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JUNIOR FACILITY AGREEMENT
between
NORD LTD.
as borrower
CHRISTIANIA BANK OG KREDITKASSE ASA
as agent and security trustee
and
CHRISTIANIA BANK OG KREDITKASSE ASA
as lender
Clifford Chance
London
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CONTENTS
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CLAUSE PAGE
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1. Interpretation ........................................................ 1
2. The Facility .......................................................... 8
3. Purpose ............................................................... 8
4. Conditions Precedent .................................................. 8
5. Nature of Banks' Rights and Obligations ............................... 8
6. Availability .......................................................... 8
7. Interest Periods ...................................................... 9
8. Interest .............................................................. 10
9. Repayment and Prepayment .............................................. 11
10. Taxes and Tax Receipts ................................................ 12
11. Changes in Circumstances .............................................. 13
12. Representations ....................................................... 15
13. Information Covenants ................................................. 18
14. Financial Condition ................................................... 19
15. General Covenants ..................................................... 20
16. Events of Default ..................................................... 21
17. Default Interest and Indemnity ........................................ 25
18. Currency of Account and Payment ....................................... 26
19. Payments .............................................................. 27
20. Set-Off ............................................................... 27
21. Sharing ............................................................... 27
22. Fees .................................................................. 28
23. Costs and Expenses .................................................... 29
24. The Agent and the Banks ............................................... 29
25. Benefit of Agreement .................................................. 34
26. Assignments and Transfers ............................................. 34
27. Calculations and Evidence of Debt ..................................... 35
28. Remedies and Waivers .................................................. 36
29. Partial Invalidity .................................................... 36
30. Notices ............................................................... 36
31. Law ................................................................... 37
32. Jurisdiction .......................................................... 37
The First Schedule
Condition Precedent Documents.............................................. 39
The Second Schedule
Notice of Drawdown......................................................... 42
The Third Schedule
Form of Transfer Certificate............................................... 43
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THIS AGREEMENT is made on 6 August 1997
BETWEEN:
(1) NORD LTD. (the "BORROWER");
(2) CHRISTIANIA BANK OG KREDITKASSE ASA (in its capacity as agent, the
"AGENT");
(3) CHRISTIANIA BANK OG KREDITKASSE ASA (in its capacity as the security
trustee, the "SECURITY Trustee"); and
(4) CHRISTIANIA BANK OG KREDITKASSE ASA ("INITIAL BANK").
RECITALS
A. The Initial Bank has agreed to grant to the Borrower, upon the terms
and subject to the conditions herein set forth, a loan facility in the
amount of up to $2,250,000.
B. By a further Loan Agreement (the "SENIOR FACILITY AGREEMENT") of even
date herewith and made between the Borrower, the Agent, the Security
Trustee and Christiania Bank og Kreditkasse ASA as Initial Bank, the
Initial Bank has agreed to lend to the Borrower a further sum of up to
$21,000,000 secured by first ranking security over the assets mortgaged
or charged by the Borrower to the Security Trustee pursuant to the
Facility Documents defined therein.
NOW IT IS HEREBY AGREED as follows:
1. INTERPRETATION
1.1 In this Agreement:
"ADMINISTRATIVE GENERAL PARTNER" means GMC Administration Ltd., a
company duly incorporated under the laws of Cayman Islands;
"ADVANCE" means, save as otherwise provided herein, the advance made or
to be made by the Initial Bank hereunder;
"ASSIGNMENT OF ACCOUNTS" means the assignment of the Borrower's bank
accounts to be executed by the Borrower pursuant to paragraph 3 of Part
2 of the First Schedule;
"ASSIGNMENT OF EARNINGS AND INSURANCES" means an assignment of earnings
and insurances to be entered into by the Borrower in favour of the
Security Trustee named therein pursuant to paragraph 2, Part 2 of the
First Schedule;
"BANKS" means the Initial Bank and any Transferees of the Initial Bank
(and any subsequent Transferees) and "BANK" means each of the Banks;
"BASLE PAPER" means the paper entitled "International Convergence of
Capital Measurement
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and Capital Standards" dated July 1988 and prepared by the Basle
Committee on Banking Regulations and Supervision, as amended in
November 1991;
"CAPITAL ADEQUACY REQUIREMENT" means a request or requirement relating
to the maintenance of capital, including one which makes any change to,
or is based on any alteration in, the interpretation of the Basle Paper
or which increases the amounts of capital required thereunder, other
than a request or requirement made by way of implementation of the
Basle Paper in the manner in which it is being implemented at the date
hereof;
"CHARTERS" mean each of the Initial Charter and the Subsequent Charter
and "CHARTER" means each of them;
"CHARTERERS" means each of the Initial Charterer and the Subsequent
Charterer and "CHARTERER" means each of them;
"DRAWDOWN DATE" means the date on which the Advance is made to the
Borrower hereunder;
"EARNINGS ACCOUNT" has the meaning ascribed to it in the Assignment of
Earnings and Insurances;
"EVENT OF DEFAULT" means any of those events specified in Clause 16.1
(EVENTS OF DEFAULT);
"FACILITY" means the dollar loan facility granted to the Borrower in
this Agreement;
"FACILITY AMOUNT" means an amount of up to US$2,250,000 to be advanced
by the Initial Bank to the Borrower;
"FACILITY OFFICE" means in relation to a Bank, the Agent or the
Security Trustee the office identified with the signature below (or in
the case of a Transferee, at the end of the Transfer Certificate to
which it is a party as Transferee) or such other office as it may from
time to time select;
"FAIR MARKET VALUE" means, in relation to the Vessel at any time, the
sale value of the Vessel in dollars determined on the basis of a sale
(for cash and prompt delivery) by a willing seller to a willing buyer,
free of charter and encumbrances and at arm's length on normal
commercial terms;
"FINAL REPAYMENT DATE" means the date which falls 60 months after the
Drawdown Date;
"FACILITY DOCUMENTS" means this Agreement, any Interest Rate Swap
Agreement, the Trust Deed, the Mortgage, the Assignment of Earnings and
Insurances, the Priority Agreement and the Assignment of Accounts and
any other document agreed between the Agent and the Borrower to be a
Facility Document and "FACILITY DOCUMENT" means each of them;
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"GENERAL PARTNERS" means the Managing General Partner and the
Administrative General Partner and "GENERAL PARTNER" means each of
them;
"INITIAL CHARTER" means the time charter party (as from time to time
amended or novated) dated 31 January 1997 whereby the Initial Charterer
has agreed to charter the Vessel from the Borrower for a period of
approximately fifteen months from the Drawdown Date;
"INITIAL CHARTERER" means OMI Petrolink Corp. of Delaware, U.S.A.;
"INSTRUCTING GROUP" means a Bank or group of Banks to whom in aggregate
more than fifty per cent of the Loan is (or, immediately prior to its
repayment, was then) owed;
"INTEREST RATE SWAP AGREEMENT" means any interest rate swap agreement
to be entered into by the Borrower and the Initial Bank pursuant to
which the Borrower will hedge all or part of its interest costs under
this Agreement;
"INTEREST PERIOD" means any of those periods mentioned in Clause 7.2
(DURATION OF INTEREST PERIODS);
"LIBERIA" means the Republic of Liberia;
"LIBOR" means, in relation to any period for which an interest rate is
to be determined hereunder, the rate per annum determined by the Agent
to be equal to the LIBOR fixing on Telerate page 3740 for deposits in
dollars for a period corresponding to that period at 11.00 a.m. on the
Quotation Date for that period Provided that if there are no such rates
so appearing on such page at such time it means the rate per annum
determined by the Agent to be equal to the arithmetic mean (rounded
upwards, if not already such a multiple to the nearest whole multiple
of one-sixteenth of one per cent.) of the respective rates (as notified
to the Agent) at which the Reference Banks were offering to prime banks
in the London Interbank Market deposits in dollars for a period
corresponding to such period at such time;
"LOAN" means the aggregate principal amount for the time being
outstanding hereunder;
"MANAGEMENT AGREEMENT" means the agreement (as from time to time
amended or novated) to be entered or entered into between the Borrower
and Universe Tankships Bermuda Ltd. relating to the management of the
Vessel pursuant to paragraph 12, Part 1, of the First Schedule;
"MANAGING GENERAL PARTNER" means General Maritime II Corporation
(Delaware), a corporation duly incorporated under the laws of the State
of Delaware, U.S.A;
"MARGIN" means three per cent. (3.0%) per annum;
"MEMORANDUM OF AGREEMENT" means the agreement (as from time to time
amended or novated) for the purchase and sale of the Vessel dated 29
April 1997 and made between the Borrower and the Seller;
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"MORTGAGE" means a first preferred Liberian ship mortgage over the
Vessel to be granted by the Borrower to the Initial Bank pursuant to
paragraph 1, Part 2 of the First Schedule;
"NOTICE OF DRAWDOWN" means a notice in the form or substantially the
form of that set out in the Second Schedule;
"PERMITTED LIENS" has the meaning ascribed to it in the Assignment of
Earnings and Insurances;
"PRIORITY AGREEMENT" means the agreement between the Agent, the Banks,
the Borrower and the Agent and the lenders under the Senior Facility
Agreement regulating the priorities and the rights of enforcement of
security between the Banks and the lenders under the Senior Facility
Agreement pursuant to paragraph 8, Part 2 of the First Schedule;
"QUOTATION DATE" in relation to any period for which an interest rate
is to be determined hereunder means the day on which quotations would
ordinarily be given by prime banks in the London Interbank Market for
dollar deposits for delivery on the first day of that period Provided
that if, for any such period, quotations would ordinarily be given on
more than one date, the Quotation Date for that period shall be the
last of those dates;
"REFERENCE BANK" means the principal Oslo office of Christiania Bank og
Kreditkasse ASA and such other banks as may from time to time be agreed
between the Borrower and the Agent;
"RETENTION ACCOUNT" has the meaning ascribed to it in the Assignment of
Earnings and Insurances;
"SELLER" means Fjord President Company of Monrovia, Liberia;
"SHAREHOLDER" means General Maritime II, L.P., the sole shareholder of
the Borrower;
"SUBSEQUENT CHARTER" means the time charter (as from time to time
amended or novated) dated 18 April 1997 whereby the Subsequent
Charterer has agreed to charter the Vessel from the Borrower for a
minimum of forty-eight months immediately upon the termination of the
Initial Charter;
"SUBSEQUENT CHARTERER" means Stena Bulk AB of Gothenburg, Sweden;
"TERMINATION DATE" means the earlier of 30 August 1997 and the date on
which the Facility Amount has been reduced to zero;
"TRANSFER CERTIFICATE" means a certificate in the form set out in the
Third Schedule (or such other form as may be agreed between the
relevant Bank, the proposed Transferee, the Agent and the Borrower
pursuant to Clause 26.2 (ASSIGNMENTS AND TRANSFERS BY BANKS)) signed by
a Bank and a Transferee whereby:
(i) such Bank seeks to procure the transfer to such
Transferee of all or a part of such Bank's rights and
obligations hereunder upon and subject to the terms
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and conditions set out in Clause 26.2 (ASSIGNMENTS
AND TRANSFERS BY BANKS); and
(ii) such Transferee undertakes to perform the obligations
it will assume as a result of delivery of such
certificate to the Borrower as is contemplated in
Clause 26.4 (TRANSFERS BY BANKS)
"TRANSFER DATE" in relation to any Transfer Certificate means the date
for the making of the transfer as specified in the schedule to such
Transfer Certificate;
"TRANSFEREE" means a bank or other financial institution to which a
Bank seeks to transfer all or part of such Bank's rights and
obligations hereunder;
"TRUST DEED" means a security trust deed of the date hereof entered
into between the Security Trustee, the Agent, the Borrower and the
Banks and the agent and lenders under the Senior Facility Agreement
pursuant to paragraph 4, Part 2 of the First Schedule;
"VESSEL" means the vessel known as m/t "NORD-JAHRE PRESIDENT" (to be
renamed "STENA COMMANDER") more particularly described in the Mortgage.
1.2 Any reference in this Agreement to:
the Agent, the Security Trustee, or the Banks shall be construed so as
to include their respective successors, Transferees and permitted
assigns in accordance with their respective interests;
a "BUSINESS DAY" shall be construed as a reference to a day (other than
a Saturday or Sunday) on which banks are generally open for business in
Oslo, London and New York City;
a "CHARTER" shall be construed as a reference to any agreement
(including the Charters) pursuant to which the Vessel is, or will be,
employed;
a "CLAUSE" shall, subject to any contrary indication, be construed as a
reference to a clause hereof;
an "ENCUMBRANCE" shall be construed as a reference to a mortgage,
charge, pledge, lien or other encumbrance securing any obligation of
any person or any other type of preferential arrangement (including,
without limitation, title transfer and retention arrangements) having a
similar effect;
the "EQUIVALENT" in one currency (in this paragraph the "FIRST
CURRENCY") of an amount denominated in another currency (in this
paragraph the "SECOND CURRENCY") on any date shall, save as otherwise
provided, be construed as a reference to the amount of the first
currency which could be purchased with that amount of the second
currency at the spot rate of exchange quoted by the Agent at or about
11.00 a.m. on such date for the purchase of the first currency with the
second currency for delivery on the second business day thereafter;
a "GUARANTEE" includes any guarantee, indemnity or other obligation to
pay, purchase,
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provide funds for the payment of or indemnify against the consequences
of default in the payment of indebtedness of any other person and any
encumbrance which secures the payment of any indebtedness of any other
person;
a "HOLDING COMPANY" of a company or corporation shall be construed as a
reference to any company or corporation of which the first-mentioned
company or corporation is a subsidiary;
"INDEBTEDNESS" shall be construed so as to include any obligation
(whether incurred as principal or as surety) for the payment or
repayment of money, whether present or future, actual or contingent;
a "MONTH" is a reference to a period starting on one day in a calendar
month and ending on the numerically corresponding day in the next
calendar month save that, where any such period would otherwise end on
a day which is not a business day, it shall end on the next business
day, unless that day falls in the calendar month succeeding that in
which it would otherwise have ended, in which case it shall end on the
preceding business day Provided that, if a period starts on the last
business day in a calendar month or if there is no numerically
corresponding day in the month in which that period ends, that period
shall end on the last business day in that later month (and references
to "MONTHS" shall be construed accordingly);
a "PERSON" shall be construed as a reference to any person, firm,
company, corporation, government, state or agency of a state or any
association or partnership (whether or not having separate legal
personality) of two or more of the foregoing;
a "SCHEDULE" shall, subject to any contrary indication, be construed as
a reference to a schedule hereto;
a "SUBSIDIARY" of a company or corporation shall be construed as a
reference to any company or corporation:
(i) which is controlled, directly or indirectly, by the
first-mentioned company or corporation;
(ii) more than half the issued share capital of which is
beneficially owned, directly or indirectly, by the
first-mentioned company or corporation; or
(iii) which is a subsidiary of another subsidiary of the
first-mentioned company or corporation
and, for these purposes, a company or corporation shall be treated as
being controlled by another if that other company or corporation is
able to direct its affairs and/or to control the composition of its
board of directors or equivalent body;
"TAX" shall be construed so as to include any present or future tax,
levy, impost, duty or other charge of a similar nature (including,
without limitation, any penalty or interest payable in connection with
any failure to pay or any delay in paying any of the same);
"TOTAL LOSS" includes any actual, constructive, arranged, agreed or
compromised total loss,
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any requisitioning for title and the capture, seizure, arrest,
detention, or confiscation of the Vessel by any government, or by
persons purporting to act on behalf of any government, unless the
Vessel be released and restored to the Owner from such capture,
seizure, detention or confiscation within one month after the date
thereof; and
the "WINDING-UP" or "DISSOLUTION" of a company or limited partnership
shall be construed so as to include any equivalent or analogous
proceedings under the law of the jurisdiction in which such company or
limited partnership is incorporated or established or any jurisdiction
in which such company or limited partnership carries on business.
1.3 "$" and "DOLLARS" denote lawful currency of the United States of
America.
1.4 Save where the contrary is indicated, any reference in this Agreement
to:
(i) this Agreement or any other agreement or document
shall be construed as a reference to this Agreement
or, as the case may be, such other agreement or
document as the same may have been, or may from time
to time be, amended, varied or supplemented;
(ii) a statute shall be construed as a reference to such
statute as the same may have been, or may from time
to time be, amended or re-enacted; and
(iii) a time of day shall be construed as a reference to
London time.
1.5 Clause headings are for ease of reference only.
1.6 For the purposes of the Facility Documents, a total loss of the Vessel
shall be deemed to have occurred:
(i) if it consists of an actual total loss, at noon
Greenwich Mean Time on the actual date of loss or, if
that is not known, on the date on which she was last
heard of;
(ii) if it consists of a requisitioning for title, at noon
Greenwich Mean Time on the date on which the same is
expressed to take effect by the person making the
same; and
(iii) if it consists of a constructive or compromised or
arranged or agreed total loss, at noon Greenwich Mean
Time on the date at which notice of her abandonment
is given to her insurers for the time being or (if
her insurers for the time being do not admit the
claim for total loss) at the time on which a total
loss is subsequently adjudged to have occurred by a
competent court or arbitration tribunal or liability
in respect thereof as a total loss is admitted by
underwriters.
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2. THE FACILITY
The Initial Bank hereby grants to the Borrower, upon the terms and
subject to the conditions hereof, a loan facility in the maximum amount
of $2,250,000.
3. PURPOSE
The purpose of the Facility is to provide the Borrower with funds to
finance the purchase of the Vessel and, accordingly, the Borrower shall
apply all of the amounts raised by it hereunder in or towards such
purpose (but so that neither the Agent nor the Initial Bank shall be
obliged to concern itself with the application of amounts borrowed by
the Borrower hereunder).
4. CONDITIONS PRECEDENT
The Borrower shall not be entitled to give any Notice of Drawdown
hereunder unless the Agent shall have confirmed to the Borrower by
facsimile or letter that it has received three days prior to the
proposed Drawdown Date each of the documents specified in Part 1 of the
First Schedule and found the same to be satisfactory to it in form and
substance.
5. NATURE OF BANKS' RIGHTS AND OBLIGATIONS
5.1 OBLIGATIONS OF BANKS SEVERAL
The obligations of each Bank hereunder are several.
5.2 FAILURE OF ANY BANK TO PERFORM OBLIGATIONS
The failure by a Bank to perform its obligations hereunder shall not
affect the obligations of the Borrower towards any other party hereto
nor shall any other party be liable for the failure by such Bank to
perform its obligations hereunder.
5.3 RIGHTS OF BANKS SEVERAL
The rights of the Banks hereunder are also several. The amount at any
time owing by the Borrower to any party under this Agreement shall be a
separate and independent debt from any amount owing to any other party.
6. AVAILABILITY
6.1 THE FACILITY
The Facility shall be made by the Initial Bank to the Borrower by way
of a single Advance.
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6.2 DRAWDOWN CONDITIONS
Save as otherwise provided herein, the Advance will be made by the
Initial Bank to the Borrower on the request of the Borrower if:
(i) not more than ten nor less than two business days
before the proposed date for the making of the
Advance the Agent has received from the Borrower a
Notice of Drawdown therefor, receipt of which shall
oblige the Borrower to borrow the amount therein
requested on the date therein stated upon the terms
and subject to the conditions contained herein;
(ii) the amount stated in the Notice of Drawdown shall not
be more than the amount of the Facility Amount;
(iii) the aggregate sum of the amount stated in the Notice
of Drawdown and the amount drawn down or to be drawn
down under the Senior Facility Agreement shall not
exceed 75% of the Fair Market Value of the Vessel as
determined in accordance to Clause 14.1 (FAIR MARKET
VALUE OF VESSEL);
(iv) the Drawdown Date is a business day which is or
precedes the Termination Date;
(v) on or before the Drawdown Date the Agent has received
from the Borrower each of the documents specified in
Part 2 of the First Schedule and found the same to be
satisfactory to it in both form and substance;
(vi) the interest rate applicable to the Advance during
its first Interest Period does not fall to be
determined pursuant to the proviso to Clause 7.2
(DURATION OF INTEREST PERIODS); and
(vii) (a) no event has occurred which is or may become
(with the passage of time, the giving of
notice, the making of any determination
hereunder or any combination thereof) an
Event of Default; and
(b) the representations set out in Clause 12
(REPRESENTATIONS) are true on and as of the
proposed date for the making of such Advance
or the Initial Bank agrees (notwithstanding any matter
mentioned at (a) or (b) above) that the Advance should be
made.
7. INTEREST PERIODS
7.1 INTEREST PERIODS
The period for which the Advance is outstanding shall be divided into
successive periods each of which (other than the first) shall start on
the last day of the preceding such period.
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7.2 DURATION OF INTEREST PERIODS
The duration of each Interest Period relating to the Advance shall,
save as otherwise provided herein, be one, three, six or twelve months,
or any such other period as may be agreed from time to time between the
Borrower and the Agent, in each case as the Borrower may select by not
less than three business days' prior notice to the Agent Provided that:
(i) if the Borrower selects a duration of twelve months
in relation to an Interest Period, then:
(a) the Borrower may, at the same time, notify
the Agent of an alternative selection of
three or six months to apply if the
Borrower's selection becomes ineffective
pursuant to (b) below; and
(b) any Bank may, at any time before 9.00 a.m.
on the second business day preceding the
first day of such Interest Period, notify
the Agent that it objects to the Borrower's
selection, whereupon such selection shall
become ineffective Provided that no such
objection shall be given except for reason
of the non availability to such Bank of
dollars for twelve months interest periods
in the London Inter-bank Market;
(ii) if the Borrower fails to give such notice of its
selection in relation to an Interest Period, or if
its selection becomes ineffective under (i)(b) above
and the Borrower has failed to give the Agent any
permitted alternative selection pursuant to (i)(a)
above, then the duration of that Interest Period
shall, subject to (iii) below, be three months;
(iii) the Borrower may not select an Interest Period of one
month more than three times during any calendar year;
and
(iv) any Interest Period which would otherwise end during
the month preceding, or extend beyond, the Final
Repayment Date shall be of such duration that it
shall end on the Final Repayment Date.
7.3 If pursuant to Clause 7.2 the Borrower selects an Interest Period for
an Advance which will extend beyond one or more Repayment Dates, then
such Advance shall be divided into parts such that on such (or each
such) Repayment Date there will be one or more parts in an amount equal
to the amount scheduled to be repaid on each such Repayment Date, each
such part to constitute an Advance and to have an Interest Period
ending on that Repayment Date.
8. INTEREST
8.1 PAYMENT OF INTEREST
On the last day of each Interest Period (and, in the case of an
Interest Period of a duration of more than three months, on the last
day of each successive period of three months falling
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within such Interest Period) the Borrower shall pay accrued interest on
the Advance to which such Interest Period relates.
8.2 CALCULATION OF INTEREST
The rate of interest applicable to the Advance from time to time during
an Interest Period relating thereto shall be the rate per annum which
is the sum of the Margin and LIBOR for such Interest Period Provided
that if LIBOR for an Interest Period falls to be determined in
accordance with the proviso to the definition thereof but none of the
Reference Banks was offering to prime banks in the London Interbank
Market dollar deposits for the proposed duration of such Interest
Period, the rate of interest applicable to the Advance to which such
Interest Period relates from time to time during such Interest Period
shall be the rate per annum which is the sum of the Margin and the
weighted average of the rates per annum notified to the Agent by each
Bank before the last day of such Interest Period to be that which
expresses as a percentage rate per annum the cost to it of funding such
Advance during such Interest Period from whatever sources it may select
and the Agent shall notify the Borrower accordingly.
9. REPAYMENT AND PREPAYMENT
9.1 REPAYMENT
The Borrower shall repay the Loan in full on the Final Repayment Date:
9.2 PREPAYMENT
The Borrower may, if it has given to the Agent not less than fifteen
(15) business days' prior notice to that effect, prepay the whole or
any part of the Advance (but if in part being an amount or integral
multiple of $100,000) on the last day of an Interest Period relating
thereto. Any prepayment made by the Borrower pursuant to this Clause
shall satisfy the Borrower's remaining obligations under Clause 9.1
(REPAYMENT) in inverse order of maturity.
9.3 NOTICE OF PREPAYMENT
Any notice of prepayment given by the Borrower pursuant to Clause 9.2
(PREPAYMENT) shall be irrevocable and shall specify the date upon which
such prepayment is to be made and the amount thereof and shall oblige
the Borrower to make such prepayment on such date.
9.4 PREPAYMENT FEE
If the Borrower makes any prepayment pursuant to Clause 9.2
(PREPAYMENT), the Borrower shall be obliged, together with such
prepayment, to pay a prepayment fee. The prepayment fee shall equal
to:-
(a) for any prepayments made within 12 months of the Drawdown
Date, 7% of the amounts so prepaid;
(b) for any prepayments made in the period beginning 12 months and
ending 24 months
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from Drawdown Date, 5.75% of the amounts so prepaid;
(c) for any prepayments made in the period beginning 24 months and
ending 36 months from Drawdown Date, 4.25% of the amounts so
prepaid;
(d) for any prepayments made in the period beginning 36 months and
ending 48 months from Drawdown Date, 2.5% of the amounts so
prepaid;
(e) for any prepayments made during the 12 months preceding the
Final Repayment Date, 1% of the amounts so prepaid.
Provided that no such fee shall be payable if such prepayment was made
pursuant to a refinancing of the Loan granted by the Initial Bank or by
a syndicate of banks of which the Initial Bank is an agent or an
underwriter.
9.5 INTEREST RATE SWAP AGREEMENTS
If the Borrower makes any prepayment pursuant to Clause 9.2, it shall
be obliged to pay to the Initial Bank as counterparty to any Interest
Rate Swap Agreement (or the Initial Bank shall pay to the Agent for
account of the Borrower) the amount of any loss (or, as the case may
be, profit) incurred or made by the Initial Bank as a result of a total
or partial early termination of any Interest Rate Swap Agreement made
to ensure that the notional principal amount of such Interest Rate Swap
Agreement matches the reduced amount of the Loan.
9.6 NO OTHER REPAYMENTS OR REBORROWING
No amount repaid or prepaid hereunder may be reborrowed.
10. TAXES AND TAX RECEIPTS
10.1 TAX GROSS-UP
All payments to be made by the Borrower to any person under any of the
Facility Documents shall be made free and clear of and without
deduction for or on account of tax unless the Borrower is required to
make such a payment subject to the deduction or withholding of tax, in
which case the sum payable by the Borrower in respect of which such
deduction or withholding is required to be made shall be increased to
the extent necessary to ensure that, after the making of such deduction
or withholding, such person receives and retains (free from any
liability in respect of any such deduction or withholding) a net sum
equal to the sum which it would have received and so retained had no
such deduction or withholding been made or required to be made.
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10.2 TAX INDEMNITY
Without prejudice to the provisions of Clause 10.1 (TAX GROSS-UP), if
any person or the Agent on its behalf is required to make any payment
on account of tax or otherwise (not being a tax imposed on the net
income of the Facility Office by the jurisdiction in which it is
incorporated or in which the Facility Office is located) on or in
relation to any sum received or receivable by such person under any of
the Facility Documents (including, without limitation, any sum received
or receivable under this Clause 10) or any liability in respect of any
such payment is asserted, imposed, levied or assessed against the such
person, the Borrower shall, upon demand of the Agent, promptly
indemnify the such person against such payment or liability, together
with any interest, penalties and expenses payable or incurred in
connection therewith Provided that if a Bank or the Agent or the
Security Trustee considers that it is reasonable to do so and that it
would not be otherwise prejudiced thereby, it will, prior to
instructing the Agent to make a demand under this Clause 10.2, use
reasonable endeavours to determine whether any such payment or
liability was correctly or legally imposed or asserted.
10.3 CLAIMS BY A BANK
If a Bank intends to make a claim pursuant to Clause 10.2 (TAX
INDEMNITY) it shall notify the Agent of the event by reason of which it
is entitled to do so whereupon the Agent shall notify the Borrower
accordingly.
10.4 NOTIFICATION OF REQUIREMENT TO DEDUCT TAX
If, at any time, the Borrower is required by law to make any deduction
or withholding from any sum payable by it under any of the Facility
Documents (or if thereafter there is any change in the rates at which
or the manner in which such deductions or withholdings are calculated),
the Borrower shall promptly notify the Agent, whereupon the Agent shall
notify the Banks and the Security Trustee accordingly.
10.5 EVIDENCE OF PAYMENT OF TAX
If the Borrower makes any payment under any of the Facility Documents
in respect of which it is required to make any deduction or
withholding, it shall pay the full amount required to be deducted or
withheld to the relevant taxation or other authority within the time
allowed for such payment under applicable law and shall deliver to the
Agent, within thirty days after it has received the same, an original
receipt (or a certified copy thereof) issued by such authority
evidencing the payment to such authority of all amounts so required to
be deducted or withheld in respect of such payment.
<PAGE>
11. CHANGES IN CIRCUMSTANCES
11.1 INCREASED COSTS
If, by reason of (a) any change in law or in its interpretation or
administration and/or (b) compliance with any Capital Adequacy
Requirement or any request from or requirement of any central bank or
other fiscal, monetary or other authority:
(i) a Bank or any holding company of such Bank incurs a
cost as a result of such Bank having entered into
and/or performing its obligations under this
Agreement and/or assuming or maintaining a commitment
under this Agreement and/or making its advance
hereunder;
(ii) a Bank or any holding company of such Bank is unable
to obtain the rate of return on its overall capital
which it would have been able to obtain but for such
Bank having entered into and/or performing its
obligations and/or assuming or maintaining a
commitment under this Agreement;
(iii) there is any increase in the cost to a Bank or any
holding company of such Bank of funding or
maintaining all or any of the advances comprised in a
class of advances formed by or including the advance
made or to be made by such Bank hereunder; or
(iv) a Bank or any holding company of such Bank becomes
liable to make any payment on account of tax or
otherwise (not being a tax imposed on the net income
of the Facility Office by the jurisdiction in which
such Bank is incorporated or in which the Facility
Office is located) on or calculated by reference to
the amount of the Advance made or to be made
hereunder and/or by reference to any sum received or
receivable by such Bank hereunder,
then the Borrower shall, from time to time on demand of the Agent,
promptly pay to the Agent for the account of such Bank amounts
sufficient to indemnify it (or,as the case may be, to enable it to
indemnify its holding company) against, as the case may be, (1) such
cost, (2) such reduction in such rate of return (or such proportion of
such reduction as is, in the opinion of such Bank, attributable to its
obligations hereunder), (3) such increased cost (or such proportion of
such increased cost as is, in the opinion of such Bank, attributable to
its funding or maintaining its advance hereunder) or (4) such
liability.
11.2 INCREASED COSTS CLAIMS
If a Bank intends to make a claim pursuant to Clause 11.1 (INCREASED
COSTS) it shall notify the Agent of the event by reason of which it is
entitled to do so whereupon the Agent shall notify the Borrower
accordingly.
<PAGE>
11.3 ILLEGALITY
If at any time it is unlawful for a Bank to make its portion of the
Advance or to fund or allow to remain outstanding its portion of the
Loan, then that Bank shall, promptly after becoming aware of such fact,
deliver to the Agent who will deliver to the Borrower a certificate to
that effect whereupon:
(i) if no Advance has been made hereunder, the Bank shall
not thereafter be obliged to make the Advance
hereunder and its Facility Commitment shall be
reduced to zero; and
(ii) if the Advance has already been made hereunder, then,
if the Agent on behalf of any relevant Bank so
requires, the Borrower shall on such date as the
Agent shall have specified repay such Bank's portion
of the Loan in full together with accrued interest
thereon.
11.4 MITIGATION
(a) If circumstances arise which would (or would upon the giving
of notice) result in:
(i) the reduction of a Bank's portion of the Loan
pursuant to Clause 11.3 (ILLEGALITY);
(ii) the prepayment of the Loan pursuant to Clause 11.3
(ILLEGALITY);
(iii) an increase in the amount of any payment pursuant to
Clause 10.1 (TAX GROSS-UP); or
(iv) a claim by a Bank for indemnification pursuant to
Clause 10.2 (TAX INDEMNITY) or a claim by a Bank for
indemnification pursuant to Clause 11.1 (INCREASED
COSTS),
then, without in any way limiting, reducing or otherwise
qualifying the obligations of the Borrower under any of the
Clauses referred to above, such Bank shall, in consultation
with the Agent and the Borrower, take such reasonable steps as
may be reasonably open to it to mitigate the effects of such
circumstances, including by transferring its Facility Office
to another jurisdiction or by assigning its rights hereunder
to another financial institution approved by the Borrower
Provided that such Bank shall have no obligation to transfer
its Facility Office or assign its rights hereunder as
aforesaid if it is of the opinion that to do so would or might
have an adverse effect on its business, operations or
financial condition.
(b) If circumstances arise which would result in the Security
Trustee being entitled pursuant to Clause 4.5 of the Trust
Deed to exercise its rights to make deductions and
withholdings from payments made to the Agent hereunder, the
Security Trustee shall, in consultation with the Borrower,
take such reasonable steps as may be reasonably open to it to
mitigate the effects of such circumstances Provided that the
Security
<PAGE>
Trustee shall have no obligation to do so if it is of the
opinion that to do so would or might have an adverse effect on
its business operations or financial condition.
12. REPRESENTATIONS
12.1 Subject to any reservations and/or qualifications as to matters of law
which may be made in the legal opinions referred to in paragraphs 3, 4,
5, 6 and 7 of Part 1 of the First Schedule, the Borrower represents
that:
(i) STATUS It is a company both duly organised under the
laws of the Cayman Islands with power to enter into
the Facility Documents and to exercise its rights and
perform its obligations under the Facility Documents
and it is duly qualified as a foreign maritime entity
in Liberia with the power to register the Vessel in
the office of the Deputy Commissioner of Maritime
Affairs of the Republic of Liberia in New York;
(ii) DUE AUTHORISATION All corporate and other action
required to authorise the execution by the Borrower
of the Facility Documents and the performance of its
obligations under the Facility Documents has been
duly taken;
(iii) NO DEDUCTIONS OR WITHHOLDING Under the laws of the
Cayman Islands and Liberia in force at the date
hereof, the Borrower will not be required to make any
deduction or withholding from any payment it may make
under any of the Facility Documents;
(iv) CLAIMS PARI PASSU Without prejudice to the security
constituted by or pursuant to any Facility Documents
under the laws of the Cayman Islands and Liberia in
force at the date hereof, the claims of the Agent,
the Banks and the Security Trustee against the
Borrower under any Facility Documents will, to the
extent that such claims exceed the realised value of
the security therefor, rank at least PARI PASSU with
the claims of all its other unsecured and
non-subordinated creditors save those whose claims
are preferred solely by any bankruptcy, insolvency or
other similar laws of general application;
(v) NO IMMUNITY In any proceedings taken in the Cayman
Islands in relation to any of the Facility Documents,
the Borrower will not be entitled to claim for itself
or any of its assets immunity from suit, execution,
attachment or other legal process;
(vi) GOVERNING LAW AND JUDGMENTS In any proceedings taken
in the Cayman Islands in relation to any of the
Facility Documents, the choice of English law as the
governing law of those of the Facility Documents as
are expressed to be governed by English law and any
judgment obtained in England will be recognised and
enforced;
(vii) VALIDITY AND ADMISSIBILITY IN EVIDENCE Other than the
recording of the Mortgage at the office of the Deputy
Commissioner of Maritime Affairs of the Republic of
Liberia in New York and any required registration in
the
<PAGE>
Cayman Islands, all acts, conditions and things
required to be done, fulfilled and performed in order
(a) to enable the Borrower lawfully to enter into,
exercise its rights under and perform and comply with
the obligations expressed to be assumed by it in the
Facility Documents, (b) to ensure that the
obligations expressed to be assumed by it in the
Facility Documents are legal, valid and binding and
(c) to make the Facility Documents admissible in
evidence in the Cayman Islands have been done,
fulfilled and performed;
(viii) NO FILING OR STAMP TAXES Under the laws of the Cayman
Islands in force at the date hereof, it is not
necessary that any of the Facility Documents be
filed, recorded or enrolled with any court or other
authority in its jurisdiction of incorporation or
that any stamp, registration or similar tax be paid
on or in relation to any such Facility Documents; and
(ix) BINDING OBLIGATION The obligations expressed to be
assumed by the Borrower in the Facility Documents are
legal and valid obligations binding on it in
accordance with the terms of such Facility Documents.
12.2 The Borrower further represents that:
(i) NO WINDING-UP It has not taken any corporate action
nor have any other steps been taken or legal
proceedings been started or (to the best of its
knowledge and belief) threatened against it for its
winding-up, dissolution or reorganisation or for the
appointment of a receiver, administrator,
administrative receiver, trustee or similar officer
of it or of any or all of its assets or revenues;
(ii) NO MATERIAL DEFAULT It is not in breach of or in
default under any agreement to which it is a party or
which is binding on it or any of its assets to an
extent or in a manner which might have a material
adverse effect on its business or financial
condition;
(iii) NO MATERIAL PROCEEDINGS No action or administrative
proceeding of or before any court or agency which
might have a material adverse effect on its business
or financial condition has been started or
threatened;
(iv) NO OTHER BUSINESS It has not incurred any liabilities
or entered into any other commitments nor undertaken
any business other than in connection with the
purchase or operation of the Vessel;
(v) NO UNDISCLOSED LIABILITIES As at the date hereof it
has no liabilities (contingent or otherwise) which
have not been disclosed to the Agent nor any
unrealised or anticipated losses arising from
commitments entered into by it;
(vi) FULL DISCLOSURE Each of the Charters, the Memorandum
of Agreement and the Management Agreement are in full
force and effect and the Borrower has disclosed to
the Agent all of the terms and conditions of each
such agreement and there are no amendments or
variations to any such document which have
<PAGE>
not been disclosed to the Agent;
(vii) NO OBLIGATION TO CREATE SECURITY Its execution of the
Facility Documents and its exercise of its rights and
performance of its obligations thereunder will not
result in the existence of nor oblige it to create
any encumbrance over all or any of its present or
future revenues or assets except pursuant to the
Facility Documents;
(viii) EXECUTION OF FACILITY DOCUMENTS Its execution of the
Facility Documents and its exercise of its rights and
performance of its obligations under the Facility
Documents do not constitute and will not result in
any breach of any agreement or treaty;
(ix) ENCUMBRANCES Save as permitted by Clause 15(ix), no
encumbrance exists over all or any of its present or
future revenues or assets;
(x) OWNERSHIP OF THE BORROWER The Shareholder is the sole
shareholder of the Borrower;
(xi) OWNERSHIP OF THE SHAREHOLDER The General Partners are
the only general partners of the Shareholder; and
(xii) MANAGEMENT OF THE VESSEL The Vessel will be managed
by Universe Tankships Bermuda Ltd. in accordance with
the provisions of the Management Agreement.
13. INFORMATION COVENANTS
13.1 ANNUAL STATEMENTS
The Borrower shall using its best endeavours and as soon as the same
become available, but in any event within one hundred and eighty days
after the end of each of their respective financial years, furnish to
the Agent, the Borrower's and the Initial Charterer's or as the case
may be, the Subsequent Charterer's balance sheets as at the end of such
financial year and the Borrower's and the Initial Charterer's or as the
case may be, the Subsequent Charterer's profit-and-loss accounts in
respect of that financial year, in each case prepared in accordance
with internationally accepted accounting principles consistently
applied.
13.2 SEMI-ANNUAL STATEMENTS
The Borrower shall using its best endeavours and as soon as the same
become available, but in any event within 90 days after the end of each
of their respective financial half years, furnish to the Agent, the
Borrower's and the Initial Charterer's or as the case may be, the
Subsequent Charterer's balance sheets as at the end of such accounting
period and the Borrower's and the Initial Charterer's or as the case
may be, the Subsequent Charterer's profit-and-loss accounts in respect
of that accounting period, together with the Borrower's cash flow
reports for such period in each case prepared in accordance with
internationally accepted accounting principles consistently applied.
<PAGE>
13.3 NOTIFICATION OF EVENT OF DEFAULT
The Borrower shall promptly inform the Agent of the occurrence of any
event which is or may become (with the passage of time, the giving of
notice, the making of any determination hereunder or any combination
thereof) an Event of Default and, upon receipt of a written request to
that effect from the Agent, promptly deliver to the Agent a written
confirmation given by a duly authorised officer of the Borrower to the
effect that, save as previously notified to the Agent or as notified in
such confirmation, no such event has occurred.
13.4 NOTIFICATION OF OFF-HIRE
The Borrower shall promptly inform the Agent of any material
interruption in the operation of the Vessel (which shall include
situations where the Vessel is off-hire for a period of 5 days or more
at any one time) and the financial implications of such interruption.
13.5 OTHER FINANCIAL INFORMATION
The Borrower shall from time to time on the request of the Agent use
its best endeavours to furnish the Agent with such other information
about its and either Charterer's business, assets and financial
condition (including financial accounts and cash flow reports) as the
Agent may reasonably request.
13.6 PROVISO
It is hereby agreed that the Borrower's obligations under this Clause
13 to provide or furnish the Agent with any information regarding the
Initial Charterer shall cease upon termination of the Initial Charter.
14. FINANCIAL CONDITION
14.1 FAIR MARKET VALUE OF VESSEL
The Borrower shall ensure that at all times during the term of the
Loan, the Fair Market Value of the Vessel as established by R.S. Platou
and H Clarkson Limited or such other two (2) reputable brokers
appointed by the Agent (after consultation with the Borrower) shall
equal or exceed 135% of the Loan under the Senior Facility Agreement.
If at any time such ratio is not met, the Borrower will forthwith on
the demand of the Agent prepay such portion of the Loan as will ensure
that such ratio is complied with. The Agent shall be entitled to
request such estimates of the Fair Market Value at least twice per
calendar year (or at any time after the occurrence of an Event of
Default) and the Borrower shall promptly pay or reimburse to the Agent
the cost of obtaining such valuations.
14.2 MINIMUM WORKING CAPITAL
The Borrower shall maintain at all times Working Capital (which shall
mean Current Assets less Current Liabilities) of at least $750,000.
<PAGE>
14.3 NOTIFICATION OF FINANCIAL CONDITION The Borrower shall deliver to the
Agent a certificate stating the Borrower's compliance with the
covenants undertaken pursuant to this Clause 14 with each of the
semi-annual financial statements delivered pursuant to Clause 13.2.
14.4 For the purposes of Clause 14.2:
"CURRENT ASSETS" means all assets of the Borrower which, in accordance
with internationally accepted accounting principles, would be classed
as current assets; and
"CURRENT LIABILITIES" means all obligations of the Borrower which, in
accordance with internationally accepted accounting principles, would
be considered as current liabilities, excluding all amounts of
principal due under this Facility within one year from the date of
calculation.
15. GENERAL COVENANTS
The Borrower:
(i) shall obtain, comply with the terms of and do all
that is necessary to maintain in full force and
effect all authorisations, approvals, licences and
consents required in or by the laws and regulations
of the Cayman Islands and Liberia and all other
applicable jurisdictions to enable it lawfully to
enter into and perform its obligations under the
Facility Documents or to ensure the legality,
validity, enforceability or admissibility in evidence
the Cayman Islands and Liberia and all other
applicable jurisdictions of the Facility Documents;
(ii) shall procure that no change of the classification or
flag of the Vessel, management of the Vessel or the
Charters shall occur without the prior written
consent of the Agent;
(iii) shall, in the event of total loss of the Vessel,
procure that the Loan is repaid in full within 90
days of the Agent's written notice (whether as a
result of the application of insurance proceeds or
otherwise);
(iv) shall not, without the prior written consent of the
Agent, (such consent not to be unreasonably withheld)
permit any distributions of the Borrower's profits or
assets or pay any dividends or other distributions to
the Shareholder or any of the Shareholder's partners;
(v) shall not make any loans, grant any credit (save in
the ordinary course of business) or give any
guarantee or indemnity to or for the benefit of any
person or otherwise voluntarily assume any liability,
whether actual or contingent, in respect of any
obligations of any person;
(vi) shall not, without prior written consent of the
Agent, make any investments with the assets of the
Borrower (otherwise than by placing its cash into
bank accounts with the Agent) except for any
investments required to maintain the
<PAGE>
classification status of the Vessel;
(vii) shall not, without the prior written consent of the
Instructing Group, permit any change to its
shareholding;
(viii) shall maintain all its bank accounts with the Agent's
branch in New York shall only operate such accounts
in accordance with Clause 11 of the Assignment of
Earnings and Insurances;
(ix) shall not, without the prior consent of the Agent,
create or permit to subsist any encumbrance over all
or any of its present or future revenues or assets
other than the Permitted Liens and any encumbrance
created pursuant to the Facility Documents and any
second priority security over the Vessel and its
earnings, insurances and bank accounts in favour of
the Security Trustee on terms acceptable to the Agent
to secure the Borrower's obligations under the Junior
Facility Agreement;
(x) shall manage its business and procure that the Vessel
is managed in compliance with all applicable laws and
regulations applicable thereto and shall promptly
notify the Agent of any non-compliance other than of
a minor or technical nature.
(xi) shall not engage in any other business other than the
ownership and chartering of the Vessel;
(xii) shall procure that the Vessel is at all times fully
approved by the major oil companies relevant in its
trade;
(xiii) shall ensure that the technical management of the
Vessel remains with Universe Tankships Bermuda Ltd.;
and
(xiv) shall upon notice and within the time frame set by
the Initial Bank enter into one or more Interest Rate
Swap Agreements with the Initial Bank and shall enter
into such amendment or additions to the Facility
Documents as the Initial Bank may reasonably require
to ensure that the Borrower's obligations under any
such Interest Rate Swap Agreement are secured on the
same security as is provided by the Facility
Documents and with the same priority as is accorded
to the Initial Bank hereunder.
<PAGE>
16. EVENTS OF DEFAULT
16.1 If:
(i) FAILURE TO PAY The Borrower or the Initial Charterer,
or as the case may be, the Subsequent Charterer fails
to pay any sum due from it under this Agreement or
the Initial Charter or as the case may be, the
Subsequent Charterer at any time, in the currency and
in the manner specified herein or therein Provided
that it shall not be an Event of Default if any sum
due under the Initial Charter or as the case may be,
the Subsequent Charter is paid by the Initial
Charterer or as the case may be, the Subsequent
Charterer within 5 business days of the due date for
payment as specified therein; or
(ii) MISREPRESENTATION Any representation or statement
made by the Borrower in any Facility Document or in
any notice or other document, certificate or
statement delivered by it pursuant hereto or thereto
or in connection herewith or therewith is or proves
to have been incorrect or misleading in any material
respect when made; or
(iii) COVENANTS The Borrower fails duly to perform the
obligations expressed to be assumed by it in Clause
14 (FINANCIAL CONDITION) or 15 (GENERAL COVENANTS);
or
(iv) INSURANCE The Borrower fails to insure the Vessel in
accordance with the requirements of the Assignment of
Earnings and Insurances and/or the Mortgage; or
(v) OTHER OBLIGATION The Borrower fails duly to perform
or comply with any other obligation expressed to be
assumed by it in any Facility Document and such
failure is not remedied within thirty days after the
Agent has given notice to the Borrower requiring the
same to be remedied; or
(vi) CROSS DEFAULT If any indebtedness of the Borrower or
the Shareholder or any General Partner or the Initial
Charterer or the Subsequent Charterer is not paid
when due (or within any period of grace applicable
thereto), (b) any indebtedness of the Borrower or the
Shareholder, or either General Partner or the Initial
Charterer or the Subsequent Charterer is declared to
be or otherwise becomes due and payable prior to its
specified maturity or (c) any creditor of the
Borrower or the Shareholder or either General Partner
or the Initial Charterer or the Subsequent Charterer
become entitled to declare any indebtedness of the
Borrower or the Shareholder or either General Partner
or the Initial Charterer or the Subsequent Charterer
due and payable prior to its specified maturity
Provided that it shall not be an Event of Default if,
with respect to either General Partner, the events
specified in (a), (b) and (c) above are genuinely
disputed by such General Partner in appropriate legal
proceedings; or
<PAGE>
(vii) INSOLVENCY AND RESCHEDULING The Borrower or the
Shareholder or either General Partner or the Initial
Charterer or the Subsequent Charterer is unable to
pay its debts as they fall due, commences
negotiations with any one or more of its creditors
with a view to the general readjustment or
rescheduling of its indebtedness or makes a general
assignment for the benefit of or a composition with
its creditors; or
(viii) WINDING-UP Otherwise than for the purposes of a
reconstruction on terms previously approved by the
Instructing Group, the Borrower or the Shareholder or
either General Partner or the Initial Charterer or
the Subsequent Charterer takes any corporate action
or other steps are taken or legal proceedings are
started for its winding-up, dissolution or
re-organisation or for the appointment of a receiver,
administrator, administrative receiver, trustee or
similar officer of it or of any or all of its
revenues and assets; or
(ix) REPUDIATION The Borrower or the Initial Charterer or
the Subsequent Charterer repudiates any Facility
Document or the Initial Charter or, as the case may
be, the Subsequent Charter or does or causes to be
done any act or thing evidencing an intention to
repudiate any such Facility Document or the Initial
Charter or Subsequent Charter; or
(x) LEGALITY OF FACILITY DOCUMENTS At any time any act,
condition or thing required to be done, fulfilled or
performed in order (a) to enable the Borrower
lawfully to enter into, exercise its rights under and
perform its obligations expressed to be assumed by it
in the Facility Documents, (b) to ensure that the
obligations expressed to be assumed by the Borrower
in the Facility Documents are legal, valid and
binding or (c) to make any the Facility Documents
admissible in evidence in the Cayman Islands or
Liberia is not done, fulfilled or performed; or
(xi) COMPLIANCE WITH OBLIGATIONS At any time it is or
becomes unlawful for the Borrower to perform or
comply with any or all of its obligations under any
Facility Document or any of the obligations of the
Borrower under the Facility Document are not or cease
to be legal, valid and binding; or
(xii) SEIZURE BY GOVERNMENT By or under the authority of
any government, (a) the management of the Borrower is
wholly or partially displaced or the authority of the
Borrower in the conduct of its business is wholly or
partially curtailed or (b) the whole or any part (the
market value of which is twenty per cent. or more of
the market value of the whole) of its revenues or
assets is seized, nationalised, expropriated or
compulsorily acquired; or
(xiii) MATERIAL ADVERSE CHANGE There shall occur any event
or circumstance which in the opinion of the
Instructing Group may, or may be likely to,
materially and adversely affect the ability of the
Borrower or the Initial Charterer or as the case may
be the Subsequent Charterer to discharge its
obligations under the Facility Documents or the
Initial Charter or as the case
<PAGE>
may be the Subsequent Charter in the manner provided
therein; or
(xiv) VARIATION OR TERMINATION OF AGREEMENTS The Memorandum
of Agreement or the Initial Charter or as the case
may be, the Subsequent Charter is amended in any
material manner without the prior written consent of
the Agent or terminated otherwise than by reason of
the due discharge of all obligations of each of the
parties thereto or if any party thereto is in breach
of any of its obligations thereunder; or
(xv) MANAGEMENT AGREEMENT If there is any material
amendment to the Management Agreement or the
Management Agreement is terminated or otherwise
ceases to be effective without the Agent's prior
written consent; or
(xvi) SENIOR FACILITY Any event of default (howsoever
described) occurs under the Senior Facility
Agreement; or
(xvii) PARTNERSHIP/OWNERSHIP STRUCTURE If there is any
change in the shareholding of the Borrower or of
either General Partner without the prior written
consent of the Instructing Group; or
(xviii) ANALOGOUS EVENT If any event occurs to the Borrower,
the Shareholder, any General Partner, the Initial
Charterer or as the case may be, the Subsequent
Charterer under the laws of any other jurisdiction
which is analogous to any of the events or
circumstances referred to in paragraphs (vii) or
(viii) above; or
(xix) OWNERSHIP OF SUBSEQUENT CHARTERER If the Subsequent
Charterer ceases to be a wholly owned subsidiary of
Stena AB of Sweden, or if the Subsequent Charterer
fails to take delivery of the Vessel pursuant to the
Subsequent Charter promptly upon the expiry of the
Initial Charter; or
(xx) SWAP AGREEMENT Any event of default (howsoever
described) occurs under any Interest Rate Swap
Agreement,
then, and in any such case and at any time thereafter, the Agent may,
and shall if so instructed by the Instructing Group, by written notice
to the Borrower:
(a) declare the Loan to be immediately due and payable (whereupon
the same shall become so payable together with accrued
interest thereon and any other sums then owed by the Borrower
hereunder) or declare the Loan to be due and payable on demand
of the Agent; and/or
(b) declare that the Facility Amount shall be cancelled, whereupon
the same shall be cancelled and the amount thereof reduced to
zero.
<PAGE>
16.2 ADVANCE DUE ON DEMAND
If, pursuant to Clause 16.1, the Agent declares the Loan to be due and
payable on demand of the Agent, then, and at any time thereafter, the
Agent may by written notice to the Borrower:
(i) call for repayment of the Loan on such date as it may
specify in such notice (whereupon the same shall
become due and payable on such date together with
accrued interest thereon and any other sums then owed
by the Borrower hereunder) or withdraw its
declaration with effect from such date as it may
specify in such notice; and/or
(ii) select as the duration of any Interest Period
relating to an Advance which begins whilst such
declaration remains in effect a period of six months
or less.
16.3 PROVISO
(i) It is hereby agreed that each of the events set out
in Clause 16.1(i), (vi), (vii), (viii), (ix), (xiii)
and (xiv) shall not be an Event of Default if it
occurs in relation to the Initial Charterer after the
termination of the Initial Charter as a result of the
obligations thereunder having been fully performed by
the Initial Charterer in accordance with the terms
specified therein.
(ii) It is hereby agreed that if any Event of Default
occurs only in relation to the Initial Charterer or
the Subsequent Charterer and within 15 days
thereafter alternative arrangements in form and
substance satisfactory to the Agent and the
Instructing Group, as determined in their sole
discretion, are entered into to provide alternative
security for the performance by the Borrower of its
obligations hereunder, then the Agent, on instruction
of the Instructing Group, may agree that the event of
circumstances giving rise to such Event of Default
shall not be treated as an Event of Default.
17. DEFAULT INTEREST AND INDEMNITY
17.1 DEFAULT INTEREST PERIODS
If any sum due and payable by the Borrower hereunder is not paid on the
due date therefor in accordance with the provisions of Clause 19
(PAYMENTS) or if any sum due and payable by the Borrower under any
judgment of any court in connection with this Agreement is not paid on
the date of such judgment, the period beginning on such due date or, as
the case may be, the date of such judgment and ending on the date upon
which the obligation of the Borrower to pay such sum (the balance
thereof for the time being unpaid being herein referred to as an
"UNPAID SUM") is discharged shall be divided into successive periods,
each of which (other than the first) shall start on the last day of the
preceding such period and the duration of each of which shall be
selected by the Agent.
<PAGE>
17.2 DEFAULT INTEREST
During each such period relating thereto as is mentioned in Clause 17.1
(DEFAULT INTEREST PERIODS) an unpaid sum shall bear interest at the
rate per annum which is the sum from time to time of one per cent., the
Margin and LIBOR for that period Provided that:
(i) if, for any such period, LIBOR falls to be determined
pursuant to the proviso to the definition thereof but
none of the Reference Banks was offering dollar
deposits for the period aforesaid, the rate of
interest applicable to such unpaid sum shall be
determined by reference to the cost to each Bank of
obtaining such deposits from such sources as it may
select as notified to the Agent; and
(ii) if such unpaid sum is all or part of the Advance
which became due and payable on a day other than the
last day of an Interest Period relating thereto, the
first such period applicable thereto shall be of a
duration equal to the unexpired portion of that
Interest Period and the rate of interest applicable
thereto during such period shall be that which
exceeds by one per cent. the rate which would have
been applicable to it had it not so fallen due.
17.3 PAYMENT OF DEFAULT INTEREST
Any interest which shall have accrued under Clause 17.2 (DEFAULT
INTEREST) in respect of an unpaid sum shall be due and payable and
shall be paid by the Borrower at the end of the period by reference to
which it is calculated or on such other dates as the Agent may specify
by written notice to the Borrower.
17.4 BROKEN PERIODS
If any Bank receives or recovers all or any part of such Bank's share
of the Advance otherwise than on the last day of an Interest Period
relating to the Advance, the Borrower shall pay to the Agent on demand
an amount equal to the amount (if any) by which (a) the additional
interest which would have been payable on the amount so received or
recovered had it been received or recovered on the last day of that
Interest Period exceeds (b) the amount of interest which in the opinion
of the Agent would have been payable to the Agent on the last day of
that Interest Period in respect of a dollar deposit equal to the amount
so received or recovered placed by it with a prime bank in London for a
period starting on the third business day following the date of such
receipt or recovery and ending on the last day of that Interest Period.
<PAGE>
17.5 BORROWER'S INDEMNITY
The Borrower undertakes:
(i) to indemnify each of the Agent, each Bank and the
Security Trustee against any loss or expense,
including legal fees on a full indemnity basis, which
any of them may sustain or incur as a consequence of
any default by the Borrower in the performance of any
of the obligations expressed to be assumed by it in
any of the Facility Documents to which it is a party;
and
(ii) to indemnify each Bank against any loss it may suffer
as a result of its funding its share of the Advance
requested by the Borrower hereunder but not made by
reason of the operation of any one or more of the
provisions hereof.
17.6 Any unpaid sum shall (for the purposes of this Clause 17 and Clause
11.1 (INCREASED COSTS) be treated as an advance and accordingly in this
Clause 17 and Clause 11.1 (INCREASED COSTS) the term "Advance" includes
any unpaid sum and the term "Interest Period", in relation to an unpaid
sum, includes each such period relating thereto as is mentioned in
Clause 17.1 (DEFAULT INTEREST PERIODS).
18. CURRENCY OF ACCOUNT AND PAYMENT
18.1 CURRENCY OF ACCOUNT
The dollar is the currency of account and payment for each and every
sum at any time due from the Borrower hereunder Provided that each
payment in respect of costs and expenses shall be made in the currency
in which the same were incurred.
18.2 CURRENCY INDEMNITY
If any sum due from the Borrower under any Facility Document to which
the Borrower is a party or any order or judgment given or made in
relation hereto or thereto has to be converted from the currency (the
"FIRST CURRENCY") in which the same is payable under such Facility
Document or order or judgment into another currency (the "SECOND
CURRENCY") for the purpose of (i) making or filing a claim or proof
against the Borrower, (ii) obtaining an order or judgment in any court
or other tribunal or (iii) enforcing any order or judgment given or
made in relation to any Facility Document, the Borrower shall indemnify
and hold harmless each of the persons to whom such sum is due from and
against any loss suffered as a result of any discrepancy between (a)
the rate of exchange used for such purpose to convert the sum in
question from the first currency into the second currency and (b) the
rate or rates of exchange at which such person may in the ordinary
course of business purchase the first currency with the second currency
upon receipt of a sum paid to it in satisfaction, in whole or in part,
of any such order, judgment, claim or proof.
<PAGE>
19. PAYMENTS
19.1 PAYMENTS
On each date on which this Agreement requires an amount to be paid by
the Borrower or a Bank hereunder, the Borrower or, as the case may be,
such Bank shall make the same available to the Agent by payment in
dollars and in same day funds (or in such other funds as may for the
time being be customary in New York City for the settlement in New York
City of international banking transactions in dollars) to the account
of the Agent in Oslo or such other account as the Agent may have
specified for this purpose.
19.2 NO SET-OFF
All payments made by the Borrower hereunder shall be made free and
clear of and without any deduction for or on account of any set-off or
counterclaim.
20. SET-OFF
The Borrower authorises each Bank at any time following the occurrence
of an Event of Default to apply any credit balance to which the
Borrower is entitled on any account of the Borrower with such Bank in
satisfaction of any sum due and payable from the Borrower to such Bank
under this Agreement but unpaid; for this purpose, such Bank is
authorised to purchase with the moneys standing to the credit of any
such account such other currencies as may be necessary to effect such
application.
21. SHARING
21.1 REDISTRIBUTION OF PAYMENTS
If at any time, the proportion which any Bank (a "RECOVERING BANK") has
received or recovered (whether by payment, the exercise of a right of
set-off or combination of accounts or otherwise) in respect of its
portion of any payment (a "RELEVANT PAYMENT") to be made under this
Agreement by the Borrower for account of such Recovering Bank and one
or more other Banks is greater (the portion of such receipt or recovery
giving rise to such excess proportion being herein called an "EXCESS
AMOUNT") than the proportion thereof so received or recovered by the
Bank or Banks so receiving or recovering the smallest proportion
thereof, then:
(i) such Recovering Bank shall pay to the Agent an amount
equal to such excess amount;
(ii) there shall thereupon fall due from such Recovering
Bank an amount equal to the amount paid out by such
Recovering Bank pursuant to paragraph (i) above, the
amount so due being, for the purposes hereof, treated
as if it were an unpaid part of such Recovering
Bank's portion of such relevant payment; and
<PAGE>
(iii) the Agent shall treat the amount received by it from
such Recovering Bank pursuant to paragraph (i) above
as if such amount had been received by it from the
Borrower in respect of such relevant payment and
shall pay the same to the persons entitled thereto
(including such Recovering Bank) PRO RATA to their
respective entitlements thereto.
21.2 REPAYABLE RECOVERIES
If any sum (a "RELEVANT SUM") received or recovered by a Recovering
Bank in respect of any amount owing to it by the Borrower becomes
repayable and is repaid by such Recovering Bank, then:
(i) each Bank which has received a share of such relevant
sum by reason of the implementation of Clause 19.1
(PAYMENTS) shall, upon request of the Agent, pay to
the Agent for account of such Recovering Bank an
amount equal to its share of such relevant sum; and
(ii) there shall thereupon fall due from the Borrower to
each such Bank an amount equal to the amount paid out
by it pursuant to paragraph (i) above, the amount so
due being, for the purposes hereof, treated as if it
were the sum payable to such Bank against which such
Bank's share of such relevant sum was applied.
22. FEES
22.1 ARRANGEMENT FEE
The Borrower shall pay to the Agent for the account of the Initial Bank
hereunder an arrangement fee of the amount specified in the letter
exchanged between the Agent and Maritime Equity Management Limited
dated 17 April 1997 such fee to be payable at the Drawdown Date.
22.2 COMMITMENT FEE
The Borrower shall pay to the Agent for account of the Initial Bank a
commitment commission on the Facility Amount from day to day during the
period beginning on 23 July 1997 and ending on the Drawdown Date, such
commitment commission to be calculated at the rate of one per cent. per
annum and payable quarterly in arrears up to the Drawdown Date and on
the Drawdown Date.
<PAGE>
22.3 AGENCY FEE
The Borrower shall pay to the Agent a non-refundable agency fee of the
amount specified in the letter exchanged between the Agent and Maritime
Equity Management Limited dated 17 April 1997, such fee to be payable
on the Drawdown Date and on each anniversary thereof.
23. COSTS AND EXPENSES
23.1 TRANSACTION EXPENSES
The Borrower shall, from time to time on demand of the Agent, reimburse
the Agent for all costs and expenses including legal fees) incurred by
it in connection with the negotiation, preparation and execution of the
Facility Documents and the completion of the transactions herein
contemplated.
23.2 PRESERVATION AND ENFORCEMENT OF RIGHTS
The Borrower shall, from time to time on demand of the Agent, reimburse
the Agent, the Banks and the Security Trustee for all costs and
expenses (including legal fees) incurred in or in connection with the
preservation and/or enforcement of any of the rights of the Agent, the
Banks and the Security Trustee under the Facility Documents.
23.3 STAMP TAXES
The Borrower shall pay all stamp, registration and other taxes to which
any Facility Document or any judgment given in connection with any
Facility Document is or at any time may be subject and shall, from time
to time on demand of the Agent, indemnify the Security Trustee and the
Bank against any liabilities, costs, claims and expenses resulting from
any failure to pay or any delay in paying any such tax.
23.4 BANKS' LIABILITIES FOR COSTS
If the Borrower fails to perform any of its obligations under this
Clause 23, each Bank shall, in the proportion borne by its share of the
Loan to the amount of the Loan for the time being indemnify the Agent
against any loss incurred by it as a result of such failure and the
Borrower shall forthwith reimburse each Bank for any payment made by it
pursuant to this Clause 23.4.
24. THE AGENT AND THE BANKS
24.1 APPOINTMENT OF THE AGENT
Each Bank hereby appoints the Agent to act as its agent in connection
with this Agreement and the other Facility Documents and authorises the
Agent to exercise such rights, powers and discretions as are
specifically delegated to the Agent by the terms hereof together with
all such rights, powers and discretions as are reasonably incidental
thereto.
<PAGE>
24.2 AGENT'S DISCRETIONS
The Agent may:
(i) assume that:
(a) any representation made by the Borrower in
connection with this Agreement and the other
Facility Documents is true;
(b) no event which is or may become an Event of
Default has occurred; and
(c) the Borrower is not in breach of or default
under its obligations with this Agreement
and the other Facility Documents
unless it has actual knowledge or actual notice to
the contrary;
(ii) assume that the Facility Office of each Bank is that
identified with its signature (or, in the case of a
Transferee, at the end of the Transfer Certificate to
which it is a party as Transferee) below until it has
received from such Bank a notice designating some
other office of such Bank to replace its Facility
Office and act upon any such notice until the same is
superseded by a further such notice;
(iii) engage and pay for the advice or services of any
lawyers, accountants, surveyors or other experts
whose advice or services may to it seem necessary,
expedient or desirable and rely upon any advice so
obtained;
(iv) rely as to any matters of fact which might reasonably
be expected to be within the knowledge of the
Borrower upon a certificate signed by or on behalf of
the Borrower;
(v) rely upon any communication or document believed by
it to be genuine;
(vi) refrain from exercising any right, power or
discretion vested in it as agent hereunder unless and
until instructed by an Instructing Group as to
whether or not such right, power or discretion is to
be exercised and, if it is to be exercised, as to the
manner in which it should be exercised; and
(vii) refrain from acting in accordance with any
instructions of an Instructing Group to begin any
legal action or proceeding arising out of or in
connection with this Agreement until it shall have
received such security as it may require (whether by
way of payment in advance or otherwise) for all
costs, claims, expenses (including legal fees) and
liabilities which it will or may expend or incur in
complying with such instructions.
<PAGE>
24.3 AGENT'S OBLIGATIONS
The Agent shall:
(i) promptly inform each Bank of the contents of any
notice or document received by it from the Borrower
under this Agreement and the other Facility
Documents;
(ii) promptly notify each Bank of the occurrence of any
Event of Default or any default by the Borrower in
the due performance of or compliance with its
obligations under this Agreement and the other
Facility Documents of which the Agent has actual
knowledge or actual notice;
(iii) save as otherwise provided herein, act as agent
hereunder in accordance with any instructions given
to it by an Instructing Group, which instructions
shall be binding on all the Banks; and
(iv) if so instructed by an Instructing Group, refrain
from exercising any right, power or discretion vested
in it as agent hereunder.
24.4 EXCLUDED OBLIGATIONS
Notwithstanding anything to the contrary expressed or implied herein,
the Agent shall not:
(i) be bound to enquire as to:
(a) whether or not any representation made by
the Borrower in connection with the Facility
Documents is true;
(b) the occurrence or otherwise of any event
which is or may become an Event of Default;
(c) the performance by the Borrower of its
obligations under any of the Facility
Documents; or
(d) any breach of or default by the Borrower of
or under its obligations under any of the
Facility Documents;
(ii) be bound to account to each Bank for any sum or the
profit element of any sum received by it for its own
account;
(iii) be bound to disclose to any other person any
information relating to the Borrower if such
disclosure would or might in its opinion constitute a
breach of any law or regulations or be otherwise
actionable at the suit of any person; or
(iv) be under any obligations other than those for which
express provision is
<PAGE>
made herein.
24.5 INDEMNIFICATION
Each Bank shall, from time to time on demand by the Agent, indemnify
the Agent, in the proportion its share of the Loan bears to the amount
of the Loan at the time of such demand or, if the Loan has then been
repaid in full, against any and all costs, claims, losses, expenses
(including legal fees) and liabilities together with any VAT thereon
which the Agent may incur, otherwise than by reason of its own
negligence or wilful misconduct, in acting in its capacity as agent
hereunder.
24.6 EXCLUSION OF LIABILITIES
The Agent does not accept any responsibility for the accuracy and/or
completeness of information supplied by the Borrower in connection
herewith or with any other Facility Document or for the legality,
validity, effectiveness, adequacy or enforceability of this Agreement
or any other Facility Document and the Agent shall not be under any
liability as a result of taking or omitting to take any action in
relation to this Agreement or any other Facility Document, save in the
case of gross negligence or wilful misconduct.
24.7 NO ACTION
Each Bank agrees that it will not assert or seek to assert against any
director, officer or employee of the Agent any claim it might have
against any of them in respect of the matters referred to in Clause
24.6 (EXCLUSION OF LIABILITIES).
24.8 BUSINESS WITH THE BORROWER
The Agent and each of the Banks may accept deposits from, lend money to
and generally engage in any kind of banking or other business with the
Borrower.
24.9 RESIGNATION
The Agent may resign its appointment hereunder at any time without
assigning any reason therefor by giving not less than thirty days'
prior written notice to that effect to each of the other parties hereto
Provided that no such resignation shall be effective until a successor
for the Agent is appointed in accordance with the succeeding provisions
of this Clause 24.
24.10 SUCCESSOR AGENT
If the Agent gives notice of its resignation pursuant to Clause 24.9
then any reputable and experienced bank or other financial institution
may be appointed as a successor to the Agent by an Instructing Group
with the Borrower's consent (such consent not to be unreasonably
delayed or withheld) during the period of such notice but, if no such
successor is so appointed, the Agent may appoint such a successor
itself.
<PAGE>
24.11 RIGHTS AND OBLIGATIONS
If a successor to the Agent is appointed under the provisions of Clause
24.10 (SUCCESSOR AGENT), then (i) the retiring Agent shall be
discharged from any further obligation hereunder but shall remain
entitled to the benefit of the provisions of this Clause 24 and (ii)
its successor and each of the other parties hereto shall have the same
rights and obligations amongst themselves as they would have had if
such successor had been a party hereto.
24.12 OWN RESPONSIBILITY
It is understood and agreed by each Bank that it has itself been, and
will continue to be, solely responsible for making its own independent
appraisal of and investigations into the financial condition,
creditworthiness, condition, affairs, status and nature of the Borrower
and, accordingly, each Bank warrants to the Agent that it has not
relied and will not hereafter rely on the Agent:
(i) to check or enquire on its behalf into the adequacy,
accuracy or completeness of any information provided
by the Borrower in connection with the Facility
Documents or the transactions therein contemplated
(whether or not such information has been or is
hereafter circulated to each Bank by the Agent); or
(ii) to assess or keep under review on its behalf the
financial condition, creditworthiness, condition,
affairs, status or nature of the Borrower.
24.13 AGENCY DIVISION SEPARATE
In acting as agent hereunder for the Banks, the Agent shall be regarded
as acting through its agency division which shall be treated as a
separate entity from any other of its divisions or departments and,
notwithstanding the foregoing provisions of this Clause 24, any
information received by some other division or department of the Agent
may be treated as confidential and shall not be regarded as having been
given to the Agent's agency division.
24.14 CONFIDENTIAL INFORMATION
Notwithstanding anything to the contrary expressed or implied herein
and without prejudice to the provisions of Clause 24.13 (AGENCY
DIVISION SEPARATE), the Agent shall not as between itself and the Banks
be bound to disclose to any Bank or other person any information which
is supplied by Borrower to the Agent in its capacity as agent hereunder
for the Banks and which is identified by such member of the Group at
the time it is so supplied as being confidential information Provided
that the consent of the Borrower to such disclosure shall not be
required in relation to any information which in the opinion of the
Agent relates to an Event of Default or in respect of which the Banks
have given a confidentiality undertaking in a form satisfactory to the
Agent and the Borrower.
<PAGE>
25. BENEFIT OF AGREEMENT
This Agreement shall be binding upon and enure to the benefit of each
party hereto and its successors and permitted assigns.
26. ASSIGNMENTS AND TRANSFERS
26.1 NO ASSIGNMENT AND TRANSFER BY THE BORROWER
The Borrower shall not be entitled to assign or transfer all or any of
its rights, benefits and obligations hereunder.
26.2 ASSIGNMENTS AND TRANSFERS BY BANKS
Any Bank may at any time (and at its own cost) assign or transfer all
or any of its rights and benefits hereunder.
26.3 ASSIGNMENTS BY BANKS
If any Bank assigns all or any of its rights and benefits hereunder in
accordance with Clause 26.2 (ASSIGNMENTS AND TRANSFERS BY BANKS), then,
unless and until the assignee has agreed with the Agent and the
Security Trustee that it shall be under the same obligations towards
each of them as it would have been under if it had been an original
party hereto as a Bank, the Agent and the Security Trustee shall not be
obliged to recognise such assignee as having the rights against each of
them which it would have had if it had been such a party hereto.
26.4 TRANSFERS BY BANKS
If a Bank wishes to transfer all or any of its rights, benefits and/or
obligations hereunder as contemplated in Clause 26.2 (ASSIGNMENTS AND
TRANSFERS BY BANKS), then such transfer may be effected by the delivery
to the Agent and the Borrower of a duly completed and duly executed
Transfer Certificate in which event, on the later of the Transfer Date
specified in such Transfer Certificate and the fifth business day after
(or such earlier business day endorsed by the Agent on such Transfer
Certificate) the date of delivery of such Transfer Certificate to the
Agent:
(i) to the extent that in such Transfer Certificate such
Bank seeks to transfer its rights and obligations
hereunder, the Borrower and such Bank shall be
released from further obligations towards one another
hereunder and their respective rights against one
another shall be cancelled (such rights and
obligations being referred to in this Clause 26.4 as
"DISCHARGED RIGHTS AND OBLIGATIONS"); and
(ii) the Borrower and the Transferee party thereto shall
assume obligations towards one another and/or acquire
rights against one another which differ from such
discharged rights and obligations only insofar as the
Borrower and
<PAGE>
such Transferee have assumed and/or acquired the same
in place of the Borrower and such Bank;
26.5 TRANSFER FEES
On the date upon which a transfer takes effect pursuant to this Clause
26, the Transferee in respect of such transfer shall pay to the Agent
for its own account a transfer fee of $500.
26.6 Any assignment or transfer which is not contemplated by the express
provisions of this Clause 26 may only be made by a Bank with the prior
written consent of the Borrower and in such event, the provisions of
Clauses 26.2 (ASSIGNMENTS AND TRANSFERS BY BANKS), 26.4 (TRANSFERS BY
BANKS) and 26.5 (TRANSFER FEES) shall apply MUTATIS MUTANDIS thereto.
26.7 DISCLOSURE OF INFORMATION
Any Bank may, with the prior written consent of the Borrower (such
consent not to be unreasonably withheld or delayed), disclose to any
actual or potential assignee or to any person who may otherwise enter
into contractual relations with such Bank in relation to this Agreement
such information about the Borrower as such Bank and the Borrower shall
consider appropriate.
27. CALCULATIONS AND EVIDENCE OF DEBT
27.1 BASIS OF ACCRUAL
Interest and commitment commission shall accrue from day to day and
shall be calculated on the basis of a year of 360 days and the actual
number of days elapsed.
27.2 EVIDENCE OF DEBT
Each Bank shall maintain in accordance with its usual practice accounts
evidencing the amounts from time to time lent by and owing to it
hereunder; in any legal action or proceeding arising out of or in
connection with this Agreement and other Facility Documents, the
entries made in such accounts shall be conclusive evidence of the
existence and amounts of the obligations of the Borrower therein
recorded.
27.3 CONTROL ACCOUNTS
The Agent shall maintain on its books a control account or accounts in
which shall be recorded (i) the amount of the Advance made hereunder by
the Banks, (ii) the amount of all principal, interest and other sums
due or to become due from the Borrower to each of the Banks under the
Facility Documents and (iii) the amount of any sum received or
recovered by the Agent under the Facility Documents and each Bank's
share therein. To the extent that discrepancies exist between accounts
maintained by each Bank pursuant to clause 27.2 (EVIDENCE OF DEBT) and
control accounts maintained by the Agent under this Clause 27.3, the
control accounts herein maintained shall prevail.
<PAGE>
27.4 PRIMA FACIE EVIDENCE
In any legal action or proceeding arising out of or in connection with
this Agreement and/or any other Facility Document, the entries made in
the accounts maintained pursuant to Clause 27.2 (EVIDENCE OF DEBT) or
Clause 27.3 (CONTROL ACCOUNTS) shall be PRIMA FACIE evidence of the
existence and extent of the obligations of the Borrower therein
recorded.
27.5 CHANGE OF CIRCUMSTANCE CERTIFICATES
A certificate of the Bank as to (a) the amount by which a sum payable
to it hereunder is to be increased under Clause 10.1 (TAX GROSS-UP) or
(b) the amount for the time being required to indemnify it against any
such cost or liability as is mentioned in Clause 10.2 (TAX INDEMNITY)
or 11.1 (INCREASED COSTS) shall, in the absence of manifest error, be
conclusive for the purposes of this Agreement and PRIMA FACIE evidence
in any legal action or proceeding arising out of or in connection with
this Agreement.
28. REMEDIES AND WAIVERS
No failure to exercise, nor any delay in exercising, on the part of the
Agent, any Bank and the Security Trustee or any of them, any right or
remedy hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise of any right or remedy prevent any further
or other exercise thereof or the exercise of any other right or remedy.
The rights and remedies herein provided are cumulative and not
exclusive of any rights or remedies provided by law.
29. PARTIAL INVALIDITY
If at any time any provision hereof is or becomes illegal, invalid or
unenforceable in any respect under the law of any jurisdiction, neither
the legality, validity or enforceability of the remaining provisions
hereof nor the legality, validity or enforceability of such provision
under the law of any other jurisdiction shall in any way be affected or
impaired thereby.
30. NOTICES
30.1 COMMUNICATIONS IN WRITING
Each communication to be made hereunder shall be made in writing but,
unless otherwise stated, may be made by telex, facsimile or letter.
30.2 COMMUNICATIONS THROUGH THE AGENT
Each communication between the Banks and the Borrower hereunder shall
only be effected through the Agent.
30.3 DELIVERY
Any communication or document to be made or delivered by one party to
the other pursuant to this Agreement shall (unless the other party has
by three days' written notice to the one
<PAGE>
specified another address or telex or facsimile number) be made or
delivered to that other party at the address or telex or facsimile
number identified with its signature below and shall be deemed to have
been made or delivered when despatched and answerback received (in the
case of any communication made by telex) or (in the case of any
communication made by facsimile) when legibly received or (in the case
of any communication made by letter) when left at that address or (as
the case may be) ten days after being deposited in the post postage
prepaid in an envelope addressed to it at that address Provided that:
(i) if any such communication or document would otherwise
be deemed to have been received on a day which is not
a business day it shall be deemed to have been
received on the first business day thereafter; and
(ii) any communication or document to be made or delivered
by the Borrower to each Bank shall be effective only
when legibly received by the Bank and then only if
the same is expressly marked for the attention of the
department or officer identified with such Bank's
signature below (or such other department or officer
as such Bank shall from time to time specify for this
purpose).
30.4 ENGLISH LANGUAGE
Each communication and document made or delivered by one party to
another pursuant to this Agreement shall be in the English language or
accompanied by a translation thereof into English certified (by an
officer of the person making or delivering the same) as being a true
and accurate translation thereof.
31. LAW
This Agreement shall be governed by, and construed in accordance with,
English law.
32. JURISDICTION
32.1 ENGLISH COURTS
Each of the parties hereto irrevocably agrees for the benefit of the
Agent, the Banks and the Security Trustee that the courts of England
shall have jurisdiction to hear and determine any suit, action or
proceeding, and to settle any disputes, which may arise out of or in
connection with this Agreement and, for such purposes, irrevocably
submits to the jurisdiction of such courts.
32.2 APPROPRIATE FORUM
The Borrower irrevocably waives any objection which it might now or
hereafter have to the courts referred to in Clause 32.1 (ENGLISH
COURTS) being nominated as the forum to hear and determine any suit,
action or proceeding, and to settle any disputes, which may arise out
of or in connection with this Agreement and agrees not to claim that
any such court is not a convenient or appropriate forum.
<PAGE>
32.3 SERVICE OF PROCESS
The Borrower agrees that the process by which any suit, action or
proceeding in England is begun may be served on it by being delivered
to Clifford Chance Secretaries Limited at 200 Aldersgate Street,
London, EC1A 4JJ or other of its registered offices for the time being.
32.4 NON-EXCLUSIVE SUBMISSIONS
The submission to the jurisdiction of the courts referred to in Clause
32.1 (ENGLISH COURTS) shall not (and shall not be construed so as to)
limit the right of the Agent, the Banks or the Security Trustee to take
proceedings against the Borrower in any other court of competent
jurisdiction nor shall the taking of proceedings in any one or more
jurisdictions preclude the taking of proceedings in any other
jurisdiction, whether concurrently or not.
AS WITNESS the hands of the duly authorised representatives of the parties
hereto the day and year first before written.
<PAGE>
THE FIRST SCHEDULE
CONDITION PRECEDENT DOCUMENTS
PART 1
1. In relation to the Borrower, the Shareholder, the Managing General
Partner, the Initial Charterer and the Subsequent Charterer (herein together
referred to as the "RELEVANT PARTIES"):
(i) a copy, certified a true copy by a duly authorised
officer of the Borrower, of a Board Resolution of the
Borrower approving the execution, delivery and
performance of each of the Facility Documents to
which it is a party and the terms and conditions
thereof and authorising a named person or persons to
sign each of the Facility Documents;
(ii) a copy, certified a true copy by a duly authorised
officer of the Managing General Partner of the
Shareholder's Certificate of Registration as a
Limited Partnership and its Limited Partnership
Agreement;
(iii) a copy, certified a true copy by a duly authorised
officer of the Relevant Party, of the constitutive
documents of such Relevant Party;
(iv) a copy, certified a true copy by a duly authorised
officer of the Initial Charterer, of a Board
Resolution of the Initial Charterer approving the
execution, delivery and performance of the Initial
Charter and the terms and conditions thereof and
authorising a named person or persons to sign the
Initial Charter;
(v) a certificate of a duly authorised officer of the
Borrower setting out the names and signatures of the
persons authorised to sign, on behalf of the
Borrower, each of the Facility Documents and any
documents to be delivered pursuant thereto; and
(vi) a copy, certified a true copy by a duly authorised
officer of the Subsequent Charterer, of a Board
Resolution of the Subsequent Charterer approving the
execution, delivery and performance of the Subsequent
Charter and the terms and conditions thereof and
authorising a named person or persons to sign and
deliver the Subsequent Charter;
(vii) a copy certified a true copy by a duly authorised
officer of the Borrower of the proforma opening
balance sheet of the Borrower evidencing its capital
structure including the amount of its Working
Capital;
(viii) a certificate of a duly authorised officer of the
Managing General Partner of the Shareholder setting
out the partners (both general and limited) of the
Shareholder; and
(ix) a certificate of a duly authorised officer of the
Borrower certifying that the
<PAGE>
Shareholder is the sole Shareholder of the Borrower.
2. A copy of the Cayman Islands Exempted Limited Partnership Law and of
each such other law, decree, consent, licence, approval, registration or
declaration as is, in the opinion of counsel to the Banks, necessary to render
the Facility Documents and the Charters legal, valid, binding and enforceable,
to make them admissible in evidence in the Cayman Islands and Liberia and to
enable the Borrower lawfully to perform its obligations under the Facility
Documents.
3. An opinion of the Banks' counsel in relation to Liberian law in a form
satisfactory to the Banks.
4. An opinion of the Banks' Cayman Islands Counsel in a form satisfactory
to the Banks.
5. An opinion of the Initial Charterer's internal counsel in a form
satisfactory to the Banks relating to the Initial Charter.
6. An opinion of the Subsequent Charterer's internal counsel in a form
satisfactory to the Banks relating to the Subsequent Charter.
7. An opinion of Clifford Chance in a form satisfactory to the Banks.
8. Evidence that Clifford Chance Secretaries Limited has agreed to act as
the agent of the Borrower for the service of process in England.
9. A copy, certified to be a true copy by a duly authorised officer of the
Borrower of the Memorandum of Agreement showing the purchase price of the Vessel
to be $31,000,000.
10. A copy, certified to be a true copy by a duly authorised officer of the
Borrower of each of the Charters.
11. Valid up-to-date class certificates from a classification society
acceptable to the Agent and showing the Vessel to be in a class acceptable to
the Agent, without extension or recommendations.
12. Details of the manager of the Vessel and a certified true copy of the
Management Agreement in a form acceptable to the Banks.
13. A copy of the Bill of Sale relating to the Vessel and any other
documents required to be produced by the Seller or the Borrower pursuant to the
Memorandum of Agreement.
14. Evidence of the discharge of any existing mortgages over the Vessel.
15. Confirmation that the technical management of the Vessel is with
Universe Tankships Bermuda Ltd.
<PAGE>
PART 2
Each of the following documents duly executed by the Borrower:
1. A first preferred Liberian ship mortgage over the Vessel granted by the
Borrower in favour of the Initial Bank in a form acceptable to the Initial Bank.
2. An assignment of earnings and insurances agreement entered into by the
Borrower in favour of the Security Trustee to secure the Borrower's obligations
under this Agreement in a form acceptable to the Initial Bank.
3. An assignment of the Borrower's bank accounts in a form acceptable to
the Initial Bank.
4. A security trust deed whereby the Security Trustee agrees to hold the
benefit of the security created by the mortgage and the assignment of earnings
and insurances and the assignment of accounts referred to in paragraphs 1, 2 and
3 above on trust for the Beneficiaries named therein in a form acceptable to the
Banks.
5. All notices to be given under the assignments referred to in 2 and 3
above.
6. The Protocol of Delivery and Acceptance of the Vessel duly signed by
the Borrower and the Seller.
7. Evidence that the Vessel has been accepted for service under the
Initial Charter by the Initial Charterer for a period of approximately 15 months
from Drawdown Date on terms and conditions acceptable to the Initial Bank.
8. A Priority Agreement between the Borrower, the Initial Bank and the
Agent under this Agreement and the Agent under this Agreement and the Agent and
the lenders under the Senior Facility Agreement.
<PAGE>
THE SECOND SCHEDULE
NOTICE OF DRAWDOWN
From: Nord Ltd.
To: Christiania Bank og Kreditkasse ASA as Agent
Dear Sirs,
1. We refer to the agreement (the " JUNIOR FACILITY AGREEMENT") dated ____
August 1997 and made between ourselves as borrower, yourselves as agent and
security trustee and the Banks as defined therein. Terms defined in the Facility
Agreement shall have the same meaning in this notice.
2. We hereby give you notice that, pursuant to the Facility Agreement and
on ____________, we wish to borrow the amount of ________________ United States
Dollars (being an amount equal to the lesser of the amount of the Facility
Amount) upon the terms and subject to the conditions contained therein. We
hereby confirm that the aggregate sum of this proposed drawdown and the amount
drawndown (or to be drawndown) under the Senior Facility Agreement shall not
exceed 75% of the Fair Market Value of the Vessel.
3. We would like the Advance to have a first Interest Period of:
First Choice: _____________________________ months' duration.
Second Choice:* __________________________ months' duration.
4. We further confirm that, at the date hereof, the representations set
out in Clauses 12.1 and 12.2 of the Facility Agreement are true and that no
event which is or may become (with the passage of time, the giving of notice,
the making of any determination under the Facility Agreement or any combination
thereof) an Event of Default has occurred.
5. The proceeds of this drawdown should be credited to our account with
the Agent's New York branch.
Yours faithfully
-----------------------------
for and on behalf of
NORD LTD.
--------------------------------------------------------------------------------
* Only if the first choice of Interest Period is twelve months.
<PAGE>
THE THIRD SCHEDULE
FORM OF TRANSFER CERTIFICATE
To: Christiania Bank og Kreditkasse ASA (as Agent) and
Nord Ltd.
TRANSFER CERTIFICATE
relating to the agreement (as from time to time amended, varied, novated or
supplemented, the "FACILITY AGREEMENT") dated [ ] whereby a US$2,250,000 loan
facility was made available to [ ] (the "BORROWER") by the Banks as defined
therein in connection with which Christiania Bank og Kreditkasse ASA acted as
Agent and Security Trustee.
1. Terms defined in the Facility Agreement shall, subject to any contrary
indication, have the same meanings herein. The terms Bank, Transferee, Bank's
Participation and Amount Transferred are defined in the schedule hereto.
2. The Bank confirms that the Bank's Participation is an accurate summary
of its participation in the Facility Agreement and requests the Transferee to
accept and procure the transfer to the Transferee of a percentage of the Bank's
Participation (equal to the percentage that the Amount Transferred is of the
aggregate of the component amounts (as set out in the Schedule hereto) of the
Bank's Participation) by counter-signing and delivering this Transfer
Certificate to the Agent at its address for the service of notices specified in
the Facility Agreement.
3. The Transferee hereby requests the Agent to accept this Transfer
Certificate as being delivered to the Agent pursuant to and for the purposes of
Clause 26.2 of the Facility Agreement so as to take effect in accordance with
the terms thereof on the Transfer Date or on such later date as may be
determined in accordance with the terms thereof.
4. The Transferee warrants that it has received a copy of the Facility
Agreement together with such other information as it has required in connection
with this transaction and that it has not relied and will not hereafter rely on
the Bank to check or enquire on its behalf into the legality, validity,
effectiveness, adequacy, accuracy or completeness of any such information and
further agrees that it has not relied and will not rely on the Bank to assess or
keep under review on its behalf the financial condition, creditworthiness,
condition, affairs, status or nature of the Borrower.
5. The Transferee hereby undertakes with the Bank and each of the other
parties to the Facility Agreement that it will perform in accordance with their
terms all those obligations which by the terms of the Facility Agreement will be
assumed by it after delivery of this Transfer Certificate to the Agent and
satisfaction of the conditions (if any) subject to which this Transfer
Certificate is expressed to take effect.
6. The Bank makes no representation or warranty and assumes no
responsibility with respect to the legality, validity, effectiveness, adequacy
or enforceability of the Facility Agreement or any document relating thereto and
assumes no responsibility for the financial condition of the Borrower or
<PAGE>
for the performance and observance by the Borrower of any of its obligations
under the Facility Agreement or any document relating thereto and any and all
such conditions and warranties, whether express or implied by law or otherwise,
are hereby excluded.
7. The Bank hereby gives notice that nothing herein or in the Facility
Agreement (or any document relating thereto) shall oblige the Bank to (i) accept
a re-transfer from the Transferee of the whole or any part of its rights,
benefits and/or obligations under the Facility Agreement transferred pursuant
hereto or (ii) support any losses directly or indirectly sustained or incurred
by the Transferee for any reason whatsoever including, without limitation, the
non-performance by the Borrower or any other party to the Facility Agreement (or
any document relating thereto) of its obligations under any such document. The
Transferee hereby acknowledges the absence of any such obligations under any
such document. The Transferee hereby acknowledges the absence of any such
obligation as is referred to in (i) or (ii) above.
8. This Transfer Certificate and the rights and obligations of the parties
hereunder shall be governed by and construed in accordance with English law.
SCHEDULE
1. Bank:
2. Transferee:
3. Transfer Date:
4. Bank's Participation:
Bank's portion of the Loan:
Bank's Commitment:
5. Amount Transferred:
[Transferor Bank] [Transferee Bank]
By: By:
Date: Date:
Address:
<PAGE>
EXECUTION PAGES
THE BORROWER
NORD LTD.
By: PETER GEORGIOPOULOS
Address: c/o General Maritime Corporation
730 Fifth Avenue (15th Floor)
New York
NY 10019
USA
Attention: Peter Georgiopoulos
Tel: (212) 698 9630
Fax: (212) 698 9628
THE AGENT AND SECURITY TRUSTEE
CHRISTIANIA BANK OG KREDITKASSE ASA
By: CARL ERIK STEEN
Address: PO Box 1166
Sentrum
0107 Oslo
Norway
Attention: Shipping Department
Tel: 47 2248 5000
Fax: 47 2248 6668
<PAGE>
THE INITIAL BANK
CHRISTIANIA BANK OG KREDITKASSE ASA
By: CARL ERIK STEEN
Address: PO Box 1166
Sentrum
0107 Oslo
Norway
Attention: Shipping Department
Tel: 47 2248 5000
Fax: 47 2248 6668
