<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, 1996
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 9, 1996: 3,338,852.<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, 1995, and the information included in the
Proxy Statement dated April 1, 1996.
2<PAGE>
<PAGE>3
GULFMARK INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
(Unaudited) (Audited)
--------- -------
<S> <C> <C>
(In thousands)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents............................................... $ 3,399 $ 5,163
Accounts and notes receivable........................................... 8,063 6,148
Investment in Energy Ventures, Inc. - current........................... 9,750 --
Inventory, prepaids and other........................................... 2,268 1,399
------- -------
Total current assets.................................................. 23,480 12,710
------- -------
INVESTMENT IN ENERGY VENTURES, INC........................................ 32,901 34,321
------- -------
PROPERTY AND EQUIPMENT, at cost, net of accumulated
depreciation of $16,505,000 in 1996 and $14,959,000 in 1995............. 71,773 61,582
------- -------
OTHER ASSETS.............................................................. 2,606 2,322
------- -------
$130,760 $110,935
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term borrowings and current portion of long-term debt............. $ 6,022 $ 4,066
Accounts payable........................................................ 1,126 1,779
Accrued payroll and related expenses.................................... 231 564
Other accrued liabilities............................................... 1,255 1,245
------- -------
Total current labilities.............................................. 8,634 7,654
------- -------
LONG-TERM DEBT............................................................ 43,063 33,600
------- -------
DEFERRED TAXES AND OTHER.................................................. 13,428 10,308
------- -------
MINORITY INTEREST......................................................... 368 415
------- -------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock, $1 par value; 10,000,000 shares authorized;
3,336,352 shares issued and outstanding............................... 3,336 3,336
Additional paid-in capital.............................................. 23,501 23,501
Retained earnings....................................................... 29,040 28,237
Cumulative translation adjustment....................................... (4,137) (4,146)
Unrealized gain on investment, net of tax............................... 13,527 8,030
------- -------
Total stockholders' equity............................................ 65,267 58,958
------- -------
$130,760 $110,935
======= =======
</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
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
-------------------- ---------------------
1996 1995 1996 1995
-------- -------- ------- ------
(In thousands, except per share amounts)
<S> <C> <C> <C> <C>
REVENUES............................................... $ 8,978 $ 9,535 $ 16,139 $ 17,035
COSTS AND EXPENSES:
Direct operating expenses............................ 5,391 6,861 10,492 13,195
Selling, general and administrative expenses......... 1,597 1,348 3,002 2,696
-------- -------- ------- -------
6,988 8,209 13,494 15,891
-------- -------- ------- -------
OPERATING INCOME....................................... 1,990 1,326 2,645 1,144
-------- -------- ------- -------
OTHER INCOME (EXPENSES):
Interest expense..................................... (946) (856) (1,744) (1,443)
Interest income...................................... 76 37 131 85
Equity in earnings of Energy Ventures, Inc........... -- 393 -- 761
Other................................................ 15 16 75 96
-------- -------- ------- -------
(855) (410) (1,538) (501)
-------- -------- ------- -------
INCOME BEFORE INCOME TAXES............................. 1,135 916 1,107 643
INCOME TAX PROVISION................................... (379) (3,628) (304) (3,576)
-------- -------- ------- -------
NET INCOME (LOSS)...................................... $ 756 $ (2,712) $ 803 $ (2,933)
======== ======== ======= =======
EARNINGS (LOSS) PER SHARE.............................. $ 0.23 $ (0.81) $ 0.24 $ (0.88)
======== ======== ======= =======
WEIGHTED AVERAGE SHARES OUTSTANDING..................... 3,336 3,321 3,336 3,321
======== ======== ======= =======
</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,
----------------------
1996 1995
------- ---------
(In thousands)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)......................................................... $ 803 $ (2,933)
Adjustments to reconcile net income (loss) to net cash provided
by operations:
Depreciation and amortization............................................ 2,319 2,764
Equity in earnings of Energy Ventures, Inc............................... -- (761)
Deferred and other income tax benefit.................................... 256 3,532
Change in assets and liabilities......................................... (2,197) 345
Other, net............................................................... (15) (127)
------- -------
Net cash provided by operating activities.................................. 1,166 2,820
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment...................................... (13,000) (3,493)
Expenditures for drydocking and main engine overhaul..................... (997) (811)
Proceeds from sales of property and equipment............................ -- 18
------- -------
Net cash used in investing activities...................................... (13,997) (4,286)
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments of debt....................................................... (1,344) (14,936)
Proceeds from debt, net.................................................. 12,411 15,563
Other.................................................................... -- 38
------- -------
Net cash provided by financing activities.................................. 11,067 665
------- -------
NET DECREASE IN CASH AND CASH EQUIVALENTS.................................. (1,764) (801)
CASH AND CASH EQUIVALENTS AT BEGINNING OF THE PERIOD....................... 5,163 2,989
------- -------
CASH AND CASH EQUIVALENTS AT END OF THE PERIOD............................. $ 3,399 $ 2,188
======= =======
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid.............................................................. $ 1,485 $ 1,566
======= ========
Income taxes paid.......................................................... $ 53 $ 48
======= ========
</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) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Property and Equipment
During the first quarter of 1996, management completed an
evaluation of the useful life used for depreciating vessels in light
of recent vessel performance, changes in the materials available to
protect vessel hulls and industry practice. Based on the results, it
was determined that a useful life of twenty-five years for its vessels
was a better estimate than the twenty years used previously.
Therefore effective January 1, 1996 the useful life was extended to
twenty-five years. For the quarter ended June 30, 1996, the effect of
this change in accounting estimate lowered depreciation expense by
$468,000. The impact of the change on net income for the quarter
ended June 30, 1996 was $313,000 or $0.09 per share. For the six
months ended June 30, 1996, the effect of this change lowered
depreciation expense by $936,000. The impact of the change on net
income for the six months ended June 30, 1996 was $625,000 or $0.19
per share.
New Accounting Pronouncements
In March 1995, the Financial Accounting Standards Board issued
SFAS No. 121, "Accounting for Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed Of", which is effective for the
Company on January 1, 1996. The statement sets forth guidelines
regarding when to recognize an impairment of long-lived assets,
including goodwill, and how to measure such impairment. Adoption of
SFAS No. 121 did not have any effect on the Company's consolidated
financial statements.
As of January 1, 1996, SFAS No. 123, "Accounting for Stock-Based
Compensation", is effective for the Company. SFAS No. 123 permits,
but does not require, a fair value based method of accounting for
employee stock option plans which results in compensation expense
recognition when stock options are granted. The Company will continue
the use of its current intrinsic value based method of accounting for
such plans.
6<PAGE>
<PAGE>7
(2) VESSEL ACQUISITIONS
In 1995, the Company contracted with a shipyard in Norway for the
construction of two new UT 755 design vessels for deployment in the
North Sea. The first vessel, named the Highland Piper, was delivered
on March 15, 1996. The second vessel, to be named the Highland
Drummer, is expected to be delivered in early 1997. Included in
capital expenditures for the six months ended June 30, 1996 is a total
of $11,508,000 related to the final construction payment on the
Highland Piper and interim construction payments on the Highland
Drummer. Funding for these payments was provided through additional
borrowings of approximately $12,400,000 under a British Pound Sterling
("GBP") 16,500,000 facility with a bank.
In connection with the final payment to a shipyard for the
Highland Drummer, the Company entered into a forward contract to hedge
approximately $12,164,000 of the commitment to pay in Norwegian Kroner
against unfavorable fluctuations in the exchange rate to GBP which
will be used to fund the payment. The unrealized loss of $110,000 as
of June 30, 1996, is not reflected in the accompanying financial
statements. Upon realization, expected to be in early 1997 when the
vessel is delivered, any gain or loss will be included in the cost of
the vessel.
On August 2, 1996, the Company purchased six offshore supply
vessels from Maritime (Pte) Limited which will operate in Southeast
Asia. Funding for this acquisition was provided through a new
$7,000,000 facility with a bank and drawdown available under existing
facilities.
(3) INVESTMENT IN ENERGY VENTURES, INC.
At June 30, 1996, the Company owned 14% 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 drill pipe and premium tubulars, production
equipment and provides rig contracting services. The Company's
ownership interest was diluted from 20% to 17% on June 30, 1995 as a
result of Energy Ventures issuing 2.25 million shares in connection
with an acquisition and from 17% to 14% in September 1995 with the
issuance of 3.45 million shares through a public stock offering.
On July 26, 1996 the Company sold 300,000 of its 2,535,572 share
holding in Energy Ventures in conjunction with a public offering by
Energy Ventures of 3,000,000 newly issued shares. As a result, the
Company received net proceeds of approximately $8.9 million resulting
in a pre-tax realized gain of approximately $6.2 million ($1.23 per
7<PAGE>
<PAGE>8
share). This gain will be reported in third quarter results. As a
result of this offering the Company's ownership interest in Energy
Ventures decreased to approximately 10%. The accompanying balance
sheet as of June 30, 1996 reflects the fair market value (excluding
underwriting commissions and other related sales costs) of the 300,000
shares sold as current assets.
Prior to June 30, 1995, the Company accounted for Energy Ventures
on the equity method; however, the reduction in the Company's
ownership interest on June 30, 1995, necessitated a change from the
equity method 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 no longer records
its proportionate share of Energy Ventures' earnings as was done prior
to June 30, 1995, under the equity method. Any dividends paid by an
investee under the cost method are reported as income to the extent
that such amounts are not in excess of net accumulated earnings
subsequent to the date the Company began following the cost method.
In addition, under SFAS No. 115,"...the portion of the security
that can reasonably be expected to qualify for sale within one
year..." must be reported at its "fair value." If the Company is
considered an "affiliate" under the federal securities rules and
regulations, approximately 749,700 shares represents the number of
shares which may be sold by the Company without registration pursuant
to Rule 144 promulgated under the Securities Act of 1933. However, in
connection with the sale of 300,000 shares discussed above, the
Company has agreed not to sell any additional shares of Energy
Ventures stock for 90 days after July 22, 1996, the effective date of
Energy Ventures registration statement. Accordingly, the Company has
reflected in the accompanying balance sheet approximately 862,200
shares of the Energy Ventures holding, comprised of 562,000 shares
which could be sold under Rule 144 and 300,000 shares sold under
Energy Ventures registration statement, at the closing price quoted on
the New York Stock Exchange as of June 30, 1996. The related
unrealized gains and losses on those shares, effective June 30, 1995,
are reflected as a separate component of stockholders' equity, net of
the related deferred taxes until realized. The remaining 1,673,392
shares are carried at historical 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. As of August 9, 1996, the
quoted market value of Energy Ventures' shares held by the Company,
excluding the 300,000 shares sold on July 26, 1996, was $67,068,000.
8<PAGE>
<PAGE>9
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, 1996 Form 10-Q filed with the Securities and
Exchange Commission.
<TABLE>
<CAPTION>
SUMMARIZED INCOME STATEMENTS
(Unaudited)
---------------------------------------------------------------------------------------
Three Months Ended Six Months Ended
June 30, June 30,
-------------------- --------------------
1996 1995 1996 1995
-------- -------- --------- --------
(In thousands)
<S> <C> <C> <C> <C>
Revenues................................ $ 119,886 $ 79,747 $ 229,928 $ 152,407
Expenses................................ (106,895) (72,860) (206,167) (138,866)
Other expenses, net..................... (4,075) (4,144) (8,159) (8,168)
--------- -------- -------- --------
Income before income taxes.............. 8,916 2,743 15,602 5,373
Income tax provision.................... (3,122) (990) (5,461) (1,989)
--------- -------- -------- --------
Income before extraordinary charge...... 5,794 1,753 10,141 3,384
Extraordinary charge, net of taxes...... (731) -- (731) --
--------- -------- -------- --------
Net income.............................. $ 5,063 $ 1,753 $ 9,410 $ 3,384
======== ======= ======== ========
</TABLE>
9<PAGE>
<PAGE>10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
At June 30, 1996, the Company had $3.4 million in cash and cash
equivalents as compared to $5.2 million at December 31, 1995.
In 1995, the Company contracted with a shipyard in Norway for the
construction of two UT 755 design vessels for deployment in the North
Sea. The first vessel, named the Highland Piper, was delivered March
15, 1996. The second vessel, to be named the Highland Drummer, is
expected to be delivered in early 1997. The Company made a final
construction payment and interim construction payments during the six
months ended June 30, 1996, totaling $11,508,000. No further payments
on the second vessel are expected in 1996. Funding was provided by
additional borrowings under an existing credit facility.
On August 2, 1996 the Company purchased six offshore supply
vessels which will operate in Southeast Asia. Funding for this
acquisition was provided through a new $7,000,000 facility with a bank
and through drawdowns on existing facilities.
During the six month period ended June 30, 1996, expenditures for
scheduled drydockings of vessels were $993,000 and for vessel upgrades
and modifications were $57,000. The Company estimates that capital
and maintenance expenditures, excluding any expenditures to build or
acquire additional vessels, will be approximately $0.5 million for the
remainder of 1996, of which $0.4 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, 1996, the Company had outstanding long-term debt of
$46.6 million borrowed under various facilities. These facilities are
secured by first preferred ship mortgages on thirteen of the Company's
vessels and assignments of such vessels' earnings. Interest on the
borrowings accrues at between LIBOR plus 1 1/4% and LIBOR plus 1 5/8%
per annum. Scheduled long-term debt repayments are expected to be
$1,767,000 for the remainder of 1996. 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 $2,932,000 million as of June 30, 1996. As of August 9, 1996, the
Company could borrow up to $2.4 million under its short-term credit
facilities without providing additional security to its lenders.
10<PAGE>
<PAGE>11
An additional $9.3 million is available under a revolving credit
facility with the provision of further security through vessel
mortgages. This available credit is expected to be used in connection
with the building of the Highland Drummer discussed above.
On July 26, 1996, the Company sold 300,000 shares of Energy
Ventures stock for approximately $8.9 million in cash. Such cash is
available for future investment opportunities.
Substantially all of the Company's tax provision is for deferred
taxes. As of December 31, 1995, the Company had net operating loss
carryforwards for tax purposes which are available to offset taxable
income generated of $8,021,000 for United States tax purposes and of
$19,498,000 for United Kingdom tax purposes in future years. As a
result of the sale of 300,000 shares of Energy Ventures stock
subsequent to June 30, 1996, substantially all of the net operating
loss carryforward available for United States tax purposes was
utilized.
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
or a combination thereof.
RESULTS OF OPERATIONS
The Company's operating income was $1,990,000 for the quarter
ended June 30, 1996 as compared to $1,326,000 for the 1995 second
quarter, a 50% increase. Revenues for the quarter were $8,978,000 as
compared to $9,535,000 for the comparative prior year period.
Improvements in revenues and operating income for the marine
segment are primarily attributable to the addition of two vessels to
the North Sea fleet: the newly constructed Highland Piper (delivered
March 1996) and the Atlantic Warrior (previously was under bareboat
charter and purchased December 1995). In addition earnings for the
current quarter benefitted from the impact on depreciation of a change
in the estimated useful life of the vessels in the fleet (effective
January 1, 1996) and earnings from the Seapower, which was out of
service from January to May of 1995 while being readied for a contract
in Brazil. This contract was recently extended to May 1999. These
improvements were offset somewhat by lower earnings from vessels
working in Southeast Asia.
11<PAGE>
<PAGE>12
The erosion control segment reported marginal earnings for the
1996 second quarter in contrast to earnings of $0.3 million for the
1995 second quarter. Revenues for this segment were 51% less than the
1995 second quarter.
Net income was $756,000 or $0.23 per share as compared to a net
loss of $(2,712,000) or $(0.81) per share for the same period in 1995.
Included in the prior year second quarter results was a non-cash
charge of $3,374,000 or $1.02 per share for additional deferred taxes
associated with the Company's holding in Energy Ventures. In
addition, the 1995 second quarter included $393,000 or $0.12 per share
of income attributable to equity in earnings of Energy Ventures. As
discussed in the condensed notes to consolidated financial statements,
the Company no longer accounts for this holding using the equity
method and accordingly there is no equity pickup component included in
results for 1996. Excluding the impact of Energy Ventures from 1995
results, net income was $296,000 or $0.09 per share for the 1995
second quarter versus $756,000 or $0.23 per share for the 1996 second
quarter.
The Company's operating income for the six months ended June 30,
1996 was $2,645,000 versus $1,144,000 for the comparative prior year
period. Marine operating income improved as a result of the vessel
additions, reduction in depreciation due to the change in the
estimated useful life of the vessels and earnings from the Seapower
discussed above. These improvements were offset by higher operating
expenses for vessels deployed in the North Sea. The erosion control
segment incurred a loss for the six months ended June 30, 1996 in
contrast to earnings for the comparative 1995 period.
The Company had net income of $803,000 or $0.24 per share for the
six months ended June 30, 1996 versus a net loss of $(2,933,000) or
$(0.88) per share for the six months ended June 30, 1995. In addition
to the $3,374,000 non-cash charge for additional taxes associated with
the Company's investment in Energy Ventures discussed above, the
results for the six months ended June 30, 1995 included $761,000 or
$0.22 per share of income attributable to equity in earnings of Energy
Ventures.
As discussed in the notes to consolidated financial statements
and "Liquidity and Capital Resources," the Company sold 300,000 shares
of Energy Ventures common stock on July 26, 1996 in a public offering
for approximately $8.9 million resulting in a pre-tax realized gain of
approximately $6.2 million or $1.23 per share. This gain will be
reported in third quarter results.
12<PAGE>
<PAGE>13
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
generated $11,133,000 in revenues, $3,712,000 in operating income and
$2,350,000 of cash flows from operations during the six months ended
June 30, 1996. Fluctuations in the GBP/Dollar exchange rate for 1996
thus far have been minimal as was also the case in 1995 with a high of
GBP=U.S.$1.56 to a low of GBP=U.S.$1.49 for the period from January 1,
1996 to August 9, 1996 for an average of GBP = $1.53 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 88% or $42.9 million of total debt. All of the estimated
$1.8 million in debt repayments for the remainder of 1996 are
attributable to GBP denominated debt.
Reflected in the accompanying balance sheet for June 30, 1996, is
a $(4,137,000) cumulative translation adjustment relating to the lower
GBP exchange rate as of June 30, 1996 and to the Company's equity
share of translation adjustments reported by Energy Ventures. Changes
in the cumulative translation adjustment are non-cash items that are
primarily attributable to investments in vessels and are partially
offset by GBP denominated debt in the North Sea.
13<PAGE>
<PAGE>14
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)
Date: August 14, 1996
14
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE FOLLOWING SETS FORTH CERTAIN SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF GULFMARK INTERNATIONAL, INC.
AS OF JUNE 30, 1996, AND THE CONDENSED CONSOLIDATED STATEMENT OF INCOME FOR
THE SIX MONTHS ENDED JUNE 30, 1996, 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-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 3,399
<SECURITIES> 9,750
<RECEIVABLES> 8,063
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 23,480
<PP&E> 88,278
<DEPRECIATION> 16,505
<TOTAL-ASSETS> 130,760
<CURRENT-LIABILITIES> 8,634
<BONDS> 0
0
0
<COMMON> 26,837
<OTHER-SE> 9,390
<TOTAL-LIABILITY-AND-EQUITY> 130,760
<SALES> 16,139
<TOTAL-REVENUES> 16,139
<CGS> 10,492
<TOTAL-COSTS> 13,494
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,744
<INCOME-PRETAX> 1,107
<INCOME-TAX> 304
<INCOME-CONTINUING> 803
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 803
<EPS-PRIMARY> 0.24
<EPS-DILUTED> 0.24
</TABLE>
<PAGE>
EXECUTION COPY
FACILITY AGREEMENT
between
GULF OFFSHORE SHIPPING SERVICES, INC.
as borrower
GULFMARK INTERNATIONAL, INC.
GULFMARK NORTH SEA LIMITED
and
GULF OFFSHORE MARINE INTERNATIONAL INC.
as sponsors
CHASE MANHATTAN INTERNATIONAL LIMITED
as agent
and security trustee
THE CHASE MANHATTAN BANK
as initial bank
and
OTHERS
Clifford Chance
London<PAGE>
CONTENTS
Clause Page No.
PART 1
INTERPRETATION 1
1. Interpretation 1
PART 2
THE FACILITY 10
2. The Facility 10
3. Purpose 10
4. Nature of Bank's Obligations 10
5. Conditions Precedent 10
PART 3
AVAILABILITY OF THE FACILITY 12
6. Availability of the Facility 12
7. Determination of Available Amount 13
PART 4
INTEREST 14
8. Interest Periods 14
9. Interest 14
10. Alternative Interest Rates 14
PART 5
REPAYMENT, CANCELLATION AND PREPAYMENT 16
11. Repayment 16
12. Reduction. Cancellation and Prepayment 16
PART 6
CHANGE IN CIRCUMSTANCES 18
13. Taxes 18
14. Tax Receipts 18
15. Increased Costs 19
16. Illegality 19<PAGE>
PART 7
REPRESENTATIONS, COVENANT'S AND EVENTS OF DEFAULT 21
17. Representations 21
18. Financial Information 24
19. Financial Condition and Security Coverage 24
20. Covenants 28
21. Events of Default 32
PART 8
SPONSORS' OBLIGATIONS 36
22. Sponsors' Obligations 36<PAGE>
PART 9
DEFAULT INTEREST AND INDEMNITY 37
23. Default Interest and Indemnity 37
PART 10
PAYMENT'S 39
24. Currency of Account and Payment 39
25. Payments 39
26. Set-Off 40
27. Redistribution of Payments 40
PART 11
FEES, COSTS AND EXPENSES 42
28. Fees 42
29. Costs and Expenses 42
PART 12
AGENCY PROVISIONS 43
30. The Agent and the Banks 43
PART 13
ASSIGNMENT AND TRANSFERS 47
31. Benefit of Agreement 47
32. Assignments and Transfers by the Obligors 47
33. Assignments and Transfers by Banks 47
34. Disclosure of Information 48
PART 14
MISCELLANEOUS 50
35. Calculations and Evidence of Debt 50
36. Remedies and Waivers 50
37. Partial Invalidity 50
38. Notices 51
PART 15
LAW AND JURISDICTION 52
39. Law 52
40. Jurisdiction 52
THE FIRST SCHEDULE 54
Condition Precedent Documents 54
THE SECOND SCHEDULE
Notice of Drawdown 56
THE THIRD SCHEDULE
Form of Transfer Certificate 57
THE FOURTH SCHEDULE
The Original Vessels 60
<PAGE>
THIS AGREEMENT is made the 26th day of July, 1996
BETWEEN
(1) GULF OFFSHORE SHIPPING SERVICES, INC. (the "Borrower");
(2) GULFMARK INTERNATIONAL, INC., GULFMARK NORTH SEA LIMITED,
and GULF OFFSHORE MARINE INTERNATIONAL, INC. (together the
"Sponsors" and each a "Sponsor").
(3) CHASE MANHATTAN INTERNATIONAL LIMITED as agent (the "Agent")
and security trustee ("Security Trustee"); and
(4) THE CHASE MANHATTAN BANK (the "Initial Bank").
NOW IT IS HEREBY AGREED as follows:
PART 1
INTERPRETATION
1. Interpretation
1.1 In this Agreement:
"ADVANCE" means, save as otherwise provided herein, an Advance
made or to be made by the Banks hereunder;
"ADDITIONAL MORTGAGED VESSEL" means any vessel, other than the
Original Vessels, owned by the Borrower subject to a first
priority legal mortgage and a deed of covenants collateral
thereto (or documents conferring a similar security interest),
granted in favour of the Security Trustee as security, inter
alia, for the obligations of the Borrower hereunder, which
mortgage and collateral deed of covenants (or such documents)
have been duly registered, recorded or filed as required by the
Security Trustee and are in full force and effect;
"APPROVED CHARTER" means any charterparty, contract or engagement
of affreightment or for the carriage or transportation of cargo,
mail or passengers or any of them, relating to any of the
Mortgaged Vessels, whether now existing or hereafter entered into
by the Borrower or any person, firm or company on its behalf, the
terms of which are approved by the Agent;
"APPROVED CHARTER EARNINGS" in relation to a Mortgaged Vessel
means the amount of all freights and hires which may be earned by
the Borrower during the term of any Approved Charter pursuant to
the terms and conditions thereof, less the estimated cost of the
Borrower during such term of maintaining and operating the
Mortgaged Vessel to which such Approved Charter relates in
accordance with the terms and conditions hereof and of the
mortgage and/or deed of covenants relating to such Mortgaged
Vessel to and such Approved Charter;
"AVAILABLE AMOUNT" means the principal amount at any time
available for drawing under the Facility as computed by the Agent
pursuant to Clause 7;
"AVAILABLE COMMITMENT" in relation to a Bank at any time means,
save as otherwise provided herein, its Commitment less its
portion of each Advance which has been made hereunder and is
outstanding at such time;
"AVAILABLE FACILITY" means, at any time and save as otherwise
provided herein, the aggregate amount from time to time of the
Available Commitments at such time;
"BANKS" means the Initial Bank and its respective successors, any
permitted transferees or assigns which are for the time being
participating in the Facility;
"BENEFICIARIES" mean the Agent and the Banks;
"CHRISTIANIA MORTGAGES" means each of the mortgages over:
(a) the m.v. "Highland Star";
(b) the m.v. "Highland Pride";
(c) the m.v. "Highland Legend";
(d) the m.v. "Highland Piper"; and
(e) the m.v. "Atlantic Warrior",
securing the obligations of Gulf Offshore N.S. Limited in respect
of loans (the "Christiania Loans") made or to be made by
Christiania Bank of Kreditkasse to Gulf Offshore N.S. Limited on
terms disclosed to and approved by the Agent prior to the date
hereof together with any deed of covenants (and/or such other
documents as may be executed assigning the earnings and insurance
of any of those vessels);
"COMMITMENT" in relation to the Initial Bank at any time means,
subject to the provisions of Clause 12.1 and save as otherwise
provided herein, the amount of $7,000,000, the amount of any
commitment transferred to it in accordance with Clause 33 less
any amount of its Commitment transferred by it in accordance with
Clause 33;
"DESIGNATED VESSEL" means a vessel which in the opinion of the
Agent will, forthwith upon the making of an Advance, become an
Additional Mortgaged Vessel and in respect of which the Agent has
received each of the documents referred to in Clause 6.2(ii) and
6.2(iii);
"ENVIRONMENTAL AFFILIATE" means in relation to a party an agent
or employee of that party or a person in a contractual
relationship with that party, with respect to any of the
Mortgaged Vessels or its operation or its carriage of cargo
thereon whose acts or omissions have or will have a Material
Adverse Effect;
"ENVIRONMENTAL APPROVALS" means any permit, licence, approval,
ruling, variance, exemption or other authorisation required under
applicable Environmental Laws;
"ENVIRONMENTAL CLAIM" means any and all enforcement, clean-up,
removal or other governmental or regulatory actions or orders
instituted or completed pursuant to any Environmental Laws or
Environmental Approvals together with claims made by any third
party relating to damage, contribution, loss or injury, resulting
from any Release of Material of Environmental Concern;
"ENVIRONMENTAL LAWS" means all national, state, local, foreign
and international laws, regulations, treaties and conventions
pertaining to the pollution or protection of human health or the
environment (including ambient air, surface water, ground water,
land surface or subsurface strata, navigable waters, waters of
the contiguous zone, ocean waters and international waters),
including laws, regulations, treaties and conventions relating to
the Release (or threatened release) of Material of Environmental
Concern;
"EVENT OF DEFAULT" means any of those events specified in Clause
21.1;
"FACILITY" means the dollar revolving loan facility granted to
the Borrower pursuant to Clause 2;
"FACILITY AMOUNT" means $7,000,000;
"FACILITY OFFICE" in relation to the Agent or any Bank means the
office identified with its signature below or such other office
as it may from time to time select;
"FINAL MATURITY DATE" means 31 July 2001;
"FINANCE DOCUMENTS" means this Agreement, the Security Documents
and all other documents from time to time creating, evidencing or
entered into as security for, or guaranteeing the obligations of
the Borrower hereunder or thereunder and any document entered
into pursuant hereto or thereby;
"FIXED ASSET INVESTMENT" means any investment which will in the
reasonable opinion of the Principal Sponsor increase the
marketability of a Mortgaged Vessel or any other vessel or is
necessary to ensure the compliance by the owner of such Vessel of
all laws and regulations applicable to such Mortgaged Vessel or
any other vessel;
"FREELY AVAILABLE LIQUID RESOURCES" shall have the meaning
ascribed thereto in Clause 19.4;
"GMM GROUP" means the Sponsors (other than the Principal
Sponsor), Gulf Offshore N.S. Limited, Gulf Offshore Far East Inc.
and subsidiaries for the time being;
"GROUP" means the Principal Sponsor and its subsidiaries for the
time being;
"INSTRUCTING GROUP" means;
(i) before any Advance has been made hereunder, a group of Banks
whose Total Available Commitments amount in aggregate to more
than fifty one (51%) of the Total Available Facility; and
(ii) thereafter, a group of Banks to whom in aggregate more than
fifty one (51%) of the Loan is (or, immediately prior to its
repayment, was then) owed;
"INTEREST PERIOD" means save as otherwise provided herein, any of
those periods mentioned in Clause 8.2.
"LIBOR" means, in relation to any Advance or unpaid sum, the rate
per annum at which the Agent was offering to prime banks in the
London Interbank Market deposits in the currency of and in an
amount approximately equal to the amount of such Advance or
unpaid sum and for the specified period at or about 11.00 a.m. on
the Quotation Date for such period and, for the purposes of this
definition, "specified period" means the Interest Period of such
Advance or, as the case may be, the period in respect of which
LIBOR falls to be determined in relation to such unpaid sum;
"LOAN" means at any time the aggregate principal amount of all
Advances for the time being outstanding hereunder;
"MAIN FACILITY" means the facility agreement dated 8 July 1993,
as amended by the amendment agreement dated 20 May 1994 and 20
October 1995 and as amended, varied, supplemented, extended or
novated from time to time, and made between GulfMark North Sea
Limited, Gulf Offshore Marine International Inc. as principal
borrowers, Gulf Offshore N.S. Limited, as permitted borrowers,
the Principal Sponsor as sponsor, The Chase Manhattan Bank, N.A.
as agent, security trustee and hedge counterparty and others;
"MARGIN" means one point six two five per cent. (1.625%) per
annum;
"MARKET VALUE" means, at any time, in relation to any Vessel, her
sale value in dollars as then most recently determined by an
independent and internationally recognised firm of shipbrokers
acceptable to the Agent on the basis of a sale of such Vessel (a)
for cash (b) free of charter, liens, charges, mortgages and
encumbrances and (c) at arm's length on normal commercial terms
between a willing seller and a willing buyer;
"MATERIAL ADVERSE EFFECT" means a material adverse effect on the
ability of the Borrower to meet its obligations to the Security
Trustee, the Agent and the Banks hereunder or under any of the
Security Documents to which the Borrower is a party;
"MATERIAL OF ENVIRONMENTAL CONCERN" means and includes
pollutants, contaminants, toxic substances, oil as defined in the
United States Oil Pollution Act of 1990, and all hazardous
substances as defined in the United States Comprehensive
Environmental Response, Compensation and Liability Act;
"MORTGAGED VESSELS" means (a) each of the Original Vessels in
respect of which a first priority legal mortgage and deed of
covenant or assignments collateral thereto granted in favour of
the Security Trustee is in full force and effect; and (b) each
Additional Mortgaged Vessel and "Mortgaged Vessel" means any of
them;
"MORTGAGES" means the first priority mortgages (each as amended,
varied, novated, supplemented or extended from time to time and
including, for the avoidance of doubt, any addenda thereto) in
favour of the Security Trustee to be executed by the Borrower in
favour of the Security Trustee over each of the Original Vessels
and each Additional Mortgaged Vessel;
"NOTICE OR DRAWDOWN" means a notice substantially in the form set
out in the Second Schedule;
"OBLIGORS" means the Sponsors and the Borrower;
"ORIGINAL FINANCIAL STATEMENTS" means the consolidated financial
statements of the Principal Sponsor and its subsidiaries for its
financial year ended 31 December 1995;
"ORIGINAL VESSELS" means each of the vessels listed in the Fourth
Schedule; and
"POTENTIAL EVENT OF DEFAULT" means any event which may become
(with the passage of time, the giving of notice, the making of
any determination hereunder or any combination thereof) an Event
of Default;
"PRINCIPAL SPONSOR" means GulfMark International, Inc.;
"PROFITS AFTER TAX" means in respect of any financial year of any
member of the GMM Group, the profit after deduction of tax
thereon of such member of the GMM Group for such financial year
determined by reference to the consolidated profit and loss
account of the GMM Group in respect of such financial year and
delivered to the Agent pursuant to Clause 18.1;
"QUOTATION DATE" means, in relation to any period for which an
interest rate is to be determined hereunder, the day on which
quotations would ordinarily be given by prime banks in the London
Interbank Market for deposits in dollars for delivery on the
first day of that period Provided that, if for any such period
quotations would ordinarily be given on more than one date, the
Quotation Date for that period shall be the last of those dates;
"REDUCED AMOUNT" on any Reduction Date, and in relation to the
Facility, means the amount of the Facility as the same has been
reduced on such Reduction Date in accordance with the provisions
of Clause 12.1;
"REDUCTION DATE" means 31 January 1997 and then each of the days
which are 6, 12, 18, 24, 30, 36, 42, 48 and 54 months thereafter;
"Release of Material of Environmental Concern" means an emission,
spill, release or discharge into or upon (i) the air, (ii)
surface water, (iii) ground water or (iv) soils, of any Material
of Environmental Concern for which any member of the Group has
any liability under Environmental Laws, except in accordance with
a valid Environmental Approval;
"SECURITY DOCUMENTS" means:
(i) the first preferred Panamanian ship mortgage and assignment
of insurances and earnings collateral thereto executed in respect
of each of the Original Vessels;
(ii) each of the mortgages and deed of covenants (and/or such
other documents as may be executed assigning the earnings and
insurances of any vessel) which may be executed in respect of any
vessel as security for the obligations of the Borrower hereunder;
(iii) the Trust Agreement; and
(iv) the Share Pledge.
"SHARE PLEDGE" means the share pledge referred to in paragraph 5
of the First Schedule,
"SHORT TERM FACILITY" means the short term facility agreement
dated 8 July 1993 as amended by the amendment agreement dated 20
May 1994 and as amended, varied, supplemented, extended or
novated from time to time made between GulfMark North Sea
Limited, Gulf Offshore Marine International Inc., Gulf Offshore
N.S. Limited and Gulf Offshore Far East Inc., as borrowers, the
Principal Sponsor, as guarantor, and the Agent as lending bank;
"TRANSFER CERTIFICATE" means a certificate in the form set out in
the Third Schedule signed by a Bank and a Transferee whereby:
(a) such Bank seeks to procure the transfer to such Transferee
of all or a part of such Bank's rights and obligations hereunder
upon and subject to the terms and conditions set out in Clause
33; and
(b) such Transferee undertakes to perform the obligations it
will assume as a result of delivery of such certificate to the
Agent as is contemplated in Clause 33;
"TRANSFER DATE" in relation to any Transfer Certificate means the
date for the making of the transfer as specified in such Transfer
Certificate,
"TRANSFEREE" means a bank or other financial institution to which
a Bank seeks to transfer all or part of such Bank's rights and
obligations hereunder; and
"TRUST AGREEMENT" means the trust agreement referred to in
paragraph 3 of the First Schedule.
1.2 Any reference in this Agreement to:
the "Agent", the "Security Trustee" or a "Bank" shall be
construed so as to include it and any subsequent successors in
accordance with their respective interests and "successors" in
relation to a party means an assignee or successor in tide of
such party or any person who, under the laws of its jurisdiction
of incorporation or domicile has assumed the rights and
obligations of such party hereunder or to which under such laws
the same have been transferred;
a "business day" shall be construed as a reference to a day
(other than a Saturday or Sunday) on which banks are generally
open for business in London and New York City;
a "Clause" shall, subject to any contrary indication, be
construed as a reference to a clause hereof;
an "encumbrance" shall be construed as a reference to a mortgage,
charge, pledge, lien or other encumbrance securing any obligation
of any person or any other type of preferential arrangement
(including, without limitation, title transfer and retention
arrangements) having a similar effect;
the "equivalent" on any given date in one currency (the "first
currency") of an amount denominated in another currency (the
"second currency") is a reference to the amount of the first
currency which could be purchased by the amount of the second
currency at the spot rate of exchange quoted by the Agent at or
about 11.00 a.m. on such date for the purchase of the first
currency with the second currency for delivery two business days
thereafter;
a "holding company" of a company or corporation shall be
construed as a reference to any company or corporation of which
the first-mentioned company or corporation is a subsidiary;
"indebtedness" shall be construed so as to include any obligation
(whether incurred as principal or as surety) for the payment or
repayment of money, whether present or future, actual or
contingent;
"indebtedness for borrowed money" shall be construed so as to
include, without limitation, any indebtedness of any person for
or in respect of:
(i) amounts raised by acceptance under any acceptance credit
facility;
(ii) amounts raised under any note purchase facility;
(iii) the amount of any liability in respect of leases or hire
purchase contracts which would, in accordance with generally
accepted accounting standards in the United States and/or the
United Kingdom (as used in the Principal Sponsor's most recent
audited annual consolidated financial statements from time to
time), be treated as finance or capital leases;
(iv) the amount of any liability in respect of any purchase price
for assets or services the payment of which is deferred for a
period in excess of one hundred and eighty days; and
(v) amounts raised under any other transaction (including,
without limitation, any forward sale or purchase agreement)
having the commercial effect of a borrowing (excluding, for the
avoidance of doubt, indebtedness incurred in relation to
commercial transactions);
a "month" is a reference to a period starting on one day in a
calendar month and ending on the numerically corresponding day in
the next succeeding calendar month save that, where any such
period would otherwise end on a day which is not a business day,
it shall end on the next succeeding business day, unless that day
falls in the calendar month succeeding that in which it would
otherwise have ended, in which case it shall end on the
immediately preceding business day Provided that, if a period
starts on the last business day in a calendar month or if there
is no numerically corresponding day in the month in which that
period ends, that period shall end on the last business day in
that later month (and references to "months" shall be construed
accordingly);
a "person" shall be construed as a reference to any person, firm,
company, corporation, government, state or agency of a state or
any association or partnership (whether or not having separate
legal personality) of two or more of the foregoing;
"repay" (or any derivative from thereof) shall, subject to any
contrary indication, be construed to
include "prepay" (or, as the case may be, the corresponding
derivative form thereof);
"requisition compensation" means the sums of money or other
compensation from time to time payable or paid by any person in
connection with or by reason of requisition for title or other
compulsory acquisition of the Vessels or either of them otherwise
than by requisition for hire;
"requisition for title" (as a verb) includes, in relation to an
asset, compulsorily acquire, expropriate, nationalise, seize,
capture, forfeit, condemn as prize or otherwise act so as to
divest the owner thereof of title thereto and noun forms of the
verb shall be construed accordingly;
a "Schedule" shall, subject to any contrary indication, be
construed as a reference to a schedule hereto;
a "subsidiary" of a company or corporation shall be construed as
a reference to any company or corporation:
(i) which is controlled, directly or indirectly, by the
first-mentioned company or corporation;
(ii) more than half the issued share capital of
which is beneficially owned, directly or indirectly,
by the first-mentioned company or corporation; or
(iii) which is a subsidiary of another subsidiary
of the first-mentioned company or corporation
and, for these purposes, a company or corporation shall be
treated as being controlled by another if that other company or
corporation is able to direct its affairs and/or to control the
composition of its board of directors or equivalent body;
"tax" shall be construed so as to include any tax, levy, impost,
duty or other charge of a similar nature (including, without
limitation, any penalty or interest payable in connection with
any failure to pay or any delay in paying any of the same);
"total loss" shall be construed in accordance with the provisions
of the relevant Security Document;
"VAT" shall be construed as a reference to value added tax
including any similar tax which may be imposed in place thereof
from time to time;
a "wholly-owned subsidiary" of a company or corporation shall be
construed as a reference to any company or corporation which has
no other members except that other company or corporation and
that other company's or corporation's wholly-owned subsidiaries
or persons acting on behalf of that other company or corporation
or its wholly-owned subsidiaries; and
the "winding-up", "dissolution" or "administration" of a company
or corporation shall be construed so as to include any equivalent
or analogous proceedings under the law of the jurisdiction in
which such company or corporation is incorporated or any
jurisdiction in which such company or corporation carries on
business including the seeking of liquidation, winding-up,
reorganisation, dissolution, administration, arrangement,
adjustment, protection or relief of debtors.
1.3 "GBP" and "sterling" denote the lawful currency of the United
Kingdom and "$" and "dollars" denote lawful currency of the
United States of America.
1.4 Save where the contrary is indicated, any reference in this
Agreement to:
(i) this Agreement or any other agreement or document shall be
construed as a reference to this Agreement or, as the case may
be, such other agreement or document as the same may have been,
or may from time to time be, amended, varied, novated or
supplemented;
(ii) a statute shall be construed as a reference to such statute
as the same may have been, or may from time to time be, amended
or re-enacted; and
(iii) a time of day shall be construed as a reference to London
time.
1.5 Clause and Schedule headings are for ease of reference only.
PART 2
THE FACILITY
2. The Facility
The Banks grant to the Borrower through their respective Facility
Offices, subject to the provisions of Clauses 7 and 12 and
otherwise upon the terms and subject to the conditions hereof, a
revolving loan facility in an aggregate amount of up to
$7,000,000.
3. Purpose
3.1 The Facility is intended to be applied in or towards the
cost of acquisition of the Original Vessels and for general
working capital purposes.
3.2 Without prejudice to the obligations of the Borrower under
Clause 3. 1, neither the Agent, the Banks nor any of them shall
be obliged to concern themselves with the application of amounts
raised by the Borrower hereunder.
4. Nature of Bank's Obligations
4.1 The obligations of each Bank hereunder are several.
4.2 The failure by a Bank to perform its obligations hereunder
shall not affect the obligations of the Borrower to any other
party hereto nor shall any such other party be liable for the
failure by such Bank to perform its obligations hereunder.
5. Conditions Precedent
5.1 Save as the Agent may otherwise agree, the Borrower may not
deliver any Notice of Drawdown hereunder unless the Agent has
confirmed to the Principal Sponsor that it has received all of
the documents listed in the First Schedule and that each is, in
form and substance, satisfactory to the Agent.
5.2 In respect of the documents referred to in paragraphs 4 and
5 of the First Schedule (the "Undated Security Documents") the
Agent agrees that they are to be held in safe custody by it (or
any sub-custodian as hereinafter referred to) unless and until an
Advance is made pursuant to Clause 6: in which event the Agent
shall when such Advance is made contemporaneously date, or shall
procure the contemporaneous dating of, the Undated Security
Documents referred to in paragraphs 4 and 5 of the First Schedule
and shall then endeavour to register (as soon as is reasonably
practicable to do so) the mortgages referred to in paragraphs 4
of the First Schedule on the Panamanian Register of Ships. The
Agent may place the Undated Security Documents with any firm of
lawyers of good repute and, in the absence of gross negligence or
wilful default on the part of the Agent, the Agent shall not be
responsible for any loss thereby incurred.
5.3 The Agent shall not, in the absence of gross negligence or
wilful default on its part, be responsible for any loss, incurred
by any person, if for any reason it is not possible to put into
effect any matter the subject of Clause 5.2. The Borrower shall
from time to time execute and sign all documents which the Agent
may reasonably require for effecting the registration of the
Undated Security Documents and, furthermore, the Borrower agrees
not to withdraw, or purport to withdraw, the Undated Security
Documents from the custody of the Agent (or any sub-custodian as
hereinbefore referred to) except with the prior written consent
of the Agent.
PART 3
AVAILABILITY OF THE FACILITY
6. Availability of the Facility
6.1 Subject to the provisions of Clause 6.2 and save as
otherwise provided herein, an Advance will be made by the Banks
to the Borrower if:
(i) not more than ten, nor less than three business days before
the proposed date for the making of such Advance, the Agent has
received from the Borrower a notice of drawdown therefore,
receipt of which shall oblige the Borrower to borrow the amount
therein requested on the date therein stated upon the terms and
subject to the conditions herein;
(ii) the proposed date far the making of such Advance is a
business day which falls one or more months before the Final
Maturity Date;
(iii) the proposed amount of such Advance is (a) an amount of
not less than $1,000,000 which is an integral multiple of
$500,000 and which is less than the Available Facility or (b)
equal to, the amount of the Available Facility;
(iv) the proposed amount of such Advance (less the amount of any
Advances falling to be repaid on or before the proposed date for
the making of such Advance) will not result, when such Advance is
made, in the Loan exceeding the Available Amount;
(v) in the case of the initial Advance the Agent is satisfied
that the Original Vessels will be transferred to the Borrower
free from encumbrances and first priority legal mortgages over
each of the Original Vessels will be duly registered, recorded
and filed immediately on the making thereof;
(vi) the interest rate applicable to such Advance during its
first Interest Period would not fall to be determined pursuant to
Clause 10. 1;
(vii) the making of such Advance would not result in a breach of
the requirements of Clause 19. 1; and
(viii) either:
(a) no Event of Default or Potential Event of Default has
occurred; and
(b) the representations set out in Clause 17 are true on and
as of the proposed date for the making of such Advance,
or the Banks agree (notwithstanding any matter mentioned at (a)
or (b) above) to make such Advance.
Provided always that if the Banks agree to make an Advance
notwithstanding any of the above, and the proceeds of such
Advance are paid into an account with The Chase Manhattan Bank or
any of its subsidiaries or affiliates (the "Deposit Holding
Bank"), the Deposit Holding Bank shall not be obliged to release
such proceeds from such account until the Agent is satisfied
regarding compliance with the above provisions and has confirmed
such satisfaction to the Deposit Holding Bank.
6.2 Save as the Agent may otherwise agree, other than in the
case of the initial Advance, the Borrower may not deliver a
Notice of Drawdown hereunder in respect of an Advance the
availability of which is determined by reference to the value of
a Designated Vessel, unless the Agent has confirmed to the
Principal Sponsor that it has received in form and substance
satisfactory to it:
(i) evidence that such Designated Vessel
(a) is, or will be, registered in the name of the Borrower
under a flag acceptable to the Agent, free from all charters,
contracts liens and encumbrances other than in favour of the
Security Trustee or in terms acceptable to the Agent;
(b) is classified by the American Bureau of Shipping Al AMS
or to an equivalent classification acceptable to the Agent; and
(c) is, or will be, insured in accordance with the deed of
covenants (and/or such other document as may be executed
assigning the insurances of such Designated Vessel) referred to
in Clause 6.2(ii);
(ii) a first priority mortgage in respect of such Designated
Vessel in favour of the Security Trustee; and
(iii) a deed of covenants (and/or such other document as may be
executed, assigning the earnings and insurances of such
Designated Vessel)
Provided that the documents referred to in Clause 6.2(ii) and
(iii) shall be left undated and held by the Agent on the terms
and conditions of Clause 5.2 and 5.3 mutatis mutandis.
7. Determination of Available Amount
At any time "Available Amount" shall be an amount equal to the
lesser of (a) 51% of the aggregate amount of the Market Value of
the Mortgaged Vessels and (b) the Facility Amount Provided always
that in calculating (a) the Agent shall, in determining the
Available Amount to ensure compliance with Clause 6.1(iv), treat
any Designated Vessel by which the availability is to be
determined as a Mortgaged Vessel.
PART 4
INTEREST
8. Interest Periods
8.1 The period for which an Advance is outstanding shall be
divided into successive periods each of which (other than the
first) shall start on the last day of the preceding such period.
8.2 The duration of each Interest Period shall, save as otherwise
provided herein, be one, three or six months, in each case as the
Borrower may by not less than five business days' prior notice to
the Agent select Provided that:
(i) if the Borrower fails to give such notice of its selection in
relation to an Interest Period, the duration of that Interest
Period shall, subject to paragraphs (ii) and (iii) below, be
three months;
(ii) any Interest Period which begins during or at the same time
as any other Interest Period shall (if the Advances to which
those Interest Periods relate are in the same currency) end at
the same time as that other Interest Period; and
(iii) any Interest Period which would otherwise end during the
month preceding, or extend beyond, a Reduction Date or the Final
Maturity Date shall be of such duration that it shall end on such
date.
9. Interest
9.1 On the last day of each Interest Period (and in the case of
an Interest Period of a duration of six months or more, on the
expiry of each period of three months during such Interest
Period) the Borrower shall pay accrued interest on the Advance to
which such Interest Period relates.
9.2 The rate of interest applicable to an Advance from time to
time during an Interest Period relating thereto shall be the rate
per annum. which is the sum of the Margin and LIBOR on the
Quotation Date therefor.
10. Alternative Interest Rates
10.1 If, in relation to an Advance at or about 11.00 a.m. on the
Quotation Date for an Interest Period in respect of such Advance:
(i) the Agent was not offering to prime banks in the London
Interbank Market deposits in the currency in which such Advance
is to be denominated for the proposed duration of such Interest
Period; or
(ii) before the close of business in London on the Quotation
Date for such Interest Period, the Agent has been notified by
each of a group of Banks to whom in aggregate fifty-one (51) per
cent or more of the aggregate amount of Advances denominated in
the currency of such Advance is (or, if an Advance were then to
be made, would be) owed that the rate at which such deposits were
being so offered does not reflect the cost to it of obtaining
such deposits,
then notwithstanding the provisions of Clause 8:
(a) if paragraph (i) above applies the duration of that
Interest Period shall be one month or, if less, such that it
shall end on the next succeeding Reduction Date or the Final
Maturity Date as the case may be; and
(b) the rate of interest applicable to each Bank's portion of
the Advance to which such Interest Period relates from time to
time during such Interest Period shall be the rate per annum
which is the sum of the Margin and the rate per annum notified to
the Agent by such Bank before the last day of such Interest
Period to be that which expresses as a percentage rate per annum
the cost to such Bank of funding its portion of the Advance
during such Interest Period from whatever sources it may
reasonably select.
10.2 If (i) the event mentioned in paragraph (i) or (ii) in
Clause 10.1 occurs or (ii) by reason of circumstances affecting
the London Interbank Market during any period of three
consecutive business days the Agent was not offering deposits in
the currency in which an Advance is to be denominated to prime
banks in the London Interbank Market, then:
(i) the Agent shall notify the Banks, the Principal Sponsor and
the Borrower of such event;
(ii) if the Agent so requires, within five days of such
notification the Agent and the Principal Sponsor and the Borrower
shall enter into negotiations with a view to agreeing a
substitute basis (a) for determining the rates of interest from
time to time applicable to the Advances and/or (b) upon which the
Advances may be maintained thereafter and any such substitute
basis that is agreed shall take effect in accordance with its
terms and be binding on each party hereto; Provided Always that
the Agent may not agree any such substitute basis without the
prior consent of each Bank; and
(iii) if the Agent has required the Principal Sponsor and the
Borrower to enter into such negotiations, the Agent may declare
(any such declaration to be binding on the Borrower) that each
Advance shall become due and payable on the last day of its then
current Interest Period unless by then a substitute basis has
been agreed upon in relation thereto.
PART 5
REPAYMENT, CANCELLATION AND PREPAYMENT
11. Repayment
11.1 The Borrower shall, on the Final Maturity Date, repay each
Advance then outstanding.
11.2 On each Reduction Date the Borrower shall repay the amount
or amounts by which, on that Reduction Date, the Advances then
outstanding under the Facility exceed the Reduced Amount of the
Facility.
12. Reduction, Cancellation and Prepayment
12.1 The amount of the Facility shall be reduced on each of the
Reduction Dates by an amount equal to ten per cent. (10%) of the
Facility Amount.
12.2 The Borrower may, by giving to the Agent not less than
thirty days' prior notice to that effect, cancel the whole or any
part (being an amount or integral multiple of $500,000) of the
Facility. Any such cancellation shall reduce the Available
Commitment of the Banks rateably.
12.3 The Borrower may, if it has given to the Agent not less
than ten business days prior notice to that effect, prepay the
whole of any Advance or any part of any Advance (being an amount
of not less than $1,000,000 and an integral multiple of $500,000)
on the last day of any Interest Period relating to that Advance.
12.4 In the event any Mortgaged Vessel is sold or is or becomes
or is declared an actual or constructive or comprised or agreed
total loss then the Borrower shall apply the proceeds of sale or
insurance proceeds or any requisition compensation in respect
thereof in repayment of any Advances then outstanding, such
repayment to be effected on the last day of the Interest Period
during which such proceeds are received or, if earlier, 120 days
from the date of total loss; Provided Always that if any such
proceeds of sale or insurance proceeds are recovered or
requisition compensation received other than on the last day of
any Interest Period the Agent shall, at the request of the
Borrower, retain such proceeds of sale or insurance proceeds or
requisition compensation, as the case may be, in a suspense
account with interest accruing thereon for the account of the
Borrower at such rate as the Agent would pay in the normal course
of its business in respect of deposits of a like amount and for a
like term.
12.5 Any notice of cancellation or prepayment given by the
Borrower pursuant to Clause 12.2 or 12.3 shall be irrevocable,
shall specify the date upon which such cancellation or prepayment
is to be made and the amount of such cancellation or prepayment
and, in the case of a notice of prepayment, shall oblige the
Borrower to make such prepayment on such date.
12.6 If any Bank claims indemnification from the Borrower under
Clause 13.2 or Clause 15.1 and within thirty days thereafter the
Agent receives from the Borrower at least fifteen days' prior
notice (which shall be irrevocable) of the Borrower's intention
to repay such Bank's share of the Advances then outstanding, the
Borrower shall on the last day of each of the then current
Interest Period of each such Advance repay such Bank's portion of
such Advances.
12.7 A Bank for whose account a repayment is to be made under
Clause 12.6 shall not be obliged to make any Advances hereunder
on or after the date upon which the Agent receives the Borrower's
notice of their intention to repay such Bank's share of the
Advances then outstanding, on which date such Bank's Available
Commitment shall each be reduced to zero.
12.8 The Borrower shall not repay all or any part of any Advance
except at the times and in the manner expressly provided for in
this Agreement, but, shall subject to the terms and conditions
hereof, be entitled to reborrow any amount repaid.
PART 6
CHANGE IN CIRCUMSTANCES
13. Taxes
13.1 All payments to be made by the Borrower to any person
hereunder shall be made free and clear of and without deduction
for or on account of tax unless the Borrower is required to make
such a payment subject to the deduction or withholding of tax, in
which case the sum payable by the Borrower in respect of which
such deduction or withholding is required to be made shall be
increased to the extent necessary to ensure that, after the
making of the required deduction or withholding, such person
receives and retains (free from any liability in respect of any
such deduction or withholding) a net sum equal to the sum which
it would have received and so retained had no such deduction or
withholding been made or required to be made.
13.2 Without prejudice to the provisions of Clause 13. 1, if any
person or the Agent on its behalf is required to make any payment
on account of tax (not being a tax imposed on the net income of
its Facility Office in the jurisdiction in which it is
incorporated or in which its Facility Office is located) or
otherwise on or in relation to any sum received or receivable by
such person or the Agent on its behalf hereunder (including,
without limitation, any sum received or receivable under this
Clause 13) or any liability in respect of any such payment is
asserted, imposed, levied or assessed against such person or the
Agent on its behalf, the Borrower shall, upon demand of the
Agent, promptly indemnify such person against such payment or
liability, together with any interest, penalties and expenses
payable or incurred in connection therewith.
13.3 A Bank intending to make a claim pursuant to Clause 13.2,
shall notify the Agent of the event by reason of which it is
entitled to make such claim whereupon the Agent shall notify the
Borrower and the Principal Sponsor thereof Provided that nothing
herein shall require any Bank to disclose any confidential
information relating to the organisation of its affairs.
14. Tax Receipts
14.1 If, at any time, the Borrower is required by law to make
any deduction or withholding from any sum payable by it hereunder
(or if thereafter there is any change in the rates at which or
the manner in which such deductions or withholdings are
calculated), the Borrower shall promptly notify the Agent.
14.2 If the Borrower makes any payment hereunder in respect of
which it is required to make any deduction or withholding, the
Borrower shall pay the full amount required to be deducted or
withheld to the relevant taxation or other authority within the
time allowed for such payment under applicable law and shall
deliver to the Agent for each Bank, within thirty days after it
has made such payment to the applicable authority, an original
receipt (or a certified copy thereof) issued by such authority
evidencing the payment to such authority of all amounts so
required to be deducted or withheld in respect of such payment.
15. Increased Costs
15.1 If, by reason of (i) any change in law or in its
interpretation or administration and/or (ii) compliance with any
request from or requirement of any central bank or other fiscal,
monetary or other authority (including, without limitation, a
request or requirement which affects the manner in which a Bank
or any holding company of such Bank is required to or does
maintain capital resources having regard to such Bank's
obligations hereunder and to amounts owing to it hereunder):
(a) a Bank or any holding company of such Bank incurs a cost
as a result of its having entered into and/or performing its
obligations under this Agreement and/or assuming or maintaining a
commitment under this Agreement and/or making one or more
Advances;
(b) a Bank or any holding company of such Bank is unable to
obtain the rate of return on its overall capital which it would
have been able to obtain but for its having entered into and/or
performing its obligations and/or assuming or maintaining a
commitment under this Agreement;
(c) there is any increase in the cost to a Bank or any
holding company of such Bank of funding or maintaining all or any
of the advances comprised in a class of advances formed by or
including the Advances; or
(d) a Bank or any holding company of such Bank becomes liable
to make any payment on account of tax or otherwise (not being a
tax imposed on the net income of its Facility Office by the
jurisdiction in which it is incorporated or in which its Facility
Office is located) on or calculated by reference to the amount of
the Advances and/or to any sum received or receivable by it
hereunder,
then the Borrower shall, from time to time on demand of the
Agent, promptly pay to the Agent for the account of that Bank
amounts sufficient to indemnify that Bank or any such holding
company against, as the case may be, (1) such cost, (2) such
reduction in such rate of return (or such proportion of such
reduction as is, in the opinion of that Bank, attributable to its
obligations hereunder), (3) such increased cost (or such
proportion of such increased cost as is, in the opinion of that
Bank, attributable to its funding or maintaining Advances) or (4)
such liability.
15.2 A Bank intending to make a claim pursuant to Clause 15.1,
shall notify the Agent of the event by reason of which it is
entitled to do so whereupon the Agent shall notify the Principal
Sponsor thereof Provided that nothing herein shall require any
Bank to disclose any confidential information relating to the
organisation of its affairs.
16. Illegality
If, at any time, it is unlawful for a Bank to make, fund or allow
to remain outstanding all or any of the Advances, then that Bank
shall, promptly after becoming aware of the same, deliver to the
Borrower through the Agent a certificate to that effect and:
(i) such Bank shall not thereafter be obliged to make any
Advances and the amount of its Available Commitment shall be
immediately reduced to zero; and
(ii) if the Agent on behalf of such Bank so requires, the
Borrower shall on such date as the Agent shall have specified
repay such Bank's share of each outstanding Advance together with
accrued interest thereon and all other amounts owing to such Bank
hereunder and any repayment so made shall reduce rateably the
remaining obligations of the Borrower under Clause 11.
PART 7
REPRESENTATIONS, COVENANTS AND EVENTS OF DEFAULT
17. Representations
17.1 Each Obligor represents that:
(i) it is a corporation duly organised under the laws of its
jurisdiction of incorporation with power to enter into this
Agreement and the Security Documents to which it is a party and
to exercise its rights and perform its obligations hereunder and
all corporate and other action required to authorise its
execution of this Agreement and the Security Documents to which
it is a party and its performance of its obligations hereunder
has been duly taken;
(ii) under the laws of its jurisdiction of incorporation in
force at the date hereof, it will not be required to make any
deduction or withholding from any payment it may make hereunder;
(iii) under the laws of its jurisdiction of incorporation in
force at the date hereof, the claims of the Agent and the Banks
against it under this Agreement and under the Security Documents
to which it is a party will rank at least pari passu with the
claims of all its other unsecured creditors save those whose
claims are preferred solely by any bankruptcy, insolvency,
liquidation or other similar laws of general application;
(iv) in any proceedings taken in its jurisdiction of
incorporation in relation to this Agreement and the Security
Documents to which it is a party, it will not be entitled to
claim for itself or any of its assets immunity from suit,
execution, attachment or other legal process;
(v) in any proceedings taken in its jurisdiction of
incorporation in relation to this Agreement and any of the
Security Documents expressed to be governed by English law, the
choice of English law as the governing law of this Agreement and
such Security Documents and any judgment obtained in England will
be recognised and enforced;
(vi) save for the registration of the Mortgages with the
appropriate authorities, all acts, conditions and things required
to be done, fulfilled and performed in order (a) to enable it
lawfully to enter into, exercise its rights under and perform and
comply with the obligations expressed to be assumed by it in this
Agreement, (b) to ensure that the obligations expressed to be
assumed by it in this Agreement and the Security Documents are
legal, valid and binding and (c) to make this Agreement and the
Security Documents admissible in evidence in its jurisdiction of
incorporation have been done, fulfilled and performed;
(vii) under the laws of its jurisdiction of incorporation in
force at the date hereof, it is not necessary that this Agreement
and the Security Documents, other than the Mortgages, the Share
Pledge and any deed of covenant or assignment of earnings and
insurance collateral thereto be filed, recorded or enrolled with
any court or other authority in such jurisdiction or that any
stamp, registration or similar tax be paid on or in relation to
this Agreement or any Security Document; and
(viii) the obligations expressed to be assumed by it in this
Agreement and the Security Documents to which it is a party are
its legal, valid and binding obligations.
17.2 Gulf Offshore Marine International, Inc. and GulfMark North
Sea Limited further represents that:
(i) no member of the Group has taken any corporate action nor
have any other steps been taken or legal proceedings been started
or (to the best of the Borrower's knowledge and belief)
threatened against any member of the Group for its winding-up,
dissolution, administration or re-organisation or for the
appointment of a receiver, administrator, administrative
receiver, trustee or similar officer of it or of any or all of
its assets or revenues;
(ii) no member of the Group is in breach of or in default under
any agreement to which it is a party or which is binding on it or
any of its assets to an extent or in a manner which might have a
Material Adverse Effect on the business or financial condition of
any member of the Group;
(iii) no action or administrative proceeding of or before any
court or agency which might have a Material Adverse Effect on the
business or financial condition of any member of the Group has
been started or threatened;
(iv) it and (to the best of its knowledge) its and the
Borrower's Environmental Affiliates have complied with the
provisions of all applicable Environmental Laws, except where
non-compliance does not and will not have a Material Adverse
Effect;
(v) it and (to the best of its knowledge) its and the Borrower's
Environmental Affiliates have obtained all requisite
Environmental Approvals and are in compliance with such
Environmental Approvals, except where the failure to obtain or
comply with any such Environmental Approvals does not and will
not have a Material Adverse Effect;
(vi) neither it nor (to the best of its knowledge) its or the
Borrower's Environmental Affiliates has received notice of any
Environmental Claim that alleges that it or any of its
Environmental Affiliates are not in compliance with applicable
Environmental Laws or Environmental Approvals,
where such non-compliance has or will have a
Material Adverse Effect;
(vii) there is no Environmental Claim against any member of the
Group pending or threatened, to the best of its knowledge, that
has or will have a Material Adverse Effect;
(viii) there has been no Release of Material of Environmental
Concern except where such event does not and will not have a
Material Adverse Effect;
(ix) all of the written information supplied by any member of
the Group to the Agent and the Banks in connection herewith is
true, complete and accurate in all material respects and it is
not aware of any material facts or circumstances that have not
been disclosed to the Agent and the Banks and which might, if
disclosed, adversely affect the decision of a person considering
whether or not to provide finance to the Borrower;
(x) Gulf Offshore Marine International Inc. is directly or
indirectly, the sole legal and beneficial owner of the entire
share capital of the Borrower; and
(xi) save for the Christiania Mortgages, those encumbrances
created pursuant to the Main Facility and the Short Term Facility
and any encumbrance created pursuant to the provisions of Clause
20.2(iii), no encumbrance exists over all or any of the present
or future revenues or assets of any member of the Group.
17.3 Each Obligor further represents that:
(i) the execution by it of this Agreement and of each Security
Document to which it is a party and the exercise of its rights
and performance of its obligations hereunder will not result in
the existence of nor oblige any member of the Group to create any
encumbrance over all or any of its present or future revenues or
assets: except, insofar as the same may arise pursuant to the
Security Documents;
(ii) the execution by it of this Agreement and the exercise of
its rights and performance of its obligations hereunder do not
and will not:
(a) conflict with any agreement, mortgage, bond or other
instrument or treaty to which it is a party or which is binding
upon it or any of its assets;
(b) conflict with its constitutive documents and rules and
regulations; or
(c) conflict with any applicable law, regulation or official
or judicial order; and
(iii) the execution by it of this Agreement constitutes, and the
exercise of its rights and performance of its obligations
hereunder will constitute, private and commercial acts done and
performed for private and commercial purposes.
17.4 The Borrower represents that it, and each of the other
parties thereto are in compliance with all their obligations
under each of the charters relating to the Original Vessels (and
any Additional Mortgaged Vessels) and none of the parties to such
charters have cancelled or repudiated or sought to terminate,
cancel or repudiate their obligations thereunder.
18. Financial Information
18.1 The Sponsors shall, and shall procure that the Borrower
shall:
(i) as soon as the same become available, but in any event
within 120 days after the end of each of its financial years,
deliver to the Agent in sufficient copies for the Banks the
audited consolidated financial statements of the Group and the
Borrower for such financial year;
(ii) as soon as the same become available, but in any event
within 60 days after the end of each of its financial quarter
years, deliver to the Agent in sufficient copies for Banks the
consolidated financial statements of the Group, the Borrower and
the GMM Group for such period; and
(iii) from time to time on the request of the Agent, furnish the
Agent with such information about the business and financial
condition of the Group as the Agent may reasonably require
(including, but without limitation, such further information as
the Agent may from time to time require in order to enable it to
ascertain where the obligations as set out in Clause 19 are
complied with).
18.2 Each of the Sponsors and the Borrower shall ensure that:
(i) each set of financial statements delivered by it pursuant to
Clause 18.1 is prepared on the same basis as was used in the
preparation of its Original Financial Statements and in
accordance with accounting principles generally accepted in the
United States and/or the United Kingdom and consistently applied;
(ii) each set of financial statements delivered by it pursuant
to Clause 18.1 is certified by a duly authorised officer of the
Principal Sponsor as giving a true and fair view of the financial
condition of the Group as at the end of the period to which those
financial statements relate and of the results of the Group's
operations during such period; and
(iii) each set of financial statements delivered by it pursuant
to paragraph (i) of Clause 18.1 has been audited by auditors
acceptable to the Agent.
19. Financial Condition and Security Coverage
19.1 Each of Gulf Offshore Marine International Inc. and
GulfMark North Sea Limited shall ensure that at all times the
consolidated financial condition of the GMM Group, as evidenced
by the Sponsors' then most recent audited annual consolidated
financial statements and in the case of paragraph (iv) below the
then most recent quarterly financial statements delivered
pursuant to Clause 18. 1 (ii) (each as adjusted, as the Agent may
consider appropriate, to take account of any changes in
circumstances which occur after the date as of which such audited
annual consolidated financial statements or, as the case may be,
quarterly financial statements, were prepared), shall be such
that:
(i) the ratio of Current Assets to Current Liabilities shall
exceed 1.15:1;
(ii) the ratio of Total Liabilities to Tangible Equity shall not
exceed 1.75:1;
(iii) the aggregate of Tangible Equity and Subordinated Debt
shall be equal to or exceed $29,000,000;
(iv) for the twelve month period preceding the date as of which
such financial statements were prepared, the ratio of Gross
Revenues to Operating Expenses shall be equal to or exceed
1.75:1.
19.2 Each of Gulf Offshore Marine International Inc. and
GulfMark North Sea Limited shall at all times ensure that Freely
Available Liquid Resources exceed $1,500,000.
19.3 The Borrower shall ensure at all times that the aggregate
of:
(i) gross revenues received in respect of the charter, lease or
hire of any of the Mortgaged Vessels during the preceding six
months; and
(ii) the projected gross revenues from any unconditional
committed charter, lease or agreement to hire of any of the
Mortgaged Vessels for the succeeding six months
shall be equal to or exceed $4,000,000.
19.4 In this Clause 19:
(i) "Current Assets" means the aggregate of all of the assets of
each member of the GMM Group, other than monies due or to become
due from another member of the GMM Group, which would, in
accordance with generally accepted accounting practice in the
U.S. consistently applied, be classified as current assets, all
as shown on the latest financial statements delivered in
accordance with Clause 18. 1;
(ii) "Current Liabilities" means at any particular time the
aggregate of the obligations of each member of the GMM Group to
pay money other than (a) repayment obligations in respect of
Advances made hereunder falling due within a six month period
from the date at which such liabilities are calculated and (b)
monies due or to become due to other members of the GMM Group,
which would, in accordance with generally accepted accounting
practice in the U.S. consistently applied, be classified as
current liabilities, all as shown on the Principal Sponsor's
latest financial statements delivered in accordance with Clause
18.1;
(iii) Freely Available Liquid Resources means the aggregate of
any cash and deposits in any jurisdiction from which funds are
freely transferable, denominated in freely convertible and
transferable currencies (placed in a prime bank or reputable
financial institution) then solely legally and beneficially owned
by the members of the GMM Group and free from encumbrances;
(iv) "Gross Revenues" means in respect of the Borrower and in
respect of any period of time the aggregate of the following
items (all ascertained on a before tax basis and without double
counting):
(a) the revenues received or receivable by the Borrower
during such period in respect of the charter, use or operation of
any Mortgaged Vessel;
(b) all compensation or other consideration received or
receivable by the Borrower during such period from any person on
account of any requisition for hire of any Mortgaged Vessel;
(c) any and all proceeds of insurances relating to revenue
claims received or receivable by the Borrower during such period
in respect of any Mortgaged Vessel;
(d) any other amounts received or receivable by the Borrower
during such period which the Agent has agreed may be taken into
account in calculating the Gross Revenues for such period,
(v) "Operating Expenses" means in respect of the Borrower and in
respect of any period of time the aggregate of the following
items (all ascertained on a before tax basis and without double
counting):
(a) all management fees paid or payable by the Borrower
during, or which are attributable to, such period in connection
with the management of any of the Mortgaged Vessels; and
(b) all administrative, operating and overhead costs and
expenses paid or payable by the Borrower in connection with any
of the Mortgaged Vessels during, or which are attributable to,
such period (other than, for the avoidance of doubt, items
relating to depreciation or amortisation),
but only to the extent, in the case of (a) and (b) hereof, that
such items are non-capital items and are deductible from revenues
under generally accepted accounting principles in the United
States and/or the United Kingdom consistently applied;
(vi) "Total Liabilities" means at any particular time the
aggregate of the obligations of each member of the GMM Group on a
consolidated basis for the payment of monies whether borrowed or
not and whether due or to become due which would, in accordance
with generally accepted accounting practice in the U.S.
consistently applied, be classified as liabilities (including,
for the avoidance of doubt, liabilities in respect of lease or
hire purchase contracts, contracts of charter and contracts of
guarantee), other than monies due or to become due to any other
member of the GMM Group;
(vii) "Tangible Equity" means at any particular time the
aggregate of the amounts paid up or credited as paid up in
respect of the share capital and the aggregate amount of capital
and reserves of the members of the GMM Group including, but not
limited to any credit balance standing to the consolidated profit
and loss account of the GMM Group;
but deducting
(a) any debit balance standing to the consolidated profit and
loss account of the GMM Group; and
(b) any intangible asset, including (for the avoidance of
doubt) goodwill
but shall exclude the cumulative amount of any translation or
transaction adjustments as required to be deducted from or added
to equity but excluded from the determination of consolidated
profit and loss in accordance with accounting principles
generally accepted in the United States;
(viii) "Subordinated Debt" means any indebtedness of any member
of the GMM Group which is subordinated, in a manner and to an
extent satisfactory to the Agent, to the indebtedness of the
Borrower under this Agreement, the Main Facility and the Short
Term Facility.
19.5 All expressions used in the definitions of this Clause 19
which are not otherwise defined herein shall be construed in
accordance with generally accepted accounting principles in the
United States of America (as used in the Principal Sponsor's most
recent audited annual consolidated financial statements).
19.6 If the Agent at any time determines that the aggregate of
the Market Value of each of the Mortgaged Vessels as determined
by reference to the most up-to-date valuation of the Mortgaged
Vessels delivered pursuant to the provisions of Clause 20.1(v) is
less than 175% of the aggregate amount of all Advances then
outstanding (such requirement being the "Required Security
Coverage") then the Borrower shall within ten business days after
a request therefor from the Agent either:
(a) prepay an amount of the Advance or Advances then
outstanding which shall be applied prorata in prepayment thereof,
together with interest thereon and any amounts falling due under
Clause 23.4 as a result of such prepayment; or
(b) provide additional security as may be acceptable to the
Agent such that the Required Security Coverage is met.
20. Covenants
20.1 Each of Gulf Offshore Marine international, Inc., GulfMark
North Sea Limited and the Borrower shall:
(i) obtain, comply with the terms of and do all that is
necessary to maintain in full force and effect all
authorisations, approvals, licences and consents required in or
by the laws and regulations of its jurisdiction of incorporation
to enable it lawfully to enter into and perform its obligations
under this Agreement and each of the Security Documents or to
ensure the legality, validity, enforceability or admissibility in
evidence in its jurisdiction of incorporation of this Agreement
and each of the Security Documents;
(ii) without prejudice to the specific requirements of the
Security Documents procure that each member of the GMM Group
maintains insurances on and in relation to its business and
assets with reputable underwriters or insurance companies against
such risks and to such extent as is usual for companies carrying
on a business such as that carried on by such member of the GMM
Group whose practice is not to self insure;
(iii) promptly inform the Agent of the occurrence of any Event
of Default or Potential Event of Default and, upon receipt of a
written request to that effect from the Agent, confirm to the
Agent that, save as previously notified to the Agent or as
notified in such confirmation, no Event of Default or Potential
Event of Default has occurred;
(iv) without prejudice to the priority afforded by any mortgage
and deed of covenant or assignment collateral thereto securing
the obligations of the Borrower hereunder ensure that at all
times the claims of the Agent and the Banks against the Borrower
under this Agreement rank at least pari passu with the claims of
all its other unsecured creditors save those whose claims are
preferred by any bankruptcy, insolvency, liquidation or other
similar laws of general application;
(v) at the request of the Agent, deliver to the Agent or procure
the delivery to the Agent of up-to-date valuations of the Vessels
prepared at the sole cost and expense of the Borrower, showing
the Market Value of each of the Mortgaged Vessels:
(vi) ensure that the Mortgaged Vessels are maintained in good
working order and condition and in any event in such condition as
enables them to maintain the classification American Bureau of
Shipping Al AMS or to an equivalent classification acceptable to
the Agent free from all notations and recommendations which have
not been complied with within any applicable time limit and
ensure that such classification is maintained;
(vii) comply with all applicable Environmental Laws including,
without limitation, requirements relating to the establishment of
financial responsibility (and shall require that all
Environmental Affiliates of the Borrower comply with all
applicable Environmental Laws and obtain and comply with all
required Environmental Approvals, which Environmental Laws and
Environmental Approvals relate to any of the Mortgaged Vessels or
their operation or their carriage of cargo), except where such
non-compliance does not or will not have a Material Adverse
Effect;
(viii) upon the request of the Agent, conduct and complete all
investigations, studies, sampling, audits and testings reasonably
required by any known (or threatened) Release of Material of
Environmental Concern that has or will have a Material Adverse
Effect;
(ix) promptly upon the occurrence of either of the following
events, provide to the Agent, or procure that there is provided
to the Agent, a certificate of an officer of the Principal
Sponsor specifying in detail the nature of such event and the
proposed response of the Borrower or its Environmental Affiliate
concerned:
(a) the receipt by the Borrower or any Environmental
Affiliate (where the Borrower has knowledge of such receipt) of
any Environmental Claim which has or will have a Material Adverse
Effect; or
(b) any actual or threatened Release of Material of
Environmental Concern which has or will have a Material Adverse
Effect,
and upon the written request by the Agent submit to the Agent in
sufficient copies for the Banks, at reasonable intervals, a
report updating the status of any occurrence of an Environmental
Claim or a Release of Material of Environmental Concern, that has
or will have a Material Adverse Effect;
(x) maintain the registration of the Mortgaged Vessels under the
laws and flag of Panama (or such other flag as the Banks may, at
the request of the Borrower, from time to time to agree) and not
cause or permit to be done any act or omission whereby their
registration as such would or might be defeated or imperilled or
which might result in such Mortgaged Vessels being required to be
registered under any other flag and registered with the
appropriate authorities;
(xi) permit the Agent on reasonable notice to inspect the
Mortgaged Vessels and their logs;
(xii) from time to time on being required to do so by the Agent,
do or procure the doing of all such acts and execute or procure
the execution of all such documents as the Agent may reasonably
consider necessary for giving full effect to each of the Security
Documents or for securing to the Banks the full benefit of the
rights, powers and remedies intended to be conferred upon the
Agent or the Security Trustee pursuant to the Security Documents;
(xiii) at all times ensure that Gulf Offshore Marine
International, Inc. is, subject to the rights conferred by the
Share Pledge, the sole beneficial owner of the entire issued
share capital of the Borrower;
(xiv) commencing from the date hereof and thereafter no later
than 14 days from and inclusive of each of 30 September, 31
December, 31 March and 30 June deliver to the Agent in sufficient
copies for the Banks a schedule in form and substance
satisfactory to the Agent detailing Fixed Asset Investments
exceeding $50,000 made by the Borrower in the three months
proceeding the date upon which such schedule is delivered
(whether such Fixed Asset Investment was made with the consent of
the Banks or pursuant to the exception for such consent set out
in Clause 20.2(x))
(xv) no later than 14 days from and inclusive of 31 March, 30
June, 30 September and 31 December in each calendar year, furnish
the Agent in sufficient copies for the Banks with a report in
form and substance satisfactory to the Agent and at the cost of
the Borrower, relating to the status, employment, earnings and
location of the Mortgaged Vessels as at the date upon which such
report is furnished in respect of the period elapsing since the
previous such report, if any; and
(xvi) forthwith upon the request of the Agent, charge, pledge or
otherwise encumber in favour of the Security Trustee pursuant to
a security document in form and substance satisfactory to the
Agent any account into which Approved Charter Earnings are paid.
20.2 The Borrower shall not without the prior written consent of
an Instructing Group:
(i) make or declare any dividend or other distribution in
respect of any financial year;
(ii) incur expenditure in respect of any management fees payable
other than management fees payable to the Principal Sponsor or
Gulf Offshore Marine International, Inc. in such amount as the
Agent may agree, having regard to the annual budget and operating
expenses of the Principal Sponsor or Gulf Offshore Marine
International, Inc.;
(iii) create or permit to subsist any encumbrance over all or
any of its present or future revenues or assets except:-
(a) pursuant to the Security Documents; or
(b) any encumbrance imposed by law, such as carrier's,
warehouseman's, mechanics' liens, crew's wages and master's
disbursements and other similar liens arising in the ordinary
course of business or permitted under the terms of the Security
Documents; or
20.3 The Principal Sponsor shall at all times remain, subject to
such rights as may be conferred by the share pledges granted
pursuant to the terms of the Main Facility, the sole beneficial
owner free from all encumbrances. of the entire issued share
capital of each member of the GMM Group.
20.4 The Sponsors shall not, save with the consent of the Agent
or pursuant to the Short Term Facility or the Main Facility, give
any guarantee or indemnity to or for the benefit of any person or
otherwise voluntarily assume any liability, whether actual or
contingent, in respect of any obligation of any other person
Provided always that this Clause 20.4 shall not apply to (i) the
guarantee issued by the Principal Sponsor in favour of the
Southwest Bank of Texas N.A. in respect of indebtedness incurred
by Ercon Development Co. ("Ercon") up to a maximum aggregate
principal amount of $500,000, (ii) any bid or performance bond
issued by the Principal Sponsor at the request of Ercon up to a
maximum aggregate amount of $500,000 or (iii) the guarantees
issued by GulfMark North Sea Limited and Gulf Offshore Marine
International, Inc. under the Christiania Loans.
21. Events of Default
21.1 If:
(i) the Borrower fails to pay any sum due from it hereunder or
any Security Document at the time, in the currency and in the
manner specified herein or therein or if such failure results
solely from technical or administrative difficulties relating to
the transfer of such sums, such failure is not remedied within
three days;
(ii) any representation or statement made by the Obligors, or
any of them, in this Agreement or under any Security Document or
in any notice or other document, certificate or statement
delivered by it pursuant hereto or thereto or in connection
herewith is or proves to have been incorrect or misleading when
made; or
(iii) any of the Obligors fails duly to perform or comply with
any of the obligations expressed to be assumed by it in Clauses
18, 19 or 20 hereof or duly to effect insurance of the Mortgaged
Vessels or any of them in accordance with the applicable
provisions of the Security Documents; or
(iv) any of the Obligors fails duly to perform or comply with
any other obligation expressed to be assumed by it in this
Agreement or under any Security Document and such failure is not
remedied within fourteen days after the Agent has given notice
thereof to such Obligor; or
(v) the Borrower is in breach of any of its obligations under
any of the Approved Charters or the Borrower seeks to cancel,
terminate or repudiate any of the Approved Charters without the
prior consent of the Agent; or
(vi) any indebtedness of any Obligor or any member of the GMM
Group (other than indebtedness due to trade creditors incurred in
the normal course of business of such Obligor or such member of
the GMM Group which is disputed in good faith and by appropriate
proceedings diligently conducted) is not paid when due or within
any applicable grace period, any indebtedness of any Obligor or
any member of the GMM Group is declared to be or otherwise
becomes due and payable prior to its specified maturity or any
creditor or creditors of any Sponsors or any member of the GMM
Group become entitled to declare any indebtedness of any Obligor
or such member of the GMM Group due and payable prior to its
specified maturity; or
(vii) in any period of twelve months commencing from the date
hereof any judgments or judicial orders or arbitration awards are
made against the Borrower in an amount or an aggregate amount in
excess of $750,000 (or the equivalent in any other currency)
(other than any judgment, judicial order or arbitration award as
to which, and only to the extent that, a reputable company or
other surety, in either case acceptable to the Agent, has
acknowledged coverage of such judgment, judicial order or
arbitration award in writing) and,
(a) any such judgment, judicial order or arbitration award
has not been stayed, discharged, paid, bonded or vacated within
30 days or such longer period as may be agreed by the Agent; or
(b) enforcement proceedings have been commenced by any
creditor on any such judgment, judicial order or arbitration
award;
(viii) any Obligor or any member of the GMM Group is unable to
pay its debts as they fall due, commences negotiations with any
one or more of its creditors with a view to the general
readjustment or rescheduling of its indebtedness or makes a
general assignment for the benefit of or a composition with its
creditors; or
(ix) (otherwise than for the purpose of a reconstruction on
terms previously approved by the Agent) any Obligor or any member
of the GMM Group takes any corporate action or other steps are
taken or legal proceedings are started for its winding-up,
dissolution, administration or re-organisation or for the
appointment of a receiver, administrator, administrative
receiver, trustee or similar officer of it or of any or all of
its revenues and assets: or
(x) any execution or distress is levied against, or an
encumbrancer takes possession of the whole or any material part
of, the property, undertaking or assets of any of the Obligors or
any member of the GMM Group; or
(xi) by or under the authority of any governments (a) the
management of any of the Obligors or any member of the GMM Group
is wholly or partially displaced or the authority of any of the
Obligors or any member of the GMM Group in the conduct of its
business is wholly or partially curtailed or (b) all or a
majority of the issued shares of any of the Obligors or any
member of the GMM Group or the whole or any part (the book value
of which is twenty per cent. or more of the book value of the
whole) of its revenues or assets is seized, nationalised,
expropriated or compulsorily acquired; or
(xii) subject to the rights conferred by the Share Pledge, Gulf
Offshore Marine International Inc. ceases to be the sole legal
and beneficial owner of the entire share capital of the Borrower;
or
(xiii) subject to the rights conferred by the Share Pledge, the
Principal Sponsor ceases to be the beneficial owner of the entire
issued share capital of each member of the GMM Group;
(xiv) any member of the GMM Group ceases to carry on the
business it carries on at the date hereof or enters into any new
type of business; or
(xv) any Obligor repudiates this Agreement or any Security
Document to which it is a party or does or causes to be done any
act or thing evidencing an intention to repudiate this Agreement
or any such Security Document; or
(xvi) at any time any act, condition or thing required to be
done, fulfilled or performed in order (a) to enable any Obligor
lawfully to enter into, exercise its rights under and perform the
obligations expressed to be assumed by it in this Agreement and
the Security Documents to which it is a party, (b) to ensure that
the obligations expressed to be assumed by any Obligor in this
Agreement and the Security Documents to which it is a party are
legal, valid and binding or (c) to make this Agreement and the
Security Documents to which it is a party admissible in evidence
in the Borrower's jurisdiction of incorporation is not done,
fulfilled or performed; or
(xvii) at any time any of the security interests constituted by
any of the Security Documents ceases to constitute valid and
perfected first priority security interests;
(xviii) at any time it is or becomes unlawful for any Obligor to
perform or comply with any or all of its obligations hereunder or
under any of the Security Documents to which it is a party or any
of the obligations of any Obligor hereunder or under any of the
Security Documents to which it is a party are not or cease to be
legal, valid and binding; or
(xix) (a) any circumstances arise which give grounds in the
reasonable opinion of the Agent for belief that any Obligor may
not (or may be unable to) perform or comply with its obligations
hereunder, or any of the Security Documents to which it is a
party (b) the Agent shall have given to the Principal Sponsor
notice that it is of such opinion setting out in reasonable
detail the grounds upon which such opinion is based and (c) after
having given due regard to any representation made by the
Obligors during the period of ten days after the giving of such
notice by the Agent, the Agent is of the same opinion upon the
expiration of such period,
then, and in any such case and at any time thereafter, the Agent
may (and, if so instructed by an Instructing Group, shall) by
written notice to the Principal Sponsor and the Borrower:
(a) declare the Advances to be immediately due and payable
(whereupon the same shall become so payable together with accrued
interest thereon and any other sums then owed by the Borrower
hereunder) or declare the Advances to be due and payable on
demand of the Agent; and/or
(b) declare that any undrawn portion of the Facility shall be
cancelled, whereupon the same shall be cancelled and the
Available Facility shall be reduced to zero.
21.2 If, pursuant to Clause 21.1, the Agent declares the
Advances to be due and payable on demand of the Agent, then, and
at any time thereafter, the Agent may by written notice to the
Principal Sponsor and the Borrower:
(i) call for repayment of the Advances on such date as it may
specify in such notice (whereupon the same shall become due and
payable on such date together with accrued interest thereon and
any other sums then owed by the Borrower hereunder) or withdraw
its declaration with effect from such date as it may specify in
such notice; and/or
(ii) select as the duration of any Interest Period which begins
whilst such declaration remains in effect a period of six months
or less.
PART 8
PRINCIPAL SPONSOR'S OBLIGATIONS
22. Principal Sponsor's Obligations
For the avoidance of doubt, the obligations of the Principal
Sponsor herein contained shall not constitute a guarantee of the
obligations of the Borrower, but shall be limited to a liability
in damages arising out of or in connection with any breach by the
Principal Sponsor of the representations, covenants or
undertakings on its part contained herein.
PART 9
DEFAULT INTEREST AND INDEMNITY
23. Default Interest and Indemnity
23.1 If any sum due and payable by the Borrower hereunder is not
paid on the due date therefor in accordance with the provisions
of Clause 25 or if any sum due and payable by the Borrower under
any judgment of any court in connection herewith is not paid on
the date of such judgment, the period beginning on such due date
or, as the case may be, the date of such judgment and ending on
the date upon which the obligation of the Borrower to pay such
sum (the balance thereof for the time being unpaid being herein
referred to as an "unpaid sum") is discharged shall be divided
into successive periods, each of which (other than the first)
shall start on the last day of the preceding such period and the
duration of each of which shall (except as otherwise provided in
this Clause 23) be selected by the Agent.
23.2 During each such period relating thereto as is mentioned in
Clause 23.1 an unpaid sum shall bear interest at the rate per
annum which is the sum from time to time of one per cent., the
Margin and LIBOR on the Quotation Date therefor Provided that:
(i) if, for any such period, LIBOR cannot be determined, the
rate of interest applicable to such unpaid sum shall be the sum
from time to time of one per cent., the Margin and the rate per
annum equal to the cost to the Agent of funding such unpaid sum
for such period from whatever source it may select; and
(ii) if such unpaid sum is all or part of the Advance which
became due and payable on a day other than the last day of an
Interest Period relating thereto, the first such period
applicable thereto shall be of a duration equal to the unexpired
portion of that Interest Period and the rate of interest
applicable thereto from time to time during such period shall be
that which exceeds by one per cent. the rate which would have
been applicable to it had it not so fallen due.
23.3 Any interest which shall have accrued under Clause 23.2 in
respect of an unpaid sum shall be due and payable and shall be
paid by the Borrower at the end of the period by reference to
which it is calculated or on such other date or dates as the
Agent may specify by written notice to the Borrower.
23.4 If any Bank or the Agent on its behalf receives or recovers
all or any part of such Bank's share of an Advance otherwise than
on the last day of an Interest Period relating to that Advance,
the Borrower shall pay to the Agent on demand for account of such
Bank an amount equal to the amount (if any) by which (i) the
additional interest which would have been payable on the amount
so received or recovered had it been received or recovered on the
last day of that Interest Period exceeds (ii) the amount of
interest which in the opinion of the Agent would have been
payable to the Agent on the last day of that Interest Period in
respect of a dollar deposit equal to the amount so received or
recovered placed by it with a prime bank in London for a period
starting on the third business day following the date of such
receipt or recovery and ending on the last day of that Interest
Period.
23.5 The Borrower undertakes to indemnify:
(i) each of the Agent and the Banks against any cost, claim,
loss, expense (including legal fees) or liability together with
any VAT thereon, which it may sustain or incur as a consequence
of the occurrence of any Event of Default or any default by the
Borrower in the performance of any of the obligations expressed
to be assumed by it in this Agreement; and
(ii) each Bank against any loss it may suffer as a result of its
funding an Advance requested by the Borrower hereunder but not
made by reason of the operation of any one or more of the
provisions hereof.
23.6 Any unpaid sum shall (for the purposes of this Clause 23
and Clause 15. 1) be treated as an advance and accordingly in
this Clause 23 and Clause 15.1 the term "Advance" includes any
unpaid sum and the term "Interest Period", in relation to an
unpaid sum, includes each such period relating thereto as is
mentioned in Clause 23.1.
PART 10
PAYMENTS
24. Currency of Account and Payment
24.1 Dollars is the currency of account and payment for each and
every sum at any time due from the Borrower hereunder Provided
that:
(i) each payment in respect of costs and expenses shall be made
in the currency in which the same were incurred; and
(ii) each payment pursuant to Clause 13.2 or Clause 15.1 shall
be made in the currency specified by the Bank to whom such
payment is to be made.
24.2 If any sum due from any of the Borrower under this
Agreement or any order or judgment given or made in relation
hereto has to be converted from the currency (the "first
currency") in which the same is payable hereunder or under such
order or judgment into another currency (the "second currency")
for the purpose of (i) making or filing a claim or proof against
the Borrower, (ii) obtaining an order or judgment in any court or
other tribunal or (iii) enforcing any order or judgment given or
made in relation hereto, the Borrower shall indemnify and hold
harmless each of the persons to whom such sum is due from and
against any loss suffered as a result of any discrepancy between
(a) the rate of exchange used for such purpose to convert the sum
in question from the first currency into the second currency and
(b) the rate or rates of exchange at which such person may in the
ordinary course of business purchase the first currency with the
second currency upon receipt of a sum paid to it in satisfaction,
in whole or in part, of any such order, judgment, claim or proof.
25. Payments
25.1 On each date on which this Agreement or any of the Security
Documents requires an amount to be paid by any of the Borrower or
any of the Banks, the Borrower or, as the case may be, such Bank
shall make the same available to the Agent by payment in dollars
and in same day funds (or in such other funds as may for the time
being be customary in New York City for the settlement in New
York City of international banking transactions in dollars) to
The Chase Manhattan Bank, New York, N.Y. for the account of Chase
Manhattan International Limited, London (Swift Code CHASGB22
account number 544-7-14108) (or such other account or bank as the
Agent may have specified for this purpose).
25.2 If, at any time, it shall become impracticable (by reason
of any action of any governmental authority or any change in law,
exchange control regulations or any similar event) for the
Borrower to make any payments hereunder in the manner specified
in Clause 25.1, then the Borrower may agree with each or any of
the Banks alternative arrangements for such payments to be made
Provided that, in the absence of any such agreement with any
Bank, the Borrower shall be obliged to make all payments due to
such Bank in the manner specified herein. Upon reaching such
agreement the Borrower and such Bank shall immediately notify the
Agent thereof and shall thereafter promptly notify the Agent of
all payments made direct to such Bank.
25.3 Save as otherwise provided herein, each payment received by
the Agent for the account of another person pursuant to Clause
25.1 shall be made available by the Agent to such other person
(in the case of a Bank, for the account of its Facility Office)
for value the same day by transfer to such account of such bank
in the principal financial centre of the country of the currency
of such payment as such person shall have previously notified to
the Agent.
25.4 All payments required to be made by the Borrower hereunder
shall be calculated without reference to any set-off or
counterclaim and shall be made free and clear of and without any
deduction for or on account of any set-off or counterclaim.
25.5 Where a sum is to be paid hereunder to the Agent for
account of another person, the Agent shall not be obliged to make
the same available to that other person until it has been able to
establish to its satisfaction that it has actually received such
sum, but if it does so and it proves to be the case that it had
not actually received such sum, the person to whom such sum was
so made available shall on request refund the same to the Agent
together with an amount sufficient to indemnify the Agent against
any cost or loss it may have suffered or incurred by reason of
its having paid out such sum prior to its having received such
sum.
26. Set-Off
The Borrower authorises each Bank to apply any credit balance to
which the Borrower is entitled on any account of the Borrower
with that Bank in satisfaction of any sum due and payable from
the Borrower to such Bank hereunder but unpaid; for this purpose,
each Bank is authorised to purchase with the moneys standing to
the credit of any such account such other currencies as may be
necessary to effect such application. No Bank shall be obliged
to exercise any right given to it by this Clause 26.
27. Redistribution of Payments
27.1 If, at any time, the proportion which a Bank (a "Recovering
Bank") has received or recovered (whether by payment, the
exercise of a right of set-off or combination of accounts or
otherwise) in respect of its portion of any payment (a "relevant
payment") to be made under this Agreement by the Borrower for
account of such Recovering Bank and the other Bank is greater
(the portion of such receipt or recovery giving rise to such
excess proportion being herein called an "excess amount") than
the proportion thereof so received or recovered by the Bank so
receiving or recovering the smallest proportion thereof, then:
(i) such Recovering Bank shall pay to the Agent an amount equal
to such excess amount;
(ii) there shall thereupon fall due from the Borrower to such
Recovering Bank an amount equal to the amount paid out by such
Recovering Bank pursuant to paragraph (i) above, the amount so
due being, for the purposes hereof, treated as if it were an
unpaid part of such Recovering Bank's portion of such relevant
payment; and
(iii) the Agent shall treat the amount received by it from such
Recovering Bank pursuant to paragraph (i) above as if such amount
had been received by it from the Borrower in respect of such
relevant payment and shall pay the same to the persons entitled
thereto (including such Recovering Bank) pro rata to their
respective entitlements thereto.
27.2 If any sum (a "relevant sum") received or recovered by a
Recovering Bank in respect of any amount owing to it by the
Borrower becomes repayable and is repaid by such Recovering Bank,
then:
(i) each Bank which has received a share of such relevant sum by
reason of the implementation of Clause 27.1 shall, upon request
of the Agent, pay to the Agent for the account of such Recovering
Bank an amount equal to its share of such relevant sum; and
(ii) there shall thereupon fall due from the Borrower to each
such Bank an amount equal to the amount paid out by it pursuant
to paragraph (i) above, the amount so due being, for the purposes
hereof, treated as if it were the sum payable to such Bank
against which such Bank's share of such relevant sum was applied.
PART 11
FEES, COSTS AND EXPENSES
28. Fees
28.1 The Borrower shall pay to the Agent for the account of the
Banks a commitment commission on the amount of each of the
Available Facility from day to day during the period beginning on
the date hereof and ending on the Final Maturity Date, such
commitment commission to be calculated at the rate of three
quarters of one per cent. per annum and payable in arrear on the
last day of each successive period of three months which ends
during such period and on the Final Maturity Date.
28.2 The Borrower shall pay to the Agent for the account of the
Banks an arrangement fee equal to one and a half per cent. (1.5%)
of the Facility Amount upon the earlier of the date of drawdown
of the first Advance made hereunder and the date being thirty
days after the date of this Agreement.
29. Costs and Expenses
29.1 The Borrower shall, from time to time on demand of the
Agent, reimburse the Agent for all costs and expenses (including
legal fees, travelling and accommodation and other reasonable out
of pocket expenses) together with any VAT thereon incurred by it
in connection with the negotiation, preparation and execution of
this Agreement and the completion of the transactions herein
contemplated.
29.2 The Borrower shall, from time to time on demand of the
Agent, reimburse the Agent and all the Banks for all costs and
expenses (including legal fees) together with any VAT thereon
incurred in or in connection with the preservation and/or
enforcement of any of the rights of the Agent, the Security
Trustee and the Banks under this Agreement.
29.3 The Borrower shall pay all stamp, registration and other
taxes to which this Agreement or any judgment given in connection
herewith is or at any time may be subject and shall, from time to
time on demand of the Agent, indemnify the Agent, the Security
Trustee and the Banks against any liabilities, costs, claims and
expenses resulting from any failure to pay or any delay in paying
any such tax.
29.4 If the Borrower fails to perform any of its obligations
under this Clause 29, each Bank shall, in the proportion borne by
its share of the Loan (or, if no Advances have been made, its
Available Commitment) to the amount of the Loan (or, if no
Advances have been made, the Available Facility) for the time
being (or, if the Loan has been repaid in full, immediately prior
to the final repayment thereof), indemnify the Agent against any
loss incurred by any of them as a result of such failure and the
Borrower shall forthwith reimburse each Bank for any payment made
by it pursuant to this Clause 29.4.
PART 12
AGENCY PROVISIONS
30. The Agent and the Banks
30.1 Each Bank hereby appoints the Agent to act as its agent in
connection herewith and authorises the Agent to exercise such
right, powers and discretions as are specifically delegated to
the Agent by the terms hereof together with all such rights,
powers and discretions as are reasonably identical thereto.
30.2 The Agent may:
(i) assume that:
(a) any representation made by an Obligor in connection
herewith is true;
(b) no event which is or may become an Event of Default has
occurred; and
(c) no Obligor is in breach of or default under its
obligations hereunder
unless it has actual knowledge or actual notice to the contrary;
(ii) assume that the Facility Office of each Bank is that
identified with its signature below until it has received from
such Bank a notice designating some other office of such Bank to
replace its Facility Office and act upon any such notice until
the same is superseded by a further such notice;
(iii) engage and pay for the advice or services of any lawyers,
accountants, surveyors or other experts whose advice or services
may to it seem necessary, expedient or desirable and rely upon
any advice so obtained;
(iv) rely as to any matters of fact which might reasonably be
expected to be within the knowledge of any of the Obligors upon a
certificate signed by or on behalf of the Obligors.
(v) rely upon any communication or document believed by it to be
genuine;
(vi) refrain from exercising any right, power or discretion
vested in it as agent hereunder unless and until instructed by an
Instructing Group as to whether or not such right, power or
discretion is to be exercised and, if it is to be exercised, as
to the manner in which it should be exercised; and
(vii) refrain from acting in accordance with any instructions of
an Instructing Group to begin any legal action or proceeding
arising out of or in connection with this Agreement until it
shall have received such security as it may require (whether by
way of payment in advance or otherwise) for all costs, claims,
expenses (including legal fees) and liabilities which it will or
may expend or incur in complying with such instructions.
30.3 The Agent shall:
(i) promptly inform each Bank of the contents of any notice or
document received by it in its capacity as Agent from any of the
Obligors hereunder;
(ii) promptly notify each Bank of the occurrence of any Event of
Default or any default by any of the Obligors in the due
performance of or compliance with its obligations under this
Agreement of which the Agent has notice from any other party
hereto;
(iii) save as otherwise provided herein, act as agent hereunder
in accordance with any instructions given to it by an Instructing
Group, which instructions shall be binding on the Banks; and
(iv) if so instructed by an Instructing Group, refrain from
exercising any right, power or discretion vested in it as agent
hereunder.
30.4 Notwithstanding anything to the contrary expressed or
implied herein, the Agent shall not:
(i) be bound to enquire as to:
(a) whether or not any representation made by any Obligor in
connection herewith is true;
(b) the occurrence or otherwise of any Event of Default or
Potential Event of Default;
(c) the performance by the Obligors of their obligations
hereunder; or
(d) any breach of or default by any Obligor of or under its
obligations hereunder;
(ii) be bound to account to any Bank for any sum or the profit
element of any sum received by it for its own account;
(iii) be bound to disclose to any other person any information
relating to any member of the Group if such disclosure would or
might in its opinion constitute a breach of any law or regulation
or be otherwise actionable at the suit of any person; or
(iv) be under any obligations other than those for which express
provision is made herein.
30.5 Each Bank shall, from time to time on demand by the Agent,
indemnify the Agent, in the proportion its share of the Loan (or,
if no Advances have been made, its Available Commitment) bears to
the amount of the Loan (or, if no Advances have been made, the
Available Facility) at the time of such demand (or, if the Loan
has then been repaid in full, immediately prior to the final
repayment thereof), against any and all costs, claims, losses,
expenses (including legal fees) and liabilities together with any
VAT thereon which the Agent may incur, otherwise than by reason
of its own gross negligence or wilful misconduct, in acting in
its capacity as Agent hereunder.
30.6 The Agent accepts no responsibility for the accuracy and/or
completeness of any information supplied by the Obligors in
connection herewith or for the legality, validity, effectiveness,
adequacy or enforceability of this Agreement and the Agent shall
be under no liability as a result of taking or omitting to take
any action in relation to this Agreement, save in the case of
gross negligence or wilful misconduct.
30.7 Each of the Banks agrees that it will not assert or seek to
assert against any director, officer or employee of the Agent any
claim it might have against any of them in respect of the matters
referred to in Clause 30.6.
30.8 The Agent may accept deposits from, lend money to and
generally engage in any kind of banking or other business with
any member of the Group.
30.9 The Agent may resign its appointment hereunder at any time
without assigning any reason therefor by giving not less than
thirty days' prior written notice to that effect to each of the
other parties hereto Provided that no such resignation shall be
effective until a successor for the Agent is appointed in
accordance with the succeeding provisions of this Clause 30.
30.10 If the Agent gives notice of its resignation pursuant to
Clause 30.9, then any reputable and experienced bank or other
financial institution may be appointed as a successor to the
Agent by an Instructing Group during the period of such notice
but, if no such successor is so appointed, the Agent may appoint
such a successor itself.
30.11 If a successor to the Agent is appointed under the
provisions of Clause 30.10, then (i) the retiring Agent shall be
discharged from any further obligation hereunder but shall remain
entitled to the benefit of the provisions of this Clause 30 and
(ii) its successor and each of the other parties hereto shall
have the same rights and obligations amongst themselves as they
would have had if such successor had been a party hereto.
30.12 It is understood and agreed by each Bank that it has
itself been, and will continue to be, solely responsible for
making its own independent appraisal of and investigations into
the financial condition, creditworthiness, condition, affairs,
status and nature of each member of the Group and, accordingly,
each Bank warrants to the Agent that it has not relied on and
will not hereafter rely on the Agent:
(i) to check or enquire on its behalf into the adequacy,
accuracy or completeness of any information provided by the
Obligors in connection with this Agreement or the transactions
herein contemplated (whether or not such information has been or
is hereafter circulated to such Bank by the Agent); or
(ii) to assess or keep under review on its behalf the financial
condition, creditworthiness condition, affairs, status or nature
of any member of the Group.
PART 13
ASSIGNMENT AND TRANSFERS
31. Benefit of Agreement
This Agreement shall be binding upon and enure to the benefit of
each party hereto and its or any subsequent successors and
assigns.
32. Assignments and Transfers by the Obligors
None of the Obligors shall be entitled to assign or transfer all
or any of its rights, benefits and obligations hereunder.
33. Assignments and Transfers by Banks
33.1 Any Bank may, at any time, assign at its sole cost and
expense all or any of its rights and benefits hereunder or
transfer in accordance with Clause 33.3 all or any of its rights,
benefits and obligations subject to the Principal Sponsor's
consent, such consent not to be unreasonably withheld where the
proposed assignee or transferee is (i) acting through an office
or branch in the United Kingdom and is carrying on a bona fide
banking business for the purposes of Section 349 of the Income
and Corporation Taxes Act 1988, or (ii) another bank or financial
institution to whom, at the time of such assignment or transfer
payments may be made without deduction or withholding on account
of United Kingdom taxes.
33.2 If any Bank assigns all or any of its rights and benefits
hereunder in accordance with Clause 33. 1, then, unless and until
the assignee has agreed with the Agent and the other Banks that
it shall be under the same obligations towards each of them as it
would have been under if it had been an original party hereto as
a Bank, the Agent and the other Banks shall not be obliged to
recognise such assignee as having the rights against each of them
which it would have had if it had been such a party hereto.
33.3 If any Bank wishes to transfer all or any of its rights,
benefits and/or obligations hereunder as contemplated in Clause
33. 1, then such transfer may be effected by the delivery to the
Agent of a duly completed and duly executed Transfer Certificate
in which event, on the later of the Transfer Date specified in
such Transfer Certificate and the fifth business day after (or
such earlier business day endorsed by the Agent on such Transfer
Certificate failing on or after) the date of delivery of such
Transfer Certificate to the Agent:
(i) to the extent that in such Transfer Certificate the Bank
party thereto seeks to transfer its rights, benefits and
obligations hereunder, the Borrower and such Bank shall be
released from further obligations towards one another hereunder
and their respective rights against one another shall be
cancelled (such rights, benefits and obligations being referred
to in this Clause 33.3 as "discharged rights and obligations");
(ii) the Borrower and the Transferee party thereto shall assume
obligations towards one another and/or acquire rights against one
another which differ from such discharged rights and obligations
only insofar as the Borrower and such Transferee have assumed
and/or acquired the same in place of the Borrower and such Bank;
and
(iii) the Agent, such Transferee and the other Banks shall
acquire the same rights and benefits and assume the same
obligations between themselves as they would have acquired and
assumed had such Transferee been an original party hereto as a
Bank with the rights, benefits and/or obligations acquired or
2:1 assumed by it as a result of such transfer.
33.4 On the date upon which a transfer takes effect pursuant to
Clause 33.3, the Transferee in respect of such transfer shall pay
to the Agent for its own account a transfer fee of $500.
33.5 In the event that a Bank transfers its Facility Office and,
at the time of such transfer, there arises an obligation on the
part of the Obligors hereunder to pay to such Bank or any other
person an amount in excess of the amount it would have been
obliged to pay but for such transfer, then, without prejudice to
any obligation of the Obligors which arise after the time of such
transfer, the Obligors shall not be obliged to pay the amount of
such excess.
34. Disclosure of Information
34.1 Any information disclosed by the Borrower to any of the
Beneficiaries in connection herewith or in connection with the
negotiation of the Facilities shall be kept confidential by such
of the Beneficiaries, Provided that:
(i) subject to the terms hereof each of the Beneficiaries may
disclose to any other of the Beneficiaries any information about
the Borrower;
(ii) each of the Beneficiaries shall be entitled to disclose
such information:
(a) in connection with any proceedings arising out of or in
connection with any Finance Document;
(b) if required to do so by an order of a court of competent
jurisdiction whether in pursuance of any procedure for
discovering documents or otherwise;
(c) pursuant to any law or regulation in accordance with
which that party is required or accustomed to act;
(d) to any governmental, banking or taxation authority;
(e) to its auditors or legal or other professional advisers;
or
(f) if the information is in the public domain.
34.2 Any of the Beneficiaries may, at any time with the prior
consent of the Principal Sponsor and the Agent, such consent not
to be unreasonably withheld, disclose to any actual or potential
assignee or transferee which has executed a confidentiality
undertaking in favour of the Agent and the Principal Sponsor in a
form acceptable to the Agent and the Principal Sponsor any
information such Beneficiary has obtained about the Obligors
Provided always that no person may disclose any information that
they may have obtained about the Obligors or any of them, to any
person which it is aware is a supplier, competitor or customer of
any member of the Group.
PART 14
MISCELLANEOUS
35. Calculations and Evidence of Debt
35.1 Interest and commitment commission shall accrue from day to
day and shall be calculated on the basis of a year of 360 days
(or, if market practice differs, in accordance with market
practice) and the actual number of days elapsed.
35.2 Each Bank shall maintain in accordance with its usual
practice accounts evidencing the amounts from time to time lent
by and owing to it hereunder.
35.3 The Agent shall maintain on its books a control account or
accounts in which shall be recorded (i) the amount of any Advance
made or arising hereunder and each Bank's share therein, (ii) the
amount of all principal, interest and other sums due or to become
due from the Borrower to any of the Banks hereunder and each
Bank's share therein and (iii) the amount of any sum received or
recovered by the Agent hereunder and each Bank's share therein.
35.4 In any legal action or proceeding arising out of or in
connection with this Agreement, the entries made in the accounts
maintained pursuant to Clauses 35.2 and 35.3, save for manifest
error, shall be conclusive evidence of the existence and amounts
of the obligations of the Obligors therein recorded.
35.5 A certificate of a Bank as to (i) the amount by which a sum
payable to it hereunder is to be increased under Clause 13.1 or
(ii) the amount for the time being required to indemnify it
against any such cost, payment or liability as is mentioned in
Clause 13.2 or 15.1 shall, in the absence of manifest error, be
conclusive for the purposes of this Agreement.
36. Remedies and Waivers
No failure by the Agent or the Banks or any of them to exercise,
nor any delay by the Agent or the Banks or any of them in
exercising, any right or remedy hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any
right or remedy prevent any further or other exercise thereof or
the exercise of any other right or remedy. The rights and
remedies herein provided are cumulative and not exclusive of any
rights or remedies provided by law.
37. Partial Invalidity
If, at any time, any provision hereof is or becomes illegal,
invalid or unenforceable in any respect under the law of any
jurisdiction, neither the legality, validity or enforceability of
the remaining provisions hereof nor the legality, validity or
enforceability of such provision under the law of any other
jurisdiction shall in any way be affected or impaired thereby.
38. Notices
38.1 Each communication to be made hereunder shall be made in
writing but, unless otherwise stated, may be made by telex,
facsimile or letter.
38.2 Any communication or document to be made or delivered by
one person to another pursuant to this Agreement shall (unless
that other person has by fifteen days' written notice to the
Agent specified another address) be made or delivered to that
other person at the address identified with its signature below
(or in the case of a transferee, at the end of the Transfer
Certificate to which it is a party as Transferee) (save for
Notices of Drawdown or notices under Clause 8.2 relating to the
duration of Interest Periods, which shall be made or delivered to
the Agent at Chaseside, Boumemouth, Dorset BH7 7DB Attention:
Elena Plant; Facsimile: 01202 343 706; Telex: 8954681 CMB G (or
such other address as the Agent may from time to time notify for
this purpose)) shall be deemed to have been made or delivered
when despatched (in the case of any communication made by telex)
or (in the case of any communication made by fax) when receipt
has been acknowledged or (in the case of any communication made
by letter) when left at that address or (as the case may be) ten
days after being deposited in the post postage prepaid in an
envelope addressed to it at that address Provided that any
communication or document to be made or delivered to the Agent
shall be effective only when received by the Agent and then only
if the same is expressly marked for the attention of the
department or officer identified with the Agent's signature below
(or such other department or officer as the Agent shall from time
to time specify for this purpose).
38.3 Each communication and document made or delivered by one
party to another pursuant to this Agreement shall be in the
English language or accompanied by a translation thereof into
English certified (by an officer of the person making or
delivering the same) as being a true and accurate translation
thereof.
PART 15
LAW AND JURISDICTION
39. Law
This Agreement shall be governed by, and shall be construed in
accordance with, English law.
40. Jurisdiction
40.1 Each of the parties hereto irrevocably agrees for the
benefit of each of the Agent and the Banks that the courts of
England shall have jurisdiction to hear and determine any suit,
action or proceeding, and to settle any disputes, which may arise
out of or in connection with this Agreement and, for such
purposes, irrevocably submits to the jurisdiction of such courts.
40.2 Each of the Obligors irrevocably waives any objection which
it might now or hereafter have to the courts referred to in
Clause 40.1 being nominated as the forum to hear and determine
any suit, action or proceeding, and to settle any disputes. which
may arise out of or in connection with this Agreement and agrees
not to claim that any such court is not a convenient or
appropriate forum.
40.3 Each of the Obligors agrees that the process by which any
suit, action or proceeding is begun may be served on it by being
delivered in connection with any suit, action or proceeding in
England, to Gulf Offshore N.S. Limited at 10 Charlotte Road,
London SW13 9QJ or its place of business for the time being. If
such appointment ceases to be effective in respect of any of the
Obligors, such Obligor or Obligors shall immediately appoint a
further person in England to accept service of process on its
behalf in England, and failing the appointment within 15 days,
the Agent shall be entitled to appoint such a person by notice or
to such Obligor or Obligors. Nothing contained herein shall
affect the right to serve process in any other manner permitted
by law.
40.4 The submission to the jurisdiction of the courts referred
to in Clause 40.1 shall not (and shall not be construed so as to)
limit the right of the Agent, the Banks or any of them to take
proceedings against any of the Obligors in any other court of
competent jurisdiction nor shall the taking of proceedings in any
one or more jurisdictions preclude the taking of proceedings in
any other jurisdiction (whether concurrently or not) if and to
the extent permitted by applicable law.
40.5 Each of the Obligors hereby consents generally in respect
of any legal action or proceeding arising out of or in connection
with this Agreement to the giving of any relief or the issue of
any process in connection with such action or proceeding
including, without limitation, the making, enforcement or
execution against any property whatsoever (irrespective of its
use or intended use) of any order or judgment which may be made
or given in such action or proceeding.
40.6 To the extent that any of the Obligors may in any
jurisdiction claim for itself or its assets immunity from suit,
execution, attachment (whether in aid of execution, before
judgment or otherwise) or other legal process and to the extent
that in any such jurisdiction there may be attributed to itself
or its assets such immunity (whether or not claimed), such
Obligor hereby irrevocably agrees not to claim and hereby
irrevocably waives such immunity to the full extent permitted by
the laws of such jurisdiction.
AS WITNESS the hands of the duly authorised representatives of
the parties hereto the day and year first before written.
THE FIRST SCHEDULE
Condition Precedent Documents
1. In relation to each of the Obligors:
(i) a copy, certified a true copy by a duly authorised officer
of such Obligor, of the constitutive documents of such Obligor;
(ii) a copy, certified a true copy by a duly authorised officer
of such Obligor of a Board Resolution of such Obligor approving
the execution, delivery and performance of this Agreement and the
terms and conditions hereof and authorising a named person or
persons to sign this Agreement and any documents to be delivered
by such Obligor pursuant hereto; and
(iii) a certificate of a duly authorised officer of such Obligor
setting out the names and signatures of the persons authorised to
sign, on behalf of such Obligor, this Agreement and any documents
to be delivered by such Obligor pursuant hereto.
2. A copy, certified a true copy by or on behalf of the
Principal Sponsor, of each such law, decree, consent, licence,
approval, registration or declaration as is, in the opinion of
counsel to the Agent, necessary to render this Agreement and the
Security Documents legal, valid, binding and enforceable, to make
this Agreement and the Security Documents admissible in evidence
in each Obligor's jurisdiction of incorporation and to enable
each of the Obligors to perform its obligations hereunder.
3. A trust agreement executed between the Security Trustee, the
Initial Bank, the Borrower and others, pursuant to which the
Security Trustee declares itself to be trustee for the Banks
named therein, the Hedge Counterparty and such financial
institutions in respect of any security granted pursuant to any
Security Document.
4. A first preferred Panamanian ship mortgage and assignment of
earnings and insurances collateral thereto executed in respect of
the following vessels:-
(i) Sea Endeavor (ex Africa Eagle);
(ii) Sea Diligent (ex Sentosa Eagle);
(iii) Sea Explorer (ex Australia Eagle);
(iv) Sea Searcher (ex Golden Eagle);
(v) Sea Eagle (ex Singapore Eagle);
(vi) Sea Conquest (ex Indonesia Eagle).
5. Share Pledge over all of the shares in the Borrower legally
and beneficially owned by Gulf Offshore Marine International,
Inc.
6. Evidence that the Borrower has complied with all of its
obligations arising under any Security Document relating to
insurance of the Mortgaged Vessels, together with a report,
issued by an independent person, (being an insurance broker
and/or insurance consultant), addressed to the Agent confirming
that insurances effected in respect of the Original Vessels are
adequate.
7. All such notices of assignment as may be called for by any of
the Security Documents.
8. A valuation of the Mortgaged Vessels by an independent valuer
acceptable to the Agent, confirming that as at the date hereof
the value of the Mortgaged Vessels is not less than $14,300,000.
9. Evidence as to the operational condition of each of the
Original Vessels, such evidence to be in such form and such terms
as the Agent may require.
10. An opinion from Patton Moreno & Asvat, Panamanian counsel
for the Agent.
11. An opinion of Clifford Chance, solicitors for the Agent.
12. Evidence that Gulf Offshore N.S. Limited has agreed to act
as agent for the Obligors for the service of process in England.
THE SECOND SCHEDULE
Notice of Drawdown
From:
To:
Dated:
Dear Sirs,
1. We refer to the agreement (as from time to time amended,
varied, novated or supplemented, the "Facility Agreement") dated
[ ] July, 1996 and made between Gulf Offshore Shipping Services,
Inc. as borrower, GulfMark International Inc., GulfMark North Sea
Limited and Gulf Offshore Marine International, Inc. as sponsors,
Chase Manhattan International Limited as agent and security
trustee and The Chase Manhattan Bank as initial bank. Terms
defined in the Facility Agreement shall have the same meaning in
this notice.
2. We hereby give you notice that, pursuant to the Facility
Agreement and on [date of proposed Advance], we wish to borrow an
Advance in the amount of dollars upon the terms and subject to
the conditions contained therein.
[3. We would like this Advance to have a first Interest Period
of months' duration.]*
4. We confirm that, at the date hereof, the representations set
out in Clause 17 of the Facility Agreement are true and no Event
of Default or Potential Event of Default has occurred.
5. The proceeds of this drawdown should be credited to [insert
account details].
Yours faithfully
.............................
for and on behalf of
*Insert only if there are no outstanding Advances.
THE THIRD SCHEDULE
Form of Transfer Certificate
To:
TRANSFER CERTIFICATE
relating to the agreement (as from time to time amended, varied,
novated or supplemented, the "Facility Agreement") dated July,
1996 whereby a dollar revolving credit facility was made
available to Gulf Offshore Shipping Services, Inc. as borrower by
a bank on whose behalf Chase Manhattan International Limited
acted as agent in connection therewith.
1. Terms defined in the Facility Agreement shall, subject to any
contrary indication, have the same meanings herein. The terms
Bank, Transferee, Bank's Participation and Amount Transferred are
defined in the schedule hereto.
2. The Bank confirms that the Bank's Participation is an
accurate summary of its participation in the Facility Agreement
and requests the Transferee to accept and procure the transfer to
the Transferee of a percentage of the Bank's Participation (equal
to the percentage that the Amount Transferred is of the aggregate
of the component amounts (as set out in the schedule hereto) of
the Bank's Participation) by counter-signing and delivering this
Transfer Certificate to the Agent at its address for the service
of notices specified in the Facility Agreement.
3. The Transferee hereby requests the Agent to accept this
Transfer Certificate as being delivered to the Agent pursuant to
and for the purposes of Clause 33 of the Facility Agreement so as
to take effect in accordance with the terms thereof on the
Transfer Date or on such later date as may be determined in
accordance with the terms thereof.
4. The Transferee confirms that it has received a copy of the
Facility Agreement together with such other information as it has
required in connection with this transaction and that it has not
relied and will not hereafter rely on the Bank to check or
enquire on its behalf into the legality, validity, effectiveness,
adequacy, accuracy or completeness of any such information and
further agrees that it has not relied and will not rely on the
Bank to assess or keep under review on its behalf the financial
condition, creditworthiness, condition, affairs, status or nature
of the Borrower.
5. The Transferee hereby undertakes with the Bank and each of
the other parties to the Facility Agreement that it will perform
in accordance with their terms all those obligations which by the
terms of the Facility Agreement will be assumed by it after
delivery of this Transfer Certificate to the Agent and
satisfaction of the conditions (if any) subject to which this
Transfer Certificate is expressed to take effect.
6. The Bank makes no representation or warranty and assumes no
responsibility with respect to the legality, validity,
effectiveness, adequacy or enforceability of the Facility
Agreement or any document relating thereto and assumes no
responsibility for the financial condition of the Borrower or for
the performance and observance by the Borrower of any of its
obligations under the Facility Agreement or any document relating
thereto and any and all such conditions and warranties, whether
express or implied by law or otherwise, are hereby excluded.
7. The Bank hereby gives notice that nothing herein or in the
Facility Agreement (or any document relating thereto) shall
oblige the Bank to (i) accept a re-transfer from the Transferee
of the whole or any part of its rights, benefits and/or
obligations under the Facility Agreement transferred
pursuant hereto or (ii) support any losses directly or indirectly
sustained or incurred by the Transferee for any reason whatsoever
including, without limitation, the non-performance by the
Borrower or any other party to the Facility Agreement (or any
document relating thereto) of its obligations under any such
document. The Transferee hereby acknowledges the absence of any
such obligation as is referred to in (i) or (ii) above.
8. This Transfer Certificate and the rights and obligations of
the parties hereunder shall be governed by and construed in
accordance with English law.
THE SCHEDULE
1. Bank:
2. Transferee:
3. Transfer Date:
4. Bank's Participation:
Bank's Commitment Bank's Portion of the Advances
5. Amounts Transferred:
[Transferor Bank] [Transferee Bank]
By: By:
Date: Date:
Administrative Details of Transferee
Address:
Contact Name:
Account for Payments in dollars:
Telex:
Telephone:
THE FOURTH SCHEDULE
The Original Vessels
Vessel Provisional Patente
Sea Endeavor (ex "Africa Eagle") 25422-PEXT
Sea Diligent (ex "Sentosa Eagle") 25418-PEXT
Sea Explorer (ex "Australia Eagle") 25421-PEXT
Sea Searcher (ex "Golden Eagle") 25419-PEXT
Sea Eagle (ex "Singapore Eagle") 25417-PEXT
Sea Conquest (ex "Indonesia Eagle") 25420-PEXT
The Borrower
GULF OFFSHORE SHIPPING SERVICES, INC.
as borrower
by: /s/ N. Alan Jones
Address: 201 Energy Center Parkway Suite 220
Lafayette Louisiana 70508 USA
Attention:
The Sponsors
GULFMARK INTERNATIONAL, INC.
by: /s/ N. Alan Jones
Address: 5 Post Oak Park Suite 1170 Houston Texas 77027 USA
Attention:
GULF OFFSHORE MARINE INTERNATIONAL, INC.
by: /s/ N. Alan Jones
Address: 201 Energy Center Parkway Suite 220
Lafayette Louisiana 70508 USA
Attention:
GULFMARK NORTH SEA LIMITED
by: /s/ N. Alan Jones
Address: 10 Charlotte Road London SW13 9QT
Attention:
The Agent and Security Trustee
CHASE MANHATTAN INTERNATIONAL LIMITED
as agent and security trustee
By: /s/ J.G. Haynes
Address: Woolgate House Coleman Street London EC2P 2HD
Attention: Global Energy Group
Facsimile: 962 5030
Telex: 8954681 CMB G
The Initial Bank
THE CHASE MANHATTAN BANK
By: /s/ Tim Chapman
Address: Woolgate House Coleman Street London EC2P 2HD
Attention: Global Energy Group
Facsimile: 962 5030
Telex: 8954681 CMB G
