<PAGE>
CONFORMED COPY
JUNIOR FACILITY AGREEMENT
between
GENERAL MARITIME I, L.P.
as borrower
CHRISTIANIA BANK OG KREDITKASSE ASA
as agent and security trustee
and
CHRISTIANIA BANK OG KREDITKASSE ASA
as lender
Clifford Chance
London
<PAGE>
CONTENTS
<TABLE>
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CLAUSE PAGE
<S> <C>
1. Interpretation........................................................ 1
2. The Facility.......................................................... 7
3. Purpose............................................................... 7
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.............................................. 10
10. Taxes and Tax Receipts................................................ 11
11. Changes in Circumstances.............................................. 13
12. Representations....................................................... 15
13. Information Covenants................................................. 17
14. Financial Condition................................................... 18
15. General Covenants..................................................... 19
16. Events of Default..................................................... 21
17. Default Interest and Indemnity........................................ 24
18. Currency of Account and Payment....................................... 25
19. Payments.............................................................. 26
20. Set-Off............................................................... 26
21. Sharing............................................................... 26
22. Fees.................................................................. 27
23. Costs and Expenses.................................................... 28
24. The Agent and the Banks............................................... 28
25. Benefit of Agreement.................................................. 33
26. Assignments and Transfers............................................. 33
27. Calculations and Evidence of Debt..................................... 34
28. Remedies and Waivers.................................................. 35
29. Partial Invalidity.................................................... 35
30. Notices............................................................... 35
31. Law................................................................... 36
32. Jurisdiction.......................................................... 36
The First Schedule
Condition Precedent Documents................................................ 38
The Second Schedule
Notice of Drawdown........................................................... 42
The Third Schedule
Form of Transfer Certificate................................................. 43
</TABLE>
<PAGE>
THIS AGREEMENT is made on 15 May 1997
BETWEEN:
(1) GENERAL MARITIME I, L.P. (the "BORROWER");
(2) CHRISTIANIA BANK OG KREDITKASSE ASA (the "INITIAL BANK");
(3) CHRISTIANIA BANK OG KREDITKASSE ASA (in its capacity as agent, the
"AGENT"); and
(4) CHRISTIANIA BANK OG KREDITKASSE ASA (in its capacity as the security
trustee, the "SECURITY TRUSTEE").
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 $3,000,000.
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 [Union Bank of Norway and Christiania Bank og Kreditkasse
ASA as Banks, the Banks have agreed to lend to the Borrower a further
sum of up to $27,000,000 secured by first ranking security over the
assets mortgaged or charged by the Borrower to the Security Trustee
pursuant to the Financing Documents defined therein.
NOW IT IS HEREBY AGREED as follows:
1. INTERPRETATION
1.1 In this Agreement:
"ADMINISTRATIVE GENERAL PARTNER" means General Maritime (Alta) 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 EARNINGS AND INSURANCES" means an assignment of earnings
and insurances to be entered into by the Guarantor in favour of the
Security Trustee named therein pursuant to paragraph 2, Part 2 of the
First Schedule;
"ASSIGNMENT OF ACCOUNTS" means the assignment of the Guarantor's
accounts to be executed by the Guarantor pursuant to paragraph 3 of 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;
<PAGE>
"BASLE PAPER" means the paper entitled "International Convergence of
Capital Measurement 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;
"CAYMAN ISLANDS" means the Cayman Islands;
"CHARTER" means the time charterparty dated 31 March 1997 (as from time
to time amended or novated) pursuant to which the Borrower has agreed to
charter the Vessel to the Charterer for a period of at least 5 years
from the Drawdown Date;
"CHARTERER" means Mendala II Transport, Inc.
"CHARTER GUARANTEE" means the guarantee entered or to be entered into,
pursuant to paragraph 10 Part 1 of the First Schedule by the Charter
Guarantor and the Guarantor whereby the Charter Guarantor guarantees the
performance of the Charterer's obligations under the charter;
"CHARTER GUARANTOR" means OMI Corp;
"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$3,000,000 to be advanced
by the Banks 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;
<PAGE>
"FINAL REPAYMENT DATE" means the date which falls 60 months after the
Drawdown Date;
"FINANCING 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, the
Guarantee and any other document agreed between the Agent and the
Borrower to be a Financing Document;
"GUARANTEE" means the guarantee to be entered into by the Guarantor in
favour of the Security Trust pursuant to paragraph 8, Part 2 of the
First Schedule;
"GUARANTOR" means Alta Ltd., a wholly-owned subsidiary of the Borrower
in whom the ownership of the Vessel is vested;
"GENERAL PARTNERS" means the Managing General Partner and the
Administrative General Partner;
"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, any Bank and the Agent 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 into between the Guarantor and Universe
Tankships (Delaware) LLC relating to the management of the Vessel
pursuant to paragraph 12, Part 1 of the First Schedule;
"MANAGING GENERAL PARTNER" means General Maritime I Corporation, a
corporation duly incorporated under the laws of the State of Delaware,
U.S.A;
"MARGIN" means three per cent. (3%) per annum;
<PAGE>
"MEMORANDUM OF AGREEMENT" means the agreement (as from time to time
amended or novated) for the purchase and sale of the Vessel dated 31
March 1997 and made between the Guarantor and the Seller;
"MORTGAGE" means a first preferred Liberian ship mortgage over the
Vessel to be granted by the Guarantor to the Security Trustee 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;
"OBLIGORS" means each of the Borrower and the Guarantor;
"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 Guarantor 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
Junior Facility Agreement;
"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 the Initial Bank and
following the completion of any Transfer Certificates, such other banks
as may from time to time be agreed between the Borrower and the Agent;
"SELLER" means Mendala II Transport, Inc.;
"TERMINATION DATE" means the earlier of 31 May 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 26.3 (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 and
conditions set out in Clause 26.3 (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
<PAGE>
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 Borrower, the Guarantor and the
Initial Bank pursuant to paragraph 4, Part 2 of the First Schedule;
"VESSEL" means the vessel known as m/t "ALTA" 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
London and New York City;
a "CHARTER" shall be construed as a reference to any agreement
(including the Charter) 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, 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
<PAGE>
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, 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
<PAGE>
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 Financing 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.
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 $3,000,000.
3. PURPOSE
The purpose of the Facility is to provide the Borrower with funds so
that the Borrower can
<PAGE>
assist the Guarantor in financing 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 the Initial Bank shall
not 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 telex
or letter that it has received five 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 Banks to the Borrower by way of a
single Advance.
6.2 DRAWDOWN CONDITIONS
Save as otherwise provided herein, the Advance will be made by the Banks
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
<PAGE>
Facility Amount;
(iii) the aggregate sum of the amount stated in the Notice of
Drawdown and the amount drawndown or to be drawndown
under the Senior Facility Agreement shall not exceed 76%
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 Banks agree (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.
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
<PAGE>
(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.
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 twelve months, on the last day of the sixth of
those months) 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 rate 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
<PAGE>
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.
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)
otherwise than out of its own resources generated by the operations of
the Vessel, 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 from Drawdown Date, 6.25% of the amounts so
prepaid;
(c) for any prepayments made in the period beginning 24 months and
ending 36 months from Drawdown Date, 4.5% of the amounts so
prepaid;
(d) for any prepayments made in the period beginning 36 months and
ending 48 months from Drawdown Date, 2.75% 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 NO OTHER REPAYMENTS OR REBORROWING
No amount repaid or prepaid hereunder may be reborrowed.
10. TAXES AND TAX RECEIPTS
10.1 TAX GROSS-UP
<PAGE>
All payments to be made by the Borrower to any person under any of the
Financing 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.
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 Financing
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 Financing
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.
<PAGE>
10.5 EVIDENCE OF PAYMENT OF TAX
If the Borrower makes any payment under any of the Financing 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.
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
<PAGE>
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.
11.3 ILLEGALITY
If at any time it is unlawful (i) for the Initial Bank to make the
Advance or (ii) thereafter, any of the Banks to fund or allow to remain
outstanding 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 Initial Bank
shall not thereafter be obliged to make the Advance
hereunder and the Facility Amount 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 COST),
then, without in any way limiting, reducing or otherwise
qualifying the obligations of the Borrower under any of the
Clauses referred to above, such a 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
<PAGE>
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 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. This sub-clause (b) shall not in any way
limit, reduce or otherwise qualify the obligations of the
Borrower set out in Clause 4.3 of the Trust Deed.
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
and 5 of Part 1 of the First Schedule, the Borrower represents that:
(i) STATUS It is a limited partnership and the Guarantor is
a company both duly organised under the laws of the
Cayman Islands and each of the General Partners is a
corporation or company duly organised under the laws of
the State of Delaware, USA or as the case may be, the
Cayman Islands with power to enter into the Financing
Documents on behalf of the Borrower and to exercise its
rights and perform its obligations under such Financing
Documents on behalf of the Borrower and the Borrower 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 each Obligor of
the Financing Documents to which it is a party and its
performance of its obligations under such Financing
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,
no Obligor will be required to make any deduction or
withholding from any payment it may make under any of
the Financing Documents;
(iv) CLAIMS PARI PASSU Without prejudice to the security
constituted by or pursuant to any Financing Documents to
which it is a party 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
each Obligor under any Financing 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;
<PAGE>
(v) NO IMMUNITY In any proceedings taken in the Cayman
Islands in relation to any of the Financing Documents to
which it is a party, neither Obligor will 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 Financing
Documents, the choice of English law as the governing
law of those of such Financing 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
Cayman Islands, all acts, conditions and things required
to be done, fulfilled and performed in order (a) to
enable each Obligor lawfully to enter into, exercise its
rights under and perform and comply with the obligations
expressed to be assumed by it in the Financing Documents
to which it is a party, (b) to ensure that the
obligations expressed to be assumed by each Obligor in
such Financing Documents are legal, valid and binding
and (c) to make such Financing 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 Financing 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 Financing Documents; and
(ix) BINDING OBLIGATION The obligations expressed to be
assumed by each Obligor in the Financing Documents to
which it is a party are legal and valid obligations
binding on it in accordance with the terms of such
Financing Documents.
12.2 The Borrower further represents in relation to each Obligor that:
(i) NO WINDING-UP Neither Obligor has taken any corporate
action nor have any other steps been taken or legal
proceedings been started or (to the best of its
knowledge and belief) threatened against it or either of
the General Partners 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 Neither Obligor nor either of the
General Partners is in breach of or in default under any
agreement to which it is a party or which is binding on
it or any of its assets to an extent or in a manner
which might have a material adverse effect on its
business or financial condition;
<PAGE>
(iii) NO MATERIAL PROCEEDINGS No action or administrative
proceeding of or before any court or agency which might
have a material adverse effect on either Obligor's
business or financial condition has been started or
threatened;
(iv) NO OTHER BUSINESS Neither Obligor has 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 neither
Obligor has 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 Charter, the Charter
Guarantee, 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
not been disclosed to the Agent;
(vii) NO OBLIGATION TO CREATE SECURITY The execution of the
Financing Documents and its exercise of its rights and
performance of its obligations to which each Obligor is
a party 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 such Financing Documents;
(viii) EXECUTION OF FINANCING DOCUMENTS The execution of the
Financing Documents and its exercise of its rights and
performance of its obligations under such Financing
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 the present or
future revenues or assets of each Obligor;
(x) OWNERSHIP OF THE BORROWER The General Partners are the
only general partners of the Borrower;
(xi) OWNERSHIP OF THE GUARANTOR The Guarantor is a
wholly-owned subsidiary of the Borrower; and
(xii) MANAGEMENT OF THE VESSEL The Vessel will be managed by
Universe Tankships (Delaware) LLC in accordance with the
provisions of the Management Agreement.
<PAGE>
13. INFORMATION COVENANTS
13.1 ANNUAL STATEMENTS
The Borrower shall 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 Obligors' and the
Charter Guarantor's balance sheets as at the end of such financial year
and the Obligors' and the Charter Guarantor'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 as soon as the same become available, but in any
event within 90 days after the end of each of its financial half years
in each of their respective financial years, deliver to the Agent, the
Obligors' and the Charter Guarantor's balance sheets as at the end of
such accounting period and the Obligors' and the Charter Guarantor's
profit-and-loss accounts in respect of that accounting period, together
with the Obligors' cash flow reports for such period in each case
prepared in accordance with internationally accepted accounting
principles consistently applied.
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 procure that the Guarantor 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
the Obligors' and the Charter Guarantor's business, assets and financial
condition (including financial accounts and cash flow reports) as the
Agent may reasonably request.
14. FINANCIAL CONDITION
14.1 FAIR MARKET VALUE OF VESSEL
<PAGE>
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
140% of the Loan as defined in 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 from time to time Working Capital (which
shall mean Current Assets less Current Liabilities) which, when
aggregated with the Working Capital of the Guarantor, is at least
$750,000.
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 Financing Documents to
which it is a party or to ensure the legality, validity,
enforceability or admissibility in evidence the Cayman
Islands and Liberia and all other applicable
jurisdictions of the Financing Documents;
(ii) shall procure that no change of the classification or
flag of the Vessel, management of the Vessel or the
Charter shall occur without the prior written consent of
the Agent;
<PAGE>
(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 by the Guarantor 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
any of its partners save for distributions to its
partners for the payment of United States of America
income taxes, if any, resulting from their investment in
the Borrower but not in an amount greater than the taxes
that would have been payable if the Borrower had been a
United States of America tax resident corporation and
provided further that any such distribution in respect
of such tax liability may only be made with the prior
written consent of the Agent;
(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 classification status of the Vessel;
(vii) shall not, without the prior written consent of the
Agent change its partnership agreement or permit any
change to the shareholders of the General Partners or
its partners;
(viii) shall and shall procure that the Guarantor maintains all
its bank accounts with the Agent's branch in New York
and shall ensure that the Guarantor 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 Financing Documents and the Financing
Documents referred to in the Senior 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 of the Guarantor;
(xii) shall ensure that the Vessel is at all times fully
approved by the major oil
<PAGE>
companies specified in the Management Agreement;
(xiii) shall upon notice and within the time frame set by the
Agent enter into one or more Interest Rate Swap
Agreement with any Banks and shall enter into such
amendment or additions to the Financing Documents as the
Agent 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 Financing Documents and with the same
priority as is accorded to the Banks hereunder.
16. EVENTS OF DEFAULT
16.1 If:
(i) FAILURE TO PAY The Obligors or as the case may be, the
Charterer or the Charter Guarantor fails to pay any sum
due from it under this Agreement or the Guarantee or as
the case may be, under the Charter or Charter Guarantee
at any time, in the currency and in the manner specified
therein Provided that it shall not be an Event of
Default if any sums due under the Charter or the Charter
Guarantee is paid by the Charterer or, as the case may
be, the Charter Guarantor within 5 business days of the
due date for payment specified therein; or
(ii) MISREPRESENTATION Any representation or statement made
by either Obligor in any Financing Document to which it
is a party 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 them in Clause 14
(FINANCIAL CONDITION) or 15 (GENERAL COVENANTS) or the
Guarantor fails duly to perform the obligations
expressed to be assumed by it in Clause 5 of the
Guarantee; or
(iv) INSURANCE The Guarantor 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 Either Obligor fails duly to perform or
comply with any other obligation expressed to be assumed
by it in any Financing Document to which it is a party
and such failure is not remedied within thirty days
after the Agent has given notice to either Obligor
requiring the same to be remedied; or
(vi) CROSS DEFAULT If (a) any indebtedness of either of the
Obligors or any General Partner or the Charterer or the
Charter Guarantor is not paid when due (or within any
period of grace applicable thereto), (b) any
indebtedness of the either of the Obligors or any
General Partner or the Charterer or the
<PAGE>
Charter Guarantor is declared to be or otherwise becomes
due and payable prior to its specified maturity or (c)
any creditor of either of the Obligors or any General
Partner or the Charterer or the Charter Guarantor become
entitled to declare any indebtedness of either of the
Obligors or any General Partner or the Charterer or the
Charter Guarantor due and payable prior to its specified
maturity Provided that it shall not be an Event of
Default if, with respect to any General Partners, the
events specified in (a), (b) and (c) above are genuinely
disputed by such General Partner in appropriate legal
proceedings; or
(vii) INSOLVENCY AND RESCHEDULING Either Obligor or any
General Partner or the Charterer or the Charter
Guarantor 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
Agent, either Obligor or any General Partner or the
Charterer or the Charter Guarantor 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 Either Obligor or any General Partner or the
Charterer or the Charter Guarantor repudiates any
Financing Document or, as the case may be, the Charter
or the Charter Guarantee or does or causes to be done
any act or thing evidencing an intention to repudiate
any such Financing Document of Charter or Charter
Guarantee; or
(x) LEGALITY OF FINANCING DOCUMENTS At any time any act,
condition or thing required to be done, fulfilled or
performed in order (a) to enable either Obligor lawfully
to enter into, exercise its rights under and perform its
obligations expressed to be assumed by it in the
Financing Documents to which it is a party, (b) to
ensure that the obligations expressed to be assumed by
either Obligor in such Financing Documents are legal,
valid and binding or (c) to make any of such Financing
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 either Obligor to perform or comply with
any or all of its obligations under any Financing
Document to which it is a party or any of the
obligations of either Obligor under such Financing
Document are not or cease to be legal, valid and
binding; or
<PAGE>
(xii) SEIZURE BY GOVERNMENT By or under the authority of any
government, (a) the management of either Obligor is
wholly or partially displaced or the authority of either
Obligor 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 Agent may, or
may be likely to, materially and adversely affect the
ability of either Obligor or the Charterer or the
Charter Guarantor to discharge its obligations under the
Financing Documents to which it is a party or as the
case may be, the Charter or the Charter Guarantee in the
manner provided therein; or
(xiv) VARIATION OR TERMINATION OF AGREEMENTS Either of the
Memorandum of Agreement or the Charter Guarantee 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 STRUCTURE If there is any change of any of
the partners in the Borrower or to either General
Partner or any of their respective shareholders or to
the shareholding of the Guarantor without the prior
written consent of the Agent; or
(xviii) ANALOGOUS EVENT If any event occurs to either Obligor,
any General Partner the Charterer or the Charter
Guarantor 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 provided
that any such event shall not be an Event of Default if
it occurs to the Charterer or the Charterer Guarantor
after the termination of the Charter or the Charter
Guarantee in accordance with the terms specified
therein,
then, and in any such case and at any time thereafter, the Agent 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
<PAGE>
(b) declare that the Facility Amount shall be cancelled, whereupon
the same shall be cancelled and the amount thereof reduced to
zero.
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.
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.
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,
<PAGE>
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.
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
Financing 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 COST) be treated as an advance and accordingly in this Clause
17 and Clause 11.1 (INCREASED COST) 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).
<PAGE>
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 Financing 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 Financing
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 Financing 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.
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.
<PAGE>
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
(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
<PAGE>
(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
an arrangement fee of the amount specified in the letter exchanged
between the Initial Bank and Maritime Equity Management Limited dated
1st April 1997 such fee to be payable at the Drawdown Date.
22.2 COMMITMENT FEE
The Borrower shall pay to the Agent for the account of the Initial Bank
a commitment commission on the Facility Amount from day to day during
the period beginning on 1 May 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.
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 Initial Bank and
Maritime Equity Management Limited dated 1st 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
Financing 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 Financing Documents.
<PAGE>
23.3 STAMP TAXES
The Borrower shall pay all stamp, registration and other taxes to which
any Financing Document or any judgment given in connection with any
Financing 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 Financing 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.
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
Financing 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 Financing 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
<PAGE>
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.
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 Financing 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 Financing 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:
<PAGE>
(i) be bound to enquire as to:
(a) whether or not any representation made by the
Borrower in connection with the Financing
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 Financing
Documents; or
(d) any breach of or default by the Borrower of or
under its obligations under any of the Financing
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 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 Financing Document or for the legality,
validity, effectiveness, adequacy or enforceability of this Agreement or
any other Financing 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 Financing 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).
<PAGE>
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.
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 Financing 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.
<PAGE>
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.
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.
<PAGE>
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 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.
<PAGE>
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 Financing 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 Initial Bank, (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 Financing Documents and (iii) the amount of any sum received or
recovered by the Agent under the Financing 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.
27.4 PRIMA FACIE EVIDENCE
In any legal action or proceeding arising out of or in connection with
this Agreement and/or any other Financing 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 COST) 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.
<PAGE>
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 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.
<PAGE>
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 Bank 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.
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 its registered office 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 General Managing Partner, the Guarantor,
the Charterer and the Charter Guarantor (herein together referred to as the
"RELEVANT PARTIES"):
(i) a copy, certified a true copy by a duly authorised
officer of the Managing General Partner of the Borrower
of the Borrower's Certificate of Registration as a
Limited Partnership and its Limited Partnership
Agreement;
(ii) a copy, certified a true copy by a duly authorised
officer of the Relevant Party, of the constitutive
documents of such Relevant Party;
(iii) a copy, certified a true copy by a duly authorised
officer of the Managing General Partner of the Borrower,
of a Board Resolution of the Managing General Partner on
behalf of the Borrower approving the execution, delivery
and performance of each of the Financing Documents to
which it is a party and the terms and conditions thereof
and authorising a named person or persons to sign each
of such Financing Documents and any documents to be
delivered by the Borrower pursuant hereto;
(iv) a copy, certified a true copy by a duly authorised
officer of the Charterer, of a Board Resolution of the
Charterer approving the execution, delivery and
performance of the Charter and the terms and conditions
thereof and authorising a named person or persons to
sign the Charter;
(v) a certificate of a duly authorised officer of each
Relevant Party setting out the names and signatures of
the persons authorised to sign, on behalf of such
Relevant Party, each of the Financing Documents and the
Charter or the Charter Guarantee (to the extent it is a
party thereto) and any documents to be delivered
pursuant thereto; and
(vi) a copy, certified a true copy by a duly authorised
officer of the Managing General Partner of the Borrower
of each of the powers of attorney, if any, issued
pursuant to the resolutions or other authority referred
to in (iii) above.
(vii) a copy, certified a true copy by a duly authorised
officer of the Charter Guarantor, of a Board Resolution
of the Charter Guarantor approving the execution,
delivery and performance of the Charter Guarantee and
the terms and conditions thereof and authorising a named
person or persons to sign the Charter Guarantee;
(viii) a copy certified a true copy by a duly authorised
officer of the Managing General Partner of the Borrower
of the proforma opening balance sheet of the Borrower
evidencing its capital structure including the amount of
its
<PAGE>
Working Capital;
(ix) a certificate of a duly authorised officer of the
Managing General Partner of the Borrower setting out the
partners (both general and limited) of the Borrower;
(x) a copy, certified a true copy by a duly authorised
officer of the Guarantor, of a Board Resolution of the
Guarantor approving the execution, delivery and
performance of each of the Financing Documents to which
it is a party and the terms and conditions thereof and
authorising a named person or persons to sign each such
Financing Document.
(xi) a certificate of a duly authorised officer of the
Managing General Partner setting out the shareholders of
the Managing General Partner.
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 Initial Bank, necessary to render the
Financing Documents and the Charter 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 their respective obligations under the
Financing Documents.
3. An opinion of the Initial Bank's counsel in relation to Liberian law in a
form satisfactory to the Initial Bank.
4. An opinion of the Initial Bank's Cayman Islands Counsel in a form
satisfactory to the Initial Bank.
5. An opinion of the Charter Guarantor's internal counsel in a form
satisfactory to the Initial Bank relating to the Charterer and the Charter
Guarantor.
6. An opinion of Clifford Chance in a form satisfactory to the Initial Bank.
7. Evidence that Clifford Chance Secretaries Limited has agreed to act as
the agent of the Borrower and the Guarantor for the service of process in
England.
8. A copy, certified to be a true copy by a duly authorised officer of the
Managing General Partner of the Borrower of the Memorandum of Agreement showing
the purchase price of the Vessel to be $39,000,000;
9. A copy, certified to be a true copy of a duly authorised officer of the
Managing General Partner of the Borrower, of the Charter.
10. A copy of the Charter Guarantee on terms and conditions acceptable to the
Initial Bank.
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
<PAGE>
in a form acceptable to the Initial Bank.
13. A Priority Agreement between the Borrower, the Initial Bank and the Agent
under this Agreement and the Agent and the lenders under the Senior Facility
Agreement.
14. A copy of the Bill of Sale relating to the Vessel and any other documents
required to be produced by the Borrower pursuant to the Memorandum of Agreement.
15. Evidence of discharge of any existing mortgage.
<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
Guarantor in favour of the Security Trustee in a form acceptable to the Initial
Bank.
2. An assignment of earnings and insurances agreement entered into by the
Guarantor in favour of the Security Trustee to secure the Guarantor's
obligations under the Guarantee in a form acceptable to the Initial Bank.
3. An assignment of the Guarantor'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
Initial Bank.
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. A guarantee whereby the Guarantor guarantees the performance of the
Borrower's obligation hereunder in a form acceptable to the Initial Bank.
8. Evidence that the Vessel has been accepted for service under the Charter
by the Charterer for at least 5 years on terms and conditions acceptable to the
Initial Bank.
<PAGE>
THE SECOND SCHEDULE
NOTICE OF DRAWDOWN
From: General Maritime I, L.P.
To: Christiania Bank og Kreditkasse ASA as Agent
Dear Sirs,
1. We refer to the agreement (the "JUNIOR FACILITY AGREEMENT") dated [ ]
and made between ourselves as borrower, yourselves as agent and security
trustee and yourselves as Initial Bank. Terms defined in the Junior Facility
Agreement shall have the same meaning in this notice.
2. We hereby give you notice that, pursuant to the Facility Agreement and on
[date of proposed borrowing], 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 76% 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 Junior 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 Junior Facility Agreement or any
combination thereof) an Event of Default has occurred.
5. The proceeds of this drawdown should be credited to Alta Ltd.'s account
with the Agent's New York branch.
Yours faithfully
-------------------------
for and on behalf of
GENERAL MARITIME I, L.P.
--------------------------------------------------------------------------------
* Only if the first choice Interest Period is twelve months.
<PAGE>
THE THIRD SCHEDULE
FORM OF TRANSFER CERTIFICATE
To: Christiania Bank og Kreditkasse ASA (as Agent) and
General Maritime I, L.P.
TRANSFER CERTIFICATE
relating to the agreement (as from time to time amended, varied, novated or
supplemented, the "FACILITY AGREEMENT") dated [ ] whereby a US$3,000,000 loan
facility was made available to [ ] (the "BORROWER") by Christiania Bank og
Kreditkasse ASA 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
GENERAL MARITIME I, L.P.
acting by its General Managing Partner
GENERAL MARITIME I CORPORATION
By: Peter C Georgiopoulos, President
Address: c/o General Maritime Corporation
730 Fifth Avenue (15th Floor)
New York
NY 10019
USA
Attn: Peter Georgiopoulos
Tel: 00 212 698 9630
Fax: 00 212 698 9628
THE INITIAL BANK
CHRISTIANIA BANK OG KREDITKASSE ASA
By: Justin F McCarthy III, Attorney-in-Fact
Address: PO Box 1166
Sentrum
0107 Oslo
Norway
Attn: Shipping Department
Tel: 00 47 2248 5000
Fax: 00 47 2248 6668
<PAGE>
THE AGENT AND SECURITY TRUSTEE
CHRISTIANIA BANK OG KREDITKASSE ASA
By: Justin F McCarthy III, Attorney-in-Fact
Address: PO Box 1166
Sentrum
0107 Oslo
Norway
Attn: Shipping Department
Tel: 00 47 2248 5000
Fax: 00 47 2248 6668
