incurred in distributing preliminary offering circulars and the
Offering Document (including any amendments and supplements thereto) to
the Purchasers.
(i) In connection with the offering, until CSFBC shall have
notified the Issuer and the other Purchaser of the completion of the
resale of the Offered Securities, neither the Issuer nor any of its
affiliates has or will, either alone or with one or more other persons,
bid for or purchase for any account in which it or any of its
affiliates has a beneficial interest any Offered Securities or attempt
to induce any person to purchase any Offered Securities; and neither it
nor any of its affiliates will make bids or purchases for the purpose
of creating actual, or apparent, active trading in, or of raising the
price of, the Offered Securities.
(j) The Issuer and the Subsidiary Guarantors will indemnify
and hold harmless the Purchasers against any documentary, stamp or
similar issuance tax, including any interest and penalties, on the
creation, issuance and sale of the
<PAGE>
Offered Securities and on the execution and delivery of this Agreement.
All payments to be made by the Issuer or the Subsidiary Guarantors
hereunder shall be made without withholding or deduction for or on
account of any present or future taxes, duties or governmental charges
whatsoever unless the Issuer or the Subsidiary Guarantors are compelled
by law to deduct or withhold such taxes, duties or charges. In that
event, the Issuer or the Subsidiary Guarantors shall pay such
additional amounts as may be necessary in order that the net amounts
received after such withholding or deduction shall equal the amounts
that would have been received if no withholding or deduction had been
made.
(k) The Issuer will cause each Offered Security to bear the
legend set forth in the form of note attached as Exhibit 1 to the Rule
144A/Regulation S Appendix to the Indenture until such legend shall no
longer be necessary or advisable because the Offered Securities are no
longer subject to the restrictions on transfer
described therein.
(l) The proceeds to the Issuer from the offering of the
Offered Securities will be used as described in the Offering Document.
(m) For a period of 180 days after the date of the initial
offering of the Offered Securities by the Purchasers, the Issuer will
not offer, sell, contract to sell, pledge or otherwise dispose of,
directly or indirectly, (a) any United States dollar-denominated debt
securities issued or guaranteed by the Issuer and having a maturity of
more than one year from the date of issue (b) any shares of Common
Stock of the Issuer or securities convertible or exchangeable or
exercisable for shares of Common Stock of the Issuer or warrants or
other rights to purchase shares of Common Stock of the Issuer or
publicly disclose the intention to make any such offer, sale, pledge or
disposal, without the prior written consent of CSFBC. The Issuer will
not at any time offer, sell, contract to sell, pledge or otherwise
dispose of, directly or indirectly, any securities under circumstances
where such offer, sale, pledge, contract or disposition would cause the
exemption afforded by Section 4(2) of the Securities Act or the safe
harbor of Regulation S thereunder to cease to be applicable to the
offer and sale of the Offered Securities.
(n) The Issuer and the Subsidiary Guarantors will use their
best commercially reasonable efforts to have the Offered Securities
listed on the Luxembourg Stock Exchange.
6. CONDITIONS OF THE OBLIGATIONS OF THE PURCHASERS. The obligations of
the several Purchasers to purchase and pay for the Offered Securities will be
subject to the accuracy of the representations and warranties on the part of the
Issuer and the Subsidiary Guarantors herein, to the accuracy of the statements
of officers of the Issuer and the Subsidiary Guarantors made pursuant to the
provisions hereof, to the performance by the Issuer and the Subsidiary
Guarantors of their respective obligations hereunder and to the following
additional conditions precedent:
(a) The Purchasers shall have received a letter, dated the
date of this Agreement and attaching a form of the letter to be
delivered pursuant to subsection (j) of this Section from Coopers &
Lybrand, in form and substance satisfactory to the Purchasers
concerning the financial information with respect to the Issuer and the
Subsidiary Guarantors (and their predecessors) set forth in the
Offering Document.
(b) Subsequent to the execution and delivery of this
Agreement, there shall not have occurred (i) a change in U.S. or
international financial, political or economic conditions or currency
exchange rates or exchange controls as would, in
<PAGE>
the judgment of CSFBC, be likely to prejudice materially the success of
the proposed issue, sale or distribution of the Offered Securities,
whether in the primary market or in respect of dealings in the
secondary market, or (ii) (A) any change, or any development or event
involving a prospective change, in the condition (financial or other),
business, properties or results of operations of the Issuer, the
Subsidiary Guarantors or their respective subsidiaries which, in the
judgment of CSFBC, is material and adverse and makes it impractical or
inadvisable to proceed with completion of the offering or the sale of
and payment for the Offered Securities; (B) any downgrading in the
rating of any debt securities of the Issuer by any "nationally
recognized statistical rating organization" (as defined for purposes of
Rule 436(g) under the Securities Act), or any public announcement that
any such organization has under surveillance or review its rating of
any debt securities of the Issuer (other than an announcement with
positive implications of a possible upgrading, and no implication of a
possible downgrading, of such rating); (C) any suspension or limitation
of trading in securities generally on the New York Stock Exchange or
any setting of minimum prices for trading on such exchange or such
market, or any suspension of trading of any securities of the Issuer on
any exchange or in the over-the-counter market; (D) any banking
moratorium declared by U.S. Federal or New York authorities; or (E) any
outbreak or escalation of major hostilities in which the United States
is involved, any declaration of war by Congress or any other
substantial national or international calamity or emergency if, in the
judgment of CSFBC, the effect of any such outbreak, escalation,
declaration, calamity or emergency makes it impractical or inadvisable
to proceed with completion of the offering or the sale of and payment
for the Offered Securities.
(c) The Purchasers shall have received an opinion, dated the
Closing Date, of Thacher Proffitt & Wood, U.S. and Liberian maritime
counsel for the Issuer and the Subsidiary Guarantors, that:
(i) assuming due authorization, execution and
delivery by the Issuer and the non-Liberian Subsidiary
Guarantors, as the case may be, the Offered Securities conform
to the description thereof contained in the Offering Document
and each of the Security Documents, the Warrant Agreement and
the Offered Securities constitute valid and legally binding
obligations of the Issuer and the Subsidiary Guarantors, as
the case may be, enforceable in accordance with their terms,
subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights and
to general equity principles;
(ii) neither the Issuer nor any of the Subsidiary
Guarantors is and, after giving effect to the offering and
sale of the Offered Securities and the application of the
proceeds thereof as described in the Offering Document, will
be an "investment company" as defined in the Investment
Company Act;
(iii) no consent, approval, authorization or order
of, or filing with, any Liberian, New York or Federal
governmental agency or body or any court is required for the
consummation of the transactions contemplated by this
Agreement in connection with the issuance or sale of the
Offered Securities by the Issuer and the issuance of the
Guarantees by the Subsidiary Guarantors, except such as may be
required under state securities laws and except for the filing
and registration of the Liberian Mortgages in the Office of
the Deputy Commissioner of Maritime Affairs of the Republic of
Liberia;
<PAGE>
(iv) the execution, delivery and performance by the
Issuer and the Subsidiary Guarantors of each of the Security
Documents, the Warrant Agreement, this Agreement and the
Registration Rights Agreement, and the issuance and sale of
the Offered Securities and the issuance of Guarantees by the
Subsidiary Guarantors and compliance with the terms and
provisions thereof will not result in a breach or violation of
any of the terms and provisions of, or constitute a default
under, any statute, rule, regulation or order of any Liberian,
New York or U.S. Federal governmental agency or body or any
court having jurisdiction over the Issuer or the Subsidiary
Guarantors or any of their respective properties, or any
agreement or instrument to which the Issuer or the Subsidiary
Guarantors is a party or by which the Issuer or the Subsidiary
Guarantors is bound or to which any of the properties of the
Issuer or the Subsidiary Guarantors is subject, or the charter
or by-laws (or other organizational documents) of the Liberian
Subsidiary Guarantors;
(v) such counsel has no reason to believe that the
Offering Document, or any amendment or supplement thereto, as
of the date hereof and as of the Closing Date, contained any
untrue statement of a material fact or omitted to state any
material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not
misleading; the descriptions in the Offering Document of
statutes, legal and governmental proceedings and contracts and
other documents are accurate and fairly present the
information called for with respect to such statutes, legal
and governmental proceedings and contracts and other documents
and fairly summarize the matters referred to therein; it being
understood that such counsel need express no opinion as to the
financial statements or other financial or statistical data
contained in the Offering Document;
(vi) it is not necessary in connection with (A) the
offer, sale and delivery of the Offered Securities by the
Issuer to the Purchasers pursuant to this Agreement or (B) the
resales of the Offered Securities by the Purchasers in the
manner contemplated by this Agreement, to register the Offered
Securities under the Securities Act or to qualify an indenture
in respect thereof under the Trust Indenture Act;
(vii) assuming the Trustee is without notice of any
"adverse claim" as such term is defined in the Uniform
Commercial Code of New York (the "NYUCC"), upon execution and
delivery of the Indenture by the Issuer and the delivery to
the Trustee of certificates evidencing the Pledged Stock
together with stock powers relating thereto executed in blank,
the Trustee will have a valid, first priority perfected
security interest in the Pledged Stock, free and clear of any
liens or encumbrances;
(viii) the Escrow Agreement, the Indenture, the
Insurance Assignments and each Liberian Mortgage will create
in favor of the Escrow Agent, the Trustee and the Collateral
Agent, respectively, a valid security interest in the Issuer's
or each Liberian Subsidiary Guarantor's, as the case may be,
right, title and interest in and to the Collateral (as defined
in the Indenture) covered thereby, and no filing is necessary
in the State of New York under the NYUCC to perfect such
security interest.
(ix) each of the Liberian Subsidiary Guarantors has
been duly incorporated, is validly existing as a corporation
in good standing under the laws of Liberia and has the
corporate power and authority to own its
<PAGE>
property and to conduct its business as described in the
Offering Document; and all the issued shares of capital stock
of [insert names of Liberian subsidiaries] have been duly
authorized and validly issued and, assuming issuance against
payment therefor, are fully paid and nonassessable and
registered in the name of the Issuer;
(x) each of the Liberian Subsidiary Guarantors is the
registered owner of the Mortgaged Vessel listed opposite its
name in the Offering Document, free and clear of any Liens (as
such terms is defined in the Indenture and except as permitted
by the Indenture) of record, except for the lien of a mortgage
(and the related assignments of earnings and insurance) held
by the holders of certain indebtedness outstanding on the
Mortgaged Vessels (the "Existing Indebtedness") to be repaid
on the Closing Date and for the lien of the related Liberian
Mortgage;
(xi) each Liberian Charter, if applicable, has been
duly authorized, executed and delivered by the applicable
Liberian Subsidiary Guarantor;
(xii) the statements made in the Offering Document
under "Enforcement of Civil Liabilities", "Risk
Factors--Enforcement of Mortgages", "Description of the
Notes--Guarantees", "The Mortgages", and "Certain United
States Federal Income Tax Consequences", to the extent that
they constitute matters of law or legal conclusions, fairly
present the information disclosed therein in all material
respects;
(xiii) upon the recording of a Mortgage with respect
to a Liberian Mortgaged Vessel in the Office of the Deputy
Commissioner of Maritime Affairs of the Republic of Liberia at
the Port of New York in accordance with the laws of Liberia on
the Closing Date, such Mortgage will create a valid and
enforceable first preferred ship mortgage lien covering the
related Liberian Mortgaged Vessel which it purports to create,
with such Mortgage being the only preferred mortgage lien on
the related Liberian Mortgaged Vessel;
(xiv) the security interests created by the Security
Documents do not require any action to be taken under or
pursuant to the laws of Liberia (except as contemplated by
clause (xiv) above) or the State of New York, in order to
create or perfect such security interests or to permit the
Trustee, the Collateral Agent or the Escrow Agent, as the case
may be, to enforce its rights under the Security Documents
creating the same;
(xv) the choice of New York law to govern this
Agreement, the Registration Rights Agreement, the Indenture,
the Warrant Agreement, the Escrow Agreement, the Collateral
Agency Agreement, the Insurance Assignments and the Offered
Securities constitutes a valid choice of law insofar as the
law of Liberia is concerned. The submission by the Issuer and
the Liberian Subsidiary Guarantors to the non-exclusive
jurisdiction of any Federal or state court in the Borough of
Manhattan, The City of New York (a "New York court"), is a
valid submission insofar as the law of Liberia is concerned;
(xvi) in a suit on the merits brought before a
Liberian court, a Liberian court will respect and enforce the
agreement of the parties as to judgment in a foreign currency;
<PAGE>
(xvii) a judgment granted by a foreign court against
the Issuer or any Subsidiary Guarantor may be enforced in
Liberia without a retrial on the merits of the matter;
(xviii) neither the Issuer nor the Subsidiary
Guarantors nor any of their respective properties has any
immunity from jurisdiction of any court or from any legal
process under the laws of Liberia; and
(xix) the Liberian Mortgages conform in all material
respects to the description thereof in the Offering Document.
(d) The Purchasers shall have received an opinion, dated the
Closing Date, of Maples & Calder, special Cayman counsel for the Issuer
and Cayman Subsidiary Guarantors, that:
(i) each of the Issuer and MMI has been duly
incorporated, is validly existing as a corporation in good
standing under the laws of the Cayman Islands and has the
corporate power and authority to own its property and to
conduct its business as described in the Offering Document,
and each of the Issuer and MMI is duly qualified to do
business as a foreign corporation in good standing in all
other jurisdictions in which its ownership or lease of
property or the conduct of its business requires such
qualification;
(ii) each of the Cayman Subsidiary Guarantors has
been duly incorporated, its validly existing as a corporation
in good standing under the laws of Cayman Islands and has the
corporate power and authority to own its property and to
conduct its business as described in the offering document;
(iii) the authorized capital stock of the Issuer and
each Cayman Subsidiary Guarantor conforms as to legal matters
to the description thereof contained in the Offering Document;
(iv) all the issued shares of capital stock of the
Issuer have been duly authorized and validly issued and,
assuming issuance against payment therefor, are fully paid and
nonassessable and registered in the name of MMI; the shares of
Common Stock initially issuable upon conversion of the
Warrants have been duly authorized and reserved for issuance
upon such conversion; and all the issued shares of capital
stock of [insert names of the Cayman Subsidiaries] have been
duly authorized and validly issued and, assuming issuance
against payment therefore, are fully paid and nonassessable
and registered in the name of the Issuer;
(v) the Warrants are convertible into Common Stock of
the Issuer in accordance with the terms of the Warrant
Agreement and the holders of capital stock of the Issuer have
no preemptive rights or rights to have "anti-dilution" or
similar adjustments made in connection with the issuance of
the Warrants or the Underlying Shares;
(vi) the Offered Securities have been duly
authorized, executed, issued and delivered and conform to the
description thereof contained in the Offering Document;
<PAGE>
(vii) each of the Indenture, the Warrant Agreement,
the Escrow Agreement, the Collateral Agency Agreement, this
Agreement and the Registration Rights Agreement has been duly
authorized, executed and delivered by the Issuer;
(viii) there is no tax, levy, impost, deduction,
charge or withholding imposed by the Cayman Islands or any
political subdivision or taxing authority thereof or therein
either (1) on or by virtue of the execution, or delivery or
performance or continued validity of any of the Indenture, the
Warrant Agreement, the Escrow Agreement, the Collateral Agency
Agreement or any Mortgage or any other document referred to
therein or to be furnished thereunder (including the Offered
Securities) or (2) on any payment to be made by the Issuer or
any Subsidiary Guarantor pursuant to any of the Indenture, the
Warrant Agreement, the Escrow Agreement, the Collateral Agency
Agreement, the Offered Securities or any Mortgage. All filing,
registration and recording fees required under the laws of the
Cayman Islands in connection with the Security Document or the
Warrant Agreement or other fees necessary to assure the
validity, effectiveness and priority of any liens, charges and
encumbrances created thereby have been paid;
(ix) no consent, approval, authorization or order of
or filing with, any governmental authority or regulatory body
or court of the Cayman Islands is required for the execution,
delivery and performance of the Indenture, the Warrant
Agreement, the Collateral Agency Agreement and the Escrow
Agreement by the respective parties thereto, and no such
consent, approval or authorization or order of or filing is
required for the exercise by the Trustee, the Warrant
Agreement, the Collateral Agent or the Escrow Agent, as the
case may be, of the rights and remedies granted to it under
any of the Security Documents or the Warrant Agreement, except
for a filing and registration of the Cayman Islands Mortgages
in [insert appropriate location], or for the consummation of
the transactions contemplated by this Agreement in connection
with the issuance or sale of the Offered Securities by the
Issuer and the issuance of the Guarantees by the Subsidiary
Guarantors;
(x) the execution, delivery and performance of the
Collateral Agency Agreement, the Indenture, the Warrant
Agreement, the Escrow Agreement, this Agreement and the
Registration Rights Agreement, and the issuance and sale of
the Offered Securities and compliance with the terms and
provisions thereof will not result in a breach or violation of
any of the terms and provisions of, or constitute a default
under, any statute, rule, regulation or order of any
governmental agency or body or any court of the Cayman Islands
having jurisdiction over the Issuer or the Subsidiary
Guarantors or any subsidiary of the Issuer or the Subsidiary
Guarantors or any of their respective properties, or any
agreement or instrument to which the Issuer or the Subsidiary
Guarantors or any such subsidiary is a party or by which the
Issuer or the Subsidiary Guarantors or any such subsidiary is
bound or to which any of the Issuer or the Subsidiary
Guarantors or any such subsidiary is subject, or the charter
or by-laws (or other organizational documents) of the Issuer,
and the Issuer has full power and authority to authorize,
issue and sell the Offered Securities as contemplated by this
Agreement;
<PAGE>
(xi) the statements in the Offering Circular under
the caption "Risk Factors -- Enforcement of Mortgages",
"Certain Foreign Tax Considerations -- Cayman Islands Tax
Considerations" and in the paragraph regarding Cayman Islands
maritime law under the caption "The Mortgages" insofar as such
statements constitute summaries of the legal matters,
documents or proceedings referred to therein, fairly present
the information called for with respect to such legal matters,
documents and proceedings and fairly summarize the matters
referred to therein;
(xii) the security interests created by the Security
Documents do not require any action to be taken under or
pursuant to the laws of Cayman Islands in order to create or
perfect such security interests or to permit the Trustee, the
Collateral Agent or the Escrow Agent, as the case may be, to
enforce its rights under the Security Document creating the
same, other than (i) the delivery by the Issuer of the stock
certificates of each of the Subsidiary Guarantors to the
Trustee, (ii) due and timely notice of the assignments of
earnings to charterers and third parties and (iii) due and
timely notice of each of the Insurance Assignments to
underwriters and third parties, as well as the consent of such
underwriters or such third parties where the terms of
insurance policies, other insurance documents or provisions of
applicable law so require;
(xiii) the choice of New York law to govern this
Agreement, the Registration Rights Agreement, the Indenture,
the Warrant Agreement, the Collateral Agency Agreement, the
Escrow Agreement and the Offered Securities constitutes a
valid choice of law insofar as the law of the Cayman Islands
is concerned. The submission by the Issuer and the Subsidiary
Guarantors to the non-exclusive jurisdiction of any Federal or
state court in the Borough of Manhattan, The City of New York
(a "New York court") is a valid submission insofar as the law
of the Cayman Islands is concerned;
(xiv) in a suit on the merits brought before a Cayman
Islands court, a Cayman Islands court will respect and enforce
the agreement of the parties as to judgment in a foreign
currency;
(xv) a judgment granted by a foreign court against
the Issuer or a Guarantor may be enforced in the Cayman
Islands without a retrial on the merits of the matter; and
(xvi) none of the Issuer or the Subsidiary Guarantors
nor any of their respective properties has any immunity from
jurisdiction of any court or from any legal process under the
laws of the Cayman Islands.
(e) The Purchasers shall have received an opinion of Andreas
Demetriades Law Office, special Cypriot counsel for the Issuer and the
Cypriot Subsidiary Guarantors, that:
(i) each of the Cypriot Subsidiary Guarantors has
been duly incorporated, is validly existing as a corporation
in good standing under the laws of Cyprus and has the
corporate power and authority to own its property and to
conduct its business as described in the Offering Document;
<PAGE>
(ii) the authorized capital stock of each of the
Cypriot Subsidiary Guarantors conforms as to legal matters to
the description thereof contained in the Offering Document;
(iii) all the issued shares of capital stock of each
of the Cypriot Subsidiary Guarantors have been duly authorized
and validly issued and, assuming issuance against payment
therefor, are fully paid and nonassessable and registered in
the name of the Issuer;
(iv) each of the Indenture, the Collateral Agency
Agreement, the Insurance Assignments, this Agreement and the
Cypriot Mortgages has been authorized, executed and delivered
by the Cypriot Subsidiary Guarantors;
(v) each of the Cypriot Subsidiary Guarantors is the
registered owner of the Mortgaged Vessel listed opposite its
name in the Offering Document, free and clear of any Liens (as
such term is defined in the Indenture and except as permitted
by the Indenture) of record, except for the lien of a mortgage
(and the related assignments of earnings and insurance) held
by the holders of the Existing Indebtedness to be repaid on
the Closing Date and for the lien of the related Cypriot
Mortgage;
(vi) each Cypriot Charter, if applicable, has been
duly authorized, executed and delivered by the applicable
Cypriot Subsidiary Guarantor;
(vii) there is no tax, levy, impost, deduction,
charge or withholding imposed by Cyprus or any political
subdivision or taxing authority thereof or therein either (1)
on or by virtue of the execution, or delivery or performance
or continued validity of any Security Document or any other
document referred to therein or to be furnished thereunder
(including the Offered Securities) or (2) on any payment to be
made by the Issuer or any Subsidiary Guarantor pursuant to the
Offered Securities or any Security Document. All filing,
registration and recording fees required under the laws of
Cyprus in connection with any Security Document or other fees
necessary to assure the validity, effectiveness and priority
of any liens, charges and encumbrances created thereby have
been paid;
(viii) insofar as any matter of Cypriot law is
addressed therein, the statements made in the Offering
Document under "Risk Factors-- Enforcement of Mortgages",
"Description of the Notes--Guarantees", "The Mortgages" and
"Certain Foreign Tax Considerations--Cypriot Tax
Considerations", to the extent that they constitute matters of
law or legal conclusions, fairly present the information
disclosed therein in all material respects;
(ix) no consent, approval, authorization or order of
or filing with, any governmental authority or regulatory body
or court of Cyprus is required for the execution, delivery and
performance of the Indenture, the Collateral Agency Agreement
and the Escrow Agreement by the respective parties thereto,
and no such consent, approval, authorization or order of or
filing is required for the exercise by the Trustee, the
Collateral Agent or the Escrow Agent, as the case may be, of
the rights and remedies granted to it under any of the
Security Documents, except for the filing and registration of
the Cypriot Mortgages;
<PAGE>
(x) the execution, delivery and performance of the
security Documents and this Agreement and compliance with the
terms and provisions thereof will not result in a breach or
violation of any of the terms and provisions of, or constitute
a default under, any statute, rule, regulation or order of any
governmental agency or body or any court of Cyprus having
jurisdiction over the Cypriot Subsidiary Guarantors or any of
their respective properties, or any agreement or instrument to
which any of the Cypriot Subsidiary Guarantors is a party or
by which any of the Cypriot Subsidiary Guarantors is bound or
to which any of the properties of the Cypriot Subsidiary
Guarantors is subject, or the charter or by-laws (or other
organizational documents) of the Cypriot Subsidiary
Guarantors;
(xi) upon the recording of a Mortgage with respect to
a Cypriot Mortgaged Vessel at the Cypriot consulate in New
York City, New York, U.S.A., after receiving permission from
the Registrar of Cyprus Ships on the Closing Date, such
Mortgage will create the first preferred mortgage lien
covering the related Cypriot Mortgaged Vessel which it
purports to create, with such Mortgage being the only
preferred mortgage lien on the related Cypriot Mortgaged
Vessel;
(xii) the security interests created by the Security
Documents do not require any action to be taken under or
pursuant to the laws of Cyprus in order to create or perfect
such security interests or to permit the Trustee, the
Collateral Agent or the Escrow Agent, as the case may be, to
enforce its rights under the Security Document creating the
same, other than (i) the delivery by the Issuer of the stock
certificates of each of the Subsidiary Guarantors to the
Trustee, (ii) due and timely notice of the assignments of
earnings to charterers and third parties and (iii) due and
timely notice of each of the Insurance Assignments to
underwriters and third parties, as well as the consent of such
underwriters or such third parties where the terms of
insurance policies, other insurance documents or provisions of
applicable law so require;
(xiii) the choice of New York law to govern this
Agreement, the Registration Rights Agreement, the Indenture,
the Collateral Agency Agreement, the Escrow Agreement, the
Insurance Assignments and the Offered Securities constitutes a
valid choice of law insofar as the law of Cyprus is concerned.
The submission by the Issuer and the Subsidiary Guarantors to
the non-exclusive jurisdiction of any Federal or state court
in the Borough of Manhattan, The City of New York (a "New York
court") is a valid submission insofar as the law of Cyprus is
concerned;
(xiv) in a suit on the merits brought before a
Cypriot court, a Cypriot court will respect and enforce the
agreement of the parties as to judgment in foreign currency;
(xv) a judgment granted by a foreign court against
the Issuer or a Subsidiary Guarantor may be enforced in Cyprus
without a retrial on the merits of the matter;
(xvi) none of the Issuer or the Subsidiary Guarantors
nor any of their respective properties has any immunity from
jurisdiction of any court or from any legal process under the
laws of Cyprus; and
(xvii) the Cypriot Mortgages conform in all material
respects to the description thereof in the Offering Document.
<PAGE>
(f) The Purchasers shall have received an opinion, dated the
Closing Date, of Patton Moreno & Asvat, special Panamanian counsel for
the Issuer, that:
(i) the security interests created by the Security
Documents do not require any action to be taken under or
pursuant to the laws of Panama in order to create or perfect
such security interests or to permit the Trustee to enforce
its rights under the Security Document creating the same;
(ii) all filing, registration and recording fees
required under the laws of Panama in connection with the
Panamanian Mortgage or other fees necessary to assure the
validity, effectiveness and priority of any liens, charges and
encumbrances created thereby have been paid, except for those
fees required in connection with permanent registration of the
Panamanian Mortgaged Vessels;
(iii) the Mortgages have been preliminarily
registered against each Panamanian Mortgaged Vessel in the
Public Registry Office of the Republic of Panama and such
registration of the Mortgages constitutes due recording or
registration thereof in accordance with Panamanian law in a
public registry or central office and all other actions
required to constitute each Mortgage a First Preferred Naval
Mortgage on each Vessel under the laws of the Republic of
Panama have been taken; so long as the Mortgages in respect of
each Vessel are filed for permanent registration at the Panama
Public Registry Office within six months from the date of
their preliminary registration, the Panamanian Mortgages will
rank from the date of preliminary registration as a First
Preferred Naval Mortgage over the respective Panamanian
Vessel;
(iv) the Panamanian Mortgage conforms in all material
respects to the description thereof in the Offering Document;
and
(v) the statements in the Offering Document under
"Enforcement of Civil Liabilities", "Risk Factors--Enforcement
of Mortgages", "Description of the Notes -- Guarantees", and
"The Mortgages", to the extent that they constitute matters of
law or legal conclusions, fairly present the information
disclosed therein in all material respects.
(g) the Purchasers shall have received an opinion, dated the
Closing Date, of Basil T. Patkos, special Liberian tax counsel for the
Issuer, that:
(i) insofar as any matter of Liberian law is
addressed therein, the statements made in the Offering
Document under "Certain Foreign Tax Considerations--Liberian
Tax Considerations", to the extent that they constitute
matters of law or legal conclusions, fairly present the
information disclosed therein in all material respects; and
(ii) there is no tax, levy, impost, deduction, charge
or withholding imposed by Liberia or any political subdivision
or taxing authority thereof or therein either (1) on or by
virtue of the execution, or delivery or performance or
continued validity of any Security Document or any other
document referred to therein or to be furnished thereunder
(including the Offered Securities) or (2) on any payment to be
made by the Issuer or any Subsidiary Guarantor pursuant to the
Offered Securities or any Security Document. All filing,
registration and recording fees required under the laws of
Liberia in connection with any security document or other fees
<PAGE>
necessary to assure the validity, effectiveness and priority
of any liens, charges and encumbrances created thereby have
been paid.
(h) The Purchasers shall have received from Cravath, Swaine &
Moore, counsel for the Purchasers, such opinion, dated the Closing
Date, with respect to the validity of the Offered Securities, the
Offering Document, the exemption from registration for the offer and
sale of the Offered Securities by the Issuer to the Purchasers and the
resales by the Purchasers as contemplated hereby and other related
matters as the Purchasers may require, and the Issuer shall have
furnished to such counsel such documents as they request for the
purpose of enabling them to pass upon such matters. In rendering such
opinion, Cravath, Swaine & Moore may rely as to the incorporation of
the Issuer and the Subsidiary Guarantors and all other matters governed
by Cayman, Liberian, Cypriot, Panamanian and Bahamian law upon the
opinions of Thacher Proffitt & Wood, Maples & Calder, Law Offices of
Basil T. Patkos, Andreas Demetriades Law Offices, and Patton Moreno &
Asvat referred to above.
(i) The Purchasers shall have received a certificate, dated
the Closing Date, of the President or any Vice President and a
principal financial or accounting officer of the Issuer in which such
officers, to the best of their knowledge after reasonable
investigation, shall state that (i) the representations and warranties
of the Issuer and the Subsidiary Guarantors, respectively, in this
Agreement are true and correct, (ii) the Issuer and the Subsidiary
Guarantors, respectively, have complied with all agreements and
satisfied all conditions on their respective parts to be performed or
satisfied hereunder at or prior to the Closing Date, (iii) the
execution, delivery and performance of the Security Documents, the
Warrant Agreement, this Agreement and the Registration Rights
Agreement, and the issuance and sale of the Offered Securities and
compliance with the terms and provisions thereof will not result in a
breach or violation of any of the terms and provisions of, or
constitute a default under, any agreement or instrument to which the
Issuer or the Subsidiary Guarantors is a party or by which the Issuer
or the Subsidiary Guarantors is bound or to which any of the properties
of the Issuer or the Subsidiary Guarantors is subject, (iv) all shares
of the Issuer and the Subsidiary Guarantors are owned, directly or
indirectly, by MMI and the Issuer, respectively, free and clear of any
pledge, lien, security interest, charge, claim, equity or encumbrance
of any kind, except for the security interest created under the
Indenture, (v) there are no outstanding rights, warrants or options to
acquire, or instruments convertible into or exchangeable for, any
shares of capital stock of the Issuer or any of the Subsidiary
Guarantors, and (vi) subsequent to the dates of the most recent
financial statements in the Offering Document there has been no
material adverse change, nor any development or event involving a
prospective material adverse change, in the condition (financial or
other), business, properties or results of operations of the Issuer and
its subsidiaries taken as a whole except as set forth in or
contemplated by the Offering Document.
(j) The Purchasers shall have received a letter, dated the
Closing Date, of Coopers & Lybrand which meets the requirements of, and
in form and substance identical to the form of letter referred to in
subsection (a) of this Section, and attached as Exhibit A hereto, with
only such changes as are reasonably acceptable to the Purchasers and
their counsel.
(k) The Issuer and the Subsidiary Guarantors shall have
furnished to you and the Trustee a copy of the Charters with respect to
each applicable Mortgaged Vessel substantially in the form heretofore
delivered to you certified by the Issuer and the respective Subsidiary
Guarantor to be true and correct;
<PAGE>
(l) The Issuer shall have delivered to the Trustee a
Certificate of Ownership issued by the respective authorities of the
Republic of Liberia, Cyprus or Panama, with respect to each Existing
Vessel showing that each Subsidiary Guarantor is the sole owner of its
Mortgaged Vessel free and clear of all Liens, except Liens created
pursuant to the Mortgages and Permitted Liens (as defined in the
Indenture);
(m) The Issuer shall have delivered to the Trustee the stock
certificates evidencing the Pledged Stock pledged to the Trustee
pursuant to the Indenture, together with stock powers executed in
blank;
(n) The Issuer shall have delivered to the Trustee its
irrevocable proxy pursuant to the Indenture with respect to the Pledged
Stock;
(o) The Purchasers shall have received for each Mortgaged
Vessel a letter from two of the following appraisers: Associated
Shipbroking S.C.S., A.L. Burbank (Shipbroking) Ltd., H. Clarkson and
Company Limited, Equator Shipbroking Ltd., Fearnleys, R.S. Platou
Shipbrokers a.s. and Simpson, Spence & Young, in form and substance
satisfactory to CSFBC, setting forth their determination of the
Appraised Value (as defined in the Indenture), dated no earlier than
February 25, 1998, which average Appraised Values shall, for each
Mortgaged Vessel, not be less than the value set forth below opposite
such Mortgaged Vessel:
Average
Appraised Value
Mortgaged Vessel (in thousands)
- - - - ---------------- --------------
Clipper Harmony......................... $5,175
Clipper Golden Hind..................... $4,375
Clipper Atlantic........................ $1,625
Clipper Pacific......................... $1,675
Monica Marissa.......................... $3,625
Millenium Amethyst...................... $3,000
Millenium Yama.......................... $3,500
Millenium Aleksander.................... $8,688
Millenium Elmar......................... $8,125
Millenium Leader........................ $8,100
Millenium Hawk.......................... $7,113
Millenium Eagle......................... $6,825
Millenium Osprey........................ $7,113
Millenium Falcon........................ $5,613
Millenium Condor........................ $5,613
Millenium Majestic...................... $3,050
<PAGE>
(p) With respect to each Mortgaged Vessel, the Purchasers
shall have received a copy of the most recent and currently valid
Classification Certificate that is in the Issuer's or any Subsidiary
Guarantor's possession, from the classification societies listed below:
MORTGAGED VESSEL CLASSIFICATION SOCIETY
Clipper Harmony......................... Lloyds Register
Clipper Golden Hind..................... Germanicher Lloyd
Clipper Atlantic........................ Germanicher Lloyd
Clipper Pacific......................... Lloyds Register
Monica Marissa.......................... Lloyds Register
Millenium Amethyst...................... American Bureau of Shipping
Millenium Yama.......................... American Bureau of Shipping
Millenium Aleksander.................... Russian Society
Millenium Elmar......................... Russian Society
Millenium Leader........................ Lloyds Register
Millenium Hawk.......................... Det Norske Veritas
Millenium Eagle......................... Det Norske Veritas
Millenium Osprey........................ Det Norske Veritas
Millenium Falcon........................ Lloyds Register
Millenium Condor........................ Lloyds Register
Millenium Majestic...................... American Bureau of Shipping
(q) On the Closing Date, the Collateral Agent shall have
received each of the Mortgages duly executed by the Subsidiary Guarantors that
own the Existing Vessels and dated on or before the Closing Date.
(r) The Issuer and the Subsidiary Guarantors that own the
Existing Vessels shall have made irrevocable arrangements, acceptable to counsel
for the Purchasers, for the repayment in full, on the Closing Date, of all
Indebtedness (as defined in the Indenture) outstanding on the Closing Date and
under each agreement related thereto; all commitments to lend under such
agreements shall have been permanently terminated; all security interests
related shall have been discharged; and the Purchasers shall have received duly
executed documentation either evidencing or necessary for such repayment,
termination and discharge, in each case in the form satisfactory to counsel for
the Purchasers.
(s) The explanatory going-concern paragraph in the Report of
the Independent Accountants dated April 13, 1998, included in the Offering
Document shall have been removed.
(t) This Agreement or an amendment thereto shall have been
duly authorized, executed and delivered by all Subsidiary Guarantors on the
Closing Date.
(u) The Equity Contribution (as such term is defined in the
Offering Document) and related financings (including the deposit of $85.2
million in the Escrow Account (as such term is defined in the Offering
Document)) shall have been consummated.
(v) The Purchasers shall have received, on the Closing Date,
four copies of the Offering Document signed by a duly authorized officer of the
Issuer, one of which includes the independent accountants' report therein
(without legends or any other qualification or explanatory paragraph and
otherwise in form and substance acceptable to the Purchasers) manually signed by
such independent accountants.
<PAGE>
The Issuer will furnish the Purchasers with such conformed copies of
such opinions, certificates, letters and documents as CSFBC reasonably requests.
CSFBC may in its sole discretion waive compliance with any conditions to the
obligations of the Purchasers hereunder, whether in respect the Closing Date or
otherwise.
7. INDEMNIFICATION AND CONTRIBUTION. (a) The Issuer and the Subsidiary
Guarantors will jointly and severally indemnify and hold harmless each Purchaser
against any losses, claims, damages or liabilities, joint or several, to which
such Purchaser may become subject, under the Securities Act or the Exchange Act
or otherwise, insofar as such losses, claims, damages or liabilities (or actions
in respect thereof) arise out of or are based upon any breach of any of the
representations and warranties of the Issuer and the Subsidiary Guarantors
contained herein or any untrue statement or alleged untrue statement of any
material fact contained in the Offering Document, or any amendment or supplement
thereto, or any related preliminary offering circular, or arise out of or are
based upon the omission or alleged omission to state therein 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 will reimburse
each Purchaser for any legal or other expenses reasonably incurred by such
Purchaser in connection with investigating or defending any such loss, claim,
damage, liability or action as such expenses are incurred; PROVIDED, HOWEVER,
that neither the Issuer nor the Subsidiary Guarantors will be liable in any such
case to the extent that any such loss, claim, damage or liability arises out of
or is based upon an untrue statement or alleged untrue statement in or omission
or alleged omission from any of such documents in reliance upon and in
conformity with written information furnished to the Issuer or the Subsidiary
Guarantors by any Purchaser through CSFBC specifically for use therein, it being
understood and agreed that the only such information consists of the information
described as such in subsection (b) below.
(b) Each Purchaser will severally and not jointly indemnify and hold
harmless the Issuer and the Subsidiary Guarantors against any losses, claims,
damages or liabilities to which the Issuer or the Subsidiary Guarantors may
become subject, under the Securities Act or the Exchange Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in the Offering Document, or any
amendment or supplement thereto, or any related preliminary offering circular,
or arise out of or are based upon the omission or the alleged omission to state
therein a material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading, in
each case to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was made in reliance
upon and in conformity with written information furnished to the Issuer or the
Subsidiary Guarantors by such Purchaser through CSFBC specifically for use
therein, and will reimburse any legal or other expenses reasonably incurred by
the Issuer or the Subsidiary Guarantors in connection with investigating or
defending any such loss, claim, damage, liability or action as such expenses are
incurred, it being understood and agreed that the only such information
furnished by any Purchaser consists of the following information in the Offering
Document: the last paragraph at the bottom of the cover page concerning the
terms of the offering by the Purchasers, the legend concerning over-allotments
and stabilizing on the inside front cover page and, paragraphs three, six and
nine and each second sentence of paragraphs four and eight under the caption
"Plan of Distribution"; it being expressly agreed and acknowledged by the Issuer
and the Subsidiary Guarantors that the Purchasers have not provided, and shall
bear no responsibility or liability under this paragraph (b) for, the
information contained under the caption "Certain Forecast Financial Information"
in the Offering Document.
<PAGE>
(c) Promptly after receipt by an indemnified party under this Section
of notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under
subsection (a) or (b) above, notify the indemnifying party of the commencement
thereof; but the omission so to notify the indemnifying party will not relieve
it from any liability which it may have to any indemnified party otherwise than
under subsection (a) or (b) above. In case any such action is brought against
any indemnified party and it notifies the indemnifying party of the commencement
thereof, the indemnifying party will be entitled to participate therein and, to
the extent that it may wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof, with counsel satisfactory to such
indemnified party (who shall not, except with the consent of the indemnified
party, be counsel to the indemnifying party), and after notice from the
indemnifying party to such indemnified party of its election so to assume the
defense thereof, the indemnifying party will not be liable to such indemnified
party under this Section for any legal or other expenses subsequently incurred
by such indemnified party in connection with the defense thereof other than
reasonable costs of investigation. No indemnifying party shall, without the
prior written consent of the indemnified party, effect any settlement of any
pending or threatened action 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 any claims that are the subject
matter of such action.
(d) If the indemnification provided for in this Section is unavailable
or insufficient to hold harmless an indemnified party under subsection (a) or
(b) above, then each indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of the losses, claims, damages or
liabilities referred to in subsection (a) or (b) above (i) in such proportion as
is appropriate to reflect the relative benefits received by the Issuer or the
Subsidiary Guarantors on the one hand and the Purchasers on the other from the
offering of the Offered Securities 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 Issuer or the Subsidiary Guarantors on
the one hand and the Purchasers on the other in connection with the statements
or omissions which resulted in such losses, claims, damages or liabilities, as
well as any other relevant equitable considerations. The relative benefits
received by the Issuer or the Subsidiary Guarantors on the one hand and the
Purchasers on the other shall be deemed to be in the same proportion as the
total net proceeds from the offering (before deducting expenses) received by the
Issuer bear to the total discounts and commissions received by the Purchasers
from the Issuer under this Agreement. The relative fault 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 the Issuer, the Subsidiary Guarantors or the
Purchasers and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such untrue statement or omission. The
amount paid by an indemnified party as a result of the losses, claims, damages
or liabilities referred to in the first sentence of this subsection (d) shall be
deemed to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any action or
claim which is the subject of this subsection (d). Notwithstanding the
provisions of this subsection (d), no Purchaser shall be required to contribute
any amount in excess of the amount by which the total price at which the Offered
Securities purchased by it were resold exceeds the amount of any damages which
such Purchaser has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. The Purchasers'
obligations in this subsection (d) to contribute are several in proportion to
their respective purchase obligations and not joint.
<PAGE>
(e) The obligations of the Issuer and the Subsidiary Guarantors under
this Section shall be in addition to any liability which the Issuer and the
Subsidiary Guarantors may otherwise have and shall extend, upon the same terms
and conditions, to each person, if any, who controls any Purchaser within the
meaning of the Securities Act or the Exchange Act; and the obligations of the
Purchasers under this Section shall be in addition to any liability which the
respective Purchasers may otherwise have and shall extend, upon the same terms
and conditions, to each person, if any, who controls the Issuer and the
Subsidiary Guarantors within the meaning of the Securities Act or the Exchange
Act.
8. DEFAULT OF PURCHASERS. If any Purchaser or Purchasers default in
their obligations to purchase any Offered Securities hereunder and arrangements
satisfactory to CSFBC and the Issuer for the purchase of such Offered Securities
by other persons are not made within 36 hours after such default, this Agreement
will terminate without liability on the part of any non-defaulting Purchaser or
the Issuer, except as provided in Section 9. As used in this Agreement, the term
"Purchaser" includes any person substituted for a Purchaser under this Section.
Nothing herein will relieve a defaulting Purchaser from liability for its
default.
9. SURVIVAL OF CERTAIN REPRESENTATIONS AND OBLIGATIONS. The respective
indemnities, agreements, representations, warranties and other statements of the
Issuer, the Subsidiary Guarantors or their respective officers and of the
several Purchasers set forth in or made pursuant to this Agreement will remain
in full force and effect, regardless of any investigation, or statement as to
the results thereof, made by or on behalf of any Purchaser, the Issuer, the
Subsidiary Guarantors or any of their respective representatives, officers or
directors or any controlling person, and will survive delivery of and payment
for the Offered Securities. If this Agreement is terminated pursuant to Section
8 or if for any reason the purchase of the Offered Securities by the Purchasers
is not consummated, the Issuer and the Subsidiary Guarantors shall remain
responsible for the expenses to be paid or reimbursed by either of them pursuant
to Section 5 and the respective obligations of the Issuer, the Subsidiary
Guarantors and the Purchasers pursuant to Section 7 shall remain in effect. If
the purchase of the Offered Securities by the Purchasers is not consummated for
any reason other than solely because of the termination of this Agreement
pursuant to Section 8 or the occurrence of any event specified in clause (C),
(D) or (E) of Section 6(b)(ii), the Issuer or the Subsidiary Guarantors will
reimburse the Purchaser for all out-of-pocket expenses (including fees and
disbursements of counsel) reasonably incurred by it in connection with the
offering of the Offered Securities.
10. NOTICES. All communications hereunder will be in writing and, if
sent to the Purchasers will be mailed, delivered or telecopied and confirmed to
the Purchasers, c/o Credit Suisse First Boston Corporation, Eleven Madison
Avenue, New York, NY 10010- 3629, Attention: Investment Banking
Department--Transactions Advisory Group, telephone: (212) 325-2107, telecopy:
(212) 325-8278, or, if sent to the Issuer or the Subsidiary Guarantors, will be
mailed, delivered or telecopied and confirmed to them In care of Maples and
Calder, P.O. Box 309, South Church Street, George Town, Grand Cayman, Cayman
Islands, British West Indies, Attention: Gareth Griffiths, telephone: (345)
949-8066, telecopy: (345) 949-8080; PROVIDED, HOWEVER, that any notice to a
Purchaser pursuant to Section 7 will be mailed, delivered or telegraphed and
confirmed to such Purchaser.
<PAGE>
11. SUCCESSORS. This Agreement will enure to the benefit of and be
binding upon the parties hereto and their respective successors and the
controlling persons referred to in Section 7, and no other person will have any
right or obligation hereunder, except that holders of Offered Securities shall
be entitled to enforce the agreements for their benefit contained in the second
and third sentences of Section 5(b) hereof against the Issuer or the Subsidiary
Guarantors as if such holders were parties thereto.
12. REPRESENTATION OF PURCHASERS. In connection with this purchase, any
action taken by CSFBC as representative of the Purchasers will be binding upon
all Purchasers.
13. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same Agreement.
14. APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAWS.
The Issuer and the Subsidiary Guarantors hereby submit to the
non-exclusive jurisdiction of the Federal and state courts in the Borough of
Manhattan in The City of New York in any suit or proceeding arising out of or
relating to this Agreement or the transactions contemplated hereby. The Issuer
and the Subsidiary Guarantors irrevocably appoint Kylco Maritime (USA) Inc., as
their authorized agent in the Borough of Manhattan in The City of New York upon
which process may be served in any such suit or proceeding, and agree that
service of process upon such agent, and written notice of said service to the
Issuer or the Subsidiary Guarantors, as the case may be, by the person serving
the same to the address provided in Section 9, shall be deemed in every respect
effective service of process upon the Issuer or the Subsidiary Guarantors, as
the case may be, in any such suit or proceeding. The Issuer and the Subsidiary
Guarantors further agree to take any and all action as may be necessary to
maintain such designation and appointment of such agent in full force and effect
for a period of seven years from the date of this Agreement.
The obligation of the Issuer and the Subsidiary Guarantors in respect
of any sum due to any Purchaser shall, notwithstanding any judgment in a
currency other than United States dollars, not be discharged until the first
business day, following receipt by such Purchaser of any sum adjudged to be so
due in such other currency, on which (and only to the extent that) such
Purchaser may in accordance with normal banking procedures purchase United
States dollars with such other currency; if the United States dollars so
purchased are less than the sum originally due to such Purchaser hereunder, the
Issuer and the Subsidiary Guarantors agree, as a separate obligation and
notwithstanding any such judgment, to indemnify, jointly and severally, such
Purchaser against such loss. If the United States dollars so purchased are
greater than the sum originally due to such Purchaser hereunder, such Purchaser
agrees to pay to the Issuer or the Subsidiary Guarantors, as the case may be, an
amount equal to the excess of the dollars so purchased over the sum originally
due to such Purchaser hereunder.
<PAGE>
If the foregoing is in accordance with your understanding of
our agreement, kindly sign and return to us one of the counterparts hereof,
whereupon it will become a binding agreement among the Issuer, the Subsidiary
Guarantors and the several Purchasers in accordance with its terms.
Very truly yours,
MILLENIUM SEACARRIERS, INC.
by /s/ Vassilios M. Livanos
-------------------------------
Name: Vassilios M. Livanos
Title: Chief Executive Officer
RAPID OCEAN CARRIERS LIMITED
by /s/ Vassilios M. Livanos
------------------------------
Name: Vassilios M. Livanos
Title: Chief Executive Officer
IVY NAVIGATION LIMITED
by /s/ Vassilios M. Livanos
------------------------------
Name: Vassilios M. Livanos
Title: Chief Executive Officer
OAKMONT SHIPPING AND TRADING LIMITED
by /s/ Vassilios M. Livanos
------------------------------
Name: Vassilios M. Livanos
Title: Chief Executive Officer
TOPSCALE SHIPPING COMPANY LIMITED
by /s/ Vassilios M. Livanos
------------------------------
Name: Vassilios M. Livanos
Title: Chief Executive Officer
<PAGE>
CONIFER SHIPPING COMPANY LIMITED
by /s/ Vassilios M. Livanos
------------------------------
Name: Vassilios M. Livanos
Title: Chief Executive Officer
MILLENIUM MAJESTIC, INC.
by /s/ Vassilios M. Livanos
------------------------------
Name: Vassilios M. Livanos
Title: Chief Executive Officer
MILLENIUM YAMA, INC.
by /s/ Vassilios M. Livanos
------------------------------
Name: Vassilios M. Livanos
Title: Chief Executive Officer
MILLENIUM AMETHYST, INC.
by /s/ Vassilios M. Livanos
------------------------------
Name: Vassilios M. Livanos
Title: Chief Executive Officer
MILLENIUM ELMAR, INC.
by /s/ Vassilios M. Livanos
------------------------------
Name: Vassilios M. Livanos
Title: Chief Executive Officer
MILLENIUM ALEKSANDER, INC.
by /s/ Vassilios M. Livanos
------------------------------
Name: Vassilios M. Livanos
Title: Chief Executive Officer
<PAGE>
MILLENIUM II, INC.
by /s/ Vassilios M. Livanos
------------------------------
Name: Vassilios M. Livanos
Title: Chief Executive Officer
MILLENIUM III, INC.
by /s/ Vassilios M. Livanos
------------------------------
Name: Vassilios M. Livanos
Title: Chief Executive Officer
MILLENIUM IV, INC.
by /s/ Vassilios M. Livanos
------------------------------
Name: Vassilios M. Livanos
Title: Chief Executive Officer
MILLENIUM V, INC.
by /s/ Vassilios M. Livanos
------------------------------
Name: Vassilios M. Livanos
Title: Chief Executive Officer
<PAGE>
MILLENIUM VI, INC.
by /s/ Vassilios M. Livanos
------------------------------
Name: Vassilios M. Livanos
Title: Chief Executive Officer
MILLENIUM VI, INC.
by /s/ Vassilios M. Livanos
------------------------------
Name: Vassilios M. Livanos
Title: Chief Executive Officer
MILLENIUM VII, INC.
by /s/ Vassilios M. Livanos
------------------------------
Name: Vassilios M. Livanos
Title: Chief Executive Officer
Millenium VIII, Inc.
by /s/ Vassilios M. Livanos
------------------------------
Name: Vassilios M. Livanos
Title: Chief Executive Officer
The foregoing Purchase Agreement
is hereby confirmed and accepted
as of the date first above written.
CREDIT SUISSE FIRST BOSTON CORPORATION
DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION
BY: CREDIT SUISSE FIRST BOSTON CORPORATION
by /s/ Joseph D. Fashano
-------------------------------------------
Name: Joseph D. Fashano
Title: Director
<PAGE>
Schedule A
PURCHASER NUMBER OF UNITS
Credit Suisse First Boston Corporation 80,000
Donaldson, Lufkin & Jenrette
Securities Corporation 20,000
-------
Total............................................. 100,000
================================================================================
Millenium Management, Inc., as Manager
Millenium Seacarriers, Inc,.as Company
and
The Subsidiaries of the Company From Time to Time Listed on Schedule A Hereto
-------------------------------------------
MANAGEMENT AGREEMENT
-------------------------------------------
================================================================================
<PAGE>
This Management Agreement, dated as of July 1, 1998 (the
"Agreement"), among Millenium Management, Inc. (the "Manager"), Millenium
Seacarriers, Inc. (the "Company") and each of the subsidiaries of the Company
from time to time listed on Schedule A attached hereto (each, a "Restricted
Subsidiary").
PRELIMINARY STATEMENT
Each Restricted Subsidiary owns a drybulk carrier (each, a
"Restricted Subsidiary Vessel" and, collectively, the "Restricted Subsidiary
Vessels") and is a wholly-owned or majority-owned subsidiary of the Company. The
Manager is the sole shareholder of the Company. Certain of the Restricted
Subsidiaries (the "Subsidiary Guarantors") have guaranteed the obligations of
the Company under and pursuant to the Indenture (the "Indenture"), dated as of
the date hereof, among the Company, such Subsidiary Guarantors and The First
National Bank of Maryland, as trustee (the "Trustee"). The Company and the
Restricted Subsidiaries desire to engage the Manager to provide certain
management services for the Company, the Restricted Subsidiaries and for the
Restricted Subsidiary Vessels. The Manager is willing to provide such services
to the Company, the Restricted Subsidiaries and the Restricted Subsidiary
Vessels 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 Company, the Restricted
Subsidiaries and the Manager hereby agree as follows:
ARTICLE I
DEFINITIONS
Capitalized terms shall have the meanings assigned to such
terms in the Indenture.
ARTICLE II
ADMINISTRATIVE MANAGEMENT
Section 2.01 APPOINTMENT OF MANAGER AS MANAGER OF
ADMINISTRATIVE OBLIGATIONS. The Company and the Restricted Subsidiaries hereby
appoint the Manager and the Manager hereby accepts its appointment as
administrative manager of the Company and the Restricted Subsidiaries.
Section 2.02 ADMINISTRATIVE RESPONSIBILITIES OF MANAGER. The
Manager hereby covenants and agrees with the Company and the Restricted
Subsidiaries that the Manager shall or shall cause its designee to do the
following:
(i) maintain the respective books and records of the Company
and the Restricted Subsidiaries;
(ii) prepare and file the respective annual financial
statements and annual tax returns of the Company and the Restricted
Subsidiaries, if required;
<PAGE>
(iii) provide all office staff and accommodations for the
Company and the Restricted Subsidiaries;
(iv) prepare and submit invoices to each Restricted Subsidiary
for the cost and expense of (A) the annual corporate and tax exemption fees of
such Restricted Subsidiary, (B) the annual fees of the officers and directors of
such Restricted Subsidiary, (C) the annual premiums for directors and officers
liability insurance for the directors and officers of such Restricted
Subsidiary, if any, and (D) any other expenses properly incurred on behalf of
such Restricted Subsidiary;
(v) prepare and submit invoices to the Company for the cost
and expense of (A) the annual corporate and tax exemption fees of the Company,
(B) the annual fees of the officers and directors of the Company, (C) the annual
premiums for directors and officers liability insurance for the directors and
officers of the Company, if any, and (D) any other expenses properly incurred on
behalf of the Company;
(vi) prepare and file any and all information, documents and
reports required in order to comply with Section 13 or 15(d) of the Exchange Act
or the provisions of the Indenture;
(vii) file with the Trustee the information, documents and
reports described in the Indenture relating to the Subsidiary Guarantors;
ARTICLE III
VESSEL MANAGEMENT
Section 3.01 APPOINTMENT OF MANAGER AS VESSEL MANAGER OF THE
RESTRICTED SUBSIDIARY VESSELS. Each Restricted Subsidiary hereby appoints the
Manager and the Manager hereby accepts its appointment to act as the sole and
exclusive vessel manager of such Restricted Subsidiary 's Restricted Subsidiary
Vessel from and after the date hereof to the date the Restricted Subsidiary
Vessel is disposed of by the Restricted Subsidiary or the Manager is removed
pursuant to Section 4.02.
Section 3.02 RESPONSIBILITIES OF THE MANAGER. From the date
hereof, the Manager hereby covenants and agrees with each Restricted Subsidiary
that:
(a) it shall (i) maintain and preserve each Restricted
Subsidiary Vessel and her equipment in good condition, running order and repair,
so that such Restricted Subsidiary Vessel shall be, insofar as due diligence can
make her so, tight, staunch, strong and well and sufficiently tackled,
appareled, furnished, equipped and in every respect seaworthy and in good
operating condition and (ii) keep each Restricted Subsidiary Vessel in such
conditions as will entitle her to be in class as certificated by the related
classification society.
(b) The Manager shall for the account of each Restricted
Subsidiary attend to, supervise and perform all matters and details involving
the operation and vessel management of such Restricted Subsidiary's Restricted
Subsidiary Vessel including but not limited to:
- 2 -
<PAGE>
(i) unless instructed to the contrary, in case of general or
particular average, the appointment of an adjuster and
assistance in preparing the average account, the taking of
proper security for the cargo's and freight's proportion of
average, and in all ways reasonably possible the protection of
the interest of such Restricted Subsidiary Vessel;
(ii) in case of particular average, the settlement of claims
in conjunction with such Restricted Subsidiary 's protection
and indemnity insurance and the making of disbursements
accordingly for such Restricted Subsidiary's account, and the
doing of such other acts and the execution and delivery of
such other documents as in the Manager's judgment may be
necessary or appropriate for the conduct of the agency and
operation of such Restricted Subsidiary Vessel;
(iii) the attendance to all matters involving such Restricted
Subsidiary Vessel's crew, including, but not limited to, the
following:
(A) the procuring and enlisting for such
Restricted Subsidiary Vessel, as required by
applicable law, competent, reliable and duly
licensed personnel (hereinafter referred to
as "crew members"), and all replacements
therefor as from time to time may be
required in compliance with applicable law;
(B) the arranging for and procuring of all
transportation, board and lodging for the
crew members as and when required;
(C) the keeping and maintaining of full and
complete records of any labor agreements
which may be entered into between the
Manager and the crew members, in accordance
with existing or future collective
bargaining agreements between employer
organizations and unions;
(D) the settlement of all wages with the crew
members during the course of and upon
termination of their employment;
(E) the handling of all details and settlement
of any and all claims of the crew members
including, but not limited to, those arising
out of accidents, sickness, or death, loss
of personal effects, disputes under articles
or contracts of enlistment, policies of
insurance, pension plans and fines;
(F) the keeping and maintaining of all
administrative and financial records
relating to the crew members as required by
law, labor agreements or such Restricted
Subsidiary, and rendering to such Restricted
Subsidiary any and all reports when, as and
in such form as requested by such Restricted
Subsidiary; and
(G) the performance of any other function in
connection with the crew members as may be
required by such Restricted Subsidiary.
- 3 -
<PAGE>
(iv) the approval, settlement and payment for such Restricted
Subsidiary's account of all charges incurred in connection
with the operation of the Restricted Subsidiary Vessel, but
limited to, the cost of the items listed in sub-paragraphs (A)
through (G) of paragraph (iii) hereof, repair charges, any
amounts due to any government agency with respect to the crew,
and all contributions to welfare or similar plans required by
the collective bargaining agreements relating to or covering
the Restricted Subsidiary Vessel's crew and to which Manager
is a party;
(v) the prompt reporting to such Restricted Subsidiary of its
Restricted Subsidiary Vessel's movement, position at sea,
arrival and departure dates, casualties and damages received
or caused by such Restricted Subsidiary Vessel in such form
and on such terms as may be requested by such Restricted
Subsidiary;
(vi) keeping such Restricted Subsidiary informed about the
planned drydocking and/or repairs effecting its Restricted
Subsidiary Vessel's trading, supplying such Restricted
Subsidiary current copies of the repair lists, damage reports
and reports of inspection of such Restricted Subsidiary
Vessel;
(vii) arranging for the supply of all necessary bunkers,
lubricants, water, victuals and stores for each Restricted
Subsidiary Vessel and placing all necessary contracts relative
thereto;
(viii) arranging for the procurement and maintenance of a
reasonable supply of usual and necessary spare parts for each
Restricted Subsidiary Vessel, its tackle and equipment; and
(ix) arranging for the supervising drydocking, surveys,
repairs, renewals, alterations, betterments and upkeep of the
Restricted Subsidiary Vessel, obtaining details,
specifications and estimates of costs of repairs and renewals,
at any time carrying out running or emergency repairs
necessary for the seaworthiness or economical operation of the
Restricted Subsidiary Vessel.
(c) The Manager, for the account of each Restricted
Subsidiary, shall procure and retain in full force and effect all customary
insurance pertaining to such Restricted Subsidiary's Restricted Subsidiary
Vessel as instructed by the Restricted Subsidiary and as required by the related
Mortgage, if any, and all such policies and indemnity, hull and machinery, war
risk and pollution covering the Restricted Subsidiary Vessel, shall (i) include
the Manager and any sub-manager as an insured as their respective interests may
appear, (ii) contain provisions waiving the insurer's right of subrogation
against the Manager and any sub-manager, (iii) cover the full liability of the
Manager and any sub-manager to the extent of the cover, (iv) provide there shall
be no liability for the Manager or any sub-manager for the payment of premiums,
commissions, club calls, assessments, deductibles or advances and (v) contain a
provision requiring the insurer to provide thirty (30) days prior notice before
any material change in or cancellation of the insurance becomes effective.
(d) the Manager shall review and approve all charters and
contacts of affreightment for the Restricted Subsidiary Vessels.
- 4 -
<PAGE>
(e) 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 the Manager may determine to be necessary in order
properly to perform the services referred to herein.
(f) 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.
(g) The Manager shall keep all books and records of things
done and transactions performed on behalf of each Restricted Subsidiary.
Section 3.03 MANAGER TO ACT AS ATTORNEY-IN-FACT OF RESTRICTED
SUBSIDIARIES. Each Restricted Subsidiary hereby constitutes the Manager, and its
successors and assigns, its true and lawful attorney, irrevocably, with full
power of substitution, with full power in its own name, in the name of its
agents or nominees or in the name of such Restricted Subsidiary or otherwise, to
execute any and all documents, instruments, agreements and applications for and
on behalf of such Restricted Subsidiary relating to or in connection with (i)
the registration of such Restricted Subsidiary's Restricted Subsidiary Vessel
under the laws of the jurisdiction under which such Restricted Subsidiary Vessel
is registered and (ii) the monitoring and enforcement of the terms and
conditions of all sub- management agreements.
Section 3.04 MANAGER TO ACT AS RESTRICTED SUBSIDIARIES'
REMARKETING AGENT. Each Restricted Subsidiary hereby appoints and the Manager
accepts appointment as such Restricted Subsidiary's exclusive marketing agent
for and on behalf of such Restricted Subsidiary with respect to the sale and/or
charter of such Restricted Subsidiary's Restricted Subsidiary Vessel on the
terms and conditions set forth in this Agreement. Any such sale and/or charter
shall be approved by the Company and the related Restricted Subsidiary.
Section 3.05 MANAGER TO ACT AS PURCHASING AGENT. The Company
hereby appoints the Manager as its exclusive purchasing agent with respect to
the purchase of vessels by subsidiaries of the Company. Each purchase shall be
approved by the Company and the related subsidiary of the Company.
Section 3.06 LIMITATION ON MANAGER'S AUTHORITY.
Notwithstanding anything herein to the contrary, so long as the Advisory
Agreement, between the Company and Millenium Advisors L.L.C. remains in effect,
the Manager will not perform any financial advisory services for the Company or
any Restricted Subsidiary.
Section 3.07 OPERATING ADVANCES; CONTINGENCY FUNDS. Each
Restricted Subsidiary agrees to deposit in advance into an account (the
"Operating Account") in accordance with the Manager's instructions an amount
equal to the estimated aggregate operating expenses for all of the Managed
Vessel for the first quarter of service under the terms of this Agreement. If
the balance of the Operating Account is less than an amount equal to one month's
estimated aggregate operating expenses, the Manager shall have the right to
demand that the related Restricted Subsidiary to deposit an amount equal to
three months' estimated aggregate operating expenses for the related Restricted
- 5 -
<PAGE>
Subsidiary Vessel. Each Restricted Subsidiary agrees to deposit with the Manager
such amount within seven days of the receipt of the Manager's instructions.
(b) Each Restricted Subsidiary, if so requested by the
Manager, agrees to deposit into an account (the "Contingency Fund") in
accordance with the Manager's instructions an amount equal to $200,000 per
Restricted Subsidiary Vessel (the "Contingency Amount"). At any such time as the
balance of the Contingency Fund is less than the Contingency Amount, the Manager
shall have the right to demand that the related Restricted Subsidiary Vessel
deposit an amount equal to such deficiency. The Related Restricted Subsidiary
Vessel shall deposit with the Manager such amount within seven days of receipt
of the Manager's instructions. Upon the incurrence of an extraordinary or
unanticipated cost or expense, the Manager shall have the right to withdraw the
amount of such cost or expense from such Contingency Fund. If the amount in the
Contingency Fund is insufficient to cover such cost or expense, the Manager
shall so notify the related Restricted Subsidiary and such Restricted Subsidiary
shall forward the amount of any insufficiency to the Contingency Account upon
demand.
ARTICLE IV
GENERAL PROVISIONS REGARDING
THE MANAGER
Section 4.01 NO DUTIES EXCEPT AS SPECIFIED IN AGREEMENT OR
INSTRUCTIONS. (a) 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. Without limiting the foregoing, the Manager shall
have no 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 Restricted Subsidiary Vessels 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 Company's or the Subsidiary Guarantors' obligations under the Indenture, the
other Security Agreements or the indebtedness evidenced by the Notes or (ii) the
validity or sufficiency of the Indenture or any of the other Security
Agreements. The Manager shall not assume any liability, duty or obligation to
any Person, other than as expressly provided for herein.
(c) No provision of this Agreement shall be construed to
relieve the Manager from liability unless same is found in a final judgment to
have resulted from the Manager's own grossly negligent action, its own grossly
negligent failure to act or its own willful misconduct. 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.
- 6 -
<PAGE>
(d) 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.
(e) 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 therefor unless same is found in a final judgment to
have resulted from the Manager's 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.
(f) The Manager has the right to appoint sub-managers,
attorneys, accountants, agents, contractors, sub-agents, sub-contractors,
brokers, superintendents, surveyors, consultants and other experts and agents in
connection with the Manager's obligations under the Agreement as it may see fit
and each Restricted Subsidiary hereby ratifies and confirms the appointment
thereof.
Section 4.02 TERM OF AGREEMENT; RESIGNATION BY OR REMOVAL OF
MANAGER. This Agreement shall be effective commencing on the Issue Date and with
respect to a particular Restricted Subsidiary Vessel as of the date such
Restricted Subsidiary Vessel is acquired by a Restricted Subsidiary and shall
terminate with respect to a particular Restricted Subsidiary Vessel on the date
such Restricted Subsidiary Vessel is sold or an Event of Loss occurs with
respect thereto (the "Restricted Subsidiary Termination Date"). No later than
120 days after the Restricted Subsidiary Termination Date of a Restricted
Subsidiary Vessel, the Manager shall (a) present to the related Restricted
Subsidiary a final accounting with respect to such Restricted Subsidiary Vessel
and (b) pay to such Restricted Subsidiary any balance due to such Restricted
Subsidiary. No later than 15 days after such Restricted Subsidiary has received
such accounting, it shall pay to the Manager any amounts owing to the Manager
with respect to such Restricted Subsidiary Vessel. Any dispute regarding the
final accounting not resolved within five business days shall be decided
pursuant to Section 5.05(b).
(b) The Manager may be removed by the Company or with respect
to a particular Restricted Subsidiary by a Restricted Subsidiary, in either case
with cause in the event of a material breach of a material obligation of the
Manager. The Manager may be removed by the Company without cause only upon the
payment by the Company of a termination fee in an amount equal to, with respect
to any Restricted Subsidiary (or in the case of removal by the Company, with
respect to all Restricted Subsidiaries), an amount equal to twelve months of
compensation that would otherwise be payable by such Restricted Subsidiary to
the Manager pursuant to Section 4.04(i) hereof, which shall in no event be less
than the sum of the amounts included in the Operating Account and Contingency
Fund in place with respect to such Restricted Subsidiary.
(c) The Manager may resign as Manager hereunder upon 90 days
prior written notice.
(d) In the event of the resignation or removal of the Manager,
a successor manager shall be appointed by the Restricted Subsidiaries. The
Restricted Subsidiaries shall cause such
- 7 -
<PAGE>
successor manager to execute any and all documents requested by the Company to
evidence such successor's acceptance of all of the obligations of the Manager
pursuant to this Agreement.
Section 4.03 INDEMNIFICATION. The Company and each Restricted
Subsidiary hereby, jointly and severally, indemnify the Manager, any sub-manager
and its officers, directors, shareholders, members, partners, employees,
representatives, custodians, nominees or agents, together with such parties
successors and assigns (each of such Persons being referred to as an
"Indemnified Party"), and hold each of 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 such Indemnified Person (whether or
not indemnified against by other parties and whether or not initiated or
conducted by such Indemnified Party) in any way relating to or arising out of
this Agreement, PROVIDED, HOWEVER, that the Company and the Restricted
Subsidiary shall not be required to indemnify an Indemnified Person for Expenses
arising or resulting from such Indemnified Person's own willful misconduct or
gross negligence.
Section 4.04 COMPENSATION. The Company and each Restricted
Subsidiary, jointly and severally, agree to pay to the Manager as compensation
for its services hereunder for each Restricted Subsidiary Vessel it manages on
behalf of a Restricted Subsidiary as follows: (i) the Manager shall receive a
fixed daily management fee payable monthly in advance for each Restricted
Subsidiary Vessel in an amount ranging from $350 to $600 per day (the "Fixed
Daily Management Fee"), (ii) (A) with respect to the first five days each year
of visits by a superintendent of the Manager to evaluate or supervise any
repairs, drydocking or other activities of a Restricted Subsidiary Vessel, the
manager shall receive reimbursement of expenses incurred with respect to such
visit and (B) with respect to each day in excess of such five days per annum for
such Restricted Subsidiary Vessel, the Manager shall receive an amount equal to
the reimbursement of its expenses and $550 for each additional day, (iii) the
Manager shall receive commissions of (A) 1.25% on all gross revenue relating to
time charter earned by each Restricted Subsidiary Vessel, (B) 1.75% on all gross
revenue relating to charters arranged on the spot market earned by each
Restricted Subsidiary Vessel, (C) 1% on the gross sale or purchase price of a
Restricted Subsidiary Vessel (including vessels that become Restricted
Subsidiary Vessels upon their purchase by the Company or a subsidiary of the
Company) and (D) 2% of insurance premiums for insurance placed, in each case as
adjusted to reflect fluctuations in market rates and practices.
Section 4.05 ADDITIONAL RESTRICTED SUBSIDIARIES. In the event
a Restricted Subsidiary (whether or not in existence on the Issue Date) acquires
a Restricted Subsidiary Vessel after the Issue Date, the Company shall cause
such Restricted Subsidiary to agree in writing to be bound by the terms and
conditions of this Agreement and to be included as a "Restricted Subsidiary"
pursuant to the terms hereof.
Section 4.06 MANAGER MAY ACT FOR OTHER VESSEL OWNERS. The
parties hereto agree that the Manager shall in no way be prohibited or limited
from providing vessel management services to other entities, including
Affiliates of the Company and other third parties.
- 8 -
<PAGE>
ARTICLE V
MISCELLANEOUS PROVISIONS
Section 5.01 AMENDMENT. This Agreement may be amended from
time to time by written agreement signed by the Manager, on the one hand, and
with respect to a Restricted Subsidiary or such Restricted Subsidiary's
Restricted Subsidiary Vessel, such Restricted Subsidiary.
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 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: c/o Maples and
Calder, P.O. Box 309, South Church Street, George Town, Grand Cayman, Cayman
Islands, British West Indies, (b) in the case of each of the Restricted
Subsidiaries, at the address indicated on the signature page hereto, (c) in the
case of the Company, at the following address: c/o Maples and Calder, P.O. Box
309, South Church Street, George Town, Grand Cayman, Cayman Islands, British
West Indies, or at other such address as shall be designated by such party in a
written notice to the other parties.
Section 5.04 THIRD PARTY BENEFICIARIES. The parties hereto
acknowledge that each Indemnified Party, and each of Kylco Maritime Limited and
Kylco Maritime (USA), Inc. pursuant to the Sub-Management Agreement between such
parties and the Manager of even date herewith are third-party beneficiaries to
this Agreement. No other Person should be deemed a third party beneficiary to
this Agreement.
Section 5.05 GOVERNING; ARBITRATION. (a) 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.
(b) If any dispute should arise in connection with the
interpretation and fulfillment of this Agreement, the same shall be decided by
arbitration in the City and State of New York, with laws of the State of New
York to apply. Any dispute shall be referred to a single arbitrator to be
appointed by the parties hereto. If the parties cannot agree upon the selection
of the single arbitrator, the dispute shall be settled by three arbitrators,
with the Manager, on the one hand, selecting one arbitrator and the Company, on
the other hand, selecting one arbitrator and the third being selected by the
president of The Society of Maritime Arbitration (New York). If either the
Manager or the Company fails to select an arbitrator, either originally or by
way of substitution, for two weeks after the other party having selected its
arbitrator has sent the party making default notice by mail, cable or telex to
make the selection, the party selecting the third arbitrator shall, after
application from the
- 9 -
<PAGE>
party having selected its arbitrator, also select an Arbitrator on behalf of the
party making default. The award rendered by the arbitration court shall be final
and binding upon the parties and may if necessary be enforced by the court or
any other competent authority in the same manner as a judgement in the court of
State of New York and the federal courts of the United States. The proceedings
shall be conducted in accordance with the rules of The Society of Maritime
Arbitration (New York).
Section 5.06 NO DEMISE. Nothing herein contained shall be
construed as creating a demise of any Restricted Subsidiary 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.
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;
- 10 -
<PAGE>
(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 Agreement;
(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;
(f) the term "include" or "including" shall mean without
limitation by reason of enumeration; and
(g) 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.
- 11 -
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized, all as of the day and year first above written.
Millenium Management, Inc.
By: /s/ Vassilios M. Livanos
-------------------------------------
Name: Vassilios M. Livanos
Title: Chief Executive Officer
Millenium Seacarriers, Inc.
By: /s/ Vassilios M. Livanos
-------------------------------------
Name: Vassilios M. Livanos
Title: Chief Executive Officer
Conifer Shipping Company Limited
By: /s/ Vassilios M. Livanos
-------------------------------------
Name: Vassilios M. Livanos
Title: Chief Executive Officer
Address: c/o Andreas P. Demetriades & Associates
P.O. Box 4533
Nicosia Cyprus
Topscale Shipping Company, Limited
By: /s/ Vassilios M. Livanos
-------------------------------------
Name: Vassilios M. Livanos
Title: Chief Executive Officer
Address: c/o Andreas P. Demetriades & Associates
P.O. Box 4533
Nicosia Cyprus
Rapid Ocean Carriers
By: /s/ Vassilios M. Livanos
-------------------------------------
Name: Vassilios M. Livanos
Title: Chief Executive Officer
Address: c/o 80 Broad Street
Monrovia Liberia
Ivy Navigation, Inc.
By: /s/ Vassilios M. Livanos
-------------------------------------
Name: Vassilios M. Livanos
Title: Chief Executive Officer
Address: c/o 80 Broad Street
Monrovia Liberia
Oakmont Shipping and Trading, Inc.
By: /s/ Vassilios M. Livanos
-------------------------------------
Name: Vassilios M. Livanos
Title: Chief Executive Officer
Address: c/o 80 Broad Street
Monrovia Liberia
- 12 -
<PAGE>
Millenium Majestic, Inc.
By: /s/ Vassilios M. Livanos
-------------------------------------
Name: Vassilios M. Livanos
Title: Chief Executive Officer
Address: c/o P.O. Box 309
Ugland House
South Church Street
Grand Cayman
Cayman Islands
British West Indies
Millenium Yama, Inc.
By: /s/ Vassilios M. Livanos
-------------------------------------
Name: Vassilios M. Livanos
Title: Chief Executive Officer
Address: c/o P.O. Box 309
Ugland House
South Church Street
Grand Cayman
Cayman Islands
British West Indies
Millenium Amethyst, Inc.
By: /s/ Vassilios M. Livanos
-------------------------------------
Name: Vassilios M. Livanos
Title: Chief Executive Officer
Address: c/o P.O. Box 309
Ugland House
South Church Street
Grand Cayman
Cayman Islands
British West Indies
Millenium Elmar, Inc.
By: /s/ Vassilios M. Livanos
-------------------------------------
Name: Vassilios M. Livanos
Title: Chief Executive Officer
Address: c/o P.O. Box 309
Ugland House
South Church Street
Grand Cayman
Cayman Islands
British West Indies
Millenium Aleksander, Inc.
By: /s/ Vassilios M. Livanos
-------------------------------------
Name: Vassilios M. Livanos
Title: Chief Executive Officer
Address: c/o P.O. Box 309
Ugland House
South Church Street
Grand Cayman
Cayman Islands
British West Indies
Millenium II, Inc.
By: /s/ Vassilios M. Livanos
-------------------------------------
Name: Vassilios M. Livanos
Title: Chief Executive Officer
Address: c/o P.O. Box 309
Ugland House
South Church Street
Grand Cayman
Cayman Islands
British West Indies
Millenium III, Inc.
By: /s/ Vassilios M. Livanos
-------------------------------------
Name: Vassilios M. Livanos
Title: Chief Executive Officer
Address: c/o P.O. Box 309
Ugland House
South Church Street
Grand Cayman
Cayman Islands
British West Indies
Millenium IV, Inc.
By: /s/ Vassilios M. Livanos
-------------------------------------
Name: Vassilios M. Livanos
Title: Chief Executive Officer
Address: c/o P.O. Box 309
Ugland House
South Church Street
Grand Cayman
Cayman Islands
British West Indies
- 13 -
<PAGE>
Millenium V, Inc.
By: /s/ Vassilios M. Livanos
-------------------------------------
Name: Vassilios M. Livanos
Title: Chief Executive Officer
Millenium VI, Inc.
By: /s/ Vassilios M. Livanos
-------------------------------------
Name: Vassilios M. Livanos
Title: Chief Executive Officer
Millenium VII, Inc.
By: /s/ Vassilios M. Livanos
-------------------------------------
Name: Vassilios M. Livanos
Title: Chief Executive Officer
- 14 -
<PAGE>
Schedule of Restricted Subsidiaries
Conifer Shipping Company Limited
Topscale Shipping Company, Limted
Rapid Ocean Carriers
Ivy Navigation, Inc.
Oakmont Shipping and Trading, Inc.
Millenium Majestic, Inc.
Millenium Yama, Inc.
Millenium Amethyst, Inc.
Millenium Elmar, Inc.
Millenium Aleksander, Inc.
Millenium II, Inc.
Millenium III, Inc.
Millenium IV, Inc.
Millenium V, Inc.
Millenium VI, Inc.
Millenium VII, Inc.
- 15 -
EXECUTION COPY
MILLENIUM SEACARRIERS, INC.
$100,000,000
REPRESENTING 100,000 UNITS CONSISTING OF
12% FIRST PRIORITY SHIP MORTGAGE NOTES DUE 2005
AND WARRANTS TO PURCHASE 500,000 SHARES OF COMMON STOCK
REGISTRATION RIGHTS AGREEMENT
-----------------------------
July 20, 1998
Credit Suisse First Boston Corporation
Donaldson, Lufkin & Jenrette Securities Corporation
c/o Credit Suisse First Boston Corporation
Eleven Madison Avenue
New York, New York 10010-3629
Dear Sirs:
Millenium Seacarriers, Inc., a Cayman Islands corporation (the
"Issuer"), proposes to issue and sell to Credit Suisse First Boston Corporation
and Donaldson Lufkin & Jenrette Securities Corporation (collectively, the
"Initial Purchasers"), upon the terms set forth in a purchase agreement of even
date herewith (the "Purchase Agreement"), 100,000 units (the "Units") each Unit
consisting of one of its 12% First Priority Ship Mortgage Notes Due 2005 in a
principal amount at maturity of $1,000 (the "Initial Securities") and one
warrant (each a "Warrant") to purchase 5 shares of common stock, par value $1
per share of the Issuer at an exercise price of $.01 per share. The Initial
Securities will be unconditionally guaranteed on a senior basis by each of the
Issuer's subsidiaries that owns a Mortgaged Vessel (as defined in the Purchase
Agreement) on the Closing Date (as defined in the Purchase Agreement) or
thereafter, identified on the signature pages hereto (collectively, the
"Guarantors" and together with the Issuer, the "Company"). The Initial
Securities will be issued pursuant to an Indenture, dated as of July 15, 1998
(the "Indenture"), among the Issuer, the Guarantors named therein and First
National Bank of Maryland, as trustee (the "Trustee").
As an inducement to the Initial Purchasers to enter into the Purchase
Agreement, the Company agrees with the Initial Purchasers, for the benefit of
the holders of the Initial Securities (including, without limitation, the
Initial Purchasers), the Exchange Securities (as defined below) and the Private
Exchange Securities (as defined below) (collectively the "Holders"), as follows:
1. REGISTERED EXCHANGE OFFER. The Company shall, at its own cost,
prepare and, not later than 45 days after (or if the 45th day is not a business
day, the first business day thereafter) the date of original issue of the
Initial Securities (the "Issue Date"), file with the Securities and Exchange
Commission (the "Commission") a registration statement (the "Exchange Offer
Registration Statement") on an appropriate form under the Securities Act of 1933
(the "Securities Act"), with respect to a proposed offer (the "Registered
Exchange Offer") to the Holders of the Initial Securities, who are not
prohibited by any law or policy of the Commission from participating in the
Registered Exchange Offer, to issue and deliver to such Holders, in exchange for
the Initial Securities, a like aggregate principal amount of debt securities
(the "Exchange Securities") of the Company issued under the Indenture and
identical in all material respects to the Initial Securities (except for the
transfer restrictions relating to the Initial Securities and the provisions
relating to the matters described in Section 6 hereof) that would be registered
under the Securities Act. The Company shall use its best efforts to cause such
Exchange Offer Registration Statement to become effective under the Securities
Act within 150 days (or if the 150th day is not a business day, the first
business day thereafter) after the Issue Date of the Initial Securities and
shall keep the Exchange Offer Registration Statement effective for not less than
30 days (or longer, if required by applicable law) after the date notice of the
Registered Exchange Offer is mailed to the Holders (such period being called the
"Exchange Offer Registration Period").
If the Company effects the Registered Exchange Offer, the Company will
be entitled to close the Registered Exchange Offer 30 days after the
commencement thereof provided that the Company has
<PAGE>
2
accepted all the Initial Securities theretofore validly tendered in accordance
with the terms of the Registered Exchange Offer.
Following the declaration of the effectiveness of the Exchange Offer
Registration Statement, the Company shall promptly commence the Registered
Exchange Offer, it being the objective of such Registered Exchange Offer to
enable each Holder of Transfer Restricted Securities (as defined in Section 6
hereof) electing to exchange the Initial Securities for Exchange Securities
(assuming that such Holder is not an affiliate of the Company within the meaning
of the Securities Act, acquires the Exchange Securities in the ordinary course
of such Holder's business and has no arrangements with any person to participate
in the distribution of the Exchange Securities and is not prohibited by any law
or policy of the Commission from participating in the Registered Exchange Offer)
to trade such Exchange Securities from and after their receipt without any
limitations or restrictions under the Securities Act and without material
restrictions under the securities laws of the several states of the United
States.
The Company acknowledges that, pursuant to current interpretations by
the Commission's staff of Section 5 of the Securities Act, in the absence of an
applicable exemption therefrom, (i) each Holder which is a broker-dealer
electing to exchange Initial Securities, acquired for its own account as a
result of market making activities or other trading activities, for Exchange
Securities (an "Exchanging Dealer"), is required to deliver a prospectus
containing the information set forth in (a) Annex A hereto on the cover, (b)
Annex B hereto in the "Exchange Offer Procedures" section and the "Purpose of
the Exchange Offer" section, and (c) Annex C hereto in the "Plan of
Distribution" section of such prospectus in connection with a sale of any such
Exchange Securities received by such Exchanging Dealer pursuant to the
Registered Exchange Offer and (ii) an Initial Purchaser that elects to sell
Exchange Securities or Private Exchange Securities acquired in exchange for
Initial Securities constituting any portion of an unsold allotment, is required
to deliver a prospectus containing the information required by Items 507 or 508
of Regulation S-K under the Securities Act, as applicable, in connection with
such sale.
The Company shall use its best commercially reasonable efforts to keep
the Exchange Offer Registration Statement effective and to amend and supplement
the prospectus contained therein, in order to permit such prospectus to be
lawfully delivered by all persons subject to the prospectus delivery
requirements of the Securities Act for such period of time as such persons must
comply with such requirements in order to resell the Exchange Securities;
PROVIDED, HOWEVER, that (i) in the case where such prospectus and any amendment
or supplement thereto must be delivered by an Exchanging Dealer or an Initial
Purchaser, such period shall be the lesser of 180 days and the date on which all
Exchanging Dealers and the Initial Purchasers have sold all Exchange Securities
held by them (unless such period is extended pursuant to Section 3(j) below) and
(ii) the Company shall make such prospectus and any amendment or supplement
thereto available to any broker-dealer for use in connection with any resale of
any Exchange Securities for a period of not less than 180 days after the
consummation of the Registered Exchange Offer.
If, upon consummation of the Registered Exchange Offer, any Initial
Purchaser holds Initial Securities acquired by it as part of its initial
distribution, the Company, simultaneously with the delivery of the Exchange
Securities pursuant to the Registered Exchange Offer, shall issue and deliver to
such Initial Purchaser upon the written request of such Initial Purchaser, in
exchange (the "Private Exchange") for the Initial Securities held by such
Initial Purchaser, a like principal amount of debt securities of the Company
issued under the Indenture and identical in all material respects (including the
existence of restrictions on transfer under the Securities Act and the
securities laws of the several states of the United States, but excluding
provisions relating to the matters described in Section 6 hereof) to the Initial
Securities (the "Private Exchange Securities"). The Initial Securities, the
Exchange Securities and the Private Exchange Securities are herein collectively
called the "Securities".
In connection with the Registered Exchange Offer, the Company shall:
(a) mail to each Holder a copy of the prospectus forming part
of the Exchange Offer Registration Statement, together with an
appropriate letter of transmittal and related documents;
(b) keep the Registered Exchange Offer open for not less than
30 days (or longer, if required by applicable law) after the date
notice thereof is mailed to the Holders;
<PAGE>
3
(c) utilize the services of a depositary for the Registered
Exchange Offer which may be the Trustee or an affiliate of the Trustee;
(d) permit Holders to withdraw tendered Securities at any time
prior to the close of business, New York time, on the last business day
on which the Registered Exchange Offer shall remain open; and
(e) otherwise comply with all applicable laws.
As soon as practicable after the close of the Registered Exchange Offer
or the Private Exchange, as the case may be, the Company shall:
(x) accept for exchange all the Securities validly tendered
and not withdrawn pursuant to the Registered Exchange Offer and the
Private Exchange;
(y) deliver to the Trustee for cancelation all the Initial
Securities so accepted for exchange; and
(z) cause the Trustee to authenticate and deliver promptly to
each Holder of the Initial Securities, Exchange Securities or Private
Exchange Securities, as the case may be, equal in principal amount to
the Initial Securities of such Holder so accepted for exchange.
The Indenture will provide that the Exchange Securities will not be
subject to the transfer restrictions set forth in the Indenture and that all the
Securities will vote and consent together on all matters as one class and that
none of the Securities will have the right to vote or consent as a class
separate from one another on any matter.
Interest on each Exchange Security and Private Exchange Security issued
pursuant to the Registered Exchange Offer and in the Private Exchange will
accrue from the last interest payment date on which interest was paid on the
Initial Securities surrendered in exchange therefor or, if no interest has been
paid on the Initial Securities, from the date of original issue of the Initial
Securities.
Each Holder participating in the Registered Exchange Offer shall be
required to represent to the Company that at the time of the consummation of the
Registered Exchange Offer (i) any Exchange Securities received by such Holder
will be acquired in the ordinary course of business, (ii) such Holder will have
no arrangements or understanding with any person to participate in the
distribution of the Securities or the Exchange Securities within the meaning of
the Securities Act, (iii) such Holder is not an "affiliate," as defined in Rule
405 of the Securities Act, of the Company or if it is an affiliate, such Holder
will comply with the registration and prospectus delivery requirements of the
Securities Act to the extent applicable, (iv) if such Holder is not a
broker-dealer, that it is not engaged in, and does not intend to engage in, the
distribution of the Exchange Securities and (v) if such Holder is a
broker-dealer, that it will receive Exchange Securities for its own account in
exchange for Initial Securities that were acquired as a result of market-making
activities or other trading activities and that it will be required to
acknowledge that it will deliver a prospectus in connection with any resale of
such Exchange Securities.
Notwithstanding any other provisions hereof, the Company will ensure
that (i) any Exchange Offer Registration Statement and any amendment thereto and
any prospectus forming part thereof and any supplement thereto complies in all
material respects with the Securities Act and the rules and regulations
thereunder, (ii) any Exchange Offer Registration Statement and any amendment
thereto does not, when it becomes effective, 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 not misleading and (iii) any prospectus
forming part of any Exchange Offer Registration Statement, and any supplement to
such prospectus, does not include an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading.
<PAGE>
4
2. SHELF REGISTRATION. If, (i) because of any change in law or in
applicable interpretations thereof by the staff of the Commission, the Company
is not permitted to effect a Registered Exchange Offer, as contemplated by
Section 1 hereof, (ii) the Registered Exchange Offer is not consummated within
180 days of the date of this Agreement, (iii) any Initial Purchaser so requests
with respect to the Initial Securities (or the Private Exchange Securities) not
eligible to be exchanged for Exchange Securities in the Registered Exchange
Offer and held by it following consummation of the Registered Exchange Offer or
(iv) any Holder (other than an Exchanging Dealer) is not eligible to participate
in the Registered Exchange Offer or, in the case of any Holder (other than an
Exchanging Dealer) that participates in the Registered Exchange Offer, such
Holder does not receive freely tradeable Exchange Securities on the date of the
exchange, the Company shall take the following actions:
(a) The Company shall, at its cost, as promptly as practicable
(but in no event more than 30 days after so required or requested
pursuant to this Section 2) file with the Commission and thereafter
shall use its best commercially reasonable efforts to cause to be
declared effective a registration statement (the "Shelf Registration
Statement" and, together with the Exchange Offer Registration
Statement, a "Registration Statement") on an appropriate form under the
Securities Act relating to the offer and sale of the Transfer
Restricted Securities (as defined in Section 6 hereof) by the Holders
thereof from time to time in accordance with the methods of
distribution set forth in the Shelf Registration Statement and Rule 415
under the Securities Act (hereinafter, the "Shelf Registration");
PROVIDED, HOWEVER, that no Holder (other than an Initial Purchaser)
shall be entitled to have the Securities held by it covered by such
Shelf Registration Statement unless such Holder agrees in writing to be
bound by all the provisions of this Agreement applicable to such
Holder.
(b) The Company shall use its best efforts to keep the Shelf
Registration Statement continuously effective in order to permit the
prospectus included therein to be lawfully delivered by the Holders of
the relevant Securities, for a period of two years (or for such longer
period if extended pursuant to Section 3(j) below) (the "Shelf
Registration Period") from the date of its effectiveness or such
shorter period that will terminate when all the Securities covered by
the Shelf Registration Statement (i) have been sold pursuant thereto or
(ii) are no longer restricted securities (as defined in Rule 144 under
the Securities Act, or any successor rule thereof). The Company shall
be deemed not to have used its best efforts to keep the Shelf
Registration Statement effective during the requisite period if it
voluntarily takes any action that would result in Holders of Securities
covered thereby not being able to offer and sell such Securities during
that period, unless such action is required by applicable law.
(c) Notwithstanding any other provisions of this Agreement to
the contrary, the Company shall cause the Shelf Registration Statement
and the related prospectus and any amendment or supplement thereto, as
of the effective date of the Shelf Registration Statement, amendment or
supplement, (i) to comply in all material respects with the applicable
requirements of the Securities Act and the rules and regulations of the
Commission and (ii) not to contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
3. REGISTRATION PROCEDURES. In connection with any Shelf Registration
contemplated by Section 2 hereof and, to the extent applicable, any Registered
Exchange Offer contemplated by Section 1 hereof, the following provisions shall
apply:
(a) The Company shall (i) furnish to each Initial Purchaser,
prior to the filing thereof with the Commission, a copy of the
Registration Statement and each amendment thereof and each supplement,
if any, to the prospectus included therein and, in the event that an
Initial Purchaser (with respect to any portion of an unsold allotment
from the original offering) is participating in the Registered Exchange
Offer or the Shelf Registration Statement, the Company shall use its
best efforts to reflect in each such document, when so filed with the
Commission, such comments as such Initial Purchaser reasonably may
propose; (ii) include the information set forth in Annex A hereto on
the cover, in Annex B hereto in the "Exchange Offer Procedures" section
and the
<PAGE>
5
"Purpose of the Exchange Offer" section and in Annex C hereto in the
"Plan of Distribution" section of the prospectus forming a part of the
Exchange Offer Registration Statement and include the information set
forth in Annex D hereto in the Letter of Transmittal delivered pursuant
to the Registered Exchange Offer; (iii) if requested by an Initial
Purchaser, include the information required by Items 507 or 508 of
Regulation S-K under the Securities Act, as applicable, in the
prospectus forming a part of the Exchange Offer Registration Statement;
(iv) include within the prospectus contained in the Exchange Offer
Registration Statement a section entitled "Plan of Distribution,"
reasonably acceptable to the Initial Purchasers, which shall contain a
summary statement of the positions taken or policies made by the staff
of the Commission with respect to the potential "underwriter" status of
any broker-dealer that is the beneficial owner (as defined in Rule
13d-3 under the Securities Exchange Act of 1934, as amended (the
"Exchange Act")) of Exchange Securities received by such broker-dealer
in the Registered Exchange Offer (a "Participating Broker-Dealer"),
whether such positions or policies have been publicly disseminated by
the staff of the Commission or such positions or policies, in the
reasonable judgment of the Initial Purchasers based upon advice of
counsel (which may be in-house counsel), represent the prevailing views
of the staff of the Commission; and (v) in the case of a Shelf
Registration Statement, include the names of the Holders who propose to
sell Securities pursuant to the Shelf Registration Statement as selling
securityholders.
(b) The Company shall give written notice to the Initial
Purchasers, the Holders of the Securities and any Participating
Broker-Dealer from whom the Company has received prior written notice
that it will be a Participating Broker-Dealer in the Registered
Exchange Offer (which notice pursuant to clauses (ii)-(v) hereof shall
be accompanied by an instruction to suspend the use of the prospectus
until the requisite changes have been made):
(i) when the Registration Statement or any amendment
thereto has been filed with the Commission and when the
Registration Statement or any post-effective amendment thereto
has become effective;
(ii) of any request by the Commission for amendments
or supplements to the Registration Statement or the prospectus
included therein or for additional information;
(iii) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration
Statement or the initiation of any proceedings for that
purpose;
(iv) of the receipt by the Company or its legal
counsel of any notification with respect to the suspension of
the qualification of the Securities for sale in any
jurisdiction or the initiation or threatening of any
proceeding for such purpose; and
(v) of the happening of any event that requires the
Company to make changes in the Registration Statement or the
prospectus in order that the Registration Statement or the
prospectus do not contain an untrue statement of a material
fact nor omit to state a material fact required to be stated
therein or necessary to make the statements therein (in the
case of the prospectus, in light of the circumstances under
which they were made) not misleading.
(c) The Company shall make every reasonable effort to obtain
the withdrawal at the earliest possible time, of any order suspending
the effectiveness of the Registration Statement.
(d) The Company shall furnish to each Holder of Securities
included within the coverage of the Shelf Registration, without charge,
at least one copy of the Shelf Registration Statement and any
post-effective amendment thereto, including financial statements and
schedules, and, if the Holder so requests in writing, all exhibits
thereto (including those, if any, incorporated by
reference).
<PAGE>
6
(e) The Company shall deliver to each Exchanging Dealer and
each Initial Purchaser, and to any other Holder who so requests,
without charge, at least one copy of the Exchange Offer Registration
Statement and any post-effective amendment thereto, including financial
statements and schedules, and, if any Initial Purchaser or any such
Holder requests, all exhibits thereto (including those incorporated by
reference).
(f) The Company shall, during the Shelf Registration Period,
deliver to each Holder of Securities included within the coverage of
the Shelf Registration, without charge, as many copies of the
prospectus (including each preliminary prospectus) included in the
Shelf Registration Statement and any amendment or supplement thereto as
such person may reasonably request. The Company consents, subject to
the provisions of this Agreement, to the use of the prospectus or any
amendment or supplement thereto by each of the selling Holders of the
Securities in connection with the offering and sale of the Securities
covered by the prospectus, or any amendment or supplement thereto,
included in the Shelf Registration Statement.
(g) The Company shall deliver to each Initial Purchaser, any
Exchanging Dealer, any Participating Broker-Dealer and such other
persons required to deliver a prospectus following the Registered
Exchange Offer, without charge, as many copies of the final prospectus
included in the Exchange Offer Registration Statement and any amendment
or supplement thereto as such persons may reasonably request. The
Company consents, subject to the provisions of this Agreement, to the
use of the prospectus or any amendment or supplement thereto by any
Initial Purchaser, if necessary, any Participating Broker-Dealer and
such other persons required to deliver a prospectus following the
Registered Exchange Offer in connection with the offering and sale of
the Exchange Securities covered by the prospectus, or any amendment or
supplement thereto, included in such Exchange Offer Registration
Statement.
(h) Prior to any public offering of the Securities pursuant to
any Registration Statement the Company shall register or qualify or
cooperate with the Holders of the Securities included therein and their
respective counsel in connection with the registration or qualification
of the Securities for offer and sale under the securities or "blue sky"
laws of such states of the United States as any Holder of the
Securities reasonably requests in writing and do any and all other acts
or things necessary or advisable to enable the offer and sale in such
jurisdictions of the Securities covered by such Registration Statement;
PROVIDED, HOWEVER, that the Company shall not be required to (i)
qualify generally to do business in any jurisdiction where it is not
then so qualified or (ii) take any action which would subject it to
general service of process or to taxation in any jurisdiction where it
is not then so subject.
(i) The Company shall cooperate with the Holders of the
Securities to facilitate the timely preparation and delivery of
certificates representing the Securities to be sold pursuant to any
Registration Statement free of any restrictive legends and in such
denominations and registered in such names as the Holders may request a
reasonable period of time prior to sales of the Securities pursuant to
such Registration Statement.
(j) Upon the occurrence of any event contemplated by
paragraphs (ii) through (v) of Section 3(b) above during the period for
which the Company is required to maintain an effective Registration
Statement, the Company shall promptly prepare and file a post-effective
amendment to the Registration Statement or a supplement to the related
prospectus and any other required document so that, as thereafter
delivered to Holders of the Securities or purchasers of Securities, the
prospectus will not contain an 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. If the Company notifies the
Initial Purchasers, the Holders of the Securities and any known
Participating Broker-Dealer in accordance with paragraphs (ii) through
(v) of Section 3(b) above to suspend the use of the prospectus until
the requisite changes to the prospectus have been made, then the
Initial Purchasers, the Holders of the Securities and any such
Participating Broker-Dealers shall suspend use of such prospectus, and
the period of effectiveness of the Shelf Registration Statement
provided for in Section 2(b) above and the Exchange Offer Registration
Statement provided for in
<PAGE>
7
Section 1 above shall each be extended by the number of days from and
including the date of the giving of such notice to and including the
date when the Initial Purchasers, the Holders of the Securities and any
known Participating Broker-Dealer shall have received such amended or
supplemented prospectus pursuant to this Section 3(j).
(k) Not later than the effective date of the applicable
Registration Statement, the Company will provide a CUSIP number for the
Initial Securities, the Exchange Securities or the Private Exchange
Securities, as the case may be, and provide the applicable trustee with
printed certificates for the Initial Securities, the Exchange
Securities or the Private Exchange Securities, as the case may be, in a
form eligible for deposit with The Depository Trust Company.
(l) The Company will comply with all rules and regulations of
the Commission to the extent and so long as they are applicable to the
Registered Exchange Offer or the Shelf Registration and will make
generally available to its security holders (or otherwise provide in
accordance with Section 11(a) of the Securities Act) an earnings
statement satisfying the provisions of Section 11(a) of the Securities
Act, no later than 45 days after the end of a 12-month period (or 90
days, if such period is a fiscal year) beginning with the first month
of the Company's first fiscal quarter commencing after the effective
date of the Registration Statement, which statement shall cover such
12-month period.
(m) The Company shall cause the Indenture to be qualified
under the Trust Indenture Act of 1939, as amended, in a timely manner
and containing such changes, if any, as shall be necessary for such
qualification. In the event that such qualification would require the
appointment of a new trustee under the Indenture, the Company shall
appoint a new trustee thereunder pursuant to the applicable provisions
of the Indenture.
(n) The Company may require each Holder of Securities to be
sold pursuant to the Shelf Registration Statement to furnish to the
Company such information regarding the Holder and the distribution of
the Securities as the Company may from time to time reasonably require
for inclusion in the Shelf Registration Statement, and the Company may
exclude from such registration the Securities of any Holder that
unreasonably fails to furnish such information within a reasonable time
after receiving such request.
(o) The Company shall enter into such customary agreements
(including, if requested, an underwriting agreement in customary form)
and take all such other action, if any, as any Holder of the Securities
shall reasonably request in order to facilitate the disposition of the
Securities pursuant to any Shelf Registration.
(p) In the case of any Shelf Registration, the Company shall
(i) make reasonably available for inspection by the Holders of the
Securities, any underwriter participating in any disposition pursuant
to the Shelf Registration Statement and any attorney, accountant or
other agent retained by the Holders of the Securities or any such
underwriter all relevant financial and other records, pertinent
corporate documents and properties of the Company and (ii) cause the
Company's officers, directors, employees, accountants and auditors to
supply all relevant information reasonably requested by the Holders of
the Securities or any such underwriter, attorney, accountant or agent
in connection with the Shelf Registration Statement, in each case, as
shall be reasonably necessary to enable such persons, to conduct a
reasonable investigation within the meaning of Section 11 of the
Securities Act; PROVIDED, HOWEVER, that the foregoing inspection and
information gathering shall be coordinated on behalf of the Initial
Purchasers by you and on behalf of the other parties, by one counsel
designated by and on behalf of such other parties as described in
Section 4 hereof.
(q) In the case of any Shelf Registration, the Company, if
requested by any Holder of Securities covered thereby, shall cause (i)
its counsel to deliver an opinion and updates thereof relating to the
Securities in customary form addressed to such Holders and the managing
underwriters, if any, thereof and dated, in the case of the initial
opinion, the effective date of such Shelf Registration Statement (it
being agreed that the matters to be covered by such opinion shall
<PAGE>
8
include, without limitation, the due incorporation and good standing of
the Company and its subsidiaries; the qualification of the Company and
its subsidiaries to transact business as foreign corporations; the due
authorization, execution and delivery of the relevant agreement of the
type referred to in Section 3(o) hereof; the due authorization,
execution, authentication and issuance, and the validity and
enforceability, of the applicable Securities; the absence of material
legal or governmental proceedings involving the Company and its
subsidiaries; the absence of governmental approvals required to be
obtained in connection with the Shelf Registration Statement, the
offering and sale of the applicable Securities, or any agreement of the
type referred to in Section 3(o) hereof; the compliance as to form of
such Shelf Registration Statement and any documents incorporated by
reference therein and of the Indenture with the requirements of the
Securities Act and the Trust Indenture Act, respectively; and, as of
the date of the opinion and as of the effective date of the Shelf
Registration Statement or most recent post-effective amendment thereto,
as the case may be, the absence from such Shelf Registration Statement
and the prospectus included therein, as then amended or supplemented,
and from any documents incorporated by reference therein of an untrue
statement of a material fact or the omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading (in the case of any such documents,
in the light of the circumstances existing at the time that such
documents were filed with the Commission under the Exchange Act); (ii)
its officers to execute and deliver all customary documents and
certificates and updates thereof requested by any underwriters of the
applicable Securities and (iii) its independent public accountants [and
the independent public accountants with respect to any other entity for
which financial information is provided in the Shelf Registration
Statement] to provide to the selling Holders of the applicable
Securities and any underwriter therefor a comfort letter in customary
form and covering matters of the type customarily covered in comfort
letters in connection with primary underwritten offerings, subject to
receipt of appropriate documentation as contemplated, and only if
permitted, by Statement of Auditing Standards No. 72.
(r) In the case of the Registered Exchange Offer, if requested
by any Initial Purchaser or any known Participating Broker-Dealer, the
Company shall cause (i) its counsel to deliver to such Initial
Purchaser or such Participating Broker-Dealer a signed opinion in the
form set forth in Section 6(c)-(h) of the Purchase Agreement with such
changes as are customary in connection with the preparation of a
Registration Statement and (ii) its independent public accountants to
deliver to such Initial Purchaser or such Participating Broker-Dealer a
comfort letter, in customary form, meeting the requirements as to the
substance thereof as set forth in Section 6(a) of the Purchase
Agreement, with appropriate date changes.
(s) If a Registered Exchange Offer or a Private Exchange is to
be consummated, upon delivery of the Initial Securities by Holders to
the Company (or to such other Person as directed by the Company) in
exchange for the Exchange Securities or the Private Exchange
Securities, as the case may be, the Company shall mark, or caused to be
marked, on the Initial Securities so exchanged that such Initial
Securities are being canceled in exchange for the Exchange Securities
or the Private Exchange Securities, as the case may be; in no event
shall the Initial Securities be marked as paid or otherwise satisfied.
(t) The Company will use its best commercially reasonable
efforts to (a) if the Initial Securities have been rated prior to the
initial sale of such Initial Securities, confirm such ratings will
apply to the Securities covered by a Registration Statement, or (b) if
the Initial Securities were not previously rated, cause the Securities
covered by a Registration Statement to be rated with the appropriate
rating agencies, if so requested by Holders of a majority in aggregate
principal amount of Securities covered by such Registration Statement,
or by the managing underwriters, if any.
(u) In the event that any broker-dealer registered under the
Exchange Act shall underwrite any Securities or participate as a member
of an underwriting syndicate or selling group or "assist in the
distribution" (within the meaning of the Conduct Rules (the "Rules") of
the National Association of Securities Dealers, Inc. ("NASD")) thereof,
whether as a Holder of such Securities or as an underwriter, a
placement or sales agent or a broker or dealer in respect thereof,
<PAGE>
9
or otherwise, the Company will assist such broker-dealer in complying
with the requirements of such Rules, including, without limitation, by
(i) if such Rules, including Rule 2720, shall so require, engaging a
"qualified independent underwriter" (as defined in Rule 2720) to
participate in the preparation of the Registration Statement relating
to such Securities, to exercise usual standards of due diligence in
respect thereto and, if any portion of the offering contemplated by
such Registration Statement is an underwritten offering or is made
through a placement or sales agent, to recommend the yield of such
Securities, (ii) indemnifying any such qualified independent
underwriter to the extent of the indemnification of underwriters
provided in Section 5 hereof and (iii) providing such information to
such broker-dealer as may be required in order for such broker-dealer
to comply with the requirements of the Rules.
(v) The Company shall use its best efforts to take all other
steps necessary to effect the registration of the Securities covered by
a Registration Statement contemplated hereby.
4. REGISTRATION EXPENSES. The Company shall bear all fees and expenses
incurred in connection with the performance of its obligations under Sections 1
through 3 hereof (including the reasonable fees and expenses, if any, of
Cravath, Swaine & Moore, counsel for the Initial Purchasers, incurred in
connection with the Registered Exchange Offer), whether or not the Registered
Exchange Offer or a Shelf Registration is filed or becomes effective, and, in
the event of a Shelf Registration, shall bear or reimburse the Holders of the
Securities covered thereby for the reasonable fees and disbursements of one firm
of counsel designated by the Holders of a majority in principal amount of the
Securities covered thereby to act as counsel for the Holders of the Securities
in connection therewith.
5. INDEMNIFICATION. (a) The Company agrees to indemnify and hold
harmless each Holder of the Securities, any Participating Broker-Dealer and each
person, if any, who controls such Holder or such Participating Broker-Dealer
within the meaning of the Securities Act or the Exchange Act (each Holder, any
Participating Broker-Dealer and such controlling persons are referred to
collectively as the "Indemnified Parties") from and against any losses, claims,
damages or liabilities, joint or several, or any actions in respect thereof
(including, but not limited to, any losses, claims, damages, liabilities or
actions relating to purchases and sales of the Securities) to which each
Indemnified Party may become subject under the Securities Act, the Exchange Act
or otherwise, insofar as such losses, claims, damages, liabilities or actions
arise out of or are based upon any untrue statement or alleged untrue statement
of a material fact contained in a Registration Statement or prospectus or in any
amendment or supplement thereto or in any preliminary prospectus relating to a
Shelf Registration, or arise out of, or are based upon, the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and shall reimburse, as
incurred, the Indemnified Parties for any legal or other expenses reasonably
incurred by them in connection with investigating or defending any such loss,
claim, damage, liability or action in respect thereof; PROVIDED, HOWEVER, that
(i) the Company shall not be liable in any such case to the extent that such
loss, claim, damage or liability arises out of or is based upon any untrue
statement or alleged untrue statement or omission or alleged omission made in a
Registration Statement or prospectus or in any amendment or supplement thereto
or in any preliminary prospectus relating to a Shelf Registration in reliance
upon and in conformity with written information pertaining to such Holder and
furnished to the Company by or on behalf of such Holder specifically for
inclusion therein and (ii) with respect to any untrue statement or omission or
alleged untrue statement or omission made in any preliminary prospectus relating
to a Shelf Registration Statement, the indemnity agreement contained in this
subsection (a) shall not inure to the benefit of any Holder or Participating
Broker-Dealer from whom the person asserting any such losses, claims, damages or
liabilities purchased the Securities concerned, to the extent that a prospectus
relating to such Securities was required to be delivered by such Holder or
Participating Broker-Dealer under the Securities Act in connection with such
purchase and any such loss, claim, damage or liability of such Holder or
Participating Broker-Dealer results from the fact that there was not sent or
given to such person, at or prior to the written confirmation of the sale of
such Securities to such person, a copy of the final prospectus if the Company
had previously furnished copies thereof to such Holder or Participating
Broker-Dealer; PROVIDED FURTHER, HOWEVER, that this indemnity agreement will be
in addition to any liability which the Company may otherwise have to such
Indemnified Party. The Company shall also indemnify underwriters, their officers
and directors and each person who controls such underwriters within the meaning
of the Securities Act or the Exchange Act to the same extent as provided above
with respect to the indemnification of the Holders of the Securities if
requested by such Holders.
<PAGE>
10
(b) Each Holder of the Securities, severally and not jointly, will
indemnify and hold harmless the Company and each person, if any, who controls
the Company within the meaning of the Securities Act or the Exchange Act from
and against any losses, claims, damages or liabilities or any actions in respect
thereof, to which the Company or any such controlling person may become subject
under the Securities Act, the Exchange Act or otherwise, insofar as such losses,
claims, damages, liabilities or actions arise out of or are based upon any
untrue statement or alleged untrue statement of a material fact contained in a
Registration Statement or prospectus or in any amendment or supplement thereto
or in any preliminary prospectus relating to a Shelf Registration, or arise out
of or are based upon the omission or alleged omission to state therein a
material fact necessary to make the statements therein not misleading, but in
each case only to the extent that the untrue statement or omission or alleged
untrue statement or omission was made in reliance upon and in conformity with
written information pertaining to such Holder and furnished to the Company by or
on behalf of such Holder specifically for inclusion therein; and, subject to the
limitation set forth immediately preceding this clause, shall reimburse, as
incurred, the Company for any legal or other expenses reasonably incurred by the
Company or any such controlling person in connection with investigating or
defending any loss, claim, damage, liability or action in respect thereof. This
indemnity agreement will be in addition to any liability which such Holder may
otherwise have to the Company or any of its controlling persons.
(c) Promptly after receipt by an indemnified party under this Section 5
of notice of the commencement of any action or proceeding (including a
governmental investigation), such indemnified party will, if a claim in respect
thereof is to be made against the indemnifying party under this Section 5,
notify the indemnifying party of the commencement thereof; but the omission so
to notify the indemnifying party will not, in any event, relieve the
indemnifying party from any obligations to any indemnified party other than the
indemnification obligation provided in paragraph (a) or (b) above. In case any
such action is brought against any indemnified party, and it notifies the
indemnifying party of the commencement thereof, the indemnifying party will be
entitled to participate therein and, to the extent that it may wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel reasonably satisfactory to such indemnified party (who
shall not, except with the consent of the indemnified party, be counsel to the
indemnifying party), and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof the
indemnifying party will not be liable to such indemnified party under this
Section 5 for any legal or other expenses, other than reasonable costs of
investigation, subsequently incurred by such indemnified party in connection
with the defense thereof. No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement of any pending or
threatened action 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 any claims that are the subject matter
of such action.
(d) If the indemnification provided for in this Section 5 is
unavailable or insufficient to hold harmless an indemnified party under
subsections (a) or (b) above, then each indemnifying party shall contribute to
the amount paid or payable by such indemnified party as a result of the losses,
claims, damages or liabilities (or actions in respect thereof) referred to in
subsection (a) or (b) above (i) in such proportion as is appropriate to reflect
the relative benefits received by the indemnifying party or parties on the one
hand and the indemnified party on the other from the exchange of the Securities,
pursuant to the Registered Exchange Offer, or (ii) if the allocation provided by
the foregoing clause (i) 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 indemnifying party or
parties on the one hand and the indemnified party on the other in connection
with the statements or omissions that resulted in such losses, claims, damages
or liabilities (or actions in respect thereof) as well as any other relevant
equitable considerations. The relative fault of the parties 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 the Company on the one hand or
such Holder or such other indemnified party, as the case may be, on the other,
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The amount paid by
an indemnified party as a result of the losses, claims, damages or liabilities
referred to in the first sentence of this subsection (d) shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any action or claim which is
the
<PAGE>
11
subject of this subsection (d). Notwithstanding any other provision of this
Section 5(d), the Holders of the Securities shall not be required to contribute
any amount in excess of the amount by which the net proceeds received by such
Holders from the sale of the Securities pursuant to a Registration Statement
exceeds the amount of damages which such Holders have 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. For purposes
of this paragraph (d), each person, if any, who controls such indemnified party
within the meaning of the Securities Act or the Exchange Act shall have the same
rights to contribution as such indemnified party and each person, if any, who
controls the Company within the meaning of the Securities Act or the Exchange
Act shall have the same rights to contribution as the Company.
(e) The agreements contained in this Section 5 shall survive the sale
of the Securities pursuant to a Registration Statement and shall remain in full
force and effect, regardless of any termination or cancelation of this Agreement
or any investigation made by or on behalf of any indemnified party.
6. ADDITIONAL INTEREST UNDER CERTAIN CIRCUMSTANCES. (a) Additional
interest (the "Additional Interest") with respect to the Initial Securities and
the Private Exchange Securities shall be assessed as follows if any of the
following events occur (each such event in clauses (i) through (iii) below a
"Registration Default"):
(i) If by September 7, 1998, neither the Exchange Offer
Registration Statement nor a Shelf Registration Statement has been
filed with the Commission;
(ii) If by January 20, 1999, neither the Registered Exchange
Offer is consummated nor, if required in lieu thereof, the Shelf
Registration Statement is declared effective by the Commission; or
(iii) If after either the Exchange Offer Registration
Statement or the Shelf Registration Statement is declared effective (A)
such Registration Statement thereafter ceases to be effective (except
as permitted in paragraph (b)) or (B) such Registration Statement or
the related prospectus ceases to be usable in connection with resales
of Transfer Restricted Securities during the periods specified herein
because either (1) any event occurs as a result of which the related
prospectus forming part of such Registration Statement would include
any untrue statement of a material fact or omit to state any material
fact necessary to make the statements therein in the light of the
circumstances under which they were made not misleading, or (2) it
shall be necessary to amend such Registration Statement or supplement
the related prospectus, to comply with the Securities Act or the
Exchange Act or the respective rules thereunder.
Additional Interest shall accrue on the Initial Securities and the Private
Exchange Notes over and above the interest set forth in the title of the
Securities from and including the date on which any such Registration Default
shall occur to but excluding the date on which all such Registration Defaults
have been cured, at a rate of 0.50% per annum.
(b) A Registration Default referred to in Section 6(a)(iii) hereof
shall be deemed not to have occurred and be continuing in relation to a
Registration Statement or the related prospectus if (i) such Registration
Default has occurred solely as a result of (x) the filing of a post-effective
amendment to such Registration Statement to incorporate annual audited financial
information with respect to the Company where such post-effective amendment is
not yet effective and needs to be declared effective to permit Holders to use
the related prospectus or (y) other material events, with respect to the Company
that would need to be described in such Shelf Registration Statement or the
related prospectus and (ii) in the case of clause (y), the Company is proceeding
promptly and in good faith to amend or supplement such Registration Statement
and related prospectus to describe such events; PROVIDED, HOWEVER, that in any
case if such Registration Default occurs for a continuous period in excess of 30
days, Additional Interest shall be payable in accordance with the above
paragraph from the day such Registration Default occurs until such Registration
Default is cured.
<PAGE>
12
(c) Any amounts of Additional Interest due pursuant to clause (i), (ii)
or (iii) of Section 6(a) above will be payable in cash on the regular interest
payment dates with respect to the Securities. The amount of Additional Interest
will be determined by multiplying the applicable Additional Interest rate by the
principal amount of the Initial Securities or Private Exchange Notes, as the
case may be, multiplied by a fraction, the numerator of which is the number of
days such Additional Interest rate was applicable during such period (determined
on the basis of a 360-day year comprised of twelve 30-day months), and the
denominator of which is 360.
(d) "Transfer Restricted Securities" means each Security until (i) the
date on which such Security has been exchanged by a person other than a
broker-dealer for a freely transferable Exchange Security in the Registered
Exchange Offer, (ii) following the exchange by a broker-dealer in the Registered
Exchange Offer of an Initial Security for an Exchange Note, the date on which
such Exchange Note is sold to a purchaser who receives from such broker-dealer
on or prior to the date of such sale a copy of the prospectus contained in the
Exchange Offer Registration Statement, (iii) the date on which such Security has
been effectively registered under the Securities Act and disposed of in
accordance with the Shelf Registration Statement or (iv) the date on which such
Security is distributed to the public pursuant to Rule 144 under the Securities
Act or is saleable pursuant to Rule 144(k) under the Securities Act.
7. RULES 144 AND 144A. The Company shall use its best efforts to file
the reports required to be filed by it under the Securities Act and the Exchange
Act in a timely manner and, if at any time the Company is not required to file
such reports, it will, upon the request of any Holder of Securities, make
publicly available other information so long as necessary to permit sales of its
securities pursuant to Rules 144 and 144A. The Company covenants that it will
take such further action as any Holder of Securities may reasonably request, all
to the extent required from time to time to enable such Holder to sell
Securities without registration under the Securities Act within the limitation
of the exemptions provided by Rules 144 and 144A (including the requirements of
Rule 144A(d)(4)). The Company will provide a copy of this Agreement to
prospective purchasers of Initial Securities identified to the Company by the
Initial Purchasers upon request. Upon the request of any Holder of Initial
Securities, the Company shall deliver to such Holder a written statement as to
whether it has complied with such requirements. Notwithstanding the foregoing,
nothing in this Section 7 shall be deemed to require the Company to register any
of its securities pursuant to the Exchange Act.
8. UNDERWRITTEN REGISTRATIONS. If any of the Transfer Restricted
Securities covered by any Shelf Registration are to be sold in an underwritten
offering, the investment banker or investment bankers and manager or managers
that will administer the offering ("Managing Underwriters") will be selected by
the Holders of a majority in aggregate principal amount of such Transfer
Restricted Securities to be included in such offering.
No person may participate in any underwritten registration hereunder
unless such person (i) agrees to sell such person's Transfer Restricted
Securities on the basis reasonably provided in any underwriting arrangements
approved by the persons 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.
9. MISCELLANEOUS.
(a) AMENDMENTS AND WAIVERS. The provisions of this Agreement may not be
amended, modified or supplemented, and waivers or consents to departures from
the provisions hereof may not be given, except by the Company and the written
consent of the Holders of a majority in principal amount of the Securities
affected by such amendment, modification, supplement, waiver or consents.
(b) NOTICES. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand delivery, first-class mail,
facsimile transmission, or air courier which guarantees
overnight delivery:
(1) if to a Holder of the Securities, at the most current
address given by such Holder to the Company.
<PAGE>
13
(2) if to the Initial Purchasers;
Credit Suisse First Boston Corporation
Eleven Madison Avenue
New York, NY 10010-3629
Fax No.: (212) 325-8278
Attention: Transactions Advisory Group
with a copy to:
Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, NY 10019-7475
Telephone: (212) 474-1000
Fax No.: (212) 474-3700
Attention: Kris F. Heinzelman, Esq.
(3) if to the Company, at its address as follows:
Millenium Seacarriers, Inc.
c/o Maples and Calder
P.O. Box 309
George Town, Grand Cayman
Cayman Island, British West Indies
with a copy to:
Thacher Proffitt & Wood
Two World Trade Center
New York, NY 10048
Telephone: (212) 912-7400
Fax No.: (212) 912-7751
Attention: Charles A. Dietzgen, Esq.
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; three business
days after being deposited in the mail, postage prepaid, if mailed; when receipt
is acknowledged by recipient's facsimile machine operator, if sent by facsimile
transmission; and on the day delivered, if sent by overnight air courier
guaranteeing next day delivery.
(c) NO INCONSISTENT AGREEMENTS. The Company has not, as of the date
hereof, entered into, nor shall it, on or after the date hereof, enter into, any
agreement with respect to its securities that is inconsistent with the rights
granted to the Holders herein or otherwise conflicts with the provisions hereof.
(d) SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon the
Company and its successors and assigns.
(e) 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.
(f) HEADINGS. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(g) GOVERNING Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
<PAGE>
14
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAWS.
(h) SEVERABILITY. If any one or more of the provisions contained
herein, or the application thereof in any circumstance, is held invalid, illegal
or unenforceable, the validity, legality and enforceability of any such
provision in every other respect and of the remaining provisions contained
herein shall not be affected or impaired thereby.
(i) SECURITIES HELD BY THE COMPANY. Whenever the consent or approval of
Holders of a specified percentage of principal amount of Securities is required
hereunder, Securities held by the Company or its affiliates (other than
subsequent Holders of Securities if such subsequent Holders are deemed to be
affiliates solely by reason of their holdings of such Securities) shall not be
counted in determining whether such consent or approval was given by the Holders
of such required percentage.
(j) AGENT FOR SERVICE; SUBMISSION TO JURISDICTION; WAIVER OF
IMMUNITIES. By the execution and delivery of this Agreement, the Company (i)
acknowledges that it has, by separate written instrument, irrevocably designated
and appointed Kylco Maritime (U.S.A.), Inc., ("Kylco U.S.A.") (and any successor
entity), as its authorized agent upon which process may be served in any suit or
proceeding arising out of or relating to this Agreement that may be instituted
in any federal or state court in the State of New York or brought under federal
or state securities laws, and acknowledges that Kylco USA has accepted such
designation, (ii) submits to the nonexclusive jurisdiction of any such court in
any such suit or proceeding, and (iii) agrees that service of process upon Kylco
USA and written notice of said service to the Company shall be deemed in every
respect effective service of process upon it in any such suit or proceeding. The
Company further agrees to take any and all action, including the execution and
filing of any and all such documents and instruments, as may be necessary to
continue such designation and appointment of Kylco USA in full force and effect
so long as any of the Securities shall be outstanding. To the extent that the
Company may acquire any immunity from jurisdiction of any court or from any
legal process (whether through service of notice, attachment prior to judgment,
attachment in aid of execution, execution or otherwise) with respect to itself
or its property, it hereby irrevocably waives such immunity in respect of this
Agreement, to the fullest extent permitted by law.
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Issuer a counterpart hereof, whereupon
this instrument, along with all counterparts, will become a binding agreement
among the several Initial Purchasers, the Issuer and the Guarantors in
accordance with its terms.
Very truly yours,
MILLENIUM SEACARRIERS, INC.
by /s/ Vassilios Livanos
-------------------------------------
Name: Vassilios Livanos
Title: Chief Executive Officer
RAPID OCEAN CARRIERS LIMITED
by /s/ Vassilios Livanos
-------------------------------------
Name: Vassilios Livanos
Title: Chief Executive Officer
IVY NAVIGATION LIMITED
by /s/ Vassilios Livanos
-------------------------------------
Name: Vassilios Livanos
Title: Chief Executive Officer
<PAGE>
15
OAKMONT SHIPPING AND TRADING LIMITED
by /s/ Vassilios Livanos
-------------------------------------
Name: Vassilios Livanos
Title: Chief Executive Officer
TOPSCALE SHIPPING COMPANY LIMITED
by /s/ Vassilios Livanos
-------------------------------------
Name: Vassilios Livanos
Title: Chief Executive Officer
CONIFER SHIPPING COMPANY LIMITED
by /s/ Vassilios Livanos
-------------------------------------
Name: Vassilios Livanos
Title: Chief Executive Officer
MILLENIUM MAJESTIC, INC.,
by /s/ Vassilios Livanos
-------------------------------------
Name: Vassilios Livanos
Title: Chief Executive Officer
MILLENIUM YAWA, INC.,
by /s/ Vassilios Livanos
-------------------------------------
Name: Vassilios Livanos
Title: Chief Executive Officer
MILLENIUM AMETHYST, INC.,
by /s/ Vassilios Livanos
-------------------------------------
Name: Vassilios Livanos
Title: Chief Executive Officer
MILLENIUM ELMAR, INC.,
by /s/ Vassilios Livanos
-------------------------------------
Name: Vassilios Livanos
Title: Chief Executive Officer
<PAGE>
16
MILLENIUM ALEKSANDER, INC.,
by /s/ Vassilios Livanos
-------------------------------------
Name: Vassilios Livanos
Title: Chief Executive Officer
MILLENIUM II, INC.,
by /s/ Vassilios Livanos
-------------------------------------
Name: Vassilios Livanos
Title: Chief Executive Officer
MILLENIUM III, INC.,
by /s/ Vassilios Livanos
-------------------------------------
Name: Vassilios Livanos
Title: Chief Executive Officer
MILLENIUM IV, INC.,
by /s/ Vassilios Livanos
-------------------------------------
Name: Vassilios Livanos
Title: Chief Executive Officer
MILLENIUM V, INC.,
by /s/ Vassilios Livanos
-------------------------------------
Name: Vassilios Livanos
Title: Chief Executive Officer
MILLENIUM VI, INC.,
by /s/ Vassilios Livanos
-------------------------------------
Name: Vassilios Livanos
Title: Chief Executive Officer
MILLENIUM VII, INC.,
by /s/ Vassilios Livanos
-------------------------------------
Name: Vassilios Livanos
Title: Chief Executive Officer
<PAGE>
17
The foregoing Registration
Rights Agreement is hereby confirmed
and accepted as of the date first
above written.
CREDIT SUISSE FIRST BOSTON CORPORATION
DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION
by: CREDIT SUISSE FIRST BOSTON CORPORATION
by /s/ Joseph D. Fashamo
-----------------------------------
Name: Joseph D. Fashamo
Title: Director
<PAGE>
ANNEX A
Each broker-dealer that receives Exchange Securities 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 Securities. The Letter
of Transmittal 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 Securities received in exchange for Initial Securities
where such Initial Securities were acquired by such broker-dealer as a result of
market-making activities or other trading activities. The Company has agreed
that, for a period of 180 days after the Expiration Date (as defined herein), it
will make this Prospectus available to any broker-dealer for use in connection
with any such resale. See "Plan of Distribution."
<PAGE>
ANNEX B
Each broker-dealer that receives Exchange Securities for its own account
in exchange for Initial Securities, where such Initial Securities 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 Securities. See "Plan of Distribution."
<PAGE>
ANNEX C
PLAN OF DISTRIBUTION
Each broker-dealer that receives Exchange Securities 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 Securities. 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 Securities received in
exchange for Initial Securities where such Initial Securities were acquired as a
result of market-making activities or other trading activities. The Company has
agreed that, for a period of 180 days after the Expiration Date, it will make
this Prospectus, as amended or supplemented, available to any broker-dealer for
use in connection with any such resale. In addition, until , 199 , all dealers
effecting transactions in the Exchange Securities may be required to deliver a
prospectus.1
The Company will not receive any proceeds from any sale of Exchange
Securities by broker-dealers. Exchange Securities 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 Securities 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 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 or the purchasers of any such Exchange
Securities. Any broker-dealer that resells Exchange Securities 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 Securities may be
deemed to be an "underwriter" within the meaning of the Securities Act and any
profit on any such resale of Exchange Securities and any commission 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 180 days after the Expiration Date the Company 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 Company has agreed to pay all expenses
incident to the Exchange Offer (including the expenses of one counsel for the
Holders of the Securities) other than commissions or concessions of any brokers
or dealers and will indemnify the Holders of the Securities (including any
broker-dealers) against certain liabilities, including liabilities under the
Securities Act.
- - - - --------
1 In addition, the legend required by Item 502(e) of Regulation S-K will
appear on the back cover page of the Exchange Offer prospectus.
<PAGE>
ANNEX D
CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL
COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS THERETO.
Name: _______________________________________
Address: _______________________________________
_______________________________________
If the undersigned is not a broker-dealer, the undersigned represents that it is
not engaged in, and does not intend to engage in, a distribution of Exchange
Securities. If the undersigned is a broker-dealer that will receive Exchange
Securities for its own account in exchange for Initial Securities that were
acquired as a result of market-making activities or other trading activities, it
acknowledges that it will deliver a prospectus in connection with any resale of
such Exchange Securities; 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.
================================================================================
CREDIT AGREEMENT
MILLENIUM SEACARRIERS, INC.
the Company
and
THE BANK OF NEW YORK,
the Bank
July 20, 1998
================================================================================
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
SECTION PAGE
<S> <C> <C>
1. DEFINITIONS.....................................................................................1
2. REPRESENTATIONS, COVENANTS AND WARRANTIES.......................................................9
3. THE LINE OF CREDIT.............................................................................13
4. THE SECURITY...................................................................................14
5. CONDITIONS.....................................................................................14
6. REPAYMENT, PREPAYMENT AND REDUCTION OF FACILITY................................................20
7. INTEREST.......................................................................................20
8. PAYMENTS.......................................................................................21
9. ILLEGALITY, INCREASED COST, NON-AVAILABILITY, ETC..............................................22
10. AFFIRMATIVE COVENANTS..........................................................................23
(a) Maintenance of Existence..............................................................23
(b) Perform Agreements....................................................................23
(c) Maintenance of Books, Records,
Providing of Financial Statements, etc................................................23
(d) Inspection of Property, Books and Records.............................................24
(e) Payment of Taxes......................................................................25
(f) Notice of Actions, Suits, Proceedings and Environmental Claims........................25
(g) Compliance with ISM Code..............................................................26
(h) Management of the Vessels.............................................................26
(i) Confirmation of Class Certificates....................................................26
(j) Maintenance of Properties.............................................................26
(k) Payment of Indebtedness...............................................................26
(l) Compliance with Agreements............................................................26
(m) Operating Accounts....................................................................26
(n) Addressing the Year 2000 Issue........................................................26
(o) Compliance with Obligations...........................................................27
(p) Additional Guaranties, etc............................................................27
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
11. NEGATIVE COVENANTS.............................................................................27
(a) Indebtedness..........................................................................27
(b) Guaranties, etc.......................................................................27
(c) Liens, etc............................................................................27
(d) Consolidation, Merger or Sale of Assets...............................................28
(e) Dividends.............................................................................28
(f) Loans or Advances.....................................................................28
(g) Investments...........................................................................28
(h) Engagement in Business................................................................28
(i) Sale/Leaseback Transactions...........................................................28
12. OPERATING ACCOUNTS.............................................................................28
13. APPLICATION OF FUNDS...........................................................................28
14. EVENTS OF DEFAULT AND REMEDIES.................................................................29
15. SUNDRY PROVISIONS..............................................................................32
(a) Further Assurances....................................................................32
(b) Notices...............................................................................32
(c) Further Panamanian and Cypriot Counsel Opinions.......................................32
(d) Payment of Costs, Expenses, etc.......................................................33
(e) Successors and Assigns................................................................33
(f) GOVERNING LAW.........................................................................33
(g) Submission to Jurisdiction............................................................33
(h) WAIVER OF TRIAL BY JURY...............................................................34
(i) Execution in Counterparts.............................................................34
(j) Vessel Trading Prohibitions...........................................................34
(k) Assignments and Participations by the Bank............................................34
(l) Severability..........................................................................35
(m) Indemnification.......................................................................35
(n) Information Disclosure................................................................36
(o) No Claims for Consequential Damages...................................................36
(p) Entire Agreement......................................................................36
(q) Rights Cumulative, Non-Waiver, etc....................................................36
(r) International Financing Transaction...................................................37
(s) Headings; Table of Contents...........................................................37
</TABLE>
Consent and Agreement of the Initial Guarantors
Schedules
<PAGE>
SCHEDULES
SCHEDULE
1 FORM OF DRAWDOWN NOTICE
2 FORM OF NOTE
3 FORM OF GUARANTEES
4 LIST OF COMMITTED VESSELS
5 LIST OF OTHER INITIAL GUARANTORS
<PAGE>
CREDIT AGREEMENT
CREDIT AGREEMENT, dated July 20, 1998, between MILLENIUM
SEACARRIERS, INC. (the "Company"), a company incorporated under the laws of the
Cayman Islands, and THE BANK OF NEW YORK (the "Bank"), a trust company organized
and existing under the laws of the State of New York.
1. DEFINITIONS
(a) In this Agreement the words and expressions specified
below shall, except where the context otherwise requires, have the meanings
attributed to them below:
"Agreement" this Agreement, as the same shall be amended
or supplemented from time to time; "Alternate
Base Rate" for each day, at a rate per annum
equal to the higher of (i) the Prime Rate in
effect for such day and (ii) 1/2%, plus the
Federal Funds Rate in effect for such day;
"Applicable Rate" the rate of interest on the Loans, or any
portion thereof, from time to time applicable
pursuant to Section 7(a);
"Approved Classification Society" any of the American Bureau of Shipping,
Nippon Kaiji Kyokai, Germanischer Lloyd,
Lloyd's Register of Shipping, Bureau Veritas
or Det Norske Veritas;
"Business Days" a day on which dealings in dollar deposits of
the United States of America are carried on
in the London interbank market and on which
commercial banks are open for domestic and
international business (including dealings in
dollar deposits of the United States of
America) in London, England and in New York,
New York;
"Change of Control" shall have the meaning ascribed thereto in
the Indenture;
"CLIPPER ATLANTIC" shall have the meaning ascribed thereto in
Section 2(b);
"CLIPPER ATLANTIC
Insurances Assignment" the assignment of all right, title and
interest of Conifer in and to the insurances
covering the CLIPPER ATLANTIC and all
proceeds thereof to be executed by Conifer in
favor of the Collateral Agent pursuant to
Section 5(a)(xi) and to be in form and
substance satisfactory to the Bank;
"CLIPPER ATLANTIC
Mortgage" the statutory first mortgage and deed of
covenants collateral thereto covering the
CLIPPER ATLANTIC to be executed
<PAGE>
by Conifer in favor of the Collateral Agent
pursuant to Section 5(a) (viii) and to be in
form and substance satisfactory to the Bank;
CLIPPER GOLDEN HIND" shall have the meaning ascribed thereto in
Section 2(c);
"CLIPPER GOLDEN HIND
Insurances Assignment" the assignment of all right, title and
interest of Ivy in and to the insurances
covering the CLIPPER GOLDEN HIND and all
proceeds thereof to be executed by Ivy in
favor of the Collateral Agent pursuant to
Section 5(a)(xi) and to be in form and
substance satisfactory to the Bank;
"CLIPPER GOLDEN HIND
Mortgage" the first preferred mortgage covering the
CLIPPER GOLDEN HIND to be executed by Ivy in
favor of the Collateral Agent pursuant to
Section 5(a)(x) and to be in form and
substance satisfactory to the Bank;
"CLIPPER HARMONY" shall have the meaning ascribed thereto in
Section 2(d);
"CLIPPER HARMONY
Insurances Assignment" the assignment of all right, title and
interest of Rapid in and to the insurances
covering the CLIPPER HARMONY and all proceeds
thereof to be executed by Rapid in favor of
the Collateral Agent pursuant to Section
5(a)(xi) and to be in form and substance
satisfactory to the Bank;
"CLIPPER HARMONY
Mortgage" the first naval mortgage covering CLIPPER
HARMONY to be executed by Rapid in favor of
the Collateral Agent pursuant to Section
5(a)(ix) and to be in form and substance
satisfactory to the Bank;
"CLIPPER
PACIFIC" shall have the meaning ascribed thereto in
Section 2(e);
"CLIPPER PACIFIC
Insurances Assignment" the assignment of all right, title and
interest of Topscale in and to the insurances
covering the CLIPPER PACIFIC and all proceeds
thereof to be executed by Topscale in favor
of the Collateral Agent pursuant to Section
5(a)(xi) and to be in form and substance
satisfactory to the Bank;
"CLIPPER PACIFIC
Mortgage"
the statutory first mortgage and deed of
covenants collateral thereto covering the
CLIPPER PACIFIC to be executed by Topscale in
favor of the Collateral Agent pursuant to
Section 5(a)(viii) and to be in form and
substance satisfactory to the Bank;
"Collateral Agency and
Intercreditor Agreement" the Collateral Agency and Intercreditor
Agreement, dated as of July 1, 1998, by and
among the Collateral Agent, the
2
<PAGE>
Bank, the Company and the Initial Guarantors
as to the rights of the parties thereto in
the Collateral Property, which Collateral
Agency and Intercreditor Agreement shall be
in form and substance satisfactory to the
Bank and shall provide the Bank with a first
priority position in the case of a sale,
Total Loss or foreclosure of any Vessel;
"Collateral Agent" The First National Bank of Maryland, in its
capacity as collateral agent and trustee
under the Collateral Agency and Intercreditor
Agreement;
"Collateral Documents" the Mortgages, the Insurances Assignments and
the Guarantees, together with any other
documents which may be executed and delivered
to the Collateral Agent or the Bank from time
to time mortgaging, assigning or otherwise
transferring thereto additional assets as
security for the obligations of the Company
to the Bank under this Agreement and under
the Note or as security for the obligations
of any Guarantor under its Guaranty of the
obligations of the Company to the Bank under
this Agreement and under the Note;
"Collateral Property" the assets mortgaged or assigned to the
Collateral Agent or the Bank pursuant to the
terms of the Collateral Documents, together
with any other assets which may be held by
the Collateral Agent or the Bank from time to
time as additional security for the
obligations of the Company to the Bank under
this Agreement and under the Note or as
security for the obligations of any Guarantor
under its Guaranty of the obligations of the
Company to the Bank under this Agreement and
under the Note;
"Committed Vessels" the Vessels listed on Schedule 4;
"Conifer" Conifer Shipping Company Limited, a company
organized and existing under the laws of the
Republic of Cyprus;
"Default Rate" shall have the same meaning ascribed thereto
in Section 7(b);
"DOC" a Document of Compliance issued in accordance
with Rule 13 of the ISM Code;
"Dollars" and the sign "$" the legal currency, at any relevant time
hereunder, of the United States of America
and, in relation to all payments hereunder,
in same day funds settled through the New
York Clearing House Interbank Payments System
(or such other
3
<PAGE>
Dollar funds as may be determined by the Bank
to be customary for the settlement in New
York City of banking transactions of the type
herein involved);
"Drawdown Date(s)" the dates, each being a Business Day not
later than July , 1999, upon which the
Company has requested that any Loan be made
available to the Company as provided in
Section 3;
"Drawdown Notice" shall have the meaning ascribed thereto in
Section 3(c);
"Environmental Approvals" all permits, licenses, approvals, rulings,
variances, exemptions, clearances, consents
or other authorizations required under
applicable Environmental Laws;
"Environmental Claim" any claim arising out of, based on or
resulting from (i) the presence, or release
or threat of release into the environment, of
any Material of Environmental Concern at any
location, whether or not owned by the party
against which the claim is asserted, or (ii)
circumstances forming the basis of any
violation, or alleged violation, of any
Environmental Law or Environmental Approval;
"Environmental Laws" United States, federal and state, local,
foreign and international laws, regulations,
conventions and agreements relating to
pollution prevention or protection of human
health and the environment (including,
without limitation, ambient air, surface
water, ground water, navigable waters, waters
of the contiguous zone, ocean waters and
international waters), including, without
limitation, laws, regulations, conventions
and agreements relating to (i) emissions,
discharges, releases or threatened releases
of Materials of Environmental Concern or (ii)
the manufacture, processing, distribution,
use, treatment, storage, disposal,
transportation or handling of Materials of
Environmental Concern;
"Event of Default" the occurrence of any of the events set out
in Section 14;
"Federal Funds Rate" for any day, the weighted average of the
rates on overnight Federal funds transactions
with members of the Federal Reserve System
arranged by Federal funds brokers, as
published for such day (or if such day is not
a Business Day, for the next preceding
Business Day) by the Federal Reserve Bank of
New York, or if such rate is not so published
for any day which is a Business Day, the
average of quotations for such day on such
transactions received by the Bank from
4
<PAGE>
three Federal funds brokers of recognized
standing selected by the Bank;
"Final Payment Date" July , 1999 or, if such day is not a Business
Day, the next following Business Day unless
such next following Business Day falls in the
following month in which case the Final
Payment Date will be the Business Day
immediately preceding such day;
"Guarantees" the Initial Guaranty and each additional
guaranty to be executed in favor of the Bank
by a Guarantor acquiring an Additional Vessel
(as such term is utilized in the Offering
Circular) of the payment and performance of
the obligations of the Company to the Bank
under this Agreement and under the Note
pursuant to Section 10(p) and to be
substantially in the form set out in Schedule
3 or in such other form as the Bank may
agree;
"Guarantors" the Initial Guarantors and each additional
wholly-owned subsidiary of the Company which
acquires an Additional Vessel;
"Indenture" the Indenture, dated as of July , 1998, among
the Company, the Subsidiary Guarantors (as
defined therein) and the Trustee, pursuant to
which the Senior Secured Notes will be
issued;
"Initial
Guarantors" Conifer, Ivy, Oakmont, Rapid, Topscale and
the other Initial Guarantors listed on
Schedule 5;
"Initial Guaranty" the guaranty of the payment and performance
of the obligations of the Company to the Bank
under this Agreement and under the Note to be
executed by the Initial Guarantors in favor
of the Bank pursuant to Section 5(a)(xi) and
to be substantially in the form set out in
Schedule 3 or in such other form as the
Initial Guarantors and the Bank may agree;
"Initial Vessels" the CLIPPER ATLANTIC, the CLIPPER GOLDEN
HIND, the CLIPPER HARMONY, the CLIPPER
PACIFIC and the MONICA MARISSA;
"Insurances Assignments" the CLIPPER ATLANTIC Insurances Assignment,
the CLIPPER GOLDEN HIND Insurances
Assignment, the CLIPPER HARMONY Insurances
Assignment, the CLIPPER PACIFIC Insurances
Assignment, the MONICA
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MARISSA Insurances Assignment and each
additional assignment to be executed in favor
of the Collateral Agent by a Guarantor
acquiring a Committed Vessel or an Additional
Vessel of all right, title and interest of
such Guarantor in and to the insurances
covering such Vessel and all proceeds thereof
and to be in form and substance satisfactory
to the Bank;
"Interest Notice" a notice to the Bank specifying the interest
option selected and the duration of any
relevant Interest Period; "Interest Payment
Date(s)" shall have the meaning ascribed
thereto in Section 7(d); "Interest Period(s)"
shall have the meaning ascribed thereto in
Section 7(c); "ISM Code" the International
Management Code for the Safe Operation of
Ships and for Pollution Prevention; "Ivy" Ivy
Navigation, Inc., a corporation organized and
existing under the laws of the Republic of
Liberia; "LIBOR" means the rate of interest
for deposits, in Dollars, of an amount equal
to the relevant Loan (or portion thereof),
for periods equivalent to the applicable
Interest Period, which appear at or about
11:00 a.m. (London Time) on the date falling
two Business Days prior to the first day of
the relevant Interest Period as displayed on
Telerate page 3750 (British Bankers'
Association Interest Settlement Rates) (or
such other page as may replace such page
3750) on such system or on any other system
of the information vendor for the time being
designated by the British Bankers'
Association's Recommended Terms and
Conditions (BBAIRS) (dated August 1985)),
PROVIDED, HOWEVER, that, if on any date of
determination of an Applicable Rate, no rate
is so displayed for amounts equivalent to the
relevant Loan (or portion thereof) and for
periods equivalent to the applicable Interest
Period, LIBOR shall be equal to the rate
quoted by the Bank as the offered rate for
deposits, in Dollars, in an amount
approximately equal to the amount in relation
to which LIBOR is to be determined for a
period equivalent to such period to prime
banks in the London interbank market on the
second Business Day before the first day of
such period;
"Loans" the loans, not to exceed at any one time
outstanding
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$7,000,000, to be made by the Bank to the
Company pursuant to Section 3(a);
"Manager" shall have the meaning ascribed thereto in
Section 10(h);
"Margin" shall have the meaning ascribed thereto in
Section 7(a);
"Materials of
Environmental Concern" chemicals, pollutants, contaminants, wastes,
toxic substances, hazardous materials, oil,
hazardous substances, petroleum and petroleum
products and by-products;
"MONICA MARISSA" shall have the meaning ascribed thereto in
Section 2(g);
"MONICA MARISSA
Insurances Assignment" the assignment of all right, title and
interest of Oakmont in and to the insurances
covering the MONICA MARISSA and all proceeds
thereof to be executed by Oakmont in favor of
the Collateral Agent pursuant to Section
5(a)(xi) and to be in form and substance
satisfactory to the Bank;
"MONICA MARISSA
Mortgage" the first naval mortgage covering the MONICA
MARISSA to be executed by Oakmont in favor of
the Collateral Agent pursuant to Section
5(a)(ix) and to be in form and substance
satisfactory to the Bank;
"Mortgages" the CLIPPER ATLANTIC Mortgage, the CLIPPER
GOLDEN HIND Mortgage, the CLIPPER HARMONY
Mortgage, the CLIPPER PACIFIC Mortgage and
the MONICA MARISSA Mortgage and each
additional mortgage (and any deed of
covenants collateral thereto) to be executed
in favor of the Collateral Agent by a
Guarantor acquiring a Committed Vessel or an
Additional Vessel and to be in form and
substance satisfactory to the Bank;
"Note" the secured promissory note to be executed by
the Company to the order of the Bank pursuant
to Section 5(xi) evidencing the Loans and to
be substantially in the form set out in
Schedule 2 or in such other form as the Bank
may agree;
"Oakmont" Oakmont Shipping and Trading, Inc., a
corporation organized and existing under the
laws of the Republic of Liberia;
"Offering Circular" the Offering Circular, dated July 20, 1998,
covering the Senior Secured Notes;
"Operating Accounts" shall have the meaning ascribed thereto in
Section 12;
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"Permitted Liens" the liens permitted by the Indenture;
"Prime Rate" the prime commercial lending rate of the Bank
as publicly announced to be in effect from
time to time, such rate to be adjusted
automatically, without notice, on the
effective date of any change in such rate;
"Restricted Payments" shall have the meaning ascribed thereto in
the Indenture;
"Rapid" Rapid Ocean Carriers Inc., a corporation
organized and existing under the laws of the
Republic of Liberia;
"Sale/Leaseback Transaction" shall have the meaning ascribed thereto in
the Indenture;
"Senior Secured Notes" the notes to be issued under the Indenture;
"Shipping Business" shall have the meaning ascribed thereto in
the Indenture;
"SMC" a Safety Management Certificate issued in
accordance with Rule 13 of the ISM Code;
"Topscale" Topscale Shipping Company Limited, a company
organized and existing under the laws of the
Republic of Cyprus;
"Total Loss" with respect to any of the Vessels, its
actual or constructive total loss, including
arranged or compromised total loss, or its
requisition, taking, capture, seizure or
forfeiture;
"Trustee" The First National Bank of Maryland, a
national banking association;
"Vessels" the Initial Vessels and each Committed Vessel
and each Additional Vessel acquired by a
Guarantor; and
"Year 2000 Issue" the failure of computer software, hardware
and firmware systems and equipment containing
embedded computer chips to properly receive,
transmit, process, manipulate, store,
retrieve, re-transmit or in any other way
utilize data and information due to the
occurrence of the year 2000 or the inclusion
of dates on or after January 1, 2000.
(b) Words importing the singular number only shall include the
plural and vice versa. Words importing persons shall include companies, firms,
corporations and their respective successors and assigns.
8
<PAGE>
(c) All accounting terms not specifically defined herein shall
be construed in accordance with generally accepted accounting principles as in
effect from time to time in the United States of America ("GAAP") consistently
applied and all financial data submitted pursuant to this Agreement shall be
prepared in accordance with GAAP.
2. REPRESENTATIONS, COVENANTS AND WARRANTIES
The Company hereby represents, covenants and warrants as
follows:
(a) The Company is duly incorporated, validly existing and in
good standing under the laws of the Cayman Islands without limitation on the
duration of its existence. Each of the Initial Guarantors is a corporation or a
company duly organized or incorporated, validly existing and in good standing
under the laws of its jurisdiction of incorporation without limitation on the
duration of its existence. The Company and each of the Initial Guarantors have
the corporate power and authority to lease their respective properties and to
carry on their respective businesses as now being conducted and to execute,
deliver and perform their respective obligations under this Agreement (which
term as used herein includes the Consent and Agreement of the Initial Guarantors
annexed hereto) and under each of the documents executed or to be executed
thereby as contemplated herein; and this Agreement and each of such documents
when executed and delivered will constitute the legal, valid and binding
obligation of the Company and/or the Initial Guarantor or Guarantors as is a
party hereto, as the case may be, enforceable in accordance with their
respective terms.
(b) Conifer is the sole owner of the 1975 built, 7,923 dwt
Cypriot flag vessel CLIPPER ATLANTIC, gross tonnage 6,157, net tonnage 3,004,
Official No. 708620 and RCS No. 6259.
(c) Ivy is the sole owner of the 1978 built, 16,560 dwt
Liberian flag vessel CLIPPER GOLDEN HIND, Official No. 10245.
(d) Rapid is the sole owner of the 1978 built, 16,711 dwt
Panamanian flag vessel CLIPPER HARMONY.
(e) Topscale is the sole owner of the 1976 built, 7,923 dwt
Cypriot flag vessel CLIPPER PACIFIC, gross tonnage 6,157, net tonnage 3,004,
Official No. 708918 and RCS No. 6465.
(f) Oakmont is the sole owner of the 1973 built, 55,057 dwt
Panamanian flag vessel MONICA MARISSA.
(g) Each of the Initial Vessels is in good condition, working
order and repair and is classed by an Approved Classification Society with
respect to hull and machinery in the highest classification and rating for
vessels of the same age and type.
(h) There are no actions, suits or proceedings (in arbitration
or otherwise) pending or, to the knowledge of the Company, threatened against or
affecting the Company or any of the
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<PAGE>
Initial Guarantors or their respective properties, at law, in equity or in
admiralty, before any court or before or by any federal, state, municipal or
other governmental department, commission, board, bureau, agency or other
instrumentality, domestic or foreign, or before any privately constituted panel,
which may result in (i) any material adverse change in the business, operations,
properties or assets or in the condition, financial or otherwise, of any
thereof, or (ii) any liability which could materially impair their respective
abilities to satisfy their respective obligations; and none thereof is in
default with respect to any order, writ, decision, injunction, decree or demand
of any court or federal, state, municipal or other governmental department,
commission, board, bureau, agency or other instrumentality, domestic or foreign,
or of any privately constituted panel.
(i) The consummation of the transactions herein contemplated
and the fulfillment of the terms hereof and the compliance by the Company and
each of the Initial Guarantors with all of the terms and provisions of this
Agreement and of the other documents contemplated herein will not (i) violate or
conflict with any provision of law, statute, rule, regulation, treaty or
convention or any order, writ, injunction, license, permit, ruling, regulation,
decree or judgment of any court or governmental or regulatory body, agency,
commission, tribunal or other authority of the Cayman Islands, the Republic of
Panama, the Republic of Liberia, the Republic of Cyprus, the United States of
America or the State of New York, (ii) result in, or require, the creation or
imposition of any mortgage, lien, pledge, assignment, charge, security interest
or other encumbrance on any of the properties or assets of any thereof, now
owned or hereafter acquired, except in favor of the Collateral Agent or the
Trustee pursuant to the terms of this Agreement and the Indenture, (iii) violate
or conflict with the Memorandum or Articles of Association or the Articles of
Incorporation or Bylaws, as the case may be, of any thereof or (iv) violate or
conflict with, or constitute, with the giving of notice or lapse of time, or
both, a default under, the terms, conditions or provisions or any agreement,
judgment, injunction, order, decree or other instrument to which any thereof is
a party or by which any thereof is bound or to which any of the properties,
assets or businesses of any thereof are subject.
(j) No consent, license, approval or authorization of any
nature of, or other formal action by, any governmental authority, bureau or
agency is or will be required to be obtained by the Company or the Initial
Guarantors in connection with the execution, delivery, validity or performance
of this Agreement or any of the documents referred to herein or the carrying out
of the transactions contemplated hereby or thereby except as shall have been
duly and timely obtained.
(k) Neither the Company nor any of the Initial Guarantors is
in violation of any material provision of applicable law or of any decree or
order of any court or of any government or governmental agency or official,
domestic or foreign, or of any material provision of any indenture, agreement or
other instrument to which any thereof is a party or by which any thereof or any
of their respective properties may be bound or affected.
(l) Neither the Company nor any of the Initial Guarantors (i)
is a national of any foreign country designated in Presidential Executive Order
No. 9193, No. 12543, No. 12722, No. 12775, No. 12779 or No. 12959 of the United
States of America, as amended, respectively, within the meaning of any of said
Executive Orders, as amended, or any regulations thereunder, (ii) is presently
in violation of any of the provisions of any of said Executive Orders, (iii) is
a national of any designated foreign country within the meaning of the Foreign
Assets Control Regulations of
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<PAGE>
the United States of America (Title 31, Code of Federal Regulations, Chapter V,
Part 500, as amended) or the Cuban Assets Control Regulations of the United
States of America (Title 31, Code of Federal Regulations, Chapter V, Part 515,
as amended), or (iv) is presently in violation of any of the provisions of said
Foreign Assets Control Regulations, as amended, any of the provisions of said
Cuban Assets Control Regulations, as amended, any of the provisions of the
Libyan Assets Control Regulations of the United States of America (Title 31,
Code of Federal Regulations, Chapter V, Part 550, as amended), any of the
provisions of the Iranian Transactions Regulations of the United States of
America (Title 31, Code of Federal Regulations, Chapter V, Part 560, as
amended), any of the provisions of the Iraqi Sanctions Regulations of the United
States of America (Title 31, Code of Federal Regulations, Chapter V, Part 575)
or any of the provisions of the Regulations of the United States of America
Governing Transactions in Foreign Shipping of Merchandise (Title 31, Code of
Federal Regulations, Chapter V, Part 505, as amended).
(m) No default exists and no event has occurred which, with
the giving of notice or lapse of time, or both would constitute a material
default under any material instrument or agreement to which the Company or any
of the Initial Guarantors is a party or by the terms of which any thereof or any
of their respective properties may be bound.
(n) The execution and delivery of this Agreement and all
documents contemplated herein to which the Company or any of the Initial
Guarantors is or is to be a party and the carrying out of the transactions
contemplated hereby and thereby have been duly authorized by all proper
corporate action by the Company and the Initial Guarantors.
(o) The financial statements of the Company and its
subsidiaries (including certain of the Initial Guarantors), heretofore furnished
to the Bank, are complete and correct and present fairly in accordance with GAAP
the financial condition of the Guarantor and its subsidiaries as at the dates of
such statements and the results of their operations for the periods covered
thereby.
(p) All of the issued and outstanding shares of the capital
stock of the Company have been duly authorized, are validly issued and are fully
paid and nonassessable and are owned free of any liens, charges or other
encumbrances thereon or affecting title thereto.
(q) Neither the Company nor any of the Initial Guarantors now
maintains, or in the future will maintain, any office in the United States of
America or now maintains, or will in the future maintain, any financial records
in the United States of America outside the State of New York, County of New
York and neither the Company nor any of the Initial Guarantors has any security
agreements or financing statements outstanding under the Uniform Commercial Code
of any state of the United States of America with respect to its assets.
(r) None of the proceeds of any of the Loans shall be used to
purchase or carry, or to reduce or retire or refinance any credit incurred to
purchase or carry, any margin stock (within the meaning of Regulations U and X
of the Board of Governors of the Federal Reserve System) or to extend credit to
others for the purpose of purchasing or carrying any margin stock. If requested
by the Bank, the Company will furnish to the Bank statements in conformity with
the requirements of Federal Reserve Form U-1 referred to in said Regulation U.
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<PAGE>
(s) The Company and the Initial Guarantors have filed all tax
returns required to be filed thereby and have paid all taxes payable thereby
which have become due, other than those not yet delinquent or the nonpayment of
which would not have a material adverse effect thereon and except for those
taxes being contested in good faith and by appropriate proceedings or other acts
and for which adequate reserves have been set aside on the books thereof.
(t) There is no tax, duty, fee, assessment or other
governmental charge, or any deduction or withholding, imposed by the Cayman
Islands, the Republic of Panama, the Republic of Liberia or the Republic of
Cyprus or any political subdivision or taxing authority of any thereof or
therein (i) on or by virtue of the execution, delivery, acquisition,
registration or enforcement of this Agreement, the Note or any of the Collateral
Documents or (ii) on any payment to be made by the Company or any of the Initial
Guarantors pursuant to this Agreement, the Note or any of the Collateral
Documents.
(u) To ensure the enforceability or admissibility in evidence
of this Agreement, the Note or any of the Collateral Documents, it is not
necessary that this Agreement, the Note or any of the Collateral Documents be
filed or recorded with any court or other authority in the Cayman Islands, the
Republic of Panama, the Republic of Liberia or the Republic of Cyprus, except
for the recording of each of the CLIPPER HARMONY Mortgage and the MONICA MARISSA
Mortgage in the Republic of Panama, the recording of the CLIPPER GOLDEN HIND
Mortgage in the Republic of Liberia and the recording of each of the CLIPPER
ATLANTIC Mortgage and the CLIPPER PACIFIC Mortgage in the Republic of Cyprus.
(v) (i) The Company and each of the Initial Guarantors is now
and will continue to be, to the extent required, in full compliance with all
applicable Environmental Laws; (ii) the Company and each of the Initial
Guarantors now has and will continue to have, to the extent required, all
necessary Environmental Approvals required under applicable Environmental Laws
to operate their respective businesses as now or then being conducted, is now
and will continue to be, to the extent required, in full compliance with all
Environmental Approvals; (iii) neither the Company nor any of the Initial
Guarantors has received any notice, claim, action, cause of action,
investigation or demand by any person, entity, enterprise or government,
political subdivision, intergovernmental body or agency, department or
instrumentality thereof alleging potential liability for, or a requirement to
incur, investigatory costs, cleanup costs, response and/or remedial costs
(whether incurred by a governmental entity or otherwise) in connection with,
natural resources damages, property damages, personal injuries, attorneys' fees
and expenses, or fines or penalties, in each case arising out of, based on or
resulting from any Environmental Claim (other than Environmental Claims that
have been fully and finally adjudicated or otherwise determined and all fines,
penalties and other costs, if any, payable by the Company and/or the Initial
Guarantors in respect thereof have been paid in full); and (iv) there are no
circumstances that may prevent or interfere with such full compliance in the
future.
(w) There is no Environmental Claim pending or, to the
knowledge of the Company, threatened against the Company or any of the Initial
Guarantors.
(x) There are no past or present actions, activities,
circumstances, conditions, events or incidents, including, without limitation,
the release, emission, discharge or disposal of any
12
<PAGE>
Material of Environmental Concern, that could form the basis of any
Environmental Claim against the Company or any of the Initial Guarantors.
(y) The Company and each of the Initial Guarantors have
reviewed the effect of the Year 2000 Issue on the computer software, hardware
and firmware systems and equipment containing embedded microchips owned or
operated by or for the Company or the Initial Guarantors or used or relied upon
in the conduct of their business (including systems and equipment supplied by
others or with which such computer systems of the Company or the Initial
Guarantors interface). The costs to the Company and the Initial Guarantors of
any reprogramming required as a result of the Year 2000 Issue to permit the
proper functioning of such systems and equipment and the proper processing of
data, and the testing of such reprogramming, and of the reasonably foreseeable
consequences of the Year 2000 Issue to the Company and the Initial Guarantors
(including reprogramming errors and the failure of systems or equipment supplied
by others) are not reasonably expected to result in an Event of Default or to
have a material adverse effect on the business, assets, operations, prospects or
condition (financial or otherwise) of the Company or the Initial Guarantors.
(z) Each of Conifer, Ivy, Oakmont, Rapid, Topscale or the
Manager, as the case may be, has obtained a DOC for itself and a SMC for each of
the Initial Vessels.
All representations, covenants and warranties made herein and
in any certificate or other document delivered pursuant hereto or in connection
herewith shall survive the execution and delivery of this Agreement, the making
of the Loans to be made by the Bank hereunder and the issuance of the Note to be
issued by the Company hereunder.
3. THE LINE OF CREDIT
(a) Subject to the terms and conditions hereof, and in
reliance upon the foregoing representations, covenants and warranties and each
of them, the Bank agrees to establish on the date hereof and make available to
the Company at and through one or more of its offshore branches or through its
international banking facility, such branch, branches or facility to be selected
at the option of the Bank, a line of credit, in offshore dollars of the United
States of America, pursuant to which the Company may make borrowings, not to
exceed in the aggregate at any one time outstanding $7,000,000; provided,
however, that during the period from January , 1999 through the Final Payment
Date, there shall be no Loans outstanding under this Agreement for a period of
at least 30 consecutive days. Each Loan shall be in a minimum amount of $250,000
and shall be evidenced by the Note. Within the limit of this Section 3(a) and
upon the conditions herein provided, the Company may from time to time borrow
pursuant to this Section 3(a), repay such borrowings pursuant to Section 5 and
reborrow pursuant to this Section 3(a).
(b) The proceeds of the Loans shall be utilized solely and
exclusively to provide working capital to the Company, for operating expenses
and to pay interest on the Senior Secured Notes.
(c) The Company shall give to the Bank at least three Business
Days' prior written notice (the "Drawdown Notice"), substantially in the form
set out in Schedule 1 or in such other form as the Bank may agree, of the
Business Day on which any Loan is to be made, which
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<PAGE>
notice shall (i) be in writing addressed to the Bank, (ii) be effective upon
receipt by the Bank as aforesaid, provided it is received before 11:00 a.m. New
York time (otherwise it shall be deemed to have been received on the next
Business Day), (iii) specify the Business Day on which the Loan is to be drawn
down and the initial Interest Period, (iv) specify the disbursement instructions
and (v) be irrevocable.
(d) Each Drawdown Notice shall be deemed to constitute a
warranty by the Company (a) that the representations and warranties stated in
Section 2 and in each of the Guarantees then outstanding (updated MUTATIS
MUTANDIS in each instance) are true and correct on the date of such Drawdown
Notice and will be true and correct on the relevant Drawdown Date as if made on
such date, and (b) that no Event of Default or any event which with the giving
of notice or lapse of time, or both, would constitute an Event of Default has
occurred and is continuing.
(e) Each Loan made by the Bank to the Company may be evidenced
by a notation of the same made by the Bank on the grid attached to the Note,
which notation, absent manifest error, shall be PRIMA FACIE evidence of the
amount of the relevant Loan.
(f) Anything heretofore to the contrary notwithstanding, the
obligation of the Bank to make Loans hereunder, if not previously terminated,
shall terminate immediately and without notice to the Company if any change in
applicable law (which expression as used in this Section includes statutes and
regulations thereunder by any competent court or by any governmental body or
official charged with the administration thereof) shall make it unlawful for the
Bank to comply with its obligations hereunder, but no such termination shall
prejudice the rights of the Bank acquired prior thereto or impair the
obligations of the Company hereunder.
(g) The Company covenants and agrees to pay to the Bank on the
date of the making of the initial Loan hereunder a financing fee of $35,000.
(h) The Company also covenants and agrees to pay to the Bank a
commitment fee computed at the rate of 3/8 of 1% per annum from the date hereof
on the unused portion of the line of credit facility from time to time available
under subsection (a) of this Section 3, such commitment fee to be payable
quarterly in arrears commencing October , 1998 and on the Final Payment Date.
4. THE SECURITY
The obligations of the Company to the Bank hereunder and under
the Note and of the Guarantors to the Bank under the Guarantees shall be secured
by the Collateral Property being mortgaged or assigned to the Collateral Agent
pursuant to the Collateral Documents, and each of the Collateral Documents shall
be in form and substance satisfactory to the Bank.
5. CONDITIONS
(a) The obligation of the Bank to make the initial Loan under
subsection (a) of Section 3 shall be subject to the following conditions
precedent:
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(i) All representations and warranties of the Company
contained in Section 2 or of any of the Initial Guarantors contained in
any of the Collateral Documents shall be true on and as of the date of
the making of such Loan, with the same effect as though made on such
date, except as the same may be changed by the transactions
contemplated by this Agreement, and any consents, licenses, approvals
or authorizations required by subsection (j) of Section 2 to have been
obtained on or before such date shall have been duly and timely
obtained, and the Bank shall have received a certificate of a duly
authorized officer, director or attorney-in-fact of the Company to such
effect.
(ii) The Company shall have performed all agreements required
to be performed thereby on or before the date of the making of such
Loan under this Agreement and under the documents contemplated herein
to which it is or is to be a party; and no Event of Default or event
which, with the giving of notice or lapse of time, or both, would
become an Event of Default shall have occurred and be continuing or
will have occurred immediately upon or after the making of such Loan,
and the Bank shall have received a certificate of a duly authorized
officer, director or attorney-in-fact of each of the Company to such
effect.
(iii) The CLIPPER ATLANTIC (A) shall be owned by Conifer free
and clear of all liens, charges or other encumbrances except for (1)
the CLIPPER ATLANTIC Mortgage, (2) liens for crew's wages remaining
unpaid in accordance with reasonable commercial practices, (3) liens
for the costs of fuel, supplies and other services furnished thereto in
the ordinary course of business (none of the suppliers thereof having
evidenced an intention to enforce any such liens), (4) liens for
repairs and tort claims fully covered by insurance as to which coverage
has been acknowledged by the applicable insurer and (5) liens for
repairs and tort claims not fully covered by such insurance, in the
aggregate not to exceed $200,000, and the Bank shall have received a
certificate of a duly authorized officer, director or attorney-in-fact
of Conifer to such effect, (B) shall be duly registered in the name of
Conifer under the laws of the Republic of Cyprus, (C) shall be duly
covered by insurance in compliance with the terms of the CLIPPER
ATLANTIC Mortgage, and the Bank shall have received evidence of such
coverage satisfactory to it, including a report or reports in
reasonable detail by independent marine insurance brokers (who may be
marine insurance brokers regularly employed by Conifer) with respect to
the insurances maintained with respect to the CLIPPER ATLANTIC and its
operation and the Bank shall be satisfied with such report or reports,
and (D) shall have the highest classification and rating of an Approved
Classification Society for vessels of the same age and type, as
evidenced by a certificate of such classification society as to such
classification and rating being in full force and effect without any
outstanding recommendations or requirements other than those consented
to, in writing, by the Bank.
(iv) The CLIPPER GOLDEN HIND (A) shall be owned by Ivy free
and clear of all liens, charges or other encumbrances except for (1)
the CLIPPER GOLDEN HIND Mortgage, (2) liens for crew's wages remaining
unpaid in accordance with reasonable commercial practices, (3) liens
for the costs of fuel, supplies and other services furnished thereto in
the ordinary course of business (none of the suppliers thereof having
evidenced an intention to enforce any such liens), (4) liens for
repairs and tort claims fully covered by insurance as to which coverage
has been acknowledged by the applicable insurer and (5) liens for
repairs and tort claims not fully covered by such insurance, in the
aggregate not
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<PAGE>
to exceed $200,000, and the Bank shall have received a certificate of a
duly authorized officer or attorney-in-fact of Ivy to such effect, (B)
shall be duly registered in the name of Ivy under the laws of the
Republic of Liberia, (C) shall be duly covered by insurance in
compliance with the terms of the CLIPPER GOLDEN HIND Mortgage, and the
Bank shall have received evidence of such coverage satisfactory to it,
including a report or reports in reasonable detail by independent
marine insurance brokers (who may be marine insurance brokers regularly
employed by Ivy) with respect to the insurances maintained with respect
to the CLIPPER GOLDEN HIND and its operation and the Bank shall be
satisfied with such report or reports, and (D) shall have the highest
classification and rating of an Approved Classification Society for
vessels of the same age and type, as evidenced by a certificate of such
classification society as to such classification and rating being in
full force and effect without any outstanding recommendations or
requirements other than those consented to, in writing, by the Bank.
(v) The CLIPPER HARMONY (A) shall be owned by Rapid free and
clear of all liens, charges or other encumbrances except for (1) the
CLIPPER HARMONY Mortgage, (2) liens for crew's wages remaining unpaid
in accordance with reasonable commercial practices, (3) liens for the
costs of fuel, supplies and other services furnished thereto in the
ordinary course of business (none of the suppliers thereof having
evidenced an intention to enforce any such lien), (4) liens for repairs
and tort claims fully covered by insurance as to which coverage has
been acknowledged by the applicable insurer and (5) liens for repairs
and tort claims not fully covered by such insurance, in the aggregate
not to exceed $200,000, and the Bank shall have received a certificate
of a duly authorized officer or attorney-in-fact of Rapid to such
effect, (B) shall be duly registered in the name of Rapid under the
laws of the Republic of Panama, (C) shall be duly covered by insurance
in compliance with the terms of the CLIPPER HARMONY Mortgage, and the
Bank shall have received evidence of such coverage satisfactory to it,
including a report or reports in reasonable detail by independent
marine insurance brokers (who may be marine insurance brokers regularly
employed by Rapid) with respect to the insurances maintained with
respect to the CLIPPER HARMONY and its operation, and the Bank shall be
satisfied with such report or reports, and (D) shall have the highest
classification and rating of an Approved Classification Society for
vessels of the same age and type, as evidenced by a certificate of such
classification society as to such classification and rating being in
full force and effect without any outstanding recommendations or
requirements other than those consented to, in writing, by the Bank.
(vi) The CLIPPER PACIFIC (A) shall be owned by Topscale free
and clear of all liens, charges or other encumbrances except (1) the
CLIPPER PACIFIC Mortgage, (2) liens for crew's wages remaining unpaid
in accordance with reasonable commercial practices, (3) liens for the
costs of fuel, supplies and other services furnished thereto in the
ordinary course of business (none of the suppliers thereof having
evidenced an intention to enforce any such lien), (4) liens for repairs
and tort claims fully covered by insurance as to which coverage has
been acknowledged by the applicable insurer and (5) liens for repairs
and tort claims not fully covered by such insurance, in the aggregate
not to exceed $200,000, and the Bank shall have received a certificate
of a duly authorized officer, director or attorney-in-fact of Topscale
to such effect, (B) shall be duly registered in the name of Topscale
under the laws of the Republic of Cyprus, (C) shall be duly covered by
insurance in compliance with
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the terms of the CLIPPER PACIFIC Mortgage, and the Bank shall have
received evidence of such coverage satisfactory to it, including a
report or reports in reasonable detail by independent marine insurance
brokers (who may be marine insurance brokers regularly employed by
Topscale) with respect to the insurances maintained with respect to the
CLIPPER PACIFIC and its operation, and the Bank shall be satisfied with
such report or reports, and (D) shall have the highest classification
and rating of an Approved Classification Society for vessels of the
same age and type, as evidenced by a certificate of such classification
society as to such classification and rating being in full force and
effect without any outstanding recommendations or requirements other
than those consented to, in writing, by the Bank.
(vii) The MONICA MARISSA (A) shall be owned by Oakmont free
and clear of any liens, charges or other encumbrances except for (1)
the MONICA MARISSA Mortgage, (2) liens for crew's wages remaining
unpaid in accordance with reasonable commercial practices, (3) liens
for the costs of fuel, supplies and other services furnished thereto in
the ordinary course of business (none of the suppliers thereof having
evidenced an intention to enforce any such lien), (4) liens for repairs
and tort claims fully covered by insurance as to which coverage has
been acknowledged by the applicable insurer and (5) liens for repairs
and tort claims not so fully covered by such insurance, in the
aggregate not to exceed $200,000, and the Bank shall have received a
certificate of a duly authorized officer or attorney-in-fact of Oakmont
to such effect, (B) shall be duly registered in the name of Oakmont
under the laws of the Republic of Panama, (C) shall be duly covered by
insurance in compliance with the terms of the MONICA MARISSA Mortgage
and the Bank shall have received evidence of such coverage satisfactory
to it, including a report or reports in reasonable detail by
independent marine insurance brokers (who may be marine insurance
brokers regularly employed by Oakmont) with respect to the insurances
maintained with respect to the MONICA MARISSA and its operation, and
the Bank shall be satisfied with such report or reports, and (D) shall
have the highest classification and rating of an Approved
Classification Society for vessels of the same age and type, as
certified by a certificate of such classification society as to such
classification and rating being in full force and effect without any
outstanding recommendations or requirements other than those consented
to, in writing, by the Bank.
(viii) Each of the CLIPPER ATLANTIC Mortgage and the CLIPPER
PACIFIC Mortgage shall have been duly executed, delivered and recorded
and arrangements satisfactory to the Bank shall have been made with
special Cypriot counsel referred to in subparagraph (xvii) of this
subsection (a) of this Section 5 for the filing within 42 days of the
execution thereof with the Registrar of Companies in Nicosia, Cyprus of
a certified copy of each of the CLIPPER ATLANTIC Mortgage and the
CLIPPER PACIFIC Mortgage, and all other actions required to be taken
shall have been taken so as to constitute each of the CLIPPER ATLANTIC
Mortgage and the CLIPPER PACIFIC Mortgage a statutory first mortgage
lien on the CLIPPER ATLANTIC or the CLIPPER PACIFIC, as the case may
be, under the laws of the Republic of Cyprus and so that each of such
mortgages shall qualify as a preferred mortgage under Chapter 313 of
Title 46 of the United States Code (46 U.S.C.
ss.31301 ET SEQ.).
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(ix) Each of the CLIPPER HARMONY Mortgage and the MONICA
MARISSA Mortgage shall have been duly executed, delivered and
provisionally recorded and arrangements satisfactory to the Bank shall
have been made with special Panamanian counsel referred to in
subparagraph (xvii) of this subsection (a) of this Section 5 for the
permanent recordation thereof with the appropriate Panamanian
authorities and all other actions required to be taken shall have been
taken so as to constitute each of such mortgages a first naval mortgage
lien on the CLIPPER HARMONY or the MONICA MARISSA, as the case may be,
under the laws of the Republic of Panama and so that each of such
mortgages shall qualify as a preferred mortgage under Chapter 313 of
Title 46 of the United States Code (46 U.S.C. ss.31301 ET SEQ.).
(x) The CLIPPER GOLDEN HIND Mortgage shall have been duly
executed, delivered and recorded and all other actions required to be
taken shall have been taken so as to constitute the CLIPPER GOLDEN HIND
Mortgage a first preferred mortgage lien on the CLIPPER GOLDEN HIND
under the laws of the Republic of Liberia and so that the CLIPPER
GOLDEN HIND Mortgage shall qualify as a preferred mortgage under
Chapter 313 of Title 46 of the United States Code (46 U.S.C.ss.31301 ET
SEQ.).
(xi) Each of this Agreement, the Note, the Collateral Agency
and Intercreditor Agreement, the Initial Guaranty, the CLIPPER ATLANTIC
Insurances Assignment, the CLIPPER GOLDEN HIND Insurances Assignment,
the CLIPPER HARMONY Insurances Assignment, the CLIPPER PACIFIC
Insurances Assignment and the MONICA MARISSA Insurances Assignment
shall have been duly executed and delivered and shall be in full force
and effect and arrangements satisfactory to the Bank shall have been
made with special Cypriot counsel referred to in subparagraph (xvii) of
this subsection (a) of this Section 5 for the filing within 42 days of
execution thereof with the Registrar of Companies in Nicosia, Cyprus of
a certified copy of the CLIPPER ATLANTIC Insurances Assignment and the
CLIPPER PACIFIC Insurances Assignment.
(xii) The Bank shall have received evidence satisfactory to it
that $100,000,000 of Senior Secured Notes have been issued under terms
and conditions satisfactory to the Bank in all respects.
(xiii) The Bank shall have received payment in full of the
fees and expenses due to the Bank on or prior to the date thereof,
including, without limitation, the financing fee due under Section
3(g).
(xiv) No material adverse change shall have occurred and be
continuing in the business, operations or financial condition of the
Company or any of the Initial Guarantors since the date of the last
financial statements of the Company and its subsidiaries heretofore
delivered to the Bank which in the reasonable opinion of the Bank, if
not remedied, would prevent or materially impair the ability of the
Company or any of the Initial Guarantors to comply with any of their
respective material obligations under this Agreement, under the Note or
under any of the Collateral Documents.
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(xv) The Bank shall have received (A) a Drawdown Notice, (B)
certified copies of all corporate action taken by the Company and by
each of the Initial Guarantors to authorize the transactions herein
contemplated and (C) such other documents as the Bank shall reasonably
request, and all instruments and proceedings incident to the making of
such Loan shall be satisfactory in form and substance to the Bank.
(xvi) All corporate proceedings and all other legal matters
(including the form and sufficiency of documents) incident to the
making of such Loan shall have been found satisfactory by Messrs.
Seward & Kissel, special counsel for the Bank.
(xvii) The Bank shall have received from Messrs. Thacher,
Profitt & Wood, counsel for the Company and the Initial Guarantors,
from Messrs. Maples and Calder, special Cayman Islands Counsel, from
Messrs. Patton Moreno & Asvat, special Panamanian counsel, and from
Andreas Demetriades Law Offices, special Cypriot counsel, favorable
opinions, satisfactory in scope, form and substance to the Bank and its
counsel, as to all legal matters incident to the making of such Loan,
including, but not limited to, (A) the due organization, existence and
good standing of the Company and of each of the Initial Guarantors, (B)
the corporate power, authority and legal right of the Company and of
each of the Initial Guarantors to execute, deliver and perform their
respective obligations under this Agreement and under each of the
documents referred to herein to which such corporation is a party, (C)
the due authorization of all acts and things to be done by the Company
and by each of the Initial Guarantors in connection with the
transactions hereby contemplated, (D) the due execution and delivery
and the validity, binding effect and enforceability of this Agreement,
the Note and those of the Collateral Documents being executed and
delivered on the date of the making of such Loan, (E) the due
registration of the CLIPPER ATLANTIC and the title thereto of Conifer,
subject to no liens or other encumbrances of record, except the CLIPPER
ATLANTIC Mortgage, (F) the status of the CLIPPER ATLANTIC Mortgage as a
valid and perfected statutory first mortgage lien on the CLIPPER
ATLANTIC under the laws of the Republic of Cyprus, (G) the due
registration of the CLIPPER GOLDEN HIND and the title thereto of Ivy,
subject to no liens or other encumbrances of record, except the CLIPPER
GOLDEN HIND Mortgage, (H) the status of the CLIPPER GOLDEN HIND
Mortgage as a valid and perfected first preferred mortgage lien on the
CLIPPER GOLDEN HIND under the laws of the Republic of Liberia, (I) the
due registration of the CLIPPER HARMONY and the title thereto of
Topscale, subject to no liens or other encumbrances of record, except
the CLIPPER HARMONY Mortgage, (J) the status of the CLIPPER HARMONY
Mortgage as a valid and perfected first naval mortgage lien on the
CLIPPER HARMONY under the laws of the Republic of Panama, (K) the due
registration of the CLIPPER PACIFIC and the title thereto of Rapid,
subject to no liens or other encumbrances of record, except the CLIPPER
PACIFIC Mortgage, (L) the status of the CLIPPER PACIFIC Mortgage as a
valid and perfected statutory first mortgage lien on the CLIPPER
PACIFIC under the laws of the Republic of Cyprus, (M) the due
registration of the MONICA MARISSA and the title thereto of Oakmont,
subject to no liens or other encumbrances of record, except the MONICA
MARISSA Mortgage and (N) the status of the MONICA MARISSA Mortgage as a
valid and perfected first naval mortgage lien on the MONICA MARISSA
under the laws of the Republic of Panama.
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(b) The obligation of the Bank to make any other Loan
available to the Company hereunder shall be subject to receipt by the Bank of a
Drawdown Notice and to the matters certified therein being true as of the date
of the making of such Loan.
6. REPAYMENT, PREPAYMENT AND REDUCTION OF FACILITY
(a) Each Loan may be repaid at any time and from time to time
(in multiples of $100,000) on not less than two Business Days' notice to the
Bank (which notice shall be irrevocable) specifying the amount and date of
repayment and must be paid on or before the Final Payment Date.
(b) In the event of a sale or Total Loss of any of the Vessels
and the proceeds from such sale or Total Loss are required pursuant to the terms
of the Indenture to prepay a portion of the Senior Secured Notes, if the
Company, at its option, uses any portion of the net cash proceeds of a public
equity offering to prepay a portion of the Senior Secured Notes or the Company
is required to redeem a portion of the principal amount due under the Senior
Secured Notes from amounts on deposit in the Escrow Account (as such term is
utilized in the Offering Circular) then, in any such case, such proceeds or
amounts on deposit in the Escrow Account, as the case may be, shall be utilized
on a pro rata basis to prepay the Senior Secured Notes and to repay the
outstanding Loans (any amount so repaid not to be available for further
borrowings) hereunder and/or permanently reduce the amount then available for
additional Loans under Section 3(a), Company's option.
(c) In the event of any repayment under subsection (a) of this
Section or any prepayment under subsection (b) of this Section, under Section 9
or under the terms of any of the Collateral Documents, the Company shall include
with such repayment of prepayment interest on the amount repaid or prepaid to
the date of such repayment or prepayment and shall also hold the Bank harmless
for the amount of any loss of interest or other costs incurred by the Bank in
respect of such repayment or prepayment for the balance of the applicable
Interest Period or Periods in effect with respect to the amount repaid or
prepaid.
(d) The Company shall have the right, at any time and from
time to time, upon giving to the Bank not less than three Business Days' prior
written notice (which notice shall be irrevocable) to terminate in whole, or
permanently reduce the available unused portion of, the line of credit
established under Section 3(a); provided, however, that each partial reduction
shall be in a minimum amount of $250,000.
7. INTEREST
(a) The Loans shall bear interest for each day on the
principal amounts thereof from time to time outstanding from the date of the
making of the initial Loan hereunder until the Final Payment Date, at the
Applicable Rate, which shall be the rate per annum which is equal to LIBOR for
the applicable Interest Period, plus 1-1/2% (the "Margin").
(b) Any payment with respect to the Loans not paid when due,
whether on the Final Payment Date, by acceleration or otherwise, shall bear
interest thereafter at a rate per annum equal to the Applicable Rate in effect
with respect to such payment at the time of such default, plus
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<PAGE>
2% (the "Default Rate"), or, if the Bank so elects, in its sole option, the
Default Rate shall be the Alternate Base Rate, plus 2%.
(c) The Company may select an applicable interest period or
periods of 1, 3 and 6 months (or such other duration as shall be mutually
acceptable to the Company and the Bank) (each an "Interest Period"), provided,
however, that no Interest Period may extend beyond the Final Payment Date. The
Company shall give the Bank an Interest Notice at least three Business Days
prior to the end of any then existing Interest Period, which Interest Notice
shall set forth the Interest Period or Periods selected. If at the end of any
then existing Interest Period, the Company fails to give an Interest Notice as
provided in the preceding sentence, the following Interest Period shall have a
duration of the lesser of (i) 3 months and (ii) the number of days remaining
until the Final Payment Date. The Company's right to select an Interest Period
shall be further subject to the restriction that no selection of an Interest
Period shall be effective unless the Bank is satisfied that the necessary funds
will be available to the Bank for such period and the Bank is satisfied that no
Event of Default or event which with the giving of notice or lapse of time, or
both, would constitute an Event of Default shall have occurred and be
continuing.
(d) The Company covenants and agrees that it will pay interest
on each of the Loans (each an "Interest Payment Date") on the last day of each
Interest Period and, if any Interest Period exceeds three months, also on each
three month anniversary of the date of the commencement of such Interest Period.
In each case, interest shall be payable on each Interest Payment Date only on
the portion of the Loans covered by such Interest Period and/or Periods and/or
covered by such Interest Period and/or Periods having a duration in excess of
three months.
(e) Interest shall be computed on the actual number of days
elapsed on the basis of a 360 day year.
(f) Nothing contained in this Agreement or in the Note shall
require the Company to pay interest at a rate exceeding the maximum rate
permitted by applicable law. If the interest payable to the Bank on any Interest
Payment Date shall exceed the maximum permissible amount, it shall be
automatically reduced to the maximum permissible amount, and interest for any
subsequent period, to the extent less than that permitted by applicable law,
shall, to that extent, be increased by the amount of such reduction.
8. PAYMENTS
All payments of the principal, interest and other amounts
payable upon or in respect of the Loans shall be made to the Bank, in
immediately available funds, at its office at One Wall Street, New York, New
York 10286, Attention: Marine Transportation Division, for the account of the
designated lending office, or at such other office of the Bank as the Bank shall
direct. Whenever any payment to be made hereunder or under the Note shall be due
on a day other than a Business Day (unless the next succeeding Business Day
falls in the next calendar month, in which event such payment shall be made on
the next preceding Business Day), such payment may be made on the next
succeeding Business Day and any extension of time shall be included in computing
interest with respect to such payment. All payments shall be made without
set-off or counterclaim and free and clear of, and without deduction for, any
taxes, levies, imposts, duties, charges, fees, deductions,
21
<PAGE>
withholdings, restrictions or conditions of any nature heretofore or hereafter
imposed by any governmental authority or by any political subdivision thereof or
taxing authority therein, unless the Company is compelled by law to make such
deduction or withholding. In the event that any such obligation is imposed upon
the Company, the Company will pay to the Bank such additional amount as may be
necessary to enable the Bank to receive the same net amount (after taking into
account any credit, repayment, relief or rebate in respect of taxation by the
taxing authority imposing any such tax or duty which the Bank may be entitled to
claim, as reasonably determined by the Bank, arising directly or indirectly as a
result of any such deduction as aforesaid) which the Bank would have received if
no such obligation had been imposed; provided that the foregoing provisions of
this sentence shall not apply in the case of amounts deducted from interest in
respect of taxes charged upon or by reference to the income, profits or gains of
the Bank and imposed by the United States of America or the State or City of New
York. The Company agrees that it will pay and save the Bank harmless from all
liabilities with respect to or resulting from any delay or omission to pay any
such tax, levy, impost, duty, charge or fee or to make any such deduction or
withholding required by law. The obligations of the Company under this Section 8
shall survive the termination of this Agreement and the repayment in full of the
Loans.
9. ILLEGALITY, INCREASED COST, NON-AVAILABILITY, ETC.
(a) In the event that by reason of any change in any
applicable law, regulation or regulatory requirement or in the interpretation
thereof the Bank has a reasonable basis to conclude that it has become unlawful
for the Bank to maintain or give effect to its obligations as contemplated by
this Agreement, the Bank shall inform the Company to that effect whereafter the
Company shall be required to prepay immediately the then outstanding Loans. In
any such event, but without prejudice to the aforesaid obligation of the Company
to prepay the outstanding Loans, the Company and the Bank shall negotiate in
good faith with a view to agreeing on terms for making the Loans available from
another jurisdiction or otherwise restructuring the Loans on a basis which is
not unlawful.
(b) If after the date of this Agreement any change in
applicable law, regulation, directive or request (whether or not having the
force of law) or in the interpretation thereof by any governmental authority
charged with the administration thereof shall (i) subject the Bank to any taxes
imposed by any jurisdiction on the debt acquisition of a foreign obligor, (ii)
materially change the basis of taxation of payments of principal of or interest
on the Loans (except for taxes charged in respect of or by reference to the
income, profits or gains of the Bank and imposed by the United States of America
or the State or City of New York), (iii) impose or increase or render applicable
any official reserve, special deposit, assessment, capital adequacy or other
requirements against foreign assets held by or deposits in or for the account of
or loans or commitments to make loans by an office of the Bank or (iv) impose on
the Bank any other condition or requirement with respect to this Agreement or
the Note, the result of which is (A) to increase by an amount deemed material by
the Bank the cost to the Bank of making or carrying the Loans, (B) to reduce the
amount of any payment (whether principal, interest or otherwise) received or
receivable by the Bank hereunder or under the Note by an amount deemed material
by the Bank or (C) to otherwise reduce the rate of return to the Bank by an
amount deemed material by the Bank then the Company, upon receipt of notice from
the Bank of such change in law, regulation, directive, request or interpretation
and a demand by the Bank arising therefrom, will pay to the Bank, in lawful
money of the United States
22
<PAGE>
of America, an amount or amounts (in addition to the principal and interest
payable hereunder and under the Note) sufficient to compensate the Bank for the
additional cost or reduction which the Bank incurs or suffers subsequent to the
date of receipt of such notice by the Company by virtue of such change in
applicable law, regulation, directive, request or interpretation. A certificate
signed by an officer of the Bank setting forth the additional amount or amounts
required, submitted to the Company, shall be conclusive evidence thereof. The
obligations of the Company under this Section 9(b) shall survive the termination
of this Agreement and the repayment in full of the Loans.
(c) Notwithstanding anything to the contrary contained in this
Agreement or in the Note, if the Bank shall determine that, by reason of
circumstances affecting the London interbank market generally, adequate and
reasonable means do not and will not exist for ascertaining the Applicable Rate
for any Interest Period, the Bank shall give notice of such determination to the
Company. The Company and the Bank shall then negotiate in good faith in order to
agree upon a mutually agreeable basis for funding the Loan or Loans in question
and/or for determining the interest rate and/or Interest Period(s) to be
substituted for those which would otherwise have applied under this Agreement.
If the Company and the Bank are unable to agree upon such a substituted funding
base, interest rate and/or Interest Period(s) within 30 days of the giving of
such notice, the Company shall repay the Loans, or the relevant portion hereof,
as the case may be, to the Bank immediately; provided, however, that if the
Company fails to make such repayment, the Bank shall determine a funding basis,
set an interest rate and/or set an Interest Period(s), as the case may be, all
to take effect from the expiration of the relevant Interest Period(s) in effect
at the date of said determination notice, which rate shall be equal to the
aggregate of the Margin and the cost to the Bank of funding the relevant Loan or
Loans.
10. AFFIRMATIVE COVENANTS
From the date hereof and until payment in full of the
obligations of the Company to the Bank under this Agreement and under the Note,
the Company will:
(a) MAINTENANCE OF EXISTENCE. At all times maintain its
corporate existence and right to carry on business and do or cause to be done
all things necessary to preserve the Collateral Property and keep in full force
and effect each of the Collateral Documents.
(b) PERFORM AGREEMENTS. Observe and perform all the agreements
and conditions on its part to be observed and performed under this Agreement and
under the Note.
(c) MAINTENANCE OF BOOKS, RECORDS, PROVIDING OF FINANCIAL
STATEMENTS, ETC. Keep proper books of record and account into which full and
correct entries shall be made, in accordance with GAAP consistently applied
throughout the period during which this Agreement is in effect, and will
furnish, or cause to be furnished, to the Bank, at the sole expense of the
Company:
(i) within 120 days after the end of each fiscal year of the
Company (A) a consolidated balance sheet as at the end of such fiscal
year of the Company and of each of its vessel owning affiliates and (B)
consolidated statements of income and retained earnings of the Company
and each of its vessel owning affiliates for such fiscal year, setting
forth in each case in comparative form the corresponding figures as at
the end of and for the previous
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<PAGE>
fiscal year all in reasonable detail, unaudited, but certified as
correct by a chief financial officer of the Company to the best of his
knowledge and belief;
(ii) within 60 days after the end of each fiscal quarter of
the Company (A) a consolidated balance sheet as at the end of such
quarter of the Company and each of its vessel owning affiliates and (B)
consolidated statements of income and retained earnings of the Company
and each of its vessel owning affiliates for such quarter, unaudited,
but certified as correct by a chief financial officer of the Company to
the best of his knowledge and belief;
(iii) concurrently with each delivery of financial statements
pursuant to subparagraphs (i) and (ii) of this subsection, a
certificate of a principal executive officer of the Company, in form
and substance satisfactory to the Bank, stating that he has reviewed
the provisions of this Agreement, of the Note and of the Collateral
Documents and the performance or observance thereof and either stating
that to his knowledge no event has occurred and no condition exists
which constitutes or with the giving of notice or lapse of time, or
both, would constitute an Event of Default or if any such event has
occurred or condition exists, specifying the nature and period of
existence of such event or condition of which he has knowledge and what
action the Company is taking or proposes to take with respect thereto;
(iv) promptly upon the occurrence thereof, notice from the
principal executive officer of the Company of the occurrence of any
condition or event which constitutes an Event of Default or which, with
the giving of notice or lapse of time, or both, would constitute an
Event of Default specifying in such notice the nature and period of
such condition or event and what action the Company is taking or
proposes to take with respect thereto;
(v) promptly upon the institution thereof, notice from the
Company of any material litigation against, or investigation by any
public regulatory body or commission involving, the Company or any of
the Guarantors and, promptly upon the request of the Company, an
opinion of counsel as to the nature thereof and the extent of the
potential liability, if any, of the Company and/or any of the
Guarantors, as the case may be, in relation to the subject matter
thereof; and
(vi) with reasonable promptness, such other information
respecting its business, assets, financial condition and the results of
operations of the Company and the Guarantors as the Bank may from time
to time reasonably request, including, without limitation, all reports
(including all annual reports on Form 20-F and all 6-K reports) filed
by the Company with the United States Securities and Exchange
Commission, Vessel employment information, lists of operating expenses,
lists of all vessels owned or on order by the Company or by any of its
affiliates and statements as to total indebtedness of the Company and
its vessel owning affiliates.
(d) INSPECTION OF PROPERTY, BOOKS AND RECORDS. Allow any
representative or representatives designated by the Bank, subject to applicable
laws and regulations, to visit and inspect any of the properties of the Company
and, on request, to examine the books of account,
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<PAGE>
records, reports and other papers thereof (and to make copies thereof and to
take extracts therefrom) and to discuss the affairs, finances and accounts
thereof with its officers and executive employees all at such reasonable times
and as often as the Bank reasonably requests.
(e) PAYMENT OF TAXES. Pay and discharge, or cause to be paid
and discharged, all taxes, assessments and governmental charges or levies
imposed upon it or upon its income or property, prior to the date upon which
penalties attach thereto; PROVIDED, HOWEVER, that it shall not be required to
pay and discharge, or cause to be paid and discharged, any such tax, assessment,
charge or levy so long as the legality thereof shall be contested in good faith
and by appropriate proceedings or other acts and it shall set aside on its books
adequate reserves with respect thereto, and so long as such deferment in payment
shall not subject any of the Vessels to forfeiture or loss.
(f) NOTICE OF ACTIONS, SUITS, PROCEEDINGS AND ENVIRONMENTAL
CLAIMS:
(i) within 10 days after the commencement thereof, notify the
Bank in writing of any actions, suits or proceedings (in arbitration or
otherwise) commenced against the Company or any of the Guarantors at
law, in equity, in admiralty or before any governmental department,
commission, board, bureau, agency or other instrumentality, domestic or
foreign, which involves the possibility of any judgment or liability,
not fully covered by insurance as to which coverage has been
acknowledged by the appropriate insurers, in excess of $200,000 or
which may result in any material adverse change in the business,
operations, properties or assets or in the condition, financial or
otherwise, of any thereof;
(ii) within 5 Business Days after the occurrence of any of the
following conditions, provide the Bank with a certificate of an
authorized officer of the Company, and/or the affected Guarantor or
Guarantors, as the case may be, specifying in detail the nature of such
condition and its or their proposed response thereto: (A) the receipt
by the Company or any of the Guarantors of any Environmental Claim, if
such Environmental Claim could reasonably be expected to have a
material adverse effect upon the business, operations, properties,
assets or condition, financial or otherwise, of any thereof or upon the
ability of any thereof to perform, or of the Bank or the Collateral
Agent to enforce, the obligations of any thereof to the Bank hereunder,
under the Note or under any of the Collateral Documents to which such
corporation is a party, (B) the Company or any of the Guarantors shall
obtain actual knowledge that there exists any Environmental Claim
pending, threatened or reasonably likely against any thereof, which
individually or in the aggregate could reasonably be expected to have a
material adverse effect upon the business, operations, properties,
assets or condition, financial or otherwise, of any thereof or upon the
ability of any thereof to perform, or of the Bank or the Collateral
Agent to enforce, the obligations of any thereof to the Bank hereunder,
under the Note or under any of the Collateral Documents to which such
corporation is a party, or (C) any release, emission, discharge or
disposal of any Material of Environmental Concern that could form the
basis of any Environmental Claim against the Company or any of the
Guarantors relating to any of the Collateral Property, if such
Environmental Claim could reasonably be expected to have a material
adverse effect upon the business, operations, properties, assets or
condition, financial or otherwise, of any thereof or upon the ability
of any thereof to perform, or of the Bank or the Collateral Agent to
enforce, the obligations of any thereof to the Bank hereunder, under
the
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Note or under any of the Collateral Documents to which such corporation
is a party. Upon the written request of the Bank, the Company, and/or
the affected Guarantor or Guarantors, as the case may be, will submit
to the Bank at reasonable intervals a report providing an update of the
status of any issue or claim identified in any notice or certificate
required pursuant to this subsection.
(g) COMPLIANCE WITH ISM CODE. Procure that the Guarantors and
the Manager comply with, and insure that the Vessels when mortgaged to the
Collateral Agent will comply with, the requirements of the ISM Code within the
time periods prescribed thereby, including, without limitation, the maintenance
and renewal of valid certificates pursuant thereto and will immediately inform
the Bank if there is a threatened or actual withdrawal of any Guarantor's and/or
the Manager's DOC or the SMC in respect of any Vessel mortgaged to the Trustee
or if notification has been received that any Guarantor's or the Manager's
application for a DOC or SMC has been refused.
(h) MANAGEMENT OF THE VESSELS. Cause each of the Vessels when
mortgaged to the Collateral Agent to be managed and operated by Millenium
Management, Inc., a company organized and existing under the laws of the Cayman
Islands, or by another entity satisfactory to the Bank (the "Manager").
(i) CONFIRMATION OF CLASS CERTIFICATES. If requested by the
Bank, furnish, or cause to be furnished, to the Bank a confirmation of class
certificate covering each of the Vessels mortgaged to the Collateral Agent.
(j) MAINTENANCE OF PROPERTIES. Maintain and keep all
properties used or useful in the conduct of its business in good condition,
repair and working order and supplied with all necessary equipment and will
cause to be made all necessary repairs, renewals and replacements thereof so
that the business carried on in connection therewith and every portion thereof
may be properly and advantageously conducted at all times.
(k) PAYMENT OF INDEBTEDNESS. Pay, or cause to be paid, the
principal of, and premium, if any, and interest on, any indebtedness thereof for
borrowed monies at the times and in the manner specified in the agreements
regarding such indebtedness.
(l) COMPLIANCE WITH AGREEMENTS. Make all payments and comply
with all other terms, conditions and provisions on its part to be performed
under, and will not allow any default to exist or any right of termination to
accrue under, this Agreement, the Note, any of the Collateral Documents or any
other agreement to which it shall be a party or by which it may be bound.
(m) OPERATING ACCOUNTS. Cause the operating accounts for each
of the Vessels mortgaged to the Collateral Agent to be maintained with the Bank.
(n) ADDRESSING THE YEAR 2000 ISSUE. The Company shall take and
shall cause each of the Guarantors to take all necessary action to complete in
all material respects the reprogramming of computer software, hardware and
firmware systems and equipment containing embedded microchips owned or operated
by or for the Company and the Guarantors or used or relied
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upon in the conduct of their business (including systems and equipment supplied
by others or with which such systems of the Company and the Guarantors
interface) required as a result of the Year 2000 Issue to permit the proper
functioning of such computer systems and other equipment and the testing of such
systems and equipment, as so reprogrammed. At the request of the Bank, the
Company shall provide, and shall cause the Guarantors to provide, the Bank
reasonable assurance of its compliance with the preceding sentence.
(o) COMPLIANCE WITH OBLIGATIONS. Use its reasonable best
commercial efforts to cause all parties to the Collateral Documents to comply
with their obligations thereunder.
(p) ADDITIONAL GUARANTIES, ETC. Cause each wholly-owned
subsidiary of the Company which acquires an Additional Vessel subsequent to the
date hereof (i) to execute and deliver to the Bank a Guaranty and a Consent and
Agreement to this Agreement in the form of the Consent and Agreement attached
hereto and (ii) to execute and deliver to the Collateral Agent a first mortgage
and an assignment of insurances covering such Additional Vessel.
11. NEGATIVE COVENANTS.
From the date hereof and until payment in full of the
obligations of the Company to the Bank under this Agreement and under the Note,
the Company will not, without the prior written consent of the Bank:
(a) INDEBTEDNESS. Create, assume, incur or become or be or
remain liable, directly or indirectly, in respect of any indebtedness except:
(i) indebtedness to the Bank evidenced by the Note or
otherwise incurred under or in connection with this Agreement or any of
the Collateral Documents;
(ii) indebtedness evidenced by the Senior Secured Notes;
(iii) current indebtedness or obligations (other than
indebtedness for borrowed monies) incurred in the normal course of its
business so long as the relevant creditors have evidenced no intention
to enforce any of their rights against the Company if such enforcement
could have a material adverse effect on the business, operations or
financial condition of the Company; and
(iv) any other indebtedness to the extent permitted by the
Indenture.
(b) GUARANTIES, ETC. Directly or indirectly assume, guaranty,
endorse or become liable on the obligation of any person, firm or corporation,
or suffer to exist any such assumption, guaranty, endorsement or liability,
except in favor of the Bank or as otherwise permitted by the Indenture.
(c) LIENS, ETC. Create, assume or incur, or suffer to be
created, assumed or incurred or to exist, any mortgage, lien, pledge, charge or
other security interest or encumbrance of any kind in respect of any of its
properties, whether heretofore or hereafter acquired, except for (i)
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Permitted Liens and (ii) mortgages, liens, pledges, charges or other security
interests or encumbrances in favor of the Bank or expressly provided for herein
or in the documents referred to herein.
(d) CONSOLIDATION, MERGER OR SALE OF ASSETS. Consolidate with
or merge into any other corporation or sell, lease or transfer or otherwise
dispose of all or any substantial portion of its assets or any shares of capital
stock of any Guarantor, except as otherwise permitted by the Indenture.
(e) DIVIDENDS. Declare or pay any dividend of any kind or make
any purchase or redemption of or distribution on any of its stock, except that
so long as no Event of Default has occurred and is continuing, it may at any
time pay dividends in an amount not to exceed in the aggregate 50% of the
consolidated cumulative net income of the Company and its subsidiaries from the
beginning of the Company's fiscal quarter commencing immediately after the
issuance of the Senior Secured Notes to the end of the Company's most recent
fiscal quarter for which internal financial statements are available and have
been delivered to the Bank, but only so long as the Company is permitted to make
Restricted Payments under the Indenture.
(f) LOANS OR ADVANCES. Make or suffer to exist any loan,
advance or extension of credit to any person, firm or corporation, by loan,
guaranty or otherwise, except for advances in the normal course of its business
or as otherwise permitted under the Indenture.
(g) INVESTMENTS. Make or suffer to exist any investment in any
person, firm or corporation, whether by acquisition of stock or indebtedness,
except as permitted by the Indenture.
(h) ENGAGEMENT IN BUSINESS. Engage in any business other than
the Shipping Business.
(i) SALE/LEASEBACK TRANSACTIONS. Enter into any Sale/Leaseback
Transaction, except to the extent permitted by the Indenture.
12. OPERATING ACCOUNTS
The Company agrees to cause to be opened with the Bank on or
prior to the date of the making of the initial Loan under Section 3(a) one or
more special accounts (collectively the "Operating Account") into which all
earnings of the Vessels when mortgaged to the Collateral Agent shall be
deposited.
13. APPLICATION OF FUNDS
All monies received by or on behalf of the Bank in respect of
any of the Collateral Property shall be applied as follows:
(a) So long as no Event of Default shall have occurred and be
continuing the Bank (subject to applicable provisions of any of the Collateral
Documents and to subparagraph (b) of Section 5) may deduct from such monies
received sums sufficient to pay, or reimburse itself for
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its payment of, any expenses incurred by it hereunder or in connection herewith
and the balance of such monies shall be available to the Company for any
business purpose whatsoever consistent with the terms of this Agreement.
(b) If and so long as an Event of Default shall have occurred
and be continuing the Bank shall, in its sole discretion, either apply such
monies as provided in subparagraph (i) of this subsection or apply such monies
(subject to applicable provisions of any of the Collateral Documents and to
subparagraph (b) of Section 5), (i) to the payment of the Bank's costs and
expenses incurred in the protection of its rights hereunder, under the Note or
under any of the Collateral Documents, including, but not by way of limitation,
reasonable compensation and expenses for the Bank, its agents and attorneys and
court costs and other expenses incurred or made by the Bank or its agents or
attorneys in exercising any trust or power hereunder or in collecting said
monies, (ii) to the payment of all interest then due on the Note, (iii) to the
payment of all amounts of principal of the Note, whether or not then due and
payable, (iv) to the payment of any other obligations of the Company, to the
Bank and (v) the remainder, if any, shall be remitted to, or upon the order of,
the Company or to whomsoever may be entitled thereto.
14. EVENTS OF DEFAULT AND REMEDIES
The occurrence of any one or more of the following events
shall constitute an "Event of Default":
(a) Any principal of or interest on the Note shall not be paid
when due.
(b) Any fee or other amount payable hereunder, under the Note
or under any of the Collateral Documents shall not be paid when due and such
default shall continue unremedied for more than 10 days after written notice
thereof from the Bank.
(c) Any representation or warranty made by the Company herein
or by the Company or any of the Guarantors in any certificate delivered pursuant
hereto or in any of the Collateral Documents proves to have been untrue or
misleading in any material respect as at the date as of which made.
(d) The Company shall default in the performance or observance
of any covenant or condition contained in Sections 11 or 15(c) and (j) or shall
default in the performance or observance of any covenant or condition contained
in Section 10 and such default under Section 10 continue unremedied for a period
of 14 days.
(e) Any of the Guarantors shall default in the performance or
observance of any covenant or condition contained in Sections 4 or 5 of its
Guaranty or shall attempt to repudiate, rescind, limit or annul any of its
obligations under its Guaranty or any Guaranty shall be declared to be, or shall
become, null and void.
(f) The Company or any of the Guarantors shall default in the
performance or compliance with any other covenant or condition contained in this
Agreement, in the Note or in any
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of the Collateral Documents and such default shall continue unremedied for more
than 30 days after written notice thereof from the Bank.
(g) A default shall occur and be continuing under any of the
Mortgages or any legislation, decree or regulation is enacted or promulgated the
effect of which is to repudiate, rescind, limit or annul any of the Mortgages
unless the Company, within a period of 30 days after such enactment or
promulgation, shall have obtained a waiver or other relief satisfactory to the
Bank from such legislation, decree or regulation or shall have restructured such
Mortgage or Mortgages on terms and conditions satisfactory to the Bank in a
manner which would not be illegal and which would avoid any such repudiation,
rescission, limitation or annulment.
(h) An Event of Default shall have occurred and be continuing
under the Indenture.
(i) The capital stock of the Company, or any portion thereof,
shall be pledged to any person or shall otherwise be encumbered or, without the
prior written consent of the Bank, there shall occur a Change in Control of the
Company.
(j) Contemporaneously with the acquisition by a Guarantor of a
Committed Vessel or an Additional Vessel, such Vessel shall not have been
mortgaged to the Collateral Agent and its insurances assigned to the Collateral
Agent as security for the obligations of such Guarantor to the Bank under its
Guaranty.
(k) The Company or any of its affiliates shall default in the
payment when due (subject to any applicable grace period) of any indebtedness
for borrowed monies, whether directly incurred or guaranteed, and whether at
maturity or at any other time if, in such latter event, such indebtedness is, or
by reason of such default is subject to being, accelerated, and such default
shall continue unremedied for a period of 7 days after written notice of such
default from the Bank to the Company, unless such default is being contested in
good faith and by appropriate proceedings or other acts and there are set aside
on its books adequate reserves with respect thereto.
(l) A material adverse change shall occur in the business,
operations or financial condition of the Company or any of the Guarantors which,
in the reasonable opinion of the Bank, if not remedied, would prevent or
materially impair the ability of the Company or any of the Guarantors to perform
their respective material obligations under this Agreement, under the Note and
under any of the Collateral Documents, and such shall not have been remedied
within 15 days after written notice thereof from the Bank.
(m) A judgment or order for the payment of money shall be
entered against the Company or any of the Guarantors by any court, and such
judgment or order shall continue undischarged, unstayed or unappealed for a
period of 10 days in which the aggregate of all such judgments or orders exceeds
$5,000,000.
(n) The Company or any of the Guarantors shall make an
assignment for the benefit of creditors, become insolvent or be unable, or admit
in writing its inability, to pay its debts as they mature, or shall file a
petition in voluntary bankruptcy or a petition or answer or consent
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seeking reorganization or readjustment of indebtedness thereof under applicable
bankruptcy laws now or hereafter existing, or shall consent to the appointment
by a court of a receiver, administrator or trustee of the property thereof or of
a substantial part of such property, or corporate action or other action shall
be taken by any thereof for the purpose of effecting any of the foregoing.
(o) By order or decree of a court of competent jurisdiction
the Company or any of the Guarantors shall be adjudicated a bankrupt or
insolvent, or a petition for proceedings in bankruptcy or for the reorganization
thereof or the readjustment of the indebtedness thereof under applicable
bankruptcy laws now or hereafter existing shall be filed against any thereof and
any thereof shall admit the material allegations thereof, such petition shall
not have been dismissed within 60 days of its filing or an order, judgment or
decree shall be made approving such petition or a receiver or trustee shall be
appointed by a court for any thereof or the property of any thereof, or any part
thereof, and shall remain in possession thereof for 60 days.
If an Event of Default shall have occurred and be continuing;
(x) The Bank's obligation to make Loans available hereunder
shall cease and the Bank may, by giving notice to the Company, declare the
unpaid principal amount of the Note and the interest accrued thereon to be
immediately due and payable. Thereupon, such principal and interest and all
other, if any, sums payable hereunder or in respect of the Note (if not already
due and payable) shall forthwith become and be due and payable without further
notice and without presentment for payment, demand, protest or notice of protest
or other conditions precedent to the enforcement or collection thereof, all of
which are hereby expressly waived by the Company and the Guarantors; provided
that upon the happening of an event specified in subsections (n) and (o) of this
Section 14, the Note and all other amounts payable hereunder or under any of the
Collateral Documents shall automatically be immediately due and payable without
declaration and without presentment for payment, demand, protest or notice of
protest.
(y) The Bank may proceed to protect and enforce its rights by
action at law, suit in equity or in admiralty or other appropriate proceeding,
whether for specific performance of any covenant contained in this Agreement, in
the Note or in any of the Collateral Documents, or in aid of the exercise of any
power granted herein or therein, or the Bank may proceed to enforce the payment
of the Note when due or to enforce any other legal or equitable right of the
Bank, or proceed to take any action authorized or permitted under the terms of
any of the Collateral Documents or by applicable law for the collection of all
sums due, or so declared due, on the Note, including, without limitation, the
right to appropriate and hold, or apply (directly, by way of setoff or
otherwise) to the payment of the obligations of the Company to the Bank
hereunder, under the Note and/or under the Collateral Documents (whether or not
then due), all monies and other amounts of the Company, or any thereof, then or
thereafter in possession of the Bank, the balance of every deposit account
(demand or time, matured or unmatured) of the Company, then or thereafter with
the Bank and every other claim of the Company, then or thereafter against the
Bank; and the Company will pay the Bank all costs and expenses of collection,
including, without limitation, reasonable attorneys' fees, court costs and
expenses.
(z) The Bank shall not be required to marshal any present or
future security for, or guaranties of, the Loans, or to resort to any such
security or guaranties in any particular order.
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15. SUNDRY PROVISIONS
(a) FURTHER ASSURANCES. The Company and each of the Initial
Guarantors by its Consent and Agreement hereto jointly and severally agree that
at any time and from time to time, upon the written request of the Bank, the
Company and/or the Initial Guarantors, or any of them, will promptly and duly
execute and deliver to the Bank and/or the Collateral Agent any and all further
instruments and documents as the Bank may reasonably deem desirable in obtaining
and perfecting the full benefits of this Agreement, of the Note and/or of any of
the Collateral Documents and of the rights and powers granted herein and
therein.
(b) NOTICES. All notices, requests and other communications
pursuant to this Agreement shall be in writing, either by letter (if mailed,
such letter to be registered or certified) or telecopy, addressed as follows:
If to the Company,
c/o Maples and Calder
P.O. Box 309
South Church Street
George Town, Grand Cayman
Cayman Islands, British West Indies
Telecopy No. 345-949-8080
If to the Bank,
Marine Transportation Division
One Wall Street
New York, New York 10286
Telecopy No. 212-635-7512
or to such other address as the party to receive any such notice, request or
other communication may have designated by written notice to the other party.
All periods of notice shall be measured from the date of
delivery thereof, if delivered by hand or by courier service, or from the date
of receipt thereof, if sent by certified or registered mail or by telecopy.
(c) FURTHER PANAMANIAN AND CYPRIOT COUNSEL OPINIONS. The
Company agrees at its expense (i) to have Messrs. Patton Moreno & Asvat, special
Panamanian counsel, deliver further opinions to the Bank within 120 days from
the date hereof with respect to (A) the due and valid permanent recordation of
the CLIPPER HARMONY Mortgage under Panamanian law, (B) the status of the CLIPPER
HARMONY Mortgage as a valid and perfected first naval mortgage lien on the
CLIPPER HARMONY under Panamanian law, (C) the due registration of the CLIPPER
HARMONY and the title thereto of Rapid subject to no mortgage, lien or other
encumbrance of record, except the CLIPPER HARMONY Mortgage, (D) the due and
valid permanent recordation of the MONICA MARISSA Mortgage under Panamanian law,
(E) the status of the MONICA
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MARISSA Mortgage as a valid and perfected first naval mortgage lien on the
MONICA MARISSA under Panamanian law and (F) the due registration of the MONICA
MARISSA and the title thereto of Oakmont subject to no mortgage, lien or other
encumbrance of record, except the MONICA MARISSA Mortgage and (ii) to have
Andreas Demetriades Law Offices, special Cypriot counsel, deliver a further
opinion to the Bank as soon as each of the CLIPPER ATLANTIC Mortgage, the
CLIPPER PACIFIC Mortgage, the CLIPPER ATLANTIC Insurances Assignment and the
CLIPPER PACIFIC Insurances Assignment has been filed with the Registrar of
Companies in Nicosia, Cyprus, such opinion to cover such matters as the Bank
shall reasonably request.
(d) PAYMENT OF COSTS, EXPENSES, ETC. The Company agrees,
whether or not the transactions hereby contemplated are consummated, on demand
to pay, or reimburse the Bank for its payment of, the reasonable expenses of the
Bank incident to said transactions (and in connection with any supplements,
amendments, waivers or consents relating thereto or incurred in connection with
the defense of any of the Bank's rights or remedies with respect thereto or in
the preservation of the Bank's priorities under the documentation executed and
delivered in connection therewith) including, without limitation, the reasonable
fees and disbursements of the Bank's counsel in connection therewith, including
special Cayman Islands, Panamanian and Cypriot counsel, any loss of interest on
the Note or other costs incurred by the Bank occasioned by any delay in closing
any of the Loans requested by the Company hereunder, all costs and expenses, if
any, in connection with the enforcement of this Agreement, the Note and the
other documents provided for herein and stamp and other similar taxes, if any,
incident to the execution and delivery of the documents (including, without
limitation, the Note) herein contemplated and to hold the Bank free and harmless
in connection with any liability arising from the nonpayment of any such stamp
or other similar taxes. Such taxes and, if any, interest and penalties related
thereto as may become payable after the date hereof shall be paid immediately by
the Company to the Bank when liability therefor is no longer contested by the
Bank or reimbursed immediately by the Company to the Bank after payment thereof
by the Bank (if the Bank, at its sole discretion, chooses to make such payment).
(e) SUCCESSORS AND ASSIGNS. This Agreement and the Consent and
Agreement annexed hereto shall be binding upon the Company and the Initial
Guarantors and their respective successors and assigns and shall be binding upon
and inure to the benefit of the Bank and its successors and assigns; PROVIDED,
HOWEVER, that neither the Company nor any of the Initial Guarantors may transfer
any of their respective obligations or assign any of their respective rights
hereunder or thereunder without the prior written consent of the Bank.
(f) GOVERNING LAW. THIS AGREEMENT SHALL BE DEEMED TO HAVE BEEN
MADE UNDER AND SHALL BE GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK
AS TO ALL MATTERS OF CONSTRUCTION, VALIDITY, EFFECT AND PERFORMANCE WITHOUT ANY
REFERENCE TO CONFLICTS OF LAW PRINCIPLES.
(g) SUBMISSION TO JURISDICTION. The Company and each of the
Initial Guarantors by its Consent and Agreement annexed hereto jointly and
severally agree that any legal action or proceeding brought by the Bank or on
behalf of the Bank against any thereof hereunder, under the Note or under any of
the Collateral Documents, may be brought in the courts of the State of New York
or of the United States of America for the Southern District of New York, as the
plaintiff in
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such action or proceeding may elect, and by execution and delivery of this
Agreement and such Consent and Agreement the Company and each of the Initial
Guarantors jointly and severally submit to each such jurisdiction and agree that
any summons or other process against any thereof may be served by registered
mail addressed thereto at,
c/o Kylco Maritime (USA), Inc.
645 Fifth Avenue
New York, New York 10022
The foregoing, however, shall not limit or impair the right of the Bank to bring
any legal action or proceeding in any other appropriate jurisdiction or to
effect service of process in any other manner which may be lawful in the
jurisdiction in which any such legal action or proceeding may be brought.
(h) WAIVER OF TRIAL BY JURY. IT IS MUTUALLY AGREED BY AND
BETWEEN THE COMPANY AND THE BANK THAT EACH OF THEM HEREBY WAIVES TRIAL BY JURY
IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY ANY PARTY HERETO AGAINST
ANY OTHER PARTY HERETO ON ANY MATTER WHATSOEVER ARISING OUT OF OR IN ANY WAY
CONNECTED WITH THIS AGREEMENT, THE NOTE OR ANY OF THE COLLATERAL DOCUMENTS.
(i) EXECUTION IN COUNTERPARTS. This Agreement and the Consent
and Agreement annexed hereto may be executed in several counterparts with the
same effect as if the parties executing such counterparts shall have all
executed one agreement on the date hereof, each of which counterparts when
executed and delivered shall be deemed to be an original and all of such
counterparts together shall constitute this Agreement.
(j) VESSEL TRADING PROHIBITIONS. The Company and each of the
Initial Guarantors by its Consent and Agreement annexed hereto jointly and
severally agree that none of the Vessels when mortgaged to the Collateral Agent
will engage in any trade or business with any country or area which may expose
the Bank to any penalty, fine, sanction or other liability, whether civil or
criminal, under any applicable law, rule, treaty or convention, or engage in any
trade or business which shall have been or may be declared to be illegal or
which shall or may render any of such Vessels liable to confiscation, seizure,
detention or destruction or which may render any of the Collateral Documents
with respect to any of such Vessels liable to nullification. In the event that,
for any reason, any of such Vessels has engaged, is engaging or is about to
engage in any such trade or business, the Company and each of the Initial
Guarantors shall, immediately upon acquiring knowledge thereof, give written
notice thereof to the Bank. Upon receipt of such notice by the Bank or upon the
Bank acquiring knowledge thereof from any source whatsoever, the Bank shall have
the right to surrender its interest in such Vessel and the Company and the
Initial Guarantors shall have the unconditional obligation to provide the Bank,
simultaneously with such surrender, with other substitute security equivalent
thereto in value, such equivalence to be determined by the Bank in its sole
discretion prior to such substitution.
(k) ASSIGNMENTS AND PARTICIPATIONS BY THE BANK. It is
understood and agreed that, with the prior written consent of the Company, which
consent shall not be unreasonably withheld, the Bank may assign a portion of its
rights hereunder, under the Note and under the Collateral
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Documents to one or more banking or other financial institutions; provided,
however, that without such consent it may assign its rights, or any portion
thereof, hereunder, under the Note and under the Collateral Documents to any
Federal Reserve Bank of the United States of America as collateral for the
Bank's obligations thereto, and the Bank may, without such consent, also enter
into one or more loan participation agreements with respect to this Agreement,
the Note and the Collateral Documents with one or more participating banking or
other financial institutions and each participant shall, with respect to its
participation, be entitled to all of the rights of the Bank and may exercise any
and all rights of set-off or banker's lien with respect thereto, in each case as
fully as though the Company were directly indebted to the holder of such
participation in the amount of such participation.
(l) SEVERABILITY. Any provision of this Agreement which is
prohibited or is unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provisions in any other
jurisdiction. To the extent permitted by the laws of any such jurisdiction, the
Company hereby waives any provisions of law which renders any provision hereof
prohibited or unenforceable in any respect.
(m) INDEMNIFICATION. (i) The Company and each of the Initial
Guarantors by its Consent and Agreement annexed hereto jointly and severally
agree to indemnify the Bank, its successors and assigns, and their respective
officers, directors, employees, representatives and agents (each an
"Indemnitee") from, and hold each of them harmless against, any and all losses,
liabilities, claims, damages, expenses, obligations, penalties, actions,
judgments, suits, costs or disbursements of any kind or nature whatsoever
(including, without limitation, the fees and disbursements of counsel for such
Indemnitee in connection with any investigative, administrative or judicial
proceeding commenced or threatened, whether or not such Indemnitee shall be
designated a party thereto) that may at any time (including, without limitation,
at any time following the repayment of the Loans) be imposed on, asserted
against or incurred by, any Indemnitee as a result of, or arising out of or in
any way related to or by reason of, (A) any violation by the Company or any of
the Guarantors of any applicable Environmental Law, (B) any Environmental Claim
arising out of the management, use, control, ownership or operation of property
or assets by the Company or any of the Guarantors (or, after foreclosure, by the
Bank or its successors or assigns) and (C) the breach by the Company and/or any
of the Guarantors of any representation or warranty set forth in Sections 2(y),
(w) or (x).
(ii) The Company and each of the Initial Guarantors by its
Consent and Agreement annexed hereto jointly and severally agree to
indemnify each Indemnitee from and against any and all losses, claims,
damages and liabilities, including without limitation, the reasonable
fees and disbursements of counsel for such Indemnitee in connection
with any investigative, administrative or judicial proceeding commenced
or threatened, whether or not such Indemnitee shall be designated a
party thereto, to which any such Indemnitee may become subject arising
out of or in connection with any claim, litigation, investigation or
proceeding relating to (A) the Loans (including, the use of the
proceeds of the Loans) or (B) the execution, delivery or performance of
this Agreement, the Note or any of the other documents referred to
herein or contemplated hereby (whether or not the Indemnitee is a party
thereto); PROVIDED, HOWEVER, that the indemnification provided for in
this subparagraph (ii) of this subsection (m) of this Section 15 shall
not be available to an
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Indemnitee to the extent any loss, cost, damages, liability or expense
subject to indemnification arises out of the gross negligence or
willful misconduct of such Indemnitee.
(iii) If, and to the extent that, the obligations of the
Company and/or the Initial Guarantors under this Section are
unenforceable for any reason, the Company and each of the Initial
Guarantors by its Consent and Agreement annexed hereto jointly and
severally agree to make the maximum contribution to the payment and
satisfaction of such obligations which is permissible under applicable
law.
(iv) The obligations of the Company and each of the Initial
Guarantors under this Section 15(m) shall survive the termination of
this Agreement and the repayment of the Loans.
(n) INFORMATION DISCLOSURE. The Bank may disclose to, or
exchange or discuss with, any other corporation, partnership, individual or
governmental entity (the Bank and each such other corporation, partnership,
individual and/or governmental entity being hereby irrevocably authorized to do
so) any information concerning the Company or any of the Guarantors (whether
received by the Bank or such other corporation, partnership, individual or
governmental entity in connection with or pursuant to this Agreement or
otherwise) for the purpose of protecting, preserving, exercising or enforcing
any rights hereunder, under the Note or under any of the Collateral Documents,
or consulting with respect to any such rights or any rights of the Company or
any of the Guarantors and the Bank may disclose to any such other corporation,
partnership, individual or governmental entity any such information as may be
required by applicable law or in accordance with normal Bank procedures.
(o) NO CLAIMS FOR CONSEQUENTIAL DAMAGES. The Company and each
of the Initial Guarantors by its Consent and Agreement annexed hereto jointly
and severally agree that none thereof will make any claim (whether based on
contract, tort or duty imposed by law) against the Bank for any special,
indirect or consequential damages in respect of any breach or wrongful conduct
in any way related to this Agreement and the transactions contemplated hereby or
any act by, or omission of, the Bank occurring in connection herewith, and the
Company and each of the Initial Guarantors by its Consent and Agreement annexed
hereto waive and jointly and severally agree not to sue upon any such claim for
any such damages, whether or not known or not known or suspected to exist in
favor thereof.
(p) ENTIRE AGREEMENT. Any and all prior understandings and
agreements heretofore entered into between the Company, the Initial Guarantors
and the Bank, whether written or oral, are, so far as the same relate directly
to the transactions contemplated by this Agreement, superseded by and merged
into this Agreement and the other agreements being executed and delivered
pursuant to this Agreement to which the Company and the Initial Guarantors, or
any of them, and the Bank are parties, which alone fully and completely
expresses the agreements between the Company, the Initial Guarantors and the
Bank.
(q) RIGHTS CUMULATIVE, NON-WAIVER, ETC. Each and every right
granted to the Bank hereunder or under any other document delivered hereunder or
in connection herewith, or allowed it by law or equity, shall be cumulative and
may be exercised from time to time. No failure
36
<PAGE>
or delay on the part of the Bank in exercising any power or right hereunder,
under the Note or under any of the Collateral Documents shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right or
power preclude any other or further exercise of any other right or power
hereunder or thereunder. No modification or waiver of any provision of this
Agreement, the Note or any of the Collateral Documents nor any consent to any
departure by any party to any provision thereof shall in any event be effective
unless the same shall be in writing and signed by the Bank and then such waiver
or consent shall be effective only in the specific instance and for the purpose
for which given. No notice to or demand on any party in any case shall entitle
such party to any other or further notice or demand in similar or other
circumstances.
(r) INTERNATIONAL FINANCING TRANSACTION. This is an
international financing transaction in accordance with which the specification
of United States dollars is of the essence, and United States dollars shall be
the currency of account in the case of all of the Company's obligations and
payments due under this Agreement, under the Note and under the Collateral
Documents. The payment obligations of the Company hereunder or thereunder shall
not be discharged by an amount paid in a currency or in a place other than that
specified with respect to such obligations, whether pursuant to a judgment or
otherwise, to the extent that the amount so paid on prompt conversion to United
States dollars and transferred to the specified place of payment under normal
banking procedures does not yield the amount of United States dollars, in such
place, due under this Agreement, under the Note or under any of the Collateral
Documents, as the case may be.
(s) HEADINGS; TABLE OF CONTENTS. The table of contents and the
headings of Sections and subsections are not a part of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on the date first above written.
MILLENIUM SEACARRIERS, INC.
By /s/ Vassilios M. Livanos
----------------------------------
THE BANK OF NEW YORK
By /s/ Beth K. Baker
----------------------------------
37
<PAGE>
CONSENT AND AGREEMENT
OF
THE INITIAL GUARANTORS
The undersigned, referred to in the within Credit Agreement as
the "Initial Guarantors", hereby consent and agree to said Credit Agreement and
to the documents contemplated thereby and to the provisions contained therein
relating to conditions to be fulfilled and obligations to be performed by the
undersigned pursuant to or in connection with said Credit Agreement and agree
particularly to be bound by the representations, warranties, covenants and
waivers relating to, or made on behalf of, the undersigned contained in Sections
2, 10 and 15 of said Credit Agreement to the same extent as if each of the
undersigned were a party to said Credit Agreement.
CONIFER SHIPPING COMPANY LIMITED
By /s/ Vassilios M. Livanos
------------------------------------------
IVY NAVIGATION INC.
By /s/ Vassilios M. Livanos
------------------------------------------
OAKMONT SHIPPING & TRADING, INC.
By /s/ Vassilios M. Livanos
------------------------------------------
RAPID OCEAN CARRIERS INC.
By /s/ Vassilios M. Livanos
------------------------------------------
TOPSCALE SHIPPING COMPANY LIMITED
By /s/ Vassilios M. Livanos
------------------------------------------
MILLENIUM ALEKSANDER, INC.
By /s/ Vassilios M. Livanos
------------------------------------------
MILLENIUM ELMAR, INC.
By /s/ Vassilios M. Livanos
------------------------------------------
38
<PAGE>
MILLENIUM III, INC.
By /s/ Vassilios M. Livanos
------------------------------------------
MILLENIUM II, INC.
By /s/ Vassilios M. Livanos
------------------------------------------
MILLENIUM VII, INC.
By /s/ Vassilios M. Livanos
------------------------------------------
MILLENIUM VI, INC.
By /s/ Vassilios M. Livanos
------------------------------------------
MILLENIUM V, INC.
By /s/ Vassilios M. Livanos
------------------------------------------
MILLENIUM IV, INC.
By /s/ Vassilios M. Livanos
------------------------------------------
MILLENIUM AMETHYST, INC.
By /s/ Vassilios M. Livanos
------------------------------------------
MILLENIUM YAMA, INC.
By /s/ Vassilios M. Livanos
------------------------------------------
MILLENIUM MAJESTIC, INC,
By /s/ Vassilios M. Livanos
------------------------------------------
39
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE 4
COMMITTED VESSELS
Vessel Name To Be Named Guarantor Flag Year Built
- - - - ----------- ----------- --------- ---- ----------
<S> <C> <C> <C> <C>
Aleksander Aberg Millenium Aleksander Millenium Aleksander, Inc. Cayman Islands 1988
Elmar Kivistik Millenium Elmar Millenium Elmar, Inc. Cayman Islands 1987
LT Pragati Millenium Leader Millenium III, Inc. Cayman Islands 1984
LT Argosy Millenium Hawk Millenium II, Inc. Cayman Islands 1984
Mangel Desai Millenium Eagle Millenium VII, Inc. Cayman Islands 1983
LT Odyssey Millenium Osprey Millenium VI, Inc. Cayman Islands 1984
Soren Toubro Millenium Falcon Millenium V, Inc. Cayman Islands 1981
Holk Larsen Millenium Condor Millenium IV, Inc. Cayman Islands 1981
Clipper Amethyst Millenium Amethyst Millenium Amethyst, Inc. Bahamas 1978
Clipper Yama Millenium Yama Millenium Yama, Inc. Bahamas 1979
Clipper Majestic Millenium Majestic Millenium Majestic, Inc. Bahamas 1979
</TABLE>
================================================================================
WARRANT AGREEMENT
Dated as of
July 15, 1998
between
MILLENIUM SEACARRIERS, INC.
and
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
as the Warrant Agent
---------------------------------------------
Warrants for
Common Stock of
Millenium Seacarriers, Inc.
---------------------------------------------
================================================================================
<PAGE>
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
SECTION 1.01. DEFINITIONS.....................................................1
ARTICLE II
WARRANT CERTIFICATES
SECTION 2.01. FORM AND DATING.................................................8
SECTION 2.02. EXECUTION AND COUNTERSIGNATURE.................................10
SECTION 2.03. CERTIFICATE REGISTER...........................................10
SECTION 2.04. TRANSFER AND EXCHANGE OF GLOBAL WARRANTS.......................10
SECTION 2.05 CERTIFICATED WARRANTS..........................................14
SECTION 2.06. REPLACEMENT CERTIFICATES.......................................15
SECTION 2.07. OUTSTANDING WARRANTS...........................................15
SECTION 2.09. CANCELATION....................................................16
SECTION 2.10. CUSIP NUMBERS..................................................16
ARTICLE III
EXERCISE TERMS
SECTION 3.01. EXERCISE PRICE.................................................16
SECTION 3.02. EXERCISE PERIODS...............................................17
SECTION 3.03. EXPIRATION.....................................................17
SECTION 3.04. MANNER OF EXERCISE.............................................17
SECTION 3.05. ISSUANCE OF WARRANT SHARES.....................................18
SECTION 3.06. FRACTIONAL WARRANT SHARES......................................19
SECTION 3.07. RESERVATION OF WARRANT SHARES..................................19
SECTION 3.08. COMPLIANCE WITH LAW............................................19
ARTICLE IV
ANTIDILUTION PROVISIONS
SECTION 4.01. CHANGES IN COMMON STOCK........................................20
SECTION 4.02. CASH DIVIDENDS AND OTHER DISTRIBUTIONS.........................20
SECTION 4.03. COMMON STOCK ISSUE.............................................21
SECTION 4.04. ISSUANCE OF RIGHTS OR OPTIONS..................................22
SECTION 4.05. COMBINATION; LIQUIDATION.......................................23
SECTION 4.06. TENDER OFFERS; EXCHANGE OFFERS.................................23
SECTION 4.07. OTHER EVENTS...................................................24
SECTION 4.08. SUPERSEDING ADJUSTMENT.........................................24
SECTION 4.09. MINIMUM ADJUSTMENT.............................................25
<PAGE>
SECTION 4.10. NOTICE OF ADJUSTMENT...........................................25
SECTION 4.11. NOTICE OF CERTAIN TRANSACTIONS.................................26
SECTION 4.12. ADJUSTMENT TO WARRANT CERTIFICATE..............................26
ARTICLE V
REGISTRATION AND REPURCHASE RIGHTS
SECTION 5.01. REGISTRATION RIGHTS............................................27
SECTION 5.02. PREPARATION AND FILING.........................................29
SECTION 5.03. INDEMNIFICATION................................................32
SECTION 5.04. REPURCHASE OF WARRANTS.........................................35
SECTION 5.05. DRAG ALONG/TAG ALONG RIGHTS....................................38
ARTICLE VI
Warrant Agent
SECTION 6.01. APPOINTMENT OF WARRANT AGENT...................................39
SECTION 6.02. RIGHTS AND DUTIES OF WARRANT AGENT. (a) AGENT FOR THE COMPANY..39
SECTION 6.03. INDIVIDUAL RIGHTS OF WARRANT AGENT.............................40
SECTION 6.04. WARRANT AGENT'S DISCLAIMER.....................................41
SECTION 6.05. COMPENSATION AND INDEMNITY.....................................41
SECTION 6.06. SUCCESSOR WARRANT AGENT. (a) THE COMPANY TO PROVIDE WARRANT
AGENT.........................................................................41
ARTICLE VII
MISCELLANEOUS
SECTION 7.01. COMPANY RESALES................................................43
SECTION 7.02. SEC REPORTS AND OTHER INFORMATION..............................43
SECTION 7.03. RULE 144A......................................................44
SECTION 7.04. PERSONS BENEFITTING............................................44
SECTION 7.05. RIGHTS OF HOLDERS..............................................44
SECTION 7.06. AMENDMENT......................................................44
SECTION 7.07. NOTICES........................................................45
SECTION 7.08. GOVERNING LAW..................................................46
SECTION 7.09. SUCCESSORS.....................................................46
SECTION 7.10. MULTIPLE ORIGINALS.............................................46
SECTION 7.11. TABLE OF CONTENTS..............................................46
SECTION 7.12. SEVERABILITY...................................................46
EXHIBIT A Form of Face of Warrant Certificate
EXHIBIT B Form of Election To Purchase Warrant Shares
<PAGE>
WARRANT AGREEMENT dated as of July 15, 1998,
between MILLENIUM SEACARRIERS, INC., a Cayman Islands
company (the "Company"), and CHASEMELLON SHAREHOLDER
SERVICES,L.L.C., as Warrant Agent (the "Warrant
Agent").
The Company desires to issue the warrants (the "Warrants")
described herein. The Warrants will initially entitle the holders thereof (the
"Holders") to purchase in the aggregate 500,000 shares of Voting Common Stock,
$.01 par value (the "Common Stock"), of the Company in connection with an
offering (the "Offering") by the Company of 100,000 units (the "Units"). Each
Unit consists of (i)$1,000 principal amount at maturity of the Company's 12%
First Priority Ship Mortgage Notes Due 2005 (the "Notes"), and (ii) one Warrant
(each, a "Warrant"). Each Warrant will entitle the Holder to purchase five
shares of Common Stock at an exercise price of $.01 per share, subject to
adjustment as provided herein.
The Warrants will not trade separately from the Notes until
the earliest date (the "Separation Date") to occur of: (i) the commencement by
the Company of a registered exchange offer for the Notes or the effective date
of a registration statement with respect to the Notes; and (ii) such earlier
date after August 24, 1998, as may be determined by the Initial Purchasers (as
defined herein).
The Company further desires the Warrant Agent to act on behalf
of the Company in connection with the issuance of the Warrants as provided
herein and the Warrant Agent is willing to so act.
Each party agrees as follows for the benefit of the other
party and for the equal and ratable benefit of the Holders of Warrants:
ARTICLE I
DEFINITIONS
SECTION 1.01. DEFINITIONS.
"Affiliate" of any specified Person means (i) 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;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing. "Affiliate" shall also mean any beneficial owner of Capital Stock
representing 5% or more of the total voting power of the Voting Stock (on a
fully diluted basis) of the Company or of rights or warrants to purchase such
Capital Stock (whether or not currently exercisable) and any Person who would be
an Affiliate of any such beneficial owner pursuant to the first sentence hereof.
"Board" means the Board of Directors of the Company or any
committee thereof duly authorized to act on behalf of such Board of Directors.
<PAGE>
"Business Day" means any day other than a Saturday, Sunday or
day on which commercial banking institutions are not required by law to be open
in the States of New
York or Maryland.
"Capital Stock" of any Person means any and all shares,
interests, rights to purchase, warrants, options, participations or other
equivalents of or interests in (however designated, whether voting or nonvoting)
equity of such Person, including any common stock and preferred stock, whether
outstanding on the Issue Date or issued after the Issue Date but excluding any
debt securities convertible into such equity.
"Cashless Exercise Ratio" means a fraction, the numerator of
which is the excess of the Current Market Value per share of Common Stock on the
date of exercise over the Exercise Price per share as of the date of exercise
and the denominator of which is the Current Market Value per share of the Common
Stock on the date of exercise.
"Certificated Warrants" means certificated Warrants in fully
registered definitive form.
"Change of Control" means the occurrence of any of the
following events:
(i) Prior to the earlier to occur of (A) the first public
offering of common stock of Parent or (B) the first public offering of
common stock of the Company, the Permitted Holders cease to be the
"beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the
Exchange Act), directly or indirectly, of a majority in the aggregate
of the total voting power of the Voting Stock of the Company, whether
as a result of issuance of securities of the Parent or the Company, any
merger, consolidation, liquidation or dissolution of the Parent or the
Company, any direct or indirect transfer of securities by Parent or
otherwise (for purposes of this clause (i) and clause (ii) below, the
Permitted Holders shall be deemed to beneficially own any Voting Stock
of a corporation (the "specified corporation") held by any other
corporation (the "parent corporation") so long as the Permitted Holders
beneficially own (as so defined), directly or indirectly, in the
aggregate a majority of the voting power of the Voting Stock of the
parent corporation);
(ii) Any "person" (as such term is used in Sections 13(d) and
14(d) of the Exchange Act), other than one or more Permitted Holders,
is or becomes the beneficial owner (as defined in clause (i) above,
except that for purposes of this clause (ii) such person shall be
deemed to have "beneficial ownership" of all shares that any such
person has the right to acquire, whether such right is exercisable
immediately or only after the passage of time), directly or indirectly,
of more than 35% of the total voting power of the Voting Stock of the
Company; PROVIDED, HOWEVER, that the Permitted Holders beneficially own
(as defined in clause (i) above), directly or indirectly, in the
aggregate a lesser percentage of the total voting power of the Voting
Stock of the Company than such other person and do not have the right
or ability by voting power, contract or otherwise to elect or designate
for election a majority of the Board (for the purposes of this clause
(ii), such other person shall be deemed to beneficially own any Voting
Stock of a specified corporation held by a parent corporation, if such
other person is the beneficial owner (as defined in this clause (ii)),
directly or indirectly, of more than 35% of the voting power of the
Voting Stock of such parent corporation and the Permitted Holders
beneficially own (as defined in clause (i) above), directly or
indirectly, in the aggregate a lesser percentage of the voting power of
the Voting Stock of such parent corporation and do not have the right
or ability by voting power, contract or otherwise to elect or designate
for election a majority of the board of directors of such parent
corporation);
2
<PAGE>
(iii) during any period of two consecutive years, individuals
who at the beginning of such period constituted the Board (together
with any new directors whose election or appointment by such Board or
whose nomination for election by the shareholders of the Company was
approved by a vote of 66-2/3% of the directors of the Company then
still in office who were either directors at the beginning of such
period or whose election or nomination for election was previously so
approved) cease for any reason to constitute a majority of the Board
then in office; or
(iv) the merger or consolidation of the Company with or into
another Person or the merger of another Person with or into the
Company, or the sale of all or substantially all the assets of the
Company to another Person (other than a Person that is controlled by
the Permitted Holders), and, in the case of any such merger or
consolidation, the securities of the Company that are outstanding
immediately prior to such transaction and which represent 100% of the
aggregate voting power of the Voting Stock of the Company are changed
into or exchanged for cash, securities or property, unless pursuant to
such transaction such securities are changed into or exchanged for, in
addition to any other consideration, securities of the surviving
corporation that represent immediately after such transaction, at least
a majority of the aggregate voting power of the Voting Stock of the
surviving corporation.
"Combination" means an event in which the Company consolidates
with, merges with or into, or sells all or substantially all the property and
assets of the Company or the Company and its subsidiaries taken as a whole to
another Person.
"Current Market Value" per share of Common Stock or any other
security at any date means (i) if the security is not registered under the
Exchange Act, (a) the value of the security, determined in good faith by the
Board of Directors and certified in a board resolution, based on the most
recently completed arm's-length transaction between the Company and a Person
other than an Affiliate of the Company and the closing of which occurs on such
date or shall have occurred within the three-month period preceding such date,
or (b) if no such transaction shall have occurred on such date or within such
three-month period, the value of the security as determined by an independent
financial expert, or (ii) if the security is registered under the Exchange Act,
the average of the daily closing bid prices for each Business Day during the
period commencing 15 Business Days before such date and ending on the date one
day prior to such date, or if the security has been registered under the
Exchange Act for less than 15 consecutive Business Days before such date, then
the average of the daily closing bid prices for all of the Business Days before
such date for which daily closing bid prices are available; PROVIDED, HOWEVER,
that if the closing bid price is not determinable for at least 10 Business Days
in such period, the "Current Market Value" of the security shall be determined
as if the security were not registered under the Exchange Act.
"Depository" means The Depository Trust Company, its nominees
and their respective successors.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Extraordinary Cash Dividend" means that portion, if any, of
the aggregate amount of all dividends paid by the Company on its Common Stock in
any fiscal year that exceeds 5 million.
"Initial Public Offering" means the first time a registration
statement filed under the Securities Act respecting an offering, whether primary
or secondary, of Common Stock (or securities convertible into, or exchangeable
or exercisable for, Common Stock or rights to acquire Common Stock or such
securities, other than the Warrants) which is
3
<PAGE>
underwritten on a firmly committed or best efforts basis, is declared effective
and the securities so registered are issued and sold.
"Initial Purchasers" means Credit Suisse First Boston
Corporation and Donaldson, Lufkin & Jenrette Securities Corporation.
"Issue Date" means the date on which the Warrants are
initially issued.
"Non-U.S. Person" means a person who is not a U.S. person, as
defined in Regulation S.
"Officer" means the Chairman of the Board, the President, the
Vice President, the Treasurer or the Secretary of the Company.
"Officer's Certificate" means a certificate signed by two
Officers.
"Opinion of Counsel" means a written opinion from legal
counsel who is acceptable to the Warrant Agent. The counsel may be an employee
of or counsel to the Company or the Warrant Agent.
"Parent" means any Person that owns directly or indirectly all
the Voting Stock of the Company.
"Permitted Holder" means (i) the members of Millenium
Management Inc.'s management and their respective affiliates as of the Issue
Date and (ii) Millenium Investment and Millenium Advisors, together with any
Affiliate of either of such Persons on the Issue Date or Stanton Capital
Corporation.
"Person" means any individual, corporation, partnership, joint
venture, limited liability company, association, joint-stock company, trust,
unincorporated organization, government or any agency or political subdivision
thereof or any other entity.
"Public Offering" means an underwritten public offering of
Common Stock of the Company pursuant to an effective registration statement
under the Securities Act.
"Purchase Agreement" means the Purchase Agreement dated July
20, 1998 among the Company, the Subsidiary Guarantors and the Initial
Purchasers.
"Public Market" means, for Common Stock, a time when (x) a
Public Offering has been consummated, (y) at least 15% of the total issued and
outstanding shares of such Common Stock of the Company has been distributed by
means of an effective registration statement under the Securities Act or sales
pursuant to Rule 144 under the Securities Act and (z) such Common Stock is
registered under Section 13(a) or 15(d) of the Exchange Act and the Company is
current in its reporting thereunder.
"QIB" means a "qualified institutional buyer" as defined in
Rule 144A.
"Registration Rights Agreement" means the Registration Rights
Agreement among the Company, the Subsidiary Guarantors and the Initial
Purchasers, dated July 20, 1998.
"Regulation S" means Regulation S under the Securities Act.
"Repurchase Price" means (a) in respect of a Warrant, the
Current Market Value of the Common Stock multiplied by the number of Warrant
Shares that would be
4
<PAGE>
obtained if such Warrant were exercised on the date of repurchase and (b) in
respect of a Warrant Share, the Current Market Value for the Common Stock.
"Rule 144A" means Rule 144A under the Securities Act.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933.
"Subsidiary Guarantor" means each subsidiary of the Company,
whether now owned or hereafter formed, as identified on the signature page to
the Purchase Agreement and any amendments thereto.
"Transfer Restricted Securities" means the Warrants and the
Common Stock which may be issued to Holders upon exercise of the Warrants,
whether or not such exercise has been effected. Each such security shall cease
to be a Transfer Restricted Security when (i) it has been disposed of pursuant
to a registration statement of the Company filed with the SEC and declared
effective by the SEC that covers the disposition of such Transfer Restricted
Security, (ii) it has been distributed pursuant to Rule 144 promulgated under
the Securities Act (or any similar provisions under the Securities Act then in
effect) or (iii) it has been otherwise transferred and may be resold without
registration under the Securities Act.
"Voting Stock" of a Person means all classes of Capital Stock
or other interests (including partnership interests) of such Person then
outstanding and normally entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees thereof.
"Warrant Custodian" means the custodian with respect to a
Global Warrant (as appointed by the Depository) or any successor person thereto
and shall initially be the Warrant Agent.
"Warrant Shares" means the shares of Common Stock (or any
other securities) for which the Warrants are exercisable or which have been
issued upon exercise of Warrants.
SECTION 1.02. OTHER DEFINITIONS.
DEFINED IN
TERM SECTION
"Agent Member"................................... 2.01(b)
"Cashless Exercise".............................. 3.04
"Certificate Register"........................... 2.03
"Common Stock"................................... Recitals
"Company"........................................ Recitals
"Drag Along Purchase"............................ 5.06
"Exercisability Date"............................ 3.02(a)
"Exercise Price"................................. 3.01
"Expiration Date"................................ 3.02(b)
"Fair Value"..................................... 4.02
"Global Warrant"................................. 2.01(a)
"Holders"........................................ Recitals
"Inspectors"..................................... 5.02
"Losses"......................................... 5.03(d)
"Managing Underwriter"........................... 5.01
"Notes".......................................... Recitals
"Note Transfer Agent"............................ 2.01
5
<PAGE>
"Offering"....................................... Recitals
"Regulation S"................................... 2.01(a)
"Requesting Holders"............................. 5.01
"Repurchase Agreement"........................... 5.04(b)
"Repurchase Notice".............................. 5.04
"Rule 144A"...................................... 2.01(a)
"Separation Date"................................ Recitals
"Stock Transfer Agent"........................... 3.05
"Subordinated Notes"............................. 5.04
"Successor Company".............................. 4.05(a)
"Tag Along Purchase"............................. 5.06
"Triggering Date"................................ 5.04(a)
"Units".......................................... Recitals
"Warrants"....................................... Recitals
"Warrant Agent".................................. Recitals
"Warrant Certificates"........................... 2.01
"Warrant Repurchase"............................. 5.04(a)
SECTION 1.03. RULES OF CONSTRUCTION. Unless the text otherwise
requires:
(i) a term has the meaning assigned to it;
(ii) an accounting term not otherwise defined has the meaning
assigned to it in accordance with generally accepted accounting principles
as in effect from time to time;
(iii) "or" is not exclusive;
(iv) "including" means including, without limitation; and
(v) words in the singular include the plural and words in the
plural include the singular.
ARTICLE II
WARRANT CERTIFICATES
SECTION 2.01. FORM AND DATING. The Warrants shall be offered
and sold by the Company pursuant to the Purchase Agreement. Each Warrant shall
initially be issued as part of a Unit consisting of one Note and one Warrant.
Prior to the Separation Date, the Warrants may not be transferred or exchanged
separately from, but may be transferred or exchanged only together with, the
Notes attached to such Warrants. Prior to the Separation Date, the transfer
agent for the Notes shall act as transfer agent ("Notes Transfer Agent") for
both the Warrants and the Notes. Any request for transfer of a Warrant prior to
the Separation Date made to the Note Transfer Agent shall be accompanied by the
Notes attached thereto and the Note Transfer Agent will not execute any such
transfer without such Notes attached thereto. Such Notes will be duly endorsed
and accompanied by a written instrument of transfer in form satisfactory to the
Company and the Note Transfer Agent, duly executed by the Holder thereof or the
Holder's attorneys duly authorized in writing. In the event of the commencement
of a registered exchange offer for the Notes or a shelf registration statement
with respect to the Notes, the Company shall provide notice to the Note Transfer
Agent and the Warrant Agent of the Separation Date not less than two Business
Days prior to such date and the Company will cause the Note Transfer Agent to
notify the Depository of such date. In the event of a determination by the
Initial Purchasers to separate the Warrants and the Notes, the Company shall
promptly, but in no event later
6
<PAGE>
than the next following Business Day after receiving notice of such
determination, provide notice to the Note Transfer Agent and the Warrant Agent
of the Separation Date and cause the Note Transfer Agent to notify the
Depositary of such date. In acting as the transfer agent for the Warrants prior
to the Separation Date, the Note Transfer Agent shall be entitled to all the
rights, privileges and immunities to which the Warrant Agent is entitled in
performing such role pursuant to the terms of this Agreement.
(a) GLOBAL WARRANTS. Warrants offered and sold to a QIB in
reliance on Rule 144A under the Securities Act ("Rule 144A") or in reliance on
Regulation S under the Securities Act ("Regulation S"), in each case as provided
in the Purchase Agreement, shall be issued initially in the form of two
permanent Global Warrants in definitive, fully registered form with the global
securities legend and restricted securities legend set forth in Exhibit A hereto
(each, a "Global Warrant"), which shall be deposited on behalf of the Initial
Purchasers with, subject to the first paragraph of this Section 2.01, the
Warrant Agent, as custodian for the Depository (or with such other custodian as
the Depository may direct), and registered in the name of the Depository or a
nominee of the Depository, duly executed by the Company and countersigned by the
Warrant Agent as hereinafter provided. The number of Warrants represented by the
Global Warrant may from time to time be increased or decreased by adjustments
made on the records of the Warrant Agent and the Depository or its nominee as
hereinafter provided.
(b) BOOK-ENTRY PROVISIONS. (i) This Section 2.01(b) shall
apply only to a Global Warrant deposited with or on behalf of the Depository.
The Company shall execute and the Warrant Agent shall, in
accordance with Section 2.02, countersign and deliver initially two Global
Warrants that (a) shall be registered in the name of the Depository for such
Global Warrant or the nominee of such Depository and (b) shall be delivered by
the Warrant Agent to such Depository or pursuant to such Depository's
instructions or held by the Warrant Agent as custodian for the Depository.
(ii) Members of, or participants in, the Depository ("Agent
Members") shall have no rights under this Agreement with respect to any Global
Warrant held on their behalf by the Depository or by the Warrant Agent as the
custodian of the Depository or under such Global Warrant, and the Depository may
be treated by the Company, the Warrant Agent and any agent of the Company or the
Warrant Agent as the absolute owner of such Global Warrant for all purposes
whatsoever. Notwithstanding the foregoing, nothing herein shall prevent the
Company, the Warrant Agent or any agent of the Company or the Warrant Agent from
giving effect to any written certification, proxy or other authorization
furnished by the Depository or impair, as between the Depository and its Agent
Members, the operation of customary practices of such Depository governing the
exercise of the rights of a holder of a beneficial interest in any Global
Warrant.
(c) CERTIFICATED SECURITIES. Except as provided in this
Section 2.01 or Section 2.03 or 2.04, owners of beneficial interests in Global
Warrants will not be entitled to receive physical delivery of certificated
Warrants.
SECTION 2.02. EXECUTION AND COUNTERSIGNATURE. Two Officers
shall sign the Warrant Certificate for the Company by manual or facsimile
signature. The Company's seal shall be impressed, affixed, imprinted or
reproduced on the Warrant Certificate and may be in facsimile form.
If an Officer whose signature is on a Warrant Certificate no
longer holds that office at the time the Warrant Agent countersigns the Warrant
Certificate, the Warrants evidenced by such Warrant Certificate shall be valid
nevertheless.
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At any time and from time to time after the execution of this
Warrant Agreement, the Warrant Agent or an agent reasonably acceptable to the
Company shall upon receipt of a written order of the Company signed by two
Officers or by an Officer and either an Assistant Secretary or an Assistant
Treasurer of the Company manually countersign for original issue a Warrant
Certificate evidencing the number of Warrants specified in such order; provided
that the Warrant Agent shall be entitled to receive an Officers' Certificate and
an Opinion of Counsel of the Company that it may reasonably request in
connection with such countersignature of Warrants. Such order shall specify the
number of Warrants to be evidenced on the Warrant Certificate to be
countersigned, the date on which such Warrant Certificate is to be countersigned
and the number of Warrants then authorized.
The Warrants evidenced by a Warrant Certificate shall not be
valid until an authorized signatory of the Warrant Agent manually countersigns
the Warrant Certificate. The signature shall be conclusive evidence that the
Warrant Certificate has been countersigned under this Agreement.
SECTION 2.03. CERTIFICATE REGISTER. The Warrant Agent shall
keep a register ("Certificate Register") of the Warrant Certificates and of
their transfer and exchange. The Certificate Register shall show the names and
addresses of the respective Holders and the date and number of Warrants
evidenced on the face of each of the Warrant Certificates.
SECTION 2.04. TRANSFER AND EXCHANGE OF GLOBAL WARRANTS. (a)
The transfer and exchange of Global Warrants or beneficial interests therein
shall be effected through the Depository, in accordance with this Agreement
(including applicable restrictions on transfer set forth herein, if any) and the
procedures of the Depository therefor. A transferor of a beneficial interest in
a Global Warrant shall deliver to the Warrant Agent a written order containing a
certification that such transfer is permitted under this Agreement and given in
accordance with the Depositary's procedures containing information regarding the
participant account of the Depositary to be credited with a beneficial interest
in the Global Warrant. The Warrant Agent shall, in accordance with such
instructions instruct the Depositary to credit to the account of the Person
specified in such instructions a beneficial interest in the Global Warrant and
to debit the account of the Person making the transfer the beneficial interest
in the Global Warrant being transferred.
(b) Notwithstanding any other provisions of this Agreement
(other than the provisions set forth in Section 2.05), the Global Warrant 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.
(c) LEGEND. (i) Except as permitted by the following
paragraphs (ii) and (iii), each Warrant certificate evidencing the Global
Warrants (and all Warrants and Warrant Shares issued in exchange therefor or in
substitution thereof) shall bear a legend in substantially the following form:
"THIS SECURITY (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A
TRANSACTION EXEMPT FROM REGISTRATION UNDER THE UNITED STATES
SECURITIES ACT OF 1933 (THE "SECURITIES ACT"), AND THIS
SECURITY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN
THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION
THEREFROM. EACH PURCHASER OF THIS SECURITY IS HEREBY NOTIFIED
THAT THE SELLER OF THIS SECURITY MAY BE RELYING ON THE
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EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES
ACT PROVIDED BY RULE 144A THEREUNDER.
THE HOLDER OF THIS SECURITY AGREES FOR THE BENEFIT OF THE
COMPANY THAT (A) THIS SECURITY AND ANY SECURITY INTO WHICH
SUCH SECURITY IS EXCHANGEABLE MAY BE OFFERED, RESOLD, PLEDGED
OR OTHERWISE TRANSFERRED ONLY (i) WITHIN THE UNITED STATES TO
A PERSON WHOM 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, (ii) OUTSIDE THE UNITED STATES IN A TRANSACTION IN
ACCORDANCE WITH RULE 904 UNDER THE SECURITIES ACT, (iii)
PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE),
OR (iv) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE SECURITIES ACT, IN EACH OF CASES (i) THROUGH (iv) IN
ACCORDANCE WITH ANY 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 OF THIS SECURITY FROM IT OF THE
RESALE RESTRICTIONS REFERRED TO IN (A) ABOVE. THE WARRANT
EVIDENCED BY THIS CERTIFICATE AND THE SECURITIES TO BE ISSUED
UPON ITS EXERCISE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT AND THE WARRANT MAY NOT BE EXERCISED BY OR ON
BEHALF OF ANY U.S. PERSON UNLESS REGISTERED UNDER THE
SECURITIES ACT OR AN EXEMPTION FROM SUCH REGISTRATION IS
AVAILABLE."
Each Warrant Certificate issued prior to the Separation Date
will also bear the following legend (the "Separability Legend"):
"THE WARRANTS EVIDENCED BY THIS CERTIFICATE WERE INITIALLY
ISSUED AS PART OF AN ISSUANCE OF UNITS, EACH OF WHICH CONSISTS
OF $1,000 PRINCIPAL AMOUNT AT MATURITY OF 12% FIRST PRIORITY
MORTGAGE NOTES DUE 2005 OF MILLENIUM SEACARRIERS, INC. (THE
"NOTE") AND ONE WARRANT. THE NOTES AND WARRANTS WILL NOT TRADE
SEPARATELY UNTIL THE EARLIEST OF (I) THE COMMENCEMENT OF A
REGISTERED EXCHANGE OFFER FOR THE NOTES, (II) THE
EFFECTIVENESS OF A SHELF REGISTRATION STATEMENT WITH RESPECT
TO THE NOTES AND (III) SUCH EARLIER DATE AFTER AUGUST 24,
1998, AS THE INITIAL PURCHASERS MAY DETERMINE."
(ii) Upon any sale or transfer of a Transfer Restricted
Security (including any Transfer Restricted Security represented by a Global
Warrant) pursuant to Rule 144 under the Securities Act, the Warrant Agent shall
permit the Holder thereof to exchange such Transfer Restricted Security for a
certificated Warrant that does not bear the legends set forth above (other than
the Separability Legend) and rescind any restriction on the transfer of such
Transfer Restricted Security if the Holder certifies in writing to the Warrant
Agent that its request for such exchange was made in reliance on Rule 144 (such
certification to be in the form set forth on the reverse of the Warrant).
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(iii) After a transfer of any Warrants during the period of
the effectiveness of a Shelf Registration Statement with respect to such
Warrants, all requirements pertaining to legends on such Warrant (other than the
Separability Legend) will cease to apply, the requirements requiring any such
Warrant issued to certain Holders to be issued in global form will cease to
apply, and a certificated Warrant without legends (other than the Separability
Legend) will be available to the transferee of the Holder of such Warrants upon
exchange of such transferring Holder's certificated Warrant or directions to
transfer such Holder's interest in the Global Warrant, as applicable.
(iv) On or after the Separation Date, the Holder of a Warrant
Certificate containing a Separability Legend may surrender such Warrant
Certificate accompanied by a written application to the Warrant Agent, duly
executed by the Holder thereof, for a new Warrant Certificate or certificates
not containing the Separability Legend.
(c) CANCELLATION OR ADJUSTMENT OF GLOBAL WARRANT. At such time
as all beneficial interests in a Global Warrant have been exchanged for
certificated Warrants, redeemed, repurchased or canceled, such Global Warrant
shall be returned to the Depository for cancelation or retained and canceled by
the Warrant Agent (if it is then the Securities Custodian for such Global
Warrant). At any time prior to such cancelation, if any beneficial interest in a
Global Warrant is exchanged for certificated Warrants, redeemed, repurchased or
canceled, the number of Warrants represented by such Global Warrant shall be
reduced and an adjustment shall be made on the books and records of the Warrant
Agent (if it is then the Securities Custodian for such Global Warrant) with
respect to such Global Warrant, by the Warrant Agent, to reflect such reduction.
(d) OBLIGATIONS WITH RESPECT TO TRANSFERS AND EXCHANGES OF
WARRANTS. (i) To permit registrations of transfers and exchanges, the Company
shall execute and the Warrant Agent shall countersign certificated Warrants and
Global Warrants as required pursuant to the provisions of Section 2.02 and this
Section 2.04.
(ii) No service charge shall be made to a Holder for any
registration of transfer or exchange, but the Company may require payment of a
sum sufficient to cover any transfer tax, assessments, or similar governmental
charge payable in connection therewith.
(iii) Prior to the due presentation for registration of
transfer of any Warrant, the Company and the Warrant Agent may deem and treat
the Person in whose name a Warrant is registered as the absolute owner of such
Warrant, and neither the Company nor the Warrant Agent shall be affected by
notice to the contrary.
(iv) All Warrants issued upon any transfer or exchange
pursuant to the terms of this Agreement shall be the valid obligations of the
Company, entitled to the same benefits under this Agreement as the Warrants
surrendered upon such transfer or exchange.
(e) NO OBLIGATION OF THE WARRANT AGENT. (i) The Warrant Agent
shall have no responsibility or obligation to any beneficial owner of a Global
Warrant, a member of, or a participant in the Depository or other Person with
respect to the accuracy of the records of the Depository or its nominee or of
any participant or member thereof, with respect to any ownership interest in the
Warrants or with respect to the delivery to any participant, member, beneficial
owner or other Person (other than the Depository) of any notice or the payment
of any amount, under or with respect to such Warrants. All notices and
communications to be given to the Holders and all payments to be made to Holders
under the Warrants shall be given or made only to or upon the written order of
the registered Holders (which shall be the Depository or its nominee in the case
of a Global Warrant). The rights of beneficial owners in any Global Warrant
shall be exercised only through the Depository subject to the applicable rules
and procedures of the Depository. The Warrant Agent may rely and shall
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be fully protected in relying upon information furnished by the Depository with
respect to its members, participants and any beneficial owners.
(ii) The Warrant Agent shall have no obligation or duty to
monitor, determine or inquire as to compliance with any restrictions on transfer
imposed under this Agreement or under applicable law with respect to any
transfer of any interest in any Warrant (including any transfers between or
among Depository participants, members or beneficial owners in any Global
Warrant) other than to require delivery of such certificates and other
documentation or evidence as are expressly required by, and to do so if and when
expressly required by, the terms of this Agreement, and to examine the same to
determine substantial compliance as to form with the express requirements
hereof.
2.05 CERTIFICATED WARRANTS. (a) A Global Warrant deposited
with the Depository or with the Warrant Agent as custodian for the Depository
pursuant to Section 2.01 shall be transferred to the beneficial owners thereof
in the form of certificated Warrants in a number equal to the number of Warrants
represented by such Global Warrant, in exchange for such Global Warrant, only if
such transfer complies with Section 2.04 and (i) the Depository notifies the
Company that it is unwilling or unable to continue as Depository for such Global
Warrant or if at any time such Depository ceases to be a "clearing agency"
registered under the Exchange Act and a successor depositary is not appointed by
the Company within 90 days of such notice or (ii) the Company, in its sole
discretion, notifies the Warrant Agent in writing that it elects to cause the
issuance of Certificated Warrants under this Agreement.
(b) Any Global Warrant that is transferable to the beneficial
owners thereof pursuant to this Section shall be surrendered by the Depository
to the Warrant Agent, to be so transferred, in whole or from time to time in
part, without charge, and the Warrant Agent shall countersign and deliver, upon
such transfer of each portion of such Global Warrant, an equal number of
Certificated Warrants. Any certificated Warrant delivered in exchange for an
interest in the Global Warrant shall, except as otherwise provided by Section
2.04(d), bear the restricted securities legend set forth in Section 2.04(b)
hereto.
(c) Subject to the provisions of Section 2.05(b), the
registered Holder of a Global Warrant may grant proxies and otherwise authorize
any Person, including Agent Members and Persons that may hold interests through
Agent Members, to take any action which a Holder is entitled to take under this
Agreement or the Warrants.
(d) In the event of the occurrence of either of the events
specified in Section 2.05(a), the Company will promptly make available to the
Warrant Agent a reasonable supply of Certificated Warrants in definitive, fully
registered form Warrants.
SECTION 2.06. REPLACEMENT CERTIFICATES. If a mutilated Warrant
Certificate is surrendered to the Warrant Agent or if the Holder of a Warrant
Certificate claims that the Warrant Certificate has been lost, destroyed or
wrongfully taken, the Company shall issue and the Warrant Agent shall
countersign a replacement Warrant Certificate if the reasonable requirements of
the Warrant Agent and of Section 8-405 of the Uniform Commercial Code as in
effect in the State of New York are met. If required by the Warrant Agent or the
Company, such Holder shall furnish an indemnity bond sufficient in the judgment
of the Company and the Warrant Agent to protect the Company and the Warrant
Agent from any loss which either of them may suffer if a Warrant Certificate is
replaced. The Company and the Warrant Agent may charge the Holder for their
expenses in replacing a Warrant Certificate. Every replacement Warrant
Certificate evidences an additional obligation of the Company.
SECTION 2.07. OUTSTANDING WARRANTS. Warrants outstanding at
any time are all Warrants evidenced on all Warrant Certificates authenticated by
the Warrant Agent except
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for those canceled by it and those delivered to it for cancelation. A Warrant
does not cease to be outstanding because the Company or an Affiliate of the
Company holds the Warrant.
If a Warrant Certificate is replaced pursuant to Section 2.06,
the Warrants evidenced thereby cease to be outstanding unless the Warrant Agent
and the Company receive proof satisfactory to them that the replaced Warrant
Certificate is held by a bona fide purchaser.
SECTION 2.08. TEMPORARY CERTIFICATES. Until definitive Warrant
Certificates are ready for delivery, the Company may prepare and the Warrant
Agent shall countersign in accordance with the provisions of Section 2.02
temporary Warrant Certificates. Temporary Warrant Certificates shall be
substantially in the form of definitive Warrant Certificates but may have
variations that the Company considers appropriate for temporary Warrant
Certificates. Without unreasonable delay following the occurrence of either of
the events specified in Section 2.05(a), the Company shall prepare and the
Warrant Agent shall countersign definitive Warrant Certificates and deliver them
in exchange for temporary Warrant Certificates.
SECTION 2.09. CANCELATION. (a) In the event the Company shall
purchase or otherwise acquire Certificated Warrants, the same shall thereupon be
delivered to the Warrant Agent for cancelation.
(b) The Warrant Agent and no one else shall cancel and destroy
all Warrant Certificates surrendered for transfer, exchange, replacement,
exercise or cancelation and deliver a certificate of such destruction to the
Company unless the Company directs the Warrant Agent to deliver canceled Warrant
Certificates to the Company. The Company may not issue new Warrant Certificates
to replace Warrant Certificates to the extent they evidence Warrants which have
been exercised or Warrants which the Company has purchased or otherwise
acquired.
SECTION 2.10. CUSIP NUMBERS. The Company in issuing the
Warrants may use "CUSIP" numbers (if then generally in use) and, if so, the
Warrant Agent shall use "CUSIP" numbers in notices as a convenience to Holders;
PROVIDED, HOWEVER, that any such notice may state that no representation is made
as to the correctness of such numbers either as printed on the Warrant
Certificates or as contained in any notice and that reliance may be placed only
on the other identification numbers printed on the Warrant Certificates.
ARTICLE III
EXERCISE TERMS
SECTION 3.01. EXERCISE PRICE. Each Warrant shall initially
entitle the Holder thereof, subject to adjustment pursuant to the terms of this
Agreement, to purchase five shares of Common Stock for a per share exercise
price (the "Exercise Price") of $.01.
SECTION 3.02. EXERCISE PERIODS. (a) Subject to the terms and
conditions set forth herein, the Warrants shall be exercisable at any time or
from time to time on any Business Day on or after the earliest to occur of (i)
the first anniversary of the Issue Date and (ii)(a) the occurrence of a Change
of Control, (b)(1) 90 days after an Initial Public Offering or (2) upon the
closing of an Initial Public Offering by the Company but only in respect of
Warrants required to be exercised in order to permit the holder thereof to sell
shares in such Initial Public Offering as permitted under Section 5.01, (c) a
consolidation, merger or purchase of assets involving the Company or any of its
subsidiaries that results in the Common Stock becoming subject to registration
under the Exchange Act, (d) an Extraordinary Cash Dividend, or (e) the voluntary
or involuntary dissolution, liquidation or
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winding up of the affairs of the Company. The earliest to occur of the dates
described in the foregoing clauses (i) and (ii) shall be referred to herein as
the "Exercisability Date". The Company shall notify the Warrant Agent of the
occurrence of the Exercisability Date.
(b) No Warrant shall be exercisable after July 15, 2005 (the
"Expiration Date").
SECTION 3.03. EXPIRATION. A Warrant shall terminate and become
void as of the earlier of (i) the close of business on the Expiration Date or
(ii) the date such Warrant is exercised. The Company shall give notice not less
than 90, and not more than 120, days prior to the Expiration Date to the Holders
of all then outstanding Warrants to the effect that the Warrants will terminate
and become void as of the close of business on the Expiration Date; PROVIDED,
HOWEVER, that notwithstanding that the Company may fail to give notice as
provided in this Section 3.03, the Warrants will terminate and become void on
the Expiration Date.
SECTION 3.04. MANNER OF EXERCISE. Warrants may be exercised
upon (i) surrender to the Warrant Agent of the Warrant Certificates, together
with the form of election to purchase Common Stock in the form of Exhibit B
hereto duly and properly filled in and signed by the Holder thereof and (ii)
payment to the Warrant Agent, for the account of the Company, of the Exercise
Price for the number of Warrant Shares in respect of which such Warrant is then
exercised. Such payment shall be made (a) in cash or by certified or official
bank check payable to the order of the Company or by wire transfer of funds to
an account designated by the Company for such purpose or (b) by the surrender of
one or more Warrant Certificates (and without the payment of the Exercise Price
in cash) in exchange for such number of shares of Common Stock equal to the
product of (1) the number of shares of Common Stock for which such Warrant is
exercisable as of the Exercise Date (if the Exercise Price were being paid in
cash) and (2) the Cashless Exercise Ratio. The Warrant Agent shall be entitled
to request, and shall be fully protected in relying on, a certificate of the
Company setting forth the Cashless Exercise Ratio. An exercise of Warrant in
accordance with clause (b) of the immediately preceding sentence is herein
called a "Cashless Exercise". Upon surrender of a Warrant Certificate
representing more than one Warrant in connection with the Holder's option to
elect a Cashless Exercise, the number of shares of Common Stock deliverable upon
a Cashless Exercise shall be equal to the product of the number of shares of
Common Stock issuable in respect of those Warrants that the Holder specifies are
to be exercised pursuant to a Cashless Exercise multiplied by the Cashless
Exercise Ratio. All provisions of this Agreement shall be applicable with
respect to an exercise of Warrant Certificates pursuant to a Cashless Exercise
for less than the full number of Warrants represented thereby. Subject to
Section 3.02, the rights represented by the Warrants shall be exercisable at the
election of the Holders thereof either in full at any time or from time to time
in part and in the event that a Warrant Certificate is surrendered for exercise
in respect of less than all the Warrant Shares purchasable on such exercise at
any time prior to the expiration of the Expiration Date, a new Warrant
Certificate exercisable for the remaining Warrant Shares will be issued. The
Warrant Agent shall countersign and deliver the required new Warrant
Certificates, and the Company, at the Warrant Agent's request, shall supply the
Warrant Agent with Warrant Certificates duly signed on behalf of the Company for
such purpose. For the purposes of this Section 3.04, Section 3.02(e) shall be
deemed to have occurred immediately before the earlier of any notice or actual
occurrence of any voluntary or involuntary dissolution, liquidation or winding
up of the affairs of the Company.
SECTION 3.05. ISSUANCE OF WARRANT SHARES. Upon the surrender
of Warrant Certificates as set forth in Section 3.04, the Company shall issue
and cause the Warrant Agent upon written instructions or, if appointed, a
transfer agent for the Common Stock ("Stock Transfer Agent") to countersign and
deliver to or upon the written order of the Holder and in such name or names as
the Holder may designate, a certificate or certificates
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for the number of full Warrant Shares so purchased upon the exercise of such
Warrants or other securities or property to which it is entitled, registered or
otherwise, to the Person or Persons entitled to receive the same, together with
cash as provided in Section 3.06 in respect of any fractional Warrant Shares
otherwise issuable upon such exercise. Such certificate or certificates shall be
deemed to have been issued and any Person so designated to be named therein
shall be deemed to have become a holder of record of such Warrant Shares as of
the date of the surrender of such Warrant Certificates and payment of the per
share Exercise Price.
SECTION 3.06. FRACTIONAL WARRANT SHARES. The Company shall not
be required to issue fractional Warrant Shares on the exercise of Warrants. If
more than one Warrant shall be exercised in full at the same time by the same
Holder, the number of full Warrant Shares which shall be issuable upon such
exercise shall be computed on the basis of the aggregate number of Warrant
Shares purchasable pursuant thereto. If any fraction of a Warrant Share would,
except for the provisions of this Section 3.06, be issuable upon the exercise of
any Warrant (or specified portion thereof), the Company may pay an amount in
cash equal to the Current Market Value for one Warrant Share on the day
immediately preceding the date the Warrant is presented for exercise, multiplied
by such fraction, computed to the nearest whole cent.
SECTION 3.07. RESERVATION OF WARRANT SHARES. The Company shall
at all times keep reserved out of its authorized shares of Common Stock a number
of shares of Common Stock sufficient to provide for the exercise of all
outstanding Warrants. The registrar for the Common Stock shall at all times
until the Expiration Date, or the time at which all Warrants have been exercised
or canceled, reserve such number of authorized shares as shall be required for
such purpose. The Company will keep a copy of this Agreement on file with the
Stock Transfer Agent. The Company will supply such Stock Transfer Agent with
duly executed stock certificates for such purpose and will itself provide or
otherwise make available any cash which may be payable as provided in Section
3.06. The Company will furnish to such Stock Transfer Agent a copy of all
notices of adjustments and certificates related thereto transmitted to each
Holder.
Before taking any action which would cause an adjustment
pursuant to Article IV to reduce the Exercise Price below the then par value (if
any) of the Common Stock, the Company shall take any and all corporate action
which may, in the opinion of its counsel, be necessary in order that the Company
may validly and legally issue fully paid and nonassessable shares of Common
Stock at the Exercise Price as so adjusted.
The Company covenants for the benefit of Holders of Warrants
and Warrant Shares that all shares of Common Stock which may be issued upon
exercise of Warrants will, upon issue, be fully paid, nonassessable, free of
preemptive rights, free from all taxes and free from all liens, charges and
security interests, created by or through the Company, with respect to the issue
thereof.
SECTION 3.08. COMPLIANCE WITH LAW. (a) Notwithstanding
anything in this Agreement to the contrary, in no event shall a Holder be
entitled to exercise a Warrant unless (i) a registration statement filed under
the Securities Act in respect of the issuance of the Warrant Shares is then
effective or (ii) an exemption from the registration requirements is available
under the Securities Act for the issuance of the Warrant Shares (and the
delivery of any other securities for which the Warrants may at the time be
exercisable) at the time of such exercise.
(b) If any shares of Common Stock required to be reserved for
purposes of exercise of Warrants require, under any other Federal or state law
or applicable governing rule or regulation of any national securities exchange,
registration with or approval of any governmental authority, or listing on any
such national securities exchange before such
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shares may be issued upon exercise, the Company will cause such shares to be
duly registered or approved by such governmental authority or listed on the
relevant national securities exchange, as the case may be.
ARTICLE IV
ANTIDILUTION PROVISIONS
SECTION 4.01. CHANGES IN COMMON STOCK. In the event that at
any time or from time to time the Company shall (i) pay a dividend or make a
distribution on its Common Stock in shares of its Common Stock or other shares
of Capital Stock, (ii) subdivide its outstanding shares of Common Stock into a
larger number of shares of Common Stock, (iii) combine its outstanding shares of
Common Stock into a smaller number of shares of Common Stock or (iv) increase or
decrease the number of shares of Common Stock outstanding by reclassification of
its Common Stock, then the number of shares of Common Stock purchasable upon
exercise of each Warrant immediately after the happening of such event shall be
adjusted so that, after giving effect to such adjustment, the Holder of each
Warrant shall be entitled to receive the number of shares of Common Stock upon
exercise of such Warrant that such Holder would have owned or have been entitled
to receive had such Warrants been exercised immediately prior to the happening
of the events described above (or, in the case of a dividend or distribution of
Common Stock, immediately prior to the record date therefor). An adjustment made
pursuant to this Section 4.01 shall become effective immediately after the
distribution date, retroactive to the record date therefor in the case of a
dividend or distribution in shares of Common Stock, and shall become effective
immediately after the effective date in the case of a subdivision, combination
or reclassification.
SECTION 4.02. CASH DIVIDENDS AND OTHER DISTRIBUTIONS. In case
at any time or from time to time the Company shall distribute to holders of
Common Stock (i) any dividend or other distribution (including any dividend or
distribution made in connection with a consolidation or merger in which the
Company is the continuing corporation) of cash, evidences of its indebtedness,
shares of its Capital Stock or any other properties or securities or (ii) any
options, warrants or other rights to subscribe for or purchase any of the
foregoing (other than, in the case of clause (i) and (ii) above, (x) any
dividend or distribution described in Section 4.01, (y) any rights, options,
warrants or securities described in Section 4.03 and Section 4.04 and (z) any
cash dividends or distributions from current or retained earnings other than
Extraordinary Cash Dividends), then the number of shares of Common Stock
purchasable upon the exercise of each Warrant immediately after the record date
for the determination of stockholders entitled to receive such dividend or
distribution shall be increased to a number determined by multiplying the number
of shares of Common Stock purchasable upon the exercise of such Warrant
immediately prior to such record date for any such dividend or distribution by a
fraction, the numerator of which shall be the Current Market Value per share of
Common Stock on the record date for such distribution, and the denominator of
which shall be such Current Market Value per share of Common Stock less the sum
of (x) any cash distributed per share of Common Stock and (y) the fair value
(the "Fair Value") (as determined in good faith by the Board, whose
determination shall be evidenced by a board resolution filed with the Warrant
Agent, a copy of which will be sent to Holders upon request) of the portion, if
any, of the distribution applicable to one share of Common Stock consisting of
evidences of indebtedness, shares of stock, securities, other property,
warrants, options or subscription of purchase rights; and the Exercise Price
shall be adjusted to a number determined by dividing the Exercise Price
immediately prior to such record date by the above fraction. Such adjustments
shall be made, and shall only become effective, whenever any dividend or
distribution is made; PROVIDED, HOWEVER, that the Company is not required to
make an adjustment pursuant to this Section 4.02 if at the time of such
distribution the Company makes the same distribution to Holders of Warrants as
it
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makes to holders of Common Stock pro rata based on the number of shares of
Common Stock for which such Warrants are exercisable (whether or not currently
exercisable). No adjustment shall be made pursuant to this Section 4.02 which
shall have the effect of decreasing the number of shares of Common Stock
purchasable upon exercise of each Warrant or increasing the Exercise Price.
SECTION 4.03. COMMON STOCK ISSUE. In the event that at any
time or from time to time the Company shall issue shares of Common Stock for a
consideration per share that is less than the Current Market Value per share of
Common Stock as of the issuance date of such shares, the number of shares of
Common Stock purchasable upon the exercise of each Warrant immediately after
such issuance date shall be determined by multiplying the number of shares of
Common Stock purchasable upon exercise of each Warrant immediately prior to such
issuance date by a fraction, the numerator of which shall be the number of
shares of Common Stock outstanding immediately preceding the issuance of such
shares plus the number of additional shares of Common Stock to be issued in such
transaction, and the denominator of which shall be the number of shares of
Common Stock outstanding immediately preceding the date for the issuance of such
shares plus the total number of shares of Common Stock which the aggregate
consideration expected to be received by the Company upon the issuance of such
shares (as determined by the Board of Directors of the Company acting in good
faith, whose determination shall be evidenced by a board resolution) would
purchase at the Current Market Value per share of Common Stock as of the date of
such issuance. In the event of any such adjustment, the Exercise Price shall be
adjusted to a number determined by dividing the Exercise Price immediately prior
to such date of issuance by the aforementioned fraction. Such adjustment shall
be made, and shall only become effective, whenever such shares are issued. No
adjustment shall be made pursuant to this Section 4.03 which shall have the
effect of decreasing the number of shares of Common Stock purchasable upon
exercise of each Warrant or of increasing the Exercise Price.
SECTION 4.04. ISSUANCE OF RIGHTS OR OPTIONS. In the event that
at any time or from time to time the Company shall issue rights, options or
warrants to acquire, or securities convertible or exchangeable into, Common
Stock entitling the holders thereof to subscribe for or purchase shares of
Common Stock at a price per share that is less than the Current Market Value per
share of Common Stock in effect immediately prior to such issuance, the number
of shares of Common Stock purchasable upon the exercise of each Warrant
immediately after such issuance shall be determined by multiplying the number of
shares of Common Stock purchasable upon exercise of each Warrant immediately
prior to such issuance by a fraction, the numerator of which shall be the number
of shares of Common Stock outstanding immediately prior to the issuance of such
rights, options, warrants or securities plus the number of additional shares of
Common Stock offered for subscription or purchase or into which such securities
are convertible or exchangeable, and the denominator of which shall be the
number of shares of Common Stock outstanding immediately prior to the issuance
of such rights, options, warrants or securities plus the total number of shares
of Common Stock which the aggregate consideration expected to be received by the
Company upon the exercise, conversion or exchange of such rights, options,
warrants or securities (as determined by the Board of Directors of the Company
acting in good faith, whose determination shall be evidenced by a board
resolution) would purchase at the Current Market Value per share of Common Stock
as of the record date. In the event of any such adjustment, the Exercise Price
shall be adjusted to a number determined by dividing the Exercise Price
immediately prior to such date of issuance by the aforementioned fraction. Such
adjustment shall be made, and shall only become effective, whenever such rights,
options, warrants or securities are issued. No adjustment shall be made pursuant
to this Section 4.04 which shall have the effect of decreasing the number of
shares of Common Stock purchasable upon exercise of each Warrant or of
increasing the Exercise Price.
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SECTION 4.05. COMBINATION; LIQUIDATION. (a) Except as provided
in Section 4.05(b), in the event of a Combination, the Holders shall have the
right to receive upon exercise of the Warrants such number of shares of Capital
Stock or other securities or property which such Holder would have been entitled
to receive upon completion of or as a result of such Combination had such
Warrant been exercised immediately prior to such event or to the relevant record
date for any such entitlement. Unless paragraph (b) is applicable to a
Combination, the Company shall provide that the surviving or acquiring Person
(the "Successor Company") in such Combination will enter into an agreement with
the Warrant Agent confirming the Holders' rights pursuant to this Section
4.05(a) and providing for adjustments, which shall be as nearly equivalent as
may be practicable to the adjustments provided for in this Article IV. The
provisions of this Section 4.05(a) shall similarly apply to successive
Combinations involving any Successor Company.
(b) In the event of (i) a Combination where consideration to
the holders of Common Stock in exchange for their shares is payable solely in
cash, or (ii) in the event of the dissolution, liquidation or winding-up of the
Company, then the Holders of the Warrants will be entitled to receive such cash
distributions on an equal basis with the holders of Common Stock or other
Securities issuable upon exercise of the Warrants, as if the Warrants had been
exercised immediately prior to such event, less the Exercise Price.
In the event of any Combination described in this Section
4.05(b), the surviving or acquiring Person and, in the event of any dissolution,
liquidation or winding-up of the Company, the Company shall deposit promptly
with the Warrant Agent the funds, if any, necessary to pay to the Holders of the
Warrants the amounts to which they are entitled as described above. After such
funds and the surrendered Warrant Certificates are received, the Warrant Agent
shall make payment to the Holders by delivering a check in such amount as is
appropriate (or, in the case of consideration other than cash, such other
consideration as is appropriate) to such Person or Persons as it may be directed
in writing by the Holders surrendering such Warrants.
SECTION 4.06. TENDER OFFERS; EXCHANGE OFFERS. In the event
that the Company or any subsidiary of the Company shall purchase shares of
Common Stock pursuant to a tender offer or an exchange offer for a price per
share of Common Stock that is greater than the then Current Market Value per
share of Common Stock in effect at the end of the trading day immediately
following the day on which such tender offer or exchange offer expires, then the
Company, or such subsidiary of the Company, shall offer to purchase Warrants for
comparable consideration per share of Common Stock based on the number of shares
of Common Stock which the Holders of such Warrants would receive upon exercise
of such Warrants; PROVIDED, HOWEVER, that if a tender offer is made for only a
portion of the outstanding shares of Common Stock, then such offer shall be made
for Warrants in the same pro rata proportion.
SECTION 4.07. OTHER EVENTS. If any event occurs as to which
the foregoing provisions of this Article IV are not strictly applicable or, if
strictly applicable, would not, in the good faith judgment of the Board, fairly
and adequately protect the purchase rights of the Warrants in accordance with
the essential intent and principles of such provisions, then the Board shall
make such adjustments in the application of such provisions, in accordance with
such essential intent and principles, as shall be reasonably necessary, in the
good faith opinion of such Board, to protect such purchase rights as aforesaid,
but in no event shall any such adjustment have the effect of increasing the
Exercise Price or decreasing the number of shares of Common Stock subject to
purchase upon exercise of this Warrant.
SECTION 4.08. SUPERSEDING ADJUSTMENT. Upon the expiration of
any rights, options, warrants or conversion or exchange privileges which
resulted in the adjustments pursuant to this Article IV, if any thereof shall
not have been exercised, the number of Warrant Shares purchasable upon the
exercise of each Warrant shall be readjusted as if
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(A) the only shares of Common Stock issuable upon exercise of such rights,
options, warrants, conversion or exchange privileges were the shares of Common
Stock, if any, actually issued upon the exercise of such rights, options,
warrants or conversion or exchange privileges and (B) shares of Common Stock
actually issued, if any, were issuable for the consideration actually received
by the Company upon such exercise plus the aggregate consideration, if any,
actually received by the Company for the issuance, sale or grant of all such
rights, options, warrants or conversion or exchange privileges whether or not
exercised and the Exercise Price shall be readjusted inversely; PROVIDED,
HOWEVER, that no such readjustment shall (except by reason of an intervening
adjustment under Section 4.01) have the effect of decreasing the number of
Warrant Shares purchasable upon the exercise of each Warrant or increasing the
Exercise Price by an amount in excess of the amount of the adjustment initially
made in respect of the issuance, sale or grant of such rights, options, warrants
or conversion or exchange privileges.
SECTION 4.09. MINIMUM ADJUSTMENT. The adjustments required by
the preceding Sections of this Article IV shall be made whenever and as often as
any specified event requiring an adjustment shall occur, except that no
adjustment of the Exercise Price or the number of shares of Common Stock
purchasable upon exercise of Warrants that would otherwise be required shall be
made (except in the case of a subdivision or combination of shares of Common
Stock, as provided for in Section 4.01) unless and until such adjustment either
by itself or with other adjustments not previously made increases or decreases
by at least 1% the Exercise Price or the number of shares of Common Stock
purchasable upon exercise of Warrants immediately prior to the making of such
adjustment. Any adjustment representing a change of less than such minimum
amount shall be carried forward and made as soon as such adjustment, together
with other adjustments required by this Article IV and not previously made,
would result in a minimum adjustment. For the purpose of any adjustment, any
specified event shall be deemed to have occurred at the close of business on the
date of its occurrence. In computing adjustments under this Article IV,
fractional interests in Common Stock shall be taken into account to the nearest
one-hundredth of a share.
SECTION 4.10. NOTICE OF ADJUSTMENT. Whenever the Exercise
Price or the number of shares of Common Stock and other property, if any,
purchasable upon exercise of Warrants is adjusted, as herein provided, the
Company shall deliver to the Warrant Agent a certificate of a firm of
independent accountants selected by the Board (who may be the regular
accountants employed by the Company) setting forth, in reasonable detail, the
event requiring the adjustment and the method by which such adjustment was
calculated (including a description of the basis on which the Board of Directors
of the Company determined the fair market value of any evidences of
indebtedness, other securities or property or warrants or other subscription or
purchase rights), and specifying the Exercise Price and the number of shares of
Common Stock purchasable upon exercise of Warrants after giving effect to such
adjustment. The Company shall promptly cause the Warrant Agent to mail a copy of
such certificate to each Holder in accordance with Section 7.07. The Warrant
Agent shall be entitled to rely on, and shall have no liability with respect to,
such certificate and shall be under no duty or responsibility with respect to
any such certificate, except to exhibit the same from time to time to any Holder
desiring an inspection thereof during reasonable business hours. The Warrant
Agent shall not at any time be under any duty or responsibility to any Holder to
determine whether any facts exist which may require any adjustment of the
Exercise Price or the number of shares of Common Stock or other stock or
property, purchasable on exercise of the Warrants, or with respect to the nature
or extent of any such adjustment when made, or with respect to the method
employed in making such adjustment or the validity or value of any shares of
Common Stock.
SECTION 4.11. NOTICE OF CERTAIN TRANSACTIONS. In the event
that the Company shall propose (a) to pay any dividend payable in securities of
any class to the holders of its Common Stock or to make any other distribution
to the holders of its Common
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Stock, (b) to effect any capital reorganization, consolidation or merger or (c)
to effect the voluntary or involuntary dissolution, liquidation or winding-up of
the Company, or in the event of a tender offer or exchange offer described in
Section 4.06, the Company shall within 5 days send to the Warrant Agent and the
Warrant Agent shall within 5 days of its receipt thereof send the Holders a
notice (in such form as shall be furnished to the Warrant Agent by the Company)
of such proposed action or offer, such notice to be mailed by the Warrant Agent
to the Holders at their addresses as they appear in the Certificate Register,
which shall specify the record date for the purposes of such dividend,
distribution, or the date such issuance or event is to take place and the date
of participation therein by the holders of Common Stock, if any such date is to
be fixed, and shall briefly indicate the effect of such action on the Common
Stock and on the number and kind of any other shares of stock and on other
property, if any, and the number of shares of Common Stock and other property,
if any, purchasable upon exercise of each Warrant and the Exercise Price after
giving effect to any adjustment which will be required as a result of such
action. Such notice shall be given as promptly as possible and, in the case of
any action covered by clause (a) above, at least 10 days prior to the record
date for determining holders of the Common Stock for purposes of such action
and, in the case of any other such action, at least 20 days prior to the date of
the taking of such proposed action or the date of participation therein by the
holders of Common Stock, whichever shall be the earlier.
SECTION 4.12. ADJUSTMENT TO WARRANT CERTIFICATE. The form of
Warrant Certificate need not be changed because of any adjustment made pursuant
to this Article IV, and Warrant Certificates issued after such adjustment may
state the same Exercise Price and the same number of shares of Common Stock as
are stated in the Warrant Certificates initially issued pursuant to this
Agreement. The Company, however, may at any time in its sole discretion make any
change in the form of Warrant Certificate that it may deem appropriate to give
effect to such adjustments and that does not affect the substance of the Warrant
Certificate, and any Warrant Certificate thereafter issued or countersigned,
whether in exchange or substitution for an outstanding Warrant Certificate or
otherwise, may be in the form as so changed.
ARTICLE V
REGISTRATION AND REPURCHASE RIGHTS
SECTION 5.01. REGISTRATION RIGHTS. (a) If the Company proposes
to sell shares of Common Stock in a Public Offering, then the Company shall in
each case give written notice, not later than the date of the initial filing of
a registration statement related to such Public Offering, of such proposed
Public Offering to the Holders of Warrants and Warrant Shares and such notice
shall offer to the Holders the opportunity to include in such Public Offering
such number of Warrant Shares as such Holders may request. Within 20 days after
receipt of such notice, the Holders of Warrants and Warrant Shares (the
"Requesting Holders") shall, subject to the following sentence, have the right
by notifying the Company in writing to require the Company to include in the
registration statement relating to such Public Offering such number of Warrant
Shares as such Holder may request. Notwithstanding the foregoing, if at any time
the managing underwriter or underwriters of such Public Offering (the "Managing
Underwriter") shall advise the Company in writing (and shall deliver a copy
thereof to the Warrant Agent) that, in its opinion, the total number of shares
proposed to be sold exceeds the maximum number of shares which the Managing
Underwriter believes may be sold without materially adversely affecting the
price, timing or distribution of the Public Offering, then the Company will be
required to include only that number of shares which the Managing Underwriter
believes may be sold without causing such adverse effect in the following order:
(i) all the shares that the Company proposes to sell in such Public Offering,
(ii) all the shares that are proposed to be sold by any holder of
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Common Stock of the Company who is exercising a demand registration right
existing on the Issue Date, if such Public Offering is being made pursuant to
such demand and (iii) shares of the Requesting Holders and all other shares that
are proposed to be sold by any holder of Common Stock of the Company on a pro
rata basis in an aggregate number which is equal to the difference between the
maximum number of shares that may be distributed in such Public Offering as
determined by the Managing Underwriter and the number of shares to be sold in
such Public Offering pursuant to clauses (i) and (ii) above. The Company will
have the right to postpone or withdraw any registration statement relating to a
Public Offering described under this Section 5.01(a) prior to the effective date
without obligation to any Requesting Holder.
(b) At any time and from time to time following the Initial
Public Offering by the Company of its Common Stock, holders of more than 50% of
the Warrant Shares (whether outstanding or subject to issuance upon exercise of
outstanding Warrants) that have not been sold pursuant to a registration
statement may request the Company to register, on two occasions, all of their
Warrant Shares (and those of any other holder of Warrant Shares that have not
been sold pursuant to a registration statement) in connection with a Public
Offering. The request by such holders shall specify the approximate number of
shares requested to be registered. The Company shall, at its cost, as promptly
as practicable (but in no event more than 45 days after so requested pursuant to
this Section 5.01(b)) file with the SEC and thereafter shall use its best
efforts to cause to be declared effective a registration statement on an
appropriate form under the Securities Act. Within 10 days after receipt of any
such request, the Company shall give written notice of such requested
registration to all other Holders of Warrants and Warrant Shares and shall
include in such registration all Warrant Shares with respect to which the
Company has received written requests for inclusion therein within 15 business
days after the receipt of the Company's notice by the applicable Holder. The
Company may also include in such registration additional shares proposed to be
sold by it or by any other holder of Common Stock or the holders of Warrant
Shares; PROVIDED, HOWEVER, that if the managing underwriter, if any, of any
public offering of the shares to be sold by the holders of Warrant Shares
advises the Company in writing that in its opinion the number of securities
requested to be included in such registration exceeds the number which can be
sold in such offering without adversely affecting the marketability of the
offering, the Company shall include in such registration (i) first, the Warrant
Shares, (ii) second, the shares that the Company proposes to sell, and (iii)
third, all other shares that are proposed to be sold by any other holders of
Common Stock of the Company on a pro rata basis in an aggregate number which is
equal to the difference between the maximum number of shares that may be
distributed in such Public Offering as determined by the managing underwriter
and the number of shares to be sold in such Public Offering pursuant to clauses
(i) and (iii) above. All registration expenses (other than underwriting
commissions and discounts payable in respect of shares sold by holders of
Warrant Shares) shall be paid by the Company in the case of any and all
registrations governed by this Section 5.01.
(c) Notwithstanding the provisions of Section 5.01(b), if,
while a registration request is pending pursuant to Section 5.01(b), the Company
determines in the good faith judgment of the Board that the filing of a
registration statement would require the disclosure of material information
which the Company has a bona fide business purpose for preserving as
confidential or the Company is unable to comply with SEC requirements, the
Company shall not be required to commence using its best efforts to effect a
registration pursuant to Section 5.01(b) until the earlier of (i) the date upon
which such material information is disclosed to the public or ceases to be
material or (ii) 60 days after the Company makes such good faith determination.
SECTION 5.02. PREPARATION AND FILING. (a) Whenever the Company
is required to include in a registration statement, or to effect the
registration, of any Warrant
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Shares pursuant to Section 5.01 in connection with an offer and sale thereof,
the Company will as expeditiously as possible:
(i) prepare and file with the SEC a registration statement
with respect to such Warrant Shares and use its best efforts to cause such
registration statement to promptly become and remain effective for the
period set forth in subsection (ii) below and promptly notify the Holders
of Warrants and Warrant Shares (x) when such registration statement
becomes effective, (y) when any amendment to such registration statement
becomes effective and (z) of any request by the SEC for any amendment or
supplement to such registration statement or any prospectus relating
thereto or for additional information;
(ii) prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration
statement effective and to comply with the provisions of the Securities
Act with respect to the sale or other disposition of all securities
covered by such registration statement for a period of not less than 90
days after the effective date of such registration statement (or such
shorter period to the extent necessary to permit the completion of the
sale or distribution of such securities within such period);
(iii) furnish to such Holders such number of copies of such
registration statement, each amendment and supplement thereto, the
prospectus included in such registration statement (including each
preliminary prospectus), reports on Forms 10-K and 10-Q (or their
equivalents) which the Company shall have filed with the SEC and financial
statements, reports and proxy statements mailed to shareholders of the
Company as such Holders may reasonably request in order to facilitate the
disposition of the Warrant Shares being sold;
(iv) use its best efforts to register or qualify, not later
than the effective date of any filed registration statement, the Warrant
Shares covered by such registration statement under the securities or
"blue sky" laws of such jurisdictions as such Holders reasonably request;
PROVIDED that the Company will not be required to (A) qualify to do
business as a foreign corporation or as a dealer in any jurisdiction where
it is not so qualified, (B) subject itself to taxation in any jurisdiction
where it is not subject to taxation, (C) consent to general service of
process in any jurisdiction where it is not subject to general service of
process or (D) take any action that would subject it to service of process
in suits other than those arising out of the offer or sale of the Warrant
Shares covered by the registration statement;
(v) make available, upon reasonable notice and during business
hours, for inspection by the Managing Underwriter or underwriters for the
Warrant Shares (and their counsel) (collectively, the "Inspectors"), all
financial and other records, pertinent corporate documents, agreements and
properties of the Company as shall be reasonably necessary to enable them
to exercise their due diligence responsibilities and cause the Company's
officers, directors and employees to supply all information reasonably
requested by any such Inspector in connection with the registration
statement; PROVIDED, HOWEVER, that any such Inspector shall first agree in
writing with the Company that any information that is reasonably and in
good faith designated by the Company in writing as confidential at the
time of delivery of such information shall be kept confidential by such
Inspector, unless (A) disclosure of such information is required by a
court or administrative order or is necessary to respond to inquiries of
regulatory authorities, (B) disclosure of such information is required by
law (including any disclosure requirements pursuant to Federal securities
laws in connection with the filing of a registration statement or the use
of any prospectus referred to in this Agreement), (C) such information
generally becomes available to the public other than as a result of
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a disclosure or failure to safeguard any such information by any Inspector
or (D) such information becomes available to any such Inspector from a
source other than the Company or its agents and such source is not bound
by a confidentiality agreement; PROVIDED, HOWEVER, that prior to the
disclosure of such information by such Inspector pursuant to clauses (A)
or (B) above, such Inspector shall provide the Company with prompt written
notice of such proposed disclosure to permit the Company to seek an
appropriate protective order preventing such disclosure, but it is
understood that the Inspector may comply with the requirements of law.
(vi) obtain a comfort letter from the Company's independent
public accountants dated within five business days prior to the effective
date of the registration statement (and as of such other dates as the
Managing Underwriter or underwriters for the Warrant Shares may reasonably
request) in customary form and covering such matters of the type
customarily covered by such comfort letters as such Managing Underwriter
or underwriters reasonably request;
(vii) obtain an opinion of counsel dated the effective date of
the registration statement (and as of such other dates as the Managing
Underwriter or underwriters for the Warrant Shares may reasonably request)
in customary form and covering such matters of the type customarily
covered by such opinions as counsel designated by such Managing
Underwriter or underwriters reasonably request;
(viii) during the period when the registration statement is
required to be effective, notify such Holders of the happening of any
event as a result of which the prospectus included in the registration
statement contains an untrue statement of a material fact or omits to
state any material fact required to be stated therein or necessary to make
the statements therein not misleading, and the Company will forthwith
prepare a supplement or amendment to such prospectus so that, as
thereafter delivered to the purchasers of such Warrant Shares, such
prospectus will not contain an 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;
(ix) in the case of an underwritten offering, enter into an
underwriting agreement containing customary terms, including such
indemnity and contribution provisions as the managing underwriter or
underwriters customarily require or may reasonably require;
(x) cause such Warrant Shares to be traded on each securities
exchange on which similar securities issued by the Company are then
traded, provided that the Company is eligible to do so under applicable
listing requirements; and
(xi) otherwise use its best efforts to comply with all
applicable rules and regulations of the SEC, and make available to its
securityholders, as soon as reasonably practicable, an earnings statement
covering a period of 12 months, beginning within three months after the
effective date of the registration statement, which earnings statement
shall satisfy the provisions of Section 11(a) of the Securities Act.
(b) The Holders participating in such offering shall timely
furnish to the Company such information regarding the distribution of such
Warrant Shares as the Company may from time to time reasonably request.
(c) The Holders agree that upon the receipt of any notice from
the Company of the happening of any event of the kind described in paragraph
(a)(viii) above, they will forthwith discontinue, and cause any underwriter
acting on their behalf to agree to discontinue the disposition of Warrant Shares
pursuant to the registration statement covering
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such Warrant Shares until the Holders' receipt of the copies of the supplemented
or amended prospectus contemplated by paragraph (a)(viii) above.
SECTION 5.03. INDEMNIFICATION. (a) In connection with any
registration statement contemplated by this Agreement, the Company agrees to
indemnify and hold harmless each Holder of Warrants or Warrant Shares covered
thereby, the directors, officers and employees of each such Holder and each
person who controls any such Holder within the meaning of either the Securities
Act or the Exchange Act against any and all losses, claims, damages or
liabilities, joint or several, to which they or any of them may become subject
under the Securities Act, the Exchange Act or other Federal or state statutory
law or regulation, at common law or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement of a material fact
contained in the registration statement as originally filed or in any amendment
thereof, or in any preliminary prospectus or prospectuses contained therein, or
in any amendment thereof or supplement thereto, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
and agrees to reimburse each such indemnified party, as incurred, for any legal
or other expenses reasonably incurred by them in connection with investigating
or defending any such loss, claim, damage, liability or action; PROVIDED,
HOWEVER, that (i) the Company will not be liable in any case to the extent that
any such loss, claim, damage or liability arises out of or is based upon any
such untrue statement or alleged untrue statement or omission or alleged
omission made therein in reliance upon and in conformity with written
information furnished to the Company by or on behalf of any such Holder or the
underwriter specifically for inclusion therein, and (ii) the Company will not be
liable to any indemnified party under these provisions with respect to any
registration statement or prospectus to the extent that any such loss, claim,
damage or liability of such indemnified party results from the use of the
prospectus during a period when the use of the prospectus has been suspended in
accordance with Section 5.02(a)(viii), hereof; PROVIDED, in each case, that such
Holders received prior notice of such suspension. This indemnity agreement will
be in addition to any liability which the Company may otherwise have.
The Company also agrees to indemnify or contribute to Losses,
as provided in Section 5.03(d), of any underwriters of Warrant Shares registered
under a registration statement, their officers and directors and each person who
controls such underwriters on substantially the same basis as that of the
indemnification of the Holders of Warrants or Warrant Shares covered by a
registration statement as provided in this Section 5.03(a); PROVIDED, HOWEVER,
that with respect to any untrue statement or alleged untrue statement in or
omission or alleged omission from any registration statement or prospectus the
indemnity agreement contained in this Section 5.03(a) shall not inure to the
benefit of any underwriter that sold the Warrant Shares concerned to the Person
asserting any such losses, claims, damages or liabilities, to the extent that
such sale was an initial resale by such underwriter and any such loss, claim,
damage or liability of such underwriter results from the fact that there was not
sent or given to such Person, at or prior to the written confirmation of the
sale of such Warrant Shares to such Person, a copy of the registration statement
or the prospectus or any amendment or supplement thereto (exclusive of any
supplementary material included therein but not attached thereto) if the Company
had previously furnished copies thereof to such underwriter. The Company also
shall, if requested by any Holder of Warrants or Warrant Shares covered by a
registration statement, enter into an underwriting agreement containing
customary terms and conditions, including those related to indemnification.
(b) Each Holder of Warrants or Warrant Shares covered by a
registration statement severally agrees to indemnify and hold harmless (i) the
Company, (ii) each of its directors, (iii) each of its officers who signs such
registration statement and (iv) each Person who controls the Company within the
meaning of either the Securities Act or the Exchange Act to the same extent as
the foregoing indemnity from the Company to each such Holder,
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but only with reference to written information relating to such Holder furnished
to the Company by or on behalf of such Holder specifically for inclusion in the
documents referred to in the foregoing indemnity. This indemnity agreement will
be in addition to any liability
which any such Holder may otherwise have.
(c) Promptly after receipt by an indemnified party under this
Section 5.03 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying party
under this Section 5.03, notify the indemnifying party in writing of the
commencement thereof; but the failure so to notify the indemnifying party (i)
will not relieve it from liability under paragraph (a) or (b) above unless and
to the extent it did not otherwise learn of such action and such failure results
in the forfeiture by the indemnifying party of substantial rights and defenses
and (ii) will not, in any event, relieve the indemnifying party from any
obligations to any indemnified party other than the indemnification obligation
provided in paragraph (a) or (b) above. The indemnifying party shall be entitled
to appoint counsel of the indemnifying party's choice at the indemnifying
party's expense to represent the indemnified party in any action for which
indemnification is sought (in which case the indemnifying party shall not
thereafter be responsible for the fees and expenses of any separate counsel
retained by the indemnified party or parties except as set forth below);
PROVIDED, HOWEVER, that such counsel shall be reasonably satisfactory to the
indemnified party. Notwithstanding the indemnifying party's election to appoint
counsel to represent the indemnified party in an action, the indemnified party
shall have the right to employ separate counsel (including local counsel), and
the indemnifying party shall bear the reasonable fees, costs and expenses of
such separate counsel (and local counsel) if (i) the use of counsel chosen by
the indemnifying party to represent the indemnified party would present such
counsel with a conflict of interest, (ii) the actual or potential defendants in,
or targets of, any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that there may be legal defenses available to it or other indemnified parties
which are different from or additional to those available to the indemnifying
party, (iii) the indemnifying party shall not have employed counsel reasonably
satisfactory to the indemnified party to represent the indemnified party within
a reasonable time after notice of the institution of such action or (iv) the
indemnifying party shall authorize the indemnified party to employ separate
counsel at the expense of the indemnifying party; PROVIDED, HOWEVER, that the
indemnifying party shall be obligated to pay for only one such separate counsel
for all indemnified parties in each action or related group of actions. An
indemnifying party will not, without the prior written consent of the
indemnified parties, settle or compromise or consent to the entry of any
judgment with respect to any pending or threatened claim, action, suit or
proceeding in respect of which indemnification or contribution may be sought
hereunder (whether or not the indemnified parties are actual or potential
parties to such claim or action) unless such settlement, compromise or consent
includes an unconditional release of each indemnified party from all liability
arising out of such claim, action, suit or proceeding.
(d) In the event that the indemnity provided in paragraph (a)
or (b) of this Section 5.03 is unavailable to or insufficient to hold harmless
an indemnified party for any reason, then each applicable indemnifying party, in
lieu of indemnifying such indemnified party, shall have a joint and several
obligation to contribute to the aggregate losses, claims, damages and
liabilities (including legal or other expenses reasonably incurred in connection
with investigating or defending same) (collectively "Losses") to which such
indemnified party may be subject in such proportion as is appropriate to reflect
the relative benefits received by such indemnifying party, on the one hand, and
such indemnified party, on the other hand, from the registration statement which
resulted in such Losses; PROVIDED, HOWEVER, that in no case shall any subsequent
holder of any Warrant Share be responsible, in the aggregate, for any amount in
excess of the dollar amount of the proceeds received by the Holder of any
Warrant Share from the sale of such Holder's Warrant Shares. If the allocation
provided by the immediately preceding sentence is unavailable for any reason,
the
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indemnifying party and the indemnified party shall contribute in such proportion
as is appropriate to reflect not only such relative benefits but also the
relative fault of such indemnifying party, on the one hand, and such indemnified
party, on the other hand, in connection with the statements or omissions which
resulted in such Losses as well as any other relevant equitable considerations.
Relative fault shall be determined by reference to whether any alleged untrue
statement or omission relates to information provided by the indemnifying party,
on the one hand, or by the indemnified party, on the other hand. The parties
agree that it would not be just and equitable if contribution were determined by
pro rata allocation or any other method of allocation which does not take
account of the equitable considerations referred to above. Notwithstanding the
provisions of this paragraph (d), 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. For purposes of this Section 5.03, each person who
controls a Holder of Warrants or Warrant Shares covered by a registration
statement within the meaning of either the Securities Act or the Exchange Act
and each director, officer, employee and agent of such Holder shall have the
same rights to contribution as such Holder, and each person who controls the
Company within the meaning of either the Securities Act or the Exchange Act,
each officer of the Company who shall have signed such registration statement
and each director of the Company shall have the same rights to contribution as
the Company, subject in each case to the applicable terms and conditions of this
paragraph (d).
(e) The provisions of this Section 5.03 will remain in full
force and effect, regardless of any investigation made by or on behalf of any
holder or the Company or any of the officers, directors or controlling persons
referred to in this Section 5.03 hereof, and will survive the sale by a Holder
of Warrants or Warrant Shares covered by a registration
statement.
SECTION 5.04. REPURCHASE OF WARRANTS. (a) In the event that
Initial Public Offering has not occurred by December 31, 2002(the "First
Triggering Date"), the Company shall make an offer to purchase for cash (the
"Warrant Repurchase") all outstanding Warrants and Warrant Shares issued by it
in cash at the Repurchase Price no later than 120 days after such Triggering
Date.
(b) If, by law or pursuant to the agreement(s) governing the
Company's then outstanding debt instruments, the Company is not permitted to
effect the Warrant Repurchase as described in Section 5.04(a), the Company shall
make an offer (the "Subordinated Note Exchange Offer") no later than 120 days
after such Triggering Date to exchange all outstanding Warrants and Warrant
Shares for newly issued subordinated debt of the Company (the "Subordinated
Notes"), pursuant to an indenture substantially in the form attached as Exhibit
C hereto (the "Subordinated Note Indenture"), the aggregate principal amount of
which will be equal to the aggregate value of all outstanding Warrants and
Warrant Shares at the Repurchase Price.
(c) In the event that an Initial Public Offering has not
occurred by December 31, 2004 (the "Second Triggering Date") then, with respect
to all outstanding Warrants and Warrant Shares, the Company shall again make an
offer of Warrant Repurchase as described under Section 5.04(a) or, if by law or
pursuant to the agreement(s) governing the Company's then outstanding debt
instruments, the Company is not permitted to effect such Warrant Repurchase,
shall make the Subordinated Note Exchange Offer as described under Section
5.04(b).
(d) If a Public Offering relating to the Company occurs at any
time between any Triggering Date and 90 days after the expiration date for a
Warrant Repurchase pursuant to Section 5.04(a), 5.04(b) or 5.04(c), the Company
will pay to each Holder of Warrants or Warrant Shares that were purchased in
such Warrant Repurchase an amount in cash equal to the sum of (i) the number of
Warrants purchased by the Company multiplied by the
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excess, if any, of (A) the value, as determined pursuant to the terms of such
Public Offering (net of applicable underwriting discounts and placement fees) of
the number of Warrant Shares issuable upon the exercise of one Warrant over (B)
the Repurchase Price paid by the Company for each Warrant in such Warrant
Repurchase and (ii) the number of Warrant Shares purchased by the Company
multiplied by the excess, if any, of (A) the value, determined as aforesaid, of
the Warrant Shares over (B) the Repurchase Price paid by the Company for each
Warrant Share in such offer.
(e) NOTICE OF WARRANT REPURCHASE. As promptly as practicable
following the First Triggering Date or the Second Triggering Date, as the case
may be, the Company shall give notice of the terms of the Warrant Repurchase or
of the Subordinated Note Exchange Offer (a "Repurchase Notice") to each Holder,
as of the First Triggering Date or the Second Triggering Date, as the case may
be, of then outstanding Warrants and Warrant Shares. Each Repurchase Notice: (i)
shall be given by the Company directly to all Holders of the Warrants and
Warrant Shares, with a copy to the Warrant Agent and (ii) shall be given within
five Business Days after the First Triggering Date or the Second Triggering
Date, as the case may be, and shall specify (A) whether the Warrant Shares will
be exchanged for cash or for Subordinated Notes (B) the manner in which Warrants
and Warrant Shares may be surrendered to the Warrant Agent for repurchase by the
Company, (C) the Repurchase Price at which each Warrant and Warrant Share will
be repurchased by the Company, (D) the name of the independent appraisal firm,
if any, whose valuation of the Common Stock was utilized in connection with
determining such Repurchase Price and (E) that payment of the Repurchase Price
will be made by the Warrant Agent (if in cash or by the issuance and delivery by
the Company of Subordinated Notes, duly authenticated pursuant to the
Subordinated Indenture (if in Subordinated Notes)).
(f) PAYMENT FOR WARRANTS. (i) To receive payment for any
unexercised Warrants and any Warrant Shares pursuant to this Section 5.04, each
Holder thereof shall, except as otherwise provided herein, surrender to the
Warrant Agent the Warrant Certificates evidencing such Holder's Warrants and
certificates evidencing such Holder's Warrant Shares.
(ii) As promptly as practicable following the First Triggering
Date or the Second Triggering Date, as the case may be, the Company shall, in
the case of a Warrant Repurchase, deposit with the Warrant Agent funds
sufficient to make payment for all unexercised Warrants and all Warrant Shares
or, in the case of a Subordinated Note Exchange Offer, make arrangements
satisfactory to the Warrant Agent for the issuance and delivery of Subordinated
Notes sufficient to make payment for all unexercising warrants and all Warrant
Shares. In the case of the Warrant Repurchase, after receipt of such deposit
from the Company, the Warrant Agent shall make payment to each Holder, by
delivering a check in an amount equal to the Repurchase Price for each Warrant
and each Warrant Share surrendered by such Holder in accordance with this
Section 5.04, to such Person or Persons as it may be directed in writing by any
Holder surrendering Warrant Certificates or Warrant Shares, net of any transfer
taxes required to be paid in the event that the check is to be delivered to a
Person other than the Holder. Any funds not used to pay for Warrants or Warrant
Shares within 180 days after the Triggering Date shall be promptly returned to
the Company.
(g) COMPLIANCE WITH LAWS. Notwithstanding anything contained
in this Section 5.04, if the Company is required to comply with laws or
regulations in connection with making the Warrant Repurchase or Subordinated
Note Exchange Offer, such laws or regulations shall govern the making of such
Warrant Repurchase or Subordinated Note Exchange Offer. The Company shall
immediately notify the Warrant Agent in writing if any such laws or regulations
shall require the Company to supplement or amend this Agreement or to modify or
amend the procedures or manner of such repurchase or any other provisions set
forth herein and the Warrant Agent shall not be responsible or liable for making
any such
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determination, complying with any such laws or regulations or for the failure of
the Company to so notify the Warrant Agent.
SECTION 5.05. DRAG ALONG/TAG ALONG RIGHTS. If, prior to the
consummation of an Initial Public Offering, the Board of Directors of the
Company and the holders of a majority of the outstanding Common Stock approve a
sale of the Company to a Person other than a Permitted Holder, then, the Company
shall give to each of the Holders or Warrants and Warrant Shares 30 days'
written notice (a "Sale Notice") prior to the closing of such proposed sale,
which Sale Notice shall include reasonable details of the proposed sale,
including the proposed time and place of the closing and the consideration to be
received by the Company's shareholders and (i) the Company shall have the right
(which right shall be exercised prior to the giving of such Sale Notice, and
notice of the exercise of such right shall be included in the Sale Notice) to
require the holders of the Warrants and Warrant Shares to sell, transfer and
deliver or cause to be sold, transferred and delivered, to such Person, all (or
a pro rata number, based on the number of shares proposed to be sold compared to
the total number of fully diluted shares of Common Stock of the Company (other
than Warrant Shares) at such time) their Warrants in the same transaction at the
closing thereof; PROVIDED that the consideration to be received by all Holders
shall be the same (in terms of price per share, terms, conditions and in all
other material respects) as that to be received by the Company's other
shareholders and, in any event, shall be cash or securities registered under the
Securities Act and listed on a national securities exchange or authorized for
quotation on The Nasdaq Stock Market, Inc.; and PROVIDED FURTHER, that if a
Holder of a Warrant has, prior to its receipt of a Sale Notice, entered into a
binding agreement to transfer the Warrants held by such Holder, such Holder
shall not be prohibited from consummating such transfer, notwithstanding
anything to the contrary contained in this Section 5.05 and (ii) if the Company
does not exercise its right described in Section 5.05(i), any Holder of Warrants
and of Warrant Shares shall be entitled, at its option, by written notice (a
"Tag-Along Notice") to the Company given within seven Business Days after
receipt of the Sale Notice, to require the Company and the majority shareholders
to include all or any portion of such Holder's Warrants or Warrant Shares in
such sale to the transferee(s) on the same terms as those applicable to the
majority holders. Any purchase of Warrants pursuant to Section 5.05(i) shall be
deemed a "Drag Along Purchase", and any purchase of Warrants pursuant to Section
5.05(ii) shall be deemed a "Tag Along Purchase." A Tag-Along Notice delivered
pursuant to this Section 5.05 shall be deemed to be an irrevocable commitment by
such Holder to sell pursuant to the Tag-Along Purchase the number of Warrants or
Warrant Shares designated in such Tag-Along Notice. Failure to provide a
Tag-Along Notice shall be deemed to be a waiver of the right to have any Warrant
or Warrant Shares included in the Tag-Along Purchase. Each Holder of Warrants or
Warrant Shares who shall participate in a Drag-Along Purchase or a Tag-Along
Purchase shall deliver, not later than two business days prior to the closing
date referenced in the Sale Notice, the certificate or certificates representing
the Warrants or Warrant Shares to be sold by such Holder (duly endorsed in blank
for transfer, if in definitive form), free and clear of all liens but without
any other representation or warranty, together with a limited power of attorney
authorizing the Company to sell or otherwise dispose of such Warrants or Warrant
Shares in accordance with the terms of this Section 5.05. Promptly after the
closing of the Drag-Along Purchase or the Tag-Along Purchase, the Company shall
promptly pay to each Holder of the consideration (less any taxes or expense
allocated to such Holder on a pro rata basis based on a number of shares sold)
for the Warrants or Warrant Shares sold in such Drag-Along Purchase or Tag-Along
Purchase. If for any reason the Drag-Along Purchase or the Tag-Along Purchase is
not completed within 120 days following the delivery of the Sale Notice, the
Company shall return to each Holder all certificates representing Warrant Shares
and Warrants.
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ARTICLE VI
WARRANT AGENT
SECTION 6.01. APPOINTMENT OF WARRANT AGENT. The Company hereby
appoints the Warrant Agent to act as agent for the Company in accordance with
provisions of this Agreement and the Warrant Agent hereby accepts such
appointment.
SECTION 6.02. RIGHTS AND DUTIES OF WARRANT AGENT. (a) AGENT
FOR THE COMPANY. In acting under this Warrant Agreement and in connection with
the Warrant Certificates, the Warrant Agent is acting solely as agent of the
Company and does not assume any obligation or relationship or agency or trust
for or with any of the Holders of Warrant Certificates or beneficial owners of
Warrants.
(b) COUNSEL. The Warrant Agent may consult with counsel
satisfactory to it, and the advice of such counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or omitted
by it hereunder in good faith and in accordance with the advice of such counsel.
(c) DOCUMENTS. The Warrant Agent shall be protected and shall
incur no liability for or in respect of any action taken or thing suffered by it
in reliance upon any Warrant Certificate, notice, direction, consent,
certificate, affidavit, statement or other paper or document reasonably believed
by it to be genuine and to have been presented or signed by the proper parties.
(d) NO IMPLIED OBLIGATIONS. The Warrant Agent shall be
obligated to perform only such duties as are expressly herein set forth and no
implied duties or obligations shall be read into this Agreement or the Warrant
Certificates against the Warrant Agent. The Warrant Agent shall not be under any
obligation to take any action hereunder which may tend to involve it in any
expense or liability for which it does not receive indemnity if such indemnity
is reasonably requested. The Warrant Agent shall not be accountable or under any
duty or responsibility for the use by the Company of any of the Warrant
Certificates countersigned by the Warrant Agent and delivered by it to the
Holders or on behalf of the Holders pursuant to this Agreement or for the
application by the Company of the proceeds of the Warrants. The Warrant Agent
shall have no duty or responsibility in case of any default by the Company in
the performance of its covenants or agreements contained herein or in the
Warrant Certificates or in the case of the receipt of any written demand from a
Holder with respect to such default, including any duty or responsibility to
initiate or attempt to initiate any proceedings at law or otherwise.
(e) NOT RESPONSIBLE FOR ADJUSTMENTS OR VALIDITY OF STOCK. The
Warrant Agent shall not at any time be under any duty or responsibility to any
Holder to determine whether any facts exist that may require an adjustment of
the number of shares of Common Stock purchasable upon exercise of each Warrant
or the Exercise Price, or with respect to the nature or extent of any adjustment
when made, or with respect to the method employed, or herein or in any
supplemental agreement provided to be employed, in making the same. The Warrant
Agent shall not be accountable with respect to the validity or value of any
shares of Common Stock or of any securities or property which may at any time be
issued or delivered upon the exercise of any Warrant or upon any adjustment
pursuant to Article IV, and it makes no representation with respect thereto. The
Warrant Agent shall not be responsible for any failure of the Company to make
any cash payment or to issue, transfer or deliver any shares of Common Stock or
stock certificates upon the surrender of any Warrant Certificate for the purpose
of exercise or upon any adjustment pursuant to Article IV, or to comply with any
of the covenants of the Company contained in Article IV.
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SECTION 6.03. INDIVIDUAL RIGHTS OF WARRANT AGENT. The Warrant
Agent and any stockholder, Affiliate director, officer or employee of the
Warrant Agent may buy, sell or deal in any of the Warrants or other securities
of the Company or its affiliates or become pecuniarily interested in
transactions in which the Company or its affiliates may be interested, or
contract with or lend money to the Company or its affiliates or otherwise act as
fully and freely as though it were not the Warrant Agent under this Agreement.
Nothing herein shall preclude the Warrant Agent from acting in any other
capacity for the Company or for any other legal entity.
SECTION 6.04. WARRANT AGENT'S DISCLAIMER. The Warrant Agent
shall not be responsible for and makes no representation as to the validity or
adequacy of this Agreement or the Warrant Certificates and it shall not be
responsible for any statement in this Agreement or the Warrant Certificates
other than its countersignature thereon.
SECTION 6.05. COMPENSATION AND INDEMNITY. The Company agrees
to pay the Warrant Agent reasonable fees for services hereunder, and to
reimburse the Warrant Agent for its reasonable out-of-pocket expenses as
incurred. The Company shall indemnify the Warrant Agent against any loss,
liability, claim or expense (including reasonable agents' and attorneys' fees
and expenses) incurred by it (including costs and expenses of defending itself)
without negligence or bad faith on its part arising out of or in connection with
the acceptance or performance of its duties under this Agreement. In the absence
of negligence or bad faith on its part, the Warrant Agent shall not be liable
for any action taken, suffered, or omitted by it or for any error of judgment
made by it in the performance of its duties under this Agreement. In no case
will the Warrant Agent be liable for special, indirect, incidental or
consequential loss or damages of any kind whatsoever (including but not limited
to lost profits), even if the Warrant Agent has been advised of the possibility
of such damages. Any liability of the Warrant Agent will be limited to the
amount of fees paid by the Company hereunder. The Warrant Agent shall notify the
Company promptly of any claim for which it may seek indemnity. The Company need
not reimburse any expense or indemnify against any loss or liability incurred by
the Warrant Agent through wilful misconduct, gross negligence or bad faith. The
Company's payment obligations pursuant to this Section 6.05 shall survive the
termination of this Agreement or the Warrant Agent's resignation or removal.
SECTION 6.06. SUCCESSOR WARRANT AGENT. (a) THE COMPANY TO
PROVIDE WARRANT AGENT. The Company agrees for the benefit of the Holders that
there shall at all times be a Warrant Agent hereunder until all the Warrants
have been exercised or are no longer exercisable.
(b) RESIGNATION AND REMOVAL. The Warrant Agent may at any time
resign by giving written notice to the Company of such intention on its part,
specifying the date on which its desired resignation shall become effective;
PROVIDED, HOWEVER, that such date shall not be less than 60 days after the date
on which such notice is given unless the Company otherwise agrees. The Warrant
Agent hereunder may be removed at any time by the filing with it of an
instrument in writing signed by or on behalf of the Company and specifying such
removal and the date when it shall become effective, which date shall not be
less than 60 days after such notice is given unless the Warrant Agent otherwise
agrees. Any removal under this Section 6.06 shall take effect upon the
appointment by the Company as hereinafter provided of a successor Warrant Agent
(which shall be a bank or trust company authorized under the laws of the
jurisdiction of its organization to exercise corporate trust powers) and the
acceptance of such appointment by such successor Warrant Agent.
(c) THE COMPANY TO APPOINT SUCCESSOR. In case at any time the
Warrant Agent shall resign, or shall be removed, or shall become incapable of
acting, or shall be adjudged a bankrupt or insolvent, or shall commence a
voluntary case under the Federal bankruptcy laws, as now or hereafter
constituted, or under any other applicable Federal or
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state bankruptcy, insolvency or similar law or shall consent to the appointment
of or taking possession by a receiver, custodian, liquidator, assignee, trustee,
sequestrator (or other similar official) of the Warrant Agent or its property or
affairs, or shall make an assignment for the benefit of creditors, or shall
admit in writing its inability to pay its debts generally as they become due, or
shall take corporate action in furtherance of any such action, or a decree or
order for relief by a court having jurisdiction in the premises shall have been
entered in respect of the Warrant Agent in an involuntary case under the Federal
bankruptcy laws, as now or hereafter constituted, or any other applicable
Federal or State bankruptcy, insolvency or similar law; or a decree order by a
court having jurisdiction in the premises shall have been entered for the
appointment of a receiver, custodian, liquidator, assignee, trustee,
sequestrator (or similar official) of the Warrant Agent or of its property or
affairs, or any public officer shall take charge or control of the Warrant Agent
or of its property or affairs for the purpose of rehabilitation, conservation,
winding up of or liquidation, a successor Warrant Agent, qualified as aforesaid,
shall be appointed by the Company by an instrument in writing, filed with the
successor Warrant Agent. Upon the appointment as aforesaid of a successor
Warrant Agent and acceptance by the successor Warrant Agent of such appointment,
the incumbent Warrant Agent shall cease to be Warrant Agent hereunder; PROVIDED,
HOWEVER, that in the event of the resignation of the Warrant Agent hereunder,
such resignation shall be effective on the earlier of (i) the date specified in
the Warrant Agent's notice of resignation and (ii) the appointment and
acceptance of a successor Warrant Agent hereunder.
(d) SUCCESSOR TO EXPRESSLY ASSUME DUTIES. Any successor
Warrant Agent appointed hereunder shall execute, acknowledge and deliver to its
predecessor and to the Company an instrument accepting such appointment
hereunder, and thereupon such successor Warrant Agent, without any further act,
deed or conveyance, shall become vested with all the rights and obligations of
such predecessor with like effect as if originally named as Warrant Agent
hereunder, and such predecessor, upon payment of its charges and disbursements
then unpaid, shall thereupon become obligated to transfer, deliver and pay over,
and such successor Warrant Agent shall be entitled to receive, all monies,
securities and other property on deposit with or held by such predecessor, as
Warrant Agent hereunder.
(e) SUCCESSOR BY MERGER. Any Person into which the Warrant
Agent hereunder may be merged or consolidated, or any Person resulting from any
merger or consolidation to which the Warrant Agent shall be a party, or any
Person to which the Warrant Agent shall sell or otherwise transfer all or
substantially all of its corporate trust business; PROVIDED that it shall be
qualified as aforesaid, shall be the successor Warrant Agent under this
Agreement without the execution or filing of any paper or any further act on the
part of any of the parties hereto.
ARTICLE VII
MISCELLANEOUS
SECTION 7.01. COMPANY RESALES. The Company hereby agrees with
each Holder, that the Company shall not resell any Warrants or Warrant Shares it
acquires, by purchase or otherwise, except pursuant to an effective registration
statement.
SECTION 7.02. SEC REPORTS AND OTHER INFORMATION.
Notwithstanding that the Company may not be required to remain subject to the
reporting requirements of Section 13 or 15(d) of the Exchange Act applicable to
a "foreign private issuer" (as such term is defined in Rule 3b-4 under the
Exchange Act), the Company shall file with the SEC and furnish to the Trustee,
Holders or prospective Holders, upon request, (i) commencing with respect to the
fiscal year ended December 31, 1998, within 120 days after the end of each
fiscal year, an annual report on Form 20-F (or any successor form) containing
the
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information required to be contained therein for such fiscal year, and (ii)
commencing with respect to the fiscal quarter ended September 30, 1998, within
45 days after the end of each of the first three quarters in each fiscal year,
quarterly reports on Form 6-K consisting of unaudited financial statements
(including a balance sheet and statement of income, changes in stockholders'
equity and cash flows) and Management's Discussion and Analysis of Financial
Condition and Results of Operations for and as of the end of each of such
quarters (with comparable financial statements for such quarter of the
immediately preceding fiscal year.
SECTION 7.03. RULE 144A. The Company hereby agrees with each
Holder, for so long as any Transfer Restricted Securities remain outstanding and
during any period in which the Company is not subject to Section 13 or 15(d) of
the Exchange Act, to make available, upon request of any Holder, to any Holder
or beneficial owner of Transfer Restricted Securities in connection with any
sale thereof and any prospective purchaser of such Transfer Restricted
Securities from such Holder or beneficial owner, the information required by
Rule 144A(d)(4) under the Securities Act in order to permit resales of such
Transfer Restricted Securities pursuant to Rule 144A.
SECTION 7.04. PERSONS BENEFITTING. Nothing in this Agreement
is intended or shall be construed to confer upon any Person other than the
Company, the Warrant Agent and the Holders any right, remedy or claim under or
by reason of this agreement or any part hereof.
SECTION 7.05. RIGHTS OF HOLDERS. Except as expressly
contemplated herein, Holders of unexercised Warrants are not entitled (i) to
receive dividends or other distributions (ii) to receive notice of or vote at
any meeting of the stockholders, (iii) to consent to any action of the
stockholders, (iv) to receive notice of any other proceedings of the Company or
(v) to exercise any other rights as stockholders of the Company.
SECTION 7.06. AMENDMENT. This Agreement may be amended by the
parties hereto without the consent of any Holder for the purpose of curing any
ambiguity, or of curing, correcting or supplementing any defective provision
contained herein or making any other provisions with respect to matters or
questions arising under this Agreement as the Company and the Warrant Agent may
deem necessary or desirable; PROVIDED, HOWEVER, that such action shall not
affect adversely the rights of the Holders. Any amendment or supplement to this
Agreement that has an adverse effect on the interests of the Holders shall
require the written consent of the Holders of a majority of the then outstanding
Warrants. The consent of each Holder affected shall be required for any
amendment pursuant to which the Exercise Price would be increased or the number
of Warrant Shares purchasable upon exercise of Warrants would be decreased
(other than pursuant to adjustments provided herein). In determining whether the
Holders of the required number of Warrants have concurred in any direction,
waiver or consent, Warrants owned by the Company or by any Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with the Company shall be disregarded and deemed not to be outstanding,
except that, for the purpose of determining whether the Warrant Agent shall be
protected in relying on any such direction, waiver or consent, only Warrants
which the Warrant Agent knows are so owned shall be so disregarded. Also,
subject to the foregoing, only Warrants outstanding at the time shall be
considered in any such determination.
31
<PAGE>
SECTION 7.07. NOTICES. Any notice or communication shall be in
writing and delivered by hand or overnight courier service, mailed by certified
or registered mail or sent by telecopy, as follows:
if to the Company:
Millenium Seacarriers, Inc.
c/o Maples and Calder
P.O. Box 309
George Town, Grand Cayman
Cayman Islands, British West Indies
Attention: Gareth Griffith, Esq.
Telecopy: (345) 949-8080
with a copy to:
Thacher Proffitt & Wood
Two World Trade Center
New York, New York 10048
Telecopy: (212) 912-7751
Attention: Charles A. Dietzgen, Esq.
if to the Warrant Agent:
ChaseMellon Shareholder Services, L.L.C.
450 West 33rd Street
10th Floor
New York, New York 10001
Attention: Mr. Jocelyn Montrose
Telecopy: (212) 947-7629
All notices and other communications given to any party hereto in accordance
with the provisions of this Agreement shall be deemed to have been given on the
date of receipt if delivered by hand or overnight courier service or sent by
telecopy or on the date five Business Days after dispatch by certified or
registered mail if mailed, in each case delivered, sent or mailed (properly
addressed) to such party as provided in this Section 7.07 or in accordance with
the latest unrevoked direction from such party given in accordance with this
Section 7.07.
The Company or the Warrant Agent by notice to the other may
designate additional or different addresses for subsequent notices or
communications.
Any notice or communication mailed to a Holder shall be mailed
to the Holder at the Holder's address as it appears in the Certificate Register
and shall be sufficiently given if so mailed within the time prescribed.
Failure to mail a notice or communication to a Holder or any
defect in it shall not affect its sufficiency with respect to other Holders. If
a notice or communication is mailed in the manner provided above, it is duly
given, whether or not the addressee receives
it.
SECTION 7.08. GOVERNING LAW. The laws of the State of New York
shall govern this Agreement and the Warrant Certificates without giving effect
to applicable principles of conflicts of law to the extent that the application
of the laws of another jurisdiction would be required thereby.
32
<PAGE>
Each party hereby submits to the jurisdiction of the Federal
and state courts in the Borough of Manhattan in The City of New York in any suit
or proceeding arising out of or relating to this Agreement or the transactions
contemplated hereby. The Company hereby appoints Kylco Maritime (USA), Inc. 645
Fifth Avenue, New York, New York 10022 as its authorized agent upon which
process may be served in any suit or proceeding and agrees that service of
process upon such agent shall be deemed in every respect effective service of
process upon the Company in any such suit or proceeding.
SECTION 7.09. SUCCESSORS. All agreements of the Company in
this Agreement and the Warrant Certificates shall bind its successors. All
agreements of the Warrant Agent in this Agreement shall bind its successors.
SECTION 7.10. MULTIPLE ORIGINALS. The parties may sign any
number of copies of this Agreement. Each signed copy shall be an original, but
all of them together represent the same agreement. One signed copy is enough to
prove this Agreement.
SECTION 7.11. TABLE OF CONTENTS. The table of contents and
headings of the Articles and Sections of this Agreement have been inserted for
convenience of reference only, are not intended to be considered a part hereof
and shall not modify or restrict any of the terms or provisions hereof.
SECTION 7.12. SEVERABILITY. The provisions of this Agreement
are severable, and if any clause or provision shall be held invalid, illegal or
unenforceable in whole or in part in any jurisdiction, then such invalidity or
unenforceability shall affect in that jurisdiction only such clause or
provision, or part thereof, and shall not in any manner affect such clause or
provision in any other jurisdiction or any other clause or provision of this
Agreement in any jurisdiction.
33
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to
be duly executed as of the date first written above.
MILLENIUM SEACARRIERS, INC.,
by /s/ Vassilios M. Livanos
---------------------------
Name:Vassilios M. Livanos
Title: Chief Executive Officer
CHASEMELLON SHAREHOLDER
SERVICES, L.L.C.,
as Warrant Agent
by /s/ Jocelyn Montrose
-----------------------
Name: Jocelyn Montrose
Title: Relationship Manager
34
<PAGE>
EXHIBIT A
[FORM OF FACE OF WARRANT CERTIFICATE]
[Restricted Securities Legend]
THIS SECURITY (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT
FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF 1933 (THE
"SECURITIES ACT"), AND THIS SECURITY MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION
THEREFROM. EACH PURCHASER OF THIS SECURITY IS HEREBY NOTIFIED THAT THE SELLER OF
THIS SECURITY MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5
OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.
THE HOLDER OF THIS SECURITY AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) THIS
SECURITY AND ANY SECURITY INTO WHICH SUCH SECURITY IS EXCHANGEABLE MAY BE
OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (i) WITHIN THE UNITED
STATES TO A PERSON WHOM 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, (ii) OUTSIDE THE UNITED
STATES IN A TRANSACTION IN ACCORDANCE WITH RULE 904 UNDER THE SECURITIES ACT,
(iii) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT
PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE), (iv) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR (v) TO THE COMPANY, IN EACH
OF CASES (i) THROUGH (iv) IN ACCORDANCE WITH ANY 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 OF
THIS SECURITY FROM IT OF THE RESALE RESTRICTIONS REFERRED TO IN (A) ABOVE. THE
WARRANT EVIDENCED BY THIS CERTIFICATE AND THE SECURITIES TO BE ISSUED UPON ITS
EXERCISE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT AND THE WARRANT MAY
NOT BE EXERCISED BY OR ON BEHALF OF ANY U.S. PERSON UNLESS REGISTERED UNDER THE
SECURITIES ACT OR AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE.
[Global Securities Legend]
[UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITARY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"),
NEW YORK, NEW YORK, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF
CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
DTC (AND ANY PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC) ANY TRANSFER, PLEDGE OR OTHER
USE HEREOF FOR VALUE OR OTHERWISE
1
<PAGE>
BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE &
CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO
TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR
THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL
SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS
SET FORTH IN THE INDENTURE REFERRED TO ON THE REVERSE HEREOF.]1
THE WARRANTS EVIDENCED BY THIS CERTIFICATE WERE INITIALLY
ISSUED AS PART OF AN ISSUANCE OF UNITS, EACH OF WHICH CONSISTS OF $1,000
PRINCIPAL AMOUNT AT MATURITY 12% FIRST PRIORITY MORTGAGE NOTES DUE 2005 OF
MILLENIUM SEACARRIERS, INC. (THE "NOTES") AND ONE WARRANT. THE NOTES AND
WARRANTS WILL NOT TRADE SEPARATELY UNTIL THE EARLIEST OF (I) THE COMMENCEMENT OF
A REGISTERED EXCHANGE OFFER FOR THE NOTES, (II) THE EFFECTIVENESS OF A SHELF
REGISTRATION STATEMENT WITH RESPECT TO THE NOTES AND (III) SUCH EARLIER DATE
AFTER AUGUST 24, 1998, AS THE INITIAL PURCHASERS MAY DETERMINE.
- - - - --------
1. To be included only if the Warrant is in global form.
2
<PAGE>
No. [ ] Certificate for ____ Warrants
WARRANTS TO PURCHASE COMMON STOCK OF
MILLENIUM SEACARRIERS, INC.
THIS CERTIFIES THAT, [ ], or its registered assigns, is the
registered holder of the number of Warrants set forth above (the "Warrants").
Each Warrant entitles the holder thereof (the "Holder"), at its option and
subject to the provisions contained herein and in the Warrant Agreement referred
to below, to purchase from Millenium Seacarriers, Inc., a Cayman Islands company
("the Company"), ______ shares of Voting Common Stock, $.01 par value, of the
Company (the "Common Stock") at the per share exercise price of $.01 (the
"Exercise Price"). This Warrant Certificate shall terminate and become void as
of the close of business on July 15, 2005 (the "Expiration Date") or upon the
exercise hereof as to all the shares of Common Stock subject hereto. The number
of shares purchasable upon exercise of the Warrants and the Exercise Price per
share shall be subject to adjustment from time to time as set forth in the
Warrant Agreement.
This Warrant Certificate is issued under and in accordance
with a Warrant Agreement dated as of July 24, 1998 (the "Warrant Agreement"),
between the Company and ChaseMellon Shareholder Services, Inc. (the "Warrant
Agent", which term includes any successor Warrant Agent under the Warrant
Agreement), and is subject to the terms and provisions contained in the Warrant
Agreement, to all of which terms and provisions the Holder of this Warrant
Certificate consents by acceptance hereof. The Warrant Agreement is hereby
incorporated herein by reference and made a part hereof. Reference is hereby
made to the Warrant Agreement for a full statement of the respective rights,
limitations of rights, duties and obligations of the Company, the Warrant Agent
and the Holders of the Warrants. Capitalized terms used but not defined herein
shall have the meanings ascribed thereto in the Warrant Agreement. A copy of the
Warrant Agreement may be obtained for inspection by the Holder hereof upon
written request to the Warrant Agent at ChaseMellon Shareholder Services, Inc.,
450 West 33rd Street, 10th Floor, New York, New York 10001, Attention: Mr.
Jocelyn Montrose.
Subject to the terms of the Warrant Agreement, the Warrants
may be exercised in whole or in part (i) by presentation of this Warrant
Certificate with the Purchase Form attached hereto duly executed and with the
simultaneous payment of the Exercise Price in cash (subject to adjustment) to
the Warrant Agent for the account of the Company at the office of the Warrant
Agent or (ii) by Cashless Exercise. Payment of the Exercise Price shall be made
in cash or by certified or official bank check payable to the order of the
Company or by wire transfer of funds to an account designated by the Company for
such purpose. Payment by Cashless Exercise shall be made by the surrender of one
or more Warrant Certificates (and without payment of the Exercise Price in cash)
in exchange for such number of shares of Common Stock equal to the product of
(1) the number of shares of Common Stock for which such Warrant is exercisable
as of the Exercise Date (if the Exercise Price were being paid in cash) and (2)
a fraction, the numerator of which is the excess of the Current Market Value per
share of Common Stock on the date of exercise over the Exercise Price per share
as of the date of exercise and the denominator of which is the Current Market
Value per share of the Common Stock on the date of exercise.
As provided in the Warrant Agreement and subject to the terms
and conditions therein set forth, the Warrants shall be exercisable at any time
or from time to time on any Business Day on or after the earliest to occur of
(i) the first anniversary of the Issue Date, and (ii)(a) the occurrence of a
Change of Control, (b) 90 days after an Initial Public Offering upon
registration of Common Stock under the Exchange Act, (c) a consolidation, merger
or purchase of assets involving the Company or any of its subsidiaries
3
<PAGE>
that results in the Common Stock becoming subject to registration under the
Exchange Act,(d) an Extraordinary Cash Dividend, or (e) the voluntary or
involuntary dissolution, liquidation or winding up of the affairs of the
Company; PROVIDED, HOWEVER, that no Warrant shall be exercisable after July 15,
2005.
In the event of a Combination, the Holder hereof will be
entitled to receive upon exercise of the Warrants, such number of shares of
Capital Stock or other securities or other property as the Holder would have
received had the Holder exercised its Warrants immediately prior to such
Combination; PROVIDED, HOWEVER, that in the event that, in connection with such
Combination, consideration to holders of Common Stock in exchange for their
shares is payable solely in cash or in the event of the dissolution, liquidation
or winding-up of the Company, the Holder hereof will be entitled to receive such
cash distributions on an equal basis with the holders of Common Stock or other
securities issuable upon exercise of the Warrants, as if the Warrants had been
exercised immediately prior to such Combination, less the Exercise Price.
The Company may require payment of a sum sufficient to cover
any taxes, assessments or other governmental charges in connection with the
transfer or exchange of the Warrant Certificates pursuant to Section 2.04 of the
Warrant Agreement but not for any exchange or original issuance (not involving a
transfer) with respect to temporary Warrant Certificates, the exercise of the
Warrants or the Warrant Shares.
Upon any partial exercise of the Warrants, there shall be
countersigned and issued to the Holder hereof a new Warrant Certificate in
respect of the remaining Warrant Shares which shall not have been exercised.
This Warrant Certificate may be exchanged at the office of the Warrant Agent by
presenting this Warrant Certificate properly endorsed with a request to exchange
this Warrant Certificate for other Warrant Certificates evidencing an equal
number of Warrants. The Company is not required to issue fractional Warrant
Shares upon the exercise of Warrants, but the Company may pay an amount in cash
equal to the Current Market Value for one Warrant Share on the trading day
immediately preceding the date the Warrant is presented for exercise, multiplied
by the fraction of a Warrant Share that would be issuable on the exercise of any
Warrant.
All shares of Common Stock issuable by the Company upon the
exercise of the Warrants shall, upon such issue, be duly and validly issued and
fully paid and nonassessable.
Prior to the due presentation for registration of transfer of
any Warrant, the Holder in whose name the Warrant Certificate is registered may
be deemed and treated by the Company and the Warrant Agent as the absolute owner
of the Warrant evidenced by such Warrant Certificate for all purposes whatsoever
and neither the Company nor the Warrant Agent shall be affected by notice to the
contrary.
4
<PAGE>
The Warrants do not entitle any Holder hereof to any of the
rights of a shareholder of the Company.
This Warrant Certificate shall not be valid or obligatory for
any purpose until it shall have been countersigned by the Warrant Agent.
MILLENIUM SEACARRIERS, INC.,
by
----------------------------
Name:
Title:
Attest:
-----------------------------
Secretary
DATED:
Countersigned:
THE CHASE MANHATTAN BANK,
as Warrant Agent,
by
--------------------------
Authorized Signatory
5
<PAGE>
EXHIBIT B
FORM OF ELECTION TO PURCHASE WARRANT SHARES
(to be executed only upon exercise of Warrants)
MILLENIUM SEACARIERS, INC.
The undersigned hereby irrevocably elects to exercise
__________________ Warrants to acquire shares of Voting Common Stock, $.01 par
value, of Millenium Seacarriers, Inc., at an exercise price per share of Common
Stock of $.01, and otherwise on the terms and conditions specified in the within
Warrant Certificate and the Warrant Agreement therein referred to, surrenders
this Warrant Certificate and all right, title and interest therein to Millenium
Seacarriers, Inc. and directs that the shares of Common Stock deliverable upon
the exercise of such Warrants be registered or placed in the name and at the
address specified below and delivered thereto.
Date: ______________, _____
------------------- [2]
(Signature of Owner)
-------------------------------------
(Street Address)
-------------------------------------
(City) (State) (Zip Code)
Signature Guaranteed by:
-------------------------------------
- - - - --------
[2] The signature must correspond with the name as written upon the face of
the within Warrant Certificate in every particular, without alteration or
enlargement or any change whatever, and must be guaranteed by a national bank or
trust company or by a member firm of any national securities exchange.
1
<PAGE>
Securities and/or check to be issued to:
Please insert social security or identifying number:
Name:
Street Address:
City, State and Zip Code:
A new Warrant Certificate evidencing any unexercised Warrants evidenced by the
within Warrant Certificate is to be issued to:
Please insert social security or identifying number:
Name:
Street Address:
City, State and Zip Code:
2
<PAGE>
SCHEDULE OF EXCHANGES OF CERTIFICATED WARRANTS [3]
The following exchanges of a part of this Global Warrant Certificate for
definitive Warrants have been made:
Number of
Amount of increase Warrants in this
in Number of Global Warrant
Warrants in Certificate Signature of
this Global Warrant following authorized officer
Date of EXCHANGE CERTIFICATE SUCH INCREASE of WARRANT AGENT
4
- - - - --------
[3]. To be included only if the Warrant is in global form.
3
ADVISORY AGREEMENT
------------------
AGREEMENT made as of July 24, 1998 1998, between Millenium
Seacarriers, Inc., a Cayman Islands company ("MSI"), and Millenium Advisors,
L.L.C. (the "Advisor"), a New York limited liability company and member of
Millenium Management, Inc. ("MMI"), a Cayman Islands company and sole
shareholder of MSI.
WHEREAS, MMI is making an equity contribution to MSI in
conjunction with the consummation of MSI's $100 million mortgage notes offering
(collectively, the "Transaction");
WHEREAS, MSI and its subsidiaries (collectively, the
"Company"), upon consummation of the Transaction, will be (and certain
predecessor companies and affiliates of the Company currently are) engaged in
the international shipping business, through the ownership, operation and
management of a fleet of handysize and handymax drybulk carriers, and the
Advisor, through its principals and affiliates, is experienced in corporate
finance, financial and investment management and merchant and investment
banking; and
WHEREAS, the Company desires, upon consummation of the
Transaction, to retain the Advisor to provide corporate finance advice,
financial and investment management and merchant and investment banking
services, and executive compensation planning to the Company upon the terms and
conditions hereinafter set forth, and upon consummation of the Transaction, the
Advisor is willing to undertake such obligations
NOW, THEREFORE, in consideration of the mutual covenants
hereinafter set forth, the parties hereto hereby agree as follows:
1. APPOINTMENT.
The Company hereby agrees, upon consummation of the
Transaction, to engage the Advisor, and the Advisor hereby agrees, upon
consummation of the Transaction and under the terms and conditions set forth
herein, to provide certain services to the Company as described in Section 2
hereof.
2. DUTIES OF ADVISOR.
2.1 CONSULTING SERVICES. The Advisor shall from time to time
provide the Company with consulting services (collectively, the "Consulting
Services) related to the following:
(i) corporate finance, including
(a) advice on general matters involving
corporate finance;
1
<PAGE>
(b) plan for an appropriate and efficient
capital structure for the Company;
(c) work with management to analyze specific
investment opportunities and capital
structure alternatives;
(d) develop and upgrade the financial budgeting
and forecasting process; and
(ii) financial and investment management and merchant and
investment banking, including
(a) analysis of specific investment
opportunities, expected return scenarios,
and capital structure alternatives;
(b) identification and implementation of merger
and acquisition opportunities for the
Company, for which the Advisor may receive
additional consideration pursuant to Section
2.2(v) hereof;
(c) assistance with negotiation of loan
documentation and other financial contracts
(including amendments thereto) and lender
relationships on an ongoing basis;
(d) advice regarding acquisition strategies and
responses to external proposals;
(e) advice regarding additional capital
requirements; and
(iii) executive compensation planning, including
(a) design and development of incentive and
bonus programs for management team;
(b) assistance with senior executive hiring
decisions; and (c) design and development of
employee equity programs.
Without limiting any of the foregoing, representatives of the
Advisor may participate on the Boards of Directors and Board committees of, MSI
and certain of its affiliates.
2.2 EXCLUSIONS FROM "CONSULTING SERVICES". Notwithstanding
anything in the foregoing to the contrary, the following services are
specifically excluded from the definition of "Consulting Services," regardless
of whether any employee of the Advisor is qualified to perform such services:
INDEPENDENT ACCOUNTING SERVICES. Accounting services rendered to
the Company or the Advisor with prior notice and consultation with the Company's
management, by an independent accounting firm or accountant;
INDEPENDENT ACTUARIAL SERVICE. Actuarial services
rendered to the Company or the Advisor with prior notice and consultation with
the Company's management, by an independent actuarial firm or actuary;
2
<PAGE>
INDEPENDENT APPRAISAL SERVICES. Appraisal services
rendered to the Company or the Advisor with prior notice and consultation with
the Company's management, by an independent appraisal firm or appraiser;
(iv) LEGAL SERVICES. Legal services rendered to
the Company or the Advisor with prior notice and consultation with the Company's
management, by an independent law firm or attorney; and
(v) TRANSACTION SERVICES. To the extent the
Company determines that it desires the services of any third party financial
advisor, services in connection with any transaction (excluding the acquisition
or sale of vessels) in which the Company or any of its subsidiaries may be, or
may consider becoming, involved (including, without limitation, an initial
public offering of the Company), it is understood that the Advisor shall have
the right of first refusal concerning all opportunities to perform, for
additional compensation, any of such transaction-related services. Such right
must be exercised within 30 business days after receipt by the Advisor of a copy
of such offer from any third party financial advisor by Advisor's written
indication of its interest in such a transaction, in which case the Company
shall pay, or cause to be paid, compensation to the Advisor equal to the fee
payable pursuant to such offer (the "Transaction Fee"). The Transaction Fee
shall be payable in cash at the consummation of any transaction unless the
parties hereto shall mutually agree otherwise. The Advisor may delegate any of
its rights hereunder to any affiliated entity.
In addition to the foregoing, the parties acknowledge that the Advisor will not
be obligated to perform vessel management services for any of the Company's
vessels, which services will be provided by MMI pursuant to the terms of a
separate management agreement.
2.3 POWERS OF THE ADVISOR. So that it may properly perform its
duties hereunder, the Advisor shall, subject to Section 2.4 hereof, have the
power to represent the Company and do all things necessary and proper to carry
out the duties set forth in Section 2 hereof.
2.4 LIMITATIONS ON THE ADVISOR'S POWERS. Notwithstanding
anything herein to the contrary, the Advisor's responsibilities are consultative
only, and the Advisor shall have no power to take any action on behalf of the
Company, or to cause the Company to be responsible for taking any action.
2.5 ACTIVITIES OF THE ADVISOR AND OTHERS. The Advisor and it's
affiliates may engage, simultaneously with their advisory services on behalf of
the Company, in other businesses, and may render services similar to those
described in this Agreement for other individuals, companies, trusts or persons,
and shall not by reason of such engaging in other businesses or rendering of
services for others be deemed to be acting in conflict with the interests of the
Company. Notwithstanding the foregoing, the Advisor shall devote sufficient time
to providing the Consulting Services as the Advisor deems necessary. The
officers, directors, employees or members of the Advisor, in their individual
capacities, may be officers, directors, employees or members of the Company (or
any of its affiliates), but shall not be deemed thereby to have interests that
are in conflict with the interests of the Company. MSI acknowledges that the
Advisor will serve as management company to Millenium
3
<PAGE>
Investment, Inc., a Cayman Islands company and member of MMI ("MII"), pursuant
to which the Advisor may provide services similar to the Consulting Services to
MII.
3. COMPENSATION OF ADVISOR.
3.1 COMPENSATION STRUCTURE. During the term of this Agreement
and as compensation for services provided hereunder for the Company (but
explicitly excluding any services as may be performed by the Advisor pursuant to
Section 2.2(v) hereof), MSI agrees to pay the Advisor on a quarterly basis in
advance, payable on the first business day of each calendar quarter (other than
the first payment hereunder, which shall be made on the date of the closing of
the Transaction), (i) through the latest to occur between (y) the first full
eight quarters following consummation of the Transaction and (z) an initial
public offering of MMI, $300,000 per year (or $75,000 per quarter),
appropriately pro rated for partial periods, and (ii) thereafter, $150,000 per
year (or $37,500 per quarter), appropriately pro rated for partial periods.
3.2 EXPENSE REIMBURSEMENT. In addition to the foregoing
compensation payable by MSI, MSI shall reimburse the Advisor (or cause the
Advisor to be reimbursed), upon request, for any and all customary and
reasonable out-of-pocket expenses incurred by the Advisor in the performance of
its services pursuant to this Agreement, including any fees or disbursements to
its counsel; PROVIDED, HOWEVER, that such reimbursement obligation shall not
exceed $10,000 in any calendar year without the approval of MSI.
4. GENERAL CONDITIONS.
4.1 Any advice (written or oral) rendered by the Advisor
pursuant to this Agreement is solely for the benefit of the Company in the
context of the matters described in this Agreement and may not be disclosed
without the prior written consent of the Advisor.
4.2 The Advisor agrees to keep confidential all material
non-public information that the Advisor receives or develops concerning the
Company or its affiliates, their business, assets, properties, technologies,
condition and prospects and to disclose that information only with the prior
consent of the Company or as required by law or legal process.
4.3 The Advisor shall have no obligation to make any
independent appraisals of assets or liabilities or any independent verification
of the accuracy or completeness of any information provided it in the course of
this engagement and shall have no liability in regard thereto.
5. TERM AND TERMINATION OF AGREEMENT.
(a) This Agreement shall be for a term of seven
(7) years from the date hereof, and shall automatically renew from year to year
thereafter unless terminated as described in paragraph (b) of this Section 5.
4
<PAGE>
(b) If MII and its affiliates and members shall
own less than 8% (adjusted for share splits, share dividends share issuance or
similar transactions) of the outstanding common equity of MMI, this Agreement
shall be subject to renegotiation by the Board of Directors of MSI.
(c) Not withstanding the foregoing, it is
understood that the provisions relating to compensation, expenses,
indemnification and exculpation shall survive any such expiration or
termination.
6. LIABILITY; INDEMNITY.
The Advisor is not and never shall be liable to any creditor of the
Company. In addition to the compensation and expenses that MSI has agreed to pay
for the services to be performed pursuant to this Agreement, the Company agrees
(and MSI agrees): (i) to indemnify and hold the Advisor (which term for the
purposes of this Agreement includes its controlling persons, members, directors,
officers, employees, agents and representatives) harmless against and from all
losses, claims, damages or liabilities, joint or several (and all action,
claims, proceeds and investigations in respect thereof), to which the Advisor
may become subject in connection with its performance of the services described
in this Agreement; (ii) that the Advisor will not be culpable for and will have
no liability to the Company for or with respect to any and all losses, claims,
damages or liabilities, joint or several, of the Company incurred in connection
with the Advisor's performance of the services described in this Agreement; and
(iii) in each case to reimburse the Advisor for all reasonable legal and other
out-of-pocket expenses (including the cost of investigation and preparation) as
and when incurred by the Advisor arising out of or in connection with any
action, claim, proceeding or investigation (whether initiated or conducted by
the Company or any other party) in connection therewith, whether or not
resulting in any liability (and whether or not the Advisor is defendant in, or
target of, any such action, claim, proceeding or investigation); PROVIDED,
HOWEVER, that the Company shall not be liable to the Advisor pursuant to clause
(i) and (iii) above and the Company's exculpation of the Advisor pursuant to
clause (ii) above shall not apply in any such case to the extent that any such
loss, claim, damage or liability is found in a final judgement by a court of
competent jurisdiction to have resulted from the Advisor's gross negligence, bad
faith, or willful misconduct or any other indemnified person hereunder or a
material breach of this Agreement, and amounts paid and reimbursement of
expenses under (iii) above shall be refunded. If for any reason the foregoing
indemnification (including reimbursement pursuant to clause (iii) above) or the
exculpation is unavailable to the Advisor or insufficient to hold it harmless
(other than by reason of the proviso to the preceding sentence), then the
Company shall contribute to the amount paid or payable by the Advisor as a
result of such loss, claim, damage or liability in such proportion as is
appropriate to reflect not only the relative benefits received by the Company on
the one hand and the Advisor on the other hand but also the relative fault of
the Company and the Advisor as well as any relevant equitable considerations,
PROVIDED that, in no event, will the Advisor's aggregate contribution hereunder
exceed the amount of compensation actually received by the Advisor pursuant to
this Agreement. The indemnity, exculpation, reimbursement and contribution
obligations of the Company under this paragraph shall be in addition to any
liability which the Company may otherwise have, shall survive any termination of
this Agreement, and shall be binding upon and extend to the benefit of any
successors, assigns, heirs and personal representatives of the Company and the
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Advisor.
7. ASSIGNMENT.
This Agreement shall be binding upon and inure to the benefit
of the parties' successors and permitted assigns. However, neither this
Agreement nor any of the rights of the parties hereunder may be transferred or
assigned by either party hereto, except that (a) if the Company shall merge or
consolidate with or into, or sell or otherwise transfer substantially all its
assets to, another corporation that assumes the Company's obligations under this
Agreement, the Company may assign its rights hereunder to that corporation, and
(b) the Advisor may assign its rights and obligations hereunder to any
affiliated person or entity. Any attempted transfer or assignment in violation
of this Section 7 shall be void.
8. RELATIONSHIP OF THE PARTIES.
Nothing contained in this Agreement is intended or is to be
construed to constitute the Advisor and the Company as partners or joint
venturers or either party as an employee of the other party. Neither party
hereto shall have any express or implied right or authority to assume or create
any obligations on behalf of or in the name of the other party or to bind the
other party to any contract, agreement or undertaking with any third party. The
services to be performed by the Advisor hereunder are consultation services
only. The Company shall at all times be free to accept or reject the advice
rendered by the Advisor hereunder in its sole discretion.
9. MISCELLANEOUS.
9.1 ARMS-LENGTH AGREEMENT. The Company and the Advisor each
represents, warrants and agrees to the other that this Agreement constitutes an
arms-length agreement between the Company and the Advisor. The Company
understands the method of compensation provided for herein.
9.2 AMENDMENT AND WAIVERS. This Agreement may be amended or
waived only by a writing signed by both parties, and then such consent shall be
effective only in the specific instance and for the specific purpose for which
given.
9.3 NOTICES. All notices and other communications provided for
herein shall be dated and in writing and shall be deemed to have been duly given
when delivered, if delivered personally or sent by telecopy, or when mailed, if
sent by registered or certified mail, return receipt requested, postage prepaid.
(i) if to MSI or the Company, to MSI at:
c/o Maple & Calder
P.O. Box 309
George Town, Grand Cayman
Cayman Islands, British West Indies
Attention: Gareth Griffiths
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(ii) if to the Advisor, to it at:
450 Park Avenue, Suite 2103
New York, New York 10022
Attention: Connor O'Brien
or at such other address as any party shall have specified by notice in writing
to the others.
9.4 EFFECTIVENESS OF AGREEMENT; ENTIRE AGREEMENT. The terms of
this Agreement shall become effective upon the consummation of the Transaction.
This Agreement contains the entire agreement between the parties hereto and
supersedes all prior agreements and understandings, oral and written, between
the parties hereto with respect to the subject matter hereof.
9.5 SECTION HEADINGS. The section headings contained herein
are included for convenience of reference only and shall not constitute a part
of this Agreement for any other purpose.
9.6 COUNTERPARTS. This Agreement may be executed in
counterparts, each of which shall be deemed to be an original and all of which
together shall be deemed to be one and the same instrument.
9.7 APPLICABLE LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York applicable to
contracts made and to be performed entirely within such State, regardless of the
law that might be applied under principles of conflicts of law.
9.8 SEVERABILITY. Any section, clause, sentence, provision,
subparagraph or paragraph of this Agreement held by a court of competent
jurisdiction to be invalid, illegal or ineffective shall not impair, invalidate
or nullify the remainder of this Agreement, but the effect thereof shall be
confined to the section, clause, sentence, provision, subparagraph, or paragraph
so held to be invalid, illegal or ineffective.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
MILLENIUM SEACARRIERS, INC.
By: /s/ Vassilios M. Livanos
----------------------------------
Name: Vassilios M. Livanos
Title: President
MILLENIUM ADVISORS, L.L.C.
By: /s/ Connor O'Brien
----------------------------------
Name: Connor O'Brien
Title: Managing Member
8
GUARANTY AGREEMENT
GUARANTY AGREEMENT, dated July 20, 1998, by CONIFER SHIPPING COMPANY
LIMITED ("Conifer"), TOPSCALE SHIPPING COMPANY LIMITED ("Topscale"), each a
company organized and existing under the laws of the Republic of Cyprus, IVY
NAVIGATION, INC. ("Ivy"), RAPID OCEAN CARRIERS INC. ("Rapid"), OAKMONT SHIPPING
AND TRADING, INC. ("Oakmont"), each a corporation organized and existing under
the laws of the Republic of Liberia, MILLENIUM ALEKSANDER, INC. ("Aleksander"),
MILLENIUM AMETHYST, INC. ("Amethyst"), MILLENIUM ELMAR, INC. ("Elmar"),
MILLENIUM MAJESTIC, INC. ("Majestic"), MILLENIUM YAMA, INC. ("Yama"), MILLENIUM
II, INC. ("Millenium II"), MILLENIUM III, INC. ("Millenium III"), MILLENIUM IV,
INC. ("Millenium IV"), MILLENIUM V, INC. ("Millenium V"), MILLENIUM VI, INC.
("Millenium VI") and MILLENIUM VII, INC. ("Millenium VII"), each a company
organized and existing under the laws of the Cayman islands (Conifer, Topscale,
Ivy, Rapid, Oakmont, Millenium Aleksander, Millenium Amethyst, Millenium Elmar,
Millenium Majestic, Millenium Yama, Millenium II, Millenium III, Millenium IV,
Millenium V, Millenium VI and Millenium VII being herein sometimes singly called
a "Guarantor" and collectively the "Guarantors"), to THE BANK OF NEW YORK (the
"Bank"), a trust company organized and existing under the laws of the State of
New York.
WHEREAS, pursuant to a Credit Agreement (the "Credit Agreement"), dated
July 20, 1998, between Millenium Seacarriers, Inc. (the "Borrower"), a Cayman
Islands company and the record and beneficial owner of all of the issued and
outstanding capital stock of the Guarantor, and the Bank, the Bank, subject to
the terms and conditions thereof, has established in favor of the Borrower a
revolving line of credit not to exceed at any one time outstanding U.S.
$7,000,000, all borrowings
<PAGE>
under said line of credit to be evidenced by a Secured Promissory Note (the
"Note"), dated July 1998, of the Borrower to the order of the Bank.
NOW, THEREFORE, in consideration of the establishment of the
aforesaid line of credit and of other valuable considerations, the receipt and
sufficiency of which are hereby acknowledged, the Guarantors hereby jointly and
severally agree as follows:
1. The Guarantors hereby jointly and severally guarantee to
the Bank the punctual payment and performance when due of all of the
obligations, now due or hereafter arising, of the Borrower to the Bank under the
Credit Agreement and under the Note (all of such obligations being hereinafter
collectively called the "Guaranteed Obligations").
2. The obligations of Conifer under this Agreement will be
simultaneously secured by, among other things, a Statutory First Mortgage and
Deed of Covenants collateral thereto (the "CLIPPER ATLANTIC Mortgage") from
Conifer to the Collateral Agent (as such term is defined in the Credit
Agreement) covering the Cypriot registered vessel CLIPPER ATLANTIC (the "CLIPPER
ATLANTIC"). Reference is made to the CLIPPER ATLANTIC Mortgage for a description
of the nature and extent of the security provided thereby and of the rights in
respect of such security of the Collateral Agent and Conifer. The obligations of
Topscale under this Agreement will be simultaneously secured by, among other
things, a Statutory First Mortgage and Deed of Covenants collateral thereto (the
"CLIPPER PACIFIC Mortgage") from Topscale to the Collateral Agent covering the
Cypriot registered vessel CLIPPER PACIFIC (the "CLIPPER PACIFIC"). Reference is
made to the CLIPPER PACIFIC Mortgage for a description of the nature and extent
of the security provided thereby and of the rights in respect of such security
of the Collateral Agent and Topscale. The obligations of Ivy under this
Agreement will be simultaneously secured by, among other things, a First
Preferred Mortgage (the "CLIPPER GOLDEN HIND Mortgage") from
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Ivy to the Collateral Agent covering the Liberian registered vessel CLIPPER
GOLDEN HIND (the "CLIPPER GOLDEN HIND"). Reference is made to the CLIPPER GOLDEN
HIND Mortgage for a description of the nature and extent of the security
provided thereby and of the rights in respect of such security of the Collateral
Agent and Ivy. The obligations of Rapid under this Agreement will be
simultaneously secured by, among other things, a First Naval Mortgage (the
"CLIPPER HARMONY Mortgage") from Rapid to the Collateral Agent covering the
Panamanian registered vessel CLIPPER HARMONY (the "CLIPPER HARMONY"). Reference
is made to the CLIPPER HARMONY Mortgage for a description of the nature and
extent of the security provided thereby and of the rights in respect of such
security of the Collateral Agent and Rapid. The obligations of Oakmont under
this Agreement will be simultaneously secured by, among other things, a First
Naval Mortgage (the "MONICA MARISSA Mortgage") from Oakmont to the Collateral
Agent covering the Panamanian registered vessel MONICA MARISSA (the "MONICA
MARISSA") (the CLIPPER ATLANTIC, the CLIPPER PACIFIC, the CLIPPER GOLDEN MIND,
the CLIPPER HARMONY and the MONICA MARISSA being herein sometimes collectively
called the "Existing Vessels"). Reference is made to the MONICA MARISSA Mortgage
for a description of the nature and extent of the security provided thereby and
of the rights in respect of such security of the Collateral Agent and Oakmont.
3. The Guarantors hereby jointly and severally represent,
covenant and warrant as follows.:
(a) Each of the Guarantors is a corporation duly organized,
validly existing and in good standing under the laws of its jurisdiction of
incorporation without limitation on the duration of its existence and each has
the corporate power and authority to own or lease its properties and to carry on
its business as now being conducted and to execute, deliver and perform its
obligations
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under this Agreement and under each of the Collateral Documents (as such term is
defined in the Credit Agreement) to which it is or is to be a party; and this
Agreement and each of such Collateral Documents when executed and delivered
shall constitute the legal, valid and binding obligation of Conifer, Topscale,
Ivy, Rapid, Oakmont, Millenium Aleksander, Millenium Amethyst, Millenium Elmar,
Millenium Majestic, Millenium Yama, Millenium II, Millenium III, Millenium IV,
Millenium V, Millenium VI and/or Millenium VII, as the case may be, enforceable
in accordance with their respective terms.
(b) Each of the Existing Vessels is in good condition, working
order and repair and is classed by an Approved Classification Society (as such
term is defined in the Credit Agreement) with respect to hull and machinery in
the highest classification and rating for vessels of the same age and type.
(c) There are no actions, suits or proceedings (in arbitration
or otherwise) pending or, to the knowledge of the Guarantors, threatened against
or affecting any of the Guarantors, or their respective properties, at law, in
equity or in admiralty, before any court or before or by any federal, state,
municipal or other governmental department, commission, board, bureau, agency or
other instrumentality, domestic or foreign, or before any privately constituted
panel, which may result in (i) any material adverse change in the business,
operations, properties or assets or in the condition, financial or otherwise, of
any of the Guarantors or (ii) any liability which could materially impair the
ability of any of the Guarantors to satisfy their respective obligations; and
none of the Guarantors is in default with respect to any order, writ, decision,
injunction, decree or demand of any court or federal, state, municipal or other
governmental department, commission, board, bureau, agency or other
instrumentality, domestic or foreign, or of any privately constituted panel.
4
<PAGE>
(d) The consummation of the transactions herein contemplated
and the fulfillment of the terms hereof and the compliance by each of the
Guarantors with all of the terms and provisions of this Agreement and of the
other documents contemplated herein and the execution and delivery hereof and
thereof will not violate or conflict with any provision of law, statute, rule,
regulation, treaty or convention or any order, writ, injunction, license,
permit, ruling, regulation, decree or judgment of any court or governmental or
regulatory body, agency, commission, tribunal or other authority of the Republic
of Cyprus, the Republic of Liberia, the Republic of Panama, the Cayman Islands,
the United States of America or the State of New York, (ii) result in, or
require, the creation or imposition of any mortgage, lien, pledge, assignment,
charge, security interest or other encumbrance on any of the properties or
assets of any of the Guarantors, now owned or hereafter acquired, except in
favor of the Collateral Agent or the Trustee (as such term is defined in the
Credit Agreement), (iii) violate or conflict with the Memorandum or Articles of
Association or Articles of Incorporation or By-Laws, as the case may be, of any
thereof or (iv) violate or conflict with, or constitute, with the giving of
notice or lapse of time, or both, a default under, the terms, conditions or
provisions of any agreement, judgment, injunction, order, decree or other
instrument under which any of the Guarantors is a party or by which any thereof
is bound or to which any of the properties, assets or businesses of any thereof
is subject.
(e) No consent, license, approval or authorization of any
nature of, or other formal action by, any governmental authority, bureau or
agency is or will be required in connection with the execution, delivery,
validity or performance of this Agreement or any of the documents referred to
herein or the carrying out of the transactions contemplated hereby or thereby
except as shall have been duly and timely obtained.
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<PAGE>
(f) None of the Guarantors is in violation of any material
provision of applicable law or of any material decree or order of any court or
of any government or governmental agency or official, domestic or foreign, or of
any material provision of any indenture, agreement or other instrument to which
any thereof is a party or by which any thereof or any of their respective
properties may be bound or affected.
(g) None of the Guarantors is (i) a national of any foreign
country designated in Presidential Executive Order No. 9193, No. 12543, No.
12722, No. 12775, No. 12779 or No. 12959 of the United States of America, as
amended, respectively, within the meaning of any of said Executive orders, as
amended, or any regulations thereunder, (ii) presently in violation of any of
the provisions of any of said Executive Orders, (iii) a national of any
designated foreign country within the meaning of the Foreign Assets Control
Regulations of the United States of America (Title 31, Code of Federal
Regulations, Chapter V, Part 500, as amended) or the Cuban Assets Control
Regulations of the United States of America (Title 31, Code of Federal
Regulations, Chapter V, Part 515, as amended) or (iv) presently in violation of
any of the provisions of said Foreign Assets Control Regulations, as amended,
any of the provisions of said Cuban Assets Control Regulations, as amended, any
of the provisions of the Libyan Sanctions Regulations of the United States of
America (Title 31, Code of Federal Regulations, Chapter V, Part 550, as
amended), any of the provisions of the Iranian Transactions Regulations of the
United States of America (Title 31, Code of Federal Regulations, Chapter V, Part
575, as amended), any of the provisions of the Iraqi Sanctions Regulations of
the United States of America (Title 31, Code of Federal Regulations, Chapter V,
Part 575, as amended) or any of the provisions of the Transactions Control
Regulations of the United States of America (Title 31, Code of Federal
Regulations, Chapter V, Part 505, as amended).
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<PAGE>
(h) No default exists and no event has occurred which, with
the giving of notice or lapse of time, or both, would constitute a material
default under any material instrument or agreement to which any of the
Guarantors is a party or by the terms of which any of the Guarantors or any of
their respective properties may be bound.
(i) The execution and delivery of this Agreement and all
documents contemplated herein and the carrying out of the transactions
contemplated hereby and thereby have been duly authorized by all proper
corporate action by the Guarantors.
(j) None of the assets of any of the Guarantors is subject to
any mortgage, lien, pledge, charge or other encumbrance, except in favor of the
Collateral Agent or the Trustee or as otherwise contemplated herein or in the
documents referred to herein.
(k) Each of the Guarantors has filed all tax returns required
to be filed thereby and has paid all taxes payable thereby which have become
due, other than those not yet delinquent or the nonpayment of which would not
have a material adverse effect thereon and except for those taxes being
contested in good faith and by appropriate proceedings or other acts and for
which adequate reserves have been set aside on the books thereof.
(l) There is no tax, duty, fee, assessment or other
governmental charge, or any deduction or withholding, imposed by the Republic of
Cyprus, the Republic of Liberia, the Republic of Panama, the Cayman islands or
any political subdivision or taxing authority thereof or therein (i) on or by
virtue of the execution, delivery, acquisition, registration or enforcement of
this Agreement or any of the Collateral Documents to which the Guarantors, or
any of them, is or is to be a party or (ii) on any payment to be made by any of
the Guarantors pursuant to this Agreement or any of the Collateral Documents to
which the Guarantors, or any of them, are or are to be a party.
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<PAGE>
(m) To ensure the enforceability or admissibility in evidence
of this Agreement or any of the Collateral Documents to which the Guarantors, or
any of them, is or is to be a party, it is not necessary that this Agreement or
any of such Collateral Documents be filed or recorded with any court or other
authority in the Republic of Cyprus, the Republic of Liberia, the Republic of
Panama or the Cayman Islands, except for the recording of each Mortgage (as such
term is defined in the Credit Agreement) to which a Guarantor is or is to be a
party in the jurisdiction where the Vessel (as such term is defined in the
Credit Agreement) covered by such mortgage is registered.
(n) All of the issued and outstanding shares of the capital
stock of each of the Guarantors have been duly authorized, are validly issued,
are fully paid and non assessable and are beneficially owned by the Borrower.
(o) None of the Guarantors now maintains, nor in the future
will maintain, any office in the United States of America or now keeps, or will
in the future keep, any financial records in the United States of America
outside the County of New York, State of New York and none of the Guarantors
have any security agreements or any financing statements outstanding under the
Uniform Commercial Code of any state of the United States of America with
respect to its assets.
(p) Each of the Guarantors (i) is now and will continue to be,
to the extent required, in full compliance with all applicable Environmental
Laws (as such term is defined in the Credit Agreement), (ii) now has and will
continue to have, to the extent required, all necessary Environmental Approvals
(as such term is defined in the Credit Agreement) required under applicable
Environmental Laws to operate its business as now or then being conducted and is
now and will continue to be, to the extent required, in full compliance with all
such Environmental Approvals and (iii) has not received any notice of any claim,
action, cause of action, investigation or demand by any person, entity,
enterprise or government, or any political subdivision,
8
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intergovernmental body or agency, department or instrumentality thereof,
alleging potential liability for, or a requirement to incur, investigatory
costs, cleanup costs, response and/or remedial costs (whether incurred by a
governmental entity or otherwise in connection with), natural resources damages,
property damages, personal injuries, attorneys' fees and expenses, or fines or
penalties, in each case arising out of, based on or resulting from any
Environmental Claim (as such term is defined in the Credit Agreement) (other
than Environmental Claims that have been fully and finally adjudicated or
otherwise determined and all fines, penalties and other costs, if any, payable
by the Guarantors in respect thereof have been paid in full) and there are no
circumstances that may prevent or interfere with such full compliance in the
future.
(q) There is no Environmental Claim pending or, to the
knowledge of the Guarantors, threatened against any of the Guarantors.
(r) There are no past or present actions, activities,
circumstances, conditions, events or incidents, including, without limitation,
the release, emission, discharge or disposal of any Material of Environmental
Concern (as such term is defined in the Credit Agreement), that could form the
basis of any Environmental Claim against any of the Guarantors.
4. From the date hereof and until payment in full of the
Guaranteed obligations, each of the Guarantors will:
(a) At all times maintain its corporate existence and right to
carry on business and do or cause to be done all things necessary to preserve
the Collateral Property (as such term is defined in the Credit Agreement) and
keep in full force and effect this Agreement and each of the Collateral
Documents to which it is a party.
9
<PAGE>
(b) Observe and perform all the agreements and conditions on
its part to be observed and performed under this Agreement and under each of the
Collateral Documents to which it is a party.
(c) Keep proper books of record and account into which full
and correct entries shall be made, in accordance with GAAP (as such term is
defined in the Credit Agreement) consistently applied throughout the period
during which this Guaranty is outstanding, and will furnish, or cause to be
furnished, to the Bank, at the sole expense of the Guarantors:
(i) promptly upon the occurrence thereof, notice from a
principal executive officer thereof of the occurrence of any
condition or event which constitutes an Event of Default (as
such term is defined in the Credit Agreement) or which, with
the giving of notice or lapse of time, or both, would
constitute an Event of Default, specifying in such notice the
nature and period of such condition or event and what action
it is taking or proposes to take with respect thereto;
(ii) promptly upon the institution thereof, notice of any
material litigation against, or investigation by any public
regulatory body or commission involving, any of the Guarantors
and, promptly upon request of the Bank, an opinion of counsel
as to the nature thereof and the extent of the potential
liability, if any, of the Guarantors in relation to the
subject matter thereof; and
(iii) with reasonable promptness, such other information
respecting its business, assets, financial condition and
results of its operations as the Bank may from time to time
reasonably request, including, without limitation, budgets,
Vessel employment information, lists of operating expenses and
statements as to its total indebtedness.
10
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(d) Allow any representative or representatives designated by
the Bank, subject to applicable laws and regulations, to visit and inspect any
of the properties thereof and, on request, to examine the books of account,
records, reports and other papers thereof (and to make copies thereof and to
take extracts therefrom) and to discuss the affairs, finances and accounts
thereof with its officers and executive employees all at such reasonable times
and as often as the Bank reasonably requests.
(e) Pay and discharge, or cause to be paid and discharged, all
lawful taxes, assessments and governmental charges or levies imposed upon it or
upon its income or property, prior to the date upon which penalties attach
thereto; provided, however, that it shall not be required to pay and discharge,
or cause to be paid and discharged, any such tax, assessment, charge or levy so
long as the legality thereof shall be contested in good faith and by appropriate
proceedings or other acts and it shall set aside on its books adequate reserves
with respect thereto, and so long as such deferment in payment shall not subject
any Vessel owned or to be owned thereby to forfeiture or loss.
(f) Within 10 days after the commencement thereof, notify the
Bank in writing of any actions, suits or proceedings (in arbitration or
otherwise) commenced against it at law, in equity, in admiralty or before any
governmental department, commission, board, bureau, agency or other
instrumentality, domestic or foreign, which involves the possibility of any
judgment or liability, not fully covered by insurance as to which coverage has
been acknowledged by the appropriate insurer, in excess of $200,000 or which may
result in any material adverse change in its business, operations, properties or
assets or in its condition, financial or otherwise.
(g) Within 5 Business Days (as such term is defined in the
Credit Agreement) after the occurrence of any of the following conditions,
provide the Bank with a certificate of an
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authorized officer specifying in detail the nature of such condition and its
proposed response thereto: (i) the receipt by any of the Guarantors of any
Environmental Claim, if such Environmental Claim could reasonably be expected to
have a material adverse effect upon the business, operations, properties, assets
or condition, financial or otherwise, of any thereof or upon the ability of any
thereof to perform, or of the Collateral Agent or the Bank to enforce, the
obligations of any thereof hereunder or under any of the Collateral Documents to
which any thereof is a party, (ii) any of the Guarantors shall obtain actual
knowledge that there exists any Environmental Claim pending, threatened or
reasonably likely against it, which individually or in the aggregate could
reasonably be expected to have a material adverse effect upon the business,
operations, properties, assets or condition, financial or otherwise, of any
thereof or upon the ability of any thereof to perform, or of the Collateral
Agent or the Bank to enforce, the obligations of any thereof hereunder or under
any of the Collateral Documents to which any thereof is a party, or (iii) any
release, emission, discharge or disposal of any Material of Environmental
Concern that could form the basis of any Environmental Claim against any of the
Guarantors relating to any of the Collateral Property owned thereby, if such
Environmental Claim could reasonably be expected to have a material adverse
effect upon the business, operations, properties, assets or condition, financial
or otherwise, of any thereof or upon the ability of any thereof to perform, or
of the Collateral Agent or the Bank to enforce, the obligations of any thereof
hereunder or under any of the Collateral Documents to which any thereof is a
party. Upon the written request of the Bank, the Guarantors will submit to the
Bank at reasonable intervals a report providing an update of the status of any
issue or claim identified in any notice or certificate required pursuant to this
subsection.
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(h) Cause any Vessel owned or to be owned thereby to be
managed and operated by Millenium Management, Inc., a company organized and
existing under the laws of the Cayman Islands or by another entity satisfactory
to the Bank.
(i) If requested by the Bank, furnish to the Bank a
confirmation of class certificate covering any Vessel owned or to be owned
thereby.
(j) Maintain and keep all properties used or useful in the
conduct of its business in good condition, repair and working order and supplied
with all necessary equipment and will make, or cause to be made, all necessary
repairs, renewals and replacements thereof so that the business carried on in
connection therewith and every portion thereof may be properly and
advantageously conducted at all times.
(k) Pay, or cause to be paid, the principal of, and premium,
if any, and interest on, any indebtedness thereof for borrowed monies at the
times and in the manner specified in the agreements regarding such indebtedness.
(l) make all payments and comply with all other terms,
conditions and provisions on its part to be performed under, and will not allow
any default to exist or any right of termination to accrue under, any agreement
to which it shall be a party or by which it is bound.
(m) Maintain with the Bank the operating account of the vessel
owned or to be owned thereby.
5. From the date hereof and until payment in full of the
Guaranteed Obligations, none of the Guarantors will, without the prior written
consent of the Bank:
(a) Create, assume, incur or become or be or remain liable,
directly or indirectly, in respect of any indebtedness except:
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(i) indebtedness to the Bank or incurred under or in
connection with this Agreement or any of the Collateral
Documents;
(ii) current indebtedness or obligations (other than
indebtedness for borrowed monies) incurred in the normal
course of its business so long as the relevant creditors have
evidenced no intention to enforce any of their rights against
such Guarantor if such enforcement could have a material
adverse effect on the business, operations or financial
condition of such Guarantor; and
(iii) any other indebtedness to the extent permitted by the
Indenture (as such term is defined in the Credit Agreement).
(b) Directly or indirectly assume, guaranty, endorse or become
liable on the obligation of any person, firm or corporation, or suffer to exist
any such assumption, guaranty, endorsement or liability, except in favor of the
Bank or as otherwise permitted by the Indenture.
(c) Create, assume or incur, or suffer to be created, assumed
or incurred or to exist, any mortgage, lien, pledge, charge or other security
interest or encumbrance of any kind in respect of any of its properties, whether
heretofore or hereafter acquired, except for (i) Permitted Liens (as such term
is defined in the Credit Agreement) and (ii) mortgages, liens, pledges, charges
or other security interests or encumbrances in favor of the Bank or expressly
provided for herein, in the Indenture or in the documents referred to herein.
(d) Consolidate with or merge into any other corporation or
sell, lease or transfer or otherwise dispose of all or any substantial portion
of its assets, except as otherwise permitted by the Indenture.
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(e) Make or suffer to exist any loan, advance or extension of
credit to any person, firm or corporation, by loan, guaranty or otherwise,
except for advances in the normal course of its business or as otherwise
permitted under the Indenture.
(f) Make or suffer to exist any investment in any person, firm
or corporation, whether by acquisition of stock or indebtedness, except as
permitted by the Indenture.
(g) Engage in any business other than the Shipping Business
(as such term is defined in the Credit Agreement).
(h) Enter into any Sale/Leaseback Transaction (as such term is
defined in the Credit Agreement), except to the extent permitted by the
Indenture.
6. It is hereby agreed that if an Event of Default shall have
occurred and be continuing, the Bank shall have the right to demand payment and
performance by the Guarantors of the Guaranteed Obligations, whether or not the
Guaranteed Obligations by their terms shall have become due and payable.
7. The obligations of the Guarantors under this Agreement
shall be irrevocable, absolute, continuing and unconditional and shall remain in
full force and effect without regard to, and shall not be released, discharged
or in any way affected by: (a) any amendment or modification of or supplement to
the Credit Agreement, the Note or any collateral at any time held by or on
behalf of the Bank as security in connection herewith or in connection with any
of the Guaranteed Obligations, or any assignment or transfer of any thereof; (b)
any exercise or non-exercise of any right, remedy, power or privilege under or
in respect of this Agreement, the Credit Agreement, the Note or any collateral
at any time held by or on behalf of the Bank as security in connection herewith
or in connection with any of the Guaranteed Obligations, or any waiver, consent,
extension, indulgence or other action or inaction in respect of any thereof; (c)
any failure by the Bank and/or
15
<PAGE>
the Collateral Agent to perfect any security interest in any collateral at any
time held by or on behalf of the Bank as security in connection herewith or in
connection with any of the Guaranteed Obligations; or (d) any bankruptcy,
insolvency, reorganization, arrangement, readjustment, composition, liquidation
or similar proceedings in respect of any of the Guarantors or the Borrower or
any party to any collateral held at any time by or on behalf of the Bank as
security in connection herewith or in connection with any of the Guaranteed
Obligations; all whether or not the Guarantors or the Borrower shall have notice
or knowledge of any of the foregoing.
8. The Bank may enforce the Guarantors' obligations hereunder
without in any way first pursuing or exhausting any other rights or remedies
which the Bank and/or the Collateral Agent may have against the Borrower or
against any other person, firm or corporation, or against any security the Bank
and/or the Collateral Agent may hold.
9. The Guarantors hereby jointly and severally waive (a)
notice of acceptance of this Agreement and of any action by the Bank in reliance
hereon; (b) presentment, demand of payment, notice of dishonor or nonpayment,
protest and notice of protest with respect to any of the Guaranteed Obligations;
and (c) giving any notice of default or other notice to, or making any demand
on, any party liable in any manner for the payment of any of the Guaranteed
Obligations.
10. The Bank may, at any time and from time to time, without
the consent of or notice to the Guarantors, and without in any manner impairing
or releasing the obligations of the Guarantors hereunder, (a) realize upon in
any manner and in any order any property by whomsoever at any time pledged,
mortgaged or assigned to secure or howsoever securing this Agreement or any of
the Guaranteed Obligations; (b) apply any sum by whomsoever paid or howsoever
realized to the payment of any of the Guaranteed Obligations; (c) extend the
date of maturity of, or otherwise modify the terms and provisions of, any of the
Guaranteed Obligations; (d) exchange, release or
16
<PAGE>
modify any of the collateral security from time to time held by or on behalf of
the Bank as security in connection herewith or in connection with any of the
Guaranteed Obligations; and (e) release the Borrower, any Guarantor or any other
guarantor of the Guaranteed Obligations from any of its obligations to the Bank
under the Credit Agreement, under the Note or under any of the Collateral
Documents.
11. The Guarantors agree that notwithstanding the payment of
any or all of the Guaranteed Obligations, the liability of the Guarantors
hereunder shall continue and remain in full force and effect in the event that
all or any part of any such payments are recovered from the Bank as a preference
or fraudulent transfer under any bankruptcy or other applicable law or
otherwise.
12. The Guarantors shall have no right of subrogation with
respect to any rights the Bank and/or the Collateral Agent may have against the
Borrower or against any security which may be held by or on behalf of the Bank
unless and until all of the Guaranteed Obligations have been paid in full.
13. This Agreement shall be valid and binding upon the
Guarantors (a) regardless of any invalidity, irregularity or unenforceability of
the Credit Agreement, the Note or any collateral at any time held by or on
behalf of the Bank as security in connection herewith or in connection with any
of the Guaranteed Obligations, and (b) irrespective of any defenses or
counterclaims that the Borrower may assert with respect to the Guaranteed
Obligations, including, without limitation, failure of consideration, breach of
warranty, fraud, statute of frauds, statute of limitations, lender liability,
accord and satisfaction or usury.
14. The Guarantors jointly and severally further agree to pay
all expenses incurred by or on behalf of the Bank and/or the Collateral Agent in
connection with the enforcement of this Agreement, together with interest
thereon for each day at a rate per annum equal to the rate quoted
17
<PAGE>
by the Bank as its offered rate in the overnight or, where applicable, weekend
London interbank market from time to time for United States dollar deposits of
an amount equivalent to the sums due and owing to the Bank under this Agreement,
plus 2%.
15. All notices, requests and other communications pursuant to
this Agreement shall be in writing, either by letter (if mailed, such letter to
be certified or registered) or telecopy, addressed as follows:
If to the Guarantors:
c/o Maples & Calder
P.O. Box 309
South Church Street
Georgetown, Grand Cayman
Cayman Islands, British West Indies
Telecopy No. (345) 949-8080
If to the Bank:
Marine Transportation Division
One Wall Street
New York, New York 10286
Telecopy No. 212-635-7512
or to such other address as the party to receive any such notice, request or
other communication may have designated by written notice to the other party.
All periods of notice shall be measured from the date of
delivery thereof, if delivered by hand or by a courier service, or from the date
of receipt thereof, if sent by certified or registered mail or by telecopy.
16. The Guarantors jointly and severally agree that any legal
action or proceeding brought by or on behalf of the Bank against any of the
Guarantors hereunder may be brought in the courts of the State of New York or of
the United States of America for the Southern District of
18
<PAGE>
New York, as the plaintiff in such action or proceeding may elect, and by
execution and delivery of this Agreement each of the Guarantors submits to each
such jurisdiction, and agrees that any summons or other process against it may
be served by registered mail addressed thereto at c/o Kylco Maritime (USA),
Inc., 645 Fifth Avenue, New York, New York 10022. The foregoing, however, shall
not limit or impair the right of the Bank to bring any legal action or
proceeding in any other appropriate jurisdiction or to effect service of process
in any other manner which may be lawful in the jurisdiction where any such legal
action or proceeding may be brought.
17. THE GUARANTORS HEREBY WAIVE TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM BROUGHT BY THE BANK ON ANY MATTER WHATSOEVER ARISING
OUT OF OR IN ANY WAY CONNECTED WITH THIS AGREEMENT OR ANY OTHER DOCUMENT
REFERRED TO HEREIN.
18. All payments by the Guarantors under or in respect of this
Agreement shall be made to the Bank at its office at One Wall Street, New York,
New York 10286 (Attn: Marine Transportation Division), in immediately available
funds.
19. Any provision of this Agreement which is prohibited or is
unenforceable in whole or in part in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provision in any other
jurisdiction. To the extent permitted by the laws of any such jurisdiction, the
Guarantor hereby waives any provisions of law which renders any provision hereof
prohibited or unenforceable in any respect.
20. Notwithstanding anything herein to the contrary, the
maximum aggregate amount of the Guaranteed Obligations with respect to each
Guarantor shall not exceed the maximum amount that can be guaranteed thereby
without rendering this Guaranty, as it relates to such
19
<PAGE>
Guarantor, voidable under applicable law relating to fraudulent conveyance or
fraudulent transfer or similar laws affecting the rights of creditors generally.
21. The obligations of the Guarantors under this Agreement and
each provision hereof are joint and several whether or not so specified in any
provision hereof.
22. This Agreement shall be binding upon the successors and
assigns of the Guarantors; provided, however, that none of the Guarantors may
not transfer any of its obligations or assign any of its rights hereunder
without the prior written consent of the Bank.
23. THIS AGREEMENT SHALL BE DEEMED TO HAVE BEEN MADE UNDER AND
SHALL BE GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK IN ALL RESPECTS
INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY, EFFECT AND PERFORMANCE WITHOUT
REFERENCE TO CONFLICTS OF LAWS PRINCIPLES.
IN WITNESS WHEREOF, the Guarantors have caused this Agreement
to be duly executed on the day and year first above written.
CONIFER SHIPPING COMPANY MILLENIUM MAJESTIC, INC.
LIMITED
By /S/ Vassilios M. Livanos By /S/ Vassilios M. Livanos
------------------------ ------------------------
Vassilios M. Livanos Vassilios M. Livanos
TOPSCALE SHIPPING COMPANY MILLENIUM YAMA INC.
LIMITED
By /S/ Vassilios M. Livanos By /S/ Vassilios M. Livanos
------------------------ ------------------------
Vassilios M. Livanos Vassilios M. Livanos
20
<PAGE>
IVY NAVIGATION, INC. MILLENIUM II, INC.
By /S/ Vassilios M. Livanos By /S/ Vassilios M. Livanos
------------------------ ------------------------
Vassilios M. Livanos Vassilios M. Livanos
RAPID OCEAN CARRIERS, INC. MILLENIUM III, INC.
By /S/ Vassilios M. Livanos By /S/ Vassilios M. Livanos
------------------------ ------------------------
Vassilios M. Livanos Vassilios M. Livanos
OAKMONT SHIPPING AND MILLENIUM IV, INC.
TRADING, INC.
By /S/ Vassilios M. Livanos By /S/ Vassilios M. Livanos
------------------------ ------------------------
Vassilios M. Livanos Vassilios M. Livanos
MILLENIUM ALEXSANDER, INC. MILLENIUM V, INC.
By /S/ Vassilios M. Livanos By /S/ Vassilios M. Livanos
------------------------ ------------------------
Vassilios M. Livanos Vassilios M. Livanos
MILLENIUM AMETHYST, INC. MILLENIUM VI, INC.
By /S/ Vassilios M. Livanos By /S/ Vassilios M. Livanos
------------------------ ------------------------
Vassilios M. Livanos Vassilios M. Livanos
MILLENIUM ELMAR, INC. MILLENIUM VII, INC.
By /S/ Vassilios M. Livanos By /S/ Vassilios M. Livanos
------------------------ ------------------------
Vassilios M. Livanos Vassilios M. Livanos
21
To: The Board of Directors of Millenium Seacarriers, Inc.
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in this registration statement on Form F-4 (for $100
million 12% First Priority Exchange Ship Mortgage Notes due 2005 of Millenium
Seacarriers, Inc.) of our report dated April 13, 1998, except as to Note 11 for
which the date is July 24, 1998, on our audits of the combined financial
statements of Group of Shipping Companies acquired by Millenium Seacarriers,
Inc. We also consent to the references to our firm under the captions
"Independent Public Accountants", "Summary Combined Financial Information", and
"Selected Combined Financial Information".
/s/ Coopers & Lybrand
----------------------------
Coopers & Lybrand
Piraeus, Greece
September 4, 1998
Letterhead
Maples and Calder
1st September, 1998
TO: THE BOARD OF DIRECTORS OF:
Millenium Seacarriers, Inc.
Oakmont Shipping and Trading Limited Rapid Ocean Carriers, Inc.
Topscale Shipping Company Limited Conifer Shipping Company Limited
Ivy Navigation Ltd. Millenium Aleksander, Inc.
Millenium Elmar, Inc. Millenium II, Inc.
Millenium III, Inc. Millenium IV, Inc.
Millenium V, Inc. Millenium VI, Inc.
Millenium VII, Inc. Millenium Amethyst, Inc.
Millenium Yama, Inc. Millenium Majestic, Inc.
Re: Registration Statement offering 12% First Priority Exchange Ship Mortgage
Notes Due 2005 by the above referenced Registrants on Form F-4.
-------------------------------------------------------------------------
Ladies and Gentlemen:
We hereby consent to the use in the Prospectus constituting part of the
above captioned Registration Statement to be filed on Form F-4, of this firm's
name in the form and context in which
the same appears.
Yours faithfully,
/s/ Maples and Calder
- - - - ----------------------
Maples and Calder
Letterhead
Andreas P. Demtriades & Associates
2nd September 1998
TO THE BOARD OF DIRECTORS OF:
Millenium Seacarriers, Inc.
Oakmont Shipping and Trading Limited
Topscale Shipping Company Limited
Ivy Navigation Ltd.
Millenium Elmar, Inc.
Millenium III, Inc.
Millenium V, Inc.
Millenium VII, Inc.
Millenium Yama, Inc.
Rapid Ocean Carriers, Inc.
Conifer Shipping Company Limited
Millenium Aleksander, Inc.
Millenium II, Inc.
Millenium IV, Inc.
Millenium VI, Inc.
Millenium Amethyst, Inc.
Millenium Majestic, Inc.
Re: Registration Statement offering 12% First Priority Exchange Ship Mortgage
Notes Due 2005 by the above referenced Registrants on Form F-4.
-------------------------------------------------------------------------
Ladies and Gentlemen:
We hereby consent to the use in the Prospectus constituting part of the
above captioned Registration Statement to be filed on Form F-4, of this firm's
name in the form and context in which the
same appears.
/s/ Andreas P. Demetriades
- - - - -----------------------
Andreas P. Demetriades-Managing Partner
Andreas P. Demetriades & Associates
Mabella Court
8 Acropoleos Avenue
P.O. Box 4533
Nicosia - Cyprus
Tel: 00357 2 420809
Fax: 00357 2 420772
Letterhead
The Law Offices of Basil T. Patkos
September 2, 1998
TO: THE BOARD OF DIRECTORS OF:
Millenium Seacarriers, Inc.
Oakmont Shipping and Trading Limited Rapid Ocean Carriers, Inc.
Topscale Shipping Company Limited Conifer Shipping Company Limited
Ivy Navigation Ltd. Millenium Aleksander, Inc.
Millenium Elmar, Inc. Millenium II, Inc.
Millenium III, Inc. Millenium IV, Inc.
Millenium V, Inc. Millenium VI, Inc.
Millenium VII, Inc. Millenium Amethyst, Inc.
Millenium Yama, Inc. Millenium Majestic, Inc.
Re: Registration Statement offering 12% First Priority Exchange Ship Mortgage
Notes Due 2005 by the above referenced Registrants on Form F-4.
-------------------------------------------------------------------------
Ladies and Gentlemen:
We hereby consent to the use in the Prospectus constituting part of the
above captioned Registration Statement to be filed on Form F-4, of this firm's
name in the form and context in which
the same appears.
/s/ Basil T. Patkos
---------------------
Basil T. Patkos
SSY Letterhead
September 3, 1998
TO: THE BOARD OF DIRECTORS OF:
Millenium Seacarriers, Inc.
Oakmont Shipping and Trading Limited Rapid Ocean Carriers, Inc.
Topscale Shipping Company Limited Conifer Shipping Company Limited
Ivy Navigation Ltd. Millenium Aleksander, Inc.
Millenium Elmar, Inc. Millenium II, Inc.
Millenium III, Inc. Millenium IV, Inc.
Millenium V, Inc. Millenium VI, Inc.
Millenium VII, Inc. Millenium Amethyst, Inc.
Millenium Yama, Inc. Millenium Majestic, Inc.
Re: Registration Statement offering 12% First Priority Exchange Ship Mortgage
NOTES DUE 2005 BY THE ABOVE REFERENCED REGISTRANTS ON FORM F-4.
Ladies and Gentlemen:
We hereby consent to the use in the Prospectus constituting part of the
above captioned Registration Statement to be filed on Form F-4, of this firm's
name in the form and context in which
the same appears.
SIMON, SPENCE & YOUNG
SHIPBROKERS LTD.
By: /s/ John Alfred Welham
----------------------
Name: John Alfred Welham
Title: Managing Director
Letterhead
Drewry Shipping Consultants Ltd.
3 September 1998
TO: THE BOARD OF DIRECTORS OF:
Millenium Seacarriers, Inc.
Oakmont Shipping and Trading Limited Rapid Ocean Carriers, Inc.
Topscale Shipping Company Limited Conifer Shipping Company Limited
Ivy Navigation Ltd. Millenium Aleksander, Inc.
Millenium Elmar, Inc. Millenium II, Inc.
Millenium III, Inc. Millenium IV, Inc.
Millenium V, Inc. Millenium VI, Inc.
Millenium VII, Inc. Millenium Amethyst, Inc.
Millenium Yama, Inc. Millenium Majestic, Inc.
Re: Registration Statement offering 12% First Priority Exchange Ship
Mortgage Notes Due 2005 by the above referenced Registrants on
Form F-4.
----------------------------------------------------------------
Ladies and Gentlemen:
We hereby consent to the use in the Prospectus constituting part of the
above captioned Registration Statement to be filed on Form F-4, of this firm's
name in the form and context in which
the same appears.
For Drewry Shipping Consultants Ltd.
/s/ M. Jupe
M. Jupe
Director
Shipping Intelligence, Inc.
August 26, 1998
TO: THE BOARD OF DIRECTORS OF:
Millenium Seacarriers, Inc.
Oakmont Shipping and Trading Limited Rapid Ocean Carriers, Inc.
Topscale Shipping Company Limited Conifer Shipping Company Limited
Ivy Navigation Ltd. Millenium Aleksander, Inc.
Millenium Elmar, Inc. Millenium II, Inc.
Millenium III, Inc. Millenium IV, Inc.
Millenium V, Inc. Millenium VI, Inc.
Millenium VII, Inc. Millenium Amethyst, Inc.
Millenium Yama, Inc. Millenium Majestic, Inc.
Re: Registration Statement offering 12% First Priority Exchange Ship Mortgage
Notes Due 2005 by the above referenced Registrants on Form F-4.
-------------------------------------------------------------------------
Ladies and Gentlemen:
We hereby consent to the use in the Prospectus constituting part of the
above captioned Registration Statement to be filed on Form F-4, of this firm's
name in the form and context in which the same appears.
Shipping Intelligence, Inc.
By: /s/ Sydney P. Levine
----------------------------
Name: Sydney P. Levine
Title: President
Maritime Research, Inc.
September 3, 1998
TO: THE BOARD OF DIRECTORS OF:
Millenium Seacarriers, Inc.
Oakmont Shipping and Trading Limited Rapid Ocean Carriers, Inc.
Topscale Shipping Company Limited Conifer Shipping Company Limited
Ivy Navigation Ltd. Millenium Aleksander, Inc.
Millenium Elmar, Inc. Millenium II, Inc.
Millenium III, Inc. Millenium IV, Inc.
Millenium V, Inc. Millenium VI, Inc.
Millenium VII, Inc. Millenium Amethyst, Inc.
Millenium Yama, Inc. Millenium Majestic, Inc.
Re: Registration Statement offering 12% First Priority Exchange Ship Mortgage
NOTES DUE 2005 BY THE ABOVE REFERENCED REGISTRANTS ON FORM F-4.
Ladies and Gentlemen:
We hereby consent to the use in the Prospectus constituting part of the
above captioned Registration Statement to be filed on Form F-4, of this firm's
name in the form and context in which
the same appears.
MARITIME RESEARCH, INC.
499 Ernston Road
P.O. Box 805
Parlin, NJ 08859
By: /s/ Jay Allan, V.P.
-------------------
Name: Jay Allan
Title: Vice President
Registration No. 333-_________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------
FORM T-1
STATEMENT OF ELIGIBILITY UNDER THE TRUST
INDENTURE ACT OF 1939 OF A CORPORATION
DESIGNATED TO ACT AS TRUSTEE
--------------------
THE FIRST NATIONAL BANK OF MARYLAND
(Exact name of trustee as specified in its charter)
UNITED STATES 52-0312840
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or formation)
25 SOUTH CHARLES STREET
BALTIMORE, MARYLAND 21201
(Address of principal (Zip code)
executive offices
GREGORY K. THORESON, GENERAL COUNSEL
THE FIRST NATIONAL BANK OF MARYLAND
25 SOUTH CHARLES STREET
BALTIMORE, MARYLAND 21201
(410) 244-3800
(Name, address and telephone number of agent
for service of process)
MILLENIUM SEACARRIERS, INC.
(Exact name of obligor as specified in its charter)
CAYMAN ISLANDS N/A
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or formation)
C/O UGLAND HOUSE
SOUTH CHURCH STREET
GRAND CAYMAN, CAYMAN ISLANDS
(Address of principal (Zip code)
executive offices)
12% FIRST PRIORITY SHIP MORTGAGE NOTES DUE 2005
(Title of the indenture securities)
<PAGE>
ITEM 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.
Comptroller of the Currency, Washington, D.C. 20219.
Federal Reserve Bank of Richmond, Richmond, Virginia 23261.
Federal Deposit Insurance Corporation,
Washington, D.C. 20429.
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
ITEM 2. AFFILIATIONS WITH THE OBLIGOR.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
(Because responses from the obligor and the underwriters have not yet
been received, Item 2 is at the date hereof based upon incomplete
information but is believed to be correct and may be considered to be
complete unless modified by an amendment to this Form T-1).
ITEM 16. LIST OF EXHIBITS.
List below all exhibits filed as a part of this statement of
eligibility.
EXHIBIT
1 A copy of the articles of association of the trustee as now in
effect is incorporated herein by refererence to Exhibit 1 to
Form T-1 (Exhibit 25 to the Registration Statement on Form
S-3, Registration No. 333-27305)
2 A copy of the certificate of authority of the trustee to
commence business is incorporated herein by reference to
Exhibit T1-2 to Form T-1 (Exhibit 26 to the Registration
Statement on Form S-2, Registration No. 2-98697)
3 A copy of the authorization of the trustee to exercise
corporate trust powers is incorporated herein by reference to
Exhibit T1-3 of Amendment No. 1 to Form T-1 (Exhibit 26 to the
Registration Statement on Form S-3, Registration No.
33-18373)
<PAGE>
4 A copy of the existing bylaws of the trustee is incorporated
herein by refererence to Exhibit 4 to Form T-1 (Exhibit 25 to
the Registration Statement on Form S-3, Registration No.
333-27305)
5 Not applicable
6 The consent of the trustee required by Section 321(b) of
the
Act
7 A copy of the latest report of condition of the trustee
published pursuant to law or the requirements of its
supervising or examining authority
8 Not applicable
9 Not applicable
<PAGE>
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, the
Trustee, The First National Bank of Maryland, a corporation organized and
existing under the laws of the United States of America, has duly caused this
statement of eligibility to be signed on its behalf by the undersigned,
thereunto duly authorized, all in the City of Baltimore and State of Maryland,
on August 25, 1998
THE FIRST NATIONAL BANK OF MARYLAND
By: /s/ Donald C. Hargadon
-------------------------------
Donald C. Hargadon
Assistant Vice President
<PAGE>
EXHIBIT 6
---------
CONSENT OF TRUSTEE
Pursuant to the requirements of Section 321(b) of the Trust Indenture
Act of 1939, in connection with the issuance by Millenium Seacarriers, Inc., we
hereby consent that reports of examination by Federal, state, territorial or
district authorities may be furnished by such authorities to the Securities and
Exchange Commission upon request therefor.
THE FIRST NATIONAL BANK OF MARYLAND
By: /s/ Donald C. Hargadon
-------------------------------
Donald C. Hargadon
Assistant Vice President
<PAGE>
EXHIBIT 7
Report of Condition Consolidating Domestic and Foreign Subsidiaries of The First
National Bank of Maryland, Baltimore, Maryland at the close of business on June
30, 1998 published in response to call made by Comptroller of the Currency,
under Title 12, United States Code, Section 161, Charter No. 04822, Comptroller
of the Currency, Richmond District.
CONSOLIDATED REPORT OF CONDITION
(Dollars in Thousands)
ASSETS
Cash and balances due from depository institutions:
Noninterest-bearing balances
and currency and coin.................. $ 788,621
Interest-bearing balances................ 986
Securities:
Held-to-maturity securities..................... -0-
Available-for-sale securities................... 2,656,568
Federal funds sold and securities purchased
under agreements to resell...................... 193,304
Loans and lease financing receivables:
Loans and leases, net of unearned income........ 6,055,422
LESS: Allowance for loan and lease losses....... 103,381
LESS: Allocated transfer risk reserve........... 1,400
Loans and leases, net of unearned income,
allowance, and reserve................... 5,950,641
Trading assets.................................... 113,364
Premises and fixed assets (including
capitalized leases)............................. 95,787
Other real estate owned........................... 9,751
Investments in unconsolidated subsidiaries
and associated companies........................ 37,116
Customers' liability to this bank
on acceptances outstanding...................... 11,050
Intangible assets................................. 48,819
Other assets...................................... 205,370
TOTAL ASSETS............................. 10,111,377
==========
<PAGE>
LIABILITIES
Deposits:
In domestic offices............................. $6,918,347
Noninterest-bearing.......................... 2,382,713
Interest-bearing............................. 4,535,634
In foreign offices, Edge and Agreement
subsidiaries, and IBFs........................ 489,086
Noninterest-bearing.......................... 0
Interest-bearing............................. 489,086
Federal funds purchased and securities
sold under agreements to repurchase............. 1,333,730
Demand notes issued to the U.S. Treasury.......... 6,001
Trading liabilities............................... 70,580
Other borrowed money:
With a remaining maturity of one year or less... -0-
With a remaining maturity of more than one year
through three years........................... -0-
With a remaining maturity of more than three
years......................................... -0-
Bank's liability on acceptances
executed and outstanding........................ 11,050
Subordinated notes and debentures................. 174,000
Other liabilities................................. 362,895
TOTAL LIABILITIES............................ $9,365,689
---------
EQUITY CAPITAL
Perpetual preferred stock and related surplus..... -0-
Common Stock...................................... 18,448
Surplus........................................... 253,832
Undivided profits and capital reserves............ 465,608
Net unrealized holding gains (losses)
on available-for-sale securities................ 7,800
Cumulative foreign currency transalation
adjustments..................................... -0-
TOTAL EQUITY CAPITAL......................... $ 745,688
---------
TOTAL LIABILITIES AND EQUITY CAPITAL......... $10,111,377
==========
LETTER OF TRANSMITTAL
OFFER TO EXCHANGE THE 12% FIRST PRIORITY SHIP MORTGAGE
NOTES DUE 2005 THAT HAVE BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED,
FOR ANY AND ALL OF THE OUTSTANDING
12% FIRST PRIORITY SHIP MORTGAGE EXCHANGE NOTES DUE 2005
OF
MILLENIUM SEACARRIERS, INC.
OAKMONT SHIPPING & TRADING LIMITED MILLENIUM II, INC.
RAPID OCEAN CARRIERS INC. MILLENIUM III, INC.
IVY NAVIGATION LTD. MILLENIUM IV, INC.
TOPSCALE SHIPPING COMPANY LIMITED MILLENIUM V, INC.
CONIFER SHIPPING COMPANY LIMITED MILLENIUM VI, INC.
MILLENIUM ALEKSANDER, INC. MILLENIUM VII, INC.
MILLENIUM ELMAR, INC. MILLENIUM YAMA, INC
MILLENIUM AMETHYST, INC. MILLENIUM MAJESTIC, INC.
PURSUANT TO THE PROSPECTUS DATED ______, 1998
- - - - --------------------------------------------------------------------------------
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT
5:00 P.M., NEW YORK CITY TIME, ON ___________ __, 1998,
UNLESS THE OFFER IS EXTENDED
- - - - --------------------------------------------------------------------------------
To The First National Bank of Maryland
(the "Exchange Agent")
BY REGISTERED OR CERTIFIED MAIL: BY HAND(UNTIL 4:00 P.M., NEW YORK TIME)
25 South Charles Street 110 South Paca Street
Mail Code 101-591 Mail Code 101-754
Baltimore, MD 21201 Baltimore, MD 21201
Attention Donald Hargadon Attention: Nancy Lloyd
BY OVERNIGHT MAIL OR COURIER, OR BY HAND BY FACSIMILE
(AFTER 4:00 P.M., NEW YORK TIME) (FOR ELIGIBLE INSTITUTIONS ONLY):
110 South Paca Street (410) 613-3061
Mail Code 101-754 Confirm by telephone (410)613-3067
Baltimore, MD 21201
Attention: Nancy Lloyd
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
_________, 1998 (the "Prospectus") of Millenium Seacarriers, Inc., Oakmont
Shipping & Trading Limited, Millenium II, Inc., Rapid Ocean Carriers Inc.,
Millenium III, Inc., Ivy Navigation Ltd., Millenium IV, Inc., Topscale Shipping
Company Limited, Millenium V, Inc., Conifer Shipping Company Limited, Millenium
VI, Inc., Millenium Aleksander, Inc., Millenium VII, Inc., Millenium Elmar,
Inc., Millenium Yama, Inc., Millenium Amethyst, Inc., and Millenium Majestic,
Inc. (collectively, the "Company") and this Letter of Transmittal, which
together constitute the offer of the Company (the "Exchange Offer") to exchange
up to $100,000,000 in aggregate principal amount at maturity of their registered
12% First Priority Ship Mortgage Exchange Notes due 2005 (the "Exchange Notes")
for a like principal amount at maturity of its outstanding unregistered 12%
First Priority Ship Mortgage Notes due 2005 (the "Existing Notes"). Existing
Notes may be tendered only in minimum denominations of $1,000 and integral
multiples of $1,000 in excess thereof. The term "Expiration Date" shall mean
5:00 p.m., New York City time, on ____________ ___, 1998, unless the Company, in
its sole discretion, extends 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 at Maturity Amount
(Please fill in) Numbers* Represented by Tendered**
Existing Notes
- - - - ---------------------------------------------------------------------------------------------------------
<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 at maturity amount represented by such Existing
Notes. All tenders must be in minimum denominations of $1,000 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 Tendering" in the Prospectus or (iii) if
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 Millenium
Seacarriers, Inc. 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 Company the principal amount at maturity
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 Company
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 Company 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 Company 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 Company believes 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 Company 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 Company 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 Company 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 Company within
the meaning of Rule 405 under the Securities Act nor a broker-dealer tendering
Existing Notes acquired directly from the Company 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.
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
<PAGE>
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 additio nal documents deemed by the Exchange Agent or the Company 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 Company), as more particularly set forth in the Prospectus,
the Company 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 incapac ity 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" OR THE 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 "DESCRI PTION 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>
============================================================================================================================
SPECIAL REGISTRATION INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
To be completed ONLY if the Exchange Notes are to be To be completed ONLY if the Exchange Notes are to be
issued in the name of someone other than the undersigned. sent to someone other than the undersigned, or to the
undersigned at an address other than that shown under
"Description of Existing Notes Tendered Hereby."
<S> <C>
Issue Exchange Note to: Mail Exchange Note to:
Name: Name:
Address: Address:
Book-Entry Transfer Facility Account:
Employer Identification or Social Security No.:
(PLEASE PRINT OR TYPE) (PLEASE PRINT OR TYPE)
- - - - ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
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)
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:
================================================================================
<PAGE>
Payors:
MILLENIUM SEACARRIERS, INC.
Oakmont Shipping & Trading Limited
Millenium II, Inc.
Rapid Ocean Carriers Inc.
Millenium III, Inc.
Ivy Navigation Ltd.
Millenium IV, Inc.
Topscale Shipping Company Limited
Millenium V, Inc.
Conifer Shipping Company Limited
Millenium VI, Inc.
Millenium Aleksander, Inc.
Millenium VII, Inc.
Millenium Elmar, Inc.
Millenium Yama, Inc.
Millenium Amethyst, Inc.
Millenium Majestic, Inc.
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.
<TABLE>
<CAPTION>
===================================================================================================================
<S> <C> <C>
SUBSTITUTE FORM W-9 PART I - PLEASE PROVIDE YOUR TIN IN THE BOX AT RIGHT
DEPARTMENT OF THE TREASURY AND CERTIFY BY SIGNING AND DATING BELOW.
INTERNAL REVENUE SERVICE
PART I - CHECK THE BOX IF YOU ARE NOT SUBJECT TO -------------
BACKUP WITHHOLDING UNDER THE PROVISIONS OF SECTION SOCIAL SECURITY
3406(A)(I)(C) OF THE INTERNAL REVENUE CODE BECAUSE NUMBER OR
(1) YOU ARE EXEMPT FROM BACKUP WITHHOLDING, (2) EMPLOYER
YOU HAVE NOT BEEN NOTIFIED THAT YOU ARE SUBJECT TO IDENTIFICATION
BACKUP WITHHOLDING AS A RESULT OF FAILURE TO NUMBER
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 at maturity
of Existing Notes tendered, stating that the tender is being made
thereby and guaranteeing what, within five New York Stock Exchange
<PAGE>
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.
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 at maturity of Existing Notes
evidenced by a submitted certificate is tendered, the tendering Holder should
fill in the principal amount at maturity tendered in the column entitled
"Principal Amount at Maturity Tendered" of the box entitled "Description of
Existing Notes Tendered Hereby." A newly issued Existing Note for the principal
amount at maturity of Existing Notes submitted but not tendered will be sent to
such Holder as soon as practicable after the Expiration Date. Subject to minimum
denominations of $1,000 and integral multiples of $1,000 in excess thereof,
$1,000 principal amount at maturity of Exchange Notes is offered in exchange for
each $1,000 principal amount at maturity of Existing Notes. 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 at maturity 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
<PAGE>
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 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 Company, 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
<PAGE>
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).
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 Company, proper evidence
satisfactory to the Company 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 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.
The Company 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 Company reserves 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.
<PAGE>
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.
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 Millenium Seacarriers, Inc., P.O. Box 309,
Ugland House, Grand Cayman, Cayman Islands, telephone number: (345) 949-8066.
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 Company in their sole discretion, which
determination will be final and binding. The Company reserves 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 Company, be
unlawful. The Company also reserves the right to waive any defects,
irregularities or conditions of tender as to particular Existing Notes. The
Company's 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
Company shall determine. Although the Company intends to notify Holders of
defects or irregularities with respect to tenders of Existing Notes, neither the
Company, the Exchange Agent nor 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
<PAGE>
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.
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
MILLENIUM SEACARRIERS, INC.
OAKMONT SHIPPING & TRADING LIMITED MILLENIUM II, INC.
RAPID OCEAN CARRIERS INC. MILLENIUM III, INC.
IVY NAVIGATION LTD. MILLENIUM IV, INC.
TOPSCALE SHIPPING COMPANY LIMITED MILLENIUM V, INC.
CONIFER SHIPPING COMPANY LIMITED MILLENIUM VI, INC.
MILLENIUM ALEKSANDER, INC. MILLENIUM VII, INC.
MILLENIUM ELMAR, INC. MILLENIUM YAMA, INC.
MILLENIUM AMETHYST, INC. MILLENIUM MAJESTIC, INC.
for Tender of
12% First Priority Ship Mortgage Notes due 2005
(including those in book-entry form)
This form or a facsimile hereof must be used by a holder of the 12% First
Priority Ship Mortgage Notes due 2005 of Millenium Seacarriers, Inc., Oakmont
Shipping & Trading Limited, Millenium II, Inc., Rapid Ocean Carriers Inc.,
Millenium III, Inc., Ivy Navigation Ltd., Millenium IV, Inc., Topscale Shipping
Company Limited, Millenium V, Inc., Conifer Shipping Company Limited, Millenium
VI, Inc., Millenium Aleksander, Inc., Millenium VII, Inc., Millenium Elmar,
Inc., Millenium Yama, Inc., Millenium Amethyst, Inc., and Millenium Majestic,
Inc. (the "Existing Notes"), who wishes to tender Existing Notes to The First
National Bank of Maryland, as Exchange Agent (the "Exchange Agent"), pursuant to
the guaranteed delivery procedures described in "The Exchange Offer-Guaranteed
Delivery Procedures" of the Prospectus, dated ____________, 1998 (the
"Prospectus"), relating to the offer by Millenium Seacarriers, Inc., Oakmont
Shipping & Trading Limited, Millenium II, Inc., Rapid Ocean Carriers Inc.,
Millenium III, Inc., Ivy Navigation Ltd., Millenium IV, Inc., Topscale Shipping
Company Limited, Millenium V, Inc., Conifer Shipping Company Limited, Millenium
VI, Inc., Millenium Aleksander, Inc., Millenium VII, Inc., Millenium Elmar,
Inc., Millenium Yama, Inc., Millenium Amethyst, Inc., and Millenium Majestic,
Inc. (collectively, the "Company") to exchange the 12% First Priority Ship
Mortgage Notes due 2005 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
________ __, 1998, 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 The First National Bank of Maryland
BY REGISTERED OR CERTIFIED MAIL: BY HAND (UNTIL 4:00 P.M., NEW YORK TIME)
25 South Charles Street 110 South Paca Street
Mail Code 101-591 Mail Code 101-754
Baltimore, MD 21201 Baltimore, MD 21201
Attention: Donald Hargadon Attention: Nancy Lloyd
BY OVERNIGHT MAIL OR COURIER, OR BY HAND BY FACSIMILE (AFTER 4:00
P.M., NEW YORK TIME) (FOR ELIGIBLE INSTITUTIONS ONLY):
110 South Paca Street
Mail Code 101-754
Baltimore, MD 21201 (410) 613-3061
Attention: Nancy Lloyd Confirm by telephone (410) 613-3067
<PAGE>
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 Company, in accordance with the
Company's 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.
