<PAGE>
<PAGE>1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1995
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number 0-457
GULFMARK INTERNATIONAL, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 74-1203713
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5 POST OAK PARK, SUITE 1170 77027
Houston, Texas
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(713) 963-9522
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the Registrant was required to file such reports)
and (2) has been subject to such filing requirements for the past 90
days. YES /X/ NO / /
Number of shares of Common Stock, $1.00 Par Value, outstanding as of
August 10, 1995: 3,321,385.<PAGE>
<PAGE>2
PART 1. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The unaudited consolidated financial statements included herein
have been prepared by the Registrant (the "Company") pursuant to the
rules and regulations of the Securities and Exchange Commission.
These consolidated financial statements reflect all adjustments,
consisting of normal recurring adjustments, which the Company
considers necessary for the fair presentation of such financial
statements for the periods indicated. Certain information relating to
the Company's organization and footnote disclosures normally included
in financial statements prepared in accordance with generally accepted
accounting principles has been condensed or omitted in this Form 10-Q
pursuant to such rules and regulations. However, the Company believes
that the disclosures herein are adequate to make the information
presented not misleading. It is suggested that these financial
statements be read in conjunction with the financial statements and
notes thereto included in the Company's Annual Report on Form 10-K for
the year ended December 31, 1994, and the information included in the
Proxy Statement dated April 10, 1995.
2<PAGE>
<PAGE>3
GULFMARK INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, December 31,
1995 1994
(Unaudited) (Audited)
--------- -------
<S> <C> <C>
(In thousands)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents............................................... $ 2,188 $ 2,989
Accounts and notes receivable........................................... 7,712 7,938
Inventory, prepaids and other........................................... 1,483 1,781
------ ------
Total current assets.................................................. 11,383 12,708
------ ------
INVESTMENT IN ENERGY VENTURES, INC........................................ 27,699 21,588
------ ------
PROPERTY AND EQUIPMENT, at cost, net of accumulated
depreciation of $13,242,000 in 1995 and $11,179,000 in 1994............. 54,132 51,405
------ ------
OTHER ASSETS.............................................................. 2,693 2,975
------ ------
$95,907 $88,676
====== ======
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term borrowings and current portion of long-term debt............. $ 1,589 $ 1,487
Accounts payable........................................................ 2,161 1,540
Accrued payroll and related expenses.................................... 573 1,009
Other accrued liabilities............................................... 1,192 1,738
------ ------
Total current labilities.............................................. 5,515 5,774
------ ------
LONG-TERM DEBT............................................................ 27,970 26,727
------ ------
DEFERRED TAXES AND OTHER.................................................. 8,054 2,629
------ ------
MINORITY INTEREST......................................................... 411 521
------ ------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock, $1 par value; 10,000,000 shares authorized;
3,321,385 shares issued and outstanding............................... 3,321 3,321
Additional paid-in capital.............................................. 23,338 23,338
Retained earnings....................................................... 27,206 30,139
Cumulative translation adjustment....................................... (3,567) (3,773)
Unrealized gain on investment, net of tax............................... 3,659 --
------ ------
Total stockholders' equity............................................ 53,957 53,025
------ ------
$95,907 $88,676
====== ======
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
3<PAGE>
<PAGE>4
GULFMARK INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
-------------------- ---------------------
1995 1994 1995 1994
-------- -------- ------- ------
(In thousands, except per share amounts)
<S> <C> <C> <C> <C>
REVENUES............................................... $ 9,535 $ 8,662 $17,035 $16,709
COSTS AND EXPENSES:
Direct operating expenses............................ 6,861 5,781 13,195 11,518
Selling, general and administrative expenses......... 1,348 1,605 2,696 2,792
-------- -------- ------- -------
8,209 7,386 15,891 14,310
-------- -------- ------- -------
OPERATING INCOME....................................... 1,326 1,276 1,144 2,399
-------- -------- ------- -------
OTHER INCOME (EXPENSES):
Equity in earnings of Energy Ventures, Inc........... 393 46 761 238
Interest expense..................................... (856) (614) (1,443) (1,210)
Interest income...................................... 37 53 85 102
Gain on sale of vessel............................... -- 842 -- 842
Other................................................ 16 (6) 96 (35)
-------- -------- ------- -------
(410) 321 (501) (63)
-------- -------- ------- -------
INCOME BEFORE INCOME TAXES AND EXTRAORDINARY ITEM...... 916 1,597 643 2,336
INCOME TAX PROVISION................................... 3,628 673 3,576 913
------- -------- ------- -------
INCOME (LOSS) BEFORE EXTRAORDINARY ITEM................. (2,712) 924 (2,933) 1,423
EXTRAORDINARY ITEM ATTRIBUTABLE TO ENERGY VENTURES, INC.
(Less applicable income tax benefit of $51)........... -- -- -- (706)
------- -------- ------- -------
NET INCOME (LOSS)....................................... $ (2,712) $ 924 $(2,933) $ 717
======= ======== ======= =======
EARNINGS (LOSS) PER SHARE:
Income (loss) before extraordinary item............... $ (0.81) $ 0.28 $ (0.88) $ 0.43
Extraordinary item attributable to Energy
Ventures, Inc...................................... -- -- -- (0.21)
------- -------- ------- -------
Net income (loss)..................................... $ (0.81) $ 0.28 $ (0.88) $ 0.22
======= ======== ======= =======
WEIGHTED AVERAGE SHARES OUTSTANDING..................... 3,321 3,320 3,321 3,320
======= ======== ======= =======
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
4<PAGE>
<PAGE>5
GULFMARK INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
----------------------
1995 1994
------- --------
(In thousands)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)......................................................... $ (2,933) $ 717
Adjustments to reconcile net income (loss) to net cash provided
by operations:
Depreciation and amortization............................................ 2,764 2,521
Equity in (earnings) loss of Energy Ventures, Inc........................ (761) 519
Deferred and other income tax provision.................................. 3,532 833
Gain on sale of vessel................................................... -- (842)
Change in assets and liabilities:
Accounts and notes receivable.......................................... 304 (101)
Inventory, prepaids and other.......................................... 332 (279)
Accounts payable, accrued payroll and related expenses................. 166 (818)
Other accrued liabilities.............................................. (457) 11
Other, net............................................................... (127) (80)
------- -------
Net cash provided by operating activities.................................. 2,820 2,481
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment...................................... (3,493) (141)
Expenditures for drydocking and main engine overhaul..................... (811) (556)
Proceeds from sales of property and equipment............................ 18 199
------ -------
Net cash used in investing activities...................................... (4,286) (498)
------ -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments of debt....................................................... (14,936) (781)
Proceeds from debt, net.................................................. 15,563 893
Other.................................................................... 38 143
------ -------
Net cash provided by financing activities.................................. 665 255
------ -------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS....................... (801) 2,238
CASH AND CASH EQUIVALENTS AT BEGINNING OF THE PERIOD....................... 2,989 5,510
------ -------
CASH AND CASH EQUIVALENTS AT END OF THE PERIOD............................. $ 2,188 $ 7,748
====== =======
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid.............................................................. $ 1,566 $ 1,170
====== =======
Income taxes paid.......................................................... $ 48 $ 39
====== =======
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
5<PAGE>
<PAGE>6
GULFMARK INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(1) INVESTMENT IN ENERGY VENTURES, INC.
At June 30, 1995, the Company owned 17% of the outstanding stock
of Energy Ventures, Inc. ("Energy Ventures"), a publicly-traded (NYSE
trading symbol "EVI") international oilfield equipment and service
company which manufactures artificial lift and completion systems,
drill pipe and premium tubulars and provides rig contracting services.
The Company's ownership percentage was diluted from 20% as of March
31, 1995 to its current percentage of 17% as a result of Energy
Ventures' issuance of 2,250,000 shares on June 30, 1995 in connection
with an acquisition.
Prior to June 30, 1995, the Company accounted for Energy Ventures
on the equity method; however, the reduction in the Company's
ownership interest to 17% necessitated a change to the cost method and
the application of certain requirements of Statement of Financial
Accounting Standards No. 115 - Accounting for Certain Investments in
Debt and Equity Securities ("SFAS No. 115"). Under the cost method,
the Company will prospectively no longer record its proportionate
share of Energy Ventures' earnings as was done prior to June 30, 1995
under the equity method. In accordance with SFAS No. 115, the portion
of the investment which could qualify for sale within one year
(approximately 600,000 shares) is reflected in the accompanying
interim balance sheet at the quoted market value as June 30, 1995.
Unrealized gains and losses on this portion of the investment are
reported as a separate component of stockholders' equity, net of the
related deferred taxes, until realized. The remaining shares held are
carried at cost. The quoted market value of Energy Ventures' shares
held by the Company may not be the value that would be realized should
the Company dispose of some or all of the shares in a short period of
time.
The following represents unaudited summarized income statements
for Energy Ventures. For more information regarding Energy Ventures'
financial condition and operations, reference is made to Energy
Ventures' June 30, 1995 Form 10-Q filed with the Securities and
Exchange Commission.
6<PAGE>
<PAGE>7
<TABLE>
<CAPTION>
SUMMARIZED INCOME STATEMENTS
(Unaudited)
---------------------------------------------------------------------------------------
Three Months Ended Six Months Ended
June 30, June 30,
-------------------- --------------------
1995 1994 1995 1994
-------- -------- -------- --------
(In thousands)
<S> <C> <C> <C> <C>
Revenues................................ $ 79,747 $ 50,566 $152,407 $105,684
Expenses................................ (72,860) (47,065) (138,866) (98,761)
Other expenses, net..................... (4,144) (3,306) (8,168) (5,392)
-------- -------- -------- --------
Income before income taxes.............. 2,743 195 5,373 1,531
Income tax provision.................... 990 68 1,989 549
-------- -------- -------- --------
Income before extraordinary charge...... 1,753 127 3,384 982
Extraordinary charge, net of taxes...... -- -- -- (3,784)
-------- -------- -------- --------
Net income (loss)........................ $ 1,753 $ 127 $ 3,384 $ (2,802)
======== ======== ======== ========
</TABLE>
(2) SHORT-TERM BORROWINGS
On July 8, 1993, the Company entered into a one year loan
facility agreement with a bank under which the Company can borrow up
to GBP3,300,000. This facility was renewed for an additional year in
1994 and again in July 1995.
(3) LONG-TERM DEBT
On June 16, 1995, the Company replaced GBP8,925,000 of its loan
facility due in 1999 with a GBP16,500,000 loan facility due in 2002.
Interest is at 1 3/8% over the lending bank's LIBOR rate (8.0% as of
June 30, 1995). Principal payments of GBP235,000 are due quarterly
for the first year of the loan and GBP395,000 thereafter with a final
payment of GBP6,475,000 due in 2002. The Company drew down
GBP9,250,000 of the funds on June 16, 1995 to replace existing loans
and expects to draw down the remaining GBP7,250,000 in early 1996 upon
delivery of a vessel it is currently constructing for use in the North
Sea.
7<PAGE>
<PAGE>8
The following is a summary of scheduled debt maturities by year
(in thousands):
<TABLE>
<S> <C>
Six months ended December 31, 1995...........$ 749
1996......................................... 2,937
1997......................................... 7,164
1998......................................... 11,667
1999......................................... 2,519
2000......................................... 2,519
Thereafter................................... 1,914
------
$29,469
======
</TABLE>
(5) INCOME TAXES
As a result of the change from the equity to the cost method of
accounting for it's investment in Energy Ventures discussed in Note 1
above, the tax treatment for this investment changed, and deferred
taxes of $3,374,000 were recorded.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
At June 30, 1995, the Company had $2.2 million in cash and cash
equivalents as compared to $3.0 million at December 31, 1994.
The Company has fulfilled final conditions for contracts with a
shipyard to construct two supply vessels at an anticipated cost of
$14.2 million each. These vessels are planned for service in the
North Sea with delivery expected in the first quarter of 1996 for one
vessel and the fourth quarter of 1996 for the other. The Company is
required to make interim construction payments of $5.0 million in 1995
and $0.8 million in 1996 representing approximately 20% of the vessel
cost. Final payment is due upon delivery of each vessel. As of June
30, $3.1 million of the required interim construction payments had
been made. In addition the Company expects to receive a 9.5% subsidy,
$1.5 million per vessel, from the Norwegian government within twelve
months of delivery. The Company intends to finance the cost of these
vessels primarily through additional borrowings. Approximately $11.6
million will be provided under a new bank loan and $11.0 million
through a combination of drawing on unused borrowing capacity and
increased borrowing capacity under an existing revolving credit
facility.
8<PAGE>
<PAGE>9
During the six month period ended June 30, 1995, expenditures for
scheduled drydockings of vessels were $811,000 and for vessel upgrades
and modifications were $648,000. The latter is primarily attributable
to modifications required under a new two year contract for a vessel
to work in Brazil. The Company estimates that capital and maintenance
expenditures, excluding any expenditures to acquire additional
vessels, will be approximately $1.3 million for the remainder of 1995,
of which $0.5 million is related to scheduled drydockings. The
remainder primarily represents vessel upgrades and non-marine
expenditures which are not subject to firm commitments, and the
Company may modify its plans as appropriate.
At June 30, 1995, the Company had outstanding long-term debt of
$29.5 million borrowed under various facilities. These facilities are
secured by first preferred ship mortgages on ten of the Company's
vessels and assignments of such vessels' earnings. Interest on the
borrowings accrues at between LIBOR plus 1 3/8% and LIBOR plus 1 3/4%
per annum. Scheduled debt repayments are expected to be $750,000 for
the remainder of 1995. The loan facility agreements place certain
restrictions on the ability of the subsidiaries subject to these
agreements to pay dividends. Cash held by these subsidiaries was $2.1
million as of June 30, 1995. As of July 1, 1995, the Company could
borrow up to $5.7 million under its short-term credit facilities and
$1.5 million under its long-term credit facility without providing
additional security to its lenders. An additional $4.6 million is
available under a revolving credit facility with the provision of
further security either through vessel mortgages or securing long-term
charters or a combination thereof. This available credit is expected
to be used in connection with the building of the two new vessels
discussed above.
Substantially all of the Company's tax provision is for deferred
taxes. As of December 31, 1994, the Company had net operating loss
carryforwards for tax purposes which are available to offset taxable
income generated of $6,999,000 for United States tax purposes and of
$16,991,000 for United Kingdom tax purposes in future years. The
Company also has foreign tax credits of $512,000 and alternative
minimum tax credits of $292,000 available to offset taxable income
generated for United States tax purposes.
The Company believes that current reserves of cash and short-term
investments, cash flows from operations and access to various credit
arrangements will provide sufficient resources to finance internal
operating requirements. The Company continues, however, to actively
seek further investment opportunities. Such investments may require
the expenditure of significant resources, either in cash, notes, stock
9<PAGE>
<PAGE>10
or a combination thereof.
RESULTS OF OPERATIONS
The Company's operating income was $1,326,000 for the quarter
ended June 30, 1995 as compared to $1,276,000 in the same period last
year. Revenues for the quarter were $9,535,000 as compared to
$8,662,000 for the comparative prior year period.
Marine results continue to be impacted by a softer market in
Southeast Asia. Although a lack of seasonal earnings in the North Sea
resulted in lower income for the 1995 second quarter versus 1994,
vessel demand has improved resulting in more term contract coverage.
Thus the North Sea earnings increased between the first quarter and
second quarter of 1995.
Results for the quarter were further impacted by acceptance of a
two year contract for the Seapower with Petrobras, the state owned
Brazilian oil company, which required the vessel's removal from
service beginning in January for modifications to substantially
upgrade the vessel for duties largely related to the carriage of bulk
material products. The vessel began the contract in mid-May, and the
third quarter is expected to reflect the full benefit from this two-
year charter.
The erosion control segment reported earnings for the 1995 second
quarter in contrast to a loss for the 1994 second quarter. Revenues
for this segment were double over the 1994 second quarter.
A net loss of $2,712,000 or $0.81 per share for the second
quarter is due to a non-cash charge of $3,374,000 or $1.02 per share
for additional deferred taxes associated with the Company's investment
in Energy Ventures, the Company's 17% owned affiliate. As discussed in
the notes to the financial statements, the Company changed from the
equity to the cost method of accounting for its investment in Energy
Ventures when its ownership interest was diluted from 20% to 17% on
June 30, 1995. This change in method in turn changed the tax
treatment for this investment.
At Energy Ventures, net income improved substantially from the
near break-even results of the 1994 second quarter with the Company
reporting equity in Energy Ventures' earnings of $393,000 for the 1995
second quarter as compared to $46,000 for the 1994 second quarter.
Prospectively, as the Company follows the cost method, it will no
longer record its proportionate share of Energy Ventures' earnings as
was done in the past under the equity method.
10<PAGE>
<PAGE>11
Other income and expenses for the quarter reflects a $201,000
charge to write-off deferred loan costs in connection with the
refinancings discussed above under "Liquidity and Capital
Resources." The 1994 second quarter included an $842,000 gain on the
sale of the 1974-built Highland Sentinel.
The Company's operating income for the six months ended June 30,
1995 was $1,144,000 versus $2,399,000 for the comparative prior year
period. In addition to the factors affecting the marine results for
the quarter as discussed above, several vessels were offhire for
drydockings earlier in the year. Anticipating a pickup in market
demand later in the year, the Company accelerated otherwise required
survey and drydock activity to the first of the year in order to take
full advantage of the improvements expected in the balance of the
year. In Southeast Asia, results for the first part of the period
were affected by the increased offhire days caused by four of the
eight vessels in the region being in drydock including two of the
region's most productive units.
The Company had a net loss of $2,933,000 or $0.88 per share for
the six months ended June 30, 1995 versus net income of $717,000 or
$0.22 per share for the six months ended June 30, 1994. As discussed
above, the June 30, 1995 period included a $3,374,000 non-cash charge
for additional taxes associates with the Company's investment in
Energy Ventures. Also affecting comparisons between the periods is a
$706,000 extraordinary charge or $0.21 per share in 1994 attributable
to Energy Ventures, which incurred a penalty of $3.8 million, net of
tax, from the prepayment of certain debt.
CURRENCY FLUCTUATIONS AND INFLATION
A significant portion of the Company's operations are overseas,
therefore the Company is potentially exposed to currency fluctuations
and exchange risks. Charters for vessels in the Company's North Sea
fleet are primarily denominated in British Pounds Sterling ("GBP") as
are substantially all the operating costs. North Sea operations are
expected to account for approximately $6.8 million of cash flows from
operations in 1995. Fluctuations in the GBP/Dollar exchange rate for
1995 thus far have been minimal as was also the case in 1994 with a
high of GBP=U.S.$1.64 to a low of GBP=U.S.$1.55 for the period from
January 1, 1995 to August 1, 1995 for an average of GBP = $1.59 for
the period. The Company hedged the effect on cash flows of these
fluctuations in the GBP/Dollar exchange rates through GBP denominated
borrowings which account for 90% or $26.5 million of total debt. All
of the estimated $1.5 million in debt repayments for 1995 are
11<PAGE>
<PAGE>12
attributable to GBP denominated debt.
Reflected in the accompanying balance sheet for June 30, 1995, is
a $(3,567,000) cumulative translation adjustment relating to the lower
GBP exchange rate as of June 30, 1995 and to the Company's equity
share of translation adjustments reported by Energy Ventures, its
equity investee. Changes in the cumulative translation adjustment are
non-cash items.
Where currency risks are high, as in Brazil, the Company has
generally accepted only a small percentage of charterhire in the local
currency and the remainder is paid in U.S. Dollars. Under the two
year vessel charter for service in Brazil, the Company anticipates
that expenses in the local currency will approximate the portion of
charterhire paid in local currency.
12<PAGE>
<PAGE>13
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Company has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
GulfMark International, Inc.
(Registrant)
By: /s/ Frank R. Pierce
-----------------------------
Frank R. Pierce
Executive Vice President
(Principal Financial Officer)
By: /s/ Elizabeth D. Brumley
------------------------------
Elizabeth D. Brumley
Controller
(Principal Accounting Officer)
Date: August 14, 1995
13
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE FOLLOWING SETS FORTH CERTAIN SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
THE CONDENSED CONSOLIDATED FINANICAL STATEMENTS OF GULFMARK INTERNATIONAL, INC.
AS OF JUNE 30, 1995, AND THE CONDENSED CONSOLIDATED STATEMENT OF INCOME FOR THE
SIX MONTHS ENDED JUNE 30, 1995, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 2,188
<SECURITIES> 0
<RECEIVABLES> 7,712
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 11,383
<PP&E> 67,374
<DEPRECIATION> 13,242
<TOTAL-ASSETS> 95,907
<CURRENT-LIABILITIES> 5,515
<BONDS> 0
<COMMON> 26,659
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 95,907
<SALES> 17,035
<TOTAL-REVENUES> 17,035
<CGS> 13,195
<TOTAL-COSTS> 15,891
<OTHER-EXPENSES> 96
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,443
<INCOME-PRETAX> 643
<INCOME-TAX> 3,576
<INCOME-CONTINUING> (2,933)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,933)
<EPS-PRIMARY> (0.88)
<EPS-DILUTED> (0.88)
</TABLE>
<PAGE>
LOAN AGREEMENT
--------------
Dated s/7th/ June, 1995
between
GULF OFFSHORE N.S. LIMITED
as Borrower
-and-
CHRISTIANIA BANK OG KREDITKASSE
as Lender and Security Trustee
relating to
a GBP16,500,000 facility
WATSON, FARLEY & WILLIAMS
-----------------------------------
LONDON . PARIS . OSLO
Affiliated firm . NEW YORK . ATHENS<PAGE>
CONTENTS
CLAUSE PAGE
1. INTERPRETATION -1-
2. FACILITY -8-
3. DRAWDOWN -8-
4. INTEREST -9-
5. INTEREST PERIODS -9-
6. DEFAULT INTEREST -10-
7. REPAYMENT AND PREPAYMENT -11-
8. CONDITIONS PRECEDENT -12-
9. REPRESENTATIONS AND WARRANTIES -13-
10. GENERAL UNDERTAKINGS -15-
11. CORPORATE UNDERTAKINGS -18-
12. SECURITY COVER -19-
13. PAYMENTS AND CALCULATIONS -20-
14. APPLICATION OF RECEIPTS -21-
15. APPLICATION OF EARNINGS -22-
16. EVENTS OF DEFAULT -22-
17. FEES AND EXPENSES -27-
18. INDEMNITIES -28-
19. NO SET-OFF OR TAX DEDUCTION -30-
20. ILLEGALITY, ETC -30-
21. INCREASED COSTS -31-
22. CHANGES IN CIRCUMSTANCES -32-
23. SET-OFF -33-
24. TRANSFERS AND CHANGES IN LENDING OFFICES -33-
25. VARIATIONS AND WAIVERS -36-
26. NOTICES -37-
27. THE SECURITY TRUSTEE -38-
28. SUPPLEMENTAL -42-
29. LAW AND JURISDICTION -42-
EXECUTION
SCHEDULE 1 DRAWDOWN NOTICE
SCHEDULE 2 CONDITION PRECEDENT DOCUMENTS
SCHEDULE 3 TRANSFER CERTIFICATE
SCHEDULE 4 COMPLIANCE CERTIFICATE
APPENDIX A FORM OF MORTGAGE
APPENDIX B FORM OF DEED OF COVENANT
APPENDIX C FORM OF ACCOUNT SECURITY DEED
APPENDIX D FORM OF GUARANTEE
<PAGE>
LOAN AGREEMENT made on the day of June, 1995
--------------
BETWEEN
-------
(1) GULF OFFSHORE N.S. LIMITED, a company incorporated in
England with company number 2541716, whose registered office
is at 10 Charlotte Road, London SW13 9QJ, England (the
"Borrower");
(2) CHRISTIANIA BANK OG KREDITKASSE, acting through its office
at Middelthunsgate 17, 0368 Oslo, Norway, as Lender; and
(3) CHRISTIANIA BANK OG KREDITKASSE, acting through its office
at Middelthunsgate 17, 0368 Oslo, Norway, as Security
Trustee.
WHEREAS the Lender has agreed to make available to the Borrower a
facility of GBP16,500,000 to refinance certain existing
indebtedness of the Borrower and to provide post-delivery finance
for the acquisition of a platform supply vessel presently under
construction for the Borrower by Brattvag Skipsverft AS and known
during construction as Yard No. 66.
IT IS AGREED as follows:
1. INTERPRETATION
--------------
1.01 Subject to Clause 1.07, in this Agreement:
"Account Security Deed" means a deed creating security in
respect of the Earnings Account in the form set out in
Appendix C;
"Advance" means the amount of each borrowing by the Borrower
under this Agreement;
"Assigned Value" means, in relation to each Ship, 60 per
cent. of the value in Sterling set out against its name
below, such values being reduced by 8 per cent. on each
anniversary of the first Drawdown Date (except that, in
relation to the Newbuilding, the first such reduction shall
only occur on the second anniversary of the first Drawdown
Date):
Highland Legend GBP4,000,000
Highland Pride GBP8,500,000
Highland Star GBP8,500,000
Newbuilding GBP9,500,000;
"Availability Period" means the period commencing on the
date of this Agreement and ending on (a) in relation to the
first Advance, 30th June, 1995 (or such later date as the
Lender may agree with the Borrower), or (b) in relation to
the second Advance, 30th July, 1996 (or such later date as
the Lender may agree with the Borrower) or (c) if earlier,
the date on which the Lender's obligation to make the Loan
is canceled or terminated;
"Budgeted Financial Expenses" means, in relation to each 12
month period for which the Borrower delivers a budget to the
Lender under Clause 10.06, all budgeted payments by the
Borrower during such period arising from any of its
Financial Indebtedness including principal, interest,
acceptance commission and any other continuing, regular or
periodic costs and expenses in the nature of interest
(whether payable, accruing or capitalized) but excluding any
balloon repayment instalments of principal;
"Budgeted Operating Profit" means, in relation to each 12
month period for which the Borrower delivers a budget to
the Lender under Clause 10.06, the budgeted operating
revenues of the Borrower during such period less general and
administrative operating expenses (but excluding
depreciation);
"Building Contract" means the contract dated 29th December,
1994 entered into between the Borrower and Brattvag
Skipsverft AS pursuant to which Brattvag Skipsverft AS
agreed to build and sell, and the Borrower agreed to
purchase, the Newbuilding;
"Business Day" means a day on which banks are open in Oslo
and London;
"Deed of Covenant" means, in relation to each Ship, a deed
of covenant collateral to the Mortgage on that Ship and
creating charges over that Ship, her Insurances, her
Earnings and any requisition compensation in the form set
out in Appendix B (and, in the plural, means all of them);
"Drawdown Date" means, in relation to each Advance, the date
requested by the Borrower for that Advance to be made, or
(as the context requires) the date on which that Advance is
actually made;
"Drawdown Notice" means a notice in the form set out in
Schedule 1 (or in any other form which the Lender approves
or reasonably requires);
"Earnings" means, in relation to each Ship, all moneys
whatsoever which are now, or later become payable (actually
or contingently) to the Borrower and which arise out of the
use or operation of that Ship, including (but not limited
to) (a) all freight, hire and passage moneys, compensation
payable to the Borrower in the event of requisition of that
Ship for hire, remuneration for salvage and towage services,
demurrage and detention moneys and damages for breach (or
payments for variation or termination) of any charterparty
or other contract for the employment of that Ship, (b) all
moneys which are at any time payable under Insurances in
respect of loss of earnings, and (c) if and whenever that
Ship is employed on terms whereby any moneys falling within
(a) or (b) are pooled or shared with any other person, that
proportion of the net receipts of the relevant pooling or
sharing arrangement which is attributable to that Ship;
"Earnings Account" means an account in the name of the
Borrower with the Lender in London with account number
51295101, or any other account (with that or another office
of the Lender or with a bank or financial institution other
than the Lender) which is designated by the Lender as the
Earnings Account for the purposes of this Agreement;
"Event of Default" means any of the events or circumstances
described in Clause 16.01; "Finance Documents" means (a)
this Agreement, the Guarantee, the Deeds of Covenant, the
Mortgages and the Account Security Deed and (b) any other
document (whether creating a Security Interest or not) which
is executed at any time by the Borrower or any other person
as security for, or to establish any form of subordination
or priorities arrangement in relation to, any amount payable
to the Lender under this Agreement or any of the documents
referred to in this definition;
"Financial Documents" means (a) this Agreement, the
Guarantee, the Deeds of Covenant, the Mortgages and the
Account Security Deed and (b) any other document (whether
creating a Security Interest or not) which is executed at
any time by the Borrower or any other person as security
for, or to establish any form of subordination or priorities
arrangement in relation to, any amount payable to the Lender
under this Agreement or any of the documents referred to in
this definition;
"Financial Indebtedness" means, in relation to a person (the
"debtor"), a liability of the debtor (a) for principal,
interest or any other sum payable in respect of any moneys
borrowed or raised by the debtor, (b) under any loan stock,
bond, note or other security issued by the debtor, (c) under
any acceptance credit, guarantee or letter of credit
facility made available to the debtor, (d) under a financial
lease, a deferred purchase consideration arrangement or any
other agreement having the commercial effect of a borrowing
or raising of money by the debtor, (e) under any interest or
currency swap or any other kind of derivative transaction
entered into by the debtor, or (f) under a guarantee,
indemnity or similar obligation entered into by the debtor
in respect of a liability of another person which would fall
within (a) to (e) if the references to the debtor referred
to the other person;
"GNS" means GulfMark North Sea Limited, a company
incorporated in England with company number 2625893, whose
registered office is at 10 Charlotte Road, London SW13 9QJ,
England;
"GOMI" means Gulf Offshore Marine International Inc., a
company incorporated in Panama, whose registered office is
at Comosa Building, Samuel Lewis Avenue, Panama City,
Panama;
"Guarantee" means a guarantee in the form set out in
Appendix D;
"Guarantors" means, together, GNS and GOMI (and, in the
singular, means either of them);
"Highland Legend" means the platform supply vessel named
"Highland Legend" registered in the name of the Borrower
under British flag with official number 709907;
"Highland Pride" means the platform supply vessel named
"Highland Pride" registered in the name of the Borrower
under British flag with official number 722013;
"Highland Star" means the platform supply vessel named
"Highland Star" registered in the name of the Borrower under
British flag with official number 719032;
"Insurances" means, in relation to each Ship, (a) all
policies and contracts of insurance, including entries of
that Ship in any protection and indemnity or war risks
association, which are effected in respect of that Ship, her
Earnings or otherwise in relation to her, and (b) all rights
and other assets relating to, or derived from, any of the
foregoing, including any rights to a return of a premium;
"Interest Period" means a period determined in accordance
with Clause 5;
"Latest Accounts" means, in relation to the Borrower, the
latest audited annual or unaudited quarterly accounts
delivered to the Lender under Clause 10.06 or, in relation
to a Guarantor, under Clause 4.01 of the Guarantee;
"Lender" means, subject to Clause 24.06, (a) Christiania
Bank og Kreditkasse, acting through its branch at
Middelthunsgate 17, 0368 Oslo, Norway (or through another
branch notified to the Lender under Clause 24.04) and (b)
the holder for the time being of a Transfer Certificate;
"Liquid Assets" means:
(i) cash in hand;,
(ii) deposits in prime banks or other financial institutions
with a maturity of 6 months or less;
(iii)government issued bills and bonds; and
(iv) marketable securities quoted on a recognized stock
exchange,
but excluding any of those assets (other than monies
standing to the credit of the Earnings Account) subject to
any Security Interest;
"Loan" means the principal amount for the time being
outstanding under this Agreement;
"Margin" means one and three-eighths of one per cent. (1
3/8%) per annum;
"Mortgage" means, in relation to each Ship, the first
priority account current ship mortgage on that Ship in the
form set out in Appendix A (and, in the plural, means all of
them);
"net working capital" means, in relation to the Borrower and
each Guarantor and at any time, its current assets less its
current liabilities as shown in its Latest Accounts;
"Newbuilding" means, with effect from delivery to and
acceptance by the Borrower under the Building Contract, the
platform supply vessel presently under construction for the
Borrower by Brattvag Skipsverft AS and known during
construction as Yard No. 66;
"Pertinent Jurisdiction", in relation to a company, means
(a) England and Wales, (b) the country under the laws of
which the company is incorporated or formed, (c) a country
in which the company's central management and control is or
has recently been exercised, (d) a country in which the
overall net income of the company is subject to corporation
tax, income tax or any similar tax, (e) a country in which
assets of the company (other than securities issued by, or
loans to, related companies) having a substantial value are
situated, in which the company maintains a permanent place
of business, or in which a Security Interest created by the
company must or should be registered in order to ensure its
validity or priority, and (f) a country the courts of which
have jurisdiction to make a winding up, administration or
similar order in relation to the company or which would have
such jurisdiction if their assistance were requested by the
courts of a country referred to in (b) or (c);
"Potential Event of Default" means an event or circumstance
which, with the giving of any notice, the lapse of time, a
determination of the Lender and/or the satisfaction of any
other condition, would constitute an Event of Default;
"Pounds", "GBP" and "Sterling" means the lawful currency for
the time being of the United Kingdom;
"Repayment Date" means a date on which a repayment is
required to be made under Clause 7;
"Security Interest" means (a) a mortgage, charge (whether
fixed or floating) or pledge, any maritime or other lien or
any other security interest of any kind, (b) the rights of
the plaintiff under an action in rem in which the vessel
concerned has been arrested or a writ has been issued or
similar step taken, and (c) any arrangement entered into by
a person (A) the effect of which is to place another person
(B) in a position which is similar, in economic terms, to
the position in which B would have been had he held a
security interest over an asset of A; but (c) does not apply
to a right of set off or combination of accounts conferred
by the standard terms of business of a bank or financial
institution;
"Security Party" means each Guarantor and any other person
(except the Lender) who, as a surety or mortgagor, as a
party to any subordination or priorities arrangement, or in
any similar capacity, executes a document falling within
paragraph (b) of the definition of "Finance Documents";
"Security Period" means the period commencing on the date of
this Agreement and ending on the date on which all amounts
payable by the Borrower or any Security Party under the
Finance Documents have been paid;
"Security Trustee" means Christiania Bank og Kreditkasse,
acting through its branch at Middelthunsgate 17, 0368 Oslo,
Norway;
"Ships" means, together, Highland Legend, Highland Star,
Highland Pride, and from delivery to, and acceptance by, the
Borrower under the Building Contract, the Newbuilding (and,
in the singular, means each of them);
"Total Liabilities" means, at any time, the total
liabilities of the Borrower as shown in its Latest Accounts;
"Total Loss" and "Total Loss Date" have, in relation to each
Ship, the meaning given in the Deed of Covenant relating to
that Ship;
"Transfer Certificate" has the meaning given in Clause 24;
"Value Adjusted Equity" means Value Adjusted Total Assets
less Total Liabilities (excluding any Financial Indebtedness
which by its terms is subordinated to the Loan); and
"Value Adjusted Total Assets" means, at any time, the total
assets of the Borrower as shown in its Latest Accounts after
deducting (i) goodwill and (ii) the values of the ships used
in the preparation of its Latest Accounts and substituting,
in the case of the Ships, the most recent market values
shown by valuations complying with the requirements of
Clause 12.04 and, in the case of any other ships, the most
recent market values shown by valuations prepared on a
similar basis (and if no such valuations have been made, the
Lender shall be entitled to require that valuations shall be
made on such similar basis).
1.02 In this Agreement:
"asset" includes every kind of property, asset, interest or
right, including any present, future or contingent right to
any revenues or other payment;
"company" includes any partnership, joint venture and
unincorporated association;
"contingent liability" means a liability which is not
certain to arise and/or the amount of which remains
unascertained;
"document" includes a deed; also a letter, fax or telex;
"expense" means any kind of cost, charge or expense
(including all legal costs, charges and expenses) and any
applicable value added or other tax;
"law" includes any form of delegated legislation, any order
or decree, any treaty or international convention and any
regulation, directive or decision of the Council of the
European Union or the European Commission;
"legal or administrative action" means any legal proceeding
or arbitration and any administrative or regulatory action
or investigation;
"liability" includes every kind of debt or liability
(present or future. certain or contingent), whether incurred
as principal or surety or otherwise;
"months" shall be construed in accordance with Clause 1.03;
"official consent" and "official requirement" mean
respectively:
(a) any consent, authorization or clearance; and
(b) any requirement, directive, request, guideline or
notice (whether general or specific and whether or not
having the force of law);
of or issued by any fiscal, monetary or banking authority or
any other governmental, official or public authority of any
kind, including the Council of the European Union or the
European Commission; and "official requirement" also
includes a resolution of the United Nations or of its
Security Council;
"parent company" has the meaning given in Clause 1.04;
"person" includes any company; any state, political sub-
division of a state and local or municipal authority; and
any international organization;
"subsidiary" has the meaning given in Clause 1.04; and
"tax" includes any present or future tax, duty, impost, levy
or charge of any kind which is imposed by any state, any
political sub-division of a state or any local or municipal
authority (including any such imposed in connection with
exchange controls), and any connected penalty, interest or
fine.
1.03 A period of one or more "months" ends on the day in the
relevant calendar month numerically corresponding to the day
of the calendar month on which the period started ("the
numerically corresponding day"), but:
(a) on the Business Day following the numerically
corresponding day if the numerically corresponding day
is not a Business Day or, if there is no later Business
Day in the same calendar month, on the Business Day
preceding the numerically corresponding day; or
(b) on the last Business Day in the relevant calendar
month, if the period started on the last Business Day
in a calendar month or if the last calendar month of
the period has no numerically corresponding day;
and "month" and "monthly" shall be construed accordingly.
1.04 A company (S) is a subsidiary of another company (P) if:
(a) a majority of the issued shares in S (or a majority of
the issued shares in S which carry unlimited rights to
capital and income distributions) are directly owned by
P or are indirectly attributable to P; or
(b) P has direct or indirect control over a majority of the
voting rights attaching to the issued shares of S; or
(c) P has the direct or indirect power to appoint or remove
a majority of the directors of S; or
(d) P otherwise has the direct or indirect power to ensure
that the affairs of S are conducted in accordance with
the wishes of P;
and any company of which S is a subsidiary is a parent
company of S.
1.05 In this Agreement:
(a) references to, or to a provision of, a Finance Document
or any other document are references to it as amended
or supplemented, whether before the date of this
Agreement or otherwise; and
(b) references to, or to a provision of, any law include
any amendment, extension, reenactment or replacement,
whether made before the date of this Agreement or
otherwise.
1.06 Clauses 1.01 to 1.05 apply unless the contrary intention
appears.
1.07 References in Clause 1.01 to a document being in the form of
a particular Appendix include references to that form with
any modifications to that form which the Lender approves or
reasonably requires.
1.08 The clause headings shall not affect the interpretation of
this Agreement.
2. FACILITY
--------
2.01 Subject to the other provisions of this Agreement, the
Lender shall make a loan facility not exceeding
GBP16,500,000 available to the Borrower.
2.02 The Borrower undertakes with the Lender to use the Loan only
for the purposes stated in the preamble to this Agreement.
3. DRAWDOWN
--------
3.01 Subject to the following conditions, the Borrower may
request an Advance to be made by ensuring that the Lender
receives a completed Drawdown Notice not later than 11.00
a.m. (Oslo time) 3 Business Days prior to the intended
Drawdown Date for that Advance.
3.02 Those conditions are that:
(a) there shall only be two Advances, the first of
GBP9,250,000 and the second of GBP7,250,000; and
(b) the Drawdown Date for an Advance has to be a Business
Day during the applicable Availability Period.
3.03 A Drawdown Notice must be signed by a director of the
Borrower; and, once served, a Drawdown Notice cannot be
revoked without the prior consent of the Lender.
3.04 Subject to the provisions of this Agreement, the Lender
shall on the Drawdown Date for an Advance make available to
the Borrower the proceeds of that Advance as the Borrower
shall direct in the Drawdown Notice for that Advance.
4. INTEREST
--------
4.01 Subject to the provisions of this Agreement, interest on an
Advance in respect of an Interest Period applicable to it
shall be paid by the Borrower on the last day of that
Interest Period.
4.02 Subject to the provisions of this Agreement, the rate of
interest on an Advance in respect of an applicable Interest
Period shall be the aggregate of the Margin and LIBOR for
that Interest Period.
4.03 LIBOR for an Interest Period is the rate per annum
determined by the Lender to be the rate of the offered
quotation for deposits in Sterling which appears on the
Reuter Monitor Money Rates Service page designated ISDA (or
such other page on that service as may replace that page) at
or about 11.00 a.m. (London time) on the second Business Day
prior to the commencement of that Interest Period for a
period equal to that Interest Period.
4.04 However, in the case of an Interest Period longer than 6
months, accrued interest shall be paid every 6 months during
the Interest Period and on the last day of the Interest
Period.
5. INTEREST PERIODS
----------------
5.01 The first Interest Period applicable to an Advance shall
commence on the Drawdown Date for that Advance and each
subsequent Interest Period applicable to that Advance shall
commence on the expiry of the preceding Interest Period
applicable to that Advance.
5.02 Subject to Clauses 5.03 and 5.04, each Interest Period shall
be:
(a) 1, 3 or 6 months as notified by the Borrower to the
Lender not later than 11.00 a.m. (London time) 3
Business Days before the commencement of the Interest
Period; or
(b) 3 months, if the Borrower fails to notify the Lender by
the time specified in paragraph (a) above; or
(c) such other period as the Lender may agree with the
Borrower.
5.03 However,
(a) unless the Lender notifies the Borrower to the
contrary, the first Interest Period applicable to the
second Advance shall end on the last day of the
Interest Period then current in respect of the first
Advance, whereupon both Advances shall be consolidated
and treated as a single Advance;
(b) in respect of an amount due to be repaid under Clause 7
on a particular Repayment Date, an Interest Period
shall end on that Repayment Date; and
(c) the Borrower shall not select Interest Periods of 1
month more often than 5 times in each period of 12
months from the first Drawdown Date.
5.04 If, after the Borrower has selected an Interest Period
longer than 6 months, the Lender notifies the Borrower by
11.00 a.m. (London time) on the second Business Day before
the commencement of the Interest Period that it is not
satisfied that deposits in Sterling for a period equal to
the Interest Period will be available to it in the London
Interbank Market when the Interest Period commences, the
Interest Period shall be of 6 months.
6. DEFAULT INTEREST
----------------
6.01 The Borrower shall pay interest in accordance with the
following provisions on any amount payable by the Borrower
under any Finance Document which the Lender or the Security
Trustee does not receive on or before the relevant date,
that is:
(a) the date on which the Finance Documents provide that
such amount is due for payment; or
(b) if a Finance Document provides that such amount is
payable on demand, the date on which the demand is
served; or
(c) if such amount has become immediately due and payable
under Clause 16.04, the date on which it became
immediately due and payable.
6.02 Interest shall accrue on an overdue amount from (and
including) the relevant date until the date of actual
payment (as well after as before judgment) at the rate per
annum determined by the Lender to be 2 per cent. above:
(a) in the case of an overdue amount of principal, the
higher of the rates set out at paragraphs (a) and (b)
of Clause 6.03; or
(b) in the case of any other overdue amount. the rate set
out at paragraph (b) of Clause 6.03.
6.03 Those rates are:
(a) the rate applicable to the overdue principal amount
immediately prior to the relevant date (but only for
any unexpired part of any then current Interest
Period),
(b) the Margin plus, in respect of successive periods of
any duration (including at call) up to three months
which the Lender may select from time to time:
(i) LIBOR, as determined by the Lender in accordance
with Clause 4.03; or
(ii) if the Lender determines that Sterling deposits
for any such period are not being made available
to it by leading banks in the London Interbank
Market in the ordinary course of business, a rate
from time to time determined by the Lender by
reference to the cost of funds to it from such
other sources as the Lender may from time to time
determine.
6.04 The Lender shall promptly notify the Borrower of each
interest rate determined by it under Clause 6.03 and of each
period selected by it for the purposes of paragraph (b) of
that Clause; but this shall not be taken to imply that the
Borrower is liable to pay such interest only with effect
from the date of the Lender's notification.
6.05 Subject to the other provisions of this Agreement, any
interest due under this Clause shall be paid on the last day
of the period by reference to which it was determined.
6.06 Any such interest which is not paid at the end of the period
by reference to which it was determined shall thereupon be
compounded.
7. REPAYMENT AND PREPAYMENT
-------------------------
7.01 The Borrower shall repay the Loan by 28 consecutive three-
monthly instalments, the first 4 of two hundred and thirty-
five thousand Pounds (GBP235,000) each, the next 23 of three
hundred and ninety-five thousand Pounds (GBP395,000) each
and the final instalment of six million four hundred and
seventy-five thousand Pounds (GBP6,475,000). Instalments
falling due shall be payable whether or not the second
Advance has been made on any Repayment Date.
7.02 If the second Advance is not made for any reason, each of
the first 27 instalments specified in Clause 7.01 shall be
two hundred and thirty-five thousand Pounds (GBP235,000) and
the final instalment shall be two million nine hundred and
five thousand Pounds (GBP2,905,000).
7.03 The first instalment shall be repaid on the date falling 3
months after the first Drawdown Date and the last instalment
on the date falling 84 months after the first Drawdown Date.
7.04 On the final Repayment Date, the Borrower shall additionally
pay to the Lender all other sums then accrued or owing under
any Finance Document.
7.05 Subject to the following conditions, the Borrower may prepay
the whole or any part of the Loan on the last day of an
Interest Period.
7.06 Those conditions are:
(a) that a partial prepayment shall be GBP500,000 or a
multiple thereof;
(b) that the Lender has received from the Borrower at least
20 days prior written notice specifying the amount to
be prepaid and the date on which the prepayment is to
be made;
(c) that the Borrower has provided evidence satisfactory to
the Lender that any official consent required by the
Borrower or any Security Party in connection with the
prepayment has been obtained and remains in force, and
that any official requirement relevant to this
Agreement which affects the Borrower or any Security
Party has been complied with.
7.07 A prepayment notice may not be withdrawn or amended without
the consent of the Lender.
7.08 If a Ship is sold or becomes a Total Loss, the Borrower
shall prepay a portion of the Loan equal to the then
prevailing Assigned Value of that Ship. Such prepayment
shall be made simultaneously with the sale of that Ship (and
as a condition of the release of the Mortgage on that Ship)
or within 120 days after the Total Loss Date.
7.09 A prepayment shall be made together with accrued interest
(and any other amount payable under Clause 18 below or
otherwise) in respect of the amount prepaid and, if the
prepayment is not made on the last day of an Interest Period
together with any sums payable under Clause 18.01(b) but
without premium or penalty.
7.10 Each partial prepayment shall be applied against the
repayment instalments specified in Clause 7.01 in inverse
order of maturity.
7.11 No amount prepaid may be reborrowed.
8. CONDITIONS PRECEDENT
---------------------
8.01 The Lender's obligation to make each Advance is subject to
the following conditions precedent:
(a) that the Lender receives the documents described in
Schedule 2 below in form and substance satisfactory to
it and its lawyers on or before the service of the
Drawdown Notice for the Advance or, in the case of
paragraph 9 of Part I and paragraph 3 of Part 11, on or
before the Drawdown Date for the Advance;
(b) that, on or before the first Drawdown Date, the Lender
receives the arrangement fee and the trustee fee
referred to in Clause 17.01;
(c) that on or before each Drawdown Date, the Lender
receives all accrued commitment fee payable pursuant to
Clause 17.01;
(d) that both at the date of the Drawdown Notice and at the
Drawdown Date for that Advance:
(i) no Event of Default or Potential Event of Default
has occurred and is continuing or would result
from the making of the Advance;
(ii) the representations and warranties in Clause 9.01
and those of the Borrower or any Security Party
which are set out in the other Finance Documents
would be true and not misleading if repeated on
each of those dates with reference to the
circumstances then existing;
(iii)none of the circumstances contemplated by Clause
22 has occurred and is continuing; and
(e) that, if the ratio set out in Clause 12.01 were applied
immediately following the making of the Advance, the
Borrower would not be obliged to provide additional
security or prepay part of the Loan under that Clause.
8.02 If the Lender, at its discretion, permits an Advance to be
made before certain of the conditions referred to in Clause
9. REPRESENTATIONS AND WARRANTIES
------------------------------
9.01 The Borrower represents and warrants to the Lender and the
Security Trustee as follows.
9.02 The Borrower is duly incorporated and validly existing under
the laws of England.
9.03 The Borrower has an authorized share capital of GBP655,865
divided into 655,865 registered shares of GBP1 each, of
which 655,767 shares have been issued fully paid, and the
legal title (other than the legal title to 1 share held by
GOMI) and beneficial ownership of all those shares is held,
free of any Security Interest (except as disclosed in
writing to the Lender) or other claim, by GNS.
9.04 The Borrower has the corporate capacity, and has taken all
corporate action and obtained all official consents
necessary for it:
(a) to execute the Building Contract;
(b) to execute the Finance Documents to which the Borrower
is a party; and
(c) to borrow under this Agreement and to make all the
payments contemplated by, and to comply with, those
Finance Documents.
9.05 All the official consents referred to in Clause 9.04 remain
in force and nothing has occurred which makes any of them
liable to revocation.
9.06 The Finance Documents to which the Borrower is a party, do
now or, as the case may be, will, upon execution and
delivery (and, where applicable, registration as provided
for in the Finance Documents):
(a) constitute the Borrower's legal, valid and binding
obligations enforceable against the Borrower in
accordance with their respective terms; and
(b) create legal, valid and binding Security Interests
enforceable in accordance with their respective terms;
subject to any relevant insolvency laws affecting creditors'
rights generally.
9.07 The execution by the Borrower of each Finance Document, and
the borrowing by the Borrower of the Loan, and its
compliance with each Finance Document will not involve or
lead to a contravention of:
(a) any law or official requirement; or
(b) the constitutional documents of the Borrower; or
(c) any contractual or other obligation or restriction
which is binding on the Borrower or any of its assets.
9.08 All payments which the Borrower is liable to make under the
Finance Documents may be made without deduction or
withholding for or on account of any tax payable under any
law of England.
9.09 No Event of Default or Potential Event of Default has
occurred and is continuing.
9.10 All information which has been provided in writing by or on
behalf of the Borrower or any Security Party to the Lender
in connection with any Finance Document satisfied the
requirements of Clause 10.05; all audited and unaudited
accounts which have been so provided satisfied the
requirements of Clause 10.07; and there has been no material
adverse change in the financial position or state of affairs
of the Borrower from that disclosed in the latest of those
accounts.
9.11 No legal or administrative action involving the Borrower has
been commenced or taken or, to the Borrower's knowledge, is
likely to be commenced or taken which, in either case, would
be likely to have a material adverse effect on the
Borrower's financial position or profitability.
9.12 The copy of the Building Contract delivered to the Lender
before the date of this Agreement is a true and complete
copy; the Building Contract constitutes valid, binding and
enforceable obligations of Brattvag Skipsverft AS and the
Borrower respectively in accordance with its terms; and no
amendments or additions to the Building Contract have been
agreed nor has the Borrower or Brattvag Skipsverft AS waived
any of their respective rights under the Building Contract.
9.13 There is no agreement or understanding to allow or pay any
rebate, premium, commission or other payment (howsoever
described) to the Borrower or a third party in connection
with the purchase by the Borrower of the Newbuilding, other
than as disclosed to the Lender in writing on or prior to
the date of this Agreement.
9.14 At the date of this Agreement, the Borrower is in compliance
with Clauses 10.02, 10.04, 10.09 and 10.13.
9.15 The Borrower has paid all taxes applicable to, or imposed on
or in relation to the Borrower, its business or any Ship.
10. GENERAL UNDERTAKINGS
--------------------
10.01 The Borrower undertakes with the Lender and the Security
Trustee to comply with the following provisions of this
Clause 10 at all times during the Security Period, except as
the Lender may otherwise permit.
10.02 The Borrower will hold the legal title to, and own the
entire beneficial interest in each Ship, her Insurances and
her Earnings, free from all Security Interests and other
interests and rights of every kind, except for those created
by the Finance Documents and the effect of assignments
contained in the Finance Documents, but this undertaking
shall not apply to the Newbuilding until the second Drawdown
Date.
10.03 The Borrower will not transfer, lease or otherwise dispose
of:
(a) all or a substantial part of its assets, whether by one
transaction or a number of transactions, whether
related or not; or
(b) any debt payable to it or any other right (present,
future or contingent right) to receive a payment,
including any right to damages or compensation.
10.04 The Borrower will not incur any liabilities or obligations
except:-
(a) those existing at the date of this Agreement;
(b) those arising under the Building Contract and the
Finance Documents;
(c) those incurred in the ordinary course of managing,
operating and chartering any vessel owned, managed or
chartered by the Borrower,
(d) those incurred in ordering and acquiring one additional
platform supply vessel of the same UT 755 design as the
Newbuilding and one ME High Sided Design vessel; or
(e) in addition to those covered by paragraphs (c) to (d)
above, those not exceeding GBP500,000 in aggregate at
any time.
10.05 All financial and other information which is provided in
writing by or on behalf of the Borrower under or in
connection with any Finance Document will be true and not
misleading and will not omit any material fact or
consideration.
10.06 The Borrower will send to the Lender:
(a) as soon as possible, but in no event later than 150
days after the end of each financial year of the
Borrower, the audited accounts of the Borrower,
(b) as soon as possible, but in no event later than 45 days
after the end of each quarter in each financial year of
the Borrower:
(i) unaudited accounts of the Borrower prepared in
accordance with accounting principles generally
accepted in England, consistently applied and
certified as to their correctness by a director of
the Borrower; and
(ii) management accounts in a format approved by the
Lender which show the results of the operation of
each Ship during the preceding financial quarter
and which are certified as to their correctness by
a director of the Borrower-,
(iii) a budget for the next 12 month period in a format
approved by the Lender which shows the Budgeted
Financial Expenses and Budgeting Operating Profit
of the Borrower for such period (and that budget
will be subject to the approval of the Lender for
the purposes of Clause 11.04(d)); and
(iv) a compliance certificate in the form set out in
Schedule 4 signed by a director of the Borrower.
10.07 All accounts (audited and unaudited) delivered under Clause
10.06 will:
(a) be prepared in accordance with all applicable laws and
accounting principles generally accepted in England
consistently applied;
(b) give a true and fair view of the state of affairs of
the Borrower at the date of those accounts and of its
profit for the period to which those accounts relate;
and
(c) fully disclose or provide for all significant
liabilities of the Borrower.
10.08 The Borrower will send to the Lender, at the same time as
they are despatched, copies of all communications which are
despatched to the Borrower's shareholders or creditors or
any class of them (other than communications to a specific
creditor under the terms of any agreement with that
creditor).
10.09 The Borrower will maintain in force and promptly obtain or
renew, and will promptly send certified copies to the Lender
of, all official consents required:
(a) for the Borrower to perform its obligations under any
Finance Document;
(b) for the validity or enforceability of any Finance
Document,
(c) for the Borrower to continue to own and operate each
Ship;
and the Borrower will comply with the terms of all such
official consents.
10.10 The Borrower will promptly register, file, record or enrol
any Finance Document with any court or authority in England
or Panama, pay any stamp, registration or similar tax in
England or Panama in respect of any Finance Document, give
any notice or take any other step which may be or become
necessary or desirable for any Finance Document to be valid,
enforceable or admissible in evidence or to ensure or
protect the priority of any Security Interest which it
creates.
10.11 The Borrower will provide the Lender with details of any
legal or administrative action involving the Borrower, any
Security Party or any Ship, her Earnings or her Insurances
as soon as such action is instituted or it becomes apparent
to the Borrower that it is likely to be instituted, unless
it is clear that the legal or administrative action cannot
be considered material in the context of any Finance
Document.
10.12 The Borrower will not agree to any material amendment or
supplement to, or waive or fail to enforce, the Building
Contract or any of its provisions.
10.13 The Borrower will maintain its registered office, and keep
its corporate documents and records, at the address stated
at the commencement of this Agreement.
10.14 The Borrower will, within two Business Days after service
by the Lender of a written request, serve on the Lender a
notice which is signed by two directors of the Borrower and
which:
(a) states that no Event of Default or Potential Event of
Default has occurred; or
(b) states that no Event of Default or Potential Event of
Default has occurred, except for a specified event or
matter, of which all material details are given.
10.15 The Borrower will notify the Lender as soon as the Borrower
becomes aware of:
(a) the occurrence of an Event of Default or a Potential
Event of Default; or
(b) any matter which indicates that an Event of Default or
a Potential Event of Default may have occurred;
and will thereafter keep the Lender fully up-to-date with
all developments.
10.16 The Borrower will, as soon as practicable after receiving
the request, provide the Lender with any additional
financial or other information relating:
(a) to the Borrower, any Ship, her Insurances or her
Earnings; or
(b) to any other matter relevant to, or to any provision
of, a Finance Document; which may reasonably be
requested by the Lender at any time.
11. CORPORATE UNDERTAKINGS
----------------------
11.01 The Borrower also undertakes with the Lender and the
Security Trustee to comply with the following
provisions of this Clause 11 at all times during the
Security Period except as the Lender may otherwise
permit (such permission not to be unreasonably withheld
in relation to Clause 11.03(g)).
11.02 The Borrower will maintain its separate corporate existence
under the laws of England.
11.03 The Borrower will not:
(a) make any material change in the nature of its business
as conducted at the date of this Agreement; or
(b) repay any principal of or interest on a loan owing to
any such person or company as is referred to in Clause
11.03(c) below or pay any dividend or make any other
form of distribution or effect any form of redemption,
purchase or return of share capital unless, after doing
so, the aggregate of the net working capital of the
Borrower and of each Guarantor exceeds GBP4,000,000; or
(c) provide any form of credit or financial assistance to:
(i) a person who is directly or indirectly interested
in the Borrower's share or loan capital; or
(ii) any company in or with which such a person is
directly or indirectly interested or connected;
or enter into any transaction with or involving such a
person or company on terms which are, in any respect,
less favourable to the Borrower than those which it
could obtain in a bargain made at arms' length;
(d) assign or otherwise dispose of any book debt;
(e) issue, allot or grant any person a right to any shares
in its capital or repurchase or reduce its issued share
capital;
(f) acquire any shares or other securities other than
government issued bills and bonds, certificates of
deposit issued by prime banks and marketable securities
quoted on a recognized stock exchange, or enter into
any transaction in a derivative (other than an interest
rate or currency hedge entered into in the ordinary
course of business); or
(g) enter into any form of amalgamation, merger or de-
merger or any form of reconstruction or reorganization.
11.04 The Borrower will:
(a) at all times retain Liquid Assets of at least
GBP500,000;
(b) ensure that the Borrower's Value Adjusted Equity is at
least GBP12,000,000;
(c) ensure that the Borrower's Value Adjusted Equity is at
least 40 per cent. of the Borrower's Value Adjusted
Total Assets;
(d) ensure that, at the end of each quarter of each
financial year of the Borrower, the ratio of Budgeted
Operating Profit of the Borrower to Budgeted Financial
Expenses of the Borrower for the next 12 months is at
least 1:1.
12. SECURITY COVER
--------------
12.01 The Borrower undertakes with the Lender and the Security
Trustee that, if the Lender notifies the Borrower that:
(a) the aggregate of the market values (determined as
provided below) of the Ships; plus
(b) the net realizable value of any additional security
previously provided under this Clause 12;
is below 150 per cent. of the Loan, the Borrower will,
within one month after the date on which the Lender's notice
is served, either:
(i) provide, or ensure that a third party provides,
additional security which, in the reasonable opinion of
the Lender, has a net realizable value at least equal
to the shortfall and which, if it consists of or
includes a Security Interest, covers such asset or
assets and is documented in such terms as the Lender
may reasonably approve or require; or
(ii) prepay in accordance with Clause 7 such part (at least)
of the Loan as will eliminate the shortfall.
12.02 In Clause 12.01 "security" means a Security Interest over
an asset or assets (whether securing the Borrower's
liabilities under the Finance Documents or a guarantee in
respect of those liabilities), or a guarantee, letter of
credit or other security in respect of the Borrower's
liabilities under the Finance Documents.
12.03 The Borrower shall not be deemed to have complied with
Clause 12.01 (i) above until the Lender has received in
connection with the additional security certified copies of
documents of the kinds referred to in paragraphs 3, 4 and 5
of Part I Schedule 2 below and such legal opinions in terms
reasonably acceptable to the Lender from such lawyers as it
may select.
12.04 The market value of a Ship at any date is the arithmetic
mean of the values shown by valuations prepared:
(a) as at a date not more than 14 days previously;
(b) by 2 independent sale and purchase shipbrokers which
the Borrower has appointed and the Lender has approved
or (if the Borrower has not appointed 2 such
shipbrokers promptly after a request from the Lender to
do so) which the Lender has appointed for the purpose;
(c) with or without physical inspection of that Ship (as
the Lender may require);
(d) on the basis of a sale for prompt delivery for cash on
normal arm's length commercial terms as between a
willing seller and a willing buyer, free of any
existing charter or other contract of employment;
(e) after deducting the estimated amount of the usual and
reasonable expenses which would be incurred in
connection with the sale.
12.05 The net realizable value of any additional security which
is provided under Clause 12.01 and which consists of a
Security Interest over a vessel shall be that shown by a
valuation complying with the requirements of Clause 12.04.
12.06 Any valuation under Clause 12.01(i), 12.04 or 12.05 shall
be binding and conclusive as regards the Borrower, as shall
be any valuation which the Lender makes of a security which
does not consist of or include a Security Interest.
12.07 The Borrower shall promptly provide the Lender and any
shipbroker or expert acting under Clause 12.04 or 12.05 with
any information which the Lender or the shipbroker or expert
may request for the purposes of the valuation; and, if the
Borrower fails to provide the information by the date
specified in the request, the valuation may be made on any
basis and assumptions which the shipbroker or the Lender (or
the expert appointed by it) considers prudent.
12.08 The Borrower shall, on demand, pay the Lender the amount of
the fees and expenses of any shipbroker or expert instructed
by the Lender under this Clause (but not more often than
twice in any calendar year) and all legal and other expenses
incurred by the Lender in connection with any matter arising
out of this Clause.
13. PAYMENTS AND CALCULATIONS
-------------------------
13.01 All payments to be made by the Borrower to the Lender or
the Security Trustee under a Finance Document shall be made
to the Lender (or to the Security Trustee, in the case of
an amount payable to it):
(i) by not later than 11.00 a.m. (London time) on the due
date;
(ii) in same day Sterling funds settled in such manner as
the Lender shall specify as being customary at the time
for the settlement of international transactions of the
type contemplated by this Agreement);
(iii) in the case of an amount payable to the Lender, to
such account of the Lender with such bank as the Lender
may from time to time notify to the Borrower; and
(iv) in the case of an amount payable to the Security
Trustee, to such account of the Security Trustee with
such bank as the Security Trustee may from time to time
notify to the Borrower.
13.02 If any payment by the Borrower under a Finance Document
would otherwise fall due on a day which is not a Business
Day:
(a) the due date shall be extended to the next succeeding
Business Day; or
(b) if the next succeeding Business Day falls in the next
calendar month, the due date shall be brought forward
to the immediately preceding Business Day;
and interest shall be payable during any extension under
paragraph (a) at the rate payable on the original due date.
13.03 All interest and commitment fee and any other payments
under any Finance Document which are of an annual or
periodic nature shall accrue from day to day and shall be
calculated on the basis of the actual number of days elapsed
and a 365 day year.
13.04 The Lender shall maintain an account showing the amounts
advanced by the Lender and all other sums owing to the
Lender from the Borrower and each Security Party under the
Finance Documents and all payments in respect of those
amounts made by the Borrower and any Security Party.
13.05 If the account maintained under Clauses 13.04 shows an
amount to be owing by the Borrower or a Security Party to
the Lender, that account shall be prima. facie evidence that
that amount is owing to the Lender.
14. APPLICATION OF RECEIPTS
-----------------------
14.01 Except as any Finance Document may otherwise provide, any
sums which are received or recovered by the Lender or the
Security Trustee under or by virtue of any Finance Document
shall be applied:-
FIRST: in or towards satisfaction of any amounts then due
and payable under the Finance demand any sum payable under a
Finance Document or under any document relating to a Finance
Document; or
(b) any breach occurs of Clause 8.02, 10.02, 10.03, 11.02,
11.03, 11.04 or 12.01; or
(c) any breach by the Borrower or any Security Party occurs
of any provision of a Finance Document (other than a
breach covered by paragraph (a) or (b) above)
unless the breach is capable of remedy and within 14
Business Days (or such other remedy period as may be
specified by the relevant provision of the Finance
Documents) after the Lender serves on the Borrower a
notice requiring the breach to be remedied, the Lender
notifies the Borrower in writing that the breach has
been remedied to its satisfaction; or
(d) any representation, warranty or statement made by, or
by an officer of, the Borrower or a Security Party in a
Finance Document or in the Drawdown Notice or any other
notice or document relating to a Finance Document is
untrue or misleading when it is made; or
(e) any of the following occurs in relation to any
Financial Indebtedness of, or aggregating, GBP50,000 or
more or the equivalent in another currency of a
Relevant Person (as defined in Clause 16.07) unless
such occurrence is being contested by bona fide
proceedings diligently pursued:
(i) any such Financial Indebtedness is not paid when
due or, if so payable, on demand; or
(ii) any such Financial Indebtedness becomes due and
payable or capable of being declared due and
payable prior to its stated maturity date as a
consequence of any event of default; or
(iii) a lease, hire purchase agreement or charter
creating any such Financial Indebtedness is
terminated by the lessor or owner or becomes
capable of being terminated as a consequence of
any termination event; or
(iv) any overdraft, loan, note issuance, acceptance
credit, letter of credit, guarantee, foreign
exchange or other facility, or any swap or other
derivative contract or transaction, relating to
any such Financial Indebtedness ceases to be
available or becomes capable of being terminated
as a result of any event of default, or cash cover
is required, or becomes capable of being required,
in respect of such a facility as a result of any
event of default; or
(v) any Security Interest securing any such Financial
Indebtedness becomes enforceable; or
(f) any of the following occurs in relation to a Relevant
Person:
Documents (or any of them) in such order of application
and/or such proportions as the Lender may specify by
notice to the Borrower, the Security Parties and the
Security Trustee;
SECONDLY: in retention of an amount equal to any amount
not then due and payable under any Finance Document but
which the Lender, by notice to the Borrower, the
Security Parties and the Security Trustee, states in
its opinion will or may become due and payable in the
future and, upon those amounts becoming due and
payable, in or towards satisfaction of them in
accordance with the foregoing provisions of this
Clause; and
THIRDLY: any surplus shall be paid to the Borrower or
to any other person appearing to be entitled to it.
14.02 The Lender may, by notice to the Borrower, the Security
Parties and the Security Trustee, provide for a different
manner of application from that set out in Clause 14.01
either as regards a specified sum or sums or as regards sums
in a specified category or categories.
14.03 The Lender may give notices under Clause 14.02 from time to
time; and such a notice may be stated to apply not only to
sums which may be received or recovered in the future, but
also to any sum which has been received or recovered on or
after the third Business Day before the date on which the
notice is served.
14.04 This Clause 14 and any notice which the Lender gives under
Clause 1.4.02 shall override any right of appropriation
possessed, and any appropriation made, by the Borrower or
any Security Party.
15. APPLICATION OF EARNINGS
-----------------------
15.01 The Borrower undertakes with the Lender to ensure that,
throughout the Security Period (and subject only to the
provisions of the Deeds of Covenant), all the Earnings are
paid to the Earnings Account.
15.02 Until such time after an Event of Default occurs as the
Lender directs to the contrary, sums standing to the credit
of the Earnings Account shall be at the disposal of the
Borrower for any purpose not inconsistent with the terms of
the Finance Documents.
15.03 The Lender shall be entitled (but not obliged) from time to
time to debit the Earnings Account without prior notice in
order to discharge any amount due and payable to it under
Clause 17 or 18 or payment of which it or the Security
Trustee has become entitled to demand under Clause 17 or 18.
16. EVENTS OF DEFAULT
-----------------
16.01 An Event of Default occurs if:
(a) the Borrower or any Security Party fails to pay when
due or (if so payable) on
(i) a Relevant Person becomes, in the reasonable
opinion of the Lender, unable to pay its debts as
they fall due; or
(ii) any assets of a Relevant Person are subject of any
form of execution, attachment, arrest,
sequestration or distress in respect of a sum of,
or sums aggregating, GBP50,000 or more or the
equivalent in another currency unless such event
is being contested by bona fide proceedings
diligently pursued; or
(iii) any administrative or other receiver is appointed
over any asset of a Relevant Person; or
(iv) a Relevant Person makes any formal declaration of
bankruptcy or any formal statement to the effect
that it is insolvent or likely to become
insolvent, or a winding up or administration order
is made in relation to a Relevant Person, or the
members or directors of a Relevant Person pass a
resolution to the effect that it should be wound
up, placed in administration or cease to carry on
business, save that this paragraph does not apply
to a fully solvent winding up of a Relevant Person
other than the Borrower or a Guarantor which is,
or is to be, effected for the purposes of an
amalgamation or reconstruction previously approved
by the Lender and effected not later than 3 months
after the commencement of the winding up; or
(v) a petition is presented in any Pertinent
Jurisdiction for the winding up or administration,
or the appointment of a provisional liquidator, of
a Relevant Person unless the petition is being
contested in good faith and on substantial grounds
and is dismissed or withdrawn within 30 days of
the presentation of the petition; or
(vi) a Relevant Person petitions a court, or presents
any proposal for, any form of judicial or non-
judicial suspension or deferral of payments,
reorganization of its debt (or certain of its
debt) or arrangement with all or a substantial
proportion (by number or value) of its creditors
or of any class of them or any such suspension or
deferral of payments, reorganization or
arrangement is effected by court order, contract
or otherwise; or
(vii) any meeting of the members or directors of a
Relevant Person is summoned for the purpose of
considering a resolution or proposal to authorize
or take any action of a type described in
paragraphs (iii), (iv), (v) or (vi) above; or
(viii) in a Pertinent Jurisdiction other than England,
any event occurs or any procedure is commenced
which, in the opinion of the Lender, is similar to
any of the foregoing; or
(g) the Borrower ceases or suspends carrying on its
business or a part of its business which, in the
opinion of the Lender, is material in the context of
this Agreement; or
(h) it becomes unlawful in any Pertinent Jurisdiction or
impossible (i) for the Borrower or any Security Party
to discharge any liability under a Finance Document or
to comply with any other obligation which the Lender
considers material under a Finance Document or (ii) for
the Lender or the Security Trustee to exercise or
enforce any right under, or to enforce any Security
Interest created by, a Finance. Document; or
(i) any official consent necessary to enable the Borrower
to own, operate or charter the Ships or to enable the
Borrower or any Security Party to comply with any
provision which the Lender considers material of a
Finance Document or the Building Contract is not
granted, expires without being renewed, is revoked or
becomes liable to revocation or any condition of such a
consent is not fulfilled; or
(j) it appears to the Lender that, without its prior
consent, a material change has occurred or probably has
occurred in the ultimate beneficial ownership of any of
the shares in the Borrower or either Guarantor or in
the ultimate control of the voting rights attaching to
any of those shares; or
(k) any provision which the Lender considers material of a
Finance Document proves to have been or becomes invalid
or unenforceable, or a Security Interest created by a
Finance Document proves to have been or becomes invalid
or unenforceable or such a Security Interest proves to
have ranked after, or loses its priority to, another
Security Interest or any other third party claim or
interest; or
(l) the security constituted by a Finance Document is in
any way imperilled or in jeopardy; or
(m) there occurs any material (in the opinion of the
Lender) adverse change in the financial position of the
Borrower or either Guarantor in the light of which the
Lender considers that there is a significant risk that
the Borrower or either Guarantor is, or will later
become, unable to discharge its liabilities under the
Finance Documents to which it is a party as they fall
due.
16.02 On, or at any time after, the occurrence of an Event of
Default:
(a) the Lender may;
(i) serve on the Borrower a notice stating that all
obligations of the Lender to the Borrower under
this Agreement are terminated; and/or
(ii) serve on the Borrower a notice stating that the
Loan, all accrued interest and all other amounts
accrued or owing under this Agreement are
immediately due and payable; and/or
(iii) take any other action which, as a result of the
Event of Default or any notice served under
paragraph (i) or (ii) above, the Lender is
entitled to take under any Finance Document or any
applicable law; and/or
(b) the Security Trustee may take any action which, as a
result of the Event of Default or any notice served
under paragraph (a) (i) or (ii) above, the Security
Trustee and/or the Lender is entitled to take under any
Finance Document or any applicable law.
16.03 On the service of a notice under paragraph (a)(i) of Clause
16.02, all the obligations of the Lender to the Borrower
under this Agreement shall terminate.
16.04 On the service of a notice under paragraph (a)(ii) of
Clause 16.02, the Loan, all accrued interest and all other
amounts accrued or owing from the Borrower or any Security
Party under this Agreement and every other Finance Document
shall become immediately due and payable.
16.05 The Lender may serve notices under paragraphs (a) (i) and
(ii) of Clause 16.02 simultaneously or on different dates
and it may take any action referred to in that Clause if no
such notice is served or simultaneously with or at any time
after the service of both or either of such notices.
16.06 Neither the Lender nor the Security Trustee nor any
receiver or manager appointed by the Lender or the Security
Trustee, shall have any liability to the Borrower or a
Security Party:
(a) for any loss caused by an exercise of rights under, or
enforcement of a Security Interest created by, a
Finance Document or by any failure or delay to exercise
such a right or to enforce such a Security Interest; or
(b) as mortgagee in possession or otherwise, for any income
or principal amount which might have been produced by
or realised from any asset comprised in such a Security
Interest or for any reduction (however caused) in the
value of such an asset;
except that this does not exempt the Lender, the Security
Trustee or a receiver or manager from liability for losses
shown to have been caused mainly and directly by the gross
and culpable negligence or the dishonesty of the Lender's or
the Security Trustee's own officers and employees or (as
the case may be) such receiver's or manager's own partners
or employees.
16.07 In this Clause 16 "a Relevant Person" means the Borrower,
each Security Party and any company which is a subsidiary or
a fellow-subsidiary of the Borrower or a Security Party or
of which the Borrower or a Security Party is a subsidiary;
but excluding any company which is dormant and the value of
whose gross assets is f.50.000 or less.
16.08 In Clause 16.01(e) references to an event of default or a
termination event include any event, howsoever described,
which is similar to an event of default in a facility
agreement or a termination event in a finance lease; and in
Clause 16.01(f) "petition" includes an application.
17. FEES AND EXPENSES
-----------------
17.01 The Borrower shall pay to the Lender:
(a) on the earlier of the first Drawdown Date and the date
falling one month after the date of this Agreement, an
arrangement fee of 161,875; and
(b) quarterly in arrears during the period from (and
including) 25th April, 1995 to the earlier of (i) the
second Drawdown Date and (ii) 30th July, 1996 and on
the last day of that period a commitment fee at the
rate of 5/8 per cent. per annum on the undrawn amount
of the Loan; and
(c) for the benefit of the Security Trustee, on the first
Drawdown Date and each anniversary thereof, a trustee
fee of GBP5,000.
17.02 The Borrower shall pay to the Lender or the Security
Trustee on its demand the amount of all expenses incurred by
the Lender or the Security Trustee in connection with the
negotiation, preparation, execution or registration of any
Finance Document or any related document or with any
transaction contemplated by a Finance Document or a related
document.
17.03 The Borrower shall pay to the Lender or the Security
Trustee, on its demand, the amount of all expenses incurred
by the Lender or the Security Trustee in connection with:
(a) any amendment or supplement to a Finance Document, or
any proposal for such an amendment to be made;
(b) any consent or waiver by the Lender or the Security
Trustee concerned under or in connection with a Finance
Document, or any request for such a consent or waiver;
(c) the valuation of any security provided or offered under
Clause 12 or any other matter relating to such
security; or
(d) any step taken by the Lender or the Security Trustee
with a view to the protection, exercise or enforcement
of any right or Security Interest created by a Finance
Document or for any similar purpose.
There shall be recoverable under paragraph (d) the full
amount of all legal expenses, whether or not such as would
be allowed under rules of court or any taxation or other
procedure carried out under such rules.
17.04 The Borrower shall promptly pay any tax payable on or by
reference to any Finance Document, and shall, on the
Lender's demand, fully indemnify the Lender and the Security
Trustee against any liabilities and expenses resulting from
any failure or delay by the Borrower to pay such a tax.
17.05 A notice which is signed by two officers of the Lender or
the Security Trustee, which states that a specified amount,
or aggregate amount, is due to the Lender or the Security
Trustee (as the case may be) under this Clause 17 and which
indicates (without necessarily specifying a detailed
breakdown) the matters in respect of which the amount, or
aggregate amount, is due shall be prima facie evidence that
the amount, or aggregate amount, is due.
18. INDEMNITIES
-----------
18.01 The Borrower shall fully indemnify the Lender and the
Security Trustee on its demand in respect of all expenses,
liabilities and losses which are incurred by the Lender or
the Security Trustee, or which the Lender or the Security
Trustee reasonably and with due diligence estimates that it
will incur, as a result of or in connection with:
(a) the Loan not being borrowed on the date specified in
the Drawdown Notice for any reason other than a default
by the Lender or the Security Trustee;
(b) the receipt or recovery of all or any part of the Loan
or an overdue sum otherwise than on the last day of an
Interest Period or other relevant period;
(c) any failure (for whatever reason) by the Borrower to
make payment of any amount due under a Finance Document
on the due date or, if so payable, on demand (after
giving credit for any default interest paid by the
Borrower on the amount concerned under Clause 6);
(d) the occurrence and/or continuance of an Event of
Default or a Potential Event of Default and/or the
acceleration of repayment of the Loan under Clause 16;
and in respect of any tax (other than tax on its overall net
income) for which the Lender or the Security Trustee is
liable in connection with any amount paid or payable to the
Lender (whether for its own account or otherwise) under any
Finance Document.
18.02 Without limiting its generality, Clause 18.01 covers any
liability, expense or loss, including a loss of a
prospective profit, incurred by the Lender or the Security
Trustee:
(a) in liquidating or employing deposits from third parties
acquired or arranged to fund or maintain all or any
part of the Loan and/or any overdue amount (or an
aggregate amount which includes the Loan or any overdue
amount); and
(b) in terminating, or otherwise in connection with, any
interest and/or currency swap or any other transaction
entered into (whether with another legal entity or with
another office or department of the Lender or the
Security Trustee) to hedge any exposure arising under
this Agreement or a number of transactions of which
this Agreement is one.
18.03 The Borrower shall fully indemnify the Lender and the
Security Trustee on its demand in respect of all claims,
demands, proceedings, liabilities, taxes, losses and
expenses of every kind ("liability items") which may be made
or brought against, or incurred by, the Lender or the
Security Trustee, in any country, in relation to:
(a) any action taken, or omitted or neglected to be taken,
under or in connection with any Finance Document by the
Lender or the Security Trustee or by any receiver
appointed under a Finance Document;
(b) any other event, matter or question which occurs or
arises at any time during the Security Period and which
has any connection with, or any bearing on, any Finance
Document, any payment or other transaction relating to
a Finance Document or any asset covered (or previously
covered) by a Security Interest created (or intended to
be created) by a Finance Document;
other than liability items which are shown to have been
caused mainly and directly by the gross and culpable
negligence or the dishonesty of the Lender's or the Security
Trustee's own officers or employees.
18.04 Without prejudice to its generality, Clause 18.03 covers
any liability items which arise, or are asserted, under or
in connection with any law relating to safety at sea,
pollution or the protection of the environment.
18.05 If any sum due from the Borrower or any Security Party to
the Lender or the Security Trustee under a Finance Document
or under any order or judgment relating to a Finance
Document has to be converted from the currency in which the
Finance Document provided for the sum to be paid (the
"Contractual Currency") into another currency (the "Payment
Currency") for the purpose of:
(a) making or lodging any claim or proof against the
Borrower or any Security Party, whether in its
liquidation, any arrangement involving it or otherwise;
or
(b) obtaining an order or judgment from any court or other
tribunal; or
(c) enforcing any such order or judgment;
the Borrower shall indemnify the Lender against the loss
arising when the amount of the payment actually received by
the Lender is converted at the available rate of exchange
into the Contractual Currency.
Here the "available rate of exchange" means the rate at
which the Lender is able at the opening of business (London
time) on the Business Day after it receives the sum
concerned to purchase the Contractual Currency with the
Payment Currency.
18.06 Clause 18.05 creates a separate liability of the Borrower
which is distinct from its other liabilities under the
Finance Documents and which shall not be merged in any
judgment or order relating to those other liabilities,
18.07 A notice which is signed by two officers of the Lender,
which states that a specified amount, or aggregate amount,
is due to the Lender under this Clause 18 and which
indicates (without necessarily specifying a detailed
breakdown) the matters in respect of which the amount, or
aggregate amount, is due shall be prima facie evidence that
the amount, or aggregate amount, is due.
19. NO SET-OFF OR TAX DEDUCTION
---------------------------
19.01 All amounts due from the Borrower under a Finance Document
shall be paid:
(a) without any form of set-off, cross-claim or condition;
and
(b) free and clear of any tax deduction except a tax
deduction which the Borrower is required by law to
make.
19.02 If the Borrower is required by law to make a tax deduction
from any payment:
(a) the Borrower shall notify the Lender as soon as it
becomes aware of the requirement;
(b) the Borrower shall pay the tax deducted to the
appropriate taxation authority promptly, and in any
event before any fine or penalty arises;
(c) the amount due in respect of the payment shall be
increased by the amount necessary to ensure that the
Lender and the Security Trustee receives and retains
(free from any liability relating to the tax deduction)
a net amount which, after the tax deduction, is equal
to the full amount which it would otherwise have
received.
19.03 Within one month after making any tax deduction, the
Borrower shall deliver to the Lender documentary evidence
satisfactory to the Lender that the tax had been paid to the
appropriate taxation authority.
19.04 In this Clause 19 "tax deduction" means any deduction or
withholding for or on account of any present or future tax
except tax on the Lender's or Security Trustee's overall net
income.
20. ILLEGALITY, ETC
---------------
20.01 This Clause 20 applies if the Lender notifies the Borrower
that it has become, or will with effect from a specified
date, become:
(a) unlawful or prohibited as a result of the introduction
of a new law, an amendment to an existing law or a
change in the manner in which an existing law is or
will be interpreted or applied; or
(b) contrary to, or inconsistent with, an official
requirement,
for the Lender to maintain or give effect to any of its
obligations under this Agreement in the manner contemplated
by this Agreement.
20.02 On the Lender so notifying the Borrower, the Lender's
obligation to make the Loan shall terminate; and thereupon
or, if later, on the date specified in the Lender's notice
as the date on which the notified event would become
effective the Borrower shall prepay the Loan in full in
accordance with Clause 7.
21. INCREASED COSTS
---------------
21.01 This Clause 21 applies if the Lender notifies the Borrower
that it considers that as a result of:
(a) the introduction or alteration after the date of this
Agreement of a law or an official requirement or an
alteration after the date of this Agreement in the
manner in which a law is interpreted or applied
(disregarding any effect which relates to the
application to payments under this Agreement of a tax
on the Lender's overall net income); or
(b) the effect of complying with any official requirement
(including any which relates to capital adequacy or
liquidity controls or which affects the manner in which
the Lender allocates capital resources to its
obligations under this Agreement) which is introduced,
or altered, or the interpretation or application of
which is altered, after the date of this Agreement,
is that the Lender (or a parent company of it) has incurred
or will incur an "increased cost", that is to say,:
(i) an additional or increased cost incurred as a result
of, or in connection with, the Lender having entered
into, or being a party to, this Agreement or having
taken an assignment of rights under this Agreement, of
funding or maintaining the Loan or performing its
obligations under this Agreement, or of having
outstanding all of any part of the Loan or other unpaid
sums; or
(ii) a reduction in the amount of any payment to the Lender
under this Agreement of in the effective return which
such a payment represents to the Lender or on its
capital;
(iii) an additional or increased cost of funding all or
maintaining all or any of the advances comprised in a
class of advances formed by or including the Loan or
(as the case may require) the proportion of that cost
attributable to the Loan; or
(iv) a liability to make a payment, or a return foregone,
which is calculated by reference to any amounts
received or receivable by the Lender under this
Agreement;
but not an item attributable to a change in the rate of tax
on the overall net income of the Lender (or a parent company
of it) or an item covered by the indemnity for tax in Clause
18.01 or by Clause 19.
21.02 The Borrower shall pay to the Lender, on its demand, the
amounts which the Lender from time to time notifies the
Borrower that it has specified to be necessary to compensate
it for the increased cost.
21.03 If the Borrower is not willing to continue to compensate
the Lender for the increased cost under Clause 21.02, the
Borrower may give the Lender not less than 14 days' notice
of its intention to prepay the Loan at the end of an
Interest Period.
21.04 That notice shall be irrevocable; and on the date specified
in its notice of intended prepayment, the Borrower shall
prepay (without premium or penalty) the Loan, together with
accrued interest thereon at the applicable rate plus the
Margin.
21.05 Clause 7 shall apply in relation to the prepayment.
22. CHANGES IN CIRCUMSTANCES
------------------------
22.01 This Clause 22 applies if by reason of circumstances
affecting the London Interbank Market the Lender is unable
to determine LIBOR in accordance with Clause 4.03 or is
unable to obtain Sterling in the London Interbank Market in
order to fund the Loan (or any part of it) during any
Interest Period.
22.02 The Lender shall promptly notify the Borrower stating the
circumstances which have caused its notice to be given.
22.03 If the Lender's notice is served on the Borrower before an
Advance is made, the Lender's obligation to make that
Advance shall be suspended while the circumstances referred
to in the Lender's notice continue.
22.04 The Borrower and the Lender shall use reasonable endeavors
to agree, within the 30 days after the date on which the
Lender serves its notice under Clause 22.02 (the
"Negotiation Period"), an alternative interest rate or (as
the case may be) an alternative basis for the Lender to fund
or continue to fund the Loan during the Interest Period
concerned.
22.05 Any alternative interest rate or an alternative basis which
is agreed during the Negotiation Period shall take effect in
accordance with the terms agreed.
22.06 However, if an alternative interest rate or alternative
basis is not agreed within the Negotiation Period, and the
relevant circumstances are continuing at the end of the
Negotiation Period, then the Lender shall set an interest
period and interest rate representing the cost of funding of
the Lender in Sterling or in any available currency of the
Loan plus the Margin; and the procedure provided for by this
Clause 22.06 shall be repeated if the relevant circumstances
are continuing at the end of the interest period so set by
the Lender.
22.07 If the Borrower does not agree with an interest rate set by
the Lender under Clause 22.06, the Borrower may give the
Lender not less than 15 Business Days' notice of its
intention to prepay at the end of the interest period set by
the Lender.
22.08 That notice shall be irrevocable; and on the last Business
Day of the interest period set by the Lender, the Borrower
shall prepay (without premium or penalty) the Loan, together
with accrued interest thereon at the applicable rate plus
the Margin.
22.09 Clause 7 shall apply in relation to the prepayment.
23. SET-OFF
-------
23.01 The Lender and the Security Trustee may without prior
notice:
(a) apply any balance (whether or not then due) which at
any time stands to the credit of any account in the
name of the Borrower at any office in any country of
the Lender or the Security Trustee in or towards
satisfaction of any sum then due from the Borrower to
the Lender or the Security Trustee under any of the
Finance Documents; and
(b) for that purpose:
(i) break, or alter the maturity of, all or any part
of a deposit of the Borrower;
(ii) convert or translate all or any part of a deposit
or other credit balance into Sterling;
(iii) enter into any other transaction or make any
entry with regard to the credit balance which the
Lender or the Security Trustee considers
appropriate.
23.02 Neither the Lender nor the Security Trustee shall be
obliged to exercise any of its rights under Clause 23.01;
and those rights shall be without prejudice and in addition
to any right of set-off, combination of accounts, charge,
lien or other right or remedy to which the Lender or the
Security Trustee is entitled (whether under the general law
or any document).
24. TRANSFERS AND CHANGES IN LENDING OFFICES
----------------------------------------
24.01 The Borrower may not, without the consent of the Lender:
(a) transfer any of its rights or obligations under any
Finance Document; or
(b) enter into any merger, de-merger or other
reorganisation, or carry out any other act, as a result
of which any of its rights or liabilities would vest
in, or pass to. another person.
24.02 Subject to Clauses 24.04, a Lender (the "Transferor
Lender") may at any time at its sole cost and expense, with
the consent of the Borrower (such consent not to be
unreasonably withheld and not to be required in the case of
a transfer to a subsidiary or the parent company of the
Transferor Lender or to another subsidiary of its parent
company), cause:
(a) its rights in respect of all or part of the Loan; or
(b) its obligations to advance all or part of the Loan; or
(c) a combination of (a) and (b);
to be (in the case of its rights) transferred to, or (in the
case of its obligations) assumed by, another bank or
financial institution (a "Transferee Lender") by delivering
to the Security Trustee a completed certificate in the form
set out in Schedule 3 with any modifications approved or
required by the Security Trustee (a "Transfer Certificate")
executed by the Transferor Lender and the Transferee Lender.
24.03 As soon as reasonably practicable after a Transfer
Certificate is delivered to the Security Trustee, it shall
(unless it has reason to believe that the Transfer
Certificate may be defective):
(a) sign the Transfer Certificate on behalf of itself, the
Borrower and each Security Party;
(b) on behalf of the Transferee Lender, send to the
Borrower and each Security Party letters or faxes
notifying them of the Transfer Certificate and
attaching a copy of it;
(c) send to the Transferee Lender copies of the letters or
fixes sent under paragraph (b) above.
24.04 A Transfer Certificate becomes effective on the date, if
any, specified in the Transfer Certificate as its effective
date, provided that it is signed by the Security Trustee
under Clause 24.03 on or before that date.
24.05 No assignment or transfer of any right or obligation of a
Lender under any Finance Document is binding on, or
effective in relation to, the Borrower, any Security Party
or the Security Trustee unless it is effected, evidenced or
perfected by a Transfer Certificate.
24.06 However, if a Lender enters into any merger. de-merger or
other reorganisation as a result of which all its rights or
obligations vest in another person (the "successor"), the
Security Trustee may, if it sees fit, by notice to the
successor and the Borrower waive the need for the execution
and delivery of a Transfer Certificate; and, upon service of
the Security Trustee's notice, the successor shall become a
Lender with the same obligations and rights as were held by
the predecessor Lender.
24.07 A Transfer Certificate takes effect in accordance with
English law as follows:-
(a) to the extent specified in the Transfer Certificate,
all rights and interests (present, future or
contingent) which the Transferor Lender has under or by
virtue of the Finance Documents are assigned to the
Transferee Lender absolutely, free of any defects in
the Transferor Lender's title and of any rights or
equities which the Borrower or any Security Party had
against the Transferor Lender;
(b) the Transferor Lender's obligations are discharged to
the extent specified in the Transfer Certificate;
(c) the Transferee Lender becomes a Lender with the
obligations previously held by the Transferor Lender
specified in the Transfer Certificate;
(d) the Transferee Lender becomes bound by all the
provisions of the Finance Documents which are
applicable to the Lenders generally, including those
about the exclusion of liability on the part of, and
the indemnification of, the Security Trustee and, to
the extent that the Transferee Lender becomes bound by
those provisions (other than those relating to
exclusion of liability), the Transferor Lender ceases
to be bound by them;
(e) an Advance or part of an Advance which the Transferee
Lender makes after the Transfer Certificate's effective
date ranks in point of priority and security in the
same way as it would have ranked had it been made by
the transferor, assuming that any defects in the
transferor's title and any rights or equities of the
Borrower or any Security Party against the Transferor
Lender had not existed; and
(f) the Transferee Lender becomes entitled to all the
rights under the Finance Documents which are applicable
to the Lenders generally and to the extent that the
Transferee Lender becomes entitled to such rights, the
Transferor Lender ceases to be entitled to them.
The rights and equities of the Borrower or any Security
Party referred to above include, but are not limited to, any
right of set off and any other kind of cross-claim.
24.08 The Borrower irrevocably authorizes the Security Trustee to
sign Transfer Certificates on its behalf.
24.09 The Lender may sub-participate all or any part of its
rights and/or obligations under or in connection with the
Finance Documents without the consent of, or any notice to,
the Borrower, any Security Party or the Security Trustee.
24.10 The Lender may disclose to a potential transferee or sub-
participant any information which the Lender has received in
relation to the Borrower, any Security Party or their
affairs under or in connection with any Finance Document,
unless the information is clearly of a confidential nature.
24.11 The Lender may change its lending office by giving notice
to the Borrower and the change shall become effective on the
later of:
(a) the date on which the Borrower receives the notice; and
(b) the date, if any, specified in the notice as the date
on which the change will come into effect.
24.12 If, at the time of any transfer or change of lending office
by the Lender, circumstances exist which would oblige the
Borrower to pay to the Transferee Lender or the Lender under
Clauses 19, 20 or 21 any sum in excess of the sum (if any)
which it would have been obliged to pay to the Lender under
the relevant Clause in the absence of that transfer or
change of lending office the Borrower shall not be obliged
to pay that excess.
25. VARIATIONS AND WAIVERS
----------------------
25.01 A document shall be effective to vary, waive, suspend or
limit any provision of a Finance Document, or the Lender's
or the Security Trustee's rights or remedies under such a
provision or the general law, only if the document is
signed, or specifically agreed to by fax or telex, by the
Borrower, the Security Trustee and the Lender and, if the
document relates to a Finance Document to which a Security
Party is party, by that Security Party.
25.02 Except for a document which satisfies the requirements of
Clauses 25.01, no document, and no act, course of conduct,
failure or neglect to act, delay or acquiescence on the part
of the Lender or the Security Trustee (or any person acting
on its behalf) shall result in the Lender or the Security
Trustee (or any person acting on its behalf) being taken to
have varied, waived, suspended or limited, or being
precluded (permanently or temporarily) from enforcing,
relying on or exercising:
(a) a provision of this Agreement or another Finance
Document; or
(b) an Event of Default; or
(c) a breach by the Borrower or a Security Party of an
obligation under a Finance Document or the general law;
or
(d) any right or remedy conferred by any Finance Document
or by the general law;
and there shall not be implied into any Finance Document any
term or condition requiring any such provision to be
enforced, or such right or remedy to be exercised, within a
certain time.
26. NOTICES
-------
26.01 Unless otherwise specifically provided, any notice under or
in connection with any Finance Document shall be given by
letter, fax or telex; and references in the Finance
Documents to written notices, notices in writing and notices
signed by particular persons shall be construed accordingly.
26.02 A notice shall be sent:
(a) to the Borrower: 10 Charlotte Road
London SW13 9QJ
Fax No: 0181 748 568
with a copy to:
201 Energy Centre Parkway
Suite 200
Lafayette
Louisiana 70508
Fax No: 318 235 2584
and
5 Post Oak Park
Suite 1170
Houston
Texas 77027
Fax No: 713 963 9796
(b) to the Lender or the Security Trustee:
P.O. Box 1166 Sentrum
0107 Oslo
Fax No: 22 48 47 51
(att: International Loans Admin.)
or to such other address as the relevant party may notify
the other.
26.03 Subject to Clauses 26.04 and 26.05:
(a) a notice which is delivered personally or posted shall
be deemed to be served, and shall take effect, at the
time when it is delivered,
(b) a notice which is sent by telex or fax shall be deemed
to be served, and shall take effect, 2 hours after its
transmission is completed.
26.04 However, if under Clause 26.03 a notice would be deemed to
be served:
(a) on a day which is not a business day in the place of
receipt; or
(b) on such a business day, but after 5 p.m. local time;
the notice shall (subject to Clause 26.05) be deemed to be
served, and shall take effect, at 9 a.m. on the next day
which is such a business day.
26.05 Clauses 26.03 and 26.04 do not apply if the recipient of a
notice notifies the sender within 2 hours after the time at
which the notice would otherwise be deemed to be served that
the notice has been received in a form which is illegible in
a material respect.
26.06 Any notice under or in connection with a Finance Document
shall be in English.
26.07 In this Clause "notice" includes any demand, consent,
authorization, approval, instruction, waiver or other
communication.
27. THE SECURITY TRUSTEE
--------------------
27.01 In this Clause the "Trust Property" means:
(a) all Security Interests and all rights granted to, or
held or exercisable by, the Security Trustee under or
by virtue of the Finance Documents, except rights
clearly intended for the sole benefit or protection of
the Security Trustee;
(b) all moneys which are received or recovered by or on
behalf of the Security Trustee under or by virtue of
any Security Interest or right covered by paragraph (a)
above, including any moneys which are received or
recovered by it as a result of the enforcement or
exercise by it of such a Security Interest or right;
(c) all moneys and other assets which may accrue in respect
of, or be derived from, any moneys covered by paragraph
(b) above; and
(d) any rights or other assets which the Security Trustee,
by notice to the Lender, states shall be deemed to form
part of the Trust Property;
except any moneys which the Security Trustee has transferred
to the Lender or (being entitled to do so) has retained in
accordance with the following provisions of this Clause.
27.02 The Security Trustee shall:
(a) hold the Trust Property on trust for the Lender and the
Security Trustee; and
(b) deal with the Trust Property; in accordance with this
Clause and the other provisions of the Finance
Documents.
27.03 Except as expressly stated to the contrary in any Finance
Document, any moneys which the Security Trustee receives or
recovers and which are Trust Property shall (without
prejudice to the rights of the Security Trustee under any
Finance Document to credit any moneys received or recovered
by it to any suspense account) be transferred to the Lender
for application in accordance with Clauses 13 and 14.
27.04 However, before transferring such moneys to the Lender, the
Security Trustee may deduct any sum then due and payable
under this Agreement or any other Finance Document to the
Security Trustee or any receiver, agent or other person
appointed by it and retain that sum for itself or, as the
case may require, pay it to the other person to whom it is
then due and payable; for this purpose if the Security
Trustee has become entitled to require a sum to be paid to
it on demand, that sum shall be treated as due and payable,
even if no demand has yet been served.
27.05 In addition to its rights under or by virtue of this
Agreement and the Finance Documents, the Security Trustee
shall have all of the rights conferred on a trustee by the
Trustee Act 1925 and any other applicable law for the time
being in force.
27.06 The duties of the Security Trustee are limited to those
expressly set out in this Agreement and the Finance
Documents; and the Lender waives any additional or more
extensive fiduciary or other obligation which the Security
Trustee might otherwise have by virtue of its position or
its designation as trustee.
27.07 Subject to the provisions of the Finance Documents:
(a) the Security Trustee shall act in connection with the
Finance Documents in accordance with the written
instructions of the Lender; but
(b) in the absence of any such instructions, the Security
Trustee shall not be obliged to act.
27.08 The Security Trustee shall not have any obligation to
request the Lender to give it any instructions or to make
any determination.
27.09 The Security Trustee cannot be required by the Lender:
(a) to commence, join in or defend any form of legal
proceeding or to take or participate in any other
action which it considers will or may expose it to any
liability (whether for expenses or otherwise) unless it
has first received a letter of credit in such amount
and terms and from such a bank as it may require; or
(b) to take or participate in any action which the Security
Trustee considers is or may be contrary to any Finance
Document or unlawful or contrary to or inconsistent
with any official requirement or the policy of any
authority which regulates or supervises any activity of
the Security Trustee or the Lender.
27.10 Any action which the Security Trustee takes or purports to
take on behalf of the Lender at a time when it had not been
authorized to do so shall, if subsequently ratified, be as
valid as regards the Borrower, the Security Parties and the
Lender as if the Security Trustee had been expressly
authorized in advance.
27.11 The Security Trustee shall not have or incur any obligation
or responsibility to the Lender, the Borrower or any
Security Party except those expressly specified in the
Finance Documents; and no term shall be implied into any
Finance Document to the effect that the Security Trustee has
such an obligation or responsibility.
27.12 The Security Trustee shall not be liable to the Borrower,
any Security Party or the Lender for any loss or expense
attributable to any action taken or omitted to be taken by
the Security Trustee, or any of its officers, employees or
agents under or in connection with any Finance Document
unless the loss or expense is shown to have been caused
directly and mainly by the gross and culpable negligence or
the dishonesty of the Security Trustee's own officers or
employees; and neither the Borrower, nor any Security Party
nor the Lender shall make any claim against an officer,
employee or agent of the Security Trustee in respect of such
a loss or expense unless he is shown to have acted
dishonestly.
27.13 The Security Trustee shall have no responsibility to keep
under review or to report to the Lender about:
(a) the financial position or the affairs of the Borrower,
any Security Party or any other person; or
(b) the accuracy of any representation, warranty or
statement made (or deemed to be repeated), or any
information provided (whether before the date of this
Agreement or otherwise), by the Borrower or any
Security Party in or in connection with any Finance
Document; or
(c) the title, value or any other matter relating to, any
asset covered or proposed to be covered by a Security
Interest created by a Finance Document; or
(d) whether any Event of Default or Potential Event of
Default has occurred.
27.14 The Security Trustee shall not be treated as having
knowledge, or any form of notice, of:
(a) an Event of Default or a Potential Event of Default; or
(b) any other event or matter which is relevant to any
Finance Document;
until the Event of Default or Potential Event of Default or
(as the case may require) the other event or matter
concerned has been specifically brought to the attention of
the officers of the Security Trustee who have direct
responsibility for the carrying out of the Security
Trustee's functions under the Finance Documents and so
brought to their attention specifically for the purposes of
the Finance Documents.
27.15 The Security Trustee shall not be responsible to the Lender
for:
(a) any breach by the Borrower or a Security Party of any
Finance Document; or
(b) the business merits of the terms of any Finance
Document; or
(c) ensuring and preserving the validity or enforceability
of any Finance Document or the validity, enforceability
or priority of any Security Interest created or
purportedly created by a Finance Document.
27.16 The Security Trustee may:
(a) engage lawyers, accountants and other experts, and rely
on their advice;
(b) rely on any communication or document, including any
Transfer Certificate, which it believes to be genuine
and correct and to have been communicated, sent or
signed by (or with the authority of) the person by whom
(or on whose behalf) it purports to be communicated,
sent or signed; and
(c) perform all or any of its functions under this
Agreement and the other Finance Documents through any
office or branch of the Security Trustee which it may
from time to time select and notify to the other
parties or through any kind of agent and, in
particular, by power of attorney or otherwise delegate
the exercise of any of its powers and discretions under
the Finance Documents to any person on such terms (as
to duration, sub-delegation, remuneration, exoneration
and otherwise) as the Security Trustee may consider
appropriate.
27.17 The Security Trustee shall be fully entitled, without
liability to account or disclose to the Lender, to enter
into:
(a) banking, investment and/or other transactions of every
kind with the Borrower or any Security Party
(including, but not limited to, any interest or
currency swap or other transaction, whether related to
this Agreement or not, and acting as syndicate agent
and/or security trustee for, and/or participating in,
other facilities to the Borrower or a Security Party),
and
(b) transactions relating, or dealings in, to any
securities issued or to be issued by the Borrower or
any Security Party;
as though the Security Trustee were not a trustee of the
Lender; and, in particular, the Security Trustee:
(i) shall have no obligation to make available to the
Lender any information which it acquires in connection
with any such transaction or to use such information
for the benefit of the Lender or for the purposes of
any Finance Document; and
(ii) shall be fully entitled to act or refrain from acting
in relation to any such transaction having exclusive
regard to its own best interests.
27.18 At the end of the Security Period, the Security Trustee
shall release, without any covenants for title or other
recourse whatsoever, all the Security Interests created by
the Finance Documents, whereupon the Security Trustee shall
be discharged from all liabilities and obligations which it
has under this Agreement and the other Finance Documents.
27.19 The trusts hereby constituted are governed by English law,
and the applicable perpetuity period is 75 years commencing
on the date of this Agreement.
27.20 In this Clause "right" includes any power, discretion or
remedy.
28. SUPPLEMENTAL
------------
28.01 The rights and remedies which the Finance Documents give to
the Lender and the Security Trustee are:
(a) cumulative;
(b) may be exercised as often as appears expedient; and
(c) shall not, unless a Finance Document explicitly and
specifically states so, be taken to exclude or limit
any right or remedy conferred by any law.
28.02 If any provision of a Finance Document is or subsequently
becomes void, unenforceable or illegal, that shall not
affect the validity, enforceability or legality of the other
provisions of that Finance Document or of the provisions of
any other Finance Document.
28.03 A Finance Document may be executed in any number of
counterparts.
29. LAW AND JURISDICTION
--------------------
29.01 This Agreement is governed by English law.
29.02 Without prejudice to Clause 29.03, the courts of England
shall have jurisdiction to settle any disputes which may
arise out of or in connection with this Agreement.
29.03 However, Clause 29.02 is for the exclusive benefit of the
Lender, which reserves the right to bring proceedings in
respect of any matter which arises out of or in connection
with this Agreement in the courts of any country which have
or claim jurisdiction in relation to that matter.
29.04 The Borrower waives any objection on the ground of
inconvenient forum to any proceedings which relate to this
Agreement being brought:
(a) in the courts of England; and
(b) in any other courts by virtue of Clause 29.03.
29.05 Nothing in this Clause 29 shall exclude or limit any right
which the Lender may have (whether under the law of any
country, an international convention or otherwise) with
regard to the bringing of proceedings, the service of
process, the recognition or enforcement of a judgment or any
similar or related matter in any jurisdiction.
29.06 If the Lender commences proceedings in connection with a
Finance Document, that shall not preclude it from commencing
proceedings (whether concurrently or not) with respect to
that or any other Finance Document in another jurisdiction.
AS WITNESS the hands of the duly authorized officers or
attorneys of the parties the day and year first before
written.
<PAGE>
SCHEDULE 1
----------
DRAWDOWN NOTICE
---------------
To: Christiania Bank og Kreditkasse
P.O. Box 1166 Sentrum
0107 Oslo
Attention: Loans Administration ( ), 1995
DRAWDOWN NOTICE
---------------
1. We refer to the loan agreement (the "Loan Agreement") dated
1995 and made between ourselves, as Borrower, and ourselves,
as Lender and Security Trustee, in connection with a
facility of up to GBP16,500,000. Terms defined in the Loan
Agreement have their defined meanings when used in this
Drawdown Notice.
2. We request to borrow as follows:-
(a) Amount: GBP( );
(b) Drawdown Date: ( );
(c) Duration of the first Interest Period shall be ( )
months;
(d) Payment instructions: account in our name and numbered
( ) with ( ) of ( ).
3. We represent and warrant that:
(a) the representations and warranties in Clause 9 of the
Loan Agreement would remain true and not misleading if
repeated on the date of this notice with reference to
the circumstances now existing;
(b) no Event of Default or Potential Event of Default has
occurred or will result from the borrowing of the Loan.
(Name of Signatory)
Director
for and on behalf of
Gulf Offshore N.S. Limited<PAGE>
SCHEDULE 2
----------
CONDITION PRECEDENT DOCUMENTS
-----------------------------
PART I
------
The following are the documents referred to in Clause 8.01 in
relation to the first Advance.
1. A duly executed original of each Finance Document (except
those relating to the Newbuilding) and of each document
required to be delivered by each such Finance Document,
including (but without limitation) all notices of
assignment, acknowledgments and letters of undertaking
required by the Deeds of Covenant.
2. Copies of the certificate of incorporation and
constitutional documents of the Borrower and each Security
Party.
3. Copies of resolutions of the directors of the Borrower and
each Security Party authorising the execution of each of the
Finance Documents to which the Borrower or that Security
Party is a party and, in the case of the Borrower,
authorising named officers to give the Drawdown Notices and
other notices under this Agreement and ratifying the
execution of the Building Contract,
4. The original of any power of attorney under which any
Finance Document is executed on behalf of the Borrower or a
Security Party.
5. Copies of all official consents which the Borrower or any
Security Party requires to enter into, or make any payment
under, any Finance Document or the Building Contract.
6. The originals of any mandates or other documents required in
connection with the opening or operation of the Earnings
Account.
7. The audited (or, in the case of GOMI, unaudited)
consolidated accounts of the Borrower and each Guarantor for
the year ended 31st December, 1994.
8. A copy of the Building Contract.
9. Documentary evidence that each Ship (other than the
Newbuilding):
(a) is definitively and permanently registered in the name
of the Borrower under British flag;
(b) is in the absolute and unencumbered ownership of the
Borrower save as contemplated by the Finance Documents;
(c) maintains the class + lAl with Det norske Veritas free
of all recommendations and qualifications of such
Classification Society;
(d) the Mortgage on her has been duly registered against
that Ship as a valid first priority ship mortgage in
accordance with the laws of England; and
(e) is insured in accordance with the provisions
of the Deed of Covenant and all
requirements therein in respect of
insurances have been complied with.
10. Favourable legal opinions from lawyers appointed by the
Lender on such matters concerning the laws of Panama and
such other relevant jurisdictions as the Lender may require.
Each of the documents specified in paragraphs 2, 3, 5 and 8 above
and every other copy document delivered under this Schedule shall
be certified as a true and up to date copy by a director or the
secretary (or equivalent officer) of the Borrower.
PART II
-------
The following are the documents referred to in Clause 8.01 in
relation to the second Advance.
1. A duly executed original of each Finance Document relating
to the Newbuilding and of each document required to be
delivered by each such Finance Document, including (but
without limitation) all notices of assignment,
acknowledgments and letters of undertaking required by the
Deed of Covenant.
2. A certificate signed by a director or the secretary of the
Borrower that there has been no revocation of or change to
any of the Documents specified in paragraphs 2, 3 and 5 of
Part I and each of them remains in full force and effect.
3. Documentary evidence that the Newbuilding:
(a) is definitively and permanently registered in the name
of the Borrower under British flag;
(b) is in the absolute and unencumbered ownership of the
Borrower save as contemplated by the Finance Documents;
(c) maintains the class + 1A1 with Det norske Veritas free
of all recommendations and qualifications of such
Classification Society;
(d) the Mortgage on her has been duly registered against
that Ship as a valid first priority ship mortgage in
accordance with the laws of England; and
(e) is insured in accordance with the provisions
of the Deed of Covenant and all requirements
therein in respect of insurances have
been complied with.<PAGE>
SCHEDULE 3
----------
TRANSFER CERTIFICATE
--------------------
The Transferor and the Transferee accept exclusive
--------------------------------------------------
responsibility for ensuring that this Certificate and the
---------------------------------------------------------
transaction to which it relates comply with all legal and
---------------------------------------------------------
regulatory requirements applicable to them respectively.
--------------------------------------------------------
To: Christiania Bank og Kreditkasse for itself, as Security
Trustee, and for and on behalf of the Borrower and each
Security Party as defined in the Loan Agreement referred to
below.
( ), 1995
1. This Certificate relates to a Loan Agreement ("the
"Agreement") dated ( ), 1995 and made between (1) Gulf
Offshore N.S. Limited (the "Borrower") and (2) Christiania
Bank og Kreditkasse as Lender and Security Trustee for a
loan facility of GBP16,500,000.
2. In this Certificate:
"the Relevant Parties" means the Borrower, each Security
Party, the Security Trustee and (the) (each) Lender;
"the Transferor" means (full name) of (lending office);
"the Transferee" means (full name) of (lending office).
Terms defined in the Loan Agreement shall, unless the
contrary intention appears, have the same meanings when used
in this Certificate.
3. The effective date of this Certificate is......... 19. ,
provided that this Certificate shall not come into effect
unless it is signed by the Security Trustee on or before
that date.
4. The Transferor assigns to the Transferee absolutely all
rights and interests (present, future or contingent) which
the Transferor has as Lender under or by virtue of the Loan
Agreement and every other Finance Document (in relation to
( ) per cent. of the Loan.).
5. By virtue of this Transfer Certificate and Clause 27 of the
Loan Agreement, the Transferor is discharged (entirely from
its obligations under the Loan Agreement) (from ( ) per
cent. of its obligations under the Loan Agreement, which
percentage represents GBP( )).
6. The Transferee undertakes with the Transferor and each of
the Relevant Parties that the Transferee will observe and
perform all the obligations under the Finance Documents
which Clause 27 of the Loan Agreement provides will become
binding on it upon this Certificate taking effect.
7. The Security Trustee, at the request of the Transferee
(which request is hereby made) accepts, for the Security
Trustee itself and for and on behalf of every other Relevant
Party, this Certificate as a Transfer Certificate taking
effect in accordance with Clause 27 of the Loan Agreement.
8. The Transferor:
(a) warrants to the Transferee and each Relevant Party (i)
that the Transferor has full capacity to enter into
this transaction and has taken all corporate action and
obtained all official consents which are in connection
with this transaction; and (ii) that this Certificate
is valid and binding as regards the Transferor;
(b) warrants to the Transferee that the Transferor is
absolutely entitled, free of encumbrances, to all the
rights and interests covered by the assignment in
paragraph 2 above;
(b) undertakes with the Transferee that the Transferor
will, at its own expense, execute any documents which
the Transferee reasonably requests for perfecting in
any relevant jurisdiction the Transferee's title under
this Transfer Certificate or for a similar purpose,
9. The Transferee:
(a) confirms that it has received a copy of the Loan
Agreement;
(b) agrees that it will have no rights of recourse on any
ground against either the Transferor, the Security
Trustee or (the) (any) Lender in the event that (i)
the Finance Documents prove to be invalid or
ineffective, (ii) the Borrower or any Security Party
fails to observe or perform its obligations, or to
discharge its liabilities, under the Finance Documents
(iii) it proves impossible to realise any asset covered
by a Security Interest created by a Finance Document,
or the proceeds of such assets are insufficient to
discharge the liabilities of the Borrower or any
Security Party under the Finance Documents;
(c) agrees that it will have no rights of recourse on any
ground against the Security Trustee or (the) (any)
Lender in the event that this Certificate proves to be
invalid or ineffective;
(d) warrants to the Transferor and each Relevant Party (i)
that it has full capacity to enter into this
transaction and has taken all corporate action and
obtained all official consents which it needs to take
or obtain in connection with this transaction; and
(ii) that this Certificate is valid and binding as
regards the Transferee; and
(e) confirms the accuracy of the administrative details set
out below regarding the Transferee.
10. The Transferor and the Transferee each undertake with the
Security Trustee severally, on demand, fully to indemnify
the Security Trustee in respect of any claim, proceeding,
liability or expense (including all legal expenses) which it
may incur in connection with this Certificate or any matter
arising out of it, except such as are shown to have been
mainly and directly caused by the gross and culpable
negligence or dishonesty of the Security Trustee's own
officers or employees.
(Name of Transferor) (Name of Transferee)
By: By:
Date: Date:
Security Agent
--------------
Signed for itself and for and on behalf of itself as
Security Trustee and for every other Relevant Party
Christiania Bank og Kreditkasse
By:
Date:
Administrative Details of Transferee
Name of Transferee:
Lending Office:
Contact Person
(Loan Administration Department):
Telephone:
Telex:
<PAGE>
Fax:
Contact Person
(Credit Administration Department):
Telephone:
Telex:
Fax:
Account for payments:
Note: This Transfer Certificate alone may not be
sufficient to -
transfer a proportionate share of the Transferor's
interest in the security constituted by the Finance
Documents in the Transferor's or Transferee's
jurisdiction. It is the responsibility of each Lender to
ascertain whether any other documents are required for
this purpose.
<PAGE>
SCHEDULE 4
----------
COMPLIANCE CERTIFICATE
----------------------
Christiania Bank og Kreditkasse Date, , 1995
P.O. Box 1166 Sentrum
0107 Oslo
Norway
Att: E. Marianne Aalby
COMPLIANCE CERTIFICATE
----------------------
Please accept this letter as certification that as of (date)*,
Gulf Offshore N.S. Limited was in compliance with all of the
covenants stipulated in Clause 11.04 of the loan agreement dated
( ), 1995 between ourselves and Christiania Bank og
Kreditkasse. With regards to the covenants in Clause 11.04:-
1. The Company had GBP( )in Liquid Assets as of
( )*;
2. The Company's Value Adjusted Equity as of ( )* was
GBP( );
3. The Company's Value Adjusted Total Assets as of ( )*
was GBP( ), (based on the following vessel
valuations):-
( )
4. The ratio of the Company's Budgeted Operating Profit to
Budgeted Financial Expenses as of ( )* was ( :1);
5. The Book Equity of Gulf Offshore Marine International, Inc.
as of ( )*, was USD( ).
Regards,
Gulf Offshore N.S. Limited
* The quarter end for which compliance is being certified.
EXECUTION PAGE(S)
-----------------
SIGNED by )
s/Bruce A. Streeter/ )
for and on behalf of ) s/Bruce A. Streeter/
GULF OFFSHORE N.S. )
LIMITED in the presence of:- )
s/David E. Kenwright/
SIGNED by )
s/Oivind Haraldsen/ )
for and on behalf of )
CHRISTIANIA BANK OG )
KREDITKASSE as Lender and ) s/Oivind Haraldsen/
Security Trustee in the )
presence of:- )
s/E.M. Aalby/
